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Code · REGISTER · 2006-05-18 · Federal Deposit Insurance Corporation (FDIC) · Proposed Rules

Proposed Rules. Notice of proposed rulemaking

35,088 words·~159 min read·/register/2006/05/18/06-4628·

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

BILLING CODE 6714-01-P FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 327 RIN 3064-ADO7 Dividends AGENCY: Federal Deposit Insurance Corporation (FDIC). ACTION: Notice of proposed rulemaking. SUMMARY: The FDIC is proposing to amend 12 CFR 327 to implement the dividend requirements in the recently enacted Federal Deposit Insurance Reform Act of 2005 (“Reform Act”) and the Federal Deposit Insurance Reform Conforming Amendments Act of 2005 (“Amendments Act”) for an initial two-year period.
The proposed rule would sunset on December 31, 2008. If this proposal is adopted, during 2007, the FDIC would plan to undertake a second notice-and-comment rulemaking beginning with an Advanced Notice of Proposed Rulemaking to explore alternative methods for distributing future dividends after this initial two-year period. DATES: Comments must be received on or before July 17, 2006. ADDRESSES: You may submit comments, identified by RIN number by any of the following methods: • Agency Web Site: *http://www.fdic.gov/regulations/laws/federal.propose.html.* Follow instructions for submitting comments on the Agency Web site. • E-mail: *Comments@FDIC.gov.* Include the RIN number in the subject line of the message. • Mail:
Robert E. Feldman, Executive Secretary, Attention: Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 20429. • Hand Delivery/Courier: Guard station at the rear of the 550 17th Street Building (located on F Street) on business days between 7 a.m. and 5 p.m. *Instructions:* All submissions received must include the agency name and RIN for this rulemaking. All comments received will be posted without change to *http://www.fdic.gov/regulations/laws/federal/propose.html* including any personal information provided.
FOR FURTHER INFORMATION CONTACT: Munsell W. St.Clair, Senior Policy Analyst, Division of Insurance and Research,
(202)898-8967; Donna M. Saulnier, Senior Assessment Policy Specialist, Division of Finance,
(703)562-6167; and Kymberly K. Copa, Counsel, Legal Division,
(202)898-8832. SUPPLEMENTARY INFORMATION: I. Background The Reform Act requires the FDIC to prescribe final regulations, within 270 days of enactment, to implement the dividend requirements, including regulations governing the method for the calculation, declaration, and payment of dividends and administrative appeals of individual dividend amounts. See sections 2107(a) and 2109(a)(3) of the Reform Act. 1 1 The Reform Act was included as Title II, Subtitle B, of the Deficit Reduction Act of 2005, Public Law 109-171, 120 Stat. 9, which was signed into law by the President on February 8, 2006. Section 2109 of the Reform Act also requires the FDIC to prescribe, within 270 days, rules on the designated reserve ratio, changes to deposit insurance coverage, the one-time assessment credit, and assessments. An interim final rule on deposit insurance coverage was published on March 23, 2006. See 71 FR 14629. A notice of proposed rulemaking on the one-assessment credit and a notice of proposed rulemaking on operational changes to the FDIC's assessment regulations are both being proposed by the FDIC at the same time as this notice on dividends. Additional rulemakings on the designated reserve ratio and risk-based assessments are expected to be proposed in the near future. Section 7(e)(2) of the Federal Deposit Insurance Act (“FDI Act”), as amended by the Reform Act, requires that the FDIC, under most circumstances, declare dividends from the Deposit Insurance Fund (“DIF” or “fund”) when the reserve ratio at the end of a calendar year exceeds 1.35 percent, but is no greater than 1.5 percent. In that event, the FDIC must generally declare one-half of the amount in the DIF in excess of the amount required to maintain the reserve ratio at 1.35 percent as dividends to be paid to insured depository institutions. However, the FDIC's Board of Directors (“Board”) may suspend or limit dividends to be paid, if the Board determines in writing, after taking a number of statutory factors into account, that: 1. The DIF faces a significant risk of losses over the next year; and 2. It is likely that such losses will be sufficiently high as to justify a finding by the Board that the reserve ratio should temporarily be allowed to grow without requiring dividends when the reserve ratio is between 1.35 and 1.5 percent or to exceed 1.5 percent. 2 2 This provision would allow the FDIC's Board to suspend or limit dividends in circumstances where the reserve ratio has exceeded 1.5 percent, if the Board made a determination to continue a suspension or limitation that it had imposed initially when the reserve ratio was between 1.35 and 1.5 percent. In addition, the statute requires that the FDIC, absent certain limited circumstances (discussed in footnote 2), declare a dividend from the DIF when the reserve ratio at the end of a calendar year exceeds 1.5 percent. In that event, the FDIC must declare the amount in the DIF in excess of the amount required to maintain the reserve ratio at 1.5 percent as dividends to be paid to insured depository institutions. If the Board decides to suspend or limit dividends, it must submit, within 270 days of making the determination, a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and to the Committee on Financial Services of the House of Representatives. The report must include a detailed explanation for the determination and a discussion of the factors required to be considered. 3 3 *See* section 5 of the Amendments Act. Public Law 109-173, 119 Stat. 3601, which was signed into law by the President on February 15, 2006. The FDI Act directs the FDIC to consider each insured depository institution's relative contribution to the DIF (or any predecessor deposit insurance fund) when calculating such institution's share of any dividend. More specifically, when allocating dividends, the Board must consider: 1. The ratio of the assessment base of an insured depository institution (including any predecessor) on December 31, 1996, to the assessment base of all eligible insured depository institutions on that date; 2. The total amount of assessments paid on or after January 1, 1997, by an insured depository institution (including any predecessor) to the DIF (and any predecessor fund); 4 4 This factor is limited to deposit insurance assessments paid to the DIF (or previously to the Bank Insurance Fund (“BIF”) or the Savings Association Insurance Fund (“SAIF”)) and does not include assessments paid to the Financing Corporation (“FICO”) used to pay interest on outstanding FICO bonds, although the FDIC collects those assessments on behalf of FICO. Beginning in 1997, the FDIC collected separate FICO assessments from both SAIF and BIF members. 3. That portion of assessments paid by an insured depository institution (including any predecessor) that reflects higher levels of risk assumed by the institution; and 4. Such other factors as the Board deems appropriate. The statute does not define the term “predecessor” for purposes of the distribution of dividends to insured depository institutions. Predecessor deposit insurance funds are the BIF and the SAIF, as those were the deposit insurance funds in existence after 1996 and prior to enactment of the Reform Act, and which merged into the DIF. That merger was effective on March 31, 2006. The statute expressly requires the FDIC to prescribe by regulation the method for calculating, declaring, and paying dividends. As with the one-time assessment credit, the dividend regulation must include provisions allowing a bank or thrift a reasonable opportunity to administratively challenge the amount of dividends it is awarded. Any review by the FDIC pursuant to these administrative procedures is to be considered final and not subject to judicial review. Accordingly, the FDIC today is requesting comment on proposed rules that would implement the dividend requirement added by the Reform Act. II. Description of the Proposal As part of this rulemaking, the FDIC must establish the process for the Board's annual determination of whether a declaration of a dividend is required and consideration, to the extent appropriate, of whether circumstances indicate that a dividend should be limited or suspended. In addition, the FDIC must set forth the procedures for calculating the aggregate amount of any dividend, allocating that aggregate amount among insured depository institutions considering the factors provided, and paying such dividends to individual insured depository institutions. Furthermore, these regulations must allow an insured depository institution a reasonable opportunity to challenge the amount of its dividend. A. Annual Determination of Whether Dividends Are Required/Declaration of Dividends The statute requires the FDIC to determine whether at the end of each calendar year the reserve ratio of the DIF equals or exceeds 1.35 percent or exceeds 1.5 percent, thereby triggering a dividend requirement. If the reserve ratio equals or exceeds 1.35 percent of estimated insured deposits, then the FDIC generally is required to declare the amount that is equal to one-half the amount in excess of the amount required to maintain the reserve ratio at 1.35 percent as dividends to be paid to insured depository institutions. 5 As a practical matter, when the reserve ratio is at or only slightly above 1.35 percent, the aggregate amount of a potential dividend would be relatively small, and an individual institution's share would be very small. Nonetheless, the statute expressly provides that the Board may elect to suspend or limit such dividends only in certain circumstances, as discussed further below. 5 The FDIC, thus, would have to determine how much is necessary to maintain the reserve ratio at 1.35 percent, once the dividend requirement is triggered by the year-end reserve ratio. If the reserve ratio exceeds 1.5 percent of estimated insured deposits, then the FDIC generally is required to declare the amount in the DIF in excess of the amount required to maintain the reserve ratio at 1.5 percent as dividends to be paid to insured depository institutions. In order to limit or suspend the payment of dividends when the reserve ratio is at or above 1.35 percent, the Board must determine in writing that a significant risk of losses to DIF exists over the next year and that it is likely that such losses will be high enough to justify allowing the reserve ratio either—(1) to grow temporarily without requiring dividends; or
(2)to exceed the upper end of the range for the reserve ratio (that is, 1.5 percent). The statute directs the Board to consider certain factors in making a determination to limit or suspend dividends:
(1)National and regional conditions and their effect on insured depository institutions;
(2)Potential problems affecting institutions or a specific group or type of institutions;
(3)The degree to which the contingent liability of the FDIC for anticipated failures adequately addresses funding levels in the DIF; and
(4)Any other factors the Board deems appropriate. As noted above, if the Board elects to suspend or limit dividends pursuant to this authority, it must report to Congress within 270 days of that decision giving a detailed explanation, including a discussion of the statutory factors required to be considered. A determination to limit or suspend dividends will have to be reviewed annually and must be justified to renew or make a new determination to limit or suspend dividends. Each year, if the decision is to continue to limit or suspend dividends, the Board must report to Congress. If the FDIC does not justify renewal or a new determination, it is required to provide cash dividends based on the amount of the reserve ratio. The FDIC proposes that the Board announce its determination regarding dividends by May 15th of each year, which will allow for the Board's consideration of the dividend determination using complete data for the reserve ratio for the preceding December 31st. Depending on circumstances, such announcements could include:
(1)A determination that no dividend is required because the reserve ratio is below 1.35 percent as of the end of the preceding calendar year;
(2)a declaration of a dividend; or
(3)a determination that a dividend would otherwise be required, but that circumstances warrant the limitation or suspension of that dividend, to be followed by the required report to Congress. Absent a Board determination that dividends should be limited or foregone, the aggregate amount of a dividend must be calculated as set forth in the statute. If the reserve ratio is between 1.35 percent and 1.5 percent, the FDIC must dividend half of the amount in excess of the amount required to maintain the reserve ratio at 1.35 percent. If the reserve ratio exceeds 1.5 percent, the FDI Act requires the FDIC to dividend the excess of the amount required to maintain the reserve ratio at 1.5 percent. 6 6 In most circumstances, if the reserve ratio exceeds 1.5 percent, the FDIC would declare a dividend of the excess, as determined by the FDIC, above 1.5 percent. At the same time, the FDIC would generally expect to declare a dividend of half of the amount necessary to maintain the reserve ratio at 1.35 percent, unless the Board makes a determination that suspension or limitation of that dividend is justified under section 7(e)(2)(E) of the FDI Act. That might happen, for example, if based on its consideration of the various statutory factors, the Board determines that it is appropriate to set the designated reserve ratio at 1.5 percent and set assessments to maintain the reserve ratio at that point. Sections 2104(a) and 2105(a) of the Reform Act (to be codified at 12 U.S.C. 1817(b)(2) and (3), respectively). B. Allocation of Dividends The FDIC proposes initially adopting a simple system for allocating future dividends. Under the proposal, this system would remain in place for two years with a definite sunset date (December 31, 2008). During the two-year lifespan of the initial dividend regulations, the FDIC would undertake another rulemaking, beginning with the issuance of an advance notice of proposed rulemaking, seeking industry comment on more comprehensive alternatives for allocating future dividends. Specifically, the FDIC proposes that, initially, any dividends be awarded simply in proportion to an institution's 1996 assessment base ratio (including any predecessors' 1996 ratios), discussed more fully below. The FDI Act requires that the FDIC consider this ratio when allocating dividends. The statute also requires that the FDIC consider the total amount of assessments paid after 1996 and the portion of those assessments that reflects higher levels of risk. No institution while in the lowest risk category (sometimes referred to as “the 1A category”) has paid any deposit insurance assessments since the end of 1996. All assessments paid since then have reflected higher levels of risk—that is, since year-end 1996 when the BIF and SAIF were both fully capitalized with reserve ratios in excess of the statutory minimum of 1.25 percent, only those insured depository institutions that exhibited financial, operational, or compliance weaknesses ranging from moderately severe to unsatisfactory, or that were not well capitalized (as defined in section 38 of the FDI Act), were required to pay assessments. Within the proposed initial two-year period, any assessments that institutions pay that do not reflect higher levels of risk are likely to be small in comparison to the assessments that institutions paid over time to capitalize the deposit insurance funds, for which the 1996 assessment base is intended to act as a proxy. As a result, the FDIC has concluded that payments since 1996 should not be included in the proposed temporary allocation method. 7 7 It is in large part because post-2006 payments may become material over time that the FDIC proposes adoption of an interim rule, with the expectation that in 2007 the process of developing a more comprehensive long-term rule will begin. Under the FDI Act, the Board also has discretion to consider such factors as it deems appropriate when allocating dividends. In the FDIC's view, other factors support an initially simple allocation based upon institutions' 1996 ratio. As a practical matter, it appears quite unlikely that the reserve ratio of the DIF will equal or exceed 1.35 percent in the near future given the combined fund's current reserve ratio of 1.25 percent 8 as of December 31, 2005, the continuing trend of high insured deposit growth rates, and the $4.7 billion one-time credit, which will constrain net assessment income. The FDIC has concluded that it is important to obtain and consider carefully public comment before instituting a more comprehensive allocation scheme that may not change for many years. Such a small likelihood of a dividend does not justify adoption of a more complex scheme within the relatively short timeframe required by the statute. 8 When the funds from the SAIF exit fee escrow account are included, the combined reserve ratio for December 31, 2005, would be 1.26 percent. 1. 1996 Assessment Base Ratio As noted above, the FDI Act sets forth three specific factors for consideration in distributing dividends. The first factor is the ratio of the assessment base of an insured depository institution (including any predecessor) on December 31, 1996, to the assessment base of all eligible insured depository institutions on that date. This factor essentially parallels the basis for distribution of the one-time assessment credit. The 1996 assessment base ratio for each insured depository institution will have been determined under the one-time assessment credit regulations and will continue in effect for dividend purposes, subject to subsequent adjustments for transactions that result in the combination of insured depository institutions, thereby recognizing “predecessor” institutions as time goes by. 2. Predecessor Insured Depository Institutions The FDI Act does not define the term “predecessor” for purposes of the distribution of dividends to individual insured depository institutions. In addition, unlike the term “successor” used in the context of the one-time assessment credit, the FDI Act does not expressly charge the FDIC with defining “predecessor.” Nonetheless, in order to implement the dividend requirements, the FDIC must define “predecessor” for these purposes when it is used in connection with an insured depository institution and the distribution of dividends. The FDIC proposes to adopt a definition of “predecessor,” that is consistent with general principles of corporate law and the proposed definition of “successor” in the one-time assessment credit notice of proposed rulemaking. Therefore, a “predecessor” would be defined as an institution that combined with another institution through merger or consolidation and did not survive as an entity. As with the definition of “successor” in the one-time assessment credit notice of proposed rulemaking, the FDIC is seeking comment on whether the definition of “predecessor” should include an institution that combined with another institution through a de facto merger. In addition, if the FDIC were to adopt an alternative definition of “successor” for purposes of the one-time assessment credit rule, such as a definition that takes into account deposit or branch sales, the FDIC seeks comment on whether that alternative should similarly be applied to the definition of “predecessor” for purposes of dividends. C. Notification and Payment of Dividends The FDIC proposes that the FDIC advise each institution of its dividend amount as soon as practicable after the Board's declaration of a dividend on or before May 15th. Depending on circumstances, notification would take place through a special notice of dividend or, at the latest, with the institution's next assessment invoice. To allow time for requests for review of dividend amounts, the FDIC proposes that the individual dividend amounts be paid to insured depository institutions at the time of the assessment collection for the second calendar quarter beginning after the declaration of the dividend and offset each institution's assessment amount. Under the proposed rule, the settlement would be handled through the Automated Clearing House consistent with existing procedures for underpayment or overpayment of assessments. Thus, in the event that the institution owes assessments in excess of the dividend amount, there will be a net debit (resulting in payment to the FDIC). Conversely, if the FDIC owes an additional dividend amount in excess of the assessment to the institution, there will be a net credit (resulting in payment from the FDIC). If an institution requests review of the amount of its dividend (as discussed below), and that request is not finally resolved at the time of the collection of the assessment, the FDIC proposes to credit the institution with the dividend amount on the notice or invoice. To the extent that a dividend amount is in dispute between institutions, the FDIC proposes to freeze the availability of the amount in dispute. If the institution prevails on its request for review, then any additional amount of dividend will be remitted to the institution, with interest. D. Requests for Review of Dividend Amounts Like the regulations governing the one-time assessment credit, the FDI Act requires the FDIC to include in its dividend regulations provisions allowing an insured depository institution a reasonable opportunity to challenge administratively the amount of its dividend. The FDIC's determination under such procedures is to be final and not subject to judicial review. It is proposed that the proposed rule largely parallel the procedures for requesting revision of computation of a quarterly assessment payment as shown on the quarterly invoice. As with the one-time credit notice of proposed rulemaking, the FDIC proposes shorter timeframes in the dividend appeals process so that requests for review may be resolved by the time payment of dividends is due, to the extent possible. An institution would have 30 days from the date of the notice or invoice advising each institution of its dividend amount to request review of the dividend determination. Under the proposed rule, an institution could request review if
(1)it disagrees with the computation of the dividend as stated on the notice or invoice, or
(2)it believes that the notice or invoice does not fully or accurately reflect appropriate adjustments to the institution's 1996 assessment base ratio. For example, the institution may believe that its 1996 assessment base ratio has not been adjusted to reflect its acquisition of an eligible insured depository institution. The FDIC proposes that, if an institution does not submit a timely request for review, the institution be barred from subsequently requesting review of its dividend amount. The proposed rule would require that a request for review be submitted to Division of Finance and include documentation sufficient to support the change sought by the institution. In addition, the requesting institution would have to identify all other institutions of which it knew or had reason to believe would be directly and materially affected by granting the request for review and provide those institutions with copies of the request for review, supporting documentation, and the FDIC's procedures for these requests for review. Under the proposal, the FDIC shall make reasonable efforts, based on its official systems of records, to determine that such institutions have been identified and notified. These institutions would then have 30 days to submit a response and any supporting documentation to the FDIC's Division of Finance, copying the institution making the original request for review. The FDIC proposes that, if an institution is identified and notified through this process and does not submit a timely response, the institution be foreclosed from subsequently disputing the information submitted by any other institution on the transaction(s) at issue in the review process. The FDIC may request additional information as part of its review, and the proposed rule would require the institution to supply that information within 21 days of the date of the FDIC's request for additional information. As previously noted, the FDIC further proposes to freeze temporarily the distribution of the dividend amount in dispute for the institutions involved in the challenge until the challenge is resolved. The proposed rule requires a written response from the FDIC's Director of the Division of Finance (“Director”):
(1)Within 60 days of receipt by the FDIC of the request for revision;
(2)if additional institutions have been notified by the requesting institution or the FDIC, within 60 days of the date of the last response to the notification; or,
(3)if additional information has been requested by the FDIC, within 60 days of receipt of the additional information, whichever is latest. Whenever feasible, the response is to notify the institution of the determination of the Director as to whether the requested change is warranted. In all instances in which a timely request for review is submitted, the Director will make a determination on the request as promptly as possible and notify the institution in writing of the determination. Notice of the procedures applicable to reviews will be included with the notice or invoice providing notification of the dividend. Under the proposed rule, an institution that disagrees with the determination of the Director may appeal its dividend determination to the FDIC's Assessment Appeals Committee (“AAC”). An appeal would have to be filed within 15 calendar days from the date of the Director's written determination. Notice of the procedures applicable to appeals will be included with that written determination. The AAC's determination would be final and not subject to judicial review. III. Regulatory Analysis and Procedure A. Solicitation of Comments on Use of Plain Language Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. We invite your comments on how to make this proposal easier to understand. For example: • Have we organized the material to suit your needs? If not, how could this material be better organized? • Are the requirements in the proposed regulation clearly stated? If not, how could the regulation be more clearly stated? • Does the proposed regulation contain language or jargon that is not clear? If so, which language requires clarification? • Would a different format (grouping and order of sections, use of headings, paragraphing) make the regulation easier to understand? If so, what changes to the format would make the regulation easier to understand? • What else could we do to make the regulation easier to understand? B. Regulatory Flexibility Act The Regulatory Flexibility Act (“RFA”) requires that each Federal agency either certify that a proposed rule would not, if adopted in final form, have a significant impact on a substantial number of small entities or prepare an initial regulatory flexibility analysis of the proposal and publish the analysis for comment. See 5 U.S.C. 603, 605. This proposed rule, if adopted in final form, would provide the procedures for the FDIC's declaration, distribution, and payment of dividends to insured depository institutions under the circumstances set forth in the FDI Act. While each insured depository institution would have the opportunity to request review of the amount of its dividend each time a dividend is declared, the proposed rule would rely on information already collected and maintained by the FDIC in the regular course of business. For the limited duration of the proposed rule, it appears unlikely that a dividend would be required. On this basis, the FDIC certifies that this proposal, if it is adopted in final form, would not have a significant impact on a substantial number of small entities, within the meaning of those terms as used in the RFA. Commenters are invited to provide the FDIC with any information they may have about the likely quantitative effects of the proposal. C. Paperwork Reduction Act No collections of information pursuant to the Paperwork Reduction Act (44 U.S.C. Ch. 3501 *et seq.* ) are contained in the proposed rule. D. The Treasury and General Government Appropriations Act, 1999—Assessment of Federal Regulations and Policies on Families The FDIC has determined that the proposed rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, enacted as part of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 2681). List of Subjects in 12 CFR Part 327 Bank deposit insurance, Banks, Banking, Savings associations. 12 CFR Chapter III Authority and Issuance For the reasons set forth in the preamble, the FDIC proposes to amend chapter III of title 12 of the Code of Federal Regulations as follows: PART 327—ASSESSMENTS 1. Add subpart C, consisting of § 327.50 through 327.55, to read as follows: Subpart C—Implementation of Dividend Requirements Sec. 327.50 Purpose and scope. 327.51 Definitions. 327.52 Annual dividend determination. 327.53 Allocation and payment of dividends. 327.54 Requests for review of dividend amount. 327.55 Sunset date. Subpart C—Implementation of Dividend Requirements Authority: 12 U.S.C. 1817(e)(2), (4). § 327.50 Purpose and scope.
