Professional Documents
Culture Documents
Fedral Registrar
Fedral Registrar
10-31-89 Tuesday
Vol. 54 No. 209 October 31, 1989
Pages 45729-46042
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II Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989
FEDERAL AGENCIES
Subscriptions:
Paper or fiche 523-5240
Magnetic tapes 275-3328
Problems with Federal agency subscriptions 523-5240
PROPOSED RULES
Applications, hearings,determinations, etc.:
Superfund program:
Toxic chemical release reporting; community right-to- Carnegie Natural Gas Co.; correction, 45891
Equitrans, Inc., et al., 45791
know-
Natgas U.S. Inc., 45792, 45793
Cadmium sulfide and cadmium selenide; correction,
(2 documents)
45891 New England Power Co., 45793
NOTICES
Air programs: Northern Border Pipeline Co., 45794
Ambient air monitoring reference and equivalent Northwest Alaskan Pipeline Co., 45794-45796..
methods- (3 documents)
Ozone Analyzer, Series 300 Computerized, 45800 Panhandle Eastern Pipe Line Co:, 45796
United Gas Pipe Line Co. et al., 45796
Meetings:
International Environmental Technology Transfer
Advisory Board, 45800 Federal Highway Administration
Superfund program: NOTICES
Response action contractor indemnification, 46012 Meetings:
Superfund; response and remedial actions, proposed Handicapped Parking Regulatory Negotiation Advisory
settlements, etc.: Committee, 45884
Clyde Elrod Drum Site, KY, 45801
Water pollution control: Federal Reserve System
Disposal site determinations-- NOTICES
Leonard Pond, Agawam, MA, 45801 Meetings; Sunshine Act, 45889,
(3 documents)
Equal Employment Opportunity Commission
PROPOSED RULES Fiscal Service
Federal sector complaint process, 45747 NOTICES
Federal debt collection and discount evaluation; Treasury
Executive Office of the President current value of fund rate, 45886
See Presidential Documents
Part IV
Department of Defense; General Services Administration;
National Aeronautics and Space Administration, 46004
Part V
Environmental Protection Agency, 46012
Part VI
United States Sentencing Commission, 46032
Part VII
Department of Defense; General Services Administration;
National Aeronautics and Space Administration, 46036
Part VIII
The President, 46041
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.
VIII Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Contents
3 CFR
Proclamations:
6057...................................
46041
7 CFR
1137 ...................................
45891
1610 ...................................
45729
Proposed Rules:
971 .....................................
45737
984.. ..................................
45738
9 CFR
Proposed Rules:
85 .......................................
45739
12 CFR
Ch. III
.................................
45891
Ch. IV.................................
45891
13 CFR
120.....................................
45891
14 CFR
Proposed Rules:
45891
75 .......................................
25 CFR
Proposed Rules:
45743
61 .......................................
26 CFR
1926 ...................................
45894
29 CFR
Proposed Rules:
1614 ...................................
45747
30 CFR
Proposed Rule:.
917 .....................................
45767
935 .....................................
45768
31 CFR
515 .....................................
45730
Proposed Rules:
103 .....................................
45769
32 CFR
Proposed Rules:
169a ...................................
45771
34 CFR
Proposed Rules:
668 .....................................
45994
40 CFR
180 .....................................
45733
Proposed Rules:
372 .....................................
45891
47 CFR
73 (3documents).............
45735
45891
90 .......................................
Proposed Rules:
73 (4 documents) ...........
45771-
45773
48 CFR
5.........................................
46004
6.........................................
46004
46004
19 .......................................
46004
52 .......................................
815 .....................................
45736
Proposed Rules:
46036
29 .......................................
46036
52 .......................................
50 CFR
Proposed Rules:
45773
17 .......................................
45729
This section of the FEDERAL REGISTER provided in Table 1. Since the calculated $28,710,000. Total advances for the
contains regulatory documents having rate (4.87 percent) is less than the purchase of Class B stock and cash
general applicability and legal effect, most minimum rate allowed under 7 U.S.C. purchases for Class B stock were
of which are keyed to and codified In 948(b)(3)(A), the cost of money rate is $4,955,025. Rescissions of loan funds
the Code of Federal Regulations, which Is set at the minimum rate of 5.00 percent. advanced for Class B stock amounted to
published under 50 titles pursuant to 44 The methodology required to calculate $1,071,815. Thus, the amount received by
U.S.C. 1510.
The Code of Federal Regulations is sold the cost of money rate is established in 7 the Bank from the issuance of Class B
by the Superintendent of Documents. CFR 1610.10(c). stock, per 7 CFR 1610.10(c), was
Prices of new books are listed in the FOR FURTHER INFORMATION CONTACT. $3,883,210 ($4,955,025 -$1,071,815). The
first FEDERAL REGISTER issue of each F. Lamont Heppe, Jr., Chief, Loans and total amount received by the Bank in
week. Management Branch, Fiscal Year 1989 from the issuance of
Telecommunications Staff Division, Class C stock was $11,614.
Rural Electrification Administration, The Bank did not issue debentures or
DEPARTMENT OF AGRICULTURE Room 2250, South Building, U.S. any other obligations during Fiscal Year
Rural Telephone Bank Department of Agriculture, Washington, 1989. Consequently, no cost was
DC 20250, telephone number (202) 382- incurred related to the issuance of
7 CFR Part 1610 9550. debentures subject to 7 U.S.C.
SUPPLEMENTARY INFORMATION: The cost 948(b)(3)(D).
Determination of the 1989 Fiscal Year of money rate methodology develops a The excess of Fiscal Year 1989 loan
Interest Rate on Rural Telephone Bank weighted average rate for the Bank's advances over amounts received from
Loans cost of money by considering total fiscal issuances of Class A, B, and C stocks
AGENCY:. Rural Telephone Bank, USDA. year loan advances; the excess of fiscal and debentures and other obligations
ACTION: Notice of 1989 fiscal year year loan advances over amounts amounted to $64,442,123. The cost
received in the fiscal year from associated with this excess is the
interest rate determination.
issuances of Class A, B, and C stocks, historical cost of money rate as defined
SUMMARY: In accordance with 7 CFR debentures and other obligations; and in 7 U.S.C. 948(b)(3)(D)(v). The
1610.10, the Rural Telephone Bank's the costs to the Bank of obtaining funds calculation of the Bank's historical cost
Fiscal Year 1989 cost of money rate has from these sources. During Fiscal Year of money rate is provided in Table 2.
been established at 5.00 percent. Except 1989, the Bank paid the following The methodology required to perform
for loans approved from October 1, 1987 dividends: the dividend on Class A this calculation is described in 7 CFR
through December 21, 1987 where stock was 2.00 percent as established in 1610.10(c). The cost of money rates for
borrowers elected to remain at interest amended section 406(c) of the Rural fiscal years 1974 through 1987 are
rates set at loan approval, all loan Electrification Act; no dividends were defined in section 408(b) of the RE Act,
advances made from October 1, 1988 payable on Class B stock as specified in a amended by Public Law 100-203, and
through September 30, 1989 under Bank 7 CFR 1610.10(c); and the dividend on are listed in 7 CFR 1610.10(c) and Table
loans approved on or after October 1, Class C stock was established by the 2 herein.
1987 shall bear interest at the rate of Bank at 8.5 percent Dated: October 26,1989.
5.00 percent. The total amount received by the
The calculation of the Bank's cost of Bank in Fiscal Year 1989 from the Jack Van Mark,
money rate for Fiscal Year 1989 is issuance of Class A stock was Acting Governor,Rural Telephone Bank,
Source of bank funds Amount Cost rate (percent) Amount X cost (Amount x rate)
rate advances (percent)
FY 1989 issuance of Class A Stock...... .... ................................................ . $28,710,000 2.00 $574,200 0.5917
FY 1989 Issuance of Class B Stock ......................................................................... 3,883,210 0.00 0 0.0000
FY 1989 Issuance of Class C Stock ................................................... . ....... ; ..... 11,614 8.50 987 0.0010
FY 1989 Issuance of debentures and other obligations ...................................... 0 .................................... 0 0.0000
Excess of total advances over 1989 issuances.......... . 64,442,123 6.44 4,150,073 4.2764
Total FY 1989 advances .............................................................................. 97,046,947 14.87
5.00
Fiscal year Bank cost of money (percent) Bank loan advances vaces x cost rate (Advances X cost rate) total
advances (percent)
1974 ........... .. 5.01 $111,022,574 $5,562,231 3.336
1975 .................................................. 5.85 130,663,197 7,643,797 3.462
1976 .................................................. 5.33 99,915,066 5.325,473 0.322
1977 ............................................... 5.00 80,907,425 4,045,371 0.244
1978 .................................................. 5.87 142,297,190 8,352,845 0.504
1979 ................................................. 5.93 130,540,067 7,741,026 0.467
1980 ................................................ 8.10 199,944,235 16,195,483 0.978
1981 .................................................. 9.46 148,599,372 14,057,501 0.849
1982 ................................................ 8.39 112,232,127 9,416,275 0.569
1983 .................................................. 6.99 93,402,836 6,528,858 0.394
1984 ............ 6.55 90,450,549 5,924,511 0.358
1985 ............. 5.00 72,583,394 3,629,170 0.219
1986 ........... 5.00 71,852,383 3,592,619 0.217
1987 .................................................. 5.00. 51,974,938 2,598,747 0.157
1988 .................................................. 5.00 119,488,367 5,974,418 0.361
Total advances...................... 1,655,873,720 _ 16.44
[FR Doc. 89-25682 Filed 10-30-89; 8:45 am] specially designated nationals of Cuba, designated national of Cuba. The list of
BILLING CODE 3410-15-M or involving any property in which there Specially Designated Cuban Nationals is
exists an interest of any national or a partial one, since the Department of
specially designated national of Cuba, the Treasury may not be aware of all the
DEPARTMENT OF THE TREASURY except as authorized by law or by the persons located outside Cuba that might
Treasury Department's Office of Foreign be acting as agents or front
Office of Foreign Assets Control Assets Control by means of a general or organizations for Cuba, thus qualifying
31 CFR Part 515 specific license. as specially designated nationals of
Section 515.302 of Part 515 defines the Cuba. Also, names may have been
Supplemental List of Specially term "national," in part, as (a) a subject omitted because it seemed unlikely that
Designated Nationals (Cuba) In or citizen domiciled in a particular those persons would engage in
Panama country, or (b) any partnership, transactions with persons subject to the
association, corporation, or other jurisdiction of the United States.
AGENCY. Office of Foreign Assets organization owned or controlled by Therefore, persons engaging in
Control, Department of the Treasury. nationals of that country, or that is transactions with foreign nationals may
ACTION: Notice of Additions to the List organized under the laws of, or that has not rely on the fact that any particular
of Specially Designated Nationals of had its principal place of business in foreign national is not on the list as
Cuba. that f9reign country since the effective evidence that it is not a specially
date (for Cuba, 12:01 a.m., e.s.t., July 8, designated national.
SUMMARY, This notice.provides the 1963), or (c) any person that has directly
names of individuals and firms The Treasury Department regards It
or indirectly acted for the benefit or on as incumbent upon all U.S. persons
operating in Panama that have been behalf of any designated foreign
added to the list of Specially Designated engaging in transactions with foreign
country. Section 515.305 defines the term
Nationals under the Treasury "designated national" as Cuba or any
nationals to take reasonable steps to
Department's Cuban Assets Control national thereof, including any person
ascertain for themselves whether such
Regulations (31 CFR Part 515). Also foreign nationals are specially
who Is a specially designated national.
provided is a complete current listing of designated nationals of Cuba, or other
Section 515.306 defines "specially
known Specially Designated Nationals designated national" as any person who
designated countries (at present,
of Cuba in Panama. has been designated as such by the Cambodia, North Korea, and Vietnam),
Secretary of the Treasury; any person
The list of Specially Designated
EFFECTIVE DATE: October 31, 1989. Nationals was last published on
FOR FURTHER INFORMATION CONTACT. who, on or since the effective date, has
either acted for or on behalf of the
December 10, 1986, in the Federal
Richard J. Hollas, Chief, Enforcement Register (51 FR 44459), and was
Division, Office of Foreign Assets government of, or authorities exercising
control over, any designated foreign amended on November 3, 1988 (53 FR
Control, Tel: (202) 376-0400. Copies of 44397), January 24, 1989 (54 FR 3446),
the list of Specially Designated country; or any partnership, association,
corporation or other organization that, April 10, 1989 (54 FR 14215) and August
Nationals are available upon request at 4,1989 (54 FR 32064), and September 20,
the following location: Office of Foreign on or since the applicable effective date,
has been owned or controlled directly or 1989 (54 FR 38811).
Assets Control, Department of the Please take notice that section 16 of
Treasury, 1331 G Street, NW., Room 300, indirectly by such government or
authorities, or by any specially the Trading with the Enemy Act as
Washington, DC 20220. amended fthe "Act"), 50 U.S.C. App. 16,
designated national
SUPPLEMENTARY INFORMATION: Under Section 515.201 prohibits any provides in part that whoever willfully
the Cuban AssetsControl Relgulations, transaction, except as provided in violates any provision of the Act or any
persons subject to the jurisdiction of the Section 515.201 or as authorized by law license, rule or regulation issued
United States are prohibited from thereunder:
or by the Secretary of the Treasury,
engaging, directly or indirectly, in involving property in which there exists "Shall, upon conviction, be fined not
transactions with any nationals or an interest of any national or specially more than $50,000, or, if a natural
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45731
person, imprisoned for not more than Melo y Cia. Caribsugar, S.A.
ten years, or both; and the officer, Panama Panama
director or agent of any corporation who Pan Canal Skipping Company Carisub, S.A..
knowingly participates in such violation Panama Panama
shall be punished by a like fine, Piex
Casa de Cambio
Panama
imprisonment, or both; and any Procesos Metalicos. S.A. Panama
property, funds, securities, papers, or Panama Casa del Respuesto
other articles or documents, or any Radio Verbo Panama
vessel, together with her tackle, apparel, Panama Castell, Osvaldo Antonio (Valdez)
furniture, and equipment, concerned in Setraca, S.A. Panama
such violation shall be forfeited to the Panama Cecoex; S.A.
United States." Shahani Auto Supplier Panama City, Panama
Panama Chamet Import, S.A.
In addition, persons convicted of an Superseguros
offense under the Act may be fined a Panama
Panama Cia. Istmena de Aviacion
greater amount than set forth in the Act, Televisora Nacional Canal 2 Panama
as provided in 18 U.S.C. 3571 and 3581. Panama Cimex, S.A.
Teneria Tauro, S.A. Panama
Authority: 50 U.S.C. App. 5(b) and 18 U.S.C. Panama
3571 and 3581. Club Villa Fenix
Zebetex International, S.A. (a.k.a. Calpar de
Panama
Panama, S.A.)
Specially DesignatedNationalsof Cuba Duty Free Shop
Panama
in Panama(New Additions at this Balboa Pier
Complete CurrentList of Specially Panama
Publication) Duty Free Shop
DesignatedNationals of Cuba in
Noriega, Manuel Antonio Panama Cristobal Pier
Panama Panama
Sieiro de Noriega, Felicidad Abastecadora Naval Y Industrial, S.A. (a.k.a. Duty Free Shop
Panama Anainsa) Paitilla Airport
Atlantic Pacific, S.A. (APSA) Panama Panama
Panama Abdelnur, Nury De Jesus Duty Free Shop
Calpar de Panama, SA.(a.k.a. Zebetex Panama Torrijos Airport
.International, S.A.) Agencia de Viajes Guama (a.k.a. Viajes Panama
Panama Guama Tours, Guamatur, S.A. and Duty Free Shop
Carbonica, S.A. Guama Tour) Port of Vacamonte
Panama Bal Harbour Shopping Center, Via Italia,
Panama
Casas de Cambio Panama City, Panama, Coll, Gabriel (Prado)
Panama Alfonso, Carlos, (a.k.a. Carlos Alfonso
Panama
Cia. Istmena de Aviacion Gonzalez)
Colon, Eduardo (Betancourt)
Panama Panama
Panama
Club Villa Fenix Alvarez, Manuel (Aguirre)
Colony Trading, S.A.
Panama Panama
Duty Free Shop Anainsa (a.k.a. Abastecadora Naval Y Panama
Balboa Pier Industrial, S.A.) Comercial Cimex, S.A.
Panama Panama Panama
Duty Free Shop Angelini, Alejandro Abood Comercial Muralla, S.A. (ak.a. Muralla, S.A.)
Cristobal Pier Panama Panama City, Panama
Panama Atlantic Pacific, S.A. (APSA) Compania Pesquera Internacional. SA
Duty Free Shop Panama Panama
Paitilla Airport Avalon, S.A. Contex, S.A.
Panama Colon Free Zone, Panama Panama
Duty Free Shop Azrak, S.A. Corporacion Cimex, SA.
Torrijos Airport Panama Panama
Panama Azrak, Victor Cubana Airlines (a.k.a. Empresa Cubana de
Duty Free Shop Panama Aviacion)
Port of Vacamonte Batista, Miguel Calle 29 y Avda Justo Arosemena
Panama Panama Panama City, Panama
Econollantas Bewail Corporation, Inc. Cuenca, Ramon Cesar
Panama Panama Panama
El Deposito Boutique La Maison Delgado, Antonio (Arsenio)
Panama 42 Via Brasil Panama
El Millon Panama City, Panama Deprosa, S.A. (a.k.a. Desarrollo De Proyectos,
Panama Bradfield Maritime Corp., Inc. S.A.)
Hotel Granada Panama Panama City, Panama
Panama Calpar de Panama, S.A. (a.k.a. Zebetex Desarrollo De Preyectos, S.A. (a.k.a. Deprosa,
Hotel Nacional International, S.A.) SA.)
Panama Panama Panama City, Panama
Hotel Riande Aeropuerto Caballero, Roger Montanes (a.k.a. Roger Dooley, Michael P.
Panama Montanes and Roger Edward Dooley) Panama
Hotel Riande Continental Panama Dooley, Roger Edward (a.k.a. Roger
Panama Canapel, S.A. Montanes Caballero and Roger
Hotel Suites Alvear Panama Montanes)
Panama Carbonica, S.A. Panama
Joyeria y Boutique Pretelt Panama Duque, Carlos
Panama Caribbean Happy Lines (a.k.a. Caribbean Panama
Marinexam Happy Lines Co.) Echeverri, German
Panama Panama Panama
45732 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
Econollantas Inversiones Lupamar, S.A. (a.k.a. The Pesmar (or Pezmar), S.A. (a.k.a. Pescados y
Panama Lupamar Investment Company) Mariscos de Panama)
Edyju, S.A. Panama Panama City, Panama
Panama IPESCO (a.k.a. International Petroleum S.A.) Piex
El Deposito Colon Free Zone, Panama Panama
Panama Jiminez, Gillermo (Soler) Piramide Internacional
Panama Panama
El Millon
Joyeria y Boutique Pretelt Pans, Alberto
Panama ..Panama Executive Representative
Empresa Cubana de Avlacion (see Cubana Kaspar Shipping, S.A.
Airlines) Banco Nacional de Cuba
Panama Federico Boyd Ave. &51 St.
Panama Kave, S.A.
Fabro Investment, Inc. Panama City, Panama
Panama Prado, Julio (a.k.a. Julio Lobato)
Panama Lakshmi
Panama Panama
Facobata
Leybda Corporation, S.A. Presa,. S.A.
Panama
Panama Panama
Famesa International, S.A. Processos Metalicos, S.A.
Panana Louth Holdings, S.A.
Panama Panama
Fruni Trading, S.A. Radio Service, S.A.
Panama City, Panama Manzper Corp.
Panama Panama
Gallo -Import Marine Registration Company Radio Verbo
Panama Panama Panama
Garcia Santamaria de la Torre, Alfredo Marinexam Reciclaje Industrial, S.A.
Rafael (see also "Santamarina") Panama Panama,
Panama Marisco (or Mariscos de Farallon, S.A. Rent-A-Car, S.A.
Global Marine Overseas. Inc. Panama Panama
Panama Marketing Associates Corporation Reyes, Guillermo (Vergara)
Goldern Comet Navigation Co., Ltd. Calle 52 E, Campo Alegre Panama City, Panama
Panama Panama City, Panama Rocha, Antonio
Gonzalez, Carlos Alfonso (a.k.a. Carlos Maryol Enterprises, Inc. Panama City, Panama
Alfonso) Panama Rodriquez, Jesus (Borges or Borjes)
Panama
Median, Anita (a.k.a. Ana Maria Medina) Panama
Grete Shipping Co., S.A.' Panama Romeo, Charles (a.k.a. Charles Henri Robert
Panama
Melo y Cia. Romeo)
. Panama Panama
Guaco Export Mercurius Import/Export Company, Panama,
Panama . S.A. Roque, Roberto (Perez)-
Guama Tour (a.k.a. Agenoia de Viajes Panama
Calle C, Edlficio 18 Ruiz, Ramon Miguel (Poo)
Guama, Viajes Guama Tours and Box 4048, Colon Free zone, Panama
Guamatur, S.A.) Panama
Monet Trading Company Santamarina, de Ia Torre Rafael Garcia (see
Bal Harbour Shopping Center, Via Italia Panama
Panama City, Panama also "Garcia")
Montanes, Roger (a.k.a. Roger Montanes Panama
Guamar Shipping Co., S.A. Caballero and Roger Edward Dooley)
Panama Servimpex, S.A.
Panama Panama
Guamatur, S.A. (a.k.a. Agencia de Viajes Montanez, Michael
Guama, Viajes Guama Tours and Guama Servinaves, S.A.
Panama Panama
Tour) Moonex International, S.A.
Bal Harbour Shopping Center, Via Italia Panama Setraca, S.A.
Panama City, Panama Muralla, S.A. (a.k.a. Comercial Muralla, S.A.) Panama
Havanatur, S.A. Panama City, Panama Shahani Auto Supplier
Panama City, Panama Navigable Water Corp., Ltd. Panama
Havinpex, S.A. (a.k.a. Transover, S.A.) Panama Shipley Shipping Corp.
Panama City, Panama Noriega, Manuel Antonio Panama
Haya, Francisco Panama Siboney Internacional, S.A.
. Panama
Ortega, Dario (Pina) Edificio Balmoral, 82 Via Argentina
Hermann Shipping Corp., Inc. Edificio Saldivar Panama City, Panama
Panama Panama City, Panama
Heywood Navigation Corp.
Sieiro de Noriega, Felicidad
Panamerican Import and Export Commercial Panama
Panama Corp.
Hotel Granada Panama Superseguros
Panama Panoamericana Panama
Hotel Nacional Panama Suplidora Latino Americana, S.A. (a.k.a.
Panama Pan Canal Shipping Company Suplilat, S.A.)
Hotel Riande Aeropuerto Panama Panama City, Panama
Panama Pens, Jose (Tones) Suplilat, S.A., (a.k.a. Suplidora Latino
Hotel Riande Continental Panama Americana, S.A.)
Panama Pena. Victor Panama City, Panama
Hotel Suites Alvear Panama
Panama
Taller De Reparaciones Navales, S.A. (a.k.a.
Perez,,Alfonso Tarena)
Imprisa, S.A. Panama Panama City, Panama
Panama Perez, Manuel Martin
Interconsult Panama Tarena, S.A. (a.k.a. Taller De Reparaciones
Panama Perez. Osvaldo (Cruz) Navales S.A.)
International Petroleum, S.A. Panama Panama
. Colon Free Zone, Panama Pescados Y Mariscos de Panama (a.k.a. Technic Digemex Corp.
International Transport Corporation Pesmar or Pezmar) S.A. Calle 34 No. 4-50, Office 301
Colon Free Zone, Panama Panama City, Panama. Panama City, Panama
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations S45733
Technic Holding Inc. for residues of fenarimol in or on the hyperplastic nodules) at the highest
Calle 34 No. 4-50, Office 301 commodity was requested in a petition dose tested (17.5 mg/kg bwt/day), when
Panama City, Panama submitted by Elanco Products Co. data for male and female rats were
Televisora Nacional Canal 2
Panama EFFECTIVE DATE: October 31, 1989. combined.
Temis Shipping Co. ADDRESSES: Written objections, Since that time, the compound has
Panama identified by the document control been reevaluated. The Agency now
Teneria Tauro, S.A. number [PP 8F3630/R1039], may be considers it more appropriate to
Panama submitted to the: Hearing Clerk (A-110), separate data for males and females and
Tosco, Arnaldo (Garcia) Environmental Protection Agency, Rm. also to separate hyperplastic nodules
Panama from tumors (adenomas and
Tramp Pioneer Shipping Co. M-3708, 401 M St. SW., Washington, DC
20460. carcinomas). When a reevaluation of the
Panama
Transit, S.A. FOR FURTHER INFORMATION CONTACT: hepatic lesions for males and females
Panama Susan T. Lewis, Acting Product Manager was performed separately with the
Transover, S.A. (a.k.a. Havinpex, S.A.) (PM) 21, Registration Division (H7505C), elimination of hyperplastic nodules, the
Panama City, Panama Environmental Protection Agency, 401 M data did not demonstrate a statistically
Treviso Trading Corporation St. SW., Washington, DC 20460. significant increased incidence in
Edificio Banco de Boston Office location and telephone number: adenomas and/or carcinomas in either
Panama City, Panama sex. Moreover, the mouse oncogenicity
Trober, S.A. (a.k.a. Trover, S.A.) Rm. 227, CM #2,1921 Jefferson Davis
Highway, Arlington, VA 22202, (703)- study did not demonstrate oncogenic
Edificio Saldivar
Panama City, Panama 557-1900. potential at dose levels up to and
Trust Import-Export, S.A. SUPPLEMENTARY INFORMATION: EPA
including a dose level of 85.7 mg/kg
Panama issued a notice, published in the Federal bwt/day (the highest dose level tested).
Valletta Shipping Corp. Register of May 25, 1988 (53 FR 18898), Because of the appearance of a low
Panama which announced that Elanco Products incidence of fatty change of the liver
Vasquez, Oscar D. (a.k.a. Vazques, Oscar D.) (nonneoplastic pathological lesions) in
Panama Co., 740 South Alabama St.,
Indianapolis, IN 46285, had submitted the low-dose groups in this study, it was
Viacon International, Inc. unclear if a NOEL for fatty change of the
Apartment 7B Torre Mar Building pesticide petition (PP) 8F3630 to EPA
Punta Paitilla Area, Panama City, Panama requesting that the Administrator, liver was established-in this study.
France Field, Colon Free Zone, Panama pursuant to section 408(d) of the Federal 3. Additional.2-year chronic feeding/
Viajes Guama Tours (a.k.a. Guamatur, S.A., Food, Drug, and Cosmetic Act, propose oncogenicity studies in rats using
Guama Tour and Agencia de Viajes the establishment of tolerances for the dietary concentrations of 0, 12.5, 25, and
Guama) fungicide fenarimol [alpha-(2- 50 ppm (equivalent to doses of 0, 0.63,
Bal Harbour Shopping Center, Via Italia 1.25, and 2.5 mg/kg bwt/day). The
Panama City, Panama chlorophenyl)-alpha-(4-chlorophenyl)-5-.
Wittgreen, Carlos (a.k.a. Carlos Wittgreen pyrimidinemethanol] in or on the raw purpose of these additional studies was
Antinori, Carlos Wittgreen A., and agricultural commodity cherries at 1.0 to assist in determining a NOEL for fatty
Carlos Antonio Wittgreen) ppm. liver changes. The first of these two
Panama There were no comments received in studies was compromised, however, by
Zebetex International, S.A. (a.k.a. Calpar de response to the notice of filing. an outbreak of chronic respiratory
Panama S.A.) The data submitted in support of the disease which reduced survival in all
Panama petition and other relevant material experimental groups, including control.
Date: October 13, 1989. have been evaluated. The pesticide is The study was then repeated with the
R. Richard Newcomb, considered useful for the purpose for same dose levels. In the second study,
Director,Office of ForeignAssets Control. which the tolerance is sought. The no fatty liver changes or oncogenic
Approved: October 17, 1989. toxicological data considered in support effects were observed at the doses
Salvatore R. Martoche, of the tolerance include the following: tested under the conditions of the study.
AssistantSecretary(Enforcement). 1. A 1-year dog feeding study using Using data from all three 2-year studies,
[FR D6c. 89-25717 Filed 10-27-89; 12:36 pm] doses of 0, 1.25, 12.5, and 125 a NOEL for fatty liver change of 6.5 mg/
milligrams/kilogram (mg/kg) body kg bwt/day was established.
BILLING CODE 4810-25-M
weight (bwt)/day. The no-observed- 4. A 2-year oncogenicity study in mice
effect level (NOEL) is 12.5 mg/kg bwt/ using dietary concentrations of 0, 50,
ENVIRONMENTAL PROTECTION day. The 125 mg/kg bwt/day dose level 170, and 600 ppm (equivalent to doses of
caused increased serum alkaline 0, 7, 24.3, and 85.7 mg/kg bwt/day) that
AGENCY
phosphatase, increased liver weights, was negative for oncogenic effects at all
40 CFR Part 180 increase in p-nitroanisole o-demethylase doses tested under the conditions of the
activity, and mild hepatic bile stasis. study. At 600 ppm, an increase in fatty
[PP 8F3630/R1039; FRL-3658-11 2. An initial 2-year chronic feeding/ Change of the liver was demonstrated.
oncogenicity study in rats using dietary The NOEL for this effect was 170 ppm
Pesticide Tolerance for Fenarimol concentrations of 0, 50, 130, and 350 ppm (24.3 mg/kg bwt/day).
(equivalent to doses of 0, 2.5, 6.5, and 5. A rabbit teratology study that was
AGENCY: Environmental Protection
Agency (EPA). 17.5 mg/kg bwt/day). In a previous negative for teratogenic effects at all
ACTION: Final rule. Federal Register Notice (51 FR 7567; doses tested (0, 5, 10, and 35 mg/kg).
March 5, 1986), the Agency indicated 6. A rat teratology study that
SUMMARY: This rule establishes a fenarimol to be oncogenic. In that demonstrated hydronephrosis at 35 mg/
tolerance for residues of the fungicide Notice, the Agency's initial conclusion kg (doses tested were 0, 5, 13, and 35
fenarimol in or on the raw agricultural that fenarimol was oncogenic was based mg/kg). A second study in rats (with a
comm6dity cherries at 1.0 part per on a finding in the 2-year rat study of a postpartum evaluation) again
million (ppm). This regulation to statistically significant increase in demonstrated hydronephrosis at 35 mg/
establish the maximum permissible level hepatic lesions (adenomas and kg, but also indicated that the dose level
45734 Federal Register / VoL 54, No. 209. / Tuesday, October 31, 1989 / Rules and Regulations
of 35 mg/kg was associated with a The acceptable daily intake CADI) regulations establishing, new tolerances
maternal toxic effect (decreased body based on the 2-year rat chronic feeding or raising tolerance levels or
weight gain during treatment" The study (NOEL of 6.5 mg/kg bwtfday), and establishing exemptions from tolerance
Agency considers the NOEL for' using a hundredfold safety. factor, is requirements do not have a significant
hydronephrosis and for matemat calculated to be 0.065 mg/kg: bwtjday. economic impact on a substantial
toxicity to be 13 mg g. The theoretical maximum residue number of small entities. A certification
7. A multigeneration reproduction contribution from previously established statement to this effectwas published in
study in rats that demonstrated.', tolerances and.the tolerances the Federal Register of May 4, 1981 (46
decreased fertility in males and.delayed established here is a0004 mgJkg bwt/ FR 24950).
parturition and dystocia in females at 5 day and.utilizes 0.6 percent of the ADI. The Office of Management and Budget
mgkg bwttday. The NOEL for Previous tolerances have been
established for fenarimol in pecans, has exempted this rule from the
reproductive effects in this study was
2.5 mgfkg bwtfday . pears, apples. apple pomace, milk. meat requirement of section 3 of Executive
8. Multigeneration reproduction and meat byproducts of cattle, goats,, Order 12291.
studies in guinea pigs and mice that hogs, horses, and sheep: and fat.and
were negativ for reproductive effects at liver of cattlei, goats, hogs, horses, and List of Subjects in 40 CFR Part180
doses up to 35 mg/kg bwt/day (highest sheep. Administrative practice and
dose testedl and 20 mg/kg bwtjday, The nature of the, residue is procedures, Agricultural commodities,
respectively. adequately understood, and adequate Pesticides and pests, Reporting and
9. An aomatase inhibition study in analytical methods are available for recordkeeping requirements.
rats that showed fenarimol to be a enforcement purposes. Because of the
moderately weak inhibitor of aromatase long lead time from establishing this Dated: September 27, 1989.
activity. tolerance to publication of the Douglas D.Campt,
The adverse reproductive effects enforcement methodology in the
observed in the rat multigeneration PestiicideAnalytica[Manual,Vol. I, the DirectorOffice of PesticideProgroms-
reproduction study are considered to, be analytical. methodology is being made Therefore, 40 CFR part 180 is amended
a speciesrspecific effect caused by available in the interim to anyone as follows:
aromatase inhibition. This enzyme interested in pesticide enforcement
promotes normal sexual behavior in rats when requested from: Calvin Furlow, PART 180-AMENDED]1
and mice, but not in guinea pigs Public Information Branch. Field
primates, or man. A NOEL of 35 mgkg -Operation Division H7506C, 401. M i. The authority citation, for part 180
bwt/day for reproductive effects Street SW., Washington. DC 20460. continues to read as follows:
relevant to, humans was established in Office location and. telephone number:
the multigeneration reproduction study Room 242, CM #2 1921 refferson: Davis Authority: 21 U.S.C. 346a and 371.
in guinea pig. Highway, Arlington, VA 22202, (703)- 2. In J 180.421. by revising paragraph
I. A mouse lymphoma forward. 557-4432.
The pesticide is considered useful for (b) by adding the raw agricultural
mutation assay. a DNA repair synthesis
study in rat liver culture systems; gene the purposes for which the tolerances commodity cherries and putting the
mutation assays in Salmonella are sought. Based on the information. paragraph in tabular fbrmat, to read as
typlimurium (Ames teatl and in and data considered., the Agency follows:
EschericlU coiL; a dominant lethal concludes that the establishment of the,
assay in Wistar rats;, an assay for tolerances will' protect the public health. § 180.421 Fenarlmol; tolerances for
transformation activity in the C3HI10T Therefore, the tolerances are residues.
/2 embryonic mouse fibroblast, and an' established as set forth below.
in. viva assay for chromosome This tolerance will expire 1 year after (b) A tolerance is established for
aberration in the Chinese hamster. the date of publication of this final rule. combined residues of the fungicide
Fenarimol did not demonstrate Based on the reviews of the California fenarimol [alpha-(Z-chlorophenyU-alpha-
mutagenic activity in any of these residue data, the Agency will determine (4-chlorophenyl),--pyrimidinemethanol
studies. whether establishing a permanent and its metabolites [alpha-(2-
The mutagenic potential of fenarimol tolerance is appropriate. chlorophenyl).alpha-(4-chlorophenyl)-
has been evaluated in several assay Any person adversely affected by this 1,4-dihydro-5-pyrimidinemethano, and 5-
systems (see item10 above). FenarimoL regulation may, within 30 days after
didnot demonstrate a mutagenic effect publication of this document in the [[2-chlorophenyl) (4-
in any of these studies. Furthermore, Federal Register, file written objections chlorophenyllmethyl]-3,4-dihydro-4-
fenarimol did not induce altered. foci or' with the Hearing Clerk, at the address pyrimidinol measured as the total of
neoplastic nodules in an initiation and given above. Such objections should fenarimol and 5-[(2-chlorophenyl)-(4-
promotion study in rat liver tisaue. specify the provisions of the regulation chlorophenyl)methyllpyrimidine
Based on the above findings the deemed objectionable and the grounds (calculated as fenarimol)], in or on the
Agency concludes that fenarimol was for the objections. If a hearing is following raw agricultural commodities:
not oncogenic in lbng-term studies in requested, the objections must state the
rats and mice under test conditions in issues for the hearing and the grounds
for the objections. A hearing will be Commodities Parts per Expiration date
which the highest dose tested fbr both
species approached a maximum granted if the, objections are supported
tolerated dose as evidenced by by grounds legally sufficient to usti Cherries ................. . 1.0 October 31,1990.
increased fatty change in the liver. the relief sought. Grapes ................. 0.2 r None;.
Data currently lacking is additional Pursuant to the requirement of the
field trial data from California. The. Regulatory Flexibility Act (Pub. L. 96- [FR Doc., 89-25478 Fled 11-30-89 8:45 aml
Agency expects the additional data to 354, 94' Stat. .1164, 5 U.S.Q 6M1-612), the
Administrator has determined that BILLING CODE 6560-60-'
be submitted by October 1989.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and,Regulations 45735
This section of the FEDERAL REGISTER the Agricultural Marketing Agreement be established at a rate which will
,contains notices; to the public! of the Act of 1937, as amended [7 U.S.C. 601- produce sufficient income to pay the
proposed issuance of. rules and 6741, hereinafter referred to as, the Act. committee's expected expenses..
regulations. The purposel of these notices This proposed rule has-been reviewed
is to give Interested persons an The committee met on October-3,
under Executive Order 12291 and 1989, and unanimously recommended a
opportunity to participate in, the rule
making prior to the adoption of the final Departmental Regulation 1512-1. and has 1989-90 budget of $51,531.49. Last
rules. been determined to be a "non-major" season's budget was $34,305. Major,
rule under,criteria contained therein. expense items include increases in
Pursuant to requirements set forth in committee staff salaries, travel and
DEPARTMENT OF AGRICULTURE the Regulatory Flexibility Act (RFA), the marketing development and production
Administrator of the: Agricultural research projects.
Agricultural Marketing Service Marketing Service (AMS): has The committee also unanimously
7 CFR Part 971 considered the economic. impact. of this recommended an assessment rate of
proposed rule on small entities. $0.05,per carton, the same rate as last
(Docket No. FV-89-110] The purpose of the: RFA is to, fit season's. This rate, when applied to
regulatory actions to the: scale of anticipated shipments of 1.01T,500
South. Texas Lettuce; Expenses and business, subject to such. actions in order
Assessment Rate cartons of lettuce, would yield $50,575 in
that small. businesses!will not be unduly assessment. revenue. This, amount when
AGENCY:. Agricultural Marketing, Service, or disproportionately burdened. added to $956.49 from the reserve fund
USDA. Marketing orders issued pursuant to the would be adequate to cover budgeted
ACTION. Proposed rule. Act, and.rules issued. thereunder, are. expenses.
unique. in. that they are brought about While this proposed action would
SUMMARY: This proposed rule would through group, action. of essentially small impose some additional costs on
authorize expenditures and establish an entities acting on. their own behalL. handlers, the costs are in the form of
assessment rate under Marketing Order Thus, both statutes have small entity
uniform assessments on all handlers.
971 for the 1989-90 fiscal period. orientation and compatibility. Some of the additional costs may be
Authorization of this budget. would There are approximately 10 handlers, passed on to producers. However, these
allow the South Texas Lettuce and 20 producers. of South Texas lettuce costs would be offset by the benefits
Committee. to incur expenses that are. covered under this marketing order; derived from the operation of the
reasonable and necessary to administer Small agricultural producers have been marketing order. Therefore, the
the program. Funds to administer this defined by the Small Business Administrator of the AMS has
program would be derived. from Administration [13 CFR 121.2] as those determined that this action would not
assessments on handlers. having annual gross revenues for the have: a significant economic impact on a
DATES: Comments must be received by last three: years of less than $500,000, substantial number of small entities.
November 10, 1989. and small agricultural service firms are
defined as. those whose gross; annual This action should be expedited
ADDRESSES:Interested persons are because the committee needs to have
receipts are less than $3,500,000. The
invited to submit written comments majority of the: handlers and producers sufficient funds to pay its expenses
concerning- this proposal. Comments may be. classified as small entities. which are incurred on a continuous
must be sent in triplicate to the Docket The budget of expenses for the 198.9- basis. The 1989-90 fiscal period began in
Clerk, Fruit and Vegetable Division,
90 fiscal year was prepared by the. South
August, and the marketing, order
AMS, USDA, P.O. Box 96456, Room Texas Lettuce Committee. (committeel., requires that the rate of assessment
2525-,. Washington. DC 20090-6456.
the agency responsible for local apply to all assessable lettuce handled
Comments should.reference the docket administration of the marketing order, during the fical period. In addition,
number and the date and page number
and submitted to the Department of
handlers are, aware of this action which
of this issue: of the. Federal Register and Agriculture for approval The; members was recommended by the committee at
will be available for public inspection in
of the committee are: handlers and
a public meeting Therefore, it is found
the Office. of the Docket Clerk during and determined that a comment period
producers of lettuce. They are familiar
regular business hours.
with the committee's needs and.with the of less than 30 days is appropriate
FOR FURTHER INFORMATION CONTACT:. costs for,goods, services and personnel
because the budget and assessment rate
Kenneth G. Johnson. Marketing Order in their local area and are. thus, in a approval for this program needs to be
Administration Branch. Fruit and position to formulate an appropriate. expedited. The. committee needs to have
Vegetable Divisioni. AMS USDA. P.O. budget, The budget. was formulated and sufficient funds to pay its expenses
Box 96456, Room 2525-S,. Washington, discussed in a.public: meeting. Thus, all. which are incurred on a continuous
DC, 20090-6456, telephone 202-447-5331. directly' affected persons have had.an basis.
SUPPLEMENTARY INFORMATION: This rule opportunity to-participate and provide List of Subjects in 7 CFR Part 971
is proposed, under Marketing Agreement input.,
No. 144 and Marketing Order No.. 971 [7 The assessment rate recommended by Lettuce, Marketing agreements and
CFR part 971], regulating the handling of the committee, was, derived by dividing, orders,. South Texas.
lettuce grown in the Lower Rio Grande. anticipated expenses by expected For the reasons set forth in the.
Valley of South Texas. The marketing shipments of lettuce. Because that rate preamble, it is proposed that 7 CFR Part
agreement and order are effective under is. applied. toa actual shipments, it must 971 be amended as follows:
45738 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
PART 971-LETTUCE GROWN IN FOR FURTHER INFORMATION CONTACT. are thus in a position to formulate an
LOWER RIO GRANDE VALLEY IN Beatriz Rodriguez, Marketing Specialist, appropriate budget. The budget is
SOUTH TEXAS Marketing Order Administration Branch, formulated and discussed in public
F&V, AMS, USDA, P.O. Box 96456, meetings. Thus, all directly affected
1. The authority citation for 7 CFR Room 2524-S, Washington, DC 20090- persons have an opportunity to
Part 971 continues to read as follows: 6456; telephone: (202] 447-5120. participate and provide input.
Authority: Secs. 1-19, 48 Stat. 31, as SUPPLEMENTARY INFORMATION: This rule The assessment rate recommended by
amended; 7 U.S.C. 601-674. is issued under Marketing Agreement the Board is derived by dividing
2. A new section 971.229 is added to and Order No. 984 [7 CFR part 984]; both anticipated expenses by expected
read as follows : as amended, regulating the handling of shipments of walnuts. Because that rate
walnuts grown in California. The is applied to actual shipments it must
§ 971.229 Expenses and assessment rate. marketing agreement and order are be established at a rate which will
Expenses of $51,531.49 by the South effective under the Agricultural produce sufficient income to pay the
Texas Lettuce Committee are authorized Marketing Agreement Act of 1937, as Board's expected expenses. The
and an assessment rate of $0.05 per amended [7 U.S.C. 601-674], hereinafter recommended budget and rate of
carton of lettuce is established for the referred to as the Act. assessment is usually acted upon by the
fiscal period ending July 31, 1990. This proposed rule has been reviewed Board shortly before a season starts,'
Unexpended funds may be carried over under Executive Order 12291 and and expenses are incurred on a
as a reserve. Departmental Regulation 1512-1 and has continuous basis. Therefore, the budget
Dated: October 25, 1989. been determined to be a "nonmajor" and assessment rate approval must be
William J.Doyle, rule under criteria contained therein. expedited so that the Board will have
Acting Deputy Director,Fruitand Vegetable Pursuant to requirements set forth in funds to pay its expenses.
Division. the Regulatory Flexibility Act (RFA), the The Board met on September 15, 1989,
[FR Doc. 89-25569 Filed 10-30-89; 8:45 am] Administrator of the Agricultural and unanimously recommended 1989-90
Marketing Service (AMS) has marketing order expenditures of
BILLING CODE 3410-02-M
considered the economic impact of this $1,463,782 and an assessment rate of
proposed action on small entities. $0.0085 per kernelweight pound of
7 CFR Part 984 The purpose of the RFA is to fit walnuts. In comparison, 1988-89
regulatory actions to the scale of marketing year budgeted expenditures
[FV-89-108PR] business subject to such actions in order were $1,475,294, and the assessment rate
that small businesses will not be unduly was $0.0085 per kernelweight pound of
Expenses and Assessment Rate for or disproportionately burdened. walnuts. Budget categories for 1989-90
Walnuts Grown In California for 1989- Marketing orders issued pursuant to the
are $79,436 for administrative expenses,
90 Act, and rules issued thereunder, are $300,000 for production research,
unique in that they are brought about
AGENCY: Agricultural Marketing Service, $700,000 for the domestic market
through group action of essentially small
USDA. research and development program, and
entities acting on their own behalf.
ACTION: Proposed rule. $37,000 for the 1990 crop estimate.
Thus, both statutes have small entity
Comparable actual expenditures for the
orientation and compatibility.
SUMMARY: This proposed rule-would 1988-89 crop were $75,999, $244,968,
There are approximately 65 handlers
authorize expenditures and establish an $688,554, and $30,500, respectively.
of walnuts grown in California who are
assessment rate under Marketing Order Assessment income for 1989-90 is
subject to regulation under the walnut
No. 984 for the 1989-90 marketing year marketing order, and approximately estimated to total as much as $1,539,707
established under the walnut marketing based on an estimated crop of
5,000 producers of walnuts in the
order. This action is needed for the production area. Small agricultural 181,142,000 kernelweight pounds of
Walnut Marketing Board (Board), the walnuts.
producers have been defined by the
agency responsible for the local Small Business Administration [13 CFR While this proposed action would
administration of the order, to operate 121.2] as those having average gross impose some additional costs on
during the 1989-90 marketing year. The annual revenues for the last three years handlers, the costs are in the form of
Board incurs expenses on a continuous -uniform assessments on all handlers.
of less than $500,000, and small
basis and needs to collect funds during agricultural service firms are defined as Some of the additional costs may be
the year to pay those expenses. Funds to those whose gross annual receipts are passed on to producers. However, these
administer this program are derived costs would' be significantly offset by
less than $3,500,000. The majority of
from assessments on handlers. walnut producers. and handlers may be the benefits derived from the operation
DATES: Comments must be received by classified as small entities. of the marketing order. Therefore, the
November 10, 1989. The walnut marketing order requires Administrator of the AMS has
ADDRESSES: Interested persons are that the assessment rate for a particular determined that this action would not.
invited to submit written comments marketing year shall apply to all have a significant economic impact on a
concerning this proposal. Comments assessable walnuts handled from the substantial number of small entities.
must be sent in triplicate to the Docket beginning of such year. An annual Based on the foregoing, it is found and
Clerk, F&V, AMS, USDA, P.O. Box budget of expenses is prepared by the determined that a comment period of
96456, Washington, DC 20090-6456. All - Board and submitted to the U.S. less than 30 days is appropriate because
comments should reference the docket Department of Agriculture for approval the budget and assessment rate
number and the date and page number The Board consists of handlers, approval for the program need to be
of this issue of the Federal Register and producers, and a non-industry member. expedited. The Board needs to have
will be made available for public They are familiar with the Board's needs sufficient funds to pay its expenses,
inspection in the Office of the Docket and with the costs for goods, services, which are incurred on a continuous
Clerk during regular business hours. and personnel in their local areas.and basis.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45739
List of Subjects in 7 CFR Part 984 Avenue SW., Washington, DC, between can distinguish between antibodies
California,. Marketing, agreements and 8 a.m. and 4:3a p.m., Monday through produced in response to the field strain
order, Walnuts. Friday, except holidays. of the pseudorabies virus and antibodies
FOR FURTHER INFORMATION CONTACT. produced in response to the new
For the. reasons set forth in the vaccine. The new test is called the
preamble, it is proposed that a new Dr. William Stewart, Chief Staff
§ 984.341 be added as,follows: Veterinarian, Swine Diseases Staff,. VS, "HardChek ® anti-pseudorabies virus
APHIS, USDA, Room 736, Federal glycoprotein X enzyme-linked
1. The authority citation for 7 CFR immunosorbent assay test" (referred to
part 984 continues to read as follows: Building, 6505 Belcrest Road,
Hyattsville, MD 20782, 301-436-7767. below and in the proposed regulations
Authority- Secs. 1-19, 49 Stat 31. as
SUPPLEMENTARY INFORMATION:
as "HardChek ® anti-PRV-gpX ELISA
amended; 7 U.S.C 601-674. test"). The complementary vaccine is
Background: called the "PRV/Marker TM vaccine."
PART 984-WALNUTS GROWN IN The PRV/Marker I vaccine is a
CALIFORNIA Pseudorabies, also known as
Aujeszky's disease, mad itch, and vaccine from which a nonessential
2. New § 984.341 is. added to read as infectious bulbar paralysis, is caused by glycoprotein (gpX) has been deleted.
follows: a herpes virus and is primarily a disease Swine vaccinated with the gpX-deleted
of swine. The regulations in 9 CFR part vaccine would not produce antibodies to
§984.341 Expenses and assessment rate. that gpX unless they were infected with
85 (referred to below as the regulations)
Expenses of $1,463,782 by the,Walnut govern the interstate movement of swine the pseudorabies field virus or
Marketing Board are authorized, and an and other livestock in order to help vaccinated with vaccines containing the
assessment rate of $01085 per prevent the spread of pseudorabies. gpX antigen. The HardChek ® anti-PRV-
kernelweight pound of merchantable Swine: are allowed to be moved gpX ELISA test is specific for antibodies
walnuts is established for the 1989-90 interstate under specific conditions, as to,the gpX deleted from the PRV/
marketing year ending: July 31, 1990. provided in §§85.3 through 85.13 of the Marker Tm vaccine, that is, it recognizes
Dated- October 25, 1989. regulations. those antibodies but ignores others.
William I. Doyle, The specific conditions that apply Thus, the HardChek® anti-PRV-gpX
Acting Deputy Director,Fruitand Vegetable depend, in part, upon whether the swine ELISA test, when used in combination
Division. are known to be infected with or with the PRV/Marker Tm vaccine, can
[FR Doc. 89-25570 Filed 10-30-89; 8:45 am] exposed to pseudorabies. Swine known distinguish between swine vaccinated
BILLING CODE 3410-02-U. to be infected with or exposed to the with the PRV/Marker TM vaccine and
disease may be moved interstate under swine infected with pseudorabies.
very restrictive conditions to prevent the Data submitted to the Animal and
Animal and Plant Health Inspection interstate spread of the disease. Swine Plant Health Inspection Service by the
Service not known. to be infected with or producers; of the new vaccine and test,
exposed to pseudorabies may be moved including results of field trials on these
9r CFR Part 85 interstate under less restrictive products, and other relevant literature
conditions. are available for inspection at the
[Docket No. 89-0221 Hyattsville, Maryland, offices of the:
Within the latter category, swine
Pseudorabies vaccinated for pseudorabies are. subject Animal and Plant Health Inspection
to tighter controls than unvaccinated Service (Room 736, Federal Building,
AGENCY:. Animal and Plant Health swine. There: are two related reasons for 6505 Belcrest Road, Hyattsville,
Inspection Service, USDA. this. First, the: pseudorabies vaccines Maryland 20782).
ACTION:. Proposed rule. that have been developed. do; not confer Based on this information, it appears
immunity from the disease;, vaccinated that swine from a herd vaccinated and
SUMMARY: We are proposing to amend. swine,can become infected and spread tested with these, products could, under
the pseudorabies regulations to allow pseudorabies. The advantages of certain conditions, be moved interstate
certain interstate movements of swine vaccination are that it increases the with fewer restrictions than swine
based on compliance with new herd swine's resistance to the disease and,. if vaccinated in the traditional manner,
vaccination and testing procedures. The infection occurs, lessens the severity of without increasing the risk of spreading
effect of this action would be to.allow the illness and facilitates recovery'. Also, pseudorabies interstate. We therefore
an additional option for the interstate vaccinated swine that become infected. propose to revise the regulations
movement of swine without presenting a with pseudorabies generally shed less accordingly.
significant risk of pseudbrabies being. virus than n onvaccinated swine, making We anticipate that the proposed
spread interstate. them less likely to spread the disease. changes to the regulations would
DATE: Consideration will be given only The drawback is that vaccinated swine provide swine producers with a greater
to comments received on or before produce antibodies to the vaccine that incentive. to vaccinate their herds,
November 30, 1989. cannot be distinguished by traditional thereby reducing pseudorabies in the
ADDRESSEsE To help ensure that your pseudorabies tests from antibodies United States. The American
comments are considered, send an produced in response to the.field strain Association of Veterinary Laboratory
original and three copies to Chief, of the virus that causes pseudorabies Diagnosticians and the U.S. Animal
Regulatory Analysis and Development, infection. Thus, the second reason for Health Association recommend that we
PPD, APHIS, USDA, Room 866, Federal restricting the interstate movement of allow use of the PRV/Marker Tm vaccine
Building, 6505 Belcrest Road, vaccinated swine is that the and the associated HardChek® anti-
Hyattsville, MD,20782. Please state that pseudorabies status of these swine PRV-gpX ELISA test.
your comments refer, to Docket No. 89-. cannot be determined by traditional
Herd Status
022. Comments received may be tests.
inspected at Room 1141 of the South A test has been developed that, when To ensure that swine from herds
Building, 14th Street and Independence used in conjunction with anew vaccine, vaccinated and tested with the PRV/
45740 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
Marker T' vaccine and the HardChek ® the herd except swine nursing from their (2) Not less than 35 days after
anti-PRV-gpX ELISA test can be moved mothers must be tested with an official vaccination with the PRV/Marker TM
interstate as proposed in this document pseudorabies serologic test and found vaccine, all swine in the herd over 6
(see "Interstate Movements" in this negative. Within 30 to 60 days after this months of age must be tested with an
Supplementary Information) without first negative test, the herd must be official pseudorabieg serologic test. All
increasing the risk of spreading. tested again in accordance with serological samples that are positive
pseudorabies interstate, the herd would paragraph (1), above. must be tested with the HerdChek ® anti-
have to meet certain conditions to These requirements appear necessary PRV-gpX ELISA test and found negative.
ensure the swine are free of to establish that the herd no longer Testing the vaccinated swine with an
pseudorabies. Herds that meet these contains swine infected with or exposed official pseudorabies serologic test
conditions would be designated as to pseudorabies. Requiring that positive would identify all swine in the herd that
"qualified PRV/Marker vaccinated/gpX swine be removed from a herd is the have antibody titers for pseudorabies.
negative herds." We propose the only way to remove sources of infection Testing those positive swine with the
following requirements for achieving the from a herd; there are no effective HerdChek ® anti-PRV-gpX ELISA test
maintaining this herd status: treatments for pseudorabies. Cleaning, would be necessary to show that the
InitialQualifying Tests and disinfection of premises in positive reaction to the official
accordance with the regulations has pseudorabies serologic test was in
(1) All swine in the herd over 6 been shown to destroy pseudorabies response to the PRV/Marker TM vaccine
months of age must be tested with an virus that may be present on inanimate and not pseudorabies infection. We are
official pseudorabies serologic test. For objects. Follow-up testing of all proposing an interval of at least 35 days
a minimum of 30 days before the test, remaining swine in the herd, except between vaccination with the PRV/
the herd must not have been a "own swine nursing from their mothers, is MarkerTM vaccine and the official
infected herd. During the 90 days before necessary to determine whether the pseudorabies serologic test to ensure
the test, at least 90 percent of the swine herd is free of pseudorabies infection. that the vaccinated swine have
in the herd either must have been on the Nursing swine would not need to be sufficient time to develop detectable
premises and a part of the herd or must tested since the result of a pseudorabies levels of antibodies to the PRV/
have entered the herd directly from a test on the mother would be sufficient Marker TM vaccine.
qualified pseudorabies nagative herd. If indication of the disease status of the
any of the tested swine are found nursing swine. Swine nursing from a MaintainingHerdStatus
positive on this or any other official dam infected with pseudorabies would We propose that qualified PRV/
pseudorabies test prior to vaccination become infected. Swine nursing from a Marker vaccinated/gpX negative herds
with the PRV/Marker TM vaccine, the dam free of pseudorabies would be meet the following requirements to
requirements In paragraph (2) must be unlikely to contract the disease since maintain their status:
met. they would normally not come in (1) All swine over 6 months of age in
These requirements appear necessary contact with swine other than their dam the herd must be tested at least once a
to establish that the herd is free of swine or other swine in the same litter. Based year with the HerdChek ® anti-PRV-gpX
infected with or exposed to on our experience with herds that have ELISA test and found negative. This
pseudorabies. Requiring a 30-day had pseudorabies, it appears that all requirement could be met by testing 25
waiting period for herds that have had swine -other than those nursing from
pseudorabies would ensure that the percent of the swine over 6 months of
their mothers must be subjected to an age every 80-105 days, or by testing 10
disease, if incubating in the herd, -would official pseudorabies serologic test to
be detectable by an official percent of the swine over 6 months of
determine whether the herd is free of age each month and finding them
pseudorabies serologic test. Tests of pseudorabies. The 30-day waiting period
more recently exposed swine may not negative. No swine could be tested
before this test would help ensure that twice in 1 year to comply with the 25
yield a positive result because the swine swine incubating the disease have had
would not have had time to develop percent requirement, or twice in 10
time to develop detectable levels of months to comply with the 10 percent
sufficient antibodies to the virus. Placing ,antibodies. If all tested swine are
restrictions on additions to the herd negative, then negative results on a requirement.
during the 90 days before the qualifying second official pseudorabies serologic .Continued testing would be required
test would further reduce the chances of 'test 30 to 60 days later would establish to ensure that the herd remains free of
the herd containing swine that are in the that the herd is free of pseudorabies. pseudorabies. Testing all swine over 6
initial stages of developing months of age has been found to be a
pseudorabies. Our experience with Vaccination and Follow-up,Tests sufficient method of monitoring for
herds subject to these identical (1) No more than 15 days after test pseudorabies in herds not known to be
qualifying conditions (qualified results show the herd to be negative for infected with or exposed to the disease.
pseudorabies negative herds) indicates pseudorabies in accordance with Testing a certain percentage of the
that testing all swine in the herd over 6 paragraph (1) under "Initial Qualifying swine on a rotating basis throughout-the
months of age would be adequate to Tests," all swine in the herd over 6 year is desirable to find infection as
detect pseudorabies if it exists in the months of age must be vaccinated with early as possible if it develops in a herd.
herd. the PRV/Marker TM vaccine. (2) Swine may be added to a qualified
(2) If any swine in the herd test We are proposing a 15-day time PRV/Markqr vaccinated/gpX negative
positive on the official pseudorabi'es period to allow herd owners time to herd only under one of the following
test, those swine must be removed from have the herd vaccinated, yet minimize conditions:
the herd, and the premises on which the the chances for exposure to (i) The swine are moved to the
herd is kept must be disinfected in pseudorabies between testing and qualified PRV/Marker vaccinated/gpX
accordance with the regulations (see 9 vaccination. Based on our experience negative herd from another qualified
CFR 85.13). No less than 30 days after with pseudorabies controlled vaccinated PRV/Marker vaccinated/gpX negative
the positive swine are remov6d and the herds, 15 days appears to be an herd, or from a qualified pseudorabies
premises are disinfected, all swine in appropriate amount of time. negative herd, without having any
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45741
contact en route with swine other than are found negative to an official they would be unlikely, in most cases, to
those from a qualified PRV/Marker pseudorabies serologic test conducted develop and spread the infection before
vaccinated/gpXl negative herd or a 30 days or more after the swine are being slaughtered, and, in any case,
qualified pseudorabies negative herd. isolated. The same rationale applies to would not have contact with any swine
(ii) The swine are moved to the swine that are moved from another other than those also moving to
qualified PRV/Marker vaccinated/gpX qualified PRV/Marker vaccinated/gpX slaughter. Thus, these interstate
negative herd from a qualified negative herd and have contact with movements would not present a
pseudorabies negative herd, have swine from other than a qualified PRV/ significant risk of spreading
contact en route with swine other than Marker vaccinated/gpX negative herd or pseudorabies interstate.
those from a qualified PRV/Marker a qualified pseudorabies negative herd. The regulations in 9 CFR part 71
vaccinated/gpX negative herd or a The only difference is that these swine, contain identification and recordkeeping
qualified pseudorabies negative herd, vaccinated with the PRV/MarkerT requirements for swine mQved in
and, before being added, are isolated vaccine, would need to be tested with interstate commerce, including swine
until they are found negative to an the HerdChek ® anti-PRV-gpX ELISA test moved in accordance with the
official pseudorabies serologic test rather than an official pseudorabies pseudorabies regulations. These
conducted 30 days or more after the serologic test. requirements appear adequate to allow
swine are isolated. Swine from other than a qualified
the swine to be traced through market
(iii) The swine are moved to the PRV/Marker vaccinated/gpX negative channels.
qualified PRV/Marker vaccinated/gpX herd or a qualified pseudorabies For all other interstate movements of
negative herd from another qualified. negative herd would present the greatest swine from a qualified PRV/Marker
PRV/Marker vaccinated/gpX negative risk of carrying and spreading vaccinated/gpX negative herd, we
herd, have contact en route with swine pseudorabies infection. Requiring that
proposed to require that the swine be
other than those from a qualified PRV/ the swine be isolated until they are accompained by a certificate, and that
Marker vaccinated/gpX negative herd or found negative to two official
a qualified pseudorabies negative herd, the certificate be delivered to the
pseudorabies serologic tests, one
and, before being added, are isolated consignee. In addition to other
conducted at the time the swine are
information routinely required on a
until they are found negative to a isolated, and the second conducted 30
HerdChek ® anti-PRV-gpX ELISA test certificate (see 9 CFR 85.1), the
days or more after the swine are
conducted 35 days or more after the isolated, would help ensure that only certificate would have to state that the
swine are isolated. swine are from a qualified PRV/Marker
swine free of pseudorabies are added to
(iv) The swine are moved to the vaccinated/gpX negative herd and the
the herd.
qualified PRV/Marker vaccinated/gpX date of the last qualifying test, and list
negative herd from a herd other than a Interstate Movement of Swine From a the identification for the swine to be
qualified PRV/Marker vaccinated/gpX Qualified PRV Marker Vaccinated/gpX moved, in accordance with 9 CFR 71.19.
negative herd or a qualified Negative Herd Swine moved interstate for purposes
pseudorabies negative herd, and, before We propose to allow swine that are other than slaughter, sale for slaughter,
being added, are isolated until they are from a qualified PRV/Marker or feeding would be breeder swine or
found negative to two official vaccinated/gpX negative herd, and that could have opportunity for contact with
pseudorabies serologic tests, one are not known to be infected or exposed breeder swine. Breeder swine that
conducted at the time the swine are to pseudorabies, to be moved interstate become exposed to or infected with
isolated, and the second conducted 30 without further restriction under the pseudoralies present a significant risk
days or more after the swine are pseudorabies regulations if: of spreading pseudorabies. Requiring the
isolated. (1) The swine are moved directly to a swine to be accompained by a
These conditions are designed to recognized slaughtering establishment, certificate would provide the consignee
ensure that any swine added to the herd or directly through one or more with certification by a Veterinary
are free of pseudorabies. slaughter markets and then directly to a Services representative, a State
Swine from qualified pseudorabies recognized slaughtering establishment; representative, or an accredited
negative herds or qualified PRV/Marker or veterinarian that the swine are from a
vaccinated/gpX negative herds would (2) The swine are moved from a qualified PRV/Marker vaccinated/gpX
present an insignificant risk of carrying qualified PRV/Marker vaccinated/gpX negative herd and are not infected with
pseudorabies infection, given the negative herd directly to a feedlot, or exposed to pseudorabies.
existing and proposed standards for quarantined feedlot, or approved Executive Order 12291 and Regulatory
achieving and maintaining herd status. If livestock market; or - Flexibility Act
swine from these herds have no contact, (3) The swine are moved from an
en route, with swine from other types of approved livestock market to a feedlot, We are issuing this proposed rule in
herds, it is unlikely that they will be quarantined feedlot, or other approved conformance with Executive Order
exposed to pseudorabies infection. livestock market. 12291, and we have determined that it is
There does not appear to be any need to . These interstate movements represent not a "major rule." Based on information
isolate and test these swine before market channels for moving swine to compiled by the Department, we have
adding them to the herd. slaughter, either directly or through determined that this rule would have an
If swine from a qualified pseudorabies markets or feedlots. Swine from a effect on the economy of less than $100
negative herd do have contact, en route qualified PRV/Marker vaccinated/gpX million; would not cause a major
to their new herd, with swine from other negative herd would present an increase in costs or prices for
than a qualified PRV/Marker insignificant risk of carrying consumers, individual industries,
vaccinated/gpX negative herd or a pseudorabies infection, given the Federal, State, or local government
qualified pseudorabies negative herd, proposed standards for achieving and agencies, or geographic regions; and
the risk of exposure to infection would maintaining herd status. If any of these would not cause a significant adverse
be increased. That is why we are swine became exposed to pseudorabies effect on competition, employment,
proposing to isolate the swine until they at any point along the way to slaughter, investment, productivity, innovation, or
45742 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
on the ability Of United States-based markets the "HardChek ® anti-PRV-gpX the words "paragraph (q) of" would be
enterprises to compete with foreign- test kit, and another that markets the removed.
based enterprises in domestic or export PRV/MarkerTM vaccine. Both businesses 3. In § 85.1, in the definition of
markets. appear to be small entities. "official pseudorabies test", the
According to the United States However, the two affected firms are semicolon immediately after "(ELISA)
Department of Agriculture (USDA) working in a niche within a small part of Test" would be replaced by a comma,
Agricultural Statistics Board, in 1988 a very large market. USDA records and the phrase "except for the
hogs were raised on 333,500 farms in the indicate that approximately 25.2 million HerdChek ® anti-pseudorabies virus
United States. This includes all farms doses of pseudorabies vaccine were glycoprotein X enzyme-linked
that raised hogs of any type. The vast" produced in the United States in 1988. immunosorbent assay test (Herdchek ®
majority of producers raise hogs for the These records also indicate that about anti-PRV/gpX ELISA test);" would be
slaughter market, but a small number of 65 percent of annual production (19.8 added immediately after "(ELISA)
farms raise hogs to produce breeding million doses) is for domestic use. The Test,".'
stock, which is sold to other hog approximate annual value of the United 4. In § 85.1, in the definition of
producers. Very few, if any, producers States pseudorabies vaccine market, at "Certificate", the phrase "are not
who raise hogs for the slaughter market $10 million, is just 2 percent of the pseudorabies vaccinates" would be
maintain qualified pseudorabies United States $500 million-a-year removed and the phrase "are not
negative herds. It appears, from veterinary biologics market. The vaccinated for pseudorabies with any
tabulating the membership rolls of hog estimated use of the Marker vaccine vaccine other than the PRV/Marker M
breed associations, that about 12,000 under the proposed regulations would vaccine" would be added in its place.
farmers raise hog breeding stock. Of expand the pseudorabies vaccine 5. In § 85.1, two new definitions would
these producers' herds, 3,182 are listed market by only 1.5 percent. Thus any be added, in alphabetical order, to read
by USDA and State regulatory officials strategic advantage gained by these as follows:
as qualified pseudorabies-negative firms, while important to them, would
herds. These herds supply most of the not be significant compared with the § 85.1 [Amended)
U.S. hog seedstock. total veterinary biologics market.
We believe that under the proposed PR V/Marker vaccinateswine. Swine
rule qualified pseudorabies negative Under these circumstances; the
Administrator of the Animal and Plant vaccinated with the PRV/Marker TM
herds are the only viable market for the vaccine.
PRV/Markerm vaccine and the Health Inspection Service has
HerdChek ® anti-PRV-gpX test kits. determined that this action would not
However, we believe these products will have a significant economic impact on a QualifiedPR V/marker vaccinated/
be used as a risk management tool by substantial number of small entities. gpX negative herd.(a) Qualified PRV/
only a small number of these specialized marker vaccinated/gpX negative herd
Paperwork Reduction Act status is attained under the following
hog producers. Their use would be
optional. Producers' decisions to adopt The regulations in this proposal conditions:
this technology will depend on current contain no new information collection or (1) All swine in the herd over 6
disease exclusion costs, producers' recordkeeping requirements under the months of age must be tested with an
perceptions of the risk of their herds' Paperwork Reduction Act of 1980 (44 official pseudorabies serologic test. For
being infected with pseudorabies, and U.S.C. 3501 et seq.). a minimum of 30 days before the test,
their personal preferences about the herd must not have been a known
Executive Order 12372
assuming risk. infected herd. During the 90 days before'
We estimate that owners of no more This program/activity is listed in the the test, at least 90 percent of the swine
than 5 percent of the qualified Catalog of Federal Domestic Assistance in the herd either must have been on the
pseudorabies negative herds will use the under No. 10.025 and is subject to premises and a part of the herd or must
Marker vaccine and its companion test Executive Order 12372, which requires have entered the herd directly from a
instead of or in addition to the intergovernmental consultation with qualified pseudorabies negative herd. if
management practices they currently state and local officials. (See 7 CFR part any of the tested swine are found
use to prevent pseudorabies from 3015, Subpart V.) positive on this or any other official
entering their herds. Assuming an pseudorabies test prior to vaccination
List of Subjects in 9 CFR Part 85
average of 100 sows and 10 boars in a with the PRV/Marker Tm vaccine, the
herd and an annual production of 18 Animal diseases, Livestock. requirements in paragraph (a)(2) of this
pigs weaned per sow per year, and that Pseudorabies, Quarantine, Reporting definition must be met.
all breeding animals and their offspring and recordkeeping requirments, (2) If any swine in the herd test
are vaccinated annually, the estimated Transportation. positive on the official pseudorabies
annual use of the vaccine would be Accordingly, 9 CFR part 85 would be test, those swine must be removed from
310,000 doses. the herd, and the premises on which the
amended as follows:
Some small businesses may realize a herd is kept must be disinfected in
modest economic benefit through the PART 85-PSEUDORABIES accordance with § 85.13 of this part. No
sale of the PRV/MarkerTM vaccine and less than 30 days after the positive
the HerdChek ®anti-PRV-gpX test kits. 1. The authority citation for part 85 swine are removed and the premises are
Other marker vaccines and tests for would continue to read as follows: disinfected, all swine in the herd except
pseudorabies may be developed. When Authority: 21. U.S.C. 111-112, 113. 115, 117, swine nursing from their mothers must
appropriate, APHIS would propose to 120, 121,123-120,134b. 134f; 7 CIR 2.17, 2.51. be tested with an official pseudorabies
amend the regulations to include these and 3.71.2(d). serologic test and found negative.
vaccines and tests. Of the dozen or so Within 30 to 60 days after this first
businesses that market pseudorabies § 85.1 [Amended] negative test, the herd must be tested
vaccines and related products, we are 2. In § 85.1, in the definition of again in accordance with paragraph
aware of only one that currently "Official pseudorabies serologic test" (a)l) of this definition.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45743
(3) No more than 15"days after test until they are found negative to a quarantined feedlot, or approved
results show the herd to be negative for HerdChek ® anti-PRV-gpX ELISA test livestock market; or
pseudorabies in accordance with conducted 35 days or more after the (3) The swine are moved from an
paragraph (a)(1) of this definition, all- swine are isolated. approved livestock market to a feedlot,
swine in the herd over 6 months of age (iv) The swine are moved to the quarantined feedlot, or other approved
must bevaccinated with the PRV/ qualified PRV/Marker vaccinated/gpX livestock
MarkerTM vaccine. (b) For market.
all interstate movements other
negative herd from a herd other than a
(4) Not less than 35 days after qualified PRV/Marker vaccinated/gpX than those set forth in paragraph (a) of
vaccination with the PRV/MarkerTM negative herd or a qualified this section, the swine must be
vaccine, all swine in the herd over 6 pseudorabies negative herd, and, before accompanied by a certificate, and the
months of age must be tested with an being added, are isolated until they are certificate must be delivered to the
official pseudorabies serologic test. All found negative to two official consignee. In addition to the information
serological samples that are positive pseudorabies serologic tests, one required by § 85.1, the certificate must
must be tested with the Herdchek ® anti- conducted at the time the swine are state that the swine are from a qualified
PRV/gpX ELISA test and found isolated, and the second conducted 30 PRV/Marker vaccinated/gpX negative
negative. days or more after the swine are herd and the date of the herd's last
(b) Qualified PRV/Marker isolated. qualifying test, and must list the
vaccinated/gpX negative herd status is identification for the swine to be moved
maintained under the following
conditions:
interstate, in accordance with § 71.19 of
§85.6 [Amended] this chapter.
(1) All swine over 6 months of age in 6. In § 85.6, remove the phrase Done in Washington, DC, this 25th day of
the herd must be tested at least once a "pseudorabies vaccinate swine" and
year with the Herdchek ® anti-PRV/gpX October 19b9.
ELISA test and found negative. This
add the phrase "pseudorabies vaccinate Larry B.Slagle,
swine, except PRV/Marker vaccinate Acting Administrator,Animal and Plant
requirement may be met by testing 25 swine," in the following places:
percent of the swine over 6 months of Health InspectionService.
age every 80-105 days, or by testing 10 (a) The section heading; [FR Doc. 89-25567 Filed 10-30-89; 8:45 am]
percent of the swine over 6 months of (b) The heading for paragraph (a); and BILLING CODE 3410-34-M
age each month and finding them (c) The heading for paragraph (b).
negative. No swine may be tested twice 7. In § 85.6, remove the phrase
in 1 year to comply with the 25 percent "Pseudorabies vaccinate swine"-and
requirement, or twice in 10 months to add the phrase "Pseudorabies vaccinate DEPARTMENT OF THE INTERIOR
comply with the 10 percent requirement. swine, except PRV/Marker vaccinate Bureau of Indian Affairs
(2) Swine may be added to a qualified swine," in the following places:
PRV/Marker vaccinated/gpX negative (a) In the introductory text to § 85.6; 25 CFR Part 61
herd only under one of the following (b) In the introductory text to
conditions: paragraph (a); and RIN 1076-AC 11
(i) The swine are moved to the (c) In the introductory text to
qualified PRV/Marker vaccinated/gpX .paragraph (b). Preparation of Rolls of Indians
negative herd from another qualified
PRV/Marker vaccinated/gpX negative §§ 85.9,85.10, and 85.11 [Redesignated September 8, 1989.
herd, or from a qualified pseudorabies from §§ 85.8, 85.9, and 85.10] AGENCY: Bureau of Indian Affairs,
negative herd, without having any 5. Sections 85.8, 85.9, and 85.10 would Interior.
contact en route with swine other than be redesignated as §§ 85.9, 85.10, and ACTMON: Proposed rule.
those from a qualified PRV/Marker 85.11, respectively.
vaccinated/gpX negative herd or a 6. A new § 85.8 would be added to SUMMARY: The Bureau of Indian Affairs
qualified pseudorabies negative herd. read as follows: (BIA) is proposing to amend the
(ii) The swine are moved to the regulations contained in 25 CFR part 61
qualified PRV/Marker vaccinated/gpX § 85.8 Interstate movement of swine from governing the preparation of rolls of
negative herd from a qualified a qualified PRV/Marker vacclnated/gpX Indians. The Cow Creek Band of
pseudorabies negative herd, have negative herd and not known to be Infected Umpqua Tribe of Indians Distribution of
contact en route with swine other than
with or exposed to pseudorables. Judgment Funds Act of 1987 directs the
those from a qualified PRV/Marker Swine that are from a qualified PRV/ Secretary of the Interior to prepare a
vaccinated/gpX negative herd or a Marker vaccinated/gpX negative herd, tribal membership roll in accordance
qualified pseudorabies negative herd, and that are not known to be infected or with the regulations contained in 25 CFR
and, before being added, are isolated exposed to pseudorabies, may be moved part 61. The regulations in Part 61
until they are found negative to an interstate only in accordance with the provide general enrollment procedures
official pseudorabies serologic test following provisions: that can be made applicable to the
conducted 30 days or more after the (a) Without further restriction under preparation of a specific roll of Indians
swine are isolated. this part if: by amending the regulations to include
(iii) The swine are moved to the (1) The swine are moved directly to a the qualifications for enrollment and the
qualified PRV/Marker vaccinated/gpX recognized slaughtering establishment, deadline for filing applications for the
negative herd from another qualified or directly through one or more particular roll. The BIA is proposing to
PRV/Marker vaccinated/gpX negative slaughter markets and then directly to a amend Part 61 by adding a paragraph (e)
herd, have contact en route with swine recognized slaughtering establishment; to § 61.4 to include the qualifications for
other than those from a qualified PRV/ or enrollment and the deadline for filing
Marker vaccinated/gpX negative herd or (2) The swine are moved from a applications so that the procedures
a qualified pseudorabies negative herd, qualified PRV/Marker vaccinated/gpX contained in part 61 will govern the
and, before being added, are isolated negative herd directly to a feedlot, preparation of the tribal membership
45744 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
roll of the Cow Creek Band of Umpqua in the Federal Register on June 3, 1988. individuals and the Cow Creek Band of
Tribe of Indians. Because the effect, which will be Umpqua Tribe of Indians through its
DATE: Comments must be received on or discussed below under COMMENTS General Counsel within the public
before November 30, 1989. AND CHANGES, is significant, the BIA comment period. Basically only three
ADDRESS: Written comments should be is again issuing a proposed rule to provisions were addressed by the
directed to the Chief, Division of Tribal amend the regulations contained in part commenters: (1) The requirement that all
Government Services, Bureau of Indian 61. individuals must establish Cow Creek
Affairs, Mail Stop 4627 MIB, 18th &C The policy of the Department of the Indian ancestry to be included on the
Streets, NW., Washington, DC 20240. Interior is, whenever practical, to afford - membership roll of the Cow Creek Band
the public an opportunity to participate of Umpqua Tribe of Indians, (2) the
FOR FURTHER INFORMATION CONTACT.
in the rulemaking process. Accordingly, deadline date for filing applications that
Kathleen L. Slover, Branch of Tribal interested persons may submit written
Enrollment Services, Division of Tribal was published in the proposed rule
comments, suggestions or objections document and (3) the requirement that
Government Services, Bureau of Indian regarding this proposed amendment.
Affairs, Mail Stop 4627 MIB, 18th &C all individuals have to file applications
The regulations in part 61 provide by the deadline date to establish
Streets, NW., Washington, DC 20240, general enrollment procedures and
telephone number: (202) 343-1702 (FTS eligibility for enrollment.
contain provisions which are not 1. Section 5 of the Judgment Act states
343-1702). applicable in the preparation of all rolls.
SUPPLEMENTARY INFORMATION: This
that the Secretary is to prepare a tribal
As a matter of clarification, because the membership roll comprised of "Indian
proposed amendment to a rule is BIA is preparing a tribal membership
published in exercise of rulemaking individuals" who were not members of
roll of the Cow Creek Band of Umpqua any other federally recognized Indian
authority delegated by the Secretary of Tribe of Indians under this proposed
the Interior to the Assistant Secretary- tribe on July 30, 1987, and (1) who are
amendment, review of applications by named on a tribal roll dated September
Indian Affairs in the Departmental tribal authorities under section 61.10 will
Manual at 209 DM 8. 13, 1980 (the so-called Interrogatory No.
be applicable to provide for maximum 14 roll); (2) who were born on or prior to
A proposed rule to amend the tribal participation in the enrollment
regulations contained in Part 61 to October 26, 1987, and are descendants
process. of persons named on the so-called
include the qualifications for enrollment Also, in addition to general public
and the deadline for filing applications Interrogatory No. 14 roll; or (3) who are
notice, to provide actual notice of the
for the tribal membership roll of the descendants of persons considered to be
preparation of the roll to as many members of the Cow Creek Band of
Cow Creek Band of Umpqua Tribe of potentially eligible beneficiaries as
Indians was previously published for Umpqua Tribe of Indians for the
possible, the Superintendent, Siletz
public comment in the Federal Register purposes of the treaty entered between
Agency, Bureau of Indian Affairs, shall such Band and the United States on
on Friday, June 3, 1988, 53 FR 20335. An send notices in accordance with section
editorial correction was published in the 61.5(c) to all persons whose names
September 19, 1853.
Federal Register on Wednesday, June 29, appear on the so-called Interrogatory The Department had concluded that
1988, 53 FR 24551. No. 14 roll and all descendants, whose the enrollment requirements stated in
The Cow Creek Band of Umpqua names have been furnished to the BIA, the Judgment Act were ambiguous, in
Tribe of Indians was awarded judgment of persons named on the so-called part'cular it was not clear what was
funds in docket numbered 53-81L by the Interrogatory No. 14 roll at their last meant by "Indian individuals" in the
United States Claims Court. Funds to available address. The notice shall context of the Judgment and Recognition
satisfy the award were appropriated by advise individuals of the preparation of Acts. A review of the legislative history
Congress. The Cow Creek Band of the roll and the relevant procedures to found no clear intent that when"
Umpqua Tribe of Indians Distribution of be followed, including the qualifications Congress recognized the Cow Creek
Judgment Funds Act of October 26, 1987, for enrollment and the deadline for filing Band of Umpqua Tribe of Indians it was
Pub. L 100-139 (Judgment Act), application forms. It should be noted, recognizing a tribal entity comprised of
authorized the use and distribution of however, that the ability of the individual Indians, irrespective of tribal
the judgment funds. Superintendent to send notices will be affiliation, rather than a tribe comprised
Section 5 of the JudgmentAct, which dependent upon the availability of of Cow Creek descendants.
amended the Cow Creek Band of addresses furnished either by the If all individuals were not required to
Umpqua Tribe of Indians Recognition individuals or the tribe. An application establish Cow Creek Indian ancestry,
Act of December 29, 1982 (Recognition form will be mailed with each notice. the Secretary might be in the position of
Act), directs the Secretary to prepare a The primary author of this document preparing and approving a tribal
tribal membership roll of the Cow Creek is Kathleen L Slover, Tribal Enrollment membership roll comprised of
Band of Umpqua Tribe of Indians in Specialist, Division of Tribal individuals who did not meet the current
accordance with the regulations Government Services, Mail Stop 4627 membership requirements or the
contained in 25 CFR part 61. The Act MIB, Bureau of Indian Affairs, 18th and membership requirements under which
further directs that the tribal C Streets, NW., Washington, DC 20240. the so-called Interrogatory No. 14 roll
membership roll be published in the was prepared. The Judgment Act
Federal Register. Comments and Changes provided that until the tribe adopted and
Language was included in the Fiscal The period for commenting on the the Secretary approved a new governing
Year 1989 Interior Appropriations Act of previously proposed amendment to 25 document, the interim governing
September 27, 1988, Public Law 100-446, CFR part 61 to add paragraph (e) to document would "be the tribal bylaws
to amend the Cow Creek Band of section 61.4 to include the qualifications entitled 'Bylaws of Cow Creek Band of
Umpqua Tribe of Indians Recognition for enrollment and a deadline for filing Umpqua Tribe of Indians' which bear an
Act. The amendment to the Recognition applications for the tribal membership 'approved' date of '9-10-78.' "The 1978
Act affects the qualifications for roll of the Cow Creek Band of Umpqua Bylaws were also the document under
enrollment on the tribal membership roll Tribe of Indians closed on July 5, 1988. which the so-called Interrogatory No. 14
that were in the proposed rule published Comments were received from 46 roll was prepared. The membership
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45745
article of the Bylaws states that no provisions that are contained in the time for the filing of applications.
person "shall be a member * * * unless Judgment Act. Under the Judgment Act. Consequently, no change is being made.
he shall be able-to trace his ancestry to until a permanent roll is prepared by the A deadline date of 60 days from the
the members of the Cow Creek Band Secretary the membership shall consist effective date of the final rule is being
who claimed and lived upon the land of all persons named on the so-called proposed.
described in the treaty of September 19, Interrogatory No. 14 roll and their 3. As the amendment to part 61 to
1853, with the United States descendants. govern the preparation of the
Government." When Congress restored the Cow membership roll of the Cow Creek Band
The BLA was reluctant to expand. Creek Band of Umpqua Tribe of Indians, of Umpqua Tribe of Indiins was
administratively the membership of the it was restoring not only the tribe, but previously proposed, all persons -
Cow Creek Band of Umpqua Tribe of individual members, i.e., those persons including those named on the so-called
Indians beyond clear Congressional named on the so-called Interrogatory Interrogatory No. 14 roll and their
intent. Consequently, the proposed rule No. 14 roll and their descendants. descendants were required to file
published on June 3, 1988, to govern the Consequently, "other Indian application forms by the deadline date
preparation of the tribal membership individuals" named on the so-called to establish eligibility for enrollment.
roll of the Cow Creek Band of Umpqua Interrogatory No. 14 roll and their One of the commenters, the General
Tribe of Indians required all persons, descendants, irrespective of their tribal Counsel on behalf of the tribe, objected
including those whose names appeared affiliation, have been effectively strongly and found this requirement
on the so-called Interrogatory No. 14 roll restored and may "satisfy basic Indian directly contrary to the Judgment Act. It
and their descendants, to establish that ancestry requirements." Appropriate is presumed that this is a twofold
they were of Cow Creek Indian ancestry changes have been made to the objection, both to the requirement that
to qualify for enrollment. proposed amendment. individuals named on the so-called
During Congressional consideration of Consistent with a generally accepted Interrogatory No. 14 roll and their
the Fiscal Year 1989 Interior legal definition of Indian and absent any descendants must file application forms
Appropriations Act, disapproval of the specific statutory language to the and that they must file before the
BIA's interpretation was expressed and contrary, individuals, in addition to deadline date to establish eligibility for
the Secretary was directed to revise the being recognized as Indian by their tribe enrollment.
proposed rule to include all members on or community, must possess aboriginal
ancestry indigenous to the United The commenter argued that section 5
the so-called Interrogatory No. 14 roll
States. [See F. Cohen, HANDBOOK OF of the Judgment Act directs that only the
who satisfy basic Indian ancestry
FEDERAL INDIAN LAW, pp. 19-20 (1982 third category of potentially eligible
requirements. Accordingly, the Fiscal
Year 1989 Interior Appropriations Act ed.)] Although persons named on the so- individuals, i.e., those who are
amended the Recognition Act by striking called Interrogatory No. 14 roll. and their descendants of persons considered to be
descendants may be recognized as members of the Cow Creek Band of
out "Indian individuals" and inserting
Indians by the tribe, they will, Umpqua Tribe of Indians for the
"Cow Creek descendants or other
nevertheless, be required to establish purposes of the treaty entered between
Indian individuals."
As a result of the amendment to the that they possess Indian ancestry such Band and the United States on
Recognition Act, the BIA has determined indigenous to the United States to September 19, 1853, must apply for
that when Congress recognized the Cow qualify for inclusion on the tribal inclusion on the membership roll, while
Creek Band of Umpqua Tribe of Indians, membership roll of the Cow Creek Band mandating the inclusion of all Indian
it was recognizing the tribe and its of Umpqua Tribe of Indians being individuals, or as amended, all Cow
members, irrespective of their tribal prepared. Appropriate changes have Creek descendants or other Indian
affiliation, rather than a tribe comprised been made to the proposed amendment individuals named on the so-called
exclusively of Cow Creek descendants. to part 61 from what was previously Interrogatory No. 14 roll and their
Section 3 of the Restoration Act, proposed. descendants. The commenter found that
codified at 25 U.S.C. 712a, in part, 2. As, the proposed amendment to the Congressionally-established
provides: part 61 was published in the Federal distinction in the Judgment Act between
Register, the date of August 2, 1988, was the section 5(b) (1) and (2) enrollees, i.e.,
(a) Federal Recognition.-Notwithstanding so-called Interrogatory No. 14 enrollees
any provision of the Act approved August 13, inserted in paragraph (e)(2) of section
1954 (25 U.S.C. 691 at seq.) [Western Oregon 61.4, as the deadline for filing and their descendants, on one hand and
Indians Termination of Federal Supervision applications to establish eligibility for section 5(b)(3) enrollees, i.e.,
Act], or any other law, Federal recognition is inclusion on the roll of the Cow Creek descendants of persons considered to be
extended to the Cow Creek Band of Umpqua Band of Umpqua Tribe of Indians being members of the historical Cow Creek
Tribe of Oregon. * * * prepared under the regulations. Most of Band, on the other is confirmed by
(b) Restoration of Rights and Privileges.- the commenters believed that the section 5(c) which mandates regulations
All rights and privileges of the tribe and the covering the enrollment process for
members of the tribe under any Federal deadline of August 2, 1988, was not a
treaty, Executive order, agreement, or statute, reasonable or adequate length of time. section 5(b)(3) enrollees only. Further,
or under any other authority, which may have The insertion of August 2, 1988, in the these group-specific regulations are
been diminished or lost under the Act proposed amendment when it was necessary because only section 5(b)(3)
approved August 13, 1954 (25 U.S.C. 691 et published was, however, an editorial enrollees must actually apply to the
seq.), are restored, and the provisions of such error. The deadline in the proposed Secretary for inclusion on the tribal
Act shall be inapplicable to the tribe and to amendment should have been published membership roll.
members of the tribe after the date of to read as "60 days from the effective Section 5(c) is not the only reference
enactment [December 29, 1982] of this Act.
(Italic supplied.)
date of the final rule." A document was in section 5 of the Judgment Act to
pitblished in the Federal Register on regulations for enrollment purposes.
The Restoration Act, as amended, Wednesday, June 29, 1988 (53 FR 24551), Section 5(b) directs the Secretary to
defines "member" as a person enrolled to make that correction. The prepare the tribal membership roll of the
on the membership roll of the tribe in commenters did not suggest an alternate Cow Creek Band of Umpqua Tribe of
accordance with the membership deadline or specify a particular length of Indians "in accordance with the
45746 Federal Register /. Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
regulations contained in part 61 of title The proposed amendment imposed both was published in the proposed rule.
25 of the Code of Federal Regulations." requirements on all persons including However, the proposed rule does not
Thus, the enrollment process of all *those namedon the so-called revise the authority citation for Part 61
categories of eligibles is, in fact, subject Interrogatory No. 14 roll and their as previously proposed. Section 6 of the
to Secretarial regulations. descendants. Judgment Act directed the Secretary to
An early version of the proposed Cow The BIA has found that if a roll is ever determine the eligibility of two
Creek legislation contained specific to be completed, there must be a additional categories of Cow Creek
language granting a "rebuttable deadline for filing applications. descendants. On Wednesday, April 6,
presumption" of eligibility for those Although the class of persons named on 1988, 53 FR 11271, a final rule was
persons whose names were listed on the the so-called Interrogatory No. 14 roll is published amending Part 61 to govern
so-called Interrogatory No. 14 roll, but a matter of record, such persons must processing of applications from the two
that provision was removed from the still establish their eligibility for other categories of Cow Creek Indian
Judgment Act as enacted. Furthermore, enrollment. If a deadline is not imposed deicendants. The final rule revised the
recent considerations of the Judgment on this class of persons, there might then authority citation for part 61 and no
and Restoration Acts still indicate a be confusion as to whether applications further revision is necessary.
Congressional intent that persons had to be filed at all. Also, if a deadline
named on the so-called Interrogatory is not set, there would be no reasonable Paperwork Reduction Act
No. 14 roll must satisfy basic Indian basis for determining when the BIA
The Office of Management and Budget
ancestry requirements. Consequently, could take actions rejecting persons for
has informed the Department of the
the real issue here is the failure to establish that they met the
appropriateness of requiring the filing of Interior that the information collection
requirements for enrollment. As far as
requirements contained in this part 61
application forms to meet the burden of descendants of persons named on the
need not be reviewed by them under the
proof. so-called Interrogatory No. 14 roll, that
The so-called Interrogatory No. 14 roll class of individuals is not a matter of Paperwork Reduction Act (44 U.S.C.
is basically a listing of names. It does record. Although the BIA has received 3501 et seq.).
not contain sufficient information on listings from time to time of Executive Order 12291
which to base a determination of "supplemental enrollees," BIA's records
eligibility for enrollment on the tribal may not be complete. To avoid any The Department of the Interior has
membership roll being prepared under confusion as to who has to file determined that this is not a major rule
this amendment. The most suitable applications and when the applications under E.O. 12291 because only a limited
manner in which to ensure that have to be filed, the proposed rule to number of individuals will be affected
adequate information and amend part 61 requires all persons and those individuals who are
documentation is submitted is to require including those named on the so-called determined eligible to be enrolled on the
that all persons including those named Interrogatory No. 14 roll and their tribal membership roll will be
on the Interrogatory No. 14 roll and their descendants to submit applications by participating in the programs of one
descendants submit application forms the deadline specified to establish tribal entity funded by a relatively small
for enrollment on the tribal membership eligibility for enrollment. Furthermore, judgment award granted the Cow Creek
roll being prepared under this such persons can be rejected solely for Band by the United States Claims Court.
amendment to part 61.: failure to file on time regardless of
The regulations contained in part 61 whether they otherwise meet the Compliance With Other Laws
provide in section 61.6(c) that qualifications for enrollment. Therefore, The Department of the Interior has
"[aipplication forms may be filed by no change has been made'to the determined that this rule will not have a
sponsors on behalf of other persons." amendment from what was previously significant economic impact on a
Under section 61.1 "sponsor" is defined proposed. substantial number of small entities
as "any person who files an application It should be noted the Judgment Act within the meaning of the Regulatory
for enrollment or appeal on behalf of does provide that after completion and Flexibility Act (5 U.S.C. 601 et seq.)
another person." Consequently, under publication in the Federal Register, because of the limited applicability as.
the regulations the tribe can file membership in the Cow Creek Band of stated above.
applications on behalf of their members Umpqua Tribe of Indians shall be
The Department of Interior has
and relieve the individuals of the limited to persons listed on the tribal
determined that this rule is not a major
burden. membership roll being prepared and
No alternative manner for the BIA to Federal action significantly affecting the
their descendants. However, the
obtain the necessary Indian ancestry Judgment Act further provides that the quality of the human environment and
information about the individuals Cow Creek Band of Umpqua Tribe of that neither an environmental
named on the so-called Interrogatory Indians, at its discretion, may assessment nor an environmental
No. 14 roll and their descendants was impact statement is required.
subsequently grant tribal membership to
offered by the commenter. any person of Cow Creek Band of List of Subjects in 25 CFR Part 61
Consequently, the proposed rule to Umpqua ancestry who under tribal
amend part 61 requires the submission procedures applies to the tribe for Indians--claims, Indians-enrollment.
of application forms for all persons membership and is determined to meet Accordingly, it is proposed that part
including those named on the so-called the tribal requirements for membership. 61 of Subchapter F of Chapter I of Title
Interrogatory No. 14 roll and their 25 of the Code of Federal Regulations be
descendants to establish eligibility for Other Changes
amended as shown.
enrollment on the tribal membership roll No other changes have been made to
the text of the amendment adding a new 1. The authority citation for part 61
being prepared.
As indicated above, the requirement paragraph (e) to § 61.4 of part 61 to continues to read as follows:
that applications be filed and the govern the preparation of a tribal Authority: 5U.S.C. 301; 25 U.S.C. 2 and 9:
requirement that applications be filed by membership roll of the Cow Creek Band 25 U.S.C. 1401 et seq., as amended; Pub. L.
a deadline are considered two issues. of Umpqua Tribe of Indians from what 100-139; Pub. L.100-580.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45747
2. Section 61.4 is amended by adding a sector EEO complaint process in this Subcommittee's Report, "Overhauling
new paragraph (e) to read as follows: new part 1614 to its regulations. The the Federal EEO Complaint Processing
new regulations will result in quicker, System: A New Look at a Persistent
§ 61.4 Oualificatlons for enrollment and more efficient processing and will Problem." H.R. Rep. No. 456, 100th
the deadline for filing application forms.
promote administrative fairness in the Cong., 1st Sess. (1987).
process of Federal sector EEO The new part will apply to all
(e) Cow Creek Band of Umpqua Tribe complaints.
of Indians. (1) Pursuant to Section 5 of counseling efforts pending on or
DATES: Written comments on the commencing after the effective date of
the Cow Creek Band of'Umpqua Tribe of
proposed regulations must be received the regulations as well as to all
Indians Distribution of Judgment Funds
Act of October 26, 1987, Pub. L. 100-139, on or before January 2, 1990. The complaints filed after the effective date
Commission proposes to consider any of the regulations; complaints previously
a tribal membership roll is to be
prepared comprised of all persons who comments received and thereafter adopt filed will continue to be processed under
are able to establish that they are of final regulations. part 1613. The major differences
Cow Creek or other Indian ancestry ADDRESSES:' Comments should be between part 1613 and proposed part
indigenous to the United States based addressed to the Office of the Executive 1614 are discussed below.
on any rolls or records acceptable to the Secretariat, Room 10402, Equal
A. Organization
Secretary and were not members of any Employment Opportunity Commission,
other Federally recognized ndian tribe 1801 L Street, NW., Washington, DC Proposed part 1614 is organized
on July 30, 1987; and: 20507. Copies of comments submitted by differently than part 1613. Part 1613 is
(i) Who are named on the tribal roll the public will be available for review at organized according to the type of
dated September 13, 1980, the so-called the Commission's library, Room 6502, discrimination complaint at issue: it has
Interrogatory No. 14 roll; 1801 L Street, NW., Washington, DC separate subparts for Title VII
(ii) Who are descendants of between the hours of 9:30 a.m. and 5:00 complaints, mixed case complaints, age
individuals named on the tribal roll p.m. complaints, class complaints, handicap
dated September 13, 1980, the so-called FOR FURTHER INFORMATION CONTACT: complaints, and old mixed case
Interrogatory No. 14 roll, and were born Nicholas M. Inzeo, Assistant Legal complaints. Proposed part 1614
on or prior to October 26, 1987; or Counsel, at (202) 663--4669, Thomas J. eliminates the repetition and cross-
(iii) Who are descendants of Schlageter, Senior Attorney at (202] 663- references inherent in the part 1613
individuals who were considered to be 4669, or Kathleen Oram, Staff Attorney scheme by consolidating the complaint
members of the Cow Creek Band of at (202) 663-4669. processing procedures as much as
Umpqua Tribe of Indians for the SUPPLEMENTARY INFORMATION: Pursuant possible. It is organized into six
purposes of the treaty entered between to Reorganization Plan No.. 1 of 1978, 43 subparts. Subpart A concerns the
such Band and the United States on FR 19807 (May 9, 1978), and Executive agencies' programs for promoting equal
September 18, 1853. Order 12106, 44 FR 1053 (December 28, employment opportunity and the
(2) Application forms for enrollment 1978), authority for the administration procedures for agency processing of
must be, filed with the Superintendent, and enforcement of equal opportunity in individual complaints of discrimination.
Siletz Agency, Bureau of Indian Affairs, Federal employment, previously vested Subpart B provides additional
P.O. Box.539, Siletz, Oregon 97380, by in the Civil Service Commission, was provisions that are applicable to the
(60 days from the effective date of the transferred to the Equal Employment processing of particular types of
Final rule). Application forms filed after Opportunity Commission. The complaints (.e., ADEA, Equal Pay Act,
*that date will be rejected for inclusion Commission is specifically granted the Rehabilitation Act, class). Subpart C
on the tribal membership roll for failure authority to issue, rules, regulations, explains the relationship between the
to file on time regardless of whether the orders and instructions pursuant to Title EEO process and the negotiated
applicant otherwise meets the VII of the Civil Rights Act of 1964, 42 grievance process and between the EEO
qualifications for enrollment. U.S.C. 2000e-16(b); the Age process and appeals to MSPB. Subpart D
Discrimination in-Employment Act of describes the right and method by which
Eddie F. Brown, 1967, 29 U.S.C. 633a(b); the a complainant can appeal to EEOC and
AssistantSecretary-IndianAffairs. Rehabilitation Act of 1973, 29 U.S.C. the right to file civil actions under each
794a(a)(1); the Fair Labor Standards Act, statute administered by EEOC. Subpart
[FR Doc. 89-25564 Filed 10-30-89; 8:45 am] 29 U.S.C. 201 et seq., and E.O. 12067. E sets forth EEOC's policy on remedies
BILUNG CODE 4310-02-M
Pursuant to the foregoing authorities, and corrective: action when
the Commission is publishing a discrimination has occurred. Subpart F
EQUAL EMPLOYMENT OPPORTUNITY proposed part 1614 that fundamentally contains miscellaneous provisions of
restructures the Federal sector equal general applicability to agency EEO
COMMISSION employment opportunity complaint programs.
29 CFR Part 1614 process. Part 1614 represents the
Commission's response to-numerous
B. Individual Complaint Process
RIN 3046-AAll commentaries on the existing Federal Proposed part 1614 also changes the
sector complaint process, located at 29 complaint process for individual
Federal Sector Equal Employment CFR part 1613, that was created by the complaints. As under part 1613, a person
Opportunity Civil Service Commission in 1972, 37 FR who believes' he orshe has been
AGENCY: Equal Employment Opportunity 22,717 (October, 21, 1972). Recent retaliated against or discriminated
Commission. commentaries on part 1613 include a against on the basis of race, color,
ACTION: Notice of proposed rulemaking. Government Accounting Office Audit religion, sex, national origin, age, or'
Report, comments by the Assistant handicap must first seek counseling
SUMMARy: The Equal Employment Secretaries for Management Group, and from the alleged discriminating agency
Opportunity Commission is proposing a the latest in the series, the House and then. file a written complaint with
fundamental restructuring of the Federal Employment and Housing that agency. The agency must
45748 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
m
acknowledge receipt and, if properly days within which to request a hearing. legislative and judicial branch agencies,
filed, investigate. Proposed part 1614, A party may request that the 5 U.S.C. 7153, however, that authority
however, eliminates the hearing from Administrative Judge issue passed, not to EEOC, but to the Office of
the agency investigation stage and recommended findings and conclusions Personnel Management in 5 U.S.C. 7203.
requires the agency to investigate, without a hearing if there are not EEOC has requested that the Office of
attempt resolution and issue a notice of genuine issues of fact or of credibility. Personnel Management issue a
final action within 180 days. (A After the Administrative Judge issues regulation under section 7203 extending
•complainant's right to a hearing is being recommended findings and conclusions, regulatory coverage of the
shifted from the agency investigation or after the complainant fails to timely Rehabilitation Act to competitive
process to the EEOC-appeal process; request a hearing, the EEOC will issue a positions in the legislative and judicial
only the timing of the request, not the decision on the appeal and the appellant branches. In addition, EEOC has asked
right to a hearing itself, is being can then seek reopening or file a civil the Interagency Committee on
modified by the proposal.) Because action in federal court. By shortening the Handicapped Employees to recommend
agencies' responsibilities in the 180-day agency processing time, independently a legislative change to section 501 of the
period are limited to investigation and reviewing the agency's investigation Rehabilitation Act to provide
settlement attempts, it is anticipated and, when appropriate, conducting its competitive employees of legislative and
that agencies will be able to complete own investigation, EEOC has attempted judicial branch agencies with a remedy.
investigations within that time limit. to make the federal sector process more under the Rehabilitation Act.
The new procedure allows a large like its private.sector charge process. The Commission has taken the
degree of flexibility in the investigation By providing for EEOC review of position that, under certain
of complaints. The agency can use an agency investigations early in the circumstances, an agency is required by
exchange of letters, position papers, process and for EEOC supplementation section 501 of the Rehabilitation Act of
interrogatories, investigation, fact- of agency investigations when 1973, 5 U.S.C. 791, and the Commission's
finding conference or any other method necessary, the proposed part should implementing regulations to consider
or combination of methods that will lead correct any perceived conflict of interest reassignment as a reasonable
to the development of a complete factual or unfairness in the current part 1613 accommodation. See Ignacio v. United
record. Agencies can incorporate practice of agency self-investigation. States PostalService, Petition No.
alternative dispute resolution techniques The 'proposed part should also eliminate 03840005 (Sept. 4, 1984), upheld, 30
into their investigations in order to the time delays and bocklogs frequently M.S.P.R. 471 (Spec. Panel 1986). The
facilitate early resolution of complaints. associated with part 1613 agency courts have not embraced this position.
The Commission encourages agencies to complaint processing by limiting agency Congress intended the Federal
explore the possibility of tailoring their processing to 180 days and by reducing
government to be a model employer of
investigative procedures to the issue(s) the number of decision-making levels the handicapped and the Commission
raised in a complaint and to adopt (proposed part 1614 eliminates the
proposed disposition); believes that reassignment of employees
procedures
resolution. that emphasize prompt with handicaps who can no longer
C.The Rehabilitation Act and perform in their positions is a necessary
If the complainant wishes to pursue Reassignment component of that responsibility. The
the matter beyond the agency level, he In proposed section 1614.103, the Commission is, therefore, proposing a
or she may file a civil action in federal Commission defines the scope of the new § 1614.203(g), which imposes a duty
district court or may appeal the notice of part. In a change from § 1613.701(b), to consider reassignment as part of an
final action to the EEOC. In an appeal, § 1614.103 states that for purposes of the agency's affirmative action obligation
-EEOC will review the agency record to Rehabilitation Act, the part applies to under section 501.
determine if it is adequate for decision. military departments as defined in 5 The Supreme Court has recognized a
If it is not, EEOC will supplement the U.S.C. 102, executive agencies as distinction in the Rehabilitation Act's
agency investigation by various defined in 5 U.S.C. 105, the U.S. Postal civil rights provisions between
methods. It may remand part or all of Service, the Postal Rate Commission nondiscrimination and affirmative
the matter to the agency for further and the Tennessee Valley Authority. action. In SoutheasternCommunity
investigation and may draw an adverse This definition of charge processing College v. Davis, 442 U.S. 397, 410 (1979),
inference if the agency fails to jurisdiction is based on the plain the Court contrasted the "evenhanded
supplement the record within the time language of section 501 of the treatment of qualified handicapped
specified by the Commission or it may Rehabilitation Act which limits persons" required by section 504 with
refer the matter to an EEOC field office coverage to departments, agencies and the "affirmative efforts to overcome the
for investigation and require that the instrumentalities in the executive disabilities caused by handicaps"
agency reimburse the Commission for branch, and brings the regulation into required by section 501 and noted the
the investigation. Although § 1613.216(c) conformance with a recent decision of a requirements of the latter section for
of the current regulations provides for United States Court of Appeals. In Judd affirmative action program plans that
reimbursement, it has seldom been used; v. Billington, 863 F.2d 103 (D.C. Cir. describe how the special needs of
the Commission intends to make full use 1988), the court held that section .791 of handicapped employees are beingmet.
of the reimbursement provision in the the Rehabilitation Act "applies only to The Court reiterated in Alexander v.
proposed process. If an agency fails to employees in the executive branch, See Choate,469 U.S. 287, 300 n.20 (1985), the
develop an adequate record, the 29 U.S.C. 791(b)." 863 F.2d at 105. The distinction between the
Commission may also send notice of this Commission recently acknowledged and nondiscriminatory reasonable
deficiency to an appropriate agency adopted the Judd decision in Faucettev. accommodations required by section 504
official or Congressional committee or Kennickell, Request No. 05880886 and the affirmative action required by
take other appropriate action. (March 1, 1989). section 501 to effect substantial changes,
Once EEOC has determined the The former Civil Service Commission adjustments and modifications in
record is complete, it will so notify the had authority to issue regulations existing personnel practices. Section 501
parties and the complainant will have 15 covering competitive positions in requires each agency to submit an
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45749
affirmative action program plan for the -only at the settlement or relief stage. that are and are not covered by 5 U.S.C.
hiring, placement and advancement of Cox v. American Cast Iron Pipe Co., 784 7121(d). In view of the dual filing and
handicapped individuals including a F.2d 1546, 1554 (11th Cir. 1986). In Cox, processing responsibilities that can arise
description of the extent to which and the court held that it would be an abuse in agencies that are not covered by 5
methods whereby the special needs of of discretion for a district court to permit U.S.C. 7121(d), however, the
handicapped individuals are being met. a right to opt out at the certification Commission proposes to toll the new
The Commission can require that such stage, i.e., before the class is identified •180-day processing limit for such
plans include reassignment as a method or before the merits of the class claim complaints. If an employee of'an agency
of meeting the special needs of are considered or resolved. not covered by 5 U.S.C. 7121(d) files an
handicapped employees. As a special Permitting class members to opt out EEO complaint on a matter which is the
affirmative action requirement, the would make the class action mechanism subject of a negotiated grievance, the
reassignment obligation would not be a less effective, It would make possible 180-day processing time contained in
component of the statute's reasonable the repeated litigation of pattern and § 1614.106 shall be held in abeyance
accommodation requirement and would practice issues, a consequence that the during the processing of the grievance.
not be subject to the undue hardship class action procedure was designed to
limitation. Because this would be a new prevent. Cox, 784 F. 2d at 1554..Use of an This will permit efficient processing of
,provision implementing the affirmative opt out procedure at the commencement the EEO complaint without undercutting
action requirements of section 501 only, of a class action "force[s] class • the grievance procedure.
the case law interpreting reasonable members to take a stand against their F. Time limit For Seeking Counseling
accommodation would be inapplicable. employers in order to stay in a
Thus, cases involving reassignment controversial lawsuit." Cox, 784 F. 2d at Part 1613 provides that unless the time
would rely on this new provision and 1554-55. It also discourages settlement limits should be extended in accordance
not the reasonable accommodation case by making it impossible to resolve all with certain criteria, an agency may
law in determining the proper legal claims at once and would subject the only accept a complaint if the
standards for such reassignments under defendant to the risk that class members complainant previously sought
section 501., will settle only the questionable claim counseling fqi the matter within 30
The proposed paragraph .does not and opt for separate treatment of the calendar days of tle date of the alleged
require the Postal Service to reassign an stronger claims. Kincade v. GeneralTire discriminatory event, of the effective
employee to a position in a different S Rubber Co., .635 F. 2d 501, 507 (5th Cir. date of the alleged discriminatory
craft or to make any other-reassignment 1981). An opt out provision is thus personnel action or of the date that the
that would be inconsistent with the inconsistent with the Title VII goal of aggrieved person knew or reasonably
terms of a collective bargaining encouraging settlement of claims. should have known of the
agreement covering an employee. This If the opt-out provision is eliminated discriminatory event or personnel
except for the Postal Service in included from the regulation, all class members action. Part 1614 continues this 30-day
in order to be consistent with the will still receive notice that the class rule and the provision for extension of
reassignment requirements of 5 U.S.C. complaint has been filed and notice of the time limit under certain
8337 and 5 U.S.C. 8451. The Commission any settlement or decision on the class circumstances. The Commission,
seeks comment on this new proposal. complaint. If they do not wish to however, is aware of concerns
D. Opting Out of Class Complaints participate in the class or to file a claim expressed by some people that this 30-
for individual relief, they do not have to day time limit does not provide
The Commission proposes to delete do so. Those who wish to participate
the opting out provisions contained in sufficient time for a potential claimant
will have the'opportunity to object to to evaluate the situation or to decide if
§ 1613.605(b). The class complaint any proposed settlement and to file
regulations are based on Rule 23 of the he or she wants to pursue the matter in
claims for individual relief if the EEO process, and of suggestions that
Federal Rules of Civil Procedure. See 41 discrimination is found. The
FR 8081 (Feb. 24, 1976);'42 FR 11807 this period be extended 'to as much as
Commission believes that class 180 days. The Commission solicits
(March 1, 1977). Rule 23 governs class memberi' rights are sufficiently
action lawsuits; among other things, it protected by the notice provisions and comment on whether this time limit
defines the different types of class should be lengthened,-and if so, what
that the opt-out provision is both the appropriate period for seeking
actions and states the required notice inconsistent and unnecessary.
provisions and opting out provisions for Therefore, the proposed regulation omits counseling should be.
each. In court, employment it. G. ADEA Statute of Limitations
discrimination class actions are
generally treated under subsection (b)(2) E. Negotiated Grievance Procedure. The Commission proposes in
of Rule 23, Holmes v. ContinentalCan Under 29 CFR 1613.219, employees of § 1614.409(a) to address the absence of
Co., 706 F.2d 1144, 1152 (11th Cir. 1983). agencies covered by 5 U.S.C. 7121(d) an explicit statute of limitations period
A prerequisite of a "(b)(2)" class is that must elect initially to pursue a matter In section 15 of the Age Discrimination
the defendant "acted or refused to act that is both grievable and allegedly in Employment Act, 29 U.S.C. 633a,
on grounds generally applicable to the discriminatory either through'the which creates a right of action against
class, thereby making appropriate final negotiated grievance procedure or Federal agencies for violations of the
injunctive relief or corresponding through the EEO complaint process, but ADEA. The absence of an express
declaratory relief with respect to the not both. This regulatory provision also limitations period in a statute does not
class as a whole." Fed. R. Civ. P. states that allegations of discrimination mean that there is no time limitation for
23(b)(2). The right to opt out of such a by employees of agencies not subject to filing suits under that statue.
class could be inconsistent with the 5 U.S.C. 7121(d) will not be subject to an DelCostellov. International
prerequisite of a (b)(2) class that relief is election and should be processed as Brotherhoodof Teamsters,462 U.S. 151,
appropriate for the class as a whole. complaints under part 1613. The 158 (1983). When a statute is silent,
Some courts have permitted class Commission proposes to continue this courts borrow a limitations period from
members to opt out of a (b)(2) class but processing distinction between agencies a closely analogous statute. Johnson v.
4575C Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
Railway ExpressAgency, Inc., 421 U.S. Service Reform Act and that their 30- limitations period is the most analogous
454,466 (1975). day limitations periods should be statute of limitations, or because the
The courts have split on the issue of borrowed for federal sector ADEA limitations periods common to both Title
the correct statute of limitations lawsuits. VII and the CSRA should both be
applicable to ADEA lawsuits by federal Although there are differences borrowed as the most analogous
employees. One court found that the between the federal sector provisions of statutes of limitations. Failure to use the
two-and three-year limitations period Title VII and the ADEA, courts have 30-day limitations period for all civil
for private sector ADEA cases was the nevertheless looked to Title VII for actions under the ADEA would result in
most analogous limitations period for analogous procedures to use In Federal some age complaints having a 30-day
federal sector ADEA cases. Weirsema v. employees' ADEA lawsuits. See, e.g., limitations period (i.e., mixed case
Tennessee Valley Authority,41 Fair. Lehman v. Nakshian, 453 U.S. 156 (1981) complaints that raise age
Empl. Prac. Cas. (BNA) 1588 (E.D. Tenn. (as in Title VII action, plaintiff isnot discrimination) and others having a
1986). But see Lehman v. Nakshian. 453 entitled to trial by jury); Ellis v. United different limitations period (i.e., non-
U.S. 156 (1981) (the Court held that the States Postal Service, 784 F.2d 835. 838 mixed case complaints).
federal sector provisions of the ADEA (7th Cir. 1986) (as in Title VII action, the The Commission, therefore, proposes
are self-contained and looked to Title only proper defendant in an ADEA suit that the limitations period applicable to
VII rathern than the private sector is the head of the Federal agency); Smith suits brought under Title VII and the
provisions of the ADEA for guidance in v. Office of PersonnelManagement, 778 CSRA be borrowed and applied to suits
interpreting the ADEA's federal sector F.2d 258, 262 (5th Cir. 1985) (like Title brought under section 15 of the ADEA
provisions). Other courts have borrowed VII, the ADEA does not allow recovery by individuals who have filed
the Title VII limitations period as the of compensatory damages). The use of administrative complaints.
most analogous. See Carrawayv. different statutes of limitations for There are, however, two methods for.
PostmasterGeneralof the United Federal sector Title V11 and ADEA cases a Federal employee to pursue an ADEA
States, 678 F. Supp. 125 (D. Md. 1988); could lead to attempts to split claim, i.e., by filing an administrative
Strazdos v. Baker,No. 8&-1520 (S.D.N.Y. complaints that allege violations of both complaint or by filing a notice of intent
July 5.1988); DiCamillov. U.S Postal statutes or premature departure from the to sue. Where an individual files a
Service, No. 87-6028 (D. Conn. April 22, administrative process in order to timely complaint, the Commission believes that
1988); Ramochandranv. U.S. Postal file a lawsuit on the ADEA issue. the 30-day suit period is appropriate.
Service, No. CV-86-7690 WDK (C.D. * Further support for a 30-day Where, however, an individual files a
Cal. April 15,1987), off'd, No. 87-6028 limitations period is found in the Civil notice of intent to sue, the Commission
(9th Cir. May 26, 1988); White v. Service Reform Act (CSRA) and its believes that the two- or three-year
Departmentof the Air Force,No. CA-3- legislative history. The CSRA provides a limitations period applicable to private
87-1452-R (N.D. Tex. Oct. 14, 1987) off'd, 30-day limitations period for Federal sector ADEA lawsuits is appropriate.
835 F. 2d 871 (Fed. Cir. 1987); Healy v. "employees to file suit when a claim of The notice of intent to sue procedure
U.S. PostalService, 677F.Supp. 1284 age discrimination is based on an action clearly comes from the private sector
(E.D.N. Y. 1987); see also Rivera v. US. that is appealable to the MSPB, i.e., a ADEA process and adopting that
PostalService, 830 F. 2d 1037,1039 (9th mixed case involving a claim of age limitations period for this purpose is
Cir. 1987) (dismissing ADEA claims for discrimination. See 5 U.S.C. 7703(b)(2). consistent with the case law on
failure to file within 30 days), cert This may indicate that Congress borrowing and our approach.
denied,180 S. Ct. 1737 (1988). Three intended or understood that the 30-day
courts have refused to borrow the 30-
H. Exhaustion of Remedies Under the
limitations period from Title VII applied
day limitations period of Title VII for
ADEA
as well to ADEA lawsuits. See S. Rep.
ADEA actions without stating what No. 969, 95th Cong.. 2d Seass. 63, In § 1614A09(b], the Commission
limitations period should be borrowed. reprinted in 1978 U.S. Code Cong. & proposes to address the exhaustion of
See Coleman v. Nolan.49 Fair Empl. Admin. News 2723, 2785 ("Under the remedies problem raised by the
Prac. Cas. (BNA) 285 [S.D.N.Y. 1988); anti-discrimination laws an employee decisions in-Purtillv. Harris,658 F.2d
Wetzel v. U.S. PostalService, No. 87-4- has 30 days from the final agency action 134, 137 (3d Cir. 1981), cert. denied,462
CIV-5 (E.D.N.C. Aug. 14,1987); Tkac v. to initiate a de nova court proceeding"). U.S. 1131 (1983); Bunch v. United States,
Veterans Administration,610 F. Supp. Apart from any indication of legislative 548 F.2d 336, 340 (9th Cir. 1977). and
1075 (W.D. Mich. 1985). One court intent, it also constitutes another other cases. These cases hold that once
applied the six-year statute of analogous statute of limitations that is a Federal complainant under the Age
limitations contained in 28 U.S.C. available for borrowing. It can be Discrimination in Employment Act
2401(a) to a Federal sector ADEA suit. argued that it is the most analogous initiates administrative procedures, he
Marks v. Turnage, 46 Fair EmpI. Prac. limitations period since it applies not or she must exhaust these procedures
Cas. (BNA) 382 (N.D. 111. 1988). only to employment discrimination before filing a civil action. As the
The Commission finds the reasoning actions by Federal employees like Title agency responsible for interpretation
of the cases applying the two- or three- VII but more specifically to those and enforcement of the ADEA in the
year limitations period of the private alleging age discrimination. In the Federal sector, the Commission believes
sector ADEA provisions or the six-year alternative, it can be argued that it is at that a complainant exhausts
limitations periods of 28 U.S.C. 2401(a) least as analogous as the Title VII administrative remedies either 180 days
upersuasive and the use of those limitations period to which it is after filing a complaint (the time period
limitations periods to be inconsistent identical. Thus, the CSRA supports the during which the agency is required to
with the administrative process utilized use of a 30-day limitations period for issue a notice of final action), or 180
for federal sector ADEA complaints. The ADEA lawsuits either because its days after filing an appeal with the
Commission believes that the most legislative history indicates that EEOC, if EEOC has not issued a
closely analogous statutes to the Federal Congress intended the Title VII decision, or after EEOC issues a
sector provisions of the ADEA are limitations period be applied to ADEA decision on an appeal. This exhaustion
section 717 of Title VII and the Civil actions, or because the CSRA requirement is the same as the Title VII
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45751
45751
exhaustion requirement and will permit These regulations have been 1614.408 Reopening and reconsideration.
those complainants alleging age coordinated with affected federal 1614.409 Civil action: Title VII and
discrimination as well as Title VII agencies pursuant to E.O. 12067 and Rehabilitation Act.
discrimination to bring the entire have been reviewed by the Office of 1614.410 Civil action: Age Discrimination In
complaint to court at the same time. Management and Budget pursuant to Employment-Act.
The Commission believes that this 1614.411 Civil action: Equal Pay Act.
E.O. 12291. The Commission hereby 1614.412 Effect of filing a civil action.
proposed fundamental restructuring of publishes these proposed rules for
the complaint process will provide more public comment. The proposed rules Subpart E-Remedies And Corrective
efficient resolution of federal sector appear below. Action
employment discrimination complaints 1614.501 Remedial actions.
while, at the same time, ensuring List of Subjects in 29 CFR Part 1614 1614.502 Corrective action.
administrative fairness. Equal employment opportunity, 1614.503 Enforcement of final decisions.
In the process of developing proposed Government employees. 1614.504 Enforcement action by the
part 1614, the Commissibn considered Commission.
proposals to require payment of interest For the Commission. 1614.505 Compliance with settlement
on back pay in discrimination cases and Clarence Thomas, agreements and decisions.
to provide for awards of attorneys fees Chairman. Subpart F-Matters Of General Applicability
in Age Discrimination in Employment For the reasons set forth in the' 1614.601 EEO group statistics.
Act cases. The Office of Legal Counsel preamble, it is proposed to amend title 1614.602 Reports to the Commission.
at the Department of Justice has advised 29, chapter XIV of the Code of Federal 1614.603 Voluntary settlement attempts.
us, however, of its opinion that the Back Regulations by adding part 1614 to read 1614.604 Filing and computation of time.
Pay Act of 1966, 5 U.S.C. 5596, does not as follows: 1614.605 Representation and official time.
serve as a waiver of sovereign immunity 1614.606 Joint processing and consolidation
for those purposes. We are now PART 1614-FEDERAL SECTOR of complaints.
providing in § 1614.501, therefore, that EQUAL EMPLOYMENT OPPORTUNITY 1614.607 Severance of issues.
1614.608 Delegation of authority.
interest on back pay may not be Subpart A-Agency Program To Promote
awarded to federal applicants or Authority- 42 U.S.C. 2000e-16; 29 U.S.C.
Equal Employment Opportunity 633a; 29 U.S.C. 791 and 794a; 29 U.S.C. 206(d);
employees who prevail in discrimination E.O. 10577; 3 CFR 218 (1954-1958 Comp.); E.O.
claims. Proposed § 1614.501(e) will Sec.
1614.101 General policy. 11222, 3 CFR 306 (1964-1965 Comp.); E.O.
remain unchanged from its counterpart 1614.102 Agency program. 11478, 3 CFR 133 (1969 Comp.); E.O. 12106, 44
in part 1613; that is, the attorneys fees 1614.103 Complaints of discrimination FR 1053 (1978); Reorg. Plan No. I of 1978, 43
awards provisions shall apply to covered by this part. FR 19807 (1978]. unless otherwise-noted.
allegations of discrimination or 1614.104 Agency processing.
retaliation prohibited by Title VII and 1614.105 Counseling. Subpart A-Agency Program To
the Rehabilitation Act. 1614.106 Individual complaints. Promote Equal Employment
In addition to these proposed 1614.107 Rejections or cancellations of Opportunity
regulations, the Commission invites complaints.
comment on whether the Supreme § 1614.101 General policy.
Subpart B-Provisions Applicable-To
Court's recent decision in Price Particular Complaints (a) It is the policy of the Government
Waterhouse v. Hopkins, 57 U.S.L.W. 1614.201 Age Discrimination In Employment of the United States to provide equal
4469 (May 1, 1989), requires that the Act opportunity in employment for all
Commission change its regulation on 1614.202 Equal Pay Act. persons, to prohibit discrimination in
remedial action, found currently at 29 1614.203 Rehabilitation Act. employment because of race, color,
CFR 1613.271. Section 1613.271 states 1614.204 Class complaints. religion, sex, national origin, age or
that full relief should be provided to an Subpart C-Related Processes handicap and to promote the fuii
individual when discrimination is found realization of equal employment
unless the record contains clear and 1614.301 Relationship to negotiated opportunity through a continuing
grievance procedure.
convincing evidence that the individual 1614.302 Mixed case complaints. affirmative program in each agency.
would not have been selected even 1614.303 Petitions to the EEOC from MSPB (b) No person shall be subject to
absent discrimination. During the public decisions on mixed case appeals and retaliation for opposing any practice
comment and interagency coordination complaints. made unlawful by Title VII of the Civil
of the latest amendments to part 1613, 1614.304 Contents of petition. Rights Act (Title VII), the Age
published at 52 FR 41919 (October 30, 1614.305 Consideration procedures. Discrimination in Employment Act
1987), commenters suggested that the 1614.306 Referral of case to special panel. (ADEA), the Equal Pay Act or the
burden of proof be changed from "clear 1614.307 Organization of special panel. Rehabilitation Act or for participating in
and convincing evidence" to "a 1614.308 Practices and procedures of special
panel. any stage of administrative or judicial
preponderance of the evidence" 1614.309 Enforcement of special panel proceedings under those statutes.
standard. As a result of these decisions.
suggestions and comments, the 1614.310 Right to file a civil action. § 1614.102 Agency program.
Commission solicits comment on what (a) Each agency shall maintain a
effect, if any, the Hopkins decision Subpart D-Appeals And Civil Actions continuing affirmative program to
should have on proposed § 1614.501, 1614.401 Appeals to the commission. promote equal opportunity and to
which is patterned on 29 CFR 1613.271. 1614.402 Time for appeals to the identify and eliminate discriminatory
The Commission also invites Commission. practices and policies. In support of this
comments on whether any of the 1614.403 How to appeal.
1614.404 Appellate procedure. program, the agency shall:
substantive changes proposed for part 1614.405 Supplementing the record on (1) Provide sufficient resources to its
1614 should also be applied to appeal. equal employment opportunity program
complaints being processed under part 1614.406 Hearings. to ensure efficient and successful
1613. 1614.407 Decisions on appeals. operation;
45752 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
(2) Provide for the prompt, fair and (2) Appraise its personnel operations with respect tomanagerial, supervisory
impartial processing of complaints in at regular intervals to assure their or other employees who have failed in
accordance with this part and the conformity with its program, part 1614 their responsibilities;
instructions contained in the and the instructions contained in the (3) When authorized by the head of
Commission's Management Directives; Commission's Management Directives; the agency, making changes in programs
(3) Conduct a continuing campaign to (3) Designate a Director of Equal and procedures designed to eliminate
eradicate every form of prejudice or Employment Opportunity (EEO discriminatory practices and improve
discrimination from the agency's Director), EEO Officer(s) and such the agency's program for equal
personnel policies, practices and Special Emphasis Program Managers employment opportunity;
working conditions; (including but not necessarily limited to (4) Providing for counseling of
(4) Communicate the agency's equal a Handicapped Program Coordinator, a aggrieved individuals and for the receipt
employment opportunity policy and Federal Women's Program Manager and and processing of individual and class
program and its employment needs to all a Hispanic Employment Program complaints of discrimination; and
sources of job candidates without regard Manager), clerical and administrative (5) Assuring that individual
to race, color, religion, sex, national support as may be necessary to carry complaints are properly and thoroughly
origin, age or handicap, and solicit their out the functions described in this part investigated and that notices of final
recruitment assistance on a continuing in all organizational units of the agency action are issued in a timely manner in
basis; and at all agency installations. The EEO accordance with this part.
(5) Review, evaluate and control Director shall be under the immediate
managerial and supervisory supervision of the agency head. The § 1614.103 Complaints of discrnmnation
performance In such a manner as to responsibility for regulating the covered by this part:
insure a continuing affirmative government-wide Special Emphasis (a) Individual and class complaints of
application and vigorous enforcement of Program continues with the Office of employment discrimination and
the policy of equal opportunity, and Personnel Management; retaliation prohibited by tite VII
provide orientation, training and advice (4) Make written materials available (discrimination on the basis of race,
to managers and supervisors to assure to all employees and applicants color, religion, sex and national origin),
their understanding and implementation informing them of the variety of equal the ADEA (discrimination on the basis
of the equal employment opportunity employment opportunity programs and of age when the aggrieved individual is
policy and program; administrative and judicial remedial at least 40 years of age), the
(6) Take appropriate disciplinary procedures available to them and Rehabilitation Act (discrimination on
action against employees who engage in prominently post such written materials the basis of handicap) or the Equal Pay
discriminatory practices; in all personnel and EEO offices and Act (sex-based wage discrimination) are
(7) Make reasonable accommodation throughout the workplace; covered by this part unless the
to the religious needs of applicants and . (5) Ensure that full cooperation is
complainant has elected to grieve the
employees when those accommodations provided by all agency employees to matter through a negotiated grievance
can be made without undue hardship on EEO Counselors and agency EEO procedure or to appeal the matter to the
the business of the agency; personnel in the processing and Merit Systems Protection Board.
(8) Provide recognition to employees, resolution of pre-complaint matters and (b) This part applies to:
supervisors, managers and units complaints within an agency and that (1) Military departments as defined in.
demonstrating superior accomplishment full cooperation is provided to the 5 U.S.C. 10Z;
in equal employment opportunity;, Commission in the course of appeals, (2) Executive agencies as defined in 5
(9] Establish a system for periodically including granting the Commission U.S.C. 105;
evaluating the effectiveness of the routine access to personnel records of
agency's overall equal employment (3) The United States Postal Service,
the agency when required in connection
opportunity effort; Postal Rate Commission and Tennessee
with an investigation;
(10) Provide the maximum feasible Valley Authority, except for complaints
(6) Publicize to all employees and
opportunity to employees to enhance under the Equal Pay Act; and
permanently post the names and
their skills through on-the-job training, addresses of the EEO Director, EEO (4) All units of the legislative and
work-study programs and other training Officer. Special Emphasis Program judicial branches of the Federal
measures so that they may perform at Managers and EEO Counselors and a Government having positions in the
their highest potential and advance in notice of the time limits and necessity of competitive service, except for
accordance with their abilities; contacting a Counselor before filing a complaints under the Rehabilitation Act.
(11) Inform-its employees and complaint; and This part does not apply to the General
recognized labor organizations of the (c) Under each agency program, the Accounting Office or the Library of
affirmative equal employment EEO Director shall be responsible for. Congress.
opportunity policy and program and (1) Advising the head of the agency (c) Within the covered departments,
enlist their cooperation; and with respect to the preparation of agencies and units, this part applies to
(12) Participate at the community level national and regional equal employment all employment policies or practices
with other employers, with schools and opportunity plans, procedures, affecting employees or applicants for
universities and with other public and regulations, reports and other matters employment including employees and
private groups in cooperative action to pertaining to the policy in § 1614.101 and applicants who are paid from
improve employment opportunities and the agency program; nonappropriated funds but does not
community conditions that affect (2) Evaluating from time to time the apply to the employment of aliens
employability. sufficiency of the total agency program outside the limits of the United States.
(b) In order to implement its program, for equal employment opportunity and
reporting to the head of the agency with § 1614.104 Agency processing.
each agency shall:
(1) Develop the plans, procedures and recommendations as to any (a) Each agency subject to this part
regulations necessary to carry out its improvement or correction needed, shall adopt procedures for processing
program; including remedial or disciplinary action individual and class complaints of
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45753
discrimination and retaliation that instructions contained in Commission (c) Complaints must contain a signed
include the provisions contained in Management Directives. When advised statement from the person claiming to
§§ 1614.105 through 1614.107 and that that a complaint has been filed by an be aggrieved. This statement must be
are consistent with all other applicable aggrieved person, the Counselor shall sufficiently precise to identify the
provisions of this part and the submit a written report to the agency's aggrieved individual and the agency and
instructions for complaint processing EEO Officer and the aggrieved person to describe generally the action(s) or
contained in the Commission's concerning the issues discussed and practice(s) that form the basis of the
Management Directives. -actions taken during counseling. complaint.
(b) The Commission shall periodically (d) Unless the aggrieved person agrees (d)The agency shall acknowledge
review agency resources and procedures to a longer counseling period under receipt of a complaint and inform the
to ensure that an agency makes paragraph (e) of this section, the complainant of the date on which the
reasonable efforts to resolve complaints Counselor shall conduct the final complaint was filed. Such
informally, to process complaints in a interview with the aggrieved person acknowledgement shall also advise the
timely manner, to develop adequate within 30 days after the date the complainant that:
factual records, to issue findings which aggrieved person brought the matter to ((1] The agency is required to complete
are consistent with acceptable legal the Counselor's attention. If the matter processing of the complaint within 180
standards, to explain the reasons for its has not been resolved to the satisfaction days after filing unless the parties agree
findings, and to give complainants of the aggrieved person, that person in writing to extend that period; and
adequate and timely notice of their shall be informed in writing by the (2) If the agency has not issued a
rights. Counselor, not later than the thirtieth notice of final agency action within 180
§1614.105 Counseling. day after contacting the Counselor, of days of filing or within the agreed period
the right to file a discrimination of extension, the complainant can file a
(a) Aggrieved persons who believe civil action or appeal to EEOC in
they have been discriminated against on complaint. The notice shall inform the
complainant of the right to file a accordance with subpart D.
the basis of race, color, religion, sex, (e) In accordance with instructions
national origin, age or handicap or discrimination complaint at any time up
to 15 days after receipt of the notice, of contained in Commission Management
retaliated against must consult a Directives, the agency shall develop a
Counselor prior to filing a complaint in the appropriate official with whom to
order to try to informally resolve the file a complaint and of the complete factual record upon which to
matter. Contact with a Counselor must complainant's duty to assure that the make findings on the matters raised by
be initiated by the aggrieved person agency is informed immbdiately if the the written complaint. Agencies may use
within 30 days of the date of the matter complainant retains counsel or a an exchange of letters or memoranda,
alleged to be discriminatory, within 30 representative. interrogatories, investigations, fact-
days of the effective date of a personnel (e) Prior to the end of the 30-day finding conferences or any other fact-
action or within 30 days of the date that period, the aggrieved person may agree finding conferences or any other fact-
the aggrieved person knew or in writing with the Counselor to finding methods that efficiently and
reasonably should have known of the 'postpone the final interview and extend thoroughly address the matters at issue.
matter or personnel action alleged to be the counseling period for an additional Agencie are encouraged to incorporate
discriminatory. period of no more than 60 days. If the alternative dispute resolution techniques
(b) At the initial counseling session, matter has not been resolved to the into their investigative efforts in order to
Counselors must advise individuals in satisfaction of the aggrieved person promote early resolution of complaints.
writing of their rights and before the conclusion of the agreed (f The agency shall issue a notice of
responsibilities, including election rights extension, the notice described in final action within 180 days from the
pursuant to § 1614.301 and § 1614.302, paragraph (d) shall be issued. date of filing of an individual complaint.
the right to file a notice of intent to sue (f The Counselor shall not attempt in By written agreement within the 180-day
pursuant to § 1614.201(a) and a lawsuit any way to restrain the aggrieved period, the complainant and the agency
under the ADEA instead of an person from filing a complaint. The may voluntarily extend this 180-day
administrative complaint of age Counselor shall not reveal the identity period for not more than an additional
discrimination under this part, the duty of an aggrieved person who consulted 90 days. The notice of final action shall
to mitigate damages, administrative and the Counselor, except when authorized consist of:
court time frames, and that only the to do so by the aggrieved person, until (1) Findings by the agency on the
matter(s) raised in pre-complaint the agency has received a merits of each issue in the complaint
counseling may be alleged in a discrimination complaint under this part that is not rejected or cancelled
subsequent complaint filed with the from that person involving that same pursuant to § 1614.107; and
agency. Counselors must advise matter. (2) Appropriate remedial and
individuals of their duty to keep the (g) The agency shall ensure that full corrective action in accordance with
agency and Commission informed of cooperation is provided by all Subpart E of this part when
their current address. If the aggrieved employees to the Counselor in the discrimination is found; and
person informs the Counselor that he or *performance of the duties under this (3) A statement of supporting reasons
she wishes to file a class complaint, the section. for rejection or cancellation'of each
Counselor shall explain the class issue not considered on the merits; or
complaint procedures and the § 1614.106 1ndividual complaints. (4) A statement that the agency has
responsibilities of a class agent and (a) Complainants or their been unable to resolve the matter or
include in the notice required by representatives must file complaints issue findings within the time limits of
paragraphs (d) or (e) of this section a with the agency that allegedly this paragraph.
notice of the right to file a class discriminated against them. The notice of final action shall include
complaint. (b) Complainants must file complaints notice of the right to appeal to the
(c) Counselors shall conduct within 15 days after receipt of the notice Commission with the applicable time
counseling activities in accordance with required by § 1614.105(d) or Je). limitations, EEOC Form 573, Notice Of
45754 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
I II
Appeal/Petition, and notice of the right full relief in adjustment of the complaint, (2) "Physicalor mental impairment"
to file a civil action in Federal district provided that the agency's EEO means:
court with the applicable time Director, Chief Legal Officer or a (i) Any physiological disorder or
limitations. A copy of the agency's designee reporting directly to the EEO condition, cosmetic disfigurement, or
investigative file shall be attached to the Director or Chief Legal Officer, has -anatomical loss affecting one or more of
notice. certified in writing that the agency's the following body systems:
(g) An agency's failure to issue a written offer constitutes full relief. An Neurological, musculoskeletal, special
notice of final action after 180 days or offer of full relief under this subsection sense organs, cardiovascular,
any period of extension shall constitute is the appropriate relief in J 1614.501. reproductive, digestive, respiratory,
final action and the agency shall cease genitourinary, hemic and lymphatic,
processing the complaint. Subpart B-Provisions Applicable to skin, and endocrine, or
*Particular Complaints (ii) Any mental or psychological
§ 1614.107 Rejections or cancellations of
complaints. § 1614.201 Age Discrimination In disorder, such as mental retardation,
The agency shall reject or cancel a Employment Act. organic brain syndrome, emotional or
complaint or part of a complaint: (a) As an alternative to filing a mental illness, and specific learning
(a) That fails to state a claim under complaint under this part, an aggrieved disabilities.
§ 1614.103 or § 1614.106(a) or states the individual may file a civil action to (3) "Majorlife activities" means
same claim that is pending before or has obtain a judicial determination of his or functions, such as caring for one's self,
been decided by the agency or her rights under the ADEA after giving performing manual tasks, walking,
Commission; the Commission not less than 30 days seeing, hearing, speaking, breathing,
(b) That fails to comply with the notice of the intent to file such an action. learnifig, and working.
applicable time limits contained in Such notice must be filed in writing with (4) "Hasa recordofsuch an
§§ 1614.105, 1614.106 and 1614.204(c), EEOC, Federal Sector Programs, 1801 L impairment" means has a history of, or
unless the agency extends the time St. NW., Washington, DC 20507 within has been classified (or misclassified) as
limits in accordance with § 1614.604(c), 180 days after the alleged unlawful having, a mental or physical impairment
or that raises a matter which has not practice occurred. that substantially limits one or more
been brought to the attention of a (b) The Commission may exempt a major life activities.
Counselor; position from the provisions of the (5) "Is regardedas having such an
(c) That is the basis of a pending civil ADEA if the Commission establishes a impairment"means has a physical or
action in a United States District Court maximum age requirement for the mental impairment that does not
in which the complainant is a party position on the basis of a determination substantially limit major life activities
provided that at least 180 days have that age is a bona fide occupational but is treated by an employer as
passed since the filing of the qualification necessary to the constituting such a limitation; has a
administrative complaint, or that was performance of the duties of the physical or mental impairment that
the basis of a civil action decided by a position. substantially limits major life activities
United States District court in which the only as a result of the attitude of an
complainant was a party; §1614.202 Equal Pay Act. employer toward such impairment; or
(d) Where the complainant has raised (a) In its enforcement of the Equal Pay has none of the impairments defined in
the matter in a negotiated grievance Act, the Commission has the authority Paragraph (a)(2) of this section but is
procedure that permits allegations of - to investigate an agency's employment treated by an employer as having such
discrimination or in an appeal to the practices on its own initiative at any an impairment.
Merit Systems Protection Board and time in order to determine compliance (6) "Qualifiedindividualwith
§ 1614.301 or § 1614.302 indicates that with the provisions of the Act. handicaps"means with respect to
the complainant has elected to pursue (b) Complaints alleging violations of employment, an individual with
the non-EEO process; the Equal Pay Act shall be processed handicaps who, with or without
(e) That alleges that an agency is under this part unless they are brought reasonable accommodation, carperform
proposing to take a personnel action against the United States Postal Service, the essential functions of the position in
that may be dicriminatory; Postal Rate Commission or the question without endangering the health
(f) Where the complainant cannot be Tennessee Valley Authority. These and safety of the individual or others
located, provided that reasonable efforts three entities will be treated by the and who, depending upon the type of
have been made to locate the Commission as private employers. appointing authority being used:
complainant and the complainant has Alleged violations by these agencies (I)Meets the experience or education
not responded within 15 days to a notice may be filed with an appropriate
of proposed cancellation sent to his or requirements (which may include
Commission office listed in 29 CFR passing a written test) of the position in
her last known address; 1610.4(c). question, or
(g) That the complainant has failed to
cooperate, where the agency has § 1614.203 Rehabilitation Act. (ii) Meets the criteria for appointment
provided the complainant with a written (a) Definitions.(1) "Individualwith under one of the special appointing
request to provide relevant information handicaps"is defined for this section as authorities for individuals with
or otherwise proceed with the one who: handicaps.
complaint, and the complainant has (i) Has a physical or mental (b) The Federal Government shall
failed to satisfy the request within 15 impairment which substantially limits become a model employer of individuals
days of its receipt, provided that the one or more of such person's major life with handicaps. Agencies shall give full
request included a notice of the activities. consideration to the hiring, placement
proposed cancellation; or (ii) Has a record of such an and advancement of qualified
(h) If the complainant refuses within impairment, or individuals with mental and physical
15 days of receipt of an offer of (iii) Is regarded as having such an handicaps. An agency shall not
settlement to accept an agency offer of impairment. discriminate against a qualified
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45755
individual with physical or mental (e) Preemployment inquiries.(1) applicant shall be kept confidential
handicaps. Except as provided in paragraphs (e)(2) except that:
(c) Reasonable accommodation.(1) and (e)(3) of this section, an agency may (i) Managers, selecting officials, and
An agency shall make reasonable not conduct a preemployment medical others involved in the selection process
accommodation to the known physical examination and may not make or responsible for affirmative action
or mental limitations of an applicant or preemployment inquiry of an applicant may be informed that the applicant is an
employee who is a qualified individual as to whether the applicant is an individual with handicaps eligible for
with handicaps unless the agency can individual with handicaps or as to the affirmative action;
demonstrate that the accommodation nature or severity of a handicap. An (ii) Supervisors and managers may be
would impose an undue hardship on the agency may, however, make informed regarding necessary
operations of its program. preemployment inquiry into an accommodations;
(2) Reasonable accommodation may applicant's ability to meet the medical (iii) First aid and safety personnel
include, but shall not be limited to: qualification requirements, with or may be informed, where appropriate, if
(i) Making facilities readily accessible withour reasonable accommodation, of the condition might require emergency
to and usable by individuals with the position in question, i.e., the treatment;
handicaps, and minimum abilities necessary for safe (iv) Government officials investigating
(ii) Job restructuring, part-time or and efficient performance of the duties compliance with laws, regulations, and
modified work schedules, acquisition or of the position in question. The Office of instructions relevant to equal
modification of equipment or devices, Personnel Management may also make employment opportunity and affirmative
appropriate adjustment or modification an inquiry as to the nature and extent of action for individuals with handicaps
of examinations, the provision of a handicap for the purpose of special shall be provided information upon
readers and interpreters, and other testing. request; and
similar actions. (2) Nothing in this section shall (v) Statistics generated from
(3) In determining whether, pursuant prohibit an agency from conditioning an
to paragraph (c)(1) of this section. an information obtained may be used to
offer of employment on the results of a manage, evaluate, and report on equal
accommodation would impose an undue medical examination conducted prior to
hardship on the operation of the agency employment opportunity and affirmative
the employee's entrance on duty, action programs.
in question, factors to be considered provided that:
include: (f) Physicalaccess to buildings.(1) An
(i) All entering employees are agency shall not discriminate against
(i) The overall size of the agency's
program with respect to the number of subjected to such an examination applicants or employees who are
regardless of handicap or when the qualified individuals with handicaps due
employees, number and type of facilities preemployment medical questionnaire
and size of budget; to the inaccessibility of its facility.
(ii)-The type of agency operation, used for positions that do not routinely (2) For the purpose of this subpart, a
including the composition and structure require medical examination indicates a facility shall be deemed accessible if it
of the agency's work force; and condition for which further examination is in compliance with the Architectural
(it) The nature and the cost of the is required because of the job-related Barriers Act of 1968.
accommodation. nature of the condition, and (g) Reassignment. When a
(d) Employment criteria.(1) An (ii) The results of such an examination nonprobationary employee becomes
agency may not make use of any are used only in accordance with the unable t3 perform the essential
employment test or other selection requirements of this part. Nothing in this functions of his or her position even
criterion that screens out or tends to section shall be construed to prohibit. with reasonable accommodation due to
screen out qualified individuals with the gathering of preemployment medical a handicap, an agency shall reassign the
handicaps or any class of individuals information for the purposes of special individual to a vacant position within
with handicaps unless: appointing authorities for individuals the same commuting area and at the
(i) The test score or other selection with handicaps. same grade or level, whose essential
criterion, as used by the agency, is (3) To enable and evaluate affirmative functions the individual would be able
shown to be job-related for the position action to hire, place or advance to perform with reasonable
in question, and individuals with handicaps, the agency accommodation if necessary. In the
(ii) Alternative job-related tests or may invite applicants for employment to absence of a position at the same grade
criteria that do not screen out or tend to indicate whether and to what extent or level, reassignment to a vacant lower
screen out as many individuals with they are handicapped, if: graded position shall be required, but
handicaps are not shown by the Office (i) The agency states clearly on any availability of such a vacancy shall not
of Personnel Management to be written questionnaire used for this affect the employee's entitlement, if any,
available. purpose or makes clear orally if no to disability retirement pursuant to 5
(2) An agency shall select and written questionnaire is used. that the U.S.C. 8337 or 5 U.S.C. 8451. For the
administer tests concerning employment information requested is intended for purpose of this paragraph, an employee
so as to insure that, when administered use solely in conjunction with of the United States Postal Service shall
to an applicant or employee who has a affirmative action, and not be considered qualified for
handicap that impairs sensory, manual (ii) The agency states clearly that the reassignment to a position in a different
or speaking skills, the test results information is being requested on a craft or for any reassignment that would
accurately reflect the applicant's or voluntary basis, that refusal to provide be inconsistent with the terms of a
employee's ability to perform the it will not subject the applicant or collective bargaining agreement
position or type of positions in question employee to any adverse treatment, and covering the employee.
rather than reflecting the applicant's or that it will be used only in accordance
employee's impaired sensory, manual, with this part. § 1614.204 Class complaints.
or speaking skill (except where those (4) Information obtained in (a) Definitions. (1) A "class" is a
skills are the factors that the test accordance with this section as to the group of employees, former employees
purports to measure). medical condition or history of the or applicants for employment who, it is
45756 Federal Reister / Vol. 54, No. 209
4fl756 I Tuesday, October 31, 1989 I Proposed Rules
Feera
4575 Reistr /Vol 4,No.209/ Tesdy, ctoer 3, '989/ Popoed ule
alleged, have been or are being does not meet the prerequisites of a § 1614.107. In addition, it shall'inform
adversely affected by an agency class complaint under § 1614.2O4(a)(). the agent of the right to appeal the final
personnel management policy or (3) If an allegation is not included in agency decision rejecting or cancelling
practice which discriminates against the the Counselor's report, the the class complaint to the Office of.
group on the basis of their race, color, Administrative Judge shall afford the Review and Appeals or to file a civil
religion, sex, national origin, age or agent 15 days to state whether the action and include EEOC Form 573,
handicap. matter was discussed with the Notice Of Appeal/Petition. ' .-..
(2) A "class complaint" is a written Counselor and, if not, explain why it (e) Notification. (1) Within 15 days of
complaint of discrimination filed on was not discussed. If the explanation is accepting a class complaint, the agency
behalf of a class by the agent of the not satisfactory, the Administrative shall use reasonable means, such as'
class alleging that: Judge shall recommend that the agency delivery, mailing to last known address
(I) The class is so numerous that a reject the allegation. If the explanation or distribution, to notify all class
consolidated complaint of the members is satisfactory, the Administrative Judge members of the acceptance of the class
of the class is impractical; shall refer the allegation to the agency complaint.
(ii) There are questions of fact for further counseling of the agent. (2) Such notice shall contain:
common-to the class; (4) If an allegation lacks specificity (i) The name of the agency or
(iii) The claims of the agent of the and detail, the Administrative Judge organizational segment, its location, and
class are typical of the claims of the shall afford the agent 15 days to provide the date of acceptance of the complaint;
class; specific and detailed information. The (ii) A description of the issues
(iv) The agent of the class, or, if
- Administrative Judge shall recommend accepted as part of the class complaint,
represented, the representative, will that the agency reject the complaint if and
fairly and adequately protect the the agent fails to provide such (iii) An explanation of the binding
interests of the class. information within the specified time nature of the final decision or resolution
'(3) An "agentof the class" is a class period. If the information provided of the complaint on class members.
member who acts for the class during contains new allegationsoutside the (f) Obtainingevidence concerningthe
the processing of the class complaint. scope of the complaint, the complaint. (1) Upon the acceptance of a
(b) Pre-complaint processing. An Administrative judge shall advise the complaint, the agency head shall
employee or applicant who wishes to agent how to proceed on an individual designate an agency representative. The
file a class complaint must seek or class basis concerning these agency representative shall not be any
counseling and be counseled in allegations. of the individuals referenced in
accordance with § 1614.105. (5) The Administrative Judge shall § 1614.102(b)(3)*
(c) Filing and presentation of a class recommend that the agency extend the (2) Development of evidence. (i) The
complaint. time limits for filing a complaint and for Administrative Judge shall notify the
(1) A class complaint must be signed consulting with a Counselor when the agent and the agency representative of
by the agent and must identify the agent shows that he or she was not the time period that will be allowed both
policy or practice adversely affecting the notified of the prescribed time limits and parties to prepare their cases. This time
class as well as the specific action or was not otherwise aware of them or that
matter affecting the class agent. period may be extended by the
he or she was prevented by Administrative Judge upon the request
(2) The complaint must be filed with circumstances beyond his or her control*
the agency that allegedly discriminated of either party. Both parties are entitled
from acting within the time limits. to reasonable development of evidence
not later than 15 days after the agent's (6) When appropriate, the
receipt of the notice of right to file a Administrative judge may recommend on matters relevant to the issues raised
class complaint. that a class be divided into subclasses in the complaint. Evidence may be
(3] The complaint shall be processed and that each subclass be treated as a developed through interrogatories,
promptly; the parties shall cooperate class, and the provisions of this section depositions, and requests for production
and shall proceed at all times without then shall be construed and applied of documents. It shall be grounds for
undue delay. accordingly. objection to producing evidence that the
(d) Acceptance, rejection or (7) The Administrative Judge's information sought by either party Is
cancellation.(1),Within 15 days of an recommendation to the agency on irrelevant, overburdensome, repetitious,
agency's receipt of a complaint, the whether to accept, reject or cancel a or privileged.
agency shall forward the complaint, complaint shall be transmitted in writing (ii) If mutual cooperation fails, either
along with a copy of the Counselor's to theagency and the agent. The party may request to develop evidence.
report and any other information Administrative judge's recommendation If a party refuses in bad faith or fails
pertaining to timeliness or other relevant to accept, reject or cancel shall become without adequate explanation to
circumstances related to the complaint, the agency decision unless the agency respond fully and in timely fashion to a
to the Commission. The Commission accepts, rejects, cancels or modifies the request made or approved by the
shall assign the complaint to a recommended decision within 60 days of Administrative Judge for documents,
Commission Administrative judge the receipt of the recommended decision records, comparative data, statistics or
except in instances where the and complaint file. The agency shall affidavits, and the information is solely
Commission finds it more practical to notify the agent and the Administrative in the control of one party, such failure
delegate this responsibility to a Judge of its decision to accept, reject, may, in appropriate circumstances,
complaints examiner or Administrative modify or cancel a complaint. A cause the Administrative Judge:
judge from another agency who is not an decision to reject or cancel a class (A) To draw an adverse inference that
employee of the agency in which the complaint shall inform the agent either the requested information would have
complaint arose. that-the complaint will be processed as reflected unfavorably on the party
(2] The Administrative judge may an individual complaint of refusing to provide the requested
recommend that the agency reject the discrimination under subpart A or that information; "
complaint, or any portion, for any of the the complaint is also rejected as an (B)To consider the matters to which
reasons listed in § 1614.107 or because it individual complaint in accordance with the requested information pertains to be
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45757
established in favor of the opposing include EEOC Form 573, Notice of (k) Notification of decision. The
.party: Appeal/Petition. agency shall notify class members of the
(C) To exclude other evidence offered (h) Hearing.On expiration of the decision and corrective action, if any,
by the party failing to produce the period allowed for preparation of the through the same media employed to
requested information: or case, the Administrative Judge shall set give notice of the existence of the class
(D) To take such other actions as the a date for hearing. The hearing shall be complaint. The notice, where
Administrative Judge deems conducted in accordance with 29 CFR appropriate, shall include information
appropriate. 1614.406; concerning the rights of class members
(iii) During the period for development (i) Report of findings and to seek individual relief, and of the
of evidence, the Administrative Judge recommendations.(1) The procedures to be followed. Notice shall
may, in his or her discretion, direct that Administrative Judge shall transmit to be given,by the agency within 10 days of
an investigation of facts relevant to the the agency a report of finding and the transmittal of its decision to the
complaint or any portion be conducted recommendations on the complaint, agent.
by an investigator trained or-certified by including a recommended decision, (1) Corrective action for individual
the Commission. corrective action pertaining to systemic class members. (1) When discrimination
(iv) Both parties shall furnish to the relief for the class and any individual is found, an agency must eliminate or
Administrative Judge copies of all corrective action, where appropriate, modify the employment policy or
materials that they wish to be examined with regard to the personnel action or practice out of which the complaint
and such other material as may be matter that gave rise to the complaint. arose and provide individual corrective
requested. (2) If the Administrative Judge finds action, including an award of attorney's
(g) Opportunityfor resolution of the no class relief appropriate, he or she fees and costs, to the agent in
complaint.(1) The Administrative Judge shall determine if a finding of individual accordance with § 1614.501.
shall furnish the agent and the discrimination is warranted and, if so,
shall recommend appropriate relief. (2) When class-wide discrimination is
representative of the agency a copy of not found, but-it is found-that the class
all materials obtained concerning the (3) The Administrative Judge shall
notify the agent of the date on which the agent is a victim of discrimination, the
complaint and provide opportunity for report of findings and recommendations remedial provisions of § 1614.501 shall
the agent to discuss materials with the was forwarded to the agency. apply.
agency representative and attempt (j) Agency decision. (1) Within 60 (3) When discrimination is found in
resolution of the complaint. days of receipt of the report of findings the final agency decision and a class
(2) The complaint may be resolved by and recommendations issued under member believes that he or she is
agreement of the agency and the agent § 1614.204(h), the agency shall issue a entitled to individual relief, the class
at any time as long as the agreement is decision to accept, reject, or modify the member may file a written claim with
fair and reasonable. findings and recommendations of the the head of the agency or its EEO
(3) If the complaint is resolved, the Administrative Judge. Director within 30 days of notification
terms of the resolution shall be reduced (2) The decision of the agency shall be by the agency of its decision. The claim
to writing and signed by the agent and in writing and shall be transmitted to must include a specific, detailed
the agency. the agent along with a copy of the report showing that the claimant is a class
(4) Notice of the resolution shall be of findings and recommendations of the member who was affected by a
given to all class members in the same Administrative Judge. personnel action or matter resulting
manner as notification of the acceptance (3) When the agency's decision is to from the discriminatory policy or
of the class complaint and shall state reject or modify the findings and practice, and that this discriminatory
the terms of corrective action, if any, to recommendations of the Administrative action took place within the period of
be granted by the agency. A resolution Judge, the decision shall contain specific time for which the agency found class-
shall bind all members of the class. reasons for the agency's action. wide discrimination in its decision. The
Within 30 days of the date of the notice (4) If the agency has not issued a period of time for which the agency
of resolution, any member of the class decision within 60 days of its receipt of finds class-wide discrimination shall
may petition the EEO Director to vacate the Administrative Judge's report of begin not more than 30 days prior to the
the resolution because it benefits only findings and recommendations, those agent's initial contact with the
the class agent or is otherwise not fair findings and recommendations shall Counselor and shall end not laer than
and reasonable. Such a petition will be become the final agency decision. The the date when the agency eliminates the
processed in accordance with agency shall transmit the final agency policy or practice found to be
§ 1614.204(d) and if the Administrative decision to the agent within five days of discriminatory in the final agency
Judge finds that the resolution does not the expiration of the 60-day period. decision. The agency shall issue a final
comply with § 1614.204(g)(2), he or she (5) The decision of the agency shall decision on each such claim within 90
shall recommend that the resolution be require any remedial action authorized days of filing. Such decision must
vacated and that the original class agent by law determined to be necessary or include a notice of the right to file an
be replaced by the petitioner or some desirable to resolve the issue of appeal or a civil action in accordance
other class member who is eligible to be discrimination. with subpart D of this part and the
the class agent during further processing (6) A final agency decision on a class applicable time limits.
of the class complaint. Agency complaint shall, subject to the
acceptance of a petition under this provisions of § 1614.204(g)(4) and Subpart C-Related Processes
paragraph vacates any agreement subpart D, be binding on all members of
between the former class agent and the the class and the agency. § 1614.301 Relationship to negotiated
agency. An agency decision on such a (7) The final agency decision shall grievance procedure.
petition shall inform the former class inform the agent of the right to appeal or (a) When a person is employed by an
agent or the petitioner of the right to, to file a civil action in accordance with agency subject to 5 U.S.C. 7121(d) and is
appeal the adverse decision to the subpart D and of the applicable time covered by a collective bargaining
Office of Review and Appeals and limits. agreement that permits allegations of
45758 Federal Register / Vol. 54, No. 209 ,/ Tuesday, October 31, 1989 / Proposed Rules
discrimination to be raised in a appealed to the Merit Systems Any such mixed case complaint filed
negotiated grievance procedure, a Protection Board (MSPB). The complaint after an appeal has been filed on the
person wishing to file a complaint or a may contain only an allegation of same matter shall be rejected without
grievance on a matter of alleged employment discrimination or it may affecting the complainant's right to raise
employment discrimination must elect to contain additional allegations that the the discrimination issue in the MSPB
raise the matter under either part 1614 or MSPB has jurisdiction to address. process and the complainant's right to
the negotiated grievance procedure, but (2) Mixed case appeals.A mixed case petition the EEOC to review MSPB's
not both. An election to proceed under appeal is an appeal filed with the MSPB decision on the discrimination allegation
this part is indicated only by the filing of that alleges that the appealable agency as provided in § 1614.303. The notice of
a written complaint; use of the pre- action was effected, in whole or in part, final action rejecting such a complaint
complaint process as described in because of discrimination on the basis shall advise the complainant of the right
§ 1614.105 does not constitute an to petition the EEOC to review the
blection for purposes of this section. An of race, color, religion, sex, national
origin, handicap, age or retaliation. MSPB's final decision on the
aggrieved employee who files a discrimination issue. An agency
complaint under this part may not (b) Election. An aggrieved person may
thereafter file a grievance on the same initially file a mixed case complaint decision to hold a mixed case complaint
with an agency pursuant to this part or in abeyance is not appealable to EEOC.
matter. An election to proceed under a An agency decision to cancel or reject a
negotiated grievance procedure is an appeal on the same matter with the
indicated by the filing of a timely MSPB pursuant to 5 CFR 1201.151, but mixed case complaint is not appealable
written grievance. An aggrieved not both. An agency shall inform every to the Commission except where
employee who files a grievance with an employee who is the subject of an action § 1614.107(d) has been applied to a non-
agency whose negotiated agreement that is appealable to the MSPB and who mixed case matter.
permits the acceptance of grievances has raised the issue of discrimination, (d) Procedures for agency processing
which allege discrimination may not either orally or in writing, during the of mixed case complaints. When a
thereafter file a complaint on the same processing of the action of the right to complainant elects to proceed initially
matter under part 1614 irrespective of file either a mixed case complaint with under this part rather than with the
whether the grievance has raised an the agency or to file a mixed case appeal MSPB, the procedures set forth in
issue of discrimination. Any such with the MSPB. The person shall be subpart A shall govern the processing of
complaint filed after a grievance has advised that he or she may not initially the mixed case complaint with the
been filed on the same matter shall be file both a mixed case complaint and an following exceptions:
rejected without prejudice to the appeal on the same matter and that (1) At the time the agency advises a
complainant's right to proceed through whichever is filed first shall be complainant of the acceptance Of a
the negotiated grievance procedure considered an election to proceed in that mixed case complaint, it shall also
including the right to appeal to the forum. If a person files an appeal with advise the complainant that:
Commission from a final decision as the MSPB that is dismissed as untimely, (i) If a notice of final action is not
provided in subpart D of this part. The he or she may, subject to § 1614.107, be issued within 120 days of the date of
notice of final action rejecting such a able to file a mixed case complaint with filing of the mixed case complaint, .the
complaint shall advise the complainant the agency. complainant may appeal the matter to
of the right to appeal the final grievance (c) Cancellationor rejection. An the MSPB at any time thereafter, as
decision to the Commission. agency decision to cancel or reject a specified at 5 CFR 1201.154(a) or may
(b) When a person is not covered by a mixed case complaint on the basis of the file a civil action as specified at
collective bargaining agreement that complainant's prior election of the § 1614.310(g), but not both, and
permits allegations of discrimination to MSPB procedures shall be made as
be raised in a negotiated grievance (ii) If the complainant is dissatisfied
procedure, allegations of discrimination follows: with the agency's notice of final action
shall be processed as complaints under (1) Where the agency does not dispute on the mixed case complaint, the
this part. the MSPB's jurisdiction over the appeal complainant may 'appeal the matter to
(c) When a person is employed by an on the same matter, it shall cancel or the MSPB (not EEOC) within 20 days of
agency not subject to 5 U.S.C. 7121(d) reject the mixed case complaint receipt of the agency's notice of final
and is covered by a negotiated pursuant to § 1614.107(d). action;
grievance procedure, allegations of (2) Where the agency disputes the (2) At the time that the agency issues
discrimination shall be processed as MSPB's jurisdiction over the appeal on its notice of final action on a mixed case
complaints under this part, except that the same matter, it shall hold the mixed complaint, the agency shall advise the
the time limits for processing the case complaint in abeyance until the. complainant of the right to appeal the
complaint contained in § 1614.106 and MSPB's Administrative Judge rules on matter to the MSPB (not EEOC) within
for appeal to the Commission contained the jurisdictional issue. During this 20 days of receipt and of the right to file
in § 1614.402 shall be held in abeyance period of time, all time limitations for a civil action as provided at
during processing of a grievance processing or filing under this part and § 1614.310(a).
covering the same matter as the the statutes referenced in § 1614.103(a)
complaint. will be tolled. If the MSPB's § 1614.303 Petitions to the EEOC from
Administrative Judge finds that MSPB MSPB decisions on mixed case appeals and
§ 1614.302 Mixed case complaints. has jurisdiction over the matter, the complaints.
(a] Definitions.(1) Mixed case agency shall cancel or reject the mixed (a) Who may file. Individuals who
complaint. A mixed case complaint is a case complaint pursuant to have received a final decision from the
complaint of employment discrimination § 1614.107(d). If the MSPB's MSPB on a mixed case appeal or on the
filed with a federal agency based on Administrative Judge finds that MSPB appeal 6f a notice of final action on a
race, color, religion, sex, national origin, does not have jurisdiction over the mixed case complaint.under 5 CFR
age, handicap or retaliation related to or matter, the agency shall recommence 1201.151 et seq. and 5 U.S.C. 7702 may
stemming from an action that can be processing of the mixed case complaint. petition EEOC to consider that decision.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45759
The EEOC will not accept appeals from the Commission shall within 60 days (2) One member of the MSPB
MSPB dismissals without prejudice. after the date of its determination, designated by the Chairman of the
(b) Method of filing. Filing shall be consider the entire record of the Board each time a panel is convened;
made by certified or registered mail . proceedings of the MSPB and on the (3) One member of the EEOC
return receipt requested to the Office of basis of the evidentiary record before designated by the Chairman of the
Review and Appeals, Equal Employment the Board as supplemented in Commission each time a panel is
Opportunity Commission, 1801 L Street, accordance with paragraph (d) of this convened.
NW., Washington, DC 20507. section, either: (b) Designation of Special Panel
(c) Time to file. A petition must be (1) Concur in the decision of the member.
filed with the Commission either within MSPB; or (1) Time of designation. Within five
30 days after receipt of the final decision (2) Issue in writing a decision that days of certification of the case to the
of the MSPB or within 30 days after the differs from the decision of the MSPB to Special Panel, the Chairman of the
decision of a MSPB field office becomes the extent that the Commission finds MSPB and the Chairman of the EEOC
final. that, as a matter of law: shall each designate one member from
(d) Service. The petition for review (i) The decision of the MSPB their respective agencies to serve on the
must be served upon all individuals and constitutes an incorrect interpretation of Special Panel.
parties on the MSPB's service list and* any provision of any law, rule, (2) Manner of designation. Letters of
the petitioner must certify as to the date
regulation, or policy directive referred to designation shall be served on the
and method of service. Chairman of the Special Panel and the
in 5 U.S.C. 7702(a)(1)(B), or
(ii) The decision involving such parties to the appeal.
§ 1614.304 Contents of petition.
(a) Form. Petitions must be written or provision is not supported by the § 1614.308 Practices and procedures of
typed, but may use any format including evidence in the record as a whole. the special panel.
a simple letter format. Petitioners are (d) In considering any decision of the (a) Scope. The rules in this subpart
encouraged to use EEOC Form 573, MSPB, the Commission, pursuant to 5 apply to proceedings before the Special
Notice of Appeal/Petition. U.S.C. 7702(b)(4), may refer the case to Panel.
(b) Contents.Petitions must contain the MSPB for the taking of additional (b) Suspension of rules. In the interest
the following: evidence within such period as permits .of expediting a decision, odr for good
(1) The name and address of the the Commission to make a decision cause shown, the Chairman of the
petitioner; within the 60-day period prescribed or Special Panel may, except where the
(2) The name and address of the provide on its own for the taking of rule is required by statute, suspend
petitioner's representative, if any; additional evidence to the extent the these rules on application of a party, or
(3) A statement of the reasons why Commission considers it necessary to on his or her own motion, and may order
the decision of the MSPB is alleged to be supplement the record. proceedings in accordance with his or
incorrect, in whole or in part, with (e) Where the EEOC has differed with her direction.
regard to issues of discrimination based the decision of the MSPB under (c) Time limit for proceedings.
on race, color, religion, sex, national § 1614.305(c)(2), the Commission shall Pursuant to 5 U.S.C. 7702(d)(2)(A), the
origin, age, handicap or retaliation; refer the matter to the MSPB. Special Panel shall issue a decision
(4) A copy of the decision issued by § 1614.306 Referral of case to special within *5days after a matter has been
the MSPB; and certified to it.
(5) The signature of the petitioner and panel;
(d) Administrative assistanceto
representative, if any. If the MSPB reaffirms its decision SpecialPanel.-(1) The MSPB and the
§ 1614.305 Consideration procedures. under 5 CFR 1201.162(a)(2) with or EEOC shall provide the Panel with such
(a)
( Once a petition is filed, the
without modification, the matter shall be reasonable and necessary
immediately certified to the Special administrative resources as determined
Commission will examine it and Panel established pursuant to 5 U.S.C.
determine whether the Commission will by the Chairman of the Special Panel.
7702(d). Upon certification, the Board (2) Assistance shall include, but is not
consider the decision of the MSPB. An shall, within five days (excluding
agency may oppose the petition, either limited to, processing vouchers for pay
Saturdays, Sundays, and Federal and travel expenses.
on the basis that the Commission should holidays), transmit to the Chairman of
not consider the MSPB's decision or that (3) The Board and the EEOC shall be
the Special Panel and to the Chairman responsible for all administrative costs
the Commission should concur in the of the EEOC the administrative record in incurred by the Special Panel and, to the
MSPB's decision, by filing any such the proceeding including-
argument with the Office of Review and extent practicable, shall equally divide
(a) The factual record compiled under the costs of providing such
Appeals and serving a copy on the this section, which shall include a
petitioner within 15 days of the date of administrative assistance. The
transcript of any hearing(s); Chairman of the Special Panel shall
service of the petition.
(b) The Commission shall determine (b) The decisions issued by the Board resolve the manner in which costs are
whether to consider the decision of the and the Commission under 5 U.S.C. 7702; -divided in the event of a disagreement
MSPB within 30 days after the and between the Board and the EEOC.
Commission's Office of Review and (c) A transcript of oral arguments (e) Maintenanceof the official record.
Appeals receives the petition. A made, or legal brief(s) filed, before the The Board shall maintain the official
determination of the Commission not to Board and the Commission. record. The Board shall transmit two
consider the decision shall not be used copies of each submission filed to each
§ 1614.307 Organization of special panel. member of the Special Panel in an
as evidence with respect to any issue of
discrimination in any judicial (a) The Special Panel is composed of: expeditious manner.
proceeding concerning that issue. (1) A Chairman appointed by the (f) Filingand service of pleadings.-
.(c) If the Commission makes a President with the advice and consent of (1) The parties shall file the original and
determination to consider the decision, the Senate, and whose term is 6 years; six copies of all submissions with the
45760 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / proposed Rules
Clerk, Merit Systems Protection Board, seq. or 29 CFR 1614.302 et seq. is (2) Of the arbitrator on the grievance:
1120 Vermont Avenue, NW., authorized by 5 U.S.C. 7702 to file a civil or
Washington, DC 20419. One copy of action in an appropriate United States (3) Of the Federal Labor Relations
each submission shall be served on the District Court: Authority (FLRA) on exceptions to the
other parties. (a) Within 30 days of receipt of notice arbitrator's award. A grievant may not
(2) A certificate of service specifying of final action issued by an agency on a appeal under this part, however, when
how and when service was made must complaint unless an appeal is filed with the matter initially raised in the
accompany all submissions of the the MSPB;-or negotiated grievance procedure is still
parties. (b) Within 30 days of receipt of notice ongoing in that process, is in arbitration,
(3) Service may be by mail or by of the final decision or action taken by is before the FLRA or is appealable to
personal delivery during normal the MSPB if the individual does not file the MSPB. Any appeal prematurely filed
business hours (8:30 a.m.-5:00 p.m.). Due a petition for consideration with the in such circumstances shall be
to the short statutory time limit, parties EEOC; or dismissed without prejudice. In addition,
are required to file their submissions by (c) Within 30 days of receipt of notice a grievant may not appeal under this
overnight Express Mail, provided by the that the Commission has determined not subsection if 5 U.S.C. 7121(d) is
U.S. Postal Service, should they file by to consider the decision of the MSPB; or inapplicable to the involved agency.
mail. (d) Within 30 days of receipt of notice (d) A complainant, agent or individual
(4) The date of filing shall be that the Commission concurs with the class claimant may appeal to the
determined by the date of mailing as decision of the MSPB; or Commission an agency's alleged
indicated by the order date for Express (e) If the Commission issues a noncompliance with a settlement
Mail. If the filing is by personal delivery, decision different from the decision of agreement, notice of final action or final
it shall be considered filed on that date the MSPB, within 30 days of receipt of agency decision in accordance with
it is received in the office of the Clerk, notice that the MSPB concurs in and § 1614.505.
MSPB. adopts in whole the decision of the
Commission; or § 1614.402 Time for appeals to the
(g) Briefs and responsive pleadings.If
the parties wish to submit written (f) If the MSPB does not concur with commission.
argument, briefs shall be filed with the the decision of the Commission and Except for mixed case complaints and
Special Panel within 15 days from the reaffirms its initial decision or reaffirms class complaints, any notice of final
date of the Board's certification order. its initial decision with a revision, action may be appealed to the
Due to the short statutory time limit within 30 days of the receipt of notice of Commission within 30 days of the
responsive pleadings will not ordinarily the decision of the Special Panel; or complainant's receipt of the notice.
be permitted. (g) After 120 days from the date of Except for complaints to which
(h) Oral argument.The parties have filing a formal complaint if there is no § 1614.301(c) applies, any complaint may
the right to oral argument if desired. final action or appeal to the MSPB; or be appealed after 180 days from the
Parties wishing to exercise this right (h) After 120 days from the date of filing of the written complaint or. after
shall so indicate at the time of filing filing an appeal with the MSPB if the 180 days plus any period of extension
their brief, or if no brief is filed, within MSPB has not yet made a decision; or agreed to under § 1614.106(e), if the
15 days from the date of the Board's (i) After 180 days from the date of agency has not issued a notice of final
certification order. Upon receipt of a filing a petition for consideration with action. Anv complaint to which
request for argument, the Chairman of Commission if there is no decision by § 1614.301(c) applies may be appealed
the Special Panel shall determine the the Commission, reconsideration after 180 days after the grievance
time and place for argument and the decision by the MSPB or decision by the decision becomes final if the agency
time to be allowed each side, and shall Special Panel. has not issued a notice of final action.
so notify the parties. Any grievance decision may be
(i) Post-argumentsubmissions. Due to Subpart D-Appeals and Civil Actions
appealed within 30 days of receipt of a
the short statutory time limit, no post- § 1614.401 Appeals to the Commission. - decision referred to in § 1614.401(c). In
argument submissions will be permitted the case of class complaints, any final
(a) A complainant may appeal an
except by order of the Chairman of the agency's notice of final action or an agency decision received by an agent,
Special Panel. agency's failure to issue such a notice on petitioner or an individual claimant may
(j) Proceduralmatters. Any an individual complaint. be appealed to the Commission within
procedural matters not addressed in (b) An agent may appeal a final 30 days of its receipt.
these regulations shall be resolved by agency decision on a class complaint, a
written order of the Chairman of the § 1614.403 How to appeal.
Special Panel. class member may appeal a final agency
decision on a claim for individual relief (a) The complainant must file his or
§ 1614.309 Enforcement of special panel under a class complaint and both may her appeal and any supporting
decision. appeal a final agency decision on a statement or brief with the Director,
The Board shall, upon receipt of the petition pursuant to § 1614.204(g)(4). Office of Review and Appeals, Equal
decision of the Special Panel, order the (c) A grievant may appeal issues of Employment Opportunity Commission,
agency concerned to take any action employment discrimination raised in a 1801 L Street, NW., Washington, DC
appropriate to carry out the decision of negotiated grievance procedure where 20507. The agency shall include this
the Panel. The Board's regulations the agency's negotiated labor- address in any notice of appeal rights
regarding enforcement of a final order of management agreement permits such which it is required to give the
the Board shall apply. These regulations issues to be raised and the individual complainant under this part. The
elected under 5 U.S.C. 7121(d) to raise complainant should use EEOC Form 573,
are set out at 5 CFR Part 1201, subpart E. Notice of Appeal/Petition.
the matter in the negotiated grievance
§ 1614.310 Right to file a civil action. procedure. A grievant may appeal the (b] The complainant shall furnish a
An individual who has a complaint final decision: copy of the appeal and any supporting
processed pursuant to 5 CFR 1201.151 et (1) Of the agency on the grievance; statement or brief to the agency's EEO
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Pioposed Rules 45761
I
Director (or whomever is designated by allegations of impropriety in the conduct respond fully and in timely fashion to
the agency in the notice of final action) of the investigation have been made that requests for documents, records,
at the same time that he or she files the could change the outcome of the case) comparative data, statistics, affidavits,
appeal with the Commission. In or he or she may send the appeal to one of or the attendance of witness(es), the
attached to the appeal, the complainant the Commission's field offices with Commission may, in appropriate
must certify that a copy of the appeal instructions on how to supplement the circumstnaces:
and any supporting statement or brief record, or may remand the complaint (i) Draw an averse inference that the
were furnished to the agency's EEO back to the agency to complete the requested information would have
Director or other designated official and investigation. reflected unfavorably on the party
state the date and method by which it (b) An agency's failure to develop an refusing to provide the requested
was furnished. adequate record may result in notice information;
(c) If a complainant does not file an being sent to an appropriate agency (ii) Consider the matters to which the
appeal within the time limits of this official or Congressional committee, or requested information pertains to be
subpart, the appeal will be untimely and other appropriate action. established in favor of the opposing
shall be rejected by the Commission. (c) If the EEOC Chairman or his or her party;
(d) The Agency file and any agency designee determines that the complaint (iii) Exclude other evidence offered by
statement or brief in opposition to the requires further investigation by EEOC, the party failing to produce the
appeal must be submitted to the the field office shall assigne an requested information;
Commission within 30 days of the date investigator to supplement the record.
(iv) Issue a decision in favor of the
on which the appeal was served on the The Commission's investigator shall
opposing party; or
agency. A copy of the agency's submit a report of the investigation to
(v) Take such other actions as it
opposition and, if not already furnished, the Office of Review and Appeals.
(d) If the EEOC Chairman or his or her deems appropriate.
the agency file, must be served on the
complainant at the same time. designee remands the complaint back to (g) Any supplementation of the record
the agency to complete the investigation, will be conducted by Commission
§ 1614.404 Appellate procedure. he or she shall designate a period of employees with appropriate security
The EEOC Chairman or his or her time between 30 and 90 days within clearances when necessary except
designee shall review the record and which the agency must complete the where the Commission finds it
shall determine if the record requires investigation and return the record to appropriate to delegate this
supplementation. If the record requires EEOC. If the agency fails to return the responsibility to an Administrative
supplementation, EEOC may complete record to the EEOC within the Judge, complaints examiner or
supplement the record by its own fact designated time period without investigator from another agency that is
finding or may remand the complaint adequate explanation, such failure may, not a party to the complaint. When the
back to the agency for further in appropriate circumstances, cause the Commission delegates such
investigation. Once EEOC determines EEOC: responsibilities, it will supply the agency
the record is complete, it will notify the (1) To draw an adverse inference that with the name of an Administrative
parties and the complainant may'then the completed record would have Judge, a complaints examiner or
request a hearing. After the hearing, or reflected unfavorably on the agency; investigator from another agency with
after the time to request a hearing (2) To consider the matters to which appropriate security clearance who has
expires, the Commission shall issue a the further investigation pertains to be been certified by the Commission as
written decision on the appeal setting established in favor of the complainant; qualified to exercise the delegated
forth the reasons for its decision. (3) To exclude other evidence offered responsibility.
by the agency;
§ 1614.405 Supplementing the record on § 1614.406 Hearings.
(4) To take such other actions as
appeal. deemed appropriate. . (a) When EEOC determines the
The EEOC Chairman or his or her (e) When the Commission investigation is complete, the Chairman
designee may supplement the record by sipplements the record by means of or his or her designee shall notify the
an exchange of letters or memoranda, additional investigation, the agency parties that the investigation is complete
investigation, fact finding conference, shall reimburse the Commission in and where appropriate shall transmit
remand to the agency or other accordance with instructions contained copies of any supplemental record to the
procedures. in the Commission's Management parties. At that time, the Chairman or
(a) Where the EEOC Chairman or his Directives. his or her designee shall notify the
or her designee determines that the (f) The following procedures apply complainant that he or she may request
agency record is inadequate (i.e., the when the Commission supplements the a hearing. The complainant must notify
agency, without a reasonable record: the EEOC in writing within 15 calendar
explanation, did not investigate an issue (1) The complainant, the agency, and days of the receipt of the notice that he
or matter raised by the complaint, the any employee of a federal agency shall or she desires a hearing.
investigation of which is necessary for a produce such documentary and (b) Conduct of hearing. Agencies shall
proper determination or which could testimonial evidence as the Commission provide for the attendance at a hearing
change the outcome of the case; material deems necessary. of all employees approved as witnesses
evidence is available but was not (2) Commission employees are by a Commission Administrative Judge.
obtained, there is no adequate authorized to administer oaths. Attendance at hearings will be limited
explanation as to why it was not Statements of witnesses shall be made to persons determined by the
obtained and such evidence is either under oath or affirmation or, Administrative Judge to have a direct
necessary for a proper determination or alternatively, be made by written connection with the complaint. Hearings
could change the outcome of the case; statement under penalty or perjury. are part of the investigative process and
new and material evidence has been (3) When the complainant, or the are thus closed to the public. The
discovered that could change the agency against which a complaint is Administrative Judge shall have the
outcome of the case; or substantial filed, or its employees in bad faith fail to power to regulate the conduct of a
45762 Federal Register / Vol. 54, No. 209 1 Tuesday, October 31, 1989 / Proposed Rules
hearing, limit the number of witnesses (d) Recommended findings and notwithstanding any other provisions of
whose testimony would be repetitious, conclusions.Except as provided in this part.
and exclude any person from the § 1614.406(c), the Administrative Judge (b) A party may request reopening or
hearing for contumacious conduct or shall issue recommended findings and reconsideration provided that such
misbehavior that obstructs the hearing. conclusions on the merits of the request is made within 30 days of
The Administrative Judge shall receive complaint, including recommended receipt of a decision of the Commission
into evidence information or documents remedial action, where appropriate, or within 20 days of receipt of another
relevant to the complaint. Rules of with regard to the matter that gave rise party's timely request to reopen. Such
evidence shall not be applied strictly, to the complaint. The Administrative request, along with any supporting
but the Administrative Judge shall Judge shall send copies of the statement or brief, shall be submitted to
exclude irrelevant or repetitious recommended findings and conclusions the Office of Review and Appeals and to
evidence. The Administrative Judge or to the parties. The parties may, within all parties with proof of such
the Commission may refer to the 30 days of receipt of the recommended submission. All other parties shall have
Disciplinary Committee of the findings and conclusions, submit 20 days from the date of service in
appropriate Bar Association any statements concerning the which to submit to all other parties, with
attorney who refuses to follow the recommended findings and conclusions proof of submission, any statement or
orders of an Administrative Judge, or to the Office of Review and Appeals.
who otherwise engages in improper brief in opposition to the request.
conduct. The procedures contained in § 1614.407 Decisions on appeals. (c) The request or the statement or
§ 1614.405(f) shall apply to the conduct (a) Where the appeal has not been brief in support of the request shall
of hearings. settled and after receipt of the contain arguments or evidence which
(c) Recommended findings and statements of the parties regarding the tend to establish that:
conclusions without hearing.(1) If a recommended findings and conclusions (1) New and material evidence is
party believes that some or all material or upon expiration of the period for available that either was not readily
facts are not in genuine dispute and submitting statements, or if a available when the previous decision
there is no genuine issue as to complainant fails to request a hearing was issued or that explains evidence
credibility, the party may file a within 15 days of receiving notice that obtained by the Commission under
statement with the Administrative Judge the investigation is complete, the Office § 1614.405; or
prior to the hearing setting forth the fact of Review and Appeals on behalf of the (2) The previous decision involved an
or facts and referring to the parts of the
record Commission shall issue a decision that erroneous interpretation of law,
relied on to support the specifically sets forth findings for each regulation or material fact, or
statement. The statement must issue decided on the merits and reasons misapplication of established policy; or
demonstrate that there is no genuine for each issue that is cancelled. The (3) The decision is of such exceptional
issue as to any material fact asserted Commission shall cancel appeals or nature as to have effects beyond the
not to be in dispute and cannot be based portions of appeals in accordance with actual case at hand.
on informaiton not previously made § 1614.107 and shall remand matters to (d) A decision on a request to reopen
available during the investigation unless the agency when it reverses an agency's by either party is final and there is no
the party demonstrates that the rejection or cancellation of a complaint.
The decision shall be based on the further right by either party to request
information was not available during the reopening unless the decision remanded
investigation. The statement must also preponderance of the evidence. If the
decision contains a finding of the complaint to the agency for further
demonstrate that there is no genuine processing.
issue as to credibility. discrimination or retaliation,
(2) A party opposing a request for appropriate remedy(ies) shall be § 1614.409 Civil action: Title VIl and
recommended findings and conclusions included and, where appropriate, the Rehabilitation AcL
without a hearing may refer to the entitlement to attorney's fees or costs A complainant who has filed an
record in the case to rebut the statement shall be indicated. The decision shall individual complaint, an agent who has
that a fact is not in dispute or may file reflect the date of its issuance, inform
the complainant of his or her civil action filed a class complaint or a claimant
an affidavit stating that the party who has filed a claim for individual
cannot, for reasons stated, present facts rights, and be transmitted to the relief is authorized under Title VII and
to oppose the request. After considering complainant and the agency by certified
mail, return receipt requested. A copy of the Rehabilitation Act to file a civil
the submissions, the Administrative action in an appropriate United States
Judge may refuse the request for the appeal file will only be provided to
the complainant and to the agency upon District Court:
recommended findings and conclusions
without a hearing, order that discovery request. (a) Within 30 days of receipt of the
be permitted on the fact or facts (b) A decision issued under this agency's notice of final action on an
involved, limit the hearing to the issues section is final within the meaning of individual complaint or final agency
remaining in dispute, or make such other §§ 1614.408 and 1614.409 unless: decision on a class complaint if no
ruling as is appropriate. appeal has been filed;
(1) Either party files a timely request
(3) If the Administrative Judge to reopen pursuant to § 1614.407; or (b) After 180 days from the date of
determines that some or all facts are not filing a complaint if no appeal has been
(2) the Commission on its own motion
in genuine dispute, based on a statement filed;
reopens the case.
by a party or upon his or her own (c) Within 30 days after receipt of the
initiative, the Administrative Judge may, § 1614.408 Reopening ana Commission's final decision on an
after giving notice to the parties and reconsideration. appeal; or
providing them an opportunity to (a) Within a reasonable period of (d) After 180 days from the date of
respond in writing within 15 calendar time, the Commission may, in its filing an appeal with the Commission if
days, issue recommended findings and discretion, reopen and reconsider any there has been no final decision by the
conclusions without holding a hearing. decision of the Commission Commission.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45763
§ 1614.410 Civil action: Age Discrimination court of competent jurisdiction within equivalent position unless clear and
In Employment Act. two years or, if the violation is willful, convincing evidence indicates that the
-(a A complainant who has filed an three years of the date of the alleged applicant would not have been selected
individual complaint, an agent who has violation of the Equal Pay Act even absent the discrimination.The
filed a class complaint or claimant who regardless of whether he or she pursued offer shall be made in writing. The
has filed a claim for individual relief and any administrative complaint individual shall have 15 days from
who has exhausted administrative processing. Recovery of back wages is receipt of the offer within which to
remedies may file a civil action in an limited to two years prior to the date of accept or decline the offer. Failure to
appropriate United States District Court: filing suit, or to three years if the accept the offer within the 15-day period
(1) Within 30 days of receipt of the violation is deemed willful; liquidated will be considered a declination of the
agency's notice of final action on an damages in an equal amount may also offer, unless the individual can show
individual complaint or final agency be awarded. The filing of a complaint or that circumstances beyond his or her
decision on a class complaint if no appeal under this part shall not toll the control prevented a response within the
appeal has been filed; time for filing a civil action. time limit. If the offer is accepted,
(2] After 180 days from the date of appointment shall be retroactive to the
filing a complaint if no appeal has been § 1614.412 Effect of filing civil action.
date the applicant would have been
filed; Filing a civil action under § 1614.408 hired. Back pay, computed in the
(3] Within 30 days after receipt of the through § 1614.410 shall terminate manner prescribed by 5 CFR 550.805,
Commission's final decision on an Commission processing of the appeal. If shall be awarded from the date the
appeal; or private suit is filed subsequent to the individual would have entered on duty
(4) After 180 days from the date of Commission's initiation of an until the date the individual actually
filing an appeal with the Commission if investigation, the parties are requested
enters on duty unless clear and
there has been no final decision by the to notify the Commission in writing.
convincing evidence indicates that the
Commission. Subpart E--Remedies and Corrective applicant would not have been selected
(b) When an individual has filed an even absent discrimination. The back
Action
administrative complaint alleging age pay computation, however, shall not
discrimination, administrative remedies § 1614.501 Remedial actions. include any.amount as interest on back
will be considered to be exhausted: (a) When an agency, or the pay. The individual shall be deemed to
(1) 180 days after the filing of an Commission, in an individual case of have performed service for the agency
individual complaint if the agency has discrimination, finds that an applicant during this period for all purposes
not issued a notice of final action and or an employee has been discriminated except for meeting service requirements
the individual has not filed an appeal or against, the agency shall provide full for completion of a required
180 days after the filing of a class relief, as explained in appendix A of this probationary or trial period. If the offer
complaint if the agency has not issued a part, which shall include the following of employment is declined, the agency
final agency decision; elements in appropriate circumstances: shall award the individual a sum equal
(2) After the issuance of notice of final (1) Notification to all employees of the to the back pay he or she would have
action on an individual complaint or agency in the affected facility of their receive, computed in the manner
final agency decision on a class rights to be free of unlawful prescribed by 5 CFR 550.805, from the
complaint if the individual has not filed discrimination and assurance that the date he or she would have been
an appeal; or particular types of discrimination found appointed until the date the offer was
(3) After the issuance of a final will not recur; made, subject to the limitation of
decision by the Commission on an (2) Commitment that corrective, paragraph (b)(4) of this section. The
appeal or 180 days after the filing of an curative or preventive action will be
back pay computation shall not include
appeal if the Commission has not issued taken, or measures adopted, to ensure
any amount as interest on back pay. The
a final decision. that violations of the law similar to agency shall inform the applicant, in its
(c)When a person has not filed an those found will not recur,
offer of employment, of the right to this
administrative complaint alleging age (3) An unconditional offer to each
award in the event the offer is declined.
discrimination, the person may file a identified victim of discrimination of
placement in the position the person (2) When an agency, or the
civil action not less than 30 days after
giving the Commission notice of intent would have occupied but for the Commission, finds that dliscrimination
to file such action. Such notice shall be discrimination suffered by that person, existed at the time the applicant was
filed with EEOC, Federal Sector or a substantially equivalent position; considered for employment but also
(4) Payment to each identified victim finds by clear and convincing evidence
Programs, 1801 L Street NW.,
Washington, DC 20507, within 180 days of discrimination on a make whole basis that the applicant would not have been
after the alleged unlawful practice for any loss of earnings the person may hired even absent discrimination, the
occurred. The civil action must be filed have suffered as a result of the agency shall nevertheless take all steps
in an appropriate United States District discrimination; and necessary to eliminate the
Court within two years or, if willful, (5) Commitment that the agency shall discriminatory practice and ensure it
three years of the date of the alleged ceas6 from engaging in the specific does not recur.
violation of the ADEA. Recovery of back unlawful employment practice found in (3] This paragraph shall be cited as
wages in such a lawsuit is limited to two the case. the authority under which the above-
years prior to the date of filing suit, or to (b) Remedial action involving an described appointments or awards of
three years if the violation is deemed applicant. (1) When an agency, or the back pay shall be made.
willful. Commission, finds that an applicant for (4) Back pay under this paragraph for
employment has been discriminated complaints under Title VII or the
§ 1614.411 Civil action: Equal Pay Act. against, the agency shall offer the Rehabilitation Act may not extend from
A complainant is authorized under applicant the position for which the a date earlier than two years prior to the
section 16(b) of the Fair Labor applicant applied or, if juStified by the date on which the complaint was
Standards Act to file a civil action in a circumstances, a substantially initially filed by the applicant.
