12- 1-86 Monday

Vol. 51 NO. 230 December 1, 1986

Pages 43167-43336

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 II Federal Register / Vol. 51, No. 230 / Monday, December 1,1986

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 Ill
in a H a B H B H n in H B B B H H H a i

Contents Federal Register

Vol. 51, No. 230
Monday, December 1, 1986

Agricultural Marketing Service PROPOSED RULES

RULES Federal Acquisition Regulation (FAR):
Lemons grown in California and Arizona, 43169 Value engineering, 43219
Oranges (navel) grown in Arizona and California, 43169 NOTICES
Federal Acquisition Regulation (FAR):
Agriculture Department Agency information collection activities under OMB
See Agricultural Marketing Service; Animal and Plant review, 43237, 43238
Health Inspection Service; Federal Grain Inspection (4 documents)
Service Meetings:
Science Board task forces, 43236
Alcohol, Tobacco and Firearms Bureau (4 documents)
RULES
Alcohol, tobacco, and other excise taxes: Education Department
RULES
Consolidated Omnibus Budget Reconciliation Act;
implementation (chewing tobacco and snuff), 43191 Postsecondary education:
State student incentive grant program, 43310
Animal and Plant Health Inspection Service
Student assistance general provisions, 43320, 43332
RULES
(2 documents)
NOTICES
Exportation and importation of animals and animal Grants; availability, etc.:
products: Institutional quality control pilot project, 43335
Poultry hatching eggs; importation, 43172
Swine, pork, and pork products imported from— Energy Department
Northern Ireland, 43174 See Federal Energy Regulatory Commission
Interstate transportation of animals and animal products
(quarantine): Equal Employment Opportunity Commission
Brucellosis-
NOTICES
State and area classifications, 43170
Meetings; Sunshine Act, 43264
(2 documents)
Arts and Humanities, National Foundation
See National Foundation on the Arts and Humanities Executive, Legislative, and Judicial Salaries Commission
See Commission on Executive, Legislative, and Judicial
Commerce Department
Salaries
See International Trade Administration; National Oceanic
and Atmospheric Administration; National Technical Executive Office of the President
Information Service See Presidential Documents; Trade Representative, Office of
United States
Commission on Executive, Legislative, and Judicial
Salaries Federal Aviation Administration
NOTICES
RULES
Meetings, 43225 Airworthiness directives:
British Aerospace, 43176
Committee for the Implementation of Textile Agreements Sikorsky, 43178
NOTICES
Société National Industrielle Aerospatiale, 43179
Cotton, wool, and man-made textiles: Control zones and transition areas, 43180
Malaysia, 43233 PROPOSED RULES
Philippines, 43234 Airworthiness directives:
Sri Lanka, 43235 Messerschmitt-Bolkow-Blohm (MBB), 43216
Date of export; enforcement of requirement, 43236 NOTICES
Export visa requirements; certification, etc.: Advisory circulars; availability, etc.:
Taiwan, 43233 Aircraft seat cushions; flammability requirements, 43261

Customs Service Federal Communications Commission

RULES RULES
Financial and accounting procedure: Radio stations; table of assignments:
Ad valorem user fee, 43188 Missouri, 43199
West Virginia, 43200
Defense Department Television stations; table of assignments:
RULES Idaho, 43200
Acquisition regulations: NOTICES
Profit policy, 43200 Rulemaking proceedings; petitions filed, granted, denied,
Progress payments, 43210 etc., 43243
 IV Federal Register / V o i 51, No. 230 / Monday, December 1, 1986 / Contents

Federal Deposit Inisurance Corporation Food and Drug Administration

NOTICES
RULES
Meetings; Sunshine Act, 43264, 43265 Food additives:
(2 documents) Polymers—
Vinylidene fluoride-hexafluoropropene copolymer,
Federal Emergencyy Management Agency 43190
RULES PROPOSED RULES
Flood insurance; co:immunities eligible for sale: Regulatory hearing before FDA; denial, etc., 43217
Georgia et al., 431198
General Services Administration
Federal Energy Regulatory Commission PROPOSED RULES
NOTICES Federal Acquisition Regulation (FAR):
Electric rate and corporate regulation filings: Value engineering, 43219
NOTICES
Arkansas Power & Light Co. et al„ 43241
Environmental statements; availability, etc;: Federal Acquisition Regulation (FAR):
Central Power & Light Co. et al., 43239 Agency information collection activities under OMB
Applications, hearings, determinations, etc.: review, 43237, 43238
Algonquin Gas Transmission Co., 43238 (4 documents)
Arkla Energy Resources et al., 43238
Cheney Energy Corp., 43239 Health and Human Services Department
Northern Natural Gas Co., 43239 See also Food and Drug Administration; Health Care
Texas Eastern Transmission Corp., 43240 Financing Administration; Human Development
Services Office
NOTICES
Federal Grain Inspection Service
Organization, functions, and authority delegations:
NOTICES
Office of the Secretary et al., 43245
Agency designation actions:
Illinois and Texas, 43224 Health Care Financing Administration
Illinois, North Dakota, and Iowa, 43223 RULES
Iowa, 43225 Medicare:
Oklahoma and Connecticut, 43223 Peer review organizations (PRO), utilization and quality
co n tro l-
Federal Maritime Commission Obsolete rules removed, 43195
PROPOSED RULES
Maritime carriers and related activities in foreign Housing and Urban Development Department
commerce: RULES
Filing of service contracts, etc.; recordkeeping Mortgage and loan insurance programs, public and Indian
Correction, 43267 housing, etc.:
NOTICES
S>-Pet ownership in assisted rental housing for elderly or
Investigations, hearings, petitions, etc.: handicapped, 43270
Yangming Marine Transport et al., 43243 NOTICES
Manufactured home enforcement proceedings:
Federal Reserve System Scott Housing Systems, Inc., 43248
RULES Mortgage and loan insurance programs:
Reserve requirements of depository institutions (Regulation «— EfiLownership in assisted rental housing for elderly or
handicapped; pet deposit limitation, 43306
Reserve requirement ratios, 43175
NOTICES Human Development Services Office
Meetings; Sunshine Act, 43265 NOTICES
(2 documents) Grants; availability, etc.:
Applications, hearings, determinations, etc.: Coordinated discretionary funds program, 43248
Chemical New York Corp., 43244
Leroy C. Darby, Inc., et al., 43245 Interior Department
Michigan National Corp., 43245 See Land Management Bureau; Minerals Management
Schwing, Jules B., et al„ 43244 Service

Federal Trade Commission Internal Revenue Service

PROPOSED RULES RULES
Ophthalmic practice, 43217 Income taxes:
Source of interest and dividends, 43191
PROPOSED RULES
Financial Management Service
See Fiscal Service Income taxes:
Source of interest and dividends, 43218
Fiscal Service
International Trade Administration
NOTICES
NOTICES
Czechoslovakian claims, etc.; notice to awardees for Antidumping:
application filing, 43314 Industrial nitrocellulose from France, 43227
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Contents V

Self-propelled bituminous paving equipment replacement NOTICES

parts from Canada, 43230 Coastal zone management programs and estuarine
Antidumping and countervailing duties: sanctuaries:
Administrative review requests, 43225 State programs—
Countervailing duties: New York, 43232
Carbon steel wire rod from— Meetings:
South Africa, 43227 Pacific Fishery Management Council, 43232
Applications, hearings, determ inations, etc.:
University of California, Los Alamos National Laboratory, National Science Foundation
43226 NOTICES
(2 documents) Agency information collection activities under OMB review,
University of California, Los Alamos National Laboratory 43251, 43252
et al., 43226 (2 documents)
University of Illinois et al., 43226 Committees; establishment, renewals, terminations, etc.:
Biological, Behavioral, and Social Sciences Advisory
Interstate Commerce Commission Committee, 43252
NOTICES
National Science Board; membership nominations, 43252
Railroad operation, acquisition, construction, etc.: Meetings:
Chicago & North Western Transportation Co., 43250 Division of Mechanics, Structures and Materials
Railroad services abandonment: ' Engineering Advisory Committee, 43251
Baltimore & Ohio Railroad Co., 43250
Seaboard System Railroad, Inc., 43250 National Technical Information Service
NOTICES
Patent licenses, exclusive:
Land Management Bureau
Turbulence Prediction Systems, Inc., 43233
RULES
Public land orders:
Nuclear Regulatory Commission
Colorado; correction, 43267
NOTICES NOTICES
Opening of public lands: Environmental statements; availability, etc.:
Nevada, 43249 Vermont Yankee Nuclear Power Corp., 43254
Meetings:
Reactor Safeguards Advisory Committee, 43253, 43255-
Minerals Management Service
43257
NOTICES
(4 documents)
Outer Continental Shelf operations:
Meetings; Sunshine Act, 43265
Gulf of Mexico—
Regulatory guides:
Lease sales, 43249 Issuance, availability, and withdrawal, 43255
Applications, hearings, determinations, etc.:
National Aeronautics and Space Administration Georgia Power Co. et al., 43253
PROPOSED RULES
Federal Acquisition Regulation (FAR): Office of United States Trade Representative
Value engineering, 43219 See Trade Representative, Office of United States
NOTICES
Federal Acquisition Regulation (FAR):
Postal Service
Agency information collection activities under OMB
RULES
review, 43237, 43238
Domestic Mail Manual:
(4 documents)
Undeliverable mail; disposal of books and sound
recordings, 43194
National Communications System
n o t ic e s
Presidential Documents
Meetings: PROCLAMATIONS
National Security Telecommunications Advisory Special observances:
Committee, 43241 Farm-City Week, National, (Proc. 5579), 43167
National Foundation on the Arts and Humanities Public Health Service
NOTICES See Food and Drug Administration
Agency information collection activities under OMB review,
43251 Securities and Exchange Commission
NOTICES
National Labor Relations Board Self-regulatory organizations; unlisted trading privileges:
NOTICES Boston Stock Exchange, Inc., 43257
Meetings; Sunshine Act, 43265 Cincinnati Stock Exchange, Inc., 43257
Midwest Stock Exchange, Inc., 43258
National Oceanic and Atmospheric Administration Philadelphia Stock Exchange, Inc., 43258
PROPOSED RULES Applications, hearings, determ inations, etc.:
Fishery conservation and management: Mellon Bank, N .A., 43258 *' "
Pacific Coast groundfish, 43219 Salomon Brothers Mortgage Securities III, Inc., 43259
 VI Federal Register / VoL 51« N o. 230 / Monday, December 1,1986 / Contents

Textile Agreements Implementation Committee

See Committee for the implementation of Textile
Agreements

Trade Representative, Office of United States

NOTICES
Harmonized commodity description and coding system,
43262

Transportation Department
S ee also Federal Aviation Administration
RULES
Aviation proceedings:
Limited-entry markets; certificate duration, selection
procedures and criteria, etc., 43180

Treasury Department
S ee Alcohol, Tobacco and Firearms Bureau; Customs
Service; Fiscal Service; Internal Revenue Service

Veterans Administration
NOTICES
Agency information collection activities under OMB review
43263

Separate Parts in This Issue

Part II
Housing and Urban Development Department, 43270
Part ill
Department of Education, 43310

Part IV
Department of the Treasury, Fiscal Service, 43314
Part V
Department of Education, 43320

Part VI
Department of Education, 43332

Reader Aids
Additional information, including a list of public
laws, telephone numbers, and finding aids, appears
in the Reader Aids section at the end of this issue.
 Federal Register / Vol. 51, No. 230 / Monday, December 1,1986 / Contents

CFR PARTS AFFECTED IN THIS ISSUE

A cumulative list of the parts affected this month can be found in

the Reader Aids section at the end of this issue.

3 CFR 46 CFR
Proclamations: Proposed Rules:
5579................................43167 580......................................... 43267
7 CFR 47 CFR
907.. .. 43169 73 (3 documents)............. 43199,
910.. .. 43169 43200
9 CFR 48 CFR
78............... 43170 204........... 43200
92....... 43172 215................................... .....43200
94.. ............................ 43174 230......................................... 43200
12 CFR 232.........................................43209
204........ 43175 252 ....................................43209
14 CFR
253 ...................................43200
39 (3 documents)...43176- Proposed Rules:
43179 48................ 43219
71.......... 43180 52................ 43219
323.. ............... 43180 50 CFR
399..... ............................43180
Proposed Rules:
Proposed Rules: 663.........................................43219
39............................. 43216
16 CFR
Proposed Rules:
456.. .... 4 3 217
19 CFR
24................................. 43 188
21 CFR
177........ 43 190
Proposed Rules:
16........................................... 43 217
24 C FR
243............ ........43 270
511.................. :..... ............... 4 3 2 7 0
84 2..................................... ...4 3 2 7 0
942.................. 43 2 7 0
26 CFR
4a............................... 43191
Proposed Rules:
1......... 4 3 218
4a.................... 4 3 218
27 CFR
270......... 43191
275....................... 43191
290.......................... 43191
295 ................................ ...43191
296 ......................,....... ........ 43191
34 CFR
668 (2 documents)........... 43 320,
43 332
692......................................... 4 3 310
39 CFR
111....................... ...4 3 1 9 4
42 C FR
400.. ........ 43 1 9 5
405...... 43195
412........... 43 195
421......................................... 4 3 195
456......... 43 195
460 .......... 43 1 9 5
461 .............................. 43 1 9 5
462.. ........... 43195
463........................ 43 195
46 6................ 4 3 195
47 3................................. 43195
476...................... 4 3 195
478........ 4 3 195
43 CFR
Public Land Order:
6625......................... 43 267
44 CFR
64.......... 43198
 43167

Federal Register Presidential Documents

Vol. 51. No. 230
Monday. December 1, 1986

Title 3— Proclamation 5579 of November 26, 1986

T h e P resid en t N a tio n a l F a r m -C ity W e e k , 1986

By the President of the United States of America

A Proclamation
American agriculture is the most productive in the world. Our Nation s
consumers have the broadest selection of nutritious and healthful food in the
world, and we purchase our food for only around 15 percent of after-tax
income. Because we are most grateful for this abundance and we share it
gladly with other lands, we lead in providing food aid programs around the
world. In addition, we are a huge commercial exporter and dependable
supplier of food and fiber.
Our Nation and the world owe many thanks for this bounty to American
farmers, whose dedication, enterprise, hard work, and good management are
models of modem productivity. One American farm worker supplies food and
fiber for 75 people, 60 here in the United States and 15 overseas.
W e also owe thanks to our farmers’ partners in our agricultural system—-the
rural townspeople and the city workers who maintain a pipeline of production
supplies to farms. W e are grateful as well to the truckers, shippers, processors,
warehousers, retailers, and others in our chain of marketing distributors.
Each year at Thanksgiving time, our Nation pauses for Farm-City Week
activities to recognize the enterprise that makes this bountiful agricultural
harvest possible through the blessings of our Creator.
N O W , T H EREFO RE, I, R O N A L D R E A G A N , President of the United States of
America, by virtue of the authority vested in me by the Constitution and laws
of the United States, do hereby proclaim the week of November 21 through
November 27,1986, as National Farm-City Week. I call upon all Americans, in
rural areas and in cities alike, to join in recognizing the accomplishments of
our productive farmers and of our urban residents cooperating to create
abundance, wealth, and strength for the Nation.
IN W IT N E SS W H ER EO F, I have hereunto set my hand this twenty-sixth day
of November, in the year of our Lord nineteen hundred and eighty-six, and of
the Independence of the United States of America the two hundred and
eleventh.

[FR Doc. 86-27110

Filed 11-28-86; 10:32 am]
Billing code 3195-01-M
 43169

Rules and Regulations Federal Register

Vol. 51, No. 230
Monday, December 1, 1986

This section of the FEDERAL REGISTER Marketing orders issued pursuant to the Authority: Secs. 1-19, 48 Stat. 31, as
contains regulatory documents having Agricultural Marketing Agreement Act, amended; 7 U.S.C. 601-674.
general applicability and legal effect, most and rules issued thereunder, are unique 2. Section 907.936 Navel Orange
of which are keyed to and codified in
the Code of Federal Regulations, which is in that they are brought about through Regulation 636 is hereby added to read:
published under 50 titles pursuant to 44 group action of essentially small entities § 907.936 Navel Orange Regulation 636.
U.S.C. 1510. acting on their behalf. Thus, both
The Code of Federal Regulations is sold statutes have small entity orientation The quantities of navel oranges grown
by the Superintendent of Documents. and compatibility. in California and Arizona which may be
Prices of new books are listed in the handled during the period November 28
This rule is issued under Order No. through December 4,1986, are
first FEDERAL REGISTER issue of each
week.
907, as amended (7 CFR Part 907), established as follows:
regulating the handling of navel oranges
grown in Arizona and designated part of (a) D istrict 1 :1,600,000 cartons;
California. The order is effective under (b) D istrict 2: Unlimited cartons;
DEPARTMENT OF AGRICULTURE (c) D istrict 3: Unlimited cartons;
the Agricultural Marketing Agreement
Agricultural Marketing Service Act of 1937, as amended (7 U .S.C. 601- (d) D istrict 4: Unlimited cartons;
674). This action is based upon the Dated: November 26,1986.
7 CFR Part 907 recommendation and information Joseph A. Gribbin,
[Navel Orange Regulation 636] submitted by the Navel Orange Director, Fruit and Vegetable Division,
Administrative Committee and upon Agricultural Marketing Service.
Navel Oranges Grown in Arizona and other available information. It is found [FR Doc. 86-27079 Filed 11-28-86; 8:45 am]
Designated Part of California; that this action will tend to effectuate BILUNG CODE 3410-02-M
Limitation of Handling the declared policy of the act.
This action is consistent with the 7 CFR Part 910
AGENCY: Agricultural Marketing Service,
marketing policy for 1986-87 adopted by
USDA. [Lemon Regulation 537]
the Navel Orange Administrative
a c t io n : Final rule. Committee. The committee met publicly Lemons Grown in California and
SUMMARY: Regulation 636 establishes on November 25,1986, at Los Angeles, Arizona; Limitation of Handling
the quantity of California-Arizona navel California, to consider the current and
prospective conditions of supply and agency: Agricultural Marketing Service,
oranges that may be shipped to market USDA.
during the period November 28 through demand and recommended, by a vote of
December 4,1986. Such action is needed 6 to 5, a quantity of navel oranges A C TIO N : Final rule.
to balance the supply of fresh navel deemed advisable to be handled during
the specified week. The committee s u m m a r y : Regulation 537 establishes
oranges with the demand for such
reports that demand has improved. the quantity of fresh California-Arizona
period, due to the marketing situation
It is further found that it is lemons that may be shipped to market at
confronting the orange industry. 270,000 cartons during the period
DATE: Regulation 636 (§ 907.936) is impracticable and contrary to the public
interest to give preliminary notice, November 30 through December 6,1986.
effective for the period November 28 Such action is needed to balance the
through December 4,1986. engage in public rulemaking, and
postpone the effective date until 30 days supply of fresh lemons with market
FOR FURTHER IN FO RM A TIO N CONTACT: demand for the period specified, due to
Ronald L. Cioffi, Chief, Marketing Order after publication in the Federal Register
the marketing situation confronting the
Administration Branch, F&V, AM S, (5 U.S.C. 553), because of insufficient
lemon industry.
USDA, Washington, DC 20250, time between the date when information
became available upon which this DATES: Regulation 537 (§ 910.837) is
telephone: 202-447-5697. effective for the period November 30
regulation is based and the effective
SUPPLEMENTARY IN FO RM A TIO N : This through December 6,1986.
date necessary to effectuate the
final rule has been reviewed under declared policy of the act. To effectuate FOR FURTHER IN FO RM A TIO N C O NTACT:
Executive Order 12291 and the declared purposes of the act, it is Ronald L. Cioffi, Chief, Marketing Order
Departmental Regulation 1512-1 and has necessary to make this regulatory Administration Branch, F&V, AM S,
been determined to be a “non-major” provision effective as specified, and USDA, Washington, DC 20250,
rule under criteria contained therein. handlers have been apprised of such telephone: (202) 447-5697.
Pursuant to requirements set forth in provision and the effective time.
the Regulatory Flexibility Act (RFA), the SUPPLEMENTARY IN FO RM A TIO N : This
Administrator of the Agricultural final rule has been reviewed under
Marketing Service has determined that List of Subjects in 7 CFR Part 907 Executive Order 12291 and
this action will not have a significant Departmental Regulation 1512-1 has
Agricultural Marketing Service, been determined to be a "non-major”
economic impact on a substantial Marketing agreements and orders,
number of small entities. rule under criteria contained therein.
California, Arizona, Oranges (navel).
The purpose of the RFA is to fit Pursuant to requirements set forth in
regulatory action to the scale of PART 907—[AMENDED] the Regulatory Flexibility Act (RFA), the
business subject to such actions in order Administrator of the Agricultural
that small businesses will not be unduly 1. The authority citation for 7 CFR Marketing Service has determined that
or disproportionately burdened. Part 907 continues to read: this action will not have a significant
 j3 1 7 0 ___F e d e r aI Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

economic impact on a substantial PART 910—[AMENDED] 812, Federal Building, 6505 Belcrest
number of small entities. Road, Hyattsville, MD 20782, 301-436-
The purpose of the RFA is to fit 1. The authority citation for 7 CFR 5965.
regulatory actions to the scale of Part 910 continues to read as follows:
SUPPLEMENTARY INFO RM ATION*
business subject to such actions in order Authority: Secs. 1-19, 48 Stat. 31, as
that small businesses will not be unduly amended: 7 U.S.C. 601-674. Background
or disproportionately burdened. 2. Section 910.837 is added to read as The brucellosis regulations (contained
Marketing orders issued pursuant to the follows:
in 9 CFR Part 78 and referred to below
Agricultural Marketing Agreement Act, § 910.837 Lemon Regulation 537. as the regulations) provide a system for
and rules issued thereunder, are unique . classifying States or portions of States
in that they are brought about through The quantity of lemons grown in
California and Arizona which may be according to the rate of brucella
group action of essentially small entities infection present and the general
acting on their behalf. Thus, both handled during the period November 30
through December 6,1986, is established effectiveness of a brucellosis control
statutes have small entity orientation and eradication program. The
at 270,000 cartons.
and compatibility. classifications are Class Free, Class A,
This regulation's issued under Dated: November 26,1986. Class B, and Class C. States or Areas
Marketing Order No. 910, as amended (7 Joseph A. Gribbin, which do not meet the minimum
CFR Part 910) regulating the handling of Director, Fruit and Vegetable Division, standards for Class C are required to be
lemons grown in California and Arizona. Agricultural Marketing Service, placed under Federal quarantine. The
The order is effective under the [FR Doc. 86-27080 Filed 11-28-86; 8:45 am] States of Florida and Texas are divided
Agricultural Marketing Agreement Act BILLING CODE 3410-02-M into Glass B Areas and Class C Areas.
of 1937, as amended (7 U .S.C. 601-674)* Before the effective date of this
This action is based upon the document the following counties in
recommendation and information Animal and Plant Health Inspection Florida and Texas were included in
submitted by the Lemon Administrative Service portions of Florida and Texas
Committee and upon other available 9 CFR Part 78
designated as Class C: In Florida—Levy,
information. It is found that this action Marion, Citrus, Pinellas, Orange, Flagler,
will tend to effectuate the declared [Docket No. 86-106] Volusia, Seminole, Lake, Sumter,
policy of the Act. Hernando, and Pasco: in Texas—Frio,
Brucellosis in Cattle; State and Area Denton, Grayson, Dimmit, Bastrop,
This regulation is consistent with the
Classifications Caldwell, Guadalupe, Lee, Milam, Falls,
marketing policy for 1986-87. The
committee met publicly on November 25, AGENCY: Animal and Plant Health Gonzales, and Wilson. This document
1986, at Los Angeles, California, to Inspection Service, USDA. amends the regulations to include these
consider the current and prospective counties in the portions of Florida and
a c t i o n : Interim rule.
conditions of supply and demand and Texas designated as Class B.
recommended, by a vote of 9 to 3, a S UM M ARY: This document amends the The brucellosis Class Free
quantity of lemons deemed advisable to regulations governing the interstate classification is based on a finding of no
be handled during the specified week. movement of cattle because of known brucellosis in cattle for the
The committee reports that demand brucellosis by changing the period of 12 months preceding
remains weak for larger sizes of lemons classification of 12 counties in the State classification as Class Free. The Class C
and has improved somewhat for smaller of Florida and 12 counties in the State of classification is for States or Areas with
sizes. Texas from Class C to Class B. This the highest rate of brucellosis, with
action is necessary because it has been Class A and B in between. Restrictions
It is further found that it is on the movement of cattle are more
impracticable and contrary to the public determined that these counties meet the
standards for Class B status. The effect stringent for movements from Class A
interest to give preliminary notice, States or Areas compared to movements
engage in public rulemaking, and of this action is to relieve certain
restrictions on the interstate movement from Free States or Areas, and aré more
postpone the effective date until 30 days stringent for movements from Class B
after publication in the Federal Register of cattle from certain counties in the
States of Florida and Texas. States or Areas compared to movements
(5 U.S.C. 553), because of insufficient from Class A States or Areas, and so on.
time between the date when information d a t e s : Effective date of the interim rule
The restrictions include testing for
became available upon which this is December 1,1986. We will consider
movement of Certain cattle from other
regulation is based and the effective your comments if we receive them on or
than Class Free States or Areas.
date necessary to effectuate the before January 30,1987.
The basic standards for the different
declared purposes of the a ct Interested a d d r e s s e s : Send written comments to
classifications of States or Areas
persons were given an opportunity to---- Steven R. Poore, Acting Assistant concern maintenance of: (1) A State or
submit information and views on the Director, Regulatory Coordination, Area-wide accumulated 12 consecutive
regulation at an open meeting. It is APHIS, USDA, Room 728, Federal months herd infection rate not to exceed
necessary to effectuate the declared Building, Hyattsville, MD 20782. Please a stated level; (2) a Market Cattle
purposes of the act to make these state that your comments refer to Identification (MCI) reactor prevalence
regulatory provisions effective as Docket Number 86-106. Comments rate not to exceed a stated rate (this
specified, and handlers have been received may be inspected at Room 728 concerns the testing of cattle at auction
apprised of such provisions and the of the Federal Building between 8 a.m. markets, stockyards, and slaughtering
effective time. and 4:30 p.m., Monday through Friday, establishments); (3) a surveillance
except holidays. system which includes a testing program
List of Subjects in 7 CFR Part 910
FOR FURTHER IN FO RM A TIO N CONTACT: for dairy herds and slaughtering
Marketing agreements and orders, Dr. Jan D. Huber, Domestic Programs establishments, and provisions for
California, Arizona, and Lemons. Support Staff, VS, APHIS, USDA, Room identifying and monitoring herds at high
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43171

risk of infection, including herds Cattle moved interstate are moved for List of Subjects in 9 CFR Part 78
adjacent to infected herds and herds slaughter, for use as breeding stock, or Animal diseases, Brucellosis, Cattle,
from which infected animals have been for feeding. Changing the status of a
sold or received under approved action Hogs, Quarantine, Transportation.
portion of the States of Florida and
plans; and (4) minimum procedural Texas reduces certain testing and other PART 78—BRUCELLOSIS
standards for,administering the requirements on the interstate
program. . movement of these cattle. Testing Accordingly, 9 CFR Part 78 is
Before the effective date of this requirements for cattle moved interstate amended as follows:
document, Levy, Marion, Citrus, for immediate slaughter or to 1. The authority citation for Part 78
Pinellas, Orange, Flagler, Volusia, quarantined feedlots are not affected by continues to read as follows:
Seminole, Lake, Sumter, Hernando, and the changes in status. Also, cattle from Authority: 21 U.S.C. lll-114a-l, 114g, 115,
Pasco Counties in Florida; and Frio, Certified Brucellosis-Free Herds moving 117,120,121,123-126,134b, 134f; 7 CFR 2.17,
Denton, Grayson, Dimmit, Bastrop, interstate or not affected by these 2.51, and 371.2(d).
Caldwell, Guadalupe, Lee, Milam, Falls, changes in status. It has been
Gonzales, and Wilson Counties in Texas 2. In § 78.20, paragraph (c), the listing
determined that the changes in for “Florida” is revised to read as
were classified as Class: C. It had been brucellosis status made by this
necessary to classify these counties as follows:
document will not affect market patterns
Class C rather than Class B because of and will not have a significant economic § 78.20 State/area classifications.
the herd infection rate and the MCI impact on those persons affected by this * * * * *
reactor prevalence rate. To attain and (c) * * * Florida (Counties of Alachua,
document.
maintain Class B status, a State or Area Baker, Bay, Bradford, Calhoun, Citrus, Clay,
must, among other things, maintain an Under these circumstances, the Columbia, Dixie, Duval, Escambia, Flagler,
accumulated 12-month herd infection Administrator of the Animal and Plant Franklin, Gadsden, Gilchrist, Gulf, Hamilton,
rate for brucellosis not to exceed 15 Health Inspection Service has Hernando, Holmes, Jackson, Jefferson,
herds per 1,000 (1.5 percent) if the State determined that this action will not have Lafayette, Lake, Liberty, Leon, Levy,
has more than 1,000 herds, and the a significant economic impact on a Madison, Marion, Nassau, Okaloosa, Orange,
adjusted MCI reactor prevalence rate for substantial number of small entities. Pasco, Pinellas, Putnam, Saint Johns, Santa
Rosa, Seminole, Sumter, Suwannee, Taylor,
such 12-month period must not exceed 3 Executive Order 12372 Union, Volusia, Wakulla, Walton, and
reactors per 1,000 cattle tested (0.30 Washington), * * *
percent). A review of brucellosis This program/activity is listed in the
program records establishes that the Catalog of Federal Domestic Assistance 3. In § 78.20, paragraph (c), the listing
portion of Florida encompassing Levy, under No. 10.025 and is subject to the for “Texas” is revised to read as
Marion, Citrus, Pinellas, Orange, Flagler, provisions of Executive Order 12372, follows:
Volusia, Seminole, Lake, Sumter, which requires intergovernmental (c) * * * Texas (Counties of Andrews,
Hernando, and Pasco Counties; and the consultation with State and local Archer,, Armstrong, Bailey, Bandera, Bastrop,
portion of-Texas encompassing Frio, officials. (See 7 CFR Part 3015, Subpart Baylor, Bell, Blanco, Borden, Bosque,
Denton, Grayson, Dimmit, Bastrop, V.) Brewster, Briscoe, Brown, Burnet, Caldwell,
Caldwell, Guadalupe, Lee., Milam, Falls, Callahan, Carson, Castro, Childress, Clay,
Gonzales, and Wilson Counties should Emergency Action Cochran, Coke, Coleman, Collingsworth,
Comal, Comanche, Concho, Cooke, Coryell,
be changed to Class B, since these Dr. John K. Atwell, Deputy Cottle, Crane, Crockett, Crosby, Culberson,
counties in the States of Florida and Administrator of the Animal and Plant Dallam;, Dawson, Deaf Smith, Denton,
Texas now meet the criteria for Health Inspection Service for Veterinary Dickens, Dimtniti Donley, Eastland, Ector,
classification as Class B. Services, has determined that an Edwards, El Paso, Erath, Falls, Fisher, Floyd,
emergency situation exists which Foard, Frio, Gaines, Garza, Gillespie,
Executive Order and Regulatory Glasscock, Gonzales, Gray, Grayson,
Flexibility Act warrants publication of this interim rule Guadalupe, Hale, Hall, Hamilton, Hansford,
without prior opportunity for public Hardeman, Hartley, Haskell, Hays, Hemphill,
This rule is [Link] conformance comment. Immediate action is
with Executive Order 12291 and has Hockley, Hood, Howard, Hudspeth,
warranted in order to delete Hutchinson, Irion, Jack, Jeff Davis, Johnson,
been determined to be not a ‘‘major Jones, Kendall, Kent, Kerr, Kimble, King,
rule.” Based on information compiled by unnecessary restrictions on the
interstate movement of certain cattle Kinney, Knox, Lamb, Lampasas, Lee,
the Department, it has been determined Lipscomb, Llano, Loving, Lubbock, Lynn,
that this rule will not have a significant from areas in Florida and Texas.
McCullock, Martin, Mason, Maverick,
effect on the economy; will not cause a Further, pursuant to the Medina, Menard, Midland, Milam, Mills,
major increase in costs or prices for administrative procedure provisions in 5 Mitchell, Montague, Moore, Motley, Nolan,
consumers, individual industries, U.S.C. 553, it is found upon good cause Ochiltree, Oldham, Palo Pinto, Parker,
Federal, State, or local government that prior notice and other public Parmer, Pecos, Potter, Presidio, Randall,
agencies, or geographic regions; and will procedures with respect to this interim Reagan, Real, Reeves, Roberts, Runnels, San
rule are impracticable and contrary to Saba, Schleicher, Scurry, Shackelford,
not cause adverse effects on Sherman, Somervell, Sterling, Stephens,
competition, employment, investment, the public interest, and good cause is Stonewall, Sutton, Swisher, Tarrant, Taylor,
productivity, innovation, or on,the found for making this interim rule Terrel, Terry, Throckmorton, Tom Green,
ability of United States-based effective less than 30 days after Travis, Upton, Uvalde, Val Verde, Ward,
enterprises to compete with foreign- publication of this document in the Wheeler, Witchita, Wilbarger, Williamson,
based-enterprisea in. domestic or export Federal Register. Comments have been Wilson, Winkler, Wise, Yoakum, Young and
markets. solicited for 60 days after publication of Zavala).
this document. A document discussing * * * * *
For this action, the Office of
Management and Budget has waived its comments received and any 4. In § 78.20, paragraph (d), the listing
review process required by Executive amendments required will be published for "Florida” is amended by removing
Order 12291. - in the Federal Register. the following counties: Citrus, Flagler,
 43172 Federal Register / V oL 51, N o. 230 / M onday. Decem ber 4, 1986 / Rules and Regulations

Hernando, Lake, Levy, Marion, Orange, SUPPLEMENTARY IN FO RM ATION: for hatching that are imported from
Pasco, Pinellas, Seminole, Sumter, and Background countries designated as VVND-free.
Volusia.
Thé regulations in 9 CFR Part 92 These objections are discussed below.
5. In § 78.20, paragraph (d), the listing
(referred to below as the regulations), Based on the rationale contained in >
for “Texas” is amended by removing the
contain, among other things, the proposal and this document, the
following counties: Bastrop, Caldwell,
requirements for importing poultry into regulations are amended as proposed.
Denton, Dimmit, Falls, Frio, Gonzales,
the United States. Prior to the effective The effect of this rule is to relieve
Grayson, Guadalupe, Lee, Milam, and
Wilson. date of this final rule, § 92.11(c) of the certain restrictions on poultry eggs for
regulations required all poultry, hatching that aré imported into the
Done in Washington, DC, this 25th day of including eggs for hatching, imported United States from countries designated
November 1986. as free from VVND.
from any part of the world except
B.G. Johnson, Canada to be quarantined for not less Effective Date
Deputy Administrator, Veterinary Services, than 30 days and to be subjected during
Animal and Plant Health. Inspection. Service. This final rule is made effective on the
this time to certain inspections, date of publication. The final rule
[FR Doe. 86-26936 Filed 11-28-80; 8:45 am] disinfections, and tests. The purpose of relieves certain restrictions which have
BILLING CODE 3410-34-M these requirements was to help protect been found to be unnecessary.
the poultry industry of the United States Accordingly, prompt action should be
from viscerotropic velogenic Newcastle taken to delete these restrictions.
9 CFR Part 92 disease (VVND) and other
communicable diseases of poultry. Comments
[D o c k e t N o. 8 6 -0 3 1 ]
The regulations also contain Commenters opposed deleting the
inspection and certification quarantine requirement for poultry eggs
requirements for poultry eggs for for hatching that are imported into the
Importation of Poultry Hatching Eggs
hatching and set forth conditions under United States from countries designated
which import permits for such eggs will as VVND-free based on the premise that
agency: Animal and Health Inspection
Service, USDA. be granted or denied. such eggs would present an
A document published in the Federal unacceptable risk of disseminating
a c t i o n : Final rule.
Register on November 5,1985 (50 FR diseases other than VVND into the
sum m ary: This document amends the 45918-45919), proposed to amend the United States.
import regulations for poultry by import regulations for poultry by In this connection, most of the
deleting the quarantine requirements for deleting the quarantine requirement for commenters asserted that quarantine
poultry eggs for hatching that are poultry eggs for hatching that are should be required for all poultry eggs
imported into the United States from imported into the United States from for hatching that are imported into the
countries designated as free of countries designated in 9 CFR 94.6(a)(2) United States. This assertion was based
viscerotropic velogenic Newcastle as VVND-free. The document also on one or more of the following
disease (VVND). This action is proposed to clarify the period of premises: Transovarially transmitted
warranted since it has been determined quarantine for certain poultry eggs for diseases would not be detected until
that poultry eggs for hatching that are hatching and the poultry therefrom by after hatch; “previously unrecognized
imported from VVND-free countries and providing that poultry eggs for hatching diseases" and “emerging diseases"
are accompanied by a certificate that are imported from any country not might escape detection prior to
pursuant to the regulations, and the designated as VVND-free be importation; and some diseases may not
poultry from such eggs, will not present quarantined from time of arrival at the be eliminated by egg shell sanitation.
a risk of introducing communicable port of entry and that the poultry from In addition, one commenter asserted
diseases of poultry, including VVND, such eggs be quarantined for not less that the quarantine should be lifted only
into the United States. This document than 30 days following hatch. The for those poultry eggs for hatching that
also clarifies the period of quarantine document also proposed to change are imported from W ND-free countries
for certain poultry eggs for hatching and language in the regulations concerning for use as parent Or grandparent breeder
the poultry therefrom by providing that such quarantine provisions to reflect stock and raised to maturity Under
poultry eggs for hatching that are more closely the language of the veterinary supervision.
imported from any country not statutory authority for such provisions. No changes are made based on these
designated as VVND-free be The document of November 5,1985, comments.
quarantined from time of arrival at the invited the submission of written Most poultry eggs for hatching that
port of entry and that the poultry from comments-on or before January 6,1986. are imported into the United States
such eggs be quarantined for not less A document published in the Federal originate in Canada and are exempt
than 30 days following hatch. This Register on January 7,1986 (51 FR 613) from quarantine. Further, as explained
document also changes language in the extended the comment period until in the proposal and this document,
regulations concerning such quarantine March 7,1986, to provide industry poultry eggs for hatching which
provisions to reflect more closely the representatives and other interested originate in countries other than Canada
language of the statutory authority for persons adequate time in which to are imported for flock improvement
such provisions.. prepare comments. Thirty-three projects, such as improving blood lines,
EFFECTIVE DATE: December 1,1986.
comments were received. These in other words, for use as parent or
comments were from representatives of grandparent breeder stock. Further, it is
FOR FURTHER IN FO R M A TIO N CONTACT:
the poultry industry, a State governor, a standard practice for breeder industries
Dr. S.S. Richeson, Chief Staff State commissioner of agriculture, and a to protect their flocks by retaining the
Veterinarian, Import-Export Operations member of Congress. Eight comments services of veterinarians. However, even
Staff, VS, APHIS, USDA, Room 761, supported the proposal. The others if poultry eggs for hatching were
Federal Building, 6505 BeJcrest Road, objected to the proposed deletion of imported for marketing as broilers, any
Hyattsville, MD 20782, 301-436-8144. quarantine requirements for poultry eggs disease risk from such eggs would be
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43173

insignificant because of the diseases mentioned by the competition, employment, investment,

requirements which must be met before commenters—into the United States. productivity, innovation, or on the
poultry hatching eggs may leave the Transovarially transmitted diseases, ability of United States-based
country of origin for the United States. for example, are transmitted from the enterprises to compete with foreign-
The deletion by this final rule of the mother hen to the embryo. Although based enterprises in domestic or export
quarantine requirement for poultry eggs such diseases may not be detected in markets.
for hatching that are imported into the the egg until after hatch, they would be Consideration was given concerning
United States from countries designated detectable in the flock or flocks of whether (1) to continue to impose the
as VVND-free does not allow such eggs origin, resulting in denial of the required
quarantine requirement for poultry eggs
to enter the United States without health certificate and import permit.
The comment concerning “previously for hatching imported from countries
restrictions.
The regulations require, among other unrecognized diseases” and “emerging designated as free of VVND, and the
things, that a health certificate for the diseases” apparently refers to new, poultry from such eggs, or (2) to delete
flock or flocks of origin of all poultry previously undefined, diseases and fresh the quarantine requirement. Alternative
eggs for hatching imported into the outbreaks of diseases. Outbreaks of 2 is adopted because it appears that
United States accompany the eggs to a most virulent or highly contagious poultry eggs for hatching accompanied
port of entry in the United States. diseases of poultry are quickly and by a certificate pursuant to the
Section 92.5(b) states, in part: easily detected. Inspections for health regulations, that are imported from
All eggs for hatching offered for certification include testing for certain VVND-free countries, and the poultry
importation from any part of the world, shall hard-to-detect diseases such as from such imported eggs, will not
be accompanied by a certificate of a salaried pullorum typhoid and egg drop present a risk of introducing
veterinary officer of the national government syndrome-76. The discovery of any communicable diseases of poultry into
of the country of origin stating that the flock previously undefined poultry disease in the United States.
or flocks of origin were found upon any country would be cause under Most of the poultry eggs for hatching
inspection to be free from evidence of § 92.4(a) for Veterinary Services to deny
communicable diseases of poultry, that no imported into the United States come
import permits for affected poultry,
Newcastle disease has occurred on the from Canada. This document has no
premises bf origin or on adjoining premises including poultry hatching eggs, from
that country until sufficient information effect on the importation of poultry eggs
during the 90 days immediately preceding the for hatching from Canada because
date of movement of the eggs from such became available to determine that
poultry from that country could be poultry imported from Canada is exempt
country, and that as far as it has been
possible to determine such flock or flocks safely imported. If special safeguards from the quarantine requirement.
were not exposed to such disease during the appeared necessary, additional Poultry eggs for hatching from countries
preceding 90 days. regulations would be developed to other than Canada are imported in
In addition, the regulations require prevent the dissemination into the limited numbers for use in flock
importers of poultry eggs for hatching to United States of any new disease. improvement projects, such as
first apply for and obtain an import Further, Veterinary Services does not improving blood lines. These eggs are
permit from Veterinary Services. Section rely on egg shell sanitation to prevent imported both from some of the VVND-
92.4(a) states, among other things, that the dissemination of communicable free countries, such as Denmark, Great
such import permits may be denied for poultry diseases. Rather, as stated Britain, Iceland, Northern Ireland, and
any of the following reasons: above, it has been determined that the the Republic of Ireland, as well as from
requirements for health certification of countries not designated as VVND-free,
Communicable disease conditions in the any flock or flocks of origin, combined
area or country of origin, or in a country mainly Holland, France, and Germany.
where the shipment has been or will be held with the precautions observed in issuing Although the elimination of the
or through which the shipment has been or import permits, are adequate to ensure quarantine requirement will facilitate
will be transported: deficiencies in the that poultry eggs for hatching imported the entry of poultry eggs for hatching
regulatory programs for the control or into the United States from countries from those VVND-free countries that
eradication of animal diseases and the designated as VVND-free to not present
unavailability of veterinary services in the export these eggs to the United States,
a significant disease risk. no significant change in the supply of or
above mentioned countries; the importer’s
failure to provide satisfactory evidence Miscellaneous demand for poultry eggs for hatching
concerning the origin, history, and health Four nonsubstantive changes have imported into the United States from
status of the animals or animal semen; the been made: one to conform a cross these countries is anticipated.
lack of satisfactory information necessary to
determine that the importation will not be reference to the style now required by Under the circumstances explained
likely to transmit any communicable disease the Office of the Federal Register; the above, the Administrator of the Animal
to livestock or poultry of the United States; or others to eliminate redundant language. and Plant Health Inspection Service has
any other circumstances which the Deputy determined that this action will not have
Administrator believes require such denial to Executive Order 12291
a significant economic impact on a
prevent the dissemination of any This rule is issued in conformance substantial number of small entities.
communicable disease of livestock or poultry with Executive Order 12291, and has
into the United States. been determined to be not a “major Executive Order 12372
It has been determined that the rule.” Based on information compiled by This program/activity is listed in the
requirements for health certificates and the Department, it has been determined Catalog of Federal Domestic Assistance
import permits are adequate to ensure that this rule will not have a significant
under No. 10.025 and is subject to the
that poultry eggs for hatching that are effect on the economy, will not cause a
provisions of Executive Order 12372
imported into the United States from major increase in costs or prices for
consumers, individual industries, which requires intergovernmental
countries designated as VVND-free will
Federal, State or local government consultation with State and local
not present a significant risk of
disseminating communicable poultry agencies, or geographic regions; and will officials. (See 7 CFR Part 3015, Subpart
diseases—including those types of not have a significant adverse effect on V.)
 43174 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

List of Subjects in 9 CFR Part 92 9 CFR Part 94 from these countries under conditions
Animal diseases, Canada, Imports, less restrictive than would be
[Docket No. 86-081] acceptable for importation into the
Livestock and livestock products,
United States.
Mexico, Poultry and poultry products, Importation of Meat of Ruminants and
Quarantine, Transportation, Wildlife. Swine and Animal Products From The interim rule was effective on the
Northern Ireland date of publication in the Federal
PART 92—IMPORTATION OF CERTAIN Register, and comments were solicited
a g e n c y : Animal and Plant Health
ANIMALS AND POULTRY AND for 60 days ending September 2,1986.
CERTAIN ANIMAL AND POULTRY Inspection Service, USDA. No comments were received. The facts
PRODUCTS; INSPECTION AND OTHER a c t i o n : Affirmation of interim rule. presented in the interim rule still
REQUIREMENTS FOR CERTAIN provide a basis for the amendment.
MEANS OF CONVEYANCE AND sum m ary: We are affirming without
SHIPPING CONTAINERS THEREON change an interim rule that imposed Executive Order 12291 and Regulatory
additional restrictions on the Flexibility Act
Accordingly, 9 CFR Part 92 is importation of meat from ruminants and This rule is issued in conformance
amended as follows: swine, and certain other animal with Executive Order 12291 and has
1. The authority citation for Part 92 products, from Northern Ireland. The been determined not to be a “major
continues to read as follows: restrictions are necessary to prevent rule.” Based on information compiled by
Authority: 7 U.S.C. 1622; 19 U.S.C. 1306; 21 rinderpest and foot-and-mouth disease the Department, we have determined
U.S.C. 102-105, 111, 134a, 134b, 134c, 134d, from being introduced into the United that this rule would have an effect on
134f, and 135: 7 CFR 2.17, 2.51, and 371.2(d). States. the economy of less than $100 million;
EFFECTIVE DATE: December 1,1988. would not cause a major increase in
2. Paragraph (c) of § 92.11 is revised to
read as follows:
FOR FURTHER IN FO R M A TIO N CONTACT: costs or prices for consumers, individual
Dr. Mark P. Dulin, Import-Export industries, Federal, State, or local
§ 92.11 Q u ara n tin e re q u ire m e n ts . Animals and Emergency Planning Staff, government agencies, or geographic
* * * * * VS, APHIS, USDA, Room 805, Federal regions; and would not cause a
Building, 6505 Belcrest Road, significant adverse effect on
(c) Poultry. (1) Poultry, other than eggs Hyattsville, MD 20782; 3Q1-436-8499.
for hatching, imported, except as competition, employment, investment,
provided in § 92.26 of this part, shall be
SUPPLEMENTARY IN FO RM A TIO N : productivity, innovation, or the ability of
quarantined for not less than 30 days, Background United States-based enterprises to
counting from the date of arrival at the compete with foreign-based enterprises
The regulations in 9 GFR Part 94 in domestic or export markets.
port of entry. During their quarantine, prohibit or restrict the importation of
such poultry shall be subject to any certain animals and animal products to For this action, the Office of
inspections, disinfections, and tests as prevent various diseases, including Management and Budget has waived its
may be required by the Deputy rinderpest and foot-and-mouth disease, review process required by Executive
Administrator, Veterinary Services, to from being introduced into the United Order 12291.
determine their freedom from States. Rinderpest and foot-and-mouth The United States receives less than 1
communicable diseases of poultry, and disease are dangerous and destructive percent of its imports of fresh, chilled, or
their freedom from exposure to such communicable diseases of ruminants frozen meat of ruminants and swine
diseases. and swine. from Northern Ireland.
(2) Poultry eggs for hatching imported, Northern Ireland is included in Under these circumstances, the
except from countries designated in § 94.1(a)(2) in the list of countries administrator of the Animal and Plant
§ 94.6(a)(2) of this chapter as free of declared free from rinderpest and foot- Health Inspection Service has
viscerotropic velogenic Newcastle and-mouth disease. We place minimal determined that this action will not have
restrictions on the importation of meat significant economic impact on a
disease, shall be quarantined from time
and other animal products from these substantial number of small entities.
of arrival at the port of entry until countries.
hatched and the poultry from such eggs By an interim rule published in the Executive Order 12372
shall remain quarantined for not less Federal Register on July 1,1986 [51 FR
than 30 days following hatch. During This program/activity is listed in the
23730-23731], we amended § 94.11 by
their quarantine, such eggs for hatching adding Northern Ireland to the list of Catalog of Federal Domestic Assistance
and poultry from such eggs shall be countries that are free from rinderpest under N. 10.025 and is subject to the
subject to any inspections, disinfections, and foot-and-mouth disease but subject provisions of Executive Order 12372,
and tests as may be required by the to additional restrictions because of which requires intergovernmental
Deputy Administrator, Veterinary these diseases. These restrictions are consultation with State and local
Services, to determine their freedom necessary because meat and other officials. (See 7 CFR Part 3015, Subpart
from communicable diseases of poultry. animal products produced in these V.)
* * * * * countries may be contaminated by List of Subjects in 9 CFR Part 94
Done at Washington, DC, this 25th day of infected animals and animal products
November 1986. from countries where rinderpest or foot- African Swine Fever, Animal
B.G. Johnson, and-mouth disease exists. Northern diseases, Foot-and-mouth Disease,
Ireland imports fresh, chilled, or frozen Garbage, Hog Cholera, Imports,
Deputy Administrator. Veterinary Services. beef and pork from countries where Livestock and livestock products, Meat
[FR Doc. 86-26939 Filed 11-28-86:8:45 am| rinderpest or foot-and-mouth disease and meat products, Milk, Rinderpest,
Billing code 3410-34-m exists and also imports live animals Swine Vesicular Disease,
 Federal Register / Vol, 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43175

PART 94— RINDERPEST, FOOT-AND- for the Deaf (TDD), Earnestine Hill or reservable liabilities exempt from
MOUTH DISEASE, FOWL PEST (FOWL Dorothea Thompson (202/452-3544); reserve requirements. The change in the
PLAGUE), NEWCASTLE DISEASE Board of Governors of the Federal amount is to be made only if the total
(AVIAN PNEUMOENCEPHALITIS), Reserve System, Washington, DC, 20551. reservable liabilities held at all
AFRICAN SWINE FEVER, AND HOG SUPPLEMENTARY IN FO RM A TIO N : Section depository institutions increases from
CHOLERA: PROHIBITED AND 19(b)(2) of the Federal Reserve Act one year to the next. The percentage
RESTRICTED IMPORTATIONS requires each depository institution to increase in the exemption is to be 80
maintain with the Federal Reserve percent of the percentage increase in
Accordingly, we are adopting as a
System reserves against its transaction total reservable liabilities of all
final rule without change, the interim
accounts and nonpersonal time deposits, depository institutions determined as of
rule that amended 9 CFR Part 94 and
as prescribed by Board regulations. The June 30 each year. The growth in total
that was published at 51 FR 23739-23731
on July 1,1986» initial reserve requirements imposed reservable liabilities of all depository
under section 19(b)(2) were set at three institutions from June 30,1985, to June
Authority: 7 U.S.C. 147a, 150ee, 101,162, percent for each depository institution’s 30,1986, was 13.6 percent (from $928.0
450; 19 U.S.C. 1306: 21 U.S.C. I l l , 114a, 134a, total transaction accounts of $25 million billion to $1,054.3 billion). In accordance
134b, 134c, 134f; 42 U.S.C. 4331, 4332;'7 CFR or less and at 12 percent on total
2.17, 2.51, and 371.2(d). with section 19(b)(ll), the Board is
transaction accounts above $25 million. amending Regulation D to increase the
Done in Washington, DC, this 25th day of Section 19(b)(2) further provides that,
November, 1986. amount of the reserve requirement
before December 31 of each year, the exemption for 1987 by $0.3 million to
B. G. Johnson,
Board shall issue a regulation adjusting $2.9 million.
Deputy Administrator, Veterinary Services, for the next calendar year the total
Animal and Plant Health Inspection Service. As a result, the effect of these
dollar amount of the transaction account amendments is to modify the low
[FR Doc. 86-26940 Filed 11-28-86; 8:45 am] tranche against which reserves must be reserve tranche (which is $36.7 million,
BILLING CODE 3410-34-M maintained at a ratio of three percent. effective December 30,1986) to apply a
The adjustment in the tranche is to be 80 zero percent reserve requirement on the
percent of the percentage change in total first $2.9 million of transaction accounts
FEDERAL RESERVE SYSTEM transaction accounts for all depository (effective January 1,1987) and a three
12 CFR Part 204 institutions determined as of June 30 of percent reserve requirement on the
each year. remainder of the low reserve tranche.
[Regulation D; Docket No. R-0585J Currently, the amount of the low Any amount of this zero percent reserve
reserve tranche on transaction accounts requirement tranche remaining after
Reserve Requirements of Depository is $31.7 million. The growth in the total applying it to transaction accounts will
Institutions; Reserve Requirement net transaction accounts of all then be applied to nonpersonal time
Ratios depository institutions from June 30, deposits with maturities of less than lVfe
AGENCY: Board of Governors of the 1985, to June 30,1986, was 19.6 percent years or to Eurocurrency liabilities, both
Federal Reserve System. (from $427.2 billion to $510.8 billion). In of which are subject to a reserve
accordance with section 19(b)(2), the requirement ratio of three percent.
a c t i o n : Final rule.
Board is amending Regulation D to The tranche adjustment and the
SUMMARY: The Board is amending 12 increase the amount of the low reserve reservable liabilities exemption
CFR Part 204 (Regulation D—Reserve tranche for transaction accounts for 1986 adjustment for weekly reporting
Requirements of Depository by $5.0 million to $36.7 million. institutions will be effective starting
Institutions): (1) To increase the amount Section 19(b)(ll)(A) o f the Federal with the reserve computation period
of transaction accounts subject to a Reserve Act provides that $2 million of beginning on December 30,1986, and
reserve requirement ratio of three reservable liabilities 1 of each with the corresponding reserve
percent, as required by section depository institution shall be subject to
maintenance periods beginning January
19(b)(2)(C) of the Federal Reserve Act a zero percent reserve requirement.
1.1987, for net transaction accounts, and
(12 U.S.C. 461(b)(2)(C)), from $31.7 Section 19(b)(ll)(A) permits each
on January 29,1987, for other reservable
million to $36.7 million of net depository institution, in accordance
liabilities. For institutions that report
transaction accounts; (2) to increase the with the rules and regulations of the
quarterly, the tranche adjustment and
amount of reservable liabilities of each Board, to designate the reservable
the exemption will be effective with the
depository institution that is subject to a liabilities to which this reserve
computation period beginning on
reserve requirement of zero percent, as requirement exemption is to apply.
December 16,1986, and with the reserve
required by section 19(b)(ll)(B) of the However, if transaction accounts are
designated, only those that would maintenance period beginning January
Federal Reserve Act (12 U .S.C. 15.1987. In addition, all entities
461(b)(ll)(B)), from $2.6 million to $2.9 otherwise be subject to a three percent
currently submitting Form FR 2900 will
million of reservable liabilities; and (3) reserve requirement (/.e„ transaction
continue to submit reports to the Federal
to increase the reporting cutoff level accounts within the low reserve
Reserve under current reporting
which is used to separate weekly requirement tranche) may be so
procedures.
reporters from quarterly reporters from designated.
Section 19(b)(ll)(B) of the Federal In order to reduce the reporting
$26.8 million to $28.6 million of total burden for small institutions, the Board
deposits and other reservable liabilities. Reserve Act provides that, before
December 31 of each year, the Board established a deposit reporting cutoff
EFFECTIVE DATE: December 30,1986. level (currently $26.8 million in total
shall issue a regulation adjusting for the
FOR FURTHER IN FO R M A TIO N CONTACT:
next calendar year the dollar amount of deposits and other reservable liabilities)
John Harry Jorgenson, Senior Attorney to determine deposit reporting
(202/452-3778), Legal Division, or Paul frequency. In March of 1985, the Board
1 Reservable liabilities include transaction
O’Brien, Economist (202/452-3589), accounts, nonpersonal time deposits, and
decided to index this reporting cutoff
Division of Research and Statistics; for Eurocurrency liabilities as defined in section level equal to 80 percent of the annual
users of the Telecommunications Device 19(b)(5) of the Federal Reserve Act. rate of increase of total deposits and
43176 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

other reservable liabilities.2 Institutions made when the new deposit reporting 2. In § 204.9 paragraph (a) is revised to
are screened during the second quarter panels are implemented in September read as follows:
of each year to determine reporting 1987.
§ 20 4.9 R e s e rv e re q u ire m e n t ratio s.
frequency beginning the following Finally, the Board may require a
September. depository institution to report on a (a)(1) Reserve percentages. The
All U.S. branches and agencies of weekly basis regardless of the cutoff following reserve ratios are prescribed
foreign banks and all Edge and level, if the institution manipulates its for all depository institutions, Edge and
Agreement Corporations, regardless of total deposits and other reservable Agreement Corporations, and United
size, and all other institutions with liabilities in order to qualify for States branches and agencies of foreign
reservable liabilities in excess of the quarterly reporting. Similarly, any banks:
exemption level amount prescribed by depository institution that reports
section 19(b)(ll) of the Federal Reserve quarterly may be required to report Category Reserve requirement
Act and with at least $26.8 million in weekly and to maintain appropriate Net transaction accounts:
total deposits and other reservable reserve balances with its Reserve Bank $0 to $36.7 million....... 3 percent of amount.
liabilities are required to file weekly the if, during its computation period, it Over $36.7 million........ $1,101,000 plus 12% of
amount over $36.7 million.
Report of Transaction Accounts, Other understates its usual reservable Nonpersonal time deposits
Deposits and Vault Cash (Form FR liabilities or it overstates the deductions by original maturity (or
notice period):
2900). Depository institutions with allowed in computing required reserve Less than 1 Vfe years..... 3 percent.
reservable liabilities in excess of the bàlances. 1V4 years or more........ 0 percent.
exemption level amount but with total The provisions of 5 U .S.C. 553(b) Eurocurrency liabilities......... 3 percent.
deposits and other reservable liabilities relating to notice and public
less than $26.8 million may file the Form participation have not been followed in (2) Exem ption from reserve
FR 2900 quarterly. Institutions that connection with the adoption of these requirements. Each depository
obtain funds from non-U.S. sources or amendments because the amendments institution, Edge or Agreement
that have foreign branches or involve adjustments prescribed by Corporation, and U.S. branch or agency
international banking facilities are statute and an interpretative statement of a foreign bank is subject to a zero
required to file the Report of Certain reaffirming the Board’s policy percent reserve requirement on an
Eurocurrency Transactions (Form FR concerning reporting practices. The amount of its transaction accounts
2950) on the same frequency. The amendments also reduce regulatory subject to the low reserve tranche in
reporting cutoff level [Link] used to burdens on depository institutions. paragraph (a)(1) of this section,
determine whether an institution with Accordingly, the Board believes that nonpersonal time deposits, or
reservable liabilities at or below the notice and public participation is Eurocurrency liabilities or any
exemption level amount must file the unnecessary and contrary to the public combination thereof not in excess of $2.9
Quarterly Report of Selected Deposits, interest. million determined in accordance with
Vault Cash, and Reservable Liabilities Regulatory F lexib ility A ct A n a lysis. § 204.3(a)(3) of this part.
(Form FR 2910q) or the Annual Report of Pursuant to section 605(b) of the * * * * *
Total Deposits and Reservable Regulatory Flexibility Act (Pub. L. 96- By order of the Board of Governors of the
Liabilities (Form FR 2910a). 354, 5 U.S.C. 601 et seq.), the Board Federal Reserve System, November 24,1986.
From June 30,1985, to June 30,1986, certifies that the proposed amendments William W. Wiles,
total deposits and other reservable will not have a significant economic Secretary o f the Board.
liabilities grew 8.1 percent, from $2.87 impact on a substantial number of small
%[FR Doc. 86-26885 Filed 11-28-86; 8:45 am]
trillion to $3.11 trillion. This results in an entities. The proposed amendments
BILLING CODE 6210-01-M
increase in the cutoff level reduce certain regulatory burdens for all
distinguishing weekly from quarterly depository institutions, reduce certain
reporters of $1.8 million from the current burdens for small depository
$26.8 million to $28.6 million. Based on institutions, and have no particular DEPARTMENT OF TRANSPORTATION
the indexation of the reserve effect on other small entities.
Federal Aviation Administration
requirement exemption, the cutoff level
List o f Subjects in 12 CFR Part 204
for total deposits and other reservable 14 CFR Part 39
liabilities above which reports of Banks, banking; Currency; Federal
deposits must be filed rises $0.3 million Reserve System; Penalties and reporting [D o c k e t N o. 8 6 -C E -3 4 -A D ; A rndt. 3 9 -5 4 7 2 ]
to $2.9 million. Institutions with total requirements.
deposits and other reservable liabilities Pursuant to the Board’s authority Airworthiness Directives; British
below $2.9 million are excused from under section 19 of the Federal Reserve Aerospace Models HP-137 MK 1,
reporting if their deposits can be Act, 12 U .S.C. 461 et seq., the Board is Jetstream 200 and 3101
estimated from other sources. The $28.6 amending 12 CFR Part 204 as follows: Airplanes
million cutoff level for weekly reporters agency: Federal Aviation
and the $2.9 million level threshhold for PART 204—RESERVE REQUIREMENTS
Administration (FAA), DOT.
reporting will be used in the second OF DEPOSITORY INSTITUTIONS
a c t i o n : Final rule.
quarter 1987 deposits report screening
1. The authority citation for Part 204 is
process to identify weekly and quarterly s u m m a r y : This amendment adopts a
revised to read as follows:
reporters and the adjustments will be new Airworthiness Directive (AD)
Authority: Sections 11(a), 11(c), 19, 25, 25(a)
of the Federal Reserve Act (12 U.S.C. 248(a), applicable to British Aerospace Models
2 Total deposits and other reservable liabilities is
248(c), 371a, 371b, 461, 601, 611); section 7 of HP-137 MK 1 Series, Jetstream 200
the sum of gross transaction deposits, savings Series, and certain Jetstream 3101 Series
accounts, and time deposits plus the sum of the International Banking Act of 1978 (12
reservable obligations of affiliates, ineligible U.S.C. 3105); and section 411 of the Gam St- airplanes which requires inspectiori of
acceptance liabilities, and net Eurocurrency Germain Depository Institutions Act of 1982 the nut securing the special stud located
liabilities. (12 U.S.C. 461). on the aileron drive quadrant at the
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43177

wing root end for tightness, security and 5257, dated June 6,1986, which requires 26,1979); and (3) will not have a
locking, and correction thereof as a visual inspection of the nut securing significant economic impact on a
necessary. A report has been received of the special stud located on the aileron substantial number of small entities
inadequate peening of this special stud. drive quadrant at the wing root end for under the criteria of the Regulatory
This situation, if not detected and tightness, security and locking, and Flexibility Act. A copy of the final
corrected, may result in vibration being correction thereof as necessary. evaluation prepared for this action is
felt through the aileron controls or The Civil Airworthiness Authority- contained in the regulatory docket. A
restriction or jamming of the ailerons United Kingdom (CAA-UKJ, who has copy of it may be obtained by contacting
and loss of control of the airplane. responsibility and authority to maintain the Rules Docket at the location
EFFECTIVE CATE: January 2,1987. the continuing airworthiness of these provided under the caption
Com pliance: Required within 600 airplanes in United Kingdon, classified "A D D R E S S E S ” .
hours time-in-service (TIS) after the this BAe Mandatory S/B BAe 27-JM-
5257, dated June 6,1986, and the actions List of Subjects in 14 CFR Part 39
effective date of this AD, unless already
accomplished. recommended therein by the Air transportation. Aviation safety.
manufacturer as mandatory to assure Aircraft, Safety.
ADDRESSES: British Aerospace
the continued airworthiness of the
Mandatory Service Bulletin (S/B) BAe affected airplanes. Adoption of the Amendment
27-JM-5257, dated June 6 , 1986. On airplanes operated under United
applicable to this AD may be obtained Kingdom registration, this action has the PART 39—[AMENDED]
from British Aerospace PLC., Manager, same effect as an A D on airplanes
Product Support Civil Aircraft Division, Accordingly, pursuant to the authority
certificated for operation in the United delegated to me by the Administrator,
Prestwick Airport, Ayrshire, KA92RW, States. The FA A relies upon the
Scotland; or British Aerospace, Inc., the Federal Aviation Administration
certification of CAA-U K combined with amends § 39.13 of Part 39 of the FAR as
Librarian, Box 17414, Dulles FAA review of pertinent documentation
International Airport, Washington, DC follows:
in finding compliance of the design of
20041. A copy of this information is also these airplanes with the applicable 1. The authority citation for Part 39
contained in the Rules Docket, FAA, United States airworthiness continues to read as follows:
Office of the Regional Counsel, Room requirements and the airworthiness and Authority: 49 U.S.C. 1354(a), 1421 and 1423;
1558, 601 East 12th Street, Kansas City, conformity of products of this design 49 U.S.C. 106(g) (Revised. Pub. L 97-449,
Missouri 64106. certificated for operation in the United January 12,1983k 14 CFR 11.89.
FOR FURTHER IN FO RM A TIO N CONTACT: States.
Mr. Ted Ebina, Aircraft Staff, AELT-100, The FA A examined the available §39.13 [Amended]
Europe, Africa and Middle East Office, information related to the issuance of 2. By adding the following new AD:
FAA, c / o American Embassy, B-1000 British Aerospace Mandatory S/B No.
Brussels, Belgium; Telephone (322) British Aerospace: Applies to Models HP-137
27-JM-5257. dated June 6,1986, and the MK 1 and Jetstream 200 Series (all serial
513.38.30; or Mr. Harvey A . Chimerine, mandatory classification of this service numbers), and Model Jetstream 3101 (S/
FAA, ACE-109, 601 East 12th Street, bulletin by CA A -U K , and concluded that N 601-633, 635-646 and 648-654
Kansas City, Missouri 64106; Telephone the condition addressed by BAe inclusive) airplanes certificated in any
(316) 374-6932. Mandatory S/B BAe 27-JM-5257, dated category.
SUPPLEMENTARY IN FO RM A TIO N : A June 6,1986, was an unsafe condition Compliance: Required within 600 hours
proposal to amend Part 39 of the Federal that may exist on other airplanes of this time-in-service (TIS) after the effective date
Aviation Regulations to include an AD type certificated for operation in the of this AD, unless already accomplished.
requiring a visual inspection using a United States. Accordingly, the FAA To prevent unacceptable aileron control
vibration and aileron jamming, accomplish
suitable light source and an inspection proposed an amendment to Part 39 of the following:
mirror of the special stud and nut for the FAR to include an A D on this (a) Inspect the special stud BAe P/N
tightness, security and correct locking subject. 13705E29 and nut BAe P/N A103-JT for
on certain British Aerospace (BAe) Interested persons have been afforded tightness, visible thread length and punch
Models HP-137 MK 1 and Jetstream 200 an opportunity to comment on the marks, in accordance with Section 2.
Series (all serial numbers), and Model proposal. “Accomplishment Instructions" in BAe
Jetstream 3101 (S/N 601-633, 635-646 No comments or objections were Mandatory S/B No. 27-JM-5257, dated June 6.
and 648-654 inclusive) airplanes was received on the proposal or the FAA 1986,
published in the Federal Register on determination of the related cost to the (1) If the special stud and nut are secure,
August 22,1986 (51 FR 30074). The public. Accordingly, the proposal is and the special stud end protrudes 1 to 2
adopted without change. threads beyond the nut and all three punch
proposal resulted from an incident that marks are visible, no further action is
occurred on a BAe Jetstream type The FAA has determined that this necessary.
airplane which was caused by a regulation involves 75 airplanes at an (2) If the special stud and nut are loose, or
loosening of the nut (BAe P/N A103-JT) approximate one-time cost of $320 for the special stud end does not protrude 1Vfe to
securing the special stud (BAe P/N each airplane for a total one-time cost of 2 threads beyond thé nut, or all three punch
13705E29) located on the aileron drive $24,000. marks are not visible, prior to further flight,
quadrant at the wing root end. The The cost of compliance with the remove aileron quadrant in accordance with
manufacturer has determined that the proposed A D is so small that the Sections. “Accomplishment Instructions,"
cause of this problem is due to expense of compliance will not be a Paragraph B. “Removal/Installation” in BAe
inadequate peening of the special stud.- significant financial impact on any small Mandatory S/B No. 27-JM-5257, dated June 6.
entities operating these airplanes. 1986, and check the security of the nut P/N
This looseness may result in vibrations A103-JT securing the special stud P/N
being felt through the aileron controls or Therefore, I certify that this action (1) 13705E29 to the quadrant, and determine that
can possibly cause restriction in aileron is not a "major rule” under Executive peening of the stud is in accordance with the
control and jamming. Consequently, Order 12291; (2) is not a “ significant above BAe Service Bulletin.
British Aerospace issued British rule” under DOT Regulatory Policies (i) If security and locking are satisfactory,
Aerospace Mandatory S/B BAe 27-JM- and Procedures (44 FR 11034; February prior to further flight, reinstall aileron control
43178 Federal Register / Vol. 51, No. 230 / Monday, Decem ber 1, 1986 / Rules and Regulations

quadrant using steps (13) to (20) inclusive of FOR FURTHER IN FO R M A TIO N CONTACT: § 39 .13 [A m e n d e d ]
the above Service Bulletin, and no further Wayne E. Gaulzetti, FAA, Boston
action is required. 2. 8y adding the following new AD:
Aircraft Certification Office, ANE-153,
(ii) If the securing nut P/NA103-JT or Sikorsky Aircraft: Applies to Model S-r58A, B,
special stud P/N 13705E29 is loose or the 12 New England Executive Park,
C, D, E. F, G, H, J, BT, DT, ET, FT, HT,
peening of the stud is not in accordance with Burlington, Massachusetts 01803; and JT, CH-34 series, HH-34 series, SH-
the above BAe Service Bulletin, prior to telephone (617) 273-7102. 34 series, UH-34 series, and VH-34
further flight, remove and replace nut BAe P/ SUPPLEMENTARY IN FO RM A TIO N : A series helicopters certificated in any
N A103-JT with new nut BAe P/N RMTE proposal to amend Part 39 of the Federal category and fitted with tail rotor
9868-6, install new stud BAe P/N 13705E91 intermediate gearbox input bevel pinions
and add split pin SP90-C7 to lock the nut on, Aviation Regulations (FAR) to include
an AD which establishes retirement Part Number (P/N) Sl635;-64114-0 and
according to the instructions in BAe output bevel gears P/N S1635-64115-Ó.
Mandatory S/B 27-JM-5257, dated June 6, times for intermediate gearbox bevel (See Note 1 for exempt pinion and gear
1986. pinions and bevel gears on certain configurations.)
(b) Airplanes may be flown in accordance Sikorsky S-58 series and corresponding Compliance is required as indicated, unless
with FAR 21.197 to a location where this AD military series helicopters was already accomplished.
may be accomplished. published in the Federal Register on (a) To preclude failure of pinions or gears
(c) An equivalent means of compliance June 13,1986 (51 FR 21563). indentified above, accomplish the following:
with this AD may be used if approved by the (1) For applicable pinions or gears that
Manager, Aircraft Certification Staff, AEU- The proposal was prompted by an
100, Europe, Africa and Middle East Office, analysis of the intermediate gear box have attained 750 or less hours’ time in
FAA, c/o American Embassy, B-1000 stress levels following two gearbox service on the effective date of this AD,
Brussels, Belgium. replace with a serviceable pinion or gear as
failures on Sikorsky S-58 helicopters. required, prior to their accumulation of 1,000
All persons affected by this directive Interested persons have been afforded hours’ time in service.
may obtain copies of the document an opportunity to participate in the (2) For pinions or gears that have attained
referred to herein upon request to British making of this amendment. No more than 750 hours’ time in service on the
Aerospace P.L.C., Manager, Product comments were received. Accordingly, effective date of this AD, replace with a
Support Civil Aircraft Division, the proposal is adopted without change. serviceable pinion or gear as required, within
Prestwick Airport, Ayrshire, KA9 2RW, the next 250 hours’ time in service.
The FA A has determined that this (3) Operators who have not kept records of
Scotland; or British Aerospace, Inc., regulation involves 180 aircraft with hours’ time in service on individual
Librarian, Box 17414, Dulles only seven operators owning four or intermediate gearbox bevel gears and bevel
International Airport, Washington, DC more aircraft. The approximate cost for pinions shall substitute rotorcraft hours’ time
20041; or FAA, Office of the Regional each compliance event and aircraft in service in lieu thereof.
Counsel, Room 1558, 601 East 12th would be $3,000. For an estimated 300 Note 1.—This AD is not applicable to
Street, Kansas City, Missouri 64106. hours of operation per year, the helicopters fitted with tail rotor intermediate
This amendment becomes effective on annualized cost of this action would be gears which utilize the following pinion and
January 2,1987. $900 for each aircraft or $162,000 for the gear combinations:
fleet. Therefore, I certify that this action: (á) P/N 1635-64114-101 pinion and P/N
Issued in Kansas City, Missouri, on S1635-64115-101 gear.
November 18,1986. (1) Is not a “major rule” under Executive (b) P/N 1635-64114-102 pinion and P/N
Jerold M. Chavkin, Order 12291; (2) is not a "significant S1635-64115-102 gear.
Acting Director, Central Region. rule” under DOT Regulatory Policies (c) P/N 1635-64114-0 pinion and P/N
[FR Doc. 86-26852 Filed 11-28-86; 8:45 am] and Procedures (44 FR 11034; February S1635-64115-0 gear reworked in accordance
BILLING CODE 4910-13-M
26,1979); and (3) will not have a with Sikorsky Service Bulletin 58B35-26. This
significant economic impact on a rework includes remarking P/N S1635-64114-
substantial number of small entities 0 pinion and P/N S1635-64115-0 gear with
under the criteria of the Regulatory TS-200-1 and TS-200-2, respectively.
14 CFR Part 39
Flexibility Act. A copy of the final Note 2.—Refer to the Equalized Inspection
[D o c k e t N o. 8 5 -A S W -8 ; A rn d t 3 9 -5 4 7 1 ] evaluation prepared for this action is and Maintenance Program Manual SA 4047-
contained in the regulatory docket. A 20, Revision 10, dated December 14,1984, or
Airworthiness Directives; Sikorsky copy of it may be obtained by contacting later FAA-approved revision for retirement
Model S-58 Series and Corresponding times assigned to new or modified bevel
the person identified under the caption pinions and bevel gears for the Model S-
Military Series Helicopters “ FOR FURTHER IN FO R M A TIO N C O N TA C T.” 58BT, DT, ET, FT, HT, and JT helicopters, and
AGENCY: Federal Aviation List of Subjects in 14 CFR Part 39 to the Maintenance Manual SA 4045-15
Administration (FAA), DOT. Section IV, revised December 14,1984, or
A C TIO N : Final Rule. Air transportation, Aircraft, Aviation later FAA-approved revision for retirement
safety, Safety. times assigned to new or modified bevel
s u m m a r y : This amendment adopts a pinions and gears for the Model S-58A, B, C,
new airworthiness directive (AD) which Adoption of the Amendment D, E, F, G, H, and J helicopters.
establishes retirement lives of PART 39—[AMENDED] Upon request, an alternate method of
intermediate gearbox pinions and bevel compliance which provides an
gears on Sikorsky Model S-58 series and Accordingly, pursuant to the authority equivalent level of safety may be
corresponding military series delegated to me, the Federal Aviation approved by the Manager, Boston
helicopters. The AD is needed to Administration (FAA) amends § 39.13 of Aircraft Certification Office, ANE-150,
prevent failure of the intermediate Part 39 of the Federal Aviation FAA, 12 New England Executive Park,
gearbox bevel pinion or bevel gear Regulations (FAR) as follows: Burlington, Massachusetts 01803.
which could result in loss of tail rotor 1. The authority citation for Part 39 Upon submission of substantiating
control. continues to read as follows: ; data by an owner or operator through an
EFFECTIVE DATE: January 5,1987. FA A maintenance inspector, the
Authority: 49 U.S.C. 1354(a), 1421, and 1423;
COMPLIANCE: As indicated in the body of 49 U.S.C. 106(g) (Revised Pub. L 97-449, Manager, Boston Aircraft Certification
this A D . January 12,1983); and 14 CFR 11.89. Office, ANE-150, F A A , 12 New England
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43179

Executive Park, Burlington, APO NY 09667, telephone 513.38.30; or List of Subjects in 14 CFR Part 39
Massachusetts 01803 may adjust the R.T. Weaver, Rotorcraft Standards Staff,
compliance time specified in this AD. Air transportation, Aircraft, Aviation
ASW-110, Federal Aviation
This amendment becomes effective on safety, and Safety.
Administration, P.O. Box 1689, Fort
January 5,1987. Worth, Texas 76101, telephone (817) Adoption of the Amendment
Issued in Fort Worth, Texas, on November 624-5122.
17,1986. SUPPLEMENTARY INFO RM A TIO N : On PART 39—[AMENDED]
Don P. Watson., September 24* 1986, priority letter AD
Accordingly, pursuant to the authority
A tit¡rig Director, South west Region. 86-19-15 was issued and made effective delegated to me, the Federal Aviation
[FR Doc. 86-26849 Filed 11-28-86; 8:45 am] immediately as to all known U.S. Administration amends § 39.13 of Part
BILLING CODE 4910-13-M owners and operators of certain
39 of the FAR as follows:
Aerospatiale Model A S 355 series
helicopters. The AD required inspection 1. The authority citation for Part 39
14 CFR Part 39 of the main rotor head sleeves if a continues to read as follows:
severe tracking discrepancy is Authority: 49 U.S.C. 1354(a), 1421, and 1423:
I D ocket N o. 8 6 -A S W -2 7 ; Arndt. 3 9 -5 4 7 0 ]
experienced and reduction of the service 49 U.S.C. 106(g) (Revised Pub. L. 97-449,
life of Model A S 355 sleeves from 8,000 January 12,1983): and 14 CFR 11.89.
Airworthiness Directives; Societe
Nationaie Industrielie Aerospatiale to 1,500 hours. The AD was prompted by § 39.13 [Amended]
(SNIAS) Model AS 350 and AS 355 a report of a crack found in the main
rotor head sleeve of a Model-SA 365C 2. By adding the following new AD:
Series Helicopters
which has a design similar to the Model Societe Nationaie Industrielle Aerospatiale
a g e n c y : Federal Aviation A S 355. A sleeve crack could result in (SNIAS): Applies to Aerospatiale Model
Administration (FAA), DOT. rotor head failure and consequent loss AS 350 and AS 355 series helicopters,
a c t i o n : Final rule. of control of the helicopter. certificated in any category.
Since it was found that immediate Compliance is required as indicated unless
summary: This action publishes in the corrective action was required, notice already accomplished.
Federal Register and makes effective as and public procedure thereon were To prevent failure of the main rotor head
to all persons an amendment adopting a impracticable and contrary to public sleeves, accomplish the following:
new airworthiness directive (AD) which interest, apd good cause existed to make (a) For AS 350B and AS 350D helicopters,
was previously made effective as to all accomplish the following:
the AD effective immediately by (1) Within the next 100 hours’ time in
known U.S. owners and operators of individual letters issued September 24,
certain Aerospatiale Model A S 355 service after the effective date of this AD,
1986, to all known U.S. owners and replace, with serviceable parts, those main
series helicopters by individual letters. operators of certain Aerospatiale Model
The AD requires inspection of the main rotor head sleeves (Part Numbers (P/N)
A S 355 series helicopters. These 350A31.1831.00, .01, .04, .05, .06, and .07)
rotor head sleeves if a severe tracking conditions still exist, and the AD is which have 3,900 or more,hours’ time in
discrepancy is experienced and hereby published in the Federal Register service.
reduction of the service life of Model A S as an amendment to § 39.13 of Part 39 of (2) For those main rotor head sleeves
355 sleeves from 8,000 to 1,500 hours and the Federal Aviation Regulations to having less than 3,900 hours’ time in service
Model AS 350B and D sleeves from no make it effective as to all persons. Also, on the effective date of this AD, replace with
limit to 4,000 hours. The AD is prompted since the same main rotor head sleeves serviceable parts before 4,000 hours’ time in
by a report of a crack found in the main service.
are used on the Aerospatiale Model A S (b) For AS 355 series helicopters,
rotor head sleeve of a Model SA 365C 350 series helicopters as on the Model
(The Model A S 350 and A S 355 rotor accomplish the following:
A S 355 series helicopters, this (1) Within the next 100 hours' time in
heads have a similar design) which amendment includes the Model A S 350
could result in rotor head failure and service after the effective date of this AD,
series helicopters. replace, with serviceable parts, those main
consequent loss of control of the The FA A has determined that this ' rotor head sleeves (P/N’s 350A31.1831.04 .05,
helicopter. regulation is an emergency regulation .06, and .07) which have 1,400 or more hours’
EFFECTIVE DATE: December 18,1986, as that is not considered to be major under time in service.
to all persons except those persons to Executive Order 12291. It is (2) For those main rotor head sleeves
whom it was made immediately impracticable for the agency to follow having less than 1,400 hours’ time in service
effective by priority letter AD 86-19-15, the procedures of Executive Order 12291 after the effective date of this AD, replace
issued September 24,1986, which with respect to this rule since the rule with serviceable parts before 1,500 hours'
contained most of this amendment. time in service.
must be issued immediately to correct (c) In the event of sudden or repeated
ADDRESSES: The applicable service an unsafe condition in aircraft. It has occurrence of a severe tracking defect,
documents may be obtained from been further determined that this action accomplish the following before the next
Aerospatiale Helicopter Corporation, involves an emergency regulation under flight:
2701 Forum Drive, Grand Prairie, Texas DOT Regulatory Policies and Procedures (1) Remove blades and visually check to
75051, Attention: Customer Support. (44 FR 11034; February 26,1979). If this determine if outboard sleeve bushes are
A copy of each of the service action is subsequently determined to separated; and
documents is contained in the Rules involve a significant/major regulation, a (2) If bush separation is found, remove and
Docket, Office of the Regional Counsel, final regulatory evaluation or analysis, replace sleeves.
FAA, Southwest Region, 4400 Blue as appropriate, will be prepared and (d) An alternate method of compliance
Mound Road, Fort Worth, Texas 76106. placed in the regulatory docket with this AD, which provides an equivalent
level of safety, may be used when approved
f o r f u r t h e r in f o r m a t io n c o n t a c t : (otherwise, an evaluation or analysis is by the Manager, Aircraft Certification
John Varoli, Manager, Aircraft not required). A copy of it, when filed, Division, Federal Aviation Administration,
Certification Office, FAA, Europe, may be obtained by contacting the P.O. Box 1689, Fort Worth, Texas 76101, or by
Africa* and Middle East Office, c/o person identified under the caption “ FOR the Manager, Aircraft Certification Office,
American Embassy, Brussels, Belgium, FURTHER IN FO R M A TIO N C O N TA C T". AEU-100, FAA, Europe, Africa, and Middle
43180 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

East Office, c/o American Embassy, Brussels, not be particularly interested. Sections Mitchell, SD—[Amended]
Belgium. 71.171 and 71.181 of Part 71 of the
(e) In accordance with FAR §§ 21.197 and Menominee, MI—[Amended]
21.199, flight is permitted to a base where the Federal Aviation Regulations were
republished in Handbook 7400.6B dated Manistee, MI—[Amended)
maintenance required by this AD may be
accomplished. January 2,1986. Issued in Des Plaines, Illinois, on
Note.—Aerospatiale Telex Services 01.13 The FAA has determined that this November 18,1986.
and 01.16 and French AD’s 86-35-28(B) and regulation only involves an established Peter H. Salmon,
86-57-44(B) pertain to this subject. body of technical regulations for which Acting Manager, A ir Traffic Division.
This amendment becomes effective frequent and routine amendments are [FR Doc. 86-26853 Filed 11-28-86; 8:'45 am]
December 18,1986, as to all persons necessary to keep them operationally BILLING CODE 4910-13-M
except those persons to whom it was current. It, therefore—(1) is not a “major
made immediately effective by priority rule” under Executive Order 12291; (2) is
letter AD 86-19-15 issued September 24, not a “significant rule” under DOT Office of the Secretary
1986, which contained this amendment. Regulatory Policies and Procedures (44 14 CFR Parts 323 and 399
Issued in Fort Worth, Texas, on November FR 11034; February 26,1979); and (3)
17,1986. does not warrant preparation of a [D o c k e t N o. 43403; 323, Arndt. 9 an d 399,
Don P. Watson, regulatory evaluation as the anticipated Arndt. 9 1 ]

Acting Director, Southwest Region. impact is so minimal. Since this is a Certificate Duration in Limited-Entry
[FR Doc. 86-26850 Filed 11-28-86; 8:45 am] routine matter that will only affect air Markets; Requirements for Carriers
BILLING CODE 4910-13-M traffic procedures and air navigation, it Leaving Limited-Entry Markets During
is certified that this rule will not have a a Selection Case; Procedures and
significant economic impact on a Criteria for Selecting Carriers for
14CFR Part 71 substantial number of small entities Limited-Entry Markets
under the criteria of the Regulatory
[A irs p a c e D o c k e t N o. 8 6 -A G L -2 7 ]
Flexibility Act. agency: Department of Transportation.
Alteration of Various Control Zones A C TIO N : Final rule and policy statement.
List of Subjects in 14 CFR Part 71
and Transition Areas Within the Great
s u m m a r y : The Department of
Lakes Region Aviation safety, Control zones,
Transition areas. Transportation is making final the
AGENCY: Federal Aviation proposals set forth in Notice No. 85-12,
Administration (FAA), DOT. Adoption of the Amendment with two modifications. Thus, as
a c t i o n : Final rule. proposed in the NPRM, all certificates
PART 71—CAMENDED] awarded to U.S. air carriers on limited-
The nature of this action is to
SU M M A R Y: entry international routes will be issued
alter the published descriptions for Accordingly, pursuant to the authority
delegated to me, Part 71 of the Federal for five-year periods. These certificates
certain control zones and transition will be issued under the "experimental”
areas within the Great Lakes Region. Aviation Regulations (14 GFR Part 71) is
provisions of section 401(d)(8) of the
This amendment to Part 71 of the amended as follows:
Federal Aviation Act. This action will
Federal Aviation Regulations modifies 1. The authority citation for Part 71 establish by rule what has been the
the published descriptions for Mitchell, continues to read as follows: practice for the past five years and will ‘
SD; Menominee, MI; Manistee, MI; and, Authority: 49 U.S.C. 1348(a), 1354(a), 1510; not affect existing permanent
Madison, WI by changing the acronyms E .0 .10854; 49 U.S.C. 106(g) (Rev. Pub. L. 97- certificates.
VO R to VOR/DME or VOR to VORTAÇ. 449, January 12,1983); 14 CFR 11.69. The Department also will require any
EFFECTIVE d a t e : 0901 UTC, February 12, air carrier operating under an exemption
1987. § 71.171 [Amended]
in a limited-entry market which is the
FOR FURTHER IN FO RM A TIO N CONTACT: 2. In all instances where the acronym subject of a carrier selection proceeding
Edward R. Heaps, Air Traffic Division, VO R appears; remove and replace with to file a notice with the Department at
Airspace Branch, AGL-520, Federal VOR/DME for the Mitchell, SD; least 90 days before it terminates
Aviation Administration, 2300 East Menominee, MI; and, Manistee, MI service in that market. This will prevent
Devon Avenue, Des Plaines, Illinois control zones and/or transition areas or minimize service gaps in those
60018, telephone (312) 694-7360. listed below. Where the acronym VOR international markets where the
SUPPLEMENTARY IN FO RM ATION: This appears remove and replace with exemption carrier loses the sélection
amendment to Part 71 of the Federal V O R T A C for the Madison, Wisconsin, case and might otherwise leave the
Aviation Regulations modifies the control zone. market before the selected carrier
published descriptions for Mitchell, SD; 3. Section 71.171 is amended as enters. We changed the wording of this
Menominee, MI; Manistee, MI; and, follows: provision slightly to clarify its effect.
Madison, WI by changing the acronyms With one exception the Department
V O R to VOR/DME or VOR to VORTAC. Madison, WI—[Amended] will adopt the carrier-selection criteria
There will be no changes to the Mitchell, SD—[Amended] used by the Civil Aeronautics Board
existing designated airspace area or (Board), as well as its practice of
designated altitudes for the associated Menominee, MI—[Amended] varying the weight accorded each
control zones or transition area. and criterion depending on each case’s
I find that notice and public procedure particular circumstances. Instead of
under 5 U .S.C. 553(b) are unnecessary § 71.181 [Amended] according an incumbent’s application a
because this action is a minor 4. Section 71.181 is amended as positive weight if it has performed well,
amendment in which the public would follows: as the NPRM proposed to do, there will
 Federal Register / V ol. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations 43181

be a rebuttable presumption favoring submitted to the Office of Information A section 401(d)(8) experimental
renewal of thé incumbent’s authority. and Regulatory Affairs of the Office of certificate may be revoked if the carrier
DATE: This regulation is effective Management and Budget (OMB) for fails to provide the innovative or low-
December 8,1986. review under section 3504(h) of the priced air transportation it was selected
FOR FURTHER IN FO RM A TIO N CONTACT: Paperwork Reduction Act of 1980. A to provide. This supplements provisions
Peter M. Bloch, Office of the Assistant notice will be published in the Federal already in section 401(g) for deleting or
General Counsel for International Law Register when those requirements are suspending certificate authority if the
(202) 366-9183, or Robert Goldner, Office approved by OMB. The notice will public convenience and necessity so
of the Assistant Secretary for Policy and incorporate the OMB approval numbers require and for revoking a certificate for
International Affairs, Proceedings into the regulations. violating the Act or the Board’s—and
Division (202) 366-4826. now the Department’s—rules or orders.
I. Certificate Duration
SUPPLEMENTARY INFO RM A TIO N : Section 401(g) was amended by the
The aviation relationship between the International Air Transportation
Executive Order 12291, Regulatory United States and a foreign country Competition Act (IATCA) to add section
Flexibility Act, and Paperwork govern whether the air routes between 401(g)(3), permitting suspension or
Reduction Act of 1980 the United States and that country are revocation of an incumbent’s authority
This action has been reviewed under open to any number of U.S. carriers or without a hearing for failure to provide
Executive Order 12291, and it has been are restricted to a specified number. In regularly scheduled service to the point
determined that this is not a major rule. open-entry routes, there are no at issue for 90 days.
It will not result in an annual effect on governmentally established limits on the After the ADA, although the Board
the economy of $100 million or more. number of U.S. carriers that may continued to award permanent authority
There will be no increase in production operate. In limited-entry routes, which under subsection 401(d)(1) for open-
costs or prices for consumers, individual are the subject of this rulemaking, the entry markets, it began to grant three-
industries, Federal, State or local aviation relationship typically permits year temporary, experimental
governments, agencies, or geographic only one or two U.S. carriers to operate. certificates in limited-entry markets. See
regions. Furthermore, this rule will not Before the passage of the Airline Spokane-Vancouver Route Proceeding,
adversely affect competition, Deregulation Act of 1978, Pub. L. 95-504 Order 80-3-170._At that time, the Board
employment, investment, productivity, (ADA), carriers were generally awarded anticipated deciding de novo what
innovation, or the ability of United permanent certificates for international carriers should serve the routes when
States-based enterprises to compete routes. However, in certain limited-entry these certificates expired. It would not
with foreign-based enterprises in markets, including most of the entertain replacement applications
domestic or export markets. transatlantic markets, carriers received before an incumbent had a reasonable
Accordingly, a regulatory impact temporary certificates; the Board chose opportunity to inaugurate service and
analysis is not required. not to grant much permanent establish itself in the market.
These regulations primarily review transatlantic authority because it In late 1981, beginning with the New
and adopt former CAB practices on wanted to retain the ability to respond Gatew ays to Brazil Case, Order 81-11-
carrier selection and certification. The to changes in market conditions or the 137, the Board began granting five-year
new notice requirement will impose international situation. See, experimental certificates for limited-
little additional cost to the carriers; the Transatlantic Route Proceeding, Order entry routes. The Board was concerned
situation addressed occurs very 78-1-118. that three years might not be enough
infrequently and the amount of time that Before the AD A , certificates for time for a carrier to establish itself on a
a carrier would be held in a market scheduled authority could be awarded route and realize a return on its
would be minimal. Consequently, it is only under sections 401 (d)(1) and (d)(2) investment. The Board continued to
very unlikely that this rule will impose of the Federal Aviation Act, governing award five-year experimental
an economic hardship on any carrier. permanent and temporary certificates, certificates for the balance of its
This regulation is significant under the respectively. A carrier would be issued existence.
Department’s Regulatory Policies and a certificate if the proposed On September 3,1982, Congress
Procedures, dated February 28,1979, transportation was found to be required extended for two years the terms of all
because it involves important by the public convenience and temporary certificates issued under
Departmental policies and is of unusual necessity.1 section 401(d)(8), as well as those of
public interest. Because its economic certificates awarded in the
impact should be minimal, however, a The A D A gave the Board a significant
new option for limited-entry routes. It Transatlantic Route Proceeding and the
full regulatory evaluation is not California/South west— Western M exico
required. added a new section 401(d)(8) to the
Federal Aviation Act. The provision Route Proceeding.* Finally, in
I certify that this rule will not have a anticipation of the Board’s sunset, the
significant economic impact on a empowered the Board—and now
empowers the Department—to grant an Department asked the Board to extend
substantial number of small entities. the expiration dates of most
Most international air transportation is experimental certificate under sections
401 (d)(1) or (d)(2) upon determining that international route certificates
provided by large air carriers and, as scheduled to expire between January 1,
noted above, there will be little a test period is desirable, either to see if
projected results will materialize and 1985, and January 15,1986. The Board
economic impact on any carrier. responded by issuing Order 84-8-107,
This regulation does not significantly remain over time or to evaluate or
assess the effects of new services. served August 27,1984, directing all
affect the environment. An
interested persons to show cause why
environmental impact statement is not
required under the National 1The A D A changed “ required by" to “consistent
with" for domestic route authority; the International * Airport and Airway Improvement Act of 1962,
Environmental Policy Act of 1969. Air Transportation Competition A ct of 1979, Pub. L. section 531. Pub. L. 97-24& 96 Stat. 671. 701 (1982)
The collection of information 96-192 (IATCA) applied the new language to (Title V. Tax Equity and Fiscal Responsibility Act o f
requirements in this notice have been international route authority. 1982. 96 Stat. 324).
43182 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

these certificates should not be Commerce, Kansas City, Missouri, DOT should establish a standard to
extended for 12 to 14 months. Order 84- Northwest Airlines, Pan American define what is “consistent with the
8-107’s tentative conclusions were World Airways, Peoples Express public convenience and necessity” .
finalized by Order 85-1-1. By this Airlines, the Regional Airline Under this proposal, the challenger
action, the Board sought to facilitate the Association, Transamerica Airlines, would be required to show that its
orderly transfer of its carrier selection Trans World Airlines, United Air Lines, service proposal was better than the
function to the Department and to allow and USAir. existing service in the market and that
us to establish our own procedures for the incumbent’s service was no longer
Summary of Comments consistent with the public convenience
carrier selection before beginning to
process applications. 1. Comments supporting indefinite and necessity. The proposal further
During the three years preceding the experim ental certificates. The contemplates that full hearing
issuance of our NPRM, the issue of proponents of indefinite experimental procedures under section 401(g) should
certificate duration had been examined certificates repeat a number of the be employed only upon a prima facie
on three separate occasions. First, in arguments advanced in the earlier showing that the incumbent was not
July 1982, the Civil Aeronautics Board proceedings and which were performing adequately.
issued an Advance Notice of Proposed summarized in the NPRM: they argue Another commenter argued that if
Rulemaking (PSDR-78, Docket 40832) on that indefinite certificates would DOT was not prepared to adopt
the duration of experimental certificates encourage carriers to expend the indefinite certificates as the rule, it
awarded to U.S. carriers for limited- resources necessary to develop their should at least use a case-by-case
designation international markets.8 The routes properly. Without the burden of approach, awarding either indefinite
Board asked for comments on whether it renewal proceedings and the attendant certificates or 10-year certificates where
should continue to award five-year risk to their authority, some claim it an incumbent has, over a period of
temporary, experimental certificates; would be easier to attract capital, decades, provided uninterrupted service
whether there should be a rebuttable recoup their high start-up costs, gain with competitive fares at the maximum
presumption of renewal for temporary footholds in their markets, and thereby allowed capacity level.
certificates; whether the Board should succeed over the long term. These Exception also is taken to our
issue indefinite experimental certificates commenters further argue that renewal statement in the NPRM that temporary
and adopt an effective “bumping” proceedings, even when an incumbent certificates keep incumbents responsive
mechanism; what criteria should be has performed satisfactorily, consume to market needs; it is argued that
used to develop either a rebuttable much valuable time and money while existing competitive forces such as
presumption or a replacement accomplishing no affirmative good. intergateway, intragateway (whether by
mechanism; and whether any changes Although routes generally have not been a foreign or second U.S. carrier) and
the Board might adopt should be made lost in these proceedings, these routes destination competition are already
retroactive to existing certificates. The have been costly to defend. Proponents doing this. Further, as many limited-
Board took no further action after also argue that these expenses are not entry routes are heavily encumbered by
receiving comments to this ANPRM. only “grossly” excessive, but that they restrictions imposed by foreign
Certificate duration was also the put U.S. carriers at a disadvantage vis-a- governments, there is little that pressure
subject of hearings held on May 31,1984, vis their foreign flag competitors (since
from renewal proceedings can
by the Aviation Subcommittee of the the latter enjoy permanent authority),
accomplish; competition can only really
House Committee on Public Works and when in fact it is the policy of the A D A
be improved through liberalizing
Transportation. Legislation had been to strengthen the competitive position of
restrictive bilateral regimes.
proposed to convert all temporary U.S. carriers. Renewal procedures are
One proponent alleges that DOT is
certificates to certificates of indefinite characterized as simply reviving
pervasive regulatory procedures, which trying to avoid the minimum due process
duration which could be altered or requirements of section 401(g) by
revoked only if required by the public are inconsistent with the A D A ’s policy
of placing maximum reliance on market asserting that 401(d)(8) requires less
convenience and necessity. This process than 401(g). This proponent
legislation was not enacted. forces.
Proponents further argue that states that, to the contrary, a 401(d)(8)
In May of 1985, while the NPRM was temporary certificate can only be
being prepared, the Subcommittee on temporary certificates result in an unfair
anomaly: one carrier may hold amended or revoked using 401(g)
Aviation of the Senate Committee on procedures.
Commerce, Science and Transportation permanent authority in the same market
that another carrier holds temporary Some proponents argue that neither
held hearings to consider legislation the language nor the legislative history
which would convert all temporary authority. The latter has the burden and
expense of having to defend its of section 401(d)(8) indicate that it
certificates to permanent certificates. . should be used for all routes all of the
The views expressed in each of these authority periodically, while the former
does not. time. Rather, it was intended to be used
instances were carefully considered in for test periods to evaluate new and
reaching the tentative conclusions set Proponents claim that indefinite
experimental certificates would not innovative services. In any event, it
forth in the NPRM. Comments on the should not be used for renewals because
prevent the government from replacing
tentative conclusions set forth in the the test period will already have expired
an incumbent that was performing
NPRM were filed by American Airlines, and it will be known whether or not the
unsatisfactorily—the Federal Aviation
Calgary Transportation Authority, experiment was a success.
Act makes ample provision for
Dallas/Ft. Worth Parties, Delta Air Another proponent states that
revocation of route authority and for
Lines, Eastern Air Lines, City of requiring renewal proceedings could
Houston and the Houston Chamber of suspension of fares.
This last point notwithstanding, one cause incumbents to incur serious losses
proponent of indefinite experimental because, as renewal time approaches,
3 The Board noted a letter it had received from certificates did make suggestions for a they might offer fares and frequency
Senators Kassebaum and Cannon suggesting that all
temporary certificates-be converted to indefinite
bumping mechanism to replace levels which do not reflect the amount
certificates. ineffective incumbents. It stated that of traffic in the market but which are
 Federal Register / VoL 51, No. 230 / Monday* December 1, 1986 / Rules and Regulations 43183

i solely designed to maximize their renewal approach is an advantage, not a when necessary. Finally, we consider it
chances of obtaining a renewal of their liability. It shows that the intended highly unlikely that this option will
certificate authority. Such a situation simulation of competitive market forces result in protracted or costly renewal
could undermine a carrier’s long term is actually succeeding. Finally, they proceedings when the incumbent is
ability to continue to serve that market. assert that there is no convincing performing satisfactorily.
2. Comments supporting temporary evidence that temporary certificates We believe that the award of
experimental certificates. Commenters limit U.S. carriers’ ability to compete temporary certificates represents the
supporting the award of temporary with foreign flag airlines. best means to ensure that incumbents
experimental certificates contend that Two carriers, although primarily remain responsive to the needs of a
the public interest is best served by an supporting indefinite certificates, particular market, absent the preferable
approach to limited-entry route suggested procedures for handling the opportunity to award authority on a
allocation that simulates free market renewal of temporary experimental multiple-permissive basis. A renewal
competition to as great a degree as certificates which they believe would proceeding acts as both a carrot and a
possible. Proponents claim that the reduce tho impact and Gost of renewal stick: it encourages carriers to adhere to
threat of losing authority for the route in proceedings on incumbents. One their fare and service proposals; it
a renewal proceeding works to keep an recommends that all temporary discourages complacency and
incumbent’s fare and service offerings certificates carry a common expiry date, exploitation of monopoly power.
competitive in much the same way that and that the Department issue a show In light of the data at hand, we also
the threat of potential entry works in cause order 18 months before that find no evidence to suggest that five
domestic markets. As a corollary, the expiry date. If a challenger did not fileyears is an insufficient period of time for
I certainty of renewal proceedings also within three weeks, the routes would be a carrier to develop a route and realize a
preserves opportunities for potential automatically renewed. Routes for reasonable return on its investment
new entrants, many of whom may not which a meritorious challenge was Despite our specific request in the
have been in existence when temporary received would be set down for an NPRM, no carrier provided
authority for any particular market was expedited hearing. A second proposal documentation of either its development
[ first granted. would renew these certificates costs for any route or the time that it
Claiming that the Civil Aeronautics automatically if the incumbent had takes to recover those costs. The use of
I Board never revoked a permanent fulfilled its fare/service obligations and
temporary certificates does not appear
l certificate in a section 401(g) proceeding, no other carrier had applied for the to have kept carriers from vigorously
I some proponents of temporary route. competing for route authority, and we
[ experimental certificates do not believe Most proponents of temporary have not yet seen any evidence that
I that the traditional replacement experimental certificates favor a strong carriers have failed to expend the
I procedures can effectively ensure that rebuttable presumption of renewal: the resources necessary to develop new

I
incumbent carriers remain continually incumbent’s authority should be routes. While opponents argue that
I responsive to the changing needs of the renewed unless its performance has fixed-term certificates reduce a carrier's
I limited-entry markets which they serve. been significantly inferior to what incentive to develop a market, it is at
another willing operator might least as logical that five-year
realistically be expected to provide, in experimental certificates would increase
one carrier’s view, once a carrier has development incentives by raising the
performed well under a temporary spectre that the route will otherwise be
I They also maintain that changing to a certificate, the rationale behind
t policy of awarding indefinite lost.
experimental certificates will have been
I experimental certificates would create Another critical advantage we see in
served—i.e ., its actual performance will
j tremendous barriers to entry in limited- have matched its proposal. Such merit awarding five-year temporary
I designation markets, an undesirable experimental certificates is that new
having been demonstrated once, there
I result because new carrier entry has, in would be no need to test that carrier entrants will then have recurring
I past instances, greatly stimulated price opportunities to compete for limited-
further.
I and service innovations. They further entry routes. We believe that, as a
I argue that temporary certificates make it D O T D ecision on Certificate Duration practical matter, carriers desiring to
I easier to replace a carrier that is no After thoroughly reviewing the acquire new or additional international
I longer the best choice for the route due comments received in response to our route authority would have much more
j to subsequent events, for example, a NPRM, we have decided to finalize our limited opportunities for entry if
I significant change in its domestic route proposal to continue the practice of permanent certificates became the norm.
I structure. awarding five-year temporary Given the realities of entry restrictions
Proponents argue that rather than experimental certificates under section in many major foreign markets,
I discouraging or hindering the investment 401(d)(8) of the Act for limited-entry temporary certificates represent the
I of resources necessary to develop routes. We believe that this option most viable substitute for unencumbered
I limited-designation markets, temporary strikes the best balance between an competitive forces, and our decision to
I certificates provide a greater incumbent’s need for sufficient time to continue to issue them is consistent, in
I developmental incentive than indefinite develop its market and recoup its this regard, with the pro-competitive
j or permanent certificates, because investment, on the one hand, and the policies of both the A D A and IATCA.
I carriers with temporary authority know public interest in the incumbent’s The five year term for limited-entry
j that they will have to perform well to continued responsiveness to the certificates also affords the Department
k retain the authority. Proponents also market’s needs, on the other. It also an opportunity to periodically appraise
I argue that renewal proceedings are not preserves opportunities for new entrants each market’s changing needs. This
j necessarily costly, burdensome, that otherwise would probably not exist, flexibility would be sacrificed were we
I protracted, or complicated. Simplified, and it gives the Department the greatest to issue indefinite experimental
I non-oral, show-cause proceedings can flexibility available under the Act to certificates under section 401(d)(8) or
I be used in the majority of cases. respond to changed circumstances, permanent certificates under section
Also in support of temporary
I certificates, proponents argue that
I incumbents’ reduction of fares and
I expansion of service as expiration and
 43184 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