(a)*Scope.* This subpart C of part 327 implements the dividend provisions of section 7(e)(2) of the Federal Deposit Insurance Act, 12 U.S.C. 1817(e)(2), and applies to insured depository institutions.
(b)*Purpose.* This subpart C of part 327 sets forth the rules for:
(1)The FDIC's annual determination of whether to declare a dividend and the aggregate amount of any dividend;
(2)The FDIC's determination of the amount of each insured depository institution's share of any declared dividend;
(3)The time and manner for the FDIC's payment of dividends; and
(4)An institution's appeal of the FDIC's determination of its dividend amount. § 327.51 Definitions. For purposes of this subpart:
(a)*Board* has the same meaning as under subpart B of this part.
(b)*DIF* means the Deposit Insurance Fund.
(c)An *insured depository institution's 1996 assessment base ratio* means the share of an insured depository institution in the one-time assessment credit under subpart B of this part, adjusted as necessary after the effective date of subpart B of this part to reflect mergers in which the institution succeeds to another institution's share of the one-time assessment credit.
(d)*Merger* has the same meaning as under subpart B of this part.
(e)*Predecessor* , when used in the context of insured depository institutions, refers to the institution merged with or into a resulting institution.
(f)*Resulting institution* has the same meaning as under subpart B of this part.
(g)*Successor* , when used in the context of insured depository institutions, has the same meaning as under subpart B of this part. § 327.52 Annual dividend determination.
(a)Before May 15th of each calendar year, beginning in 2007, the Board shall determine whether to declare a dividend based upon the reserve ratio of the DIF as of December 31st of the preceding year, and the amount of the dividend, if any.
(b)Except as provided in paragraph
(d)of this section, if the reserve ratio of the DIF equals or exceeds 1.35 percent of estimated insured deposits and does not exceed 1.5 percent, the Board shall declare the amount that is equal to one-half of the amount in excess of the amount required to maintain the reserve ratio at 1.35 percent as the aggregate dividend to be paid to insured depository institutions.
(c)If the reserve ratio of the DIF exceeds 1.5 percent of estimated insured deposits, except as provided in paragraph
(d)of this section, the Board shall declare the amount in excess of the amount required to maintain the reserve ratio at 1.5 percent as the aggregate dividend to be paid to insured depository institutions and shall declare a dividend under paragraph
(b)of this section. (d)(1) The Board may suspend or limit a dividend otherwise required to be paid if the Board determines that:
(i)A significant risk of losses to the DIF exists over the next one-year period; and
(ii)It is likely that such losses will be sufficiently high as to justify the Board concluding that the reserve ratio should be allowed:
(A)To grow temporarily without requiring dividends when the reserve ratio is between 1.35 and 1.5 percent; or
(B)To exceed 1.5 percent.
(2)In making a determination under this paragraph, the Board shall consider:
(i)National and regional conditions and their impact on insured depository institutions;
(ii)Potential problems affecting insured depository institutions or a specific group or type of depository institution;
(iii)The degree to which the contingent liability of the FDIC for anticipated failures of insured institutions adequately addresses concerns over funding levels in the DIF; and
(iv)Any other factors that the Board may deem appropriate.
(3)Within 270 days of making a determination under this paragraph, the Board shall submit a report to the Committee on Financial Services and the Committee on Banking, Housing, and Urban Affairs, providing a detailed explanation of its determination, including a discussion of the factors considered.
(e)The Board shall annually review any determination to suspend or limit dividend payments and must either:
(1)Make a new finding justifying the renewal of the suspension or limitation under paragraph
(d)of this section, and submit a report as required under paragraph (d)(3) of this section; or
(2)Reinstate the payment of dividends as required by paragraph
(b)or
(c)of this section. § 327.53 Allocation and payment of dividends.
(a)For any dividend declared before January 1, 2009, allocation of such dividend among insured depository institutions shall be based solely on an insured depository institution's 1996 assessment base ratio.
(b)The FDIC shall notify each insured depository institution of the amount of such institution's dividend payment based on its share as determined pursuant to paragraph
(a)of this section. Notice shall be given as soon as practicable after the Board's declaration of a dividend through a special notice of dividend or, at the latest, with the institution's next assessment invoice.
(c)The FDIC shall pay individual dividend amounts to insured depository institutions at the time of the collection by the FDIC of the assessments for the second calendar quarter beginning after the declaration of the dividend. An institution's dividend amount shall be remitted with that institution's assessment. Any excess dividend amount will be a net credit of the FDIC and will be deposited into the deposit account designated by the institution for assessment payment purposes pursuant to subpart A. If the dividend amount is less than the amount of assessment due, then the institution's account will be directly debited to the FDIC to reflect the net amount owed to the FDIC as an assessment.
(d)If an insured depository institution requests review of its dividend amount under § 327.54, and that request is not finally resolved prior to the dividend payment date, the FDIC shall credit the institution with the dividend amount provided on the invoice. If the institution prevails on its request for review, then any additional amount of dividend will be remitted to the institution, with interest, with the institution's assessment in the next calendar quarter after the final determination has been made. § 327.54 Requests for review of dividend amount.
(a)An insured depository institution may submit a request for review of the FDIC's determination of the institution's dividend amount as shown on the special notice of dividend or assessment invoice, as appropriate. Such review may be requested if:
(1)The institution disagrees with the calculation of the dividend as stated on the special notice of dividend or invoice; or
(2)The institution believes that the 1996 assessment base ratio attributed to the institution does not fully or accurately reflect appropriate adjustments for predecessors resulting from transactions involving the institution after the FDIC's final determination of the 1996 assessment base ratio under subpart B of this part.
(b)Any such request for review must be submitted within 30 days of the date of the special notice of dividend or invoice for which a change is requested. The request for review shall be submitted to the Division of Finance and shall provide documentation sufficient to support the change sought by the institution. If an institution does not submit a timely request for review, that institution may not subsequently request review of its dividend amount, subject to paragraph
(d)of this section. At the time of filing with the FDIC, the requesting institution shall notify, to the extent practicable, any other insured depository institution that would be directly and materially affected by granting the request for review and provide such institution with copies of the request for review, the supporting documentation, and the FDIC's procedures for requests under this subpart. The FDIC shall make reasonable efforts, based on its official systems of records, to determine that such institutions have been identified and notified.
(c)During the FDIC's consideration of the request for review, the amount of dividend in dispute shall not be available for use by any institution.
(d)Within 30 days of the filing of the request for review, those institutions identified as potentially affected by the request for review may submit a response to such request, along with any supporting documentation, to the Division of Finance, and shall provide copies to the requesting institution. If an institution that was notified under paragraph
(b)of this section does not submit a response to the request for review, that institution may not subsequently:
(1)Dispute the information submitted by any other institution on the transaction(s) at issue in that review process; or
(2)Appeal the decision by the Director of the Division of Finance.
(e)If additional information is requested of the requesting or affected institutions by the FDIC, such information shall be provided by the institution within 21 days of the date of the FDIC's request for additional information.
(f)Any institution submitting a timely request for review will receive a written response from the FDIC's Director of the Division of Finance (“Director”):
(1)Within 60 days of receipt by the FDIC of the request for revision;
(2)If additional institutions have been notified by the requesting institution or the FDIC, within 60 days of the date of the last response to the notification; or
(3)If additional information has been requested by the FDIC, within 60 days of receipt of the additional information,whichever is later. Whenever feasible, the response will notify the institution of the determination of the Director as to whether the requested change is warranted. In all instances in which a timely request for review is submitted, the Director will make a determination on the request as promptly as possible and notify the institution in writing of the determination. Notice of the procedures applicable to reviews will be included with the special notice of dividend or assessment invoice providing notification of the dividend.
(g)An insured depository institution may appeal the determination of the Director to the FDIC's Assessment Appeals Committee on the same grounds as set forth under paragraph
(a)of this section. Any such appeal must be submitted within 15 calendar days from the date of the Director's written determination. Notice of the procedures applicable to appeals under this section will be included with the Director's written determination. The decision of the Assessment Appeals Committee shall be the final determination of the FDIC. § 327.55 Sunset date. Subpart C shall cease to be effective on December 31, 2008. Dated at Washington, DC, this 9th day of May, 2006. By order of the Board of Directors. Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. [FR Doc. E6-7585 Filed 5-17-06; 8:45 am] BILLING CODE 6714-01-P FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 327 RIN 3064-AD08 One-Time Assessment Credit AGENCY: Federal Deposit Insurance Corporation (FDIC). ACTION: Notice of proposed rulemaking. SUMMARY: The Federal Deposit Insurance Corporation (“FDIC”) is proposing to amend 12 CFR part 327 to implement the one-time assessment credit for certain eligible insured depository institutions required by the Federal Deposit Insurance Act (“FDI Act”) as amended by the Federal Deposit Insurance Reform Act of 2005 (“Reform Act”). The proposed rule covers: the aggregate amount of the one-time credit; the institutions that are eligible to receive credits; and the amount of each eligible institution's credit, which for some institutions may be largely dependent on how the FDIC defines “successor” for these purposes. The proposed rule also would establish the qualifications and procedures governing the application of assessment credits, and provide a reasonable opportunity for an institution to challenge administratively the amount of the credit. DATES: Comments must be received on or before July 17, 2006. ADDRESSES: You may submit comments, identified by RIN number by any of the following methods: • Agency Web site: *http://www.fdic.gov/regulations/laws/federal.propose.html.* Follow instructions for submitting comments on the Agency Web site. • E-mail: *Comments@FDIC.gov.* Include the RIN number in the subject line of the message. • Mail: Robert E. Feldman, Executive Secretary, Attention: Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 20429 • Hand Delivery/Courier: Guard station at the rear of the 550 17th Street Building (located on F Street) on business days between 7 a.m. and 5 p.m. *Instructions:* All submissions received must include the agency name and RIN for this rulemaking. All comments received will be posted without change to *http://www.fdic.gov/regulations/laws/federal/propose.html* including any personal information provided. FOR FURTHER INFORMATION CONTACT: Munsell W. St.Clair, Senior Policy Analyst, Division of Insurance and Research,
(202)898-8967; Donna M. Saulnier, Senior Assessment Policy Specialist, Division of Finance,
(703)562-6167; and Kymberly K. Copa, Counsel, Legal Division,
(202)898-8832. SUPPLEMENTARY INFORMATION: I. Background Section 7(e)(3) of the Federal Deposit Insurance Act, as amended by the Reform Act, 1 requires that the FDIC's Board of Directors (“Board”) provide by regulation an initial, one-time assessment credit to each “eligible” insured depository institution (or its successor) based on the assessment base of the institution as of December 31, 1996, as compared to the combined aggregate assessment base of all eligible institutions as of that date (“the 1996 assessment base ratio”), taking into account such other factors the Board may determine to be appropriate. The aggregate amount of one-time credits is to equal the amount that the FDIC could have collected if it had imposed an assessment of 10.5 basis points on the combined assessment base of the Bank Insurance Fund (“BIF”) and Savings Association Insurance Fund (“SAIF”) as of December 31, 2001. 12 U.S.C. 1817(e)(3). 1 The Reform Act was included as Title II, Subtitle B, of the Deficit Reduction Act of 2005, Public Law 109-171, 120 Stat. 9, which was signed into law by the President on February 8, 2006. An “eligible” insured depository institution is one that: 1. Was in existence on December 31, 1996, and paid a Federal deposit insurance assessment prior to that date; 2 or 2 Prior to 1997, the assessments that SAIF member institutions paid the SAIF were diverted to the Financing Corporation (“FICO”), which had a statutory priority to those funds. Beginning with enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA,” Pub. L. 101-73, 103 Stat. 183) and ending with the Deposit Insurance Funds Act of 1996 (“DIFA,” Pub. L. 104-208, 110 Stat. 3009, 3009-479), FICO had authority, with the approval of the Board of Directors of the FDIC, to assess against SAIF members to cover anticipated interest payments, issuance costs, and custodial fees on FICO bonds. The FICO assessment could not exceed the amount authorized to be assessed against SAIF members pursuant to section 7 of the FDI Act, and FICO had first priority against the assessment. 12 U.S.C. 1441(f), as amended by FIRREA. Beginning in 1997, the FICO assessments were no longer drawn from SAIF. Rather, the FDIC began collecting a separate FICO assessment. 12 U.S.C. 1441(f), as amended by DIFA. Payments to SAIF prior to December 31, 1996, therefore, are considered deposit insurance assessments for purposes of the one-time assessment credit. The new law does not change the existing process through which the FDIC collects FICO assessments. 2. Is a “successor” to any such insured depository institution. The FDI Act requires the Board to define “successor” for these purposes and provides that the Board “may consider any factors as the Board may deem appropriate.” The amount of a credit to any eligible insured depository institution must be applied by the FDIC to the assessments imposed on such institution that become due for assessment periods beginning after the effective date of the one-time credit regulations required to be issued within 270 days after enactment. 3 12 U.S.C. 1817(e)(3)(D)(i). 3 Section 2109 of the Reform Act also requires the FDIC to prescribe, within 270 days, rules on the designated reserve ratio, changes to deposit insurance coverage, the dividend requirement, and assessments. An interim final rule on deposit insurance coverage was published on March 23, 2006. See 71 FR 14629. A notice of proposed rulemaking on the dividend requirement and a notice of proposed rulemaking on operational changes to the FDIC's assessment regulations are both being proposed by the FDIC at the same time as this notice on the one-time assessment credit. Additional rulemakings on the designated reserve ratio and risk-based assessments are expected to be proposed in the near future. *There are three restrictions on the use of credits:* 1. As a general rule, for assessments that become due for assessment periods beginning in fiscal years 2008, 2009, and 2010, credits may not be applied to more than 90 percent of an institution's assessment. 12 U.S.C. 1817(e)(3)(D)(ii). (This 90 percent limit does not apply to 2007 assessments.) 2. For an institution that exhibits financial, operational or compliance weaknesses ranging from moderately severe to unsatisfactory, or is not at least adequately capitalized (as defined pursuant to section 38 of the FDI Act) at the beginning of an assessment period, the amount of any credit that may be applied against the institution's assessment for the period may not exceed the amount the institution would have been assessed had it been assessed at the average rate for all institutions for the period. 12 U.S.C. 1817(e)(3)(E). 3. If the FDIC is operating under a restoration plan to recapitalize the Deposit Insurance Fund (“DIF”) pursuant to section 7(b)(3)(E) of the FDI Act, as amended by the Reform Act, the FDIC may elect to restrict credit use; however, an institution must still be allowed to apply credits up to three basis points of its assessment base or its actual assessment, whichever is less. 12 U.S.C. 1817(b)(3)(E)(iii). The one-time credit regulations must include the qualifications and procedures governing the application of assessment credits. These regulations also must include provisions allowing a bank or thrift a reasonable opportunity to challenge administratively the amount of credits it is awarded. 4 Any determination of the amount of an institution's credit by the FDIC pursuant to these administrative procedures is final and not subject to judicial review. 12 U.S.C. 1817(e)(4). 4 Similarly, for dividends under the FDI Act as amended by the Reform Act, the regulations must include provisions allowing a bank or thrift a reasonable opportunity to administratively challenge the amount of dividends it is awarded. 12 U.S.C. 1817(e)(4). Accordingly, the FDIC is requesting comment on proposed rules that would implement the one-time assessment credit requirement added by the Reform Act. II. Description of the Proposal As part of this rulemaking, the FDIC must, among other things: determine the aggregate amount of the one-time credit; determine the institutions that are eligible to receive credits; and determine the amount of each eligible institution's credit, which for some institutions may be largely dependent on how the FDIC defines “successor” for these purposes. The FDIC also must establish the qualifications and procedures governing the application of assessment credits, and provide a reasonable opportunity for an institution to challenge administratively the amount of the credit. The FDIC's determination after such challenge will be final and not subject to judicial review. As set out more fully below, the FDIC proposes that the Board: rely on the 1996 assessment base figures contained in the Assessment Information Management System (AIMS II) 5 ; define “successor” as the resulting institution in a merger or consolidation, while seeking comment on alternative definitions; determine that the FDIC will automatically apply each institution's credit against future assessments to the maximum extent allowed consistent with the limitations in the FDI Act; and provide an appeals process for administrative challenges to the amounts of credits that culminates in review by the Assessment Appeals Committee (AAC). 5 The current Assessment Information Management Systems (commonly referred to as AIMS II) contains a record for quarterly reports of condition data from institutions with bank and thrift charters. The FFIEC Central Data Repository (“FFIEC-CDR”) for banks and the Thrift Financial Report for thrifts provide AIMS II with the values of the deposit line items that are used in the calculation of an institution's assessment base. Shortly after publication of the notice of proposed rulemaking, the FDIC intends to make available to each insured depository institution the FDIC's calculation of that institution's 1996 assessment base (if any), and to give each institution the opportunity to review and verify its 1996 assessment base, as well as information related to mergers or consolidations to which it was a party. A. Aggregate Amount of One-time Assessment Credit The aggregate amount of the one-time assessment credit is expected to be $4,707,580,238.19, which is calculated by applying an assessment rate of 10.5 basis points to the combined assessment base of BIF and SAIF as of December 31, 2001. The FDIC proposes to rely on the assessment base numbers available from each institution's certified statement (or amended certified statement), filed quarterly and preserved in AIMS II, which records the assessment base for each insured depository institution as of that date. AIMS II is the FDIC's official system of records for determination of assessment bases and assessments due. B. Determination of Eligible Insured Depository Institutions and Each Institution's 1996 Assessment Base Ratio The FDIC must determine the assessment base of each eligible institution as of December 31, 1996, and any successor institutions, to determine the 1996 assessment base ratio. In making these determinations, the Board has the authority to take into account such factors as the Board may determine to be appropriate. 12 U.S.C. 1817(e)(3)(A). Stated simply, the denominator of the 1996 assessment base ratio is the combined aggregate assessment base of all eligible insured depository institutions and their successors. The numerator of each eligible institution's 1996 assessment base ratio is its assessment base as of December 31, 1996, together with the assessment base on December 31, 1996, of each institution (if any) to which it is a successor. An eligible insured depository institution is one in existence as of December 31, 1996, that paid an assessment prior to that date (or a successor to such institution). 