45764 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
(c) Remedial action involving an any employee of the Federal other employment due to acceptance of
employee. When an agency, or the Government. the case, the customary fee, whether the
Commission, finds that an employee of (iv) Attorney's fees shall be paid only fee is fixed or contingent, time
the agency Was discriminated against, for services performed after the filing of limitations imposed by the client or the
the agency shall take remedial actions the complaint required in § 1614.104. and circumstances, the amount involed and
which shall include one or more of the after the complainant has notified the the results obtained, the experience,
following, but need not be limited to agency that he or she is represented by reputation, and ability of the attorney,
these actions: an attorney, except that fees are the undesirability of the case, the nature
(1) Retroactive promotion, with back allowable for a reasonable period of and length of the professional
pay computed in the manner prescribed time prior to the notification of relationship with the client, and the
by 5 CFR 550.805, unless clear and representation for any services awards in similar cases. Only-in cases
convincing evidence contained in the performed in reaching a determination of exceptional success should any of
record evidences that the employee to represent the Complainant. Written these factors be used to enhance an
would not have been promoted or submissions to the agency which are award computed by the formula set
employed at a higher grade, even absent signed by the representative shall be forth In paragraph (d)(2){i](A) of this
discrimination. The back pay deemed to constitute notice of section.
computation, however, shall not include representation. (ii) The costs that may be awarded
any amount as interest on back pay. The (2) Amount of awards.When the are those authorized by 28 U.S.C. 1920. to
back pay liability under Title VII or the agency or the Commission awards include:
Rehabilitation Act is limited to two attorney's fees or costs, the (A) Fees of the reporter for all or any
years prior to the date the complainant's attorney shall submit a of the stenographic transcript
discriminatiop complaint was filed. verified statement of costs and
necessarily obtained for use in the case:
(2) If clear and convincing evidence attorney's fees, as appropriate, to the
agency within 20 days of receipt of the (B) Fees and disburserhents for
indicates that, although discrimination
decision. A statement of attorney's fees printing and witnesses; and
existed at thb time selection for
promotion was made, the employee shall be accompanied by an affidavit (C) Fees for exemplification and
would not have been promoted even executedby the attorney of record copies of papers necessarily obtained
absent discrimination, the agency shall itemizing the' attorney's charges for legal for use in the case.
nevertheless eliminate any services and both the verified statement Witness fees shall be awarded in accordance
discriminatory practice and ensure it and the accompanying affidavit shall be with the provisions of 28 U.S.C. 1821, except
does not recur. made a part of the complaint file. The that no award shall be made for a federal
(3) Cancellation of an unwarranted employee who is in a duty status 'when made
amount of attorney's fees or costs to be available as a witness.
personnel action and restoration of the awarded the complainant shall be
employee. determined by agreement between the § 1614.502 Corrective action.
(4) Expunction from the agency's complainant, the complainant's (a) Corrective action ordered by the
records of any reference to or any representative and the agency. Such Office of Review and Appeals or the
record of an unwarranted disciplinary agreement shall immediately be reduced Commission is mandatory and binding
action that is not a personnel action. to writing. If the complainant, the on the agency except as provided in
(5) Full opportunity to participate in representative and the agency cannot § 1614.406(b). Failure to implement
the employee benefit denied (e.g., reach an agreement on the amount of ordered relief shall be subject to judicial
training, preferential work assignments, attorney's fees or costs within 20 days of enforcement as specified in
overtime scheduling). the agency's receipt of the verified § 1614.504(c).
(d) The agency has the burden of statement and accompanying affidavit,
proving by a preponderance of the (b) When the agency requests
the agency shall issue a decision
evidence that the complainant has failed reopening and when the case involves
determining the amount of attorney's
to mitigate his or her damages. removal, separation, or suspension
fees or costs due within 30 days of
(e) Attorney's fees or costs. (1) receipt of the statement and affidavit. continuing beyond the date of the
Awards of attorney's fees or costs. The The decision shall Include a notice of request to reopen, and when the
provisions of this paragraph relating to decision recommends retroactive
right to appeal to the EEOC along with
the award of attorney's fees or costs EEOC Form 573, Notice Of Appeal/ restoration, the agency shall comply
shall apply to allegations of Petition and shall include the specific with the decision only to the extent of
discrimination or retaliation prohibited reasons for determining the amount of ,the temporary or conditional restoration
by Title VII and the Rehabilitation Act. the award. of the employee to duty status in the
In a notice of final action or a decision, (i) The amount of attorney's fees shall position recommended by the
the agency or Commission may award be calculated in accordance with Commission, pending the outcome of the
the applicant or employee reasonable existing case law using the following agency request for reopening.
attorney's fees or costs incurred in the standards: (1) Service under the temporary or
processing of the complaint. (A) The starting point shall be the' conditional restoration provisions of this
(i) A finding of discrimination raises a number of hours reasonably expended paragraph shall be credited toward the
presumption of entitlement to an award multiplied by a reasonable hourly rate. completion of a probationary or trial
of attorney's fees. (B) This amount may be reduced or period, eligibility for a within-grade
(ii) Any award of attorney's fees or increased in consideration of the increase, or the completion of the
costs shall be paid by the agency. following factors, although ordinarily service requirement for career tenure, if
(iii) Attorney's fees are allowable only many of these factors are subsumed the Commission upholds its decision
for the services of members of the Bar within the calculation set forth above: after reopening the case or refuses to
and law clerks, paralegals or law the time and labor required, the novelty reopen.
students under the supervision of and difficulty of the questions, the skill (2) The agency shall notify the
members of the Bar, except that no requisite to perform the legal service Commission and the employee in
award is allowable for the services of properly, the attorney's preclusion from writing, at the same time it requests
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45765
reopening, that the remedial action it (b) Certificationto the Office of parties submit whatever additional
takes is temporary or conditional. Special Counsel. Where appropriate and information or documentation it deems
(c) When no request for reopening is pursuant to the terms of a memorandum necessary or may direct that an
filed within 30 days of receipt of the of agreement, the Commission may refer investigation or hearing on the matter be
decision, or-when a request to reopen is the matter to the Office of Special conducted. If the Commission
denied, the agency shall execute the Counsel for enforcement action. determines that the agency is not in
action ordered and there is no further (c) Notification to complainantof compliance and the noncompliance is
right to delay implementation of the completion of administrativeefforts. not attributable to acts or conduct of the
ordered relief. The corrective action Where the Commission has determined complainant, it may order such .
shall be completed not later than 60 that an agency is not complying with a compliance or it may order that the
days after the decision becomes final. prior decision, or where an agency has complaint be reinstated for further.
failed or refused to submit its report of processing from the point processing
§ 1614.503 Enforcement of final decisions. corrective action, the Commission shall ceased. Allegations that subsequent acts
(a) Petitionfor enforcement. A notify the complainant of the right to file of retaliation or discrimination violate a
complainant may petition the a cival action for enforcement of the
settlement agreement shall be processed-
Commission for enforcement of a decision pursuant to Title VII, the as separate complaints under § 1614.106
decision issued under the Commission's ADEA, the Equal Pay Act or the
or § 1614.204, as appropriate, rather than
appellate jurisdiction. The petition shall Rehabilitation Act and to seek judicial
review of the agency's refusal to under this section.
be submitted to the Office of Review
and Appeals. The petition shall implement corrective action pursuant to Subpart F-Matters of General
specifically set forth the reasons that the Administrative Procedure Act, 5
U.S.C. 701 et seq., and the mandamus Applicability
lead the complainant to believe that the
agency is not complying with the statute, 28 U.S.C. 1361, or to commence § 1614.601 EEO group statistics.
decision. de novo proceedings pursuant to the
appropriate statutes. (a) Each agency shall establish a
(b) Compliance. On behalf of the system to collect and maintain accurate
Commission, the Office of Review and § 1614.505 Compliance with settlement employment information on the race,
Appeals shall take all necessary action agreements and decisions. national origin, sex and handicap(s) of
to ascertain whether the agency is Any settlement agreement knowingly its employees.
implementing the decision of the and voluntarily agreed to by the parties, (b) Data on race, national origin and
Commission. If the agency is found not reached at any stage of the complaint sex shall be collected by voluntary self-
to be in compliance with the decision, process shall be binding on both identification. If an employee does not
efforts shall be undertaken to obtain, parties. A notice of final action or final voluntarily provide the requested
compliance. agency decision that has not been the information, the agency shall advise the
(c) Clarification.On behalf of the subject of an appeal, request to reopen, employee of the importance of the data
Commission, the Office of Review and or civil action shall be binding on the and of the agency's obligation to report
Appeals may, on its own motion or in agency. If the complainant believes that it. If the employee still refuses to
response to a petition for enforcement or the agency has failed to comply with the provide the information, the agency
in connection with a timely request to terms of a settlement agreement, notice must make a visual identification and
reopen, issue a clarification of a prior of final action, or final agency decision, inform the employee of the data it will
decision. A clarification cannot.change the complainant'shall notifiy the EEO be reporting. If an agency believes that
the result of a prior decision or enlarge Director, in writing, of the alleged information provided by an employee is
or diminish the relief ordered but may noncompliance within 30 days of when
inaccurate, the agency shall counsel the
further explain the meaning or intent of the complainant knew or should have employee about the solely statistical
the prior decision. known of the alleged noncompliance.
purpose for which the data is being
. (d) Referral to the Commission. The complainant may request that the
terms of the settlement agreement be collected, the need for accuracy, the
Where the Director, Office of Review agency's recognition of the sensitivity of
and Appeals, is unable to obtain specifically implemented or,
the information and the existence of
satisfactory comhpliance with the final alternatively, that the complainant be
reinstated for further processing from procedures to prevent its unauthorized
decision, the Director shall submit disclosure. If, after counseling, the
appropriate findings and the point processing ceased. The agency
shall resolve the matter and respond to employee declines to change the
recommendations for enforcement to the apparently inaccurate self-identification,
Commission, or, as directed by the the complainant, in writing. If the
agency has not responded to the the agency must accept it.
Commission, refer the matter to another
appropriate agency. complainant, in writing, or if the (c) The information collected under
complainant is not satisfied with the paragraph (b) of this section shall be
§ 1614.504 Enforcement action by the agency's attempt to resolve the matter, disclosed only in the form of gross
commission. the complainant may appeal to the' statistics. An agency shall not collect or
(a) Notice to show cause. The Commission for a determination as to mai*tain any information on the race,
Commission may issue a notice to the whether the agency has complied with national origin or sex of individual
head of any Federal agency that has the terms of the settlement agreement, employees except when an automated
failed to comply with a decision to show notice of final action or final agency data processing system is used in
cause why there is noncompliance. Such decision. The complainant may file such accordance with standards and
notice may request the head of the an appeal 35 days after service of the requirements prescribed by the
agency or a representative to appear allegations of noncompliance, but must Commission to insure individual privacy
'before the Commission or to respond to file an appeal within 30 days of receipt and the separation of that information
the notice in writing with adequate of an agency's determination. Prior to from personnel records.
evidence of compliance or with rendering its determination, the (d) Each system is subject to the
compelling reasons for non-compliance. Commission may request that the following controls: .
45766 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
(1)Only those categories of race and Commission and'shall include, but not represented, and advised by a
national origin prescribed by the be limited to: representative of complainant's choice.
Commission may be used; (1)Provision for the establishment of (b) If the complainant is an employee
(2) Only the specific procedures for training and education programs of the agency, he or she shall have a
the collection and maintenance of data designed to provide maximum reasonable amount of official time to
that are prescribed or approved by the opportunity for employees to advance so prepare the complaint if otherwise on
Commission may be used; as to perform at their highest potential; duty. If the complainant is an employee
(3)The Commission shall review the (2) Description of the qualifications, in of the agency and he designates another
operation of the agency system to insure terms of training and experience relating employee of the agency as his or her
adherence to Commission procedures to equal employment opportunity, of the representative, the representative shall
and requirements. An agency may make have reasonable amount of official time,
principal and operating officials
an exception to the prescribed concerned with administration of the if otherwise on duty, to prepare the
procedures and requirements only with agency's equal employment opportunity complaint. The agency is not obligated
the advance written approval of the to change work schedules, incur
program; and
Commission. overtime wages, or pay travel expenses
(e) The agency may use the data only (3) Description of the allocation of
in studies and analyses which personnel and resources proposed by to facilitate the choice of a specific
contribute affirmatively to achieving the the agency to carry out its equal representative or to allow the
objectives of the equal employment employment opportunity program. complainant and representative to
opportunity program. An agency shall confer. However, the complainant and
§ 1614.603 Voluntary settlement attempts. representative, if employed by the
not establish a quota for the
employment of persons on the basis of Each agency shall make reasonable agency and otherwise in a pay status,
race, color, religion, sex, or national efforts to voluntarily settle complaints of shall be on official time, regardless of
origin. discrimination as early as possible in, their tour of duty, when their presence is
(f) Data on handicaps shall also be and throughout, the administrative authorized or required by the agency or
collected by voluntary self- processing of complaints, including the the Commission during the investigation,
identification. If an employee does not precomplaint counseling stage. Any informal adjustment, or hearing on the
voluntarily provide the requested settlement reached shall be in writing complaint.
information, the agency shall advise the and signed by both parties and shall (c) In cases where the representation
employee of the importance of the data identify the allegations resolved. of a complainant or agency would
and of the agency's obligation to report conflict With the official or collateral
§ 1614.604 Filing and computation of time. duties of the representative, the
it. If an employee who has been
appointed pursuant to special (a) All time periods in this part that Commission or the agency may, after
appointment authority for hiring are stated in terms of days are calendar giving the representative an opportunity
individuals with handicaps still refuses days unless otherwise stated. to respond, disqualify the
to provide the requested information, (b) A document shall be deemed representative.
the agency must identify the employee's timely if it is delivered in person or (d) After the agency has received
handicap based upon the records postmarked before the expiration of the written notice of the designation of a
supporting the appointment. If any other applicable filing period, or, in the representative, all official
employee still refuses to provide the absence of a legible postmark, if it is correspondence shall be with the
requested information or provides received by mail within five days from representative with copies to the
information which the agency believes the expiration of the applicable filing complainant' and time frames for receipt
to be inaccurate, the agency should period. of materials by the complainant shall be
report the employee's handicap status (c) The agency or the Commission computed from the time of receipt by the
as unknown. shall extend any time limits in this part representative.
(g) An agency shall report to the when the individual shows that he or (e) The Complainant shall at all times
Commission on employment by race, she was not notified of the time limits be responsible for proceeding with the
national origin, sex and handicap in the and was not otherwise aware of them, complaint whether or not he or she has
form and at such times as the or that despite due diligence he or she designated a representative.
Commission may require. was prevented by circumstances beyond (f) Witnesses who are Federal
his or her control from submitting the employees, regardless of their tour of
§ 1614.602 Reports to the Commission. matter within the time limits, or for duty and regardless of whether they are'
(a) Each agency shall report to the other reasons considered sufficient by employed by the respondent agency or
Commission information concerning the agency or the Commission. some other Federal agency, shall be in a
precomplaint counseling and the status, (d) The first day counted shall be the duty status when their presence is
processing and disposition of complaints day after the event from which the time authorized or required by Commission
under this part at such times and in such period begins to run and the last day of or agency officials in connection with a
manner as the Commission prescribes. the period shall be included, unless it complaint.
(b) Each agency shall advise the falls on a Saturday, Sunday or Federal
Commission whenever it is served with § 1614.606 Joint processing and
holiday, in which case the period shall
a Federal court complaint based upon a be extended to include the next business consolidation of complaints.
complaint that has been appealed to the day. Complaints 'of discrimination filed by
Commission. two or more complainants consisting of
(c) Each agency shall submit annually § 1614.605 Representation and official substantially similar allegations of
for the review and approval of the time. discrimination or.relating to the same
Commission written national and (a) At any stage in the processing of a matter, or two or more complaints of
regional equal employment opportunity complaint, including the counseling discrimination from the same
plans of action. Plans shall be submitted stage under § 1614.105, the complainant complainant, may be consolidated by
in a format prescribed by the shall have the right to be accompanied, the agency or the Commission for joint
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45767
processing after appropriate notification oral testimony at the hearing must be II. Discussion of Amendment
to the parties. received on or before 4:00 p.m. on By letter dated September 18, 1989
November 15, 1989. (Administrative Record No. KY-916),
§ 1614.607 Severance of Issues.
An agency or the Commission may ADDRESSES: Written comments and Kentucky submitted proposed
sever any issue(s) from a complaint at requests for a hearing should be mailed regulations to revise 405 KAR 10:200, the
any time for separate processing or or hand delivered to: Roger Calhoun, regulations governing the Kentucky
decision, or for consolidation with Acting Director, Lexington Field Office, Bond Pool. The proposed regulations
another complaint after appropriate Office of Surface Mining Reclamation implement Senate Bill 338 passed by the
notification to the complainant. and Enforcement, 340 Legion Drive, 1988 Kentucky General Assembly.
Suite 28, Lexington, Kentucky 40504. The proposed regulations delete from
§ 1614.608 Delegation of authority. Copies of the Kentucky program, the the definition of "member" the
An agency may delegate authority proposed amendment, and all written requirement that only permits held by
under this part to the agency's EEO comments received in response to this bond pool members can be covered by
Director, who must report directly to the notice will be available for review at the the pool. Kentucky Revised Statutes
agency head. The EEO Director may addresses listed below, Monday through (KRS) 350.720(14) authorizes pool
redelegate any of his or her authority to Friday, 9:00 a.m. to 4:00 p.m., excluding coverage for nonmember permittees to
a designee reporting directly to the EEO holidays. Each requestor may receive, participate in the abandoned mine land
Director. free of charge, one copy of the proposed enhancement program.
[FR Doc. 89-25550 Filed 10-30-89; 8:45 am] amendment by contacting OSM The proposed regulations relax the
BILLING CODE 6750-06-M Lexington Field Office. criteria used to determine eligibility for
membership into the Kentucky Bond
Office of Surface Mining Reclamation Pool. The proposed regulations allow the
DEPARTMENT OF THE INTERIOR and Enforcement, Lexington Field Bond Pool Commission greater
Office, 340 Legion Drive, Suite 28, flexibility in applying compliance record
Office of Surface Mining Reclamation Lexington, Kentucky 40504, criteria in determining eligibility. The
and Enforcement Telephone: (606) 233-7327 Bond Pool Commission is authorized to
Office of Surface Mining Reclamation defer action on an application for pool
30 CFR Part 917 and Enforcement, 1100 "L" Street, membership until violations and penalty
NW., Room 5131, Washington, DC assessments that could affect the
Kentucky Permanent Regulatory 20240. Telephone: (202) 343-5492 applicant's eligibility or membership
Program; Kentucky Bond Pool rating have been resolved. The proposed
Office of Surface Mining Reclamation
AGENCY: Office of Surface Mining and Enforcement, Eastern Field regulations also make several
Reclamation and Enforcement (OSMRE), Operations, Ten Parkway Center, nonsubstantive changes for compliance
Interior. Pittsburgh, Pennsylvania 15220, with KRS Chapter 13A provisions.
ACTION: Proposed rule. Telephone: (412) 937-2828 Ill. Public Comment Procedures
Department for Surface Mining In accordance with the provisions of
SUMMARY: OSM is announcing the Reclamation and Enforcement, No. 2
receipt of a proposed program Hudson Hollow Complex, Frankfort, 30 CFR 732.17(h), OSM is now seeking
amendment to the Kentucky permanent Kentucky 40601, Telephone: (502) 564- comment on whether the amendment
regulatory program (hereinafter referred proposed by Kentucky satisfies the
6940
to as the Kentucky program) under the applicable program approval criteria oft
Surface Mining Control and Reclamation If a public hearing is held, its location 30 CFR 732.15. If the amendment is
Act of 1977 (SMCRA). The amendment will be: The Harley Hotel, 2143 North deemed adequate, it will become part of
consists of proposed modifications to Broadway, Lexington, Kentucky 40505. the Kentucky program.
Kentucky Administrative Regulations FOR FURTHER INFORMATION CONTACT.
(KAR) at 405 KAR 10:200, the regulations Written Comments
Roger Calhoun, Acting Director,
governing Kentucky's alternative Lexington Field Office, Telephone (606) Written comments should be specific,
bonding program known as the 233-7327. pertain only to the issues proposed in
Kentucky Bond Pool. The proposed this rulemaking, and include
regulations implement Senate Bill 338 SUPPLEMENTARY INFORMATION: explanations in support of the
passed by the 1988 Kentucky General I. Background commentor's recommendations.
Assembly. Comments received after the time
This notice sets forth the times and On May 18, 1982, the Secretary of the indicated under "DATES" or at locations
locations that the Kentucky program and Interior conditionally approved the other than the Lexington Field Office
the proposed amendment are available Kentucky program. Information will not necessarily be considered in the
for public inspection, the comment pertinent to the general background, final rulemaking or included in the
period during which interested persons revisions, modifications, and Administrative Record.
may submit written comments on the amendments to the proposed permanent
proposed amendment, and the program submission, as well as the PublicHearing
procedures that will be followed Secretary's findings, the disposition of Persons wishing to comment at the
regarding a public hearing, if one is comments and a detailed explanation of public hearing should contact the person
requested. the conditions of approval can be found listed under "FOR FURTHER INFORMATION
DATES: Written comments must be in the May 18, 1982, Federal Register (47 CONTACT" by 4:00 p.m. on November 15,
received on or before 4:00 p.m. on FR 21404-21435). Subsequent actions 1989. If no one requests an opportunity
November 30, 1989. If requested, a concerning the conditions of approval to comment at a public hearing, the
public hearing on the proposed and program amendments are identified hearing will not be held.
amendment will be held at 10:00 a.m. on at 30 CFR 917.11, 917.15, 917.16, and Filing of a written statement at the
November 27, 1989. Requests to present 917.17. time of the hearing is requested as it will
45768 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
greatly assist the transcriber. 3. PaperworkReduction Act public hearing on the proposed
Submission of written statements in This rule does not contain information amendments will be held at 1.00 p.m. on
advance of the hearing will allow OSM collection requirements which require November 27, 1989. Requests to present
officials to prepare adequate responses approval by the Office of Management oral testimony at the hearing must be
and appropriate questions. received on or before 4:00 p.m. on
and Budget under 44 U.S.C. 3507.
The public hearing will continue on November 15, 1989.
List of Subjects in 30 CFR Part 917 comments and
the specified date until all persons ADDRESSES: Written
scheduled to comment have been heard. Coal mining. Intergovernmental requests to testify at the hearing should
Persons in the audience who have not relations, Surface mining, Underground be mailed or hand-delivered to Ms. Nina
been scheduled to comment, and who mining. Rose Hatfield, Director, Columbus Field
wish to do so, will be heard following Dated: October 19, 1989. Office, at the address listed below.
those scheduled. The hearing will end Carl C. Close, Copies of the Ohio program, the
after all persons scheduled to comment Assistant Director,EasternFieldOperations. proposed amendments, and all written
and persons present in the audience [FR Doc. 89-25560 Filed 10-30-89; &45am] comments received in response to this
who wish to comment have been heard. notice will be available for public
BILLING CODE 4310-05--M
review at the addresses listed below
Public Meeting during normal business hours, Monday
If only one person requests an 30 CFR Part 935 through Friday, excluding holidays. Each
opportunity to comment at a hearing, a requester may receive, free of charge,
public meeting, rather than a public Ohio Permanent Regulatory and one copy of the proposed amendments
hearing, may be held. Persons wishing to Abandoned Mined Lands Programs; by contacting OSM's Columbus Field
meet with OSM representatives to Revision of Ohio Revised Code Office.
discuss the proposed amendments may AGENCY: Office of Surface Mining Office of Surface Mining Reclamation
request a meeting at the OSM, Lexington Reclamation and Enforcement (OSM). and Enforcement. Columbus Field
Field Office listed under "ADDRESSES" Interior. Office, 2242 South Hamilton Road,
by contacting the person listed under Room 202, Columbus, Ohio 43232,
ACTION: Proposed rule.
"FOR FURTHER INFORMATION CONTACT." Telephone: (614) 866-0578.
All such meetings will be open to the SUMMARY. OSM is announcing the Ohio Department of Natural Resources,
public and, if possible, notices of receipt of proposed Program Division of Reclamation, Fountain
meetings will be posted in advance at Amendment Number 40 to the Ohio Square, Building B-3, Columbus, Ohio
the locations listed under "ADDRESSES." permanent regulatory and abandoned 43224, Telephone: (614) 265-6675.
A written summary of each meeting will mined lands (AML) programs FOR FURTHER INFORMATION CONTACT.
be made a part of the Administrative (hereinafter jointly referred to as the Ms. Nina Rose Hatfield, Director,
Record. Ohio program) under the Surface Mining Columbus Field Office, (614) 866-0578.
Control and Reclamation Act of 1977
VI. Procedural Determinations (SMCRA). The amendments were SUPPLEMENTARY INFORMATION:
(B). (C), (F), and (H); 1513.24; and apply to persons who were inspection Public Hearing
1513.37(j). officers on or before April 10, 1972 if the Persons wishing to comment at the
Nonsubstantive changes are proposed person is a certified employee in the public hearing should contact the person
throughout these six sections of the ORC classified service of the State.
listed under "FOR MORE INFORMATION
to correct paragraph letter notations and (3) Administrative and Design Costs for CONTACT" by 4.00 p.m. on November 15,
to improve the clarity of the statutes. Reclamation of Forfeitedand Defaulted 1989. If no one requests an opportunity
The substantive changes proposed in
Areas to comment at a public hearing, the
Program Amendment No. 40 are hearing will not be held.
discussed briefly below: ORC section 1513.08 paragraph (A):
This paragraph is being rewritten to Filing of a written statement at the
(1) Average Wage Rates for provide that the Chief may expend time of the hearing is requested as it will
Reclamation Contractors money from the reclamation greatly assist the transcriber.
ORC section 1513.02 paragraph (1): supplemental forfeiture account to pay Submission of written statements in
This new paragraph is being added to necesary administrative, engineering, advance of the hearing will allow OSM
specify that the Chief of the Ohio and design costs incurred by Ohio in officials to prepare adequate responses
Department of Natural Resources, reclaiming forfeited areas. and appropriate questions.
Division of Reclamation (the Chief), Administrative exenditures need not be The public hearing will continue on
shall triennially determine the average made under contract. the specified date until all persons
wage rates paid by companies ORC section 1513.18 paragraphs (B) scheduled to comment have been heard.
performing reclamation for Ohio. The and (C): These paragraphs are being Persons in the audience who have not
initial determination of the average rewritten to provide that the Chief may been scheduled to comment and who
wage rate will be based on the wages expend money from the defaulted areas wish to do so will be heard following
paid by companies performing work for fund to pay necessary administrative, those scheduled. The hearing will end
Ohio during the last ten years. engineering, and design costs incurred after all persons scheduled to comment
Subsequent determinations will be by Ohio ini reclaiming defaulted areas. and persons present in the audience
based on wages paid by companies Administrative expenditures need not who wish to comment have been heard.
during the preceding three years. be made under contract. Public Meeting
ORC section 1513.18 paragraph (H):
(4) ProhibitionAgainst Delaying
This paragraph is being rewritten to If only one person requests an
specify that the average wage rate Reclamation
opportunity to comment at a hearing, a
required by the Chief of every ORC section 1513.18 paragraph (F): public meeting. rather than a public
contractor performing reclamation work The last sentence in this paragraph is hearing, may be held. Persons wishing to
under ORC section 1513.18 shall be as being rewritten to provide that the Chief meet with OSM representatives to
determined by the Chief under ORC shall not postpone the reclamation of discuss the proposed amendments may
section 1513.02. forfeited or defaulted ards because of request a meeting at the Columbus Field
ORC section 1513.24: A new any actions being brought by the! Ohio Office by contacting the person listed
paragraph is being added to provide that Attorney General under this paragraph under "FOR MORE INFORMATION
the Chief shall require every contractor to recover the State's reclamation CONTACT." All such meetings shall be
performing reclamation work under expenses. Prior to completing open to the public and, if possible,
ORC section 1513.24 to pay workers at reclamation, the Chief may collect notices of the meetings will be posted at
the greater of their rate of pay or the through the Attorney General any the locations listed under "ADDRESSES."
average wage rate for the same or additional amount in excess of th e A written summary of each public
similar work as determined by the Chief forfeited bond that the Chief believes meeting will be made a part of the
under ORC section 1513.02. will be necessary for reclamatior, of the Administrative Record.
ORC section 1513.37 paragraph (f: land that the operator should have, but
The last sentence in this paragraph is failed to, reclaim. List of Subjects in 30 CFR Part 935
being rewritten to specify that the Coal mining, Intergovernmental
average wage rate required by the Chief IlL Public Comment Procedures
relations, Surface mining, Underground
of every contractor performing In accordance with the provisions of mining.
reclamation work under ORC section 30 CFR 732.17(h), OSM is now seeking
comment on whether the amendments Dated: October19, 1989.
1513.37 shall be as determined by the
Chief under ORC section 1513.02. proposed by Ohio satisfy the applicable Carl C. Close,
program approval criteria of 30 CFR AssistantDirector,EasternFieldOperations.
(2) Civil Service Status for Regulatory 732.15. If the amendments are deemed [FR Doc. 89-25512 Filed 10-31-89; 8:45 am]
Inspectors adequate, they will become part of the BILLING CODE 4310-0S-M
ORC 1513.03: This section is being Ohio program.
rewritten to delete the statement that
Written Comments
Ohio regulatory inspection officers shall
serve at the pleasure of the Chief. A new Written comments should be specific,
pertain only to the issues proposed in DEPARTMENT OF THE TREASURY
paragraph is also being added to
provide that, to be eligible for this rulemaking, and include 31 CFR Part 103
appointment as inspection officers, explanations in support of the
appointees shall first pass an commenters recommendations. Bank Secrecy Act Regulatory
examination prepared and administered Comments received after the time Applictions to the Problem of Money
by the Ohio Department of indicated under "DATES" or at locations Laundering Through International
Administrative Services and that new other than the Columbus Field Office Payments
inspectors shall serve in a provisional will not necessarily be considered in the
status for one year to the satisfaction of final rulemaking or included in the AGENCY: Departmental Offices,
the Chief. These provisions shall not Administrative Record. Treasury.
45770 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
ACTION: Advance notice of proposed transfers of funds include transactions transfers of funds and book transfers of
rulemaking. where either (1) a foreign office of a credit. Currently, Treasury does not
financial institution instructs a U.S. specify what type of information must
SUMMARY: Treasury expects to issue a office of a financial institution to effect a be contained in the record. Thus,
Notice of Proposed Rulemaking under payment in the U.S., directly or financial institutions are not required to
the Bank Secretary Act to address the indirectly, or (2) where a U.S. office of a obtain or record information from or
problem of money laundering through financial institution instructs a foreign about the identity of an originator or
international payments, especially wire office of a financial institution to effect a beneficiary of a payment, about the
transfers of funds. This Advance Notice payment abroad, directly or indirectly. parties on whose behalf the originator or
of Proposed Rulemaking requests (The term does not include check or beneficiary may be acting, or other
comments on a number of regulatory ACH payments.) information beyond what is in their
options. World-wide gross drug revenues are records or necessary to make the
DATES: Comments must be received no estimated to be $300 billion. Illegal drug transfer.
later than January 2, 1990. revenues in the United States are In addition to the current
ADDRESS: Comments should be sent to: estimated to total $110 billion. Estimates recordkeeping requirements for wire
Amy G. Rudnick, Director, Office of are that only 20% of the money transfers, Treasury is authorized to
Financial Enforcement, Department of generated from narcotics trafficking require financial institutions to report
the Treasury, Room 4320, 1500 goes to the cost of goods sold, With 80% transactions, including international
Pennsylvania Avenue NW., Washington, available for profits. These profits are wire transfers of funds, with foreign
DC 20220. used to finance other narcotics and financial institutions in a designated
FOR FURTHER INFORMATION CONTACT: criminal activities, purchase luxury location for a limited period of time
Linda Noonan, Senior Counsel for items, make investmens in real estate pursuant to 31 CFR 103.25. This
Financial Enforcement. Office of the and acquire legitimate businesses. authority is limited by the fact that
Assistant General Counsel Money laundering is a vital financial institutions involved in
(Enforcement), (202) 566-2941. component of drug trafficking and other international wire transfers of funds
SUPPLEMENTARY INFORMATION: The criminal activity throughout the world. frequently do not have complete
Bank Secretary Act, Public Law 91-508, Criminals must "wash" their "dirty" information about the originator or
(codified at 12 U.S.C. 1829b, 12 U.S.C. money to make it appear "clean." As beneficiary of payments.
1951, et seq., and 31 U.S.C. 5311-5326), President Bush recently stated, Treasury is reviewing a number of
authorizes the Secretary of the Treasury Drug money undermines honest businesses, regulatory options under the authority of
to require financial institutions to keep corrupts political institutions, and even 31 U.S.C. 5314 and 5318 to deal with
records and file reports that the threatens the security of nations. To conceal these deficiencies and the severe money
Secretary determines have a high degree their obscene profits, drug barons must wash laundering problem. In our regulatory
or usefulness in criminal, tax, and their money by cycling it through financial review, we will give careful
regulatory matters. The primary purpose institutions and illegitimate shell consideration to the question of reaching
of the Act is to identify the sources,
corporations. an appropriate balance between law
volumes and movements of monies Currently, illegal funds are being enforcement needs, the importance of
moving into and out of the country and transferred from or to the United States free capital flow in global commerce
through domestic financial institutions. and "cycled" through intricate money and an efficient international financial
See H.R. Rep. No. 975, 91st Cong., 2d laundering schemes involving network, Pn'd the potential burden on
Sess. 11-13 (1970). In exercising this far international payments, particularly financial institutions. This is difficult
,reaching authority, Treasurey has been wire transfers. Several recent money given the severity of the money
mindful of issues concerning undue laundering operations, which have been laundering problem and the enormous
interference with foreign laws and has discovered by Treasury and other daily volume of international payments,
been careful'not to create obstacles to federal law enforcement agencies, such the overwhelming majority of which
the free flow of legitimate international as Operations C-Chase and Polar Cap, represent normal commercial
trade and commerce. H.R. Rep. No. 975 are testaments to this phenomenon. In transactions: Therefore, Treasury is
at 13. an April 28, 1989, submission to the soliciting views of financial institutions,
Under 31 U.S.C. 5314, the Secretary Director, Office of National Drug law enforcement officials, regulatory
may require reports or records relating Control Policy, reprinted in the agencies, and other interested parties on
to transactions between persons subject Congressional Record of May 18, 1989, these or other regulatory options. After
to the jurisdiction of the United States the American Bankers Association Treasury analyzes the comments
and "foreign financial agencies", e.g., stated that, "Wire transfers, which are received in response to the Advance
financial institutions located abroad. In essentially unregulated, have emerged Notice, it expects to issue a Notice of
addition, pursuant to 31 U.S.C. as the primary method by which high Proposed Rulemaking with specific
5318(a)(2), the Secretary may require volume launderers ply their trade." 135 regulatory proposals for comment.
that domestic financial institutions Cong. Rec. S5555 (May 18, 1989). The following list illustrates some of
"maintain appropriate procedures" to To date Treasury has used its Bank the regulatory options under
ensure compliance with any regulation Secrecy Act authority to require consideration. Treasury seeks views on
prescribed under section 5314 or any financial institutions to keep records of each of these proposals. However, these
other provision in 31 U.S.C. 5311-5326. all requests, advices and instructions proposals are not meant to be
Treasury will be exercising its authority relating to international transfers of considered as mutually exclusive
unde these provisions to address the more than $10,000 to or from any person alternatives; they may be later proposed
problem of "laundering" drug and other or account outside the United States. 31 in combination with one another. With
illegal proceeds through the CFR 103.33(b). Under this provision, a respect to any possible reporting
international payments system, financial institution must keep a record requirement, Treasury would propose
particularly through international wire of each international transaction over that reporting could be made by
transfers of funds. International wire $10,000, including all international wire electronic data transmission.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45771
1. Require a record or report by the This list is not meant to be exhaustive was published in the Federal Register on
financial institution originating or of the ways in which Treasury's October 18, 1989 (54 FR 42807),
receiving an international wire transfer regulatory authority might be used to "Commeicial Activities Program
of funds for a customer which includes address the problem. Treasury is open Procedures," 32 CFR part 169a. This
identifying and account information to other suggestions from financial correction is made to enable readers to
about the originator, beneficiary and the institutions or other interested parties better understand paragraph 169a.2(k)'s
person on whose behalf the payment is regarding additional or alternative' original meaning.
being made or received and whether the regulatory measures or voluntary FOR FURTHER INFORMATION CONTACT:.
sender or receiver is aware of any programs. Mr. Dom Migliorfico, Office of the
separate payment instructions regarding Treasury requests that financial Assistant Secretary of Defense
the payment unknown to the financial institutions that have dealt with the (Production and Logistics)Installations
institution. This requirement might be issue of money laundering through Support Division, Pentagon,
coupled with some type of an exemption international payments share their Washington, DC 20301-8000.
system designed to cover the majority of experiences with Treasury, for instance, SUPPLEMENTARY INFORMATION:
normal business transactions. on efforts to isolate suspicious wire
2. Require that all international wire transfers or to impose "know youri List of Subjects in 32 CFR Part 169a
transfer messages contain all known customer" procedures. We wouldilike Armed forces; Government
third party identifying information, e.g., financial institutions to advise of their procurement.
account numbers, addresses, and names policies and procedures for "pay on -
proper ID" payments or other Accordingly, 32 CFR Part 169a is
of the originator and beneficiary of the
payment. arrangements whereby noncustomers amended as follows:
3. Require that, prior to originating can receive-(or send] international
PART 169a--[AMENDED]
international payments on a customer's payments. Treasury also is interested in
behalf, either through book entry comments on any practical problems 1. The authority citation for part 169a
transfers of credit or through presented by these options and on the continues to read as follows:
international wire transfers of funds, estimated costs of compliance. We Authority: 5 U.S.C. 301; E.0. 12615; Pub. L.
financial institutions apply model "know welcome recommendations on how best 93-400.
your customer" procedures to verify the to fashion an appropriate exemption
system if routine recordkeeping or 2. Section 169a.2(k] is corrected to
legitimate nature of the customer's
business and that the transfers are reporting requirements are adopted. read as follows:
commensurate with legitimate business Finally, we welcome comments relating § 169a.2 Applicabilityand scope.
activities. to. specific problems which might arise * * *t * •
noncommercial television service, . Federal Communications Commission. Street, NW., Washington, DC. The
Coordinates for the proposal are 38-48- Karl A. Kensinger, complete text of this decision may also
26 and 104-48-51. Chief,AllocationsBranch,Policy andRules be purchased from the Commission's
Although this proposal falls within the Division, Mass Media Bureau. copy contractors, International
parameters of the Denver, Colorado, [FR Doc. 89-25576 Filed 10-30-89; 8:45 am] Transcription Service, (202) 857-3800,
market, which is one of the metropolitan BILLING CODE 6712-01-M 2100 M Street, NW., Suite 140,
areas for which the Commission has Washington, DC 20037.
imposed a "freeze" on TV allotments, or Provisions of the Regulatory
47 CFR Part 73 Flexibility Act of 1980 do not apply to
applications therefor, a waiver is this proceeding.
appropriate in this instance since the [MM Docket No. 89-461, RM-6881]
. Members of the public should note
proposed allotment of Channel *66 at that from the time a Notice of Proposed
Radio Broadcasting Services;
Colorado Springs is for noncommercial Rule Making is issued until the matter is
Lafayette, FL
educational use. no longer subject to Commission
DATES: Comments must be filed on or AGENCY: Federal Communications ccnsideration or court review, as'ex
Commission. porte contacts are prohibited in
before December 12, 1989, and reply
comments on or before December 22, ACTION: Proposed rule. Commission proceedings, such as this
1989. one, which involve channel allotments.
SUMMARY: This document requests
See 47 CFR 1.1204(b) for rules governing
ADDRESSES: Federal Communications comments on a petition by Brian permissible ex parte contact.
Commission, Washington, DC 20554. In Mitchell Rowland requesting the I For information regarding proper filing
addition to filing comments with the substitution of Channel 260C2 for
procedures for comments, See 47 CFR
FCC,. interested parties should serve the Channel 260A at Lafayette, Florida, and 1.415 and 1.420.
modification of the construction permit
petitioner's counsel, as follows: Wayne List of Subjects in 47 CFR Part 73
Coy, Jr., Esq., Cohn &Marks, 1333 New (BPH-870729MJ) for Station WKXJ(FM)
to special operation on the higher Radio broadcasting.
Hampshire Ave., NW., Suite 600, Wash., powered channel. Channel 260C2 can be
DC 20036. allotted to Lafayette in compliance with Federal Communications Commission.
FOR.FURTHER INFORMATION CONTACT: the Commission's minimum distance Karl A.Kensinger,
Nancy Joyner, Mass Media Bureau (202) separation requirements with a site Chief Allocations Branch,Policyand Rules
restriction of 20.8 kilometers (12.9 miles) Division, MassMedia Bureau.
634-6530. [FR Doc. 89-25577 Filed 10-30-89; 8:45 am]
southeast. The coordinates for the
SUPPLEMENTARY INFORMATION: This is a allotment are North Latitude 30-18-21 BILLING CODE 6712-01-M
synopsis of the Commission's Notice of and West Longitude 84-03--09. In
Proposed Rule Making, MM Docket accordance with § 1.420(g) of the
No.89-462, adopted September 26,1989, Commission's Rules, competing 47 CFR Part 73
and released October 16, 1989. The full expressions of interest in use of Channel
text of this Commission decision is 260C2 at Lafayette will not be [MM Docket No.89-463, RM-6896]
available for inspection and copying considered and petitioner Will not be
Radio Broadcasting Services; Boyce,
during normal business hours in the FCC required to demonstrate the availability LA
Dockets Branch (Room 230), 1919 M of an additional equivalent channel for
Street, NW., Washington, DC. The use by such interested parties. AGENCY: Federal Communications
complete text of this decision may also DATES: Comments must be filed on or Commission.
be purchased from the Commission's before December 7, 1989, and reply ACTION: Proposed rule.
copy contractors, International comments on or before December 22,
Transcription Service, (202) 857-3800, 1989. SUMMARY: This document requests
2100 M Street, NW., Suite 140, ADDRESS: Federal Communications comments on a petition by Trinity
Washington, DC 20037. Commission, Washington, DC 20554 In Broadcasting Corporation, licensee of
addition to filing comments with the Station KBCE(FM), Boyce, Louisiana,
Provisions of the Regulatory proposing the substitution of Channel
Flexibility Act of 1980 do not apply to FCC, interested parties should serve the
petitioners, or their counsel or 272C3 for Channel 272A at Boyce, and
this proceeding. the modification of the station's license
consultant, as follows: Peter Gutmann,
Members of the public should note Neal 1.Friedman, Pepper &Corazzini, to special operation on the higher
that from the time a Notice of Proposed 200 Montgomery Building, 1776 K Street, powered channel. A site restriction of
Rule Making is issued until the matter is NW., Washington, DC 20006, (Attorneys 5.7 kilometers (3.5 miles) east of the
no longer subject to Commission for petitioner) community has been requested. The
consideration or court review, all ex FOR FURTHER INFORMATION CONTACT. coordinates are 31-22-21 and 92-36-41.
porte contacts are prohibited in Nancy J.Walls, Mass Media Bureau The community could receive its first
Commission proceedings, such as this (202) 634-6530. wide coverage area FM service.
one, which involve channel allotments. SUPPLEMENTARY INFORMATION: This is a DATES: Comments must be filed on or
See 47 CFR 1.1204(b) for rules governing synopsis of the Commission's Notice of before December 7, 1989, and reply
permissible ex parte contact. Proposed Rule Making, MM Docket comments on-or before December 22,
For information regarding proper filing No.89-461, adopted October 2, 1989, and 1989.
procedures for comments, See 47 CFR released October 16, 1989. The full text ADDRESSES: Federal Communications
1.415 and 1.420. of this Commission decision is. available Commission, Washington, DC 20554 In
for inspection and copying during addition to filing comments with the
List of Subjects in 47 CFR part 73 normal business hours in the FCC FCC, interested parties should serve the
Television broadcasting. Dockets Branch (Room 230), 1919 M petitioners., or their counsel or
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45773
consultant, as follows: Robert G. Allen, license to specify the higher class coordinates specified by the petitioner
Esquire, Denise B. Moline, Broadcast station. In order to accomplish the are 29-55-00 and 97-20-00, which is
Media Legal Services, P.O. Box 1667, substitution at Giddings, channel located 48.2 kilometers (30.0 miles)
Manassas Park, VA 22111 (Counsel for substitutions must also be made at four southwest of the city. The suggested
petitioner). other Texas communities: (1) Cameron, channel changes at Cameron,
FOR FURTHER INFORMATION CONTACT. Texas,. Channel 232A for Channel 267A, Centerville, Edna and Hearne can be
Patricia Rawlings (202) 634-6530. Station KJKS(FM); (2) Centerville, accomplished at the existing stations's
Texas, Channel 290A for vacant sites. The coordinates for Channel 232A
SUPPLEMENTARY INFORMATION: This is a
at Cameron are 30-57-00 and 96-54-07.
Channel 276A; (3) Edna, Texas, Channel
synopsis of the Commission's Notice of
285A for vacant but applied for Channel The coordinates for Channel 290A at
Proposed Rule Making, MM Docket No. 269A; and (4) Hearne, Texas, Channel Centerville are 31-15-36 and 95-58-42.
89-463, adopted September 26, 1989, and 276A for Channel 232A, Station The coordinates for Channel 285A at
released October 16, 1989. The full text KHRN(FM). Edna are 28-57-32 and 96 37-30. The
of this Commission decision is available coordinates for Channel 276A at Hearne
for inspection and copying during DATES: Comments must be filed on or
before December 8, 1989, and reply are 30-51-07 and 96-34-04.
normal business hours in the FCC
Dockets Branch (Room 230), 1919 M comments on or before December 26, Federal Communications Commission.
Street, NW., Washington, DC. The 1989. Karl A. Kensinger,
complete text of this decision may also ADDRESSES: Federal Communications Chief,AllocationsBranch,Policyand Rules
be purchased from the Commission's Commission, Washington, DC 20554. In Division,Mass Media Bureau.
copy contractors, International addition to filing comments with the [FR Doc. 89-25578 Filed 10-30-89; 8:45am]
Transcription Service, (202) 857-3800, FCC, interested parties should serve the BILLING CODE 6712-01-M
2100 M Street, NW., Suite 140, petitioners, or their counsel or
Washington, DC 20037. consultant, as follows: Don Werlinger,
Provisions of the Regulatory Broadcast Development Group, 7819
Flexibility Act of 1980 do not apply to Manassas Drive, Austin, Texas 78745 DEPARTMENT OF THE INTERIOR
this proceeding. (Consultant to petitioner).
Members of the public should note FOR FURTHER INFORMATION CONTACT: Fish and Wildlife Service
that from the time a Notice of Proposed Patricia Rawlings, (202) 634-6530.
Rule Making is issued until the matter is 50 CFR Part 17
SUPPLEMENTARY INFORMATION: This is a
no longer subject to Commission synopsis of the Commission's Notice of
consideration or court review, all ex RIN 1018-AB35
Proposed Rule Making, MM Docket
parte contacts are prohibited in No.89-459, adopted October 2, 1989, and
Commission proceedings, such as this Endangered and Threatened Wildlife
released October 17, 1989. The full text and Plants; Desert Tortoise
one, which involve channel allotments. of this Commission decision is available
See 47 CFR 1.1204(b) for rules governing for inspection and copying during AGENCY: Fish and Wildlife Service,
permissible ex parte contact. normal business hours in the FCC Interior.
For information regarding proper filing Dockets Branch (Room 230), 1919 M ACTION: Proposed rule; correction.
procedures for comments, See 47 CFR Street, NW., Washington, DC. The •
1.415 and 1.420. complete text of this decision may also SUMMARY: The U.S. Fish and Wildlife
List of Subjects in 47 CFR Part 73 be purchased from the Commission's Service (Service) is correcting an error
copy contractors, International in the SUMMARY of the proposed rule
Radio Broadcasting. Transcription Service, (202) 857-3800, to list the Mojave population of the
Federal Communications Commission. 2100 M Street, NW., Suite 140, desert tortoise, which appeared in the
Karl A. Kensinger, Washington, DC 20037. Federal Register on October 13, 1989 (54
Chief, AllocationsBranch,Policyand Rules Provisions of the Regulatory FR 42270).
Division,Mass MediaBureau. Flexibility Act of 1980 do not apply to FOR FURTHER INFORMATION CONTACT:
[FR Doc. 89-25579 Filed 10-30-89; 8:45 am] this proceeding. Dr. James Tate, Jr. at (703) 358-2171.
BILUNG CODE 6712-01-M Members of the public should note SUPPLEMENTARY INFORMATION: The
that from the time a Notice of Proposed Service published an emergency rule to
Rule Making is issued until the matter is list the Mojave population of the desert
47 CFR Part 73 no longer subject to Commission tortoise as endangered on August 4, 1989
consideration or court review, as ex (54 FR 55654). The emergency rule will
[MM Docket No. 89-459, RM-7009]
parte contacts are prohibited in cease to have force and effect after 240
Radio Broadcasting Services; Commission proceedings, such as this days unless the procedures leading to a
Giddings, Cameron, Centervillei Edna one, which involve channel allotments. final rule, or to a withdrawal of the
and Hearne, TX See 47 CFR 1.1204(b) for rules governing emergency rule, have been complied
permissible ex porte contact. with during that period. Thus, the
AGENCY: Federal Communications For information regarding proper filing
emergency rule to list the desert tortoise
Commission. procedures for comments, See 47 CFR would expire on Sunday, April 1, 1990
ACTION: Proposed rule. 1.415 and 1.420. (actually on the next working day,
SUMMARY: This document requests Monday, April 2, 1990). A proposed rule
List of Subjects in 47 CFR Part 73
comments on a petition by Radio Lee to list the Mojave population of the
Radio br6adcasting. desert tortoise appeared in the Federal
County, the licensee of Station
KGID(FM), Channel 268C2 at Giddings, The proposed allotment of Channel Register on October 13, 1989 (54 FR
Texas, proposing the substitution of 268C1 at Giddings requires the station to 42270).
Channel 268C1 for Channel 268C2 at relocate its transmitter site at least 21.6 The correct statement that the "* * *
Giddings and the modification of its kilometers south of the communtty. The emergency rule provides protection
45774 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
under the [Endangered Species] Act for Dated: October 25, 1989. Register on October 13, 1989 (54 FR
the Mojave population of tortoises for John F. Turner, 42270).
240 days (until April 2, 1990)" appears Director,Fish and Wildlife Service. On page 42270, first column, line 33,
on page 42271. An incorrect date of change "August 2, 1990" to "April 2,
August 2, 1990 appears in the The following correction is made in 1990".
RIN 1018-AB35, the proposed rule to list * * ., * *
SUMMARY of the same publication.
This error is corrected below. the Mojave population of the desert [FR Doc. 89-25628 Filed 10-30-89; 8:45 am]
* * * * * tortoise, which appeared in the Federal BILUNG OoE 4310-55-UM
45775
This section of the FEDERAL REGISTER to private land owners within a market evaluation period. Notice of adoption of
contains documents other than rules or area for seismic exploration surveys. a final fee policy for seismic exploration
proposed rules that are applicable to the The second method, which was will be given in the Federal Register.
public. Notices of hearings and developed by the Regional Forester for
investigations, committee meetings, agency Dated: October 10, 1989.
the Rocky Mountain Region in George M. Leonard,
decisions and rulings, delegations of
authority, filing of petitions and consultation with seismic exploration Associate Chief
applications and agency statements of contractors, was based upon average
rental values of Federal oil and gas [FR Doc. 89-25568 Filed 10-30-89; 8:45 am]
organization and functions are examples
leases within that Region and adjacent BILuNG CODE 3410-11-M
of documents appearing in this section.
areas. This fee method, notice of which
was published February 12, 1987, in the Draft Supplement to a Final
DEPARTMENT OF AGRICULTURE Federal Register [52 FR 4514] resulted in Environmental Impact Statement for
a fee of $200 per mile, or fraction of a the Grouse Creek Gold Mine Project
Forest Service mile. In contrast, surveys of the private (Formally the Sunbeam Mine Project)
rental market have resulted occasionally
Seismic Exploration Permit Fees on the Yankee Fork Ranger District of
in fees that were higher than the fees
the Challis National Forest, Custer
AGENCY: Forest Service, USDA. determined by the Rocky Mountain County, ID
Region, particularly when the National
ACTION: Notice of interim policy. Forest lands were located in areas with AGENCY: Forest Service, USDA.
SUMMARY: The Forest Service gives good potqntial for oil and gas ACTION: Notice of intent to prepare a
notice that it is establishing a standard development, such as the Gulf Coast supplement to an environmental impact
land use rental fee applicable States. statement.
nationwide to seismic exploration The agency has reviewed the current
permits issued by the Forest Service. fee determination procedure and SUMMARY: The Department of
The revised fee policy is set forth in concluded that a uniform fee would not Agriculture, Forest Service will prepare
Interim Directive No. 69 to the Forest only eliminate inconsistent fee charges a Draft and Final Supplement (DSEIS
Service Manual Chapter 2720-Special but would also increase agency and SEIS respectively) to the
Uses Administration. The intended efficiency of processing seismic permits Environmental Impact Statement (EIS)
effect is to bring consistency to fee by reducing the time and cost associated previously prepared for the Sunbeam
determinations on seismic exploration with the current fee determination Mining Project (September 1984). The
permits and to increase efficiency in methods. The agency is, therefore, supplement is for an exparlded Plan of
processing permits. adopting a standard, nationwide fee for Operation proposed by Grouse Creek
seismic exploration permits of $200 per Mining, Inc., for an open-pit gold mine
EFFECTIVE DATE: The interim directive is mile, or fraction of a mile, and $50 per located 19 miles northeast of Stanley,
effective November 15, 1989. shot hole. This fee rate is currently Idaho and 30 miles southwest of Challis,
FOR FURTHER INFORMATION CONTACT:. charged on several National Forests for Idaho, on the Yankee Fork District of the
Persons interested in this rental fee seismic permits. Challis National Forest in Custer
policy should direct inquiries and These fee rates will be imposed on all County, Idaho.
comments to Ruben M. Williams, Lands types of seismic exploration in which The supplement will focus on
Staff, Forest Service, USDA, P.O. Box temporary disturbance and occupancy. proposed modifications to the original
96090, Washington, DC 20090-6090 (703) of the land is authorized by a Forest Sunbeam Mining Project, including: (1)
235-8212. Service permit. They do not apply to Expanded operation into the Grouse
SUPPLEMENTARY INFORMATION: National exploration by a holder of a valid Creek drainage resulting in an
Forest System lands are open to seismic Federal lease within a leasehold on additional pit and potential waste dump.
exploration activities. Seismic National Forest System lands. Also, the (2) change in milling process from vat
exploration commonly involves the use seismic permit fee does not include any leaching to conventional counter-current
of explosives or machinery to generate costs of reclamation, restoration, or decant process, (3) construction of
energy shock waves through the earth's compliance with applicable laws, such tailing impoundment and embankments,
surface to detect the presence of oil and as indentification and protection of and (4) improvement of Forest Route
gas deposits or conditions likely to be cultural resources for which the holder 40172. The modified proposal will be
favorable to location of such deposits. may be responsible as a condition of the called Grouse Creek Project.
When an operator wishes to explore for permit. The agency will accept written
oil and gas in an area of the National This fee policy is being issued as comments and suggestions on the scope
Forest system that is not covered by a interim direction to allow the agency to of the analysis. However, because the
Federal lease, the operator must obtain evaluate the effects of a standard fee Forest has been communicating with
a permit for the exploration and pay a and the fee amount over the next 12 interested persons concerning the scope
land u.se rental fee (36 CFR 251.57). months and to determine if any changes of the proposed action through prior
Forest Service policy has allowed are needed before isuing permanent negotiations and meetings, the agency
Regional Foresters to establish fees for direction. Any member of the public, urges that any comments on the
seismic exploration permits by one of including seismic exploration proposal be concise. Comments directed
two methods. The first method bases the contractors, may submit comments for to the substance, as opposed to the
fee on a survey of rental payments paid the agency's consideration during the scope, of the proposal are more
45776 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
appropriately submitted during the Scoping of this project was initiated publish a notice of availability of the
comment period following release of the on August 24, 1989 through an draft supplement in the Federal Register.
DSEIS. informational meeting held in Stanley, The comment period on the DSEIS
In addition, the agency gives notice of Idaho by Grouse Creek Mining, Inc. will be 45 days from the date the
the full environmental analysis and Numerous Federal, State, and local Environmental Protection Agency's
decision-making process will occur on agencies and other individuals and notice of availability appears in the
the proposal so that interested persons organizations were represented at the Federal Register. It is very important
are aware of how they may participate August 24 meeting. All interested and that those interested in this proposed
- and contribute to the final decision. affected publics are invited to action participate at that time. To be
DATE: Comments concerning the scope participate in the scoping process. This most useful, comments on the DSEIS
of the analysis must be received by process will include: should be as specific as possible and
December 1, 1989 to ensure timely 1. Identification of new or additional
issues.
may address the adequacy of the
consideration. statement or the merits of the
ADDRESS: Submit written comments and 2. Identification of issues to be
analyzed in depth. alternatives discussed (See The Council
suggestions related to the scope of the on Environmental Quality Regulations
analysis to Forest Supervisor, Challis 3. Elimination of insignificant issues
or those sufficiently covered in the for implementing the procedural
National Forest, P.O. Box 404, Challis, provisions of the National
Idaho 83226. original Sunbeam EIS.
4. Exploring additional alternatives. Environmental Policy Act at 40 CFR
FOR FURTHER INFORMATION: Direct 5. Identifying potential environmental 1503.3).
questions about the proposed action and effects of the proposed action and - In addition, Federal court decisions
DSEIS to Ruth Monahan, Project alternatives (i.e., direct, indirect and have established that reviewers of
Coordinator, Challis Supervisor's Office, cumulative effects and connected DSEIS's must structure their
P.O. Box 404, Challis, Idaho, telephone actions). participation in the environmental
208-879-2285. Additional public meetings are review of the proposal so thpt it is
SUPPLEMENTARY INFORMATION: The tentatively scheduled for November meaningful and alerts an agency to the
Final Environmental Impact Statement 1989 and will be held in Stanley and reviewers' position and contentions.
for the Sunbeam Mining Project was Challis, Idaho. Actual dates, times and Vermont Yankee NuclearPower Corp.
approved by Forest Supervisor Jack C. locations for these meetings will be v. NRDC, 435 U.S. 519, 553 (1978).
Griswold on September 28, 1984. Full announced through the news media, by Environmental objections that could
development and construction of the letter or personal contact. have been raised at the draft stage may
Sunbeam Project has been delayed due The Fish and Wildlife Service of the be waived if not raised until after
to litigation concerning Clean Water Act Department of the Interior, Army Corps
section 402/404 permitting authority completion of the SEIS. City of Angoon
of Engineers of the Department of Army, v. Hodel, (9th Circuit, 1986) and
between the U.S. Army Corps of and the U.S. Environmental Protection
Engineers and the U.S. Environmental Wisconsin Heritages,Inc. v. Harris,490
Agency (EPA) have been invited to F. Supp. 1334, 1338 (E.D. Wis. 1980]. The
Protection Agency, relating to the participate as cooperating agencies. The
discharge of spent ore tailings to the reason for this is to ensure that
U.S. Fish and Wildlife Service will
Pinyon Baslin wetland. As a result of substantive comments and objections
evaluate potential impacts on
Sunbeam Mining Corporation's recent threatened and endangered species
are made available to the Forest Service
merger with CoCa Mines, Inc., the habitat if any are found to exist in and at a time when it can meaningfully
original Sunbeam Mine Project is now adjacent to proposed project area. consider them and respond to them in
being developed by Grouse Creek The Army Corps of Engineers is the final.
Mining, Inc. a subsidiary of CoCa Mines, responsible for issuance of the Clean The SEIS is scheduled to be
Inc. Water Act section 404 permit, regulating completed and available to the public by
The Forest Service received a the discharge of dredged or fill materials August 1990. The responsible official
Conceptual Plan of Operation from into navigable waters. The EPA is will document the decision and the
Grouse Creek Mining, Inc. in August of responsible for the issuance of the reasons supporting it in a Record of
1989. Re-evaluation of the original National Pollution Discharge Decision. That decision will be subject
Sunbeam Mine Project caused Grouse Elimination System (NPDES) permit, to appeal pursuant to 36 CFR 217.
Creek Mining, Inc. to modify regulating any discharges to surface Dated: October 23,1989.
components of the original project. water. The SEIS will provide the Ronald L. Johnson,
Grouse Creek Mining proposes to National Environmental Policy Act
construct an open pit mine, waste documentation requirements necessary Acting ForestSupervisor.
dumps, haul road, processing facilities, for the issuance of the section 404 and [FR Doc. 89-2551 Filed 10-30-89; 8:45 am]
mine tailing embankments and the NPDES permits. Numerous other BILLING CODE 3410-1-"
impoundments, and widening of USFS State and local permits and licenses will
Forest Road #40172 along Jordan Creek. be required to implement the proposed
The 1984 EIS Project Area has also been action. DEPARTMENT OF COMMERCE
expanded under the modified proposed Jack C. Griswold, Forest Supervisor of
project to include the Grouse Creek the Challis National Forest, Challis, National Oceanic and Atmospheric
drainage basin. The supplemental EIS Idaho, is the responsible official for this Administration
will evaluate the new or changed action. The Forest Service is the lead
aspects of the Project. agency. Marine Mammals; National Zoological
A range of alternatives will be The DSEIS is expected to be filed with Park, Smithsonian Institution
considered, including the no-action the Environmental Protection Agency
alternative. Other alternatives will be and be available for public review in AGENCY: National Marine Fisheries
developed to address significant issues April of 1990. At that time, the Service (NOAA Fisheries), NOAA,
and to mitigate impacts.. Environmental Protection Agency will Commerce.
Federal Register / Vol. 54, No, 209 1 Tuesday, October 3, 989 / Notices 45777
ACT1ON Application for Permit National Office of Protected Resources and see 5a FR 50276, published on,
Zoological Park-Smithsonian Habitat Programs, National Marine December: 14, 1988.
Institution (P614 Fisheries Service, 1335 East West Auggie D. Tantllo,
SUMMARY. Notice is hereby g ven that an Highway, Room 7330, Silver Spring, Chairman,Committeefor the Implementatibn
Applicant has applied in due form for a Maryland 20910; of TextileA reemenfs.
Scientific Research Permit to import Director, Northeast Region, National Committee for the Implementation, of Textile
marine mammal samples as authorized Marine Fisheries Service, NOAA, One Agreements
by the Marine Mammal Protecffon, Act Blackburn Drive, Gloucester October2, 1989.
of 1972 (10 U.SC_., 1361-14071, and,the Massachusetts 01030: and Commissioner of Customs,
Regulations Governing the Taking and Director,. National Marine Mammal Departmentof 6he Treasury.
rmporting of Marine Mammals (50 CFR Washington.DC 20229.
Laboratory, National Marine Fisheries
part 216). • Dear Mr. Commissioner: Effective on
Service. NOAA. 7600 Sand Point Way, &ctober 31, 1989, this directive cancels, only
1. Applicant: National Zoological
Park. Smithsonian Institutioz, NE BIN C15700, Seattle, Washington that portion of the directive of December 6,
Washington, DC 2000&. 98115. 1988 issued to- you by the Chairman,
2. Type of Permit Scientific Research. Dated: Octoberl9, 1989 Committee fur the Implementation of Textile
Agreements, which establishes a restraint
3., Name and Number of Marine Nancy Foster. limit for silk blend and other vegetable fiber
Mammals: Harbor seals (Phoca Director,Office of PhtectedResawrce.Tand textile,products in Category 8"0, produced or
vitrinal.up to 80, Gray seat HabitatPrograms. manufactured in China and exported during:
[HaIicioerusgrypus), up to 160. [FR Doc. 89-25537 Filed 16-301-89; 8:45 am] the twelve-month period which began on
4. The Applicant requests permission BILLING CODE 3510-22-u January 1, 1989 and extends through.
to import samples of milk (including December 31, 1989.
gastric milk contents), blood and.tissues The Committee for the implementation of
(organs and blubber) from harbor seals Textile Agreements has determined that this
COMMITTEE FOR THE. actio, falls, within..the foreign affairs
and gray seals, collected from animals IMPLEMENTATION OF TEXTILE
under a research permit issued. by the exception to the rulemaking provisions $
AGREEMENTS U.S.C. 553(a)(1).
Director General. of.Fisheries and Sincerely,
Oceans, Government of Canada. Tissues Rescission,of a Umit on Luggage of
were previously obtained by the Auggie D. Tantillo.
Silk Blend and Other Vegetable Fiber
Canadian Government from animals Chairman,Committeefor thelmplementatian
Produced: or Manufactured in. the of Textile Agreements.
sacrificed according to Canadian People's Republic of China
Sealing Regulations. [FR, Doc. 89-25420 Filed 10-27-89: 8:45 am.]
5. Location and Duration of Activity, October24, 1989. BILLING. CODE 3510-DR-U
Samples will be obtained from seals on AGENCY" Committee for the
Sable Island, Nova Scotia, Canada. The Implementatfon of Textile Agreements
requested duration for import of samples CCITA. Adjustment of Import,Limits;for
is three years. Certain Cotton, Wool Man-Made Fiber,
ACTION: Issuing a directive to the Silk Blend and Other Vogetabre Fiber
Concurrent with the publication of Commissioner of Customs cancelling a
this notice in the Federal Register, the Textiles and Textile Products
limit. Produced or Manufactrecd in the
Secretary of Commerce is forwarding
copies ofthis application to the Marine EFFECTIVE DATE: October 31, 1989. Republic of Korea
Mammal Commission and the FOR FURTHER INFORMATION CONTACT: October 25, 1989.
Committee of Scientific Advisors. Jerome Turtola., International Trade: AGENCY Committee for the
Written data or views, or requests for Specialist, Office of Textiles and Implementation. of Textile. Agreements,
a public hearing on this application Apparel, U.S. Department of Commerce, {CI-TAI.-
should be submitted' to, the Assistant (202) 377-4212.
Administrator for Fisheries, National ACTION: Issuing a directive to the
Marine Fisheries Service-. U.S. SUPPLEMENTARY INFORMATION: Commissioner- of Customs adjusting
Department of Commerce, 1335 East Authority-. Executive Order 11651 of March limits.
West Highway, Silver Spring; Maryland 3, 1972, as amended; section 204 of the.
20910,; within 30 days; of the publication. Agricultural Act of 1956, as.amended (7 EFFECTIVE DATE: November 1, 1989.
of this notice- Those individuals U.S.C. 1854). FOR FURTHER INFORMATION CONTACT:
requesting a hearing should set forth the Pursuant to consultations held with, Kimbang Pham, International Trade
specific reasons why a hearing on this the Government of the People4s- Republic Specialist, Office of Textiles and
particular application would, be of China, the United States Government Apparel, U.S. Department of Commerce,
appropriate. The holding of such hearing has decided to cancel. the current (202) 377-4212. For information on the.
is at the discretion of the Assistant restraint limit on luggage of silk blend; quota status of these limits, refer to,the
Administrator for Fisheries. All and other vegetable fiber in Category Quota Status Reports posted on the
statements and opinions contained in 870. bulletin boards of each Customs port or
this application are summaries of those A description of the textile and call (202) 566-8041. For information on.
of the Applicant and. do not necessarily apparel. categories in terms. ofEtS embargoes and.quota re-openings, call
reflect the views of the National Marine numbers is available in. the (202) 377-3715.
Fisheries Service. CORRELATION: Textile and Apparel SUPPLEMENTARY INFORMATION
Documents submitted in connection Categories, with. the HarmonizedTarif
with the above, application, are available Authority: Executive Order 11651 of March
Schedule of the United States (see 31,1972, as amended: Sen 204-of the
for review by interested persons in, the Federal. Register notice 53 FR
174937, Agricultural Act of 1956,. as amended (7
following officest published on November 7, 1988J. Also U.S.C. 185q.
45778 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
The current limits for Groups 1,11, and Category Adjusted 12-month limit ' 4In Category 669-T, only - HTS numbers
6306.12,0000, 6306.19.0010 and 6306.22.9000.
III, and certain sublevels within the 5In Category 340-Y, only HTS numbers
groups, are being adjusted, variously, for Group II 6205.20.2015, 6205.20.2020, 6205.20.2046,
swing, carryover and shift. 6205.20.2050 and 6205.20.2060.
237, 239, 330-354, 583,581,095 square meters 6 In Category 359-H, only HTS numbers
A description of the textile and 359, 431-448, 459, equivalent. ' 65P0. 1530 and 6505.90.2060.
apparel categories in terms of HTS 630-654 and 659, In Category 459-W, only HTS number
as a group. 6505.90.4060.
numbers is available in the " In Category 640-D. only HTS numbers 6205-
Sublevels in Group II 30.2010, 6205.30.2020, 6205.30.2030,
CORRELATION: Textile and Apparel 333/334 ......................... 6205.90.2040, 6205.90.2030 and 6205.90.4030.
106,000 dozen.
Categories with the Harmonized Tariff 335 ................................. 111,229 dozen. 9 In Category 640-DY, only HTS numbers
Schedule of the United States (see 336 ................................. 49,635 dozen. 6205.30.2010
10 and 6205.30.2020.
In Category 640-0, only HTS numbers
Federal Register notice 53 FR 44937, 338/339 ......................... 851,843 dozen. 6203.23.0080, 6203.29.2050, 6205.30.1000,
340 ................................. 471,144 dozen of which not 6205.30.2050, 6205.30.2060, 6205.30.2070,
published on November 7, 1988). Also more than 155,980 6205.30.2080 and 6211.33.0040.
see 53 FR 50988, published on December dozen shall be in Cate- 1 In Category 640-OY, only HTS numbers
19, 1988. gory 340-Y.5 6205.30.2050 and 6205.30.2060.
341 ................................. 201,608 dozen. 11In Category 641-Y, only HTS numbers
The letter to the Commissioner of 6204.23.0050, 6204.29.2030, 6206.40.3010 and
342 ................................ 75,429 dozen.
Customs and the actions taken pursuant 6206.40.3025.
347/348 ............... 377,339 dozen. '" In Category 659-H, only HTS numbers 6502-
to it are not designed to implement all of 351 ................................. 126,819 dozen. 00.9030, 6504.00.9015, . 6504.00.9060,
the provisions of the bilateral 352 ................ :................ 149,282 dozen. 6505.90.5060, 6505.90.6060, 6505.90.7060 and
agreement, but are designed to assist 353/354/653/654. 249,281 dozen. 6505.90.8060.
..........
359-H 6.......... ......2,126,281 kilograms. IIn Category 659-S, only HTS numbers
only in the implementation of certain of 433/434 ......................... 18,083 dozen of which not 6112.31.0010, 6112.31.0020, 6112.41.0010,
its provisions. more than 13,627 dozen 6112.41.0020, 6112.41.0030, 6112.41.0040,
6211.11.1010, 6211.11.1020, 6211.12.1010 and
Auggie D. Tantillo, shall be in Category 433 6211.12.1020.
and not more than 6,802
Chairman,Committee for the Implementation dozen shall be in Cate-
of Textile Agreements. The Committee for the
gory 434.
435 ................................. 34,151 dozen. Implementation of Textile Agreements
Committee for the Implementation of Textile 436 .................................. 13,655 dozen. has determined that these.actions fall
Agreements 442 ................ : 46,526 dozen. within the foreign affairs exception to
October 25, 1989. 443 .................................. 338,158 numbers. the rulemaking provisions of 5 U.S.C.
444 .................................. 52,737 numbers.
Commissioner of Customs, 447 ................................. 85,504 dozen. 553(a)(1).
Departmentof the Treasury, 448 ................................. 34,691 dozen. Sincerely,
Washington, DC 20229. 459-W 7 .......................... 92,974 kilograms. Auggie D. Tantillo,
Dear Mr. Commissioner: This directive 631 ................................. 260,499 dozen pairs.
632 ................................. 1,996,798 dozen pairs. Chairman,Committeefor the Implementation
amends, but does not cancel, the directive of of Textile Agreements.
633/634/635 .................. 1,340,662 dozen of which
December 13, 1988 issued to you by the not more than 150,000 [FR Doc. 89-25557 Filed 10-30-89; 8:45 am]
Chairman, Committee for the Implementation dozen shall be in Cate-
of Textile Agreements. That directive BILUNG CODE 3510-DR-M
gory 633, not more than
concerns imports into the United States of 803,000 dozen shall be
certain cotton, wool, man-made fiber, silk in Category 634, and not
blend and other vegetable fiber textiles and more than 559,000
dozen shall be In Cate- DEPARTMENT OF DEFENSE
textile products, produced or manufactured in
gory 635.
the Republic of Korea and exported during 638/639 .......................... 5,756,299 dozen. Public Information Collection
the twelve-month period which began on 640-D 8 ........................... 3,477,935 dozen of which Requirement Submitted to OMB for
January 1, 1989 and extends through not more than 1,325,538 Review
December 31, 1989. dozen shall be in Cate-
9
Effective on November 1, 1989, the gory 640-DY. ACTION: Notice.
directive, of December 13, 1988 is amended 640-0 10 .......................... 2,548,567 dozen of which
not more than 2,192,235
further to adjust the limits for the following dozen shall be in Cate-
The Department of Defense has
categories, as provided under the terms of the gory 640-OY. 1" submitted to OMB for clearance the
current bilateral textile agreement between 641 ........................... 1,042,542 dozen of which following proposal for collection of
the Governments of the United States and the not more than 37,730 information under the provisions of the
Republic of Korea: dozen shall 2be In 'Cate-,
gory 641-Y.'
Paperwork Reduction Act (44 U.S.C.
642 ............................... 98,672 dozen. Chapter 35).
Category Adjusted 12-month limit' 643 .................................. 778,560 numbers. Title, Applicable Form, and Applicable
64 7/648 ......................... 1,273,262 dozen.
650 ................................. 21,113 dozen. OMB Control Number: Civilian
Group I 659-H Is..: ............... 1,211,917 kilograms, Validation of ASVAB-14;
200, 201, 218-220, 387,587,856 square meters 659-S I, ....................... 156,811 kilograms. Suppleinental Information form,
222-229, 300-326, equivalent.
360-363, 369-02, Group III Behaviorally-Anchored Rating Scales
400,410,414, 464- 831-844 and 847- 12,507,858 square meters (BARS), Importance of Occupational
469, 600-607, 611- 859, as a group. equivalent. Dimensions; 0704-0292.
622, 624-629, 665- Sublevels in Group III Type of Request: Extension.
669 and 670-03, as
a group. 835 .................................
29,595 dozen. Average Burden Hours/Minutesper
836 .................................
76,315 dozen. Response: 15 minutes
Sublevels in Group I
' The limits have not been adjusted to account for
Frequency of Resonse: One
375,199 kilograms.
200 ..................................
2,689,281 kilograms.
300/301 .......................... any imports exported after December 31, 1988. Number of Respondents: 7,736
16,054,242 square meters.
317/326 ......................... 2In Category 369-0, all HTS numbers except Annual Burden Hours: 1,934
295,819 kilograms. 4202.12.4000, 4202.12.8020, 4202.12.8060.
604 ............. 4202.92.1500, 4202.92.3015 and 4202.92.6000 in Annual Responses: 7,736
611 ............. 2,230,203 square meters, Category 369-L. Needs and Uses: Three types of
625/626/627/628/ 11,749,337 square meters. 3 In Category 670-0, all HTS numbers except
629. 4202.12.8030, 4202.12.8070, 4202.92.3020 instruments will be used to determine
669-T 4 3,924,236 kilograms. 4202.92.3030 and 4202.92.9020 in Category 670-L the valdity of ASVAB 14 for predicting
Federal Register / Vol. 54, No. 209 / Tuesday, COtober 31,, 1989 f Notices 45779
performance in.12 civilian Washington, DC 20306-6000, telephone Collection Act of 1966 and the Debt
occupations&The Supplemental (202) 576-2900. Collection Act of 1982 to the "Authority"
Information form will ask employees Kenneth L. Denton, element. The specific changes. to. the
who take the ASVAB' certain Departmentof the Arzmy.Alternate Lirisan record system, being amended is set
background information about Officer.with, the FederalRegister. forth. below,. followed by the system
themselves. The Behaviorally- [FR Doc. 89-25515 Filed 10-30-89; 8:45 am] notice, as amended, published in Its
anchored Rating Scales will ask BILLING CODE 3710-08-M entirety The amended notice is not
supervisors their employees' within the purview of subsection (rJ of
performance; and the third instrument, the Privacy Act, 5 U.SC. 552a, which
Importance of Occupational Department of the Army requires the submission, of an altered
Dimensions, will ask supervisors to Privacy Act. of 1.974,. Amended, System system report.
indicate importance of the LM.. Bynm.
occupational dimensions covered in of Records Noticei Alternate OSDFederalRegisterLiaison-
the scales. AGENCY: Department of the Army,, DOD. Officer,.Departmentaf Defense.
AffecfeiPJrublic: IndfviduaIs, or OctoberZ4;41989.
ACTION Amendment of one sy-sten, of
households, State or local
governments, businesses or other for- records notice for puliin commenL AAFES702.34
profit, Federal agencies or employees, SUMMARY: The Department of the Army S.ystea rame
non-profit hstitutions. proposes to amend,one, system of
Frequenry:One-time oly. records, to its inventory of systems of rndividual Accounts Receivable Files
Respondentrs Obligation:Voluntary. records subject to, the. Privacy Act of (54 FR 14835, Apr 13, 1989J.
OMB Desk Offlir- Dr: Trmothy Sprehe 1974,. as amended, L5 U.S.C. 5524aa. The.
Written comments and Changes:
system notice for the amended systemis
recommendations on the proposed set forth. below.
information collection. should be sent to DATEW This amendment will be.
Dr. Timothy Sprehe at Office of A utharityfor mantenanceof the
effective November 30, 1989,, unless system:
Management of Budget Desk Officer, comments are received which would
Room 3235, New Executive; Office. result in a contrary determintion Delete entire entry and substitute with
Building, Washington DC 2050. "10 U.S.C. 3012 and 8012; Federal Claims
ADDRESS: Send comments to Mr. Robert
DoD ClearanceOfficer: Ms Pearl Collection Act of 1966, 31 U.S.C. § 3711;
Priest, Chief, Systems Management
Rascoe-Harrisom Debt Collection Act of 1982 (Pt-b. L. 97-
Branch HQ. Army Information Systems
Written request for copies, of the Command (AS--OPS-M4R,. Ft Huachuca, 3651,: 31 U.S.C. 5512' througli 551 , and
infoaation collection proposal should AZ 85613-5000. E.O. g397."
be sent. tG Ms. Rasco-Harison,. WHS/ SUPPLEIENTARY INFORMATION: The
* * * *. *
CATEGORIES OF INDIVIDUALS COVERED BY THE 3701(a)(3)) to collect dishonored check 21-8; 32 CFR Part 505; or may be
SYSTEM: indebtedness. obtained from the system manager.
AAFES customers (military, retirees,
POLICIES AND PRACTICES FOR STORING, RECORD SOURCE CATEGORIES:
civilian, and civilian dependents). RETRIEVING, ACCESSING, RETAINING AND
DISPOSING OF RECORDS IN THE SYSTEM:
From the customer and from
CATEGORIES OF RECORDS IN THE SYSTEM:
correspondence between AAFES and
Case files relating to debts owed by STORAGE: Vendors.
individuals, including dishonored Paper records in individual file
checks, deferred payment plans, home EXEMPTIONS CLAIMED FOR THE SYSTEM:
folders.
layaways, salary/travel advances, None.
pecuniary liability claims and credit RETRIEVABILITY. [FR Doc. 89-25588 Filed 10-30-89; 8:45 am]
cards. These files include all Retrieved by customer's surname or BILLING CODE 3810-Ol-M
correspondence to the debtor/his or her Social Security Number.
commander, notices from banks
concerning indebtedness, originals or SAFEGUARDS: Corps of Engineers, Department of
copies of returned checks, envelopes Records are maintained in areas the Army
showing attempts to contact the debtor, accessible only by authorized personnel
payment documentation, pay adjustment within AAFES/CM-G. Intent To Prepare a Draft
authorizations, deferred payment plan Environmental Impact Statement
applications, charges and statements or RETENTION AND DISPOSAL (DEIS) for a Clean Water Act Section
accounts, and home layaway cards. Records are retained in current files 404 Permit for Construction of Hunter
until close of fiscal year in which the Lake Reservoir near Springfield, IL
AUTHORITY FOR MAINTENANCE OF THE
SYSTEM:
receivable is cleared, or if office space
doesn't permit, at the end of the fiscal AGENCY: U.S. Army Corps of Engineers,
-10 U.S.C. 3012 and 8012; Federal quarter in which receivable is cleared. DoD.
Claims Collection Act of 1966, 31 U.S.C. At year end, files are stored for 10 years ACTION: Notice of intent.
3711; Debt Collection Act of 1982 (Pub. and subsequently forwarded to the
L. 97-365); 31 U.S.C. 5512 through 5514; Federal Records Center, Fort Worth, SUMMARY: On July 26, 1989, an
and E.O. 9397. Texas for destruction. application for a permit under Section
PURPOSE(S):
404 of the Clean Water Act (33 CFR part
SYSTEM MANAGER(S) AND ADDRESS: 325) was submitted to the U.S. Army
To process, monitor, and post audit Corps of Engineers, Rock Island District
accounts receivable, to administer the Commander, Army and Air Force
Exchange Service, Dallas, TX 75222. (Corps) for construction of the Hunter
Federal Claims Collection Act, and to Lake Reservoir near Springfield, Illinois.
answer inquiries pertaining thereto. To NOTIFICATION PROCEDURE: A DEIS will be prepared to address the
collect dishonored. check indebtedness. Individuals seeking to determine effects of construction and operation of
ROUTINE USES OF RECORDS MAINTAINED IN whether this system of records contains the project.
THE SYSTEM, INCLUDING CATEGORIES OF information about themselves should FOR FURTHER INFORMATION CONTACT.
USERS AND THE PURPOSE OF SUCH USES: address written inquiries to the Questions about the proposed action
To the U.S. Department of Justice/U.S. Commander, Army and Air Force and DEIS can be answered by: Charlene
Attorneys for legal action and/or final Exchange Service, ATTN: Chief, General Carmack; 309/788-6361, Ext. 570.
disposition of the debt claim. Accounting Branch, Comptroller Written comments may be addressed to:
To the Internal Revenue Service to Division,-Dallas, TX 75222 or telephone District Engineer, U.S. Army Engineer
obtain locator status for delinquent (214) 330-2631. District, Rock Island, ATTN: Planning
accounts receivables (controls exist to Individuals should provide full name, Division, Clock Tower Building-P.O.
preclude redisclosure of solicited IRS Social Security Number, or other Box 2004, Rock Island, Illinois 61204-
address data: and/or to report write-off acceptable identifying information that 2004.
amounts as taxable income as pertains will facilitate locating the records.
SUPPLEMENTARY INFORMATION:,
to amounts compromised and accounts RECORD ACCESS PROCEDURE: 1. The proposed reservoir, presently
barred from litigation due to age. known as Hunter Lake, would be
To private collection agencies for Individuals seeking access to
collection action when the Army has information about themselves contained constructed by building an earthfill dam
exhausted its internal collection efforts. in this system of records should address across Horse Creek, approximately one
To civil or criminal law enforcement written inquiries to the Commander, mile downstream of the confluence of
agencies for law enforcement purposes. Army and Air Force Exchange Service, Horse and Brush Creeks. The lake
The "Blanket Routine Uses" that ATTN: Chief, General Accounting would have a projected storage volume
appear at the beginning of the Branch, Comptroller Division, Dallas, of 17.4 billion gallons with a surface
Department of the Army's compilation TX 75222 or telephone (214) 330-2631. area at normal lake elevation of 3,250
of systems of records also apply to this Individuals should provide full name, acres. Proposed development will
system. Social Security Number, or other include approximately 82 miles of
acceptable identifying information that shoreline and 4,450 acres of marginal
DISCLOSURE TO CONSUMER REPORTING 'will facilitate locating the records. property surrounding the area of
AGENCIES: inundation.
Disclosure pursuant to 5 U.S.C CONTESTING RECORD PROCEDURE: 2. Alternatives, in addition to the No
552a(b)(12) may be made from this The Department of the Army rules for Action alternative, to be considered for
system to consumer reporting agencies accessing records and for contesting meeting water supply needs include
as'defined in the Fair Credit Reporting contents and appealing initial agency temporary or permanent diversions of
Act (15 U.S.C. 1681a(f) or the Federal determinations are published in water from the Sangamon River to
Claims Collection Act of 1966 (31 U.S.C. Department of the Army Regulation 430- supplement the City's present supply:
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / -Notices 45781
3. This notice solicits input and 52 FR 2147 Jan 20, 1987 Policiesandpracticesfor storing,
assistance from the interested public 52 FR.2149 Jan 20, 1987 retrieving,accessing,retainingand
and invites participation by affected 52 FR 8500 Mar 18, 1987 disposing of recordsin the system:
Federal and State agencies having 52 FR 15530 Apr 29, 1987
52 FR 22671 Jun 15, 1987 Storage:
special jurisdiction and/or expertise.
-'Impacts to natural, social, economic, 52 FR 45846 Dec 2, 1987 In line one, delete the words "Card/
and cultural resources resulting from 53 FR 17240 May 16, 1988 Luxury Permit" and replace with
53 FR 21512 Jun 8,1988 "Cards".
construction and operation of the
project will be addressed and 53 FR 22028 Jun 13, 1988
considered in determining whether it 53 FR 25363 Jul 6, 1988
53 FR 39499 Oct 7, 1988 Retention and disposal:
is in the public interest to grant or to
deny the permit. 53 FR 41224 Oct 20, 1988 Delete the entry in its entirety and
54 FR 8322 Feb 28, 1989 substitute with "All records maintained
4. A scoping meeting is expected to be 54 FR 14377 Apr 11, 1989
scheduled within the last quarter of for duration of tour of personnel
54 FR 32682 Aug 9, 1989
calendar year 1989 to facilitate early concerned and then destroyed."
54 FR 40160 Sep 29, 1989
input to the NEPA process and identify 54 FR 41495 Oct 10, 1989
significant issues to be analyzed in
depth in the EIS. The date, time and The specific changes to the record N10140-1
location of this meeting is yet to be systems being amended are set forth SYSTEM NAME:
determined. below, followed by the system notices,
5. It is anticipated that the DEIS will as amended, published in their entirety. Ration Card Records.
be made available to the public in the These notices are not within the SYSTEM LOCATION:
second quarter of calendar year 1991. purview of subsection (r) of the Privacy U.S. NavyPersonnel Support Activity
Dated: October 13, 1989. Act, 5 U.S.C. 552a, which requires the Detachments London, Holy Loch,
John R. Brown, submission of altered systems reports. Brawdy, Edzell, and Thurso, United
Colonel,EN Commanding. October 24,1989. Kingdom.
[FR Doc.,89-25514 Filed 10-30-89; 8:45 am] L.M. Bynum, CATEGORIES OF INDIVIDUALS COVERED BY THE
BILUNG CODE 3710-1V-M Alternate OSD FederalRegisterLiaison SYSTEM:
Officer,Deportment of Defense.
Officers, -enlisted, and civilian
Department of the Navy N10140-1 component personnel.
Privacy Act of 1974; Amended Record System name: CATEGORIES OF RECORDS IN THE SYSTEM:
Systems Ration Card, Luxury Permit Record Ration Card holders are entered on 5"
Cards (51-FR 18207, May 16, 1986). x 8' color coded cards, which are
AGENCY: Department of the Navy, DOD.
contained in boxes and maintained
ACTION: Notice of amended systems of Changes: alphabetically. Ration Cards are
records subject to the Privacy Act. registered in log, showing name of
System name:
SUMMARY: The Department of the Navy i'dividual and number of Ration Cards
proposes to amend eight systems of Delete entire entry and substitute with issued.
records in its inventory of record "Ration Card Records".
AUTHORITY FOR MAINTENANCE OF THE
systems subject to the Privacy Act of System location: SYSTEM:
1974, as amended (5 U.S.C. 552a).
Delete entire entry and substitute with 5 US.C. 301. Departmental
DATES: This proposed action will be Regulations.
"U.S. Navy Personnel Support Activity
effective without further notice
November 30, 1989, unless comments are Detachments London, Holy Loch, PURPOSE(S):
received which would result in a Brawdy, Edzell and Thurso, United
Kingdom." To establish strict control over
contrary determination. * * * * * persons entitled to acquire tax-free
ADDRESS: Send any comments to Mrs. ration items; to ensure entitled
Gwen Aitken, Head, PA/FOIA Branch, Categoriesof recordsin the system: personnel do not obtain more than one
Office of the Chief of Naval Operations ration card, and for inspection by
(OP-09B30), Room 5E521, Department of In line one, delete the words "/Luxury officers of Her Majesty's Commissioners
the Navy, The Pentagon, Washington, Permits." In line five, delete the words of Customs and Excise, United Kingdom,
DC 20350-2000. Telephone (202) 697- "/Luxury Permit." In line seven, delete with whom the Ration Card program
1459, Autovon: 227-1459. the words "Card/Luxury Permit" and was originally negotiated by the U.S.
SUPPLEMENTARY INFORMATION: The replace with "Cards". military authorities. Accredited
Department of the Navy systems of members of the Naval Investigative
records notices inventory subject to the Service Office may have access, upon
Privacy Act of 1974 have been published Purpose(s): request.
in the Federal Register as follows: In line nine, delete the words "Card ROUTINE USES OF RECORDS MAINTAINED IN
51 FR 12908 Apr 16, 1986 and Luxury Permits program" and THE SYSTEM, INCLUDING CATEGORIES OF
51FR 18086 May 16, 1986 (Compilation, replace with "Cards". USERS AND THE PURPOSE OF SUCH USES:
changes follow)
51 FR 19884 Jun 3,1986 The "Blanket Routine Uses" that
51 FR 30377 Aug 26, 1986 .appear at the beginning of the
51 FR 30393 Aug 26, 1986 Department of the Navy's compilation of
51 FR 45931 Dec 23, 1986 systems of records apply to this system.
45782 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
POUCIES AND PRACTICES FOR STORING, N10140-4 CATEGORIES OF RECORDS IN THE SVSEMW.
RETRIEVING, ACCESSING, RETAINING AND File sheet with membees name, rate,
DISPOSING OF RECORDS IN THE SYSTEM: System name:
Social Security Number, organization
STORAGE: USAREUR/USAFE Ration Card (51 assigned, and marital status.
All Ration Cards are maintained on 5' FR 18208, May 16, 1986).
AUTHORITY FOR MAINTENANCE OF THE
x 8' cards filed and listed in numerical Changes: SYSTEM:
order in logs. 5 U.S.C. 301, Departmental
RETRIEVABIUTY:
Regulations.
System location:
Retrieved by name. PURPOSE(S
Delete entire entry and substitute with To record the individuals holding a
SAFEGUARDS: "U.S. Navy Personnel Support Activity ration card.
Records held in file cabinets in space Detachment, Thurso UK, FPO New York
maintained by Enlisted Personnel Office 09516-1100." ROUTINE USES OF RECORDS MAINTAINED IN
during working hours and locked after THE SYSTEM, INCLUDING CATEGORIES OF
working hours. Categoriesof individuals covered by the USERS AND THE PURPOSE OF SUCH USES:
system: The 'Blanket Routine Uses" that
RETENTION AND DISPOSAL:
In lines three and four, delete the appear at the beginning of the
All records maintained for duration of words "U.S. Radio Station, FPO New Department of the Navy's compilation of
tour of personnel concerned and then York 09516" and substitute with "U.S.' systems of records apply to this system.
destroyed. Naval Communication Station, FPO POLICIES AND PRACTICES FOR STORING,
SYSTEM MANAGER(S) AND ADDRESS:.
New York 09516-3000." RETRIEVING, ACCESSING, RETAINING AND
DISPOSING OF RECORDS IN THE SYSTEM:
Commander, U.S. Naval Activities, Categoriesof records in the system:
United Kingdom, Box 60, FPO New York STORAGE:
In line two, delete the word
09510-5000. . and . and the period and File folders.
NOTIFICATION PROCEDURE: replace the period with a cona. Delete RETRIEVABILITY:.
Individuals seeking to determine line three in its entirety and substitute Retrieved by name.
whether this system of records contains with "' * * and marital status."
SAFEGUARDS:
information about themselves should
visit the U.S. Navy Personnel Support Locked safe in PSD with a 24 hour
Safeguards: security alarm.
Activity Detachment where attached.
Official addresses are published as an Delete the entire entry and substitute RETENTION AND DISPOSAL:
appendix to the Department of the with "Locked safe in PSD with a 24 hour Records are maintained as long as
Navy's compilation of systems of security alarm." member retains ration card. After
records. * * * * *
transfer, records are burned.
Personnel should be prepared to
present a valid military identification System manager(s)and address: SYSTEM MANAGER(S) AND ADDRESS:
card or Department of Defense Delete the entire entry and substitute Commanding Officer, U.S. Navy
identification card to view records with "Commanding Officer, U.S. Navy Personnel Support Activity, UK/
pertaining to themselves. NOREUR FPO New York 09553-2900 is
Personnel Support Activity, UK/
NOREUR FPO New York 09553-2900 is the overall policy official with the
RECORD ACCESS PROCEDURE:
the overall policy official with the Officer in Charge, U.S. Navy Personnel
Individuals seeking access to records Activity Detachment, Thurso United
Officer in Charge, U.S. Navy Personnel
about themselves contained in this Kingdom, FPO New York 09516-1100 as
Support Activity Detachment, Thurso
system of records should visit the U.S. the subordinate holder.
UK, FPO New York 09516-1100 as the
Navy Personnel Support Activity where
subordinate holder." NOTIFICATION PROCEDURE:
attached. Official addresses are
published as an appendix to the Individuals seeking to determine
Department of the Navy's compilation of whether this system of records contains
N10140-4
systems of records. information about themselves should
SYSTEM NAME: address written inquiries to the Officer
CONTESTING RECORD PROCEDURE: in Charge, U.S. Navy Personnel Support
The Department of the Navy rules for USAREUR/USAFE Ration Card. Activity Detachment, Thurso, United
accessing records and contesting SYSTEM LOCATION. Kingdom, FPO New York 09516-2200.
contents and appealing initial The request should include full name,
determinations by the individual U.S. Navy Personnel Support Activity address, and Social Security Number of
concerned are published in Secretary of Detachment, Thurso, United Kingdom, the individual concerned and should be
the Navy Instruction 5211.5, 32 CFR Part FPO New York 09516-1100. signed.. Personal visitors must have valid
701, or may be obtained from the system military I.D. or, if no longer in the
CATEGORIES OF INDIVIDUALS COVERED BY THE
manager. SYSTEM:
military, have other valid identification
such as a driver's license.
RECORD SOURCE CATEGORIES: USN personnel and their dependent
Not applicable. wives and children over 18 years of age RECORD ACCESS PROCEDURE:
who are stationed at U.S. Naval Individuals seeking access to records
EXEMPTIONS CLAIMED FOR THE SYSTEM Communication Station, FPO New York about themselves contained in this
None. 09516-3000. system of records should address
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 /_ Notices 45783
written inquiries to the Officer in and wish to purchase Navy Exchange Charge, U.S. Naval Weapons Facility,
Charge, U.S. Navy Personnel Support Gasoline. Detachment, FPO New York 09515-0052.
Activity Detachment, Thurso, United
CATEGORIES OF. RECORDS IN THE SYSTEM: CONTESTING RECORD PROCEDURE:
Kingdom, FPO New York 09516-1100.
Record on each individual contains The Department of the Navy rules for
CONTESTING RECORD PROCEDURE: information on vehicle description; accessing records and contesting
The Department of the Navy rules for dates of vehicle insurance, inspection contents and appealing initial
accessing records and contesting and tax; United Kingdom address of determinations by the individual
contents and appealing initial individual and amount of gasoline concerned are published in Secretary of
determinations by the individual allowed. the Navy Instruction 5211.5, 32 CFR Part
concerned are published in Secretary of 701, or may be obtained from the system
AUTHORITY FOR MAINTENANCE OF THE
the Navy Instruction 5211.5, 32 CFR Part manager.
SYSTEM:
701, or may be obtained from the system
manager. 5 U.S.C. 301, Departmental RECORD SOURCE CATEGORIES:
Regulations. Information concerning vehicles,
RECORD SOURCE CATEGORIES: insurance, inspection and tax is copied
PURPOSE(S):
Applicable U.S. Servicemen. from the appropriate document as
Information is used by custodian(s) to provided by the individual. Other
EXEMPTIONS CLAIMED FOR THE SYSTEM: allocate ration coupons to authorized information is received from the
None.
personnel. individual directly.
N10140-6 ROUTINE USES OF RECORDS MAINTAINED IN
EXEMPTIONS CLAIMED FOR THE SYSTEM:
THE SYSTEM, INCLUDING CATEGORIES OF
System name: USERS AND THE PURPOSE OF SUCH USES: None.
Gasoline Ration System (51 FR 18209, The "Blanket Routine Uses" that N12711-1
May 16, 1986). appear at the beginning of the
Department of the Navy's compilation of System name:
Changes:
systems of records apply to this system. Labor Management Relations Records
POLICIES AND PRACTICES FOR STORING, (51 FR 18216, May 16, 1986)
Purpose(s): RETRIEVING, ACCESSING, RETAINING AND, Changes:
In lines one and two, delete the words DISPOSING OF RECORDS IN THE SYSTEM: *k * * * *
activities maintain manual rosters of System manager(s) and address: maintained data base (access restricted
local union officials and representatives. Delete the entire entry and substitute to authorized users) contains all
OCPM Headquarters maintains manual with "Office of Civilian Personnel iinformation pertaining to a specific case.
roster of addresses and files concerning Management (Code 31), 800 North -Bargaining unit files contain information
national consultation with national/ Quincy Street, Arlington. VA 22203- about each bargaining unit, including
international unions regarding changes 1998." contact information on union local
in Departmental-level civilian personnel * * * * * presidents.
policies. (2) ADP system maintains
records by type of case and case AUTHORITY FOR MAINTENANCE OF THE
N12711-1
SYSTEM:
number (not individual). Centrally
maintained data base (access restricted SYSTEM NAME: 5 U.S.C. 7101-7135.
to authorized users) contains all Labor Management Relations Records
System. PURPOSE(S):
information pertaining to a specific case.
Bargaining unit files contain information To manage the Labor-Management
SYSTEM LOCATION:
about each bargaining unit, including Relations Program, e.g., administration/
contact information on union local Office of Civilian Personnel implementation of arbitration awards;
presidents." Management (OCPM) (Coile 31), processing of unfair labor practice
* * * * *
Department of the Navy and Designated charges; adjudication of negotiability
Contractors; OCPM Regional Offices; disputes, resolution of negotiations -
Purpose(s): and Navy staff headquarters and field impasses; interpretation of 5 U.S.C.
activities employing civilians. Official 7101-7135 through 3rd party case
In line four, beginning with the word mailing addresses are published as an decisions; national consultation and
"interpretation" delete entry in its appendix to the Department of the other dealings with recognized unions.
entirety and substitute with "processing Navy's compilation of systems of
of unfair labor practice charges; records. ROUTINE USES OF RECORDS MAINTAINED IN
adjudication of negotiability disputes, ,THE SYSTEM, INCLUDING CATEGORIES OF
CATEGORIES OF INDIVIDUALS COVERED BY THE USERS AND THE PURPOSE OF SUCH USES:
resolution of negotiations impasses;
SYSTEM:
interpretation of 5 U.S.C. 7101-7135 To representatives of the Office of
through 3rd party case decisions; Navy civilian employees paid from Personnel Management on matters
national consultation and other dealings appropriated and non-appropriated relating to the inspection, survey, audit,
with recognized unions." funds, who are involved in a grievance or evaluation of Navy Civilian Personnel
which has been referred to an arbitrator Management Programs.
Routine uses of recordsmaintainedin for resolution, or who are involved in To the Comptroller General or any of
the system, includingcategoriesof users the filing of an Unfair Labor practice his authorized representatives, in the
and the purpose of such uses: complaint which has been referred to course of the performance of duties of
the Federal Labor Relations Authority the General Accounting Office relating
In paragraph three, delete lines two (FLRA) for resolution, or who are
through four in their entirety and to the Navy's Labor Management
inVolved in a labor negotiations impasse Relations Program. To a duly appointed
substitute with "* * * Administrative which has been referred to the Federal
Law Judge, arbitrator, or other proper hearing examiner, Administrative Law
Service Impasses Panel or an interest Judge, arbitrator, or other proper 3rd
3rd party for the purpose of conducting a arbitrator for resolution, or who are
hearing or inquiry in connection with an party for the purpose of conducting a
involved in a negotiability dispute which hearing or inquiry in connection with an
employee's grievance, unfair labor has been referred to the FLRA for
practice charge, impasse, negotiability employee's grievance, unfair labor
resolution; union officials and practice charge, impasse, negotiability
appeal, or other labor relations dispute." representatives (both Navy employees
Delete paragraph four in its entirety. appeal, or other labor relations dispute.
and non-employees) involved in the
aforementioned processes and in The "Blanket Routine Uses" that
Policiesandpracticesfor storing, appear at the beginning of the
retrieving, accessing,retainingand national consultation; independent
arbitrators involved in grievance and Department of the Navy's compilation of
disposing of recordsin the system: systems of records also apply to this
interest arbitrations concerning Navy
Storage: activities. system.
At end of entry, add "ADP records are CATEGORIES OF RECORDS IN THE SYSTEM: POLICIES AND PRACTIOES FOR STORING,
stored in a central, contractor Records are comprised of (1) Manual
RETRIEVING, ACCESSING, RETAINING AND
maintained data base." DISPOSING OF RECORDS IN THE SYSTEM:
files maintained in paper folders,
Retrievability: manually filed by type of case and case STORAGE:
number (not individual). Folder contains Manual records are stored in paper
At end of entry, add "ADP records are all information pertaining to a specific folders. ADP records are stored in a
retrieved by case subject, activity, case. Field activities maintain manual central, contractor maintained data
bargaining unit, servicing personnel rosters of local union officials and base.
office, command, or 3rd party docket representatives. OCPM Headquarters
number." maintains manual roster of addresses RETRIEVABILITY:
Safeguards: and files concerning national Manual records are retrieved by case
consultation with national/international subject, case number, and/or individual
In line one, delete the word ..... unions regarding changes in employee names. ADP records are
manual * * " and at the end of the Departmental level civilian personnel retrieved by case subject, activity,
entry add "Access to the ADP system is policies. (2) ADP system maintains bargaining unit, servicing personnel
controlled through the use of multiple records by type of case and case office, commancL or 3rd party docket
security passwords." number (not individual). Centrally number.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31. 1989 / Notices 45785
North Quincy Street, Arlington, VA of area coordination significanc. and Records are retained for varying
22203-1998. their servicing personnel speakerm, specialists and other lengths of time as required by local
office, arbitrator's office, or Federal interested participants. regulations; some records may be
unions or local unions. maintained indefinitely.
CATEGORIES OF RECORDS IN THE SYSTEM
CONTESTING RECORD PROCEDURE: System isbcomposed of, but not limited SYSTEM MANAGER(S) AND ADDRESS:
to, records compiled in accordance with Director, Office of Civilian Personnel
The Department of the Navy rules for
regulations, correspondence regarding Management, 800 North Quincy Street,
accessing records and contesting
status of EEO investigations, index file Arlington, VA 22203-1998 and the heads
contents and appealing initial
of program administration and of Navy Staff, Headquarters, and field
determinations by the individual
interested participants including ad activities employing civilians. Official
concerned are published in Secretary of
hocs, summaries compiled for budget mailing addresses are published as an
the Navy Instruction 5215, 32 CFR Part
administration, biographies of speakers appendix to the Department of the
701, or may be obtained from the system
orof key officials obtained from Navy's compilation of systems of
manager.
individual. records.
RECORD SOURCE CATEGORIES: AUTJO4RITY fFOR MAINTENANCE OF THE NOTIFICATION PROCEDURE:
Navy civilian personnel offices; SYSTEM:
Individuals seeking to determine
arbitrator's offices- Federal unions and 5 U.S.C. 301, Departmental whether this system of records contains
union locals. Regulations. information about themselves should
EXEMPTIONS C.AIMED FOR TIHE SYSTEM: PURPOSE[S): address written inquiries to the
servicing Civilian personnel office where
None. To manage civilian personnel and
assigned or to the Director. Office of
special projects related to civilian
N12939-2 Civilian Personnel Management, 800
employees.
North Quincy Street, Arlington, VA
System name: ROUTINE USES OF RECORDS MAINTAINEO IN 22203-1998. The request should contain
Area Coordinator Information and THE SYSTEM, INCLUDING CATEGORIES OF full name, Social Security Number, and
Operation Files (51 FR 18219, May 16. USERS AND THE PURPOSE OF SUCH USES: address. For personal visits, proof of
198). To representatives of the Office of identification will consist of a
Personnel Management on matters Department of Defense orNavy building
Changes: relating to the inspection, survey, audit pass or identification badge or driver's
or evaluation of Navy civilian personnel license or other types of identification
45786' Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
bearing his/her signature or picture or New York Staten Island, Staten Island, POUCIES AND PRACTICES FOR STORING,
by providing information which may be New York 10305-5097." RETRIEVING, ACCESSING, RETAINING AND
DISPOSING OF RECORDS IN THE SYSTEM:
verified against the record.
STORAGE:
RECORD ACCESS PROCEDURE' N12950-3 The media in which these records are
Individuals seeking access to records maintained vary, but include Magnetic
about themselves contained in this SYSTEM NAME:
tape files; card files; file folders; ledgers;
system of records should address Payroll and Employee Benefits and printed reports.
written inquiries to the servicing civilian Records.
personnel office or to the Director, RETRIEVABILITY:
Office of Civilian Personnel SYSTEM LOCATION: Name and/or Social Security Number;
Management, 800 North Quincy Street, Commander, Navy Resale and employee job number; employee payroll
Arlington, VA 22203-1998. Services Support Office, Naval Station number.
New York Staten Island, Staten Island,
CONTESTING RECORD PROCEDURE: SAFEGUARDS:
New York 10305-5097.
The Department of the Navy rules for Locked file cabinets; safes; locked
accessing records and contesting CATEGORIES OF INDIVIDUALS COVERED BY THE offices which are supervised by
contents and appealing initial SYSTEM: appropriate personnel, when open;
determinations by the individual Civilian employees and former security guards; supervised computer
concerned are published in Secretary of civilian employees with the Navy Resale tape library which is accessible only
the Navy Instruction 5211.5; 32 CFR Part and Services Support Office and Navy through the computer center (entry to
701; or may be obtained from the system Exchanges located world-wide. (Payroll computer center is controlled by a
manager. combination lock known by authorized
and benefits information) Civilian
employees and former civilian personnel only).
RECORD SOURCE CATEGORIES:
employees of Coast Guard exchanges, RETENTION AND DISPOSAL:
Navy Civilian Personnel Offices and
clubs and messes and US Navy civilian Permanent records-maintained for
their representatives.
employees. five years.and then retired to the
EXEMPTIONS CLAIMED FOR THE SYSTEM: Director, National Personnel Records
CATEGORIES OF RECORDS IN THE SYSTEM:
None. Center, Civilian Personnel Records, 111
Distribution reports; tax reports; leave Winnebago Street, St. Louis, MO 63118.
N12950-3 accrual reports; earnings records cards,
payroll registers; insurance records and SYSTEM MANAGER(S) AND ADDRESS:
System name:
reports regarding property damage, Policy Official: Commander, Navy
Payroll and Employee Benefits personal injury or death, group life, Resale and Services Support Office,
Records (51 FR 18221, May 16, 1986). disability, medical and retirement plan; Naval Station New York Staten Island,
Changes: payroll savings authorization; record of Staten Island, NY 10305-5097.
payroll savings; overtime authorization; Record Holder Manager, Risk
Treasury Department tax withholding Management and Workers
System location: exemption certificate. Compensation Branch (TD2), Manager,
Labor/Employee Relations and
In lines two and three, delete the AUTHORITY FOR MAINTENANCE OF THE Employee Benefits Branch (IRD1),
words "Fort Wadsworth" and substitute SYSTEM: Comptroller Non-appropriated Fund
with "Naval Station New York Staten Division (CNAFD), Navy Resale and
Island". 5 U.S.C. 301, Departmental
Regulations and E.O. 9397. Services Support Office, Naval Station
New York Staten Island, Staten Island,
Authority for maintenance of the PURPOSE(S): NY 10305-5097.
system: To calculate pay; prepare checks for Individual record holders within the
distribution; prepare education registers; central system may be contacted
Delete the words "and'lO U.S.C. 5031" through the central system record
and substitute with ", Departmental leave records; to submit federal and holder. "
Regulations". At the end of the entry, state tax reports; to record contributions
add "and E.O. 9397." to benefit plans; to process all insurance NOTIFICATION PROCEDURE:
claims; to calculate retirement benefits Individuals seeking to determine
upon request of employees. whether this system of records contains
System manager(s)and address. information about themselves should
ROUTINE USES OF RECORDS MAINTAINED IN
In paragraph one, lines two and three, address written inquiries to the
THE SYSTEM, INCLUDING CATEGORIES OF
delete the words "Fort Wadsworth" and USERS AND THE PURPOSE OF SUCH USES: Commander, Navy Resale and Services
substitute with "Naval Station New Support Office, Naval Station New York
York Staten Island". Delete paragraph To the insurance carriers and the U.S. Staten Island Staten Island, NY 10305-
two and substitute with "Record Holder- Department of Labor, Bureau of 5097.
Manager, Risk Management and Employees Compensation. In the initial inquiry the requester
Workers Compensation Branch (TD2), The "Blanket Routine Uses" that must provide full name, Social Security.
Manager, Labor/Employee Relations appear at the beginning of the Number, activity where last employed.
and Employee Benefits Branch (IRDi), Department of the Navy's compilation of A list of other offices the requester may
Comptroller Non-Appropriated Fund systems of records also apply to this Visit will be provided after initial
Division (CNAFD), Navy Resale and system. contact is made at the office listed
Services Support Office, Naval Station above. At the time of a personal visit,
Federal Register / VoL 54, No. 209 / Tuesday, October 31, 1989 / Notices -4578
requesters must provide proof of identity 22203-1998 and the commanding officers Management ,System .fTIMS), the
containing the requester's signature. of the employee's activity," Personnel Automated Data System
* *
* *
(PADS), the Computerized FAnployee
REOORD ACCESS PROCEDURE: Management Program Administration
Individuals seeking access to records Record source categories: and Research (CEMPAR, Office -of
about themselves contained in this In line four, delete the word ','NCPC" Civilian Personnel Management
system of records should address. and substitute -with OCPM". Customer Support Centers, the
written inquiries to the Commander, Executive Personnel Managerment
Navy Reside and Services Support Information System JEPMIS) and the
Office, Naval Station New York Staten N12950-5 NCPDS base level and Headquarters
Island, Staten Island, NY 10395-W97. SYSTEM NAME: systems.
CONTESTING RECORD ROOCEDURM. Navy Civilian Personnel Data System AUT'HORrTN FOR MAINTENANCE OF THE
(NCPDS). SYSTEM:
The Department of the Navy uoles for
accessing records and contesting SYSTEM LOCATION: 5 U.S.C. 301; 5 U.S.C. 4118 E.O. 9397; 5
contents and appealing initial U.S.C. 2951; E.O. 10450; 42 U.S-C. 2000e
Office of Civilian Personnel
determinations by the individual Management 1OCMl and its field 5 U.S&C. 3135, 5 U.S.C 4301, et seq., 5
concerned are published in Secretary of offices; operating civilian personnel U.S.C. 4501 et seq., 5 U.S.C. 4705 and
the Navy Instruction 5211.5C, 32 CFR offices and Navy Commands and subparts D, E F, and G of title 5 U.S.C.
part 701, or may be obtained from the management offices; and the Navy and 29 CFR part 1613 et seq.
system manager. Regional Data Autoration Center PURPOSE(SJ:
(NARDAC) and its designated To -manage and administer the
RECORD SGURCE CA1EGORI2M contractors. Official maling addresses
Department's civilian personnel ard
The employee or former employee; are published as an appendix ,to the civilian manpower planning programs
payroll department; the employee's Department of the Navy's comp ilation of and in the design, development,
supervisor and the employee's physician systems of records. Included in this
maintenance and operation of the
or insurance carrier's physician. notice are those records duplicated for
automated system of records.
retrievability at a site doser to where
EXEMPTIONS CLAIMED FOR THE SYSTEM: Designated contractors of the
the employee worAs (e.g., in an
Department of the Navy and Defense in
None. administrative office or a supersor's
work area). the performance of their duties with
respect to equipment and system design,
CATEGORIES -OF4NDJWDUAL COVERED BY THE development test, operation and
System name: SYSTEM: maintenance.
Navy Civilian Personnel Data System Department of the Navy civiian
ROUTINE USES OF RECORDS MAINTAINED IN
(NCPDS) (51 FR 18222, May 16, 1986). employees paid from appropriated and THE SYSTEM, INCLUDING CATEGORIES OF
non-appropriated funds and foeign USERS AND M54ePUMPOSE OF SUO UES.
Changes: national direct and indirect hire
employees. To the Comptroller General or any of
his authoried representatives, in the
System location: CATEGORIES OF RECORDS IN THE SYSTEM: course of the performance 'of duties of
Delete lines one through six beginning The system is comprised of automated the General Accounting Office.
with "Chief' and ending with and non-automated records describiig To the Attorney General of the United
"Divisions" and substitute with "Office and identifyug the employee (e., States or his authorized representatives
of Civilian Personnel Management name, Social Security Account Number in connection with litigation, law
(OCPM) and its field offices". sex, birth date, minority designator. enforcement, or other matteis under the
citizenship, physical handicap code); the direct jurisdiction of the Department of
position occupied and the employee's Justice or carried out as the legal
Categoriesof recordsin the system: qualifications; salary and salary basis or representative of Executive Branch
other compensation and allowances; agencies.
In lines 33 and 34, delete the phrase To officials and employees of other
employee's status in relation to the
"OP-14/NGPC" and substitute with
position occupied and the organization departments and agencies of the
"Office of Civilian Personnel to which assigned; tickler dates for Executive Branch ofgovernment upon
Management (OCPMJ". request in the performance of their
impending changes in status; education
and training records; previous .nilitary official duties related to the screening
Routine uses of records,maintainedin status; functional code; previous and selection of Candidates for vacant
the system, including categoriesof users employment record. performance positions,
and the purpose of such uses appraisal and other data needed for To representatives of the Untled
screening and selection of an employee; States Department of Labor on matters
In paragraph eight, line one, delete the referral records; professional licenses relating to the inspection, survey, audit
words "complaints examiner" and and publications; and reason for , or evaluation of the Navy's apprentice
substitute with "Administrative Jadge'. position change or other.action affecting training programs or on other such
the employee and case files pertaining matters under the jurisdicition of the
System managers)and address:
to EEO, MSPB, labor and employee Labor Department.
relations, and incentive awamds. The To representatives of the Veterans
Delete the entry in its entirety and records are those found in the NCPDS Administration on matters relating to
substitute with "Director, Office of subsystems: the Navy Automated. the inspection survey, aucit or
Civilian Personnel Management, SW Civilian Manpower information System evaluation of the Navy's apprentice and
North Quincy Street, Arlington, VA (NACMISJ, the Training Information on-the-ob training program.
45788 Federal Register'/ Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
I
To contractors or their employees for the computer magnetic tapes are concerned are published in Secretary of
the purpose of automated processing of permanent. Manual records are the Navy Instruction 5211.5, 32 CFR part
data from employee personnel actions maintained on a fiscal year basis and 701, or may be obtained from the system
and training documents, or data are retained for varying periods from manager.
collection forms and other documents. one to five years.
To a duly appointed hearing examiner RECORD SOURCE CATEGORIES:
SYSTEM MANAGER(S) AND ADDRESS:
or arbitrator in connection with an Categories of sources of records in the
employee's grievance.- Director, Office of Civilian Personnel system are, the civilian personnel office
To an appointed Administrative Judge Management, 800 North Quincy Street,
of the employing activity; the payroll
for the purpose of conducting a hearing Arlington, VA 22203-1998 and the' *
office; OCPM headquarters; the security
in connection with an employee's formal commanding officers of the employee's
activity office of the employing activity; line
Equal Employment Opportunity (EEO) managers, other designated officials and
complaint. NOTIFICATION PROCEDURE: supervisors; the employee and persons
To officials and employees of schools
Individuals seeking to determine named by the employee as references.
and other institutions engaged to
provide training. whether this system of records contains
EXEMPTIONS CLAIMED FOR THE SYSTEM:
To labor organizations recognized. information about themselves should
under5 U.S.C. Chapter 71 when relevant address written Inquiries to the Director, None.
and necessary to their duties of Office of Civilian Personnel
Management, 800 North Quincy Street, N12950-6
exclusive representation concerning
personnel policies, practices, and Arlington, VA 22203-1998 or to the System Name:
matters affecting working conditions. civilian personnel officer under his/her
cognizance. The request should contain Computer Assisted Manpower
To representatives of the Federal Analyses System (CAMAS) (51 FR
Labor Relations Authority. the individual's full name, Social
Security Number and name of employing 18223, May 16,1986)
To representatives of the Merit
Systems Protection Board. activity. Requesters may visit the Changes:
The "Blanket Routine Uses" that civilian ersormel office of the naval
appear at the beginning of the activity covered by the system to obtain
Department of the Navy's compilation of information. In such case, proof of
systems of records also apply to this identity will consist of full name, Social System location:
system. Security Number and a third positive
identification such as driver's license, In line one, delete the words "Chief of
POLICIES AND PRACTICES FOR STORING, Navy building pass or identification Naval Operations (OP-14)," and
RETRIEVING, ACCESSING, RETAINING AND badge, birth certificate, Medicare card, substitute with "Office of Civilian
DISPOSING OF RECORDS IN THE SYSTEM: etc. Official mailing addresses are Personnel Management,".
STORAGE: published as an appendix to the
Automated records are stored on Department of the Navy's compilation of
magnetic tape, disc, drum and puniched systems of records. Authorityfor maintenance of the
cards and computer printouts. Manual RECORD ACCESS PROCEDURE:
system:
records are stored in paper file folders.
Individuals seeking access to records In line one, delete the word "Title". At
RETRIEVABIUTY: about themselves contained in this the end of the entry, add "and E.O.
Information is retrieved by Social system of records should address 9397."
Security Number or other similar written inquiries to the Director, Office
substitute if there is no Social Security of Civilian Personnel Management, 800
Number, position number, name, or by North Quincy Street, Arlington, VA
22203-1998 or to the civilian personnel System manager(s)and address:
specific employee characteristics such
as date of birth, grade, occupation, officer under his/her cognizance. The Delete the entire entry and substitute
employing organization; tickler dates, request should contain the individual's with "Director, Office of Civilian
academic specialty level. full name, Social Security Number and Personnel Management, 800 N. Quincy
name of employing activity. Requesters St., Arlington, VA 22203-1998".
SAFEGUARDS: may visit the civilian personnel office of
The computer facility and terminal are the naval activity covered by the system
accessible only to authorized persons to obtain information. In such case,
that have been properly screened, proof of identity will consist of full N12950-6
cleared and trained. Manual and name, Social Security Number and a
automated records and computer third positive identification such as SYSTEM NAME:
printouts are available only to driver's license, Navy building pass or Computer Assisted Manpower
authorized personnel having a need-to- identification badge, birth certificate, Analyses System (CAMAS).
know. Medicare card, etc. Official mailing
addresses are published as an appendix SYSTEM. LOCATION:
RETENTION AND DISPOSAL: to the Department of the Navy's
Input documents are destroyed after Office of Civilian Personnel
compilation of systems of records.
data are converted to magnetic medium. Management, and Navy Department
Information is stored in magnetic CONTESTING RECORD PROCEDURE: Staff, headquarters, and field.activities
medium within the ADP system. The Department of the Navy rules for employing civilians. Official mailing
Information recorded via-magnetic accessing records and contesting addresses are published as an appendix
medium will be retained permanently. contents and appealing initial . to the'Department of the-Navy's
For TIMS and the apprentice programs determitihtions by the individual -.- compilation of systems of records.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45789
CATEGORIES OF INDIVIDUALS COVERED BY THE system of records should address .are available to Government agencies.
SYSTEM: written inquiries to the Director, Office These exemptions are used whenever
Navy civilian employees paid from of Civilian Personnel Management, 800 the anticipated savings outweigh the
administrative costs associated with
appropriated funds. North Quincy Street, Arlington, VA
CATEGORIES OF RECORDS IN THE SYSTEM:
22203-1998. processing required documentation.
When a Government contractor
Files contain records from the CONTESTING RECORD PROCEDURE:
purchases foreign supplies it must notify
Personnel Automated Data System The Department of the Navy rules for the contracting officer to determine
(PADS) which contain job related data accessing records and contesting whether the supplies should be duty-
including individual identification, contents and appealing initial free. In addition, all shipping documents
location information, and salary. determinations by the individual and containers must specify certain
AUTHORITY FOR MAINTENANCE OF THE
concerned are published in Secretary of information to assure the duty-free entry
SYSTEM: the Navy Instruction 5211.5, 32 CFR part of the supplies.
701, or may be obtained from the system
5 U.S.C. 301, Departmental manager. The contracting officer analyzes the
Regulations and E.O. 9397. information submitted by the contractor
RECORD SOURCE CATEGORIES: to determine whether or not supplies
PURPOSE(S
Personnel Automated Data System should enter-the country duty-free. The
To aggregate manpower planning, information, the contracting officer's
including calculating transition rates,
(PADS).
determination, and the U.S. Customs
forecasting number of retirements, and EXEMPTIONS CLAIMED FOR THE SYSTEM: forms are placed in the contract file.
running models to determine the extent None.
to which projected manpower [FR Doc. 89-25589 Filed 10-30-89; 8:45 am] b.Annual Reporting Burden
requirements can be met. This is estimated as follows:
BILLING CODE 3810-01
ROUTINE USES OF RECORDS MAINTAINED IN Respondents, 10; total annual responses,
THE SYSTEM, INCLUDING CATEGORIES OF 13,300; hours per response, .5; responses,
USERS AND THE PURPOSE OF SUCH USES: DEPARTMENT OF DEFENSE total burden hours, 6,650.
The "Blanket Routine Uses" that GENERAL SERVICES Obtaining Copies of Proposals:
appear at the beginning of the Requester may obtain copies from the
ADMINISTRATION
Department of the Navy's compilation of FAR Secretariat (VRS), Room 4041, GSA
systems of records apply to this system. NATIONAL AERONAUTICS AND Building Washington, DC 20405,
POLICIES AND PRACTICES FOR STORING, SPACE ADMINISTRATION -
telephone (202) 523-4755. Please cite
RETRIEVING, ACCESSING, RETAINING AND
OMB Control No. 9000-0022, Customs
DISPOSING OF RECORDS IN THE SYSTEM Federal Acquisition Regulation (FAR); and Duties.
STORAGE:
Information Collection Under OMB Dated: October 23, 1989.
Computer magnetic tape and disc.
Review Margaret A. Willis,
AGENCIES: Department of Defense FAR Secretariat.
RETRIEVABILUTY:
(DOD), General Services Administration [FR Doc. 89-25517 Filed 10-30-89; 8:45 am]
Retrieved by Social Security Number. (GSA), and National Aeronautics and BILLING CODE 6820-JC-M
SAFEGUARDS: Space Administration (NASA).
Records are maintained in areas ACTION: Notice.
accessible only to authorized personnel. Federal Acquisition Regulation (FAR);
Information Collection Under OMB
RETENTION AND DISPOSAL SUMMARY: Under the provisions of the Review
Records are permanent. Paperwork Reduction Act of 1980 (44
U.SC. chapter 35), the Federal AGENCIES: Department of Defense
SYSTEM MANAGER(S) AND ADDRESS: Acquisition Regulation (FAR) (DOD), General Services Administration
Office of Civilian Personnel Secretariat has submitted to the Office (GSA), and National Aeronautics and
Management, Department of the Navy, of Management and-Budget (OMB) a Space Administration (NASA).
800 North Quincy Street, Arlington, VA request to review and approve an ACTION: Notice.
22203-1998. extension of a currently approved
NOTIFICATION PROCEDURE:
information collection, Customs and
Duties.
Individuals seeking to determine
whether this system of records contains ADDRESS: Send comments to Ms. SUMMARY: Under the provisions of the
information about themselves should Eyvette. Flynn, FAR Desk Officer, OMB, Paperwork Reduction Act of 1980 (44
address written inquiries to the Director, Room 3235, NEOB, Washington, DC U.S.C. chapter 35), the Federal
Office of Civilian Personnel 20503. Acquisition Regulation (FAR)
Management, 800 North Quincy Street, FOR FURTHER INFORMATION CONTACT: Secretariat has submitted to the Office
Arlington, VA 22203-1998. The request Ms. Jeritta Parnell, Office of Federal of Management and Budget (OMB) a
for information must contain full name Acquisition Policy, GSA (202) 523-6982. request to review and approve an
of the individual, current address and SUPPLEMENTARY INFORMATION: extension of a currently approved
telephone number, and birth date and information collection, Customs and
Social Security Number.
a. Purpose Duties.
United States laws impose duties on ADDRESS: Send comments to Ms.
RECORD ACCESS PROCEDURE: foreign supplies imported into the Eyvette Flynn, FAR Desk Officer, OMB,
Individuals seeking access to records customs territory of the United States. Room 3235, NEOB, Washington, DC
about themselves contained in this Certain exemptions from these duties 20503.
45790 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 1 Notices
FOR FURTHER INFORMATION CONTACT. "closed-captioned network, syndicated needs of independent and small
Ms. Jeritta Parnell, Office of Federal and public". company inventors were being
-Acquisition Policy, GSA, (202) 523-6982. FOR FURTHER INFORMATION CONTACT. addressed by numerous programs at the
SUPPLEMENTARY INFORMATION: Joseph Clair, Office of Special Education non-federal level. The proliferation of
a. Purpose and Rehabilitative Services, Division of programs during the middle of the
Educational Services, 400 Maryland decade indicated widespread interest at
Under the Trade Agreements Act of Avenue, SW., Room 4622, Switzer the state and local level in helping
1979, unless specifically exempted by Building, Washington, DC 20202 inventors and technology based small
statute or regulation, agencies are Telephone: (202) 732-4503. businesses succeed. Since that time,
required to evaluate offers over a Authority: 20 U.S.C. 1451, 1452.
certain dollar limitation not supply an program staff have been involved in
Dated: October 25,1989. identifying and characterizing various
eligible product without regard to the
restrictions of the Buy American Act or Robert Davila, assistance programs that can be useful
the Balance of Payments program. AssistantSecretary, Office of Special to inventors.
Offerors identify excluded end products EducationandRehabilitativeServices. This solicitation represents a new
on this certificate. [FR Doc. 89-25539 Filed 10-31-89; 8.45 am] effort of the States' Initiatives Program
The contracting officer uses the BILLING CODE 4000-01-M to provide assistance to groups (inventor
information to identify the offered items support groups] which work with
which are domestic end products. Items independent and small company
having components-of unknown origin inventors in the area of invention
are considered to have been mined, DEPARTMENT OF ENERGY development and commercialization
produced, or manufactured outside the assistance or otherwise promote the
United States or a designated country of Solicitation for Grant Application
interests of inventors. This solicitation
the Act. AGENCY: U.S. Department of Energy. invites proposals for grants to support
b. Annual Reporting Burden ACTION: Solicitation for grant new initiatives by inventor support
application. groups; it is not intended to offset the
This is estimated as follows: cost of established day-to-day
Respondents, 10; total annual responses, SUMMARY: The U.S. Department of
11,400; hours per response, .167; operations of existing programs. The
Energy (DOE), pursuant to the DOE
responses, total burden hours, 1,904. Financial Assistance Rule, 10 CFR 600.9,
grants will be awarded to inventor
ObtainingCopies of Proposals: announces the availability of a
support groups proposing new,
Requester may obtain copies from the solicitation for grant application No.
innovative projects aimed at improving
FAR Secretariat (VRS), Room 4041, GSA DE-90CH15997 under the States' assistance to inventors. The grants will
Building, Washington, DC 20405, Initiative Subprogram of the Energy- be for projects of up to one year in
telephone (202) 523-4755. Please cite Related Invention Program (ERIP). length. Examples of such projects would
OMB Control No. 9000-0025, the Buy FOR FURTHER INFORMATION CONTACT:
include experimental inventor-resource
American Act-Trade Agreements Act- Ms. Mary Lou Zambrano, U.S. matching systems, development of
Balance of Payments Program Department of Energy, Chicago educational materials pertaining to the
Certificate. Operations Office, 9800 South Cass invention commercialization process or
Dated: October 23, 1989. Avenue, Argonne, IL 60439, (312) 972- projects which will enhance the
Margaret A. Willis, 2077. standing of inventors as a group.
FAR Secretariat. SUPPLEMENTARY INFORMATION: The Project applications must identify a
[FR Doc. 89-25518 Filed 10-30-89; 8:45 am] objective of this solicitation is to complete project and the availability of
BILLING CODE 6820JC-M ,identify and provide support for up to resources required to complete it in
ten innovative projects to be conducted order to receive consideration. Funding
by nonfederal entities in the field of will not be awarded to start a project
DEPARTMENT OF EDUCATION providing support to independent that will rely upon as yet unidentified
inventors. resources for completion. Special
[CFDA 84.0261 ERIP was established in 1974 under consideration will be given for projects
the authority of the Federal Non-Nuclear that are transferable to other inventor
Educational Media Research,
Energy Research and Development Act support groups for their educational
Production, Distribution, and Training
of 1974 to assist independent and small benefit or duplication by them. A final
Program; Correction
company inventors. The principal means report on the results of each project will
AGENCY: Department of Education. through which the program has worked be required. Project results will be
ACTION: Final priority; correction. with inventors is a program offering published in the Inventor Assistance
technical evaluation of inventions by the
Newsletter published by Argone.
SUMMARY: On September 14, 1989, final National Institute of Standards and
funding priorities for certain new Direct Technology (NIST), formerly the
National Laboratory.
Grant awards for FY 1990 were National Bureau of Standards (NBS), Total funding for this solicitation is
published at 54 FR 38160. The notice and the prospect of financial support $200,000.00 to fund up to ten grafits. No
contained a final priority for Closed- (grants) form DOE for those inventions grant under this solicitation will exceed
Captioned Children's Program under the identified by NIST as "promising" in $20,000.00. The solicitation is expected
Educational Media Research, terms of technical feasibility, to be issued on or about November 6,
Production, Distribution, and Training commercial viability and energy impact 1989 with applications due on or about
Program, at 54 FR 38164. , potential. December 8, 1989. If you are interested
The priority is corrected as follows: Establishement of the States' in receiving the solicitation, send your
On page 38164, in the second column, Initiatives Program in 1986 was, written request to Mary Lou Zambrano,
the fifth line is corrected to read prompted by the recognition that the Team Secretary at the above address.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45791
All responsible sources may submit an above. Requests must be received 5 alleges it is unable to convert the full
application, which will be considered. days prior to the meeting and portion of sales entitlements to
Timothy S. Crawford, reasonable provision will be made transportation entitlements it requested
Assistantlvlanagerfor Administration. to include the presentation on the in order to avoid the GIC payments to
[FR Doc. 89-25618 Filed 10-30--9; 8:45 am] agenda. The Chairperson of the Texas Eastern.
BILLING CODE 6450-O-M Committee is empowered to Equitrans contends that in order to
conduct the meeting in a fashion obtain priority to firm receipt and
that will facilitate the orderly delivery points for FT-1 service, Texas
Advisory Committee on Nuclear conduct of business. Eastern's sales customers were required
Facility Safety; Open and Closed Closed Meeting: Pursuant to section to submit nominations for those points
Meetings 10(d) of the Federal Advisory by October 1, 1989. Equitrans contends
Committee Act, Public Law 92-463, that it fully complied with Texas*
Pursuant to the provisions of the as amended (U.S.C. App. 11 (1982)), Eastern's tariff.requirements by
Federal Advisory Committee Act (Pub. part of these advisory committee requesting firm FT-1 conversions of
L. 92-463, 86 Stat. 770), notice is hereby meetings concerns matters listed in 60,000 dekatherms (dth) per day by
given of the following advisory 5 U.S.C. 552b(c)(1). Accordingly on letter dated September 25, 1989 and
committee meeting: November 14, 1989, from amended on September 29, 1989.
Name: Advisory Committee on Nuclear approximately 1:00 p.m. until 5:00
Facility Safety. However, even though the conversion
p.m., the meeting will be closed to option was intended to permit up to 100
Date & Time: the public.
-- Monday, November 13, 1989, 8:00 a.m. percent abandonment of the sales
Transcripts:The transcript of the open service at the sole discretion of the sales
to 10:00 p.m. meeting will be available for public
Tuesday, November 14, 1989, 1:00 p.m. customer, Equitrans alleges that it was
review and copying at the Freedom denied its request for even the 60,000 dth
to 5:00 p.m. of Information Public Reading
Place:Harvey Hotel, 31001-40 West, conversion it requested. Equitrans
Room, IE-190,Forrestal Building, asserts that Texas Eastern informed
Amarillo, Texas 79102. 1000 Independence Ave., SW.,
Contact:Wallace R. Kornack, Executive Equitrans by letter on October 9, 1989,
Washington, DC, between 9:00 a.m. that it would permit only 20,000 dth of
Director, ACNFS, S-2, 1000 and 4:00 p.m., Monday through,
Independence Avenue SW., firm transportation and that if it still
Washington, DC 20585, Telephone: Friday, except Federal holidays. desired FT-1 conversion of the
202/586-1770. Issued at Washington, DC on October 25, remaining 40,000 dth, it must request
Purpose of the Committee: The 1989, alternative firm receipt and delivery,
Committee was established to .. Robert Franklin, points by noon on October 11, 1989, less
provide the Secretary of Energy Deputy Advisory Committee Management than 48 hours after the letter was
with advice and recommendations Officer. received. Equitrans contends this was
concerning the safety of the [FR Doc. 89-25619 Filed 10-30-89; 8:45 am] insufficient time to arrange for new gas
Department's production and BILLING CODE 6450-1-M
purchase agreements with third parties.
utilization facilities, as defined in In addition, according to Equitrans, it
section 11 of the Atomic Energy Act and the other customers were required
Federal Energy Regulatory to execute new ten-year service
of 1954, as amended (42 U.S.C.
2014). Commission agreements which provide for, interala,
full or partial conversions from firm
Tentative Agenda [Docket No. RP90-15-0001 sales to firm transportation, by October
November 13, 1989 Equitrans, Inc. v. Texas Eastern 16, 1989. Equitrans asserts that it had no
8:00 a.m. Chairman John F. Ahearne Transmission Corp.; Complaint and meaningful choice but to execute a
Opens Meeting, Waste Isolation Request for Stay service agreement providing for only
Pilot Plant Report, Committee 20,000 dth of firm transportation under
Business, Review of Issues at October 24, 1989. Rate Schedule FT-1, and make no
Pantex. Take notice that on October 20, 1989, change with respect to its remaining
Noon. Lunch. pursuant to Section 5 of the Natural Gas sales entitlements.
1:00 p.m. Review of Issues at Pantex, Act, 15 USCA § 717d, Section 10(d) of Equitrans requests that the
Subcommittee Reports, Committee the Administrative Procedure Act,.5 Commission:
Business. USCA § 705, and Rules 206 and 212 of ,(1) Investigate the policy of Texas
5:00 p.m. Meeting Adjourned until 8:00 the Commission's Rules of Practice and Eastern with respect -to handling
p.m. Procedure, 18 CFR 385.206 and 385.212, requests for firm transportation receipt
8:00 p.m. to 10:00 p.m. Public Comment Equitrans, Inc. (Equitrans) filed an and delivery points for FT-1 and
Session. emergency complaint against Texas standby service customers;
November 14, 1989 Eastern Transmission Corporation (2) Assure that Texas Eastern give a
1:00 p.m. to 5:00 p.m. Closed Meeting. (Texas' Eastern) and requests an higher priority to requests for firm
PublicParticipation:The meeting on immediate stay of the Commission's receipt and delivery points by customers
November 13 is open to the public. authorization for Texas Eastern to opting for FT-1 conversions than for
-Written statements may be filed implement a Gas Supply Inventory standby service;
with the Committee either before or Reservation Charge (GIC) pending (3) Direct Texas Eastern to
after the meeting. Members of the action on the complaint. incorporate its policy on allocating FT-1
public who wish to make oral Equitrans alleges it has been unable to capacity in its FERC Gas Tariff;
statements at the public comment secure, to the extent requested, the FT-1 (4) Provide for an iterative process to
session on November 13 should firm receipt and delivery points upon take place under which a series of '
contact Wallace R. Kornack at the which to secure transportation of third requests for firm receipt and delivery
address or telephone number listed • party supplies. As a result, Equitrans points would be made by customers
45792 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
I
converting to firm transportation'from Waechter, Poitevent, Carrere & Denegre, abandonment previously issued by the
firm sales service in whole or in part Suite 1700, One American Plaza, Baton Commission in Docket No. CI89-348-000
until such time as all requests for firm Rouge, Louisiana 70825 on behalf of to the extent necessary to authorize the
points have been satisfied at mutually Walker Resources, Inc. (Applicant) sale for resale of gas purchased by
agreeable points; submitted for filing an application for Natgas from Northwest Alaskan
(5) Nullify new ten-year service certification of a facility as a qualifying Pipeline Company (Northwest Alaskan)
agreements between Texas Eastern and cogeneration facility pursuant to as part of the Alaska Natural Gas
its customers executed on or about § 292.207 of the Commission's Transportation System (ANGTS)
October 16, 1989. and permit new regulations. No determination has been prebuild project. Natgas also request
agreements to be executed after the new made that the submittal constitutes a that the Commission amend the blanket
rounds of requests for firm receipt and complete filing. certificates of marketers which purchase
delivery points have been concluded; The proposed topping-cycle gas from Natgas to provide such
(6) Determine whether denials of cogeneration facility will be located at marketers with blanket authorization to
requests for firm receipt and delivery 2800 Richland Street, Metairie, sell such gas for resale. In addition,
points that were made by Texas Eastern Louisiana. The facility will consist of an Natgas requests that it be authorized to
in order to reserve the locations where internal combustion engine-generator resell prebuild gas which it purchases
the lowest cost supplies are available and a heat recovery boiler. The thermal from Northwest.Alaskan at the contract
for Texas Eastern's system supply; and energy recovered from the facility will rates which it negotiates at arm's length
(7) Stay the authorization for Texas be used in pasteurizing and processing with its customers and that similar
Eastern to commence billing its sales milk and milk products, and for space authority be granted to certificated
customers a GIC for purchase heating and cooling. The net electric marketers who purchase such gas from
deficiencies until after the firm power production capacity will be 481 Natgas for resale. Finally, Natgas
transportation conversions and new kW. Primary source of energy will be requests that the Commission find that
service agreements requested above natural gas. Commission actions granting the
have been completed and executed, Any person desiring to be heard or approvals requested are "necessary or
respectively. objecting to the granting of qualifying related to the construction and initial
Any person desiring to be heard or to status should file a petition to intervene operation of the * * * [ANGTSJ" and
protest said complaint should file a or protest with the Federal Energy grant any waivers or relief as may be
motion to intervene or a protest with the Regulatory Commission, 825 North necessary to implement the proposal set
Federal Energy Regulatory Commission, Capitol Street NE., Washington, DC forth herein. The application is on file
825 North Capitol Street, NE., 20426, in accordance with rules 211 and with the Commission and open for
Washington, DC 20426, in accordance 214 bf the Commission's Rules of public inspection.
with Rules 214 and 211 of the Practice and Procedure. All such According to Natgas, the
Commission's Rules of Practice and petitions or protests must be filed within authorization requested is an integral
Procedure [18 CFR 385.214, 385.211 30 days after the date of publication of part of a comprehensive settlement
(1988)]. All such motions or protests this notice and must be served on the agreed to by Pan-Alberta Gas Ltd. and
should be filed on or before November 7, applicant. Protests will be considered by United Gas Pipe Line Company (United)
1989. Protests will be considered by the the Commission in determining the on June 5, 1989, in order to resolve all
Commission in determining the appropriate action to be taken but will ongoing disputes pertaining to United's
appropriate action to be taken, but will not serve to make protestants parties to
not serve to make protestants parties to obligation to the ANGTS prebuild
the proceeding. Any person wishing to project and to release United
the proceeding. Any person wishing to become a party must file a petition to permanently from all such obligations.
become a party must file a motion to intervene. Copies of this filing are on file
intervene. Copies of this filing are on file It appears reasonable and consistent
with the Commission and are available with the public interest in this case to
with the Commission and are available for public inspection. prescribe a period of 10 days for the
for public inspection. Answers to this Lois D. Cashell,
complaint shall be due on or before filing of protests and petitions to
Secretary. intervene. Therefore, any person
November 7, 1989. [FR Doc. 89-25523 Filed 10-30-89; 8:45 am] desiring to be heard or to make any
Lois D. Cashell, protest with reference to said
BILUNG CODE 6717-01-M
Secretary. application should on or before
[FR Doc. 89-25524 Filed 10-30-89; 8:45 am] November 3, 1989, file with the Federal
BILLING CODE 6717-01-M [Docket No. C189-348-001] Energy Regulatory Commission,
Natgas U.S. Inc.; Application To Amend Washington, DC 20426, a petition to
[Docket No. OF88-72-003] a Blanket Certificate With Pregranted intervene or a protest in accordance
Abandonment with the requirements of the
Gulf Coast Engineering Management, Commission's Rules of Practice and
Inc., and Boyce Machinery Corp. October 24, 1989. Procedure (18 CFR 385.211 and 385.214).
(Walker-Roemer Facility; Application Take notice that on October 23, 1989, All protests filed with the Commission
for Commission Certification of Natgas U.S. INC. (Natgas) of 500, 707 will be considered by it in determining
'Qualifying Status of a Cogeneration Eighth Avenue, SW., Calgary, Alberta, the appropriate action to be taken but
Facility Canada, T2P 3V3, filed an application will not serve to make the protestants
pursuant to sections 4 and 7 of the parties to the proceeding. Any person
October 24, 1989. Natural Gas Act and the Federal Energy wishing to become a party in any
On October 17, 1989, Gulf Coast Regulatory Commission's (Commission) proceeding herein most file a petition to
Engineering Management, Inc., 6 regulations thereunder and Section 9 of intervene in accordance with the
Richmond Place, New Orleans, the Alaska Natural Gas Transportation Commission's rules.
Louisiana 70115 and Boyce Machinery Act of 1976 to amend its blanket Under the procedure herein provided
Corporation, c/o Jones, Walker, certificate with pregranted for, unless otherwise advised, it will be
Federal. Register /.Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45793
unnecessary for Natgas to appear or to Northwest Alaskan Pipeline Co., Docket No. with the requirements of the
be represented at the hearing. CP78-123-028 Commission's Rules of Practice and
Lois D.Cashell, Northwest Alaskan Pipeline Co., Docket No. Procedure (18 CFR 385.214 or 385.211)
RP90-16-000
Secretary. Northern Border Pipeline Co., Docket No. and the Regulations under the Natural
[FR Doc. 89-25525 Filed 10-30-89; 8:45 am] CP78-124-013 Gas Act (18 CFR 157.10). All protests
BILLING CODE 6717-01-M Natgas (U.S.) Inc., Docket No. C189-348-001 filed with the Commission will be
United Gas Pipe Line Co., Docket No. CP79- considered by it in determining the
400-004 appropriate action to be taken, but will
[Docket No. CP90-93-0001 Northern Natural Gas Co., Natgas (U.S.) Inc., not serve to make the protestants
Docket No. CP79-396-007 parties to the proceeding. Any person
Natgas U.S. Inc.; Application wishing to become a party to a
Natgas states that Pan-Alberta is the
October 24, 1989. export/supplier of 800,000 Mcf per day proceeding or to participate as a party in
Take notice that on October 23, 1989, of natural gas to Northwest Alaskan any hearing therein must file a motion to
Natgas U.S. Inc. (Natgas), 500, 707 Eighth Pipeline Company (Northwest Alaskan), intervene in accordance with the
Avenue, SW., Calgary, Alberta, Canada, which sells the gas for resale in Commission's Rules.
T2P 3V3, filed an abbreviated interstate commerce to three interstate Take further notice that, pursuant to
application pursuant to Section 7(c) of pipelines. The gas is transported by the authority contained in and subject to
the Natural Gas Act, section 9 of the Northern Border Pipeline .Company as the jurisdiction conferred upon the
Alaska Natural Gas Transportation Act part of the pre-build project of the Federal Energy Regulatory Commission
(ANGTA) and part 157 of the Eastern Leg of the ANGTS. Natgas by sections 7 and 15 of the Natural Gas
Commission's Regulations for the further states that one on those Act and the Commission's Rules of -
expedited issuance of a certificate of interstate pipeline repurchasers, United Practice and Procedure, a hearing will
public convenience and necessity. Gas Pipe Line Company, (United) is be held without further notice before the
By such application, Natgas seeks: assigning its rights and obligation to Commission or its designee on this
(1) Authorization to sell up to 100,000 purchase and ship up to 450,000 Mcf per application if no motion to intervene is
Mcf of natural gas per day to Northern day to Natgas. Natgas states that it will filed within the time required herein, if
Natural Gas Company for resale in seek to market these supplies of natural the Commission or its designee on this
interstate commerce; gas, which it will now purchase from its application if no motion to intervene is
(2) A finding that such an affiliate, Pan-Alberta. filed within the time required herein, if
authorization is necessary or related to Natgas states that this application the Commission on its own review of the
the construction and initial operation of requests certification of a specific long- matter finds that a grant of the
the Alaskan Natural Gas Transportation term sale for resale in interstae certificate is required by the public
System (ANGTS); commerce of up to 100,000 Mcf per day convenience and necessity. If a motion
(3) Confirmation that the sale by of those supplies to Northern pursuant for leave to intervene is timely filed, or if
Natgas to Northern is exempt from to a Gas Purchase Agreement dated the Commission on its own motion
Order No. 380 concerning minimum bills, October 16, 1989, between Natgas and believes that a formal hearing is
as codified in Section 154.111 of the Northern. Natgas states that under the required, further notice of such hearing
Commission's Regulations; Agreement, Northern will have the will be duly given.
(4) Confirmation that Northern may obligation to purchase.a minimum of Under the procedure herein provided
flow through, on an "as-billed" basis, all 20% of the contract quantity on a daily for, unless otherwise advised, it will be
demand charges paid to Natgds, as an basis and a minimum of 60%of the unnecessary for Natgas to appear or be
exception to policy established in contract quantity on an annual average represented at the hearing.
Opinion No. 256; and, basis. The term of the Agreement is -Lois D.Cashell,
(5) Waiver of certain tariff and rate through October 31, 2001. Secretary.
regulations so that Natgas' tariff may be Natgas states that the price of the gas [FR Doc. 89-25526 Filed 10-30-89; 8:45 am]
in the form of its agreement with will be based on a multi-part rate which
BILLING CODE 6717-01-1
Northern and that such tariff may includes a demand charge, Tier I, Tier II
become effective on a specifically and best-efforts commodity charges. The
defined date in the proforma tariff. demand charges is equal to 50% of the [Docket No. EL89-55-0001
Natgas' proposals are more fully set current demand charge, Northern
forth in the application which is on file currently pays to Northwest Alaskan, New England Power Co.; Filing
with the Commission and open to public plus 100/450 th's of Natgas' share of
inspection. Northern Border's demand charges. The October 24, 1989.
Natgas states that it is a wholly- demand charge is limited by a cap Take notice that on September 28,
owned subsidiary of Pan-Alberta through October 31, 1991. The Tier I 1989, New England Power Company
Resources, Inc., an affiliate of Pan- commodity charge is equal to Northern's (NEP) filed a Petition for Waiver of Fuel
Alberta Gas, Ltd. (Pan-Alberta). All of then effective weighted average cost of Clause Regulations. NEP requests
these companies are engaged in various domestic gas and the Tier II and best- waiver of the Commission's fuel clause
phases of natural gas marketing in both efforts commodity charges will be regulations in order to allow flow-
Canada and the United States. determined on the basis of market through to customers of certain contract
Natgas states that this application is factors. termination costs related to'uranium
one of several being filed as the result of Any person desiring to be heard or to supply and enrichment services billed to
complex, interrelated agreements make any protest with reference to said NEP pursuant to its power contracts
reached between the parties with application should on or before with Yankee Atomic Electric Company,
respect to the purchase, sale and November 3, 1989, file with the Federal Maine Yankee Nuclear Corporation, and
transportation of Canadian gas on the Energy Regulatory Commission, Vermont Yankee Nuclear Power
pre-build Eastern Leg of the ANGTS. Washington, DC 20426, a motion to Corporation. According to the Company,
This group of applications includes: intervene-or a protest in accordance the benefits of these transactions have
45794 Federal Register / Vol. 54, No. 209 Tuesday, October 31, 1989 / Notices
already been passed on to customers as Northwest Alaskan Pipeline Co., Docket letter of credit or fails to adhere to the
lower fuel expense. No. RP90-16-000; .specific provision of the alternative
Any person desiring to be heard or to Natgas (U.S.) Inc, Docket No. CP90-93- credit support arrangement. Northern
protest said filing should file a motion to 000; Border states that its application is
intervene or protest with the Federal Natgas (U.S. Inc., Docket No. CI89-348- being filed under the ANGTA and that
Energy Regulatory Commission, 825 001; ANGTA furnishes an independent and
North Capitol Street NE., Washington, United Gas Pipe Line Co., Docket No. unique basis for approval of the pre-
DC 20426, in accordance with Rules 211 CP79-400-004; granted abandonment.
and 214 of the Commission's Rules of Northern Natural Gas Co., Natgas (U.S.) Any person desiring to be heard or to
Practice and Procedure (18 CFR 385.211, Inc., Docket No. CP79-396-007. make any protest with reference to said
385.214). All such motions or protests By this application Northern Border petition to amend should on or before
should be filed on or before November 7, proposes to abandon the firm November 3, 1989, file with the Federal
1989. Protests will be considered by the transportation of 450,000 Mcf per day of Energy Regulatory Commission,
Commission in determining the natural gas for United. Northern Border Washington, DC 20426, a motion to
appropriate action to be taken, but will receives the natural gas volumes for intervene or a protest in accordance
not serve to make protestants parties to United's account at a point of with the requirements of the
the proceeding. Any person wishing to interconnection between the facilities of Commission's Rules of Practice and
become a party must file a motion to Foothills Pipe lines (Sask.) Ltd. and Procedure (18 CFR 384.214 or 385.211)
intervene. Copies of this filing are on file Northern Border on the international and the Regulations under the Natural
with the Commission and are available boundary near Port of Morgan, Gas Act (18 CFR 157.10). All protests
for public inspection. Montana, (Monchy, Saskatchewan). filed with the Commission will be
Lois D.Cashell, Northern Border transports and considered by it in determining the
Secretary. redelivers such volumes at existing appropriate action to be taken but will
[FR Doc. 89-25527 Filed 10-w30-89; 8:45 am] points of interconnection between the not serve to make the protestants
BILLING CODE 6717-01-M facilities of Northern Natural Gas parties to the proceeding. Any person
Company, (Northern) and Northern wishing to become a party to a
Border near Aberdeen, South Dakota, proceeding or to participate as a party in
[Docket No. CP78-124-013] Welcome, Minnesota and Ventura, any hearing therein must file a motion to
Iowa. intervene in accordance with the
Northern Border Pipeline Co.; Petition Northern Border states that United Commission's Rules.
To Amend purchases the natural gas volumes Lois D.Cashell,
transported by Northern Border from Secretary.
October 24, 1989. Northwest Alaskan Pipeline Company [FR Doc. 89-25528 Filed 10-30-89; 8:45 am]
Take notice that on October 23, 1989, (Northwest Alaskan) which in turn BILLING CODE 6717-01-M
Northern Border Pipeline Company purchases them from Pan-Alberta Gas
(Northern Border), 2223 Dodge Street, Ltd. (Pan-Alberta). " [Docket No. RP90-16-OOO]
Omaha, Nebraska 68102, filed in Docket Northern Border further states that
No. CP78-124-013, an application United and Pan-Alberta have entered Northern Alaskan Pipeline Co.; Tariff
pursuant to Sections 7 (b) and (c) of the into a Memorandum of Understanding, Changes
Natural Gas Act and Section 9 of the dated June 5, 1989 which provides that
Alaska Natural Gas Transportation Act Pan:Alberta's designee, Natgas U.S. Inc., October 24, 1989.
(ANGTA) for amendment of its (Natgas), will assume United's natural Take notice that on October 23, 1989,
certificate authorization. gas purchase rights and obligations with Northwest Alaskan Pipeline Company
By such application Northern Border Northwest Alaskan and United's natural ("Northwest Alaskan") tendered for
seeks: (1) Approval to abandon the gas transportation rights and obligations filing in Docket No. RP90-16-O00 the
transportation of natural gas for United with Northern Border. following revisions to its FERC Gas
Gas Pipe Company (United); (2) A Thus, Northern Border now proposes Tariff, Original Volume No. 2.
certificate of public convenience and to transport on a firm basis up to 450,000 Rate Schedule and Tariff Sheet Number
necessity authorizing the firm Mcf per day of natural gas for Natgas
transportation of natural gas for Natgas X-1
from Monchy to Aberdeen, Welcome
U.S. Inc. (Natgas) through October 31, and Ventura. Northern Border states Fourth Revised Sheet No. 100;
2001; and, (3) Pre-granted approval to that Natgas is a natural gas marketer in Fourth Revised Sheet No. 101;
abandon service to Natgas under certain the United States and is an affiliate of Second Revised Sheet No. 106;.
conditions. Pan-Alberta. Northern Border states that Third Revised Sheet No. 109;
Northern Border's proposals are fully Natgas and Northern Border have Fourth Revised Sheet No. 123;
set forth in the application which is on entered into a "U.S. Shippers Service Fifth Revised Sheet No. 150;
file with the Commission and open to Agreement", dated October 6, 1989, Second Revised Sheet No.157;
public inspection. which makes special provision for an Second Revised Sheet No. 157A;
Northern Border indicates that the alternative credit support arrangement Third Revised Sheet No. 158;
application is one of several being filed between Natgas and Northern Border. Fourth Revised Sheet No. 186A;
as the result of complex, interrelated Northern Border also seeks pre-
agreements reached between the parties granted approval for abandonment of X-3
with respect to the purchase, sale and the transportation service for Natgas in Third Revised Sheet No. 300;
transportation of Canadian gas on the the event of nonpayment by Natgas. Third Revised Sheet No. 301;
pre-built Eastern Leg of the ANGTS. Northern Border states that it will Original Sheet Nos. 321A-3211;
This group of applications includes: terminate service to Natgas if Natgas Third Revised Sheet No. 322;
Northwest Alaskan Pipeline Co., Docket fails to make timely payment to Second Revised Sheet No. 350;
No. CP78-123-028; Northern Border, fails to maintain a Second Revised Sheet No. 386A;
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45795
Original Sheet Nos. 386B-386G. Alaskan Natural Gas Transporation Act respect to the Eastern Leg, Northwest
Northwest Alaskan states that the (ANGTA). Northwest Alaskan states Alaskan states that it entered into a
proposed tariff revisions implement, in that its application is necessary or contract, dated March 9, 1978, with Pan-
part, a transaction contemplated in related to the construction and initial Alberta Gas, Ltd. for the purchase of
principle by the Memorandum of operation of the Alaskan Natural Gas 800,000 Mcf per day of natural gas which
Understanding between Northwest Transportation System (ANGTS). was to be imported by Northwest
Alaskan's supplier, Pan-Alberta Gas, By such application Northwest Alaskan and resold to three interstate
Ltd. ("Pan-Alberta") and its purchaser, Alaskan seeks to: (1) Abandon its sale natural gas pipelines. Of that volume,
United Gas Pipe Line Company to United Gas Pipe Line Company United was to have purchased 450,000
("United"). The proposed tariff revisions (United) of an average daily volume of Mcf per day, Northern Natural Gas
provide, in summary, for an assignment 450,000 Mcf of Canadian natural gas Company (Northern)-200,000 Mcf per
at Pan-Alberta's request of the Gas transported through the Eastern Leg of day, and Panhandle Eastern Pipe Line
Purchase Agreement between the ANGTS; (2) Amend its current Company (Panhandle)-150,000 per day.
Northwest Alaskan and United (the certificate of public convenience and Northwest Alaskan states that the
"United Agreement") from United to necessity to authorize the sale for resale sale to United has been amended
Natgas U.S. Inc. ("Natgas"), a of an annual average daily volume of several times, most recently by the
redetermination of the price to be paid 450,000 Mcf to Natgas U.S. Inc. (Natgas), Commission in Docket No. RP87-34--000
by Natgas under the United Agreement, as a replacement for United; and (3) and 001 on June 16, 1987. This
an increase of the minimum daily Amend its current certificate of public amendment approved a two-year
volume of gas to be purchased by convenience and necessity to extend the settlement of take-or-pay and force
Northern National Gas Company, authorization for sale for resale through majeure, disputes between United and
Division of Enron Corp. ("Northern"), October 31, 2001 of a maximum daily Northwest Alaskan. The settlement was
from Northwest Alaskan, and the volume of up to 880,000 Mcf per day, later extended through October 31, 1989.
elimination of Northern's option to plus two percent tolerance, not to Northwest Alaskan states that upon
increase its average daily volume of gas exceed on an annual basis, a daily further negotiations, United has agreed
purchased from Northwest Alaskan. average of 800,000 Mcf. to assign its Northwest Alaskan natural
These tariff revisions would not Northwest Alaskan's proposals are gas purchase rights and obligations to
become effective unless a notice is filed more fully set forth in the application Pan-Alberta's designee, now Natgas.
with the commission by Northwest which is on file with the Commission Northwest Alaskan states that Natgas is
Alaskan within thirty days of filing the and open to public inspection. a natural gas marketer in the United
Petition and would not become effective Northwest Alaskan indicates that the States and is an affiliate of Pan-Alberta.
until the time specified in that notice. application is one of several being filed Thus, by this application, Northwest
Any person desiring to be heard or to as the result of complex, interrelated Alaskan seeks approval of the
protest said filing should file a motion to agreements reached between the parties abandonment the sale to United of
intervene or protest with the Federal with respect to the purchase, sale and 450,000 Mcf per day and re-certification
Energy Regulatory Commission, 825 transportation of Canadian gas on the of the sale of that volume to Natgas.
North Capitol Street, NE., Washington, pre-build Eastern Leg of the ANGTS. Northwest Alaskan also seeks
DC 20426, in accordance with Rules 211 This group of applications includes: approval of an amendment of its
and 214 of the Commission's Rules of Northwest Alaskan Pipeline Co., Docket certificate to extend the term of its sales
Practice and Procedure (IS CFR 385.211 No. RP90-16-000; to Natgas, Northern, and Panhandle
or 385.214). All such motions or protests Northern Border Pipeline Co., Docket through October 31, 2001. Northwest
should be filed on or before November 3, No. CP78-124-013; Alaskan further specifically requests
1989. Protests will be considered by the Natgas (U.S.) Inc., Docket No. CP90-93- that it be authorized to make sales for
Commission in determining the 000; resale in interstate commerce of a
appropriate action to be taken, but will Natgas (U.S.) Inc., Docket No. CI89-348- maximum of 880,000 Mcf per day, plus a
not serve to make protestants parties to 001; , two percent tolerance, not to exceed on
the proceeding. Any person wishing to United Gas Pipe Line Co., Docket No. an annual average daily basis 800,000
become a party must file a-motion to CP79-400-004; Mcf per day.
intervene. Copies of this filing are on file Northern Natural Gas Co., Natgas (U.S.) Finally, Northwest Alaskan states that
with the Commission and are available Inc., Docket No. CP79-396-007. it cannot and will not accept an order
for public inspection. Northwest Alaskan states that the which does not provide that each
Lois D. Cashell, overall transaction proposed by this component of the order becomes
Secretary. group of applications is subject to a final effective simultaneously, and which
[FR Doc. 89-25529 Filed 10-30-89; 8:45 am] Closing Agreement which will have does not allow for a prospective period
BILLING COOE 6717-01-M terms addressing and resolving all in which it can review the contents of
issues relating to the potential the order. Northwest Alaskan also
[Docket No. CP78-123-028] bankruptcy of a party and any potential wants the order to be effective only
losses or liabilities that result. after the date it specifies in its further
Northwest Alaskan Pipeline Co 4 Northwest Alaskan further states that if notice to the Commission. Northwest
Petition To Amend it has not filed a notice with the Alaskan further seeks waiver of
October 24, 1989. Commission within thirty days of this § 157.20(a) which would otherwise
Take notice that on October 23, 1989, application, the application will be require it to accept a certificate within
Northwest Alaskan Pipeline Company deemed automatically withdrawn. thirty days of issuance.
(Northwest Alaskan), 295 Chipeta Way, Northwest Alaskan states that upon Any person desiring to be heard or to
Salt Lake City, Utah 84158-0900, filed in the recommendation of the United make any protest with reference to said
Docket No. CP78-123-028, an . States Government it initiated the pre- petition to amend should on or before
application pursuant to Section 7 of the build projects of the Eastern and November 3, 1989, file with the Federal
Natural Gas Act and Section 9 of the Western Legs of the ANGTS. With Energy Regulatory Commission,
45796 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
Washington, DC 20426, a motion to Northwest Alaskan states that the proceedings on Frida i, November ,
intervene or a protest in accordance provisions of the Interim Agreement to 1989, at 9:30 a.m. in a hearing room of
with the requirements of the be extended for the Extended Interim the Federal Energy Regulatory
Commission's Rules of Practice and Period 'are paragraphs 5(b), 7, 7(a), 7(b), Commission, 810 First Street, NE.,
Procedure (18 CFR 384.214 or 385.211) 7(c), 7(d), 7(6), 7(fl, 7(h), 7(i), 8, 9, 9(b), 11, Washington, DC, 20426. The settlement
and the Regulations under the Natural 12, 13, 14, 17 and 18 of the Tenth conference will be convened on
Gas Act (18 CFR 157.10). All protests Amendment and the Twentieth November 2, 1989, at 2 p.m. instead of
filed with the Commission will be Amending Contact and paragraphs 3(a), November 3, 1989 at 9:30 a.m. and, if
considered by it in determining the 3(b), (5(a), 5(b), 6, 7, and 8 of the necessary, the settlement conference
appropriate action to be taken but will Marketing and Transportation will continue through November 3, 1989.
not serve to make the protestants Agreement. Any party, as defined by 18 QFR
parties to the proceeding. Any person Northwest Alaskan states that United 385.102(c), is invited to attend. Persons
wishing to become a party to a and Pan-Alberta have entered into a wishing to become a party must move to
proceeding or to participate as a party in Memorandum of Understanding dated intervene and receive intervenor status
any hearing therein must file a motion to June 5,1989 which sets forth among pursuant to the Commission's
intervene in accordance with the other things, the basic principles upon regulations (18 CFR 385.214).
Commission's Rules. which definitive agreements shall be For additional information, please
Lois D. Cashell, reached with respect to the purchase, contact John J. Keating, (202) 357-5762 or
Secretary. sale and transportation of Canadian gas Donald A. Heydt, (202) 357-5248.
[FR Doc. 89-25530 Filed 10-30-89; 8:45 am] subsequent to the expiration of the Lois D. Cashell,
BILLING CODE 6717-01-M
Interim Agreement. The purpose of the Secretary.
requested extension is to preserve that
status quo and to grant the parties an [FR Doc. 89-25532 Filed 10--30-89; 8:45 am]
[Docket No. RP87-34-009] BILLING CODE 6717-01-M
opportunity to finalize and obtain
Northwest Alaskan Pipeline Co.; necessary approvals of those definitive
Extension of Tariff Provisions agreements. [Docket No. CP79-400-004 and CP79-396-
Northwest Alaskan has requested that 007] , .
October 25, 1989. the Commission approve the requested
Take notice that on October 24, 1989, extension of the Interim Agreement United Gas Pipe Line Co. et al; Petition
Northwest Alaskan Pipeline Company provisions of Northwest Alaskan's tariff To Amend
("Northwest Alaskan") tendered for to be effective on November 1, 1989 and
filing in Docket No. RP87-34-009 the find that the extension is in the public October 24. 1989.
following tariff sheets: interest. Take notice that on October 23, 1989,
Rate Schedule and Tariff Sheets Number Any person desiring to be heard or to United Gas Pipe Line Company (United),
protest said filing should file a motion to Northern Natural Gas Company,
X-3 intervene or protest with the Federal Division of Enron Corp. (Northern), and
Original Sheet No. 308BBB.2; Energy Regulatory Commission, 825 Natgas U.S. Inc. (Natgas), (jointly as the
Original Sheet No. 308FFF.2; North Capitol Street, N.E., Washington, applicants), filed an application in the
Original Sheet No. 358VV.2; DC. 20426, in accordance with Rulesi 211 above-captioned dockets pursuant to
Original Sheet No. 358AAA.2 and 214 of the Commission's Rules of Sections 7(b) and (c) of the Natural Gas
Northwest Alaskan proposed that Practice and Procedure (18 CFR 385.211 Act, and Section 9 of the Alaska Natural
these tariff sheets be effective on or 385.214). All such motions or protests Gas Transportation Act (ANGTA), for
November 1, 1989. should be filed on or before November .1, the expedited issuance of an
Northwest Alaskan states that these 1989. Protests will be considered by the amendment to a certificate of public
tariff sheets would continue in effect Commission in determining the convenience and necessity.
appropriate action to be taken, but will . by such application the applicants
certain aspects of the current interim
agreement among Northwest Alaskan, not serve to make protestants parties to seek: (1)'Approving the "partial"
United Gas Pipe Line Company the proceeding. Any person wishing to abandonment of the firm exchange of up
("United") and Pan-Alberta Gas Ltd. become a party must file a motion to to 450,000 Mcf per day of natural gas
("Pan-Alberta"), which would otherwise intervene. Copies of this filing are on file between United States and Northern
expire on October 31, 1989, from with the Commission and are available authorized in Docket Nos. CP79-396 and
November 1, 1989 through December 31, for public inspection. CP79-400; (2) Authorizing the exchange
1989 (the "Extended Interim Period'). Lois D. Cashell, on a firm basis of 75,000 Mcf per day of
The current interim agreement (the Secretary. natural gas between Northern and
"Interim Agreement") consists of the [FR Doc. 89-25531 Filed 10-30-89; 8:45 am] Natgas, as successor to United, and the
Tenth Amendment to the Gas Purchase BILLING CODE 6717-01-M
exchange of amounts in excess of 75,000
Agreement between United and Mcf per day, up to 450,000 Mcf per day,
Northwest Alaskan, the Twentieth on a best-efforts basis; and'(3) Extend
Amending Contract to the Gas Sales [Docket Nos. RP87-103-000 and RP88-262- the term of the exchange through
Contract between Northwest Alaskan
000, et al. (Not Consolidated)]. October 31, 2001.
and Pan-Alberta and the Marketing and Panhandle Eastern Pipe Line Co.; The applicants' proposals are more
Transportation Agreement between fully set forth in the application which is
Change of Date of Informal Settlement
United and Pan-Alberta, which are Conference on file with the Commission and open to
contained in Northwest Alaskan's FERC public inspection.'
Gas Tariff Original!Volume No.-2, Rate (October 24, 1989). United, Northern, and Natgas state'
Schedule X-3 at tariff sheets numbered By notice issued on October 18,. 1989, that their application is one of several
30800 through 308FFF and 358HH an informal settlement conference was being filed as the result of complex,
through 358AAA. scheduled to 'convened in the above- interrelatedagreemehts reached'among
Federal Register / Vol. 54, No. 209 /Tuesday, October 31, 1989 / Notices 45797
the parties with respect to the sale, with the requirements of the applications or proposals must be sent
purchase, and transportation of Commission's Rules of Practice and to this same address.
Canadian gas on the pre-build Eastern Procedure (18 CFR 384.214 or 385.211) SUPPLEMENTARY INFORMATION: As
Leg of the Alaskan Natural Gas and the Regulations under the Natural mentioned above, the solicitations for
Transportation System (ANGTS). This Gas Act (18 CFR 157.10). All protests Special Research Grants and the
group of applications includes: filed with the Commission will be Research Opportunity Announcement
Northwest Alaskan Pipeline Co. Docket considered by it in determining the for research contracts were published in
No. RP9Q-16-000; appropriate action to be taken but will the Federal Register. Those solicitations
Northwest Alaskan Pipeline Co. Docket not serve to make the protestants specify the policies and procedures
No. CP78-123-028; parties to the proceeding. Any person which govern the application/proposal,
Northern Border Pipeline Co. Docket No. wishing to become a party to a evaluation, and selection processes for
CP78-124-013; proceeding or to participate as a party in research grants and contracts. It is
Natgas (U.S.) Inc. Docket No. CP90-93- any hearing therein must file a motion to anticipated that approximately 409
000; intervene in accordance with the million dollars will be available for
Natgas (U.S.) Inc. Docket No. Ci89-348- Commission's Rules. award'in FY 1990. DOE is under no
001. Lois D. Cashell, obligation to pay for any costs
The applicants state that United Secretary. associated with the preparation or
purchase up to 450,000 Mcf per day of [FR Doc. 89-25533 Filed 10-30-89; 8:45 am] submission of applications/proposals.
natural gas from Northwest Alaskan BILLING CODE 6717-01-M DOE reserves the right to fund, in whole
Pipeline Company (Northwest Alaskan), or in part, any, all, or none of the
which Northwest Alaskan imports from applications/proposals submitted in
Pan-Alberta Gas, Ltd. (Pan-Alberta). Office of Energy Research response to this notice.
The natural gas is then transported by
Continuation of Solicitation for Special Issued in Washington, DC, on October 17,
the Northern Border Pipeline Company 1989.
(Northern Border). United takes delivery Research Grants and Research
Opportunity Announcement for D.D. Mayhew,
of these volumes via a firm exchange of
Research Contracts, No. 90-1 Deputy Directorfor Management, Office of
natural gas with Northern, which Energy Research.
interconnects at various locations with AGENCY: Department of Energy.
Northern Border. This exchange is for [FR Doc. 89-25624 Filed 10-30-89; 8:45 am]
ACTION: Annual notice of continuation of BILLING CODE 6450-1-M
the mutual benefit of United and availability of research grants and
Northern, and is on a cost-free basis. contracts.
The applicants state that as a result of
SUMMARY: The Office of Energy Office of Fossil Energy
an agreement among United, Pan-
Alberta, and Northwest Alaskan, Research (ER) of the Department of
Energy hereby announces its continuing [FE Docket No. 89-63-NG]
Natgas, an affiliate of Pan-Alberta, will
replace United in the purchase and interest in receiving applications/ ' Amerigas International Corp.;
shipment of 450,000 Mcf per day. :By this proposals for Special Research Grants Application To Export Natural Gas to
application the applicants seek to or Research Contracts supporting work Mexico
partially reassign to Natgas United's in the following ER program offices:
rights and obligations in the natural gas Basic Energy Sciences, Health and AGENCY: Office of Fossil Energy,
exchange with Northern. Environmental Research, Fusion Energy, Department of Energy.
More specifically, the applicants Scientific Computing, Field Operations ACTION: Notice of application for
propose to abandon United's obligation Management, Superconducting blanket authorization to export n atural
to deliver 450,000 Mcf per day to Supercollider, and High Energy and
gas to Mexico.
Northern and the obligation of Northern Nuclear Physics. Information about
to deliver,450,000 Mcf per day to United. submission of applications/proposals, SUMMARY: The Office of Fossil Energy
Applicants request that a certificate be eligibility, limitations, evaluation and (FE) of the Department of Energy (DOE)
issued authorizing the exchange of selection processes, and other policies gives notice of receipt on September 13,
natural gas between Northern and and procedures are specified, for grants, 1989, of an application filed by Amerigas
Natgas on a firm, cost-free basis of up to in 10 CFR part 605 which was published International Corporation (Amerigas)
75,000. Mcf per day, and the cost-free in the Federal Register on April 15, 1985 requesting blanket authorization to
exchange of volumes in excess of 75,000, (50 FR 14856) and, for contracts, in the export from the United States to Mexico
up to 450,000 on a best-efforts basis. The Research Opportunity Announcement up to 54.75 Bcf of natural gas over a two-
applicants state that they have amended published on November 8, 1988 (53 FR year period beginning on the date of first
and assigned the existing exchange 45234). The Catalog of Federal Domestic delivery. Amerigas intends to use
agreement between Northern and Assistance number is 81'049. existing pipeline facilities within the
United by a further agreement provided DATES: Applications and proposals may United States and at the international
with the application. Further, this be submitted at any time in response to border for transportation of the exported
agreement contains a listing of the firm this Notice of Availability but in all gas. Amerigas states that it will advise
and alternative exchange points to be cases must be received by DOE on or the DOE of the date of first delivery and
used by Northern and Natgas. before October 31, 1990. submit quarterly reports detailing each
Any person desiring to be heard or to ADDRESSES: Applicants/proposers may transaction.
make any protest with reference to said obtain forms and additional information The application was filed under
petition to amend'should on or before from Director, Acquisition and, section 3 of the Natural Gas Act and
November 3, 1989, file with the Federal Assistance Management Division, Office DOE Delegation Order Nos. 0204-111
Energy Regulatory Commission, of Energy Research, ER-64, U.S. and 0204-127. Protests, motions to
Washington, DC 20426, a motion to Department of Energy, Washington, DC intervene notices of intervention and
intervene or a protest in accordance 20545, (301) 353-5544. Completed written comments are invited.
45798 Federal Register / Vol. 54, No. 209'/ Tuesday, October 31, 1989 / Notices
DATE: Protests, motions to intervene, or All parties should be aware that if this determining the appropriate action to be
notices of intervention, as appliable, blanket export application is granted, taken on the application. All protests,
requests for additional procedures and the authorization may permit the export motions to intervene, notices of
written comments are to be filed at the of the gas at the international border intervention, and written comments
address listed below no later than 4:30 point where existing transmission must meet the requirements that are
p.m., e.s.t., November 30, 1989. facilities of Del Norte Pipeline near El specified by the regulations in 10 CFR
ADDRESS: Office of Fuels Program, Paso, Texas, connect with the facilities part 590.
Fossil Energy, U.S. Department of of Pemex near Ciudad Juarz, Chihuahua,
Mexico, or at any other existing border Protests, motions to intervene, notices
Energy, Room 3F-056, FE-50, Forrestal of intervention, requests for additional
Building, 1000 Independence Avenue, exit facility. Further, all parties should
be aware that, in accordance with its procedures, and written comments
SW., Washington, DC 20585.
present policy and past practice, if DOE should be filed with the Office of Fuels
FOR FURTHER INFORMATION CONTACT: Programs at the address listed above.
approves the blanket authorization, it
Perry Bolger, Office of Fuels Program, may limit the terms to two years. This A decisional record on the application
Fossil Energy, U.S. Department of limitation, if imposed, presumes that the
Energy, Forrestal Building, Room 3056, will be developed through responses to
exports would take place under this notice by parties, including the
1000 Independence Ave, SW., contracts with terms of two years or
Washington, DC 20585. (202) 586-1789. parties' written comments and replies
less. thereto. Additional procedures will be
Diane Stubbs, Natural Gas and Mineral Amerigas requests that an used as necessary to achieve a complete
Leasing, Office of General Counsel, authorization be granted on an
U.S. Department of Energy, Forrestal understanding of the facts and issues. A
expedited basis. A decision on
party seeking intervention may request
Building, Room 6E-042, 1000 Amerigas' request for expedited
Independence Avenue, SW., treatment will not be made until all that additional procedures be provided,
Washington, DC 20585, (202) 586-6667. responses to this notice have been such as additional Written comments, an
received and evaluated. oral presentation, a conference, or trial-
SUPPLEMENTARY INFORMATION:
type hearing. Any request to file
Amerigas, a subsidary of AP Propane, additional written comments should
Inc., a Delaware corporation, is located NEPA Compliance
explain why they are necessary. Any
in Houston, Texas, and was organized The DOE has determined that
compliance with the National request for an oral presentation should
to engage in the international marketing
Environmental Policy Act of 1969 identify the substantial question of fact,
of natural gas, light hydrocarbons, and
gaseous petroleum chemicals. Amerigas (NEPA), 42 U.S.C. 4321 et seq., can be law,'or policy at issue, show that it is
intends to export natural gas to Mexico accomplished by means of a categorical material and relevant to a decision in
for spot-market sales, primarily to exclusion. On March 29, 1989, the DOE the proceeding, and demonstrate why an
Petroleos Mexicanos (Pemex). Amerigas published in the Federal Register (54 FR oral presentation is needed. Any request
currently is negotiating with Pemex a 12474) a notice of amendments to its for a conference should demonstrate
contract for the sale of up to 60,000 Mcf guidelines for compliance with NEPA. In why the conference would materially
per day. Amerigas anticipates that notice, the DOE added to its list of advance the proceeding. Any request for
purchasing all the gas required to serve categorical exclusions the approval or a trial-type hearing must show that there
this authorization from natural gas disapproval of an import/export are factual issues genuinely in dispute
producers in the states of Texas and authorization for natural gas in cases that are relevant and material to a
New Mexico. Amerigas states that each not involving new construction. decision and that a trial-type hearing is
sales transaction would be negotiated at Application of the categorical exclusion necessary for a full and true disclosure
arms length with Pemex and would be in any particular case raises a of the facts..
consistent with the public interest. rebuttable presumption that the DOE's
action is not a major Federal action If an additional procedure is
This export application will be scheduled, notice will be provided to all
reviewed under section 3 of the Natural under NEPA. Unless the DOE receives
comments indicating that the parties. If no party requests additional
Gas Act and the authority contained in procedures, a final opinion and order
DOE Delegation Order Nos. 0204-111 presumption does not or should not
apply in this case, no further NEPA may be issued based on the official
and 0204-127. In deciding whether the
review will be conducted by the DOE. record, including the application and
proposed export of natural gas is in the
response filed by parties pursuant to
public interest, domestic need for the
gas will be considered, and any other Public Comment Procedures this notice, in accordance with 10 CFR
issue determined to be appropriate, In response to this notice, any person Sec. 590.316.
including whether the arrangement is may file a protest, motion to intervene A copy of Amerigas's application is
consistent with the DOE policy of or notice of intervention, as applicable, available for inspection and copying in
promoting competition in the natural gas and written comments. Any person the Office of Fuels Programs Docket
marketplace by allowing commercial wishing to become a party to the Room, 3F-056 at the above address. The
parties to freely negotiate their own proceeding and to have the written docket room is open between the hours
trade arrangements. Parties, especially comments considered as the basis for of 8:00 a.m. and 4:30 p.m., e.s.t.. Monday
those that may oppose this application, any decision on the application must, through Friday, except Federal holidays.
should comment on these matters as however, file a motion to intervene or
they relate to the requested export Issued in Washington; DC' on October 27,
notice of intervention, as applicable. 1989.
authority. The applicant asserts that The filing of a-protest with respect to
there is no current need for the domestic this application will not serve to make Constance L. Buckley,
gas that would be exported under the the protestant a party to the proceeding, Deputy Assistant Secretaryfor Fuels
proposed arrangements. Parties although protests and comments Programs,Office of FossilEnergy.
opposing this arrangement bear the received from persons who are not [FR Doc. 89-25620 Filed 10-30-89: 8:45 am]
burden of overcoming this assertion. parties will be considered in BILUNG CODE 6450-01-M
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45799
[FE Docket No. 89-15-NG] 1989, of an application filed by Libra public interest, domestic need for the
Marketing, Inc. (Libra), requesting gas will be considered, and any other
Great Lakes Gas Transmission Co.; blanket authorization to export from the issue determined to be appropriate,
Conditional Order Amending United States to Mexico up to 146 Bcf of including whether the arrangement is
Authorization To Import Natural Gas natural gas over a two-year period consistent with the DOE policy of
From and Export Natural Gas to beginning on the date of first delivery. promoting competition in the natural gas
Canada Libra intends to use existing pipeline marketplace by allowing commercial
AGENCY: Office of Fossil Energy, facilities within the United States and at parties to freely negotiate their own
Department of Energy. the international border for trade arrangements. Parties, especially
ACTION: Notice of conditional order transportation of the exported gas. Libra those that may oppose this application,
amending authorization to import states that it will advise the DOE of the should comment on these matters as
natural gas from and export natural gas date of first delivery and submit they relate to the requested export
to Canada. quarterly reports detailing each authority. The applicant asserts that
transaction. there is no current need for the domestic
SUMMARY: The Office of Fossil Energy The application was filed under gas that would be exported under the
(FE) of the Department of Energy (DOE) section 3 of the Natural Gas Act and proposed arrangements. Parties
gives notice that it has issued a DOE Delegation Order Nos. 0204-111 opposing this arrangement bear the
conditional order approving an and 0204-127. Protests, motions to burden of overcoming this assertion.
amendment to Great Lakes Gas intervene, notices of intervention and All parties should be aware that if this
Transmission Company's (Great Lakes) written comments are invited. blanket export application is granted,
authorization to import natural gas from DATE: Protests, motions to intervene, or the authorization may permit the export
and export natural gas to Canada. The notices of intervention, as applicable, of the gas at any point of exit on the
order issued in FE docket-No. 89-15-NG requests for additional procedures and international border where existing
increases by 417,500 Mcf the currently written comments are to be filed at the pipeline facilities are located.
authorized maximum daily volumes address listed below no later than 4:30 Libra requests that an authorization
Great Lakes may import from and p.m., e.s.t., November 30, 1989. be granted on an expedited basis. A
export to Canada and thereby raises the ADDRESS: Office of Fuels Programs, decision on Libra's request for expedited
total maximum daily volumes Great Fossil Energy, U.S. Department of treatment will not be made until all
Lakes may import and export through Energy, Room 3F-056, FE-50, Forrestal responses to this notice have been
November 1, 2005, from 987,500:Mpf to Building, 1000 Independence Avenue, received and evaluated.
1,405,000 Mcf. SW., Washington, DC 20585.
Final approval 'ofthis import is NEPA Compliance
FOR FURTHER INFORMATION CONTACT.
conditioned on DOE's.completion of its The DOE has determined that
Perry Bolger, Office of Fuels Programs,
.responsibilities under the National Fossil Energy, U.S. Department of compliance with the National
Environmental Policy Act of 1969 and its Energy, Forrestal Building, Room 3F- Environmental Policy Act of 1969
reexamination at that time of this
055B, 1000 Independence Avenue, (NEPA), 42 U.S.C. 4321 et seq., Can be
conditional order. SW., Washington, DC 20585, (202) accomplished by means of a categorical
A copy of this order is available for 586-1789. exclusion. On March 27, 1989, the DOE
inspection and copying in the Office of Diane Stubbs, Natural Gas and Mineral published in the Federal Register (54 FR
Fuels Program Docket Room, 3F-056, Leasing, Office of General Counsel, 12474) a notice of amendments to its
Forrestal Building, 1000 Independence U.S. Department of Energy, Forrestal guidelines for compliance With NEPA. In
Avenue SW., Washington, DC 20585, Building, Room 6E-042, 1000 that notice, the DOE added to its list of
(202) 586-9478. The docket room is open Independence Avenue, SW., categorical exclusions the approval or
between the hours of 8:00 a.m. and 4:30 Washington, DC 20585, (202) 586-6667. disapproval of an import/export
p.m., Monday through Friday, except SUPPLEMENTARY INFORMATION: authorization for natural gas in cases
Federal holidays. Libra, a Texas corporation with its not involving new construction.
Issued in Washington, DC, October 25, principal place of business in Corpus Application of the categorical exclusion
1989. Christi, Texas, Is an international in any particular case raises a
Constance L. Buckley, marketer of natural gas, light rebuttable presumption that the DOE's
Deputy Assistant Secretaryfor Fuels hydrocarbons, and gaseous petroleum action isnot a major Federal action
Programs,Office of FossilEnergy. chemicals. Libra intends to export under NEPA. Unless the DOE receives
[FR Doc. 89-25621 Filed 10-30-89; 8:45 am] natural gas to Mexico for spot market comments indicating that the
BLUNG CODE 6450-01-M sales, primarily to Petroleos Mexicanos presumption does not or should not
(Pemex). Libra anticipates purchasing apply in this case, no further NEPA
all the gas required to serve this review will be conducted by the DOE.
[FE Docket No. 89-64-NG] authorization from natural gas
Public Comment Procedures
producers in the States of Texas,
Libra Marketing, Inc.; Application To Louisiana, and New Mexico. Libra In response to this notice, any person
Export Natural Gas to Mexico states that each sales transaction would may file a protest, motion to intervene
AGENCY: Office of Fossil -Energy, be negotiated at arms length with Pemex or notice of intervention, as applicable,
Department of Energy. or other purchasers and that the terms and written comments. Any person
ACTION: Notice of application for of each would reflect market conditions. wishing to become a party to the
blanket authorization to export natural This export application will be proceeding and to have the written
gas to Mexico.- reviewed under section 3 of the Natural comments considered as the basis for
Gas Act and the authority contained in any decision on the application must,
SUMMARY: The Office of Fossil Energy DOE Delegation Order Nos. 0204-111 however, file a motion to intervene or
(FE) of the Department of Energy (DOE) and 0204-127. In deciding whether the notice of intervention, as applicable.
gives notice of receipt on September 14, proposed export of natural gas is in the The filing of a protest with respect to
45800 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
this application will not serve to make Issued in Washington. DC, on October 23, Analyzer should be designated by the
the protestant a party to the proceeding, 1989. Administrator of the EPA as an
although protests and comments Constance L. Buckley. equivalent method under 40 CFR part 53.
received from persons who are not Deputy Assistant Secretaryfor Fuels If, after appropriate technical study, the
parties will be considered in Programs Office of FossilEnergy. Administrator determines that this
determining the appropriate action to be [FR Doc. 89-25622 Filed 10-30-89;, 8:45 am] method should be so designated, notice
taken on the application. All protests, BILLING CODE 8450-01-M thereof will be given in a subsequent
motions to intervene, notices of issue of the Federal Register.
intervention, and written comments Erich W. Bretthauer,
[FE Docket No. 89-42-NG]
must meet the requirements that are Acting Assistant AdministrotorforResearch
specified by the regulations in 10 CFR Panhandle Trading Co.; Order Granting andDevelopment.
part 590. Protests, motions to intervene, Blanket Authorization To Import and [FR Doc. 89-25580 Filed 10-30-89; 8:45 am]
notices of intervention, requests for Export Natural Gas BILLING CODE 6560-50-M
additional procedures, and written AGENCY: Office of Fossil Energy,
comments should be filed with the Department of Energy.
Office of Fuels Programs at the address [FRL-3676-71
listed above. ACTION: Notice of order granting blanket
authorization to import natural gas from Open Meeting of International
It is intended that a decisional record and export natural gas to Canada. Environmental Technology Transfer
on the application will be developed Advisory Board
through responses to this notice by SUMMARY: The Office of Fossil Energy
parties, including the parties' written (FE) of the Department of Energy gives Under Public Law 92-463, notice is
notice that it has issued an order hereby given that a meeting of the
comments and replies thereto.
granting Panhandle Trading Company International Environmental Technology
Additional procedures will be used as
(PTC) blanket authorization to import Transfer Advisory Board (IETTAB) will
necessary to achieve a complete and export natural gas. The order issued be held on December 7, 1989 in the Main
understanding of the facts and issues. A in FE Docket No. 89-42-NG authorizes Lounge of the National Press Club, 14th
party seeking intervention may request PTC to import up to 100 Bcf of Canadian and F Streets, NW., Washington, DC.
that additional procedures be provided, natural gas and to export up to 100 Bcf The meeting is open to the public and
such as additional written comments, an of domestically produced natural gas to will run from 8:30 a.m. until,
oral presentation, a conference, or trial- Canada for short-term and spot market approximately 5:00 p.m.
type hearing. Any request to file sales over separate two-year periods The purpose of this meeting is to
additional written comments should beginning on the dates of the first import review the need for transfer of
explain why they are necessary. Any and the first export. environmental technolgy to low income
request for an oral presentation should A copy of the order is available for countries to eliminate ozone depleting
identify the substantial question of fact, inspection and copying in the Office of substances and greenhouse gases as
law, or policy at issue, show that it is Fuels Programs Docket Room, 3f-056, well as similar needs regarding other
material and relevant to a decision in Forrestal Building, 1000 Independence pollution control or prevention. The
the proceeding, and demonstrate why an Avenue SW.. Washington, DC 20585, Board will review ways and means to
oral presentation is needed. Any request (202) 586-9478. The docket room is open facilitate finance and aid for such
for a conference should demonstrate between the hours of 8:00 a.m. to 4:30 environmental technology transfer.
why the conference would materially p.m.,*Monday through Friday, except Public comments can be made through
advance the proceeding. Any request for Federal holidays. written statements which will be
a trial-type hearing must show that there Issued in Washington, DG, October 24, distributed to Board Members. Written
are factual issues genuinely in dispute 1989. statements must be sent in care of the
that are relevant and material to a Constance L Buckley, Executive Secretary listed below no
decision and that a trial-type hearing is DeputyAssistontSecretaryforFuels later than November 17, 1989, in order to
necessary for a full and true disclosure Programs,Office of FossilEnergy. distribute to Members before the
of the facts. [FR Doc. 89-25623 Filed 10-30-89; 8:45 am] meeting time. Seating for interested
BILLING CODE 6450-01-M members of the public is limited to
If an additional procedure is seventy seats. Seats will be filled on a
scheduled, notice will be provided to all first-come basis. To confirm your
parties. If no party requests additional ENVIRONMENTAL PROTECTION interest inattending, contact the
procedures, a final opinion and order AGENCY Executive Secretary by November 17,
may be issued based on the official 1989.
record, including the application and [FRL-3676-41
FOR MORE INFORMATION CONTACT: Mark
response filed by parties pursuant to Ambient Air Monitoring Reference and Kasman, Executive Secretary, IETTAB,
this notice, in accordance with 10 CFR Equivalent Methods; Receipt of Office of International Activities (A-
590.316. Application for an Equivalent Method 106), U.S. Environmental Protection
A copy of Libra's application is Determination Agency, 401 M Street, SW,Washington,
DC 20460, (202) 382-4870.
available for inspection and copying in Notice is hereby given that on
the Office of Fuels Programs Docket September 12, 1989, the Environmental Dated: October 26, 1989.