401(d)(1). With permanent certificates, In our NPRM we expressed the record of service in an international
the Department could replace an tentative view that we should not market.
operating incumbent only under section automatically apply a rebuttable We believe that a presumption
401(g)(1), which allows the Department presumption in favor of the incumbent favoring incumbent carriers is justified
to delete or suspend certificate authority carrier. Instead, where a carrier seeking as a matter of public policy wherever
only if such action is required by the renewal of existing authority had carriers have demonstrated, through
public convenience and necessity.4 performed satisfactorily during the term actual performance, both their ability
We would also lose flexibility if we of its certificate, we proposed to and willingness to offer good service.
were to begin awarding experimental consider its incumbency in that market We are persuaded that a policy of
certificates of indefinite duration under as a positive decisional factor in the merely considering prior good
seqtion 401(d)(8). In addition to the renewal proceeding. In those cases performance as a positive decisional
section 401(g) standard described above, where it was determined that there were factor, as we initially proposed, does not
section 401(d)(8) empowers us to revoke significant deficiencies in an afford sufficient weight to the degree to
the certificate of a carrier that has not incumbent’s performance, it was our which an incumbent’s positive
performed according to its original tentative position that we would not performance in a market lends
proposal. While this would give us some assess a negative weight to that factor— credibility to its renewal proposal. The
additional flexibility compared to but would instead review all incumbent has, for several years, had to
permanent certificate authority, it does applications on a de novo basis. deal with the challenges posed by the
not ensure that the needs of a particular Based upon the comments that market and has developed a track
market will be reviewed on a regular discussed this issue, together with the record in responding to the prevailing
basis. We believe that the public experience we have gained in conditions and needs of the market. As
interest is better served by ensuring that conducting carrier selection cases past performance is usually the best
each market’s evolving needs will be during the past 18 months, we have now evidence of a carrier’s capabilities, we
reevaluated periodically. decided to apply a rebuttable believe that an incumbent’s favorable
As for the claimed disadvantages to presumption in favor of renewal of track record should be sufficient to
five-year certificates, we think that the existing certificate authority. Therefore, outweigh a competing proposal that
carriers’ fears of unnecessary, in cases where an incumbent carrier promises to offer equal or even
protracted, and costly renewal seeks to renew an international marginally superior public benefits, but
proceedings are overstated. We certificate in a limited-designation which is untested by actual experience
anticipate handling uncontested renewal market, and where that carrier has in the market. Only where a competing
applications through expedited paper performed well, taking into account all applicant has demonstrated that it will
proceedings. Even when an incumbent is relevant factors (including fare and/or offer substantially superior service
challenged, oral evidentiary hearings capacity restrictions in the market that might the Department determine that the
need not necessarily follow; the have been imposed by foreign benefits of that proposal outweigh the
Department is free in renewal cases to governments or bilateral agreements), actual record of an incumbent that has
conduct paper proceedings under the there will be a presumption that the served the market well.
simplified procedures of section 401(p) incumbent carrier will be the best Because each market is unique, we
when circumstances warrant and there applicant to provide service during the have chosen not to establish a fixed,
are no material facts in dispute. Also, in next five years. We will begin the use of general definition of “substantially
a proceeding heard by an this presumption with all route renewal superior service” in a given case.
Administrative Law Judge, the judge cases instituted after the publication of Instead, we intend to develop our
may dispense with a hearing if he or she this Final Rule and Policy Statement in standards over time as we review the
believes that the written record is the Federal Register. This presumption cases that come before us. Nevertheless,
sufficient to support a decision. may be rebutted only upon a showing by we see merit in providing some broad
One opponent of temporary a competitor that it will provide guidelines. Thus, as an example, it is
certificates has raised the spectre of substantially superior service in the likely that we would consider a proposal
hearings costing as much as the future so as to warrant its selection. As of daily service in a market receiving
Transatlantic Route Proceeding. That a general matter, there will be no three weekly flights to be substantially
proceeding was costly even by pre­ rebuttable presumption for incumbents superior (assuming that we believe daily
deregulation standards and today, with which have substantially deviated from service to be economically and
statutory deadlines for the processing of their fare and service proposals without bilaterally feasible}. Similarly, it is likely
cases, the chances of such an expensive adequate justification. We recognize that we would consider a roundtrip
case occurring are virtually nil. that markets do change over time and APEX fare of $500 (assuming there is no
It is important to keep in mind the fact that a carrier’s deviation from its foreign government policy known to us
that most limited-entry route authority is proposal may be justified, e.g., by which would preclude this fare) to be
not challenged on renewal. O f all the changed economic circumstances in the substantially superior to an incumbent’s
transatlantic route authority at issue market or governmental constraints. $800 roundtrip APEX fare. However, it is
before the Department, only two routes The specific criteria for determining not likely that we would consider
have been the subject of competing the quality of an incumbent’s service incremental increases in services, i.e .,
applications, Houston-London and will, necessarily, vary according to the from 3 to 4 flights per week or
Chicago-London. This fact alone should particular facts of each case. Individual incremental reductions in fares, i.e.,
quell the fears of those carriers who markets differ significantly from each from $800 to $750, to represent
believe that renewal proceedings will be other, and traffic on any particular route substantially superior service. We
a never-ending series of contested cases. is susceptible to substantial fluctuation emphasize that these are mere
over time. Therefore, it would not be illustrations. We fully expect that each
4 It also allows certificate revocation as a practical to attempt to codify here the case will turn on its own facts.
punitive measure for violations of the Act or universe of factors that might be We recognize that in those instances
Department rules or orders. considered in evaluating an incumbent’s where a contested renewal application
 Federal Register / V o i. 51, No. 230 / M on d ay, December 1, 1986 / Rules and Regulations 43185

is set for oral evidentiary hearing, the far more regulatory oversight than the continuing to simulate the threat of
parties and the Government incur costs current approach does. Thus, while potential competition in limited-entry
in terms of both time and money. indefinite experimental certificates routes serves the public interest far
Generally, we believe that those costs might obviate the need for some better. Also, as with indefinite
are outweighed by the benefits inherent automatic renewal proceedings, we experimental certificates, we think that
in allowing other carriers to believe, on balance, that the public the carriers’ interest in having route
demonstrate that they would offer interest would be best served through a security and avoiding the costs of
service that is substantially superior to regular review of an incumbent carrier’s renewal proceedings are outweighed by
that provided by the incumbent carrier. performance in a limited-entry market. the public’s interest in ensuring a
However, we cannot justify imposing One commenter has suggested that periodic review of service in limited-
the costs of the renewal process where implementation of this rule would deny entry markets. A further disadvantage of
only marginally superior service would incumbents of the various due process this option is that, once the certificate
be offered by the selection of a different requirements of section 401(g). We do
carrier. Therefore, we will only consider becomes indefinite, absent a finding that
not agree with this interpretation of the
replacing incumbents that are the public convenience and necessity so
Act. The award of temporary certificates
performing well in a market where a required, that authority cannot be
is specifically provided for in section
competing applicant will offer service 401(d)(2). A temporary certificate by its deleted even for fully unjustified and
that is substantially superior in quality. very definition means that the unexplained failure to adhere to fare
This approach improves the entitlement ceases at the end of the and service proposals.
credibility of the renewal process and term. Therefore, there is no interest II. Withdrawal From a Route by a
our ability to rely on that process to which is being terminated if we chose a Carrier With Exemption Authority
authorize U.S. carrier service in limited- carrier other than the incumbent in a Before the Replacement Carrier’s Entry
designation markets. This approach also renewal proceeding.
provides the incentives necessary to We also disagree with the The Department also solicited
encourage incumbent carriers to remain commenters that argued that temporary comments on a proposed rule to
continuously responsive to the changing experimental certificates Can only be minimize service gaps in limited-entry
character of international markets. At used for an initial test period. Section international routes. A number of carrier
the same time, it will ensure that 401(d)(8) provides, in part, that such selection cases involve markets in
opportunities for new entry remain certificates can be used if it is which no U.S. carrier is providing
available in those situations where the determined ’’that a test period is service. Often, one of the applicants will
incumbent has failed to provide quality desirable in order to determine if be authorized to serve the route by a
service, or where a competing applicant projected services . . . fares . . . or pendente lite exemption. If the
has shown that it will offer travellers in other projected results will in fact exempted carrier is not subsequently
the market service that is substantially materialize and remain for a sustained selected for certificate authority, it may
superior to that which the incumbent period of time,” The Department will be decide to leave the market before the
carrier has been providing. making its decision in carrier selection newly authorized carrier is in a position
Indefinite Experim ental Certificates cases based on the applicants’ proposals to inaugurate service. If it is the only
and, to that extent, each time that a U.S. carrier in the market, the disruption
The critical disadvantage we perceive carrier’s proposal is selected, there is a
in indefinite certificates is that our in service to the communities involved
new need to have a test period to can be significant.
ability to replace incumbents that are no determine whether its fares and services
longer best serving the public interest will be realized for a sustained period. The proposed rule would require any
could be curtailed, because the legal carrier providing service under a
We agree with the commenters that
standard for removing an operating say that competition can best be created pendente lite exemption on a route that
incumbent is higher than for declining to in limited-entry markets by altering is at issue in a carrier selection
renew an incumbent’s temporary restrictive bilateral regimes and proceeding to notify the Department at
authority. Furthermore, incumbents effectively making them open markets. least 90 days before it ceases to serve
would be freed from the simulated While we will continue our efforts to that route. The rule would allow the
potential competition that fixed-term achieve that goal, the reality is that exempted carrier to terminate service
certificates now provide, and restrictive regimes exist and earlier if the replacement carrier
opportunities for new entrants would be unfortunately will likely continue to initiates service before the 90-day period
more limited. (Even if many exist in the future. We must therefore expires. At present all carriers have an
international routes are open to , find alternative means of introducing or exemption under 14 CFR 323.8 relieving
unlimited entry, still, many of the more simulating competition in these markets, them of their section 401(j) obligation to
lucrative routes are not.) Finally, and the use of temporary experimental file notices when terminating, reducing
notwithstanding the higher standard for certificates, as described above, best or suspending service in foreign air
removal of an incumbent, incumbents meets this need. transportation.6 This rulemaking will
would be vulnerable to challenge and
removal at any time, thereby creating Five-Year Temporary Experim ental
far more potential instability and Certificates Converting to Indefinite or 6 Although the Board issued anN PRM in 1982 {47
uncertainty than exist with five-year Permanent Certificates Upon Renew al FR 35433) to limit this exemption by requiring an air
carrier to give notice when it intends to terminate or
certificates.5 This in turn would require This option has all the disadvantages suspend service to a foreign point, the Board
of indefinite experimental certificates terminated that rulemaking at the end of 1984 (50 FR
5 Although a five-year temporary experimental after the incumbent’s first five years: 481), on the grounds that such notice was not
certificate is subject to challenge at any time, Upon renewal, it would remove all the necessary and discouraged carrier flexibility. The
challengers are more likely to make such a bid in rule we are now adopting is far more narrow than
the context of a renewal proceeding because the
performance incentives provided by the one rejected in 1984 and is directed at those few
evidentiary burden that they must meet is lower in a temporary certificates. A s we have situations where there is a greater likelihood dial a
renewal case than in a mid-term challenge. already stated, we believe that service disruption could occur.
43186 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

scale back that exemption only to the unlawful taking of property; each carrier new criterion should be considered. One
extent necessary to address this accepting authority will be on notice commenter argues that, in light of the
problem. that the benefit is accompanied by the A ct’s directive to strengthen the
Comments Supporting the Proposed risk that it may be held in the market competitive position of U.S. carriers and
N otice Requirement temporarily. If it is unwilling to accept the government’s desire to improve the
the risk, it need not accept the authority. over-all U.S. balance of trade, a carrier’s
Several commenters supported the The number of situations where the ability to attract traffic away from
proposal, considering it necessary to exemption carrier loses a certification foreign carriers should be considered. In
avoid unexpected service disruptions to case, is losing money on the route,and particular, it argues, DOT should focus
the traveling public. One proponent, cannot work out an acceptable more on support traffic behind the
citing two instances in the past two transition with the successful carrier, foreign gateway.
years where exemption carriers abruptly are few. Consequently, we believe that Another commenter states that DOT
left a market after losing carrier few carriers are likely to be dissuaded should give greater positive weight to
selection cases, states that the proposal from seeking exemptions as a result of incumbency where the incumbent has
addresses the most serious part of the the adoption of this rule. provided uninterrupted service in a
problem and represents a minimal We will not expand the scope of this market for many years and has invested
interference. Another stated that it is a rule as was suggested by some substantial assets in an effort to develop
narrowly-drawn rule applicable only in commenters. The limited exception we
those situations where the exemption the market. The same commenter said
have created to our existing exemption that DOT should not rule out
carrier has little incentive to remain. from notice filing requirements will
Another respondent supports the consideration of a foreign government’s
address the situation where it is most possible response to fare or service
proposed rule, but states that it should likely to be needed and, in our view,
be extended to all U.S. carriers serving proposals. It noted that where the
strikes a proper balance between the foreign government’s attitudes are
limited-entry and open international needs of the carriers and the
markets where the carrier is the only restrictive and well known, a decision
communities involved. To do more not to consider foreign government
U.S. carrier offering nonstop service on would represent too great an intrusion
the route. It argues that the unexpected reaction could allow a challenger
into the freedom of carriers to enter and
termination of service in these markets proposing unobtainable service or fares
exit markets.
has the same potential to disrupt air to win out over an incumbent presenting
As a final matter, we reject the
services as it does in markets involved a realistic proposal. Another commenter
suggestion that we impose notice
in a carrier selection case. One carrier requirements on a case-by-case basis. In suggests that DOT should give priority
suggests that DOT impose the notice most instances it would be impossible to to establishing new gateways,
requirement on a case-by-case basis, tell at the time the exemption is granted particularly in the interior of the U.S.,
thus allowing each market to be judged whether notice might be required. In and in choosing gateways should
on the need for and adequacy of notice. fact, to impose a notice requirement in consider which would most increase
Finally, one respondent supported the an individual case might create the intergateway competition.
proposal, but pointed out that the erroneous impression that the Another commenter stated that the
language of the regulation was exemption carrier was not expected to views of civic parties should be given
somewhat ambiguous and could be win the certification case. This might more attention and weight. The
interpreted as covering essential air inhibit an exemption carrier from commenter also seeks clarification of
service carrier selection cases. beginning service. our statement that we will not consider
As noted in the NPRM, gaps, in service domestic hub dominance except in cases
Commenters Opposing the Proposed of excessive market power. Although
may still occur under this rule, e.g., if the
N otice Requirement not a subject for which comments had
replacement carrier needs more than 90
One respondent takes the view that days to initiate service. Nevertheless, been requested, many commenters
imposing such a rule may constitute a we believe that benefits afforded by stressed their opposition to the use of
taking of property without due process, further expanding the notice lotteries and auctions, while no
unless the government agrees to requirement are outweighed by the commenters supported either of these
subsidize the carrier for losses during burdens it would impose on exemption approaches.
the hold-in period. Another respondent carriers. Our solution represents a D O T P olicy on Selection Criteria and
stated that the effect of the rule would compromise between that concern and Their Application
be to discourage carriers from seeking the public interest in minimizing service
exemption authority during the disruptions. The Department will retain, with the
pendency of a certificate case. It states exception of its treatment of
III. Carrier Selection Criteria incumbency, the selection criteria as
that the newly certificated carrier
should be required to enter the market The Department also solicited discussed and described in the NPRM.
quickly, rather than placing a burden on comments on its intention to adopt the The major elements of consideration in
the losing carrier to remain. carrier selection criteria that had carrier selection cases heard by the
historically been developed by the CAB, Department will include the factors
D O T D ecision on the N otice as well as its practice of varying the listed below.
Requirement weight accorded each criterion from
We have decided to implement the case to case, depending on the 1. Market Structure
proposed rule with the suggested particular circumstances of each Market structure encompasses the
clarification to indicate that it only proceeding. All of the commenters impact that a route award will have on
applies to international carrier selection addressing the subject endorsed the the overall level of competition in a
cases. existing selection criteria and the case- particular market. In order to evaluate
Conditioning an exemption to require by-case approach to their application, A this issue, the Department looks at
the carrier to remain in die market few commenters felt that certain criteria potential intergateway competition—
temporarily does not constitute an should be given greater weight or that a the competitive effect of the proposed
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules andU Regulations 43187

service on flights offered to the same This standard together with our route authority is extremely limited. As
destination at possible alternative rationale for adopting it are discussed in a result, we can envision few
gateways. We also examine the degree detail in the section setting forth our circumstances where the degree of
to which each applicant might increase decision on certificate duration. market share at a particular hub is so
competition with existing services at the great as to make it of decisional
same gateway. Occasionally in vacation 5. Ability To Enter a Market Ouickly
consequence in the allocation of an
and resort markets, where traffic is Occasionally, in those cases where it international route. This is not to say
highly discretionary, there may also be is considered essential that service be that it does not play a role in other
competition between different inaugurated or resumed expeditiously, aspects of our analysis, such as market
destinations. the ability of a carrier to enter the structure. We simply do not see it as an
market quickly may be a factor to be independent criterion in the ordinary
2. Route Integration considered in the selection process. case.
The route integration criterion entails A fully detailed discussion of these
an assessment of each applicant’s . criteria, along with a description of their Another commenter stated that DOT
ability to flow traffic over the primary historical development, can be found in should give greater weight to an
route to and from points behind the U.S. the NPRM. While these criteria applicant’s ability to obtain support
gateway or beyond the foreign gateway. represent the major decisional elements traffic behind the foreign gateway, as
This ability has figured significantly in in most selection cases, there may be well its potential to divert traffic from
; carrier selection because it bears on other factors which the Department will the foreignflag service. The Board
Iboth the economic viability of a carrier’s wish to consider, depending on the considered, and the Department will
proposal and the benefits it might bring particular circumstances of each continue to consider, the support traffic
:passengers outside of the primary proceeding. which applicants can generate behind
¡market. foreign points, insofar as it affects the
6. Other Criteria Raised by Commenters
viability of the proposed service by
13. Fare and Service Proposals While most of the comments endorsed enlarging the revenue base of the carrier
the criteria discussed in the NPRM, providing the primary market service.
Carriers’ fare and service proposals, several raised issues dealing with
[to the extent they are credible, provide Furthermore, we are confident that our
specific selection criteria and the efforts to select the U.S. carrier that will
basic evidence as to the public benefits relative weight they should be afforded.
to be gained by selecting a particular be the most efficient and effective
One issue that was raised concerned the competitor will in fact have the effect of
Iapplicant. Such public benefits include weight to be afforded arguments in a diverting traffic from foreign carrier
low or innovative fares, high frequency selection case concerning the reaction of competitors.
or capacity and a variety of service foreign governments to the selection of a
options. How the applicants’ proposals One commenter suggested that we
particular applicant, and the likelihood
compare with one another can bear should give priority to establishing new
that the foreign government will accept
directly on which carrier will be able to the level of fares and frequencies that and interior gateways, and increasing
provide the greatest public benefits. had been proposed. These questions are the level of intergateway competition.
generally considered at the time that a New gateways are usually created as a
p. Incumbency result of bilateral negotiations, and not
particular case is instituted, and parties
We have decided to apply a are advised at that time whether fares, as part of the carrier selection process.
rebuttable presumption in favor of frequency levels, projected capacity, or However, we recognize that there are
renewal of existing certificate authority. any other factors should be tailored to instances where we must select
In cases where an incumbent carrier reflect our aviation relations with gateways from among competing
seeks to renew an international another country and/or whether such proposals. In such cases, one of the
certificate in a limited-designation factors will be given less decisional criteria which has traditionally been
market, and where that carrier has weight for reasons of foreign aviation afforded great weight has been the
performed well, taking into account all policy. Parties are free to consider the promotion of intergateway competition.
relevant factors (including fare and/or degree to which an applicant’s fare or This has resulted in the creation of new
capacity restrictions in the market that service proposal is realistic in light of gateways in areas of the country which
nave been imposed by foreign the historic willingness of foreign were previously unserved or
governments or bilateral agreements), governments to accept initiatives in underserved.
there will be a presumption that the these areas. On the other hand, we do As a final matter, we note that the
incumbent carrier will be the best not want to encourage parties in carrier views of civic parties have historically
applicant to provide service during the selection cases to engage in speculative been afforded substantial weight in
next five years. This presumption may debates concerning the likelihood that decisions involving the selection of both
be rebutted only upon a showing by a future negotiations will yield changes in carriers and gateways, and the
competitor that it will provide a foreign government’s historic practices Department fully intends to continue
substantially superior service in the and attitudes regarding such issues as this policy in future selection cases.
future. As a general matter, there will be fare or capacity levels.
no rebuttable presumption for A second issue raised by the List of Subjects in 14 CFR Parts 323 and
incumbents which have substantially comments is whether the level of hub 399
deviated from their fare and service dominance resulting from the award of
proposals without adequate an international route should be Administrative practice and
justification. We recognize that markets considered in the selection process. Our procedure, Advertising, Air carriers,
do change over time and that a carrier’s view is that hub concentration is Antitrust, Archives and records,
deviation from its proposal may be primarily an issue that the domestic Consumer protection, Essential air
justified, e.g., by changed economic market should address, and that our service, Freight forwarders, Grant
Circumstances in the market or ability to respond to it through a single programs—transportation, Hawaii,
governmental constraints. case dealing solely with international Motor carriers, Puerto Rico, Railroads,
43188 Federal Register / VoL 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

Reporting and recordkeeping 6. A new § 399,120 Subpart K is addedHeadquarters, Room 2426,1301

requirements, Travel agents, Virgin to read as follows: Constitution Avenue, NW., Washington,
Islands. D C 20229.
Subpart K—Policies Relating to
Issued in Washington, DC on November 18, Certificate Duration FOR FURTHER IN FO R M A TIO N CONTACT:
1986.
§ 3 9 9.12 0 D u ratio n o f c e rtific a te s in Operational Aspects: Thomas Banner,
Elizabeth Hanford Dole, Commercial Compliance Division,
lim ite d -e n try m ark ets .
Secretary o f Transportation. (202-566-4136J.
All certificate authority that the
In consideration of the foregoing, the Department grants to U.S. air carriers in Legal Aspects: Arthur I. Rettinger, Office
Department of Transportation amends carrier selection proceedings will be of the Chief Counsel, (202-566-2482).
Parts 323 and 399 of its Regulations (14 awarded in the form of experimental SUPPLEMENTARY INFO RM A TIO N :
CFR Parts 323 and 399) as follows: certificates Of five years’ duration
Background
pursuant to section 401(d)(8) of the
PART 323—[AMENDED] Federal Aviation Act. This provision U ser Fees—H istory
1. The authority citation for Part 323 is does not alter or amend permanent
Until recently, Customs had no
revised to read as follows: certificates issued prior to January 1,
general authority to collect fees for the
1985.
Authority: 49 U.S.C. 1324,1371,1381 and processing of persons, aircraft, vehicles,
1389. [FR Doc. 86-26758 Filed 11-28-86; 8:45 am) vessels and merchandise arriving in or
BILLING CODE 4910-62-M departing from the U.S. However, it has
2. By amending the table of contents
had authority under certain
of Part 323 to add a new § 323.19 to read
DEPARTMENT OF THE TREASURY circumstances to charge fees, i.e., fees
as follows:
charged when providing preclearance of
Customs Service passengers and private aircraft when
Sec.
* * * * * 19 CFR Part 24 such services are of special benefit to
323.19 Withdrawal notice by exemption [T .D . 8 6 -2 0 5 } particular persons. Customs also had
carriers in certain limited-entry markets. been authorized to receive
Ad Valorem User Fee; Amendments reimbursement from carriers for
3. By adding a new § 323.19 to read as A GENCY: U.S. Customs Service, overtime services provided during non­
follows: Department of the Treasury. business hours, and reimbursement from
§ 32 3 .1 9 W ith d raw al n o tic e by e x e m p tio n a c t i o n : Interim regulations. local authorities for services provided to
c a rrie rs in ce rta in lim ite d -e n try m ark ets . certain small airports. Customs also has
summary: This document amends the authority to assess fees on operators of
As a condition on the exemption, an Customs Regulations to implement a bonded warehouses and foreign trade-
air carrier operating under exemption provision of the Omnibus Budget zones and on the entry of vessels into
authority in an international market Reconciliation Act of 1986 which ports. Further, Customs has authority to
which is the subject of a carrier authorizes the Customs Service to collect certain navigation fees specified
selection proceeding shall file a notice assess a merchandise processing user in | 4.98, Customs Regulations (19 CFR
with the Department at least ninety fee on formal entries of imported 4.98).
days before it terminates service in that merchandise. This ad valorem user fee,
market. Once such a notice has been The Consolidated Omnibus Budget
which is to be based on the appraised Reconciliation Act of 1985 (Pub. L. 99-
filed, the carrier may not terminate Customs value of the merchandise, does
service in that market during the notice 272) greatly extended Customs authority
not apply to articles provided for in to assess fees. Section 13031 of Pub. L.
period unless the air carrier chosen in schedule 8 of the tariff schedules or to
the selection proceeding enters the 99-272 established a schedule of fees
products of least developed developing chargeable to users of various services
market and the Department grants the countries, eligible countries under the
operating carrier permission to do so. provided by Customs in connection with
Caribbean Basin Economic Recovery the processing of persons, aircraft,
The Department may allow earlier Act, or U .S. insular possessions. The vehicles, vessels and dutiable mail
termination for good cause when in the proceeds of the user fees are to be
public interest. arriving in the U .S., as well as for the
deposited in a dedicated account of the payment of an annual fee by customs
Treasury and, subject to authorization brokers.
PART 399—[AMENDED] and appropriation, are to be used to By T.D. 86-109, published in the
4. The authority citation for Part 399 is offset Customs appropriations for the Federal Register (51 FR 21152) on June
revised to read as set forth below. All salaries and expenses of Customs 11.1986, various parts of the Customs
authorities shown for specific sections incurred in conducting commercial Regulations (19 CFR Chapter I), were
in Part 399 are removed. operations. The amendments are being amended on an interim basis to set forth
made on an interim basis due to the the fees established by Pub. L. 99-272.
Authority: 49 U.S.C. 1301,1302,1305,1324, limited period of time available to
1371,1372,1373,1374,1375,1376,1377,1378, The amendments were made on an
1379,1381,1382,1384,1386,1461,1481,1482, initiate these changes before the law interim basis doe to the limited period of
1502 and 1504, unless otherwise noted. becomes effective. However, any time available before the new law
written comments received will be became effective. However, written
5. By amending the table of contents considered before a final rule is issued.
of Part 399 to include a new Subpart K comments were invited for
d a t e s : Interim regulations effective on consideration before final regulations
to read as follows: December 1,1986. Written comments are drafted. The numerous comments
S ub part K— P olicies R ela tin g to C e rtific a te must be received by January 30,1987. received have been analysed. However,
D uration ADDRESS: Written comments (preferably by section 1893 of the Tax Reform Act of
Soc. ' in triplicate) should be submitted to and 1986 (Pub. L. 99-514), passed on October
399.120 Duration of certificates in iimited- may be inspected at the Regulations 22.1986, several technical amendments
entry markets. Control Branch, Customs Services were made to Pub. L. 99-272, and the
 Federa^Regjstçf / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43189

effect of these legislative changes withdrawals from warehouse for give consideration to any written
necessitates several changes to the consumption made after the date that is comments (preferably in triplicate)
interim regulations. The final regulations 60 days after the date of such timely submitted. Comments submitted
implementing these fees will appear as a determination. will be available for public inspection in
separate document in the Federal A slightly higher fee is assessed for accordance with the Freedom of
Register. The document will describe the the first 10 months of the ad valorem fee
changes made as a result of the Information Act (5 U .S.C. 552), § 1.4,
to ensure that there are adequate Treasury Department Regulations (31
technical amendments and the receipts to cover start-up costs and to
comments. CFR 1.4), and § 103.11(b), Customs
cover any potential increases in the Regulations (19 CFR 103.11(b)), on
Other amendments were made to Pub. costs of Customs commercial
L. 99-272 by the Omnibus Budget normal business days between the hours
operations. Unless reauthorized by
Reconciliation Act of 1986 (Pub. L. 99- Congress, fees are not to be charged of 9:00 a.m. and 4:30 p.m. at the
509). Among these amendments is the after September 30,1989. Regulations Control Branch, Customs
establishment of an ad valorem user fee Service Headquarters, Room 2426,1301
to be collected by Customs on formal A rticles Not Subject to Fee Constitution Avenue, NW., Washington,
entries of merchandise imported for Pub. L. 99-509 provides that certain DC 20229.
consumption, or withdrawn from articles are to be exempt from the ad
inapplicability of Notice and Delayed
warehouse for consumption, beginning valorem fee. The exemptions are: (1)
Effective Date Provisions
on December 1,1986. This document Articles provided for in schedule 8 of thé
sets forth interim regulations governing Tariff Schedules of the United States The statutory effective date for
the ad valorem user fee. (TSUS) (19 U.S.C. 1202); (2) products of collection of the ad valorem user fee is
insular possessions of the U.S.; and (3) December 1,1986. In light of the limited
A d Valorem Fee products of any country listed in deadline imposed upon Customs to
Section 8101 of Pub. L. 99-509 states General Headnote 3(e) (vi) or (vii), implement these changes, it has been
that with certain exceptions, TSUS. General Headnote 3(e)(vi) lists determined that, pursuant to 5 U.S.C.
merchandise formally entered, or least developed developing countries. 553(b)(B), notice and public procedure is
withdrawn from a warehouse, for General Headnote 3(e)(vii) lists
impracticable. For the same reason,
consumption, is subject to an ad beneficiary countries of the Caribbean
Basin Economic Recovery Act pursuant to 5 U .S.C. 553(d)(3), we are
valorem fee based on the appraised dispensing with a delayed effective
customs value of the merchandise. The (CBERA)(19 U .S.C. 2701 et seq.). The fee
applies to all other articles, even if duty­ date. However, before adopting final
fee does not apply to informal entries of regulations, consideration will be given
merchandise entered under the free or eligible for tariff preference.
to all written comments timely
procedures set forth in § 143.21, Customs Other Spécifies o f Fee submitted.
Regulations (19 CFR 143.21), and to
merchandise which does nof enter the The ad valorem fee is to be paid by E .0 .12291 and Regulatory Flexibility
commerce of the U.S. for consumption. the importer of record of the Act
The proceeds of the user fees are to be merchandise and shall be based on the
deposited in a dedicated account of the value of the merchandise as determined Because the amendments do not meet
Treasury and, subject to authorization under section 402, Tariff Act of 1930, (19 the criteria for a “major rule” within the
and appropriation, are to be used to U .S.C. 1401a). meaning of section 1(b) of E .0 .12291,
offset Customs appropriations for the Charges imposed by the ad valorem Customs has not prepared a regulatory
salaries and expenses of Customs user fee are considered to be charges or impact analysis.
incurred in conducting commercial exactions within the meaning of section Because no notice of proposed
operations. 514, Tariff Act of 1930, as amended (19 rulemaking is required for these interim
U .S.C. 1514). As such, they are final and
Pursuant to section 8101, the fee that regulations, the provisions of the
conclusive upon all persons unless a
will be assessed is 0.22 percent ad Regulatory Flexibility Act (5 U .S.C. 601
protest is filed in accordance with the
valorem for merchandise formally et seq .) do not apply.
procedures set forth in Part 174,
entered, or withdrawn from a
Customs Regulations (19 CFR Part 174). Paperwork Reduction Act
warehouse, for consumption, after
November 30,1986, and before October Comments No new recordkeeping or data
1,1987. After September 30,1987, the fee Customs realizes that this document collection burdens are imposed upon the
will be 0.17 percent ad valorem or a does not answer all questions pertaining public as a result of this amendment.
lesser ad valorem rate determined by to collection of the ad valorem user fee. Accordingly, it is not subject to the
the Secretary of the Treasury as Because of the limited time available to Paperwork Reduction Act of 1980, Pub.
sufficient to provide the amount of draft these regulations before the L. 96-511.
revenue needed to conduct commercial statutory effective date, the regulations
operations for the upcoming fiscal year. basically follow the-statutory language List of Subjects in 19 CFR Part 24
The Secretary of the Treasury shall of Pub. L. 99-509. Additional regulations Accounting, Taxes.
publish in the Federal Register the ad and directives will be prepared and
valorem rate for fiscal year 1988 by no Drafting Information
disseminated as soon as possible.
later, than the date that is 5 days after Comments are requested on the The principal author of this document
which funds are appropriated to conforming or clarifying regulatory was Harold M. Singer, Regulations
Customs for salaries or expenses changes needed as a result of the statute Control Branch, Office o f Regulations
incurred in conducting commercial or these interim regulations. and Rulings, U.S. Customs Service.
operations. The rate set shall apply for Before adopting the interim However, personnel from other offices
the processing of entries and regulations as a final rule. Customs will participated in its development.
43190 Federal Register / Vol. 51, N o. 230 / Monday, December 1, 1986 / Rules and Regulations

Amendments to the Regulations DEPARTMENT OF HEALTH AND will delete from the documents any
Part 24, Customs Regulations (19 CFR HUMAN SERVICES materials that are not available for
Part 24), is amended as set forth below: public disclosure before making the
Food and Drug Administration documents available for inspection.
PART 24—CUSTOMS FINANCIAL AND
The agency has carefully considered
ACCOUNTING PROCEDURE 21 CFR Part 177
the potential environmental effects of
1. The authority for Part 24, Customs [Docket No. 86F-0307] this action and has concluded that the
Regulations, is amended by adding the action will not have a significant impact
Indirect Food Additives: Polymers on the human environment and that an
following citation to read as follows:
agency: Food and Drug Administration. environmental impact statement is not
Authority: 5 U.S.C. 301,19 U.S.C, 66,1202 required. The agency’s finding of no
(Gen. Hdnote 11), 1624, 31 U.S.C. 9701. a c t io n : Final rule. significant impact and the evidence
Section 24.23 also issued under Pub. L. s u m m a r y : The Food and Drug supporting that finding, contained in an
99-272, Pub. L. 99-509; * * *. Administration (FDA) is amending the environmental assessment, may be seen
2. Part 24 is amended by adding a new food additive regulations to provide for in the Dockets Management Branch
§ 24.23 to read as follows: the safe use of vinylidene fluoride- (address above) between 9 a.m. and 4
hexafluoropropene copolymer as an p.m., Monday through Friday. This
§ 24.23 A d va lo re m fe e . adjuvant in the production of olefin action was considered under FDA’s final
(a) Fee. Except for those types listed polymers intended to contact food. This rule implementing the National
in paragraph (b), merchandise formally action responds to a petition filed by Environmental Policy Act (21 CFR Part
entered or withdrawn from a Minnesota Mining & Manufacturing Co. 25).
warehouse, for consumption, is subject DATES: Effective December 1,1986; Any person who will be adversely
to the payment to Customs of an ad objections by December 31,1986. The affected by this regulation may at any
valorem fee of 0.22 percent from Director of the Office of the Federal time on or before December 31,1986, file
December 1,1986, through September 30, Register approves the incorporation by with the Dockets Management Branch
1987. For the fiscal year beginning reference of certain publications at 21 (address above) written objections
October 1,1987, the fee will be the lesser CFR 177.1520, effective December 1, thereto. Each objection shall be
1986. separately numbered, and each
of 0.17 percent ad valorem or an ad
ADDRESS: Written objections to the numbered objection shall specify with
valorem rate provided by the Secretary
Dockets Management Branch (HFA- particularity the provisions of the
of the Treasury pursuant to section regulation to which objection is made
8101(a) of the Omnibus Budget 305), Food and Drug Administration, Rm.
4-62, 5600 Fishers Lane, Rockville, MD and the grounds for the objection. Each
Reconciliation Act of 1986 (Pub. L. 99- numbered objection on which a hearing
509). The fee for the fiscal year 20857.
FOR FURTHER IN FO R M A TIO N CONTACT:
is requested shall specifically so state.
beginning on October 1,1987, will be Failure to request a hearing for any
published in the Federal Register. The Vir Anand, Center for Food Safety and
Applied Nutrition (HFF-335), Food and particular objection shall constitute a
fee shall be based on the value of the waiver of the right to a hearing on that
merchandise as determined under Drug Administration, 200 C St. SW .,
Washington, DC 20204, 202-472-5690. objection. Each numbered objection for
section 402, Tariff Act of 1930 (19 U.S.C. which a hearing is requested shall
1401a). SUPPLEMENTARY IN FO RM A TIO N : In a
include a detailed description and
(b) Exem ptions. The following articles notice published in the Federal Register analysis of the specific factual
are not subject to the ad valorem fee: of August 19,1986 (51 FR 29613), FDA information intended to be presented in
announced that a petition (FAP 6B3902) support of the objection in the event that
(1) Articles provided for in schedule 8, had been filed by Minnesota Mining &
Tariff Schedules of the United States a hearing is held. Failure to include such
Manufacturing Co., 3M Center, St. Paul,
(TSUS; 19 U .S.C. 1202). a description and analysis for any
MN 55144, proposing that § 177.1520
(2) Products of insular possessions of particular objection shall constitute a
O lefin polym ers (21 CFR 177.1520) be
the U.S.(General Headnote 3(a), TSUS). waiver of the right to a hearing on the
amended to provide for the safe use of
objection. Three copies of all documents
(3) Products of beneficiary countries vinylidene fluoride-hexafluoropropene
copolymer as an adjuvant (extrusion shall be submitted and shall be
of the Caribbean Basin Economic identified with the docket number found
Recovery Act. (General Headnote aid) in the production of olefin polymers
intended to contact food. in brackets in the heading of this
3(e)(vii), TSUS.) document. Any objections received in
(4) Products of least developed FDA has evaluated data in the
petition and other relevant material. The response to the regulation may be seen
developing countries. (General in the Dockets Management Branch
Headnote 3(e)(vi), TSUS.) agency concludes that the proposed use
of this food additive is safe, and that the between 9 a.m. and 4 p.m., Monday
(c) Payment. The fee shall be due and regulations should be amended as set through Friday.
payable to Customs by the importer of forth below.
record of the merchandise at the time of List of Subjects in 21 CFR Part 177
In accordance with § 171.1(h) (21 CFR
deposit of estimated duties. 171.1(h)), the petition and the documents Food additives, Food packaging,
Michael Schmitz, that FDA considered and relied upon in Incorporation by reference.
Acting Commissioner o f Customs. reaching its decision to approve the Therefore, under the Federal Food,
petition are available for inspection at Drug, and Cosmetic Act and under
Approved: November 25,1986.
the Center for Food Safety and Applied authority delegated to the Commissioner
Michael H. Lane, Nutrition (address above) by of Food and Drugs and redelegated to
Acting Assistant Secretary o f the Treasury. appointment with the information the Director of the Center for Food
(FR Doc. 86-26891 Filed 11-28-86; 8:45 am] contact person listed above. As Safety and Applied Nutrition, Part 177 is
BILLING CODE 4820-02-M provided in 21 CFR 171.1(h), the agency amended as follows:
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43191

PART 177—INDIRECT FOOD and domestic corporations and the from other offices of the Internal
ADDITIVES: POLYMERS source of dividends derived from Revenue Service and Treasury
domestic corporations. Department participated in developing
1. The authority citation for 21 CFR D ATES: The removal of the temporary the regulations.
Part 177 continues to read as follows: regulations at § 4a.861-l is effective
Authority: Secs. 201(s), 409, 72 Stat. 1784- December 31,1986. List of Subjects in 26 CFR Part 4a
1788 as amended (21 U.S.C. 321(s), 348); 21 FOR FURTHER IN FO RM A TIO N C ONTACT: Income taxes, Sources of income.
CFR 5.10 and 5.61. Richard Chewning of the Office of Adoption of Amendments to the
2. Section 177.1520 is amended in Associate Chief Counsel (International),
paragraph (b) by alphabetically Regulations
within the Office of Chief Counsel,
inserting a new item in the list of Internal Revenue Service, 1111 The Temporary Income Tax
substances to read as follows: Constitution Avenue NW., Washington, Regulations Relating to Source of
DC 20224 (Attention: CC:LR:T) (202-506- Income (26 CFR Part 4a) are amended as
§ 177.1520 O le fin p o lym ers.
6384, not a toll-free call). follows:
Paragraph 1. The authority citation fo r
* ★ * * *
SUPPLEMENTARY INFO RM A TIO N :
(b) * * * Part 4a continues to read in part:
Background Authority: 26 U.S.C. 7805.
Substances Limitations
This document removes Temporary
Income Tax Regulations Relating to PART 4a—TEMPORARY INCOME TAX
Vfnylidene fluonde-hexaflucx- For use only as an extrusion Source of Income (26 CFR Part 4a) at REGULATIONS RELATING TO
opropene copolymer (CAS aid in the production of ex­
Reg. No. 9011-17-0) truded olefin polymers at § 4a.861-1 (T.D. 7865) published in the SOURCE OF INCOME
having a fluorine content levels not to exceed 0.1 Federal Register on December 29,1982
of 65 to 66 percent and a percent by weight of the
(47 FR 57919). The temporary regulations PART 4a—[REMOVED]
Mooney viscosity of 28 to polymer. The finished poly­
38. as determined by a mers may be used only in are being removed because they have Par. 2. Part 4a is removed.
method entitled “Mooney contact with nonalcoholic been mooted by amendment of section Approved:
Viscosity,” which is incor­ foods under the conditions
porated by reference. described Hi § 176.170(c) 881(b) by section 130(a) of the Tax Roscoe L. Egger, Jr.,
Copies are available from of this chapter, table 2, Reform Act of 1984. Section 881(b), a9 Commissioner o f Internal Revenue.
the Division of Food and under conditions of use B
Color Additives. Center for through H. amended, provides generally that J. Roger Mentz,
Food Safety and Applied passive income paid from U.S. sources Assistant Secretary o f the Treasury.
Nutrition (HFF-330), Food to a corporation organized in Guam or
and Drug Administration, November 15,1986.
200 C St. SW., Washing­ the Virgin Islands will be subject to U.S.
ton. DC 20204. or may be [FR Doc. 86-26909 Filed 11-28-86; 8:45 am]
examined at the Office of
tax if 25% or more in value of the
BILLING COOE 4830-01-M
the Federal Register. 1100 corporation’s stock is owned by foreign
L St. NW„ Washington, DC persons and if less than 20% of the
20408.
recipient corporation’s income is from
Guam or Virgin Islands sources (as the Bureau of Alcohol, Tobacco and
* * * * * case may be). Firearms
Dated: November 5,1986. The notice of proposed rulemaking
Richard J. Ronk, (INTL-64-86) published in the Federal 27 CFR Parts 270,275,290,295, and 296
Acting Director, Centerfor Food Safety and Register on December 29,1982 (47 FR
Applied Nutrition. 57972) which pertains to this subject is [T .D . A T F -2 4 3 ]

[FR Doc. 88-26478 Filed 11-28-86; 8:45 am] being withdrawn.

Implementing the Consolidated
BILLING COOE 4160-01-M Nonapplicability of Executive Order Omnibus Budget Reconciliation Act of
12291 1985 (Public Law 99-272)
DEPARTMENT OF THE TREASURY
The Treasury Department has AGENCY: Bureau of Alcohol, Tobacco
determined that removal of these and Firearms (ATF), Treasury.
Internal Revenue Service temporary regulations is not subject to
A CTION: Final rule (Treasury decision).
review under Executive Order 12291.
26 CFR Part 4a Accordingly, a Regulatory Impact SUM M ARY: This final rule implements
Analysis is not required. Title XIII, Subtitle B of the Consolidated
[T.D. 8 1 0 8 ]
Regulatory Flexibility Act Omnibus Budget Reconciliation Act of
Temporary Income Tax Regulations 1985 (Pub. L. 99-272,100 Stat 311).
A general notice of proposed This document amends temporary
Relating to Source of Income; Source rulemaking is not required by 5 U.S.C.
of Interest and Dividends regulations (T.D. ATF-232, 51 FR 28078)
553(b) for removal of temporary in 27 CFR Parts 270, 275, 290, 295, and
a g e n c y : Internal Revenue Service, regulations. Accordingly, the Regulatory 296 which provided for the taxation and
Treasury. Flexibility Act (5 U .S.C. chapter 6) does regulation of chewing tobacco and snuff
a c t io n : Removal of temporary
not apply and no Regulatory Flexibility pursuant to Pub. L. 99-272. In addition,
regulations. Analysis is required. detailed rules for the grandfathering of
Drafting Information existing manufacturers of diewing
SUMMARY: This document removes tobacco and snuff into the current
Temporary Income Tax Regulations The principal author of this removal of
regulatory framework for other tobacco
Relating to Source of Income published temporary Income Tax Regulations is
products were provided.
in the Federal Register on December 29, Richard Chewning of the Office of
Associate Chief Counsel (International), EFFECTIVE DATE: December 31,1986.
1982 (47 FR 57919) concerning special
rules for determining source of interest within the Office of Chief Counsel, FOR FURTHER IN FO R M A TIO N CONTACT:

derived from resident alien individuals Internal Revenue Service. Personnel Nancy Cook or Clifford A . Mullen,
 4 3 1 9 2 _ _je d e r a l Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

Distilled Spirits and Tobacco Branch, are packaged in small, tea-bag-like, by established industry practice,
Bureau of Alcohol, Tobacco and porous, in-mouth pouches.) As an manufacturers often label and market
Firearms, Room 6235, Ariel Rios Federal alternative those commenters requested their products using such terms as
Building, 1200 Pennsylvania Avenue that shipping cases for those products “smokeless tobacco” or “fine cut
NW., Washington, DC 20226 (202) 566- be marked with the weight or average tobacco” rather than “chewing tobacco"
7531. net weight of the contents. One or “snuff.” The commenters asserted
SUPPLEMENTARY INFO RM A TION : This commenter requested that cases for all that a requirement that products be
document contains final regulations smokeless tobacco products be marked designated as “chewing tobacco” or
implementing the smokeless tobacco with the actual weight of the product “sn u ff might cause confusion to
provisions of the Consolidated Omnibus contained therein. consumers, and disrupt the sales and
Budget Reconciliation Act of 1985 (Pub. Procedures fo r Destruction o f marketing plans of smokeless tobacco
L. 99-272). The final regulations Products—27 CFR 270.253 or manufacturers.
provided by this document supersede W ithdrawal o f Tobacco Products from
the temporary rule on this subject which The purpose of the required notice for
the M arket—27 CFR 270.311 smokeless tobacco is to protect the
was published in the Federal Register on
August 5,1986 (51 FR 28078). A notice of One commenter requested separate revenue. ATF’s jurisdiction does not
proposed rulemaking cross referenced to procedures specific to smokeless extend to the regulation of the labeling
the temporary rule was also published tobacco manufacturers for the of Smokeless tobacco products for
in the Federal Register on August 5,1986 destruction of smokeless tobacco purposes of consumer protection. It is
(51 FR 28106) and comments were products entered into the factory record necessary for the protection of the
received under the notice. as manufactured or received, without revenue and for the purpose of effective
salvaging the tobacco, and destruction tax administration, that all packages of
Temporary Rule Comments of tobacco products withdrawn from the smokeless tobacco products bear a
Comments from four correspondents market. The commenter expressed the designation of the tax classification.
were received concerning the temporary view that the procedures required for all However, ATF has determined that the
rule. The comments were directed to tobacco products manufacturers would use of alternative markings on packages
three specific areas of the regulations— be unduly burdensome for smokeless of smokeless tobacco products, which
notice of tax classification of smokeless tobacco manufacturers because of the clearly designate the tax classification
tobacco on packages, weight of the relatively small volume of product of the product therein, would provide
products on packages, and procedures withdrawn from the market by the same protection and security to the
for destruction of the products at the smokeless tobacco manufacturers. The revenue without hindering effective tax
factory or for destruction of the products special procedures requested for administration.
withdrawn from the market. smokeless tobacco manufacturers would Accordingly, ATF has determined
be based on an oral approval by ATF that, without jeopardy to the revenue of
N otice o f Tax Classification on
after oral notification by the relinquishing necessary administrative
Packages—27 CFR 270.216 manufacturer of the intended control 27 CFR 270,216 will be amended
One Commenter petitioned for final destruction. The oral request for to provide for alternative markings to
regulations which would allow destruction before removal from the the designations “chewing tobacco” or
smokeless tobacco products to be factory, (27 CFR 270.253), would be
designated other than as “chewing “ snuff’ to be shown on the packages of
supported by manufacturer’s credit smokeless tobacco products. However,
tobacco” or “ snuff’ to avoid confusion memoranda. In the case of a product
to his customers. These customers geometric figures would not serve well
withdrawn from the market, (27 CFR as tax class designations because they
selectively purchase smokeless tobacco 270.311), the oral notification would be
products based on “cut,” e.g., “long cut," might be difficult to distinguish from
supported by the manufacturer’s credit
“rough cut," “western cut,” etc. memorandum and ATF Form 3069 other decorative package features,
Other commenters requested that the (5200.7), Schedule O f Tobacco Products, unless elaborate and burdensome
final regulations provide for the use of Cigarette Papers Or Tubes Withdrawn particulars as to their location, size, and
geometric symbols in lieu of the From the Market. color were specified in the regulations.
designation “ chewing tobacco" or As an alternative, packages of chewing
“snuff’ as proposed in the notice for Analysis of Comments tobacco may be designated “Tax Class
smokeless tobacco, The commenters On July 1,1986, smokeless tobacco C ,” and packages of snuff may be
expressed the view that the designation manufacturers began operating under designated “Tax Class M .” The
“ chewing tobacco” or “sn u ff would the temporary rule. In the subsequent regulations in 27 CFR 275.72 and 295.43
cause confusion to customers, interfere months the actual experience of the will be similarly amended.
with existing marketing plans, and pose Bureau of Alcohol, Tobacco and ATF has also determined, from the
an obstacle to the development of new Firearms (ATF) confirms industry comments received, that because of
products. statements that a change to the manufacturing and packaging methods,
regulations is necessary with respect to certain products such as “twist”, “plug”,
Weight o f Product on Package—27 CFR
270.216 package markings in order to prevent and “portion packed" smokeless
unnecessary burdens on the industry. tobacco are subject to unavoidable
All commenters requested that the The temporary rule, 27 CFR 270.216, variation in individual package weights.
final rule not require the package weight Notice for smokeless tobacco, requires Therefore, for these products, it would
to be marked on the consumer packages every package of chewing tobacco or be impractical and unreasonable to
of either “plug,” "twist,” or “portion snuff, before removal subject to tax, to require that each package bear a
packaged” smokeless tobacco because have thereon the designation “chewing statement of the actual pounds and
of the lack of uniformity in the packaged tobacco” or “sn u ff and a statement of ounces contained therein. However, the
weight of those products, (“Portion the actual pounds and ounces of the comments indicate that there is no such
packed” products are those smokeless product contained therein. The difficulty in determining the total weight
tobacco products such as snuff which comments received by ATF indicate that of large quantities of these products,
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43193

when the products are placed in Part 275 regions; and it will not have significant
shipping cases. The table of contents, § § 275.1, 275.11, adverse effects on competition,
Accordingly, ATF has determined 275.21, 275.23, 275,25, 275,33, 275.40, employment, investment, productivity,
that, without jeopardy to the revenue or 275.41, 275.50, 275.60, 275,62, 275.63, innovation, or on the ability of United
relinquishing necessary administrative 275.71, 275.72a, 275.75, 275.81, 275.85, States-based enterprises to compete
control, 27 CFR 270.216 will be amended 275.85a, 275.86, 275.101, 275.105, 275.106, with foreign-based enterprises in
to provide for alternative marking of the 275.107, 275.109, 275.110, 275.111, 275.112, domestic or export markets.
product weight of packages of
275.115a, 275.116, 275.117, 275.120, Paperwork Reduction Act
smokeless tobacco. As amended, the 275.121, 275.125, 275.135, 275.136, 275.137,
regulation will provide that smokeless 275.138, 275.139, 275.140, 275.141, 275.161, The requirements to collect
tobacco manufacturers may, instead of 275.162, 275.163, 275.165, 275.170, 275.171, information proposed in this final rule
marking the product weight on each 275.172, 275.173, 275^174. have been submitted to the Office of
package, have the total weight of the Management and Budget and approved
product, and the number and tax class Part 290 under Sec. 3507 of the Paperwork
of packages of product contained The heading, the table of contents, Reduction Act of 1980, Pub. L. 96-511, 44
therein, marked on the shipping cases §§290.1, 290.2, 290.11, 290.61, 290.61a, U.S.C. Chapter 35.
containing tobacco products. The 290.62, 290.63, 290.64, 290.65, 290.66,
regulations in 27 CFR 275.272 and 295.43 List of Subjects
290.67, 290.69, 290.70, 290.90, 290.112,
will be similarly amended. 290.123, 290.142, 290.143,290.147, 290.152, 27 CFR Part 270
With respect to procedures for 290.153, 290.154, 290,181, 290.182, 290.183,
destruction of products at the factory, 27 Administrative practice and
290.184, 290,185, 290.187, 290.189, 290.189, procedure, Authority delegations,
CFR 270.253, or for destruction of 290.190, 290.191, 290.192, 290.193, 290.194,
products withdrawn from the market, 27 Claims, Electronic fund transfer, excise
290.195, 290.196, 290.196a, 290.197, taxes, Labeling, Packaging and
CFR 270.311, ATF has determined that 290,198, 290.200, 290.201, 290.202, 290.203,
the current regulations are not unduly containers, Penalties, Reporting
290.204, 290.205, 290.206, 290.207,
burdensome to smokeless tobacco requirements, Seizures and forfeitures.
290,207a, 290.208, 290.210, 290.212,
manufacturers. However, such Surety bonds, Tobacco products.
290.213, 290.221, 290.222, 290.223, 290.224,
manufacturers may request approval for 290.225, 290.226, 290.227, 290.228, 290.229, 27 CFR Part 275
alternative methods or procedures under 290.230, 290.255, 290.264.
existing regulations in 27 CFR 270.45. Administrative practice and
ATF has determined to re-examine the Part 295 procedure, Authority delegations,
destruction procedures with a view to The heading, the table of contents, Cigarette papers and tubes, Electronic
bringing the requirements for all tobacco §§295.1, 295.11, 295.23, 295.25, 295.31, fund transfer, Claims, Customs duties
products into conformity with those for 295.32, 295.33, 295.34, 295.35, 295.36, and inspection, Excise taxes, Imports,
the other commodities regulated by 295.37, 295.41, 295.42, 295.46, 295.51. Labeling, Packaging and containers,
ATF. Accordingly, ATF will include Penalties, Reporting requirements,
destruction procedures among the topics Part 296 Seizures and forfeitures, Surety bonds,
covered in a forthcoming notice of The heading, the table of contents, Tobacco products, U.S. possessions,
proposed rulemaking applicable to all §§ 296.71, 296.72, 296.73, 296.74, 296.75, Warehouses,
tobacco products. 296.76, 296.77, 296.78, 296.79, 296.80, 27 CFR Part 290
Temporary Regulations Adopted As 296.161, 296.163, 296.164, 296.166, 296.167.
Administrative practice and
Final Regulations Without Change Regulatory Flexibility Act procedure, Aircraft, Authority
Temporary regulations were The provisions of the Regulatory delegations, Cigarette papers and tubes,
promulgated as T.D. ATF-232 (51FR Flexibility Act relating to a final Claims, Customs duties and inspection,
28078} as a result of changes necessary regulatory flexibility analysis (5 U.S.C. Excise taxes, Exports, Foreign-trade
to implement the smokeless tobacco 604} are not applicable to this document, zones, Labeling, Packaging and
provisions of the Consolidated Omnibus because it was not required to be containers, Penalties, Surety bonds
Budget Reconciliation Act of 1985. These preceded by a general notice of Tobacco products, Vessels,
regulations are hereby adopted as final proposed rulemaking under 5 U .S.C. 553, Warehouses.
regulations with no change, except as and because the revenue effects of this
27 CFR Part 295
amended herein. The following is a list rulemaking on small businesses flow
of sections in the temporary regulations directly from the underlying statute. Administrative practice and
which are adopted as final regulations Likewise, any significant secondary or procedure, Authority delegations,
with no change. incidental effects, and any significant Cigarette papers and tubes, Excise
reporting, recordkeeping, or other taxes, Labeling, Packaging and
Part 270 containers, Tobacco products.
compliance burdens flow directly from
The heading, table of contents, the statute.
§§270.1, 270.11, 270.25, 270.26,270.27, 27 CFR Part 296
270.41, 270.42, 270.44, 270.61, 270.61a, Executive Order 12291 Authority delegations, Cigarette
270.69, 270.72, 270.104, 270.133, 270.161, This document is not a major rule papers and tubes, Claims, Disaster
270.162, 270.165a, 270.166, 270.167, within the meaning of Executive Order assistance, Excise taxes, Penalties,
270.168, 270.182, 270.183, 270.184, 270.186, 12291, 46 FR 13193 (1981), because it will Seizures and forfeitures, Surety bonds,
270.201, 270.202, 270.211, 270.212, not have an annual effect on the Tobacco products.
270.216a, 270.217, 270.231, 270.232, economy of $100 million or more; it will
270.233, 270.234, 270.235, 270.236, 270.251, not result in a major increase in costs or Drafting Information
270.252, 270.253, 270.254, 270.255, 270.281, prices for consumers, individual The principal authors of this
270.282, 270.283, 270.284, 270.286, 270.287, industries, Federal, State, or local document are Nancy F. Cook and
270.301, 270.311, 270.312, 270.331. government agencies, or geographic Clifford A. Mullert of the Distilled Spirits
 Register / Vol- 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

and Tobacco Branch, Bureau of Alcohol, § 27 5.72 N o tic e fo r sm o k eles s to b ac co . label securely affixed thereto, a clear
Tobacco and Firearms. [a] Product designation. Every statement, in pounds and ounces, of the
Authority and Issuance package of chewing tobacco or snuff total weight of the product, the tax class
shall, before removal subject to internal of the product, and the total number of
PARTS 270, 275, 290, 295 AND 296— revenue tax, have adequately imprinted the packages of product contained
[AMENDED] thereon, or on a label securely affixed therein.
thereto, the designation “chewing (Approved by the Office of Management and
Accordingly, the temporary regulation tobacco” or “snuff.” As an alternative,
amending 27 CFR Parts 270, 275, 290, 295 Budget under control number 1512-0488)
packages of chewing tobacco may be (Sec. 202, Pub. L. 85-859, 72 Stat. 1422 (26
and 296 which was published at 51 FR designated "Tax Class C ,” and packages U.S.C. 5723))
28076-28092 is adopted as a final rule of snuff may be designated “Tax Class
with the following changes: M .” Signed: November 7,1986.
Sec. A . The temporary regulations in (b) Product weight. Every package of Stephen E. Higgins,
27 CFR Part 270 are amended as follows: chewing tobacco or snuff shall, before Director.
Paragraph 1. The authority citation for removal subject to internal revenue tax, Approved: November 24,1986.
Part 270 continues to read as follows: have adequately imprinted thereon, or Francis A. Keating, II,
Authority: 5 U.S.C. 552(a), 26 U.S.C. 5701, on a label securely affixed thereto, a Assistant Secretary (Enforcement).
5703, 5704, 5705, 5711, 5712, 5713, 5721, 5722, clear statement of the actual pounds and [FR Doc. 86-26935 Filed 11-28-86; 8:45 am]
5723, 5741, 5751, 5753, 5761, 5762, 5763, 6109, ounces of the product contained therein. BILLING CODE 4810-31-M
6301, 6302, 6311, 6313, 6402, 6404, 6423, 6676, As an alternative, the shipping cases
7212, 7325, 7342, 7502, 7503, 7606, 7805, 31 containing packages of chewing tobacco
U.S.C. 9301, 9303, 9304, 9306. or,snuff may, before removal, have POSTAL SERVICE
Par. 2. Section 270.216 is revised to adequately imprinted thereon, or on a
read as follows: label securely affixed thereto, a clear 39 CFR Part 111
statement, in pounds and ounces, of the
§270.216 Notice for smokeless tobacco. total weight of the product, the tax class Disposal of Books and Sound
(a) Product designation. Every of the product, and the total number of Recordings
package of chewing tobacco or snuff the packages of product contained
shall, before removal subject to tax, therein. agency: Postal Service.
have adequately imprinted thereon, or (Approved by the Office of Management and A CTION: Final rule.
on a label securely affixed thereto, the Budget under control number 1512-0488)
designation “chewing tobacco” or S UM M ARY: This final rule changes the
(Sec. 202, Pub. L. 85-859, 72 Stat. 1422 (26 procedures for the return of books and
“snuff.” As an alternative, packages of U.S.C. 5723))
chewing tobacco may be designated sound recordings found loose in the mail
“Tax Class C ” , and packages of snuff by providing a central location for the
PART 295—[AMENDED] approval of requests for their return. It
may be designated “Tax Class M ” .
(b) Product weight. Every package of Sec. C. The temporary regulations in also requires requesters to designate the
chewing tobacco or snuff shall, before 27 CFR Part 295 are amended as follows: location where they will pick up their
removal subject to tax, have adequately Paragraph 1. The authority citation for items or wish to have them returned.
imprinted thereon, or on a label securely Part 295 continues to read as follows: DATES: Effective date: January 1,1987.
affixed thereto, a clear statement of the Authority: 26 U.S.C. 5703, 5704, 5705, 5723, Publishers and distributors of books and
actual pounds and ounces of the product 5741, 5751, 5762, 5763, 6313, 7212, 7342, 7606, sound recordings should submit their
contained therein. As an alternative, the 7805, 44 U.S.C. 3504(h). requests for the return of such books
shipping cases containing packages of and sound recordings prior to February
Par. 2. Section 295.43 is revised to read 1,1987, in order to be included in the
chewing tobacco or snuff may, before
as follows: first central file of requesters effective
removal, have adequately imprinted
thereon, or on a label securely affixed § 29 5.43 N o tic e fo r sm o k eles s to b a c c o . March 1,1987, when all prior files will
thereto, a clear statement, in pounds and (a) Product designation. Every become obsolete.
ounces, of the total weight of the package of chewing tobacco or snuff FOR FURTHER IN FO RM A TIO N CONTACT:
product, the tax class of the product, shall, before removal under this part, Francis E. Gardner (202) 268-5178.
and the total number of the packages of have adequately imprinted thereon, or SUPPLEMENTARY INFO RM A TIO N : On
product contained therein. on a label securely affixed thereto, the November 19,1985, the Postal Service
(Approved by the Office of Management and designation “chewing tobacco” or published for comment in the Federal
Budget under control number 1512-0488) “snuff.” As an alternative, packages of Register (50 FR 47564) proposed changes
(Sec. 202, Pub. L. 85-859, 72 Stat. 1422 (26 chewing tobacco may be designated to the Domestic Mail Manual altering
U.S.C. 5723)) “Tax Class C ,” and packages of snuff the rule governing the return of books
may be designated "Tax Class M .” and sound recordings. Interested
Sec. B. The temporary regulations in
(b) Product weight. Every package of persons were invited to submit
27 CFR Part 275 are amended as follows:
chewing tobacco or snuff shall, before comments on the proposed changes by •
Paragraph 1. The authority citation for removal under this part, have
Part 275 continues to read as follows: December 19,1985.
adequately imprinted thereon, or on a Five commenters responded to our
Authority: 5 U.S.C. 552(a), 26 U.S.C. 5701, label securely affixed thereto, a clear invitation. Although the commenters
5703, 5704, 5705, 5708, 5722, 5723, 5741, 5761, statement of the actual pounds and generally favored the proposed changes,
5762, 5763, 6301, 6302, 6313, 6404, 7101, 7212, ounces of the product contained therein.
7342, 7606, 7652, 7652(a), 7805, 31 U.S.C. 9301, all objected on the ground of undue
9303, 9304, 9306. As an alternative, the shipping cases hardship to the proposal that publishers
containing packages of chewing tobacco and distributors be required to pick up
Par. 2. Section 275.72 is revised to read or snuff may, before removal, have their merchandise at a designated dead
as follows: adequately imprinted thereon, or on a parcel branch, since some mailers would
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43195

have to travel great distances to the than one trade name, company name or other the letter of authorization will be receipted in
nearest branch. They suggested that organizational identification may be listed in bulk by the person accepting delivery. One
pick up be permitted at the point of the same request. copy will be given with the merchandise, one
entry in the mail stream, such as a bulk (3) The request must specify only one copy will be mailed directly to the requester
location where the books and sound and the original will be retained by the
mail center, post office, or detached mail recordings will be picked up. The specific releasing facility for one year.
unit. We have changed the regulation as pick-up facility may be changed at any time h. Books and sound recordings separated
requested. by submitting a written request to the for return at a location other than a
Another commenter recommended General Manager, Customer and Field designated release facility will be made up in
that the name of an approved publisher Support Division. individual shipments to the return point in
or distributor be kept in the central file (4) After approval, a central file of packages, sacks, hampers, or other types of
of requesters for five years, instead of requesters and the items specified for return containers. Packages will be as large as
two as proposed, on the ground that the will be maintained by the Customer and Field possible, subject to the weight and size
industry is fairly stable and not likely to Support Division. All requesters will receive limitations for fourth-class frail in DMN Part
confirmation of their requests. 750. Each package will be sent under a
change. We agree with this comment (5) An approval will remain in effect for penalty label to the designated point of
and have changed the regulation. five years or until cancelled in writing by release (bulk mail center, post office or
A commenter said that distributors either the requester or the Postal Service. detached mail unit). Sacks are subject to the
should be aljowedjwenty days from a (See 159.564i).---- 70 poundweight limitation. Hampers or other
scheduled release date, or twenty days jb, A book or sound recording will not be, containers-may be used if adequate security
after being notified by the Postal released to the requester even though it bears against pilferage can be maintained. Where
Service, to pick up their merchandise, an applicable trade name, company name, or hampers or other containers are used,
instead of ten, as proposed. We other organizational identification, if it does arrangements must be made through the
not appear to be new, or was involved in the Transportation Management Service Center
considered this comment, discussed it settlement of a postal indemnity claim, or if it
with the Mailers Technical Advisory associated with the sending facility for
is known that the requester was not the suitable containment, labeling, movement,
Committee, and have decided to mailer or addressee. Such books will be and security.
increase the period to 15 days, which we Suctioned. i. When a request is cancelled (see
believe should be adequate. c. A request for release of books or sound 159.564e(2)J, the requester will be notified in
For the above reasons and after recordings will not be granted whenever a writing by the dead parcel office, with a copy
careful consideration of all the written protest or a conflicting request from to the General Manager, Customer and Field
comments, the Postal Service hereby another party is presented to the General Support Division. A cancelled request may
adopts the following amendments to the Manager, Customer and Field Support not be renewed until six months after the
Domestic Mail Manual, which is Division. Books and sound recordings date of cancellation. At that time, a written
involved in such a dispute will be sold at application must be resubmitted, which will
incorporated by reference in the Code of auction in the normal course of business,
Federal Regulations. See 39 CFR 111.1. be treated as if it were a new request. Books
unless written notice from both parties and sound recordings on hand at the time of a
List of Subjects in 39 CFR Part 111 advising of settlement of the dispute is cancellation will be included in the next
received before the sale deadline (see auction.
Postal Service. 159.564i). Both parties to a dispute will be
1. The authority citation for Part 111 advised when a question over ownership A transmittal letter making these
continues to read as follows: occurs and when any settlement of the changes in the Domestic Mail Manual
dispute is made. will be published and will be
Authority: 5 U.S.C. 552(a); 39 U.S.C. 401, d. Upon approval of a request by the
404, 407, 408, 3001-3011, 3201-3219, 3403-3406, General Manager, Customer and Field transmitted to subscribers
3621, 5001. automatically. Notice of issuance of the
Support Division, facilities handling books transmittal letter will be published in
and sound recordings will establish the Federal Register as provided in 39
PART 159—UNDELIVERABLE MAIL separations to the maximum extent
practicable. CFR 111.3.
2. In 159.56, revise .564 to read as Fred Eggleston,
follows: e. Release procedures at the point of
customer mail entry (i.e., bulk mail center, Assistant General Counsel, Legislative
^.56 Dead Parcel Branches post office or detached mail unit) are as Division.
* .★ it ★ ★
follows: [FR Doc. 86-26897 Filed 11-28-86; 8:45 am]
.564 Disposal o f Books and Sound (1) Books and sound recordings will be BILLING CODE 7710-12-M
Recordings. Books and sound recordings will released to requesters or their authorized
be disposed of by sale, except for those that representatives at a time and in a manner
may be withheld from sale for release to a mutually agreeable between the requester
publisher or distributor under the following and the Postal Service consistent with the DEPARTMENT OF HEALTH AND
conditions: instructions in this section. HUMAN SERVICES
a. A publisher or distributor may request, (2) Failure of requesters to pick up books
in the manner set forth below, that books and and sound recordings within fifteen days of Health Care Financing Administration
sound recordings bearing a particular trade written notification or on a previously
name, company name or other organizational scheduled release date will result in return of 42 CFR Parts 400,405, 412, 421, 456,
identification, be released to the requester or the material to a dead parcel branch for 460,461, 462,463, 466, 473,476, and
to the requester’s representative. The auction and in the cancellation of the request. 478
requirements for such a request are: f. If the designated release facility has a
(1) The requester must apply in writing to dead parcel branch, the release procedures ' [H S Q -1 2 2 -F ]
the General Manager, Customer and Field are the same as above.
Support Division, Office of Classification and g. In order to pick up books and sound Removal of Obsolete Rules; Peer
Rates Administration, USPS Headquarters, recordings at the designated facility, Review Organizations; Medicare
Washington, DC 20260-5361. requesters or their representatives must Program
(2) The request must include a statement present a letter from the requester authorizing
that the requester is the publisher or the Postal Service to release such agency: Health Care Financing
distributor of the books and sound recordings merchandise to the bearer. This letter of Administration (HCFA), HHS.
bearing the listed trade name, company name authorization must be executed in triplicate. a c t i o n : Final rule.
or other organizational identification. More Upon release the merchandise, all copies of
43196 Federal Register / V o i. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

s u m m a r y : This document removes rules outdated cross-references. Part 474, 42 CFR Part 462
pertaining to Professional Standards which contained a Subpart B pertaining Grant programs-health. Health care.
Review Organizations {PSROs), which to PSROs, was removed by final Health professions, Peer review
became obsolete as a result of regulations published on September 30. organizations.
amendments made to the Social Security 1986 {51 FR 34786).
Act (the Act) by the Tax Equity and 42 CFR Part 463
Fiscal Responsibility Act of 1982 Waiver of Notice and Delayed Effective
Date Claims, Health care, Health
(TEFRA). Those amendments
professions, Professional Standards
established a new peer review program These amendments remove rules that
under which Utilization and Quality Review Organizations (PSRO).
have become obsolete because the PRO
Control Peer Review Organizations program has replaced the PSRO 42 CFR Part 466
(PROs) would assume responsibilities program, and conform cross-references
very similar to those previously carried Grant programs health, Health care.
in others. These changes affect neither
out by PSROs. Health facilities, Health professions,
the Medicare beneficiaries nor those
Removal of the obsolete rules will Peer review organizations.
that provide Medicare services to them.
preclude any possible confusion and Accordingly, we find that notice and 42 CFR Part 473
make it unnecessary to include opportunity for public comment and
InoperativeTule^ in future editionsTjf Administrative practice and..............
delayed effective date are unnecessary.
HCFA's regulations (42 CFR Chapter procedure, Health care, Health,
IV). Regulatory Impact Statement professions, Peer review organizations.
EFFECTIVE DATE: These rules are Since we are merely removing 42 CFR Part 476
effective December 1,1988. . obsolete rules and adding nothing new,
Health care, Health professions.
FOR FURTHER IN FO RM A TIO N CONTACT: there will be no impact, and the
Health records, Peer review
Mary Kay Terry, (301) 594-7909. requirements of Executive Order 12291,
the Regulatory Flexibility Act, and the organizations, Penalties, Privacy.
s u p p l e m e n t a r y i n f o r m a t i o n : The Peer
Review Improvement Act of 1982 (Title Paperwork Reduction Act do not apply. 42 CFR Part 478
I, Subtitle C of TEFRA-Pub. L. 97 248) List of Subjects Health care, Health professions,
amended Part B of Title XI of the Act by Professional Standards Review
establishing the Utilization and Quality 42 CFR Part 400
Organizations (PSRO).
Control Peer Review Organization Grant programs-health, Health 42 CFR Chapter IV is amended as set
(PRO) program. This program replaced facilities, Health maintenance forth below:
the Professional Standards Review organizations (HMO), Medicaid,
Organization (PSRO) program The Medicare, Reporting and recordkeeping I. Removal of Obsolete Rules
responsibilities that PROs have assumed requirements. A. Part 405, Subpart P is amended as
are similar to those exercised by PSROs. set forth below:
PROs review health care services 42 CFR Part 405
funded under Title XVIII of the Act Administrative practice and PART 405—FEDERAL HEALTH
(Medicare) to determine whether those procedure, Health facilities, Health INSURANCE FOR THE AGED AND
services are reasonable, medically professions, Kidney diseases, DISABLED
necessary, furnished in the appropriate Laboratories, Medicare, Nursing homes,
setting, and of a quality that meets Reporting and recordkeeping Subpart P—Certification and
professionally recognized standards. requirements, Rural areas, X-rays. Recertification; Claims and Benefit
Congress created the PRO program in Payment Requirements; Check
order to redirect and simplify the peer 42 CFR Part 412
Replacement Procedures
review of services reimbursed by Health facilities, Medicare,
Medicare, and enhance the efficiency 1. The authority Gitation for Subpart P
42 CFR Part 421 continues to read as follows:
and cost effectiveness of that review.
In June of 1984, H CFA began Administrative practice and Authority: Secs. 1102,1814,1835,1871, and
awarding contracts to PROs. There are procedure, Health facilities, Health 1883 of the Social Security Act (42 U.S.C.
no longer any PSROs performing review professions, Medicare, Reporting and 1302,1395f, 1395h, 1395hh, and 1395tt).
functions in the Medicare program. recordkeeping requirements. §405.1625-1 {Removed]
We have removed all portions of
Subchapter D that dealt exclusively with 42 CFR Part 456 2. Section 405.1625-1 is removed and
PSROs, that is, Parts 460, 461, 463 and Administrative practice and the table of contents is amended to
478, Subpart B of Part 462, Subpart B of procedure, Grant programs-health, reflect this change.
Part 466, Subpart A of Part 473, and Health facilities, Medicaid, Reporting
Subpart A of Part 476» We have also and recordkeeping requirements. PART 460—[RESERVED]
amended Parts 462 and 466 by removing B. Part 460 is removed and reserved
42 CFR Part 460
definitions of terms that are defined in and the table of contents is amended to
Part 400 or are not used in the PRO Health care, Health professions, Peer reflect this change.
regulations: made conforming changes in Review Organizations, Professional
other definitions: removed § 405.1625-1 Standards Review Organizations PART 461—[RESERVED]
because it was based on statutory (PSRO).
provisions applicable to PSROs that are C. Part 461 is removed and reserved
42 CFR Part 461 and the table of contents is amended to
not included in the current PRO
provisions; conformed cross-references Health care, Health professions, reflect this change.
throughout 42 CFR Chapter IV and, in Professional Standards Review D. Part 462 is amended as set forth
the conformed sections, corrected other Organizations (PSRO). below: •
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43197

PART 462—PEER REVIEW services furnished, or proposed to be 1. § 400.200 [Amended]

ORGANIZATIONS furnished, to a patient. § 400.200 is amended by removing the
c. In the definition of “Adm ission definition for “PSROs.”
1. The authority citation for Part 462 is review ”, the words “a PSRO or” are 2. § 405.160 [Amended]
revised to read as follows: removed. Paragraph (d), which pertains only to
Authority: Secs 1102.1152, and 1153 of the d. In the definition of “Continued stay PSROs, is removed and reserved.
Social Security Act (42 U.S.C. 1302,1320c-l review ”, the words “PSRO or” are 3. § 405.162 [Amended]
and 1320-2). removed. In paragraph (b)— —
2. Subpart A is amended as follows: e. In the definition of “Regional a. The phrase “PSRO and” is removed
a. § 462.1 [Amended] norms, criteria, and standards", “PRO from the paragraph heading.
The definitions of the following terms area” is substituted for "PSRO area”. b. The phrase “a Professional
are removed: “A c t”, “A ctivepractice", f. In the definition of “ Working day", Standards Review Organization (PSRO)
“Conditionally designated P S R O ”, the words “PSRO or” are removed. or” is removed from the first sentence.
“Fully designated P S R O ”, “Governing c. Reference to “ § 405.472” is changed
body", “H C F A ", “N onprofit”, “P S R O ”, Subpart B—[Reserved]
to “Part 412, Subpart C ” .
and “P SR O area ". §§ 4 6 6 .2 -4 6 6 .6 3 [R e s e rv e d ] d. Reference to “Part 463” is changed
b . In the definition of “Physician", the to “Part 466” .
words “PSRO or” are removed wherever g. Subpart B (§§ 466.2-466.63) is e. Reference to "§ 463.17(a)” is
they appear. removed and reserved and the table of changed to “ § 466.70(d)” .
contents is amended to reflect that In paragraph (c)—
Subpart B—[Reserved] change.
a. Reference to “ §§ 405.470 through
§§ 462.6-462.16 [Reserved] F. Part 473 is amended as follows: 405.477,” is changed to “Part 412 of this
chapter,” . *
3. Subpart B (§§ 462.6^162.16) is PART 473—RECONSIDERATIONS AND
APPEALS b. Reference to “ § 405.475” is changed
removed and reserved, and the table of to “Part 412, Subpart F, of this chapter” .
contents is amended to reflect this 1. The authority citation for Part 473 is 4. § 405.310-1 [Amended]
change. revised to read as follows: In the section heading, “PSRO” is
PART 463—[RESERVED] Authority: Secs. 1102,1154,1155,1866,1871, changed to "PRO” , and in the text—
and 1879 of the Social Security Act (42 U.S.C. a. “Professional Standards Review
E. Part 463 is removed and reserved 1302,1320C-3,1320C-4,1395cc, 1395hh, and Organization (PSRO)” is changed to
and the table of contents is amended to 1395pp). “PRO” .
reflect this change. b. Reference to “Part 463” is changed
F. Part 466 is amended as set forth Subpart A—[Reserved] to “Part 466” .
below: § § 4 7 3 .1 -4 7 3 .6 [R e s e rv e d ] c. Reference to “ §§ 463.15 through
2. Subpart A (§§ 473.1-473.6) is 463.18” is changed to "Part 466, Subpart
PART 466—UTILIZATION AND C ”.
QUALITY CONTROL REVIEW removed and reserved and the table of
contents is amended to reflect this 5. § 405.704 [Amended]
1. The authority citation for Part 466 is change. In paragraph (b)(ll), the words “PSRO
revised to read as follows: or” are removed.
G. Part 476 is amended as set forth 6. § 405.1902 [Amended]
Authority: Secs. 1102,1154, and 1871 of the below:
Social Security Act (42 U.S.C. 1302,1320c-3 In paragraph (c)—
and 1395hh). • “Professional Standards Review
PART 476—ACQUISITION, Organization (PSRO)” is changed to
§466.1 [A m e n d e d ] PROTECTION, AND DISCLOSURE OF “PRO” and reference "1861(k) and 1865
2. Section 466.1 is amended as follows: PRO INFORMATION of the Act” is changed to read "and
a. The definitions of the following 1. The authority citation for Part 476 is 1861(k) of the Act” .
terms are removed: “A dverse revised to read as follows: • Reference to “section 1155(a) of the
determination”, “Assignedlength o f Act” is changed to “ section 1154 of the
stay”, “A rea”, “Autom atic Authority: Secs. 1102,1154(a), 1156(a), and Act and Part 466 of this chapter” ,
1160 of the Social Security Act (42 U S.C.
certification", “Certified length o f sta y”, 130 2 ,1320c-3(a), 1320c-5(a), an d 1320O-9). • The last sentence is removed.
“Concurrent quality assurance”, 7. § 405.1913 [Amended]
“Concurrent review ”, “Delegated §§ 4 7 6 .1 -4 7 6 .4 [R e s e rv e d ] In paragraph (f)(9), “planning or
hospital”, “Federal adm ission”, conditional Professional Standards
“Federalprogram patient", “H ospital 2. Subpart A (§§ 476.1-476.4) is Review Organization (PSRO)” is
review com m ittee”, “Independent removed and reserved and the table of changed to “PRO” .
admitting privilege ”, *‘L ength-of-stay contents is amended to reflect this 8. § 405.2100 [Amended]
norms”, “Length-of-stayprojection", change. In paragraph (a), last sentence,
"Medical care evaluation (M CE) study”, PART 478—[REMOVED] “Professional Standards Review
“Nondelegated hospital" (which appears Organizations” is changed to "PROs” .
twice), “Procedure review ", “P S R O ”, H. Part 478 is removed and the table 9. § 405.2110 [Amended]
“PSRO representative ”, “P SR O review ”, of contents is amended to reflect that In paragraph (b), “PSRO” is changed
and “State survey agency”. change. to "PRO” .
b. The following definition is added, II. Correction of Cross-References 10. § 405.2112 [Amended]
in alphabetical order: References to PSROs are removed or In paragraphs (a)(7) and (b)(6) and
“Initial denial determination " means changed to refer to PROs, as (b)(8)* “PSRO” is changed to "PRO” .
an initial negative decision by a PRO, appropriate, and outdated references to 11. § 405.2114 [Amended]
regarding the medical necessity, quality, the Act and to Subchapter D of this _ In paragraph (b), “PSRO” is changed
or appropriateness of health care chapter are also corrected, as follows: to “PRO” wherever it appears.
43198 Federal Register / V o l. 51, N o. 230 / Monday, December 1, 1986 / Rules and Regulations

12. § 412.92 {Amended] FEDERAL EMERGENCY subsidized flood insurance is now

In paragraph (a)(2)(H), the words MANAGEMENT AGENCY available for property in the community.
“ PSRO or” are removed. In addition, the Director of the Federal
13. §421.100 {Amended] Federal Insurance Administration Emergency Management Agency has
In § 421.100(a)(3), “Professional identified the special flood hazard areas
Standards Review Organization 44 CFR Part 64 in some of these communities by
(PSRO)” and “PSRO” are changed to publishing a Flood Hazard Boundary
[D o c k e t N o. FE M A 6 7 3 8 ]
Map. The date of the flood map, if one
“PRO", and “Part 463” is changed to
has been published, is indicated in the
“Part 466” . List of Communities Eligible for the fifth column of the table. In the
14. § 421.200 (Amended] Sale of Flood Insurance communities listed where a flood map
In § 421.2G0(a)(l)(iii), “Professional has been published, Section 102 of the
Standards Review Organization AGENCY:Federal Emergency Flood Disaster Protection Act of 1973, as
(PSRO)" and “ PSRO” are changed to Management Agency. amended, requires the purchase of flood
“PRO” , and “Part 463", is changed to A C TIO N : Final rule, insurance as a condition of Federal or
“ Part 466". federally related financial assistance for
s u m m a r y : This rule lists communities
15. § 456.2 (Amended] acquisition or construction of buildings
participating in the National Flood in the special flood hazard area shown
In paragraph (b), “or” is inserted after Insurance Program (NFIP). These
paragraph (b)(1), paragraph (b)(2) is on the map.
communities have applied to the The Director finds that the delayed
removed, and paragraph (b)(3) is program and have agreed to enact
redesignated as (b)(2). effective dates would be contrary to the
certain floodplain management
public interest. The Director also finds
16. § 456.144 [Amended] measures. The communities’
that notice and public procedure under 5
Paragraph (c)(1) is changed from participation in the program authorizes
U.S.G. 553(b) are impracticable and
“PSROs’’ to “ PROs” the sale of flood insurance to owners of unnecessary.
17. § 456.244 (Amended] property located in the communities
listed. The Catalog of Domestic Assistance
Paragraph (c)(1) is changed from Number for this program is 83.100
EFFECTIVE DATE: The dates listed in the
“PSROs” to “ PROs” . “Flood Insurance.”
fourth column of the table, Pursuant to the provisions of 5 U.S.C
18. § 456.344 (Amended]
ADDRESSEE: Flood insurance policies for 605(b), the Administrator, Federal
Paragraph (c)(1) is changed from
property located in the communities Insurance Administration, to whom
“PSROs” to “PROS".
listed can be obtained from any licensed authority has been delegated by the
19. § 456.650 (Amended] property insurance agent or broker Director, Federal Emergency
In paragraph (c), “or" is inserted after serving the eligible community, or from Management Agency, hereby certifies
paragraph (c)(1), paragraph (c)(2) is the National Flood Insurance Program that this rule, if promulgated, will not
removed, and paragraph (c)(3) is (NFIP) at; P.O. Box 457, Lanham, have a significant economic impact on a
redesignated as (c)(2). Maryland 20706. Phone: (800) 638-7418. substantial number of small entities.
20. § 456 654 (Amended] FOR FURTHER IN FO R M A TIO N CONTACT: This rule provides routine legal notice
In paragraph (a)(4), the words “ or to a Frank H. Thomas, Assistant stating the community’s status in the
PSRO” and “or PSRO" are removed. Administrator, Office of Loss Reduction, NFIP and imposes no new requirements
Federal Insurance Administration, (202) or regulations on participating
(Catalog of Federal Domestic Assistance communities.
Program No. 13.773—Medicare—Hospital 646-2717, Federal Center Plaza, 500 C
Insurance.) Street, SW ., Room 416, Washington, DC List of Subjects in 44 CFR Part 64
20472.
Dated: September 4,1986. Flood insurance—floodplains.
SUPPLEMENTARY IN FO RM A TIO N : National
William L. Roper, 1. The authority citation for Part 64
Flood Insurance Program (NFIP), continues to read as follows:
Administrator, Health Care Financing enables property owners to purchase
A dministration. flood insurance at rates made Authority: 42 U.S.C. 4001 et. seq.,
Approved; September 30,1986. reasonable through a Federal subsidy. In Reorganization Plan No. 3 of 1978, E .0 .12127.
Otis R. Bowen, „ return, communities agree to adopt and 2. Section 64.6 is amended by adding
Secretary. administer local floodplain management in alphabetical sequence new entries to
[FR Doc. 86-26763 Filed 11-28-86; 8:45 ami measures aimed at protecting lives and the table.
new construction from future flooding. In each entry, a complete chronology
BILLING CODE 4120-01-M Since the communities on the attached of effective dates appears for each listed
§ 64.6 List of Eligible Communities. list have recently entered the NFIP, community. The entry reads as follows:

State and county Location Community Effective dates of authorization/canceNation of sale of Special flood hazard areas identified
No. flood insurance in community

13Q257A July 8, 1977.

Pennsylvania: Washington,.......... West Pike Pun.1 township oi.............. 422157A Oct. 25, 1974, Emerg.; Sept. 1, 1986. Reg.: Sept. 1, Dec. 6, 1974 and Sept. 1. 1986.
1986, Susp.; Oct 6, 1986. Rein.
260691 Oo.
Illinois: Lake .............................. Third Lake, village of..................... . 170392IB Dec. 26, 1975, Emerg.; Feb. 1. 1980. Reg; Feb. 1, Sept. 6, 1974, Mar. 19, 1976 and Feb
1980, Susp; Oct. 3, 1986, Rein. 1. 1980
Pennsylvania:
Beaver..........—.. ................. South Beaver,1 township of................ 422329A Dec. 11, 1975, Emerg; Sept 1. 1986. Reg., Sept. 1, Jan. 10. 1975 and Sept. 1. 1986
1986. Susp; Oct 14, 1986, Rein.
Brush Valley,:1 township of................ - 421710A Mar. 23, 1977, Emerg.-, Aug. 19, 1986, Reg; Aug. 19. Jan. 3, 1975 and Aug. 19, 1986.
1986, Susp; Oct 14, 1986, Rein.
Dauphin.. . . . . . ................ Conewago, toWnship of......... ............. 422406A Feb. 10, 1981, Emerg; Apr. 30, 1988, Reg; Apr 30. Dec. 27, 1974 and Apr. 30. 1986
1986, Susp; Oct. 14, 1986. Rem.
 Federal Register / V o l. 51. N o. 230 / M on d ay, Decem ber 1, 1986 / Rules and Regulations 43199

State and county Location Community Effective dates of authorization/cancellation of sale of Special flood hazard areas identified
No. flood insurance in community
Erie..................... Waterford, township of.... 422419A Mar. 22, 1976, Emerg.; Feb. 17, 1982, Reg.; Feb. 17, Jan. 24, 1975 and Feb. 17, 1982.
1982, Susp.; OcL 14. 1986, Rein.
Crawford............... Spring,1 township of...... 421570 Mar. t, 1977, Emerg.; Sept. 1, 1986, Reg.; Sept. 1, May 31, 1974, July 9, 1976 and Sept.
1986, Susp.; Oct. 14, 1986, Rein. 1, 1986.
Virginia: Rockingham.... Unincorporated area...... 510133B July 2, 1974, Emerg.; Sept. 29, 1986, Reg.; Sept. 29, Nov. 15, 1974, June 23, 1978 and
1986. Susp.; Oct. 14, 1986, Rein. Sept. 29, 1986.
Pennsylvania:
Allegheny.............. Forest Hills/ borough of. 420035B Oct. 15, 1973, Emerg.; Sept. 1, 1986, Reg.; Sept. 1, May 10. 1974, Sept. 10, 1976 and
1986, Susp.; Oct. 14, 1986, Rein. Sept. 1 1986.
Susquehanna........ Silver Lake/ township of 422091A Mar. 18, 1976, Emerg.; Sept. 1, 1986, Reg.; Sept. 1, Jan. 10, 1975 and Sept. 1, 1986.
1986, Su3p.; Oct. 14, 1986, Rein.
Missouri:
Gasconade........... Morrison, city of............ 290142B May 30, 1975, Emerg.; Sept. 18, 1986, Reg.; Sept. 18, May 30, 1975, Oct. 3, 1975 and Sept.
1986, Susp.; Oct 16, 1986, Rein. 18, 1986.
Stoddard............... Bernie, city of................ 290422B Mar. 26, 1975, Emerg.; July 17, 1986, Reg.; July 17, Mar. 29, 1974, Nov. 28, 1975 and July
1986, Susp ; Oct. 10, 1986, Rein. 17, 1986.
Georgia: Quitman......... Georgetown, town of...... 130379 Oct. 17, 1986, Emerg.... ........................................... Feb. 10, 1978.
Tennessee: Carroll........ Bruceton, town of.......... 470244 .....do............................................................... .................. July 2, 1976.
Wisconsin:
Grant........ ........... Bagley/ village of... ..... 550145B July 25, 1975, Emerg.; June 17, 1986, Reg.; June 17, Aug. 30, 1974, May 21, 1976 and
1986, Susp.; Oct. 17, 1986, Rein. June 17, 1986.
Washington........... Stinger/ village of.......... 550587 Oct. 16, 1986, Emerg.................................. Oct. 21, 1977.
Illinois:
Pulaski_____ ,_... U8in,1 village of............. 170568B May 8, 1975, Emerg.; Sept. 27, 1985, Reg; Nov. 1, Apr. 12, 1974, May 14, 1976 and
1985, Susp.; Oct. 23, 1986, Rein. Sept. 27, 1985.
Effingham.............. Altamont, * city of_____ 170228 Jan. 28» 1976, Emerg.; Sept. 4, 1985, Reg.; Sept. 4, Mar. 22, 1974, June 11, 1976, June
1985, Susp; Oct. 23, t986, Rein. 22. 1979 and Sept 4, 1985.
Stark....................... Bradford,1village of___ 170745A Sept. 30 1975, Emerg.; Sept. 4, 1986, Reg.; Sept. 4, Dec. 20, 1974 and Sept. 4, 1986.
1986 Susp.; Oct 23, 1986, Rein.
Greene.................. Greenfield,1 city of......... 170252B July 5, 1979, Emerg.; June 17, 1986, Reg, June 17, Feb. 22. 1974, July 16, 1976 and
1986, Susp.; Oct. 23, 1986, Rein. June 17. 1986.
Pennsylvania: Beaver.... Darlington/ township of... 422312 Mar. 11, 1975, Emerg.; Sept. 1, 1986, Reg.; Sept. 1, Dec. 13, 1974 and Sept. 1, 1986.
1986, Susp.; Oct. 28. 1986, Rein.
NewHampshire: Grafton East Kingston/ town of ... 330203A July 16, 1976, Emerg.; Apr. 2, 1986, Reg.; Apr. 2, 1986, Feb. 28, 1978 and Apr. 2, 1986.
Susp.; Oct. 27. 1980, Rein.
Pennsylvania: Schuylkill.. Kline/ township of......... 422010A Dec. 26» 1975, Emerg.; Sept. 1, 1986, Reg.; Sept. 1, Nov. 8, 1974 and Sept. 1, 1986.
1986, Susp.; Oct. 30, 1986, Rein.
Missouri: Montgomery... Unincorporated areas2... 290242A Oct. 29, 1986, Emerg......... ................,....,....._...,..... .... Nov. 2, 1983.
Tennessee: Montgomery Rhineland, town of__ ..... 290243B Oct. 24, 1986, Emerg.; Oct. 24, 1986, Reg............... ~ " . Jan. 21, 1977, Aug. 16, 1977 and
Sept. 4, 1986.
1Minimal conversions.
2Declared disaster area.
Code for reading fourth column: Emerg—Emergency; Reg.—Regular; Susp.—Suspension; Rein.—Reinstatement

State and location Community Effective dates ot authorization/cancellation of Special flood hazard areas
No. sale of flood insurance in community identified
Region III
Pennsylvania: Windber, borough of, Somerset County.................... 422046A Jan. 31, 1975 and Oct. 17,
1986.
Region V
Michigan: Huron, township of Wayne County............................... 260545B June 30, 1978 and Oct 17,
1986.
Region VII
Iowa:
Muscatine County, unincorporated areas...................................... 190836B May 31, 1977 and Oct 17,
1986.
West Liberty, city of, Muscatine County....................................... 1902158 Jan. 16, 1974, Apr. 30, 1976,
and Oct. 17,1986.
Kansas: Syracuse, city of, Hamilton County................................. 200124C Jan. 9, 1974, Nov. 14, 1975,
Oct. 2, 1979, and Oct. 17,
1986.
Missouri: Carroll County, unincorporated areas......................................... 290057B Jan. 5, 1984 and Oct. 17, 1986.

Issued: November 21,1986. A C TIO N : Final rule.___________________________ SUPPLEMENTARY IN FO RM A TIO N :This is a

Harold T. Duryee, summary of the Commission’s Report
This document allots Channel
S U M M A R Y:
Administrator, Federal Insurance 225A to Ozark, Missouri, as that and Order, MM Docket No 86-129,
Administration. adopted October 20,1986, and released
community’s first FM service, with a site
[FR Doc. 86-26896 Filed 11-28-86; 8:45 am] restriction 7.2 kilometer (4.5 miles) north November 19.1986. The full text of this
BILLING CODE 6718-01-M____________________ of the community, in response to a Commission decision is available for
request from Ozark Entertainment inspection and copying during normal
f e d e r a l c o m m u n ic a t io n s
Network. business hours in the FCC Dockets
COMMISSION Branch (Room 230), 1919 M Steet, NW „
With this action, this proceeding is Washington, DC. The complete text of
47 CFR Part 73 terminated.
this decision may also be purchased
EFFECTIVE D A TE: December 26,1986; The
[MM Docket No. 86-129; RM-5286] from the Commission’s copy contractors,
window period for filing applications International Transcription Service,
will open on December 29,1986, and (202) 857-3800, 2100 M Street, NW „ Suite
Radio Broadcasting Services; Ozark,
MO close on January 26,1987. 140, Washington, DC 20037.
FOR FURTHER IN FO RM A TIO N CONTACT:
agency : Federal Communications Kathleen Scheuerle, (202) 634-6530, List of Subjects in 47 CFR Part 73
Commission. Mass Media Bureau. Radio broadcasting.
S-094999 003l(02K28-NOV-86-12:34:09)
43200 Federal Register / Voi. 51,- No. 230 / Monday, December 1, 1986 / Rules and Regulations

PART 73—[AMENDED] and Order, MM Docket No. 86-22, and Order, MM Docket No. 85-374,
1. The authority citation for Part 73 adopted October 24,1986, and released adopted October 24,1986, and released
continues to read as follows: November 19,1986. The full text of this November 19,1986. The full text of this
Commission decision is available for Commission decision is available for
Authority: 47 U.S.C. 154, 303. inspection and copying during normal inspection and copying during normal
§ 73.202 [Amended] business hours in the FCC Dockets business hours in the FCC Dockets
2. In § 73.202(b) the table of allotments Branch (Room 230), 1919 M Street, NW., Branch (Room 230), 1919 M Street, NW.,
is amended, under Missouri, by adding Washington, DC- The complete text of Washington, DC. The complete text of
Ozark, Channel 225A. this decision may also be purchased this decision may also be purchased
from the Commission’s copy contractors, from the Commission’s copy contractors,
Federal Communications Commission. International Transcription Service, International Transcription Service,
Charles Schott, (202) 857-3800,2100 M Street NW., Suite (202) 857-3800, 2100 M Street, NW., Suite
Chief, Policy and Rules Division, M ass Media 140, Washington, D C 20037. 140, Washington, DC 20037.
Bureau.
[FR Doc. 86-20911 Filed 11-28-86; 8:45 am] List of Subjects in 47 CFR Part 73 List of Subjects in 47 CFR Part 73
BILLING CODE 6712-01-M Radio broadcasting. Television broadcasting.
PART 73—[AMENDED] PART 73—[AMENDED]
47 CFR Part 73
1. The authority citation for Part 73 1. The authority citation for Part 73
[MM Docket No. 86-22; RM-5151, 5322] continues to read as follows: continues to read as follows:
Radio Broadcasting Services; Authority: 47 U.S.C. 154, 303. Authority: 47 U.S.C. 154, 303.
Pocatalico and Dunbar, WV § 73.202 [Amended ]
§73.606 [Amended]
agency: Fédéral Communications 2. § 73.202(b), the table of allotments,
Commission. 2. In § 73.606(b), the table of
the entry for Dunbar, West Virginia is assignments, in the entry for Twin Falls,
a c t i o n : Final rule. amended to add Channel 233A and the Idaho, Channel 35 is added.
entry for Pocatalico; West Virginia is
amended to add Channel 254A. Federal Communications Commission.
sum m ary: This document allots Channel
254A to Pocatalico, W V, and Channel Charles Schott, Charles Schott,
233A to Dunbar, W V, at the request of C hief Policy and Rules Division, M ass Media Chief, Policy and Rules Division, M ass Media
Bureau. Bureau.
Mountaineer Communications
Corporation and West Virginia Rural [FR Doc. 86-26912 Filed 11-28-86; 8:45 am] [FR Doc. 86-26913 Filed 11-28-86; 8:45 am]
Radio Company, respectively. The BILLING CODE 6712-01-M BILLING CODE 6712-01-M
allotments could provide each
community with its first local FM
service. Channel 254A requires a site 47 CFR Part 73
DEPARTMENT OF DEFENSE
restriction of 3.1 kilometers (1.9 miles)
[MM Docket No. 85-374; RM-5015]
northeast of Pocatalico and Channel 48 CFR Parts 204, 215, 230, and 253
233A requires a site restriction of 2.7 Television Broadcasting Services;
kilometers (1.7 miles) north of Dunbar. Twin Falls, ID Department of Defense Federal
The allotment to Pocatalico is Acquisition Regulation Supplement;
contingent upon Station WSIP-FM, AGENCY: Federal Communications DoD Profit Policy
Paintsville, Kentucky, receiving a license Commission.
in accordance with a construction AGENCY: Department of Defense (DoD).
a c t i o n : Final rule.
permit reclassifying its facilities from a Interim rule and request for
A CTION:
full Class C channel to a Class C l S UM M ARY:This document allots UHF comments.
channel, which is currently pending. television Channel 35 to Twin Falls,
Therefore, the filing window dates for Idaho, as its second commercial sum m ary: Comments are solicited on
Channel 254A at Pocatalico, West television service at the request of this interim rule which revises thé DoD
Virginia, will be announced at a future Ambassador Media Corp. and denies a profit policy on negotiated defense
date to follow the licensing of Station joint counterproposal by King contracts.
WSIP-FM, accordingly. With this action, Broadcasting Company and American
this proceeding is terminated. Community Broadcasting, Inc. to assign The interim rule reforms DoD’s
method of establishing prenegotiation
EFFECTIVE DATE: December 26,1986; The Channel 68 to Twin Falls, in lieu of
profit objectives on negotiated defense
window period for filing applications for Channel 35. With this action, this
contracts.
Channel 233A at Dunbar, W V will open proceeding is terminated.
on December 29,1986, and close on EFFECTIVE DATE: December 26,1986. DATES: This policy is effective on all
January 26,1987. applicable contracting actions awarded
FOR FURTHER IN FO R M A TIO N CONTACT:
under solicitations issued on or after
FOR FURTHER IN FO RM A TIO N CONTACT: Montrose H. Tyree, (202) 634-6530, Mass October 18,1986. Comments on the
Patricia Rawlings, (202) 634-6530. Media Bureau. interim rule should be submitted in
SUPPLEMENTARY IN FO RM ATION: This is a SUPPLEMENTARY INFO RM A TIO N : This is a writing to the address shown below no
summary of the Commission’s Report summary of the Commission’s Report later than December 31,1986, to be
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43201

considered in the formulation of the general and administrative expenses as a profit objectives oh negotiated defense
final rule. profit determinant. contracts. The interim rule will apply
The corresponding revisions to the DoB only to those small businesses which
ADDRESS: Interested parties should Federal Acquisition Regulation Supplement
submit written comments to: Lieutenant (DFARS) were published in the Federal meet the criteria for applying a
Colonel Richard J. Wall, USAF, Register for public comment on September 18, structured approach to developing
Chairman, Joint Implementation 1986, with a planned implementation date of prenegotiation profit objectives. Since
Committee, ODASD(P)/CPF, Room January 1,1987. However, as a result of the the threshold is $100,000 and applies to
3C800, Pentagon, Washington, DC Department of Defense Appropriations Act of negotiated contracts, the small business
20301-3062. 1987, DoD is compelled to issue ah interim involvement is not expected to be
rule immediately, effective on all solicitations significant as the majority of contracts
FOR FURTHER IN FO R M A TIO N CONTACT: issued on or after October 18,1986. The awarded at this level are to other than
Lieutenant Colonel Richard J. Wall, Department still intends to consider the
views expressed through the public comment small businesses. Therefore, Regulatory
USAF, Chairman, Joint Implementation
process, as well as practical application Flexibility Act Requirements do not
Committee, (202) 695^9764.
problems discovered with field apply.
SUPPLEMENTARY INFO RM A TIO N :
implementation. D. Paperwork Reduction Act
It is expected that the profit policy
A. Background revisions will result in lower prenegotiation Information
This interim rule concerning DoD’« profit objectives overall. This expectation has The changes to the Weighted
profit policy is being issued in been built into the DoD’s budget estimates for Guidelines Method are expected to
compliance with section 9105 of the thé future and is the principal reason given reduce the volume of paperwork. First,
for legislative action in this area. Therefore,
Department of Defense Appropriations management officials must take care to the DD Form 1547 and DD Form 1499 are
Act of 1987. This policy is effective on ensure that the new guidelines are applied combined into one form. Second, the
all applicable contracting actions without regard to historical profit levels that volume of data elements collected udner
awarded under solicitations issued on or may have been higher. Exceptions to DoD’s management information system
after October 18,1986. It also supersedes applying the Weighted Guidelines Method on profit are reduced. The DD Form 1861
the proposed DoD profit policy should be granted only in truly extraordinary has been expanded into two parts, but
published in the Federal Register on circumstances. this will not have a major impact. The
September 18,1986 (51 FR 33087, The profit policy revisions also entail a new portion of the DD Form 1861 will be
major overhaul to the DoD’s profit reporting
September 18,1986}, for public comment. systems. The DD Form 1499 (Report of completed only once a year from
The interim rule is identical in structure Individual Contract Profit Plan) has been available information. The forms have
to the rule proposed on September 18. eliminated. Instead, the DD Form 1547 been revised as necessary, and OMB
However, the profit factors for (Record of Weighted Guidelines Method approval on the information collection
performance risk and facilities capital Application) will serve as the source requirements has been obtained.
employed have been modified. The document for DoD’s profit reporting systems
under the new procedures established in List of Subjects in 48 CFR Parts 204, 215,
guidance furnished by the Under
DFARS Subpart 4.6 and DoD Instruction 230, and 253
Secretary of Defense for Acquisition to
7730.27, “Reporting of Planned and Government procurement.
the Secretaries of the Military Negotiated Contract Profits.” Because of the
Departments and Directors of the importance in assessing the new policy with Charles W. Lloyd,
Defense Agencies reads as follows: current information, it is necessary to Executive Secretary, Defense Acquisition
The Office of the Secretary of Defense, supplement these reporting systems. Regulatory Council.
with the participation of the Military Services Therefore, for Fiscal Year 1987 (October 1, Therefore, 48 CFR Parts 204, 215, 230,
and the Defense Logistics Agency, has 1986 to September 30,1987] the contracting and 253 are amended as follows:
developed a new profit policy to be used offices listed in DFARS 4.673-3 shall send a
copy of each completed DD Form 1547 1. The authority citation for 48 CFR
when negotiating defense contracts. This Parts 204, 215, 230, and 253 continues to
effort has been directed by the Deputy exceeding $500,000 where the new Weighted
Secretary of Defense in response to the Guidelines Method was used to the read as follows:
reforms recommended by DoD’s Defense Directorate of Cost, Pricing, and Finance; Authority: 5 U.S.C. 301,10 U.S.G 2202, DoD
Financial and investment Review (DFAIR). Office of the Deputy Assistant Secretary of Directive 5000.35, and DoD FAR Supplement
The revised profit policy includes not only Defense for Procurement; the Pentagon; 201.301.
these reforms, but it also adopts a number of Washington, DC 20301-8000; Attention—
other initiatives recommended by the Profit Report. The forms should be forwarded PART 204—ADMINISTRATIVE
Military Services/Agencies, Executive within 30 days after the completion of MATTERS
Branch, Congress, and the General contract negotiations. The Military Services
Accounting Office. are authorized to collect the forms on a 2. Sections 204.673 and 204.673-1
The new profit policy is reflected in a centralized basis. through 204.673-4 are revised to read as
completely restructured Weighted Guidelines B. Determination To Issue a Temporary follows;
Method for establishing the contracting Regulation
officer’s prenegotiation profit objectives. The 2 0 4.67 3 R e c o rd o f W e ig h te d G u id elin es
major revisions to this method accomplish A determination has been made under M e th o d A p p lica tio n (D D Fo rm 1547).
the following: (1) Eliminate separate profit the authority of the Secretary of Defense
policies for manufacturing, research and 2 0 4 .6 7 3 -1 P urpo se.
that the regulations promulgated by the
development, and service contracts: (2) Military Departments must be issued as The DD Form 1547 is the principal
decrease the emphasis placed on contract temporary regulations in compliance source document for maintaining a DoD-
cost; (3) redirect the performance risk with section 22 of the Office of Federal wide management information system
assessment to technical, management, and on profit and fee statistics, as required
cost considerations rather than individual Procurement Policy Act, as amended.
elements of cost; (4) integrate contract under DoD Instruction 7730.27,
C. Regulatory Flexibility Act “Reporting of Planned and Negotiated
financing with contract type risk assessment; Information
(5) increase and redistribute the proportion of Contract Profit Rates,” (see 215.970). The
prenegotiation profit objective to be based on The interim rule reforms DoD’s management information system is
facilities capital; and (6) remove contractor method of establishing prenegotiation extensively used within the Office o f the
 Federal Register / Vol. 51, No. 230 / Monday, December % 1986 / Rules and Regulations

Secretary of Defense to serve a wide Aviation Supply Office, Philadelphia; Sec.

variety of purposes ranging from Navy Ships Parts Control Center, 215.972 Modified Weighted Guidelines
evaluating profit and fee policies to Mechanicsburg; Naval Regional Method for nonprofit organizations.
responding to information requests Contracting Center, Long Beach; and 215.972- 1 Procedures for establishing fee
received from all Branches of the Naval Regional Contracting Center, objectives,
Government, Congress, and the public. Philadelphia. 215.972- 2 Instructions for completing DD
Form 1547.
204.673- 2 Responsibilities.
(2) Designated Office: Commander. 215.973. Cost-plus-award-fee contracts.
Naval Supply Systems Command (SUP
The Heads of the Military 024B), Washington, DC 20376.
Departments shall develop the Subpart 215-9—Profit
(c) A ir Force
necessary policies, procedures, and (1) Selected Field Contracting 215.900 Scope of subpart.
internal controls for implementing this Offices—
reporting system. The contracting officer This subpart prescribes additional
(1) Air Force Systems Command; and policies and procedures which DoD
is responsible for properly preparing the (ii) Air Force Logistics Command.
DD Form 1547 and forwarding a copy of contracting officers shall use in
(2) Forwarding Office—H Q AFLC/ developing prenegotiation profit or fee
it to the designated office within 30 LMSC/SORS, Wright-Patterson Air
calendar days after the date of contract objectives (hereinafter collectively
Force Base, Ohio 45433.
award. The contracting officer is also called “profit objectives” ) on negotiated
responsible for the correction of any 2 0 4 .6 7 3 -4 P ro ced u res defense contracts,
errors detected by the system’s auditing (a) All elements of the DD Form 1547 204.902 Policy.
processes. shall be completed by the contracting
officer as instructed in 215.970-2, (a)(1) The Weighted Guidelines
204.673- 3 Applicability. Method described in 215.970 is DoD’s
215.971-3, and 215.972-2.
For the field contracting offices (b) Completed forms shall be sent to structured approach for performing a
specified below, a copy of the completed the designated office, as an unclassified profit analysis. Its purpose is to achieve
DD Form 1547 shall be forwarded to the document, within 30 days after contract uniformity and consistency in the
office designated for all contract actions award. Classified information shall not manner DoD contracting officers
valued $500,000 or more where the be entered into the management develop prenegotiation profit objectives.
contracting officer employed either the information system on profit. The This method ensures that the key factors
Weighted Guidelines Method (215.970), designated office will perform the which motivate efficient contract
an alternate structured approach necessary audit tests to ensure that the performance and encourage facilities
(215.971), or the Modified Weighted capital investment in the defense
information on the DD Form 1547 is
Guidelines Method (215.972). Offices accurate. Use of mechanized or industrial base are the main
located outside the United States, its automated systems is desirable. determinants of profit objectives. The
possessions, and Puerto Rico are exempt contracting officer shall use the
(c) The designated offices shall
from this reporting requirement. Weighted Guidelines Method in
(a) Arm y transmit the DD Form 1547 information
in the manner and format specified in performing a profit analysis prior to the
(1) Selected Field Contracting negotiation of any contract action
Offices— DoD Instruction 7730.27.
(d) The reporting requirements of this requiring cost analysis (see 215.805-3),
(1) Army Materiel Command; including contract actions involving
(ii) Strategic Defense Command; part have been assigned RCS: A&L(Q)
1751. existing contracts. Exceptions to this
(iii) Defense Supply Service, requirement are set forth in
Washington, DC; and x2 0 4 .6 7 3 -5 [ R e m o v e d ] 215.902(a)(2). It is DoD’s policy that the
(iv) U.S. Army Corps of Engineers. 3. Section 204.673-5 is removed. Weighted Guidelines Methods or
(2) Designated Office—H QDA alternate structured approaches under
(DALO-CSZ-SM ), Washington, DC PART 215—CONTRACTING BY authorized exceptions be applied by the
20310-0600 through intermediate offices NEGOTIATION contracting officer in a credible manner.
if shown below. Practices which produce an arbitrary
(i) For Army Materiel Command field 3. Subpart 215.9, consisting of sections
215.900 through 215.973, is revised to profit objective or accomplish a profit
contracting offices, send through Army analysis on an after-the-fact basis are
Materiel Command, ATTN: AM CPP-SC, read as follows:
unacceptable.
5001 Eisenhower Avenue, Alexandria, S u b p art 21 5.9— P ro fit
Virginia 22333-0001; and (2) The Weighted Guidelines Method
(ii) For U.S. Army Corps of Engineers Sec. is not required for the types of contract
contracting offices, send through Office 215.900 Scope of subpart. actions listed immediately below as (i)
215.902 Policy. through (viii). In such cases, an alternate
of the Chief of Engineers, H QDA 215.903 Contracting officer responsibilities.
(DAEN-PRP), Washington, DC 20314- structured approach which specifically
215.905 Profit-analysis factors. addresses performance risk, contract
1000. 215.905-1 Common factors.
(b) N avy 215.970 Weighted Guidelines Method. type risk (including contractor working
(1) Selected Field Contracting 215.970- 1 Procedures for establishing profit capital), and contractor facilities capital
Offices— objectives. shall be used (see 215.971-1). The
(i) Naval Air Systems Command; 215.970- 2 Instructions for completing DD contracting officer shall also adhere to
(ii) Naval Sea Systems Command; Form 1547. the offset policy for facilities capital cost
(iii) Space and Naval Warfare 215.971 Alternate approaches to Weighted of money described in 215.971-2.
Systems Command; Guidelines Method. (i) Architect-engineering contracts;
215.971- 1 Recognized Profit Factors.
(iv) Naval Facilities Engineering 215.971- 2 Offset policy for facilities capital (ii) Management contracts for
Command; and cost of money. operation and maintenance of
(v) The following field offices of the 215.971- 3 Instructions for completing DD Government facilities;
Naval Supply Systems Command: Navy Form 1547. (iii) Construction contracts*
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43203

(iv) Contracts primarily requiring 215.970 Weighted Guidelines Method. a description of above and below
delivery of material supplied by The Weighted Guidelines Method normal conditions.
subcontractors; requires application of a DD Form 1547, (1) Technical considerations. This
(v) Termination settlements; “ Record of Weighted Guidelines Method category focuses on the technical risks
(vi) Cost-plus-award-fee contracts; Application” (see 253.303-70-DD-1547). assumed by the contractor in fully
(vii) Contracts not expected to exceed This method is DoD’s structured satisfying the requirements specified by
$500,000; and approach to be used by the contracting the contract. The contracting officer’s
(viii) Although it is intended that the officer for (a) performing the profit evaluation should address the
Weighted Guidelines Method be applied analysis necessary to develop a technology being applied by the
to most contract actions, there may be prenegotiation objective, (b) contractor, program maturity,
unusual situations where this method summarizing profit amounts performance specifications and
m ay not produce a reasonable overall subsequently negotiated as part of the tolerances, and delivery schedule. The
prenegotiation profit objective. An contract price, and (c) serving as the contracting officer may, however,
alternate structured approach may be principal source document for reporting consider other factors which
used by the contracting officer, provided profit statistics through DoD’s substantially bear on the contractor’s
th at approval has been obtained in management information system. The ability to meet the technical aspects of
writing from the head of the contracting Weighted Guidelines Method expressly the contract. The contracting officer is
■ activity. takes [Link] the contractor’s . expected to carefully review the
(S—70) The prime contractor-should be degree of performance risk jn producing contract requirements and focus oil the
encouraged to use the Weighted the goods or services purchased under critical performance elements iri thè
Guidelines Method or a similar the contract action, the contract type statement of work and related
structured approach in developing profit risk assumed by the contractor under specifications. The normative value to
objectives on negotiated subcontracts. varied contract and incentive be assigned in developing a composite
arrangements, the level of working value for technical considerations is 4%.
215.903 Contracting officer capital needed for contract performance, Conditions which might justify higher or
responsibilities. and the nature of facilities capital to be lower values are discussed immediately
(e) The contractor should be employed by the contractor. The below in (a)(1) (i) and (ii).
encouraged to present on a voluntary considerations that must be made by the (1) A bove norm al conditions. The
basis the details of proposed profit contracting officer when developing a contracting officer may assign a value
amounts in the format described in profit objective are described below. up to 5% if the contractor is either
215.970, if application of the Weighted The normative value for each profit developing or applying advanced
Guidelines Method is anticipated. This factor is the value to be assigned by the technologies. Higher technical risk might
would facilitate a more complete contracting officer in the majority of be present on a new weapon system,
discussion of the individual factors contract actions. However, a different particularly if performance or quality
which will determine the overall profit value may be assigned by the specifications are tight. Manufacturing
objective. The contracting officer is not contracting officer, within the specifications that have stringent
expected to attempt to reach agreement designated range of minimum and tolerance limits might also impose an
with the contractor on either the maximum values, if considered above normal condition for technical
individual factors or the total profit appropriate under the conditions considerations. The extent of a warranty
amount. described. or guarantee pledged by the contractor
(S—70) The contracting officer’s price should also be considered. Contractors
215.970-1 Procedures for establishing
negotiation memorandum shall describe profit objectives. who are willing to accept an accelerated
the profit analysis performed, whether it delivery schedule to meet DoD
(a) Performance risk (designated
be accomplished through the Weighted requirements should be considered for
range 3% to 5%; norm al value 4%). This
Guidelines Method or an alternate higher profit under this factor.
factor addresses the contractor’s degree
structured approach. (ii) Below norm al conditions. If the
of performance risk in producing the
(S— 71) The contracting officer is goods and services purchased under the technical considerations reflect a low
responsible for the accuracy and contract. It is to be evaluated by the degree of performance risk, the
timeliness of profit reporting under contracting officer within three broad contracting officer may assign a value of
DoD’s management information system categories of consideration: technical, not-less-than 3%. For example, a
(see 204.673). In general, such reporting management, and cost. The normative relatively simple requirement where
should be accomplished within 30 value for each of these categories is 4%, there is little application of complex
calendar days after the date of contract although the contracting officer may technology would justify a lower profit
award. The contracting officer is also assign a higher or lower value within a assignment. This would generally be the
responsible for the correction of any designated range of 3% to 5%. The case on a relatively mature weapon
errors detected by the system’s auditing overall value to be assigned for system or one where the contractor is
processes. performance risk shall be the arithmetic employing commercial specifications.
215.905 Profit-analysis factors. average of the three categories (each Follow-on effort to existing contracts
has equal weighting). The profit amount should also be an indication of lower
215.905-1 Common factors. for performance risk is computed by technical risk, if design has remained
The Weighted Guidelines Method and multiplying the composite value stable.
alternate structured approaches provide assigned times total contract costs, (2) Management considerations. This
sufficient means for the contracting excluding general and administrative category considers the management
officer to consider the common profit (G&A) expenses, contractor independent effort involved on the part of the
analysis factors. It is not necessary for research and development/bid and contractor to integrate the many
the contracting officer to give proposal (IR&D/B&P) expenses, and resources nècessary to meet contract
consideration to the common factors facilities capital cost of money. Each requirements. Resources include raw
beyond these means. category is discussed below along with materials, labor, technology, and capital.
43204 Federal Register / Voi. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