1. Determination of Eligible Institutions As a starting point, the FDIC proposes to use the December 31, 1996 assessment base for each institution, as it appears on the institution's certified statement or as subsequently amended and as recorded in AIMS II. Those numbers reflect the bases on which institutions that existed on December 31, 1996, paid assessments. As of December 31, 2005, it appears that there were approximately 7,400 active insured depository institutions that may be eligible for the one-time assessment credit—that is, they were in existence on December 31, 1996, and had paid an assessment prior to that date. a. Effect of Voluntary Termination or Failure The FDIC has identified those institutions that have voluntarily terminated their insurance or failed since December 31, 1996, which otherwise would have been considered eligible insured depository institutions for purposes of the one-time credit. The FDIC proposes that the definition of “successor” (discussed more fully below) govern the determination of whether the one-time credits of an institution that voluntarily is eligible and its credits transfer to a successor. Whether an institution that voluntarily terminated would have a successor would depend on the specific circumstances surrounding its termination. The FDIC proposes that an insured depository institution that has failed would not have a successor. b. De Novo Institutions The FDIC has identified those institutions newly in existence as of December 31, 1996 (“ *de novo* institutions”) that did not pay deposit insurance premiums prior to December 31, 1996. Under the statute, those institutions could not be eligible insured depository institutions for purposes of the one-time assessment credit. The FDIC's records indicate that there were approximately 90 institutions that became newly insured between July 1, 1996 and December 31, 1996, that did not pay any deposit insurance assessment and did not acquire through merger or consolidation another institution that had paid assessments before year-end 1996. These institutions are not eligible for credits under the terms of the statute. In addition, the FDIC's records indicate that there are two *de novo* institutions, which did not pay assessments directly, but each acquired by merger an institution that had paid assessments before December 31, 1996. Under traditional general principles of corporate law, the surviving or resulting institution in a merger or consolidation is considered to have acquired the rights, privileges, powers, franchises, and property of the terminating institution, as well as the liabilities, restrictions, and duties of that institution. The surviving or resulting institution effectively continues the business of the terminating institution. 15 William Meade Fletcher *et al.* , Fletcher Cyclopedia of the Law of Private Corporations §§ 7041-7100 (perm. ed., rev. vol. 1999). On that basis, the FDIC proposes that a *de novo* institution that acquired, through merger or consolidation, an existing insured depository institution that had paid a deposit insurance assessment be considered to have stepped into the shoes of the existing institution for purposes of determining eligibility for the one-time assessment credit. 2. Definition of “Successor” As noted above, an insured depository institution in existence on December 31, 1996, that paid insurance premiums is eligible for the one-time assessment credit. An institution also may be eligible as a “successor” to such an institution. In making the preliminary determinations of eligible insured depository institutions, their assessment bases as of December 31, 1996, and the combined assessment base of the BIF and the SAIF as of the same date, the FDIC proposes to rely on the institution's certified statement (as amended, if necessary), as recorded in AIMS II. Many institutions that existed at the end of 1996 no longer exist. Some have disappeared through merger or consolidation. In fact, it appears that approximately 3,850 additional institutions that were in existence on December 31, 1996, have since combined with other institutions. In addition, 38 institutions have failed and no longer exist, while the FDIC has to date identified approximately 90 others that voluntarily relinquished federal deposit insurance coverage or had their coverage terminated. The FDIC does not maintain complete records on sales of branches or blocks of deposits, but various sources suggest that at least 1,400 and possibly over 1,800 branch or deposit transactions have occurred since 1996. Section 7(e)(3)(F) of the FDI Act expressly charges the FDIC with defining “successor” by regulation for purposes of the one-time credit, and it provides the FDIC with broad discretion to do so. The Board may consider any factors it deems appropriate. In developing its proposal regarding the definition of “successor,” the FDIC viewed the issue in the context of two fundamental questions: what would be most consistent with the purpose of the one-time credit and what would be operationally viable. While a number of definitions of “successor” are possible in light of the discretion accorded the FDIC in defining the term, on balance, the FDIC concluded that one approach was more consistent with the purpose of the credit and more operationally viable. The FDIC considered definitions that would focus on the institution itself and definitions that linked credits to deposits and considered the arguments in support of those definitions. Proponents of an institution-based approach might argue that it is the institution that paid deposit insurance premiums to capitalize the insurance funds, that the potential one-time credit would be one of the rights or privileges of an institution that would be acquired through merger or consolidation under general principles of corporate law, and that a different approach could result in institutions that had not paid premiums to capitalize the funds receiving credits. Proponents of a “follow-the-deposits” definition, however, might argue that the one-time credit should adhere to deposits because the one-time credit is to be allocated based on deposits and is intended to offset future assessments to be paid on deposits. The FDIC also considered the operational viability of these approaches to the definition and found that the FDIC's existing systems of records could support an institution-based approach, but a “follow-the-deposits” approach would require collection of information from the industry before it could be fully implemented. For the reasons set forth below, the FDIC proposes to define “successor” for purposes of the one-time credit as the resulting institution in a merger or consolidation occurring after December 31, 1996. As proposed, the definition would not include a purchase and assumption transaction, even if substantially all of the assets and liabilities of an institution are acquired by the assuming institution. However, the FDIC further requests comment on whether to include in this definition a regulatory definition of a *de facto* merger to recognize that the results of some transactions, which are not technically mergers or consolidations, largely mirror the results of a merger or consolidation. a. Merger or Consolidation Rule Defining “successor” as the resulting institution in a merger or consolidation is consistent with the clear purpose of the one-time assessment credit—that is, to recognize the contributions that some insured depository institutions made to capitalize the deposit insurance funds and conversely to recognize the fact that many newer institutions have never paid assessments because they were chartered after the reserve ratios of BIF and SAIF reached 1.25 percent and most institutions were charged nothing. 6 In addition, the FDIC believes that this definition is consistent with the general expectations of the industry, because it reflects the common legal meaning of the word “successor” and the principle that the resulting corporation in a merger or consolidation generally receives the rights, privileges, interests, and liabilities of the merging or consolidating corporations. 15 William Meade Fletcher *et al.* , Fletcher Cyclopedia of the Law of Private Corporations §§ 7041-7100 (perm. ed., rev. vol. 1999). Institutions that acquired other institutions by way of merger or consolidation will have believed that they were acquiring *all* of the rights and privileges of the acquired institution, known or unknown. 6 Prior to the effective date of changes to the FDIC's assessment authority by the Reform Act, the FDIC is required to set assessments when necessary and only to the extent necessary to maintain the reserve ratio at 1.25 percent of estimated insured deposits, except for those institutions that exhibit financial, operational, or compliance weaknesses ranging from moderately severe to unsatisfactory, or are not well capitalized. 12 U.S.C. 1817(b)(2)(A) (2005). While it is possible that some state banking laws may differ, this definition is consistent with the National Bank Consolidation and Merger Act. 12 U.S.C. 215, 216. The FDIC has significant discretion in defining the term “successor” for these purposes, and a single federal standard is essential to allow the FDIC to implement and administer the one-time credit requirement in a timely and efficient manner. Mergers and consolidations require regulatory approval under section 18(c) of the FDI Act, and the FDIC maintains records on true mergers and consolidations. Only if the FDIC's records are incomplete or in error will institutions have to provide information to the FDIC. Because the “merger or consolidation rule” relies principally on existing data, it is operationally viable. In addition, a merger or consolidation rule would not advantage or disadvantage parties simply on the basis of whether they kept records on transactions for which the statute of limitations has expired. 7 7 Section 7(b)(5) of the FDI Act currently requires institutions to maintain assessment-related records for five years, and section 7(g) provides a five-year statute of limitations for assessment actions. The Reform Act includes amendments to those provisions, prospectively shortening both to three years, effective on the date that new assessment regulations take effect. See sections 2104(b),
(d)and 2109(a)(5) of the Reform Act. b. *De Facto* Merger Alternative Some transactions may be viewed as effectively paralleling the results of a merger or consolidation. The FDIC looked to traditional principles of corporate law for guidance on this issue and found a useful analogy. Traditional corporate law principles provide for certain exceptions to the general rule that liabilities do not transfer with the sale of assets, including an exception for a transaction that amounts to a *de facto* merger or consolidation (“ *de facto* merger”). The FDIC recognizes, however, that a *de facto* merger exception could be viewed as a departure to some extent from the clear, bright line that a strictly applied merger or consolidation rule would provide. The FDIC, therefore, seeks comment on whether to include *de facto* mergers in the definition of “merger” for purposes of the one-time assessment credit and to provide a regulatory definition of *de facto* merger. A *de facto* merger for these purposes could be defined, for example, as an eligible institution conveying all of its deposit liabilities and substantially all of its assets to a single acquiring institution, so long as the conveying institution subsequently terminated its deposit insurance. This type of transaction might have arisen, for example, as part of a voluntary liquidation. Even under this alternative, unless an eligible institution actually merged or consolidated with another institution, it would not have a successor if it conveyed its assets and deposit liabilities to more than one acquiring institution. 2. Alternative Approaches to Definition of Successor That Would “Follow the Deposits” The FDIC also explored alternative definitions of successor that allowed credits to follow deposits (regardless of the means by which deposits were transferred, including merger, consolidation, branch sale, or other deposit transfer). These alternative definitions might be based on a view that credits should adhere to deposits, as described above. Under these alternative definitions, credits could be transferred on a *pro rata* basis with the deposits transferred or they could be split between the parties to the deposit transfer transaction. Splitting the credits associated with a deposit transfer between the buyer and seller would be a compromise solution and would recognize that, as a practical matter, it is unlikely the parties to most of these deposit transfers took into account the potential for assessment credits at the time of the transactions. After considering the arguments, the FDIC concluded that a “follow-the-deposits” approach seemed less consistent with the purpose of the one-time credit and did not reflect the reasonable expectations of parties to transactions based on general corporate law principles. In addition, the FDIC was concerned about the viability of a “follow-the-deposits” approach because of: An absence of reliable existing data; the number of interrelated transactions that would have to be resolved due to the passage of time and consolidation in the industry; and the potential inequities and litigation risks inherent in mechanisms (such as thresholds or other choices) that might be used to reduce the number of potential claims to a more manageable level. Potential inequities also arise in connection with the data issue because institutions that engaged in very similar transactions could be treated differently solely because some institutions retained records long past the expiration of the statute of limitations and others did not. The FDIC does not routinely maintain the detailed data on all deposit transfer transactions that would be necessary to implement a “follow-the-deposits” rule. Thus, most, if not all, of the necessary information would have to be collected from the industry and disputes between institutions resolved before a deposit transfer approach to allocating the one-time credit could be fully implemented. As previously noted, available data suggests that, in addition to roughly 3,850 mergers and consolidations, at least 1,400 and perhaps over 1,800 branch or deposit transactions may have occurred since 1996. Because of the possibility of a chain of mergers, consolidations, and deposit transfers, resolving one institution's claim to one-time credits first might require examining claims from many transactions in the chain. In most cases, the FDIC would have to review and rely on the records of the institutions involved in the deposit transfer. Appeals of credit determinations could become lengthy fact finding exercises involving the comparison of the available evidence from all of the institutions involved. The FDIC explored developing a type of *de minimis* rule under which, for example, only deposit transfers (or a series of transfers) from one institution to another that, in total, exceeded some percentage threshold, such as 15 percent of the transferor's total domestic deposits or 30 percent of the transferee's deposits as determined at the time of the transfer, might be considered. The FDIC was concerned, however, that thresholds or other choices to limit the number of institutions covered by a rule by their nature may result in disparate treatment of otherwise similarly situated institutions. Because the statute of limitations will have expired with respect to many deposit transfer transactions from the late 1990s, institutions may not have retained records of these transactions. Institutions that saved their records would have a significant advantage over those that did not, potentially leading to results based solely on the availability of records. The FDIC is seeking comment on the proposed definition of “successor,” as well as alternative “follow-the-deposits” approaches, for purposes of the one-time assessment credit. The FDIC requests that commenters address the purpose of the one-time credit and the extent to which the various possible definitions of “successor” are viewed as consistent with that purpose. In addition, the FDIC requests that commenters consider whether a “follow-the-deposits” approach might be made more operationally viable, including how the data issues might be addressed. 3. No Successor Identified If there is no successor to an institution that would have been eligible for the one-time assessment credit *before* the effective date of the final rule, because an otherwise eligible institution ceased to be an insured depository institution before that date, then the FDIC proposes that that portion of the aggregate one-time credit amount be redistributed among the eligible institutions. For example, if an otherwise eligible insured depository institution failed after December 31, 1996, but before the issuance of the final rule implementing the one-time credit, and had no successor, that institution would be excluded from the calculation. As a result, the remaining eligible institutions would receive a proportionate share of that failed institution's share of the one-time credit. On the other hand, if there is no successor to an eligible insured depository institution that ceases to exist *after* the Board issues the final rule and allocates the one-time assessment credit among eligible insured depository institutions, it is proposed that that institution's credits expire unused. One example would be the failure of an eligible institution after it has received its one-time credit amount. Under those circumstances, any remaining one-time credit amount would simply expire. D. Notification of 1996 Assessment Base Ratio and Credit Amount The FDIC intends to make available a searchable database provided through the FDIC's public Web site ( *http://www.fdic.gov* ) that shows each currently existing institution and its predecessors by merger or consolidation from January 1, 1997, onward, based on information contained in certified statements, AIMS II, and the Structure Information Management System (“SIMS”). 8 The database would include corresponding December 31, 1996 assessment base amounts for each institution and its predecessors and preliminary estimates of the amount of one-time credit that the existing institution would receive based on the proposed definition of successor. 8 SIMS maintains current and historical non-financial data for all institutions that is retrieved by AIMS II to identify the current assessable universe for each quarterly assessment invoice cycle. SIMS offers institution-specific demographic data, including a complete set of information on merger or consolidation transactions. SIMS, however, does not contain complete information about deposit or branch sales. The database will also allow searching by institution name or insurance certificate number to ascertain which current institution (if any) would be considered a successor to an institution that no longer exists. Institutions would have the opportunity to review this information, which could significantly reduce the time needed to determine successors even if one of the “follow-the-deposits” alternatives for defining “successor” is adopted in the final rule. Institutions should be aware that this preliminary estimate could change, for example, because of a change in the definition of “successor” adopted in the final rule or because of a change to the information available to the FDIC for determining successorship. As soon as practicable after the Board approves the final rule, the FDIC proposes to notify each insured depository institution of its 1996 assessment base ratio and share of the one-time assessment credit, based on the information developed through the FDIC's searchable database. The notice would take the form of a Statement of One-time Credit (or “Statement”): Informing every institution of its 1996 assessment base ratio; itemizing the 1996 assessment bases to which the institution may now have claims pursuant to the successor rule based on existing successor information in the database; providing the amount of the institution's one-time credit based on that 1996 assessment base ratio as applied to the aggregate amount of the credit; and providing the explanation as to how ratios and resulting amounts were calculated generally. The FDIC proposes to provide the Statement of One-time Credit through FDICconnect and by mail in accordance with existing practices for assessment invoices. Under the proposal, if an institution has any question as to the calculation of its 1996 assessment base ratio or its credit amount, the institution would be advised to contact the Division of Finance. The FDIC encourages institutions to discuss and attempt to resolve perceived discrepancies due to an omission of a merger or consolidation, or due to disagreement about the size of an institution's 1996 assessment base while the notice of proposed rulemaking is out for comment. 9 As described below, each institution would have the opportunity to challenge formally the amount of its one-time credit, regardless of whether the institution sought an informal resolution during the rulemaking. Depending upon the definition of “successor” ultimately adopted, some challenges may not be resolved prior to the collection of assessments after the effective date of the final rule. However, the FDIC proposes to make available any credit amounts that are not in controversy. For example, if an eligible institution argues that it may be entitled to a larger share of the one-time credit as a successor, the amount of its original 1996 base ratio and share will be available (assuming they are not in dispute), and any potential additional credit amounts would be frozen until resolution of the challenge. 9 Staff believes that the information developed through the searchable database would be useful even if the final rule defines “successor” in a way that follows deposits, because a “follow-the-deposit” definition would include recognition of the deposits actually transferred as part of a merger or consolidation. E. Requests for Review of Credit Amounts Section 7(e)(4) of the FDI Act requires the FDIC's credit regulations to include provisions allowing an institution a reasonable opportunity to challenge administratively the amount of its one-time credit. The FDIC's determination of the amount following any such challenge is to be final and not subject to judicial review. The proposed administrative procedures are intended generally to parallel the process for requesting revision of computation of quarterly assessment payments. Deadlines, however, would be shorter because of the need to resolve credit appeals quickly so institutions can use the credits to offset assessments. As noted above, the FDIC expects to notify each institution of its one-time credit share as soon as practicable after the issuance of the one-time assessment credit final rule through FDICconnect and by mail. The Statement of One-time Credit would include: The 1996 assessment base ratio for the institution; the amount of the assessment credit to be awarded to the institution based on the 1996 ratio; and a discussion of the basis for these calculations, based on the FDIC's definition of “successor” and any other relevant factors. After this initial notification, it is proposed that an updated notice of the remaining amount of one-time credit, as well as any appropriate adjustment to an institution's 1996 assessment base ratio due to a subsequent merger or consolidation, would be included with each quarterly assessment invoice until an institution's credits have been exhausted. The initial Statement and any subsequent assessment invoices advising of the remaining credit amount or an adjustment to the assessment base ratio would also advise institutions of their right to challenge the calculation and the procedures to follow. The FDIC proposes that an institution could request review if
(1)It disagrees with the FDIC's determination of eligibility or ineligibility for the credit;