Room, Room 3F--056 at the above Protection Agency received an' Timothy B.Atkeson,
address. The docket room is open application from Environics, Inc., 165 Assistant Administratorfor Internalional
between the hours of 800 a.m. and 4:30 River Road, West Willington, Activities.
p.m., e.s.t., Monday through Friday, Connecticut 06279, to determine if their IFR Doc. 89-25583 Filed 10-30-89; &45 aml
except Federal holidays. Series 300 Computerized Ozone BILLING CODE 6560-50-P
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45801
[FRL-3674-51 Fish and Wildlife Service asked for an (7) The "old-law" contribution and
extension to the comment period in. benefit base to be $37,500 for 1990.
Clyde Elrod Drum Site; Proposed order to obtain and submit information We also describe the computation of
Settlement which pertains directly to the benefits for a worker and the workeres
AGENCY: Environmental Protection environmental values of the site. Since family who first become eligible for
Agency. this information could influence the benefits in 1990, and the computation of
ACTION: Notice of proposed settlement. nature and scope of the section 404(c) the old-age, survivors, and disability
action, EPA believes there is good cause insurance (OASDI) fund ratio used to
SUMMARY: Under section 122th) of the for extending the comment period. determine whether the automatic
Comprehensive Environmental Therefore, EPA is extending the period increase in benefits under title II of the
Response, Compensation and Liability for comment on the proposed Act is affected by the "stabilizer"
Act (CERCLA). the Environmental determination until close of business, provision.
Protection Agency (EPA) has agreed to November 27,1989. This time extension Finally, we are publishing a table of
settle claims for past response costs at is made under authority of 40 CFR 231.8, OASDI "special minimum" benefit
the Clyde Elrod Drum Site- Kevil, DATE. Comments should be postmarked amounts. This table provides the range
Kentucky with Clyde M. Elrod and on or before November 27. 1989 of primary insurance amounts and the
Central Service, Inc. EPA will consider FOR FURTHER INFORMATION CONTACT: corresponding maximum family benefits
public comments on the proposed under the "'special minimum" benefit
Mr. Ralph W. Abele, EPA Water Quality
settlement for thirty days. EPA may provision, as revised to reflect the
Branch.. JFK Federal Building, WWP-
withdraw from or modify the proposed automatic benefit increase. These,
1900, Boston, MA 02203-2211, (617) 565-
settlement should such comments benefits are payable to certain
4438.
disclose facts or considerations which individuals with long periods of
indicate the proposed settlement is, Dated- October 24,1989. relatively low earnings.
inappropriate, improper or inadequate Paul G. Keough,
FOR FURTHER INFORMATION CONTACT:
Copies of the proposed settlement are Acting RegionalAdmiistfrtor,Region L
Jeffrey L. Kunkel. Office of the Actuary,
available from Ms, Carolyn McCall, [FR Doc. 89-2558Z Filed 10-30-; 8.45 am) Social Security Administration, 6401.
Investigation Support Assistant, BILLING CODE 6560-80-K
Security Boulevard, Baltimore. MD
Investigation and Cost Recovery Unit,
21235, (301), 965-3013.
Site. Investigation and Support Branch.
Waste Management Division. U.S. EPA, DEPARTMENT OF HEALTH AND SUPPLEMENTARY INFORMATION: The
Region IV, 345 Courtland St. NE., HUUAN SERVICES Secretary is required by the Act to
Atlanta, GA 30365, (404) 347-5059. publish within 45 days after the close of
Office. of the Secretary the third calendar quarter of 1989, the
Written comments may be submitted Social Security Administration benefit increase percentage and the-
to the person above by 30 days from
revised table of "special minimum"
date of publication.. 1990 Cost-of-Uving Increase and'
Other Determinations benefits (section 215(iJ{Z21D). Also, the
Dated: October 10k 1989. Secretary is required to publish before
Patrick M. Tobin, AGENCY: Social Security Administration, November 1 the average of the total
Director,Waste ManagemeatDivisfornEPA HHS. wages for 1988 (section 215(i)(2](C)(iiil]
Region IV. ACTION:' Notice. and the. OASDI fund ratio for 1989
[FR Doc. 89-25581 Filed 10-30-89; 8:45 amj (section 215(i](2)(C)(ili')). Finally, the
BILUNG CODE 6560-60-U
SUMMARY: The, Seqretary has. Secretary is required to publish on or
determined--(1) A 42 percent cost-of- before November 1 the contribution and
living increase in benefits under title II benefit base for 1990 (section 230(a)], the
[FRL-3676-5], (section 215(i)) of the Social Security Act amount of earnings required to be
(the Act); credited with a quarter of coverage in
Extension of the Public Comment' (211An increase in the Federal
Period for the Proposed Determination 1990 (section 213(d)(2}, the monthly
Supplemental Security Income (SSI) exempt amounts under the Social
To Restrict the Specification of (title XVI) monthly benefit amounts for
Leonard Pond and its Wetlands as Security retirement earnings test for
1990 to $386 for an eligible individual, 1990 (section 203(fl(8)(A)], the formula
Disposal Sites $579 for an eligible individual with an for computing a primary insurance
AGENCY: Environmenta; Protection eligible spouse, and $193 for an essential amount for workers who first become
Agency. person (section 1617 of the Act);
eligible for benefits or die in 1990
ACTION: Notice to extend the comment (3) The average of the total wages for
(section 215(a)(1)[D)), and the formula
period for August 30, 1989, § 404{(cl 1988 to be $19,334.04; for computing the maximum amount of
proposed determination. (4) The: Social Security contribution benefits payable to the family of a
and benefit base to be $50,400 for worker who first becomes eligible for
SUMMARY: A Public Notice entitled remuneration paid in 1990 and self-
old-age benefits or dies in 1990 (section
"Proposed Determination to Restrict the employment income earned in taxable
203(al(2)(C)I.
Specification of Leonard Pond and Its years beginning in 1990,
Wetlands as Disposal Sites" was (5) The amount of earnings a person Cost-of-Living Increases
,published in the F3deral Register on must have to be credited with a quArter General
August 30, 1989 (54 FR 35927). That of coverage in 1990 to be $520;
notice indicated that comments should (6) The: monthly exempt amounts The cost-of-living increase is 4.7
be received at the address listed below under the Social Security retirement percent for benefits under titles II and
on or before. October 19, 1989. earnings test for taxable years ending in XVI of the Act.
During the public comment period calendar year 1990 to be $780 for, Under title It,old-age, survivors, and
landowners within the area of the beneficiaries age 65 through 69 and $570 disability insurance benefis will
proposed determination and the U.S. for beneficiaries under age 65; increase by 4.7 percent beginning with
45802 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
the December 1989 benefits, which are Consumer Price Index for the calendar Section 227 of the Act provides flat-
payable on January 3, 1990. The kinds of quarter ending September 30, 1989, rate benefits to a worker who became
benefits payable to individuals entitled exceeds that for the calendar quarter age 72 before 1969 and was not insured
under this program are old-age, ending September 30, 1988, by 4.7 under the usual requirements, and to his
disability, wife's, husband's, child's, percent, a cost-of-living benefit increase or her spouse or surviving spouse.
widow's, widower's, mother's, father's, of 4.7 percent is effective for benefits Section 228 of the Act provides similar
and parent's insurance benefits. This under title II of the Act beginning benefits at age 72 for certain uninsured
increase is based on the authority December 1989. persons. The current monthly benefit
contained in section 215(i) of the Act (42 amount of $151.90 for an individual
Title II Benefit Amounts
U.S.C. 415(i)). under sections 227 and 228 of the Act is
Under title XVI, Federal SSI payment In accordance with section 215(i) of increased by 4.7 percent to obtain the
levels will also increase by 4.7 percent the Act, in the case of insured workers new amount of $159.00. The present
effective for payments made for the and family members for whom eligibility monthly benefit amount of $76.10 for a
month of January 1990 but paid on for benefits (i.e., the worker's attainment spouse under section 227 is increased by
December 29, 1989. This is based on the of age 62, or disability or death before 4.7 percent to $79.60.
authority contained in section 1617 of age 62) occurred before 1990, benefits
the Act (42 U.S.C. 13821). The percentage will increase 4.7 percent beginning with Title XVI Benefit Amounts
increase effective January 1990 is the benefits for December 1989 which will In accordance with section 1617 of the
same as the title II benefit increase and be received January 3, 1990. In the case Act, Federal SSI benefit amounts for the
the annual payment amount is rounded, of first eligibility after 1989, the 4.7 aged, blind, and disabled are increased
when not a multiple of $12, to the next percent increase will not apply. by 4.7 percent effective January 1990.
lower multiple of $12. For eligibility after 1978, benefits are Therefore, the yearly Federal SSI benefit
Automatic Benefit Increase generally determined by a benefit amount of $4,416 for an eligible
Computation formula provided by the Social Security individual, $6,636 for an eligible
Amendments of 1977 (Pub. L. 95-216), as individual With an eligible spouse, and
Under section 215(i) of the Act, the
described later in this notice. $2,208 for an essential person, which
third calendar quarter of 1989 is a cost-
For eligibility before 1979, benefits are became effective January 1989, are
of-living computation quarter for all the
determined by means of a benefit table. increased, effective January 1990, to
purposes of the Act. The Secretary is
therefore required to increase benefits, In accordance'with section 215(i)(4) of $4,632, $6,948, and $2,316 respectively
the Act, the primary insurance amounts after rounding. The corresponding
effective with December 1989, for
individuals entitled under section 227 or and the maximum family benefits shown monthly amounts for 1990 are
228 of the Act, to increase primary in this table are revised by (1) increasing determined by dividing the yearly
insurance amounts of all other by 4.7 percent the corresponding amounts: by'12, giving $386, $579, and
individuals entitled under title II of the amounts established by the last cost-of- .$193, respectively The monthly amount
living increase and the last extension of is reduced by subtracting monthly
Act, and to increase maximum benefits
payable to a family. For December 1989, the benefit table made under section countable income. In the case of an
the benefit increase is the percentage 215(i)(4) (to reflect the increase in the eligible individual with an eligible
increase in the Consumer Price Index for contribution and benefit base for 1989); spouse, the amount payable is further
Urban Wage Earners and Clerical and (2) by extending the table to reflect, divided equally between the two
Workers from the third quarter of 1988 the higher monthly wage and related spouses.
through the third quarter of 1989. benefit amounts now possible under the
Average of the Total Wages for 1988
Automatic benefit increases may be. increased contribution and benefit base
modified by a "stabilizer" provision for 1990, as described later in this The determination of the average
under certain adverse financial notice. A copy of this table may be wage figure for 1988 is based on the 1987
conditions that are described in the obtained by writing to: Social Security average wage figure of $18,426.51
section on the OASDI fund ratio. The Administration, Office of Public Affairs, announced in the Federal Register on
December 1989 benefit increase is not Office of Public Inquiries, 4100 Annex, October 31, 1988 (53 FR 43932), along
affected by this provision. Baltimore, MD 21235. with the percentage increase in average
Section 215(i)(1) of the Act provides Section 215(i)(2)(D) of the Act also wages from 1987 to 1988 measured by
that the Consumer Price Index for a requires that, when the Secretary annual Wage data tabulated by the
cost-of-living computation quarter shall determines an automatic increase in Social Security Administration (SSA).
be the arithmetic mean of this index for Social Security benefits, the Secretary. The average amounts of wages
the 3 months in that quarter: The shall publish in the Federal Register a calculated directly from. this data were
Department of Labor's Consumer Price revision of the range of the primary $17,416.59 and $18,274.38 for 1987 and
Index for Urban Wage Earners and insurance amounts and corresponding 1988, respectively. To determine an
Clerical Workers for each month in the maximum family benefits based on the average wage figure for 1988 at a level
quarter ending September 30, 1988, was: dollar amount and other porvisions that is consistent with the series of
for Juily 1988, 117.2; for August 1988, described in section 215(a)(1)(C)(i). average wages for 1951 through 1977
117.7; and for September 1988, 118.5. The These benefits are referred to as (published December 29, 1978, at 43 FR
arithmetic mean for this calendar "special minimum" benefits and are 61016), we multiplied the 1987 average
quarter is 117.8 (after rounding to the payable.to certain individuals with long wage figure of $18,426.51 by the
nearest 0.1). The corresponding periods of relatively low earnings. In percentage increase in average wages
Consumer Price Index for each month in accordance with section 215(a)(1)(C)(i), from 1987 to 1988 (based on SSA-
the quarter ending September 30, 1989, the attached table shows the revised tabulated wage data) as follows (with
was: for July 1989, 123.2; for August 1989, range of primary insurance amounts and the result rounded to the nearest cent):
123.2; and for September 1989, 123.6. The corresponding maximum family benefit Average wage for
arithmetic mean for this calendar amounts after the 4.7 percent benefit 1988=$18,426.51 X $18,274.38--
quarter is 123.3. Thus, because the increase. $17,416.59=$19,334.04. Therefore, the
Federal Register / Vol. 54, No. 209 / Tuesday, October 31,,1989 / Notices 45803
average wage for 1988 is determined to of coverage for every taxable year in 203(f)(8)(B) for computing the exempt
be $19,334.04. which $400 or more of self-employment amount applicable for years after 1982.
income was earned. Beginning in 1978, The monthly exempt amount for 1989
Contribution and: Benefit Base wages generally are no longer reported was determined by this formula to be.
General on a quarterly basis; instead, annual $740. Under the formula, the exempt
The contribution and benefit base is reports are made. With the change to amount for 1990 shall be the 1989
$50,400 for remuneration paid in 1990 annual reporting, section 352(b) of the exempt amount multiplied by the ratio
and self-employment income earned in Social Security Amendments of 1977 of (1) the average amount, per employee,
(Pub. L. 95-216] amended section 213(d) of the total wages for calendar year 1988
taxable years beginning in 19906
The contribution and benefit base of the Act to provide that a quarter of to (2) the average amount of those
serves two purposes: coverage would be credited for each wages for calendar year 1987. The
(1) It is the maximum annual amount $250 of an individual's total wages and section further provides that if the
of earnings on which Social Security self-employment income for calendar amount so determined is not a multiple
taxes are paid. year 1978 (up to a maximum of 4 of $10, it shall be rounded to the nearest
(a) It is the maximum annual amount quarters of coverage for the year). multiple of $10.
used in determining a person's Social Individuals generally must have self-
Security benefits. employment income of at least $400 in a Average Wages
taxable year in order to be credited with
Computation Average wages for this purpose are
any quarters of coverage.
determined in the same way as for the
Section 230(c) of the Act provides a Computation contribution and benefit base.
table with the contribution and benefit Therefore, the ratio of the average
base for each year 1978,1979 1980, and Under the prescribed formula, the
quarter of coverage amount for 1990 wages for 1988, $19,334.04, compared to
1981. For years after 1981, section 230(b that for 1987, $18,42&51, is 1.0492513.
of the Act. contains a formula for shall be equal to the 1978 amount of
determining the contribution and benefit $250 multiplied by the ratio of (1 the Exempt Amount for Beneficiaries Aged
average amount, per employee, of total
base. Under the prescribed formula, the 65 through 69
wages for calendar 1988 to (Z)the
contribution and benefit base for 1990
average amount of those wages reported Multiplying the 1989 retirement
shall be equal to the 1989 base of 48,000 earnings test monthly exempt amount of
for calendar year 1976. The section
multiplied by the ratio of (1) the average
further provides that if the amount so $740 by the ratio of 1.0492513 produces
amount, per employee, of total wages for
determined is not a multiple of $10, it the amount of $776.45 This must then be
the calendar year 1988 to (21 the average shall be rounded to the nearest multiple rounded to $780. The retirement
amount of those wages for the calendar
of $10,. earnings test monthly exempt-amount
year 1987. Section 230(b) further
provides that if the amount so Average Wages for beneficiaries aged 65 through 69 is
determined is not a multiple of $300, it determined to be $780 for 199. The
The average wage for calendar year. corresponding retirement earnings test
shall be rounded to the nearest multiple 1976 was previously determined to be
of $300. annual exempt amount for these
$9,226.48. This was published in the beneficiaries is $9,360.
Average Wages Federal Register on December 29, 1978,
at 43 FR 61016. The average wage for (c) BeneficiariesUnder Age 65
The average wage for calendar year calendar year 1988 has been determined
1987 was previously determined to be Section 203 of the Act provides that
to be $19,334.04 as'stated herein.
$18,426.51. The average wage for beneficiaries under age 65 have a lower
calendar year 1988 has been determined Quarterof CoverageAmount retirement earnings test monthly exempt
to be $19,334.04 as stated herein. The ratio of the average wage for amount than those beneficiaries aged 65
1988, $19,334.04, compared to that for through 69. The exempt amount for
Amount beneficiaries under age 65 is determined
1976, $9,226.48, is 2.0954947. Multiplying
The ratio of the average wage for the 1978 quarter of coverage amount of by a formula provided in section
1988, $19,334.04, compared to that for $250 by the ratio of 2.0954947 produces 203(f(81(B] of the Act. Under the
1987, $18,42&51, is 1.0492513. Multiplying the amount of $523.87, which must then formula, the monthly exempt amount for
the 1989 contribution and benefit base of be rounded to $520. Accordingly, the beneficiaries under age 65 is $540 for
$48,000 by the ratio1.0492513 produces quarter of coverage amount is 1989. The formula provides that the
the amount of $50,364.06, which must determined to be $520 for 1990. exempt amount for 1990 shall be the
then be rounded to $50,400. Accordingly, 1989 exempt amount for beneficiaries
the contribution and benefit base is Retirement Earnings Test Exempt under age 65 multiplied by the ratio of
determined, to be $50400 for 19,0. Amounts (1) the average amount, per employee, of
Quarter of Coverage Amount (a) BeneficiariesAged 70 or Over the total wages for calendar year 1988 to
Beginning, with months after (2] the average amount of those wages
General for calendar year 1987. The section
December 1982, there is no limit on the
The 1990 amount of earnings required amount an individual 70 or over may further provides that if the amount so
for a quarter of coverage is $520. A earn and still receive Social Security determined is not a multiple of $10, it
quarter of coverage is the basic unit for benefits. shall be rounded to the nearest multiple
determining whether a worker is insured of $10.
under the Social Security program. For (b) BeneficiariesAged 65 through 69
Average Wages,
years before 1978, an individual The retirement earnings test monthly
generally was credited with a quarter of exempt amount for beneficiaries aged 65 Average wages for this purpose are
coverage for each quarter in which through 69 is stated in the Act at section determined in the same way as for the
wages of $50 or more were paid, or an 203(f)(8)(D) for years 1978 through 1982. contribution and benefit base.
individual was. credited with 4 quarters A formula is provided in section Therefore, the ratio of the average
45804 Fedcral Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
wages for 1988, $19,334.04, compared to each year by the corresponding ratio to primary insurance amount. Those
that of 1987, $18,426.51, is 1.0492513. obtain the worker's adjusted earnings amendments also continued the then
for each year. After determining the existing relationship between maximum
Exempt Amount for Beneficiaries Under number of years we must use to family benefits and primary insurance
Age 65
compute the primary insurance amount, amounts but did change the method of
Multiplying the 1989 retirement we pick those years with highest computing the maximum amount of
earnings test monthly exempt amount of indexed earnings, total those indexed benefits which may be paid to a
$540 by the ratio 1.0492513 produces the earnings and divide by the total number worker's family. The Social Security
amount of $566.60. This must then be of months in those years. This figure is Disability Amendments of 1980 (Pub. L.
rounded to $570. The retirment earnings rounded down to the next lower dollar 96-265) established a new formula for
test monthly exempt amount for amount, and becomes the average computing the maximum benefits
beneficiaries under age 65 is thus indexed monthly earnings'figure to be payable to the family of a disabled
determined to be $570 for 1990. The used in computing the worker's primary worker. This new formula is applied to
corresponding retirement earnings test insurance amount for 1990. the family benefits of workers who first
annual exempt amount for these become entitled to disability insurance
Computing the PrimaryInsurance
beneficiaries is $6,840. benefits after June 30,1980, and who
Amount
Computing Benefits After 1978 first become eligible for these benefits
The primary insurance amount is the after 1978. The new formula was
General sum of three separate percentages of explained in a final rule published in the
The Social Security Amendments of portions of the average indexed monthly FEDERAL REGISTER on May 8, 1981, at 46
1977 provided a new method for earnings. In 1979 (the first year the FR 25601. For disabled workers initially
formula was in effect), these portions entitled to disability benefits before July
determining an individual's primary were the first $180, the amount between
insurance amount. This method uses a 1980, or whose disability began before
$180 and $1,085, and the amount over 1979, the family maximum payable is
formula based on "wage indexing" and
was fully explained with interim $1,085. The amounts for 1990 are computed the same as the old-age and
regulations and final regulations obtained by multiplying the 1979 survivor family maximum.
amounts by the ratio between the
published in the Federal Register on average of the total wages for 1988, Computing the Old-Age and Survivor
December 29, 1978, at 43 FR 60877 and $19,334.04, and for 1977, $9,779.44. These FamilyMaximum
July 15, 1982, at 47 FR 30731 respectively. results were then rounded to the nearest
It generally applies when a worker after The formula used to compute the
1978 attains age 62, becomes disabled, dollar. For 1990, the ratio is 1.9770089.
family maximum is similar to that used
Multiplying the 1979 amounts of $180
or dies before age 62. The formula uses and $1,085 by 1.9770089 produces the
to compute the primary insurance
the worker's earnings after they have amount. It involves computing the sum
amounts of $355.86 and $2,145.05. These
been adjusted, or "indexed," in of four separate percentages of portions
must then be rounded to $356 and $2,145.
proportion to the increases in average of the worker's primary insurance
Accordingly, the portions of the average
wages of all workers. Using this method, amount. In 1979, these portions were the
indexed monthly earnings to be used in
we determine the worker's "average *first$230, the amount between $230 and
indexed monthly earnings." We then 1990 are determined to be the first $356,
the amount between $356 and $2,145, $332, the amount between $332 and $433,
compute the primary insurance amount, and the, amount over $2,145.
and the amount over $433. The amounts
using the worker's average indexed •Consequently, for individuals who for 1990 are obtained by multiplying the
monthly earnings. The computation first become eligible for old-age 1979 amounts by the ration between the
formula is adjusted automatically each insurance benefits or disability average of the total wages for 1988,
year to reflect changes in general wage insurance benefits in 1990, or who die in $19,334.04, and the average for 1977
levels. 1990 before becoming eligible for $9,779.44. This amount is then rounded
Average Indexed Monthly Earnings benefits, we will compute their primary to the nearest dollar. For 1990, the ratio
insurance amount by adding the is 1.9770089. Multiplying the amounts of
To assure that a worker's future $230, $332, and $433 by 1.9770089
benefits reflect the general rise in the following:
(a) 90 percent of the first $356 of their produces the amounts of $454.71,
standard of living that occurs during his average indexed monthly earnings, plus $656.37, and $856.04. These amounts are
or her working lifetime, we adjust or then rounded to $455, $656, and $856.
(b) 32 percent of the average indexed
"index" the worker's past earnings to monthly earnings over $356 and through Accordingly, the portions of the primary
take into account the change in general insurance amounts to be used in 1990
wage levels that has occurred during the $2,145, plus
(c) 15 percent of the average indexed are determined to be the first $455, the
worker's years of employment. These amount between $455 and $656, the
monthly earnings over $2,145.
adjusted earnings are then used to amount between $656 and $856, and the
This amount is then rounded to the
compute the worker's primary insurance next multiple of $.10 if it is not already a amount over $856.
amount. multiple of $.10. This formula and the Consequently, for the family of a
For example, to compute the average adjustments we have described are worker who becomes age 62 or dies in
indexed monthly earnings for a worker 1990, the total amount of benefits
contained in section 215(a) of the Act (42
attaining age 62, becoming disabled, or
U.S.C. 415(a)). payable to them will be computed so.
dying before attaining age 62, in 1990, that it does not exceed:
we divide the average of the total wages Maximum Benefits Payable to a Family
for 1988, $19,334.04, by the average of (a) 150 percent of the first. $455 of the
General worker's primary insurance amount,
the total wages for each year prior to
1988 in which the worker had earnings. The 1977 Amendments continued the plus
We then multiply the actual wages and long established policy of limiting the (b) 272 percent of the worker's
self-employment income as defined in total monthly benefits which a worker's primary insurance amount over $455
section 211(b) of the Act credited for family may receive based on his or her through $656, plus
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45805
(c) 134 percent of the worker's primary Amount (Catalog of Federal Domestic Assistance
insurance amount over $656 through Programs Nos. 13.802-13.805, and 13.807
The ratio of the average wage for Social Security Programs.]
$856, plus
1988, $19,334.04, compared to that for Dated: October 26, 1989.
(d) 175 percent of the worker's 1987, $18,426.51, is 1.0492513. Multiplying
primary insurance amount over $856. Louis W. Sullivan,
the 1989 "old-law" contribution and
This amount is then rounded to the benefit base amount of $35,700 by the Secretaryof Health andHuman Services.
next lower multiple of $.10 if it is not ratio of 1.0492513 produces the amount
already a multiple of $.10. This formula of $37,458.27 which must then be SPECIAL MINIMUM PRIMARY INSURANCE
and the adjustments we have described rounded to $37,500. Accordingly, the AMOUNTS AND MAXIMUM FAMILY BENE-
are contained in section 203(a) of the "old-law" contribution and benefit base FITS
Act (42 U.S.C. 403(a)). is determined to be $37,500 for 1990.
"Old-Law" Contribution and Benefit Special Number of Special Special
OASDI Fund Ratio minimum rmiimum minimum
Base primary years at primary family
General insuranceamountamount
minimum insurance benefit
General amount earnings payable aabe o
Section 215(i) of the Act was amended payable for evel for payable for
The 1990 "old-law" contribution and Dec. 1988 Dec. 1989 Dec. 1989
by section 112 of Public Law 98-21, the
benefit base is $37,500. This is the base Social Security Amendments of 1983, to
that would have been effective under $21.00 11 $21.90 $33.00
include a "stabilizer" provision that can 41.70 12 43.60 65.70
the Act without the enactment of the limit the automatic OASDI benefit 62.70 13 65.60 98.70
1977 amendments. The base is computed increase under certain circumstances. If 83.80 14 87.40 131.30
under section 230(b) of the Act as it read 104.40 15 f09.30 164.00
the combined assets of the OASI and DI 125.40 16 131.20 197.20
prior to the 1977 amendments. Trust Funds, as a percentage of annual 146.30 17 153.10 229.90
The "old-law" contribution and expenditures, are below a specified 167.20 18 175.00 262.70
benefit base is used by: level, the automatic benefit increase is 188.10 19 196.90 295.50
(1) the Railroad Retirement program to 208.80 20 218.60 328.20
equal to the lesser of (1) the increase in 230.00 21 240.80 361.30
determine certain tax liabilities and tier average wages or (2) the increase in 250.80 22 262.50 394.00
II benefits payable under that program prices. The threshold level specified for 271.90 23 284.60 427.30
to supplement the tier I payments which the OASDI fund ratio is 20.0 percent for 292.70 - 24 306.40 460.00
correspond to basic Social Security 313.50 25 328.20. 492.50
benefit increases for December of 1989 334.60 26 350.30 525.90
benefits, and later. The amendments also provide 355.50 27 372.20 558.60
(2) the Pension Benefit Guaranty for subsequent "catch-up" benefit 376.30 28 393.90 591.20
Corporation to determine the maximum increases for beneficiaries whose 397.10 29 415.70 624.20
amount of pension guaranteed under the previous benefit increases were affected 418.00 30 437.60 656.80
Employee Retirement Income Security by this provision. "Catch-up" benefit
Act (as stated'in section 230(d) of the increases occur only when trust fund [FR Doc. 89-25625 Filed 10-30-89; 8:45 am]
Act), and assets exceed 32.0 percent of annual
BILLING CODE 4190-11-M
(3) Social Security to determine a expenditures.
"year of coverage" in computing the
"special minimum" benefit and in Computation
National Institutes of Health
computing benefits for persons who are Section 215(i) specifies the
also eligible to receive pensions based computation and application of the Meeting of the Program Advisory
on employment not covered under OASDI fund ratio. The OASDI fund Committee on the Human Genome
section 210 of the Act. ratio for 1989 is the ratio of (1) the
combined assets of the OASI and DI Pursuant to Public Law 92-463, notice
Computation Trust Funds at the beginning of 1989, is hereby given of the meeting of the
The base is computed using the including advance tax transfers for Program Advisory Committee on the
automatic adjustment formula in section January 1989, to (2) the estimated Human Genome on December 4, and a
230(b) of the Act as it read prior to the expenditures of the OASI and DI Trust joint NIH and DOE subcommittee
enactment of the 1977 amendments. Funds during 1989, excluding transfer meeting on December 5, 1989, (as
Under the formula, the "old-law" payments between the OASI and DI specified in the Memorandum of
contribution and benefit base shall be Trust Funds, and reducing any transfers Understanding) at the National
the "old-law" 1989 base multiplied by to the Railroad Retirement Account by Institutes of Health, Bethesda,
the ratio of (1) the average amount, per any transfers from that account into Maryland. The meeting will take place
employee, of total wages for the either trust fund. from 8:30 a.m. to 5:30 p.m. on December
calendar year of 1988 to (2) the average 4, and the joint subcommittee meeting
Ratio will take place from 9:00 a.m. to 1:00
amount of those wages for the calendar
year of 1987. If the amount so The combined assets of the OASI and p.m. on December 5 in the Shannon
determined is not a multiple of $300, it DI Trust Funds at the beginning of 1989 Building, Wilson Hall, 9000 Rockville
shall be rounded to the nearest multiple (including advance tax transfers for Pike, Bethesda, Maryland. The meeting
of $300. January 1989) equaled $134,428 million, will be open to the public.
and the expenditures are estimated to This will be the third meeting of the
Average Wages be $235,674 million. Thus, the OASDI Program Advisory Committee on the
The average wage for calendar year fund ratio for 1989 is 57.0 percent, which Human Genome. The purpose of the
1987 was previously determined to be exceeds the applicable threshold of 20.0 meeting is to discuss the planning,
$18,426.51. The average wage for percent. As a result, the "stabilizer" organization, and progress of the human
calendar year 1988 has been determined provision does not affect the benefit genome project at the National Institutes
to be $19,334.04, as stated herein. increase for December 1989. of Health.
45806 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices I
Dr. Elke Jordan, Deputy Director of the proposal by name and should be sent to: proposal is new or an extension,
National Center for Human Genome John Allison, OMB Desk Officer, Office reinstatement, or revision of an
Research, National Institutes of Health, of Management and Budget, New information collection requirement; and
Shannon Building, Room 201, Bethesda, Executive Office Building, Washington, (9) the names and telephone numbers of
Maryland 20892, (301) 496-0844, will DC 20503. an agency official familiar with the
furnish the meeting agenda, rosters of FOR FURTHER INFORMATION CONTACT. proposal and of the OMB Desk Officer
Committee members and consultants, David S. Cristy, Reports Management for the Department.
and substantive program information Officer, Department of Housing and Authority: Section 3507 of the Paperwork
upon request. Urban Development, 451 7th Street, Reduction Act, 44 U.S.C. 3507; Section 7(d) of
Dated: October 24, 1989. Southwest, Washington, DC 20410, the Department of Housing and Urban
Betty 1.Beveridge, telephone (202) 755-6050. This is not a Development Act, 42 U.S.C. 3535(d):
Committee Management Office, NIH. toll-free number, Copies of the proposed Dated: October 21, 1989.
[FR Doc. 89-25510 Filed 10-30-89; 8:45 am] forms and other available documents John T. Murphy,
submitted to OMB may be obtained Director,Information Policyand Management
BILUNG CODE 4140-0t-M
from Mr. Cristy. Division.
SUPPLEMENTARY INFORMATION: The Proposal:Letter of Transmittal, 24 CFR
DEPARTMENT OF HOUSING AND Deparfnent has submitted the proposal part 390
URBAN DEVELOPMENT for the collection of information, as Office: Government National Mortgage
described below, to OMB for review, as Association (GNMA)
[Docket No. N-89-2076] required by the Paperwork Reduction Descriptionof the Need for the
Act (44 U.S.C. chapter 35). Information and its Proposed Use:
Submission of Proposed Information The Notice lists the following
Collection to OMB GNMA provides these forms for use
information: (1) The title of the
by issuers of mortgage-backed
AGENCY: Office of Administration, HUD. information collection proposal; (2) the
office of the agency to collect the securities to transmit the required
ACTION: Notice. materials to request approval of an
information; (3) the description of the
SUMMARY: The proposed information need for the information and its application, to provide GNMA with a
collection requirement described below proposed use; (4) the agency form Resolution of the Board of Directors
has been submitted to the Office of number, if applicable; (5) what members and Certificate of Authorized
Management and Budget (OMB) for of the public will be affected by the Signatures, and to furnish the
review, as required by the Paperwork proposal; (6) how frequently information servicing agreement.
Reduction Act. The Department is submissions will be required; (7) an Form Number: HUD-11700, 11702, and
soliciting public comments on the estimate of the total numbers of hours 11707
subject proposal. needed to prepare the information Respondents: Businesses or Other For-
ADDRESS: Interested persons are invited submission including number of Profit
to submit comments regarding this respondents, frequency of response, and Frequencyof Submission: On Occasion
proposal. Comments should refer to the hours of response; (8) whether the Reporting Burden:
Total EstimatedBurden Hours: 7,050 Reduction Act. The Department is SUPPLEMENTARY INFORMATION: The
Status: Extension soliciting public comment on the subject Department has submitted the proposals
Contact: Brenda Countee, HUD, (202) proposals. for the collections of information, as
755-5535. John Allison, OMB, (202) ADDRESS: Interested persons are invited described below, to OMB for review, as
395-6880. required by the Paperwork Reduction
to submit comment regarding these
Dated: October 24, 1989. proposals. Comments should refer to the Act (44 U.S.C. chapter 35).
[FR Doc. 89-25542 Filed 10-309; 8:45 am] proposal by name and should be sent to: The Notices list the following
BILLING CODE 4210-01-M John Allison, OMB Desk Officer, Office information: (1) The title of the
information collection proposal; (2) the
of Management and Budget, New
office of the agency to collect the
[Docket No. N-89-20771 Executive Office Building, Washington,
information; (3) the description of the
Submission of Proposed Information DC 20503. need for the information and its
FOR FURTHER INFORMATION CONTAC. proposed use; (4) the agency form
Collections to OMB David S. Cristy, Reports Management number, if applicable; (5) what members
AGENCY: Office of Administration, HUD. Officer, Department of Housing and of the public will be affected by the
ACTION: Notices. Urban Development, 451 7th Street, proposal; (6) how frequently information
Southwest, Washington, DC 20410, submissions will be required; (7) an
SUMMARY: The proposed information telephone (202) 755-6050. This is not a estimate of the total numbers of hours
collection requirements. described below toll-free number. Copies of the proposed needed to prepare the information
have been submitted to the Office of forms and other available documents submission including number of
Management and Budget (OMB) for submitted to OMB may be obtained respondents, frequency of response, and
review, as required by the Paperwork from Mr. Cristy. hours of response; (8) whether the
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices S45807
proposal is new or an extension, Dated: October 25, 1989. forms incorporates the terms and
reinstatement, or revision of an John T. Murphy, conditions of the Guaranty
information collection requirement; and Director,InformationPolicy andManagement Agreements for each type of mortgage
(9) the names and telephone numbers of Division. pool. Execution by the issuer indicates
an agency official familiar with the Proposal:Summary of Guaranty compliance with the terms and
proposal and of the OMB Desk Officer Agreements (To include conditions of the Guaranty
for the Department. recordkeeping requirements contained Agreement.
in the Guaranty Agreements) Form Number: HUD-11716, 1723, 11727,
Authority: Section 3507 of the Paperwork
Office: Government National Mortgage 1730, and 11733
Reduction Act, 44 U.S.C. 3507; Sec. 7(d) of the
Association (GNMA) Respondents: Businesses or Other For-
Department of Housing and Urban
Descriptionof the Needfor the Profit
Development Act, 42 U.S.C. 3535(d). Information and Its ProposedUse: Frequency of Submission:On Occasion
The information furnished on the Reporting Burden:
TotalEstimated Burden Hours: 2,000 DEPARTMENT OF THE INTERIOR ACTION: Moab District Advisory Council
Status: Reinstatement Meeting.
Bureau of Land Management
Contact: James J.Tahash, HUD, (202]
426-3944., John Allison, OMB, (202) SUMMARY: The Moab District Advisory
[UT-060-00-4410-141
Council will meet Tuesday, November
395-6880 21, 1989. The meeting will be held in the
Moab District Advisory Council
Dated: October 25, 1989. Meeting BLM Moab District Office Conference
[FR Doc. 89-25543 Filed 10-30-89; 8:45 am] Room beginning at 10:00 a.m. and
AGENCY: Bureau of Land Management, adjourning at 4:30 p.m. The agenda
BILLING CODE 4210-01-M Moab. includes an update on current planning
45808 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
efforts and the drought situation in COR-942-00-4730-12 GPO-027j Dated: October 20, 1989.
southeast Utah. Also, selected program Robert E. Moliohan,
updates. new business, opportunity for Filing of Plats of Survey: Oregon/ Acting Chief,Branchof Lands and Minerals
public comment, finalization of Washington Operations.
resolutions, and adjournment. AGENCY: Bureau of Land Management, [FR Doc. 89-25591 Filed 10-30-89; 8:45 am]
All Advisory Council meetings are Interior. BILLING CODE 4310-33-M
open to the public. Persons wishing to
ACTION: Notice.
make a comment to the Council must
notify the BLM by Friday, November 17. National Park Service
SUMMARY: The plats of survey of the
Depending on the number of people following described lands are scheduled
desiring to make a statement, a per- National Register of Historic Places;
to be officially filed in the Oregon State Notification of Pending Nominations
person time limit may be established. Office, Portland, Oregon, thirty (30)
Gene Nodine, calendar'days from the date of this Nominations for the following
DistrictManager. publication. properties being considered for listing in
[FR Doc. 89-25693 Filed 10-30-89; 8:45 am] the National Register were received by
Willamette Meridian the National Park Service before
BILLING CODE 4310-D6-M
Oregon October 21, 1989. Pursuant to § 60.13 of
T. 3 N., R. 2 W., accepted 9/15/89 36 CFR part 60 written comments
[ID-942-00-4730-12]
T. 3 N., R. 3 W., accepted 9/29/89 concerning the significance of these
T. 2 N., R. 3 W., accepted 10/o/89 -properties under the National Register
Idaho: Filing of Plats of Survey; Idaho
T. 29 S., R. 3 W., accepted 9/29/89 criteria for evaluation may be forwarded
The plats of survey of the following T. 30 S., R. 7 W., accepted 9/15/89 to the National Register, National Park
described lands Were officially filed in T. 13 S., R. 8 W., accepted 9/15/89 Service, P.O. Box 37127, Washington, DC
the Idaho State Office, Bureau of Land T. 5 S.. R. 3 E., accepted 10/6/89 20013-7127. Written comments should
Management, Boise, Idaho, effective T. 5 S., R. 4 E., accepted 10/6/89 be submitted by November 15, 1989.
10:00 A.M., date October 23, 1989. T. 28 S., R. 14 E., accepted 10/6/89 Carol D. Shull,
The plat representing the dependent Washington Chief of Registration,NationalRegister,
resurvey of the west boundary, portions T. 39 N., R. 25 E., accepted 9/29/89 ARKANSAS
of the south and north boundaries, and T. 32 N., R. 35 E., accepted 8/25/89 Carroll County
subdivisional lines, and the subdivision
of certain sections in T. 14, S., R. 46 E., If protests against a survey, as shown Chaney, James C., House, AR 68, Osage,
Boise Meridian, Idaho, Group No. 732, on any of the above plat(s), are received 89002012
was accepted September 27, 1989. prior to the date of official filing, the
GEORGIA
This survey was executed to meet filing will be stayed pending
consideration of the protest(s). A plat Floyd County
certain administrative needs of this
will not be officially filed until the day Mayo's Bar Lock and Dam, On the Coosa
Bureau.
after all protests have been dismissed River, 8 mi. SW of Rome, Rome vicinity,
The plat representing the dependent and become final or appeals from the 89002020
resurvey of portions of the east and dismissal affirmed.
north boundaries and a portion of the Thomas County
The plat(s) will be placed in the open
subdivisional lines, the subdivision of files of the Oregon State Office, Bureau Box Hall Plantation,Lower Cairo Rd. at
section 1, and the survey of Lot 1, T. 3 of Land Management, 825 NE Pinetree Blvd., Thomasville, 89002015
N., R. 41 E., Boise Meridian, Idaho, Multnomah, Portland, Oregon 97208, and HAWAII
Group No. 766, was accepted October will be available to the public as a
11, 1989. matter of information only. Copies of the Kauai County
The plat representing the dependent plat(s) may be obtained from the above US Post Office-Lihue. 4441 Rice St.. Lihue,
resurvey of portions of the north office upon required payment. A person 89002011
boundary and subdivisional lines, H.E.S. or party who wishes to protest against a IDAHO
260 and a portion of H.E.S. No. 555, the survey must file with the State Director,
subdivision of section 6, and the survey Bureau of Land Management, Portland, Butte County
of certain lots in section 6 and 7, T. 3 N., Oregon, a notice that they wish to Mackenzie's Donald,Campground,Fallert
R. 42 E., Boise Meridian, Idaho, Group protest prior to the proposed official Springs in Challis National Forest. City
No. 766, was accepted October 11, 1989. filing date given above. A statement of Unavailable, 89001990
These surveys were executed to meet reasons for a protest may be filed with Clark County
certain administrative needs of the U.S. the notice of protest to the State
Director, or the statement of reasons Spencer Rock House. Off US 91 at Huntley
Forest Service. Canyon, Spencer, 89001991
must be filed with the State Director
All inquires about these lands should within thirty (30) days after the IOWA
be sent to the Idaho State Office, Bureau proposed official filing date.
of Land Management, 3380 Americana Linn County
The above-listed plats represent
Terrace, Boise, Idaho, 83706. dependent resurveys', survey and Armstrong. Robert and Esther. House. 370
Duane E. Olsen, subdivision. 34th St., SE., Cedar Rapids, 89002009
Chief Cadastral Surveyorfor Idaho. FOR FURTHER INFORMATION CONTACT Polk County
October 23, 1989 Bureau of Land Management, 825 NE Rumely-Des Aoines Drug Company
[FR Doc. 89-25592 Filed 10-30-89; 8:45 am] Multnomah St'reet, P.O. Box 2965, Building, 110 SW. Fourth St., Des Moines,
BILLING CODE 4310-GG-M Portland" Oregon 97208. .89002008
Federal Register / Vol. 54, No. 209. / Tuesday, October 31, 1989 / Notices 45809
business hours (8:45 a.m. to 5:15 p.m.) in unless the Commission orders review of determined that the unique
the Office of the Secretary, U.S. the initial determination. The initial circumstances of this investigation
International Trade Commission, 500 E determination in this matter was served warrant-that a portion of its hearing be
Street, SW. Washington, DC 20436, upon the parties on October 20, 1989. conducted in camera.See 19 CFR 201.13,
telephone 202-252-1000. Hearing Copies of the initial determination, the 201.35(b)(3). The in camera. portion of
impaired individuals are advised that settlement agreement, and all other the hearing will consist of two phases.
information on this matter can be nonconfidential documents filed in In phase one, the presentations will be
obtained by contacting the connection with this investigation are limited to arguments relevant to the
Commission's TDD terminal on 202-252- available for inspection during official proper analysis of AT&T's financial data
1810. business hours (8:45 a.m' to 5:15 p.m.) in and the relevance of its McKinsey study.
WRITTEN COMMENTS: Interested the Office of the Secretary, U.S. In phase two, the parties will be allowed
persons may file written comments with International Trade Commission, 500 E. to comment on all other business
the Commission concerning termination Street, SW. Washington, DC 20436, proprietary information.
of the aforementioned respondents. The telephone 202-252-1000. Hearing
-original and 14 copies of all such impaired individuals are advised that In determining to undertake this
comments must be filed with'the information on this matter can be unusual procedural step, the
Secretary to the Commission, 500 E obtained by contacting the Commission strongly reaffirms the
Street, SW. Washington, DC 20436, no Commission's TDD terminal on 202-252- desirability of conducting its business in
later than 10 days after publication of 1810. public. However, given the dominant
this notice in the Federal Register. Any WRITTEN COMMENTS: Interested position of the petitioner in the domestic
person desirng to submit a document (or persons may file written comments with industry and its involvement in a wide
portion thereof) to the Commission in the Commission concerning termination array of activities in addition to, but
confidence must request confidential of the aforementioned respondents. The also related to, the production of small
treatment. Such requests should be original and 14 copies of all such business telephone equipment, including
directed to the Secretary to the comments must be filed with the refurbishing, renting, leasing, selling and
Commission and must include a full Secretary to the Commission, 500 E distributing such equipment, an in
statement of the reasons why Street, SW., Washington, DC 20436, no camera session devoted to the proper'
confidential treatment should be later than 10 days after publication of understanding of its financial condition
granted. The Commission will either this notice in the Federal Register. Any is appropriate. Moreover, none of the
accept the submission in confidence or person desiring to submit a document parties to this investigation have raised
return it. (or portion thereof) to the Commission in any objection to this procedure. See 19
FOR FURTHER INFORMATION CONTACT: confidence must request confidential CFR 201.35(b)(4). In the interests of
Ruby J.Dionne, Office of the Secretary, treatment. Such requests should be procedural equity, the Commission has
U.S. International Trade Commission, directed to the Secretary to the determined not to limit the in camera
telephone 202-252-71805. Commission and must include a full ,session solely to the petitioner's
statement of the reasons why business proprietary information.
By order of the Commission. After the completion of the
Issued: October 25, 1989.
confidential treatment should be
granted. The Commission will either petitioner's public presentation and
Kenneth R. Mason, accept the submission in confidence or questioning of the petitioner by the
Secretary. return it. Commission, the hearing will be
[FR Doc. 89-25546 Filed 10-30-89; 8:45 am] FOR FURTHER INFORMATION CONTACT. recessed. The in camera session will
BILLING CODE 7020-02-M Ruby J.Dionne, Office of the Secretary, take place when the Commission
U.S. International Trade Commission, reconvenes following the recess. Only
[Investlgation No. 337-TA-2951 telephone 202-252-1805. those individuals who have been
By order of the Commission. granted access to business proprietary
Certain Novelty Teleidoscopes; Initial Issued: October 25, 1989. information under a Commission
Determination Terminating
Kenneth R.Mason, Administrative Protective Order (APO)
Respondent on the Basis of and are included on the Commission's
Secretary.- APO service list will be allowed to
Settlement Agreement
FR Doc. 89-25547 Filed 10-30-89; 8:45 am] attend the in camerasession. See 19
AGENCY: U.S. International Trade BILLING CODE 7020-02-M
Commission.
CFR 201.35(b)(1), (2). During phase one
of the in camerasession, the relevant
ACTION: Notice is hereby given that the, AT&T and McKinsey personnel will be
(Iny. Nos. 731-TA-426-4281
Commission has received an initial allowed to attend. They will, however,
determination from the presiding officer Certain Telephone Systems and be excused at the end of phase one. All
in the above-captioned investigation Subassemblies Thereof From Japan, those planning to attend that session
terminating the following respondent on Korea, and Taiwan; Commission should present proper identification in
the basis of a settlement agreement: Determination to Conduct a Portion of order to be admitted to the hearing
Universal Specialties Co. its Hearing in Camera room.
SUPPLEMENTARY INFORMATION: This AGENCY:U.S. International Trade During phase one of the in camera
investigation is being conducted Commission. hearing, respondents will first present
pursuant to section 337 of the Tariff Act ACTION: Closure of a portion of
their arguments relating to the financial
of 1930 (19 U.S.C. S1337). Under the Commission hearing to the public. condition of AT&T and the relevance of
Commission's rules, the presiding its McKinsey study. The Commission
officer's initial determination will SUMMARY: Upon request of certain will then question the respondents as
become the determination of the .respondents and without objection from appropriate. Petitioner may then
Commission thirty (30) days after the the petitioner, the U.S. International respond. Petitioner also will be
date of its service upon the parties, Trade Commission has unanimously questioned by the Commission. At the
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 1 45811
conclusion of phase one, all AT&T and and extends eastward from the F&J Constitution Avenue, NW., Washington,
McKinsey personnel will be excused. junction to the Talleyrand Docks and DC 20210.
During phase two of the in camera Terminal. The transaction was to be These meetings will be closed under
session, petitioner will be allowed to consummated on the effective date of the authority of section 10(d) of the
address all other BPI matters. this notice, September 14, 1989.1 : Federal Advisory Committee Act. The
Respondents may then reply. Both Any comments must be filed with the Panel will review and discuss personal
groups will be questioned by the Commission and served on Frank J. information regarding the nominees,
Commission as appropriate. Pergolizzi, Slover &Loftus, 1224 disclosure of which would constitute a
Respondents will be allowed up to 20 Seventeenth Street, NW., Washington, clearly unwarranted invasion of privacy.
minutes to make their collective DC 20036.
FOR FURTHER INFORMATION, CONTACT.
presentation, allocated as they choose Applicant must retain its interest in
and maintain the historic integrity of all Robert N. Colombo, Director, Office of
between phase one and phase two, with
sites and structures on the line that are Employment and Training Programs.
that amount deducted from their allotted
time. Petitioner will be allowed up to 15 50 years old or older until completion of U.S. Department of Labor, Employment
minutes to make its collective the section 106 process of the National and Training Administration, 200
presentation, allocated as it chooses Historic Preservation Act, 16 U.S.C. 470 Constitution Avenue, NW., Room N-
is achieved. See Class Exemption-Acq. 4703, Washington, DC 20210. Telephone:
between phase one and phase two, with
of Oper.of R. Lines Under49 US.C. 202-535-0577.
that amount of time deducted from its
allotted time. 10901, 4 I.C.C.2d 305 (1988).2 Signed atWashington, DC, this 25th day of
At the conclusion of the in camera This notice is filed under 49 CFR October, 1989.
portion of the hearing, the Commission 1150.31. If the notice contains false or Roberts T. Jones,
will take a brief recess and will misleading information, the exemption is Assistant Secretaryof Labor.
reconvene in public session to complete void ab initio. Petitions to revoke the [FR Doc. 80-25595 Filed 1-30-89. 8:45 am]
their public questioning of the petitioner, exemption under 49 U.S.C. 10505(d), may BILLING CODE 4510-30-M
if necessary. The Commission will then be filed at any time. The filing of a
consider the public presentation of petition to revoke will not automatically Employment and Training
respondents. stay the transaction.
FOR FURTHER INFORMATION CONTACT: Decided: October 25.1989. Administration
Stephen A. McLaughlin, Esq., Office of By the Commission, Jane F. Mackall.
the General Counsel, U.S. International Director, Office of Proceedings. [TA-W-21,7391
Trade Commission, tel. 202-252-1095. Noreta R. McGee,
AUTHORITY: The General Counsel has Secretary. Myers Drilling Co.; Midland, Texas;
certified, 'pursuant to Commission Rule Termination of Investigation;
[FR Doc. 89-25558 Filed 10-30-89; 8:45 am]
201.39, 19 CFR 201.39, that, in her Correction
BILLING CODE 7035-01-M
opinion, a portion of the Commission's This notice corrects the language in
hearing in Telephone Systems and the Federal Register of March 3, 1989 at
Subassemblies Thereoffrom Japan, DEPARTMENT OF LABOR page 9096 (54 FR 9096), FR Document 89-
Korea, and Taiwan, Inv. Nos. 731-TA- 5029, denoting the TA-W number of the
426-428 (Final) may be closed to the Review Panel for the Job Training
active certification covering the instant
public to prevent the disclosure of Partnership Act Presidential Awards; worker group.
confidential financial information. Meeting
Under Myers Drilling Co., Midland
By order of the Commission. The Review Panel for the Job Training TX, Termination of Investigation, the
Issued: October 20, 1989. Partnership Act (JTPA) Presidential last line on page 9096, the active
Kennth Ri. Mason, Awards was renewed by Notice dated certification number covering the
Secretary. August 8, 1988, for a two-year period, petitioning group of workers should be
[FR Doc. 89-25689 Filed 10-27-89; 10:23 am] and published August 12, 1988, 53 FR "TA-W-21,592" instead of TA-W-
BILLING CODE 7020-02-M
30482, to advise the Secretary of Labor 21,739.
on the selection of the Presidential Signed at Washington, DC, this 20th day of
Awards recipients. October 1989.
INTERSTATE COMMERCE Notice is hereby given of the meetings
Marvin M. Fooks,
COMMISSION
of the Review Panel for the JTPA
Presidential Awards and its working Director,Office of Trade Adjustment
[Finance Docket No. 315441 groups during a two-week period to Assistance.
begin November 20,1989. [FR Doc. 89-25596 Filed 10-30-89; 8:45 am)
Jaxport Terminal Railway Co.; Lease TIME AND PLACE: 10:00 a.m., Room S5515, BILLING CODE 4510-30-M
and Operation Exemption-Terminal Seminar Room 2, Frances Perkins
Railroad Facilities In Jacksonville, Department of Labor Building, 200 /
Duvall County, FL' Determinations Regarding Eligibility to
Apply for Worker Adjustment
Jaxport Terminal Railway Company 'JTR states that even though the lease became Assistance
(JTR), a noncarrier, has filed a notice of effective on July 24,1989, common carrier
operations would not begin until the hotice became
exemption to lease and operate 8.72 effective. It notes that it has performed all terminal In accordance with section 223 of the
miles of ail line owned by the railroad operations on the property during the Trade Act of 1974 (19 U.S.C. 2273) the
Municipal Docks Railroad (MDR), a unit interim period, solely as contract agent of MDR, in Department of Labor herein presents
of the Jacksonville Port Authority. The MDR's name and pursuant to MDR's filed tariffs. summaries of determinations regarding
line is located between Norfolk 2JTR certifies that it has identified to the eligibility to apply for adjustment
appropriate State Historic Preservation Officer all
Southern milepost 5-C and CSX sites and structures 50 years old and older that will assistance issued'druing the period of
Transportation, Inc., milepost 632.08, be transferred as a result of this transaction. October 1989.
45812 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
In order for an affirmative TA-W-23,315; L &S Shirt Co., Inc., New TA-W-23,275 SSMC, Inc., Fairfield,NJ
determination to be made and a York, NY The workers' firm does not produce
certification of eligibility to apply for, Increased imports did not contribute an article as required for certification
adjustment assistance to be issued, each importantly to workers separations at under Section 222 of the Trade Act of
of the group eligibility'requirements of the firm. 1974.
section 222 of the Act must be met. TA-W.-23,292 Grant Oil Country TA-W-23,256 FirstFinancial
(1) That a significant number or Tubular Corp., Houston, TX Management Corp., Thrift Services
proportion of the workers in the Increased imports did not contribute Div., Englewood, CO
workers' firm, or an appropriate importantly to workers separations at The workers' firm does not produce
subdivision thereof, have become totally the firm. an article as required for certification
or partially separated, TA-W-23,'329;Sooner Completion Co., under Section 222 of the Trade Act of
(2) That sales or production, or both, Enid,OK 1974.
of the firm or subdivision have The workers' firm does not produce TA-W-23,260; J'C"Penny Co., Inc.,
decreased absolutely, and an article as required for certification MerchandiseTesting Center,New
(3) That increases of imports of under section 222 of the Trade Act of
articles like or directly competitive with York, NY
1974. The workers' firm does not produce
articles produced by the firm or TA-W-21,635; Kerr Finishing,Inc.,
appropriate subdivision have an article as required for certification
Travelers Rest, SC under Section' 222 of the Trade Act of
contributed importantly to the Increased imports did not contribute 1974.
separations, or threat thereof, and to the importantly to workers separations at
absoulte decline in sales or production. TA-W-23,230; HarnischfegerCorp.,
the firm. CedarRapids,IA
Negative Determinations TA-W-23,336 B &B Tool & Supply Co., Increased imports did not contribute
In each of the following cases the Inc., Casper, WY importantly to workers separations at
investigation revealed that criterion (3) U.S. imports of oilfield machinery are the firm.
negligible.
has not been met. A survey of customers TA-W-23,298 PPGIndustries,Inc.,
indicated that increased imports did not TA-W-23,339; BOPRepair &Machine,
Glass Research Center,Pittsburgh,
contribute importantly to worker Inc., Casper, WY PA
separations at the firm. U.S. imports of oilfield machinery are The workers' firm does not produce
negligible.
TA-W-23,282; V'Loro Swim wear, Inc., an article as required for certification
Bloomfield, NJ TA-W-23,318; Miller Taxidermy, under Section 222 of the Trade Act of
TA-W-23,270; ParkerSeal Co., Berea, Aransas Pass, TX 1974.
KY 'The investigation revealed that
criterion (1) has not been met. TA-W-23,236; MCENA, Inc., Midland,
"TA-W-23,277 Snyder Tank Corp., TX
Galeton,PA Employment did not decline during the
relevant period as required for The workers' firm does not produce.
TA- W-23,229; Honeywell, Inc., Solid an article as required for certification
State ElectronicsDiv, Colorado certification.
under Section 222 of the Trade Act of
Springs, CO TA-W-23,309 Dailey Petroleum
1974.
TA-W-23,272; PharoahCorp., East Services, Inc., Lafayette, LA
Increased imports did not contribute TA-W-23,263; Meilink Steel Safe Co.,
Newark, NJ
TA-W-23,330; Syltron, Inc., PMG, importantly to workers separations at Toledo, OH
the firm. Increased imports did not contribute
Luquillo PR
TA-W-23,252; Dotti Original,Inc., importantly to workers separations at
TA-W-23,394; NationalSemiconductor
Elizabeth, NJ Corp., Danbury, CT the firm.
TA-W-23,286; CirculineFabrics,Inc., Increased imports did not contribute TA-W-23,257 Guy Friel& Sons, Inc.,
Brooklyn, NY importantly to workers separations at Smyrna Mills; ME
In the following cases, the the firm. . Increased imports did not contribute
investigation revealed that the criteria TA-W-23,279 Sovonics Solar Systems, importantly to workers separations at
for eligibility has not been met for the Troy, MI the firm.
reasons specified. Increased imports did not contribute Affirmative Determination
TA-W-23,264; Michel T. Halbouty importantly to workers separations at
Energy Co., Houston, TX the firm. TA-W-23,142; Garan,Inc., Adamsville,
The workers' firm does not produce TA-W-23,320 Moriarty Welding & TN
an article as required for certification A certification was issued covering all
Fabrication,Buffalo, NY
under section 222 of the Trade Act of The workers' firm does not produce workers separated on or after June 27,
1974. an article as required for-certification 1988.
TA-W-23,289; GE Lighting, Troy, MI under section 222 of the Trade Act of TA-W-23,262; Koelling Metals,St.
The workers' firm does not produce 1974. Louis, MO
an article as required for certification TA-W-23,290 GNB, Inc., Dunmore, PA A certification was issued covering all
under section 222 of the Trade Act of Increased imports did not contribute workers separated on or after August 1.
1974. importantly to workers separations at 1988.
TA-W-23,267 North CentralOil Corp., the firm. TA-W-23,233; Leviton Manufacturing
Houston, TX TA-W-23,276; Service America Corp.,. Co., Inc., West Kingston,'RI
The investigation revealed that Springdale,AR A certification was issued covering all
criterion (2) has not been met. Sales or The workers' firm does not produce workers separated on or after July 19,
production did not decline during the an article as required for certification 1988.
relevant period as required for under Section 222 of the Trade Act of TA-W-23,244; Teledyne Wisconsin
certification. 1974. Motors, West Allis, WI
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45813
A certification was issued covering all A certification was issued covering all TA-W-23,268; Oil Well Perforators,
workers separated on or after April 1, workers separated on or after July 28, Inc., Englewood, CO
1989. 1988. A certification was issued covering all
TA:-W-23,231; Joy FootwearCo., TA-W-23,242; Samsung International, workers separated on or-after August 3,
Hialeah,FL Inc., Ledgewood, NJ 1988.
A certification was issued covering all A certification was issued covering all TA-W-23,268; Oil Well Perforators,
workers separated on or after July 19, workers separated on or after July 20, Inc., & Operatingat Various
1988 and before April 30, 1989. 1988. Locations in The Following States
TA-W-23,251; Diamond Well Service, TA-W-23,278; Somerset Knitting Mills, A-W-23,268A CO
Inc., Casper,WY Philadelphia,PA A-W-23,268B WY
Acertification was issued covering all A certification was issued covering all A-W-23,268C UT
workers separated on or after July 27, workers separated on or after August 7, A-W-23,268D MT
1988. 1988. A certification was issued covering all
TA-W-23,274; R WIMCO, Inc., Cisco,
TA-W-23,249; Beta ManufacturingCo., workers separated on or after August 3,
TX i
Warren, MI 1988.
A certification was issued covering all
A'certification was issued covering all workers separated on or. after August 7, TA-W-21,807; Catus Drilling Co.,
workers separated on or after August 3, 1988. Midland, TX
1988. TA-W-23,322; NiagaraPaperCo., Inc., A certification was issued covering all
TA-W-23,273; Rod Ric Corp., Odessa, Buffalo, NY workers separpted on or after October 1,
TX A certification was issued covering all 1985.
A certification was issued 'covering all workers separated on or after August 21, Ihereby certify that the
workers separated on or after January 1, 1988. aforementioned determinations were
1989. TA-W-23,266; Nichols Casing Crews, issued during the month of October 1989.
Inc., Oklahoma City, OK Copies of these determinations are
TA-W-23,223; Edmar Creations,Inc./ available for inspection in Room 6434.
The Edmar Co., Clifton, NJ A certification was issued covering all
workers separated on or after August 2, U.S. Department of Labor, 601 D Street,
A certificationfwas issued covering all NW., Washington, DC 20213 during.
workers separated on or after July 13, 1988
TA-W-23,280 Texaco USA, West normal business hours or will-be mailed
1988. to persons who write to the above
Region, ProducingDept., Casper,
TA-W-23,248 Barlyn Manufacturing WY address.
Corp., Newark, NJ A certification was issued covering all Dated: October 24, 1989.,
A certification was issued covering all workers separated On or after August 2,
workers separated on or after June 7, Marvin M. Fooks,
1988. Director,Office of Trade Adjustment
1988. TA-W-23,280A; Texaco USA, West Assistance.
TA-W-22,860;Kaypro Corp., Solana Region, ProducingDept., Operating
[FR Doc. 89-25594 Filed 10-30-89; 8:45 am]
Beach, CA at Other Locations in WY
BILUNG CODE 4510-30-M
A certification was issued covering all A certification was issued covering all
workers separated on or after April 14, workers separated on or after August 2,
1988. 1988. Job Training Partnership Act; State
TA-W-23,293; HarrisGraphicsCorp., TA-W-23,280; Texaco USA. West
Designations of Entities as Dislocated
. Pawcatuck, CT Region, ProducingDept., Operating
Worker Units Under Title III,as
A certification was issued covering all at Various Locations in The Amended by Economic Dislocation
workers separated on or after August 7, Following States:
and Worker Adjustment Assistance
1988. A-W-23,280B CO
A-W-23,280C MT Act
TA-W-23,297 Ottenheimer& Co., Inc., A-W-23,280F UT /
Bozarth Facility,Vichy, MO AGENCY: Employment and Training
A-W-23,280D NM Administration, Labor.
A certification was issued covering all A-W-23,280E ND
workers separated on or after August 8, A certification was issued covering all ACTION: Notice.
1988 and before May 30, 1989. workers separated on or after August 2, SUMMARY: The Department of Labor is
TA-W-23,301; Sherwood MedicalCo., 1988. publishing for public information an
Tucson, AZ TA-W-23,281; Texaco USA, Midland update of a listing of names, addresses,
A certification was issued covering all Div., Midland,TX and telephone numbers of entities
workers separated on or after June 30, A certification was issued covering all designated by State as Dislocated
1988. workers separated on or after January I
Worker Units.
TA-W-23,327 RP[ International,Inc., 23, 1989.
TA-W-23,281A; Texaco USA, Midland FOR FURTHER INFORMATION CONTACT:
Boulder, CO Mr. Robert N. Colombo, Director, Office
A certification was issued covering all Div., Operatingat Other Locations
in Texas of Employment and Training Programs,
workers separated on or after January 1, Employment and Training .
1989. A certification was issued covering all
workers separated on or after January Administration, Department of Labor,
TA-W-23,302; Teledyne Exploration 23. 1989. Room N-4469, 200 Constitution Avenue;
Co., Metairie,LA - TA-W-23,281B; Texaco USA, Midland NW., Washington, DC 20210. Telephone:
A certification was issued covering all Div., Operatingat Other Locations 202-535-0577 (this is not a toll-free
workers separated on or after July 28, in New Mexico. number).
1988. -LA certification was Issued covering all SUPPLEMENTARY INFORMATION: Title III
TA-W-23,303; Teledyne Exploration workers separated on or after August'l, of the Job Training Partnership Act
Co., Houston, TX , 1988. (JTPA), as amended by the Economic
45814 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
Box 30039, Lansing, Michigan 48909, Telephone: 505-827-6824, copy to: Mr. South Dakota
Telephone: 517-373-6227 Paul Garcia, Secretary, New Mexico
Department of Labor, P.O. Box 1928, Dislocated Worker Unit, South Dakota
Minnesota Albuquerque, New Mexico 87102 Department of Labor, 700 Governor's
Mr. Edward Retka, Employment and Drive, Pierre, South Dakota 57501,
Training Specialist III, Minnesota New York Telephone: 605-773-5017
Department of Jobs and Training, Mr. David Mance, Early Warning Tennessee
State Job Training Office, 690 Notification Unit, Room 162, Building
American Center Building, 150 E. 12, State Office Building Campus, Mr. Jimmy White, Commissioner,
Kellogg Boulevard, St. Paul, Albany, New York 12240, Telephone: Tennessee Department of Labor,
Minnesota 55101, Telephone: 612-296- 518-457-0206 (Within State-1-800- Dislocated Worker Unit, 501 Union
7918 548-1158) Building, 6th Floor, Nashville,
Mississippi North Carolina Tennessee 37219-5388, Telephone:
615-741-2582
Ms. Jane Black, Director, DWU, Mr. Joel C. New, Director, Division of
Department of Job Development and Employment and Training, P.O. Box Texas
Training, Governor's Office of 27687, Raleigh, North Carolina 27611-
7687, Telephone: 919-733-6383 Ms. Joyce Leidy, Associate Director,
Federal-State Programs, 301 West Texas Department of Commerce,
Pearl Street, Jackson, Mississippi North Dakota Industrial Development Training, P.O.
39203-3089, Telephone: 601-949-2128
Mr. James Hirsch, Director, Employment Box 12728, Austin, Texas 78711,
Missouri and Training Division, Job Service of Telephone: 512-834-6237
Mr. Michael Hartmann, Director, ND, P.O. Box 1537, Bismarck, North Utah
Department of Econ. Dev., Division of Dakota 58502, Telephone: 701-224-
Job Development and Training, 221 2843 Mr. Gary Gardner, Director, DWU,
Metro Drive, Jefferson City, Missouri Ohio
Office of Job Training and Economic
65109, Telephone: 314-751-7796 Development, 6136 State Office
Ms. Ellen O'Brien Saunders, Building, Salt Lake City, Utah 84114,
Montana Administrator, Ohio Bureau of Telephone: 801-538-3619
Ms. Patricia Gross, Program Manager, Employment Services, 145 S.Front
DWU, Employment Policy Division, Street, Columbus, Ohio 43215, Vermont
Department of Labor and Industry, Telephone: 614-466-8032 Mr. Thomas Douse, Director, Office of
P.O. Box 1728, Helena, Montana Oklahoma Employment and Training Programs,
59624, Telephone: 406-444-4500 Department of Employment and
Mr. Eddie Foreman, Supervisor,
Nebraska EDWAA Unit, Oklahoma Employment Training, P.O. Box 488, Montpelier,
Security Commission, Will Rodgers Vermont 05602, Telephone: 802-229-
Ms. Patricia Meisenholder/Mr. Edward 0311
Building, Room 308, 22401 N. Lincoln
Kosark, Nebraska Department of
-Boulevard, Oklahoma City, Oklahoma
Labor, Job Training Program Division, 73105, Telephone: 405-557-7128
Virginia
550 South 16th Street, Box 95004, Mr. Ralph Cantrell, Commissioner,
Lincoln, Nebraska 68509-5004, Oregon
Telephone: 402-471-2127 Virginia Employment Commission,
Ms. Gale Castillo, Manager, Job Training P.O. Box 1358, 703 E. Main Street,
Nevada Partnership Administration, Economic Richmond, Virginia 23211, Telephone:
Development Department, 155 Cottage 804-786-3001, Copy to: Dr. James E.
Ms. Barbara Weinberg, State Job Street N.E., Salem, Oregon 97310,
Training Office, Capitol Complex, Telephone: 503-373-1995
Price, Executive Director, Governor's
Carson City, Nevada 89710, Employment and Training
Telephone: 702-885-4310 Pennsylvania Department, The Commonwealth
New Hampshire Mr. Franklin G. Mont, Deputy Secretary Building, 4615 West Broad Street,
for Employment, Security and Job Third Floor, Richmond, Virginia'23230.
Mr. Robert Steiner, Director, Dislocated Training, 7th and Forster Streets, Telephone: 804-367-9800
Worker Unit, NH Job Training Harrisburg, Pennsylvania 17120,
Coordinating Council, 64B Old Telephone: 717-787-1745 Washington
- Suncook Road, Concord, New Ms. Susan Dunn, Commissioner,
Hampshire 03301, Telephone: 603-228- Rhode Island Employment Security Department,
9500 Mr. Richard D'Iorio, Director, The Training and Employment Analysis
New Jersey Dislocated Workers Resources Center, Division, 605 Woodview Drive S.E.,
555 Valley Street, Building 51, KG 11, Olympia, Washington 98504,
Mr. Thomas Draybik, Coordinator, New Providence, Rhode Island 02908,
Jersey Department of Labor Response Telephone: 401-277-2090
Telephone: 206-438-4611
Team, New Jersey Department of West Virginia
Labor Room 1013, John Fitch Plaza, South Carolina
Trenton, New Jersey 08625, Ms. Regina D. Ratterree, Program Mr. Paul Skaff, Administrative Manager,
Telephone: 609-292-2074 Coordinator, South Carolina -State DWU, Employment and Training
Employment Security Commission, Division, Governor's Office of
New Mexico Community and Industrial
Manpower Training Unit, Rapid
Mr. Patrick Newman, Chief, Dislocated Response Unit, 1550 Gadsden Street, Development, 5790-A Mac Corkle
Worker Unit, State Administrative Columbia, South Carolina 29201-3430, Avenue S.E., Charleston, West
Entity, P.O. Box 4218, 1596 Pacheco Telephone: 803-737-2600 or 1-800- Virginia 25304, Telephone: 304-348-
Street, Santa Fe, New Mexico 87501 922-6332 5920
45816 Federal Register / Vol. 54, No. 209 /,Tuesday, October 31, 1989 1 Notices
Written Comments: The applicant After consideration of the entire Code, shall not apply to the sale for cash
submitted a few written comments with record, the Department has determined by the Plan of certain real property (the
respect to the notice of proposed to grant the exemption. Real Property) to Helen M. Harding, a
exemption (the Notice). FOR FURTHER INFORMATION CONTACT: party in interest with respect to the Plan,
Paragraph 4 of the Notice states that Mr. E. F. Williams of the Department, provided that the price paid be no less
in June 1986, Congress passed legislation telephone (202) 523-8883. (This is not a than the fair market value of the Real
(the Legislation) perniitting rural electric toll-free number.) Property on the date of sale, as
utilities to take advantage of the Ophthalmic Associates, P.A. Employees' established by an independent and
reductions in interest rates by prepaying Pension Plan (the Pension Plan) and qualified appraiser of real estate.
their high interest loans from the Federal Ophthalmic Associates, P.A. For a more complete statement of the
Financing Bank of the United States Employees' Money Purchase Pension Plan
(the Money Purchase Pension Plan; facts and representations supporting the
Treasury (the FFB Loans), without any Department's decision to grant this
prepayment penalty or fees, through the collectively, the Plans)
Located in Lansdale, PA exemption refer to the notice of
issuance of debt to private lenders (i.e. proposed exemption published on
private notes) which would be [Prohibited Transaction Exemption 89-94;
Exemption Application Nos. D-7684 and D- August 8, 1989 at 54 FR 32542.
guaranteed by the Rural Electrification 7685, respectively]
Agency (REA). Paragraph 4 states ForFurtherInformation Contact:
further that REA has adopted Exemption Joseph L. Roberts III of the Department,
regulations (the Regulations) The restrictions of section 406(b)(2) of telephone (202) 523-8881. (This is not a
implementing the Legislation, and has the Act shall not apply to the transfer by toll-free number.)
accepted prepayment applications the Pension Plan to the Money Purchase
submitted by a number of cooperative Pension Plan of a 50 percent tenant-in- General Information
electric utilities (the Cooperatives). common interest in certain improved The attention of interested persons is
In addition, paragraph 5 of the Notice real property and cash, provided the directed to the following:
states that CFC has formulated a terms of the transaction are at least as (1) The fact that a transaction is the
program (the Program) to permit the favorable to the Money Purchase subject of an exemption under section
Cooperatives to refinance their FFB Pension Plan as those obtainable in an 408(a) of the Act and/or section
Loans in accordance with the arm's-length transaction with an
unrelated party. In addition, the
4975[c)(2) of the Code does not relieve a
Regulations at competitive rates, and fiduciary or other party in interest or
that the Program has been approved by restrictions of sectiori 406(a), 406(b)(1)
and (b)(2) of the Act and the sanctions disqualified person -from certain other
REA as complying with the Regulations. provisions of the Act and/or the Code,
The third paragraph of Paragraph 5 of resulting from the application of section
4975 of the Code, by reason of section including any prohibited transaction
the Notice states that the Regulations provisions to which the exemption does
4975(c)(1)(A) through (E) of the Code
require that the interest rates on the not apply and the general fiduciary
private notes issued by the Cooperatives shall not apply to the assumption, by the
Money Purchase Pension Plan, of certain responsibility provisions of section 404
must be at least 50 basis points lower of the Act, which among other things.
pre-existing loan, lease and sublease
than the weighted average interests rate require a fiduciary to discharge his
obligations of the Pension Plan with
borne by the FFB Loans being repaid.
persons who are parties in interest with duties respccting the plan solely in the
The applicant states that the respect to both Plans, provided the interest of the participants and
Regulations have been revised, effective terms of the transaction are at least as beneficiaries of the plan and in a
as of February 1988 to require that the favorable to the Money Purchase prudent fashion in accordance with
interest rates on the private notes be Pension Plan as those obtainable in an section 404(a)(1)(B) of the Act; nor does
equal to or lower than the weighted arm's length transaction with an it affect the requirement of section
average interest rate borne by the FFB unrelated party. 401(a) of the Code that the plan must
Loans being repaid, taking into account For a more complete statement of the
savings achieved during earlier periods operate for the exclusive benefit of the
facts and representations supporting the employees of the employer maintaining
following the refinancing of such FFB Department's decision to grant this
Loans. CFC states that it continues to the plan and their beneficiaries;
exemption refer to the notice of
assume all-risks associated with interest proposed exemption published on (2) These exemptions are
rate fluctuations. -August 23, 1989 at 54 FR 35094. supplemental to and not in derogation
Paragraph 13 of the Notice states that FOR FURTHER INFORMATION CONTACT. of, any other provisions of the-Act and/
a number of Cooperatives have Ms. Jan D. Broady of the Department, or the Code, including statutory or
submitted applications to REA to telephone (202) 523-8881. (This is not a administrative exemptions and
refinance their FFB Loans under the toll-free number.) transitional rules. Furthermore, the fact
Program. The applicant states that all of that a transaction is subject to an
the Cooperatives mentioned in Jon A. Harding, D.M.D., P.S., Employees'
Amended and Restated Money Purchase administrative or statutory exemption is
paragraph 13 have refinanced their FFB Pension Plan and Trust (the Plan) not dispositive of whether the
loans in accordance with the Program, Located in Spokane, Washington transaction is in fact a prohibited
except for Cajun Electric Power Prohibited Transaction Exemption 89-95; transaction.
Cooperative, Inc. The applicant states Exemption Application No. D-80301
further that Western Illinois Power (3) The availability of these
Cooperative, Inc., which was not Exemption exemptions is subject to the express
mentioned in paragraph 13, has also The restrictions of section 406(a), condition that the material facts and
refinanced its FFB Loan under the 406(b)(1) and (b)(2) of the Act and the representations contained in each
Program, although the Certificates sanctions resulting from the application application accurately describes all
resulting from such refinancing have not of section 4975 of the Code, by reason of material terms of the transaction which
yet been resold by CFC. section 4975(c) (1) (A) through (E) of the is the subject of the exemption.
.. 45818. Federal Register / Vol. 54.. No 209t / Tu,-nr Oc,t ',1 ,Qi Oin I XT-.
-'-'-~~J*~'.-'~n
-- I ~J~U ~VLoUices
Signed at Washington, DC, this 25th day of Federal Register and shall inform
October, 1989. state of Ohio with its corporate
interested persons of their right to headquarters in Findlay, Ohio. The
Ivan Strasfeld,
comment and to request a hearing. Employer serves as the trustee and
Directorof Exemption Determinations,
'Pension and Welfare Benefits Administration (where appropriate). administrator of the Plan through
U.S. Departmentof Labor. SUPPLEMENTARY INFORMATION: The committees appointed from -among its
[FR Doc. 89-25565 Filed 10-30-89; 8:45 am] proposed exemptions Were requested in employees, officers and directors.
BILLING CODE 4510-29-M
applications filed pursuant to section 2. The Employer maintains its
408(a) of the Act and/or section principal place of business in premises
4975(c)(2) of the Code, and in located in downtown Findlay, Ohio at
[Application No. D-7902, et al.] accordance with procedures set forth in 236 South Main Street. Situated nearby
ERISA Procedure 75-1 (40 FR 18471, is the Property, which is utilized as a
Proposel Exemptions; Ohio Bank & April 28, 1975). Effective December 31,
Savings Company Employees' Profit parking lot by the Employer. The
1978, section 102 of Reorganization Plan Employer leases the Property (the
Sharing Plan and Trust, et al. No. 4 of 1978 (43 FR 47713, October 17, Original Lease) from W. Dean Fouts and.
AGENCY: Pension and Welfare Benefits 1978) transferred the authority of the Joyce M. Fouts (Fouts), whom the
Administration, Labor. Secretary of the Treasury to issue Employer represents to be unrelated to
ACTION: Notice of proposed exemptions. exemptions of the type requested to the the Plan and the Employer. The Original
Secretary of Labor. Therefore, these Lease, a ten-year triple-net lease
SUMMARY: This document contains notices'of pendency are issued solely by effective November 1, 1988, was
notices of pendency before the the Department. executed after the Employer loaned the
Department of Labor (the Department) The applications contain Fouts $140,000 (the Loan) to adapt the'
.of proposed exemptions from certain of representations with regard to the Property for use as the Employer's
the prohibited transaction restrictions of proposed exemptions which are parking lot. Since the Original Lease
the Employee Retirement Income summarized below. Interested persons was executed, the Fouts have expressed
Security Act of 1974 (the Act) and/or the are referred to the applications on file a desire to sell the Property and the
Internal Revenue Code of 1954 (the with the Department for a complete Employer has determined that
Code). statement of the facts and ownership of the Property and income
representations. therefrom under a lease to the Employer
Written Comments and Hearing
Requests Ohio Bank and Savings Company would constitute a desirable investment
Employees' Profit Sharing Plan and, for the Plan. Accordingly, the Employer
All interested persons are invited to*
- Trust (the Plan) Located in Findlay, OH is proposing that the Plan purchase the
.submit written comments or requests for
[Exemption Application No. D-7902] Property for cash from the Fouts and
-a hearing on the pending exemptions,
unless otherwise stated in the Notice of immediately commence leasing the
ProposedExemption Property to the Employer under an
Pendency, within 45 days from-the date
of publication of this Federal Register The Department is considering agreement which provides for the
Notice. Comments and requests for a granting an exemption under the Employer's potential future purchase of
hearing should state the reasons for the authority of.section 408(a) of the Act the Property from the Plan.
The
writer's interest in the pending and section 4975(c)(2) of the Code and in Employer is requesting an exemption 'to
accordance with the procedures set permit such transactions under the
exemption.
forth in ERISA Procedure 75-1 (40 FR terms and conditions described herein.
ADDRESS: All written comments and
18471, April 28, 1975). If the exemption is 3. The interests of the Plan with
requests for a hearing (at least three
granted, the restrictions of sections respect to the proposed transactions will
copies) should be sent to the Pension be represented by an independent
406(a), 406 (b)(1) and (b)(2) of the Act
and Welfare Benefits Administration,
and the sanctions resulting from the fiduciary, Ronald C. Pfeiffer (the
Office of Regulations and
application of section 4975 of the Code, Fiduciary), an institutional investment
Interpretations, Room N-5671, U.S.
by reason of section 4975(c)(1) (A) services professional with the firm of
Department of Labor, 200 Constitution through (E) of the Code, shall not apply McDonald & Company Securities, Inc. in
Avenue, NW., Washington, DC 20210. Findlay, Ohio, who represents that he -
to (1) the proposed purchase by the Plan
Attention: Application No. stated in has substantial knowledge and
of certain real property (the Property]
each Notice of Pendency. The located in Findlay, Ohio which is leased experience in fiduciary responsibilities
applications for exemption and the
to the Ohio Bank and Savings Company under the Act and that he is
comments received will be available for
(the Employer), the sponsor of the Plan; independent of the Employer. The
public inspection in the Public (2) the proposed lease of the Property by Fiduciary will represent the Plan in the
Documents Room of Pension and the Plan to the Employer; and (3) the Plan's proposed purchase of the
Welfare Benefit Programs, U.S. proposed poiential purchase of the Property from the Fouts, in the execution
Department of Labor, Room N-5507, 200 Property by the Employer from the Plan; of the proposed lease .with the 'Employer
Constitution Avenue, NW., Washington, provided that all terms of such (the New Lease) and in the oversight
DC 20210. transactions are no less favorable to the. and enforcement 'of the Employer's..
Notice to Interested Persons Plan than those which the Plan could obligations under the New Lease for its
Notice of the proposed exemptions obtain in arm's-length transactions with duration. The Fiduciary will also
will be provided to all interested .an-unrelated party. represent the Plan in any potential sale
persons in the manner agreed upon by of the Property to'the Employer puirsuant'
Summary of Facts and Representations
the applicant and the Department within to one of three provisions in the New .
1. The Plan is a defined
15 days of the date of publication in the plan with 143 participants contribution
and total
Lease as described herein.-
Federal Register. Such notice shall 4. The Propeity consists of eight".
assets of $959,718.00 as of December 31, contiguous lots .ofcommercially-zoned
include a copy of the notice of pendency.
1988 The Employer is a state-chartered real-property located at 100 North:Main
of the exemption as published in the •
bank organized under the laws of the Street in the central business district in
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45819
the City of Findlay, County of Hancock, is required under the New Lease to Fiduciary to require the Employer to
Ohio. All buildings on the Property, provide full fire and extended coverage Purchase the Property from the Plan any
having been condemned, were removed insurance of the Plan's interests in the time after the tenth year of the New
by the Fouts in preparation of the Property and to provide general public Lease, following two consecutive years
Property's 19,200 square feet of surface liability insurance. The Employer is also of unsuccessful efforts to sell the
area for asphalt paving suitable for required to obtain rent insurance in the Property, if the Fiduciary so elects. Any
automobile parking. This adaptation of amount of six months net rent. Under purchase of the Property pursuant to the
the Property has resulted in the creation the New Lease the Employer will agree Put will be for cash in the amount of the
of fifty-six parking spaces and the to indemnify and hold harmless the Plan greater of $142,000 or the fair market
Property remains accessible to full against and from any and all claims of value of the Property at the time of the
utilities and municipal police and fire any nature arising from the Employer's Put's exercise as determined by an
protection. As of August 17, 1988, the use of the Property. independent professional real property
Property had a fair market value of 7. The New Lease will include a appraiser selected by the Fiduciary. In
$149,000, according to Larry E. provision granting the Employer aright any sale pursuant to the Put the
McCormick and J.F. Lamberjack, of first refusal (the Right) with respect to Employer will pay closing costs and
professional real property appraisers the Property. Accordingly, upon the other expenses related to the transfer of
with the firm of Midwest Appraisal Fiduciary's acceptance of a bona fide the Property.
Service (Midwest) in Findlay, Ohio. offer for the purchase of the Property or 10. The Fiduciary represents that after
5. It is proposed that the Plan will pay any part thereof during the New Lease, a complete investigation of the proposed
the Fouts cash for the Property in the including any renewal, and after the transactions, including an inspection of
amount of $142,000, a price negotiated Fiduciary has determined such the Property, he has determined that the
with and accepted by the Fouts. The acceptance to be in the best interests of Plan's acquisition of the Property and its
Fouts will deliver to the Plan fee simple the Plan's participants and beneficiaries, lease to the Employer under the New
title in the Property free of all liens and, the Employer will be entitled to Lease would be in the best interests and
mortgages. The Loan will be repaid in purchase the Property or part thereof protective of the participants and
full before the transfer of the Property. from the Plan upon the same terms as beneficiaries of the Plan. The Fiduciary
6. The New Lease will be a triple-net the bona fide offer accepted by the has ascertained that the Plan's
lease for an initial term of ten years Fiduciary. However, the Right investment in the Property will leave the
commencing on the date of the Plan's authorizes only'a cash purchase of the Plan appropriately liquid and diverse, as
purchase of the Property. The Plan's Property by the Employer, regardless of it will constitute the Plan's sole
interests as landlord under the New other non-cash terms of the bona fide investment in real property and will
Lease will be represented exclusively by offer, and the bona fide offer is limited represent less than twenty five percent
the Fiduciary. With the Fiduciary's to one which equals or exceeds the of the Plan assets. In this regard, the
approval and ninety days advance Property's fair market value at the time Fiduciary notes that, because of the
written notice, the New Lease is of the offer as determined by an -particular provisions of the New Lease,
renewable at the expiration of the initial independent professional real estate the Plan will not be compelled to retain
term for one additional term of five appraiser selected by the Fiduciary. the Property among its assets in the
years under the same terms applicable 8. A purchase option (the Option) on event, which he represents to be
to the initial term. The New Lease the part of the Employer will also be unlikely, that ownership of the Property
authorizes the Fiduciary to terminate the among the New Lease's provisions. ceases to be in the best interests of the
New Lease without penalty of any sort Pursuant to the Option, the Employer participants and beneficiaries of the
to the Plan in the event, during the-New will have the right, subject to the Plan. The Fiduciary finds little or no
Lease; the Fiduciary receives and approval of the Fiduciary, to purchase risks to the Plan from the proposed
accepts a bona fide offer for the the Property from the Plan by providing transactions due to the protective
purchase of the Property. Under the written notice in compliance with the provisions of the New Lease.
New Lease the Employer will pay Option at least ninety days prior to the The Fiduciary represents that he will
annual rent in monthly installments at expiration of the initial or renewal term continually monitor and oversee the
the rate of no less than the Property's of the New Lease. The Fiduciary performance by the Employer of the
fair market annual rental value. The represents that it will approve of a sale tenant obligations under the New Lease
New Lease provides that during its first of the Property by the Plan only after and will move without delay to remedy
three years the annual rent will be the having determined that the continued any breaches or defaults thereunder.
greater of $14,784 or the Property's fair holding of the Property would not be in The Fiduciary states that in the event
market annual rental value upon the best interests of the participants and the Right, the Put or the Option are
commencement of the New Lease as beneficiaries of the Plan. The Option exercised under the New Lease, he will
determined by an independent provides that any purchase of the cause the Property to be sold only at
professional real estate appraiser Property thereunder will be for cash in such time as he determines that
selected by the Fiduciary. Thereafter, the amount of no less than the greater of continuing to hold the Property is not in
the Fiduciary shall cause the Property to $142,000 or the Property's fair market the best interests of the Plan and will
be appraised every three years by an -value as determined at the time of such ensure that the Property is sold only for
independent appraiser, at the expense of purchase by an independent no less than its fair market value.
the Employer, and the annual rent will professional real estate appraiser 11. In summary, the applicant
be increased in the amount, if any, by selected by the Fiduciary. In any sale represents that the proposed
which the Property's fair market rental pursuant to the Option the Employer transactions satisfy the criteria of
value has increased since the previous will pay all closing costs and other fees section 408(a) of the Act for the
appraisal. and expenses related to the transfer of following reasons: (1) The interests of
In addition to obligations for payment the Property. the Plan with respect to the purchase of
of all taxes and all costs of maintenance 9. The New Lease also includes a the Property, the execution and
and repair on the Property, the Employer provision (the Put) which empowers the maintenance of the New Lease and the
45820 Federal Register / Vol. 54, No. 209 / Tuesday,.. October 31, 1989 / Notices
potential sale of the Property to the the fiduciary of which is independent of which there is a generally recognized
Employer pursuant to the New Lease Capital Guardian; market; and
will be represented exclusively by the (b) The authorization referred to in (c) The cross-trade transaction is
Fiduciary, who represents himself to be paragraph (a) is terminable at will affected only where the trade involves
independent of the Employer; (2) The without. penalty to such Plan, upon* less than 5 percent of the aggregate
Plan will pay.the Fouts cash for the receipt by Capital Guardian of written average daily trading volume of the
Property in an amount not exceeding its notice of terminatioh; and securities which are the subject of the
fair market value and will obtain fee (c) Before an authorization is made, transaction for the week immediately
simple title free of all liens; (3) The the authorizing Plan fiduciary must be preceding the -authorization of the
Plan's ownership of the Property as ' furnished with any reasonably available transaction;
proposed will present little or no risks to *information necessary for the 4. (a) Capital Guardian furnishes the
the Plan due to the protective and triple- authorizing fiduciary to determine authorizing Plan fiduciary at least once
net provisions of the New Lease which whether the authorization should be
made, including (but not limited to) a every three months, and not later than
ensure that the Plan will receive rental 45 days following the period to which it
payments of no less than the Property's • copy of this exemption, an explanation relates, a report disclosing (i) A list of
fair rental market value; (4) The New . of how the authorization may be all cross-trade transactions engaged in
Lease provides for its termination if the ' terminated, a description of Capital on behalf of the Plan. and (ii) with '
Fiduciary determines to sell the Property Guardian's cross-trade practices, and
respect to each cross-trade transaction,
before the completion of the initial or any other reasonably available the highest and lowest prices at which
renewal terms ofthe New Lease; (5) The information regarding the matter that
the authorizing fiduciary requests; the securities involved in the transaction
Put enables the Plan to require the were traded on the date of such
Employer to purchase the Property in '2. (a) No more' than three (3) business
..days prior to the. execution of any-cross- transaction; and
the event the Fiduciary.determines that
. trade transaction, Capital Guardian (b) The authorizing Plan fiduciary is.
it is not in the best interests of the Plan
'must inform an independent fiduciary of furnished with a-summary of the
to retain the Property and is not able'to
each Plan invo'lved in the cross-trade information'required under tfiis
sell the Property to an unrelated buyer;
transaction: (i) That Capital Guardian • paragraph 4(a) at least once per year.
(6) Any sale of the Property to the
proposes to buy or sell specified The summary must be furnished within
Employer under the-New Lease will
securities in a cross-trade transaction if. 45 days after the' end of the period to
occur only after the Fiduciary has which it relatbs and must contain the
determined that continued ownership of an appropriate opportunity is available;
(ii) the current trading price for such 'following: (i) A description of the total
the Property would not be in the best
securities; and (iii) the total number of. amount of Plan assets involved in cross-
interests of thePlan; and (7) The sale trade fransactions during the period; (ii)
provisions of the New Lease ensure that shares to be acquired or sold by each
the Plan will receive cash in the amount such Plan; a description of Capital Guardian's
(b) Prior to each cross-trade cross-trade practices, if such practices
of noess than the Property's fair market have changed materially during the
value. transaction, the transaction must be
authorized either orally or in writing by period covered by the summary; (iii) a
FOR FURTHER INFORMATION CONTACT: ,the independent fiduciary of each Plan statement that the Plarn fiduciary's
Ronald Willett of the Department, involved in the cross-trade transaction; -authorization of cross-trade transactions
telephone (202) 523-8881. (This is not a . (c) If a cross-trade transaction is may be terminated upon receipt by'
toll-free number.) authorized orally by an independent Capital Guardian of the fiduciary's
Capital Guardian Trust Company * fiduciary, Capital Guardian will provide. written notice to that effect; and (iv) a
(Capital Guardian) Located in Los written confirmation of such statement that the'Plan fidddiary's
Angeles, CA authorization in a manner reasonably authorization of the cross-trade
calculated to be received by such transactions will continue in effect
. (Application No. D-7929) independent fiduciary within one (1) unless it is terminated;
ProposedExemption business day from the date of such 5. The cross-trade transaction aoes
authorization; not involve as-sets of any Plan
The Department is considering (d) The authorization referred to in- established or maintained by Capital
granting an exemption under the this paragraph (2) will be effective for a Guardian or any of its affiliates;
authority of section 408(a) of the Act period of three (3) business days; and
and section 4975(c)(2) of the Code and in
6. All Plans which will participate in
(e) No more than ten (10) days after the cross-trade program will have total
accordance with the procedures set the completion-of a cross-trade
forth in ERISA Procedure 75-1 (40 FR
assets of at least $25 million;
transaction, the independent fiduciary
18471, April 28, 1975). If the exemption is authorizing the cross-trade transaction 7. Capital Guardian receives no fee or
granted, the restrictions of section must be provided a written confirmation other compensation (other than its
406(b)(2) of the Act shall not apply to of the transaction and the price at which agreed investment management fee)
the cross-trading of securities by Capital the transaction was executed; with respect to any cross-trade
Guardian for employee benefit plan 3. (a) The cross-trade transaction is transaction;
accounts (Plans) for which Capital effected at the closing price for the 8. Capital Guardian is a discretionary
Guardian acts as a fiduciary. security on the date of the transaction, investment manager with respect to
•. and such price is within 10 percent of Plans participating in the cross-trade
Conditionsand Definitions program;
the closing price of the security on the
1. This exemption is subject to the day before the date-on which Capital 9. For purposes of this exemption:
following conditions: Guardian receives authorization by the (a) "cross-trade" transaction meahs a
(a) A Plan's participation in the cross- independent Plan fiduciary to engage in purchase'and saile.of securities between
trade program is subject to a written the cross-trade transaction; accounts for which Capital Guardian or
authorization executed inadvance by a ((b) The'securities involved in the an affiliate, of Capital Guardian isacting
fiduciary with respect to each such Plan, cross-trade transaction are those for as a trustee or investment ifianager;
Federal Register/ Vol. '54, No. 209 . Tuesday, October, 31, 1989 / Notices: S- 45821
(b) "affiliate" means any person involve a security which a portfolio practices, and any other available
.directly or indirectly through one or manager may desire to purchase for one. information which the authorizing Plan
more intermediaries, controlling, or more of Capital Guardian's other fiduciary may reasonably request.
contr6lled by, or under common control accounts. If Capital Guardian acquires 6. In addition .to requiring a general
- with-Capital Guardian; such securities for one of its other .
accounts, authorization of a Plan's participation in
- (c) "Plan account" means an account it has an opportunity to save Capital, Guardian's cross-trade program,
holding assets of one or more employee substantial commissions for both the an independent fiduciary of each Plan
b.enefit plans which are subject to the liquidating account and the acquiring must specifically authorize each cross-
Act, for which.Capital Guardian acts as account. This saving is caused by an trade transaction. Any such,
a fiduciary.. independent broker effecting a cross- authorization will be effective only for a
Summary of FactslandRepresentations trade transaction, which involves period of three (3) business days and
matching Capital Guardian's sell orders -will be subject to certain pricing and
. apital Guardian is a trust company .for a particular day with its buy orders volume limitations (see representations
organized under- the laws of the State of for the same day and the execution of .9 and'10,respectively). The
California and supervised by the trades between the accounts in bff:, authorization to proceed With the
California banking authorities. Capital market transactions.'The independent transaction may be either oral or
Guardian i s a' Wholly-owned subsidiary,.. -,broker is prepared to execute these - Written. If a cross-trade'transaction is"
of thd Capital Group, ap organization transactions for Capital Guardian for authorized oraUy by an independent
whih, through its subsidiaries, provides one cent per share. By contrast, if fiduciary, Capital Guardian will provide
a broad ra'nge of financial services to a Capital Guardian Were to execute the a written confirmation of such
variety of. different clients, including same trades on the open market, it is authorization in a manner reasonably
employee benefit plans, registered
represented that the commission would calculated to be received by such
investment companies, college be six to seven cents per share for each independent fiduciary within one (1)
endowment funds, and foundations. of the purchase and sale transactions. business day from the date of such
Capital Guardian currently provides Accordingly, cross-trade transactions authorization. The Plan fiduciary will be
investment management services to 120 can bemade at lower costs than open sent a written confirmation of the cross-
employee benefit plans. Other market trades. trade, including the price at which it
companies affiliated with the Capital was executed, within ten (10) days of
4. Capital Guardian's portfolio
Group provide investment advisory managers make decisions regarding the completion of the transaction.
services to accounts, principally mutual which securities to purchase or sell for 7. At least once every three months
funds, the underlying securities of which
client accounts considering all of the and not later than forty-five (45) days
the applicant represents are not plan
assets subject to the Act. Capital relevant facts and circumstances, following the period to which it relates,
Guardian currently has more than $16 "including the composition of the Capital Guardian will provide the
billion in assets under management. portfolios and the 'liquidity requirements authorizing Plan fiduciary with a report
With respect to the Plans participating of the Plan accounts. Such decisions, it setting forth: (a) A list of all the cross-
in the cross-trading program, it is is represented, are not influenced by the trade transactions conducted on behalf
represented that Capital Guardian is a fact-that anopportunity fora cross-trade of the Plan account during the previous
discretionary investment manager.. transaction may, or may not, be period; and (b)with respect to each
2. Capital Guardian sometimes available. The matching of sale and cross-trade transaction, the highest and
receives instructions from an employee purchase orders is represented to be lowest prices at which the subject
benefit plan or other client to liquidate largely automatic. seurities were traded on the date of
all or a portion of an investment 5. Under the proposed exemption, such transaction. In addition, at least
account. In addition, Capital Guardian only Plans with at least $25 million in once a year, and not later than 45 days
sometimes must dispose of securities assets will participate in the cross-trade after the end of the period-to which it
held in a client account in order to bring program. A Plan fiduciary which is relates, each Plan fiduciary will be
the portfolio into compliance with client- independent of Capital Guardian must provided with a summary of the
imposed investment guidelines. For provide written authorization allowing quarterly reports, including: (a) A
example, such investment guidelines for the Plan's participation in Capital description of the total amount of Plan
an account may require the sale of a Guardian's cross-trade program before assets involved in cross-trade
security that has increased in value any specific cross-trade transactions are transactions completed during the year;
which Capital Guardian might otherwise executed. This authorizationwill be (b) a statement that the Plan's
continue to hold in the account. In terminable at will upon written notice fiduciary's authorization to participate
addition, an affiliate of Capital by the appropriate independent Plan in the cross-trade program can be
Guardian may make a discretionary -fiduciary. Capital Guardian will receive terminated without penalty upon Capital
determination to dispose of securities no additional fee for providing such Guardian's receipt of a written notice to
for an account not involving plan assets. service. No penalty or other charge will that effect; (c) a statement that the
-However, it is represented that cross- be made as a result of the termination of fiduciary's authorization of the Plan's
trade transactions will not involve a Plan's participation in the program. In participaiion in the program will
assets of any Plan established or addition, before any such general continue unless it' is terminated; and (d)
maintained by Capital Guardian or any authorization is granted, Capital a description of any material change, if
of its affiliates. Guardian will provide the authorizing -any; in Capital Guardian's cross-trade
3. Itis represented that Capital Plan fiduciary with all materials practices during the period covered by
Guardian's disposition of a particular necessary to permit an evaluation of the the summary. It is represented that these
security for one client account may cross-trade program. These materials reports will provide the Plan fiduciaries
will include a copy of the exemption, an with a mechanism for monitoring the
explanation of how the authorization operation of the cross-trade program.
I'All future references to Capital Guardian will
also include affiliated companies in the Capital - may be.terminated, a description of The applicant.further represents that the
Group.. Capital Guardian's cross-trade authorization procedures, particularly
:45822 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 1 Noticep
the requirement of specific authorization opportunities which have been made accordance with the procedure set forth
for each cross-trade transaction, would available to the accounts. In this regard, in ERISA Procedures 75-1 (40 FR 18471,
prevent Capital Guardian from favoring Capital Guardian does not believe that April 28, 1975). If the exemption is
one account at the expense of another in an automatic allocation system would granted the restrictions of section 406(a),
a cross-trade transaction. be appropriate because it would 406 (b)(1) and (b)(2) of the Act and the
8. The securities involved in the cross- interfere with the proper discharge of its sanctions resulting from the application
trade transaction will be those only for fiduciary duties as an investment of section 4975 of the Code, by reason of
which there is a generally recognized manager.2 section 4975(c)(1) (A) through (E) of the
market. 12. In summary, the applicant Code, shall not apply to the proposed
9. A cross-trade transaction will be represents that the proposed transaction sale by the Plan of common stock of
effected at the closing price for the satisfies the criteria of section 408(a) of Samuel Shapiro & Co. (of D.C.), Inc. (the
.security on the date of the transaction. the Act because among other things: D.C. Company), to Samuel Shapiro &
Such price must be within 10 percent of (a) An independent Plan fiduciary Co., Inc. i(the Company), the sponsor of
the closing price of the security on the must provide written authorization, the Plan and a Subchapter S
day before the date on which Capital which is terminable at will, to Capital Corporation under the Code, in
Guardian receives authorization by the Guardian to permit the Plan to connection with the proposed merger of
independent Plan fiduciary to engage in participate in the cross-trading program; the Company and the D.C. Company,
the cross-trade transaction. This (b) Oral or written authorization must provided that the sales price for the
condition, together with the specific be provided by -the independent Plan stock is not less than the fairmarket
authorization requirements, it is fiduciary to Capital Guardian prior to value of thestock on the date of sale.
represented, would prevent Capital each cross-trade transaction;
Guardian from using cross-trade Summary of Facts and Representations
(c) All cross-trades will be executed at,
transactions to benefit one client to 'the the closing price for the security on the 1. The Plan is a profit sharing plan
detriment of another client. This date of the transaction; which, as of December 31, 1988, had
safeguard requires monitoring market (d) A cross-trade transaction will be approximately 54 participants and total
activity and avoids executing trades at effected only if certain price and volume assets of approximately $6,491,114. The
prices that were not contemplated at the requirements are satisfied; Profit Sharing Trust Committee (the
time the independent fiduciaries (e) All securities involved in cross- Committee) is the named fiduciary of
authorized such transactions. trades will be ones for which there is a the Plan. The members of the Committee
10. A cross-trade transaction will be generally recognized market; are M. Sigmund Shapiro (Mr. Shapiro),
effected only where the trade involves (f) Capital Guardian will receive no Morris E. Horwitz and Julius Braverman.
less than '5 percent of the aggregate additional fees as a result of the The trustee of the Plan (the Trustee) is
average daily trading volume for the proposed cq"oss-trades; the Mercantile-Safe Deposit &Trust
securities involved in the transaction for (g) Capital Guardian will provide Company, located in Baltimore,
the week immediately preceding the periodic reporting of the cross-trade Maryland.
authorization of the transaction. It is transactions to the participating Plan's The Committee has the authority
represented that this condition will help independent fiduciary; under the Plan to appoint an investment
to minimize the potential impact which a (h) The Plans participating in the advisor to invest the Plan's assets. The
large trade might have in the sale of cross-trade program will save significant Committee has appointed Rothchild and
securities on the open market. sums of money because of reduced Company of Baltimore, Maryland (the
11. Capital Guardian represents that it Advisor) as an investment advisor. The
brokerage commissions;
is highly unlikely that situations will applicant states that the decision-
(i) All Plans participating in the cross-
arise in which it will be necessary to
trade program must have assets of not makers for investment of the Plan's
allocate cross-trade opportunities
less than $25-million; and assets are the Committee and the
among several accounts. It is possible,
however, that situations may arise
(j) The cross-trade transaction does Advisor.
where securities to be sold for a client not involve the assets of any Plan 2. The Company is a Maryland
account present an attractive established or maintained by Capital corporation and the D.C. Company is a
investment opportunity for more than Guardian or any affiliates thereof. Delaware corporation [together, the
one other account. In this regard, the ForFurther information Contact: Mrs. Companies), The Companies are
applicant represents that the issues B.S. Scott of the Department, telephone engaged in the business of providing
presented in allocating cross-trade (202) 523,8883. (This is not a toll-free customs brokerage and freight
opportunities among client accounts are number.) forwarding services. Mr. Shapiro is the
no different than the issues which Samuel Shapiro & 'Co., Inc. Profit President and the Chairman of the Board
Capital Guardian must face daily in Sharing Trust 4the Plan) Located in of Directors of the Company. Mr.
determining the allocation of limited Shapiro'owns 92.5% of the stock of the
Baltimore, Maryland
investment opportunities among client Company [the Company Stock).
accounts. Capital Guardian will make [Exemption Application No. D-8072] The Company owns 72% of the
these decisions considering all the ProposedExemption common stock of the D.C. Company (the
relevant facts and circumstances in a D.C. Company Stock) and Mr. Shapiro
The Department is considering owns 3% of the D.C. Company Stock.
manner which it believes -tobe granting an exemption under the
consistent with its fiduciary The Plan owns 25% of the D.C.. Company
authority of section 408[a) of the Act Stock. The Plan acquired the D.C.
responsibilities under the Act and which and section 4975(c)(2) of the Code and in
is equitable to all accounts involved. in Company Stock asa contribution from
making such allocation decisions, the Company in 1969 prior to the
2 The Department is expressing no opinion herein effective date of the Act. The applicant
Capital Guardian will consider, among
as to the applicability of any of the provisions of " represents that because the Company is
other things, the relative liquidity needs part 4 of title lof the Act tothe allocation decisions
of the accounts, the composition of the made by Capital Guardian on behalf of the Plans a Subchapter S Corporation under the
portfolios and the number of cross-trade participating in the cross-trading program. Code, Mr. Shapiro is a shareholder-
Federal Register / Vol. 54, No. 209 / Tuesday,- October 31, 1989 / Notices 45=23
employee with respect to the Plan as the appreciate in value. In this regard, the Dudley M. Baker, M.D. Profit Sharing
owner of more than 5% of the Company Plan Fiduciaries state that the D.C. Plan and Trust (the Plan) Located in
Stock.3 However, the D.C. Company is Company has had an erratic earnings Bennington, Vermont
not a Subchapter S Corporation under history and that the 'future profitability [Application No. D-8157]
the Code. The applicant states that the of the D.C. Company is uncertain.
D.C. Company presently cannot operate Moreover, the Plan Fiduciaries note that ProposedExemption
as a Subchapter S Corporation due to
the long-term management direction of The Department is considering
the Plan's ownership of the D.C.
Company Stock (see section 1361 of the the D.C. Company is unclear due to the granting an exemption under the
Code). age of the key executive, Mr. Shapiro, In authority of section 408 (a) of the Act
addition, the Plan Fiduciaries believe and section 4975(c)(2) of the Code and in
3. The applicant represents that a
that the progressively increasing accordance with the procedures set
proposal has'been made to merge the
expenses of operating the D.C, Company forth in ERISA Procedure 75-1 (40 FR
Companies (the Merger), in order to
simplify administration and-eliminate may cause a decline in the value of the 18471, April 28, 1975). If the exemption is
duplication of operational expenses. D.C. Company Stock. Finally, the Plan granted, the restrictions of section
After the Merger, the combined Fiduciaries state that the'D.C. Company 406(a), (406)(b)(1) and (b)(2) of the Act
organization will be a Subchapter S Stock is not publicly traded and the Plan" and the sanctions resulting from the
Corporation. should have an investment which is* application of section 4975 of the Code,
more liquid in nature. by reason of section 4975(c)(1)(A)
The applicant states that the Merger
through (E) of the Code, shall not apply
would be accomplished as follows: (1) 5. The D.C. Company Stock was to the proposed loan of $25,000 (the
The Board of Directors of the appraised on July 10, 1989 by Harvey D. Loan) to 'Dudley M. Baker, M.D. (Dr.
Cormpanies would recommend to the Gold (Mr. Gold), an independent, Baker), a party in interest with respect
stockholders that the Companies be qualified appraiser in Baltimore,
merged; (2) the stockholders of each of to the Plan; by Dr. Baker's individually
Maryland, as having a fair market value directed account in the Plan, provided
the Companies would approve the of $9000 per share as of May 31, 1989.
Merger by at least a two4hirds vote; (3) that: the terms and conditions of the
The applicant states that Mr; Gold Will, proposed Loan are no less favorable to
an Agreement of Meiger (the update his appraisal of the D.C.
Agreement) would befiled with the. thePlan than those obtainable in an
Secretary of State of.Delaware and Company Stock prior to the Merger., arm's-length transaction with an
Articles of Merger (the Articles) would 6. The Plan Fiduciaries represent.that unrelated third party at the time of the
be filed with the State Department of the proposed saleof the D.C. Company making of the proposed Loan.
Assessments and Taxation of Maryland; Stock to the Company would be in the Summary of Facts and Representations
(4) pursuant to the Agreement and the best interest of the Plan and its'
Articles, the D.C. Company would be participants and beneficiaries. The Plan 1. The Plan isa frozen Keogh plan
merged into the Company,' and the with two participants, one Of whom is
Fiduciaries state that the Plan will
assets.and liabilities of the D.C. Dr. Baker. As of the end ofthe Plan's
receive cash equal to the value of the 1988 plan year the assets in Dr. Baker's
Company 'would be transferred to the D.C. Company Stock, as established by
Company; (5) pursuant to the Merger-all individually directed separate account
Mr.' Gold's appraisal. In addition, the amounted to $160,033. Dr. Baker, a
stockholders of'the D.C. Company proposed ttansaction will provide the
(except the Plan) Would receive surgeon doing business as a sole
Plan'with funds which.can be invested ,proprietor, is an owner-employee as
Company Stock in exchange for their in assets with more certain income
D.C. Company Stock and (6) the Plan defined in section 401(c)(3) of the Code.
would receive cash in change for its D.C. earning potential and greater likelihood 2. It is proposed that a loan of $25,000
for future appreciation. The Plan will, not be made to Dr. Baker from his separate
Company Stock. Therefore, the Plan
would not own any D.C. Company Stock pay any commissions or other expenses account in the Plan. The Loan will not.
after the Merger and'would not own any with reslect to the proposed sale,. affect the account of the Plan's other
Company Stock as a result of the 7. In summary, the applicant. participant.iThe Loan would be secured
Merger. represents that the proposed transaction by the account of Mrs. Geraldine Baker
4. The Committee and the Advisor will. meet the statutory criteria of section (Dr. Baker's wife] in Massachusetts
(together, the Plan Fiduciaries) represent 408(a) of the Act and section 4975(c)(2) Financial Services' Managed Municipal
that the Plan's continued investment in of the Code because: (a) the sale will be Bond Trust which held 8,143.098 shares
the D.C. Company Stock is not in the a one-time transaction for cash; (b) the worth $10.71 each as of July 19, 1989.
best.interest of the Plan. The Plan Plan will receive an amount which is not The applicant represents that the
Fiduciaries state that. the D.C. Company less than the fair market-value of the account balance securing the Loan will
Stock has limited potential for D.C. Company Stock, as established by at all times exceed the outstanding Loan
appreciation and that the interest of the an independent, qualified appraiser; (c) balance.
Plan's'participants and beneficiaries the Plan will not pay any commissions 3. The Loan will be at a rate 2 percent
would be served better by an or-otherexpenses with respect to the over the prime rate charged for similar
investment which is more 'likely to sale; -And (d) the transaction will allow loans on the date of the Loan by First
the Plan to divest itself of the D.C.. Vermont Bank and Trust Company (the
Company Stock and acquire Bank) of Bennington, Vermont, an
Section 408(d) of the Act prohibits any unrelated bank, and will be repaid over
transaction in which a plan acquires for the plan investments yielding a higher rate. of
any property from or sells any property to any a five-year period with equal quarterly
return.
person Who is with respect to the plan an owner- payments of principle and interest. The
employee, as defined under section 401(c}(ql of the For FurtherInformation Contact: Mr. applicant and the Bank represent that
Code, or shareholder-employee.:as defined under E.F. Williams of the"Department at (202) these terms are no less favorable to the
section 1379 of'the Code. However, the Department
has 'the authority under section 408(a) of the Act to 523-8883. (This is not a toll-free Plan than those obtainable from an
provide an exemption for such atransaction. number.) unrelated third party.
45824. Federal Register / Vol. 54,'No. 209 1/
Tuesday,' Octobbr '31, 1989 / Notices
4. In summary, the applicant could obtain in a similar transaction with current state-of-the-art systems.
represents that the proposed transaction with unrelated parties. Segal states that it 'was already familiar
will satisfy the provisions of section 408 EFFECTIVE DATE: If the' proposed' with the RIMS' system before Segal
(a) of the Act because: (a) The Loan will exemption is granted, the exemption will became involved in the termination of
be adequately secured at all.times; (b) be effective as of July 6, 1988, the date Meyers' contract with the Plan
Only 15.6% of Dr. Baker's account will the agreements comprising the (described below) and that in Segal's
be invested in the Loan; (c) The terms Arrangement were executed. November 1986 report to the Trustees,
and conditions of the Loan are no less Segal commented favorably on the
favorable to the Plan than those Summary of Facts and Representations RIMS.system. Segal represents that it
obtainable from an unrelated party; and 1. The Plan has no interest in or relation to Meyers,
(d) Dr. Baker, the only participant whose RIMS, or Winthrop.
The Plan was established by the Hotel
account is affected by this proposed
Employees and Restaurant Employees 4. Segal's Evaluation of and
transaction, has determined that the
proposed transaction would be in the
International Union to provide health Recommendations re: Plan
and welfare benefits for its members. It Administration
interest of his account in the Plan, and
is administered by a Taft-Hartley joint
desires that the proposed transaction be. In November 1986, Segal submitted its
board of trustees (the Trustees), of
consummated. report on Meyers' administrative
whom there are currently seventeen. As
Notice to InterestedPersons:Because services. This report was critical of the
of September 12, 1988, the Plan covered
Dr. Baker is the -only person in the Plan Meyers operation, particularly with
approximately 106,000 participants. The respect to the abilities of its
to be affected by the proposed approximate.fair market value of the
transaction, it has been determined that management-level executives, while
total assets ,ofthe Plan was $65,749,327 noting, nevertheless, that a number of
there is no need distribute the notice of as of March 31, 1987.'The percentage of
proposed exemption to interested very capable and knowledgeable
the fair market value of the Plan's total
persons. Comments and requests for a assets involved in the exemption employees were trying to do a
public hearing are due 30 days from the competent job. This report also
transaction is 0.5%. As of September 12, identified alternative.solutions to the
date of publication of this notice of. 1988, no Plan assets were invested in
proposed exemption in the Federal Plan's administrative problems,
loans to any party in interest involved in
Register. suggesting that the Trustees (a) select
this exemption transaction, in property
ForFurtherInformation Contact: another third-party administrator to
leased to any such party in interest, or
Joseph L. Roberts III of the Department, replace Meyers, or (b)self-administer
in securities issued by such party in
telephone (202) 523-8881. (This is not a the Plan, either by acquiring the services
interest.
toll-free number.) of Meyers' staff or by hiring entirely
2. Meyers. new employees. After -studying the
Hotel Employees and Restaurant relative merits of each proposal, the
Employees International Union Welfare From its inception to July 31, 1988, the
Plan was administered by Meyers. The Trustees decided to self-administer the
Plan (the Plan) Located in Naperville, Plan. The Trustees at that time hoped to
Illinois
applicant, the Martin E. Segal Company
(Segal], the independent fiduciary in acquire the services of many of Meyers'
[Application No. L-7754] charge of (among other things) the Plan's employees and to acquire Meyers'
agreements with RIMS and Winthrop, offices, equipment, and computer
ProposedExemption systems, either by purchase or lease.
states that as the size of the Plan
The Department is considering increased, the Trustees became aware 5. The Plan's Negotiations with Meyers
granting an exemption under the of the development .of a.number of
authority of section 408[a) of the Act administrative problems and delays in In September 1987, the Trustees
and in accordance with the procedures claim processing. Consequently, in 1986 authorized Segal, along with outside
set forth in ERISA Procedure 75-1 (40 FR the Trustees retained Segal as a counsel for the Trustees, to begin
18471, April 28, 1975). If the exemption is consultant to evaluate Plan negotiations with Meyers concerning the
granted, the restrictions of section 406(a) administration, particularly relating to termination of Meyers' administrative
of the Act shall not apply to: the lease the services provided by Meyers. contract and the possible sale of
arrangement (the Arrangement) Meyers' assets to the Plan. On
comprising five written agreements 3. Segal-General Information November 13, 1987, the Trustees
executed on July 6, 1988-namely: a The applicant, Segal, represents. that formally adopted a resolution to
Lease of Personal Property, a Computer it: was founded in 1939, is among the terminate Meyers for cause as Plan
Security Agreement, an Option To largest employee benefit consulting administrator. The Trustees directed
Purchase (covering leased computer firms in the country, is headquartered in Segal to discharge Meyers at an
equipment), a Software Program License New York, has 15 regional offices appropriate time, based on the progress
Agreement, and a Software System around the country. and provides, of Segal's negotiations with Meyers, and
Support Agreement-between (a) the through its 600 employees, consulting to negotiate the acquisition of Meyers'
Plan and (b) Resource Information and actuarial services to more than assets at a price determined by Segal.
Management Systems (RIMS) and its 3,000 employee benefit plans covering On January 28, 1988, Segal notified
wholly owned subsidiary, Winthrop nearly eight million employees and their Meyers that, pursuant to the six-month
Financial Group, Inc. (Winthrop], parties dependents. Segal also xepresents that it termination provision in Meyers'
in interest with respect to the Plan, has substantial experience with the contract with the Plan, Meyers would be
covering computer equipment and establishment and operation of welfare terminated as Plan administrator
software previously leased to the Plan's benefit plans and that, as a major effective July .31, 1988. Segal then
former 'administrator, William L. employee benefit .consulting firm, it has continued negotiations with Meyers
Meyers, Inc. (Meyers), provided -the substantial experience in advising regarding Meyers' termination and the
terms of the Arrangement are as clients on the selection ofcomputer transition to self-administration. Segal
favorable to the Plan as those the Plan equipment and software and is familiar states that these negotiations were
Federal Register. / Vol. 54,. No. 209 / Tuesday, October 31, 1989 / Notices • 45825
lengthy and difficult, involving a number to this litigation and therefore had no termination of the lease between RIMS
of disputes with Meyers, some of which direct role in the settlement negotiations and Meyers was made possible. Meyers
were not resolved as of the date of the or the preparation of the Consent and RIMS and Winthrop executed a
exemption application. Segal represents Decrees. Among other things, these termination agreement on July 6, 1988,
that in conducting these negotiations, it Consent Decrees provided for the under which Meyers relinquished all its
was guided by the following principles ,appointment of an independent named rights and title to the RIMS equipment
and concerns: fiduciary with certain specifically and-software it had leased. In return,
(a) Meyers must remain in operation enumerated responsibilities relating to RIMS released Meyers from its
to provide services to the Plan until July Plan administration, including, for obligations, including the financial
31, 1988, thereby avoiding any disruption example, the authority to terminate obligations incurrcd by Meyers in
in Plan administration; Meyers as Plan administrator, to connection with the lease and exclusive
(b) The Plan must obtain access to oversee benefit delivery arrangements, software licensing agreement.
Meyers' employees to arrange for their to monitor performance of Plan service 8. The Plan's Acquisition of Computer
employment by the Plan; and benefit providers, and to oversee Equipment and Software
(c)Plan employees'must be provided record keeping and claims processing.
with full, active cooperation by Meyers Segal's authority as Independent Segal represents that in connection
and its employees, and complete access Fiduciary is limited to-the authority with the transition to self-
to those documents, information, data, granted under the Conseni Decrees, administration, it considered various
and software that are the Plan's which provide that Segal, as methods of acquiring or leasing :
property in Meyers' possession; Independent Fiduciary, must generally computer equipment and software for.
(d) It would be more'efficient and less make either binding or non-binding the Plan. Among other things, Segal took
expensive for the Plan to use certain recommendations to the Trustees for into account that a major cost of the
equipment and office'space currently their approval before undertaking change to self-administration would be
used by Meyers; and . actions on behalf of the Plan. The the expense of computer conversion,
(e) The.Plan's new administrative Consent Decrees allocate to the part of which is attributable to the cost
system must be operational as of August Trustees authority in a number of areas of software and hardware (programming
1, 1988. For this reasorn, time deadlines involving Plan investments and and equipment). Segal explains that this
were imposed on negotiations, and operation, as well as the authority to expense also involves the cost of
alternative courses'of action, including monitor the activities of the Independent moving the equipment, the effortneeded
court enforcement actions, were' Fiduciary and to petition the courts for to identify the data elements and
considered. ' its removal. By the terms of the Consent acquaint new technical staff with the
In the negotiation process, Segal Decrees, the district courts retain style and location of information within
initially explored the possibility of the jurisdiction over the parties and Segal the existing computer files, the transfer
Plan's purchasing all of Meyers' assets, "for the purpose of administration, .and control of the current and historical
including its office furniture, computer application and interpretation" of the data from the old computers to their
'software, and equipment leases, but Consent Decrees. Segal is required to replacements, and the start-up and-
because the parties involved were provide to the courts, the Trustees, and training of technical and operation staff
unable to agree to the terms for these the Secretary semi-annual reports handling the new systems. Segal states
transactions, this possibility was describing its activities as Independent that all these conversion efforts require
rejected. However, the Plan has sublet Fiduciary for the Plan. expertise and a great deal of staff time.
some office space leased by Meyers in 7. Termination of Meyers' Contracts Segal considered purchasing or
connection4 with its Plan administration Meyers, Segal, and the Trustees* leasing computer equipment and
activities. executed a severance agreement on July software different from that which had
6, 1988, governing all aspects of the been used by Meyers. However, Segal
6. Segal's Appointment as Independent concluded that the acquisition of an
Fiduciary for the Plan termination of Meyers and the transition
to self-administration. The termination entirely different computer system
By May 12, 1988, Segal was appointed
of Meyers' position as Plan would be impractical because the Plan
IndependentFiduciary for the Plan in administrator became effective on July would have to transfer all its data from
connection with the settlement of 31, 1988, as scheduled. Segal states that the old system to the new system as
litigation concerning the administration as of August 1, 1988, the Plan well as to spend time correcting the
of the Plan. In both McLaughlin v. commenced administration at its new inevitable errors accompanying such a
Henley, No. 86-421-LDG (D. Nev. 1988) offices in Naperville, Illinois. transfer. Segal noted that an important
and McLaughlin v. Gerace, No. 85-3669 Segal advises that through the period consideration was that staff would have
(D. N.J. 1988), the Secretary of Labor ending July 31, 1988, the payment of to be retrained to operate the new
alleged violations of Part 4 of.Subtitle B, benefits on behalf of the Plan was made equipment and software. Segal
Title I of the Act in connection with by Meyers through a computer system .determined that this alternative was
certain aspects of the Plan's supplied by RIMS. As part of this unnecessarily costly and impractical at
administration. These cases were settled system, Meyers entered into an this time.
pursuant to the entry of two exclusive 'licensing agreement with In considering possible computer.
substantially similar Consent Decrees, RIMS for the use of RIMS software. systems for the Plan, Segal contacted
on May 12, 1988 and April 12, 1988, Segal explains that under the terms of RIMS to discuss leasing new, upgraded
.respectively, after lengthy negotiations the licensing agreement, Meyers alone equipment and software which would be
among the parties. Segal was not a party had the right to use this software and generally compatible with the then-
could not transfer that right to any other existing system. Although the software
' The Department is proposing no exemption with entity, including the Plan. used by Meyers would be compatible
respect to such subleasing and is expressing no Segal states that because Meyers' with the new system the software
opinion herein as to whether or not such subleasing
satisfies the requirements of either section 408(b)(2) position as administrator of the Plan licensed exclusively to Meyers would
or section 404(a)(I.) of the Act. was terminated as of July 31, 1988, a not be available to the Plan absent a
45826 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
separate agreement between the Plan July 6, 1988. Because the RIMS system (d) A Software Program License.
and RIMS. Segal states that RIMS was was already substantially in place when Agreement between the Plan and RIMS;
willing to sell a new computer system the Plan took over its own and
and to license software to the Plan for administration on August 1, 1988, no (e) A Software System Support
approximately $480,000. shutdown of administrative services Agreement between the Plan and RIMS.
At the -same time, Segal considered was necessary. Segal states that some Segal represents that all of these
the possibility of leasing the RIMS RIMS computers were installed in the agreements are standard form contracts
system then leased to Meyers. Segal Naperville, Illinois office over the
asserts that using this system would which represent the common practice
weekend of July 30-31, and they were within the industry and summarizes the
avoid the disruption of services which operational and paying claims on
would be inherent in any change of terms of these agreements as follows:
August 4; while in other Plan offices, the
computer systems, particularly as the (a) Lease of Personal Property: This is
systems were already in place. Segal
Plan planned to hire employees who had asserts that only leasing the equipment the lease of computer hardware for 32
experience using the same RIMS system. previously used by Meyers could have months by the Plan from Winthrop. The
Segal states that RIMS was willing to equipment was installed at the Plan's
achieved this result, and that leasing
lease the equipment and software to the administrative offices in Naperville,
this system successfully avoided any
Plan (assuming that it was availal~le and shutdown of Plan operations. Thus, Illinois and Atlantic City, New Jersey.
no longer used by Meyers) for For the first 27 months of the lease,
Segal opines that the leasing of the rental payments are $13,039.10 per
approximately $360,000, a present value subject computer equipment and
equivalent of $315,000 after discounting month; for months 28 through 32, the
software was clearly in the best rental payments are reduced to
for time payments over three years at interests of the Plan's participants and
ten percent. $2,811.96. (The last five payments are
Segal determined that leasing the beneficiaries, and necessary and reduced to reflect the deposit supplied
RIMS system previously used by Meyers appropriate for the efficient and to Winthrop by the Plan.)
economical administration of the Plan.
was the most cost effective and efficient (b) Computer Equipment Security
method of securing computer services 9. The Party-in-Interest Status of RIMS Agreement: The Plan -provided to
for the Plan. Segal's prior experience and Winthrop Winthrop a security interest in the
had shown that the RIMS system was Qantel computer and computer-related
competitively priced and a good system. Segal asserts that although RIMS has equipment until the Plan's *obligations
In Segal's opinion, continued use ,ofthe had a contractual relationship with under the Lease of Personal Property are
existing system would reduce the start- Meyers, RIMS has had no relationship satisfied.
up costs for switching to self- (as a service provider or otherwise) with
(c) The Option: The'Plan has the right
administration of the Plan. Moreover, the Plan prior to the Plan's lease with to purchase the computer equipment
significant training and start-up costs RIMS and Winthrop. Segal also from Winthrop for approximately
would be eliminated due to the represents that although the Plan $19,000, representing 10 percent of the
familiarity with the system of Meyers' entered into a lease for the same initial computerequipment cost, at the
staff, whom the Plan intended to hire. equipment and software previously expiration of the term of the computer
Furthermore, the computer software was leased by Meyers, the Plan did not equipment lease (see (a), above) or any
already in place to handle the Plan's assume Meyers' lease, and Meyers is renewal or extension term thereof. 'The
benefit claims. Thus, service to not a party, directly or indirectly, to the computer equipment would be sold in an
participants and beneficiaries would lease agreement between .RIMS and the "as is" -condition.
suffer the least disruption through this Plan. Segal explains that Winthrop is
decision. Consequently, Segal began (d) Software Program License
the leasing agent for RIMS and, as such,
negotiations with RIMS to lease the provided no services with respect to the Agreement: RIMS provides to the Plan a
system then used by Meyers. hardware or software formerly leased to non-exclusive license to use its
In connection with the severance programs on the equipment rented from
Meyers. However, upon execution of the
agreement, and in light of the Winthrop and will also provide training
Software System Support Agreement
termination agreement between RIMS for Plan personnel. In return, the Plan
(described below), RIMS became a
and Meyers, Segal made a binding will pay RIMS $96,500.
service provider to the Plan and,
recommendation to the Trustees for the therefore, a party in interest thereto, as (e) Software.System Support
approval of the RIMS lease for the did Winthrop due to its status as a Agreement: RIMS agrees to provide the
computer system used by Meyers.'The wholly owned subsidiary of RIMS, Plan with .telephone support services for
Trustees reviewed this recommendation pursuant to paragraphs (B) and (G), the .use of its licensed programs. In
at their meeting on June 29, 1988, and respectively, of section 3(14) of the Act. addition, RIMS will supply all final
approved a resolution putting this versions of all new releases of the
recommendation into effect. Pursuant to 10. :Current RIMS/Winthrop Contractual programs during the terms of the lease.
this resolution, RIMS (and its wholly Arrangements The Plan is required to maintain at each
owned subsidiary, Winthrop) and the installation site a key operator who has
Segal explains that the Plan currently
Plan entered into an agreement taken the RIMS training program. These
has the following contractual
providing for a 32-month lease for the key operators will be the sole Plan
- relationships with RIMS or Winthrop:
computer system. They also executed an employees to request support from
option-to-purchase agreement which * (a) A.Lease of Personal Property RIMS. This agreement has a term of one
gives the Plan the ability to purchase the between the Plan and Winthrop; year, beginning August 1, 1988, with
equipment it currently leases. (b) A rComputer Equipment Security automatic one-year renewals unless
The lease of computer -equipment and Agreement 'between the Plan and either party provides the other party
software from RIMS and Winthrop by Winthrop; with 30-days prior written notice of its
the Plan comnenced on August 1, 1988, (c) The Option: An Op tion To intent not to renew. The Plan will pay
pursuant to the contracts between the Purchase the ,computer'equipment RIMS a fee of$1,845/58 per month for the
Plan and RIMS or Winthrop executed leased by the Plan from Winthrop; first one year term.
Federal Register, / VoL. 54, No, 209' /'Tuesday, October 31, 1989 / Notices 45827
11. Comparison of the: Plan's andk (b) If Segal elects, to exercise the appropriate . and,commercially
Meyers' Contracts. Option, such election will only be made reasonable in a lease of this, type ('see
Segal: states that Meyers and RIMS/
to the extent that the purchase of the 10(a), above). (i) if Segal elects to
Winthrop had standard form, contracts,
equipment is in the Plansbest interest; exercise the Option, such' election, will
which represented the common practice
(c) Segal' will ensure that the Option is only-be made to the extent' that the
within the industry and that, Meyers. had
not exercised if Segal' determines that' purchase of the equipment is in- the
the following agreements: with RIMS or
the Plan's purchase-of the equipment is Plan's best interest , (iiil Segal! wil
not in the Plan's best interests; and ensure-that the Option is not exercised if
Winthrop: (d), If'the Option' is to be exercised, Segal determines that the Plan's
(a) Lease of Personal Property,. Segal will determine the leased. purchase of the equipment is not in the
(b) Software Program Licenses equipment's fair market value as of the Plan's best interests; and (iv)' if the
Agreement, and date of purchase by thePlan and will. Option is to be exercised, Segail will
(c) System Support Agreement. ensure that the purchase price' to be paid determine the leased. equipment's fair
Segal also represents that the by the Plan does not exceed said. fair market value, as. of.the' date of purchase
agreements between the Planm and. market value. by the Plan and will; ensure: that the
RIMS/Winthrop. and the,agreements. 13. Summary- purchase. price tor be paid' by the Plan.
between Meyers and RIMS/ Winthrop does not exceed said fair market value.
are. substantially, the same: and are all In summary, Segal (the applicant)
represents that the. Arrangement ForFurther1Information.Contact:Mrs..
the standard form contracts, developed, Miriam Freund, of the Department,
by RIMS/Winthrop which were in use at satisfies the exemptiont criteria set fbrth,
in section 408(a). of the Act because:. telephone (202) 523-8194, (.This is' not a.
the time the parties entered into the toll-free number.)
contracts. (a) Having considered alternative
arrangements; Segal, arm independent General Information
Segal represents that although the first
year fee paid by the Plan for system
fiduciary, with respect to the Plan,,
believes that the Arrartgement is in. the The attention, of interested 'persons is
support services is. greater than. the. directed to the following:
initial. fee. paid by Meyers under its. 1985
best,interests of the Plan and its'
participants and beneficiaries because' it (1) The fact that a transaction is the
systems support services agreement; subject, of an' exemption under section'
with RIMS, the increase. in the. amount
preserves the continuity of Plan
administration; including the processing, 408(a) of the Act and'/or-sectibn
of the fee from, 1985 (.payable by Meyers) of'participants' and beneficiaries' 4975(c'(2) of the Code does, nov relieve a.
to 1988 (payable. by the Plan). was a fiduciary or other party in, interest or
claims, while conserving, the Plan's
result of changing market conditions. disqualified person from certain. other
assets;
Segal: represents further that the. fee. (b)Segal, which has: extensive provisions of the Act and/or the Code,
currenfy charged by RIMS reflects experience in the operation of including any prohibifted' transaction
industry fee levels and is reasonable in. multiemployer benefit plans. and is provisions to which the exemption does
light of the services, to. be. provided.. familiar with state-of-the-art computer not apply and' the general fiduciary
Further, Segal represents that the overall systems. has, negotiated the terms. of the responsibility provisions of section 404
cost increases reflected in the Plan's Arrangement on behalf of the. Pan, with, of'the Act, whi'ch amongother things
1988 agreements with RIMS and' the approval of the Trustees; requi're a fiduciary to discharge his
Winthrop merely.indicate changes in the (c) As independent fiduciary to,the duties respecting.the plan sorely in the
market for this equipment andl these Plan, Segal, has expressed the opinions interest of the participants and.
services since 1985. Segal notes that the that (i) the. increases- (compared ta the beneficiaries of the plan and' in. a
lease payments by,the Plan are, amounts payable by Meyers. under its, prudentfashion in accordance with,
essentially, the same as those paid' by. contracts' with-RIMS/Winthrop) in, section 404(a)(1)(B);of the Act; nor does.
Meyers and will result in a significant, payments required, from the.Plan under it affect the requirement of'section
savings for the Plan. While the, systems its, Lease. of Personal Property with 401(a)' of the Code 'that the plan must
servicing fees, have increasedi, Segal Winthrop (see 10(a), above) and under operate for the exclusive benefif of the
states that those increased fees its Software System Support Agreement employees of the employer maintaining,
represent reasonable compensation for with RIMS' (see 10(e), above)' are due tb the plan and their-beneficiaries;.
the services rendered and that leasing changing market conditions, and (ii)- (2) Bef6re an exemption may be.
the RIMS equipment previously used by althouglT the first year fee-paid' by the granted under sectibn 408)*of'the Act
Meyers is clearly in the best. interests- of' Plan for system support services' i's more' and/or section 4975(c)(Z of the Code,
the Plan and its participants and, than the initial. fee paid by; Meyers. under the Department must find that the
beneficiaries because of the efficiencies; its 1985 systems' support services exemption is administratively feasibe,
and cost savings involved. agreement, the fee currently charged, to. in the interests of the plan and of its
12. Monitoring by Segaf the Plan reflects. industry fee levels and participants and beneficiarfes and'
is reasonable in light of the services tn protective of'the nights of participauts
Segal represents that as court- be provided;, and beneficiaries, of the plan;, and,
appointed independent fiduciary to the (d) As independent fiduciary to the: (3)'The proposed exemptibs,. if
Plan, Segal will monitor the Plan's Plan, Segal i's responsible. fbr oversight granted,, will be supplemental to, and ,
agreements, with RIMS and Winthrop of record keeping and.claims, processing. not in derogatibn of, any other
and will, act to, protect the Plan's' interest for the Plan, among, other duties, and. provisions of the Act and/or the Code,
therein throughout the' duration of said will' monitor the contracts between the. including-statutory oradministrative
agreements.. With: regardi to,,the.Option. Plan and RIMS or Winthrop, pursuant to exemptions and' transitional rules.
(see 10(c; above)', Segat makes; the the Arrangement, acting to protect the Furthermore the-fect that'a transaction
followingrepresentations:. Plan's interests-therein throughout their' is subject to an admihistrative- or
(4&JThe. Option is appropriate and( duration; and statutory exemption is noot di'spositive of
cormercially reasonable: in, a lease. of (eJ& With respect to, the-Option, Segali whether the. transaction is in fact, aj
this type (see O(a) aboveyW represents that: (i) the Option is prohibited transaction.
45828 Federal Register / Vol. 54, No. 209 / Tuesday,. October 31, 1989 / Notices
(4) The proposed exemptions, if Dated: October 19, 1989. Arts and Artifacts Indemnity Panel'
granted, will be subject to the express Edward A. Frankle, Advisory Committee; Meeting
condition that the material facts and GeneralCounsel.
representations contained in each Pursuant to the provisions of the
[FR Doc. 89-25549 Filed 10-30-89; 8:45 am]
application are true and complete, and Federal Advisory Committee Act (Pub.
that each application accurately BILLING CODE 7510-01-M Law 92-463 as amended) notice is
describes all material terms of the hereby given that a meeting of the Arts
transaction which is the subject of the and Artifacts Indemnity Panel of the
exemption. NATIONAL FOUNDATION ON THE Federal Council on the Arts and the
Signed at Washington, DC, this 25th day of ARTS AND THE HUMANITIES Humanities will be held at 1100
October 1989. Pennsylvania Avenue, NW.,
National Endowment for the Arts; Washington, DC 20506, in Room 730,
Ivan Strasfeld,
Cooperative Agreement from 9:00 a.m. to 5:00 p.m. on Tuesday,
Directorof Exemption Determinations,
Pension and Welfare Benefits Administration, AGENCY: National Endowment for the November 21, 1989.
U.S.Departmentof Labor. The purpose of the meeting is to
Arts.
[FR Doc. 89-25566 Filed 10-30-89; 8:45 am] review applications for Certificates of
ACTION: Notification of availability.
BILLING CODE 4510-29- Indemnity submitted to the Federal
SUMMARY: The National Endowment for Council on the Arts and the Humanities
NATIONAL AERONAUTICS AND the Arts is requesting proposals leading for exhibitions beginning after January
to the award of a Cooperative 1, 1990.
SPACE ADMINISTRATION
Agreement for the design and Because the proposed meeting will
[Notice 89-751 implementation of a process for consider financial and commercial data
conducting independent assessments of and because it is important to keep
Intent To Grant Co-Exclusive Patent the readiness of approximately 80 panel- value of objects, methods of
Licenses recommended organizations which have transportation and sechrity measures
AGENCY: National Aeronautics and applied to the Endowment to participate confidential, pursuant to the authority
Space Administration. in the Advancement Program. The granted me by the Chairman's
ACTION: Notice of intent to grant co- recipient of the Cooperative Agreement Delegation of Authority to Close
will prepare written reports which will Advisory Committee Meetings, dated
exclusive licenses.
provide professional judgment'on each April 16, 1978, I have determined that
SUMMARY: NASA hereby gives notice of organization's financial and the meeting would fall within
intent to grant National Water organizational status and capacity to exemptions (4) and (9] of U.S.C. 552(b)
Management Corporation of San Jose, develop through the 15-month period of and that it is essential to close the
California, Stearman Industries, technical assistance services provided meeting to protect the free exchange of
Incorporated, of Tavares, Florida, and by the program. The recipient will also views and to avoid interference with the
Alten Water Treatment Corporation of identify principal areas of need in order operations of the Committee. '
Palo Alto, California, each a limited, to ensure the assignment of appropriate* It is suggested that those desiring
revocable, royalty-bearing, c6-exclusive consultants and to permit planning for more specific information contact the
license to practice the invention as supplementary workshops or specialized Advisory Committee Management
described in U.S. Patent No. 4,172,786 for assistance. Those interested in receiving Officer, Stephen J.McCleary, 1100
"Ozonation of Cooling Tower Waters," the Solicitation package should Pennsylvania Avenue, NW.,
which issued October 30, 1979, to the reference Program Solicitation PS 90-03 Washington, DC 20506, or call 202/786-
Administrator of the National in their written request and include two 0322.
Aeronautics and Space Administration (2) self-addressed labels. Verbal
on behalf of the United States of requests for the Solicitation will not be .Stephen J.McCleary,
America. The proposed co-exclusive honored. Advisory Committee ManagenentOfficer.
licenses will contain appropriate terms, [FR Doc. 89-25572 Filed 10-30-89; 8:45 am]
DATES: Program Solicitation PS 90-03
limitations and conditions in accordance will be available approximately BILLING CODE 7537-01-M
with NASA Patent Licensing' November 8, 1989, with proposals due
Regulations, 14 CFR part 1245, subpart 2.. on December
8, 1989.
NASA will negotiate the final terms and
conditions and grant the co-exclusive * ADDRESS: Requests for the Solicitation
licenses, unless written objections to should be addressed to National NATIONAL SCIENCE FOUNDATION
this Notice are received within 60 days Endowment for the Arts, Contracts
of the date of this Notice. The Director ' Division, Room 217, 1100 Pennsylvania Establishment of a Routine Use for
* of Patent'Licensing will review the Avenue NW., -Washington., DC 20506. Microdata for the Survey of Doctorate
written objections and then recommend FOR FURTHER INFORMATION CONTACT:
Recipients " .-
to the-Associate General Counsel William Hummel or Anna Mott, Background
((Intellectual Property) whether to grant Contracts Division, National
the co-exclusive licenses. Endowment for the Arts, 1100 The National Science Foundation
DATE: Comments to this notice must be Pennsylvania Avenue NW., Washington, (NSF]. Collects infor'mation on the'_ "
received January 2,1989. DC 20506"(202/682-5482). characteristics 'of 'a'smple of
individuais who have received a
ADDRESS: National Aeronautics and William I. Hummel, doctoral-level degree in science and
Space Administration, Code GP, Director,Contractsand Procurement engineering fields. This biennial survey,-
Washington, DC 20546. Division. is referred to as ihe.ui'vey of Doctoral
FOR FURTHER INFORMATION CONTACT: [FR.Doc.89-25519 Filed 10-30-89; 8:45 am] Scientists and Engirieers..The survey
Mr..Harry Lupuloff, (202] 453-2430. BILLING CODE 7537-01-M results are currently analyzed
Federal, Register fj Vol,. 54, No: 209 / Tuesday, October 31, 1989 /' Notices 45829t
statistically by employees. and: information for individuals responding Alternatives to the ProposedAction:
contractors of the National. Science to the, 1989 or subsequent surveys.
Foundation and, the co-sponsors-of the Individuals wishing to comment on, Since-the staff concluded that there
survey (the.National Institutes of Health, the proposed routine use of the are no significant environmental effects
the Department of Agriculture and the, microdata from the Survey of Doctoral that would result from the proposed.
Department of Energy), There, have been. Scientists and' Engineers should submit actiorr, any alternatives with equal or
numerous requests from theresearch commentsfin writing to the following greater environmental impacts need not
community to, make the microdata from, address wilhin, thirty days of the be evaluated.
this survey more readily evailable for publication date of this notice: Dr. The principal alternative wouldbe to
secondary analysis. Carolyn F: Shettle, National' Science- deny the requested' amendment. This
Foundation, Room L-611, 1800G Street, would not reduce environmental
Plansfor the Release of Microdata impacts of plant operation an&might
NW., Washington, DC 20550.
It is NSF's , intent to release microdata; result in additional' plant trips.
Dated: October 26,1989.
from the, 19891 and subsequent Surveys.
of Doctoral Scientists and Engineers, in William L Stewart, Alternative Use of Resources:
two formats that are, intended to be used Director,Division of,Science Resources The action would involve no use of
only for statistical purposes. For the Studies,NationalScience Foundation.
resources, not previously considered. in
1989 survey we intend to produce the [FR Doc. 89_-25555TFiled 10-30-89; 8:45,ami the "Final Environmental Statement
following: BILLING. CODE. 7555 01-'
related to the operation.of Millstone
(1) A public use. tape will be-prepared Nuclear Power Station Unit No.. 3' dated
with selected information on 1989 NUCLEAR REGULATORY December 1984.
survey respondents. This tape will,
include information obtained from, these COMMISSION, Agencies: and Persons.Consulftd.-
1980.respondents prior to 1989 in [Docket No. 50-4231 The NRC staff reviewed, the licensee's,
addition to their 1989. responses. All request and: did not consult other
direct identifiers (e.g,.name, social Northeast Nuclear Energy Co.; agencies or persons,.
security number,. address., and phone. Millstone Nuclear Power Station, Unit
number) will be; stripped from this tape. No. 3, Envronmental Assessment and Finding No Signifkant Lmpact
In addition, information which, could be Finding of No Significant impact .The s ta.ffhas determine& not to-
easily used to identify someone prepare an,environmental impact
indirectly will either be stripped from The U.S. Nuclear-Regulatory
Commission (NRC-or the Commissior 4 i's statement for the-proposedilicense
the tape or otherwise. disguised' For amendment.
example, sex and race will not be considering issuance of an amenhnent
included on the tape. Instead of to Facility Opelrating License No. NPF- Based upon the forgoihg
identifying colleges and universities. by 49 to Northeast Nuclear Energy environmental assessment, we: conclude?
Company (the licensee), for-Millstone: that the proposed actions will not have.
name, these institutions. will be grouped
Unit 3 located in the Tow'n of Waterford a significant effect.on thequality, of the-
,by type of institution. This tape will be
made available to. the public: Connecticut.. human environment.
(2). A limited, access. tape for 1989. For-further details; wit- respect to this
Environmental Assessment
survey respondents designed to serve action, see the-applicatibn for,
statistical. research. needs- that cannot be Identificationof ProposedAction amendment dated August 1, 1989, which.
met by the public.use-tape will-be: The proposed amendment would' is available for public:inspectibn- at the,
prepared. This tape will be. strippedi of provide revised Technical Sgecifications Commission's Public Document Room',
direct identifiers,. but it will contain to decrease the reactor trip set point and the Gelman Building; 2120,L-Slreet, NW.,
other information stripped from the allowable value for the reactor coolant Washington, DC 20555 and at the
public use tape (e.g., sex and race). pump (RCP) lbw shaft speed Waterford Public Library, 49 Rope, Ferry
Release of the limited access tape-will' (underspeed trip set point) from 97.8 to Road, Waterford, Connecticut 06385.
only be made under stringent 95.8 percent of rated speed and from 94.6' For the Nuclear Regulntory Cbmmiision.
safeguards. It is expected that to 92.5 percent rated speed, respectively.. John F Stolz,,
researchers wishing to use-this tape-will The proposed action is in accordance Director,ProjectDirectorateL-4, Division of
need to: with the licensee's application dated, Reactor Projects-/7!, Office of Nuclear
a} Submit a prospectus explaining the August 1, 1989., ReactorRegulation..
research to be conducted.. This [FR" Doc. 89-25561 Filed 10-30-89;,8:45 am]
prospectus will be reviewed by relevant The Need for-te:ProposedAction:
BILLING CODE 7590-01-M
NSF program staff. The proposed' changes are needed! to
(b) Sign a non-disclosure form. prevent unnecessary plant trips which
(c);Use, the tape at a computer facility could result from el'ectrical grid' Advisory Committee or Reactor
designated by NSF. disturbances. Safeguards MeetIng Agenda,
(d) Agree to cite NSF and the Survey
of Doctoral Recipients in any published' EnvironmentalImpacts of the Proposed In accordhnce-witlr the purposes of
results. Action- sectibns 29 nd 182b. of the Atomic-
(e) Agree to pravide two copies, of all The-proposed'changes to the- Energy Act (42 U.S.C: 2039,. Z232b), the
resulting pubricatfons to NSF: Technical Specifications would not advisory Committee on Reactor
(f) Comply with other procedures affect plant effluents during- normar or Safeguards- willhold a.meeting on
developed by NSF to protect the- privacy accident conditions. Accordingly, there November 16-48:1,989 in Room P'-lqO
of individuals: are no' significant radiblogical/hon- 7920W Norfblk Avenue; Bethesdh,
For survey years- after 1989' we will' radiorogical environmental impacts Maryland. Notice of thisl meeting was
produce similar rapes, to-the' 1-989 tapes: associated with: the, proposed licensing published fri the Fed'croarRigister on
These tapes wilt only include action. October1l8 1.989'.
45830 Federal Register / Vol. 54, No. 209 Tuesday, October 31, 1989 . Notices
Thursday, November 16, 1989 Information applicable to this design. statements should notify the ACRS
Room P-110,7920 Norfolk A venue, Representatives from the NRC staff will Executive Director as far in advance as
Bethesda, MD. participate, as appropriate. practicable so that appropriate •
-8:30 a.m.-8:45 a.m.: Comments by 1:30 p.m. 4:30p.m.: Nine Mile Point arrangements can be made to allow the
ACRS Chairman (Open)-The ACRS Nuclear Station, Unit I (Open}-The necessary time during the meeting for
Chairman will report on items of current Committee will review and report on the such statements. Use of still, motion,
proposed restart of this nuclear plant picture and televison cameras during
interest.
which has been shut down for an this meeting may be limited to'selected
8:45 a.m.-11:00 a.m.: NuclearPower
PlantAccident Management (Open)- extended period due to safety-related portions of the meeting as determined
reasons. Representatives from the NRC by the Chairman. Information regarding
The Committee will review and report
on a proposed NRC generic letter and staff and licensee will participate, as the time to be set aside for this purpose
NUREG/CR report on accident appropriate. may be-obtained by a prepaid telephone
4:45 p.m.-5:15 p.m.: FutureActivities call. to the ACRS Executive Director, Mr.
management at nuclear power plants.
(Open)-The Committee will discuss Raymond F. Fraley, prior to the meeting.
Representatives of the NRC staff will
anticipated ACRS subcommittee In view of the possibility that the
participate.
activities, items proposed for schedule for ACRS meetings may be
11:00 a.m.-12:00 Noon: Definition of
consideration by the full Committee, and adjusted by the Chairman as necessary
'Adequate Protection 'Open)-The ACRS meeting dates for CY 1990.
Committee will discuss a proposed to facilitate the conduct of the meeting,
5:15 p.m.-6:15 p.m.: GenericIssue--87, persons planning to attend should check
report to the Commission on ACRS and HPCISteam Line Break Without
NRC staff positions regarding the . with the ACRS Executive Director if
Isolation (OpenJ-The Committee will such rescheduling would result in major
definition of "adequate protection" as it discuss a proposed ACRS report to the
relates to the NRC quantitative safety inconvenience.
NRC regarding the resolution of-this I have determined in accordance with.
goals. Representatives from the NRC generic issue proposed by the NRC staff.
staff will participate, as appropriate. subsection 10(d) Public Law 92-463 that
:1:O
l:0pm.-:45p.m.: Standaidized it is necessary to close portions of this
Saturday, November 18, 1989
PWRs (Open)-The Committee will hear meeting as noted above todiscuss
8:30 a.m.-12:30p.m.: Preparationof
a briefing regarding the status of the safeguards and security information at
ACRS Reports to the NRC (Open)-The
NRC staffs review of proposed nuclear plants'(5 U.S.C. 552b(c)(3), " .'
Committee will discuss proposed ACRS
standardized PWRs, including the reports to the NRC regarding items information the release of which would
WAPWR SP/90, Westinghouse AP-600, considered during this meeting. represeit'a clearly unwarranted
and the CESSAR-System'80 plus. 1:30 p.m,-2:30 p.m.: ACRS invasion of personal privacy (5U.S.C.
1:45 p.m.-315 p.m.; Access Subcommittee Activities (Open)-The 552b(c}(6)), and'Proprietary Information
Authorization at NuclearPowerPlants Committee will hear and discuss reports applicable to matters being discussed (5
(Open/Closed)-The Committee will of ACRS subcommittee activities U.S.C. 552b(c)(4)).,
review and report on the proposed final including thermal-hydraulic phenomena Further information regarding topics
rule, 10 CFR part 743, "Access and ACRS policies and practices. to be discussed, whether the meeting
Authorization Program for Nuclear 2:30p.rh.-2:45p.m:: Appointment of has been cancelled or rescheduled, the
Power Plants." Representatives of the A'CRS Members (Open/Closed)-The Chairman's ruling on requests for the
NRC staff will participate, as Committee will hear and discuss a opportunityto present oral statements •
appropriate. report regarding the status of the and the time allotted can be obtained by
Portions of the session will be closed appointment of candidates proposed for a prepaid telephone call tothe ACRS
as required to discuss safeguards and selection as ACRS members. Executive Director, Mr. Raymond F.
security information at nuclear power Portions of this session will be closed Fraley (telephone 301/492-8049),
plants. as necessary to discuss information the between 7:30 a.m. and 4:15 p.m.
3:30p.m.-5:00p.m. Integrationof the release of which would represent a Dated: October 26, 1989.
NuclearRegulatoryProcess (Open)- clearly unwarrranted invasion of John C.Hoyle,
The Committee will discuss proposed personal privacy. Advisory Committee Management Officer.
ACRS recommendations on how best to 2:345p.m.-3:00p.m.: Activities of [FR Doc. 89-25563 Filed 10-30-89; 8:45 am]
integrate the nuclear regulatory process. A CRS Members (Open)-The
BILLING CODE 7590-01-M
5:00 pm.-6:00 p.m.: Three Mile Island Committee will discuss related activities
NuclearStation, Unit 2 (Open)-The of ACRS mem'iers.
Committee will hear a briefing regarding 3:00 p.m.-3:30 p.m.: Miscellaneous
analysis of the loss of cooling accident (Open)-The Committee will complete OFFICE OF PERSONNEL
at TMI-2. discussion of items considered during MANAGEMENT
this meeting. Request for Approval of OPM
Friday, November 17, 1989 Procedures for the conduct of and
Attitudinal Survey Submitted to OMB
8:30 a.m.-12:30 p.m.: GE Advanced participation in ACRS meetings.were
for Expedited Clearance
Boiling Water Reactor (Open/Closed)- published in the Federal Register on
The Committee will review and report September.27, 1989 (54 FR 39594). In AGENCY: Office of Personnel.
on the initial portion (Mod 1) of the NRC accordance with these procedures,.oral Management.
staffs review of the GE Advanced or written statements may be presented ACTION' Expedited Notice.
boiling Water Reactor. by members of the public, recordings.
Representatives of the NRC staff and will be.permitted only during those SUMMARY: In.accordance-with the
the GE Company will participate as .. portions of the meeting when a Paperwork Reduction Act of 1980 (title
.appropriate in the discussibn regarding transcript,is being kept, and questions 44, U.S Code, chapter 35), thisnotice
this standardized plant design.. may be asked only by members of the announces an expedited'request for'
Portions of this session will be closed. Committee .its. consultants, and Staff.. clearance of the attached OPM .. .
as necessary to discuss Proprietary -Persois desiring to make.oral . attitudinal' telephone survey. This-.
Federal Register / Vol. 54 No.' 209 /Tuesday; October 31; 1989 / Notices '45831
survey is required to carry out OPM's - provider, other than a dentist, during-the past' contribution rates for employees, annuitants;
statutory mandate to study. the year? ," and Medicare covered annuitants.
operation and administration of the 10. Were you'and/or a covered family'', [FR Doc. 89-25571 Filed 10-89; 8:45 am]"
Federal Employees Health Benefits member an-overnight patient in a hospital BILUNG CODE 6325-01-M
Program and to formulate a during 1989?- yes ' no,
comprehensive reform package for 11. Are you now covered by Medicare?
Congress by February 7, 1990,.as Spouse SECURITIES AND EXCHANGE
Own Coverage '
[Rel. No. 34-27369; File No. SR-NASD-89- period will be established and published of 5 U.S.C. 552, will be available for
48] by the Association. Article VII Section 3 inspection and copying in the
Self-Regulatory Organizations;
of the By-Laws allows Association Commission's'Public Reference Room.
action regarding the operation of a Copies of such filing will also be
National Association of Securities system owned by the NASD or its available for inspection and copying at
Dealers, Inc.; Filing and Immediate subsidiaries under emergency or the principal office of the NASD. All
Effectiveness of Proposed Rule extraordinary market conditions.
Change Relating to Modification of
submissions should refer to the file
The NASD believes that the rule number in the caption above and should
Grace Period to Establish New SOES change is consistent with Section 15 A
Exposure Limit be submitted by November 21, 1989.
(b)(6) of the Act which, among other
For the Commission, by the Division of
Pursuant to Section 19(b)(1) of the things, requires the rules of the Market Regulation, pursuant to delegated
Securities Exchange Act of 1934 ("the Association to be designed to perfect authority, 17 CFR 200.30-3(a)(12).
Act"),notice is hereby given that on the mechanism of a free and open Dated: October 19, 1989.
October 16, 1989, the National market and national system and in
Jonathan G.Katz,
Association of Securities Dealers, Inc. general to protect investors and the
public interest. The rule change will Secretary.
("NASD"] filed with the Securities and
Exchange Commission ("Commission") facilitate SOES participants' ability to IFR Doc. 89-25502 Filed 10-30-89; 8:45 am]
the proposed rule change as described continue to function in the SOES market BILING CODE 8010-01-M
in Items I, II, and III below, which Items under extraordinary market conditions.
have been prepared by the NASD. The B. Self-Regulatory Organization's
Commission is publishing this fiotice to (ReL No. 34-27376; [File No. SR-MSTC-89-
Statement on Burden on Competition 0811
solicit comments on the proposed rule
change from interested persons. The NASD does not believe that the
proposed rule change imposes any Self-Regulatory Organizations; Filing
I. Self-Regulatory Organization's burden on competition not necessary or and Immediate Effectiveness of
Statement of the Terms of Substance of appropriate in furtherance of the Proposed Rule Change by Midwest
the Proposed Rule Change purposes of the Act. Securities Trust Company Relating to
The proposed rule change modifies Procedues Regarding the Payment of
the grace period for restoration of SOES
C. Self-Regulatory Organization's Cash InLieu of Bonds in Portions Less
exposure limits in NASDAQ/NMS
Statement on Comments on the Than $1,000 Principal Amount in Bond
securities.
ProposedRule ChangeReceived from Issues Paying in Kind
Members, Participants,or Others
II. Self-Regulatory Organization's October 24, 1989.
No written comments were either
Statement of the Purpose of, and solicited or received.
Pursuant to Section 19(b)(1) of the
Statutory Basis for, the Proposed Rule Securities Exchange Act of 1934 ("the
Change III. Date of Effectiveness of the Act"), 15 U.S.C. 78s(b(1, notice is
Proposed Rule Change and Timing for hereby given that on October 12, 1989,
In its filing with the Commission, the Commission Action
NASD included statements concerning the Midwest Securities Trust Company
the purpose of and basis for the The foregoing rule change has become ("MSTC") filed with the Securities and
proposed rule change and discussed any effective pursuant to Section 19(b)(3) of Exchange Commission the proposed rule
comments it received on the proposed the Act and-subparagraph (e) of Rule change as described in Items 1, I and Ill
*rule change. The text of these 19b-4 thereunder. At any time within 60 below, which Items have been prepared
statements may be examined at the days of the filing ofsu'ch proposed rule by the self-regulatory organization. The
places specified in Item IV below. The change, the Commission may summarily. Commission is publishing this notice to
NASD has prepared summaries, set abrogate such rule change if it appears solicit comments on the proposed rule
forth in Sections (A), (B), and (C] below, to the Commission that such action is change from interested persons.
of the most significant aspects of such necessary or appropriate in the public I. Self-Regulatory Organization's
statements. interest, for the protection of investors, Statement of the Terms of Substance of
or otherwise in furtherance of the the Proposed Rule Change
A. Self-Regulatory Organization's purposes of the Act.
Statement of the Purp'oseof,and Attached as Exhibit A is the text of a
Statutory Basisfor, the ProposedRule IV. Solicitation of Comments proposed rule change of MSTC which
Change Interested persons are invited to interprets and clarifies MSTC's current
The proposed rule change increases submit written data, views, and procedures regarding the payment of
the grace period allowed by the NASD arguments concerning the foregoing. cash-in-lieu of bonds in portions less
for renewal by NASDAQ/NMS market Persons making written submissions than $1,000 principal amount in bond
makers of their SOES exposure limit.' should file six copies thereof with the issues paying in kind (PIK).
Failure by a market maker to renew its Secretary, Securities-and Exchange
I. Self-Regulatory Organization's
exposure limit results in a suspension Commission, 450 Fifth Street NW., Statement of the Purpose of, and
from SOES. This modification has been - Washington, DC 20549. Copies of the Statutory Basis for, the Proposed Rule
necessitated by the extraordinary submissions, all subsequent Change
market conditions encountered on amendments, all written statements
Friday, October 13, 1989. Section with respect to the proposed rule change In its filing with the Commission, the
(c}(2)(E) of the SOES rules provides that that are filed with the ,Commission, and self-regulatory organization included
the duration of the standard grace all written communications relating to statements concerning the purpose of
the proposed rule change between the and basis for the proposedrule change
The NASD.allowed a grace period of 10 minutes Commission and any person, other than and discussed any comments it received
for the day of October 11,1989. This is an increase those that may be withheld from the on the proposed rule change. The text of
from the usual grace period of 5 minutes. public in accordance with the provisions- these statements may be examined at
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices4 45833
the places specified in Item IV below. Washington, DC 20549. Copies of the Change as described in Items 1, 11 and III
The self-regulatory organization has submission, all subsequent amendments, below, which Items have been prepared
prepared summaries, set forth in all written statements with respect to by the self-regulatory organization The
Sections (A), (B), and (C) below, of the the proposed rule change that are filed Commission is publishing this notice to
most significant aspects of such with the Commission, and all written solicit comments on the proposed rule
statements. communications relating to the proposed change from interested persons.
rule change between the Commission
(A) Self-Regulatory Organization's I. Self-Regulatory Organization's
and any person, other than those that
Statement of the Purposeof, and Statement of the Terms of Substance of
may be withheld from the public in
StatutoryBasisfor, the ProposedRule the Proposed Rule Change
accordance with the provisions of 5
Change
U.S.C. 552, will be available for Attached as Exhibit A is the text of a
Under current MSTC procedures, inspection and copying at the principal
MSTC does not process fractional proposed rule change of MCC which
office of the above-referenced self- interprets and clarifies-MCC current
shares (those in denominations of less -regulatoryobrganization. All submissionsS
than one'share) or bonds for procedures regarding the payment of
should refer to File No. SR-MSTC-89-08
denominations in principal amount less case-in-lieu of bonds -inportions less
and should be submitted by November
than $1,000 ("baby bonds"). MSTC also 21, 1989. " 'than $1,000 principal amount in bond:
does not process stock dividend For the Commission, by the Division of
issues paying in kind (PIK).
allocations in fractional shares and Market Regulation , pursuant to delegated II. Self-Regulatory Organization's
accordingly distributes'cash in lieu of authority. Statement of the Purpose of, and-
fracti6nal shares. The proposed rule Jonathan G. Katz, Statutory Basis for, the Proposed Rule
change clarifies that, as in the case of Secretary. Change
payments in cash of fractional shares,
MSTC will also distribute cash in lieu of Exhibit A-MST System In its filing with the Commission, the
the "baby bond" portion of interest AdministrativeBulletin self-regulatory organization included
distributions involving PIK issues. August 3,1989, * statements concerning the purpose of
The proposed rule change is To: All participants. - and basis for the proposed rule change
consistent with Section 17A of the Act, Attention: Dividend manager/head cashier. and discussed any comments it received
in that it promotes the prompt and Subject: Cash-in-lieu of baby bonds. on the proposed rule change. The text of
accurate clearance and settlement of Due to the increase ini bond issues paying -these tatements may be examined at
PIK bond transactions. ,n kind (PIC), MCC/MSTC will commence to the places specified in Item IV below.
pay cash-in-lieu of the baby bond portions'
(B) Self-Regulatory Organization's (less than $1,000 principal amount) of this The self-regulatory organization has
Statement on Burden on Competition type of distribution. This policy change prepared-summaries, set forth in Section
MSTC does not believe that any becomes effective immediately and will (A), (B) and (C) below, of the most
maintain interfacing compatibility with other significant aspects of such statements,
burdens will be placed on competition RIO members.
as a result of the proposed rule change. MCC/MSTC will also pay cash-in-lieu of (A)Self-Regulatory Organization's
(C) Self-Regulatory.Organization's baby bonds on any type of distribution Statement of-the Purpose of, and
Statement on Comments on the resulting in a baby bond residue. On all StatdtoryBasis for, the ProposedRule
claims made by, or against, MCC/MSTC, the
ProposedRule Change Received from baby bond portion will also be paid in the Change
Members, Participantsor Others form of cash-in-lieu. Under currentMCC procedures, MCC
Comments were neither solicited nor Questions regarding this bulletin may be does not proces's fractional shares
directed to your Participant Services
received. Representative (those in denominations of less than one
111. Date of Effectiveness of the Kathleen M. Staes, share) or bonds fordenominationrs in
Proposed Rule Change and Timing for Vicepresident MCC/MSTC. principal amount less than $1,000 ('.baby
Commission-Action bonds"). MCC also does not process
[FR Doc. 89--25497 Filed 10-30-89; 8A5 am]
stock dividend allocationsin fractional
The foregoing rule change has become BILLING CODE 80l-O1-M
shares and accordingly distributes cash
effective pursuant to Section 19(b)(3) of
in lieu of fractional shares. The
the Act and subparagraph (e) of Rule
19b-4 thereunder. At any time within 60 [Rel. No. 34-27377; File No. SR-MCC-89-121 proposed rule change clarifies that, as in
days of the filing of such proposed rule the case of payments in cash of
Self-Regulatory Organizations; Filing fractional shares, MCC will also
change, the Commission may summarily and Immediate Effectiveness of
abrogate such rule change if it appears distribute cash in lieu of the "baby
Proposed Rule Change by Midwest
to the Commission that such action is bond",portion of interest distributions
Clearing Corporation Relating to
necessary orappropriate in the public involving PIK issues.
Procedures Regarding the Payment of
interest, for the protection of investors, Case in Lieu of Bonds in Portions Less The proposed rule change is
or otherwise in furtherance of the Than $1,000 Principal Amount In Bond consistent with Section 17A of the Act.
purposes of the Act. Issues Paying the Kind in that it promotes the prompt and
IV. Solicitation of Comments accurate clearance and settlement of
October 24, 1989, PIK bond transactions.
Interested persons are invited to Pursuant to Section 19(b)(1) of the
submit Written data, views and Securities Exchange Act of,1934 ("the (B) Self-Regulatory Organization's
arguments concerning the foregoing. Act"j; 15 U.S'C. 78s(b)(1), notice is :Statement on Burden on'Competition
Persons making written submissions hereby given that on October 10, 1989,
MCC does not believe that any
should file six copies thereof with the the Midwest Clearing Corporation burdens willbe placed on competition
Secretary, Securities &Exchange ("MCC") filed with the Securities and
as a result of the proposed rule change.
Commission, 450 Fifth Street, NW., Exchange Commission the proposed rule
45834 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
(C) Self-Regulatory Organization's MCC/MSTC will also pay cash-in-lieu of II. Description of the Proposal
Statement on Comments on the baby bonds on any type of distribution
resulting in a baby bond residue, On all, A. ESPDescription.
ProposedRule ChangeReceived from
Members, Partiaansor others. claims made by, or against, MCC/MSTC, the The ESP service enables the trading of
baby bond po.riion will also be paid in the standardized baskets of stocks at an
Comments were neither solicited nor form of caab-in-lieu.I21Questions regarding. aggregate price in a single execution on
received. this bulletin may be directed to your the Exchange's stock Floor." An ESP
Ill. Date of Effectiveness of the Participant Services Representative. trade will result in a transfer to the
Proposed Rule Change and Timing for Kathlee M. Staes, buyer of ownership, of each of the
Commission Action Vice president,MCC/MSTC. component stocks. When the transaction
[FR Doc. 89-25497 Filed 10-30-89; 8:45 am] is completed, the buyer will be entitled
The foregoing rule change has become to all rights attending ownership of the
effective pursuant to Section 19(b)(3] of BILUNG CODE 8010-01"1
basket stocks (including rights to vote
the Act and subparagraph (e) of Rule and receive dividends), and will be free '
1913-4 thereunder. At any time within 60 to sell or hold each stock separately.
days of the filing of such proposed rule [Rel. No. 34-27382; File No. SR-NYSE-89-
05] That .same buyer may later sell the
change, the Commission may summarily basket stocks he acquired, either
abrogate such rule change if it appears indi'vidually or through another ESP
to the Commission that such action is Self-Regulatory Organizations; New
York Stock Exchange, Inc.; Order trade. In order to sell the basket stocks
necessary or appropriate in the public through the ESP service, they must be
interest, for the protection of investors, Approving Proposed Rule Changes
and Notice of Filing and Order identical as a group with the
or otherwise in furtherance of the standardized ESP basket at the time of
purposes of the Act. Granting Accelerated Approval to
Amendments to Proposed Rule sale. If a buyer has sold'individual
IV. Solicitation of Comments Changes Relating to Basket Trading basket stocks and has not separately re-
acquired them, or if changes have been
Interested persons are invited to I. Introduction made to the index sincethe basket was
submit written data, views and purchased, the buyer will havew to
arguments concerning the foregoing. On June 2, 1989, the New York Stock "rebalance" his position by purchasing.
Persons making written submissions Exchange, Inc. ("NYSE" or "Exchange") or borrowing the additional securities so
should file six copies thereof with the filed-with the Securities and Exchange that he can deliver all the current ESP
Secretary, Securities & Exchange Commission ("Commission" or "SEC"), stocks in their proportionate number of
Commission, 450 Fifth Street, N.W., pursuant to section '19(b)(1) of the shares.
Washington, D.C. 20549. Copies of the Securities Exchange Act of 1934 Initially, ESP trading will be available
submission, all subsequent amendments, ("Act"),I and rule 19b-4 thereunder, 2 a for executions of a standardized basket
all written statements with respect to proposed rule change to trade of 500 stocks comprising the "Standard
the proposed rule change that are filed "Exchange Stock Portfolios" ("ESP's"), & Poor's ("S&P") 500 ("S&P 500")
with the Commission, and all written standardized baskets of stocks, on the Portfolio Index." At the commencement
communicaitons relating to the proposed floor of the exchange. The proposed rule
rule change between the Commission change consists of changes to existing
ard any person, other than those that 5 NYSE Rule 800(b)(iii) defines the term "basket"
Exchange rules, the adoption of a new as "a group of stocks that the Exchange designates
may be withheld from the public in "800 series" of rules that apply solely to as eligible for execution in a single trade through
accordance with the provisions of 5 ESP trading, the adoption of guidelines the ESP service 'fid that consists of stocks whose
U.S.C. 552, will be available for inclusion and relative representation in the group
to implement certain provisions of the are determined by the inclusion and relative
inspection and copying at the principal proposed rules, and an ESP fee representation of their current market prices ina
office of the above-referenced self- schedule. Amendments No. 1, 2, and 3, widely-disseminated stock Index reflecting the
regulatory organization. All submissions submitted on September 1 and 13 and stock market as a whole." See also the definition
should refer to File No. SR-MCC-89-12 contained in proposed Rule 431(a)18). NYSE Rule
October 18, 1989, respectively, proposed 801: (1) Limits ESP trading to baskets that the
and should be sumitted by November 21, additional changes to the Exchange's Exchange has approved: 12)'authorizes the
1989. rules, fees and the statements of Exchange to change the component stocks
For the Commission, by the Division of comprising a basket: and (3) requires that a basket's
purposes governing the proposed rule component stocks have been admitted to dealings-
Market Regulation, pursuant to delegated change., for ESP purposes on an "issued", "when issued", or
authority. Notice of the proposed rule change, "when distributed" basis. See also NYSE Rule 804.
Jonathan G. Katz, was provided by the issuance of a 6 Section 12(a) of the act generally prohibits the
Secretary. trading of a security, on a national securities
Commission release (Securities exchange unless the security is requested on the
Exhibit A-MST System Exchange Act Release No. 26908, June 8, exchange, Upon application by an exchange and
1989), and by publication in the Federal Commission approval, however, section 129(f)(1) of
AdministrativeBulletin Register (54 FR 25516, June 15, 1989). the Act and Rule 12f-1 thereunder authorize the
August 3,1989 Commission to extend unlisted trading privileges
Nine comment letters were received 4 ("UTP"l to any security registered pursuant to
To: All participants. regarding the proposed rule change. Sections 12(b) or (g) of the Act. The NYSE's S&P 500
Attention: Dividend manager/head cashier. Portfolio Index currently is comprised of 39 stocks
Subject: Cash-in-lieu of baby bonds.121Due to that are not listed for trading on the NYSE. Pursuant
15 U.S.C 78s[b)(i) (1982.
the increase in bond issues paying in kind 2 17 CFR 240.19b-4 (1989).
to Section 12(f) of the Act, the Exchange has
(PIK), MCC/MSTC will commence to pay submitted applications for UTP in 206 stocks for the
3 In Amendment No. 2, The NYSE proposed, limited purpose of ESP stock basket trading based
cash-in-lieu of the baby bond portions (less among other things, that the Commission initially upon the S&P 500 Portfolio Index, which the
than $1000 principal amount) of this type of approve proposed NYSE Rules"805 and 806 for only Commission has approved by separate order.
distribution. This policy change becomes a 6-month period. In amendments No. 2 and 3, the Because the composition of the market baskets will
effective immediately and will maintain exchange requested accelerated approval of file No. change from time to time as the composition of the
interfacing compatibility with other RIO SR-NYSE-.89-05, as amended. S&P 500 Index changes, it will be necessary for the
members. 4 See notes 59-71, infra and accompanying text. Continued
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45835
of ESP trading, each 500-stock ESP will The NYSE states that even with these requirements. t ' Exchange membersor
have a value
7
of approximately $5 two differences, the S&P 500 Portfolio member organizations registered as
million. Index closely tracks the S&P 500 Index. CBMMs in the ESP market basket wou ld
The S&P 500 Portfolio Index is nearly During the latter half of 1988, the be treated as specialists for margin
identical to the S&P 500 Index, "tracking" error between the two purposes, and would be irititled to good
containing the same stocks and with indexes never exceeded .02 index faith margin treatment forESP
virtually the same capitalization points. transactions effected in their CBMM
weighting. It differs in two respects to Under § 220.18(a) of Regulation T,9 accounts.12
accommodate standardized basket ESP trades would be subject to the 50% , NYSE Rule 807A(e) authorizes
trading. First, the S&P 500 Portfolio initial margin requirement dpplicable to CBMMs to withdraw voluntarily their
Index is designed so that fractional exchange-traded equity securities'. In CBMM registration with proper notice to
share interests that would result from a addition, basket stocks that are acquired the Exchange. The NYSE Guidelines for
basket derived directly from the S&P 500 through an ESP transaction would be the 800 Series Rules- Basket Trading
Index are rounded up or down to the subject to the 25% maintenance margin
nearest whole share. Because of this ("Basket Guidelines") establish a 30 day
requirement set out in NYSE Rule
written notice requirement for
factor, a basket based on the S&P 500 431(c)(1). withdrawal of a CBMM registration. A
Portfolio Index will not contain B. ESP Market Structure. CBMM, however, may not give such
fractional shares.
Second, in order to decrease the 1. Competitive Basket Market notice prior-to the 60th day after its
occasions when rebalancing is Makers.- The Exchange will not use its registration becomes effective, .and
necessary to liquidate a basket position, standard specialist system to trade hence must remain registered as a
the Exchange may not adjust the S&P ESPs, but instead will employ a market CBMM until at least the 90th day
500 Portfolio Index every time S&P structure consisting of "Competitive following the effective date of its
adjusts the S&P 500 Index. At a . • Basket Market Makers" ("CBMMs"), registration. A member or member
minimum, the Exchange will adjust the Exchange specialists, Floor brokers, and organization so withdrawing its CBMM
S&P 500 Portfolio Index each calendar an ESP "Basket Book Broker" ("BBB"). registration will not be eligible to re-
quarter. The Exchange will determine The CBMMs will perform the principal register as a CBMM for 30 days after
when additional adjustments will be market-making function for ESP such withdrawal. Moreover, a CBMM
made to the S&P 500 Portfolio Index in trading,' 0 and registration as a CBMM may petition the Exchange's Department
response.to adjustments made to the will trigger specific market-making of Market Surveillance in writing to
S&P 500 Index. Generally, such obligations. In contrast to the traditional suspend its CBMM market-making
additional adjustments will be made exchange specialist, CBMMs will not be obligations, but only for cause.
whenever an index stock is substituted required to maintain a presence on the In return for the CBMM franchise,
or some other corporate event occurs Floor. They may fulfill theirmarket- member firms undertake certain
that affects significantly an index making functions through their upstairs affirmative market-making obligations
stock's relative capitalization in the S&P ESP terminals, which will provide them set forth in1NYSE Rule 807B. The
500 Index, such as the issuance of stock with the same basket data available to following specific'obligations govern
dividends or special cash distributions. the crowd on the Floor, plus order-entry CBMM market-making activities: (1) A
Whenever an adjustment is made to the capability and identification of their CBMM'may make a proprietary bid or
'S&P 500 Portfolio Index,'all intervening own entered orders. Under proposed offer only in a manner consistent with
changes to the S&P 500 Index will be NYSE Rule 36.20, CBMMs (or CBMM the maintenance of a fair and orderly
incorporated as well.8 nominees) on the Floor also will have market; (2) a CBMM must help alleviate
telephone access to their upstairs desks. temporary disparities between supply
Pursuant to NYSE Rule 807A(a), a and demand; (3) a CBMM must effect
NYSE to request UTP in additional securities in the
future. Section 12(f)(5) of the Act requires that 10 NYSE member or member organization proprietary trades in a reasonable and
days' notice be provided to the issuer of a security may register as a CBMM by satisfying orderly manner in relation to the market
for which UTP has been requested. This such registration requirements as the in general and to the basket market; and
requirement could hamper trading in standardized Exchange may from time to time specify.
market baskets, as the NYSE cannot receive 10 days (4) a CBMM must maintain a
advance notice of changes in the S&P 500 Index.To Registered CBMMs must meet a continuous, two-sided quotation in the
remedy this, the Commission is considering a new minimum $10 million capital basket subject to a specified bid-ask
rule [Rule 12a-71 that will exempt from section requirement over and above any and all parameter. 13The rule authorizes a
12(al. solely for the purpose of market basket other federal and/or Exchange capital
trading, securities included in a standardized
market basket product approved by the Commission I NYSE Rule 807A(d). See also, Rule 15c3-1
pursuant to section 19(b) of the Act. *use S&P's Index Alert System to disseminate current under the Act, 17 CFR 240.15c3-1 (1989); NYSE Rle
7 The dollar value of a basket bid or offer is information about the composition and 325.
determined by multiplying the basket multiplier and capitalization weighting of the S&P 500 Portfolio 12 Under proposed NYSE Rule 43T(e)(2)(Da -
the number of index points bid or offered. NYSE Index. In addition, the Exchange will maintain in i member organization may clear and carry a
Rule 801.10. Pursuant to NYSE Rule 80t(b)(v), the files available to the public current data on the CBMM'sESP trades upon su6hfmiargin as the
term "basket multiplier" is defined as an amount composition of the component stocks and their member and market maker may agree so long as the
which, when multiplied by the current price of a relative representation in the Index and the method resulting margin adequately covers the risk
basket expressed in index points, establishes the of calculating the Index. The Exchange also vill attendant to the Market Functions Account (i.e.,
dollar value of the basket. Sujject to compliance' make available computer disks containing all CBMM account) in which the ESP transactions are
with Rule 19b-4 under the Act, the Exchange shall current data on the state of the Index as well as a 'carried. Moreover, NYSE Rule 807A(g) authorizes a
from time to time specify each basket's multiplier. facility for disseminating current data on the CBMM to have a bank or a member finance its ESP
The Exchange will issue specifications setting forth component stocks through commercial electronic transactions in a special or joint account on a.
the number of shares of each of a basket's mail. margin basis that is mutually agreeable with the
component stocks that comprise a basket based 9 12 CFR 220.18(a) (1989). carrying organization.
upon a formula that determines the percentage of 10. In addition to the CBMMs' principal market- " In addition, NYSE Rule 803 imposes on CHMMs
the total index that each component stock making function for ESP trading, specialists and the obligations comparable to those that Rule 11Ac1-I
represents. NYSE Rule 801.10. 1313perform a secondary, passive ESP market- under the Act, 17 CFR 240.11Ac1-1 (the firm quote
8 The NYSE states that index information will be making function. See notes 17-32, infra and rule) and NYSE Rule 60 impose with respect to
readily available to investors. The Exchange will accompanying text. Contisnijd
45836 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
CBMM to comply with its market- Tier 1" quotation will be derived from to the consolidated tape. 24 Because the
making obligations by having a Floor the weighted summation of the ESP system will calculate and
broker represent and execute orders on prevailing bids and offers for each of the disseminate the aggregate Tier I and-
its behalf. basket's component stocks as Tier 2 quotes only once every 15
The Basket Guidelines include a disseminated through the consolidated seconds, and because of'the human and
general requirement that a CBMM must quotation system, plus the Tier 1 "mini- system time involved in entering an ESP
maintain a spread of not greater than basket" bid and offer for the non-NYSE •trade and disseminating the execution
two index points during normal market component stocks. 19 When a basket notices, the Tier 1 or Tier 2 execution
conditions as the bid-ask parameter. order is executed at the aggregate Tier 1 price indicated in a basket execution
Nevertheless, whenever the spread in quote, upon receiving the basket notice may be superior or inferior to the
the S&P 500 Index quote 14 exceeds two execution notice through the ESP prevailing market quotation at the time
points, the required bid-ask spread can service, a specialist must assign, take, or the specialist receives the execution
equal that spread. supply the number of shares of the notice.'Nevertheless, the execution price
Although CBMMs, like Floor brokers component stock at the execution price indicated in the execution notice always
and BBBs, can represent customer needed to complete one basket and must" will apply. If the execution price
orders, as a general matter, NYSE Rule report the size and price20
as a trade to indicated in the notice is inferior to the
809 establishes that only CBMMs can the consolidated tape. prevailing market price, the specialist
initiate basket trades for their own NYSE Rule 800(b)(xii) defines a "Tier must assign the execution to the bid or
accounts on the Floor or from 2 component stock" quotation as a bid
offer then having priority at the price
terminals. 15 Thus, only CBMMs can or offer for the number of shares of a indicated in the notice. If the execution
6
facilitate a customer's ESP transaction.' basket's component stock necessary to price indicated in the notice is superior,
In addition, proposed NYSE Rule 111(g) comprise three baskets. NYSE Rule the specialist must take or supply the
authorizes a CBMM to initiate 803(e) specifies that the "aggregate Tier necessary shares. The specialist also is
proprietary trades to liquidate a position 2" quotation derives from the weighted
required to take or supply the necessary
in a component stock that the CBMM summation of the prevailing bids and
shares when the size of the interest on
established through basket transactions offers for each of the component stocks the book or in the trading crowd at or
in the same trading session, whether necessary to fill three baskets, plus the
better than the execution price is
acquired to accommodate customers, to Tier 2 "mini-basket" bid and offer for
insufficient or, in a non-firm market,
meet his market-making obligations, or the non'NYSE component stocks. 21The
aggregate Tier 2 quote represents a bid when it is impractical for him to assign
otherwise. the'execution to the book or trading
2. Specialists. NYSE specialists in the or offer for three baskets, and is 25
designed to operate as a limit off- crowd.
individual stocks comprising the ESP 3. The BasketBook Broker. Under
basket will, in the aggregate, act as one market, away from the Tier 1 quote. The
Basket Guidelines specify that the NYSE Rule 808, the BBB presides over
passive ESP market maker. Whenever all ESP executions, executes orders
all of the basket's component stocks quotes for the component stocks
comprising the Tier 2 aggregate entrusted to him, maintains the ESP
listed on the Exchange are open-for display unit, arranges the opening of the
quotation may each be "auto-quoted" at,
trading, NYSE Rule 803(e) requires that ESP market, presides over the ESP call
the Exchange automatically calculate or e or V4 point away from, the Tier 1
individual quote.2 2 If a basket order is market, maintains a market in mini-
and disseminate through the'ESP system baskets, reports ESP trades to market
executed at the aggregate Tier 2 quote,
at 15-second intervals the aggregate Tier data vendors, and otherwise generally
1 and Tier 2 quotations in 'all basket each component stock specialistmust
assign, take, or supply at the execution supervises the ESP market. Qualified
stocks. 17 price the number' of shares of his members or member organizations may
A specialists's "Tier 1 component specialty stock needed to complete three register as a BBB, e and the BBB
stock" quotation means the price of the franchise may be operated on a
baskets.
best published bid and published offer When the ESP system sends a basket rotational basis. 27 Each BBB must
for a basket's component stock that is execution notice to the component stock arrange to have a member qualified to
listed on the Exchange. 18An "aggregate specialist indicating that a basket order act as a BBB in attendance during all
has been executed at the aggregate Tier business hours.
quotations for individual stocks. Basket quotations 1 or Tier 2 quotation, the specialist must The ESP display unit is maintained by
always will be firm under Rule 803, except when the assign the execution at the execution
basket market is in the call mode. See NYSE Rule the BBB. The display unit on the Floor
816. price to interest on his book or in the provides members in the trading crowd
"The S&P 500 Index quotation reflects the trading crowd in accordance with ESP market data that is also available
mathematical aggregation of all the bid and offer existing stock rules of priority and off-Floor through vendors (i.e., the ESP
quotations of the component stocks multiplied by precedence, 23 as well as report the price last sale price and current best quote,
their respective percentage weighting.
"Pursuant to NYSE Rule 809, a non-CBMM with sizes), as well as the size interest at
member may initiate proprietary basket trades on to them in Rule lhAcl-1 under the Act, 17 CFR each minimum tick away from the
the Floor to offset a basket transaction made in 240.11Acl-1. See also proposed NYSE Rule 104.11A. prevailing bid and offer for the basket.
error or, subject to NYSE Rule 92, a non-CBMM "See NYSE Rule 803(e). See also notes 28-32, Thus, the display unit allows the trading
member on the Floor may accept proprietary basket - infra and accompanying text for a description of the
orders initiated off the Floor. BBB's obligation to supply the Tier I and Tier 2
"lSee NYSE Rule 806. "mini-basket" quotations. 24 See proposed NYSE'Rule 104.11A.
"See proposed NYSE Rule 104.11A. NYSE Rule "'See NYSE Rules 800(b)(iv}, 800(b)(xi], and 25 Id.
803(e) permits specialist participation in the basket proposed NYSE Rule 104A.11A. 25 The BBB may be affiliated with a CBMM, but
market through aggregate Tier I and Tier 2 quotes "See note 30, infra and accompanying test, for a the two units must be separated in accordance with
only when all the NYSE-listed stocks that comprise definition of "mini-basket" quotations. the guidelines of NYSERule 98. See NYSE Rule
the S&P 500 Portfolio Index are open. Thus, no "The Basket Guidelines provide that the 808(h).
component stock specialist participates in the Exchange's Department of Market Surveillance may 27 A BBB may withdraw its registration by
basket market unless all participate. grant requests for wider settings consistent with providing the Exchange's Department of Market
"See NYSE Rule 800(b)(xi). The terms "published applicable ,Exchange Depth Guidelines. Surveillance with 30 days' written notice. NYSE
bid" and "published offer" have the meaning given 2' See NYSE Rules 71 and 72. Rule 808(g).
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45837
crowd to see both the ESP bid-offer (offer) no more than V/ point lower and the lowest offer will have priority.38
spread and the depth of the ESP market. (higher) than that rounded value. The Aggregate-Tier 1 and' Tier 2 bids and
Only the BBB's terminal has both BBB must establish' his Tier 2 bid (offer) offers, however, are accorded priority
execution and confirmation capabilities. no more than Y. point lower (higher) over all other bids and offers at the
All basket executions must be entered than his Tier 1 bid (offer). When a same price. Otherwise, bids and offers
into the system by the BBB, and only the basket order is executed at the displayed on the basket display unit
BBB's data display identifies the aggregate Tier 1 or Tier 2 quotation, the enjoy priority based on the order of
entering member firms. The BBB uses a BBB must take or supply the necessary entry into the ESP service. 39 Basket
terminal to-perform its order entry mini-baskets, at the price indicated in orders will retain time priority once they
function. CBMMs also may enter orders are entered on the display unit, and
the basket execution notice. 3 " Upon the
through- their upstairs terminals. CBMMs intervening trades will not result in a
and brokers in the crowd also may enter execution of a basket transaction, NYSE
rule 808.15 requires the BBB to report for new auction."
orders in terminals near the trading 3. Crossing Orders.Under NYSE Rule
location. If.the CBMM or broker order dissemination, and submit to the
Exchange for comparison, such 805(d), a member may cross'two agency
would result in an execution, then the orders without exposing either side, but
BBB would. enter the execution into the transaction-related information as the
Exchange prescribes.