The contracting officer’s assessment targets, such as foreign currency overall. This percentage would be applied to
should not only embrace a broad exchange rates and inflation rates, may total allowable costs, excluding G&A
perspective of the contractor’s also be considered. The contracting expenses, IR&D/B&P expenses, and facilities
management and internal control officer should examine a reliability of capital cost of money.
systems but also management the contractor’s estimating system. Cost (4) Adjustm ent far low fa cilities
involvement that is expected on the reduction initiatives are those actions capital. It is recognized that there are
individual contract action. The taken by the contractor to reduce some R&D and service contractors that
contracting officer should consider the program costs. Some examples may be have minimum facilities capital but are
degree of cost mix as an indication of the existence of competition advocacy still faced with substantial performance
the types of resources applied and programs, spare pricing reforms, and risk. It is DoD’s intent that its profit
value-added by the contractor. The cost value engineering. The cost control policies recognize the effort involved in
elements should not, themselves, be a assessment should address the creating and sustaining an organization
basis for profit assignment In evaluating contractor’s overall record of meeting of highly skilled technicians that
management efforts, the contracting cost goals. The nonnative value to be perform scientific, analytical, and
officer should use reviews made by the assigned in developing a composite specialized support services. For such
field contract administration office or value for cost considerations is 4%. contractors, the contracting officer may
other pertinent DoD field offices. The Conditions which might justify higher or assign a value for performance risk up to
contracting officer should also give lower values are discussed immediately 7% based on an Qverallassessment. The
consideration to the contractor’s support below in (a)(3) (!) ahd (ii). contractor would still be permitted profit
of federal socioeconomic programs, such (i) A bove norm al conditions. A value for facilities capital employed and
as support to small business concerns up to 5% may be assigned by the facilities capital cost of money. This
and labor surplus areas. The normative contracting officer if cost considerations assignment must be approved by a
value to be assigned in developing a reflect above normal circumstances. management level above the contracting
composite value for management Higher profit should be assigned in officer and is restricted to those
considerations is 4%, Conditions which those instances where contractors contracts that meet all of the criteria
might justify higher or lower values are provide fully documented and reliable specified below.
discussed immediately below in (a)(2) (i) cost estimates. Higher profit should also (i) Contracts which have facilities
and (ii). be assigned if the contractor has an capital employed allocations for
(i) Above norm al conditions: The aggressive cost reduction program that buildings and equipment in an amount
contracting officer may assign a value has demonstrable benefits to the less than 4% of total contract costs
up to 5% if the size or nature of the item individual contract action. The degree of [including G&A expenses and IR&D/
or service being acquired requires a subcontract competition should B&P expenses);
substantial amount of management influence this evaluation. The (ii) Contracts with business segments
involvement. This might be the case on a contracting officer should also consider where it would not be in DoD’s interests
contract action where the value-added higher profit on contracts awarded to a to place substantial emphasis on
by the contractor is both considerable contractor with a proven record of cost facilities capital investment; and
and reasonably difficult Additional control. (in) Contracts involving highly skilled
profit should be assigned for (ii) Below norm al conditions. If little and complex effort, such as state-of-the-
management considerations if the effort has been made to initiate cost art R&D or highly specialized technical
contractor has a proven record of reduction programs, the contracting services to Government-owned
significant active participation to the officer may assign a value of not-less- equipment or facilities. This would not
federal socioeconomic programs. than 3%. A lower profit assignment be expected to include janitorial
(ii) Below normal conditions. If there should be made if the contractor has a services, security services, or
is a low degree of management marginal cost estimating system. A professional service contracts for
involvement, then the contracting officer lower profit assignment would be studies or general services.
may assign a value of not-less-than 3%. appropriate if contractor proposal (b) Contract type risk. This profit
A comparably mature program where submissions are inadequate or late. If factor focuses on the degree of cost
many end item deliveries have been the contractor has a record of cost responsibility accepted by the
previously made might justify a lower overruns or other indications of contractor under varying contract
profit assignment. If minimum value- unreliable cost estimates and lack of structures and incentive arrangements.
added is accomplished by the cost control, the contracting officer The recognition under the Weighted
contractor, a lower profit should be might be justified in a lower profit Guidelines Method gives the highest
assigned. A lower profit would be assignment. value to a firm fixed-price contract and
appropriate if reviews performed by the Example the lowest value to a cost-plus-fixed-fee
field contract administration offices contract. The guidelines below describe
disclose unsatisfactory management and The following example demonstrates the
method for assigning a composite factor for the considerations that should be
internal control systems which relate to performance risk. Suppose Acme applied to each contract type, along with
significant elements of contract Manufacturing is to be awarded a negotiated conditions that would indicate above or
performance (e.g., quality assurance, contract to develop a prototype end item for a below normal risk. The amount of profit
property control, safety, security). major weapon system. Through analysis for contract type risk is computed by
(3) Cost considerations. This category performed by the contracting officer, the multiplying the value assigned by the
focuses on cost aspects beyond those following values were assigned for each contracting officer times total allowable
addressed under contract type risk. The category of consideration: technical = 4.6% costs excluding G&A expenses, IR&D/
principal areas for evaluation are the (advanced technology), management =* 4.3%
(somewhat high degree of management B&P expenses, and facilities capital cost
expected reliability of cost estimates, involvement), and cost = 3.7% (somewhat of money. An adjustment to the profit
cost reduction initiatives, and cost unrealiable cost estimating system). To factor for contract type risk shall be
control. Other factors which bear on the compute a composite value, the sum of these made on all firm fixed-price and fixed-
contractor’s ability to meet the cost factors (12.6%) is divided by 3 to yield 4.2% price incentive contracts as shown in
 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations 43205

215.970-1 (c) to take working capital (i) Above norm al conditions. A value responsibility as influenced by technical
requirements into account. up to 5% may be assigned if an incentive considerations is more than normal.
(1) Firm fixed-price contract provision or combination of incentive (5) Regardless of contract type, the
(designated range 5% to 7%; normal provisions (e.g., cost and performance contracting officer shall consider the
value 6 %). The firm fixed-price contract incentives) places a higher degree of risk
presents the highest degree of contract extent of costs already incurred by the
on the contractor than normal. This
type risk for the contractor. Although contractor under an undefinitized
might include performance incentives on
this contract type is normally applied on contract action. The profit value for the
tasks with relatively difficult levels of
mature product lines with reasonably portion of costs incurred should be 0%
achievement or task critical to contract
predictable cost estimates, many factors because the contractor has minimum
completion. This might also include cost
can affect the degree of risk assumed by incentives where the contractor assumes risk. The remaining portion of effort to
the contractor. These factors include a large percentage of the over-target be performed under a definitive contract
length of contract, economic cost risk (e.g., contractor share is 50% or may receive profit values equating to the
environment, availability of cost history, more). This would also include contract type.
extent of effort subcontracted under consideration of ceilings above which (6) Time and material contracts; labor-
fixed-price arrangements, and protection the contractor accepts full responsibility hour contracts; overhaul contracts
provided by the contracting officer (e.g., 120% or less). Above normal risk priced on a time and material basis; and
under other contract provisions (e.g., should also include consideration of the firm fixed-price-level-of-effort-term
economic price adjustment). The guidance contained for firm fixed-price contracts shall be considered to be cost-
normative value is 6%, but the contracts. plus-fixed-fee contracts for the purpose
contracting officer may assign a higher (ii) Below norm al conditions. A
or lower value if risk is substantially of establishing a profit value for contract
minimum value of not less than 3% may type risk,
more or less than normal, as shown be assigned where cost risk assumed by
immediately below in (b)(l){i) and (ii). the contractor under an incentive (7) In determining contract type risk, it
(1) Above norm al conditions. A value provision or combination of incentive is appropriate to consider additional
up to 7% may be assigned by the provisions is lower than normal. For risks associated with contracts for
contracting officer if there is a example, a lower value might be foreign military sales (FMS) which are
reasonably high degree of cost assigned if the contractor accepts not funded by United States
uncertainty under this contract type. For minimum responsibility for over-target appropriations. For example, a contract
example, higher than normal contract cost risk ([Link] share is then containing an offset arrangement with
type risk might occur if there is minimal 30% or less; ceiling is 125% or more). the foreign country may expose the
cost history on effort to be performed by Below normal risk should also include contractor to additional risk. The
the contractor. Above normal risk might contracting officer may recognize
consideration of the guidance contained
also be present on long-term contracts, additional risk if the contractor can
for firm fixed-price contracts. Fixed-
particularly if there is Considerable demonstrate that there are substantial
price contracts with redeterminable
economic uncertainty and no provision risks above those normally present in
protecting the contractor. provisions should be considered as an
incentive contract with below normal DoD contracts for similar items. If an
(ii) Below norm al conditions. A value additional risk factor is recognized, the
contract type conditions.
of not less than 5% may be assigned by
(3) Cost-plus-incentive-fee contracts total profit factor for cost risk shall not
the contracting officer if the risk is
(designated range 1% to 3%; norm ative exceed the designated range limits
substantially lower than normal. For
example, a very mature product line value 2 %). The profit factor for cost- established for each contract type. The
with a large volume of cost history plus-incentive-fee contracts also additional assigned value for contract
would be expected to have less risk. addresses the contractor’s willingness to type shall not apply to FMS sales made
Contracts with short periods of accept performance and cost incentives. by United States Government
performance should be assigned lower The contracting officer should consider inventories or stocks nor to acquisitions
profit values for contract type risk. In the impact of multiple incentives. The made under DoD cooperative logistics
addition, the contracting officer should normative value for cost-plus-incentive- support arrangements.
give full consideration to protection fee contracts is 2%, but the contracting
officer may adjust this value within the (c) Working capital adjustment factor
afforded the contractor under other (as computed; upward adjustment lim it
contract provisions. designated range using the same
guidance as described immediately 3%.) This adjustment shall be made by
(2) Fixed-price incentive contracts the contracting officer on all fixed-price
(designated range 3% to 5%; normative above in (b)(2)(i) and (ii) for fixed-price
incentive contracts. However, it must be type contracts in order to consider
value 4%). The profit factor for fixed- contractor working capital needs. No
price incentive contracts not only recognized that some factors affect the
contractor’s cost responsibility more on profit adjustment is to be made for
focuses on the degree of contract type working capital requirements on cost
risk, but it also recognizes the fixed-price type contracts than on cost
type contracts. Examples include type contracts. The working capital -
contractor’s willingness to accept
contract length, economic environment, adjustment factor employs a formula
performance and cost incentives. The
normative value is 4%. Adjustments and program maturity. approach that takes into account the
within the designated range would be (4) Cost-plus-fixed-fee contracts amount of contract effort financed by
affected by the same considerations that (designated range 0% to .5%; normative the contractor, interest rate, and length
affect risk on firm fixed-price contracts. value 0%). There is generally no contract of contract. The formula is based on the
However, additional considerations are type risk associated with a cost-plus- same method for computing simple
necessary with respect to the type of fixed-fee contract; therefore, the normal interest (Interest = Principal x Rate x
incentive or combination of incentives, value has been set at 0%. A value up to Time). The working capital adjustment
using the guidance shown immediately .5% may be assigned by the contracting factor is computed as follows (see
below in (b)(2)(i) and (ii). officer if the contractor’s cost reference for detailed description):
432Q6 Federal Register / V ol. 51, N o. 230 / M onday, Decem ber 1, 1980 / Rules and Regulations
. . . -------- - ------------- r ——rmmn— n —iTt7-n^iT"T-iir-r-iinrrii-i-rTiiiir-«ir~Ti r r n in m if n r i - m n 'ornwrnTm ~rrr itrwtirTiifliiH rr- i n — f T iir n i >~ii n

Reference developed for contracts with multiple (e.g., une each in the 34th, 36th, 38th, and 40th
deliveries. In order to translate contract month). In this ca se the contract length factor
C u s ís financed b y co n tracto r.......(1) should be w eighted b y the different delivery
length into the mid point of effort in
M ultiplied b y interest fa cto r........... (2) events. A ssu m in g eq u al d eliveries, the
A n n u a l w orking capital co sts .... .. (3)
terms of years, the number of months
contract length factor should b e 1.54
M ultiplied b y contract le n g th ........ (4) must be divided by 24 (by 2 to get mid­
(w eighted average contract length o f 37
C on tract working ca p ita l c o s ts ..... (5) point of effort and by 12 to convert divided by 24).
Less adjustm ent b a s e lin e ...........__ (6) months to years).
W orking capital a d ju stm e n t............ (7) (5) Contract working ca p ita l costs.
Multiply the annual working capital C o sts fin an ced b y contractor_____ '$400,000
costs (3) by the contract length factor M u ltip lied b y current interest
(1) C o sts fin a n ced b y contractor. This fa ctor (percent)..,......... ...................... 7.5
14).
represents all allowable costs, including (6) Adjustm ent baseline. The A n n ual w orking capital c o s ts ...... $30,000
contractor G&A expenses -and IR&D/ adjustment baseline reflects the Office M u ltiplied by contract length
B&Î* expenses [but not facilities capital of the Secretary of Defense’s policy on factor ( y e a r s ) ___.......... ........... 2 1.54
cost of money), that are financed by the the portion of working capital costs that C on tra ct w orking capital co sts.... $46,200
contractor. The contractor’s share of may be recognized in the prenegotiation L ess adjustm ent b a seline ____.... 3 (50,000)
.financing requirements is generally profit objective. The baseline amount is
computed by multiplying total allowable computed by multiplying [Link] W orking ca p ita l ad ju stm en t......... 4 $(3,800)
costs times the portion not covered by contract [Link] G&A expenses ‘ $2.000,000 nuittiplied by (ICX»*, minus atnf ).
progress payments. The portion not and IR&D/B&P expenses (but not 237 months divided by 24.
3$2,000.000 multiplied by 2.5%.
covered by progress payments will facilities capital cost of money), times ' $:C800 (subtracted from contract type risk - amount
typically be 100% minus the customary 2.5%. This computation shall not be
progress payment rate (see 232.501-1). subject to modification by the Example 3
For example, if the contract provides for contracting officer. Considerations Sup p ose 20% o f A C M E M a n u fa ctu rin g ’s
progress payments at 80%, then thé applied in arriving at costs financed by effort in volves subcontractor d eliveries that
contractor’s share of financing would be the contractor in (1) shall not be applied com m en ce im m ediately prior to A C M E ’s four
20% (10G% minus 80%). At 85% progress in establishing baseline amounts. deliveries to the Governm en t (e.g., contractor-
payments the contractor’s share would (7) Working capital adjustment. The h ad no unreim bursed investm ent). The Costs
be 15% (100% minus 85%). On fixed-price adjustment baseline (6) is subtracted fin an ced by the contractor should be
contracts with either no progress from the contract working capital costs proportionately reduced.
payments, limited progress payments (5). The net result is applied to the
(e.g., first article financing), or flexible contract type risk amount. To the extent C o sts Financed by contractor..... . 1 $320.000
progress payments (252.232-7004), the that the contract working capital costs M u ltiplied b y current interest
contractor’s share shall be computed as exceed the adjustment baseline, the factor (p ercent)...:.......... 7.5
100% minus the customary progress contract type risk amount is increased. A n n u a l w orking ca p ita l c o s ts ....... $24.000
payment rate for large businesses. The Conversely, if the contract working M u ltip lied by contract length
amount of costs financed by the capital costs are less, then the difference factor (y e a r s)...............__ ........... M1.67
contractor may be reduced by other is subtracted from the profit amount for C on tra ct w orking capital co sts.— $40,000
factors, as well. For example^ the contract type risk. The following L ess adjustm ent b aselin e ____ i! (50.000)
contracting officer should reduce costs examples are used to demonstrate the
financed by contractor when there is a method for computing the working W orking ca p ita l adju stm en t......... 4 $(10,000)
minimum cash investment in a capital profit factor. 1$2.000 BUiitiptjsd by (100% minus 80%) reduced by 20%.
subcontract (e.g., 100% reimbursement of 240 months divided by 24.
Exa m p le 1 3 $2.000.000 multiplied‘by 2.5%.
subcontractor progress payments) or 4$10.000 subtracted from contract type risk amount.
when the contract includes provisions Sup p o se A c m e M an u factu rin g is to be
aw ard ed a negotiated contract fo r four {A} F a cilitie s cap ita l em ployed. This
for advance payments.
a ssem blies costing $500,000 each (profit is to
(2) Current interest factor. The profit factor recognizes the facilities
be exclu d ed). T h e period o f p erform ance is 40
interest factor shall be 7.5%. This rate is m onths w ith a ll a ssem blies b eing delivered at
capital to be employed by the contractor
subject to change by the Assistant the end o f the contract. A c m e M anu factu ring in the performance of the contract. The
Secretary of Defense for Acquisition and w ill receive progress paym ents a t 80% and amount of recognition is differentiated
Logistics or designee, as economic the current interest fa ctor is 7.5%. among asset categories in proportion to
conditions warrant. No other interest the potential for productivity. The
rate or factor is authorized. C o sts fin an ced b y contractor........... 1 $400,000 amount of profit is computed by
(3) A n n u al w orking cap ita l costs. M u ltip lied b y current interest multiplying the value assigned by the
Multiply costs financed by contractor (1) factor (p ercent)..........................7.5 contracting officer times the net book
by the interest factor (2). A n n u a l working capital c o s ts ........ $30,000 value of facilities capital employed in
(4) Contract length facto r. This factor M u ltiplied by contract length each asset category, as derived in DD
represents the length of contract, as , facto r (y e a r s).................................... . 2 1.67 Form 1861-2, ’’Contract Facilities
determined by the contracting officer. It C o n tract w orking capital co s ts ___ Capital Cost of Money.” In addition to
$50,000
is not the period of time between L ess adjustm ent b a s e lin e .................. 3 (50,000) the net book value of facilities capital
contract award and close-out. Instead, it employed, the contracting officer may
is the period of actual effort for W orking capital a dju stm en t............. 4 $0
consider facilities capital that is part of
performing the substantive portion of 1$2.000,000 mukhrfied by {100% minus 80%). an approved investment plan: if the
the work required under the contract. It ?! 40 months divided by 24.
3$2,000,000 multiplied by 2.5%. contractor submits reasonable evidence
should not include periods for 4 No adjustment needed to nontract type risk amount. that achievable benefits to the
performance contained in option Government will result from the
provisions. Periods of little or no effort Exa m p le 2 investment and unrecorded investment
should be excluded from contract length. Sup p ose A C M E M a n u fa ctu rin g delivered is included in the forward pricing
A composite length factor should be the four assem b lies over a period o f time structure covering periods when the
 Federal Register / V o l. 51, No. 230 / M onday, Decem ber 1, 1986 / R ules and Regulations 43207

planned facilities will have been product lines. A lower profit assignment still be assigned four digits (e.g., 0004.
acquired and used. might be justified on furniture and 0055. 0123).
(1) The normative values of [profit fixtures, home or group level (2) Item 2 —B asic Procurement
recognition, along with the designated administrative offices, corporate aircraft Instrument Identification No. {FUN),
range of minimum and maximum values, and hangars, gymnasiums, etc. Old This is a four-part designation in the
for each asset category are shown facilities or extensive idle facilities manner prescribed in 204.671~5{b)(l) for
below. should be considered. completing DD Form 350. The parts are
(3) The contracting officer should as follows:
Normative Designated ensure that increase in facilities capital Subitem A — P urchasing O ffice ;
Asset type value range (percent) investments are not merely asset Subitem B — F isca l Y ear (FY);
(percent)
revaluations attributable to mergers, Sub item C — T yp e Procurem ent Instrum ent
stock transfers, take-overs, sales of C o d e (T P IC j; and
Land ~. 0 0 to 0. corporate entities, or similar actions. Subitem D — Procurem ent Instrum ent
Buildings.«.—; 10 5 to 15. (Serial N u m b er (P R ISN ).
Equipment...... 30 25 to 35. 2 1 5 .9 7 0 -2 Instructions fo r co m p le tin g DO
Fo rm 1547.
(3) Item 3—Supplem ental
Procurement Instrument Identification
(2) The contracting officer’s The DD Form 1547 not only assists the No. (SPUN). Enter supplemental
assessment should relate the usefulness contracting officer in establishing profit agreement or other modification number
of the facilities capital to the goods or objectives under the Weighted in the manner prescribed for the DD
services being acquired under the Guidelines Method, it also serves as the Form 350 in 204.671-5(b)(2).
individual contract action, as well as to principal source document for reporting (4) Item 4—Date o f Action %Enter
the broader perspective of defense profit statistics to DoD’s management the date when the price of the contract
programs. The contracting officer should information system. It is essential that action was negotiated (e.g., 87-03 for
compare the direct and identifiable this form be prepared accurately on all March 1987).
benefits of facilities capital employed to contract actions employing the (5) Item 5—Name o f Purchasing
productivity or other industrial base Weighted Guidelines Method. O ffice *. Enter the identifying code of
considerations. The assessment should (a) General guidance. The items contracting office using the same code
consider the economic value of the contained on the DD Form 1547 shall be as reported on the related DD Form 350.
facilities capital, such as physical age, completed as shown below. All amounts (6) Item 8 —Federal Supply C la ss or
undepreciated value, Idleness, and are those related to the price of the Service *. Enter the appropriate Federal
expected contribution to future defense contract action without regard to Supply Class or Service Code in.
needs. The contracting officer should funding status (e.g., amounts obligated). accordance with instructions shown in
consider any special protection Amounts related to options for 204.671-5(b)(8)(ij.
provisions that may be included in the additional quantities shall be handled as (7) Item 7—DoD Claim ant Code *.
contract which reduce the contractor’s a separate contract action when Enter the appropriate code for the DoD
risk of investment recovery (termination exercised. Items marked with an Procurement Coding Manual, Volume 1,
protection clauses, capital investment asterisk (*) do not have to be completed Section III, that describes the
indemnification). Typically, the by field contracting officers that have commodity or services being acquired
normative value should be assigned by been exempted from the profit reporting under the contract.
the contracting officer. However, a requirement (204.673-3), All dollar (8) Item &—Type o f Contract Code.
higher or lower value may be justified as values shall be expressed to nearest Enter the appropriate code as shown on
indicated immediately below In (d)(2) (i) whole value (e g., $200,008.55=$200,009). the DD Form 1547.
and (ii). All factors and percentages shall be (9) Item s 9 thru 15—Cost Category.
(i) Above normal conditions. The expressed to nearest hundredth (e.g., Enter the dollar values for the
contracting officer may assign a higher 1.67 years or 7.50%). In some cases, the contracting officer’s prenegotiation
than normative profit (up to 5 information required will be identical to objectives for each applicable cost
percentage points more) where facilities information provided on the related DD category. The amount for G&A expenses
capital investments are a substantial Form 350, "Individual Contracting in Item 14 shall also include contractor
benefit to defense contracts. For Action Report.” IR&D/B&P expenses.
example, a higher value might be (1) Item 1—Report Number *. For (10) Item 13—Type Effort Code. Enter
justified for new investment in robotic each field contracting office identified in the appropriate code as shown on the
technology which reduces unit costs of Item 5 below that is designated for profit DD From 1547.
production. Investments in new reporting, a control system shall be (11) Item 17—W eighted Guidelines
equipment for research and established for consecutively numbering Use Code *. Enter the appropriate code
development applications might also completed DD Forms 1547. A number as shown on the DD Form 1547.
justify a higher profit assignment. does not have to be assigned until (12) Item s 18 thru 25—W eighted
Investments that are program unique contract negotiations have been Guidelines Profit Factors. Enter whole
and the contractor assumes a higher completed. This number is intended to dollar values and factors and
degree risk of recovery might represent identify the specific DD Form 1547 in percentages to nearest hundredth, as
above normal conditions. DoD’s management information system appropriate.
(ii) Below norm al conditions. and will be used for follow-up actions. (13) Item s 28 thru 29—Negotiation
Conversely, the contracting officer might The contracting office shall assign a Summary. Enter dollar values for
assign a lower profit (up to 5 percentage four-digit number starting with 0001 at contractor proposed, contracting officer
points less) where the capital employed the beginning of each fiscal year. This prenegotiation objective, and negotiated
provides little tangible benefit to four-digit number shall be followed by a amounts.
defense contracts. This might be the dash and the last two digits of the fiscal (14) Item s 30 thru 33—Contracting
case for allocations of capital which are year (e.g., 0004-87 for 4th action in fiscal O fficer Approval. All forms shall be
predominantly applied to commercial year 1987). Numbers less than 1000 shall signed by the contracting officer. Includ >
 43208 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

complete commercial telephone number 215.971- 3 Instructions for completing DD as a Federally Funded Research and
(e.g., area code) so that follow-up Form 1547. Development Center (FFRDC). Such
actions can be accomplished quickly. For all selected field contracting consideration shall include the FFRDC’s
(b) Special guidance. (1) While it is offices identified in 204.673-3, the proportion of retained earnings, as
recognized that fixed-price type contract contracting officer shall report Items 1 established under generally accepted
actions are negotiated on the basis of through 8,16 and 17, and 26 through 33 accounting methods, that is relatable to
total price, the negotiation summary on all contract actions of $500,000 or DoD contracted effort. The need for fee
portion of the DD Form 1547 shall be more. A DD Form 1547 is necessary, may be based on the FFRDC’s facilities
prepared showing the contracting even where an alternate structured capital acquisition plans, working
officer’s best estimates of cost and approach is used because it is the capital funding as assessed on operating
profit. principal source document for DoD’s
cycle cash needs, contingency funding,
(2) Where multiple profit rates apply management information system on
profit. Profit amounts in the negotiation and provision for funding unreimbursed
to a single negotiation, a consolidated costs deemed ordinary and necessary to
DD Form 1547 shall be prepared. summary shall be net of offset for
facilities capital cost of money (215.971- the FFRDC.
(3) The profit analysis for indefinite 2). Only the base fee shall be reported
delivery-type contracts is generally 215.972-2 instructions for completing DD
on cost-plus-award-fee contracts. Form 1547.
based on the annual requirements. The
DD Form 1547 summarizing cost and 215.972 Modified Weighted Guidelines A DD Form 1547 shall be prepared on
profit estimates for the annual Method for nonprofit organizations. all contract actions using the Modified
requirement shall be submitted with the 215.972- 1 Procedures for establishing fee Weighted Guidelines Method if the
first delivery order that exceeds objectives. applicability criteria specified for
$ 100, 000. structured approaches in 215.902 are
It is DoD’s policy to establish the fee
objective on defense contracts with met. The instructions contained in
215.971 Alternate approaches to
Weighted Guidelines Method. nonprofit organizations in a manner that 215.970-2 should be applied. Fee
will stimulate efficient contract amounts included in the negotiation
As provided in 215.902(a)(2), alternate summary shall be net of offsets and
performance. To achieve this, the
structured approaches may be used in need for fee considerations.
contracting officer shall use the
lieu of the Weighted Guidelines Method.
Modified Weighted Guidelines Method
The contracting officer shall adhere to described below. For purposes of
215.973 Cost-plus-award-fee contracts.
the provisions on profit factors and applying this method, a nonprofit The policies and procedures for
offset policy described below. See also organization is a business entity which establishing fee provisions on cost-plus-
guidance on cost-plus-award-fee operates exclusively for charitable, award-fee contracts are contained in
contracts in 215.973. scientific, or educational purposes; 216.404-2. Although these procedures
215.971-1 Recognized profit factors. whose earnings do not benefit any prohibit application of the Weighted
private shareholder or individual; whose Guidelines Method to cost-plus-award-
The basic structure of the Weighted activities do not involve influencing fee contracts, and similarly the general
Guidelines Method establishes a legislation or political campaigning for guidance on alternate structured
uniform approach for examining the any candidate for public office; and is approaches contained in 215.971-1, the
three components of profit: Performance exempted from Federal income taxation offset policy for facilities capital cost of
risk, contract type risk (including under section 501 of the Internal money shall apply. Therefore, the
working capital), and facilities capital Revenue Code. contracting officer shall reduce the base
employed. Alternate approaches should (a) The contracting officer shall use
also consider these factors using the fee on cost-plus-award-fee contracts by
the guidelines described in 215.970 but the lesser of (1) 1% of total costs or (2)
general principles described in 215.970. make the following adjustments to the the amount of facilities capital cost of
215.971-2 Offset policy for facilities
fee objective: money.
capital cost of money. (1) The performance risk fee factor
shall be reduced by 1% of total costs, PART 230—COST ACCOUNTING
The values of the profit factors used in excluding G&A expenses and IR&D/B&P STANDARDS
the Weighted Guidelines Method have expenses.
been adjusted to recognize the shift in (2) The designated range for the 5. Subpart 230.70, consisting of
facilities capital cost of money from an contract type risk fee factor on a cost- sections 230.7001 through 230.7007, is
element of profit to an element of plus-fixed-fee shall be —1% to 0% of revised to read as follows:
contract cost (231.205-10). Reductions total costs, excluding G&A expenses
have been made directly to the profit and IR&D/B&P expenses, for contracts Subpart 230.70—Facilities Capital Employed
factors for performance risk. In order to with nonprofit organizations or elements for Facilities in Use
assure that this policy is applied to all that have been identified by the Sec.
DoD contracts which allow facilities Secretary of Defense or Secretary of a 230.7001 Policy.
capital cost of money, similar Department, or their designees, as 230.7002 Definitions, measurement, and
adjustments shall be made to contracts receiving sustaining support on a cost- allocation.
which use alternate structured plus-fixed-fee basis from a particular 230.7003 Estimating business unit facilities
approaches. Therefore, the contracting Department or Agency of the ' capital and cost of money.
officer shall reduce the overall Department of Defense. 230.7004 Contract facilities capital estimates.
prenegotiation profit objective derived (b) In addition to the fee amounts 230.7005 Preaward facilities capital
from alternate structured approaches by computed in 215.972-l(a) above, the applications.
1 % of total cost or the amount of contracting officer shall consider the 230.7006 Postaward facilities capital
facilities capital cost of money, need for fee on contracts to be awarded applications.
whichever is less. to a nonprofit organization designated 230.7007 Administrative procedures.
 Federal Register / V ol. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations 43209

Subpart 230.70—Facilities Capital 230.7003 Estimating business unit allowable costs foncost settlement and/
Employed for Facilities in Use facilities capital and cost of money. or repricing in accordance with C A S 414
The niethod of estimating the business and FAR 31.205-10,
230.7001 Policy. unit facilities capital and cost of money
(a) It is the policy of the Department utilizes the techniques of C A S 414. Cost 230.7004 Contract facilities capital
of Defense to recognize facilities capital of money factors (CMF) by overhead estimates.
employed as an element in establishing pools at the business unit are developed (a) After the appropriate Forms
the price of certain negotiated defense using Form SASB-CM F. Three elements CASB-CM F have been analyzed and
contracts when such contracts are are required to develop cost of money CM F’s have been developed, the
priced on the basis of cost analysis. The factors: Business unit facilities capital contracting officer is in a position to
inclusion of this recognition is intended data, overhead allocation base data, and estimate the facilities capital cost of
to reward contractor investments, the interest rate promulgated by the money and capital employed for a
motivate increased productivity and Secretary of the Treasury pursuant to contract proposal. Two forms have been
reduced costs through the use of modern Pub. L. 92-41. These elements are provided for linking the Form C A S B -
manufacturing technology, and to discussed below. CMF and DD Form 1547, "Record of
generate other efficiencies in the (a) Business unit fa cilities capital Weighted Guidelines Method
performance of defense contracts. The data. The net book value (acquisition Application”: DD Form 1861-1,
recognition of contractor investments in cost less accumulated depreciation) is “Facilities Capital Cost of Money—
thé development o f the-profit objective usedfor each cost accounting period. Distribution of Asset Types,” and DD
will result in a profit objective based on The net book value used is .the total of: Form 1861-2. This is necessary to
a combination of effort, risk, and (1) The net book value of facilities provide the degree of differentiation
investment factors, recorded on the accounting records of sought in the profit to be established for
fb) Separate recognition shall be given the business unit, varying asset types (land, buildings,
(2) The capitalized value of leases equipment). An evaluated contract cost
to the cost of capital and the special risk
(see FAR 31.2Q5-2 and FAR 31.205-36), breakdown, reduced to the contracting
associated with the facilities capital
and officer’s prenegotiation cost objective,
employed for defense contract purposes. (3) The net book value of facilities at
(1) The risk aspect of facilities capital must be available. The procedure is
the corporate or group level that support similar to applying overhead rates to
employed shall be recognized as a part depreciation charges allocated to the
of profit when the profit objective is appropriate overhead allocation bases
business unit in accordance with the to determine contract overhead costs.
established in accordance with the provisions of C A S 403.
guidelines set forth in 215.970-lfd). Projections of facilities capital will be (b) Both DD Form 1861-1 and DD
(2) Cost of money for facilities capital supported by budget plans and/or Form 1861-2 provide for listing overhead
will be recognized as an allowable cost similar type documentation and the pools and direct-charging service
in those negotiated defense contracts estimated depreciation will be the same centers (if used) in the same structure
priced on the basis of cost analysis [See as used in projected overhead rates. they appear on the contractor’s cost
FAR 31.2G5-10(a)). Projections will accommodate changes proposal and Form CASB-CM F. The
in the level of facilities net book value, structure and allocation base units-of-
230.7002 Definitions, measurement, and measure must be compatible on all three
allocation. e.g., facilities additions, deletions of
facilities by sale, abandonment or other displays. The base for each overhead
Cost Accounting Standard (CAS) No. disposal, idle facilities (see FAR 31.205- pool must be broken down by year to
414, “Cost of Money as an Element of 17). match each separate Form CASB-CM F.
the Cost of Facilities Capital” (see (b) Overhead allocation bases. The Appropriate contract overhead
Appendix O), establishes criteria for the base data used to compute the CMF allocation base data are extracted by
measurement and allocation of the cost must be the same as that used to year from the evaluated cost breakdown
of capital committed to facilities, as an compute the proposed overhead rates, or pre-negotiation cost objective, and
element of contract cost for historical CM F’s should be submitted and are listed against each separate Form
cost determination purposes. Important evaluated as part of the proposal. CASB-CM F. Each allocation base is
features of the C A S are its definitions, (c) Interest rate. For purpose of multiplied by its correspondiiig cost of
techniques for application, and a projection, the most recent interest rate money factor to get the Facilities Capital
prescribed Form CASB-CMF with promulgated by the Secretary of the Cost of Money estimated to be incurred
instructions. This Subpart adopts Treasury will be used as the cost of each year. The sum of these products
techniques of C A S 414 as the approved money rate in Column 1 of Form C A S B - represents the estimated Contract
methods of measurement and allocation CMF and the same rate must be used on Facilities Capital Cost of Money for the
of facilities cost of money to overhead the DD, Form 1861-2, “Contract Facilities year’s effort. Total contract facilities
pools at the business unit level, and Capital Cost of Money” (see 230.7004 cost of money is the sum of the yearly
adds only such supplementary below). Where actual costs are used in amounts.
procedures as are necessary to extend definitization actions, the actual (c) Since the Facilities Capital Cost of
those techniques to contract forward treasury rate(s) applicable to the Money Factors reflect the applicable
pricing and administration purposes. period(s) of the incurred cost will be cost of money rate in Column 1 of Form
Therefore, these procedures are recognized by development of a CASB-CMF, the Contract Facilities
intended to be completely compatible composite rate. Capital Employed can be determined by
with, and an extension of, the (d) Determination a ffin a l cost o f dividing the contract Cost of Money by
definitions, criteria and techniques of money. C M F s estimated in accordance that same rate. Both DD Form 1861-1
CAS 414. Contractors who computerize with the above procedures are used to and DD Form 1861-2 have been
their financial data are encouraged to develop the facilities investment base designed to record and compute all the
meet the requirements of both C A S 414 used in the pre-negotiation profit above in the most direct way possible,
and this Subpart from the same data objectives. Actual CM F’s are required and the end result is the Contract
bank and programs. when it it necessary to determine final Facilities Capital Cost of Money and
 43210 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

Capital Employed which is carried estimated or target cost will not be Money—Distribution of Asset Types
forward to DD Form 1547. adjusted. and 253.303-70-DD-1861-2 DD Form
230.7005 Pre-award facilities capital 230.7007 Administrative procedures. 1861-2: Contract Facilities Capital Cost
applications. of Money.
(a) Contractor submission of Forms
Facilities Capital Cost of Money and CASB-CM F will normally be initiated [FR D o c. 86-27016 Filed 11-28-86; 8:45 am]
Capital Employed as determined above, under the same circumstances as BILUNG CODE 3810-01-M
are applied in establishing cost and Forward Pricing Rate Agreements (See
price objectives as follows: FAR 15.809), and evaluated as
(a) C ost o f m oney .—(1) C ost objective. complementary documents and 48 CFR Parts 232 and 252
This special, imputed cost of money procedures. Separate forms are required
shall be used, together with normal, for each prospective cost accounting
booked costs, in establishing a cost Department of Defense; Federal
period during which Government Acquisition; Regulation Supplement;
objective or the target cost when contract performance is anticipated, If
structuring an incentive type contract. Progress Payments
the contractor does not annually
Target costs thus established at the negotiate FPRA’s, submissions may
outset, shall not be adjusted as actual AGENCY: Department of Defense (DoD).
nevertheless be made annually o r with
eostof money rates become available individual contract pricing proposals, as A C TIO N : Interim rule. ~
for the periods during which contract . agreed to by the contractor and the «*,
performance takes place. cognizant A C O . The cognizant A GO S UM M ARY: This is an interim rule for
(2) Profit objective. Cost of money shall, with the assistance of the lowering the progress payment rate, as
shall not be included as part of the cost cognizant auditor, evaluate the cost of required by section 9105 of the
base when measuring the contractor’s money factors, and retain approved Department of Defense Appropriations
effort in connection with establishing a factors with other negotiated forward Act of 1987 (Pub. L. 99-591).
pre-negotiation profit objective. The cost pricing data and rates.
DATES: This rule is effective on all
base for this purpose shall be restricted (b) The contracting officer using the
tomormalf booked costs. solicitations issued after October 18,
Weighted Guidelines Method under
-(b) F a cilities cap ita l em ployed. The 1986. Comments on the interim rule
215.970 will complete DD Form 1861-1
profit objective as it relates to the risk and DD Form 1861-2 only after should be submitted in writing to the
associated with facilities Capital evaluating the contractor’s Cost proposal address shown below no later than
employed shall be assessed and and establishing negotiation objectives December 31,1986, to be considered in
weighted in accordance with the profit on cost. These forms are, however, a the formulation of the final rule.
guidelines set forth in 215.970-1 (d). prerequisite to completing the DD Form a d d r e s s : Interested parties should

230.7006 Post-award facilities capital 1547. Computer generated forms for submit written comments to: Lieutenant
applications. completing DD Form 1861-1 and DD Colonel Richard J. Wall, USAF,
(a) Interim b illin g s b ased on costs Form 1861-2 are acceptable, provided all ODASD(P)/CPF, Room 3C800, Pentagon,
incurred. Contract Facilities Capital essential data elements are adequately Washington, DC 20301-3062.
Cost of Money may be included in cost identified. The contracting officer may
FOR f u r t h e r i n f o r m a t i o n c o n t a c t :
reimbursement and progress payment also request completion of these forms
in connection with normal field pricing Lieutenant Colonel Richard J. Wall,
invoices. The amount that qualifies as USAF, Chairman, DoD Contract Finance
cost incurred for purposes of the “Cost support under 215.805 by the cognizant
contract administration office. Committee, (202) 695-9764.
Reimbursement, Fee and Payment’’ or
“Progress Payment” clause of the (c) A final Form CA SB-CM F must be SUPPLEMENTARY INFO RM A TIO N :
contract is the result of multiplying the submitted by the contractor under C A S
414 as soon after the end of each cost A. Background
incurred portions of the overhead
allocation bases by the latest available accounting period as possible for the
purpose of final cost determinations Section 9105 of the Department of
Cost of Money Factors. Like applied Defense Appropriations Act of 1987
and/or repricing. The submission should
overhead at forecasted overhead pool required the Department to lower
rates, such computations are interim accompany the contractor’s proposal for
actual overhead costs and rates and be current progress payment rates on: (1)
estimates subject to adjustment. As Contracts which provide for progress
each year’s data are finalized by evaluated as complementary documents
and procedures. payments based on either (2)
computation of the actual Cost of Money modifications to existing contracts for
Factors under C A S 414 and FAR 31.205- PART 253—FORMS additional supplies or services not
10, the new factors should be used to contemplated by the existing contracts.
calculate contract facilities cost of 253.270 [Amended]
This action is effective on all
money for the next accounting period. 6. The list of forms following section solicitations issued after October 18,
(b) F in a l settlem ent. Contract 253.270 is amended by removing 1986.
facilities capital cost of money for final 253.303-70-DD1499 DD Form 1499:
cost determination or repricing is based Report of Individual Contract Profit B. Determination To Issue a Temporary
on each year’s final Cost of Money Plan; by revising 253.303-70-DD-1547, Regulation
Factors determined under C A S 414 and the title for DD Form 1547 to read
supported by separate Forms CASB- "Record of Weighted Guidelines Method A determination has been made under
CMF. Contract cost must be separately Application” in lieu of “Weighted the authority of the Secretary of Defense
computed in a manner similar to yearly Guidelines Profit/Fee Objective”; by that the regulations promulgated by the
final overhead rates. Also like overhead removing 253.303-70-DD-1861: Contract Military Departments must be issued as
costs, the final settlement will include Facilities Capital and Cost of Money; temporary regulations in compliance
an adjustment from interim to final and by adding 253.303-70-DD-l DD with section 22 of the Office of Federal
contract cost of money. However, Form 1861-1: Facilities Capital Cost of Procurement Policy Act, as amended.
 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations 43211

C. Regulatory Flexibility Act 232.102 Description of contract financing changing in the first sentence of
Information methods. paragraph (S-71)(7) the percentage
(e)(2) Progress payments based on a figures to read “27%” and “23%” in lieu
This rule implements legislative percentage or stage of completion will of “ 7%” and “3%” respectively; by
direction contained in the Department of be confined to contracts for changing in the second sentence of
Defense Appropriations Act of 1987. It construction, shipbuilding, and ship paragraph (S—71)(7) the percentage
will impact small business entities, conversion, alteration, or repair. Agency figures to read “25%” in lieu of “5%” ; and
because progress payment rates will be procedures must ensure that payments by changing in paragraph (S—71)(9) the
lowered. A Regulatory Flexibility are commensurate with work clause designation “FAR 52.232-16’’ to
Analysis has been prepared and is accomplished, which meets the quality read “252.232-7007”.
available from the Chief Counsel for standards established under the . 7. Section 232.502-4 is amended by
Advocacy, Small Business contract. Furthermore, progress adding paragraphs (S-72) through (S— 74)
Administration, Washington, DC. For payments may not exceed 80 percent of to read as follows:
those contracts falling below the the eligible costs of work accomplished
weighted guidelines threshold, it is on undefinitized contract actions. 232.502-4 Contract clauses.
anticipated that the increase in 4. Section 232.111 is amended by
* Hr

financing costs would not be significant. adding paragraphs (S—71) and (S—72) to (S—72) The contracting officer shall
However, for those contracts that will read as follows: insert the clause at 252.232-7007,
be subject to the Weighted Guidelines Progress Payments, in lieu of FAR clause
Method, the impact of this rate 232.111 Contract clauses. 52.232.16 and its Alternates I and II, in
reduction will be offset as a result of (a) * * * solicitations and fixed-price contracts
application of the new profit policy (S—71) The contracting officer shall under which the Government will
which is being concurrently insert the clause at 252.232-7005, provide progress payments based on
implemented. Under the new profit Payments Under Fixed Price costs.
policy, the contracting officer will be Construction Contracts, in lieu of FAR (S—73) If the contract is with a small
able to consider progress payment levels clause 52.232-5, in solicitations and business concern, the Contracting officer
in the determination of the contracts for construction when a fixed- shall use the clause at 252.232-7007,
prenegotiation profit objective. price contract is contemplated. Progress Payments, with its Alternate I.
D. Paperwork Reduction Act (S— 72) The contracting officer shall (S-74) If the contract is a letter
Information insert the clause at 252.232-7006, contract, the contracting officer shall use
Payments Under Fixed-Price Architect- the clause with its Alternate II.
This rule changes rates of progress Engineer Contracts, in lieu of FAR
payments only and not existing clause 52.232-10, appropriately modified PART 252—SOLICITATION
procedures; therefore, additional with respect to payment due dates, in PROVISIONS AND CONTRACT
paperwork burden is not involved. fixed-price architect-engineer contracts. CLAUSES
5. Section 232.501-1 is revised to read
List of Subjects in 48 CFR Parts 232 and 252.232- 7004 [Amended]
as follows:
252 8. Section 252.232-7004 is amended by
232.501- 1 Use of customary progress changing the date of the clause of read
Government procurement. payments.
Charles W. Lloyd, “O CT 1986” in lieu of “APR 1984” ; by
(a) The customary progress payment changing in the third sentence of the
Executive Secretary, Defense Acquisition rate applicable to DoD contracts
Regulatory Council. clause the percentage rate to read
awarded to large businesses is 75 “ twenty-five percent (25%)” in lieu of
Therefore, 48 CFR Parts 232 and 252 percent and 80 percent for small . "five percent (5%)” ; and by changing in
are amended as follows: businesses. The customary progress the fourth sentence of the clause the
1. The authority citation for 48 CFR payment rate applicable to Foreign percentage rates to read “ twenty-seven
Parts 232 and 252 continues to read as Military Sales requirements is the same percent (27%)” and “ twenty-three
follows: as that applicable to DoD requirements. percent (23%)” in lieu of “ seven percent
Authority: 5 U.S.C. 301,10 U.S.C. 2202, The customary progress payment rate (7%)” and “five percent (5%)”
DoD Directive 5000.35, and DoD FAR for flexible progress payments is the respectively.
Supplement 201.301. rate determined by use of either the 9. Sections 252.232-7005 through
C A SH II, C A SH III, or CA SH IV 252.232- 7007 are added to read as
PART 232—CONTRACT FINANCING computer program as applicable in > follows:
accordance with the requirements of
2. Section 232.070 is added to read as 232.502- 1 (S-71). 252.232- 7005 Payments under fixed-price
follows: construction contracts.
232.502 [Amended] As prescribed in 232.111(S-71), insert
232.070 Definition. 6. Section 232.502-1 is amended by the following clause:
“Contract action” , as used in this part, removing in the third sentence of
means an action resulting in a contract, paragraph (S—71)(1) the words “ (i.e., 90% Payments Under Fixed-Price Construction
as defined in FAR Subpart 2.1, including or 95%)” ; by changing in the third and Contracts (APR 1986) (Dev.)
contract modifications that are within fourth sentences of paragraph (S—71)(2) (a) The Government shall pay the
the scope and under the terms of the the percentage figures to read “25%” in Contractor the contract price as provided in
contract, such as contract modifications lieu of “5%”; by changing the first word this contract.
(b) The Government shall make progress
issued pursuant to the Changes clause, of the fifth sentence of paragraph (S- payments monthly as the work proceeds, or
or funding and other administrative 71)(2) to read “The” in lieu of the word at more frequent intervals as determined by
changes. “This”; by changing in the first sentence the Contracting Officer, on estimates of work
3. Section 232.102 is added to read as of paragraph (S—71)(4) the designation accomplished which meets standards of
follows: “ CA SH II” to read “ CA SH IV ” ; by quality established under the contract, as
 approved by the Contracting Officer. If release may also be required of the assignee
requested by the Contracting Officer, the specifically excepted by the Contractor from
if the Contractor’s claim to amounts payable the Operation of the release in amounts stated
Contractor shall furnish a breakdown of the under this contract has been assigned under
total contract price showing the amount in the release.
the Assignment of Claims Act of 1940 (31 (e) Notwithstanding any other provision In
included therein for each principal category U.S.C. 203 and 4l U.S.C. 15).
of work, in such detail as requested, to this contract, and specifically paragraph (b)
(g) Notwithstanding any other provision of of this clause, progress payments shall not
provide a basis for determining progress this contract, progress payments shall not
payments. In the preparation of estimates, the exceed eighty percent (80%) on work exceed eighty percent (80%) on work
Contracting Officer may authorize material accomplished oh iindefinjtized contract
accomplished on undefinitized contract actions. A “contract action” is any action
delivered on the site and preparatory work actions. A “contract action” is any action
done to be taken into consideration. Material resulting in a contract, as defined in FAR
resulting in a contracting, as defined in FAR Subpart 2 .1 , including contract modifications
delivered to the Contractor at locations other Subpart 2.1, including contract modifications
than the site may also be taken into for additional supplies or services, but not
for additional supplies or services, but not including contract modifications that are
consideration if— including contract modifications that are
(1) Consideration is specifically authorized within the scope and under the terms of the within the scope and under the terms of the
by this contract; and contract such as contract modifications contract, such as contract modifications
(2) The Contractor furnishes satisfactory issued pursuant to the Changes clause, or issued pursuant to the Changes clause, or
evidence that it has acquired title to such funding and other administrative changes. funding and other administrative changes.
material and that the material will be used to (End of clause)
perform this contract. (End of clause)
(c) In making these progress payments, the § 252.232-7006 Payments under fixed- 252.232-7007 Progress payments. :
Contracting Officer may retain a maximum of price architect-engineer contracts. (a) As prescribed in 232.502-4(S-72),
ten percent (10%) of the approved estimated
amount until final completion and acceptance As prescribed in 232.111 (S-72), insert insert the following clause in
of the contractwork. If the Contracting the following clause: solicitations and fixed-price contracts
Officer finds that satisfactory progress was under which the Government will
Payments Under Fixed-Price Architect-
achieved during any period for which a Engineer Contracts (APR 1986) (Dev.) provide progress payments based on
progress payment is to be made, the costs. A different customary rate for
Contracting Officer may authorize payment (a) Estimates shall be made monthly of the other than small business concerns may
to be made in full without retention of a amount and value of the work accomplished
and services performed by the Contractor be substituted in accordance with
percentage. However, by the time the work is 232.502-4(S-73) for the progress
substantially complete, the Contracting under this contract which meet standards of
Officer shall have retained an amount that quality established under this contract. The payment and liquidation rate indicated.
the Contracting Officer considers adequate estimates shall be prepared by the Contractor (b) If an unusual progress payment
protection of the Government and may then and accompanied by any supporting data rate is approved for the prime contractor
release to the Contractor all or a portion of required by the Contracting Officer. (see FAR 32.501-2), the rate approved
any excess amount. Also, on completion and (b) Upon approval of the estimate by the shall be substituted for the customary
acceptance of each separate building, public Contracting Officer, payment upon properly
executed vouchers shall be made to the rate in the paragraph (a)(1).
work, or other division of the contract, for (c) If the liquidation rate is changed
which the price is stated separately in the Contractor, as soon as practicable, of ninety
contract, payment may be made for the percent (90%) of the approved amount, less from the customary progress payment
completed work without retention of a all previous payments; Provided, that rate (see FAR 32.503-8 and FAR 32.503-
percentage. payment may be made in full during any 9), the new rate shall be substituted for
(d) All material and work covered by months in which the Contracting Officer the rate in paragraphs (a)(4), (a)(5), and
progress payments made shall, at the time of determines that performance has been (b).
payment, become the sole property of the satisfactory. Also, whenever the Contracting
Officer determines that the work is (d) If advance and progress payments
Government, but this shall not be construed substantially complete and that the amount are authorized in the same contract, the
as—
(1) Relieving the Contractor from the sole retained is in excess of the amount adequate words "less any unliquidated advance
responsibility for all material and work upon for the protection of the Government, the payments” may be deleted from
which payments have been made or the Contracting Officer may release the excess paragraph (a)(4) of this clause.
amount to the Contractor.
restoration of any damaged work; or (c) Upon satisfactory completion by the (e) If an unusual progress payment
(2) Waiving the right of the Government to Contractor and acceptance by the rate is approved for a subcontract (see
require the fulfillment of all of the terms of Contracting Officer of the work done by the FAR 32.504(b) and FAR 32.501-2),
the contract. Contractor under the “Statement of paragraph (j)(4) shall be modified to
(e) In making these progress payments, the Architect-Engineer Services” the Contractor specify the new rate, the name of the
Government shall, upon request, reimburse will be paid the unpaid balance of any money subcontractor, and that the new rate
the Contractor for the amount of premiums due for work under the statement, including
paid for performance and payment bonds shall be sued for that subcontractor in
retained percentages relating to this portion lieu of the customary rate.
(including coinsurance and reinsurance of the work. If the Government exercises the
agreements, when applicable) after the option under the Option for Supervision and Progress Payments (OCT 1986)
Contractor has furnished evidence of full Inspection Services clause, progress
payment to the surety. The retainage Progress payments shall be made to the
payments as provided in (a) and (b) above Contractor when requested as work
provisions in paragraph (c) above shall not will be made for this portion of the contract
apply to that portion of progress payments progresses, but not more frequently than
work. Upon satisfactory completion and final monthly in amounts approved by the
attributable to bond premiums. acceptance of the construction work, the
(f) The Government shall pay the amount Contracting Officer, under the following
Contractor shall be paid any unpaid balance conditions:
due the Contractor under this contract after— of money due under this contract.
(1) Completion and acceptance of all work; (a) Computation o f amounts. (1) Unless the
(d) Before final payment under the contractor requests a smaller amount, each
(2) Presentation of a properly executed contract, or before settlement upon
voucher; and progress payment shall be computed as: (i)
termination of the contract, and as a Seventy-five percent (75 percent) of the
(3) Presentation of release of all claims condition precedent thereto, the Contractor
against the Government arising by virtue of Contractor s cumulative total costs Under this
shall execute and deliver to thé Contracting contract, as shown by records maintained by
this contract, other than claims, in stated Officer a release of all claims against the
amounts, that the Contractor has specifically the Contractor for the purpose of obtaining
Government arising under or by virtue of this payment under Government contracts, plus
excepted from the operation of the release. A contract; other than any claims that are (ii) progress payments to subcontractors (see
 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules^and^JRegulations^^^^43213

paragraph (j) below), all less the sum of all (B) Work under cost-reimbursement or upon the date of this contract, for property
previous progress payments made by the time-and-material subcontracts to which the acquired or produced before that date.
Government under this contract. Cost of Contractor has acquired title. Otherwise, investiture shall occur when the
money that would be allowable under 31,205- (4) The amount of unliquidated progress property is or should have been allocable or
10 of the Federal Acquisition Regulation shall payments may exceed neither: (i) The properly chargeable to this contract.
be deemed an incurred cost for progress progress payments made against incomplete (2) “Property," as used in this clause,
payment purposes. work (including allowable unliquidated includes all of the below-described items
(2) The following conditions apply to the progress payments to subcontractors) nor (ii) acquired or produced by the Contractor that
timing of including costs In progress payment the value, for progress payment purposes, of are or should be allocable or properly
requests: the incomplete work. Incomplete work shall chargeable to this contract under sound and
(i) The costs of supplies and services be considered to be the supplies and services generally accepted accounting principles and
purchased by the Contractor directly for this required by this contract, for which delivery practices.
contract may be included only after payment and invoicing by the Contractor and (i) Parts, materials, inventories, and work
by cash, check, or other form of actual acceptance by the Government are in process:
incomplete. (ii) Special tooling and special test
payment. (5) The total amount of progress payments
(ii) Costs for the following may be included equipment to which the Government is to
shall not exceed seventy-five percent (75 acquire title under any other clause of this
when incurred, even if before payment, when, percent) of the total contract price.
the Contractor is not delinquent in payment contract:
(6) If a progress payment or the (iii) Nondurable (i.e., noncapital) tools, jigs,
of the costs of contract performance in the unliquidated progress payments exceed the
ordinary course of business: dies, fixtures, molds, patterns, taps, gauges,
amounts permitted by paragraphs (a)(4) or (5) test equipment, and other similar
(A) Materials issued from the Contractor’s above, the Contractor shall repay the amount
stores inventory and placed in the production manufacturing aids, title to which would not
of such excess to the Government on be obtained as special tooling under
process for use on this contract. demand.
(Bj Direct labor, direct travel, and other paragraph (d)(2)(ii) above: and
(b) Liquidation. Except as provided in the (iv) Drawing and technical data, to the
direct in-house costs. Termination for Convenience of the
(C) Properly allocable and allowable extent the Contractor or subcontractors are
Government clause, all progress payments required to deliver them to the Government
indirect costs. shall be liquidated by deducting from any
(iii) Accrued costs of Contractor by other clauses of this contract.
payment under this contract, other than (3) Although title to property is in the
contributions under employee pension, profit advance or progress payments, the
sharirig, and stock ownership plans shall be Government under this clause, other
unliquidated progress payments, or seventy- applicable clauses of this contract, e.g., the
excluded until actually paid unless— five percent (75%) of the amount invoiced,
(A) The Contractor’s practice is to termination or special tooling clauses, shall
whichevër is less. The Contractor shall repay determine the handling and disposition of the
contribute to the plans quarterly or more to the Government any amounts required by
frequently: and property.
a retroactive price reduction, after computing (4) The Contractor may sell any scrap
(B) The contribution does not remain liquidations and payments on past invoices
unpaid thirty (30) days after the end of the resulting from production under this contract
at the reduced prices and adjusting the without requesting the Contracting Officer’s
applicable quarter or shorter payment period unliquidated progress payments accordingly.
(any contributions remaining unpaid shall be approval, but the proceeds shall be credited
The Government reserves the right to against the costs of performance.
excluded from the Contractor's total costs for unilaterally change from the ordinary
progress payments until paid). (5) To acquire for its own use or dispose of
liquidation rate to an alternate rate when property to which title is vested in the
(iv) If the contract is subject to the special deemed appropriate for proper contract
transition method authorized in Cost Government under this clause, the Contractor
financing. must obtain the Contracting Officer’s
Accounting Standard (CAS) 410, Allocation (c) Reduction or suspension. The
of Business Unit General and Administrative Contracting Officer may reduce or suspend advance approval of the action and the
Expense to Final Cost Objective, General and terms. The Contractor shall: (i) Exclude the
progress payments, increase the rate of allocable costs of the property from the costs
Administrative expenses (G&A) shall not be liquidation, or take a combination of these
included in progress payment requests until actions, after finding on substantial evidence of contract performance, and (ii) repay to the
the suspense account prescribed in CAS 410 any qf the following conditions: Government any amount of liquidated
is less than—I (1) The Contractor failed to comply with progress payments allocable to the property.
(A) Five million dollars ($5 million): or any thaterial requirement of this contract Repayment may be by cash or credit
(B) The value of the work-in-process (which includes paragraphs (f) and (g) memorandum.
inventories under contracts entered into after below). (6) When the Contractor completes all of
the suspense account was established (only a (2) Performance of this contract is the obligations under this contract, including
pro rata share of the G&A allocable to the endangered by the Contractor’s: (i) Failure to liquidation of all progress payments, title
excess of the inventory over the suspense make progress or (ii) unsatisfactory financial shall vest in the Contractor for all property
; account value is includable in progress condition. (or the proceeds thereof) not—
payment requests under this contract). (3) Inventory allocated to this contract (i) Delivered to, and accepted by, the
(3) The Contractor shall not include the substantially exceeds reasonable Government under this contract: or
following in total costs for progress payment requirements. (ii) Incorporated in supplies delivered to,
purposes in paragraph (a)(l)(i) above: (4) The Contractor is delinquent in payment and accepted by, the Government under this
(i) Costs that are not reasonable, allocable of the costs of performing this contract in the contract and to which title is vested in the
to this contract, and consistent with sound ordinary course of business. Government under this clause.
and generally accepted accounting principles (5) The unliquidated progress payments (7) The terms of this contract concerning
exceed the fair value of the work liability for Government-furnished property
and practices- ; shall not apply to property to which the
(ii) Costs incurred by subcontractors or accomplished on the undelivered portion of
this contract. Government acquired title solely under this
suppliers. .
(iii) Costs ordinarily capitalized and (6) The Contractor is realizing less profit clause.
subject to depreciation or amortization than that reflected in the establishment of (e) Risk o f Loss. Before delivery to and
except for the properly depreciated or any alternate liquidation rate in paragraph acceptance by the, Government, the
amortized portion of such costs. (b) above, and that rate is less than the Contractor shall bear the risk of loss for
(iv) Payments made or amounts payable to progress payment rate stated in property, the title to which vests in the
subcontractors or suppliers, except for— subparagraph (a)(1) above- Government under this clause, except to the
(A) Completed work, including partial (d) Title. (1) Title to the property described extent the Government expressly assumes
deliveries, to which the Contractor has in this paragraph (d) shall vest in the the risk. The Contractor shall repay the
acquired title: and Government. Investiture shall be immediately Government an amount equal to the
 43214 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

unliquidated progress payments that are (iii) Are not more favorable to the as described in paragraph (b), progress
based on costs allocable to property that is subcontractor or division than the terms of payments for undefinitized contract actions
damaged, lost, stolen, or destroyed. this clause are to the Contractor: shall be liquidated at eighty percent (80%) of
(f) Control o f Costs and Property. The (iv) Are in conformance with the the amount invoiced for work performed
Contractor shall maintain an accounting requirements of section 32.504(e) of the under the indefinitized contract action as
system and controls adequate for the Federal Acquisition Regulation: and long as the contract action remains
property administration of this clause. (v) Subordinate all subcontractor rights undefinitized. The amount of unliquidated
(g') Reports and Access to Records. The concerning property to which the progress payments for undefinitized contract
Contractor shall promptly furnish reports, Government has title under the subcontract actions shall not exceed eighty percent (80%)
certificates, financial statements, and other to the Government’s right to require delivery of the maximum liability of the Government
pertinent information reasonably requested of the property to the Government if (A) the under the undefinitized contract action or
by the Contracting Officer for the Contractor defaults or (B) the subcontractor such lower limit specified elsewhere in the
administration of this clause. Also, the becomes bankrupt or insolvent. contract. Separate limits may be specified by
Contractor shall give the Government (4) The progress payment rate in the separate actions.
reasonable opportunity to examine and verify subcontract is the customary rate used by the
the Contractor’s books, records, and Contracting Agency, depending on whether (End of clause)
accounts. the subcontractor is or is not a small business Alternate I (O CT 1986).
(h) Special Terms Regarding Default If this concern.
contract is terminated under the Default (5) The parties agree concerning any If the contract is with a small business
clause: (i) The Contractor shall, on demand, proceeds received by the Government for concern* change each mention of the progress
repay to the Government the amount of property to which title has vested in the payment and liquidation rates excepting
unliquidated progress payments and (ii) title Government under the subcontract terms, paragraph (k) to the customary rate of eighty
shall vest in the Contractor, on full that the proceeds shall be applied to reducing percent (80%) for small business concerns,
liquidation of progress payments, for all any unliquidated progress payments by the delete paragraphs (a)(1) and (a)(2) from the
property for which the Government elects not Government to the Contractor under this basic clause, and substitute the following
to require delivery under the Default clause. contract. paragraphs (a)(1) and (a)2);
The Government shall be liable for no (6) If no unliquidated progress payments to (a) Computation o f amounts. (1) Unless the
payment except as provided by the Default the Contractor remain, but there are Contractor requests a smaller amount, each
clause. unliquidated progress payments that the progress payment shall be computed as; (i)
(i) Reservations o f rights. {1) No payment Contractor has made to any subcontractor, Eighty percent (80%) of the Contractor’s total
or vesting of title under this clause shall: (i) the Contractor shall be subrogated to all the costs incurred under this contract whether or
Excuse the Contractor from perfonnance of rights the Government obtained through the not actually paid, plus (ii) progress payments
obligations under this contract or (ii) terms required by this clause to be any to subcontractors (see paragraph (j) below),
constitute a waiver of any of the rights to subcontract, as if all such rights had been all less the sum of previous progress
remedies of the parties under the contract. assigned and transferred to the Contractor. payments made by the Government under
(2) The Government’s rights and remedies (7) The Contractor shall pay the this contract Cost of money that would be
under this clause: (i) Shall not be exclusive subcontractor’s progress payment request allowable under 31.205-10 of the Federal
but rather shall be in addition to any other under subparagraph (j)(l)(ii) above, within a Acquisition Regulation shall be deemed an
rights and remedies provided by law or this reasonable time after receiving the incurred cost for progress payment purposes.
contract and fii) shall not be affected by Government progress payment covering those (2) Accrued costs of Contractor
amounts. contributions under employee pension plans
delayed, partial, or omitted exercise of any (8) To facilitate small business
right, remedy, power, or privilege, nor shall shall be excluded until actually paid unless—
such exercise or any single exercise preclude participation in subcontracting under this (i) The Contractor’s practice is to make
or impair any further exercise under this contract, the Contractor agrees to provide contributions to the retirement fund quarterly
clause or the exercise of any other right, progress payments to small business or more frequently; and
power, or privilege of the Government. concerns, in conformity with the standards (ii) The contribution does not remain
for customary progress payments stated in unpaid thirty (30) days after the end of of the
(j) Progress Payments to subcontractors. Subpart 32.5 of the Federal Acquisition
The amounts mentioned in (a)(l)(ii) above applicable quarter or shorter payment period
Regulation. The Contractor further agrees (any contribution remaining unpaid shall be
shall be all progress payments to that the need for such progress payments
subcontractors or divisions, if the following excluded from the Contractor’s total costs for
shall not be considered as a handicap or progress payments until paid).
conditions are met: adverse factor in the award of subcontracts.
(1) The amounts included are limited to: (i) (k) Limitations on undefinitized contract Alternate H (O CT 1986)
The unliquidated remainder of progress actions. Notwithstanding any other progress If the contract is a letter contract, add
payments made plus (ii) for small business payment provision in this contract, progress paragraphs (1) and (m) shown below. The
concerns any unpaid subcontractor requests payments may not exceed eighty percent amount specified in paragraph (m) shall not
for progress payments that the Contractor (80%) of costs incurred on work accomplished exceed eighty percent (80%) applied to the
has approved for current payment in the under undefinitized contract actions. A maximum liability of the Government under
ordinary course of business. “contract action” is any action resulting in a the letter contract. Separate limits may be
(2) The subcontract or interdivisional order contract, as defined in FAR Subpart 2.1 specified for separate parts of the work.
is expected to involve a minimum of including contract modifications for (1) Progress payments made under this
approximately six (6) months between the additional supplies or services, but not letter contract shall, unless previously
beginning of work and the first delivery, or, if including contract modifications that are liquidated under paragraph (b), be liquidated
the subcontractor is a small business within the scope and under the terms of the under the following procedures:
concern, four (4) months. contract, such as contract modifications (1) If this letter contract is superseded by a
(3) The terms of the subcontract or issued pursuant to the Changes clause, or definitive contract, unliquidated progress
interdivisional order concerning progress funding other administrative changes. This payments made under this letter contract
payments— limitation shall apply to the costs incurred, as shall be liquidated by deducting the amount
(i) Are substantially similar to the terms of computed in accordance with paragraph (a), from the first progress or other payments
the clause at 252.232-7007, Progress and shall remain in effect until the contract made under the definitive contract.
Payments, for any subcontractor that is a action is definitized. Costs incurred which (2) If this letter contract is not superseded
large business concern, or that clause with its are subject to this limitation shall be by a definitive contract calling for the
Alternate I for any subcontractor that is a segregated on contractor progress payment furnishing of all or part of the articles or
small business concern: requests and invoices from those costs services covered under the letter contract,
(ii) Are at least as favorable to the eligible for higher progress payment rates. unliquidated progress payments made under
Government as the terms of this clause; For purpose of progress payment liquidation, the letter contract shall be liquidated by
 Federal Register / V o l. 51, N o. 230 / M on d ay, Decem ber 1, 1986 / Rules and Regulations 43215

deduction from the amount payable under the

Termination clause.
(3) If this letter contract is partly
terminated and partly superseded by a
contract, the Government shall allocate the
unliquidated progress payments to the
terminated and unterminated portions as the
Government deems equitable, and shall
liquidate each portion under the relevant
procedure in subparagraphs (1) and (2)
above.
(4) If the method of liquidating progress
payments provided above does not result in
full liquidation, the Contractor shall
immediately pay the unliquidated balance to
the Government on demand.
(m) The amount of unliquidated progress
payments shall not exceed —----- (specify
dollar amount).
(FR Doc. 86-27017 Filed 11-28-86; 8:45 am]
billing c o d e 381 o- o i - m
 43216

Proposed Rules Federal Register

Yol. 51, No. 230
Monday, December 1, 1986

This section of the FEDERAL REGISTER may be obtained from Messerschmitt

contains notices to the public of the
envelope where the aircraft has
Bolkow-Blohm, GmbH, Abt, Drehflugler, exhibited static longitudinal instability.
proposed issuance of rules and Postfach 801140, D-8000 München 80,
regulations. The purpose of these notices After issuing Amendment 39-4989, the
is to give interested persons an Federal Republic of Germany. FA A has determined that the
opportunity to participate in the rule A copy of the applicable service manufacturer has developed a SPAS
making prior to the adoption of the final information is contained in the Rules which eliminates the unstable static
rules. Docket, Office of the Regional counsel, longitudinal control motion. Installation
FAA, Southwest Region, 4400 Blue
of the SPAS would allow removal of the
Mound Road, Fort Worth, Texas 76106.
DEPARTMENT OF TRANSPORTATION airspeed restrictions imposed by the
FOR FURTHER IN FO RM A TIO N CONTACT: original AD.
Federal Aviation Administration Larry F. Plaster, Aerospace Engineer,
Rotorcraft Standards Staff, ASW-110, This proposed amendment provides
14 CFR Part 39 Aircraft Certification Division, an optional means of compliance and
Southwest Region, FAA, P.O. Box 1689, imposes no additional burden.
[Docket No. 85-ASW-l 1 Fort Worth, Texas 76101, telephone (817) Therefore, I certify that this action (1) is
624-5119. not a “major rule” under Executive
Airworthiness Directives; SUPPLEMENTARY INFO RM A TIO N :
Order 12291; (2) is not a "significant
Messerschmitt-Bolkow-Blohm (MBB), Interested persons are invited to rule” under DOT Regulatory Policies
GmbH, Model BK 117A-1 Helicopters participate in the making of the and Procedures (44 FR 11034; February
proposed rule by submitting such 26,1979); and (3) if promulgated, will not
agency: Federal Aviation
written data, views, or arguments as have a significant economic impact on a
Administration (FAA), DOT.
they may desire. Communications substantial number of small entities
A C TIO N : Notice of proposed rulemaking
should identify the regulatory docket under the criteria of the Regulatory
(MPRM). Flexibility Act.
number and be submitted in duplicate to
summary: This notice proposes to the address specifed above. All
communications received on or before List of Subjects in 14 CFR Part 39
amend an existing airworthiness
directive (AD) which requires the closing date for comments will be Air transportation, Aircraft, Aviation
installation of a revised V NE (never- considered by the Director before taking safety, Safety.
exceed speed) placard reducing V NE for action on the proposed rule. The
proposal contained in this notice may be The Proposed Amendment
certain portions of the approved altitude
and temperature flight envelope where changed in light of comments. Accordingly, pursuant to the authority
the MBB BK 117A-1 helicopter has Comments are specifically invited on delegated to me, the Federal Aviation
exhibited unstable static longitudinal the overall regulatory, economic, Administration proposes to amend
control characteristics. The proposed environmental, and energy aspects of § 39.13 of Part 39 of the FAR as follows:
amendment is needed to permit removal the proposed rule. All comments
of the V NE restrictions when the submitted will be available, both before PART 39—[AMENDED]
manufacturer’s stick position and after the closing date for comments,
in the Rules Docket, Office of the 1. The authority citation for Part 39
augmentation system (SPAS) is installed continues to read as follows:
in affected aircraft. The SPAS eliminates Regional Counsel, 4400 Blue Mound
the static longitudinal control position Road, Fort Worth, Texas, for Authority: 49 U.S.C. 1354(a), 1421, and 1423;
instability. examination by interested persons. A 49 U.S.C. 106(g) (Revised, Pub. L 97-449,
report summarizing each FAA-public January 12,1983); and 14 CFR 11.89.
d a t e s : Comments must be received on
or before January 2,1987. contact, concerned with the substance
§ 3 9 .1 3 [A m e n d e d ]
of the proposed AD, will be filed in the
ADDRESSES: Comments on the proposal Rules Docket. 2. By amending Amendment 39-4989,
may be mailed in duplicate to: Office of Commentera wishing the FA A to Ad 85-02-04, by adding the following
the Regional Counsel FAA, Southwest acknowledge receipt of their comments
Region, P.O. Box 1689, Fort Worth, new paragraph:
submitted in response to this notice * * * * *
Texas 76101, or delivered in duplicate must submit a self-addressed, stamped
to: Office of the Regional Counsel, FAA, postcard on which the following (d) The requirements of this AD do
Southwest Region, Room 158, Building statement is made: “ Comments to not apply when the MBB stick position
3B, 4400 Blue Mound Road, Fort Worth, Docket No. 8 5 -A SW -l.” The postcard augmentation system (SPAS) is installed
Texas 76106. Comments delivered must will be date/time stamped and returned in accordance with MBB Helicopter
be marked: Docket No. 8 5-A SW -l. to the commenter. Service Bulletin No. BK 117-40-7.
Comments may be inspected in Room This notice proposes to amend
158, Building 3B, Office of the Regional Issued in Fort Worth, Texas, on November
Amendment 39-4989 (50 FR 4198), Ad 17,1986.
Counsel, Southwest Region, between 8 85-02-04, which currently requires
a.m. and 4:30 p.m., weekdays, except Don P. Watson,
installation of a revised Vm placard to
Federal holidays. reduce V nb in those portions of the MBB Acting Director, Southwest Region.
The applicable service information Model BK 117A-1 helicopter flight [FR Doc. 86-26851 Filed 11-28-86; 8:45 am]
BILLING CODE 49K M 3-M
 Federal Register / V o l. 51, N o. 230 / M on d ay, Decem ber 1, 1986 / Proposed R ules 4321?

FEDERAL TRADE COMMISSION record, and may include a request for effective 30 days after the date of
review by the Commission of any publication of a final rule.
16 CFR Part 456 rulings or other determinations made by ADDRESS: Written comments to the
the Presiding Officer. Additionally, Dockets Management Branch (HFA-
Ophthalmic Practice; Final Staff participants in this rulemaking may
Report, Presiding Officer’s Report, and
305), Food and Drug Administration, Rm.
request an opportunity to make a oral 4-62, 5600 Fishers Lane, Rockville, MD
invitation for Comment presentation to the Commission 20857.
AGENCY: Federal Trade Commission. pursuant to 16 CFR 1.13(i).
FOR FURTHER IN FO R M A TIO N C O NTACT:
Publication of Final Staff report, The inclusion in comments of further
a c t io n :
evidence or factual material not Tenny P. Neprud, Jr., Division of
Presiding Officer’s Report, and Regulations Policy (HFC-220), Food and
invitation for comment. presently in the rulemaking record may
result in rejection of the comment as a Drug Administration, 5600 Fishers Lane,
Federal Trade Commission’s Rockville, MD 20857, 301-443-3480.
summ ary: whole.
Staff and Presiding Officer have The Commission has not yet reviewed SUPPLEM ENTARY IN FO RM A TIO N :
released to the public their respective the rulemaking record in this proceeding
reports in the rulemaking proceeding on or determined whether or not to I. Background
Ophthalmic Practice Rules. The Final promulgate a rule. Any decision by the Part 16 of FDA’s regulations (21 CFR
Staff Report contains a summary and Commission in this matter will be based Part 16) governs regulatory hearings
analysis of the evidence in the solely upon the contents of the held before the agency to determine
rulemaking record and the staff rulemaking record, including the whether any, or what type of, regulatory
recommendation on the proposed trade material submitted in response to this action should be taken with respect to a
regulation rule. The Presiding Officer’s notice. particular matter involving a specified
Report contains a recommended firm, individual, or product. These
decision based upon his findings and List of Subjects in 16 CFR Part 456
informal hearings involve consideration
conclusions as to all relevant and Trade practices, Ophthalmic practice of whether the agency should take direct
material evidence. Interested persons rules. regulatory action, administratively or
and the public are invited to submit Henry B. Cabell, through court proceedings, against a
written comments on both the Final Presiding Officer. particular firm, individual, or product
Staff Report and the Presiding Officer's [FR Doc. 86-26865 Filed 11-28-86; 8:45 am] subject to any of the laws administered
Report. The Commission has not by die agency. Such a hearing does not
BILUNG CODE 6750-01-M
reviewed or adopted either of these involve the type of factual issues that
reports. are litigated in a formal evidentiary
d a t e : Comment period will end on public hearing under 21 CFR Part 12t the
DEPARTMENT OF HEALTH AND
February 13,1987. HUMAN SERVICES policy issues usually considered in a
a d d r e s s e s : Copies of the Presiding public hearing before the Commissioner
Officer’s Report and the Final Staff Food and Drug Administration under 21 CFR Part 15, or any other
Report may be obtained from the Public general matter such as the development
Reference Branch, Room 130, Federal 21 CFR Part 16 of a regulation.
Trade Commission, 6th Street and
(Docket No. 86N-0358] II. Proposed Amendment to Part 16
Pennsylvania Avenue NW., Washington,
DC 20580. Telephone: 202-326-2222. Regulatory Hearing Before the Food
Under § 12.24(a) (21 CFR 12.24(a)), the
Comments received in response to this and Drug Administration
Commissioner has a number of
notice may be reviewed there as well. alternatives for a formal evidentiary
Written comments should be sent to agency: Food and Drug Administration. public hearing filed under § 12.22. First,
Henry B. Cabell, Presiding Officer, a c t io n : Proposed rule. the Commissioner may modify or revoke
Federal Trade Commission, 6th Street the regulation or order involved. Second,
and Pennsylvania Avenue NW., The Food and Drug
SU M M A R Y: the Commissioner may order a formal
Washington, DC 20580. These comments Administration (FDA) is proposing to evidentiary public hearing or, if
should be submitted on 8 V2 by 11 inch amend its regulations governing requested, an alternative form of hearing
paper, and those in excess of four pages regulatory hearings before the agency to on the matter. Third, the Commissioner
in length should be accompanied by provide that the Commissioner may may deny any hearing as unjustified and
three copies. deny such a hearing, in whole or in part, let the regulation or order stand
for f u r t h e r in f o r m a t io n c o n t a c t : upon a determination that no genuine unmodified.
Henry B. Cabell, Presiding Officer, at the and substantial issue of fact has been To justify a hearing, the person
above address. Telephone: 202-326- raised by the submission of the person requesting it must demonstrate that
3642. requesting the hearing. The proposed there is a genuine and substantial issue
SUPPLEMENTARY IN FO R M A TIO N : The Staff amendment would also authorize the of fact for resolution at the hearing (see
Report and the Presiding Officer’s presiding officer for such a hearing to § 12.24(b)(1), (2), and (6)). If there are
Report in the Ophthalmic Practice Rules issue a summary decision, subject to only policy or legal issues involved,
proceeding have been placed in the appeal to the Commissioner, on any § 12.24(b)(1) provides that a hearing will
rulemaking record [Public Record No. issue in the hearing with respect to not be granted on the matter.
215-63]. During the post record comment which the presiding officer determines, Furthermore, the Commissioner has
period which will end on February 13, based on the material submitted by the authority to deny a hearing when it
1987, the public, including persons parties, that there is no genuine and appears from the submission of the
interested in this proceeding, is invited substantial issue of fact in dispute. person requesting the hearing that no
to submit comments on these reports. DATES: Written comments by January 30, substantial issue of fact is in dispute.
Such comments should be confined to 1987. FDA intends that any final rule Pineapple Growers A s s ’n o f H aw aii v.
information already in the rulemaking based on this proposal would become FD A , 673 F.2d 1083 (9th Cir. 1982);
 43218 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Proposed Rules

W einberger v. Hynson, W estcott & notice to the parties explaining why the PART 16—REGULATORY HEARING
Dunning, 412 U.S. 609 (1973). hearing was denied. BEFORE THE FOOD AND DRUG
Although Part 12 reflects this well- Proposed § 16.26(b) would apply only ADMINISTRATION
settled principle (see § 12.24(b)(1)), Part after a hearing has been granted by the
16 does not. As a result, certain Commissioner. This provision would 1. The authority citation for 21 CFR
situations have arisen in connection permit the presiding officer to issue a Part 16 is revised to read as follows:
with Part 16 where even though no summary decision on any issue, if he or Authority: 15 U.S.C 401 et seq., 1451 et seq.;
material fact was in dispute, FDA she determines from the material 21 U.S.C. 41-50,141-149, 321 et seq., 467f(b),
proceeded with a hearing. submitted that there is no genuine and 679(b), 821 et seq., 1031 et seq.; 42 U.S.C. 201
One such situation arose in the substantial issue as to any fact et seq., 257a; 21 CFR 5.10.
context of an investigational device respecting that issue. The presiding 2. By adding new § 16.26 to read as
exemption under 21 CFR Part 812. The officer’s decision would be subject to follows:
question in the case was whether an review by the Commissioner under
arrangement between a sponsor and a § 16.26 Denial of hearing and summary
proposed § 16.26(b). decision.
clinical investigator amounted to The authority that would be granted
commercialization of the investigational (a) A request for a hearing may be
the Commissioner by these proposed denied, in whole or in part, if the
device, and, therefore, violated FDA’s revisions could also be exercised by
regulations; A written agreement Commissioner of Food and Drugs or the
another FDA decisionmaker to whom FDA official delegated the final decision
between the sponsor and the the authority to issue a final decision on
investigator embodied the terms under making authority on the matter
the matter had been redelegated (e.g., determines that no genuine and
which the investigation was conducted. the Director, Center for Devices and
Both FDA and the private party substantial issue of fact has been raised
Radiological Health, with respect to by the material submitted. If the
acknowledged that the facts were not in investigational device exemptions).
dispute, but because there was no Commissioner or his or her delegate
provision in Part 16 for the presiding III. Environmental Impact determines that a hearing is not
officer to issue summary decision, the justified, written notice of the
presiding officer determined that the The agency has determined under 21 determination will be given to the
hearing should continue. It would have CFR 25.24(a)(8) that this action is of a parties explaining the reason for denial.
been useful for the presiding officer to type that does not individually or (b) After a hearing commences, the
have had the authority either to issue a cumulatively have a significant effect on presiding officer may issue a summary
summary decision in such a case or to the human environment. Therefore, decision on any issue in the hearing if
hold the hearing. neither an environmental assessment the presiding officer determines from the
In addition, FDA routinely grants nor an environmental impact statement material submitted in connection with
is required. the hearing, or from matters officially
hearings under Part 16 on whether an
emergency permit is justified under 21 IV. Economic Impact noticed, that there is no genuine and
CFR Part 108. These hearings are held substantial issue of fact in dispute. The
on short schedules (see 21 CFR In accordance with Executive Order Commissioner or his or her delegate
108.5(a)(1) and 108.10(c)) and are 12291, FDA has carefully analyzed the may review such decision of the
extremely resource-intensive for the economic effects of this proposal and presiding officer at the request of a party
agency. Yet, in the absence of a has determined that the final rule, if or on his or her own initiative.
summary judgment provision, FDA promulgated, will not be a major rule as Dated: November 13,1986.
holds such a hearing even if the person defined by the Order. John M. Taylor,
requesting the hearing fails to V. Request for Comments Associate Commissionerfor Regulatory
demonstrate in his or her request that a Affairs.
genuine and substantial issue of fact Interested persons may, on or before [FR Doc. 86-26862 Filed 11-28-86; 8:45 am]
exists. January 30,1987, submit to the Dockets BILUNG CODE 4160-01-M
FDA believes that regulatory hearings Management Branch (HFA-305), Food
in these circumstances result in and Drug Administration, Rm. 4-62, 5600
inefficient use of agency resources. For Fishers Lane, Rockville, MD 20857,
this reason, the agency is proposing to written comments regarding this DEPARTMENT OF THE TREASURY
amend Part 16 to expressly authorize the proposal. Two copies of any comments
are to be submitted, except that Internal Revenue Service
Commissioner to deny a hearing and the
presiding officer to issue a summary individuals may submit one copy^ 26 CFR Parts 1 and 4a
decision. These amendments would Comments are to be identified with the
conform Part 16 to the existing state of docket number found in brackets in the [INTL-64-86]
the law. heading of this document. Received
Proposed § 16.26(a) would provide for comments may be seen in the office Source of Interest and Dividends;
administrative summary judgment. If the above between 9 a.m. and 4 p.m., Withdrawal of Notice of proposed
Commissioner determines from the Monday through Friday. Rulemaking
submission of the person requesting a List of Subjects in 21 CFR Part 16 AGENCY: Internal Revenue Service,
hearing that no genuine and substantial Treasury.
issue of fact is in dispute, the Administrative practice and
Commission may deny a hearing, in procedures. A C TIO N : Withdrawal of notice of
whole or in part, and resolve the legal or proposed rulemaking.
Therefore, under the Federal Food,
policy issues using the undisputed facts. Drug, and Cosmetic Act and under s u m m a r y : This document withdraws the
Should the Commissioner determine that authority delegated to the Commissioner notice of proposed rulemaking relating
a hearing is not justified, the of Food and Drugs, it is proposed that to the source of interest derived from
Commissioner is required to give written Part 16 be amended as follows: resident alien individuals and domestic
 Federal Register / V o l. 51, N o. 230 / M on d ay, Decem ber 1, 1986 / Proposed Rules 43219

corporations and the source of Federal Register on December 29,1982 DEPARTMENT OF COMMERCE
dividends derived from domestic (47 FR 57972) are hereby withdrawn.
corporations that appeared in the Roscoe L. Egger, Jr., National Oceanic and Atmospheric
Federal Register on December 29,1982 Administration
Commissioner of Internal Revenue.
(47 FR 57972} [FR Doc. 86-26910 Filed 11-28-86; 8:45 am] 50 CFR Part 663
FOR FURTHER IN FO RM A TIO N CONTACT: BILLING CODE 4830-01-M
Richard Chewning of the Office of [Docket No. 61111-6211]
Associate Chief Counsel (International),
within the Office of the Chief Counsel, Pacific Coast Groundfish Fishery
DEPARTMENT OF DEFENSE
Internal Revenue Service, 1111 agency: National Marine Fisheries
Constitution Avenue NW „ Washington, GENERAL SERVICES Service (NMFS), N O A A , Commerce.
DC 20224, Attention: CC:LR:T (INTL-64- ADMINISTRATION a c t i o n : Proposed rule. , . / . V'
86), 202-566-6384, not a toll-free call.
NATIONAL AERONAUTICS AND s u m m a r y : N O A A issues this proposed
SUPPLEMENTARY INFO RM A TIO N :
SPACE ADMINISTRATION rule to implement amendment 2 to the
Background Fishery Management Plan for the Pacific
48 CFR Parts 48 and 52 Coast Groundfish Fishery (FMP) which
This document withdraws the notice governs domestic and foreign fishing for
of proposed rulemaking under section Federal Acquisition Regulation (FAR); groundfish in the fishery conservation
861 that appeared in the Federal Value Engineering zone off the coasts of Washington,
Register on December 29,1982 (47 FR Oregon, and California. The amendment
57972). a g e n c ie s :Department of Defense eliminates the special quota for
The proposed regulations are being (DoD), General Services Administration sablefish in Monterey Bay, provides a
withdrawn because they have been (GSA), and National Aeronautics and process for making changes to gear
Space Administration (NASA). requirements, and imposes marking
mooted by amendment of section 881(b)
by section 130(a) of the Tax Reform Act a c t i o n : Proposed rule (Extension of requirements on fixed gear. The
of 1984. Section 881(b), as amended, comment period). intended effect is to make management
provides generally that passive income of the groundfish resource more
paid from U.S. sources to a corporation sum m ary: The Civilian Agency responsive and efficient.
organized in Guam or the Virgin Islands Acquisition Council and the Defense d a t e : Comments on the amendment and

will be subject to U.S., tax if 25% or Acquisition Regulatory Council are the proposed rule must be received by
more in value of the corporation’s stock considering a revision to the Federal January 10,1987.
is owned by foreign persons and if less Acquisition Regulation (FAR) Part 48, ADDRESSES: Send comments to Rolland
Value Engineering. FAR Coverage was A . Schmitten, Director, Northwest
than 20% of the recipient corporation’s
published as a proposed rule for public Region, National Marine Fisheries
income is from Guam or Virgin Islands comment on September 2,1986 (51 FR
| sources (as the case may be). Services, 7600 Sand Point W ay NE, BIN
31197). The original date for submission C15700, Bldg. 1, Seattle, W A 98115; or E.
Temporary regulations under of comments was November 3,1986. The
§ 4a.861-l published in the Federal Charles Fullerton, Director, Southwest
Councils have decided to extend the Region, National Marine Fisheries
Register on December 29,1982 (47 FR period for public comment on FAR
57919) which pertain to this subject are Service, 300 S. Ferry Street, Terminal
coverage for Value Engineering to Island, C A 90731. Copies of the
being removed by a document published accommodate the requests of interested amendment, combined with the
elsewhere in this issue [T.D. 8108]. parties. environmental assessment and the
d a t e : Written comments on the regulatory impact review/regulatory
Drafting Information
proposed FAR coverage for Value flexibility analysis are available from
The principal author of this document Engineering should be submitted to the the Pacific Fishery Management
I is Richard Chewning of the Office of FAR Secretariat by February 3,1987, for Council, Metro Center, Suite 420, 2000
I Associate Chief Counsel (International), consideration in the formulation of a S.W . First Avenue, Portland, OR 97201.
within the Office of Chief Counsel, final rule. FOR FURTHER IN FO R M A TIO N CON TA C T:
I Internal Revenue Service. However, a d d r e s s : Interested parties should Rolland A . Schmitten at 206-526-6150, E.
personnel from other offices of the submit written comments to: General Charles Fullerton at 213-514-6196, or the
Internal Revenue Service and Treasury Services Administration, FAR Pacific Fishery Management Council at
Department participated in developing Secretariat (VRS), 18th & F Streets NW., 503-221-6352.
I this document both in matters of Room 4041, Washington, DC 20405. SUPPLEMENTARY IN FO RM A TIO N : Under
I substance and style. Please cite FAR Case 88-33 in all the Magnuson Fishery Conservation and
correspondence related to this issue. Management Act (Magnuson Act), the
Withdrawal of Proposed Amendments FOR FURTHER IN FO R M A TIO N CONTACT: FMP was prepared by the Pacific
Ms. Margaret A . Willis, FAR Secretariat, Fishery Management Council (Council)
I The proposed amendments to 26 CFR and approved by the Secretary of
Parts 1 and 4a relating to the source of Telephone (202) 523-4755.
Commerce (Secretary) on January 4,
I interest derived from resident alien Dated: November 24,1986. 1982. Final implementing regulations
I individuals and domestic corporations Lawrence J. Rizzi, were published October 5,1982 (47 FR
and the source of dividends derived Director, Office of Federal Acquisition and 43964). The first amendment to the FMP
from domestic corporations under Regulatory Policy. was implemented July 29,1984 (49 FR
section 861 of the Internal Revenue [FR Doc. 86-28854 Filed 11-28-86; 8:45 am] 27518). The second amendment to the
Code of 1954 and published in the BILUNG CODE 6820-61-M FMP was initiated in July 1985 when a
 43220 Federal Register / VoL 51, No. 230 / Monday, December 1, 1986 / Proposed Rules

“ scoping session’’ was held by the Issue 2. Gear Regulations Flexibility facilitated. The proposed implementing
Council. Subsequent Council language is found at § 663.26 in
Changes in gear regulations can now
discussions identified seven issues paragraphs (d) and (g) and the former
be made without amending the FMP
requiring further analyses and possible only if the changes are designed to paragraph (g) “Recreational fishing” is
modifications to the FMP. A draft reduce biological stress on the resource, redesignated as a new paragraph (h).
amendment was prepared and mailed to otherwise, a time consuming and
interested parties on August 8,1986, Changes To H ie Proposed Rule
expensive plan amendment must be
analyzing four of the seven issues; used. However, it is clear that there is a A new § 663.25 gear adjustments is
consideration of three issues requiring need to change gear regulations in a added instead of the paragraph
clarification was postponed indefinitely. timely manner for reasons other than amendment to § 663.22 proposed by the
Five public hearings were held on stress on a resource. Two gear changes Council because the proposed
August 27 and 28,1986. have been made by plan amendment adjustments to fishing gear can occur j
After considering the comments since 1982, one to remove an obsolete anytime during a year.
received at the public hearings and footrope requirement, and the other to Classification
Council meetings, and from its add gear marking requirements. Another
Groundfish Advisory Subpanel, gear marking requirement is being Section 304(a) (l)(C)(ii) of the
Scientific and Statistical Committee, and considered in this amendment. No gear Magnuson Act requires the Secretary to
Groundfish Management Team, the changes have been proposed to reduce publish regulations proposed by a
Council made its final selection of stress on the resource. Council (and received by the Secretary
preferred options at its September 17, The Council considered two options: prior to November 14,1986) within 30
Option 1 (status quo)—maintain Current days of receipt of the FMP amendment
1986, meeting in Portland, Oregon. The
procedures for changing gear and regulations. At this time, the
Council selected the status-quo option Secretary has not determined that the
for one issue, declining at this time to regulations, and Option (2)—provide a
framework mechanism for changing gear FMP amendment this rule would
propose allowing retention (until implement is consistent with the
landed) of unsorted catches, which regulations for reasons not related to
conservation and without a plan national standards, other provisions of
could include prohibited species, taken the Magnuson Act, and other applicable
in the shore-based fishery for Pacific amendment.
The Council selected Option 2 law. The Secretary, in making that
whiting, consequently this issue does determination, will take into account the
not appear in the final amendment and because it allows greater efficiency and
flexibility while providing for full public data, views, and comments received
will be reconsidered in a future during the comment period.
review and comment, minimizes costs to
amendment. The remaining three issues, The Council prepared an
industry by providing for phase-in
their impacts, and the rationale for the environmental assessment for this
periods, and makes die FMP more
Council’s recommended changes are amendment and concluded that there
responsive to public concerns. The
summarized below. will be no significant impact on the
proposed language incorporating Option
Issue 1. Deletion of a separate OY 2 is found in a new § 663.22(d). environment as a result of this rule. A
(quota) For Sablefish Caught in copy of the environmental assessment is
Issue 3. Marking Requirements for Set available from the Council at the
Monterey Bay Nets and Commercial Vertical Hook-and address listed above.
Sablefish currently are managed Line Gear.
The Administrator of N O A A
under a coastwide optimum yield (OY) Current regulations include specific determined that this proposed rule is not
quota which includes a 2,500 metric ton marking requirements for traps, pots, a “major rule” requiring a regulatory
(mt) O Y quota for the Monterey Bay and longlines, all of which are types of impact analysis under Executive Order
subarea (36°30'to 37°00' N. latitude) fixed gear. These require the terminal 12291. The proposed rule, together or
Information available at the time the end(s) to be marked at the surface with separately, would not result in an
FMP was written indicated that a pole and flag, light, radar reflector, annual effect on the economy of $100
sablefish in the Monterey Bay subarea and a buoy identifying the owner in million or more, a major increase in
were a separate stock and so separate order to prevent gear conflicts between costs or prices, or a significant, adverse
quota was designated to protect that fixed and mobile gears and to aid in effect on employment, investment,
stock. However, more recent data retrieval of lost gear by making fixed productivity, innovation, or competition
indicate there is not a closed population gear more visible. Two more types of (within the United States or abroad).
in the subarea and a separate O Y is not fixed gear have become common: set The Council prepared a regulatory
needed. nets (off California south of 38°00'N. impact review which concludes that the
The Council considered two options: latitude) and commercial vertical hook- economic impacts of the proposed rule
Option 1 (status quo)—maintain the and-line gear (also known as Portuguese are expected to be slight (less than $1
separate O Y quota for sablefish caught longlines). million) and beneficial to U.S. industry;
in Monterey Bay, and Option 2—delete The Council considered two options: productivity could be slightly enhanced;
this quota. Option 1 (status quo)—do not impose the overall impact on investment would
marking requirements on set nets and be small; an increase in imports is not
The Council selected Option 2
commercial vertical hook-and-line gear, expected; any change to the cost of
because it is based on the best scientific and Option 2—impose marking
information available. goods and services would be negligible;;
requirements on these two gears, and the proposed rule would not change
The proposed revisions resulting from consistent with other marking the competitive structure of the west
selection of this option result in deletion requirements for fixed gear. coast fishing industry. A copy of this
of § 663.21(a)(2), subsequent Option 2 was selected so that Federal review is available from the Council at ;
renumbering of that section, and marking requirements for fixed gear will the address above.
deletion of references to Monterey Bay be consistent coastwide, gear conflicts This proposed rule is exempt from the
in the regulations at § 663.27(b)(3). minimized, and retrieval of lost gear advance review procedures of E.O.
 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Proposed Rules 43221

12291 under section 8(a)(2) of that order. review by the responsible State agencies relevant biological or socio-economic
Deadlines imposed under the Magnuson under section 307 of the Coastal Zone information.
Act, as amended by Pub. L. 97-453, Management Act. (b) Changes to gear restrictions may
require the Secretary to publish this include, but are not limited to,
List of Subjects in 50 CFR Part 663 definitions of legal gear, mesh size
proposed rule 30 days after its receipt.
The proposed rule is being reported to Fisheries, Fishing. specifications, codend specifications,
the Director, Office of Management and Dated: November 25,1986. marking requirements, and other gear
Budget, with an explanation of why it is specifications included in this part, 50
Carmen j. Blondin,
not possible to follow procedures of the CFR 611.70, and the FMP.
Deputy Assistant Administrator For Fisheries (c) A public hearing will be held
order. Resource Management, National Marine before any determination that a change
The General Counsel of the Fisheries Service.
to the gear restrictions is consistent with
Department of Commerce certified to For the reasons set out in the
the objectives of the FMP and would
the Chief Counsel for Advocacy of the preamble, 50 CFR Part 663 is proposed
result in significant improvements in the
Small Business Administration that this to be amended as follows:
groundfish fishery, and before
proposed rule, if adopted, will not have PART 663—[AMENDED] publishing any notice changing gear
a significant economic impact on a restrictions. Implementation of changes
sustantial number of small entities. 1. The authority citation for 50 CFR to the gear restrictons will be scheduled
Deletion of the separate O Y for Part 663 continues to read as follows: so as to minimize the costs to the fishing
sablefish in Monterey Bay (Issue 1) has Authority: 16 U.S.C, 1801 et seq. industry, insofar as this is consistent
a potential cost savings, although data with achieving the goals of the change.
have not been monitored separately. 2. The Table of Contents is amended
by removing the title at § 663.25 “Season 5. In § 663.26, paragraph (c) is revised,
The framework provision to change gear
[Reserved]” and inserting a new title paragraph (g) is redesignated as
regulations (Issue 2) is designed to
“Gear adjustments” . paragraph (h), and a new paragraph (g)
minimize cost to the industry as long as
is added read as follows:
this is consistent with the goals of the § 663.21 [Amended]
FMP. At the time an action is proposed 3. Section 663.21 is amended by §663.26 Gear restrictions.
for implementation under this removing paragraph (a)(2) in its entirety * * * ★. *
framework provision, N O A A will and redesignating paragraph (a)(3) as (c) Set nets. (1) Fishing for groundfish
determine whether the proposed change paragraph (a)(2). with set nets is prohibited in the fishery
to gear regulations will have a 4. A new § 663.25 is added to read as management area north of 38‘,00'N.
significant economic impact on a follows:
latitude,
substantial number of small entities,
and, if so, will prepare initial and final § 663.25 Gear adjustments. (2) Set nets must be marked at the
regulatory flexibility analyses. The (a) Changes to gear restrictions. surface at each terminal end with a pole
proposed requirement to mark set nets Except as otherwise provided by section and flag, light, radar reflector, and a
and commercial vertical hook-and-line 305(e) of the Magnuson Act, after buoy displaying clear identification of
gear the same as other fixed gear is receiving a recommendation and written the owner.
report by the Pacific Fishery * * * * *
expected to have an initial incremental
Management Council, the Secretary may (g) Com m ercial vertical hook-and-line
cost of about $230 and $106 per Vessel,
publish one or more notices under
respectively; lines, buoys, poles and (Portugese longline). Commercial
§ 663.23 at any time during the year to
probably flags are already in use. The vertical hook-and-line gear (Portuguese
change domestic or foreign gear
cost of this change is expected to be restrictions if it is determined that the longline) must be marked at the surface
offset by reductions in gear conflicts and change is consistent with the objectives with a pole and flag, light, radar
lost gear. As a result, the regulatory of the Pacific Coast Groundfish Plan and reflector, and a buoy displaying clear
flexibility assessment which was would result in significant improvements identification of the owner.
prepared in conjunction with the * * * * *
in the groundfish fishery. Significant
regulatory impact review states that the improvements may exist when: 6. In § 663.27, paragraph (b)(3) is
total impact of these proposed (1) Sustainable landings are revised to read as follows:
regulations is expected to be beneficial increased;
but minor. (2) The value of landings are § 663.27 Catch restrictions.
This rule does not contain a collection increased; it ' . *■ c • :
of information for purposes of the (3) Gear conflicts are reduced;
Paperwork Reduction Act. (4) Fishing efficiency is increased; and (b)* * *
The Council determined that this rule (5) Another condition exists which (3) Sablefish. When it is determined
will be implemented in a manner that^s promotes achievement of the objectives that 90 percent of the O Y will be
consistent td the maximum extent of the Pacific Coast Groundfish Plan, reached the Secretary will publish a
practicable with the approved coastal which may be based on consideration of notice in accordance with § 663.23
zone management programs of changes in catch composition, yield per dividing the 10 percent balance of O Y
Washington, Oregon, and California. recruit, cost to the fishing industry, equally (5 percent apiece) between trawl
This determination was submitted for impacts on other management measures gear and fixed gear, and establishing a
and other fisheries, and any other
43222 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Proposed Rules

percentage trip limit for trawl gear. The

trip limit will be based on the most
recent data available for the season and
will equal the average percentage of
sablefish in all trawl landings containing
sablefish from the fishery management
area but in no event will the trip limit
exceed 30 percent by weight of all fish
on board. If the Secretary determines
that either trawl or fixed gear will take
its 5 percent balance of O Y, the
Secretary will publish a notice of
closure under § 663.23 prohibiting
retention and landing of sablefish taken
by that gear type in the fishery
management area. The provisions at
§ 663.21(b) prohibiting landings when
O Y is reached will apply even if fixed or
trawl gear has not landed its 5 percent
balance of O Y .
[FR Doc. 86-26952 Filed 11-25-8$ 5:03 pm]
BILLING CODE 3510-22-M
Notices Federal R egister

Vol. 51, No. 239

Monday,, December 1. 1906

This section of the FEDERAL REGISTER designation in their respective Request for Comments on Designation
contains documents other than rules or geographic areas and each applied for Applicants in the Geographic Area
proposed rules that are applicable to the designation renewal in the area Currently Assigned to the Alton, IL,
public. Notices of hearings and currently assigned to that agency. Grand Forks, ND, and McCrea, IA
investigations, committee meetings, agency
FGIS announced the applicant names Agencies
decisions and rulings, delegations of
authority, filing of petitions and and requested comments on die same in AGENCY: Federal Grain Inspection
applications and agency statements of the September 2 ,1986, Federal Register Service (FGIS), USDA.
organization and functions are examples (51 FR 31153). Comments were to be a c t i o n : Notice.
of documents appearing in this section. postmarked by October 17,1986. No
comments were received regarding S U M M A R Y : This, notice
requests
Alva’s and Connecticut’s designation comments from interested parties on the
DEPARTMENT OF AGRICULTURE renewal. applicants for official agency
F G IS evaluated all available designation in the geographic area
Federal Gram Inspection Service information regarding the designation currently assigned to Alton Grain
criteria in section 7(f)(1)(A) of the Act, Inspection Department (Alton), Grand
Forks Grain Inspection Department
Designation Renewal o f the Alva and in accordance with section
(Grand Forks), and John R. McCrea
Agency, OK ancf the State of 7(f)(1)(B), determined that A lva and
Agency (McCrea).
Connecticut Connecticut are able to provide official
d a t e : Comments to be postmarked on or
services in the geographic area for
agency: Federal Grain Inspection which F G IS is renewing their before January 13,1987.
Service (FGISJ, U5DA. designation. Effective January 1,1987, ADDRESS: Comments must be submitted,
action: Notice. and terminating December 31,1989, in writing, to Lewis Lebakken, Jr.,
ALva and Connecticut will provide Information Resources Staff, Resources
summary: This notice announces the official inspection services in their entire Management Division, Federal Grain
designation renewal o f Alva Grain specified geographic areas, previously Inspection Service, U S . Department of
Inspection Department [Alva) and described in the July 1 Federal Register. Agriculture, Room 1661 South Building,
Connecticut Department of Agriculture 1400 Independence Avenue, SW .,
A specified service point, for the
(Connecticut, as official agencies Washington, DC- 20250. A ll comments
purpose of this notice; is a city» town, or received wiH be made available for
responsible for providing official
other location specified by an agency far public inspection at the above address
services under the U in Grain Standards
Act, as Amended (Act). the performance of official inspection or during regular business hours (7 CFR
Glass X or Class Y weighing services 1.27fbfl.
effective d a t e January %. 1987- and where the agency and one or more
FOR FURTHER IN FO R M A TIO N CON TA C T:
address : James R. Conrad, Chief, of its inspectors or weighers is located.
Review Branch, Compliance Division, Lewis Lebakken, Jr., telephone (202)
In addition to the specified service
Federal Grain Inspection Service, U.S. 382-1738.
points within the assigned geographic
SUPPLEM ENTARY IN FO R M A TIO N : This
Department of Agriculture, 1400 area, an agency will provide official
Independence Avenue, SW ., Room 1647 action has been reviewed and
services not requiring an inspector or determined not to be a rule or regulation
South Building, Washington, DC 20250”. weigher to all locations within its as defined in Executive Order 12291 and
FOR FURTHER IN FO R M A TIO N C O N TA C T: geographic area. Departmental Regulation 1512-1;
James R. Conrad, telephone (202) 447- Interested persons may receive a therefore, the Executive Order and
8525. listing of an agency’s specified service Departmental Regulation do net apply to
SUPPLEMENTARY IN FO RM A TIO N : This points by contacting either the Review this action.
actionhas been reviewed and ' Branch, Compliance Division, at the F G IS requested applications for
determined not to be a rule or regulation address listed above or the agencies at official agency designation to provide
asdefined in Executive Order 12291 and the following addresses; official services within a specified
Departmental Regulation 1512—1; Alva Grain Inspection Department, 129 geographic area in the October 1,1986,
therefore, the Executive Order and Federal Register (51 FR 35015).
Departmental Regulation do not apply to College, P.O. Box 501, Alva, O K 73717
Applications were to be postmarked by
thisaction. Connecticut Department of Agriculture; October 31,1986. Alton, Grand Forks,
FGIS announced that Alva’s and 165 Capital Avenue,. Hartford, CT and McCrea were the only applicants
Connecticut’sdesignations terminate on 06106 for designation in their geographic area
December31,1986, and requested (Pub. L. 94-582, 90 Slat. 2867, as amended (7 and each applied for designation
applications for official agency U.S.C. 71 etseq.J) renewal in the area currently assigned
designation to provide official services Dated: November 20,1986. to that agency.
within specified geographic areas in the This notice provides interested
July 1.1986, Federal Register (51 FR J.T. Abshier,
persons the opportunity to present their
23802). Applications were to be Director, Compliance Division. comments concerning the designation
postmarked by July 31,1986. Alva and [FR Doc.. 86-Z6742 Filed 11-28-86; 8:45 am] applicants. All comments must be
Connecticut were the only applicants for BILLING CODE 3410-EN-M submitted to the Information Resources
 43224 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices

Staff, Resources Management Division, therefore, the Executive Order and 1. Gibson City Grain Inspection
at the address listed above. Departmental Regulation do not apply to Department to service Farm Service,
Comments and other available this action. Arrowsmith, McLean County.
information will be considered in Section 7(f)(1) of the Act specifies that 2. Springfield Grain Inspection
making a final decision. Notice of the the Administrator of FGIS is authorized, Department to service East Lincoln
final decision will be published in the upon application by any qualified Farmers Grain Co., Lincoln, Logan
Federal Register, and the applicants will agency or person, to designate such County.
be informed of the decision in writing. agency or person to provide official The geographic area presently
(Pub. L. 94-582, 90 Stat. 2867, as amended(7 services after a determination is made assigned to Plainview in the State of
U.S.C. 71 et seg.)) that the applicant is better able than any Texas pursuant to section 7(f)(2) of the
Dated: November 20,1986. other applicant to provide official Act, which may be assigned to the
J.T. Abshier, services in an assigned geographic area. applicant selected for designation, is as
Director, Compliance Division. Bloomington Grain Inspection follows:
[FR Doc. 86-26743 Filed 11-28-86; 8:45 am] Department (Bloomington), P.O. Box Bounded on the North by the northern
BILLING CODE 3410-EN-M
3428, Bloomington, IL 61702, and Deaf Smith County line east to U.S.
Plainview Grain Inspection and Route 385; U.S. Route 385 south to FM
Weighing Service, Inc. (Plainview), 1100 1062; FM 1062 east to State Route 217;
Request for Designation Applicants To North Broadway Street, P.O. Box 717, State Route 217 east to Prairie Dog
Provide Official Services in the Plainview, T X 79072, were each Town Fork of the Red River; Prairie Dog
Geographic Area Currently Assigned designated under the Act as an official Town Fork of the Red River southeast to
to the Bloomington, IL and Plainview, agency to provide inspection functions the Briscoe County line; the northern
TX Agencies on June 1,1984.
Briscoe County line; the northern Hall
Each official agency’s designation
a g e n c y : Federal Grain Inspection
County line east to U.S. Route 287;
terminates on May 31,1987. Section
Service (FGIS), USDA. Bounded on the East by U.S. Route
7(g)(1) of the Act states that official
a c t i o n : Notice.
287 southeast to the eastern Hall County
agencies’ designations shall terminate
not later than triennially and may be line; the eastern and southern Hall
s u m m a r y : Pursuant to the provisions of
renewed according to the criteria and County lines; the eastern Motley County
the U.S. Grain Standards Act, as line;
procedures prescribed in the Act.
Amended (Act), official agency The geographic area presently Bounded on the South by the southern
designations shall terminate not later assigned to Bloomington in the State of Motley and Floyd County lines; the
than triennially and may be renewed Illinois pursuant to section 7(f)(2) of the western Floyd County line north to FM
according to the criteria and procedures Act, which may be assigned to the 37; FM 37 west to FM 400; FM 400 north
prescribed in the Act. This notice applicant selected for designation, is as to FM 1914; FM 1914 west, including
announces that the designation of two follows: Hale Center, to FM 179; FM 179 south to
agencies will terminate, in accordance Bounded on the North by State Route FM 37; FM 37 west to U.S. Route 84; U.S.
with the Act, and requests applications 18 east to U.S. Route 51; U.S. Route 51 Route 84 northwest to FM 303; and
from parties, including the agencies If south to State Route 17; State Route 17 Bounded on the West by FM 303, not
currently designated, interested in being east to Livingston County; the Livingston including Sudan, north to U.S. Route 70;
designated as the official agency to County line east to the ICG Railroad U.S. Route 70 west to the Lamb County
provide official services in the line; line; the western and northern Lamb
geographic area currently assigned to Bounded on the East along the ICG County lines; the western Castro County
the specified agencies. The official Railroad line southwest to Pontiac, line; the southern Deaf Smith County
agencies are Bloomington Grain which intersects with a straight line line west to State Route 214; State Route
Inspection Department and Plainview running north and south through 214 north to the northern Deaf Smith
Grain Inspection and Weighing Service, Arrowsmith to the southern McLean County line.
Inc. County line; Interested parties, including
d a t e : Applications to be postmarked on Bounded on the South by the southern Bloomington and Plainview, are hereby
or before December 30,1986. McLean County line; the eastern Logan given opportunity to apply for official
a d d r e s s : Applications must be
County line south to State Route 10; agency designation to provide the
submitted to James R. Conrad, Chief, State Route 10 west to State Route 121; official services in each geographic area,
Review Branch, Compliance Division, and as specified above, under the provisions
Federal Grain Inspection Service, U.S. . Bounded on the West by State Route of section 7(f) of the Act and
Department of Agriculture, 1400 121 north to Interstate 74; Interstate 74 § 800.196(d) of the regulations issued
Independence Avenue, SW ., Room 1647, northwest to State Route 116; State thereunder. Designation in each
South Building, Washington, DC 20250. Route 116 north to State Route 26; State specified geographic area is for the
All applications received will be made Route 26 north to State Route 18. period beginning June 1,1987, and
available for public inspection at the The following location, outside of the ending May 31,1990. Parties wishing to
above address during regular business foregoing contiguous geographic area, is apply for designation should contact the
hours. presently assigned to Bloomington and Review Branch, Compliance Division, at
is part of this geographic area the address listed above, for forms and
FOR FURTHER IN FO RM A TIO N CONTACT:
assignment: Bunge Corporation, Pontiac, information.
James R. Conrad, telephone (202) 447- Livingston County. Applications and other available
8525.
Exceptions to the described information will be considered in
SUPPLEMENTARY IN FO RM A TIO N : This geographic area are the following determining which applicant will be
action has been reviewed and locations situated inside Bloomington’s designated to provide official services in
determined not to be a rule or regulation area which have been and will continue a geographic area.
as defined in Executive Order 12291 and to be serviced by the following official
Departmental Regulation 1512-1; (Pub. L. 94-582, 90 Stat. 2867, as amended (7
agencies: U.S.C. 71 et se<7.))
 Federal Register / Voi. 51» No. 230 / Monday, December 1„ 1986 / Notices 43225