(2)it disagrees with the computation of the credit amount on the initial Statement or any subsequent invoice, or
(3)it believes that the Statement or a subsequently updated invoice does not fully or accurately reflect appropriate adjustments to the institution's 1996 assessment base ratio. For example, the institution may believe that its 1996 assessment base ratio has not been adjusted to reflect its acquisition through merger of an eligible institution. The FDIC also proposes that an institution that disagrees with the FDIC's determination have 30 days from the date the FDIC made available its Statement of One-time Credit or adjusted invoice to file a request for review with the Division of Finance. The request would have to be accompanied by any documentation supporting the institution's claim. The FDIC proposes that, if an institution does not submit a timely request for review, the institution be barred from subsequently requesting review of its one-time assessment credit amount. In addition, the requesting institution would have to identify all other institutions of which it knew or had reason to believe would be directly and materially affected by granting the request for review and provide those institutions with copies of the request for review and supporting documentation, as well as the FDIC's procedures for these requests for review. The FDIC would make reasonable efforts, based on its official systems of records, to determine that such institutions have been identified and notified. These institutions would then have 30 days to submit a response and any supporting documentation to the FDIC's Division of Finance, copying the institution making the original request for review. If an institution identified and notified through this process does not submit a timely response, the FDIC proposes that the institution would be:
(1)Foreclosed from subsequently disputing the information submitted by any other institution on the transaction(s) at issue in the review process; and
(2)foreclosed from any appeal of the decision by the Director of the Division of Finance (discussed below). Under the proposal, the FDIC also would be able to request additional information as part of its review and require the institution to supply that information within 21 days of the date of the FDIC's request for additional information. The FDIC proposes to freeze temporarily the amount of the proposed credit in controversy for the institutions involved in the request for review until the request is resolved. The proposed rule would require a written response from the FDIC's Director of the Division of Finance (“Director”):
(1)Within 60 days of receipt by the FDIC of the request for revision;
(2)if additional institutions have been notified by the FDIC, within 60 days of the last response; or
(3)if additional information has been requested by the FDIC, within 60 days of receipt of any additional information due to such request, whichever is later. Whenever feasible, the response would notify the requesting institution and any materially affected institutions of the determination of the Director as to whether the requested change is warranted. In all instances in which a timely request for review is submitted, the Director will make a determination on the request as promptly as possible and notify the requesting institution and any other materially affected institutions in writing of the determination. Notice of the procedures applicable to reviews will be included with the initial Statement and any subsequent assessment invoice providing notification of the amount of credit and any change to the institution's 1996 assessment base ratio. Under the proposed rule, the requesting institution, or an institution materially affected by the Director's decision, that disagrees with that decision may appeal its credit determination to the AAC. An appeal would have to be filed within 15 calendar days from the date of the Director's written determination. Notice of the procedures applicable to appeals will be included with that written determination. The AAC's determination would be final and not subject to judicial review. A number of challenges may arise in connection with the distribution of the one-time credit, in large part because many transactions occurred after 1996 and before the Reform Act provided for a one-time credit, and because this will be the first time that an institution's 1996 assessment base ratio is calculated. Once those challenges are resolved, and each institution's 1996 assessment base ratio for purposes of its one-time credit share is established, unforeseen circumstances or issues may lead to other challenges of credit share, and administrative procedures will remain in place to address those challenges. Once the Director or the AAC has made the final determination, as appropriate, the FDIC would adjust the affected institutions' 1996 assessment base ratios consistent with that determination and correspondingly update each affected institution's share of the one-time credit. F. Using Credits The FDIC proposes that the FDIC track each institution's one-time credit amount and automatically apply an institution's credits to its assessment to the maximum extent allowed by law. For fiscal year 2007 assessment periods, for most institutions, credits generally can offset 100 percent of an institution's assessment. For assessments that become due for assessment periods beginning in fiscal years 2008, 2009, and 2010, the FDI Act provides that credits may not be applied to more than 90 percent of an institution's assessment. Thus, under the proposal, credits would automatically apply to 90 percent of an institution's assessment, assuming the institution has sufficient credits, subject to the two other statutory limitations on usage. The statute does not define a “fiscal year” for these purposes. The FDIC, therefore, may define that term and proposes to define it as the calendar year. One of the other limitations is that, for an institution that exhibits financial, operational or compliance weaknesses ranging from moderately severe to unsatisfactory, or is not adequately capitalized at the beginning of an assessment period, the amount of any credit that may be applied against the institution's assessment for the period may not exceed the amount the institution would have been assessed had it been assessed at the average rate for all institutions for the period. The FDIC proposes to interpret the phrase “average assessment rate” to mean the aggregate assessment charged all institutions in a period divided by the aggregate assessment base for that period. The FDI Act does not define “average assessment rate” for these purposes, leaving that to the discretion of the FDIC. On balance, the FDIC views the proposed approach as preferable to an average calculated by the sum of all assessment rates divided by the number of institutions, because the proposed approach more accurately reflects the average rate actually charged all insured institutions. Section 7(e)(3)(E) of the FDI Act, as added by the Reform Act, also gives the FDIC the discretion to limit the application of the one-time credit, when the FDIC establishes a restoration plan to restore the reserve ratio of the DIF to the range established for it. 10 That discretion, however, is restricted by the statute. During the time that a restoration plan is in effect, the FDIC shall apply one-time credit amounts against any assessment imposed on an institution for any assessment period in an amount equal to the lesser of
(1)the amount of the assessment, or
(2)the amount equal to three basis points of the institution's assessment base. 10 Section 2105 of the Reform Act, amending section 7(b)(3) of the FDI Act to establish a range for the reserve ratio of the DIF, will take effect on the date that final regulations implementing the legislation with respect to the designated reserve ratio become effective. Those regulations are required to be prescribed within 270 days of enactment. Section 2109(a)(1) of the Reform Act. Credit amounts may not be used to pay FICO assessments pursuant to section 21(f) of the Federal Home Loan Bank Act, 12 U.S.C. 1441(f). The Reform Act does not affect the authority of FICO to impose and collect, with the approval of the FDIC's Board, assessments for anticipated interest payments, issuance costs, and custodial fees on obligations issued by FICO. G. Transferring Credits The FDI Act provides for transferring one-time credits through successors to eligible insured depository institutions. A successor institution, as defined by regulation, would succeed to the predecessor institution's credits and to its 1996 assessment base ratio for purposes of any future dividends. The FDIC is further proposing to allow transfer of credits and adjustments to 1996 assessment base ratios by express agreement between insured depository institutions prior to the FDIC's final determination of an eligible insured depository institution's 1996 assessment base ratio and one-time credit amount pursuant to these regulations. It is possible that such agreements might already be part of deposit transfer contracts drafted in anticipation of deposit insurance reform legislative changes. Alternatively, institutions involved in a dispute over successorship, their 1996 assessment base ratio, and their shares of the one-time credit might reach a settlement over the disposition of the one-time credit. In either case, under the proposal, the FDIC would require the institutions to submit a written agreement signed by legal representatives of the involved institutions. Upon the FDIC's receipt of the agreement, appropriate adjustments would be made to the institutions' affected one-time credit amounts and 1996 assessment base ratios. Adjustments to each institution's credit amount and 1996 assessment base ratio would then be reflected with the next quarterly assessment invoice, so long as the institutions submit the written agreement, at least 10 business days prior to the FDIC's issuance of invoices for the next assessment period. If the FDIC does not receive the written agreement at least 10 days before the next assessment invoice, the FDIC shall retroactively adjust the invoice or invoices in later assessment periods. Similarly, after an institution's credit share has been finally determined and no request for review is pending with respect to that credit amount, the FDIC proposes to recognize an agreement between insured depository institutions to transfer any portion of the one-time credit from the eligible institution to another institution. Adjustments to each institution's credit amount would then be reflected with the next quarterly assessment invoice, so long as the institutions notify the FDIC of such agreement, through a written agreement signed by legal representatives of the institutions, at least 10 business days prior to the FDIC's issuance of invoices for the next assessment period. If the FDIC does not receive the written agreement at least 10 days before the next assessment invoice, the FDIC shall retroactively adjust the invoice or invoices in later assessment periods. With respect to these transactions, occurring after the determination of each eligible institution's 1996 assessment base ratio and share of the one-time credit as of the effective date of these regulations, the FDIC proposes *not* to adjust the transferring institution's 1996 assessment base ratio. Adjustments to the 1996 ratios would be made only to reflect mergers or consolidations occurring after the effective date of these regulations. There would seem to be less likelihood of disputes over successorship because institutions would be aware of the definition of “successor” and could take that into account when entering future contracts as the parties deem appropriate. Thus, there seems little need to allow the sale of an institution's 1996 assessment base ratio, which the FDIC would be required to track on an ongoing basis for dividend purposes. III. Regulatory Analysis and Procedure A. Solicitation of Comments on Use of Plain Language Section 722 of the Gramm-Leach-Bliley Act, Pub. Law 106-102, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. We invite your comments on how to make this proposal easier to understand. For example: • Have we organized the material to suit your needs? If not, how could this material be better organized? • Are the requirements in the proposed regulation clearly stated? If not, how could the regulation be more clearly stated? • Does the proposed regulation contain language or jargon that is not clear? If so, which language requires clarification? • Would a different format (grouping and order of sections, use of headings, paragraphing) make the regulation easier to understand? If so, what changes to the format would make the regulation easier to understand? • What else could we do to make the regulation easier to understand? B. Regulatory Flexibility Act Analysis The Regulatory Flexibility Act
(RFA)requires that each federal agency either certify that a proposed rule would not, if adopted in final form, have a significant economic impact on a substantial number of small entities or prepare an initial regulatory flexibility analysis of the proposal and publish the analysis for comment. See 5 U.S.C. 603, 604, 605. Certain types of rules, such as rules of particular applicability relating to rates or corporate or financial structures, or practices relating to such rates or structures, are expressly excluded from the definition of “rule” for purposes of the RFA. 5 U.S.C. 601. The proposed one-time assessment credit rule relates directly to the rates imposed on insured depository institutions for deposit insurance, as they will offset future deposit insurance assessments. Nonetheless, the FDIC is voluntarily undertaking an initial regulatory flexibility analysis of the proposal and seeking comment on it. As discussed in detail in the SUPPLEMENTARY INFORMATION section, the proposed rule is required by statute to implement the one-time assessment credit added to the FDI Act by the Reform Act, and if it is adopted in final form, would not have a significant impact on a substantial number of small entities within the meaning of those terms as used in the RFA. Section 7(e)(3) of the FDI Act provides for the allocation of the one-time credit among eligible insured depository institutions and their successors, based on each institution's assessment base as of December 31, 1996, as compared to the combined assessment bases of all eligible institutions. The statute defines “eligible insured depository institution” and requires the FDIC to define “successor” for these purposes. These credits will be used to offset deposit insurance assessments collected after the effective date of the final rule. All insured depository institutions that are eligible, regardless of size, would be affected by this rule. Of the approximately 8,845 insured depository institutions as of December 31, 2005, approximately 5,360 institutions fell within the definition of “small entity” in the RFA—that is, having total assets of no more than $165 million. Approximately 4,390 small institutions appear to be eligible for the one-time credit under the FDI Act definition of “eligible insured depository institution.” These institutions would have approximately $241 million in one-time credits out of a total of approximately $4.7 billion in one-time credits, given the FDI Act definition of “eligible insured depository institution” and the definition of “successor” proposed in this rulemaking. 11 These one-time credits represent approximately 8 basis points of the combined assessment base of small institutions as of December 31, 2005. Assuming, for purposes of illustration, that small institutions were charged an average annual assessment rate of 2 basis points, these one-time credits would last, on average, approximately 4 years. In sum, most small, eligible institutions would benefit if the proposed rule were made final. 11 The present value of these one-time credits depends upon when they are used, which in turn depends on the assessment rates charged. The one-time credits do not earn interest; therefore, the higher the assessment rate charged—and the faster credits are used—the greater their present value. The FDIC has proposed making one-time credits transferable, which could increase their present value. The proposed rule relies primarily on information already available to the FDIC and requires little new reporting or recordkeeping. If an eligible institution, regardless of size, disagrees with the FDIC's determination of its credit amount, it may request review of that determination. The review procedures are required by the statute and largely parallel existing procedures for similar requests for review. Moreover, the FDIC proposes to recognize settlements between institutions if there is a disagreement as to an institution's eligibility or the amount of its credit. The FDIC would merely require the institutions' to demonstrate their agreement with the submission of a signed document. Neither the request for review nor the submission of agreement is required generally, but rather is aimed at responding to questions raised by individual institutions based on their particular circumstances. Thus, the FDIC does not view the proposed rule as imposing a significant burden on small institutions. Based on these findings, particularly the ability to offset future assessments for some period of time, the FDIC has concluded that the economic impact of the one-time credit rule would be largely positive and could be “significant” for some small, eligible institutions. One potentially negative economic impact could be felt by a small number of institutions that would not be eligible under the proposed definition of “successor,” but might be eligible if an alternative definition were adopted to recognize acquisitions of deposit or branches. As discussed more fully in the SUPPLEMENTARY INFORMATION section, the FDIC concluded that the proposed definition of successor is more consistent with the purpose of the one-time credit and more operationally viable. It is particularly noted, for RFA purposes, that the proposed definition, for the most part, relies on existing data in the FDIC's official systems of records, while the alternatives considered would require collection of information from the industry. (The alternative definitions of “successor” also would not affect a substantial number of small institutions. 12 ) 12 Preliminary analysis suggests that the eligibility or credit amounts of some small institutions could be affected if the alternative definition of a “successor” as the acquirer of deposits, regardless of whether acquired through a merger or consolidation, were adopted. Compared to the proposed definition of “successor,” at least 330 small institutions could gain or lose credits. However, the value of the gain or loss is not known because the FDIC does not maintain comprehensive records of deposit transfers. The FDIC has been unable to identify any other relevant federal rules that may duplicate or conflict with this proposed rule, although the FDIC's Notice of Proposed Rulemaking to implement the dividend requirements added by the Reform Act overlaps with this proposed rule because both statutory provisions rely to some extent on an institution's assessment base as of December 31, 1996. Commenters are invited to provide the FDIC with any information they may have about the likely quantitative effects of the proposal. C. Paperwork Reduction Act In accordance with the Paperwork Reduction Act (44 U.S.C. 3501 *et seq.* ) the FDIC may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid Office of Management and Budget
(OMB)control number. The collection of information contained in this proposed rule has been submitted to OMB for review. ADDRESSES: Interested parties are invited to submit written comments to the FDIC concerning the Paperwork Reduction Act implications of this proposal. Such comments should refer to “Notification of Credit Transfers, 3064-AD08.” Comments may be submitted by any of the following methods: • *http://www.FDIC.gov/regulations/laws/federal/propose.html.* • E-mail: *comments@FDIC.gov.* Include “Notification of Credit Transfers, 3064-AD08” in the subject line of the message. • Mail: Steve Hanft (202-898-3907), Federal Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 20429. • Hand Delivery: Comments may be hand-delivered to the guard station at the rear of the 17th Street Building (located on F Street), on business days between 7 a.m. and 5 p.m. • A copy of the comments may also be submitted to the OMB desk officer for the FDIC, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Washington, DC 20503. *Comment is solicited on:*
(1)Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2)The accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(3)The quality, utility, and clarity of the information to be collected;
(4)Ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology; e.g., permitting electronic submission of responses; and
(5)Estimates of capital or start-up costs and costs of operation, maintenance, and purchases of services to provide information. *Summary of the collection:* The information collection occurs when an institution participates in a transaction that results in the transfer of one-time credits or an institution's 1996 assessment base, as permitted under the proposed rule, and seeks the FDIC's recognition of that transfer. It is expected that most transactions will occur during the first year. *Need and Use of the Information:* Institutions are required to notify the FDIC of these transactions so that the FDIC can accurately track the transfer of credits, apply available credits appropriately against institutions' deposit insurance assessments, and determine an institution's 1996 assessment base if the transaction involved both the base and the credit amount. The need for credit transfer information will expire when the credit pool has been exhausted. *Respondents:* Insured depository institutions. *Frequency of response:* Occasional. *Annual Burden Estimate:* *Number of responses:* 200-500 during the first year with fewer than 10 per year thereafter. *Average number of hours to prepare a response:* 2 hours. *Total annual burden:* 400-1,000 hours the first year, and fewer than 100 hours thereafter. D. The Treasury and General Government Appropriations Act, 1999—Assessment of Federal Regulations and Policies on Families The FDIC has determined that the proposed rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, enacted as part of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (Public Law 105-277, 112 Stat. 2681). List of Subjects in 12 CFR Part 327 Bank deposit insurance, Banks, Banking, Savings associations. Authority and Issuance For the reasons set forth in the preamble, the FDIC proposes to amend chapter III of title 12 of the Code of Federal Regulations as follows: PART 327—ASSESSMENTS 1. Revise subpart B, consisting of § 327.30 through 327.36, to read as follows: Subpart B—Implementation of One-time Assessment Credit Sec. 327.30 Purpose and scope. 327.31 Definitions. 327.32 Determination of aggregate credit amount. 327.33 Determination of eligible institution's credit amount. 327.34 Transferability of credits. 327.35 Application of credits. 327.36 Requests for review of credit amount. Subpart B—Implementation of One-time Assessment Credit Authority: 12 U.S.C. 1817(e)(3). § 327.30 Purpose and scope.