32 only at a price that is better than the
system. best bid and' offer on the ESP display
The BBB has responsibility for the ESP C. ESP TradingRules.33 unit and only if the crossing price is
limit order "book." NYSE Rule 808(f) announced to the trading crowd. Thus, a
requires a BBB to. execute promptly any 1. Acceptable Orders,Limit Orders. Floor broker or CBMM can cleanly cross
immediately-executable limit orders and the Book. NYSE Rule 802(d] permits customer orders for ESPs anywhere
entrusted to. him at the price shown on only market and limit orders to be, within the prevailing ESP quote, by
the display unit,. in, accordance with. entered on the basket display unit. executing the cross on.the Floor, and
price and time priority, against the Additionally; in contrast to. traditional then givitig it to the BBB. to.enter into the
prevailing contra-side interest until the block trading'procedures,'3 4 the ESP system. '
4
order is filled; and to place promptly any rules provide no special rules to handle
other limit orders on the basket display CBMMs also can enter agency crosses
large "one-sided" stock basket, orders. through their terminals by sequential
unit. Rather,. the rules for ESP trading, provide
In conjunction with specialist entry of each side, although they risk a
participation for purposes of Tier 1 and that orders may be executed against break-up during the time it takes to
Tier 2 basket executions, the BBB acts opposite-side limit orders on the display enter the second side. In either case, if
also- as a'passive market- maker with unit at their displayed prices, in the crossing price is, at or away from, the
respect to those stocks that are not accordance with price and time priority, prevailing bid of offer, the broker or
NYSE-listed. 28 The BBB makes a market until the order is filled, thereby allowing CBMM can execute the cross, only by
in the "mini-basket" 29 by: disseminating a larger buyer or seller of baskets to clearing the book of all quotes that.have
"walk the book" without having to effect priority. Although CBMMs, like Floor
"Tier 1 mini-basket" quotations and
"Tier 2 mini'basket" quotations, ie., the execution at a single "clean-up" brokers and BBBs, can represent
"bids and offers for the mini-basket that price. 35 customer orders, as a general matter,
are related to the markets for the stocks 2..Rulbs.of Priority,Parityand under NYSERule 809 only CBMMs, can
included in the mini-basket in Precedence.For purposes of ESP initiate basket trades for their own
accordance with such parameters as the trading, NYSE Rule 805 makes no' accounts on 42
the Floor or from.
Exchange, may from time to time distinction between proprietary and terminals.
prescribe." 3s The Basket Guidelines customer basket orders; Accordingly, Proposed NYSE Rule 806(a) permits
provide that the. BBB must establish. Tier- ESP priority' rules, based strictly-on time CBMMs' to facilitate a customer's order
1 and Tier 2.quotes; expressed'in 1/s point at a price that is better' than the best. bid
and price, apply equally to agency and
increments either as follows, or pursuant or offer on. the ESP display unit, after
principal interest. 3 6
to such other criteria as the. Exchange's, communicating the facilitation price to
ESP baskets will trade in an. auction other members in the. trading crowd. t
Market. Surveillance. Department may market based on strict time. and price
prescribe.. In establishing his Tier 1 NYSE Rule 806(b)- prohibits another
priority, and traditional rules. of priority' Exchange member from interceding, in.
quote, the BBB'must round the weighted
sum of the bids. (offers) for the: mini- or precedence based on sizedo not the facilitation if theproposed
basket's component stocks down. (up) to apply to ESP trading.3 7 The highest bid facilitation price is only one "minimtum
the nearest Vs point and, must. set his bid variation" (i.e., .01 index points) better
31 NYSE Rule'850820(b}. than the prevailing quote on: the
32 See also NYSE Rule 817.
' A-sdiscussed above,.ESP trading initially, will customer's' side of the market." When a,
be available-for executions of a standardizedbasket 33 See File No. SR-NSCC,-89-08, Securities
of 500 stocks based on.the. S&P 500 Portfolio index, ExchangeAct ReleaseNo..27021 (July 11, 1989), 54
FR 30125"(Jhly 18;.19891, andiSecurities Exchange a8NYSE Rules.805(a) and 805(c).
which is nearly identical to the S&P 500 Index.
Act Release: No. 27207 (September 1,.1989);,54 FR 39 NYSE,Rules,805(jb)(i)'and 805(c).
Because the-S&P 50.Portfolio-lndex currently is 40 NYSE Rules.805(b)(iiil and 805{c).
comprised of 39 stocks that are not listed for trading 37a59'(September 13, 1989 for.'aidescription of the
clearance!andsettlement rules applicable to'ESPs. 4 As stated:supra, note: 3, the Exchange. has
on the NYSE. UTP will be necessary in order to.
trade these non-NYSE-listed issues as part of an See also NYSE:rule 817. proposed'that the. Commission approve Rule,805 for
ESP stock.basket . See discussior at note 8, supra. '4 See; e.g.. NYSE'rulb 127: only a-sixrmonth period:.
29 NYSE Rule 800(b}{ix) defines the term "mini- a'-'See'NYSE; Rule 808(fl. 42 See note 15: supra and accompanying text.
basket" as "h group of'stocks that consist of those '6 The Ekchange has proposed that the 4 The-Exchange hias' proposed that'ther
of a basket's stocksthatare not listed for trading on Commission.initlly approve Rule 805 for only a Commission initially approve NYSE Rule 806 for
.
the Exchange and whose inclusion and relative six-month period. Once the Exchange has only a six-monthperiod Oncethe E'kchange'has
-
representatibn ihthe group aredetermined!by'the experience in the operation of Rule 805 in the basket experience in the operation of Rule 806 in the basket
inclusion and relative representation of their current market, the Exchange will propose permanent market: the, Ekchange'willl propose permanent
market pricesin the stock index from which the approval of Rule 805, either in its current form or approval"of. Rule 806, either.'in. its current form or
basket is.derivech" modified in light ot market experience. modifiedin light of market experience.
30 NYSE Rule.808:20{a.}. 37 See, e.g.. NYSE Rules 71 and 72. 4 See,NYSE Rule 802[5)}
45838 - 4 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
facilitation is more than the minimum In addition, under Rule 816(b) and the of the Exchange's Senior Officers or
variation from the prevailing quote, Basket Guidelines, a call market is Floor Directors, the BBB may reopen the
NYSE Rule 806(b) permits another mandatory if more than 30% of the auction market with a quotation.5"
member to intercede in a CBMM's weighted value of the index is not open 7. Openings and Reopenings. NYSE
facilitation trade by taking or supplying for trading and trading in the related, Rule 815 permits the basket market to
all of the baskets that the customer futures contract has reached the daily open or reopen only at a single price,
seeks at a price that is better for the price limit (or trading in the contract has and requires that all market orders be
4. Split than
customer the facilitation price. halted). Under NYSE Rule 816(a) and the executed at that price. All market orders
Orders. NYSE Rule 802.30 Basket Guidelines, the Exchange's are matched. If there is an order
allows CBMMs to accommodate a Senior Officers or Floor Directors may imbalance, then the BBB will attempt to
customer's need for a customized basket initiate a call market if market satisfy the imbalance with the limit
through "split" orders that enable a conditions make it unreasonable to orders on the book at a single price,
CBMM to participate on the same side conduct basket trading pursuant to unless the imbalance is significant
of the transaction with a customer: In a regular auction procedures. The Basket enough to warrant entry into a call
"vertical split", a customer takes or Guidelines establish standards that market.
supplies all shares of specified NYSE officials may consider in making
D. price Allocations.Member firms
component stocks of a basket and the such a determination, including an
have indicated to the Exchange that
CBMM t6ikes or supplies the remainder. unreasonably wide spread in the S&P
500 Index quote or the triggering'of the they will use the Institutional Delivery
A CBMM may not take or supply more 49 ("ID") System of the Depository Trust
than 100 stocks when vertically splitting NYSE Rule 80A "sidecar"provisions.
Under NYSE Rule 816(b), the existence Company ("DTC") to confirm
an order for a customer, whether as part
transactions with customers and to
of an agency cross under Rule 805 or as of a call market suspends the
effect customer settlement. 54 Because
a facilitation under Rule 806. 4 5 In a obligations of specialist, BBBs, CBMMs
the ID System requires that member
"horizontal split", a customer takes or to establish, maintain, and communicate
firms provide individual prices for each
supplies a specified percentage of each component stock, mini-basket, and
component stock's basket shares, basket quotations. of the basket component stocks, NYSE
rounded to the nearest whole share, and The BBB must conduct the call market Rule 817.20 provides a methodology to
the CBMM takes or supplies the residual as follows. At the commencement of a allocate a basket execution price to
percentage of every stock in the basket. call market, the BBB will begin to collect each of the basket's 500 component
5. Index-on-Close Orders. The indications of interest in the basket and stocks 5. The NYSE believes that the
Exchange's proposed "Index-on-Close" enter them into the display unit. Within single price allocation methodology
("IOC")order would enable baskets to five minutes of entry into the call mode, should avoid confusion among member
trade at 4:00 p.m. at the not-yet-known the BBB must disseminate the initial firms and.institutional users of the ESP
closing yalue of the S&P 500 Index. IOC indications of interest to the Floor and product. The methodology would
.orders may be placed at any time during to the CBMM terminals. 50 The BBB must allocate an execution price based on the
the day prior to the close of trading, but update the indications whenever relative representation of each of the
only as crosses. Because the closing S&P appropriate, but at least every fifteen component stocks in the basket, as
500 Index value is based on the minutes, even if only to indicate tha t determined by the closing price of each
weighted sum of the closing prices of the there is no new interest." The BBB may stock on the day prior to trade date.5 8
500 component stocks, the IOC trade execute any matching interest that the Where a customer buys or sells, a basket
price will be appended and indication process elicits at the end of that contains fewer than all 500 stocks,
disseminated after the 4:00 execution of each fifteen-minute cycle. If the match the calculation will exclude the omitted
46
the TOC orders. consists, of paired market orders, a Floor component stock(s).
6. TradingHalts and Call Markets. Governor must determine that the , E. Fees. The ESP fee schedule
ESP basket trading would halt under proposed execution5 2price is fair under proposes fees intended to recover the
NYSE Rule 816(b) when market activity the circumstances. Exchange's costs in developing and
triggers the Rule 80B "circuit The BBB may not reinitiate the operating the ESP market. The initial
breakers". 4 7 Moreover, under NYSE continuous market until the later of (1) fees are $200 per unit (i.e., per basket)
Rule 816(b), the Exchange's Senior fifteen minutes after the dissemination per side, $125 per unit per side for
Officers or Floor Directors can halt ESP of the initial indications or (2) five crosses, and an access fee of $12,000 per
trading when the condition of the minutes after the most recent year in advance for each CBMM
48
market so warrants. dissemination. Following the approval terminal line.
F. Purpose and Benefit. Given the
,1NYSE Rule 802.40. while'such a trading halt was In effect, basket increased institutionalization of the
40See NYSE Rule 802.20. transactions could not take place until the stock market and the growth of index-
47 NYSE Rule 80B, the Exchange's "circuit suspension of trading ended.
49 NYSE Rule 80A, the "sidecar" rule, imposes related trading strategies, the Exchange
breaker" rule, provides procedures for one-hour
trading halt in'.the trading of all securities after a certain trading restrictions on orders entered into has proposed the ESP service to address
250-point decline in the Dow Jones Industrial the NYSE's automated order-routing system, the the need for an institutional stock
Average ("DIA") and a two-hour trading halt after Super Designated Order Turnaround ("SuperDOT}
a 400-point decline. See Securities Exchange Act System, during period of significant market declines. 5 NYSE Rule 816(a).
Release No. 26198 (October 19,1988), 53 FR 41637 The rule applies when the price of the S&P 500
futures contract traded on the Chicago Mercantile 54 See notes 88-92, infra and accompanying text
(order approving NYSE. American Stock Exchange,
Chicago Board Options Exchange, and National Exchange.falls 12 points below the previous trading for a discussion of the Exchange's request for
Association of Securities Dealers circuit breaker day's closing value. Once activated, program exemption from the trade confirmation requirements
proposals). trading-related market orders entered into of Rule lob-10 under the Act, 17 CFR 240.10b-10
4s The Commission notes in addition that the SuperDOT are routed into a separate file. See (1989).
practical effect of a Commission-ordered Securities Exchange Act Release No. 26198 (October 55 See also NYSE circular, dated September 11.
19, 1988), 53 FR 41637. 1989.
suspension of trading in a basket component stock
pursuant to section 12(k) of the Act, 15 U.S.C. 781(k), 10 NYSE Rule 816(a). 66 See File No. SR-NSCC-89-08, supra note 33. for
would be a halt in ESP basket trading. Because 6, !1. further explanation of the clearance and settlement
transactions in such a security would be prohibited 52 NYSE Rule 816.10. rules applicable to basket transactions.
Federal Register / Vol. 54 No. 209 / Tuesday, October 31, 1989 / Notices 45839
basket trading system with. physical commended the NYSE for developing: notice,. that execution should receive a
delivery of the underlying component the ESP service, and asserted that the better price in the equity pieces
stocks. The Exchange contends that the ESP service- will have a positive' whenever 'available at the equity point-
ESP service will-address' market influence on liquidity in the markets as of-sale. ' -"
inefficiencies resulting from the an efficient execution mechanism for (6). The,AFB- contends&that the ability
fragmented executions currenfly 57
trading a standardized basket of stocks of a larger buyer-or seller-to
accorded program trading, strategies. at a single, aggregate, price on the Floor disadvantage the limit orders on the
The Exchange believes that the of the NYSE. book essentially with prior knowledge
prop osed ESP market structure is A third comment letter was received
that inferior-priced prints-will take place
designed to attract and concentrate the from the Alliance. of Floor Brokers
("AFB"), 62 whose membership is -is counter to existing block trading rules-
"block positioning" 58 capital necessary
comprised predominantly of NYSE Floor Specifically, the AFB argues that this
to support ESP trading. The Exchange
brokers. In general, the AFB letter type. of dealing, is predatory when the
further believes,-that ESP trading will
criticizes certain aspects of the ESP prior-knowledge is shared with a market
reduce. the transaction and price impact
costs associated, with current index- market structure as anti-competitive. maker who then takes part of the contra
related trading strategies through the The. AFB also, believes that ESP trading side at a clean up price after intervening
ESP service's. single, aggregated may exacerbate structural market risks. public orders have been disadvantaged.
execution function. Finally, the that already exist because of the Accordingly, the AFB believes some
Exchange states that the ESP'trading unequal regulatory treatment accorded form of block trading protection is
service. may reduce the price volatility derivative. products. The AFB argues necessary for-ESP transactions.
associated with institutional demands that,, in, comparison. to existing equity (7) The AFB agreed with the
and selling pressures that their index- auction market trading procedures,, the Exchange's. logic supporting its-request
oriented trading strategies currently alternative trading, procedures for short sale relief when the specialist
transmit to. individual component stocks envisioned by the ESP system ultimately is required to participate in an execution
and which may translate into overall would. result in,a fragmented securities and the specialist is short the stock. The
market. volatility. itarket structure with increased market AFB also supported the Exchange's
IL, Comments Received. The volatility.. In a report appended to its. request for short sale reliefwhen a
Commission. received nine comment comment letter, the AFB made the CBMM supplies stock on a minus or
letters in response to its, request-for following specific, comments. zero-minus. tick because the prices of the
comments- on the proposed rule, change. (1) The. AFB criticized the lack. of individual equity prices are priced
The. Commission received"a. comment compatibility of the:ESP rules package independently. The AFB, however,
letter from the!Commodity Futures with traditional auction market concepts criticized the NYSE's request.to extend
Trading. Commission ("CFTC") 5 9 embodied. in,NYSE. Rule. 92 that. attempt short sale-relief to the basket point-of-
stating that ESP transactions. are "spot to eliminate conflicts. of interest that, sale as a potentially disruptive
transactions in securities", and therefore may arise man auction market deregulatory initiative. The AFB also
are not "contracts. of sale of a environment.. The AFB argued that a claims that such,relief would foment a
commodity for future delivery under CBMM should. be. required, to.hand off regime of anti-competitive, and
section. 2(a)( l(A), of the-Commodity all customer orders. to an independent inequitable short sale regulation in
Exchange. Act.," 60 agent if the CBMM seeks to continue to comparison to the regulation of the short
• The Commission also received a trade for its. own account.- 63 selling of individual stocks. Specifically,
comment letter from, the Chicago. Board (2) The AFB contends thatparity
the AFB'posits the example of shorting
of Trade ("CHOT"),, a commodities. should be allowed at the. basket point- an industry group (i.e., oil stocks).
exchange registered with the CFTC. as a of-sale, because absolute time and price through ESP short sales in a fashion that
contract markeL 6 ' The CBOT letter priority will serve to dampen
is otherwise not available in the retail"
participation by portfolio managers if
equity market.
11 "Program trading" generally is defined as the they must reveal their trading intentions
in advance. Richard. Ney &Associates Asset
simultaneous entry, but separate execution, of
multiple orders together in a package trade. NYSE (3) The AFB argues that all' crosses,. Management Inc.. ("Ney"), an investment.
Rule 80A defines "program. trading" as-"either (-A) whether agency to agency or principal to management company,, criticized the
index arbitrage or-(B} any-trading-strategy invol.ving configuration of ESP transaction
the related purchase or sale of a 'basket' or group of
agency, should be subjject to price-
15 or more stocks having a total wlue of $1 million. betterment at the basket point-of-sale reporting:6 4 The Commission also
or more. Program trading includes the purchases or and that all brokers, not just CBMMs,. received letters from Thomas C. and
sales of stocks that are part of a coordinated trading- should' be. permitted' to effect facilitation Ruth M.. Roberts ("the Roberts") and
strategy,. even: if the purchases or sales are neither from Dr. Burton Roger ("Dr. Roger"),
entered or executed contemporaneously, not, part of
crosses.
a tradingstrategy involving options or futures (4) The AFB' argues for more basket individual investors residing in
contracts on an index stock group, or options on any order interaction with the "trading California, who similarly criticized the,
such futures contracts, or otherwiserelating to a crowd," and, contends. that the BBB Exchange's proposed transaction
stock market index." reporting plan as it would apply to the
should be allowed. to stop basket
58 Section:3(a)(38) of the-Act, 15 U.S.C. 78c[a})3t},
defines the term "market maker" as "any dealer commitments, whenever appropriate in basket's constituent stocks.6 5
acting in the capacity of at block positioner." NYSE the hope. of achieving price
Rules 97 and 127'generally govern the block- improvement. 64 See letter from Richard Ney, Richard Ney &
positioning operations of Exchange member (5)-The AFB contend's that when a Associates Asset Management, Inc., to-Richard G.
organizations. specialist receives a basket execution Ketchum, Director, DiVision of Market Regulation,
59 See letter from.Jean A. Webb, Secretary,.CFTC;
dutedluly 5, 1989: .
to Jonathan G. Katz. Secretary, SEC,. dated.August 65 See letter from-Thomas G. and-Ruth M:
17; 1989: 62See letter from-Michael D. Robbins,.President. Roberts, to the.Hon Esteban E. Torres, U.S: House
60 7 U.S'C. 2(a)('lq(A} ('1982). AFB, to Jonathan G. Katz, Secretary, SEC, dated' of Representatives, dated August 10. 1989, and letter
61 See letter from-Thomas R Donovan Presidbnt lul 13, 1989. from Burton Roger,.M.D., to the-lion. Howard L.
and Chief ExecutiveiOfficer,,CBOT. to JonathamG. 03 Namely,, customer orders andi proprietary. Berman, U'S. Flouse.of Representatives, dhted
Katz. Secretary; SECdated July, 17, 1989. orders areyaccorded, equal executionprionritis. August 19, 1989
45840 ' Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
Specifically, Ney, the Roberts, and Dr. the Exchange notes that ESP trading is priorities imposed by the ESP rules. The
Roger criticized the lack of real time structured with the goal of providing Exchange contends that no exposure is
price and volume reporting for the ESP institutionial customers and member necessary for agency crosses because
stock components when NYSE firms with a trading vehicle suited for an both sides of the order will receive
specialists do not participate in a basket institutional, composite-asset market. prices better than the prevailing
execution. Tucker Anthony, Inc. The Exchange believes that the rules quotations in the market. The Exchange
("Tucker Anthony"), an investment supporting ESP trading are designed further contends that the lack of
management firm,86 criticizes the ESP appropriately to accommodate the exposure for principal crosses when the
system as an institutional and particular needs of the portfolio market price to the customer is a minimum tick
proprietary trading vehicle whose in a fair and competitive market inside the bid or offer is reasonable
trading will increase market volatility. structure. because the customer receives an
Tucker Anthony also criticized the In response to the specific issues immediate execution at the best
NYSE's proposed exemptions from the raised in the comment letters, the available price. In addition, it
short sale rule, and expressed concern Exchaige made the following comments. encourages market makers to bring
regarding the operational aspects of (1) In response to the concern that the order flow to the Floor because it
basket trading. proposed ESP market structure would provides them with certainty in
The eighth comment letter was from - require CBMMs to make markets while executing crosses, so long as they are
Junius W. Peake, a securities trading allowing them to handle customer prepared to provide the customer the
systems consultant, and Morris orders, the Exchange contends that if best possible price.
Mendelson, a finance professor ("Peake- CBMMs cannot trade for their own In response to the argument that all
Mendelson letter"), who together accounts while holding customer orders, brokers should be able to effect .
question the overall need for the ESP they would either have to cease facilitation crosses, the Exchange stated
trading system, and argue that the ESP providing two-sided quotations while its belief that allowing only CBMMs to
service is an inefficient protfolio holding customer orders, or they would effect proprietary crosses is an
execution system that would lead to have to handoff all of their customer appropriate limitation when viewed in
market fragmentation and exacerbated orders. The Exchange concluded that the the overall context of the ESP market
price discontinuities.6 7 The Peake- former alternative would lead to structure. In particular, because market
Mendelson letter also requests a more inadequte support for the product, while makers will assume significant
complete vetting of the market structure the latter alternative ignores a obligations and will incur significant
implications of ESP trading in a public fundamental market reality, namely, costs in helping to maintain a fair and
hearing. The ninth comment letter was that the potential ESP market-making orderly market, the Exchange believes it
firms are the very'same firms that are is reasonable to limit to CBMMs the
from the John Hancock Freedom
likely to handle customer orders. ability, to effect facilitation crosses. The
Securities Corp. ("John Hancock
Securities letter", 68 a holding company Accordingly, the Exchange struck a Exchange believes that without this
for three broker-dealer subsidiaries that balance between the two competing. limitation it would be difficult to .attract
are NYSE member organizations. The 'concerns by proposing a basket market sufficient market-making expertise.
*John Hancock Securities letter reiterated structure that allows a market maker (4) The Exchange notes, in response to
several criticisms raised by the AFB,6 9 holding customer orders to maintain a the argument for more basket order
including concern over the proposed two-sided quotation, while executing interaction with the trading crowd, that
customer orders against those the ESP rules provide for price .
strict price and time priorities applicable
quotations and otherwise trading in improvement at the basket point-of-sale:
'toESP trading and the proposed
furtherance of its affirmative because orders'are "flashed"
regulatory treatment of ESP short sales.
obligations. electronically to all market participants,
The Exchange generally addressed (2) In response to the contention that 'both upstairs and Floor traders can
these commentator's concerns and other parity should be allowed at the basket interact with that order and improve the
issues raised by Commission staff in a point-of-sale, the Exchange contends best bid or offer in the system.
letter to Commission staff ("September C that absolute time and price priority is (5) In response to the argument for
letter"), which furthe r explains the essential to attracting upstairs capital to price improvement at the equity point-
rationale underlying ESP trading and its the ESP basket market. The Exchange of-sale, the Exchange argues that the
accompanying market structure, as well states that strict priorities are necessary issue of possible price improvement at
as clarifies its requests for relief from to assure upstirs market makers that the equity point-of-sale in a basket
certain trading practice rules of the an order will be executed when the execution that involves Tier 1 or Tier 2
Commission.7 0 In its September 6 letter,
market reaches the specified price, thus specialist participation arises because
providing them with an incentive to the specialist's aggregate quotations are
* See letter from John H. Goldsmith, President place and leave orders in the system. updated only every 15 seconds, and an
.and Chief Executive Officer, Tucker Anthony, to Mr
" The Exchange notes that the minimum unavoidable delay occurs between the
John Phelan, Chairman of the Board. NYSE, dated
July 28, 1989. ESP tick is 1/100th the size of the tick in basket execution and the integration of
67 See letter from Junius W. Peake Chairman, Tht the average Exchange-traded stock, and that execution in the markets for the
Peake/Ryerson Consulting Group, Inc.. and Morris should provide traders ample room to component stocks. As a result, when a
Mendelson, Professor of Finance, The Wharton compete by betttering the market. specialist receives a basket execution
School University of Pennsylvania, to Jonathan G.
Katz, Secretary, SEC, dated September 1.1989. (3) In response to the suggestion that notice, there could be a quotation In the
. 08 See letter from John H. Goldsmith, Chairman all crosses should be subject to price stock superior to the price specified in
and Chief Executive Officer, John Hancock Freedon I betterment at the basket point-of-sale, the notice. The Exchange contends that
* Securities Corporation, to Jonathan G Katz, the Exchange stated that it believes that it is reasonable to award the benefits of
Secretary, SEC, dated October 12,1989.
09 See supra note 62.
the limitations on when ESP crosses the improved price to the participant in
76 See letter from lames E. Buck, Secretary. must be exposed for price improvement the market for the component stock.
NYSE, to Mary Revell, Branch Chief, Division of are reasonable when viewed in the who is much more likely to be a retail
Market Regulation, SEC, dated September 6. 1989. context of the absolute time and price customer interested in receiving the best
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45f41
price for his order. The Exchange further IV. Discussion. could provide efficiencies associated
contends that such a resoluton is a with effecting transactions in a portfolio.
A. Introduction of securities, as opposed to individual.
reasonable one for a. basket customer
who may view a speedy.execution with, After careful consideration of the stocks. This could add an.additional
price certainty as more important than a Comments received, applicable statutory layer of liquidity and concentrated
relatively, insignificant improvement in provisions, and relevant policy capital to the market in order to help
the price of a.$5-million basket. considerations, the Commission believes absorb the volume and velocity of
(6) In response to concerns raised that the NYSE's basket trading proposal trading associated7 with index-related
regarding the ability of large buyers or is reasonably desinged to prevent trading strategies .
sellers. to.walk the book, .the Exchange fraudulent and' manipulative acts and Furthermore, because ESP market
notes that the ESP basket market is, an practices, promote just and equitable basket will, be traded on the Exchange
institutional market comprised of the principles of trades, provide for an Floor at a single location inan "open
equivalent of large block orders equitable allocation of fees, and is book" environment, members in the
competing for execution according to consistent with the.maintenance of fair crowd will be able: to. see both the ESP
strict price and time priorities. and orderly markets. For these reasons bid-offer spread and the depth of the
Accordingly, the Exchange believes that and for the additional reasons set forth ESP market, i.e., the size of the buying
ESP trading does not require a below, the Commission finds that and/or selling interest at each minimum
approval of the Exchange's proposed tick away from the prevailing bid and
regulatory structure modeled' on its
retail auction market which is designed rule change relating to stock basket offer for the basket. Program trading
to integrate both retail and institutional trading is consistent with the order flow entered into the system and
order flow and to protect retail order - requirements of the Act and the rules- imbalances resulting therefrom thus will
and regulations thereunder applicable to be disclosed, thereby ameliorating
flow from"inferior-block executions at
"gap" prices --7 r a national' securities exchange, and, in curent market information limitations in
(7) Finally, in. response to concerns particular, with the requirements of identifying program trade executions (or
sections"6(b)' (4) and. (5).72 overhanging program orders) in the
raised about the NYSE proposal for
relief from the short sale rule, the B. Benefits of Market Baskets individual stocks; 77 Finally, by creating
Exchange notes that ESPs, much like a trading vehicle for an aggregated
Both,the Division of Market
.options and futures, will be priced basket of standardized portfolios of
Regulation's Report on. The October stocks in a single execution with
*derivatively. Because the Exchange also 1987 Market Break "' and an NYSE-
expects ESP trading to be somewhat minimal "execution slippage," 78 the'
commissioned Study entitled An
discontinuous, with potentially long ESP trading system will provide an
Overview of Program'Tradingand Its.
intervals- between trades, the Exchange efficient mechanism to trade, clear and
Impact on CurrentMarket Practices
believes that there is not likely to be settle stock baskets.
("Katzenbach Report") recommend,
much of a price relationship between the among other things, the listing and The Commission believes the ESP
last tick in the ESP market and the, trading of'a basket of'stocks on an. trading will provide institutional
actual direction of market movements in exchange as a.means to. enhance investors; with a cost efficient means to
the ESP market and the actual direction efficiency and, possibly, the market's make investment decisions based on the
of market movements in the component ability to,absorb' institutional portfolio direction of standardized measures of
stocks. The Exchange contends, trading.7 4 As noted in the Staff Report, stock market segments and the stock
moreover, that it is impractieal to apply the creation of one)or more. posts for the market as a whole, and may provide
the short sale rule at the basket point-of- stock market participants several
purpose of trading actual baskets or
sale since it will,not be' easy to portfolios!of stock could alter the advantages' over existing methods of
determine. when a person is ".hort' a dynamics of program trading, because effecting progam trades of stocks and
basket that contains 500 component the availability of such, basket trading transactions in portfolios of securities.
stocks. Thus, the Exchange reasons that could, in effect; restore program trades The Commission recognizes that the ESP
it is impractical and competitively to more traditional block trading market will have different trading
disadvantageous to apply short sale techniques."5 The' Staff'Report noted' dynamics than the market for the-
restrictions at the basket point-of-sale. further that, while arbitrage ultimately individual stocks, and that the
In response to.the suggestion that a would flow to individual component
market participant might use the market stocks, many institutional investors-and Iid. Similar ideas have been discussed in).
basket to-short a particular industry member firms effecting arbitrage Grundfest "WoLd More Regulation Prevent
group, the Exchange counters that the Another black Monday?", Address before the
transactions could focus their equity CATO Institute Policy Forum on July 20, 198S, at 13-
risk inherent in such a trading strategy transactions at the basket post where 14 (available at the Commission); H. Stoll and R.
is prohibitively expensive, because the the market makers and trading crowd Whaley, "Program'Trading and The Monday
trader would be required to cover the massacre" (November 4.1987) (available at the
unwanted stock short positions at a Owen Graduate School of Management, Vanderbilt
72 15 U.S.C. 78f(b) [4) and (5) (1982). University); and 11.Stoll, Portfolio Trading, Working
price no higher than the price at which it 73 SEC, Division of Marketi Regulation, The Paper No. 87-14 (September 1987) [available at the
sold the stocks. Moreover, the Exchange October 1987 Market Break [February 1988) ("Staff Owen Graduate School of'Management, Vanderbilt
notes that the general anti-fraud rules, of Report"). University).
the Exchange and. the Commission will 14 See also, Securities and Exchange Commission 17 The NYSE's concept of an open, fully-disclosed
apply fullyto ESP trading, and that the Recommendations Regarding the October 1987 book to support ESP trading is consistent with
Market Break contained in-Testimony of David S. suggestions offered by various studies of the
Exchange's. detailed surveillance Ruder, Chairman, SEC, Before the U.S. Senate October.1987 Market Break. See. e.g., the Brady
procedures will-operate to. capture any Committee on Banking, Housing, and Urban Affairs, Report; supra note 75 at vii. See also Wells Fargo
such anomalous trading patterns that on February 3, 1988. Investment Adisors, Reflections on the Stock
may evidence a manipulative or 7- Staff.Report at 3-18. For a detailed'description Market Crash of October 1987 [January 25,1987).
78 "Execution slippage" may be defined as the
otherwise fraudulent trading strategy. of current block. trading.mechanisms. see the leport
of the.Presidential.Task Force on larket adverse price impact. that currently accompanies the
Mechanisms,,at_VI-9to.VI-71 (January 1988) fragmented. execution of program trades. See e.g..
71 See NYSE Rule 127. ["Brady Report"). the Katzenbach Report at note 29.
45842 Federal Register'/ Vol. 54, NO. 209 / Tuesday, October 31,'1989 / Notices
regulatory structure for individual be able to facilitate customer orders Commission finds that it is consistent
stocks may not be best suited for ESP through proprietary trading on the -with the Act for the NYSE to build in
trading. For the reasons discussed: Floor. 0 Thus, only CBMMs may effect' necessary incentives to ensure active
below, the Commission finds that the proprietary cross transactions. market-making participation.
deviations from this structure proposed In response to concerns voiced by the Accordingly, the Commission has.
by the NYSE reasonably are designed to commentators that these provisions determined to approve,.on a temporary
promote just and equitable principles of were anti-competitive, the Exchange six-month'basis, the NYSE's limitations
trade and fair and orderly markets. contended that such a structural tradeoff on proprietary trading contained in
Furthermore, the Commission believes was necessary to attract sufficient NYSE Rule 806. If during the next six
that ESP trading will not lead unduly upstairs market-making participation.81 months, however, ESPs become actively
toward a more fragmented and volatile In return for this trading "monopoly", traded no artificial market-making
market, because the "open book" the Exchange emphasized that CBMMs incentives should be necessary and the
environment, customer crossing and will be required to undertake specific Commission would expect the NYSE to
facilitation rules, and the combination of affirmative obligations in connection revise its rules to permit basket trading
'both "auction" and' "dealer ' attributes with their ESP market-making * and facilitation by all member firms.
in the trading system for ESPs are operations. For example, Rule 807 E. Customer ProtectionRules and Rules
consistent with the dev6lopment of an establishes affirmative market-making
open and competitive national market obligations, including the requirement to of Priority,Parityand Precedence
system. maintain a fair and orderly ESP market. 1. Customer Protection
C. Margin Moreover, CBMMs must help alleviate
temporary disparity between supply and NYSE Rule 92 protects against
As discussed above, ESP trades would demand through proprietary trading conflicts of interest when a member
be subject to the to percent initial operations. In addition, CBMMs also holds a customer order and trades for a
margin requirement applicable to must maintain a continuous, two-sided proprietary account by imposing specific
exchange-traded equity securities. firm quotation in the basket. requirements on how the member must
Market makers who are designated as The Exchange also emphasized that price and handle customer orders in-
CBMMs 'in the ESP market basket would CBMMs will incur the terminal and these.circumstances. Under NYSE Rule
be treated as specialist for margin other systems and personnel costs 800(c)fi), however, a member who holds
purposes, and would be entitled to good necessary to support their market- or has knowledge of a customer's
faith margin treatment for ESP making function. Furthermore, once unexecuted order for one or more of a
transactions effected in their CBMM registered, operation of a CBMM basket's component stocks still may
account. franchise demonstrates a significant -initiate proprietary basket transactions,
Because the purchase of an ESP capital commitment to the ESP market despite the otherwise contrary
results in the physical delivery of eich because a CBMM will not be permitted application of Rule 92. Thus, while
stock composing the basket, Regulation to withdraw its registration except on 30 holding customer orders, the ESP rules
T requires a 50 percent initial margin days' notice,8 2 and if a CBMM does allow a market maker to maintain a
requirement. For the same reasons, the withdraw its registration, it will not be two-sided quotation, executing customer
Commission believes that it is permitted to re-register for 30 additional orders against those quotations and
appropriate to apply the NYSE equity days. otherwise trading in furtherance of its
security maintenance margin The Commission believes that the affirmative obligations. The Rule 92
requirement of 25 percent to ESPs. unique capabilities provided to market restrictions apply when a CBMM seeks
The Commission also finds that, in makers in the ESP market raise difficult to trade for its own account at the then-
light of their affirmative market making questions under the Act. On the one prevailing bid or offer (if not pursuant to
obligations, the NYSE proposal hand, the limitations on direct its affirmative obligations), or to break
83
appropriately treats CBMMs as proprietary facilitations by other NYSE up a facilitation.
"specialists" for the purpose of receiving
members may discourage their use of The Commission believes that the
.exempt credit treatment under ESPs, thus reducing liquidity. On the exceptions proposed for CBMMs are
Regulation T and U. 79 In order for other hand, the NYSE is attempting to appropriate measures to facilitate
CBMMs to qualify for exempt credit, provide, through CBMM participation, a liquidity in an institutional market.
however, the Commission believes that continous basket'trading market, Because of the size of the ESP's unit of
it is necessary for CBMMs to segregate something which has heretofore been trading and the screen-based trading
market-making positions from other unavailable. It is difficult to predict system employed, ESPs require the
positions (e.g., proprietary and arbitrage whether the market will expand and be participation of large, well-capitalized
transactions). characterized by active basket trading, upstairs firms. Because these firms are
D. Agency Crosses,ProprietaryTrading or whether trading will be sporadic. At integrated, any restriction on their
and Customer Facilitations least in its initial stages, when the latter ability to handle customer orders almost
assumption may be correct, the certainly would discourage them from
Rule 805(d) provides that any member
registering as CBMMs. While the
or member organization may cross
"A non-CBMM member may initiate proprietary Commission is concerned over the
agency orders. As discussed above,
basket trades on the Floor to offset a basket potential that CBMMs might prefer their
however, under NYSE Rules 806 and 809 tra'nsaction made in error, however, or. subject to
only CBMMs can initiate basket trades own proprietary order over a customer
NYSE Rule 92, a non-CBMM member on the Floor
may accept proprietary basket orders initiated off order or "frontrun" that customer order,
for their own accounts on the Floor or
the Floor. the Commission recognizes that
from terminals, and CBMMs alone will
61NYSE September 6 letter, supra note 70. effectively the same potential for abuse
2
" In addition, because the member or member exists today when upstairs firms
. 7 The BBB also will be entitled to exempt credit. organization may not give such notice prior to the execute programs through the N YSE's
but only with respect to transactions entered into 60th day after its registration becomes effective; a
pursuant to Its role as passive market maker in the CBMM must continue to function as such for at least
"mini-basket." 00 days. See Basket Guidelines. . 631See supra note 44.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989' / Notices 45843
Designated Order Turnaround ("DOT") F. PriceImprovement and Price and Tier 2 specialist executions are
system. The Commission is satisfied that Protection appropriate because it is reasonable to
the NYSE's present surveillance and As discussed above,.the ESP rules award the benefit of any improved price
examination programs are capable of provide variationsfrom the usual NYSE to the participant in the market for the
detecting any such improper trading., market structure in several other component stock, who is much more
The Commission also notes that the instances to accommodate ESP trading; likely to be a retail customer interested
Rule 92 restrictions still apply when a First, the rules for ESP trading allow in receiving the best price for his order,
CBMM seeks to "hit" the then-prevailing orders to be executed against opposite- and because a basket customer is likely
bid or offer for a proprietary account (if. side limit orders on the display unit at to view aspeedy execution with price
not pursuant to its'affirmative their displayed prices, in accordance certainty as more important than a
obligations), orto break up a with price and time priority, until the relatively insignificant improvement in
facilitation. Accordingly, in light of the order is filled, thereby allowing a larger the price of a $5 million basket.
unique market structure of ESPs and the buyer or seller of baskets to "walk the G. Exemption Requests
institutional nature of the market, the book" without having to effect the
Commission finds that the NYSE's execution at a single "clean-up "price. 5 The Exchange has requested that the
limitation of Rule 92 is'consistent with Second, theproposed ESP rules 6 Commission grant exemptions from
provide that when a specialist receives Rules 10a-1, lob-6, 10b-7, iob-8, lob-10,
the Act. 10b-13, 15c1-5, and 15c-6 under the
a notice indicating the execuion of a.
2. Rules of Priority,Parityand Act as.to facilitate tradingin ESPs., 9
Tier I or Tier 2 basket trade, he or she .Rule 10a-1 provides that short sales 90
Precedence.Pursuant to NYSE Rule 805,
must assign that interest at the price
the ESP 'basket market will trade under of exchange-listed securities may not be
specified in the notice to whomever has
a regime of strict price and time priority. priority at that time or take or supply the effected at a price less than the price at
Accordingly, for purposes of component stock at the execution which the immediately preceding sale
determining ESP.execution priorities, 7
price.0 was effected ("minus tick") or at a price
there is no distinction between The Commission believes that the equal to the last sale if the last
proprietary and customer basket 'trading rules proposed by the NYSE are. preceding transaction ata different
4
order.8 consistent with the Act. The "gap price was at a higher price ("zero-minus
The Commission agrees with the - pricing" protections set forth in NYSE tick"). The Exchange has requested
Exchange that rules of time and price Rule 127 for block transactions in relief from Rule 10a-1 in three areas.
priority are appropriate in an individual securities are designed to First; the Exchange seeks an -exemption
institutional basket product that-will ensure that small public limit orders do form Rule Oa-1 as it would apply to the
trade in lots of $5 million. Coupled with not receive.block executions inferior to individual component stocks traded in
the "open book" environment of the ESP those of the block trade.. Application of an ESP transaction and to transactions
-basket market, rules of time priority similar protections in the ESP market in the ESPs themselves. Second, the
should promote a more "transparent" would first raise difficult definitional Exchange requestsan exemption
ESP market by providing institutions questions'as to what was an ESP block. analogous to the "block positioner"
with an incentive to place and leave ;In addition, it is not clear that the exemption in paragraph (e)(13) of Rule
orders in. the system. This should result sophisticated institutions participating 10a-1. 9 1 The requested exemption
in order flow and imbalances being in the ESP market require the identical would permit CBMMs selling stock
more fully disclosed, thereby protections developed for retail public acquired in an ESP transaction to
ameliorating current market information investors in the equity market. In this disregard, when-netting positions for
limitations that may result when connection, it is important to note that purposes of Rule 10a-1, a short position
program trades are executed in the the absolute time priority provided in that is the subject of one or more
individual stocks. The alternative of the ESP market protects limit orders offsetting positions created in the course
from being "sized out" by larger orders of bona fide arbitrage, risk arbitrage, or
granting institutional customer orders a
that would be provided precedence. in bona fide hedging activities. Third, the
preference over market maker orders
the market for individual securities. Exchange is requesting relief from the
would allow institutions to price broker-
Therefore, the Commission believes that operation of the short sale rule as it
dealer CBMMs out of the market the absence of gap pricing protections would apply to a specialist's obligation
without those institutions accepting the
for ESP limit orders in light of the to trade for its own account when the
affirmative obligations required of institutional nature of the market and
market makers. The result might be specialist participates in a Tier 1 or a
the advantage provided limit orders by Tier 2 execution through a "passive
significant disincentives to market time priority is appropriate. sale," i.e., when-the specialist is acting
making and less liquidity. Accordingly, Similarly, the Commission believes
because the Commission believes that that the special rules regarding Tier 1 8817 CFR 240.10a-1, 240.10b-6, 240.10b6-7.
strict time and price priority provides a 240.lob-8, 240.Iob-10, 240.lob-13, 240.15cl-5 and
fair market regimen for ESPs, the 85 See NYSE Rule 80810. 240.15cl-6 (1989). ,
Commission has determined to se See proposed NYSE Rule 104.11A(b). 89 See letters from Donald J. Solodar, Senior Vice
approved NYSE Rule 805 for a six-month 81 Moreover, although NYSE Rule 812 requires a President, NYSE, to Larry Bergmann. Associate
period. CBMM to guarantee the purchase or sale of a basket Director, SEC, dated September 25 and October 12,.
at the price at which he "stops" a basket, the 1989.
Exchange is not requiring the BBB to "stop" basket 90 A short sale is defined in Rule 3b-3 under the
s In contrast, Rule 11al-iT(a)(3) under the Act, market orders to achieve price improvement. Act. 17 CFR 240.3b-3. as any sale of a security that
17 CFR 240.11al-1TI{a}(3), generally provides'an Because of the fact that ESP baskets trade in lots of the seller does not own or any sale that is
exemption from Section'11(a) conditioned on * ' '$5 million the Commission believes it is reasonable consummated by the delivery of a security
providing customer orders priority over orders of- -for the Exchange not to require the BBB to stop borrowed by, or for the account of, the seller. Rule
the exchange member handling those orders at the basket orders in what may prove to be an illusory 3b-3 provides further that a person shll.be deemed
same price. Members whose ESP orders are subject attempt at achieving price improvement, because.. to own a security onli to the extnt that that person
to Section 11(a)'s limitations'will have available the the BBB would ultimately bear the risk'of any has a net long position in that security.
exemptions providedfin Rule 11a2-2(T) as well as adverse market moves whenever it would stop a 9 See Securities Exchange Act ReleaseNo.-20715
Rule 11al-1iT) in executing these orders.: basket commitment. (March 6,.1984). 49 FR 9414 (March 13. 1984) ' "
45844 Federal Register t Vol. 54, No.. 209 f Tuesday, October 31, 1989 / Notices
as the seller of last resort who is customer operations. Proposed Rule stock ofthe affiliated issuer;, because, the
required to fulfill a trading commitment 800(c) would exempt ESP trading from member finn would have. to-buy or sellf.
at a given price. these customer protection rules. the stock for its own account to
Rule lob-6 limits the ability of For example, NYSE Rule 95.20 accommodate the customer.
underwriters, issuers, or certain other generally prohibits specialists from Paragraph (vii) of NYSE Rule. 800(c)
persons to bid for or purchase a security initiating discretionary orders in would apply Rule 312(g) to market
being distributed, or a related security,. specialty stocks. Proposed NYSE Rule baskets. 9 as follows. (11. Member
during the distribution of that security. 800(c)(ii) would, allow a specialist to corporations of the NYSE would be
Rule 104-7 regu'lates stabilizing originate basket orders for discretionary permitted to recommend and effect
transactions in connection with an accounts even if the basket contains his, customer market basket transactions
offering of securities. Rule 10b-8 specialty stocks; despite the otherwise without restrictions; (Z) an Exchange
restricts bids and purchases of rights, contrary provisions of NYSE Rule 95.20. member corporation that is a market
and offers and sales of the underlying Similarly, a member who holds or has, maker in stock. baskets (e.g., CBMMs, on
stock, by persons participating in a granted an option on a basket's the N YSE br other' exchange-designated'
rights offering. Rule lOb-l0 requires component stock may still initiate. basket market makers) would be;
broker-dealers to provide customers proprietary basket transactions, under
with a written confirmation that permitted to buy and sell baskets for
Rule 800(c)iii), despite the otherwise proprietary accounts without
includes the identity, price, and number contrary operation of Rule 96. restrictions; (3) if an Exchange member'
of shares or units of a security Exchange Rule 97 generally restricts .that is a CBMM or other exchange-
purchased or sold by the customer.2, block positioners from trading in a
Rule 10b-13 prohibits persons making a designated basket market maker
manipulative manner that would be liquidates, one or more component stock
tender offer for a security from inconsistent with the informational
purchasing or arranging to, purchase that positions with respect to a basket that it
advantages derived from the holds in its, market-making inventory,,
security otherwise than pursuant to the intersection of their customer and
tender offer. Rule 15cl-5 requires a the CBMM or such other exchange-
proprietary trading operations.. Proposed designated basket market maker will
broker-dealer to disclose that it has a Rule 8W0(cJ(iv)} exempts a member from
*control relationship, with an issuer have until the close of the day following
the operation of the otherwise such action to. liquidate its position in
before executing a transaction in: that applicable tick tests, contained in Rule
issuer's securities. Rule '5cl-6 requires the stock of an affiliated issuer;,and (4.
97 if he or she has acquired a long stock if an Exchange member corporation that
a broker-dealer to disclose any position as a result of a member's
participation or financial interest in the, is neither a CBMM nor a basket market
basket transactions. maker designated on another exchange
distribution of a security, at or before Additionally, a stock specialist may
the completion of a transaction in such acquires a position in the stock of an
initiate basket transactions- under Rule affiliated issuer through its execution of
security for the account of a customer. 800(c)(v), everr if the basket contains' a
The Commission believes that a split. order, the member corporation
specialty stock, despite the otherwise would have until the close of business
transactions in ESPs generally do not contrary provisions of Rule 104.
involve the same concerns that are -on the day following the transaction to
Nevertheless, under Rule 800(c)(vi), a dispose of the position in the stock of
applicable to transactions in individual specialist, registered competitive market
stocks, and that appropriate conditional the affiliated issuer.
maker or competitive trader must
relief from Rules 10a-1, 10b-6, iob-7, include, in any calculation of his- The Exchange contends that the Rule
lOb-8, 10b-10 is necessary if the benefits aggregate stock position any stock that 800[cl provisions appropriately balance.
of ESP trading are tobe achieved. With he has' acquired by means of one or
customer protection concerns against
respect to Rules 15cl-5 and 15c--6. in more basket transactions for the potential conflicts that could arise while
recognition of the unique nature of ESP purposes of the stock trading limitations members and member organizations
transactions, the Division has imposed by Rufes 104, 107 and 112 service customers and provide liquidity
determined that transactions in ESPs are Finally, NYSE Rule 312(g} places
to the basket market. Consistent with
unlikely to give rise to, the abuses the restrictions on an Exchange member
the no-action position taken by the
rules were designed to prevent and corporation effecting transactions, or
Commission staff with regard.to the
accordingly, the Division is taking a no- making recommendations, in its own, operation of Rules 15c'-5 and 15G1-6
action position under these rules. securities or in securities issued by any
under the Act," the Commission
Accordingly, the Commission's staff believes that the. amended operation of
corporation controlling, controlled by, or
today has issued a letter granting under common control with the member
Exchange Rules 95, 96, 97, 104,, 107, 112
certain exemptions and taking certain corporations (collectively, an "affiliated
and 312(g)' as they relate to ESP trading
no-action positions with respect to the issue"). The rule is designed to protect
strike. an appropriate balance between
treatmentof transactions in ESPs under against potential' conflicts of interest
customer protection concerns and any
these rules. potential trading abuses-by members
and potential nfisuses of corporate
and member organizations, because
H. NYSE Rules 95, 9a,97, 104, 107,112' information. Applied literally to, basket
investors will make basket trading
and312=(g) trading, however, the rule would
- prohibit a member firm that is affiliated
decisions based on the, market as a
A variety of Exchange rules-impose whole and not on stock-specific criteria,
transaction restrictions designed to to any of the; component companies
included in a, standardized, market and any proprietary trading undertaken
ameliorate conflicts of interest that arise by a member or member organization in
in connection with the intersection of basket product approved. by the this connection does not entail the
proprietary trading operations and Commissfon, from (I]} Making
recommendations or effecting customer
03 Amendment'No. 3.o, the Exchange'srule filing
transactions in baskets, (2) making, a
9'See notes 54-56, supra.and accompanying' text. clarifies that the operation of NYSE.RilL 800tc)[Vii)
for a description of the-NYSE s.prnposed market in baskets, or (3) executing. is genericainAts applicationto bzskets traded on
mett adology for allocatiogan executiom price- to 'split' orders for customers, in baskets. if other natibnat securitiesexchanges..
each component stocl in al basket. the customer wanted to exclude the, 94 See note 9 supraand accompanyffig ext.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45845
manipulative concerns that these exclude end-of-day transaction volume Commission has issued an order
Exchange rules are intended to address in the ESP component stocks from the exempting the NYSE from certain
in the context of individual stock consolidated transaction volume figures requirements in that rule
00 with respect to
trading. is appropriate to provide the transactions in ESPs.1
Commission and the Exchange with an
I. Transaction and Quotation Data opportunity to assess whether the I. Surveillance Procedures
Reporting The proposed ESP market structure-
absence of individual basket component
Pursuant to Rule 11Aa3-1 under the stocks in the end-of-day consolidated raises various surveillance concerns.
5
Act,. the NYSE is required to collect volume figures merits modification in The Commission believes that the
and disseminate transaction data on light of actual trading experience.9 8 The Exchange's enhanced ESP surveillance
securities listed and traded on the NYSE has, however, committed at the procedures should capture any
Exchange. The NYSE will provide end of the first six months of basket potentially abusive trading practices of
trading facilities through the ESP service trading to submit to the Commission a market participants attempting to profit
for reported securities (as components proposed rule change that will provide unfairly from the information
of baskets) but will not report for the inclusion of end-of-day advantages that their fiduciary and
transactions in the component stocks, as transaction volume in the ESP market positions entail. In this
96
is required by Rule llAa3-1. component stocks in the consolidated connection, the Commission expects the
The Exchange intends to disseminate transaction volume figures. 99 Exchange to exercise its Rule 814
basket last sale information and Ney, the Roberts, and Dr. Roger authority to surveil ESP training through
quotations to market data vendors, criticized the proposed configuration of routine post-trade monitoring, program
thereby assuring that all ESP market ESP transaction reporting, which would trading reports, revamped Form 81s,
participants will have ready access to not include price and volume intermarket surveillance, its surveillance
the ESP transaction reports and breakdowns in the component stocks of agreement with the Chicago Mercantile
quotations. Tier 1 and Tier 2 executions a basket trade. Because ESP trades are Exchange and the Exchange's own
in the NYSE-listed component stocks executed at aggregated prices, the frontrunning ci'rcular. The Exchange
will be disseminated to market data Exchange contends that a last sale should be able to monitor and police
vendors in the same manner as reporting requirement for the price and derivative activity relating to ESP
individual executions in the component volume of a basket's individual trading and program trading, as well as
stocks. In addition, proposed Rule 803 component stocks does not translate questionable transactions that may
will impose on members obligations well into the ESP context. relate to customer, conflicts of interest.
consistent with those imposed by Rule The Commission agrees with the Finally, the Commission believes that
11Ac1-1 under the Act 97 and Exchange, Exchange that, with the exception of the Exchange should use its existing
Rule 60 with respect to the quotations specialist Tier I and Tier 2 executions, procedures to discipline members and
for individual stocks. Basket quotations real-time last sale and volume reporting member organizations that abuse their
always will be firm under Rule 803, for the individual component stocks fiduciary positions and informational
except when the market is in a call underlying a basket trade would not be advantages to the detriment of
mode. However, outside of the existing appropriate in the ESP context. Pricing customers and the public interest.
markets in the individual component of the baskets is based on the aggregate
stocks trading on the Exchange in value of the underlying securities and V. Conclusion..
compliance with Rules 11Aa3-1 and thus any assignment of a "price". to any The Commission believes that the ESP
11Ac1-1, no quotes or last sale reporting- of the component stocks in the basket market structure balances appropriately
will be available for the individual would be arbitrary. For these reasons, the competing concerns of various
constituent stocks that comprise a stock the Commission believes that the- Exchange constituencies in a manner
basket when it trades under the ESP proposed reporting requirements, -even consistent with just and equitable
market structure, unless an order is though they deviate to a certain extent, principles of trade. Given the
executed against a Tier I or Tier 2 from the requirements of Rule 11Aa3-1, institutional character of stock portfolio
aggregate quotation. are, nevertheless, consistent with the trading that ESP trading is designed to
For the frist six months of ESP trading, Act. In addition, the Commission capture, the Commission agrees that the
the NYSE will not disseminate on a believes that a six-month delay in Exchange's chosen market structure,
cons6lidated basis the total trading implementing copsolidated reporting of which accords institutions strict price-
volume for each of the component end-of-day transaction volume in the time priority, is a.fair and competitive
stocks represented by ESP transactions basket component stocks is reasonable market structure. Finally, the - '
either during or after the trading day. in order to determine whether such Commission's section 19 authority and.
The NYSE believes that its proposal to consolidation would provide useful the Rule 19b-4 process allow the
*information: to.market participants. Commission and the Exchange sufficient
!5 Rule 11Aa3-1. the transaction reporting rule, ',The Commission believes that flexibility to modify ESP trading in light
generally requires that'exchanges file transaction
reporting plans governing the'collection, processing conditional relief from Rule 11Aa3-1 for of actual trading experience and any
'and dissemination of last sale data on securities ESP transactions is necessary and future developments that materially
traded on.the exchanges. 17 CFR 240.11Aa3-1 appropriate. Accordingly, the affect the ESP market structure.' 0
(1989).
By separate order, The Commission has
B5
98 See letter from Richard A. Grasso, President 100 See supra note 96.
granted the NYSE an exemption from this
requirement. See Securities Exchange Act Release and'CEO, NYSE, to Brandon C: Becker, Associate 101 The Commission believes that the 30 day ' •
No. 27390 (October 26. 1989). Director,.Division of Market Regulation, SEC, dated -comment period that accompanied publication of
' 17 CFR 240.11Ac1-1 (1989). Rule I1Ac-1 October 4, 1989. the Exchange's proposal and the Commission's
imposes quote collection obligations on exchanges Id The Exchange has reserved the right to continued willingness to entertain all comments-that
and associations and requires broker-dealer provide views and information that would express, precede its action-as providing an adequate public
quotations, subject to specific exceptions, to be firm its continued opposition to the addition of end-of- forum to vet.all the. issues and concerns that may
at the price and size publicly disseminated. The day tIransaction volume in the ESP component have accompanied the ESP proposal. Accordingly, it-
Commission notes that Rule 11Ac1-1 applies to- stocks in the consolidated transaction volume. is'unnecessary to hold public hearings 'on Ihe NYSE
quotations for ESP baskets. * figures. proposal. - : "' ,
4,5846, Federal Register f Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
Accordingly, based upon the It is therefore ordered, pursuant to II. Background and Description of
aformentioned factors, the Commission section 19(b)(21 of the Actr ° a that Market Baskets'
finds that the Exchange's proposed rule proposed Rules 805 and 806 are
change relating to the trading of ESP approved for a six-month, period ending A. Description and Terms of Market
stock baskets is properly within its on April 30i 1990 and that the remaining Basket Contracts
jurisdiction and consistent with the proposed nle changes be, and hereby A CBOE market basket contract
requirements of sections 6(b](41 and (5) are, approved. enables the trading of standardized
and the rules and regulations, By the Commission. baskets of'sfocks at an aggregpte price
thereunder.102 Dated: October 26, 1989 in a single execution on the Exchange's
The Commission finds good cause for floor." A market basket trade will result-
Jonathan G.. Katz,
approving those portions of the NYSE's in a transfer to the buyer of ownership
Secretary. of each of the component stocks. When,
proposal that were amended by [FR Doc. 89-25598, Filed 10-30-89 8:45' aml}
Amendments 1, Z, and 3 prior to the the transactions is completed, the buyer
BILLING CODE 8010..O1- M willf be entitled to all rights attending
thirtieth day after the date of
publication of the amendments in the ownership of the basket stocks
Federal Register. The original filing was [Rel. No. 34-27383; Fle No. SR;-CBOE-88- (including rights to vote and receive
the subject of a 35-day notice period that 20] dividends), and will be free to sell ar
generated several comment letters. The hold each,stock separately.,
amendments made only minimal Self-Regulatory Organizations; That same buyer may later sell the
Chicago Board Options Exchange, basket stocks he acquired, either
changes to the proposal as noticed. In
addition, accelerated approval is Inc.; Order Approving Proposed Rule individually or through another market
necessary because ESP trading is Change and Filing and Order granting, basket trade. In order to sell the basket
scheduled to begin on October 26,,1989. Accelerated Approval of Amendments stocks through market basket contracts,
to Proposed Rule Change Relating to they must be identical as a group with
Because of the Commission view of the
Market Basket Trading the standardized basket at the time of
benefits- that may result from the trading
sale.7 If a buyer has sold individal
of a basket of stocks on a national I. Introduction
securities exchange, the Commission basket stocks and' has not separately
On may 12, 1989, the Chicago Board reacquired them, or'if changes have
believes a good cause finding is
Options. Exchange, Inc.. ("CBOE" or been made to the:index since the basket
justified. was purchased, the buyer who then
"Exchange") filed with the Securities
Interested persons are invited to and exchange Commission, decides to sell a basket will have to
submit written data, views, and ("Commission" or "SEC"), pursuant to, "rebalance" his position so that he can-
arguments concerning the foregoing, Section 19(b)(1) of the Securities deliver all the current market basket
Persons making written submissions Exchange Act of 1934 ("Act"), I and Rule stocks in their proportionate number of
should file six copies, thereof with the 19b-4 thereunder;' a' proposed rule shares.6
Secretary, Securities and Exchange change that establishes Exchange rules,
'Commission, 450 Fifth Street, NW., to govern the. trading of "market basket stocks; oe the floor of the NYSE. See Securities
Washington, DC 20549. Copies of the contracts" on the floor of'the Exchange. Exchange Act Retease No,26908 (June 8, 19891,.54'
submission, all subsequent amendments, FR 25516 (June: 15. 1989); Additionally,, th Midwest
The proposed rule change was, Stock Exchange,.Inc. ("MSE") filed with, the
ali written statements with respect to published for conunent in Securities Commission a proposal to establish a secondary,
the proposed rule change that are filed Exchange Act, Release No. 26882 (June 1, trading session for'theexecution of transactions in
with the Commission, and all written 1989) 54 FR 24442 (June 7, 1989).3 The portfolios ofisecurities. See Securities Ekchange Act
Release No,. 26887 (June.l,,1989),,54 FR,24779,(,J'une ,
communications relating to the proposed Exchange subsequently submitted 1989). For a discussion of the comments applicable
rule change between the Commission ,
amendments, to its proposed rule to the CBOE' proposal' see infra notes 34t-39 and
and any person, other than those. that change. 4 No direct cormnent letters were, accompanying text.
may be withheld from the public, in received regarding the proposed rule The number of shares of individual stock shall
be determined by dividing the outstanding float of
accordance with, the provisions of 5 change, although commentators did the. particular security by the divisor of the index.
U.S.C. 552, will be available for discuss the CBOE proposal in and multiplying this value by the index multiplier,
inspection and copying in the responding to proposals by other subject to.the requirement that any fractional'
5 amount is. to be rounded, to) the nearest whole share .
Commission's Public Reference Section, exchanges to trade baskets, of stock. ' For example, if XYZ Corp. has 130.257 million.
450 Fifth Street, NW., Washington. DC. shares outstanding and, the divisor for the. S&P 500
Copies of such-filing also will, be ,o 15.U.S.C. 78s(b)(2 (1982). (expressed to four decimal places) is 3022.4168
available for inspection and copying at 115 U.SC. 78s(b(,lJ. (1982). million; the weighted number of shares forXYZ
17 CFR 240.19b-4 (1989 . Corp. would be 0.0431 'Ia3.257 million. 3022168
the principal office of the above- 2
million). The purchaser of the S&P 500 market
referenced self-regulatory organization. 3 The proposed rule change published for basket would receive 216 shares (.0431 X<5,000; the
All submissions should refer to the file comment wasAmendment No..ZtoSR-CBOE,.88-20 index multiplier for the basket contract), of XYZ
end was filed with the Commission on May 12, 1989. stock, together with the,stock of the other
number im the caption above and should The CBOE originally filed SR --CBOE-88-2" with the companies whose shares comprise thetindbx in
be submitted by November 2, 1989 Commission on, November 1, 1988 and filed amounts corresponding to their respective weighting
Amendment No. T to the filing with, the Commissioni in the index.
on January 13,1989. The process will be simpler for offsetting
1es The Commission notes that approval of the 4 The Commission received Amendments No. 3; 4,. transactions that occur during a single trading duy.
proposed rule change is based upon a. determination and 5 to the CBOE proposaf on September 21, 1989, Specifically, the Exchange proposes that if a
that the terms of ESP hasket trading are consistent September 2&, 1989'and October'S 1,989; customerhas, purchased and: sold the same market
with the requirements of the Act. Ifthe-terms.of the respectively. The Exchange requested accelerated basket contract on the same dite; then the customer
ESP basket market structure, inctuding.the index approval of File No. SR-CBOE-88-20, as amended' will receive, a confirmation, statement reflecting the
multiplier, ase changed' in any material, way, The notable, changes made in these amendments are terms of'such purchase and: sal'e, including the
however it would be necessary for the N'YSE to described in this order. amount of any credit or debit to, thecustomer's
submit a proposed rule change to the Commission in 2 The New York Stock Exchange; Inci ("NYSE")
account.
order to afford the public an opportunity to review filed with the Commission a proposal that sets forth. s If a change occurs h the composition of either
the proposed modification, and for the Commissioft a framework for trading"FchangeStock the S&P'100'or'S&F500. the composition otthe
to review its prior determination. Portfolios" ("ESPs"), standardized baskets of Continued'
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45847
45847
The CBOE proposes to trade market provide additional liquidity to the The Exchange also proposes to
basket contracts based on the Standard market basket post. Under the proposal, require a market maker to have $450,000
& Poor's 100 Stock Price Index ("S&P market makers in market basket of net liquidating equity in order to be
100") and the Standard & Poor's 500 contracts will be obligated to perform a eligible to trade market basket
Stock Price Index ("S&P 500").9 The similar function to market makers in contracts. 16 In addition to this initial
Exchange proposal provides that classes of options. In general, a market capital requirement, the CBOE proposal
determinations as to the composition of maker will be expected to engage in a contains a maintenance requirement for
the index, the index divisor, and the course of dealings reasonably calculated market makers of $225,000 net
number of shares outstanding of each of to contribute to the maintenance of a liquidating equity. The net equity
the component stocks shall be fair and orderly market. Specifically, requirement can be met from either an
determined by the Exchange after the market basket market makers, when individual account, joint account '17 or
close of business on the date preceding present in the trading crowd, will be
the trade date.1 0 The index multiplier group account.1 8 According to the
expected to compete with other market CBOE, this net liquidating equity
for both the S&P 100 basket ("OBE") and makers to improve the markets of
S&P 500 basket ("MBX") contract is standard does not require that specific
market basket contracts. Moreover,
5,000, and, accordingly, the value of a funds be dedicated to market basket
when present in the trading crowd, the
single OBE and MBX contract is trading; rather, the standard is designed
market basket market makers are
approximately $1,610,000 and $1,730,000, expected to update market quotations in to ensure that only market makers with
respectively. 1 I response to changed market conditions. a substantial equity position are allowed
B. Market Structure for the Trading of In addition, the market basket market to trade market basket products.
The Exchange believes these financial
Market Basket Contracts makers will be expected to make
markets and, at the request of another requirements will ensure that
1. DPM and Market Makers member or the DPM, provide bid and/or participating market makers have
The Exchange proposes to trade offer quotations that are subject to sufficient capital to withstand day-to-
market basket contracts under its immediate acceptance for one contract. day price movements in the securities
Designated Primary Market Maker The Exchange believes this one-contract comprising the market baskets. 19
("DPM") program. In acting as a market requirement is appropriate based on the
maker, the DPM will fulfill all the size of each market basket contract.1 3 September 27, 1989. For the purpose of this
obligations of a market maker along Moreover, if a bid and/or offer requirement, net capital shall be computed in
with the other market basket market quotation larger than one contract is accordance with the requirements of Rule 15c3-1
under the AcL Excess net capital shall mean the
makers that are at the market basket displayed, then the trading crowd amount of net capital in excess of the amount
post. Additionally, the DPM will fulfill (including the DPM) will be required to required under Rule 15c3-1.
the responsibilities of the Order Book sell or buy such greater number of 16 By contrast, a member acting as a floor broker
Official by, among other things, contracts. will be required to have $225,000 of net liquidating
equity in order to qualify to trade market basket
maintaining the limit order book and 2. Financial Requirements for DPM and contracts. Net liquidating equity is defined as the
12
displaying bids and offers in the book. Market Makers sum of the net value of a market maker's long and
The Exchange also proposes to short positions adjusted for any credit or debit
appoint market makers to trade the In addition to the requirement of a balance. See Rule 15c3-1(c}(2)(x)(B){2}.
market basket contracts. These market Clearing Member Guarantee,1 4 the 17 See letter from Margaret E. Wiermanski,
Exchange proposes to establish Director, Credit Policies and Special Projects,
basket market makers will supplement Department of Financial Compliance. CBOE, to
the DPM in making markets and thereby financial requirements for the market Mark McNair, Staff Attorney, Division of Market
basket DPM and-market makers. Regulation, SEC, dated September 1, 1989. A joint
Specifically, the CBOE proposes to market maker account is an account in which more
stocks that comprise the applicable market basket than one market maker participates. The Exchange
will change the following trade day. Accordingly, require the market basket DPMs to have
$10,000,000 in excess net capital.' s approves all joint accounts and, for surveillance
changes in the composition of the market baskets purposes, each joint account is assigned an acronym
will complicate liquidating transactions by market that begins with the letter "Q." If a joint account
participants and investors. 13 Interpretation .05 to CBOE Rule 8.7. establishes trades market basket contracts, then only one
9 Section 12(a) of the Act generally prohibits the individual market maker can trade market basket
a similar bidding/offering five-contract requirement
trading of a security on a national securities contracts for the benefit of the joint account at any
exchange unless the security is registered on the
for options market makers. The monetary value of
five OEX contracts, however, is approximately time
1
unless the Exchange grants an exception.
exchange. Upon application by an exchange and $20,000, in comparison to a value of $1.600,000 for A group account involves several traders
Commission approval, however Section 12(f)(1) of
the Act and Rule 12f-1 thereunder authorize the
one MBX basket. trading for the same market maker account, where
14 CBOE Rule 8.5 provides that no market maker the equity in each trader's account is aggregated to
Commission to extend unlisted trading privileges
("UTP") to any security registered pursuant to shall make any transaction on the floor of the determine the equity position of the group account.
Section 12 (b or (g) of the Act. The CBOE has Exchange unless a Letter of Guarantee has been For example, broker-dealer ABC is a market maker
requested UTP in the companies comprising the S&P issued for such member by a clearing member, firm that has employed four individuals to trade on
1001 and S&P 500 Index.
approved by the Options Clearing Corporation its behalf ("nominees") at the Exchange. Each
0 The CBOE states that index information will be ("OCC"), and filed with the Exchange. With respect nominee has an acronym and an account, but the
to market basket contracts, a market maker Letter accounts identify ABC as the ultimate beneficiary.
readily available to investors. For Example, S&P's of Guarantee must acknowledge that the market For purposes of the minimum capital requirements,
Index Alert System provides current information maker is approved to trade market basket contracts. the nominee accounts are combined to determine
about the composition and capitalization weighting Additionally, special notations will be placed on the
of the S&P 100 and 500 Indexes. The Exchange will
how many, if any, nominees would be permitted to
badges of market makers that are qualified to trade trade market basket contracts for the group account
maintain in files available to the public current data market baskets. For example, if the combined net liquidating equity
on the composition of the component stocks and for ABC is $1,000000. then the market maker firm
their relative representation in the indexes.
- The Exchange reserves the right to waive this
requirement in unusual circumstances, such as could have no more than two nominees trading
II Based on S&P 100 and S&P 500 Index values on permitting a DPM, whose capital drops below the market basket contracts at the same time.
September 8, 1989. capital requirement, to continue its function where 19 Specifically, the Exchange examined the daily
12 In addition, the DPM will be required
the markets are volatile or disruptive, and no other close-to-close price moves for the Indexes for the
continuously to display the highest bid and the Exchange member reasonably can be expected to last three years. The Exchange, consistent with its
lowest offer voiced in the trading crowd, execute fulfill the DPM function. See letter from Mary L. methodology for assessing risk in other areas such
customer orders left on his book, and disclose, upon Bender, First Vice PresidentjDivision of Regulatory as margin requirements, sought to develop financial
request, information regarding the depth of the Services, CBOE, to Howard Kramer, Assistant requirements that would meet the close-to-close
market. Director, Division of Market RegulAion, SEC, dated Continued
45848 Federal Register .I Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
Moreover, the Exchange notes that there in the maintenance of a fairand orderly confirmation of customer transactions,
are a significant.number of OEX and market for the-market basket contracts, member organizations must provide
SPX Options-market makers 20 who Because a market basket contract is a details, not only as to the market basket
currently meet the proposed financial stock product and not an options transaction itself, but also information
requirements that would be eligible to contract, however, there are areas as to the.identity, price and number of
trade market baskets. 2 1 The Exchange where the Exchange proposes to modify shares of each of the component stocks
proposed an initial entry requirement the applicable Exchange rules. that comprise the basket. 26 The CBOE
higher than the maintenance level to proposal provides that members.who
ensure that day-to-day price changes in 1. Net Capital Requirements
participate in the Institutional Delivery
equities do not prevent market makers Broker-dealers, at the end of the System ("IDS") of the Depository Trust
from committing equity to22trading trading day, will be long or short the Company may use the confirmations
market basket contracts. component stocks as a result of the generated by IDS to satisfy 27customer
market basket transactions. confirmation requirements.
3.Location of the Market Basket Posts Accordingly, the Exchange notes that
The Exchange proposes to trade the normal "haircuts" for stocks set out 3. Position and Exercise Limits
market baskets adjacent to the posts in the Commission's net capital rule will The Exchange believes that the
where index options are traded. The apply to transactions in market basket position-limits and exercise limits
Exchange believes that this arrangement contracts. Additionally, the CBOE notes applicable to options contracts should
will enhance the efficiency of both that positions in the component stocks not be applicable*to market basket
markets by minimizing price disparities resulting from the trading of market contracts because there will be no open
between, market baskets and index baskets will be subject to lesser haircuts interest in, and no exercise of, market
options. Additionally, the Exchange when these positions are offset by basket contracts. Instead, all
believes this arrangement will facilitate broad-based
23
index options or futures transactions in market baskets will be
hedging and other trading strategies contracts. settled by the delivery of the component
involving both types of index contracts. 2. CustomerProtectibn Rules stocks. Thus, the Exchange believes that
Moreover, the Exchange believes that exercise limits have no application to
this arrangement will not present any of The Exchange proposes to apply, market baskets. Additionally, the.
the potential abuses generally substantially all of its customer Exchange believes that because there
associated with side-by-side trading protection rules to market basket
are no numerical, restrictions on the
because both the market basket and trading.2 4 In considering the ownership of individual common stock,
index options contracts are priced applicability of its customer protection
rules, the Exchange notes that the dollar the position limits that apply to
nderivatively
in relation to the prices of transactions in options should not apply
the underlying stocks in the principal value of the unit of trading for market
to-market basket transactions.
markets where such stocks are traded. baskets most likely will limit the interest
in these contracts only to the'largest 'and 4. Margin"
C. Application of Exchan'ge Rules to most sophisticated institutional
Market Basket Contracts Because the purchase of a market
investors. Accordingly, the Exchange basket contract results inthe physical
The Exchange proposes to apply most believes that these institutiofnal delivery of each stock composing the
of its rules for options to the trading of investors may not require the same
basket, Regulation T requires a 50%
market baskets. The Exchange believes protections as do retail investors. mdrgin requirement. Moreover, the
that these rules are suitable to the Nevertheless, the Exchange proposes applicable Exchange rules provide for
trading of market baskets and will assist that market basket transactions will be maintenance margin requirements of
subject to Exchange rules covering 25% and 30% for long and short
price moves for 95% of trading days. Moreover, the
supervision, suitability, restrictions on positions, respectively. In this regard,
CB3OE, in calculating market maker exposure, acting for persons affiliated with the CBOE received a staff opinion from
assumed the market maker would have an exchanges or other members, assuming the Federal Reserve System that the
unhedged position of ten market basket contracts on losses, communications with customers,
the same side of the market and such an exposed
position would be unusual for a market maker.
and complaints. 25 With respect to the
stocks. Specifically, many CBOE rules were adopted
Accordingly, the Exchange, believes the proposed in recognition that the unique attributes of options
$450,000 financial requirement for market makers, 23 See letter from Mary L. Bender, First Vice
required special safeguards and procedures that are
which would cover 95% of one day price moves President, Division of Regulatory Services, CBOE, to not required for a customer's non-options accounts
based on closing prices for 10 MBX baskets, is Michael Macchiaroli, Assistant Director, Division of and transactions. For example, the CBOE proposal
sufficient and appropriate. See letter from Mary Market Regulation, dated January 27,1989. provides that certain rules relating to the opening of
Bender, First Vice President, Division of Regulatory 24 Because the buyer is acquiring a basket of custompr options accounts, such as registration of
Services, CBOE, to Brandon Becker,-Asgociate options principals and delivery of the options
securities rather thanan option, delivery of an
Director, Division of Market Regulation. dated options disclosure document is'not required. disclosure document, will not be applicable to
August 21. 1989. 25 The original CBOE proposal included a market baskets.
20 "OEX" and "spx"'are options contracts traded
requirement that a member organization provide a 21 Such information is required by the provisions
on the Exchange and based on the S&P 100 index customer, before or contemporaneous with the first of Rule lob-10 of the Act. The Exchange's proposed
and S&P 500 Index, respectively. " written confirmation of a market basket transaction, Rule 26.10 provides that each confirmation shall
21 The Exchange represents that as of-July 1989. a written description, substantially in the form show the class of a market basket contract, contract
with respect to OEX and SPX traders with monthly provided by the Exchange, of the mechanics and price, number of market basket contracts purchased
trading volume in excess of 10,000 contracts. risks of trading in market basket contracts. The or sold, number of individual component underlying
approximately 70 traders maintain net liquidating Exchange has amended its proposal to delete this stocks, commissions, date of transaction and
equity of $225,000 or more, of which 50 traders requirement. The Exchange believes that this settlement do'te, whether the transaction is a
maintain net liquidating equity greater than requirement 'is not necessary because only purchase or sale, and whether it is a principal or
$450,000. See CEOE letter, sup'o note 19. sophisticated institutional investors will trade the .agency transaction.
22 A trader falling below the maintenance level
product. Additionally, because market basket 27 The CBOE proposal also provides that the
will be permitted only to effect liquidating market contracts are not options, the CBOE further derived prices of component stocks of a market
basket transactions as a market maker. As long as amended its proposal to make the rules for market basket contract shall be based upon the market.
'his account maintains positive equity, however, he basket contracts relating to dealing with the public basket transaction price and calculated in
would not be precluded from trading option more closely comparable'to the rules of other.self- accordance with an algorithm provided by the
contracts on the Exchange: regulatory organizptions that regulate the trAding of CBOE.
Federal Register I Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45849
margin requirements applicable to of OCC and OCC's correspondent stock the CBOE letter notes that many of the
exchange-traded equity securities would clearing corporations.3 3 market structure issues identified in thp
be appropriate for market basket AFB comment letters are specifically
contracts.
28 III. Comments Received addressed in the CBOE proposal.
The Exchange also proposes to clarify The Commission did not receive any Specifically, the CBOE notes that
the margin rules applicable to market comment letters in response to its because of its concern with order
makers in market basket contracts. request for comments on the proposed exposure and competition, the CBOE
Specifically, the Exchange believes that rule. The Commission however, did proposal utilizes a competitive market
markct basket market makers should be receive responses to a similar proposal3 4 maker and DPM trading system to trade
entitled to "good faith margin" by the NYSE to trade baskets of stock. market baskets. The CBOE also notes
treatment for all transactions in market that all the present safeguards to ensure
Specifically, the Commission received a
basket contracts, as would any other public priority in options trading will
specialist who makes a market in a
comment letter from the Commodity
Futures Trading Commission ("CFTC") apply to basket trading. In particular, for
particular security.2 9 Movever, the example, there will be a public limit
Exchange believes that Regulation T that stated that the NYSE market basket
proposal was not a futures contract order book in place and basket orders
affords good faith margin treatment for
under the Commodity Exchange Act, will be routed via the CBOE's
positions in broad-based index options
taken by market basket makers, and a Chicago Board of Trade ("CBT"] computerized "Order Routing System."
provided that the market maker is using letter that commended the NYSE 3 5 The CBOE also responded to AFB
the options to hedge stock positions proposal to trade baskets of stock. criticisms regarding possible exemptive
acquired through market basket trading The Commission also received relief from the short sale rule for market
and he is a market maker in both the comment letters from the Alliance of basket products. Specifically, the CBOE
market basket and the index option. Floor Brokers ("AFB"), whose believes that sales of market baskets
Accordingly, index options market membership is predominately comprised should be exempted from the "tick test"
makers who are not market makers in of NYSE floor brokers, on both the of Rule 10a-1 under the Act because the
market baskets would not receive good NYSE proposal 36 and the MSE underlying rationale for the Rule is not
faith margin treatment for market basket proposal.3 7 The AFB letters raised applicable to market basket trading.
transactions that hedge their index objections to each exchange's respective Moreover, the Exchange notes that
options positions: 30 proposal and stated that their application of the tick test to market
reservations extended to the CBOE baskets could effectively preclude
D. Clearingand Settlement of Proposed "ersatz stock" proposal. In general, the market basket trading during a declining
Contracts market, when the "shock absorbing"
AFB claimed not to be unequivocally
The CBOE proposed that OCC will and arbitrarily opposed to portfolio benefits of market basket trading would
perform the clearing and settlement products, but believed that the be most useful.
functions for the Exchange's market regulations and trading practices
basket products. 3 ' OCC has submitted a IV. Discussion
applicable to individual stock
proposal to the Commission to amend A. Introduction
transactions generally should apply to
its rules to enable it to perform such
functions for the trading of baskets of
stock basket transactions. After careful consideration of the
32 In response to the comment letters,
stock. comments received, applicable statutory
Specifically, the Exchange, proposes the CBOE argues that although the AFB provisions, and relevant policy
that the buyer of the market basket comment letters argue that both the considerations, the Commission believes
contract will be obligated to purchase NYSE and MSE proposals have very that the CBOE's market basket proposal
and the seller will be obligated to sell a specific defects, 38 neither AFB letter is reasonably designed to prevent
quantity of shares of each component specifically discussed any shortcomings. fraudulent and manipulative acts and
stock of the designated index. The in the CBOE proposal.3 9 Additionally, practices, promote just and equitable
settlement of the purchase and sale of principles of trade, provide for an
the underlying component stocks will a See Securities Exchange Act Release No. 27389 equitable allocation of fees, and, in
take place on the fifth business day after (October 26, 1989). general, protect investors and the public
34 See supra note 5.
trade date in accordance with the rules interest. For these reasons and for the
as See letterr from lean A. Webb, Secretary,
CFTC, to Jonathan G. Katz, Secretary, SEC, dated additional reasons set forth below, the
28 See letter from Mary L. Bender, First Vice August 17,1989 and letter from Thomas R. Donovan, Commission finds that approval of the
President, Division of Regulatory Services, CBOE, to President and Chief Executive Officer, CBT, to Exchange's proposed rule change
Laura Homer, Securities Credit Officer, Board of Jonathan G. Katz. Secretary, SEC, dated July 17,
Governors of the Federal Reserve System, dated
relating to the trading of market basket
1989.
May 17,1989, and letter from Laura Homer, as See letter from Michael D. Robbins, President, contracts is consistent with the
Securities Credit Officgr, Board of Governors of the AFB, to Jonathan G. Katz, Secretary, SEC, dated requirements of the Act and the rules
Federal Reserve System, to Mary L. Bender, First July 13, 1989. and regulations thereunder applicable to
Vice President, Division of Regulatory Services. 31 See letter from Michael D. Robbins, President,
CBOE, dated June 8, 1989.
a national securities exchange, in
AFB, to Jonathan G. Katz, Secretary, SEC, dated
29 See Regulation T. 12 CFR § 220.12(b){3)(i). August 18, 1989.
general, and the requirements of
lIn, this regard, the CBOE received a Federal -a The AFB comments regarding the NYSE sections 6[b) [4) and (5) and the rules
Reserve Board staff opinion that agreed with the proposal are discussed in Securities Exchange Act and regulations
40
thereunder, in
CBOE's application of good faith margin to market Release No. 27382 ("NYSE ESP Order") (October 26, particular.
basket market makers. See Homer Letter, supro 1989) at notes 62-63, 68-89 and accompanying text.
note 28, at 2. The AFB comments regarding the MSE proposal are B. Benefits of Market Baskets
31 Presently. OCC provides such functions for the discussed in Securities Exchange Act Release No.
'Exchange's options contracts. 27384.{"MSE Order") (October 28, 1989) at notes The Division of Market Regulation's
as See Securities Act Release No. 27157 (August 2124 and accompanying text.
as See letter from Robert P. Ackermann, Vice
Report on The October 1987 Market
21, 1989). 54 FR 35743 (August 29.1989. OCC filed -
amendments to the proposal with the Commission President. Legal Services, CBOE. to Jonathan
on September 21,1989 and October 13,1989. G.Katz. Secretary. SEC, dated September 27, 1989. 40 15 U.S.C. 78ffb) (4) and (5) (1982).
45850 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989'/ Notices
Break ("Staff Report"), 4 1 and an NYSE-' resulting therefrom thus will be requested an exemption from that
commissioned study entitled An. disclosed, thereby ameliorating current requirement. The Commission has
Overview of Program Trading and Its market information limitations in granted the exemption in Securities'
Impact on CurrentMarket Practices identifying program trade executions (or Exchange Act Release No. 27391
("Katzenbach Report"), recommend, overhanging program orders) in the (October 26, 1989) ("Exemption Order").
among other things, the listing and individual stocks. 4 5 Finally, by creating CBOE Rule 26.11(e) imposes on
trading of a basket of stocks on an a trading vehicle for an aggregated Exchange members an obligation to
exchange as a means to enhance market basket of standardized protfolios of make firm quotes for market basket
efficiency and, possibly, the market's stocks in a single execution with contracts, which is consistent with the
ability to absorb institutional portfolio minimal "execution slippage", 46 the requirement in Commission Rule 11Ac-
trading. 42 As noted in the Staff Report, trading of market baskets will provide
the creation of one or more posts for the an efficient mechanism to trade, clear 1 that quotations be firm. 48 However, no
purpose of trading actual baskets or quotes or last sale reports will be
and settle stock baskets.
portfolios of stock could alter the The Commission believes'that the generated or disseminated for the
dynamics of program trading because CBOE market baskets will provide individual constituent stocks comprising
the availability of such a basket trading institutional investors with a cost a markej basket during the trading day.
mechanism could, in effect, restore the efficient means to make investment For the first six months of basket
execution of program trades to more 43 decisions based on the direction of trading, the CBOE will not disseminate
traditional block trading techniques. standardized measures of stock market on a consolidated- basis the total trading
The Staff Report noted further that, segments and the stock market as a volume represented by basket trades. .
while arbitrage ultimately.would flow to whole, and may provide stock market While the Commission is aware of the
indivdiual component stocks, many participants several advantages over limited usefulness of price information
institutional investors and member firms existing methods'of effecting program on the underlying securities in the
effecting arbitrage transactions could trades of stocks and transactions in . baskets, it believes that dissemination of
focus their equity transaction at the portfolios of securities. For the reasons the share Volume in the underlying
basket post where the market-makers discussed below, the Comminission finds securities is.important information and
and trading crowd could provide that the market structure proposed by should-be included in the daily -. ,
efficiencies associated with effecting. the CBOE reasonably is designed to ' - consolidated volume for each of the
transactions in a portfolio of securities promote just and equitable principles of- underlying securities. Because this
as opposed to individual stocks.. This trade and fair and orderly markets., presents. a number of technological.
could add an additional layer of Furthermore, theCommission believes difficulties for CBOE, CBOE has
liquidity and concentrated capital to the that market.basket. trading will not lead represented that it will evaluate 'trading
market in order to help absorb the unduly toward a more fragmented and in the baskets over a six-month period
volume and velocity of trading volatile market, and that the CBOE and, at the end of that period in'
associated with certain
44
index-related proposel to trade market baskets is consultation with the Commissf6n,
trading strategies. consistent with the development of an CBOE will 'econsider whether its
Furthermore, because market baskets open and competitive national market volume dissemination prodocures
will be traded on the Exchange Floor at system. should be modified.
49
a single location in an "open book"
environment, members in the crowd will C. Price Dissemination and Reporting
D. Market Structure
be able to see the bid offer spread and The CB.OE proposes to disseminate
inquire as to the depth'of the market basket last sale information and The Commission believes that the
(i.e., the size of the buying and/or selling quotations through the Options Price trading structure for market basket
interest at each minimum tick away ' Reporting Authority ("OPRA"), thereby contracts is adequate to provide fair and
from the prevailing bid and offer for the ensuring thai all market participants will orderly markets, The DPM system has
basket. Program trading or'der flow have ready access to market basket47 been employed by the CBOE for other,
entered into the system and imbalances transaction reports and quiotations. new products,.and will help to ensure
Rule 11Aa3-1 under the Act requires, continuous quotations for the basket
41 Division of Market Regulation. The October' however, an exchange to file a products.-Moreover, supplemental
1987 Market Break (F(bruary 1988). transaction reporting plan that would market making support for this
. 41 See also Securities and Exchange Commission govern transaction reporting of certain relatively "expensive" product'will.be
Recommendations Regarding the October 1987 securities traded on that exchange. provided by potentially dozens of
Market Break contained in Testimony of David S.
Ruder, Chairman. SEC. Before the U.S. Senate Because CBOE will be trading securities market basket market makers. These
Committee on Banking, Housing, and Urban Affairs, subject to transaction reporting market makers will be obligated to
on February.3, 1988. requirements and has not filed a make markets, and, specifically, provide
43aStaff Report at 3-18. For a detailed description transaction reporting plan, it has bid and/or offer quotations-which will
of current block trading mechanisms, see the Report
of the PresidentialTask Force on Market
be subject to immediate acceptance.
Mechanisms,at VI-9 to VI-11 (January 1988) " The CBOE's concept of an open, fully-disclosed
("BradyReport"). book to support market basket trading is consistent 4s 17 CFR § 240.11Ac1-1 {1989). The Commission
44 Id. Similar ideas have been discussed In J. with suggestions offered by various studies of the notes that Rule 11Ae1-1 requires that disseminated
Grundfest, "Would More Regulation Prevent October 1987 Market Break. See also Wells Fargo quotations include the size associated with the
Another Black Monday?", Address before the Investment Advisors, Reflections on the Stock quote. OPRA, the facility through which CBOE
CATO Institute Policy Forum on July 20, 1988, at 13- Market Crash of October 1987 (January 25,1938). basket quotes will be reported cannot, however,
14 (copies available at the Commission); H. Stoll 46 "Execution slippage" is defined as the adverse disseminate size. Thus, CBOE requested an
and R. Whaley, "Program Trading and The Monday price impact that currently accompanies the exemption from this requirement, which the
Massacre" (November 4,1987) (copies available at fragmented execution of program trades. See, e.g.,. Commission granted in the Exemption Order.
the Owen Graduate School of Management, the Katzenbach Report at note 29. 19 See letter from Nancy R. Crossman, First Vice
Vanderbilt University): and H. Stoll, Portfolio 47 OPRA is responsible for collecting from the President and General Counsel, CBOE, to Howard
Trading, Working Paper No. 87-14 (September 1987) options exch!anges last sale and quotation L Kramer, Assistant Director, Division of Market
(copies available at the Owen Graduate School of Information for all standardized options and Regulation, SEC, dated October 11 ,1989. See,
Management, Vanderbilt University). disseminating that information to private vendors. Exemption Order for further discussion.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45851
The Commission believes the E. Application of CurrentRules to Rule 10a-1 provides that short sales 54
proposed financial requirements for the Market Basket Contracts of exchange-listed securities may not be
DPM and market makers to trade The Commission believes that the effected at a price less than the price at
market basket contracts are appropriate. application of the existing Exchange which the immediately preceding sale
Specifically, the financial requirement options trading rules to market basket was effected ("minus tick") or at a price
for the DPM will ensure-that the DPM transactions will assist in the equal to the last sale if the last
has sufficient resources to perform maintenance of a fair and orderly preceding transaction at a different
effectively its market obligations. market for the new market basket price was at a higher price ("zero-minus
Additionally, the Commission believes contracts. Moreover, the Commission tick"). The Exchange has requested
the initial and maintenance financial believes that the application of the relief from Rule 10a-1 in two respects.
requirements for market makers are current trading rules will pronote just First, the Exchange seeks an exemption
sufficient to ensure that only those and equitable principles of trade at the from Rule 10a-1 as it would apply to the
persons or firms with adequate equity to market basket trading post and protect individual component stocks in the S&P
trade contracts worth over $1,000,000 investors and the general public. 100 and S&P 500 market basket
will receive market maker status. At the In addition, the Commission contracts and to transactions in the
same time, these financial standards are recognizes that because transactions in market basket contract itself. Second,
not so high as to result in an inadequate market basket contracts result in the the Exchange requests an exemption
number of market basket market transfer of the underlying stocks, certain analogous to the "block positioner"
makers. The Commission believes that Exchange rules designed for options exemption in paragraph (e)(13) of Rule
the Exchange has balanced concerns contracts are not appropriate for the 10a-1.5 5 The requested exemption
regarding liquidity and required capital, trading of market basket contracts. would permit DPMs and market basket
and, accordingly, designed standards to Specifically, position and exercise limits market makers, selling stock acquired in
ensure sufficient market making are not appropriate for market basket a market basket transaction, to
resources at the market basket trading contracts, because the transactions are disregard, when netting positions for
post. not leveraged and the underlying purposes of Rule 10a-1, a short position
In regard to the physical location of securities are actually acquired. that is the subject of one or more
the market basket pit, the Commission Additionally, for the same reasons, the offsetting positions created in the course
does not believe that the location of the Commission believes that the applicable of bona fide arbitrage, risk arbitrage, or
market basket trading post adjacent to margin tules for both customers and bona fide hedging activities.
the post or posts where traditional index market basket market makers should be
options are traded raises side-by-side Rule 10b-6 limits the ability of
based on the rules applicable to the
trading concerns. Specifically, both the underwriters, issuers, or certain other
underlying stock involved in a market
market basket contracts and index basket transaction. persons to bid for or purchase a security
options contracts are based on the The Commission also be lieves that the being distributed, or a related security,
prices of a group of stocks, none of proposed rules regarding customer during the distribution of that security.
which by itself accounts for a significant protection are appropriate for market Rule 10b-7 regulates stabilizing
weighting of the applicable index.50 In basket contracts. The Commission transactions in connection with an
addition, the underlying stocks for the recognizes that because of the size of a offering of securities. Rule lob--8
baskets are not traded on the CBOE. market basket contract only institutional restricts bids and purchases of rights,
Accordingly, Exchange market makers or sophisticated investors will invest in and offers and sales of the underlying
will not have a market informational them. The Commission agrees with the stock, by persons participating in a
advantage of the nature and dimension Exchange that such investors do not rights offering. Rule lob-10 requires
that specialists in individual stocks require a special disclosure document broker-dealers to provide customers
traded on the primary market would that describes the risks of trading with a written confirmation that
have. Therefore, the Commission does baskets of stocks. The Commission includes, among other things, the
not believe that permitting CBOE notes, however, that the Exchange will identity, price and number of shares or
members to be market makers for index apply substantially all of its customer units of a security purchased or sold by
options and market baskets will create protection rules, including suitability the customers.5 6 Rule 1ob-13 prohibits
an undue advantage that would requirements, to market basket persons making a tender offer for a
undermine the maintenance of fair and transactions. 5 security from purchasing or arranging to
orderly markets. Additionally, the purchase that security otherwise than
F. Exemption Requests pursuant to the tender offer. Rule 15cl-5
Commission believes that the close
proximity of the index options and The Exchange has requested that the requires a broker-dealer to disclose that
market basket posts will allow CBOE Commission grant exemptions from it has a control relationship with an
market makers to hedge both their index Rules 10a-1, lob-6, lob-8, lob-10, lob- issuer before executing a transaction in
options and stock basket positions more 13, 15cl-5, and 15cl-6 under the Act 52 that issuer's securities. Rule 15cl-6
efficiently. The Commission believes to facilitate53 trading in market basket requires a broker-dealer to disclose its
that this. opportunity to hedge may contracts. participation or financial interest in the
enhance the depth and liquidity of the
54
index options and market basket 5 To the extent relevant, the Commission A short sale is defined in Rule 3b-3 under the
markets, thereby improving the quality incorporates in this order its response to the Act. 17 CFR § 2403b-3. as any sale of a security that
comments on the NYSE's ESP proposal. the seller does not own or any sale that is
of these markets. 5217 C.F.R. § § 240.10a-1, 240.10b-0, 240.10b-7, consummated by the delivery of a security
240.1b-. 240.10b-10, 24010b-13, 240.15cl-5. and borrowed by, or for the account of, the seller. Rule
6 As of August 31.1989. the five largest 240.15cl-6 11989). 3b-3 provides further that a person shall be deemed
companies in the S&P 50 (IBM, Exxon, GE. AT&T, 51 See letters from Nancy Crossman, General to own a security only to the extent that such
and GM) comprised 10.97 percent of the Index. The Counsel, CBOE to Larry E. Bergmann, Associate person has a new long position in the security.
five largest companies in the S&P 100 (IBM, Exxon. Director, Division of Market Regulation, SEC, dated 5,1See Securities Exchange Act Release No. 20715
GE, AT&T, and Philip Morris) comprised 26.49 September 8, 1989, September 18, 1989, and October (March 6,1984), 49 FR 9414 (March 13. 19841.
percent of the Index. 10,1989. 56See supra. note 25.
45852: Federal Register, /'Vol.' 54, No., 209 /"Tuesday, October 31, 1989 / Notices
distribution of a'security at or before the The Commission finds good cause for [Rel. No. 34-27384; File No. SR- MSE-89-021
completion of a transaction.in such approving those portions of the proposal
security for the account of a customer of. that were amended by Amendments No. Self-Regulatory Organizations;.
.that broker-dealer. 3,4,and 5 prior to the thirtieth-day after Midwest Stock Exchange, Inc.; Order
The Commission believes that the date of publication of the Approving Proposed-Rule Change to
transactions involving standardized amendments in the Federal Register. Establish a Secondary Trading Session
baskets of stocks generally involve the The original filing was the subject'of a for the Execution. of Transactions In
same regulatory concerns.that .are 30-day notice period and the Portfolios of Securities
applicable to transactions in individual amendments made only minimal
stocks, and that appropriate conditional. I. Introduction.
changes to the proposal as noticed. In
relief from Rules 10a-1,10b-6, 1ob-7, OnApril 28, 1989, the Midwest Stock
addition, accelerated approval is
10b-8, 10b-10, and 10b-13 is necessary Exchange,'Inc. ("Midwest'' or
and appropriate if the benefits of trading necessary because market basket'
.trading is scheduled tobegin on October "Exchange") submitted to the Securities
*in market basket contracts are to be and Exchange Commission.'
achieved. With respect to Rules 15cl-5 26,1989.'Because of the Commission'
view of the benefits thatmay result from. ("Coimission". or "'SEC"),pursuant to
'fand.15c--6, in recognition of the unique
the trading of market baskets on,a . Section 19(b)(1) of the Securities
-nature of marketbasket. contract .
transactions, the Division.has, national securities exchange, the. Exchange Act of 1934 ("Act") '. and Rule
determined that transactions in market Commission believes a god cause 16b-4 thereunder, . a proposed rule
baskets are unlikely to give rise to the finding is justified. change 3 designed to establish a
abuses the rules were designed to Interested persons are invited to 'Secondary Trading Session for the
prevent and accordingly, the Division is submit written data, views, and execution of transaction in portfolios of
taking,a no-action position under those arguments concerning the foregoing. securities through its new automated
rules. Accordingly, the Commission's Persons making written submissions Portfolio Trading System ("PTS" or
-staff today has provided exemptions or should file six copies thereof with the "System"), 4 Concurrent with its April-
other appropriate relief with respect to Secretary, Securities and Exchange 28, 1989 filing, Midwest filed with the
* the treatment of transactions in market Commission, 450 Fifth Street, NW., Commission's Division of Market
basket contracts under these rules. Regulation ("Division") a proposed
Washington, DC 20549. Copies of the
V. Conclusion submission, all subsequent amendments, transaction reporting plan pursuant to
all written statements with respect to' Commission Rules 11Aa3-1 and 1Aa3-
The Commission believes that the 2 under the Act.
5
market structure for trading market the proposed rule change that are filed
baskets is consistent with just and with the Commission, and'all written
equitable principles of trade. Moreover, communications relating to the proposed
given the institutional character of stock rule change between the Commission '15 U.S.C. 78s(b)(1) (1982).
portfolio trading that market basket and any person, other than those that 2 17 CFR 240.19b-4 (1989).
trading is designed to capture, the may be withheld from the public in - Additionally, Midwest stated that itintends to
accordance with the provisions of 5 submit an application to the Commission's Division
Commission believes that the
of Market Regulation for unlisted trading privileges
Exchange's chosen market structure is a U.S.C. 552, will be available for ("UTP") pursuant to Section 12(f) of the Act. 15
fair and competitive market structure. inspection and copying in the U.S.C. § 781(f). See letter from J.Craig Long, Vice
Finally, the Commission's Section 19 Commission's Public Reference Room. President and General Counsel, to Richard G.
authority and the Rule 19b-4 process Copies of such filings also will be Ketchum, Director, Division of Market Regulation,
allow the Commission and the Exchange SEC, dated April 27, 1989 ("April 27 letter"). '
available for inspection and copying at Specifically, Midwest will apply for UTP in those
sufficient flexibility to modify market the principal office of the CBOE. All securities which comprise a part of the Standard
basket trading in light of actual trading submission should refer to file number and Poor's ("S&P") 500 Index and which Midwest
experience and any future SR-CBOE-88-20, and should be does not trade currently pursuant to UTP.
developments."7 submitted by November 23, 1989. ' Amendment No. 1, submitted by the Midwest on
Accordingly, based upon the May 31, 1989, deletes changes to Article XX,Rule 12
It is therefore ordered, pursuant to and Article XXI, Rules 2, 3,4, 8,9, 12 and 13 as
aforementioned factors, the Commission
finds that the Exchange's proposed rule section 19(b)(2) of the act, 59 that the proposed in the Exchange's original filing submitted
proposed rule change (SR-CBOE-88-20) on April 28. 1989. Amendment No. 1 also adds an
change relating to the trading of market Interpretation and Policy, to be set forth in Article
baskets is properly within its be, and hereby is, approved. VIII, Rule 9 of the Midwest's Rules, that clarifies the
'jurisdiction and consistent with the By the Commission. application of the Exchange's off-board trading
Dated: October 26, 1989. restrictions to member transactions in securities
requirements of Sections 6(b)(4) and (5) traded on the Exchange. In particular, the'
of the Act and the rules and regulations Jonathan G. Katz, Interpretation and Policy clarifies that
thereunder.5 8 Secretary. implementation of the Midwest's proliosed
[FR Doc. 89-25599 Filed 10-30-89; 8:45 am] Secondary Trading Session will not prohibit
members from effecting transactions in securities
s The Commission believes that the 30 dpy BILLING CODE 8010-01-M listed or admitted to unlisted trading privileges on
comment period that accompanied publication of the Exchange, where the member acts as principal
the Exchange's proposal, and the Commission's
or agent, on any organized exchange, or oyer-the-
continued willingness to entertain all comments that counter market in any foreign country, outside of
preceded this action, provided an adequate public
forum in which to examine all the issues and the trading hours of.the Exchange's Primary Trading
concerns regarding the Exchange's market basket index multiplier, or market structure are changed In Session.
proposal. Accordingly, it is unnecessary to hold any material way, however, it would be necessary 5 17 CFR § § 240.11Aa3,- and 240.!1A3-2 (1989).
public hearings on the CBOE proposal. - for the CBOE to submit a proposed rule change in The Midwest also has requested an exemption from
, The Commission notes that approval of the order to afford the public an opportunity to review the requirements of paragraph (b)(2)(viii} of Rule
proposed rule change is based upon a determination and comment on the proposed modification and for llAa3-1 for transactions effected through the
that the terms of market basket trading are the Commission to review its prior'determiination. System, See letter from 1. Craig Long, Midwest, to
consistent with the requirements of'the Act. Ifthe Mar Revell;-Branch Chief, SEC; dated September
terms of the market basket contract' including the 15'U.S.C. 78s(b)t2) (1082]. 12, 1989."
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45853
I! I
Notice of the proposed rule change group of Eligible Securities consisting of the PTS are deemed to be firm
was provided by the issuance of a at least 20 securities, where the value of quotations to buy or sell the portfolio at
Commission release (Securities any one security does not exceed 20 the stated priceas if made available for
Exchange Act Release No. 26887, June 2,: percent of the contract price of the an individual security in accordance
1989), and by publication in the Federal shares in the portfolio as executed. with Rule'llAcl-1 under the Act.10
Register (54 FR 24779, June 9, 1989). The Proposed Midwest Rule 9, Article Only orders for portfolios may be
Commission received one comment on XXXV establishes objective and executed during the Secondary Trading
the proposed rule change. 6 subjective pricing parameters for stock Session. No other orders for the
II. Description of the Proposal portfolio transactions executed through purchase or sale of securities will be
the PTS. Using the last reported price accepted for execution. Any orders for
A. PTS ProductDescriptionand Market after the New York Stock Exchange the purchase or sale of securities
Structure . ("NYSE") close for each of the securities entered in Midwest's Primary Trading
Proposed Midwest Rule 10(b), Article comprising a portfolio as reported on the Session that remain unfilled at the close
IX would establish a Secondary Trading Consolidated Transaction Reporting will be held over for'execution during
Session to be conducted from 3:30 p.m. System or the NASDAQ Transaction the next Primary Trading Session and
to 5:00 p.m. Central Time (4:30 p.m. to. Reporting System on the day the will not be executed during the
6:00 p.m. Eastern Standard Time) for the portfolio transaction is to be executed, Secondary Trading Session. 'Thus, there
limited ptirpose of permitting the the price at which the portfolio will be no interaction between orders in
execution of transactions in qualified transaction is executed may not be less individual securities left open at the end
portfolios of equity securities. through than 95% or greater than 105% of the of the Primary Trading Session and
the PTS. 7 The rules governing the aggregate value of the securities portfolio ex'ecutions that take place
Secondary-Trading Session are to be set comprising the portfolio. Additionally, during the Secondary Trading Session.
forth in a new Article XXXV of the proposed Rule 9, Article XXXV specifies A personal computer ("PC") may be
Midwest's Bylaws. 8 that the price of each security used for order' entry into the PTS. A
The Midwest's Floor will not be open comprising a portfolio may not be less member or member organization may
during the Secondary Trading Session. than 90%or greater than 110% of the last make a bid or offer to.purchase or sell a
Rather, all qualified portfolio reported price for that security. portfolio by entering into the System the
transactions will be executed through: Furthermore, the price at which a total value of the portfolio, the symbol
the PTS, an automated, screen-based portfolio transaction is executed, both in and quantity of all eligible securities
trading system maintained by Midwest. the aggregate and on a security-by- comprising a non-standardized portfolio
Exchange members will be permitted security'basis, must be fair, taking into and the settlement terms of other than
consideration all relevant "regular way" tiansactions. In the event
access to the PTS through dial-up
modems, but Exchange specialists, odd- circumstances, including market that an Exchange member or member
- lot dealers and registered market conditions with respect to such security organization attempts to trade a
makers may not participate as such or securities at the time of the portfolio that contains a non-eligible
during the Secondary Trading Session. transaction, the expense involved, and security, a PTS systems check would
The Midwest's Secondary Trading the fact that the member or member 'disallow the input, and generate a
Session is limited to transactions in organization is entitled to a profit. Upon rejection. Similarly, if a portfolio did not
portfolios of "Eligible Securities." These application by a member or member meet the standards for concentration
are defined in proposed Rule 2(d), organization, Rule 9 permits an officer of and issue composition, the PTS would*
Article XXXV as all securities that are the Exchange to exempt transactions on generate a rejection.
listed for trading on the Exchange or to a case-by-case basis from the operation
2. Price Protections and Order Execution
which UTP have been granted. The of the objective portfolio pricing
Midwest's Secondary Trading Session parameters. Members may enter crossed orders or
will allow portfolio transactions in both Under proposed Rule 5, Article XXXV, unmatched bids and offers into the
"standardized portfolios" and "non- bids or offers in portfolios entered into system. When crosses are entered, the
standardized portfolios". Proposed Rule the PTS must be made in minimum System will first search all unmatched
2(a), Article XXXV defines the term increments of $.01. Bids or offers in orders to determine whether there is an
"standardized portfolios" as any group Eligible Securities comprising a portfolio order in the System for the same
of Eligible Securities that are the subject must be made in increments of 1/10,000 portfolio at the same or a better price. If
of an option contract traded on a of a dollar per share.a there is no better quotation, the cross
national securities exchange or a futures will be executed, provided the
B. PTS Order Entry and Trading Rules
contract traded on a contract market transaction price is within the
designated by the Commodity Futures 1. Acceptable Orders applicable pricing parameters. If there
Trading Commission. Rule 2(b) defines a All qualified protfolios traded in the is a better quotation, the cross will not
"non-standardiied portfolio" as any be permitted and a message to that
PTS are deemed to'consist of a single
unit of trading, which is comprised of effect will be sent to the member
6See notes 21-24, infra and accompanying text. the number of shares of each security in attempting to effect the transaction.
I The Primary Trading Session currently is
the portfolio as specified in the bid and If an unmatched bid or offer is
conducted on the Floor of the Exchange from 8:30 offer. All bids and offers entered into entered, and the member or member
a.m, to 3:00 p.m. Central Time. , organization wished to sell a specific
1 8 The Article XXXV Rules apply to Exchange
9 The Midwest has stated that the relatively small
portfolio at a price equal to or lower
contracts made on the Exchange during the
Secondary Trading Session. Except to the extent portfolio valuation increments Were chosen to than a published bid, or it wishes to buy
that specific Article XXXV Rules govern, or unless reflect current business practice: customers price a a specific portfolio at a price equal to or
the context otherwise requires, the provisions of portfolio to the nearest cent, and then allocate the higher than a published offer, then Rule
Midwest's'Constitution and all other rules and portfolio's dollar value to each stock in the portfolio.
policies of the Board of Governors are applicable to. In allocating the portfolio's value to the stocks,
the execution of portfolio transactions through the customers may need to use a fraction of a cent to toMidwest Rule 6(a), Article XXXV.
PTs,.- value each stock. I "See April 27 letter, supra note 3.
45054 Federal Register I Vol. .54, No. 209 / Tuesday, October 31, 1989 / Notices
6(b), Article XXXV requires the member accepted in any given Secondary underlying -securities is important
or member organization to "satisfy" Trading Session, then the bid or-offer information that should be included in
such.a pre-existing quotation prior to will be retained for the next Secondary the daily consolidated volume for each
executing any order at that price. The Trading6 Session, unless it is a day of the underlying securities. This
member-could then contact the other order.' presents a number of techn6logical
side and personally negotiate a price at C. TransactionReporting Plan difficulties for Midwest, however, and
which the transaction an take place, the Commission has therefore decided
because PTS does not operate as an The Midwest has filed a transaction to grant a temporary exemption from
order -interaction system. One of the two reporting plan ("Plan") that is limited this requirement to allow Midwest
members would then enter a matched specifically to portfolio transactions adequate time to make the necessary
bid and offer into the system for executed during the Exchange's arrangements to have this volume data
execution. Secondary Trading Session.1 7 Pursuant included in the end-of-day consolidated
An Exchange member or member to the Plan, when a portfolio is executed volunie. 20
organization that has accepted for through the PTS, Midwest will
execution an order to purchase or sell a disseminate real-time transaction D. Fees
portfolio of securities on behalf of a reports for the portfolios, but not for the For portfolio transactions executed
customer through 'the PTScannot fill the individual securities that comprise the through the PTS, proposed Rule 13,
order by selling or purchasing such portfolios, from 3:30 p.m. to 5:00 p.m., Aticle XXXV imposes transaction fees
portfolio for its own account if it is Central Time (the hours of the equal to the greater of $100 per portfolio
holding an unexecuted order on behalf Secondary Trading Session), on all transaction or $.025 per,$.O0O valuation.
of another -customer to sell or purchase12a trading days.' The Exchange will make Midwest members and member
portfolio at the same or a better price. available to vendors and subscribers: .(1) organizations that elect to participate in
Similarly, no Exchange member or the aggregate price of the portfolio; and PTS are required to pay a monthly fee of
member organization that has accepted (2) the symbol and quantity for each $2,500, payable quarterly in advance. .
an order .to purchase or sell a portfolio security comprising the portfolio. 19 At The monthly access fee will -bereduced
of securities on behalf of a customer the end of each Secondat:y Trading. by an amount equal to the amount of
through the PTS may fill such an order Session, Midwest will provide to news transaction fees such member or
by selling or purchasing such portfolio vendors and subscribers a report on -the member organization pays.
for its own account or the account of a aggregate number of shares ofeach of
customer, if another member or member the securities purchased and sold during E. Prposeand Benefits
organization has entered.a quotation that session, as well as aggregate Midwest has proposed its Secondary
into the System to sell or purchasesuch System volume. Trading Session to permit the efficient
a portfolio at the same or a better The Plan submitted by the Midwest
execution of transactions in portfolios of
price.! 3 does not provide for the ,consolidation of securities subject to the regulatory
When a bid or offer is accepted over transaction reports from other markets oversight of the Midwest. The Exchange
the phone by another member or trading ,the same securities. The
contends that the Secondary'Trading
member organization, the portfolio Commission has decided to gant
Session is designed to address some of
transaction must be executed in Midwest a temporaty, exemption, for six the effects of NYSE Rule 390, which
accordance with Rule 7, Article XXXV. months, from the requirement in -Rule generally prohibits -a NYSE member, or
In order to execute an order, a member 11Aa3-1 that the Plan provide a any broker or dealer affiliated with a
or member organization must enter into mechanism for the consolidation of last NYSE member, from effecting any"
the System a matched bid and offer for a sale data on these securities with last
transaction in most NYSE-listed
portfolio., 4 An Exchangenember or sale data from other markets trading the
securities as a principal in the over-the-
n ember organization must then enter same securities. While the Commission
counter market -orfrom acting as agent
specified'information describing the is aware of the limited usefulness of
of both parties in an over-the-counter
executed portfolio transaction into the price information on the underlying transaction. Because these prohibitions
System.' 5 If a bid or offer is not securities in a portfolio transaction are not applicable to transactions
executedduring Midwest's Secondary effected in any foreign country outside
I2 Midwest Rule 8(a], Article XXXV. This rule is Trading.Session, it believes that
of NYSE trading hours, many brokers for
designed to address concerns raised by the conflict dissemination of the share volume in the large institutional investors in portfolios
of interest that may arise because of the
intersection of a member firm's -customer and of securities 'that desire to execute
proprietary trading opera tions. Upon entry of this information, an Exchange transactions based on the closing prices
13Midwest Rule 6(b), Artiule XXXV. contract will be made for each security comprising
the portfolio. of securities on the NYSE-effect such
14 Portfolio transactions between Exchange
"' Midwest Rule 4(a). Article XXXV.
transactions off-shore, usually -in
member or member oganization or between
members and their customers must be entered into 17See-Securities Exchange Act Release No. 27385 London.
the System by only -one member or member (October.26,1989) (Commission order approving The Exchange contends that these
organization. Midwest Rule 7(a, Article XXXV. Midwest Plan and exemptions from certain
requirements of Rule 11Aa3-1 under the Act).
overseas execution procedures -are
I5 An executed portfolio transaction must be
accompanied by the following items of information: 18 However, Rule 1tAa,-1 tinder the Act requires unsatisfactory -from several viewpoints.
(1) the name of the executing member or member that transactions in the individual securities be First, these transactions take place
organization and its Exchange-symbol: (2) the name reported.Thus, by separate order the Commission without 'the benefit of exchange
of the clearing member or members, if not the has granted Midwest an exemption from this oversight and without the regulatory
entering member; (3)the symbol, quantity and price. requirement. See supra note 17.
'1 The Plan also provides the terms of access for
protection afforded participants in U.S.
in decimals, for each security in the portfolio; (4)the
total value of the portfolio: and (5) the settlement vendos who wish to retransmit the data. The Plan security markets. In addition, such
terms, if other than" regular-way" -Midwest -Rule provides for no vendor -feesfor access to the transactions are not reported to the
7(b), Article XXXV. Upon entry oflhisinformation. information but 'wodld require subscribers to pay public. Thus, issuers. the investing
an Exchange contract will be made for each security "appropriate" fees for receipt of the data. The
comprising the portfolio: (4) the total value of the Commission -notes-that any fees established by the
Midwest thatwotild be dhargcd to PTS.sshcribers 20 Sree idwes1 -Plan approval order, suprei note
portfolio; and (5) the settlement terms, if other-than
"regular way." MidwestIRule"7(b), Artidle XXXV. 17.
must be filed with the Commission.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45855
public and the regulatory agencies could interact with portfolios, brokers The AFB believes that Midwest's
responsible for the oversight of the would have the incentive to change their Secondary Trading Session may
markets are deprived of,important individual stock price allocation in order exacerbate existing structural market
information regarding trading activity in to avoid this result. risks because of the unequal regulatory
various securities. In order to accommodate trading in treatment accorded transactions in PTS
The Midwest believes that the the System, Midwest has requested ' portfoliQs and regular way transactions
Secondary Trading Session will permit exemptive relief from the operation of in individual securities. The AFB
broker-dealers to execute transactions Commission Rules 10a-1 and 11Aa3-1 particularly criticizes the exemption to
in portfolios rapidly through the PTS as they would otherwise apply to the short selling rule that would apply
automated trading system maintained portfolio trading through the PTS during during the Secondary Trading Session.
by Midwest, and will provide disclosure the Secondary Trading Session. The The AFB argues that in comparison to
to the public of trade information Exchange believes that these rules existing equity procedures, short selling
concerning such transactions. In would impede the operation of the during the Secondary Trading Session
addition, the Midwest notes that it will alternative trading procedures that would result ultimately in a fragmented
maintain a complete audit trail of all govern trading through the PTS during securities market structure with
transactions effected in the Secondary its Secondary Trading Session without increased market volatility.
Trading Session, permitting the providing any regulatory benefits. The Exchange responded to the AFB's
Commission and the Midwest to monitor
III. Comments Received concerns and other issues raised by
better the after-hours institutional Commission staff in a letter to
market. The Commission received one
Commission staff. 23 The letter
As discussed above, there will be no comment on the proposed rule change
from the Alliance of Floor Brokers addressed the market structure and
interaction between orders in individual
("AFB"), 21 whose membership is regulatory concerns raised by the
securities left open on Midwest during
comprised predominantly of NYSE floor proposal and explained further the
the Primary Trading Session and
portfolio executions during the brokers. In general, the AFB comment rationale for implementing a Secondary
Secondary Trading Session. The letter argues that in comparison to Trading Session for executing portfolio
Exchange claims that this aspect of the existing equity market trading transactions.
System is a necessary consequence of procedures, the unequal regulatory In its letter the Exchange notes that its
the limited trading environment being treatment envisioned by the Secondary Secondary Trading Session is structured
supported during the Secondary Trading Trading Session and the supporting with the goal of providing institutional
Session. The PTS is not designed or System would result ultimately in a customers and member firms with a
intended to be an after-hours automated fragmented securities market structure trading vehicle that allows a largely
execution system for individual with increased market volatility. The institutional composite-asset market to
securities and small groups of securities. AFB questions the Midwest's rationale rebalance stock portfolios after the
Midwest states that at the present time supporting its proposed rule change, as NYSE close to reflect the last reported
it is not prepared to advocate an off- well as the overall need for the sale on the consolidated transaction
floor, electronic trading mechanism for Secondary Trading Session. reporting system. The Exchange believes
these types of orders, which can benefit The AFB also levels more specific that the rules supporting its Secondary
from open outcry or widespread -criticisms at the Exchange's proposal. Trading Session are designed
dissemination of firm quotations For example, the AFB contends that the appropriately to accommodate the
reflecting buying and selling interest. pricing mechanisms that govern stock particular needs of its market niche in a
Integration of orders from the Primary portfolio trading during Midwest's •fair and competitive market structure.
Trading Session into the Secondary Secondary Trading Session do not Finally, Midwest believes that it
Trading Session also would require provide for sufficient price proposal will result in improvements in
fundamental changes in the way limit transparency, order interaction and the areas cited by the AFB by bringing a
orders are handled. Brokers that do not ultimate price betterment. Furthermore, share of the after-hours institutional
want their customers' orders to be the AFB comments that the Secondary market in portfolio transactions under
executed after hours would have to Trading Session's proposed crossing the auspices of the Commission and
mark those orders or withdraw them .rules do not consider adequately the Exchange oversight and by requiring
prior to the close of the Primary Trading '"price conditionality" 22 of some transactions to be reported.
Session. Customers would.be faced with proposed cross transactions, nor do the The Exchange also answers the AFB's
the decision whether to obtain an after- portfolio pricing parameters account specific criticisms. In response to the
hours execution or wait until the adequately for the possibility of severe concern raised by the AFB that the
opening of the Primary Trading Session price variances from closing prices that proposed price parameters afford too
the following day when there could be- may result from the proposed price much leeway in pricing portfolio
an even greater price movement parameters that would govern transactions, the Exchange -stated that it
, Finally, the Exchange contends that Midwest's Secondary Trading Session. believes that the flexibility in its
its proposed price allocation process- The AFB also criticized the Midwest's proposed price parameters are
makes the entire notion of order proposed Plan for reporting trades necessary to accommodate institutional
interaction somewhat specious. Under executed during the Secondary Trading -trading in a composite-asset market
its proposed rules package, individual Session. where stock transactions with otherwise
stock prices have the potential to be set separate executions are executed.in
derivatively so long as they are within 21 See letter from Michael D. Robbins. President, aggregated portfolios at a single price,
the applicable pricing parameters set AFBto Jonathan G. Katz, Secretary, SEC. dated and will therefore allow parties to a
forth in Rule 9, Article XXXV. Therefore, August 18,1989. portfolio transaction to price portfolios
22 A proposed cross transaction may be "price
the Exchange believes that it would be
*inappropriate to initiate order conditional" to the extent that one or both sides of
the trade would delay executing the cross at the 23 See letter from 1. Craig Long, General Counsel.
executions based on that price. market in the hope that a better execution price may Midwest, to Jonathan G. Katz, Secretary, SEC, dated
Similarly, if individual stock orders be found in other buying or selling interest. September 11, 1989.
45856 Federal Register / Vol. 54, No. 209 1 Tuesday, October 31, 1989 / Notices
in response to the buying and selling Secondary Trading Session is designed needs in this area. The Midwest system
interest of their customers, as well as appropriately to prevent fraudulent and is another attempt to provide a program
respond to changed market conditions manipulative acts .and practices, trading service for institutional
after the close of regular trading. The promote just and equitable principles of investors. The Commission agrees with
Exchange contends that the price limits trade, provide foran equitable Midwest that the Secondary Trading
assure that the execution prices of a allocation of fees,.and is consistent with Session may provide a useful means for
portfolio and its component securities the maintenace of fair and orderly executing portfolio trades in U.S.
will be fair and consistent with markets, an open and competitive securities that currently are being
prevailing market conditions and national market system, and the ability executed overseas. Moreover, the
fundamental corporate valuations. of a national securities exchange to System may be helpful in -soliciting
In response to the AFB's criticism of enforce compliance with its rules. For contra-side interest for portfolios orders.
the proposed crossing procedures for the these reasons and for the additional As described below, the Commission
Secondary Trading Session, Midwest reasons set forth below, the Commission also believes that the market structure
notes that its Secondary Trading finds that approval of the Exchange's Midwest has designed to support its
Session will permit matched orders to proposed rule change relating to a Secondary Trading Session balances
be crossed only if there is not an Secondary Trading Session is consistent appropriately the competing concerns of
unmatched order in the PTS at the same with the requirements of the Act and the vari6us Exchange constituencies and its
or a better price. Citing the Cincinnati rules and regulations thereunder institutional clientele in a manner
Stock Exchange's ("CSE") National applicable to a national securities consistent with just and equitable
Securities Trading System ("NSTS") as exchange, and, in particular, with the principles of trade. Given the
an example, 24 the Exchange claims that requirements of section 6(b). 5 institutional character of stock portfolio
its PTS provides the same level of order
Over the past several years the use of trading that the Secondary Trading
interaction and price competition
composite-asset trading techniques and Session is designed to capture, the
approved by the Commission in other
strategies by institutional investors has Commission agrees that the Exchange's
electronic trading systems.
increased substantially. Both the stock chosen market structure, which accords
Midwest responded to the AFB's
exchanges and ptiva.te information price protections and trade reporting, as
critique of the proposed transaction
vendors have developed products to well as the benefits of Commission and
reporting plan for trades executed
facilitate the trading of portfolios of Exchange oversight pursuant to the Act,
during the Secondary Trading Session
securities. 26 In addition, broker-dealers is a fair and competitive market
by etnphasizing that its Secondary
Trading Session represents a marked have used exchanges-for-physicals structure, Furthermore, the Commission
improvement over current market ("FYXPs") 27 to satisfy their customers' believes that Midwest's Secondary
practices, where overseas portfolio Trading Session will not, as the AFB
transactions are not reported either to 2 t5 U.S.C. §§ 78f(b) (1982). contends, lead unduly toward a more
the Commission or the public. Under 20 See, e.g., Securities Exchange Act Release No. fragmented and volatile market. The
Midwest's proposed transaction 27383 (October 28, 1989) ICommissionorder Secondary Trading Session responds to
reporting plan for its Secondary Trading approving File No. SR-NYSE-89-05, a proposed rule existing demand for a means to effect
change submitted by the NYSE designed to enable portfolio trades at an aggregate price
Session, real time portfolio transaction the trading of standardized baskets of stocks at an
reports will be disseminated to vendors aggregate price in a single execution on the NYSE reflective of the market closing prices of
and subscribers along with aggregate flouor; Securities Exchange Act Release No. 27383 the component securities. By definition,
shares traded. Thus, the Exchange notes (October 26, 1989) tCommission order approving these transactions will not occur during
File No. SR-CBOE-88-20, a proposed rule change regular equity trading hours. The
that the investing public will no longer submitted by the Chicago Board Options Exchange
be deprived of important information ("CBOE") also designed to enable the trading of Secondary Trading Session offers the
regarding portfolio trading activity in standardized baskets of stocks at an aggregate price very real benefits of trade reporting,
various securities. in a single execution on the CBOE floorL; and letter consolidated surveillance, and pricing
from Brandon Becker, Associate Director, Division protections which ensure that matched
Finally, the AFB suggested that the of Market Regulations, SEC, to Lloyd H. Feller, Esq..
Secondary Trading Session is Morgan Lewis and Bockius, dated July 28, 1987 bids and offers do not "trade through"
susceptible to manipulation of (Commission no-action letter issued under Sections an unmatchedquotation.2 8
5 and 6 of the Act on behalf of request by Jeffries
individual securities and insider trading and Co., Inc. to implement a computerized order B. Portfolio PricingParameters.
abuses. In response, the Exchange entry mechanism'to allow for trading customized
emphasizes that the lack -ofa price portfolios of stocks ata single price). As discussed above, each individual
effect for the -individual stocks that 21 An EFP generally may be defined as the security in a portfolio traded in the
comprise a portfolio and the Exchange's exchange of a long (short) futures position for an System must be priced within a range of
equivalently valued long,(short stock position. This plus or minus 10% of the last reported
detailed surveillance procedures will normally takes place after the NYSE close and is
deter and capture any trading abuses. completed in accordance with Commodity Futures
price for that security on the day the
Trading Commission ('!CFTC") regulations. In the portfolio transaction is executed,
IV. Discussion CFTC Division of Trading and Markets Report on provided -that the portfolio itself is
Exchanges of Futures for Physicals, dated October priced within a range that is plus or
A. Introduction 1, 11187 ("CFTC Report", an EFP was defined as "a
transaction in which one party buys the physical minus 5%,ofthe aggregate closing prices
After careful consideration of the of the securities comprising the
commodity and simultaneously sells (or gives up a
comments received, applicable statutory long) futures contract. The price of the exchanged portfolio. Further, no one security shall
provisions, and relevant -policy futures position, the quantity of the futures and cash consist of more than 20% of the contract
considerations, the Commission commodity, and other terms are privately
concludes that Midwest's proposed negotiated by the parties rather than being
competitively executed in the pit." CFTC Report at 28 The Cmmissions approval order4ssued 'today
2. The CFTC has interpreted Section 4c(a) of -the for theNYSE's basket proposal, supra note 26,
24 The CSE's NSTS is a system of users linked Commodity Exchange Act, 7.U.S.C.§ 6(a), and addresses comments received by the AFB on that
electronically, which executes orders automatically. CF'C Regulation 1.38. 17 C.F.R. .§1.38, to permit product.The Commission incorporatesi'ts responses
For a general discussion of CSE's,NSTS. see individual contract markets, such as the Chicago to the AFB's comments on 4he;NYSE proposal to the
generally!SEC. Division-of'Market Regulation. The Mercantile.Exchange. to establish rules permitting AFB's comments on the'PTSrtothe:extent that 1he
October 1.987 Market Break at 7-40(February 1988. and governing .EFP.transactions. comments.are the same for both proposals.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45857
price of the shares in a "non- decision to deny order interaction The Commission believes it is
standardized portfolio" as executed. between its Primary and Secondary appropriate, particularly in view of the
The Commission agrees with Midwest Trading Sessions is reasonable to absence of price reporting in the
that the price parameters afford ensure that limit orders are not triggered individual stocks comprising portfolios,
institutions the flexibility to price by potentially unrepresentative prices of to exempt transactions during Midwest's
portfolio transactions executed during constituent securities executed after the Secondary Trading Session from the
the Exchange's Secondary Trading close of the primary markets for those operation of the short sale rule.
Session in response to changed market securities. The composite-asset nature of Accordingly, the Commission's staff will
conditions; such as currency movements the portfolios traded ovqr the System, issue a letter,granting appropriate relief
after the close of regular equity trading combined with the fact that the from Rule 10a-1 with respect to such
hours, or because of differing estimates Secondary Trading Session will operate transactions.
of equities' values. It would be in a discontinuous manner, makes the
unnecessarily rigid to require that prices prices of the individual securities less V. Conclusion
on the system reflect precisely the indicative of the prices obtained during Midwest's Secondary Trading System
closing prices for the constituent the Primary Trading Session, and should improve the portfolio trading
securities in the Primary Trading therefore not useful triggers for limit process by providing a means to
Session. orders. Second, because the PTS will
With respect to the AFB's concerns disseminate buying and selling interest
permit matched orders to be crossed for portfolio orders. To the extent that
regarding the transparency of the PTS only if there is not an unmatched order
price mechanism and the flexibility of Midwest's Secondary Trading Session
in the System at the same or a better does not integrate all segments of the
the price parameters that govern price, the Secondary Trading Session's
portfolio trading during the Secondary securities markets, the Commission
proposed crossing rules provide an
Trading Session, the Commission agrees with Midwest that these
opportunity for price betterment and
recognizes that although the individual departures are reasonably necessary to
preserve time and price priority for
prices allocated among the stocks that accommodate the unique aspects of the
portfolios.
comprise a protfolio are somewhat PTS without deviating from the concept
derivative, the plus or minus 10% price D. TransactionReporting of fair and orderly markets. Finally, the
limit on an individual stock will operate As described above, the Midwest has Commission's Section 19 authority and
as a reasonable limit on the actual price filed with the Commission a proposed the Rule 19b-4 process allow the
variance that a particular stock may .Commission and the Exchange sufficient
Plan for reporting trahsactions executed
experience. Moreover, the additional during the Secondary Trading Session. flexibility to modify the rules governing
plus or minus 5%price limit on the The Midwest also has requested portfolio trading on Midwest during its
portfolio as a whole also operates, on exemptions from certain requirements of Secondary Trading Session in light of
average, 2 9 as a further restriction on the Rule 11Aa3-1 under the Act for actual trading experience and any future
discretion of pricing an individual transactions executed -through the developments that materially affect the
component stock. The Commission System. Because the Commission agrees Secondary 34
Trading Session's market
notes furthermore that proposed Rule 9, with Midwest that the proposed structure.
Article XXXV requires all portfolio configuration for transaction reporting Based upon the aforementioned
transactions executed during the during the Secondary Trading Session is factors, the Commission finds that the
Secondary Trading Session both in the dppropriate, the Commission has issued Exchdnge's proposed rule change
aggregate and on a security-by-security a separate order approving the Plan and relating to the after-hours trading of
basis to be fair, taking into the exemptions.30 stock baskets is consistent with the
consideration all the relevant requirements of Sections 6(b) (4) and (5)
circumstances attendant to the E. Short Sale Exemption of the Act and the rules and regulations
transaction. The Commission believes The Exchange has requested that the thereunder.
Midwest's Secondary Session pricing Commission grant an exemption from It is therefore ordered, pursuant to
parameters strike an appropriate Rule 10a-1 under the Act 31 to facilitate section 19(b)(2) of the Act,3 5 that the
balance between allowing institutions transactions in the Secondary Trading proposed rule change be, and hereby is,
and Exchange members the flexibility to Session.3 2 Rule 10a-1 provides that short approved.
price transactions according to sales 3 of exchange-listed securities By the Commission.
economic fundamentals while restricting may not be effected at a price less than Dated: October 26, 1989.
the ability of market participants to the price at which the immediately
effect trades at prices that do not benefit preceding sale was effected ("minus Jonathan G. Katz,
from open outcry or the widespread tick") or at a price equal to the last sale Secretary.
dissemenatioh of firm quotations during if the last preceding transaction at a [FR Doc. 89-25603 Filed 10-30-89; 8:45 am]
regular equity trading hours. different price was at a higher price BILLING CODE S01O-0I-M
[Release No. 34-27385; File No. SR-MSE- portfolios of "Eligible Securities." 4 transparency, order interaction and
89-02] Pursuant to the Plan, Midwest will ultimate price improvement. The AFB
disseminate last sale transaction reports argues that Midwest has not properly
Self-Regulatory Organizations; for each portfolio, but not the individual addressed the lack of pricing
Midwest Stock Exchange, Inc.; Order securities composing the portfolio. transparency, and is concerned that
Approving Proposed Transaction Midwest will make available to vendors some individual securities prices may be
Reporting Plan and subscribers: (1) the aggregate price somewhat arbitrary and unreflective of
of the portfolio; and (2) the symbol and their actual price movements.
On April 28, 1989, the Midwest Stock quantity for each. security in the Midwest responded to the AFB's
Exchange, Inc. ("Midwest" or portfolio. 5 The Plan further provides *critique by emphasizing that its
"Exchange") submitted to the Securities that Midwest will make transaction Secondary Trading Session represents a
and Exchange Commission reports available to information vendors marked improvement over current'
("Commission" or "SEC"), pursuant to from 3:30 p.m. to 5:00 p.m., Central Time, market practices, where overseas
Rules 11Aa3-1 and 11Aa3-2 under the on all trading days 6 and that at the end portfolio transactions are not reported,
Securities Exchange Act of 1934 of each Secondary Trading Session, either to the Commission or to the
("Act"),' a proposed transaction Midwest will make available to vendors public." Under the Plan, real-time
reporting plan ("Plan") governing the the aggregate number of shares of each portfolio transaction reports will be
collection, consolidation and of the securities that were purchased disseminated to vendors and
dissemination of information on and sold during that session. subscribers along with aggregated
transactions in reported securities that The Plan also contains provisions for shares traded. Thus, the Exchange noted
are executed during the Midwest ensuring the accuracy and validity of that the investing public will no longer
Secondary Trading Session.2 As part of transaction reports. The Plan provides be deprived of important information
the proposal, the Exchange requested that all trades in portfolio transactions regarding portfolio trading activity in
certain exemptions under Rule 11Aa3- will be reported immediately upon various securities.
1.3 The Plan was noticed in Securities execution to Midwest through the PTS In addition, Midwest believes that the
Exchange Act Release No. 26887, June 2, pursuant to the requirements in Article pricing of portfolio tranactions between
1989, 54 FR 24779. The Commission XXXV of Midwest's rules. In addition, institutional buyers and sellers is
the Plan provides a description of how
received one comment on the proposed actually based on the aggregate portfolio
Midwest will verify the accuracy of the
rule. price, not on the prices of individual
reports and how Midwest will review securities. As a result, although
Description of the Plan portfolio transaction reports for Midwest's rules require reporting of
compliance with the pricing parameters individual security prices for audit trail
The transaction reporting plan filed by for portfolios contained in Rule 9,
Midwest is specifically limited in and clearing purposes, and require that
Article XXXV. Finally, the Plan provides
application to trading during the these prices be within a 10% range of the
that all contracts with vendors and
Exchange's Secondary Trading Session. close, Exchange members and their
subscribers explicitly provide that the
All qualified portfolio transactions can customers are free to allocate the
information provided them must be used
be executed during Midwest's portfolio's price among the individual
consistently with all applicable statutes
Secondary Trading Session through the securities at their own discretion.
and regulations and must not be used in Individual security prices therefore may
PTS, an automated, screen-based a fraudulent or manipulative manner.
be somewhat derivative and not
trading system maintained by Midwest. Comments reflective of the price movements in any
The Midwest's Secondary Trading
The Commission received one particular security. Thus, Midwest is
Session is limited to transactions in
comment on the proposed Plan from "the concerned that disseminating these
Alliance of Floor Brokers ("AFB"). 7 In arbitrarily determined prices to the
'17 CFR 240.11Aa3-1 and 240.11Aa3-2 (1989).
general, the AFB argues that in general public may be misleading and
2 Proposed Midwest Rule 10(b), Article IX will
establish a Secondary Trading Session to be comparison to existing equity market potentially harmful to the market.
conducted from 3:30 p.m. to 5:00 p.m. Central Time trading procedures, the different Discussion
for the limited purpose of permitting the execution regulatory treatment envisioned by the
of transactions in qualified portfolios of equity A. Standards of Review
securities through the new automated Portfolio Secondary Trading Session would result
Trading System ("PTS" or "System"). Brokers for in a fragmented securities market In reviewing the Plan, the Commission
institutional investors in portfolios of securities that structure. More specifically, the AFB must determine that it meets the
desire to execute transactions based on closing contends that the pricing mechanisms
prices of securities on the NYSE often effect such
standards set forth in Section 11A of the.
transactions offshore, usually in London. These that govern stock portfolio trading Act nd Rules 11Aa3-1 and 11Aa3-2
transactions take place without exchange oversight during the Secondary Trading Session thereunder. The Commission believes
and without regulatory protection for participants in do not provide for sufficient price that the Plan, as described above,
U.S. securities markets. Further, such transactions
are not reported to the public. Midwest developed
substantially meets these standards.
the Secondary Trading Session to provide a facility ' Eligible securities are defined in proposed Rule Rule llAa3-1(b)(2) provides that any
for broker-dealers to execute transactions in 2(d), Article XXXV as all securities that are listed National Market System ("NMS") plan
portfolios in the United States. The Commission for trading on the Exchange or to which unlisted
trading privileges ("UTP") have been granted.
shall specify, at a minimum: (1) the
approved the proposed rule change submitted by
Midwest to establish 'the Secondary Trading 5 The Plan also provides the terms of access for listed equity and NASDAQ securities or
Session in a separate order issued today. See vendors who wish to retransmit the data. The Plan classes of such securities for which
Securities Exchange Act Release No. provides for no vendor fees for access to the transaction reports are required by the
'See letter from J. Craig Long, Vice President, information but would require subscribers to pay plan; (2) the reporting requirements for
"appropriate" fees for receipt of the data.
General Counsel and Secretary, Midwest, SEC, to
Mary Revell, Branch Chief, Division of Market 6 This corresponds to the hours of the Secondary
Regulation, SEC, dated September 12 1989, and Trading Session. 0 See letter from 1.Craig Long. Vice President and
letter from J. Craig Long to Kathryn Natale, See Letter from Michael D. Robbins, President. General Counsel, Midwest, to Richard G. Ketchum,
Assistant Director, Division of Market Regulation, AFB, to Jonathan G. Katz, Secretary, SEC, dated Director, Division of Market Regulation, SEC, dated
SEC, dated October 18, 1989. August 18, 1989. April 27, 1989 ("April 27 letter").
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45859
transactions in listed equity securities or noted above, however, Midwest will 11Aa3-1(b){2)(viii) that it provide
NASDAQ/NMS securities for any make transaction reports on the market identifiers on the disseminated
broker or dealer subject to the plan; (3) portfolios available during the portfolio transaction reports. It requires,
the manner of collecting, processing, Secondary Trading Session and at the however, that NMS plans provide
sequencing, making available and end of each Session it will provide the market identifiers. Therefore, Midwest
disseminating transaction reports and aggregate number of shares of each of requested an exemption from this
the last sale data reported pursuant to the securities traded that day. The specific provision. Because Midwest will
such plan; (4) the manner such Commission agrees with the Exchange be the only marketplace reporting
transaction reports reported pursuant to that real-time last sale transaction transactions to vendors pursuant to the
the plan are to be consolidated with reporting for the individual stocks Plan, all trades will be known by
transaction reports from exchanges and underlying a portfolio transaction is not vendors as Midwest Trades. Midwest
associations reported pursuant to any necessary in the Secondary Trading
believes, therefore, that there is no
other effective transaction reporting Session context. The Commission
benefit to be gained by requiring that
plan; (5) the applicable standards and concurs that dissemination of prices of
transaction reports contain marketplace
methods that will be used to ensure the individual securities composing the
portfolio may be of limited value. For identifiers. The Commission agrees that
promptness of reporting and the
the reasons discussed above, the unless and until any other market
accuracy and completeness of
transaction reports; (6) any rules or Commission believes that dissemination becomes a party to the Plan and
procedures that may be adopted to of transaction reports only for the transactions in that market are reported
ensure that transaction reports or last portfolios, rather than for the underlying pursuant to the Plan, it is not necessary
sale data will not be disseminated in a securities, is consistent with the goal of that the Plan provide market identifiers
fraudulent or manipulative manner; (7) publicly disseminating accurate and for transaction reports. Thus, the
specific terms of access to transaction useful transaction information. Thus, the Commission believes it is appropriate to
reports made available or disseminated Commission believes that it is grant Midwest an exemption from the
pursuant to the plan; and (8) that appropriate to grant an exemption from requirements of Rule llAa3-1(b)(2)(viii).
transaction reports or last sale data this requirement of Rule 11Aa3-1.
made available to any vendor for Rule 11Aa3-1(b)(2)(iv) requires that Conclusion
display on an interrogation device provision be made in the plan for the For the reasons discussed above, the
identify the marketplace where each consolidation of transaction reports
Commission finds that the Midwest
transaction was executed. 9 from other markets trading the same
transaction reporting plan and the
securities. The Commission has decided
B. Exemptions From Rule I1Aa3-1 to grant Midwest a temporary exemptions under Rule 11Aa3-1 are
Because of the limited purposes of the exemption, for six months from the date consistent with the requirements of the
Plan and limited nature of the Plan of this order, from the requirement that Act and the rules and regulations
itself, Midwest requested that the the Plan provide a mechanism for the thereunder and, in particular, Section
Commission grant three exemptions consolidation of last sale data on these 11A(a)(1) and Rules 11Aa3-1 and
from the requirements of Rule 11Aa3- securities with last sale data from other llAa3-2.
14
1.10 Specifically, Midwest requests markets trading the same securities. It is therefore ordered, pursuant to
exemptions from the Rule's While the Commission is aware of the section 11A of the Act and Rules 11Aa3-
requirements to: (1) report transactions limited usefulness of price information 1 and 11Aa3-2 thereunder, that the
in reported securities; (2) specify in the on the underlying securities in the proposed transaction reporting plan be,
Plan the method of consolidation with portfolio, it believes that dissemination and hereby is, approved. Further, the
transaction reports from exchanges and of the share volume in the underlying
Commission hereby orders that Midwest
associations reported pursuant to any securities is important information and
other effective transaction reporting should be included in the daily be granted the following exemptions
plan; and (3) provide market identifiers consolidated volume for each of the from Rule I1Aa3-1: (1) the requirement
for last sale transaction reports underlying securities. This presents a under paragraphs (c) (1) and (2) that
disseminated pursuant to the Plan." number of technological difficulties for Midwest disseminate transaction
Paragraphs Cc) (1) and (2) of Rule Midwest, however, and thus the reports for individual reported securities
11Aa3-1 require Midwest to disseminate Commission has decided to grant a traded on the Exchange; (2) the
last sale transaction reports for temporary exemption from this requirement under paragraph (b)(2)(viii)
individual reported securities traded on requirement to allow Midwest adequate that transaction reports include market
the Exchange.1 2 The Plan provides for - time to make the necessary identifiers; and (3) a temporary
the dissemination of transaction reports arrangements to have this volume data exemption for a six-month period
for each portfolio, but not the individual included in the end-of-day consolidated cominencing on the date of this order.
securities composing the portfolio. t 3 As volume. from the requirement under paragraph
Finally, Midwest requested an (b)(2)(iv) that the Plan provide for the
9Additionally, Rule 11Aa3-2, to the extent that it exemption from the requirement of Rule consolidation of transaction reports
is applicable, requires that a NMS plan describe the from other markets trading the same
terms and conditions under which brokers, dealers, 14 The Commission anticipated that the portfolios
and/or self-regulatory organizations will be granted security.
or denied access. traded in the Secondary Trading Session will
,consist mostly, if not entirely, of securities already By the Commission.
10 The Commission has authority under .subject to transaction reporting requirements Dated: October 26, 1989.
paragraph (g) of Rule llAa3-1 to grant exemptions pursuant to the Consolidated Transaction Reporting
from the provisions of the Rule. Plan (the plan governing transaction reporting of
I See note 3. New York and American Stock Exchange stocks) or Jonathan G. Katz,
12 "Reported securities" are securities for which the National Association of Securities Dealers' Secretary.
there'is in effect a transaction reporting plun. transaction reporting plan. Among other things,
IsAs noted above,-Midwest will disseminate the these plans provide for real-time reporting of the [FR Doc. 89-25601 Filed 10-30--89; 8:45 am]
volume of the stocks comprising baskets but will not price and volume on trades in securities subject to
BILUNG CODE 8010-01-M
disseminate the price of those component stocks. the plans.
45860 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
[Rel. No. 34-27386; File No. 7-5309 and 7- Amex stated that, although the NYSE's the character of such trading, the impact
5356] UTP application caused some confusion of such extension on the existing
for the Amex-listed companies that were markets for such securities, and the
Self-Regulatory Organizations; included in the application, the Amex desirability of removing impediments to
Findings and Order Granting and the progress that has been made
believed that any such confusion would
Applications for Unlisted Trading be eliminated if the Commission limited toward the development of a national
Privileges; New York Stock Exchange, the grant of UTP to the sole purpose of market system. The Commission may
Incorporated trading these securities as part of the not grant such application if any rule of
October 26, 1989. ESP and then only to the extent that the the national securities exchange making
The New York Stock Exchange, Inc. securities are actually included in the an application under section 12(f)(1)(C)
("NYSE") has filed application with the ESP, as indicated by the NYSE in its of the Act would urnreasonably restrict
Securities and Exchange Commission application. competition among dealers in such
("Commission") pursuant to section The NASD letter expressed concern securities or between such dealers
12(f](1)(B) and (C) of the Securities that the application of exchange off- acting in the capacity of market makers
Exchange Act of 1934 ("Act") I and Rule board trading restrictions 6 to the who are specialists and such dealers
12f-1 2 thereunder for unlisted trading proposed market baskets of both the who are not specialists.
privileges ("UTP") in the 205 securities NYSE and CBOE would prohobit the After careful review, the Commission
listed in the attached Exhibit A 3 for the NASD from trading exchange listed has determined that granting the NYSE's
purpose of trading Exchange Stock stocks as part of a similar market basket UTP application for the limited purpose
Portfolio ("ESPs") which are based on product. In their view, the approval of of accommodating trading on the
the Standard & Poor's 500 Portfolio the UTP applications only would be NYSE's ESPs is consistent with the
4 appropriate if the Commission maintenance of fair and orderly markets
Index ("Index").
As indicated by Exhibit A, the NYSE conditioned such approval on and the protection of investors. As noted
"reciprocal unlisted trading privileges 7 above, the NYSE's UTP application is
is applying for UTP on 98 stocks
registered on the American Stock -
to all NYSE securities included in future not intended to (nor does it) permit them
Exchange ("Amex") and 107 over-the- basket products that may be traded in to make individual markets in the stocks
counter securities ("OTC") that are the NASDAQ market, free of any off- on which UTP has been requested, but
quoted on the National Association of board trading restrictions applicable to rather to permit the NYSE to trade its
Securities Dealers Automated Quotation such basket products." The NASD market basket product, ESPs. The
System ("NASDAQ") but that are not stated that, without such a condition, Commission today approved the NYSE's
listed and registered on any national the Commission could not find that the proposal to trade a basket of stocks at a
securities exchange. Last sale grant of UTP would have no anti- single trading location on the exchange. 8
information relating to the exchange- competitive effect as required under The Commission's approval order
listed stocks is reported in the section 12(f){2) of the Act. concludes that the NYSE proposal could
consolidated transaction reporting Under section 12(f) of the Act the offer a means to enhance the efficient
system. Last sale information on the ITC Commission may approve UTP execution of Portfolio trades and,
stocks .is reported through NASDAQ applications if it finds, after notice and possibly increase the market's ability to
facilities. opportunity for hearing, that the absorb institutional portfolio trading. In
Two comment letters were submitted extensions of UTP pursuant to such particular, the order notes that liquidity
on the NYSE's UTP application;5 The application is consistent with the increases resulting from trading in
maintenance of fair and orderly markets basket products could help absorb the
is U.S.C. 781F)(1) (1982).
and the protection of investors. Further, volume and velocity of trading
in considering the NYSE's application associated with index-related trading
2 17 CFR 240.12f-1 (1989).
8 See Securities Exchange Act Release Nos. 27248
for extension of UTP -in the 107 strategies, thereby reducing volatility.
September 15. 1989 and 27328, October 2, 1989. NASDAQ stocks, section 12(f)(2) of the Based on the above, the Commission
Notice of the application was given by publication Act requires the Commission to believes that the granting of UTP on the
in the FederalRegister(54 FR 38778). We note that consider, among other matters, the requested stocks for the sole purpose of
this order does not grant UTP on lerrico, Inc., as public trading activity in such securities,
originally requested by the NYSE, because that accommodating trading on NYSE's
stock has since been deleted from the Index. As market basket product is consistent with
discussed below, the Commission received two Secretary, SEC, dated September 22,1989 and from the maintenance of fair and orderly
comment letters regarding this application. Joseph R.Hardiman, President, National markets and the protection of investors.
4 See File No. SR-NYSE-89-05. The NYSE Association of Securities Dealers, Inc. ("NASD") to
application includes the 39 stocks currently Richard G.Ketchum, Director, Division of Market The Commission also believes that
comprising the INDEX that are not listed and Regulation, SEC, dated October 9,1989. approval of the NYSE's request for UTP
registered on the NYSE (The remaining 461 stocks 6 See NYSE Rule 390 which prohibits members on the 107 OTC stocks is appropriate
comprising the Index are currently registered and from effecting any transaction in any listed security and meets the requirements under
traded on the NYSE). The NYSE believes that the off the exchange floor. Rule 19c-3 under the Act,
remaining 160 stocks on which they have applied foir however, prevents exchange rules from prohibiting
section 12(f)(2) of the Act. First, because
UTP are likely candidates for substitution in the members from effecting transactions off an the grant of UTP on the OTC securities
Index. The NYSE has Indicated that UTP on the exchange floor in securities that have been listed or is limited to effecting transactions in
stocks in its application will be used for the limited traded pursuant to UTP on or after April 26,1979. ESPs, the Commission does not believe
purpose of trading these securities as part of the 1We note that unlike the registration
NYSE's ESPs and then only to the extent these requirements for exchanges under section 12(a) of
the concerns that have been previously
securities are actually included in the ESP. The the Act, there is no Section of the Act that actually raised relating.to the extension of UTP
Chicago noard Options Exchange, Inc. ["CBOE") would prohibit the NASD from trading exchange on OTC stocks to a national securities
also has requested UTP on the 500 stocks listed stocks as part of a market basket approved by- exchange are directly applicable. 9 For
comprising the S&P 500 Index for the purpose of the Commission. We recognize, however, that the
trading these securities as part of a market basket, application on exchange off-board trading
See Securities Exchange Act Release Nos. 27237, restrictions that prohibit exchange members from s See Securities Exchange Act Release No. 27382.
September 11, 1989 and 27327, October 2,1989 and trading certain securities off an exchange floor October 26, 1989.
54 FR 38475. could have a severe impact on the trading market 9 See Securities Exchange Act Release No. 22417
5 See letters from Kenneth R. Leibler, President, for an OTC market basket comprised of stocks (September 16, 1985), 50 FR 38640 which announced
American Stock Exchange, Inc. to Jonathan G. Katz. subject to these restrictions. Continued
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45861
example, among other things, the . By the Commission. Symbol Issuer Class
Commission has been concerned with Jonathan G. Katz,
procedures for assuring coordinated Secretary. RDK Ruddick Corp ..................................
market information if OTC issues were SA Stage IIApparel Corp ....................
traded on an exchange.' 0 Because the Exhibit A SBA Sbarro, Inc .......................................
SEB Seaboard Corp ...............................
OTC issues on which the NYSE has I. Amex-Listed Stocks SER Sierracin Corp ...............................
requested UTP only will trade as part of SGC Superior Surgical Manufacturing
,Co., Inc.
a market basket and not individually, Symbol Issuer Class SMC.A Smith A.O. Corp ..........................
A
however, these concerns are not raised. SMK Sanmark Stardust, Inc ..................
Further, because the grant of UTP does AMEX: SP Spelling Entertainment, Inc ...........
A
not permit market making in the AMH Amdahl Corp .................... SUP Superior Industries International
API.A American Petrofina Co .................. Inc.
individual securities by the NYSE, the SWO Standard Shares, Inc .....................
ATC Atari Corp .................... ;...................
other factors which section 12(f)(2) ATX.A Cross Co ......................................... TBS.A Turner Broadcasting System, A
directs the Commission to consider do AZA Alza Corp ......................................... Inc.
not raise concerns. For example, the BBC.A Bergen Brunswig Corp ................... TBS.B Turner Broadcasting System, B
BF.A Brown-Forman Corp ....................... Inc.
trading of the OTC securities as part of BF.B Brown-Forman Corp....................... TDS Telephone and Data Systems,
a basket should not have any negative BHA Biscayne Holdings Inc ................... Inc.
impact on the public trading activity in BIC Bic Corp .......................................... TFX Teleflex, Inc ....................................
BID Sotheby's Holdings, Inc ................. THI Thermo Instrument Systems,
such securities or their existing market Inc.
BL Blair Corp ......................
and should not have any potential to BLR Bolar Pharmaceutical Co., Inc. TMD Thermedics, Inc ..............................
change the existing primary market for BNE Bowne & Co., Inc ........................... TRC Tejon Ranch Co .............................
'the individual stocks."I In this regard, CCL Carnival Cruise Lines Inc .............. USM. United States Cellular Corp ..........
CDV.A Chambers Development Co., VAC.A Vermont American Corp ................
A
we note that the 31 OTC issues that Inc. VAL Valspar Corp ...................................
currently comprise the ESP make up a CDV.B Chambers Development Co., VIA Viacom, Inc .....................................
small component of the composite index Inc. VOT Voplex Corp ....................................
CFB Citizens First Bancorp .................... WAB Westamerica, Bancorp ..................
value, thus assuring that any impact on CJN Caesars New Jersey, Inc .............. WAH Westair Holding, Inc .......................
-the underlying NASDAQ market will be CTY Century Communications Corp. WAN.B Wang Laboratories, Inc ..............
B
minimal. CVC Cablevision Systems Corp ........... WDC Western Digital Corp ......................
DIA Diasonics, Inc ................................. WPO.B Washington Post Co .................
B
Finally, the Commission is cognizant DPC Dataproducts Corp ......................... WSC Wesco Financial Corp ...................
of the competitive implications raised by EXC Excel Industrial, Inc ........................
the NASD about approving UTP on the FCE.A Forest City Enterprises, Inc. stocks in this list are common stock.
*All
OTC issues without limiting the FCE.B Forest City Enterprises, Inc ..........
FES First Empire State Corp .................
application of exchange off-board FRK Florida Rock Industries, Inc.: II. OTC-Traded Stocks
trading restrictions to market baskets. In FRX Forest Laboratories, Inc ................
this context,' the Commission would be
concerned about any exchange
FTL
GAN
Fruit of the Loom, Inc ....................
Giran Inc ........................................ Symbol [ Issuer Class
GB Guardian Bancorp ..........................
restrictions that would limit the ability GDS.B Glenmore Distilleries Co .............. AAPL Apple Computer Inc .......................
of any market to quote and trade a GFS.A Giant Food, Inc ............................... ACAD Autodesk, Inc ..................................
GLT Glatfelter Co ................... ACCOB Adolph Coors Co ......................... B
market basket product similar to the GO Collins Industries, Inc ..................... AGREA American Greetings Corp .............. A
market baskets approved for trading on HA Hal, Inc ....................... ALEX Alexander and Baldwin Co ............
the NYSE and CBOE. HAl Hampton Industries, Inc ............... AMGN Amgen, Inc ......................................
HAS Hasbro, Inc ...................................... AMTR Ameritrust Corp .................
Accordingly, it is ordered,pursuant to HBW Howard B W olf, Ind ........................ ANAT American National Insurance Co.
section 12(f) of the Act, that the NYSE's HCO Hubco, Inc ..................... ANDW Andrew Corp ...................................
application for unlisted trading HEI Heico Corp ...................................... ATCMA American Television and Coin- A
privileges in the securities listed in the HGC Hudson General Corp .................... munications.
HOC Holly Corp ....................................... BETZ Betz Laboratories, Inc .......
attached ExhibitA for the limited HOV Hovnanian Enterprises, Inc ........... BNHI Bancorp Hawaii, Inc.........
purpose of trading such securities as HRL Hormel & Co ................................... BOAT Boatmens Bancshares, Inc ...........
part of the NYSE's ESPs and only to the HSN Home Shopping Network, Inc. BRNO Brunos, Inc ......................................
HUB.A Hubbell, Inc ..................................... BSET Bassett Furniture Industries, Inc..
extent that the securities actually are HUB.B Hubbell, Inc ..................................... CCLR Commerce Clearing House, Inc
included in the Index on which the ESPs ICH ICH Corp .......................................... CCXLA Contel Cellular, Inc ...................... A
will be based is hereby approved. JBM Jan Bell Marketing, Inc .................. CHRS Charming Shoppes, Inc .................
LFA Littlefield Adams & Co ................... CINF Cincinnati Financial Corp ...............
LII . Larizza Industries, Inc .................... CITUB Citizens Utilities Co ..................... B
LJC La Jolla Bancorp ............................ CMCA Comerica, Inc ..................................
MEG.A Media General, Inc ......................... CMCSA Comcast Corp .............................. A
MMZ.A Metro Mobile CTS, Inc ................... CNCAA Centel Cable Television Co .......... A
MMZ.B Metro Mobile CTS, Inc ................... COMM Cellular Communication, Inc.
MND Mitchell Energy & Development CPER Consolidated Papers, Inc .............
the Commission's willingness to grant UTP on OTC Corp. CRBN Calgon Carbon Corp ......................
securities if certain conditions were met. MXM' Maxxam, Inc ................................... CRFC Crestar Financial Corp ...................
10See Securities Exchange Act Release No. 22407 NAN Nantucket Industries, Inc ............... CSFN Corestates Financial Corp .............
(April 24, 1987, 52 FR 17349 which approved a NYT.A New York Times Co ....................... CTCO Cross and Trecker Corp ................
Midwest Stock Exchange application for UTP on 25 OEA OEA, Inc ......................................... CTYN City National Corp ..........................
OTC issues subject to the development of a joint ONA Oneita Industries ........................... DIGI DSC Communications Corp ..........
transaction reporting plan to accommodate such OSL O'Sullivan Corp .............................. DMBK Dominion Bankshares Corp ........
PAR Precision Aerotech, Inc. EWSC E.W. Scripps Co ............ A
trading. PGU Pegasus Gold, Inc.........................
II Rather, as noted above, one positive result of FDLNB Food Lion, Inc ............... B
PLL Pall Corp ........................................ FEXC First Executive Corp..............
such trading could be increased liquidity in the PRY Pittway Corp.... ........................ FITB Fifth Third Bancorp .............
subject securities and reduced , olatility. RAV Raven Industries, Inc .................... GOSHA Oshkosh B Gosh, Inc ................. A
45862 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
Symbol Issuer I Class *All stocks in this list are common stock. information relating to the exchange-
listed stocks is reported in the
[FR Doec. 89-25607 Filed 10-30--89; 8:45 am]
HAML Hamilton Oil Corp .......................... consolidated transaction reporting
HBAN Huntington Bancshares, Inc..: BILLING CODE 8010-01-M system. Last sale information on the
HBOL Hartford Steam 'Boiler Inspec- OTC stocks is reported through
tion and Insurance.
HECHA Hechinger, Co ................................ [Rel. No. 34-27387; File No. 7-5301 and 7- NASDAQ facilities.
HENG Henley Group, Inc ......................... 5357] One comment lette was submitted on
INGR Intergraph Corp ......................... : the CBOE's UTP application.5 The
INTC Intel Corp ........................................ Self-Regulatory Organizations; NASD letter expressed concern that the
ITGR Integra Financial Corp ................... Findings and Order Granting
JJSC Jefferson Smurtit Corp ................. application of exchange off-board
KELYA Kelly Services, Inc ......................... Applications for Unlisted Trading trading restrictions 7 to the proposed
LINB Lin Broadcasting Corp .................. Privileges; Chicago Board Options market baskets of both the New York
LIZC Liz Claiborne, Inc ............................ Exchange, Inc. Stock Exchange ("NYSE") 8 and CBOE
LMED Lyphomed, Inc ................................
October 26, 1989.
would prohibit the NASD from trading
LNCE Lance Inc ........................................
LOTS Lotus Development Corp .............. exchange-listed stocks as part of a
The Chicago Board Options Exchange,
MASX Masco Industries, Inc .................... similar market basket product. In their
Inc, ("CBOE") has filed application with
MCAWA McCaw Cellular Communica- view, the approval of the UTP
tions, Inc. the Securities and Exchange
applications only would be appropriate
MCCRK McCormick and Company, Inc ..... Commission ("Commission") pursuant
MCCS Medco Containment Services, if the Commission conditioned such
to sections 12(f)(1)(B) and (C) of the
Inc. approval on "reciprocal unlisted trading
Securities Exchange Act of 1934
MCIC MCI Communications Corp ........... privileges 9 to all NYSE securities
MIDL Midlantic Corp ........................... ("Act") I and Rule 12f-1 2 thereunder for included in future basket products that
MMEDC Multimedia, Inc ................................ unlisted trading privileges ("UTP") in may be traded in the NASDAQ market,
MNCO Michigan National Corp ................. 500 securities 3 for the purpose of
MNTL Manufacturers National Corp ....... free of any off-board trading restrictions
trading market baskets on the Standard
MOLX Molex, Inc ....................................... applicable to such basket products." The
MRDN Meridian Bancorp, Inc ....................
& Poor's ("S&P") 500 and 100 Stock Price
4 NASD stated that, without such a
MRIS Marshall and Ilsley Corp................ Indexes ("Index").
condition, the Commission could not
MSFT Microsoft Corp ............................... The CBOE originally applied for UTP
NHLI National Health Laboratories, find that the grant of UTP would have
on 462 stocks registered on the New
Inc. no anti-competitive effect as required
York Stock Exchange ("NYSE"), 7
NIKE Nike, Inc ..........................................
registered on the American Stock under section 12(f)(2) of the Act.
NGNA Neutrogena Corp ............................ Under section 12(f) of the Act the
NOBE Nordstrom, Inc : ....................... Exchange, Inc. ("Amex") and 31 over-
NOVL Novell, Inc ....................................... the-counter securities ("OTC") that are Commission may approve UTP
NOXLB Noxell Corp ..................................... quoted on the National Association of applications if it finds, after notice and
NTRS Northern Trust Corp .......................
Securities Dealers Automated Quotation opportunity for hearing, that the
OCAS Ohio Casualty Corp ........................ extensions of UTP pursuant to such
ORCL Oracle Systems Corp ..................... System ("NASDAQ") but that are not
PACCB Provident Life and Accident In- listed and registered on any national application is consistent with the
, surance of America. securities exchange. 5 Last sale maintenance of fair and orderly markets
PCAR Paccar, Inc ...................................... and the protection of investors. Further,
PCLB Price Co ........................................... in considering the CBOE's application
PHYB Pioneer Hi Bred International, '15 U,S.C. 781(f)1) (1982).
Inc. ' 17 CFR 240.12f-I (1989).
PTCM Pacific Telecom, Inc ....................... 3 See Securities Exchange Act Release No. 27237 includes 460 NYSE registered stocks rather than 462
ROAD Roadway Services, Inc ................. September 11,1989. Notice of the application was The list continues to include 7 Amex registered
ROUS Rouse Co ....................................... given by publication in the Federal Register (54 FR stocks and 31 OTC securities.
SAFC Safeco Corp ............................... 38475). As discussed below, the Commission 6 See letter form Joseph R. Hardiman, President
SCRP Scripps Howard Broadcasting received two comment letters regarding this National Association of Securities Dealers, Inc.
Co. application. The Commission also received ("NASD") to Richard G. Ketchum, Director, Division
SGAT Seagate Technology, Inc ............. applications for UTP in four additional securities. of Market Regulation, SEC, dated October 9, 1989.
SIAL Sigma Aldrich Corp ....................... See Securities Exchange Act Release Nos. 27327 1 See NYSE Rule 390 which prohibits members
SMED Shared Medical Systems Corp...., (October 2, 1989) 54 FR 41357. from effecting any transaction in any listed security
SOCI Society Corp .................................. 4 See File No. SR-CBOE-88-20. The CBOE off the exchange floor. Rule 19c-3 under the Act.
SONO Sonoco Products C ..................... requested UTP in the 500 stocks comprising the S&P however, prevents exchange rules from prohibiting
SPGLA Spiegel, Inc .................................... 500 Index at the time of their initial application. members form effecting transactions off an
STBK State Street Boston Corp.: ............ Subsequent to the submission of CBOE's UTP exchange floor in securities that have been listed or
STJM St. Jude Medical, Inc .................... application, S&P replaced four stocks in the Index. traded pursuant to UTP on or after April 26, 1979.
STPL St. Paul Companies, Inc ................ The replacement stocks were not part of CBOE's s The NYSE also has requested UTP in 205 stocks
SUNW Sun Microsystems, Inc ................. original UTP request. Although the Commission has for the purpose of trading these securities as part of
TCOMA Tale Communication, Inc .............. noticed for comment the UTP request for the four Exchange Stock Portfolios ("ESPs). See Securities
TECU Tecumseh Products Co ................ replacement securities, the 10 day notice period Exchange Act Release Nos.'27248, September 15,
TYSNA Tyson Foods, Inc ....................... required by Section 12(f)5) of the Act has not 1989 and 27328, October 2, 1989 and 54 FR 38778. In
UBNK Union Bank .................................... expired on two of the replacement securities. a separate order the Commission is approving the
USBC U.S. Bancorp of Oregon ............. . Accordingly, the Commission is only considering a NYSE's UTP request. See Securities Exchange Act
USWNA U.S. West New Vector Group grant of UTP in the 498 stocks listed on the attached Release No. 27386.
Inc. Exhibit A that are currently Included in the Index 9 We note that unlike the registration
VCELA Vanguard Cellular Systems Inc ... and for which the 10 day notice requirement has requirements for exchanges under section 12(a) of
WETT Wetterau, Inc ................................ been fulfilled., But see letter from Richard C. the Act, there is no Section of the Act that actually
WILM Wilmington Trust Co ..................... Ketchum, Director, Division of Market Regulation. would prohibit the NASD from trading exchange-
WMOR Westmoreland Coal Co ................ SEC to Nancy R.Crossman, General Counsel, listed stocks as part of a market basket approved by
WMTr Willamette Industries. Inc ............. CBOE,dated October 28, 1989 granting no-action the Commission. We recognize, however, that the
WTHG I Worthington Industries, Inc .......... relief from compliance with Section 12(f) of the Act application of exchange off-board trading
YELL* Yellow Freight System, Inc. of to the CBOE under certain conditions for restrictions that prohibit exchange members from
Delaware. replacement securities. trading certain securities off an exchange floor
RYAN Ryan's Family Steak Houses, 5For the reasons discussed in note 4 supra, the could have a severe impact on the trading market
Inc. Commission is only considering CBOE's request for for an OTC market basket comprised of stocks
UTP in the 498 stocks listed in Exhibit A. This list subject to these restrictions.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45863
for extension of UTP in the 31 NASDAQ possibly, the market's ability to absorb to consider do not raise concerns. For
stocks, section 12(f)(2) of the Act institutional portfolio trading. In example, the trading of the OTC
required the Commission to consider, particular, the order notes that liquidity securities as part of a basket should not
among other matters, the public trading increases resulting from trading in have any negative impact on the public
activity in such securities, the character basket products could help absorb the trading activity in such securities or
of such trading, the impact of such volume and velocity of trading their existing market and should not
extension on the existing markets for associated with index/related trading have any potential to change the
such securities, and the desirability of strategies thereby reducing volatility. existing primary market for the
removing impediments to and the Based on the above, the Commission individual stocks.' 3 In this regard, we
progress that has been made toward the believes that the granting of UTP on the note that the 31 OTC issues, that
development of a national market requested stocks for the sole purpose of currently comprise the CBOE's market
system. The commission may not grant accommodating trading on CBOE's basket product make up a small
such application if any rule of the proposed market basket product is component of the composite index
national securities exchange making an consistent with the maintenance of fair value, thus assuring that any impact on
application under section 12(f)(1)(C) of and orderly markets and the protection the underlying NASDAQ market will be
the Act would unreasonably restrict of investors. minimal. Finally, the Commission is
competition among dealers in such The Commission also believes that cognizant of the competitive
securities or between such dealers approval of the CBOE's request for UTP implications raised by the NASD about
acting in the capacity of market makers on the 31 OTC stocks is appropriate and approving UTP on the OTC issues
who are specialists and such dealers meets the requirements under section without limiting the application of
who are not specialists. 12(0(2) of the Act. First, because the exchange off-board trading restrictions
After careful review, the Commission grant of UTP on the OTC securities is to market baskets. In this context, the
has determined that granting the CBOE's limited to effecting transactions in commission would be concerned about
UTP application for the limited purpose market baskets, the Commission does any exchange restrictions that would
of accommodating trading on the not believe the concerns that have been limit the ability of any market to quote
CBOE's market basket contracts is previously raised relating to the and trade a market basket product
consistent with the maintenance of fair extension of UTP on OTC stocks to a similar to the market baskets approved
and orderly markets and the protection national securities exchange are directly for trading on the NYSE and CBOE.
of investors. As noted above, the applicable.' 1 For example, among other Accordingly, it is ordered, pursuant to
CBOE's UTP application is not intended things, the Commission has been section 12(f) of the Act, tha the CBOE's
to (nor does it) permit them to make concerned with preocedures for assuring application for unlisted trading
individual markets in the stocks on coordinated market information if OTC privileges in the securities listed in the
12 attached Exhibit A for the limited
which UTP has been requested, but issues were traded on an exchange.
rather to permit the CBOE to trade its Because the OTC issues on which the purpose of trading such securities as
market basket product. The Commission CBOE has requested UTP only will trade part of the CBOE's market basket
today approved the CBOE's proposal to as part of a market basket and not contracts and only to the extent that the
trade a basket of stocks at a single individually, however, these concerns securities actually are included in the
trading location on the exchange.' 0 The are not raised. Further, because the Index on which the market baskets will
Commission's approval order concludes grant of UTP does not permit market be based is hereby approved.
that the CBOE proposal could offer a making in the individual securities by By the Commission.
means to enhance the efficient the NYSE, the other factors which Jonathan G.Katz,
execution of portfolio trades and, section 12(f)(2) directs the Commission Secretary.
EXHIBIT A
"0See Securities Exchange Act Release No. 27383, the Commission's willingness to grant UTP on OTC OTC issues subject to the development of a joint
(October 26,1989). securities if certain conditions were met. transaction reporting plan to accommodate such
I I See Securities Exchange Act Release No. 22417 12 See Securities Exchange Act Release No. 24407 trading.
(September 16, 1985), 50 FR 38640 which announced (April 24, 1987), 52 FR 17349 which approved'a 13 Rather, as noted, above, one positive result of
such trading could be increased liquidity in the
Midwest Stock Exchange application for UTP on 25
subject securities and reduced volatility.
45864 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
EXHIBIT A--Continued
EXHIBIT A-Continued
EXHIBIT A-Continued
NYSE FLE Fleetwood Enterprises, Inc ............................ Common Stock .......................................................... $1.00
NYSE FLM Flem ing Com panies, Inc .................................................................................... Common Stock ........ :............................. $2.50
NYSE FLR Flour Corporation ............................................................................................... Common Stock.......................................................... $0.62Va
NYSE F Ford Motor Com pany ......................................................................................... Common Stock................................ $1.00
NYSE FWC Foster W heeler Corporation ....................................................................... Common Stock ......................................................... $1.00
NYSE GTE GTE Corporation ................................................................................................ Common Stock .......................................................... $0.10
NYSE GCI G annett Co., Inc ................................................................................................. Common Stock ......................................................... $1.00
NYSE GPS Gap. Inc. (The) ............................................ Common Stock.......................................................... $0.05
NYSE GNE G enentch, Inc ..................................................................................................... Common Stock .......................................................... $0.02
NYSE GCN General Cinem a Corporation ............................................................................ Common Stock ............................ $1.00
NYSE GD G eneral Dynam ics Corporation ........................................................................ Common Stock ....................................................... $1.00
NYSE GE G eneral Electric Com pany ................................................................................ Common Stock .......................................................... $0.63
NYSE GRL General Instrum ent Corporation ....................................................................... Common Stock .......................................................... $1.00
NYSE GIS G eneral Mills, Inc ............................................................................................... Common Stock .......................................................... $0.75
NYSE GM G eneral M otors Corporation ....................................... ............ Common Stock .......................................................... $1.66%
C mnn tn~rk
NYSE GRN General Re Corporation................................ S .......................................................$0.50
NYSE GSX G eneral Signal Corporation ............................................................................. Com mon Stock ....................................................... $1.00
NYSE GCO Genesco incorporated ...................................................................................... Com mon Stock ....................................................... $1.00
NYSE "GPC G enuine Parts Com pany .................................................................................. Com mon Stock ....................................................... $1.00
NYSE GP Georgia-Pacific Corporation ............................................................................. Com mon Stock ....................................................... $0.80
NYSE GEB G erber Products Com pany .............................................................................. Com mon Stock ....................................................... $2.50
AMEX GFSA G iant Food, Inc ........................................................................................... Class A Com m on Stoc k .......................................... $1.00
NYSE GS G illette Com pany (The) ..................................................................................... Com mon Stock ....................................................... $1.00
NYSE GDW Golden W est Financial Corporation ................................................................. Com mon Stock ....................................................... $0.10
NYSE GR G oodrich (B.F.) Com pany, (The) ...................................................................... Com mon Stock ....................................................... $5.00
NYSE GT Goodyear Tire & Rubber Com pany (The) ....................................................... Com m on Stock ....................................................... None.
NYSE GRA G race (W .R.) & Co ............................................................................................ Com mon Stock ....................................................... $1.00
NYSE GWW G rainger (W .W .), Inc .......................................................................................... Com mon Stock ....................................................... $1.00
NYSE GAP G reat Atlantic & Pacific Tea Com pany, Inc. (The) ......................................... Com mon Stock ....................................................... $1.00
NYSE GNN G reat Northern Nekoosa Corporation ............................................................ Com m on Stock ....................................................... $2.50
NYSE - GWF G reat W estern Financial Corporation ............................................................. Com mon Stock ....................................................... $1.00
NYSE G G reyhound Corporation (The) .......................... ........................ "..................... Com mon Stock ....................................................... $1.50
NYSE GO G rum m an Corporation ...................................................................................... Com mon Stock ....................................................... $1.00
.NYSE HAL Halliburton Com pany ........................................................................................ Com m on Stock .................... ............................... $2.50
NYSE HDL Handlem an Com pany ....................................................................................... Com mon Stock ....................................................... $0.01
NYSE HBJ Harcourt Brach Jovanovich, Inc ...................................................................... Com mon Stock ....................................................... $1.00
NYSE HRS Harris Corporation ............................................................................................. Com mon Stock ................. v................................. $1.00
NYSE HMX Hartm arx Corporation ....................................................................................... Com mon Stock ......................... ......... $2.50
AMEX HAS Hasbro Inc .......................................................................................................... Common Stock ........................... $0.50
NYSE HNZ Heinz (H.J.) Com pany ...................................................................................... Com mon Stock ....................................................... $0.50
NYSE HP Helm erich & Payne, Inc .................................................................................... Com mon Stock....................................................... $0.10
NYSE HPC Hercules Incorporated ...................................................................................... Com mon Stock ............................. None.
...........
NYSE HSY Hershey Foods Corporation ............................................................................. Com mon Stock ....................................................... $1.00
NYSE HWP Hewlett-Packard Com pany .............................................................................. Com mon Stock ....................................................... $1.00
NYSE HLT Hilton.H otels Corporation .................................................................................. Com m on Stock ........................ $2.50
........................
NYSE HIA Holiday Corporation ........................................................................................... Com mon Stock ....................................................... $1.50
NYSE HD Hom e Depot, Inc. (The) ..................................................................................... Com mon Stock ....................................................... $0.05
NYSE HM Hom estake M ining Com pany ............................................................................ Com mon Stock ....................................................... $1.00
NYSE HON Honeyw ell Inc ..................................................................................................... Com mon Stock ....................................................... $1.50
NYSE HI Household International, Inc ............................................................................. Com mon Stock ....................................................... $1.00
NYSE HOU Houston Industries Incorporated ..................................................................... Com mon Stock ............... ..................................... None.
NYSE HUM Hum ana Inc ........................................................................................................ Com mon Stock ....................................................... $0.16%
NYSE ISS INTERCO , INCORPORATED ........................................................................... Com mon Stock ......................... ......................... None.
NYSE ITT ITT Corporation ................................................................................................. Com mon Stock ....................................................... $1.00
NYSE ITW Illinois Tool Works Inc ...................................................................................... Com mon Stock ....................................................... None.
NYSE N Inco Lmited ........................................................................................................ Com mon Stock ....................................................... None.
NYSE IR Ingersoll-Rand Com pany .................................................................................. Com mon Stock ....................................................... $2.00
NYSE lAD Inland Steel Industries, Inc ...................................................................... Com m on Stock ....................................................... $1.00
NASDAQ INTC Intel Corporation ................................................................................................ Capital Stock ........................................................ None.
NASDAQ INGR Intergraph Corporation ..................................................................................... Com mon Stock ....................................................... $0.10
NYSE IK Interlake Corporation ........................................................................................ Com mon Stock ....................................................... $1.00
NYSE IBM International Business M achines Corporation ............................................... Com mon Stock ....................................................... $1.25
NYSE IFF International Flavors & Fragrances Inc .......................................................... Com mon Stock ....................................................... $0.125
NYSE IGL International Minerals & Chem ical Corporation ............................................. Com mon Stock ....................................................... $5.00
NYSE IP International Paper Com pany ........................................................................... Com mon Stock ....................................................... $1.00
NYSE JR Jam es River Corporation of Virginia ................................................................ Common Stock ............................$0.10
NYSE JP Jefferson-Pilot Corporation ............................................................................... Com mon Stock ....................................................... $1.25
NYSE JNJ Johnson & Johnson ........................................................................................... Com mon Stock ....................................................... $1.00
NYSE JCI Johnson Controls, Inc ........................................................................................ Com m on Stock ....................................................... $0.16%
NYSE JOS Jostens, Inc ......................................................................................................... -Com m on Stock....................................................... $0.33 YV
NYSE KM K mart Corporation ............................................................................................ Common Stock............................ $1.00
NYSE KBH Kaufman and Broad Home Corporation ................. ............ Com mon Stock....................................................... $1.00
NYSE K Kellogg Com pany ............................................................................................... Common Stock ............................. $0.25
NYSE KMG Kerr-M cGee Corporation ............................. ................................................ * Common Stock ............................ $1.00
NYSE KMB Kim beriy-Clark Corporation ............................................................................. Common Stock ............................ $1.25
NYSE KWP King Worid Productions, Inc ..................................... Com m on Stock...................................................... $0.01
NYSE KRI Knight-Ridder, Inc .............................................................................................. Com m on Stock ....................................................... $0.02/'2
NYSE KR Kroger Co. (The) ................................................................................................ . Com m on Stock ....................................................... $1.00
NASDAQ LINB LIN Broadcasting Corporation .................................. Com m on Stock ....................................................... $0.01
NYSE LLY Lilly (Eli) and Com pany...................................................................................... • com m on Stoc k .......................................................$0.62 Y2
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45857
EXHIBIT A-Continued
Traded I Ticker Company Security . jPar value
NYSE LTD Limited, Inc. (The) ............................................................................................. Com mon Stock ......................................................... None.
NYSE LNC Lincoln National Corporation ............................................................................ Com mon Stock ....................... :................................. $.125
NYSE LIT Litton Industries, Inc .......................................................................................... Com mon Stock .............................. *.......................... $1.00
NASDAQ LIZC Liz Claiborne, Inc ............................................................................................... Com mon Stock ......................................................... $1.00
NYSE LK Lockheed Corp .......................................................................................... Com mon Stock ........................................................ $1.00
NYSE LCE Lone Star Industries, Inc ................................................................................... Com mon Stock ...................................................... $1.00
NYSE LDG Longs Drug Stores Corp .................................................................................. Comm on Stock ......................................................... None.
NYSE LOR Loral Corporation ............................................................................................... Com mon Stock ............. ............................... $0.25
NASDAQ LOTS Lotus Developm ent Corporation ................................................. .................... Co m mon Stock ............................................ :.............
$0 0
NYSE LLX Louisiana Land & Exploration Com pany (The) ............................................... Capital Stock ............................................................ $0.15
NYSE LPX Louisiana-Pacific Corporation .................................... Common Stock....................... $1.00
NYSE LOW Lowe's Com panies, Inc ..................................................................................... Com mon Stock ........................................................ $0 50
NYSE LUB Luby's Cafeterias, Inc ....................................... Com mon Stock......................................................... $0.32
NYSE MAI M/A-Com , Inc ........................................................................................... Comm on Stock......................................................... $1.00
NYSE MCA MCA Inc ............................................................................................................. Com mon Stock ......................................................... None.
NASDAQ MCIC MCI Com munication Corporation ..................................................................... Cotnmon Stock ......................................................... $0.10
NYSE MNR M anor Care, Inc ................................................................................................. Com mon Stock .................................................... $0.10
NYSE MHC Manufacturers Hanover Corporation ............................................................... Com mon Stock ......................................................... $1.00
NYSE MHS Marriott Corporation ................................................................. Com mon Stock......................................................... $1.00
NYSE MMC Marsh & McLennan Companies, Inc ............................... Com mon Stock ......................................................... $1.00
NYSE ML Martin M arietta Corporation .............................................................................. Com mon Stock ........................................................ $1.00
NYSE MAS Masco Corporation ............................................................................................. Com mon Stock......................................................... $1.00
NYSE MAT Mattel, Inc ......................................................................................................... Common Stock ......................................................... $1.00
NYSE MXS Maxus Energy Corporation .............................................................................. Com mon Stock ......................................................... $1.00
NYSE MA May Departm ent Stores Com pany (The) ........................................................ Common Stock ........................... $1.66%
NYSE MYG Maytag Corporation ........................................................................................... Com mon Stock ......................................................... $1.25
NYSE MDR McDerm ott International, Inc ............................................................................ Com mon Stock ......................................................... $1.00
NYSE MCD McDonald's Corporation .................................................................................... Com mon Stock......................................................... None.
NYSE MD McDonnell Douglas Corporation ...................................................................... Comm on Stock......................................................... $1.00
NYSE MHP McG raw-Hill, Inc ............................................................................................... Com mon Stock......................................................... $1.00
NYSE MCK McKesson Corporation ..................................................................................... Com mon Stock......................................................... $2.00
NYSE. MEA Mead Corporation (The) .................................................................................... Com mon Stock......................................................... None.
NYSE MDT Medtronic, Inc........................................... ................................................. Com mon stock.................................................... $.10
NYSE MEL Mellon Bank Corporation ................................ Com m on Stock.......................................................... $.50
NYSE MES Melville Corporation ........................... ....................................................... Com m on Stock ......................................................... $1.00
NYSE MST Mercantile Stores Com pany, Inc...................................................... ..... Com m on Stock .......................................................... $.36%
NYSE MRK Merck & Co., Inc .................................... Com mon Stock ........................................................ $.00
NYSE MDP Meredith Corporation ....................................................................................... 1. Com m on Stock ......................................................... $1.00
NYSE MER Merrill Lynch & Co., Inc.................................................................................... Com mon Stock .......................................................... $1.33'l/3
NYSE MIL Millipore Corporation......................................................................................... Com mon Stock ......................................................... $1.00
NYSE MMM Minnesota Mining & Manufacturing Company ................................................ Com mon Stock .......................................................... None.
NYSE MOB Mobile Corporation ............................................................................................. Com mon Stock .......................................................... $2.00
NYSE MMO Monarch Machine Tool Com pany (The) ......................................................... Com mon Stock .......................................................... None.
NYSE MTC Monsanto Com pany.......................................................................................... Com mon Stock .......................................................... $2.00
NYSE MCL Moore Corporation Lim ited ...................... .................................................. Com m on Stock ......................................................... None.
NYSE JPM Morgan (J.P.) & Co. Incorporated............................... Comm on Stock ................................................. $2.50
NYSE MIt Morton International, Inc. ........:...................................................................... Com m on Stock ........................................................ $1.00
NYSE MOT Motorala. Inc .................................................................................................... Common Stock ...................... $3.00
NYSE NBO NBO Bancorp, Inc ............................................................................................. Common Stock .................................................... $1.00
NYSE NCB NCNB Corporation .................................................................................... v Com m on Stock ........................................................ $2.50
NYSE NCR NCR Corporation ; .................................. .......
I Com mon Stock......................................................... $5.00
NYSE GAS NICO R Inc ........................................................................................................... Com m on Stock .............................................. $5.00
NYSE NL NL Industries, Inc.......................... ;.......................................................... Com mon Stock ......................................................... $.125
NYSE NC NACCO Industries. Inc .................................................................... . .... Class A Comm on Stock .......................................... $1.00
NYSE NEC National Education Corporation ................. ;................................................... Com mon Stock ........................................................ $.01
NYSE Nil National Intergroup, Inc ............. 6 .................. . . Com mon Stock.................................................... $5.00
NYSE NME National Medical Enterprises, Inc........................................................ u n ,U , .........................................................
NYSE NSM National Semiconductor Corporation ......................................................... Common Stock.......................................................... $50
NYSE NSI National Service Industries, Inc... . . .................................................... Common Stock ....................... $1.00
NYSE NAV Navistar International Corporation . ..................... Common Stock......................... $1.00
AMEX NYTA New York Times Com pany (The) ..................................................................... Class A Common Stock ...................................... $.10,
NYSE NWL Newell C ........................... .............. Common Stock ........................................................ $1.00
NYSE NEM Nem one Mining Corporation; ............................................................ .
Common Stock ........................................................ $1.60
NYSE NMK Niagara Mohawk Power Corporation ............ . . .............. $1.00
NASDAQ NIKE NIKE, Inc ............................................................................................................ Class A Common Stock .......................................... None.
Class B Common Stock ...................... None.
- NASDAQ NOBE Nordstrom, Inc .................... Common Stock........................... None.
NYSE NSC Norfolk Southern Corporati Common Stock ......................................................... $1.00
NYSE NSP Northern States Power Co anv ................................................................
NYSE NT Northern Telecom Limited. Common Stock................................ ....... None.
NYSE NOC r ur p rp r u ....................................................................................... Common Stock ......................................................... $1.00
NYSE NRT Norton Com pany .............................................................................................. Common Stock......................................................... $5.00
NYSE NOB lw Pnwest L'utofr Common Stock......................................................... $1.00%
NASDAQ NOXLB, Noxell Corporati Jo..................................................... Class B Common Stock ...................... $1.00
NYSE NUE Nucor Corporati Common Stock........................................................ $.40
NYSE NYN NYNEX Corpora n........................................................ Common Stock ............................................... $1.00
NYSE OKE ONEOK Inc ....... Common Stock........................... None.
NYSE OXY Occidental Petrc im Ltorporatlon ............................................. Common Stock.................. ................... $.20
NYSE OG Ogden Corporat Common Stock ................. ;................................ $.50
NYSE OEC Ohio Edison Coi iny............................. .............................. Common Stock ......................................................... $9.00
45868 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
EXHIBIT A-Continued
Traded Ticker. Company Security Par value
NASDAQ ORCL Oracle Systems Corporation ............................................................................ uuirmon OCK . .................... $.01
NYSE ORX Orvx Enerav Comoanv. ............................................................................ Com mon Stock ......................................................... $1.00
NASDAQ GOSHA Oshkosh B'Gosh. Inc .. ............................................................................... Class A Com mon Stock .......................................... $.01
NYSE OM Outboard Marine Corporation .................................... Com mon Stock ......................................................... $.30
NYSE OCF Owens-Corning Fiberglass Corporation .......................................................... Com mon Stock ......................................................... $.10
NASDAQ PCAR PACCAR Inc ....................................................................................................... $12.00
NYSE PHM PHM Corporation ................................................ :.......................................... ............... I $.01
NYSE PNC PNC Financial Corp........................................................................................... $5.00
NYSE PPG PPG Industries, Incorporated ............................. $1.66%
NYSE PIN PSI Moldings, Inc .............................................................................................. None.
NYSE PPW PacifiCorp ....................................................................................... $3.25
NYSE PET Pacific Enterprises ............................................................................................. None.
NYSE PCG Pacific Gas & Electric Com pany ...................................................................... Common Stock.., $10.00
NYSE PAC Pacific Telesis Group ........................................................................................ Common Stock... eln
AMEX PLL Pall Corporation ................................................................................................. Common Stock...
NYSE PN Pan Am Corporation ......................................................................................... Common Stock...
NYSE PEL Panhandle Eastern Corporation ...................................................................... $1.00
NYSE PCI Param ount Com munications Inc. ....................................................................
NYSE PH Parker Hannifin Corporation ............................................................................
NYSE JCP Penney (J.C.) Com pany, Inc ............................................................................
NYSE PZL Pennzoil Com pany ..................................................................................... $.83 V
NYSE PGL Peoples Energy Corporation ........................... ;........................................ None.
NYSE PEP PepsiCo. Inc ....................................................................................................... $.05
NYSE PKN Perkin-Elm er Corporation (The) ....................................................................... $1.00
NYSE PFE Pfizer Inc ........................................................................................................... $.10
NYSE PD Phelps Dodge Corporation ............................................................................. $6.25
NYSE PE Philadelphia Electric Company ........................................................................ None.
NYSE MO Philip M orris Com panies, Inc ................................................................ :......... $1.00
NYSE PHL Philips Industries Inc. (Ohio) ............................................................................ None.
NYSE P Phillips Petroleum Com pany ............................................................................ $1.25
NYSE PBI Pitney Bowes, Inc..................................... $2.00
NYSE PCO Pittston Company (The)..................................................................................
NYSE PDG Placer Dome Inc ....................................................................................... .
NYSE PRD Polaroid Corporation ........................................................................................
NYSE PCH Potlatch Corporation .........................................................................................
NYSE PMI Premark International, Inc ................................................................................