Dated: November 20,1986. designating it. Effective January 1» 1987, DEPARTMENT OF COMMERCE
J.T. Absfcier; and terminating December 31,1989,
Director, Compliance Division. Schaal will provide official inspection International Trade Administration
|FR Doc. 86-26744 Filed 11-28-86; 8:45 am], services in the entire specified
BILLING CODE 3410-EN-M geographic area, previously described in Antidumping or Countervailing Duty
the July 1 Federal Register. Order, Finding, or Suspended
A specified service paint* for the Investigation; Opportunity To Request
Designation o f the Schaal Agency in purpose of this notice, is a city, town, or Administrative Review
the Belmondo IA, Geographic Area other location specified by an agency for agency: International Trade
agency: Federal Grain inspection the performance o f official inspection or Administration, Import Administration,
Service (FGISJ. USDA. Class X or Class Y weighing services Commerce.
and where the agency and one or more
a c t io n : Notice. a c t i o n : Notice of opportunity to request
of its inspectors or weighers-is located.
SUMMARY! This notice announces the In addition to the specified* service administrative review of antidumping or
designation of Lewis D. Schaal, doing points within the assigned geographic countervailing duty order, finding, or
business as BR~ Schaal Agency, as the area, an agency will provide official suspended investigatkm.
official agency responsible for providing services not requiring an inspector or B a c k g ro u n d
official services under the U iL Grain weigher to all locations within its
Standards A ct, as Amended (Act), in the geographic area. Each year during the anniversary
Belmond, Iowa, geographic area. Interested persons may receive a month of the publication of an
EFFECTIVE d a t e : January 1,1987. listing of an agency’s specified service antidumping or countervailing duty
points by contacting either the Review order, finding, or suspension of
ADDRESS: James R. Conrad, Chief,
Branch, Compliance Division, at the investigation, an interested party as
Review Branch, Compliance Division, defined in section 771(9} of the Tariff
Federal Grain Inspection Service, U.S. address fisted above or the agency at
the following address: D.R. Schaal Act of 1930 may request, in accordance
Department of Agriculture, 1400 with § 353,53a or 355.10 of the
Independence Avenue, SW ., Room 1647 Agency, 219 River Avenue North,. P.Q.
Box 213, Belmond, IA 50421. Commerce Regulations, that the
South Building, Washington, DC 20250. Department o f Commerce (‘The
FOR FURTHER IN FO RM A TIO N C O N TA C T: (Pub. L. 94-582, 90 Stat. 2867, as amended (7 Department” ) conduct an administrative
James R. Conrad, telephone (202) 447- U.S.C. 71 etseq.)) review of that antidumping or
8525. Dated: November 20,1986. countervailing duty order, finding, or
SUPPLEMENTARY INFO RM A TIO N : This J.T. Abshier, suspended investigation.
action has been reviewed and Director, Compliance Division.
determined not to be a rule or regulation Opportunity To Request a Review
[FR Doe. 86—
26745 Filed 11-28-86; 8:45 am}
as defined in Executive Order 12291 and Not later than Decmber 31,1986,
BILLING CODE 3410-EN-M
Departmental Regulation 1512-1; interested parties may request
therefore, the Executive Order and administrative review of the following
Departmental Regulation do not apply to orders, findings, or suspended
this action. COMMISSION ON EXECUTIVE, investigations, with anniversary dates in
FGIS announced the cancellation of LEGISLATIVE AND JUDICIAL December, for the following periods:
designation of David R. Schaal, doing SALARIES
business as D.R. Schaal Agency,
Period
effective December 81,1986, and Meeting
requested applications for official Antidumping Duty Proceeding:
agency designation to provide official The Commission on Executive, Low-Fuming Brazing Copper Wire
services within a specified geographic Legislative and Judicial Salaries will and Rod'from New Zealand:......... 8/02/85-11/30/86
Steel Wire Strand from Japan_____ 12/01/85-11/30/86
area in the July 1,1986, Federal Register meet Thursday, December 4,1986 at 2:30 Polychloroprene Rubber from.
(51FR 23802). Applications were to be p.m. at 734 Jackson Place N W „ Japan....... .................. 1 2/0T /85-T Î/30/86
Large Electric Motors from Japan.... 12/01 785-1 Î.-30-86
postmarked by July 31,1986. Lewis D. Washington, DC. Cellular. Mobile Telephones and
Schaal (Schaal), who proposed to do It is anticipated that the meeting will Subassemblies from Japan........... 6/T 1/85-11-30-86
Tuners' from: Japan......___________ 12/01/85-11-30-86
business as D.R. Schaal Agency, was the be closed in accordance with section Clear Sheet Glass from Italy............. 12/01/85-11-30>-8&
only applicant for designation and 10(d) of the Federal Advisory Committee Photo Albums and Filler Pages
fron>S. Korea....... ........................ 7/16/85-11-30-86
applied for designation in the entire area Act and Title 5 U .S.C. 552b(c)(9)(B). A Photo Alumbs and Filler Pages
available for assignment. request for determination as to the from Hong Kong.______ ____ 7/16/85-11-30-86
FGIS announced the applicant name closing o f this meeting has been Elemental Sulphur from Canada....... f2/6T/85-1T-30-86
Certain Carton Closing Staples and
and requested comments on the same in presented to the Director, Office o f Staple Machines from. Sweden__ 12/01/85-11-3066
theSeptember 2,1986, Federal Register Personnel Management for approval. Animal Gibe and Ihedible Gelatin
12/01/85-11-30-86
from Sweden________________
(51 FR 31153). Comments were to be Due to the Commission's need to Animal Glue and Inedible Gelatin
postmarked by October 17,1986. No promptly address the issues before it, ft from W. Germany........... ............... 12/01/85-11-30-86
comments were received regarding is not feasible to delay the meeting or to
Animal Glue and inedible Gelatin
from Yugoslavia............................. 12/01/85-11-30-86
Schaal’sdesignation. give earlier notice. Animal Glue and Inedible Gelatin
FGIS evaluated all available For further information, contact Fatsy
from Netherlands....... ,.............. 12/0T/85-TT-30-86
Countervailing Doty1Proceeding:
information regarding the designation Semple at (202) 275-6834. Litharge, Red Lead and Lead Stabi­
criteria in section 7(f)(1)(A) of the Act, lizers from Mexico......................... 1701/85-12-31-85
and in accordance with section Janies L. Ferguson, Toy Balloons and Playballs from
Mexico____ ___ ____ ______ 1/01/85-12/31/85
7(f)(1)(B), determined that Schaal is able Chairman. Cement from Costa Rica.................. 10/01/85^-09/30/86
to provide official services in the (FR Doc. 86-27012 Filed 11-28-86; 8:45 am) Polypropylene Film from Mexico*....:.. 1/0T/85-Ì2/3T/85
Pectin’ from Mexico........ . 1/01785-12/3T/85
geographic area for which FGIS is BILLING CODE 6325-01-M
 43226 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices

A request must conform to the Comments: None received. Decision on Application For Duty-Free
Department’s interim final rule Decision: Approved. No instrument of Entry of Scientific Instrument;
published in the Federal Register (50 FR equivalent scientific value to the foreign University of CA, Los Alamos National
32556) on August 13V1985. Seven copies
instrument, for such purposes as each is Laboratory
of the request should be sumitted to the
intended to be used, is being
Deputy Assistant Secretary for Import This decision is made pursuant to
Administration, International Trade manufactured in the United States.
section 6(c) of the Educational,
Administration, Room B-099, U.S. Reasons: The foreign instrument
Scientific, and Cultural Materials
Department of Commerce, Washington, provides simultaneous qualitative and Importation Act of 1966 (Pub. L. 89-651,
DC 20230. semi-quantitative data for major, minor 80 Stat. 897; 15 CFR Part 301). Related
The Department will publish in the and trace constituents and abundance records can be viewed between 8:30 AM
Federal Register a notice of “Initiation sensitivity of at least 10'5for both high and 5:00 PM in Room 1523, U.S.
of Antidumping (Countervailing) Duty and low mass. The capability is Department of Commerce, 145th and
Administrative Review,” for requests pertinent to each applicant’s intended Constitution Avenue, NW., Washington,
received by December 31,1986. purpose. We know of no domestic DC.
If the Department does not receive by instrument or apparatus of equivalent Docket No.: 86-316. Applicant:
December 31,1986 a request for review scientific value for the intended use of University of California, Los Alamos
of entries covered by an order or finding each instrument. National Laboratory, Los Alamos, NM
listed in this notice and for the period Frank W. Creel,
identified above, the Department will 87544. Instrument: Mass Spectrometer,
instruct the Customs Service to assess Director, Statutory Import Programs Staff. Model V G 354 with Accessories.
antidumping or countervailing duties on [FR Doc. 86-26931 Filed 11-28-86: 8:45 am] Manufacturer: V G Isotopes Limited,
those entries at a rate equal to the cash BILLING CODE 3510-DS-M United Kingdom. Intended Use: See
deposit of (or bond for) estimated notice at 51 FR 34680.
antidumping or countervailing duties Comments: None received.
required on those entries at the time of Decision on Application for Duty-Free Decision: Approved. No instrument of
entry, or withdrawal from warehouse, Entry of Scientific Instrument; equivalent scientific value to the foreign
for consumption and to continue to University of CA, Los Alamos National instrument, for such purposes as it is
collect the cash deposit previously Laboratory intended to be used, is being
ordered. manufactured in the United States.
This notice is not required by statute This decision is made pursuant to Reasons: The foreign instrument
but is published as a service to the section 6(c) of the Educational, provides a fully automated multiple (5)
international trading community. Scientific, and Cultural Materials collector system capable of providing an
Dated: November 24,1986. Importation Act of 1966 (Pub. L. 89-651, external precision on Neodymium (300
Gilbert B. Kaplan, 80 Stat. 897; 15 CFR Part 301). Related ng) of 0.003%. This capability is
Deputy Assistance Secretary, Import
records can be viewed between 8:30 am pertinent to the applicant’s intended
Administration. and 5:00 pm in Room 1523, U.S. purpose. We know of no domestic
[FR Doc. 86-26929 Filed 11-28-86; 8:45 am] Department of Commerce, 14th and instrument or apparatus of equivalent
Constitution Avenue, NW., Washington, scientific value to the foreign instrument
BILLING CODE 3510-DS-M
DC. for the applicant’s intended use.
Docket Number; 86-314: Applicant: Frank W. Creel,
Consolidated Decision on Applications University of California, Los Alamos Director, Statutory Import Prbgrams Staff.
For Duty-Free Entry of Scientific ICP National Laboratory, Los Alamos, NM [FR Doc. 86-26933 Filed 11-28-86; 8:45 am]
Mass Spectrometers; University of CA, 87545. Instrument: Excimer/Dye Laser BILLING CODE 3510-05-M
Los Alamos National Laboratory et al. System, Model HE-IL. Manufacturer:
This is a decision consolidated Lumonics Inc., Canada. Intended Use:
See notice at 51 FR 34680. Consolidated Decision on Applications
pursuant to section 6(c) of the For Duty-Free Entry of Scanning
Educational, Scientific, and Cultural COMMENTS: None received.
Tandem F-P Interferometers;
Materials Importation Act of 1966 (Pub. DECISION: Approved. No instrument University of Illinois, et al.
L. 89-651, 80 Stat. 897; 15 CFR Part 301). of equivalent scientific value to the
Related records can be viewed between foreign instrument, for such purposes as This is a decision consolidated
8:30 a.m. and 5:00 p.m. in Room 1523, it is intended to be used, is being pursuant to section 6(c) of the
U.S. Department of Commerce, 14th & manufactured in the United States. Educational, Scientific, and Cultural
Constitution Avenue, NW., Washington, REASONS: The foreign article Materials Importation Act of 1966 (Pub.
DC. provides high output energy (450 mj at L. 89-651, 80 Stat. 897; 15 CFR Part 301).
Docket Number: 86-163R. Applicant: 340 nm) and high energy conversion Related records can be viewed between
University of California, Los Alamos efficiency (8% at 340 nm 0.1 cm-1 8:30 a.m. and 5:00 p.m. in Room 1523,
National Laboratory, Los Alamos, NM linewidth). This capability is pertinent U.S. Department of Commerce, 14th and
87545. Intended Use: See notice at 51 FR to the applicant’s intended purpose. We Constitution Avenue NW „ Washington,
15820. DC.
know of no domestic instrument or
Docket Number: 86-308. Applicant: apparatus of equivalent scientific value Docket No.: 85-041. Applicant:
University of Cincinnati, Cincinnati, OH to the foreign instrument for the University of Illinois, Urbana
45221-0172. Intended Use: See notice at applicant’s intended use. Champaign Campus, Urbana, IL 61801.
51 FR 34238. Intended Use: See notice at 49 FR 50419.
Instrument: ICP Mass Spectrometers, Frank W. Creel,
Docket No.: 86-291. Applicant: City
Model PlasmaQuad. Director, Statutory Import Program Staff.
College-C.U.N.Y., New York, NY 10031.
Manufacturer: V G Instruments Inc., [FR Doc. 86-26932 Filed 11-28-86; 8:45 am] Intended Use: See notice at 51 FR 29953.
United Kingdom. BILLING CODE 3510-DS-M Instrument: Interferometer.
 Federal Register / Vol. 51, No. 230 / Monday. December 1, 1986 / Notices 43227

Manufacturer: Dr. J.R. Sandercock, Steel Company, Georgetown Steel November 21,1986.
Switzerland. Corporation, Raritan River Steel G ilb ert B. K ap lan,
Comments: None received. Company, North Star Steel Texas, Inc., Deputy Assistant Secretary, Import
Decision: Approved. No instrument of the Atlantic Steel Company, requested Administration.
equivalent scientific value to the foreign in accordance with § 355.10 of the [FR 86-26930 Filed 11-28-86; 8:45 am)
instrument, for such purposes as each is Commerce Regulations an BILLING CODE 3510-DS-M
intended to be used, is being administrative review of the order. We
manufactured in the United States. published the initiation on November 27,
Reasons: The foreign instrument is 1985 (50 FR 48825) and the preliminary [A -4 2 7 - 0 0 9 ]
capable of measuring Brillouin and results of administrative review on
Raman Spectra from opaque materials. October 9,1986 (51 FR 36259). We have Industrial Nitrocellulose From France;
The capability of each of the foreign now completed the administrative Final Results of Antidumping Duty
instruments described is pertinent to review in accordance with section 751 of Administrative Review
each applicant’s intended purpose. We the Tariff Act of 1930 (“the Tariff Act” ).
know of no domestic instrument or On October 7,1985, we revoked the AGENCY: International Trade
apparatus of equivalent scientific value order effective October 1,1984 (50 FR Administration/Import Administration,
for the intended use of each instrument. 40886). Department of Commerce.
Frank W. Creel, Scope of Review A C TIO N : Notice of final results of
Director, Statutory Import Programs Staff. antidumping duty administrative review.
Imports covered by the review are
[FR Doc. 86-26934 Filed 11-28-86; 8:45 am] shipments of South American carbon
BILLING CODE 3510-DS-M steel wire rod. Such merchandise is SU M M A R Y: On May 22,1986, the
currently classifiable under item Department of Commerce published the
[C -7 9 1 -0 0 4 ] 607.1700 of the Tariff Schedules of the preliminary results of its administrative
United States Annotated. review of the antidumping duty order on
Carbon Steel Wire Rod From South The review covers the period January industrial nitrocellulose from France.
Africa; Final Results of Countervailing 1,1983 through September 30,1984 and The review covers one exporter of this
Duty Administrative Review eight programs: (1) Export Incentive merchandise to the UnitecTStates and
Program—Categories A , B and D; (2) the period May 13,1983 through July 31, j
agency: International Trade government assumption of finance
Administration/Import Administration, 1984.
charges; (3) government equity We gave interested parties an
Department of Commerce. participation; (4) loans from the General
a c t io n : Notice of final results of
opportunity to comment on the
Levy and Import Subsidy Scheme; (5)
countervailing duty administrative Industrial Development Corporation preliminary results. Based on our
review. loans; (6) preferential rail rates; (7) analysis of the comments received, the
government loan guarantees; and (8) a final results of review are unchanged
summ ary: On October 9,1986, the homeland development/regional from those presented in the preliminary
Department of Commerce published the decentralization program. During the results.
preliminary results of its administrative period of review, the South African Iron e f f e c t i v e d a t e : December 1,1986.
review of the countervailing duty order and Steel Corporation ("ISCOR”) was
on carbon steel wire rod from South die only known exporter of South
FOR FURTHER IN FO R M A TIO N C O NTACT:
Africa. The review covers the period Craig Daugherty or John Kugelman,
African wire rod to [Link] States.
January 1,1983 through September 30, Office of Compliance, International
1984 and eight programs. Final Results of Review Trade Administration, U .S. Department
We gave interested parties an We gave interested parties an of Commerce, Washington, DC 20230;
opportunity to comment on the opportunity to comment on the telephone: (202) 377-2923/3601.
preliminary results. We received no preliminary results. We received no SUPPLEMENTARY IN FO R M A TIO N :
comments. Based on our analysis, the comments. Based on our analysis, we
final results of the review are the same determine the total bounty or grant to be Background
as the preliminary results. ‘ 0.43 percent ad valorem for the period On May 22,1986 the Department of
e f f e c t iv e d a t e : December 1,1986. January 1,1983 through June 30,1983, Commerce (“the Department” )
for f u r t h e r in f o r m a t io n c o n t a c t : 0.39 percent ad valorem for the period published in the Federal Register (51 FR
Sylvia Chadwick or Lorenza Olivas, July 1,1983 through June 30,1984, and 18819) the preliminary results of its
Office of Compliance, International 0.35 percent ad valorem for the period administrative review of the
Trade Administration, U.S. Department July 1,1984 through September 30,1984. antidumping duty order on industrial
of Commerce, Washington, DC 20230; The Department considers any rate less nitrocellulose from France (48 FR 36303,
telephone (202) 377-2786. than 0.50 percent ad valorem to be de
August 10,1983). We began this review
SUPPLEMENTARY IN FO RM A TIO N : m inim is.
The Department therefore will instruct under our old regulations. After the
Background the Customs Service not to assess promulgation of our new regulations, the
countervailing duties on any shipments respondent, Societe Nationale des
On September 17,1986, the
Department of Commerce (“the of this merchandise exported on or after Poudres et Explòsifs (“SNPE”),
Department” ) published in the Federal January 1,1983 and exported on or requested in accordance with
Register (51 FR 32931) the final results of before September 30,1984. This § 353,53a(a) of the Commerce
its last administrative review of the administrative review and notice are in Regulations that we complete the
countervailing duty order on carbon accordance with section 751(a)(1) of the administrative review. We have now
steel wire rod from South Africa (47 FR Tariff (19 U .S.C. 1675(a)(1)) and § 355.10 completed the administrative review in
42396, September 27,1982). On October of the Commerce Regulations (19 CFR accordance with section 751 of the Tariff
10,1985, the petitioners, Continental 355.10) Act of 1930 (“ the Tariff Act”).
 43228 Federal Register / Vol. 51, N o. 230 / Monday, December 1, 1986 / Notices

Scope of the Review Department’s Position. When expenses relating to two subsidies
Imports covered by the review are merchandise which is identical to the (employee training and capital
shipments of industrial nitrocellulose merchandise sold in the United States is equipment purchases), the Department
containing between 10.8 and 12.2 not sold in the home market, the understated SN PE s cost of production
percent nitrogen. Industrial Department compares U.S. sales to by omitting expenses relating to
nitrocellulose is a dry, white, amorphous contemporaneous home market sales of research and development, pollution
synthetic chemical produced by the what we determine to be the most control, and labor, which are paid by the
action of nitric acid on cellulose. The similar merchandise. In determining the Government of France.
product comes in several viscosities and most similar merchandise we may select Department’s Position. We included in
is used to form films in lacquers, from a range of similar merchandise. For SNPE’s cost of production the net value
coatings, furniture finishes, and printing each U.S. sale during the period there of two subsidies since SNPE’s
inks. Industrial nitrocellulose is were sufficient above-cost home market accounting records include them.
currently classifiable under item sales of either such or similar However, SNPE did not receive any
445.2500 of the Tariff Schedules of the merchandise for comparison purposes. research and development assistance
United States Annotated. Comment 4. The Department must use related to industrial nitrocellulose.
The review covers one exporter of the best information available to Further, all costs of the capital
French industrial nitrocellulose to the calculate the profit component of equipment purchased through
United States and the period May 13, constructed value since SNPE’s profit government assistance for pollution
1983 through July 31,1984, was unverified. The best information control (depreciation, repair, and
available is that all of SNPE’s profit was maintenance costs) are included in
Analysis of Comments Received earned on sales of nitrocellulose. SNPE’s cost of production. Finally, all
We invited interested parties to Department’s Position. Since we did
actual labor costs relating to SNPE
comment on the preliminary results, We not use constructed value in determining
employees with civil service status are
received comments from both the foreign market value, the issue is moot.
Comment 5. The Department included in SNPE’s cost of production,
petitioner and the respondent. since we used SNPE’s actual cost of
understated SNPE’s cost of production
Petitioner’s Comments by including only the actual interest production, not SNPE’s theoretical cost
expenses incurred between the date of (see Tool Steel from the Federal
Comment 1. The Department should Republic o f Germ any, Correction to
use constructed value to calculate shipment and the date of payment. The
Department should have used an Early D e termination o f Antidumping
foreign market value because there is no Duty. (51 FR 10071, March 24,1986)).
verified evidence that SNPE had a imputed interest expense based on
SNPE’s average interest rate and the Comment 8. The Department
viable home market during the period, understated SNPE’s cost of production
since SNPE refused to allow the time period between the date of sale
and the date of payment. by omitting expenses relating to travel
Department to verify its third-country and lodging for employees temporarily
sales. Department’s Position. In computing
the cost of production we prefer actual assigned to the Bergerac plant, which
Department’s Position. As noted in produces industrial nitrocellulose.
the verification report, SNPE did not expenses over imputed expenses {see
Tool Steel from the Federal Republic o f Department's Position. These travel
permit the Department to verify prices of and lodging expenses are not related,
third-country sales; however, we did Germ any, Correction to Early
Determination o f Antidum ping Duty (51 either directly or indirectly, to the cost
verify the quantity of third-country sales of producing industrial nitrocellulose.
and that SNPE had sufficient above-cost F R 10071, March 24,1986)), unless we
determine that the firm’s actual We consider these to be factory
home market sales for the home market overhead expenses of the plants where
to be viable for comparison purposes. expenses do not accurately reflect the
actual experience of the firm. In this the workers are normally based, and
Comment 2. To determine whether consider the cost of production
case, we found that the actual expenses
SNPE had a viable home market, the ofnitrocellulose to include the amount of
found in SNPE’s records did accurately
Department should define the scope of reflect the experience of the firm. travel and lodging expenses of Bergerac j
“ such or similar” merchandise prior to Comment 6. The Department workers temporarily assigned to plants
testing for below-cost sales in the home understated SNPE’s cost of production other than Bergerac.
market.
by omitting the imputed rent costs for Comment 9. In determining the extent j
Department’s Position. We agree. The equipment used but not owned by SNPE. of below-cost sales, the Department
Department first determined whether Department’s Position. The cost of improperly compared SNPE’s full-year
SNPE’s total home market sales of such capital equipment can be reflected 1983 cost of production with SN PEs
or similar merchandise were at least 5 either in a lease charge or in combined sales prices between May and
percent of SNPE’s total third-country charges for depreciation, repair, and December 1983. The Department should I
sales. W e then retested the viability of maintenance. In its financial records have compared such sale prices with
SNPE's home market after disregarding SNPE includes charges for repair and SNPE’s cost of production between May fl
below-cost sales. maintenance of the equipment, which and December.
Comment 3. For those grades of we included in SNPE’s cost of Department’s Position. As required by I
nitrocellulose which are sold in the production. There are no depreciation section 773(b) of the Tariff Act, we
United States but not in the home charges in SNPE’s financial records investigated whether SNPE made sales j
market, for comparison purposes the since, among other reasons, had SNPE over an extended period of time at
Department should use the physically owned the equipment, it would have prices which would permit the recovery I
most similar merchandise sold in the already been fully depreciated. of all costs within a reasonable period
home market If home market sales of Therefore, all actual costs of this of time. It is our normal practice in
the most similar merchandise are equipment are included in SNPE's cost administrative reviews to calculate the j
insufficient, the Department should base of production. cost of production over a one year
foreign market value on constructed Comment 7. While the Department did
value period. We may make exceptions to this fl
include in SNPE’s cost of production the practice when the review period spans j
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices 43229

more than one accounting period of the generally accepted accounting principles expenses for doubtful accounts (an
firm or when costs vary significantly of France, and it reasonably reflects the SG&A item) from added costs only for
within the year. In this case, the actual experience of the firm. the purpose of allocating SG&A
petitioner has not demonstrated that the Comment 14. The Department should expenses.
costs for the period January through allocate home market selling and Comment 17. The Department should
April 1983 vary significantly from the advertising expenses only over sales to calculate SNPE’s U.S. credit expense
costs for the period May through unrelated parties, because SNPE incurs from the date of sale, not from the, date
December 1983. See also, response to no selling expenses on sales of of shipment, as required by Atlantic
comment 10. industrial nitrocellulose to the Steel Co. v. United States, 10 CIT
Comment 10. Since the Department Government of France. Sales" of military _______ , 7 ITRD 2503 (1986).
calculated foreign market value on a nitrocellulose should also be excluded Department’s Position. We disagree.
monthly basis, the Department should from the allocation base because SNPE In Atlantic Steel, the Court agreed with
calculate SNPE’s cost of production on a refused to provide requested data on the ITA’s conclusion that there was a
monthly basis when determining these products. direct relationship between the credit
whether home market sales were made Department’s Position. W e have costs incurred prior to shipment and the
below the cost of production. reconsidered this issue since the fair sales under investigation because the
Department’s Position. Only in value investigation and have determined orders were filled in advance of
unusual economic circumstances, such that SNPE incurs no such selling and shipment. SNPE does not fill orders in
as hyperinflation or when the cost of advertising expenses at the Bergerac advance of shipment. It is not possible
production fluctuates dramatically from sales office on sales of military to identify particular merchandise in
month to month, is it appropriate to nitrocellulose to the French SNPE’s inventory prior to shipment with
compute a very short-term cost of Government. While we included in the any particular sale. Therefore, we have
production. No such circumstances allocation base certain sales of military calculated credit expenses from the date
existed in France during the review nitrocellulose to customers other than of shipment, not the date of sale (see
period. the Government of France, we excluded N ylon Im pression Fabric from Japan,
Comment-11* The Department should from the allocation base sales of Final Determination o f Sales at Not Less
allocate all production costs common to military nitrocellulose to the Than Fair Value, 51 F R 15816, April 28,
industrial and military nitrocellulose to Government of France. The Department .1986).
the cost of production of industrial did not include in the allocation base Comment 18. The Department should
nitrocellulose because SNPE refused to any sales of industrial nitrocellulose to investigate whether SNPE could have
provide requested financial data which the Government of France, since SNPE agreed to reimburse the importer of
would confirm that SNPE had properly did not make any such sales. record for antidumping duty cash
allocated such expenses. Comment 15. The Department should deposits.
Department’s Position. Within the investigate whether the prices SNPE
Department’s Position. The petitioner
context of verification the Department paid for inputs from government-owned
, has not presented, nor does the
thoroughly investigated the allocation of entities are charged to all French
Department have, any information
common costs between industrial and consumers of those inputs.
indicating that SNPE is reimbursing the
military nitrocellulose. We verified that Department’s Position. To examine
SNPE had correctly allocated such the arm’s-length nature of transactions importer of record for cash deposits of
common costs. betwèeh SNPE and related parties, the estimated antidumping duties.
Comment 12 TheDepartment should Department compared the prices paid by Comment 19. For any entries for
use the depreciation expenses reflected SNPE for inputs from related suppliers which SNPE posts an antidumping duty
in SNPE’s cost accounting records to to prices paid by SNPE for the same cash deposit, the Department should
compute its cost of production, rather inputs from unrelated suppliers. In some adjust foreign market value to account
than the depreciation expenses found in cases no unrelated supplier existed. for the imputed credit cost that SNPE
its financial statements. In these cases, SNPE provided other incurs in posting such cash deposits.
Department’s Position. We accept the information concerning the arm’s-length Department’s Position. See comment
accounting practices of a respondent as nature of the transaction, as described 18.
long as they are the respondent’s usual in our verification report. The Comment 20. For any entries for
accounting practices, they are consistent Department is satisfied that all such which SNPE ultimately becomes liable
with the generally accepted accounting transactions were made at arm’s length. for antidumping duties, the Department
principles of that country, and they Comment 16. The Department should should subtract those amounts from
reasonably reflect the actual experience not deduct from SNPE's cost of United States price as required by
of the firm. Since French law prohibits production its provision for doubtful § 353.55(a) of the Commerce
the use in financial reporting of certain accounts. Regulations. The Department should
SNPE cost accounting practices relating Department’s Position. We agree. make an identical adjustment to United
to depreciation, SNPE’s normal Provisions for doubtful accounts are States price for any countervailing
accounting practice for depreciation is estimated SG&A expenses not yet duties ultimately paid by SNPE.
found in its financial statements, not in incurred by SNPE. SNPE reported its Department’s Position. As provided
its cost accounting records. estimated expenses for 1984 in its by § 353.55(a) of the Commerce
Comment 13. The Department should questionnaire response. By the date of Regulations, prior to appraisement the
require SNPE to allocate SG&A verification, SNPE had audited its Customs Service will assess additional
expenses by sales revenue, not by accounting records for this period, and antidumping duties in the amount of any
“added cost” . reported its actual expenses for doubtful such duties for which SNPE ultimately
Department’s Position. We disagree. accounts. We included these actual becomes liable. Further, § 353.55(a) of
We accepted SNPE’s use of "added expenses in SNPE’s cost of production. the Commerce Regulations pertains only
costs” to allocate SG&A expenses However, SNPE’s cost accounting to antidumping duties.
because it is SNPE’s normal accounting records accumulate these expenses as Comment 21. The Department should
practice, it is consistent with the "added costs” . We therefore deducted have based foreign market value on a
 43230 Federal Register / Voi. 51, No. 230 / Monday, December 1, 1986 / Notices
in . i i j . . * I ■ „ . i n I, .................................... ...... ...................... ......... — I.......... m u —

VAT-inclusive price, and should have incurred by SNPE in connection with margin is less than 0.5 percent and,
increased the United States price by the this antidumping duty proceeding. therefore, de m inim is, the Department
V A T amount which was rebated by Department’s Position. We disagree. waives the estimated antidumping duty
reason of exportation to the extent that We do not consider legal fees paid in cash deposit requirement. This waiver
the V A T is added to or included in the connection with an antidumping applies to shipments of French industrial
price of industrial nitrocellulose when proceeding to be directly related to sales nitrocellulose entered, or withdrawn
sold in France, but failed to do either. (see Certain Steel Pipes and Tubes from from warehouse, for consumption on or
Department’s Position. As directed by Japan, (48 FR 1206, January 11,1983}).
after the date of publication of this
the Court of International Trade (“the
Respondent’s Comments notice and shall remain in effect until
CIT” ) in Zenith v. United States (April
24,1986), we are now attempting to Comment 1. In computing SNPE’s cost publication of the final results of the
formulate a methodology for calculating of production, the Department next administrative review.
the amount of indirect taxes passed incorrectly allocated SNPE’s R&D This administrative review and notice
through in the home market, which expenses generally rather than are in accordance with section 751(a)(1)
should then be added to the United allocating them on a product-specific of the Tariff Act (19 U .S.C. 1675(a)(1))
States price. Because the remand in basis. and § 353.53a of the Commerce
Zenith is still before the CIT, we have Department’s Position. The Regulations (19 CFR 353.53a).
followed our traditional methodology for Department was unable to verify that Dated: November 24,1988.
the reasons stated in our final SNPE’s accounting system recorded
R&D costs in a manner that would Gilbert B. Kaplan,
determination of sales at less than fair
value on Grand and Upright Pianos from permit the allocation o f R&D expenses DeputyAssistant Secretary, Import
on a product-specific basis. Therefore, Administration,
Korea, (50 FR 37561, September 16,
1985), and have subtracted the full we allocated R&D expenses generally. [FR Doc. 86-26927 Filed 11-28-86; 8:45 am]
amount of these taxes from foreign Comment 2. The Department SILLING CODE 3510-OS-M

market value. Further, we note that the incorrectly computed SNPE’s financing
combined effect of adding the V A T to expenses by failing to make adjustments
the selling price in the home market and for financing expenses unrelated to __ IA -122-057]
adding the rebated V A T to the United' industrial nitrocellulose and for
States price would change the margin financing income. Replacement Parts for Self-Propelled
calculations by less than 0.03 percent, Department’s Position. SNPE was Bituminous Paving Equipment From
and would, therefore, be insignificant. unable to substantiate die amount of Canada; Final Results of Antidumping
financing expenses unrelated to Duty Administrative Review
Comment 22. The Department should
nitrocellulose. Further, SNPE was
add the countervailing duty rate to the AGENCY: International Trade
unable to demonstrate that such
dumping margin to determine whether Administration/Import Administration,
SNPE’s unfair trading practices are de financing income was directly related to
industrial nitrocellulose. Department o f Commerce.
minimis
Comment 3. The Department a c t i o n : Notice of final results of
Department's Position. There is no overstated SNPE’s cost of production by
express authority for the Department to antidumping duty administrative review.
including depreciation expenses found
add the final rates of countervailing and in SNPE’s financial statements. The
antidumping duty to determine the On August 28,1986 the
SU M M A R Y:
Department should have used a straight- Department of Commerce published the
extent of unfair trading practices. line depreciation method only, since any
Although the Department has the preliminary results of its administrative
other method distorts SNPE’s actual review of the antidumping duty finding
inherent authority to do whatever is costs.
necessary to administer the unfair trade on replacement parts for self-propelled
Department’s Position. SNPE deviated bituminous paving equipment from
laws in a fair manner (see Smith-Corona from its normal accounting practice to
Group v. United States, 713 F.2d 1568 Canada. The review covers four
report depreciation expenses based only
(Fed. Cir. 1983)}, accounting for the manufacturers/exporters of this
on a straight-line methodology. The
simultaneous interaction between merchandise to the United States and
Department used SNPE’s normal
countervailing duties and antidumping two consecutive periods from September
methodology, as found in SNPE’s
duties is provided for in § 53.10{d}(l){iv) 1,1981 through August 31,1983.
financial statements, to compute
of the Commerce Regulations, making depreciation. We gave interested parties an
the adding of final duty rates redundant. Final Results o f the Review . Based on opportunity to comment on the
This section requires an addition to the our analysis of the comments received, preliminary results. W e received
United States price in the amount of any the preliminary results remain comments from Fortress Allatt Ltd.
countervailing duty imposed on the unchanged, and a de minimis margin of Based on our analysis of the comments
merchandise to offset an export subsidy. 0.17 percent exists for the period May received and correction of clerical errors
However, since the countervailing duty 13,1983 through July 31,1984. we have changed the margins from
rate during the period, if any, is The Department will instruct the those presented in the preliminary
unknown, and any addition to the Customs Service to assess antidumping results for Fortress Allatt Ltd.
United States price would merely lower duties on all appropriate entries. EFFECTIVE d a t e : December 1,1986.
an already de m inim is dumping margin, Individual differences between United
no adjustment to United States price is States price and foreign market value FOR FURTHER IN FO R M A TIO N CONTACT:
appropriate. may vary from the percentage stated Arthur N. DuBois or Robert J. Marenick,
Comment 23. The Department should above. The Department will issue Office of Compliance, International
consider as a direct selling expense, and appraisement instructions directly to the Trade Administration, U.S. Department
therefore make an adjustment to foreign Customs Service. of Commerce, Washington, DC 20230.
market value for, the amount of Further, as provided for in section telephone: (202) 377-5289/5255.
attorneys’ fees and related expenses 751(a)(1) of the Tariff Act, since the SUPPLEMENTARY INFO RM A TIO N :
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices 43231

Background produced erroneous results in the Typewriters from Japan (48 FR 40761,
On August 28,1986, the Department of currency conversion and duty rate September 9,1983). Such an adjustment
Commerce (“the Department”) calculations for those sales. We have is necessary to properly account for
published in the Federal Register (51 FR made the appropriate corrections. overhead costs incurred while the
Comment 4. Fortress argues that by merchandise is in inventory.
30685) the preliminary results of its
comparing sales to distributors in the We have now calculated the interest
administrative review of the
United States to sales to end-users in expense based on the price to the U.S.
antidumping duty finding on
the home market, margins were created, subsidiary and have included the
replacement parts for self-propelled
or larger margins resulted, from the imputed interest in indirect selling
bituminous paving equipment from
Department’s failure to make an expenses which increased the ESP cap.
Canada (42 FR 44811, September 7,
appropriate level-of-trade adjustment. Since we already verified that indirect
1977). We began this review under our
Fortress states that since discounts are expenses in the home market exceeded
oldregulations. After promulgation of granted to distributors in both markets,
our new regulations, Blaw Knox those in the United States we deducted
an appropriate adjustment would be to home market indirect expenses from
Construction Equipment Company, the apply the discount granted to the
petitioner, and Fortress Allatt Ltd., a foreign market value up to the amount
distributor on the U .S. sale as a discount deducted from the United States price.
manufacturer/exporter, requested in to the end-user in calculating foreign
accordance with § 353.53a(a) of the We did not calculate any imputed
market value. interest on the home market sales since
Commerce Regulations that we complete Department’s Position. We disagree. It
theadministrative review. We have now Fortress did not sell through subsidiaries
is our policy to make comparisons at the with warehouse facilities in the home
completed the administrative review in same level of trade when they exist in
accordance with section 751 of the Tariff market.
both markets. However, when, as here, Comment 6. Fortress contends that the
Act of 1930 (“the Tariff Act”). there are sales of a particular part to deduction for commissions should have
Scope of the Review distributors in the United States and been calculated as a percentage of the
there are no sales of the same part to invoice price, which was net of
Imports covered by the review are distributors in the home market, we
shipments of replacement parts for self- discounts, rather than as a percentage of
used the weighted-average price of that the starting price before discounts, since
propelled bituminous paving equipment. part to end-users in the home market,
Thereview covers rour manufacturers/ commissions were actually computed
which was the nearest comparable and paid in both markets in this manner.
exporters of this merchandise to the commercial level of trade. (See 19 CFR
United States and to consecutive Department’s Position. We agree and
353.19.) Distributors in both markets are have changed our calculations
periods from September 1,1981 through granted discounts of five, fifteen, or
August 31,1983. Since National Paver accordingly.
twenty-five percent without any fixed
Partswas acquired by Fortress in 1983 Comment 7. Fortress states that the
bases. However, we cannot simply
andceased to exist as a corporate Canadian Federal Sales Tax (“FST” ) is
assume that on sales of identical parts
entity, we will not separately cover included in the price of all end-user
to distributors in both markets, the same
National Paver Parts in future reviews. home market sales. Thus the correct
discount would be granted. Also,
Fortress did not satisfactorily, quantify calculation of FST should have been the
Analysis of Comments Received home market price less that price
any price differences related to sales at
We gave interested parties an different levels of trade.
divided by 1.09, rather than 9 percent of
opportunity to comment on the Comment 5. Fortress contends that we the price. Also, FST should be
preliminary results as provided by lack statutory or regulatory authority for calculated based on the full invoice
§ 353.53(d) of the Commerce deducting imputed interest on ESP sales. price, not the price less the commission,
Regulations. We received written Even if we have the statutory authority, since this was the amount of FST
comments from Fortress, then we computed the expense actually paid.
j Comment 1. Fortress contends that the incorrectly. The cost of carrying Department’s Position. W e agree and
¡preliminary results of review showed a inventory is generally viewed as a have changed our calculations
marginof 0 067 percent for September 1, function of interest, turnover time, and accordingly.
j1981 to August 31,1982, and that it cost of the merchandise to the seller, not Comment 8. Fortress contends that for
shouldhave been 0.66 percent. the sales value. Therefore, any ESP sales we should have applied the
Department’s Position: The deduction for this expense should be deductions for U.S. inland freight and
preliminary results of review showed a based on the transfer price to the U.S. for duty (in percentage terms) against
marginof 0.67 percent for the first subsidiary, which was list price less a the discounted list price rather than
period, not 0.067 percent. We agree that discount. against the list price before discount.
[themargin should have been 0.66 If the interest cost is treated as an Department’s Position. We disagree in
percent. indirect selling expense, it must be part. Fortress reported and we verified
I Comment 2. Fortress contends that added to the other U.S. indirect selling U.S. inland freight as a percentage of the
jour currency conversion table was expenses and included in the ESP cap. list price before discounts. We agree,
Imissing an entry for a quarterly rate that Finally, Fortress contends that imputed however, that duty was based on the list
¡adversely affected the margin interest costs in Canada exceeded price less discount, and we have
jcalculations for that quarter. imputed interest costs in the United changed our calculations accordingly.
I Department’s Position. We agree and States.
|have corrected the error. Final Results of the Review
Department’s Position. The
Comment 3. Fortress argues that its Department has the authority to Based on our analysis on the
Icomputer tape contained several consider imputed interest as an indirect comments received and the correction of
»erroneous U.S. sale dates tnat adversely selling expense, based on section clerical errors, we have revised our
jaffected its margins. 1677a(e)(2) of the Tariff Act and preliminary results for Fortress and we
Department’s Position. We agree that § 353.10(e)(2) of the Commerce determine that the following margins
(several dates were incorrect and Regulations. See also Portable Electric exist:
 43232 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices

Manufacturer/exporter Time period

Margin stated his intention to appeal from an Levy, Esquire, Law Office of Lawrence
(per­
cent) objection by the New York Department E. Elovich, 164 West Park Avenue, Long
of State (State) to Appellant’s dock/ Beach, New York 11561, and George R.
Fortress.................... ........... 9 /1/81-8/31/82
9 /1/82-8/31/83
0.53
.59
waiting area project adjacent to his Stafford, Director, Division of Coastal
General Construction............... 9 /1/81-8/31/82 .00 restaurant on Reynolds Channel in Resources and Waterfront
Equipment Manufacturing......... 9 /1/82-8/31/83
National Paver Parts.........
.59 Hempstead, New York, F-86-224 U.S. Revitalization, State of New York
9/1/81-8/31/83 1.05
Parker Hannifin....................... 9 /1/81-8/31/82 120.12 Army Corps of Engineers/NY District Department of State, Albany, New York
9 /1/82-8/31/83 20.12 Permit Application No. 86-352-L3. On
12231. All nonconfidential documents
1No shipments during the period. September 17,1986, Appellant’s counsel
filed a Notice of Appeal with the submitted or received in this appeal are
The Department will instruct the Secretary of Commerce under section available for public inspection during
Customs Service to assess antidumping 307(c)(3)(A) of the Coastal Zone business hours at the Law Office of
duties on all appropriate entries. Management Act of 1972 (CZMA), 16 Lawrence E. Elovich, the State of New
Individual differences between United U.S.C. 1456(c)(3)(A) and the Department York Department of State and the Office
States price and foreign market value of Commerce’s implementing of General Counsel, National Oceanic
may vary from the percentages stated regulations, 15 CFR 930, Subpart H. The and Atmospheric Administration, U.S.
above. The Department will issue additional information contained in the Department of Commerce, 1825
appraisement instructions directly to the September 17 letter and the one sent on Connecticut Avenue, NW., Suite 603,
Customs Service. October 29, perfected the appeal, but Washington, DC 20235.
Further, as provided by section were filed subsequent to the time period FOR A D D ITIO N A L IN FO RM A TIO N CONTACT:
751(a)(1) of the Tariff Act, a cash deposit specified in 15 CFR 930.125 for
of estimated antidumping duties based Katherine A . Pease, Attomey/Adviser,
submitting such information. The State
on the above margins shall be required Office of General Counsel, National
objected to the project as inconsistent
for these firms. For any future entries of with New York State’s coastal Oceanic and Atmospheric
this merchandise from a new exporter management program because of the use Administration, U.S. Department of
not covered in this or prior of the dock for a non-water dependent Commerce, 1825 Connecticut Avenue
administrative reviews, whose first use and its size and configuration. NW., Suite 603, Washington, DC 20235
shipments occurred after August 31,1983 The Appellant requests that the (202) 673-5200.
and who is unrelated to any reviewed Secretary find that his project may be [Federal Domestic Assistance Catalog No.
firm or any previously reviewed firm, a approved by the Corps of Engineers 11.419 Coastal Zone Management
cash deposit of 0.59 percent shall be despite the objection by the State Administration]
required. These deposit requirements because the project is “ consistent with Dated: November 25,1986.
are effective for all shipments of the objectives or purposes of the
Timothy R.E. Keeney,
Canadian replacement parts for self- C Z M A ,’’ a statutory ground set forth in
propelled bituminous paving equipment section 307(a)(3)(A) for overriding a Acting General Counsel.
entered, or withdrawn from warehouse, state’s objection. In order to make this [FR Doc. 86-26892 Filed 11-28-86; 8:45 am]
for consumption on or after the date of determination, the Secretary must find BILLING CODE 3510-08-M
publication of this notice and shall that the project furthers one or more of
remain in effect until publication of the the national objectives contained in
final results of the next administrative section 302 or 303 of the CZM A; that the Pacific Fishery Management Council;
review. adverse effects of the project do not Amended Meeting
This administrative review and notice outweight its contribution to the
are in accordance with section 751(a)(1) national interest; that the project will AGENCY: National Marine Fisheries
of the Tariff Act (19 U.S.C. 1675(a)(1)) not violate the Clean Air Act or the Service, N O A A , Commerce.
and § 353.53a of the Commerce Federal Water Pollution Control Act; The date and room number as
Regulations (19 CFR 353.53a). and that no reasonable alternative is published in the Federal Register on
Dated: December 24,1986. available that would permit the activity November 25,1986 (51 FR 42610), for a :
Gilbert B. Kaplan, to be conducted in a manner consistent special public meeting of Pacific Fishery I
with the State’s coastal management Management Council advisors, have
Deputy Assistant Secretary for Import program.
Administration. been changed.
Both Appellant and the State have
(FR Doc. 86-26928 Filed 11-28-86; 8:45 am] raised the issue of the timeliness of the The public meeting will convene on
BILLING CODE 3510-DS-M
appeal in their preliminary filings. This December 4,1986, in Room 330 of the
issue will be briefed by Appellant and Council’s office (address below), at 9
the State, and the Secretary will decide a.m., instead of on December 2 in Room I
National Oceanic and Atmospheric
this issue when he makes his decision 180. All other information remains
Administration
on the merits of the case. unchanged. For further information
Coastal Zone Management; Federal Public comments are invited on the contact Joseph C. Greenley, Executive
Consistency Appeal by John Bianchi findings that the Secretary must make as Director, Pacific Fishery Management
From an Objection by the New York set out in the regulations at 15 CFR Council, Metro Center, 2000 S.W . First
Department of State 930.121. Comments are due within thirty Avenue, Suite 420, Portland OR 97201;
days of the publication of this notice. telephone: (503) 221-6352.
a g e n c y : National Oceanic and Comments should be sent to Daniel W.
Atmospheric Administration. Dated: November 24,1986.
McGovern, General Counsel, National
a c t i o n : Notice of appeal. Oceanic and Atmospheric Richard B. Roe,
Administration, U.S. Department of Director, Office of Fisheries Management,
On September 5,1986, John Bianchi Commerce, Washington, DC 20235. National Marine Fisheries Service.
(Appellant) sent a letter to the Copies of the comments also should be [FR Doc. 86-26899 Filed 11-28-86; 8:45 am]
Department of Commerce in which he sent to Appellant’s counsel, Peter H. BILUNG CODE 3510-22-M
 Federal Register / V o l. 51, N o. 230 / M on d ay, Decem ber 1, 1986 / N otices 43233

National Technical Information Background Agreements, which established an export

Service visa requirement for certain cotton, wool and
Under the terms'of the bilateral man-made fiber textiles and textile products,
agreement of November 18,1982, as produced or manufactured in Taiwan.
Intent to Grant Exclusive Patent amended and extended, concerning
License; Turbulence Prediction
Effective on December 2,1986 and until
certain cotton, wool and man-made fiber further notice, the existing export visa
Systems, Inc. requirement established by the directive of
textile products from Taiwan, agreement
The National Technical Information has been reached to further amend the September 27,1972, as amended, is hereby
Service (NTIS), U.S. Department of existing export visa requirement to further amended to permit entry for
Commerce, intends to grant to provide for the use of visas for the consumption, or withdrawal from warehouse
merged Categories 447/448, instead of for consumption, in the United States of wool
Turbulence Prediction Systems, Inc., textile products in Categories 447 and 448,
having a place of business in Boulder, individual Categories 447 and 448. In the visaed as merged Category 447/448, and man­
Colorado 80302, an exclusive right in the case of Category 659, 659-C and 659-H made fiber textile products in Category 659,
United States to practice the invention are being combined and shall be visaed visaed as Category 659-H 1and exported on
embodied in U.S. Patent 4,266,130, as 659-H (T.S.U.S.A. numbers 703.0510, and after November 1986. Merchandise
“Method and Apparatus for Detecting 703.0520, 703.0530, 703.0540, 703.0550, visaed as Categories 447, 448 and 659-C 2
Clear Air Turbulences.” The patent 703.0560, 703.1000, 703.1610, 703.1620, before December 2,1986, shall not be denied
rights in this invention have been 703.1630, 703.1640 and 705.1650). entry provided all other requirements
assigned to the United States of Accordingly, in the letter which follows previously established under this visa
America, as represented by the this notice, the Chairman of the arrangement have been met.
Secretary of Commerce. The Committee for the Implementation of
Committee for the Implementation of Textile Agreements has determined that
The proposed exclusive license will Textile Agreements directs the these actions fall within the foreign affairs
be royalty-bearing and will comply with Commissioner of Customs to permit exception to the rulemaking provisions of 5
the terms and conditions of 35 U .S.C. 209 entry into the United States for U.S.C. 553(a)(1).
and 37 CFR Part 404. The proposed consumption and withdrawal from Sincerely,
license may be granted unless, within warehouse for trousers visaed as William H. Houston III,
sixty days from the date of this Category 447/448 and man-made fiber Chairman, Committee for the Implementation
published Notice, NTIS receives written headwear visaed as Category 659-H, o f Textile Agreements.
evidence and argument which effective on December 2,1986 for goods (FR Doc. 86-26926 Filed 11-28-86; 8:45 am]
establishes that the grant of the exported on and after December 2,1986. BILLING CODE 3510-DR-M
proposed license would not serve the Wool trousers exported before
public interest. December 2,1986 may be visaed
Inquiries, comments and other individually as Categories 447 and 448, Establishing Import Limits for Certain
materials relating to the proposed and man-made fiber headwear in Cotton, Man-Made and Vegetable Fiber
license must be submitted within the Category 659, exported before that date, Textile Products Produced or
above specified 60-day period and may be visaed as Category 659-C, Manufactured in Malaysia
should be addressed to Robert P. Auber, provided all other requirements
Office of Federal Patent Licensing, NTIS, established under this visa arrangement November 25,1986.
Box 1423, Springfield, V A 22151. have been met.
Douglas J. Campion, The Chairman of the Committee for
A description of the cotton, wool and the Implementation of Textile
Patent Licensing Specialist, O ffice o f Federal man-made fiber textile categories in
Patent Licensing, U.S. Department of Agreements (CITA), under the authority
terms of T .S.U .S.A . numbers was contained in E .0 .11651 of March 3,1972,
Commerce, National Technical Information published in the Federal Register on
Service. as amended, has issued the directive
December 13,1982 (47 FR 55709), as published below to the Commissioner of
[FR Doc. 86-26951 Filed 11-28-86; 8:45 am] amended on April 7,1983 (48 FR 15175), Customs to be effective on November
BILLING CODE 3510-04-M May 3,1983 (48 FR 19924), December 14, 18,1986. For further information contact
1983 (48 FR 55607), December 30,1983 Eve Anderson, International Trade
(48 FR 57584), April 4,1984 (49 FR Specialist, Office of Textiles and
COMMITTEE FOR THE 13397), June 28,1984 (49 FR 26622), July
IMPLEMENTATION OF TEXTILE Apparel, U.S. Department of Commerce,
16,1984 (49 FR 28754), November 9,1984 (202) 377-4212. For information on the
AGREEMENTS (49 FR 44782), and in Statistical quota status of these limits, please refer
Amending Export Visa Requirement Headnote 5, Schedule 3 of the Tariff to the Quota Status Reports which are
for Certain Man-Made Fiber Textile Schedules of the United States posted on the bulletin boards of each
Products Produced or Manufactured in Annotated (1986). Customs port. For information on
| Taiwan William H. Houston III, embargoes and quota re-openings,
Chairman, Committee for the Implementation please call (202) 377-3715.
November 25,1986. o f Textile Agreements.
The Chairman of the Committee for Background
COMMITTEE FOR THE
the Implementation of Textile IMPLEMENTATION OF TEXTILE Under the terms of the Bilateral
Agreements (CITA), under the authority AGREEMENTS
contained in E .0 .11651 of March 3,1972, Cotton, Wool and Man-Made Fiber
November 25,1986. Textile Agreement of July 1 and July 11,
as amended, has issued the directive
published below to the Commissioner of Commissioner of Customs, 1985, the Governments of the United
Department o f the Treasury, Washington, D C
j Customs to be effective on December 2, 20229.
1986. For further information contact Dear Mr. Commissioner: This directive
* In Category 659, only T .S.U .S.A . numbers
703.0510, 703.0520, 703.0530, 703.0540, 703,0550,
I Kathy Davis, International Trade further amends, but does not cancel, the 703.0560, 703.1000, 703.1810, 703.1620, 703.1630,
I Specialist, Office of Textiles and directive of September 27,1972, as amended, 703.1640 and 705.1650.
j Apparel, U.S. Department of Commerce, issued to you by the Chairman, Committee 2 In Category 659, only T .S.U .S.A . numbers
| (202) 377-4212. for the Implementation ot Textile 703.1610, 703.1620, 703.1630, 703.1640 and 705.1650.
43234 ___________Federal Register / Vol. 51, N o, 230 / Monday, December 1, 1986 / Notices

States and Malaysia have agreed to 342/642/842. 351/651 and 605-T K produced Sincerely,
amend their bilateral agreement to or manufactured in Malaysia and exported William H. Houston III,
establish new specific limits for textile during the designated restraint periods, in Chairman, Committee for the Implementation
products in Categories 342/642/842 excess of the following restraint limits: o f Textile Agreements.
(skirts of cotton, man-made and [FR Doc. 86-26923 Filed 11-28-86; 8:45 am]
vegetable fibers), 351/651 (cotton and Category . Restraint limit Restraint period
BILUNG CODE 3510-DR-M
man-made fiber pajamas and nightwear)
and 605-T (man-made fiber sewing 342/642/842....... 52.500 doz........... Oct. 1-Dec. .31,1966
351/651.......... 40.000 doz........... Do.
thread—-only T.S.U.S. A . number 605-T.........„...;...... 115,000 pds.......... Sep. 1-Dec. 31, Adjusting import Limits for Certain
310.9500), produced or manufactured in 1986
Cotton, Wool and Man-Made Fiber
Malaysia and exported during the Textile Products Produced or
period which, for Categories 342/642/ Textile products in Categories 342/642/842, Manufactured in the Philippines
842 and 351/651, began on October 1, 351/651, 605-T which have been exported to
1986 and extends through December 31, the United States prior to September 1,1986 November 25,1986.
1986, and for Category 605-T, which for Category 605— T and October 1,1986 for
The Chairman of the Committee for
began on September 1,1986 and extends Categories 342/642/842 and 351/651, shall not
through December 31,1986. be subject to this directive. the Implementation of Textile
Accordingly, in the letter which Textile products in Categories 342/642/842, Agreements (CITA), under the authority
follows this notice the Chairman of the 351/651 and 605-T which have been released contained in E .0 .11651 of March 3,1972,
Committee for the Implementation of from the custody of the U.S. Customs Service as amended, has issued the directive
Textile Agreements directs the under the provisions of 19 U.S.C. 1448(b) or published below to the Commissioner of
1484(a)(1)(A) prior to the effective date of this Customs to be effective on December 2,
Commissioner of Customs to prohibit directive shall not be denied entry under this
entry into the United States for 1986. For further information contact
directive. Eve Anderson, International Trade
consumption, or withdrawal from The restraint limits set forth above are
warehouse for consumption, of cotton, Specialist, Office of Textiles and
subject to adjustment in the future according Apparel, U.S. Department of Commerce,
man-made and vegetable fiber products to the provisions of the bilateral agreement,
in the foregoing categories in excess of (202) 377-4212. For information on the
as amended, between the Governments of the
the designated restraint limits. United States and Malaysia which provide, in quota status of these limits, please refer
A description of the cotton, wool and part, that: (1) Specific limits or sublimits may to the Quota Status Reports which are
man-made fiber textile categories in be exceeded by not more than 5 percent, posted on the bulletin boards of each
terms of T.S.U.S. A . numbers was provided a corresponding reduction in Customs port. For information on
published in the Federal Register on equivalent square yards is made in one or embargoes and quota re-openings,
December 13,1982 (47 FR 55709), as more other specific limits during the same please call, (202) 377-3715.
agreement year; (2) specific limits may be
amended on April 7,1983 (48 FR 15175), adjusted for carryover and carryforward up Background
May 3,1983 (48 FR 19924), December 14, to 11 percent of the applicable category
1983 (48 FR 55607), December 30,1983 A CITA directive dated December 20,
limits, except that there will be not carryover 1985 (50 FR 52830), as amended,
(48 FR 57584), April 4,1984 (49 FR in the first agreement period (May 1,1986
13397), June 28,1984 (49 FR 26622), July established limits for certain cotton,
through December 31,1986) and no wool and man-made fiber textile
16,1984 (49 FR 28754), November 9,1984 carryforward in the final agreement period
(49 FR 44782), and in Statistical products, including Categories 335-T,
(calendar year 1989); and (3) administrative
Headnote 5, Schedule 3 of the Tariff arrangements or adjustments may be made to 335-NT, 338/339, 341-T, 345, 348-T, 348-
Schedules of the United States resolve problems arising in thé NT, 433, 631-W, (only TSU SA numbers
annotated (1986). implementation of the agreement. Any 704.3215, 704.8525, and 704.9000) 634,
William H. Houston III, appropriate adjustments under the provisions 642-NT, 643, 651, 652-NT and 659-T,
of the bilateral agreement referred to above produced or manfactured in the
Chairman, Committee for the Implementation will be made to you by letter. Philippines and exported during the
o f Textile Agreements. A description of the cotton, wool and man­ agreement year which began on January
Committee for the Implementation of Textile made fiber textile categories in terms of 1,1986 and extended through December
Agreements. T. S.U.S.A. numbers was published in the 31,1986.
November 25,1986. Federal Register on December 13,1982 (47 FR
55709), as amended on April 7,1983 (48 FR At the request of the Government of
Commissioner of Customs, 15175), May 3,1983 (48 FR 19924), December the Republic of the Philippines, pursuant
Department o f the Treasury, Washington, D C 14,1983 (48 FR 55607), December 30,1983 (48 to the Bilateral Cotton, Wool and Man-
20229.
FR 57584), April 4,1984 (49 FR 13397), June 28, Made Fiber Textile Agreement of
Dear Mr. Commissioner: Under the terms of 1984 (49 FR 26622), July 16,1984 (49 FR 28754), November 24,1982, as amended,
section 204 of the agricultural Act of 1956, as November 9,1984 (49 FR 44782), and in between the Governments of the United
amended (7 U.S.C. 1854), and the Statistical Headnote 5, Schedule 3 of the States and the Republic of the
Arrangement Regarding International Trade Tariff Schedules of the United States
in Textiles done at Geneva on December 20, Philippines, swing and carryover are
annotated (1986). being applied to the restraint limits
1973, as further extended on July 31,1986; In carrying out the above directions, the
pursuant to the Bilateral Cotton. Wool and previously established for textile
Man-Made Fiber Textile Agreement of July 1 Commissioner of Customs should construe
entry into the United States for consumption products in the foregoing categories.
and July 11,1985, as amended, between the As a result of these adjustments the
Governments of the United States and- to include entry for consumption into the
Commonwealth of Puerto Rico. limits for cotton and man-made fiber
Malaysia; and in accordance with the textile products in Categories 335-T, 634,
provisions of Executive Order 11651 of March The Committee for the Implementation of
3,1972, as amended, you are directed to Textile Agreements has determined that ~643 and 659-T are being reduced. The
prohibit, effective on November 28,1986, these actions fall within the foreign affairs limits for all remaining categories
entry into the United States for consumption exception to the rulemaking provisions of 5 affected by this action are being
and withdrawal from warehouse for U. S.C. 553(a)(1). increased.
consumption of cotton, man-made and In the letter published below, the
vegetable fiber textile products in Categories ‘ In Category 605, only T S U SA number 310.9500. Chairman of the Committee for the
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices 43235

Implementation of Textile Agreements exception to the rulemaking provisions of 5 13397), June 28,1984 (49 FR 26622), July
directs the Commissioner of Customs to U.S.C. 553(a)(1). 16,1984 (49 FR 28754), November 9,1984
adjust the limits accordingly. Sincerely, (49 FR 44782), and in Statistical
A description of the textile categories William H. Houston III, Headnote 5, Schedule 3 of the Tariff
in terms of T.S.U.S.A. numberss was Chairman, Committee for the Implementation Schedules of the United States
published in the Federal Register on o f Textile Agreements. Annotated (1986).
December 13,1982 (47 FR 55709), as [FR Doc. 86-26924 Filed 11-28-86; 8:45 am]
William H. Houston III,
amended on April 7,1983 (48 FR 15175),. BILLING CODE 3510-DR-M
Chairman, Committee for the Implementation
May 3,1983 (FR 19924), December 14, o f Textile Agreements.
1983, (48 FR 55607), December 30,1983
(48 FR 57584), April 4,1984 (49 FR
Adjustment of Import Limits for November 21,1986.
13397), June 28,1984 (49 FR 26622), July
Certain Cotton and Man-Made Fiber
COMMITTEE FOR THE
1 6 , 1984 (49 FR 28754), November 9,1984
Textile Products Produced or IMPLEMENTATION OF TEXTILE
(49 FR 44782), July 14,1986 (51 FR 25386)
Manufactured in Sri Lanka AGREEMENTS
and in Statistical Headnote 5, Schedule November 21,1986. Commissioner of Customs,
3 of the Tariff Schedules of the United Department o f the Treasury, Washington, D C
States Annotated (1986). The Chairman of the Committee for 20229.
William H. Houston III, the Implementation of Textile
Agreements (CITA), under the authority Dear Mr. Commissioner: This directive
Chairman, Committee for the Implementation
contained in E .0 .11651 of March 3,1972, further amends, but does not cancel, the
of Textiles Agreements. directive issued to you on May 22,1986 by
as amended, has issued the directive
Committee for the Implementation of Textile published below to the Commissioner of the Chairman, Committee for the
Agreements Customs to be effective on November Implementation of Textile Agreements,
November 25,1986. concerning imports into the United States of
28,1986. For further information contact
Ann Fields, International Trade certain cotton, wool, and man-made fiber
Commissioner of Customs,
Department of the Treasury, Washington, D C textile products, produced or manufactured in
Specialist, Office of Textiles and
20229. Sri Lanka and exported during the twelve-
Apparel, U .S. Department of Commerce,
Dear Mr. Commissioner: This directive month period which began on June 1,1986
(202) 377-4212. For information on the
further amends, but does not cancel, the and extends through May 31,1987.
quota status, please refer to the Quota Effective on November 28,1986, the
directive issued to you on December 20,1985 Status Reports which are posted on the
by the Chairman, Committee for the directive of May 22,1986 is hereby further
Implementation of Textile Agreements, bulletin boards of each Customs port. amended to adjust the previously established
concerning imports into the United States of For information on embargoes and quota limits for cotton and man-made fiber textile
certain cotton, wool, and man-made fiber re-openings, please call (202) 377-3715. products in the following categories, as
textile products, produced or manufactured in Background provided under the terms of the bilateral
the Philippines and exported during the agreement of May 10,1983, as amended:1
twelve-month period which began on January On May 28,1986, a notice was
1,1986 and extends through December 31, published in the Federal Register (51 FR
1986. 19249), which announced import Category Adjusted 12-mo. lim it1
Effective on December 2,1986, the limits for restraint limits for cotton, wool and
the indicated categories are to be adjusted as man-made fiber textile products in 335........................ 137,645 doz.
follows under the terms of the bilateral 340........................ 495,268 doz.
agreement:1 Categories 335, 340, 341, 348 and 640, 341.......... ............. 475,524 doz.
among others, produced or 348........................ 275,292 doz.
640........................ 96,609 doz.
Category Adjusted limit1 r manufactured in Sri Lanka and exported
during the twelve-month period which 1The limits have not been adjusted to account for any
335-T....Sâ imports exported after May 31; 1986.
42,765 doz. began on June 1,1986 and extends
335-NT .... 46.232 dOZ.
338/339 .......... . 1,055,394 doz. through May 31,1987. The Committee for the Implementation of
341-T ..... 90.105 doz. Under the terms of the Bilateral Textile Agreements has determined that
345.... 45,857 doz.
348-T .. .... 262,363 doz.
Cotton, Wool and Man-Made Fiber these actions fall within the foreign affairs
348-NT.............. 266,760 doz. Textile Agreement between the exception to the rulemaking provisions of 5
433........ 3,061 doz. Governments of the United States and
631-W..... 449,822 .doz. prs.
U.S.C. 553(a)(1).
634........ 237,628 doz. Sri Lanka, the limits for Categories 335, Sincerely,
642-NT................. . 76,614 doz. 340, 341, 348 and 640 are being reduced
643 ..... 49,120 doz. William H. Houston III,
651........ 122,509 doz. from 145,904 dozen to 137,645 dozen Chairman, Committee for the Implementation
652-NT. 727,482 doz. (Category 335), 524,984 dozen to 495,268 o f Textile Agreements.
6 5 9 - T . 3,978,650 doz. dozen (Category 340), 525,256 dozen to
[FR Doc. 86-26925 Filed 11-28-86; 8:45 am]
. 'The limits have not been adjusted to account for any 475,524 dozen (Category 341), 291,810
roports exported after December 31, 1985. dozen to 275,292 dozen (Category 348), BILLING CODE 3510-DR-M
2,ln Category 631, only TSUSA numbers 704.3215,
704.8525 and 704.9000. 102,406 dozen to 96,609 dozen (Category
The Committee for the Implementation of 640), to account for carryforward used in
Textile Agreements has determined that the previous agreement year. 1 The bilateral agreement provides, in part, that:
these actions fall within the foreign affairs A description of the cotton, wool and (1) Specific limits and sublimits may be exceeded
man-made fiber textile catagories in by certain designated percentages of the square
terms of T .S.U .S.A. numbers was yard equivalent total, provided the amount of the
1 The agreement provides, in part, that: (1) increase is compensated for by a decrease in
Specific limits may be exceeded during the published in the Federal Register on
equivalent square yards in one of more other
agreement year by designated percentages; (2) December 13,1982 (47 FR 55709), as specific limits; (2) specific limits may be increased
specific limits may be adjusted for swing, carryover amended on April 7,1983 (48 FR 15175},
and carryforward: and (3) administrative for carryover or carryforward: (3) administrative
arrangements or adjustments may be made to May 3,1983 (48 FR 19924), December 14, adjustments or arrangements may be made to
resolve minor problems arising in the 1983 (48 FR 55607), December 30,1983 resolve minor problems arising in the
1implementation of the agreement. (48 FR 57584), April 4,1984 (49 FR implementation of the agreement.
 43236 Federal Register / V o l. 51, N o, 230 / M onday, Decem ber 1, 1986 / N otices

Enforcement of Requirement to DEPARTMENT OF DEFENSE Pub. L. No. 92-463, as amended (5 U.S.C,

Provide Correct Date of Export App. II, (1982)), it has been determined
November 25,1986. Office of the Secretary that these DSB Task Force meetings,
concern matters listed in 5 U .S.C.
The Committee for the Defense Science Board Task Force on 552b(c)(l) (1982), and that accordingly
Implementation of Textile Agreements B-1B Defensive Avionics Review these meetings will be closed to the
(CITA) has learned that import Subgroup public.
declaration have been filed citing the
incorrect date of export from the country a c t i o n : Notice of advisory committee Dated: November 25,1986.
of origin. Since bilateral textile meetings. Patricia H. Means,
agreements and unilateral restraint OSD Federal Register Liaison Officer.
levels are implemented on the basis of summary: The Defense Science Board Department o f Defense.
the date of export and not the date of Task Force on B -lB Defensive Avionics [FR Doc. 86-26880 Filed 11-28-86; 8:45 amj
import of textile and apparel products, Review Subgroup will meet in closed BILLING CODE 3810-01-M
an incorrect date of export can affect session on December 15,1986 at Eaton
the quote period to which goods are Corp., AIL Division, Deer Park, New
charged. York.
Accordingly, the public is reminedd The mission of the Defense Science Defense Science Board Task Force on
that the correct date of export from the Board is to advise the Secretary of Computer Applications to Training and
Defense and the Under Secretary of Wargaming
country of origin must be stated on the
entry document with supporting Defense for Acquisition on scientific and
: Change in date of advisory
a c t io n
evidence included in the entry package technical matters as they affect the
perceived needs of the Department of committee meeting notice.
presented to Customs. Entry documents
containing incorrect or unverifiable date Defense. At this meeting the Task Force
s u m m a r y : The meeting of the Defense
of export informa tin will not be will evaluate the status of the Air Force
B -lB Defensive Avionics Program. Science Board Task Force on Comupter
accepted and Customs will deny such Applications to Training and
In accordance with section 10(d) of
merchandise entry for consumption, or Wargaming scheduled for January 12-13,
the Federal Advisory Committee Act,
withdrawal from warehouse for Pub. L. No. 92-463, as amended (5 U.S.C. 1987 as published in the Federal Register
consumption in the United States. App. II, (1982)), it has been determined (Vol. 51, No. 220, Page 41382, Friday,
Background that this DSB Task Force meeting, November 14,1986, FR Doc 86-25693)
The United States Customs Service, concerns matters listed in 5 U.S.C. will be held on November 24,1986. In all
under §§ 12.130(f) and 132.11(b) of its 552b(c)(l) (1982), and that accordingly other respects the original notice
regulations (19 CFR 12.130(f) and this meeting will be closed to the public. remains unchanged.
132.11(b)), has the authority to deny Dated: November 25,1986. Dated: November 25.1986.
entry to shipments lacking correct or Patricia H. Means,
Patricia H. Means,
verifiable date of export information. OSD Federal Register Liaison Officer,
Department o f Defense. OSD Federal Register Liaison O fficer,
Specifically, §§ 12.130(f) which requires Department o f Defense.
a manufacturer, producer, exporter or [FR Doc. 86-26879 Filed 11-28-86; 8:45 amj [FR Doc. 86-26881 Filed 11-28-86; 8:45 am]
importer of a textile product to file a BILLING CODE 3810-01-M
BILUNG CODE 3810-01-M
declaration of the country of origin,
states that entry will be denied unless
the merchandise is accompanied by a Defense Science Board Task Force on
properly executed declaration. Among B-1B Defensive Avionics Review Defense Science Board Task Force on
the information to be provided on that Subgroup Follow-on Forces Attack (FOFA)
declaration is the correct date of export
A C TIO N : Notice of advisory committee : Change in date of advisory
from the country of origin. Section meeting.
a c t io n

132.11(b) states that entry documents for committee meeting notice.

quota merchandise must be presented in s u m m a r y : The Defense Science Board
“proper form” and provides that when Task Force on B -B l Defensive Avionics sum m ary: The meeting of the Defense
entry documents are not in proper form, Review Subgroup will meet in closed Science Board Task Force on Follow-on
the accompanying merchandise “ shall session on December 17 and 29,1986, Forces Attack (FOFA) scheduled for
not be regarded as entered for purposes and January 13,1987 at the Pentagon, December 1-2,1986 as published in the
of quota priority and shall not acquire Arlington, Virginia. Federal Register (Vol. 51, No. 216, Page
quota status.” Section 152.1(c) of the The mission of the Defense Science 40477-40478, Friday, November 7,1986,
Customs regulations defines “ date of Board is to advise the Secretary of FR Doc. 86-25269) will be held on
exportation” as “ the actual date the Defense and the Under Secretary of January 22-23,1987. In all other respects
merchandise finally leaves the country Defense for Acquisition on scientific and the original notice remains unchanged.
of exportation for the United States." technical matters as they affect the Dated: November 25,1986.
William H. Houston III, perceived needs of the Department of
Defense. At these meetings the Task Patricia H. Means,
Chairman, Committee for the Implementation Force will evaluate the status of the Air OSD Federal Register Liaison Officer.
o f Textile Agreements. Department o f Defense.
Force B -lB Defensive Avionics Program.
[FR Doc. 26922 Filed 11-28-86; 45 ami In accordance with section 10(d) of [FR Doc. 86-26882 Filed 11-28-86; 8:45 amj
BILLING CODE 3510-DR-M the Federal Advisory Committee Act, BILLING CODE 3810-01-M
 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / N otices 43237

DEPARTMENT OF DEFENSE Dated: November 24,1986. Dated: November 24,1986.

Margaret A. Willis, Margaret A. Willis,
GENERAL SERVICES
FAR Secretpriat. FAR Secretariat.
ADMINISTRATION
(FR Doc. 86-26855 File 11-28-86; 8:45 am] [FR Doc. 86-26856 File 11-28-86; 8:45 am]
NATIONAL AERONAUTICS AND BILLING CODE 6820-61-M BILLING CODE 6820-61-M
SPACE ADMINISTRATION
Federal Acquisition Regulation (FAR); Federal Acquisition Regulation (FAR); Federal Acquisition Regulation (FAR);
Information Collection Under OMB Information Collection Under OMB Information Collection Under OMB
Review Review Review
AGENCIES: Department of Defense AGENCY: Department of Defense (DOD), a g e n c ie s :Department of Defense
(DOD), General Services Administration General Services Administration (GSA), (DOD), General Services Administration
(GSA), and National Aeronautics and and National Aeronautics and Space (GSA), and National Aeronautics and
Space Administration (NASA). Administration (NASA). Space Administration (NASA).
a c t i o n : Notice. a c t i o n : Notice. a c t i o n : Notice.

summ ary : Under the provisions of the S UM M ARY:Under the provisions of the sum m ary: Under the provisions of the
Paperwork Reduction A c t of 1980 (44 Paperwork Reduction Act of 1980 (44 Paperwork Reduction Act of 1980 (44
U.S.C. Chapter 35), the Federal U.S.C. Chapter 35), the Federal U.S.C. Chapter 35), the Federal
Acquisition Regulation (FAR) Acquisition Regulation (FAR) Acquisition Regulation (FAR)
Secretariat has submitted to the Office Secretariat has submitted to the Office Secretariat has submitted to the Office
of Management and Budget (OMB) a of Management and Budget (OMB) a of Management and Budget (OMB) a
request to review and approve an request to review and approve an request to review and approve an
extension of a currently approved extension of a currently approved extension of a currently approved
information collection. information collection. information collection.
ADDRESS: Send comments to Franklin S. ADDRESS: Send comments to Franklin S. ADDRESS: Send comments to Franklin S.
Reeder, FAR Desk Officer, Room 3235, Reeder, FAR Desk Officer, Room 3235, Reeder, FAR Desk Officer, Room 3235,
NEOB, Washington, DC 20503. NEOB, Washington, D C 20503. NEOB, Washington, DC 20503.
FOR FURTHER IN FO R M A TIO N C O NTACT: FOR FURTHER IN FO R M A TIO N CONTACT:
FOR FURTHER IN FO RM A TIO N CONTACT:
Mr. G.W. Mathews, Office of Federal Mr. C.W . Mathews, Office of Federal Ms. Victoria Moss, Office of Federal
Acquisition and Regulatory Policy (202) Acquisition and Regulatory Policy (202) Acquisition and Regulatory Policy (202)
523-3856 or Mr. Owen Green, Defense 523-4820 or Mr. Owen Green, Defense 523-4820 or Mr. Owen Green, Defense
Acquisition Regulatory Council, (703) Acquisition Regulatory Council, (703) Acquisition Regulatory Council, (703)
697-7268. 697-7268. 697-7268.
SUPPLEMENTARY IN FO R M A TIO N : SUPPLEMENTARY INFO RM A TIO N :
SUPPLEMENTARY INFO RM A TIO N :
a. Purpose a. Purpose
a. Purpose
The Government does not normally Entities doing business with the
This request covers recordkeeping purchase used items. Therefore, when a Government must identify those persons
requirements and the collection of contractor proposes the substitution of a who have authority to bind the
information regarding data about use item for a new item, data must be principal. This information is needed to
organization, products and services, furnished to the contracting officer so ensure that Government contracts are
security clearance, facilities, etc. which the proposal can be properly evaluated. legal and binding. The information is
is used to establish files of firms to be A description of the item, quantity, data used by the contracting officedr to
solicited when the products or services of acquisition, source and monetary ensure that authorized persons sign
they provide are needed by the advantages to the Government are the contracts.
Government. The Standard Form (SF) basic data necessary to evaluate the
1413, Statement and Acknowledgment, proposal. Upon completion of the b. Annual reporting burden
will be used by all Executive agencies to contracting officer’s evaluation and The annual reporting burden is
obtain a statement from contractors that determination the data is placed in the estimated as follows: Respondents,
the proper clauses have been included contract file and becomes a matter of 12,000; responses per respondent, 10;
in subcontracts. The form includes a record. total annual responses 120,000; hours
signed subcontractor acknowledgment
b. Annual reporting burden per response, .017; and total burden
of the inclusion of those clauses in the
subcontract. hours, 2,040.
The annual reporting burden is Obtaining Copies of Proposals:
b. Annual reporting burden estimated as follows: Respondents, 790; Requesters may obtain copies from the
responses per respondent, 4; total FAR Secretariat (VRS), Room 4041, G SA
The annual reporting burden is annual responses 3,160; hours per Building, Washington, DC 20405,
estimated as follows: Respondents, response, .25; and total burden hours,
2,000; responses, 3,000; and reporting telephone (202) 523-4755. Please cite
790. OMB Control No. 90004)033,
and recordkeeping hours, $14,963. Obtaining Copies of Proposals: Contractor’s Signature Authority.
Obtaining Copies of Proposals: Requesters may obtain copies from the
FAR Secretariat (VRS), Room 4041, G SA Dated: November 21,1986.
Requesters may obtain copies from the
FAR Secretariat (VRS), Room 4041, G SA Building, Washington, DC 20405, Margaret A. Willis,
Building, Washington, DC 20405, telephone (202) 523-4755. Please cite FAR Secretariat.
telephone (202) 523-4755. Please cite OMB Control No. 9000-0030, Sale of [FR Doc. 86-26857 Filed 11-28-86; 8:45 am]
OMB Control No. 9000-0014. Used Items to Government. BILLING CODE 6820-61-M
 43238 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / N otices

Federal Acquisition Regulation (FAR); DEPARTMENT OF ENERGY Complainant, v. Alice-Sidney Gil

Information Collection Under OMB Company and Anthony Oil & Gas
Review Federal Energy Regulatory Company, Respondents.
Commission Take notice that on October 10,1986,
AGENCIES: Department of Defense
[Docket No. TA87-1-20-0021 Arkla Energy Resources, a division of
(DOD), General Services Administration
Arkla, Inc. (AER) filed a complaint
(GSA), and National Aeronautics and Algonquin Gas Transmission Co.; pursuant to Rule 206 of the Federal
Space Administration (NASA). Proposed Changes in FERC Gas Tariff Energy Regulatory Commission’s
a c t i o n : Notice. (Commission) Rules of Practice and
November 24,1986. Procedure1 against Alice-Sidney Oil
S u m m a r y : Under the provisions of the Take notice that Algonquin Gas Company and Anthony Oil & Gas
Paperwork Reduction Act of 1980 (44 Transmission Company (“Algonquin Company (Respondents) in connection
U.S.C. Chapter 35), the Federal Gas” ) on November 17,1986, tendered with the sale of natural gas by
Acquisition Regulation (FAR) for filing Second Substitute Seventh Respondents from the Ada Field in
Secretariat has submitted to the Office Revised Sheet No. 205 to its FERC Gas Webster and Bienville Parishes,
of Management and Budget (OMB) a Tariff, Second Revised Volume No. 1. Louisiana.
request to review and approve an Algonquin Gas states that Second AER states that Respondents were
extension of a currently approved Substitute Seventh Revised Sheet No. sellers of natural gas to AER and its
information collection. 205 is being filed pursuant to the predecessor, Arkansas Louisiana Gas
provisions of section 7 of its Rate Company (ARKLA) pursuant to a .
a d d r e s s : Send comments to Franklin S.
Schedule F-4 to reflect in its rates, November 14,1951 gas purchase
Reeder, FAR Desk Officer, Room 3235, effective November 1,1986, an contract (the Contract) between ARKLA
NEOB, Washington, DC 20503. adjustment in the Contract Adjustment and Respondents’ predecessors. The
FOR FURTHER IN FO RM A TIO N CONTACT: Demand Rate to be charged by its Contract was terminated effective
Ms. Victoria Moss, Office of Federal pipeline supplier, Texas Eastern March 1,1985. AER states that between
Acquisition and Regulatory Policy (202) Transmission Corporation (‘Texas November 14,1951, and December 31,
523-4820 or Mr. Owen Green, Defense Eastern”), as set forth in Texas Eastern’s 1984, it bought wet gas from
Acquisition Regulatory Council, (703) November 7,1986 filing. Respondents at the wellhead first at the
697-7268. Algonquin Gas requests that the full just and reasonable rate under
Commission accept the above tariff section 4 of the Natural Gas Act,
SUPPLEMENTARY INFO RM A TIO N :
sheet to be effective as proposed. (NGA)2 and later at the maximum
a . P u rp o s e Algonquin Gas notes that a copy of lawful price under the Natural Gas
this filing is being served upon each Policy Act of 1978 (NGPA).3 AER states
Firms offering supplies or services to affected party and interested State that under the Contract, Respondents
the Government under negotiated commission. also were paid an additional sum for
solicitations must provide the names, Any person desiring to be heard or to natural gas liquids that were extracted
titles, and telephone numbers of protest said filing should file a motion to by AER from the wet gas at AER’s
authorized negotiators to assure that intervene or a protest with the Federal Bistineau processing plant. AER did not
discussions are held with authorized Energy Regulatory Commission, 825 receive any credit from the wellhead
individuals. The information collected is North Capitol Street, NE., Washington, price for the loss of gas resulting from
referred to before contract negotiations DC 20426, in accordance with Rules 211 the extraction of the natural gas liquids.
and it becomes part of the official and 214 of the Commission’s Rules of AER alleges that the compensation
contract file. Practice and Procedure (18 CFR 385.211, received by Respondents for the gas
385.214). All such motions or protests plus the supplemental compensation
b. Annual reporting burden
should be filed on or before December 2, received for the natural gas liquids
This is estimated as follows: 1986. Protests will be considered by the exceeded the maximum lawful price
Respondents, 61, 875; responses per Commission in determining the under the NGPA and the just and
respondent, 8; total annual responses, appropriate action to be taken, but will reasonable rate under section 4 of the
495,000; hours per response, 0.17; total not serve to make protestants parties to N GA . AER further alleges that
reporting hours, 8,415. the proceeding. Any person wishing to Respondents have overcollected
Obtaining Copies of Proposals: become a party must file a motion to approximately $368,000 under the NGPA
intervene. Copies of this filing are on file and at least $81,000 under the N G A .
Requesters may obtain copies from the
with the Commission and are available When interest through September 30,
FAR Secretariat (VRS), Room 4041, G SA for public inspection.
Building, Washington, DC 20405, 1986, computed in accordance with the
Kenneth F. Plumb, Commission’s regulations,4 is added to
telephone (202) 523-4755. Please cite
Secretary. these figures, the total refund allegedly
OMB Control No. 9000-0048, Authorized
[FR Doc. 86-26917 Filed 11-28-86; 8:45 am) owed to AER exceeds $700,000. AER
Negotiators.
BILUNG CODE 6717-01-M states that it has presented refund
Dated: November 24,1986. figures to Respondents and that
Margaret A. Willis, Respondents have refused to make any
FAR Secretariat. [Docket No. GP87-1-000] refund. Instead, Respondents
[FR Doc. 86-26858 Filed 11-28-80; 8:45 am] commenced a civil action against AER
Arkla Energy Resources, et al.; in the United States District Court,
BILLING CODE 6820-61-M Complaint
November 24.1986. * 18 CFR 385.206 (1986).
2 15 U .S.C. 717c (1982).
In the matter of Arkla Energy 3 15 U .S .C . 3301-3432 (1982).
Resources, a division of Arkla, Inc., 4 18 CFR 154.102(c) (1986).
 Federal Register / V o i. 51, N o. 230 / M on d ay, Decem ber 1, 1986 / N otices 43239

Western District of Arkansas, El Dorado Take notice that on November 17, sales for resale of gas to all customers
Division, seeking a determination 1986, the applicants in the above- who have the ability to buy gas in the
whether AER overpaid for the gas sold captioned proceeding substantially spot market. Such authority will also
to it by Respondents under the Contract amended their environmental report enable Cheney to act as agent for
for the period December 1,1978, through concerning an application under various producers who wish to sell gas
Decemper 31,1984. AER states that it sections 210,211, and 212 of the Federal subject to N G A jurisdiction on the spot
will assert in the federal court action Power Act to construct transmission market. As the duration of the sales
that the N GPA pricing claim falls within facilities for the purpose of transactions for which authority is
theprimary jurisdiction of the interconnecting electric utilities in the sought will be coterminous with the
Commission, that the issue should be states of Texas, Oklahoma, Louisiana abandonment authority granted to
referred to the Commission, and that the and Arkansas. The report addresses the producers in separate proceedings,
federal court action should be stayed environmental factors specified in § 4.41
including expedited proceedings
pending the Commission’s resolution of of the Commission’s Rules of Practice
pursuant to the Commission’s expedited
thefederal regulatory issues. and Procedure, 18 CFR 4.41. This report
abandonment procedures set forth in
AER requests that the Commission is available for public inspection in the
initiate a show cause proceeding Commission’s Office of Public Order No. 436, Cheney is also requesting
pursuant to 18 CFR 385.209; find that Information, 825 North Capitol Street, the Commission to authorize pre-granted
Respondents have violated section 504 NE., Washington, DC. Members of the abandonment of such sales. Finally,
of the NGPA by collecting a price in public are hereby invited to submit Cheney requests that the Commission
excess of the maximum lawful price,5 written comments on the environmental declare in its order issuing the
section 4 of the N GA , and the effects of the relief requested by the authorizations requested herein that the
Commission’s regulations issued under applicants. The Commission staff will Commission’s N G A jurisdiction over the
those statutes; and order Respondents to analyze such comments in determining activities and operations of Cheney is
refund to AER all revenues collected in whether the proposed interconnection of limited to the transactions for which
violation of the NGPA, the N GA , and electric utilities constitutes a major authorization is sought in this
the Commission’s regulations, together federal action significantly affecting the Application,
with interest computed in accordance quality of the environment. Any person desiring to be heard or to
with 18 CFR 154.102(c), Any person wishing to comment make any protest with referénce to said
Any person desiring to be heard or to should file a statement with the filing should on or before December 8,
protest AER’s complaint should file a Secretary, Federal Energy Regulatory 1986, file with the Federal Energy
motion to intervene or a protest with the Commission, 825 North Capitol Street, Regulatory Commission, 825 North
Federal Energy Regulatory Commission, NE., Washington, DC 20426. A ll Capitol Street, NE„ Washington, DC
825 North Capitol Street, NE., comments should be filed by December 20426, a motion to intervene or a protest
Washington, D C 20426, in accordance 23,1986 and should refer to the above in accordance with the requirements of
with Rules 214 or 211 of the docket number. the Commission’s Rules of Practice and
Commission’s Rules of Practice and Kenneth F. Plumb, Procedure (18 CFR 385.214 or 385.211).
Procedure.6 A ll motions to intervene or Secretary. All protests filed with the Commission
protests must be filed not later than 30 [FR Doc. 86-26916 Filed 11-28-86; 8:45 amj will be considered by it in determining
days following the issuance date of this BILLING CODE 6717-01-M the appropriate action to be take but
Notice. Any person wishing to become a will not serve to make the protestants
party to the proceeding must file a parties to the proceeding. Any person
motion to intervene. AER has served a ( Docket No. Cl87-53-000J wishing to become a party to a
copy of the complaint on Respondents Cheney Energy Corp.; Application proceeding or to participate as a party in
and the due date for answering the any conference or hearing therein must
complaint is 30 days from the issuance N o vem b er 24,1986.
file a motion to intervene in accordance
date of this Notice. Take notice that on October 8, Cheney with the Commission’s Rules.
Kenneth F. Plumb, Energy Corp. (Cheney), 6600 Powers Kenneth F. Plumb,
Secretary. Ferry Road, Suite 225, Atlanta, Georgia Secretary.
[FR Doc. 86-26918 Filed 11-28-86; 8:45 am} 30339, filed in this proceeding an [FR Doc. 86-26919 Filed 11-28-86; 8:45 amj
bilung c o d e e rir-o i-M application pursuant to sections 4 and 7
BILLING CODE 6717-01-M
of the Natural Gas Act (NGA) and Part
157 of the Commission's regulations,
(Docket No. EL79-8-0O2] requesting certificate authorization for
(1) sales for resale of certain natural gas [Docket No. TA87-1-59-000, 001]
Central Power and Light Co. et al.; in interstate commerce, without market
Amendment to Environmental Report Northern Natural Gas Co., Division of
restriction, by Cheney; (2) sales of
on Proposed Interconnection of Enron Corp.; Purchased Gas Cost
certain natural gas by others to Cheney
Electric Utilities Adjustment Rate Change
for resale in interstate commerce,
November 24,1986. without market restriction; and (3) sales N ovem b er 24,1986.
for resale of certain natural gas in
In the matter of Central Power and interstate commerce, without market Take notice that on November 17,
Light Company, Public Service Company restriction, by producers through 1986, Northern Natural Gas Company,
ofOklahoma, Southwestern Electric Cheney acting as their agent. Cheney Division of Enron Corp. (Northern),
Power Company, and West Texas also seeks pre-granted abandonment of tendered for filing, as part of Northern’s
Utilities Company. all sales for resale for which sales F.E.R.C. Gas Tariff, Third Revised
certificate authority is sought herein. Volume No. 1 (Volume 1 Tariff) and
5 IS U .S.C. 3414(a) (1982). Cheney states that the purpose of its Original Volume No. 2 (Volume 2 Tariff),
* CFR 385.214 and 385.211 (1986). application is to enable Cheney to make the following tariff sheets;
43240 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / N otices

Third Revised Volume No. 1 (4) Reflect an increase in the Gas [Docket No. CP84-429-024]
Forty-fourth Revised Sheet No. 4a Research Institute (GRI) surcharge
Thirty-eighth Revised Sheet No. 4b pursuant to Paragraph 19 of Northern’s Texas Eastern Transmission Corp.,
Seventh Revised Sheet No. 4b.l Volume 1 Tariff. Such increase in the Proposed Changes in FERC Gas Tariff
Seventh Revised Sheet No. 4c GRI surcharge has been authorized by
First Revised Sheet No. 4g.2 November 24,1986.
Commission Opinion No. 252, issued
Sixth Revised Sheet No. 65 September 29,1986 in Docket No. RP86- Take notice that Texas Eastern
Sixth Revised Sheet No. 67 Transmission Corporation (Texas Eastern) on
Fifth Revised Sheet No. 68 117.
Ninth Revised Sheet No. 69 In the filing, Northern has established November 17,1986 tendered for filing as part
Second Revised Sheet No. 69a a PGA ceiling rate of $2.1939 per MMBtu of its FERC Gas Tariff, Fourth Revised
First Revised Sheet No. 69b which reflects a decrease of $.2996 per Volume No. 1 the following sheets:
Eighth Revised Sheet No. 70 MMBtus from the approved 1986 PGA Revised Substitute Fourth Revised Sheet No.
Sixth Revised Sheet No. 71 ceiling rate of $2.4935 per MMBtu. 16
Third Revised Sheet No. 72 Northern states that since the Revised Substitute Eleventh Revised Sheet
First Revised Sheet No. 73 projection of 1987 gas purchased costs No. 97
Third Revised Sheet No. 74 does not reflect the level of gas Revised Substitute Seventh Revised Sheet
First Revised Sheet No. 74c purchased costs it actually will No. 101B
Second Revised Sheet No. 74d Revised Substitute Fourth Revised Sheet No.
Second Revised Sheet No. 74e experience beginning on January 1,1987
Second Revised Sheet No. 74f (due in part to the fact that the impact of 101E
Order No. 451 will not be felt Texas Eastern filed on November 7,1986,
Original Volume No. 2 immediately on that date), it does not tariff sheets in Docket No. CP84-429-023
Forth-sixth Revised Sheet No. lc. intend to bill the commodity rates which reinstated as of November 1,1986 for
Third Revised Sheet No. Id established in its filing on January 1, the affected participants in such Docket,
Third Revised Sheet No. le 1987. Instead, Northern states that it will rates, respective billing determinants and
Fourth Revised Sheet No. If utilize its flexible PGA tariff mechanism sales entitlements at the 1985 Contract
Sixth Revised Sheet No. lg Adjustment levels which were in effect prior
First Revised Sheet No. lj to reflect in the commodity rates on to the October 2,1986 tariff filing in Docket
First Revised Sheet No. Ik January 1,1987, the estimated actual No. CP84-429-022.
Third Revised Sheet No. 1L cost of purchased gas being experienced Pursuant to Article VII. Facilities
Third Revised Sheet No. lo at that time. Construction of the May 2,1985 Joint Offer of
Second Revised Sheet No. Ip Consistent with the provisions of Settlement (Settlement) in Docket No. CP84-
Second Revised Sheet No. lq northern’s tariff, Northern states that it 429-001, Public Service Electric and Gas
Second Revised Sheet No. lr proposes to effectuate on January 1, Company (Public Service) agreed to take
Such revised tariff sheets are required 1987, the proposed demand rate 5,125 dth per day of Algonquin Gas
in order that Northern may place into adjustments, PGA surcharge Transmission Corporation’s (Algonquin)
effect the proposed rates on January 1, adjustments, AN GTS rate adjustments, nominated volume for the first year of service
1987 to reflect: and GRI rate adjustments. Northern (1985 Program). In accordance with
(1) Reflect Northern’s cost of states that such components of Algonquin’s and Public Service's Precedent
purchased gas to be experienced during Northern’s rates will remain in effect Agreements dated December 11,1984 in the
the Calendar Year 1987, pursuant to throughout 1987 and will not be Settlement, the acceptance of such volumes
impacted by any subsequent rate by Public Service terminates October 31,
Paragraph 18 of Northern’s FJE.R.C. Gas
adjustments pursuant to Northern’s 1986.
Tariff Third Revised Volume No. 1 Texas Eastern in its November 7,1986
(Volume 1 Tariff), and Paragraphs of flexible RGA tariff.
Northern requests an effective date of filing, inadvertently failed to reflect the
Northern’s Original Volume No. 2 Tariff reversion of this volume in Algonquin’s and
(Volume 2 Tariff). January 1,1987 for the proposed tariff
sheets contained in its filing. Public Service’s billing determinants and
(2) Reflect a negative surcharge to sales entitlements. These tariff sheets set
amortize the overrecovered commodity Any person desiring to be heard or to
forth the above mentioned revisions.
cost of purchased gas account for the protest said filing should file a motion to The proposed effective date of the above
twelve months ended September 30, intervene or protest with the Federal listed tariff sheets is November 1,1986, the
1986, and a positive surcharge to Energy Regulatory Commission, 825 prescribed dated in the Settlement as
amortize the underrecovered demand North Capitol Street, NE., Washington, approved by Commission order dated August
cost of purchased gas account for the DC 20426, in accordance with Rules 211 15,1985 in Docket No. CP84-429-001.
twelve months ended September 30, and 214 of the Commission’s Rules of Copies of the filing were served on Texas
1986, both pursuant to Paragraph 18 of Practice and Procedure (18 CFR 385.211, Eastern’s jurisdictional customers and
Northern’s Volume 1 Tariff and 385.214). All such motions or protests interested state commissions.
Paragraph 1 of Northern’s Volume 2 should be filed on or before December 1, Any person desiring to be heard or to
Tariff and also to reflect certain revenue 1986. Protests will be considered by the protest said filing should file a motion to
tracking adjustments. Commission in determining the intervene or protest with the Federal Energy
(3) Track the change in the cost of appropriate action to be taken, but will Regulatory Commission, 825 North Capital
not serve to make protestants parties to Street, NE, Washington, DC 20426, in
transportation of gas through the Alaska accordance with Rules 211 and 214 of the
Natural Gas Transportation System the proceeding. Any person wishing to
become a party must file a motion to Commission’s Rules of Practice and
(ANGTS) pursuant to Paragraph 21 of Procedure. All such motions or protests
Northern’s Volume 1 Tariff and intervene. Copies of this filing are on file
with the Commission and are available should be filed on or before December 2,
Paragraph 4 of Northern’s Volume 2 1986. Protests will be considered by the
Tariff. In addition, this filing reflects a for public inspection.
Commission in determining the appropriate
negative surcharge to amortize the Kenneth F. Plumb, action to be taken, but will not serve to make
overrecovered cost of transportation of Secretary. protestants parties to the proceeding. Any
gas through AN GTS for the twelve [FR Doc. 86-26920 Filed 11-28-86; 8:45 am] person wishing to become a party must file a
months ended September 30,1986. BILUNG CODE 6717-01-M motion to intervene. Copies of this filing are
 Federal Register / V o l. 51, N o. 230 / M onday, D ecem ber 1, 1986 / N otices 43241

on file with the Commission and are Comment dote: December 8,1988, in 5. Cliffs Electric Service Company
available for public inspection. acordance with Standard Paragraph E at [Docket N o . ER87-96-000J
Kenneth F. Plumb, the end of this notice.
Secretary. N ovem b er 25,1986.