(a)*Scope.* This subpart B of part 327 implements the one-time assessment credit required by section 7(e)(3) of the Federal Deposit Insurance Act, 12 U.S.C. 1817(e)(3) and applies to insured depository institutions.
(b)*Purpose.* This subpart B of part 327 sets forth the rules for:
(1)Determination of the aggregate amount of the one-time credit;
(2)Identification of eligible insured depository institutions;
(3)Determination of the amount of each eligible institution's December 31, 1996 assessment base ratio and one-time credit;
(4)Transferability of credit amounts among insured depository institutions;
(5)Application of such credit amounts against assessments; and
(6)An institution's request for review of the FDIC's determination of a credit amount. § 327.31 Definitions. For purposes of this subpart and subpart C of this part:
(a)The *average assessment rate* for any assessment period means the aggregate assessment charged all insured depository institutions for that period divided by the aggregate assessment base for that period.
(b)*Board* means the Board of Directors of the FDIC.
(c)An *eligible insured depository institution* means an insured depository institution that:
(1)Was in existence on December 31, 1996, and paid a deposit insurance assessment before December 31, 1996; or
(2)Is a successor to an insured depository institution referred to in paragraph (c)(1) of this section. The term shall not include an institution if its insured status has terminated.
(d)*Merger* means any transaction in which an insured depository institution merges or consolidates with any other insured depository institution. Notwithstanding part 303, subpart D, for purposes of this subpart B and subpart C of this part, *merger* does not include all transactions in which an insured depository institution either directly or indirectly acquires the assets of, or assumes liability to pay any deposits made in, any other insured depository institution.
(e)*Resulting institution* refers to the acquiring, assuming, or resulting institution in a merger.
(f)*Successor* means a resulting institution. § 327.32 Determination of aggregate credit amount. The aggregate amount of the one-time credit shall equal the product of:
(a)The combined assessment base of BIF and SAIF as of December 31, 2001, as reflected in the FDIC's official system of record for determination of assessment bases and assessments due; and
(b)10.5 basis points. § 327.33 Determination of eligible institution's credit amount.
(a)Allocation of the one-time credit shall be based on each eligible insured depository institution's 1996 assessment base ratio.
(b)An institution's 1996 assessment base ratio shall consist of:
(1)Its assessment base as of December 31, 1996 (adjusted as appropriate to reflect the assessment base of December 31, 1996, of all eligible institutions for which it is the successor), as the numerator; and
(2)The combined aggregate assessment bases of all eligible insured depository institutions, including any successor institutions, as of December 31, 1996, as the denominator. § 327.34 Transferability of credits
(a)Any remaining amount of the one-time assessment credit and the associated 1996 assessment base ratio shall transfer to a successor of an eligible insured depository institution.
(b)Prior to the final determination of its 1996 assessment base and one-time assessment credit amount, an eligible insured depository institution may enter into an agreement to transfer any portion of such institution's one-time credit amount and 1996 assessment base ratio to another insured depository institution. The parties to the agreement shall submit to the FDIC's Division of Finance a written agreement, signed by legal representatives of both institutions. The adjustment to credit amount and the associated 1996 assessment base ratio shall be made in the next assessment invoice that is sent at least 10 days after the FDIC's receipt of the written agreement. If the FDIC does not receive the written agreement at least 10 days before the next assessment invoice, the FDIC shall retroactively adjust the invoice or invoices in later assessment periods.
(c)An eligible insured depository institution may enter into an agreement after the final determination of its 1996 assessment base ratio and one-time credit amount to transfer any portion of such institution's one-time credit amount to another insured depository institution. The parties to the agreement shall submit to the FDIC's Division of Finance a written agreement, signed by legal representatives of both institutions. The adjustment to the credit amount shall be made in the next assessment invoice that is sent at least 10 days after the FDIC's receipt of the written agreement. If the FDIC does not receive the written agreement at least 10 days before the next assessment invoice, the FDIC shall retroactively adjust the invoice or invoices in later assessment periods. § 327.35 Application of credits.
(a)Subject to the limitations in paragraph
(b)of this section, the amount of an institution's one-time credit shall be applied to the maximum extent allowable by law against that institution's quarterly assessment payment under subpart A of this part, until the institution's credit is exhausted.
(b)The following limitations shall apply to the application of the credit against assessment payments.
(1)For assessments that become due for assessment periods beginning in calendar years 2008, 2009, and 2010, the credit may not be applied to more than 90 percent of the quarterly assessment.
(2)For an insured depository institution that exhibits financial, operational, or compliance weaknesses ranging from moderately severe to unsatisfactory, or is not at least adequately capitalized (as defined pursuant to section 38 of the Federal Deposit Insurance Act) at the beginning of an assessment period, the amount of the credit that may be applied against the institution's quarterly assessment for that period shall not exceed the amount that the institution would have been assessed if it had been assessed at the average assessment rate for all insured institutions for that period.
(3)If the FDIC has established a restoration plan pursuant to section 7(b)(3)(E) of the Federal Deposit Insurance Act, the FDIC may elect to restrict the application of credit amounts, in any assessment period, to the lesser of:
(i)The amount of an insured depository institution's assessment for that period; or
(ii)The amount equal to 3 basis points of the institution's assessment base. § 327.36 Requests for review of credit amount. (a)(1) An insured depository institution may submit a request for review of the FDIC's final determination of the institution's credit amount as shown on the Statement of One-time Credit (“Statement”) within 30 days of the date the FDIC makes the Statement available. Such review may be requested if:
(i)The institution disagrees with a determination as to eligibility for the credit that relates to that institution's credit amount;
(ii)The institution disagrees with the calculation of the credit as stated on the Statement; or
(iii)The institution believes that the 1996 assessment base ratio attributed to the institution on the Statement does not fully or accurately reflect its own 1996 assessment base or appropriate adjustments for successors.
(2)If an institution does not submit a timely request for review, that institution may not subsequently request review of its credit amount, subject to paragraph
(e)of this section. (b)(1) An insured depository institution may submit a request for review of the FDIC's adjustment to the credit amount in a quarterly invoice within 30 days of the date on which the FDIC provides the invoice. Such review may be requested if:
(i)The institution disagrees with the calculation of the credit as stated on the invoice; or
(ii)The institution believes that the 1996 assessment base ratio attributed to the institution due to the adjustment to the invoice does not fully or accurately reflect appropriate adjustments for successors since the last quarterly invoice.
(2)If an institution does not submit a timely request for review, that institution may not subsequently request review of its credit amount, subject to paragraph
(e)of this section.
(c)The request for review shall be submitted to the Division of Finance and shall provide documentation sufficient to support the change sought by the institution. At the time of filing with the FDIC, the requesting institution shall notify, to the extent practicable, any other insured depository institution that would be directly and materially affected by granting the request for review and provide such institution with copies of the request for review, the supporting documentation, and the FDIC's procedures for requests under this subpart. The FDIC shall make reasonable efforts, based on its official systems of records, to determine that such institutions have been identified and notified.
(d)During the FDIC's consideration of the request for review, the amount of credit in dispute shall not be available for use by any institution.
(e)Within 30 days of the filing of the request for review, those institutions identified as potentially affected by the request for review may submit a response to such request, along with any supporting documentation, to the Division of Finance, and shall provide copies to the requesting institution. If an institution that was notified under paragraph
(c)of this section does not submit a response to the request for review, that institution may not:
(1)Subsequently dispute the information submitted by other institutions on the transaction(s) at issue in the review process; or
(2)Appeal the decision by the Director of the Division of Finance.
(f)If additional information is requested of the requesting or affected institutions by the FDIC, such information shall be provided by the institution within 21 days of the date of the FDIC's request for additional information.
(g)Any institution submitting a timely request for review will receive a written response from the FDIC's Director of the Division of Finance:
(1)Within 60 days of receipt by the FDIC of the request for revision;
(2)If additional institutions have been notified by the requesting institution or the FDIC, within 60 days of the date of the last response to the notification; or
(3)If additional information has been requested by the FDIC, within 60 days of receipt of the additional information,whichever is later. Whenever feasible, the response will notify the institution of the determination of the Director as to whether the requested change is warranted. In all instances in which a timely request for review is submitted, the Director will make a determination on the request as promptly as possible and notify the institution in writing of the determination. Notice of the procedures applicable to reviews will be included with the Statement and assessment invoices.
(h)Subject to paragraph
(e)of this section, the insured depository institution that requested review under this section, or an insured depository institution materially affected by the Director's determination, that disagrees with that determination may appeal to the FDIC's Assessment Appeals Committee on the same grounds as set forth under paragraph
(a)of this section. Any such appeal must be submitted within 15 calendar days from the date of the Director's written determination. Notice of the procedures applicable to appeals under this section will be included with the Director's written determination. The decision of the Assessment Appeals Committee shall be the final determination of the FDIC. By order of the Board of Directors. Dated at Washington, DC, this 9th day of May, 2006. Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. [FR Doc. E6-7583 Filed 5-17-06; 8:45 am] BILLING CODE 6714-01-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2006-24793; Directorate Identifier 2006-NM-056-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Model A330, A340-200, and A340-300 Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: The FAA proposes to adopt a new airworthiness directive
(AD)for certain Airbus Model A330, A340-200, and A340-300 airplanes. This proposed AD would require replacing the attachment landing assemblies of certain blow-down panels of the wing leading edges with new, improved landing assemblies. This proposed AD results from several reports of full or partial loss of certain blow-down panels of the wing leading edges during flight. We are proposing this AD to prevent damage to the airplane and hazards to persons or property on the ground. DATES: We must receive comments on this proposed AD by June 19, 2006. ADDRESSES: Use one of the following addresses to submit comments on this proposed AD. • *DOT Docket Web site:* Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • *Government-wide rulemaking Web site:* Go to *http://www.regulations.gov* and follow the instructions for sending your comments electronically. • *Mail:* Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 20590. • *Fax:*
(202)493-2251. • *Hand Delivery:* Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Contact Airbus, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France, for service information identified in this proposed AD. FOR FURTHER INFORMATION CONTACT: Tim Backman, Aerospace Engineer, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone
(425)227-2797; fax
(425)227-1149. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed in the ADDRESSES section. Include the docket number “FAA-2006-24793; Directorate Identifier 2006-NM-056-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments. We will post all comments we receive, without change, to *http://dms.dot.gov* , including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of that Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78), or you may visit *http://dms.dot.gov.* Examining the Docket You may examine the AD docket on the Internet at *http://dms.dot.gov,* or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone
(800)647-5227) is located on the plaza level of the Nassif Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the Docket Management System receives them. Discussion The European Aviation Safety Agency
(EASA)notified us that an unsafe condition may exist on certain Airbus A330, A340-200, and A340-300 airplanes. The EASA advises that several operators have reported full or partial loss of certain blow-down panels of the wing leading edges during flight. Analysis showed that wing vibration resulted in wear formation of the rivet slots or complete shearing of the attaching rivets of the blow-down panel landings. This condition, if not corrected, could result in damage to the airplane and hazards to persons or property on the ground. Relevant Service Information Airbus has issued Service Bulletins A330-57-3091; and A340-57-4100; both dated October 25, 2005. The service bulletins describe procedures for replacing the attachment landing assemblies of certain blow-down panels of the wing leading edges with new, improved landing assemblies. Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. The EASA mandated the service information and issued the EASA airworthiness directive 2006-0048, dated February 16, 2006, to ensure the continued airworthiness of these airplanes in the European Union. FAA's Determination and Requirements of the Proposed AD These airplane models are manufactured in France and are type certificated for operation in the United States under the provisions of section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Pursuant to FAA Order 8100.14A, “Interim Procedures for Working with the European Community on Airworthiness Certification and Continued Airworthiness,” dated August 12, 2005, the EASA has kept the FAA informed of the situation described above. We have examined the EASA's findings, evaluated all pertinent information, and determined that we need to issue an AD for products of this type design that are certificated for operation in the United States. Therefore, we are proposing this AD, which would require accomplishing the actions specified in the service information described previously. Costs of Compliance The following table provides the estimated costs for U.S. operators of Model A330 airplanes to comply with the modifications required by this proposed AD. The estimated labor rate is $80 per work hour. Estimated Costs Airplane group Work hours Parts Cost per airplane Number of U.S.-registered airplanes Fleet cost 1, 2, 3, 4, 5 68 $25,120 $30,560 5 (group 2 only) $152,800 6 11 2,480 3,360 22 73,920 Currently, there are no Model A340-200 or A340-300 airplanes on the U.S. Register. However, if an affected Model A340-200 or A340-300 airplane is imported and placed on the U.S. Register in the future, the estimated costs shown in the table above will apply to accomplish the required actions of this proposed AD for that airplane. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in subtitle VII, part A, subpart III, section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that the proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The Federal Aviation Administration
(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **Airbus:** Docket No. FAA-2006-24793; Directorate Identifier 2006-NM-056-AD. Comments Due Date
(a)The FAA must receive comments on this AD action by June 19, 2006. Affected ADs
(b)None. Applicability
(c)This AD applies to Airbus A330, A340-200, and A340-300 airplanes, certificated in any category; all serial numbers; except for airplanes which have received both Airbus modification 47249 and Airbus modification 53383 in production. Unsafe Condition
(d)This AD results from several reports of full or partial loss of certain blow-down panels of the wing leading edges during flight. We are issuing this AD to prevent damage to the airplane and hazards to persons or property on the ground. Compliance
(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Replacement
(f)Within 56 months after the effective date of this AD, replace the landing assemblies of certain blow-down panels of the wing leading edges with new, improved landing assemblies; in accordance with the Accomplishment Instructions of Airbus Service Bulletin A330-57-3091; or Airbus Service Bulletin A340-57-4100; both dated October 25, 2005; as applicable. Alternative Methods of Compliance (AMOCs) (g)(1) The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.