NASDAQ PCLB Price Com pany (The) ........................................................................................
NYSE PDQ Prime Motor Inns, Inc. ..............................
NYSE PA Primerica Corporation ................................. $01
NYSE PG Procter & Gamble Com pany (The) ................................................................. None.
NYSE PEG Public Service Enterprise Group Incorporated ............................................... None.
NYSE OAT Q uaker Oats Com pany (The) ............................................................. . $5.00
NYSE CUE Quantum Chem ical Corporation ................................................................. $2.50
NYSE RAL Ralston Purina Company ............................... Com mon Stock ......................................................... $.41 %
NYSE RAM Ram ada Inc....................................................................................................... Com m on Stock ........................................................ $.10
NYSE RYC Raychem Corporation ....................................................................................... Com mon Stock ......................................................... None.
NYSE RTN Raytheon Com pany ........................................................................................... Com mon Stock ......................................................... $1.00
NYSE RBK Reebok International Ltd .................................................................................. Common Stock ................ ....... $01
NYSE RLM Reynolds Metals Com pany ............................................................................... Com mon Stock .................................................... None.
NYSE RAD Rite Aid Corporation ................................................... ............ Com mon Stock .......................................................... $1.00
NASDAQ ROAD Roadway Services, Inc................................................. !.................................... Com mon Stock ......................................................... None.
NYSE ROK Rockwell International Corporation .................................................................. Com mon Stock......................................................... $1.00
NYSE ROH Rohm & Haas Com pany ........................................... !....................................... Com mon Stock ................................................... $2.50
NYSE REN Rollins Environmental Services, Inc................................................................ Com mon Stock. ........................................................ $1.00
NYSE RDC Rowan Com panies, Inc............................................................................. Com mon Stock ......................................................... $.12V2
NYSE RD Royal Dutch Petroleum Co ............................................................................... Share Capital ............................................................ 5 Guilders.
NYSE RBD Rubberm aind Incorporated ............................................................................... Com mon Stock .......................................................... $1.00
NYSE RML Russell.Corporation ........................................................................................... Com mon Stock......................................................... $.01
NYSE R .Ryder System, Inc .................................. Com mon Stock.......................................................... $.50
NASDAQ SAFC SAFECO Cornoration ................................................................................. Com mon Stock ......................................................... $5.00
SCFICo(.rn Com m on Stock.......................................................... $4 Vs
NYSE SCE
NYSE SPW SPX Corporation .......................................................................................... Com m on Stock.......................................................... $10.oQ
NYSE SK Onutlly-KMle Com m on Stock...................................... ........ $.10
NYSE SB Salomon In Common Stock............................. $1.00
NYSE SFX Santa Fe P cific Corporation ........................................................................... Com m on Stock ................................................... $1.00
NYSE SLE Sara Lee C Com m on Stock.......................................................... $1.33V
NYSE SGP irt n
itS;lit ........................................................................ Com m on Stock.......................................................... $1.10
NYSE SLB Schlumberger Limited .............. Com m on Stock.......................................................... $.01
NYSE SFA Scientific-Atlanta Inc .............. Com m on Stock.......................................................... $.50
NYSE SPP Scott Paper Company: ............ Com mon Stock .......................................................... None.
NYSE VO Seagram Company Ltd. (The) Com m on Stock.......................................................... None.
NYSE S Sears. Roebuck & Co ....... Com m on Stock .................................... a..................... $75
NYSE SPiO Security Pacific Corporation ............................................................................. Com mon Stock .......................................................... $10.00
NYSE SRV Service Corporation International .................................................................... Com mon Stock .......................................................... $1.00
NASDAQ SMED Shared Medical System s Corporation ............................................................ Com mon Stock ......................................................... $.01
NYSE SNC Shawmut National Corporation ................................................................. Com mon Stock ...................... I.......................... $.01
NYSE SHW Sherwin.William s Com pany (The) ..................................... !............................. Com mon Stock ........................................................ $1.00
NYSE SHN Shoney's, Inc ................................... ........................... . ............ Com mon Stock ....................................................... $1.00
NYSE SKY Skyline Corporation ........................................................................................ $.0277
NYSE SNA Snap-O n Tools Corporation ............................................................................. $1.00
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45869
EXHIBIT A-Continued
a
Traded Ticker Company Security Par value
NYSE SNT Sonat Inc ............................................................................................................ Com mon Stock ......................................................... $1.00
NYSE so Southern Com pany (The) ................................................................................. Com mon Stock................................. .................... $5.00
NYSE SBC Southwestern Bell Corporation ........................................................................ Com mon Stock .......................................................... $1.00
NYSE SOV Sovran Financial Corporation .......................................................................... Comm on Stock .......................................................... $5.00
NYSE SMI Springs Industries, Inc....; ................................................................................. Com mon Stock .......................................................... $0.50
Class A Com mon Stock .................................... *...... $0.25
Class B Com mon Stock .......................................... $ 0.25
NYSE SOD Square D Com pany.......................................................................................... Com m on Stock .......................................................... $1.66%
NASDAQ STPL St. Paul Com panies, Inc. (The) ........................................................................ Com m on Stock .......................................................... None.
NYSE SWK Stanley Works (The) ................................................................................. Com m on Stock .......... I............................................... $2.50
NYSE STO Stone Container Corporation ........................................................................... Com mon Stock .......................................................... None.
NYSE SUN Sun Com pany, Inc........................................... ............................................ Com mon Stock ......................................................... $1.00
NYSE STI SunTrust Bank, Inc ..................................................................... ...... Com mon Stock ........................................................ $1.00
NYSE SVU Super Valu Stores, Inc ............................................... Com m on Stock .......................................................... $1.00
NYSE SYN Syntex Corporation .......................................................................................... Common Stock ....................... $1.00
NYSE SYY Sysco Corporation ............................................................................................. Com m on Stock ......................................................... $1.00
NYSE TJX TJX Companies, Inc. (The) ..................................... Common Stock .......................................................... $1.00
NYSE TRW TRW Inc: ............................................................................................................ Com m on Stock .......................................................... $0.625
NYSE TDM Tandem com puters Incorporated ..................................................................... Com mon Stock ............................................. :........... $0.02 /
NYSE TAN Tandy Corporation ............................................................................................ Com mon Stock ......................................................... $1.00
NYSE TEK Tektronix, Inc ...................................................................................................... Com mon Stock ......................................................... None.
NASDAQ TCOMA Tele-Com muinications, Inc ................................................................................ Class A Com mon Stock ........................................... $ 1.00
NYSE TDY Teledyne, Inc ..................................................................................................... Com mon Stock .......................................................... $1.00
NYSE TIN Tem ple-inland Inc .............................................................................................. Com m on Stock ......................................................... $1.00
NYSE TGT Tenneco Inc...................................................................................................... Com m on Stock ......................................................... $5.00
NYSE TX Texaco Inc .......................................................................................................... Com mon Stock ......................................................... $6.25
NYSE TXN Texas Instrum ents Incorporated ...................................................................... Com mon Stock ................................... ..................... $1.00
NYSE TXU Texas Utilities Com pany ................................................................................... Com mon Stock ........................................................ None.
NYSE TXT Textron Inc ............................................... Com mon Stock ......................................................... $0.12'/2
NYSE TNB Thom as & Betts Corp ....................................................................................... Com m on Stock ......................................................... $0.50
NYSE TL Tim e Incorporated............................................................................................. Com m on Stock ......................................................... $1.00
NYSE TMC Tim es Mirror Com pany (The)........................................................................... Series A Com m on Stock ......................................... None.
NYSE TKR Timken Com pany (The)..................................................................................... Com mon Stock ......................................................... None.
NYSE TKA Tonka Corporation ............................................................................................. Com mon Stock ......................................................... $0.66%
NYSE TMK Torchm ark Corporation ......................................... ................................... Common Stock ....................... $2.00
NYSE TOY Toys "R"Us, Inc .............................................................................................. Com mon Stock ........................................................ $0.10
NYSE TA Transamerica Corporation ................................................................................ Com mon Stock ......................................................... $1.00
NYSE TIC Traverlers Corporation (The) ........................................................................... Com mon Stock ....................... "........... $....................
$1.25
NYSE TFB Tribune Com pany ................................................... ;......................................... Com mon Stock ....................................................... None.
NYSE TNV Trinova Corporation ....................................................................... :1.................. Com mon Stock ......................................................... $5.00
NYSE TYC Tyco Laboratories, Inc ....................................................................................... Com mon Stock ......................................................... $0.50
NYSE FG USF&G Cororation ........................................................... Com mon Stock ......................................................... $2.50
III t' ,nrnrrtirnn . $5.00
NYSE UAL S , . ............................................. .I. ........................................ Com m on Stock ........................................................
NYSE USW US West Inc , ........................................................................................... ....... Com m on Stock ........................................................ None.
NYSE U USAir Group, nc........................................................................................ Com m on Stock .................................................... $1.00
NYSE USG USG Corporation: ........................ ........................................................................ -Common Stock .......... ......................... $0.10
NYSE USH USLIFE Corporation .......................................................................................... Com mon Stock ......................................................... $1.00
NYSE UST UST Inc .......................................... Com m on Stock......................................................... $0.50
NYSE X USX Corporation ................................................................................................ Com m on Stock ......................................................... $1.00
NYSE UN Unilever N.V ....................................... Ordinary Shares ....................................................... $4 Guilders.
NYSE UCC Union Camp Corporation .................................................................................. Com m on Stock ........... ............................................ $1.00
NYSE UK Union Carbide Corporation ................................................................................ Com m on Stock .......................................................... $1.00
NYSE UNP Union Pacific Corporation ................................................................................ Com mon Stock .. ........................... ..................... $2.50
NYSE UIS. Unisys Corporation ........... ;.......................................................................... Com m on Stock .......................................................... $5.00
NYSE UH U.S. Home Corporation.. ................................ ..... Com mon Stock ......................................................... $0.10
NYSE UTX United Technologies Corporation .................................................................... Com m on Stock.......................................................... $5.00
NYSE UT United Telecommunication, Inc........................ ................ Com mon Stock ......................................................... $2.50
NYSE UCL Unocal Corporation .......................................................................................... Com m on Stock .......................................................... $1.00
NYSE UPJ Upjohn Company (The) ...... ........................... Common Stock ........................................... $1.00
NYSE VFC V.F. Corporation ............................................ .............................................. Common Stock....................... None.
NYSE VAT Varity Corporation .. ........................................ ;............................ . Com mon Stock .......................................................... None.
NYSE WMT Wal-Mart Stores, Inc .......................................................................................... Com mon Stock .......................................................... $0.10
NYSE WAG Walgreen Co ...................................................................................................... Common Stock ....................... $1.25
NYSE DIS The Walt Disney Company .............................................................................. Com mon Stock.......................................................... $0.10
AMEX WANB Wang Laboratories, Inc ................................................................................... Class B Com mon Stock ........................................... $0.50
NYSE WLA Warner-Lambert Company ............................................................................... Com mon Stock .......................................................... $1.00
NYSE WMX Waste Management, Inc................................ Common Stock .......................................... $1.00
NYSE WFC Well Fargo & Company .................................................................................... Common Stock ........................................... $5.00
NYSE OVEN Wendy's International, Inc .............................................................................. Common Stock ........... ............................. $0.10
NYSE WX Westinghouse Electric Corporation ................................................................ Common Stock .......................................... $1.00
NASDAQ WMOR Westmoreland Coal Company .................................. Com mon Stock ..................................................... $2.50
NYSE W Westvaco Corporation ............................. .................................................. Common Stock ............... .............. $5.00
NASDAQ WElT Wetterau, Incorporation ................................................................................... Common Stock ............. .................. $1.00
NYSE WY Weyerhaeuser Company .................................... Com mon Stock .......................................................... $1.25
NYSE WHR Whirlpool Corporation ................................................................................... Com mon Stock ......................................................... $1.00
NYSE WH Whitman Corporation..:; ...................................................................... .. Com mon Stock .......................................................... None.
NYSE WMB Williams Companies (The) .............................. ;.................................. Com mon Stock ....................... :.................................. $1.00
NYSE WIN Winn-Dixie Stores, Incorporated ................................. Com mon Stock .. ...... ........................................... $1.00-
NYSE z Woolworth Corporation ............................................................................. . Com mon Stock .......... ......................... .................... :1$1.00
NASDAQ -WTHG Worthington Industries, Inc ............................................................................. Com mon Stock ........................................................ $O.01
45870 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
EXHIBIT A-Continued
Traded Ticker Company Security Par value
NYSE WWY Wrigley (Win.) Jr. Company .............................................................................. Common Stock ......................................................... None.
NYSE XRX Xerox Corporation ............................................................................................ Common Stock ......................................................... $1.00
NASDAQ Yell Yellow Freight Systems, Inc. of Delaware ..................................................... Common Stock. . . . . . . . $1.00'
NYSE ZE Zenith Electronics Corporation ......................................................................... .Common Stock .......................... .......... $1.00
NYSE ZRN Zurn Industries, Inc .................................................................................. Common Stock ........................................................ $050
NASDAQ RYAN Ryan's Family Steak Houses, Inc ............................ Common Stock ......................................................... $1.00
NYSE Harnischfeger Industries, Inc ........................................................................... Common Stock ....................................................... $1.00
[FR Doc. 89--2560% Filed 10-30-89; 8:45 am) a marketplace selfregulatory NSCC will receive a locked-in basket
BILLING CODE 8t0-Ot-M organization ("SRO"). NSCC will net trade from the NYSE into its comparison
[Rel. No. 34-27388; File No. SR-NSCC-89- reported basket trades so that each system, and thus will be responsible for
member will have either a net long bursting the basket into its 500
08] position or a net short position in basket component securities. If, on the other
Self-Regu!atory Organizations; trades. After netting a member's basket hand, a member executes a basket trade
National Securities Clearing trades, NSCC will "burst" the member's off of a Tier 1 or Tier 2 quote, 6 the NYSE
Corporation; Order Approving net basket position into its individual will burst the basket into 461 separate
Proposcd Rule Change Providing for security components based on locked-in trades for securities traded on
the Processing of Basket Trades information received from the exchange the NYSE and one locked-in trade of a
or marketplace SRO. mini-basket of 39 securities that are not
On June 7,1989, the National
Securities Clearing Corporation The extent to which NSCC must burst traded on the NYSE. NYSE will submit
("NSCC"I filed a proposed rule change a member's net basket position depends the 461 separate locked-in trades and
(SR-NSCC-89-08) with the Commission on the quotation off of which the the locked-in mini-basket trade to
pursuant to Section 19(b)(1) of the member's basket trades were executed.
For example, if a member executes a NSCC's comparison system. NSCC will
Securities Exchange Act of 1934 ("Act").' then be responsible for bursting the
On July 18, 1989, the Commission basket trade off of a quote established
by a competitive basket market maker,
5 mini-basket into its 38 component
published notice of the proposal in the securities.
Federal Register to solicit comments
from interested parties, 2 On August 24, containing all of these reports, and passes this file NSCC will issue a report ("Basket
to NSCC at the end of the day. Consequently, for Trade Detail Report") to members
1989, NSCC submitted an amendment to market maker to market maker basket trades, NSCC
its filing. No comments were received. receives basket trade reports from the NYSE that showing the results of their basket
As discussed below, the Commission is show the market makers as the counterparties to trades on the day after the trade date
locked-in basket trades. ("T+1"). This report will contain,
approving the amended proposal.
NYSE will use an omnibus comparison system for among other things, the member's net
I. Description trades between market makers and the BBB, and
has established a new omnibus account, TAB, for position with respect to basket trades,
NSCC proposed to revise its rules to this purpose. After a market maker agrees to trade a the individual security components of
enable it to clear and settle. basket basket with the BBB, the BBB will enter the trade such net position, the individual and
trades.' NSCC will accept locked-in Into his terminal. This will create a report showln'g aggregate settlement valu6 7 for such
basket trade data from an exchange 4 or that the market maker bought or sold a basket from
components and any adjustment to
TAB. This also will automatically send a message to
115 U..C. 78s(b)(l) (19821. the specialists in the 461 component stocks traded basket trades or component securities
on the NYSE informing them that their bids have as described below.
'See Securities and Exchange Act Release No. been hit or their offers have been taken. Each
27021 [July 11, 1989). 54 FR 30125. specialist will see TAB as his counterpart, and must At the same time NSCC issues the
3 In its proposed rules. NSCC defines a "basket take or provide the appropriate number of shares Basket Trade Detail Report to its
trade" as a trade in a group of securities that an either from his inventory or off his book. Similarly.
exchange or marketplace self-regulatory the BBB also is notified that he must take or provide members, it also will issue a report to
organization las defined in § 3(a)(26 of the Act. See the 39 stocks that do not trade on the NYSE to TAB.
15 U.S.C. 78c (19821) designates as eligible for All trades executed against TAB are locked-in
execution in a single trade. The Commission has trades. within specified bid-ask parameters. See Exchange
approved a proposal by the New York Stock Approval Order at a.
The NYSE will create a file comprised of all
Exchange "NYSE"l to begin trading a market
NYSE locked-in omnibus basket trades and pass 6Under NYSE's basket trading rues, each NYSE
basket product called Exchange Stock Portfolios specialist has the obligation to contribute quotes in
this file to NSCC at the end of the day. Thus, NSCC
("ESPs"). See Securities Exchange Act Release No. his specialty stock(s) for the purpose of facilitating
will see the market maker v. TAB on one side of the
27382 (October 26,1989), File No. SR-NYSE-89-05 market basket transactions. All of these contributed
trade, and will see the appropriate specialist v.
("Exchange Approval Order"). Although this specialist quotes will comprise aggregate "Tier 1"
TAB. and the BBB v. TAB on the other side of the
Release refers only to the NYSE's ESPs, NSCC's and "Tier 2" basket quotes, and will consist of the
trade. NSCC will burst the market maker v. TAB
filing is generic and its proposed rules would apply prevailing bids and offers in all basket stocks as
position into 500 "pieces" and burst the BBB v. TAB
to all market basket products cleared and settled disseminated through the consolidated quotation
position into 30 "pieces", thus allowing it to zero out
through NSCX. system. When an aggregate Tier 1 quote is hit, a
4 All comparison of ESP trade data will occur at
the TAB account. Telephone conversation between
John Limeick, NYSE, and Ross Pazzol, Attorney, specialist must take or supply the number of shares
the NYSE. The NYSE's method for comparing Branch of Clearing Agency Regulation, Division of of his specialty stocks needed tocomplete one
basket trades and its format for submission of data Market Regulation, SEC, on October 12. 1989. ' basket. Similarly, when a Tier 2 quote is hit, each
to NSCC depends upon whether the trade occurred specialist must take or supply the number of shares
between two market makers or between a market 5 A competitive basket market maker has four of his specialty stocks needed to complete three
maker and the basket book broker ("1BBB". For specific market-making obligations: (1) Establish baskets.
example, two market makers who agree to a basket and maintain a course of dealings consistent with a
trade musftring the trade to the BBB for execution. fair and orderly market: (21help alleviate temporary 7The-aggregate settlement value for each
The BBB executes the trade by entering it into his disparities between supply and demand; (3) effect component security is equal to the product of the
terminal on the floor of the NYSE. Entry of the trade proprietary trades in a reasonable and orderly settlement price (i.e.. the current NSCC system
will result in a report showing the two market manner in relation to the market in general and the price) of the component security and the number of
makers as the counterparties to a locked-in basket basket market in particular, and (4) maintain a shares of the component in the basket as reported
trade. The NYSE takes this report, adds it to a file continuous, two-sided quotation in the basket by the exchange or marketplace SRO.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45871
the BBB, 5 for its position in mini-baskets on T+4 or'later which causes a change settlement of such products.1 3 This
arising from trades executed off of Tier 1 in the quantity of securities to be order focuses on NSCC's proposed
or Tier 2 quotes. This report will contain received or delivered, or the value to be system.
the same information for mini-baskets received or delivered for a CNS-eligible The Commission believes that NSCC's
that the Basket Trade Detail Report security, the trade will settle two procedures for processing market basket
contains for basket trades as a whole. business days after such adjustment. If a transactions will promote the prompt
NSCC makes this information available similar adjustment is made to a and accurate clearance and settlement
to the BBBs so they can determine their component security which is a balance of securities transactions. In general,
net deliver and receive obligations for order security, NSCC will issue a trade- NSCC's proposed procedures are
the securities comprising the mini- for-trade ticket between the original substantially similar toits existing
basket. If, however, a BBB executes a parties to the basket trade. procedures for the clearance and
basket trade for his own account, the
II. Rationale for the Proposai settlement of equity securities
mini-basket component of his
NSCC believes its proposed rule transactions.
proprietary trades will not be netted
with the mini-basket trades he executes change is consistent with. the purposes Notwithstanding the similarity
pursuant to his function as a passive and requirements of section 17A of the between the procedures set forth in
market maker for trades executed off of Act. Specifically, NSCC believes that its NSCC's proposal and its existing
Tier 1 and Tier 2 quotes. proposal will promote the prompt and processing procedures, NSCC's proposal
One result arising from a basket accurate clearance and settlement of does contain some items that are unique
trading system in which a member must securities transactions by increasing the to the clearance and settlement of
deliver or receive the component number of securities transactions that market baskets. The first of these items
securities comprising the basket is that are subject to its efficient clearance and concerns the manner in which NSCC
the value of the basket contract may settlement procedures. NSCC also will deal with the possibility that the
differ from the settlement value of the believes that its proposal will promote aggregate value of the securities
component securities. 9 To eliminate that the safeguarding of funds and securities comprising the basket may differ from
disparity, NSCC will make a cash within its possession or control by the value of the market basketcontract.
adjustment for the difference between subjecting market basket transactions to As described above,1 4 NSCC will
the contract value 10 of the market its risk assessment procedures and account for the possible disparity
basket and the aggregate settlement safeguards'. between these values by creating a cash
values of all of the component adjustment equal to the amount of the
III. Discussion disparity between the market basket
securities. The cash adjustment will be
collected and paid to the appropriate The Commission believes that NSCC's contract price and the aggregate
party on the settlement date. proposal is consistent with section 17A settlement values of the underlying
After the component stocks are of the Act and NSCC's obligation to component securities. The Commission
separated and assigned a settlement promote the prompt and accurate believes this is appropriate because it
value, they are processed through NSCC clearance and settlement of securities enables NSCC to combine obligations
with the member's other trades. transactions and to safeguard securities arising out of market basket with
Securities acquired or sold through and funds in NSCC's custody and obligations arising out of individual
basket trading will be netted with all of control. Accordingly, for the reasons stock transactions for netting purposes
the member's other transactions in the discussed below, the Commission is while simultaneously allowing the
same securities and entered into either approving NSCC's proposal. purchaser or seller of the market basket
NSCC's continuous net settlement Since the October 1987 market break, to deliver or receive the agreed value of
("CNS"] system or balance order a number of studies have recommended the component stocks comprising the
accounting system, as appropriate. The creating a market basket product.11 basket.' 5 Thus,.the Commission
results of the processing cycle will be These studies suggest that such a believes NSCC's market basket cash
reported to the members on the product may, among other things, adjustement mechanism enhances
appropriate compared trade summary address the volatility and steep price NSCC's ability to clear and settle
on the morning of T+4. declines experienced during and since securities transactions in a timely and
Throughout the basket trade October 1987.12 These studies did not accurate manner.
processing cycle, NSCC will be able to discuss the clearance and settlement The second new item presented by
accept adjustment data from the issues raised by the development of a NSCC's proposal is the fact that NSCC
exchange or marketplace SRO with market basket product. It appears, will be responsible for "bursting" a
respect to market basket transaction however, that the feasibility of basket of 500 stocks into its individual
prices and the prices of the component developing a workable market basket security components within a relatively
securities. If NSCC makes an adjustment product is directly related to the short time frame. NSCC will receive
development of a system that provides
8The BBB performs many of the same functions for the safe and efficient clearance and
13 This is because settlement of the ESP will
for market baskets performed by specialists for involve the actual transfer of the component stocks
individual stocks. See Exchange Approval Order at I I See, e.g., N. Katzenbach, An Overview of underlying the ESP. See Exchange Approval Order
13-16. Program Tradingand Its Impact on Current Market at 2. Similarly, settlement of the Chicago Board
9For example, assume a basket is comprised of Practices(December 21, 1987) and Division of Options Exchange's market basket product also will
two stocks, A and B, and that the market price of A Market Regulation, The October1987 Market Break result in the transfer of the component stocks
is $50 and the market price of B is also $50. Assume (February 1988). See also Report of the Presidential comprising the basket. See Securities Exchange Act
also that the purchaser buys a market basket for Task Force on Market Mechanisms (January 1988) Release No. 27383 (October 26,1989), File No. SR-
$100 and that the last sale price of A and B at the and the Interim Report of the Working Group on CBOE-89-20.
end of the day was $50Y2. Because the purchaser Financial Markets (May 1988) for other 14 See note 8,supra.
would be obligated to delier $101 on the settlement reccommendations arising out of the October 1987 " The Commission notes that NSCC's cash
date, the purchaser would be entitled to receive a market break. adjustment procedure for market baskets is similar
$1.00 cash adjustment from NSCC. 12 See Exchange Approval Order, supra, note 7, to NSCC's existing cash adjustment mechani3m
10 At present, the current contract value of a far a more detailed discussion of the benefits of used in connection with its balance order and CNS
NYSE market basket is $5 million. market basket products. systems. See NSCC Procedures at V and VII.
45872 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
data by 2:00 a.m. (Eastern Time) and for For the reasons stated above, the is based. 4 Although market basket
those members with automated output Commission believes that NSCC's trades are purchases and sales of the
capacity, will be responsible for proposal is consistent with section 17A component basket stocks, OCC will
reporting a member's positions by 4:00 of the Act. process market basket trades as if
a.m. (Eastern Time). NSCC has IV. Conclusion market baskets were exercised equity
represented to the Commission that its options, but will include market baskets
computer systems have the capacity to It is therefore ordered,pursuant to as a class group within the non-equity
perform such functions and that such section 19(b](2) of the Act, that the option system for other purposes. To
performance will not adversely affect proposed rule change (SR-NSCC--89-08) account for the differences between
NSCC's processing capabilities. 16 Thus, be, and hereby is, approved. market baskets and options, OCC also
the Commission believes that this aspect For the Commission. by the Division of proposes to add a new set of rules and
of NSCC's proposal will not detract from Market Regulation, pursuant to delegated procedures designed specifically to
NSCC's ability to promote the prompt authority. 17 CFR 200.30.3. accommodate market baskets. These are
and accurate clearance and settlement Dated: October 26. 1989. described more fully below.
of securities transactions. Jonathan G.Katz,
The Commission also believes that II. Description
Secretary
NSCC's procedures enable NSCC to [FR Doc. 89-25604 Filed 10-30-89:8:45 am] OCC proposes to revise its rules so
safeguard securities and funds in its BILLING CODE 8010-01-M that clearing members involved in
custody and control consistent with its basket trading ("market basket clearing
obligations under the Act. Members members") are subject to the same
desiring to trade market baskets are [Rel. No. 34-27389; File No. SR-OCC-89-101 general requirements as OCC clearing
subject to the same financial members that trade non-equity options.
responsibility and reporting Self-Regulatory Organizations; For example, iny clearing member
requirements currently imposed on all Options Clearing Corporation; Order desiring to trade market baskets first
NSCC members. 17 In addition. Approving Proposed Rule Change would have to obtain OCC's approval to
member's equity security deliver and Providing for the Clearance and do so. Before receiving such approval,
receive obligations arising out of basket Settlement of Market Baskets each clearing member, among other
trading will be guaranteed by NSCC on things, would be required to meet OCC's
midnight of the day after the trade On August 14, 1989, the Options
Clearing Corporation ("OCC") filed a minimum initial net capital
date.1" Members, therefore, will be requirements. 5 After receiving approval
proposed rule change (SR-OCC-89-10)
exposed to the credit risk of their with the Commission pursuant to to trade market baskets, a market
counterparty for only a short period of Section 19(b) of the Securities Exchange basket clearing member would have to
time. Moreover, NSCC will add a Act of 1934 ("Act").' Notice of the deposit the minimum required
member's deliver and receive proposal was published in the Federal contribution to OCC's non-equity
obligations arising out of basket trading Register on August 29, 1989 2 to solicit securities clearing fund,6 and maintain
to all of the member's other obligations comments from interested parties. On the level of minimum net capital
for the purposes of calculating the September 21, 1989 and October 13, required by OCC.7 A market basket
member's required clearing fund 1989, OCC filed amendments to its clearing member also would be required
contribution. In this way, NSCC will proposal. No comments were received. to maintain the records prescribed by
ensure that it will be covered for any As discussed below, the Commission is OCC 8 and maintain a bank account in a
additional exposure resulting from its approving the amended proposal. clearing bank 9 for each of its market
member's market basket trading.' 9 basket accounts.' 0
I. Introduction
16 See letter from Robert A. Schultz. Executive OCC proposes to revise its rules to
Vice President, NSCC. to Ross Pazzol, Attorney,
4 See Article 1, Section 1( ) of OCC's
provide for the clearance and settlement proposed By-laws.
Branch of Clearing Agency Regulation. Division of
Market Regulation, SEC, dated October 19,.1989. of market baskets traded on the Chicago 5 See OCC Rule 301.
17See NSCC Rule 15. Board Options Exchange ("CBOE"].3 6 See OCC By-laws, Article VIII, section 2. Under
1s NSCC will treat the burst stock positions of OCC's proposed By-laws define a Rule 1001(b), a market basket clearing member's
members involved in basket trading as being "market basket" as a contract obligating minimum required non-equity securities clearing
reported to NSCC as compared. Thus. NSCC will fund contribution is equal to the greater of (1)
the seller to sell and the purchaser to $75,000: or (21 the member's proportionate share of
guarantee the performance of these transactions at
midnight on T+i. See letter from Allison Hoffman, purchase a designated number of shares 7% of the average daily aggregate margin
Associate Counsel. NSCC. to Ross Pazzol, Attorney. of each of the stocks comprising the requirement for non-equity securities options
Branch of Clearing Agency Regulation. Division of contracts, and market baskets outstanding during
index group on which the market basket the preceding month. Under OCC's proposal, a
Market Regulation, dated October 24, 1989. Accord,
Securities Exchange Act of Release No. 27192 market basket clearing member's proportionate
(August 29, 1989), 54 FR 37070. ' 15 U.S.C. 78s(b)(1) (1982). share is determined by calculating the member's
19 See NSCC Procedure XV. The Commission is 2 See Securities Exchange Act Release No. 27157 daily average long and short positions in non-equity
concerned that NSCC's clearning fund calculation (August 21, 19891, 54 FR 35743. securities options contracts and the daily average of
may not reflect a member's actual mark-to-the- 3 OCC's proposal is generic and would apply to the net number of market baskets purchased or sold
market exposure because it allows NSCC to collect all market basket products cleared and settled during the preceding month and dividing it by the
only a percentage of a member's mark-to-the-market through OCC. However, because OCC's proposal same sum as calculated for all non-equity securities
exposure. NSCC currently calculates each member's was submitted concurrently with CBOE's proposal clearing members.
mark-to-the-market exposure daily, but only collects to begin trading two market basket products based 7See OCC Rule 302.
mark-to-the-market payments on the settlement on the Standard and Poor's 100 Stock Price Index s See OCC Rule 207.
date. The Commission believes that NSCC should and the Standard and Poor's 500 Stock Price Index. OA "clearing bank" is a bank located in a city in
consider collecting marks on all of its members' this release will discuss OCC's proposal as it relates which OCC has a clearing office and which has
open obligations from the time of guarantee through to CBOE's market basket products. See Securities entered into an agreement with OCC for settlement
the scheduled settlement date. See Securities Exchange Act Release No. 27383 (October 26 1989), of transactions on behalf of a clearing member. See
Exchange Act Release No. 27192 (August 29, 1#89). File No. SR-CBOE-88-20, approving CBOE's OCC Rule 101(c).
54 FR 37070. proposal ("CBOEApproval Order"). 1oSee OCC Rule 203.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45873
OCC's proposal also adds new Members with a net cash adjustment member's market basket settlement
provisions to its rules and By-laws that requirement also must pay this amount obligations. 7
apply specifically to market baskets. In to OCC at this time. Members with a net Money and securities settlement of
many areas, these rules and By-laws cash adjustment credit may offset their market baskets will occur at the
parallel those for processing equity required margin deposits by this member's Clearing Corporation on the
option transactions. For example, under amount. settlement date. Members also will
OCC's proposal, each exchange must Each member must pay the required settle their net cash adjustment credits
report to OCC each exchange margin on its net basket position on a on the settlement date through OCC's
transaction in market baskets for which cash settlement system. Any member
the purchasing clearing member and the daily basis. In addition, members with with a net cash adjustment credit will
selling clearing member have submitted net cash adjustment requirements must
receive this amount from OCC at or
matching trade information. This report maintain such amounts on deposit15
with before 10:00 a.m. (Central Time).
must identify the purchaser and seller of OCC until the settlement date. If a certain component security is
the market baskets, the number of Although members with net cash ineligible for settlementthrough a
market baskets bought and sold, and the adjustment credits may use these credits member's Clearing Corporation, OCC
class 1 and trade price of each market to offset their daily margin obligations, may require that the security be settled
basket. This report also must identify they may not collect these amounts until outside the Clearing Corporation on a
the transaction to the clearing member's the settlement date. broker to broker basis. In addition, OCC
firm, market maker or customer account. After members pay their margin and may postpone settlement of one or more
After OCC receives this report, OCC net cash adjustment requirements, OCC component securities comprising the
will calculate the difference between the will "accept" (i.e., guarantee) their basket if. in its opinion, such action is
price at which a member purchased or market basket transactions and required because of unusual market
sold a market basket and the closing interpose itself between the parties to conditions or is in the public interest. If
price of the component securities on that the transactions. OCC willdeem all OCC determines that, because of
day ("cash adjustment"). OCC will net accepted market basket positions to be extraordinary conditions, delivery of
the member's cash adjustments across in the member's firm account. OCC will such securities is impossible or unduly
accounts to arrive at a net cash burdensome for the delivering member,
adjustment credit or requirement. report each member's net market basket
settlement obligations t'o the member's OCC may relieve the delivering member
After calculating each member's net from its obligation to deliver such
cash adjustment, OCC will net out each designated clearing corporation by 2:00
a.m. (Central Time) on the day after the security and adjust the aggregate value
member's market basket trades to either of the market basket accordingly. 18
a net long or short position, burst each trade date.t1
If OCC suspends any member
member's net position into its At 1:00 p.m. (Central Time) on the day obligated to deliver the securities
underlying component securities, 12 and before the settlement date, OCC's comprising a market basket before the
assign each component security a price settlement obligations for accepted member's Clearing Corporation becomes
equal to its closing price as determined market basket transactions will be obligated to effect settlement (i.e.,
by OCC's reporting authority. OCC then transferred to each member's designated before 1:00 p.m. (Central Time) on the
will report the above information to Clearing Corporation. From that point day before the settlement date), OCC
each market basket clearing member's forward, each member's designated will direct a receiving member to buy-in
designated clearing corporation by 2:00 Clearing Corporation will guarantee its the securities and report the execution
a.m. (Central Time). If OCC does not price of the buy-in to OCC. If the
receive the closing price of any of the member buying in suffers a loss, OCC
component securities, OCC may either value of the member's net basket position), and (2)
"additional margin" (which covers any exposure must satisfy the loss by 10:00 a.m.
set the market price of the securities OCC may have as a result of liquidating a member's (Central Time) the following business
based on the most recent market price net basket position). After OCC calculates a day. If such a buy-in results in a gain,
available for such securities or suspend member's margin requirement (credit) for market the buying member must pay the gain to
the settlement obligations of its clearing baskets, it will determine the member's product
members for such securities.1 3 group margin requirement (credit) by combining OCC, and OCC will deposit the amount
Each market basket clearing member such requirement (credit) with the member's margin in the suspended member's Liquidating
must deposit margin at OCC for its net
requirements (credits) for other broad-based index Settlement Account.19 If a member is
options. OCC will determine a member's aggregate suspended after his designated clearing
basket position by.9 a.m. (Central14 Time)
margin requirement by adding the member's
on the day after the trade date. aggregate class group and product group margin corporation is obligated to effect
requirements and (1) subtracting 50% of any credits settlement on his behalf, any amount the
attributable to such class groups and product member is entitled to receive is paid
I I OCC's proposal amends OCC Rule 602A(b)(2) groups; (2) adding (subtracting) any mark-to-market
to set market baskets in a separate class group from payments which the member has paid (collected) for
the other non-equity options products issued, its net basket position; and (3) subtracting any '7 See Supplement to Options Exercise Settlement
cleared and settled at OCC. Market baskets will, margin credit attributable to the member's position Agreements between OCC and NSCC, MCC and
however, be included in OCC's broad-based index in equity options. See OCC proposed Rule 602A. SCCP dated October 26.1989. After OCC's market
product group. Is All market basket transactions will settle on basket settlement guarantees are transferred to
12The CBOE will determine the particular the fifth business day after the trade date ("T"). each member's designated Clearing Corporation,
securities comprising the market basket and the I Each market basket clearing member must OCC will continue to calculate and collect margin
number of shares of each such security in the basket designate either National Securities Clearing from market basket clearing members until the
at or prior to the opening of trading on each Corporation ("NSCC"). Midwest Clearing settlement date. See discussion at p. 16, infra.
exchange on which the market basket is traded. Corporation ("MCC") or the Stock Clearing 's See OCC proposed By-Law XIX, Section 4.
- "'See OCC proposed By-Law XIX, section 5. Corporation of Philadelphia ("SCCP") ("Clearing 19 After a member is suspended, OCC promptly
14 OCC will calculate margin requirements for Corporation(s)") as its designated clearing converts all of the member's margin deposits,
market baskets in essentially the same manner it corporation for the purpose of settling the deliver clearing fund contributions and other funds subject
makes such calculations for non-equity options. and receive obligations arising out of the member's to OCC's control to cash and deposits these funds in
Accordingly, each member must pay margin market basket activity. OCC has supplemented its a Liquidating Settlement Account in the name of the
consisting of two components: (1) "Premium options exercise settlement agreements with the clearing member. OCC then uses these funds to
margin" (which covers OCC's exposure resulting Clearing Corporations to provide for settlement of satisfy the member's outstanding liabilities. See
from the one day price movement in the market these obligations. OCC Rule 1104.
45874 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
directly into his Liquidating Settlement Advocates of such a product believe Although OCC's proposal relies
Account. These same procedures apply that trading baskets of portfolios of heavily on its existing equity option
in reverse to a situation in which a stock may reduce the volatility and exercise and settlement procedures,
member obligated to receive °
securities dramatic price changes in the market some aspects of OCC's proposal are
is suspended from OCC.2 that are associated with index-related tailored to fit the unique characteristics
III. OCC's Rationale for the Proposed trading strategies. 2 2 They also believe of market baskets. For example, unlike
Rule Change that a specific post or posts for trading purchases and sales of equity options, a
market baskets will enhance the clearing member who buys or sells a
OCC believes its proposed rule liquidity of the markets by providing a market basket is obligated to purchase
change is consistent with the purposes mechanism for the efficient trading of or deliver the stocks comprising the
and requirements of the Act. 23
portfolios of stocks. basket. Consequently, the Commission
Specifically, OCC believes that its The Commission is satisfied that believes it is appropriate that OCC's
proposal will promote the prompt and OCC's proposal to clear and settle the proposed rules require both the
accurate clearance and settlement of market basket product to be traded on purchasing clearing member and the
securities transactions by applying to the CBOE is well designed to promote selling clearing member to deposit
market basket transactions rules and the prompt and accurate clearance and margin on the morning of the day after
procedures comparable to those that settlement of these transactions the trade date.2 7 Moreover, although
have been used successfully for the consistent with section 17A(b)(3] of the settlement of market basket transactions
clearance and settlement of-options Act. As stated in OCC's proposal, a results in the delivery or receipt of
transactions. OCC also believes that its market basket is not a separate
proposal will promote the safeguarding stock, OCC proposes to margin its
security;2 4 instead, it is a contract to members' positions in market baskets
of funds and securities because it will purchase and sell a designated number
apply to market baskets a system of under its non-equity option margin
of shares of each of the stocks system. The Commission believes this is
safeguards which is substantially the comprising the 4ndex group on which the
same as those that OCC currently uses appropriate because OCC's non-equity
market basket is based. 25 Thus, because option margin system, unlike its present
for options. the assets underlying market baskets equity option margin system, is a
IV. Discussion are equity securities, and because the "portfolio-based" system that provides
a
purchase and sale of a market basket sophistic'ated method of calculating the
The Commission believes that OCC's results in an obligation to deliver or amount of margin necesssary to cover
proposal is consistent with section 17A
receive equity securities, the the risk posed by the member's
of the Act and with OCC's obligation to Commission believes that the clearance
promote the prompt and accurate positions.25 OCC's proposal also
and settlement of market basket recognizes that the contract price of the
clearance and settlement of securities
transactions should be similar to the basket may be greater or less than the
transactions and to safeguard funds and exercise and settlement of equity option aggregate settlement value of the
securities in OCC's custody and control.
transactions. As described above, individual stocks comprising the
Accordingly, the Commission is
OCC's proposed rules, for the most part, basket.2 9 0CC will use a cash
approving OCC's proposal for the
reasons provided below. follow OCC's well-established system
The Commission believes that market for processing equity option
arrangement does not affect CBOE's obligation to
basket trading will benefit the financial transactions. Therefore, the Commission pay Section 31 fees. See Section 18 of the Market
markets. Indeed, one of the many believes that OCC's proposed rules Basl'-et Supplemental Agreement between OCC and
recommendations in the aftermath of the facilitate the same prompt and accurate CBOE dated October 26,1989.
27 See OCC proposed Rule 602A(a).
October 1987 market break was the 2 clearance and settlement of market
26 Both OCC's equity and non-equity option
creation of a market basket product. ' basket transactions that OCC's rules
margin calculations are based, in part, on options
presently provide
6 for equity option premiums. In both systems, open positions are
2 The Commission has received an opinion from
transactions.2 marked to market daily based on closing ask prices.
The second component of equity options margin,
OCC's counsel stating that in the event of a
22 See Overview of Program Trading at note 20.
however, is based on a flat 30%of the current value
suspension of a clearing member, the rights of OCC
of the underlying securities. The second component
as set forth in proposed section 3(b) of Article XIX See also H. Stall, Portfolio Trading. Working Paper of non-equity option margin is more flexible and is
of OCC's By-Laws would be enforceable by OCC No. 87-14 (September 1987) (available at the Owen adjusted according to the current risk posed to OCC
against the clearing member and any receiver, Graduate School of Management, Vanderbilt
examiner or trustee appointed for the clearing by the member's position. See Staff Report at 10-50.
University).
member's estate under the Securities Investor 23 Id. For a more complete discussion of the
, OCC's non-equity option margin system uses
Protection Act of 1970 or the Bankruptcy Code, to options price theory to project the cost of liquidating
benefits provided by the creation and trading of a member's positions in the event of an assumed
the same extent as if such transaction had market basket products, see CBOE Approval Order "worst-case" change in the price of the underlying
originated in the clearing member's firm account note 3, supra, and Securities Exchange Act Release
and without regard to whether market basket asset or index. The margin requirement on the same
No. 27382 (October 26, 1989), File No. SR-NYSE-89- class of options equals the premium plus the
transactions effected by such clearing member are
05, approving the New York Stock Exchange additional margin calculated by determining the
or have been identified in any of OCC's reports as
having originated in the customer, market-maker or ("NYSE") proposal to trade a market basket assumed maximum one-day price movement in the
product. underlying assets and by projecting the liquidatinil
other account of the clearing member. See letter
24 See proposed section 1 (mmmm) of Article I of
from James R. McDaniel, Schiff, Hardin &Waite, to value of such position. To provide additional
lonathqn Kaltman, Assistant Director, Division of OCC'a By-Laws. protection, OCC presumes that the cost of
Market Regulation, dated October 24,1989. 21 See CBOE approval order at 20. liquidating a member's out of the money positions
"1 See, e.g., Division of Market Regulation, The 26 Section 31-of the Act requires each national would increase by a minimum of 25% of the margin
October 1987 Market Break (February, 1988) ("Staff securities exchange to pay certain transaction fees interval. For a further discussion of OCC's non-
Report") and N. Katzenbach, An Overview of to the Commission. See 15 U.S.C. 78ee (1982). OCC equity options margin system, see OCC, The Back-
Program Trading and Its Impact on Current Market and CBOE have agreed in writing that OCC will up System, A Special Study by the Margin
Practices (December 21, 1987) ("Overview of collect the so-called Section 31 fees attributable to Committee Subcommittee ("Backup Report")
Program Trading"). See also Report of the market basket trading on CBOE's behalf and pay (August 3, 1988) at 24-41. See also Staff Report at
Presidential Task Force on Market Mechanisms them to the Commission as CBOE's agent. Although 10-36.
(January 1988) and The Interim Report of the Section 31 does not specifically contemplate this 29 For example, assume a basket comprised of
President's Working Group on Financial Markets arrangement, the Commission does not believe that one share bach of two separate stocks. Assume
(May 1988) for other recommendations arising out of it is inconsistent with the requirements of Section each stock has a fair market value of $501/2 and that
the market break. 31. The Commission also notes that this Continued
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45875
adjustment to eliminate this disparity. 30 to which they are subject. It also allows default in a manner that does not
This cash adjustment will settle through them to gauge their financial impose unnecessary costs on clearing
OCC's cash settlement system on the commitments and allows them to adjust members. Until such revised agreements
settlement date. The Commission their trading strategy accordingly. are in effect, however, the Commission
believes this mechanism is appropriate The Commission, however, believes believes that OCC and the Clearing
because it simultaneously ensures that that there is room for further Corporations can take certain steps to
market basket clearing members pay the improvement in OCC's market basket increase their protection against
agreed upon price for a market basket processing procedures. For example, as clearing member default within the
while facilitating netting by allowing discussed below, the Commission framework of their existing
OCC to combine transactions in the believes that OCC and the Clearing arrangements.
Corporations could enhance their
same securities executed at different As explained above, the Clearing
3 protection against the credit risk
prices In a single netting process. ' associated with market basket Corporations' trade guarantee with
Finally, OCC's proposal is designed so transactions. respect to equity option transactions
that market participants who buy and Undbr OCC's proposal, OCC will and market basket transactions is
sell stocks through individualized stock assume the credit risk involved in currently effective from 1:00 p.m. on
transactions in the exchange and over- market basket transactions by T+4 (Central Time) until settlement on
the-counter markets and who buy or sell guaranteeing transactions upon payment T+5. OCC, however, collects margin-
stock through basket trading will have a of the margin on the morning of T+1 at from T+1 until settlement on T+5. The
report that summarizes all of their 9:00 a.m. (Central Time). OCC also will Commission believes OCC should
previous day's trading activity before protect against the market risk 34 explore ways to make the margin
the beginning of trading on the following associated with market basket deposited in connection with equity
day. OCC will report market basket transactions by collecting market-to- option and market basket transactions
transaction data to the Clearing market payments daily through its available to the Clearing Corporations
Corporations in time for them to include margin system. On T+4, each Clearing (to the extent necessary to satisfy losses
thisdata in position reports that are Corporation will take over OCC's arising out of equity options exercise
made available to members before the guarantee by becoming the counterparty settlement obligations and market
opening of trading on the following to every market basket transaction basket transactions) from the time the
day. 3 2 The Commission believes that settled through its facilities. This Clearing Corporations' guarantee
this aspect of OCC's proposal is guarantee will remain in effect until becomes effective until settlement. OCC
settlement occurs on T+5. could make this amount available by
beneficial because it allows market
Under the Clearing Corporations' giving the Clearing Corporations a
participants to have a report that current rules, locked-in equity trades
35
are perfected, first lien on such amounts
reflects all of their previous day's guaranteed as of midnight on T+1.
compared stock trades regardless of the deposited at OCC. as This would
This trade guarantee policy does not provide the Clearing Corporations with
marketplace in which such trades were apply to exercise and settlement of
executed or the trading vehicle used to more direct protection against market
equity option transactions. Thus, risk than is currently provided under
acquire such stocks before trading because OCC's proposal treats the
commences on the following day. This, their existing financial safeguards.3 7
clearance and settlement of market
in turn, provides market participants a basket transactions in much the same
OCC's exposure would not be increased
complete and accurate picture of their way as the exercise and settlement of
under such an arrangement because its
market exposure and the credit risk 33 equity options, the Clearing loss of control over the margin on
Corporations' guarantee will not become -deposit would coincide with the
effective until T+4. The Commission termination of its guarantee. After
the purchaser buys the basket for $101.00. Further
assume that each stock has a system price (i.e., the understands that OCC will be revising settlement of exercised equity options
price used to facilitate netting) of $50 per share. its exercise settlement agreements with and market basket transactions at the
Because each stock will settle at $50 per share, the the Clearing Corporations to reflect the appropriate Clearing Corporation, the
seller is entitled to receive a $1.00 cash adjustment
Corporations' earlier trade guarantees. Clearing Corporation's lien would be
to account for the difference between the basket
contract price and the settlement value of the The Commission encourages OCC to do terminated and OCC would then release
underlying stocks. so with a view toward providing
3o See OCC proposed Rule 2001(b)(3). adequate protection against Member 6 his proposal assumes that OCC would have
31 NSCC intends to use a similar mechanism to no liability remaining with respect to the equity
facilitate the netting of transactions in the NYSE's options and market basket settlement obligations it
34 Market risk is the risk associated with the
market basket product. See Securities Exchange Act guaranteed after its guarantee is superceded by the
Release No. 27388 (October 26, 1989), File No. SR- change in the market price of a security. This risk Clearing Corporations' guarantee on T+4. If OCC
NSCC-89-08. arises where die price of the security rises or falls retains some residual liability for performance of
after trade execution but before settlement. If the such guaranteed settlement obligations, OCC would
32 For example, NSCC will include market basket
price of the security rises and the seller does ndt want to maintain control over the margin deposited
transaction data in the reports it provides to its deliver the security, the buyer may have to find with it on T+4 and T+5 to satisfy any contingent
members in automated form through the current another seller at a higher price. Conversely, if the liability it may have with respect to such
Regional Interface Operation by 8:00 a.m. (Eastern price of the security falls and the buyer does not obligations. The Commission urges OCC and the
Time) on the morning of T+i. See letter from honor the trade, the seller may have to find another Clearing Corporations to resolve this issue
Robert A. Schultz, Executive Vice President, NSCC, buyer at a lower price. Currently, stock clearing expeditiously.
to Ross Pazzol, Attorney, Branch of Clearing corporations such as NSCC calculate marks-to-the- 31 OCC's margin calculations include a mark-to-
Agency Regulation, Division of Market Regulation. market on a daily basis but do not collect such market component. See note 14, supro. By contrast,
dated October 19, 1989. MCC also will report market amounts until the settlement date. The Commission each Clearing Corporation's current clearing fund
basket transaction data to its members by 9:00 a.m. believes that requiring members to make daily calculations does not normally cover the full
on the morning of T+1. See letter from Jeffrey mark-to-the-market payments would provide the amount of its members' daily mark-to-market
Lewis, Associate Counsel, MCC. to Ross Pazzol clearing corporation (and its members) with the exposure. See Securities and Exchange Act Release
dated October 24, 1989. greatest degree of protection against the market No. 27912 (August 29. 1989), 54 FR 37070. The
.3 Credit risk is the risk that the counterparty to a risk. See Staff Report at 10-25. Commission and NSCC are currently exploring, in a
transaction will not be able to meet its obligations 35 See Securities Exchange Act Release No. 27912 separate proceeding, the appropriate calculation of
under the terms of the transaction. (August 29, 1989), 54 FR 37070. clearing fund requirements.
45876; 'Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
the margin38
to the appropriate clearing report transactions in reported securities executions in the NYSE-listed
member. and to disseminate on a consolidated component stocks will be disseminated
For the reasons stated above, the basis the total trading volume for each5 to market data vendors in the same
Commission believes that OCC's component stock in ESP transactions. manner as individual executions in the
proposal is consistent with Section 17A Notice of the proposal was provided by component stocks.'I
of the Act. the issuance of a Commission release Further, proposed Rule 803 will
(Securities Exchange Act Release No. impose on members obligations that are
V. Concipsion 26908, June 8,1989), and by publication
consistent with those that Commission
It is therefore ordered, pursuant to in the Federal Register (54 FR 25516,
Rule 11Ac1-1 12 and Exchange Rule 60
Section 19(b)(2) of the Act, that the June 15, 1989). Seven comment letters
proposed rule change (SR-OCC-89-10) were received regarding the proposed impose on quotations for individual
be, and hereby is, approved. rule change, three of which dealt with stocks. Basket quotations, with one
transaction reporting.0 exception, will be firm under Rule 803.
For the Commission, by the Division of Outside of the existing markets in the
Market Regulation, pursuant to delegated II. Description of the Proposed ESP
authority. 17 CFR 200.20.3.
individual component stocks trading on
Service and Exemption Requests the Exchange in compliance with Rules
Dated: October 26,1989.
The ESP Service will allow NYSE 11Aa3-1 and 11Ac1-1,however, no
Jonathan G. Katz,
members to trade standardized baskets quotes or last sale reports will be
Secretary. of stocks at an aggregate price in a available for the individual component
[FR Doc. 89-25605 Filed 10-30-89; 8:45 am) single execution on the Exchange's stock stocks that comprise a stock basket
BILLING CODE 610O-O1-M floor.7 Given the increased when it trades under the ESP market
institutionalization of the stock market structure, unless, as discussed above, an
[Rel. No. 34-27390; File No. SR-NYSE-89- and the growth of index-related trading order is executed against a Tier 1 or Tier
051 strategies, the Exchange has proposed 2 aggregate quotation. This, however, is
the ESP Service to address the need for inconsistent with paragraphs (c)(1) and
Self-Regulatory Organizations; New an institutional stock basket trading (c)(2) of Rule 11Aa3-1, which require
York Stock Exchange, Inc.; Order system with physical delivery of the
that the Exchange disseminate
Granting Exemptions Relating to underlying component stocks." The
Exchange intends to disseminate basket transaction reports in individual
Basket Trading reported securities. In addition, the
last sale information and quotations to
L Introduction market data vendors, thereby assuring Exchange will not provide a mechanism
that all ESP market participants will for consolidating transaction volume in
On June 2, 1989, the New York Stock
have ready access to the-ESP the individual reported securities, which
Exchange, Inc. ("NYSE" or "Exchange"]
filed with the Securities and Exchange transaction reports and quotations. In is inconsistent w.th Rule 11Aa3-
Commission ("Commission" or "SEC"), addition, Tier 1 9 and Tier 2 10 1(b)(2](iv). That paragraph requires the
pursuant to Section 19(b)(1) of the Exchange to disseminate transaction
Securities Exchange Act of 1934 gives the commission authority to grant exemptions reports pursuant to a plan that provides
from the Rule's requirements. 17 CFR § 240.11Aa3-1
("Act"),I and Rule 19b-4 thereunder, 2 a (1989).
for the consolidation of transactions in
proposed rule change to trade 5 See letter from Richard A. Grasso, President and the same securities executed on other
"Exchange Stock Portfolios" ("ESPs"], Chief Operating Officer, NYSE, to Brandon C. exchanges. Thus, the NYSE filed its
standardized baskets of stocks, on the Becker, Associate Director, Division of Market request that the Commission grant
Regulation ("Division"), SEC, dated Octobet 4,1989;
floor of the Exchange. 3 As part of the and letter from Michael 1. Simon, Milbank, Tweed,
exemptions from those requirements.
proposal, the Exchange requested Hadley & McCloy, counsel for the NYSE, to Kathryn III. Comments
certain exemptions under Rule 11Aa3- V. Natale, Assistant Director, Division of Market
1 4 from the Rule's requirements to Regulation, SEC, dated October 13,1989. Th.e Commission received seven
6 See notes 13-15, infro and accompanying text.
7 Initally, ESP trading will be available for comment letters in response to its
38 The Commission notes that OCC has not executions of a standardized basket of 500 stocks request for comments on the proposed
completed action with respect to some of the comprising the Standard & Poor's 500 ("S&P 500") rule change, three of which addressed
recommendations made in the Backup'Report, Portfolio Index. At the commencement of ESP transaction reporting.
including guaranteeing trades as they are compared, trading, each 500-stock ESP will have a value of
instead of making OCC's guarantee conditional on approximately $5 million.
payment of the premium. OCC has represented that 8 The Exchange contends that the ESP Service
it will assess the feasiblity of moving to an earlier will address market inefficiencies resulting from the bederived from the weighted summation of the
trade guarantee and the corresponding increase in fragmented executions that currently characterize. prevailing bids and offers for each of the component
risks by the end of this year. Conversation between program trading. Furthermore, the Exchange stocks necessary to fill three baskets, plus the Tier 2
James Yong, Deputy General Counsel, OCC and believes that the ESP Service may /edu.ce the price "mini-basket" bids and offers for the non-NYSE
Jonathan Kallman, Assistant Director, Division of volatility associated with institutional demands and component stocks.
Market Regulation, on September 25, 1989. Thus, the the selling pressures their index-oriented trading I When a basket order is executed at the
Commission expects OCC to inform the Commission strategies currently transmit to individual aggregated Tier 1 quote, upon receiving the basket
of the results of its assessment and set a timetable component stocks. execution notice through the ESP Service, each
for completing action of Backup Report 9 "Tier I component stock quotation" refers to the component-stock specialist must assign, take or
recommendations by January 1,1990. price of the best published bid and published offer supply the number of shares of the component stock
15 U.S.C. 78(b)(1) (1982]. for each basket component stock that is listed on at the execution price needed to complete one .
2 17 CFR 240.19b-4 (1989]. the Exchange. An "aggregated Tier 1" quotation will 'basket and must report the size and price as a trade
3 The Commission approved the proposed rule be derived from the weighted summation of the in the same manner as all reported stocks. If a
change submitted by the NYSE to establish ESPs In prevailing bids and offers for each of the component basket order is executed at the aggregate Tier 2
a separate order issued today. See Securities -stocks as disseminated through the consolidated quote, each component-stock specialist must assign,
Exchange Act Release No. 27382 (October 26,1989). quotation system, plus Tier 1 "mini-basket" bids take, or supply at the execution price the number of
4 Rule IlAa3-1, the TransactionReporting Rule, and offers for the non-NYSE component stocks. shares of his specialty stock needed to complete
generally requires that exchanges file transaction 10 "Tier 2 component stock quotation" refers to three baskets.
reporting plans governing the collection, processing the bid or offer for the number of shares ofa 12 17 CFR § 240.11Ac1-1 (1989). The Commission
and dissemination of last sale data on securities basket's component stocks necessary to comprise notes that Rule 11Ac1-1 applies to quotations on
traded on the exchanges. Paragraph (g)of the Rule three baskets. An "aggregated Tier 2" quotation will ESP baskets.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45877
The Alliance of Floor Brokers asset market. The Exchange believes figures merits modification2 1in light of
("AFB"), 13 criticized certain aspects of that the rules supporting ESP trading are actual trading experience.
the ESP market structure as anti- designed appropriately to accommodate At the end of the first six months of
competitive. The AFB believes that ESP the particular needs of the portfolio basket trading, however, the NYSE has
trading may exacerbate structural market in a fair and competitive market committed to submit to the Commission
market risks that exist because of the structure. Because ESP trades are a proposed rule change that will provide
different regulatory treatment accorded executed at aggregated prices, the for the inclusion of end-of-day
derivative products. The AFB argues Exchange contends that a last sale transaction volume in the ESP
that, in comparison to existing equity reporting requirement for the price and component stocks in the consolidated
auction market trading procedures, the volume of a basket's individual transaction volume figures. The
alternative trading procedures evisioned Exchange has reserved the right to
component stocks does not translate
by the ESP System ultimately would provide views and information that
result in a fragmented securities market well into the ESP context.
would express and support its continued
structure with increased market IV. Discussion opposition to the inclusion of end-of-day
volatility. transaction.volume in the ESP
Richard Ney & Associates Asset Pursuant to Commission Rule 11Aa3-
1 "1the NYSE is required to collect and component stocks in the consolidated
Management Inc. ("Ney"), an investment transaction volume figures, which would
management company, criticizes the disseminate transaction data on
be reflected in the publication of the
configuration of ESP transaction securities listed and traded on the proposed rule change for comment. The
reporting. 14 The Commission also exchange. More specifically, Rule Exchange would withdraw the
received letters from Thomas G. and 11Aa3-1 requires that the Exchange amendment should the Commission
Ruth M. Roberts ("the Roberts"), and disseminate transaction reports for concur with the Exchange at that time.
Burton Roger ("Roger"), individual individual reported securities traded on The Commission believes that a six-
investors residing in California, who the Exchange,1 9 and that the Exchange month delay is reasonable in order to
similarly criticized the Exchange's disseminate on a consolidated basis determine whether the absence of the
proposed transaction reporting plan as it trading volume for each of the consolidated reporting of end-of-day
would apply to the basket's component component stocks
20
represented by ESP transaction volume in the basket
stocks.' 5 Specifically, Ney, Roger and transactions. components stocks merits modification.
the Roberts criticized the lack of real The NYSE will provide trading The Commission believes that the
time price and volume reporting for the -facilities through the ESP Service for ESPs will provide institutional investors
ESP stock companies when NYSE reported securities (as components of with a cost-efficient means to make
specialists do not participate in a basket baskets) but will not report transactions investment decisions based on the
execution. Further, the Ney letter in the individual component stocks, as is direction of standardized measures of
questioned the usefulness of the required by paragraphs (c)(1) and (c)(2) stock market segments and the stock
consolidated tape when such of Rule 11Aa3-1. The Commission market as a whole, and may provide
information is not included. 6 agrees with the Exchange that, with the
The Exchange generally addressed stock market participants several
these commentators' concerns and other exception of specialist Tier 1 and Tier 2 advantages over existing methods of
issues raised by Commission staff in a executions, real-time last sale and effecting program trades of stocks and
letter to Commission staff ("September 6 volume reporting for the individual transactions in portfolios of securities.
component stocks underlying a basket The Commission believes that
letter"), which, among other things,
trade would not be appropriate in the appropriate conditional relief from Rules
further explained the rationale
underlying ESP trading and its ESP context. Pricing of the baskets is 11Aa3-1 is necessary and appropriate if
based on the aggregate value of the the benefits of trading in market basket
accompanying market structure. 1 7 In its
September 6 letter, the Exchange notes underlying securities and, thus, any contracts are to be achieved.
that ESP trading is structured with the assignment of a "price" to any of the V. Conclusion
goal of providing institutional customers component stocks in the basket would
and member firms with a trading vehicle be derivative of the aggregate price. The Commission believes that the ESP
suited for an institutional, composite- Further, for the first six months, the market structure balances appropriately
the competing concerns of various
NYSE will not disseminate on a
13 See letter from Michael D.Robbins, President, consolidated basis the total daily Exchange constituencies and is
AFB, to Jonathan G.Katz, Secretary, SEC, dated trading volume for each component consistent with the maintenance of fair
July 13, 1989. and orderly markets and the protection
stock. The NYSE believes that its
14 See letter from Richard Ney, Richard Ney & of investors. Accordingly, based upon
Associates Asset Management, Inc., to Richard G. proposal to exclude end-of-day the aforementioned factors, the
Ketchum, Director, Division of Market Regulation. transaction volume in the ESP Commission finds that the requested
dated July 5, 1959. component stocks from the consolidated exemptions under Rule 11Aa3-1 are
16 See letter from Thomas G. and Ruth M. transaction volume figures is
Roberts, to the Hon. Esteban E. Torres, U.S. House consistent with the requirements of the
of Representatives, dated August 10, 1989; and letter appropriate to provide the Division and Act and the rules and regulations
from Burton Roger to)he Hon. Howard L Berman, the Exchange with an opportunity to thereunder.
U.S. House of Representatives, dated August 19, assess whether the absence of It is therefore ordered, pursuant to
1989. individual basket component stocks in
16 The consolidated tape refers to the data stream Section 11A of the Act, and Rule 1lAa3-
of last sale reports on NYSE, American Stock the end-of-day consolidated volume 1(g) thereunder, that the following
Exchange and certain regional exchange stocks, requested exemptions from Rule hlAa3-
which is collected,'piocessed and disseminated Is17 CFR 240.1!Aa3-1 (1989).
pursuant to the Consolidated Transaction
Association Plan. 19Rule llAa3-1(c) (1) and (2). "Reported 2' See letter from Richard A. Grasso, President
17See letter from James E. Buck, Secretary, securities" are securities for which there is in effect and CEO, NYSE, to Brandon C. Becker, Associate
NYSE, to Mary Revell, Branch Chief, Division of a transaction reporting plan, Director, Division of Market Regulation, SEC, dated
. 20 Rule 11Aa3-1(b)(2)(iv).
Market RegulationrSEC, dated September 6,1989, October 4, 1989.
45878 Federal Register / Vol. 54, No. 209 / Tuesday, October 31. 1989 / Notices
1 be, and hereby are, granted: (1) an requested, pursuant to Rule llAcl-1(d, inconsistent with paragraphs (cJ(1) and
exemption from the requirements of an exemption from the Rule 11Ac1-1 (c)(2) of Rule'llAa3-1, which require
paragraphs (c)[Ij and (c)(2J of Rule requirement that disseminated CBOE to disseminate transaction
11Aa3-1 that the NYSE disseminate last quotations include the size associated reports in individual reported securities.
sale transaction reports for individual with those quotations.0 The proposal In addition, CBOB will not provide a
securities and (2) a temporary was published for comment in Securities mechanism for consolidating' transaction
exemption for a six-month period Exchange Act Release No. 26882 (June 1, volume in the individual reported
commencing on the date of this order 1989), 54 FR 24442 (June 7, 19891. No securities, which is inconsistent with
from the requirement of paragraph direct comment letters were received Rule 11Aa3-1(b(2)(iv). That paragraph
(b)(2}(iv) of Rule 11Aa3-1 that the regarding the proposed rule change, requires CBOE to disseminate
Exchange provide for the consolidation however, commentators did discuss the transaction reports pursuant to a plan
of transaction reports. CBOE proposal in responding to that provides for the consolidation of
proposals by other exchanges to trade transactions in the same securities
For the Commission by the Division of baskets of stock.8 The Commission executed on other exchanges.' 1 Further,
Market Regul3tion, pursuant to delegated considered those comments in reviewing the Options Price Reporting Authority
authority. the CBOE proposal." ("OPRA"), which CBOE will use to
Dated: October 20, 1989. disseminate last sale and quotation
II.Description of the Proposed Basket
Jonathan G.Katz, Product and Exemption Requests information, does not have the capacity
Secretary. to show sizes for bids and offers. This
CBOE's proposed market basket also is inconsistent with the Act,
[FR Doc. 89-25602 Filed 1.0-30-8 &:45am) contract will enable CBOE members to specifically Rule I1Ac1-i(b){I), which
BILLING CODE 691"O?- trade standardized baskets of stocks at requires that the Exchange, disseminate
an aggregate price in a single execution the size associated with quotations
on the Exchange's floor. A market published on the floor. The CBOK
[Release No. 34-27391; File No. SR-CBOE- basket trade wil result in a transfer to
88-201 therefore filed its request that the
the buyer of ownership of each of the Commission grant exemptions from
component stocks. When the transaction these requirements.
Self-Regulatory Organizations; is completed, the buyer will be entitled
Chicago Board Options Exchange, to all rights attending ownership of the III. Discussion
Inc.; Order Granting Exemptions basket stocks (including rights to vote
Relating to Market Basket Trading and receive dividends), and will be free As noted above, paragraphs (c)l1 and -
to sell or hold each stock separately. (c)(2) of Rule 11Aa3--1 require the CBOE
I. Introduction The CBOE proposes to trade market to disseminate last sale transaction
basket contracts based on the Standard reports for individual reported securities
On May 12,1989. the Chicago Board
&Poor's 100 Stock Price Index ("S&P pursuant to an effective transaction
Options Exchange, Inc. ("CBOF" or reporting plan. Because CBOE proposes
"Exchange") filed with the Securities 100") and the Standard a Poor's 500
Stock Price Index ("S&P 5001. to trade reported securities only as part
and Exchange Commission of standardized market basket contracts
("Commission" or "SEC"). pursuant to The Exchange intends to disseminate
quotation and last sale information for and not individually, the last sale
Section 19(b){1) of the Securities information to be made available for
Exchange Act of 1934 ("Act"),' and Rule market basket contracts but not for the
individual component stocks comprising market baskets will be limited to the
19b-4 thereunder a proposed rule price at which the basket last traded
change that establishes Exchange rules the market basket.' 0 This is. however,
and the size of the trade. No last sale
governing the trading of "market basket reports will be generated or
6 See letter from Nancy R. Crossman. First Vice
contracts" on the floor of the Exchange. 3 President and General Counsel, CBOE, to Teresa disseminated for the individual
As part of the proposal, the Exchange Fink, Attorney. Branch of National Market System component stocks comprising a market
requested certain exemptions under Regulation, Division of Market Regulation. SEC.
9 basket during the trading day. The
Rules 11Aa3-1 and 11Aci-1. 4 The dated October 1 61989-
The substance of the proposed rule change was CBOE proposes to disseminate basket
Exchange requested, pursuant to Rule filed with the Commission in Amendment No. 2 to last sale information and quotations
11Aa3-1(g) an exemption from the File No. SR--CBOE-88-2W on May 20,1989. through OPRA; thus providing ready
Rule's requirements to report sThe New York Stock Exchange. bwnc ("NYSE" access to market basket transaction
transactions in reported securities filed with the Commission a proposal that sets forth
a framework for trading "Exchange Stock reports and quotations to all market
pursuant to an effective transaction Portfolios". standardized baskets of stocks, on the participants. ' 2 The.Commission agrees
reporting plan and to disseminate on a floor of the NYS. See Securities Exchange Act with the Exchange that real-time last
consolidated basis the total trading Release No. 26908 (June 8,1989). 54 FR 25516 (June sale and volume reporting for the
15,1989). Additionally, the Midwest Stock
volume for each component stock of the Exchange, Inc. ('?!SE") filed with the Commission a individual component stocks underlying
market basket contracts.3 CBOE also proposal to establish a secondary trading session a basket trade would not be appropriate
for the execution of transactions in portfolios of
securities. See Securities Exchange Act Release No.
115 U.S.C. 78s(b)i) (19s2j. 268 (June Z,1989. 54 FR 24779 (rune 9.1989. letter from Robert P. Ackermann. Vice President.
2 17 CFR 24M19b-4 11989). CBOE. to Mark McNair. Attorney. Options Branch.
'The Commission received comment letters from
3 The Commission approved the proposed rule the Alliance of Floor Brokers ("AFB"I on the NYSE Division of Market Regulation. SEC.dated
change submitted by CBOE to establish the trading proposal and the MSE proposal. The AFB comments September 20. 1989.
of market basket contracts in a separate order regarding the NYSE proposal are discussed in "Reported securities!' are securities- for which
issued today. See Securities Exchange Act Release Securities Exchange Act Release No. 2"8. . there is in effect a transaction reporting plan leg..
No. 22383. (October 26.1989) at notes 62--63 and accompanying the Consolidated Tape .ssocition P am). The
* 17 CFR 240.llAa3-1,(g) and 240.1lAcl-1(d) text. The AFB comments regarding the MSE securities that make up the baskets that will trade
(1989). proposal are discussed in Securities Exchange Act on CBOE are 91 reported securities.
Release No. 2738&. (October 2. 1980) at notes 21-24 12 OPRA collects from the options exchanges kass
5 See letter from Nancy R. Crossman. First Vice
President and General Counsel. CBOE. to Itoward and accompanying text. sale and quotation irdormation, for ag standardized
L Kramer. AssIstant Director. Division oharket 10 The transactions in each basket will be options and. disseminates that information to
Regulation, SEC, dated October 11. 1980. reported within 90 seconds of their occurrence. See vendors and other subscribers-
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45879
in the market basket context. Pricing of It is important to note that other than commencing on the date of this order,
the baskets is based on the aggregate the requirements to disseminate the size from the requirement of paragraph
value of the underlying securities and, associated with quotations, all other (b)(2)(iv) of Rule 11Aa3-1 that the CBOE
thus, any assignment of a "price" to any requirements of Rule 11Ac1-1 will apply provide for the dissemination of the
of the component stocks in the basket to market basket quotations; including, total daily trading volume of the
would be derivative of the aggregated most notably, the requirement that component stocks on a consolidated
price. quotations for baskets be firm. Thus, if basis; and (3) a temporary exemption for
Additionally, for the first six months basket market makers are disseminating a six-month period commencing on the
of basket trading, the CBOE will not quotes on the CBOE floor that are good date of this order from the requirement
disseminate on a consolidated basis the for greater than one contract, regardless of paragraph (b)(1) of Rule llAcl-1 that
total daily trading volume in individual of the fact that this size will not be the CBOE disseminate the quotation
securities represented by basket trades. disseminated through OPRA, market sizes associated with quotations on
Volume in market basket-contracts will makers will have to honor their size market basket contracts.
be reported over the OPRA system, as a quotes. For the Commission, by the Division of
result of reporting each market basket The Commission believes that the Market Regulation, pursuant to delegated
transaction as it takes place, and in the CBOE market baskets will provide authority.
end-of-day message.' 3 While the institutional investors with a cost- Dated: October 26, 1989.
Commission is aware of the limited efficient means to make investment
Jonathan G. Katz,
usefulness of price information on the decisions based on the direction of
underlying securities in the baskets, it standardized measures of stock market Secretary.
believes that dissemination of the share segments and the stock market as a [FR Doc. 89-25600 Filed 10-30-Q9; 8:45 am]
volume in the underlying securities is whole, and may provide stock market BILLING CODE 8010-01-M
writing, giving the nature of your or refinancing transactions, as defined have substantial unsheltered passive
interest, the reason for the request, and in the Partnership's partnership income or, if an individual, such investor
the issues you contest. Serve the agreement (the "Partnership reasonably expects to have adjusted
Applicants with the request, either Agreement"). gross income of less than $250,000 in the
personally or by mail, and also send it to 3. The Partnership will normally next twelve years and reasonably
the Secretary of the SEC, along with acquire at least a 90% interest in the expects to have income tax liability
proof of service by affidavit or, for cash distributions, profits, losses and during those years in respect of which
lawyers, by certificat6. Request tax credits of the Local Limited the tax credits can be utilized and either
notification of the date of a hearing by Partnerships, with the balance (1] has a net worth (exclusive of home,
writing to the Secretary of the SEC. remaining with the local general furnishings, and automobiles) of at least
ADDRESSES: Secretary, SEC, 450 5th partners. However, in certain cases, at $50,000 ($35,000, if such investor is a
Street, NW., Washington, DC 20549. the discretion of the Managing General resident of New Hampshire) and an
Applicants, c/o The Boston Financial Partner, the Partnership may acquire a annual gross income of not less than
Group Incorporated, 101 Arch Street, lesser interest in a Local Limited $30,000 ($35,000, if such investor is a
Boston, Massachusetts 02110. Partnership. Should the Partnership resident of New Hampshire) in the
FOR FURTHER INFORMATION CONTACT: invest in any Local Limited Partnership current year and estimates he will
Barbara Chretien-Dar, Staff Attorney, at in which it acquires less than 50% of the maintain these levels for the twelve
(202) 272-3022, or Stephanie M. Monaco, limited partnership interest, the succeeding years and that (without
Branch Chief, at (202) 272-3030 (Division. Partnership Agreement will provide that regard to investment in the Partnership)
of Investment Management, Office of the Partnership will have at least a 50% some part of his income for the current
Investment Company Regulation). vote to: amend such partnership year and the twelve succeeding years
SUPPLEMENTARY INFORMATION:
agreement of such Local Limited will be subject to federal income tax at
Following is a summary of the Partnership; dissolve such Local Limited the rate of 28% or more, or (21
application; the complete application is Partnership; remove the local general irrespective of annual taxable income,
available for a fee from either the SEC's
partner and elect a replacement; and he has a net worth (exclusive of home,
Public Reference Branch in person or the approve or disapprove the sale of furnishings, and automobiles) of at least
SEC's commercial copier who can be substantially all of the assets of such $75,000, or (3} is purchasing in a
contacted at (800) 231-3282 (in Maryland Local Limited Partnership. In addition, fiduciary capacity for a person or entity
(301) 258-4300). the Partnership will require that the having such set worth and annual gross
Local Limited Partnership agreements income as set forth in clause (1) or such
Applicants' Representations provide to the limited partners of the net worth as set forth in clause (2); or (c)
1. The Partnership was organized on
Local Limited Partnerships substantially in the case of an investor that is a
all of the rights required by Section VII corporation subject to Subchapter S of
June 16, 1989, under the Uniform Limited of the guidelines adopted by the North the Code, each of its shareholders (or if
Partnership Act of the Commonwealth American Securities Administrators
of Massachusetts as a vehicle for equity a partnership each of its partners) meets
investment in. apartment complexes to
Association, Inc. ("NASAA"). the criteria applicable to non-corporate
4. On July 13, 1989, the Partnership
be qualified, in the opinion of counsel, filed a registration statement under the investors. Units will be sold in certain
for the low income housing tax credit Securities Act of 1933 (the "Securities states only to persons who meet
(the "Low Income Housing Credits') Act") for the sale of up to 100,000 units additional or alternative standards
under the Internal Revenue Code of of limited partnership interest ("Units") which will be set forth in the Prospectus,
1986, as amended ("Code"). It is at $1,000 per Unit with a minimum any supplement to the Prospectus, or the
anticipated that the Partnership will suloscription of five units ($5,000) per Subscription Agreement; provided,
invest both in apartment complexes that investor. however, that in no event shall the
receive operating and financing 5. Subscriptions for Units must be Partnership employ any such suitability
subsidies and in apartment complpxes , approved by the Managing General standard which is less restrictive than
that do not receive such subsidies. Partner, and such approval will be made that set forth above. The Partnership
2. The Partnership will operate as a conditional upon representations as to Agreement also imposes certain
"two-tier" entity, i.e., the Partnership, as suitability of the investment for each restrictions on transfer and assignment
,a limited partner, will invest in other subscriber. The form of subscription for of the Units, including that each
limited partnerships ("Local Limited Units provides that each subscriber will proposed assignee must deliver to the
Partnerships") which, in turn, will represent, among other things, that he Managing General Partner evidence of
engage in the development,. meets the general investor suitability his suitability. The Partnership will not
rehabilitation, ownership, and operation standards established by the redeem or repurchase Units, does not
of apartment complexes in accordance Partnership and set forth in the anticipate formation of a public market
with the purposes and criteria set forth Prospectus under the heading "Who for the Units, and thus believes
in Investment Company Act Release No. Should Invest." Such general investor purchases of Units should be considered
8456 (August 9, 1974) ("Release No. suitability standards provide, among illiquid investments.
8456"). The Partnership's investment other things, that investment in 6. The Partnership will be controlled
objectives are: (i) to provide current tax Partnership is suitable only for an by its general partners, the Managing
benefits in the form of tax credits which investor (a "Qualified Investor") who General Partner and Arch-Street V
Qualified Investors (defined herein) may meets the following requirements: (a) in Limited Partnership (collectively, the
use to offset their federal income tax the case of an investor that is a "General Partners"). The Limited
liability; (ii) to preserve and protect the. corporation, other than a corporation Partners, consistent with their limited
Partnership's capital; (iii) to provide subject to Subchapter S of the Code, liability status, will not be entitled to
limited cash distributions which are not such corporation (a"C Corporation") has participate in the control of the business
expected to constitute taxable income a net worth of not less than $75,000, (b) of the Partnership. However, the
during Partnership operations; and (iv) in the case of a noncorporate investor. majority in interest of the Limited
to provide cash distributions from sale such investor reasonably expects to Partners will have the right to amend the
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45W81
Partnership Agreement (subject to the guidelines adopted by NASAA. Units will terminate not later than one
certain limitations), dissolve the During the operating phase, the year from the date upon which the
Partnership, and remove any General Partnership may pay additional fees or Partnership's Registration Statement
Partner and elect a replacement compensation to the General Partners or shall have been declared effective. If,
therefor. In addition, under the their affiliates including, without subscriptions for at least 5,000 Units
Partnership Agreement, each Limited limitation, an asset management fee. have not been received by such
Partner is entitled to review all books Such asset management fee is paid in termination date, no Units will be sold
and records of the Partnership at any consideration of the administration of and funds paid by subscribers will be
and all reasonable times. the affairs of the Partnership in returned promptly, together with a pro
7. The Partnership Agreement connection with each Local Limited rata share of any interest earned
provides that certain significant actions Partnership in which the Partnership thereon. The Partnership will not admit
cannot be taken by the Managing invests. Such other fees may be paid in any subscribers as Limited Partners to
General Partner without the express consideration of property management the Partnership until the exemptive
consent of a majority in interest of the services rendered by the General order applied for herein is granted or the
Limited Partners. Such actions include: Partners or their affiliates as the Partnership receives an opinion of
(a) until the end of the 10-year period management and leasing agent for some counsel that it is exempt from
commencing on the date of the of the Local Limited Partnerships and registration under the 1940 Act. Upon
Prospectus, the sale in a 12-month for consulting services rendered by the receipt of thi prescribed minimum
period of Local Limited Partnership General Partners or their affiliates as, number of subscriptions, funds in
interests constituting more than 33% of consultants to some of the Local Limited escrow will be released to the
the Partnership's then existing total Partnerships. All such fees shall be Partnership and held in trust pending
investment in Local Limited Partnership subject to the terms of the Partnership investment in Local Limited
interests; (b) the sale at any one time of Agreement. In addition, the General Partnerships. Any net proceeds not
all or substantially all of the assets of Partners or their affiliates may receive immediately utilized to acquire Local
the Partnership, except for sales in amounts from Local Limited Limited Partnership interests or for other
connection with the liquidation and Partnerships to the extent permitted by Partnership purposes will be invented
winding up of the Partnership's business applicable law and regulations. Such and held in highly liquid, non-
upon its dissolution: (c) diss61ution of amounts shall be subject to the terms of speculative securities set forth in the
the Partnership; and (d) causing the the Partnership Agreement. application and which provide
Partnership to merge or be consolidated Compensation to the General Partners adequately for the preservation of
with any other entity. The admission of or their affiliates during the liquidating capital ("Temporary Investments"). The
a successor or additional General stage will be in the form of distributions Partnership intends to apply capital
Partner would also require express of the sale or refinaning proceeds of raised in its public offering to the
consent under the Partnership Local Limited Partnership projects or acquisition of Local Limited Partnership
Agreement. interests, or of real or personal property interests as soon as possible and does
8. Boston Financial Securities, Inc., an of the Partnership. In addition to the not intend to trade or speculate in
affiliate of the General Partners (the foregoing fees and interests, the General Temoorary Investments.
"Selling Agent"), will receive customary Partners and their affiliates will be
commissions and an underwriting allocated generally 1%of profits and 13. The Partnership Agreement
advisory fee on the sale of the Units, losses of the Partnership for tax provides that, subject to certain
together with an expense allowance to purposes. limitations including negligence and
defray accountable due diligence 11. All compensation to be paid to the misconduct, the Partnership shall
activities. The Selling Agent may General Partners and their affiliates is indemnify the General Partners and
authorize other members ("Soliciting specified in the Partnership Agreement certain affiliates for losses sustained by
Dealers") of the National Association of and Prospectus, and no compensation them or their affiliates in connection
Securities Dealers, Inc. (" NASD") to sell will be payable to the General Partners with the business of the Partnership.
Units. The Selling Agent will pay a or their affiliates not so specified. The However, the Partnership has been
concession to each Soliciting Dealer on substantial fees and other forms of advised in the opinion of the SEC
all sales of Units by such Soliciting compensation that will be paid to the indemnification for liabilities under the
Dealer and may reallow all or any General Partners and their affiliates will Securities Act is contrary to public
portion of its underwriting advisory fee not have been negotiated through arm's policy as expressed in the Securities Act
and expense allowance to such length negotiations. Terms of all such and is therefore unenforceable.
Soliciting Dealer. Such selling compensation, however, will be fair and Applicant's Legal Conclusions
commissions and fees are customarily not less favorable to the Partnership
charged in securities offerings of this than would be the case if such terms 1. The exemption of the Partnership
type and are consistent with NASD had been negotiated with independent from all provisions of the 1940 Act is
guidelines. third parties. In addition, compensation both necessary and appropriate in the
9. During the offering and in various forms will be paid to the local public interest, because: (a) investment
organizational phase, the Managing general partner of each Limited in low and moderate income housing in
General Partner and its affiliates (as Partnership. accordance with the national policy
defined in the Partnership Agreement) 12. All proceeds of the public offering expressed in Title IX of the Housing and
will receive from the Partnership *of Units will initially in an escrow Urban Development Act of 1968 is not
reimbursement of organizational and account with Shaumut Bank, N.A. economically suitable for private
offering expenses. ("Escrow Agent"). Pending release of investors without the tax and
10. Acquisition phase fees payable to offering proceeds to the Partnership, the organizational advantages of the limited
all persons, including the General Escrow Agent will desposit escrowed partnership form; (b) the limited
Partners or their affiliates, in connection funds in the "Shawmut Interest Bearing partnership structure provides the only
with the acquisition of interests in Local Account;" a federally insured money means of bringing private equity capital
Limited Partnerships, will be limited by market deposit account, The offering of into such housing; (c) the limited
45882 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
partnership form insulates each Limited Partners and to assure fair dealing by Summary of Application:Applicant
Partner from personal liability and limits the General Partners vis-a-vis the seeks an order declaring that it has
his financial risk to the amount he has Limited Partners. The Partnership will ceased to be an investment company
invested in the program, while also also file with the SEC and distribute under the 1940 Act.
allowing the Limited Partner to claim on certain financial documents and reports FilingDates: The application on Form
his individual tax return his on its activities. N-8F was filed on September 18, 1989.
proportionate share of the tax credits, 3. Release No. 8456 lists two
income and losses from the investment; conditions, designed for the protection HearingorNotification of Hearing:
(d) the limited partnership form of of investors, which must be satisfied in An order granting the application will be
organization is incompatible with order to quality for the type of issued unless the SEC orders a hearing.
fundamental provisions of the 1940 Act, exemptive relief which the Partnership Interested persons may request a
such as the requirement of annual seeks: (1) "interests in the issuer should hearing by writing to the SEC's
approval by investors of a management be sold only to persons for whom Secretary and serving Applicant with a
contract and the requirements investments in limited profit, essentially copy of the request, personally or by
concerning election of directors and the tax-shelter, investments would not be mail. Hearing requests should be
termination of the management contract;. suitable * * *;" and (2) "requirements received by the SEC by 5:30 p.m. on
and (e) real estate limited partnerships for fair dealing by the general partner of November 15, 1989, and should be
such as the Partnership generally cannot the issuer with the limited partners of accompanied by proof of service on the
comply with the asset coverage the issuer should be included in the Applicant, in the form of an affidavit or,
limitations imposed by Section 18 of the basic organizational documents of the for lawyers, a certificate of sbrvice.
1940 Act. Also, an exemption from these company." The Partnership will comply Hearing requests should state the nature
basic provisions is necessary and with these conditions and will otherwise of the writer's interest, the reason for
appropriate so as not to discourage use operate in a manner deisigned to ensure the request, and the issues contested.
of the two-tier limited partnership entity investor protection. Persons who wish to be notified of a
or frustrate the public policy established 4. The contemplated arrangement of hearing may request notification by
by the housing laws. the Partnership is not susceptible to writing to the SEC's Secretary.
2. Interests in the Partnership will be abuses of the sort the 1940 Act was
ADDRESSES: Secretary, SEC, 450 Fifth
sold only to, and transfers will be designed to remedy. The suitable
Street, NW., Washington, DC 20549.
permitted only to, investors who meet standards described above, the
Applicant, 700 Central Avenue, St.
specified suitability standards (as requirements for fair dealing provided
Petersburg, Florida 33733-8030.
described above) which the Partnership by the Partnership's governing
believes are consistent with the instruments, and pertinent governmental FOR FURTHER INFORMATION CONTACT:
requirements in Release No. 8456, with regulations imposed on each Local Patricia Copeland, Legal Technician,
the guidelines of those states which Limited Partnership by various federal, (202) 272-3009, or Karen L. Skidmore,
prescribe suitability standards, and with state and local agencies, provide Branch Chief, (202) 272-3023 (Office of
the securities laws of all states where protection to investors in Units Investment Company Regulation).
the Units will be sold. Such investors comparable to and.in some respects SUPPLEMENTARY INFORMATION:
will receive extensive reports greater than that provided by the 1940 Following is a summary of the
concerning the Partnership's business Act. An exemption would therefore be application: the complete application is
and operations. Although the interests of entirely consistent with the protection of available for a fee from either the SEC's
the General Partners and their affiliates investors and the purposes and policies Public Reference Branch in person or the
may conflict in various ways with the of the 1940 Act. SEC's commercial copier (800) 231-3282
interests of Limited Partners, Limited For the Commission, by the Division of (in Maryland (301) 258-4300).
Partners are adequately protected Investment Management, under delegated
through disclosures of all political authority. Applicant's Representations
conflicts in the Prospectus, including Jonathan G. Katz,
competition by Local Limited 1. Applicant is an open-end
Secretary.
Partnerships with affiliates for diversified management investment
[FR Doc. 89-25500 Filed 10-30-89; 8:45 am] company incorporated under the laws of
properties and the participation by an BILLING CODE 8010-01-M
affiliate as the Selling Agent for the the" state of Maryland. On February 25,
offering. To address this conflict, the 1988, Applicant filed a Notification of
General Partners agree, in Section 5.7 of [Rel. No. IC-17187; 811-54811 Registration pursuant to Section 8(a) of
the Partnership Agreement, that each the 1940 Act on Form N-8A. On that
General Partner and each affiliate Templeton Constant Pay-Out Fund, same date, Applicant filed a registration
thereof, prior to entering into an Inc. (Formerly, Templeton Emerging statement on Form N-1A (33-20320)
investment which could be suitable for Growth Stock Fund, Inc.); Application with respect to an indefinite amount of
the Partnership or recommending such forDeregistration common stock. The registration
investment to others, must present to the October 20, 1989. statement never became effective and
Partnership the opportunity to enter into AGENCY: Securities and Exchange was withdrawn by Applicant on March
such investment and my not enter into Commission ("SEC"). 21, 1989. Applicant has never made a
such investment on its own behalf nor public offering of its securities.
-ACTION: Notice of Application for
recommend it to others unless the ,2. Applicant has no shareholders,
Deregistration under the Investment
Partnership has declined to enter into assets or liabilities. Applicant is not a
Company Act of 1940 (the "1940 Act").
such investment. Further protection for party to any litigation or administrative
the interests of Limited Partners is Applicant: Templeton Constant Pay- proceeding. Applicant is not engaged
provided by the numerous provisions of Out Fund, Inc. ("Applicant"). nor does it propose to engage in any
. Relevant 1940 Act Section: Section
the Partnership Agreement designed to business activities other than those
prevent overreaching by the General 8(n. necessary to wind up its affairs.
Federal Register / Vol. 54, No, 209 / Tuesday, October 31, 1989 / Notices 45883
For the Commission, by the Division of Dated: October 25, 1989. Council, located in the geographical area
Investment Management, under delegated of Charlotte, will hold a public meeting
authority. Jean M. Nowak,
Director,Office of Advisory Councils. at 10:00 a.m. on Tuesday, November 14,
Jonathan G. Katz, 1989, at the Kenan Center in Chapel Hill,
[FR Doc. 89-25609 Filed 10-30-89; 8:45 am]
Secretary. North Carolina, to discuss such matters
BILLING CODE 8025-01-M
[FR Doc. 89-25501 Filed 10-30-89; 8:45 am] as may be presented by members, staff
BILLING CODE 8010-01-M of the U.S. Small Business
Region IX Advisory Council Public Administration, or others present.
Meeting; Hawaii For further information, write or call
SMALL BUSINESS ADMINISTRATION Gary A. Keel, District Director, U.S.
The U.S. Small Business
Administration Region IX Advisory Small Business Administration, 222
[Declaration of Disaster Loan Area #2382 Council, located in the geographical area South Church Street, Suite 300,
Amendment # 11 of Honolulu, will hold a public meeting' Charlotte, North Carolina 28202, phone
at 9:30 a.m. on Tuesday, November 21, (704) 371-6561.
Territory of the Virgin Islands; 1989, at the Prince Kuhio Federal Dated: October 25, 1989.
Declaration of Disaster Loan Area Building, 300 Ala Moana Boulevard, Jean M. Nowak,
The above-numbered Declaration is Conference Room 4113A, Honolulu, Director,Office of Advisory Councils.
hereby amended in accordance with the Hawaii, to discuss such'matters as may
[FR Doc. 89-25612 Filed 10-30-89: 8:45 am]
be presented by members, staff of the
Notice of Amendment to the President's BILLING CODE 8025-01-M
U.S. Small Business Administration, or
declaration, dated September 20, 1989,
others present.
to include Water Island, and other For further information, write or-call
inhabited islands under the jurisdiction Charles T.C. Lum, District Director, U.S. Region VIII Advisory Council Public
of the Territorial Government, as a Small Business Administration, 300 Ala Meeting; North Dakota
disaster area as a result of damages Moana Boulevard, Room 2213, Honolulu,
caused by Hurricane Hugo which Hawaii 96850, phone (808) 541-2990. The U.S. Small Business
occurred on September 17-18, 1989. Administration Region VIII Advisory
Dated: October 25, 1989. Council, located in the geographical area
All other information remains the
same; i.e., the termination date for filing Jean M. Nowak, of Fargo, will hold a public meeting at
applications for physical damage is until Director,Office of Advisory Councils. 9:00 a.m. on Tuesday, November 14,
such time as determined by the Federal [FR Doc. 89-25610 Filed 10-30-89; 8:45 am] 1989, at the Kelly Inn, Bismarck, North
Emergency Management Agency, and BILLING CODE 8025-01-M Dakota, to discuss such matters as may
for economic injury until the close of be presented by members, staff of the
business on June 20, 1990. U.S. Small Business Administration, or
Region VII Advisory Council Public others present.
(Catalog of Federal Domestic Assistance Meeting; Iowa For further information, write or call
Program Nos. 59002 and 59008) James J. Stai, District Director, U.S.
Dated: October 23, 1989. The U.S. Small Business
Administration Region VII Advisory Small Business Administration, 657-2nd
Alfred E. Judd, Council, located in the geographical area Avenue North, Fargo, North Dakota
Acting Deputy Associate Administratorfor of Des Moines, will hold a public 58102, phone (701) 239-5131.
DisasterAssistance. meeting at 10:00 a.m. on Tuesday, Dated: October 25, 1989.
[FR Doc. 89-25608 Filed 10-30-89; 8:45 am] November 28, 1989, at the Golden Circle Jean M. Nowak,
BILLING CODE 8025-01-M Incubator, Des Moines Area, Community
Director,Office of Advisory Councils.
College, 2010 South Ankeny Boulevard,
Ankeny, Iowa, to discuss such matters [FR Doc. 89-25613 Filed 10-30-89; 8:45 am]
Region I Advisory Council Public as may be presented by members, staff BILLING CODE 8025-01-M
for regulatory negotiation. 54 FR 24908 DEPARTMENT OF THE TREASURY paragraphs 1. through 7. of this Order,
and 40770 (1989). The committee will the Commissioner may create, abolish,
develop a report concerning the [Number: 150-02] or modify offices and positions within
establishment of a uniform system for the Internal Revenue Service as may be
Establishment of Certain Offices in the
handicapped parking to enhance the necessary to effectively and efficiently
National Office of the Internal Revenue
safety of persons with disabilities. This administer the tax laws or other
Service responsibilities assigned to the Internal
report will include a recommended
rulemaking proposal and will be October 12, 1989. Revenue Service. The authority of the
submitted to the Administrators of the Subject: Establishment of certain Commissioner to create, abolish, or
FHWA and the NHTSA. After the offices in the national office of the modify offices under this delegation is
agencies issue a notice of proposed Internal Revenue Service. subject only to limitations that exist by
1. Authority. By the authority vested law or Department of Treasury rules
rulemaking (NPRM), the committee will
in me as Secretary of the Treasury by 31 and regulations.
review any comments submitted to the
rulemaking docket, and write a second U.S.C. 321(b); sections 7801(a), 7802 and 3. Senior Deputy Commissioner.The
7803 of the Internal Revenue Code of Senior Deputy Commissioner serves as
report which will include a
1986; and Reorganization Plan No. 1 of chief operating officer of the Service.
recommended final rule. This official is the highest career official
1952, -pursuant to section 7804(a) of the
This advisory committee will consider Internal Revenue Code, all offices in the in the Service and is responsible for the
the following issues: National-Office of the Internal Revenue following activities.
1. The adoption of the International Service continue uninterrupted except a. Assists and acts for the
Symbol of Access (ISA) as the only as follows: Commissioner in planning, directing,
recognized symbol for the identification a. The positions of Assistant coordinating, and controlling the
of vehicles used for transporting Commissioner (Planning, Finance and policies, programs and other activities of
individuals with handicaps that limit or Research), under the Deputy the Internal Revenue Service.
impair the ability to walk. Commissioner (Planning and b. Assists the Commissioner in
2. The issuance of license plates Resources), are abolished. establishing tax administration policy
displaying the ISA for vehicles which b. The Deputy Commissioner and developing strategic issues and
(Planning and Resources) is retitled objectives as a basis for strategic
will be used to transport individuals
Deputy Commissioner (Planning and management of the Service.
with handicaps which limit or impair the
Resources)/Chief Financial Officer c. Supervises the Deputy
ability to walk. (CFO). Three new positions are Commissioners, Chief Information
3. The issuance of removable established under the Deputy Officer, and Assistants to the
windshield placards (displaying the Commissioner (Planning and Commissioner and Senior Deputy
ISA) to individuals with handicaps Resources)/CFO. These are Assistant Commissioner.
which limit or impair the ability to walk. Commissioner (Finance)/Controller; 4. Deputy Commissioner(Operations).'
4. The fees charged for the licensing or Assistant Commissioner (Planning and The Deputy Commissioner (Operations)
registration of a vehicle used to Research); and Deputy Assistant is the principal advisor to the
transport individuals with handicaps. Commissioner (Planning and Research). Commissioner and Senior Deputy
c. A new position of Chief Information Commissioner on policy and operational
5. The recognition of licenses and Officer is established under the Senior matters affecting field functions. The
placards, which display the ISA and are Deputy Commissioner. The Assistant Deputy Commissioner is responsible for
issued by other States and countries. Commissioner and Deputy Assistant the following activities.
We anticipate that this advisory Commissioner (Information Systems a. Serves as national spokesperson for
committee will discuss matters that are Development) are retitled Assistant the field operations functions which are:
ancillary to the issues set forth above. Chief Information Officer and Deputy (1) Assisting taxpayers in complying
In the notice of establishment of the Assistant Chief Information Officer with the tax laws;
advisory committee, which was (Systems Design and Development); and (2) Processing tax returns and
published on October 3, 1989, 52 FR the Assistant Commissioner and Deputy information documents;
Assistant Commissioner (Computer (3) Accounting for revenue collected
40770, we noted that notices of the
Services) are retitled Assistant Chief by the Service;
meetings will be published in the
Information Officer and Deputy
Federal Register, if time permits. We (4) Collecting delinquent accounts;
Assistant Chief Information Officer
noted that publication may not be (5) Investigating delinquent taxpayers;
(Systems and Applications
possible in cases when the committee Management). The Assistant Chief (6) Investigating criminal tax fraud;
decides to meet for a few days, break Information Officers will report to the (7) Examining tax returns;
for a few days, and then resume Chief Information Officer. (8) Approving and examining
negotiations. However, through this 2. Office of Commissionerof Internal employee plans and exempt
notice, we are attempting to advise all Revenue. The Office of the organizations;
interested parties of the committee Commissioner shall consist of the (9) Tax treaty administration; and
meetings. Commissioner, Senior Deputy (10) Foreign tax administration
Commissioner, Deputy Commissioner assistance and disclosure.
Issued on: October 24, 1989. (Planning and Resources)/Chief b. Supervises the regional
E. Dean Carlson, Financial Officer, Deputy Commissioner commissioners and the following
Acting FederalHigh way A dministrtor, (Operations), Chief Information Officer, assistant commissioners: Collection,
FederalHighway Administration. Assistant Commissioner (Inspection), Criminal Investigation, Employee Plans
and Assistants to the Commissioner and and Exempt Organizations,
[FR Doc. 89-25513 Filed 10-30-89; 8:45 am! Senior Deputy Commissioner. Except for Examination, International, Returns
BILLING CODE 4910-22-M the specific positions and titles in Processing, and Taxpayer Services,
45886 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
c. As designated by the d. Supervises the following assistant National Office of the Internal Revenue
Commissioner, represents the Service to chief information officers: Systems Service," dated July 2, 1987; and
other Executive Branch agencies, the Design and Development, and Systems b. Treasury Order 150-31,
Congress, other tax authorities and the and Applications Management. "Establishment of the Office of
public on field operations and major e. As designated by the Assistant Commissioner (Taxpayer
cross-functional issues. Commissioner, represents the Service to ,Services)," dated May 8, 1989.
5. Deputy Commissioner(Planning other Executive Branch agencies, the Nicholas F. Brady,
and Resources)/ChiefFinapcialOfficer. Congress, other tax authorities, and the Secretaryof the Treasury.
The Deputy Commissioner (Planning public on Servicewide information
and Resources)/Chief Financial Officer [FR Doc. 89-25520 Filed 10-30-89; 8:45 aml
resources and technology management
is the principal advisor to the and major cross-functional issues. BILLING CODE 4830-01-L
Commissioner and Senior Deputy 7. Assistant Commissioner
Commissioner on Servicewide planning (Inspection).The Assistant Fiscal Service
and the management of human and Commissioner (Inspection) will, to
financial resources. The Deputy ensure objectivity and integrity, report Treasury Current Value of Funds Rate
Commissioner is responsible for the directly to the Commissioner.
following activities. AGENCY: Fiscal Service, Financial
a. Serves as national spokesperson for 8. The changes shall be implemented
at a date determined by the Management Service, Treasury.
the planning and management of ACTION: Notice of rate for use in Federal
resources functions which are: Commissioner of Internal Revenue.
(1) Administering the Strategic Effective immediately, the debt collection and discount evaluation.
Management System; Commissioner of Internal Revenue is
(2) Conducting research; authorized to effect, at appropriate times SUMMARY: Pursuant to section 11 of the
(3) Formulating budgets and and in an orderly manner, such transfers Debt Collection Act of 1982 (31 U.S.C.
controlling their execution; and of functions, personnel, positions, 3717), the Secretary of the Treasury is
(4] Administering human resource equipment and funds as may be responsible for computing and
policies, facilities and logistical support, necessary to implement the provisions publishing the percentage rate to be
and contracting. of this Order. used in assessing interest charges for
b. Serves as the Service's chief 9. The ChiefCounsel.The Chief outstanding debts on claims owed the
financial officer and establishes Counsel, pursuant to delegated authority Government. Treasury's Cash
practices, procedures, standards and from the General Counsel, is authorized Management Regulations (I TFM -8000)
controls for the Service's financial to take necessary action on all also prescribeuse of this rate by
systems. personnel and administrative matters agencies as a comparison point in
c. Supervises the following assistant pertaining to the Office of Chief
evaluating the cost-effectiveness of a
commissioners: Finance/Controller, Counsel, including but not limited to
cash discount. Notice is hereby given
Human Resources Management and those for the appointment, classification,
Support; and Planning and Research. that the applicable rate is 9% for
promotion, demotion, reassignment,
d. As designated by the transfer or separation of officers or calendar year 1990.
Commissioner, represents the Service to employees; however, all personnel and DATES: The rate will be in effect for the
other Executive Branch agencies, the administrative matters concerning period beginning on January 1, 1990 and
Congress, other tax authorities, and the Senior Executive Service or Performance ending on December 31, 1990.
public on Servicewide planning, Management Recognition System FOR FURTHER INFORMATION CONTACT:.
management of resources, and major employees in the Offices of Associate Inquiries should be directed to the Cash
cross-functional issues. Chief Counsels (International) and Management Division (Program
6. ChiefInformation Officer. The (Technical] whose primary duties do not Compliance Branch), Financial
Chief Information Officer is the involve litigation, and the Office of
principal advisor to the Commissioner Management Service, Department of the
National Director of Appeals, shall be
and Senior Deputy Commissioner on Treasury,"401 14th Street SW.,
approved by the Commissioner of
Servicewide information resources and Internal Revenue prior to Washington, DC 20227 (Telephone: (202)
technology management. The Chief implementation. 287-0745).
Information Officer is responsible for a. The National Director of Appeals is SUPPLEMENTARY INFORMATION: The rate
the following activities. supervised by the Chief Counsel. The reflects the current value of funds to the
"a. Serves as the national
Commissioner of Internal Revenue Treasury for use in connection with
spokesperson for the functions of exercises line supervision over the Chief Federal Cash Management systems and
strategic technology planning, data Counsel for this function. is based on investment rates set for
administration, technology standards, b. The Commissioner of Internal purposes of Public Law 95-147, 91 Stat.
and telecommunications. Revenue will exercise the Service's final 1227. Computed.each year by averaging
b.Establishes policies and standards authority concerning substantive investment rates for the 12-month period
affecting these functions and the interpretation of the tax laws as ending every September 30 for
development and acquisition of reflected in legislative and regulatory applicability effective January 1, the rate
computer hardware and software. proposals, revenue rulings, letter rulings, is subject to quarterly revisions if the
c. Provides the focus for technology and technical advice memoranda.
management within the Service and annual average, on the moving basis,
plays an essential role in shaping 10. Cancellations.This Order changes by 2 per centum'. The rate in
Servicewide technology goals and supersedes the following: effect for calendar year 1990 reflects the
programs and fostering a shared a.Treasury Order 150-02, average investment rates for the 12-
commitment to them. "Establishment of Certain Offices in the month period ended September 30, 1989.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 45887
Dated: October 25, 1989. Consumer Price Index (CPI) during the Either veteran housebound, $10,368.
Michael T. Smokovich, one year period ending September 30, Both veterans housebound, $11,873.
One veteran housebound and one veteran
1989. VA is also giving notice of the in need of aid and attendance, $14,424.
Assistant CommissionerFederalFinance.
maximum amount of reimbursement that For each dependent child, $1,150.
[FR Doc. 89-25559 filed 10-30-89; 8:45 am]
may be paid for headstones or markers (5) Surviving spouse alone and with a child
BILLING CODE 4810-35-M purchased in lieu of Government- or children of the deceased veteran in
furnished headstones or markers in custody of the surviving spouse (38 U.S.C.
Internal Revenue Service (IRS) fiscal year 1990 which began on October 541).
1, 1989. Surviving spouse alone, $4,535.
Assistant Commissioner (EP/EO) Surviving spouse and one child in his or
Employee Plans Ad Hoc Group; Open DATES: These COLAs are effective her custody, $5,941.
December 1, 1989. The headstone or 'For each additional child in his or her
Meeting custody, $1,150.
marker allowance rate is effective
A meeting of the Assistant (6) Surviving spouses in need of aid and
October 1, 1989. attendance (38 U.S.C. 541).
Commissioner (Employee Plans and
FOR FURTHER INFORMATION CONTACT: Surviving spouse alone, $7,254.
Exempt Organizations) Employee Plans Surviving spouse with one child in his or
Ad Hoc Group will be held on December Robert M. White, Chief, Regulations her custody, $8,656.
7, 1989 at the IRS Baltimore District Staff, Compensation and Pension For each additional child in his or her
Office. The office is located at 31 Service (211B), Veterans Benefits custody, $1,150,
Hopkins Plaza in the Fallon Federal Administration, Department of Veterans (7) Surviving spouses who are housebound
Building, Baltimore, Maryland. The Affairs, 810 Vermont Avenue NW., (38 U.S.C. 541).
meeting will begin at 9:00 a.m. on Washington, DC 20420 (202) 233-3005. Surviving spouse alone, $5,544.
Thursday, December 7, 1989. The agenda Surviving spouse and one child in his or
will include the following topics: SUPPLEMENTARY INFORMATION: Under her custody, $6,947.-
the provisions of 38 U.S.C. 3112 and For each additional child in his or her
Discussion of Employee Plans custody, $1,150.
Determination and Examination section 306 of Public Law 95-588, VA is
(8) Surviving child alone (38 U.S.C. 542),
Programs. required to increase the benefit rates $1,150.
Discussion of Service Center Processing and income limitations in the pension Reduction for income. The rate
Issues and parents' DIC programs by the same payable is the applicable maximum rate
Discussion of Employee Plans Technical percentage, and effective the same date, minus the countable annual income of
Issues as increases in the benefit amounts the eligible person. (38 U.S.C. 521, 541,
Member Forum payable under title II of the Social and 542).
Due to limited conference space, Security Act. The increased rates and Mexican borderperiodand World
notification of intent to attend the income limitations are also required to War I veterans. The applicable
meeting must be made with Jane be published in the Federal Register., maximum annual rate payable to a
Baniewicz, Staff Assistant to the The Social Security Administration Mexican border period or World War I
Assistant Commissioner, no later'than has announced that there will be a 4.7 veteran under this table shall be
November 27, 1989. Ms. Baniewicz may percent cost-of-living increase in social increased by $1,530. (38 U.S.C. 521(g))
be reached on (202] 566-9204 (not toll- security benefits effective December 1,
free). Parents'DIC
1989. Therefore, applying the same
FOR FURTHER INFORMATION CONTACT. percentage, the following increased DIC (dependency and indemnity
Jane Baniewicz, Staff Assistant to rates and income limitations for the VA compensation) shall be paid monthly to
Assistant Commissioner (EP/EO), (202) pension and parents' DIC programs will parents of a deceased veteran in the
566-9204 (not toll-free}." following amounts. (38 U.S.C. 415)
be effective December 1, 1989.
Robert 1.Brauer,
Assistant Commissioner(E). Table I-Improved Pension Table 2
[FR Doc. 89-25503 Filed 10-30-89; 8:45 am] Maximum annual rates One parent.If there is only one parent
BILLING CODE 483"1-M (1) Veterans permanently and totally dis- the monthly rate of DIC paid to such
abled (38 U.S.C. 521). parent shall be $318 reduced on the
Veteran with no dependents, $6,767. basis of the parent's annual income
Veteran with one dependent, $8,864. according to the following formula:
DEPARTMENT OF VETERANS
For each-additional dependent, $1,150.
AFFAIRS (2)Veterans in need of aid and attendance
(38 U.S.C. 521). For each $1 of annual income
Cost-of-Uving Adjustments and Veteran with no dependents, $10,824. The $318
Headstone or Marker Allowance Rate Veteran with one dependent, $12,922. monthly rate Which is more But not more
AGENCY: Department of Veterans For each additional dependent, $1,150. shall be than than
(3)Veterans who are housebound (38 U.S.C. reduced by
Affairs.
521).
ACTION: Notice. Veteran with no dependents, $8,271. $0.00 0 $800
Veteran with one dependent, $10,368. .08 $800 7,697
SUMMARY: As required by law the
Department of Veterans Affairs (VA) is For each additional dependent, $1,150.
hereby giving notice of cost-of-living (4) Two veterans married to one another;
No DIC is payable under this table if
combined rates (38 U.S.C. 521).
adjustments (COLAs) in certain benefit Neither veteran in need of hid and attend- annual income exceeds $7,697.
rates and income limitations. These ance or housebound, $8,864. One Parent Who Has Remarried If
COLAs affect the pension and parents' Either veteran in need of aid and attend- there is only one parent and the parent
dependency and indemnity ance, $12,922. has remarried and is living with the
compensation (DIC) programs. These Both veterans in need of aid and attend- parent's spouse, DIC shall be paid under
adjustments are based on the rise in the ance, $16,977. table 2 or under table 4, whichever shall
45888 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
result in the greater benefit being paid to For each $1 of annual Income (5) Child (no entitled veteran or
.the veteran's parent. In the case of surviving spouse), $6,291 (Pub. L. 95-588,
The $214
remarriage, the total combined annual monthly rate Which is more But not more section 306(a)).
income of the parent and the parent's shall be than than (6) Spouse income exclusion (38 C.F.R.
spouse shall be counted in determining reduced by
§ 3.262), $2,454 (Pub. L. 95-588, section
the monthly rate of DIC. 306(a)(2)(B)).
.04 1,500 1,900
Two parentsnot living together.The .05 1,900 2,400
rates in table 3 apply to (1) two parents Table 6-Old-Law Pension Income
.06 2,400 2,900
who are not living together, or (2) an .07 2,900 3,200 Limitations
unmarried parent when both parents are .08 3,200 10,350
(1) Veteran or surviving spouse
living and the other parent has without dependents or an entitled child,
remarried. The monthly rate of DIC paid $6,738 (Pub. L. 95-588, section 306(b)).
to each such parent shall be $228 No DIC is payable under this table if
combined annual income exceeds (2) Veteran or surviving spouse with
reduced on the basis of each parent's one or more dependents, $9,716 (Pub. L.
annual income, according to the $10,350.
The rates in this table are also 95-588; section 306(b))
following formula:
applicable in the case of one surviving Headstone or Market Allowance
Table 3 parent who has -remarried, computed on
the basis of the combined income of the Under 38 U.S.C. 906(d) the VA may
For each $1 of annual income parent and spouse, if this would be a provide reimbursement for the cost of
greater benefit than that specified in non-Government headstones or markers
The $228 table 2 for one parent. at a rate equal to the actual cost or the
monthly rate Which Is more But not more average actual cost of Government-
shall be than than
reduced by Aid and attendance furnished headstones or markers during
The monthly rate of DIC payable to a the fiscal year preceding the fiscal year
$0.00 0 $800
parent under tables 2 through 4 shall be
in which the non-Government headstone
.06 $800 900 or marker was purchased, whichever is
.07 900 1,100 increased by $169 if such parent is (1) a
.08 1,100 7,697 patient in a nursing home, or (2) helpless less.
or blind, or so nearly helpless or blind The average actual cost of
as to need or require the regular aid and Government-furnished headstones-and
No DIC is payable under this table if attendance of another person. markers during any fiscal year is
annual income exceeds $7,697. determined by dividing the sum of the
Two parents living together or Minimum rate VA costs during that fiscal year for
remarriedparentsliving with spouses. procurement, transportation, Monument
The monthly rate of DIC payable to
The rates in table 4 apply to each parent Service and miscellaneous
any parent under tables 2 through 4
living with another parent; and each administration, inspection and support
shall not be less than $5.
remarried parent, when both parents are staff by the total number of headstones
alive. The monthly rate of DIC paid to Table 5-Section 306 Pension Income and markers procured by the VA during
such parents will be $214 reduced on the Limitations that fiscal year and rounding to the
basis of the combined annual income of nearest whole dollar amount.
(1) Veteran or surviving spouse with
the two parents living together or the The average actual cost of
remarried parent or parents and spouse no dependents, $7,697 (Pub. L. 95-588,
section 306(a)). Government-furnished headstones or
or spouses, as computed under the markers for fiscal year 1989 under the
following formula: (2) Veteran with no dependents in
need of aid and attendance, $8,197 (38 above computation method was $85.
Table 4 U.S.C. 521(d) as in effect on December
Therefore, effective October 1, 1989, the
31, 1978) maximum rate of reimbursement for
non-Government headstones or markers
For each $1 of annual income (3) Veteran or surviving spouse with purchased during fiscal year 1990 is $85.
The $214 one or more dependents, $10,350 (Pub. L.
monthly rate Which is more But not more 95-588, section 306(a)) Dated: October 25, 1989.
shall be than than (4) Veteran with one or more Edward J.Derwinski,
reduced by Secretary.
dependents in need of aid and
attendance, $10,850 (38 U.S.C. 521(d) as [FR Doc. 89-25492 Filed 10-30-89; 8:45 am]
0.00 0
.03 $1,000 in effect on December 31, 1978) BILUNG CODE 8320-01-M
45889
This section of the FEDERAL REGISTER FEDERAL RESERVE SYSTEM BOARD OF Dated: October 27, 1989.
contains notices of meetings published GOVERNORS Jennifer J. Johnson,
under the "Government in the Sunshine
TIME AND DATE: 9:30 a.m., Friday, Associate Secretaryof the Board.
Act" (Pub. L. 94-409) 5 U.S.C. 552b(e)(3).
October 27, 1989. [FR Doc. 89-25766 Filed 10-27-89; 3:25 pm]
The business of the Board required BILLING CODE 6210-01-M
FARM CREDIT ADMINISTRATION that this meeting be held with less than
Farm Credit Administration; Special one week's advance notice to the public, FEDERAL RESERVE SYSTEM BOARD OF
Meeting arid no earlier announcement of the GOVERNORS
AGENCY: Farm Credit Administration. meeting was practicable. "FEDERAL REGISTER" CITATION OF
SUMMARY: On January 26, 1989, a notice PLACE: Marriner S. Eccles Federal PREVIOUS ANNOUNCEMENT. 54 FR 43519,
(54 FR 3900) was published stating that Reserve Board Building, C Street October 25, 1989.
no further regularly scheduled meetings entrance between 20th and 21st Streets, PREVIOUSLY ANNOUNCED TIME AND DATE
of the Farm Credit Administration Board NW., Washington, DC 20551. OF THE MEETING: 10:00 a.m., Monday,
(Board) would be held due to lack of a STATUS: Closed. October 30, 1989.
quorum. A quorum has been constituted CHANGES INTHE MEETING: Change in the
with the recent appointment of Harold MATTERS TO BE CONSIDERED: Proposed
time of the open meeting to 9:30 a.m.,
B. Steele as Chairman of the Board. 1990 Federal Reserve Board officer and
Monday, October 30, 1989.
Notice is hereby given, pursuant to the employee salary, structure adjustments.
CONTACT PERSON FOR MORE
Government in the Sunshine Act (5 CONTACT PERSON FOR MORE
INFORMATION: Mr. Joseph R. Coyne,
U.S.C. 552b(e)(3)), that the regular INFORMATION: Mr. Joseph R. Coyne, Assistant to the Board; (202) 452-3204.
meeting of the Board scheduled for Assistant to the Board; (202) 452-3204.
November 7, 1989 will not be held and You may call (202) 452-3207, beginning Dated: October 26, 1989.
that a special meeting of the Board has at approximately 5 p.m. two business Jennifer J. Johnson,
been scheduled for Tuesday, Noi'ember days before this meeting, for a recorded Associate Secretaryof the Board.
21, 1989, starting at 10:00 a.m. An agenda announcement of bank and bank [FR Doc. 89-25683 Filed 10-27-89; 9:47 am]
for this meeting will be published at a holding company applications scheduled BILLING CODE 6710-01-M
later date. for the meeting.
FOR FURTHER INFORMATION CONTACT. Dated: October 27, 1989. NUCLEAR REGULATORY COMMISSION
David A. Hill, Secretary to the Farm Jennifer 1.Johnson, DATE: Weeks of October 30, November
Credit Administration Board, (703) 883- Associate Secretaryof the Board. 6, 13, and 20, 1989.
4003, TDD (703) 883-4444. [FR Doc. 80-25765 Filed 10-31-89; 3:25 pm] PLACE: Commissioners' Conference
ADDRESS: Farm Credit Administration, BILLING CODE 6210-01-M Reom, 11555 Rockville Pike, Rockville,
1501 Farm Credit Drive, McLean, Maryland.
Virginia 22102-5090.
FEDERAL RESERVE SYSTEM BOARD OF STATUS: Open and Closed.
Dated: October 26, 1989. GOVERNORS MATTERS TO BE CONSIDERED:
David A. Hill,
TIME AND DATE: 11:,00 a.m., Monday, Week of October 30
Secretary,Form CreditAdministrationBoard.
November 6, 1989. Tuesday, October31
[FR Doc. 89-25753 Filed 10-27-89; 1:25 am]
BILLING CODE 6705-01-M
PLACE: Marriner S. Eccles Federal 8:30 a.m.
Reserve Board Building, C Street Collegial Discussion of Items of
entrance between 20th and 21st Streets, Commission Interest (Public Meeting)
FEDERAL ENERGY REGULATORY
NW., Washington, DC 20551. Wednesday, November 1
COMMISSION
"FEDERAL REGISTER" CITATION OF STATUS: Closed. 10:00 a.m.
PREVIOUS ANNOUNCEMENT: October 24, MATTERS TO BE CONSIDERED: Briefing by General Electric on the
1989, 54 FR 43214. Advanced BWR Standard Plant Review
1. Personnel actions (appointments, (Public Meeting
PREVIOUSLY ANNOUNCED TIME AND DATE promotions, assignments, reassignments, and 11:00 a.m.
OF MEETING: October 25,1989, 10:00 a.m. salary actions involving individual Federal Affirmation/Discussion and Vote (Public
CHANGE IN THE MEETING: The following Reserve System employees. Meeting) (if needed]
2. Any items carried forward from a 1:00 p.m.
Docket Numbers have been added to
previously announced meeting. Briefing by Combustion Engineering on
Item CAG-9 for the agenda of October
25, 1989: CONTACT PERSON FOR MORE
ALWR System 80+ (Public Meeting)
2:30 p.m.
INFORMATION: Mr. Joseph R. Coyne,
Item NO., Docket No, and Company Briefing by Westinghouse on Advanced
Assistant to the Board; (202) 452-3204. LWR SP 90 (Public Meeting
CAG-9--RP89-48-000 and RP89-222-000, You may call (202) 452-3207, beginning
Transwestern Pipeline Company Week of November 6-Tentative
at approximately 5 p.m. two business
Lois D. Cashell,
days before this meeting, for a recorded Thursday, November 9
Secretary. announcement of bank and bank 3:30 p.m.
[FR Doc. 89-25677 Filed 10-26-89; 8:45 am] holding company applications scheduled Affirmation/Discussion and Vote (Public
BILLING CODE 6717-02-M , for the meeting. Meeting) (if needed)
45890 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Sunshine Act Meetings
Week of November 13-Tentative Wednesday, November 22 requiring any Commission vote on this date.
Thursday, November 16 11:30 a.m. To verify the status of meetings call
3:30 p.m. Affirmation/Discussion and Vote (Public (recording)-(301) 492-0292
Affirmation/Discussion and Vote (Public Meeting) (if needed)
Meeting) (if needed) FOR FURTHER INFORMATION CONTACT:
Note: Affirmation sessions are initially
Week of November 20-Tentative scheduled and announced to the public on a William Hill (301) 492-1661.
Tuesday, November 21 time-reserved basis. Supplementary notice is Dated: October 26, 1989.
provided in accordance with the Sunshine William M. Hill, Jr.,
10:00 a.m. Act as specific items are identified and added
Briefing on Implementation of the U.S. to the meeting agenda. If there is no specific Office of the Secretary.
Environmental Protection Agency's HLW subject listed for affirmation, this means that [FR Doc. 89-25714 Filed 10-27-89; 12:39 pm]
Disposal Standards (Public Meeting) no time has as yet been identified as BILLING CODE 7590-01-M
45891
This section of the FEDERAL REGISTER October 13, 1989, make the following § 90.241 [Corrected]
contains editorial corrections of previously corrections: On page 38681, in the first column, in
published Presidential, Rule, Proposed
Rule, and Notice documents. These 1. On page 42028, in the first column, item 20., in the first line, "§ 90.241(c)"
corrections are prepared by the Office of in the fourth line from the bottom, should read "§ 90.241(e)".
the Federal Register. Agency prepared "process" should read ,"product". BILLING CODE 1505-01-D
corrections are issued as signed 2. On page 42029, in the third column,
documents and appear in the appropriate in the line immediately preceding
document categories elsewhere in the FEDERAL.DEPOSIT INSURANCE
Availability of Information, "or" should
issue. read "nor". CORPORATION
3. On the same page, in the same
column, under Availability of 12 CFR Chapters III and IV
DEPARTMENT OF AGRICULTURE
Information, in the eighth line, remove
Agricultural Marketing Service the comma following "Crossroads". Regulations Transferred From Federal
Savings and Loan Insurance
BILUNG CODE 1505-01-D Corporation; Redesignation From
7 CFR Part 1137
Chapter V to Chapter III
[DA-89-0S51 ENVIRONMENTAL PROTECTION
Correction
Milk in the Eastern Colorado Marketing AGENCY
Area; Order Suspending Certain In rule document 89-24539 beginning
Provisions on page 42799 in the issue of
40 CFR Part 372
Wednesday, October 18, 1989, make the
Correction following corrections:
[OPTS-400035; FRL-3660-9]
In rule document 89-23839 beginning 1. On page 42800, in the second
on page 41437 in the issue of Tuesday, Cadmium Sulfide and Cadmium column, in the 12th line, "others" should
October 10, 1989, make the following Selenide; Toxic Chemical Release read "orders".
correction: Reporting; Community Right-to-Know 2. On page 42801, in the first column,
On page 41438, in the second column, in the table, remove the third line from
in the first and second lines immediately Correction the bottom.
preceding the signature, the date should In proposed rule document 89-24674 BILLING CODE 1505-01-D
read "October 3, 1989". beginning on page 42962 in the issue of
BILLING CODE 1505-01-D Thursday, October 19, 1989, make the
following corrections: DEPARTMENT OF THE INTERIOR
1. On page 42962, in the second Bureau of Land Management
DEPARTMENT OF ENERGY column, under SUPPLEMENTARY
Federal Energy Regulatory INFORMATION, in the first paragraph, in [ID-943-09-4214-11; IDI-05384]
Commission the second line, "(3)(1)" should read
"le}(1)". Proposed Continuation of Withdrawal;
[Docket No. TQ90-1-63-000] 2. On the same page, in the third Idaho
column, under SUPPLEMENTARY Correction
Carnegie Natural Gas Co.; Proposed
INFORMATION, in the third complete
Changes in FERC Gas Tariff In notice document 89-21149 beginning
paragraph, in the fifth line, "meeting"
should read "melting". on page 37385 in the issue of Friday,
Correction
September 8, 1989, make the following
In notice document 89-24639 BILLING CODE 150501-D correction:
appearing on page 42985 in the issue of On page 37385, in the second column,
Thursday, October 19, 1989, make the FEDERAL COMMUNICATIONS under EFFECTIVE DATE:, "September"
following correction: should read "December".
In the first column, in the heading, the COMMISSION
BILUNG CODE 1506-1-0
docket number should read as set forth
above. 47 CFR Part 90
INTERNATIONAL TRADE
BILLING CODE 1505-01-0
[DA 89-767]
ADMINISTRATION
Private Radio Services; Editorial
DEPARTMENT OF ENERGY [A-475-084]
Amendments of Parts 90 and 94 of the
Western Area Power Administration Commission's Rules Spun Acrylic Yarn From Italy; Final
Correction Results of Antidumping Duty
Loveland Area Projects; Rate Order Administrative Review
Correction In rule document 89-22056 beginning,
on page 38680 in the issue of Correction
In notice document 89-24245 beginning Wednesday, September 20, 1989, make In notice document 89-24107 beginning
on page 42025 in the issue of Friday, the following correction: on page 42005 in the issue of Friday,
45892 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Corrections
October 13, 1989, make the following Wednesday, September 27, 1989, make DEPARTMENT OF TRANSPORTATION
correction: the following corrections:
On page 42008, in the third column, in Federal Aviation Administration
the second column of the table, the § 120.502-1 [Corrected]
margin for the first entry should read 1. On page 39518, in the third column, 14 CFR Part 75
1,- 0
-1?o in § 120.502-1, in the sixth line, "of"
should read "and". [Airspace Docket No. 89-AEA-121
BILUNG CODE 150"1-0
Part !1
Department of Labor
Occupational Safety and Health
Administration
DEPARTMENT OF LABOR Avenue, NW., Washington, DC 20210, technical nature were made to subpart P
(202) 523-8151. (37 FR 3512, February 17, 1972).
Occupational Safety and Health SUPPLEMENTARY INFORMATION: Subsequent to the adoption of those
Administration amendments, OSHA found it necessary
I. Background to further amend the standard. After a
29 CFR Part 1926 A. History Notice of Proposed Rulemaking (37 FR
[Docket No. S-204] 15317, July 29, 1972) § 1926.652 was
Congress amended the Contract Work amended to require ladders as a means
RIN 1218-AA36 Hours Standards Act (CWHSA) (40 of access and egress in trenches greater
U.S.C. 327 et seq.) in 1969 by adding a than four feet (1.2 m) in depth-instead
Occupational Safety and Health new section 107 (40 U.S.C. 333) to
of three feet (.9 m) in depth (37 FR 24345,
Standards-Excavations provide employees in the construction
November 16, 1972).
industry with a safer work environment
AGENCY: Occupational Safety and In 1976, OSHA, in response to
and to reduce the frequency and
Health Administration,' Labor. severity of construction accidents and continued complaints concerning the
ACTION: Final rule. injuries. The amendment, commonly adequacy of the standards in subpart P,
known as the Construction Safety Act engaged the National Bureau of
SUMMARY: The Occupational Safety and Standards (NBS) to study the
(CSA) (Pub. L. 91-54; August 9, 1969),
Health Administration (OSHA) hereby significantly strengthened employee compatibility of the technical provisions
amends its Construction Standards for protection by providing for occupational in the regulations with actual
Excavations, 29 CFR part 1926, subpart construction practice. In addition, NBS
safety and health standards for
P. employees of the building trades and was to examine the state of the
The existing standards regulate the construction industry in Federal and knowledge in geotechnical and
use of support systems, sloping and federally-financed or federally-assisted structural engineering; to review the
benching systems and other systems of construction projects. field experience accumulated since the
protection as means of protection promulgation of the standards; and to
Accordingly, the Secretary of Labor
against excavation cave-ins. In addition, issued Safety and Health Regulations recommend potential modifications that
the standards regulate the means of" for Construction in 29 CFR part 1518 (36 could improve the effectiveness of the
access to and egress from excavations, FR 7340, April 17, 1971) pursuant to standards.
and employee exposure to vehicular section 107 of the Contract Work Hours Findings and preliminary
traffic, falling loads, hazardous and Safety Standards Act. Included in recommendations of the NBS studies
atmospheres, water accumulation, and these regulations were the existing were presented and discussed at a
unstable structures in and adjacent to safety standards for trenches and federally-sponsored workshop in
excavations. excavations. September 1978. Six reports were then
The revised standard uses completed as a result of NBS' work, and
The Occupational Safety and Health
performance criteria where possible, these were published in 1979 and 1980.
Act (the Act) (84 Stat. 1580; 29 U.S.C. 650
rather than specification requirements; et seq.) was enacted by Congress in Copies of these reports are part of the
consolidates and simplifies many of the. 1970, and authorized the Secretary of public record (Exs. 2-1 through 2-6).
existing provisions; adds and clarifies Labor to adopt established Federal As a result of the development of
definitions; reformats the standard to Standards issued under other statutes, these recommended changes, private
eliminate duplicate provisions and including the Construction Safety Act, industry proposed and sponsored a
ambiguous language; provides a as occupational safety and health series of five workshops in the spring
consistent method of soil classification; standards. Accordingly, the Secretary of and summer of 1981 to discuss and
and gives employers added flexibility in Labor adopted the Construction comment on ways to implement the NBS
providing protection for employees. This recommendations. An unpublished text
Standards in 29 CFR part 1518 as
Final Rule is being issued after established Federal Standards in was used at these workshops (Ex. 2-7).
appropriate consultation with the accordance with section 6(a) of the Act Final recommendations for technical
Advisory Committee on Construction changes to the standards incorporating
(36 FR 10466, May 29, 1971). Part 1518
Safety and Health (ACCSH). was redesignated as part 1926 later in the comments from the industry-
OSHA initiated this rulemaking action sponsored workshops were prepared by
1971 (36 FR 25232, December 30, 1971).
to establish clearly the requirements for NBS in May 1983 (Ex. 2-26).
The standards in existing subpart P of
protection of employees in excavations. part 1926, titled' § 1926.650-General Excavation-related accidents resulting
The intended effect of this regulation is Protection Requirements; § 1926.651- in injuries and fatalities have continued
to increase safety for these workers. to occur at construction sites despite the
Specific Excavation Requirements;
EFFECTIVE DATE: January 2, 1990. § 1926.652-Specific Trenching development and promulgation of the
ADDRESS: In compliance with 28 U.S.C. Requirements; and § 1926.653- OSHA-Construction Standards in 1971
2112(a), the Agency designates for Definitions Applicable to this subpart, and 1972. Based on a careful review of
receipt of petitions for review of the were adopted as OSHA standards as compliance problems and public
standard, the Associate Solicitor for part of this process. comments received since 1972, OSHA
Occupational Safety and Health, Office The need for review and revision of believed that the present standard
of the Solicitor, Room S-4004, U.S. § § 1926.650 through 1926.653 has been needed updating. Therefore, the Agency
Department of Labor, 200 Constitution recognized by OSHA since the earliest developed a proposed revision to the
Avenue NW., Washington, DC 20210. days of the Agency's existence. existing standard.
FOR FURTHER INFORMATION CONTACT: Consequently, after a Notice of A draft of the proposed changes to the
Mr. James Foster, Director, Office of Proposed Rulemaking (36 FR 19083, standard was reviewed by ACCSH in
Information and Consumer Affairs, September 28, 1971) and after a review October 1982. Transcripts of this
Occupational Safety and Health by the Advisory Committee on meeting are part of the public record
Administration, U.S. Department of Construction Safety and Health (Ex. 2-8). The Committee's comments
Labor, Room N-3637, 200 Constitution (ACCSH), several amendments of a and recommendations, and those of
31, 1989 / Rules and Regulations
I Federal Register / Vol. 54, No. 209 / Tuesday, October 45895
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 I Rules and Regulations 45895
other interested parties, were carefully notice. A wide range of employers, applies only to those excavationA; which
analyzed in connection with the businesses, labor unions, trade are also trenches (see § 1926.651(c)(2)).
proposed rulemaking. Many of the associations, state governments and (2) Excavations (Non-Trench)
changes in the proposed standard other interested parties contributed to
reflected the recommendations and the development of this record. OSHA A second major problem with the
suggestions of these participants. appreciates the efforts interested parties existing standards involves the
Relevant ACCSH comments are have made to help develop a rulemaking requirements for protecting employees
discussed below in section III- record which would provide a sound in non-trench excavations from the
"Summary and Explanation of the Final basis for the promulgation of a Fiffal hazards of cave-ins. Existing
Rule." Committee discussions that were Rule. § 1926.651(c) currently requires that
inconclusive have been considered, but
are not discussed in this preamble. B. Problems with the Existing Standards "The walls and faces of all excavations
in which employees are exposed to
Several suggestions for changes to the OSHA's efforts to revise its danger from moving ground shall be
draft standard were made by members excavation and trenching standards guarded by a shoring system, sloping of
of the ACCSH. OSHA sought more were initiated primarily because the the ground, or some other equivalent
discussion on these suggestions and, Agency has experienced difficulty in means." The term "danger from moving
therefore, raised individual points as enforcing the existing standards. Several ground" is not defined in the standard
issues in the preamble of the proposal. of these problems are discussed in detail and, thus, the standard does not specify
On April 15, 1987, OSHA issued a below. when an employer must take
notice of proposed rulemaking (NPRM) precautions to protect employees from a
on excavations (52 FR 12288]. The (1) "Specific Excavation"/"Specific
Trenching Requirements" cave-in. Furthermore, the standard does
NPRM established a sixty day period, not specify what degree of precaution an
which ended June 15, 1987, for The first major problem with the employer must take even when
submission of written comments. existing standards is that because
Several commenters requested an employees are exposed to a "danger
§ § 1926.651 and 1926.652 are two
extension of the written comment from moving ground." Requirements
separate sections, one entitled "Specific contained in existing § 1926.651 (e), (f),
period. Therefore, on June 16, 1987 (52 Excavation Requirements" and the other
FR 22799), the Agency extended the (g), and (h), discuss employee protection
"Specific Trenching Requirements," the again, however, only in very general
written comment period until October standards are not clear as to whether
14, 1987. terms.
the excavation requirements must also
On August 5, 1987, OSHA consulted be followed when digging trenches. It The language was resolved somewhat
with the ACCSH for a second time, was intended by OSHA that many of the& when the OSHRC, in agreement with the
regarding the issues raised in the NPRM. excavation standards would also apply Secretary of Labor, interpreted the
In addition to making recommendations to trenches since a trench is a type of standard to require shoring or sloping in
regarding these issues, the ACCSH excavation, but that intention is not accordance with Table P-1 of subpart P,
suggested changes to the proposed clearly stated. whenever employees are exposed to
regulations. The transcript of this The Occupational Safety and Health unstable soil in excavation sides (M.J.
meeting is part of the record of this Review Commission (OSHRC}, and two Lee Construction Company, 7 BNA
rulemaking (Ex. 4-119). United States Court of Appeals, have OSHC 1140 ((R.C. 1979)1; Terra Motus
During the extended comment period, sanctioned the application of the Company, Inc., 5 BNA OSHC 1696 ((R.C.
OSHA received requests for an informal 1977]); D. Federico Company, Inc., 3
excavation standards in § 1926.651 to
public hearing. On February 23, 1988, trenches (Dobson Brothers Construction BNA OSHC 1970 ((R.C. 1976)) affirmed
OSHA announced it would convene an Company, 3 BNA OSHC 2035 (R.C. on other grounds 558 F. 2d 614 ((1st Cir.
informal public hearing on April 19, 1977)) 5 BNA OSHC 1528). However, this
1988, and extended the period for 1976]; Texas Eastern ProductsPipeline
Co. v. OSHRC, 827 F. 2d 46 (7th Cir. problem was revived by two OSHRC
submitting testimony, documentary decisions which are inconsistent with
evidence, and additional comments until 1987); and D. FedericoCompany, Inc. v.
OSHRC and Usery, 558 F. 2d 614 (1st the cases mentioned above. In the first
April 1, 1988 (53 FR 5280). The hearing case, Seaward Construction Company,
was held on April 19,1988, with Cir. 1977) 5 BNA OSHC 1528,
respectively). However, other Courts of Inc., 5 BNA OSHC 1422 ((R.C. 1977)), the
Administrative Law Judge Michael OSHRC interpreted § 1926.651(c) to
Schoenfeld presiding. At the close of the Appeals have held, to the contrary, that
excavation standards cannot be applied require sloping and shoring only if
hearing, Judge Schoenfeld set a period, OSHA establishes that the ground to
ending May 20, 1988, for the submission to trenches (Lloyd C. Lockrem, Inc, v.
OStHRC, 609 F. 2d 940 (9th Cir 1979) 8 which employees are exposed is
of additional data, and a period ending actually moving. In the second case,
June 20,1988, for the submission of BNA OSHC 1316; Kent Nowlin
Construction Co. v. OSHRC, 593 F. 2d Pipe-Rite Utilities Ltd., Inc., 10 BNA
briefs and arguments. OSHC 1289 ((R.C. 1982)), the OSHRC,
At the request of one participant at 368 (loth Cir. 1979)).
the public hearing, Judge Schoenfeld This Final Rule resolves the relying on Seaward vacated a citation
extend the comment period until June 24, uncertainty left by these decisions and and did not address the other cases
1988, for the submission of additional by the ambiguous language of the interpreting existing § 1926.651(c). These
data and until July 29, 1988, for the existing standards by establishing one decisions reestablished the uncertainty
submission of additional views and set of requirements which are applicable as to when and to what degree an
arguments (Ex. 31). to all excavations, including trenches. employer must slope, shore or otherwise
On December 15, 1988 Judge Where there are requirements intended protect employees in a non-trench
Schoenfeld certified the hearing to be applicable only to trenches-such excavation. OSHA has long maintained
transcript and related submissions, as the requirement that ladders or that employees exposed to potential
closing the record for this proceeding. equivalent means of egress be provided cave-ins must be protected by shoring or
OSHA received over 150 comments in every 25 feet horizontally-the Final sloping long before the excavation face
response to its NPRM and hearing Rule makes it clear that the requirement is in imminent danger of collapse.
45896 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
45896 table classifies soils in a manner that is -
Another problem with the existing needed to be done to clarify the meaning
standards for non-trench excavations and intent of these standards. difficult to relate to the soil descriptions
(§ 1926.651) is that the degree of The key provisions of the current used in § 1926.652(b) and (c), and the
protection required is not always easily specific trenching standards are terms used are not the same as terms
determined. With regard to sloping, the § 1926.652(b) (for trenches in soft or generally used in the construction
existing § 1926.651(g) provides that "All unstable material) and § 1926.652(c) (for industry.
slopes shall be excavated to at least the trenches in hard or compact soil). The The Final Rule rectifies these
angle of repose except for areas where main difficulty with existing § 1926.652 problems in two ways. First, it provides
solid rock allows for line drilling or (b) and (c) is that the terms "soft or employers with a soil classification
presplitting." To find the angle of repose unstable" soil and "hard or compact" system in appendix A which describes
an employer must consult Table P-1, soil do not, in some instances, provide the variables in soil composition an
which appears at the end of § 1926.652, sufficient guidance to employers as to employer can encounter; and secondly,
"Specific Trenching Requirements." the requirements applicable to digging a it sets forth sloping and shoring
Table P-1 is titled "Approximate Angle trench. The OSHRC has held that any requirements in accordance with the
of Repose for Sloping of Sides of trench requiring a slope less steep than types of soil, as determined with respect
Excavations." The difficulty with table 63 degrees from the horizontal under to the soil classification system. In
P-1 is that it describes the approximate table P-1 must be considered to be in OSHA's opinion, the soil classification
angle of repose for various soil types in soft or unstable soil, within the meaning system in appendix A will make it much
terms that are not the same as terms of § 1926.652(b). The OSHRC has ruled: easier for employers to determine
commonly used in the industry to whether their slopes comply with
Since § 1926.652(c) requires a slope of not
classify soils. In addition, the terms are steeper than Vs to Ifor hard or compact soil, OSHA's requirements.
not defined in the standard. Thus, it is it is evident that these materials listed in Paragraph 1926.652(c) has caused
sometimes very difficult to determine Table P-1 as having a less steep angle of compliance problems in one other
what OSHA considers to be the repose must be considered soft or unstable, important respect. The standard
appropriate degree of sloping from this and are therefore regulated by § 1926.652(b). requires sloping of at least 1/2 to I
table. (ConnecticutNaturalGas Corporation,6 (horizontal to vertical), but requires only
OSHA recognizes a problem with the BNA OSHC 1796, (R.C. 1978)). that sloping begin five feet (1.52 m) from
term "angle of repose." The term is used Although the OSHRC ruling the bottom of the trench. This standard
in the standard in a manner which is harmonized the existing regulations, has been interpreted as permitting a
inconsistent with iti meaning in the civil OSHA prefers employers to know which trench dug in hard or compact soil to be
engineering profession. In the American requirements they are subject to before vertical for the first five feet (1.52 m)
Society for Testing and Materials determining the extent to which they from the bottom, and sloped not more
(ASTM) Standard D653-67, "Standard must slope, rather than determining the than 63 degrees from the horizontal
Definitions of Terms and Symbols slope first and then determining the beginning at the fiye feet (1.52 m) level
Relating to Soil and Rock Mechanics," regulation with which they must comply. (Horowitz Brothers, Inc., 3 BNA OSHC
the term "angle of repose" is defined as In some instances, this determination is 1131 ((R.C. 1975)). OSHA believes that
follows: "The angle between the not a difficult problem under the current this interpretation is inadequate because
horizontal and maximum slope that a standard. For example, for many it is, in most instances, dangerous to
soil assumes through natural processes. granular soils, an employer is not going allow employees to work in a trench
For dry granular soils the effect of height to have a problem determining that a excavated in soils in which the sides are
is negligible; for cohesive soils the effect slope of to 1 (approximately 63 vertical for the bottom five feet (1.52 m)
of height is so great that the angle of degrees from the horizontal) is portion and then sloped starting at the
repose is meaningless." Thus, to talk in inadequate, and that § 1926.652(b) five foot level. This is particularly true
terms of a single "angle of repose" is applies to the trenches excavated in in a relatively deep trench in which the
technically inaccurate. The "angle of such soil. Indeed, the OSHRC has ruled weight of cohesive soils adversely
repose" for cohesive soil depends on the that there is a rebuttable presumption affects the stability of the trench side.
depth of the excavation, whereas the that predominately sandy soils, unless OSHA has always interpreted and
"angle of repose" for granular soil cemented, are soft or unstable within enforced this provision to require
depends largely on its density and the meaning of 1926.652(b). (Duane shoring or a trench shield in the
changes in environmental conditions of Meyer d/b/a D.T. Construction unsloped, vertical sided portion of the
exposure, such as the drying process. Company, 7 BNA OSHC 1560 ((R.C. trench.
This Final Rule resolves the 1979)). However, there are situations in The proposed standard required that
uncertainty created by the ambiguous which under the existing standard it is trenches and excavations be sloped or
language of the existing standard by not easily determined which sloping benched from the bottom instead of
establishing requirements for the sloping angle applies. For example, if a trench is from the five foot (1.52 m) level, unless a
of all excavations that convey clearly excavated in previously disturbed qualified person or qualified engineer
when precautiona must be taken to cohesive soil, the existing standard designs an alternate configuration.
protect employees and the degree of gives little guidance as to which Acceptable configurations for sloped
protection that is necessary. The Final standard applies or what constitutes an excavations were illustrated in Figure
Rule uses terms that are consistent with adequate slope under table P-1. And, B-1 of appendix B of the proposal.
both the civil engineering profession and since the sloping requirements of OSHA still believes that sound
the construction industry. §1926.652 are contained in table P-1, engineering principles dictate that a five
the shortcomings of that table foot deep vertical-sided portion should
(3) Need for Clarification of Trench be shored in most instances. The
(previously discussed above under non-
Requirements. trench excavations) are also a problem Agency notes that the National Bureau
OSHA learned from its enforcement with the existing standards regulating of Standards depicts a similar situation
experience with § 1926.652, "Specific trenches. In addition to the technical' in Figure A-2 (Ex. 2-3), but recommends
Trenching Requirements" that much misuse of the term "angle of repose," the only a three foot maximum vertical-
45897
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45897
--
sided portion and a slope of not more unintended way-a hazard not generally classified under a general "accident-
than 1 horizontal: I vertical (45°1. arising when timber shoring is used. type" heading that does not specifically
Additionally, Figure A-7 depicts another The requirements for trench boxes identify whether the accident involved a
similar situation where the depth of the and shields in existing § 1926.652(k) cave-in. For example, cave-in accidents
vertical-sided portion is approximately were changed in the proposal to allow are most likely to be recorded under the
four feet deep, shored, and the slope is I employers more flexibility in the design "accident-type" categories of "caught in.
horizontal : 1 vertical (45*). OSHA of trench shields. The Final Rule also under, or between" or "asphyxiation,"
solicited comment on the clarifies the way in which an employer which encompass many accidents that
appropriateness, and costs and benefits must assure that shields provide are not excavation-related, such as
of the configurations discussed above equivalent protection to sloping or those in which an employee becomes
with special emphasis on the OSHA shoring required by the standard. It caught in the moving parts of machinery.
interpretation. allows an employer to use a trench box There is no apparent way to separate
The Final Rule addresses this or shield that is either designed or out those accidents that are cave-ins.
situation by allowing employees to use approved by a registered professional Furthermore, many cave-ins are not
trench configurations with a vertical engineer or that is based upon tabulated reported to BLS. OSHA received
portion in the bottom of the trench in data prepared or approved by a testimony at the public hearing asserting
accordance with the limitations that registered professional engineer. that the exemptions for small employers
have been successfully used in the State For manufactured rather than job- from the BLS reporting and
of California, or with the approval of a made trench boxes or shields, the recordkeeping requirements contributes
registered professional engineer. revised standard requires that significantly to the undereporting of
employers comply with all excavation injuries and fatalities (Tr. 4/
(4] Trench Boxes and Shields manufacturer's warnings and 19/88 pp. 62-69).
The requirements for trench boxes instructions which might affect the Nevertheless, estimates of the number
and shields are contained in existing safety of employees. Because of of injuries and fatalities occurring in
§ 192.652(k). The requirements are not concerns with product liability, the excavations have been made. In a 1975
clear as to their intent with regard to the manufacturers typically include study, based primarily on a previous
design of shields. For example, the instructional materials that establish a study of newspaper articles and other
standard requires that such devices method or methods which the data made available from OSHA files, it
"shall be designed, constructed, and manufacturer has determined will was estimated that more than 100
maintained in a manner which will provide for safe installation and use of a persons were killed in excavation cave-
provide protection equal to or greater product. The employer is on notice of ins each year (Ex. 2-11). In a recent
than the sheeting or shoring required for the precautions set forth in these report prepared by NIOSH, based on
the trench." In addition, the standard materials, and is responsible for OSHA's inspection data, it was
defines a trench shield as "A shoring implementing them. Additionally, estimated that at least 73 persons were
system (emphasis added) composed of requirements were added that address killed each year in cave-in accidents,
steel plates and bracing *** which the hazardous situations that arise and at least 97 persons were killed as a
support the walls of a trench . during the course of using a shield, but result of all excavation-related
Shields may be constructed of steel, but are not addressed in the existing accidents (Exs. 2-24, 2-30, 2-31 and 2-
need not be, and they may provide standard. In OSHA's opinion, these 32). Using the same inspection data,
support to the side of a trench. However, requirements will assure that shield OSHA has estimated a fatality rate due
shields are more often used in a manner systems will adequately protect to excavation-related work injuries of
where they do not support the side of a employees. .318 per 1,000 full time workers for all
trench but rather act as a barrier in the SIC's involved and .508 per 1,000 full-
event a cave-in occurs. Because of the II. The Nature of Excavation Accidents
time workers for SIC 1623. These rates
restrictive nature of the existing Accidents and Injuries are at least similar to, if not higher than
definition, and since the design of Studies show that excavation work is the fatality rate of .248 per 1,000 full time
sheeting and shoring is tied to the one of the most hazardous types of work workers due to all types of work injuries
requirements for timber shoring and done in the construction industry (Ex. 2- occurring in construction SIC's in
sheeting set forth in Table P-2 "Trench 9 and Ex. 2-10). Accidents in excavation general. The fatality rate for trenching
Shoring-Minimum Requirements," work occur more frequently than do work was estimated to be as high as 112
some observers have perceived a lack of accidents in construction in general. The percent greater than the rate for
flexibility on the part of OSHA primary type of accident of concern in construction in general.
regarding the design of trench shields. excavation-related work is a cave-in. Estimates of non-fatal injuries in
Another problem with the existing The actual number of cave-in accidents excavation and trenching work have
requirements for trench shields is the is not large when compared to the total also been made. California has reported
lack of coverage addressing hazardous number of accidents occurring in all of that the ratio of non-fatal, lost-time
situations that arise out of the use of construction. However, those that do injuries to fatalities for all types of
shields. Shields are used differently than occur tend to be of a very serious accidents in sewer, pipeline, and
shoring, and situations can arise when nature. Cave-in accidents are much trenching work was 50 to 1. That is, one
using shields that do not arise when more likely to be fatal to the employees fatality occurred for every 50 non-fatal,
using shoring. For example, shields are involved than other construction-related lost time injuries. In contrast, the ratio
moved into position by sliding them accidents. for all contract construction was 174 to 1
along the trench bottom or by lowering The true extent of excavation-related (Ex. 2-9).
them into position. Employees who are injuries and deaths cannot be readily In another report specifically related
within the confines of a shield being determined from available accident data to cave-ins, California reported that the
repositioned by other than horizontal such as those maintained by the Bureau ratio of lost-time-injuries to fatalities
movement are subject to being injured if of Labor Statistics (BLS). This is because due only to cave-in accidents was 17 to
the shield suddenly shifts in an a large number of cave-in accidents are 1. In contrast the lost-time work injuries
45898 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
to fatalities for all types of accidents in CIO (Ex. 4-17) noted that the approach necessary regional differences in soils,
all industries in California was 250 to 1 was feasible,.but not recommended climate, and work practices.
(Ex. 2-10). because of the difficulty of making Therefore, with respect to this issue
As a measure of the seriousness of revisions, and the difficulty of the agency makes no change and
cave-in accidents, Thompson and incorporating the necessary flexibility. promulgates the standard as proposed.
Tannenbaum stated that ratios of Union Electric Company (Ex. 4-35) In Issue 2 of the NPRM (52 FR 12294),
injuries to fatalities due to cave-ins as commented that "We do not see the OSHA requested comment on whether
high as 10 to 1 and 14 to 1 have been need for such charts and/or tables in or not it should limit design
reported (Ex. 2-11). addition to that already included." In responsibility to a "qualified engineer,"
OSHA has determined that the addition, the National Utility which was defined in the proposal as "A
available accident and injury data Contractors of America (NUCA) (Ex. 3- person who has attained (through
clearly establish a significant risk to 91) contended that it would be engineering education and experience) a
employees working in and around inappropriate for OSHA to sponsor any special knowledge of mathematical,
excavations. A high rate of injuries has particular set of charts or tables, and physical, and engineering sciences and
continued to occur in excavations that this approach would not be feasible the principles and methods of
throughout the years since subpart P because regional work practices are engineering analysis and design; and.
was first adopted by OSHA. OSHA different. NUCA also expressed support who, therefore, is qualified to practice
believes that this revision of subpart P for the flexibility of the performance- engineering, i.e., apply the principles
will help reduce the current accident toll oriented approach of the proposal. and methods of engineering analysis
associated with excavation work. The Washington Metropolitan Area and design to specific problems." The
IIl. Summary and Explanation of the Construction Safety Association proposal permitted design by either a
Final Rule (WMACSA) (Ex: 4-101) commented that "qualified person or a qualified
"Standard practices appear to have engineer." The Agency also solicited
In order to solicit desired public been provided for by the options information, opinion, and comment on
comment, OSHA identified fifteen issues provided by OSHA." WMACSA also costs; the rationale for requiring or not
in the preamble of the proposal on pointed out the difficulty of revision and
which the Agency needed additional requiring a "qualified engineer,"
in deciding, regionally, what was situations which would require a
information. These issues, the comments appropriate. "qualified engineer;" the proposed
received relating to these issues, and Finally, Lone Star Gas Company, (Ex. definition; criteria to evaluate
OSHA's determination on the 4-105), commented that charts and
appropriate way to address these issues experience; impacts on small
tables need to incorporate flexibility businesses; the rationale for requiring or
are discussed below. and permit the option of individuaP'
Issue 1, raised in the preamble of the not requiring a "registered professional
design to meet unique circumstances. engineer," and any evidence supporting
proposed rule (52 FR 12293), solicited OSHA notes that many responses to
public input on the suggestion that or disproving that requiring a "qualified
this issue included comments on other
OSHA include a "standard practice" in engineer" decreases the risk of injuries
sections of the proposal. These
its revision of Subpart P in addition to and fatalities.
comments will be addressed later in this
those set forth in the appendices. These preamble as appropriate. OSHA received 30 comments on this
data, in the form of charts and tables, Based on the above discussion. OSHA issue, including input from the ACCSH
would be used to protect employees has determined that a "standard (Tr. 8/5/87 pp. 456-470). Some comments
against cave-ins, and would be capable practice," in the context of Issue 1, supported the idea ihat a "qualified.
of being understood and used by the would not be appropriate because it person" could properly perform design
journeyman worker. As an alternative, would limit flexibility and would not work. Several comments, like that of H.
the employer could have a qualified recognize regional work practices. The J. Schneider Construction, Inc. (Ex. 4-3),
engineer design the protective system. Agency believes that the current format, expressed support for "qualified
These data (standard practice) would as revised, provides the necessary person" but provided no rationale.
include generic tables and charts for degree of flexibility; provides a Other commenters, like the
metal hydraulic shoring, timber shoring, mechanism for the recognition and use Underground Construction Co. and the
trench shields, protection for footing of regional shoring and sloping Associated Builders and Contractors,
excavations (bell-bottom pier holes), practices; and allows rapid introduction Inc. (ABC) (Exs. 4-57 and 4-78), argued
and sloping and benching systems. and use of new products and that allowing only a "qualified engineer"
OSHA received 13 comments on this technology, while insuring that to do design work would deprive
issue. Several commenters supported appropriate employee protection is contractors of the ability to use capable
the incorporation of a standard practice provided. supervisors to do such work. However,
and suggested that OSHA adopt the OSHA believes that adoption of CAL- ABC also stated that a qualified
CAL-OSHA Title 8 standards as the OSHA standards as the National engineer would be appropriate in
National "standard practice" (Exs. 4-28, "standard practice," as suggested by complex cases such as excavations
4-35, 4-37, 4-82, 4-102, 4-106 4-109 and some commenters, would not be under foundations and trenches deeper
4-115). Another commenter (Ex. 4-96) appropriate as those standards were than 15 feet.
favored OSHA providing this type of developed regionally for local interests, Several other commenters, such as W.
data as an alternative to the use of an and are not recognized nationally as M. Lyles Co., Kaweah Construction Co.,
engineer, but made no suggestions as to appropriate for all regions. However, ARB, Inc., and Herman Weissker, Inc.
a specific source that OSHA should use OSHA notes that the flexibility of the (Exs. 4-5 and 4-82, 4-13, 4-102 and 4-
for these data. final rule permits California contractors 109), objected to the suggestion of
On the other hand, several to use any standard approved by a limiting design responsibility to a
commenters disagreed with the registered professional engineer, while "qualified engineer" because of severe
incorporation of a standard practice. In contractors in other states may choose cost implications; however, they
particular, the Building and Construction to use other standards which are equally supplied no specific cost data or
Trades Department (BCTD) of the AFL- effective, and which reflect the supporting rationale. These commenters
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45899
also objected to the suggested use of a this is a current business practice. The at every excavation, and that
registered professional engineer, stating commenter also stated that they knew of experienced supervisors would no
that they felt experience and training no evidence to support the fact that longer be able to determine the selection
were more important than registration injuries and fatalities would decrease by of protection systems. This was not
as an engineer. However, the the presence of a "qualified engineer" at OSHA's intent, and, as discussed later
commenters did not indicate what the excavation site. in the preamble, the Final Rule will
amount of experience or training would Lone Star Gas Company (Ex. 4-105) clarify the point.
qualify a person to do this type of work. stated that limiting design responsibility Most of the commenters on this issue,
In addition, these commenters to "qualified engineers" would exclude as well as the ACCSH, supported
apparently misinterpreted the proposal individuals who are fully capable of limiting design responsibility to an
as requiring an engineer's involvement performing the required.duties, but do "engineer." However, many of the
with every excavation because they also not possess an engineering degree. Lone commenters, along with the ACCSH,
noted that their firms do not employ Star also noted that the risk of injury in recommended that the proposed
engineers to be involved with every an excavation designed by an "qualified engineer" be changed to
excavation. unqualified engineer or person would be "registered professional engineer." In
Three commenters (Exs. 4-82, 4-102 high, and that design of high risk order to solicit public input on a
and 4-109) noted that the State of excavation, i.e., excavations under the requirement for the use of a registered
California has laws which require such foundations of buildings, should very professional engineer, the Agency again
design to be done by engineers, but they likely be performed by a "qualified raised this topic in its Notice of Informal
objected to this becoming a national engineer." Lone Star also emphasized Public Hearing (53 FR 5280).
standard. The three commenters argued experience, training, number of years of Many of these commenters noted the
that they knew of no evidence that apprenticeship, and the type of soil in shortcoming of allowing design by a
requiring a "qualified engineer" to do which these individuals gained their "qualified person" and pointed out the
design work would reduce the risk of experience as being "objective criteria" difficulty of determining who is, in fact,
fatality or injury. They also contended to determine qualification. Lone Star qualified (Exs. 4-17, 4-27, 4-28, 4-37,4-
that the proposed definition of commented that the cost would range 75, 4-91, 4-101, and 4-114). In particular,
"qualified person" contained adequate from $30,000 on up for each job because Granite Construction Company (Ex. 4-
criteria for evaluation of an individual's each job would require an engineer on 28] stated that "While there may be
qualifications. site at all times. Lone Star also 'qualified persons' who by experience
Union Electric Company (Ex. 4-35) commented that it knew of no evidence and/or education can perform design
objected to limiting design responsibility to support the conclusion that requiring function, we feel the majority of people
to engineers, noting that their designs a "qualified engineer" would decrease who may fit the broad definition of
were often developed in the field or the risk of injuries and fatalities. 'qualified person' lack the qualifications
adapted to field conditions on site, Underground Contractors, Inc. (Ex. 4-
within accepted parameters. The 115), objected to limiting design necessary for design of excavation
Company also noted that the adequacy responsibility to "qualified engineers," protective systems, in the absence of
of their design was verified by company citing a financial burden. They standard practices." Granite did not
engineers. estimated the cost for engineers would support a requirement for a registered
The Carolina Branch of the be $60 to $100 per hour. The commenter professional engineer, and noted that
Associated General Contractors also objected to the use of "registered the cost for hiring a "qualified engineer"
(CBAGC) (Ex. 4-54) objected to limiting professional engineer" for the same should not fall disproportionally on
design responsibility to engineers in reason. Underground Constructors, Inc. small businesses because it would be
"routine situations." However, they also suggested OSHA consider passed on to the consumer.
noted that a "qualified engineer" should experience or specific safety training as Griswald Machine and Engineering,
be required in complicated situations, proof of qualification for designing Inc. (GME) (Ex. 4-27) noted that "a
'qualified person' is too subjective a
such as excavations under foundations protective systems. As an example, the
and trenches deeper than 15 feet. The commenter suggested qualification level of expertise," and recommends
*CBAGC also stated that they have no requirements of 10-20 years experience, that OSHA require that only a qualified
evidence that a qualified engineer would and noted that individuals who feel engineer, or a person working under the
improve safety. directly responsible for employees in the direction of a qualified engineer, be
The Laclede Gas Company (Ex. 4-88] field may in fact be better suited to this allowed to do design work.
commented that it was unnecessary to duty and more safety conscious than an The Washington Metropolitan Area
limit design responsibility to qualified outside "card-carrying engineer." Construction Safety Association
engineers, considering the definition of One other commenter, Schield (WMACSA) (Ex. 4-101) pointed out that
"qualified person," and noted that field Construction Co. Inc. (Ex. 4-56), dropping "qualified person" from the
experience is as important as formal although not specifically addressing standard .**. would ,appear to be in
training. Issud 2, commented that a registered the best interest of the industry. There is
The Public Service Electric and Gas professional engineer would not always no way to decide if a person is in fact
Co. (Ex. 4-89) commented that company be more qualified than a contractor who qualified. Anyone can say he or she is
supervisors trained in the proper has the experience with trench qualified by reason of extensive
application of existing standards and protective systems. experience, knowledge, and training.
aware of field conditions are their The Agency notes that many of the The lack of any method to prove or
primary means of controlling on-the-job commenters opposed to a requirement disprove this could be very expensive to
safety. The commenter recognized the limiting design responsibility to a any employer." WMACSA also noted
need for a "qualified engineer" to do "qualified engineer" misinterpreted the that under the proposal, if a company
basic planning and design on large proposed requirement, and concluded, could not afford to hire an engineer,
projects such as building construction, as evidenced by maniy of the above there were a great many other options
tmnel construction, and major comments, that such a requirement available for providing protection which
infrastructure installation and noted that would require an engineer to be on site would not require the services of an
45900 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
engineer. WMACSA commented that It engineer. The commenters suggested PGT also noted that an engineer
would be difficult to prove that requiring that a qualified engineer should be a would be required only if site conditions
a "qualified engineer" would decrease registered professional engineer, for required specific expertise in evaluation.
injuries and fatalities. WMACSA also legal reasons. The commenter noted that or if the employer felt that through
recommended that a "qualified licensed engineers carry Insurance special design he or she could realize a
engineer" be a professional engineer which is negated if all applicable laws, project savings. PGT further commented
registered in the state where he or she ordinances, rules and regulations of any that In neither case would this
works, because the registered engineer Federal, state or local government are requirement adversely impact small
works with a license that can be not followed. Additionally, the business, and that without such a
withdrawn for cause. The commenter commenter noted that improperly requirement costly and fatal accidents
also pointed out the difficulty for OSHA designed excavations can only be cured would continue to occur.
to set standards for an individual by proper design and accurate The National Utility Contractors
designing protective systems and construction. The commenter also Association [NUCA) (Ex. 4-91) endorsed
evaluate and certify candidates, and pointed out that solving design problems the use of a registered professional
notes that this would be impractical. in the beginning (before digging begins) engineer or a person working under the
Finally, the commenter also noted that decreases costs. direction of a registered professional
with all the options available, the use of Pacific Gas Transmission Co. (PGT) engineer. NUCA pointed out the
an engineer should seldom, if ever, be (Ex. 4-37) supported a requirement for difficulty of proving or disproving the
required. design by a qualified engineer. The qualifications of a qualified person.
Speed Shore Corporation (Ex. 4-114) commenter noted that: NUCA also noted the liability
stated that allowing a "qualified person" While we respect the importance of consequences of using a qualified
to design an intricate, detailed safety qualified persons in the development of the person. Cost figures provided by the
system would provide a "loophole," area of trench protection, we feel it is now commenter indicate total design of a
explaining that terms such as "extensive time to rely on the training and tools of the protective system would cost
knowledge, training and experience" are qualified engineer to provide this service. approximately $3,000, but did not
too general to use for properly qualifying Both the qualified engineer and the qualified provide specfic details as to the type of
individuals. Speed Shore strongly person have the same physical tools to work. system or size of project this cost
recommenoled that protective systems with: soil type, plasticity, water content, represents. In addition. the commenter
not utilizing the other more specific weight, compaction, etc. The difference is in pointed out that small contractors do not
options should be designed by a how these tools are used. Through his bid work where such levels of expertise
qualified engineer who works under training the engineer is able to apply are necessary.
registration and a code of ethics sometimes complex engineering techniques to . The Los Angeles Section of the
applicable to his field. design a trench protection system. The
qualified person gets his engineering training American Society of Civil Engineers
The Building and Construction Trades through trial and error. The preamble to the (LAASCE) (Ex. 4-75) supported the use
Department (BCTD) of the AFL-CIO (Ex. PRM indicates that this trial and error of registered professional engineers. The
4-17) recommended eliminating process is costing time and lives. commenter noted that under the
"qualified person" from the standard
Although the commenter did not California State Plan, an alternate
because, in their view, there is no way shoring design (i.e., one not specifically
to determine if a person is in'fact directly recommend the use of a permitted in the California standard) for
qualified. They also supported the use of registered professional engineer, several excavations under 20 feet in depth, and
a registered professional engineer, comments indicated that PGT did in fact all shoring designs for excavations over
noting that registration is a state support this concept. For example: 20 feet in depth, must be prepared by a
prerogative, and that engineers are First of all, if the qualified engineer is also civil engineer registered in California.
registered to protect the public for the a registered engineer, he is legally liable for The commenter also noted that because
same reasons and in the same manner his work. If he continues to provide faulty of this requirement, the safety record of
as physicians and attorneys. BCTD design he is no longer allowed to practice. California has been exemplary
argued that it-would be hard to find And the preamble to this PRM indicates that compared to the rest of the nation. The
"prima facie" evidence to support the the majority of excavation accidents result LAASCE also commented that allowing
conclusion that requiring an engineer from the use of designs or systems selected, design preparation by a "qualified
would decrease the risk of injury and prepared or implemented by unqualified person" would be considered a
noted that it would be just as hard to personnel. significant lowering of safety standards
prove that an attorney practicing at "the PGT feels that this responsibility should be
given to qualified engineers. It should be for the construction industry and also a
bar decreases client risk. The noted that this responsibility may already be possible undermining of professional
commenter also pointed out the delegated to registered engineers in some engineering standards. The commenter
difficulty of incorporating criteria into states (e.g., California) and that under most also stated:
the standard to define who would be extraordinary conditions it would be prudent We would prefer to see registration as a
qualified to design protective systems, for the employer to hire a consultant or use civil engineer a requirement in the definition.
and, as an example, suggested that in-house engineers to protect his employees This would totally relieve OSHA of the
OSHA consider the difficulty of as well as avoiding damage to adjoining responsibility of determining a person's
incorporating a surgeon's education into properties. qualifications to design shoring. Each State
a health standard. BCTD also notes that In certain states only registered engineers has its own criteria of what is acceptable to
the options available in the standard may call themselves "engineer." The them for a person to practice engineering. It
would avoid the necessity for hiring registration process is the only nationwide would also make enforcement by OSHA
certification program in place that attests to inspection personnel much easier when
engineers in most cases. the suitability, through education and questioning the qualifications of the person
Rader, Addision and Story (Ex. 4-1) experience, of a person to do the required responsible for a shoring design.
supported the use of "qualified work. As we said earlier, the registered Qualified engineers use the physical laws
engineer" but pointed out the potential engineer is legally liable for his work and in of nature'to estimate applied loads and the
controversy as to who is a qualified some states personally liable. strength of construction materials with
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45901
appropriate factors of safety to ensure engineer" for alternative design person" or "qualified engineer," nor the
against all possible failures of a proposed (anything other than a standard substitution of registered professional
shoring system. A wealth of data is available
to help a qualified engineer predict the
practice) and for any design for engineer.
behavior of a proposed shoring system. A excavations deeper than 20 feet. The The Associated General Contractors
person designing by "experience" has but one commenter stated that their organization of California (Ex. 8-18) did not support
method to establish his limiting design could not cite any evidence that the use of the term "registered
criteria. That method is to encounter a design requiring designs by qualified engineers professional engineer."
failure in actual practice and relate that to would decrease the risk of injuries and The Carolina Branch of the
future designs. Unfortunately, the application fatalities, but noted that they were not Associated General Contractors of
of this design technique may come at a high aware of any failures of engineered
price in injuries and lives. This method of America (Ex. 8-19) agreed with the use
design should be as totally unacceptable to
plans which were properly followed. of a registered professional engineer in
OSHA as it is to us. The AGC of California did not support special situations, but recommended
the use of a registered professional retention of the term "qualified person,"
The commenter did not support engineer, but noted the qualified because of the implied experience
including criteria for qualifications of engineer must have expertise and skill factor.
persons designing protective systems, in structural design and soils mechanics.
noting that it would require the
Several commenters (Exs. 8-21, 8-22,
The commenter also confirmed the cost 8-26, and 8-29) responded to the hearing
establishment of an "OSHA Board of data supplied by the LASACE (Ex. 4-75)
Registration." Such a board would
notice with objections to using the terms
discussed above, citing hourly fees of "qualified person" or "qualified
duplicate State licensing boards, which $65 to $75, and complete shoring plans
are currently an adequate means of engineer" for design work, but did not
for small to medium projects at $200 to address the use of registered
setting qualification criteria. Cost data $800.
supplied by the commenter indicated professional engineer. However, these
Other commenters, like the State of commenters did not state clearly
that the cost for shoring drawings for a California, the Michigan Department of
typical $500,000 project would run about whether their comments were support
Labor, and Schield Construction (Exs. 4- for the use of a registered professional
$800, and noted that often these cost , 4, 4-46 and 4-56) did not address Issue 2
were recovered by increased efficiency. engineer or an objection to any limiting
directly, but supported limiting design of design responsibility.
Finally, the commenter raised the responsibility to a "qualified engineer"
following legal issue: The South Dakota Engineering Society
or a registered professional engineer
(Ex. 8-24) was in total support of the
One other question not asked in your (California) in their comments on the ACCSH recommendation to use a
proposed rulemaking, but one that is standard.
certainly pertinent, is "Does the recognition registered professional engineer.
The comments received prompted
of experience as a qualification for shoring OSHA to seek additional information in Southern California Gas Company
design conflict with any existing laws? the hearing notice (53 FR 5280) on the (Ex. 8-25) commented that the use of a
In the State of California, the practice of suggestion that a registered professional registered professional engineer in lieu
civil engineering requires that an individual of "qualified person" or "qualified
be licensed with the Board of Registration for engineer be required instead of either a
"qualified person" or "qualified engineer" was unnecessary, but
Professional Engineers. Other states have
engineer" for all original design work, provided no rationale for this statement.
similar statutes which would be in conflict The Texas Department of Highway
with your proposed rulemaking. In the event for the development of all original
of a civil action regarding a trench bracing tabulated data, and for determinations and Public Transportation (Ex. 8-27)
failure, what will be a defendant's position regarding the stability of adjacent recommended that OSHA not require a
regarding compliance with the law if a "registered professional engineer" to
structures. In response the Agency
workman is injured or killed while working in perform the work required in the
a trench shored in accordance with an
received the following comments:
Peoples Gas (Ex. 8-6) commented that standard, but did recommend "the most
unprofessionally prepared shoring plan? -competent possible person be used to
most companies use qualified engineers
The Structural Engineers Association of from within the company to examine insure safety in excavation work."
Southern California (Ex. 4-80) special cases. Mr. William E. Patten (Ex. 8-3) did not
commented in support of the LASACE The W.M. Lyles Co. (Ex. 8-7) objected specifically address this issue, but in his
position, favoring the use of a registered to the suggested requirement for a comments suggested design by a
professional engineer. registered professional engineer. The qualified engineer for any alternative
Consultant Services Institute, Inc. commenter's objection was basically the means of protection.
(CSI) (Ex. 4-64) Was strongly opposed to same as the previously discussed In addition to the comments received
the use of a qualified person, and objections to a requirement for a specifically addressing Issue 2, OSHA
recommended that the standard require "qualified engineer" (Exs. 4-5 and 4-82). also received comment on other
a qualified civil or soils engineer The Exxon Company (Ex. 8-10) provisions of the standard which relate
licensed in the state where the work is commented that its procedure involved to this issue and are discussedhere in
being done. performing soil borings and laboratory order to provide a complete discussion
Neyer, Tiseo and Mundo, Ltd. (Ex. 4- analysis of soils, and based on the of this Issue in one place. The following
71) also opposed allowing design by results, its "qualified engineers" apply comments were received on proposed
anyone who is not an engineer. The previously developed equations to § 1926.650(b)(14), which defined
commenter noted that design tables and calculate a stable slope. Exxon noted "qualified person."
charts should not be used by people that possession of an engineering license Granite Construction (Ex. 4-28) agreed
who are unfamiliar with soil mechanics is not required to apply these equations with the criticism of the definition of
since the user must know how soils will safely. "qualified person," as discussed under
behave in order to use the charts and The Milwaukee Construction Industry Issue 2, and also raised an objection to
tables properly. Safety Council and the Associated allowing the competent person to
The Associated General Contractors General Contractors of America (Exs. 8- choose among the options allowed in
(AGC) of California (Ex. 4-106) 14 and 8-16) commented, that they did § 1926.652(b) and (c). The commenter
endorsed the use of a "qualified not support deletion of "qualified noted that this could be dangerous
45902 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
because there was no limit on the depth The Agency disagrees with those state, and would make enforcement by
of excavation for which this person was commenters who suggest that OSHA easier in regards to the
permitted to choose or to design experience, per se, qualifies an qualifications of the person responsible
protective systems. individudl to design protective systems. for any design.
. The National Institute for The principles of soil mechanics are too The wording of the Final Rule,
Occupational Safety and Health complex to learn on a trial and error requiring approval of original designs by
(NIOSH) (Ex. 4-30) recommended tying basis. In addition, OSHA notes that "a registered professional engineer"
the qualification of a "qualified person" many of the commenters that supported recognizes the industry practice where
to the opinion of a registered engineer design by a "qualified person" conceded junior engineers, engineers-in-training,
with required documentation of that that engineers were necessary in some or non-engineers may, in fact, develop
opinion. OSHA notes that the Final Rule situations, or stated that field-developed the actual design, but the design is
recognizes this type of arrangement by designs were verified by engineers (Exs. verified and approved by a registered
not specifying who designs a set of 4-35, 4-54, 4-78, 4-105, and 8-6). professional engineer.
plans or tabulated data, but requires The Agency wants to emphasize that Finally, OSHA agrees with the many
that plans or data be approved by a this decision does not limit the commenters who recommended that
registered professional engineer. The employer's ability to use supervisors excavations under foundations,
Agency does not require the who meet the criteria for competent excavations deeper than 20 feet, and
documentation suggested by NIOSH but persons to choose protective systems excavations where unusual site
notes that the "responsibility" for the from the numerous other options conditions exist require the expertise of
design rests with the registered available. OSHA notes that these an engineer in all cases. The Agency has
professional engineer. persons are permitted to design revised this final rule to reflect these
Exxon Pipeline Company (Ex. 4-53) protective systems using the appendices concerns. Therefore, with respect to the
recommended that OSHA allow the to Subpart P, manufacturers data, or issues, the agency has determined that
competent person to design less other tabulated data, in accordance with revision of the standard is justified and
complex protective systems. The this Final Rille. However, they may not promulgates the standard as revised.
Agency notes that in the Final Rule the develop original designs (i.e., those not Issue 3 of the proposed rule (52 FR
competent person is permitted to design based on any of the other options), 12294) sought to determine if OSHA
protective systems under the limitations unless the supervisor is also a registered should require specific visual or manual
of the appendices, manufacturer's data, professional engineer or has the design tests when using proposed appendix A
or other tabulated data without an approved by a registered.professional to classify soils.
engineer's approval. In addition, the engineer. e OSHA received 17 responses to this
competent person can develop original The Agency also notes that this issue (Exs. 4-3, 4-5, 4-13, 4-17, 4-28, 4-
designs, but these designs must be revision does not mean that an engineer 35, 4-37, 4-57, 4-82,4-88, 4-91, 4-101, 4-
approved (simply by stamping and must be on site at every excavation, as 102, 4-105, 4-106, 4-109, and 4-115).
signing the design) by the registered suggested by some commenters. Although the rationale expressed in
professional engineer before use. In addition, OSHA has determined these responses differed, almost all
Finally, the BCTD and WMACSA 'that the term "qualified engineer" commenters agreed that a specific
(Exs. 4-17 and 4-111) recommended should be replaced by the term •test(s) should not be required. One
elimination of the term, "qualified "registered professional engineer" in the commenter, Union Electric Co. (Ex. 4-
person" as they did in their direct final rule. This decision is based on 35), observed that mandated testing was
response to Issue 2. evidence in the record which unnecessary because most soils can be
After careful consideration of the demonstrates the need for original classified by visual analysis. OSHA
comments received, OSHA has designs to be developed by a person disagrees with this observation because
determined that the term "qualified whose qualifications in this field have of the complexity of soil make-up and
person" should be dropped from the been demonstrated and are readily the number of conditions that affect soil
standard. This decision is based on the recognizable. The Agency agrees with stability. On the other hand, most
evidence in the record which indicates the commenters who point out the commenters agreed that some type of
that most of the individuals who fit this difficulty OSHA would have in soil testing is necessary, but that the
broad definition lack the qualifications establishing criteria, evaluating method of testing should be left as an
necessary to do original design work .individuals and certifying these employer prerogative. OSHA agrees that
and may often have insufficient individuals as qualified to develop soil testing is-necessary, but has
incentive to provide adequate protection original designs for protective systems. determined that mandating a specific
to employees. The Agency agrees with The commenters also note that such a test would lock in current procedures
the many commenters who point out process would be impractical and a and discourage new development
that the proposed definition of duplication of state licensing boards. Therefore, with respect to this issue, the
"qualified person" was so broad and OSHA recognizes that the registration Agency promulgates the standard as
subjective that almost anyone with process is the only nationwide proposed. A complete discussion of
construction experience would meet the certification program in place that acceptable tests is provided below in
requirements and, therefore, be attests to the qualifications of a person the summary and explanation of
permitted to design protective systems to do the required work. OSHA also appendix A.
for excavations. The Agency's position recognizes that registered professional Issue 4 of the proposed rule (52 FR
is supported by commenters, like Johns engineers are legally liable for their 12294) solicited public input on
Hopkins University (Ex. 4-11), who work, work under a code of ethics, and §1926.652(b), which would permit
highlighted the frequency of accidents have a license which can be withdrawn employers to have a steep slope for
where experienced "qualified persons" for cause. The Agency also notes that excavations open less than 72 hours
dug unprotected excavations which the current registration system allows (short term), but which would require
caved in, resulting in unnecessary each state to establish the criteria flatter slopes for excavations open
fatalities and injuries. necessary to practice engineering in that longer than 72 hours (long term).
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45903
OSHA received 16 comments on this that, while there is no scientific basis to with one of the other options provided,
issue, and additional input from the delineate short time exposure, time must and, therefore, may use different slopes
ACCSH. be considered to some extent in the from-those listed. The Agency realizes
Several commenters (Exs. 4-5, 4-13, 4- regulation because long term stresses that the allowable slopes and required
28, 4-57, 4-82, 4-102, 4-106 and 4-109] are different from short term stresses. soil classification system in Appendix A
disagreed with the concept. Many of The Agency points to documents in the may, in some instances, be conservative,
these commenters assumed this record (Ex. 2-1 p. 2-3 and pp. B-44 and but believes this is necessary since this
provision would create a paperwork B-47 and Ex. 2-5 pp. 20, 21, 28-30 and option is intended for use by field
burden, and felt any time frame 70-71) which support the recognition personnel, without benefit of laboratory
established would be arbitrary. They and use of short term/long term time generated soils analysis.
also pointed out that the effect of time frames for sloping. One commenter (Ex. OSHA has also determined that the
on an excavation depends on the type of 41) submitted several studies to the time frame for differentiating long term
soil, and noted that weather, vibration, record which support the use of this from short term excavations in the case
water, and superimposed loads must practice. of Type A soil should be reduced to 24
also be considered. In addition, these However, because of the great hours. Although there was no clear
commenters pointed out that there is no concern expressed by many commenters consensus on a time frame, this period
technical or engineering basis for regarding soil type and environmental has more support in the record than the
establishing any specific time frame to factors, the Agency has determined that proposed 72 hours or the one work shift
differentiate long term or short term, and it is appropriate to limit the use of recommended by the ACCSH. This
that this concept should not be made steeper slopes for short term exposure to decision also is in line with the Agency's
part of the standard. One of these Type A soils, as defined in appendix A. belief that it is best to have an
commenters, the AGC of California (Ex. These soils have the greatest strength, excavation open for the shortest
4-106), asserted that the proposed next to stable rock, and field experience reasonable amount of time. OSHA
provision would be overly restrictive, has shown that these soils can stand on believes that a period of time less than
and supported slope angles presented by a slope steeper than % horizontal:1
R.T. Frankian which, for simple slopes,
24 hours could be disruptive and would
vertical (as prescribed in Table B-1 of not be appropriate, in light of the other
were somewhat similar to the short term the Final Rule) for short term exposures
slopes presented by OSHA'in the
requirements in subpart P, such as
to a depth of 12 feet and still provide § 1926.651(k) which requires daily
proposal. adequate employee safety. inspection of the excavation.
Another commenter, Underground OSHA disagrees with those
Contractors, Inc. (Ex. 4-115), suggested Therefore, based on the above
commenters who believe this concept discussion OSHA promulgates the
that the passage of time should not be would create a paperwork burden. The
recognized in the standard, but provided Agency notes that no recordkeeping standard, as revised, in regard to this
no rationale. burden was required or implied in the issue.
One commenter, the Tennessee Valley proposal. The Agency believes the Issue 5 of the proposed rule (52 FR
Authority (Ex. 4-39), argued that only information needed to verify the amount 12295) raised ACCSH suggestions that
one set of slopes should apply to of time the excavation is open can be design specifications for shields be
excavations, the ones that provide the readily obtained by questioning available at the worksite, and that
greatest protection regardless of the. employees on site. shields should be certified that they can
time the excavation is open, while While the Agency accepts the withstand the specified maximum loads.
another commenter (Ex. 4-78) argued argument that no-specific time frame has The proposal also asked for information
that protection should match site scientific backing, and that selection of on the effects of such requirements on
conditions, not time. a time frame, to some extent, is manufacturers and users, and for
Another commenter, Lone Star Gas arbitrary, OSHA believes the amount of information on current industry practice.
(Ex. 4-105), asserted that time definitely time an excavation is open does play an OSHA received 14 comments on this
has an effect on the stability of an important role in employee protection. issue. Eight commenters opposed a
excavation, noting, however, that 72 The Agency raised this issue in order to requirement for design specifications to
hours may not be the appropriate determine a reasonable time frame for be available on site. Four of these
dividing line. The commenter provided a distinguishing between long term and commenters (Exs. 4-82, 4-102, 4-106, and
qualified endorsement for a 24 hour cut short term excavations. OSHA also 4-109) argued that design specifications
off, but noted that the effects of the notes that this short term/long term contain proprietary information and -
environment should be the basis for concept must be used with the soil, should not be available on site. These
calculating time limitations. classification system in Appendix A, commenters did recommend that the
Other commenters (Exs. 4-17 and 4- which recognizes other important design maximum load for the shield be
101) noted that the critical time is when conditions that affect soil stability. displayed on the shield. Two other
the trench is first opened and These other conditions were also noted commenters (Exs. 4-35 and 4-115)
recommended that "short term" should by many commenters. recommended that these specifications
be considered to be 24 hours or less. OSHA disagrees with the AGC of should not be on site, but should be
Two conmmenters (Exs. 4-27 and 4-91) California (Ex. 4-106) position that a made available to OSHA upon request
endorsed the proposed handling of short long term/short term'concept is overly within a reasonable amount of time.
term/long term as a necessary restrictive. The Agency notes that the Another commenter (Ex. 4-54) noted
improvement, with one commenter (Ex. slopes proposed by OSHA on that basis that "paper at the jobsite inhibits
4-91) enthusiastically supporting the 72 were less stringent in many cases than attention to productivity and safety."
hour dividing time. those already required by the State of The last commenter (Ex. 4-57) to
In addition, the ACCSH (Tr. 8/5/87 p. California. In addition, OSHA notes that disagree with the proposed requirement
520) suggested the time division be the use of long term/short term for design specification availability at
reduced to one work shift or eight hours. distinction is only one of the options the worksite also noted that the
After careful consideration of the available to employers under specifications often contain certain
entire record, OSHA has determined § 1926.652(b). The employer can comply proprietary information and would be of
45904 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
minimal value on site. The commenter Another commenter (Ex. 4-105) stated Another commenter (Ex. 4-37) stated
went on to state that what would be that such a requirement would likely that the surface disturbance resulting
more important to have at the site are eliminate shop-built protection, and from construction provides enough
installation and placement instructions, would require an engineer on each job. delineation. A third commenter (Ex.
drawings, allowable load restrictions, On the other hand, two commenters 4-105) noted that it is present practice to
weights, lift points and maintenance (Exs. 4-17 and 4-101) agreed that provide such warnings except for
instructions. specifications necessary for the proper trenches of great length.
Three commenters (Exs. 4-27, 4-28, use of the support system should be on Two commenters expressed strong
and 4-78) supported the suggestion to site while the system is in use, in order support for such a requirement. The first
require shield design specifications to be to enable the employer to make commenter, BCTD (Ex. 4-17),
available at the job site. Two other modifications to the system if necessary. recommended that this requirement be
commenters (Exs. 4-101 and 4-105), in The'se commenters alsonoted that implemented at multiple contractor
addition to supporting the suggestion, reputable manufacturers already furnish worksites because employees not
noted that manufactured shields usually this type of information for their directly involved with the excavation
have the load requirements stamped on product. This was also confirmed by may not be aware of the specific
them, and also noted that design testimony presented at the informal location of the excavation. The second
specifications are easily obtained from public hearing (Tr. 4/19/88, p. 184). commenter (Ex. 4-39) noted that a
the manufacturers. Finally, one Another commenter (Ex. 4-28) warning system not only protects
commenter (Ex. 4-14) recommended that recommended that design plans and workers not directly involved in the
design specifications, which indicate the specifications for support systems be excavation, but should help to maintain
circumstances under which the shield available at the job site for any unusual the stability of the excavation by
can be used, should be on site to enable or alternate design. keeping mobile equipment away from
a competent person to know how to use One other commenter (Ex. 4-37) noted the edge of the excavation.
the shield properly under changing soil that if the system is designed by an On the other hand, many other
conditions. engineer, the requirement would have commenters disagreed with this type of
OSHA has determined that detailed little effect on the employer, since a set requirement. Several commenters (Exs.
drawings, which usually contain of drawings would be on site anyway. 4-5, 4-13, 4-82, 4-102 and 4-109) implied
proprietary information, would be of Based on the record, OSHA has that this type of requirement will not
little use on the job site because the determined that the information prevent falls into excavations, because
Agency has no way to confirm certain necessary for the safe installation, most falls are the result of inattention.
criteria, such as the grade of steel used placement, use, and removal of a The commenters also noted that falls
in a shield. However, as suggested by support system must be available at the occur despite the fact that employees
several commenters, the Agency will work site. Further, the Agency has are aware that excavation activity is
require that information necessary for 'determined that this information is being undertaken. Another group of
the safe installation, placement, use, and usually supplied by, the manufacturers of commenters (Exs. 4-57 and 4-115) noted
removal of a shield must be on site. these support systems when the systems that warning barriers would only result
OSHA has also determined, based on are delivered to the site or to the user. in more problems, because they would
the above comments and testimony Therefore, with respect to this issue, the become additional obstacles in the work
pfesented at the informal public hearing Agency is promulgating the standard as environment, and material, such as
(Tr. 4/19/88 p. 184), that most revised. shoring, would have to be moved
manufacturers already provide the Issue 7 of the NPRM (52 FR 12295) around, over or under these obstacles,
above information with their product, solicited comments on an ACCSH creating other unspecified hazards.
and, therefore, such a requirement will recommendation that OSHA require Finally, several commenters noted
not impose a significant burden. some form of warning along the edges of that this type of requirement is
Therefore, with respect to this issue, the excavations that are five feet or more in impractical and unnecessary (Ex. 4-28)
Agency is promulgating the standard as depth to warn employees who work because many types of work, such as
revised. adjacent to excavations, but who are pipeline excavations, are completed or
Issue 6 of the proposal (52 FR 12295) not directly involved with the move from one area to another too fast
solicited input on a suggestion to require excavation activity, that a fall hazard for barricades to be effective (Ex. 4-91),
design specifications (a plan or drawing) exists. and their use should be left to the
and a statement of a support system's The Agency received 17 comments on discretion of the employers as site
limitations to be available at the this issue. Two commenters (Exa. 4-54 conditions require (Exs. 4-35 and 4-106).
worksite. OSHA received 10 comments and 4-161) supported such a Additionally, one commenter (Ex. 4-19)
on this issue. Three commenters (Exs. 4- requirement, but supplied no rationale. noted that contractors working at one
82, 4-102, and 4-109) stated that it would One of these commenters (Ex. 4-54) site for any length of time normally
be unreasonable to require design indicated that a barrier bank (the spoil provide this type of protection as a
specifications for support systems to be pile) was itself an effective means of matter of course.
on site, but noted that the requirement warning. OSHA appreciates the input received
should be for the employer to furnish the Other commenters (Exs. 4-37, 4-49, on this issue. However, the Agency has
design specifications to OSHA, given and 4-105) noted that .a requirement for determined that this subject is more
reasonable notice. Two other some kind of warning along the edges appropriately addressed in its Final Rule
commenters (Exs. 4-106 and 4-115) might be appropriate for some revising subpart M, "Safety Standards
objected to the proposal that design excavations but was impractical for for Fall Protection in the Construction
specifications for all (emphasis added) larger (longer) excavations such as Industry," (Docket S-206) which is on
support systems be maintained at the pipeline excavations. One commenter OSHA's Regulatory calendar for
job site. These commenters noted that (Ex. 4-49) pointed out that most publication in the Federal Register later
under CAL/OSHA, only alternate or pipelines go through remote areas with this year. The proposal was published
special designs must be made available. little potential for unwarranted access. on November 26, 1986 (51 FR 42718).