[FR Doc. 86-26921 Filed 11-28-86; 8:45 amj 3. Kansas Power and Light Company Take notice that on November 10,
BILUNG CODE 6717-01-M [Docket No. ER87-108-O00J 1986, Cliffs Electric Service Company
(Service Co) tendered for filing an
November 25,1986. amendment to the Incidental Energy
(Docket Nos. ER87-000 et al.J
Take notice that on November 17, Service Schedule of the Interconnection
1986, Kansas Power and Light Company and Energy agreement between the
Electric Rate and Corporate (KPL) tendered for filing an initial tariff Service Co. and Wisconsin Electric
Regulation Filings; Arkansas Power & designated Standby Transmission Power Company (Wisconsin Electric).
Light Co. et al. Service to Kansas Electric Power The Service Co. states, while the
Cooperative, Inc. {KEPCo). This tariff amendment substitutes a new Service
Take notice that the following filings would increase revenues from Schedule E for the existing Schedule, the
have been made with the Commission; jurisdictional sales and service by only effect of the amendment is to add a
1. Arkansas Power & Light Company $72,864 based upon the 12 month period paragraph to section 3.1 of the Schedule
ending October, 1987. which clarifies the procedure pursuant
[Docket No. ER87-87-000) Standby Transmission Service to to which Service Co.’s fuel costs are
November 25,1986. KEPCo, dated October 30,1986, with calculated for purposes of determining
Take notice that November 7,1986, KEPCo provides for Standby the rate for sales of Incidental Energy by
Arkansas Power and Light Company Transmission Service to KEPCo, Service Co. to Wisconsin Electric.
(AP&L) tendered for filing a notice of provided KPL has transmission Comment date: December 8,1986, in
cancellation of Rate Schedule FERC No. capability available. Copies of the filing accordance with Standard Paragraph E
106, effective December 31,1986. have been mailed to KEPCo and the at the end of this notice.
Notice o f the proposed cancella tion State Corporation Commission of
6. Carolina Power & Light Company
has been served upon the following: Kansas.
Mr. Jack L. Gambrel!, Vice-President—- Comment date: December 8,1986, in [Docket No. ER87-103-000]
Operations, Cajun Electric Power accordance with Standard Paragraph E N ovem b er 25,1986.
Cooperative, Inc., P.O. Box 15540, at the end of this document. Take notice that Carolina Power &
Baton Rouge, Louisiana 70895 Light Company on November 13,1986,
4. Utah Power & Light Company
Arkansas Public Service Commission tendered for filing changes outlined
P.O. Box C-400, Little Rock, Arkansas [Docket No. ER87-111-OOOJ below in its agreement with the French
72203 November 25,1986. Broad EMC, Jones-Onslow EMC, and
Louisiana Public Service Commission, Lumbee River EMC.
Take nolice that on November 14, 1. French Broad E M C —Peterburg 69
One American Place, Suite 1630. 1986, Utah Power & Light Company kv—To reflect the installation of this
Baton Rouge, Louisiana 70825 (UP&L) submitted for filing a new point of delivery with an in-service
Comment date: December 8,1986, in Transmission Service Agreement and an date of September 1,1986. A load of
accordance with Standard Paragraph E Interconnected Operation Agreement for 1,500 kw is being transferred from
at the end of this notice, wheeling services to the city of Manti, French Broad EM C's Marshall point of
Utah. The Transmission Service delivery to this new point of delivery.
2. Southwestern Electric Power Agreement provides for the firm delivery
Company 2. Jones-O rislow E M C —Southwest 115
of UMPA resource power from the kv—To reflect the installation of special
[Docket No. ER87-135-000] Company's Mona Substation to Manti to metering facilities required to provide
November 25,1986. the Company’s Mona Substation. It metering pulse information to Jones-
Take notice that on November 20, additionally provides for the non-firm Onslow EM C’s Southwest U 5kv point of
1986, Southwestern Electric Power delivery of UMPA resource power from delivery. The metering pulse information
Company (“ SW EPCO”) tendered for other available Company points of will be provided under the Company’s
filing a Letter Agreement between interconnection to Manti in the event additional facilities plan.
SWEPCO and TEX-LA Electric Manti is unable to deliver at Mona its
3. Lum bee R iver E M C —Rennert 115
Cooperative of Texas, Inc. (TEX-LA” ), UMPA resoruce power which is located kv—To reflect the installation of this
dated July 31,1986, which provides for outside the Company’s system.
new point of delivery with an in-service
SWEPCO to sell TEX-LA all the power The submission of these agreements is date of September % 1986. A load of
and energy required by TEX-LA to meet in compliance with the Commission’s 2,000 kw is being transferred from
the approximately 9 MW load served by Order issued July 23,1986 and is Lumbee River ECM ’s Red Springs 23 kv
Deep East Texas Electric Cooperative, intended to resolve all matters at issue point of delivery to this new point of
Inc. (“Deep East”), a TEX-LA member, in this proceeding according to UP&L. delivery.
from Deep East's Center South UP&L requests that the agreements be Comment date: December 8,1986, in.
substation located in Shelby County. made effective on the date they are accordance with Standard Paragraph E
Texas. accepted for filing in accordance with at the end of this notice.
SWEPCO requests an effective date o f the terms erf the contracts.
7. Clifs Electric Service Company
July 31,1986, and therefore requests Copies have been served upon Manti
waiver o f the Commission’s notice and the Utah Public Service [Docket Ne. ER87-94-O0O}
requirements. Commission. November 25,1986. .
Copies of this filing were served upon Comment date: December 8,1986, in Take notice that on November 10,
the Public Utility Commission of Texas accordance with Standard Paragraph E 1986, Cliffs 'Electric Service Company
and TEX-LA. at the end of this notice. (Service Co) tendered for filing an
43242 Federal Register / V oL 51, N o. 230 / M onday, Decem ber 1, 1986 / N otices

amendment to the Incidental Energy Inc. System, the only customer affected 12. Florida Power & Light Company
Service Schedule of the Interconnection by the change in rates.
and Energy agreement between the [Docket No. ER87-114-000]
The company states that this change November 25,1986.
Service Co. and the Board of Light and in rates was set forth in the Partial
Power of the City of Marquette, Settlement Agreement, dated August 12, Take notice that no November 20,
Michigan. 1986. 1986, Florida Power & Light Company
The Service Co. states, while the (FPL) tendered for filing a document
The company states that the entitled Amendment Number Seven to
amendment substitutes a new Service
Wisconsin Public Service Commission, Revised Agreement to Provide Specified
Schedule D for the existing Schedule,
the only effect of the amendment is to the Michigan Public Service Commission transmission Service Between Florida
add a paragraph to section 3.1 of the and all other Parties in this proceeding Power & Light Company and City of
Schedule which clarifies the procedure will be notified of their compliance. Gainesville (Rate Schedule FERC No. 62)
pursuant to which Service Co.’s fuel Comment date: December 8,1986, in and a document entitled Schedule TX
costs are calculated for purposes of accordance with Standard Paragraph E Operating Agreement Between Florida
determining the rate for sales of at the end of this notice. Power & Light Company and City of
Incidental Energy by Service Co. to Gainesville, which document
10. Idaho Power Company
Marquette. supplements Amendment Number
Comment date: December 8,1986, in [Docket No. ER87-107-000] Seven.
accordance with Standard Paragraph E November 25,1986. FPL states that under Amendment
at the end of this notice. Number Seven, FPL will transmit power
Take notice that on November 14,
and energy for City of Gainesville as is
8. Delmarva Power & Light Company 1986, Idaho Power Company (Idaho)
required in the implementation of its
tendered for filing an Agreement for
[Docket No. ER87-112-000] interchange agreements with The
Transmission Services between Idaho Florida Municipal Power Agency,
November 24,1986. Power Company and Pacific Power &
Take notice that Delmarva Power & Orlando Utilities Commission, Tampa
Light Company. Transmission services Electric Company Fort Pierce Utilities
Light Company, on November 18,1986, provided by Idaho Power Company to
tendered for filing a Supplement to the Commission, City of New Smyrna
Pacific Power & Light Company for the Beach, City of Starke and City of Vero
Transmission Service Agreement transfer of up t& 1,600 megawatts of Beach.
between Conowingo Power Company Pacific Power & Light Company’s share
and Delmarva. The Supplement makes FPL further states that the Schedule
of the Jim Bridger Project as well as TX Operating Agreement defines the
the following revisions to the existing Pacific’s other Wyoming generation in a
agreement: methodology used to determine the
westerly direction to Pacific Power & additional incremental cost under
(a) Changes the designation of the Light Company’s western system for its section 1.4 of Amendment Number
Conowingo Substation from “C A Y O T S” use. Charges for the transmission
to "TELEGRAPH.” seven.
services provided are fully set forth in FPL requests that waiver of § 35.3 of
(b) Increases the interconnection the Agreement. the Commission’s Regulations be
capability from 1690 kW up to 8000 kW Idaho requests that the requirements
in any hour. granted and that the proposed
of prior notice be waived for an Amendment and the proposed
(c) Allows Delmarva to render a effective date as of September 10,1980. Operating Agreement be made effective
billing for $21,500 to Conowingo to cover Because the only purchasing party under immediately. FPL states that copies of
the construction costs associated with the Agreement is Pacific Power & Light the filing were served on City of
increasing the interconnection Company, there would be no effect upon Gainesville.
capability to 8000 kW.
purchasers under other rate schedules. Comment date: December 8,1986, in
Delmarva has requested an effective accordance with Standard Paragraph E
date of November 21,1986. Comment date: December 8,1986, in
accordance with Standard Paragraph E at the end of this notice.
The reason for the revised Agreement
at the end of this notice. 13. Pacific Power & Light Company, an
was to provide increased backup service
for a new substation which Conowingo 11. PacifiCorp, doing business as Pacific assumed business name of PacifiCorp
is constructing. Power & Light Company [Docket No. ER87-113-000)
Copies of the filing were served on November 25,1986.
[Docket No. ES87-13-000]
Conowingo Power Company and its
November 25,1986. Take notice that on November 19,
parent, Philadelphia Electric Company,
1986, Pacific Power & Light Company
the Delaware Public Service Take notice that on November 18, (Pacific), an assumed business name of
Commission and the Maryland Public 1986, PacifiCorp, doing business as PacifiCorp, tendered for filing Eleventh
Service Commission. Pacific Power & Light Company, {Pacific) Revised Sheet No. 5C, superseding
Comment date: December 8,1986, in filed an application with the Federal Tenth Revised Sheet No. 5C (Index of
accordance with Standard Paragraph E Energy Regulatory Commission, Purchasers) of Pacific’s FERC Electric
at the end of this notice. pursuant to section 204 of the Federal Tariff, Original Volume No. 3 (Tariff),
9. Wisconsin Electric Power Company Power Act, seeking authorization to and a Service Agreement between
negotiate privately the terms for the Pacific and Sacramento Municipal
[Docket No. ER85-785-0U] offering and sale in one or more public Utility District dated February 6,1986.
November 24,1986. offerings, $125,000,000 of variable rate Pacific states that the Service
Take notice that on November 6,1986, preferred stock pursuant to 18 GFR Agreement provides for the sale of
Wisconsin Electric Power Company (the 34.2(b)(2). nonfirm power and energy, in
Company) tendered for filing a Comment date: December 17,1986, in accordance with the rates specified in
compliance report whereby a refund accordance with Standard Paragraph E Service Schedule PPL-3 under Pacific’s
was issued to Wisconsin Public Power, at the end of this notice. Tariff.
 Federal Register / V o l. 51, N o. 230 / M onday, D ecem ber 1, 1980 / N otices 43243

Comment date: December 8,1988, in Order No. 84 rate (unchanged by this Stations. (Sedona, Arizona). Number of
accordance with Standard Paragraph E filing) originally became effective with petitions received: 1.
at the end of this notice. respect to the underlying agreements. Subject: Amendment of the
14. Public Service Company of New Copies of the filing have been sent to Commission’s Rules for Rural Cellular
Mexico OMPA, the Oklahoma Corporation Service. (CC Docket No. 85-388, RM -
Commission, the Louisiana Public 5167). Number of petitions received: 1.
[Docket No. ER87-43-000] Service Commission and all parties to Subject: Amendment of § 73.202(b),
November 25,1986. the above listed agreements. Table of Allotments, FM Broadcast
Take notice that on October 23,1986, Comment date: December 8,1986, in Stations. (Trinity and Rogersville,
Public Service Company of New Mexico accordance with Standard Paragraph E Alabama) (MM Docket No. 86-35, RM’s
(PNM) tendered for filing an Economy at the end of this notice. 5134 & 5377). Number of petitions
Energy Agreement with Los Angeles received: 1.
Department of Water and Power. The Standard Paragraphs Subject: Amendment of § 73.202(b),
Agreement permits the seller to offer E. Any person desiring to be heard or Table of Allotments, FM Broadcast
economy energy rates which permit the to protest said filing should file a motion Stations, (Aurora, Republic and Pleasant
price to reflect the current market price to intervene or protest with the Federal Hope, Missouri) (MM Docket No. 86-303,
of such energy or the seller’s actual cost Energy Regulatory Commission, 825 RM-5236). Number of petitions received:
to generate such energy. North Capitol Street, NE., Washington, 1.
Comment date: December 8,1986, in DC 20426, in accordance with Rules 211 Federal Communications Commission.
accordance with Standard Paragraph E and 214 of the Commission’s Rules of William ). Tricarico,
at the end of this document. Practice and Procedure (18 CFR 385.211 Secretary.
15. Southwestern Electric Power and 385.214). All such motions or [FR Doc. 86-26914 Filed 11-28-86: 8:45 am]
Company protests should be filed on or before the BILUNG CODE 6712-01-M
comment date. Protests will be
[Docket No. ER87-40-000] considered by the Commission in
November 25,1986. determining the appropriate action to be
Take notice that on November 17, taken, but will not serve to make FEDERAL MARITIME COMMISSION
1986, Southwestern Electric Power protestants parties to the proceeding.
Any person wishing to become a party [Docket No. 86-30]
Company (“ SW EPCO” ) tendered for
filing an amendment to its October 22, must file a motion to intervene. Copies
Investigation of Unfiled Agreements;
1986 filing of a Letter Agreement of this filing are on file with the
Yangming Marine Transport,
providing for the sale of replacement Commission and are available for public
Evergreen Marine Corp., and Orient
energy from SW EPCO to the Oklahoma inspection.
Overseas Container Line, Inc.; Order of
Municipal Power Authority (“OM PA” ) Kenneth F. Plumb, Investigation
and a Rate Schedule for Third-Party Secretary.
Purchase and Resale Transactions [FR Doc. 86-26915 Filed 1-28-86; 8:45 am] This proceeding is instituted pursuant
(Pursuant to FERC Order No. 84). The BILLING CODE 6717-01-M to sections 15 and 22 of the Shipping
Order No. 84 Rate Schedule tendered for Act, 1916 (1916 Act), 46 U.S.C. 814 and
filing incorporates SW EPCO’s 8211 and sections 10 and 11 of the
established Order No. 84 rate in a tariff Shipping Act of 1984 (1984 Act, 46 U .S.C.
format intended for general applicability FEDERAL COMMUNICATIONS app. 1709 and 1710.
where SW EPCO purchases and resells COMMISSION By Order served December 24,1985,
energy from another utility. SW EPCO [Report No. 1630] the Commission directed three ocean
now asks that such Order No. 84 Rate common carriers, engaged in the United
Schedule be deemed a supplement to the Petitions for Reconsideration of States to Taiwan trade, Yangming
OMPA Letter Agreement and to the Actions in Rulemaking Proceedings
Marine Transport (Yangming),
following SW EPCO rate schedules: Evergreen Marine Corporation
November 21,1986. (Evergreen), and Orient Overseas
Container Line, Inc. (OOCL), to submit
SWEPCO Rate Description
Petitions for reconsideration have information and documents concerning
Schedule No. been filed in the Commission rule their tariff filing, rate negotiation, and
93 ..... ... Interchange Agreement with Associated
making proceeding listed in this Public rate setting practices as well as
Electric Cooperative, Inc., Empire Dis­ Notice and published pursuant to 47 information about memberrship in two
trict Electric Company, Grand River CFR 1.429(e). The full text of these Taiwan trade organizations—
Dam Authority and the Board of Public
Utilities of Springfield, Missouri documents are available for viewing and Association of Shipping Services
96...... . , Interchange Agreement with the City of copying in Room 239,1919 M Street,
Lafayette, Louisiana (AOSS) and its predecessor, Overseas
NW ., Washington, DC, or may be Joint Shipping Office (OJSO).
purchased from the Cpmmission’s copy O JSO was an organization in Taiwan
SWEPCO requests an effective date of contractor, International Transportation whose membership included Yangming,
August 4,1986 for the OM PA Letter Service (202-857-3800). Oppositions to Evergreen and O O CL (through O O C L ’s
Agreement and the Order 84 Rate these petitions must be filed within 15
Schedule supplement thereto and days after publication of this Public
* Prior to June 18,1984, the effective date of the
accordingly seeks waiver of the notice Notice in the Federal Register. Replies to Shipping Act of 1984, sections 15 and 22 of the 1916
requirements of the Federal Power Act. an opposition must be filed within 10 Act were codified at 46 U .S.C . 814 and 821 and
SWEPCO requests that the Order No. 84 days after the time for filing oppositions applied to both foreign and interstate commerce.
has expired. When the Shipping Act of 1984 became effective,
Rate Schedule supplement to the two those sections were, amended and later codified at
other agreements be permitted to Subject: Amendment of § 73.202(b), 46 U .S.C. app. 814 and 821. As amended, they apply
become effective as of the date that the Table of Allotments, FM Broadcast to interstate commerce, only.
43244 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / N otices

General Agent in Taiwan, Chinese Counsel is designated a party to this A . Federal Reserve Bank of Atlanta
Maritime Transport, Ltd. (CMT)). proceeding; (Robert E. Heck, Vice President) 104
Yangming, Evergreen and O O CL (again, It is further ordered, that notice of this Marietta Street, NW., Atlanta, Georgia
through CMT) have been members of Order be published in the Federal 30303:
A O SS since it was established on Register, and a copy be served on [Link] le s B. Schwing, New Iberia,
September 21,1984. parties designated herein; Louisiana; to acquire 7.03 percent of the
Responses to the Order of December It is further ordered, that other voting shares of New Iberia National
24,1985, indicate that during the period persons having an interest in Bancorp, Inc., New Iberia, Louisiana,
January 1,1983 to November 30,1985, participating in thi3 proceeding may file and thereby indirectly acquire New
Yangming, Evergreen, and O OCL, under petitions for leave to intervene in Iberia National Bank, New Iberia,
the aegis of the O JSO and A O SS, held accordance with Rule 72 of the Louisiana.
discussions and attempted to set rates in Commission’s Rules of Practice and B. Federal Reserve Bank of
the United States to Taiwan Trade Procedure, 46 CFR 502.72; Minneapolis (James M. Lyon, Vice
without an effective agreement on file at It is further ordered, that all future President) 250 Marquette Avenue,
the Commission, in apparent violation of notices, orders, and/or decisions issued Minneapolis Minnesota 55480:
section 15 of the 1916 Act, during the in this proceeding, including notice of 1. T. Denny Sanford, Plam Harbor,
period January 1,1983 through June 17, the time and place of hearing or Florida; to acquire 100 percent of the
1984, and sections 10(a)(2) and 10(a)(3) prehearing conference, shall be served voting shares of United National
of the 1984 Act, 46 U.S.C. app. 1709(a) (2) on parties of record; Corporation, Sioux Falls, South Dakota,
and 1709(a) (3), during the period June It is further ordered, that all and thereby indirectly acquire United
18,1984 through November 30,1985. documents submitted by any party of National Bank, Sioux Falls, South
Now therefore it is ordered, that record in this proceeding shall be
Dakota.
pursuant to sections 15 and 22 of the directed to the Secretary, Federal
C. Federal Reserve Bank of San
1916 Act, and sections 10(a)(2), 10(a)(3), Maritime Commission, Washington, DC
Francisco (Harry W. Green, Vice
and 11 of the 1984 Act, an investigation 20573, in accordance with Rule 118 of
is instituted to determine the following: the Commission’s Rules of Practice and President) 101 Market Street, San
1. Whether Yangming, Evergreen and Procedure, 46 CFR 502.118, and shall be Francisco, California 94105:
O O CL violated section 15 of the 1916 served on parties of record; 1. P hyllis L. M cKinney, Long Beach,
Act by discussing rates and attempting It is further ordered, that in California, Herbert B. Leo, Anaheim
to set rates without an effective accordance with Rule 61 of the California, Duane D. Logsdon, Stanton,
agreement on file at the Commission. Commission’s Rules of Practice and California; to acquire an additional 38.79
2. Whether Yangming, Evergreen and Procedure, the initial decision of the percent of the voting shares of New City
O O CL violated sections 10(a) (2), and presiding officer in this proceeding shall Bancorp, Orange, California, and
10(a) (3) of the 1984 Act, by discussing be issued by November 25,1987, and the thereby indirectly acquire New City
rates and attempting to set rates without decision of the Commision shall be Bank, Orange, California.
an effective agreement on file at the issued by March 25,1988. Board of Governors of the Federal Reserve
Commission. By the Commission. System, November 24,1986.
3. In the event Yangming, Evergreen or Joseph C. Polking, William W. Wiles,
O O CL is found to have violated any of Secretary of the Board.
Secretary.
the above-cited provisions of the 1916 [FR Doc. 86-26886 Filed 11-28-86; 8:45 am]
Act of the 1984 Act, whether civil [FR Doc. 86-26907 Filed 11-28-86; 8:45 am]
BILUNG CODE 6210-01-M
penalties should be assessed, and, if so, BILLING CODE 6730-01-M

the amount of such penalties;

4. Whether Yangming, Evergreen and Chemical New York Corp.; Application
O O CL are continuing to violate any of FEDERAL RESERVE SYSTEM
To Engage de Novo in Nonbanking
the above-cited provisions of the 1984 Activities
Act; Change in Bank Control; Acquisition o f
Banks or Bank Holding Companies
It is further ordered, that in the event Chemical New York Corporation, New
Yangming, Evergreen or O O CL is found The notificants listed below have York, New York, has filed an application
to be continuing to violate any of the applied under the Change in Bank under § 225.23(a)(3) of the Board’s
above-cited provisions of the 1984 Act, Control Act (12 U .S.C. 1817(j)) and Regulation Y, 12 CFR 225.23(a)(3), for the
an appropriate order shall be entered; § 225.41 of the Board’s Regulation Y (12 Board’s approval under section 4(c)(8) of
It is further ordered, that a public CFR 225.41) to acquire a bank or bank the Bank Holding Company Act, 12
hearing be held in this proceeding and holding company. The factors that are U .S.C. 1843(c)(8), and § 225.21(a) of
that this matter be assigned for hearing considered in acting on the notices are Regulation Y, 12 CFR 225.21(a), to
before an Administrative Law Judge, of set forth in paragraph 7 of the Act (12 engage through a national bank
the Commission’s Office of U .S.C. 1818(j)(7)). subsidiary in making loans to
Administrative Law Judges at a date The notices are available for individuals for personal, family,
and place to be hereafter determined by immediate inspection at the Federal household, or charitable purposes, and
the Administrative Law Judge, in Reserve Bank indicated. Once the other noncommercial loans, and in
compliance with Rule 61 of the notices have been accepted for taking deposits, including savings, time,
Commission’s Rules of Practice and processing, they will also be available and demand deposits. The national bank
Procedure, 46 CFR 502.61; for inspection at the offices of the Board subsidiary will not make commercial
It is further ordered, that Yangming, of Governors. Interested persons may loans or engage in any transactions
Evergreen, and O OCL, jointly and express their views in writing to the defined by applicable law or regulation
severally, are designated Respondents Reserve Bank indicated for that notice to be commercial loans for purposes of
in this proceeding; or to the offices of the Board of the definition of “Bank” in the Bank
It is further ordered, that the Governors. Comments must be received Holding Company Act. The activities
Commission’s Bureau of Hearing not later than December 16r 1986. will be engaged in by Chemical Trust
 Federal Register / V o l. 51, N o. 230 / M onday, D ecem ber 1, 1986 / Notices 43245

Company of Florida, N.A., Palm Beach, Governors. Interested persons may noted, such activities will be conducted
Florida, and will be conducted express their views in writing to the throughout the United States.
throughout the state of Florida. The Reserve Bank or to the offices of the The application is available for
Board has previously determined by Board of Governors. Any comment on immediate inspection at the Federal
order that such activities are closely an application that requests a hearing Reserve Bank indicated. Once the
related to banking. U.S. Trust Company, must include a statement of why a application has been accepted for
70 Federal Reserve Bulletin 371 (1984). written presentation would not suffice in processing, it will also be available for
The application is available for lieu of a hearing, identifying specifically inspection at the offices of the Board of
immediate inspection at the Federal any questions of fact that are in dispute Governors. Interested persons may
Reserve Bank of New York. Once the and summarizing the evidence that express their views in writing on the
application has been accepted for would be presented at a hearing. question whether consummation of the
processing, it will also be available for Unless otherwise noted, comments proposal can “reasonably be expected
inspection at the offices of the Board of regarding each of these applications to produce benefits to the public, such
Governors. Interested persons may must be received not later than as greater convenience, increased
express their views in writing on the December 18,1986. competition, or gains in efficiency, that
question whether consummation of the A . Federal Reserve Bank of Chicago outweigh possible adverse effects, such
proposal can “reasonable be expected (Franklin D. Dreyer, Vice President) 230 as undue concentration of resources,
to produce benefits to the public, such South LaSalle Street, Chicago, Illinois decreased or unfair competition,
as greater convenience, increased 60690: conflicts of interests, or unsound
competition, or gains in efficiency, that 1. L e R o y C. Darby, Inc., Monona, banking practices.” Any request for a
outweigh possible adverse effects, such Iowa; to retain 3.11 percent of the voting hearing on this question must be
as undue concentration of resources, shares of Keystone Bancshares, Inc., accompanied by a statement of the
decreased or unfair competition, Monona, Iowa, and 3.10 percent of reasons a written presentation would
conflicts of interests, or unsound Peoples State Bank, Elkader, Iowa, and not suffice in lieu of a hearing,
banking practices.” Any request for a thereby indirectly acquire 5.87 percent
hearing on this question must be identifying specifically any questions of
of Peoples State Bank, Elkader, Iowa. fact that are dispute, summarizing the
accompanied by a statement of the Comments on this application must be
reasons a written presentation would evidence that would be presented at a
received by December 16,1986.
not suffice in lieu of a hearing, hearing, and indicating how the party
2. W FC, Inc., Waukon, Iowa; to
identifying specifically any questions of commenting would be aggrieved by
become a bank holding company by
fact that are in dispute, summarizing the acquiring 98.71 percent of the voting approval of the proposal.
evidence that would be presented at a shares of Waukon State Bank, Waukon, Comments regarding the application
hearing, and indicating how the party Iowa. must be received at the Reserve Bank
commenting would be aggrieved by B. Federal Reserve Bank of Dallas indicated or the offices of the Board of
approval of the proposal. (Anthony J. Montelaro, Vice President) Governors not later than December 12,
Comments regarding the application 400 South Akard Street, Dallas, Texas 1986.
must be received at the Federal Reserve 75222: A. Federal Reserve Bank of Chicago
Bank of New York or the offices of the 1. Com m unity Bankers, Iiic., (Franklin D. Dreyer, Vice President) 230
Board of Governors not later than Granbury, Texas; to acquire 80 percent South LaSalle Street, Chicago, Illinois
December 19,1986. of the voting shares of Farmers & 60690:
Merchants State Bank, Burleson, Texas. 1. M ichigan N ational Corporation,
Board of Governors of the Federal Reserve Bloomfield Hills, Michigan; to acquire
System, November 24,1986. Comments on this application must be
William W. Wiles, received by December 19,1986. Morison International, Inc., Minneapolis,
Minnesota, and therby engage in the
Secretary o f the Board. Board of Governors of the Federal Reserve activity of investment advisor pursuant
[FR Doc. 86-26881 Filed 11-28-86; 8:45 am] System, November 24,1986.
William W. Wiles,
to § 225.25(b)(4) of the Board’s
BILLING CODE 6210-01-M Regulation Y.
Secretary o f the Board.
(FR Doc. 86-26888 Filed 11-28-86; 8:45 am] Board of Governors of the Federal Reserve
Leroy C. Darby, Inc., et al.; Formations System, November 24,1986.
BILLING CODE 6210-01-M
of; Acquisitions by; and Mergers o f William W. Wiles,
Bank Holding Companies Secretary o f the Board.
Michigan National Corp.; Acquisition of [FR Doc. 86-26889 Filed 11-28-86; 8:45 am]
The companies listed in this notice Company Engaged in Permissible BILUNG CODE 6210-01-M
have applied for the Board’s approval Nonbanking Activities
under section 3 of the Bank Holding
Company Act (12 U.S.C. 1842) and The organization listed in this notice
§ 225.14 of the Board’s Regulation Y (12 has applied under § 225.23 (a)(2) or (f) of DEPARTMENT OF HEALTH AND
CFR 225.14) to become a bank holding the Board’s Regulation Y (12 CFR 225.23 HUMAN SERVICES
company or to acquire a bank or bank (a)(2) or (f)) for the Board’s approval
holding Company. The factors that are under section 4(c)(8) of the Bank Office of the Secretary
considered in acting on the applications Holding Company Act (12 U .S.C.
are set forth in section 3(c) of the Act (12 Statement of Organization, Functions
1843(c)(8)) and § 225.21(a) of Regulation
U.S.C. 1842(c)). and Delegation of Authority
Y (12 CFR 225.21(a)) to acquire or
Each application is available for control voting securities or assets of a Part A (Office of the Secretary),
immediate inspection at the Federal company engaged in a nonbanking Chapter AE (Office of the Assistant
Reserve Bank indicated. Once the activity that is listed in § 225.25 of Secretary for Planning and Evaluation)
application has been accepted for Regulation Y as closely related to of the Statement of Organization,
processing, it will also be available for banking and permissible for bank Functions and Delegation of Authority
inspection at the offices of the Board of holding companies. Unless otherwise for the Department of Health and
43246 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices

Human Services (last amended at 48 FR (2) Division of Disability, Aging and legislative proposals affecting HHS
4915 on February 3,1983) is amended. Long-Term Care Policy. prepared by other Departments; for
The following organizational change are performing analyses to identify
made in part as a result of the Section AE.20 Functions
opportunities to improve program
streamlining of the Office of the A . The Immediate O ffice o f the efficiency and the effectiveness of
Secretary, principally to consolidate the Assistant Secretary fo r Planning and program management across HHS
support functions within the Office of Evaluation provides executive direction, agencies; and for analyzing data and
the Assistant Secretary for Planning and leadership and guidance to OASPE developing guidelines and options
Evaluation. The changes will reduce components. The Assistant Secretary concerning income eligibility, State
organizational overlap and duplication, acts as a principal advisor to the allotments, and other aspects of
and provide a more efficient Secretary on policy development issues, program design.
organization. and is responsible for major decisions 3. The Division of Research,
The changes are as follows: and support activities in the areas of Evaluation, and Special Analysis is
1. Amend Chapter AE by deleting the legislative development, policy planning, responsible for developing policies and
current sections AE.10 in its entirety and policy analysis and research and procedures to ensure the quality,
replacing it with the following: evaluation oversight. relevance, and utility of the
AE.00 Mission B. The O ffice o f Program Svstem s —in Department’s evaluation and policy
AE.10 Organization conjunction with the offices of Health, research activities; for the conduct of
AE.20 Functions Income Security, and Social Services policy analysis in subjects and areas
Policy—is responsible for (1) the general
Section AE.00 Mission affecting other units of government; for
development, coordination, and
representing the Department on
The Assistant Secretary for Planning operation of the Department’s policy
intergovernmental policy task forces;
and Evaluation serves as the principal planning, development, and policy
and for identifying and assessing
advisor to the Secretary on policy support activities, including formulation
alternative Federal financial assistance
development, program analysis, and of legislation: and (2) for developing the
Department’s evaluation, research and policies, including block grants. It is also
economic policy. He/She is responsible responsible for coordinating the
for the major decisions and support statistical policies, including revision of
development of evaluation and policy
activities which encompass legislative poverty income guidelines required by
Pub. L. 97-35; and oversight of research plans for the OASPE.
development, planning, policy analysis 4. The Division of Technical and
and research and evaluation oversight. regulatory analysis conducted
throughout the Department. It is also Computer Support is responsible for
This mission is accomplished through an providing analytic, statistical, scientific
organization consisting of functional and responsible for policy analysis, research,
and evaluation of crosscutting issues programming and computer systems
programmatic units. This dual approach support, and for other technical staff
provides both an operational framework which involve more than one HHS
agency or which involve HHS services in support of policy analyses,
to direct, coordinate and evaluate research and evaluation activities of the
departmental activities in a research interaction with other Federal
departments or agencies or other levels OASPE. It is responsible for
and analytic capability to perform development, coordination, and
policy analyses. of government; and for providing a fulL
range of technical support services to oversight of Departmental policy for
Section AE.10 Organization the OASPE, and selected policy support social and demographic statistics,
services for the Department. including the revision and publication of
The Office of the Assistant Secretary
for Planning and Evaluation (OASPE) 1. The Division of Policy and the Poverty Income Guidelines. Finally,
consists of the following components: Regulatory Analysis is responsible for it is responsible for providing technical
A. Immediate Office (IO). the conduct of policy analysis in assistance and advice to other policy
B. Office of Program Systems (OPS). subjects and areas, such as civil rights, offices within the Department on
(1) Division of Policy and Regulatory not covered by, or cutting across, the statistical and specialized scientific
Analyses. programmatic offices of OASPE; for policy analyses, and computer support
(2) Division of Planning and Policy providing the Department’s analysis of systems design; and for operation of a
Coordination. issues for the Domestic Policy Council; policy information center for identifying
(3) Division of Research, Evaluation for the analysis of economic issues and and retrieving evaluative and policy
and Special Analyses. their implications for the Department’s research studies.
(4) Division of Technical and programs; for the oversight of regulatory C. The O ffice o f Health P o licy is
Computer Support. analysis and related analytic and responsible for policy development—
C. Office of Health Policy (OHP). planning activities concerning including policy planning, policy and
(1) Division of Health Financing regulations; and for developing budget analysis, review of regulations
Policy. approaches to conduct effective policy and formulation of legislation—and for
(2) Division of Public Health Policy. analysis of social programs; and for the conduct and coordination of
(3) Division of Health Economic providing support to other Departmental research and evaluation on issues
Analysis and Research. offices on techniques of policy, systems, relating to health policy. In these
D. Office of Income Security Policy and cost-benefit analyses. matters, the office works closely with
(OISP). 2.. The Division of Planning and Policy the Public Health Service and the Health
(1) Division of Income Assistance Coordination is responsible for the Care Financing Administration.
Policy. coordination and oversight of policy 1. The Division of Health Financing
(2) Division of Policy Research and planning and formulation of legislation Policy is responsible for policy
Analysis. by the Department, including the coordination, long-range planning,
E. Office of Social Services Policy establishment of schedules and formulating budget and legislation,
(OSSP). procedures to ensure the availability of economic analysis, program analysis,
(1) Division of Children, Youth and supporting information. This Division is review of regulations, evaluation, and
Family Policy. further responsible for reviewing information dissemination related to the
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices 43247

Department’s health financing programs, relating to social services, child welfare, the office works closely with the Social
primarily Medicare and Medicaid and aging, Native American and human Security Administration and Family
policies affecting health care financing development programs; Support Administration.
and health care costs. Functions include: deinstitutionalization and long-term care 1. The Division of Income Assistance
formulating and analyzing alternative policy; and volunteerism and private Policy is responsible for policy
legislative and regulatory proposals; sector social services initiatives. In coordination, long-range planning,
preparing short-term policy analyses these matters, the office works closely budget and economic analysis, program
and evaluations on the efficacy of with the Office of Human Development analysis, review of regulations and
existing and potential policies and Services. reports on legislation, and information
programs in terms of cost, effectiveness 4» The Division of Children, Youth and dissemination related to the
and other variables; and synthesizing Family Policy is responsible for policy Department’s programs that provide
technical analyses performed outside of coordination, long-range planning, cash assistance and social insurance
the Government in a manner that is formulating budget and legislation, benefits. In the cash assistance area, the
relevant to policy formulation. economic analysis, program analysis, principal programs examined are Aid to
2. The Division of Public Health Policy review of regulations, research, Families With Dependent Children,
is responsible for policy coordination, evaluation and information Supplemental Security Income, Child
long-range planning, formulating budget dissemination related to service Support Enforcement, Low-Income
and legislation, economic analysis, programs and human development Home Energy Assistance, Work
program analysis, review of regulations, policies affecting children, youth, and Incentive program and refugee
evaluation, and information families. The Division oversees and assistance. The Division performs the
dissemination related to public health assists the development o f legislative,
same functions in regard to programs
programs and policies, including budgetary, regulatory, and research/
outside the Department that affect the
biomedical research; food and drug evaluation proposals for programs
safety; disease control; health care typically administered by the Office of employment and income support, such
resources development; health care and Human Development Services and other as the Earned Income Tax Credit, Food
services delivery; alcohol, drug abuse human services agencies. The Division Stamps, housing assistance programs,
and mental health services; and health performs independent policy research and employment and training programs.
promotion and disease prevention. and evaluation of these programs and In the social insurance area, the Old
Specific responsibilities include: policies affecting them. Age, Survivors and Disability Insurance
preparation of studies on the 2. The Division of Disability, Aging programs are the principal social
distribution, adequacy, and organization and Long Term Care Policy is insurance programs examined. As with
of health resources and services; on the responsible for policy coordination, cash assistance, other programs of this
effects of these resources and services long-range planning, formulating budget and other Departments concerning
on costs and health status; and on the and legislation, economic analysis, income provision, old-age and disability
appropriateness of services utilization. It program analysis, review of regulations, (e.g., the tax treatment of deferred
also is responsible for the conduct of research, evaluation and information compensation) are similarly monitored.
policy research and evaluation studies dissemination related to service Responsibilities include advising the
on public health issues, synthesizing programs and human development Secretary about his or her decisions as a
these analyses into special initiatives policies concerning the disabled, trustee of the several Social Security
and new policies, and for the retarded, and aging populations, funds. In addition, the Division assists
formulation of alternative legislative including deinstitutionalization, the Division of Policy Research and
and regulatory proposals. rehabilitation, long-term, and non- Analysis in the review and conduct of
3. The Division of Economic Analysis institutional community-assisted care. research in the areas of welfare,
is responsible for the performance of The Division is the focal point for the employment, social security and
economic and statistical analyses of the coordination of disability and long-term retirement policy.
Department’s existing and proposed care policy, including home and
2. The Division of Policy Research and
health care financing and community care and institutional care,
reimbursement programs, policies and with related policies which affect the Analysis is responsible, in conjunction
proposed legislation; performance of aged and disabled. Specific functions with the Division of Income Assistance
economic research and statistical include design and execution of Policy, for reviewing the Department’s
analysis, as well as development, research, and review and coordination research and evaluation activities in the
coordination and monitoring of health of departmental research and areas of income assistance, employment
research and evaluation contracts in the demonstration activities concerning and retirement income provision and for
areas of financing and reimbursement; disability, aging and long-term care conducting an intramural and
and the estimation and analysis of the policies. extramural policy research program in
costs of existing and proposed E. The O ffice o f Incom e Security these areas on issues of priority to the
Departmental health programs for use in P olicy is responsible for policy Secretary, and those that cut across and
the development of health policy. development—including policy planning, complement research conducted by
D. The Office of Social Services Policy policy and budget analysis, review of HHS agencies.
is responsible for policy development— regulations and formulation of Dated: November 17,1986.
including policy planning, policy and legislation—and for the conduct and Otis R. Bowen,
budget analysis, review of regulations coordination of research and evaluation
Secretary.
end formulation of legislation—and for on issues relating to income assistance,
the conduct and coordination of income security, and employment [FR Doc. 86-26873 Filed 11-28-86; 8:45 am]
research and evaluation on issues programs and policies. In these matters, BILLING CODE 4110-60-M
43248 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices

Office of Human Development Approved: November 24,1986. General Services Administration and
Services Jean K. Elder, that the chassis used in these homes, in
Acting Assistant Secretary for Human conjunction with the manufactured
[Program Announcement No. HDS-87-1] Development Services. home structure, were unable to
[FR Doc. 86-26883 Filed 11-28-86; 8:45 am] effectively sustain transportation loads
FY 1987 Coordinated Discretionary BILLING CODE 4130-01-M as required by the Federal manufactured
Funds Program; Availability of Funds home construction and safety standards
and Request for Applications (Standards). As a result, overstreees
agency: Office of Human Development DEPARTMENT OF HOUSING AND exist in various components.
Services, HHS. URBAN DEVELOPMENT The Department has further
preliminarily determined that Scott used
AC TIO N : Correction to the FY 1987 [Docket No. N-86-1656; FR-2295] an insufficient number of fasteners to
Coordinated Discretionary Funds fasten the outer metal siding to the
Program: availability of funds and Scott Housing Systems, Inc.;
Presentation of Views sidewall belt rail of some of the FEMA
request for applications; notice. homes. As a result, the exterior siding
AGENCY: Assistant Secretary for on the sidewalls separated from the wall
sum m ary: This document corrects
Housing-Federal Housing Commissioner, studs and belt rails.
Volume 51, No. 189, page 34744, of
HUD. HUD also has preliminarily
program announcement HDS-87-1
published September 30,1986, in regard a c t i o n : Notice of presentation of views determined that Scott failed to properly
to eligibility for applicants for priority in the matter of Scott Housing Systems, seal areas around the passage doors and
area, 5.3.D (Special Indian Grants), and Inc. living room windows in some of the
extends the due date for applications FEMA homes. As a result, panels and
S UM M ARY: A Presentation of Views floors were damaged.
under this priority area. pursuant to 24 CFR 3282.152(f) will The Department has preliminarily
FOR FURTHER IN FO R M A TIO N CONTACT: commence at 9:30 a.m. on December 15, determined that Scott failed to glue wall
Duane Ragan, Room 2044, Donohoe 1986, in Room 9280, Department of paneling properly at the butt joints in
Building, P.O. Box 1182, Washington, DC Housing and Urban Development, 451 some of the FEMA homes. As a result,
20013, (202-755-7730). Seventh Street, SW ., Washington, DC wall panels separated.
SUPPLEMENTARY IN FO RM A TIO N : On 20410 on the Department of Housing and AHUD has preliminarily determined
September 30,1986, the Office of Human Urban Development’s preliminary that Scott failed to affix the data place
Development Services published in the determination that certain homes permanently in some of the FEMA
Federal Register its FY 1987 Coordinated manufactured by Scott Housing homes. As a result, the data plates were
Discretionary Funds Program; Systems, Inc. (HUDALJ 1-86-MH) fail to misplaced or missing.
Availability of Funds and Request for comply with the Federal manufactured Further, the Department has
Applications; Notice (Volume 51, No. home construction and safety standards. preliminarily determined that Scott used
189, pages 34712-34762). On page 34744 FOR FURTHER IN FO R M A TIO N C O NTACT: exposed combustible material below the
of this announcement a change in William C. Sorrentino, Director, cabinets over the kitchen stove without
eligibility requirements for funding Manufactured Housing and Construction adequate flame spread protection in
under priority area 5.3.D, Special Indian Standards Division, U.S. Department of some of the homes. As a result, the
Grants, is needed. Housing and Urban Development, Room homes had inadequate fire protection in
The current requirement for all four 9158, 451 Seventh Street SW ., this area.
child welfare training priority areas (5.3 Washington, DC 20410. Telephone: (202) The Department has also preliminarily
A, B, C, and D) states that all applicants 755-5210. determined that Scott’s set-up
must train bachelors or master level SUPPLEMENTARY IN FO R M A TIO N : The instructions for the home, if followed,
students in social work. This Secretary of Housing and Urban would result in overstressed I-beams.
requirement was added this year, and Development (Secretary) administers Finally, HUD has preliminarily
should have applied to 5.3 A -C only, as the National Manufactured Housing determined that Scott wired the FEMA
most Indian Colleges and other Construction and Safety Standards Act homes to accommodate a clothes dryer
interested educational institutions do of 1974, 42 U .S.C. 5401 et seq. (the Act) but failed to properly install the
not train BSWs and MSW s. It was not and its regulations. Based on necessary receptacles in some of the
our intention to make these colleges information available through the Office FEMA homes.
ineligible for child welfare training of Manufactured Housing and Based on these preliminary
grants which focus on the education and Regulatory Functions, HUD has made a determinations, the Department has
training of Indians. preliminary determination that preliminarily determined that Scott has
Accordingly, the Office of Human noncompliance with the Federal constructed homes which fail to comply
Development Services is correcting page manufactured home construction and with the Standards at 24 CFR 3280.5,
34744, Column 1, “Introduction”, safety standards exist in certain 3280.204, 3280.303, 3280.305, 3280.306,
paragraph four to add: "except for manufactured homes produced by Scott 3280.307, 3280.801 and 3280.903 and that
applicants for area 5.3.D (Special Indian Housing Systems, Inc. (Scott). The by manufacturing and selling such
Grants). For this priority area only, noncompliances arise from Scott’s homes Scott has violated 42 U .S.C.
applicants will be considered from failure to comply with various sections 5409(a)(1).
institutions of higher education which of 24 CFR Part 3280. As a result of these preliminary
are accredited by the appropriate The Department has preliminarily determinations, a Presentation of Views
accrediting authority, with no determined that between June 1,1984 will be held under the authority of the
requirement that they train bachelors or and July 31,1984, Scott manufactured Act and 24 CFR Part 3282 Subpart D.
masters level students in social work." 100 manufactured homes to be used by The parties to this proceeding are the
Applications under this priority area the Federal Emergency Management Secretary and Scott. The purpose of this
(5.3.D) will now be due January 15,1987. Agency pursuant to a contract with the proceeding are to enable Scott to
 Federal Register / V o l. 51, N o. 230 / M on d ay, December 1, 1986 / Notices 43249

present information that would Comprising 1,561.74 acres in Humboldt described above will be open to location
demonstrate that the homes County, Nevada and entry under the United States
manufactured by Scott do not fall to mining laws and to applications and
In exchange for these lands, the
comply with the indicated standards offers under the mineral leasing laws.
United States acquired the following
and were not produced and sold in Appropriation of lands under the
non-Federal lands having high public
violation of the Act. general mining laws prior to the date
values for wildlife habitat, recreation
This presentation of views will be and livestock grazing: and time of restoration is unauthorized.
held in accordance with the provisions Any such attempted appropriation,
of 24 CFR 3282.152(f). William C. Mount Diablo Meridian, Nevada
including attempted adverse possession
Sorrento, Director, Manufactured T. 40 N., R. 40 E., under 30 U.S.C. 38, shall vest no rights
Housing and Construction Standards Sec. 4, NEy4SW‘/4. against the United States. Acts required
Division is hereby designated as the T. 42 N., R. 40 E.,
Sec. 14, SEyiNEVi; to establish a location and to initiate a
presiding officer for the proceedings. All Sec. 35, E^SWVi. right of possession are governed by
inquiries concerning these proceedings T. 42 N„ R. 41 E., State law where not in conflict with
should be directed to Mr. Sorrentino. Sec. 1, SWyiNEy4, SEy4NWy4; Federal law. The Bureau of Land
The presentation of views will Sec. 5, lot 2 , SEViNwy4, Nwy4swy4. Management will not intervene in
commence at 9:30 a.m. on December 15, T. 43 N., R. 41 E., disputes between rival locators over
1986 in room 9280. Department of Sec. 28. WMiNEVi, NWy4SEy4, SEy4SWy4; possessory rights since Congress has
Housing and Urban Development, 451 Sec. 32, EV 2 SE Y 4 , SWy4SEy4, SEViNEyi: provided for such determinations in
Seventh Street SW ., Washington, DC Sec. 3 3 , Ny2Nwy4, swy4Nwy4.
T. 44 N., R. 41 E., local courts.
20410. The purpose of this notice is to inform
Sec. 26, Ny2SW%, SEy4SWy4;
Interested persons may participate in Sec. 34, NWy4SE‘/4, NEy4NEy4, Sy2NEy4; the public and interested State and local
writing in the oral portion of the Sec. 35, Ny2NWy4, governmental officials of the issuance of
presentation of views pursuant to 24 T. 43 N., R. 42 E., the conveyance documents.
CFR 3282.153. The presiding officer may Sec. 19, sy2NEy4, NVaSEVV. FOR FURTHER IN FO R M A TIO N CONTACT:
determine that such participation should T. 44 N., R. 42 E.,
be limited or barred so as not to unduly Sec. 31, NEy4NEy4; Frank Shields, District Manager, Bureau
prejudice the rights of the parties Sec. 32, NWy4NW. of Land Management, Winnemucca
involved or unnecessarily delay the Comprising 1,400.41 acres in Humboldt District Office, Winnemucca, NV 89445.
proceedings. County, Nevada. Robert G. Steele,
Deputy State Director. Operations.
Dated: November 20,1986. The land is located approximately 14
miles northeast of Paradise Valley, [FR Doc. 86-26863 Filed 11-28-86: 8:45 amj
Thomas T . D em ery,
Assistant Secretary for Housing^-Fec/eral Nevada. Title was accepted on July 28, BILLING CODE 4310-HC-M

Housing Commissioner. 1986.

|FR Doc. 86-27001 Filed 11-28-86; 8:45 am} DATES: On the 30th day, commencing
Minerals Management Service
BILLING CODE 4210-27-M with the date of this publication, the
land described above will be open to the Outer Continental Shelf; Availability
operation of the public land laws, and Proposed Notice of Sale; Central
DEPARTMENT OF THE INTERIOR subject to valid existing rights, existing Gulf of Mexico Oil and Gas Lease Sale
classifications, and requirements of 110
Bureau of Land Management applicable laws. All valid applications
received from the date of this Gulf of Mexico Outer Continental
INV-943-07-4212-13; N-39040] publication and until the opening of Shelf: Notice of Availability of Proposed
business on the 30th day, will be Notice of Sale, Central Gulf of Mexico,
Nevada; Opening of Public Lands considered as simultaneously filed. Oil and Gas Lease Sale 110.
Those received thereafter shall be With regard to oil and gas leasing on
agency : Bureau of Land Management,
Interior. considered in the order of fifing. the Outer Continental Shelf (OCS), the
All mineral in the following described Secretary of the Interior, pursuant to
action : Notice of conveyance and order
lands were reconveyed to the United section 19 of the O CS Lands Act, as
providing for opening of public lands.
States: amended (43 U .S.C. 1345), has provided
summary: On August 22,1986, the the affected States the opportunity to
Mount Diablo Meridian, Nevada
United States issued an exchange review the proposed Notice of Sale.
T. 40 N., R. 40 E.. The proposed Notice of Sale for Sale
conveyance document to Ninety-Six Sec. 4. NEy4SWy4.
Ranch for the following described T. 42 N., R. 40 E., 110, Central Gulf of Mexico, may be
Federal lands pursuant to section 206 of Sec. 14, SEy4NEy4; obtained by written request to the
the Act of October 21,1976 (43 U.S.C. Sec. 35, EVzSW Y*. Public Information Unit, Gulf of Mexico
1716): T. 42 N., R. 41 E.. Region, Minerals Management Service,
Sec. 1, swy4NEy4, SEy4Nwy4. 1201 Wholesalers Parkway, New
Mount Diablo Meridian. Nevada T. 44 N., R. 41 E., Orleans, Louisiana 70123-2394, or by
T. 43 N.. R. 41 E., Sec. 26 , Ny2swy4, SEy4SWy4; telephone (504) 736-2519.
Sec. 3, lots 3, 4, SVfeNWWSWVi; Sec. 34, NWy4SEy4, NE'ANEVi, SViNEy4; The final Notice of Sale will be
Sec. 4, lot 1, S VfeNEV*, E VhSWY*. SE%; Sec. 35, Ny2NWy4.
Sec. 9, NEV4, EVzSEVi; T. 43 N.. R. 42 E., published in the Federal Register at
Sec. 10, WV2; Sec. 19, Sy2NEy4, N‘/£SEy4. least 30 days prior to the date of bid
Sec. 15, NVaNW^v. T. 44 N., R. 42 E., opening. Bid opening is scheduled for
Sec. 16 NEViNEVi; Sec. 31 NEyiNEVi; April 1987.
T- 44 N., R. 41 E., Sec. 32, NWy4NWy4. The proposed Notice includes a
Sec. 33 , SVfeSWVi, NWViSEVi; request for comments regarding possible
Sec. 34, sv2swy4. On the 30th day, commencing with the
date of this publication, the land incentives for leasing and for diligent
43250 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices

exploration being considered by the Commerce Commission Building, the trackage rights agreement shall be
Department for the final Notice of Sale Washington, DC 20423, or call 289-4357 protected pursuant to N orfolk and
for Sale 110. Proposed incentives include (DC Metropolitan area) or tolLfree (800) Western Ry. C o — Trackage Rights —
such items as lower minimum bids and 424-5403. B N , 3541.C.C. 605 (1978), as modified by
variable rental options. The comments Decided: November 17,1986. M endocino Coast R y., In c —Lease and
requested on these items are due no By the Commission, Chairman Gradison, Operate, 3601.C.C. 654 (1980).
later than January 26,1987. Vice Chairman Simmons, Commissioners Decided: November 21,1986.
This Notice of Availability is hereby Sterrett, Andre, and Lamboley. Vice
published pursuant to 30 CFR 256.29 as By the Commission, Jane F. Mackall,
Chairman Simmons and Commissioner
amended (51 FR 37177 on October 20, Lamboley dissented with separate Director, Office of Proceedings.
1986) as a matter of information to the expressions. Noreta R. McGee,
public. Noreta R. McGee, Secretary.
Dated: November 25,1986. Secretary. [FR Doc. 86-26904 Filed 11-28-88; 8:45 am]
Wm. D. Bettenberg, [FR Doc. 86-26903 Filed 11-28-66; 8:45 am] BILLING CODE 7035-01-M

Director, Minerals Management Service. BILUNG CODE 7035-02-M

[FR Doc. 86-26898 Filed 11-28-86; 8:45 am]

[Finance Docket No. 30944] [Docket No. AB-55 (Sub-177)B]
BILLING CODE 4310-MR-M

Chicago & North Western Seaboard System Railroad, Inc.;

Transportation Co.; Trackage Rights Abandonment; Between Ewing and
INTERSTATE COMMERCE Exemption; Soo Line Railroad Co.; Hagans, VA; Findings
COMMISSION Exemption
The Commission has found that the
On November 11,1986, Chicago and
[Docket No. AB-19; Sub-125X] public convenience and necessity permit
North Western Transportation Company
(C&NW) filed a notice of exemption for Seaboard System Railroad, Inc. (CSX
Baltimore & Ohio Railroad Co.; Transportation, Inc.) to abandon its 8.0-
Exemption; Abandonment in Harrison, trackage rights over a line of track of the
Soo Line Railroad Company (Soo) (1) mile rail line between Milepost CV-234
Doddridge, Ritchie and Wood near Ewing and Milepost CV-242 near
Counties, WV between milepost 34.60 near Beloit, W I,
and milepost 30.85 near South Beloit, IL, Hagans in Lee County, V A .
AGENCY: Interstate Commerce and (2) between milepost 32.37 and A certificate will be issued
Commission. milepost 33.47 near Beloit, WI, including authorizing this abandonment unless
A CTION: Notice of exemption. a spur line which extends .53 miles. within 15 days after this publication thè
C&NW also desires that certain Commission also finds that: (1) A
sum m ary: The Interstate Commerce connector tracks be constructed or financially responsible person has
Commission exempts from the rearranged. C&NW must separately offered financial assistance (through
requirements of prior approval under 49 obtain authority under or an exemption subsidy or purchase) to enable the rail
U.S.C. 10903, et seq., the abandonment from U .S.C. 10901 before commencing service to be continued; and (2) it is
by The Baltimore and Ohio Railroad construction of any track. likely that the assistance would fully
Company of 60.57 miles of rail line in C&NW is an independent railroad and compensate the railroad.
Harrison, Doddridge, Ritchie and Wood is not part of any railroad system. It has
Counties, W V, subject to standard labor Any financial assistance offer must be
entered into a written agreement with filed with the Commission and served
protective conditions. Soo, whereby C&NW will acquire
D ATES: This exemption will be effective
on the applicant no later than 10 days
trackage rights over the Soo line to
on December 31,1986. Petitions for stay from publication of this Notice. The
transport its overhead traffic between
must be filed by December 11,1986, and following notation shall be typed in bold
Harvard, IL, and Beloit, WI. The
petitions for reconsideration must be trackage rights will also facilitate face on the lower left-hand comer of the
filed by December 22,1986. contiqued rail service to Colt Industries envelope containing the offer: "Rail
a d d r e s s e s : Send pleadings referring to at Beloit, WI. As a result of the proposed Section, A B -O FA ” . Any offer previously
Docket No. AB-19 (Sub-No. 125X) to: transaction, it is anticipated that made must be remade within this 10-day
operations will be more efficient and period.
(1) Office of the Secretary, Case Control
Branch, Interstate Commerce economical. The trackage rights were Information and procedures regarding
Commission, Washington, DC 20423 effective on November 18,1986. financial assistance for continued rail
(2) Peter J. Shudtz, Lawrence H. The transaction is based on written service are contained in 49 U .S.C. 10905
Richmond, 100 North Charles Street, agreements and is not filed or sought in and 49 CFR 1152.
Baltimore, MD 21201 responsive applications in rail Decided: November 21,1986.
(3) Patricia Vail, Charles M. consolidation proceedings. Thus, this
trackage rights agreement falls within By the Commission, Chairman Gradison,
Rosenberger, 500 Water Street, Vice Chairman Simmons, Commissioners
Jacksonville, FL 32202. the class of transactions identified at 49
CFR 1180.2(d)(7) that the Commission Sterrett, Andre, and Lamboley. Commissioner
FOR FURTHER IN FO RM A TIO N CONTACT:
has found to be exempt under 49 U .S.C. Lamboley dissented with a separate
Joseph H. Dettmar, (202) 275-7245. expression. Chairman Gradison did not
10505. Petitions to revoke the exemption
SUPPLEMENTARY INFO RM A TIO N : participate.
under 49 U.S.C. 10505(d) may be filed at
Additional information is contained in any time. The filing of a petition to Noreta R. McGee,
the Commission’s decision. To purchase revoke will not stay the transaction. Secretary.
a copy of the full decision, write to T.S. As a condition to the use of this [FR Doc. 86-26905 Filed 11-28-86; 8:45 am]
InfoSystems, Inc., Room 2229, Interstate exemption, any employees affected by BILLING CODE 7035-01-M
 Federal Register / V ol. 51, N o. 230 / M onday, Decem ber 1, 1986 / N otices 43251

NATIONAL COMMUNICATIONS FOR FURTHER IN FO R M A TIO N CONTACT: NATIONAL SCIENCE FOUNDATION

SYSTEM Ms. Marianna Dunn, National
Endowment for the Arts, Administrative Survey Submitted for OMB Review
Industry Executive Subcommittee of Service Division, Room 203,1100
the National Security Pennsylvania Avenue, NW., In accordance with the Paperwork
Telecommunications Advisory Washington, DC 20506; (202-682-5464) Reduction Act and OMB Guidelines, the
Committee; Meeting National Science Foundation is posting
from whom copies of the documents are
this notice of information collection that
A meeting of the Industry Executive available.
will affect the public.
Subcommittee of the National Security SUPPLEMENTARY INFO RM A TIO N : The
Telecommunications Advisory Agency Clearance O fficer: Herman G.
Endowment requests the reinstatement Fleming, (202) 357-9421.
Committee will be held Tuesday, of two previously approved collections
January 20,1987. The meeting will be O M B D esk O fficer: Carlos Tellez,
for which approval has expired. The (202) 395-7340.
held [Link] MITRE Corporation, 7525 entry is issued by the Endowment and
Colshire Drive, McLean, Virginia. Title: Survey of Academic Research
contains the following information: (1) Facilities Needs.
Registration will begin at 8:30 a.m. and
the meeting will start at 9 a.m. The title of the form; (2) how often the
A ffected Public: Non-Profit
The agenda is as follows: required information must be reported; Institutions.
a. Opening remarks. (3) who will be required or asked to
report; (4) what the form will be used Num ber o f Respondents: 250
b. Administrative remarks. respondents: total of 10,000 burden
c. Briefings on industry and for; (5) an estimate of the number of
hours.
government activities. responses; (6) an estimate of the total
number of hours needed to prepare the Abstract: Congress directed NSF to
Due to the requirement to discuss maintain data collection capability to
classified information, in conjunction form. This entry is not subject to 44
assess academic science/engineering
with the issues listed above, the meeting U.S.C. 3504 (h).
(S/E) research facilities needs. Data are
will be closed to the public in the Title: Advancement Program collected on current and planned
interest of National Defense. Any person Application Guidelines F Y 1988. construction, repairs, and renovations
desiring information about the meeting by major S/E field. Users include
Frequency of Collection: One-time.
may telephone (202) 692-9274 or write Federal and State policy makers and
the Manager, National Communications Respondents: Non-profit institutions.
Use: Guideline instructions and planners, academic officials, etc.
System, Washington, DC 20305-2010. Affected public: universities and
Charles F. Noll, applications elicit relevant information
colleges.
Captain, U.S. Navy, Assistant Manager, N CS from nonprofit organizations that apply
Joint Secretariat. for funding under the Advancement Dated: November 24,1986.
[FR Doc. 86-26902 Filed 11-28-86; 8:45 am] Program. This information is necessary Herman G. Fleming,
BILLING CODE 3610-05-M for the accurate, fair and thorough N SF Reports Clearance Officer.
consideration of competing proposals in [FR Doc. 86-26847 Filed 11-28-86; 8:45 amj
the peer review process. BILLING CODE 7S55-01-M
NATIONAL FOUNDATION ON THE Estimated Number of Respondents:
ARTS AND THE HUMANITIES 250.
Directorate for Engineering; Division
Estimated Hours for Respondents to
Agency Information Collection of Mechanics, Structures and
Provide Information: 8,000.
Activities Under OMB Review Materials Engineering Advisory
Title: Dance/Inter-Arts/State Committee; Meeting
agency : National Endowment for the Programs Presehting/Touring Initiative
Arts. <~ «• 1| Guidelines FY 1988. In accordance with the Federal
action: Notice. Frequency of Collection: One-time. Advisory Committee A gL Pub. L. 92-463,
as amended, the National Science
Summary: The National Endowment for Respondents: State or local
Foundation announces the following
the Arts (NEA) has sent to the Office of governments and non-profit institutions. meeting:
Management and Budget (OMB) the Use: Guideline institutions and
following proposals for the collection of applications elicit relevant information Name: Committee for the Division of
information under the provisions of the Mechanics, Structures and Materials
from nonprofit organizations and state Engineering.
Paperwork Reduction Act (44 U.S.C. or local arts agencies that apply for Date & Time: December 15,1986, 8:30 a.m.
Chapter 35). funding under specific Program to 5:00 p.m.; December 16,1986, 8:30 a.m. to
date: Comments on this information categories. This information's 3:00 p.m.
collection must be submitted by necessary for the accurate, fair and Place: Room 540, NSF.
December 18,1986. thorough consideration of competing Type of Meeting: Open.
Contact Person: Ms. Hope Duckett,
addresses : Send comments to Mrs. proposals in the peer review process. National Science Foundation Room 1110,
JudyEgan, Office of Management and Estimated Number of Respondents: 20, Washington, DC 20550; Telephone (202) 357-
^Budget, New Executive Office Building, Estimated Hours for Respondents to 9542.
726 Jackson Place, NW., Room 3208, Provide Information: 700. Summary Minutes: May be obtained from
Washington, DC 20503; (202-395-6880). the Contact Person.
Murray R. Welsh, Agenda:
In addition, copies of such comments
may be sent to Ms. Marianna Dunn, Director, Administrative Services Division,
National Endowment for the Arts. Monday, December 15,1986
National Endowment for the Arts, 8:30-8:45 a.m.: Introductions and Welcoming
Administrative Services Division, Room [FR Doc. 86-26953 Filed 11-28-86; 8:45 am]
Remarks
203,1100 Pennsylvania Avenue, NW., BILLING CODE 7537-01-M
8:45-9:45 a.m.: Reports of Activities by
Washington, DC 20506; (202-682-5464). Advisory Committee Members
43252 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices

9:45-10:30 a.m.: Reports and Discussion of Abstract: This survey provides Pennsylvania State University,
Actions Items from the February 6-7,1986 academic R&D expenditures data by University Park, Pennsylvania
Meeting by NSF Staff and Advisory source and discipline, including research
Committee Members Dr. William F. Miller, President and
10:30-Noon: Activities of the Engineering equipment and facilities. Data are used Chief Executive Officer, SRI
Directorate and the Division for planning and policy formulation International, 333 Ravenswood
Noon-lr30 p.m.: Lunch related to academic science and Avenue, Menlo Park, California
1:36-5:00 p.m.: Discussion of Division Hans engineering infrastructure. Users include Prof. William A . Nierenberg, Director
and Programs Congress, Federal agencies, States, Emeritus, Scripps Institution of
Tuesday, December 16,1986 industry, universities, etc. Affected Oceanography, A-021, University of
public—Higher education and California at San Diego, La Jolla,
8:30-10:30: Objectives of the Division and the associated federally funded R&D
Advisory Committee for FY 1987 California
10:30-Noon: Development of Tasks and centers. Dr. Norman C . Rasmussen, McAfee
Assignments for FY 1987 II. Title: Survey of Scientific and Professor of Engineering,
Noon-l:30 pjn.: Lunch Engineering Personnel Employed at Massachusetts Institute of
1:30-3:00 p.m.: Preparation of Summaries of Universities, January 87-88-89 Technology, 77 Massachusetts
Action Items and Recommendations to the A ffected Public: Non-profit Institutions
Assistant Director Avenue, Room 24-205, Cambridge,
Number o f Respondents: 300 Massachusetts
3:00: Adjourn Respondents; total of 4,800 burden
Dated: November 24,1986. Dr. Roland W. Schmitt, Chairman,
hours Senior Vice President and Chief
M. Rebecca Winkler, Abstract: Data are provided on Scientist, General Electric Company,
Committee Management Officer. employment status and gender of P.O. Box 8, Schenectady, New York
[FR Doc. 86-26845 Filed 11-28-86; 8:45 am] scientific and engineering personnel
BILLING CODE 7555-01-M employed in universities in 25 Terms Expire May 10,1990
disciplines, along with their full-time- Dr. Perry L> Adkisson, Chancellor, The
equivalents. Users include Federal, Texas A&M University System,
Committee Management; Renewal State, industrial, and academic officials System Administration Building,
The Advisory Committee for in analyses o f the academic Executive Offices, Room 219, College
Biological, Behavioral, and Social infrastructure and research capacity. Station, Texas
Sciences is being renewed for an Affected public; Doctorate-granting Dr. Annelise G. Anderson, Senior
additional two years. institutions and their affiliate federally Research Fellow, The Hoover
The Assistant Director for Biological, funded R&D centers. Institution, Room 301-M, Stanford
Behavioral, and Social Sciences has Dated; November 21,1986. University, Stanford, California
determined that the renewal of this Herman G. Fleming, Dr. Craig C. Black, Director, Los Angeles
Committee is necessary and in the N SF Reports Officer. County Museum of Natural History,
public interest in connection with the [FR Doc. 86-26938 Filed 11-26-86; 8:45 am] 900 Exposition Boulevard, Los
performance of duties imposed upon the BILUNG CODE 7555-01-M Angeles, California
Director, National Science Foundation Dr. Rita R. Colwell, Vice President for
(NSF), and other applicable law. This Academic Affairs, University of
determination follows consultation with National Science Board; Nominations Maryland, Central Administration,
the Committee Management Secretariat, for Membership, December 1r 1986 Adelphi, Maryland
General Services Administration. Dr. Thomas B. Day, President, San Diego
The National Science Board (NSBJ is
Dated: November 24,1986 State University, 5300 Campanile
the policymaking body of the National
M. Rebecca Winkler, Drive, San Diego, California
Science Foundation (NSF). The Board
Committee Management Officer. Dr. James J. Duderstadt, Vice President
consists of 24 members appointed by the
[FR Doc. 86-26846Filed 11-28-86; 8:45 am] President, with the advice and consent for Academic Affairs and Provost, The
BILUNG CODE 7555-01-M of the Senate, for six-year terms, in University of Michigan, 3068 Fleming
addition to the NSF Director ex officio, Building, Ann Arbor, Michigan
as follows: Dr. K. June Lmdstedt-Siva, Manager,
Forms Submitted For OMB Review Environmental Sciences, Atlantic
Terms Expire May 10,1988 Richfield Company, 515 South Flower
In accordance with the Paperwork Dr. Warren J. Baker, President, Street, Los Angeles, California
Reduction A ct and OMB Guidelines, the California Polytechnic State (One Vacancy)
National Science Foundation is posting University, San Luis Obispo,
this notice of information collection that Terms Expire May 10,1902
California
will affect the public. Dr. F. Albert Cotton, W .T. Doherty-
Mr. Robert F. Gilkeson, Chairman of the
Agency Clearance O fficer: Herman G. Executive Committee, Philadelphia Welch Foundation, Distinguished
Fleming, (202) 357-9421 Electric Company, 2301 Market Street, Professor of Chemistry, Texas A&M
O M B D esk O fficer: Carlos Tellez, (202) P.O. Box 8699, Philadelphia, University, 113 Chemistry Building,
395-7340 Pennsylvania College Station, Texas
I. Title: Survey of Scientific and Dr. Charles E. Hess, Vice Chairman, Dr. Mary L. Good, President—
Engineering Expenditures at Dean, College of Agricultural and Engineered Materials Research,
Universities and Colleges, FY 87-88- Environmental Sciences, 228 Mrak Allied-Signal Corporation, 50 East
89. Hall, University of California at Davis, Algonquin Road, Box 5016, Des
A ffected Public: Non-profit Institutions Davis, California Plaines, Illinois
Num ber o f Respondents: 422 Dr. Charles L. Hosier, Vice President for Dr. John C. Hancock, Executive Vice
respondents; total of 8,153 burden Research and Dean of Graduate President and Chief Technical Officer,
hours School, 114 Kern Building, The United Telecommunications, Inc., 2330
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices 43253

Shawnee Mission Parkway, Washington, DC was published in the the events since the issuance of the Vogtle
Westwood, Kansas •Federal Register on November 17,1986 construction permits to Georgia Power
Dr. James B. Holderman, President, (51 FR 41551). Company (Georgia Power), the staffs of the
University of South Carolina, This revision replaces the statement Planning and Resource Analysis Branch,
Columbia, South Carolina made in the original notice that the Office of Nuclear Reactor Regulation and the
Dr. James L. Powell, President, Franklin entire meeting will be open to public Office of the General Counsel, hereafter
and Marshall College, Lancaster, attendance as follows: referred to as ’staff have jointly concluded,
Pennsylvania after consultation with the Department of
The portion of the meeting during Justice, that the changes that have occurred
*Dr. Howard A. Schneiderman, Senior which the Subcommittee will review
Vice President for Research and since the construction permit review are not
item 2 of the previous announcement of the nature to require a second antitrust
Development and Chief Scientist, will be closed for the discussion of review at the operating license (OL) stage of
Monsanto Company, 800 North information which is protected under the application.
Lindbergh Boulevard, St. Louis, Exemption 5 of the Freedom of In reaching this conclusion, the staff
Missouri Information Act. Otherwise, all considered the structure of the electric utility
(Two Vacancies) information contained in the original industry in Georgia, the events relevant to the
*NSB Nominee notice remains unchanged. Plant Vogtle and Plant Hatch construction
Further infromation regarding topics permit reviews, the events relevant to the
Member Ex Officio Plant Hatch, Unit 2 operating license review
to be discussed, whether the meeting and the events that have occurred
Mr. Enrich Bloch (Chairman, NSB has been cancelled or rescheduled, the
Executive Committee), Director, subsequent to these antitrust reviews.
Chairman’s ruling on requests for the The conclusion of the staffs analysis is as
National Science Foundation opportunity to present oral statements follows:
Section 4(c) of the National Science and the time allotted therefor can be The generation and transmission of bulk
Foundation Act of 1950, as amended, obtained by a prepaid telephone call to power and energy in the State of Georgia has
states that: “The persons nominated for the cognizant A CR S staff member, Mr. for many years been dominated by the
appointment as members of the Board Owen S. Merrill (telephone 202/634- Georgia Power Company. During the
(1) shall be eminent in the fields of the 1413) between 8:15 a.m. and 5:00 p.m. construction permit review of Plant Hatch
basic, medical, or social sciences, Persons planning to attend this meeting and Plant Vogtle, the staffs of the Department
engineering, agriculture, education, are urged to contact the above named of Justice and the Atomic Energy Commission
identified several instances where Georgia
research management, or public affairs; individual one or two days before the Power Company abused its market position
(2) shall be selected solely on the basis scheduled meeting to be advised of any and its market power at the expense of
of established records of distinguished changes in schedule, etc., which may smaller competing power systems in Georgia.
service; and (3) shall be so selected as to have occurred. Georgia Power’s activities had a stifling
provide representation of the views of Dated: November 25,1986. effect upon the competitive process in bulk
scientific and engineering leaders in all Thomas G. McCreless, power supply in Georgia and severely
areas of the Nation.” hampered the ability of competing municipal
Assistant Executive Director for Technical and cooperative electric systems to supply
All members whose terms expire in Activities.
May of 1988 are eligible for their customers with the most cost effective
[FR D og . 86-26944 Filed 11-28-86^8:45 am] sources of power and energy available. After
reappointment.
BILLING CODE 7590-01-M extensive negotiations involving Georgia
The Board and the Director solicit and Power, intervening power systems and the
evaluate nominations for submission to staffs of the Department of Justice and the
the President. Nominations [Docket No. 50-424A] Atomic Energy Commission, Georgia Power
accompanied by biographical agreed to a settlement agreement which
information may be forwarded to the Georgia Power Company et al.; Notice included in the Hatch and Vogtle licenses a
Chairman, National Science Board, of No Significant Antitrust Changes set of conditions designed to stimulate the
Washington, DC 20550, no later than and Time for Filing Requests for competitive process in the Georgia bulk
February 1,1987. Réévaluation power services market.
Any questions should be directed to The license conditions provided municipal
The Director of the Office of Nuclear and cooperative electric power systems,
Mrs. Lois Hamaty, Staff Assistant, Reactor Regulation has made a finding individually and through their broker
National Science Board (202/357-7512). in accordance with section 105c(2) of the representatives, ownership participation in
November 25,1986. Atomic Energy Act of 1954, as amended, Plant Vogtle and Unit 2 of Plant Hatch as
Roland W. Schmitt, that no significant (antitrust) changes in well as ownership in the integrated
the licensees’ activities or proposed transmission grid running throughout most of
Chairman, National Science Board. Georgia—heretofore controlled solely by
[FR Doc. 86-26937 Filed 11-28-86; 8:45 am] activities have occurred subsequent to
the construction permit review of Unit 1 Georgia Power Co. Moreover, the license
BILLING CODE 7555-01-M conditions provided these competing power
of Plant Vogtle by the Attorney General systems the means to effectively implement
and the Commission. The finding is as their newly acquired power and energy
n u c lea r r e g u l a t o r y
follows: options by requiring Georgia Power to: (1)
COMMISSION Section 105c(2) of the Atomic Energy Act of File partial requirements rates with the
1954, as amended, provides for an antitrust Federal Power Commission; (2) coordinate
Advisory Committee on Reactor review of an application for an operating and share energy reserves; (3) interconnect
Safeguards; Meeting of the license if the Commission determines that with qualifying Georgia power entities; (4)
Subcommittee Waste Management; significant changes in the licensee’s activities transmit bulk power over its transmission
Revised
or proposed activities have occurred system, and generally treat all power systems
subsequent to the previous construction in the State more equally.
The notice that the ACR S permit review. The Commission has The operating license antitrust review is
delegated the authority to make the concerned with changes in the licensee’s
Subcommittee on Waste Management ‘significant change’ determination to the activities since the construction permit
will hold a meeting on December 4 .and Director, Office of Nuclear Reactor review that may create or maintain a
5,1986, Room 1046,1717 H Street, NW., Regulation. Based upon an examination of situation inconsistent with the antitrust laws.
43254 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1966 / Notices

Staff has identified several groups of changes Any person whose interest may be duration. Furthermore, safe shutdown
that have occurred since the construction affected by this finding, may file with could be effected if a fire occurred in
permit review which are attributable to the full particulars, a request for one of these areas because of the
licensees; however, these changes have
largely been procompetitive and do not réévaluation with the Director of passive protection afforded by such
warrant remedial action by the Commission. Nuclear Reactor Regulation, U .S. separation and barriers as exist, and
The vast majority of these changes have Nuclear Regulatory Commission, because of the provision of detection
materialized through the implementation of Washington, D C 20555 within 30 days of systems to alert the fire brigade. The fire
the antitrust license conditions attached to the initial publication o f this notice in brigade could then take action to
the Plant Vogtle and Plant Hatch Unit 2 the Federal Register. Requests for
construction permits. Through their purchases extinguish the fire. Therefore, automatic
réévaluation of the no significant fire suppression and additional
in portions of Plant Hatch and Plant Vogtle changes determination shall be accepted
(and portions of Unit 1 of Plant Hatch: and separation in these locations would not
various Georgia Power Co. fossil fueled after the date when the Director's
finding becomes final, but before the enhance the level o f fire protection and
plants which were not subject to the licensing are unnecessary.
commitments), as well as participation in the issuance of the OL, only if they contain
Georgia transmission grid, the municipal and new information, such as information With regard to the repairs needed in
cooperative power systems in Georgia are about facts or events of antitrust order to achieve and maintain safe hot
now active players in the Georgia bulk power significance that have occurred since shutdown, the times in which the repairs
market. Georgia Power has provided these that date, or information that could not are required are well in excess of the
systems with, ownership in existing and reasonably have been submitted prior to times required to perform the repairs
planned future transmission facilities based that date. considering the proximity of work
upon each system’s expected use of the
transmission grid. Georgia Power has also Dated in Bethesda, Maryland, this 24th day locations, the provision of necessary
provided interconnections and filed partial of November 1986. tools and equipment, and the simplicity
requirements power rates allowing newly For the Nuclear Regulatory Commission. of the actions required.
emerging power systems to shop for power Jesse L. Funches,
supply alternatives within and outside of the En vironmental Im pacts o f the Proposed
Director, Planning and Program Analysis Action
Georgia Power territorial service area. An Staff, Office o f Nuclear Reactor Regulation.
example of this new found independence is
Oglethorpe Power Corporation’s [Oglethorpe) [FR Doc. 86-26959 Filed 11-28-86; 8:45 am) The proposed action would not impact
energy exchange agreements with the B IL U N G CODE 7590-01-M the ability to effect safe shutdown of the
Alabama Electric Cooperative and the South plant in the event of a fire in the above
Mississippi Electric Power Association. mentioned areas and would provide an
Oglethorpe has also entered into negotiations [Docket No. 50-271J
acceptable level of safety, equivalent to
to sell a portion of its Plant Scherer capacity that attained by compliance with section
to the Seminole Electric Cooperative of Vermont Yankee Nuclear Power Corp.;
Florida. Both Oglethorpe and the Municipal Environmental Assessment and III.G of Appendix R to 10 CFR Part 50.
electric Authority of Georgia [MEAGJ have Finding of No Significant impact On this basis, the Commission
set goals of generating self-sufficiency and concludes there are no significant
are capable erf achieving these goals hi the The U.S. Nuciear Regulatory radiological environmental impacts
near future given the marketing tools Commission (NRC/the Commission) is associated with this proposed
provided by the settlement agreement and considering issuance of an exemption
the emergence of competitive alternatives in exemption.
from the requirements of Appendix R of
the state of Georgia since the completion of 10 CFR Part 50 to the Vermont Yankee With regard to potential
the Vogtle construction permit review. Nuclear Power Corporation VYNPC/the nonradiological impacts, the proposed
The formation of Oglethorpe and MEAG in licensee) for the Vermont Yankee exemption involves features located
1974 and 1975 coupled with the successful entirely within the restricted areas as
implementation, of the antitrust license Nuclear Power Station located in
conditions has resulted in a vastly different Windham County, Vermont. defined in 10 CFR Part 20. It does not
Georgia bulk power market than was affect nonradiological plant effluents
Environmental Assessment and has no other environmental impact.
apparent during the construction permit
review in Plant Hatch and Plant Vogtle. The Identification o f Proposed Action Therefore, the Commission concludes
changes which have taken place in this that there are no significant
market have largely been procompetitive, The licensee would be exempted from
the requirements of sections I1I.G.1 and nonradiological environmental impacts
allowing smaller competitors to mature and
contribute to the competitive process ongoing IU.G.2 of Appendix R to IQ CFR Part 50 associated with the proposed
in the Georgia bulk power services market. that require that automatic fire exemption.
Based upon the successful implementation of suppression be installed in four Alternative Use o f Resources
the antitrust license conditions to date and locations, that separation be provided in
the lack of any significant negative three locations, and that in two This action involves no use of
competitive activities by the licensees since instances equipment necessary to resources not previously considered in
the antitrust review at the construction
permit stage, staff recommends that no achieve and maintain safe hot shutdown the Final Environmental Statement
affirmative signficant change determination be free of fire damage without taking (construction permit and operating
be made pursuant to the application for an credit for repairs. Specifically, the license) for the Vermont Yankee Nuclear
operating license for Unit 1 of Plant Vogtle. repairs would involve connecting a Power Station.
Based upon the staffs analysis, it is my backup battery Gharger and replacing
finding that there have been no "significant fuses. Agencies and Persons Consulted
changes" in the licensees’ activities or
proposed activities since the completion of The N eed fo r the Proposed Action The NRC staff based their review in
the previous antitrust review in connection part on an evaluation by the NRC
Because of low combustible loading in
with the construction permit. the locations being exempted from contractor, Franklin Research Center
Signed on November 21,1986, by separation or automatic fire (FRC). Except for FRC assistance the
Harold R. Denton, Director of the Office suppression, a fire in one of these areas NRC staff did not consult other agencies
of Nuclear Reactor Regulation. would be of low intensity and short or persons.
 Federal Register / V o l. 51, N o. 230 / M on d ay, Decem ber 1, 1986 / N otices 43255

Findings of No Significant Impact its evaluation of a Safety Analysis Advisory Committee on Reactor
The Commission has determined not Report for an independent spent fuel Safeguards Instrumentation and
to prepare an environmental impact storage installation. The guide also Control Systems; Meeting
statement for the proposed exemption. provides a format for submitting this
Based upon the foregoing information. The A CR S Subcommittee on
environmental assessment, we conclude This draft guide and the associated Instrumentation and Control Systems
that the proposed action will not have a value/impact statement are being issued will hold a meeting on December 18,
significant effect on the quality of the to involve the public in the early stages 1986, Room 1046,1717 H Street NW.,
human environment. of the development of a regulatory
Washington, DC.
For further details with respect to this position in this area. They have not
action, see the applications for received complete staff review and do The entire meeting will be open to
exemption dated April 24,1985, August not represent an official NRC staff public attendance.
2,1985, August 16,1985, October 31, position.
Public comments are being solicited The agenda for the subject meeting
1985, August 15,1986, and ]une 10,1986,
on both drafts, the guide (including any shall be as follows:
which are available for public
implementation schedule) and the draft
inspection at the Commission’s Public Thursday, Decem ber 18,1986—8:30 a.m.
value/impact statement. Comments on
Document Room, 1717 H Street NW., until the conclusion o f business
the draft value/impact statement should
Washington, DC and at Brooks
be accompanied by supporting data.
Memorial Library, 224 Main Street, The Subcommittee will discuss the
Written comments may be submitted to
Brattleboro, Vermont. effects of adverse conditions such as
the Rules and Procedures Branch,
Dated at Bethesda, Maryland, this 24th day Division of Rules and Records, Office of high temperature on solid-state
of November, 1986. Administration, U.S. Nuclear Regulatory components in nuclear power plants.
For the Nuclear Regulatory Commission. Commission, Washington, DC 20555. Oral statements may be presented by
Daniel R. Muller, Comments may also be delivered to members of the public with the
Director, BWR Project Directorate No. 2, Room 4000, Maryland National Bank concurrence of the Subcommittee
Division of BW R Licensing. Building, 7735 Old Georgetown Road, Chairman; written statements will be
[FR Doc. 86-26957 Filed 11-28-86; 8:45 am] Bethesda, Maryland from 8:15 a.m. to accepted and made available to the
BILLING CODE 7590-01-M 5:00 p.m. Copies of comments received Committee. Recordings will be permitted
may be examined at the NRC Public only during those portions of the
Document Room, 1717 H Street NW, meeting when a transcript is being kept,
Draft Regulatory Guide; Issuance, Washington, D C 20555. Comments will
Availability and questions may be asked only by
be most helpful if received by February
20,1987. members of the Subcommittee, its
The Nuclear Regulatory Commission consultants, and Staff. Persons desiring
Although a time is given for comments
has issued for public comment a draft of to make oral statements should notify
on these drafts, comments and
a proposed revision to a guide in its the A C R S staff member named below as
suggestions in connection with (1) items
Regulatory Guide Series together with a far in advance as is practicable so that
for inclusion in guides currently being
draft of the associated value/impact appropriate arrangements can be made.
developed or (2) improvements in all
statement. This series has been
published guides are encouraged at any During the initial portion of the
developed to describe and make
time. meeting, the Subcommittee, along with
available to the public methods
Regulatory guides are available for any of its consultants who may be
acceptable to the NRC staff of
inspection at the Commission’s Public present, may exchange preliminary
implementing specific parts of the Document Room, 1717 H Street NW .,
Commission’s regulations and, in some views regarding matters to be
Washington, DC. Requests for single considered during the balance of the
cases, to delineate techniques used by
copies of draft guides (which may be
the staff in evaluating problems or meeting.
reproduced) or for placement on an
postulated accidents and to provide automatic distribution list for single The Subcommittee will then hear
guidance to applicants concerning presentations by and hold discussions
copies of future draft guides in specific
certain of the information needed by the with representatives o f the NRC Staff,
divisions should be made in writing to
staff in its review of applications for
the U.S. Nuclear Regulatory its consultants, and other interested
permits and licenses.
Commission, Washington, DC 20555, persons regarding this review.
The draft, temporarily identified by its
Attention: Director, Division of Further information regarding topics
task number, CE 403-4 (which should be
Technical Information and Document to be discussed, whether the meeting
mentioned in all correspondence
Control. Telephone requests cannot be has been cancelled or rescheduled, the
concerning this draft guide), is proposed
accommodated. Regulatory guides are Chairman’s ruling on requests for the
Revision 2 to Regulatory Guide 3.44 and
is entitled “Standard Format and not copyrighted, and Commission opportunity to present oral statements
approval is not required to reproduce and the time allotted therefor can be
Content for the Safety Analysis Report
lor an Independent Spent Fuel Storage them.. obtained by a prepaid telephone call to
Installation (Water-Basin Type).” The (5 U.S.C. 552(a)) the cognizant A C R S staff member, Mr.
guide is being revised to conform with Dated at Rockville, Maryland, this 24th day Medhat El-Zeftawy (telephone 202/634-
changes in the proposed revision to Part of November 1986. 3267) between 8:15 a.m. and 5:00 pm .
72, “Licensing Requirements for the For the Nuclear Regulatory Commission. Persons planning to attend this meeting
Independent Storage of Spent Nuclear Karl R. Goller, are urged to contact the above named
fuel and High-Level Radioactive Director, Division o f Regulatory Applications, individual one or two days before the
Waste” (51 FR 19106). This guide O ffice o f Nuclear Regulatory Research. scheduled meeting to be advised of any
provides guidance on the type of [FR Doc. 86-26958 Filed 11-28-86; 8:45 am] changes in schedule, etc., which may
information needed by the NRC staff for BILLING CODE 7590-01-M have occurred.
 43256 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Notices

Dated: November 25,1986. Portions of this session will be closed Discuss plans for ACR S 1987 Report to
Thomas G. McCreless, as required to discuss Proprietary the U.S. Congress regarding the NRC
Assistant Executive Director for Technical Information applicable to the project Safety Research Program.
Activities. being discussed.
[FR Doc. 85-26941 Filed 11-26-86; 8:45 am] 4:15 p.m .-6:15 p.m : Improved Light Saturday, December 13,1986
BILLING CODE 7590-01-M Water Reactors (Open)—The members 8:30 a.m.-8:45 a.m .: Future A ctivities
will discuss proposed ACR S comments (Open)—The members will discuss
and recommendations regarding the anticipated ACRS subcommittee
Advisory Committee on Reactor characteristics of improved light water activities as appropriate and items
Safeguards; Meeting reactors. proposed for consideration by the full
In accordance with the purposes of Friday, December 12,1986 Committee.
sections 29 and 182b. of the Atomic 8:45 a.m.-1:00 p.m .: Preparation o f
8:30 a.m.-9:30 a.m .: Nuclear Plant
Energy Act (42 U .S.C. 2039, 2232b), the A C R S Reports to N R C (Open/Closed)—
Security (Open/Closed)—The members The members will discuss proposed
Advisory Committee on Reactor will hear a report from the Director,
Safeguards will hold a meeting on ACR S reports to the NRC regarding
NRC Division of Security, NMSS, and
December 11-13,1986, in Room 1046, matters considered during this meeting.
discuss provisions for security of
1717 H Street NW „ Washington, DC. nuclear power plants. Portions of this session will be closed
Notice of this meeting was published in Portions of this session will be closed as required to discuss Proprietary
the Federal Register on November 20, as required to discuss information Information applicable to the matter
1986. regarding detailed security being discussed.
arrangements at nuclear facilities. 2:00 p.m .-3:30 p.m .: Subcommittee
Thursday, December 11,1986 A ctivities (Open)—The members will
9:30 a.m.-10:30 a.m .: Pressurized
8:30 a.m.-8:40 a.m .: Report o fA C R S Thermal Shock (Open)—The members hear and discuss reports of ACR S
Chairman (Open)—The ACR S Chairman will discuss a proposed NRC Regulatory subcommittees and subcommittee
will report briefly regarding items of Guide on Pressurized Thermal Shock of chairman regarding the status of specific
current interest to the Committee. Reactor Pressure Vessels. safety-related issues including
8:40 a.m.-9:00 a.m .: Election o fA C R S Representatives of the NRC Staff will resolution of A CR S recommendations
O fficers (Closed)—The members will take part in this discussion. regarding proposed operation of the
discuss thé qualifications and 10:30 a.m .-12:30p.m .: Im plications o f Shearon Harris Nuclear Plant, proposed
availability of candidates and will select the Chernobyl A ccident (Open)—The revision of NRC Regulatory Guide 1,63,
Committee officers for Calendar Year members will hear and discuss reports Electrical Containment Penetrations in
1987. about the implications of the Chernobyl Nuclear Power Plants, and storage of
This portion of the meeting will be nuclear plant accident regarding the nuclear power plant spent fuel.
closed to discuss information the release safety and regulation of nuclear power Procedures for the conduct of and
of which would represent a clearly plants in the United States. participation in ACR S meetings were
unwarranted invasion of personal 1:30 p.m .-3:00p.m .: Containment published in the Federal Register on
privacy. Performance (Open)—The members will October 20,1986 (51 FR 37241). In
hear reports and discuss a proposed accordance with these procedures, oral
9:00 a.m.-9:50 a.m .: Preparation for NRC generic letter regarding the or written statements may be presented
M eeting with N R C Com m issioners performance of dynamic reactor by members of the public, recordings
(Open)—The members will discuss containment types to contain severe will be permitted only during those
the status of A CR S activities and nuclear power plant accidents. portions of the meeting when a
observations regarding the effectiveness 3:15 p,m .-5:15 p.m .: Im proved Light transcript is being kept, and questions
of NRC Staff programs which address Water Reactors (Open)—The members may be asked only by members of the
generic and unresolved safety issues, will continue discussion of proposed Committee, its consultants, and staff.
and NUREG-1225, Implementation of ACR S comments and recommendations Persons desiring to make oral
NRC Policy on Standardization of regarding the characteristics of statements should notify the ACR S
Nuclear Power Plants. improved light water reactors. Executive Director as far in advance as
5:15 p.m .-6:00 p.m .: Radioactive practicable so that appropriate
10:00 a .m .-ll:3 0 a.m .: M eeting with W aste Management and D isposal
N R C Com m issioners (Open)—The arrangements can be made to allow the
(Open)—The members will hear and necessary time during the meeting for
members will address and discuss thé discuss the report of its subcommittee
topics noted above with the NRC such statements. Use of still, motion
regarding items related to the picture and television cameras during
Commissioners.“
management and disposal of radioactive this meeting may be limited to selected
11:45 a.m .-l:00 p.m .: Reactivation o f. wastes including the NRC Staff review portions of the meeting as determined
N uclear Power Plants (Open)—The of the environmental assessment of by the Chairman. Information regarding
members will hear reports and discuss waste disposal sites nominated by the the time to be set aside for this purpose
proposed NRC requirements regarding DOE, rulemaking to conform 10 CFR may be obtained by a prepaid telephone
the reactivation of deferred or Part 60 to the EPA Standard for high- call to the ACR S Executive Director, R.
terminated nuclear power plants. level waste repositories, implementation F. Fraley, prior to the meeting. In view of
2:00 p.m .—4:00 p.m .: Reactor of the Low Level Radioactive Waste the possibility that the schedule for
Operations (Open/Closed)—'The Policy Amendments Act of 1985, and ACR S meetings may be adjusted by the
members will hear reports of and alternatives to shallow land burial of Chairman as necessary to facilitate the
discuss recent transients and incidents radioactive wastes. Representatives of conduct of the meeting, persons
which have occurred at nuclear the NRC Staff will participate as planning to attend should check with the
facilities. Representatives of the NRC appropriate. A CR S Executive Director if such
Staff will participate in this session to 6:00 p.m . -6:30 p.m .: A C R S rescheduling would result in major
the degree considered appropriate. Subcommittee A ctivities (Open)— inconvenience.
 Federal Register / Vol. 51, No. 230 J Monday, December 1, 1986 / Notices________________ 43257

I have determined in accordance with present, may exchange preliminary will approve the applications if it finds,
subsection 10(d) Pub. L. 92-463 that it is views regarding matters to be based upon all the information available
necessary to close portions of this considered during the balance of the to it, that the extensions of unlisted
meeting as noted above to discuss meeting. trading privileges pursuant to such
information the release of which would The Subcommittee will then hear applications are consistent with the
represent a clearly unwarranted presentations by arid hold discussions maintenance of fair and orderly markets
invasion of personal privacy [5 U .S.C. with representations of the NRC Staff, and the protection of investors.
552b(c)(6)], information that involves its consultants, IDCOR representatives,
and other interested persons regarding For the Commission, by the Division of
detailed security provisions for nuclear
this review. Market Regulation, pursuant to delegated
power plants [5 U .S.C. 552b(c)(l)], and
information that involves Proprietary Further information regarding topics authority.
Information [5 U .S.C. 552(c)(4)] to be discussed, whether the meeting Jonathan G. Katz,
applicable to the facility being has been cancelled or rescheduled, the Secretary.
discussed. Chairman’s ruling on requests for the
opportunity to present oral statements [FR Doc. 86-26945 Filed 11-28-86; 8:45 am]
Further information regarding topics
and the time allotted therefor can be BILLING CODE 8010-01-M
to be discussed, whether the meeting
has been cancelled or rescheduled, the obtained by a prepaid telephone call to
Chairman’s ruling on requests for the the cognizant A CR S staff member, Mr.
opportunity to present oral statements Dean Houston (telephone 202/634-3267) Self-Regulatory Organizations;
and the time allotted can be obtained by between 8:15 a.m. and 5:00 p.m. Persons Applications for Unlisted Trading
a prepaid telephone call to the ACR S planning to attend this meeting are Privileges and of Opportunity for
Executive Director, Mr. Raymond F. urged to contact the above named Hearing; Cincinnati Stock Exchange,
Fraley (telephone 202/634-3265), individual one or two days before the Inc.
between 8:15 a.m. and 5:00 p.m. scheduled meeting to be advised of any
Dated: November 25,1986. changes in schedule, etc., which may November 24,1986.
have occurred.
)ohn C. Hoyle, The above named national securities
Advisory Committee Management Officer. Dated: November 25,1986.
exchange has filed applications with the
(FRDoc. 86-26942 Filed 11-28-86; 8:45 am) Thomas G. McCreless,
Securities and Exchange Commission
Assistant Executive Director for Technical
BILLING CODE 7590-01-M
Activities. pursuant to section 12(f)(1)(B) of the
[FR Doc. 86-26943 Filed 11-28-86; 8:45 am] Securities Exchange Act of 1934 and
Advisory Committee on Reactor BILLING CODE 7590-01-M
Rule 12f-l thereunder, for unlisted
Safeguards Subcommittee on Severe trading privileges in the following stock:
Accidents; Meeting Coca-Cola Enterprises, Inc.
SECURITIES AND EXCHANGE Common Stock, $1.00 Par Value (File No. 7-
The ACRS Subcommittee on Severe COMMISSION 9411)
Accidents will hold a meeting on
December 19,1986, Room 1046,1717 H Self-Regulatory Organizations; This security is listed and registered
Street NW., Washington, DC. Applications for Unlisted Trading on one or more other national securities
The entire meeting will be open to Privileges and of Opportunity for exchange and is reported in the
public attendance. Hearing; Boston Stock Exchange, Inc. consolidated transaction reporting
The agenda for the subject meeting system.
shall be as follows: November 24,1986.
Interested persons are invited to
Friday, Decem ber 19,1986—8:30 a.m. The above named national securities submit on or before December 16,1986
until the conclusion o f business exchange has filed applications with the written data, views and arguments
Securities and Exchange Commission
The Subcommittee will discuss the concerning the above-referenced
pursuant to section 12(f)(1)(B) of the
NRRImplementation Plan for Severe Securities Exchange Act of 1934 and
applications. Persons desiring to make
Accident Policy Statement regarding Rule 12f-l thereunder, for unlisted written comments should file three
Individual Plant Examinations (IPE) for trading privileges in the following stock: copies thereof with the Secretary of the
ExistingPlants. Securities and Exchange Commission,
Oral statements may be presented by Coca-Cola Enterprises, Inc. Washington, DC 20549. Following this
members of the public with the Common Stock, $1.00 Par Value (File No. 7-
9412) opportunity for hearing, the Commission
concurrence of the Subcommittee will approve the applications if it finds,
Chairman; written statements will be This security is listed and registered based upon all the information available
accepted and made available to the on one or more other national securities to it, that the extensions of unlisted
Committee. Recordings will be permitted exchange and is reported in the
trading privileges pursuant to such
onlyduring those portions of the consolidated transaction reporting
applications are consistent with the
meetingwhen a transcript is being kept, system.
maintenance of fair and orderly markets
andquestions may be asked only by Interested persons are invited to
members of the Subcommittee, its submit on or before December 16,1986 and the protection of investors.
consultants, and Staff. Persons desiring written data, views and arguments For the Commission, by the Division of
tomake oral statements should notify concerning the above-referenced Market Regulation, pursuant to delegated
theACRS staff member named below as applications. Persons desiring to make authority.
ferinadvance as is practicable so that writteri comments should file three
appropriate arrangements can be made. copies thereof with the Secretary of the Jonathan G. Katz,
Duringthe initial portion of the Securities and Exchange Commission, Secretary. , ;
meeting, the Subcommittee, along with Washington, DC 20549. Following this [FR Doc. 86-26946 Filed 11-28-86; 8:45 am]
anyof its consultants who may be opportunity for hearing, the Commission BILLING CODE 8010-OT-M
 43258 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices

Self-Regulatory Organizations; Stop & Shop Companies, Inc. interested person may request a hearing
Applications for Unlisted Trading Common Stock, $1.00 Par Value (File No. 7- on this application, or ask to be notified
Privileges and of Opportunity for 9408)
Comdata Network, Inc. if a hearing is ordered. Any request must
Hearing; Midwest Stock Exchange, Inc. be received by the SEC by 5:30 p.m., on
Common Stock, $.02 Par Value (File No. 7-
November 24,1986. 9409) December 16,1986. Request a hearing in
writing, giving the nature of your
The above named national securities These securities are listed and interest, the reason for the request, and
exchange has filed applications with the registered on one or more other national the issues you contest. Serve the
Securities and Exchange Commission securities exchange and are reported in Applicant with the request, either
pursuant to section 12(f)(1)(B) of the the consolidated transaction reporting personally or by mail, and also send it to
Securities Exchange Act of 1934 and system. the Secretary of the SEC, along with
Rule 12f-l thereunder, for unlisted Interested persons are invited to proof of service by affidavit, or, in the
trading privileges in the following stock: submit on or before December 16,1986, case of an attorney-at-law, by
Coca-Cola Enterprises, Inc. written data, views and arguments certificate. Request notification of the
Common Sotck, $1.00 Par Value (File No. 7- concerning the above-referenGed date of a hearing by writing to the
9410) application. Persons desiring to make Secretary of the SEC.
written comments should file three
This security is listed and registered ADDRESSES: Secretary, SEC, 450 5th
copies thereof with the Secretary of the
on one or more other national securities Street, NW., Washington, D C 20549.
exchange and is reported in the Securities and Exchange Commission,
Washington, DC 20549. Following this Mellon Bank, N .A., One Mellon Bank
consolidated transaction reporting Center, Pittsburgh, PA 15258-0001.
system. opportunity for hearing, the Commission
Interested persons are invited to will approve the application if it finds, FOR FURTHER IN FO R M A TIO N CONTACT:

submit on or before December 16,1986 based upon all the information available Thomas C. Mira, Staff Attorney (202)
written data, views and arguments to it, that the extensions of unlisted 272-7324 or Brion F. Thompson, Special
concerning the above-referenced trading privileges pursuant to such Counsel (202) 272-3016 (Division of
applications. Persons desiring to make applications are consistent with the Investment Management).
written comments should file three maintenance of fair and orderly marke ts
SUPPLEMENTARY INFO RM A TION :
copies thereof with the Secretary of the and the protection of investors.
Following is a summary of the
Securities and Exchange Commission, For the Commission, by the Division of application; the complete application is
Washington, DC 20549. Following this Market Regulation, pursuant to delegated available for a fee from either the SEC’s
opportunity for hearing, the Commission authority.
Public Reference Branch in person or the
will approve the applications if it finds, Jonathan G. Katz, SEC’s commercial copier (800) 231-3282
based upon all the information available Secretary. (in Maryland (301) 258-4300).
to it, that the extensions of unlisted [FR Doc. 86-26948 Filed 11-28-86; 8:45 am)
trading privileges pursuant to such BILUNG CODE 8010-01-M Applicant’s Representations
applications are consistent with the 1. Mellon is a U.S. bank which
maintenance of fair and orderly markets [Rel. No. IC-15425; (812-6498)] satisfies the requirements of section
and the protection of investors. 17(f) of the 1940 Act for custodians of
Application for Exemption; Mellon
For the Commission, by the Division of Bank, N.A. assets of registered investment
Market Regulation, pursuant to delegated companies. Mellon acts as primary
authority. AGENCY: Securities and Exchange custodian for Securities of certain
Jonathan G. Katz, Commission (“SEC"). investment company clients and
Secretary. A C TIO N : Notice of application for anticipates performing custodial
[FR Doc. 86-26947 Filed 11-28-86; 8:45 am) exemption under the Imvestment services for other investment company
BILLING CODE 8010-01-M Company Act of 1940 (“1940 Act”). clients in the future. If the requested
Applicant: Mellon Bank, N.A. relief is granted, Mellon intends to
(“Mellon”). recommend to current and future
Self-Regulatory Organizations; investment company clients that each
Applications for Unlisted Trading Relevant 1940A ct Sections: Company with investment policies
Privileges and of Opportunity for Exemption requested pursuant to permitting investment in securities of
Hearing; Philadelphia Stock Exchange, section 6(c) from section 17(f). foreign issuers approve subcustodian
Inc. Summary o f Application: Applicant arrangements providing that the
seeks an order to permit certain Securities of such Companies be
November 24,1986.
securities or other assets of registered maintained with Pictet in Switzerland,
The above named national securities investment companies (“Securities”) for and with other foreign banking
exchange has filed applications with the which Mellon acts as custodian or institutions and securities depositories
Securities and Exchange Commission subcustodian (other than investment selected by Mellon and/or Pictet
pursuant to section 12(f)(1)(B) of the companies registered pursuant to meeting the requirements for the
Securities Exchange Act of 1934 and section 7(d) of the 1940 Act, exemption afforded by Rule 17f-5 under
Rule 12f-l thereunder, for unlisted “Companies”), to be deposited with the 1940 Act.
trading privileges in the following Pictet & Cie, Geneva, S.A . ("Pictet”), a 2. Pictet is a private Swiss bank
securities: private bank in Switzerland. organized as a partnership. It is one of
General Re Corporation Filing Dates: The application was three Swiss banks that acts as custodian
Capital Stock, $0.50 Par Value (File No, 7- filed on October 14,1986, and amended for the Eurodear Transnational Clearing
9406) on October 27 and November 13,1986. System established and operated by
Newmont Gold Company Hearing or Notification o f Hearing: If Morgan Guaranty Trust. Pictet has
Common Stock, $.01 Par Value (File No. 7- no hearing is ordered, the requested authority to oi fer all banking services,
9407) exemption will be granted. Any but has chosen to concentrate on
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices 43259

services related to portfolio any responsibility to the Company for proof of service by affidavit, or, for
management. These services include any loss due to such delegation, except attorneys, by certificate. Request
investment advisory services, such loss as may result from political notification of the date of a hearing by
investment research, securities risk (e.g., exchange control restrictions, writing to the Secretary of the SEC.
brokerage, global custody, underwriting, confiscation, expropriation, ADDRESS: Secretary, SEC, 450 Fifth
foreign exchange and money market nationalization, insurrection, civil strife Street, NW., Washington, DC 20549.
dealing, and personal financial planning. or armed hostilities) and other risk of Applicant, c/o David C . Sabel, Esq.,
Pictet’s reputation extends beyond loss (excluding bankruptcy or Cleary, Gottlieb, Steen & Hamilton, One
Switzerland; it is well-known in Latin insolvency of Pictet) for which neither State Street Plaza, New York, NY 10004.
America, Europe, the United States, and Mellon nor Pictet would be liable {e.g.,
the Far East, particularly in Tokyo and FOR FURTHER IN FO R M A TIO N CONTACT:
despite the exercise of reasonable care,
Hong Kong. Presently, Mellon cannot loss due to acts of God, nuclear incident Philip J. Niehoff, Esq., (202) 272-2048, or
deposit Securities with Pictet because and the like). ■ '. •• H.R. Hallock, Jr., Esq., (202) 272-3030
Pictet, as a partnership, has no 21. All provisions of Rule 17f-5 other (Division of Investment Management).
shareholders and, thus, cannot meet the than the shareholders’ equity SUPPLEMENTARY IN FO RM A TIO N : The
shareholders’ equity requirement of Rule requirement will be complied with in following is a summary of the
17F-5. connection with the deposit of Securities application; the complete application is
3. Pictet has provided custody in Switzerland with Pictet. available for a fee from either the SEC’s
services for over a century, and Public Reference Branch in person, or
currently is custodian of assets For the Commission, by the Division of
Investment Management, under delegated the SEC’s commercial copier (800) 231-
including securities, currency and authority. 3282 (in Maryland (301) 253-4300).
precious metals. In Mellon’s opinion, the Dated: November 21,1986.
benefits derived from use of Pictet far Applicant’s Representations
outweigh any potential risks that might Jonathan G. Katz,
be suggested as a result of Pictet’s Secretory. 1. Applicant is a Delaware
inability, as a partnership, to satisfy the [FR Doc. 86-26949 Filed 11-28-86; 8:45 am) corporation and an indirect, wholly-
shareholders’ equity requirement of Rule BILUNG CODE 8010-01-M owned, limited purpose finance
17f-5. subsidiary of Salomon Inc organized to
4. Pictet currently participates with [Release No. IC-15427; File No. 812-6532] facilitate the financing of long-term
Mellon (through subsidiaries of each) in residential mortgages on one-tp-four
Application for Exemption; Salomon family residences through the issuance
a joint venture called Mellon-Pictet
Brothers Mortgage Securities lit, Inc. of one or more series of bonds secured
International Management Limited,
which is registered as an investment November 21,1986. by such mortgages. Except as incidental
adviser under the Investments Advisers to the activities described below and
Act of 1940 and provides investment agency: Securities and Exchange more fully set forth in the application,
advisory services for foreign Commission (“ SEC” ). the Applicant will not trade or deal in
investments by U.S. pension funds and a c t i o n : Notice of application for securities or engage in any other
other institutional clients. Moreover, in exemption under the Investment activity.
connection with its administration of Company Act of 1940 (“1940 A ct”). 2. Applicant contemplates creating
assets for employee pension benefit plan one or more separate trusts (each, a
accounts (“Plans”) subject to stringent Applicant: Salomon Brothers “Trust”). Each Trust will be a common
fiduciary standards imposed by the Mortgage Securities III, Inc. law business trust created under an
Employee Retirement Income Security Relevant 1940 A ct Sections: agreement (“Trust Agreement") between
Act of 1974, Mellon for some time has Exemption requested under section 6(c) Applicant, acting as a depositor, and a
used Pictet as a foreign custodian and from all provisions of the 1940 Act. bank, trust company or other fiduciary
agdnt with respect to foreign assets Summary o f Application: Applicant acting as Owner trustee ("Owner
purchased on behalf of such Plans. seeks an order exempting it and certain Trustee” ). The Trust Agreements
trusts to be created by it from all contemplate that the Owner Trustee will
Applicant’s Conditions provisions of the 1940 Act in connection enter into a Management Agreement
If the requested order is granted, with the issuance and sale of with respect to each Trust with Salomon
Applicant expressly consents to the collateralized mortgage obligations and Brothers Inc., an affiliate of the
following conditions: ownership interests in the trusts. Applicant, or another financial
1. Securities will be deposited in Filing Date: November 12,1986. An institution, for the provision of certain
Switzerland with Pictet only in amendment was filed on November 20, management services in connection with
accordance with an agreement among 1986. the issuance of the bonds.
(a) the Company or a custodian of the Hearing or Notification o f Hearing: If 3. Each Trust will issue one or more
Securities of the Company for which no hearing is ordered, the application series of collateralized mortgage
Mellon acts as subcustodian, (b) Mellon will be granted. Any interested person obligations (“Bonds") rated in at least
and (c) Pictet, pursuant to the terms of may request a hearing on this the second highest rating category by an
which Mellon would act as the application, or ask to be notified if a independent nationally recognized
custodian or subcustodian, as the case hearing is ordered. Any requests must statistical rating agency (“Rating
may be, of the Securities of the be received by the SEC by 5:30 P.M. on Agency” ). The Bonds will be issued
Company and Pictet would be delegated December 17,1986. Request a hearing in under an Indenture (“Indenture” )
such duties and obligations of Mellon writing, giving the nature of your between the Trust and an independent
thereunder as would be necessary to interest, the reason for the request, and trustee for the Bondholders ("Bond
permit Pictet to hold in custody the the issues you contest. Serve the Trustee” ). Each series of Bonds will be
Securities of the Company in Applicant with the request, either directly secured by “fully modified pass­
Switzerland, provided that such personally or by mail, and. also send it to through” mortgage-backed certificates
delegation would not relieve Mellon of the Secretary of the SEC, along with fully guaranteed as to principal and
43260 Federal Register / Voi. 51, No, 230 f Monday, December 1, 1986 / Notices

interest by the Government National section 4(2) of the Securities Act of 1933 otherwise deprive the Bondholders of
Mortgage Corporation (“G N M A (“1933 Act"). the security afforded by the Hen of the
Certificates”1; Mortgage Participation 7. initially, the applicant intends to related Indenture. In addition, the sale
Certificates issued by the Federal Home sell the Equity Certificates of each Trust of Equity Certificates of any Trust will
Loan Mortgage Corporation (“FHÍM C to no more than twenty-five Eligible not alter the payment of cash flows
Certificates'“!; Guaranteed Mortgage Institutions. The Trust Agreement will under the Indenture, including the
Pass-Through Certificates issued by the require that each purchaser o f an Equity amounts to be deposited in the
Federal National Mortgage Association Certificate represent that it is collection account securing the Bonds or
(’’FNM A Certificates” : collectively purchasing the Equity Certificate for any reserve fund created under the
‘"Mortgage Certificates” ) and investment purposes only and that it Indenture to support payments of
reinvestment earnings and distributions will hold the Equity Certificate in its principal and interest on the Bonds.
on such Mortgage Certificates. In own name and not as nominee for
addition to the Mortgage Certificates 10. The interests of the Bondholders
undisclosed investors. Each Trust will not be compromised or impaired by
directly securing the Bonds, a series will Agreement will prohibit the transfer o f
have additional collateral, which will the ability of the Applicant to sell
any Equity Certificate of a Trust if there
include certain collection accounts and beneficial interests in each Trust and
would be more than one hundred
may include other reserve funds as there will not be a conflict of interest
beneficial owners of the Equity
specified in the related Indenture. between the Bondholders and the
Certificates of such Trust at any time.
4. For each series of Bonds, (i) Each owner of Equity Certificates Owners for several reasons: (i) The
payments on the mortgage loans collateral that will initially be deposited
(“Owner”) will agree to be bound by the
underlying the Mortgage Certificates terms of the applicable Trust into each Trust Will not be speculative
securing the Bonds will be the primary Agreement. in nature because it will consist solely
source of funds for payments o f 8. The Trust Agreements will provide of GNM A Certificates, FNMA
principal and interest due on the Bonds; that, (i) no Owner of an Equity Certificates, or FHLMC Certificates,,
(ii) the Mortgage Certificates securing Certificate may be affiliated with the which are guaranteed as to timely
each series of Bonds will be pledged to Bond Trustee; (ii) no holders of a payment of interest and timely or
the related Bond Trustee under the controlling (as that term is defined in ultimate payment of principal by each
applicable Indenture and will be held by Rule 405 under the 1933 Act) equity respective agency; (ii) the Bonds will
the Bond Trustee or an independent interest in the Trust will be affiliated only be issued provided a Rating
nominee; (iii) the Bond Trustee will have with either any custodian which may Agency has rated the Bonds in one of
a first lien perfected security interest in hold the Bond collateral on behalf o f the the two highest rating categories, which
ail such Mortgage Certificates; (iv) the Bond Trustee or the Rating Agency by definition means that the capacity of
principal amount and the collateral rating the related series of Bonds; and the issuer to repay principal and interest
value o f the Mortgage Certificates (iii) the Owner Trustee will not purchase on the Bonds is extremely strong; (iii)
securing each series of Bonds will at all any Equity Certificates but will function the Indenture under which the Bonds
times be at least equal to the principal as a legal stakeholder for the assets of have been issued will subject ¡fee
amount of outstanding Bonds; and (v) the Trust collateral pledged to secure the Bonds,
the cash flow on the Mortgage 9. Neither the Owners nor the Trustee all income distributions thereon and all
Certificates, together with reinvestment will be able to impair the security proceeds from a conversion, voluntary
income at the assumed reinvestment afforded by the Mortgage Certificates to or involuntary, of any collateral to a first
rate specified in the Indenture, will be the holders of the Board because, priority perfected security interest in the
sufficient to pay principal and interest without the consent of each affected name of the Bond Trustee on behalf of
on the Bonds when due to Bondholders. Bondholder, neither the holders of the the Bondholders; and (iv) the Owners
5- The Bonds will not be redeemable Equity Certificates of any o f the Trusts will be entitled to receive current
at the option o f the Bondholders. A nor the Bond Trustee will be able to (!) distributions representing the residual
series of Bonds may be subject to change the stated maturity on any payments on fee collateral from each
special redemption if, as a result of Bonds; (ii) reduce the principal amount Trust in accordance wife fee terms of
substantial prepayments on the of, or the rate o f interest on, any Bond; the applicable Trust Agreement, which
underlying mortgages and/or the low (iii) change the provisions in the distributions are analogous to dividens
yields available on reinvestment o f the Indenture relating to the application of payable to a shareholder of a corporate
distributions on Mortgage Certificates, collateral collections to principal issuer of collateralized mortgage
the amount o f cash anticipated to be payments on the Bonds; (iv) impair or obligations. Furthermore, unless the
available on the next Bond payment adversely affect the Mortgage Trust elects to be treated as a “real
date would not be sufficient to make Certificates securing a series of Bonds; estate mortgage investment
required interest and principal payments (v) permit the creation of any lien conduit”under the Internal Revenue
on the Bonds, ranking to or on parity with the hen of
6. Applicant also contemplates selling the related Indenture with respect to the received all fees currently owed to it (iii) the firm of
certificates (“Equity Certificates’’) Mortgage Certificates; (vi) terminate the independent accountants has received all fees owed
lien of the Indenture on any collateral at to it for services rendered under the Indenture and
representing some or all of the (iv) if and to the extent required, deposits have been
ownership interest in a Trust to one or any time subject thereto (except in made to certain reserve funds securing the Bonds.
more banks, savings and loan certain limited circumstances expressly Under the Trust Agreement the Owner Trustee is
associates, pension funds, insurance permitted in the Indenture);1 or (vii) obligated to collect all amounts released from the
lien of the Indenture by the Bond Trustee, to pay all
companies or other institutions that other current expenses of die trust, including its
customarily engage in the purchase of 1The Indenture for ¡each Trust will provide that own fees, and to remit the balance to the Owners on
mortgages and mortgage-backed assets amounts may be released from the hen of the a pro rata b asé. Each Trust Agreement provides
(“Eligible Institutions” ). Each sale will Indenture after each Bond payment date and that, once amounts have been released from the lien
remitted to the Trust only if (i) the Bond Trustee has of [Link], the Owner Trustee has a lien ,
qualify as a transaction not involving a made the scheduled payment o f principal and superior to that of the Owners- to the remaining cash
public offering within the meaning of interest on the Bonds, (ii) the Bond Trustee has flow.
 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / N otices 43261

Code of 1986, the Owners will be liable represent an attractive investment initially pledged as security for a series
for the expenses, taxes and other opportunity based upon their payment of Bonds. In no event may any new
liabilities of the Trust (other than the terms and the investors’ own mortgage collateral be substituted for
principal and interest on the Bonds) to determination as to the anticipated rate any substitute mortgage collateral.
the extent not previously paid from the of prepayments on the underlying 4. All Mortgage Certificates, funds,
trust estate. The choice of [Link] of Mortgage Certificates. The actual accounts or other collateral securing a
issuer for the Bonds and the identity of prepayment experience of the Mortgage series of Bonds, directly or indirectly,
the Owners of the equity interests in Certificates will, in any event, be will be held by the Bond Trustee or on
such issuer will not alter in any respect determined by market conditions that behalf of the Bond Trustee by an
the payments made to the holders of the are beyond the control of the Applicant independent custodian. The custodian
Bonds or the amount available to make or the Owners and are likely to affect in may not be an affiliate (as the term
such payments. a similar fashion all Mortgage “ affiliate” is defined in Rule 405 under
11. The excess cash flow, if any, from Certificates having similar payment the 1933 Act) of the Applicant. The Bond
the Bond collateral that is available to terms and maturities. Trustee will be provided with a first
Owners will always be far less than the 14. The requested order is appropriate priority perfected security or lien
cash flow from the Bond collateral that in the public interest because (1) the interest in and to all such Bond
is used to make principal and interest acquisition of Mortgage Certificates, the collateral.
payments to Bondholders. As a result, issuance of Bonds by the Trusts and the 5. Each series of Bonds will be rated
the purchase price of the entire sale of the Equity Certificates by the in one of the two highest bond rating
beneficial interest of the Owners in each Applicant in the manner described categories by at least one nationally
Trust will be significantly less than the herein are not the types of activities recognized statistical rating agency that
purchase price of the Bonds. Applicant intended to be regulated by the Act, (2) is not affiliated with the Applicant. The
does not intend to deposit in any Trust, the safeguards afforded to purchasers of Bonds will not be considered
Mortgage Certificates with a collateral the Bonds fully protect investors in a redeemable securities within the
value which exceeds 120% of the manner comparable to those protections meaning of section 2(a)(32) of the 1940
aggregate principal amount of the provided to purchasers of the Act.
related Bonds. collateralized mortgage obligations 6. No less often than annually, an
12. Except for the limited right to previously issued in reliance upon no­ independent accountant will audit the
substitute Bond collateral described in action letters under section 3(c)(5)(C) of books and records of each Trust and in
the application, it will not be possible the 1940 Act or exemptive orders addition will report on whether the
for the Owners to alter the collateral . granted under section 6(c) of the 1940 anticipated payments of principal and
initially deposited into a Trust, and, in Act and (3) its activities will promote interest on the Mortgage Certificates
the public interest by expanding the will be adequate to pay the principal
no event will the right to substitute
market for mortgage securities, thereby and interest on the Bonds in accordance
collateral result in a diminution in the
increasing the pool of funds available with their terms. Upon completion,
value or quality of such collateral.
for mortgage loans and increasing the copies of the auditor’s report(s) will be
13rWhile certain purchasers of the capacity of mortgage lenders to meet the
Bonds and certain purchasers of the provided to the Bond Trustee.
housing finance needs of the nation.
Equity Certificates may desire to 7. All of the representations and
purchase securities backed by Mortgage Applicant’s Conditions undertakings relating to the Equity
Certificates having specific The Applicant agrees that if an order Certificates mentioned above and
characteristics that, for example, would is granted it will be expressly discussed more fully in the application.
generally result in faster or slower conditioned on. the following conditions: For the Commission, by the Division of
prepayment rates on the Mortgage 1. Each series of Bonds will be Investment Management, under delegated
Certificates, the Applicant’s discretion registered under the 1933 Act, unless authority.
in directing the purchase of the offered in a transaction exempt from Jonathan G. Katz,
Mortgage Certificates by each Trust will registration under section 4(2) of the Secretary.
not adversely affect either the 1933 Act. [FR Doc. 86-26950 Filed 11-28-86; 8:45 am]
Bondholders or the purchasers of the 2. The Bonds will be “mortgage BILUNG CODE 8010-01-M
related Equity Certificates. The offering related securities” within the meaning of
documents prepared in connection with section 3(a)(41) of the Securities
the respective offers of the Bonds and Exchange Act of 1934. The mortgage
Equity Certificates will provide collateral directly securing the Bonds DEPARTMENT OF TRANSPORTATION
investors with all material information will be limited to GN M A Certificates,
concerning the characteristics of the Federal Aviation Administration
FNM A Certificates or FHLMC
related Mortgage Certificates, including Certificates. Advisory Circular 25.853-1,
the expected pass-through rates and 3. If a new Mortgage Certificate is Flammability Requirements for Aircraft
maturities of such Mortgage Certificates, substituted, the substitute collateral Seat Cushions
and will set forth information as to the must: (i) Be of equal or better quality
anticipated return on investment that than the collateral replaced; (ii) have agency: Federal Aviation
would be realized by a Bondholder or an similar payment terms and cash flow as Administration (FAA), DOT.
Owner based on varying assumptions as the collateral replaced; (iii) be insured or a c t i o n : Notice of issuance of advisory
to the prepayment rates on the Mortgage guaranteed to the same extent as the circular.
Certificates and as to other relevant collateral replaced; and (iv) meet the
factors specified in such offering conditions set forth in paragraphs (2) This notice announces the
SU M M A R Y:
documents. Each class of prospective and (4). In addition, new Mortgage issuance of Advisory Circular (AC)
investor will therefore be able to make Certificates may not be substituted for 25.853-1, Flammability Requirements for
an informed investment decision as to more than 40% of the aggregate face Aircraft Seat Cushions. The A C
whether the Bonds or Equity Certificates amount of the Mortgage Certificates provides guidance for demonstrating
 43262 Federal Register / Vol. 51. No. 230 / Monday, December 1, 1986 / Notices

compliance with the Federal Aviation The United States participated in the
Regulations (FAR) pertaining to (4) Preliminary designation of
development of the Harmonized System products to receive duty-free treatment
flammability of aircraft seat cushions. in accordance with section 608(c) of the
The A C also defines certain terms used under the Generalized System of '
Trade Act of 1974. As requested by the Preferences, Country specific product
in the FAR, in the context o f these President on August 24,1981, the U.S.
requirements. exclusions from GSP eligibility, based
International Trade Commission on the application of statutory
d a t e : Advisory Circular 25.853-1 was prepared a draft conversion of the TSUS competitive need limits and the
issued by the Transport Airplane into the nomenclature structure of the President’s policy of discretionary
Certification Directorate in Seattle, Harmonized System and submitted its authority, are not indicated in this
Washington, on September 17,1986. draft to the President on June 30,1983 publication. A separate Federal Register
H O W TO O B TA IN COPIES: A copy of A C (USITC Publication 1400). After giving notice is being published soliciting
25.853—1 may be obtained by writing to public notice in the Federal Register public comment on the proposed
the U S . Department of Transportation, (Vol. 48, No. 148, August ! , 1983, pages conversion of GPS eligible items to the
M-494.3, Subsequent Distribution Unit. 34822 and 34823), the Trade Policy Staff Harmonized System tariff nomenclature.
Washington, DC 28590. Committee held public hearings on the Guidance is provided in that notice
Issued in Seattle, Washington, on draft conversion in November 1983. concerning the submission of comments
November 14,1986. After considering the information on the proposed conversion of GSP
Leroy A. Keith, presented in connection with the public eligible articles to the Harmonized
Manager, Aircraft Certification Division, hearings, the TPSC issued a second System and the use of the President’s
Northwest Mountain Region. edition of the draft conversion in discretionary authority to exclude
(FR Doc, 86-26848 Filed 11-28-86; 8:45 am) September 1984. Public comments on countries on certain products as well as
BILUNG CODE 49H M 3-M
this revised draft were requested in a the application o f competitive need
notice published in the Federal Register limits.
(Vol. 49, No. 174, September 6,1984, (5) Preliminary designation of
OFFICE OF THE UNITED STATES
pages 35273 and 35274). products to receive duty-free treatment
TRADE REPRESENTATIVE 2 . Publication of Third Draft Conversion under the Caribbean Basin Economic
Recovery A c t
Trade POBcy Staff Committee; Written Since the issuance of the second (6) Correction of typographical errors
Comments on the Harmonized edition, refinement of the draft and more accurate alignment of the text
Commodity Description and Coding conversion has continued, taking into with the official text of the Harmonized
System consideration comments by numerous System.
interested parties in the United States, (7) Some changes in rates of duty
AGENCY: Office of the United States as well as by U.S. trading partners in
Trade Representative. based upon the recalculation of trade
informal discussions preparatory to the weighted average rates using more
a c t i o n : Request for public comments. initiation of negotiations under Article recent trade data. . „
XXVII! o f the General Agreement on (8) Numerous revisions in the
s u m m a r y : Notice is hereby given that
Tariffs and Trade (GATT) for the
the Trade Policy Staff Committee statistical annotations, according to
conversion of existing U .S. tariff which statistics on imports will be
(T PSC) has published for public concessions under that agreement into
comment a third edition of the proposed reported, in order to achieve a high level
the Harmonized System nomenclature. of comparability between U .S. import
conversion of the Tariff Schedules of the A third edition of the draft conversion
United States (TSUS) into the and export statistics.
has now been issued by the TPSC to
nomenclature structure of the The Committee for the
provide interested parties an updated
Harmonized Commodity Description Implementation of Textile Agreements
version of the proposed conversion, and
and Coding System (Harmonized (CITA) expects to complete a correlation
to provide a final opportunity for public
System). Comments must be filed with between the proposed conversion and
comment on the conversion before the the quota categories used in
the TPSC not later than January 15,1987. introduction of implementing legislation
SUPPLEMENTARY INFO RM A TIO N : in early 1987. administration of the textile program the
end of 1986. When completed, the
1. Background In addition to the revisions made in relevant chapters of the converted
response to comments received on the schedules annotated with the quota
The Harmonized System is a new second edition, most of which were to
international product nomenclature category numbers will be available to
avoid changes in existing tariff interested parties.
which has been developed under the treatment, the present edition reflects:
auspices of the Customs Cooperation The exact duty status of products of
(1) Legislation and Presidential Israel under the U.S.-Israel Free Trade
Council and is being proposed for proclamations modifying the existing
world-wide use in the classification Agreement is still under review and
T SU S which had been enacted or issued therefore is not reflected in this edition.
description, and coding of goods for as of September 1,1986.
customs purposes, the collection of Along with its major trading partners,
(2) Preliminary designation of the United States has set January 1,1988
statistical data on imports and exports, Canadian automotive products to
and the documentation of transactions as the target date for implementation of
receive duty-free treatment under the the Harmonized System tariff schedule,
in international trade. The Harmonized bilaterial U.S„-Canadian Agreement on
System will bp implemented by an subject to Congressional approval. The
Automotive Products and the Administration plans to submit to the
international convention that obligates Automotive Products Trade Act of 1965,
contracting parties to use the six-digit Congress in early 1987 the legislation
implementing that Agreement. required for implementation of the
Harmonized System nomenclature as (3) Preliminary designation of
the basis for their national customs tariff products to receive duty-free treatment United States Harmonized System tariff
and statistical nomenclatures for schedule, at which time a Final edition of
under the Agreement on Trade in Civil the proposed conversion will be
imports and exports. Aircraft. available to the public.
 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / N otices 43263