(2)Before using any AMOC approved in accordance with § 39.19 on any airplane to which the AMOC applies, notify the appropriate principal inspector in the FAA Flight Standards Certificate Holding District Office. Related Information
(h)The European Aviation Safety Agency airworthiness directive 2006-0048, dated February 16, 2006, also addresses the subject of this AD. Issued in Renton, Washington, on May 9, 2006. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E6-7560 Filed 5-17-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2005-22630; Directorate Identifier 2001-NM-323-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Model A300 B4-600, B4-600R, and F4-600R Series Airplanes, and Model C4-605R Variant F Airplanes (Collectively Called A300-600 Series Airplanes); and Airbus Model A310-200 and -300 Series Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Supplemental notice of proposed rulemaking (NPRM); reopening of comment period. SUMMARY: The FAA is revising an earlier NPRM for an airworthiness directive
(AD)that applies to all Airbus Model A300 B4-600, B4-600R, and F4-600R series airplanes, and Model C4-605R Variant F airplanes (collectively called A300-600 series airplanes); and A310-200 and -300 series airplanes. The original NPRM would have required a one-time inspection of the trimmable horizontal stabilizer actuator (THSA), corrective actions if necessary, and follow-on repetitive tasks. The original NPRM resulted from reports of THSAs that have reached their design operational life. This operational life can be extended provided an initial inspection and follow-on repetitive tasks are accomplished. This action revises the original NPRM by revising the initial compliance time. It also allows the component maintenance manual as an alternative repair method. We are proposing this supplemental NPRM to extend the operational life of the THSA to prevent a possible failure of high-time THSAs, which could result in reduced controllability of the airplane. DATES: We must receive comments on this supplemental NPRM by June 12, 2006. ADDRESSES: Use one of the following addresses to submit comments on this supplemental NPRM. • *DOT Docket Web site:* Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • *Government-wide rulemaking Web site:* Go to *http://www.regulations.gov* and follow the instructions for sending your comments electronically. • *Mail:* Docket Management Facility; U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 20590. • *Fax:*
(202)493-2251. • *Hand Delivery:* Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Contact Airbus, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France, for service information identified in this supplemental NPRM. FOR FURTHER INFORMATION CONTACT: Thomas Stafford, Aerospace Engineer, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone
(425)227-1622; fax
(425)227-1149. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to submit any relevant written data, views, or arguments regarding this supplemental NPRM. Send your comments to an address listed in the ADDRESSES section. Include the docket number “Docket No. FAA-2005-22630; Directorate Identifier 2001-NM-323-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this supplemental NPRM. We will consider all comments received by the closing date and may amend this supplemental NPRM in light of those comments. We will post all comments submitted, without change, to *http://dms.dot.gov,* including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this supplemental NPRM. Using the search function of that Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78), or you may visit *http://dms.dot.gov.* Examining the Docket You may examine the AD docket on the Internet at *http://dms.dot.gov,* or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone
(800)647-5227) is located on the plaza level in the Nassif Building at the DOT street address stated in ADDRESSES . Comments will be available in the AD docket shortly after the Docket Management System receives them. Discussion We proposed to amend 14 CFR part 39 with a notice of proposed rulemaking
(NPRM)for an airworthiness directive
(AD)(the “original NPRM”). The original NPRM would have applied to all Airbus Model A300 B4-600, B4-600R, and F4-600R series airplanes, and Model C4-605R Variant F airplanes (collectively called A300-600 series airplanes); and A310-200 and -300 series airplanes. The original NPRM was published in the **Federal Register** on October 6, 2005 (70 FR 58352). The original NPRM proposed to require a one-time inspection of the trimmable horizontal stabilizer actuator (THSA), corrective actions if necessary, and follow-on repetitive tasks. Comments We have considered the following comments on the original NPRM. Request To Withdraw Proposed AD According to a comment submitted through the Air Transport Association
(ATA)on behalf of its member American Airlines, the original NPRM is unnecessary and would impose excessive and inappropriate regulatory requirements. American Airlines alleges that the original NPRM does not address the failure or safe operation of the subject THSA but instead addresses the manufacturer's failure to do its administrative duty—to adequately define the required maintenance and service life limitations of the component in the maintenance planning document (MPD). Because there have been no reports of failed THSAs on affected airplanes, the commenter concludes that the scope of the original NPRM extends beyond addressing a specific unsafe condition, and argues that operation beyond a design service goal does not necessarily constitute an airworthiness concern. American Airlines asserts that corresponding French airworthiness directive 2001-242(B), dated June 27, 2001, “more appropriately acts as a temporary bridging document in the absence of the necessary MPD data.” We infer that the commenter requests that we withdraw the original NPRM. We disagree. First, this supplemental NPRM does not differ from the French airworthiness directive or service information (except for the source of repair approval explained in paragraph
(g)of the supplemental NPRM). Second, an unsafe condition has been identified: Failure of the THSA could result in reduced controllability of the airplane. The THSA on the affected airplanes was designed for a specified operational life; some THSAs installed on those airplanes have reached this operational limit. The DGAC has mandated an inspection and maintenance program to maintain the THSA's design reliability objective beyond its original operational life. In consonance with the DGAC, we find it necessary to require the actions as proposed. We find no basis to withdraw the proposed AD. Request To Revise Repair Requirements This same commenter requests that we revise the proposed requirement to obtain FAA or DGAC approval for repairs. American Airlines notes that there is no language in Airbus Service Bulletin A300-27-6044 or the French airworthiness directive or Goodrich Service Bulletin 47142-27-11 that proposes the need for regulatory oversight of repair actions. American Airlines adds that the original NPRM provides no justification for the requirement. According to the commenter, the THSA Component Maintenance Manual
(CMM)does provide the necessary instructions for returning a unit to serviceable condition. The commenter reports that the airline is currently “complying with the DGAC requirements” and that the repair criterion was approved by the OEM (original equipment manufacturer) and Airbus, and was satisfactory to the DGAC. We infer that the commenter requests that we revise paragraph
(g)to require repair in accordance with the CMM. We concur. We have reviewed TRW Aeronautical Systems/Lucas Aerospace CMM 27-44-13, dated September 14, 2001, and have determined that it contains the necessary repair information. We have revised paragraph
(g)in this supplemental NPRM to consider this information an approved method for the repair. Request To Incorporate Additional Service Information The same commenter would like to ensure that we are aware of Airbus Operators Information Telex (OIT), Reference SE 999.0074/05/BB, dated August 3, 2005, and that the contents of the OIT are reflected in the final rule, if applicable. The OIT determines the operational life of the THSA at 65,000 flight hours or 40,000 flight cycles or 25 years. We have reviewed the OIT, as well as Revision 01, dated October 28, 2005, which informs operators that a new life limit of 25 years applies to the THSA. In concurrence with the DGAC, we have determined that this 25-year life limit must be applied. We have revised paragraphs (g), (h), and
(i)in this supplemental NPRM accordingly. Request for Credit for Prior Inspection Paragraph
(g)of the original NPRM would require an inspection before the THSA accumulates 47,000 total flight hours, or within a grace period of 600 flight hours. The same commenter requests that we revise paragraph
(g)to provide credit for the demonstrated prior accomplishment of the inspection for any THSA inspected and approved for the revised operational life of 65,000 hours or 40,000 cycles. The commenter states that including this language would avoid the necessity to pursue accomplishment credit through the alternative method of compliance
(AMOC)process. We find it unnecessary to revise paragraph (g). The language “unless the actions have already been done” specified in paragraph
(e)in this supplemental NPRM obviates the need to repeat the inspection. Request To Revise Cost Estimate The same commenter suggests that we revise the “Estimated Costs” table to reflect actual operator experience. The commenter reports that the proposed inspection takes at least 8 work hours based on American Airlines' experience, rather than 3 hours as the original NPRM states. The commenter adds that it was necessary to replace the $6,082 elastic claw stop because of hydraulic fluid ingress. The commenter states that all operators will likely encounter the same results, and requests that we include this cost in the final rule. We acknowledge the commenter's concerns but don't agree to change the cost estimate. The amount of time for the inspection will vary among operators. The cost estimate specified in the original NPRM reflects the work hour estimate provided by the manufacturer. Further, we do not agree to include the cost of the elastic claw stop. The commenter did not specify the percentage of the fleet that required a replaced elastic claw stop. The requirement to replace it is conditional based on the inspection findings. The information in the Costs of Compliance section in an AD action is limited to the cost of actions actually required by the AD. That section does not consider the costs of conditional actions (e.g., “repair, if necessary”). Regardless of AD direction, those actions would be required to correct an unsafe condition identified in an airplane and ensure operation of that airplane in an airworthy condition, as required by the Federal Aviation Regulations. Revised Labor Rate After the original NPRM was issued, we reviewed the figures we have used over the past several years to calculate AD costs to operators. To account for various inflationary costs in the airline industry, we find it necessary to increase the labor rate used in these calculations from $65 per work hour to $80 per work hour. The cost impact information, below, reflects this increase in the specified hourly labor rate. FAA's Determination and Proposed Requirements of the Supplemental NPRM One of the changes discussed above expands the scope of the original NPRM; therefore, we have determined that it is necessary to reopen the comment period to provide additional opportunity for public comment on this supplemental NPRM. Costs of Compliance The following table provides the estimated costs for U.S. operators to comply with this supplemental NPRM. Estimated Costs Action Work hours Average labor rate per hour Parts Cost per airplane Number of U.S.-reg. airplanes Fleet cost Inspection 3 $80 None required $240 146 $35,040 Repetitive follow-on tasks 12 80 $0 $960, per inspection cycle 146 $140,160, per inspection cycle. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in subtitle VII, part A, subpart III, section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that the proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this supplemental NPRM and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The Federal Aviation Administration
(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **Airbus:** Docket No. FAA-2005-22630; Directorate Identifier 2001-NM-323-AD. Comments Due Date
(a)The FAA must receive comments on this AD action by June 12, 2006. Affected ADs
(b)None. Applicability
(c)This AD applies to all of the following Airbus airplanes, certificated in any category: Model A300 B4-601, B4-603, B4-620, and B4-622 airplanes. Model A300 B4-605R and B4-622R airplanes. Model A300 F4-605R and F4-622R airplanes. Model A300 C4-605R Variant F airplanes. Model A310-203, -204, -221, and -222 airplanes. Model A310-304, -322, -324, and -325 airplanes. Unsafe Condition
(d)This AD results from reports of trimmable horizontal stabilizer actuators (THSAs) that have reached their design operational life. We are issuing this AD to extend the operational life of the THSA to prevent a possible failure of high-time units, which could result in reduced controllability of the airplane. Compliance
(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Service Bulletin References
(f)Unless otherwise specified in this AD, the term “service bulletin,” as used in this AD, means the applicable required service bulletin identified in Table 1 of this AD. The service bulletins refer to Goodrich Actuation Systems Service Bulletin 47142-27-11, Revision 3, dated April 25, 2005, as an additional source of service information for the required actions. Table 1.—Service Bulletins Required Airbus service bulletin Approved Airbus service bulletin version for actions done before the effective date of this AD Airbus airplane model A300-27-6044, Revision 04, dated September 10, 2001. A300-27-6044, Revision 02, dated August 26, 2000; or Revision 03, dated June 28, 2001. A300 B4-601, B4-603, B4-620, and B4-622. A300 B4-605R and B4-622R. A300 F4-605R and F4-622R. A300 C4-605R Variant F. A310-27-2089, Revision 02, dated June 28, 2001. A310-27-2089, Revision 01, dated August 25, 2000 A310-203, -204, -221, and -222. A310-304, -322, -324, and -325. Inspection
(g)At the applicable time specified in paragraph (g)(1) or (g)(2) of this AD, do a detailed inspection of specified components of the THSA in accordance with paragraph 1.E.(2)(a) and the Accomplishment Instructions of the applicable service bulletin. Repair any discrepancy before further flight in accordance with a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the Direction Ge ne rale de l'Aviation Civile
(DGAC)(or its delegated agent). TRW Aeronautical Systems/Lucas Aerospace Component Maintenance Manual 27-44-13, dated September 14, 2001, is one acceptable method for the repair.
(1)If the flight hours accumulated on the THSA can be positively determined: Inspect at the earlier of:
(i)Before the accumulation of 47,000 total flight hours on the THSA, or within 600 flight hours after the effective date of this AD, whichever occurs later.
(ii)Within 25 years since the THSA was new or within 600 flight hours after the effective date of this AD, whichever occurs later.
(2)If the flight hours accumulated on the THSA cannot be positively determined: Inspect before the accumulation of 47,000 total flight hours on the airplane, or within 600 flight hours after the effective date of this AD, whichever occurs later. Note 1: For the purposes of this AD, a detailed inspection is: “An intensive examination of a specific item, installation, or assembly to detect damage, failure, or irregularity. Available lighting is normally supplemented with a direct source of good lighting at an intensity deemed appropriate. Inspection aids such as mirror, magnifying lenses, etc., may be necessary. Surface cleaning and elaborate procedures may be required.” Follow-on Repetitive Tasks
(h)After the inspection required by paragraph
(g)of this AD: Do the repetitive tasks in accordance with the Accomplishment Instructions and at the times specified in paragraph 1.E.(2)(b) of the service bulletin, as applicable, except as provided by paragraph
(i)of this AD. The repetitive tasks are valid only until the THSA operational life exceeds 65,000 flight hours, 40,000 flight cycles, or 25 years, whichever occurs first. Before the THSA is operated beyond these extended life goals, it must be replaced with a new THSA, except as required by paragraph
(i)of this AD. THSA Replacement
(i)For any THSA, whether discrepant or not, that is replaced with a new THSA: Within 47,000 flight hours or 25 years, whichever occurs first, after the THSA is replaced, do the applicable tasks specified in paragraph 1.E.(2)(a) and the Accomplishment Instructions of the applicable service bulletin. Thereafter repeat the tasks within the repetitive intervals specified in paragraph 1.E.(2)(b) of the applicable service bulletin. Alternative Methods of Compliance (AMOCs) (j)(1) The Manager, International Branch, ANM-116, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.
(2)Before using any AMOC approved in accordance with 14 CFR 39.19 on any airplane to which the AMOC applies, notify the appropriate principal inspector in the FAA Flight Standards Certificate Holding District Office. Related Information
(k)French airworthiness directive 2001-242(B), dated June 27, 2001, also addresses the subject of this AD. Issued in Renton, Washington, on May 8, 2006. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E6-7558 Filed 5-17-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2006-23889; Directorate Identifier 2005-NM-252-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Model A318, A319, A320, and A321 Series Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Supplemental notice of proposed rulemaking (NPRM); reopening of comment period. SUMMARY: The FAA is revising an earlier NPRM for an airworthiness directive
(AD)that applies to certain Airbus Model A318-111 airplanes; A319-100 series airplanes; A320-111 airplanes; A320-200 series airplanes; and A321-100 and -200 series airplanes. The original NPRM would have required inspecting to determine the part number of the twin motor actuators, and related investigative and corrective actions if necessary. The original NPRM resulted from a report of a low pressure valve of the twin motor actuator found partially open, although the valve detection system indicated that the valve was closed. Investigation revealed that the locating pin in the actuator was too short to engage with the valve slot, resulting in incorrect alignment of the actuator and the drive assembly, causing the valve to remain partially open. This action revises the original NPRM by expanding the applicability. We are proposing this supplemental NPRM to ensure that, in the event of an engine fire, the valve actuator functions properly to block the fuel flow to the engine and prevent an uncontrollable fire. DATES: We must receive comments on this supplemental NPRM by June 12, 2006. ADDRESSES: Use one of the following addresses to submit comments on this supplemental NPRM. • DOT Docket Web site: Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • Government-wide rulemaking Web site: Go to *http://www.regulations.gov* and follow the instructions for sending your comments electronically. • Mail: Docket Management Facility; U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 20590. Fax:
(202)493-2251. Hand Delivery: Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Contact Airbus, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France, for service information identified in this proposed AD. FOR FURTHER INFORMATION CONTACT: Dan Rodina, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone
(425)227-2125; fax
(425)227-1149. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to submit any relevant written data, views, or arguments regarding this supplemental NPRM. Send your comments to an address listed in the ADDRESSES section. Include the docket number “Docket No. FAA-2006-23889; Directorate Identifier 2005-NM-252-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this supplemental NPRM. We will consider all comments received by the closing date and may amend this supplemental NPRM in light of those comments. We will post all comments submitted, without change, to *http://dms.dot.gov* , including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this supplemental NPRM. Using the search function of that Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78), or you may visit *http://dms.dot.gov* . Examining the Docket You may examine the AD docket on the Internet at *http://dms.dot.gov* , or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone
(800)647-5227) is located on the plaza level in the Nassif Building at the DOT street address stated in ADDRESSES . Comments will be available in the AD docket shortly after the Docket Management System receives them. Discussion We proposed to amend 14 CFR part 39 with a notice of proposed rulemaking
(NPRM)for an airworthiness directive
(AD)(the “original NPRM”). The original NPRM applies to certain Airbus Model A318-111 airplanes; A319-100 series airplanes; A320-111 airplanes; A320-200 series airplanes; and A321-100 and -200 series airplanes. The original NPRM was published in the **Federal Register** on February 15, 2006 (71 FR 7878). The original NPRM proposed to require inspecting to determine the part number of the twin motor actuators, and related investigative and corrective actions if necessary. Since the original NPRM was issued, we have changed the airplane model designations to expand the applicability of this supplemental NPRM and be consistent with the parallel French airworthiness directive. Comments We have considered the following comments on the original NPRM. Requests To Expand Applicability Airbus asks that the applicability identified in the original NPRM be expanded to match the effectivity in the referenced French airworthiness directive. Airbus states that the referenced French airworthiness directive applies to all Airbus Model A318, A319, A320, and A321 series airplanes, certified according to the type certificate data sheet
(TCDS)issued in December 2005. Airbus adds that since the new TCDS was issued, the original NPRM is missing Model A318-112, -121 and -122 airplanes, and Model A321-212, -213, and -232 airplanes. Airbus notes that airplanes delivered after the issuance of the original NPRM with manufacturer serial number
(MSN)2155 or above are not affected by the original NPRM; airplanes delivered with MSN 2154 or below are affected by original NPRM. JetBlue Airways asks that the applicability in the original NPRM be changed to include the MSNs affected. JetBlue states that the original NPRM is applicable to all Model A320 airplanes. We agree with Airbus and partially agree with JetBlue; Airbus and the Direction Générale de l'Aviation Civile (DGAC), which is the airworthiness authority for France, determined that the requirements in the original NPRM do not apply to airplanes with MSN 2155 or above. We have expanded the applicability in this supplemental NPRM as follows: “Airbus Model A318, A319, A320, and A321 series airplanes, certificated in any category, except airplanes having manufacturer serial number
(MSN)2155 and subsequent.” Request To Remove General Visual Inspection
(GVI)JetBlue asks that the original NPRM be changed to remove the GVI and allow accomplishing the inspection/check specified in the Airbus/DGAC guidelines that are currently available. JetBlue states that the GVI, per Note 1 of the original NPRM, differs from the referenced French airworthiness directive and Airbus service bulletin, which specify a check for the discrepant part number (P/N)/serial number (S/N) of the discrepant actuator. JetBlue adds that the inclusion of a GVI will result in considerable retroactive work for U.S. operators who proactively launched/completed the inspection per the referenced Airbus service bulletin. JetBlue adds that it has already initiated the inspections in accordance with the Airbus service bulletin. We agree with the commenter. The French airworthiness directive requires inspecting the actuators for certain part numbers; the Airbus service bulletin specifies checking for certain P/Ns and S/Ns. The procedures for these actions do not constitute a GVI. We have removed the reference to a GVI in paragraph
(f)and removed Note 1 of this supplemental NPRM. Request To Add New Service Information US Airways, and the Air Transport Association
(ATA)on behalf of US Airways, ask that the supplemental NPRM include a requirement to accomplish the actions specified in Airbus Service Bulletins A320-28-1128 and A320-28-1129, which describe procedures to inspect actuators in the crossfeed valve in the center tank and the additional center tank
(ACT)transfer valve in the ACT. The commenters state that inspecting the crossfeed and transfer valve positions is necessary to ensure that no defective actuator is installed. We do not agree with the commenters. No unsafe condition has been determined to exist other than in low pressure positions in the wing, when combined with an engine fire or engine malfunction when it is critical to shut down an engine. Therefore, the status of the subject service bulletins remains “recommended;” Airbus will not upgrade the service bulletins to “mandatory” and we will not add them to the supplemental NPRM. Request To Change Work Hours US Airways asks that the work hours specified in the original NPRM be increased from 1 to 6. US Airways states that the visual part number check and the corrective actions both require removal/installation of leading edge access panels, and since the affected twin motor actuator could be installed in three to four different positions on each airplane, depending on the airplane type, 1 work hour is not sufficient. We do not agree with the commenter. The costs of compliance discussed in NPRMs represent only the time necessary to perform the specific actions actually proposed by the NPRM. These figures typically do not include on-condition costs, such as related investigative and corrective actions following an initial inspection finding; nor do they include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions. Although we agree that the work-hours required for an operator to comply with the requirements of the supplemental NPRM may be more than the hours reflected in the cost estimate, we cannot predict on-condition costs for the entire fleet. After the original NPRM was issued, we reviewed the figures we have used over the past several years to calculate AD costs to operators. To account for various inflationary costs in the airline industry, we find it necessary to increase the labor rate used in these calculations from $65 per work hour to $80 per work hour. The cost impact information, below, reflects this increase in the specified hourly labor rate. FAA's Determination and Proposed Requirements of the Supplemental NPRM A certain change discussed above expands the scope of the original NPRM; therefore, we have determined that it is necessary to reopen the comment period to provide additional opportunity for public comment on this supplemental NPRM. Costs of Compliance This supplemental NPRM would affect about 763 airplanes of U.S. registry. The proposed inspection would take about 1 work hour per airplane, at an average labor rate of $80 per work hour. Based on these figures, the estimated cost of this supplemental NPRM on U.S. operators is $61,040, or $80 per airplane. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in subtitle VII, part A, subpart III, section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that the proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this supplemental NPRM and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The Federal Aviation Administration
(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **Airbus:** Docket No. FAA-2006-23889; Directorate Identifier 2005-NM-252-AD. Comments Due Date
(a)The FAA must receive comments on this AD action by June 19, 2006. Affected ADs
(b)None. Applicability
(c)This AD applies to Airbus Model A318, A319, A320, and A321 series airplanes, certificated in any category, except airplanes having manufacturer serial number
(MSN)2155 and subsequent. Unsafe Condition
(d)This AD results from a report of a low pressure valve of the twin motor actuator found partially open, although the valve detection system indicated that the valve was closed. Investigation revealed that the locating pin in the actuator was too short to engage with the valve slot, resulting in incorrect alignment of the actuator and the drive assembly, causing the valve to remain partially open. We are issuing this AD to ensure that, in the event of an engine fire, the valve actuator functions properly to block the fuel flow to the engine and prevent an uncontrollable fire. Compliance
(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Inspection
(f)Within 6,000 flight hours or 24 months after the effective date of this AD, whichever is first: Inspect to determine the part number (P/N) of the twin motor actuators in accordance with Airbus Service Bulletin A320-28-1122, including Appendix 01, dated November 19, 2004.