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45905
The revised subpart M will also constantly for signs of danger when Several commenters (Exs. 4-5, 4-13, 4-
incorporate the fall protection employees are in an excavation. This 37, 4-82, 4-88, 4-102, 4-106, and 4-109)
requirements in existing § 1926.651(t). issue also solicited input on the extent noted that it is industry practice to have
Therefore, in respect to this issue, the to which such a requirement would a "top person" in many situations, but ,
agency promulgates the standard as increase safety, on other duties that that not every situation requires one.
proposed. could be assigned to the "top man," on Most of these commenters also
In Issue 8 of the proposed rule (52 FR the responsibilities the "top man" indicated that even when needed, a "top
12295) OSHA solicited public comment should have; and on the cost of such a person" could perform other duties in
on the ACCSH recommendation that a requirement. many situations without detracting from
written log or record of all required OSHA received 20 comments on this the safety function. Additionally, three
inspections be kept at the job site. issue, including input from the ACCSH of these commenters (Exs. 4-82, 4-102,
OSHA received 16 responses to this (Tr. 8/5/87 p. 477). The ACCSH and 4-109) pointed out that limiting this
issue. An overwhelming majority of the recommended that a "top person" (as person's functions could decrease rather
commenters opposed such a opposed to "top man") be defined as "a than enhance safety because of
requirement. Most of these commenters person at the top of the excavation boredom and the accompanying lack of
(Exs. 4-5, 4-13, 4-35, 4-57, 4-82, 4-91, constantly in visual and oral contact attention.
4-101, 4-102, 4-106, 4-109, and 4-115) with the workers in a trench or Other commenters (Exs. 4-28, 4-37, 4-
stated that the benefit of a record to excavation, and able to recognize and
54, 4-78, 4-106, and 4-115) opposed this
verify inspection was questionable, and respond to hazardous trenching or requirement, commenting that it was
that a record could be falsified. Further, excavation conditions." Further primarily the foreman's (competent
they contended that the time spent by discussion by the ACCSH indicated that
person) responsibility, and a secondary
the competent person filling out a record the "top perso" should not necessarily
responsibility of other workers, to watch
of required inspections would be better be the competent person required by
proposed § 1926.651(k), but rather, could for signs of danger.
spent maintaining and improving worker
safety. Two commenters (Ex. 4-28 and be someone with less experience who is Two commenters (Exs. 4-35 and 4-
4-78), while disagreeing with the still able to rspond to hazardous 115) also pointed out that the job of a
proposed requirement for a written log, conditions and effect a rescue. The "top person" would be a boring job
noted that if other commenters rationale for this suggestion was that the where concentration would waver, and
established an overwhelming need for a competent person would be engaged in really would not provide any effective
written record, then a certification other activities (Tr. 8/5/87 p. 477-79.) protection or safety.
would be adequate. Other commenters, Three commenters fully supported the Two other commenters (Exs. 4-49, and
while not directly endorsing the use of a "top person." In particular, the 4-91) supported the need for an observer
recommended written log, noted that Building and Construction Trades on excavations five feet or greater in
maintaining a log of inspections might Department of the AFL-CIO (BCTD) (Ex. depth. Additionally, one of these
not be necessary if the competent 4-17) noted that a "top person" was commenters (Ex. 4-49) supported the
person were constantly vigilant (Ex. 4- essential for all trenches and for all intent of this provision on the condition
17), but that keeping records and logs excavations until a permanent that the person be able to perform other
would not add a financial burden protection system was in place. BCTD responsibilities which do not impair the
because the inspector is already on the also commented that reputable duty to watch for signs of danger. The
job site (Ex. 4-105). Finally, one contractors already j rovide a "top other commenter (Ex. 4-91) opposed a
commenter (Ex. 4-37) suggested that a person," that the "top person" would mandatory "top person" as described in
log be kept of conditions that vary from logically be the competent person, and this issue.
those for which the system was that the main responsibility of the "top After careful consideration of the
designed and of any subsequent actions person" would be the safety of the comments on this issue, OSHA has
taken to bring the system into workers. A second commenter, the
Washington Metropolitan Area determined that a requirement for a "top
compliance.
Based on the above comments, the person" for every excavation is not
Construction Safety Association
appropriate. The Agency believes that
Agency has determined that a written (WMACSA) (Ex. 4-101), indicated that
the responsibilities of a "top person" are
log or record of inspections is not such a requirement would improve
necessary. OSHA agrees with the already adequately assigned to the
safety. WMACSA also noted that the
competent person or his/her designee in
commenters who note the questionable logical "top man" would be the
value of a record in this situation. The competent person, that the primary the Final Rule. OSHA notes that the
information contained in a log can be responsibility would beworker safety, majority of the commenters supporting a
obtained by other means, such as and that many contractors currently ' specific requirement for a "top person"
communicating with the competent have a "top man." A third commenter, for all excavations agreed that most
person and with employees on the site, Lone Star Gas (Ex. 4-105), noted that a contractors, in fact, already have a "top
and by reviewing the elements of the "top man" is industry practice and person," who is also the competent
protective system being used by the serves to decrease the risk of injury. person.
employer. Further, OSHA agrees that Lone Star also commented that the "top Issue 10of the NPRM (52 FR 12295)
the time required to.fill out a log could man" should not perform any duties that solicited public input on a suggested
be better spent by the competent person would prevent the performance of his or fourth option for sloping, which would
ensuring worker safety. Therefore, in her safety function, and that the "top permit the use of tabulated data in the
regard to this issue OSHA promulgates man's" responsibilities are to warn same manner as such data would be
the final rule as proposed. those in the excavation of danger and to used in option three, which addresses
Issue 9 of the NPRM (52 FR 1295) remove workers in danger as quickly as shoring. The intent would be to allow
solicited input on whether or not the possible. the use of tabulated data, meeting
Agency should require that a "top man" Many other commenters objected,. specified requirements, in designing
be present to observe work conducted however, to a requirement for a "top sloping or benching systems in-a larger
within the excavation, and to watch person" for every excavation. geographic area than the proposed
45906 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
sloping option three, which is site Issue 11 of the proposal (52 FR 12295) too diverse a range of properties, and
specific. solicited comment on allowing have a different meaning in different
The Agency received 13 responses to employees to remain inside shields areas of the country. The commenter
this issue, with most commenters during repositioning of the shields. recommended allowing hardpan and
supporting the addition of a "tabulated Proposed § 1926.652(g)(1)iv) prohibits caliche to be classified as stable rock
data" option for sloping. employees from being inside shields locally, in accordance with the
Two commenters, (Exs. 4-37 and 4- when the shields are being installed, requirements of the standard. Another
91), disagreed with the addition of removed, or relocated. commenter (Ex. 4-101] made a similar
another option for sloping. The National OSHA received 14 responses to this recommendation.
Utility Contractors Association (NUCA) issue. After careful consideration of the
(Ex. 4-91) commented that this option Twelve of the commenters (Exs. 4-5, comments, OSHA has determined that
would add confusion to the inspection 4-13, 4-17,4-28, 4-78, 4-82, 4-91, 4-102, upgrading the classification of hardpan
process, and that the proposal already 4-105, 4-106, 4-109, and 4-115) endorsed and caliche from "Type A" soil to stable
provided enough latitude for the - permitting workers to remain in shields rock, on a national basis, is not
contractor to work outside the standard. during repositioning. Two of these appropriate. The Agency notes that
In addition, Pacific Gas Transmission commenters, BCTD and ABC (Exs. 4-17 much of the support for this upgrade is
(PGT) (Ex. 4-37) commented that this and 4-78), further stated that this tempered with recommended
option would not be appropriate given practice is acceptable if the shield is limitations. OSHA agrees with the
the variety of soil conditions in larger only moved horizontally and is not comments that these terms have a wide
geographic areas. PGT also noted that lifted.,Most of the other conunenters range of meanings in different areas of
seismic activity should be considered in stated that the Increased risk of falls the country. The Agency, however, does
design. that would accompany the'repeated exit not preclude such a reclassification if
However, most commenters supported and re-entry of a shield would make it done on a regional or site-specific basis,
this suggestion {Exs. 4-28, 4-49, 4-78, safer to remain in the shield. provided that the requirements of the
and 4-101). Several other commenters Two other commenters (Exs. 4-39 and standard are met. Specifically, this
(Exs. 4-82, 4-102, 4-106, 4-109, and 4- 4-101) recommended retaining the would require approval of a registered
115), in addition to supporting a prohibition on employees remaining in professional engineer, as required for
"tabulated data" option for sloping, shields being repositioned, but supplied the use of other tabulated data or site-
noted that this type of data is already no rationale. specific designs. Appendix A does not
available in California. These Based on the comments in the record, permit this reclassification.
commenters also recommended that, if OSHA has determined that employees Therefore, in regard to this issue,
the data meets the prescribed can remain safely inside a shield being OSHA promulgates the Final Rule as
requirements in the standard, the only repositioned, provided the movement of proposed.
other restriction should be that the use the shield is horizontal and the shield is Issue 13 of the NPRM (52 FR 12295)
is limited to the soil classifications and not lifted. Additionally, the Agency solicited comment on whether or not, in
geographic areas specified. Another agrees that repeated exiting and re-entry addition to § 1926.652(f), the Agency
commenter (Ex. 4-105) suggested that will increase the fall hazard to should prQvide more specific coverage
restrictions should apply in areas of employees. for bell bottom pier holes under a
previous excavation and backfill, and Therefore, OSHA has revised separate section of subpart P, and if so,
where excavations are close to proposed § 1926.652(g)(1)(iv) to permit what a separate new section should
structures. One other commenter (Ex. 4- employees to remain inside shields address.
17) noted that in addition to the criteria *being repositioned provided movement OSHA received nine comments on
listed in the issue, any tabulated data is horizontal and the shield is not lifted. this issue. Three commenters (Exs. 4-82,
used for sloping should have either Issue 12 of the NPRM (52 FR 12295) 4-102, and 4-109) opposed having a
political or professional stature in the solicited comment on a suggestion that separate section addressing bell bottom
locality where it is being used. hardpan and caliche be moved from a pier holes. Another commenter (Ex. 4-
After careful consideration of the "Type A" soil classification to a "stable 115) noted that bell bottom pier holes
comments, OSHA has determined that a rock" classification. should not be included in this standard.
"tabulated data" option for sloping is OSHA received 13 responses to this On the other hand, several commenters
appropriate. The Agency believes that issue. Most commenters supported this (Exs. 4-17, 4-72, 4-91, 4-101, and 4-106)
this addition will not add confusion to suggestion for a variety of reasons. agreed that bell bottom pier holes
the inspection process, because an Several commenters (Exs. 4-5, 4-13, should be addressed under a separate
employer using this option would be 4-57, 4-105, and 4-115) supported this section of this standard. Only one of
required to provide the tabulated data, change for at least some depth beyond those commenters (Ex. 4-72) provided
including instructions for the safe use of five feet, citing a cost benefit. Other any input as to what should be
the data, to the inspector during the commenters (Exs. 4-37, 4-82, 4-102, addressed in a separate section.
inspection. OSHA also notes that soil 4-106, and 4-109) supported the Based on the comments received, the
variations in larger geographic areas suggestion, but noted'that the hardpan Agency believes a separate section
would be adequately addressed by the or caliche must be consistent, uniform, covering bell bottom pier holes might be
standard, since this sloping option and continuous for the full depth of the appropriate in the future, but does not
would be required to be based on a excavation; it must also be dry; and the have sufficient data and information at
recognized soil classification system depth of the excavation must be limited this time to propose or promulgate such
which takes into account such to 12 to 15 feet ifndepth. One other - regulations at present. Therefore, in
variations. The Agency declines to commenter (Ex. 4-35) expressed support, regard to this issue the Agency
require consideration of seismic activity, but provided no rationale for the promulgates the Final Rule, as proposed.
because the Agency has no data on the support. Issue 14 of the NPRM (52 FR 12295)
subject and the commenter did not On the other hand, one commenter requested public comment on a
submit any supporting data. , (Ex. 4-17) noted that these terms have suggestion that OSHA allow the use of
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45907
established regional practices for the standards and practices could lead to on while the other (Ex. 4-101) used the term
construction of protective systems. The site conflict and misunderstanding. "qualified engineer" in its comment.
Agency also solicited comment on the OSHA has no evidence which.shows the Both recommended that OSHA require
criteria to be used to ensure that these recognition of other local standards the same design specifications that are
practices are effective. would cause any problems or lessen required for manufactured systems.
OSHA received 14 comments on this employee protection. In fact, comment The last commenter (Ex. 4-115)
issue, with most commenters supporting on this-issue indicates that compliance supported the flexibility of the proposal
OSHA's recognition of regional would be more likely if OSHA permits and noted that it could eventually save
practices for shoring or sloping. the use of local standards and practices millions of dollars.
Two commenters opposed the with which employees and employers After careful consideration of the
suggestion. One commenter (Ex. 4-91), are already familiar. comments received, OSHA has
while recognizing the importance of Finally, OSHA has'determined that determined that employers should have
regional practices, recommended that the most expeditious way to recognize sone flexibility in choosing a protective
these practices be subject to the existing these local standards and practices is to system for employees, but notes that, as
variance procedure. The other evaluate them using the same criteria discussed under Issue 2, original design
commenter (Ex. 4-37) opposed the use of required in the standard for "other will now require the approval of a
localized standards because they could tabulated data," because that criteria registered professional engineer. The
result in non-uniform standards and will ensure adequate employee Agency has also determined that
practices, which could lead to on site protection. specific information should be included
conflict and misunderstanding. Issue 15 of the NPRM (52 FR 12295) on the design, in order to provide a
Several commenters (Exs. 4-28, 4-35, solicited comment on allowing a greater minimum degree of safety, and
4-37, 4-78, and 4-101) expressed support degree of employer flexibility in the additional guidance should be provided
for recognition of regional practices, but design of protective systems. In by the system designer to employers
provided no criteria for evaluating these addition, OSHA requested input on the concerning the use proper of the design.
practices. Other commenters (Exs. 4-82, type of information necessary to ensure Therefore, in regard to this issue,
4-102, 4-106, and 4-109) supported design adequacy. OSHA promulgates the standard as
recognition of regional practices and OSHA received 13 comments on this revised.
suggested that evaluation criteria should issue, and all of the commenters
include approval by local authorities expressed support for the flexibility of Section 1926.650 Scope, Application
and a proven safety record. However, the proposed amendment. Several and DefinitionsApplicable to this
they opposed as unrealistic the OSHA commenters (Exs. 4-5, 4-13; 4-57, 4-82, Subpart
suggested requirement of five years of 4-102, and 4-109) noted that some Section'1926.650(a) states that this
successful use without failure. Another employers will be irresponsible no subpart applies to all open excavations
commenter (Ex. 4-105) supported the matter what the rules are. Four made in earth surfaces and that
suggestion, but noted that approval by commenters (Exs. 4-82, 4-102, 4-106, and excavations are defined to include
local authorities may be difficult. One 4-109) also recommended that OSHA trenches. Whenever the word
commenter (Ex. 4-115) supported the not specify factors to be considered in a "excavation" is used in the final
suggestion and agreed that approval of a design, but require instead that the standard, it applies to all excavations,
local authority should be an evaluation designs be in accordance with accepted including those also falling within the
criteria, but recommended that the engineering practice. definition of a trench.
authority be at a state or regional level. Other commenters, in addition to In the preamble of the proposed rule
Another commenter (Ex. 4-17) agreed supporting the flexibility allowed by the
with the use of regional practices, noting proposal, suggested several factors OSHA included a statement intended to
that this is more likely to lead to which should be included in the design clarify the Agency's jurisdiction with
of protective systems, in addition to soil regard to excavations which fall under,
voluntary compliance. However, the the authority of other Federal agencies.
commenter also noted the difficulty of tests and results, intended or expected
evaluating regional practices even if load conditions, environmental The statement noted that OSHA
approved by a political entity, and considerations, and design limitations jurisdiction does not apply to working
listed by OSHA in the proposal. These conditions which fall under the statutory
suggested that these regional practices authority of other Federal agencies to
have the support of engineering analysis additional factors include the extent of
followed by a trial period. vibration and depth of excavation (Ex. prescribe or enforce occupational safety
After careful consideration of the 4-105); surcharge, depth, and vibration or health regulations, if that authority is
comments, OSHA has determined that (Ex. 4-17); and ground water elevations, being exercised. This statement was
information oh and evidence of materials specification, required directe'd primarily at excavations
recognition of regional practices should monitoring devices, and dewatering (surface mines) covered by the Mine
be considered to be "other tabulated requirements (Ex. 4-37). Another Safety and Health Administration
data" on the practices in question, and, commenter (Ex. 4-28) suggested that (MSHA), because MSHA does prescribe
therefore, must meet the prescribed such designs be made by a qualified and enforce comprehensive regulations
criteria required in the standard in order engineer, using the criteria listed in the intended to ensure worker safety and
to be acceptable for use. issue, and that such designs be available health.
OSHA disagrees with the comment at the job site. The commenter also Almost half of the total number of
that these local practices should be recommended that OSHA not recognize comments received during the comment
subject to the variance procedure before standard practices for trenches deeper period were sent by companies involved
they are recognized. The Agency notes than 20 feet. in excavations related to natural gas
that the criteria for "other tabulated Two commenters (Exs. 4-17 and.4- pipelines. About 75 percent of these
data" will provide sufficient assurance 101) recommended dropping "qualified comments (e.g., Exs. 4-6, 4-8, and 4-14)
that these regional practices will protect persons" from the standard. One of the expressed concern with two of the
workers. The Agency also disagrees commenters (Ex. 4-17) recommended the proposed paragraphs,
with the comment that non-uniform us. of a registered professional engineer § 1926.651(g)(1)(iii), hazardous
45908 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
The proposal defined "bell-bottom entrap, bury, or otherwise injure and of identifying existing and predictable
pier hole" as "a type of shaft or footing immobilize a person." hazards in excavation work or taking
excavation, a portion of which is made , OSHA received two comments and an prompt corrective measures.
larger than the cross section above to ACCSH recommendation (Tr. 8/5/87, The Agency received only one
form a belled shape." OSHA received pp. 449-450) on this definition. Both the comment on the actual definition. The
three comments on this definition. CAL/ ACCSH and the Building and Michigan Department of Labor (Ex. 4-
OSHA and the Associated Builders and Construction Trades Department of the 46) recommended dropping the term
Contractors Inc. (ABC) (Exs. 4-4 and 4- AFL-CIO (Ex. 4-17) noted that the from the standard and making a
78) suggested the definition should read definition did not cover the loss of soil reference to either "qualified person or
"the bottom of which" not "a portion of from under a shield or support system. qualified engineer." OSHA declines to
which", since that more accurately The Agency agrees that the hazard act on this suggestion. The "competent
describes the situation. The other noted by the commenters needs to be person," as defined, is the appropriate
commenter, Talbert Corporation (Ex.4- addressed and has revised the final rule person to use whenever an assessment
72), suggested a completely revised to reflect this Input. The Carolinas of working conditions must be made
definition in conjunction with a new Branch of the Associated General with respect to safety. By definition, a
section on excavation of pier holes. The Contractors of America (CBAGC) (Ex. competent person is capable of
commenter's suggestions are discussed 4-54) supported the proposed definition recognizing hazards and has the
in detail under Issue 13 abcve. OSHA of cave-in, but recommended that the authority to correct them. By contrast, a
has determined that the'amendment term "hazardous moving ground" be "qualified" person or engineer, as
suggested by CAL/OSHA and ABC retained and properly defined. However, defined in § 1926.32(1l might have more
presents a more accurate description of CBAGC did not suggest a definition for technical expertise, but would not
the defined conditions. "hazardous moving ground" and did not necessarily have expertise in hazard
Section 1926.650(b) defines explain the rationale for recommending recognition or the authority to correct
"benching" as "a method of protecting the inclusion of another term which has identified hazards.
employees from cave-ins by excavating a similar if not identical meaning to OSHA did receive input from the
the sides of an excavation to form one ..cave-in." Therefore, with regard to this ACCSH (Tr. 8/5/87, p. 450) concerning
or a series of horizontal levels or steps, recommendation, the Agency declines to the explanatory note at the end of the
usually with vertical or near-vertical act. definition. The ACCSH recommended
surfaces between levels." This term is Based on the above discussion, OSHA deleting "or otherwise qualified" from
not used in the existing standard and promulgates this definition as revised. the note because it is ambiguous and
therefore was not previously defined. Section 1926.650(b) defines there is no other way to be qualified to
The definition in the final rule is "competent person." This definition is develop original designs unless the
virtually identical to the proposal, identical to the definition in § 1926.32(f) person is a registered professional
except that the word "from" has been of subpart C of the current Construction engineer. The Agency recognizes the
substituted for "against," based on a Safety and Health Standards. The term potential confusion that could result if
general comment made by the ACCSH is used throughout existing subpart P, the note remained, and has decided to
(Tr. 8/5/87, p. 448). No other comments but was not defined within the subpart, delete the -explanatory note from the
were received on this definition. and there were no references to the Final Rule.
Section 1926.650(b) defines "cave-in" existing definition in subpart C. In the Section 1926.650(b) defines "cross
as "the separation of a mass of soil or proposal, OSHA added the definition to braces" as "the horizontal members of a
rock material from the side of an subpart P to help those using the shoring system installed perpendicular
excavation, or the loss of soil from standard. In addition, an explanatory to the sides of the excavation, the ends
under a trench shield or support system, note was added at the end of the of which bear against either uprights or
and its sudden movement into the definition in order to clarify the wales." This definition is identical to the
excavation, either by falling or sliding, Agency's intent that the "competent proposed definition, and replaces the
in sufficient quantity so that it could person can act as the employer's existing definition "braces (trench)." In
entrap, bury, or otherwise injure and designee for the purpose of choosing a the proposal, the term "stringers" was
immobilize a person." The existing protective system from the options dropped from the current definitions and
standard did not use or define the term provided in § 1926.652 (b) and (c) below, replaced with the term "wales." The
''cave-in," but used the terms "moving but cannot take an original design existing standard defines "wales" and
ground" and "hazardous ground responsibility allowed by § 1926.652 "stringers" identically as "the horizontal
movement" instead. However, neither of (b)(3), (c)(3) or (c)(4), unless otherwise members of a shoring system whose
these terms was defined in the existing qualified." sides bear against the uprights or earth."
standard. In order to eliminate this Although the definition of "competent ,OSHA believes use of the term "wales,"
deficiency and resolve the confusion as person" in §'1926.650 has not been which is more consistent with industry
to what these terms mean, OSHA changed from the proposal and is the terminology, would improve the
proposed to eliminate these two terms same as that in existing § 1926.32, it is definition of "cross braces."
and replace them with a definition of important to note that what constitutes The Agency received no comment on
''cave-in," which would accurately a "competent person" depends on the this definition, and therefore,
convey the intended concept of the context in which the term is used. In promulgates this definition as proposed.
hazard by describing the mechanism of order to be a "competent person" for the Section 1926.650(b) defines
the hazard and its results. The proposed purposes of this standard one must have "excavation" as "any man-made cut,
definition stated that cave-in means, had specific training in, and be cavity, trench, or depression in an earth
"The separation of a mass of soil or rock knowledgeable about, soils analysis, the surface, formed by earth removal." The
material from the side of the excavation use of protective systems, and the existing definition in § 1926.653(f)
and its sudden movement into the requirements of this standard. One who defines "excavation" as "any man-made
excavation, either by falling or sliding, does not have such training or cavity or depression In the earth's
in sufficient quantity so that it could knowledge cannot possibly be capable surface including its sides, walls, or
4591G Federal Register. / VoL. 54, No, 209 J Tuesday, October 31, 1989 / Rules and Regulations
faces, formed by earth removal and this revision will help clarify the Section 192Uo50b, defines "protective
producing unsupported earth conditions regulatory intent and therefore system," as "a method of protecting
by reason of the excavation. If installed promulgates this definition as revised. employees from cave-ins, from material
forms or similar structures reduce the Section 1920.050(b) defines that could fall or roll from an excavation
depth-ta-width relationship, an "hazardous atmosphere" as "an face or into an excavation, or from the
excavation may become a trench." In atmosphere which by reason of being collapse of adjacent structures.
the proposal, the definition was revised explosive, flammable, poisonous, Protective systems include support
to read "any man-made cut, cavity, corrosive, oxidizing, irritating, oxygen systems, sloping and benching systems,.
trench, or depression in an earth deficient, toxic, or otherwise harmful, shield systems, and other systems that
surface, formed by earth removal, and may cause death, illness, or injury." This provide the necessary protection." This
producing unsupported earth conditions definition is identical to the proposed term is not defined in the existing
(sides, faces)." definition, which was taken, with some standard. References were made
OSHA received two comments (Exs. modification, from the definition of throughout the proposal to "protective
4-17 and 4-91) on the definition, and a "hazardous substance" in existing systems." The approach taken in the
recommendation from the ACCSH (Tr. § 1926.32(k). proposed standard was to classify,
8/5/87, p. 451-52). All the commenters OSHA received seven comments on under the term "protective system" all
recommended removing "and producing this definition (Ex&A 4-21,4-23.4-31,, 4- systems and methods of protecting
unsupported earth conditions (sides, 40, 4-42, 4-74,. and 4-86). All employees from the hazards set forth in
faces)," because the phrase is confusing commenters recommended removing the the definition.
and is not necessary to the definition. word "irritating" from the definition OSHAreceived two comments (Exs.
The Agency agrees that this phrase because irritating and hazardous are 4-17 and 4-01) and input from the
could cause confusion and, therefore, different The Agency disagrees with. ACCSH (Tr. 8/5/87 p. 456)
promulgates this definition as revised. these commenters because irritating recommending that "against cave-ins"
Section 1926.650(b) defines "faces" or substances can incapacitate employees be changed to "from cave-ins." The
"sides" as "the vertical or inclined earth
to a point that would hamper Agency agrees with this change and,
surfaces formed as a result of escapeduring an emergency, or cause therefore, promulgates this definition as
excavation work." This definition and employees to rush jobs, thereby revised.
the proposed definition are identical to increasing the likelihood of mistakes Proposed J 192&650(b)[13), which
existing § 1928.653(k), except that the and accidents. For example. OSHA defined "qualified engineer" and
term 'walls" was dropped from the notes that it is not uncommon to proposed § 192M650(b)(14), defining
standard. The Agency received no encounter hydrogen sulfide in "qualified person," have both been
comments on this, definition and excavations. This substance is anirritant deleted from the final rule. The rationale
therefore promulgates it as proposed. at very low concentrations, deadens the for these deletions were discussed in
Section 192M.550(b) defines "failure" sense of smell at or below 100 parts per detail above, under Issue 2. Although
as "the breakage, displacement, or the Agency received other comments on
million. and can be lethal in a very short
permanent deforiation of a structural this definition. the points raised are
time at concentrations of 400 parts per
member or connection so as to reduce, million or less. Therefore, OSHA more pertinent to other parts of the
its structural integrity and its supportive standard and will be discussed in the
capabilities." This definition is intended declines to make the requested revisions
and promulgates this definition as appropriate section of this preamble
to apply to protective systems and to the
members and connections of protective proposed. below.
systems, where applicable. Use of the Section 1926,850b) defines "kickout" Section 1926.60(b) of the Final Rule
concept of "failure" introduces a as "the accidental release or failure of a defines "ramp" as "an inclined walking
measure for the performance of cross brace." This definition is identical or working surface that is used to gain
protective systems, their members, and to the proposed definition, which was access to one point from another, and is
their connections. Such a measure is not taken from existing § 19266653(i) with constructed from earth or from
present in the existing standard. This some modification. This definition was. structural materials such as steel or
concept will help clarify the intent of the changed by substituting the new term wood." This definition is basically
"cross brace" for the current term identical to proposed I 1926.650(h{(15)
standard and the duty of employers to
provide adequate protective systems. "brace," and by dropping reference to except for an editorial revision, moving
There is no definition of failure in the the term "shore." The first change was "that is" from before "constructed" to
current standard. In the NPRM, OSHA made for purposes of consistency in the before "used' The Agency received no
proposed to define "failure" as "the use of terms. The second change was comment on this definition and,
breakage, displacement, or permanent made in order to clarify the definition. therefore, promulgates this definition as
deformation of a structural member or' The term "shore" as used in the current revised.
connection as to affect its supportive • definition of "kickout," is not defined. Section 1926.650(b) of this Final Rule
capabilities." The Agency received two However, in accordance with accepted defines "registered professional
comments on this definition. The industry terminology, a "shore" is engineer" as "a person who is registered
Building and Construction Trades considered to be a vertical member, as a professional, engineer in the state
Department of the AFL-CIO (Ex. 4-171 such as a post, or as defined in the where the work is to be performed.
merely noted that this was a narrow current standard, an "upright." It is not However, a professional engineer.
structural definition. However. CAL/ OSHA's intention, however, to define registered in any state is deemed to be a
"kickout" as failure of any vertical 'registered professional engineer' within
OSHA (Ex. 4-41 suggested revising the
definition to read "so as to reduce its member. Therefore, use of the term the meaning of this standard when
structuralintegrity and its supportive "shore" was dropped in the proposed approving designs for 'manufactured
capabilities" (emphasis added). The revisions of "kickouL" protective systems' or'tabulated data' to
commenter felt the revision was OSHA received no comment on this be used in interstate commerce."
necessary to explain more fully what proposed revision and., therefore, This definition is similar to the
constitutes failure. The Agency believes promulgates this definition as proposed. definition recommended by the,ACCS-
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45911
and 4-91) and the ACCSH (Tr. 8/5/87 p. Shields used in trenches are usually referred
(Tr. 8/5/87 p. 466) which was also
proposed in the Notice of Informal 741) recommended deletion of "such as to as "trench boxes" or "trench shields."
Public Hearing (53 FR 5281). However, dimensional lumber uprights * * * for The concept of a shield, as used in
OSHA is deleting language from that the purpose of * * *" The only other both the proposed and final standards,
definition which becomes unnecessary commenter (Ex. 4-111) noted that the is different from the concept of a shield
because the Agency intends to rely on standard did not include directions on as defined in the existing standard. The
state registration of professional the use of plywood, but made no major difference however, is the manner
engineers to demonstrate that the suggestion as to what those directions in which shields are defined with
person appro,ing designs is, in fact, should be. respect to how they provide protection.
qualified. In addition, the Agency is The Agency has determined that the Unlike the current standard, the
providing an exception to the recommended deletion is appropriate, as proposed and final standards do not
requirement that a registered the examples cited could give the false refer to shields as devices which
professional engineer within the impression that only wood was provide protection to employees by
meaning of this standard be licensed in acceptable as sheeting. The proposed supporting the sides of an excavation
'the state in which work is being definition contained the phrase "or other and thereby preventing cave-ins. Instead
performed. A professional engineer materials," in recognition of other shields generally d6 not prevent cave-
registered in any state (as defined in equally effective materials, such as steel ins, but, rather, protect employees from
section 3(7) of the OSH Act) who sheeting, but the Agency understands cave-ins that do occur. They provide a
designs support systems, shield systems, that the definition, as phrased, could be limited but safe, sheltered space in
or other protective systems that are to misinterpreted, and has made the which employees work. In addition, the
be manufactured and used in interstate recommended deletion. new definitions do not place any limits
commerce, or who prepared "tabulated In addition, the Agency recognizes on the material from which a shield may
data" to be used in interstate commerce, that the standard does not include be constructed.
is deemed to be a "registered directions for the use of plywood, but Shields are one of several types of
professional engineer" within the notes that the use of tabulated data for protective systems that may be used to
meaning of this standard. To limit such protective systems which utilize guard employees from cave-ins and
work to engineers licensed in the state plywood sheeting, or a design prepared other hazards. Some shields are
in which the work is being performed by a-registered professional engineer designed to-be expandable. Once in
would unduly burden the manufacturers utilizing plywood sheeting, is acceptable place they can be altered such that their
of protective systems and may be under the standard. Additionally, OSHA faces are pressed against and actually
counterproductive to employee safety. does not believe it is necessary to begin to support the sides of the
Moreover, the possibility of product provide directions for all variations of excavation. In this configuration,
liability actions if manufactured systems protective system design. depending on the degree of support
fail should assure that "manufactured Therefore, based on the above provided, such a device may also be
protective devices" and "tabulated discussion the Agency promulgates this considered a support system.
data" of general applicability will be definition as revised. OSHA received three comments and
designed prudently. The incentive to input from the ACCSH on this definition.
Section 1926.650(b) of the Final Rule Two commenters (Exs. 4-17 and 4-91)
design manufactured systems safely to
defines "shield" as follows: and the ACCSH (Tr. 8/5/87 p.474)
avoid such lawsuits is an adequate
substitute for the incentive of an in-state A structure that is able to withstand the recommended deletion of the phrase
engineer to avoid risking his or her forces imposed on it by a cave-in and thereby "nonnally will not prevent a cave-in
professional license. protect employees within the structure. but" because they felt the language was
Shields can be permanent structures or can gratuitous and misleading. The third
Section 1926.650(b) defines "sheeting"
be designed to be portable and moved along
as "the members of a shoring system as work progresses. Additionally, shields can commenter (Ex. 4-111) suggested that
that retain the earth in position, and in be either premanufactured or job built in the definition should read "not designed
turn are supported by other members of accordance with § 1926.652(c)(3) or (c)(4). to prevent a cave-in." The Agency
the shoring system." This definition Shields used in trenches are usually referred disagrees with the suggestion that
contains some wording from the current to as "trench boxes" or "trench shields." shields are not designed to prevent a
definition of "sheet pile" (§ 1926.653(i)). cave-in, and notes that some shields, in
The definition replaces existing fact, are designed to be expandable, and
The definition for "sheet pile" has been
§ 1926.653(p) which defines "trench can support the sides of excavations. On
dropped since the term is not used in the
shield" as "a shoring system composed, the other hand, the Agency agrees with
final standard. "Sheeting" is a broader
of steel plates and bracing, welded or the ACCSH and the other two
term. It includes all special types of
sheeting, including sheet piles, where bolted together, which support the walls commenters that the language noted
of a trench from the ground level to the above could be misleading and
the purpose is to retain earth in position..
trench bottom and which can be moved unnecessary and therefore, deleted this
In the proposal, § 1926.650(b)(16)
along as work progresses," and it phrase. However, the Agency declines
defined "sheeting" as "the members of a replaces the proposed definition
shoring system such as dimensional to delete the sentence stating that a
§ 1926.650(b)(17) which defined "shield" shield could be either premanufactured
lumber uprights, plywood, or other
as: or job-built, as recommended by
materials that are driven or placed in
contact with the earth, usually in a A structure that normally will not prevent a ACCSH (Tr. 8/5/87 p. 474) and two
vertical position, for the purpose of cave-in, but is able to withstand the forces commenters (Exs. 4-17 and 4-91). OSHA
retaining the earth in position and in imposed on it by a cave-in and thereby assumes the commenters opposed to this
protect employees within the structure. part of the definition interpreted this
turn being supported by other members Shields can be permanent or can be designed
of the shoring system." to be portable and moved along as work sentence as giving total discretion to
OSHA received three comments on progresses. Additionally, shields can be employers in regard to job-built shields.
this definition and input from the either premanufactured or job-built, in However, the Agency's regulfitory intent
ACCSH. Two commenters (Exs. 4-17 accordance with § 1926.652 (c)(3) or (c)(4). is that job-built shields must be built in
45912 Federal Register / Vol. 54, No. 209 / Tuesday. October 31, 1989: / Rules and Regulations
accordance with the options provided in "Problems with the Existing Standard.," this effect was placed at the end of the
§ 192&652(c)(3) and (c)(4), The Final The Agency also declines to define the proposed definition of "stable rock" to
Rule has been revised to clarify this term "underpinnin," because the alert the user to this possibility. Finally,
point. Agency believes the: term is already OSHA has adopted the ASTM term,
Section 1926.650{b) of the Final Rule readily understood by the construction "natural solid mineral matter" to define
defines "shoring' (shoring system) as "a industry. rock for clarity.
structure such as. a metal hydraalic Section 1926.650(b) of the Final Rule OSHA received two comments (Exa.
mechanical, or timber shoring system defines "stable rock" as natural solid 4-17 and 4-1111 and input from the
that supports the sides of an excavation mineral material that can be excavated ACCSH [T'r. 8/5/87 p. 475), concerning
and which is designed to prevent cave- with vertical sides and will remain the term "qualified person" in the
ins." This term is not defined in the intact while exposed. Unstable rock is proposed definition. All three
existing standard, even though it is considered to be stable when the rock commenters recommended deletion of
extensively used. The final definition is material on the side or sides of the "qualified person." One commenter ({xE
almost identical to the proposed excavation-is secured against caving-in 4-17) and the ACCSH recommended
definition in § 1926.650{b)(19), except or movement by rock bolts or by another changing "qualified engineer" to
that "metal hydraulic" shoring is protective system that has been registered professional engineer; sirilar
included in the Final Rule, as designed by a registered professional to the recommendations received on
recommended by the only commenter engineer. Issue 2, discussed above.
(Ex. 4-114). OSHA agrees that "metal' The proposed definition of "stable An editorial change-has been made to,
hydraulic" shoring is used extensively rock," in paragraph, (b)(21), was similar incorporate the proposed explanatory
and should be included in the definition except that it did not use the phrase note into, the second sentence of the
as an, example. "natural solid mineral material" and the
final definition.
Section 1926.650(b) of the Final Rule second sentence of the definition was an Therefore, based o the record, OSHA
defines "sides" by referring the reader' explanatory note and design by a promulgates this definition as revised.
to the definition of "faces.* "qualified engineer or a qualified
Section 1926.650(b). of the Final Rule
Section 192.650(h) of the Final Rule person" was permitted. There was no defines "structural ramp" as "a ramp
defines "sloping" (sloping system) as "a definition for rock or rock conditions. in,
method of protecting employees from built of steel or wood, usually for
the existing standard. Reference was vehicle access., Ramps made of soil,or
cave-ins by excavating to form sides of made to rock in the existing, standard in rock are not considered structural
an excavation that are inclined away the footnotes to Table P-Z "Trench
from the excavations. as to prevent cave- ramps."
Shoring-Minimum Requirements." The . Proposed paragraph (b)(2Z) defined
ins. The angle of incline required to footnotes stated that "Shoring is not "structural ramps" as "ramps built of
prevent a cave-in varies with required in solid rock, hard shale, or
differences in such factors as the soil hard slag." material other than soil or rock." The
type, environmental conditions of It is recognized in the industry that Agency received one comment (Ex. 4-
exposure, and application of surcharge excavations in rock normally do not 106) which suggested the definition
loads." This definition is virtually present a cave-in hazard because of the should be expanded to describe clearly
identical to the proposed definition,. inherent stability of rock, and the ability a ramp of steel, or wood for vehicle
except that "against cave-ns" was of rock to carry loads. However, rock access. Since this is in line with the
changed to "from cave-ins" as varies to a great extent in its ability to Agency's regulatory intent, the Agency
recommended by the ACCSH. remain intact while exposed, just as soil agrees to amend the definition to
The definition of "slope" found in does. There are conditions that are express more, clearly what OSHA
existing § 1926.053{1) was not used in found in some rock formations, such as considers to be a structural ramp
the proposal because the concept in that fractures and seams of less stable Section 1926.650(b) defines "support
definition was not applicable in the material., that can present serious system"W as "astructure such as
proposed standard. The existing hazards. When such conditions are underpinning, bracing, or shoring, which
definition states that "slope" means "the encountered in rock, such as shale provides support to an adjacent
angle with the horizontal at whch a which contains layers of clay, the rock structure, underground installation, or
particular earth material will stand cannot be considered stable. the sides of an excavation." The
indefinitely without movement." The proposed definition for "stable proposed definition, paragraph (b)(23)}, is
The proposed and final definitions of rock" was developed from the definition identical to, this final definiio. There is
"sloping' both address a broader that was proposed by the National no definition of support system in the
concept of employee protection by Bureau of Standards (NBS) at the above existing standard. However, examples
referring to "systems" or "methods" of discussed workshops. Originally, NBS of supporting systems are given in,
protection which prevent cave-ins. The used the term "unfractured rock," existing § 1926.651(f), such as
definitions recognize that the slope or instead of "stable rock." However, many "supporting, system; Le., piling, cribbing,
multiple slopes used in a sloping system, comments were made that it is shoring, etc., * * " Theconcept of a
can vary with the soil types involved impossible to excavate any rock without support system as used in the proposed
and site conditions. fracturing it in some way. The standard remained the same as in the
OSHA received one comment (Ex. 4- Construction Advisory Committee existing standard. The definitior was
46) on this definition, other than the suggested that the definition be changed included to provide a more clearly
editorial comment by the ACCSH. The to "stable rock" (Ex. 2.-8, p. 356)} This defined concept.
one commenter recommended that recommendation was incorporated into A "support system" is one type of
"sloping" should be called "angle of the NBS definition. protective system. It should he noted
repose" and that OSHA should include Unstable rock, i.e. rock that cannot be that a "shoring system" is a type of
a definition for "underpinning."' OSHA excavated with vertical sides and support system. Support systems are,
disagrees with the suggestion to use the remain intact while exposed, can be more broadly defined than shoring
term "angle of repose" for the reasons made stable if a proper system is used systems to include structures that
discussed above in the section entitled to support the excavation side. A note to support adjacent structures or
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45913
underground facilities, whereas shoring a cave-in, the capacity of individual "excavation" are interchangeable. The
systems are defined as systems that components would not be exceeded Agency declines to adopt this
support the sides of an excavation. resulting in a failure of the system. recommendation because those
The Agency received no comments on Section 1926.650(b) of the Final Rule provisions which apply or are
this definition. Therefore, the Agency defines "trench" (trench excavation) as appropriate only for trenches cannot be
promulgates this definition as proposed. .a narrow excavation (in relation to its clearly defined if the two terms are used
Section 1926.650(b) of the Final Rule length) made below the surface of the interchangeably. Blurring this distinction
defines "tabulated data" as "tables and ground. In general, the depth is greater would introduce uncertainty into the
charts approved by a registered. than the width, but the width of a trench standard and would not provide clear
professional engineer, and used to (measured at the bottom) is not greater guidance to employers as to what
design and construct a protective than 15 feet (4.6 m). If forms or other provisions apply.
system." structures are installed or constructed in Section 1926.650(b) defines "trench
The definition of tabulated data in an excavation so as to reduce the box" and "trench shield" and refers the
paragraph (b)(24) of the proposal did not dimension measured from the forms or reader to the definition of "shield."
recognize the use of local practices, and structure to the side of the excavation to OSHA received no comment on these
required preparation by a "qualified 15 feet (4.6 m) or less (measured at the definitions and promulgates these
person" or "qualified engineer." The bottom of the excavation), the definitions as proposed.
changes made to the Final Rule are excavation is also considered to be a Section 1926.650(b) of the Final Rule
based on the discussion of Issue 2 "trench." defines "uprights" as "the vertical
(qualified person/qualified engineer) This definition is virtually identical to members of a trench shoring system
and Issue 14 (regional practices). In the definition proposed in placed in contact with the earth and
addition, OSHA received two comments § 1926.650(b)(25) except that the usually positioned so that individual
(Exs. 4-17 and.4-111) and input from the. explanatory note has been incorporated members do not contact each other.
ACCSH (Tr. 8/5/87 pp. 475-76). All of into the text of the definition. This Uprights placed so that individual
these commenters recommended definition remains basically unchanged members are closely spaced, in contact
dropping "qualified person," and two from the current definition in existing with or interconnected to each other, are
commenters (Ex. 4-17 and the ACCSH) § 1926.653(n). The changes that have often called sheeting." This definition is
supported changing "qualified engineer" been made are for the purpose of virtually identical to the proposed
to "registered professional engineer." clarifying the definition. For example, definition in § 1926.650(b)(28), except
The Agency believes that most the words "trench excavation" have that the explanatory note has been
tabulated data provides the flexibility been added to indicate more clearly that incorporated into the text of the
necessary to make minor adjustments to trenches are considered to be definition.
the protective system without requiring excavations. This definition revises the definition
the approval of an engineer provided A note was added to the end of the in existing § 1926.653(r). The definition
those changes do not exceed the definition of the word "trench" in the was changed in the proposal to be more
designlimitations of the data. The OSHA proposal. The substance of the note consistent with definitions of other
Tables in Appendix C, for example, came from the second part of the shoring system members that were in
provide flexibility by permitting two or existing definition of "excavation" the proposed standard, and to expand
more shoring configurations, in most found in existing § 1926.653(f) and the concept of the term.
case, for given site conditions. This addresses depth-to-width relationships
in trenches. The wording was revised to The term "uprights," as used in the
allows the employer to choose the proposed standard, referred only to
configuration that best fits the particular indicate more clearly how a portion of a vertical members used in trench shoring
circumstances. Flexibility also is large excavation can become a trench,
provided in that the spacing prescribed for purposes of the proposed standard, systems. Such uprights are usually
by some tabulated data is normally the as a result of creating a relatively spaced some distance apart when in
maximum spacing permitted. Of course, narrow space between the side of an position. Normally uprights are referred
an employer can always decrease the excavation and a structure'that has to as "sheeting" when they are very
spacing of members and still be in been constructed in the excavation. closely spaced, in contact with adjacent
compliance. For example an employer. The proposal and the Final Rule are uprights, or interconnected. This
definition of "uprights" is'intended to
using a configuration that allows a formatted to indicate that most of the
maximum horizontal spacing of six feet provisions of the standards apply to all clarify the application of the proposal in
for uprights, could encounter a situation types of excavations. However, some of each of these positions.
where the positioning of an upright at a the provisions of subpart P apply only to Section 1926.650(b) of the Final Rule
six foot interval is not feasible due to an excavations that are trenches. defines "wales" as "horizontal members
obstruction. In this situation, the Forexample, § 1926.651(c)(2) sets forth of a shoring system placed parallel to
employer could decrease the spacing for special requirements for means of the excavation face whose sides bear
that upright or set of uprights whatever access and egress in trenches, and against the vertical members of the
is necessary to address the situation. § 1926.652(c)(1) sets forth the option of shoring system or earth." This definition
This type of change is within the using Appendices A and C for is identical to the proposed definition in
limitations of the tabulated data, and' determining the configuration of timber paragraph (b)(29).
would not require approval of a shoring in trenches. Those provisions in Section 1926.653(s) of the current
registered professional engineer. If, on the proposal, and now the Final Rule, standard refers the reader to existing
the other hand, the employer wanted to that apply only to trenches are clearly § 1926.653(m) for the definition of
increase the spacing to 61/2 feet or more, indicated by use of the word "trench" "wales." That paragraph states that
that change would exceed the design within the provision. "stringers" (wales) are "the horizontal
limitations of the data and would The only input OSHA received on this members of a shoring system whose
require approval by a registered point was an ACCSH recommendation sides bear against the uprights or earth."
professional engineer. The approval is (Tr. 8/5/87 p. 480-482) to state However, the term "stringers" is also
necessary to ensure that, in the event of specifically that the terms "trench" and referred to in existing § 1926.650(d) as
45914 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
the supports for plank steps, which is confusion, OSHA believes that use of work. The section is arranged with
inconsistent with its definition. the term "angle of repose" should not be eleven major paragraphs, most of which
OSHA addressed this problem by continued. Therefore, it was not used in are revisions of the current requirements
dropping use of the word "stringers." In - the proposed standard and It is not used in existing §§ 1926.650, 1926.651, and
the proposal, only the term "wales" was in the final standard. 1926.652. Changes have been made to
defined and used to refer to the The term "bank" is defined in existing clarify ambiguous language and
horizontal members of a shoring system. § 1926.653(c) as "a mass of soil rising eliminate redundant requirements. Some
The term "stringers" did not appear in above a digging level." The definition is paragraphs have been reformatted to
the proposal nor does it appear in the not entirely clear in its meaning because improve ease of understanding. Other
Final Rule. the use of the term "digging level." The revisions have been made to clarify
OSHA received no comment on the OSHRC has interpreted the term OSHA's intentions as to the scope and
definition and, therefore, promulgates "digging level" to mean "the level at application of current provisions. New
this definition as proposed. which digging is commenced" (2 BNA requirements have been added to
For reasons to be discussed below, OSHC 1130). Under this interpretation, protect employees against known
the following terms which are contained the sides of trenches would not be hazards where gaps in coverage
in the current standard are not used, and considered "banks" because the sides of currently exist.
therefore need not be defined in the trenches would be below "the digging Section 1926.651(a), "surface
Final Rule: § 1926.653(b) "Angle of level" rather than above it. However, encumbrances," requires that "all
repose"; § 1926.653(c) "Bank"; the wording of existing § 1926.652(a) surface encumbrances that are located
§ 1926.653(h) "Hard, compact soil"; suggests that sides of trenches be so as to create a hazard to employees
§ 1926.653(j) "Sheet pile"; § 1926.653(1] included in the meaning of the term shall be removed or supported, as
"Slope"; § 1926.653(m) "Stringers"; "bank." For example, existing § 1926.652 necessary, to safeguard employees."
§ 1926.653(o) "Trench jack"; states: This provision is similar to the proposed
§ 1926.653(q) "Unstable soil"; and "Banks more than five feet high shall provisions which required that "Trees,
§ 1926.653(t) "Walls." be shored, laid back to a stable slope, or boulders, and other surface
The term "angle of repose," as defined some other equivalent means of -
encumbrances that are located so as to
in the existing standard, is not protection shall be provided where create a hazard to employees shall be
consistent with its use in the civil employees may be exposed to moving made safe or removed." The proposal
engineering field. The existing definition ground or cave-ins." The OSHRC noted the hazard presented bysurface
in § 1926.653(b) defines "angle of interpretation does not conflict with the encumbrances, Including trees and
repose" as "the greatest angle above the above wording. However, § 1926.652 boulders, primarily arises if excavation
horizontal plane at which a material will goes on to state: "Trenches less than operations undermine or otherwise
lie without sliding." The specific
five feet in depth shall also be cause such encumbrances to become
standards in existing § 1926.651(e), effectively protected * * *." Thus, the unstable and fall or collapse onto
§ 1926.651(g) and § 1926.651(h) speak of OSHRC interpretation is a'contradiction employees. Surface encumbrances can
determining the "angle of repose," to the wording of existing § 1926.652(a). also impede smooth traffic flow on
"excavating to the angle of repose," and In addition, existing § 1926.652(a) makes excavation sites. The wording of the
the statement: "Refer to Table P-1 as a proposed requirement is essentially the
flattening the "angle of repose," all of
which suggest that a single "angle of
guide in sloping of banks." Table P-1 is same as in existing requirement
repose" can be determined for any
titled "approximate Angle of Repose for § 1926.651(b).
Sloping of Sides of Excavations." Thus, The requirement applies to all
particular soil. However, in the
"banks" and "sides" are again equated. employees involved in construction
American Society for Testing and OSHA is eliminating the use of the
Materials Standard D653-67, "Standard term "bank" to eliminate the problems activities at the worksite. The existing
Definitions of Terms and Symbols discussed above. paragraph includes the wording
Relating to Soil and Rock Mechanics," The terms "hard, compact soil" and "involved in excavation work or in the
"angle of repose" is defined as follows: ..unstable soil" were used in the existing vicinity thereof at any time during
Angle between the horizontal and standard to describe particular soil operations." OSHA proposed to drop
maximum slope that a soil assumes through this additional wording as it is
conditions. These terms were not used redundant.
natural processes. For dry granular soils the in the proposal,and are not found in the
effect of height is negligible; for cohesive Final Rule. All soil conditions will now The requirement that surface
soils the effect of height of slope is so great
be defined in a completely new soil encumbrances be removed or made safe
that the "angle of repose" is meaningless. "before excavating is begun" did not
classification system which does not use
What this essentially means is that the terms "hard, compact soil" or appear in the proposal. In many
there is no one "angle of repose" for a "unstable soil." (See discussion of instances, it is not feasible to remove all
given type of soil, for in practice, most appendix A, Soil Classification, below.) surface encumbrances from a site before
soils encountered have some degree of The reasons for eliminating the excavating is begun simply because the
cohesion. In addition, while the "angle definitions for "sheet pile," "slope," and site is too large. The proposal required
of repose" for granular soils is "walls" have been discussed above. such removal but implied that this
unaffected by the height of the cut, it The term "trench jack" was also not action would be taken as the surface
does change in response to soil density, used in the proposed standard or in the encumbrances are encountered.
and in changes to environmental Final Rule and needs not to be defined. OSHA received two comments (Exs.
conditions or exposure. 4-4 and 4-46), and input from the
The concept of "angle of repose," as Section 1926.651 General ACCSH (Tr. 8/5/87 p. 482] on this
used in the current standard, differs Requirements provision. The ACCSH recommended
from that accepted by the civil Section 1926.651 of the Final Rule eliminating the words "trees, boulders,
engineering community and has led to contains requirements for the protection and other" and replacing these
confusion as to the meaning and intent of employees against several different examples with "all." One commenter,
of the standard. To eliminate this types of hazards of excavation-related CAL/OSHA (Ex.4-4), suggested adding
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45915
"spoil pile" to the list of surface OSHA recognizes that the existence provision. One commenter (Ex. 4-28)
encumbrances. The other commenter, of underground installations is not noted that not all underground
the Michigan Department of Labor (Ex. always readily apparent. However, in installations are owned and operated by
4-46), recommended clarifying the many locations there are features which utility companies. OSHA agrees and has
phrase "shall be made safe" because it would indicate the presence of amended the final rule to reflect this
is ambiguous. The Agency has underground installations. An example point.
determined that the ACCSH of this would be that in a housing The ACCSH had an extensive
recommendation best expresses subdivision where there are no utility discussion (Tr. 8/5/87 pp. 486-494) on a
OSHA's regulatory intent and also poles, it could reasonably be assumed requirement recommended to the full "
addresses the concern expressed by one that certain utilities are underground in committee by an ACCSH study group.
commenter. In addition, the Agency has this situation. The proposal also This requirement would prohibit the
clarified the meaning of "shall be made recognized those situations in which start of an excavation until the utility
safe" by defining what actions the underground installations are not known company marked the exact location and
employer must take. Therefore, based on to exist beforehand, but can be depth of their underground installations.
the comments received OSHA determined through the exercise of During the discussion, several
promulgates § 1926.651(a), as revised. reasonable diligence prior to excavating. participants noted the difficulty of
Section 1926.651(b) of the Final Rule OSHA received one comment (Ex. 4- determining the exact location of
specifies requirements for dealing with 91) on this provision which supported underground installations, and they
existing utility and other underground the proposed language. OSHA also related instances where detecting
installations that may be encountered received ACCSH input (Tr. 8/5/87 pp. equipment was put on the bucket of a
during excavation operations. 483-486) which recommended removing backhoe to locate installations that even
Underground installations include all the word "estimated" from the the owners could not pinpoint. Other
types of utility lines either in service or provision. The Agency declines to make participants recommended
abandoned. They also include this change, noting that it is not always
foundations and underground storage differentiating between types of
possible to get an exact location of an installation (water lines versus high
tanks of all kinds. underground utility installation prior to
Employees may be exposed to serious voltage electrical lines) or between an
opening an excavation. The Agency excavation operation and an uncovering
hazards as a result of damage to believes that a reasonable
underground installations. Flooding, operation (used to locate utilities).
determination of the estimated location,
shock, asphyxiation, electrocution, fire, OSHA also received one comment
combined with notification of the from the Public Service Electric and Gas
explosion, and collapse of undermined affected utility, and a cautious
installations are some of the hazards Co. (Ex. 4-89) noting the existence of
determination of the exact location of
that result when underground "one call'.' programs and attesting to
the utility line when excavation
installations are damaged. These approaches the estimated location, will their effectiveness. Another commenter,
hazards can be eliminated if the provide adequate employee protection. NUCA (Ex. 4-91), supported the
locations of underground installations Therefore, OSHA promulgates proposed provision but disagreed with
are properly identified prior to § 1926.651(b)(1), as proposed. any prohibition on starting work until
excavation, and if such installations are Section 1926.651(b)(2) of the Final the installation has been marked.
properly supported or protected when Rule requires that "Utility companies or OSHA recognizes that some utility
excavation takes place near them. owners shall be contacted within installations are privately owned, and
Paragraph (b)(1) of the Final Rule established or customary local response has amended the Final Rule to reflect
requires that "The estimated location of times, advised of proposed work, and this point. The Agency also recognizes
utility installations, such as sewer, asked to establish the location of the that the provision, as proposed, did not
telephone, fuel, electric, water lines, or utility underground'installations prior to clearly require the employer to request
any other underground installations that the start of actual excavation. When all utility companies to establish the
reasonably may be expected to be utility companies or owners cannot location of their underground utility
encountered during excavation work, respond to a request to locate installations. In order to clarify OSHA's
shall be determined prior to opening an underground utility installations within regulatory intent, the Final Rule has
excavation." This requirement is twenty-four hours (unless a longer been amended to state clearly that the
identical to the proposal. The proposal period is required by state or local law), employer must request the utility bwner
differed from the existing standard, or'cannot establish the exact location of to locate the installations.
§ 1926.651(a), which required only that these installations the employer may OSHA recognizes that in some cases
an effort be made to determine whether proceed, provided the employer does so the utility company cannot respond to
such installations will be encountered with caution, and provided detection contractor requests in a timely manner.
and, if so, where such underground equipment or other acceptable means to The Agency notes that most "one call"
installations are located. locate utility installations are used." or "Miss Utility" programs require a
At the suggestion of the ACCSH (Ex. This provision is similar to the prescribed lead time, usually 24 to 48
2-8, p. 358), the proposal was made proposal, but has been amended to hours prior to excavation. However, in
more stringent than the existing rule by clarify OSHA's regulatory intent and to areas with heavy construction activity,
requiring the employer to determine the address comments concerning coverage, the utility company resources may not
estimated location, at a minimum. as discussed below. The proposed be able to respond as rapidly as desired.
OSHA believes that the revision is provision was unchanged from the OSHA also notes that, for a number of
needed to prevent many of the accidents existing standard, which required, in reasons, the installation owner may not
resulting from damage to underground § 1926.651(a) that "utility companies be able to provide an exact location. In
installations. The proposed language shall be contacted and advised of each of these cases the employer might
was intended to insure that the effort to proposed work prior to the start of have to begin the work before the exact
locate existing installations is carried to actual excavation." location is established. OSHA believes
the point where, at the very minimum, OSHA received three comments and that, in those instances, the employer
an estimated location is determined. input from the ACCSH on the proposed should be able to proceed with the
45916 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
excavation work, provided the employer installations shall be protected, construction of ramps and runways and
locates these utility Installations using supported, or removed as necessary to from inadequate placement of exits in
caution and using detection equipment safeguard employees." trenches.
or other acceptable means. This language Is almost identical to Paragraph (c)(1) specifies five general
In the Final Rule OSHA has specified the proposed requirement, which was requirements for the design and
that if a utility company or owner intended to prevent employee injuries construction of ramps and runways. The
cannot respond to a request to locate resulting from damage to exposed first of these, under paragraph (c)1](i),
underground utility installations within installations, contact with energized states that "Structural ramps that are
twenty-four hours (unless a longer lines, the collapse of unsupported used solely by employees as a means of
period is required by state or local law], installations, and other similar hazards.. access or egress from excavations shall
or cannot establish the exact location of The existing standard requires only that be designed by a competent person.
these installations, the employer may installations be properly supported, and Structural ramps used for access or
proceed, provided certain precautions as such is insufficient to protect egress of equipment shall be designed
are taken. The specification of waiting employees adequately because the type by a competent person qualified in
period has been added to the Final Rule of installation, its location with regard structural design, and shall be
because it is not OSHA's intent to allow to the excavation, or other site constructed in accordance with the
an employer to proceed with excavation conditions could render this type of design."
work absent a concerted effort to have protection infeasible or ineffective.
the utility determine the exact location Removal or protection of exposed This provision differs substantially
of its installations. installations can, at times, be more from the proposal, which did not
The Agency recognizes that a appropriate ways of protecting differentiate between ramps used solely
prohibition on starting an excavation employees. for employee access and ramps used for
until utility installations are located may OSHA received one comment (Ex. 4- equipment. The proposed paragraph was
not be practical, but believes the 25) on this provision. The conmmenter intended to address the hazard of
suggestion put forward at the ACCSH expressed concern that use of the term structural ramps collapsing under heavy
meeting, permitting the use of an "removed" presupposes or technically vehicle or personnel load conditions'
uncovering operation to locate these requires dhmage to the facility. The because of underdesigned members or
utilities, is the correct approach in the commenter suggested amending the connections. In some large excavations,
circumstance discussed above. provision to list "protected" first in the ramps of steel or wood are provided for
OSHA believes most utility owners sequences, and that "altered in a vehicle access and egress. More
respond to contractor requests to locate manner acceptable to the facility frequently, however, earthen ramps are
their utility's underground installations owner" be used in place of "removed." used. These earthen ramps are created
in the interest of maintaining service to In response, OSHA has changed the out of material that is left in place as the
their customers, and notes the sequence of options, because the excavation is made. For this reason, the
increasing use of "one call" programs to Agency has no preference for how word "structural" was added to clarify
respond to these contractor requests. employees are protected in these when design of particular ramps by a
However, in those circumstances where circumstances, as long as the protection qualified individual would be necessary.
the utility cannot respond or cannot is adequate to ensure the safety of the In addition, the existing provision,
identify an exact location, the Agency employees. OSHA emphasizes that § 1926.651(x), required ramps to be
believes it is appropriate to prescribe a "protected" is intended to safeguard designed and constructed by a qualified
course of action for the contractor to employees, not to "protect" the facility person in accordances with accepted
follow. from damage. If both concerns can be engineering practices.
Therefore, based on the above addressed at the same time, so much the However, the actual construction of
discussion OSHA promulgates better, but employee protection is the ramps is usually not spoken of in terms
§-1926.651(b)(2) as revised. primary concern. of engineering practices. Therefore,
Paragraph § 1926.651(b)(3) of the Final The Agency declines to revise the OSHA proposed to revise the existing
Rule requires that as the excavation provision to limit employee protection to language to maintain this distinction.
approaches the estimated location of what is acceptable to the facility owner. The proposed language required that
underground installations, the exact OSHA notes that removal or alteration structural ramps be "constructed in
location must be determined by safe and of an underground installation may be accordance with their design" instead of
acceptable means. This requirement is necessary to provide employee in accordance with accepted
similar to the proposal, which was taken protection, and this may not be engineering practice. As noted, the
unchanged from the existing standard. considered acceptable by a facility
owner. Such situations will have to be proposed rule required ramps to be
OSHA received two comments (Exs. designed by a "qualified person, a
4-17 and 4-111) and input from the resolved between the employer and the
owner, but, as discussed above, qualified engineer or a person under the
ACCSH (Tr. 8/5/87 p. 492) on this direction of a qualified engineer."
provision. All commenters employee protection is the primary
recommended dropping "such as concern. In the proposal, the current
probing with hand-held tools" from the Therefore, based on the above requirement for design by a "qualified
proposed provision, because this could- discussion OSHA promulgates person" was changed so that the
create a hazard to employees by paragraph (b)(4) as revised. language used would be consistent with
damaging the installation or its Section 1926.651(c) of this Final Rule other language and requirements in the
insulation. sets forth the requirements for access to proposal. OSHA requested comment
The Agency agrees with these and egress from excavations. Similar and data on whether or not structural
comments and, therefore, promulgates, requirements are found throughout the ramps used by a limited number of
§ 1926.651(b)(3) as revised. existing standard in § § 1926.650 (b), (c), employees (five or fewer) should be
Section 1926.651(b)(4) of the Final and (d), 1926.651(x), and 1926.652(h). required to be designed by a qualified
Rule requires that "While the These requirements address hazards individual or, alternatively, should
excavation is open, underground resulting from inadequate design and structural ramps be a certain height
Federal Register -/ Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45917
before design by a qualified individual and those structural ramps used for has been added. OSHA added the new
is required? vehicle and equipment access. However, language in recognition of other
OSHA received six comments and the Agency declines to act on the acceptable means of securing both
input from the ACCSH on this provision. recommendation to require the design of wooden structural members and
One commenter (Ex..4-78) stated that a ramp only if it is to be over 10 feet structural members made of other
earthen ramps should be allowed, and high. The Agency has no basis to impose materials. For example, metal structural
indicated that these would be prohibited a 10 foot limit since the commenters did members could be bolted or clamped
by this provision. OSHA disagrees with not supply any rationale, and there are together to prevent separation. In
this interpretation of the rule, noting thatno technical reasons of which OSHA is addition, the Agency has deleted the
the provision applies to structural ramps aware that support this arbitrary limit. phrase "or be beveled," as discussed
only. Earthen ramps normally consist of. Therefore, OSHA promulgates below.
dirt left in place during excavation, and § 1926.651(c)(1)(i) as revised. OSHA received one comment on the
are not required to be "designed." Paragraphs (c)(1) (ii) through (v) of issue of cleats. That commenter (Ex. 72)
However, among other things, the § 1926.651 address the hazards of slips, stated that attaching cleats and beveling
competent person would be required to trips and falls, and replace the cleats would require additional labor,
inspect these ramps to check for any requirements in existing § 1926.650 (b), and noted that the nails used to secure
hazards, as required by § 1926.651(k). (c), and (d). the cleats to the bottom would penetrate
The ACCSH (Tr. 8/5/87 p.494) Paragraph (c)(1)(ii) of the Final Rule the plank and would have to be bent
suggested requiring only that a requires that "Ramps and runways over, thereby creating a tripping hazard.
"competent person," rather than a constructed of two or more structural The commenter also argued that beveled
"qualified person," design structural members shall have the structural cleats (on the top of a runway) do not
ramps used solely by employees as a members securely connected together to provide traction and noted that he was
means of access or egress. Along the prevent displacement." This provision is unaware of any tripping injury caused
same lines, several of the commenters virtually identical to the proposed rule by unbeveled cleats.
(Exs. 4-82, 4-102, 4-106, and 4-109) except that the term "structural OSHA recognizes that nails used to
recommended that only ramps used for members" has replaced the term secure cleats to the bottom of the
vehicle access and egress need to be "planks" at the suggestion of the
runway could penetrate the top surface
designed by a qualified individual. ACCSH (Tr. 8/5/87, p. 495). The Agency of the plank and would have to be bent
Three commenters (Exs. 4-82, 4-102, and agrees with this recommendation over. OSHA also notes that nails that
4-109) recommended that design should because it recognizes that material other are bent over and hammered flush
not be required at all unless ramps are than wooden planks can serve as ramps would not cause the problem anticipated
over 10 feet in height, but supplied no and runways. OSHA also believes that by the commenter.
rationale for this recommendation. this change will express more clearly its In addition, upon reevaluation of the
Another commenter (Ex. 4-111) regulatory intent that ramps or runways
,recommended deleting "qualified issue of "beveled" cleats, the Agency
constructed of two or more "members" agrees with the commenter, and is
person" from the proposed language. must have these "members" securely
The sixth commenter (Ex. 4-91) connected together, regardless of what dropping the requirement for "beveled
recommended that the phrase "designed material these members are made. cleats" from both this provision and
to prevent slipping or tripping" be added OSHA received no other substantive § 1926.651(c)(1)(v) of the final rule. This
to the rule. That commenter did not comments on this provision. Therefore, decision is in line with the existing
specify who would develop the design. based on the above discussion, OSHA § 1926.650(d) which requires only the
Based on these comments, the Agency promulgates § 1926.651(c)(1)(ii) as use of "cleats."
raised an issue in the hearing notice (53 amended. Therefore, based on the above
FR 5281) concerning design of structural Paragraph (c)(1)(iii) of the final rule discussion, OSHA promulgates
ramps. The Agency received 11 requires that "Structural members used paragraph (c)(1)(iv) as revised.
responses to this issue. Six commenters for ramps and runways shall be of Section 1926.651(c)(1liv) of the Final
(Exs. 8-6, 8-14, 8-16, 8-18, 8-25, and 8- uniform thickness." This provision is Rule requires "Structural ramps used in
27) agreed with the recommendation virtually identical to the proposed rule, lieu of steps shall be provided with
that competent persons be allowed to except that the term "structural cleats or other surface treatments on the
design structural ramps used solely by members" has replaced the term top surface to prevent slipping." This
employees. One commenter (Ex. 8-7) "planks" at the suggestion of the provision is similar to the proposed rule
opposed any requirement for design ACCSH (Tr. 8/5/87, p. 495). The Agency except that it specifies "structural
unless the ramp was over 10 feet high rationale for making this change is the ramps" and recognizes the use of other
and used for equipment. This commenter same as discussed above for paragraph surface treatments to prevent slipping.
did not provide any rationale for this (c)(1)(ii). The Agency received no other These changes were recommended by a
recommendation. Several other substantive comments on this provision. majority of the 11 commenters on this
commenters (Exs. 8-21, 8-22, 8-26, and Therefore, OSHA promulgates provision (Exs. 4-21, 4-23, 4-30, 4-31, 4-
8-29) objected to the use of a competent § 1926.651(c)(1)(iii), as revised. 40,4-42, 4-54, 4-78, and 4-86). One
person to design structural ramps for the Section 1926.651(c)(1)(iv) of the Final commenter (Ex. 4-111) merely noted that
sole use of employees, but were unclear Rule requires "cleats or other the provision related to structural
as to whether their objection was to appropriate means used to connect ramps. Another commenter (Ex. 4-72)
having the competent person design runway structural members shall be suggested "beveled" be deleted for the
these ramps, or whether they objected to attached to the bottom of the runway or same reasons as discussed above
a requirement for any design at all. shall be attached in a manner to prevent relating to paragraph (c)(1)(iv).
After careful consideration of the tripping." This provision is similar to the The Agency agrees with the majority
record, OSHA has determined that the proposed rule except that "planks" has of the commenters that it is appropriate
proposed paragraph should be amended been replaced with "structural to specify "structural ramp" in the
to address separately those structural members," as discussed above, and the context of this provision and to
ramps used only for employee access phrase "or other appropriate means" recognize other equally effective means
45918 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
of preventing slipping. In addition, the misinterpreted to permit the situation commenters (Exs. 4-21, 4-23, 4-31, 4-40,
Agency is dropping "beveled," as described by one of the commenters (Ex. 4-42, 4-54, 4-72, and 4-86) recommended
discussed above under 4-30) above. That is not the Agency's adding the word "public" to clarify the
§ 1926.651(c)(1)(iv). Therefore, based on intent, and in order to prevent any intent of the provision. OSHA
the above discussion, OSHA confusion as to what is necessary to recognizes that the provision, as
promulgates § 1926.651(c)(1)(v) as protect employees, OSHA is deleting the proposed, could be misinterpreted to
amended. explanatory note from this Final Rule. require all on-site employees to wear
Section 1926.651(c)(2) of the Final Rule OSHA disagrees with the commenter warning vests, because of exposure to
requires that "A stairway, ladder, ramp, (Ex. 4-53) who objected to this provision on-site 'construction vehicular traffic.
or other safe means of egress shall be in its entirety, and notes that the This is not OSHA's intent and,
located in trench excavations that are commenter apparently misunderstood therefore, the agency is revising the
four feet (1.22 m) or more in depth, so as the provision. OSHA points out that this provision to specifically state "public
to require no more than 25 feet (7.62 m) requirement is intended to provide vehicular traffic."
of lateral travel for employees." This employees working down in a trench Another commenter (Ex. 4-28)
provision is virtually identical to the with a safe means of escape from the suggested revising the provision to
proposed rule except that the trench in case of an emergency. The require warning vests for all employees
explanatory note allowing a negotiable provision does not require a safe means on foot exposed to mobile equipment or
slope to be used as a means of egress of crossing (traversing) a trench at 25- motor vehicle traffic. OSHA recognizes
has been deleted. This provision is foot intervals. Therefore, if the work is that almost every employee on a
similar to existing § 1926.652(h) except done outside of a trench, as stated by construction site is exposed to mobile
that the final rule recognizes ramps and the commenter, and no employees are equipment or on-site vehicular traffic at
other safe means of egress. required to enter the trench (i.e., there is some time during the day, but does not
OSHA received five comments on the no exposure to cave-in hazards), this believe all employees at a site should be
proposed rule, and input from the provision would not apply. required to wear warning vests. The
ACCSH. The ACCSH (Tr. 8/5/87, pp. Section 1926.651(d) of the Final Rule Agency is concerned that employees be
495-496) suggested deleting the requires that "employees exposed to highly visible to public vehicular traffic
explanatory note and the word "trench" public vehicular traffic shall be provided which can be of relatively high speed
from the definition, so as to require this with, and shall wear, warning vests or and where the drivers are not aware of
protection for all excavations. Two other suitable garments marked with or the presence of construction employees.
commenters (Exs. 4-17 and 4-91) also made of reflectorized or high visibility These are not conditions which are
recommended deleting the explanatory material." This is virtually identical to common with construction traffic.
note because the term "negotiable the proposed provision, except that the Therefore, based on the above
slope" is too subjective. Another word "public" has been added to clarify discussion, OSHA promulgates
commenter (Ex. 4-30) suggested that OSHA regulatory intent. § 1926.651(d), as amended.
OSHA define "negotiable slope," and The proposed requirement differed
from the existing requirement in Section 1926.651(e) of the final rule
pointed out that its personnel have requires that "No employee shall be
observed employees using sloped areas § 1926.650(f). The proposal required
permitted underneath loads handled by
as access to trenches with the employees to "wear" vests, whereas the
assistance of knotted rope lines. This lifting or digging equipment. Employees
current standard states the "Employees
commenter also noted that a knotted * * * shall be instructed to wear **.
shall be required to stand away from
rope line would'not provide "adequate The-words "be instructed to" were any vehicle being loaded or unloaded to
avoid being struck by any spillage or
and rapid escape for more than one deleted. This change, carried over into
employee" in case of an emergency. the Final Rule, is necessary to clarify the falling material. Operators may remain
One commenter (Ex. 4-46) agreed with intent of the standard. in the cabs of vehicles being loaded or
the ACCSH recommendation for Employees, particularly those unloaded when the vehicles are
inclusion of all excavations in this involved in trenching work, frequently equipped, in accordance with
provision, but provided no rationale for work where vehicular traffic flow is § 1926.601[b)[6), to provide adequate
the comment. maintained in close proximity to the protection for the operator during
Another commenter (Ex. 4-53) excavation operations. Employees may loading and unloading operations."
objected to the provision in its entirety. be assigned to direct traffic flow This requirement is virtually identical
This commenter stated that its adjacent to construction sites. These to the proposal, except that an
employees do the bulk of their work on employees are exposed to the hazard of explanatory note used in the proposal
the bank, and that they do not traverse being struck by such vehicles. This has been added directly to the
trenches at 25-foot intervals. It also hazard is increased during dark or near- provision. In addition, the basis for an
raised the issue of increased compliance dark periods of the day. The provisions operator exemption from this provision
costs that would result if required to of this paragraph are intended to reduce has been included to provide additional
provide crossings every 25 feet. this hazard. guidance to employers.
After careful consideration of the OSHA received 13 comments on this The proposed requirements were
record, OSHA has determined that a provision. Four commenters (Exs. 4-82, basically unchanged from the existing
safe means of egress every 25 feet is 4-102, 4-106, and 4-109) argued that this requirements in § 1926.650(h), except the
necessary in trench excavations, but not provision is not appropriately located in words "power shovels, derricks, or
in every excavation. The Agency notes subpart P and should be addressed in hoists" were changed to "lifting or
that egress during an emergency in a another subpart. OSHA disagrees with digging equipment." This change was
large excavation does not pose the same these commenters and notes that the made to make the requirements apply to
problem as it would in the confines of a specific hazards addressed by the all kinds of lifting or digging machines
trench excavation. provision are not covered adequately in rather than be limited to those listed in
The Agency has also determined that another subpart. (OSHA notes that the existing standard. In this way,
the explanatory note, intended to § 1926.201(a](4), for example, only backhoes and other such equipment are
provide additional guidance, could be applies to flag persons.) Eight clearly included in these requirements.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45919
In addition, the words "or unload" OSHA, therefore, declines to revise this 87, p.497). Both comments merely noted
were added to the proposed provision. provision to exclude "slung" loads. a typographical error in the document.
OSHA believes that the hazard to Based on the above discussion, OSHA Therefore, the Agency promulgates
employees from loads falling during promulgates § 1926.651(e) as revised. § 1926.651(f) as revised.
unloading is just as great as during Section 1926.651(f) of the Final Rule Section 1926.651(g) of the Final Rule
loading. requires that "When mobile equipment addresses work in hazardous
A note within proposed paragraph (e) is operated adjacent to an excavation, atmospheres. Paragraph (g)(1) presents
indicated that operators of vehicles may or when such equipment is required to the introductory text for requirements
remain in cabs that provide adequate approach the edge of an excavation, and related to testing and controls. This
protection from falling loads during the operator does not have a clear and provision states: "In addition to the
loading and unloading operations. direct view of the edge of the requirements set forth in subparts D and
The Agency received 15 comments on excavation, a warning system shall be E of this part (29 CFR 1926.50-1926.107)
this provision, including input from the utilized such as barricades, hand-or to prevent exposure to harmful levels of
ACCSH. mechanical signals, or stop logs. If atmospheric contaminants and to assure
The ACCSH (Tr. 8/5/87, pp. 496-497) possible, the grade should be away from acceptable atmospheric conditions, the
recommended deleting the explanatory the excavation." This is virtually following requirements shall apply:"
note because it could cause problems, identical to the proposal except that the This is identical to the proposed rule.
and because the hazard is covered explanatory note has been merged OSHA received no comments on this
elsewhere. OSHA declines to act on this directly into the text of the paragraph. provision and, therefore, promulgates
recommendation because the note was This paragraph (f) replaces the paragraph (g)(1) as proposed.
intended to provide additional guidance requirement in existing § 1926.651(s) Section 1926.651(g)(1)(i) of the Final
to employers by making it clear that which states "When mobile equipment Rule requires that "Where oxygen
operators of vehicles meeting the is utilized or allowed adjacent to deficiency (atmospheres containing less
requirements of § 1926.601(b)(6) may excavations, substantial stop logs or than 19.5 percent oxygen) or a
remain in the cab of those vehicles. barricades shall be installed." hazardous atmosphere exists or could
Two commenters (Exs. 4-17 and 4-91) The language of the current standard reasonably be expected to exist, such as
suggested changing "equipped" to is unclear because the word in excavations in landfill areas or
"designed." The Agency declines to act "substantial" makes it difficult for excavations in areas where hazardous
on this suggestion as the Agency employers to determine if the intent of substances are stored nearby, the
believes that a requirement for "design" the rule is to provide for physical atmosphere in the excavation shall be
would not ensure that the cabs are barriers which will prevent mobile tested before employees enter
unmodified. Another commenter (Ex. 4- equipment from going over the edge into excavations greater than four feet (1.22
46) suggested that the operator not be an excavation, or if the intent is for the m) in depth." This provision is identical
allowed in the cab of these vehicles. log or barricade meiely to alert an to the proposed rule, except the
However, OSHA believes a requirement operator not to proceed any further sentence has been reordered to describe
that the vehicles be equipped in toward the edge of an excavation. first when testing would be appropriate.
accordance with existing OSHA's intent in this provision is for the The proposed and Final Rule require
§ 1926.601(b)(6) provides the necessary stop logs or barricades to serve as a testing for oxygen deficiency or gaseous
safeguards. reminder to the operator of the conditions in excavations greater than
Four commenters (Exs. 4-82, 4-102, 4- proximity of excavations. four fLet (1.2 m) in depth where these
106, and 4-109) argued that this It is OSHA's opinion that there are conditions exist or could reasonably be
provision did not belong in subpart P several effective alternatives available expected to exist. Further, the rules
because it is not appropriate in the to protect workers in and around require that the testing be done before
excavation standard. Other commenters excavations from the danger of mobile employees enter the excavation. This
(Exs. 4-21, 4-23, 4-31, 4-40, 4-42, 4-72, equipment. Therefore, the requirement differs from the existing language in
and 4-86) recommended revising this both clarifies when warning systems are § 1926.651(v), which would appear to
provision so it applies only to loads of needed and identifies the types of require that all excavations be tested
excavated materials handled by digging warning systems that are acceptable to regardless of employee exposure. The
equipment, noting that slung loads protect vehicle operators and workers in existing rule states: "In locations where
(material, pipe, etc.) must be guided into excavations. OSHA believes that signals oxygen deficiency or gaseous conditions
the excavation by employees who may from observers can be used effectively are possible, air in the excavation shall
be underneath the load at some point. for the purpose of protecting employees be tested."
The Agency recognizes that "slung against the hazard in question. Signals The definition of "confined" or
are currently specified in other existing ,enclosed space" in existing
loads" may have to be guided into
excavations by employees, but does not standards (see § 1926.601(b)(4)) as an § 1926.21(b)(6}{ii) includes ." * * open
accept the argument that employees acceptable means of guiding mobile top spaces more than four feet in depth
must be under the load at some point. equipment which is backing up. such as pits, tubs, vaults, and vessels."
OSHA notes that this type of load could OSHA notes that the words "if The four foot (1.2 m) depth requirement
be guided from a safe position. In those possible the grade should be away from in proposed § 1926.651(g)(1)(i) was
instances where a load, such as pipe, the excavation" currently appear at the added to clarify where testing is
must be positioned as closely as end of the existing paragraph. Although required for excavations, and to be
possible to its final location, the load the language is advisory it does provide consistent with the above definition.
can be lowered into the excavation to a an example of a safe practice to follow The existing language requiring that
height where it is not suspended over In addition to the required practices. tests be performed "where oxygen
any employee. From there it can be Therefore, OSHA is maintaining this deficiency or gaseous conditions are
guided into its final place by an language in the Final Rule. possible" was changed to a requirement
employee without the danger of the load OSHA received one comment (Ex. 4- that OSHA believes is more reasonable,
falling and injuring that employee. 17) and input from the ACCSH (Tr. 8/5/ but still provides appropriate employee
45920 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
protection. Taken literally, the respiratory protection or ventilation on this point, raised such an issue in the
conditions listed in the existing rule are should be permitted in lieu of testing. hearing notice (53 FR 5281).
possible in any given excavation if the OSHA notes that respiratory OSHA received 11 comments on the
proper circumstances are present. protection or ventilation is required by hearing issue, and testimony at the
However, hazardous atmospheric § 1926.651(g)(1)(ii) of this final rule, and public hearing. Seven commenters (Exs.
conditions are more likely to exist or the requirement for testing establishes 8-6, 8-7, 8-14, 8-16, 8-18, 8-19, and 8-25)
occur in some circumstances than in what, if any, precautions or additional disagreed with the ACCSH
other circumstances. For example, work precautions are necessary. If an recommendation, most of them noting
involving the extension or maintenance employer chooses to provide adequate that excavations are open to the air or
of sewer utility or gas utility systems, employee protection in accordance with have adequate egress. Testimony at the
work near refineries or near areas the appropriate regulations as a matter public hearing (Tr. 4/19/88, pp. 73-74)
where petroleum distillates are handled of procedure, the failure to test would be also opposed this recommendation.
or stored, and work near landfills or de minimiis. Four other commenters (Exs. 8-21, 8-
hazardous waste dumps are situations One of the commenters (Ex. 4-67) also 22, 8-26, and 8-29) objected to
where hazardous atmospheric recommended extending the four-foot excavations four feet or deeper being
conditions are likely to occur (Ex. 2-8, level to six or seven feet. OSHA, considered confined spaces, but
pp. 224-226, 369-370). Atmospheres in however, is not convinced that the four- provided no rationale for their objection.
excavations in these types of situations foot level should be increased. OSHA Based on the comments received, the
must be tested. points out that the four-foot level is Agency declines to act on the ACCSH
However, it is OSHA's opinion that it consistent with other regulations and recommendation that all excavations
is not reasonable to require that all notes again that the testing requirement four feet or deeper be considered
excavations be tested routinely since. does not apply to every excavation, only confined spaces. The Agency believes
there is limited potential for oxygen to those where oxygen deficiency or that testing is only necessary when
deficiency or gaseous conditions in the hazardous atmospheres can be there is a likelihood of hazardous
vast majority of situations. Where the reasonably anticipated. OSHA believes conditions, and that the requirement for
conditions are such that these hazards that the requirement, as proposed, inspection by the competent person
could not reasonably be expected to provides adequate employee protection, provides continuing assurance that
occur, OSHA believes that routine without being unnecessarily hazardous conditions will be recognized
testing should not be required. burdensome. and addressed appropriately. In
Accordingly, the final requirement is addition, the Agency does not have any
Two other commenters (Exs. 4-17 and other data to support a requirement that
written to reflect what OSHA believes 4-111) suggested modifying paragraph ..every" excavation be considered a
to be a more reasonable approach to (g)(1}{i) to reorder the sentence, putting
testing. confined space.
the conditions which require testing
The examples cited above of areas Therefore, based on the above
first. Some commenters (Exs. 4-21, 4-23, discussion, OSHA promulgates
that are more likely than not to be 4-31, 4-40, 4-4Z and 4-66) indicated that
hazardous are not intended to be a § 1926.651(g)(1)(i) as revised.
this whole paragraph (g)(1), as written, Section 1926.651(g)(1)(ii) of the Final
comprehensive list. There are many implied that respiratory protection and
unique circumstances that could result Rule requires that "Adequate
ventilation are required at all times
in the formation of a hazardous precautions shall be taken to prevent
when hazardous, flammable, and
atmosphere in excavation-related work. employee exposure to atmospheres
oxygen-deficient atmospheres exist. containing less than 19.5 percent oxygen
An excavation that is free of hazardous OSHA agrees with the suggested
atmospheric conditions on any and other hazardous atmospheres.
reformatting of this provision, but' These precautions include providing
particular day may not be safe the disagrees with the comments that
following day. To ensure that employees proper respiratory protection or
interpret this provision to require ventilation in accordance with subparts
are continually protected against the respiratory, protection and ventilation at
development of hazardous atmospheres D and E of this part respectively."
all times. The requirement specifies This provision is similar to the
in excavations, OSHA is requiring in when the atmosphere is or could be
§ 1926.651(k)(l1 that daily inspections language of the proposed rule which
reasonably expected to be either was added to clarify when protection
[not necessarily involving air testing) for oxygen-deficient (less than 19.5 percent against exposure to oxygen deficiency is
evidence of potentially hazardous oxygen) or otherwise hazardous, then
atmospheric conditions be conducted by required, and to identify the precautions
testing must be done before employees that are necessary to prevent such
a competent person. It is intended that enter.
such inspections be conducted to exposures. Oxygen deficiency is not
Another commenter (Ex. 4-91) specifically defined in the existing
identify areas or situations where supported the provision and suggested a
hazardous atmospheric conditions exist, excavation standard. However, the
revision reading in part: "Where oxygen existing requirements for air quality for
or could reasonably be expected to deficiency [exists] * * * the "supplied air" in § 1910.134(d)(1) of the
exist, during the course of work. Where atmosphere in the excavation shall be General Industry Standards, have been
such areas or situations are identified, tested * * *."OSHA sees merit in identified as applicable to the
the requirements of paragraph (g) apply. defining when testing would be required construction industry. § 1910.134(d)(1)
OSHA received six comments and to alert employers that special states that "Breathing air shall meet at
input from the ACCSH on this precautions may be necessary, and least the requirements of the
requirement. Two commenters (Exs. 4- therefore has made the recommended specification for Grade D breathing air
25 and 4-67) objected to the requirement reordering of the sentence. as described in Compressed Gas
for testing the atmosphere, noting that The ACCSH (Tr. 8/5/88, pp. 497-507) Association Commodity Specification
the gas industry normally tests for recommended treating all excavations G-7.1-1966." This specification, as well
hazardous atmospheres. Both four feet or more in depth as confined as § 1910.94, denotes a concentration of
commenters also contended that spaces. The Agency, lacking public input 19.5 percent oxygen as the lower limit
Federal Register // VoL 54., No. 209- / Tuesday.. October 31, 1989/1 Riles and Regulations 4592"1
for synthesized-air. Therefore, the 19:5 sources, of ignition-be.eliminated. OSlKA ensure-that the atmosphere remains-
percent limit foroxygen was specifically believes, that this, requirement is. to safe.,"'
identifiedinthe proposed standard in. restrictive at low concentrations' of, Thib,provisioni' identical to'the
order to.be consistent with the. existing; flammable gas in the atmosphere; but proposed rule. The-proposed paragraph
requirementsand tolclarify when testing not restrictive enough'wherehigh . Was a new requirement, added to clarify
and protection are.required. concentrations exist By setting:forthiai further-the intention, of the exfsting'
'The. existing standardrequires that limit.for the allowable,concentration. of requirements for testing; Testing is not
employees. subjected to-oxygen; flammable gasi, the proposal notified: an effectiVe method of-preventing
deficiency be protected with approved employerslof the: evellof performance exposure-to hazardous atmospheres if it
respiratory protection.as set forth im required to protectl employees.. is used only tb-detect hazardous
subpart D.-However.. the use of' OSHA received; alarge number'of. conditionsinitially and-then not used
increased' ventilation can be as.effective comments, on this provision;, primarily. again. Therefore; the proposal'required'
or more. effectivein dealing, with oxygen from employers in the'natural:gas theemployer to conduct additional
deficient atmospheres.-Therefore, this, industry; and input from the ACCSH. testing-to ensure. that' atmospheres
type ofprotectionwas also.identified as Many, commenters (forexample, Exs remain safe whenever controls are used
acceptable in the proposal. 4-6,,4-8 4-14.and,4-61)'pointed out that that are, intended to!reduce the-levels of
OSHA received one comment on.this this requirement would in effect atmospheric contaminants tO acceptable
provision..The commenter (Ex.4-30) prevent the;repair of damaged or'leaking lbvels,
pointed'out that the provision seemed to gas pipelines, without turning:off the gas The Agency received input' from the
indicate that implementation of subparts and,disrupting service, to customers., ACCSI- (Tin. 8/5/87 p. 508)'
D and E'is. only to prevent employee Many, commenters also. noted!that the: recommending, continuous monitoring,
exposure to atmospheres containing less Office: of Pipeline,Safety (OPS) has; whenemployees are.present., Nb other
than 195'percent oxygen..The regulations which-specifically/ address , comments-were. received' on,this
commenter pointed out that' subparts D this type of'situation.They requested" provision: The Agency has determined'
and E are also intbndedto prevent thatiOSHA place.a specific'exclusion to that. continuous monitoring would not be
employee exposure tO materials and. the standard- tocoverthese situations;. appropriate in many situations. Further,,
substances in the Z-1 tables of It should be noted!that'the U.S.,Court,, even in those situations when it miht
§ 1910.1000'and other OSHA standards. of Appealb-for-the Third Circuit has' be appropriate,,theAgency believes it
OSHA agrees with-the-observation,. determined!that under section 4(b)(,1):o appropriate to permit the use of I
but received no otherinput:which' , the OSHA Act, a, particulbr OPS) alternative monitoring methods whiclh
indicated-confusion as to, the'intbnded regulation. 49 CFR 192.751,, preempts; the are alsoeffectiVe. For example,in trench
application-of:'subparts D'and E- current requirements-in paragraph (v) of situations where. worki proceeding
However, in,order to clarify its! OSHA!s excavation-standard: withi rapidly and'the trench is being,
regulatorylintent, the Agency has regard to pipeline repair. (ColumbiaGas backfilled shortly after the work in a
editorily revised this-provision. The ofPennsyvania,Inc.,v, Marshall,6363 sectionis completedinstallation and,
Agencynotes. that all constuction- F.2d!913)(3d:Cir. 1980)1 Sinceparagraph:
employers-must comply with, subpartsl1 (g)(1)(iii);of the revised OSH standard. calibratibn of the. continuous testing,
and Eto-prevent'employee ,exposure - covers-the same working:c6ndition as; instruments, may not be completed:
which exceed'the prescribed permissible existing:paragraph, (v),.OSHkAassumes before employees.move.to another
exposure limits. that the new paragraph wouldalbo.be section. The.provision is written so thatt
The Agency therefore promulgates adequate monitoring is required,
preempted..However, OSHA~declines.to
paragraph § 1926.651(gj(1J(ii)1as revised. place a,specific referenceto preemption; regardlessof the-situation. This
Paragraphy -, 1926,51[g(,1(iii)'of'the' intothe standard itselfiasnoted earlier., recognizes. that in.some.instances
FinallRule requires, that "Adequate Indeed;,ff OPS-wereto change'orrevoke continuous-monitoring-would be
precautions shall-be takenisuch'as', its regulations, pipelines might once appropriate and would be.required,
providirg'ventilation.to prevent again fall within OSHA jurisdiction;..The however in-other situations-periodic
employee exposureto-.an-atmosphere placement: of anexemptiorr.within! the) monitoring would;be more appropriate-
containing a concentration. of a- OSHA standard would unduly restrict, due to-site:conditions. Therefore the:
flammable gas.in excess of:20 percent of the standard!sbcoverage in such Agency declines to,act on this
the lower flammable-limit ofthe gas"'" situations.,Therefore nospecific recommendation; and-promulgates
This provision; is identical to, the exemption' is beingincorporated into-the § 1926.651(g)(1)(iv), as proposed..
proposed rule~which-addiessedthe: standard. Section,1926.651(g)(2)(i]'of theFinar,
hazards. posed by/ the;accumulation of' The ACCSH (Tr.8,5/87,,p, 507}) Rule requires: that "Emergency-rescue.
flammable-gases..The proposed recommended adding:the'words "or, equipment, such as breathing apparatus;,
standard-requiredthatadequate; explosive gas or-vapor"'after the word a safety, harness.andilihe,,or a~baskett
precautionsbe taken'to prevent flammable.TheAgencydecnes to) stretcher, shall be readily available.
employee exposure'to atmospherex: make'thischangebecausetheterm where hazardous atmospheric'
containing a concentration. of-flammablei "flammable gas" is-a generic:term whichi conditions: exist~ormay. reasonably' be.
gas-inexcessof 20,percent of its lower' already, includes "explosivegas or, expected to. develop-during'work in-an
flammablelimit, (LFL)...This differs: from vapor." excavation This~equipment shall be.
the existing requirement which states-in Therefore;,based'on the:abo.ve, attendedwhendlruse.!'
§ 1926.G51(y): "When flammable gases discussion'OSHA promulgate. This provision issimilartb.the
are present, adequate ventilation,shall' § 1928.851(g)(!)(iii,,as'proposed. proposedirule ,whichiwas idanticallto,
be provided, or sources- of ignition shall; Section,1926.651(g)(lf(iv)lof the Final existing § 1928,851[v];except: the
be. eliminated.."' Rue requires, that "When controls: are; requirement for-the equipment: to,be
As.stated, the existingprovision. used that are: intended tolrediicethe: "attended" wasdeleted in the-proposal!
requires-that ventilation be provided level of atmospheric contamiiants , to The-manner in which- theword
when a~flhmmablegas exists.in any acceptable levels,. testingshall:be' "attended!' is-usediin the-current
concentration or, asiam alternative, that, conducted as often as'necessary to standard implies- that personnel must be'
45922 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
with and responsible for the equipment Therefore the language of the proposal Paragraph (h), "Protection from
even when the equipment is not in use. was changed to reflect this need. hazards associated with water
This is not the intent of the standard, The purpose of this requirement is to accumulation," contains four provisions
and this word was dropped in the allow rapid rescue of an employee in the that address the control and removal of
proposal. However, it is the intent of the limited space of these special types of water from excavations. Water is
existing rule and the proposal that the excavations without exposing other present, or very likely to be present,
equipment be attended while in use. exployees to the associated hazards. during the course of work in many
Therefore, the Final Rule has been Because of the configuration and excavations. Water accumulation can
modified to make this intention explicit. unusual depths of these types of result from rain or melting snow, or from
OSHA received a great many excavations, an oxygen deficient or leaking or damaged utilities such as
comments on this provision, primarily other hazardous atmosphere could occur water or sewer lines. Water creates
from companies in the natural gas very quickly, requiring rapid removal of muddy or slippery surfaces that expose
pipeline industry. These commenters any exposed employee. employees to slips and falls. Rapid
(for example, Exs. 4-6, 4-20, 4-66, 4-89, The intent of the requirement that accumulation, such as from damaged
4-113, and 4-117) pointed out that this lifelines be "individually attended" is water supply line, has even resulted in
regulation was inappropriate for that while the lifeline is actually in use drownings (Ex. 2-9). The action of water
situations involving natural gas pipeline (attached to the employee), personne.l be against the sides of excavations can
repair or replacement, since these were assigned to oversee the individual to cause undermining and cave-ins.
routine operations performed by trained whom the lifeline is attached. Accumulated water will saturate the
personnel and not emergencies as The current standard provides that sides of excavations and weaken them
understood in normal construction 'lifelines "shall be individually manned to the point where cave-ins are very
operations. Several of these commenters and be separate from any line used to likely to occur even in very shallow
(for example, Exs. 4-58, 4-112 and 4- remove materials excavated from the excavations. Further, where protective
116) noted that Office of Pipeline Safety bell footing." The proposal revised this
(OPS) regulations already regulated systems are in place, accumulated water
language to require that lifelines "shall can adversely affect the capacity of the
equipment and material needed at the be separate from any line used to handle systems.
scene of emergencies in the gas materials * * *."This clarification is to
industry. The existing requirement in
indicate that the lifeline must be § 1926.651(p) states: "Water shall not be
As noted earlier, although OSHA separate from any line used to remove
disagrees with the rationale provided in allowed to accumulate in a excavation."
or supply or otherwise handle any
Columbia Gas, we agree that paragraph materials from or to the footing Taken literally, accumulated water in
(g)(2)(i) might well be preempted by OPS any amount, in any part of arl
excavation.
regulations, under the holding in that OSHA received eight comments on excavation, violates the existing
case. However, for reasons which have this provision. Seven commenters (Exs. standard. However, OSHA does not
also been noted above, the Agency 4-21, 4-23, 4-30, 4-31, 4-40, 4-42, and 4- intend that to be the case. At times, such
declines to add a specific exemption 86) recommended deleting this provision as during sudden rain storms, for
within the standard itself. from subpart P because, they asserted, example, or when snow melts, OSHA
OSHA received no other input in this these excavations are confined spaces realizes that it is impossible to keep
provision and, therefore, promulgates and should be addressed in a confined some amount of water from
§ 1926.651(g)(2)(i) as proposed. space standard. accumulating. Additionally, in
Section 1926.651(g)(2)(ii) of the Final The Agency disagrees with these excavations which employees do not
Rule requires that "Employees entering commenters concerning deleting this 'enter, but where there is accumulated
bell-bottom pier holes, or other similar provision from subpart P. OSHA notes water, there is no exposure to a hazard.
deep and confined footing excavations, that bell-bottom pier holes and similar Further, there are certain excavations,
shall wear a harness with a life-line footing excavation require cave-in such as long trenches, where water
securely attached to it. The lifeline shall protection and other precautions related accumulated in isolated sections would
be separate from any line used to handle specifically to work in excavations. not pose a hazard if employees do not
materials, and shall be individually Consequently, it is appropriate to enter those sections.
attended at all times while the employee address these excavations in subpart P. OSHA proposed to revise the existing
wearing the lifeline is in the However, this does not preclude these requirement to recognize that not all
excavation." same excavations from being "confined water accumulated in excavations poses
This provision is almost identical to spaces" which would require a hazard. In addition, it is OSHA's
the proposed rule, which was based on compliance with additional OSHA opinion that it is not always necessary
existing § 1926.652(f). In the Final Rule, regulations (for example, to remove all water from an excavation
OSHA clarified what was intended by § 1926.21(a)(6)). The rescue procedures in which employees are expected to
"substantially" similar footing required by this provision apply because work. Paragraph (h)(1), as proposed,
excavations. of possible excavation hazards and allowed employees to work in
The existing requirements in because of possible confined space excavations in which there is
§ 1926.652(f) apply only to bell-bottom hazards. They do not apply just because accumulated water, or in which water is
pier holes. These holes are a special of possible confined space hazards. accumulating, but only under the
type of footing excavation into which OSHA received another comment (Ex. circumstances where adequate
employees descend to inspect the hole 4-72) that suggested deleting this precautions have been taken to protect
configuration. However, similar provision and promulgating another full employees against the hazards posed by
inspections are also necessary, at times, section specifically to address bell- water accumulation. The precautions
in similar deep and confined footing bottom pier holes. This recommendation could range from providing dewatering
excavations that are not belled at the is addressed in more detail earlier in equipment to special cave-in protection.
bottom. Employees in these excavations this preamble in the discussion of Issue Work can be conducted safely in
must be protected against the same 13. Based on that discussion, the Agency excavations when there is accumulated
hazards that can exist in bell-footings. declines to act on this recommendation. water. For example, the record contains
Federal Register/' Vol' 54, No. 209 / Tuesday, October, 31., 1989r/ Rules and Regulations 459273
information on a pipeline contractor- requirement. Therefore, OSHA declines Section 1926:651(h)(3) of: the Final Rule
who installed,several miles of:pipe-in ai to act on this suggestion. requires that "If excavation work
trench where the water table was only Finally, the Agency has dropped the interrupts the natural drainage of
three to four.feet' below,the surface. of phrase"these conditions have been surface water (such as streams),
the ground (Ex. 2-25). The work required anticipated and ".. "because it:added. diversion ditches, dikes,.or other
the:use of diversto place. sections of' nothing to-the standiard. The Agency suitable means shall be used to prevent
pipe at depths of up to 18 feet. believes employees, should be-removed' surface water from entering the.
Employees were protected from.cave-ins from. excavations. where water is excavation and to provide adequate
of the sides of.the trench by theuse.of accumulating unless adequate dainage of the area adjacent to the
shields.,. precautions have been taken, regardless excavation. Excavations subject to
Depending on the amount of water. of whether thewater accumulation has' runoff from heavy rainswrequire an
the precautions necessary to protect been anticipated or not. inspection by a competent person and-
employees adequately will vary.- compliance.with paragraphs (h)(1) and.
Employers were alerted to this by the Based on-the abovediscussion, OSHA
promulgates § 1926.651(h)(1)'as revised. (h)[2) of this Section."
note following proposed paragraph The requirement is virtually identical
(h)(1). Thenote. identified several Section 1926.651(h)(2) of the final rule to the proposal,. except that the
examples of the.types of protection that requires that "If water is controlled or explanatory note has been added to the
mightbe necessary to provide an prevented from accumulating by the use text. of the provision. The proposal was
adequate level of'protection. These. of water removal equipment, the water' based on a minor revision of existing
include the use of' special support or removal equipment and operations shall
§,1926.651{p).
shield systems; dewatering.to control be monitored by a competent person to OSHA. received no comment on this
the level of water, or the use, of a safety ensure proper operation." provision and; therefore, promulgates
harness and lifeline. This provision is identical to the paragraph. (h)(3).as reformatted.
Section 1926.651(h)(1) of the final-rule proposal, which was~intended to Section,1926.651(i) of the.Final Rule,
requires that"Employees shall:notwork address the use of water removal "Stability of adjacent structures,"
inexcavations in, which thereis. equipment as a means to control the contains three paragraphs that address;
accumulated.water,.orin excavations in accumulation of water. The.proposed the hazard of, unstable structures
which. water is accumulating,, unless- rules required that such equipment be adjacent to excavations..The collapse of
adequate precautions have.been.taken monitored by a competent person to, unstable. structures. endangers.
to protect employees against the ensure proper. operation. employees; in. excavations and in the
hazards posed by water accumulation. .Water removal or control is generally area around excavations. Structures can
The precautions necessary to protect undertaken to provide a dry work area. become unstable when excavation takes
employees adequately vary with-each. The process can also-be used to' place close enough to the structures so.
situation, but.could include.special contribute to improved, stability, of. as to reduce the. ability of the soil to
support or shield systems to,protect. excavation sides, and itis done in support, them. The requirements of
employees from cave-ins, water removal emergencies when suddeninflows of. paragraph 1926.851(i) are intended to
to control'the level of accumulating. water occur. When: the equipment that is ensure that necessary employee
water, or use of a safety harness.and- used to remove! or control the flow, of protection, over and above that required
lifeline." water into excavations malfunctions, by.paragraph 1926.652, is provided when
The final provision is virtually hazards that were, eliminated. when the necef"dary..
identical to the proposal except the equipment was working' can become. Paragraph (i)(1) of the Final Rule
word "and" used'in the proposed significant. requires that "Where the stability of
explanatory note has beenchanged to The requirements in paragraph. (h)(2); adjoining buildings, walls, or other
"or" at the suggestionmof several arenew. The existing standard does not structures is endangered by excavation.
commenters (Exs. 4-21, 4-23,4-31,4-40, directly address water removalF operations, support systems such as
4-42, 4-54, and'4-86). The Agency. agrees operations; however, as discussed shoring,. bracing, or underpinning shall
with these commenters that.the word: above, it requires that water not be be provided to ensure the stability of'
"and" could cause confusion: regarding: allowed to accumulate.in excavations. such structures for the protection of
the use of options. OSHA has also The~type of waterremoval equipment, employees." The three examples of
reformatted this provision by including needed in any given circumstance will support systems generally used for this,
the explanatory note in thei text of the vary depending on the volume of water purpose-shoring, bracing and
provision. that must be.removed, or controlled. In a underpinning-are unchanged from the
The Agency also received inputfrom: very large excavation, for example, current standard. This-provision is
the ACCSH (Tr. 8/5/87, p. 508), failure of water removal equipmentmay essentially the same as the proposed
recommending retitling'- 1926.651(h). to: affect only a portion of the area within rule, which.was unchanged, from the
read: "Protection from hazards. the excavation. Therefore, the. existing standard in § 1926.651(o).
associated with water accumulation:" precautions to be taken.will, of' course, However,. the words-"support systems"
Two commenters (Exs. 4-17 and 4 -91) also vary in the event failure of the are included'so that the provision is
also suggested this change. Since the equipment occurs. Suchprecautions consistent' with other provisions of the
change clarifies the regulatory intentof could involve removal of all employees standard.
this paragraph,.the-Agency has made to a safe area if they are. all,exposed. The Agency received no comment on
the recommended revision. The ACCSH Where the problem, is more isolated, this. provision and, therefore,
also recommended that OSIA require. only the employees in the area that are promulgates § 1926.651(i)(1) as
that "waterproof outerwear"be used in exposed to the added danger would proposed.
these situations. The ACCSH did.not have tobe removed. Section 192.651(i)(2)-of the Final Rule
explain their rationale for this OSHA received no comment on this. requires that
recommendation, and there is no other provision and. therefore,.promulgates Excavation below the level. of the base or
support in the record for this type. of. paragraph (h)(2).as proposed. footihg of any foundation or retaining wall.
45924 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
that could be reasonably expected to pose a of determinations must be approved by provision. The Agency agrees and has
hazard to employees shall not be permitted a registered professional engineer.. revised this provision accordingly.
except when: OSHA also received two comments Therefore, based on the above
(i) A support system, such as underpinning,
is provided to ensure the' safety of employees. (Exs. 4-17 and 4-111) and an ACCSH discussion, OSHA promulgates
and the stability of the structure; or recommendation (Tr. 8/5/87, p. 509) § 1926.651(i)(3) as revised.
(ii) The excavation is in stable rock; or supporting the use of a registered Section 1926.6510)(1) of the proposed
(iii) A registered professional engineer has professional engineer. The Agency rule has been relocated and-combined
approved the determination that the structure received no other comments on this with § 1926.652(a) of the Final Rule
is sufficiently removed from the excavation provision. because they are related provisions.
so as to be unaffected by the excavation Therefore, based on the above This change will be discussed in more
activity; or
(iv) A registered professional engineer has discussion, OSHA promulgates detail later in this preamble.
approved the determination that such § 1926.651(i)(2) as revised. Section 1926.6510) of this Final Rule is
excavation work will not pose a hazard to Section 1926.651(i)(3) of the Final Rule entitled "Protection of employees from
employees. requires that "sidewalks, pavements, loose rock or soil." Paragraph (j)(1) of
The first two exceptions are and appurtenant structures shall not be the Final Rule requires that "Adequate
essentially unchanged from the existing undermined unless a support system or protection shall be provided to protect
requirements in § 1926.651(n). The third another method of protection is employees from loose rock or soil that
and fourth exceptions are new and were provided to protect employees from the could pose a-hazard by falling or rolling
proposed in similar form because the possible collapse of such structures." from an excavation face. Such
existing standard has been interpreted This provision is similar to the proposed protection shall consist of scaling to
by some employers to apply only to rule except that "appurtenant remove loose material; installation of
excavation at and immediately below structures" (that is, structures attached protective barricades at intervals as
foundations or retaining walls. to sidewalks and pavements) have been necessary on the face to stop and
However, the loads imposed on the soil added because of the danger they pose contain falling material; or other means
from an adjacent structure are not when undermined. that provide equivalent protection."
limited to the immediate area of the The proposed requirement revised the This is almost identical to proposed
structure, but also extend some distance existing language of § 1926.650(a) that paragraph (j)(2), except that the
from the structure. This distance varies requires shoring sidewalks to carry a introductory language has been deleted
with the depth of the excavation. minimum live load of 125 pounds per because of the relocation of proposed
Generally, this distance can be square foot. The existing requirement paragraph (j)(1) mentioned above. In
estimated as being equal to the depth of does not protect employees adequately addition, the phrase
because it does not cover all pavements, ,protect * * * against" has been
the excavation. Thus, a critical plane is
formed sloping up from the bottom of only "sidewalks." Loads on pavements changed to "protect * * * from'! to be
the excavation toward the structure at during construction operations I consistent with language suggested by
an angle of 45 degrees (one horizontal to frequently can exceed the minimum load the ACCSH and other commenters
one vertical or 1H:1V). If the footing or specified. Therefore, the proposal related to this requirement and similar
foundation remains completely below covered pavements as well as requirements in other parts of this
this plane, then the conventional sidewalks. In addition, the live load standard.
assumption Is that it probably will not specification has been changed to a •This provision addresses a hazard
be affected by excavation operations. more performance-oriented requirement similar to cave-ins, although it is not of
The possibility remains, however, that to be consistent with the overall the same magnitude. Loose rock or soil
the stability of the structure could be approach taken in this revised standard. can fall or roll from an excavation face
affected in some way. Calculating the OSHA believes that the performance and, if in sufficient volume, endanger an
effect that excavation activity has on language provides the employer greater employee even when an adequate cave-
the soil supporting a structure is a highly flexibility in determining the most in protective system is in place. For
complex procedure involving expertise effective means of protecting employees. example, when a shield is used in
in soil mechanics, structural analysis, The Agency notes that this provision is conjunction with sloping, the possibility
judgement, and experience. While the intended to apply not only to employees exists for material to loosen and slide
discussion above is in terms of in the excavation, but to employees who down and over the top of the shield,
generalities, each circumstance must be may be required to use the sidewalk or thus endangering employees.
evaluated on the specifics of the pavement area. The existing standard, § 1926.651(j),
situation. OSHA received two comments (Exs. addresses this hazard. It states: "Sides,
The fourth exception to the 4-17-and 4-91) and input from the slopes, and faces of all excavations
prohibition against excavating adjacent ACCSH (Tr. 8/15/87, p. 518) on this shall meet accepted engineering
to structures recognizes that some provision. All commenters requirements by scaling, benching,
excavation activity will not present a recommended adding "appurtenant barricading, rock bolting, wire meshing,
hazard to employees. Such a situation structures" to this provision. OSHA or other equally effective means." The
could occur, for example, if a building recognizes that "appurtentant proposed standard did not change the
were on a continuous concrete footing, structures" must also be supported to requirement other than to revise the
and excavation was undertaken in a protect employees, and that is the language to Improve clarity, and to
very limited area below the footing. Agency's intent. In order to clarify this remove the references to rock bolting
Where the footing could safely span the intent, OSHA is revising the provision to and benching. Rock-bolting and
excavation, no instability in the state clearly that any attached benching are considered types of
structure would occur. Again, each structures must also be supported. In primary support systems intended to
circumstance must be evaluated on the addition, one commenter (Ex. 4-17) and prevent cave-ins; They are not normally
specifics of the situation. the ACCSH suggested moving the words used to prevent material from falling
As discussed under Issue 2 above, the "is provided" to a position after the into an excavation after the primary
Agency has determined that these types word "protection" in order to clarify this cave-in protective system Is in place.
Federal Register ' Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45925
Section 1926.651{j)(2) of the Final Rule The language of the existing regardinq this issue be submitted during
requires that "Employees shall be requirement in § 1926.651(i) is different the comment period.
protected from excavated or other from the language that was originally ' OSHA received 10 comments on this
materials or equipment that could pose promulgated in 1971. The 1971 provision. Many commmenters (Exs. 4-
a hazard by falling or rolling into requirement originally promulgated 4, 4-82, 4-88, 4-102, 4-1.06, 4-109,4-113,
excavations. Protection shall be under the Construction Safety Act was -and 4-115) expressed support for
provided by placing and keeping such stated as follows: "Excavated or other reducing the 2 foot clearance to 1 foot
materials or equipment at least two feet material shall not be stored nearer than for excavations '5 feet or less in depth.
(.61 m) from the edge of excavations, or 4 feet from the edge of any excavation Three commenters (Exs. 4-82, 4-102, and
by the use of retaining devices that are and shall be stored and retained as to 4-109) noted that the practice was
sufficient to prevent material or prevent its falling back into the successful under CAL-OSHA. However,
equipment from falling or rolling into excavation" (36 FR 7389,, April 17, 1971). OSHA notes that comments received
excavations, or by a combination of Upon the recommendation of the from CAL-OSHA (Ex. 4-4), while
both as necessary." ACCSH, it was proposed to change this suggesting that the setback for
This provision is identical to proposed provision to require that "In excavations excavated materials be reduced,
paragraph (j)(3), which was based on which employees may enter, which are provided other input which indicated
existing § 1926.651(i). The proposal was more than 5 feet in depth, excavated or that this practice was causing problems.
rewritten from the existing standard in other materials shall be stored and This input, addressing proposed
more concise language. retained 4 feet or more from the edge of § 1926.651(a), is as follows:
Existing § 1926.651(i)(1) states that theexcavation. In excavations which
* * material shall be effectively are 5 feet or less in depth, all materials The Division feels that the subsection on
stored and retained * * *." Similarly, in shall be stored and retained at least 2
surface encumbrances should be expanded
by inserting the word "spoil," which is
existing § 1926.651(i)(2), it is stated that feet from the edge of the excavation" (36 common to the industry to designate the
".* * the employer may use effective FR 19088, Sept. 28, 1971). earth removed from the excavation, because
barriers or other effective retaining •This amendment was proposed "in
it has been ourexperience that where a large
devices * * *." Interested persons have order to allow more flexibility in storing boulder or a tree on the edge might readily be
expressed concern as to what these and retaining excavated materials removed to reduce or eliminate the hazard,
provisions require and have indicated adjacent to an excavation, while at the the "spoil"is frequently left in a condition
that they should be clarified in the same time ensuring the safety of those where it is almost rollingback into the
proposed revision. Consequently, the employees working in the excavation excavation. Forthis reason too, we believe
proposed language of paragraph (j)(3) site" (37 FR 3513, Feb. 17, 1972). The the requirementto keep the spoil back at
was written-in performance-oriented comments in response to the 1972 least two feet from the edge of the excavation
language and required "the use of proposal indicated that the proposed should be in this section rather than in
retaining devices that are sufficient to change was too rigid to allow employers Subsection ")(3).(Emphasis added.)
prevent material or equipment from digging shallow trenches (less than 5 OSHA concludes from this input that
falling or rolling into excavations." The feet in depth) and having narrow rights- the reduced setback for excavations 5
duty to provide protection is clearly of-way to meet the requirement. feet or less in depth may be adequate
stated, but the employer is allowed Alternative methods of storing and and practical in theory, but not in actual
some discretion in determining the retaining such material were suggested
necessary capacity of the retaining
practice.
which would provide equivalent
devices by use of the word "sufficient." employee protection. Other commenters (Exs. 4-41, 4-88,
A device is "sufficient" (and "effective") and 4-113) noted that in some instances,
The ACCSH considered the comments
if it can be shown to be able to resist submitted in response to the proposal,
space is limited, and compliance with a
any forces that may reasonably be and the suggestions made by the OSHA
2 foot setback is difficult. One
expected to be applied to it. staff, and, as a result, recommended that
commenter (Ex. 4-41) suggested keeping
.The intent of this requirement is to the language be changed "to permit all
materials at "sufficient distances" rather
protect employees from materials, appropriate alternative methods which
than specifying a fixed setback.
equipment, and spoil piles which might will protect employees working in The Agency disagrees with this
fall into excavations. Obviously, excavations from the hazards of falling approach because "sufficient distances"
materials such as excavated soil and materials" (37 FR 3515, Feb. 17, 1972). is too subjective, and does not provide
stored construction supplies can The ACCSH recommendations were appropriate employer guidance as to
superimpose loads on the walls of an adopted and the language was revised what the regulation requires.
excavation. Such loads can be the cause to become what is now the existing Another commenter (Ex. 4-106)
of cave-ins and must be considered requirement in § 1926.651(i). supported changing the setback
when determining what protection is Prior to publication of the 1987 requirement to one foot for excavations
necessary to safeguard employees. proposal OSHA received comments less than five feet deep, stating that the
The application of the existing 2-foot concerning the-existing 2 foot (.61 m) change is valid as far as the hazard from
setback requirement to trenching has set-back requirement. It was suggested falling materials is concerned.
been questioned in the past because the that this requirement be changed to 1 Another commenter (Ex. 4-46)
requirement only appears in existing foot (30.5 cm) for excavations-5 feet (1.52 supported the 2 foot setback for
§ 1926.651 "Specific Excavation m) or less in depth. No data to support excavated materials, and recommended
Requirements," and not in § 1926.652 this suggestion was submitted to OSHA that equipment and materials be kept at
"Specific Trenching Requirements." other than the -comment that such • a least 10 feet from the edge of the
However, the requirements in § 1926.651 requirement would be practical and excavation.
have always applied to all excavations, adequate. One commenter (Ex. 4-115) supported
including trenches. The format changes OSHA did not make that suggested the reduced setback, but provided no
in the proposal and in the Final Rule are. change in the proposal. However, OSHA ,rationale, and the ACCSH (Tr. 8/5/87,
made to clarify this point. did request that specific comments - pp. 535-538) recommended increasing
45926 Federal Register / Vol. 54, No. 209 I Tuesday, October 31, 1989 / Rules and RegUlations
the spoil pile setback to 3 feet, but also precautions to protect employees. the same time, § 1926.651(l)(1) of this
gave no rationale. Therefore, the proposed requirement Final Rule will be revised by the new
After careful consideration of the was written with this intent. subpart M to remove the fall protection
record, OSHA concludes that the spoil The existing provision also requires requirements (51 FR 42735).
pile setback distance should not be that "all work in the excavation shall Section 1926.652 of this Final Rule
changed. The current requirement for a 2 cease * * ."OSHA recognizes that in details the requirements for protective
foot setback has provided adequate many instances a hazardous condition systems. Paragraph (a)(1) of this Final
protection for employees. The record may be limited to only a small area of Rule requires that "Each employee in an
contains no convincing evidence that the excavation. For example, inspection excavation shall be protected from cave-
increasing the setback to 3 feet or more might reveal a weakness in the support ins by an adequate protective system
is necessary, nor does it indicate that system which increases the possibility designed in accordance with paragraph
decreasing the setback to 1 foot for of a cave-in in a small area of a very (b) or (c) of this section except when:
excavation 5 feet or less in depth, would large excavation. In such a situation, "(i) Excavations are made entirely in
maintain employee protection at the OSHA does not believe it is necessary stable rock; or
current level. The Agency also notes to require that "all work" throughout the "(ii) Excavations are less than 5 feet
that employers who encounter site entire excavation cease until this' (1.52 m) in depth and examination of the
conditions that do not permit a 2 foot isolated problem is repaired. Therefore, ground by a competent person provides
set-back must use retaining devices to OSHA proposed to change the no indication of a potential cave-in."
prevent materials or equipment from requirement to require that "exposed This provision is essentially identical
failing into the excavation. employees shall be removed from the to.proposed § 1926.651(j)(1] except for
Therefore, based on the above hazardous areas until the necessary editorial changes. This provision was
discussion, OSHA promulgates precautions have been taken to ensure moved from its location in proposed
paragraph (j)(2) as proposed and their safety." § 1926.651(a)(1) based on comments
renumbered. OSHA received three comments and (Exs. 4-82, 4-102, 4-106 and 4-109) that
Section 1926.651(k) of the final rule ACCSH input on this provision. These
it was more appropriate in § 1926.652,
sets out provisions for inspections and commenters (Exa. 4-53, 4-88, and 4-91)
which specifically addresses employee
requires that: agreed with the proposed requirement,
protection in excavations.
(1)Daily inspections of excavations, the but two commenters (Exs. 4-53 and 4-
Proposed paragraph (j)(1) required
adjacent areas, and protective systems shall 88) objected to any additional
requirement for a written inspection log that employees in excavations be
be made by a competent person for evidence protected from cave-ins by the
of a situation that could result in possible as suggested in Issue 8 in the preamble
cave-ins, indications of failure of protective of the proposal (52 FR 12295]. The installation or use of an adequate
systems, hazardous atmospheres, or other ACCSH (Tr. 8/5/87, p. 519) supported protective system which meets the
hazardous conditions. An inspection shall be creating an inspection certification to requirements of proposed § 1926.652,
conducted by the competent person prior to verify that the inspection was done. "Requirements of protective systems."
the start of work and as needed throughout This requirement was written in
the shift. Inspections shall also be made after However, based on the discussion of
Issue 8 above, the Agency will not performance-oriented language,
every rainstorm or other hazard increasing consistent with the approach of the
occurrence. These inspections are only require the keeping of a written
inspection log. overall proposed standard. This
required when employee exposure can be
reasonably anticipated. OSHA, however, agrees with the proposed paragraph consolidated and
(2) Where the competent person finds ACCSH recommendation that the replaced several existing requirements
evidence of a situation that could result in excavation should be inspected prior to and paragraphs. The existing
possible cave-ins, indication of failure of the start of the work shift. This paragraphs affected include § § 1926.651
protective systems, hazardous atmospheres, suggestion expresses the Agency's (c), (in), and (q), and 1926.652 (a), (b), (c),
or other hazardous conditions, exposed original regulatory intent more clearly, (e), (f, and (k).
employees shall be removed from the and therefore, OSHA has revised the The existing standard is arranged in a
hazardous areas until the necessary format consisting of § 1926.651, "Specific
precautions have been taken to ensure their standard to reflect this input.
safety. Therefore, OSHA promulgates Excavation Requirements," and
§ 1926.651(k) as revised. § 1926.652, "Specific Trenching
These provisions are similar to the Section 1926.651 (1) and (1)(2) provide Requirements." Each of these sections
proposed rule, which consolidated interim fall protection requirements for contains provisions designed to protect
requirements in existing § § 1926.650(i) excavations. These provisions are employees against cave-ins. The
and 1926.651 (d) and (o). unchanged from § 1926.651(w), and substantive requirements for
The existing requirement in § 1926.651(t), respectively, in the existing "excavations" often overlap those for
§ 1926.650(i) states: "If evidence of standard. In the proposal, OSHA "trenches." Thus, an excavation
possible cave-ins or slides is apparent, intended to redesignate these provisions employer may not always be sure which
all work in the excavation shall cease into the fall protection requirements in of the existing standards apply to a-
until the necessary precautions have revised subpart M. However, the particular situation.
been taken to safeguard employees." revisions to subpart M are not yet Some of the current requirements
This is the only requirement that completed. Therefore, for the time being, indicate when cave-in protection is
specifically identifies what is necessary these provisions will be retained in required but provide little direct
if a hazardous condition is identified, subpart P. When the revised subpart M guidance as to how it is to be provided.
and it only applies to evidence of cave- is issued, § 1926.651(1(2) of this Final For example, existing § 1926.651(c)
ins or slides. It is OSHA's opinion that Rule will be revoked. The fall protection states: "The walls and faces of all
during the course of work in requirements contained therein will be excavations in which employees are
excavations, other hazardous conditions covered in subpart M, and exposed to danger from moving ground
can develop, and that the object of daily § 1926.652(e)(1)(vi) of this Final Rule shall be guarded by a shoring system,
inspections must be to identify these addresses the requirement for sloping of the ground, or some other
conditions as well'as to take backfilling excavations. Additionally, at equivalent means."
Federal. Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45927
4592
On the other hand, some provisions loads, and from changes in the ability of discussed above, adequately responds
set forth specific means of compliance. the soil to resist stress due to exposure to the concern.
For example, existing § 1926.652[f) to environmental conditions over a Another commenter (Ex. 4-46)
states: "Employees entering bell-bottom period of time. In recognition of the low suggested revising paragraph (j)(1)(ii) to
pier holes shall be protected by the probability of a cave-in occurring in specify that if there is evidence of
- installation of removable-type casing of certain circumstances, the proposal, as moving ground in excavations' 5 feet or
sufficient strength to resist shifting of does the current standard, sets forth two less in depth, the excavation should be
the surrounding earth." exceptions to the requirement to provide shored or sloped. The Agency believes
Some of the current requirements cave-in protection. this is not needed because § 1926.652(a)
specify the earth conditions in which Proposed paragraph (j)(1)(i) stated of this final rule requires a protective
cave-in protection is required. For that excavations in stable rock are
example, existing § 1926.652(b) states: system unless the conditions of the
exempt from cave-in protection exception are met.
"Sides of trenches in unstable or soft requirements. This proposed exception
material' 5 feet or more- in depth, shall An additional commenter (Ex. 4-30)
was consistent with the existing recommended that OSHA allow a
be shored, sheeted, braced, sloped, or standard which states in Note (1) to
otherwise supported by means of vertical 5 foot section at the bottom of
Table P-2 that "shoring is not required all trenches since trenches with depths
sufficient strength to protect the in solid rock, hard shale, or hard slag."
employees working within them. (See of 5 feet or less do not normally require
The term "stable rock" was used in the shoring or sloping. This issue is
Tables P-1, P-2 * * *:)
In Table P-1, terms such as proposed standard instead of the above discussed in detail later in the preamble
"compacted angular gravels," terms and was defined in under the discussion of Appendix B.
"compacted sharp sand," and "average § 1926.650(b)(20) of the proposal. One other commenter (Ex. 4-4)
soils" are used to describe the earth The second exception, which was recommended requiring cave-in
conditions. In Table P-2, terms such as stated in proposed paragraph (j)(1)(ii), protection for excavations 5 feet or more
"hard, compact," "likely to crack," and allowed the suspension of the deep, regardless of soil type (even stable
"soft, sandy, or filled" are used to requirement to provide cave-in rock), however, no supporting
describe the earth conditions. protection in excavations less than 5 information was provided.
Other existing requirements specify feet (1.5 m) in depth, but only if a Consequently, OSHA is not convinced
when special or additional precautions competent person first examined the that this recommendation is appropriate.
are necessary. For example, existing ground and found no indication that a As discussed above, experience has
§ 1926.651(m) states: "Special cave-in should be expected. shown that there is such a very low
precautions shall be taken in sloping or The exception in proposed paragraph probability of cave-in in stable rock that
shoring the sides of excavations (j)(1)(ii) continued the existing exception OSHA does not believe it warrants the
adjacent to a previously backfilled which applied to excavations less than 5 use of cave-in protection.
excavation or a fill, particularly when feet in depth. In addition; it clarified that Therefore based on the above
the separation is less than the depth of cave-in protection would not be required discussion OSHA promulgates
the excavation. Particular attention also for such excavations only after a § 1926.652(a)(1) as revised editorially
shall be paid to joints and seams of competent person first examined the and renumbered.
material comprising a face and the slope ground and found no evidence of a Section 1926.652(a)(2) of the Final Rule
,nfsuch seams and joints." potential cave-in. requires that "Protective systems shall
The existing requirements do not The existing standard in § 1926.652(a) have the capacity to resist without
appear in any specific order. In addition, states: "Trenches less than five feet in failure all loads that are intended or
it is not always clear when provisions depth shall also be effectively protected could reasonably be expected to be
apply to a given situation. However, the when examination of the ground applied or transmitted to the system."
one common feature of all the existing indicates hazardous ground movement This provision is virtually identical to
requirements is that cave-in protection is expected" (emphasis added). On its proposed § 1926.652(a), but has been
is required. Therefore, based on this face this requirement does not seem to revised editorially and has been
central requirement, OSHA proposed to require that an examination first be renumbered to accommodate format
revise its existing standards to allow conducted, or who must conduct it. revisions as discussed above.
any of several types of protective However, existing § 1926.650(i) states: The existing standard does not
systems to be used, provided that the "Daily inspections of excavations shall contain a requirement directly
system will provide protection against be made by a competent person ..... addressing the capacity of protective
cave-ins. OSHA intended this revision The proposal clarified that inspections systems. Such a requirement is
to be more performance-oriented than must first be conducted before an necessary in order to clarify the design
the current standard, while providing employer could use the exception of not goal. However, consistent with the
greater clarity and guidance as to what providing cave-in protection in approach taken in the proposal, this
steps the employer must take to protect excavations less than 5 feet in depth. requirement is written in performance-
employees from cave-ins. There would be a presumption that oriented language. As discussed earlier,
OSHA believes that there is a excavations less than 5 feet deep need proposed § 1926.651(j)(1)
potential for a cave-in in virtually all to be protected unless there is a (§ 1926.652(a)(1) of this Final Rule) sets
excavations. However, experience has' determination by a competent person forth those situations requiring cave-in
shown that the probability of a cave-in that such protection is not needed. protection, and identifies the hazards
depends upon the combined effects of OSHA received four other comments from which employees are to be
many factors (Ex. 2-5). These factors on proposed § 1926.651(j)(1). One protected. Therefore, the employer must
include the depth of the excavation, the commenter (Ex. 4-28) recommended first select a protective system for these
type of soil involved, the ability of the deleting the reference to the more conditions and hazards. Once a
soil to resist stress imposed on the soil specific § 1926.652 because it was protective system has been selected, this
from the weight of the soil itself and inappropriate. Moving this provision to paragraph sets forth performance
from static and dynamic surcharge § 1926.652(a) of the Final Rule, as criteria that must be met by that system.
*45928 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
I
The paragraphs immediately following measured from the horizontal), unless the
this paragraph address different employer uses one of the other options listed
OSHA received seven comments on
methods and approaches that can be below. the proposed provision and input from
used to provide the required level of (if) The slopes specified in paragraph (b)(1) the ACCSH. One commenter (Ex. 4-17)
protection. (i) of this section shall be excavated to form suggested decreasing the short term/
OSHA received no comment on this configurations that are in accordance with long term time from 72 hours to 24 hours,
provision and therefore promulgates the slopes shown for Type C soil in Appendix while another (Ex. 4-91) strongly
paragraph (a)(2) as proposed and B to this Subpart. supported the proposed 72 hours.
renumbered. This requirement is very different than Another commenter (Ex. 4-37) endorsed
The introductory text of § 1926.652(b) the proposal. In addition to removing the this provision as "fail safe" and further
of this Final Rule requires that "The element of short term/long term noted that it can be employed by
slopes and configurations of sloping and excavations, as discussed in Issue 4 anyone with a minimum of experience.
benching systems shall be selected and above, "greater" has been replaced by Other commenters (Exs. 4-4, 4-28, and
constructed by the employer or his "steeper" for clarity, as discussed 4-53) objected for various reasons,
designee and shall be in accordance above; and the reference to Figures B-1 including opposition to the short term/
with the requirements of paragraph through B-1.5 has been deleted because long term concept (Ex. 4-28); opposition
(b)(1); or, in the alternative, paragraph of another revision discussed below. to the title of this section, which the
(b)(2); or, in the alternative, paragraph In this first option, employers who do commenter implied required all trenches
(b)(3); or, in the alternative, paragraph not make any effort to classify the soil to be sloped (Ex. 4-53); and objection to
(b)(4), as follows". The provision is are required to cut excavation sides to the standard permitting compound
virtually identical to the proposed rule an angle that is not steeper than one and slopes in referenced figure B-1.5 (Ex. 4-
except that an option for sloping in one-half horizontal to one vertical (34 4). One commenter (Ex. 4-53) also
accordance with tabulated data is degrees measured from the horizontal), recommended adding weather
provided as is discussed under Issue 10 as specified in paragraph (b)(1)(i). conditions to the criteria in determining
above. In OSHA's opinion, the slope required configuration and slope.
Paragraph (b) provides four by this paragraph is safe for virtually all Based on a review of the entire record
alternative methods of protecting soils. Since, under this option, the on this subject (including specifically
employees from cave-in, arranged in employer is not required to make any Issue 4), the Agency promulgates
order of increasing degree of attempt to differentiate between more § 1926.652(b)(1) as revised.
performance required, based upon the stable and less stable soil types, the Section 1926.652(b)(2) of this Final
degree to which the employer performs slope required is conservative to ensure Rule provides the requirement for
soil classification analysis needed to do that employees will be protected sloping Option (2), determination of
the alternative. Design of other types of adequately in those instances where slopes and configurations using
cave-in protection is addressed in poor soil conditions are encountered. Appendices A and B, which requires
§ 1926.652(c). The required slope angle specified is that "Maximum allowable slopes, and
OSHA received no comments identical to the slope angle that is allowable configurations for sloping and
specifically directed to this provision. required for the worst soil condition benching systems, shall be determined
However, many commenters provided determined under Option (2) below. As in accordance with the conditions and
general input concerning all provisions will be explained below, the employer is requirements set forth in Appendices A
under this paragraph (b), or input required, under the second option, to and B to this Subpart." This provision is
supporting incorporation of a fourth differentiate between more stable and identical to the proposed rule.
option for sloping as addressed by Issue less stable soil types. Steeper slopes are
10. For example, several commenters
In this second option, designs must be
allowed in soils determined to be more in accordance with the conditions and
(Exs. 4-21, 4-23, 4-31, 4-40, 4-42, 4-54, stable. By requiring a slope in Option (1)
and 4-86) suggested that OSHA use the requirements set forth in appendices A
that is the same as the worst case under and B to subpart P. In brief, Appendix A
terms "steeper than or flatter than" Option (2), a necessary level of
rather than "greater than or lesser than," is a method of classifying soil and rock
consistency in the requirements is conditions, taking into account soil,
with reference to slope angles in order maintained. If a steeper slope were
to avoid confusion. OSHA agrees that environmental, and load conditions.
allowed under Option (1), the situation Appendix A divides all soils into four
the suggested wording would express could arise where an employee might be
the Agency's regulatory intent more classifications: Stable Rock, Type A,
required to slope an excavation to a Type B and Type C.(See discussion for
clearly and has amended the language greater degree after making an effort to appendix A below.) Appendix B
accordingly. determine the soil type than would be contains requirements specifying the
Other commenters (Exs. 4-21, 4-23, 4- required if no soil classification had
31, 4-40, 4-42, 4-78, and 4-86) supported maximum allowable slopes for each of
been made at all. Sloping is set at a the four classifications. In stable rock,
the addition of a fourth option for worst case angle in Option (1) to assure
sloping (See the discussion of Issue 10 vertical sides are allowed. For Types A,
that protection is provided even where B, and C the maximum allowable slopes
above). the employer makes no determination of
Based on the above discussion, OSH4 vary, with steeper slopes allowed for
soil type or stability. Type A. Appendix B also contains
promulgates the introductory text to In paragraph (b)(1)(ii), the illustrations of sloping and benching
paragraph (b) as revised. requirements state that the
Section 1926.652(b)(1) (i) and (ii) of configurations that are acceptable. (See
configurations of slopes excavated discussion for appendix B below.)
this Final Rule provide requirements for under Option (1) must conform to the
sloping Option (1). These requirements OSHA received three comments on
configuration illustrated for Type C soils this provision. Two commenters (Exa. 4-
state: shown in appendix B to subpaet P. This 28 and 4-64) opposed allowing the
(1) Option (1)-Allowable configurations is to assure that slopes permitted under employer or the competent person to
and slopes. (i) Excavations shall be sloped at Option (1) are at least as protective as
an angle not steeper than one and one-half classify soil and choose a protective
those set forth under the second design system. The other commenter (Ex. 4-37)
horizontal to one vertical (34 degrees
option in § 1926.652(b)(2).. supported this provision and considered
. Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45929
45929
this option to be the "rule of thumb," made available to the Secretary upon options provided; and relies heavily on
which is based on site conditions as request. the prudence, competence and expertise
determined by the competent person. -These provisions are essentially the of the person selected by the employer
The Agency disagrees with the two same as those in proposed paragraph to design the system.
commenters who oppose letting the (b)(3), except that "qualified person" has The proposed requirements that
competent person or the employer use been deleted, and "qualified engineer" original engineering design, and
Appendices A and B, noting that these has been changed to "registered tabulated data (including manufacturer's
appendices are actually intended for use professional engineer" as discussed data) be made available t6 the Secretary
by non-engineers. OSHA further notes under Issue 2 above. In addition, the have been modified slightly. After a
that these appendices provide much requirement that the design be made protective system is constructed, such
more guidance than the current available to the Secretary has been data or designs need not be kept at the
standard, which permits the competent revised slightly, as discussed below, and jobsite, but need only be made available
person to determine the degree of the explanatory note has been dropped to the Secretary on request. The
protection necessary. from the language of paragraph (b){4)(iii) proposal'indicated that such data or
Therefore, based on the above of this Final Rule. designs must be made available only so
discussion, OSHA promulgates In this option, paragraph (b)(4) sets long as an excavation is open or only
§ 1926.652(b)(2) as proposed. forth three requirements. The first, during an inspection, in the Final Rule
New § 1926.652(b)(3) of the Final Rule paragraph (b)(4)(i), requires that sloping the requirement is more simply stated
adds another option for sloping, Option and benching systems be approved by a that such documentation must be
(3)--Designs using other tabulateddata registered professional engineer. provided upon request to the Secretary.
which requires that- However, a person under the direction This will insure that such data is also
(i)Designs of sloping or benching systems of a registered professional engineer is available when an excavation is no
shall be selected from and be in accordance also allowed to design sloping and longer open, and after a physical
with tabulated data, such as tables and benching systems under this option, inspection is concluded. If there is any
charts. because in this relationship, the issue as to what designs or data were
(ii) The tabulated data shall be in written registered professional engineer would utilized after the physical inspection of
form and include all of the following: still be responsible for and approve the the worksite is concluded or after a
(A)Identification of the parameters that design. This approval need be no more cave-in, the Secretary must be able to
affect the selection of a sloping or benching obtain such information.
system drawn from such data; than a stamp indicating the identity of
(B)Identification of the limits of use of the the registered professional engineer OSHA solicited opinion on whether or
data to include the magnitude and approving the design. not additional information should be
configuration of slopes determined to be safe; A second requirement under this required on any design. The input
(C)Explanatory information as may be option, paragraph (b)(4}(ii), is that received concerning this matter is
necessary to aid the user in making a correct designs be in written form and include, addressed below at the end of the
selection of a protective system from the as a minimum, the following discussion of paragraph (b)(4) of this
data. information: (a) The magnitude of the Final Rule.
(iii) At least one ccpy of the tabulated data, slopes that were determined to be safe Because of the wide discretion
which identifies the registered professional
engineer who approved the data, shall be for the particular project; (b) The allowed, OSHA believes that stricter
maintained at the jobsite during construction configurations that were determined to requirements are needed to verify that
of the protective system. After that time the be safe for the particular project; and, design requirements have been met.
data may be stored off the jobsite, but a copy (c) The identity of the individual Therefore, OSHA is requiring that
of the data shall be made available to the approving the design. designs be in written form, and that they
Secretary upon request. The third requirement, set forth in be made readily available to the
This paragraph is new, and is based paragraph (b)(4)(iii), is that at least one Secretary upon request.
on input received on Issues 10 and 14 of copy of the design be maintained at the In OSHA's opinion, requiring that
the proposal. These issues are discussed jobsite while the slope is being designs be in written form will not
in detail earlier in this preamble. constructed. After that, the design need impose a significant burden upon
Section 1926.652(b)(4) of this Final not be kept on the jobsite, but a copy employers. When an employer utilizes
Rule, Option (4)--Design by a registered must be made available to the Secretary an individual to design a sloping and
professionalengineer,requires that: upon request. In OSHA's opinion, these benching system, the results of the
requirements are necessary to insure design effort must be communicated to
(i)Sloping and benching systems not that adequate designs will be prepared. the employer, and to those responsible
utilizing Option (1), Option (2), or Option (3)
under paragraph (b)of this section shall be Under this option, the employer is for implementing the design, in some
approved by a registered professional allowed a wide range of discretion to manner. Under current industry practice.
engineer. determine the degree of the hazard and this is not done orally, but by the
(ii)Designs shall be in written form and to determine the necessary level of preparation of a written plan.
shall include at least the following: protection against the hazard. It OSHA is revising the portions of
(A)The magnitude of the slopes that were provides no specific restrictions as to Subpart P relating to sloping for several
determined to be safe for the particular maximum allowed slopes or reasons. The existing standard allows
project; configurations that a registered only one approach to be used to
(B)The configurations that were professional engineer might design or determine the degree of slope required
determined to be safe for the particular approve. Therefore, under the option,
project: and. to protect employees against cave-ins.
[C) The identity of the registered slopes steeper than those allowed under This approach requires that excavations
professional engineer approving the design. the other options could be used. be sloped to the "angle of repose." As
(iii) At least one copy of the design shall be Configurations different from those noted earlier, this term, as currently
maintained at-the jobsite while the slope is allowed under the other options could defined, does not conform to its use in
being constructed. After that time the design also be used. This fourth option is the civil engineering and has resulted in
need not be at the jobsite, but a copy shall be most performance-oriented of the considerable confusion in the field. In
45930 Federal Register./ Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
addition, the existing approach is not In the current § 1926.652, reference to imposed due to dynamic forces such as
consistent with OSHA's desire to place sloping appears in existing § 1926.52 vibration from equipment, blasting,
greater emphasis on the use of (b), (c), and (k). These requirements, in traffic, or other sources.
performance-oriented standards. More general, are intended to give more Soil is a difficult material to work
flexibility is possible by allowing the specific guidance to employers as to the with because there is no control over its
employer the choice to use any of degree of sloping required. Table P-1 is structural quality. In addition, its
several acceptable approaches to referenced in both existing § 1926.652 (a) properties vary from place to place, and
provide the required level of safety for and (b), but the language of the existing they change with the passage of time
employees. standard regarding the use of Table P-1 due to environmental exposure. There is
OSHA is also revising the standard so apparently has not been clear to some an infinite number of combinations of
as to provide greater clarity as to what employers. For example, existing conditions and factors that can affect
is required of the employer. Interviews § 1926.652(a) states: "Refer to Table P-1 soil stability. Because of these variables,
with contractors have indicated that as a guide in sloping of banks." a great degree of caution must be
some provisions in the existing standard (Emphasis added.) Some employers exercised when relying on its strength in
relating to sloping are difficult to have contended that the table is, order to design and prov'ide a sloping
understand (Ex. 2-3). therefore, not mandatory. However, system with a desired level of
This difficulty is due apparently to the existing § 1926.652(b) is phrased in a protection.
present format in which specific manner more consistent with its There are practices that are accepted
requirements relating to sloping appear intended mandatory nature. by the engineering community that can
in various places in the standard but in Other difficulties are noted that relate be followed to determine safe slopes for
no apparent order. It also results from to specific terms used in the current most situations. These practices include
the fact that the soil types currently standard. For example, 45 degrees is analyzing soil samples to determine
specified in Table P-1 (compacted sharp indicated in Table P-1 as the properties of the soil; evaluating
sand, average sofl, etc.) are not defined. appropriate angle for sloping "average intended or expected load conditions
The use and application of the terms soils." "Average soil" is not defined in and sequences; and considering the
"hard. compact soil" and "unstable or the existing standard, nor are the other possible effects of environmental
soft material" in the current standard terms used in Table P-1. Further, only exposure. Soil analysis can-be
have been the source of considerable two terms used in the standard itself to accomplished in the field, using simple
confusion and have resulted in describe soils are presently defined. field testing techniques. More extensive
considerable litigation. In addition, there These terms are "hard compact soil" and accurate soil analysis can also be
are other related format problems that and "unstable soil." Neither term done in the laboratory. In addition,
have been discussed previously in this appears in Table P-I, and existing slope stability analysis is often used to
preamble. § 1926.652 (b) and (c) use the terms predict the behavior of a slope. Full
"unstable or soft", and "hard or scale models have also been used to
It was stated earlier that the existing
Subpart P is divided into two sections compact." (Emphasis added.) predict expected behavior.
containing specific requirements. OSHA has concluded that these In OSHA's opinion, holwever, it is not
Section 1926.651 is titled "Specific difficulties can be eliminated, and at the feasible or necessary to require a rigid
Excavation Requirements;" and same time a more effective standard for soil exploration and analysis program,
§ 1926.652 is titled "Specific Trenching sloping can be created, by revising the or a slope stability analysis, for every
Requirements." In § 1926.651 there are language and format of the current trench or other excavation that is made.
several references to sloping. These standard. To avoid such specifications in the
references appear in existing § 1926.651 OSHA proposed a format allowing standard, OSHA is allowing two options.
(c), (d),- g), (h), {j), and (in), and specify employers to choose from several design in which the required slope angles are
that sloping can be used as a method of alternatives discussed above. These speified. In the opinion of the Agency,
protection against cave-ins. They alternatives allow the employer these two approaches will serve the
require that when sloping is used "all flexibility to determine the degree to needs of the industry and provide safe
slopes be excavated to at least the angle which excavation sides must be sloped working conditions for employees.
of repose * * *."In addition, it is to protect employees against cave-ins. OSHA also recognizes that the first two
required that adjustments be made to The calculation of the degree to which options could be unnecessarily
the angle of repose, i.e., flattening, when excavation sides must be sloped to restrictive in some situatibns. Thus,
certain conditions are present. These protect employees against cave-ins can OSHA is permitting other,design
requirements are not presented in a be a difficult task. This is because of the alternatives as discussed below, to
concise, logical order and there is no many factors that must be taken into allow the employer to determine the
guidance given to the employer in account which can affect the stability of degree of protection required for any
existing § 1926.651 indicating either sloped excavation sides. These factors particular circumstance.
what the "angle of repose" is or to what include: The soil type and its ability to OSHA received 10 comments on
degree it must be adjusted for the resist stress; changes in the ability of the proposed paragraph (b)(3) and input
specific conditions mentioned. Although soil to resist stress due to the effects of from the ACCSH. Several commenters
Table P-1 does give an indication of exposure to environmental conditions (Exs. 4-4i 4-17, 4-28, and 4-37) and the
certain "angles of repose," this Table is such as freezing, thawing, or rain; loads ACCSH supported limiting this
located in existing § 1926.652; and no imposed due to the particular responsibility to at least "qualified
direct reference to the Table is made in configuration of the excavation; and engineers," or registered civil engineers.
§ 1926.651. Further, as discussed earlier, loads imposed due to the presence of This is in line with the determination
there are technical problems with the water, and the variation of the water made on Issue 2 discussed above.
use of the term "angle of repose." (See content in the soil. Other factors include: Other commenters (Exs. 4-82, 4-102,
discussion above for § 1926.650- Loads imposed by the presence of 4-106, 4-109, and 4-113) objected to the
"Scope, Application, and Definitions structures, equipment, overlying requirement that a copy of the design be
Applicable to this Subpart.") material or stored equipment; and loads maintained on site and made available
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
III 45931
m
to OSHA during the inspection. The Section 1926.652(c) (1) through (4) list conditions for which their various
Agency disagrees with the position of the options allowed for design of products could be used.
these commenters because the design support systems, shield systems, and A trend in the construction industry
contains the information necessary for other protective systems. has been to rely more and more on
the construction and safe use of these Section 1926.652(c)(1) of the Final Rule protection systems that are
protective system and should therefore, sets out Option (1--Designs using
be available at all times. The ACCSH manufactured products. The design of a
Appendices A, C and D, and requires particular product, such as a trench
recommended maintaining at least one that "Designs for timber shoring in shield, can be highly complex and the
copy of the design at the excavation trenches shall be determined in final design can often be adapted to a
location and making it available to accordance with the conditions and
employees, employee representatives, or variety of situations, but not to all
requirements set forth in appendices A situations. It is, therefore, incumbent on
the Secretary upon requesL OSHA and C to this subpart. Design for
believes the revised provision provides the employer to ascertain all criteria and
aluminum hydraulic shoring shall be in limitations that the manufacturer
adequate assurance that the design will accordance with § 1926.652(c)(2) below,
be available when necessary. OSHA specifies or recommends regarding the
but if manufacturer's tabulated data use of a particular product, and then to
notes that § 1926.21 requires that cannot be utilized, designs shall be in
employees be trained in hazard use the product accordingly.
accordance with appendix D." This
recognition and avoidance, which provision is identical to the proposal An employer, then, is allowed a
means that they are to be informed as to except for the inclusion of the degree of discretion as far as choosing a
how they are being protected against requirements for the use of the new particular product for use. OSHA
cave-ins. appendix D, which is dicussed in detail believes the likelihood that
Another commenter (Ex. 4-11) below. manufactured products will be used in
suggested the design should include The Agency received only one the manner intended will be enhanced if
other criteria such as limitations due to comment on this provision. That ,the specifications and recommendations
rain or groundwater or surcharge loads, commenter (Ex. 4-28) pointed out that it that the employer uses to select such
and should indicate the means of access appears that this provision in the products, Including the limitations set by
end egress. The Agency recognizes the proposal applied only to trenches. This the manufacturer on their use, are
significance of these concerns and notes is OSHA's regulatory intent, and, required to be at the jobsite while the
that other specific provisions of the therefore, the Agency has not revised system is being constructed, and made
standard will adequately address these this provision. available to the Agency upon request.
concerns. Paragraph (c)(2) (i) through (iII) or OSHA received one comment on
The ACCSH (Tr. 8/5/87, pp. 520-521) § 1926.652 of the Final Rule set out these provisions and input from the
recommended limiting design to'a Option (2)-Designs using ACCSH. The commenter (Ex. 4-106)
registered professional engineer, which manufacturer'stabulateddata, and objected to the requirement for retention
the Agency has done, based on the input require that: of the manufacturer's specifications at
received on Issue 2. Additionally, the (i) Designs of support systems, shield the jobsite. The Agency disagrees with
ACCSH recommended deleting "an systems, or other protective systems that are this commenter for several reasons.
indication of'from proposed drawn from manufacturer's tabulated data First, OSHA is not convinced that these
§ 1926.652(b)(3)(ii) (A) and (B)because shall be in accordance with all specifications, manufactured systems can be installed
the phrase is superfluous. The Agency recommendations, and limitations issued or safely' from memory. Second, OSHA
agrees and has revised these provisions made by the manufacturer. believes this data must be available in a
(ii) Deviation from the specifications,
accordingly. recommendations, and limitations issued or reasonable amount of time to the
Section 1926.652(c) of the Final rule, made by the manufacturer shall only be competent person if site conditions
"Design of support systems, shield allowed after the manufacturer issues change. Finally, OSHA compliance staff
systems, and other protective systems," specific written approval. cannot be familiar with every
states that "Designs of support systems, (iii) Manufacturer's specifications, manufactured system that is on the
shield systems, and other protective recommendations, and limitations, and market, and must have some readily
systems shall be selected and manufacturer's approval to deviate from the available means to verify that the
constructed by the employer or his specifications, recommendations, and system is being used properly if such a
limitations, shall be in written form at the
designee and shall be in accordance jobsite, during construction of the protective question arises during an inspection.
with the requirements of paragraph system. After that time this data may be The ACCSH Tr. 8/5/87, pp. 522-523)
(c)(1); or, in the alternative, paragraph stored off the jobsite, but a copy shall be recommended that these manufacturer's
(c)(2); or, in the alternative, paragraph made available to the Secretary upon specifications be on site at all times
(c)(3); or, in the alternative, paragraph request. while the excavation is open and be
(c)(4) as follows." This introductory These provisions are virtually made available to employees, and
provision is identical to the proposed identical to the proposed rule, except for employee representatives in addition to
rule. the minor revision of the requirement to the Secretary. The Agency is not
OSHA received no public input on provide the data to the Secretary. The convinced that it is necessary for these
this provision. However, the ACCSH rationale for this change is discussed specifications to be kept on-site at all
(Tr. 8/5/87, p. 522) recommended that above under § 1926.652(b)(4). times. OSHA believes that as long as a
OSHA delete the reference to the This second option allows the use of protective system is constructed in
"designee" because it is standard designs based on or drawn from a accordance with the specifications, and
practice to consider the management manufacturer's tabulated data. The site conditions do not change, the
representative to be the employer. The manufactured systems generally specifications can be stored or used at
Agency believesthe proposed language addressed by the paragraph include another nearby site without decreasing'
makes this point clear to those who may metal hydraulic shoring and shields. In employee safety.
not follow the standard practice, and" the past, manufacturers have developed Paragraphs (c)(3) (i) through (iii) of
declines to act on this recommendation. tabulated data that indicated the § 1926.652 of the final rule 'et out option
45932 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / tRules and Regulations
(3)-Designs using other tabulateddata, OSHA received nine comments and sizes, types, and configurations of the
and require that- input from the ACCSH on these materials to be used in the protective
(i)Designs of support systems, shield provisions. The ACCSH (Tr. 8/5/87, p. system," and "the identity of the
systems, or other protective systems shall be 523) and two commenters (Exs. 4-4 and registered professional engineer
selected from and be in accordance with 4-17) supported the use of a "registered approving the design." The second
tabulated data. such as tables and charts. professional engineer" as discussed requirement, stated in paragraph
[ii) The tabulated data shall be in written under Issue 2 above.
form and include all of the following: (c)(4}(iii), requiresthat "At least one
Four commenters (Exs. 4-82, 4-102, 4- copy of the design shall be maintained
(A)Identification of the parameters that 106 and 4-109) objected to the
affect the selection of a protective system at the jobsite during the construction of
drawn from such data: requirement that the tabulated data be the system, and the design shall be
(B)Identification of the limits of use of the retained on-site during the construction made available to the Secretary upon
data; of the system and that it be provided request."
(C)Explanatory information as may be during an inspection. OSHA again
necessary to aid the user in making a correct disagrees with these four commenters These requirements are similar to
selection of a protective system from the for the same reasons discussed above. those in § 1926.652(b)(4) for sloping and
data. Paragraphs (c)(4) (i) through (iv) of benching. The discussion of those
(iii) At least one copy of the tabulated data, § 1926.652 of the final rule require that: requirements is equally applicable for
which identifies the registered professional the requirements proposed under this
engineer who approved the data. shall be (i) Support systems, shield systems, and paragraph.
maintained at the jobsite during construction other protective systems not utilizing Option
(1], Option (2), or Option (3), above, shall be There are many paragraphs
of the protective system. After that time the approved by a registered professional distributed throughout the existing
data may be stored off the jobsite, but a copy engineer. standard that set forth requirements
of the data shall be made available to the (ii)Designs shall be in written form and
Secretary upon request. pertaining to the use of shoring and
shall include the following: other protective systems. Existing
These provisions are essentially the (A)A plan indicating the sizes, types, and paragraphs (c), (m), (o), and (q) of
same as those in the proposal except configurations of the materials to be used in
the protective system; and § 1926.651. and paragraphs (b), (c), (e).
that "qualified person" has been (B)The identity of the registered and (f) of § 1926.652 state when use of a
deleted, "qualified engineer" has been professional engineer approving the design. protective system Is required. Other
replaced with "registered professional (iii) At least one copy of the design shall be existing paragraphs contain
engineer," and the requirement to make maintained at the jobsite during construction requirements pertaining to the design of
the data available to the Secretary has of the protective system. After that time, the such systems. These include paragraphs
been modified. The reasons for these design may be stored off the jobsite, but a
changes are discussed under Issue 2 copy of the design shall be made available to (e), (f), and (k) of § 1926.651; and
the Secretary upon request. paragraphs (d), (g), and (k) of § 1926.652.
above or under § 1926.652(b)(4). These existing requirements have been
In this option, it is specified that These requirements are essentially the revised and reorganized to make the
designs can be selected from other same as those of the proposal except standard easier to follow and
tabulated data, such as tables and that "qualified person" has been understand.
charts, that have been approved by a deleted. "qualified engineer" has been
replaced with "registered professional Some of the shoring requirements in
registered professional engineer. This the current standards have been
paragraph is intended to allow engineer" (as discussed under Issue 2,
above), and the explanatory note, criticized as being either too inflexible
employers to develop and use general or too difficult to understand. For
designs that can be used repetitively defining OSHA's intended meaning for
and that meet the needs of their readily available, has been incorporated example, existing table P-2, "Trench
into the text of paragraph (c)(4)(iii) as a Shoring-Minimum Requirements," has
particular circumstances. OSHA been criticized by contractors as too
recognizes that the design of protective result of format changes.
This paragraph (c)(4) gives employers inflexible (Ex. 2-3). Table P-2 specifies
systems can be a highly complex timber sizes of shoring members, but
engineering procedure that involves the flexibility to design protective
systems for unique applications. There generally only specifies one
elements of soil mechanics and
structural engineering. Each excavation are no specific restrictions or limitations configuration of members for any
regarding the application of designs particular case. Each case is defined by
is unique. Therefore, repetitive use of a three parameters: Soil condition, trench
general design must-be done with allowed under this option. The
employer, through the registered depth, and width of trench. OSHA notes
caution. Designs for general applications
have limits that must not be exceeded, professional engineer, is thus given wide that interpreting the table as not
latitude to judge the degree of the allowing any deviation from the
or else employees will be endangered. specified configurations is an inaccurate
Tabulated data, therefore, can only be hazard present and to determine the
degree of protection required. and overly restrictive reading of table P-
used safely when the necessary . OSHA recognizes, because such a 2. The table only indicates certain
information is provided that explains wide latitude exists under this provision, configurations that will provide the
the limitations of the data and that there is a possibility the intended required minimum protection. Other
demonstrates that the system is safe goal will be missed. OSHA is, therefore, configurations that provide equivalent
under prevailing soil, load, and promulgating two requirements that are or greater protection are acceptable.
environmental conditions. intended to increase the likelihood that Another problem with existing table
OSHA has determined that the the protective systems designed under P-2 is that selection of a configuration is
requirements for documentation are this Option will be adequate to protect based on soil classifications and soil
necessary to balance the wide employees. The first of these conditions that are not defined in the
discretion that is allowed employers requirements, stated in paragraph existing standard. The terms are not
when they provide a system of (c)(4)(ii), requires that "Designs shall be used in a manner that is consistent with
protection, and to assure that employees in written form," and must, at a the way other similar terms relating to
are adequately protected. minimum, include "a plan indicating the soil conditions are used in the standard.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45933
The current standard has also been is able to support the intended loads or is is extensive, or where the competent
criticized with regard to its coverage of otherwise suitable for safe use, then such person cannot assure the safe use of the
protective systems other than timber material or equipment shall be removed from system in the field, OSHA believes the
service, and shall be evaluated and approved prudent course of action is to require the
shoring. Several such protective systems by a registered professional engineer before
are in fact mentioned in the existing :. being returned to service. equipment to be evaluated and
standard. These include shoring, sloping, approved by a registered professional
use of shields, support systems, bracing, These provisions are. essentially the engineer before the equipment is
and sheet piling. In a footnote to table same as those in the proposal, except returned to service.
P-2, trench jacks and steel sheet piling that paragraph (d)(3) has been revised to Section 1926.652(e)(1) of the Final Rule
are specifically indicated as being address a concern raised by the ACCSH sets out the general provisions for the
acceptable substitutes for wood which is discussed below. installation and removal of support
members. However, the failure to The provisions in paragraph (d) system, and reads as follows:
mention other systems, particularly address the hazard to employees
resulting from the use of damaged or (i)Members of support systems shall be
metal hydraulic shoring, has led to the securely connected together to prevent
mistaken impression among some . defective components of protective
systems. The materials and equipment
sliding, falling, kickouts, or other predictable
interested persons that such systems are failure.
used for employee protection must be (ii)Support systems shall be installed and
not allowed by the standard. OSHA structurally sound. The loss of structural
emphasizes that this is not the case, removed in a manner that protects employees
capability due to defects or damage can from cave-ins, structural collapses, or from
either with the current standard or in result in the failure of a protective
this revision. being struck by members of the support
system. system.
(iii) Individual members of support systems
OSHA received eight comments and The existing requirements in
input from the ACCSH on these § § 1926.651(1) and 1926.652(d) address shall not be subjected to loads exceeding
provisions. Four commenters (Exs. 4-4, the condition of materials used for those which those members were designed to
4-17, 4-28, and 4-30) and the ACCSH support structures and systems.These withstand.
(Tr. 8/5/87, pp. 523-524) supported a requirements have been consolidated
(iv) Before temporary removal of individual
"qualified engineer" or "registered members begins, additional precautions shall
into paragraph (d)(1), which covers all be taken to ensure the safety of employees,
professional engineer" to perform this elements of protective systems and
original design work. These commenters such as installing other structural members to
extends to other types of protective carry the loads imposed on the support
also voiced their support in response to systems, such as shields. system.
Issue 2. The existing standard does not refer (v) Removal shall begin at, and progress
Four other commenters (Exs. 4-82, 4- specifically to manufactured items. from, the bottom of the excavation. Members
102, 4-106, and 4-109) objected to the However, manufactured equipment such shall be released slowly so as to note any
requirement that the design be as shields and metal hydraulic shoring is indication of possible failure of the remaining
maintained on the site during used extensively in the industry today. members of the structure or possible cave-in
construction of the protective system However, to assure their safe use, these of the sides of the excavation.
and that it be provided during an (vi) Backfilling shall progress together with
items must be used in strict accordance the removal of support systems from
inspection. OSHA disagrees with these with the manufacturer's
commmenters for the same reasons set excavations.
recommendations and instructions. In
forth in discussions above. addition, the existing standard does not This provision is virtually identical to
The ACCSH again recommended that clearly address the problem of such the proposal except for some editorial
this information be maintained on-site items becoming damaged while in use. changes to clarify the Agency's intent.
at all times and be available to Often material and equipment used in Installation and removal of support
employees and employee- temporary protective systems are systems, which can involve significant
representatives as well as to the designed with only a small factor of material-handling activity, are
Secretary. OSHA believes it sufficient if safety. If the equipment is damaged, particularly hazardous periods in
designs are on site during construction there may be no margin of safety and excavation work. Additionally, partially
and available upon-request afterwards. employees could be in immediate completed support systems will not
Therefore, based on the record, OSHA danger. Paragraphs (d) (2) and (3) of the react to loads in the same mainer as
promulgates § 1926.652(c)(4) (i) through Final Rule address the need for completed structures. Individual
(iv) as revised. employees to be protected in these members can become overloaded and
Paragraphs (d),(1) through (3] of fail, leading to a general failure of other
circumstances.
§ 1926.652 of the Final Rule address OSHA received no public comment on portions of the support system.
materials and equipment and require these provisions. However, the ACCSH Therefore, employees can be exposed to
that: (Tr. 8/5/87, pp. 524-528] recommended cave-ins, the collapse of adjacent
(1)Materials and equipment used for that OSHA require a registered structures, or collapse of the support
protective systems shall be free from damage professional engineer to make the system if the employees are not properly
or defects that might impair their proper determinations required by paragraph protected during installation. and
function. (d)(3). The ACCSH argued that the removal.
(2)Manufactured materials and equipment Paragraph (e)(1) contains six
used for protective systems shall be used and- competent person does not have the
maintained in a manner that is consistent expertise to make these determinations. requirements that address these
with the recommendations of the The Agency agrees, in part, with the hazards. Four of these requirements
manufacturer, and in a manner that will ACCSH. However, OSHA believes the (Final (e)(1) (i), (iv), (v) and (vi)) are
prevent employee exposure to hazards. competent person can be relied upon to based on existing requirements found in
(3)When material or equipment that Is make some determinations, especially three existing §§ 1926.651(f, and
used for protective systems is damaged, a when wooden shoring is used or when 1926.652 (j)and (1). In the proposal and
competent person shall examine the material in the Final Rule, the existing provisions
or equipment and evaluate its suitability for - there is only superficial damage to
continued use. Ifthe competent'person manufactured systems. In situations have been grouped into a more logical,
cannot assure that the material or'equipment where damage to manufactured systems easier-to-follow format under one
45934 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
paragraph heading. The requirements in OSHA received three other comments cave-in. Essentially, where employees
existing § 1926.652 that currently apply (Exs. 4-17, 4-91, and 4-111) basically will be expected to enter a trench, it is a
only to specific trenching situations will agreeing with these provisions or safe work practice to install the support
be extended to cover all excavations suggesting clarifications that were system as soon as possible after
because the hazard addressed by those already addressed by OSHA's excavation. OSHA believes that this
requirements exist whenever and incorporation of the ACCSH's suggested proposed requirement is necessary to
wherever support systems are being revisions. assure employee safety in trenches.
installed or removed. Paragraph § 1926.652(e)(2) of the Final OSHA received 10 comments and
The other two proposed requirements, Rule, Additionalrequirementsfor additional input from the ACCSH on
(e)(1)(ii) and (e)(1)(iii) were new. These supportsystems for trench excavations, these provisions. Several commenters
specifically require protection for requires that: (Exs. 4-21, 4-23, 4-31, 4-40, 4-42, 4-78,
employees from cave-ins, the collapse of (i) Excavation of material to a level not 4-86, and 4-91) suggested that
structures, or from being struck by greater than 2 feet (.61m) below the bottom of excavation more than 2 feet below the
members of the support system. The the members of a support system shall be support system should be permitted if
proposal required, in addition, that permitted, but only if the system is designed approved by a qualified person. The
individual members of support systems to resist the forces calculated for the full Agency notes that this 2-foot depth has
not be subjected to loads exceeding the depth of the trench, and there are no support from NBS, as discussed above.
design loads of those members. indications while the trench is open of a
possible loss of soil from behind or below the However, the commenters who want to
OSHA received ten comments and bottom of the support system. be able to dig deeper than 2 feet below
input from the ACCSH on these (ii) Installation of a support system shall be the support system have not presented
provisions. Many commenters (Exs. 4- closely coordinated with the excavation of evidence to support their position for an
21, 4-23,'4-31, 4-40, 4-42, 4-54, and 4-86) trenches. "across the board" relaxation of this
recommended adding the word These requirements are virtually requirement.
"predictable" between "other" and Employers wishing to excavate deeper
identical to the proposal, except
"failures" to indicate that the design and paragraph (e)(2)(i) contains language than 2 feet below the support system
installation of support systems take into that allows excavation to a level not must comply with § 1926.652[c)(4),
account factors that can be reasonably greater than 2 feet (.61 m) below the which requires design by a registered
anticipated. The Agency agrees that the bottom of the members of a support professional engineer. OSHA believes
word "predictable" should be inserted system of a trench. It applies only to that while deviations from the two foot
as recommended, and has revised the trenches. This provision, based upon rule could be safe in some situations, in
standard reformatting these provisions. recommendations made to OSHA by order to ensure employee safety,
However, the Agency sees no merit in NBS (Ex. 2-6), helps to clarify what was employers who dig deeper than 2 feet
the suggested reformatting, and declines meant by the phrase "installed so as to below a support system must have a
to act on that recommendation. be effective to the bottom of the protective system designed by a
The ACCSH (Tr. 8/5/87, pp. 528-529) excavation" found in existing registered professional engineer.
recommended that OSHA revise the § 1926.652(d) of the current trenching Another commenter (Ex. 4-17) pointed
heading of paragraph (e) to read standards. The revised provision out that the definition of "cave-in" is not
"Installation, modification, and quite appropriate, as used in this
recognizes that trench support systems
temporary or permanent removal of in some instances need not always be provision. OSHA agrees and has revised
support system." Additionally, the installed to the bottom of the this requirement accordingly. An
ACCSH recommended requiring that all excavation. If designed to resist the additional commenter (Ex. 4-111) merely
installation, modification, changes, or forces calculated for the full depth of the noted that when sloping, a four-foot
removal be done in accordance with a. excavation, the system can be fully bench is allowed.
plan supplied by a registered effective, even if it does not extend to The ACCSH (Tr. 8/5/87, pp. 529-530)
professional engineer or be done under the bottom. recommended eliminating the 2-foot
the direct supervision of a registered Paragraph (e)(2)(ii) requires that depth, noting that OSHA should not
professional engineer. The Agency has installation of support systems be allow excavation below the support
determined that the language requested closely coordinated with the excavation system unless the system is so designed.
in the first ACCSH suggestion is not of trenches. This is a revision of existing Also, the ACCSH recommended
necessary, and notes that these § 1926.652(i). The ACCSH suggested that eliminating "of trenches" in paragraph
provisions are not intended to address the existing and proposed requirements (e)(2)(ii) because trenches are
modifications of the support system (see be dropped (Ex. 2-8, p. 400) because excavations.
§ 1926.652(c)). they seemed to apply to all trenches, The Agency believes that the 2-foot
OSHA also notes that there is no even where there would be no employee limit, as proposed, provides adequate
other evidence in the record to support exposure to cave-in hazards (i.e., where employee protection, and is supported
the suggested requirement to have a no employees enter the trenches). by NBS. However, as discussed above,
registered professional engineer either However, this paragraph is intended to excavation deeper than 2 feet below a
plan or supervise the installation or apply only where employees are support system must be designed by a
removal of support systems. OSHA exposed to cave-in hazards. As with all registered professional engineer. In
believes that it would be both OSHA standards, these provisions apply addition, OSHA notes that paragraph
impractical and unnecessary to have an only where there is exposure of (e)(2)(ii) is directed at trenches because
engineer involved in installation and employees to hazards or potential prompt installation of the support
removal of support systems for every hazards. system is more critical in trenches than
excavation. Coordination of installation of the in excavations in general.
The ACCSH also suggested language support system with the excavation of Therefore, based on the record, OSHA
to clarify the intent of paragraphs (e)(1), the trench will reduce the possibility promulgates § 1926.652(e)(2) as revised.
(iv), and (v). The Agency has that a cave-in will occur. The longer a Section 1926.652() of the Final Rule
incorporated these suggestions. trench is open, the more likely it is to requires that "Employees shall.hot be
Federal Register / Vol. 54, No. 209 /Tuesday, October 31, 1989 / Rules and Regulations 45935
permitted to work on the faces of sloped until the revised subpart M is issued. equations for determining allowable
or benched excavations at levels above These provisions, which require fall compressive loads have been.
other employees except when the protection at remotely located developed. These newer equations are
employees at the lower levels are excavations and on walkways or described in the "Timber Construction
adequately protected from the hazard of bridges crossing over excavations, Manual" published by the American
falling, rolling, or sliding material or respectively, will be incorporated into Institute of Timber Construction (Second
equipment." This provision is identical subpart M-Fall Protection. This action edition, 1974.) The more modem
to the proposal. OSHA received no is consistent with OSHA's intention to equations take into account the shape of
comment on this requirement. locate most of the provisions relating to the member (i.e., square or round), and
Paragraphs (g)(1), (i) through (iv) of fall protection in construction together the kind of wood used to produce the
§ 1926.652 of the Final Rule set out the under one subpart. member. Allowable stresses (i.e., the
general provisions for shield systems OSHA published a proposed revision maximum stresses to which a member
and require that: of its fall protection standards in should be subjected) vary depending
subpart M. (See 51 FR 42718, Nov. 25, upon the species of wood being
{i) Shield systems shall not be subjected to 1986.) When this proposal is published considered. The equation given in
loads exceeding those which the system was
designed to withstand. as a Final Rule, the excavation fall existing § 1926.652(g)(2) does not
(ii)Shields shall be installed in a manner to protection provisions will be account for either of these factors.
restrict lateral or other hazardous movement incorporated into new subpart M. However, OSHA does not believe that
of the shield in the event of the application of OSHA is deleting the following the newer improved equations should be
sudden lateral loads. existing paragraphs: § 1926.650(e), which specified in the revised standard. First,
(iii) Employees shall be protected from the requires personal protective equipment in OSIA's opinion, these equations do
hazard of cave-ins when entering or exiting as set forth in subpart E; § 1926.651(r), not need to be specified in the standard
the areas protected by shields. which requires that blasting be itself. As pointed out above, a particular
(iv) Employees shall not be allowed in performed in accordance with subpart equation is used only to determine the
shields when shields are being installed, U; and § 1926.651(y), which requires that maximum allowable stress to which a
removed, or moved vertically. ladders be in accordance with the certain structural member should be
These provisions are virtually requirements of subpart L These subjected. Today, such information
identical to the proposal except that references are redundant in that they generally is available in tabulated form
paragraph (g)(1)(iv) has been revised to require nothing different or in addition for most species and grades of wood.
permit employees to remain inside to the requirements set forth in the Therefore, it is not necessary to use an
shields being moved horizontally. This respective subparts. In addition, they equation in the standard to calculate
revision is based on input received on might mislead an employer into maximum allowable stresses.
Issue 11, discussed above. OSHA assuming that other subparts not Furthermore, knowing the maximum
received 16 comments and ACCSH input referenced do not apply to excavations. allowable stress alone is of little value.
on proposed paragraph (g)(1)fiv), all of The requirements of subparts E, U, and The actual stress to which a member is
which supported this decision. L remain applicable to employees subjected or expected to be subjected
Section 1926.652(g)(2) of the Final Rule working in and around excavations, as must also be known and a comparison
requires that "Excavations of earth do the other subparts of part 1926. made between the actual and allowed
material to a level not greater than 2 feet OSHA is also deleting existing stresses. If the actual stress were to
(.61 m) below the bottom of a shield § 1926.652(g). This paragraph presently exceed the maximum allowable, then
shall be permitted, but only if the shield states: "Minimum requirements for the particular member could not be
is designed to resist the forces trench timbering shall be in accordance used.
calculated for the full depth of the with Table P-2." It also requires that Another reason why equations are not
trench, and there are no indications compressive stresses in timber braces required to be used in the Final Rule is
while the trench is open of a possible and diagonal shores not be in excess of that they address only one type of load
loss of soil from behind or below the certain allowable values as computed situation. For example, the current
bottom of the shield." using the given formula. The
This provision is virtually identical to requirements of this paragraph are not equation is only intended to be used to
consistent with the approach taken in calculate the maximum allowable
the proposal except for editorial changes compressive stress for wood members
suggested by commenters to clarify the the Final Rule, which does allow the acting as columns under axial
intent. employer to select trench timbering from
This provision allows excavation of tables, but does not make the tables compressive loads. However, members
minimum requirements for all trench are often subject to eccentric loads or
earth material in certain circumstances lateral loads that create bending
to a level not greater than 2 feet (.61 m) shoring.
In addition, OSHA believes that the stresses in them. These other stresses,
below the bottom of shields. The alone or in combination with axial
reasoning behind this is identical to that equation set out in existing
§ 1926.652(g)(2), which is intended to be compressive forces, can be critical.
discussed in paragraph (e)(2)(i) above. Therefore, the maximum allowable and
OSHA received two comments (Exs. used for determining the maximum
4-17 and 4-111) and input from the allowable compressive stress in braces actual stresses for various load
and diagonal shores in a wood shoring conditions need to be considered in
ACCSH [Tr. 8/5/87, p. 530] on this addition to the one load condition
provision. All input was of an editorial system, is not appropriate for
continuation in the standard. OSHA has currently specified in the standard.
nature and was substantially the same A final reason why use of the existing
as the input received on paragraph determined that the equation is outdated
(e)[2)(i), discussed above. and should not be carried forward. The equation is no longer required is that it
use of the specified equation, in a applies only to wood members. Much
Relocated and DeletedParagraphs slightly different form, was originally less wood is used today than in 1944
The fall protection requirements in contained in the USA Standard A10.2- when use of the equation was
existing § 1926.651 (t) and (w) are 1944, "Safety Code for Building recommended. Other materials,
retained in the revision of subpart P Construction." Since that time, new primarily steel and aluminum, are used
45936 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
more frequently today, and different a sloping system, or in § 1926.652(c) if "hard and compact" and "soft and
equations are used to calculate using shoring, shields, or another unstable." Further, there is an
allowable stresses in members made of system. When an employer chooses an inconsistency in the terminology
these materials. option where this appendix is to be currently found in subpart P. For
In OSHA's opinion, the alternatives used, the employer must then adhere example, one set of terms is used in
set forth in the appendices of the Final faithfully to the requirements and Table P-1 which indicates
Rule for design of protective systems provisions of the appendix. The recommended slopes in certain
will provide added flexibility for the appendix then becomes mandatory. primarily granular materials. A different
employer while increasing the degree of Appendix A may also be used in set of terms to describe soils is used as
safety afforded the employees, thus conjunction with appendix D to the basis of the divisions of Table P-2.
eliminating the need for the existing determine requirements for the use of which specifies minimum requirements
equation. aluminum hydraulic shoring in the for timber shoring in trenches.
OSHA is also deleting other existing absence of manufacturer's tabulated This soil classification system is
regulations currently in subpart P. Two data permitted in § 1926.652(c)(2).
tables which are part of the present intended to eliminate this deficiency. It
Appendix A is arranged into four is intended to provide construction
standard have been deleted and will be major paragraphs. These are: (a) Scope personnel and OSHA Compliance
replaced by material contained in the and Application; (b) Definitions; (c) Officers with a common language that
Appendices to the standard. The Requirements; and (d) Acceptable can be used to assess the requirements
contents of these Appendices are Visual and Manual Tests. and adequacy of sloping and shoring
discussed in detail below. Existing The first paragraph states the scope of systems used to prevent cave-ins.
Table P-i, "Approximate Angle of the appendix and when it is applicable.
Repose for Sloping of Sides of The soil classification system that
Terms used throughout the appendix are was proposed was developed by the
Excavations," would, in effect, be defined in the second paragraph. The
replaced by appendices A and B, which National Bureau of Standards (NBS).
requirements for making soil The background of the system is
provide a detailed soil classification classifications are set forth in the third
scheme and sloping requirements for the paragraph and basically state that the
explained in more detail in Exhibit 2-5.
employer who selects the second option OSHA incorporated this classification
classifications, as defined in the
for designing sloping system protection. previous paragraph, shall be determined
system in the proposal based on the
Similarly, existing Table P-2, 'Trench recommendations of NBS, after
based on the results of visual and
Shoring-Minimum Requirements," will manual analyses. Acceptable visual and
consultation with the ACCSH, and after
be replaced by material in appendices A manual analyses are described in the a review by interested parties at the five
and C. fourth paragraph. industry-sponsored workshops. In
OSHA recognizes that all or none of addition, OSHA used several American
Appendix A-Soil Classification Society for Testing and Materials
the particular analyses described in the
Appendix A details a method of fourth paragraph may apply at any one (ASTM) Standards, as well as other
classifying earth deposits, taking into time, and that other tests could be sources, to obtain information that, in
account various environmental developed or used which would meet OSHA's opinion, was needed to
conditions, site-specific conditions, and the intent of the standard. Therefore, supplement and clarify the NBS
soil-specific conditions. The results of these analyses are recommended, but recommendations. The ASTM Standards
the categorization of soils in accordance not mandatory. included:
with this method would then be This soil classification system, as with (1) Designation: D653-67 (Reapproved
subsequently used to determine the all soil classification systems, is not 1973)-"Standard Definitions of Terms
level of protdction from cave-ins that is intended for universal application. and Symbols Relating to Soil and Rock
required to protect employees. OSHA does not intend that the system Mechanics," (Ex. 2-27);
It is not required in every instance be used to replace analysis and testing (2) Designation: D2487--69--"Standard
that employers use this Appendix as the for engineering design. OSHA does not Method for Classification of Soils for
basis of classifying earth conditions. require sampling and testing for Engineering Purposes," (Ex. 2-28); and,
The standard provides two options for engineering design in the current (3) Designation: D2488-69--Standard
designing protective systems which standard, and for reasons discussed Recommended Practice for Description
involve the use of appendix A. First, below is not requiring specific soil of Soils (Visual-Manual Procedure),"
§ 1926.652(b)(2) provides for the use of testing procedures In this Final Rule. (Ex. 2-29).
appendix A to determine the The decision to conduct a more OSHA used these sources to clarify
requirements for sloping and benching. sophisticated soil sampling and testing and provide additional information in
The second option, in § 1926.652(c)(2), program, as under the current standard, paragraph (b) of the appendix,
uses appendix A to determine the would be left to the employer's "Definitions," and in paragraph (d),
requirements for timber shoring. This discretion. When an engineering "Recommended Visual and Manual
Appendix may also be necessary to analysis is desired, OSHA recommends Tests."
determine the requirements for that other presently accepted methods One example of the use of
aluminum hydraulic shoring in of soil sampling and testing be used. supplemental information involved the
accordance with appendix D. OSHA. Methods, such as those adopted by the development of the definition of
however, prefers employer to use American Society for Testing and "cemented soil." NBS made reference to
manufacturer's data (in accordance with Materials (ASTM), are accepted cemented soil in, its recommended
§ 1926.652(c)(2)) where possible, when methods. definition of Type A soil, but provided
using aluminum hydraulic shoring. This soil classification system is no discussion as to what constitutes
Appendix D is intended for use in the intended to address a deficiency in the cemented soil other than to suggest that
absence of manufacturers data. It should existing standard. The existing standard soils referred to as "hardpan" or "till"
be noted again that the employer is does not rely on a consistent method of are examples of cemented soil.
required to select one of the options set classifying soils, but relies on terms that Cemented soils are most commonly
forth in paragraph § 1926.652(b) if using cannot be easily quantified, such as composed of granular, or coarse-grained
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45937
particles. Carbonate salts--calcium practice. However, in OSHA's opinion, appropriate, and has incorporated it into
carbonate being the most common--are use of this system will be a major the Final Rule. However, as discussed
the primary chemical agents that improvement over the terminology and above, the Agency declines to blur the
provide the cementation of the particles practices used in the existing standard. distinction between trenches and
of soil. The action of the cementing The Agency received a great amount excavations. OSHA has also clarified
agents adds to the strength of the soil by of comment on the proposed soil the reference to § 1926.652(b) by citing
binding the particles together so that the classification system and has revised § 1926.652(b)(2) to be more specific, as
soil can resist a greater degree of stress. this Appendix substantially, as recommended by NIOSH (Ex. 4-30). The
The quantity of the cementing agent in discussed below. Final Rule reflects these changes. OSHA
a soil sample can be estimated by Paragraph (a)(1), Scope, of appendix received no other comments on this
subjecting a soil sample to a solution of A of the Final Rule states "This paragraph.
dilute hydrochloric acid and visually Appendix describes a method of Paragraph (b) of appendix A of the
noting the intensity of the reaction. classifying soil and rock deposits based Final Rule defines terms used in this
Unfortunately, this test does not give a on site and environmental conditions, appendix for soil classification. The
good indication of the strength of the and on the structure and composition of Agency has added an introductory
cemented soil. However, a satisfactory the earth deposits. The Appendix statement to this paragraph to identify
estimate of the relative strength of a contains definitions, sets forth and reference source documents so
cemented soil can be made by requirements, and describes acceptable users of this appendix will know where
conducting a dry strength test. This is a visual and manual tests for use in to look if further clarification is needed.
test that is conducted by crushing dry classifying soils." This revision is in line with suggestions
soil samples between the fingers. The The paragraph is nearly identical to made by the ACCSH (Tr. 8/5/87 p. 531),
dry strength test is used primarily for the proposal except that the Building and Construction Trades
estimating the strength of fine-grained' "recommended" has been changed to Department (BCTD) of the AFL-CIO (Ex.
soils, i.e., clays which have cohesive "acceptable" for reasons discussed 4-17), and the National Utility
qualities. Conducting this test on below. Contractors Association (NUCA] (Ex. 4-
cemented coarse-grained soils, however, The Agency received comment and 91]. In addition, the commenters
can give good estimates of relative testimony from the Associated General demonstrated a clearer.understanding of
strength that are equivalent to the Contractors (AGC) of California (Ex. 8- the proposed definitions which included
strength estimates of fine-grained soils. 18 and Tr. 4/19/88 p. 114] suggesting that examples of soils given in readily
ASTM D2488 (Ex. 2-29) states, in a "recommended" be changed to recognizable terms. Therefore, OSHA
description of the dry strength test, that: "acceptable" because they felt that has modified several definitions by
"The presence of high-strength water "recommended" implied these tests providing such examples.
soluble cementing materials, such as were mandatory. OSHA is revising the Paragraph (b) defines "cemented soil"
calcium carbonate, may cause Final Rule accordingly, noting that it as "a soil in which the particles are held
exceptionally high dry strength * * was never the Agency intent that any of together by a chemical agent, such as
In the dry strength test, "high" strengths these tests be mandatory. (See 52 FR calcium carbonate, such that a hand-size
are indicated if "the sample cannot be 12315.) The Agency is requiring only that sample cannot be crushed into powder
crushed to powder by finger pressure, one acceptable visual test and one or individual soil particles by finger
even though the sample may be broken.' acceptable manual test be performed in pressures."
"Very high" strength is indicated "if the classifying soil in accordance with This definition is identical to the
sample cannot be broken between the appendix A. These tests may include proposal. OSHA received no comment
thumb and a hard surface." In another those listed in'the Appendix or may on this provision and therefore
reference ("Handbook of Soil promulgates this definition, as proposed
include other generally recognized
Mechanics", Volume I, p. 98, by Arpad Paragraph (b) of appendix A defines
visual or manual tests.
Kezdi) under a discussion of the dry Paragraph (a)(2), Application, of "cohesive soil" as "clay (fine grained
strength test, it is stated: "If the sample appendix A of the Final Rule states: soil), or soil with a high clay content
resists crushing by finger pressure which has cohesive strength. Cohesive
altogether, the soil is an inorganic clay This appendix applies when a sloping or
of high plasticity, or a coarse-grained benching system is designed in accordance soil does not crumble, can be excavated
with the requirements set forth in with vertical sideslopes, and is plastic
soil aggregate. cemented by some high- when moist. Cohesive soil is hard to
§ 1926.652(b)(2) as a method of protection for
strength binder (e.g., calcium carbonate employees from cave-ins. This appendix also break when dry and exhibits significant
or iron oxide)." applies when timber shoring for excavations
Based on the discussions of cemented
cohesion when submerged. Cohesive
Is designed as a method of protection from soils include clayey silt, sandy clay, silty
soils in this literature, OSHA cave-ins in accordance with appendix C to
supplemented the NBS
clay, clay and organic clay."
subpart P of part 1926 and when aluminum
recommendations by developing a hydraulic shoring Is designed in accordance This definition is identical to the
proposed definition of "cemented soil" with appendix D. This Appendix also applies proposal. OSHA received one specific
with the intent of clarifying the NBS if other protective systems are designed and comment on this definition from the
recommendations. The definition of selected for use from data prepared in BCTD (Ex. 4-17), which suggested that
.'cemented soil" is intended to include accordance with the requirements set forth in the ASTM definition might be of more
those soils that exhibit strengths at leasi § 1926,852(c), and the use of the data Is value. OSHA notes that the proposed
predicated on the use of the soil classification definition incorporated the ASTM
equivalent to the strengths required for system set forth in this Appendix.
Type A cohesive soil. The result of this definition and provided further guidance
was that some soils containing a slight The ACCSH (Tr. 8/5/87 p. 530-531) as to examples of cohesive soils.
amount of a cementing agent would not recommended changing "against cave- Therefore, the Agency has decided to
be considered as cemented soil, as such ins" to "from cave-ins" and changing keep the definition as proposed.
soil will not exhibit sufficient strength. "trenches" to "excavations." The .Paragraph (b) of appendix A defines
The soil classification system 'Agency recognizes that for consistency "Dry soil" as "soil that does not exhibit
proposed had not been widely used in and accuracy, the first change was visible signs of moisture content."
45938 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
This definition is identical to the molded without cracking, or appreciable these two conditions and has revised
proposal. OSHA received no comment volume change." the definition of "saturated soil" as
on this provision, and, thereforel carries This definition is almost identical to discussed above. Additionally, the
the definition to the Final Rule the proposal, except that the word Agency is defining "submerged soil" as
unchanged. "crumbling" has been deleted. This "soil which is underwater or free
Paragraph (b) of appendix A defines deletion was suggested by the BCTD seeping," and has added this new
"Fissured" as "a soil material that has a (Ex. 4-17) because the proposed definition to appendix A of the Final
tendency to break along definite planes definition was the ASTM definition with Rule.
of fracture with little resistance, or a the word crumbling added. This Paragraph (b) of appendix A defines
material that exhibits open cracks, such commenter and others (Ex. 4-91, and the "soil classification system" as follows:
as tension cracks, in an exposed ACCSH) all recommended OSHA be
surface." consistent with existing soil For the purpose of this Subpart, a method
of categorizing soil and rock deposits in a
This definition is identical to the classification systems. Therefore, OSHA hierarchy of Stable Rock, Type A,Type B,
proposal. OSHA received no comment is revising this definition because the and Type C,in decreasing order of stability.
on this definition, and, therefore word "crumbling" added nothing to the The categories are determined based on an
promulgates it unchanged. definition, and to be consistent with analysis of the properties and performance
Paragraph (b) of appendix A defines ASTM4. OSHA received no other characteristics of the deposits and the
"granular soil" as "gravel, sand, or silt, comment on this definition. environmental conditions of exposure.
Paragraph (b) of appendix defines
(coarse grained soil) with little or no "saturated soil" as "a soil in A which the
The definition is virtually identical to
clay content. Granular soil has no the proposal except that the Agency
cohesive strength. Some moist granular voids are filled with water." Saturation notes that this definition is for the
soils exhibit apparent cohesion. does not require flow. Saturation, or purpose of this subpart only. This
Granular soil cannot be molded when near saturation, is necessary for the revision was suggested by the BCTD
moist and crumbles easily when dry." proper use of instruments such as a [Ex. 4-17) to clarify that not all soil
This definition is similar to the pocket penetrometer or sheer vane." classification systems use the soil types
proposal except that the phrase "and This definition is substantially used in this appendix. The Agency
temporarily stand on a vertical slope but different from the proposal which recognizes this distinction and has
normally cannot be excavated with defined "saturated soil" as: revised the Final Rule to incorporate this
vertical sideslopes" has been deleted as Submerged soil that is below the ground input.
suggested by the ACCSH (Tr. 8/5/87 p. water table, and very wet soil such as soil Paragraph (b) of appendix A defines
531) and the BCTD (Ex. 4-17). Both that forms the sides of an excavation from "stable rock" as "natural solid mineral
commenters believed that the phrase is which water can be seen seeping; soil that
forms the sides of an excavation that has matter that can be excavated with
misleading and confusing. OSHA been flooded to more than one-half its depth vertical sides and remain intact while
recognizes that the phrase is subject to and has not been drained for a least one day; exposed."
misinterpretation, and has deleted the and soil in which water is retained by a This definition is very similar to the
phrase from the Final Rule. shoring system. proposed definition except that the
Paragraph (b) of appendix A defines This change is based on the comments ASTM definition for "rock" has been
"layered system" as "two or more of the BCTD (Ex. 4-17) and is in line substituted in the proposed definition
distirictly different soil, or rock types with current ASTM usage. The Agency replacing the word "rock."