3. Copies of the Revised Conversion Chapter 35). This document contains an

Copies of the revised draft of the extension and lists the following
proposed new U.S. Tariff Schedule will information: (1) The department or staff
be mailed automatically to all persons office issuing the form, (2) the title of the
who received copies of the ITC’s form, (3) the agency form number, if
applicable, (4) how often the form must
original draft conversion (ITC
be filled out, (5) who will be required or
Publication 1400, June 1983), or the
asked to report, (6) an estimate of the
revised version issued by the TPSC in number of responses, (7) an estimate of
September 1984. Others may obtain the total number of hours needed to fill
copies from the Office of Tariff Affairs out the form, and (8) an indication of
and Trade Agreements, U.S. whether section 3504(h) of Pub. L. 96-511
International Trade Commission, (701 E applies.
Street, NW., Washington, DC 20436,
telephone (202) 523-5764). addresses: Copies of the form and
supporting documents may be obtained
4. Submission pf Written Comments from Patti Viers, Agency Clearance
Interested persons are invited to Officer (732), Veterans Administration,
810 Vermont Avenue, NW., Washington,
submit written comments on the new
DC 20420, (202) 233-2146. Comments and
revised text of the draft conversion.
questions about the items on the list
Such comments must be submitted in should be directed to the V A ’s OMB
twenty copies by January 15,1987, to Desk Officer, Allison Herron, Office of
Carolyn Frank, Secretary, Trade Policy Management and Budget, 726 Jackson
Staff Committee, Office of the U.S. Place, NW., Washington, DC 20503, (202)
Trade Representative, Room 521, 600 395-7316.
17th Street, NW ., Washington, DC 20506.
DATES: Comments on the information
FOR FURTHER IN FO R M A TIO N C ONTACT: collection should be directed to the
Christopher Marcich, Director, Tariff OMB Desk Officer within 60 days of this
Affairs, Office of the U.S. Trade notice.
Representative, Room 507, 600 17th
Street, NW., Washington, DC 20506; Dated: November 24,1986.
telephone: (202) 395-5097. By direction of the Administrator.
David A. Cox,
Donald M. Phillips,
Associate Deputy Administratorfor
Chairman, Trade Policy Staff Committee. Management.
[FR Doc. 86-26876 Filed 11-28-86; 8:45 am]
BILLING CODE 3190-01-M Extension
1. Department of Veterans Benefits
VETERANS ADMINISTRATION 2. Certification of Lessons Completed
3. VAForm 22-6553b
Agency Form Under OMB Review 4. Quarterly
5. Individuals or households; Businesses
agency : Veterans Administration. or other for-profit; Small businesses or
action: Notice. organizations
The Veterans Administration has 6. 9,825 responses
submittedto OMB for review the 7.1,638 hours
followingproposal for the collection of 8. Not applicable.
informationunder the provisions of the [FR Doc. 86-26890 Filed 11-28-86; 8:45 am]
Paperwork Reduction Act (44 U .S.C. BILLING CODE 8320-01-M
43264

Sunshine Act Meetings Federal Register

Voi. 51, No. 230
Monday, December 1, 1986

This section of the FEDERAL REGISTER recorded announcement a full week in Case No. 46,768-L
contains notices of meetings published advance on future Commission sessions. Banco Credito y Ahorro Ponceno, Ponce,
under the “Government in the Sunshine Please telephone (202) 634-6748 at all times Puerto Rico
Act" (Pub. L 94-409) 5 U.S.C. 552b(e)(3). for information on these meetings.)
Reports of committees and officers:
C O N TA C T PERSON FOR MORE
Cynthia C. Matthews,
IN FO RM A TIO N : Minutes of actions approved by the
EQUAL EM PLOYM ENT OPPORTUNITY
Executive Officer at (202) 634-6748. standing committees of the Corporation
C O M M ISS IO N pursuant to authority delegated by the Board
FEDERAL REGISTER C ITA T IO N OF
Dated and issued: November 26,1986. of Directors.
PREVIOUS ANNOUNCEMENT: Volume 51, Cynthia C. Matthews, Reports of the Division of Bank Supervision
No. 226, Dated November 24,1986. Executive Officer, Executive Secretariat. with respect to applications, requests, or
(FR Doc. 86-27075 Filed 11-26-86; 3:49 pm] actions involving administrative enforcement
PREVIOUSLY A NNOUNCED T IM E A N D DATE
proceedings approved by the Director or an
O F M EETING: 2:00 p.m. (eastern time) BILLING CODE 6750-06-M
Associate Director of the Division of Bank
Monday, December 1,1986. Supervision and the various Regional
CHANGE IN TH E M EETING: The item below FEDERAL D E PO SIT INSURANCE Directors pursuant to authority delegated by
on the closed portion of the meeting has CORPORATION the Board of Directors.
been postponed and rescheduled for the Pursuant to the provisions of the Report of the Director, Division of
December 9,1986 Commission Meeting. "Government in the Sunshine Act" (5 Liquidation:
3. Agency Adjudication and Determination U.S.C. 552b), notice is hereby given that Memorandum re: The First National Bank
on the Record of Federal Agency the Federal Deposit Insurance and Trust Company of Enid, Enid,
Discrimination Complaint Appeals. Corporation’s Board of Directors will Oklahoma—NR-765
meet in open session at 2:00 p.m. on Reports of the Director, Office of
C O N TA C T PERSON FOR MORE
Tuesday, Decemb~er2il986, to consider Corporate Audits and Internal
i n f o r m a t i o n : Cynthia C. Matthews,
the following matters: Investigations:
Executive Officer, Executive Secretariat, Summary Aganda: No substantive
(202)634-6748. Summary. Audit Report re:
discussion of the following items is
Dated and issued: November 26,1986. anticipated. These matters will be Atlanta Regional Office Cost Center—100
Cynthia C. Matthews, (Memo dated October 28,1986)
resolved with a single vote unless a Summary Audit Report re:
Executive Officer. member of the Board of Directors Dallas Regional Office Cost Center—400
[FR Doc. 86-27074 Filed 11-26-86; 3:49 pm] requests that an item be moved to the (Memo dated November 6,1986)
BILLING CODE 6750-06-M discussion agenda. Summary Audit Report re:
Disposition of minutes of previous Wichita Consolidated Office Cost Center—
EQUAL EM PLOYM ENT O PPORTUNITY
meetings. 304 (Memo dated October 21,1986)
C O M M ISS IO N
Application for consent to purchase Summary Audit Report re:
assets and assume liabilities: The Peoples National Bank and Trust
D A TE a n d TIM E : 9:30 a.m. (eastern time) Company, Albia, Iowa (5655)(Memo
Tuesday, December 9,1986. Southwest National Bank of Pennsylvania,
Greensburg, Pennsylvania, for consent to dated November 6,1986)
PLACE: Clarence M. Mitchell, Jr., purchase certain assets of and assume the Summary Audit Report re:
Conference Room No. 200-C on the 2nd liability to pay deposits made in the New Johnson County Bank, Tecumseh, Nebraska
Floor of the Columbia Plaza Office Stanton, Pennsylvania, branch of Great (2534)(Memo dated November 5,1986)
Building, 2401 E Street, NW., American Federal Savings and Loan Summary Audit Report re:
Washington, DC 20507. Association, Pittsburgh, Pennsylvania, a non- Utah Firstbank, Salt Lake City, Utah
FDIC-insured institution. (2531) (Memo dated October 24,1986)
STA TU S : Part will be open to the public Summary Audit Report re:
and part will be closed to the public. Recommendations regarding the Pioneer State Bank, Salt Lake City, Utah
M A TTER S TO BE CONSIDERED: liquidation of a bank’s assets acquired (2532) (Memo dated October 24,1986)
by the Corporation in its capacity as Summary Audit Report re:
Open receiver, liquidator, or liquidating agent Analysis of Liquidation, Site Audits by
1. Announcement of Notation Vote(s) of those assets: Region (Memo dated November 4,1986)
2. A Report on Commission Operations
(Optional) Case No. 46,757-L Discussion Aganda:
3. Proposed Compliance Manual, Volume I, Farmers State Bank in Afton, Oklahoma,
Afton, Oklahoma Memorandum and resolution re: Statement
Section VII, Withdrawals Case No. 46,758-L of Policy and Criteria on Assistance to
Closed Bank of Canton, Canton, Oklahoma Operating Insured Banks, which policy
1. Litigation Authorization; General Counsel Case No. 46,759-L statement (1) revises the present criteria used
Recommendations First State Bank, Jet, Oklahoma to evaluate requests for financial assistance
Case No. 46,780-SR to operating FDIC-insured banks which are in
2. Agency Adjudication and Determination Farmers State Bank of Dexter, Kansas,
on the Record of Federal Agency danger of failing; and (2) replaces the current
Dexter, Kansas Statement of Policy and Criteria on
Discrimination Complaint Appeals Case No. 46,761-SR Assistance to Operating Insured Banks
Note.—Any matter not discussed or The Sedan State Bank, Sedan, Kansas, Which Are in Danger of Failing and FDIC's
concluded may be carried over to a later Sedan, Kanas Voluntary Merger Plan,
meeting. (In addition to publishing notices on Case No. 48,767-SR
EEOC Commission meetings in the Federal West Coast Bank, Los Angeles (Encino), The meeting will be held in the Board
Register, the Commission also provides a California Room on the sixth floor of the FDIG
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Sunshine A ct Meetings 43265

Building located at 550—17th Street, administrative pay increases, Dated: November 25,1986.
NW„ Washington, DC. reassignments, retirements, separations, William W. Wiles,
Requests for further information , removals, etc.: Secretary o f the Board.
concerning the meeting may be directed [FR Doc. 86-2690 Filed 11-26-86; 9:28 am]
Names of employees authorized to be
to Mr. Hoyle L. Robinson, Executive exempt from disclosure pursuant to the BILLING CODE 6210-01-M
Secretary of the Corporation at (202) provisions of subsections (c)(2) and (c)(6) of
898-3813. the “Government in the Sunshine Act" (5 FEDERAL RESERVE SYSTEM BOARD OF
Dated: November 25,1986. U.S.C. 552b (c)(2) and (c)(6)).
GOVERNORS
Federal Deposit Insurance Corporation.
The meeting will be held in the Board T IM E a n d DATE: Approximately 3:30
Margaret M. Olsen, Room on the sixth floor of the FDIC p.m., Wednesday, December 3,1986,
Deputy Executive Secretary. Building located at 55017th Street, NW., following a recess at the conclusion of
[FR Doc. 86-27006 Filed 11-26-86; 11:25 am] Washington, DC. the open meeting.
BILLING CODE 6714-01-M Requests for further information PLACE: Marriner S. Eccles Federal
concerning the meeting may be directed Reserve Board Building, C Street
FEDERAL DEPO SIT INSURANCE to Mr. Hoyle L. Robinson, Executive entrance between 20th and 21st Streets,
CORPORATION Secretary of the Corporation, at (202) NW ., Washington, DC 20551.
Pursuant to the provisions of the 898-3813.
STA TU S : Closed.
“Government in the Sunshine Act” (5 Dated: November 25,1986.
U.S.C. 552b), notice is hereby given that Federal Deposit Insurance Corporation.
M A TTER S T O BE CONSIDERED:
at 2:30 p.m. on Tuesday, December 2, 1. Personnel actions (appointments,
1986, the Federal Deposit Insurance Margaret M. Olsen, promotions, assignments, reassignments, and
Corporation’s Board of Directors will Deputy Executive Secretary. salary actions) involving individual Federal
meet in closed session, by vote of the [FR Doc. 86-27007 Filed 11-26-86; 11:25 am] Reserve System employees.
Board of Directors, pursuant to sections BILLING CODE 6714-01-M 2, Any items carried forward from a
552b (c)(2), (c)(6), (c)(8), and (c)(9)(A)(ii) previously announced meeting.
of Title 5, United States Code* to C O N TA C T PERSON FOR MORE
FEDERAL RESERVE SYSTEM BOARD O F
consider the following matters: i n f o r m a t i o n : Mr. Joseph R. Coyne,
GOVERNORS
Summary Agenda: No substantive Assistant to the Board: (202) 452-3204.
discussion of the following items is 10:00 a.m., Wednesday,
T IM E A N D d a t e : You may call (202) 452-3207, beginning
anticipated. These matters will be December 3,1986; meeting will continue at approximately 5 p.m. two business
resolved with a single vote unless a at 2:30 p.m. if necessary. days before this meeting, for a recorded
member of the Board of Directors PLACE: Marriner S. Eccles Federal announcement of bank and bank
requests that an item be moved to the Reserve Board Building, C Street holding company applications scheduled
discussion agenda. entrance between 20th and 21st Streets, for the meeting.
Recommendations with respect to the NW., Washington, DC 20551.
initiation, termination, or conduct of Dated: November 25,1986.
administrative enforcement proceedings s t a t u s : Open. William W. Wiles,
(cease-and-desist proceedings, M A TTE R S TO BE CONSIDERED: Secretary o f the Board.
termination-of-insurance proceedings, [FR Doc. 86-26961 Filed 11-26-86; 9:29 am]
suspension or removal proceedings, or Summary Agenda
BILLING CODE 6210-01-M
assessment of civil money penalties) Because of its routine nature, no
against certain insured banks or officers, substantive discussion of the following item
is anticipated. This matter will be voted on N A TIO N A L LABOR RELATIO NS BOARD
directors, employees, agents or other
persons participating in the conduct without discussion unless a member of the TIM E A N D DATE: 2:00 p.m., Thursday,
thereof: Board requests that the item be moved to the November 13,1986.
discussion agenda. PLACE: Board Conference Room, Sixth
Names of persons and names of locations 1. Proposed modifications to the uniform
of banks authorized to be exempt from Floor 1717 Pennsylvania Avenue, NW.
Cash Service Standards.
idisclosure pursuant to the provisions of S TA TU S : Open to public observation.
subsections (c)(6), (c)(8), and (c)(9)(A)(ii) of Discussion Agenda
M A TTER S TO BE CONSIDERED: Regional
the "Government in the Sunshine Act” (5 2. Proposed 1987 Federal Reserve Board
U.S.C. 552b(c)(6), (c)(8), and (c)(9)(A)(ii)). Office Boundaries.
budget.
I Note.—-Some matters falling within this 3. Proposals to reduce risks on large-dollar C O N TA C T PERSON FOR MORE
category may be placed on the discussion transfer systems. (Proposed earlier for public IN FO RM A TIO N : John C. Truesdale,
agenda without further public notice if it comment; Docket No. R-0515-A, B, and C) Executive Secretary, Washington, DC
jbecomes likely that substantive discussion of 4. Any items carried forward from a 20570, Telephone (202) 254-9430.
ithose matters will occur at the meeting. previously announced meeting. Dated, Washington, DC, November 26,
i Discussion agenda: Note.—This meeting will be recorded for 1986.
I Request to consider a core deposit the benefit of those unable to attend. By direction of the Board.
intangible as part of primary capital: Cassettes will be available for listening in the John C. Truesdale
L.^n'on Bank and Trust, Bartlesville, Board's Freedom of Information Office, and
copies may be ordered for $5 per cassette by Executive Secretary, National Labor
Oklahoma.
calling (202) 452-3684 or by writing to: Relations Board.
[ Report of thè Director, Division of Freedom of Information Office, Board of [FR Doc. 86-27051 Filed 11-26-86; 3:14 pm],
[Accountingand Corporate Services: Governors of the Federal Reserve System, BILUNG CODE 7545-01-M
Memorandum re: Investment Management Washington, DC 20551.
report, September 30,1986 NUCLEAR REGULATORY C O M M ISS IO N
C O N TA C T PERSON FOR M O R £
I Personnel actions regarding i n f o r m a t i o n : Mr. Joseph R.
Coyne, d a t e : Weeks of December 1, 8,15, and
appointments, promotions, Assistant to the Board; (202) 452-3204. 22,1986.
43266 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Sunshine A ct Meetings

PLACE: Commissioners’ Conference Thursday, December 11 Thursday, December 18

Room, 1717 H Street, NW., Washington, 10:00 a.m. 10:00 a.m.
DC. Periodic Meeting with Advisory Committee Discussion/Possible Vote on Full Power
s t a t u s : Open and Closed. on Reactor Safeguards (ACRS) (Public License for Shearon Harris (Public
Meeting) Meeting)
M A TTER S T O BE CONSIDERED*.
3:30 p.m. 2:00 p.m.
Week of December 1 Affirmation Meeting (Public Meeting) (if Briefing on Status of Palisades (Public
needed) Meeting)
Wednesday, December 3 3:30 p.m.
10:00 a.m. Week of December 15—Tentative Affirmation Session (Public Meeting) (if
Briefing by Steering Group on Strategic needed)
Planning (Public Meeting) Tuesday, December 16
9:30 a.m. Week of December 22—Tentative
Thursday, December 4 Briefing on Status of TVA (Open/Portion NoCommission Meetings
3:30 p.m. Closed—Ex. 5 & 7) TO VERIFY TH E S TA TU S OF M EETINGS
Affirmation/Discussion and Vote (Public 2:00 p.m.
Meeting) CALL (RECO R D IN G ): (202) 634-1498.
Briefing on Chernobyl (Public Meeting)
a. Request for Hearing on Shearon Harris C O N TA C T PERSON FOR MORE
Exemption Request (Tentative) Wednesday, December 17 IN FO RM A TIO N : Robert McOsker (202)
Week of December 8—Tentative 10:00 a.m. 634-1410.
Discussion of Management-Organization Robert B. McOsker,
Wednesday, December 10 and Internal Personnel Matters (Closed— Office of the Secretary.
2:00 p.m. Ex. 2 & 6) November 26,1986.
Discussion of Management-Organization 2:00 p.m.
and Internal Personnel Matters (Closed— Briefing on Source Term and Severe [FR Doc. 86-27052 Filed 11-26-86; 3:21 pm]
Ex. 2 & 6) Accident Matters (Public Meeting) B IL U N G CO D E 7545-01-M
Corrections Federal Register
Voi. 51, No. 230
Monday, December 1, 1986

This section of the FEDERAL REGISTER DEPARTMENT OF THE INTERIOR

contains editorial corrections of previously
published Rule, Proposed Rule, and Bureau of Land Management
Notice documents. These correction? are
prepared by the Office of the Federal
Register. Agency-prepared corrections are 43 CFR Public Land Order 6625
issued as signed documents and appear
in the appropriate document categories [AA-320-07-4220-10; C-39308]
elsewhere in the issue.

Colorado; Withdrawal of National

FEDERAL MARITIME COMMISSION Forest System Land for Protection of
46 CFR Part 580 Recreational Values
[Docket No. 86-29]
Correction
Maritime Carriers and Related
Activities in Foreign Commerce; Filing In rule document 86-23350 beginning
of Service Contracts and Availability on page 36808 in the issue of Thursday,
of Essential Terms October 16,1986, make the following
Correction corrections:

In [Link] document 86-25612 1. On page 36808, in the third column,

beginning on page 41132 in the issue of in the 15th line, "Channel” should read
Thursday, November 13,1986, make the “C h ” .
following corrections: 2. On page 36809, in the second
1. On page 41132, in the third column, column, in the fifth line, “o f ’ should read
in the first paragraph, in the fifth line "or” .
from the bottom, "not" should read
B ILLIN G C O D E 150S-01-0
“now” ." . r' \ ‘ :
2. On the same page, in the same
column, in the second paragraph, in the
twelfth line, “designed” should read
“designated” .
BILLING CODE 1505-01-D
Monday
December 1, 1986

Part II

Department of
Housing and Urban
Development
24 CFR Parts 243, 511, 842, and 942
Pet Ownership in Assisted Housing for
the Elderly or Handicapped; Final Rule
and Notice of Pet Deposit Limitation
43270 Federal Register / V ol. 51, N o . 230 / M onday, Decem ber 1, 1986 / Rules and Regulations

DEPARTMENT OF HOUSING AND Section 227(a) provides that no owner or discrimination against pet owners and
URBAN DEVELOPMENT manager, of,covered housing may: (1) the imposition of discriminatory house
Prohibit or prevent any tenant from rules, and (3) requiring project owners
Office of the Secretary owning-or having common household and PHAs to issue a notice to tenants
pets living in the dwelling and applicants declaring that pets are
24 CFR Parts 243, 511, 842, and 942 accommodations or (2) restrict or allowed.
[Docket No. R-86-1152; FR-1936J discriminate against any person in On August 22,1986, HUD issued
connection with admission to, or Notice H-86-22. This Notice reiterated
Pet Ownership in Assisted Housing for continued occupancy of, covered the policies contained in the February
the Elderly or Handicapped housing because of the ownership of 28,1984 Notice, stated that the
such pets or their presence in the prohibitions of section 227 were
AGENCY: Office of the Secretary. HUD. dwelling accommodations. Section effective, and stated that PHAs and
a c t io n : Final rule. 227(b) directs the Department to issue project owners were required to comply
regulations that may be necessary to with the prohibitions of the statute even
summary: Section 227 of the Housing ensure compliance with the provisions
and Urban-Rural Recovery Act of 1983 in the absence of a final HUD regulation.
of section 227(a) and to ensure attaining The Notice also urged PHAs and project
(12 U S.C. 1701n-1) provides that no of the goal of providing decent, safe, and
owner or manager of federally assisted managers to adopt reasonable interim
sanitary housing for the elderly or house pet rules to govern the keeping of
rental housing for the elderly of handicapped. Section 227(b) also
handicapped may prohibit or prevent a pets.
requires that these regulations include The two Notices and the proposed
tenant from owning or having common guidelines under which owners or
household pets living in the tenant’s rule did not require PHAs of project
managers of covered housing: (1) May managers to notify tenants or applicants
dwelling unit, or restrict or discriminate prescribe reasonable rules for the
against any person regarding admission for tenancy that pets are permitted
keeping of pets and (2) must consult pending the effective date of the final
to or continued occupancy of such with tenants in prescribing the rules.
housing because of the person’s rule Sections 243.15 and 942.15 of the
On February 28,1984, HUD issued
ownership of pets or the presence of final rule require this notification to all
Notice H-84-10 to Public Housing affected tenants and applicants shortly
pets in the person’s dwelling unit. This agencies (PHAs), Indian Housing
final rule implements the statute, and after the rule’s effective date. Given the
Authorities (IHAs),1 project owners, and
establishes guidelines under which notice requirement in the final rule
HUD Field Staff. This Notice discussed
owners or managers o f covered housing: HUD has concluded that an additional
the effectiveness of section 227 pending
(1) May prescribe reasonable rules tenant notification in the time period
the issuance of HUD regulations, and
governing the keeping of common preceding the effective [Link] the rule
invited public comments on the issues
household pets and (2) must consult that HUD should address in its would be duplicative and costly, and
with tenants when prescribing the rules. regulations. HUD received may cause undue tenant confusion.
approximately 2,800 comments on the Commenters noted that it is possible
EFFECTIVE DATE: Under section 7(oj(3) of
Notice. On December 28,1984, the that PHAs and project owners may have
the Department of Housing and Urban
Department published a proposed rule admitted pets during the interim period
Development Act f42U.S.C. 3535(g )(3)), that ultima tely could be excluded untier
this final rule cannot become effective implementing the statute and
establishing guidelines for house pet the final house pet rules. For example, a
until after the first period of 30 calendar
rules (49 FR 50582 (1984)). HUD received project owner may have permitted a
days of continuous session of Congress tenant to keep two dogs in a dwelling
which occurs after the date of the rule’s approximately 1,500 comments by the
comment deadline (February 28,1985). unit, pending the final HUD pet
publication. HUD will publish a notice
An additional 500 comments were regulations. Under the final rule, the
of the effective date of this rule project owner may issue house pet rules
following expiration of the 30-session- received after the comment deadline.
HUD has taken into account in the final limiting the number of four-legged,
day waiting period. Whether or not the
rules all 4,800 comments received in warm-blooded pets to one. See
statutory waiting period has expired, § 243.20(c)(1). Commenters urged that
this rule will not become effective until response to the interim notice and the
proposed rule. Throughout the preamble, HUD amend various provisions of the
HUD’s separate notice is published final regulations to “grandfather” in
announcing a specific effective date. the Department has referred to the
number of commenters addressing these animals.
FOR FURTHER IN FO R M A TIO N CONTACT: It would be extremely" cruel and
certain points. These figures reflect the
Edward C. Whipple, Office of Public create unnecessary hardship to deprive
1,500 comments timely received in
Housing, telephone (202) 426-0744, or tenants of the companionship of pets
response to the proposed rule.
James J. Tahash, Office of Multifamily that have been accepted into projects
Housing, telephone (202) 426- 3970, ' Interim Effect of Section 227 pending the promulgation of t II Q’s final
Department of Housing and Urban Commenters reported that there is rules or a project’s final house pet rules.
Development, 451 Seventh Street. SW „ widespread confusion among project However, the Department does not
Washington, DC 20410. Hearing or owners and PMAs whether, in the believe it is necessary to promulgate a
speech impaired individuals may call absence of HUD final regulations, rule addressing this limited class of pets.
HUD’s TDD number (202) 426-0015. (The applicants with pets may be refused an These situations will be addressed in
telephone numbers are not toll-free apartment or existing tenants may be administrative instructions governing
numbers.) toldrio remove pets. Four commenters the rules’ implementation.
SUPPLEMENTARY IN FO RM A TIO N : Section urged HUD to publish an interim notice: As noted above, HUD has encouraged
227 of the Housing and Urban-Rural (1) Informing project owners and PHAs PHAs and project owners to adopt
Recovery Act of 1983 provides for the that the law is in effect. (2) forbidding reasonable interim rules governing the
ownership and keeping of common keeping of pets pending the issuance of
household pets in federally assisted 1 A s used in this preamble, “PHAs” wiS inclade final rules in this proceeding. One
housing for the elderly or handicapped. “IHAs J commenter stated that it developed its
 Federal Register / Vol. 51, N o. 230 / Monday, December 1, 1986 / Rules and Regulations 43271

rules on October 1,1984, and asked if it this instance. PHAs have traditionally housing projects subject to Part 942 and
would be required to start over to fulfill been given a great deal of discretion in Section 8 projects subject to Part 243 to
the procedural and content requirements the management of their local public meet different regulatory requirements,
of this Frnal rule. housing programs; Indeed, one of the this concern does not warrant the
It is the responsibility of the PHA or major policies of the United States abandonment of the "two-rule”
project owner to comply with the final Housing Act of 1937 (1937 Act) is " , . . to approach or the transfer of Section 8-
regulations. If the interim house rules vest in local public housing agencies the PHA-owned projects to Part 942. PHAs
promulgated by the project owner or maximum amount of responsibility in traditionally have been viewed as
PHA comply with the final rules’ the administration of their housing private owners for purposes of the
procedures for development of house programs.. (Section 2 of the 1937 Act. Section 8 programs. They are commonly
rules (§§ 243.22 and 942.25) and the 42 U .S.C. 1437). Moreover, PHAs are required to fulfill different regulatory
content requirements for house rules public bodies created by State, local, requirements for the two different types
(§§ 243.20 and 942.20), the project owner and tribal governments, and of programs. For example, Section 8
or PHA will not be required to take traditionally have jurisdiction over a projects are not subject to a cooperation
further actions. If these requirements broad area. Giving these entities greater agreement requirement under section
were not fulfilled, reissuance will be responsibility for the management of 5(e)(2) of the 1937 Act, are not exempt
required. projects serves the goal of minimizing from State and local real and personal
Final Rules Federal control over matters of local taxes under section 6(d) of the Act, are
concern that are within the competency not eligible for operating subsidies
The comments to the proposed rules of local governments. under section 9 or comprehensive
addressed several matters of general Commenters argued that the improvement assistance under section
importance [i.e., the "two-rule" bifurcated approach is based on the 14 of the Act, and are not subject to
approach for Housing and Public false assumption that PHAs have requirements governing the demolition
Housing, the level of specificity in the greater administrative expertise than and disposition of housing under section
rules, the effect of State and local laws, similarly situated project owners. HUD 18 of the Act. Additionally, PHA lease
and the effect on existing contractual recognizes that PHAs and project and grievance procedures under Part 966
relationships), as well as issues that ow ners possess a wide range of abilities differ from the termination of tenancy
affect specific sections of the proposed and that in some instances, project provisions governing Section 8 projects.
rules. These are addressed below. owners’ expertise will equal or surpass In the absence of any compelling reason
General Matters that of their PHA counterparts. We also to change this approach for purposes of
note, however, that project owners, this rulemaking proceeding, Parts 243
A. “T w o -R u le " Approach and 942 are left unchanged.
unlike PHAs, are unlikely to receive
The Department proposed to guidance in the management of their As noted above, Part 243 is intended
implement section 227 by promulgating projects from nonmortgagee agencies of to apply to the housing programs
two rules. 24 CFR Part 243 would govern State or local government. The administered by the Assistant Secretary
the housing programs administered by Department’s decision to give PHAs for Housing-Federal Housing
the Assistant Secretary for Housing- greater discretion is not based on a lack Commissioner. This includes projects
Federal Housing Commissioner, except of project owner administrative ability, assisted under programs described in
programs under sections 10(c) and 23 of but rather on the broad discretion Chapter VIII of Title 24. For clarity and
the United States Housing Act of 1937 contemplated for PHAs under the 1937 for ease of reference, the final rule adds
(as in effect before amendment by the Act; the policy toward minimization of a new Part 842. This part reiterates the
Housing and Community Development Federal control of local government; and purpose of section 227 and states that
Act of 1974)./ 24 CFR Part 942 would the fact that absent Federal guidance, the provisions of Part 243 apply to
govern the public housing programs project owners are unlikely to receive projects assisted under programs
administered by the Assistant Secretary any governmental guidance in the contained in Chapter VIII that meet the
for Public and Indian Housing, including implementation of section 227. definition of project for the elderly or
the sections 10(c) and 23 programs.2 Other commenters argued that two handicap contained in § 243.3(c).
While the two rules are similar in rules are inappropriate because they
content, Part 942 would generally permit 3. Specificity o f Rules
will permit similarly situated tenants to
PHAs to have more autonomy in the be treated differently. The goal of the Several commenters argued that the
administration of their programs. final regulations is to ensure that all proposed rules represented an attempt
Two commenters supported the "two- PHAs and projects owners comply with by the Federal government to write; local
rule" approach. Nineteen urged the the purposes of section 227. The fact policy. Others asserted that the
Department to implement one rule to that similarly situated tenants may be proposed rules would give PHAs and
apply to all programs. Commenters also, project owners too much discretion, may
subject to different house rules or
urged HUD to provide more uniformity
procedures is acceptable under both permit PHAs and project owners to
in the two rules. discriminate against pet owners, and
rules, and even expected. (See
While the Federal policy is to simplify
§ 243.20(a), which permits project may invite lawsuits. On the basis of
and streamline regulations whenever
owners to vary the content of house ongoing review of the proposed rules
practicable. H U D continues to believe
rules between projects owned by the and the public comments, the
that the two-rule approach is justified in
project owner and § 942.20(b), which Department has reduced the level of
permits similar actions by PHAs.) specificity of the rules in some instances
~On May 21,1985. the Secretary transferred the (e.g., the final Part 243 removes the
delegated authority to administer programs under
Contrary to the allegations of some
sections lOfc) and 23 of the United States Housing commenters, HUD does not believe that detailed tenant-move provisions under
Act of 1937 from the Assistant Secretary for the promulgation of two parts will proposed § 243.26) and increased the
Housing-Federal Housing Commissioner to the hinder the smooth implementation of level of regulation in others [see
Assistant Secretary for Public and Indian Housing
(50 PR 20943 {1985)). Parts 243 and 942 have been section 227. While the two parts may financial responsibility under final
•vised to reflect this delega tion. require PHAs that operate public § § 243.20(c)(3) and 942.20(b)(4)). These
 F gjcT flj-jtegister / V ol. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations

and the other changes are discussed conflict (on their face or as applied) with lease provisions (§§ 243.30, 243.35, and
below. the State or local authority. If a conflict 942.27)).
C. Preemption o f State and Local Laws may exist, the final rules make it clear These matters primarily pertain to
that the State or local law or regulation HUD’s management and procedural
The preamble to the proposed rule is to apply. The following sections of the
identified a few areas where the responsibilities under section 227, and
final rule contain provisions preserving do not infringe on areas of health and
proposed rule would conflict with State State and local law: Exclusion for
and local laws (49 FR 50566). It also safety that are of peculiar concern to
animals that assist the handicapped State and local jurisdictions. Thus, the
stated: (§§ 243.2 and 942.2); definition of
above-cited sections prescribe the
It is possible that these regulations and the common household pet (§§ 243.3(a) and
requirements that PHAs and project
pet rules prescribed pursuant to them will 942.20(b)(1)); pet rule general content
conflict with State and local laws in other requirements (§§ 243.20(a) and owners are to follow, irrespective of the
areas as well. During the course of the 942.20(b)); inoculations and licensing provisions of State or local law or
development of final rules in this proceeding, (§§ 243.20(b)(1), 243.20(c)(5), and regulation.
we intend to identify potentially conflicting 942.20(b)(6)(i)); sanitary standards
State and local law, determine if Federal D. Contractual Rights
preemption is available and, if available, the (§§ 243.20(b)(2) and 942.20(b)(5)(i)); pet
restraint (§§ 243.20(b)(3) and One hundred thirty commenters
extent to which it should be exercised.
Accordingly, we invite commenters to 942.20(b)(5)(ii)); registration and questioned HUD’s promulgation of rules
identify conflicting statutes and ordinances screening of pets (§ 243.20(b)(4)); pet and that, in their view, ignore and alter
that HUD ought to take into account in tenant density provisions tenant understandings, and contractual
developing a final rule. (49 FR 50566) (§ § 243.20(c)(1) and 942.20(b)(2)); pet rights and obligations under present
size and pet type .(§§ 243.20(c)(2)and leases.
In response to this invitation,
commenters identified: (1) Statutes in 942.20(b)(3)); financial obligations of pet The relevant inquiry as to whether the
Arizona and California permitting ownership (§§ 243.20(c)(3) and statute and these regulations
animal ownership by the elderly: (2) 942.20(b)(4)); standards of pet care impermissibly impair obligations and
“leash” laws; (3) inoculation and (§§ 243.20(c)(4) and 942.20(b)(5)(ii)); rights under existing contracts is two­
licensing provisions: (4) laws banning provisions governing pets temporarily fold: i.e ., is the impairment "substantial”
certain species (e.g., skunks) or certain on premises (§§ 243.20(c)(6) and and if so, are the statute and regulations
breeds within a species (e.g., pit bull 942.20(b)(7)); lease provisions (§§ 243.30 rationally related to, and justified by, a
terriers); (5) local laws limiting the and 942.27); and nuisance and threat to legitimate exercise of constitutional
number of animals residing in a unit or health or safety (§§ 243.40 and 942.30). power?
project; (6) vicious animal statutes; (7) Because of the virtually infinite There is no substantial impairment of
“pooper scooper” laws; (8) pet number of possible State or local laws the existing contractual rights of PHAs
and ordinances dealing with the owning and project owners. While the right of
procreation ordinances; (9) animal
cruelty provisions; (10) laws granting and keeping of pets, there may be other project owners or PHAs to exclude pets
areas in which State or local law or from the project under existing leases
animal control officers citation powers;
regulation conflicts with the house pet has been eliminated, the Department
and (11) statutory provisions governing
rules adopted by project owners and does not consider this to be a
pet deposits.
PHAs. Since these laws or regulations
The purpose of section 227 is to substantial change, particularly in light
prevent project owners and PHAs from constitute legitimate attempts to protect of provisions in the final regulations
[Link] health and safety, the
imposing arbitrary rules precluding or permitting project owners and PHAs to
Department will defer to the State and
restricting pet ownership or presence in local jurisdictions. impose reasonable rules governing the
federally assisted projects for the Many sections of the final rules do not keeping of pets, the provisions for the
elderly or handicapped. The Department contain specific references to the , recovery of damages through pet
does not believe, nor can we find any preservation of State and local law and deposits, the right to enforce th^ pet
legislative history to support the notion, regulation. These sections are generally rules through eviction, the preservation
that the statute contemplated, or was those necessary: of State and local pet removal remedies,
intended to permit, Federal interference (1) To provide a regulatory framework and the limited administrative
with the legitimate exercise of the power for the implementation of section 227 requirements imposed by the regulation.
of States and localities to safeguard the (e.g., the purpose sections (§§ 243.1 and Moreover, projects covered by
health and well-being of their citizens. 942.1); the definitions of project for the §§ 243.3(c) and 942.3(c) are regulated by
The statutes and ordinances cited by the elderly or handicapped, project owner, HUD. The involved project owners and
commenters represent State and local PHA, IHA, and elderly or handicapped PHAs are on notice (often under express
attempts to protect the public health and family (§§ 243.3 and 942.3); effective language in the agreements with HUD)
safety by establishing reasonable date provisions (§§ 243.4 and 942.4); and that they will be bound by later changes
limitations on pet ownership within prohibitions against discrimination in governing law and HUD regulations.
their jurisdictions. Given the limited (§§ 243.10 and 942.10)); or Similarly, there is no impairment of
purposes of section 227, and absent a (2) To provide guidance to project tenants’ contractual rights. The rights of
compelling reason for HUD to interfere owners and PHAs concerning the individual tenants who were previously
with the police and health and safety procedures to be used to implement the denied pet ownership are being
powers traditionally reserved to States substance of section 227 (e.g., notice to expanded to permit them to keep pets.
and localities, the final regulations tenants of their rights under section 227 Since current lease provisions generally
preserve these State and local laws. If, (§§ 243.15 and 942.15); procedures for prohibit a tenant from keeping pets only
therefore, there is an applicable State or development of house pet rules in his or her dwelling unit, tenants were,
locaHaw or regulation governing the (§§ 243.22 and 942.25); pet rule violation at best, incidental beneficiaries of the
owning or keeping of pets, the final rules procédures (§ 243.24); provisions for policy of excluding pets from other
provide that the pet rules prescribed by rejection of units by applicants for tenants’ units, and have no cognizable
PHAs and project owners may not tenancy (§ 243.26); implementation of contract claim on that basis.
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1980 / Rules and Regulations 43273

Even if the statute and implementing and 942.20(b)(5)(ii)) could effectively PHAs to include a reasonable definition
regulations could be construed to exclude the handicapped individual of common household pet
constitute an impairment, they do not from the area, and the imposition of pet (§ 942.20(b)(1)).
violate the due process rights of PHAs, owner financial requirements Commenters suggested that HUD
project owners, or tenants because there (§§ 243.20(c)(3) and 942.20(b)(4)) and issue one definition for common
is a rational basis for the statute and the other limitations that the final rules household pet for both parts. They
regulations implementing the statute. In allow could be contrary to Federal, argued: (1) Thjs phrase is a term of art
enacting section 227, Congress clearly State, and local laws that forbid that should be defined by the rule
stated its rationale for prohibiting discrimination against the handicapped. making agency and (2) PHA discretion
discrimination against pets in elderly or Accordingly, the Department has to define the term could create
handicapped housing: Numerous studies concluded that application of any part of administrative problems and legal
and reports that show that pets provide the pet regulations to these animals is difficulties in the enforcement of the
substantial physical and mental benefits wholly inappropriate. rule. Given the opposition of a number
to elderly and handicapped persons, To reduce the possibility that PHAs of the commenters to dogs and cats,
particularly those individuals living and project owners will intentionally or some commenters suggested that the
independently; and the necessity for- mistakenly attempt to apply the pet definition for purposes of Part 942
congressional action based on the regulations to such animals: (1) The should specifically include these
finding that project owners and PHAs, definition of common household pet in animals. Others urged the Department to
absent guidance, have acted to foreclose § 243.3(a) and the provision giving PHAs leave the definition of common
these benefits by imposing absolute “no the ability to define common household household pet entirely to the project
pets” policies. (S^ Rep. No. 98-142, 98th pets (§ 942.20(b)(1)) are revised owner.
Cong., 1st Sess. 41 (1983); 129 Cong. Rec. specifically to exclude animals that are Based on the autonomy and discretion
H5020 (Daily ed. July 12,1983) used to assist the handicapped; and (2) placed in PHAs, HUD has decided to
(statement of Rep. Biaggi); and 129 Cong. § § 243.2 and 942.2 are revised to state retain the definitional approach taken in
Rec. H10526 (Daily ed. November 18, that (A) PHAs and project owners may the proposed rule. It should be noted
1983) (statement of Rep. Biaggi)). The not apply or enforce the house pet rules that PHAs are not without guidance
Department believes that this legislative developed under Part 243 or 942 against concerning an acceptable definition of
history clearly indicates that Congress individuals with such animals and (B) common household pet. Section
acted rationally in enacting section 227 PHAs and project owners are prohibited 942.20(b)(1) requires the definition to be
and that no due process rights were from limiting or impairing the right of “reasonable” and, as noted below, the
violated. Since the final rules merely handicapped individuals under Federal, definition is subject to the
implement section 227, the same State, or local law to own or keep such reasonableness standards contained in
conclusion is compelled with respect to animals. HUD will inform PHAs and § 942.20(b) for developing house rules.
them. project owners of the exclusion through Under this standard, the PHA must
the issuance of administrative weigh competing factors, such as the
Section*by-Section Discussion
instructions, and will monitor PHA’s legitimate interest and the
A. Exclusion fo r Anim als that A ssist the compliance with this exclusion during burdens to pet owners. Such provisions
Handicapped the course of management reviews. The would prohibit the arbitrary exclusion of
Neither proposed Part 243 nor 942 Department believes that these dogs and cats.
would apply to animals that assist the measures, including the requirements Proposed § 243.3(a) defined “ common
handicapped (§ § 243.2 and 942.2). Three contained in both the proposed and final household pet” as follows:
commenters opposed this provision, and §§ 243.15 and 942.15 that tenants and A smaller domesticated animal, such as a
argued that PHAs and project owners prospective tenants be notified of the dog, cat, bird, rodent, fish or turtle, that is
should be permitted to apply selected exclusion of handicap assistance traditionally kept in the home for pleasure
provisions to these animals. Four other animals from the rules’ coverage, are rather than for commercial purposes. Reptiles
commenters supported the provision, adequate to protect the rights of (except turtles) are excluded from the
but feared that housing managers may individuals with these animals. definition.
ignore the exclusion and attempt to These provisions, however, are not Some commenters noted that
regulate the keeping of such animals meant to imply that PHAs and project “ smaller” is a comparative term and
under house pet rules. These owners have no authority outside of that the proposed definition provided no
commenters suggested that the Parts 243 and 942 to regulate the keeping standard for comparison. This term has
definition of common household pet of animals that assist the handicapped. been eliminated from the final rule. It
specifically exclude animals that assist It is possible that under Federal, State, should be noted, however, that under
the handicapped, that provisions or local law, and agreements made in § 243.20(c)(2), the project owner will
governing the content of the house pet accordance with these laws, PHAs and retain the ability to place reasonable
rules state that the house rules do not project owners may retain some restrictions on the size and weight of
apply to these animals, and that all authority to regulate the keeping of such project pets.
leases provide that pet provisions do not animals. The final rules have been Some commenters suggested that
apply to animals that assist the amended to ensure that Parts 243 and “rodents" should be excluded from the
handicapped. 942 have no affect on whatever illustrative list of common household
The application of the house pet rules independent authority PHAs and project pets. Others requested clarification of
to animals that assist the handicapped owners may have. this term since many rodents are
potentially could result in serious harm B. Definitions potentially destructive. While the term
to the handicapped individual’s ability "rodent” includes feral animals such as
to function independently and 1. Common Household Pet squirrels, chipmunks, beavers, gophers,
effectively. For example, the exclusion The proposed rules included a and prairie dogs, our definition does not
of handicap assistance animals from definition of common household pet permit the keeping of all rodents. Rather,
specified common areas (§ § 243.20(c)(4) under Part 243 (§ 243.3(a)), but permitted HUD's definition requires that all
 43274 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations

animals be “domesticated” and Section 227(a) applies to any The statute refers to projects “assisted”
“ traditionally kept in the home.” In the “federally assisted rental housing for the under the National Housing Act. In HUD
case of rodents, this may include gerbils, elderly or handicapped.” Section 227(d) program usage, the term “assisted” normally
hamsters, guinea pigs, etc. Since the defines this term to mean any “housing refers to subsidy and does not encompass
Department believes that these project” (emphasis added) that (1) is mortgage insurance without subsidy.
additional requirements will exclude However, the Department believes that
assisted under the section 202 program Congress intended a broader coverage in the
potentially destructive rodents, the of Housing for the Elderly or
definition of common household pet case of this particular enactment. Congress’
Handicapped or (2) is assisted under focus appears to have been on the character
remains unchanged.
specified authorities and “designated for of the tenants as elderly or handicapped—
One cornmenter requested that the without regard to whether their rent is
occupancy by elderly or handicapped
illustrative list provided in the common subsidized. Given this apparent focus, no
families.” Section 227(a)’s
household pet definition be expanded to rational basis appears for excluding projects
include “rabbits.” Although rabbits are nondiscrimination provisions apply to
"any tenant” and “any person” of that have a HUD association but are not
rodents and therefore within the subsidized. Such a basis might exist if
definition in the proposed rule, the covered housing. The statute is clean Congress contemplated that compliance with
illustrative list has been amended to list section 227’s provisions apply to any its requirements would entail additional cost
“rodent (including a rabbit)”, lest there tenant (not just elderly or handicapped burdens on owners and managers which
be any doubt on this point. tenants) of specified elderly or would be fairly imposed only if absorbed by
As noted above, the definition of handicapped projects (not all projects, additional subsidy, but no such
common household pet under Part 243 or all projects with elderly or contemplation is disclosed in the legislative
handicapped tenants). The proposed history, Accordingly, consistent with the
and the provisions giving PHAs the determination previously announced in
ability to issue a definition of common rules reflected this interpretation, and Notice-84-10, Part 243 would include elderly
household pets under Part 942 have remain unchanged in the final rule. It is or handicapped projects that have HUD-
been amended specifically to exclude true that some of the remarks of Rep. insured mortgages under sections 221(d)(3)
animals that assist the handicapped and Biaggi (section 227’s sponsor in the (Market Rate), 221(d)(4), and 231 of the
to recognize that where a State law or House of Representatives) support the National Housing Act, even though these
local ordinance conflicts with HUD’s notion that section 227 was intended to projects may be unsubsidized. Part 243 also
definition or the definition contained in cover only elderly or handicapped would apply to any projects for the elderly or
the house pet rules, the State law or tenants o f covered projects. [See 129 handicapped that HUD owns. (49 FR 50562,
50563.)
local ordinance will control. Cong. Rec. H5020-21 (Daily ed. July 12,
1983). This expression of intent, Several commenters commended this
2. Projects for the Elderly or
however, cannot override the clear coverage provision, while others
Handicapped
language in the statute, applying the protested it. The protesting comments,
Proposed §§ 243.3(c), 511.11(h) (Rental nondiscrimination provisions to “any who generally expressed basic
Rehabilitation Grant program), and tenant” or “any person” in covered opposition to section 227 in total, argued
942.3(c) addressed the coverage of housing, without regard to age or that HUD’s interpretation conflicted
section 227 by defining projects for the handicap status. with HUD’s own “normal” interpretation
elderly or handicapped. A number of of “assisted” housing, had no explicit
comments expressed general concern a. Application to insured, but
foundation in the legislative history, and
about the proposed rules’ coverage. One unsubsidized, projects. Section 227
is unwarranted because compliance
hundred eighty five comments requested covers “any federally assisted rental
would entail cost burdens to owners and
that the pet rule apply to a ll elderly or housing for the elderly or handicapped/’ managers that could be fairly imposed
handicapped residents of a ll federally and defines this term to include any only if absorbed by additional subsidy.
assisted rental housing projects. They rental housing (1) that is "assisted” Insofar as the commenters directly
argued that this construction conforms under section 202 of the Housing Act of addressed the statutory language of
to the intent of the legislation. An 1959, or (2) that is “assisted” under the section 227, they merely repeated the
additional 25 commenters would extend United States Housing Act of 1937, the Department's own admission, stated in
the pet rule to all tenants of HUD National Housing Act, or Title V of the the preamble to the proposed rule, that
assisted housing. Housing Act of 1949, “and is designated "in HUD program usage, the term
Seven commenters objected because for occupancy by elderly or ‘assisted’ normally refers to subsidy and
the definitions would apply to all handicapped families.” In Notice H-84- does not encompass mortgage insurance
residents of covered housing for the 10, the Department adopted the position without subsidy” (49 FR 50563).
elderly or handicapped, even if the that "assistance” under the National However, even this “normal” HUD
individual resident is not elderly or Housing Act, within the meaning of usage is not so universal that a clear
handicapped or is not a member of an section 227, encompassed mortgage understanding of it can easily be
elderly or handicapped family. They insurance without subsidy. (See also, attributed to Congress.
argued that the proposed rules’ Notice H-86-22). Consistent with this The principal source of the "normal”
interpretation (1) is contrary to the clear determination, HUD proposed to usage is the exclusion of the
language of section 227; (2) is contrary to include, in the coverage of Part 243, unsubsidized mortgage insurance
the legislative history of section 227, that elderly or handicapped projects that programs of “Federal financial
indicates that only elderly or have HUD-insured mortgages under assistance” under Title VI of the Civil
handicapped tenants would be sections 221(d)(3) (Market-Rate), Rights Act of 1964 and other
permitted to keep pets; (3) would create 221(d)(4), and 231 of the National antidiscrimination statutes modeled on
significant management problems in the Housing Act, without regard to whether it. That exclusion, however, resulted not
projects; and (4) could give rise to rent subsidies also are provided, as well from any “normal” understanding that
discrimination complaints filed by as projects for the elderly or “financial assistance” did not include
nonelderly and nonhandicapped handicapped owned by HUD following insurance, but from a specific statutory
residents of projects not covered by the foreclosure. The preamble to the exclusion. Indeed, the language of the
proposed rule. proposed rule stated: exclusion confirms that the term
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43275

"assistance” normally does include or handicapped projects.3 The United States Housing Act of 1937 or the
insurance. Section 605 of the Civil Rights Department recognizes that post­ National Housing Act and (2)
Act 1964 provides: enactment expressions by individual “designated for occupancy by elderly or
Nothing in this subchapter shall add to or legislators, even sponsors, are entitled handicapped families.” Under the
detract from any existing authority with to relatively little weight, and this letter proposed rule, a National Housing Act
respect to any program or activity under is not cited as a basis for our conclusion, project would meet the “designation”
which Federal financial assistance is as much as a later confirmation of it. requirement if it is designated for
extended by way of a contract of insurance Further, while this expression may not occupancy by the elderly or
or guaranty. (42 U.S.C. 2000d-4.) itself have much weight, the Department handicapped in the regulatory
has found no weight at all on the other agreement covering the project. A public
The effect of this exclusion insofar as side to counterbalance it. housing project subject to Part 942
Federal mortgage insurance was On the basis of the foregoing, would fulfill this requirement if it is
concerned, was to exclude the mortgage therefore, the Department believes that, designated for occupancy by the elderly
insurance programs from Title VI as used in section 227, the term or handicapped at the project’s
coverage, but to preserve their coverage “ federally assisted rental housing for the inception or, if not so designated, if the
by Executive Order 11063; Equal elderly or handicapped” includes PHA currently gives preference in
Opportunity in Housing, This executive projects for the elderly or handicapped tenant selection (with HUD approval)
order refers to laws which authorize (as otherwise defined) with mortgage for all units in the project to elderly or
"Federal financial assistance, directly or insurance under the National Housing handicapped tenants. A Section 8
indirectly, for the provision, Act, without regard to whether an project, would be “ designated” if
rehabilitation, and operation of housing additional form of subsidy is provided. preference in tenant selection is given
and related facilities,” and expressly Some commenters argued that HUD’s (with HUD or PHA approval) for all
includes within its coverage facilities position is contrary to its other efforts to units in the project to elderly or
“provided in whole or in part by loans deregulate certain aspects of the housing handicapped families. A project assisted
hereafter insured, guaranteed, or industry, and asserted that inclusion of under the Rental Rehabilitation or
otherwise secured by the credit of the unsubsidized projects is improper Housing Development Grant program
Federal Government.” because it imposes administrative would be covered if it gives such a
The Department believes that these burdens on project owners that are preference, but without reference to
precedents are enough to establish that unaccustomed to meeting HUD HUD approval, since these programs do
in Congressional usage, the term directives. The Department believes that not contemplate this type of HUD
“assistance” normally encompasses regulation and the imposition of limited involvement. HUD-owned projects
insurance, unless otherwise specifically compliance burdens in this area are would be covered where HUD gives
provided. permissible in order to effect the goals tenant selection preference for elderly or
of Congress in enacting section 227. handicapped families and the preference
Examining congressional intent within
While some commenters fear that the is applicable to all units in the project.
the context of the specific enactment,
extension to insured projects for the All of the proposed designation
the Department finds no evidence
elderly and handicapped will pave the requirements varied from the approach
whatever that would suggest an intent to
way for the extension of pet provisions contained in HUD’s February 28,1984
exclude insured but unsubsidized to family projects, such an extension is
projects, The statutory provision on pet Notice. The Notice provided that section
clearly not contemplated by section 227, 227 would apply to projects “built
ownership was sponsored in the Senate and is not included under this
by Senator Proxmire, and in the House exclusively for occupancy by the elderly
regulation. and handicapped.” A number of
by Congressman Biaggi. The justification As in the proposed rule, the final rule
for the provision was stated exclusively commenters urged HUD to adopt such
will exclude health and care facilities
in terms of the benefits of pet ownership an approach in the final rule.
that have mortgages insured under the
for elderly and handicapped persons, National Housing Act. The proposed The preamble to the proposed rule
without regard to their income status. rule excluded nursing homes and indicated that this approach was too
See S. Rep. No. 142, 98th Cong,, 1st Sess. intermediate care facilities under limited, since not all projects that serve
40 (1983); 129 Cong. Rec. H 5021 (daily section 232 of the Act, and hospitals the elderly or handicapped were built
ed. July 12,1983). (The provision was under section 242 of the Act. The final exclusively for that purpose. The
added as a floor amendment in the rule adds board and care homes under Department recognized that some family
House.) As indicated in the proposed section 232 of the Act to the list of projects evolve into elderly or
rule preamble cited above, there was no excluded health and care facilities. handicapped projects. This coverage
suggestion in the legislative discussion Omission of such homes from the was also reflected in HUD Notice H-86-
of additional costs that might be proposed rule was an oversight. Like 22, issued August 22,1986. The
incurred by project owners and other section 232 facilities, board and Department continues to believe that
therefore require subsidy, leaving no care homes are not “rental housing” determining section 227’s coverage on
discernible rationale for distinguishing and, thus, fall outside section 227’s the present use of projects is far more
between subsidized and unsubsidized coverage. responsive to congressional intent in
projects provided for the same target b. Designation. Section 227 applies to enacting the provision. Thus, the final
population. projects that are (1) assisted under the rules remain unchanged in this respect.
Finally, there is the post-enactment The proposed rule stated that a
expression of intent by the legislation’s project assisted or insured under the
8 Senator Proxmire and Representative Biaggi
principal sponsors, Senator Proxmire stated to the Department with reference to the National Housing Act would meet the
and Congressman Biaggi, contained in scope of the term “assisted” : “ We understand this “designated” requirement if the project
their letter to Secretary Pierce dated language— and intended it— to cover both insured is designated for occupancy by the
and directly-subsidized rental properties designed elderly or handicapped in the regulatory
November 18,1985, clearly indicating for elderly or handicapped persons. Mortgage
their expectation that "assisted” insurance in our minds is a form of assistance, not agreement covering the project. While
includes unsubsidized, insured elderly unlike interest payments and rent supplements.” HUD does not wish to alter the scope of
 Pcderal_Register_/^ Vol. 51, No. 230 / Monday, December 1., 1986 / Rules and Regulations

the definition, the language of the Sess. (1983), as passed by the Senate, invited comments on the factual issue of
proposed rule presents some practical contained the “designated” language whether there were projects that were
problems. that was later included in section 227. designated for occupancy by the elderiy
An analysis of various National The Senate Committee report refers to or handicapped at inception, but that
Housing Act regulatory agreements covered projects as “elderly projects’” had evolved to other uses and no longer
reveals that agreements covering some and “elderly or handicapped projects.” serve elderiy or handicapped families.
family projects that were never intended (S. Rep. No. 98-142,98th Cong., 1st Sess. No comments were provided. In light o f
for occupancy fey elderiy or 41 (1983).) More importantly, section 232 this lack of evidence of the existence of
handicapped families, through of H R . 1 ,98th Cong., 1st Sess. (1983), as such projects, the proposed definition in
administrative error, contain language passed by the House, defined the pet § 943.3(cj is left unchanged.
that inadvertently designate the projects provision’s coverage m terms of a
for such occupancy. Similarly, the c. M ixed-use projects. Under proposed
project that has “as a majority of its § 942.3(c), project for the elderly or
regulatory agreements for some elderly tenants elderly or handicapped
or handicapped projects include no handicapped was defined to include a
families.” The House approach— building within a “mixed-use” project, if
specific designation. Instead, advocated by some commenters in this
designation may appear in the loan the building independently meets the
proceeding—was dropped in favor of designation requirements. One
commitment papers, financial the Senate’s “designated” approach in
documents, the notice of fund commenter suggested that this provision
the final version o f section 227—a clear should be deleted from the final rule in
availability,, die bid invitation, or the signal that the approach proposed by
owner’s management plan or funding order to make the two parts consistent
commenters is not consistent with This commenter also suggested that this
application. congressional intent
To ensure that HUD’s regulation provision could cause management
Contrary to the interpretation given
includes all projects that currently serve difficulties within a project A second
by some commenters to the preference
the elderly or handicapped, final commenter supported H U D ’s coverage
requirement, this provision does not
§ § 243.3(c)(2) and (3) have been revised. require 100 percent occupancy by of buildings within a mixed-use project
In the final rule, a project assisted or elderiy or handicapped families. A “since such a construction is entirely
insured under die National Housing Act preference is “given” for a unit if an consonant with the statute and, as is the
will be included under Part «243 if the elderly or handicapped family would be case with antidiscrimination legislation
project was designated for occupancy offered die unit over an equally in general, the statute should be
by the elderly or handicapped when the qualified nonelderiy and construed liberally.”
commitment to insure the mortgage on nonhandicapped family. The fact that a The definitions of projects for the
the project was issued (or when funds unit is actually rented to a nonelderiy elderly or handicapped have not been
for the project were reserved, in the case and nonhandicapped family, because revised in the final rule in response to
of subsidized projects) or if not then so there is no qualified elderly or commenters’ arguments. Projects for the
designated, if the project is designated handicapped family that is able to take elderiy or handicapped under §§ 243.3(c)
for such occupancy in an effective advantage of the preference, is and 942.3(c) are treated differently
amendment to the project’s regulatory irrelevant. based on variations in the program
agreement requested by the project Two PHAs objected to the use o f the structure. Because PHAs under Part 942
owner. preference requirement entirely. They establish preferences for their entire
Under the proposed rule, Public argued that because they give inventory of dwelling units based on
Housing, Section 8, Housing preference to elderly families regarding building structure and unit size, it is
Development Grant, Rental admission to a ll units in a ll o f their possible to have a building within a
Rehabiliation Grant, and HUD-owned projects, the regulation was overly project that has a designated use
projects would be “ designated” for broad. Part 942 requires HUD to approve separate and distinct from the uses of
occupancy by the elderly or extension of the preference for the other project buildings.
handicapped, if in tenant selection, elderly or handicapped. These PHAs There may "be buildings that are
preference is given for all units in the should consult their responsible Field occupied primarily (or even exclusively
project to elderly or handicapped Offices to determine whether HUD has, by the elderly and handicapped that are
families. (See § § 243.3(c) (4), (5), and (6), in fact, approved such a preference. If located within projects that do not meet
511.11(h) and 942.3(c)). Some so, that PH A may wish to seek HUD the designation requirements o f
commenters argued that this approval to give a less sweeping § 243.3(c). Unlike buildings within public
requirement is too restrictive, and preference for these tenants. housing projects, however, it is
suggested that the requirement be The proposed definition of project for impossible for these buildings to be
reduced to require a preference for ” a the elderiy or handicapped under independently designated for the elderiy
majority of units” or “ substantially all § 943.3(c) applied to projects that were or handicapped. For projects that are
units.” One commenter reported that designated for occupancy by the elderiy assisted under the National Housing
some projects have interpreted the or handicapped at their inception. Act, specific buildings within projects
provisions to require 100 percent Because this definition could technically are never separately designated for
occupancy by elderly or handicapped apply to projects that have evolved to occupancy by the elderly or
families. other uses and that currently grant no handicapped. Buildings in other projects
HUD does not believe that this preference for the elderly or described under § 243.3(c) cannot be
requirement is overly restrictive. Rather, handicapped, commenters objected to it, independently designated because
the Department believes that it is the arguing that it could invite additional preferences for the elderiy or
most appropriate way of giving meaning administrative burdens and could handicapped are never required to be
to the statutory mandate that projects be expose the PHA to litigation by other extended with regard to a specific
“ designated for occupancy by the residents of family housing on the basis building within The project.
elderly or handicapped.” This approach of discrimination. Contrary to commenter’s arguments,
is supported by the legislative history. In the preamble to the proposed rule the presence of pets in buildings within
Section 318 of S. 1338,98th Cong., 1st (49 FR 50563-50564), HUD specifically PHA projects should not raise any
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43277

significant management problems that C. Effective Date effective date of the final rules to
cannot be mitigated by the judicious implement the regulation. It should be
Several commenters urged revision of
application of house pet rules. noted that if the 60-day period is added
§ § 243.4 and 942.4 to reduce confusion
One commenter noted that the phrase to the period of delayed effectiveness
concerning the effective date of section
“mixed-use project” was not defined in because of section 7(o), PHAs and
227 and the effective date of the final
the regulation. It is not necessary to project owners will have approximately
rules.
define this term in the regulation, since The text of proposed § § 243.4 and 180 days—the period that some
it is clear that the term includes a 942.4 clearly stated the effective dates commenters suggested—to prepare for
project with more than one building, that are applicable to the provisions of the rules’ implementation.
where the buildings are designated for Parts 243 and 942 and provided These time periods should be
different uses. extended periods from this date to adequate in all cases, if project owners
d. Exem ptions. Commenters urged permit project owners and PHAs to and PHAs pursue their responsibilities
that certain types of projects be implement the rules’ provisions. In light in a reasonably expeditious manner.
exempted from the definition of project of the clear language of these sections Accordingly, the Department has
for the elderly or handicapped. Others and the Department’s pronouncements determined that extension requests will
urged the Department to provide a in the interim Notices and the proposed not be entertained.
waiver of the regulations for certain rule preamble discussing the fact that Section 243.4 of the proposed rule
projects. Exemption or waiver was the provisions of section 227 were permitted HUD to extend the
requested for: (1) Group homes for the effective on November 30,1983, the 1983 implementation date if needed to
chronically mentally ill, Act’s effective date, the Department accomplish tenant moves under
developmentaily disabled, or physically does not believe that further proposed § 243.20(b)(5). Since, as
handicapped: (2) projects for the clarification is necessary. discussed later, the tenant move
mobility-impaired; and (3) projects Proposed § § 243.4 and 942.4 stated provisions have been eliminated, this
where the owner or manager can that project owners and PHAs would extension provision has also been
demonstrate good cause for exception have 120 days from the effective date of deleted.
(e.g., diminishing capacity of the the rules to implement the regulations. D. Prohibition Against Discrim ination
residents, health needs of a significant Some commenters urged HUD to allow
proportion of the residents, and PHAs and project owners 180 days to Proposed § § 243.10 and 942.10 would
inadequacy of the project facilities). implement the rule, and to allow forbid project owmers and PHAs from:
The statute is mandatory, and permits extensions of the implementation (1) Prohibiting or preventing any tenant
no exemption from, or waiver of, its period. from owning or keeping common
requirements. It should be noted, Section 7(o){3) of the Department of household pets in the dwelling unit and
however, that the final rules give project Housing and Urban Development Act (2) restricting or discriminating against
owners and PHAs wide latitude in r provides, in part, "No rule or regulation any person based on pet ownership or
prescribing rules for the keeping of pets. may become effective until after the first presence in the dwelling unit. The
Within statutory limits and the bounds period of 30 calendar days of continuous proposed rule also provided that these
of reasonableness, these rules can be session of Congress which occurs after prohibitions would be applicable, except
-specifically tailored to the needs of the day on which such rule or regulation as otherwise specifically authorized
individual projects. For example, under is published as final.” Based on the 1986 under the parts.
§ 243.20(b)(4) project owners are legislative calendar and the anticipated Some commenters argued that the
permitted to screen pet owners based on 1987 legislative calendar, this rule will nondiscrimination language used in
whether they will be able to fulfill their not become effective until March 1987. these provisions and reflected
obligations as tenants by adhering to the A 120-day implementation period would throughout the regulations improperly
lease, the house pet rules, and other thus delay compliance with this rule protects pet ownership to the detriment
house rule requirements. Because of the until July 1987. Due to the lengthy delay of the interests of project management
special nature of group homes, the final of the effective date of this rule caused and other tenants. Notwithstanding
rule permits these homes specifically to by the application of section 7(o), the commenters’ misgivings concerning the
impose reasonable limitations on the Department does not believe it is wisdom of the language used in these
number of pets in each home under necessary to provide such an extended provisions, this language mirrors the
§§ 243.20(c)(1) and 942.20(b)(2). (Project implementation period. provisions of section 227(a). This
quotas in other types of projects* The 120-day period was originally statutory provision makes pet
however, are expressly prohibited.) proposed to ensure that project owners ownership a protected aspect of all
e. M iscellaneous. Section 243.3(c)(1) and PHAs: would have a sufficient federally assisted projects for the
of the proposed rule would .have period to prepare for and perform elderly or handicapped. Based on this
covered projects under Part 885 (Loans various obligations imposed in the final statutory language, no revision in the
for the Elderly or Handicapped). rule. Because of the delayed effective final regulation is believed to be
Because this section would not include date of the rule, many of the preparatory warranted.
all projects currently assisted under steps may now be commenced pending Other commenters argued that the
section 202 of the Housing Act of 1959, the effective date of the rule. (These wording of proposed § § 243.10 and
the final rule has been amended. steps might include the preparation of 942.10 is improper, because it implies
One commenter suggested that HUD such documents as the notice to tenants that exceptions to the rights granted in
issue a list of projects covered by the required under § § 243.15 and 942.15, the section 227(a) are permissible. Despite
pet regulation. A listing of covered notice of proposed house rules under the absolute language contained in
projects is not available within the § 243.22(b) or revised lease provisions section 227(a), subsections (b) and (c) of
Department. It is the duty of project under §§ 243.35 and 942.27(a)). the statute place conditions, or permit
owners and PHAs to determine whether Accordingly, the final rules at § § 243.4 project owners and PHAs to place
their projects are covered under and 942.4 provide that project owners conditions, on tenants’ rights to keep
§§ 243.3(c), 942.3(c) and 511.11(h). and PHAs will have 60 days from the pets. For example, subsection (b)
 43278^^Federal_Register^/^yol. 51, No, 230 / Monday, December 1, 1986 / Rules and Regulations

permits the owners to prescribe ;■ provisions contemplated service of the or PHA, such as its interest in providing
reasonable house rales to govern the notice during the tenant consultation a decent, safe, and sanitary living
keeping of pets. Similarly, section 227(c) period, service on those in occupancy at environment for existing and
preserves the right of the owner to implementation—a later date—made prospective tenants and in protecting
require the removal of any pet whose little sense. Section 243.15 has been and preserving the physical condition of
conduct or condition is duly determined amended to clarify that the notice must the project and the owner’s financial
to constitute a nuisance or a threat to be served with the notice of proposed interest in i l
health or safety. In recognition of these pet rule under f§ 243.22(a) and must be
permissible conditions, the provisions of In addition, proposed § 243.20(a)
served upon all tenants in occupancy at
the final rule are adopted as proposed. provided that the house pet rules should
the time of service. Similarly, § 942.15(a)
be drawn narrowly to achieve the
E. N otice to Tenants now states that the PHA must serve the
notice during the tenant consultation owner’s legitimate interests, without
Under proposed 243.15 and 942.15, period (or within 60 days of the effective imposing unnecessary burdens and
project owners and PHAs would be date of the Part, if die PH A chooses not restrictions on pet owners and
required: (1) To serve a notice on to promulgate pet rules) upon all tenants prospective pet owners. This provision
tenants stating, among other things, that who are in occupancy at the time of was not included in proposed
tenants are permitted to keep pets; and service. § 943.20(b). Upon reconsideration, the
(2) to provide this notice to applicants Section 243.15(b) has been revised to Department has concluded that the final
for tenancy. make clear that applicants for tenancy rule should require PHAs to consider the
Commenters opposed to these will receive a current copy of final pet burdens of house pet rules on pet
provisions argued that this notice is rules developed under §§ 243.22, as well owners, as well as their own legitimate
burdensome and redundant. As an as any current proposed rule or interests. This modification will help
example, commenters cited the fact that proposed amendment to an existing rule. ensure that PHAs will take tenants’
§ § 243-35 and 942.27(b) require that The final § 942.15 also makes interests into account along with their
leases for existing tenants be revised to additional substantive changes. Under own and that PHA rules will not impose
incorporate material with respect to ■§ 942.15(a) the notice to tenants will unreasonable burdens and restrictions
owning and keeping pets. Since state that PHAs will be required to on those who own or wish to own pets.
§ § 247.4(d) and 906.3 already provide for provide tenants copies of any current Some commenters suggested that
tenant notice for tease changes, pet rule developed under § 942.25 (as § § 243.20(a) and 942.20(b) be modified to
commenters viewed the notice well as any current proposed rule or include definitions for “reasonable
requirements o f ¿ § 243.15 and 942.15 as proposed amendment to any existing rules”, “reasonably related to the
duplicative. rule), only upon tenants’ request. Under owner’s legitimate interest”, “narrowly
Despite the fact that the pet § 942.15(b) each prospective tenant will drawn” , and “unnecessary burdens”.
legislation has been effective since also be advised of this right to request The terms used in these sections are an
November 30,1983, the commenters rule copies. This change reflects the
indicated that there may be a attempt to prescribe general limitations
greater discretion to be accorded PHAs on project owner and PH A discretion in
substantial number of tenants who are in implementing section 227, and is
unaware of their right to keep pets. This prescribing house rules. These
designed to enable PHAs to reduce the limitations anticipate that the
lack of knowledge may have been administrative burdens of complying
fostered by the continued existence of reasonableness of any rule will vary
with the provision. with the factual situation in each case
“no pet” provisions in existing leases,
the fact that an absolute “no pets” F. Reasonable R ules Governing the and that a rigid definition would
policy was practiced for many years, Keeping o f Pets unnecessarily restrict a project owner’s
and confusion concerning the effect of or PHA’s ability to issue -rules
Section 227(b)(2) requires HUD to specifically crafted to the needs of their
section 227 pending the issuance of HUD promulgate regulations that establish
final regulations. To ensure that tenants tenants and their projects.4 Accordingly,
guidelines under which owners of
and applicants are positively notified o f the final rules contain no definitions o f
federally assisted rental housing these terms.
their rights, the notice provisions are projects for the elderly or handicapped
retained in the final rule. may prescribe reasonable rules for the Commenters suggested that
The Department does not believe that keeping of pets. To ensure that the final 1 § 243.29(a) and 942.20(b) be modified
this notice requirement is overly guidelines would permit the so that the reasonableness of a house
burdensome, since its content has been establishment of adequate house pet pet rule will also be judged by whether
limited to that strictly necessary to rules, the preamble to the proposed rule it complies with the statutory
inform tenants of their rights. Moreover invited project owners and PHAs that prohibitions against discrimination.
in some cases, the notice can be served have permitted pets in the past to Consideration of section 227’s
or provided in connection with other comment on the proposed guidelines by nondiscrimination provisions is
notices or documents (See § 243.22). In estimating the incidence of pet
addition, the final rale relaxes the ownership and the costs associated with 4 Section 243.20 specifically states, “ Sincethe
procedures for service of notice under pet presence, and by indicating how the .reasonableness o f a rule will frequently depend on
Part 243. This revision is discussed the facts and circumstances in each case, this part
proposed rule could be improved. HUD’s will not define with specificity the limits of-the
below in connection with the house rule final guidelines are found in §1 243.20 owner’s discretion” (emphasis added). Part 942 does
development procedure. and 942.20. not contain this provision, and one commenter
Proposed $§ 243.15 and 942.15 have Proposed § § 243.20(a) and 942.20(b) urged its deletion from § -243.2Q. This commenter
been revised for clarity in the final rule. provided project owners and PHAs with alleges that the language places undue .restrictions
on project owners’ ability to regulate the keeping of
Both proposed §§ 243.15(a) and 942.15(a) general guidance concerning the pets by requiring that the rules be reasonable as
stated that the project owner or PHA reasonableness of house pet rules. Both applied to each individual pet in the project. This
shall serve the written notice on tenants sections stated that the house pet rules language incorporates H U D ’s determination that the
“in occupancy at the time of must be reasonably related to furthering reasonableness of house rules can only he
determined by their application to individual cases.
implementation of this part.” Since both a legitimate interest of the project owner The provision will be left unchanged.
 Federal Register / Vol, 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43279

necessarily included in any owner of responsibility for complying within the discretion of the project
determination of a pet rule’s with applicable State and local law owner or PHA and, in any event, failure
reasonableness. It is unnecessary to (§§ 243.20(c)(5) and 942.20(b)(6)). of the house pet rules to address these
include a duplicative provision in The proposed rule noted that most matters does not relieve the pet owner
§§ 243.20 and 942.20. State and local laws only address rabies from complying with applicable State
The content of the pet rule guidelines inoculations and invited the public to and local requirements.
are similar under both parts. There are. address whether HUD’ s guidelines Section 243^0(b){4J requires pet
however, major differences. For should address other transmittable owners to include in the pet registration
example, the Department requires animal diseases. Additionally, the public and annual update, a certificate stating
project owners to prescribe certain was invited to identify jurisdictions that the pet has been inoculated as
mandatory rules under Part 243. PHAs without any inoculation requirements required by State and local law. Several
under Part 942 are not required to and comment concerning the guidance commenters proposed the expansion of
prescribe any specific rules, and are that should be given project owners and this requirement to include a pet health
permitted to elect not to promulgate any PHAs in these areas (49 FR 50565). certification. As noted above, HUD is
rules. (Under the latter circumstances, Fifty five commenters addressed the not disposed to regulate these types of
the keeping of pets would be subject to inoculation requirement. All favored the health care requirements on a national
the general obligations under the lease inoculation of animals. Some level. Owners are free, however, to
and any applicable State or local law or commentera believed that State and impose additional, reasonable pet health
regulation governing the owning or local laws will adequately address the care requirements. Where they do so,
keeping of pets in dwelling health and safety needs of local areas, § 243-2Q{b){4) permits the owner to
accommodations.! and saw no need for more stringent require the pet owner to submit
Commenters suggested that the inoculation and health care standards. additional information necessary to
mandatory rules in Part 243 be made However, most commenters urged HUD verify compliance. Although Part 942 is
applicable to ail projects; that PHAs be to require or allow the project owners silent on this issue, nothing would
required to refer to § 243.20 for guidance and PHAs to impose additional preclude PHAs from using a reasonable
for reasonable rules; or that project inoculation and health care pet registration system and requiring
owners under Part 243 be accorded the requirements, applicable either in the tenants to submit similar data under
same discretion given PHAs under Part absence of, or in addition to, existing that part
942. These suggestions are not State or local law. One commenter
incorporated in the final rules. The would forbid the PHA or project owner 2. Sanitary Standards
rationale for promulgating two rules and from imposing inoculation requirements Both proposed rules contained
for according greater deference to PHAs that violate State law. provisions governing the establishment
was discussed earlier in the General The final regulations have been left of house pet rules addressing sanitary
Matters Section under item A . unchanged. The Department presumes
standards for the disposal of pet wastes.
Other commenters urged that the term that State and local laws generally
Proposed § 243.20(b)(2) would require
"mandatory" rules under Part 243 be address the health and safety needs of a
project owners to prescribe such rules.
clarified to ensure that they are community. There is no compelling
Proposed § 942.20(b)(5)(i) would permit
interpreted to be "minimum” rules: i.e., rationale for prescribing, on a national
PHAs to impose such standards. Both
the project owner has discretion to level, more stringent inoculation or
proposed regulations also provided
impose more rigorous requirements. The health care requirements for pets that
examples of permissible sanitation
proposed rule sufficiently stated H UD’s live in housing for the elderly or
rules. For example, both rules would
position that project owners may impose handicapped than for other pets found
elsewhere in a locality or State. HUD’s permit project owners to designate
more rigorous requirements on pet
rules, of course, do not preclude PHAs portions of project premises for
owners, provided they are reasonable
and project owners from requiring other exercising pets and the disposal of
and not specifically prohibited in the
types of inoculations or other pet health wastes, and standards for the changing
regulation.
Many commenters urged that specific care requirements, provided that such and disposal of litter.
rules be made mandatory or requirements are reasonable under all Some commenters would amend the
discretionary. Based on the broader the circumstances. Based on HUD’s proposed rules to require project owners
discretion-accorded PHAs, no rules have conclusion that Parts 243 and 942 do not and PHAs to designate exercise and
been made mandatory under Part 942. preempt State and local laws, project waste disposal areas, unless special
Some mandatory and discretionary rules owners and PHAs may not impose circumstances m^ke this impossible.
under Part 243 have been changed, as additional inoculation or health care Others sought guidance concerning how
discussed below. requirements that violate State or local pet areas would be defined. The final
law. rule retains the provisions of the
1. Inoculation and Licensing As noted above, proposed proposed rule. The decision to establish
Under proposed Part 243, project §§ 243.20(c)(5) and 942.20(b)(6) stated a pet area and the type of facilities to be
owners must require pets to be that pet owners may be required to provided ultimately will depend on such
inoculated in accordance with State and license their pets. Commenters factors as the number and type of pets
local laws (§ 243.20(b)(1)}, and may suggested that the rules should require living in a project and the size and
require pets to be licensed under State the licensing and tagging of animals. location of possible exercise and waste
and local laws (§ 243.2G(c){5)}. Under While these requirements are helpful for disposal areas, both on and off the
proposed Part 942, PHAs may require verification of compliance with State project premises. Since these factors
licensing and Inoculation and local inoculation laws and will vary with the project, the
(§ 942.20(b)(6)). To the extent licensing identification of animals, the Department believes that the final
and inoculation are discretionary, the Department does not believe that decision to establish the area and the
proposed rules provided that failure of licensing and tagging should be required type of facilities to be provided must
the house pet rules to contain these as a national standard. The imposition remain with the project owner or PHA,
requirements does not relieve the pet of these requirements, however, remains based on consultation with the tenants.
 As noted above, proposed Since restraint provisions apply to a tenant by adhering to the lease, the
§§ 243.20(b)(2) and 942.20(b)(5)(i) dogs and cats "while on the common house pet rules, and other house rule
contained specific guidance permitting areas,” including shared hallways, requirements. In making this
the prescription of standards for elevators, stairwells, parking lots, lawn determination, the project owner should
changing and disposing of litter. areas, etc., it is riot necessary to revise be primarily interested in the
Proposed Part 243 stated that the pet the regulation (as commenters individual’s past history as a tenant.
rules may require the pet owner to suggested) to apply “whenever the That is, if a tenant has fulfilled his or her
change the litter not more than twice a animal is out of the owner’s apartment.” past obligations as a tenant, the project
week and to separate waste from litter Several commenters suggested that
no more than once a day. Several owner should generally assume that the
the Department should issue regulations tenant will continue to be responsible as
commenters suggested that this governing the handling and treatment of a pet owner. If a tenant has been unable
guidance was too explicit, inadequate, pets during emergency building to fulfill his or her obligations under the
or inappropriate for certain types of evacuations. The treatment of animals tenancy, the project owner has an
litter. One commenter requested during emergencies involves matters of obligation to question whether the
clarification whether the guidance is a local discretion, and have not been
requirement or a recommendation. tenant could meet his or her obligations
addressed in the final regulation. with regard to a pet. The pet’s
The specific guidance for the disposal
of litter under § 243.20 was imposed to 4. Registration temperament may be considered as a
protect tenants from overly prescriptive Under proposed § 243.20(b)(4), pet factor when considering the tenant’s
house pet rules. While there are owners would be required to register ability to fulfill its obligation under the
different types of litter with varying lease.
pets with the project owner before the
absorbency or odor control capacities, pet is brought onto the project premises. The final rule does not permit
HUD cannot foresee a situation where it Additionally, (he pet owner would be screening based on the financial status
would be reasonable for project owners required to update the registration of the tenant. The Department believes
to impose a stricter standard. This annually. As noted earlier, Part 942 is that such a test is wholly inappropriate
provision has been retained in § 243.20. silent on this issue, thus leaving the under the nondiscrimination provisions,
The proposed rule did not give specific imposition of registration requirements and interferes with the tenant’s right to
guidance concerning the changing and to PHA discretion. set his or her own financial priorities.
disposal of litter in § 942.20. That Under the proposed § 243.20(b)(4), the Moreover, HUD doubts whether it is
section did, however, contain provisions project owner would be permitted to possible to construct a reasonable
stating that PHAs may prescribe litter refuse to register a pet if the pet is not a financial means test, since people at all
changing and disposal standards. In common household pet, if the keeping of income levels set different priorities and
light of the broader discretion given the pet would violate any applicable make individual choices or sacrifices
PHAs and the fact that § 942.20 already house pet rule (e.g., restrictions on based on their needs and priorities.
contains provisions permitting PHAs to number of pets per unit), if the presence The statute permits pet ownership
issue rules governing pet waste disposal, of the pet will constitute a serious threat without regard to the therapeutic value
this provision is deleted as unnecessary to the health of another resident of the of the pet to the particular tenant.
in the final rule. project (as provided in § 243.26(c)), or if Screening on this basis, therefore, is not
the pet owner fails to provide complete permitted under § 243.20(b)(4). Similarly,
3. Leashing. screening based on the “best interest of
pet registration information or fails to
Under proposed § 243.20(b)(3), the update the pet registration annually. the property and existing tenants” is not
house pet rules must require that “all Commenters suggested that the permitted in the final rule. As long as
cats and dogs be leashed and under the project owner also be permitted to the pet owner is able to fulfill his or her
control of a responsible individual while consider: (1) The pet owner’s financial, obligations as a tenant under the lease
on the common areas of the project.” - mental, or physical ability to care for the and the house rules, the consideration of
Proposed § 942.20(b)(5)(ii) yvould permit pet; (2) the pet’s temperament; and (3) these factors is wholly inappropriate,
the establishment of these rules. the appropriateness of the pet based since it could lead to the arbitrary
Commenters suggested that the upon its therapeutic value and the best exclusion of pets from the project.
regulation require that dogs and cats be interest of the property and existing Consistent with the final rule’s
leashed or restrained in an appropriate tenants. deletion of provisions dealing with pets
container; that dogs be muzzled; that HUD has revised § 243.20(b)(4) to that may cause serious health threats
pets be carried when transported to and permit project owners to refuse to (discussed later), the final rule deletes
from apartments; and th^t this provision register pets if the project owner provisions permitting the project owner 1
apply whenever the animal is out of the reasonably determines, based upon the to refuse to register pets on these
owner’s apartment. pet owner’s habits and practices, that grounds.
Both final regulations have been the pet owner will be unable to keep the As noted above, registration must be
modified. Section 243.20(b)(3) of this pet in compliance with the house rules completed before the pet is brought onto
final" rule requires the project owner to and other lease obligations. Project the project premises. Commenters
establish house rules that require that owners should be able to screen suggested: (1) That HUD devise a
all cats and dogs be appropriately and prospective tenants with pets (and system whereby an existing tenant
effectively restrained and under the existing tenants attempting to register could be permitted to register his or her
control of a responsible individual. new pets) in the same manner that they intent to secure a pet and, after the pet
Section 942.20(b)(5)(ii) permits PHAs to screen any other prospective (or current) arrives, complete the registration
establish such rules. The Department tenant family. This does not permit process; and (2) that the regulations
believes that this general language project owners to conduct intrusive require the project owner to complete
provides projects owners and PHAs investigations of pet owners’ habits and the registration process before “move
adequate discretion with respect to practices. Rather, the emphasis in this in” of new tenants.
issuing reasonable rules governing pet screening must be on whether the tenant The Department believes that it is
restraint. is able to fulfill his or. her obligations as appropriate to require pet owners to
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 j Rules and Regulations 43281

register their pets before they are pets regarding unit enjoyment and the into account both tenant and pet
brought onto the project premises. This right to have access to subsidized density.
I will eliminate the obvious hardship of housing opportunities free from Even if project quotas were generally
[ having a pet that does not qualify for proximity to pets; and (5) minimize permitted, there may in fact be little
I registration removed from the pet exposure of sensitive tenants to pets. need for them in many projects.
I owner’s unit Thus, the final rule is Several commenters urged that special Commenters indicated that experience
I unchanged in this regard. consideration be given to establishing in States where pet legislation similar to
The Department sees no reason to pet quotas for high-rises, based on the section 227 has been in effect shows that
I require project owners to complete the inadequacy of the structure properly to quotas are not necessary because of the
I registration process before the house a large pet population. Quotas for low incidence of pet ownership (less
[ prospective tenant actually moves in. A group homes for the handicapped were thanTO percent), and the lack of any
I project owner must have a reasonable supported, based on their special design reported problems with pets in the
I opportunity to determine if he or she and the special needs of the tenants. housing units. As noted above, HUD has
I will refuse to register a pet under Thirty two commenters opposed determined not to preempt State and
I §243.20ib){4j. Because the registration project quotas. These commenters local laws regarding tenant and pet
I process begins with the submission of argued that the setting of quotas density. The final rules so provides.
I the registration material—an act wholly discriminates against pet-owning The final rule, however, does permit
I within the tenant’s control—It may not tenants and gives preference to tenants project owners and PHAs to impose
I always be possible for the project owner Without pets. These commenters argued reasonable limitations on the number of
I to complete the registration process that the ability to consider "tenant pets permitted in certain group home
I before move-in. density" in the pet rules does not arrangements where planned programs
Three additional minor modifications authorize the establishment o f quotas. of continual supportive services or
I have been made to § 243.20(b)(4). First, Rather, the ability to consider tenant supervision (other than nursing, medical,
I the section has been amended to permit density permits project owners to or psychiatric care) are provided.
I the project owner to require the pet prescribe varying rules according to the Unlike other projects for the elderly or
I owner to supply the names of one or nature of their projects, including rules handicapped, these homes do not
I more responsible parties to care for the governing where dogs may be exercised, provide each tenant with a self-
I pet in emergencies. To reduce the limitations on the number of pets that contained living unit, but rather provide
I administrative burden to the projects, m aybe in an elevator at once, communal living facilities that may
I the final rule also permits the project limitations on the stairways available to involve the shared occupancy of
I owner to coordinate the annual update pets, etc. These commenters urged HUD bedrooms. Based on this close,
I of registration with the annual to redraft §§ 243.20(c)(1) and 942(b)(2) to interdependent environment and the
I reexamination o f tenant income, if address tenant rather than p et density. unavoidable problems that would occur
I applicable. Finally, in response to public The final rules generally retain the if pet ownership were unlimited in such
I comments mi die administrative burden prohibition against project quotas. facilities, HUD has concluded that
I of service of notice requirements, the Section 227(a) stipulates that owners project owners and PH As managing
I notice of the project owner’s refusal to these types of group homes may limit
and managers; may not prohibit or
I register a pet may be delivered by first prevent tenants from owning common the right o f each tenant to own a pet, by
I class mail or by personal service. placing reasonable restrictions on the
household pets or having such pets
K 5. Pet and Tenant Density living in their dwelling accommodations. number of pets in the home.
I Considerations Project quotas could operate to deny For the purposes of Part 243, a group
individual tenants the right to own or homes is defined as a small communal
Both proposed § 243.20(c)(1) and
keep a pet. it is true that section living arrangement designed specifically
I § 942.20(b)(2) allow the project owner or
227(b)(2) authorizes project owners to for individuals that are chronically
I PHA to establish reasonable limitations
I on the number of common household establish reasonable rules for the mentally ill, developmental!/ disabled
I pets allowed in each dwelling unit keeping of pets, and specifically lists or physically handicapped and who
I Other than these limitations, the “tenant density" as a factor to be require a planned program of continual
I proposed rules would not permit a considered in drawing these rules. The supportive service or supervision (other
I project owner or PH A to place any Department does not believe, however, than continual nursing, medical, or
I quotas on overall pet occupancy. The that the living situation in elderly or psychiatric care). PHAs, subject to Part
I preamble to the proposed rule handicapped projects (including high- 942, do not develop group homes or
I specifically solicited comments rise projects), in which each family lives other housing specifically designated for
I addressing whether project quotas independently in its own dwelling unit, occupancy by individuals that are
t should be permitted and what factors presents problems of such severity as to incapable of living Independently.
I should be taken into account when outweigh section 227(a)’s clear Occasionally, however, detached houses
I detennming a building quota (49 FR statement of tenants’ rights to have pets. or apartment units within a project are
1 50564). As the commenters pointed out and the operated in a manner similar to such
a. Project pet quotas. Ninety one proposed rules indicated, project owners homes. In recognition of these
I commenters supported project quotas. have wide latitude to prescribe residences, a group home is defined for
I These commenters argued that pet reasonable house pet rules tailored to Part 942 as a dwelling or dwelling unit
I quotas would: (1) Allow the buildings to the needs and requirements of their for the exclusive residential use of
I remain in compliance with State and projects, judicious use of this authority elderly or handicapped individuals who
I local laws regarding pet density: (2) should be adequate to accommodate the are not capable o f living completely
I preserve the decent, safe, and sanitary needs and desires of both pet-owning independently and who require a
condition of the building for all tenants; and non-pet-owning tenants. To planned program of continual supportive
(3) allow for proper management and reinforce this point, the final rule revises service or supervision (other than
maintenance of the building; (4) preserve § § 243.20(c)(1) and 942.20(b)(2) to continual nursing, medical, or
the rights of tenants who do not own specify that house pet rules may take - psychiatric care).
 43282 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

Some commenters urged HUD to interpreted to permit project owners or In light of the express statutory
provide specific guidance on pet quotas. PHAs to limit pet ownership to one pet authority to impose these limits, HUD is
Consistent with the approach taken regardless of the circumstances, HUD unable to Conclude that pet size, weight,
elsewhere in the rule, the determination believes that the choice of the plural and type limitations are arbitrary under
of what is a reasonable limitation on the “pets” was merely intended to imply all circumstances. Like all house pet
number of pets permitted in each group that, under some circumstances, it rules, these limitations must be
home is left for the project owner or would not be unreasonable for a tenant reasonably related to the PHA’s or
PHA operating the group home. Given to keep more than one pet. project owner’s legitimate interest, must
the individual circumstances of each Other than dwelling unit limitations be narrowly drawn to protect that
group home, it would be impossible to on four-legged, warm-blooded pets, the interest, and may not impose
establish explicit national guidelines proposed rules did not provide specific unnecessary restrictions on pet owners.
that would not be unduly restrictive in guidance concerning permissible Based on these reasonableness
some cases and inappropriately lax in dwelling unit limitations. Several standards, HUD anticipates that size,
others. Consistent with the guidance commenters urged that the allowable weight, and type limitations will be
given project owners concerning number of pets be left to the PHA and
dwelling unit limitations, under permissible only under a limited number
project owners. Others urged HUD to set of circumstances.
§ 243.20(c)(1), the number of four-legged, specific pet limitations to avoid
warm-blooded pets may be limited to controversy during the development of Because the reasonableness of the
one pet in each group home. individual project rules. Where unit pet limitations on size, weight, and type will
b. Dw elling unit p et lim itations. As limitations were discussed, they were vary with the circumstances in each
noted above, both proposed generally aimed at four-legged, warm­ project, HUD will not establish national
§§ 243.20(c)(1) and 942.20(b)(2) allowed blooded pets, and ranged from limits of standards for projects for the elderly or
reasonable limitations on the number of one to four of these pets. Some handicapped. HUD will, however,
pets in each dwelling unit. In addition, commenters suggested that rodents, fish, provide guidance in administrative
proposed § 243.20(c)(1) provided that the or birds be exempted from unit instructions concerning the factual
number of “four-legged, warm-blooded” limitations. Others suggested that circumstances that might justify the
pets may be limited tQ one per dwelling aquaria be banned entirely. imposition of various size, weight, and
unit. Apart from the guidance given to type limitations,
Commenters opposed to the unit project owners concerning permissible Commenters to the proposed rule
limitation argued that it is contrary to limitations on the number of four-legged, suggested specific Size and weight
the statute, They asserted that while the warm-blooded pets per dwelling unit, : limitations, some stated in pounds and
keeping of pets may be regulated to the final rule leaves the allowable inches and others stated in more
assure the provision of decent, safe, and number of pets in the units to subjective measurements [i.e., “lap
sanitary housing for the elderly and management discretion. The project sized” or “small enough to be carried”);
handicapped, there is nothing in the law managers are most familiar with the Project owners and PHAs that attempt
allowing pets to be prohibited. environmental capabilities of their to issue size or weight limitations should
Furthermore, since the plural ("pets” ) is particular projects, and are in the best state the limits in quantifiable terms.
used throughout the statute, they argued position to determine what is allowable
that the intent of the law clearly is not to in a given instance. 7. Financial Obligations of Pet
limit pet ownership to one animal. Ownership
Instead of what they considered to be 6. Pet Size, Weight, and Type
Limitations Commenters argued that the presence
arbitrary limitations on the number of
of pets in covered projects would
animals, these commenters suggested Both §§ 243.20(c)(2) and 942.20(b)(3)
increase project costs and
that the criteria should be responsible permit reasonable limitations on pet
size, weight, and type. A number of administrative burdens on project
pet ownership and the ability of the
tenant to control the pet. commenters suggested that these management. Commenters predicted
As noted earlier, section 227 does not limitations are contrary to section 227. additional expenses as the result of (1)
generally permit project pet quotas While section 227(a) forbids owners damage to pet owners’ units; (2) damage
because they may unreasonably conflict from prohibiting or preventing tenants to and maintenance of common areas;
with tenants’ rights to have a pet. While from keeping common household pets, (3) increased fumigation and pest
dwelling unit limitations are like project section 227(b)(2) expressly permits control costs; (4) pet boarding costs
quotas in that they may restrict the project owners to establish reasonable under § 243.45; (5) increased
overall pet population of a project, unit rules that consider such factors as “ pet administrative costs of formulating pet
limitations do not deny any individual size” and “type of pet” . Based on these rules, registering pets, monitoring pets,
tenant his or her right to have a pet. provisions, HUD has concluded that responding to pet complaints, changing
Assuming that the unit limitations are reasonable limitations on pet size, leases and forms, complying with
reasonable under the circumstances, the weight, and type are acceptable under reporting requirements, and collecting
Department does not believe that they the statute. pet charges; (6) costs associated with
would violate the statute. Notwithstanding the statutory basis establishing pet and no-pet areas,
Moreover, HUD does not believe that for these limitations, some commenters maintaining pet and no-pet waiting lists,
the use of the term “pets” in the statute argued that these restrictions should be and moving tenants under proposed
was intended to preclude reasonable prohibited because they may eliminate § 243.26; and (7) costs associated with
unit limitations. Nothing in the pets that are temperamentally best establishing pet waste disposal
legislative history of section 227 suited for living with the elderly or facilities.
indicates that Congress intended to handicapped (e.g., large dogs); represent The proposed rules permitted project
grant elderly or handicapped tenants the an inappropriate approach to the real owners and PHAs to impose a pet
right to keep any number of every type issue [i.e., tenants’ ability to control deposit to compensate for costs
of pet in the dwelling unit. Since the use their pets); and may be administratively associated with the presence of pets in
of the singular “pet” could have been burdensome to enforce. the project (§§ 243.20(c)(3) and
 Federal Register / V o l. 51, N o. 230 / M on d ay, Decem ber 1, 1986 / Rules and Regulations 43283

942.20(b)(4)).5 Section 243.20(c)(3) also presence of pets in the project. In rules, the proposed guidelines placed no
permitted project owners to assess a addition, the expenses incurred would monetary limit on the amount of the pet
separate pet waste removal charge explicitly be required to be reasonable. deposit. (Deposits under Part 243,
against pet owners that fail to remove The Department believes that this however, were subject to HUD review of
pet wastes in accordance with the house approach strikes an appropriate balance the cost justification of the deposit.) In
pet rules. Commenters proposed between the interests of pet owners and the preamble to the proposed rule, HUD
additional forms of project owner and PHAs and project owners. The final indicated that it was considering such
P H A compensation. A discussion of rules also provide an illustrative listing limitations, and requested public
these issues, and HUD’s decisions with of the expenses that may be included comment on the issue. Commenters
respect to the final rules, follow. under this provision: the cost of repairs were invited to address whether
a. Pet deposits. One hundred seventy and replacements to, and fumigation of, monetary limitations were appropriate
commenters addressed pet deposits. O f the tenant’s dwelling unit, and the cost and how the limits should be set, how
these, 88% either supported a pet deposit of animal care facilities under § 243.45. the amount of the deposit should relate
or assumed in their comments that a pet Under Part 243, HUD will permit to other deposits currently permitted,
deposit would be imposed. The project owners to collect a pet deposit and what types of projects should or
remainder opposed pet deposits, on only from tenants owning or keeping should not be affected. (49 FR 50564-
grounds that (1) imposition of a deposit cats and dogs. HUD believes that the 50565).
may prohibit or prevent pet ownership other common household pets listed or Several PHAs and project owners
by lower income tenants; (2) there is no described under § 243.3(a) pose little urged HUD to leave the amount of the
evidence to suggest that pets will danger of causing significant damage to deposit to the discretion of local
increase the amount of damage done to the project premises. To the extent that management. They argued that a
an apartment; or (3) a pet deposit is damage occurs, the existing general national standard would be inadequate
redundant, and would accomplish no security deposit should be adequate to because it could not take into account
more than the general security deposit protect the project owner. Cats and the wide variety of physical structures
already required. dogs, on the other hand, are generally and management practices in rental
The Department has concluded that larger animals that present more housing.
there is adequate basis for determining significant waste disposal and Others argued that HUD should limit
that the presence of pets may cause sanitation problems. Since these the amount of the pet deposit. Without a
damage to the project premises, and animals are generally not restrained or limit, they feared that the deposit could
may increase other project expenses contained while in the dwelling unit, negate section 227 by making it too
that may not be adequately they also present a greater potential for difficult for tenants to own pets.
compensated for through general damage to the dwelling unit. Based on Commenters also noted that HUD-
security deposits. The final rules, these factors, HUD believes that pet imposed limits would prevent tenant
therefore, retain the provisions of the deposits are clearly appropriate for lawsuits over the amount of the deposit
proposed rules permitting the imposition these animals. and would prevent the project owner
of a pet deposit. At the same time, the Because PHAs are permitted to admit from setting a low deposit, merely to
Department recognizes that the amount a broader range of animals under the avoid a lawsuit.
and other features of deposits can Part 942 definition of common household Where specific national limitations
effectively deprive lower income tenants pet than the pets permitted under Part were suggested (or where project
of their right under section 227 to own or 243, it is possible that other pets capable owners and PHAs explained how they
keep pets in their units. Accordingly, the of causing significant damage to the would compute their deposits), the
final rules contain a number of units may be admitted. In light of this limitations generally fell within the
provisions designed to accomplish the possibility and the greater deference following categories:
objectives of minimizing the added accorded PHAs under the 1937 Act, Part —Project owners and PHAs argued
project costs resulting from the presence 942 does not specifically restrict PHAs’ that the pet deposit should be set at an
of pets without imposing unnecessary ability to impose a pet deposit to cats amount that will ensure compensation
burdens on lower income tenants who and dogs. It should be noted, however, for additional project expenses related
wish to own or keep pets. that any pet deposits assessed must be to the presence of pets. The proposed
The pet rules impose limitations on reasonable in all the circumstances. amounts for deposits varied widely,
the use of the pet deposit. Under the Both rules require that the unused “"based on the commenters’ method of
final rules, the pet deposit may only be portion of the pet deposit must be computation and whether the
used to pay “reasonable expenses refundable to the pet owner within a commenter advocated the recovery of
directly attributable to the presence of reasonable time after the tenant moves all or a portion of project costs through
the pet in the project.” The proposed from the project or no longer owns or deposits. Deposits proposed were as
rules would have permitted pet deposits keeps a pet in the dwelling unit. The high as $2,000, although deposits in the
that compensate PHAs and project Department has concluded that a $400 to $500 range were common.
owners “for costs associated with the nonrefundable or partially —Other commenters argued that a
presence of pets” in the project. The nonrefundable pet deposit may deposit based on the project owner’s
language used in the final rule makes it overcompensate the PHA or project potential exposure to harm would
clear that a pet deposit may be used owner for the costs attributable to the prohibit pet ownership by making it too
only if the tenant’s pet causes the presence of pets in the project. expensive to own a pet. These
expense, and may not be used for Additionally, a nonrefundable pet commenters urged that a national limit
expenses generally caused by the deposit may constitute impermissible be based on the tenant’s ability to pay.
additional rent under certain HUD Generally, such deposits reflected the
8 While the proposed rules referred to “ pet programs. (See section 3(a) of the 1937 tenant’s share of monthly rent or a
security deposits", this final rule and preamble will Act).
refer to “pet deposits", to eliminate any confusion
percentage of the tenant’s monthly
between the general security deposit required under Other than the general provisions income, and were commonly subject to
all leases and the pet deposit required here. governing the reasonableness of house set dollar minimums or maxi mums of
 43284 Federal Register / V o l. 51, N o. 230 / M on d ay, Decem ber 1, 1986 / Rules and Regulations

$50 to $100. Several commenters argued amendment procedures. Elsewhere in thereafter until the entire deposit is
that a deposit based upon a tenant’s today’s edition of the Federal Register, accumulated.
ability to pay would not adequately the Department is publishing a Notice of
compensate the project owner, In light of the limitations on the
Pet Deposit Limitation, setting the amounts of the deposit, provisions in
discriminate against lower income maximum pet deposit at $300. As
tenants since they would be required to proposed § 243.20(c)(4), stating that fees
explained in greater detail in this and deposits are subject to prior HUD
pay more than very low income tenants Notice, this amount should compensate
and encourage pet ownership by those approval, have been eliminated. The
project owners for potential pet-related Department believes that the pet deposit
tenants who could not afford pets.
damages to their projects without being limitations imposed in the final rules
—Other suggested limitations were
so high as to prevent tenants from should be sufficient to protect the
based on amounts equal to (1) one
owning or keeping pets. To ensure that interest and concerns of both project
month’s contract rent; (2) the general
security deposit [or a percentage of the the permissible deposit will continue to and pet owners.
general security deposit); or (3) be adequate, the final rule permits A number of commenters proposed
comparable pet deposits imposed in owners of these projects to require that the final rules explicitly address a
other projects. tenants to pay additional sums to reflect number of features dealing with the
Based on the greater deference periodic HUD increases to the pet administration of the pet deposits such
accorded PHAs under the 1937 Act, the deposit limitations. as interest on deposits, replenishment of
final Part 942 prescribes no fixed For tenants of other projects under deposits, etc. Except as provided above,
limitation on the amount of the pet Part 243 (generally tenants of projects the final rule leaves the administration
deposit that may be charged. The rule receiving assistance only in the form of of the pet deposit to the discretion of the
provides that ‘The maximum amount of HUD mortgage insurance, tenants of PHA or project owner, subject to the
the pet deposit that may be charged by projects assisted under 24 CFR Part 511 provisions of State and local law.
the PHA on a per unit basis shall not (Rental Rehabilitation Grant program) Additionally, to the extent that house
exceed the higher of the Total Tenant and tenants who do not occupy lower pet rules prescribed under HUD’s final
Payment (as defined in 24 CFR 913.102) income units in projects under the rules governing pet deposits conflict
or such reasonable fixed amount as may Housing Development Grant program), with any State or local law or
be required by the PH A.” 6 the final rule permits project owners to regulation, the final rule provides that
The Part 243 final rule takes a more collect up to one month’s rent at the time the State or local law or regulation shall
prescriptive approach. Under the final the pet is brought to reside on the apply.
rule, the maximum amount of the pet premises. Since the monthly rent will b. Noncom pliance charges. In
deposit that may be charged by the vary with the amenities available in the addition to a pet deposit, proposed
project owner, on a per unit basis, is unit, it is believed that this limitation § 243.20(c)(3) permitted project owners
dependent on several circumstances. adequately reflects the pet’s ability to to impose a pet waste removal charge
For tenants (1) who are receiving a cause damage to the unit, as well as on pet owners that fail properly to
rental subsidy under the Rent market rate tenants’ abilities to pay a remove pet waste. This charge would be
Supplement, section 236 Rental full month’s rent. Any pet deposit that is subject to HUD approval, and would be
Assistance Payments, Part 885 (Loans within the amount set by HUD for approved only if the owner provided a
for the Elderly or Handicapped), or tenants of the subsidy programs and sufficient cost justification.
Section 8 programs, (2) who are living in within the one month’s rent limitation The final rule retains this provision
lower income units developed under the for all other tenants will be deemed to with one modification. Since the
Housing Development Grant program, or be a reasonable amount for purposes of collection of funds frohi the pet removal
(3) who are living in projects subsidized Part 243. charge should be minimal, we do not
under the section 236 Interest Reduction believe that it is necessary for project
In recognition of the fact that a pet owners to prepare separate cost
Payments, section 202 Elderly or deposit may be difficult for many
Handicapped, or section 221(d)(3) justifications for each project.
tenants of projects for the elderly or Accordingly, instead of the cost
(BMIR) programs, the pet deposit cannot handicapped to pay in a lump sum, the
exceed an amount that HUD will justification approach, the final rule
final rules contain provisions for the permits project owners to establish a pet
establish from time to time in a Federal gradual accumulation of the deposit. For
Register Notice. In fixing the amount of waste removal charge of up to five
most projects, this provision is left to the dollars ($5) per occurrence. Any pet
the pet deposit, HUD will consider discretion of the project owner or PHA.
factors such as the projected expenses waste removal charge that is within this
However, because tenants whose rents limitation will be deemed to be a
directly attributable to the presence of are subsidized under the Rent
pets in the project, the ability of the reasonable amount for the purposes of
Supplement, section 236 Rental Part 243. This should be sufficient to
project owners to offset such expenses Assistance Payments, Part 885 (Loans
by the use of other security deposits or cover project owner expenses in
for the Elderly or Handicapped) or removing the waste and to encourage
HUD reimbursements, and the lower section 8 programs or who are
income status of tenants of projects for compliance with house pet waste
occupying lower income units under the removal rules,
the elderly or handicapped.
Housing Development Grant Program, Commenters suggested that the
The use of the Federal Register
are more likely to be lower income regulations permit the imposition of
publication will permit the expeditious
revision of pet deposit limitations tenants who may find it difficult to pay other charges based on other violations
without resorting to lengthy rule the entire deposit in a lump sum, the of the house pet rules (e.g., charges for
final rule requires project owners to leaving pets unattended). Given the
permit these tenants to pay the pet lower income nature of H UD’s elderly
6 “Total Tenant Payment“ d a the monthly amount
calculated under the formula for determining tenant
deposit incrementally. Under the final and handicapped population and the
rent under section 3(a) of the 1937 Act: i.e„ the rule, a tenant may be charged up to $50 potential for abuse, Part 243 prohibits
higher of 30 percent of adjusted income, 10 percent when the pet is brought onto the project project owners from imposing additional
of gross income, or welfare rent. premises, and up to $10 per month charges for noncompliance with pet
 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations 43285

rules. As some commenters pointed out, commenters expressing an opinion, 95 model lease provisions which prohibit
tenants will be well aware of the fact percent would permit project owners confessions of judgment, exculpatory
that more severe penalties, such as and PHAs to require the pet owner to clauses, waivers of legal proceedings,
removal of the pet or eviction, will be obtain a liability insurance policy in an etc.). Both Parts 243 and 942 contain
available to ensure compliance with the amount sufficient to cover potential specific provisions protecting tenants by
house rules. damages or injuries caused by the pet. prohibiting pet rules that would transfer
Part 942 does not address the PHA’s Commenters claimed that the potential legal liability or require indemnification
ability to impose charges foriiouse pet for serious injury will subject projects for the costs of litigation.
rule violations. Based on the broader and sponsors to suit, and will cause
8. Standards of Pet Care
discretion accorded PHAs, charges for dramatic increases in project liability
violation of PHA pet rules may be insurance rates. They argued that most Proposed § § 243.20(c)(4) and
treated like charges for violation of elderly and handicapped housing is 942.20(b)(5)(ii) permitted project owners
other PHA tenancy rules or the PHA nonprofit, and could not absorb the to prescribe standards of pet care.
lease. (See 24 GFR 966.4(b)). additional costs. One commenter feared Commenters addressed the following
c. Other sources o f PH A and project that project insurance will be impossible subjects.
owner compensation. The preamble to to obtain if pets are allowed. a. Spaying and neutering. Proposed
the proposed rule invited commenters to It is the Department’s understanding § 243.20(c)(4) would permit house rules
address whether the pet rule guidelines that pet-related liability is commonly that require the spaying and neutering of
should permit the imposition of a included under project policies, and that dogs and cats. Part 942 does not address
monthly pet fee. Fifty eight commenters the admission of pets will not have a this subject. O f 37 comments on the
supported the imposition [Link] monthly significant impact on the rates charged. issue, all supported the spaying and
pet fee as an equitable allocation of Moreover, the Department understands neutering of pets. Some, however, would
financial responsibility. Twenty two that specific pet liability coverage is not support spaying and neutering
other commenters opposed the pet fee. generally not available apart from more where the age or,condition of the pet
In addition to pet deposits, monthly comprehensive personal injury and would make the operation an
fees, and noncompliance charges, property damage insurance. In some unacceptable health risk. Commenters
commenters also suggested instances, this coverage can be would: (1) Have HUD’s final rule require
miscellaneous fees and charges expensive (e.g., one commenter stated the operation; (2) permit project owners
including: (1) The direct payment for that a $100,000 liability insurance policy to require the operation; or (3)
damages based on a monthly unit is available in Houston for an annual encourage pet owners voluntarily to
inspection; (2) the purchase of a bond to premium of $145). Under such have their pets neutered by offering a
ensure damage payments; (3) a circumstances, the liability insurance financial incentive for the procedure.
structured entrance fee; (4) set cleaning requirement may be so costly that it The final rules leave the decision to
charges; and (5) pet registration fees. could make it impossible for many require the spaying and neutering of cats
Some commenters suggested that HUD tenants to keep pets and, if required by and dogs with the project owner or
provide additional compensation the project rules, may constitute PHA. Like all house rules, however,
through subsidy and other payments to prohibited discrimination on the basis of spaying and neutering requirements will
PHAs and project owners. pet ownership. be permitted only where the project
The Department believes that the pet Both Parts 243 and 942 of the final owner or PHA can demonstrate that the
deposit provisions are adequate to rule, therefore, specifically prohibit rule is reasonably related to the
protect project owner and PHA financial project owners and PHAs from requiring legitimate interest of the project owner
interests and that imposition of liability insurance. The Department, or PHA and where the imposition of the
additional financial obligations on pet however, encourages pet owners to restriction will not impose unnecessary
owners would unduly burden their right consider obtaining such insurance if burdens or restrictions on pet owners or
to own and keep pets. Moreover, the they feel it is necessary for their own prospective pet owners.
final rules reflect the Department’s protection. Some commenters suggested that if
efforts to give project owners and PHAs In addition to liability insurance, 13
spaying is required, pet owners should
as much flexibility as possible in commenters discussed other liability
provisions. These included requirements be required to provide proof of the pet
administering their pet rules and to operation. Such a requirement is
reduce projeqt owner and PHA that pet owners agree to be strictly
liable for all damages caused by the pet, permitted under § 243.20(b)(4), and is
administrative costs. Examples include
and agree to indemnify the project not prohibited under Part 942^
the deletion of onerous tenant move
owner for, all costs of pet-related b. Exclusion o f pets from common
provisions required to establish pet and
no-pet areas under Part 243 and litigation, including attorneys’ fees. areas. Both proposed parts would permit
streamlining of the service of notice Commenters also suggested that HUD project owners and PHAs to exclude
requirements under that part. The reimburse project owners and PHAs for pets from specified common areas.
Department believes that management’s costs of litigation and legal claims Fifteen commenters addressed this
remaining administrative and arising from pet presence in the project, provision. Most supported this
maintenance duties are not significant _ and urged that HUD provide that project provision, provided the exclusion does
and often (like the registration process owners may not be named as parties in - not create undue hardships for the pet
in Part 243) can be merged with existing any legal action. - owner. In response to this comment,
management responsibilities that are The project owner and PHA should §§ 243.20(c)(4) and 942.20(b)(5)(ii) have
performed on a routine basis. not be able to avoid liability imposed by been amended to prohibit rules that
Accordingly, the final rules do not State or local law or transfer the cost of deny reasonable ingress and egress to
permit imposition of any additional defensive litigation to other parties. This the project or building.
HUD subsidy. policy against transferring the cost of One commenter suggested that the
d. Legal liability. In addition to litigation to tenants is recognized language of these sections should be
deposits and fees, 76 commenters throughout the regulations (e.g., §§ 966.6, amended to parallel proposed
addressed pet liability insurance. O f the 883.707, 886.122, and 886.322, and the § 243.26(a)(2). Since proposed
 Feder^JR egister^/^VoI. 51, N o. 230 / M onday, Decem ber 1, 1986 / R ules and Regulations