(1)For airplanes having any actuator with P/N FRH010041 or P/N FRH010034, no further action is required by this paragraph.
(2)For airplanes having any actuator with P/N HTE190001-2, where the actuator serial number is not identified in Appendix 01 of the service bulletin, no further action is required by this paragraph.
(3)For airplanes having any actuator with P/N HTE190001, HTE190001-1, or HTE190001-2, where the actuator serial number is identified in Appendix 01 of the service bulletin, do all applicable related investigative and corrective actions before further flight, in accordance with the service bulletin. Note 1: Airbus Service Bulletin A320-28-1122, dated November 19, 2004, refers to FR-HITEMP Service Bulletin HTE190001-28-003, dated March 30, 2004, as an additional source of service information for determining the part number of the twin motor actuators and accomplishing any related investigative and corrective actions. Parts Installation
(g)As of the effective date of this AD: No person may install an actuator with P/N HTE190001, HTE190001-1, or HTE190001-2, and a serial number identified in Appendix 01 of Airbus Service Bulletin A320-28-1122, dated November 19, 2004, on any airplane unless all applicable related investigative and corrective actions have been done in accordance with the requirements of paragraph (f)(3) of this AD. Alternative Methods of Compliance (AMOCs) (h)(1) The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.
(2)Before using any AMOC approved in accordance with § 39.19 on any airplane to which the AMOC applies, notify the appropriate principal inspector in the FAA Flight Standards Certificate Holding District Office. Related Information
(i)French airworthiness directive F-2005-189, dated November 23, 2005, also addresses the subject of this AD. Issued in Renton, Washington, on May 9, 2006. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E6-7557 Filed 5-17-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2005-20080; Directorate Identifier 2003-NM-193-AD] RIN 2120-AA64 Airworthiness Directives; Various Aircraft Equipped With Honeywell Primus II RNZ-850/-851 Integrated Navigation Units AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Supplemental notice of proposed rulemaking (NPRM); reopening of comment period. SUMMARY: The FAA is revising an earlier NPRM for an airworthiness directive
(AD)that applies to various aircraft equipped with a Honeywell Primus II RNZ-850/-851 Integrated Navigation Unit (INU). The original NPRM would have superseded an existing AD that, as one alternative for compliance, provides for a one-time inspection to determine whether a certain modification has been installed on the Honeywell Primus II NV850 Navigation Receiver Module (NRM), which is part of the INU. In lieu of accomplishing this inspection, and for aircraft found to have an affected NRM, the existing AD provides for revising the aircraft flight manual to include new limitations for instrument landing system approaches. The original NPRM proposed to require inspecting to determine whether certain other modifications have been done on the NRM; and doing related investigative, corrective, and other specified actions, as applicable. The original NPRM resulted from reports of erroneous glideslope indications on certain aircraft equipped with subject INUs. This new action revises the original NPRM by describing further modifications to address additional anomalies. We are proposing this supplemental NPRM to ensure that the flightcrew has an accurate glideslope deviation indication. An erroneous glideslope deviation indication could lead to the aircraft making an approach off the glideslope, which could result in impact with an obstacle or terrain. DATES: We must receive comments on this supplemental NPRM by June 12, 2006. ADDRESSES: Use one of the following addresses to submit comments on this proposed AD. • DOT Docket Web site: Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • Government-wide rulemaking Web site: Go to *http://www.regulations.gov* and follow the instructions for sending your comments electronically. • Mail: Docket Management Facility; U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, room PL-401, Washington, DC 20590. • Fax:
(202)493-2251. • Hand Delivery: Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Contact Honeywell Aerospace Electronic Systems, CES—Phoenix, P.O. Box 2111, Phoenix, Arizona 85036-1111, for service information identified in this proposed AD. FOR FURTHER INFORMATION CONTACT: J. Kirk Baker, Aerospace Engineer, Systems and Equipment Branch, ANM-130L, FAA, Los Angeles Aircraft Certification Office, 3960 Paramount Boulevard, Lakewood, California 90712-4137; telephone
(562)627-5345; fax
(562)627-5210. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to submit any relevant written data, views, or arguments regarding this proposal. Send your comments to an address listed in the ADDRESSES section. Include the docket number “Docket No. FAA-2005-20080; Directorate Identifier 2003-NM-193-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this supplemental NPRM. We will consider all comments received by the closing date and may amend this supplemental NPRM in light of those comments. We will post all comments submitted, without change, to *http://dms.dot.gov,* including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this supplemental NPRM. Using the search function of that Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78), or you may visit *http://dms.dot.gov.* Examining the Docket You may examine the AD docket on the Internet at *http://dms.dot.gov,* or in person at the Docket Management Facility offices between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone
(800)647-5227) is located on the plaza level of the Nassif Building at the DOT street address stated in ADDRESSES . Comments will be available in the AD docket shortly after the Docket Management System receives them. Discussion We proposed to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) with a notice of proposed rulemaking
(NPRM)for an AD (the “original NPRM”) for various aircraft equipped with a Honeywell Primus II RNZ-850/-851 Integrated Navigation Unit (INU). The original NPRM proposed to supersede AD 2003-04-06, amendment 39-13054 (68 FR 8539, February 24, 2003), which applies to various aircraft equipped with the subject INU. AD 2003-04-06 stated that it was considered “interim action” because the manufacturer was developing final corrective modifications for the unsafe condition specified in AD 2003-04-06; and that we might consider further rulemaking when those modifications were released. The original NPRM followed from the release of those modifications. The original NPRM was published in the **Federal Register** on January 19, 2005 (70 FR 2982). The original NPRM proposed to require inspecting to determine whether certain other modifications have been done on the Honeywell Primus II NV850 Navigation Receiver Module (NRM), which is part of the subject INU; and doing related investigative, corrective, and other specified actions, as applicable. The original NPRM resulted from reports of erroneous glideslope indications on certain aircraft equipped with subject INUs. That condition, if not corrected, could lead to the aircraft making an approach off the glideslope, which could result in impact with an obstacle or terrain. Actions Since Original NPRM Was Issued Since we issued the original NPRM, there have been reports of additional anomalies during instrument landing system
(ILS)landings on several Empresa Brasileira de Aeronautica S.A. (EMBRAER) airplanes equipped with subject INUs. Reports specified that the localizer deviation displayed by the INU changed quickly from a centered position to a full-scale deviation for a few seconds, then was flagged as invalid data. Honeywell has issued service information to address such ILS anomalies. Relevant Service Information Specified in Original NPRM We have reviewed Honeywell Service Bulletin 7510100-34-A0035, dated July 11, 2003, which describes procedures for inspecting the NRM to determine whether Mod L has been done. If Mod L has not been done, the service bulletin specifies re-identifying the NRM with a new part number. If Mod L has been done, the service bulletin specifies inspecting to determine if Mod N, P, or R has also been done. (Mod N, P, and R test the NRM for discrepant signals.) If any of those mods has been done, the specified actions are replacing the existing modification plates on the NRM and INU with new plates bearing new part numbers. If Mod L has been done, but neither Mod N, P, nor R has been done, the service bulletin specifies doing further investigative actions and corrective actions in accordance with Honeywell Service Bulletin 7510100-34-A0034, dated February 28, 2003, then replacing the existing modification plates on the NRM and INU with new plates bearing new part numbers. Honeywell Service Bulletin 7510100-34-A0034 describes procedures for inspecting to determine the NRM part number and marking the modification plates of the NRM and INU accordingly. This service bulletin also describes procedures for a related investigative action if neither Mod N nor P is marked, which consists of testing the INU for discrepant signals. If any discrepant signal is detected, corrective action consists of replacing the unit with a new or modified INU. Honeywell Service Bulletin 7510100-34-A0034 refers to Honeywell Service Bulletin 7510134-34-A0016, currently at Revision 001, dated March 4, 2003, as an additional source of service information for re-identifying the INU. New Relevant Service Information We have reviewed Honeywell Service Bulletin 7510100-34-0037, dated July 8, 2004. The service bulletin describes procedures for replacing the NRM, which is part of the subject INU, with an NRM that is at Mod T. Service Bulletin 7510100-34-0037 also specifies Honeywell Service Bulletin 7510134-34-0018, dated July 8, 2004, as an additional source of service information for modifying the NRM to the “Mod T” configuration. We have reviewed Honeywell Service Bulletin 7510134-34-0018. The service bulletin describes procedures for determining the part number of a certain circuit card assembly
(CCA)inside the NRM; replacing the RF absorber in the CCA, if necessary, with an improved RF absorber having a different part number and marking the appropriate revision letter on the CCA; and marking the NRM as Mod T. Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. Comments We have considered the following comments on the original NPRM. Request for Increased Compliance Time One commenter, Express Jet, requests that we extend the compliance time. The commenter states it has already returned about 106 suspect units to Honeywell for modification. Express Jet asserts that program data collected for 475,000 flight hours for the modified units show no occurrence of the described anomalies. Express Jet further states it has a large number of airplanes still to be inspected and modified and asserts that accomplishing the inspections and modifications within the specified 12 months will be very cumbersome. Express Jet requests that we extend the compliance time to 24 months. We agree with this request. The revisions specified in paragraph
(h)of the proposed AD for the Limitations section of the aircraft flight manual
(AFM)will continue to be required until all aircraft have been modified. Further, Express Jet has submitted data showing no occurrence of the described anomalies for any of its modified units. Therefore, we have determined that these combined factors demonstrate that extending the compliance time as requested will pose no increased risk to affected aircraft. Accordingly, we have revised the 12-month compliance time specified in paragraph
(j)of the original NPRM to 24 months in this supplemental NPRM. Request for Clarification of Inspection To Determine Modification Level One commenter, a private citizen, requests that we clarify the proposed requirements of the original NPRM for inspecting to determine the modification level of the NRM. The commenter states that the proposed requirements of paragraph
(k)of the original NPRM as currently written do not make sense. Paragraph
(k)states: “If the inspection to determine whether Mod L is installed, as required by paragraph
(j)of this AD, is done within the compliance time specified in paragraph
(f)of this AD, paragraph
(f)of this AD does not need to be done.” The commenter explains that, since paragraph
(f)was required to be accomplished within 5 days after March 11, 2003, it would not be possible to comply with paragraph
(j)within that same time frame, since March 16, 2003, has already gone by. The commenter also states that the requirement of paragraph
(j)to inspect for the installation of modification L, N, P, or R, is contradicted by the opening clause of paragraph (k), and asserts that this can't be the intent of paragraph
(k)in the original NPRM. The commenter suggests that, to clear up this confusion and make it possible to accomplish the requirements of the related paragraphs, paragraph
(k)should be reworded as follows: “If the inspection to determine whether Mod L is installed, as required by paragraph
(g)of this AD, is done within the compliance time specified in paragraph
(f)of this AD, paragraph
(j)of this AD does not need to be done.” We do not agree with this request. We have determined that the wording of paragraph
(k)of the original NPRM reflects the correct compliance time for both paragraphs
(f)and
(g)of the original NPRM. Further, paragraph
(j)is required regardless of compliance time or the findings of paragraph (f). Therefore, we have not changed paragraph
(k)in this supplemental NPRM. FAA's Determination and Proposed Requirements of the Supplemental NPRM The changes discussed above expand the scope of the original NPRM; therefore, we have determined that it is necessary to reopen the comment period to provide additional opportunity for public comment on this supplemental NPRM. This proposed AD would supersede AD 2003-04-06. This proposed AD would retain the requirements of the existing AD. This proposed AD would also require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between the Proposed AD and Service Information.” Differences Between the Proposed AD and Service Information The service information specifies reporting certain information and returning parts to the manufacturer. However, this proposed AD would not require those actions. Explanation of Changes Made to This Proposed Supplemental NPRM We have revised this supplemental NPRM to clarify the appropriate procedure for notifying the principal inspector before using any approved AMOC on any airplane to which the AMOC applies. After the original NPRM was issued, we reviewed the figures we have used over the past several years to calculate AD costs to operators. To account for various inflationary costs in the airline industry, we find it necessary to increase the labor rate used in these calculations from $65 per work hour to $80 per work hour. The cost impact information, below, reflects this increase in the specified hourly labor rate. Costs of Compliance For the purposes of this proposed AD, we estimate that there are 3,063 aircraft worldwide that may be equipped with a part that is subject to this proposed AD, including about 1,500 aircraft of U.S. registry. The inspection to determine whether Mod L has been done, which is currently required by AD 2003-04-06 and retained in this proposed AD, takes about 1 work hour per aircraft, at an average labor rate of $80 per work hour. Based on these figures, the estimated cost of the currently required actions is $80 per aircraft. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in subtitle VII, part A, subpart III, section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that the proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this supplemental NPRM and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by removing amendment 39-13054 (68 FR 8539, February 24, 2003) and adding the following new airworthiness directive (AD): **Various Aircraft:** Docket No. FAA-2005-20080; Directorate Identifier 2003-NM-193-AD. Comments Due Date
(a)The FAA must receive comments on this AD action by June 12, 2006. Affected ADs
(b)This AD supersedes AD 2003-04-06. Applicability
(c)This AD applies to aircraft, certificated in any category, equipped with a Honeywell Primus II RNZ-850/-851 Integrated Navigation Unit
(INU)having a part number identified in Table 1 of this AD; including, but not limited to, BAE Systems (Operations) Limited (Jetstream) Model 4101 airplanes; Bombardier BD-700-1A10 series airplanes; Bombardier CL-215-6B11 (CL415 variant) series airplanes; Cessna Model 560, 560XL, and 650 airplanes; Dassault Model Mystere-Falcon 50 series airplanes; Dornier Model 328-100 and -300 series airplanes; Empresa Brasileira de Aeronautica S.A. (EMBRAER) Model EMB-135 and -145 series airplanes; Learjet Model 45 airplanes; Raytheon Model Hawker 800XP and Hawker 1000 airplanes; and Sikorsky Model S-76A, S-76B, and S-76C aircraft. Table 1.—INU Part Numbers Part numbers 7510100-811 through 7510100-814 inclusive. 7510100-831 through 7510100-834 inclusive. 7510100-901 through 7510100-904 inclusive. 7510100-911 through 7510100-914 inclusive. 7510100-921 through 7510100-924 inclusive. 7510100-931 through 7510100-934 inclusive. Note 1: This AD applies to Honeywell Primus II RNZ-850/-851 INUs installed on any aircraft, regardless of whether the aircraft has been otherwise modified, altered, or repaired in the area subject to the requirements of this AD. For aircraft that have been modified, altered, or repaired so that the performance of the requirements of this AD is affected, the owner/operator must request approval for an alternative method of compliance in accordance with paragraph
(m)of this AD. The request should include an assessment of the effect of the modification, alteration, or repair on the unsafe condition addressed by this AD; and, if the unsafe condition has not been eliminated, the request should include specific proposed actions to address it. Unsafe Condition
(d)This AD results from reports indicating that erroneous glideslope indications have occurred on certain aircraft equipped with the subject INUs. We are issuing this AD to ensure that the flightcrew has an accurate glideslope deviation indication. An erroneous glideslope deviation indication could lead to the aircraft making an approach off the glideslope, which could result in impact with an obstacle or terrain. Compliance
(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Requirements of AD 2003-04-06 Compliance Time for Action
(f)Within 5 days after March 11, 2003 (the effective date of AD 2003-04-06, amendment 39-13054), accomplish the requirements of either paragraph
(g)or
(h)of this AD. After the effective date of this AD, only accomplishing the requirements of paragraph
(g)of this AD is acceptable for compliance with this paragraph. Inspection To Determine Part Number
(g)Perform a one-time general visual inspection of the modification plate for the Honeywell Primus II NV-850 Navigation Receiver Module (NRM); part number 7510134-811, -831, -901, or -931; which is part of the Honeywell Primus II RNZ-850/-851 INU; to determine if Mod L has been installed. The modification plate is located on the bottom of the Honeywell Primus II RNZ-850/-851 INU, is labeled NV-850, and contains the part number and serial number for the Honeywell Primus II NV-850 NRM. If Mod L is installed, the letter L will be blacked out. Honeywell Service Bulletin 7510100-34-A0035, dated July 11, 2003, is an acceptable source of service information for the inspection required by this paragraph.