-arranged in layers. Micaceous seams or notes that, while ASTM D-653-85 (Ex. This change was made to address the
weakened planes in rock or shale are 4-17 attachment) defines neither concerns of Granite Construction
considered layered." "saturated soil" nor "submerged soil" it Company (Ex. 4-28), which pointed out
This definition is similar to the does, In fact, differentiate between these that the proposed definition could be
proposal, except the Agency has two conditions under the definition of misinterpreted by the competent person
clarified that the definition does, indeed, "unit weight." to include some other types of soils.
include shale, and weakened planes in OSHA has determined that the OSHA received other comments and
both shale and rock. This revision is in proposed definition could lead to hearing testimony arguing that hardpan
response to a question raised by the sole confusion in that soil conditions at or and caliche soil should be included in
commenter on this provision (Ex. 4-111). near saturation, as defined in the Final the stable rock category.
The Agency feels that this revision is Rule, are necessary for proper use of Four commenters (Exs. 4-82, 4-102, 4-
necessary in order to clarify its mechanical instruments sometimes used 106 and 4-109) objected to the exclusion
regulatory intent. to measure soil strength. On the other of hardpan and caliche from the stable
. Paragraph (b) of appendix A defines
hand, soils that are submerged, namely, rock classification. These commenters
"Moist soil" as "a condition in which a actually underwater or seeping, present provided the same qualified
soil looks and feels damp. Moist a different set of soil conditions and recommendations, for allowing these
cohesive soil can easily be shaped into a must be treated differently from soils to be excavated with vertical sides,
ball and rolled into small diameter "saturated soils." For example, beach as they presented under Issue 12,
threads before crumbling. Moist sand that is saturated or nearly discussed above. In addition, these
granular soil that contains some saturated, can be'shaped to form sand commenters were represented by the
cohesive material will exhibit signs of castles, or other shapes and will hold Associated General Contractors (AGC)
cohesion between particles." This those shapes until the sand dries out or of California at the informal public
provision is identical to the proposal. is submerged by the incoming tide. At hearing (Tr. 4/19/88 pp. 108-165) and
OSHA received no comment on this that time, the sand will return to its provided similar arguments at that
definition, and therefore carries it natural angle of repose (as used in forum. Mr. Richard Frankian. a
forward in the Final Rule. current engineering practice) for the site consultant for the AGC of California,
Paragraph (b) of appendix A defines conditions. testified at the hearing (Tr. 4/19/88 p.
"Plastic" as "aproperty of a soil which Therefore, OSHA has determined that 118) that hardpan and caliche could be
allows the soil to be deformed or it is appropriate to differentiate between included in the stable rock group
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45939
provided they have an unconfimed Paragraph (b) of appendix A of the Cohesive soils with an unconfined
.compressive strength of at least four Final Rule also defines the soil compressive strength of 1.5 tons per square
tons per square foot-(4 T/ft2 or 8000 lbs/ classifications used in this appendix. foot (tsf) (144kPa] or greater. Examples of
2
ft ). cohesive soils are: clay, silty clay, sandy clay,
OSHA has revised these definitions clay loam and. In some cases silty clay loam
OSHA recognizes that hardpan and somewhat, based on the record, but has
caliche can be excavated with vertical and sandy clay loam. Cemented soils such as
not added additional types of-soil as caliche and hardpan are also considered
sides under some site conditions. requested by the AGC of California (Ex. Type A.
However, as pointed out even by the 24 which was revised by Exs. 28B and However, no soil is Type A if:
advocates of this practice, there are 30), and at the public hearings (Tr. 4/19/ (i) The soil is fissured; or
many restrictions (see discussion of 88 p. 117). (ii) The soil is subject to vibration from
Issue 12) which must apply. Therefore, OSHA believes that the additional heavy traffic, pile driving, or similar effects;
the Agency declines to include hardpan soil types recommended by the AGC of or
and caliche in the stable rock California, while they appear to be (iii) The soil has been previously disturbed;
classification in all circumstances for or
valid, would complicate this soil (iv) The soil is part of a sloped. layered
the purpose of this appendix. OSHA classification and would require a
wishes to restate and reiterate that even system where the layers dip into the
degree of accuracy in soil type excavation on a slope of four horizontal to
though appendix A does not allow for it, determination beyond the capabilities one vertical (4H1V or greater, or
the employer has the option of using this and limitations of this Appendix. OSHA (v) The material is subject to other factors
practice if approved by a registered notes that even the use of objective test that would require it to be classified as a less
professional engineer, or if it is in procedures, such as the pocket stable material.
accordance with tabulated data penetrameter suggested by the
prepared by a registered professional This definition is very similar to
commenter at the informal public proposed paragraph (b)(12). However, as
engineer. hearing (Tr. 4/19/88 p. 117), or the
Finally, OSHA recognizes that soil discussed above, the Agency has
with an unconfined compressive torvane shear device, are still only provided additional specific examples of
strength over four tons per square foot estimates which are subject to error. soils that are considered Type A, to help
is, indeed, very stable. However, this One commenter (Ex. 42) points out that the user. Additionally, OSHA has
measure of strength is only one factor Spangler and Hardy, in their book "Soil dropped the word "till" from the
that must be considered when Engineering," Harper and Row, pp. 101- definition, because, as pointed out by
classifying soils. (Other factors are 3, 1982, estimate the pocket one commenter (Ex. 4-17), its use in the
discussed under Issue 12.) penetrometer has a ±20 to ±40 percent proposal was inconsistent with the
Hardpan is defined in Exhibit 2-27 as error, and the authors also discuss some ASTM definition.
"a layer of extremely dense soil" limitations of the torvane shear device. Paragraph (b) of appendix A defines
(emphasis added), and in ASTM D653- OSHA recognizes the limitations of "Type B" as:
85 (Attachment to Ex. 4-17) as "a hard these methods, as well as those methods
described in appendix A. The Agency (i) Cohesive soil with an unconfined
impervious layer, composed chiefly of compressive strength greater than 0.5 tsf
clay, cemented by relatively insoluble believes that any field estimated soil (48kPa) but less than 1.5 tsf (144kPa); or
materials, that does not become plastic type must, by necessity, be based on a (ii) Granular cohesionless soils including:
when mixed with water and definitely simple, conservative soil classification angular gravel (similar to crushed rock, silt,
limits the downward movement of water system. The A-B-C soil classification silt loam, sandy loam, and in some cases,
and roots." Caliche is defined in the scheme given in this Appendix meets silty clay loam and sandy clay loam.
New College Edition of the American that need. A more complex system (iii] Previously disturbed soils except those
Heritage Dictionary as "a hard soil layer would require far more accurate which would otherwise be classed as Type C
methods of determining soil soil
cemented by calcium carbonate" (iv) Soil that meets the unconfined
(emphasis added]. OSHA notes that all classification to provide sufficient compressive strength or cementation
of these definitions recognize hardpan employee protection. requirements for Type A, but is fissured or
and caliche as a soil (clay is fine grained OSHA also notes that two subject to vibration; or
soil by definition), not as rock. commenters (Exs. 38, and 37) and a late (v) Dry rock that is not stable; or
Exhibit 2-27 defines soil as "sediment submission by Mr. William Winans of (vi) Material that is part of a sloped,
or other unconsolidatedaccumulations Allied Steel and Tractor Products, Inc. layered system where the layers dip into the
of solidparticlesproduced by physical supported the use of the A-B-C soil excavation on a slope less steep than four
and chemical disintegration of rocks, classification, as proposed in appendix horizontal to one vertical (4H:IV}, but only if
and may or may not contain organic A. the material would otherwise be classified as
OSHA emphasizes that the use of this Type B.
matter" (emphasis added). Rock is
defined in the same exhibit as "natural appendix is only required in two of the This definition is very similar to
solid mineral matter occurring in large eight options allowed by the Final Rule. proposed paragraph (b)(13), except that
masses or fragments." These definitions In these options (§ 1926.652 (b)(2) and the Agency has added specific examples
also appear in the updated version of (c)(1)) the employer cannot substitute to thisdefinition to assist the user, as
ASTM D653-85, attached to Exhibit 4- other soil classification systems. discussed, and has clarified that most
17. Employers wishing to use other disturbed soils are Type B.
Therefore, by definition, hardpan. and legitimate soil classification schemes, in OSHA received comments from the
caliche are not rock, and for the purpose conjunction with tabulated data that is AGC of California (Exs. 4-106, 24, 28B
of this Appendix are considered Type A in accordance with the standard, or who and 30) and testimony at the hearing (Tr.
soils. wish to use the services of a registered 4/19/88 p. 113) recommending at least
The definition of "Submerged Soil" is professional engineer and laboratory one more intermediate soil classification
new. "Submerged soil" is defined as testing, can do so under the other between Type A and Type C. The
"soil which is underwater or is free permissible options. Agency declines to act on this
seeping." The rationale for this new Paragraph (b) of appendix A defines suggestion because, as discussed above,
definition is discussed above. "Type A" as: OSHA believes that this appendix does
45940 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
not have the capabilities to determine R. T. Frankian (Ex. 33), a consultant for This paragraph is essentially the same
soil type with the degree of accuracy the AGC of California, recommending as the proposal except that the Agency
that the addition of one or more soil that the only prudent course for Type C has clarified that the tests in paragraph
types would require. Additionally, the soil would be to require shoring with (d) are not mandatory and that other
Agency feels that incorporating a more solid sheeting or require an engineer to recognized tests and classification are
complex system into this appendix evaluate the situation and make acceptable.
would make the system less likely to be recommendations. OSHA believes this OSHA received four comments (Exs.
used properly. Again, OSHA reiterates is not necessary and notes that NBS (Ex. 4-82, 4-102, 4-106, and 4-109) objecting
that employers are allowed to use 2-5) felt that Type C soil, as defined, to a requirement for any specific tests,
alternative soil classification systems in could be sloped safely to a maximum of and also objecting to the requirement for
accordance with other options provided 1V2 horizontal to 1 vertical. OSHA also at least one visual and at least one
by this Final Rule. notes that no other commenters made manual analysis. These commenters
The ACCSH (Tr. 8/5/87 handout) and similar recommendations to those of the argued that specific tests would be
the BCTD (Ex. 4-17) pointed out that AGC of California concerning Type C impractical because of the variety and
some parts of the proposed definitions soils. subjectivity of such methods and the
for both Type B and Type C soils were Paragraph (b) of appendix A defines changing nature of soil conditions. One
inconsistent with proposed table B-1. In "unconfined compressive strength" as
commenter, the AGC of California (Ex.
particular they noted that the definition "the load per unit area at which a soil .4-106), suggested that soil classification
of Type B included "granular soil that will fail in compression. It can be be based on an evaluation of soil
can stand on a slope of three horizontal determined-by laboratory testing, or condition and visible factors. OSHA
to one vertical," while table B-1 allowed estimated in the field using a pocket recognizes that evaluation of soil
a slope of 3/4:1 short term or 1:1 long penetrometer, by thumb penetration condition is necessary, and has
term. tests, and other methods." determined that this evaluation must
OSHA now recognizes that this This definition is identical to proposed include manual testing as well as visual
criteria, although used in the NBS paragraph (b)(15). OSHA received no analysis. Visual analyses alone are not
document (Ex. 2-5 p. 39), is inconsistent comment on this definition and carries it sufficient to classify soil properly.
with the rest of this appendix and forward in the Final Rule. Manual analyses are needed to confirm
introduces ambiguity into this definition Paragraph (b) of this appendix defines the findings of visual analyses and to
and other places in this Appendix. "wet soil" as "soil that contains
provide additional information
OSHA has therefore dropped this significantly more moisture than moist necessary for more accurate soil
evaluation criteria and instead is soil, but in such a range of values that classification.
providing examples of granular cohesive material will slump or begin to
cohesionless soils. OSHA notes that neither the proposal
flow when vibrated. Granular material nor the Final Rule requires specific
Another commenter (Ex. 4-30) noted that would exhibit cohesive properties
that the'4:1 ratio of sloped, layered tests/methods. Requiring at least one
when moist will lose those cohesive visual and at least one manual test
systems discussed in proposed properties when wet."
paragraph (b)(12){iv) was somewhat leaves the employer a great deal of
This definition is identical to proposed latitude as to which tests are used. In
restrictive. The Agency is of the opinion paragraph (b)(16). OSHA received no
that, while restrictive, this degree of order to clarify this latitude the Agency
comment on this definition and carries it has revised this provision to state
caution is necessary, because of the forward in the Final Rule.
limits of this appendix, and declines to specifically that other recognized
Paragraph (c)(1) of appendix A method of analyses are. acceptable, and
revise this provision. provides the requirements for
Paragraph (b) of appendix A defines gives examples of some of these other
classification of soil and rock deposits acceptable methods.
"Type C" as: using this appendix. This paragraph
(1] Cohesive soil with an unconfined This revision is in line with the
states: "Each soil and rock deposit shall
compressive strength of 0.5 tsf (48 kPa) or suggestion made at the public hearing
be classified by a competent person as
less; or by the AGC of California [Tr. 4/19/88 p.
Stable Rock, Type A, Type B, or Type C
(ii) Granular soils including: gravel, sand, 114). However OSHA has not deleted
and loamy sand, or in accordance with the definitions set
the requirement for at least one visual
(iii) Submerged soil or soil from which forth in paragraph (b) of this appendix."
and at least one manual test, for reasons
water is freely seeping; or This provision is identical to the discussed above.
(iv) Submerged rock that is not stable; or proposal. OSHA received no comment
(v) Material in a sloped, layered system on this provision and therefore carries it The only other commenter (Ex. 4-111)
where the layers dip into the excavation or a forward in the Final Rule. supported OSHA's requirement for both
slope of four horizontal to one vertical Paragraph (c)(2) of appendix A details a visual and a manual test.
(4H:IV) or steeper. the basis for soil classification using this Paragraphs (c)(3) through (c)(5) of
This definition is very similar to appendix. This paragraph states: "The appendix A discuss visual and manual
proposed paragraph (b)(14) except that classification of the deposits shall be analyses, layered systems, and
the criteria relating to the slope of three made based on the results of at least reclassification of soils using this
horizontal to one vertical has been one visual'and at least one manual appendix. These provisons state:
replaced with examples of this type of analysis. Such analyses shall be (3) Visual andmanual analyses. The visual
soil, and "saturated" has been removed conducted by a competent person using and manual analyses, such as those noted as-
from proposed paragraph (b)(14)(iii). tests described in paragraph (d) below, being acceptable in paragraph (d) of this
These changes have been made to be or in other recognized methods of soil Appendix, shall be designed and conducted
consistent with similar changes classification and testing such as those to provide sufficient quantitative and
discussed above. adopted by the American Society for qualitative information as may be necessary-
In addition to input from the ACCSH Testing Materials, or the U.S. to identify properly the properties, factors,
and the BCTD, discussed above under Department of Agriculture textural and conditions affecting the classification of
Type B, OSHA received a comment from classification system." the deposits.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45941
(4) Layered systems. In a layered system. indications of potentially hazardous quantitative as well as qualitative properties
the system shall be classified in accordance situations. of soil and to provide more ifformation in
with its weakest layer. However, each layer (iv) Observe the area adjacent to the order to classify soil properly.
may be classified individually where a more excavation and the excavation itself for (i) Plasticity.Mold a moist or wet sample
stable layer lies under a less stable layer. evidence of existing utility and other of soil into a ball and attempt to roll It into
(5) Reclassification.If after classifying a underground structures, and to identify threads as thin as s inch in diameter.
deposit, the properties, factors, or conditions perviously disturbed soil. Cohesive material can be successfully rolled
affecting its classification change in any way, (v) Observe the opened side of the into threads without crumbling. For example.
the changes shall be evaluated by a excavation to identify layered systems. if at least a two inch (50 mm) length of s
competent person. The deposit shall be Examine layered systems to identify if the inch thread can be held on one end without
reclassified as necessary to reflect the layers slope toward the excavation. Estimate tearing, the soil is cohesive. ,
changed circumstances. the degree of slope of the layers. (ii) Dry strength. If the soil is dry and
These provisions are virtually (vi) Observe the area adjacent to the crumbles on its own, or with moderate
excavation and the sides of the opened pressure into individual grains or fine
identical to the proposal except for an excavation for evidence of surface water,
editorial change in paragraph (c)(3). powder, it is granular (any combination of
water seeping from the sides of the
That change, based on input from the gravel, sand or silt). If the soil is dry and falls
excavation, or the location of the level of the
AGC of California, revises the word water table. into clumps which break up into smaller
"recommended" to "noted as being (vii) Observe the area adjacent to the clumps, but the smaller clumps can only be
excavation and the area within the broken up with difficulty, it may be clay in
acceptable." The input from the AGC of any combination with gravel, sand or silt. If
California (Tr. 4/19/88 p. 114) was excavation for sources of vibration that may
affect the stability of the excavation face. the dry soil breaks into clumps which do not
directed to another reference to break up into small clumps, and which can
"recommended" test, however, the These provisions are virtually only be broken with difficulty, and there is no
Agency has also made the change here identical to the proposal except as visual indication the soil Is fissured, the soil
in order to be consistent. follows. Paragraph (d)(1)(i) has been may be considered unfissured.
OSHA received no other comments on revised to read "composed of fine- (iii) Thumb penetration.The thumb
these provisions and carries them grained material." This change drops the penetration test can be used to estimate the
forward in the Final Rule. word "clay" from the proposed unconfined compressive strength of cohesive
Paragraph (d) of appendix A lists language, which reads "fine-grained clay soils. (This test is based on the thumb
material." This change was made penetration test described in American
some acceptable visual and manual Society for Testing and Materials (ASTM)
tests. The title of this paragraph has because two commenters, the ACCSH
Standard designation D2488-"Standard
been revised to read "Acceptable" (Tr. 8/5/87 p. 533) and the BCTD (Ex. 4- Recommended Practice for Description of
rather than "Recommended" at the 17), pointed out that other fine-grained Soils (Visual-Manual Procedure).") Type A
request of the AGC of California (Tr. 4/ materials such as silt should be soils with an unconfined compressive
19/88 p. 114), who noted that included. Based on these comments strength of 1.5 tsf can be readily indented by
"recommended" implied these were the OSHA is deleting the word "clay" and the thumb, however, they can be penetrated
only tests allowed. This was not thereby including all finegrained by the thumb only with very great effort.
OSHA's regulatory intent and therefore materials. Type C soils with an unconfined compressive
the Agency-has made the requested Paragraph (d)(1)(iii) of the proposal strength of 0.5 tsf can be easily penetrated
has been revised to indicate that tension several inches by the thumb, and can be
change.
cracks and small soil spalls do not molded by light finger pressure. This test
Paragraph (d)(1) of appendix A should be conducted on an undisturbed soil
discusses and lists visual tests which necessarily mean the soil is fissured.
sample, such as a large clump of spoil, as
are acceptable when using this This revision is based on input from the soon as practicable after excavation to keep
appendix. This list is not intended to be BCTD (Ex. 4-17). Additionally, another to a minimum the effects of exposure to
all-inclusive and other recognized visual sentence has been added to alert the drying influences. If the excavation is later
test are also acceptable. Paragraph users of this Appendix that small spalls exposed to wetting influences (rain, flooding),
(d)(1) reads as follows: are miniature cave-ins and are the classification of the soil must be changed
indications of potentially hazardous accordingly.
(d) Acceptable visual and manual tests. (1)
Visual tests. Visual analysis, is conducted to situations. (iv) Otherstrength tests. Estimate's of
determine qualitative information regarding Paragraph (d)(1)(vii) of the proposal unconfined compressive strength of soils can
the excavation site in general, the soil which recommended one type of visual also be obtained by use of a pocket
adjacent to the excavation, the soil forming test, is being deleted. Several penetrometer or by using a hand-operated
the sides of the opened excavation, and the commenters (Exs. 4-17, 4-30, 4-91 and shearvane.
soil taken as samples for excavated material. (v) Drying tesL The basic purpose of the
4-111) and the ACCSH (Tr. 8/5/87 pp.
(i) Observe samples of soil that are drying test is to differentiate between
533-534) all recommended deleting this cohesive material with fissures, unfissured
excavated and soil on the sides of the provision because it was.vague, and
excavation. Estimate the range of particle cohesive material, and granular material. The
therefore could be very misleading to procedure for the drying test involves drying
sizes and the relative amounts of the particle
sizes. Soil that is primarily composed of fine- the users of this appendix. OSHA agrees a sample of soil that is approximately one
grained material is cohesive material Soil and Is therefore deleting this provision, inch thick (2.54 cm) and six inches (15.24 cm)
composed primarily of coarse-grained sand and renumbering proposed paragraph in diameter until it is thoroughly dry:
or gravel is granular material. (d)(1)(viii) as paragraph (d)(1)(vii) of the (A) If the sample develops cracks as it
(ii) Observe soil as it is excavated. Soil that Final Rule. dries, significant fissures are indicated.
remains in clumps when excavated is Paragraph (d)(2) of appendix A (B) Samples that dry without cracking are
cohesive. Soil that breaks up easily and does discusses and lists manual tests which to be broken by hand. If considerable force is
not stay in clumps is granular. are acceptable when using this necessary to break a sample, the soil has
(iII) Observe the side of the opened significant cohesive material content. The
appendix. This listis not intended to be
excavation and the surface area adjacent to soil can be classified as a unfissured
the excavation, Crack-like openings such as all-inclusive and other recognized cohesive material and the unconfined
tension cracks could indicate fissured manual tests are also acceptable. compressive strength should be determined.
material. If chunks of soil spall off a vertical Paragraph (d)(2) states: (C) If a sample breaks easily by hand, it is
side, the soil could be fissured. Small spalls (2) Manual test. Manual analysis of soil either a fissured cohesive material or a,
are evidence of moving ground and are samples is conducted to determine granular material. To distinguish between the
45942 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
two, pulverize the dried clumps of the sample And: Paragraph -(c) of this appendix states
by band or by stepping on -them. Ifthe clumps The intent of the classification system Is to -the requirements for sloping and
do not pulverize easily, the material is provide a reasonably accurate and easily
cohesive with fissures. If they pulverize benching. Primarily, it -isrequired'that
understood method of permitting an soil.types be determined in accordance
asily into very small fragments, the material experienced person, who may not necessarily
is granular. be an engineer, to assess the ability of the with appendix A; -thatthe maximum
soil to stand at gradients specified in Table -allowable slopes be in accordance with
'These provisions are virtually
B-1. It is concluded that in general, the table B-1 of this appendix B; and that
identical to the proposal except for some
proposed standards would serve that the configurations of the sloping and
clarifications suggested by the ACCSH
function. (p. 4) benching systems be in accordance with
(Tr. 6/5/87 p. 534) and the BCTD (Ex. 4-
OSHA believes that revised appendix the illustrations in figure B-.1 Other
17).
A provides more guidance to the user requirements state when slopes less
OSHA received several other
and, therefore, will provide effective than the maximum allowable slope must
comments IExs. 4-21, 4-23. 4-3.1, 4-40, 4-
42, 4-54 and 4-6) suggesting that this employee protection. be used. I
section be deleted. All these. This -appendix is intended to replace
Appendix B-Sloping and Benching table P- found in the existing standard.
commenters indicated that this -type of
analysis can only be done accurately in Appendix B sets forth the The difficulties associated with the use
the laboratory, -and not in the field. requirements for sloping and benching of table P-i, such as a lack of definitions
These commenters, however, did not when those methods are used for ,ofterms, are a major reason for
indicate whether they supported a protecting employees against cave-ins. replacing the -table. Another reason for
requirement for laboratory testing for all Employers are not required in every replacing the table is to provide a new
soil analysis or whether they merely instance to use this Appendix. set of provisions that are correlated with
opposed a manual testing requirement Therefore, in this respect, it is not the soil classification system described
for use in the field. mandatory. This appendix is provided in appendix A. The reasons for
OSHA has determined not to follow as one option that employerscan use to providing a new soil classification
-these suggestions, since all the meet the requirement to provide cave-in system have been addressed earlier in
acceptable tests listed -and other protection for employees. The option to this preamble.
accepted tests not discussed in the -use this appendix is stated in. This new system is broader than the
standard appear in published literature, § 1926.652(b)(2). It is the second option current standard in that more
and are recognized as methods of employers may choose to follow to parameters must be considered when
providingreasonable estimates of soil determine the requirements for sloping determining allowable slopes, and in
properties. OSHA does not believe it is and benching protective systems. When that various allowable configurations of
feasible -or necessary to require this option is chosen by the employer, sloping and benching are illustrated. The
laboratory analysis of soils for every the provisions of this Appendix become system is based primarily on the
excavation where Appendix A is used, mandatory. recommendations made to OSHA by
nor is it realistic to believe that visual The slopes required by this appendix NBS (Ex.2--).
analyses alone can provide sufficient vary, and are dependent upon -the type OSHA believes that this appendix will
information to classify soils. -ofsoil in which the excavation is made. provide employers with a realistic and
OSHA recognizes the limitations of To use this appendix, soils must first -be flexible approach to sloping -and
each of these testing methods, and has classified in accordance with the benching. In OSHA's opinion, the
taken them into account in developing provisions of -appendix A to this maximum allowable slopes will provide
this Final Rule. The Agency stresses that Subpart-"Soil Classification." a safe work area for employees in
the results of these tests must be closely Paragraph (a) of the appendix is a ,excavations when the soils are properly
tied to a simple, conservative soil - scope and application statement. classified and the slopes properly made.
classification system, the A-B-C system Paragraph (b):sets forth applicable OSHA received a great volume of
which OSHA has provided in this definitions. comment on this appendix. However the
Appendix. In this appendix, slopes are expressed vast majority of the comment was
OSHA notes that with -regard to as maximum allowable slopes. The directed to proposed table B-1 and
manual analyses, that Mr. R.T. Frankian, maximum allowable slope is the figures BLI through Bl.5. Very little
a consultant for the AGC of California, steepest incline from the horizontal that comment was received on paragraphs
testified at the public hearing (Tr. 4/19/ will be acceptable under the most (a), (b) and (c) of this appendix.
88 pp. 145-146): favorable site conditions for a particular Paragraphs (a), (b) and 1(c) of appendix
* * I think -f you stick with A, B and C,
type of soil. These slopes vary with the B read as follows:
you could probably do this only with a finger soil type -in which the excavation is Sloping andBenching
test. I think that would be perfectly okay. made. In addition, the depth of the
excavation and-the lengthof time that (a)Scope and application.This appendix
In addition, with regard to appendix contains specifications for sloping and
the excavation is open are specifically benching when used as methods -ofprotecting
A, in general, a report by Mr. Frankian,
takeninto account in only one instance. employees working in excavations from cave-
submitted as an attachment to the AGC
In'Type A soils, the maximum allowable ins. The requirements of this appendix apply
of California comments (Ex. 4-106)
slope for the short-term (less than 24 when the design of sloping and benching
noted: protective ,systems is to be performed in
hours) can may be used in excavations
The methods used to identify various soil less than 12 feet,(3.6 m) in depth. accordance with the requirements set forth in
groups Include both visual and test The allowable slopes given for all § 1926.652(b)(2).
parameters and include assessment based on other exposures in thisappendix (in (b Definitions.
performance characteristics. In general the "Actual slope" means the slope to which
methods appear to offer.sound and readily table B-i), coupled with the allowable
an excavation face is excavated.
understood instructions which should lead an configurations shown in figure B-1, "Distress" means that the soil Is in a
experienced person to properly assess the should provide, a greater level of condition where a-cave-in is imminent or-is
engineering charadteristics of earth materials. protection to employees than is now likely -to occur. Distress is evidenced by such
(p.2-3) provided by the existing standard. phenomena as the development of fissures in
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45943
the face of or adjacent to an open excavation; revised this provision to direct the user Three of these commenters (Exs. 4-82,
the subsidence of the edge of an excavation; to § 1926.651(i) in situations involving 4-102 and 4-109) objected to the
the slumping of material from the face or the surcharge loads from adjacent permitted slopes and table B-1 as being
bulging or heaving of material from the structures. too conservative, arguing that less
bottom of an excavation; the spalling of
material from the face of an excavation. and Table B-1 of appendix B has been conservative slopes were permitted in
ravelling, i.e., small amounts of material such revised to eliminate, In most cases, California. However, in this regard
as pebbles or little clumps of material different slopes for short term and long OSHA notes that Title 8 of the
suddenly separating from the face of an term excavations. (See Issue 4 for more Construction Safety Orders of California
excavation and trickling or rolling down into discussion.) Table B-i now requires: requires at least a % horizontal to 1
the excavation. vertical slope In hard compact soil, the
"Maximum allowable slope" means the same as OSHA proposed for long term
steepest incline of an excavation face that Is excavations in Type A soils which is
acceptable for the most favorable site Maximum(H:V)
conditions as protection against cave-ins, and ock ype
Soilor slopes allowable
Ifor comparable to hard compact soil. Short
Soil or rock type excavations less than 20 term excavations in Type A soils were
is expressed as the ratio of horizontal feet deep 8
distance to vertical rise (H:V). proposed to allow a horizontal to I
"Short term exposure" means a period of vertical slope. The Title 8 Standards do
time less than or equal to 24 hours that an Stable rock ......................... Vertical (90°). not address short term exposures, rather
Type A2 . . . . . . . . . . . . :1 (53°).
excavation is open. Type B ............ 1.1 (45'-). they require a flatter slope if the soil is
(c) Requirements. (1) Soil classification. Type C.............. 1%:1 (34'). not stable, but provide no guidance as to
Soil and rock deposits shall be classified in what that slope should be.
accordance with appendix A to subpart P of Notes:
part 1926. I Numbers shown In parentheses next to maxi- OSHA received comment from
(2)Maximum allowable slope. The mum allowable slopes are angles expressed in de- Granite Construction (Ex. 428), and the
grees from the honzontal. Angles have been round- AGC of California (Exs. 4-106 and 28)
maximum allowable slope for a soil or rock ed off.
deposit shall be determined from Table B-i 2A short-term maximum allowable slope of % H: recommending that OSHA revise
of this appendix. V (63) is allowed in excavations in Type A soil that appendix B, based on a report by R.T.
are 12 feet (3.67 m) or less in depth. Short-term
(3)Actual slope. (i) The actual slope shall maximum allowable slopes for excavations greater Frankian (Ex. 30). This recommended
not be steeper than the maximum allowable (53"). 12 feet (3.67 m) In depth shall be % H:1V
than system, based primarily on a
slope. determination of unconfined
iII) The actual slope shall be less steep (Sloping or benching for excavations greater than
20 feet deep shall be designed by a registered compressive strength, would add a new
than the maximum allowable slope when professional engineer. soil Type, "AB", but would not address
there are signs of distress. If that situation
occurs, the slope shall be cut back to an This table is similar to proposed table soils defined in the proposal as Type C
actual slope which is at least horizontal to B-1 except that in most cases "short (less than .5 TSF unconfined -
one vertical (%H:1 V) less steep than the term" slopes have been deleted. compressive strength). Mr. Frankian, in
maximum allowable slope. However, the maximum allowable slope a separate comment (Ex. 33),
(iii) When surcharge loads from stored for Type C soil has been changed to 1 recommeided that Type C soil should
material or equipment, operating equipment, be required to have shoring with solid
or traffic are present, a competent person
H to IV which is in line with the slope
suggested by NBS (Ex. 2-5 p. 39). An sheeting or be evaluated by an engineer.
shall determine the degree to which the The slopes and configurations suggested
actual slope must be reduced below the additional note has also been added
limiting the use of this table to 20' as in this report are less conservative than
maximum allowable slope, and shall assure
that such reduction is achieved. Surcharge suggested by the AGC of California. those proposed by OSHA, and, indeed,
loads from adjacent structures shall be This is discussed further below. are less conservative than those
evaluated in accordance with § 1926.651(i). Several commenters (Ex. 4-28, 4-82, 4- permitted under the California
(4) Configurations.Configurations of 102, 4-106, and 4-109) objected to regulations (Title 8, Construction Safety
sloping and benching systems shall be in different requirements for short term Order) or under the Construction Safety
accordance with Figure B-1. and long term excavations. One Standards of the State of Michigan (Ex.
These provisions are very similar to commenter, the AGC of California (Ex. 4-46). Appendix B of the final rule Is
the proposal except that proposed 4-108), recommended that the reference more in line with these two proven
paragraph (b)(3) "long term exposure" to short term exposures be deleted and systems.
has been deleted, as discussed in Issue that the table be limited to a maximum The Agency sees merit in Mr.
4, above; proposed paragraph (b)(4) and depth of twenty feet, with deeper Frankian's suggested system, but not as
(b)(5) have been renumbered (b)(3) and excavations planned by an engineer. a replacement for appendix B. The
(b)(4), respectively, to accommodate the OSHA agrees with the suggestion to system is limited to use with cohesive
above discussed deletion; and, "short limit this table to excavations with a soils, assumes a uniform soil strength for
term exposure" has been redefined to maximum depth of twenty feet. This the full depth of the excavation, and
mean 24 hours or less, as discussed was OSHA's original intent, as would require a greater degree of
under Issue 4. evidenced by the limitations on the accuracy in soil type determination than
In addition, OSHA received input shoring tables presented in appendix C, OSHA's appendices A and B. The
from the ACCSH (Tr. 8/5/87 Attached but was inadvertently left out of the Agency believes that the 'suggested
handout), the BCTD (Ex. 4-17), and proposal. The issue of short term versus system would be more appropriate for
NIOSH (Ex. 4-30) recommending long term excavations Is discussed use under the new third option for
replacing competent person in under Issue 4 above. sloping (§ 1926.652(b)(3)) or design by a
paragraph (c)(3)(iii) of appendix B with The-AGC of California also registered professional engineer
registered professional engineer, introduced information concerning (§ 1926.652(b)(4)), provided it meets the
particularly in regard to surcharge loads additional soil types which they felt requirements of these provisions. The
from adjacent structure, OSHA should be added to appendix A. This slopes in final table B-i based on the A-
recognizes the potential hazards suggestion is discussed earlier in the B-C system are more conservative in
(collapse of structures or cave-ins) summary and explanation of appendix most cases than the suggested system.
pointed out by the commenters and has A. However, OSHA believes this is
45944 Federal Register I Vol. 54, No. 209 / Tuesday, October .31, 1989 / Rules and Regulations
m
necessary in order to account for the OSHA received-a large volume of The .suggested AGC of California
limitations of soil testing methods and comment on the configuration in Figures revisions which were developed by R.T.
potential errors in soil classification B 1.2 and 13 .4, which were intended to Frankian -(Ex. 30), would allow for
which may result. clarify the Agency interpretation of unsupported vertical sided portions of
The slopes in table'B-1 are not based existing § 1926.652(c). excavations, ranging in depth from 5 feet
on any one safety factor, as was The current standard, ,§ 1926,6521c), In TypeAsoil, to 4 feet in Type ABsoil
suggested by Mr. Franidan at the public has been interpreted by some and to 3 -feetIn Type B soil, based on the
hearing {Tr. 419/88, p. 123). .Instead, the individuals as permitting a trench dug in suggested -revised soil classification
slopes in table B-1 have varying safety hard or compact soil to be vertical for system, and varying excavation depths.
factors, with higher factors for steeper the first five feet [1.52 m] level.
slopes and lower factors for flatter However, OSHA has always interpreted OSHA has determined'basedon the
slopes, because flatter slopes do not and enforced this provision -to-require whole moor4, that some modification to
pose as muc1 danger of a cave-in as shoring or a tench shield in the appendix B is appropriate. However, -the
steeper slopes. For example, a cave-in of unsloped vertical sided portion of the -revision does not go as -far as suggested
a bank sloped at 34* (1 H:I V) from the trench. The proposed rule, in appendix ,by the AGC of California.
horizontal contains much 'less soil and B, Figure B 1.4 was intended to clarify The Agency is :revising appendix B of
will be less likely to entrap workers OSHA's dntent.'The Agency made the final rule to allow for certain
than a cave-in of abank sloped at 54 ° special efforts 'to draw public attention excavations to have vertical 'sided
(%H:1 'V).'The Agency does not intend and comment to. this interpretation in bottom portions, with sloping starting at
to spell out factors of safety-either in the preamble of the proposed rule.(52FR the top of the vertical sided portion. This
this appendix or in the options requiring 12291) and again in the notice of public Appendix will permit this configuration
design by a registered professional hearing '(53'FR 5281]. only in the same -contextas the Title '8,
engineer. The Agency believes that site Many commenters .(Ex. 4-5.4-13, 4-25, Construction Safety 'Orders of -theState
conditions vary to such a degree that 4-28, 4-57, 4-82, 4-102, 4-106, and 4-10
specifying a safety factor is objected to Figures 3-1.2 and B-1,4. All of California. OSHA has chosen this
inappropriate either for use of the of these commenters -notedthat course because, unlike the suggested
appendices or for any of the other- California permitted excavations to Frankian revision, the California
options requiring approval by a have an unshored vertical section of.3.5 standard has actually been in use
registered professional engineer. In feet, with the slope starting at the top of successfully for several years. The
particular, the Agency believes the vertical portion with no bench. Agency isnot denigrating the suggested
specif.ing safety factors would restrict OSHA recognizes that in some instances revision, and believes that its use may
the registered professional engineer this configuration would be desirable in well be appropriate under
from using his or her best judgement to order to 'limit 'loading on pipes or other I 1926.652(b)(3) of the Final Rule. The
design tabulated data or asloping or structures being installed. However, Agency feels that the slopes permitted
benching system to provide adequate OSHA also notes 'that 'the California under the suggested revision would
employee protection for given site regulations limit the -depth to which this require a more precise -soil
conditions. configuration can be used,ispecify the determination, -and that any errors
OSHA also notes that no slope is an slope depending on the prescribed depth based on the suggested system could be
absolute value. For example, use of limitations, 'and limit he use of the more hazardous because that -system
appendices A and B, while taking into practice to hard, compact soil which is would-permit steeper slopes in most
account many factors affecting soil equivalent to Type A -soil as defined -in instances.
stability and providing "maximum the proposal. The slope depicted in proposed Figure
allowable slopes," also requires The responses 'to the hearing notice
additional sloping when the soil shows indicated 'that some commenters found B-1.2 is being retained in the Final Rule,
signs of distress (appendix Bparagraph the configuration proposed in 'Figure B-1 because, as noted by several commenter
(c](3j(iij). The same principle could also to be too complex to use (Ex. 8-6, or (Ex. 8-25 and 8-27) it Is a viable
apply to slopes designed under the other suggested allowing a 3.5 foot vertical alternative method -ofsloping when a
options with a safety factor. If OSHA portion as in California (Ex. 8-7). The vertical -sided portion of a trench .is'
did specify a safety factor, designers AGC of California on the other hand needed. However the format of all of
might not accurately assess soil supported deleting the requirement for Figure B-1'is being revised'to provide
s'tability. the factors affecting that shoring or shielding the vertical sided more -specific examples of acceptable
stability, and might assume that the portion of the excavation. However configurations based on soil type, as
safety factor would take care of the other commenters '(Ex. 8-14 {Milwaukee suggested by the ACCSH and other
difference. On the other hand, OSHA Construction Industry Safety Council) commenters.
believes'it would be inappropriate to and 8-46, [AGC of America]] endorsed a Finally, OSHA has determined that
require a safety 'factor of two, 'for requirement for the bottom portion of the required two foot set back for spoils
example, if 1 registered professional the trench in Figure B-1.4 to be will not be :revised (See ' ,1926.651(,j)(2).
engineer determines 'that a safety factor supported unless the slope is figured The AOCSH MTr. 815187 p. 535) and the
of 1.2 is sufficient for the particular site from the toe of'the entire excavation, BCTD '(Ex. .4-17) both recommended a
conditions. In either case OSHA feels and benched '(Fiqure B-1.2), noting that
that safety factor designed into the not following this procedure increases minimum 3 foot setback, while NUCA
system should be determined .bythe the risk of collapses. (Ex. 4-91) supported zthe proposed 2 "foot
registered professional engineer. By not On the other hand, the State of Texas, setback. OSHA has no data to support
requiring a specific safety -factor,'the and Southern California Gas (Exs. 8-25 revising the setback as suggested by
Agency believes the designer will and 8-27) also supported maintaining ACSH ,andBCTD.
accurately assess the site conditions the requirement to support the vertical Therefore, based on the above
and will provide a safety 'factor sided portion of the excavation, as discussion, OSHA promulgates
appropriate for those site conditions. proposed. appendix 1, as revised.
Federal Register 1 Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45945
Appendix C-Timber Shoringfor recommendations and data provided to decided to incorporate the nominal
Trenches OSHA from NBS (Ex. 2-6), and public tables recommended by the AGC of
Appendix C contains information that comment received during the California (Ex. 32) in order to recognize
can be used to provide timber shoring in rulemaking. Data in the tables not that nominal size lumber is indeed an
trenches. Timber shoring is one of specifically recommended by NBS or by acceptable alternative to full size
several methods that can be used to substantive comment are based on lumber under the Final Rule.
provide protection for employees traditional practice. NBS could find no These commenters (Exs. 4-82, 4-102,
against cave-in hazards. evidence that traditional timber 4-106, and 4-109) also argued that,
Employers are not required in every practice, if properly executed, is unsafe based on their experience with the
instance to use the appendix. Therefore, (Ex. 2-6, p. 65). California Table, OSHA's proposed
in this respect, it is not mandatory. The OSHA received 15 comments and tables would result in overdesign of the
appendix is provided as one option that input from the ACCSH on appendix C. system in some cases, and underdesign
employers can use the provide cave-in Most of these comments were directed in others. However, OSHA notes that
protection. The option to use this at the proposed tables. the California tables refer to the use of
appendix is stated in § 1926.652(c)(1).
The text of appendix C is very similar nominal size, Douglas fir lumber, which
When this option is chosen by the
to the proposal, except for minor has a very high bending strength, about
empJoyer, the Appendix becomes
explanatory and editorial changes 1500 psi. OSHA, on the other hand,
suggested by the ACCSH (Tr. 8/5/87 pp. proposed tables based on the NBS data
mandatory.
The appendix is structured as follows: 539 and 540) and the BCTD (Ex. 4-17), for the use of full size white oak or
Paragraph (a) discusses the scope of
and a revision of the text to incorporate mixed oak, which has a bending
the appendix and its interrelationship
the addition of shoring tables based on strength in the 850 to 875 psi range. This
nominal size lumber as suggested by the difference accounts for the preceived
with the requirements for protective AGC of California (Ex. 4-106).
systems in § 1926.652(b) or § 1926.652(c).
"overdesign" or "underdesign" as
Paragraph (b) notes that the
The ACCSH and the BCTD questioned addressed by the commenters.
provisions of appendix A to subpart P
OSHNs use of a surcharge load of At the public hearing (Tr. 4/19/88 p.
20,000 pounds resulting from equipment 130-133), the AGC of California,
must be followed for the purposes of soil used near excavations in paragraph
classification. The configurations of suggested various revisions to the
(d)(2)(ii)(c) of appendix C.The Agency proposed timber shoring tables directed
timber shoring that can be selected
points out that the 20,000 pound weight primarily at increasing the timber
using this Appendix are directly tied to limit is equivalent to a two foot spoil
the soil classifications described in pile surcharge, and notes that shoring in dimension of the uprights. OSHA has
appendix A. accordance with the tables will decided not to make these changes in
Parageaph 1c) describes the withstand such a surcharge. the Final Rule. The Agency notes that
information is contained within Several commenters (Exs. 4-21, 4-23, the sizes of the uprights in the proposed
appendix C. 4-31, 4-40, 4-42, 4-54 and 4-86) tables in appendix C were based on the
Paragraph (d) describes the basis and recommended that the Agency change recommendations presented by NBS,
limitations of the data contained in the reference in the tables from "Width and were reviewed by a series of
appendix C. of trench" to "Length of Cross Brace," workshops prior to the rulemaking. The
Paragraph (e) is a description of how citing that this is the actual structural criteria in the tables are comparable to
to use the tables. Paragraph (f) contains dimension that is of concern. existing Table P 2 in the OSHA standard
examples to illustrate use of tables, and OSHA recognizes that the length of and section 601 of the Wisconsin
paragraph (g) contains notes that apply cross braces is the actual structural Administrative Code covering trenching
when using the tables. dimension, but notes that the current and excavation, both of which have
Paragraph (g) is followed by six tables Table P-2 and the NBS recommendation been used succcessfully for many years.
of data. There are two tables for each of are both designed using "width of Several other commenters (Ex. 4-28,
the three soil types. Stable rock is trench." This, in fact, shortens the length 4-106 and 4-114) suggested that OSHA
exempt from shoring requirements. One of the cross brace because of the expand the standard to address more
table for each soil type provides shoring placement of other members of the specifically, hydraulic shoring and other
requirements in actual lumber size, shoring system, and therefore increases forms of shoring which are in common
while the other does so in nominal the amount of pressure necessary to use throughout the country. OSHA has
lumber size. cause significant deflection of the cross decided to provide critera for use of
This appendix is intended to replace brace. This increases the strength of the hydraulic shoring systems in a new
Table P-2, "Trench Shoring-Minimum shoring system. Therefore, OSHA appendix D, discussed below. The
Requirements," which is found in declines to make the suggested change. Agency has also added statements to
existing subpart P. This new approach is Several other commenters (Exs. 4-82, Appendix C noting that other forms of
intended to address the problems 4-102, 4-106 and 4-109) argued that the shoring (for example, hydraulic shoring,
detailed earlier in this Preamble use of full size lumber was impractical trench jacks, and pneumatic shores) are
concerning soil classification. It and excessively expensive. acceptable and may be substituted for
provides a shoring system that is DSHA notes that these commenters wood If they possess equivalent
correlated with the new soil are all from the West Coast and strength.
classification system detailed in recognizes that standard practice in that Appendices D, E and F are new.
appendix A. This appendix, however, area is to use nominal size lumber for Appendix D, "Aluminum Hydraulic
also provides a greater degree of shoring, while on the East Coast, full Shoring for Trenches," contains criteria
flexibility than the current standard in size lumber is normally used for shoring. that can be used when aluminum
that the tables can be used to select a OSHA also notes that other tables, such hydraulic shoring is used as a method of
greater number of configurations than is as those issued by the Corps of protection in trenches that do not
currently possible with Table P-2. Engineers, Bureau of Reclamation, and exceed 20 feet (6.1 m) in depth, in the
The tables in this appendix have been the State of Wisconsin all use nominal absence of manufacturers' tabulated
developed based primarily on size lumber. Therefore, OSHA has data. This appendix D is provided for
45946 Federal Register/ Vol. 54, No. 209 / Tuesday, October 31, 1989 1 Rules and Regulations
those situations where manufacturers measures such as sloping or shoring, seq.]). In this assessment, OSHA has
data, as permitted under most of the 90 cave-in fatalities determined that the revised excavation
§ 1926.652(c)(2), has been lost or is occurring each year have happened standard (29 CFR part 1926, subpart P) is
otherwise not available. It must be used because the employer did not provide technologically and economically
in conjunction with appendix A, Soil any protection. In these instances, feasible and that the environmental
Classification. Additionally, when this compliance with the current rules would impacts of the amendments are not
appendix is selected, the user must also have prevented the accidents. Similarly, significant.
comply with the basis and limitations of ,the revised final rule published here The amendments are estimated to
this data as provided in paragraph (d) of today will provide protection only if reduce the annual rate of worker
appendix D. employers comply with its requirements. fatalities by one and of lost workday
These data were provided by the OSHA anticipates that the increased injuries by 1,107, relative to the current
Trench Shoring and Shielding clarity and flexibility of the revised standard. Further, they are estimated to
Association of America (Ex. 36) and are standards will provide incentives for reduce compliance costs by at least
being incorporated by OSHA in employers to provide the necessary $38.0 million per year, relative to the
response to several comments protection rather than ignore them current standard. These cost savings
recommending that the Agency provide completely. will arise principally by allowing firms
this type of data. OSHA notes that the However, assuming that many the flexibility to select less costly
State of California also provides very accidents have been caused by methods of providing a safe workplace
similar data. employers who have consciously and therefore are consistent with the
OSHA received no similar information violated OSHA trenching and Administration's program to reduce
from this Association concerning trench excavation rules, these and other unnecessary burdens on industry. As the
jacks, pneumatic shores or shields. employers may continue to put their net effect of the Subpart P amendment is
However, the Agency notes that air workers at risk despite this revised final less than $100 million, this regulatory
shore and trench jacks can be rule. If this assumption is correct, OSHA action does not constitute a "major
substituted for timber shoring members needs to examine ways of improving the rule."
if they are of equivalent strength or as rate of compliance with these
specified by the manufacturer. This regulations. RegulatoryHistory
would make generic tables for trench One way of improving compliance
jacks or air shores unnecessary. The Construction Safety Act of 1969
may include additional reporting (Pub. L. 91-54) amended the Contract
Shields, on the other hands, are requirements for excavation cave-ins.
usually designed for specific conditions Work Hours Standards Act (40 U.S.C.
For example, OSHA could require that 333) by adding section 107. This section
and, as noted at the public hearing (Tr. employers report all excavation cave-ins
4/19/88 p. 77-79), the manufacturers provided for occupational safety and
to OSHA within a limited time period. health standards for construction
provide data as to shield capacity, how This reported information would enable
to use the shield safely, and the soil employees working on federal,
OSHA to evaluate the so-called "near- federally-financed, or federally-assisted
conditions where the shield can be used. misses" to determine whether the
For this reason, the Agency believes that projects. In 1971, pursuant to section 107,
employer made an effort to comply with the Secretary of Labor issued safety and
it would be impractical to provide
the standard. Such information should health regulations for construction in 29
"generic" tables for shield use.
allow OSHA to identify those employers CFR part 1518. The Occupational Safety
Appendix E gives examples of who routinely failed to shore or shield
acceptable alternatives to timber and Health (OSH) Act (29 U.S.C. 650 et
their trenches and excavations when it seq.), which'was passed by Congress on
shoring, displayed graphically, to
provide guidance to employers and to is needed. December 29, 1970, and became
However, a reporting requirement is effective 4 months later, ordered the
recognize explicitly that alternatives to only one way to increase the rate of
timber shoring are acceptable means of Secretary of Labor to adopt established
compliance with these regulations. federal standards that were issued
complying with the requirements of this
OSHA solicits comment on whether under other statutes. In accordance with
regulation.
This appendix provides illustrations there are other means of increasing section 6(a) of the OSH Act, in May
compliance. In addition, OSHA seeks 1971, the Secretary adopted the
of pneumatic shores, aluminum
hydraulic shoring, trench jacks and comment on whether a cave-in reporting construction standards that had been
trench shields. This appendix does not requirement should be proposed, and issued under the Construction Safety
limit the use of other alternatives which what elements should be contained in Act in 29 CFR part 1518. Later in 1971,
may be developed, because any new such a requirement. Comments should these standards were redesignated as
alternative based on new technology be sent to the Docket Officer, Docket S- part 1926. As part of this process, the
can be used in accordance with 204, U.S. Department of Labor, regulations covering excavation
§ 1926.652(c)(2) of this Final Rule. Occupational Safety and Health (subpart P, § § 1926.650-1926.653) were
Appendix F of this Final Rule provide Administration, Room N-2634, Frances adopted as OSHA standards.
a "decision chart" for selection of Perkins Building, Washington, DC 20210.
Needfor Revision
protective systems. This chart is IV. Final Regulatory Impact Assessment
intended to assist the employer in The need to revise subpart P has been
choosing appropriate employee Introduction recognized since it was first
protection by showing all available The Occupational Safety and Health incorporated as an OSHA standard.
options and giving accompanying Administration (OSHA) has prepared Consequently, after review by the
references to appropriate sections of the this Final Regulatory Impact Advisory Committee on Construction
standard. Assessment (RIA) in compliance with Safety and Health (ACCSH) and
Although the current standards for Executive Order 12291 and the issuance of a Notice of Proposed
excavations and trenches require Regulatory Flexibility Act of 1980 (Pub. Rulemaking (NPRM, 36 FR 19083,
employers to implement protective L. 96-353, 94 Stat. 1164 [5 U.S.C. 6) et September 28, 1971), several
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45947
amendments were made to the standard factors as excavation depth and width, Residential Buildings Other than
in 1972 (37 FR 3512, February 17, 1972). soil type, hydraulic pressure, and other Single Family Houses
After another NPRM in 1972 (37 FR specific conditions present at the SIC 1541 General Contractors-
15317, July 29, 1972), the standard was worksite. In addition, some new Industrial Buildings and Warehouses.
further amended (37 FR 24345, technologies may result in fewer SIC 1542 General Contractors-Non-
November 16, 1972). accidents by reducing the amount of Residential Buildings Other than
Complaints and controversy, time that workers are physically Industrial Buildings and Warehouses.
however, continued to surround the exposed to the hazards of trenching. SIC 1611 Highway and Street
standard. As a result, in 1976, OSHA Such equipment includes trenching Construction Contractors.
commissioned the National Bureau of machines that dig and lay cable, remote- SIC 1622 Bridge, Tunnel, and Elevated
Standards (NBS) to study the standard's controlled equipment that compacts the Highway Construction.
compatibility with actual construction soil in the trench, and systems of "no SIC 1623 Water, Sewer, Pipeline,
practices and to recommend dig" trenching, where equipment Communication and Power Line
modifications that could improve the burrows to lay pipe without an open cut. Construction Contractors.
standard's effectiveness. The results of Trenching is performed primarily by SIC 1629 Heavy Construction
the NBS study were published in several utility contractors who construct gas, Contractors, Not Elsewhere Classified
reports during 1979 and 1980. sewer, water, and utility lines. Much of
These studies, other OSHA and state (NEC).
this work is performed as a result of SIC 1711 Plumbing, Heating (Except
data, and private sources of information competitive bids from state and local
revealed the need to modify the Electrical) and Air Conditioning.
governments or local utilities. Surveys SIC 1771 Concrete Work.
standard. Surveys of firms involved in indicate that 70 percent of utility
excavation indicated widespread contractors receive about 90 percent of SIC 1781 Water Well Drilling.
confusion regarding requirements of the their business through-competitive SIC 1794 Excavation and Foundation
standard. Many contractors were bidding. Minimizing costs, including Work.
critical of the standard, claiming that it safety-related costs, is therefore very SIC 1799 Specialty Trade Contractors,
was confusing, sometimes inadequate, Important to these contractors. Larger NEC.
and often irrelevant. The tables on excavation work is performed for many No published data exist that allow the
sloping and shoring procedures were kinds of construction, including estimation of either the total value of
described as confusing and inadequate. buildings, bridges, towers, swimming excavation work or the number of
Contractors were also unsure about the pools, and port facilities. establishments and workers involved
acceptability of new safety techniques, A number of important economicand and no additional data has been
such as freezing the ground rather than technical characteristics separate submitted to the record on this point.
shoring. Morever, they generally trenching from other excavation work Bureau of the Census data [1], however,
believed that the standard was too rigid and make trenching the more hazardous do exist on the amount of contracted
and was insufficiently performance activity. For example, other excavations non-trenching excavation work by four-
oriented. In response, OSHA has revised tend to be adjacent to buildings that digit SIC code. The data demonstrate
the current standard to clarify and woull collapse if the excavation were that most of such work occurs in SIC
revise the regulatory language, and not shored. The probability that damage 1794 and that most contract work in SIC
expects that these changes will facilitate suits would result from the collapse of 1794 is non-trenching excavation work.
compliance. these buildings provides a strong Excavation work performed under
Industry Profile economic incentive to shore these another contract (e.g., as part of a high-
excavations. Even where other rise apartment) would be included in
Background structures are not adjacent, large another category. Thus. although most
Excavation* projects vary in excavations are typically so deep that contracted non-trenching excavation
complexity. For example, a trench may the risk of incurring the expense of work is performed in SIC 1794, it cannot
be only a few feet deep and may be dug reexcavating following the collapse of be assumed that most non-trenching
in less than one hour by one person an unbraced wall, gives sufficient excavation work occurs in SIC 1794.
using a backhoe. A small excavation incentive to contractors to brace the Moreover, the Bureau of the Census
may simply be a hole scooped out by a walls. In contrast, such incentives are publishes no data that specifically
bulldozer. Alternatively, the greatly diminished for trenching work. identify trenching as a category of
construction of a stable 30-foot-deep Trenches are less likely to be in close business. For these reasons, OSHA has
trench requires a knowledge of proximity to other structures, structures estimated trenching and other
engineering, geology, and soil adjacent to trenches are less likely to excavation activity in the following
mechanics. collapse, and the cost of redigging a manner.
The major occupational hazards of collapsed trench is far lower than of The Associated General Contractors
excavation work result from cave-ins, reexcavating the foundation of a large of America (AGC) [2] conducted a
from exposure to underground utilities, building. survey of contractors whose work
and from material or equipment falling closely corresponded to that in SIC 1623.
into the excavation. Precautions to Industries and Economic Activity The results of this survey were used to
protect against cave-ins include bracing, Trenching and other excavation occur estimate the percentage of revenues
sloping, benching, using shields, or chiefly in the following 13 four-digit from excavation in SIC 1623. The 96
freezing. However, the proper use of Standard Industrial Classifications responding firms indicated that 38
these techniques requires an (SIC): percent of their revenues were from
understanding of the importance of such SIC 1521 General Contractors-Single trenching. Another survey also
Family Houses. conducted by AGC [3] on the practices
The term "excavation" includes trenches. SIC 1522 General Contractors- of contractors engaged in excavation
45948 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
found that of the 22 firms responding, an TABLE 1.-ESTIMATES OF EXCAVATION. clarify the requirements and the
average of 36.5 percent of their revenues REVENUES BY INDUSTRY, 1987 applicability of the various provisions
were derived from excavation. The and appendices, and increase the use of
Trench- some form of protective system.
majority of these firms would probably Net Propor- ing and
be classified in SIC 1623, as most of excava-
reve- tion tion Changes in Provisions
their trenching work was for the Industry nues subgpart reve-
construction of sewer and water lines. (dollars nues Numerous changes have been made to
billions) related (dollar specific provisions of the standard. In
Based on these surveys, OSHA assumes
billions) the following discussion, the changes
that no more than 45 percent of the
revenues in SIC 1623 are derived from are presented in broad groupings
SIC 15 (Except according to their expected effects, and
excavation. 78.5
1531) ...................... .05 3.92
SIC 16 (Except important examples of these groupings
It becomes more difficult, however, to 71.5 .05 3.57 are examined.
1623) ......................
develop similar estimates for the other 17.0
SIC 1623 ................... .40 6.79 ,Specific Changes. The first group of
affected SIC categories, and their SiC 1711 ...................
46.6 .01 .47
changes are called specific changes
revenues are derived at a more 11.8
SIC 1794 ................... .45 5.31
because, individually, they affect
aggregate level. For example, most of 20.07
specific requirements of the standard. A
the excavation activity classified within Source: U.S. Department of Labor, OSHA, Office number of these specific changes are
SIC 15 involves the excavation of of Regulatory Analysis. designed to bring the requirements of
foundations for houses, offices, and the standard into conformity with
warehouses. Foundation work for these The Revisions to the Standard current industry practices when doing so
types of structures ranges from 2 percent Introduction would'not compromise safe work
of the total costs for single-family practices. Some of the specific changes
houses to 12 percent for industrial This section discusses the revisions to are simply definitional in nature. For .
OSHA's current excavation standard. example, the existing standard defines
buildings [4]. Because the foundation The revisions are intended both to "belled excavations," and the revised
phase also includes all of the concrete clarify and explain the requirements of standard defines and refers to "belled-
costs not related to excavation, it is the standard, and to eliminate
assumed that roughly 5 percent of the bottom pier holes." Because belled
discrepancies between requirements excavations are actually called belled-
activity in SIC 15 would be affected by and current practices where there is no
subpart P. For SIC 16, the major affected bottom pier holes, the change simply
evidence that current practices pose a brings the terminology of the standard
activity, other than that in SIC 1623, hazard to workers. into'conformity with current usage.
would be highway, bridge, and other The following paragraphs describe
heavy construction. To estimate the The specific changes, however,
only those changes that may have involve more than just changes in
excavation activities for this SIC code, a significant economic impacts.
number of bids for these types of jobs wording; many change the actual
Changes in Format requirements of the standard. For
were examined [5]. The excavation
The current standard consists of four example, one change alters the
component of these bids was in the
main sections: General Protection definition of a trench shield by stating
range of 1-5 percent of the total project that it must protect employees from the
costs. Based on this information, 5 Requirements, Specific Excavation
Requirements, Specific Trenching hazards of cave-ins, but need not protect
percent has been used as a conservative against the- occurrence of cave-ins. In
Requirements, and Definitions. The
estimate of the percent of revenues in another case, the existing definition
General Protection Requirements also
SIC 16 that are affected by subpart P. In specifies that shields must be composed
apply to each section of the standard.
SIC 17, the two main classifications The use and application of these of steel plates andbraces, whereas the
affected are SIC 1711 (plumbing, heating provisions, however, are not clearly revised standard allows shields to be
and air conditioning) and SIC 1794 identified in the current standard and made of wood or other materials.
(excavation and foundation work). A some users did not understand their Many of the specific changes that
best estimate of 1 percent of revenues intent [2, appendix D]. Consequently, the OSHA is implementing will lower costs
was used for SIC 1711 based on average presentation and format of the standard of compliance without increasing
plumbing estimates from a construction have been revised in order to clarify the worker risk. For example, the existing
estimation manual [61, where trenching language and requirements of subpart P. standard requires that work must be
and backfilling represented 0.7 percent The amended standard includes a discontinued in excavations where
of the total time-required for the job. For section on Scope, Application and water has accumulated. The revision
SIC 1794, it was assumed that 45 percent Definitions, followed by General would allow work to continue under
of revenues are affected by subpart P. Requirements, and then by the some circumstances of water
This was based on the assumption that Requirements for Protective Systems. accumulation if proper precautions have
although SIC 1794 almost exclusively The existing standard contains two been taken to protect employees.
,represents firms doing excavations and tables on sloping and shoring, whereas Another example of potential cost-
foundation work, the actual excavation the revised standard contains six savings results from modifying the
activity affected by subpart P is only nonmandatory appendices that provide existing provision for the use of
a soil classification system, describe emergency rescue equipment where
one phase of the project. Once the walls
tests for determining soil type, and adverse atmospheric conditions exist.
are supported, laying the foundation,
provide designs for sloping, benching, The revised standard no longer requires
stripping, etc. are the other major cost
timber shoring, aluminum hydraulic the equipment to be physically
factors. In sum, this approach results in "attended" by a worker.
a total industry revenue estimate of shoring, a pictorial representation of
nontimber shoring methods, and a flow GeneralChanges. The general
$20.07 billion for excavation work (see changes affect several provisions of the
chart of compliance options. OSHA
Table 1). standard. Perhaps the most important
expects that this reorganization will
Federal Register I Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
l
45949
general changes are those specifying statement that support systems must be language, with respect to support
alternative acceptable ways for designed by a qualified person systems, on timber shoring. Numerous.
contractors to comply with the according to accepted engineering commentors noted that hydraulic
requirements for protective systems. practices. However, it is unclear if these shoring is now more common than
Although most of the existing standard's requirements would allow a qualified timber shoring, primarily because it is
provisions allow the use of alternative person to design a different timber frequently more practical and is
means of protection, the availability of shoring system than that contained in typically safer [7, 81. OSHA has
these options or alternatives was not Table P-2.. accordingly added nonmandatory
generally appreciated. Michael Plank, of . Changes in Tables. The final type of Appendix D, which provides guidance
the Speed Shore Corporation observed: amendment that distinguishes the for hydraulic shoring.
Everyday today if you read the current revised standard from the existing OSHA believes that, overall, these
table P-2, you go to the bottom lines and read standard will clarify and broaden the changes will significantly reduce the
the footnotes, there's two footnotes that applicability of the material contained in burden of compliance by increasing the
specifically leave you an option to use Tables P-1 and P-2 of the current flexibility, clarity, and usefulness of the
materials other than timber. But I'll promise standard. The set of tables in the
you today, if I take hydraulics in a new part standard.
existing standard not only are confusing
of the country where it's not currently being (as noted above), but also lead to Worker Risk
used, I will fight for weeks on end trying to inflexibility in application. For example,
get them convinced that aluminum is an The hazardous nature of construction
accepted standard as an equivalent to this they contain no information about
benching, or the combined use of sloping work, especially that related to
timber [8, p. 203]. excavation work, is well documented.
and benching practices. Table P-i on
In addition, there is some confusion sloping contains the note that "clays, The fatality rate in SIC 1623, which is
about the minimum standards silts, loams or nonhomogeneous soils dominated by trenching, was estimated
contractors must meet in order to be in require shoring or bracing," thus by OSHA at 50.8 deaths per 100,000
compliance. The revisions to the apparently implying that sloping is workers per year for 1984-88, whereas
requirements for protective systems inappropriate in such situations. In for construction work generally, it was
clarify such requirements. Contractors addition, although Table P-1 notes the estimated at 24.8 deaths per 100,000
who choose to use a support system, importance of both soil type and employees per year during 1982-86 [1, 9,
must follow one of four basic options: [1) environmental conditions in determining 12]. Similarly, trenching cave-in
They can slope the excavation at no proper sloping, it contains no method for fatalities have been estimated by
more than 1V2 horizontal to 1 vertical (34 determining either soil type or NIOSH at 75 per year, and lost workday
degrees), (2) they may use OSHA's environmental conditions. Finally, Table injuries due to cave-ins at 1000 per year
Appendices A and B for soil P-2 on timber shoring for trenches [11]. The incidence rate for injury among
classification and supports, shields, or contains only one set of specifications construction workers, including those
other systems prepared in accordance, for a given soil type and depth. The doing excavation work, is about two
(3) they can use other tabulated data specifications in Table P-2 would be times the all industry average (i.e., 15.1
prepared by or approved by a registered dost-effective only incidently because injuries per 100 workers in construction
professional engineer, or (4) they can the relative prices of types and grades of compared with 7.7 injuries per 100
have the system designed by or lumber vary sharply both over time and workers in all industries [12]).
approved by a registered professional geographic region. Both industry and labor
engineer. In contrast, the new appendices are representatives, as well as insurance
These requirements represent a designed to elminate these problems. firms, agree that shoring, -shielding, and
substantial change to the existing For example, the revised standard's sloping to a sufficient angle eliminate or
standard. The existing standard does appendix A on soil and environmental
not clearly specify the function of Table substantially diminish the risk of cave-
classification is applicable to field use. ins. Yet, analysis of data from OSHA's
P-1 on sloping and Table P-2 on timber Appendix B on sloping clearly applies to case files indicate that about 78 percent.
shoring or indicate who may design all excavations including trenches, and
sloping or support systems. For example, of all fatalities in excavation came from
sloping is allowed for clays, silts, and cave-ins [10, 16, 36]. A central provision
Table P-1 is required as "a guide" for other soils. In the current standard these
trenches, which appears to imply that it of subpart P is the requirement to
applications were not clearly identified, provide protection against death or
is nonmandatory. Elsewhere, the Benching and the combined use of
standard states that trench banks are injuries resulting from cave-ins by using
sloping and benching are also discussed methods that are now in use in the
required to be "laid back to a stable in this appendix. Appendix C on timber
slope," while excavations, which are industry and that were prompted by the
shoring is also more flexible than the original consensus standards.
defined to include trenches, are to be requirements shown in Table P-2 of the
dug to the "angle of repose." In addition, current standard. This appendix A study by Johns Hopkins University
there has been much ambiguity contains as many as four sets of timber of 306 trenching cave-in fatalities
regarding what is the "angle of repose". shoring procedures for a given soil between 1974 and 1986 determined that
These requirements are exceedingly classification and trench depth. 85 percent of them occurred in trenches
vague. The existing Table P-2 on timber Appendices E &F provide further that did not have shoring of the walls or
shoring is described as containing clarification through visual displays and in which the sides were not adequately
"minimum requirements," but it is flowcharts. Finally, in the revised sloped to prevent soil from sliding in
unclear whether such requirements are standard, the use of these appendices [13]. In addition, NIOSH's National
to be interpreted as minimum are nonmandatory, unless they are being Occupational Fatality study found an
performance requirements or as exact employed as a compliance option. average of 73 deaths per year from cave-
specifications. Similarly, although the In addition, while a nonmandatory ins [14]. The measures required to
standard defines a trench as a form of appendix provides instruction on the prevent deaths from excavation cave-ins
excavation, the section on "Specific proper assembly of timber shoring, the have been known for more than 75
Excavation Requirements" contains the standard no longer centers its regulatory years, since the first English-language
45930 Federal Register t Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
study of this problem was commissioned activity in recent years. These states are The fatality/catastrophe reports used
by Winston Churchill in 1912 [141 also distinguished by their large by ERG are not a comprehensive sample
Recently, several states and localities geographic size, which increases the of accident records for the years
have made significant progress; in likelihood of encountering varied soil, represented since the reports were filed
lowering cave-in deaths. California has types. only in states with federally operated'
been able to cut its number of cave-in California and Texas reported annual safety and,health programs. These
fatalities by more than half [14]. averages for fatalities due to. cave-ins of states represent about one-half of all'
Between 1974 and July 1979, the 5.3 and 9.3 respectively. The two states states. Assuming that the fatality/
Milwaukee area had 20 fatalities combined generate 23 percent, or nearly catastrophe reports represent half of all
associated with trench cave-ins, the one-fourth, of national construction fatalities for the years covered, the -
highest in the region. With the receipts as measured in the 1982 Census numerical average for 1978-1980 was 92
cooperation of local contractors, they of Construction [1]. deaths per year. The growth in
have managed since 1979 to avoid all The cave-in fatalities in these states construction employment over that
cave-in fatalities [151. In the Dallas area, were extrapolated to the total fatalities period was calculated at 5 percent [351.
there has been a significant reduction in from excavation work using a sample of Applying a simple growth factor of 5
cave-in accidents since mid-1985 [i5]. excavation fatalities reported in the percent to the fatality estimate produces
Clearly, there is significant room for OSHA fatality/catastrophe reports. ERG a revised figure of 97 fatalities: per year.
progress in decreasing worker risk in reviewed a sample of accident reports to ERG based their best estimate, on.an
excavation projects. determine their preventability under the average of the two approaches,. OSHA
The primary purpose of the revisions existing and proposed standards (this agrees and concludes that 90 fatalities
is to clarify the requirements and; to add sample is described more fully below). per year represents. a best estimate of
flexibility so that firms can tailor their The sample was.judged to be a reliable the current baseline, risk in excavation
protective measures to their particular indicator of the relative portion of work.
situations. Descriptions of 163 fatalities in. excavation work due to
excavation fatalities were reviewed by cave-ins and other causes. Using this Injuries
Eastern Research Group (ERG] [161 in sample, it was calculated that 78 percent Cave-In Injuries.A National estimate
order to identify those. which would of the fatalities were due to cave-ins.
have been prevented through of cave-in-related injuries was derived
The average cave-in related fatalities for using datat from a special study of
compliance with the existing or revised' the California and Texas data were then
standards. The analysis is based on California cave-ins [17]. Over a.22:-year
increased by a factor of 1.3 (1.0 divided
accidents as they were described in period, the California researchers
by 0.78) so that they would represent the
accident inspection abstracts. As a identified 2,229 lost workday injuries
total fatalities for trenching and
preliminary indication of the types, of and 193 fatalities due to cave-ins. The
excavation work. The combined state
accidents which occur, ERG summarized data indicate a ratio of 11.Slost
average for California and Texas was
some of the basic characteristics of the workday injuries for every cave-in
thus calculated at 19.0 (5.3 plus 9.3' times
sample of accident narratives. The data. fatality. This estimate was assumed to,
1.3). Extrapolating to the national, level
indicate that the majority of fatalities with California and Texas representing be representative of the relationship for,
resulted from cave-ins. The the nation as a whole. An OSHA
23 percent of national construction
effectiveness of the subpart P standards receipts in 1982, gives a national total of analysis of 221 trenching fatalities [101'
therefore largely depends on its 83 fatalities. has indicated that 78 percent of
effectiveness in preventing this type of The second estimation procedure was excavation fatalities are due to cave-ins.
accident. The other categories with more based on the number of fatalities Therefore, given the projection of 90
than one fatality include (1) "struck by" recorded; in the OSHA fatality/ excavation, fatalities annually, OSHA-
accidents, which typically resulted catastrophe reports. The data used' in estimated that there are 70.fatalities
when workers were struck by pipe or this study were derived; from the years annually due to cave-ins. Extrapolating
other materials, (2) gas-related accidents 1978 to 1980 (the most recent complete from the California incidence rates,
(explosions and asphyxiations),, (3) falls, years for which IMIS data related to OSHA estimates that there are 805 cave-
and (4) electrocutions. excavation activity could be retrieved in related' lost-workday injuries
The pattern of injury incidence was when ERG did their analysis. The total annually in the United States.
quite similar to that for fatalities. This number of fatalities for this time interval The approximate range for this-
finding, however, reflects the fact that a was 138 (39, 50 and 49). The more recent estimate was independently confirmed
large proportion of injuries in this Johns Hopkins' analysis of OSHA's IMIS in a separate study by the National
sample was due to cave-ins because abstracts covering the period 1984 to Institute for Occupational Safety and
OSHA primarily investigates fatalities, 1986 found 52, 85 and 75 cave-in related Health (NIOSH) [171. These researchers.
or catastrophes, and includes, only the fatalities annually for all states with the reviewed accident reports of the
associated injuries in its data base. exception of California, Michigan and Supplementary Data System of'the
Thus, these data may not be, Washington [13J. Bureau of Labor Statistics for 1976 to
representative of all injuries related to Recent studies, however, have 1981. The NIOSH researchers derived an
excavation activities. indicated that underreporting of estimate of approximately 1,000 lost
accidents is significant in, many areas workday injuries per year due to cave-
Fatalities ins, including 75 fatalities.
[33, 341 Companies sometimes choose
BaselineIncidence Rates. ERG not to report fatal accidents or are An estimate of the noncave-in related
employed two separate approaches unaware of the requirement to do soi lost workday injuries occurring in
toward estimating the annual number of' and OSHA personnel sometimes learn. excavation activities was developed,
fatalities in excavations. The first of accidents through news reports and using a special study of injuries to
approach relied on fatality data, from other unofficial sources. Nevertheless, construction- laborers prepared by the
California [17] and Texas [32]. Data the extent of underreporting is not Bureau' of Labor Statistics [18]. That
from these two states account for a large known with certainty and no adjustment study reviewed survey responses from
proportion of national, construction to the data was attempted. 658 injured construction laborers.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45951
Construction laborers are estimated to catastrophe inspection reports from asphyxiated or fatally injured by falling
constitute one-fifth of the total 1979-1981 and 48 fatalities from OSHA's soil
. The rock.
or balance
Integrated Management Information of preventable fatalities
construction-workforce.
The BLS survey of construction System (IMIS) abstracts from 1983-1985) are associated with a variety of factors.
workers provided two main indicators for preventability under the existing and For example, 2.7 percent of the fatalities
of the share of construction injuries revised standards. Fifteen fatalities had that were judged preventable by
occurring in excavation work. to be eliminated because the accident compliance with the existing standard
Specifically, the injured workers were narratives were incomplete or otherwise and 3.4 percent with the revised
asked questions on (1)the type of work insufficient to allow classification. The standard are associated with inadequate
being performed and (2)the location of remaining 148 fatalities were classified attempts to locate or support
the worker at the time of the accident. as either preventable or not preventable underground installations, such as
Numerous other questions were assuming full compliance with either the water, fuel, and electric lines. These
included but none allowed an accurate existing or revised standards. fatalities mainly occurred from
depiction of excavation work. The These reports and abstracts had drowning asa result of a water main
survey results indicated that for 6 certain limitations as data sources breakage, from electrocution, or from
percent of the injured workers, the type because the amount and specificity of inhalation of toxic fumes from broken
of work was identified as "laying sewer narrative information are inconsistent gas mains.
lines or other pipelines". (Other types of from report to report. For example, in Two percent of preventable fatalities
work included construction of homes, some cases, information on trench or under each standard were associated
buildings, or other structures and excavation dimensions, type of soil, and 'with failure to test (or adequately test)
roadways. Some of these, in turn, could various contributing factors (e.g., water or provide adequate ventilation, or
have included excavation work. accumulation, digging in a backfilled eliminate sources of ignition where there
Workers may have selected these other area, lack or positioning of ladders) may are dangerous gaseous conditions (lack
activity categories even if they were be suggestive of rule violations, but may of oxygen or presence of toxic gases). In
actually doing excavation work related not be detailed enough to allow a firm these cases, workers were either
to them.) Further, 7 percent of workers judgment. This was particularly asphyxiated or fatally injured as a result
reported their location at the time of problematic in the analysis of cave-ins. of explosions.
injury as "in trench". None of the other ERG assumed that, where there was no In 1.4 percent of the preventable
categories allowed a worker to state support system, the cave-in was likely fatalities under each standard, the
that he was in an excavation. due to the lack of such a system, and stability of structures (generally building
Thus, the survey results suggest that that any support system in place at the walls) adjoining the trench or
at least 7 percent of injuries occurred time of a cave-in was by definition excavation was not properly assured by
during trenching work. Although it is. inadequate. In some of these cases, it is appropriate support systems. In these
possible that some injuries occurring in possible that the most likely cause of the cases, the walls gave way and fell on
excavations have been reported in other cave-in was some other factor (such as the workers.
categories that do not allow them to be water accumulation) that was not Inadequate protection from
identified, OSHA has relied on the 7 adequately described. ERG's unintended movement by mobile
percent estimate, based on the location assumption therefore may have biased equipment accounted for a single
of-workers, as the best indication of the their preventability assessment in favor preventable fatality under both the
proportion of injuries occurring during existing and revised standards. In this
of the sections of Subpart P that pertain
* excavation work. Coincidentally, ERG's to support systems, and against other case, a piece of equipment struck and
estimate of the value of excavation fatally injured the worker. Various other
work as a share of the value of
sections of Subpart P.
Some of the accident narratives hazards accounted for the balance of the
construction put in place is also preventable fatalities.
approximately 7 percent. Thus the 7 included a listing of the OSHA citations-
that were Issued. In a number of cases, Overall, ERG found both the existing
percent estimate was judged to be a and revised standards to be potentially
reasonably accurate estimate of the however, the relevance of the citation
injuries could not be unambiguously interpreted effective for the prevention of most
share of all construction
occurring in excavation work. because the narratives did not correlate fatalities. The high rate of prevention is
The number of lost workday injuries very well with the citation noted. For due primarily to the effectiveness of
occurring among construction workers this reason, the listed citations were these requirements in preventing the
in 1986 was estimated at 326,800 based considered, but not totally relied upon, most common type of fatality, those due
on incidence rates and employment data in making preventability judgments. to a cave-in. The revised standard was
provided by the Bureau of Labor Fatalities that were judged byERG as found to offer a slightly higher rate of
Statistics [121. This estimate was preventable accounted for 81.1 percent accident prevention because it is more
derived using an employment level for of the sample under the existing effective against fatalities resulting from
construction workers in 1986 of 3,890,000 standard and 82.4 percent under the the failure to locate underground
workers and a derived incidence rate for revised standard [16]. Cave-ins installations and to safely install cave-in
lost workday cases of 8.4 per 100 full- accounted for the largest percentage of .protection systems.
time workers. Applying the 7 percent preventable fatalities (72.3 percent Using the earlier estimate of 90
estimate, the total lost workday injuries under the existing standard and 73.0 fatalities and applying ERG's
in excavation work was calculated at percent under the revised standard). The preventability estimates of 81.1 percent
22,876. Since 805 injuries have been relevant provisions deal with the lack of for the existing standard and 82.4
identified as occurring during cave-ins, or inadequacies in support systems (e.g., percent for the revised standard results
the remaining number of lost workday sloping, shoring, trench jacks, boxes, in 73 fatalities avoided per year under
cases is calculated to be 22,071. and shields), and to a much smaller the existing standard and 74 per year
Prevention Rates. ERG reviewed a extent, with problems in installing or under the revised standard.
sample of 163 fatalities from 1979 to 1985 removing such systems. In these cases, To estimate the preventability of
(115 fatalities from OSHA fatality/ workers were generally either nonfatal injuries, ERG reviewed 103
45952 Federal Register t VoL 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
injuries from OSHA fatality/catastrophe of these lost workdays prevented would The work disruption costs and other
inspection reports from 1979,-1981. They be approximately $63.0 million under losses were found to range,from $90 to,
found a similar pattern to that of full compliance with the existing' $24,900 for lost workday accidents. The
fatalities, with cave-ins accounting for standard and $994 million under full mean losses for the lost workday
most injuries under both standards. As compliance with, the revised standard. injuries studied (25 of the sample of 49)
noted previously, this sample of injury was $5,380. Identical cost savings were,
data includes primarily those injuries Employer Benefits Due to Cost Savings. assumed to apply to avoided fatalities.
caused by cave-ins. Few accidents of from Accident Prevention (It should be noted that even non-lost
other types have been included. The elimination of a fatality or injury workday injuries, which have not been
ERG found 74 of the injuries were due generates additional social benefits added to the, totals here, have notable
to cave-ins. For each standard, all but 3 through the restoration of all work disruption costs. The mean
of these injuries (96 percent) were productivity losses associated with an estimate of work disruption costs for a
preventable. For the three injuries not accident. These benefits are represented non-lost workday Injury was $1,450.
preventable, a cave-in occurred despite by the cost savings which occur to the The cost savings attributable to the
apparently correct sloping of a trench as firm which avoids the accident. The cost existing standard under an assumption
described in the accident report. For all savings (or prevented losses) include the of full compliance were estimated at
other classifiable injuries, 23 in total, the value of lost production time due to job $5,380 times 1,932 (the sum of 73"
existing and revised standards would interruption and delay, administrative, fatalities and 1,909 lost workday
prevent 6 (28 percent) and 11 (48 paperwork, and investigative costs injuries), or $10.7 million. The cost
percent) respectively. These injuries associated with an accident, rehiring savings for the revised standard were
may not be representative of all and retraining costs to replace a calculated at $5,380 times 3,086 (74
noncave-in injuries since only the more seriously injured or killed worker. fatalities and 3012 lost workday
serious accidents are investigated by medical' costs, and costs of re- injuries, or $16.6 million.
OSHA. These more serious accidents excavation (in the case of a cave-in) or
are also more likely to be addressed by other property loss. Estimates of these Incremental Benefits of the Amended
both the existing and revised standards. costs are presented in this section. Standard.
ERG therefore estimated that the Several previous safety studies have The benefits generated under the
existing standard would reduce all non- examined the costs of work disruptions existing or revised standard consist of
cave-in accidents by five percent and and other direct losses due to accidents. avoided fatalities, avoided lost workday
that the revised standard would reduce ERG selected one such study which is injuries, and cost savings from avoided
them by ten percent. based on accident investigations, in the work.disruptions due to accidents.. Full
Based on the earlier baseline cave-in construction industry. These research compliance with the revised standard
injury estimate of 805 annually and findings were used in estimating the. will prevent more fatalities (estimated at
applying the 96 percent preventability cumulative benefits of the indirect 1 per year)., will prevent more lost
estimate results in 773 preventable lost benefits from accident reduction. The workday injuries (estimated at 1,103
workday injuries per year due to cave- study selected was performed at The,
ins under either' standard. For noncave- more per year) and will generate larger
Construction Institute, Department of cost savings due to accident avoidance
in related injuries it was estimated that Civil Engineering, Stanford University
the existing standard would prevent (estimated at $5.9 million in cost savings
(Levitt et al.) [311. The authors studied• per year}.
1,104 (.05X 22,071) and that the revised 49 reports of lost workday and'non-lost
standard would prevent 2,207 , .workday injuries. Only results for the IncrementalCosts
(.1 X 22,071) lost workday injuries former category are used here. Data
annually. The combined total is 1,909 Preliminary Estimates
were assembled on the following items:
lost workday injuries prevented per year 1. Insurance company claims handling The changes to the current subpart P
or an overall injury prevention rate for and administrative fees. represent numerous clarifications and
the existing standard of 8.3 percent 2. Cost of transporting the injured amendments that in most cases will
(based on a total of 22,876 injuries} worker to a medical facility. increase the flexibility of and reduce the
Under the revised standard, the total 3. Wages paid to the injured worker regulatory burden on private enterprise
reduction in lost workday injuries is for the time not worked. without impairing worker protection. On
3,012 per year, or 13.2 percent. 4. Wages paid to other workers for the average,, the amendment is expected to
Quantitative Estimation of Employee time not worked (work interrupted). result in a net reduction in costs.
Benefits Due to Accident Reductions, 5. Cost of scheduling and funding However, particular provisions may
The accident reductions attributable overtime necessitated by the accident. result in cost increases for some firma.
to a standard have a monetary value to 6. Cost of loss of crew efficiency. There are few available published
the employee who would otherwise bear 7. Cost to train and orient a data on the safety costs related to
the occupational risk. This report uses replacement worker. excavation projects. Thus, for its
estimates based on.the willingness-to- 8. Extra wage cost to, rehabilitate the Preliminary Regulatory Impact
pay approach to represent the dollar returning worker at a reduced capacity. Assessment (PRIA) of the proposed
amount that employees would be willing 9. Costs to clean up,, repair, or replace standard, OSHA relied heavily upon the
to pay to reduce the statistical damage from the accident. judgement of those people in the
probability of a lost workday injury. 10. Cost of wages for supervision contracting, business, since they would
Economic studies projecting these associated with the accidenL be in the best position to know the costs
values show a high variability, but most 11. Costs for safety and clerical imposed by an OSHA regulation. These
estimates range between $23,000 and personnel to record and investigate the Individuals clearly had no Incentive to
$64,000 [20]. OSHA has chosen $33,000 accident. underestimate such costs. Cost
as a reasonable value-for a lost workday Costs of pain and suffering or other questions were posed to the Associated
injury [21, p. VI-10]. Based on the above non-quantifiable elements, were not General Contractors (AGC,,who in turn
injury preventability estimates the value included. queried a sample of its members (about
|
Federal Register
I / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
_m
45953
5
two dozen contractors). None were able one factor contributing to the total standards, and the soil types of these
to provide precise estimates of either the safety costs of an excavation job. projects.
absolute or relative costs of particular The most recent Deparment of Labor ERG estimated, based on Commerce
subpart P requirements. Similarly, a studies [23] of the distribution of Department data, that the total value of
number of representatives of firms were construction contract costs for various construction affected by the standard is
contacted directly by OSHA and asked types of construction projects found that $15.8 billion, the majority of which ($9.2
if they could estimate the percent of for sewer line construction, overhead billion) is in sewer and highway
their excavating costs that stemmed and profit accounted for 23.3 percent of trenches. Based upon OSHA inspection
directly from OSHA requirements; or the total contract costs. Before-tax profit data, sewer and highway trenches were
conversely, how their costs would be alone accounts for over 10 percent of the found to have the highest non-
affected were this particular regulation total; all other overhead items account compliance. rate with the existing
to disappear tomorrow. Once again, for the remaining 13 plus percent. From standard. As shown in Table 2., they
none could provide precise estimates, this remainder it was assumed that no were estimated to have a 24 percent
owing in part to the variety of jobs and more than 5 percent of the total project non-compliance rate, followed by utility
circumstances. Only after further cost can be attributed to all safety items, hook-up trenches at 21 percent ERG
probing did industry representatives only a portion of which is a direct result estimated that the greatest cost impact
indicate that only under the most of complying with subpart P
extreme circumstances would subpart P on non-complying firms would fall on
requirements. suburban commercial and industrial
requirements account for 5 percent of
There were approximately $12.42 building excavations, where a 26.5
total job costs. percent cost increase would occur after
In a further attempt to isolate these billion in annual excavating revenues In
costs, all of the major publishers of 1982. OSHA assumed that 5 percent of complying with either the existing or the
construction industry cost indexes, as this total represents costs imposed by revised standard. After accounting for
found in "Engineering News Record" the existing standard. Thus, OSHA's non-compliance rates, utility hook-ups
[221, were contacted in an attempt to PRIA estimated that the cost of the as a group (complying firms includedJ
determine if either subpart P or safety existing standard was $621 million were estimated to have the highest
costs generally were calculated annually. Based on discussions with average percent increase in cost, at just
separately in the compilation of costs. contractors and their representatives,. under 3 percent. Costs in this sector
Of the 15 firms contacted, all stated that OSHA's preliminary analysis estimated were attributed to the relative inability
labor and materials costs were that the amendments would save to use sloping as a means of compliance
considered individually, but that all between 2 and 7 percent of the current with the standard, along with relatively
safety costs were absorbed within cost of subpart P. The estimated savings little current usage of hydraulic shoring
overhead costs and could not be arising from the amendments therefore or trench boxes. Given the relative size
separately identified. Items such as ranged between $12.42 million and of the sewer and highway trench sector,
offsite wages, fringe benefits, financing $43.47 million to the economy as a over half the costs of compliance for
costs, inventory, other administrative whole. cave-in protection ($149 million per
expenses, and profit are included in Final Estimates year) were expected to fall in this sector
overhead costs. In addition, bids on (see Table 3). Again, the majority of
major construction projects that had Under contract to OSHA, Eastern these costs were attributed to the added
been published over several years in Research Group (ERG) [161 developed use of trench boxes, which reduce
"Engineering News Record" [5] were revised estimates of the cost of the productivity. Suburban commercial and
examined to determine whether safety existing and amended excavation industrial building excavations were
costs were a line item in the standards based upon model projects. estimated to incur $79 million per year
specifications. None were found. Based They examined sewer line installation and utility hook-up projects $52 million
upon the above information, OSHA trenching, utility hook-up trenching, per year in compliance costs to avoid
assumed that all safety costs do not foundation excavation for suburban cave-ins. In total, ERG estimated that
exceed that portion of the costs office buildings and residential building cave-in protection would cost $332.0
represented by overhead. Moreover, the excavation. They estimated the likely million under the existing standard, and
costs associated with subpart P are only means of compliance under the two, $289.0 under the revised standard.
TABLE 2.-AVERAGE PERCENTAGE COST INCREASES FOR ALL TRENCHING AND EXCAVATION PROJECTS
Source: ERG estimates. The categories of urban building excavations, gas and other pipeline trenches, i d shallow water line trenches were assumed to be In
compliance.
45954 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
TABLE 3.-TOTAL COMPLIANCE COSTS 2 The estimated total value shown here does not ERG therefore estimated that the revised
Include the value of excavations for urban building
FOR THE GENERAL CAVE-IN PROTEC- projects, aniof which were assumed to be in compli- standard would save $38.0 million.
TION REQUIREMENTS ance.
Source: ERG estimates. The categories of urban
[$millions per year] building excavations, gas and other pipeline trench-
es, and shallow water line trenches were assumed
to be in compliance.
Total cave-in
protection
compliance
ERG also estimated costs for the other
Est-
mated costs provisions of the standard, including
Project category total Exist- Re-
those related to inspections, hazardous
value ing vised
atmospheres, warning systems .for
stand- stand-
ard ard mobile equipment traffic vests and
means of access and egress from
Sewer and highway trenches. They estimated that these
trenches. 9,200 1188 '149 would cost $12.0 million to comply with.
Utility hook-ups ...................... 1,900 56 52 the existing standard, and $17.0 million
Suburban commercial and
industrial building exca- for the revised standard. Thus, as shown
vations and "other" ex- in table 4, ERG estimated that the total
cavations ............................ 3,700 79 79 annual cost of compliance, figuring in
Residential building exca- current non-compliance, would be $344.0
vations ........................ 1,000 9 9
million for the existing standard, and
332
Total ..........................
. 15,800 289 $306.0 million for the revised standard.
Includes trenches for water systems greater than
5 ft. deep. Also includes $8 million in cave-In protec-
tion costs incurred due to soil compaction problems.
TABLE 4.-SUMMARY OF COMPLIANCE COSTS UNDER FULL COMPUANCE WITH THE EXISTING AND PROPOSED STANDARD
[Dollar million per year
344.0 306.0
'Includes some annualized equipment costs as derived for the general paragraph requirements.
* Includes incremental soil compaction costs.
Neg.= Negligible.
Source: ERG estimates.
In short, using a model, or 'micro' In addition to these provisions, there these monetized benefits were
approach of estimating costs of was some concern expressed about the subtracted from the total annualized
compliance under both the existing and need to hire a certified engineer [24, 25, costs of $306.0 million, and this total
proposed standards, ERG projected a 26, 27]. The final standard, however, divided by the expected number of lives
cost savings from the amendments to does not require the use of an engineer, to be saved by the standard. Since full
subpart P of approximately the same but simply allows their participation as compliance with the revised standard is
magnitude as the "high" preliminary an alternative to using the tables expected to save 74 lives per year,
estimate OSHA produced using an provided in the standard. The rule OSHA estimates that the net cost per
aggregate approach. therefore will impose no additional cost life saved is about $2.6 million.
It should be noted, however, that
and will in fact generate cost savings for
those firms that now use engineers. Feasibility
ERG's analysis examined only the
impact on firms that are out of Cost Effectiveness The above analysis indicates that
compliance with the current and revised compliance with the revised standard is
Based on the cost estimates developed easier and less expensive than
standards. It did not examine the by ERG, the monetized savings of the
potential for cost savings under the compliance with the existing standard.
revised standard to employers from less Since the analysis also indicates that
revised standard in firms already in work disruption are estimated at $16.6
compliance with the current standard. It most firms are currently in compliance
million, and the monetized benefits to with the existing standard, OSHA
is possible, therefore, that the revised employees from fewer non-fatal
standard may save more than $38.0 accidents are estimated at $99.4 million. concludes that compliance with the
million. To derive a cost-effectiveness ratio, revised standard is both economically
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45955
and technologically feasible for these its impact on the demand elasticity for will not reflect a price influence in
firms. excavation is of a second order in accordance with demand theory-
OSHA indicates that additional. -magnitude. If the elasticity of constraints.
contractors will comply with the revised substitution is assumed to be zero, the These considerations imply that the
standard for excavation work because price elasticity of demand for effect of'small cost changes on the level
of its increased flexibility and clarity as excavation is equal to the price of construction investments in this,
compared to the existing standard. elasticity of demand for construction category would not be significant, a
Based upon the following analysis, multiplied by the share of construction conclusion reinforced by econometric
OSHA also concludes that the aggregate output accounted for by excavation analyses of expenditures for these types
economic impacts of achieving full, activities. of construction. For example, the
compliance starting from a baseline of This derived demand relationship is Brookings Econometric Model of the
current industry practice are small, as used to asses the economic impact of United States does not Include any price
are the impacts to representative the estimated compliance cost increases. or cost variables in its equations
excavation firms, and differential If the demand elasticity were zero,. there forecasting public expenditures for
impacts on small firms. would be no effect on output and highways or sewer and water systems.
industry revenues would increase in an For the purposes of their study on
Aggregate Economic Impacts amount equal to the cost increase excavating, therefore. ERG concluded
The aggregate economic impacts of projected in section 3. If the demand that the price elasticity of'demand for
enforcing full compliance with the elasticity were greater than zero (in these construction categories is not
subpart P regulations depend on the absolute value), output would decline significantly different from zero.
extent to which price hikes based on and revenues would increase by less Non-ResidentialBulding
compliance cost increases would cause than the amount of the projected cost Constrictionand Other Non-Building
a decline in the demand for excavation increases. The difference between those Constructian.Included in this category
services. Since excavation is an input in two levels represents the aggregate are commercial and industrial building
the production of construction activities. economic impact of full compliance. It construction and "other" non-building
the demand for excavation services represents the loss in revenues from that construction (highways, sewer systems.
depends ultimately on the demand for which would be necessary to support water supply facilities, gas and other'
construction output. Thus, unless cost- excavation work in a full compliance pipelines). In this case, the outputs of
based price increases would result in a state at the existing level of activity. construction activity (e.g., commercial
reduction in demand for construction Demandfor constm'ctiian.ERG [101 buildings) are themselves inputs into, the
outputs, no significant economic impacts judged that several categories- of production of other services (e.g.,
will be borne by the affected industry. excavation projects would be impacted
Methodology. Increasing the price of' services that require commercial
by the subpart P regulations. These building space]. Thus the elasticity of
excavation has two potential effects on include work related to sewers, demand for the construction output is
the demand for such services. First, highways, and water supply systems,
increasing the price of excavation related to (1)the price elasticity of
work associated with non-residential demand for the final service and E21 the
relative to the price of other inputs may building construction and other non-
result in factor substitution away from. importance of the costs of buildings or
building construction, and work
excavation. The extent to which this other construction in the total costs of
associated, with residential building the final service. Since the cost: of the
would occur depends on the construction. This category includes
substitutability between excavation and building excavations for basements and building is likely a small factor in
other input factors used in, the affecting the demand for the service, the
foundations and trenchingfor utility
construction process. Second, an price elasticity of demand for these
hook-ups. The demand characteristics of
increase in excavation prices would types of construction is likely to be
each of these three construction
result in an increase in the marginal small.. For similar reasons, the derived
categories is considered below.
costs of construction output and, Highway, sewer,and watersystem' demand for excavation activities will be
therefore, an upward shift in the construction Expenditures for another order of magnitude smaller.
construction supply curve. This in turn construction. projects in'this category Thus, ERG concluded that changes in
would result in a higher equilibrium are, as a rule, publicly'financed. For this costs of excavation activities in the:
market price and, in general, a reduction reason, decisions regarding the ranges projected in the cost analysi
in the market equilibrium level of appropriate level of such investments will not have significant impacts on the.
output. Such a reduction in construction are not made in the private marketplace,. expenditures for construction projects
output would not result in a decline. in Any relationship between the price falling within this, category.
the demand for excavation services. (cost) of'such investments and the level ResidentialConstruction.
It can be shown, in general, that the of demand depends, therefore, more on Expenditures for this category' of
price elasticity of demand for political considerations than on the construction activities represent
excavation services depends directly on factors that determine demand for investments in the stock of single and
(1) the price elasticity of demand for privately produced goods and services. multi-famiy housing. A number of
construction output and (2) the share of In the case of highways, no output studies have examined the price
the value of construction output price exists. Thus, no simple sensitivity of the demand for housing
accounted for by excavation; and varies relationship can be specified between services. Depending on the data source
inversely with the elasticity of the level of construction expenditures and estimation methodology, these
substitution between excavation and and the price of such investments. The studies have- estimated the price
other factors of production. cost of sewers and water systems elasticity of demand forhousing
The degree of substitutability between investments is often embodied ina services at values, ranging from -0.4 to,
inputs depends on the nature of the sewer or water charge, which is in effect -1.0 [28].
production function. In construction, the a "price". In the absence of-a perfect In the long run, it is reasonable to.
substitutability between excavation and political system, decisions regarding the expect the demand for the stock of'
other factors is quite low and, therefore, level of water and sewer investments housing to reflect similar levels of price
45956 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
sensitivity. Depending on the rate of Given the magnitude.of these minor and will be less evident under full
market adjustment, short-run price estimates in comparison to total compliance with the revised standard
sensitivity should be lower. It is also industry revenues, OSHA believes that than with the existing standard because
important to consider that housing no significant impacts on the of the additional flexibility permitted
investments include modifications, construction industry will result from under the former.
renovation, and depreciation (negative enforcing full compliance with either The primary point of concern
investment) to the existing stock as well version of the Subpart P standard. Only registered by smaller contractors dealt
as new housing construction. For this in residential construction does the with the possibility of having to have a
reason, the elasticity of demand for new possibility of measurable impacts exist. qualified engineer design cave-in
residential construction is likely to be Even in this case, however, the protection. OSHA's Federal Register
lower than that for residential estimated aggregate impacts are less notice on June 16, 1987 asked "Should
construction as a whole. Thus, for than the value of the construction work OSHA limit all design responsibility to a
purposes of the economic impact performed by one typical excavation "qualified engineer?" In reponse, several
analysis, ERG assumed a price elasticity contractor. As a result, OSHA concludes commentors suggested this would place
of -0.5, which is at the lower end of the that full compliance with the revised a disproportionate impact on small
spectrum of estimated price elasticities. standard is economically feasible. contractors. The Underground
Aggregate Economic Impacts. Based
Regulatory Flexibility Certification Contractors Association of Northern
on the magnitude of the elasticity California stated that:
developed above, and the small portion Pursuant to the Regulatory Flexibility
of each construction activity composed Act of 1980 (Pub. L. 95-353, 94 Stat. 1164 We feel that the most severe impact of this
of excavation work. ERG concluded that (5 U.S.C. 60 et seq.)), OSHA has requirement would be on small, minority and
no significant impacts should be assessed the impact of the revisions and disadvantaged businesses. From a
competitive standpoint, larger firms would
expected from compliance-related cost concludes that they would not adversely hire someone in-house and would integrate
increases for trenches for sewers, affect a significant number of small the cost into their overhead more effectively
highways, and water supply systems entities. than the small business who would be
and for excavations for commercial and As is generally known, the burden of required to retain a consultant on a very
industrial buildings and other non- regulation, especially the legal and expensive hourly contract rate [29, p.3].
building excavations. paperwork burdens, can fall
Only in the case of housing disproportionately on small enterprises. As stated earlier, however, employers
construction does the possibility of a This occurs primarily because larger have several options to choose from in
significant impact exist for excavation firms often have the legal and clerical selecting cave-in protection. The
work for basements and foundations support in place to handle the burdens Washington Metropolitan Area
and trench work for residential utility imposed by government regulation. ERG Construction Safety Association
hook-ups. Excavation is estimated to concluded that the sector most likely to correctly stated, "With all the options
represent 0.5 percent of residential incur some revenue loss is residential provided, the use of a [registered
construction gnd utility hook-ups are construction. Firms providing professional] engineer should seldom if
estimated to account for 1.0 percent of excavation services for this sector are ever be required" [30].
residential construction. Combining, among the smallest firms in the Other impacts of the revised standard
these shares with the estimated construction industry. Nevertheless, will not create unusual compliance
construction price elasticity of -0.5 ERG concluded that the impacts from problems for small firms. The revised
suggests an elasticity of demand with revenue loss will be minor. standard does not explicitly or implicitly
respect to price of -. 003 for residential In general, the amended standard will require that small firms have substantial
construction excavations and -. 005 for not generate differential impacts on organizational infrastructure for
utility trenches. small firms, but there may be instances providing training or other safety-
Economic impacts on excavation in which full compliance will be more oriented administrative controls. Nearly
contractors will occur to the extent that difficult for smaller firms. Full all compliance can be achieved without
cost increases exceed revenue compliance with the Subpart P a change in normal operating
increases. The estimated changes in standards will sometimes require procedures. The major compliance issue,
average project costs due to compliance contractors to utilize trench boxes or cave-in protection, can clearly be
are 0.9 percent for residential foundation more expensive means of cave-in provided by small firms in normal
excavations and 2.9 percent for utility protection. This occurs when there is not operating circumstances.
hook-ups under the more costly existing sufficient space for sloping of the trench Similarly, it may be true that the
standard. The revenues from residential sides, or where uneven trench sides may larger excavating firms are less affected
foundation excavations and utility hook- make the use of hydraulic shores by the requirements than their smaller
up trenches are $1 billion and $1.35 unwieldy' For the smallest contractors, rivals because the very size of the larger
billion, respectively. The project cost compliance through these methods may firms may have prompted the adoption
increases (at current levels of activity) be difficult because they lack adequate of companywide construction practices
will generate aggregate cost increases of equipment capabilities, such as a that meet or exceed the minimum
$9.0 million and $39.2 million in these backhoe of sufficient size to pull a requirements. It is therefore likely that
two sectors. trench box. These inequities among the amendments, which serve
Revenue increases are derived by firms are ameliorated to the extent that principally to reduce the cost of
applying the revenue elasticity (which is firms are able to rent the necessary compliance by increasing the flexibility
equal to one plus the price elasticity) to equipment. Technological impacts (e.g., of the regulations and clarifying their
the cost increases. This calculation light-weight trench boxes) also help. intent, will also benefit smaller firms.
indicates that the revenue Increases fall Rental costs may cut into profit margins, Thus, clarifying the standard and
short of the cost increases by however, and as a result small firms explicitly stating the 'flexibility and
approximately $27,000 in residential may prefer not to participate in some choice available to firms will reduce
excavations and $196,000 in utility hook-. excavation jobs. Overall, OSHA compliance costs to both small and large
up trenches. believes that these disadvantages are firms.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45957
-- . I ....... -- , 1
Some portion of these savings will significant effects upon local 11. U.S. Department of Health and Human
pass through to the consumers or to the environments. For example, erosion, Services. Public Health Service. Centers for
runoff, and similar actions can result in Disease Control. National Institute for
state and local governments that often Occupational Safety and Health. "Request for
are the purchasers of excavation environmental degradation. These Assistance in Preventing Deaths and Injuries
projects. In sum, economy-wide savings potential impacts can be more or less from Excavation Cave-ins". Cincinnati, Ohio:
from the revision are estimated to be severe depending upon how and where NIOSH, July 1985.
$38.0 million. Thus, the overall effect on the excavation is dug, how long it is left 12. U.S. Department of Labor. Bureau of
prices, output. and employment in the open, the disposition of the earth that is Labor Statistics. "Occupational Injuries and
U.S. economy will be small, but removed, etc. OSHA has determined, Illnesses in the United States by Industry,
favorable. For these reasons, OSHA however, that the revisions to subpart P 1982-8". Washington, DC: Government
concludes that the revised standard is consist primarily of clarifications in Printing Office, 1984-8.
unlikely to have an adverse impact on a work practices and procedures and are 13. Anthony Suruda, MD. Johns Hopkins
significant number of small excavation unlikely to have significant impacts on University, School of Hygiene and Public
Health. Baltimore, MD. "Epidemiologic Data
companies. any of these activities; therefore, these on Trench and Excavation Fatalities".
revisions will have no significant Comments received in response to Federal
Additional Impact Measures
environmental effects. Register notice of Wednesday, April 15, 1987.
Impacts on State and Local Exhibit 4-11, Docket No. S-204.
Governments. The value of new References
14. Suruda, et al. "Deaths from Trench
construction financed by state and local 1. U.S. Department of Commerce. Bureau of Cave-in in the Construction Industry".
governments totaled approximately $55 the Census. "1982 Census of Construction "Journal of Occupational Medicine". Vol. 30,
billion in 1985 [27, Table S-7]. ERG Industries, U.S. Summary". Washington, DC: No. 7. July 1988.
estimated the incremental compliance Government Printing Office, December 1984. 15. U.S. Department of Labor. Occupational
cost expenditure on sewer and highway 2. Hinze, Jimmie and Carino, Nicholas. "A Safety and Health Administration. "A
projects at $188 million under the Study of Work Practices Employed to Protect Retrospective Look at OSHA's Special
existing standard. It will be slightly less Workers in Trenches". Publication No. NBSIR Emphasis Program on Trenching and
under the revised standard; This equals 80-1988, National Bureau of Standards. Excavation". Docket No. S-204.
Washington, DC: U.S. Department of 16. Eastern Research Group. "Economic
0.34 percent of state and local Impact Analysis of the Proposed Revision to
Commerce, March 1980.
construction investments. 3. Salomone, Lawrence, and Yokel, Felix. OSHA Subpart P (Section 1926.650-652)
Employment. The employment "An Analysis of the Responses from an Governing Trenching and Excavation Work,"
impacts of achieving compliance with Associated General Contractors of America (Final Report). May 19,1987. Arlington, MA.
the existing or revised standard are (AGC) Survey of Trenching and Shoring Docket S-204.
dependent upon the general economic Practices". Publication No. NBSIR 79-1936. 17. California Department of Industrial
impacts discussed in previous sections. Washington, DC: U.S. Department of Relations. 1982. Division of Labor Statistics
OSHA does not expect significant Commerce, July 1979.' and Research. Ditch, Trench, or Excavation
impacts for such firms and believes the 4. Cassimatis, P.J. "Economics of the Cave-ins". In "Work Injuries and Illnesses in
employment impacts willbe negligible. Construction Industry'.. New York: National California-Quarterly". IAQ-57. December,
Foreign Trade. Changes to the Industrial Conference Board, Inc., 1969. 1982. pp. 3-4. California Division of Labor
excavation standard or enforcement of 5. "Eng News Record": 40, March 8,1984; Statistics and Research: San Francisco, CA.
35, May 3, 1984; 40, August 16, 1984; 40, 18. Department of Health and Human
full compliance with this standard will Services. National Institute of Occupational
not impact U.S. foreign trade. The September 6, 1984; 55, November 8, 1984; 39,
'January 3,1985; 14, January 10, 1985; 111, Safety and Health. 1985. "NIOSH ALERT".
OSHA sta.ndard is applicable to January 24, 1985; 40, January 31, 1985; 50, July 1985. DHHS publication No. 85-110.
excavation work performed in the U.S. March 7, 1985; 51, March 14, 1985; 44. March NIOSH: Cincinnati OH.
and there is no possibility of 28, 1985; 45, April 4, 1985; 47, April 25, 1985; 19. U.S. Department of Labor. Bureau of
substitution to lower cost foreign 39, May 2, 1985; 37, May 9, 1985; 87, May 31, Labor Statistics. "Injuries to Construction
excavation services. 1985; 57, June 27, 1985; 73-74, July 4, 1985. Laborers". Bulletin 2252. March 1986.
6. Pulver, Harvey E. "Construction 20. Viscusi, W. Kip. Alternative approaches
Environmental Impacts Estimates and Costs". 4th ed. New York, to valuing the health impacts of accidents:
The revisions to subpart P have been 1969. Liability law and prospective evaluations.
reviewed in accordance with the 7. Rubert Dunbar. "Informal Public Hearing "Law and Contemp Probl" 46 (4):49-6,
requirements of the National -In the Matter of Proposed Safety Standards Autumn 1983.
Environmental Policy Act (NEPA) of for Excavations In the Construction 21. U.S. Department of Labor'Occupational
Industry". April 19, 1988. Washington, DC Safety and Health Administration. Office of.
1969 (42 U.S.C. 4231 et seq.), the Regulatory Analysis. "Preliminary Regulatory
Regulations of the Council on Docket No. S-204.
8. Michael Plank. "Informal Public Hearing Impact and Regulatory Flexibility
Environmental Quality (CEQ) (40 CFR In the Matter of Proposed Safety Standards Assessment of Subpart L-Scaffolds (29 CFR
part 1500), and OSHA's DOL NEPA for Excavations In the Construction 1926.450 and 1926.460)". Washington, DC,
Procedures (29 CFR part 11). As a result Industry". April 19, 1988. Washington, DC, August 30, 1986.
of this review, the Assistant Secretary Docket No. S-204. 22. Building costs remain moderate. "Eng
for OSHA has determined that the 9.U.S. Department of Labor. Occupational News Record" 214(12):92-95, March 21,1985;
amended standard would have no Safety and Health Administration. Office of and Cost indexes point to rising materials.
significant environmental impact. Management Data Systems. Management "Eng News Record" 202(12):8&-87, March 22,
Although safety standards rarely Information Systems Data for OSHA fatality 1979.
reports and. associated inspections for 1984- 23. U.S. Department of Labor. Labor-
influence air, water, or soil quality, plant Management Services Administration. Office
1988..
or animal life, or the use of land or other 10. Abramo, Vincent 1."Case Studies .of Construction Industry Services. "Annual
aspects of the environment, it is Excavating Trenching and Shoring". Construction Industry Report". Washington,
appropriate to examine whether the Performed for U.S. Department of Labor, DC: Government Printing Office, April 1980.
revisions to the OSHA standard on Occupational Safety and Health P. 106.
excavation (29 CFR part 1926, subpart P) Administration, under Contract No. 24. Breslin, Mark, Comments in response to
will alter the environment external to 41USC252C3. Washington, DC, August 9, April 15, 1987 Federal Register notice. Exhibit
the workplace. Excavation can have 1983. (Unpublished). 4-115. Docket No. S-204.
:45958 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
25. Summers, Bruce G., Comments in comments regarding this burden interestate commerce, they may not
response to April 15, 1987 Federal Register estimate or any other aspect of this
notice. Exhibit 4-106. Docket No. S-204. unduly burden commerce and must be
26. Berty, Melvin, Comments in response to collection of information, including justified by compelling local conditions,
April 15, 1987 Federal Register notice. Exhibit suggestions for reducing this burden, to see section 18(c)(2).
4-109. Docket No. S-204. the Office of Information Management, The Federal standard on excavations
27. Frohmuth, L Brian. Comments in Department of Labor, Room N-1301, 200 addresses hazards which are not unique
response to April 15, 1987, Federal Register Constitution Avenue, NW., Washington.
notice. Exhibit 4-102. Docket No. S-204. to any one state or region of the country.
DC 20210, and to the Office of Nonetheless, states with occupational
28. Mayo, Stephen K. "Theory and Management and Budget Paperwork
Estimation in the Economics of Housing Reduction Project (1218-0137), safety and health plans approved under
Demand", "Journal of Urban Economics", Washington, DC 20503. section 18 of the OSH Act will be able to
1981, 10, pp. 95-116. develop their own state standards to
29. Underground Contractors Association VI.State Plan Standards deal with any special problems which
of Northern California. Comments in might be encountered in a particular
response to Federal Register notice of April The 25 states with their own OSHA-
15, 1987. October 14. 1987. Exhibit No. 4-115. approved occupational safety and state. Moreover, because this standard
Docket No. S-204. health plans must adopt a comparable is written in general, performance-
30. Washington Metropolitan Safety standard within six months of the oriented terms, there is considerable
Construction Association. Comments in publication date of the final rule or show flexibility for state plans to require, and
response to Federal Register notice of April OSHA why there is no need for action, for affect employers to use, methods of
15. 1987. October 12, 1987. Exhbit No. 4-101. e.g. because an existing standard compliance which are appropriate to the
Docket No. S-204. covering this area is already "at least as
31. Levitt, Raymond et al. "Improving working conditions covered by the
Construction Safety Performance: The User's
effective" as the revised federal standard.
Role." Stanford University. Department of standard. These states are: Alaska,
Arizona, California, Connecticut (for In brief, this Final Rule addresses a
Civil Engineering. Technical Report No. 260.
August 1981. state and local government employees clear national problem related to
32. Suarez, L et. al. 1986. "Excavation only), Hawaii, Indiana, Iowa, Kentucky, occupational safety and health in the
Cave-In Fatalities-Texas, 1976-1985." Maryland, Michigan, Minnesota, construction industry. Those states
"Morbidity and Mortality Weekly Report". Nevada, New Mexico, New York (for which have elected to participate under
35:19. May 16, 1988. Centers for Disease state and local government employees section 18 of the OSH Act are not
Control. Pp. 313-314. U.S Government only), North Carolina, Oregon. Puerto preempted this standard, and will be
Printing Office. Washington, DC. Rico, South Carolina, Tennessee, Utah,
33. Butterfield, Bruce. 1986. "U.S. Efforts to
able to address any special conditions
Compile Data on job Safety Seen Falling Vermont, Virginia, Virgin Islands, within the framework of the Federal Act
Short" "Boston Globe" November 10.1986. Washington and Wyoming. while ensuring that the state standards
34. Burrough, Bryan, and Lubov, Seth H. VU. Federalism are at least as effective as that standard.
"Credibility Gap-Some Concerns Fudge
Their Safety Records to Cut Insurance Costs" .The Final Rule has been reviewed in VIUL Authority
"Wall Street Journal", December 2,1988. accordance with Executive Order 12612
35. Bureau of Labor Statistics, U.S. (52 FR 41685; October 30, 1987) regarding This document was prepared under
Department of Labor. 1987. Information Federalism. This Order requires that the direction of Gerard F. Scannell,
provided in response to telephone contracts agencies, to the extent possible, refrain Assistant Secretary of Labor for
from ERG. from limiting state policy options,
36. U.S. Department of Labor. Occupational Occupational Safety and Health, U.S.
Safety and Health Administration. Selected consult with states prior to taking any Department of Labor, 200 Constitution
Occupational Fatalities Related to Trenching actions that would restrict state policy Avenue, NW., Washington, DC 20210.
and Excavation as Found in Reports of options, and take such actions only
OSHA Fatality/Catastrophe Investigations. when there is clear constitutional Accordingly, pursuant to sections 4,
Washington. DC, July 1985. authority and the presence of a problem 6(b) and 8(c) of the Occupational Safety
of national scope. The Order provides and Health Act of 1970'(29 U.S.C. 653;
V. OMB Approval Under the Paperwork 655, 657), section 107 of the Contract
Reduction Act for preemption of state law only if there
is a clear Congressional intent for the Work Hours and Safety Standards Act
This subpart contains a collection of agency to do so. Any such preemption is (40 U.S.C. 333), Secretary of Labor's
information in § 1926.652(b) (3) and (4), to be limited to the extent possible. Order No. 9-83 (48 FR 35736), and 29
and (c) (2), (3) and (4). These provisions Section 18 of the Occupational Safety CFR part 1911, part 1926 to title 29 of the
require employers to maintain a copy of and Health Act (OSH Act), expresses Code of Federal Regulations is amended
protective systems designs, including Congress' clear intent to preempt state as set forth below..
tabulated data and manufacturers data laws relating to issues with respect to
at the worksite and to make these which Federal OSHA has promulgated List of Subjects in 29 CFR Part 1926
designs or data available to the occupational safety or health standards.
Secretary. OMB has reviewed these Under the OSH Act; a state can avoid Construction safety, Construction
collections and approved them through preemption only if it submits, and industry, Excavations, Occupational
September 30, 1992. The approval obtains Federal approval of, a plan for safety and health, Protective equipment,
number is 1218-0137. the development of such standards and Safety.
Public reporting burden for this their enforcement. Occupational safety
collection of information is estimated to
Signed at Washington, DC, this 20th day of
and health standards developed by such
average .5 hours per response, including Plan States must, among other things, be October, 1989.
the time for reviewing instructions, at least as effective in providing safe Gerard F.Scannell,
searching existing data sources, and healthful employment and places of
gathering and maintaining the data Assistant Secretaryof Labor.
employment as the Federal standards.
needed, and completing and reviewing Where such standards are applicable to Part 1926 of 29 CFR is amended as
the collection of information. Send products distributed or used in follows:
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 4 ,7J
PART 1926-[AMENDED] sidewalls of an excavation and prevent structural materials such as steel or
cave-ins. wood.
Subpart M-[Amended] Bell-bottom pierhole means a type of RegisteredProfessionalEngineer
shaft or footing excavation, the bottom means a person who is registered as a
1. By revising the authority citation for of which is made larger than the cross
subpart M of part 1926 to read as professional engineer in the state where
section above to form a belled shape. the work is to be performed. However, a
follows: Benching (Benching system) means a professional engineer, registered in any
Authority: Sec. 107, Contract Work Hours method of protecting employees from state is deemed to be a "registered
and Safety Standards Act (Construction cave-ins by excavating the sides of an professional engineer" within the
Safety Act) (40 U.S.C. 333); Secs. 4, 6, 8, excavation to form one or a series of
Occupational Safety and Health Act of 1970 meaning of this standard when
(29 U.S.C. 653, 655, 657); Secretary of Labor's horizontal levels or steps, usually with approving designs for "manufactured
Order No. 12-71 (36 FR 8754), 8-76 (41 FR vertical or near-vertical surfaces protective systems" or "tabulated data"
25059), or 9-83 (48 FR 35736),. as applicable, between levels. to be used in interstate commerce.
and 29 CFR part 1911. Cave-in means the separation of a Sheeting means the members of a
2. By revising subpart P of part 1926 to mass of soil or rock material from the shoring system that retain the earth in
side of an excavation, or the loss of soil position and in turn are supported by
read as follows: from under a trench shield or support other members of the shoring system.
Subpart P-Excavations system, and its sudden movement into Shield (Shield system) means a
the excavation, either by falling or structure that is able to withstand the
Sec.
1926.650 Scope, application, and definitions sliding, in sufficient quantity so that it forces imposed on it by a cave-in and
applicable to this subpart. could entrap, bury, or otherwise injure thereby protect employees within the
1926.651 General requirements. and immobilize a person. structure. Shields can be permanent
1926.652 Requirements for protective Competentperson means one who is structures or can be designed to be
systems. capable of identifying existing and portable and moved along as work
Appendix A to Subpart P-Soil Classification predictable hazards in the surroundings, progresses. Additionally, shields can be
or working conditions which are either premanufactured or job-built in
Appendix B to Subpart P-Sloping and unsanitary, hazardous, or dangerous to
Benching accordance with § 1926.652 (c)(3) or
employees, and who has authorization (c)(4). Shields used in trenches are
Appendix C to Subpart P-Timber Shoring to take prompt corrective measures to usually referred to as "trench boxes" or
for Trenches eliminate them. "trench shields."
Appendix D to Subpart P-Aluminum Cross bracesmean the horizontal
members of a shoring system installed Shoring (Shoring system) means a
Hydraulic Shoring for Trenches structure such as a metal hydraulic,
perpendicular to the sides of the
Appendix E to Subpart P-Alternatives to excavation, the ends of which bear mechanical or timber shoring system
Timber Shoring that
and supports the sides of an excavation
against either uprights or wales. which is designed to prevent cave-
Appendix F to Subpart P-Selection of Excavation means any man-made cut,
Protective Systems cavity, trench, or depression in an earth MnS.
surface, formed by earth removal. Sides. See "Faces."
Subpart P-Excavations Faces or sides means the vertical or Sloping (Sloping system) means a
Authority: Sec. 107, Contract Worker Hours inclined earth surfaces formed as a method of protecting employees from
and Safety Standards Act (Construction result of excavation work. cave-ins by excavating to form sides of
Safety Act) (40 U.S.C. 333); Secs. 4, 6.8, Failuremeans the breakage, an excavation that are inclined away
Occupational Safety and Health Act of 1970 displacement, or permanent deformation from the excavation so as to prevent
(29 U.S.C. 653, 655, 657); Secretary of Labor's of a structural member or connection so cave-ins. The angle of incline required to
Order No. 12-71 (36 FR 8754), 8-76 (41 FR as to reduce its structural integrity and prevent a cave-in varies with
25059), or 9-83 (48 FR 35736), as applicable, differences in such factors as the soil
and 29 CFR part 1911. its supportive capabilities
Hazardous atmospheremeans an type, environmental conditions of
§ 1926.650 Scope, application, and atmosphere which by reason of being exposure, and application of surcharge
definitions applicable to this subpart. explosive, flammable, poisonous, loads.
(a) Scope and application.This corrosive, oxidizing, irritating, oxygen Stable rock means natural solid
subpart applies to all open excavations deficient, toxic, or otherwise harmful, mineral material that can be excavated
made in the earth's surface. Excavations may cause death, illness, or injury. with vertical sides and will remain
are defined to include trenches. Kickout means the accidental release intact while exposed. Unstable rock is
or failure of a cross brace. considered to be stable when the rock
(b) Definitions applicableto this
Protectivesystem means a method of material on the side or sides of the
subpart excavation is secured against caving-in
Accepted engineeringpractices means
protecting employees from cave-ins,
from material that could fall or roll from or movement by rock bolts or by another
those requirements which are protective system that has been
an excavation face or into an
compatible with standards of practice excavation, or from the collapse of designed by a registered professional
required by a registered professional adjacent structures. Protective systems engineer.
engineer. include support systems, sloping and Structuralramp means a ramp built of
Aluminum HydraulicShoring means a benching systems, shield systems, and steel or wood, usually used for vehicle
pre-engineered shoring system other systems that provide the access. Ramps made of soil or rock are
comprised of aluminum hydraulic necessary protection. not considered structural ramps.
cylinders (crossbraces) used in Ramp means an inclined walking or Support system means a structure
conjunction with vertical rails (uprights) working surface that is used to gain such as underpinning, bracing, or
or horizontal rails (walers). Such system access to one point from another, and is shoring, which provides support to an
is designed, specifically to support the constructed from earth or from adjacent structure, underground
45960 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
installation, or the sides of an acceptable means to locate utility when such equipment is required to
excavation. installations are used. approach the edge of an excavation, and
Tabulated data means tables and (3) When excavation operations
the operator does not have a clear and
charts approved by a registered approach the estimated location of direct view of the edge of the
professional engineer and used to design underground installations, the exact excavation, a warning system shall be
and construct a protective system. location of the installations shall be utilized such as barricades, hand or
Trench (Trench excavation) means a determined by safe and acceptable mechanical signals, or stop logs. If
narrow excavation (in relation to its means. possible, the grade should be away from
length) made below the surface of the (4) While the excavation is open, the excavation.
ground. In general, the depth is greater underground installations shall be (g) Hazardousatmospheres--{1)
than the width, but the width of a trench protected, supported or removed as Testing and controls. In addition to the
(measured at the bottom] is not greater necessary to safeguard employees. requirements set forth in subparts D and
than 15 feet (4.6 m). If forms or other (c) Access and egress-(1)Structural E of this part (29 CFR 1926.50-1926.107)
structures are installed or constructed in ramps. (i) Structural ramps that are used to prevent exposure to harmful levels of
an excavation so as to reduce the solely by employees as a means of atmospheric contaminants and to assure
dimension measured from the forms or access or egress from excavations shall acceptable atmospheric conditions, the
structure to the side of the excavation to be designed by a competent person. following requirements shall apply:
15 feet (4.6 m) or less (measured at the Structural ramps used for access or (i) Where oxygen deficiency
bottom of the excavation), the egress of equipment shall be designed (atmospheres containing less than 19.5
excavation is also considered to be a by a competent person qualified in percent oxygen) or a hazardous
trench. structural design, and shall be
Trench box. See "Shield." atmosphere exists or could reasonably
constructed in accordance with the be expected to exist, such as in
Trench shield.See "Shield." design.
Uprightsmeans the vertical members excavations in landfill areas or
(ii) Ramps and runways constructed
of a trench shoring system placed in excavations in areas where hazardous
of two or more structural members shall
contact with the earth and usually substances are stored nearby, the
have the structural members connected
positioned so that individual members atmospheres in the excavation shall be
together to prevent displacement.
do not contact each other. Uprights (iii) Structural members used for tested before employees enter
placed so that individual members are ramps and runways shall be of uniform excavations greater than 4 feet (1.22 m)
closely spaced, in contact with or thickness. in depth.
interconnected to each other, are often (iv) Cleats or other appropriate means (ii) Adequate precautions shall be
called "sheeting." used to connect runway structural taken to prevent employee exposure to
Wales means horizontal members of a members shall be attached to the bottom atmospheres containing less than 19.5
shoring system placed parallel to the of the runway or shall be attached in a percent oxygen and other hazardous
excavation face whose sides bear manner to prevent tripping. atmospheres. These precautions include
against the vertical members of the (v) Structural ramps used in lieu of providing proper respiratory protection
shoring system or earth. steps shall be provided with cleats or or ventilation in accordance with
other surface treatments on the top subparts D and E of this part
§ 1926.651 General requirements. surface to prevent slipping. respectively.
(a) Surface encumbrances.All surface (2) Means of egress from trench (iii) Adequate precaution shall be
encumbrances that are located so as to excavations. A stairway, ladder, ramp taken such as providing ventilation, to
create a hazard to employees shall be or other safe means of egress shall be prevent employee exposure to an
removed or supported, as necessary, to located in trench excavations that are 4 atmosphere containing a concentration
safeguard employees. feet (1.22 m) or more in depth so as to of a flammable gas in excess of 20
(b) Undergroundinstallations.(1) The require no more than 25 feet (7.62 m) of percent of the lower flammable limit of
estimated location of utility lateral travel for einployees. the gas.
installations, such as sewer, telephone, (d) Exposure to vehicular traffic. (iv) When controls are used that are
fuel, electric, water lines, or any other Employees exposed to public vehicular intended to reduce the level of
underground Installations that traffic shall be provided with, and shall atmospheric contaminants to acceptable
reasonably may be expected to be wear, warning vests or other suitable levels, testing shall be conducted as
encountered during excavation work, garments marked with or made of often as necessary to ensure that the
shall be determined prior to opeiiing an reflectorized or high-visibility material. atmosphere remains safe.
excavation. (e) Exposure to falling loads. No (2) Emergency rescue equipment. (i)
(2] Utility companies or owners shall employee shall be permitted underneath Emergency rescue equipment, such as
be contacted within established or loads handled by lifting or digging breathing apparatus, a safety harness
customary local response times, advised equipment. Employees shall be required and line, or a basket stretcher, shall be
of the proposed work, and asked to to stand away from any vehicle being readily available where hazardous
establish the location of the utility loaded or unloaded to avoid being atmospheric conditions exist or may
underground installations prior to the struck by any spillage or falling reasonably be expected to develop
start of actual excavation. When utility materials. Operators may remain in the during work in an excavation. This
companies or owners cannot respond to cabs of vehicles being loaded or equipment shall be attended when in
a request to locate underground utility unloaded when the vehicles are use.
installations within 24 hours (unless a equipped, in accordance with (ii) Employees entering bell-bottom
longer period is required by state or § 1926.601(b)(6), to provide adequate pier holes, or other similar deep and
local law), or cannot establish the exact protection for the operator during confined footing excavations, shall wear
location of these installations, the loading and unloading operations. a harness with a life-line securely
employer may proceed, provided the (f) Warning system for mobile attached to it. The lifeline shall be
employer does so with caution, and equipment When mobile equipment is separate from any line used to handle
provided detection equipment or other operated adjacent to an excavation, or materials, and-shall be individually
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45961
attended at all times while the employee provided to protect employees from the § 1926.652 RequIremerds for protective
wearing the lifeline is in the excavation. possible collapse of such structures. system
(h) Protectionfrom hazards (j)Protectionof employees from loose (a) Protectionof employees in
associatedwith water accumulation.(1) rock or soil.(1) Adequate protection excavations. (1) Each employee in an
Employees shall not work in shall be provided to protect employees excavation shall be protected from cave-
excavations in which there is from loose rock or soil that could pose a ins by an adequate protective system
accumulated water, or in excavations in designed in accordance with paragraph
which water is accumulating, unless hazard by falling or rolling from an
excavation face. Such protection shall (b) or (c) of this section except when:
adequate precautions have been taken (i) Excavations are made entirely in
to protect employees against the consist of scaling to remove loose
material; installation of protective stable rock; or
hazards posed by water accumulation. (ii) Excavations are less than 5 feet
The precautions necessary to protect barricades at intervals as necessary on
employees adequately vary with each the face to stop and contain falling (1.52m) in depth and examination of the
situation, but could include special material; or other means that provide ground by a competent person provides
support or shield systems to protect equivalent protection. no indication of a potential cave-in.
from cave-ins, water removal to control (2) Employees shall be protected from (2] Protective systems shall have the
the level of accumulating water, or use excavated or other materials or capacity to resist without failure all
of a safety harness and lifeline. equipment that could pose a hazard by loads that are intended or could
(2) If water is controlled or prevented falling or rolling into excavations. reasonably be expected to be applied or
from accumulating by the use of water Protection shall be provided by placing transmitted to the system.
removal equipment, the water removal and keeping such materials or (b) Design of sloping and benching
equipment and operations shall be equipment at least 2 feet (.61 m) from the systems. The slopes and configurations
monitored by a competent person to of sloping and benching systems shall
edge of excavations, or by the use of
ensure proper operation. retaining devices that are sufficient to be selected and constructed by the
(3) If excavation work interrupts the employer or his designee and shall be in
prevent materials or equipment from accordance with the requirements of
natural drainage of surface water (such falling or rolling into excavations, or by
as streams), diversion ditches, dikes, or paragraph (b](1); or, in the alternative,
a combination of both if necessary. paragraph (b)(2); or, in the alternative,
other suitable means shall be used to
prevent surface water from entering the (k) Inspections.(1) Daily inspections paragraph (b)(3), or, in the alternative,
excavation and to provide adequate of excavations, the adjacent areas, and paragraph (b)(4), as follows:
drainage of the area adjacent to the protective systems shall be made by a (1) Option (1)-Allowable
excavation. Excavations subject to competent person for evidence of a configurationsand slopes. (i)
runoff from heavy rains will require an situation that-could result in possible Excavations shall be sloped at an angle
inspection by a competent person and cave-ins, indications of failure of not steeper than one and one-half
compliance with paragraphs (h)(1) and protective systems, hazardous horizontal to one vertical (34 degrees
(h)(2) of this section. atmospheres, or other hazardous measured from the horizontal), unless
(i) Stability of adjacentstructures.(1) conditions. An inspection shall be the employer uses one of the other
Where the stability of adjoining conducted by the competent person options listed below.
buildings, walls, or other structures is prior to the start of work and as needed (ii) Slopes specified in paragraph
endangered by excavation operations, throughout the shift. Inspections shall (b)(1)(i) of this section, shall be
support systems such as shoring, also be made after every rainstorm or excavated to form configurations that
bracing, or underpinning shall be other hazard increasing occurrence. are in accordance with the slopes shown
provided to ensure the stability of such These inspections are only required for Type C soil in Appendix B to this
structures for the protection of when employee exposure can be subpart.
employees. reasonably anticipated. (2) Option (2)-Determinationof
(2) Excavation below the level of the (2) Where the competent person finds slopes and configurationsusing
base or footing of any foundation or evidence of a situation that could result Appendices A and B. Maximum
retaining wall that could be reasonably in a possible cave-in, indications of allowable slopes, and allowable
expected to pose a hazard to employees failure of protective systems, hazardous configurations for sloping and benching
shall not be permitted except when: atmospheres, or other hazardous systems, shall be determined in
(i] A support system, such as accordance with the conditions and
underpinning, is provided to ensure the conditions, exposed employees shall be requirements set forth in appendices A
safety of employees and the stability of removed from the hazardous area until and B to this subpart.
the structure; or the necessary precautions have been
(3) Option (3)--Designs using other
(ii) The excavation is in stable rock; or taken to ensure their safety. tabulateddata. (i) Designs of sloping or
(iii) A registered professional engineer () Fallprotection.(1) Where benching systems shall be selected from
has approved the determination that the employees or equipment are required or and be in accordance with tabulated
structure is sufficently removed from the permitted to cross over excavations, data, such as tables and charts.
excavation so as to be unaffected by the walkways or bridges with standard (ii) The tabulated data shall be in
excavation activity;, or guardrails shall be provided. written form and shall include all of the
(iv) A registered professional engineer (2) Adequate barrier physical following:
has approved the determination that protection shall be provided at all (A) Identification of the parameters
such excavation work will not pose a remotely located excavations. All wells, that affect the selection of a sloping or
hazard to employees. pits, shafts, etc., shall be barricaded or benching system drawn from such data;
(3) Sidewalks, pavements, and covered. Upon completion of (B) Identification of the limits of use of
appurtenant structure shall not be exploration and similar operations, the data, to include the magnitude and
undermined unless a support system or temporary wells, pits, shafts, etc., shall configuration of slopes determined to be
another method of protection is be backfilled. safe;
45962 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 /,Rules and Regulations
. (C) Explanatory information as may (ii) Deviation from the specifications, damage or defects that might impair
be necessary to aid the user in making a recommendations, and limitations their proper function.
correct selection of a protective system issued or made by the manufacturer (2) Manufactured materials and
from the data. shall only be allowed after the equipment used for protective systems
(iii) At least one copy of the tabulated manufacturer issues specific written shall be used and maintained in a
data which identifies the registered approval. manner that is consistent with the
professional engineer who approved the (iii) Manufacturer's specifications, recommendations of the manufacturer,
data, shall be maintained at the jobsite recommendations, and limitations, and
during construction of the protective and in a manner that will prevent
manufacturer's approval to deviate from employee exposure to hazards.
system. After that time the data may be the specifications, recommendations,
stored off the jobsite, but a copy of the and limitations shall be in written form (3) When material or equipment that
data shall be made available to the at the jobsite during construction of the is.used for protective systems is
Secretary upon request. protective system. After that time this damaged, a competent person shall
(4) Option (4)-Design by a registered data may be stored off the jobsite, but a examine the material or equipment and
professionalengineer.(i) Sloping and copy shall be made available to the evaluate its suitability for continued use.
benching systems not utilizing Option Secretary upon request. If the competent person cannot assure
(1) or Option (2) or Option (3) under 13) Option (3)-Designsusing other the material or equipment is able to
paragraph (b) of this section shall be tabulateddata. (i) Designs of support support the intended loads or is
approved by a registered professional systems, shield systems, or other otherwise suitable for safe use, then
engineer. protective systems shall be selected such material or equipment shall be
(ii) Designs shall be in written form from and be in accordance with removed from service, and shall be
and shall include at least the following: tabulated data, such as tables and evaluated and approved by a registered
(A) The magnitude of the slopes that charts. professional engineer before being
were determined to be safe for the, (ii) The tabulated data shall be in returned to service.
particular project; written form and include all of the (e) Installationand removal of
(B) The configurations that were following: support--[1) General.(i) Members of
determined to be safe for the particular (A) Identification of the parameters support systems shall be securely
project; and that affect the selection of a protective connected together to prevent sliding,
(C) The identity of the registered system drawn from such data;
professional engineer approving the
falling, kickouts, or other predictable
(B)Identification of the limits of use of failure.
design. the data;
(iii) At least one copy of the design (C)Explanatory information as may (ii) Support systems shall be installed
shall be maintained at the jobsite while be necessary to aid the user in making a and removed in a manner that protects
the slope is being constructed. After that correct selection of a protective system employees from cave-ins, structural
time the design need not be at the from the data. collapses, or from being struck by
jobsite, but a copy shall be made (iii) At least one copy of the tabulated members of the support system.
available to the Secretary upon request. data, which identifies the registered (iii) Individual members of support
(c) Design of support systems, shield professional engineer who approved the systems shall not be subjected to loads
systems, and otherprotective systems. data, shall be maintained at the jobsite exceeding those which those members
Designs of support systems shield during construction of the protective were designed to withstand.
systems, and other protective systems system. After that time the data may be (iv) Before temporary removal of
shall be selected and constructed by the stored off the jobsite, but a copy of the individual members begins, additional
employer or his designee and shall be in data shall be made available to the precautions shall be taken to ensure the
accordance with the requirements of Secretary upon request. safety of employees, such as installing
paragraph (c)(1); or, in the alternative, (4) Option (4)-Design by a registered other structural members to carry the
paragraph (c)(2); or, in the alternative, professionalengineer.(i) Support loads imposed on the support system.
paragraph (c)(3); or, in the alternative, systems, shield systems, and other
paragraph (c)(4) as follows: (v) Removal shall begin at, and
protective systems not utilizing Option progress from, the bottom of the
(1) Option (1)--Designs using 1, Option 2 or Option 3, above, shall be
appendicesA, C and D. Designs for excavation. Members shall be released
approved by a registered professional slowly so as to note any indication of
timber shoring in trenches shall be engineer.
determined in accordance with the possible failure of the remaining
(ii) Designs shall be in written form members of the structure or possible
conditions and requirements set forth in and shall include the following:
appendices A and C to this subpart. (A) A plan indicating the sizes, types, cave-in of the sides of the excavation.
Designs for aluminum hydraulic shoring and configurations of the materials to be (vi) Backfilling shall progress together
shall be in accordance with paragraph used in the protective system; and with the removal of support systems
(c)(2) of this section, but if (B)The identity of the registered from excavations.
manufacturer's tabulated data cannot be professional engineer approving the (2) Additionalrequirenentsfor
utilized, designs shall be in accordance design. supportsystems for trench excavations.
with appendix D. (iii) At least one copy of the design (i) Excavation of material to a level no
(2) Option (2)--Designs Using shall be maintained at the jobsite during greater than 2 feet (.61 m) below the
Manufacturer'sTabulatedData.(i) construction of the protective system. bottom of the members of a support
Design of support systems, shield After that time, the design may be system shall be permitted, but only if the
systems, or other protective systems stored off the jobsite, but a copy of the system is designed to resist the forces
that are drawn from manufacturer's design shall be made available to the calculated for the full depth of the
tabulated data shall be in accordance Secretary upon request. trench, and there are no indications
with all specifications, (d) Materials and equipment. (1) while the trench is open' of a possible
recommendations, and limitations Materials and equipment used for loss of soil from behind or below the
issued or made by the manufacturer. protective systems shall be free from bottom of the support system.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and-Regulations 45963
(ii) Installation of a support system Testing Materials (ASTM) Standards D653-85 cases, silty clay loam and sandy clay loam.
shall be closely coordinated with the and D2488; The Unified Soils Classification Cemented soils such as caliche and hardpan
excavation of trenches. System. The U.S. Department of Agriculture are also considered Type A. However, no soil
(USDA) Textural Classification Scheme; and is Type A if:
(1) Sloping and benching systems. The National Bureau of Standards Report (i) The soil is fissured; or
Employees shall not be permitted to BSS-121, (ii)The soil is subject to vibration from
work on the faces of sloped or benched Cementedsoil means a soil in which the heavy traffic, pile driving, or similar effects;
excavations at levels above other particles are held together by a chemical or
employees except when employees at agent, such as calcium carbonate, such that a (iii) The soil has been previously disturbed;
the lower levels are adequately hand-size sample cannot be crushed into - or
protected from the hazard of falling, powder or individual soil particles by finger (iv) The soil Is part of a sloped, layered
rolling, or sliding material or equipment. pressure. system where the layers dip into the
Cohesive soil means clay (fine grained excavation on a slope of four horizontal to
'()Shield systems---1) General. (i) soil), or soil with a high clay content, which one vertical (4H:IV)or greater, or
Shield systems shall not be subjected to has cohesive strength. Cohesive soil does not (v) The material is subject to other factors
loads exceeding those which the system crumble, can be excavated with vertical that would require it to be classified as a less
was designed to withstand. sideslopes, and is plastic when moist. stable material
(ii) Shields shall be Installed in a Cohesive soil is hard to break up when dry, Type B means:
manner to restrict lateral or other and exhibits significant cohesion when (i) Cohesive soil with an unconfined
hazardous movement of the shield in the submerged. Cohesive soils include clayey silt compressive strength greater than 0.5 tsf (48
event of the application of sudden sandy clay, silty clay, clay and organic clay. kPa) but less than 1.5 taf (144 kPa]; or
Dry soil means soil that does not exhibit (ii) Granular cohesionless soils including:.
lateral loads. visible signs of moisture content.
(iii) Employees shall be protected angular gravel (similar to crushed rock), silt
Fissuredmeans a soil material that has a silt loam, sandy loam and, in some cases,
from the hazard of cave-ins when tendency to break along definite planes of
entering or exiting the areas protected silty clay loam and sandy clay loam.
fracture with little resistance, or a material (iii) Previously disturbed soils except those
by shields. that exhibits open cracks, such as tension which would otherwise be classed as Type C
(iv) Employees shall not be allowed in cracks, in an exposed surface.
soiL
shields when shields are being installed, Granularsoil means gravel, sand, or silt' (iv) Soil that meets the unconfined
removed, or moved vertically. (coarse grained soil) with little or no clay compressive strength or cementation
(2) Additionalrequirementfor shield content. Granular soil has no cohesive
strength. Some moist granular soils exhibit
requirements for Type A, but is fissured or
systems used in trench excavations. apparent cohesion. Granular soil cannot be
subject to vibration; or
Excavations of earth material to a level (v) Dry rock that is not stable; or
molded when moist and crumbles easily
not greater than 2 feet (.61 m) below the when dry.
(vi) Material that is part of a sloped,
bottom of a shield shall be permitted, Layered system means two or more
layered system where the layers dip into the
but only if the shield is designed to distinctly different soil or rock types arranged
excavation on a slope less steep than four
resist the forces calculated for the full in layers. Micaceous seams or weakened horizontal to one vertical (4H:IV), but only if
planes in rock or shale are considered the material would otherwise be classified as
depth of the trench, and there are no Type B.
indications while the trench is open of a layered.
Moist soil means a condition In which a Type C means:
possible loss of soil from behind or (i) Cohesive soil with an unconfined
soil looks and feels damp. Moist cohesive soil
below the bottom of theshield. can easily be shaped into a ball and rolled compressive strength of 0.5 tsf (48 kPa) or
into small diameter threads before crumbling. less; or
Appendix A to Subpart P (ii) Granular soils including gravel, sand,
Moist granular soil that contains some
Soil Classification cohesive material will exhibit signs of and loamy sand; or
(a) Scope and application--1)Scope. This cohesion between particles. (iii) Submerged soil or soil from which
appendix describes a method of classifying Plasticmeans a property of a soil which water is freely seeping; or
soil and rock deposits based on site and allows the soil to be deformed or molded (iv) Submerged rock that is not stable, or
environmental conditions, and on the without cracking, or appreciable volume (v) Material in a sloped, layered system
structure and composition of the earth change. where the layers dip into the excavation or a
deposits. The appendix contains definitions, Saturatedsoil means a soil in which the slope of four horizontal to one vertical
sets forth requirements, and describes voids are filled with water. Saturation does (4H:IV] or steeper.
acceptable visual and manual tests for use in not require flow. Saturation. or near Unconfined compressive strength means
classifying soils. saturation, is necessary for the proper use of the load per unit area at which a soil will fail
(2)Application. This appendix applies instruments such as a pocket penetrometer or in compression. It can be determined by
when a sloping or benching system is sheer vane. laboratory testing, or estimated in the field
designed in accordance with the Soil classificationsystem means, for the using a pocket penetrometer, by thumb
requirements set forth in § 1920Z52(b)(2) as a purpose of this subpart, a method of penetration tests, and other methods.
method of protection for employees from categorizing soil and rock deposits in a Wet soil means soil that contains
cave-ins. This appendix also applies when hierarchy of Stable Rock. Type A. Type B, significantly more moisture than moist soil.
timber shoring for excavations is designed as and Type C, in decreasing order of stability. but in such a range of values that cohesive
a method of protection from cave-ins in The categories are determined based on an material will slump or begin to flow when
accordance with appendix C to subpart Pof analysis of the properties and performance vibrated. Granular material that would
part 1928 and when aluminum hydraulic .characteristics of the deposits and the exhibit cohesive properties when moist will
shoring is designed in accordance with environmental conditions of exposure. lose those cohesive properties when wet.
appendix D.This Appendix also applies if Stable rock means natural solid mineral (c) Requirements-(1) Classificationof soil
other protective systems are designed and matter that can be excavated with vertical and rock deposits.Each soil and rock deposit
selected for use from data prepared in sides and remain intact while exposed. shall be classified by a competent person as
accordance with the requirements set forth in Submerged soil means soil which is Stable Rock, Type A. Type B, or Type C in
§ 1928.852(c), and the use of the data is underwater or is free seeping. accordance with the definitions set forth in
predicated on the use of the soil classification Type A means cohesive soils with an paragraph (b)of this appendix.
system set forth in this appendix. unconfined compressive strength of 1.5 ton (2) Basis of classification.The
(b) Definitions.The definitions and per square foot (tsf) (144 kPa) or greater. classification of the deposits shall be made
examples given below are based on, in whole Examples of cohesive soils are: clay, silty based on the results of at least one visual and
or in part, the following: American Society for clay, sandy clay, clay loam and, in some at least one manual analysis. Such analyses
45964 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 Rules and Regulations
shall be conducted by a competent person (2) Manual tests. Manual analysis of soil granular material. To distinguish between the
using tests described in paragraph (d) below, samples is conducted to determine two, pulverize the dried clumps of the sample
or in other recognized methods of soil quantitative as well as qualitative properties by hand or by stepping on them. If the clumps
classification and testing such as those of soil and to provide more information in do not pulverize easily, the material is
adopted by the America Society for Testing order to classify soil properly. cohesive with fissures. If they pulverize
Materials, or the U.S. Department of (i) Plasticity.Mold a moist or wet sample easily into very small fragments, the material
Agriculture textural classification system. of soil into a ball and attempt to roll it into is granular.
(3) Visual andmanual analyses.The visual threads-as thin as V-inch in diameter.
and manual analyses, such as those noted as Cohesive material can be successfully rolled Appendix B to Subpart P
being acceptable in paragraph (d) of this into threads without crumbling. For example, Sloping and Benching
appendix, shall be designed and conducted to if at least a two inch (50 mm) -length of -
provide sufficient quantitative and inch thread can be held on one end without (a) Scope and application. This appendix
qualitative information as may be necessary tearing, the soil is cohesive. contains specifications for sloping and
to identify properly the properties, factors, (ii) Dry strength. If the soil is dry and benching when used as methods of protecting
and conditions affecting the classification of crumbles on its own or with moderate employees working in excavations from' cave-
the deposits. pressure into individual grains or fine ins. The requirements of this appendix apply
(4) Layered systems. In a layered system, powder, it is granular (any combination of when the design of sloping and benching
the system shall be classified in accordance gravel, sand. or silt). If the soil is dry and falls protective systems is to be performed in
with its weakest layer. However, each layer into clumps which break up into smaller accordance with the requirements set forth in
may be classified individually where a more clumps, but the smaller clumps can only be § 1926.652(b)(2).
stable layer lies under a less stable layer. broken up with difficulty, it may be clay in (b) Definitions.
(5) Reclassification.If, after classifying a any combination with gravel; sand or silt. If Actual slope means the slope to which an
deposit, the properties, factors, or conditions the dry soil breaks into clumps which do not excavation face is excavated.
affecting its classification change in any way, break up into small clumps and Which can Distressmeans that the soil is in a •
the changes shall be evaluated by a only be broken with difficulty, and there is no condition where a cave-in is imminent or is
competent person. The deposit shall be visual indication the soil is fissured, the soil likely to occur. Distress is evidenced by such
reclassified as necessary to reflect the may be considered unfissured. phenomena as the development of fissures in
changed circumstances. (iii) Thumb penetration.The thumb the face of or adjacent to an open excavation;
(d) Acceptable visual and manualtests.- penetration test can be used to estimate the the subsidence of the edge of an excavation;
(1) Visual tests. Visual analysis is conducted the slumping of material from the face or the'
unconfined compressive strength of cohesive bulging or heaving of material from the
to determine qualitative information soils. (This test is based on the thumb
regarding the excavation site in general, the bottom of an excavation; the spelling of
soil adjacent to the excavation, the soil penetration test described in American material from the face of an excavation; and
forming the sides of the open excavation, and Society for Testing and Materials (ASTM) ravelling, i.e., small amounts of material such
the soil taken as samples from excavated Standard designation D2488---"Standard as pebbles or little clumps of material
material Recommended Practice for Description of suddenly separating from the face of an
(i) Observe samples of soil that are Soils (Visual-Manual Procedure)." ) Type A excavation and trickling or rolling down into
excavated and soil in the sides of the soils with an unconfined compressive the excavation.
excavation. Estimate the range of particle strength of 1.5 tsf can be readily indented by Maximum allowable slope means the
sizes and the relative amounts of the particle the thumb; however, they can be penetrated steepest incline of an excavation face that is
sizes. Soil that is primarily composed of fine- by the thumb only with very great effort. acceptable for the most favorable site
grained material is cohesive material. Soil Type C soils with an unconfined compressive conditions as protection against cave-ins, and
composed primarily of coarse-grained sand strength of 0.5 tsf can be easily penetrated is expressed as the ratio of horizontal
or gravel is granular material. several inches by the thumb, and can be distance to vertical rise (H:V).
(ii) Observe soil as it is excavated. Soil that molded by light finger pressure. This test Short term exposure means a period of
remains in clumps when excavated is should be conducted on an undisturbed soil time less than or equal to 24 hours that an
cohesive. Soil that breaks up easily and does sample, such as a large clump of spoil, as excavation is open.
not stay in clumps is granular. soon as practicable after excavation to keep (c) Requirements--{1) Soil classification.
(iii) Observe the side of the opened to a miminum the effects of exposure to Soil and rock deposits shall be classified in
excavation and the surface area adjacent to drying influences. If the excavation is later accordance with appendix A to subpart P of
the excavation. Crack-like openings such as exposed to wetting influences (rain flooding), part 1926.
tension cracks could indicate fissured the classification of the soil must be changed (2) Maximum allowable slope, The
material If chunks of soil spall off a vertical accordingly. maximum allowable slope for a soil or rock
side, the soil could be fissured. Small spalls (iv) Otherstrength tests. Estimates of deposit shall be determined from Table B-1
are evidence of moving ground and are unconfined compressive strength of soils can of this appendix.
indications of potentially hazardous also be obtained by use of a pocket (3)Actual slope. (i) The actual slope shall
situations. penetrometer or by using a hand-operated not be steeper than the maximum allowable
(iv) Observe the area adjacent to the shearvane. slope.
excavation and the excavation itself for (v) Drying test. The basic purpose of the (ii)The actual slope shall be less steep
evidence of existing utility and other drying test is to differentiate between than the maximum allowable slope, when
underground structures, and to identify cohesive material with fissures, unfissured there are signs of distress. If that situation
previously disturbed soil. cohesive material, and granular material. The occurs, the slope shall be cut back to an
(v) Observe the opened side of the procedure for the drying test involves drying actual slope which is at least V horizontal to
excavation to identify layered systems. a sample of soil that is approximately one one vertical ( H:IV) less steep than the
Examine layered systems to identify if the inch thick (2.54 cm) and six inches (15.24 cm) maximum allowable slope. ,
layers slope toward the excavation. Estimate in diameter until it is thoroughly dry: (iii) When surcharge loads from stored
the degree of slope of the layers. (A) If the sample develops cracks as it material or equipmjent, operating equipment,
(vi) Observe the area adjacent to the dries, significant fissures are indicated. or traffic are present, a competent person
excavation and the sides of the opened (B) Samples that dry without cracking are shall determine the degree to which the
excavation for evidence of surface water, to be broken by hand. If considerable force is actual slope must be reduced below the
water seeping from the sides of the necessary to break a sample, the soil has maximum allowable slope, and shall assure
excavation, or the location of the level of the significant cohesive material content The that such reduction is achieved. Surcharge
water table. soil can be classified as a unfissured loads from adjacent structures shall be
(vii) Observe the area adjacent to the cohesive material and the unconfined evaluated in accordance with § 1926.651(i).
excavation and the area within the compressive strength should be determined. (4) Configurations.Configurations of
excavation for sources of vibration that may (C) If a sample breaks easily by hand, it is sloping and benching systems shall be in
affect the stability of the excavation face.. either a fissured cohesive material or a accordance with Figure B-1.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45965
TABLE B-I
MAXIMUM ALLOWABLE SLOPES
NOTES:
1. Nu m bers shown in parentheses next to maxi m u m allowable slopes are angles expressed in
degrees from the horizontal. Angles have been rounded off.
2. A short-term maximum allowable slope of 1/2H:IV (630) is allowed in
excavations in Type A soil that are 12 feet (3.67 m) or less in depth.
Short-term maximum allowable slopes for excavations greater than 12
feet (3.67 m) in depth shall be 3/4H:lV (53*).
3. Sloping or benching for excavations greater than 20 feet deep shall be designed by a registered
professional engineer.
Figure B-1
Slope Configurations
(All slopes stated below are in the horizontal to vertical ratio)
B-i.1 Excavations made in Type A soil.
1. All simple slope excavation 20 feet or less in depth shall have a maximum allowable slope of :1.
20' Max.
A
314
Simple Slope-General
Exception: Simple slope excavations which are open 24 hours or less (short term) and which are 12 feet or less in depth shall have a
- maximum allowable slope of 2:1.
45966 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
12' Max.
1/2
3/4
20' Max.
4' Max,
Simple Bench
o I
I/
3/4
Multiple Bench
3. All excavations 8 feet or less in depth which have unsupported vertically sided lower portions shall have a maximum vertical side of
3 feet.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45967
3/'
8' Max.
Max.
Al 1
12' Max. - N
20,' M .. M
JI 1
Simple Slope
2. All benched excavations 20 feet or less in depth shall have a maximum allowable slope of 1:1 and maximum bench dimensions as
follows:
Jl
20' Max
Single Bench
20" Max.
Multiple Bench
3. All excavations 20 feet or less in depth which have vertically sided lower portions shall be shielded or supported to a height at least 18
inches above the top of the vertical side. All such excavations shall have a maximum allowable slope of !i.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45969
20' Max.
A 1
l
Simple Slope
2. All excavations 20 feet or less in depth which have vertically sided lower portions shall be shielded or supported to a height at least 18
inches above the top of the vertical side. All such excavations shall have a maximum allowable slope of 1%:1.
20' Max.
18 Min.
3/4
B OVER A
J.
3/4
C OVER A.
Ci
OJF
BI
C OVER 3
Federal Register / Vol. 54, No. 209 I Tuesday, October 31, 1989 / Rules and Regulations 45971
L4
A OVER B
Cl
A OVER C
Cz
B OVER C
2. All other sloped excavations shall be in accordance with the other options permitted in § 1926.652(b).
Appendix C to Subpart P feet (6.1 m) in depth. This appendix must be systems must be designed in accordance with
used when design of timber shoring the requirements set forth in § 1926.6.2(b)
Timber Shoringfor Trenches protective systems is to be performed in and I 1926.652(c).
(a) Scope. This appendix contains accordance with § 1926.652(c)(1). Other (b) Soil Classification.In order to use the
timber shoring configurations; other systems data presented in this appendix, the soil type
information that can be used timber shoring of support such as hydraulic and pneumatic
is provided as a method of protection from or types in which the excavation is made
systems; and other protective systems such must first be determined using the soil
cave-ins in trenches that do not exceed 20 as sloping, benching, shielding, and freezing
45972 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
classification method set forth in appendix A as used here means the area within a Space 2X6 uprights at five feet
of subpart P of this part. horizontal distance from the edge of the horizontally.
(c) Presentationof Infoimation. trench equal to the depth of the trench. Arrangement #4
Information is presented in several forms as (B)When vertical loads Imposed on cross
follows: braces exceed a 240-pound gravity load Space 6X 6 crossbraces at 12 feet
(1) Information is presented in tabular form distributed on a one-foot section of the center horizontally and four feet vertically.
in Tables C-1.1, C-1.2, and C-1.3, and Tables of the crossbrace. Space 1OX10 wales at four feet vertically..
C-2.1, C-2.2 and C-2.3 following paragraph (C) When surcharge loads are present from Spaces 3X8 uprights at six feet
(g) of the appendix. Each table presents the equipment weighing in excess of 20,000 horizontally.
minimum sizes of timber members to use in pounds. (2) Example 2.
a shoring system, and each table contains (D) When only the lower portion of a A trench dug in Type B soil in-13 feet deep
data only for the particular soil type in which trench is shored and the remaining portion of and five feet wide. From Table C-1.2 three
the excavation or portion of the excavation is the trench is sloped or benched unless: The acceptable arrangements of members are
made. The data are arranged to allow the sloped portion is sloped at an angle less steep listed.
user the flexibility to select from among than three horizontal to one vertical; or the
several acceptable configurations of members members are selected from the tables for use Arrangement #1
based on varying the horizontal spacing of at a depth which is determined from the top Space 6X6 crossbracds at six feet
the crossbraces. Stable rock is exempt from of the overall trench, and not from the toe of horizontally and five feet vertically.
shoring requirements and therefore, no data the sloped portion. Space 8X8 wales at five feet vertically.
are presented fbr this condition. (e) Use of Tables. The members of the Space 2X6 uprights at two feet
(2) Information concerning the basis of the shoring system that are to be selected using horizontally.
tabular data and the limitations of the data is this information are the cross braces, the
presented in paragraph (d) of this appendix, Arrangement #2
uprights, and the wales, where wales are
and on the tables themselves. required. Minimum sizes of members are Space 6X 8 crossbraces at eight feet
(3) Information explaining the use of the specified for use in different types of soil. horizontally and five feet vertically.
tabular data is presented in paragraph (e) of There are six tables of information, two for Space 1OX10 wales at five feet vertically.
this appendix. each soil type. The soil type must first be Space 2X6 uprights at two feet
(4) Information illustrating the use of the determined in accordance with the soil horizontally.
tabular data is presented in paragraph (f) of classification system described in appendix
this appendix. A to subpart P of part 1926. Using the Arrangement #3
(5) Miscellaneous notations regarding appropriate table, the selection of the size Space 8X8 crossbraces at 10 feet
Tables C-1.1 through C-1.3 and Tables C-2.1 and spacing of the members is then made. horizontally and five feet vertically.
through C-2.3 are presented in paragraph (g) The selection is based on the depth and Space lOX12 wales at five feet vertically.
of this Appendix. width of the trench where the members are to Space 2X6 uprights at two feet vertically.
(d) Basis and limitations of the data.-{1) be installed and, in most instances, the (3) Example 3.
Dimensions of timber members. (i) The sizes selection is also based on the horizontal A trench dug in Type C soil is 13 feet deep
of the timber members listed in Tables C-1.1 spacing of the crossbraces. Instances where a and five feet wide.
through C-1.3 are taken from the National choice of horizontal spacing of crossbracing From Table C-1.3 two acceptable
Bureau of Standards (NBS) report, is available, the horizontal spacing of the arrangements of members can be used.
"Recommended Technical Provisions for crossbraces must be chosen by the user
Construction Practice in Shoring and Sloping befgre the size of any member can be Arrangement #1
of Trenches and Excavations." In addition, determined. When the soil type, the width Space 8X8 crossbraces at six feet
where NBS did not recommend specific sizes and depth of the trench, and 'the horizontal horizontally and five feet vertically.
of members, member sizes are based on an spacing of the crossbraces are known, the Space 1OX12 wales at five feet vertically.
analysis of the sizes required for use by size and vertical spacing of the crossbraces, Position 2 X 6 uprights as closely together
existing codes and on empirical practice. the size and vertical spacing of the wales, as possible.
(ii) The required dimensions of the and the size and horizontal spacing of the If water must be retained use special
members listed in Tables C-1.1 through C-1.3 uprights can be read from the appropriate tongue and groove uprights to form tight
refer to actual dimensions and not nominal table.
dimensions of the timber. Employers wanting sheeting.
(f) Examples to Illustrate the Use of Tables
to use nominal size shoring are directed to C-i.1 through C-1.3. Arrangement #2
Tables C-2.1 through C-2.3, or have this (1) Example 1. Space 8X10 crossbraces at eight feet
choice under § 1926.652(c)(3), and are A trench dug in Type A soil is 13 feet deep horizontally and five feet vertically.
referred to The Corps of Engineers, The and five feet wide. Space 12X12 wales at five feet vertically.
Bureau of Reclamation or data from other From Table C-I.1, for acceptable Position 2X 6 uprights in a close sheeting
acceptable sources. arrangements of timber can be used. configuration unless water pressure must be
(2] Limitation of application. (i) It is not
Arrangement #1 resisted. Tight sheeting must be used where
intended that the timber shoring specification
water must be retained.
apply to every situation that may be Space 4X4 crossbraces at six feet
experienced in the field. These data were (4) Example 4.
horizontally and four feet vertically. A trench dug in Type C soil is 20; feet deep
developed to apply to the situations that are Wales are not required.
most commonly experienced in current and 11 feet wide. The size and spacing of
Space 3 X 8 uprights at six feet horizontally. members for the section of trench that is over
trenching practice. Shoring systems for use in This arrangement is commonly called "skip
situations that are not covered by the data in 15 feet in depth is determined using Table C-
shoring."
this appendix must be designed as specified 1.3. Only one arrangement of members is
in § 1926.652(c). Arrangement #2 provided.
(ii) When any of the following conditions Space 4 X 6 crossbraces at eight feet Space 8x10 crossbraces at six feet
are present, the members specified in the horizontally and four feet vertically. horizontally and five feet vertically.
tables are not considered adequate. Either an Space 8X8 wales at four feet vertically. Space 12X12 wales at five feet vertically.
alternate timber shoring system must be Space 2X6 uprights at four feet Use 3X6 tight sheeting.
designed or another type of protective system horizontally. Use of Tables C-2.1 through C-2.3 would
designed in accordance with § 1926.652. follow the same procedures.
(A) When loads imposed by structures or Arrangement #3 (g) Notes for all Tables.
by stored material adjacent to the trench Space 6X6 crossbraces at 10 feet 1. Member sizes at spacings other than
weigh in excess of the load imposed by a horizontally and four feet vertically. indicated are to be determined as specified in
two-foot soil surcharge. The term "adjacent" Space 8X10 wales at four feet vertically. § 1926.652(c), "Design of Protective Systems."
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45973
2. When conditions are saturated or 3.All spacing indicated is measured center shall not exceed 42 inches. Mudsills are
submerged use Tight Sheeting. Tight Sheeting to center. wales that are Installed at the toe of the
refers to the use of specially-edged timber 4. Wales to be installed with greater. trench side.
planks (e.g., tongue and groove) at least three dimension horizontal. 6. Trench jacks may be used in lieu of or in
5. If the vertical distance from the center of combination with timber crossbraces.
inches thick, steel sheet piling, or similar 7. Placement cf crossbraces. When the
-construction that when driven or placed in the Iowest crossbrace to the bottom of the
trench exceeds two and one-half feet, vertical spacing of crossbraces is four feet.
position provide a tight wall to resist the place the top crossbrace no more than two
uprights shall be firmly embedded or a
lateral pressure of water and to prevent the mudsill shall be used. Where uprights are feet below the top of the trench. When the
loss of backfill material. Close Sheeting refers embedded, the vertical distance from the vertical spacing of crossbraces Is five feet,
to the placement of planks side-by-side center of the lowest crossbrace to the bottom place the top crossbrace no more than 2.5 feet
allowing as little space as possiblebetween of the trench shall not exceed 36 inches. below the top of the trench.
them. When mudsills are used, the vertical distance CODE 4610-2-M
BSILLNG
45974 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
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Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45975
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45976 Federal Register / Vol. 54, No. 209 /'Tuesday, October 31, 1989 / Rules and Regulations
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Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45977
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45978 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
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45980 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
Appendix D to Subpart P experienced in current trenching practice. Table 13-1.2: Find vertical shores and 2 inch
Shoring systems for use in situations that are diameter cylinder (with special oversleeves
Aluminum HydraulicShoringfor not covered by the data in this appendix must as designated by footnote #2) spaced 5.5 feet
Trenches be otherwise designed as specified in o.c. horizontally and 4 feet o.c. vertically.
(a)Sope. This appendix contains § 1926.652(c). plywood (per footnote (g)(7) to the D-1 Table)
information that can be used when aluminum (ii) When any of the following conditions should be used behind the shores. (See
hydraulic shoring is provided as a method of are present, the members specified in the Figures 2 & 3 for typical installations.)
protection against cave-ins in trenches that Tables are not considered adequate. In this (4) Example 4: A trench is dug in previously
do not exceed 20 feet (6.1m) in depth. This case, an alternative aluminum hydraulic disturbed Type B soil, with characteristics of
appendix must be used when design of the shoring system or other type of protective a Type C soil, and will require sheeting. The
aluminum hydraulic protective system cannot system must be designed in accordance with trench is 18 feet deep and 12 feet wide. 8 foot
be performed in accordance with § 1926.652. -
(A) When vertical loads imposed on cross horizontal spacing between cylinders is
§ 1926.652(c)(2). desired for working space. From Table D-1.3:
(b) Soil Classification.In order to use data braces exceed a 100 Pound gravity load
distributed on a one foot section of the center Find-horizontal wale with a section modulus
presented in this appendix, the soil type or of 14.0 spaced at 4 feet o.c. vertically and 3
types in which the excavation is made must of the hydraulic cylinder.
(B) When surcharge loads are present from inch diameter cylinder spaced at 9 feet
first be determined using the soil maximum o.c. horizontally. 3X12 timber'
classification method set forth in appendix A equipment weighing in excess of 20,000
pounds. sheeting is required at close spacing
of subpart P of part 1926. vertically. (See Figure 4 for typical
(c) Presentationof Information. (C) When only the lower portion or a
Information is presented in several forms as trench is shored and the remaining portion of installation,)
the trench is sloped or benched unless: The (5)Example 5: A trench is dug in Type C
follows:
(1) Information is presented in tabular form sloped portion is sloped at an angle less steep soil, 9 feet deep and 4 feet wide. Horizontal
in Tables D-1.1, D-1.2, D--1.3 and E-1.4. Each than three horizontal to one vertical; or the cylinder spacing in excess of 6 feet is desired
table presents the maximum vertical and members are selected from the tables for use for working space. From Table D-1.4: Find
horizontal spacings that may be used with at a depth which is determined from the top horizontal wale with a section modulus of 7.0
various aluminum member sizes and various of the overall trench, and not from the toe of and 2 inch diameter cylinders spaced at 6.5
hydraulic cylinder sizes. Each table contains the sloped portion. feet o.c. horizontally. Or, find horizontal wale
data only for the particular soil type in which (e) Use of Tables D-1.1, D-1.2, D-1.3 and with a 14.0 section modulus and 3 inch
the excavation or portion of the excavation is D-1.4. The members of the shoring system diameter cylinder spaced at 10 feet o.c.
made. Tables D-1.1 and D-1.2 are for vertical that are to be selected using this information horizontally. Both wales are spaced 4 feet o.c.
shores in Types A and B soil. Tables D-1.3 are the hydraulic cylinders, and either the vertically. 3 X 12 timber sheeting is required
and D1.4 are for horizontal waler systems in vertical shores or the horizontal wales. When at close spacing vertically. (See Figure 4 for
Types B and C soil. a waler system is used the vertical timber typical installation.)
((2) Information concerning the basis of the sheeting to be'used is also selected from (g) Footnotes, andgeneralnotes, for Tables
tabular data and the limitations of the data is these tables. The Tables D-1.1 and D-1.2 for D-1.1, D-1.2, D-1.3, and D-1.4.
presented in paragraph (d) of this appendix. vertical shores are used in Type A and B soils (1) For applications other than those listed
(3) Information explaining the use of the that do not require sheeting. Type B sois that. in the tables, refer to § 1926.652(c)(2) for use
tabular data is presented in paragraph (e) of may require sheeting, and Type C soils that of manufacturer's tabulated data. For trench
this appendix. always require sheeting are found in the depths in excess of 20 feet, refer to
(4) Information illustrating the use of the horizontal wale Tables 13-1.3 and D-1.4. The § 1926.652(c)(2) and § 1926.652(c)(3).
tabular data is presented in paragraph (f) of soil type must first be determined in (2) 2 inch diameter cylinders, at this width,
this appendix. accordance with the soil classification shall have structural steel tube
(5) Miscellaneous notations (footnotes) system described in appendix A to subpart P (3.5 X 3.5 X 0.1875) oversleeves, or structural
regarding Table D--1.1 through D-1.4 are of part 1926. Using the appropriate table, the oversleeves of manufacturer's specification
presented in paragraph (g) of this appendix. selection of the size and spacing of the extending the full, collapsed length.
(6) Figures, illustrating typical installations members is made. The selection is based on
(3) Hydraulic cylinders capacities. (i) 2 inch
of hydraulic shoring, are included just prior to the depth and width of the trench where the
cylinders shall be a minimum 2-inch inside
the Tables. The illustrations page is entitled members are to be installed. In these tables
diameter with a safe working capacity of not
"Aluminum Hydraulic Shoring; Typical the vertical spacing is held constant at four less than 18,000 pounds axial compressive
Installations." feet on center. The tables show the maximum
load at maximum extension. Maximum
(d) Basis and limitationsof the data. horizontal spacing of cylinders allowed for
extension is to include full range of cylinder
(1) Vertical shore rails and horizontal each size of wale in the waler system tables,
wales are those that meet the Section and in the vertical shore tables, the hydraulic extensions as recommended by product
Modulus requirements in the D-1 Tables. cylinder horizontal spacing is the same as the manufacturer.
Aluminum material is 6061-To or material of vertical shore spacing. (ii) 3-inch cylinders shall be a minimum 3-
equivalent strength and properties. (f) Example to Illustrate the Use of the inch inside diameter with a safe work
(2) Hydraulic cylinders specifications. (i) 2- Tables: capacity of not less than 30,000 pounds axial
inch cylinders shall be a minimum 2-inch (1) Example 1: compressive load at maximum extension.
inside diameter with a minimum safe working A trench dug in Type A soil is 6 feet deep Maximum extension is to include full range of
capacity of no less than 18,000 pounds axial and 3 feet wide. From Table D-1.1: Find cylinder extensions as recommended by
compressive load at maximum extension. vertical shores and 2 inch diameter cylinders product manufacturer.
Maximum extension is to include full range of spaced 8 feet on center (o.c.) horizontally and (4) All spacing indicated is measured
cylinder extensions as recommended by 4 feet on center (o.c.) vertically. (See Figures center to center.
product manufaturer. 1 & 3 for typical installations.) (5) Vertical shoring rails shall have a
(ii) 3-inch cylinders shall be a minimum 3- (2) Example 2: minimum section modulus of 0.40 inch.
inch inside diameter with a safe working A trench is dug in Type B soil that does not (a) When vertical shores are used, there
capacity of not less than 30,000 pounds axial require sheeting, 13 feet deep and 5 feet wide. must be a minimum of three shores spaced
compressive load at extensions as From Table 13-1.2: Find vertical shores and 2 equally, horizontally, in a group.
recommended by product manufacturer. inch diameter cylinders spaced 6.5 feet o.c. (7) Plywood shall be 1.125 in., thick
(3) Limitation of application. horizontally and 4 feet o.c. vertically. (See softwood or 0.75 inch. thick, 14 ply, arctic
(i) It is not intended that the aluminum Figures 1 & 3 for typical installations.) white birch (Finland form). Please note that
hydraulic specification apply to every (3) A trench is dug in Type B soil that does plywood is not intended as a structural
situation that may be experienced in the not require sheeting, but does experience member, .but only for prevention of local
field. These data were developed to apply to some minor raveling of the trench face. The raveling (sloughing of the trench face)
the situations that are most commonly trench is 16 feet deep and 9 feet wide. From between shores.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45981
CYLINDER
B •i
18" MAX. I
VERTICAL RAIL
HYDRAULIC CYLINDER 18" MAX. PLYWOOD
VERTICAL
SPACING 1 V
Ap SPACING
4 Evil' MAX.
S42' MAX.
iI -
HYDRAULIC
CYLINDER r
41 MAX.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
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Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45937
141L
~$X.
18' L!-VERT.ICAL RAIL
HYDRAUL'IC CYLINDER
YES NO
Option 1:
S1926.652 (b)(2) which
requires Appendices A
and B to be followed
Option 2:
1926.652 (b)(3) which
requires other tabulated
data see definition) to,
be followed.
Option 3:
S1926.652 (b)(4) which
requires the excavation
to be designed by a
registered professional
engineer.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 45991
Shorig
seecte or hieldng
Option 1
51926.652 (c)(1) which requires
Appendices A and C to be followed
(e.g. timber shoring).
Option 2
§1926.652 (c)(2) which requires
manufacturers data to be followed
(e.g. hydraulic shoring,trench.
jacks, air shores, shields).
Option 3
.S1926.652 (c)(3) which requires:
tabulated data (see definition)
to be followed (e.g. any system
as per the tabulated data).
Option 4
S1926.652- (c)(4) which requires;
the excavation to be designed'
by a reg-sterpd professional
engineer.,e.g. any.designed
system).,
Tuesday
October. 31, 1989
Part III
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Student Assistance General Provisions;
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45994 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
45994.
DEPARTMENT OF EDUCATION Public Law 100-369, snd the Compact of from these entities continue to be
Free Association. Each applicant's excluded from verification requirements.
34 CFR Part 668 information, which is subject to the In anticipation of the enactment of a
verification regulations, is used to similar compact to create the Republic
RIN 1840-AB07 calculate an EFC. The EFC is the amount of Palau, these provisions are
that an applicant and the applicant's prospectively extended to eligible
Student Assistance General Provisions family can reasonably be expected to students of that Republic.
AGENCY: Department of Education. contribute toward the cost of attendance' Section 668.54(b)(2)(vii) currently
ACTION: Notice of Proposed Rulemaking. at an institution of higher education and provides that under certain conditions a
is used to determine the applicant's student transferring from one institution
SUMMARY: The Secretary proposes to financial need for assistance. The to another may be excluded from
amend the verification regulations applicant's financial need is defined as verifying data at the second school. The
contained in Subpart E of the Student the difference between the applicant's Secretary requests comment on how to
Assistance General Provisions cost of attendance and the EFC. The notify the second school that it is not
Regulations, 34 CFR Part 668, to conform applicant may receive assistance under required to verify the student's data. The
them to certain new provisions in the most Title IV Higher Education Act purpose of this notification is to relieve
Tax Reform Act of 1986 (Pub. L. 99-514), programs upon demonstrating financial burden and improve delivery of aid. The
the Higher Education Amendments of need for such assistance. Secretary requests comments on the use
1986 (Pub. L. 99-498], the Higher The Secretary proposes to amend of the Electronic Student Aid Report
Education Technical Amendments Act Section s668.53(a)(3) to reduce burden (ESAR) to achieve this goal.
-of 1987 (Pub. L. 100-50), Public Law 100- placed on institutions to notify each Section 668.55 is being amended to
369, and the Compact of Free applicant that completes the verification simplify and clarify the updating
Association (Pub. L. 99-239), and to process of the results of verification. requirements. Currently, applicants must
update data reporting requirements to Instead, institutions would be required update or verify information as to the
reduce the administrative burden to notify verified applicants of the number of household members and the
associated with verification results of verification only if the number of household members enrolled
requirements on applicants and schools. applicant's expected family contribution in postsecondary institutions, except for
The verification regulations require and award or loan amount changes as a changes in marital status.
institutions to have a system for result of verification. An applicant's Currently, the regulations require an
verifying student aid application award letter may serve as this applicant to update information as to
information reported by applicants for notification. dependency status, except for changes
use in calculating expected family The Secretary proposes to amend in marital status, throughout the year.
contributions (EFCs) for the Pell Grant, § 668.54(a) to provide that an institution Also, an applicant is not permitted to
campus-based (Perkins Loan [National is not required to Verify the information
from more than 30 percent of its
update dependency status on a GSL
Defense/Direct Student Loan], College application, if the institution has
Work-Study (CWS), Supplemental applicants for assistance under the Pell
previously certified that application. To
Educational Opportunity Grant (SEOG)), Grant, campus-based, need-based ICL,
and GSL Programs in any award year.
simplify the regulations and to make the
need-based Income Contingent Loan updating requirements more consistent,
(ICL}, and Guaranteed Student Loan This proposed change is required by
the Secretary proposes to eliminate the
(GSL) programs. section 484(f) of the Higher Education
Act of 1965, as amended. marital status exception and require all
DATE: Comments must be received on or applicants to update dependency status,
Currently, the regulations give an
before January 2, 1990.
institution the authority to require an
including applicants for whom a loan
ADDRESSES: All comments concerning applicant, selected for verification, to has been certified. In the proposed
these proposed regulations should be provide documentation to verify any regulations, applicants would be
addressed to Paula Husselmann, Chief, data element it specifies. The Secretary required to update information as to
Verification Development Section, proposes to amend § 668.54 and § 668.60 their household size, number of family
Student Verification Branch, Division of to require an applicant to provide the members enrolled in a postsecondary
Policy and Program Development, U.S. necessary documentation to verify any educational institution, and dependency
Department of Education, 400 Maryland data element required by an institution status throughout the year regardless of
Avenue SW., [Regional Office Building or the Secretary. the reason for a change in the
3, Room 4613] Washington, DC 20202. A Previously, citizens of the Trust applicant's dependency status, for all
copy of any comments that concern Territory of the Pacific Islands were Title IV programs. Household size,
information collection requirements excluded from verification requirements, number of family members enrolled in a
should also be sent to the Office of unless an institution had information postsecondary educational institution,
Management and Budget at the address conflicting with information reported by and dependency status, under these
listed in the Paperwork Reduction Act an applicant or otherwise had reason to proposed regulations, must be updated'
section of this preamble. believe information reported by an as a result of an actual change in an
FOR FURTHER INFORMATION CONTACT. applicant to be incorrect. The Compact applicant's marital status and may not
Lorraine Kennedy, Program Analyst, of Free Association (Pub. L. 99-239) be updated or changed because of a
Telephone (202) 732-5579. conferred independent nation status on projected change in marital status.
SUPPLEMENTARY INFORMATION: The certain entities, formerly trust territories Title IV Quality Control Studies
Secretary is proposing these revised of the United States; these entities are indicate that there is significant
regulations to conform to certain new now known as the Federated States of misreporting by applicants of the
provisions in the Tax Reform Act of Micronesia and the Republic of the number of family members enrolled in
1986, the Higher Education Act of 1965, Marshall Islands. Therefore, the postsecondary educational institutions.
as amended by the Higher Education Secretary proposes to amend § 668.54 to These errors have resulted in incorrect
Amendments of 1986, the Higher update the references to these entities awards and loans to students.
Education Amendments of 1987, and so that eligible Title IV aid applicants Therefore, the Secretary proposes to
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45995
amend § 668.56 to provide that an require interest On tax-free bonds to be Option' A tolerance option is a dollar
institution must require an applicant verified as a part of untaxed income. error level allowed on an applicant's
selected for verification to verify the Prior to 1987, taxpayers were not application for which the recalculation
number of family members enrolled in required to report interest on tax-free of an applicant's EFC or SAI will not be
postsecondary educational institutions, bonds on the 1040 and 1040A tax forms. required.
even though there was no change from The new IRS Forms 1040 and 1040A A $200 tolerance option would be
information verified in the previous include these data as a line item. proposed for all Title IV programs in
award year. Section 668.56(c) of the current place of the current $200 Pell and $800
Section 668.56(a)(5) (formerly Verification Regulations provides an GSL/campus-based programs tolerance
§ 668.56(a)(6)) would be amended to exclusion for the verification of a options. It is appropriate to apply the
delete data elements, listed in the dependent Pell applicant's base year tolerance previously used only for the
verification regulations, that are no income because, under the previous Pell Grant Program to the campus-
longer considered untaxed income as a Student Aid Index (SAI) formula, based, need-based ICL, and GSL
result of the Tax Reform Act of 1986. estimated year earnings were often used programs because the Higher Education
Untaxed income is income that is to calculate the applicant's EFC, instead Act now provides a single formula for
excluded from Federal taxation by of base year adjusted gross income. The establishing need for campus-based and
provisions of the Internal Revenue Code. Higher Education Act of 1965, as need-based ICL aid and Guaranteed
For the purpose of Title IV student amended, now requires the use of the Student Loans, similar to the formula for
financial assistance, untaxed income is dependent Pell applicant's base year the Pell Grant Program. Previously,
considered in the formula used to income as a fixed data element in the under the Uniform Methodology,
determine the EFC toward the costs of current SAI formula used in calculating allowable variances in calculating the
postsecondary education. Except for an applicant's EFC, unless the EFC warranted a more liberal tolerance.
Social Security benefits and child dependent student is classified as a Additionally, the use of a single
support, the Secretary relies on the dislocated worker by the appropriate tolerance amount will increase
information applicants, their spouses, State agency in accordance with Title III consistency among the Title IV
and their parents report on their Federal of the Job Training Partnership Act. programs. Therefore, the Secretary
tax returns to verify the receipt of Consequently, the Secretary is proposes to use the Pell Grant $200
untaxed income that is subject to the proposing to delete § 668.56(c) to, in tolerance figure to make all Title IV
verification requirements. The Secretary effect, require verification of dependent programs consistent.
intends to maintain untaxed income student base year income. This change Because changes in the Pell Grant
verification requirements that are does not result in significant additional formula made the Zero SAl Charts too
consistent with Federal income tax burden to financial aid. administrators complex, reference to the Zero SAl
reporting requirements for untaxed because dependent student base year Charts would be deleted. An institution
income items listed on the Federal tax income must already be verified may continue to process the application
return, except for Social Security beginning with the 1988-89 award year
of any applicant with a reported SAI of
benefits and child support. for the campus-based and Guaranteed
zero on his or her SAR without
To avoid publishing new regulations Student Loan programs.
Public Law 100-369 requires income submitting that SAR to the Secretary for
each time Federal income tax reporting
recalculation, if the institution
requirements for untaxed income tax returns filed with the
change, the Secretary proposes to follow determines that the applicant's SAI
Commonwealth of Puerto Rico, the
government of another US. territory or remains at zero on the basis of the
Federal income tax reporting
verified information.
requirements in determining elements of commonwealth, or the central
untaxed income subject to verification. government of a foreign country to be Section 668.58 is being amended to
The Secretary, in § 668.56(a)(5)(vii),. treated the same as U.S. income tax specify that a CWS recipient may-be
. would require verification of all returns. Therefore, § 668.57 would be employed for the first sixty (60)
elements of untaxed income listed on amended to consider an income tax consecutive days of the award year,
the tax return without the use of return filed with a government of a U.S. prior to verification being completed,
additional schedules or attachments, territory or commonwealth, the provided the institution has no
beginning with the 1990-91 award year. Commonwealth of Puerto Rico, or a information indicating that the aid
The Secretary would publish in the foreign government in the same manner application is inaccurate.
Federal Register a list of categories of as a U.S. income tax return. Several other minor changes have
untaxed income subject to verification Section 668.57(d), independent student been made to the verification ,
whenever Internal Revenue Service status, would be deleted. The Higher regulations to reflect changes in
reporting requirements for untaxed Education Act requires that, for verification requirements resulting from
income change. independent students within certain the Higher Education Amendments of
Because of recent changes in Federal categories, no disbursal of an award 1986.
tax reporting requirements, may be made without documentation of Executive Order 12291
§ 668.56(a)(5) would be amended to independent student status. The
delete references to unemployment Secretary has previously issued These proposed regulations have been
compensation, which is now fully guidance on this subject in a "Dear reviewed in accordance with Executive
taxable, and to delete references to the Colleague Letter" and will not prescribe Order 12291. They are not classified as
married couple deduction and dividend requirements to document independent major because they do not meet the
exclusion, which have been student status in these regulations. criteria for major regulations established
discontinued! Similarly, references to Section 668.59 is being amended to in the order.
capital gains would be deleted since change the amount of the dollar Regulatory Flexibility Act Certification
these are now treated as taxable income tolerance option for the GSL and
and therefore no longer require a campus-based programs and also to The Secretary certifies that these
separate verification requirement. This delete one of the Pell Grant specific proposed regulations would not have a
section would also be amended to -tolerance options: SAI Recalculation significant economic impact on a
45996 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
substantial number of small entities. education, Report and recordkeeping [iv) Section 668.57, except that an.
Small entities affected by these requirements, Student aid. institution shall require an applicant
regulations are small institutions of Dated: October 23, 1989. that it has selected for verification to
higher education. The proposed Lauro F. Cavazos, submit to it a copy of the income tax
regulations revise the verification items return, if filed, of the applicant, his or
Secretaryof Education.
used to calculate an applicant's her spouse, and his- or her parents, if the
financial need. These changes are The Secretary proposes to amend part• income reported on the income tax
required by statutory amendments. 668 of title 34 of the Code of Federal return was used in determining the
There are several other minor changes Regulations as follows: expected family contribution.
in the regulations to update present (v) Section 668.60(a).
PART 668-STUDENT ASSISTANCE
policy. (2) For the purpose of this section, the
GENERAL PROVISIONS
Paperwork Reduction Act of 1980 Institutional Quality Control Pilot
1. The authority citation for part 668 Project is an experiment under which a
Sections 668.53, 668.54, 668.55, 668.56, continues to read as follows: participating institution develops and
668.57, and 668.59 contain information Authority- 20 U.S.C. 1085, 1088, 1091, 1092, implements a quality control system in
collection requirements. As required by 1094, and 1141, unless otherwise noted. connection with its administration of the
the Paperwork Reduction Act of 1980, title IV, HEA programs4 Under such a
the Department of Education will submit 2. Subpart E of part 668 is revised to
read as follows: quality control system, the institution
a copy of these sections to the Office of must evaluate its current procedures for
Management and Budget (0MB) for its Subpart E-Verfication of Student Aid administering the title IV, HEA
review. Application Information programs ("management assessment
Organizations and individuals Sec. component"), identify the errors that
desiring to submit comments on the 668.51 General. result from its current procedures ("error
information collection requirements 668.52 Definitions. measurement process component") and
should direct them to the Office of 668.53 Policies and procedures. design corrections to its procedures that
Information and Regulatory Affairs, 668.54 Selection of applications for will enable it to eliminate or
Room 3002, New Executive Office verification.
668.55 Updating information. significantly reduce those errors
Building, Washington, DC 20503; ("corrective actions process
Attention: James D. Houser. 668.56 Items to be verified.
668.57 Acceptable documentation. component").
668.58 Interim disbursements. I (d) Foreign schools. The Secretary
Invitation to Comment
668.59 Consequences of a change in exempts from the provisions of this
Interested persons are invited to application information. subpart institutions participating in the
submit comments and recommendations 668.60 Deadlines for submitting GSL Program that are not located in a
regarding these proposed regulations.. documentation and the consequences of
failing to provide documentation. State.
All comments submitted in response
to these proposed regulations will be 668.61 Recovery of funds. (Authority: 20 U.S.C. 1094)
available for public inspection, during § 668.52 Definitions.
Subpart E-Verification of Student Aid
and after the comment period, in Room
Application Information The following definitions apply to this
4613, ROB--3, 7th and D Streets, SW.,
Washington, DC 20202, between the subpart:
§ 668.51 General.
hours of 8:30 a.m. and 4:00 p.m., Monday (a) Scope andpurpose. The "Base year" means the calendar year
through Friday of each week except regulations in this subpart govern the preceding the first calendar year of an
Federal holidays. verification by institutions of award year.
To assist the Department in complying information submitted by applicants for "Edits" means a set of pre-established
with the specific requirements of student financial assistance in factors for identifying-
Executive Order 12291 and the connection with the calculation of their (a) Student aid applications that may
Paperwork Reduction Act of 1980 and expected family contributions (EFC) for contain.incorrect, missing, illogical, or
their overall requirement of reducing the Pell Grant, campus-based, need- inconsistent information; and
regulatory burden, the Secretary invites based Income Contingent Loan (ICL) (b) Randomly selected student aid
comment on whether there may be and Guaranteed Student Loan (GSL) applications.
further opportunities to reduce any programs. "Expected family contribution (EFC)"
regulatory burdens found in these (b) Applicant responsibility.If the means the amount an applicant and his
proposed regulations. Secretary or the institution requests or her spouse and family are expected to
Assessment of Educational Impact documents or information from an contribute toward the applicant's cost of
applicant under this subpart, the attendance.
The Secretary particularly requests applicant shall provide the specified "Need analysis servicer" means an
comments on whether the proposed documents or information.
regulations in this document would agency or organization who has had its
(c) InstitutionalQuality ControlPilot system for determining EFCs under the
require transmission of information that Project. (1) For the 1988-89, 1989-90, and campus-based, GSL and need-based ICL
is being gathered by or is available from 1990-91 award years, the Secretary
any other agency or authority of the programs certified by the Secretary for
exempts institutions selected to the applicable award year.