§ 243.26(a)(2) addressed the exclusion of provision. These commenters asserted pet can be their only source of
pets from units in buildings rather than that this provision conflicts with section companionship—their only protection
exclusion from common areas, the 227, since section 227 protects the against criminals—their only link to the
adoption of this language in ownership and the presence of pets. outside world” and their “only
§§ 243.20(c)(4) or 942.20(b)(5)(ii) is Three commenters supported the connection to people of their family who
clearly inappropriate. (The deletion of exclusion.
proposed § 243.20 is discussed later.) have predeceased them”. (129 Cong.
Section 227(a)(1) protects tenants R ea H5020-21 (Daily ed. July 12,1983)
Other commenters suggested that the “owning common household pets or
final rules permit project owners and (statement of Rep. Biaggi)),
having common household pets living in
PHAs to prohibit the excessive use of (their) dwelling accommodations.” Based on a reading of the statute and
common areas by pets. (For example, Section 227(a)(2) prohibits this legislative history, the Department
where a pet owner uses common discrimination “try reason of the has concluded that section 227 was not
hallways to exercise the pet or loiters ownership of such pets by, or the designed to protect all pet contact with
with the pet during normal ingress or presence of such pets in the dwelling residents of elderly or handicapped
egress to the building). Such prohibitions accommodations of, such person.” It is projects, no matter how brief or casual,
are within the discretion of the PHA or clear that pet ownership is to be but rather to safeguard the physical and
project owner under the guidelines for protected under both provisions. The emotional benefits of the buman/animal
exclusion of pets from common areas. disjunctive use of the “living in dwelling relationship that can only be realized
c. Unattended pets. Under proposed accommodations” and “presence” through interaction of a more permanent
§ 243.20(c)(4), project owners would be language also makes clear that section nature. Thus, the final rule has been
able to limit the amount of time a pet 227’s protection is not limited to pet modified to permit project owners and
may be left unattended. Part 942 does ownership situations, as the proposed PHAs to exclude from the project all
not address this subject. Commenters rule had provided. It is not clear, pets not owned by a tenant that are to
generally supported this proposed however, how far section 227’s coverage be kept temporarily on the project
provision, provided the limitations are was intended to reach. “Living in premises. The rule defines pets kept
reasonable. One commenter suggested dwelling accommodations” connotes a “temporarily” as pets that are to be kept
that house rules should be flexible strong measure of permanence; in the tenant’s unit for a period less than
enough to permit pets to be cared for in "presence,” taken literally and by itself, 14 consecutive days and nights.
the unit by others while the tenant is on could extend even to brief and casual Although the 14-day minimum has not
vacation. pet visits. It is unclear, however, been scientifically developed, the
HUD’s final rule adopts proposed whether when taken in context, Department believes that it is
§ 243.20(c)(4) without change. The length “presence” was intended to have such a appropriately responsive to section 227’s
of time that a pet may be left unattended long reach, or should be construed pari intent of protecting human/pet
(or under the temporary care of another materia with the “living in dwelling relationships that are more than
individual) is within the discretion of the accommodations” language. transitory in nature. The Department
project owner. Whether this house rule A review of the legislative history wishes to emphasize that even though
would be reasonable would depend on indicates that section 227 was primarily brief pet visits are not covered by
the facts and circumstances in each intended to protect pet ownership and to section 227*s protections, project owners
project See §§ 243.20(a) and 942.20(b). foster the beneficial relationship and PHAs are free to establish
d. N oise and odor abatement Both between pet owners and their pets. appropriate rules sanctioning them.
proposed parts would permit house rules Thus, the Senate report focused on pet
that require the pet owner to control the Several commenters assertdd that a
ownership and the substantial physical visiting pet program is an excellent
noise and odor caused by a pet. Twenty and mental benefits to be derived from
two commenters addressed this alternative for tenants who are
pets. (S. Rep. No. 9&-142, 98th Cong. 1st financially or physically unable to care
provision. One project owner would Sess. 40—41 (1983)). Similarly, the floor
require the muzzling of pets during for a resident pet. While not covered by
debates focus on pet ownership and section 227 or required in the
sleeping hours. Seventeen commenters tenants’ relationships with their pets
objected strenuously to the suggestion regulations, the final rules encourage the
(129 Cong. Rec. H5020-21 (Daily ed. July use of visiting pet programs sponsored
(in the summary of public comment on 12,1983) (statement of Rep. Biaggi)), and
the February 28,1984 Notice that was by a humane society or other non-profit
129 Cong. Rec. H10526 (Daily ed. organization.
published at the end of the proposed
November 18,1983) (statement of Rep.
rule) that project owners may require Some commenters suggested that they
Biaggi)). Indeed, the author of the
dogs to be debarked, be permitted to initiate a visiting pet
legislation stated,
HUD’s guidelines are not designed to program in lieu of full compliance with
be overly prescriptive and, accordingly, My amendent seeks to prohibit by statute section 227. Despite the good intentions
they do not dictate the rules that a discrimination against millions of elderly and of such project owners and PHAs, this
project owner or PHA may impose to disabled persons living in federally funded
housing who own pets. Put another way,"my compromise is not sanctioned by the
control noise and odor. However, we amendment seeks to establish by statute that provisions of section 227. It should be
can discern no instance in which basic human right of pet ownership for pointed out, however, that the presence
requiring the surgical removal of an elderly and disabled persons living in of a visiting pet program may meet
animal’s vocal cords would be federally funded housing. (129 Cong. Rec. tenants’ needs and desires for pet
reasonable, and have amended both H5020 (Daily ed. July 12,1983) (statement of companionship, thereby obviating the
final rules to so provide. Rep. Biaggi], need for pet ownership.
e. Pets tem porarily on the prem ises. Rep. Biaggi went on to adddress “the f. Flea and p est control. Neither part
Proposed § 243.20(c)(4) permitted the essential relationship which exists contains provisions specifically
project owner to exclude pets that are between an elderly or disabled person addressing flea and pest control. Several
not owned by a tenant Proposed Part and their respective pet” and the fact commenters argued that the pet rules
942 contained no equivalent provision. that “for many elderly or disabled should require periodic proof that the
Thirteen commenters opposed this people in this Nation, a dog or whatever pet owner has taken effective flea and
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43287

pest control measures with respect to which the pet owner is unable to care The nondiscrimination provisions of
the pet and its surroundings. for his or her pet. Some tenant section 227 do not permit the exclusion
Because the need for such measures commenters objected to the referral of of all pets, even if the ban were
will vary from project to project and pet complaints to such councils. consistent with the wishes of the owners
because of HUD’s deference to project The establishment of pet tenant and the majority of tenants.
owners and PHAs on such matters, the councils or pet owners’ associations, Consequently, a provision for a majority
regulations do not specifically require and the functions to be delegated such vote or project owner discretion for
flea and pest control. However, such councils and associations, are exclusion has not been included in the
house rules, if reasonable, may be discretionary with the project owner or final rules. While some commenters
imposed as a discretionary rule under PHA. HUD has concluded that these suggested that the regulations should
§ 243.20(c)(4) or § 942.20(b)(5)(ii). associations and councils do not need to specifically prohibit such majority votes,
Requirements for periodic proof of flea be treated specifically in the regulations. this prohibition is adequately expressed
and pest control compliance may be Accordingly, § 942.20(b)(6)(iii) has been in the nondiscrimination provisions of
required under § 243.20(b)(4) and are not deleted from the final rule.
prohibited under Part 942. §§ 243.10 and 942.10.
g. Declawing. Commenters suggested G . Procedures for Developm ent o f 1. Part 243 Procedures
that cats be declawed to prevent House Pet Rules
damage to carpets, drapes, wooden As noted above, proposed § 243.22
HUD proposed detailed notice and contained detailed notice and comment
doors, etc. This suggestion was comment procedures to govern the
vigorously opposed by numerous procedures consisting of a notice of
promulgation of house pet rules under
commenters who argued that declawing proposed house rules, a thirty-day
Part 243, but permitted PHAs under Part
is inhumane and an unreasonable tenant comment period (including
942 to develop their own procedures.
expense to the pet owner. Notwithstanding this difference in provisions for owner/tenant meetings),
The final rules leave the decision to procedural specificity, both proposed and a notice of final house rules. Forty
require cat declawing to the discretion parts contained common requirements commenters objected to the specificity
of the project owner or PHA. A s with all for tenant consultation, during the of this section, and argued that the rule
other house pet rules, project owners development of rules, and gave the PHA is administratively burdensome, time
and PHAs must be able to demonstrate or project owner sole discretion consuming, and expensive to implement
that the requirement is reasonably concerning the content of the rules. As an alternative to the rule, several
related to their legitimate interest in the commenters supported a final rule that
Several commenters opposed any
project and that the imposition of the would allow private owners and
requirement for tenant consultation, on
requirement will not impose managers the same flexibility in house
grounds of cost, administrative burden,
unreasonable burdens or restrictions on rule development as PHAs under
the pet owner. and lack of tenant interest. Section
227(b)(2) specifically provides that § 942.25. Other commenters suggested
h. Other. Several commenters modification to the procedures,
suggested that HUD require, or HUD’s regulations 4‘establish guidelines
under which the owner or manager of including: (1) The application of
specifically permit, project owners or procedures similar to lease amendment
PHAs to establish rules that ensure the any federally assisted rental housing for
the elderly or handicapped . . . shall procedures, (2) the addition of more
health and safety of pets (e.g., rules stringent tenant consultation
governing feeding, punishment, or consult with tenants of such housing in
prescribing [reasonable house rules].” In requirements (e.g., required tenant
proper pet care). meetings, tenant input before
It is neither necessary nor desirable light of this statutory requirement, the
final rules retain the requirement for notification of proposed house rules, and
for HUD, project owners, or PHAs to
tenant consultation. consultation with established tenant
impose house rules governing the
Some commenters would strengthen organizations or pet committees), and (3)
humane treatment of pets. HUD’s
the tenant consultation provisions by other procedural changes (e.g. shortened
purpose in issuing the pet regulations,
requiring project owners and PHAs to time periods for tenant consultation,
and project owners’ and PHAs’ goals in
promulgating reasonable house rules, incorporate the tenants’ preferences in etc.).
are the protection of the project owner the house pet rules. Generally, these With one modification, HUD’s final
or PHA interest in the project and the commenters would permit the exclusion rule incorporates the house pet rule
health and safety of tenants and of all pets based on the vote of the development procedures contained in
individuals associated with the project. majority of tenants. Others objected to the proposed rules. As discussed above,
Language to this effect is retained in any erosion of the project owner’s or HUD has concluded that owners of
§ 942.20(b)(5)(ii) and, for purposes of PHA’s discretion over the content of the projects under Part 243 must be
clarity, is extended to § 243.20(c)(4). rules. Several commenters would provided with more explicit guidance
expand PHA and project owner than PHAs subject to Part 942.
9- Pet Owners’ Associations discretion to permit house rules that Accordingly, § 243.22 provides specific
Under proposed § 942.20(b)(6j(iii), the exclude all pets. procedures for house rule development
house rules could permit tenants to The responsibility for management of and tenant consultation, and does not
establish a voluntary pet owners* projects in conformity with Federal allow the procedural flexibility
association. Part 243 has no similar requirements is vested in the project permitted under Part 942. Further, the
provision. Five commenters suggested owner or PHA. To ensure that these Department does not believe that the
that all projects should be required for responsibilities are properly discharged, tenant consultation requirements are
permitted) to have animal care boards, the final decision on the content of the overly burdensome, time consuming, or
and would expand the boards* functions house rules must remain with the project expensive to implement. In our view,
to include the screening of pets, the owner and PHA. The final rules retain they are necessary to give meaningful
management of pet deposits and pet the provisions granting project owners content to the statute’s mandate for
fees, and assisting the project owner in and PHAs control over the content of tenant consultation in the development
situations under proposed § 243.45(b), in the house rules. of house pet rules.
43288 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations

Some of the proposed modifications to this section would permit the PH A to clean and in a safe condition; (2) to
the Part 243 house rule development develop its own procedures governing dispose of all waste in a sanitary and
procedures have not been adopted tenant consultation, provided that these safe manner; (3) to use all facilities in a
because they would not ensure adequate procedures were designed to give reasonable manner; (4) to refrain from
tenant participation. For example, the tenants (or, if appropriate, tenant damaging the premises; (5) to refrain
suggestion that project owners use councils) adequate opportunity for from disturbing the neighbors’ peaceful
existing lease amendment procedures review and comment before the rules enjoyment of their accommodations; (6)
would provide no opportunity for tenant are issued for effect. to conduct themselves in a manner
consultation. (See 24 CFR 247.4(d)). One commenter saw no need for any conducive to maintaining the project in
Other modifications, while providing rules governing the promulgation of a decent, safe, and sanitary manner; and
greater tenant participation in the house house pet rules, since the lease and (7) to refrain from activity that impairs
rule development process, have not been grievance procedures for public housing the physical or social environment o f the
incorporated because the Department already contain a very thorough process project (24 CFR 966.4(f)). PHAs are
believes that the procedures for written for tenant notification and comment. required, among other things: (1) To
comments under § 243.22 are adequate Section 966.5 contains specific maintain the premises and the projects
to fulfill the statutory tenant procedures for the development of house in a decent, safe, and sanitary manner;
consultation requirements, and the rules. These procedures meet the (2) to make necessary repairs; and (3) to
additional procedures may be too requirements of § 942.25, and PHAs may provide waste receptacles (24 CFR
administratively burdensome, time follow these requirements if they so 966.4(e)). These general obligations
consuming, and expensive to implement desire. Section 942.25, however, permits have, in the past, been adequate for
in many projects. We note, however, PHAs to craft alternate procedures dealing with a broad spectrum of
that project owners may elect to provide specifically designed to address the landlord/tenant issues. The Department
these additional procedures in their subject of pets. In addition to written anticipates that they will be sufficient to
projects. tenant comments, such procedures may aid judges and juries in adjudicating pet-
In response to comments, proposed call for tenant meetings or advisory
§ 243.22(f) has been revised in one related lease violations as well.
consultations with veterinarians, State
significant respect. This section or local authorities, pet owners’ 3. Review of House Rules
provided for the service of the proposed
associations, or humane societies. This Neither proposed Part 243 nor 942
house pet rules (including the notice to
provision has been retained in the final provided for HUD review of the house
tenants under § 243.15) and the final rule.
house pet rules, by both personal service pet rules. Seven commenters supported
one/mail delivery. As noted by Several commenters objected to the a revision for such purpose. Tenant
commenters, these service requirements feature of the proposed rule that would representatives predicted that certain
would: (1) Exceed or equal notification permit a PHA to refrain from publishing rules may intimidate elderly residents,
requirements for more significant any house pet rules. They argued that and discourage them from owning or
notices (e.g., eviction and rent the proposal invites PHAs to put pet keeping a pet. Owner representatives
increases): (2) result in the delivery of provisions directly into the lease, stated, “ violation of the rules could
unnecessary multiple copies of the thereby circumventing the content result in eviction, and we wish to know
proposed and final house rules; and (3) requirements under § 942.20 and the in advance if our rules are acceptable to
greatly increase house rule development tenant consultation requirements under prevent the possibility of a lawsuit.” As
costs [e.g., one commenter estimated § 942.25. While it is impermissible to an alternative to HUD review of all
that the cost of mailing and serving the avoid tenant consultation procedures by house rules, some commenters
proposed and final rules would be modifying the lease to include pet- suggested that the project owner or PHA
$10,000 for 3,500 units]. Commenters specific provisions (24 CFR 966.3), to be required to inform tenants that they
suggested that HUD permit the project decrease the possibility that PHAs will may request a HUD review of any pet
owner to elect to serve tenants by attempt to circumvent the pet content rule that they feel is unreasonable or not
personal service, mail delivery, or requirements with pet-specific in keeping with HUD regulations.
posting. provisions, § 942.20(a)(1) has been Another commenter suggested that HUD
Under the final rules, project owners revised to prohibit PHAs from imposing, should have no review responsibilities
may serve notice on tenants of high-rise by lease modification or otherwise, any and that project owners should be
buildings by mail delivery, personal provision that is inconsistent with permitted to proclaim compliance.
service, or posting. (A high-rise building § 942.20. The responsibility for compliance with
is a structure that is equipped with an Commenters also argued that the regulatory requirements governing the
elevator and has a common lobby.) general obligations under the lease are day-to-day operations of housing
Project owners may serve notice on not specific to pet-related problems, projects lies primarily with the project
tenants of non-high-rise buildings by may be used to discriminate against pet owner or PHA, not with HUD. In
mail delivery or personal service. The owners, and are inadequate to assist a recognition of this fact, HUD does not
Department has concluded that posting judge or jury in determining culpability conduct “front-end” review of house
in non-high-rise buildings may not in matters regarding pets. The general rules promulgated by PHAs and project
ensure adequate notice to tenants, since obligations under the lease may not be owners in many significant areas, such
these structures generally have few, if used to discriminate against pet as house rules governing a myriad of
any, common entrances or other similar ownership, because all PHAs are landlord-tenant issues. The Department
areas through which all tenants must subject to the nondiscrimination does not see the need to deviate from
pass to reach their individual units. provisions of § 942.10, without regard to this policy with respect to pet rules.
whether they choose to promulgate HUD, of course, is aware of its duty to
2. Part 942 Procedures house pet rules. While these general ensure compliance with the
Under proposed § 942.25, PHAs could obligations do not specifically address nondiscrimination provisions of the
choose not to promulgate any pet rules. pet-related matters, the leases require statute under section 227(b)(1). Rather
If the PHA chooses to promulgate rules, tenants: (1) To keep their dwelling units than automatic review, however, HUD
i
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43289

believes that its role under the statute personal service. Since posting of commenters argued that this 10-day
should be one of monitoring project notices is inappropriate for procedures period may permit a potentially
owner and PHA compliance. To fulfill that involve an individual tenant, dangerous health or safety hazard to
this responsibility, HUD will scrutinize however, this method of service is not exist for an extended period, we note
the house pet rules during the course of permitted under the pet rule violation that pets may be removed under
the occupancy audit for projects under procedures. emergency situations in accordance
the United States Housing Act of 1937 a. Pet violation notice. Proposed with State or local law and regulations,
(except sections 8 and 17) and the § 243.24(a) required the owner to serve a as provided in § 243.40.
management review of other projects. notice of pet rule violation including: (1) b. Pet rule violation meeting.
As a part of this review, HUD intends to A summary of facts, (2) a statement Proposed § 243.24(b)(1) described the
consider such matters as: (1) Whether requiring the pet owner to correct the procedures for scheduling and
PHAs and project owners have violation (including removal of the pet, if conducting the pet rule violation
complied with applicable regulations appropriate) or to request a meeting meeting. At the pet owner’s request, the
governing tenant consultation and within 10 days, and (3) a statement project owner would be required to
promulgation of house rules; (2) whether indicating that failure to act within the schedule the pet rule violation meeting
the house rules are reasonable and 10 days or to appear at a scheduled at a mutually agreeable time within 15
consistent with the regulations; and (3) meeting may result in pet removal or days of the service of the notice of the
whether PHAs and project owners are, termination of tenancy procedures. pet rule violation. To permit the
in fact, complying with their own pet Commenters urged that the pet imposition of the most effective time
rules and the regulations. violation procedures be revised to period for working out pet complaints,
H. Pet Rule Violation Procedures prevent unfair complaints and tenant commenters suggested the elimination of
intimidation. These commenters urged the set 15-day period. The final rule
I. Part 243 Procedures that the notice provisions be amended: provides that the meeting is to be held
Proposed § 243.24 established (1) To require project owners to inform within 15 days of the effective date of
procedures to govern the project owner’s pet owners of their right to have a third the service of notice, unless the project
investigation and disposition of pet rule person of their choice present at the owner agrees to a later date.
violations, including notice of a pet rule meeting and (2) to provide the right to a Commenters also urged the revision of
violation, a pet rule violation meeting, hearing on complaints without first § 243.24 to provide an appeal from the
and notice for pet removal. While four suggesting the removal of the pet. owner’s decision at the pet meeting to a
commenters supported the proposed Because the face-to-face meeting with local community board or consultant
procedures, 23 opposed or supported project management is a potentially group. Some would require the project
revision of this provision. These intimidating confrontation, the final rule owner to advise tenants of this right.
commenters complained that: (1) This requires the pet violation notice to state While it is always within the discretion
section is excessive, onerous, and time- that the tenant has the right to have a of project owners to permit their
consuming; (2) there is no reason to treat third party of his or her choice at the pet decisions to be reviewed by another
a violation of pet rules differently from rule violation meeting. We have not, individual or group, the final pet rule
any other violation of the lease; and (3) however, amended the final rule to does not impose this requirement.
such regulations are contrary to HUD’s prevent owners from suggesting in the Review of a project owner’s actions will
ongoing efforts to streamline notice that the tenant remove the pet. be adequately provided in the local
administrative procedures. The Under the proposed rule, the notice of courts, if the owner decides to enforce
commenters proposed that violation pet violation must clearly state that pet the decision by an eviction proceeding,
procedures be deleted entirely, or owners may pursue two courses: i.e ., and in HUD’s management review.
proposed that alternate procedures be take steps to correct the pet violation or c. N otice for pet removal. Under
imposed in the final rule. discuss an alleged violation with the proposed § 243:24(b)(l), the project
The purposes of the pet rule violation project owner. It is important that the owner and pet owner may discuss the
procedures are: (1) To encourage project notice of pet rule violation contain each alleged pet rule violation, and attempt to
owners and pet owners to resolve of these elements to ensure that the pet correct any problem at the pet rule
allegations of pet rule violations without owner is aware of all of his or her violation meeting. As a result of the
excessive delay and without resorting to options from the outset and that the meeting, the project owner may give the
judicial proceedings and (2) where disposition of the alleged violation can pet owner additional time to correct the
resolution is impossible and the pet proceed on a reasonably expeditious violation. Proposed § 243.24(b)(1) also
violation is a sufficient basis for basis. The Department does not find this permitted the project owner to notify the
eviction, to ensure that the project aspect of the notice to be intimidating, pet owner to remove the pet within 10
owner has developed a complete particularly in light of its reference to a days of the meeting, if the parties were
administrative record demonstrating meeting with the project owner unable to resolve the problem at the
that a sufficient basis for eviction exists. (accompanied by a third party of the meeting. Proposed § 243.24(b)(2)
While other procedures have been tenant’s choice) before formal provided that the project owner could
suggested, HUD believes that the procedures can begin. serve a notice requiring removal of the
proposed violation procedures, as One commenter suggested that the pet within 10 days of the effective date
modified below, adequately serve these time period to request a meeting or of service, if the pet owner failed to
two goals, and their substance has been correct a violation be shortened to 24 or correct a pet rule violation within “ the
retained in the final rule. 48 hours. The pet owner must be given time provided under paragraph
As noted earlier, HUD has concluded an adequate opportunity to correct an (b)(1) . . . including any additional time
that the service of notice requirements alleged pet rule violation or to prepare permitted by the owner” at the pet
set forth in the proposed rule are for the pet meeting. HUD does not meeting.
excessive. The service requirements for believe that one or two days will The final rule revises proposed
§ 243.24 notices have been revised to provide a sufficient opportunity to do so §§ 243.24(b) (1) and (2) to clarify their
permit service by mail delivery or under most circumstances. While operation. Under the final rule,
43290 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 } Rules and Regulations

provisions of proposed § 243.24(b)(1) governed the initiation of procedures for This proposal has not been included in
that permitted the project owner to removal of the pet or termination of the the final rules.
inform the pet owner that the pet must pet owner’s tenancy. Finally, one commenter suggests that
be removed within 10 days of the pet One commenter proposed that this § 243.24(c) should provide that no tenant
rule violation meeting have been section be clarified to state that project may be evicted because of violations
consolidated with § 243.24(b)(2). Thus, owners must follow the procedures of before referral (by consent) to an
§ 243.24(b)(1) now deals only with the § 243.24 before instituting eviction appropriate social agency in order to
pet rule violation meeting and procedures. This commenter also noted assure adequate subsequent housing.
§ 243.24(b)(2) contains all the provisions that there is no need to require § 243.24 The ability to proceed with the eviction
dealing with the notice for pet removal. procedures for animals that present a remedy is dependent upon applicable
Specifically, final § 243.24(b)(2) now health or safety hazard, since State and regulations and State and local law. We
provides that if the pet owner and local laws provide for the removal of see no reason to impose this additional
project owner are unable to resolve the such animals. step to the eviction process merely
pet rule violation at the pet rule Section 243.24(c) has been revised because the lease violation is pet-
violation meeting or if the project owner slightly to express the Department’s related.
determines that the pet owner has failed position that eviction proceedings may
to correct the pet rule violation within 2. Part 942 Procedures
not be commenced until the project
any additional time provided for this owner has completed the pet rule Proposed Part 942 contained no pet
purpose at the pet rule violation violation procedures. rule violation procedures. Rather, under
meeting, the project owner may serve a The Department agrees that there is § 942.27, the lease would incorporate the
written notice on the pet owner no need to require § 243.24 procedures pet rules, state that the tenant agrees to
requiring the removal of the pet. The before the initiation of pet removal comply with the rules, and state that
notice must contain: (1) A summary of procedures under State and local law. violations of the pet rules may be
the facts; (2) a statement that the pet As noted earlier, the primary purposes grounds for removal of the pet or for
must be removed within 10 days of the of the pet rule violation procedures are termination of tenancy in accordance
effective date of the service of notice or to encourage the resolution of with applicable State or local law and
10 days of the pet rule violation meeting, complaints and to ensure that the applicable regulations, e.g., 24 CFR Part
if the notice is served at the meeting; project owner has developed a sufficient 966 (Lease and Grievance Procedures).
and (3) a statement indicating that administrative record to begin an Where the PHA chooses not to adopt
failure to remove the pet may result in eviction of a tenant under HUD pet rules, the keeping of pets would be
initiation of procedures to terminate the regulations governing termination of subject to the general obligations
pet owner’s tenancy. tenancy. These procedures are not imposed on parties to the lease.
Commenters noted that the project intended to delay State and local pet Violations of these general obligations
owner could demand removal for any removal remedies under § 243.40, nor could be grounds for the removal of a
violation, and suggested that the final are they intended to provide an pet or termination of a pet owners
rule be revised to provide a standard for additional Federal remedy for pet tenancy, or both, in accordance with the
the severity of the offense. The removal. Section 243.24 has been revised applicable State and local remedies.
regulation has not been amended to to make it clear that a project owner Some commenters believed that the
provide such standards. The notices of may initiate a removal action at any violation procedures in § 243.24 are well
pet rule violation and pet removal will time, in accordance with State and local formulated and fair, and should apply to
clearly inform the pet owner that they law. Part 942 housing. These commenters
can be enforced only through State or Several commenters urged the argued that the failure to impose pet rule
local eviction proceedings, and that Department to provide more specificity violation procedures on PHAs would
State or local law will ultimately govern concerning the grounds for removal of result in inequitable exercises of
the adequacy and validity of the project pets and evictions. For example, can a discretion by the PHAs.
owner’s demand for pet removal. pet be removed, or the tenant evicted, The final Part 942 provides no
Another commenter objected to the for failure to comply with house pet additional pet rule violation procedure,
provisions allowing the pet owner 10 rules? because of the broader discretion given
days from the pet meeting or from the As noted above, the removal remedy PHAs under the 1937 Act. It should be
notice of pet removal to remove the pet is purely a State and local matter. noted in this regard that the Lease and
before termination of tenancy Commenters should refer to the law of Grievance Procedures found at 24 CFR
procedures can begin. This commenter their local jurisdictions for answers to Part 966 currently afford the tenant an
suggested that the 10-day period for pet these inquiries. The grounds for eviction opportunity to dispute a PHA action or
removal be incorporated into the are not stated in § 243.24, but are failure to act.
termination process, so that two included in the lease provisions at
/. Special R ules Governing Designated
different notices are not needed. As § 243.30. This section provides that pet
rule violations may be grounds for Areas and Tenant M oves
noted above, to commence eviction
procedures, a project owner must eviction, in accordance with applicable Both proposed parts would permit
develop an administrative record eviction or termination of tenancy project owners and PHAs to establish
demonstrating a sufficient basis for regulations and State or local law. and maintain areas in the projects as pet
eviction. Without the issuance of a Some commenters would permit or no-pet areas. There are, however,
notice requiring removal and the failure eviction for any violation of the house differences between the two parts.
of the pet owner to comply with the pet rules. To ensure the legal sufficiency
1. Part 243 Procedures
notice, the administrative record will not of the eviction and to prevent
be complete. These two provisions have discriminatory behavior forbidden under Based on a perceived need to protect
not been consolidated. section 227(a), evictions for pet rule tenants from serious allergic reactions to
d. Initiation o f rem oval or terminationviolations must be judged by the same pets, proposed Part 243 would have
procedures. Proposed § 243.24(c) standards as all other lease violations. required project owners to designate
 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations 43291

buildings, sections of buildings, or floors In response to commenters’ with pets on common areas. It is likely
of buildings as areas for occupancy by suggestions, HUD contacted outside that brief contact in hallways and
tenants for whom the presence of a pet sources, including concerned staff at the elevators will not cause a serious
would constitute a serious health threat, National Institute of Allergies and problem, since commenters indicate that
and to direct such tenant moves as may Infectious Diseases at the National there is a need for more continuous
be necessary to establish and maintain Institutes of Health, in an effort to exposure to create symptoms. Moreover,
such areas. The proposed rule also obtain more precise data from the project owners retain the ability to
contained rules governing tenant and medical community. These contacts mitigate this exposure by taking steps,
project owner rights and responsibilities indicated that there is no clear body of such as limiting the presence of pets in
when, despite reasonable efforts, the information concerning the percentage hallways, elevators, lobbies, and other
presence of a pet in the project would of the population that would experience common areas under § 243.20(c)(4). For
seriously threaten the health of an serious allergic reactions based on example, pets may be banned from
individual. Under the proposed rule, a exposure to pets and that the only elevators (if a reasonable route for
serious threat to health was defined as a material available are extrapolations egress and ingress is maintained), or
strong allergic reaction that is brought from other studies and anecdotal may be required to use freight elevators
on by the presence of pets and is not information. Based on the lack of only. In response to another public
reasonably avoidable. Three hundred credible medical evidence, anecdotal comment, managers and employees of
six commenters opposed the special evidence that the occurrence of serious covered projects who have pet allergies
rules, or opposed one or more of the allergic reaction is very small, and the will benefit from the same mitigation
indications (mentioned earlier) that the measures adopted for the tenants.
provisions of the special rules. These
commenters argued: (1) The rule is too incidence of pet ownership in projects In the proposed rule HUD recognized
should be low, HUD cannot assume that that there may be circumstances, other
complex to administer; (2) the rule is an
a health concern of sufficient gravity than allergic reactions, where a pet
overreaction to an insignificant health
exists to warrant the prescription of a could pose a serious health threat. The
threat to tenants; (3) it is impossible to
solution on a national level— public was invited to submit comments
establish a no-pet area that is particularly a solution that generated addressing any additional health threats
completely safe; (4) the rule will such strong and widespread opposition that may be caused by the presence of
increase project expenses associated among the commenters. Accordingly, pets (49 FR 50565). In response to this
with tenant moves and the with the exceptions stated below, final invitation, commenters urged HUD to
administration of the rules; and (5) the Part 243 deletes the special rules address such health threats as: (1)
rule will cause needless suffering by governing designated areas and tenant Diseases transmitted from animals to
tenants who are moved and isolation of moves. man; (2) illnesses and allergies caused
tenants in no-pet areas. by fleas, ticks, and parasites; (3) bites
Even in the absence of § 243.26, there
To assist in determining whether the is reason to believe that tenants’ health and other injuries caused by pets; and
special rules governing designated areas should not be jeopardized. The mere (4) nervous reactions caused by
and tenant moves were necessary or presence of a pet in one apartment abnormal fear of animals and low
desirable, the preamble to the proposed should have little effect on allergic tolerance to noise.
rule requested commenters to address tenants in other apartments. HUD has taken these potential threats
the range of allergic reactions that pets Commenters indicate that allergens are into account throughout the regulations.
that may cause; suggest ways of not transmitted through the air or Protection of tenants from these threats
mitigating the risk of exposure; identify through air circulation systems, but are forms part of the basis of the regulations
the situations and reactions that generally transmitted through contact involving inoculation and licensing
constitute a serious threat to the health with the carpet or direct contact with (§§ 243.20(b)(1), 243.20(c)(5) and
of an individual; and estimate the pets. While commenters suggest that 942.20(b)(6)); sanitary standards
percentage of the population that would there could be a problem if unfiltered air (§§ 243.20(b)(2) and 942.20(b)(5)(i)); pet
experience seriously threatening is circulated between apartments, these restraint (§§ 243.20(b)(3) and
reactions based on exposure to pets. (49 air circulation systems are rarely, if 942.20(b)(5)(h)); registration and
FR 50565) ever, found in projects for the elderly or screening (§ 243.20(b)(4)); density of
Despite the numerous comments handicapped. Moreover, commenters tenants and pets (§§ 243.20(c)(1) and
submitted to the proposed pet rule, there indicated that the likelihood of there 942.20(b)(2)); pet size, weight, and type
was no conclusive scientific evidence being a high enough concentration of limitations (§§ 243.20(c)(2) and
presented concerning the incidence or allergens to be dangerous is low, and 942.20(b)(3)); standards of pet care
severity of pet allergies. The comments that disease, germs, and irritants (such (§§ 243.20(c)(4) and 942.20(b)(5)(ii)); pet
generally indicated that among the as smoke and odors) would be more of a rule violation procedures (§ 243.24);
general population, the incidence of threat under these circumstances. While lease provisions (§ 243.30); provisions
serious allergies to pets is minute there may be a problem of residual dealing with pets that are a nuisance or
(generally 1 to 2 percent) and the dander in apartments previously a threat to health and safety (§§ 243.40
incidence of mild pet allergy is small (20 occupied by pets, commenters indicate and 942.00).
to 25 percent). One commenter warned that residents may be protected by a One commenter suggested that HUD
that these percentages may misstate the thorough cleaning of carpets and drapes, perform a study to determine what types
problem, since a perception of allergy by in the rare instance that cleaning is not of disease can be transmitted from pets
a nonallergic person can often lead to sufficient, project owners retain to humans, and whether the dangers of
the same symptoms as those in a truely discretion to take additional actions disease are increased in high-density
allergic reaction. There were allegations (such as the replacement of these items living situations. Information on pet-
that the elderly are both less and more or voluntary tenant moves to protect transmitted diseases appears to be
allergic than the general population, and affected tenants). readily available (see appendices to
that cats constitute a greater problem The main problem appears to be when comments #357, Pet Rights Organization
than dogs. tenants have direct or indirect contact and #532 National Leased Housing
43292 Federal Registra / Yol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

Association). A HUD-sptxnsored study does. In light o f the discussion above and no-pet waiting lists, and would
would seem to be unnecessary. concerning the need to take action retain provisions allowing the PH A to
The final rule retains one provision of segregating pet owning tenants from adjust the size o f pet and no-pet areas
the proposed special ¡rules, with a slight tenants without pets, we reject these based on tenant need.
modification. Proposed § 243,26(b){2) proposals. We have not made the requested
would permit an applicant for tenancy amendments. Such provisions may
to reject a unit offered by the project 2. Part 942 Procedures
provide an opportunity for
owner if a tenant o f the project owns or Part 942 would permit, but not require, discrimination against pet owners, and
keeps a common household pet in his or PHAs to designate buildings, floors, or may serve as a “back door” for the
her dwelling unit, and the presence of sections of buildings where pets establishment of pet quotas.
the pet would constitute a serious threat generally may not be permitted. PHAs Additionally, such lists would unduly
to the health of the applicant (or a may also designate areas for residency compound the waiting list process, make
resident member of the applicant’s generally by pet-owning tenants. The it difficult to treat applicants in a fair
family). The rejection would have no PHA would be permitted to direct such manner, increase rent loss days as a
effect on the applicant’s position on the tenant moves as may be necessary to result of time necessary to coordinate
waiting list or qualification for any establish these areas, if the PHA elects the lists, and may be open to
tenant selection preference. to establish these areas, it would not be
manipulation by tenants (e.g., a tenant
The Department is cognizant of the permitted to deny or delay admission of
could acquire or discard an animal
fact that some individuals will not want an applicant for tenancy on the grounds
depending on whether it would speed
to live in close proximity to pets. To that the applicant’s admission would
admission to the project).
accommodate such individuals, the final violate a pet or no-pet area. The PH A
rule ,(§ 243.26(a)) permits applicants to would be permitted to adjust the areas /. Lease Provisions
reject a unit offered by the project or direct such additional tenant moves
owner, if the unit is in close proximity to (or both) as may be necessary to Proposed §§ 243.30, 243.35 and 942.27
a dwelling unit in which a pet resides. accommodate applicants for tenancy contained lease provisions necessary to
As in the proposed rule, this refusal will and to meet the changing needs of implement the pet regulations and
not adversely affect the individual’s existing tenants. See § 942.20(b)(6){ii). transitional regulations governing the
application for tenancy, including his or Many of the arguments that incorporation of these provisions into
her place on the project waiting list or commenters made against the proposed existing leases.
qualification for any tenant selection Part 243 procedures apply to Part 942 as 1. Incorporation by Reference
preference. well: e.g., (1) the establishment and \
Commenters to the proposed rule maintenance of pet/no-pet areas would Proposed § 243.30 stated that tenant
stated that the right to reject a unit be costly and would impose a complex leases shall incorporate by reference die
without any effect on the individual administrative burden on PHAs; (2) pet rules promulgated by the project
application for tenancy should increase there may be no need to establish such owner. Proposed § 942.27(a)(1) required
vacancy costs. These costs, however, areas under many circumstances; (3) the incorporation by reference if the
should be minimal, since indications are there can be no guarantee that a no-pet PHA chose to promulgate house pet
that the incidence of pet ownership will area will be completely safe from pet- rules. Commenters suggested that it was
be small. Moreover, there will generally related problems; (4) pet areas may, unnecessary to have a specific provision
be other individuals on the project under some circumstances, constitute a incorporating house pet rules since all
waiting list that will accept the unit. If health hazard; and (5) accomplishing house rules are incorporated by
no waiting list exists, project expenses tenant moves necessary to establish and reference in existing leases. Other
should not be significantly affected by maintain the areas would impose commenters urged that house pet rules
this provision, since applicants in such needless financial, physical, and be written out in provisions of the lease.
circumstances already may reject units psychological hardships on tenants To avoid potential misunderstandings
without significant consequences. forced to move. concerning whether the house pet rules
This provision does not extend to The final rule adopts proposed have been incorporated into the lease,
existing residents. Accommodation of § 942.20(b)(6)(ii) without change. This the final rules retain provisions for
tenant preferences under such approach gives PHAs the broadest incorporation by reference. This
circumstances would result in discretion to determine whether the approach is sufficient to ensure that
substantial expenses to project owners establishment of pet or no-pet areas is a project owners, PHAs, and tenants are
from tenant moves within the building. benefit to the project and its residents. aware of, and bound by, toe rules.
The final rule (§ 243.26(b)) also makes it Since the establishment o f these areas is Inclusion in the lease of the text of all
clear that Part 243 imposes no duty on left entirely to the discretion of the PHA, pet house rules is both unnecessary and
project owners to provide alternate the administrative burdens and financial very costly, and is not required in the
dwelling units to existing or prospective costs are subject to control by the final rule.
tenants based on the proximity of pets individual PHA. While it is possible that
2. Inspections
to a particular unit or the presence of mandated moves may impose some
pets in the project. measure of inconvenience on individual Several commenters urged that project
A number of commenters proposed tenants, it is reasonable to assume that owners and PHAs be given the right to
alternatives to the special rules. These the PHA will try to minimize the number enter apartments on a regular basis to
commenters suggested that HUD: (1) of these moves since the PHA will bear inspect the physical condition of the
Permit the establishment of pet rather the costs associated with them. unit, to check toe health and condition
than no-pet areas; (2) prohibit One commenter requested that of the pet, and to ensure that pet wastes
occupancy by individuals for whom the proposed § 942.20(b) (8)(ii) be amended are being disposed of properly. Other
presence of pets constitute a health by eliminating provisions that prohibit commenters would permit the right to
hazard; and (3) establish pet areas if the PHAs from refusing tenancy to pet inspect only on notice and after toe
majority of the tenants does not want owners. Instead, the commenter would receipt of a signed complaint concerning
pets, and pet-free areas if the majority permit PHAs to establish separate pet the condition of the unit. Commenters
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43293

proposed that the right to inspect be K . N uisance and Threat to Health or removal of pets that are in violation of
included in the lease or be included in a Safety house pet rules. Other commenters
consent form signed by the pet owner at In accordance with section 227(c), asserted that many localities have no
the time of registration of the pet. proposed § § 243.40 and 942.30 would laws providing for the removal of pets
The final rule adds § 243.30(b). preserve the rights of project owners, and that in these areas, the project
(Proposed § 243.30(b) has been PHAs, and appropriate community owner or PHA would be placed in the
redesignated § 243.30(c)). This new authorities to require the removal of any position of having to threaten eviction of
provision provides that tenant leases pet that is duly determined to constitute, the resident in order to remove the pet.
must state that the project owner may under State or local law, a nuisance or a Some urged that the definition of
enter the unit and inspect the premises threat to the health and safety of the nuisance should not be left to State or
during reasonable hours, upon occupants of the project or other local law, and that management should
reasonable notice to the tenant. To members of the community. Proposed be able to make a fair decision based
protect pet owners from intrusive § § 243.45(a) and 942.35 would permit upon full documentation of each case.
behavior by project owners, the right to project owners and PHAs to require the The proposed rules contemplated a
inspect will arise only if the project emergency removal of a pet that system in which a pet could be removed
owner has received a signed, written constitutes an immediate threat to from a project only through an eviction
complaint alleging (or the project owner health or safety by requesting the pet proceeding against the tenant, except
has reasonable grounds to believe) that owner to remove the pet or contacting where the pet was found to constitute a
the conduct or condition of a pet in the the appropriate State or local authority nuisance or a threat to health and safety
dwelling unit constitutes a nuisance or a (or an entity designated by such an under State or local law. As with local
threat to the health or safety of the authority). Proposed § 243.45(b) would laws governing the licensing and
occupants of the project or of other permit project owners to act to protect inoculation of pets, the Department
persons in the community where the the health and safety of the pet in assumes that State and local laws
project is located. HUD will issue limited circumstances. adequately address the community’s
guidance in administrative instructions perception of its health and safety
1. General needs. The Department does not believe
concerning the amount of advance
notice to inspect that will be required Commenters objected to the nuisance that it is appropriate for these rules to
under this new provision. and threat to health and safety provide an additional Federal remedy
In the Department’s view, existing provisions on grounds that they would for the removal of pets in federally
rules regarding inspection of a unit’s place ultimate responsibility for pets on assisted projects for the elderly or
physical condition adequately protect project owners and PHAs, rather than handicapped. Thus, consistent with the
project owners’ interests. The health on the pet owner. The Department proposed rules, the final rules provide
and condition of a pet is primarily the disagrees with this contention. Parts 243 that eviction is the sole method of
and 942 place the primary responsibility enforcement available to a project
concern of the pet owner (unless, of
for day-to-day pet care squarely on the owner or PHA where: (1) A tenant keeps
course, its health or condition causes it
pet owner. While these final rules place a pet in violation of the house pet rules
to become a nuisance or a health or
certain responsibilities regarding pets on and the violation does not constitute a
safety threat). The final rule is
project owners and PHAs, these nuisance or a threat to health and safety
unchanged on these points.
responsibilities are generally limited to under State or local law or (2) there is
The Part 942 lease provisions have not no State or local law providing for pet
establishing rules for the keeping of pets
been amended to expand PHAs’ removal on these grounds.
and enforcing these rules through
inspection rights. PHA rights to inspect
eviction or pet removal. Project owners’ 3. Emergencies
units are adequately provided in the
responsibility for pet care is very
Lease and Grievance Procedures. limited. Proposed § § 243.45(a) and 942.35
3. Review of Lease Amendments Some commenters noted that PHAs* addressed the removal of pets whose
and project owners’ responsibility for behavior constitutes an immediate
Some commenters urged HUD to enforcement through removal will arise threat to health or safety. Since the pet
review all lease amendments during nonbusiness hours. They regulation does not provide removal
implementing Parts 243 and 942. Others wondered how management can be remedies in addition to State and local
argued that HUD should include in the expected to deal with these situations. law and since § § 243.40 and 942.35
final rule a standard lease clause Since project owners and PHAs are already preserve the rights of project
acknowledging pet ownership and experienced in dealing with other owners, PHAs and community
addressing other matters. emergency situations (e.g., boiler break­ authorities to require the removal of pets
For the reasons stated in the section, downs and fires) occurring during that are duly determined to constitute,
discussing HUD’s review of house pet nonbusiness hours, HUD sees no reason under State or local law, a threat
rules, the Department will not conduct a to address this specific problem in the (including an immediate threat) to
‘‘front end” review of tenant leases, but regulations. health and safety, proposed § § 243.45(a)
will scrutinize the leases during the and 942.35 have been deleted as
course of the occupancy audit or the 2. Nuisance and Threat to Health and redundant.
management review. To assist project Safety As a related matter, however, the final
owners, HUD administrative Sections 243.40(a) and 942.30 permit rule contains an amendment to the lease
instructions will contain model lease project owners, PHAs, and community provisions at § 243.30(c)(1) to cover
provisions addressing various aspects of authorities to require the removal of any emergency situations in which there is
pet ownership under Part 243. Since pet that is duly determined to constitute, no State or local entity authorized to
PHAs are not generally provided with under State or local law, a nuisance or a remove a pet that has become an
model lease provisions, no standard threat to health and safety. immediate threat to health and safety.
provisions will be formulated for One commenter objected to these This section provides that if there is no
Projects under Part 942. sections because they do not permit the State or local authority (or designated
43294 Federal Register / VoL 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations

agent of such an authority) authorized Several commenters suggested local authorities if the responsible party
under applicable State or local law, to miscellaneous amendments to § 243.45, or parties are unwilling or unable to
remove a pet that becomes vicious, or asked whether project owners could care for the pet or if the project Owner is
displays symptoms of severe illness, or establish alternate procedures for unable to contact the responsible party
demonstrates other behavior that dealing with situations where the health or parties, despite reasonable efforts.
constitutes an immediate threat to the of the pet is threatened. For example, c. Rem oval by local authority. Under
health or safety of the tenancy as a one commenter suggested a modified § 243.45, if the designated responsible
whole, the project owner may place a procedure in which the project owner party or parties are unwilling or unable
provision in tenant leases permitting the would contact the pet’s veterinarian. to care for the pet, or the project owner
project owner to enter the premises (if The veterinarian would accept was unable, despite reasonable efforts,
necessary), remove the pet, and take responsibility for the pet based on a pre­ to contact the responsible party or
such action as may be permissible under existing contract signed by the pet parties, the project owner may contact
State arid local law. Such actions may owner. Another commenter suggested the appropriate State or local authority
include placing the animal in a facility that project owners be permitted to and request the removal of the pet.
that will provide the pet with care and require pet owners to provide up to Some commenters requested that
shelter for a period not to exceed 30 three designated parties to care for a HUD require the State or local authority
days. (The cost of the facility is payable pet. to kennel the pet for up to 30 days, or
as provided in § 243.45.) The lease shall The provisions of § 243.45 are permit pet owners to designate which
permit the project owner to take these permissive, and a project owner is under State or local authority would be
actions only if the project owner no duty to adopt these procedures. permitted to remove the pet. State or
requests the pet owner to remove the pet There may be other reasonable
from the project premises and the pet local jurisdictions will generally
procedures or modifications to the delegate animal control responsibilities
owner refuses to do so, or if the project § 243;45 procedures that may be more
owner is unable to contact the pet to one agency and will regulate the
appropriate in a given area for dealing length of time that a pet can be retained
owner to make a removal request. The with pets that are endangered by the pet
definitions of viciousness, severe illness, by the agency. HUD and the project
owner’s death or incapacity. This rule owner must defer to the State and local
and behavior that constitutes a serious does not prohibit project owners or
threat, and the range of permissible exercise of authority in these areas.
PHAs from establishing such One commenter would eliminate the
actions, are determined by reference to procedures. Like other provisions of
State and local law. This provision gives provisions requiring the project owner to
Parts 243 and 942, this section is contact State and local agencies to
the owner clear legal authority under the
applicable, and modifications to the remove the pet, and would permit the
lease to take appropriate action in case
§ 243.45 procedures are permissible, project owner to board the pet at an
of emergencies where no State or local
only to the extent that the procedures animal care facility, if the responsible
entity has the power to act.
are reasonable and do not conflict with party or parties designated in the
4. Protection of Pet State and local laws governing the care registration are not available. Such a
Proposed § 243.45 would permit the of abandoned pets. As noted above, to procedure may be imposed by the
project owmer to act if the health or accommodate project owners that wish project owner, if it is consistent with
safety of a pet is threatened by the to require pet owners to designate more State and local law governing the care
death or incapacity of the pet owner. than one responsible individual to care of abandoned pets.
Under-this section, a project owner may for the pet, the registration provisions of d. Rem oval b y project owner. Because
contact the responsible party designated § 243.20(b)(4) have been amended. of the possibility that there may be local
by the pet owner in the pet registration. Similar amendments have been made to jurisdictions without a State or local
If that person is unavailable or unwilling final § 243.45. authority empowered to remove an
to care for the pet, the project owner Proposed § 243.45 would be applicable abandoned pet, proposed § 243.45
may contact the appropriate State or “if the health and safety of a pet is permitted the project owner to enter the
local authority (or designated agent) to threatened by the death or incapacity of premises and remove the pet if the
remove and care for the pet. Because of the pet owner.” Some commenters asked designated responsible individual is
the possibility that there may be local whether this provision would permit the unavailable and no appropriate State or
jurisdictions without an authority (or a project owner to act if the pet is local authority exists. Commenters were
designated agent of such an authority) improperly cared for, or shows signs of requested to inform the Department
empowered to remove and care for an abuse. HUD believes that such whether there are any jurisdictions
animal, the proposed rule provided that circumstances may fall within the without such an authority, and if such
a project owner may insert a clause in purview of this section. Further guidance jurisdictions exist, how HUD should
the lease that permits the project owner on this issue, and other matters address the problem. 49 FR 50566. In
to enter the premises, remove the pet associated with § 243.45, will be response to this request, several
and arrange for pet care for no less than provided in administrative instructions commenters indicated that areas exist
30 days. and HUD handbooks. where there are no governmental
(a) General. Several commenters b. Care by responsible party. Under agencies or private animal welfare
requested that the protection of pet proposed § 243.45, if the pet’s health is facilities, and where there are no animal
provisions be inserted into Part 942. threatened, the project owner must first control facilities that will accommodate
Nothing in the proposed rule or other contact the responsible party listed in animals other than dogs.
HUD regulations governing PHAs’ the pet registration. If that individual is To address these problems, some
operations prevents a PHA from either unwilling or unable to care for the commenters supported the proposed
including procedures in the house rules pet, the project owner may contact State rule’s provisions governing removal by
and in tenant leases to act for the or local authorities. the project owner. Project owners
protection of the pet. It is not necessary, In response to comments, the final objected to the provisions because they
however, to incorporate these provisions rule has been amended to provide that did not want to accept the responsibility
in Part 942. project owners may contact State or of dealing with pets in the absence of
 Federal Register / V o l. 51, No. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations 43295

the pet owner. Other commenters feared however, to assume these additional § 243.20(c)(3)(v). This provision prohibits
that project owners would abuse the responsibilities, if they so choose. the imposition of financial obligations
right to enter. Several commenters asked what the on pet owners that are designed to
The final rule retains provisions for project owner will be required to do compensate the project owner for the
project owner removal of abandoned with the animal at the expiration of the costs associated with the presence of
pets. It should be emphasized that the 30-day period. The final rules leave this pets, except for the pet deposit and the
provisions of § 243.45 are permissive matter to the discretion of the project pet waste removal charge.
and that project owners who do not owner. The proper action, of course, will
wish to undertake any responsibility vary with the circumstances. For L. M iscellaneous M atters
under this section may avoid it entirely. example, if a designated responsible Commenters disagreed with the
The Department does not consider the party or the executor of a decedent’s Department’s finding that the rule is not
potential for project owner abuse under estate is found during the 30-day period a major rule under Executive Order
this section to be substantial, since the and accepts responsibility, the pet 12291. They argued that the rule could
circumstances under which the project should be transferred to these potentially have an annual impact of
owner can take action are narrowly individuals. If no responsible party is § 100 million or more, would cause
drawn. found, it may be reasonable to place the major increases in cost to government
One individual asked what the project pet with the local humane society or agencies resulting in increased taxes,
owner’s liability would be for wrongful other facilities that care for abandoned and would have a negative effect on the
removal of a pet. Another requested that pets. H UD’s administrative instructions economic feasibility of the projects.
project owners be relieved of legal and handbooks will provide further Other commenters found the Regulatory
liability for wrongful removal under the guidance on this matter. Flexibility certification to be improper,
lease. Liability for wrongful removal of a e. Costs. Proposed § 243.45 provided absent full compensation to project
pet will be determined by State or local that the cost of the animal care facility owners and PHAs for the costs of pet
law. As noted earlier, the Department may be paid from the pet deposit, and if presence.
does not favor lease provisions relieving there is no pet deposit, the cost shall be The Department continues to believe
the project owner of liability for its a project expense. Commenters argued that the Regulatory Impact Analysis and
actions in the context of this rule that if there is a pet deposit, it must first the Regulatory Flexibility certification
making. The final rule has been be applied to damages to a tenant unit; contained in the preamble to the
amended to reflect this position [See then if there are any funds left over, it proposed rule properly reflected the
§ 243.30(c) (1) and (2)). could be applied to the boarding bill. In impact of this rule making. Moreover,
The proposed regulation required the any case, these commenters protested the revisions to the proposed rule made
project owner to place the pet in a that the project should never be required in this proceeding will reduce the
facility that would provide care and to bear this expense and that the
economic impacts originally anticipated
shelter for “no less than thirty days.” expense should always rest with the
in the proposed rule (e.g., the
resident. In addition to the ability to
While some commenters urged the elimination of the required pet and no­
recover such costs through the pet
reduction of this time period, HUD pet area provisions, deletion of tenant
deposit, some commenters believed that
continues to believe that 30 days is an move requirements, the reduced service
the project owners should be able to
adequate time for the pet’s owner to of notice requirements, and the
attempt recovery of the expense through
resume care of the pet or for other provisions dealing with the assessment
relatives or the tenant’s estate (upon
arrangements to be made. Since death), or that the project owners should and uses of pet deposits).
proposed § 243.45 would require the Thus, the Department finds that this
be permitted to require pet owners to
care for 30 days despite the immediate make prior arrangements for the pet. rule does not constitute a "major rule” ,
recovery of a pet owner from incapacity, Under such an arrangement, the project as that term is defined in section 1(b) of
this section has been revised to require owner might require the pet owner to Executive Order 12291 issued by the
the project owner to provide care and place a donation (from $25 to $50) in President on February 17,1981. Analysis
shelter until the pet owner or a escrow with a local humane society to of the proposed rule indicates that it
representative of the pet owner is able be used if the pet owner dies, or to file a does not (1) have an annual effect on the
to assume responsibility for the pet, up certificate, signed by the pet owner and economy of $100 million or more; (2)
to a maximum of 30 days. a veterinarian, in which the tenant cause a major increase in cost or prices
Some commenters would require the assumes all responsibility for the cost of for consumers, individual industries,
project owner to take certain additional care that is necessary to protect the pet, Federal, State, or local government
actions during the care period including: up to 30 days. agencies, or geographic regions; or (3)
(1) Attempting to locate absent pet The final rule has been revised to have a significant adverse effect on
owners or designated responsible provide clearly that the cost of pet care competition, employment investment,
Parties; (2) notifying the pet owner of the under § 243.30(c)(1) or § 243.45 is to be productivity, innovation, or on the
pet’s removal; and (3) contacting the borne by the pet owner or the pet ability of United States based
pet’s veterinarian and making other owner’s estate. Should these resources enterprises to compete with foreign-
attempts to secure a new home for the be inadequate, the pet deposit will also based enterprises in domestic or export
pet. be available to cover these costs. We markets.
HUD’s final rule only addresses the believe that these resources should be Under the Regulatory Flexibility Act
actions to be taken by a project owner adequate to cover pet care expenses (5 U.S.C. 601), the Undersigned hereby
to ensure the pet’s health and safety in under most circumstances. certifies that this rule does not have a
an emergency. It does not require the As stated above, the project owner significant economic impact on a
project owner to undertake these may establish alternate procedures for substantial number of small entities.
actions or additional steps to locate the dealing with situations where a pet’s Since the rules will require project
pet owner or designated parties, or to health is threatened. We note that the owners and PHAs to permit common
make attempts to secure a future home project owners ability to formulate household pets to reside in projects for
for the pet. Project owners are free, alternative procedures is limited by the elderly or handicapped, it is possible
43296 Federal Register / V o l. 54, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations

that the rule may cause some increased (51 FR 38424, 38436) under Executive 243.15 Notice to tenants.
costs for owners of these projects, some Order 12291 and the Regulatory Subpart C—Rules Governing the Keeping
of which may constitute small entities. Flexibility Act. of Pets
However, since the rule also permits The Catalog of Federal Domestic 243.20 Content of pet rules.
recovery of costs through pet deposits Assistance Program numbers and titles 243.22 Procedure for development of pet
and noncompliance charges, it is not for Part 243 are: 14.103 Interest rules.
believed that the effect will be Reduction Payments—Rental and 243.24 Pet rule violation procedures.
substantial. Cooperative Housing for Lower Income 243.26 Rejection of units by applicants for
Several commenters believed that the Families, 14.135 Mortgage Insurance— tenancy.
proposed rule passed all development, Rental Housing for Moderate Income Subpart D—Lease Provisions
review, monitoring, and form-generation Families, 14.137 Mortgage Insurance—
activities from the Federal government Rental and Cooperative Housing for 243.30 Lease provisions.
to the project owners and PHAs. They Low and Moderate Income Families, 243.35 Implementation of lease provisions.
argued that this will increase their Market Interest Rate, 14.138 Mortgage Subpart E—Nuisance or Threat to Health or
paperwork by up to 25 percent in Insurance—Rental Housing for the Safety
covered projects, and that this increase Elderly, 14.156 Lower Income Housing 243.40 Nuisance or threat to health or
is inconsistent with the Paperwork Assistance Program, 14.157 Housing for safety.
Reduction Act. In developing the final the Elderly and Handicapped, 14.174 243.45 Protection of the pet.
rules, the Department has attempted to Housing Development Grant Program. Authority: Sec. 227(b), Housing and Urban-
keep the information collection There are no Catalog of Federal Rural Recovery Act of 1983,12 U.S.C. 1701n-
requirements and other administrative Domestic Assistance Program numbers 1: and sec. 7(d), Department of Housing and
burdens imposed on PHAs and project and titles for Part 511. Urban Development Act, 42 U.S.C. 3535(d).
owners to the minimum necesssary to The Catalog of Federal Domestic
implement section 227’s mandate and to Assistance Program numbers for Part Subpart A—General
carry out HUD’s statutory role under 842 are: 14.156 Lower Income Housing § 243.1 Purpose.
section 227(b)(1) of ensuring compliance Assistance Program (section 8), 14.157
with that mandate. As noted throughout Housing for the Elderly and (a) This part implements section 227
this preamble, the Department has taken Handicapped. of the Housing and Urban-Rural
steps to reduce administrative costs The Catalog of Federal Domestic Recovery Act of 1983 (12 U.S.C. 1701n-l)
through measures such as relaxing he Assistance Program number for Part 942 as it pertains to the housing programs
service of notice requirements in Part is: 14.146 Low-Income Housing— administered by the Assistant Secretary
243 and eliminating the tenant move and Assistance Program (Public Housing). for Housing-Federal Housing
related requirements in § 243.26. With Commissioner. 24 CFR Part 942
specific regard to the Paperwork List of Subjects implements this provision as it pertains
Reduction Act, the Department has 24 CFR Part 243 to the public housing programs
consciously chosen to keep information administered by the Assistant Secretary
Housing, Aged, Handicapped, Pets. for Public and Indian Housing.
collection requirements subject to the
Act to a minimum, most notably by 24 CFR Part 511 (b) Section 227 provides that no owner
eschewing “front-end” review of or manager of federally assisted rental
Rental rehabilitation grants,
material such as the draft and final housing for the elderly or handicapped
Administrative practice and procedure,
house pet rules and lease provisions may as a condition of tenancy or
Grant programs—Housing and
prescribed by project owners and PHAs. otherwise, prohibit or prevent tenants of
community development, Low and
Thus, although compliance with section such housing from owning or keeping
moderate income housing, Reporting
227 will entail some increased common household pets in their units, or
and recordkeeping requirements.
administrative costs, the Department restrict or discriminate against persons
has attempted to reduce them wherever 24 CFR Part 842 in connection with admission to, or
possible. Housing, Aged, Handicapped, Pets. continued occupancy of, such housing
The information collection because they own common household
requirements contained in this rule have 24 CFR Part 942 pets. The statute directs HUD to issue
been approved the Office of Public housing, Aged, Handicapped, regulations necessary to ensure
Management and Budget under the Pets. compliance with these provisions and to
provisions of the Paperwork Reduction For reasons set out in the preamble, ensure attaining the goal of providing
Act of 1980 (44 U.S.C. 3501-3520). The Title 24 of the Code of Federal decent, safe, and sanitary housing for
OMB Control Numbers are 2502-0342 Regulations is amended as follows: the elderly or handicapped. The statute
(Part 243) and 2577-0078 (Part 942). 1. Part 243 is added to read as follows: also requires that these regulations
A Finding of No Significant Impact establish guidelines under which owners
with respect to the environment has PART 243—PET OWNERSHIP IN and managers may prescribe reasonable
been made in accordance with HUD HOUSING FOR THE ELDERLY OR rules for the keeping of pets by tenants
regulations in 24 CFR Part 50, which HANDICAPPED and must consult with tenants in
implement section 102(2)(C) of the prescribing the rules.
Subpart A—General
National Environmental Policy Act of
1969, 42 U.S.C. 4332. The Finding of No Sec. § 243.2 Exclusion for animals that assist
Significant Impact is available for public 243.1 Purpose. the handicapped.
inspection during regular business hours 243.2 Exclusion for animals that assist the (a) This part does not apply to
in the Office of the Rules Docket Clerk, handicapped. animals that are used to assist the
243.3 Definitions. handicapped. This exclusion applies to
Room 10276, at the address listed above. 243.4 Effective date.
This rule was listed as item 782 in the animals that reside in projects for the
Department's Semiannual Agenda of Subpart B—Nondiscrimination Provisions elderly or handicapped, as well as to
Regulations published October 27,1986 243.10 Prohibition against discrimination. animals that visit these projects. A
 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations 43297

project owner may require resident (3) (i) That was designated for Subpart B—Nondiscrimination
animals to qualify for this exclusion. occupancy by elderly or handicapped Provisions
Exclusion must be granted if the tenant families when the commitment to insure
or prospective tenant certifies in writing the mortgage was issued, or if not then § 243.10 Prohibition against
that the tenant or a member of his or her discrimination.
so designated, that is designated for
family is handicapped, the animal has such occupancy in an effective Except as otherwise specifically
been trained to assist persons with that amendment to the regulatory agreement authorized under this part, no owner of
specific handicap, and the animal covering the project, made pursuant to a project for the elderly or handicapped
actually assists the handicapped the project owner’s request, and may:
individual. Project owners may not (ii) That is insured under section (a) As a condition of tenancy or
apply or enforce any pet rules developed 221(d)(3) (Market Rate) or section otherwise, prohibit or prevent any
under this part against individuals with 221(d)(4) of the National Housing Act, or tenant of such housing from owning
animals that are used to assist the 24 CFR Part 231 (Housing Mortgage common household pets or having such
handicapped. Insurance for the Elderly); pets living in the tenant’s dwelling unit;
(b) Nothing in this part: (4) (i) For which preference in tenant or
(1) Limits or impairs the rights of (b) Restrict or discriminate against
selection is given (with HUD or PHA
handicapped individuals, any person in connection with
approval) for all units in the project to
(2) Authorizes project owners to limit admission to, or continued occupancy
elderly or handicapped families and (ii)
or impair the rights of handicapped of, such housing by reason of the
individuals, or that is assisted under Part 880 (Section 8
New Construction), Part 881 (Section 8 person’s ownership of common
(3) Affects any authority that project household pets or the presence of such
owners may have to regulate animals Substantial Rehabilitation), Part 882
(Subparts D and E) (Section 8 Moderate pets in that person’s dwelling unit.
that assist the handicapped, under
Federal, State, or local law. Rehabilitation), Part 883 (Section 8 State § 243.15 Notice to tenants.
Housing Agency programs), Part 884
§243.3 Definitions. (Section 8 Rural Set-Aside), or Part 886 (a) Along with the notice of proposed
(Subparts A and C) (Section 8 Loan pet rules described in § 243.22(b),
(a) Common household pet means a
Management and Property Disposition). project owners shall serve written
domesticated animal, such as a dog, cat,
notice on all tenants of projects for the
bird, rodent (including a rabbit), fish, or (5) (i) For which preference in tenant elderly or handicapped in occupancy at
turtle, that is traditionally kept in the selection is given for all units in the the time of service of the notice, stating
home for pleasure rather than for project to elderly or handicapped that:
commercial purposes. Common families and (ii) that is assisted under 24
household pet does not include reptiles (1) Tenants are permitted to own and
CFR Part 850 (Housing Development
(except turtles). If this definition keep common household pets in their
Grant program); or
conflicts with any applicable State or dwelling units, in accordance with the
(6) (i) That is owned by HUD and (ii) pet rules promulgated under Subpart C
local law or regulation defining the pets for which HUD gives preference in
that may be owned or kept in dwelling of this part;
tenant selection for all units in the (2) Animals that are used to assist the
accommodations, the State or local law project to elderly or handicapped
or regulation shall apply. This definition handicapped are excluded from the
families. requirements of this part, as provided in
shall not include animals that are used
to assist the handicapped. This term does not include health and § 243.2; and
(b) Elderly or handicapped fam ily care facilities that have mortgage (3) Tenants may request that their
means an elderly or handicapped person insurance under the National Housing leases be amended in accordance with
or family for purposes of the program Act, such as nursing homes, § 243.30 to permit common household
under which a project for the elderly or intermediate care facilities, or board pets.
handicapped is assisted or has its and care homes with insurance under 24 (b) Project owners shall provide to
mortgage insured. CFR Part 232 and hospitals with each applicant for tenancy when he or
(c) Project for the elderly or insurance under 24 CFR Part 242. This she is offered a dwelling unit in the
handicapped means a specific rental or term also does not include any of the project a copy of the current pet rules
cooperative multifamily property that, project owner’s other property that does developed under § 243.22 (as well as
unless currently owned by HUD, is not meet the criteria contained in any any current proposed rule or proposed
subject to a first mortgage, and: one of paragraphs (c) (1) through (6) of amendment to an existing rule) and the
(1) That is assisted under section 202 this section, even if the property is written notice specified in paragraphs
of the Housing Act of 1959 (Housing for adjacent to or under joint or common (a)(1) and (2) of this section:
the Elderly or Handicapped); management with such specific
(Approved by the Office of Management and
(2) (i) That was designated for property. Budget under control number 2502-0342)
occupancy by elderly or handicapped (d) Project owner means an owner
families when funds for the project were (including HUD, where HUD is the Subpart C—Rules Governing the
reserved, or when the commitment to owner) or manager of a project for the Keeping of Pets
insure the mortgage was issued or, if not elderly or handicapped, or an agent
then so designated, that is designated authorized to act for an owner or § 243.20 Content of pet rules.
for such occupancy in an effective manager of such housing. (a) General. The project owner shall
amendment to the regulatory agreement prescribe reasonable rules to govern the
covering the project, made pursuant to § 243.4 Effective date. keeping of common household pets. The
the project owner’s request, and (ii) that This part shall be effective on (insert pet rules must include the mandatory
is assisted (with or without HUD effective date o f fin a l rule). However, rules described in paragraph (b) of this
mortgage insurance) under section project owners shall have until [insert section and may include the
221(d)(3) (BMIR) of the National Housing date 60 days after effective date) to discretionary provisions described in
Act or 24 CFR Part 236; implement the provisions of this part. paragraph (c) of this section. Since the
43298 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

“reasonableness” of a rule will may exist, the State and local law or pet owner is financially unable to care
frequently depend on the facts and regulations shall apply. for the pet or that the pet is
circumstances in each case, this part (3) Pet Restraint. The pet rules shall inappropriate, based on the therapeutic
does not define with specificity the require that all cats and dogs be value to the pet owner or the interests of
limits of the project owners’ discretion appropriately and effectively restrained the property or existing tenants. The pet
to promulgate pet rules. As a matter of and under the control of a responsible rules shall require the project owner to
general guidance, however, the pet rules individual while on the common areas of notify the pet owner if the project owner
must be reasonably related to furthering the project. If there is an applicable refuses to register a pet. The notice shall
a legitimate interest of the project State or local law or regulation state the basis for the project owner's
owner, such as the owner’s interest in governing pet restraint, the pet rules action and shall be served on the pet
providing a decent, safe, and sanitary prescribed under this paragraph (b)(3) owner in accordance with the
living environment for existing and shall not conflict with such law or requirements of § 243.22(f)(l)(i) or (ii).
prospective tenants and in protecting regulation. If such a conflict may exist, The notice of refusal to register a pet
and preserving the physical condition of the State or local law or regulation shall may be combined with a notice of pet
the project and the owner’s financial apply. violation as required in § 243.24. If there
interest in it. In addition, the pet rules (4) Registration. The pet rules shall is an applicable State or local law or
should be drawn narrowly to achieve require pet owners to register their pets regulation governing the registration of
the owner’s legitimate interests, without with the project owner. The pet owner pets, the pet rules prescribed under this
imposing unnecessary burdens and must register the pet before it is brought paragraph (b)(4) shall not conflict with
restrictions on pet owners and onto the project premises, and must such law or regulation. If such a conflict
prospective pet owners. Where a project update the registration at least annually. may exist, the State or local law or
owner has discretion to prescribe pet The project owner may coordinate the regulation shall apply.
rules under this section, the owner may annual update with the annual
vary the rules’ content among projects reexamination of tenant income, if (c) Discretionary rules. The project
owned by the project owner, provided applicable. The registration must owner may prescribe other reasonable
that the applicable rules are reasonable include: rules to govern the keeping of common
and do not conflict with any applicable (i) A certificate signed by a licensed household pets. These rules may
State or local law or regulation veterinarian or a State or local authority include, but are not limited to,
governing the owning or keeping of pets empowered to inoculate animals (or consideration of the following factors:
in dwelling accommodations. designated agent of such an authority) (1) D ensity o f tenants and pets, (i) The
stating that the pet has received all pet rules established under this section
(b) M andatory rules. The project inoculations required by applicable
owner must prescribe the following pet may take into account tenant and pet
State and local law; density. The pet rules may place
rules: (ii) Information sufficient to identify reasonable limitations on the number of
(1) Inoculations. The pet rules shall the pet and to demonstrate that it is a common household pets that may be
require pet owners to have their pets common household pet; and allowed in each dwelling unit. Under
inoculated in accordance with State and (iii) The name, address, and phone these rules, the number of four-legged,
local laws. number of one or more responsible warm-blooded pets may be limited to
parties who will care for the pet if the one pet in each dwelling unit. In the case
(2) Sanitary standards. The pet rules pet owner dies, is incapacitated, or is
shall prescribe sanitary standards to of group homes, the pet rules may place
otherwise unable to care for the pet. 1116 reasonable limitations on the number of
govern the disposal of pet waste. These project owner may require the pet owner
rules may designate areas on the project common household pets that may be
to provide additional information allowed in each home. Under these
premises for pet exercise and the necessary to ensure compliance with the
deposit of pet waste; may forbid pet rules, the number of four-legged, warm­
discretionary rules prescribed under blooded pets may be limited to one pet
owners from exercising their pets or paragraph (c) of this section, and shall
permitting their pets to deposit waste on in each group home. Other than these
require the pet owner to sign a limitations, the pet rules may not limit
the project premises outside the statement indicating that he or she has
designated areas; may require pet the total number of pets allowed in the
read the pet rules and agrees to comply project. If there is an applicable State or
owners to remove and properly dispose with them. The pet rules shall permit the
of all removable pet waste; and may local law or regulation governing the
project owner to refuse to register a pet density of tenants or pets (or both) with
require pet owners to remove pets from if the pet is not a common household
the premises to permit the pet to respect to the ownership or presence of
pet; if the keeping of the pet would pets in dwelling accommodations, the
exercise or deposit waste, if no area in violate any applicable house pet rule; if
the project is designated for such pet rules prescribed under this
the pet owner fails to provide complete paragraph (c)(1) shall not conflict with
purposes. In the case of cats and other pet registration information or fails
pets using litter boxes, the pet rules may such law or regulation. If such a conflict
annually to update the pet registration;
require the pet owner to change the litter may exist, the State or local law or
or if the project owner reasonably
(but not more than twice each week), regulation shall apply.
determines, based on the pet owner’s
may require pet owners to separate pet habits and practices, that the pet owner (ii) As used in this paragraph (c)(1),
waste from litter (but not more than will be unable to keep the pet in the term "group home” means a small,
once each day), and may prescribe compliance with the pet rules and other communal living arrangement designed
methods for the disposal of pet waste lease obligations. The pet’s specifically for individuals who are
and used litter. If there is an applicable temperament may be considered as a chronically mentally ill,
State or local law or regulation factor in determining the prospective pet developmentally disabled, or physically
governing the disposal of pet waste, the owner’s ability to comply with the pet handicapped who require a planned
pet rules prescribed under this rules and other lease obligations. The program of continual supportive services
paragraph (b)(2) shall not conflict with project owner may not refuse to register or supervision (other than continual
such law nr regulation. If such a conflict a pet based on a determination that the nursing, medical, or psychiatric care).
 Federal Register / Vol. 51, No. 230 / Monday, December % 1986 / Rules and Regulations 43299

(2) Pet size and pet type. The pet rules limit) increase the amount of the pet provided in this paragraph (c)(3), the
may place reasonable limitations on the deposit by amending the house pet rules project owner may not prescribe pet
types of pets and the size and weight of in accordance with § 243.22(e). The rules that impose on pet owners
pets allowed in the project. If there is an house pet rules shall provide for gradual additional financial obligations that are
applicable State or local law or accumulation of any such increase not designed to compensate the project
regulation governing-the size, weight or to exceed $10 per month for all deposit owner for the costs associated with the
type of pets allowed in dwelling amounts that are being accumulated. presence of pets in the project, including
accommodations, the pet rules (B) For tenants whose rents are not (but not limited to) requiring pet owners
prescribed under this paragraph (c)(2) subsidized under the programs listed in to obtain liability or other insurance to
shall not conflict with such law or paragraph (c)(3)(ii)(A) of this section, cover damage caused by the pet, to
regulation. If such a conflict may exist, but who live in a project assisted agree to be strictly liable for all
the State or local law or regulation shall (including tenants who live in a HUD- damages caused by the pet where this
apply. owned project that was assisted before liability is not otherwise imposed by
(3) Potential financial obligation o f HUD acquired it) under 24 CFR Part 236 State or local law, or to indemnify the
tenants, (i) The pet rules may require (Subpart C—Interest Reduction project owner for pet-related litigation
tenants who own or keep cats or dogs in Payments), section 202 of the Housing or attorney’s fees.
their units to pay a refundable pet Act of 1959, or section 221(d)(3)(BMIR) (vi) If there is an applicable State or
deposit. This deposit is in addition to of the National Housing Act, the pet local law or regulation governing the
any financial obligation generally deposit shall not exceed an amount financial obligations of tenants for their
imposed on tenants of the project. The periodically fixed by HUD by pets, the pet rules prescribed under this
project owner may use the pet deposit publication of a Notice in the Federal paragraph (c)(3) shall not conflict with
only to pay reasonable expenses Register. The house pet rules may such law or regulation. If such a conflict
directly attributable to the presence of provide for gradual accumulation of the may exist, the State or local law or
the pet in the project, including (but not deposit by the pet owner. The project regulation shall apply.
limited to) the cost of repairs and owner may (subject to the HUD- (4) Standards o f pet care. The pet
replacements to, and fumigation of, the prescribed limits) increase the amount rules may prescribe standards of pet
tenant’s dwelling unit, and the cost of of the pet deposit by amending the care and handling, but must be limited
animal care facilities under § 243.45. The house pet rules in accordance with to those necessary to protect the
owner shall refund the unused portion of § 243.22(e). condition of the tenant’s unit and the
the pet deposit to the tenant within a (C) For all other tenants of projects for general condition of the project
reasonable time after the tenant moves the elderly or handicapped, the pet premises, or to protect the health or
from the project or no longer owns or deposit shall not exceed one month’s safety of present tenants, project
keeps a dog or cat in the dwelling unit. rent at the time the pet is brought onto employees, and the public. Permitted
(ii) The maximum amount of the pet the premises. The house pet rules may rules may require pet owners to have
deposit that may be charged by the permit gradual accumulation of the pet their dogs and cats spayed or neutered;
project owner on a per dwelling unit deposit by the pet owner. may bar pets from specified common
basis is determined as follows: (iii) In fixing the amount of the pet areas (such as lobbies, laundry rooms,
(A) For tenants whose rents are deposit under paragraphs (c)(3)(ii) (A) and social rooms), unless the exclusion
subsidized (including tenants of a HUD- and (B), HUD will consider factors such will deny a pet reasonable ingress and
owned project, whose rents were as projected, estimated expenses egress to the project or building: may
subsidized before HUD acquired it) directly attributable to the presence of limit the length of time that a pet may be
under 24 CFR Part 215 (Rent Supplement pets in the project: the ability of project left unattended in a dwelling unit; and
Payments), Part 236 (Subpart D—Rental owners to offset such expenses by use may require the pet owner to control
Assistance Payments), Part 880 (Section of security deposits or HUD- noise and odor caused by a pet. The pet
8 New Construction), Part 881 (Section 8 reimbursable expenses: and the lower rules may not require pet owners to
Substantial Rehabilitation), Part 882 income status of tenants of projects for have any pet’s vocal cords removed. If
(Subparts D and E) (Section 8 Moderate the elderly or handicapped. Any pet there is an applicable State or local law
Rehabilitation), Part 883 (Section 8 State deposit that is within the applicable or regulation governing the care and
Housing Agency Program), Part 884 amount set by HUD under paragraphs handling of pets, the pet rules prescribed
(Section 8 Rural Set-Aside), Part 885 (c)(3)(b) (A) and (B) or its applicable under this paragraph (c)(4) shall not
(Loans for Housing for the Elderly or limit under paragraph (c)(3)(ii)(C) shall conflict with such law or regulation. If
Handicapped), or Part 886 (Subparts A be deemed a reasonable amount for such a conflict may exist, the State or
and C) (Section 8 Loan Management and purposes of this part. local law or regulation shall apply.
Property Disposition) and for tenants (iv) H ie pet rules may permit the (5) Pet licensing. The pet rules may
occupying lower income units under 24 project owner to impose a separate pet require pet owners to license their pets
CFR Part 850 (Housing Development waste removal charge of up to five in accordance with applicable State and
Grant program), the pet deposit shall not dollars ($5) per occurrence on pet local laws and regulations. (Failure of
exceed an amount periodically fixed by owners that fail to remove pet waste in the pet rules to contain this requirement
HUD by publication of a Notice in the accordance with the prescribed pet does not relieve the pet owner of
Federal Register. The pet rules shall rules. Any pet waste removal charge responsibility for complying with
provide for gradual accumulation of the that is within this five dollar ($5) applicable State and local pet licensing
deposit by the pet owner through an limitation shall be deemed to be a requirements.)
initial payment not to exceed $50 when reasonable amount for the purposes of (6) Pets tem porarily on the prem ises.
the pet is brought onto the premises, and this part. The pet rules may exclude from the
subsequent monthly payments not to (vj The pet deposit and pet waste project pets that are not owned by a
exceed $10 per month until the amount removal charge described in this tenant that are to be kept temporarily on
of the deposit is reached. The owner paragraph (c)(3) are not part of rent the project premises. For the purposes of
may (subject to the HUD-prescribed payable by the tenant. Except as this paragraph (c)(6), pets are to be kept
4330Q Federal Register / V ol. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations

“ temporarily” if they are to be kept in with tenants and tenant representatives request for a meeting to discuss the
the tenant’s dwelling accommodations to attempt to resolve issues raised by violation;
for a period of less than 14 consecutive the comments. Subject to this part, the (3) State that the pet owner is entitled
days and nights. The Department, content of the final pet rules, however, is to be accompanied by another person of
however, encourages project owners to within the sole discretion of the project his or her choice at the meeting; and
permit the use of a visiting pet program owner. The project owner shall serve on (4) State that the pet owner’s failure to
sponsored by a humane society or other each tenant of the project, a notice of correct the violation, to request a
non-profit organization. If there is an the final pet rules as provided in meeting, or to appear at a requested
applicable State or local law or paragraph (f) of this section. The notice meeting may result in initiation of
regulation governing pets temporarily in must include the text of the final pet procedures to terminate the pet owner’s
dwelling accommodations, the pet rules rules and must specify the effective date tenancy.
prescribed under this paragraph (c)(6) of the final pet rules.
shall not conflict with such law or (b) (1) Pet rule violation meeting. If
(e) Amendment o f pet rules. The the pet owner makes a timely request
regulation. If such a conflict may exist, project owner may amend the pet rules
the State or local law or regulation shall for a meeting to discuss an alleged pet
at any time by following the procedure rule violation, the project owner shall
apply. for the development of pet rules establish a mutually agreeable time and
(A pproved b y the O ffic e o f M an agem en t and specified in paragraphs (b) through (d) place for the meeting but no later than
Budget under control num ber 2502-0342) of this section. 15 days from the effective date of
§ 243.22 Procedure for development of
(f) Service o f notice. (1) The project service of the notice of pet rule violation
pet rules. owner must serve the notice required (unless the project owner agrees to a
under this section by: (i) Sending a letter later date). At the pet rule violation
(a) General. Project owners shall use
by first class mail, properly stamped and meeting, the pet owner and project
the procedures specified in this section
addressed to the tenant at the dwelling owner shall discuss any alleged pet rule
to promulgate the pet rules referred to in
unit, with a proper return address; or (ii) violation and attempt to correct it. The
§ 243.20.
(b) Developm ent and notice o f Serving a copy of the notice on any project owner may, as a result of the
proposed pet rules. Project owners shall adult answering the door at the tenant’s meeting, give the pet owner additional
develop proposed rules to govern the leased dwelling unit, or if no adult time to correct the violation.
owning or keeping of common responds, by placing the notice under or
through the door, if possible, or else by (2) N otice for pet removal. If the pet
household pets in projects for the owner and project owner are unable to
elderly or handicapped. Notice of the attaching the notice to the door; or (iii)
for service of notice to tenants of a high- resolve the pet rule violation at the pet
proposed pet rules shall be served on rule violation meeting, or if the project
each tenant of the project as provided in rise building, posting the notice in at
least three conspicuous places within owner determines that the pet owner
paragraph (f) of this section. The notice has failed to correct the pet rule
shall include the text of the proposed the building and maintaining the posted
notices intact and in legible form for 30 violation within any additional time
rules, state that tenants or tenant provided for this purpose under
representatives may submit written days. For purposes of this paragraph (f),
a high-rise building is a structure that is paragraph (b)(1) of this section, the
comments on the rules, and state that all project owner may serve a written
comments must be submitted to the equipped with an elevator and has a
common lobby. notice on the pet owner in accordance
project owner no later than 30 days from with § 243.22(f)(1) (i) or (ii) (or at the
the effective date of the notice of the (2) For purposes of computing time
meeting, if appropriate), requiring the
proposed rules. The notice may also periods following service of the notice,
pet owner to remove the pet. The notice
announce the date, time, and place for a service is effective on the day that all
must:
meeting to discuss the proposed rules notices are delivered or mailed, or in the
case of service by posting, on the day (i) Contain a brief statement of the
(as provided in paragraph (c) of this factual basis for the determination and
section). that all notices are initially posted.
the pet rule or rules that have been
(c) Tenant consultation. Tenants or (A pproved b y the O ffic e o f M a n a gem en t and
violated;
tenant representatives may submit Budget under control num ber 2502-0342)
written comments on the proposed pet (ii) State that the pet owner must
rules to the project owner by the date § 243.24 Pet rule violation procedures. remove the pet within 10 days of the
specified in the notice of proposed rules. (a) N otice o f pet rule violation. If a effective date of service of the notice of
In addition, the owner may schedule one project owner determines on the basis of pet removal (or the meeting, if notice is
or more meetings with tenants during objective facts, supported by written served at the meeting); and
the comment period to discuss the statements, that a pet owner has (iii) State that failure to remove the
proposed rules. Tenants and tenant violated a rule governing the owning or pet may result in initiation of procedures
representatives may make oral keeping of pets; the project owner may to terminate the pet owner’s tenancy.
comments on the proposed rules at these serve a written notice of pet rule (c) Initiation o f procedures to remove
meetings. The project owner must violation on the pet owner in a pet or terminate the pet ow ner’s
consider comments made at these accordance with § 243.22(f)(1) (i) or (ii). tenancy. (1) The project owner may not
meetings only if they are summarized, The notice of pet rule violation must: initiate procedures to terminate a pet
reduced to writing, and submitted to the (1) Contain a brief statement of the owner’s tenancy based on a pet rule
project owner before the end of the factual basis for the determination and violation, unless (i) the pet owner has
comment period. the pet rule or rules alleged to be failed to remove the pet or correct a pet
(d) Developm ent and notice o f fin a l * violated; rule violation within the applicable time
pet rules. The project owner shall (2) State that the pet owner has 10 period specified in this section
develop the final rules after reviewing days from the effective date of service of (including any additional time permitted
tenants’ written comments and written the notice to correct the violation by the owner) and (ii) the pet rule
summaries of any owner-tenant (including, in appropriate circumstances, violation is sufficient to begin
meetings. The project owner may meet removal of the pet) or to make a written procedures to terminate the pet owner’s
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43301

tenancy under the terms of the lease and inspect the premises. The lease shall described in § 243.30(a) and, if
applicable regulations. permit entry and inspection only if the applicable, § § 243.30 (b) and (c):
(2) The project owner may initiate project owner has received a signed, (a) Upon renewal of the lease and in
procedures to remove a pet under written complaint alleging (or the accordance with any applicable
§243.40 at any time, in accordance with project owner has reasonable grounds to regulation (see, for example, 24 CFR
the provisions of applicable State or believe) that the conduct or condition of 247.4(d)); or
local law, a pet in the dwelling unit constitutes, (b) When a tenant registers a common
(Approved by the Office of Management and under applicable State or local law, a household pet under § 243.20(b)(4).
Budget under control number 2502-0342) nuisance or a threat to the health or
safety of the occupants of the project or Subpart E—Nuisance or Threat to
§243.26 Rejection of units by applicants other persons in the community where Health or Safety
for tenancy. the project is located.
(a) An applicant for tenancy in a § 243.40 Nuisance or threat to health or
(c) Em ergencies. (1) If there is no Statesafety.
project for the elderly or handicapped or local authority (or designated agent of
may reject a unit offered by a project such an authority) authorized under Nothing in this part prohibits a project
owner if the unit is in close proximity to applicable State or local law to remove owner or an appropriate community
a dwelling unit in which an existing a pet that becomes vicious, displays authority from requiring the removal of
tenant of the project owns or keeps a symptoms of severe illness, or any pet from a project, if the pet’s
common household pet. An applicant’s demonstrates other behavior that conduct or condition is duly determined
rejection of a unit under this section constitutes an immediate threat to the to constitute, under the provisions of
shall not adversely affect his or her health or safety of the tenancy as a State or local law, a nuisance or a threat
application for tenancy in the project, whole, the project owner may place a to the health or safety of other
including (but not limited to) his or her provision in tenant leases permitting the occupants of the project or of other
position on the project waiting list or project owner to enter the premises (if persons in the community where the
qualification for any tenant selection necessary), remove the pet, and take project is located.
preference. such action with respect to the pet as
(b) Nothing in this part imposes a duty § 243.45 Protection of the pet.
may be permissible under State and
on project owners to provide alternate local law, which may include placing it If the health or safety of a pet is
dwelling units to existing or prospective in a facility that will provide care and threatened by the death or incapacity of
tenants because of the proximity of shelter for a period not to exceed 30 the pet owner, or by other factors that
common household pets to a particular render the pet owner unable to care for
days. The lease shall permit the project
unit or the presence of such pets in the the pet, the project owner may contact
owner to enter the premises and remove
project. the responsible party or parties listed in
the pet or take such other permissible
the pet registration required under
Subpart D—Lease Provisions action only if the project owner requests
§ 243.20(b) (4)(iii). If the responsible
the pet owner to remove the pet from the
party or parties are unwilling or unable
§243.30 Lease provisions. project immediately, and the pet owner
to care for the pet, or the project owner,
(a) Pet provisions. The leases for all refuses to do so, or if the project owner
despite reasonable efforts, has been
tenants of projects for the elderly or is unable to contact the pet owner to
unable to contact the responsible party
handicapped shall state that tenants are make a removal request. The lease may
or parties, the project owner may
permitted to keep common household not contain a provision relieving the
contact the appropriate State or local
pets in their dwelling units (subject to project owner from liability for wrongful
authority (or designated agent of such
the provisions of this part and the pet removal of a pet. The cost of the animal
an authority) and request the removal of
rules promulgated under § 243.20); shall care facility shall be paid as provided in
the pet. If there is no State or local
incorporate by reference the pet rules § 243.45. .
authority (or designated agent of such
promulgated by the project owner, shall (2) The project owner may place a an authority) authorized to remove a pet
provide that the tenant agrees to comply provision in tenant leases permitting the under these circumstances and the
with these rules; and shall state that project owner to enter the premises, project owner has placed a provision in
violation of these rules may be grounds remove the pet, and place the pet in a the lease agreement (as described in
for removal of the pet or termination of facility that will provide care and § 243.30(c)(2)), the project owner may
the pet owner’s tenancy (or both), in shelter, in accordance with the enter the pet owner’s unit, remove the
accordance with the provisions of this provisions of § 243.45. The lease may pet, and place the pet in a facility that
part and applicable regulations and not contain a provision relieving the will provide care and shelter until the
State or local law. These regulations project owner from liability for wrongful pet owner or a representative of the pet
include 24 CFR Part 247 (Evictions From removal of a pet. owner is able to assume responsibility
Certain Subsidized and HUD-Owned for the pet, but not longer than 30 days.
Projects) and provisions governing the § 243.35 implementation of lease
provisions. The cost of the animal care facility
termination of tenancy under the provided under this section shall be
Section 8 Housing Assistance Payments The lease for each tenant of a project
borne by the pet owner. If the pet owner
programs (see 24 CFR 880.607, for the elderly or handicapped who is
(or the pet owner’s estate) is unable or
881.607, 882.511, 883.708, 884.216, 886.128, admitted on or after the date on which
unwilling to pay, the cost of the animal
and 886.328). the project owner implements this part
care facility may be paid from the pet
(b) Inspections. In addition to other shall contain the lease provisions
deposit, if imposed under the pet rules.
inspections permitted under the lease, described in § 243.30(a) and, if
the leases for all tenants of projects for applicable, § § 243.30 (b) and (c). The PART 511—RENTAL REHABILITATION
the elderly or handicapped may state lease for each tenant who occupies a GRANT PROGRAM
that the project owner may, after unit in such a project under lease on the
reasonable notice to the tenant and date of implementation of this part shall 2. The authority citation for Part 511
during reasonable hours, enter and be amended to include the provisions continues to read as follows:
 ^330^______Federal_Register / Vol, 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

Authority: Sec. 17, United States Housing PART 942 — PET OWNERSHIP IN § 942.2 Exclusion for animals that assist
Act of 1937, 42 U.S.C. 1437o; sec. 7(d) the handicapped.
Department of Housing and Urban PUBLIC HOUSING FOR THE ELDERLY
Development Act, 42 U.S.C. 3535(d)). AND HANDICAPPED (a) This part does not apply to
animals that are used to assist the
3. In Part 511, § 511.11 is amended by Subpart A—General handicapped. This exclusion applies to
adding a new paragraph (h) to read as Sec. animals that reside in projects for the
follows: 942.1 Purpose. elderly or handicapped, as well as to
§ 511.11 Other Federal requirements. 942.2 Exclusion for animals that assist the animals that visit these projects. PHAs
* * * * *
handicapped. may not apply or enforce any pet rules
942.3 Definitions. developed under this part against
(h) Pet ownership in housing fo r the 942.4 Effective date. individuals with animals that are used
elderly or handicapped. The provisions to assist the handicapped.
of 24 CFR Part 243 apply to any project Subpart B—Nondiscrimination Provisions
(b) Nothing in this part:
assisted under this part for which 942.10 Prohibition against discrimination. (1) Limits or impairs the rights of
preference in tenant selection is given 942.15 Notice to tenants. handicapped individuals,
for all units in the project to elderly or Subpart C—Rules Governing the Keeping (2) Authorizes PHAs to limit or impair
handicapped persons or elderly or of Pets the rights of handicapped individuals, or
handicapped families, as defined in 24
CFR 812.2. 942.20 Content of pet rules. (3) Affects any authority that PHAs
942.25 Consultation with tenants on pet may have to regulate animals that assist
4. Part 842 is added to read as follows: rules. the handicapped, under Federal, State or
PART 842—PET OWNERSHIP IN 942.27 Lease provisions. local law.
HOUSING FOR THE ELDERLY AND Subpart D—Nuisance or Threat to Health or § 942.3 Definitions.
HANDICAPPED Safety
(a) Elderly or handicapped fam ily
Authority: Sec. 227(b), Housing and Urban- 942.30 Nuisance or threat to health or means an elderly or handicapped person
Rural Recovery Act of 1983,12 U.S.C. 1701n- safety. or family, as defined in 24 CFR 912.2.
1; sec. 7(d), Department of Housing and Authority: Sec. 227(b), Housing and Urban- (b) Indian Housing Authority means a
Urban Development Act, 42 U.S.C. 3535(d). Rural Recovery Act of 1983,12 U.S.C. 1701n-l; public housing agency established:
and sec. 7(d), Department of Housing and (1) By exercise of an Indian tribe’s
§ 842.1 Pet ownership in housing for the Urban Development Act, 42 U.S.C. 3535(d).
elderly or handicapped. powers of self-government, independent
of State law; or
(a) Section 227 of the Housing and Subpart A—General
(2) By operation of State law
Urban-Rural Recovery Act of 1983 (12
§ 942.1 Purpose. providing specifically for housing
U.S.C. 1701n-l) provides that no owner
authorities for Indians.
or manager of federally assisted rental (a) This part implements section 227
housing for the elderly or handicapped (c) Project fo r the elderly or
of the Housing and Urban-Rural
may as a condition of tenancy or handicapped means any project assisted
Recovery Act of 1983 (12 U .S.C. 1701n-l) under the United States Housing Act of
otherwise, prohibit or prevent tenants of as it pertains to the public housing
such housing from owning or keeping 1937 (other than under section 8 or 17 of
programs administered by the Assistant the Act), including any building within a
common household pets in their units or Secretary for Public and Indian Housing.
restrict or discriminate against persons mixed-use project, that was designated
24 CFR Part 243 implements this for occupancy by the elderly or
in connection with admission to, or provision as it pertains to the programs
continued occupancy of, such housing handicapped at its inception or,
administered by the Assistant Secretary although not so designated, for which
because they own common household for Housing-Federal Housing
pets. The statute directs HUD to issue the PHA gives preference in tenant
Commissioner. selection (with HUD approval) for all
regulations necessary to ensure (b) Section 227 provides that no owner
compliance with these provisions and to units in the project (or for a building
or manager of federally assisted rental within a mixed-use project) to elderly or
ensure attaining the goal of providing housing for the elderly or handicapped
decent, safe, and sanitary housing for handicapped families. This term does
may as a condition of tenancy or not include projects assisted under the
the elderly or handicapped. The statute otherwise, prohibit or prevent tenants of
also requires that these regulations Mutual Help Homeownership
such housing from owning or keeping Opportunity program (24 CFR Part 905,
establish guidelines under which owners common household pets in their units or
and managers may prescribe reasonable Subpart D) or the Low-Rent Housing
restrict or discriminate against persons Homeownership Opportunity program
rules for the keeping of pets by tenants in connection with admission to, or
and must consult with tenants in (Turnkey III-24 CFR Part 904).
continued occupancy of, such housing (d) Public Housing A gency ("PHA ”J
prescribing the rules. because they own common household means any State, county, municipality,
(b) Part 243 of this title implements pets. The statute directs HUD to issue or other governmental entity or public
section 227 as it pertains to the housing regulations necessary to ensure body (or agency or instrumentality) that
programs administered by the Assistant compliance with these provisions and to is authorized to engage in or assist in the
Secretary for Housing-Federal Housing ensure attaining the goal of providing development or operation of housing for
Commissioner. The provisions of Part decent, safe, and sanitary housing for lower income families. As used in this
243 apply to projects assisted under the the elderly or handicapped. The statute part, PHA includes an Indian Housing
programs contained in this Chapter VIII also requires that these regulations Authority.
that meet the definition of project for the establish guidelines under which owners
elderly or handicapped contained in 24 and managers may prescribe reasonable § 942.4 Effective date.
CFR 243.3(c). rules for the keeping of pets by tenants This part shall be effective [/nseri
5. Part 942 is added, to read as and must consult with tenants in effective date o f fin a l rule). However,
follows: prescribing the rules. the PHA shall have until [insert date 60
 Federal Register / V o l. 51, N o. 230 / M on d ay, Decem ber 1, 1986 / Rules and Regulations 43303

days after effective date] to implement Subpart C—Rules Governing the common household pets that may be
the provisions of this part. Keeping of Pets allowed in each dwelling unit. In the
case of group homes, the pet rules may
Subpart B—Nondiscrimination § 942.20 Content of pet rules. place reasonable limitations on the
Provisions (a) General. (1) PHAs may choose not number of common household pets that
to promulgate rules governing the may be allowed in each home. Other
§942.10 Prohibition against keeping of common households pets. If than these limitations, the pet rules may
discrimination. they so choose, tenants must be not limit the total number of pets
Except as otherwise specifically permitted to own and keep pets in their allowed in the project. If there is an
authorized under this part, no PHA that units in accordance with the terms and applicable State or local law or
owns or manages a project for the conditions of their leases, the provisions regulation governing the density of
elderly or handicapped may: of this part, and any applicable State or tenants or pets (or both), the pet rules
local law or regulation governing the prescribed under this paragraph (b)(2)
(a) As a condition of tenancy or
owning or keeping of pets in dwelling shall not conflict with such law or
otherwise, prohibit or prevent any accommodations. PHAs that choose not
tenant of such housing from owning regulation. If such a conflict may exist,
to promulgate pet rules, shall not the State or local law or regulation shall
common household pets or having such impose, by lease modification or
pets living in the tenant’s dwelling unit; apply.
otherwise, any requirement that is (ii) As used in paragraph (b)(2), the
or S2 d| inconsistent with the provisions of this term “group home for the handicapped’’
(b) Restrict or discriminate against section. means a dwelling or dwelling unit for
any person in connection with (2) PHAs may, if they choose, the exclusive residential use of elderly
admission to, or continued occupancy prescribe reasonable rules to govern the or handicapped individuals who are not
of, such housing by reason of the keeping of common household pets, as capable of living completely
person’s ownership of common provided in paragraph (b) of this section. independently and who require a
household pets or the presence of such These rules must be reasonably related planned program of continual supportive
pets in that person’s dwelling unit. to furthering a statutory or contractual
services or supervision (other than
interest of the PHA, such as its interest
continual nursing, medical or psychiatric
§942.15 Notice to tenants. in providing a decent, safe, and sanitary
care).
(a) During the tenant consultation living environment for existing and
prospective tenants and in protecting (3) Pet size and p et type. The pet rules
process described in § 942.25, PHAs may place reasonable limitations on the
shall serve written notice on all tenants and preserving the physical condition of
the project and its financial interest in it size, weight, and type of common
of projects for the elderly or household pets allowed in the project. If
In addition, the pet rules should be
handicapped administered by the PHA there is an applicable State or local law
drawn narrowly to achieve the PH A’s
who are in occupancy at the time of legitimate interests, without imposing or regulation governing the size, weight,
service, stating that: (1) Tenants are unnecessary burdens and restrictions on or type of pets allowed in dwelling
permitted to own and keep common pet owners and prospective pet owners. accommodations, the pet rules
household pets in their dwelling units, in PHAs may vary the content of the pet prescribed under this paragraph (b)(3)
accordance with the pet rules (if any) rules among projects administered by shall not conflict with such law or
promulgated under Subpart C of this the PHA and within individual projects, regulation. If such a conflict may exist,
part; (2) animals that are used to assist based on factors such as the size, type, the State or local law or regulation shall
the handicapped are excluded from the location, and occupancy of the project apply.
requirements of this part as provided in or its units, provided that the applicable (4) Potential fin an cial obligations o f
§ 942.2; (3) tenants may, at any time, rules are reasonable and do not conflict tenants, (i) The pet rules may require
request a copy of any current pet rule with any applicable State or local law or tenants who own or keep pets in their
developed under § 942.25 (as well as regulation governing the owning and units to pay a refundable pet deposit.
any current proposed rule or proposed keeping of pets in dwelling This deposit is in addition to any other
amendment to an existing rule); and (4) accommodations. financial obligation generally imposed
(b) Discretionary rules. Pet rules on tenants of the project. The PHA may
where leases prohibit pets, tenants may
promulgated by PHAs may include, but use the pet deposit only to pay
request that their leases be amended in
are not limited to, consideration of the reasonable expenses directly
accordance with § 942.27. If a PHA attributable to the presence of the pet in
following factors:
chooses not to promulgate pet rules, the the project, including (but not limited to)
(1) Common household pet. The pet
notice shall be served within 60 days of rules may contain a reasonable the cost of repairs and replacements to,
the effective date of this part, as definition of a common household pet. If and fumigation of, the tenant’s dwelling
provided in § 942.4. Notice under this there is an applicable State or local law unit. The PHA shall refund the unused
paragraph shall be served according to or regulation defining the term, the portion of the pet deposit to the tenant
the normal service of notice procedures definition described under this within a reasonable time after the
used by the PHA. paragraph (b)(1) shall not conflict with tenant moves from the project or no
(b) The PHA shall provide to each such law or regulation. If such a conflict longer owns or keeps a pet in the
applicant for tenancy when he or she is may exist, the State or local law or dwelling unit. The maximum amount of
offered a dwelling unit in a project for regulation shall apply. This term does pet deposit that may be charged by the
the elderly or handicapped, the written not include animals that are used to PHA, on a per dwelling unit basis, shall
notice specified in paragraphs (a) (1), assist the handicapped. not exceed the higher of the Total
(2), and (3) of this section. (2) D ensity o f tenants and pets, (i) The Tenant Payment (as defined in 24 CFR
pet rules established under this section 913.102) or such reasonable fixed
(Approved by the Office of Management and may take into account tenant and pet amount as the PHA may require. The pet
Budget under control number 2577-0078)
density. The pet rules may place rules may permit gradual accumulation
reasonable limitations on the number of of the pet deposit by the pet owner.
43304 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

Except as provided under this paragraph and social rooms), unless the exclusion prescribed under this paragraph (b)(7)
(b)(4) and 24 CFR 966.4(b), PHAs may will deny the animal reasonable ingress shall not conflict with such law or
not prescribe pet rules that impose and egress to the project or building; regulation. If such a conflict may exist,
additional financial obligations on pet and control by the pet owner of noise the State or local law or regulation shall
owners that are designed to compensate and odor caused by the pet. The pet apply.
the PHA for costs associated with the rules may not require pet owners to
presence of pets in the project, including have any pet’s vocal cords removed. If § 942.25 Consultation with tenants on pet
(but not limited to) requiring pet owners there is an applicable State or local law rules.
to obtain liability or other insurance to or regulation governing the care and PHAs that choose to promulgate pet
cover damage caused by the pet, to handling of pets, the pet rules prescribed rules shall consult with tenants of
agree to be strictly liable for all under this paragraph (b)(5)(ii) shall not projects for the elderly or handicapped
damages caused by the pet where this conflict with such law or regulation. If administered by them with respect to
liability is not otherwise imposed by such a conflict may exist, the State or their promulgation and subsequent
State or local law, or to indemnify the local law or regulation shall apply. amendment. PHAs shall develop the
project owner for pet-related litigation (6) Other, (i) The pet rules may require specific procedures governing tenant
and attorney’s fees. Hie pet deposit is pet owners to comply with applicable consultation, but these procedures must
not part of the rent payable by the State or local laws or regulations be designed to give tenants (or, if
tenant. governing the licensing and inoculation appropriate, tenant councils) adequate
(ii) If there is an applicable State or of pets. (Failure of the pet rules to opportunity to review and comment
local law or regulation governing contain these requirements does not upon the pet rules before they are issued
financial obligations of tenants for their relieve the pet owner of responsibility for effect. PHAs are solely responsible
pets, the pet rules prescribed under this for complying with applicable State and for the Gontent of final pet rules, but
paragraph (b)(4) shall not conflict with local pet licensing and inoculation must give consideration to tenant
such law or regulation. If such a conflict requirements.) comments. PHAs shall send to the
may exist, the State or local law or (ii) The pet rules may designate responsible HUD field office, copies of
regulation shall apply. buildings, floors of buildings, or sections the final (or amended) pet rules, as well
(5) Standards o f pet care. The pet of buildings as no-pet areas where pets as summaries or copies of all tenant
rules may address standards of pet care generally may not be permitted. comments received in the course of the
and handling. Similarly, the pet rules may designate tenant consultation.
(i) The pet rules may prescribe buildings, floors of buildings, or sections
sanitary standards to govern the of buildings for residency generally by (Approved by the Office of Management and
Budget under control number 2577-0078)
disposal of pet waste. For example, the pet-owning tenants. The PHA may direct
rules may designate areas on the project such initial tenant moves as may be § 942.27 Lease provisions.
premises for pet exercise and the necessary to establish pet and no-pet (a) Lease provisions. (1) Where a PHA
deposit of pet waste; may forbid pet areas. The PHA may not refuse to admit has established pet rules under Subpart
owners from exercising their pets or (or delay admission of) an applicant for C of this part, the leases for all tenants
permitting their pets to deposit waste on tenancy on the grounds that the of projects for the elderly or
the project premises outside the applicant’s admission would violate a handicapped shall not contain any
designated areas; may require pet pet or no-pet area. The PHA may adjust
owners to remove and properly dispose provisions prohibiting the owning or
the pet and no-pet areas or may direct
keeping of common household pets
of all removable pet waste; and may such additional moves as may be
require pet owners to remove pets from (subject to the provisions of this part
necessary (or both) to accommodate
the premises to permit the pet to and the pet rules); shall incorporate by
such applicants for tenancy or to meet
exercise or deposit waste, if no area on reference the pet rules promulgated by
the changing needs of existing tenants. If
the premises is designated for such there is an applicable State or local law the PHA; shall provide that the tenant
purposes. If there is an applicable State or regulation governing the agrees to comply with these rules,
or local law or regulation governing the establishment and maintenance of pet or including those governing tenant moves
disposal of pet waste, the pet rules no-pet areas, the pet rules prescribed as provided in this part; and shall state
prescribed under this paragraph (b)(5)(i) under this paragraph (b)(6)(ii) shall not that violation of these rules may be
shall not conflict with such law or conflict with such law or regulation. If grounds for removal of the pet or
regulation. If such a conflict may exist, such a conflict may exist, the State or termination of the pet owner’s tenancy
the State or local law or regulation shall local law or regulation shall apply. (or both), in accordance with the
apply. (7) Pets tem porarily on the prem ises. provisions of this part and applicable
(ii) The pet rules may address other The pet rules may exclude from the regulations, e.g., 24 CFR Part 966 (tease
aspects of pet care and handling, but project pets not owned by a tenant that and Grievance Procedures) and State
must be limited to those necessary to are to be kept temporarily on the project and local law.
protect the condition of the tenant’s unit premises. For the purposes of this (2) Where a PHA has not established
and the general condition of the project paragraph (b)(7), pets are to be kept pet rules under Subpart C, the leases of
premises, or to protect the health or “temporarily” if they are to be kept in all tenants of such projects shall not
safety of present tenants, PHA the tenant’s dwelling accommodations contain any provisions prohibiting the
employees, and the public. The pet rules for a period of less than 14 consecutive owning or keeping of common
may require that all cats and dogs be days and nights. The Department, household pets, and shall state that
appropriately and effectively restrained however, encourages PHAs to permit owning and keeping of such pets will be
and under the control of a responsible the use of a visiting pet program subject to the general obligations
individual while on the project’s sponsored by a humane society, or other imposed on the PHA and tenants in the
common areas. Other permitted pet nonprofit organization. If there is an lease and any applicable State or local
rules may include requirements for; The applicable State or local law or law or regulation governing the owning
exclusion of pets from specified common regulation governing pets temporarily in or keeping of pets in dwelling
areas (such as lobbies, laundry rooms dwelling accommodations, the pet rules accommodations.
 Federal Register / V ol. .51, N o . 230 / M onday, Decem ber 1, '1986 / -Rides and Regulations 43305

[^ Implementation o f .lease (1) Upon annual reexamination of from requiring die removal of any pet
provisions. The lease for each tenant of tenant income in accordance with any from a project, if the pet’s'conduct or
aproject for the elderly nr handicapped applicable regulation, or condition is duly determined to
who is admitted on o t after the date on f2) [Link] wishes to own or constitute, -under the provisions <dfState
which this .part is implemented:shall keep a common household pet in his or or local law, a nuisance or-a threat to
contain the .lease provisions described her unit. the health or safety of other occupants
inparagraph (a) .(1) or f 2) of this section, of the project or of other persons in the
as appropriate. The lease for each Subpart D—Nuisance or Threat to community where the project is located.
tenant who occupies a unit in such a Health or Safety D ated: N ovem b er 14, T986.
project underlease on the date of
§ 942.30 Nuisance or threat to health or Samuel R. Pierce, Jr.,
implementation of this paTt shall be
amended to include the appropriate safety. Secretary.
provisions of paragraph {a} of this Nothing in'this part prohibits a PHA [FR D o c. 86-26747 Filed 14-28-86; 8:45 am]

section as follows: or an appropriate community authority BILUNG CODE Ï2K H32-M

43306 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / N otices

DEPARTMENT OF HOUSING AND under 24 CFR Part 243, § 243.20(c)(3) reporting requirements, and collecting
URBAN DEVELOPMENT permits project owners to establish pet charges; (6) costs associated with
house pet rules that require tenants who establishing pet and no-pet areas,
Office of the Assistant Secretary for own or keep cats or dogs in their units to maintaining pet and no-pet waiting lists,
Housing—Federal Housing pay a refundable pet deposit. and moving tenants to establish and
Commissioner Section 243.20(c)(3)(ii) provides that maintain such areas; and (7) costs
[D o c k e t N o. N -8 6 -1 5 8 7 ; F R -2 1 7 7 ]
for certain tenants, the maximum associated with establishing pet waste
amount of the pet deposit that may be disposal facilities.
Pet Ownership in Housing for the charged by the project owner, on a per To ensure compensation for these
Elderly or Handicapped; Notice of Pet dwelling unit basis, may not exceed an additional expenses, the commenters
Deposit Limitation amount periodically fixed by HUD by proposed various amounts for the pet
publication of a Notice in the Federal deposit. The proposed amounts for
AGENCY: Office of the Assistant Register. These limitations apply to the deposits varied widely, based on the
Secretary for Housing—Federal Housing following classes of tenants residing in commenter’s method of computation and
Commissioner, HUD. projects that meet the definition of whether the commenter advocated the
a c t i o n : Notice of pet deposit limitation. project for the elderly or handicapped recovery of all or a portion of project
under § 243.3(c): costs through security deposits. Deposits
S UM M ARY: 24 CFR 243.20(c)(3) requires (1) Tenants assisted (including tenants proposed were as high as $2,000,
HUD periodically to fix by Notice of a HUD-owned project, who were although deposits in the $400 to $500
published in the Federal Register, a assisted before HUD acquired it) under: range were more common.
limitation on the amount of the pet (A) Section 202 of the Housing Act of Based on the comments to the
deposit that project owners may charge 1959 or section 221(d)(3) (BMIR) of the proposed rule, it is impossible to predict
tenants who own or keep cats or dogs in National Housing Act, or with precision the expenses directly
certain projects for the elderly or (B) 24 CFR Part 215 (Rent Supplement attributable to the presence of pets in
handicapped. This Notice announces a Payments), Part 236 (Subpart C—Interest
the project. Most commenters merely
pet deposit limitation of $300. Reduction Payments and Subpart D—
suggested deposit amounts, and did not
EFFECTIVE d a t e : This notice is related to Rental Assistance Payments), Part 880
explain what costs were included in
FR-1936—Pet Ownership in Assisted (Section 8 New Construction), Part 881
their computations or include any cost
Housing for the Elderly or Handicapped, (Section 8 Substantial Rehabilitation),
breakdowns. Where commenters
published elsewhere in today’s edition Part 882 (Subparts D and E) (Section 8
described the various costs considered,
of the Federal Register. Under section Moderate Rehabilitation), Part 883
many included general costs associated
7(o)(3) of the Department of Housing (Section 8 State Housing Agency
Program), Part 884 (Section 8 Rural Set- with the presence of pets in the project
and Urban Development Act (42 U.S.C. that under the final rule cannot be
3535(o)(3)), the related final rule cannot Aside), or Part 886 (Subpart A (Loan
Management) and Subpart C (Property recouped through pet deposits, or costs
become effective until after the first that would have been incurred under the
period of 30 calendar days of continuous Disposition)); and
(2) Tenants occupying “lower income proposed pet regulation, but were
session of Congress which occurs after eliminated in the final pet rule (e.g.,
the date of the rule’s publication. HUD units” under 24 CFR Part 850 (Housing
Development Grant program). costs associated with establishing and
will publish a notice of the effective date maintaining pet and no-pet areas,
of the related final rule and this notice In fixing the amount of the pet deposit
applicable to these tenants, including tenant moves). In most cases,
following expiration of the 30-session- it was impossible to isolate these
day waiting period. Whether or not the § 243.20(c)(3)(iii) requires HUD to
consider factors such as projected, expenses, because cost breakdowns
statutory waiting period has expired, the were not provided.
related final rule and this notice will not estimated expenses directly attributable
to the presence of pets in the project; the Where commenters offered data
become effective until HUD’s separate concerning the expenses that would be
notice is published announcing a ability of project owners to offset such
expenses by the use of security deposits directly attributable to the presence of
specific effective date. pets, the expenses were generally
or HUD-reimbursable expenses; and the
FOR FURTHER IN FO RM A TIO N CONTACT: limited to the costs of repairs and
lower income status of tenants of
James J. Tahash, Office of Multifamily projects for the elderly or handicapped. replacements to, and fumigation of, the
Housing, Room 6180, Department of pet owner’s dwelling unit, and pet
Housing and Urban Development* 451 Expenses Attributable to Pet Presence boarding costs under emergency
Seventh Street, SW . Washington, DC Commenters to the proposed pet situations. Where specific component
20410, Telephone (202) 426-3970. (This is regulation (49 FR 50562 (1984)) noted costs were provided: general cleaning
not a toll-free number.) that the presence of pets in covered expenses ranged from $24-$75; painting
SUPPLEMENTARY INFO RM A TIO N : projects would increase project costs expenses from $75-$350; carpet cleaning
Elsewhere in today’s edition of the and administrative burdens on project costs from $25 to $150; carpet
Federal Register, HUD is publishing a management. These commenters replacement from $300 to $800; drapery
final rule implementing section 227 o f predicted additional expenses as the cleaning from $25-$48; fumigation costs
the Housing and Urban-Rural Recovery result of: (1) Damage to pet owners’ from $35-$100, carpentry expenses from
Act of 1983 (12 U.S.C. 1701n-l). This units; (2) damage to, and maintenance $50-$100; and boarding costs from $90-
regulation provides for the ownership of, common areas; (3) increased $210, based on a 30-day stay; and
and keeping of common household pets fumigation and pest control costs; (4) pet drapery replacement costs were
in federally assisted housing for the boarding costs under emergency approximately $200.
elderly or handicapped. In order to situations; (5) increased administrative * While consideration of all conceivable
compensate owners of projects for the costs from formulating pet rules, costs would result in a high deposit
elderly or handicapped for reasonable registering pets, monitoring pets, limitation, the Department believes that
expenses directly attributable to the responding to pet complaints, changing the probable financial liability caused
presence of pets in projects covered leases and forms, complying with by pets will be considerably less. The
 Federal Register / Vol. 51, No. 230 / Monday., December 1, 1986 / Notices 43307

Department considers the costs are necessary to protect the condition of income range may be approved for
associated with damage lo the dwelling the tenant’s unit and [Link] admission under theBection 8
unit claimed by many commentera to be condition of the project -premises assistance programs under Parts 880
excessive-because they .are based on a (§ 243.20(c)(4)); and (3) enforcing these through 886, if the effective date of the
"worst case” scenerio. For-example, one pet rules under § 243.24. HAP contract is October 1,1981 or after.
commenter’s estimate of costs included Based on all of these factors, the (§ 813.105(a)).
expenses for the replacement o f ;such Department concludes that the financial Based on the national median income,
items as doors, woodwork, appliances, liability that the presence of pets will this means that the vast and growing
floorboards, subflooring, and concrete cause project owners is not amenable 4o majority o f assisted tenants’ family
floors, it would appear that the precise determination, hut viewing the incomes is below $9,450 (based on a
likelihood of such extensive damage to a rule in its entirety and taking into family of one) or $10*800 (based on a
unit would be extremely jemote. Even consideration reasonably anticipated family of two). Unfortunately, HUD does
the lower estimates based on carpet and pet-related expenses, project owner not have sfurther income level
drapery replacement, complete [Link] be lower than most of breakdowns -(e.g., the percentage of
fumigation, carpentry costs, etc., may the estimates the commenters provided. families with incomes of less than 40%,
overstate the probable liability, since Ability of the Project Owner to Offset 30%, 20%, etc,, of median income for
most pets will cause limited damage to Expenses their area). However, the available data
the unit. clearly indicate that -tenants subject to
In addition to the pet deposit project this Notice possess a limited amount of
Similarly, inclusion of ,30-day pet
owners have other resources available disposable income.
boarding costs in the calculation
to offset pet-related expenses. As noted To protect tenants of covered projects
overstates such expenses. Boarding of a
above, many of the expenses associated for the elderly or'handicapped, a large
pet is provided for under very narrowly
with the presence of pets in the project number of commenters to the proposed
defined circumstances. Under § 243.45, a are related to the damage that the pet
pet may be boarded if its health or pet regulation urged that the pet deposit
may cause to the dwelling unit. Most reflect this limited ability to pay.
safety is threatened by the death or facilities have in place some form of
incapacity of the pet owner, or by other Generally, suggested deposits were
security deposit to be used to offset
factors that render the pet owner unable based on the tenant’s share of monthly
damage caused to the dwelling unit. v
to care for the pet; the party (or parties) Moreover, project owners’ potential rent or a percentage of the tenant’s
designated by the pet owner in the pet monthly income, and were subject to
exposure to expenses from pet damage
registration are unavailable to care for to dwelling units may be limited under overall limitations ranging from $50 to
the pet; and there is no State or local certain programs that require HUD to $100.
agency authorized to care for pay reimbursement if the general Conclusion
abandoned pets. (Situations providing security deposit is insufficient to cover
for boarding under § 243.30(c)(1) are all damages and rent arrearages. For This Notice attempts to balance the
similarly limited). Even if a pet is example, for projects receiving Section 8 interests of project owners and potential
boarded under these provisions, the pet assistance under Parts 880, 881, and 883; pet owners by carefully weighing the
rule states that kenneling costs are to be this amount will be the lesser of the factors described in § 243.20(c)(3)(iii). In
borne by the tenant or the tenant’s amount owed to the owner or one this process, the Department has
estate and that the pet deposit may be month’s contract rent (minus the amount attempted to set a limitation that
used only if these resources are of the tenant’s security deposit plus provides adequate security to the
inadequate. In addition, the final rule accrued interest). See, § § 880.608(f), project owner against reasonably
states the boarding period as a 881.608(f), and 883.709(f). See also, anticipated pet-related damages that are
maximum—not more than 30 days—■ §§ 886.116(a) and 886.315(d). not likely to be recovered from other
unlike the proposed rule, which sources, and that does not unreasonably
provided for a 30-day minimum. Finally, Lower Income Status of Tenants strain tenants’ financial capabilities.
project owners may avoid potential The third factor to be taken into HUD has concluded that a pet deposit
liability for this expense entirely by not account in setting the pet deposit limitation of $300 is appropriate as an
incorporating in the tenant leases the limitation is the lower income status of initial limitation. This limitation is less
provisions of § 243.30(c)(1) and (2) that tenants. The most recent information than the deposits that most project
| deal with emergencies. within the Department indicates that owners and managers proposed.
Moreover, under the final rule, the approximately 90 percent of all assisted However, given the Department’s
project owner is able to take reasonable families are very low-income families, conclusion noted above, that many of
j measures to limit the potential expense with income levels below 50 percent of these deposit estimates are inflated or
| directly attributable to pets by: (1) median income for their area. Moreover, based on the "worst case” scenario, the
! Refusing to register pets in the project if there are factors that may increase the fact that damages can be limited by the
the project owner reasonably percentage of families with incomes of pet registration procedures and
determines, based on the pet owner’s less than 50 percent of median income. judicious prescription and enforcement
habits and practices, that the pet owner For example, under section 16(b) of the of house pet rules, and the fact that
will be unable to keep the pet in United States Housing Act of 1937, not other resources for project owner
compliance with pet rules and other more than 5 percent of the dwelling compensation may be available, the
lease obligations (§ 243.20(b)(4)), (2) units that initially become available for Department believes that this limitation
Prescribing sanitary standards occupancy under public housing A C C s will enable project owners to require a
governing the proper disposal of pet and Section 8 HAP contracts on or after security deposit that will provide
Wastes (§ 243.20(b)(2)); limiting the October 1,1981 are available for leasing adequate protection under reasonably
[ nuRiber, size, weight, and type of pets by families with incomes between 50 anticipated circumstances.
Permitted in the dwelling unit and 80 percent of the area median. This figure exceeds the deposits
II 243.20(c)(1) and (2)), and addressing Except with the prior approval of HUD, proposed by commenters who focused
standards of pet care and handling that after July 1,1984 no families in this on tenants’ financial capabilities. While
43308____________ Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices

the pet deposit will be paid by deposit is specifically authorized with A Finding of No Significant Impact
individuals with limited discretionary respect to other covered tenants. Other with respect to the environment has
income, the Department does not matters regarding the administration of been made in accordance with HUD
believe that the $300 limitation is so high the pet deposit (such as interest on the regulations in 24 CFR Part 50, which
that it imposes an unreasonable deposit and replenishment of deposit) implement section 102(2) (c) of the
financial barrier to the exercise of the are left to the discretion of the project National Environmental Policy Act of
right to pet ownership. In this regard, the owner, subject to the provisions of State 1969, 42 U .S.C. 4332. The Finding of No
Department notes that the financial and local law. Significant Impact is available for public
impact on pet owners is mitigated by the This Notice has attempted to balance inspection during regular business hours
pet deposit accumulation provisions the relevant factors in the final rule in the Office of the Rules Docket Clerk,
contained in the final rule. In the case of using the best information available to Room 10276, at the address listed above.
tenants whose rents are subsidized the Department. HUD will continue to Authority: Sec. 227(b), Housing and Urban-
under the Rent Supplement, section 236 monitor the adequacy of the limitation Rural Recovery Act of 1983 (12 U.S.C. 1701n-
Rental Assistance Payments, or Section set in this Notice, and solicits data on a 1); and sec. 7(d), Department of Housing and
8 programs, or tenants who are continuing basis concerning the effect of Urban Development Act, (42 U.S.C. 3535(d)).
occupying lower income units under the the limitation on project owners and Dated: November 17,1986.
Housing Development Grant program, tenants. Greater accuracy regarding the Silvio j. DeBartolomeis,
the final rule requires that pet owners computation of the pet deposit limitation General DeputyAssistant Secretary for
be permitted to accumulate the deposit can be achieved in future Notices, based Housing—Deputy Federal Housing
through an initial payment of up to $50, on more accurate data reflecting greater Commissioner.
and subsequent monthly payments of up HUD and project owner experience with [FR Doc. 86-26746 Filed 11-28-86: 8:45 am]
to $10. Gradual accumulation of the pet pets in assisted housing. BILLING CODE 4210-32-M
Monday
December 1, 1986

Part III

Department of
Education
34 CFR Part 692
State Student Incentive Grant Program;
Final Regulations
43310 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

DEPARTMENT OF EDUCATION grantees to meet their cost-sharing Compact of Free Aissociation

.obligations [Link] funds from
On January 14,1986, President Reagan
34 CFR Part 692 third parties. As a result of the
signed the Compact of Free Association,
amendment to § 692.3, each State must
which will terminate the trusteeship
State Student Incentive Grant Program match its Federal allotment of SSIG
status of Certain islands in the Pacific
funds with direct State appropriations.
AGENCY: Department of Education. that were previously part of the Trust
As amended, § 692.3 will not preclude a
a c t io n : Final regulations. State from receiving voluntary Territory of the Pacific Islands. This
Compact will create two new entities—
contributions from private sources
S u m m a r y : The Secretary amends the
which it could then use in its SSIG the Federated States of Micronesia and
regulations governing the State Student program as long as those funds are not the Marshall Islands. In addition,
Incentive Grant (SSIG) Program to used as part of the State’s required another separate Compact is currently
require a State which participates in the match. under consideration by the Congress
SSIG Program to match its Federal Under the existing regulations, a State which will create an independent entity,
allotment with State appropriations and must match each SSIG grant it awards. the Republic of Palau. Although the first
to allow a State to match its Federal In order to provide a State with greater Compact was signed into law on
allotment at the program level rather flexibility in its administration of its January 14,1986, the effective date is
than at the individual grant level. The SSIG program, the Secretary has being delayed, pending enactment of the
Secretary also amends the SSIG amended § 692.21(g)(1) to permit a State Palau Compact.
Program regulations to conform the to match the Federal funds it receives on Although the Marshall Islands, the
regulations to the recently enacted a program rather than on a grant basis. Federated States of Micronesia, and the
Comprehensive Omnibus Budget As a result, if the State matches its Republic of Palau will not be eligible to
Reconciliation Act of 1985, Pub. L. 99- Federal SSIG allotment with an equal participate in the SSIG Program, citizens
272, and to the Compact of Free amount of State funds, it will no longer of these islands who are in attendance
Association, Pub. L. 99-239. have to use State funds to pay fifty at institutions of higher education in
e f f e c t i v e DATE: These regulations take percent of each SSIG Program grant it States that are participating in the
effect either 45 days after publication in awards. program will continue to be eligible for
the Federal Register or later if the The Federal rules established by SSIG Program assistance, under the
Congress takes certain adjournments, statute and regulations, which govern Compacts of Free Association.
with the exception of the amendments to the administration of the SSIG Program, Therefore, the Secretary is revising the
§§ 692.3 and 692.40(a)(6). The apply equally to those aspects of funded student eligibility criteria in § 692.40 to
amendment to § 692.3 takes effect on programs supported by Federal funds include the citizens of the Marshall
July 1,1987, the beginning of the 1987-88 and State appropriations. States still Islands, the Federated States of
award year. The amendment to will be required, for example, to select Micronesia, and the Republic of Palau,
§ 692.40(a)(6) will become effective after all SSIG recipients on the basis of in anticipation that the Compacts will
the information collection requirement substantial financial need. become effective in the near future.
contained in that section has been However, the Secretary has also
Changes to Program Regulations retained the references to the Trust
submitted by the Department of
Education and approved by the Office of Several changes have been made to Territory of the Pacific Islands to
Management and Budget under the § 692.40 ofttheSSIG Program regulations maintain the eligibility of permanent
Paperwork Reduction Act of 1980. to reflect changes made to the SSIG residents of the Trust Territory until the
If you want to know the effective date Program by section 16032(a) of the Compacts become effective.
of these regulations, call or write the Consolidated Omnibus Budget
Reconciliation Act of 1985, Pub. L. 99- Waiver of Notice of Proposed
Department of Education contact Rulemaking
person. 272, and by the Compact of Free
Association, Pub. L. 99-239. In accordance with section
FOR FURTHER IN FO RM A TIO N CONTACT:
431(b)(2)(A) of the General Education
Neil C. Nelson, Chief, State Student Consolidated Omnibus Budget
Provisions Act (20 U.S.C. 1232(b)(2)(A)),
Incentive Grant Program, Office of Reconciliation Act of 1985
and the Administrative Procedure Act, 5
Student Financial Assistance, Regional Section 16032(a) of the Consolidated U.S.C. 553, it is the practice of the
Office Building 3, Room 4018, 400 Omnibus Budget Reconciliation Act of Secretary to offer interested parties the
Maryland Avenue SW ., Washington, DC 1985 amended the Higher Education Act opportunity to comment on proposed
20202. Telephone (202) 245-9720. of 1965 to make statutorily ineligible for regulations. However, the enactment of
SUPPLEMENTARY INFO RM A TIO N : Under SSIG Program assistance a student who the Consolidated Omnibus Budget
the existing SSIG Program regulations, a is in default on an NDSL, GSL, or PLUS Reconciliation Act of 1985 and the
State may force an institution loan made for attendance at any Compact of Free Association require the
participating in its SSIG Program to institution or who owes a repayment on Secretary to revise the program’s
provide the required State matching an SSIG, SEOG, or Pell Grant awarded student eligibility provisions. Since
funds as a condition of participation in for attendance at any institution. these regulations merely implement
its program. The Secretary believes that Section 692.40 has been amended to .statutory amendments and do not
this practice is not in keeping with the incorporate this eligibility criterion and establish substantive policy, the
underlying purpose of the SSIG Program to specify that a student who is in Secretary finds that publication of a
which is to encourage States to establish default on a National Defense (or Direct) proposed rule is unnecessary and
or expand their own grant programs of Student Loan may receive further SSIG contrary to the public interest under 5
student financial assistance. Therefore, Program assistance if the institution that U.S.C. 553(b)(B).
the Secretary has amended § 692.3 to made the loan or the Secretary (in the
make Subpart G of 34 CFR Part 74 case of an assigned loan) certifies that Summary of Comments and responses
(Administration of Grants) inapplicable the student has made satisfactoiy The following is a summary of the
to the SSIG Program. Subpart G permits arrangements to repay the loan. significant comments received and the
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43311

Department’s responses to those should await the enactment o f the Section 692.21(g)
comments. legislation reauthorizing the Higher
Education Act, since both houses of Comment: One commenter felt that
Section 692.3 allowing States to match at the program
Congress have provisions before them
Comment: Several commentera that would accomplish the purpose of rather than grant level will impose a
objected to the requirement that a State this rule. Two commenters were greater burden on small private colleges.
match its Federal allotment from direct opposed to the effective date of July 1, Response: The Secretary disagrees
State appropriations, thereby 1987 (the beginning of the 1987-88 award with the commenter. Changing the
eliminating the practice of having year) for implementation of the matching requirement from a grant to a
participating institutions provide the requirement because they were program basis places no burden on
required State matching funds as a concerned that some State legislatures institutions.
condition of participation in the State’s might not be able to take action to Comment: One commenter requested
SSIG Program. Several commentera appropriate and budget funds for the an explanation of the following sentence
expressed the opinion that if this program prior to July 1,1987. One in the preamble to the NPRM: “Thus a
proposal were adopted, many needy commenter urged the Department to State could use its SSIG Federal
students would be deprived of student maintain the proposed July 1 effective allotment to provide grants to students
financial assistance because date. at private institutions as long as it
economically depressed States depend Response: No change has been made. provides at least as much money from
upon institutions for this required match. Publication of the regulations is direct State appropriations for grants to
The commentera stated that many of necessary at this time, as is the July 1, students at public institutions for the
these economically depressed States 1987, effective date, in order to fulfill the same academic year” .
will find it difficult if not impossible to legislative intent of the SSIG Program
provide the required 50 percent match Response: Under § 692.21(g), a State
and to provide States with adequate will be allowed to match its Federal
from direct State appropriations. A lead time for implementation. The
majority of the commentera approved of allotment of SSIG funds on a program
Department has not been made aware of rather than an individual grant basis.
allowing States to have the option of any State affected by this program
using a third party to contribute the Therefore if a State receives $500,000 of
change that would not be able to Federal SSIG funds, it must spend
required match, which they claim gives
appropriate and budget the required $500,000 of State SSIG funds. However,
States more flexibility in providing
funds in time for grants for academic if a State is precluded from using State
support for students.
year 1987-88. If regulatory changes are SSIG funds to award grants to students
Response: No change has been made.
The Secretary believes that the necessary as a result of revised attending private institutions, it could
underlying purpose of the SSIG Program legislation, the changes will be use the Federal funds it receives for that
is to encourage States to establish and incorporated after the legislation is purpose and use its State SSIG funds for
expand their own grant programs of enacted. awards to students attending public
student aid. Institutions should not be Comment: One commenter questioned institutions.
required to take on the State’s whether there was any statutory
Comment: One commenter asked
responsibility to match its Federal SSIG provision to support the Secretary’s
what was meant by “direct State
allotment. These regulations, however, view that funds for the non-Federal
appropriations” in the preamble to the
will not preclude a State from receiving match must be provided from direct
NPRM. Specifically, the commenter
voluntary contributions from private State appropriations.
wanted to know if a State could require
sources which it could use in tis State .Response: Section 415C(b)(5) of the
participating public institutions to
SSIG Program as long as those funds are Higher Education Act of 1965 as
provide for the State match from funds
not used as part of the State’s required amended authorizes the Secretary to
which had been appropriated by the
match. allot program funds only to States that
State for the general operating expenses
Comment: One commenter stated that provide for the non-Federal share from
“Funds supplied by the State.” of the institutions.
the proposed change would result in a
50 percent reduction in SSIG assistance Moreover, that section provides that Response: A State must provide for its
for students attending private these State funds must represent an required match of SSIG Federal funds
institutions. additional expenditure by the State over from it has specifically appropriated for
Response: The Secretary disagrees the amount it expended for grants for its SSIG Program. Section 415C(b)(5) of
with the commenter. This regulatory students before the State initially the program statute provides that State
change should not work to the received SSIG funds. The Secretary matching funds must be an expenditure
disadvantage of any category of student, believes that this section requires a by the State for grants for students.
because under the change made to State’s matching share to be provided by Executive Order 12291
§ 692.21(g)(1), a State may match its the State rather than by an institution.
Federal allocation of SSIG funds at the Comment: One commenter questioned These regulations have been reviewed
program rather than the grant level, and what would happen to a State that does in accordance with Executive Order
thereby continue to provide assistance not appropriate funds for the SSIG 12291. They are not classified as major
on the basis of need to students at both Program. The commenter expressed because they do not meet the criteria for
public and private institutions. For a concern that if no State funds were major regulations established in the
further explanation of § 692.21(g), see appropriated to satisfy the matching Order.
the comments and responses for that requirement higher education
section. Paperwork Reduction Act of 1980
institutions in the State would lose a
Comment: Most of the commentera valuable form of assistance. The information collection
objected to the timing of the requirement Response: If a State does not requirement contained in these
to match the Federal program funds appropriate funds for the SSIG Program, regulations in § 692.40(a)(6) will become
from direct State appropriations, the State would not be eligible to effective after it has been approved by
claiming the issuance of new rules receive its allotment of SSIG funds. the Office of Management and Budget.
43312 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

Assessment of Educational Impact 2. In § 692.3, paragraph (b) is revised (iii) Be a permanent resident of the
In the notice of proposed rulemaking, to read as follows: Trust Territory of the Pacific Islands or
the Secretary requested comments on the Northern Mariana Islands; or
§ 69 2.3 W h a t reg u latio n s ap p ly to th e
whether the proposed regulations would S ta te S tu d e n t In c e n tiv e G ra n t P ro gram ? (iv) Be a citizen of the Marshall
require transmission of information that * * * * * Islands, the Federated States of
is being gathered by or is available from Micronesia, or the Republic of Palau.
(b) The Education Department
any other agency or authority of the * * * * *
General Administrative Regulations
United States. (5) (1) Not owe a refund on a grant
(EDGAR) in 34 CFR Part 74
Based on comments on the proposed received for attendance at any
(Administration of Grants) except for
rules and the Department’s own review, institution under the Pell Grant,
it has been determined that the Subpart G, Part 76 (State-Administered
Programs), Part 77 (Definitions That Supplemental Educational Opportunity
regulations in this document do not Grant, or State Student Incentive Grant
require information that is being Apply to Department Regulations), and
Part 78 (Education Appeal Board). programs;
gathered by or is available from any
other agency or authority of the United
* * ★ t★ •* '
(ii) Not be in default on a loan made
States. 3. In § 692.21, paragraph (g)(1) is at any institution under the National
revised to read as follows: Defense Student Loan or National Direct
List of Subjects in 34 CFR Part 692 Student Loan programs unless he or she
Education, Grant programs, § 692.21 W h a t re q u ire m e n ts m u st b e m et has made arrangements, satisfactory to
b y a S ta te pro g ra m ? the institution, to repay the loan; and
Education, State-administered, * * * ★ ★
Education, Student Aid. (iii) Not be in default on a loan made
(8 ) * * * under the Guaranteed Student Loan
Citation of Legal Authority (1) The State will pay an amount for program or the PLUS program to meet
A citation of statutory or other legal grants under this part for each fiscal the cost of attending any institution
authority is placed in parentheses on the year that is not less than the payment to unless the Secretary (for a federally
following each substantive provision of the State under this part of that fiscal insured loan) or a guarantee agency (for
these regulations. year; and a loan guaranteed by a guarantee
★ * ★ ★ agency) determines that the student has
(Catalog of Federal Domestic Assistance
Number 84.069: State Student Incentive Grant 4. In § 692.40, paragraphs (a)(1), (5), made satisficatory arrangements to
Program) and (6) are revised to read as follows; repay the loan; and
Dated: October 17,1986. (6) File with the institution a
§ 69 2 .4 0 W h a t a re th e re q u ire m e n ts fo r
William J. Bennett, s tu d e n t elig ib ility? statement (which need not be notarized
Secretary of Education. but which must include the student’s
(a) * * *
The Secretary amends Part 692 of social security number or, if the student
(l)(i) Be a U.S. citizen or national: does not have a social security number,
Title 34 of the Code of Federal
(ii) Provide evidence from the U.S. the student’s student identification
Regulations as follows:
Immigration and Naturalization Service number) that the money attributable to
PART 692—STATE STUDENT that he or she— the grant will be used solely for
INCENTIVE GRANT PROGRAM (A) Is a permanent resident of the expenses related to attendance or
United States; or continued attendance at the institution.
1. The authority citation for Part 692 is (BJ Is in the United States for other
* . it * * *
revised to read as follows: than a temporary purpose with the
Authority: 20 U.S.C. 1070c-1070c-3, unless intention of becoming a citizen or [FR Doc. 86-26878 Filed 11-28-86; 8:45 am]
otherwise noted. permanent resident; BILLING CODE 4000-01-M
Monday
December 1, 1986

Part IV

Department of the
T re a s u ry _______
Fiscal Service

Notice to Awardees Under the

International Settlement Act of 1949 and
the Czechoslovakian Claims Settlement
Act of 1981
43314 Federal Register / Vol. 51, No. 230 / Monday December 1, 1986 / Notices

DEPARTMENT OF THE TREASURY Commission (FCSC) under the account of all other awards under title
International Claims Settlement Act of IV of the International Claims
Fiscal Service 1949, 22 U.S.C. 1621-16450 (1986), and Settlement Act of 1949 and the
the Czechoslovakian Claims Settlement Czechoslovakian Claims Settlement Act
Notice to Awardees Under the of 1981.
International Claims Settlement Act of
Act of 1981, 22 U.S.C. 1642-1642p (1986),
but have failed to file valid applications DATE: Claims must be submitted by
1949 and the Czechoslovakian Claims
in order to receive these payments. January 30,1987.
Settlement Act of 1981
Pursuant to the Czechoslovakian Claims a d d r e s s : Inquiries should be submitted
a g e n c y : Financial Management Service, Settlement Act of 1981, 22 U .S.C. note 8 to: Department of the Treasury,
Treasury. preceding section 1642 (1986), unless Financial Management Service, Program
a c t i o n : Notice.
valid applications for payment are made Accounting Section Treasury Annex #1,
by January 30,1987, the awards of Rm. 340, Washington, DC 20226.
s u m m a r y : The persons listed in the persons listed below shall lapse and FOR FURTHER IN FO RM A TIO N CONTACT:
supplementary information section of amounts payable to these persons shall Bernice Mays, Chief Program
this notice have been granted awards by be paid on a pro rata basis by the Accounting Section, (202) 566-8642.
the Foreign Claims Settlement Financial Management Service on BILLING CODE 4810-35-M
 Federal Register / Vol. 51, No. 230 / Monday, December 1,1986 / Notices 43315

SUPPLEMENTARY INFORMATION: These are the names of

persons granted awards under the International Claims
Settlement Act of 1949 and the Czechoslovakian Claims
Settlement Act of 1981 who must file applications:
CZECHOSLOVAKIA 1st PROGRAM

A B E LE S J U L I U S CAMBALA ANNA FRANCHAK M A R IE MARGARET

ALT E L S E CA PER BARNEY F R O E H L IC H PETER G
A LT SCH U L KURT CERMAK FRA N CES FURTH WALTER
ANDEL JOHN CHRVALA V IN C E N T G A L L ANDREW
ARMSTRONG ANNA C IC A K N IC H O L A S G A L L JOHN F
ASCHNER JO S E P H C IH A K M AR IE GAYDOS JO H N
AUERBACH M ARIANNE H C IN T U L A K A R O LIN A GEH R IN G M ATILD A
BANCAK OTOKAR J COREN OLGA B G ER GEL BARBARA
BARDO CI MARY ANNA C R A IG FRANK B G IA N E T T A C A R O L IN E
BARGER JO HN SR C R A IG W IL L IA M GOLD ANNA
BATES CH A R LE S V CROMES MARY S O L T I S GOLDBERGER L O U IS LAR RY
BAUM HERMA C S A U C S IK ANDRASZ GOLDNER D E ZSO
BAUM THOMAS CUCH GUSTAVRD S GOPPOLD A L O IS
BEDNARIK M ARTIN C V IK M ICH A E L GOPPOLD M AR IE
BEDNO ALEXANDER C V IN C E K PAUL GO TLEY JO S E P H IN E
BEER HELEN DAMKO VERA GRAMKE M AR IE
BELAN JOHN DANO V IN C E N T GRASGREEN SAMUEL
BELAN STEPHEN DE F L O R IA N M A R IE T GROON F R A N C IS
B E LD O V IC JO S E P H DE LEON LORE E D IT H H GRÜNEWALD E D IT H R
BELFORD BARBARA DENNL O SCA R W GRUNTHAL PAUL
B E N E D IC T A N N IE DE S IN G L Y E L IZ A B E T H S GULASH W IL LIA M
B E N E D ICT E M IL DEUTSCH R I S A GUTAN ETH EL
BENES HELEN DIAMOND MARGARET GUTMAN GERTRUDE
B E N O V IT Z ESTH ER D IE SE N D R U C K L I L L I H ALUSKA STEPHEN
BERGMANN HENRY D IE S T E N F E L D E R N E S T IN E HANAUER KLARA
BERGMANN VERA D IR R E M IL IE HANZL MATHEW
BERKOW ITZ BEN DOBOS JO H N HARTMAN HELEN
BERKOW ITZ HERMAN DOCAR RUDOLPH J H EN SEL IG N A T Z
BERKOW ITZ JO S E P H DRACH JO H N SR H E S S E ANNA
BERKOW ITZ L O U IS DUNDALA IR E N E HIBSCHM AN JA C O B
BERKOW ITZ SAM DUNDALA M ICH A E L HITSCHM ANN HEDWIG
B IE R M AR IE DVORAK JO S E P H HLAVA MARY
BLOCK MARTHA EATON LEO HLAVKA MARY
BLUM S I E G F R IE D E C K E S ANNA G A LL HNATEK ANNA R OSE
BODLAK JA R O S L A V E IS E N S T E IN GERTRUDE HOCKE CH A R LE S JO S E P H
BODNAR JU L IA N N A E I S L E R ARTHUR HOCKE S T E F A N IE
BODNAR MARY EVANKO JO HN HODGSON JA M E S F
BOOR JOHN FANTA V IO L A WELSH H OFFER SIEGM UND
BORGIDA E D IT H FÄRBER BERTHA HOLUB FRANK
BRNKO ZUZANA FECK O M ARIA HRABOUSKY V IC T O R I A
BROCK KATE S F I L J A C B E N E D IC T HRACHOVSKY K A T H E R IN E
BROD JO S E P H F IN E M A T ILD A H R D L IC K A AGNES
BRUCKNER F R IT Z F IS C H E R JA C Q U E S H R D L IC K A PETER
BRUNNER F R E D E R IC K B F IS C H E R M A R IE H R IC IS A K A N T O N IE
B U B LIN E C R O SE F IS C H E R M A R IE G H R Y SL JO H N W
BUCEK L O U IS & ANNA F O L T IN E K MATTHEW H U D C O V IC ANTHONY M
BUCENEC PAUL FOLTYN ANDREW H U D C O V IC TH ER ESA
B Y S T R IC K Y JO S E P H FOLTYN M IK L O S HUDECEK ANNA
 43316 Federal Register / V ol. 51, No. 230 / Monday, December 1,1986 / Notices

HUDECEK P A U L IN E KRAUS FRANK ARNOLD M IH A L JO S E P H

IL K O V I T Z LENA K R AV EC GEORGE M IH A L IK V E R O N IC A
I L L E L O U IS E KRCEK JO S E P H MOLL W ILHELM
IM R IC H EVA KROUPA A N TO N IE MOROZ N IC K
IN D R IS E K ANNA K U B A N IK M ARTIN MUCHA VERA
JA K E S FRANK J KURUCZ GEORGE MUDRY Z U ZANNA
JA N E C E K MARGARET LANDON E D IT H DOROTHY MULLER ERN EST
JA N O S JO HN LAN GM AJER E M I L I E M ULLER GERTRUDE E
JA N O S L E O P O LD IN A LA SCH JIN D R A HANNA MURCEK JO H N RUDOLF J R
JE L I N E K R O SE LAWRENCE KENNETH H MURTZ T H ERESA
JO H N SO N MARGARETE LED ER ER T H E R ESE MUSKA GEORGE
JO Z E F E K K A T A R IN A L E E ANNE L I E S E NEMECEK JO S E P H
J U R C I K BERTHA SOBAN L E E THOMAS F R E D E R IC K NEMECEK MARY
JU R K U L A K AGNES LEHR GENE N ESENKAR PAUL
K A E U F F L LUDW IG W L E IS C H N E R MAX NEWMAN A LFO N S CH A R LE S
K A IF E R FRANK LEM ES ANDRO N O H E JL JO S E P H
KANTOR R ICH A R D LENGHART M ICHAL NOVAK OTTO E
K A R L IK JO H N LERMER AU GUST S NOVAKY ADAM J
K A R L IK JO H N J R L I S I E L L A ROCKWELL NOVAKY ANDREW J
' KAUFMAN VERNON LOEBMANN A N N E L IE S RUTH NOVAKY FRANK
KECSKEM ETHY HELEN LOEWY JO S E P H OLDEN PAUL
K E S S L E R ARTHUR IZ Y D O R LO R B ER LAWRENCE ONTL PETER
K I S E L STEPHEN LOW MARGARET O PPENH EIM J U L I A
K LAU BARF JA C K LOWRY FRED OPPEN H EIM M A X IM IL IA N M
K L E IN JOHN LUM BERDING CH A R LES ORGON J U L I A A
K L E IN NORMAN LUPTAK ANDREW ORGON STEPHEN
K L IM E S A L O IS MAGYAR A N D I O TEVR EL ANTON
K L IN G E R FRANK JO S E P H MALA STEPHEN OTTE R ICH A R D
K O E N IG ANNA MARM ORSTEIN EUGENE PALEN CAR A LZB E T A
K O E SE R JO H N W IL LIA M M ARTIN BRADLEY P A L IA T K A C Y R IL
KOHN BERTHA M ARTIN E L IZ A B E T H PA V LU S O S L E J K R IS T I N A
KOHN E L S A MATULA PAUL PA V LU S V IO L E T
KOHN E M IL M A TO V CIK ANN PECEN AN SKY MARGARET
KOHN HANS M ATOVCIK M ICH A E L P E SE K R OSE
KOHLER JU N E M ATUSEK MARY P E T C O F F V IL M A
KO LBERT ERN EST A MATZKO ANNA WABREK P E T R IL A K MARY
K O L IB A S ANNA MAY R O Z A L IA P E T R IL A K M ICH A E L
KONDRCKA M ARTIN MAZSAR HERM INE PETR U S M A R GIT P L A C ID
KONTA EMMA M AR IA MEAD HERBERT P IC K W IL L IA M
KÖ PPER C H R IS T E L H MEAD RONALD P I P E S A L IC E
KO SEM PEL PAUL MEDACEK GEORGE POKORNY ANNA
KOSEM PEL SELM A M E D IT Z H IL D A PO LA CEK JO H N
KOSEM PEL W IL L IA M MEDVECKY M ICH A E L PO LA SEK JO H N
K O T ES ANNA M ELIC H A R E K E L IZ A B E T H PO ST ER ANDREW
KOTZ I L S E H . M ELIC H A R E K JO HN P R IK A Z K S Y HELEN
KOVAC JOHN MENTO JO HN R A FFA C JOHANNA W ALLER
KOVAR ANNA MEYER AUGUST K R A FFA C STEPHAN
KOVAR JO HN M E Z D E J JO S E P H RAMM K A T H ER IN E
KRAMAR FRA N CES M IC O V SK Y JO S E P H R A STO CKY A D E L IN E
KRAMAR LEO PO LD J M IF K O V IC MARY RAU SCH ER CLEM E N T IN E
 Federal Register / Vol. 51, No. 230 / Monday, December 1,1986 / Notices 43317

RAUSCHER J U L I A SM O LIK FRANK VNUK ANNA

RAWNER HERM INE SM O LIK JO S E F VNUK JO H N
R E IC H E R MARGARET SM O LIK STEFAN VODVARKA AGNES
RIN D O S ANDREW SOBER RUDOLF V O LCSK O ANDREW
R IN G ALBERT SO F F E R MARGARET V O LCSK O HELEN
ROBERT JOHN S O L T E S Z JO S E P H VOLEK FRANK
R OESLER ANTHONY S O L T I S GEORGE VON HOHENLANGEN JO S E P H IN E
ROLAND PAUL S O L T I S HELEN WÄLDER E R IC
R O L IN C CH AR LES S O L T I S JO H N W A SIC E K JO H N
R O L IN C L I L L I A N S O L T I S JO HN B W EIGARTEN BERTHA GLU CK
ROSENBAUM MAX S O L T I S ROSE WEINMANN GRETE
ROSENBERG JO S E P H IN E SORDAN V IC T O R W EISH U T F R E D E R IC T
ROSENW ASSER ADOLF SOTAK JO S E P H W E IS S S Y L V I A
ROSENW ASSER IS ID O R E SO U CEK A N TO IN E F W ICHE A N N IE
ROSENW ASSER SAMUEL SO YKA F R A N C IS W ILSO N E M IL IA C A T H E R IN E
RUSNAK JO S E F S P IC K A GEORGE W INDSOR V IC T O R IA
RUSNAK MARY S P IS A K GEORGE W IN KLER C A M IL L A
S A L IV A R JO S E P H IN E L STANEK JO HN W IN KLER MAX
SA LZ MARTHA S T E P A N IK JOHN W INTER CH AR LES
SA LZ O SCAR STEPHAN M MAGDA W INTER SOBOTKA PETER
SAMKO B E LLA ST EVEN SON MARTHA WISSOW CHARLOTTE
SANDER E L S E STORA JO H N WITTMAN MARGARET
SA SK E ELEANOR ST R B A KATH ER IN A WOLF CHAIM
SCHAEFER EVA M SU DO VSKY JOHANNA WOLF HAROLD
SCHAFER R OSE SU P L A T JO H N WOLF JO S E P H
SCHATTEN ANNA M ARIA S V A R IN M AGDELIN A WOLF KAREL
SCHMEGNER JO HN SV E C THOMAS W ONISCH HEDWIG
SCHMEGNER MARY S V E T Z T E R E Z IA WRABEL PAUL
SCHMID ADOLF L SYKORA CLEMENT YUREK ZUZANNA
SCH U LLER JO S E P H IN E S Z C Z E S N IA K JA N ZDRAVECKY ANNA
SCH U LLER J U L I A TAUBER K A R O LIN E ZDRAVECKY STEPHEN
SCH U STER KURT T E S A R IK V L A S T A K L IM E S ZENTER HEDY
SCHUSTER S O P H IE THEBNER LEAH Z IT N E Y ANNA
SCHWARTZ P H Y L L IS THUMIN MAX ZORKOCY JO H N JO S E P H
SCHWARZKOPF OTTO T IM F E L D JO S E P H
S E D IV Y GU STAV TOMAN FRANK
SEDLAK M ARIA TOMAN J U L I A
S E F C IF JOHN T O M A SO V IC STEFAN
S E F C IF K R IS T IN A TOTH J U L I U S
SEMAK MARY HODOVANEC TOTKA M AR IE
SENKAR JU D IT A BOOR TREMBA JOHN
S IE B E R T HERBERT A U H L IA R ANNA
S IE G E L F U E R ST K ATH ER IN A U H L IA R M ARTIN
S IL A D Y E L IZ A B E T H UKROPEC T H ER ESA HEREGA
S IL A D Y FRANK U LACCO ANNA S O L T I S
SIN G E R FRED U S IA K JO H N
SKODACHEK M ARIA DARULA VACENDAK ANNA
SLADKY JO S E P H V A D O V IC JO S E P H
SLADKY M AR IE V ALYO MARY
S L IN T A K JO H N VARADY ANNA P E T R IK
SL IN T A K ZUZANA V A S S HELEN
SLOBODN IK STEFAN V E SE C K Y RUDOLPH
SM OLIK A L B IA V IT A N Y I E L IZ A B E T H
BILUNG CODE 4810-35-C
43318 Federal Register / Vol. 51, No. 230 / Monday, December 1,1986 / Notices

B E N E S C L A IM S

D A N IE L , E D IT H
K L IN G E R , ANTHONY J
S O B E R , RUDOLF

C Z E C H O SL O V A K IA N I I C L A IM S PROGRAM

BLESK A N K R E S T IN A
BLESK AN MARGARET
B LESK A N PETER J
MERVA JOHN
SZ A B O W IL L IA M
W.E. Douglas,
Commissioner, Financial Management
Service.
FR Doc. 86-26956 Filed 11-26-86; 8:45 amj
BILLING CODE 4810-35-M
Monday
December 1, 1986

Part V

Department of
Education
34 CFR Part 668
Student Assistance General Provisions;
Final Regulations
43320 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

DEPARTMENT OF EDUCATION the Student Assistance General even clearer that the procedures set
Provisions regulations, has determined forth in Subpart G, which are, in turn,
34 CFR Part 668 his response to those comments, and is required by sections 487(b)(1)(D) and
therefore publishing Subparts D, F, and 487(b)(2) of the Higher Education Act of
Student Assistance General Provisions G as final regulations at this time. 1965, as amended (HFA), do not apply to
Waiver of Notice of Proposed ED determinations regarding whether an
AGENCY: Department of Education.
Rulemaking institution or vocational school initially
a c t io n : Final regulations. satisfies, or continues to satisfy, the
In addition to the changes made to appropriate statutory definition of that
S UM M ARY: As a result of the Secretary’s Subparts D, F, and G based on public
review of current regulations, the institution or school.
comment on the notice of proposed Section 668.72 (Proposedrule);
Secretary amends Subparts D, F, and G rulemaking, the Secretary has amended
of the Student Assistance General § 668.82 (Final rule) Standards o f
§ 668.44 to incorporate a new conduct. The Secretary has revised
Provisions regulations to simplify requirement contained in the Higher
procedures, clarify requirements, and § 668.82(c) to clarify that a violation of
Education Amendments of 1986, Pub. L. an institution’s fiduciary duty with
reduce administrative burden while 99-498.
maintaining program integrity. respect to its administration of the Title
In accordance with section IV, HEA programs may warrant
EFFECTIVE d a t e : These regulations take 431(b)(2)(A) of the General Education sanctions other than termination
effect either 45 days after publication in Provisions Act (20 U.S.C. 1232(b)(2)(A)), including fine, limitation or suspension.
the Federal Register or later if Congress and the Administrative Procedure Act, 5 The Secretary has revised § 668.82(d)
takes certain adjournments. If you want U .S.C. 553, it is the practice of the to specify that an institution violates its
to know the effective date of these Secretary to offer interested parties the fiduciary duty with respect to its
regulations, call or write the Department opportunity to comment on the proposed administration of the Title IV, HEA
of Education contact person. regulations. However, this change does programs if the institution itself, its
FOR FURTHER IN FO RM A TIO N CONTACT: not implement substantive policy, but owner or its chief executive officer
Fred Sellers or Joyce Coates, U.S. merely implements the terms of the pleads guilty to, or is convicted of, a
Department of Education, Office of Higher Education Amendments of 1986, crime involving the unlawful acquisiton,
Student Financial Assistance, 400 Pub. L. 99-498. Therefore, the Secretary use or expenditure of Title IV, HEA
Maryland Avenue SW. (Regional Office finds that publication of a proposed rule program funds.
Building 3, Room 4318J, Washington, DC is unnecessary and contrary to the Section 668.73 (Proposedrule);
20202. Telephone number: (202) 472- public interest under 5 U .S.C. 553(b)(B) § 668.83 (Final rule) Em ergency action.
4300. The Secretary has revised § 668.83(b) to
Revisions to the Notice of Proposed
SUPPLEMENTARY INFO RM A TIO N : A notice Rulemaking make explicit that the notice initiating
of Proposed Rulemaking (NPRM) for the an emergency action must inform the
Student Assistance General Provisions Subpart D —Student Consum er institution or school that it is entitled to
regulations was published in the Federal Information Services a show cause hearing that the
Register of December 22,1984, 49 CFR Section 668.44 Institutional emergency action is unwarranted.
48494. These regulations were proposed information. The Secretary has Section 668.74 (Proposed rule);
to clarify requirements, reduce incorporated in this section a new § 668.84 (Final rule) Fine. Section 668.75
administrative burden on institutions of requirement that an institution which (Proposed rule); § 6651.85 (Final rule)
higher education and vocational advertises its job placement rates must Suspension. Section 668.76 (Proposed
schools, and consolidate provisions and provide to prospective students the most rule); § 668.86 (Final rule) Termination.
definitions common to all the programs recent available data that substantiates The Secretary has amended
authorized by Title IV of the Higher the truthfulness of the advertisements. §§ 668.84(b), 668.85(b) and 668.86(b) to
Education Act of 1965, as amended This requirement is contained in the provide that an institution’s written
(Title IV, HEA programs). The Title IV, Higher Education Amendments of 1986, submissions contesting a fine,
HEA programs include the Pell Grant, Pub. L. 99-498. suspension, limitation or termination
Guaranteed Student Loan (GSL), PLUS, action, or a written request for a hearing
State Student Incentive Grant (SSIG), Subpart F—M isrepresentation on the record to contest that action,
Perkins Loan (formerly National Direct The section numbers of Subpart F must be received by the designated ED
Student Loan (NDSL)), College Work- have been redesignated to accommodate official by the effective date of the
Study (CWS) and Supplemental Subpart E, “Verification of Student Aid proposed sanction rather than five days
Educational Opportunity Grant (SEOG) Application Information,” which was before that date.
programs. The latter three programs are published in the Federal Register of Section 668.78 (Proposed rule);
known collectively as the campus-based March 14,1986, 51 FR 8946. §668.88 (Final rule) Hearing on the
programs. record. In order to facilitate settlement
In the Federal Register of November Subpart G —Fine, Lim itation,
of administrative proceedings, the
19,1986, 51 FR 41920, the Secretary Suspension and Termination Secretary has revised § 668.83(c)(1) to
published Subpart A of the Student The section numbers of Subpart G specify that settlement discussions
Assistance General Provisions have been redesignated to accommodate between parties, or the terms of a
regulations, which included definitions the addition of Subpart E and the proposed settlement agreement, are not
and provisions common to all the Title redesignation of Subpart F. admissible in an administrative
IV, HEA programs, so those definitions Section 668.71 (Proposedrule); proceeding.
and provisions would become effective § 668.81 (Final rule) Scope and special Section 668.80 (Proposed rule);
at the same time that regulations for the definitions. The Secretary has added a §668.90 (Final rule) Initial and fin a l
GSL Program became effective. The definition of the term “otherwise eligible decisions. The Secretary has revised
Secretary has reviewed the comments institution” in § 668.81(a)(2) and has § 668.90(a) to limit the discretion of the
with regard to Subparts D, F, and G of revised § 668.81(c)(1) and (2) to make administrative law judge in determining
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43321

the appropriate sanction in two § 668.44(a)(6), and the Secretary has funds constituted an automatic ground
instances. In the first instance, decided to keep that requirement. This for terminating the eligibility of an
consistent with the provisions of was supported by the Comments institution to participate in the Title IV,
§668.82(d), if the administrative law received. H EA programs.
judge finds that the institution itself, its Response: The Secretary has
Comments and Responses
owner or its chief executive officer has determined that if an institution, its
pled guilty, to, or has been convicted of, The following is a summary of the owner or its chief executive officer
a crime involving the acquisition, use or comments received on Subparts D, F, pleads guilty to, or is convicted of, a
expenditure of Title IV, H EA program and G and the Secretary’s response to crime involving the acquisition, use or
funds, the administrative law judge must those comments. expenditure of Title IV, H EA program
find that the termination of the Subpart D —Student Consum er funds, the appropriate sanction in every
institution’s eligiblity to participate in Information Services case is termination of the institution’s
the Title IV, HEA programs is eligibility to participate in the Title IV,
warranted. Comment: One commenter questioned HEA programs. Accordingly, the
In the second instance, if the action the difference between “ disseminate” Secretary has revised §§ 668.82(d),
brought against an institution involves and “make readily available” when
668.90(a)(3) and 668.90(f)(3) of the final
its failure to demonstrate its financial referring to the information an regulations to require termination as a
responsibility because it failed to institution must provide to a student.
remedy in such instances. Thus, if the
provide a letter of credit or performance Response: For the purpose of Subpart
designated ED official begins a
bond in the amount established by the D, the terms “ disseminate” and "make
termination action against an institution
Secretary, the administrative law judge readily available” have the same
alleging that the institution, its owner or
must find that the amount established meaning. Both terms are used in the
its chief executive officer has pled guilty
by the Secretary is appropriate unless statute.
to, or has been convicted of, a crime
the institution can demonstrate that the Subpart G —Fine, Lim itation, involving the acquisition, use or
amount was unreasonable. The Suspension and Termination expenditure of Title IV, HEA program
Secretary has clarified the authority o f Proceedings funds, the hearing on the record will
the administrative law judge in this Section 668.72 (Proposed rule); determine, as a factual matter, whether
matter for the following reasons. § 668.82 (Final rule) Standard of the designated ED official's allegation is
In the usual termination proceeding, accurate. If it is, the administrative law
conduct.—Comment: One commenter
where an institution has violated stated that the violations of an judge must determine that termination of
program statutes or regulations, the institution’s fiduciary duty, that form the the institution’s eligibility to participate
administrative law judge is called upon grounds for its termination, should also in the Title IV, HEA programs is
to decide whether the sanction proposed warranted and the Secretary must affirm
serve as grounds for other sanctions
by the designated ED official, some that decision.
such as fine, limitation and suspension.
other sanction or no sanction is Response: A change has been made. Com m ent One commenter asked
appropriate. The administrative law The Secretary partially agrees with the whether a person is considered
judge would base his decision on the commenter and has revised § 668.82(c) "convicted of a crime” if the person
number, duration and seriousness of the accordingly. However, the Secretary has pleads guilty to a crime or is indicted for
institution’s violations. However, when not revised § 668.82(d) because the that crime, or if the person’s conviction
determining the appropriate amount of a Secretary wishes to put institutions on is being appealed. This commenter
letter of credit or performance bond, the notice in § 668.82(d), and in further asked whether a plea bargain is
administrative law judge would be § 668.90(a)(3)(i), that termination is the considered a conviction.
substituting his judgment for the consequence for criminally mishandling Response: A change has been made.
judgment of program administrators in a Title IV, H EA program funds.. H ie Secretary has amended
specialized area of program Comment: One commenter asked §§ 668.82(d), 668.90(a), and 668.90(f) of
administration. Under those what constituted an "owner” of an the final regulation to clarify that it
circumstances, the Secretary believes it institution for the purpose of § 668.82(d) includes guilty pleas as well as
is appropriate for the administrative law and suggested that the Secretary convictions.
judge to defer to the experience and provide a definition of an "owner” in the An indictment is not a conviction, and
expertise of program administrators regulations. the Secretary will not consider a person
unless the institution can demonstrate Response: A change has been made. convicted until the normal appeal
that the amount of the performance When the Secretary used the term process is exhausted with regard to that
bond or letter of credit requested was “owner” of an institution in the NPRM, person. As for plea bargaining, what is
unreasonable. he meant to include those individuals relevant is the result of the plea bargain,
Miscellaneous who operate and control the institution namely, whether an individual has
as well as those individuals who have agreed to plead guilty to a crime
Subpart D—Studen t Consum er an ownership interest in the institution. involving the acquisition, use, or
Information Services The Secretary has revised § 668.82(d) to expenditure of Title IV, HEA program
Section 668.44 Institutional make this intent explicit. The term funds.
information. In the preamble to the ‘‘owner” is now used in § 668.82(d) in its The designated ED official is not
NPRM, the Secretary proposed deleting ordinary dictionary meaning, i:e„ one precluded from seeking the termination
the requirement that an institution who has an ownership interest in the of an institution based on the allegations
provide a discussion of whether its institution. that make up an indictment or the facts
instructional or other facilities are Comment; One commenter asked established during a trial of a person
accessible to the handicapped in its what the Secretary meant when he whose conviction is on appeal.
student consumer information material. indicated that conviction of a crime However, the administrative law judge
However, the proposed regulations involving the acquisition, use or under these circumstances has the
included that requirement in expenditure of Title IV, HEA program discretion to determine that another
43322 Federal Register / V ol. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations

sanction, or no sanction, rather than §§ 668.84(b), 668.85(b), and 668.86(b) to List of Subjects in 34 CFR Part 668
termination is appropriate. provide that the institution’s written
Comment: One commenter asked Administrative practice and
submissions contesting the action or a procedure, Colleges and universities,
whether the provisions of § 668.82(d) written request for a hearing on the
(and § 668.90(a)(3)) will be applied Consumer protection, Education, Grant
record must be received by the programs-education, Loan programs-
against an institution if the conviction designated ED official by the effective
occurred before those sections go into education, Student aid.
date of the proposed sanction. Further,
effect. the Secretary believes that the Citation of Legal Authority
Response: The Secretary believes that commenter did not properly characterize
a person convicted of a crime involving A citation of statutory or other legal
the notification process. The institution’s authority is placed in parentheses on the
the acquisition, use or expenditure of burden under the notification
Title IV, HEA program funds cannot be line following each substantive
procedures is merely to notify the provision of these regulations. ;
trusted to act in accordance with the designated ED official in a timely
high standards required of a fiduciary of manner of its challenge to the (Catalog of Federal Domestic Assistance
public funds. The fact that such a designated ED official’s action. Numbers: Supplemental Educational
conviction took place before the The Department is reviewing its Opportunity Grant Program, 84.007;
regulations setting forth this belief Guaranteed Student Loan Program, 84.032;
various sets of hearing regulations with PLUS Program, 84.032; College Work-Study
became effective is irrelevant with an eye towards simplification and Program, 84.033; National Direct Student
regard to that determination. consolidation, to the extent consistent Loan Program, 84.038; Pell Grant Program,
Comment: One commenter asked if with applicable statutory provisions and 84.063; State Student Incentive Grant
the conviction of an owner of more than the nature of the various proceedings Program, 84.069)
one institution of a crime involving the involved. Any new procedures Dated: November 25,1986.
acquisition, use or expenditure of Title developed will be published for public William J. Bennett,
IV, HEA program funds at one of his comment as a notice of proposed Secretary of Education.
institutions could result in the rulemaking.
termination of all his institutions. Comment: One commenter asked The Secretary amends Part 668 as
Response: If an owner of more than whether § 668.84(a) (§ 668.74(a) in the follows:
one institution is convicted of a crime NPRM) would permit the Secretary to
involving the acquisition, use or fine an institution $25,000 for each PART 668—STUDENT ASSISTANCE
expenditure of Title IV, HEA program violation of program statutes and GENERAL PROVISIONS
funds at one of his institutions, his other regulations and for each substantial 1. The authority citation for Part 668
institutions will be subject to misrepresentation. continues to read as follows:
termination as a result of that Response: Section 668.84(a) would
conviction. permit the Secretary to fine an Authority: 20 U.S.C. 1085,1088,1091,1092.
Comment: One commenter objected to 1094, and 1141, unless otherwise noted.
institution $25,000 for each violation of
the limited time available to an program statutes and regulations and for 2. The Table of Contents for Subparts
institution that receives a notice each substantial misrepresentation. D, F, and G of Part 668 is revised to read
concerning a fine, limitation, suspension However, under § 668.92 (§ 668.82 in the as follows:
or termination action to decide whether NPRM), the administrative law judge Subpart D—Student Consumer Information
to contest that action. The commenter and the Secretary, in determining the Services
pointed out that under §§ 668.74(b), amount of a fine, must take into account
668.75(b) and 668.76(b) in the NPRM, a Sec.
the gravity of the violation or 668.41 Scope and special definition.
fine, suspension, limitation or misrepresentation and the size of the 668.42 Preparation and dissemination of
termination goes into effect 20 days from institution. materials.
the date the notice was mailed unless 668.43 Financial assistance information.
the designated ED official receives, at Executive Order 12291
668.44 Institutional information.
least five days from the effective date, These final regulations have been 668.45 Availability of employees for
the institution’s written submissions reviewed in accordance with Executive information dissemination purposes.
contesting the action or a written Order 12291. They are classified as * * A *
request for a hearing on the record. The nonmajor because they do not meet the
commenter noted that if it took the criteria for major regulations established Subpart F—Misrepresentation
institution five days to receive the notice in the Order. 668.71 Scope of special definitions.
from ED and an additional five days for 668.72 Nature of educational program.
ED to receive the institution’s response, Assessment of Educational Impact 668.73 Nature of financial charges.
the institution would only have five In the Notice of Proposed Rulemaking, 668.74 Employability of graduates.
the Secretary requested comments on 668.75 Procedures.
days to decide on its course of action.
This commenter also felt that the whether the proposed regulations would Subpart G—Fine, Limitation, Suspension
procedures resulted in persons being require transmission of information that and Termination Proceedings
considered guilty as the first step and is being gathered by or is available from 668.81 Scope of special definitions.
thereby placing the burden on the any other agency or authority of the 668.82 Standard of conduct.
institution to prove itself innocent. United States. 668.83 Emergency action.
Response: A change has been made. Based on the absence of any 668.84 Fine proceedings.
The Secretary believes that an comments on this matter and the 668.85 Suspension proceedings.
institution does not need a great deal of Department’s own review, it has been 668.86 Limitation or termination
proceedings.
time to decide whether to contest an determined that the regulations in this 668.87 Pre-hearing conference.
administrative action. However, the document do not require information 668.88 Hearing on the record.
Secretary agrees with the commenter that is being gathered by or is available 668.89 Authority and responsibilities of the
that five days is too short a period. The from any other agency or authority of administrative law judge.
Secretary has therefore amended the United States.. 668.90 Initial and final decisions—Appeals.
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43323

668.91 Verification of mailing and receipt (1) The procedures and forms by (3) A statement of the institution’s
dates. which students apply for assistance; policies regarding the distribution of any
668.92 Fines. (2) The student eligibility refund due to the Title IV, HEA
668.93 Limitation. requirements; programs as required by § 668.21;
668.94 Termination. *
668.95 Reimbursements, refunds and offsets. (3) The criteria for selecting recipients (4) The academic program of the
668.96 Reinstatement after termination, frpm the group of eligible applicants; institution, including—
668.97 Removal of limitation. and (i) The current degree programs and
3. Part 668 is amended by revising (4) The criteria for determining the other educational and training programs;
Subparts D, F, and G to read as follows: amount of a student’s award. (ii) The instructional, laboratory, and
(c) The institution shall describe the other physical facilities which relate to
Subpart D—Student Consumer rights and responsibilities of students thé academic program; and
Information Services receiving financial assistance and, (iii) The institution’s faculty and other
specifically, assistance under the title instructional personnel;
§ 668.41 S c o p e an d sp ecia l d e fin itio n . IV, HEA programs. This description (5) The names of associations,
(a) Each institution participating in must include specific information agencies or governmental bodies which
any Title IV, HEA program shall regarding— accredit, approve or license the
disseminate to all enrolled students, and (1) Criteria for continued student institution and its programs and the
to prospective students upon request, eligibility under each program; procedures by which documents
through appropriate publications and (2) (i) Standards which the student describing that activity may be
mailing, information concerning— must maintain in order to be considered reviewed under paragraph (b) of this
(1) The institution (see § 668.44): and to be making satisfactory progress in his section;
(2) Any student financial assistance or her course of study for the purpose of (6) A description of any special
available to students enrolled in the receiving financial assistance; and facilities and services available to
institution (see § 668.43). (ii) Criteria by which the student who
handicapped students; and
(b) The following definition applies to has failed to maintain satisfactory
(7) The titles of persons designated
this subpart: Prospective student: An progress may re-establish his or her
under § 668.45 and information regarding
individual who has contacted an eligibility for financial assistance;
institution participating in any Title IV. (3) The method by which financial how and where those persons may be
HEA program for the purpose of assistance disbursements will be made contacted.
(b) The institution shall make
requesting information concerning to the students and the frequency of
admission to the institution. those disbursements; available for review to any enrolled or
(4) The terms of any loan received by prospective student, upon request, a
(Authority: 20 U.S.C. 1092) copy of the documents describing the
a student as part of the student’s
§ 668.42 P re p aratio n a n d d issem in atio n o f financial assistance package, a sample institution’s accreditation, approval or
m aterials. loan repayment schedule for sample licensing.
For each award year in which it loans and the necessity for repaying (c) If the institution advertises job
participates in any Title IV, HEA loans; and placement rates as means of attracting
program, an institution shall— (5) The general conditions and terms students to enroll in the institution, the
(a) If necessary, prepare and publish applicable to any employment provided institution must make available to
materials covering the topics set forth in to a student as part of the student’s prospective students, at or before the
§ 668.43 and § 668.44; and financial assistance package. time of application, the most recent
(b) Make those materials available available data concerning—
(Approved under OMB Control Number 1840-
through appropriate publications and 0537) (1) Employment statistics for students
mailings to— who have attended that institution;
(Authority: 20 U.S.C. 1092) (2) Graduation statistics for students
(1) All currently enrolled students;
and § 668.44 Institutional inform ation. who have attended that institution; and
(2) Any prospective student, upon (a) Institutional information that the (3) Any other information that is
request of that student. institution must publish and make necessary to substantiate the
readily available to current and truthfulness of the advertisements.
(Authority: 20 U.S.C. 1092)
prospective students under this subpart (Approved under OMB Control Number 1840-
§ 668.43 Financial as sistan c e in fo rm a tio n . includes, but is not limited to— 0537)
(a) (1) Information on financial (1) The cost of attending the (Authority: 20 U.S.C. 1092)
assistance that the institution must institution, including—
publish and make readily available to (1) Tuition and fees charged to full­ § 668.45 Availability of employees for
current and prospective student’s under information dissemination purposes.
time and part-time students;
this subpart includes, but is not limited (ii) Estimates of necessary books and (a) A vailability. (1) Except as
to, a description of all the Federal, State, supplies; provided in paragraph (b) of this section
local, private and institutional student (iii) Estimates of typical charges for each institution shall designate an
financial assistance programs available room and board; employee or group of employees who
to students who enroll at that institution. (iv) Transportation costs for shall be available on a full-time basis to
(2) These programs include both need- commuting students or for students assist enrolled or prospective students
based and non-need-based programs, living on or off-campus; and in obtaining the information specified in
(3) The institution may describe its (v) Any additional cost of a program § § 668.43 and 668.44.
own financial assistance programs by in which the student is enrolled or (2) If the institution designates one
listing them in general categories. expresses a specific interest; person, that person shall be available,
(b) For each program referred to in (2) A statement of the refund policy of upon reasonable notice, to any enrolled
paragraph (a) of this section, the the. institution for the return of unearned or prospective student throughout the
information provided by the institution tuition and fees or other refundable normal administrative working hours of
must describe— portion of costs paid to the institution; that institution.
43324 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

(3) If more than one person is institution or who has been contacted § 668.73 Nature of financial charges.
designated, their combined work directly by the institution or indirectly Misrepresentation by an institution of
schedules must be arranged so that at through general advertising about the nature of its financial charges
least one of them is available, upon enrolling at the institution. includes, but is not limited to, false,
reasonable notice, throughout the Substantial m isrepresentation: Any erroneous or misleading statements
normal administrative working hours of misrepresentation on which the person concerning—
that institution. to whom it was made could reasonably (a) Offers of scholarships to pay all or
(b) Waiver. (1) the Secretary may be expected to rely, or has reasonably part of a course charge, unless a
waive the requirement that the relied, to that person’s detriment. scholarship is actually used to reduce
employee or group of employees
(Authority: 20 U.S.C. 1094) tuition charges made known to the
designated under paragraph (a) of this student in advance. The charges made
section be available on a full-time basis § 66 8 .7 2 N a tu re o f e d u c a tio n a l p ro g ra m .
known to the student in advance are the
if the institution’s total enrollment, or Misrepresentation by an institution of charges applied to all students not
the portion of the enrollment the nature of its educational program receiving a scholarship; or
participating in the Title IV, HEA includes, but is not limited to, false,
programs, is too small to necessitate an (b) Whether a particular charge is the
erroneous or misleading statements customary charge at the institution for a
employee or group of employees being concerning—
available on a full-time basis. course.
(a) The particular type(s), specific (Authority: 20 U.S.C. 1094)
(2) In determining whether an source(s), nature and extent of its
institution’s total enrollment or the accreditation; § 668.74 Employability of graduates.
number of Title IV, HEA program (b) Whether a student may transfer Misrepresentation by an institution
recipients is too small, the Secretary course credits earned at the institution regarding the employability of its
considers whether there will be an to any other institution; graduates includes, but is not limited to,
insufficient demand for information (c) Whether successful completion of false, erroneous or misleading
dissemination services among its a course of instruction qualifies a statements—
enrolled or prospective students to student for— (a) That the institution is connected
necessitate the full-time availability of (1) Acceptance into a labor union or with any organization or is an
an employee or group of employees. similar organization; or employment agency or other agency
(3) To receive a waiver, the institution (2) Receipt of a local, State or Federal providing authorized training leading
shall apply to the Secretary at the time license or a non-governmental directly to employment.
and in the manner prescribed by the certification required as a precondition
Secretary. (b) That the institution maintains a
for employment or to perform certain placement service for graduates or will
(c) The granting of a waiver under
functions; otherwise secure or assist its graduates
paragraph (b] of this section does not
(d) Whether its courses are to obtain employment, unless it provides
exempt an institution from designating a
recommended by— the student with a clear and accurate
specific employee or group of employees
to carry out on a part-time basis the (1) Vocational counselors, high description of the extent and nature of
information dissemination requirements. schools or employment agencies; or this service or assistance; or f t
(2) Governmental officials for (c) Concerning government job market
(Authority: 20 U.S.C. 1092) governmental employment; statistics in relation to the potential
* * * * *
(e) Its size, location, facilities or placement of its graduates.
equipment; (Authority: 20 U.S.C. 1094)
Subpart F—Misrepresentation (f) The availability, frequency and
§ 668.71 Scope and special definitions. appropriateness of its courses and § 668.75 Procedures.
(a) This subpart establishes the programs to the employment objectives (a) On receipt of a written allegation
standards and rules by which the that it states its programs are designed or compliant from a student enrolled at
to meet; the institution, a prospective student, the
Secretary may initiate a proceeding
under Subpart G against an otherwise (g) The nature, age and availability of family of a student or prospective
eligible institution for any substantial its training devices or equipment and student, or a governmental official, the
misrepresentation made by that their appropriateness to the employment designated department official as
institution regarding the nature of its objectives that it states its programs and defined in § 688.81 reviews the
educational program, its financial courses are designed to meet; allegation or compliant to determine its
charges or the employability of its (h) The number, availability and factual base and seriousness.
graduates. qualifications, including the training and (b) If the misrepresentation is minor
(b) The following definitions apply to experience, of its faculty and other and can be readily corrected, the
this subpart: personnel; designated department official informs
M isrepresentation: Any false, (i) The availability of part-time the institution and endeavors to obtain
erroneous or misleading statement an employment or other forms of financial an informal, voluntary correction.
eligible institution makes to a student assistance; (c) If the designated department
enrolled at the institution, to any (j) The nature and availability of any official finds that the complaint or
prospective student, to the family of an tutorial or specialized instruction, allegation is a substantial
enrolled or prospective student, or to the guidance and counseling, or other misrepresentation as to the nature of the
Secretary. Misrepresentation includes supplementary assistance it will provide educational programs, the financial
the dissemination of endorsements and its students before, during or after the charges of the institution or the
testimonials that are given under duress. completion of a course; or employability of its graduates, the
Prospective student: Any individual (k) The nature of extent of any official—
who has contacted an eligible institution prerequisites established for enrollment (1) Initiates action to fine or to limit,
for the purpose of requesting in any course. suspend or terminate the institution’s
information about enrolling at the (Authority: 20 U.S.C. 1094) eligibility to participate in the Title IV,
 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations 43325

HEA programs according to the Subject Statute Regulation or all Title IV, HEA programs if the
procedures set forth in Subpart G, or Secretary—
Discrimination on Title IX of the 34 CFR Part 106. (1) Receives information, determined
(2) Take other appropriate action. the basis of sex. Education
(Authority: 20 U.S.C. 1094) Amendments of by the official to be reliable, that the
1972 (20 U.S.C. institution is violating applicable laws,
1681-1683).
Subpart G—Fine, Limitation, Discrimination on Section 504 of the 34 CFR Part 104. regulations, special arrangements,
Suspension and Termination the basts of Rehabilitation agreements or limitations.
handicap. Act of 1973 (20
Proceedings U.S.C. 794). (2) Determines that immediate action
Discrimination on The Age 45 CFR Part 90. is necessary to prevent misuse of
§ 668.81 S c o p e an d sp ecial d efin itio n s. the basts of age. Discrimination
Act (42 U.S.C. Federal funds; and
(a) (1) This subpart establishes rules 6101 etseq.). (3) Determines that the likelihood of
for the imposition of a fine upon, or for loss outweights the importance of
the suspension, limitation or termination (f) The following definitions apply to following the procedures set forth in this
of an otherwise'eligible institution’s this subpart: subpart for suspension, limitation or
participation in any or all of the Title IV, Designated department official: An termination.
HEA programs. official of the Education Department to (b) Procedures. A designated
(2) An “otherwise eligible institution” whom the Secretary has delegated department official begins an emergency
is an institution that the Secretary has responsibilities indicated in this subpart. action by notifying the institution, by
determined— Funds: Any money, commitments to certified mail with return receipt
(i) Satisfies the appropriate definition provide money and commitments of requested, of the emergency action and
of the term “public or private nonprofit insurance or reinsurance provided under the basis on which the action is taken.
institution of higher education,” any or all Title IV, HEA programs to an The notice also states that the
“proprietary institution of higher institution or to or on behalf of students institution has an opportunity to show
education,” “postsecondary vocational enrolled and attending an institution. cause that the emergency action is
institution” or “vocational school” set unwarranted. The effective date of the
(Authority: 20 U.S.C. 1094)
forth in Subpart A of this part; and action is the date on which the notice is
(ii) Initially satisfies the factors of § 668.82 Standard of conduct. received by the institution.
financial responsibility and standards of fa) A participating institution acts in (c) Duration. An emergency action
administrative capability set forth in the nature of a fiduciary in its may not exceed 30 days unless a
Subpart B of this part. administration of the Title IV, HEA suspension, limitation or termination
(b) This subpart applies to an programs. proceeding is begun under this subpart
institution which violates any Title IV, (b) In the capacity of a fiduciary, the before the expiration of that period. In
HEA program statute, regulation, special institution is subject to the highest such case, the period may be extended
arrangement, agreement or limitation standard of care and diligence in until the completion of that proceeding,
prescribed under authority of Title IV of administering the programs and in including any appeal to the Secretary.
the HEA; accounting to the Secretary for the funds (d) Opportunity to show cause. The
(c) This subpart does not apply to a received under those programs. Secretary provides the institution, if it so
determination that— (c) An institution’s failure to requests, an opportunity to show cause
(1) An institution of higher education administer the Title IV, HEA programs, that the emergency action is
fails at any time to meet the statutory or to account for the funds it receives unwarranted.
definition set forth in section 435, 481 or under those programs, in accordance
(Authority: 20 U.S.G. 1094)
1201 of the HEA; with the highest standard of care and
(2) A vocational school fails at any diligence required of a fiduciary, § 6 6 8.84 Fine p ro c e e d in g s .
time to meet the statutory definition set constitutes grounds for a fine, or the (a) Scope and consequences. The
forth in section 435(c) of the HEA; or suspension, limitation or termination of Secretary may impose a fine of up to
(3) An institution fails to qualify for the eligibility of the institution to $25,000 per violation on an institution
initial certification to participate in any participate in those programs. that—
Title IV, HEA program because it does (d) If the owner of an institution, the
(1) Violates any provision of Title IV
not meet the fiscal and administrative institution itself or the chief executive
of the HEA or any regulation or
standards set forth in Subpart B of this officer of the institution is convicted of
agreement implementing that title; or
part. or pleads guilty to a crime involving the
unlawful acquisition, use, or expenditure (2) Substantially misrepresents the
(d) This subpart does not apply to a
of Title IV, HEA program funds, that nature of its educational program, its
determination by the Secretary of the
system to be used to disburse Title IV, conviction or guilty plea is a violation of financial charges or the employability of
the institution’s fiduciary duty and is an its graduates.
HEA program funds to an institution
[i.e., advance payments and payments automatic ground for terminating the (b) Procedures. (1) A designated
by way of reimbursements) participating institution’s eligibility to participate in department official begins a fine
under any Title IV, HEA program. any Title IV, HEA program. proceeding by sending the institution a
(e) This subpart does not apply to notice by certified mail with return
(Authority: 20 U.S.C. 1070 etseq.) receipt requested. This notice must—
administrative action by the Department
of Education based on any alleged § 668.83 Emergency action. (i) Inform the institution of the
violation of— (a) Scope and consequences. The Secretary’s intent to fine the institution
Secretary, may take an emergency and the amount of the fine and identify
action against an institution under the alleged violations which constitute
Subject Statute Regulation
which the Secretary withholds funds the basis for the action;
Discrimination on Title VI of the Civil 34 CFR Part 100. from the institution or its students and (ii) Specify the proposed effective date
trie basis ot Rights Act of withdraws the authority of the of the fine, which must be at least 20
race, color, or 1964 (42 U.S.C.
natural origin. 2000d-4). institution to obligate funds under any days from mailing of the notice of intent;
43326 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations

(iii) Inform the institution that the fine designated department official receives considering that material, notifies the
will not be effective on the date by that date, a request for a hearing or institution that—
specified in the notice if the designated written material indicating why the (i) The proposed action is dismissed;
department official receives by that suspension should not take place. (ii) Limitations are effective as of a
date, a written request for a hearing or (2) If the institution does not request a specified date; or
written material indicating why the fine hearing, but submits written material, (iii) The termination is effective as of
should not be imposed. the designated department official, after a specified date.
(2) If the institution does not request a considering that material, notifies the (3) If the institution requests a hearing
hearing but submits written material, the institution that— by the time specified in paragraph
designated department official, after (i) The proposed suspension is (b)(l)(iii) of this section, the designated
considering that material, notifies the dismissed; or department official sets the date and the
institution that— (ii) The suspension is effective as of a place. The date is at least 15 days after
(1) The fine will not be imposed; or specified date. the designated department official
(ii) The fine is imposed as of a (3) If the institution requests a hearing receives the request. No limitation or
specified date, and in a specified by the time specified in paragraph termination takes place until after a
amount. (b)(l)(iii) of this section, the designated hearing is held.
(3) If the institution requests a hearing department official sets the date and the (4) An administrative law judge
by the time specified in paragraph place. The date is at least 15 days after conducts a hearing on the record in
(b)(l)(iii) of this section, the designated the designated department official accordance with § 668.88.
department official sets the date and the receives the request. No suspension (c) Expedited hearing. With the
place. The date is at least 15 days after takes place until after a hearing is held. approval of the administrative law judge
the designated department official (4) An administrative law judge
and the consent of the designated
receives the request. conducts a hearing on the record in
department official and the institution,
(4) An administrative law judge accordance with § 668.88.
any time schedule specified in this
conducts a hearing on the record in (Authority: 20 U.S.C. 1094) section may be shortened.
accordance with § 668.88. (Authority: 20 U.S.C. 1094)
(c) Expedited hearings. With the § 6 6 8.86 L im itatio n o r te rm in a tio n
approval of the administrative law judge p ro c eed in g s. § 668.87 Pre-hearing conference.
and the consent of the designated (a) Scope and consequences. The (a) (1) A pre-hearing conference be
department official and the institution, Secretary may terminate or limit the convened by the administrative law
any time schedule specified in this eligibility of an institution to participate judge if he or she thinks that such a
section may be shortened. in any or all Title IV, HEA programs if conference would be useful, or if
{Authority: 20 U .S .C . 1094) the institution violates any provision of requested by—
Title IV of the HEA or any regulation or (1) The designated department official;
§ 6 6 8.85 S usp en sion p ro c eed in g s. agreement implementing that Title. The or
(a) (1) Scope and consequences. The consequences of the Secretary limiting (ii) The institution.
Secretary may suspend the eligibility of or terminating the eligibility of an (2) The purpose of a pre-hearing
an institution to participate in any or all institution to participate in any Title IV, conference is to allow the parties to
of the Title IV, HEA programs if the HEA program are set forth in § § 668.93 settle or narrow the dispute.
institution violates any provision of Title and 668.94, respectively. (b) If agreed to by the administrative
IV of the HEA or any provision of any (b) Procedures. (1) A designated
department official begins a limitation law judge, the designated department
regulation or agreement implementing official and the institution, a pre-hearing
that Title. or termination proceeding by sending an
institution a notice by certified mail conference may consist of—
(2) The suspension may not exceed 60
with return receipt requested. This (1) A conference telephone call;
days unless—
(i) The institution and the Secretary notice must— (2) An informal meeting; or
agree to an extension if the institution (1) Inform the institution of the intent (3) The submission and exchange of
has not requested a hearing; or of the Secretary to limit or terminate the written material.
(ii) The designated department official institution’s eligibility to participate, cite (Authority: 20 U.S.C. 1094)
begins a limitation or termination the consequences of that action, and
§ 668.88 Hearing on the record.
proceeding under § 668.86. identify thé alleged violations which
(b) Procedures. A designated constitute the basis for the action, and, (a) A hearing on the record is an
department official begins a suspension in the case of a limitation proceeding, orderly presentation of arguments and
proceeding by sending a notice to an state the limits to be imposed; evidence conducted by an
institution by certified mail with return (ii) Specify the proposed effective date administrative law judge.
receipt requested. The notice must— of the limitation or termination, which (b) The hearing process may be
(i) Infprm the institution of the intent must be at least 20 days after the date of expedited as agreed by the
of the Secretary to suspend the mailing of the notice of intent; and administrative law judge, the designated
institution’s eligibility to participate, cite (iii) Inform the institution that the department official and the institution.
the consequences of that action and limitation or termination will not be Procedures to expedite may include, but
identify the alleged violations which effective on the date specified in the are not limited to, the following—
constitute the basis for the action; notice if the designated department (1) A restriction on the number or
(ii) Specify the proposed effective date official receives by that date, a request length of submissions;
of the suspension, which shall be at for a hearing or written material . (2) The conduct of the hearing by
least 20 days after the date of mailing of indicating why the limitation or telephone conference call;
the notice of intent; and termination should not take place. (3) A review limited to the written
(iii) Inform the institution that the (2) If the institution does not request a record; or
suspension will not be effective on the hearing but submits written material, the (4) A certification by the parties to
date specified in the notice if the designated department official, after facts and legal authorities not in dispute.
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Rules and Regulations 43327

(c) (1) The formal rules of evidence (iii) The date on which the before the expiration of that period. In
and procedures applicable to administrative law judge terminates the that case, the period may be extended
proceedings in a court of law are not hearing in accordance with until the completion of that proceeding
applicable. However, discussions of § 668.89(c)(3). including any appeal to the Secretary.
settlement between the parties or the (2) The administrative law judge's (c) (1) In a fine, limitation or
terms of settlement offers are not decision must state whether the termination proceeding, the
admissible. imposition of the fine, limitation, administrative law judge’s initial
(2) The designated department official suspension or termination sought by the decision automatically becomes the
has the burden of persuasion in any fine, designated department official is Secretary’s final decision 20 day after it
suspension, limitation or termination warranted, in whole or in part. If the is issued and received by both parties
proceeding under this subpart. designated department official brought a unless, within that 20 days period, the
(3) Discovery, as provided for under termination action against the institution or the designated department
the Federal Rules of Civil Procedure, is institution, the administrative law judge official appeals the decision to the
not permitted. may, if appropriate, issue a decision to Secretary.
(4) The administrative law judge fine the institution or impose one or (2) An appeal is made by sending a
accepts only evidence that is relevant more limitations on the institution rather written notice of appeal to the
and material to the proceeding and is than terminating its eligibility to Secretary. This notice must be received
not unduly repetitious. participate. by the Secretary within twenty days of
(d) The designated department official (3) Notwithstanding the provisions of the appealing party’s receipt of the
shall make a transcribed record of the paragraph (a)(2) of this section— administrative law judge’s initial
proceeding and shall make the record (1) If, in a termination action against decision. (The appealing party shall
available to the institution upon its an institution, the administrative law send a copy of its appeal notice to the
request and upon its payment of a fee judge finds that the owner of the other party.)
comparable to that prescribed under the institution, die institution itself or the (d) (1) Within a period specified by the
Department of Education Freedom of chief executive officer of the institution Secretary, the party that appeals shall
Information Act regulations (34 CFR Part was convicted of, or pled guilty to, a submit a brief or written materials to the
5). crime involving the unlawful acquisition, Secretary explaining why the initial
{Authority: 20 U.S.C. 1094) use, or expenditure of Title IV, H EA decision of the administrative law judge
program funds, the administrative law should be overturned or modified.
§ 668.89 A u th o rity an d resp o n s ib ilities o f judge must find that termination of the (2) The appealing party may submit
the ad m in istrtive law ju d g e . institution’s eligibility to participate in proposed findings of fact or conclusions
(a) The administrative law judge the Title IV, HEA programs is of law. However, the proposed findings
regulates the course of the proceeding warranted; or of fact must be supported by—
and conduct of the parties during the (ii) If the action brought against an
(1) The evidence introduced into the
hearing and takes all steps necessary to institution involves its failure to provide
record at hearing:
conduct a fair and impartial proceeding. a letter of credit or performance bond in
(ii) Stipulations of the parties if the
(b) (1) The administrative law judge is the amount specified by the Secretary hearing consisted of written
not authorized to issue subpoenas. under § 668.15, the administrative law
judge must find that the amount of the submissions; or
(2) If requested by the administrative
performance bond or letter of credit (iii) Matters that may be judicially
law judge, the Secretary and the
established by the Secretary was noticed.
institution shall provide available
appropriate unless the institution can (3) The opposing party shall respond
personnel who have knowledge about
demonstrate that the amount was within the time period specified by the
the matter under review for oral or
unreasonable. Secretary.
written examination.
(c) The administrative law judge shall (4) The administrative law judge shall (4) Neither party may introduce new
take whatever measures are appropriate base findings of fact only on evidence evidence on appeal.
to expedite the proceeding. These considered at the hearing and on (5) Each party shall provide a copy of
measures may include, but are not matters given judicial notice. I f a its brief to the other party when it
limited to, the following— hearing is conducted by written submits its brief to the Secretary.
(1) Scheduling of conferences; submissions, findings of fact must be (e) The initial decision of the
(2) Setting time limits for hearings and agreed to by the parties. administrative law judge imposing a fine
submission of written documents; and (b)(1) In a suspension proceeding, die or limiting or terminating the eligibility
(3) Terminating the hearing and Secretary reviews the administrative of the institution to participate does not
issuing a decision against a party if that law judge’s initial decision and issues a take effect pending the appeal.
party does not meet those time limits. final decision within 20 days after the (f) (1) The Secretary renders a final
initial decision. The Secretary adopts decision.
(Authority: 20 U.S.C. 1094) (2) In rendering that decision, the
the initial decision unless it is clearly
§ 668.90 in itial an d fin al d e cisio n s— unsupported by the evidence presented Secretary considers only evidence
Appeals. at the hearing. introduced into the record at the hearing
(a)(1) The administrative law judge (2) A suspension takes effect upon and facts agreed to by the parties if the
shall issue a written initial decision to either the date on which notice of the hearing consisted of only written
the institution and the designated suspension is received by the institution submissions and matters that may be
department official by certified mail, or the original proposed effective date judicially noticed.
return receipt requested, within 30 days stated in the designated department (3) D ie Secretary's decision may
after— official’s notice of intent to suspend, affirm, modify or reverse the
(i) The last brief is filed; whichever is later. administrative law judge’s initial
(ii) The last day of the hearing, if the (3) A suspension may not exceed 60 decsion and includes a statement of the
administrative law judge does not days'unless a limitation or termination reasons for the decision, except that if
request the parties to submit briefs; or proceeding is begun under this subpart the administrative law judge finds that
 43328 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations

the termination is warranted pursuant to (4) Prohibits further guarantee § 6 6 8.96 R e in s ta te m e n t a fte r term ination.
§ 668.90 (a)(3)(i), the Secretary affirms commitments by the Secretary under the (a) (1) An institution whose eligibility
that decision. Guaranteed Student Loan or PLUS to participate in any or all of the Title
(Authority: 20 U.S.C. 1094) programs for loans to students to attend IV, HEA programs has been terminated
that institution, and prohibits further may file a request for reinstatement as a
§ 668.91 Verification of mailing and receipt disbursements by an institution which is
dates. participating eligible institution.
a lender under the Guaranteed Student (2) Except for an institution that has
(a) Verification of the Department of Loan or PLUS programs (whether or not
Education’s mailing dates and receipt been terminated for engaging in
guarantee commitments have been substantial misrepresentation
dates referred to in this subpart is issued by the Secretary or a guarantee
evidenced by the original receipt from concerning the nature of its educational
agency for such disbursements): program, the nature of its financial
the U.S. Postal Service. (b) If an institution is terminated
(b) If an institution refuses to accept a charges or the employability of its
during a payment period, any student at
notice mailed under this subpart, the graduates, a request for reinstatement
the institution who has received an
Secretary considers the notice as being may not be made before the expiration
award or to whom a commitment has
received on the date that the institution been made before the effective date of of 18 months after the effective date of
refuses to accept the notice. the termination may receive a payment the termination.
for that payment period. (3) An institution whose eligibility to
(Authority: 20 U.S.C. 1094)
(c) For purposes of this section, a participate was terminated because the
§668.92 Fines. commitment— institution engaged in substantial
(a) In determining the amount of a (1) Under the Pell Grant and Campus- misrepresentation may not request
fine, the designated department official, based programs, is defined in § 668.25 reinstatement before the expiration of
administrative law judge and Secretary and three months after the effective date of
shall take into account— (2) Under the Guaranteed Student the termination.
(1) (i) The gravity of the institution’s Loan and PLUS programs, occurs when (b) (1) The reinstatement request must
violation or failure to carry out the the Secretary or a guarantee agency be in writing and must show that the
relevant statute, regulation or advises the lender that the loan will be institution has corrected the violation(s)
agreement; or guaranteed. on which its termination was based,
(ii) The gravity of its (Authority: 20 U.S.C. 1094) including payment in full to the
misrepresentation; and Secretary or to other recipients of funds
(2) The size of the institution. § 668.95 Reimbursements, refunds and that the institution had improperly
(b) Upon the request of the institution, offsets. received, withheld, disbursed or caused
the Secretary may compromise the fine. (a) The designated department to be disbursed.
(Authority: 20 U.S.C. 1094) official, administrative law judge or (2) The institution must meet all the
Secretary may require an institution to qualifications for participation in Title
§668.93 Limitation. take reasonable and appropriate IV, H EA programs, as provided in
A limitation may include, as corrective action to remedy a violation Subpart B of this part, and enter into a
appropriate to the program in question— of applicable laws, regulations, special new participation agreement with the
(a) A limit on the number or arrangements, agreements or limitations. Secretary.
percentage of students enrolled in an (b) The corrective action may include (c) The Secretary does not grant
institution who may receive Title IV. payment of any funds to the Secretary, reinstatement to an institution if it—
H EA program funds; or to designated recipients, which the (1) Is owned, in whole or in part, by a
(b) A limit, for a stated period of time, institution improperly received, person who has been convicted of a
on the percentage of an institution’s withheld, disbursed or caused to be crime involving the abuse of Title IV,
total receipts from tuition and fees disbursed. Corrective action may, for H EA programs; or
derived from Title IV, HEA program example, relate to—
funds; (2) Continues to employ an individual
(1) With respect to the Guaranteed
(c) A requirement that an institution Student Loan or PLUS programs— in a capacity that involves the
obtain a bond, in a specified amount, to (1) Ineligible interest benefits, special administration of Title IV, HEA
assure its ability to meet its financial allowances or other claims paid by the programs or receipt of funds under Title
obligations to students who receive Title Secretary; and IV, HEA programs who was shown to be
IV, HEA program funds; or (ii) Discounts, premiums or excess an incompetent administrator during the
(d) Other conditions as may be interest paid in violations of Part 682 or termination proceedings or who was
determined by the Secretary to be 683 of Title 34 of the Code of Federal convicted of a crime involving the abuse
reasonable and appropriate. Regulations; and of Title IV, HEA programs.
(2) With respect to all Title IV, HEA (d) The Secretary, within 60 days of
(Authority: 20 U.S.C. 1094)
programs— receiving the reinstatement request—
§ 668.94 Termination. (i) Refunds due to students under (1) Grants the request;
(a) A termination— program regulations; and (2) Denies the request; or
(1) Ends an institution’s eligibility to (ii) Any grants, work-study assistance (3) Grants the request subject to
participate in any or all of the Title IV, or loans made in violation of program limitation(s).
H EA programs; regulations. (Authority: 20 U.S.C. 1094)
(2) Prohibits an institution or the (c) If any final decision requires an
Secretary from making or increasing institution to reimburse or make any § 668.97 Removal of limitation.
Title IV, HEA program awards; other payment to the Secretary, the (a) An institution whose eligibility to
(3) Prohibits an institution from Secretary may offset these claims participate in any or all Title IV, HEA
making any other new obligations against any benefits or claims diie to the programs has been limited may not
against Title IV, HEA program funds; institution. apply for removal of the limitation of its
and (Authority: 20 U.S.C. 1094) eligibility to participate before the
 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations 43329

expiration of 12 months from the (1) Granting its request; (e) The institution’s request for a show
effective date of the limitation. (2) Denying its request; or cause meeting does not waive its right to
(b) After the minimum limitation (3) Granting the request subject to participate in any or all Title IV, HEA
period, the institution may request other limitation(s). programs if it complies with the
removal of the limitation. The request (d) If the Secretary denies the request continuing limitation(sJ pending the
must be in writing and show that the outcome of the meeting.
or establishes other limitation(s), the
institution has corrected the violations {Authority: 20 U.S.C. 1094)
institution, upon request, is granted an
on which the limitation was based. [FR Doc. 86-26895 Filed 11-26-86; 10:39 am]
opportunity to show cause why its
(c) No later than 60 days after the 4000-01-M
eligibility to participate should be fully BILUNG CODE
receipt of the request, the Secretary
reinstated.
responds to the institution—
Monday
December 1, 1986

Part VI

Department of
Education
34 CFR Part 668
Student Assistance General Provisions;
Final Regulations
Institutional Quality Control Pilot Project;
Final Selection Criteria for Participation;
Notice
 43332 Federal Register / Vol. 51, N o. 230 / Monday, December 1, 1986 / Rules and Regulations

DEPARTMENT OF EDUCATION either an auditor or staff of the Response: No change has been made.
Department of Education, to ensure that The Secretary agrees that a variety of
34 CFR Part 668 Q C procedures are adequate and verification procedures will result from
effective. Successful implementation o f the Pilot Project; indeed, one of the
Student Assistance General Provisions effective quality assurance functions is stated purposes of the Pilot Project is for
considered essential to success of the an institution to develop and implement
AGENCY: Department of Education. Pilot Project.
: Final Regulations. its own verification procedures.
a c t io n
The Secretary selects institutions to However, the Secretary believes that all
participate in the Pilot Project on the developed verification procedures will
SU M M A R Y:The Secretary amends the
basis of selection criteria published in meet minimum standards and further,
Student Assistance General Provisions the Federal Register. Final selection
regulations, 34 CFR Part 668, to exempt the Secretary does not believe that
criteria and additional information
from selected verification requirements students will choose to enroll in one
concerning the Pilot Project are being
for the 1986-87 and 1987-88 award institution over another on the basis of
published in this issue of the Federal
years, institutions selected by the Register. The Secretary is exempting an institution’s verification procedures.
Secretary to participate in the from certain verification requirements Comment: One commenter who
Institutional Quality Control Pilot an institution selected to participate in supported the proposed regulations
Project (Pilot Project). The Secretary the Pilot Project from the date of its suggested that the Department
takes this action because it would be selection through the end of the 1987-88 investigate the possibility of providing
duplicative and unnecessarily award year. increased incentives to participating
burdensome to require institutions institutions such as more regulatory
participating in the Pilot Project to meet Notice of Proposed Rulemaking relief and the use of quality assurance
these regulatory requirements. On October 17,1986, the Secretary reports to meet specific Departmental
EFFECTIVE DATE: These regulations take published an NPRM for Subpart E of the requirements associated with audit and
effect either 45 days after publication in Student Assistance General Provisions program reviews.
the Federal Register or later if Congress in the Federal Register (51 FR 37132- Response: The Secretary plans to
takes certain adjournments. If you want 37133). A detailed explanation of major evaluate the Pilot Project over the two
to know the effective date of these issues is discussed on page 37132 of the remaining years of the Project. In the
regulations, call or write the Department NPRM. There have been no substantive course of the evaluation, the Secretary
of Education contact person. changes in the regulations since will consider the commenter’s
FOR FURTHER IN FO R M A TIO N C O NTACT: publication of the NPRM. suggestions.
Fred Sellers, Chief, Pell Grant Policy Summary of Comments and Responses Comment: Several commenters
Section, or Deborah Cohen, Pell Grant supported the Secretary’s proposal to
Program Specialist, U.S. Department of Comment: One commenter, while exempt institutions participating in the
Education, Office of Student Financial generally supportive of the Proposed Institutional Quality Control Pilot
Assistance, 400 Maryland Avenue SW ., regulations, objected to the requirement Project from selected verification
[Regional Office Building 3, Room 4318], that an applicant selected for
requirements of Subpart E of the Student
Washington, DC 20202. Telephone verification submit to it a copy of an
Assistance General Provisions. These
Number (202) 472-4300. income tax return if the income reported
commenters felt that the experimental
on that income tax return was used in
SUPPLEMENTARY IN FO RM A TIO N : The nature of the Pilot Project required a
determining the applicant’s expected
Institutional Quality Control Pilot lessening of the burden of implementing
family contribution (EFC). The
Project is an experiment under which a the activities of both the verification
commenter felt that this requirement
participating institution develops and regulations and the Pilot Project.
was inconsistent with the purpose of the
implements a quality control system in Pilot Project, namely that an institution Response: The Secretary agrees with
connection with its administration of the develop quality control (QC) procedures the commenters and is publishing the
Title IV, HEA programs. The Title IV, based on its own needs. proposed regulations as final
H EA programs include the Pell Grant, Response: No change has been made. regulations.
campus-based [Perkins Loan (formerly The Secretary believes that to be
National Direct Student Loan), College
Executive Order 12291
effective, all quality control procedures
Work-Study, and Supplemental must include the requirement that These regulations have been reviewed
Educational Opportunity Grant], and income reported on an income tax return in accordance with Executive Order
Guaranteed Student Loan programs. be verified by the submission of that 12291. They are classified as nonmajor
Using basic quality control components, return. However, the Secretary notes because they do not meet the criteria for
an institution participating in the Pilot that institutions participating in the Pilot major regulations established in the
Project will be able to develop Project remain subject to § 668.16(f) of order.
procedures tailored to meet the the Student Assistance General
particular problems it faces in Regulatory Flexibility Act
Provisions and they must resolve any
determining the appropriate amount of inconsistencies regarding the The Secretary certifies that these
Title IV, HEA program assistance its information on a student’s application. regulations will not have a significant
students need and in disbursing those Com m ent: One commenter feared that impact on a substantial number of small
funds to them in a timely manner. the flexibility inherent in the Pilot entities. A maximum of 102 institutions
The Secretary notes that quality Project would encourage some will be selected on a voluntary basis to
control is dependent on a successful institutions to implement “easier^ participate in the Pilot Project.
quality assurance function. Quality verification procedures, driving more
assurance is the periodic verification, students to these institutions and Paperwork Reduction Act of 1980
audit, and evaluation of quality control causing institutions with stricter These regulations have been
procedures conducted by an verification requirements to suffer from examined Under the Paperwork
independent third party, which could be decreased enrollments. Reduction Act of 1980 and have been
 Federal Register / V o l. 51, N o. 230 / M onday, Decem ber 1, 1986 / Rules and Regulations 43333

found to contain no information Number 84.032, Guaranteed Student Loan (iii) Section 668.56.
collection requirements. Program; Number 84.033, College Work-Study (iv) Section 668.57, execpt that an
Program; Number 84.038, Perkins Loan institution shall require an applicant
Assessment of Educational Impact Program; Number 84.063, Pell Grant Program. that it has selected for verification to
In the Notice of Proposed Rulemaking, Dated: November 25,1986. submit to it a copy of the income tax
the Secretary requested comments on William ). Bennett, return, if filed, of the applicant, his or
whether the proposed regulations would Secretary o f Education. her spouse, and his or her parents, if the
require transmission of information that income reported on the income tax
is being gathered by or is available from The Secretary amends Part 668 of
Title 34 of the Code of Federal return was used in determining the
any other agency or authority of the expected family contribution.
United States. Regulations as follows:
(v) Section 668.60(a).
Based on the response to the proposed (2) For the purpose of this section, the
PART 668—STUDENT ASSISTANCE
rules and on its own review, the Institutional Quality Control Pilot
GENERAL PROVISIONS
Department has determined that the Project is an experiment under which a
regulations in this document do not 1. The authority citation for Part 668 participating institution develops and
require transmission of information that continues to read as follows: implements a quality control system in
is being gathered by or is available from Authority: 20 U.S.C. 1085,1088,1091,1092, connection with its administration of the
any other agency or authority of the 1094, and 1141, unless otherwise noted. Title IV, HEA programs. Under such a
United States. quality control system, the institution
2. In § 668.51, paragraph (c) is
List of Subjects in 34 CFR Part 668 must evaluate its current procedures for
redesignated as paragraph (d), and a
administering the Title IV, HEA
Administrative practice and new paragraph (c) is added to read as
programs (“management assessment
procedure, Colleges and universities, follows:
component” ), identify the errors that
Consumer protection, Education loan
§ 668.51 General. result from its current procedures (“ error
programs—education, Grant programs— * ★ * * * measurement process component” ) and
education, Student aid.
(c) Institutional Q uality Control Pilot design corrections to its procedures that
Citation of Legal Authority Project. (1) For the 1986-87 and 1987-88 will enable it to eliminate or
A citation of statutory or other legal award years, the Secretary exempts significantly reduce those errors
authority is placed in parentheses on the institutions selected to participate in the (“corrective actions process
line following each substantive institutional Quality Control Pilot component” ).
. ★ ★. ★
provision of these regulations. ' Project from the requirements contained
(Catalog of Federal Domestic Assistance in the following sections: (FR Doc. 86-26954 Filed 11-26-86; 10:39 am]
Numbers: Number 84.007, Supplemental (i) Section 668.53(a)(1) through (4). BILLING CODE 4000-01-M
Educational Opportunity Grant Program; (ii) Section 668.54(a)(1), (2), and (4).
 43334 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices

DEPARTMENT OF EDUCATION The Pilot Project will run through the Comment: A commenter supported the
end of the 1987-88 award year. An proposed criteria and the limited
Institutional Quality Control Pilot institution that is selected to participate expansion of the project.
Project; Final Selection Criteria for in the Pilot Project is exempt, for the
Participation
Response: No change has been made.
period of its participation in the Pilot The Secretary agrees with the
Project, from selected requirements set commenter and is publishing the
AGENCY: Department of Education.
forth in the verification regulations o f proposed criteria as final criteria.
Notice of the final selection
A C TIO N : Subpart E of the Student Assistance
criteria for participation in the General Provisions, 34 CFR Part 688, Final Selection Criteria
Institutional Quality Control Pilot Subpart E. Therefore, in this issue of the
Project. Federal Register, the Secretary is The Secretary initiated the Pilot
amending § 688.51 of the Student Project during the 1985-86 award year,
sum m ary: The Secretary issues final and 42 institutions participated in the
Assistance General Provisions
selection criteria for selecting Pilot Project in that year. These
regulations to exempt, for the 1986-87
institutions to participate in the institutions focused on the first two
and 1987-88 award years, institutions
Institutional Quality Control Pilot participating in the Pilot Project from components of the quality control
Project (Pilot Project). system. In order not to lose the benefits
selected verification requirements.
The Pilot Project is an experiment derived from these institutions’
under which a participating institution Notice of Proposed Selection Criteria participating in the Pilot Project, the
develops and implements a quality On October 17,1986, the Secretary Secretary is permitting each of these
control system in connection with its published a Notice of Proposed institutions to continue in the Pilot
administration of the Title IV, HEA Selection Criteria and Deadline Date for Project if it so desires. To administer the
programs. The Title IV, HEA programs Participation in the Institutional Quality Pilot Project property, the Secretary has
include the Pell Grant, campus-based Control Pilot Project in the Federal determined that the number of
[Perkins Loan (formerly National Direct Register (51 FR 37136-37137). November institutions participating in the Pilot
Student Loan), College Work-Study, and 17,1986 was the deadline date by which Project should not exceed 102; therefore,
Supplemental Educational Opportunity the Department of Education was to if all 42 of the current participants
Grant), and Guaranteed Student Loan have received comments on the choose to remain in the Pilot Project, the
programs. proposed criteria and by which maximum number of institutions the
e f f e c t i v e d a t e : These selection criteria institutions were to have submitted their Secretary selects under these selection
become effective either 45 days after requests to participate in the Pilot criteria is 60.
publication in the Federal Register or Project. There have been no substantive The Secretary has determined that for
later if Congress takes certain changes in the criteria since publication the Pilot Project to provide a model that
adjournments. If you want to know the of the Notice. other institutions can follow, the
effective date of these regulations, call Summary of Comments and Responses institutions selected to participate in the
or write the Department of Education Pilot Project should have experience in
contact person. Comment: One commenter was of the all the Title IV, HEA programs and in
FOR FURTHER IN FO R M A TIO N CONTACT:
view that the Department would dealing with a significant number of
Jerry Whitlock, Division of Quality eliminate most community colleges from students and Federal dollars in all the
Assurance, U.S. Department of participating in the Pilot Project and that programs. Therefore, the Secretary is
Education, 400 Maryland Avenue, SW ., the results of the Pilot Project would be issuing selection criteria based on the
[Regional Office Building 3, Room 5042], based solely on large institutional input. number of programs in which an
Washington, DC 20202. Telephone The commenter recommended writing institution participates, the number of
Number (202) 732-4422. the criteria to encompass large and recipients at those schools, and the total
small, private and public, four year and number of dollars received by an
SUPPLEMENTARY IN FO RM A TIO N : Using two year institutions.
basic quality control components, an institution.
Another commenter, while supportive
institution participating in the Pilot of the proposed selection criteria, was The Secretary developed these
Project will develop procedures tailored concerned that the criteria might not criteria so that information used to
to meet the particular problems and provide a range of institutions by size. evaluate an applicant will already be in
errors it faces in determining the The commenter felt that it was the possession of ED. Therefore, an
appropriate amount of Title IV, HEA important to test the objectives of the applicant which applies to participate in
program assistance its students need Pilot Project at a variety of institutions. the Pilot Project need only submit its
and in disbursing those funds to them in Response: No change has been made. written request to participate and does
a timely manner. The Secretary has determined that for not have to submit any information with
The Secretary notes that quality the Pilot Project to provide a model that its application.
control is dependent on a successful other institutions can follow, new /. In order to be selected to participate
quality assurance function. Quality participants should be limited to those in the Pilot Project, an institution must—
assurance is the periodic verification, institutions having experience in all the 1. Participate in the Pell Grant,
audit, and evaluation of quality control Title IV, HEA programs and in dealing campus-based [Perkins Loan (formerly
procedures conducted by an with a significant number of students National Direct Student Loan), College
independent third party, which could be and Federal dollars in all the programs. Work-Study and Supplemental
either an auditor or staff of the The Secretary notes, however, that a Educational Opportunity Grant] and
Department of Education, to ensure that number of private, small, and two-year GSL programs during the 1986-87 award
Q C procedures are adequate and institutions are continuing to participate year and have participated in all five
effective. Successful implementation of and provide information to the Secretary programs during the 1984-85 and 1985-
effective quality assurance functions is for refining and adjusting Q C activities 86 award years;
considered essential to success of the and procedures developed for the Pilot 2. Have had, in the aggregate, at least
Pilot Project. Project. 2000 Pell Grant and campus-based
 Federal Register / Vol. 51, No. 230 / Monday, December 1, 1986 / Notices 43335

program recipients during the 1984-85 Findings Points rounded to the nearest tenth of a
award year; percent:
For each award year covered by the latest program
3. Have awarded, in the aggregate, at review:
least $2 million under the Pell Grant and Compliance with all applicable statutes and regu­ Potential loss rate (percent) Points
lations.... .........»................... ..... .........1 5
campus-based programs in the 1984-85 Failure to comply with applicable statutory and 0 -1 0 .......
award year; and regulatory requirements, which results in an 10.1- 15...
assessed liability of an amount equal to not 15.1- 20...
4. Have submitted and had approved more than 15 percent of the amount received Above 20
by ED its most recent audit report in by the institution under the Pell and campus-
based programs for that year........ .................. 8
which the reported liability was less Failure to comply with applicable statutory and
than $150,000. regulatory requirements, which results in an
5. Participation in ED electronic data
assessed liability of an amount equal to more transm ission projects. (Maximum 10
II. If not more than 60 applicants meet than 15 percent of the amount received by the points)
the above criteria, the Secretary selects institution under the Pell and campus-based
programs for that year.................................... o An applicant receives 10 points for
all the applicants who meet the criteria participating in award year 1985-86 in
to participate in the Pilot Project. either the “Pell Grant Program
2. The institution’s full-tim e
III. If more than 60 applicants meet equivalent (FTE) enrollment fo r the Electronic Pilot Project” or the campus-
the above criteria, the Secretary selects 1984-85 award year. (Maximum 20 based programs’ “ Gateway Electronic
applicants on the basis of the following points) FISAP” if: with regard to the Pell Grant
additional criteria. An applicant receives the following Program, the institution has a direct
number of points based upon its FTE electronic hook-up to the Pell Grant
The Secretary believes that new Pilot
Project participants should have a enrollment for the 1984-85 award year: Program Central Processing Facility;
history of proper administration of the and, with regard to the campus-based
Title IV, HEA programs. Therefore, the FTE Enrollment Points programs, the institution has a direct
Secretary is issuing criteria related to electronic hook-up to the ED-designated
Above 10,000................................... 20 facility or provides the completed floppy
potential loss rates in the Perkins Loan 5001-10,000........................................ 15
(formerly National Direct Student Loan 2000-5000......................................... 10
disk to that facility. Under the Pell Grant
[NDSL]) Program and program review
Fewer than 2 0 0 0 ..................................... o Program, the Electronic Pilot Project is
findings. In addition, the Secretary an electronic exchange system between
believes that an institution’s 3. Com pliance with the P ell Grant the Secretary and an institution under
;participation in the procedure of Program reporting requirements. which a student is able to correct or
electronic transmission of data under (Maximum 20 points) verify information contained on his or
|the Pell Grant or campus-based An applicant receives 20 points if it her Student Aid Report (SAR) at the
|programs evidences a sophistication complies with all the deadline dates for institution he or she is attending and the
needed for participation in the Pilot the receipt of institutional payment institution is able to print out a SAR for
Project. Therefore, the Secretary has summary (IPS) documents for the 1985-86 the student which is based on the
jincluded a criterion with regard to award year which were set forth corrected or verified information. Under
Iparticipation in the electronic data in Table IV of the Pell Grant Program the campus-based programs, the
|transmission projects of the Pell Grant deadline date notice published in the Gateway Electronic FISAP is an
iand campus-based programs. Federal Register of February 25,1986, 51 electronic system under which an
FR 6583-6585. institution is able to submit a Fiscal
To be selected, an applicant must 4. The applicant's potential loss rate Operations Report and Application to
iscore at least 50 points out of a potential under the Perkins Loan (form erly Participate (FISAP) to the Secretary.
80 points. If more than 60 applicants N ational D irect Student Loan [NDSL])
[Score at least 50 points, the Secretary [Authority: 20 U.S.C. 1094].
Program as o f June 30,1985. (Maximum (Catalog of Federal Domestic Assistance
selects those applicants that score the 15 points)
highest number of points. The proposed Numbers: Number 84.007, Supplemental
A potential loss rate under the Perkins Educational Opportunity Grant Program;
selection criteria and points are:
Loan Program is calculated by dividing Number 84.032, Guaranteed Student Loan
1- Findings o f the latest ED program the cumulative principal amount of Program; Number 84.033, College Work-Study
rewW. (Maximum 15 points) loans in default (including those loans Program; Number 84.038; Perkins Loan
that have been assigned or referred to Program; Number 84.063, Pell Grant Program)
| An applicant receives the following
[number of points based upon the ED for collection) by the cumulative Dated: November 25,1986.
findings of the latest program review principal amount of loans that have William J. Bennett,
conducted by ED at the institution: entered repayment. An applicant Secretary of Education.
receives the following number of points [FR Doc. 86-26955 Filed 11-26-86; 8:45 am]
based upon its potential loss rate, B ILLIN G CO D E 4000-01-M
 i

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 11 Federal Register / Vol. 51, No. 230 / Monday, December 1,1986 / Reader Aids

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1500-1899........ 7.00 Jan. 1,1986
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1900-1944................ 23.00 Jan. 1,1986
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 Federal Register / V o l. 51, N o . 230 / M on d ay, Decem ber 1,1986 / R eader A id s in

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400-629................................ 8................... ........... 21.00 July 1, 1986 1200-End................................................. ....... ...... 9.00 Oct. 1, 1985
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I I I I I I I I I I I I I I I i I I ...............