United States. participate in the institutional Quality
Control Pilot Project from the "Student aid application'"means an
List of Subjects in 34 CFR Part 668 application submitted by a person to
requirements contained in the following
Administrative practice and sections: have his or her EFC determined under
procedure, Colleges and universities, (i) Section 668.53(a) (1) through (4). the Pell Grant, campus-based, need-
Consumer protection, Education loan" (ii) Section 668.54(a)'(2), (3), and (5). based ICL, or GSL programs.
programs-education, Grant programs-- (iii) Section 668.56. (Authority: 20 U.S.C. 1094)
FederalRegister /Vol. 54, No.- 209 / Tuesday, October 31, 1989 / Proposed Rules ,- 45997"-
§ 668.53 Policies and procedures. (3) The institution shall require each cannot be contacted by normal means of
(a) An institution shall establish and applicant to verify the applicable items communication.
use written policies and procedures for specified in § 668.56 (except that no (iv) An applicant who is an immigrant
verifying information contained in a eligible institution is required to verify and who arrived in the United States
student aid application in accordance more than thirty (30) percent of the during either calendar year of the award
with.the provisions of this subpart. applications submitted in any award year.
These policies and procedures must year), if- (v) An applicant who is a dependent
include- (i) The applicant is selected by the student, both of whose parents are
(1) The time period within which-an institution to receive an award under deceased or are physically or mentally
applicant shall provide the the campus-based programs or requests incapacitated, or whose parents'
documentation; the institution to certify his or her address is unknown.
(2) The consequences of an application for a GSL or need-based ICL (vi) An applicant who does not
applicant's failure to provide required loan; and receive assistance for reasons other
documentation within the specified time (ii) The institution does not receive- than his or her failure to verify the
period; (A) A Student Aid Report (SAR) for information on the application.
(3) The method by which the the applicant; or
(B) The output document generated on (vii) An applicant who transfers to the
institution notifies an applicant of the,
behalf of the applicant submitting an institution, had previously completed
results of verification if, as a result of
application to a certified need analysis the verification process at the institution
verification, the applicant's EFC changes
servicer that has an agreement with the from which he or she transferred, and
and results in a change in the
Secretary as described under paragraph applies for assistance on the same
applicant's award or loan;
(4) The procedures the institution (a)(2) of this section. application used at the previous
requires an applicant to follow to (4) If an institution has reason to institution, if the current institution
correct application information believe that any information on an obtains-
determined to be in error; and application used to calculate an EFC is (A) A letter from the previous
(5) The procedures for making inaccurate, it shall require that the institution stating that it has verified the
referrals under § 668.14(g). applicant verify the information that it applicant's information and, if relevant,
(b) The institution's procedures must has reason to believe is inaccurate. the provision used in § 668.59 for not
provide that it furnish, in a timely (5) If an applicant is selected to verify recalculating the applicant's EFC; and
manner, to each applicant selected for the information on his or her application (B) A copy of the verified application
verification a clear explanation of- Under paragraph (a)(2) of this section, and, if the applicant applied for a Pell
(1) The documentation needed to the institution shall require the applicant Grant, pages Iand 3 of the applicant's
satisfy the verification requirements; to verify the information as specified in SAR.
and § 668.56 on each additional application (3) An institution need not require an
(2) The applicant's responsibilities he or she submits for that award year, applicant to document spouse
with respect to the verification of except for information already verified information or provide a spouse's
application information, including the under a previous application submitted signature if-
deadlines for completing any actions for the applicable award year. (i) The spouse is deceased;
required under this subpart and the (6) An institution or the Secretary may (iii The spouse is mentally or
consequences of failing to complete any require an applicant to verify any data physically incapacitated;
required action. elements that the institution or the (iii) The spouse is residing in a
(Authority: 20 U.S.C. 1094) Secretary specifies. country other than the United States and
(b) Exclusions from verification. (1)
§ 668.54 Selection of applications for cannot be contacted by normal means of
An institution need not verify an communication; or
verification. application submitted for an award year
(a) Generalrequirements.(1) Except (iv) The spouse cannot be located
if the applicant dies during the award
as provided in paragraph (b) of this because his or her address is unknown
year. and cannot be obtained by the
section, an institution shall require an (2) Unless the institution has reason to
applicant to verify application applicant.
believe that the information reported by
information as specified in this the applicant may be incorrect, it need (Authority: 20 U.S.C. 1091, 1094)
paragraph. not verify applications of the following
(2) An institution shall require each § 668.55 Updating information.
applicants:
applicant whose application is selected (i) An applicant who is- (a) (1) Unless the provisions of
for verification on the basis of edits (A) A legal resident of and, in the case paragraph (a)(2) of this section apply, an
specified by the Secretary, to verify all of a dependent student, whose parents applicant is required to update the
of the applicable items specified in are also legal residents of the information contained in his or her
§ 668.56, except that no institution is Commonwealth of the Northern Mariana application for assistance in an award
required to verify the applications of Islands, Guam, or American Samoa; or year to reflect the applicant's current
more than thirty (30) percent of its (B) A citizen of and, in the case of a circumstances regarding-
applicants for assistance under the Pell dependent student, whose parents are (i) The number of family members in
Grant, campus-based, need-based ICL, also citizens of the Republic of the the applicant's household and the
and GSL Programs in an award year. Marshall Islands, theFederated States number of those household members
The Secretary may enter into of Micronesia,'or the Republic of Palau. attending postsecondary educational
agreements with need analysis servicers (ii) An applicant wio is incarcerated institutions, in accordance with
under which the Secretary provides the at the time at which verification would provisions of paragraph (b) of this
edits to the servicer and the servicer, occur. section; and
once certified by the Secretary, (iii) An applicant who is a dependent (ii) His or her dependency status in
indicates to institutions the applications student, whose parents are residing in a accordance with the provisions of
selected for verification.. country other than the United States and paragraph (d) of this section.
45998 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
(2) An institution need not require an § 668.56 Items to be verified. requirements in the base year which are
applicant to verify the information (a) Except as provided in paragraphs included on the tax return form without.
contained in his or her'application for (b), (c), (d), and (e) of this section, an the use of additional schedules or
assistance in an award year if- institution shall require an applicant attachments.
(i) The applicant previously submitted selected for verification under § 668.54 (b) If an applicant selected for
an application for assistance for that (a) (1) or (2) to submit acceptable verification submits a SAR to the
award year; documentation described in § 668.57 institution, or the institution receives an
(ii) The applicant updated and verified that will verify or update the following output document as described in
the information contained in that information used to determine the § 668.54(a)(3)(ii)(B) within 90 days of the
application; and applicant's EFC: date the applicant signed his or her
(iii) No change in the information to (1) Adjusted gross income (AGI) for application, or if an applicant is selected
be updated has taken place since the the base year if base year data was used for verification under § 668.54(a)(2). the
last update. in determining eligibility, or income institution need not require the
(b) If the number of family members in earned from work if a non-tax filer. applicant to verify-
the applicant's household or the number (2) U.S. income tax paid for the base (1)The number of family members in
of such household members attending year. the household; or
postsecondary educational institutions (3)(i) For an applicant who is a (2) The number of family members in
changes- dependent student, the aggregate the household who are enrolled as at
(1) An applicant who is selected for number of family members in the least half-time students in
verification shall update the information household or households of the postsecondary educational institutions.
contained in his or her application applicant's parents if- (c) If the number of family members in
regarding those factors so that the (A) The applicant's parent is single, the household, the independent student
information is correct as of the day the divorced, separated or widowed and the status, or the amount of child support
applicant verifies the information; and aggregate number of family members is reported. by an applicant selected for
(2) An applicant for a Pell Grant who greater than two; or verification is the same as that verified
is not selected for verification shall (B) The applicant's parents are by the institution in the previous award
update the information contained in his married an3 the aggregate number of year, the institution need not require the
or her application regarding those family members is greater than three. applicant to verify that information.
factors and shall certify that the (ii) For an applicant who is an (d) If the family members who are
information is correct as of the day that independent student, the number of enrolled as at least half-time students in
the applicant submits his or her first family members in the household of the postsecondary educational institutions
SAR to the'institution. applicant if- are enrolled at the same institution as
(c) If an applicant has received Pell (A) The applicant is single, divorced, the applicant, and the institution verifies
Grant, campus-based, need-based ICL, separated, or widowed and the number their enrollment from its own records,
or GSL program assistance for an award of family members is greater than one; the institution need not require the
year, the applicant subsequently or. applicant to verify this information.
submits another application for (B) The applicant is married and the (e) If the applicant or the applicant's
assistance under any of those programs number of family members is greater spouse, or in the case of a dependent
for that award year, and the applicant is than two.
(4) The number of family members in student, the applicant's parents receive
required to update household size and untaxed income or benefits from a
number attending postsecondary the household who are enrolled as at
Federal, State, or local government
educational institutions -on the least half-time students in agency determining their eligibility for
subsequent application, the institutionL- postsecondary:educational institutions if
that income or benefits by means of a'*.
(1) Is required to take that newly' that number is greater than one.
financial needs test, the institution need
updated information into account when. (5) The following untaxed income and
not require the untaxed income and
awarding for that award year further, benefits for the base year-
(i) Social security benefits if- benefits to be Verified.
Pell Grant,campus-based, or need-. (Authority:.20 U.S.C. 1094, 1095).
(A) Verification is required by a
based ICL program assistance or
certifying a GSL loan: application; and comment on the applicant's SAR; or
(B) The applicant does not receive an § 668.57 Acceptable documentation.
(2) Is not required to adjust the Pell (a) Adjusted Gross Income (AGI) and
Grant, campus-based or need-based ICL SAR and the institution has reason to
believe that those benefits were U.S.income tax paid.(1) Except as
program assistance previously awarded provided in paragraphs (a)(2), (a)(3), and
to the applicant for that award year; or received;
(ii) Child support if the institution has (a)(4) of this section, an institution shall
any previously certified GSL loan require an applicant selected for
reason to believe that child support was
application for that award year, to verification to verify AGI and U.S.
received;
reflect the newly updated information' income tax paid by submitting to it, if
(iii) U.S. income tax deduction for a
unless the applicant would otherwise relevant-
payment made to an individual
receive an overaward. retirement account (IRA) or Keogh (i) A copy of the income tax return of
(d) If an applicant's dependency the-applicant, his or her spouse, and his
account;
status changes after the applicant (iv) Interest on tax-free bonds; or her parents. The copy of the return
applies to have his or her EFC (v) Foreign income excluded from U.S. must be signed by the filer of the return
calculated for an award year, the income taxation if the institution has or by one of the filers of a joint return;
applicant shall file a new application for reason to believe that foreign income (ii) For a dependent student, a copy of
that award year reflecting the was received; each Internal Revenue Service (IRS)
applicant's new dependency status (vi) The earned income credit taken Form W-2 received by the parent whose
regardless of whether thleapplicant is on the applicant's tax return. income is being taken into account if-.
seldcted for verification. (vii) All other untaxed income subject (A) The parents filed a joint return;
(Authority: 20 U.S.C. 1094). to U.S. income tax reporting and
Federal Register [ Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 45999
(B) The parents are divorced or (iii) For an individual described in the applicant's parents if the applicant is
separated or one of the parents has died; paragraph (a)(3)(iii) of this section- a dependent student, or by the applicant
and (A) A copy of each IRS Form W-2 that and the applicant's spouse if the
(iii) For an independent student, a the individual received for the base applicant is an independent student,
copy of each IRS Form W-2 he or she year; or listing-
received if the independent student- (B) For an individual who is self- (i) The name of each family member
(A] Filed a joint return; and employed or has filed an income tax who is or will be attending a
(B] Is a widow,or widower, or is return with a government of a U.S. postsecondary educational institution as
divorced or separated. territory or commonwealth, or a foreign at least a half-time student in the award
(2] If an individual who fled a U.S. central government, a- statement signed year;
tax return and who is required by by the individual certifying the amount .(ii).The age of each student; and
pragraph (a)(1) of this section to of adjusted gross income for the base. (iii) The name of the institution
provide a copy Of his.or her tax return year. attended by each s'tudent.
does not have acopy of that return, the (5) An institution shall require an (2) if the insti'tution'has reason to
institution may require that individual to individual described in paragraph believe that the information included on
submit, in lieu of a copy of the tax (a)(3)(ii) of this section to provide to it a' the application regarding the number of
return, a copy of the "IRS Listing of Tax copy of his or her completed. income tax family household members enrolled in
Account Information." return when filed. When an institution postsecondary institutions is inaccurate,
(3) An institution shall accept, in lieu receives the copy of the return, it may the institution shall require-
of an income tax return or an IRS Listing re-verify the adjusted gross income and (i)]The statement required in
of Tax Account Information of a taxes paid by the applicant and his or paragraph, (c)(1), of this section from the
relevant-individual, the documentation her spouse or parents. individuals dpscribed.in paragraph (c)(1)
set forth in paragraph (a](4] of this
(6) If an individual who is required to of this section; and
section if the relevant individual for the submit an IRS Form W-2 under this i :ii) A statement from each institution
paragraph is unable to obtain one in a named by the applicant in response to
base year-
(i) Has not filed and is not required to timely manner, the institution may the requirement of paragraph (c)(1)(iii)
permit that individual to set forth, in a
file an income tax return;
statement signed by the individual, the of this section that the household
(i i Is required to file a U.S. tax return member in question is or will be
and has been granted a filing -extension
amount of income earned from work as attending the institution on at least a
stated on the application, the source of half-time basis, unless the institution the
by the IRS; or that income, and the reason that the IRS
(iii) Has requested a copy of the tax Form W-2 is not available in a timely student is atiending de'termines that
return or a Listing of Tax Account
manner. such a statement is not available
Information and the IRS or a - • (7) For the purpose of this section, an because the household member in
government of a U.S. territory or. institution may accept in lieu of a copy question has not yet registered at the
commonwealth or a foreign central of an income tax return signed by the ' - institution he or she plans to attend.
government cannot locate the return or filer of thereturn or one, of the filers of a (d) Untaxed income and benefits. An
provide aListing of Tax Account joint return, a copy of the filer's return institution shall require an applicant
Information. that has been signed by the preparer of selected for verification to verify-
(4) An institution shall accept- the return or stamped with the name (1) Untaxed income and benefits
(i) For an individual described in and address of the preparer of the described in § 668.56(a)(5) (iii), (iv), (v),
paragraph (a)(3)(i) of this section, a return. and (vi) by submitting to it-
statement signed by that individual (b) Number of family members in (I) A copy of the U.S. income tax
certifying that he or she has not filed nor household.An institution shall require" return signedby the filer or one of the
is required to file an income tax return an applicant selected for verification to filers if a joint return, if collected under
for the base year and certifying for that verify the number of family members in paragraph (a] of this section, or the IRS
year.that individual's-- the household by submitting to it a listing of tax account information if
(A] Sources of income earned from statement signed by the applicant and collected by the institution to verify
work as stated on the application; and the applicant's parent if the applicant is adjusted gross income; or
(B) Amounts of income from each a dependent student, or the applicant (ii) If no tax return was filed or is
source; and the applicant's spouse if the required to be filed, a statement signed
(ii) For an individual described in applicant is an independent student,. by the relevant individuals certifying
paragraph (a)(3](ii) of this section- listing the name and age of each family that no tax return was filed or is
(A] A copy of the IRS Form 4868, member in the household and the - required to be filed and providing the
"Application for Automatic Extension of relationship of each household member sources and amount of untaxed income
Time to File U.S. Individual Income Tax to the applicant. and benefits specified in § 668.56(a)(5)
Return," that the individual filed with (c) Number of family household (iii), (iv), (v), and (vi);
the IRS for the base year, or a copy of members enrolledin postsecondary -(2] Social security benefits-
the IRS's approval of an extension institutions.(1) Unless the institution (i)If an edit comment appears on the
beyond the automatic four-month has reason to believe that the applicant's SAR indicating incorrect
extension if the individual requested an information included on the application Social Security benefits, the applicant
additional extension of the filing time; regarding the number of household shall verify Social Security benefits, by
and members in the applicant's family submittinga document from the Social
(B) A copy of each IRS Form W-2 that enrolled on at least half-time basis in Security Administration showing the
the individual received for the base postsecondary institutions is inaccurate, amount of benefits received in the
year, or for a self-employed individual, a the institution shall require an-applicant! appropriate calendar year by -the
statement signed by the individual selected for verification to verify that applicant, applicant's parents, and any
certifying the amount of adjusted gross information by submitting to it a other children of the applicant's parents
income for the base year; and statement signed by the applicant and. who are members of the applicant's
46000 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules
household, in the case of a dependent (ii)(A) May make one disbursement of or her EFC, and need not adjust his or
.student, or by the applicant, the any combination of Pell Grant, Perkins her Title IV award if, as a result of the
applicant's spouse, and the applicant's Loan, NDSL, SEOG or need-based ICL verification process, the institution finds
children in the case of an independent funds for the applicant's first payment no errors in dollar items or finds errors
student; or period; and reflecting a cumulative change in dollar
(ii) If the applicant does not receive an (B) May employ or allow an employer items of $200 or less.
SAR and the institution has reason to to employ an eligible student under the (c) If the applicant has received funds
believe that the applicant has CWS Program for the first sixty (60) based on information that may be
incorrectly reported Social Security consecutive days of the award year in incorrect and the institution has made a
benefits received by the applicant or any award year, and reasonable effort to resolve the alleged
any individual described in paragraph (iii)(A) May withhold certification of discrepancy, but cannot, the institution
(d)(2)(i), the applicant shall verify Social the applicant's GSL application; or shall forward the applicant's name,
Security benefits by submitting either (B) May certify the GSL application Social Security number, and other
the document described in paragraph provided that the institution does not relevant information to the Secretary.
[d)(2)(i) or, at the institution's option, a process GSL proceeds.
(b) If an institution chooses to make (Authority: 20 U.S.C. 1094)
statement signed by both the applicant
and the applicant's parent in the case of disbursement under paragraph (a)(2)(ii) § 668.60 Deadlines for submitting
a dependent student or by the applicant (A) or (B) of this section, it is liable for documentation and the consequences of
in the case of an independent student any overpayment discovered as a result failing to provide documentation.
certifying that the amount listed on the of the verification process. (a) An institution shall require an
applicant's aid application is correct; (c) An institution may not withhold applicant selected for verification to
and any GSL proceeds from a student under submit to it, within the period of time it
(3) Child support received by paragraph (a)(2) of this section for more or the Secretary specifies, the
submitting to it- than forty-five (45) days. If the applicant documents set forth in § 668.57 that are
(i) A written statement signed by the does not complete the verification requested by the institution or the
applicant and the applicant's parent in, process within the forty-five day period, Secretary.
the case of a dependent student, or by the institution shall return the proceeds
to the lender.
(b) For purposes of the campus-based,
the applicant and the applicant's spouse GSL and need-based ICL programs-
in the case of an independent student, (d) (1) If the institution receives GSL
proceeds in an amount which exceeds (1) If an applicant fails to provide the
certifying the amount of child support requested documentationwithin a
received; and the student's need for the loan based
(ii) If the institution has reason to upon the verified information and the reasonable time period established by
believe that the information provided is excess funds can be eliminated by the institution or by the Secretary-
inaccurate, the applicant must verify the reducing subsequent disbursements for (i) The institution may not-
amount of child support received by the applicable loan period, the (A) Disburse any additional Perkins
providing a document such as.- institution shall process the proceeds Loan, NDSL, SEOG or need-based ICL
(A) A copy of the separation and advise the lender to reduce the funds to the applicant;
agreement or divorce decree showing subsequent disbursements. (B) Continue to employ or allow an
the amount of child support to be (2) If the institution receives GSL employer to employ the applicant under
provided; proceeds in an amount which exceed the CWS;
(B)A statement from the parent student's need for the loan based upon (C) Certify the applicant's GSL
providing the child support showing the the verified information and the excess application; or
amount provided; or funds cannot be eliminated in (D) Process GSL proceeds for the
(C)Copies of the child support checks subsequent disbursements for the applicant;
or money order receipts. applicable loan period, the institution (ii) The institution shall return to the
(Authority: 20 U.S.C. 1094) shall return the excess proceeds to-the lender any GSL proceeds payable to the
lender. applicant; and
§ 668.58 interim disbursements. (Authority: 20 U.S.C. 1094) (iii) The applicant shall repay to the
(a)(1) If an institution has reason to institution any Perkins Loan, NDSL, or
believe that the information included on § 668.59 Consequences of a change in
application Information. SEOG, or need-based ICL payments
the application is inaccurate, until the received for that award year;
applicant verifies or corrects the (a) Except as provided in paragraph
(b) of this section, if the information on (2) If the applicant provides the
information included on his or her requested documentation after the time
application, the institution may not- an application used to determine Pell
Grant eligibility changes as a result of period established by the institution, the
(i) Disburse any Pell Grant or campus- institution may, at its option, award aid
based program funds to the applicant; the verification process, the institution
shall require the applicant to resubmit to the applicant notwithstanding the
(ii) Employ the applicant in its CWS
Program; or his or her SAR to the Secretary if- guidelines listed in paragraph (b)(1)(i) of
(iii) Certify the applicant's GSL (1) The institution recalculates the this section; and
application or process GSL proceeds for applicant's SAI (student aid index), (3) An institution may not withhold
any previously certified GSL determines that the applicant's EFC any GSL proceeds from a student under
application. changes, and determines that the change paragraph (b)(1)(i)(D) of this section for
(2) If an institution does not have in the EFC changes the applicant's Pell more than forty-five (45) days. If the
reason to believe that the information Grant award; or. applicant does not complete verification
included on an application is inaccurate (2) The institution does not recalculate within the forty-five (45) day period, the
prior to verification, the institution- the applicant's EFC. institution shall return the GSL proceeds
(i) May withhold payment of Pell (b) An institution need not require an to the lender.
Grant, campus-based, and need-based applicant to resubmit his or her SAR to (c) For purposes of the Pell Grant
ICL funds; or the Secretary, need not recalculate his Program-
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 460bl
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Proposed Rules 46001
(1) An-applicant may submit a verified information until the applicant provides (2) Reimbursing the appropriate
SAR to the institution after the the documentation or the Secretary program account by-
applicable deadline specified in 34 CFR decides that there is no longer a need (i) Requiring the applicant to return
690.61 but within an established for the documentation. the overpayment to the institution if the
additional time period set by the (e) If an applicant selected for institution cannot correct the
Secretary through publication of a notice verification for an award year dies overpayment under paragraph ()(1) of
in the Federal Register. If a verified SAR before the deadline for completing the this section; or
is submitted to the institution during the verification process without completing (ii) Making restitution from its own
established additional time period, and that process, and the deadline is in the funds, if the applicant does not return
the SAIs on the two SARs are different, subsequent award year, the institution the overpayment, by the earlier of the
payment must be based on the higher of may not- following dates:
the two SAIs." (1) Make any further disbursements (A) Sixty days after the applicant's
(2) If the applicant does not provide on behalf of that applicant; last day of enrollment.
the requested documentation, and if (2) Certify that applicant's GSL loan
(B) The last day of the award year in
necessary, a reprocessed verified SAR, application or process that applicant's which the institution disbursed Pell
within the additional time period GSL proceeds; or
Grant, Perkins Loan, NDSL, SEOG or
referenced in paragraph (c)(1) of this (3) Consider any funds it disbursed to
need-based ICL funds to the applicant.
section, the applicant- that applicant under § 668.58(a)(2) as an
(b) If the institution determines as a
(i) Forfeits the Pell Grant for the overpayment.*
result of the verification process that an
award year; and (Authority: 20 U.S.C. 1094) .applicant received for an award year a
(ii) Shall return any Pell Grant
§ 668.61 Recovery of funds. GSL of $200 or more in excess of the
payments previously received for that
student's financial need for the loan, the
award year to the Secretary. (a) If an institution discovers, as a institution shall notify the student and
(d) The Secretary may determine not result of the verification process, that an
to process any subsequent Pell Grant the lender of the excess amount within
applicant received under
thirty (30) days of the institution's
application, and an institution, if § 668.58(a)(2)(ii)(A) more than he or she
determination that the borrower is
directed by the Secretary, may not was eligible to receive, the institution
process any subsequent application for ineligible for the excess amounts.
shall eliminate the overpayment by-
campus-based, need-based ICL or GSL (1) Adjusting subsequent financial aid (Authority: 20 U.S.C. 1094)
program assistance of an applicant who payments in the award year in which [FR Doc. 89-25900 Filed 10-30-89; 8:45 am]
has been requested to provide the overpayment occurred; or BILLING CODE 4400-01-M
I I I I II
Tuesday
October 31, 1989
Part IV
Department of Defense
General Services
Administration
National Aeronautics and
Space Administration
48 CFR Parts 5, 6, 19, and 52
Federal Acquisition Regulation (FAR);
Competitive Thresholds; Final Rule
46004 Federal' Register / Vdl. 54, No. 209 / Tuesday, October 31,1989 /.Rules and Regulations'
DEPARTMENT OF DEFENSE Opportunity Development Reform Act'of case of a contract opportunity assigned
1988, Pub. L. 100-656, published in the a standard industrial classification code
GENERAL SERVICES Federal Register'on August 21, 1989 (54 for manufacturing and $3,000,000
ADMINISTRATION FR 34692). (including options) in the case .of all
NATIONAL AERONAUTICS AND other contract opportunities. In addition,
C. Paperwork Reduction Act
Part 19 is revised to implement
SPACE ADMINISTRATION The Paperwork Reduction Act (Pub. L. subsection 303(d) of Pub. L 100-656 to
96-511) does not apply because this rule permit appeals by SBA as to whether a
48 CFR Parts 5, 6, 19, and 52 does not impose any reporting or requirement should be offered to the
[Federal Acquisition Circ. 84-521 recordkeeping requirements or section 8(a) Program and as to whether
collection of information from offerors, the estimated fair market price as
RIN AD 31 contractors, or members of the public determined by the contracting agency is
which require the approval of OMB correct.
Federal Acquisition Regulation (FAR); under 44 U.S.C. 3501, et seq.
Competitive Thresholds Therefore, 48 CFR Parts 5, 6, 19, and
D. Public Comments 52 are amended as set forth below:
AGENCIES: Department of Defense 1. The authority citation for 48 CFR
(DoD), General Services Administration On June 28, 1989, a proposed rule was
Parts 5, 6, 19, and 52 continues to read
(GSA), and National Aeronautics and published in the Federal Register (54 FR
as follows:
Space Administration (NASA). 27310). Comments received were
ACTION: Final rule. considered by the Councils in the Authority:*40 U.S.C. 486(c); 10 U.S.C.
development of this final rule. Chapter 137; and 42 U.S.C. 2473(c).
SUMMARY: Federal Acquisition Circular
(FAC) 84-52 amends Federal Acquisition List of Subjects in 48 CFR Parts 5, 6, 19, PART 5--PUBLICIZING CONTRACT
Regulation (FAR) Parts 5, 6, 19, and 52 to and 52 ACTIONS
implement sections 303(b) and 303(d) of Government procurement. 2. Section 5.202 is amended by.
the Business Opportunity Development Dated: October 25, 1989. revising paragraph (a)(4) to read as
Reform Act of 1988, Pub. L. 100-656.' Albert A. Vicchiolla,. follows:
EFFECTIVE DATE: November 30, 1989. Director,Office of FederalAcquisition Policy.
FOR FURTHER INFORMATION CONTACT. 5.202 Exceptions.
Margaret A. Willis, FAR Secretariat, Federal Acquisition Circular (a) ..* .
Room 4041, GS Building, Washington, (4) The contract action is expressly
DC 20405, (202] 523-4755. Please cite (Number 84-521
authorized or required by a statute to be
FAC 84-52. Unless otherwise specified, made through another Government
all
SUPPLEMENTARY INFORMATION: Federal Acquisition Regulation (FAR) agency, including acquisitions from the
A. Background and other directive material contained Small Business Administration (SBA)
in FAC 84-52 is effective October 31, using the authority of section 8(a) of the
Section 303(b) of the Business 1989. Small Business Act (but see 5.905(e)), or
Opportunity Development Reform Act of from a specific source such as a
1988 requires that acquisitions offered Richard H. Hopf III,
Associate Directorfor Acquisition Policy workshop for the blind under the rules
for award pursuant to section 8(a) of the of the Committee for the Purchase from
Small Business Act be awarded on the S.j. Evans,
the Blind and Other Severely
basis of competition restricted to.eligible AssociateAdministratorfor Procurement,
NationalAeronauticsand Space Handicapped;
program participants if (a] there isa :
reasonable expectation that at least two Administration.
eligible program participants will submit Eleanor Spector, 3. Section 5.205 is admended by
offers and that award can be made at a Assistant Secretaryof Defense/or adding paragraph (e) to read as follows:
fair market price, and (b) the anticipated Procurement,DepartmentofDefense.
5.205 Special situations.
award price of the contract (including Federal Acquisition Circular (FAC)
options) will exceed $5,000,000 in the 84-52 amends the Federal Acquisition
case of a contract opportunity assigned Regulation as specified below: (e) Section 8(a) competitive
a standard industrial classification code acquisitin:When a national buy
for manufacturing and $3,000,000 Item-Competitive Thresholds requirement is being considered for
(including options)in the case of all FAR parts 5, 6, subparts 19.2 and 19.8, competitive acquisition limited to
other.contract opportunities. and part 52 are amended to implement eligible 8(a) concerns under Supart 19.8,
Section 303(d) amends'the current subsection 303(b) of the Business the contracting officer shall transmit a
appeal authority of the Small Business Opportunity Development Reform Act of synopsis of the proposed contract action
Administration to permit appeals as to 1988, Pub. L. 100-656, which requires to the CBD in accordance with 5.207.
whether a requirement should be offered that acquisitions offered for award The synopsis may be transmitted to the
to the section 8(a) Program and as to pursuant to section 8(a) of the Small CDB concurrent with submission of the
whether the estimated fair market price Business Act be awarded on the basis of agency offering (see 19.804-2) to the
as determined by the contracting agency. competition restricted to eligible Small Business Administration (SBA).
is correct. program participants if (a) there is a The synopsis should also include
reasonable expectation that at least two information-
B. Regulatory Flexibilify Act
eligible program participants will submit (1) Advising that the acquisition is
The requirements of the Act were offers and that-award can be made, at a being offered for competition limited. to
addressed by the Small Business fair market price, and (b) anticipated eligible,8(a) concerns;
Administration in the development of its award price of the contract (including (2) Specifying the Standard Industrial
regulations -implementing the Business options) will exceed $5,000,000 in the Classification (SIC) code;
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 46005
(3) Advising that eligibility to Sec. 19.803 Selecting acquisitions for the 8(a)
participate may be restricted to firms in 19.804-2 Agency offering. Program.
either the developmental or transitional 19.804-3 SBA acceptance. Through their cooperative efforts, the
stage, and 19.804-4 Repetitive acquisitions. SBA and an agency match the agency's
(4) Encouraging interested 8(a) firms 19.805 Competitive 8(a). requirements with the capabilities of
to request a copy of the solicitation as 19.805-1 General. 8(a) concerns to establish a basis for the
19.805-2 Procedures.
expeditiously as possible since the agency to contract with the SBA under
19.806 Pricing the 8(a) contract.
solicitation will be issued without 19.807 Estimating the fair market price. the program. Selection is initiated in one
further notice upon SBA acceptance of of three ways-
19.808 Contract negotiation.
the requirement for the section 8(a) 19.808-1 Sole source. (a) The SBA advises an agency
Program. 19.808-2 Competitive. contracting activity through a search
19.809 Preaward considerations. letter of an 8(a) firm's capabilities and
PART 6--COMPETITION, 19.810 SBA appeals. asks the agency to identify acquisitions
REQUIREMENTS 19.811 Preparing the contracts. to support the firm's business plans. In
4. Section 8.204 is added to read as 19.811-1 Sole source. these instances, ihe SBA will provide at
follows: 19.811-2 Competitive. least the following information in order
19.811-3 Contract clauses. to enable the agency to match an
.6.204 Section 8(a) competition. 19.812 Contract administration. acquisition to the firm's capabilities.
(a) To fulfill statutory requirements (1) Identification of the concern and
relating to section 8(a) of the Small Subpart 19.8-Contracting With the its owners.
Business Act, as amended by Pub. L. Small Business Administration (the (2) Background information on the
100-656, contracting officers may limit 8(a) Program) concern, including any and all
competition to eligible 8(a) contractors 19.800 General. information pertaining to the concern's
(see Subpart 19.8). technical ability and capacity to
(b) No separate justification or (a) Section 8(a) of the Small Busines perform.
determination and findings is required Act (15 U.S.C. 637(a)) established a (3) The firm's present production
under this part to limit competition to program that authorizes the Small capacity and related facilities.
eligible 8(a) contractors. Business Administration (SBA) to enter (4) The extent to which contracting
5. Section 6.302-5 is amended by into all types of contracts with other assistance is needed in the present and
revising paragraph (b)(4) to read as agencies and let subcontracts for the future, described in terms that will
follows: performing those contracts to firms enable the agency to relate the
eligible for program participation. The concern's plans to present and'future
6.302-5 Authorized or required by statute. SBA's subcontractors are referred to as agency requirements.
(b) *.* * "8(a) contractors." (5) If construction is involved, the
(4) Sole source awards under the 8(a) (b) Contracts may be awarded to the request shall also include the following:
Program---15 U.S.C. 637 (see subpart SBA for performance by eligible 8(a) (i) The concern's capabilities in and
19.8). firms on either a sole source or
* * * * *
qualifications for accomplishing various
competitive basis. categories of maintenance, repair,
(c) When, acting under the authority alteration, and construction work in
PART 19--SMALL BUSINESS AND of the program, the SBA certifies to an specific categories such as mechanical,
SMALL DISADVANTAGED BUSINESS agency that the SBA is competent and electrical, heating and air conditioning,
CONCERNS responsible to perform a specific demolition, building, painting, paving,
6. Section 19.202-6 is amended by contract, the contracting officer is earth work, waterfront work, and
revising paragraph (b) to read as authorized, in the contracting officer's general construction work. .
follows: discretion, to award the contract to the (ii) The concern's capacity in each
SBA based upon mutually agreeable construction category in terms of
19:202-6 Determination of fair market terms and conditions. estimated dollar value (e.g., electrical,
price. up to $100,000).
19.801 Definitions. (b) The SBA identifies a specific
(b) For 8(a) contracts, both with Local buy requirement, as used in this requirement for a particular 8(a) firm or
respect to meeting the requirement at subpart, means a supply or service firms and asks the agency contracting
19.806(b) and in order to accurately purchased to meet the specific needs of activity to offer the acquisition to the
estimate the current fair market price, one user in one location. 8(a) Program for the firm(s). In these
contracting officers shall follow the Nationalbuy requirement,as used in instances, in addition to the information
procedures at 19.807. this subpart, means a supply or service in paragraph (a) of this section, the SBA
7. Subpart 19.8 is revised to read as purchased to meet the needs of one or will provide-
follows: more users in two or more locations (1) A clear identification of the
where supply control, inventory acquisition sought; e.g., project name or
Subpart 19.8-Contracting With the Small
management, or acqdisition number,
Business Administration (The 8(a) Program)
responsibility have been assigned to a (2) A statement as to how any
Sec. central contracting activity. additional needed facilities will be
19.800 General. provided in order to ensure that the firm
19.801 Definitions. 19.802 Selecting concerns for the 8(a) will be fully capable of satisfying the
19.802 Selecting concerns for the 8[a) Program.
Program. agency's requirements;
19.803 Selecting acquisitions for the 8(a) Selecting concerns for the 8(a) (3) If construction, information as to
Program. Program is the responsibility of the SBA the bonding capability of the firm(s);
19.804 Evaluation, offering, and acceptance. and is based on the criteria established and
19.804-1 Agency evaluation. in 13 CFR 124.101-113. (4) Either-
46006 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
(i) If sole source request- independent review of the factors in (12) Identification of all known 8(a)
(A) The reasons why the firm is 19.803(a) and other aspects of the firms' concerns which have expressed an
considered suitable for this particular capabilities which would ensure the interest in this specific requirement as a
acquisition; e.g., previous contracts for satisfactory performance of the result of self-marketing, response to
the same or similar supply or service; requirement being considered for sources sought, or publication of
and commitment to the 8(a) Program. advanced acquisition requirements.
(B) A statement that the firm is (13) Identification of all SBA district
eligible in terms of SIC code, business 19.804-2 Agency offering.
or regional offices which have asked for
support-levels, and business activity (a) After completing its evaluation, the the acquisition for the 8(a) Program.
targets; or, agency shall notify the SBA of the (14) A recommendation, if
(ii) If competitive, a statement that at extent of its plans to place 8(a) contracts appropriate, as to whether the
least two 8(a) firms are considered with the SBA for specific quantities of acquisition should be competitive or
capable of satisfying the agency's items or work. The notification must sole source; and
requirements and a statement that the identify the timeframes within which (15) Any other pertinent and
firms are also eligible in terms of the SIC prime contract and subcontract actions
reasonably available data.
code, business support levels, and must be completed in order for the
(b) An agency offering a local buy
business activity targets. If requested by agency to meet its responsibilities. The
requirement should submit it to the SBA
the contracting activity, SBA will notification must also contain the
Regional Office for the geographical
identify at least two such firms and following information applicable to each
area where the user is located. An
provide information concerning the prospective contract:
agency offering a national buy
firms' capabilities. (1) A description of the work to be
performed or items to be delivered, and requirement should submit it to the
(c) Agencies may also review other Office of Program Development, Office
proposed acquisitions for the purpose of a copy of the statement of work, if
of Minority.Small Business and Capital
identifying requirements which may be available.
(2) The estimated period of Ownership Development, Small
offered to the SBA. Where agencies Business Administration, 1441 L Street,
independently, or through the self performance.
(3) The SIC code that applies to the NW., Washingtn, DC 20416.
marketing efforts of an 8(a) firm, identify
a requirement for the 8(a) Program, they principal nature of the acquisition. 19.804-3 SBA acceptance.
may offer on behalf of a specific 8(a). (4) The anticipated dollar value of the
(a) Upon receipt of the contracting
firm, for the 8(a) Program in general, or requirement, including options if any.
(5) Any special restrictions or agency's offer, the SBA will determine
for 8(a) competition. whether to accept the requirement for
geographical limitations on the
19.804 Evaluation, offering, and requirement (for construction and the 8(a) Program. The SBA's decision
acceptance. services include the location of the work whether to accept the requirement will
to be performed). be transmitted to the contracting agency
19.804-1 Agency evaluation. (6) Any special capabilities or in writing within 15 working days of
In determining the extent to which a disciplines needed for contract receipt of the offer, unless the SBA
requirement should be offered in support performance requests, and the contracting agency
of the 8(a) Program, the agency should (7) The type of contract anticipated. grpnts, an extension.
evaluate- (8) The acquisition history, if any, of (b)If the acquisition is accepted as a
(a) Its current and future plans to the requirement, including the names sole source, the SBA will advise the
acquire the specific items or work that and addresses of any small business contracting activity of the 8(a) firm
8(a) contractors are seeking to provide, contractors which have performed this selected for negotiation. Generally, the
identified in terms of- requirement during the previous 24 SBA Will accept a contracting activity's
(1) Quantities required or the number months. recommended source.
of construction projects planned; and (9) A statement that no solicitation for (c) If the acquisition is accepted for
(2) Performance or delivery this specific acquisition has been issued competition-(1) as a local buy
requirements, including required as a small business set-aside or a small requirement, the SBA will advise as to
monthly production rates, when disadvantaged business set-aside, and which of the SBA districts or regions the
applicable. that no other public communication competition is restricted and provide the
(b) Its current and future plans to (such as a notice in the Commerce list of the 8(a) firms in those districts or
acquire items or work similar in nature Business Daily) has been made regions which are eligible, for the
and complexity to that specifiedin the evidencing the contracting agency's designated SIC code; or (2) as a national
business plan; clear intention to set aside the buy requirement, the SBA, if requested
(c) Problems encountered in previous acquisition for small business or small by the contracting activity, will identify
acquisitions of the items or work from disadvantaged business. at least two eligible sources and the
the 8(a) contractors and/or other (10) Identification of any particular contracting officer, in coordination with
contractors; 8(a) concern designated for the small business specialist, will
(d) The impact of any delay in consideration, including a brief augment the source list based on results
delivery; justification, such as-- of the synopsis (see 5.205(e)) and other
(e) Whether the items or work have (i) The 8(a) concern, through its own available information. The SBA will
previously been acquired using small efforts, marketed the requirement and advise of any program participation
business set-asides; and caused it to be reserved for the 8(a) stage restrictions. The SBA may limit
(f) Any other pertinent information Program; or competition to 8(a) concerns in the
about known 8(a) contractors, the items, (ii) The acquisition is a follow-on or developmental stage of program
or the work. This includes any renewal contract and the nqminated participation; may limit competition to
information concerning the firms' concern is the incumbent. 8(a) concerns in the transitional stage; or
capabilities. When necessary, the (11) Bonding requirements, if may permit competition among firms in
contracting agency shall make an applicable. either stage.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 46007
19.804-4 Repetitive acquisitions. upon whether the acquisition is a local solicitation or proposed contract award.
In order for repetitive acquisitions to or national buy requirement. Any party with information concerning
be awarded through the 8(a) Program, the eligibility of an 8(a) firm to continue
there must be separate offers and 19.805-2 Procedures.
participation in the 8(a) Program may
acceptances. This allows the SBA to (a) Competitive 8(a) acquisitions shall submit such information to the SBA in
revalidate a firm's eligibility, to evaluate be conducted by contracting agencies liy accordance with 13 CFR 124.111(c).
the suitability of each acquisition as a using sealed bids (see Part 14) or
competitive 8(a), and to determine competitive proposals (see Part 15). 19.806 Pricing the 8(a) contract.
whether the requirement should (b) Offers shall be solicited from those
sources identified in accordance with (a) The contracting officer shall price
continue under the 8(a) Program. the 8(a) contract in accordance with
the SBA instructions provided under
19.805 Competitive 8(a). 19.804-3. Subpart 15.8. If required by Subpart 15.8,
(c) The SBA will determine the the SBA shall obtain certified cost or
19.805-1 General. eligibility of the firms for award of the pricing data from the 8(a) contractor. If
(a) Except as provided in paragraph contract. Eligibility will be determined the SBA requests audit assistance to
(b) of this subsection, an acquisition by the SBA as of the time of submission determine the reasonableness of the
offered to the SBA under the 8(a) of initial offers which include price. proposed price in a sole source
Program shall be awarded on the basis Eligibility is based on section 8(a) acquisition, the contracting activity shall
of competition limited to eligible 8(a) Program criteria, e.g., whether the firm furnish it to the extent it is available.
firms if- has the SIC code for the acquisition in (b) An 8(a) contract, sole source or
(1) There is a reasonable expectation its approved business plan, whether the competitive, may not be awarded if the
that at least two eligible and responsible firm is currently a small business under
8(a) firms will submit offers and that price of the contract results in a cost to
the SIC code, whether the firm is in the the contracting agency which exceeds a
award can be made at a fair market developmental or transitional stage (if
price; and fair market price.
(2) The anticipated award price of the the acquisition is restricted by stage),
whether the firm is in conformance with (c) If requested by the SBA, the
contract, including options, will exceed the 8(a) support limitation set forth in its contracting officer shall make available
$5,000,000 for acquisitions assigned business plan, and whether the firm is in the data used to estimate the fair market
manufacturing standard industrial conformance with its 8(a) business price.
classification (SIC) codes and $3,000,000 activity targets. (d) The negotiated contract price and
for all other acquisitions. (1) In sealed bid acquisitions, upon the estimated fair market price are
(b) Where an acquisition exceeds the receipt of offers, the contracting officer subject to the concurrence of the SBA. In
competitive threshold, the SBA may will provide the SBA a copy of the the event of a disagreement between the
accept the requirement for a sole source solicitation, the estimated fair market contracting officer and the SBA, the SBA
8(a) award if-- price, and a list of offerors ranked in the may appeal in accordance with 19.810.
(1) There is not a reasonable order of their standing for award (i.e.,
expectation that at least two eligible first low, second low, etc.) with the total 19.807 Estimating fair market price.
and responsible 8(a) firms will submit evaluated price for each offer, (a) The contracting officer shall
offers at a fair market price; or differentiating between basic
(2) The SBA determines that an 8(a) estimate the fair market price of the
requirements and any options. The SBA work to be performed by the 8(a)
concern owned and controlled by an will consider the eligibility of the first
economically disadvantaged Indian contractor.
low offeror. If the first low offeror is not
tribe is eligible and responsible and determined .to be eligible, the SBA will (b) In estimating the fair market price
needs the acquisition for its business consider the eligibility of the next low for an acquisition other than those
development. offeror until an eligible offeror is covered in paragraph (c) of this section,
(c) The SBA Association identified. The SBA will determine the the contracting officer shall use cost or
Administrator for Minority Small eligibility of the firms and advise the price analysis and consider commercial
Business and Capital Ownership contracting officer within 5 working prices for similar products and services,
Development (AA/MSB&COD) may days after its receipt of the list of available in-house cost estimates, data
approve an agency recommendation for bidders. Once eligibility has been (including cost or pricing data)
a competitive 8(a) award below the established by the SBA, the successful submitted by the SBA or the 8(a)
competitive thresholds. Such offeror will be determined by the contractor, and data obtained from any
recommendations will be approved only contracting activity in accordance with other Government agency.
on a limited basis and will be primarily normal contracting procedures. .(c) In estimating a fair market price
granted where technical competitions (2) In negotiated acquisition, the SBA for a repeat purchase, the contracting
are appropriate or where a large number will determine eligibility when the officer shall consider recent award
of responsible 8(a) firms are available successful offeror has been established prices for the same items or work if
for competition. In determining whether by the agency and the contract there is comparability in quantities,
a recommendation to compete below the transmitted for signature unless a
threshold will be approved, AA/ conditions, terms, and performance
referral has been made under 19.809, in times. The estimated price should be
MSB&COD will, in part, consider the which case the SBA will determine
extent to which the requesting agency is adjusted to reflect differences in
eligibility at that point. specifications, plans, transportation
supporting the 8(a) Program on a (d) In any case in which a firm is
noncompetitive basis. Agency determined to be ineligible, the SBA will costs, packaging and packing costs, and
recommendations for competition below notify the firm of that determination. other circumstances. Price indices may
the threshold may be included in the (e) The eligibility of an 8(a) firm for a be used as guides to determine the
offering letter or may be submitted by competitive 8(a) award may not be changes in labor and material costs.
separate correspondence through the challenged or protested by another 8(a) Comparison of commercial prices for
SBA region or headquarters, depending firm or any other party as part of a similar items may also be used.
46008 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
19.808 Contract negotiation. SBA and the contracting officer fail to (3) The following items shall be
agree on them: inserted by the SBA-
19.808-1 Sole source.
(1) The decision not to make a (i) The SBA contract numler.
(a) The SBA is responsible for particular acquisition available for (ii) The effective date.
initiating negotiations with the agency award under the 8(a) Program. (iii) The typed name of the SBA's
within the time established by the (2) The terms and conditions of a contracting officer.
agency. If the SBA does not initiate (iv) The signature of the SBA's
negotiations within the agreed time and
particular sole source acquisition to be
awarded under the 8(a) Program. contracting officer.
the agency cannot allow additional time, (v) The date signed.
the agency may, after notifying the SBA, (3) The estimated fair market price.
(b) Notification of a proposed referral (4) The SBA will obtain the signature
proceed with the acquisition from other of the 8(a) contractor prior to signing
sources. to the agency head'by the SBA must be
received by the contracting officer and returning the prime contract to the
(b) The 8(a) contractor should contracting officer for signature. The-
participate, whenever practicable, in within 5 working days after the SBA is
formally notified of the contracting SBA will make every effort to obtain
negotiating the contract terms. When signatures and return the contract, and
mutually agreeable, the SBA may officer's decision. The SBA shall provide
the agency Director for Small and any subsequent bilateral modification,
authorize the contracting activity to to the contracting officer within a
negotiate directly with the 8(a) Disadvantaged Business Utilization a
copy of this notification. The SBA must maximum of 10 working days.
contractor. Whether or not direct (5) If the contract is for construction
negotiations take place, the SBA is provide the request for determination to
the agency head within 20 working days work, it shall include requirements of
responsible for approving the resulting the Miller Act with respect to
contract before award and determining of the SBA's receipt of the adverse
decision. Pending issuance of a decision performance and payment bonds (see
whether the 8(a) contractor shall be
by the agency head, the contracting part 28).
required to provide a performance bond.
officer shall suspend action on the (c) Except in procurements where the
19.808-2 Competitive. acquisition. Action on the acquisition SBA will make advance payments to its
In competitive 8(a) acquisitions need not be suspended if the contracting 8(a) contractor, the agency contracting
subject to Part 15, the contracting officer officer makes a written determination officer may, as an alternative to the
conducts negotiations directly with the that urgent and compelling procedures in 19.811-1(a) and (b), use a
competing 8(a) firms. circumstances which significantly affect single contract document for both the
the interests of the United States will prime contract between the agency and
19.809 Preaward considerations. not permit waiting for a decision. the SBA and its 8(a) contractor. The
The contracting officer should request (c) If the SBA appeal is denied, the single contract document shall contain
a preaward survey of the 8(a) contractor decision of the agency head shall the information in 19.811-1(b) (1). (2), (3),.
whenever considered useful. If the specify the reasons for the denial, and (5). Appropriate blocks on the
results of the preaward survey or other including the reasons why the selected Standard Form (SF) 26 or 1442 will be
information available to the contracting firm was determined incapable of asterisked and a continuation sheet
officer raise substantial doubt as to the performance, if appropriate. The appended which includes the following:
firm's ability to perform, the contracting decision shall be made a part of the (1) Agency acquisition office, prime
officer should refer the matter to the contract file. contract number, name of agency
SBA for its consideration in deciding contracting officer and lines for
whether SBA should certify that it is 19.811 Preparing the contracts. signature, date signed, andeffective
competent and responsible to perform. 19.811-1 Sole source. date.
This is not a referral for Certificate of (2) The SBA office, the SBA contract
Competency consideration under (a) The contract to be awarded by the number, name of the SBA contracting
Subpart 19.6. Within 15 working days of agency to the SBA shall be prepared in officer, and lines for signature and date
the receipt of the referral or a longer accordance with agency procedures and signed.
period agreed to by the SBA and the in the same detail as would be required (3) Name and lines for the 8(a)
contracting activity, the SBA Assistant in a contract with a business concern. contractor's signature and date signed.
Regional Administrator for Minority The contracting officer shall use the (d) Prior to award of contract actions
Small Business and Capital Ownership Standard Form 26 as the award form, in excess of $100,000, the SBA shall
Development in the regional office except for construction contracts, in provide the contracting activity with the
which services the 8(a) firm will advise which case the Standard Form 1442 competing contractor certifications
the contracting officer as to the SBA's shall be used as required in 36.701(b). required by 3.104-9 from its 8(a)
willingness to certify its competency to (b) The agency shall prepare the contractor. The contracting activity's
perform the contract using the 8(a) contract that the SBA will award to the contracting officer shall maintain the list
concern in question as its subcontractor. 8(a) contractor in accordance with required by 3.104-9 and complete the
The contracting officer shall proceed agency procedures, as if the agency contracting officer certification.
with the acquisition. and award the were awarding the contract directly to
the 8(a) contractor, except for the 19.811-2 Competitive.
contract to another appropriately
selected 8(a) offeror if the SBA has not following. (a) The contract will be prepared in
certified its competency within 15 • (1) The award form shall cite 41 U.S.C. accordance with 14.407-1(d), except that
working days (or a longer mutually 253(c)(5) or 10 U.S.C. 2304(c)(5) (as appropriate blocks on the Standard
agreeable period.) appropriate) as the authority for use of Form 26 or 1442 will be asterisked and a
other than full and open competition. continuation sheet appended which
19.810 SBA appeals. (2) Appropriate clauses shall be includes the following:
(a) The following matters may be included, as necessary, to reflect that (1) The agency contracting activity.
submitted by the SBA Administrator for the contract is between the SBA and the prime contract number, name of agency
determination to the agency head if the 8(a) contractor. contracting officer, and lines for
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations 46009
signature, date signed, and effective required, based on the location of the 52.219-17 Section 8(a) Award.
date. 8(a) contractor (see DoD Directory of As prescribed in 19.811-3(c), insert the
(2) The SBA office, the SBA Contract Administration Services following clause:
subcontract number, name of the SBA Components (DoD 4105.59-H).
contracting officer and lines for (b) The agency shall distribute copies Section 8(a) Award (Oct 1989)
signature and date signed. of the contract(s) in accordance with (a) By execution of a contract, the Small
(b) For contract actions in excess of Part 4. All contracts and modifications, Business Administration (SBA) agrees to the
$100,000, the contracting activity's if any, shall be distributed to both the following:
contracting officer shall obtain the (1) To furnish the supplies or services set
SBA and the firm in accordance with the forth in the contract according to the
competing contractor certifications as timeframes set forth in 4.201.
required by 3.104-9 directly from the specifications and the terms and conditions
(c) To the extent consistent with the by subcontracting with the Offeror who has
8(a) firm(s). The contracting activity's contracting activity's capability and been determined an eligible concern pursuant
contracting officer shall maintain the list resources, 8(a) contractors furnishing to the provisions of section 8(a) of the Small
required by 3.104-9 and complete the requirements shall be afforded Business Act, as amended (15 U.S.C. 637(a)).
contracting officer certification. production and technical assistance, (2) Except for novation agreements and
(c) The process for obtaining including, when appropriate, advance payments, delegates to the ..........
signatures shall be as specified in identification of causes of deficiencies (insertname of contractingactivity) the
19.811-1(b)(4). responsibility for administering the contract
in their products and suggested with complete authority to take any action on
19.811-3 Contract clauses. corrective action to make such products behalf of the Government under the terms
(a) The contracting officer shall insert acceptable. and conditions of the contract; provided,
the clause at 52.219-11, Special 8(a) however that the contracting agency shall
PART 52-SOLICITATION give advance notice to the SBA before it
Contract Conditions, in contracts PROVISIONS AND CONTRACT issues a final notice terminating the right of
between the SBA and the agency when CLAUSES the subcontractor to proceed with further
the acquisition is accomplished using performance, either in whole or in part, under
the procedures of 19.811-1(a) and (b). 8. Section 52.219-11 is amended by the contract.
(b) The contracting officer shall insert revising the introductory text; by (3) That payments to be made under the
the clause at 52.219-12, Special 8(a) removing in the title of the clause the contract will be made directly to the
Subcontract Conditions, in contracts date "(APR 1984)" and inserting in its subcontractor by the contracting activity,
between the SBA and its 8(a) contractor place "(OCT 1989]"; by removing the (b) The offeror/subcontractor agrees and
when the acquisition is accomplished words "Delegatesto the . . . " and acknowledges that it will, for and on behalf
using the procedures of 19.811-1 (a) and of the SBA, fulfill and perform all of the
inserting "Except for novation requirements of the contract.
(b). agreements and advance payments,
(c) The contracting officer shall insert (End of clause)
delegates to the . . ." in paragraph (c)
the clause at 52.219-7, Section 8(a) of the clause; and by removing the 11. Section 52.219-18 is added to read
Award, in competitive solicitations and' derivation line following "(End of as follows:
contracts when the acquisition is clause)" to read as follows:
accomplished using the procedures of 52.219-18 Notification of Competition
19.805 and in sole source awards which 52.219-11 Special 8(a) Contract Limited to Eligible 8(a) Concerns.
utilize the alternative procedure in Conditions. As prescribed in 19.811-3(d), insert the
19.811-1(c). As prescribed in 19.811-3(a), insert the following clause:
(d) The contracting officer shall insert following clause: NOTIFICATION OF COMPETITION
the clause at 52.219-18, Notification of LIM4ITED TO ELIGIBLE 8(A) CONCERNS
Competition Limited to Eligible 8(a) 9. Section 52.219-12 is amended by (OCT 1989)
Concerns, in competitive solicitations revising the introductory text; by (a) Offers are solicited only from small
and contracts when the acquisition is removing in the title of the clause the business concerns expressly certified-by the
accomplished using the procedures of date "(APR 1984)" and inserting in its Small Business Administration (SBA) for
19.805. place "(OCT 1989]"; by revising participation in the SBA's 8(a) Program and
(1) The clause at 52.219-18 with its paragraph (b)(2) of the clause; by which meet the following criteria at the time
Alternate I will be used when removing the derivation line following of submission of offer-
competition is to be limited to 8(a) "(End of clause)"; and by removing (1)SIC code - *_ is
concerns within one or more specific specifically included in the Offeror's
Alternate I to read as follows: approved business plan;
SBA districts/regions pursuant to
19.804-3. 52.219-12 Special 8(a) Subcontract (2) The Offeror is in conformance with the
Conditions. 8(a) support limitation set forth in its
(2) The clause at 52.219-18 with its approved business plan; and
Alternate II will be used when As prescribed in 19.811-3(b), insert the (3) The Offeror is in conformance with the
competition is to be limited to 8(a) following clause: Business Activity Targets set forth in its
concerns within a specific stage of 8(a) approved business plan or any remedial
Program participation (i.e., (b)(2) That the SBA has delegated action directed by the SBA.
developmental or transitional) pursuant responsibility, except for novation (b) By submission of its offer, the Offeror
to 19.804-3. agreements and advance payments, for the certifies that it meets all of the criteria set
(e) the contracting officer shall insert administration of this subcontract to the forth in paragraph (a) of this clause.
the clause at 52.219-14, Limitations or [insertname of contractingagency]
.......... (c) Any award resulting from this
with complete authority to take any action on solicitation will be made to the Small
Subcontracting, in any solicitation and Business Administration, which will
contract resulting from this subpart. behalf of the Government under the terms
and conditions of this contract. subcontract performance to the successful
19.812 Contract administration. 8(a) offeror selected through the evaluation
criteria set forth in this solicitation.
(a) The contracting officer shall assign 10. Section 52.219-17 is added to read (d) Agreement. A manufacturer or regular
contract administration functions, as as follows: dealer submitting an offer in its own name
46010 Federal Register'/Vol. 54, No. 209 / Tuesday, October 31, 1989 / Rules and Regulations
agrees to furnish, in performing the contract, . (*ContractingOfficer completes Alternate III (OCT 1989). When the
only end items manufactured or produced by by inserting the appropriateSBA District acquisition is for a product in a class for
small business concerns inside the United and/orRegional Office(s) as identified by the .which the Small Business Administration has
States,its territories or possessions, the
Commonweaith of Puerto Rico, or the Trust SBA). determined that there are not small business
Territory of the Pacific Islands. However, this Alternate 1 (OCT 1989). If the Competition manufacturers in the Federal market in
requirement does not apply in connection is to be limited to 8(a) concerns within a accordance with 19.502(b), substitute the
with construction or service contracts. particular program participation stage, add following paragraph (d) for paragraph (d) of
(End of clause) the following subparagraph (a)(4) to the basic clause:
(*Insert SIC code assigned to the acquisition paragraph (a) of the clause. When used in dl Agreement. A, regular dealer submitting
conjunction with Alternate I. this an offer in its own name agrees to furnish, in
by the contracting activity.) performing the contract, only end items
subparagraph should be renumbered (a)(5).
Alternate I (OCT 1989). If the competition manufactured or produced in the United
is to be limited to 8(a) concerns within one or (4)The offeror is in the
* stage of 8(a) Program States, its territories or possessions, the
more specific SBA regions or districts, add _
Commonwealth
o of Puerto Rico, or the Trust
the following subparagraph (a)t4) to ,participation. ('ContractingOfficer
completes by inserting theappropriatestage Territory of the Pacific Islands.
,paragraph (a) of the clause:
. (4)The offeror's approved business plan is;- ofparticipationas identified by SBA (i.e., [FR Dcc.-89-25491'Filed 10-30-89; 8:45 am]
on the file and serviced by, .._,'. .. developmental or transitional).) BILLING CODE 6820-JC
Tuesday.
October 31, 1989
Part V
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46012 Federal Register. / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
Research Advisory Council (AIRAC) otherwise covered by commercial. from a vessel or facility except in cases
report ("Pollution Liability: The liability insurance or self-insurance, of negligence, gross negligence, or
Evolution of a Difficult Insurance except for cases involving gross intentional misconduct (i.e., no strict
Market") indicated that the pollution negligence or willful misconduct, and liability under Federal law).
liability insurance market has declined was based upon EPA's inherent contract * Provides EPA and other Federal
because 6f the following developments: authority (the contractor was required to agencies with discretionary authority to
* Some provisions and interpretations maintain at least $1 million of indemnify RACs who meet the
of Federal pollution laws make it comprehensive general liability requirements of section 119 against
difficult for the insurance mechanism to coverage which, by 1986, generally liability for releases arising out of the
work. State pollution laws create similar excluded all pollution liability RAC's negligent performance in carrying
difficulties in a few instances. coverage). The RAC community viewed out response activities unless such
e Courts in key jurisdictions have this EPA indemnification as inadequate liability was caused by conduct of the
imposed retroactive liabilities on because: contractor which was grossly negligent
insurers for pollution damages and (1) EPA lacked explicit statutory or which constituted intentional
cleanup costs that were never intended authority to indemnify RACs; misconduct.
to be covered. Insurers are concerned (2) No source of indemnification - Authorizes indemnification of RAGs
that the courts will not respect the intent funding was identified by statute; working for EPA, other Federal
of future pollution contracts, no matter therefore indemnification was subject to agencies, a state or political subdivision
what language they use to describe the availability of funds in the EPA budget; under a contract or cooperative
terms and limitations. and agreement, or any potentially
* The reinsurance market for gradual (3) The scope of coverage of EPA responsible party (PRP) carrying out an
pollution insurance has virtually indemnification was inadequate (for agreement under section 106 or section
disappeared because of adverse loss example, EPA's indemnification 122 of CERCLA.
experience and concerns over legal extended only to RACs employed by * Indemnification can be provided
trends in the U.S. EPA, and not to RACs employed by
* Demand for gradual pollution only:
other parties such as other federal
insurance has been confined mostly to agencies, potentially responsible parties, -For liability related to releases of
entities with a high probability of and states). hazardous substances or pollutants or
sustaining large losses, causing During the Superfund reauthorization, contaminants as a result of RAG
problems for insurers in developing the RAG community sought explicit activities conducted under the
enough insurance capacity to handle the indemnification assistance from Superfund program.
catastrophic risks involved. Insurers Congress. They contended that their -When a RAC has made a diligent
have yet to see the kind of broad ability to participate in the Superfund effort to obtain insurance from non-
demand that would be enable them to cleanup program was impaired because federal sources and has found that it
build and sustain a robust market for the the commercial insurance market was is unavailable, inadequate,or
coverage. no longer willing to provide them unreasonably priced.
* The pollution hazard has turned out affordable liability insurance coverage, -As a comparable supplement or
to be much more complex and expensive and existing EPA indemnification was substitute for commercial insurance,
to underwrite than anticipated. Gearing not an adequate substitute for to include deductibles and limits of
up to underwrite this liability risk commercial pollution liability insurance. indemnity, for adequate insurance
requires major commitments of time, They contended that the unavailability when such insurance is either
dollars, as well as specialized expertise of pollution liability insurance for RACs,
which typically is not available. unavailable, insufficient, or
may cause prudent qualified RACs to unreasonably priced.
The problems of cashflow withdraw from the Superfund cleanup
underwriting and those raised by the =-As a comparable supplement or
program.' In response to this concerh, substitute for commercial insurance,
AIRAC combined to create a situation Congress incorporated section 119 into to include deductibles and limits of
where reasonably priced pollution
CERCLA to mitigate the potential indemnity, for adequate
liability insurance was generally withdrawal of qualified RACs from the
unavailable, and, for some contractors, indemnification of RACs by PRPs,
Superfund program and to prevent when such indemnification, as
unavailable at any price. Today, limited
delays and quality reductions in determined by EPA, is either
(although expensive) insurance coverage Superfund site cleanups.
is available for most contractors at most unavailable or insufficient.
sites. 1.3 Section 119 e Indemnification cannot be provided
to owners or operators of facilities
1.2 Pre-1986Indemnification of Section 119 of CERCLA addresses
many of the concerns raised by the RAC regulated under the Resource
Superfund RACS Conservation and Recovery Act
community during the Superfund
RACs have traditionally relied upon (RCRA).
reauthorization debate. Section 119
commercial liability insurance to offset includes the following major provisions: * Indemnification payments will be
their potential liability stemming from made from the Hazardous Substance
e Exempts RACs from liability under
participation in the Superfund program. all Federal laws for injuries, costs, Superfund (the Fund). If sufficient funds
In addition, prior to the enactment of damages, expenses, or other liability are unavailable from the Fund, or if the
SARA, EPA provided indemnification to with respect to any release or Fund is repealed, authorization is
EPA RACs involved in the Superfund threatened release of a hazardous provided for such amounts to be
cleanup program (see 48 CFR 1528.3). substance or pollutant or contaminant appropriated as may be necessary to
Such indemnification was intended to make such payments.
be a supplement to commercially • Amounts expended under section
provided liability insurance. EPA's pre- 'For example, see Poirot, James W.. Chairman
CHaM Hill, Testimony before the Committee on 119 are considered governmental
SARA indemnification covered third Environment and Pub!ic Works, U.S. Senate, April 3, response costs for purposes of cost
party liability and cleanup costs not 1985, pg. 212. recovery.
4601.4
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Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989
; 1' I I II I I I I ! I
/
I
Notices
I II ll I I Il l i In I
e Indemnification claim payments are it only as a supplement to available to keep the Superfund program
exempted from the Anti-Deficiency Act. insurance, 2if available insurance is not operative during the period when EPA
e Payment of a claim under section adequate). analyzed the complex RAG
119 indemnification agreements for an The legislative history of section 119 -indemnification issue, proposed, and
RAG working for a PRP may be made reflects several objectives for section finalized section 119 guidelines. An
only if the RAG exhausts all 119 indemnification: interim guideline approach, consistent
administrative, judicial, and common e Provide RACs with a temporary with section 119 requirements, allowed
law claims for indemnification against comparable substitute for commercial EPA to comprehensively study the entire
PRPs participating in the response. pollution insurance, in the absence of indemnification subject and to subject
Section 119 is a discretionary affordable and adequate commercial this proposal to public review, while the
temporary vehicle by which EPA and insurance coverage or other viable - Superfund program remained operative.
other Federal agencies can provide private sector risk transfer mechanisms; Ultimately, the interim guidance
indemnification to RACs participating in e Encourage the P&C insurance indemnification coverage offered by
the Superfund program if market industry to provide RACs with adequate EPA to RACs will be amended to reflect
conditions indicate the need for such and affordable pollution insurance the final guidelines.
indemnification. products; In summary, the interim section 119
* Encourage the development of other guidance was intended to provide a
1.4 Section 119 Indemnification private sector mechanisms that provide
Objectives temporary indemnification policy, to be
RACs with adequate apd affordable replaced in its entirety by policy
EPA's primary goal in the Superfund prospective pollution risk transfer reflected in more detailed guidelines,
program is to protect human health and mechanisms; subject to public review and comment
the environment by expeditiously and * Maintain EPA's fiduciary before finalization. The policy guidelines
effectively cleaning up the maximum responsibility to ensure that Superfund which are the subject of today's
possible number of NPL and removal monies are used to clean up sites to the proposal, when released in final form,
sites. To meet this primary EPA maximum extent possible; will supplant completely, not simply
objective, Congress enacted section 119 * Assure that an adequate pool of amend, the policy reflected in OSWER
to assure that qualified RACs would be qualified RACs will be available to keep Directive 9835.5.
available to keep the Superfund program the Superfund program operative at
operative during the commercial liability SARA funding levels; 2.0 Proposed EPA Section 119
insurance crisis of the mid-eighties. EPA • Maintain strong RAC incentive to Indemnification Policy: Discussion Of
indemnification of Superfund program prevent and reduce RAC Induced Alternative Approaches Considered
RACs under the authority of section 119 release incidents throughout a given
2.1 Alternatives Considered
was clearly intended as an interim Superfund response action contract; and
vehicle to assure that the Superfund * Maintain strong RAC incentive to EPA considered four broad options
program remained operative until the continue to seek commercial insurance during development of the proposed
commercial liability insurance crisis of coverages and/or develop alternative indemnification policy. This section
the mideighties was resolved. A review risk transfer mechanisms presents those four broad policy options,
of the legislative history of SARA EPA specifically incorporated those along with pro/con arguments for each.
indicates that section 119 objectives into the development of The four options are:
indemnification was never intended to section 119 guidelines. A. No indemnification;
be a permanent government solution or 1.5 EPA Interim Section 119 B. Provide indemnification subject to
a complete risk transfer mechanism for IndemnificationPolicy statutory requirements;
RAC liability risk. For example, the C. Offer indemnification with market
Judiciary Committee of the House of Because of the complexity of section
119 indemnification issues, EPA has incentives to purchase commercial
Representatives in its Report on insurance:
Superfund Amendments of 1985 states: proceeded deliberately in implementing
section 119. During this period from D. Provide reinsurance for a
The indemnifichtion authority provided by enactment of SARA on October 17, 1986, commercial insurance pool.
this section may be offered in the discretion
of the Administrator (EPA). The Committee to issuance of final section 119 A. Provide No Indemnification
strongly believes that such authority should guidelines, EPA has provided and will
continue to provide RACs with section Summary. EPA's use of Option A
be discretionary because:
* Discretionary indemnification allows 119 indemnification on an interim basis, would be based on the conclusion that
EPA to provide an interim solution to the lack using procedures outlined in its "Interim indemnification of Superfund RACs may
of insurance until the insurance community Guidance on Indemnification of be neither appropriate nor necessary.
restores financial stability and is capable and Superfund Response Action Contractors EPA's goal in the Superfund program is
willing to provide prospective insurance for, to protect human health and the
Under section 119 of SARA" (OSWER
these contractors. environment by expeditiously and
* Discretionary indemnification, as Directive # 9835.5), which was issued on
October 6, 1987. The Interim Guidance effectively cleaning up the maximum.
opposed to mandatory indemnification, does
not create a disincentive for insurers to contains general policy guidelines, number of NPL sites possible and
provide prospective insurance by establishing procedural guidance for EPA's conducting removal activities. In order
the equivalent of a Federally intrusive contracting officers, and model to achieve this goal, EPA must expend
insurance program. indemnification agreements to be used its limited funding in areas most likely
* Discretionary indemnification allows with various classes of contractors. to yield cleanups. Under Option A, EPA
EPA to provide Federal Indemnification with would not agree to indemnify RACs, and
appropriate limits (i.e., to provide it in Interim section 119 guidelines and
contract modifications were necessary thus would not commit itself to use the
amounts equivalent to, but not in excess of,
adequate insurance coverage; to include Superfund to fund contingent liabilities.
deductibles; to set limits of coverage; to 2 See Judiciary Committee of the House of Arguments in Favor of Option A. The
require payment by contractors of a premium Representatives Superfund Amendments Report of prime goal of the Superfund piograin is
for indemnification coverage; arid/or to offer 1985, pg. 28. to protect human health and the
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 46015
environment by cleaning up hazardous * regardless of the Federal agency for insurance or indemnification) may
waste sites and conducting removal which they are performing work. If create a climate where many smaller,
actions. This goal must be accomplished RACs do not require Federal 16cal firms are unwilling, or financially
by EPA (and states) with a limited indemnification to perform es sentially unable, to compete with larger
amount of funding. As in any other the same tasks for other Federal companies. As a result, competition
government program, EPA must make agencies, then they may not require within the RAC industry may be '
choices as to where funds should be indemnification to perform these tasks decreased, causing an increase in the
best expended in order to achieve its for EPA. cost of response action work. A failure
ultimate purpose. Funds unnecessarily EPA has also informally consulted a to offer indemnification could result in
expended in one area of the program number of states that employ RACs to EPA being faced with a limited number
detract from other areas of the program perform response actions. In October of large RACs with the resources to self-
that could be improved with an infusion 1988, EPA contacted all fifty states to insure who could demand a higher price
of funding. Therefore, EPA must choose determine the effect of state for their services. More costly cleanups
whether section 119 indemnification is a indemnification of RACs, or lack of state would result in fewer cleanups being
necessary expense vital to the continued indemnification of RACs, on the states' performed given EPA's limited
functioning of the Superfund program, or ability to retain RACs. The informal resources.
an expenditure of funds that could be survey indicated that eight states have Alternatively, the absence of EPA
put to better use in an area of the statutory authority to indemnify RACs, indemnification may have just the
program that would more directly while 13 states may require the RAC to opposite negative effect on competition
contribute to site cleanups. indemnify the state. Five of those 13 in the RAC industry. EPA may be faced
Section 119 was includedin SARA in states indicated that they had "some with a situation where only small RACs
part to address concerns that, without a difficulty" procuring qualified RACs, with few assets will be willing to
viable risk transfer mechanism, RACs and two of the 29 states that neither perform response actions in the absence
would not participate in the Superfund indemnify RACs nor require RAC of commercial pollution liability.
program. At that time, adequate and indemnification of the state had "some insurance and indemnification. If such a
reasonably priced pollution liability difficulty" procuring qualified RACs. In small company with few assets and no
insurance was not available to RACs. general, the states were able to retain a risk transfer mechanisms were
The section 119 legislative history sufficient number of qualified
indicates clearly that section 119 responsible for an injury to a third party,
contractors to ensure the continued that third party would most likely be
indemnification was to serve as a operation of their cleanup programs. uncompensated for their injuries. While
temporary risk transfer mechanism to One might well conclude that, if RACs
the section 119 indemnification program
ensure that the Superfund program was are willing to perform essentially the
is not a victim's compensation program,
not delayed due to the unwillingness of same response action activities for
qualified RACs to perform response public policy should not generally favor
states without indemnification (and
actions. The House of Representatives even in some cases indemnifying the creating a situation which is likely to
Judiciary Committee Report (1985) result in uncompensated injuries to third
state), then EPA should be able to
states: parties.
obtain an adequate number of qualified
- RACs without Federal indemnification.
Another risk EPA faces if it does not
Finally by simply authorizing EPA to offer indemnification is the possibility of
provide indemnification, the Committee Taking into consideration both EPA's
intends to allow for flexibility if regular limited resources and the experience of subjecting the Superfund program to the
market-place forces lead to the availability of other Federal agencies and states, one uncertainties of the underwriting cycle.
insurance for response action contractors in must question whether indemnification If section 119 indemnification is not
the future. In this event, EPA should not agree is prerequisite to Superfund cleanups, available, it is uncertain how the
to provide indemnification. [House of and whether indemnification represents commercial pollution liability insurance
Representatives Report # 99-263, page 29] market would react to another hard
a judicious allocation of scarce financial
EPA's experience during the past few resources. swing in the P&C underwriting cycle.
years indicates that it is likely that Arguments Against Option A. If the Commercial pollution liability insurance
Superfund sites will continue to be commercial pollution liability insurance has become available from a small
cleaned up and no program delays will market does not fill any potential gap in number of insurers in 1988 and 1989.
result if EPA declines to provide coverage for Superfund RACs, then, This corresponds with a general
indemnification to RACs. Although the absent EPA indemnification, these softening of the P&C insurance market.
failure to indemnify RACs could result RACs could be left without an adequate Due to the predictably cyclical nature of
in the withdrawal of some RACs from risk transfer mechanism. If RACs do not the P&C industry, it is likely that another
the market, it is likely that enough possess such a risk transfer mechanism hard P&C insurance market will ensue in
qualified RACs will remain available to for their work in the Superfund program, the next two to five years. If events
perform Superfund program response it is possible that they may decide that transpire as they did during the last hard
actions so that the cleanup of sites will the risks of performing Superfund market, commercial P&C insurers may
not be delayed. response work outweigh any potential once again abandon perceived high risk
Since the enactment of SARA, EPA profits, and then may discontinue their lines such as pollution liability for
has consulted other federal agencies participation in the program. The lack of Superfund RACs. If no alternative risk
that employ RACs to perform response an adequate number of qualified RACs transfer mechanism such as section 119
actions at NPL sites. Through a series of to perform response actions could result indemnification is available, RACs may
informal consultations, EPA has found in program delays for EPA. not wish to participate in the Superfund
no other Fed.eral.agency,.including the. A lack of indemnification or other program. This situation could result in
Department of Defense and the viable risk transfer mechanisms could disruptive program delays for EPA's
Department of Energy, that offers change the nature of competition in the Superfund program.
section 119 indemnification to Superfund RAC industry. The lack of an adequate Even if an absence of indemnification
RACs. RACs face similar risks risk transfer mechanism for RACs led to no reductions in the willingness of
performing response actions at NPL sites (either commercial pollution liability RACs to participate in the Superfund
46016 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
IIll I I II I -- . I I I __ L
program, it is possible that some RACe costless forever, indemnifying RACs necessary in order to avoid program
would be unable to continue to may save substantial Fund resources. delays in the future.
participate due to an unavailability of, EPA does not want to create an
B. Provide Section 119 Indemnification
performance bonds. Most construction Subject to Statutory Requirements intrusive federal program that interferes
contractors are required to post a with private sector efforts to develop
When Adequate Insurance Is Not
performance bond at the time that a bid RAC liability insurance coverage. Also,
Available
is submitted. Sureties may be concerned EPA does not want to create an
that a contractor with no insurance Summary. Under this option, EPA indemnification program that provides
coverage poses too great a risk; that is, would offer section 119 indemnification greater coverage (or other benefits) than
without adequate liability insurance, a subject to statutory requirements. would traditional commercial pollution
third party claim may bankrupt the Implementation of this option would be liability insurance. Therefore, the
contractor, leaving the surety based on the conclusion that, although it. section 119 Indemnification under
responsible for completing the cleanup. is likely that an EPA decision not to Option B would include reasonable
Thus, it is possible that sureties may be offer indemnification will not cause limits and deductibles in order to
unwilling to provide surety bonds if, in program delays, at this time EPA may encourage high quality work, and would
the opinion of the surety, adequate not want to accept the risk of be offered only if commercial insurance
insurance and/or indemnification is not interrupting the operation of the is not available at a fair and reasonable
available to the contractor. Superfund program. The purpose of price.
Consequently, EPA indemnification may Option B indemnification would be to In addition to being consistent with
be necessary to ensure adequate ensure that an adequate number of section 119 legislative history, Option B
competition on sealed bid construction RACs are available for response indemnification could save substantial
contracts. activities in the event that RACs are Fund resources. As noted above in the
Finally, if EPA were unwilling to offer once again left without an adequate "Arguments Against Option A", in the
indemnification, EPA would almost commercial risk transfer mechanism. absence of EPA indemnification, RACs
certainly be required to expend Moreover, due to the excellent loss would be compelled to obtain insurance
additional funds. Most of EPA's history of RACs in the Superfund (or self-insure), the cost of which would
Superfund contracts are cost- program, EPA indemnification could be paid by EPA (as long as the cost is
reimbursement contracts. Under such result in lower per site cleanup costs reasonable). It is entirely possible that
contracts, the reasonable costs of than would reimbursement by EPA of the cost of available Insurance (even
performing work assignments are RACs' commercial insurance. when included as part of the indirect
reimbursed by EPA. If EPA does not Arguments in Favor of Option B. cost pool on a cost reimbursement
indemnify its response contractors, then Section 119 provides EPA with the contracts) would be far greater than the
the RACs will be compelled to obtain statutory authority to indemnify RACs. present value of future claims, in which
insurance (or self-insure), the cost of According to its legislative history, case EPA could, under Option B,
which would be paid by EPA (as long as section 119 indemnification was determine that the cost of insurance was
the cost is reasonable, as defined by the designed to serve as a discretionary unreasonable, and offer to indemnify the
Federal Acquisition Regulations). A interim risk transfer mechanism to RACs. In effect, Option B gives EPA the
"reasonable" cost for insurance or self- ensure that the Superfund program opportunity to 'self-insure (and incur
insurance could be defined as the remains operative. The House of future costs rather than pay insurance
market price for insurance. It is entirely Representatives Judiciary Committee premiums) in those instances where the
possible that the market price (i.e., Report on section 119 stated: expected present value of future claims
premium) for insurance could exceed the Discretionary indemnification allows EPA is much less than the cost of insurance.
present value of future claims, the risk to provide an interim solution to the lack of Retaining the option to self-insure
of which are offset by the premium. insurance until the insurance community becomes especially important in light of
Those Superfund dollars in excess of the restores financial stability and is capable and the claims history of the Superfund
willing to provide prospective insurance for program. As noted above, EPA has
expected present value of future claims these contractors. Discretionary
which are expended on the purchase of indemnification, as opposed to mandatory expended minimal funds on pollution
liability insurance are resources that indemnification, does not create a liability claims, despite having entered
will not be available to clean up sites disincentive for insurers to provide indemnification agreements with
(except insofar as those costs are prospective insurance by establishing the hundreds of contractors and (indirectly)
recovered from Responsible Parties). equivalent of a Federally intrusive insurance subcontractors over an eight year time
In contrast, contractor indemnification program. Discretionary indemnification period. Purchasing liability insurance in
allows EPA to provide Federal lieu of indemnification would have cost
may continue to reflect current claims indemnification with appropriate limits (i.e.,
history and generate few costs. Since millions of Superfund dollars.
to provide it in amounts equivalent to, but not
the start of the Superfund program, EPA in excess of, adequate insurance coverage), Finally, offering Option B
has included indemnification to include deductibles, to require the payment indemnification could avoid- subjecting
agreements in dozens of contracts, and by contractors of a premium for the Superfund program to the
those contractors have passed through indemnification coverage, and/or to offer it uncertainties of the underwriting cycle.
the indemnification agreement to only as a supplement to available insurance, If section 119 indemnification were not
hundreds of subcontractors. As of if available insurance is not adequate. [House available, it is uncertain how the
September 15, 1989, EPA has been of Representatives Report #99-263, page 281 commercial pollution liability insurance
presented pollution liability claims An EPA decision not to offer market would react to another hard
totalling approximately $8,000, while indemnification would probably not swing in the P&C underwriting cycle.
saving millions of dollars by not having cause program delays at this time. Commercial pollution liability insurance
to reimburse contractors for the cost of However, EPA may find it necessary at has become available from a small
pollution liability insurance (or self- this time to retain the option of offering number of insurers, corresponding with
insurance). While an indemnification discretionary indemnification if EPA a general softening of the P&C insurance
program is unlikely to remain virtually finds that such indemnification is market. Due to the predictably cyclical
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 46017
nature of the P&C industry, it is likely indemnification (and even in some cases performel by an RAG (for example, the
that another hard P&C insurance market indemnifying the state), EPA would most price might be lower for an RAG
will ensue in the next five years. If likely be able to obtain an adequate performing a remedial investigation than
events transpire as they did during the number of qualified RACs without it would be for a RAC performing a
last hard market, commercial P&C Federal indemnification. remedial action). All RACs would have
insurance may once again abandon the option of purchasing the
C. Offer Indemnification with Market
perceived high risk lines such as Incentives To Promote Purchase of indemnification from EPA. The cost of
pollution liability for Superfund RACs. If Commercial Insurance the indemnification, as well as the cost
no alternative risk transfer mechanism of any purchased insurance, would not
such as section 119 indemnification is Summary. Rather than deciding on a be reimbursable. In effect, EPA would
available, it is possible that RACs may case-by-case basis whether or not to be setting the maximum price for RACs'
not wish to participate in the Superfund offer indemnification (as would be done pollution liability insurance: If the
program. This situation could result in if option "B" were used), EPA could set market price were less than the EPA
disruptive program delays for EPA's up a system whereby the RACs indemnification price, then RACs would
Superfund program. Offering section 119 themselves would decide whether they purchase commercial liability insurance
indemnification on a limited basis could were to enter an indemnification (assuming that the terms of the
deflect some of the impact of swings in agreement with EPA. Such a program commercial insurance are similar to
the underwriting cycle from the would be identical to option "B", except
those of EPA indemnification).
Superfund program. that a cost would be associated with
contractor indemnification. That is, a Conversely, if the market price were
Arguments Against Option B. The greater than the EPA price, RACs would
prime goal of the Superfund program is RAC would perceive that a financial
'cost must be borne (or, conversely, a eschew commercial insurance, and
to clean up hazardous waste sites. This would purchase EPA indemnification.
goal must be accomplished by EPA (and financial benefit would be foregone) if
Similar types of government insurance
states) with a limited amount of funding. the contractor were to enter into an programs have been established as a
As in any other government program,
indemnification agreement with EPA.'
The RAG would be free to choose response to the inability or
EPA must make choices concerning unwillingness of commercial insurers to
where funds should be best expended in
whether to request indemnification (and
bear the consequent cost) or use some assume a particular type of risk.
order to achieve its ultimate purpose. Examples include the Federal Crop
Funds unnecessarily expended in one other risk transfer mechanism (e.g.,
commercial insurance). EPA has Insurance Program and the National
area of the program detract from those Flood Insurance Program.
other areas of the program that could be
identified three potential methods of
improved with an infusion of funding.
setting up this "incentive-based" The Federal Crop Insurance Program
Therefore, EPA must decide whether
scheme: was initially established in 1938 and
1. EPA provides indemnification for a replaced three times by updated
section 119 indemnification is necessary set price.
to the continued functioning of the versions. The current program was
2. EPA offers to (a) indemnify, or (b) established as the Federal Crop
Superfund program, justifying the reimburse a set amount for pollution
possible use of Superfund dollars for Insurance Act of 1980. This Act
liability insurance (regardless of the established an all-risk 3 crop insurance
third-party liability claims (and actual cost of the insurance).
administrative expenses) rather than in program to be administered by the
3. Indemnification and insurance cost Deprtment of Agriculture's Federal
an area of the program that would more reimbursement terms are determined
directly contribute to site cleanups. Crop Insurance Corporation (FCIC). The
during the competitive procurement program utilizes commercial insurance
Section 119 was included in SARA in process. companies as a delivery system and
part to address concerns that, without a The three incentive-based approaches reimburses them for the costs associated
risk transfer mechanism, RACs would share a characteristic that distinguishes with the coverage. Commercial insurers
not participate in the Superfund them as a group from option "B". All may enter the market at any time but,
program. At that time, no adequate and three require that EPA place an explicit
affordable pollution liability insurance unlike the EPA insurance option, must
price on EPA indemnification or the price the coverage at the same level as
was available to RACs. Section 119 equivalent pollution liability insurance. the federal program.
indemnification was designed to serve The price would be in dollar terms, or, in
as a discretionary interim risk transfer the case of approach 3, the price would The National Flood Insurance
mechanism to ensure that the Superfund be converted to technical evaluation Program was established as part of the
program was not delayed due to a points for those contracts where the Housing and Urban Development (HUD)
refusal by RACs to perform. If the entire Act of 1968. Before this time flood
contract prices are negotiated and the
Superfund program were to be delayed choice of RAG depends on factors other insurance was generally considered
because of a lack of an adequate risk than cost. The existence of an explicit unfeasible. The HUD Act established a
transfer mechanism, then expending price for indemnification gives RACs the national flood insurance program, which
funds for RAC indemnification may be incentive to seek pollution liability made flood insurance available to.
justified. However, as noted above in insurance that is less expensive than the communities that adopted control
"Arguments in Favor of Option A", EPA-priced indemnification (or measures designed to promote
Federal agencies other than EPA, as development away from flood prone
insurance).'
well as many states, have had little or Incentive-basedapproach(1): Provide areas. The program was initially
no trouble retaining qualified RACs indemnificationfor a set price.The first established as a joint effort of the
absent contractor indemnification. market based incentive approach federal government and commercial
Consequently, it is reasonable to considered by EPA is a system whereby
conclude that, since RACs are willing to EPA Would behave as if it were an 3 "All-risk" insurance provides protection from
loss arising out of any fortuitous cause other than
perform essentially the same response insurer, and offer indemnification for a those perils or causes specifically excluded by
action activities for states and other price. The price of indemnification name. This is in contrast to other policies which
Federal agencies without would depend upon the _work being name the peril or perils-insured against.
46018 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
insurers. The most recent enactment of Proposal (RFP) a price schedule for actively develop new pollution
the program however, established the insurance/indemnification which would insurance products unless there is a
federal.government as the risk bearer. reflect EPA's valuation of various strong enough demand for these
Residents in eligible communities can magnitudes of insurance/ products to make them profitable. When
purchase flood insurance from licensed indemnification. Bidders (or Proposers) commercial insurers see enough
agents and brokers. would be given the option of requesting demand, and create a product that
Incentive-basedapproach(2): Provide EPA indemnification. ensures adequate coverage at a
indemnification, or reimburse a fixed For sealed bid procurements, EPA reasonable price, it will no longer be
amount for pollution liabilityinsurance. would adjust the submitted bids by necessary for EPA to consider offering
The second "incentive-based" approach adding to the bid EPA's valuation of the indemnification. As a condition of
considered by EPA is identical to the requested indemnification. That reimbursement, EPA could require
first, except that, rather than "selling" valuation would reflect, to the extent submission of copies of-insurance
indemnification to RACs, EPA would possible, the real cost to EPA of policies purchased (with evidence of
offer RACs a set price if the RACs providing indemnification, and would be premiums paid), thus monitoring the
purchase pollution liability insurance. In based on a combination of the market market price of insurance. Presumably,
other words, EPA would "'reimburse" price for insurance (the cost of which, EPA would then be able to reset
the RACGif the RAC purchased pollution presumably, EPA would be obliged to periodically the "fixed premium" it is
liability insurance, but the amount of the pay absent indemnification), and a willing to pay, based on the market
reimbursement would be EPA's subjective evaluation of the risk posed information gathered in the previous
valuation of the risk transfer, and would by the site in question. A contractor will period. In this way, government
be independent of the actual cost of the be paid an amount equal to the intervention in the market would be
insurance (thus, this approach differs submitted bid, not an amount equal to minimized, with EPA responding to
from the interim indemnification policy, the adjusted bid. For example, assume market signals rather than distorting
which calls for reimbursement of the that RAC X submits a bid of $5 million, market prices.
actual cost of any EPA approved and RAC Z submits a bid of $4.8 million. The use of market incentives (through
pollution insurance purchased by an However, RAC Z requests placing a cost on EPA indemnification)
RAC). The key characteristic of this indemnification valued by EPA at $0.4 would relieve EPA of the burden of
approach is the independence of the million. For purposes of the selection determining the level of "adequate
reimbursement amount from the actual process only, RAC Z is considered to indemnification" and,'just as
cost of purchased insurance. This gives have submitted a $5.2 million bid. RAC importantly, of determining the type of
RACs incentive to seek the least costly X is selected, and receives a $5 million RACs that should be covered by EPA
pollution liability insurance available. If contract. Under this approach, RACs are indemnification. Through the pricing
no insurance is available at a not reimbursed for the cost of insurance. mechanism, EPA would leave such
reasonable cost, RACs would still have (except insofar as the cost of insurance determinations to RAds. In effect, any
the option to self-insure (as an is included in the bid). Presumably, RAC that was willing to pay the EPA
alternative to EPA indemnification), in those costs will be reflected in the bids. price would receive indemnification;
which case EPA would "reimburse" to The procedure with negotiated each RAC would determine its own
the RAG an amount identical to the procurements is similar except, instead indemnification limit (that is, up to
amount that would have been of adjusting bids, the technical EPA's proposed maximum indemnity
"reimbursed" had the RAC purchased evaluation of proposals is adjusted. For limit level), based on the risk it
insurance. If the RAC were to self-insure example, EPA would subtract perceives and the price of additional
under this scheme, It would hlive to evaluation points from (or not award as indemnification.
demonstrate financial responsibility for many points to) proposals which include Another advantage to this approach is
the self-insured amount before EPA a request for EPA indemnification. Once that it makes it clear to RACs and to
would "reimburse". again, the cost of insurance is not commercial insurers the value EPA puts
Incentive-basedapproach (3): reimbursable. on section 119 indemnification. Under
Indemnification terms determined as I Argument in Favor of Option C. As the system currently in place (under the
partof the procurementprocess.The noted above, Option C differs from interim guidelines), EPA decides when
third "incentive-based" option that is Option B only insofar as Option C insurance is reasonably priced (among
being considered by EPA is to places a perceived cost on EPA other factors) and either reimburses the
incorporate indemnification decisions indemnification. Thus, it would provide RAC for the insurance or rejects the
into the procurement process. This an incentive for RACs to search actively insurance. After EPA rejects the
approach is similar to the first two for pollution insurance coverage (or the insurance, the RAC and the insurer
"incentive-based" approaches discussed equivalent) which is similar to EPA's know that the price for the insurance is
in that it-would require EPA to set indemnification but has a lower cost. too high, but they do not know what
explicit prices for insurance/ Encouraging RACs to seek the least price will be considered reasonable.
indemnification, but it differs in that costly risk transfer mechanism will Under the "market incentives"
there is no direct payment or ultimately save EPA resources, since approach, RACs and insurers will know
reimbursement for insurance/ EPA ends up paying for the cost of specifically what price will be
indemnification. Instead, the potential commercial insurance either via a cost considered reasonable by EPA without
RAG's bid (or proposal, in the case of reimbursement contract, or when the the trial and error inherent in the
negotiated contracts) is adjusted by the cost of insurance is included in a fixed- present system.
procuring official to reflect EPA's price bid. Arguments Against Option C. The
valuation of the RAC's insurance or Creating incentives for RACs to seek primary argument against the first two
request for indemnification. reasonably priced commercial insurance approaches is that they place EPA
Under this "bid-adjustment" is an important step in encouraging a unambiguously in the position of an
approach, EPA would include as part of viable commercial insurance market. insurer. EPA does not wish to foster the
an Invitation for Bid (IFB) or Request for The insurance industry is not likely to perception that its indemnification is a
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 46019
permanent alternative to commercial programmed layer of commercial to property insurance for inner-city
pollution liability insurance. These , pollution insurance. Under such a plan, property owners who were unable to
options could lead commercial insurers commercial insurers would provide obtain coverage from commercial
already active in the pollution liability primary pollution coverage with EPA insurers. The urban riots that occurred
market to withdraw if these insurers *acting as a reinsurer above this primary during the late 1960s made Commercial
perceive their products as unable to coverage up to a defined limit. This insurers hesitant to provide coverage in
compete with the price set for option could be established as a those areas. Urban areas had always
indemnification by the Federal temporary measure until commercial presented an increased risk to
government. Moreover, commercial insurers gain confidence in their ability commercial insurers since the density to
insurers who were considering to underwrite the RAC risk, thus which most urban areas were developed
developing pollution liability insurance allowing EPA to reduce or discontinue increased the possibility of a
products could be discouraged from its role in the transfer of RAC risk. conflagration. Intentionally ignited fires,
doing so if they perceive EPA's When the Federal government has like those that occurred during the riots,
indemnity price is too low for them to chosen to assist in specific insurance represented a risk that commercial
compete with. problems, the reinsurance option has insurers were unwilling to assume. A
The third approach of incorporating been the method of choice in many presidential committee was established
the decision to indemnify into the circumstances. Since the ultimate aim of to study the problem and made
procurement process also has its reinsurance is to spread the exposure recommendations that led Congress to
disadvantages. This approach has very and therefore the risk of loss, the public enact the Urban Protection and
little flexibility. For any given contract, as represented by the Federal Reinsurance Act. This Act established
the decision to request indemnification government has in some circumstances the National Insurance Development
or seek liability insurance can be made provided one avenue towards risk Fund providing riot reinsurance to
only once, i.e., at the bidding (or dispersal. Adoption of a reinsurance commercial insurers.
proposing) stage. For example, if EPA program could act as a catalyst for These programs establish precedent
inserts an indemnification clause into a insurers' entry into the pollution for the type of program that is being
fixed-price contract, and later insurance market by giving insurers considered by EPA. Under this option,
determines that pollution liability experience in the market without the the EPA program would serve as a
insurance is generally available and risk of paying out any large claims. temporary measure, operating until such
fairly priced, EPA cannot withdraw its Similar types of government time as commercial insurers gain
indemnification, since the RAC reinsurance programs have been confidence in their ability to underwrite
submitted (and EPA accepted) its established in several instances. Current the RAC risk. As more primary insurers
contract bid on the condition that EPA programs include the Nuclear Energy and reinsurers enter the market the
provide indemnification throughout Liability Insurance Program and the need for EPA reinsurance would
contract performance. Conversely, if Federal Riot Reinsurance Program, disappear.
EPA awards a contract to an RAC who among others. Both of these programs
The method used to establish a
has agreed to provide pollution liability were established by the government as
reinsurance agreement varies. Between
insurance, EPA cannot later provide a response to the inability or
commercial insurers, two types of
indemnification (if, for example, unwillingness of commercial insurers to
reinsurance agreements are generally
insurance becomes unavailable). To do assume a particular type of risk. The implemented. The first is a "specific"
so would be unfair to those potential majority of these and similar programs agreement where coverage is optional to
RACs who were not awarded contracts, sought to include commercial insurers in
the program in a way comparable to that both the insurer and reinsurer in that
some of whom may have not been neither party is universally obligated to
awarded the contract because they described in this option.. provide insurance. Each contract is
requested indemnification. The Nuclear Energy Liability
written on its own merit and negotiated
One disadvantage is common to all Insurance Program was established in
individually. EPA could adopt this type
three of the incentive based approaches. 1957 as an amendment to the Atomic
Energy Act. This amendment, called the of agreement and incorporate it into its
Compared to Option A and Option B, proposal evaluation process. As
these approaches are significantly more Price-Anderson Act, established a $560
million limit on liability arising out of a commercial insurers enter the market
of an administrative burden to EPA. they could be added to a list of potential
Calculating the value of transferring a nuclear accident. The Price-Anderson
Act required operators of nuclear insurers. Individual RACs could be
portion of the RAC risk may place a
reactors to purchase insurance up to this provided this list as sources in order to
substantial analytical and obtain the primary layer of insurance.
administrative burden on EPA. At this maximum limit or demonstrate the
ability to retain all or a portion of the .PAcould then negotiate a specific
time EPA does not possess the resources
amount. Insurance pools formed by the reinsurance agreement with the selected
to assess accurately the value of the commercial insurer. The advantage of
RAC risk. Obtaining the resources to commercial insurance industry currently
this approach is that as commercial
accomplish this task may add provides for coverage up to $160 million
per occurrence. The remaining limit is insurers enter the market and gain
substantially to the cost of choosing this underwriting experience, EPA could
option. provided by contributions from
individual operators. These gradually withdraw by slowly changing
D. Provide Reinsurance for a the reinsurance agreements.
contributions are limited to $5 million
Commercial Insurance Pool The second type of reinsurance
per operating license.
Summary. EPA has considered the The Federal Riot Reinsurance Program agreement generally used by
option of acting as a reinsurer 4 above a was established to provide equal access commercial insurers is called a treaty or
automatic agreement. Under this type-of
4 Reinsurance is the practice whereby one party,
agreement, the two parties agree in
assumed by the latter party under a policy or
called the reinsurer, in consideration of a premium policies of insurance which it has issued. The
advance to the terms of coverage
paid to him. agrees to indemnify another party, reinsured may be referred to as the original or involving a designated class of risk. The
called the reinsured, for part or all of the liability primary insurer, or the ceding company. liability of the reinsurer begins
.46020 Federal Register / Vol. 54, No. 209 / Tuesday,. October 31, 1989 /. Notices
automatically when the original insurer experience underwriting the RACs.,EPA a permanent government insurance
accepts the risk. EPA could adopt this could then gradually withdraw from the program.
method by identifying insurers willing to market by reducing the amount of
provide the primary layer of insurance coverage offered. This could be done 2.2 ProposedPolicy
and establishing automatic agreements either by increasing the stipulated limit EPA is proposing to offer Option C
.with these insurers. This list could then of primary insurance in an excess-of loss indemnification in sealed bid
be provided to contractors who could contract or, by reducing the proportion procurements; and, specifically, is
choose primary coverage on the most, of insurance carried in a risk sharing proposing to use the third incentive-
favorable terms. contract. based approach, where indemnification
.Specific and automatic reinsurance One of the biggest advantages of this terms are decided as part of the
agreements also may use' two basic "option is that it will save EPA resources procurement process. When submitting
methods of distributing the risk between by putting the responsibility for a bid, a bidderwill request some - - .
the insurer and the reinsurer. The combination of indemnification limit
administering claims upon commercial
reinsurer agrees to accept either: and deductible. For the purpose of
insurers. These insurers possess
* ,A share of the amounts of risk selecting the lowest •bidder, the
which.the primary insurer underwrites; experience administering claims and:
could perform this task more efficiently submitted bids'will be adjusted to
or,. reflect EPA's valuation of the requested
* An excess of the losses'beyond than EPA. Employing this optionwould
save the expense and time involved in indemnification. In' effect, EPA'will be
certain established limits. procuring the bidder who requires the
Reinsurance contracts that share the creating a claims administration
structure within EPA. At the same time least compensation where that
amounts of risk establish a ratio of
insurance provided by the primary whichever commercial insurers compensation consists of dollar
insurer and the reinsurer that is applied participate in insuring RACs to some payments plus some amount of
extent will gain experience in the indemnification coverage-from EPA.-
to every contract. For example, the
primary insurer may retain one-fourth of administration of RAC claims.. EPA is proposing to offer Option B
the, risk and the reinsurer assumes three- Arguments Against Option D. This indemnification to other types of RACs
fourths of the risk. The reinsurer is option does not substantially reduce (typically, cost-reimbursement RACs).
entitled to three-fourths of the premium EPA's exposure to risk or expenditures Even though they are offered
and would pay three-fourths of the for operating the section 119 indemnification, RACs arerequired to
losses. This form of reinsurance contract indemnification. Under this system -it is make "diligent.efforts" to obtain
allows primary insurers to provide likely that commercial insurers will only pollution liability, insurance. Cost
coverage in much larger amounts. write pollution insurance for companies reimbursement tcontractors would be
Reinsurance written as an excess of with the best loss histories and least reimbursed the reasonable cost of,
,loss contract primarily provides 'risk of claims against it. The "specific", purchased insurance..,
protection against large losses. Under ,reinsurance agreement is particularly
3.0 Discussion of Proposal Details,
this type of contract, the reinsurer has susceptible to this adverse selection 5
no obligation until losses are in excess since the agreement would be 3.1 Deductibles and Limits of Coverage
of the amount covered by the primary negotiated for every RAC contract. As a. Under Cost-Reimbursement Contracts
insurer. Some excess of loss contracts result EPA may still be forced to
are written so that the primary insurer indemnify the marginal or bad risks. In. The reasonable cost of liability
retains a share of the excess loss. , addition, the cost of any insurance -insurance is generally an allowable cost
'Excess of loss is the usual way that a provided by commercial insurers will be (thus reimbursable) under Federal,
contract for catastrophic reinsurance is reimbursed by EPA. Therefore, unless Acquisition Regulations .(FAR) section
written. commercial insurers eliminate EPA's 31. Specifically, the.*cost of insurance is
Argument in Favorof Option D. This role as insurer completely, the savings allowable under cost-reimbursement
option would serve as a catalyst for of providing some commercial insurance contracts if the insurance is "required or-
commercial insurers to enter the is not that great.' approved, andmaintained by the
pollution insurance market. Insurers contractor pursuant to the contract" [48
Another factor working against this CFR 31.205-19(a)(1)]. Also, the cost of
could provide whatever level of option is the past history of such
insurance that they felt comfortable. insurance is allowable if the types and
government insurance programs. Some extent 'of coverage follow sound
with. Even if the commercial layer of past efforts at cooperation between
insurance does not provide a great deal business practice and if the premiums
government and commercial insurers in are reasonable [section 31.205-19(a)(2)].
of coverage, insurers will gain providing insurance have not been a
experience underwriting the RAC risk. One can infer from this set of FAR
success. In'particular, the National requirements (in combination with
The reinsurance agreement and Flood Insurance Program was initially
contract can be structured .to provide CERCLA section 119) that EPA has the
established as a cooperative effort responsibility to reimburse contractors
constant encouragement to commercial 'between the federal government and the
insurers to assume greater portions of for the allocable portion of the cost of
commercial insurance industry. This insurance maintained by the contractor,
the risk. Particularly, if specific program has since been reestablished
reinsurance is offered as a program, the or, if EPA determines that insurance is
with the federal government acting as unreasonably priced or is unavailable,
amount of risk retained by the primary the insurer. This type of result would be
commercial insurer could be EPA may offer indemnification as a
unacceptable. Section 119 replacement for insurance that would
continuously under review and adjusted indemnification was enacted as an
as allowed by market conditions. The have been purchased by a firm following
interim risk transfer mechanism and not "sound business practices" (had that
variety of activities performed by RACs
could also be part of the evaluation. insurance been available at
5 "Adverse selection" is an imbalance in a risk reasonable" prices).
When capacity in the insurance exposure group, created when organizations that
industry expands, at least some perceive a high probability of loss for themselves • For most types of insurance, it is not
commercial insurers will possess seek tQbuy insurance to transfer that risk., ,necessary for the government to make a
Federal' Register / Vol. 54, No. 209 / Tuesday; October 31, 1989 / Notices '-'46021
The Agency is concerned with the indemnification of subcontractors must The disadvantage of this approach is
financial viability of a fixed-price bb provided by the prime contractors. that it would require significant Agency
contractor insofar as it affects the RAC's The Agency may, however, agree to administrative resources, and the time
ability to complete the project. indemnify the prime contractor with required to process subcontractor
Generally, the Miller Act (40 U.S.C. respect to liability arising as a result of applications could reduce the pace of
270a-270f) requires a construction the prime's indemnification of the cleanups at Superfund sites.
contractor to post a performance bond, subcontractor. In effect, the Agency The third subcontractor
guaranteeing the government that the would be extending section 119 indemnification option is to not
job will be completed. If the contractor indemnification to the subcontractor. indemnify any subcontractors. Under
fails to complete the project, the Section 9 of the Proposed Guidance this option the prime contractor would,
government can call on the surety to outlines policies and procedures for of course, be free to include any
complete it. It is possible, however, that such an extension of an indemnification indemnification terms in its
surety companies may be unwilling to agreement to subcontractors. subcontracts. The Agency, however,
bond some Superfund RACs without In order for the Agency to indemnify would not indemnify the prime
adequate third-party liability coverage, the prime contractor with respect to any contractor with respect to any liability
because the surety will be called on to liability arising as a result of an arising from indemnification agreements
complete the job if the RAC is sued and agreement between the prime contractor in-subcontracts (that is, EPA
forced into bankruptcy as a result 6f and subcontractor, the terms and indemnification would-not "pass
inadequate third-party liability conditions of that agreement must be through" to subcontracts). This option
coverage. In that case, it may be in the consistent with the requirements of has the obvious advantage of
Agency's interest to offer section 119. The Agency has considered eliminating government administrative
indemnification to fixed-price RACs, if three options for ensuring that cost, while posing the risk that the
adequate insurance may not be indemnification agreements with Agency may be unable to procure
available. subcontractors (through prime subcontractors at certain sites.
The Agency is also concerned with contractors) satisfy the requirements of Furthermore, the Agency would no
the degree of competition in sealed-bid
procurements. It is possible that some
section 119 (as well as any other longer retain the option of agreeing to
firms, in the absence of adequate and
conditions required of RACs by EPA). indemnify subcontractors as a
The first option would require prime . replacement for liability insurance if the
reasonably priced insurance, will refrain contractors to enforce the requirements Agency determines that the insurance is
from bidding on Superfund fixed-price
of section 119 and EPA policy. Ifa claim too expensive.
contracts (those firms may be unwilling
were to arise, the Agency would inspect• The Proposed Guidance reflects the
to self-insure and include the cost of
self-insurance in their bids). Therefore,
the records maintained by the prime second option under consideration by
even if the availability of surety bonds
contractor to determine if the the Agency. Upon further consideration.
prerequisites to indemnification had the Agency may determine to include
is not a problem, it may be in the
Agency's interest to offer been met by the subcontractor. This any one of the three options in the final
indemnification as a substitute for
option has the advantage of economy of indemnification guidance. The Agency is
pollution liability insurance.
resources in that it minimizes EPA soliciting comment on each of the three
Section 11 of the proposed guidance oversight of the prime contractor.s proposed approaches to indemnifying
includes an indemnification scheme for administration of subcontracts. Its major subcontractors.
fixed-price contracts that is designed to disadvantage is that it-would leave the
prime contractor (and subcontractor) 3.4 Otherissues
discourage requests for indemnification
unless the RAC requires coverage for ignorant of whether EPA would actually Application. Sedtion 4 of the guidance
pollution liability, but insurance is provide indemnification if the defines the application of the EPA
unavailable, inadequate, or subcontractor were faced with a claim. section 119 indemnification program by
unreasonably priced. Before requesting The contractor would be certain of EPA* stating that the guidance applies to
indemnification, a bidder must consider coverage only after EPA had reviewed indemnification of all RACs (for work
carefully its need for third-party liability the documentation collected by the started after the date of enactment of
coverage, the cost of commercial prime contractor and determined that SARA). No indemnification other than
insurance to cover that liability the documentation was not deficient in section 119 indemnification is to be used
(presumably, that cost would be any way. by EPA RACs.
included in the bid), the possibility of The second option considered by the Some RACs have suggested that EPA
self-insurance, and EPA's evaluation of Agency is reflected in section 9 of the supplement its use of section 119
the cost of indemnification at that site. Proposed Guidance. Under this option, indemnification authority with other
The bidder may find that a request for EPA would review all subcontractors' forms of indemnification, such as the
indemnification is the difference requests for indemnification. The prime indemnification called for by the
between a low bid and the second contractor would be able to "pass insurance clauses at FAR section
lowest bid. through" EPA indemnification only if 52.228-7, EPAAR section 1552.228, or
EPA had determined that the FAR section 52.250-1 (i.e.,
3.3 Indemnification of Subcontractors subcontractor's indemnification request "Indemnification Under Public Law 85-
Under CERCLA section 119, both met all the requirements of section 119 804"). EPA has determined that CERCLA
prime contractors and subcontrators are and section 7 of the proposed guidance.. section 119 is the sole authority for RAG
defined as RACs. Consequently, there is The advantage of this approach is that it indemnification. In drafting SARA,
no distinction between the Agency's allows the Agency to exercise discretion Congress had the opportunity to
authority to agree to indemnify prime in determining what subcontractors it authorize EPA to provide any form of
contractors and its authority to agree to will indemnify, and it allows the indemnification, including those forms
indemnify subcontractors. Because the subcontractor to know the terms of its found in the FAR/EPAAR clauses.
Agency does not have privity of contract contract (.e., the indemnification terms) mentioned above. It is a rule of statutory
with subcontractors, however, any before it enters into the contract. construction that specific provisions
Federal Register /Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 46023
govern general provisions. Accordingly, agreements with RACs. The Agency individuals in the insurance industry
the detailed, specific statutory scheme requests comment on the feasibility and and in the RAC community; the Agency
of section 119 necessarily supplants and advisability of using underwriting is proposing a maximum limit of $50
supercedes the broad, general contract criteria, and on the varieties of criteria million. The Agency is not suggesting
authority that EPA relied on before the that should be used. Careful that this maximum limit has been
enactment of SARA. Moreover, there is consideration should be given to how derived from formal actuarial studies, or
no indication in section 119 or its the indemnification process and from a statistical analysis or formal risk
legislative history that Congress did not underwriting criteria would be management analysis of any kind.
intend the provisions of section 119 to implemented in a sealed bid vs. a Rather, it represents the informed
provide exclusive indemnification negotiated procurement, and how the professional judgment of EPA staff of
.authority. indemnification process and the maximum reasonable amount of
IndemnificationRequest. EPA underwriting criteria would be insurance/indemnification that would
indemnification is intended to provide a implemented in prime contracts and satisfy CERCLA section 119, protect the
temporary substitute for pollution subcontracts. Superfund, and provide protection from
liability insurance when that insurance Terms and Conditions.Section 8 of the risk of pollution liability that is
is inadequate, unavailable, or the guidance presents the general terms adequate to ensure that the Agency can
unreasonably priced. Section 119 and conditions of EPA indemnification. attract qualified contractors to perform
requires RACs to make "diligent efforts" These terms and conditions reflect the cleanup activities at Superfund sites.
to obtain pollution liability insurance as scope, requirements, and limitations of The deductible amount (or "self-
a condition of federal indemnification. indemnification found in CERCLA insured retention") is defined as a "per
Because EPA indemnification provides section 119. occurrence". That is, the RAC must
the equivalent of "free insurance" to The definitions of limits and incur a loss on each claim equal to the
RACs, contractors have little incentive deductibles are similar to those found in deductible amount before-EPA will
to look for insurance. A failure by-the commercial policies. The indemnify. There is, then, no logical
RACs to search for and purchase indemnification limit is a "contract upper limit to the potential loss that an
insurance would be contrary to the aggregate" limit; EPA will pay claims RAC may incur; the loss is limited only
letter and spirit of section 119, and and the cost of litigation until the by the number of occurrences.
would leave EPA as the RACs' insurer contract aggregate is reached, regardless Section 8(e) defines the coverage term
for the indefinite future. Consequently, a of the number of claims, whether the of EPA indemnification. Today,
requirement to search diligently for incidents leading to claims occurred at commercial pollution liability policies
insurance coverage has been included one site or many, and regardless of generally have a coverage term
as a prerequisite for EPA whether the claims all occur in one year extending at most two years beyond the
indemnification. or are spread out over a long time period policy period. The Agency recognizes
Section 7 of the guidance includes the* (see "Coverage Term", however). that a two year "completed operations"
specific steps that an RAC must take in Coverage at a particular site or for a or "extended reporting" period does not
order to be eligible for EPA particular firm is not necessarily limited fit the entire liability exposure at a
indemnification. It should be noted that to the contract aggregate amount. For a Superfund site. On the other hand, a
the RAC must submit the required particular site, several EPA contracts very lengthy coverage term (of, for
information, and EPA must approve the may be involved (for example, a TAT example, twenty or more years) may not
request, before an indemnification contractor and an ERCS contractor may be acreptable to the Agency because of
clause will be included in the contract. be present at a removal site), each of the difficulties created by carrying
For EPA RACs, this is a minor change which has coverage up to its contract contingent liability on its books for a
from the procedures used under the aggregate amount. A single RAC may period that far exceeds the life of the
interim indemnification policy, where have several contracts with EPA, each program as currently authorized.
standard indemnification language was of which provides coverage up to the Furthermore, EPA indemnification is
routinely included in the contract, and contract aggregate amount (each intended to be a temporary substitute
RACs were required to submit the contract, of course, provides for for pollution liability insurance. It is
"diligent efforts" documentation within indemnification for work conducted unlikely that commercial insurers will
30 days after signing the contract. under that contract only). offer a coverage period of greater than
Section 7(h) of the guidance notes that EPA is proposing to set the maximum ten years anytime in the near future; if,
EPA may decline to agree to indemnify indemnification limit at $50 million. As then, EPA offers a coverage period of
an RAC even if the RAC satisfies all the noted above, the Agency has been greater than ten years, any commercial
requirements of section 119. This unable to determine the amount of insurance that is offered would not
paragraph reflects the concern that EPA insurance that would be purchased by a replace completely the broader EPA
may become the insurer of last resort for firm following "sound business practice" coverage. Consequently, the EPA
RACs that are unable to satisfy the under Superfund contracts (see indemnification program would not be a
underwriting criteria of commercial "Indemnification under Cost temporary substitute; instead, it would
insurers. That is, insurers may refuse to Reimbursement Contracts", above). be at least a long-term supplement to
provide coverage for certain RACs Consequently, the Agency was unable to commercial insurance. Therefore, the
because, for some reason, those RACs infer from its research the maximum Agency is proposing to limit its coverage
pose an unacceptably high risk. As a amount of insurance coverage required term to a ten year completed operations
result of this process of adverse by Superfund contractors following period that is, the indemnification
selection, the Agency may be left with "sound business practice". The Agency agreement will cover claims presented
providing coverage only for the very understands, however, that a maximum up to ten years after the completion of
worst risks. Consequently, the Agency is amount must be set, both to protect the work at the site.
considering using some sort of - Superfund and to satisfy the The Agency requests comment .onthe
underwriting criteria when it considers requirements of CERCLA section 119. terms and conditions of its proposed
entering into indemnification Based on its consultations with indemnification agreements.
46024 Federal Register I Vol. 54, No. 209 / Tuesday, October 31, 19.89 / Notices
Indemnificationof PRPRA Cs. 2. Authority the SARA section 119 Interim Policy (as
CERCLA section 119(c), through E.O. These guidelines are required by specified in OSWER Directive #9835.5)
12580, gives EPA the discretionary section 119(c)(7) of the Comprehensive will be replaced, at the mutual consent
authority to agree tb indemnify RACs Environmental Response, of EPA and the contractor, with
working for PRPs, where the PRP is Compensation, and Liability Act of 1980 indemnification terms consistcnt with
conducting the cleanup pursuant to a (CERCLA), 42 U.S.C. 9601, et seq., as the policies found in this guidance
consent decree or an administrative amended by the Superfund Amendments document. Those terms will be
order. The purpose of this authority is to and Reauthorization Act of 1986 applicable retroactively to the date of
ensure that a lack of pollution liability (SARA), Public Law 99-499. In E.O. enactment of SARA, or to the starting
insurance does not eliminate the 12580, the President delegated to EPA date of the contract, whichever is later.
possibility of PRP cleanups. Section the responsibility for issuing section 119 (d) Subject to all the,requirements of
119(c)(5)(C) imposes significant guidelines and regulations that establish these guidelines, any indemnification
limitations on EPA's ability to indemnify an indemnification program funded by agreement provided by EPA to a prime
PRP RACs. To indemnify a PRP RAC, the Hazardous Substance Superfund (52 contractor may be provided by the
the Agency must first determine that the FR 2923 (Jan. 29, 1987)). prime contractor to its subcontractors if
combined financial resources of all PRPs the agreement is approved by EPA at
3. Scope the time of the award of the subcontract.
at the site are inadequate to provide
These guidelines govern That is, the prime contractor can agree
indemnification against the reasonable
indemnification by EPA of all RACs that to indemnify a subcontractor, and EPA
potential liability of the contractor at the
work under contract at NPL or removal may indemnify the prime contractor
site. Before the Agency can pay a claim, with respect to the prime contractor's
the contractor must exhaust all action sites for EPA, States (or political
subdivisions) under cooperative obligations that may arise as a
administrative, judicial, and common consequence of its indemnification of
law claims for indemnification against agreement with EPA, and potentially
responsible parties (PRPs) under a the subcontractor (see section 9, below).
the PRPs. Finally, section 119(c)(6)
provides for recovery from the PRPs of CERCLA administrative order or 5. Abbreviations
consent decree. EPA interprets section
all indemnification costs paid by EPA. CERCLA-Comprehensive
119 to permit the Agency to provide'
EPA's interim indemnification indemnification to RACs working for Enyironmental Response,
guidance included policies and federally recognized Indian tribes Compensation, and Liability Act of
procedures for EPA indemnification of pursuant to a cooperative agreement 1980 (as amended)
RACs working for PRPs. Nevertheless, with EPA. These guidelines also apply EPAAR-EPA Acquisition Regulations
EPA has not indemnified any RAC to EPA indemnification of SITE program FAR-Federal Acquisition Regulations
working for a PRP, having received only vendors conducting field investigations NPL-National Priorities List
one request, which was denied on the pursuant to SARA section 311(b), PRP-Potentially Responsible Party
grounds that the PRP did not recipients of training grants under SARA RAG-Response Action Contractor
demonstrate that it had inadequate section 126, and of RACs working for SARA-Superfund Amendments and
financial resources to provide other Federal agencies (such as the U.S. Reauthorization Act of 1986
indemnification to the RAC. Based on Army Corps of Engineers) at EPA-lead 6. Definitions
this experience, it is reasonable to sites under a Memorandum of
conclude that EPA indemnification of Understanding (MOU) or an Inter- Terms not defined in this section have
PRP RACs is not prerequisite to PRP Agency Agreement with EPA. Where the meaning given by CERCLA. as
cleanup of sites. Section 17 of the other Federal agencies indemnify RACs amended by SARA.
Proposed Guidance, which asserts that under section 119, those indemnification "Claim" means the receipt by the RAC
EPA will not agree to indemnify RACs agreements must not be inconsistent of a written demand for money,
working for PRPs, follows from that with the broad policies found in this naming the RAC and alleging a
conclusion. guidance document. release from RAC response action
activities.
Guidance Document-EPA 4. Application "Indemnification",for the purpose of
Indemnification of Superfund Response (a) These guidelines govern EPA's these guidelines, means an
Action Contractors--Introduction indemnification of RACs for work agreement under which EPA will
This guidance fulfills the requirement initiated after October 17, 1986, the date compensate certain losses suffered
of enactment of SARA. These guidelines by a RAG, and the actual payment
of CERCLA section 119(c)(7) and E.O.
12580, which require EPA to develop supercede OSWER Directive #9835.5, of that compensation.
guidelines to carry out subsection 119(c). "EPA Interim Guidance on "Non-federalsources" means
Indemnification of Superfund Response commercial insurance, PRP
1. Purpose Action Contractors Under Section 119 of indemnification, state
SARA". indemnification, or other alternative
The purpose of the section 119 (b) These guidelines will govern all risk transfer mechanisms.
guidance is to provide policies and RAC indemnification by EPA for future "ResponseAction Contractor",as
procedures by which the Environmental response action contracts. provided in section 119(e)(2), means
Protection Agency (EPA) may indemnify (c) Contract indemnification terms any person who enters into a
response action contractors (RACs) for (under EPAAR 1552.228-70) rather than response action contract to provide
cAims that result from a release of a these guidelines will apply to work services directly related to any
hazardous substance, pollutant or performed at a site after the date of release or threatened release of a
contaminant due to RAC negligence enactment of SARA only if response hazardous substance or pollutant or
arising out of response action activities work at the site was initiated under an contaminant from a facility, and
at a National Priorities List (NPL) or EPA contract prior to SARA's date of any person hired or retained by
removal action site. enactment. Indemnification terms under such a person. It also includes
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 46025
recipients of cooperative (ii) A copy of each application the RAC against third party liability
agreements under section 311(b) submitted, insurance policies offered (including the expenses of litigation or
and recipients of grants pursuant to (including the declaration page), and settlement) for negligence arising from
section 126(g) of SARA. any rejection letters received. If the RAC's performance in carrying out
"ResponseAction Contract'"as pollution liability insurance was offered the response action contract. Such
provided in section 119(e)(1), means by a commercial insurer, but not indemnification shall apply only to
any written contract or agreement accepted by the RAC, an explanation of liability not compensated by insurance
entered into by an RAC with the the reasons why such coverage was or otherwise and shall apply only to
President, any Federal agency, a rejected must be included. liability which results from a release of
state or political subdivision under (e) The EPA will not enter into an a hazardous substance, pollutant, or
a cooperative agreement with EPA, indemnification agreement until the contaminant if such release arises out of
or any PRP under an order or RAC has submitted the documentation the response action activities of the
decree, to provide response action required in (b) and (d). EPA will not contract.
at an NPL or removal action site. enter into an indemnification agreement (b) EPA indemnification is subject to
if it determines that the documentation limits and deductibles. For the purpose
Indemnification Requirements, Terms, submitted is insufficient, or if it
and Conditions of determining the amount of the
determines that the RAC's efforts to indemnification limit and deductible, the
7. Indemnification Request obtain insurance were not sufficiently expenses of litigation or settlement are
diligent. considered part of the liability covered
(a) EPA will not indemnify RACs that (f) If the RAC is working under a
fail to meet the statutory requirements by the indemnification agreement. That
multi-site contract, the "diligent effort" is, there is not a separate limit or
of section 119. EPA will not enter into an information must be updated and
indemnification agreement with an RAC deductible for expenses of litigation or
resubmitted within 30 days of the RAC settlement. The amount of the
until the RAC submits the beginning work at a new site (as part of
documentation described in section 119 indemnification limit and deductible
the indemnification agreement, the RAC depends on the type of contract entered
and in this guidance document. will have agreed to make such "diligent
(b) To be eligible for indemnification into (see below).
efforts" each time work is started at a (i) The indemnification limit is defined
by EPA, the RAC shall submit evidence new site (see 7(b)(iii), above)).
of the following: as a contract aggregate limit.
(i) If previously purchased insurance (ii) The indemnification deductible is
(i) That its potential third party covers work at the new site, and the
liability is not covered by insurance a per occurrence deductible. There 6
is no
EPA has already determined that the aggregate limit to the deductible.
available at a fair and reasonable price purchase (and maintenance) of that
at the time the contract to perform a (c) EPA indemnification will not cover
insurance satisfies the diligent effort liabilities (including the expenses of
response action is entered into, and that requirement for that contract, then there
adequate insurance is not generally litigation or settlement) that were
is no need to submit additional
available; caused by the conduct of the RAC
documentation for that site. (including any conduct of its directors,
(ii) That it has made diligent efforts to (ii) For certain types of contracts,
obtain insurance coverage from non- where a search for insurance each time managers, staff, representatives or
federal sources (or, if it is a cost- new site work starts is inappropriate or employees) which was grossly negligent
reimbursement RAC, it has satisfied the impractical, EPA may waive the or constituted intentional misconduct.
minimum insurance requirements of requirement to search for insurance Nor shall the RAC be indemnified for
10(b), below); each time new site work starts. Where liability arising under strict tort liability,
(iii) And, under a multi-site contract, EPA has granted such a waiver, the or any basis of liability other than
that the RAC also has made (or agrees RAC is required to resubmit "diligent negligence.
to make) such diligent efforts (or, if it is efforts" documentation every 12 months. (i) EPA indemnification will apply if
a cost-reimbursement RAC, it will In any case, a RAC under a multi-site the RAC is found to be not liable for
otherwise satisfy the requirements of indemnification agreement must notify alleged negligence, or if a negligence suit
10(b)) every time it begins work at a EPA before work (covered by the is settled. That is, EPA indemnification
new facility. indemnification agreement) begins at a will cover the expenses of litigation or
(c) Due to the variability of market new site. settlement subject to the terms and
conditions, EPA will determine on a (g) EPA reserves the right to change conditions of the indemnification
case-by-case basis whether adequate the frequency and content of agreement (such as limits and
insurance is available at a fair and documentation submittal requirements, deductibles).
reasonable price at the time and also to direct indemnified RACs to (ii) EPA indemnification will not apply
indemnification documentation is purchase insurance from insurers if the RAC is found both strictly liable
submitted. This determination will be identified by EPA. and negligent, and the cause of action is
based on the documentation submitted (h) EPA may apply underwriting not divisible.
in fulfillment of the diligent effort criteria in addition to the specific (d) If an RAC has an indemnification
requirement, or on any other insurance requirements of this section. That is, agreement with EPA, the RAC must
market information available to EPA. EPA may decline to enter into an promptly notify EPA of any claim or
(d) To demonstrate that diligent indemnification agreement with an RAC action against the RAC that may involve
efforts have been made to obtain non- even if the RAC meets all the indemnification. Also, the RAC must
federal pollution liability insurance requirements of the FAR, CERCLA promptly notify its insurers of any claim
coverage, an RA C must submit in section 119, and this guidance.
writing: That is. the amount of deductible that must be
(i) The names and addresses of at 8. Indemnification Terms and incurred is limited only by the number of
least three commercial insurers or Conditions occurrences, whereas the total amount of
indemnification payments per contract is limited by
alternative risk financiers to whom the (a) Where EPA has agreed to the defined "indemnification limit", which is
RAC has submitted applications; and indemnify an RAC, EPA will indemnify invariant with respect to the number of occurrences.
46026 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
or action that may involve EPA approval. This will avoid Indemnifying and maintain all insurance required by
indemnification,-even if the RAC subcontractors that are determined to law or regulation including:
believes that its insurance is not present an adverse risk and to whom (i) Insurance required for cost
applicable to the claim or action. indemnification would be denied reimbursement contracts by part 28 of
Indemnification is conditional on pursuant to paragraph 7(h). the Federal Acquisition Regulations,
prompt receipt from the RAC of copies (c) EPA indemnification limits and (ii) Commercial general liability
of the complaint (or other claim), the deductibles are unaffected by the insurance for bodily injury, death or loss
notice to the insurer, and the insurer's number of subcontracts entered into by of or damage to property of third
response. the prime contractor. That is, the limit of persons in the minimum amount of
(i) For the purpose of this guidance, EPA's obligation and the deductible
.prompt" action is defined as action $1,000,000 per occurrence, and
specified in an indemnification
within twenty days of the date when the agreement with a prime contractor
(iii) Any additional insurance EPA
RAC knew or should have known of the applies jointly to the prime contractor
may require.
claim or event. and all subcontractors. (b)Indemnification and Insurance:
(e) Coverage Term: Subject to the (d) The prime contractor is free to Any RAC working for EPA under a cost>
other terms and conditions listed in this include any limit or deductible in its reimbursement contract who requests
document, an EPA indemnification contract with the subcontractor (for that EPA enter into an indemnification
agreement will cover claims arising (and example, the prime contractor may wish agreement must procure and maintain
reported to EPA) during the period of to provide a small deductible for a small pollution liability insurance for bodily
performance of the contract, plus any company). EPA's obligation, however, is injury, death or loss of or damage to
time within ten years after the contract governed by its indemnification property of third persons in the
term. For multisite contracts, the agreement with the prime contractor.7 minimum amount of $1,000,000 per
coverage term, with respect to an (e) Subcontractors are defined as occurrence (or self-insure for the same),
individual site, is theten year period RACs. Consequently, subcontractors are or it must demonstrate that it has made
following the RAC's completion of work subject to all indemnification diligent efforts to obtain such pollution
(as specified in the Work Assignment or requirements, terms, and conditions. liability insurance (and, despite such
other relevant work order) at the site. These applicable requirements include diligent efforts, has failed to procure
9. Subcontractors the reporting requirements of section 7, reasonably priced insurance), and,
above. That is, the subcontractor must under a multi-site contract, agrees to
(a) EPA will not agree to indemnify make such diligent efforts every time
demonstrate that it has made diligent
subcontractors directly. However, with efforts to obtain pollution liability work begins at a new site. EPA will not
the prior written permission of EPA, insurance, and agree to continue to agree to indemnify a RAC who does not
prime contractors can include make such efforts. The subcontractor either purchase the required insurance
subcontractors in their indemnification or demonstrate diligent efforts, nor will
should forward all documentation to the
agreements with EPA. Thus, EPA will prime contractor, and the prime EPA make indemnification payments to
enter into no more than one an RAC who has entered into an
indemnification agreement per contract, contractor should forward copies of the
with that agreement affording coverage documentation to the contracting officer indemnification agreement but has
to the prime contractor, including any (or other appropriate official). The failed to demonstrate adequately that it'
obligation the prime contractor may contracting officer (or other appropriate has made diligent efforts each time work
incur as a result of its indemnification official) may consent to the subcontract started at a new site (possible
agreements with its subcontractors. See including the indemnification clause exception: See 7(f)(ii), above).
also the approval requirement in (b), (see paragraph 9(b), above) only if the (i) The RAC must procure and
below. contracting officer has determined, maintain pollution liability coveragefor
(b) The prime contractor confers based on the documentation supplied by professional liability and/or general
indemnification to the subcontractor by the subcontractor (through the prime liability, as appropriate.
including in the subcontract an contractor), that the subcontractor has (ii) The minimum amount of pollution
indemnification clause by which the satisfied the reporting requirements of liability insurance to be purchased will
prime contractor agrees to indemnify the section 7. increase by 25% per year unless EPA
subcontractor. That clause must have (i) A demonstration of diligent efforts determines that the increased amount of
terms and conditions (except for limits by the prime contractor is not sufficient insurance is not generally available.
and deductibles, see below) identical to to demonstrate that, by implication, Thus, where t is defined as the number
those found in the clause by which EPA insurance is unavailable to the of years elapsed since promulgation of
agrees to indemnify the prime subcontractor. this policy guidance, the minimum
contractor. EPA will indemnify the Indemnification Terms and Conditions amount of pollution liability insurance
prime contractor with respect to any for Specific Contract Types required in year t is equal to:
liability incurred by the subcontractor(s) $1 million *1. 2 5t
pursuant to an indemnification 10. RACs Working for EPA Under Cost
agreement between the prime contractor Reimbursement Contracts (iii) The demonstration of "diligent
and any subcontractor (subject to the (a) RACs working for EPA under cost efforts" is defined in 7(d), above. Those
indemnification limits and deductibles reimbursement contracts must procure
diligent efforts must be deemed
specified in the prime contract). EPA, satisfactory by EPA.
however, must approve (in writing) the 7 For example, if the indemnification agreement (c) Reimbursement: RACs working for
subcontract which contains the between the prime contractor and subcontractor EPA under cost reimbursement
indemnification agreement between the calls for a $50,000 deductible, and the agreement contracts shall submit to the Contracting
prime contractor and subcontractor. between EPA and the prime contractor calls for a Officer for prior approval all insurance
$200,000 deductible, then, in the event of a claim for
Accordingly, no indemnification $300,000, the subcontractor incurs a $50,000 loss, the policies (or documentation of all self-
agreement shall be included in any - prime contractor incurs a $150,000 loss, and EPA insurance plans) for which
subcontract without first obtaining EPA incurs a $100,000 loss. reimbursement will be sought from EPA.
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 46027
(i) Any cost incurred within the EPA (iv) For RACs requesting (b) RACs that seek EPA
indemnification deductible amount (see indemnification limits of $25 million or indemnification, and are working for
below) will not be reimbursed as either less, but more than $10 million, the EPA under fixed price contracts,
direct or indirect cost. The RAC may deductible amount shall be equal to 5% including RACs working for the U.S.
purchase insurance to cover the of the indemnification limit in excess of Army Corps of Engineers at EPA-lead
indemnification deductible amount, but $10 million, plus $250,000. That is: sites, must procure and maintain all
the cost of that insurance is not' $250,000 + (.05 * (L-$10,000,000)) insurance required by the Contracting
reimbursable (nor is any portion of the Officer.
deductible amount of that insurance Where L is the indemnification limit.
(c) RACs working for EPA under fixed
reimbursable as either a direct or (v) For RAGs requesting price contracts will not be reimbursed
indirect cost). indemnification limits of $50 million or the cost of purchased insurance (except
less, but more than $25million, the insofar as the cost of insurance may be
(d) Self-Insurance: If an RAC proposes
to self-insure against pollution liability, deductible amount shall be equal to 10% reflected in the fixed price).
and seeks reimbursement for the cost of of the indemnification limit in excess of,
(d) All indemnification agreements
self-insurance or seeks to satisfy the $25 million, plus $1,000,000. That is:
must contain a limit of indemnification
"minimum insurance" requirement of $1,000,000+(0.1 * (L-$25,000,000)) and a deductible amount. A firm fixed-
section 10(b) through self-insurance, it Where L is the indemnification limit. price RAG may request any amount of
must demonstrate to EPA financial Therefore, a cost reimbursement RAC indemnification coverage (not to exceed
responsibility for the amount of self- requesting the maximum per contract $50 million), and any deductible (with a
insurance proposed. Financial indemnification limit of $50 million will minimum deductible of $10,000) as part
responsibility may be demonstrated by be subject to a deductible of $3.5 million of its bid.
letter of credit, surety bond, trust fund, per occurrence. (i) The Invitation For Bid (IFB) will
escrow account, or other method (f)Limits, Deductibles, and Purchased include a "price schedule" for
approved by the EPA Contracting Insurance: Any pollution liability indemnification (with prices depending
Officer. insurance (or self-insurance), for the on.the size of the limit and size of
(i) A demonstration of financial cost of which EPA reimbursed the RAC, deductible amount). When EPA
viability, by itself, does not constitute an reduces the limit of EPA indemnification evaluates a bid, it will consider the
adequate demonstration of financial on a dollar for dollar basis. Further, the requested indemnification coverage to
responsibility. RAC must exhaust both the available be part of the bidder's requested
(ii) To be eligible for reimbursement of insurance coverage and the EPA remuneration. That is, when selecting
the cost of self-insurance, a RAC must deductible (found in the indemnification the lowest bidder for a project, EPA will
satisfy the applicable requirements of 48 agreement) before EPA will make an evaluate the "net bid", i.e. the bid plus
CFR Parts 28, 30, and 31, and 4 CFR Part indemnification payment. For example, the value (as reflected in the price
416. if a RAC has an indemnification schedule) of any requested
(e) Limits and Deductibles: Where agreement with EPA that includes a $5 indemnification. Consequently, bidders
EPA has agreed to indemnify a cost million limit (thus, a $100,000 should consider carefully their
reimbursement RAC working for EPA, deductible), and has $1 million of estimation of the value of EPA
the limit of indemnification included in pollution liability insurance coverage, indemnification before requesting such
the indemnification agreement shall be then the RAG must incur $1,100,000 indemnification.
requested by the RAC. The limit must be before EPA will make indemnification (ii) Model price schedules will be
not less than $1 million and not more payments, and EPA's obligation to published in a supplement to this policy
than $50 million. The deductible to be indemnify is limited to $4 million ($5 guidance.
incurred by the RAC will depend on the million from the indemnification (iii) Once included in the contract of a
limit chosen. Both the indemnification agreement, less $1 million purchased firm fixed-price RAC, indemnification
limit and the deductible amount shall be insurance). Any deductible amount on terms and conditions cannot be
specified in the indemnification the commercial insurance policy (or self- modified.
agreement. insurance) is irrelevant to EPA's (e) RAGs working for EPA under firm
(i) For RACs requesting
coverage trigger. fixed price contracts are deemed to have
indemnification limits of $1 million, the' met the "diligent efforts" requirements
11. Indemnification of BA Cs Working
deductible amount shall be equal to 1% of section 7, above. Because of the
for EPA with Firm Fixed Price[Sealed
of the indemnification limit (i.e., implicit "penalty" associated with
$10,000). Bid) Contracts'
indemnification of fixed-price RACs
(ii) For RACs requesting (a) General: Although the Government (through the bid evaluation scheme), it
indemnification limits of $5 million or is not ordinarily concerned with the can be assumed that adequate
less, but more than $1 million, the contractor's insurance coverage if the "reasonably priced" insurance is not
deductible amount shall be equal to 2% contract is a fixed price contract, EPA available if a fixed-price RAG requests
of the indemnification limit. That is: recognizes that a RAC cleaning up a indemnification.
.02 ° L Superfund site may require insurance
12. Indemnificationof RA Cs Working
coverage against third-party liability,
Where L is the indemnification limit. and that, in some cases, adequate for EPA UnderNegotiatedFixedPrice
(iii) For RACs requesting Contracts
insurance may not be available. In such
indemnification limits of $10 million or
cases, and from a bidder's perspective, (a) For the purpose of indemnification,
less, but more than $5 million, the
EPA indemnification may be a RACs working for EPA under negotiated
deductible amount shall be equal to 3% prerequisite to cleanup activities at the fixed price contracts (including RACs
of the indemnification limit in excess of site. Therefore, EPA will offer limited under fixed rate contracts with some
$5 million, plus $100,000. That is: indemnification against third-party cost elements reimbursable, such as
$100,000+(.03 * (L-$5,00,000)) pollution liability to all firm fixed price Time-and-Materials Contracts)-will be
-, Where L is the indemnification limit. RACs. - considered cost reimbursement
46028 Federal Register,/ Vol. 54, No. 209 / Tuesday, October 31, -1989 /Notices
contractors. If a negotiated fixed price, * an indemnification agreement with a (d) EPA will agree to indemnify a
RAC requests indemnification, it will be grantee, the grantee must satisfy'the RAC working for a state (or political
subject to the same insurance requirements of section 7 of this' subdivision) or federally-recognized
requirements and indemnification terms document (Le., the grantee must Indian tribe even if that entity has
and conditions as cost reimbursement demonstrate that it has made diligent agreed to indemnify the RAC.
contractors (see section 10, above). efforts to obtain pollution liability Responsibility for making -
insurance from non-federal sources). indemnification payments will be held
13. Indemnification of SITE Program
(i) The cost of insurance purchased jointly by the EPA and the state (or
RAGs
pursuant,to section 7 will not be. 'political subdivision or federally-
(a) Technology vendors participating reimbursed by EPA. The grantee should recognized Indian' tribe). Unless
in the SITE program are defined as be aware that indemnification coverage otherwise stated in the indemnification
RACs by CERCLA section 119(e). Thus,, from'EPA may be'available only at a agreementfs), responsibility formaking'
those vendors participating in the SITE substantial cost (i.e.,.the cost of in demnification payments will'be
program, under cooperative agreement purchased insurance).' divided equally between EPA aridthe
with EPA, may be eligible, to enter into .(b)'The-limitof EPA-indemnification. state (or politica subdivision or
an indemnification agreement with EPA will be equal to the greater of'the dollar, '."federally-recogfiized Indian tribe). Any
(b) Before EPA will agree to enter itoI amount of the grant, 9r.$1 million. The. indemnification payments made by EPA,
an iniemnificationagreemntwith a
maximum limit is $50 million. The.- however, 'are subject to the limits and
SITE program vendor, the vendor must 'deductible amount is computed as if the deductibles specified in the
satisfy the requirements of section 7 of grantee were a cost-reimbursement indemnification agreement. • ,
'this document (L.e., EPA must determine contractor (see section 10(e), above). (e) EPA may agree to indemnify a.
that reasonably priced pollution liabi!it3
15. Indemnification of RACs Employed RAC which is required under the terms
insurance is not available to SITE
by States or PoliticalSubdivisions of its contract with a state (or political
program RACs, or the venidor must
(a) General: EPA has been granted subdivision) or federally-recognized
demonstrate thatit his made diligent Indian tribe to indemnify and hold
efforts to'obtain pollution liability 'discretionary authority to indemnify
harmless such contracting entity from
insurance from non-federal sources). RACGs employed by states, political
claims, damages, losses and expenses;
The cost of insurance purchased subdivisions of states, or federally-
recognized Indian tribes that have' including litigation costs, that arise out
pursuant to section 7 will not be
reimbursed by EPA. The vendor should entered into a cooperative agreement of the RAC's performance-of the
be aware that indemnification coverage with EPA-foi new work initiated at NPL contract. However, any costs or
from EPA may be available only at a "or removal action sites after the date of expenses payable to the state (or,
'enactment of SARA. If EPA agrees to political subdivision) or federally-
-substantial cost (i.e., the costof
pUrchased insurance). idemnify'a.RAC employed by such' recognized.Indian tribe under such''
(c) The limit and deductible amounts . entity, theindemnification agreement indemnification are the sole'
of EPA indemnification will be will be embodied inthe'coperaitive- 'responsibility of the RAC and are not
determined as if the-vendorwere a c6dt. : agreement through insertion of a special covered under EPA's. indemnification of
reimbursement contractor working-for condition. the RAC or otherwise an eligible.
EPA (see section 10, above). (b) Requirements for EPA expense of the cooperative agreement.
(d) EPA will not indenify'SITE Indemnification: The procedures for 16. Indemnificationof RACs Employed
program RACs with respect to facilities entering into indemnification by FederalAgencies Other Than EPA
which receive waste for disposal, agreements with RACs working for
treatment (not including small-sdale, ,. states (or political subdivisions) or (a) General Rule: Under CERCLA
demonstration testing), or storage. federally-recognized Indian tribes under section 119 (as implemented by E.O.
independently of the SITE technology cooperative 'agreements are identical to 12580), other Federal agencies are
demonstration. those for RAds working directly for granted discretionary authority to
(e) EPA will not indemnify SITE EPA. In addition, before EPA will enter. indemnify RACs they employ atNPL or
program RACs with respect to any wort into an indemnification agreement, proo: removal action sites from the date of
conducted at a Federal facility (as, of the following must be supplied to enactment of SARA. Other federal
described in CERCLA section 120), EPA: - agencies that indemnify RACs under
unless the Federal agency in question is (i) The RAC's contract concerns new sectiog 119 must use their own
the EPA. site work initiated at an NPL or removal appropriations to fund their programs
•(f) If a SITE demonstration project is action site after the date of enactment ol and pay all indemnification.costs. Under
funded by a party other than EPA, then SARA; and CERCLA section 120(a)(2), if other
the SITE RAC will be considered, for thi e (ii) The RAC's contract is directly federal agencies choose to indemnify
purpose of indemnification, a RAC related to site cleanup. their RACs under CERCLA authority,.
employedby that party. For example, if (c) Terms and Conditions: For the then that indemnification must not be
a SITE Program RAC is conducting a purpose of determining the terms and inconsistent with these guidelines.
'demonstration funded at least in part b 3 conditions of an indemnification (b) Interagency agreements: RACs
a PRP, then EPA will not indemnify the agreement, a RAC working for a state employed by other Federal agencies
SITE Program RAC (see section 18, (or political -subdivision) or federally- (e.g., the Army Corps of Engineers) at:
below). recognized Indian tribe under EPA-lead NPL or removal action sites,
cooperative agreement will be subject tc managed pursuant to an interagency
14. Indemnification of RACs Receiving the same provisions of this guidance as agreement with EPA, are subject to the
GrantsUnder SARA Section 126(g) would an EPA RAC. For example, if a same provisions of this guidance as are
(a) RACs receiving SARA section 'RAC is working for a state under a cost RACs employed by EPA. Thus, the same
126(g) grants may be eligible to enter reimbursement contract, the terms and indemnification terms and conditions
into an indemnification agreement with conditions found in section 10 of this offered to RACs employed by EPA may
EPA. Before EPA will agree to enter intci, guidance will-apply. be offered to RACs employed by other
Federal Register /Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 46029
agencies under interagency agreements conditions will be consistent with settlement, EPA-shall not be obligated to
with EPA. CERCLA section 119. indemnify for any loss or obligation of
the RAC relating to the claim.in excess
17. Indemnification of RACs Employed 20. Claims Notificationsand Processing of the deductible.
by PRPs (a) The RAC shall provide written (h) If EPA recommends settlement of a
.CERCLA§ 119(c)(5)(C) (as notification to the contracting officer (or claim for a total amount in excess of the
implemented by E.O. 12580) gives EPA other EPA official designated in the RAC's indemnification limit (as'
the discretionary authority to enter into indemnification agreement) immediately specified in the contract) and the RAC'
an indemnification agreement with a (i.e., within 20 days) upon receiving refuses such settlement, EPA's
RAC employed by any potentially notice of any claim or action that may obligation for any loss shall be limited
responsible party (PRP) which has involve section 119 indemnification. to that portion of the recommended
entered into an agreement (such as a EPA will not provide indemnification settlement and the costs, charges, and
consent decree) with EPA. EPA will not payments for costs incurred prior to-its expenses (as of the RAC's refusal) that
exercise that discretionary authority, receipt- of written notice from the RAC. exceeds the deductible and falls within
i.e., EPA will not agree to indemnify a Notice must include a copy of the the limit of liability.
RAC under contract with a PRP. complaint or other claim, or, if no (i) EPA reserves the right to make any
Other Issues
written claim has been received, claim payment either to the RAC or the
available information on the time, place, claimant at its discretion.
18.Exclusion of Facilities That Receive and circumstances involved and the
21. Cost Recovery
Waste names and addresses of the injured and
(a) EPA is prohibited (by CERCLA ofI(bi
available witnesses. Under section 119(c)(6),
The RAC shall notify its insurers indemnification payments made by EPA
section 119(c)(5)(D)} from providing
indemnification to owners or operators, promptly (i.e., within 20 days) of any to RACs are recoverable from PRPs as a
of facilities regulated under the Solid claim or action that may involve EPA response cost. EPA shall document any
Waste Disposal Act, as amended, with indemnification, even if the RAC indemnification payments by following
respect to response activities performed believes that its insurance is not the same record-keeping and reporting
aL or potential liability related to, those applicable to the claim or action. The procedures as-for all other response
facilities RAC shall provide to the contracting costs.
(b) Under section 119, EPA will.not officer (or other designated person a 22. Limitation
agree to indemnify any owner or copy of any correspondence from the
insurance company, including any Nothing in this guidance shall be
operator of a facility that receives solid
notice of denial of coverage. construed as a waiver of sovereign
or hazardous waste (for disposal,
(c) The RAC shall furnish evidence or immunity by the United States. Nothing
treatment, or storage), including publicly
proof related to. any claim that may in this guidance shall be construed to
owned treatment works (POTWs), with
involve indemnification payments in the establish the United States as a liable
respect to that facility. This applies to a
manner and form required by EPA. party, within the meaning of section 107
facility regardless of whether or not it is
(d) The RAC shall furnish to EPA of CERGLA, for any release that has -
subject to the permit-by-rule provisions,
complete photocopies of all of the RAC's occurred or may occur in the course of
or any other provision of RCRA.
insurance policies that were in force at any response action the United.States'
19. Other Terms and Conditions the time of the response action, and all undertakes pursuant to section 104 of
(a) EPA will indemnify only RACs those in force at the time of the notice of CERCLA. In addition, EPA's agreement
performing work directly related to site claim. to indemnify any RAC, or EPA's
cleanup. (e) EPA reserves the right to direct, payment of any money under an
(b) At any time, EPA may cancel its control, or assist in the settlement or indemnification agreement, shall not be
indemnification of a RAC due to a defense of any claim or action'against construed as a waiver of sovereign
material misrepresentation or a failure an indemnified RAC. immunity by the United States, Within
on the part of the RAC to provide (f The RAG shall not admit liability the meaning of section 107 of CERCLA.
necessary information. or settle any claim without EPA's Jonathan Z. Cannon,
I (c) EPA reserves the right to add such Written consent. Acting Assistant Administrator,Office of
additional terms and conditions to its (g) If EPA recommends settlement of a Solid Waste andEmergency Response.
RAC indemnification agreements as it claim for an amount within the RAC's [FR Doc. 89-25490 Filed 10-30-89: 8:45*am]
deems necessary, Such terms and deductible; and the RAC refuses such BILLING CODE 6560-50-M
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Part VI
United States
Sentencing
Commission
Notification of Miscellaneous
Amendments; Notice
46032 Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices
UNITED STATES SENTENCING
UNITED STATES SENTENCING cocaine base ("crack") and to the availability of penalties under section
COMMISSION authority of courts to deny or terminate 5301.
certain federal benefits to defendants New Policy Statement: Retroactive
Notification of Miscellaneous Actions convicted of controlled substances application of amendments to guideline
offenses. sentencing ranges. Section 694(a)(2) of
AGENCY: United States Sentencing Possession of cocaine base ("crack"). title 28, United States Code authorized
Commission.
Section 6371 of the Anti-Drug Abuse Act the Commission to promulgate policy
ACTION: Public notice of (1) of 1988 (Pub. L. 100-690, Nov. 18, 1988), statements regarding application of the
promulgation of a temporary, emergency sets forth mandatory minimum terms of guidelines or any other aspect of
sentencing guideline amendment for imprisonment for defendants possessing sentencing or sentence implementation.
possession of cocaine base ("crack"); (2) certain amounts of cocaine base Unlike guideline amendme~ts issued
promulgation of a temporary, emergency ("crack"). On June 5,1989, the pursuant to 28 U.S.C. § 994(p),
guideline amendment concerning the Commission published in the Federal sentencing policy statements and
statutory authority of judges to deny or Register for comment three options for a amendments thereto promulgated by the
terminate certain Federal benefits; (3) proposed temporary, emergency Commission are not required to be
promulgation of a sentencing policy sentencing guideline amendment submitted to Congress for 180 days'
statement concerning the retroactive incorporating the new statutory review prior to their taking effect.
applicability of sentencing guideline penalties. 54 FR 24073-24074 (1989). On Section 3582(c)(2) of title 18, United
amendments; and, (4) approval of July 18, 1989, the Commission reviewed States Code provides that "the court
miscellaneous technical and clarifying its proposed temporary, emergency may reduce the term of imprisonment [in
revisions to the Guidelines Manual. guideline amendments on simple the case of a defendant who, has been
SUMMARY: The Sentencing Commission
possession and possession with intent to sentenced to a term of imprisonment
hereby gives public notice of several distribute. While it did not necessarily based upon a sentence range that has
actions taken pursuant to its authorities
accept the view of some who submitted subsequently been lowered by the
under section 21(a) of the Sentencing comments that the proposals were Sentencing Commission] * * * if such a
Act of 1987 (Pub. L. 100-182) and section outside of its emergency guideline reduction is consistent with applicable
217(a) of the Comprehensive Crime promulgation authority, the Commission policy statements issued by the
Control Act of 1984 (28 U.S.C. § 994 (a) decided to promulgate the narrow Sentencing Commission." Further, under
amendment set forth below as section 994(u) of title 28, United States
and (u)).
amendment 1. This amendment provides Code, the Commission is directed to
DATES: The effective date of the actions that convictions for possession of "specify in what circumstances and by
set forth below is November 1, 1989. cocaine base ("crack") subject to the what amount the sentences of prisoners
FOR FURTHER INFORMATION CONTACT: enhanced penalties, created by section serving terms of imprisonment for the
Paul K. Martin, Communications 6371 of the Anti-Drug Abuse Act of 1988 offense may be reduced" where it has
Director for the Commission, telephone are to be treated as if the conduct lowered sentencing ranges applicable to
(202) 662-8800. constituted possession of the controlled an offense or group of offenses. In
SUPPLEMENTARY INFORMATION: The substance with intent to distribute. furtherance of these statutory mandates,
United States Sentencing Commission is Denial of certain Federal benefits. On on September 12, 1989, the Commission
an independent commission in the August 30, 1989, the President of the adopted a policy statement concerning
judicial branch of the United States United States submitted a report to the retroactive application of
Government. Section 21(a) of the Congress concerning the implementation amendments that reduce guideline
Sentencing Act of 1987 (Pub. L. 100-182, of section 5301 of the Anti-Drug Abuse ranges set forth below as amendment 3.
Dec. 7, 1987) authorizes the U.S. Act of 1988 (Pub. L. 100-690, Nov. 18, Technical revisions to the Guidelines
Sentencing Commission to promulgate 1988) pertaining to denial of Federal Manual. The Commission approved
temporary, emergency guidelines or benefits for certain drug offenders. In. several miscellaneous technical and
amend existing guidelines in certain that report, the President "ask[s] the clarifying revisions to the Guidelines
circumstances, including "the creation of United States Sentencing Commission to Manual as set forth below under
a new offense or amendment of an assist in the initial dissemination of Miscellaneous Matters.
existing offense." Unlike regular information to the Federal courts" Authority: Section 217(a) of the
amendments issued pursuant to 28 regarding section 5301. Further, the Comprehensive Crime Control Act of 1984 (28
U.S.C. 994(p), amendments promulgated report states that "[pirincipal U.S.C. 994(a) and (u)) and Section 21(a) of the
by the Commission under this authority responsibility will rest with the Sentencing Act of 1987 (Pub. L.100-182).
are not required to be submitted to Sentencing Commission to disseminate William W. Wilkins, Jr.,
Congress for 180 days' review prior to all necessary information concerning Chairman.
their taking effort; nor is the section 5301 to Artiple III Judges and
Commission required to publish other appropriate Federal personnel." In Amendfnent 1
proposed temporary, emergency response to discussions with the Office The Commission has promulgated the
guideline amendments prior to of Drug Policy and the Office of following temporary, emergency
promulgation, though it may do so if Management and Budget regarding this amendment to the guidelines and
circumstances permit. However, section anticipated request of the President, and commentary implementing statutory
21 emergency amendments are in preparation for the submission of his minimum sentences for possession of
temporary i.e., unless submitted to report to Congress, the Commission cocaine base ("crack"):
Congress as regular amendments in the adopted the temporary, emergency Section 2D2.1 is amended by inserting
next regular amendment report, they guideline amendment on August 22, the following additional subsection:
expire upon the disposition of that 1989, set forth below as amendment 2. "(b) Cross Reference
report. The amendment informs judges, (1) If the defendant is convicted of
The temporary amendments set forth probation officers, and all recipients of possession of more than 5 grams of a
below pertain to the possession of the Guidelines Manual of the mixture or substance containing cocaine
Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Notices 46033
This policy statement provides guidance offense, significantly greater fear than that To conform to an amendment to
for a court when considering a motion under necessary to constitute an element of the § 5C1.1 authorizing the use of home
18 U.S.C. 3582(c)(2) and implements 28 U.S.C. offense of robbery.". detention as a substitute for
994(u), which provides: 'If the Commission (Appendix C, amendment 110). imprisonment in certain circumstances,
reduces the term of imprisonment § 5131.1(a)(2) is amended by deleting "or
A typographical error in the amended
recommended in the guidelines applicable to community confinement" and inserting
§ 2D1.1(c)(14) is corrected'by revising
a particular offense or category of offenses, it
"Schedule I or I Depressants" to read in lieu thereof ", community
shall specify in what circumstances and by
what amount the sentences of prisoners "Schedule I or II Depressants". No confinement, or home detention". The
serving terms of imprisonment for the offense substantive change occurs because this Commentary to § 5B1.1 captioned
may be reduced.' iesult would be required by, and the "Application Notes" is amended in Note
Among the factors considered by the intent of this subsection is clear from, 1 by inserting ", home detention,"
Commission in selecting the amendments the immediately preceding and immediately after "community
included in subsection (d) were the purpose following subsections. In addition, the confinement" wherever the latter
of the amendment, the magnitude of the Commentary to § 2D1.1 captioned appears. Chapter One, section 4(d) is
change in the guideline range made by the
amendment, and the difficulty of applying the "Application Notes"-is amended in Note amended in the third sentence of the
amendment retroactively. 10 by deleting "Other Schedule I or II third paragraph by deleting "or
The requirement in subsection (c)(1) that Substances" and inserting in lieu thereof intermittent confinement" and inserting
"Schedule I or II Depressants" to in lieu thereof ", intermittent -
the maximum of the guideline range be
lowered by at least six months for a conform to the revision in the guideline confinement, or home detention", and in
reduction to be considered is in accord with (Appendix C, amendment 125). the fourth sentence of the third
the legislative history of 28 U.S.C. 994(u) The Commentary to § 2D1.5 captioned paragraph by inserting "or home
(formerly 994(t)), which states: 'it should be "Application Notes" is amended in Note detention" immediately following "of
noted that.the Committee does not expect 2 by deleting "if the quantity of drugs
that the Commission will recommend
community confinement". These
substantially exceeds that required for conforming revisions make no
adjusting existing sentences under the
provision when guidelines are simply refined
level 36 in the drug quantity table,", and substantive change because § 5C1.1, as
in a way that might cause isolated instances by deleting "is extremely" and inserting amended, is controlling Inany event
of existing sentences falling above the old in lieu thereof "was extremely". This (Appendix C, amendment 271).
guidelines or when there is only a minor revision conforms this Commentary to A revision to the amended
downward adjustment in the guidelines. The the amendment of-the Drug*Quantity
Commentary of § 5G1.3, is made to
Committee does not believe the courts should Table in § 2D1.1, which expanded the
be burdened with adjustments in these
clarify that the amended commentary
Drug Quantity Table itself to provide
cases.' S. Rep. 98-225, 98th Cong., 1st Sess. recommends, rather than requires, the
higher offense levels for extremely larg6
180 (1983).". drug quantities (Appendix C,
court apply the methodology described.
amendment 139).
The Comm'entary to § 5G1.3, as
Statement of Reasons: The purpose of
The Commentary to § 2F1.1 captioned amended, is revised in the second
this amendment is to implement the
"Application Notes" is amended in Note sentence of the second paragraph by
directive in 28 U.S.C. 994(u).
1 by deleting "(b)(2)" and inserting in deleting "The court should impose" and
Miscellaneous Matters lieu thereof "(b)(3)", and by deleting inserting in lieu thereof "The court may
The Commission has approved the "several" 'and inserting in lieu thereof consider imposing", and by inserting the
following miscellaneous, technical, and "both" to conform to the revision of the following additional sentences at the
clarifying revisions to the Guidelines guideline (Appendix C, amendment 156). end "Where the defendant is serving a
Manual. The number of the amendment The Commentary to § 4B1.1 captioned term of imprisonment for a state offense,
in Appendix C of the revised Manual "Application Note" is amended in Note the information available may permit
containing the revision is shown 1 by deleting "felony conviction" and only a rough estimate of the total
following'each revision. inserting in lieu thereof "two prior punishment that would have been
The following additional application felony convictions" to make an editorial imposed under the guidelines. It is not
note is inserted in the Commentary to improvement (Appendix C, amendment intended that the above methodology be
§ 2B3.1 to complement the addition of a 267). applied in a manner that unduly
specific offense characteristic The caption to § 4B1.2.is amended by complicates or prolongs the sentencing
subdivision pertaining to "an express deleting "Definitions" and inserting in process." (Appendix C, amendment 289).
threat of death:" lieu thereof "Definitions of Terms Used A typographical error in an amended
in § 4B1.1", and § § 4B1.2 (1) and (2) are statutory reference in the Statutory
"8. 'An express threat of death.' as used in
amended by deleting "as used in this Index is corrected by revising "43 U.S.C.
subsection (b)(2)(D), may be in the form of an
oral or written statement, act, gesture, or provision" in each instance to make an 1773(a)" to read "43 U.S.C. 1733(a)"
combination thereof. For example, an oral or editorial improvement (Appendix C; (Appendix C, amendment 298).
written demand using words such as 'Give amendment 268). In addition, the Commission inserted
me the money or I will kill you', 'Give me the Editorial improvements are made to a "Historical Note" following each
money or I will pull the pin on the grenade I the sentencing table in Chapter Five, guideline section that contains the
have in my pocket', 'Give me the money or I part A, by inserting "(in months of
effective date of the section and the
will shoot you', 'Give me your money or else imprisonment)" immediately under the
(where the defendant draws his hand across Appendix C reference number of each
title "Sentencing Table", by inserting
his throat in a slashing motion)', or 'Give' me amendment to the section, and has
"(Criminal History Points)" immediately made a number of additional minor
the money or you are dead' would constitute
following the caption "Criminal History
an express threat of death. The court should editorial changes to improve the internal
Category", and by'enclosing in
consider that the intent of the underlying
parentheses each of the six sets of
consistency and appearance of the.
provision is to provioe an increased offense Manual.
level for cases in which the offender(s) criminal history points displayed under
[FR Doc. 89-25544 Filed 10-30-89; 8:45 am]
engaged in conduct that would instill in a that caption (Appendix C, amendment
reasonable person, vho is a victim of the 270)... BILUNG CODE 2210-40-M
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Part VII
a
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Department of Defense
General Services
Administration
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National Aeronautics and
Space Administration
48 CFR Parts 29 and 52
Federal Acquisition Regulation (FAR);
Raising Thresholds in FAR Tax Sections;
Proposed Rule
46036 FederaliRegister / Vol. 54, No. 209 / Tuesda,'October -31, 1989 / Proposed Rules
DEPARTMENT'OF DEFENSE The clauses at 52.229-3, 52.229-4, . from these taxes, and on a tax-inclusive:
52.229-6, and 52-229-7 all state that no basiswhen no exemption' exists.
GENERAL SERVICES adjustments in contract price shall be (c) Ekecutiee'agencies shall take
ADMINISTRATION made to contracts that contain the maximum advantage of available
clauses unless the amount of the- Federal excise tax exemptions.
NATIONAL AERONAUTICS AND adjustment exceeds $100. The Councils 3. Section 29.401-3 is revised to read
SPACE ADMINISTRATION believe that $100 is too low to justify a as follows:.
contract modification, and therefore are
48 CFR Parts 29 and 52 proposing to raise the figure to $250. 29.410-3 Competitive contracts.
The contracting officershall insert the
B. Regulatory Flexibility Act
Federal Acquisition Regulation (FAR); clause at 52.229-3, Federal, State, and
Raising Thresholds In FAR Tax This proposed~rule is not expected to Local Taxes, in all solicitations and.
Sections have a significant cost or administrative contracts if the contract is to be
impact on a substantial number of small performed wholly or partly within the
AGENCIES: Department of Defense businesses within the meaning of the United States, its. possessions, or Puerto
(DoD), General Services Administration Regulatory Flexibility Act, 5 U.S.C. 601, Rico when a-fixed-price contract is
(GSA), and National Aeronautics and et. seq., because it does not require any contemplated, and the contract is
Space Administration (NASA). additional action on the part Of expected to exceed the-small purchase
ACTION: Proposed rule. contractors, and because the dollar limitation in 13.000, unless the clause at
amounts involved are -relatively low. 52.229-4, Federal, State, and Local
SUMMARY: The Civilian Agency Therefore, an Initial Regulatory Taxes (Noncompetitive Contract), is
Acquisition Council and the Defense Flexibility Analysis has not been included in the contract.
Acquisition Regulatory Council are performed. Comments from small 4. Section 29.401-4 is amended by
considering revisions to FAR Parts 29 entities concerning the affected FAR revising 'the first sentence to read as
and 52 regarding taxes. subparts will also be considered in follows:.
DATE: Comments should be submitted to accordance with section 610 of the Act.
Such comments must be submitted 29.401-4 Noncompetitive contracts.
the FAR Secretariat at the address
shown below on or before January 2, separately and cite § 89-610 (FAR Case The contracting officer shall insert the
1990 to be considered in the formulation 89-73) in correspondence. clause at 52.229-4, Federal, State, and
of a final rule. Local Taxes (Noncompetitive Contract),
C. Paperwork Reduction Act in fixed-price noncompetitive contracts
ADDRESS: Interested parties should The Paperwork Reduction Act does when the contract exceeds the small
submit written comments to: General not apply because the proposed changes purchase limitation in 13.000 to be
Services Administration, FAR to the FAR do not impose recordkeeping performed wholly or partly within the
Secretariat (VRS), 18th & F Streets, NW., information collection requirements or United States, its possessions, or Puerto
Room 4041, Washington, DC 20405. Rico when satisfied (a) that the-contract
- collection of information from-offerors,
Please cite FAR Case 89-73 in all contractors, or members of the public price does not include contingencies'for
correspondence related to this issue. which require the approval of OMB State and local taxes and (b) that, unless
FOR FURTHER INFORMATION CONTACT:. - under 44 U.S.C. 3501, et seq. the clause is used, the contract price will
Margaret A. Willis, FAR Secretariat, include such contingencies. * * *
Room 4041, GS Building, Washington, List of Subjects in 48 CFR Parts 29
DC 20405, (202) 523-4755. and 52 29.402-1 [Amended]
Government procurement.. 5. Section 29.402-1 is amended in
SUPPLEMENTARY.INFORMATION:
paragraph (a) by inserting the words
Dated: October 23, 1989. "expected to exceed the dollar amount
A. Background
Albert A. Vicchiolla, in 13.000" after the words "solicitations
As part of an ongoing review of Director,Office of FederalAcquisition Policy.
various dollar thresholds in the FAR, the. and contracts", and in paragraph (b) by
Councils have concluded that certain Therefore, it is proposed that 48 CFR inserting the words "that exceed the
parts 29 and 52 be amended as set forth dollar amount in 13.000" after the words
thresholds in Parts 29 and 52 pertaining "solicitations and contracts".
to taxes should be changed. below:
•. 1..The authority citation for 48 CFR
Section 29.201 instructs Government PART 52-SOLICITATION
contracting officers to solicit prices on a parts 29 and 52 continues to read as
follows: PROVISIONS AND CONTRACT
tax-exclusive basis when they know CLAUSES
that the Government is exempt from the Authority: 40 U.S.C. 486(c); 10 U.S.C.
taxes and the exemption is at least $100. Chapter 137; and 42 U.S.C. 2473(c). 52.229-3 [Amended]
The Councils are proposing that the 6. Sec:tion 52.229-3 is amended by
threshold be eliminated since it requires PART 29-TAXES removing in the title of the clause the
no additional effort by either the 2. Section 29.201 is amended by date "(APR 1984)" and inserting in its
Government or offerors if prices are revising paragraphs (b) and (c) to read place the date "(OCT 1989)"; by
solicited on a tax-free basis, and if the as follows: removing in paragraph (f) the figure
Government is exempt from a tax it "$100" and inserting in its place the
should not pay it. 29.201 General. figure "$250"; and by removing the two
The Councils are proposing to revise derivation lines following. "(End of
29.401-3, 29.401-4, and 29.402-2 to (b) Sometimes the law exempts the clause)". :
consistently apply the policy that Federal Government from these taxes. • 7. Section 52.229-4 is amended by
contract clauses relating to taxes Contracting officers should solicit prices revising the introductory text; by
generally are not applicable to on a tax-exclusive basis when it is removing in the title of the clause the
procurements of less thani$25,000. known that the Government is exempt date "(APR 1984)" and inserting in its
Federal Register / Vol. 54, No. 209 / Tuesday, Octobei 31, 1989 / Proposed Rules 1. 46037
52.229-6 [Amended]
8. Section 52.229-6 is amended. by
inserting a colon in thefirst sentence of
the introductory text following the.word
"clause" and removing the remainder-of
* the paragraph; by-removing in the title
of the clause the date "(APR 1984)" and,
inserting in its place the date "(OCT
1989)"; by removing in paragraph (g) the
figure "$100" andnserting in its place
the figure "$250"; and by removing the:
derivation line following '(End of
clause)".
52.229- 7 [Amended]
9. Section 52.229-7 is amended by
inserting a colon in the first Sentence of
the introductory text.following the word
"clause" and removing the remainder of
, the paragraph; by removing in the title
of the clause the date "(APR 1984)'.' and
inserting in its -place the date ".(OCT
1989)"; by removing in paragraph (d) the
figure "$100" and inserting in its place..
the figure !'$250"; and by removing the
derivation line following "(End of
clause)". -
[FR Doc. 89-25510 Filed 10-31-89; 8:45 am],
BIWNG CODE 6820-JC
I I
Tuesday
October 31, 1989
PART VIII
The President
Proclamation 6057--Fire Safety at Home
Day, 1989
46041
A Proclamation
Sunday, October 29, 1989, is the date on which the Nation will return to
Standard Time. In jurisdictions that observe daylight savings time, clocks will
be set back 1 hour. We may use this adjustment of the clocks as a reminder to
perform other simple actions-actions that can save lives by helping to make
our homes safe from accidental fire.
All Americans can take simple steps such as checking to ensure that fire exit
paths are clear, safely disposing of dangerous and flammable chemicals
through means recommended by their local fire department, and verifying that
home appliances are fire-safe. In particular, we can also take a few minutes to
test our home smoke detectors, clean them, and change their batteries.
Smoke detectors are a proven lifesaver. The few minutes spent by each
American in ensuring the proper operation of smoke detectors can help avert
many senseless tragedies. Most of the 6,000 Americans who succumb to fire
each year fall victim in their homes. Children, senior citizens, families in
substandard housing, and persons with disabilities are particularly vulnerable.
Information on the proper methods for cleaning and testing smoke detectors
may be obtained from local fire departments.
The Congress, by Senate Joint Resolution 177, has designated October 29,
1989, as "Fire Safety at Home-Change Your Clock, and Change Your Battery
Day" and has authorized and requested the President to issue a proclamation
in observance of this occasion.
NOW, THEREFORE, I, GEORGE BUSH, President of the United States of
America, do hereby proclaim October 29, 1989, as Fire Safety at Home Day,
1989. I call upon all Americans to observe this day by taking steps to ensure
that their homes are safe from fire.
IN WITNESS WHEREOF, I have hereunto set my hand this twenty-seventh
day of October, in the year of our Lord nineteen hundred and eighty-nie, 'and
of the Independence of the United States of America the two hundred and
fourteenth.
Federal Register At the end of each month, the Office of the Federal Register
Index, finding aids & general information 523-6227 publishes separately a List of CFR Sections Affected (LSA), which
Public inspection desk 523-5215 lists parts and sections affected by documents published since
Corrections to published documents 523-5237 the revision date of each title.
Document drafting information 523-5237
1 CFR EO 12692) ....................
40627
Machine readable documents 523-5237 12462 (Revoked by
Proposed Rules:
Ch. III .................................
40880 40627
EO 12692) .....................
Code of Federal Regulations 12528 (Revoked by
Index, finding aids & general Information 523-5227 3 CFR 40627
EO 12692) .....................
Printing schedules 523-3419 Proclamations: 12592 (Revoked by
40627
EO 12692) .....................
40839
6030 ...................................
Laws 12601 (Revoked by
40849
6031 ...................................
EO 12692).....................40627
Public Laws Update Service (numbers, dates, etc.) 523-6641 40851
6032 ................................... 12607 (Revoked by
Additional information 523-5230 40853
6033 ...................................
41039
6034 ................................... EO 12692)........40627
41041 12610 (Superseded by
Presidential Documents 6035 ...................................
41429
6036 ................................... 40627
EO 12692) .....................
Executive orders and proclamations 523-5230 6037 ..............41431 12668 (Revoked by
Public Papers of the Presidents 523-5230 41573
6038 ................................... 40627
EO 12692) .....................
Weekly Compilation of Presidential Documents 523-5230 6039...... .... ..... 41577 40627
12692 .................................
41579
6040 ................................ 12693 .................................
40629
The United States Government Manual 41581
6041 ................................... 42285
12694 .................................
523-5230 41817
6042................................... Administrative Orders
General information
42281
6043 ................................... Orders:
Other Services 42283
6044.................................. Aug. 25,1989
42461
6045................................... (Superseded by
Data base and machine readable specifications 523-3408
523-3187 42463
6046................................... Final Order of
Guide to Record Retention Requirements
42465
6047................................... Oct. 16, 1989) ...............42795
Legal staff 523-4534
42737
6048................................. 42795
Oct. 16, 1989 ....................
Library 523-5240
Privacy Act Compilation 523-3187 42943
6049 ................................... Presidential Determinations:
Public Laws Update Service (PLUS) 523-6641 43033
6050................................... No. 90-1 of
TDD for the deaf 523-5229 43265
6051 .................................. Oct. 5, 1989 .................43797
43267
6052................................... No. 90-2 of
43793
6053 ................................... Oct. 6,1989 ..................
43035
43795
6054 ...................................
FEDERAL REGISTER PAGES AND DATES, OCT OBER 6055 ............................. 43935 5 CFR
43937
6056 ................................... 43939
890 .....................................
2
40369-40626....................... 46041
6057 ...................................
3
40627-40856......................... Executive Orders: 7 CFR
4
40857-41038 ....................... 11145 (Continued by 2................... 42467
5
41039-41236 ......................... EO 12692) ..................... 40627 26 41237
.................
6
41237-41428 ......................... 11183 (Continued by 250 ... ........ ..... 42467
10
41429-41576 ...................... EO 12692) ..................... 40627
11
41577-41816 ....................... 301 ..........
40570,42478,43037,
11287 (Continued by 43269,43575
12
41817-41942 .......................
EO 12692) ..................... 40627 43167
352 .....................................
13
41943-:42286 .......................
11776 (Continued by 43269-43273
401 ........................
16
42287-42462 .......................
EO 12692) ..................... 40627 43276
422 .....................................
17
42463-42798 ......................
12131 (Continued by 41819
701 .....................................
18
42799-42944 ......................
42945-43032............19 EO 12692) ..................... 40627 906 .....................................
41583
20
43033-43166....................... 12171 (Amended by 910 ..........
40369,41433,42287,
EO 12693) ..................... 40629 43038,43799
23
43167-43264.......................
24
43265-43414....................... 12190 (Continued by 41433
920 .....................................
EO 12692) ..................... 40627 41585
946 .....................................
25
43415-43574.......................
26
43575-43794 ....................... 12196 (Continued by 41586,43039
989 ........................
27
43795-43934....................... EO 12692)..................... 40627 41240
1065 ...................................
30
43935-45728....................... 12216 (Continued by 40857,41241
1079 ......................
31
45729-46042....................... EO 12692) ..................... 40627 41437,45891
1137 ......................
12296 (Revoked by 41237
1427 ...................................
EO 12692).................... 40627 41588
1434 ...................................
12345 (Continued by 41043,41588
1435 ......................
EO 12692) ..................... 40627 40858
1446 ...................................
12345 (Amended by 43941
1475 ...................................
EO 12694) ..................... 42285 40369
1477 ...................................
12367 (Continued by 43415,45729
1610 ......................
EO 12692) ..................... 40627 41713
1765 ...................................
12382 (Continued by 42799
1864 ...................................
ii Federal Register /Vol. 54, No. 209 / Tuesday, October 31, 1989 /Reader Aids'
43415
1930.:...... .................... 220 ............ 5
..............
.....41454 Proposed Rules: :......
314: ........ :.......
41629, 42515
1962 ............
:....................
42799 745. ....43297 19 ................................... .. 41848 320 ................. .41629
1980 ...............................
42480- 771 .....................................
747 ....................................
43299 40681 341; ....................................
40412
2003. .............. 42492 772 ......................... 40681 40808
347 ....................................
Proposed Rules: 13 CFR 773 ..................................... 40681 348)....................................
40808
51 ...........
41597,41599,43384 774 ........
120 .....................................
45891 :-........... 40681
....... 436 ................ 43592
!.............
301 ...................................
43585 786; ..........
124 .....................................
43217 ....... 40681
........... 444. ............- .... .43303
401 .........41246,,41248,43295 Proposed Rules: 799 .................................... 40681 452; ......................
43592,43593
403 ................................
41249 121.... ............... 42512
............. 806 ..................................... 41275 1020 ............... 42674
456.....................................
42305 1306 .................................
43436
16 CFR
906. ............... 41249 14 CFR 40888
1316 .............................
926. ..... ...........
41251 305 ................ 41242
21 ............41955,43417 22 CFR
949 ............................
..42306 Proposed Rules:
23.............41955, 43417
955 ...........................
.........
41252 417 ....................... 43434 120 ....................................
42496
:..............................
25 ....... 43922
966 .....................................
41253 432 ..................................... 43435 122 ....................................
42496
29......................................
43928
971 ....................................
45737 123 ....................................
42496
39 ............
40381,40382,40632, 17 CFR
968 ..................................
41601 40633,40635,40636-40639, 6...........................
126 ......... 42496
981 ....................................
41979 41051-41054,41438,41821, 1.................. 41068 514 ....................................
40386
984...........................45738 41958-41960,42288-42292, 3 ................................. 41068 Proposed Rules:
1032 .......
;...........................
43182 42493,42621,43045-43047; 31 ....................................... 41068 50....................................
41459
1139 ...................................
41254 43217,43578-43581,43800- 145.....: ................................ 41068
1762 ...................................
43429 43805,43954 147 ..................................... 41068 23 CFR
1948...................................
41626 61 .......................................
41234 200 ......... ;.......................... 40862 658....................................
43290
71.:........
,.41822,42293,42494, 211 ..................................... 41084
8 CFR 42495,42801,43048,43385, Proposed Rules
Proposed Rules:
43422,43423,43582,43786, 658 ..................................
41278
245 .....................................
43384 240 .... ............ 40395
43956-43959
73 .......................................
42495 24 CFR
9 CFR 18 CFR
91 ............
40624,41211,42439, 888.......................
43170,43291
77 ....................................
42945 43049 37 ..................................... 42945
154: ......... I.......................... 41085 1710:..........................40863
318 .....................................
43041 97.........................
41590,43048 Proposed Rules:
319 .....................................
40631 294 ................
121 .....................................
43922, *....41086
13i4 ............... 42456 882.t..................................
43594
327 ................................
41045 135 ................ 43922 887....................................
43594
381 ........................
41045,43948 1260 ...................................
43050 19 CFR
Proposed Rules: Proposed Rules: 25 CFR
71 ..........................
41845,43065 171 ........................ 41364,43423
Ch:l ......................
40672,43430 Proposed Rules:
78.......................................
43065 1............................
41986,42916 Proposed Rules:
12 .......................... 40882,43826 61..* .........................
45743
41845
80... ................................. 11 ......................................
42916
85 .......................................
45739 24 .....................................
27 ......................................
41986 40682 26 CFR
92......................................
42144 29 ...............
........
41986,42716 132 ......................40887
133 .................................. 40882 1.....
........
41087,41442,41962,
94 .....................................
41845 33 ...............
......... 41986 . 43522
39 ...........
40672,40673,-40675- 142 ...... ................ I .. 40887
41243, 41364
5h .........................
10 CFR 40678,40680,41103-41106, 20 CFR 602..........
41087,41243,41442,
11 ........ 40859 41456,41846,41987,41988, ,41962
20 .......... .......
42287 42307,42512,42514,43069- 200 ........................ 43054
1926 ...................................
45894
21 ...... 42287 43081,43430,43432,43586, 222 ................ ".....42949
43591,43824,43825 Proposed Rules:
25... ......... .................
40859 262............................... 43054
43 .......................................
43934 335 ........ ............................ 43057 1.............41990,42621
35 ............. .................
41819 65 ..........................
42916,43934 602 ...... .......... 41990
51 ..................................
43576 404 ..................................... 40779
71..........41109,41110,41458, 416 ................ 40779 ! .............................
882 ...... 43594
73 ................ .... 42287 41713,42694,42806,42916 887 ................ 43594
95 ..... ...........................
40859 - 43433,43434,43971 Proposed Rules:
600. ..................................
41943 404......................... 40570
........... 29 CFR
75 ..........................
42916, 45891"
Proposed Rules: 91 .......................................
42916 21 CFR 1601 ...........
..........
40657, 44007
2.................. 40780 93.......................................
42916 1910 ......................
41364,42498
50 .......................................
41980 Ch. I.................................
101 .....................................
42916 41363 1926....................
...........
41088
5....................................... 43960
103 .....................................
42916 2610.............................
42294
12 CFR 105 ......................42916 81 ...................................... 43961 2622...................................
42294
207 ........... 177 ........................ 40383,43168
.....................
:43952 121 ................ 42916 2644............... ..... 41962
220 ...................................
43952 178..... ... .- .. ..... 42886
127 .....................................
42916 41963
2676...................................
436 .......... 41823, 42886
221 ....................................
43952 137 .....................................
42916 Proposed Rules:
442 .......... 40651,40653,41823,
224 ....................................
43952 139 .....................................
42912 43384,44007 1614 ............... 45747
Ch. III ....................
42799,45891 145 ....................................
43934 .453......40654,41823,43288, 41460,41461
1910.....................
312 ........................
40377,43521 171 .....................................
42916 43384,44007
Ch. IV ................... 45891 205 .....................................
42309 455 ......... 40384,41823,42886 30 CFR
Ch. V.................................
42799 221 ................ 41989 610 .......... 40656,41441,41713, : ............
914 .......... 41824,41828
701 .....................................
43277 294 .....................................
42309 . 43290 Proposed Rules:
708.....................................
43278 298 ................ 42309 522........................ 40656,41441 7............40950,40995
747 .....................................
43280 540.................................... 41441 44 .....................................
43028
15 CFR
932 .....................................
43384 544 ..................................... 41441 56 .....................................
43026
1510 ...................................
41948 769 .....................................
41439 555 .................................... 41441 57.....................................
43026
1511 ...................................
41948 558 .......................
770 .....................................
40861 40657,41713 58.....................................
43026
Proposed Rules: 771 ........................
;............
40861 801 ..................................... 43766 70 ..........................
40950,43026
42306 772 ................ 42496
5......................................... Proposed Rules: 71 .....................................
43026
7..........................
42306,43398 776 .....................................
40640 Ch. I.......... ....... 43183 72 .....................................
43026
32 .......................................
43398 779.......................
40643,41055 10 ....................................... 41629 75 ..........................
40950,43026
203 .....................................
41255 799...........
40861,4.1055,43806 310....................... 40618,41629 90 .....................................
43026
Federal Register / Vol.. 54, No. 209 / Tuesday, October 31, 1.9890 Reader Aids iii
104... 43028
..............................8- ................... 42300 201-33.............41850 153 .......
154......... .. ..... :...42624
41124, 42624
917 ........................
40413,45767 601 ................ 43061 201-34......... .....................41850 .
925 .....................................
40414 160...................... 41124 4
201-38......................41850 160 ....... ............ .........
41124
45768 40 CFR
935 ..................................... 201-39...*..... .................... 41850 161 ......... .......................
41124
943................. 41281 35 ......................................
40798 201-41:............................. 41850 168 ........................41124
52 ...40657,40659,40660, 201-44*:...... ................ 41850 168...... ...........................
41124
31 CFR 41094,41443,41830,43173- 4 1124
188....................................
317..................................
40830 43176,43812-43816 42 CFR 192.... 41124
...........
515 .........
'...- 60 ..................
......................
45730 .............. 40662 405., .................. 41716 196...................................
41124
Proposed Rules: 61 .......................................
40662 - 411.... ........... ......41716 199 ........... . 41124
103 ............ 81
........................
45769 .............
41094,41831,.42956 412 ................ 41716
-515 ................ 43304 123................................... 40664 433 ..................... ...41966 580.:........... 40891, 43834
180..........41098, 43424,45733,
489 ...................... .41716 581.;.......... 40891..43834.
32 CFR 185 ..... ........... 43'24
186-........................... 43 CFR 47 CFR
536.................................
43892
537 ..............................
43914 261........
*........41402,43818 •Public Land Order. 1....... ............... 40392,.43062'
ProposedRules: 271 ........... . 41402 6750........... ....... 4318 2 ........... 41974, 43293
169a....:................
42807,'45771 300....... ..... 41000,41015 Proposed Rules: 73:.......4039j3 40873-40876,
302 ..... ...... ........... 41402 '11..... ....... 41363, 43185 -4110, 41445,41446,42507,
35 ...
:...
...... ...
,............. ....... 16
43164 .5'2090 .............
33 CFR ....... ........ ;43185 .42804 43062,43063,45735'
100 ......... 41068,'2499,43217 370................ 41904 ,2200.................... 43185, 43597': 74 .................... .....; 41842
....
117 ......... 41964,41965,43808 403 ........ ..........40664 76. ............... 41842
795 .......................41832,43252 44 CFR 80.........42804
165 ..........
40868, 40869, 43809,
43810 799 ...........41832, 43252 60.....................................42144 90............... 43293 45891-
241 .................................
40578 Proposed Rules: 64 ................ 40872, 43425 300 .....
. ...........
;41447
Proposed Rules: 51... .............. 41218 65 .......................................43178 Proposed Rules:
117 ........................
41991,42517 52. 40689,40889,41218, 67 ..........................42501, 43291 .2................ 41464
154 ...................................
41629,41849,42309:43083.
• 43183,43521,43827 Proposed Rules:. 15. .......... 41125, 41464
41366
155 .....................
41366,42624 67............40890, 41631, 4251 8; *73 .........
*.40419,40420, 40893-
61 ........................40779,41113 43305 " 40896,41125-41128,41465-
IN .....................................
41366 81.; ............41218,43829 41470,41852,41853,42523,"
165 .....................................
43890 45 CFR
228 .........40415 ,42524,42807-42809 43086-
334.....................................
40572 260.......................41930.43718 43088,,45771-45773
60 ............ 42722, 43890
34 CFR 261 .........41114, 43718, 43829 205............. .... 42146 "
264 ....... ; ....................... 43718 224............... 42146 *48CFR
30 ....................................
43583 233
..I .................... ; ....... 4 4
7.............................
265......... 43718 .23, .................... 42146 5 ................... 46004-
200:...................................
43220 266.....................................43718 234 ............ 42146; 6.......... .........
46004
201 ............... .43220
270. ... ......... ............ '43718 238 ................... ......... 1......
46 19 * .....................
..... 46004
203...7.. ............. 43220 271 ................ 43718
208................ ...........
43583 :239o..
...................... :... .: 42. 44 52..... 46004
300 .......... 40889, 43778 240 ........................ 42146 302............................ 43965
219 ... ..... :....................
43584 370................. .. 304 ......
;.................. 43965
41907 250........... *..... 42'146'
600 ..............................
40388 372 .......... 42962,45891 255.................................... 42146 309: ............. ................
43965
668 ................ 43811 721..........
........... ............ 42439 315.... .............. ... 43965
682 ....................................
43811 256 .......................42146
332 .............. ................
i43965
Proposed Rules: 41 CFR ,46 CFR 43965
342..................................
'302.........*..........................
42704 Ch. 101 .............................. 41244 352....................................
43965
50 ... .............. 40590
668....................................
45994 101:-6 .....................
............. 41214 •56............................ .........
40590 43180
532 ...................................
35 CFR 101-40............................... 42803 61 ...........4.................. 40590 552................ 43180
101-41................. 43425,43890 67 ..... ............ 41835 815 ................... 42507, 45736
103 .....................................
43962 101-44 ............................ .. 43521- 153 ...................... 43584 :1532 ........................ 40876
133 ....................................
43962 " 101-45 ............................... 43521 1552 ............... 40876
Proposed Rules:
36 CFR 101-47 ..............;...41099,41244 12........ .................. 42624 2801 : ................. 40877
201-1...., *........... 42302 13 ....... 42624 2813............ .....................
40877
7.................. 43060 201-2 ................................ 42302 15 .......................................42624 2819.............................;,..
40877
292.....................................
41089 201-6 .............................. 42302 Proposed Rules:
30 ......................... 41124, 42624
Proposed Rules: 201-38 ............................... 42302 31 ..........................41124, 42624 40420
20 ....................................
254.......................
41849,43597 302-6 ................................. 43521 32 .......... t .......
. 41366 129 ................. 46036
302-12 ......... ........ ....... 43521 33 ........ ..........
41124 31 ......................................
43032
37 CFR
Proposed Rules: 35 ........... 41124, 41366, 42624 37.... ...... ...............
41941
202 .....................................
42295 201-2 ................................. 41850 39 ...................................... 41366 52........
................. 41941, 46036
201-6 ..............41850 67 ..........................41992, 44008 1602....: ...........
I..... ............
43089
38 CFR 201-7 ... .... ........... 1615................................
43089
41850 70 ................. 41124
1............................
40388,40870 201-8 ..............41850 71..................................... 41124 1616 .... ....
:.......................
43089
42802 201-11 ..............................
3........................................ 41850 -75.......................................411 24 1622.: ............... .............
43089
21 ..........................
40871,42500 201-16................. 41850 78.. ....................... 41124, 42624 1632............... 43089
Proposed Rules: 201-17 .............. 41850 90 ..........................41124, 42624 1652 ..................................
43089
3..............
40684,40686,41110, 201-18 ............................... 41850 91 ...................................... 41124
43436,44008 201-19 .............................. 41850 94 .......................................41124 49 CFR
21 ............
40687,40688,41110; 201-20 ............................... 41850 97..... .................... 41124, 42624 171 .....................................
41447
42961 201-21 ............................... 41850 98 ........................................
42624 172 ................ 41447
201-22 .............................. 41850 105................ 42624 191 .....................................
40878
39 CFR 20.1-23 .............................. 41850 107................ 41124 195 ...................................
40878
3........................................
42300 201-24 ..............41850 108..................................... 41124 209 ...... 42894
..........
4.........................................
42300 201-26............................... 41850 109.................................... 41124 219....... .........
:40879'
42300 201-30 ...............................
5....................................... 41850 112..............................41124 383 ..................................
40782
6.........................................
42300 201-31............................. 41850 151. ............... ............... 42624 391 ............ ........... 40782
iv Federal Register / Vol. 54, No. 209 / Tuesday, October 31, 1989 / Reader Aids