(1)If Mod L is installed, before further flight, do paragraph
(h)or
(j)of this AD. After the effective date of this AD, only accomplishment of paragraph
(j)is acceptable for compliance with this paragraph.
(2)If Mod L is not installed, no further action is required by this paragraph. Note 2: For the purposes of this AD, a general visual inspection is defined as: “A visual examination of an interior or exterior area, installation, or assembly to detect obvious damage, failure, or irregularity. This level of inspection is made from within touching distance unless otherwise specified. A mirror may be necessary to enhance visual access to all exposed surfaces in the inspection area. This level of inspection is made under normally available lighting conditions such as daylight, hangar lighting, flashlight, or droplight and may require removal or opening of access panels or doors. Stands, ladders, or platforms may be required to gain proximity to the area being checked.” Note 3: For more information on the inspection specified in paragraph
(g)of this AD, refer to Honeywell Technical Newsletter A23-3850-001, Revision 1, dated January 21, 2003. Aircraft Flight Manual Revision
(h)Revise the Limitations section of the aircraft flight manual
(AFM)to include the following statements (which may be accomplished by inserting a copy of the AD into the AFM): “FLIGHT LIMITATIONS” When crossing the Outer Marker on glideslope, the altitude must be verified with the value on the published procedure. For aircraft with a single operating glideslope receiver, the approach may be flown using normal procedures no lower than Localizer Only Minimum Descent Altitude (MDA). For aircraft with two operating glideslope receivers, the aircraft may be flown to the published minimums for the approach using normal procedures if both glideslope receivers are tuned to the approach and both crew members are monitoring the approach using independent data and displays.” Parts Installation
(i)As of March 11, 2003, no person may install a Honeywell Primus II NV-850 NRM on which Mod L has been installed, on the Honeywell Primus II RNZ-850/-851 INU of any aircraft, unless paragraph
(h)or
(k)of this AD is accomplished. As of the effective date of this AD, only accomplishment of paragraph
(k)is acceptable for compliance with this paragraph. New Requirements of This AD Inspection To Determine Modification Level of NRM
(j)For aircraft on which Mod L was found to be installed during the inspection required by paragraph
(g)of this AD, or for aircraft on which paragraph
(h)of this AD was accomplished: Within 24 months after the effective date of this AD, do an inspection of the modification plate on the Honeywell Primus II NV-850 NRM; part number 7510134-811, -831, -901, or -931; which is part of the Honeywell Primus II RNZ-850/-851 INU; to determine if Mod L, N, P, R or T is installed. The modification plate located on the bottom of the Honeywell Primus II RNZ-850/-851 INU is labeled NV-850, and contains the part number and serial number for the Honeywell Primus II NV-850 NRM. If Mod L, N, P, R or T is installed, the corresponding letter on the modification plate will be blacked out. Honeywell Service Bulletin 7510100-34-A0035, dated July 11, 2003, is an acceptable source of service information for this inspection. If Mod T is installed, no further action is required by this paragraph. If Mod L, N, P, or R is installed, before further flight, do all applicable related investigative, corrective, and other specified actions, in accordance with the Accomplishment Instructions of Honeywell Service Bulletin 7510100-34-A0035, dated July 11, 2003; and Honeywell Service Bulletin 7510100-34-0037, dated July 8, 2004; to ensure that the NRM is at the Mod T configuration. Once the actions in this paragraph are completed, the AFM revision required by paragraph
(h)of this AD may be removed from the AFM. Note 4: Honeywell Service Bulletin 7510100-34-A0035, dated July 11, 2003, refers to Honeywell Service Bulletin 7510100-34-A0034, dated February 28, 2003, as an additional source of service information for inspecting to determine the NRM part number, marking the modification plates of the NRM and INU accordingly, testing the INU for discrepant signals, and replacing the unit with a new or modified INU, as applicable. Honeywell Service Bulletin 7510100-34-A0034 refers to Honeywell Service Bulletin 7510134-34-A0016, currently at Revision 001, dated March 4, 2003, as an additional source of service information for marking the modification plates of the NRM and INU. Note 5: Honeywell Service Bulletin 7510100-34-0037, dated July 8, 2004, refers to Honeywell Service Bulletin 7510134-34-0018, dated July 8, 2004, as an additional source of service information for modifying the NRM to the Mod T configuration.
(k)If the inspection specified by paragraph
(j)of this AD is done within the compliance time specified in paragraph
(f)of this AD, paragraph
(g)of this AD does not need to be done. No Reporting Requirement
(l)Where Honeywell Service Bulletin 7510100-34-A0035 (or any of the related service information referenced therein) specifies to submit certain information to the manufacturer, this AD does not include that requirement. Alternative Methods of Compliance (AMOCs) (m)(1) The Manager, Los Angeles Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.
(2)Before using any AMOC approved in accordance with 14 CFR 39.19 on any airplane to which the AMOC applies, notify the appropriate principal inspector in the FAA Flight Standards Certificate Holding District Office. Issued in Renton, Washington, on May 9, 2006. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E6-7559 Filed 5-17-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF STATE 22 CFR Part 181 [Public Notice: 5402] RIN 1400-AC21 Publication, Coordination, and Reporting of International Agreements: Amendments AGENCY: State Department. ACTION: Proposed rule with request for comments. SUMMARY: The Department of State is proposing to update the regulations implementing 1 U.S.C. 112a and 112b in order to reflect amendments to the statutes governing publication of U.S. international agreements and their transmittal to the Congress. It is further proposing not to publish certain categories of international agreements in the compilation entitled “United States Treaties and Other International Agreements” or in the Treaties and Other International Acts series. These categories of agreements are of a highly technical or specialized nature and are of limited interest to the public. Further, the regulations are proposed to be amended to reflect adjustments to certain internal procedures within the State Department on the reporting of international agreements to Congress. Finally, the Department is adding a new requirement concerning procedures for consultation with the Secretary of State in the negotiation and conclusion of international agreements. Where an international agreement could reasonably require for its implementation the issuance of a significant domestic regulatory action, agencies proposing the agreement are to consult in a timely manner with the Office of Management and Budget (OMB), and the Department of State should confirm that timely consultations were undertaken. DATES: Submit comments on or before July 17, 2006. ADDRESSES: You may submit comments, identified by any of the following methods: E-mail: *treatyoffice@state.gov* . You must include the Regulatory Identification Number
(RIN)in the subject line of your message. Mail (paper, disk, or CD-ROM submissions): An original and three copies of comments should be sent to the Assistant Legal Adviser for Treaty Affairs, Office of the Legal Adviser, Room 5420, Department of State, Washington, DC 20520. Persons with access to the internet may also view this notice and provide comments by going to the regulations.gov Web site at: *http://www.regulations.gov/index.cfm* . You must include the RIN in the subject line of your message. FOR FURTHER INFORMATION CONTACT: John J. Kim, Assistant Legal Adviser for Treaty Affairs, Office of the Legal Adviser, Department of State, 202-647-1660. SUPPLEMENTARY INFORMATION: Background Two statutes set forth the Secretary's unique role and important responsibilities in the area of publishing, coordinating, and reporting international agreements. Pursuant to 1 U.S.C. 112a, the Secretary of State is required to publish annually a compilation of all treaties and international agreements to which the United States is a party that were signed, proclaimed, or “with reference to which any other final formality ha[d] been executed” during the calendar year. The Secretary of State, however, may determine that certain categories of agreements should not be published if certain criteria are met. Any such determination must be published in the **Federal Register** . Under the second statute, 1 U.S.C. 112b, the Secretary of State is required to transmit to the Congress the text of any international agreement other than a treaty to which the United States is a party as soon as practicable but no later than 60 days after it enters into force. Those agreements that the President determines should be classified are to be transmitted, not to Congress as a whole, but to the House Committee on International Relations (at that time called “the House Committee on Foreign Affairs”) and to the Senate Foreign Relations Committee under an injunction of secrecy. The statute further recognizes the Secretary of State's special role in the negotiation and conclusion of all U.S. international agreements, providing that “[n]otwithstanding any other provision of law, an international agreement may not be signed or otherwise concluded on behalf of the United States without prior consultation with the Secretary of State. Such consultation may encompass a class of agreements rather than a particular agreement.” The Department of State has issued regulations to implement these statutory provisions. These regulations are codified in Part 181 of Chapter 22 of the Code of Federal Regulations (CFR). Congress has amended both 1 U.S.C. 112a and 1 U.S.C. 112b several times, most recently in section 7121 of the Intelligence Reform and Terrorism Prevention Act of 2004, Public Law 108-458 (Dec. 17, 2004). This proposed rule amends certain sections of 22 CFR part 181 in order to reflect
(1)the changes made to 1 U.S.C. 112a and 112b in December 2004;
(2)certain changes made to internal Departmental procedures;
(3)four additional categories of international agreements that meet the non-publication criteria of 1 U.S.C. 112(a). In addition, this proposed rule amends the procedures regarding consultation with the Secretary of State with respect to the negotiation and conclusion of international agreements. These procedures are set forth in 22 CFR 181.4 and in the Circular 175 procedure referenced therein. In particular, if a proposed international agreement embodies a commitment that could reasonably be expected to require (for its implementation) the issuance of a “significant regulatory action” (as defined in section 3 of Executive Order 12866), the agency proposing the agreement shall consult in a timely manner with the OMB regarding such commitment. This amendment is aimed at ensuring that OMB is apprised of international commitments that may have a significant regulatory impact on domestic entities or persons prior to the negotiation or conclusion of the international agreement containing the commitment. Discussion *First,* Public Law 108-458 made significant changes to certain legal definitions, including a change in the factors to be considered in assessing whether an agreement is a reportable international agreement under 1 U.S.C. 112a and the Case-Zablocki Act. Subsection
(e)of 1 U.S.C. 112b was amended to provide in relevant part: (2)(A) An arrangement shall constitute an international agreement within the meaning of this section * * * irrespective of the duration of activities under the arrangement or the arrangement itself.
(B)Arrangements that constitute an international agreement within the meaning of this section * * * include the following:
(i)A bilateral or multilateral counterterrorism agreement.
(ii)A bilateral agreement with a country that is subject to a determination under section 6(j)(1)(A) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)(1)A), section 620A(a) of the Foreign Assistance Act of 1961 (22 U.S.C. 2371(a)), or section 40(d) of the Arms Export Control Act (22 U.S.C. 2780(d)). We propose to amend the provisions of 22 CFR 181.2 (which describe criteria to be applied in determining whether an undertaking, oral agreement, document or set of documents constitutes an international agreement) to incorporate these statutory amendments. *Second,* this proposed rule amends 22 CFR 181.4(e) to provide an additional basis on which agencies must consult with OMB prior to the negotiation or conclusion of an international agreement. Currently, 22 CFR 181.4(e) states that if a proposed international agreement embodies a commitment to furnish funds, goods, or services that are beyond or in addition to those authorized in an approved budget, the agency proposing the agreement shall state what arrangements have been planned or carried out concerning consultation with OMB on such a commitment. The Department of State makes sure that the relevant budget contains funds for the commitment, or that the President has made a determination to seek the funds. The proposed rule adds a second paragraph to subsection
(e)to ensure OMB consultation on proposed international agreements that reasonably may require, for their implementation, significant domestic regulatory action. OMB is responsible for overseeing and coordinating the Administration's legislative initiatives and its domestic regulatory policy. Commitments contained in international agreements may be implemented through domestic regulations. This revision to subsection
(e)is designed to ensure that OMB is consulted, in a timely manner, prior to negotiation or conclusion of an international agreement that contains a commitment that reasonably could be expected to require, for its implementation, the issuance of a “significant regulatory action” as defined in section 3 of Executive Order 12866. *Third,* the proposed rule amends 22 CFR 181.7 to reflect that the State Department has modified its internal procedures so that the Assistant Legal Adviser for Treaty Affairs, instead of the Assistant Secretary of State for Congressional Relations, transmits classified agreements to the Senate Committee on Foreign Relations and to the House Committee on International Relations. Similarly, the Assistant Legal Adviser for Treaty Affairs, instead of the Assistant Secretary for Congressional Relations, transmits to the Congress any agreements between the American Institute in Taiwan
(AIT)and the governing authorities in Taiwan, or between AIT and an agency in the U.S. government. In order to enhance accountability and avoid the possibility of classified agreements or agreements involving AIT getting lost or misplaced between the two bureaus, the Department decided to centralize responsibility for all Case Act reporting in the Office of the Legal Adviser. *Fourth,* as provided in section 7121(b) of Public Law 108-458, any references in 22 CFR 181.7 to the “House Committee on Foreign Affairs” have been replaced with the “House Committee on International Relations,” which is the current name of the committee. *Fifth,* the Department proposes to amend 22 CFR 181.8(a) to add four additional categories of documents that it believes no longer should be published in “United States Treaties and Other International Agreements”. As set forth in 1 U.S.C. 112a, the Secretary of State is authorized to—determine that publication of certain categories of agreements is not required if the following criteria are met:
(1)Such agreements are not treaties which have been brought into force for the United States after having received Senate advice and consent pursuant to section 2(2) of Article II of the Constitution of the United States;
(2)The public interest in such agreements is insufficient to justify their publication, because
(A)as of the date of enactment of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995, the agreements are no longer in force;
(B)the agreements do not create private rights or duties, or establish standards intended to govern government action in the treatment of private individuals;
(C)in view of the limited or specialized nature of the public interest in such agreements, such interest can adequately be satisfied by an alternative means; or
(D)the public disclosure of the text of the agreement would, in the opinion of the President, be prejudicial to the national security of the United States; and
(3)Copies of such agreements (other than those in paragraph (2)(D)), including certified copies where necessary for litigation or similar purposes, will be made available by the Department of State upon request. This statute requires publication in the **Federal Register** of any such determination that publication of certain categories of agreements is not required. In selecting the following categories of agreements, the Department has focused on four areas comprising a large volume of agreements that are rather specialized and do not appear to be of general public interest. Routine non-publication of the following categories of agreements will moderate future publication requirements, thus permitting agreements of greater interest to be published in a more timely manner. Also, these agreements do not appear to create private rights or duties. In any event, copies of these agreements will be provided by the Department upon request. For the above-stated reasons, the Department proposes not to publish routinely the following: *United States Agency for International Development (USAID) Implementing Agreements.* Consistent with the Foreign Assistance Act and the Agricultural Trade and Development Act of 1954, USAID negotiates agreements with foreign governments under which specific activities and programs financed with USAID-administered foreign assistance funding are implemented. The Department seeks to exclude all such bilateral “implementing” agreements from the routine publication requirement, which is consistent with current practice. There is little, if any, public interest in these agreements. We note that the Department of State already forgoes the reporting of such agreements to Congress (under 1 U.S.C. 112b) when they involve grants of $25 million or less. The Department will continue to report to Congress those USAID agreements that exceed $25 million. *Letters of Agreement and Memoranda of Understanding for Bilateral Assistance on Counter-Narcotics and Anti-Crime Cooperation.* Pursuant to the Foreign Assistance Act and the President's constitutional authority, the United States negotiates bilateral agreements with other countries regarding the control of narcotic drugs and other anti-crime purposes. These agreements are of a limited and specialized nature, and there has been no indication of public interest in their substance. We note that the Department already forgoes the reporting of such agreements to Congress when they involve grants of less than $25 million. The Department will continue to report to Congress those letters of agreement and memoranda of understanding for bilateral assistance over $25 million. *Educational and Leadership Development Agreements.* The U.S. Government enters into a number of agreements that regulate practical or technical arrangements for targeted programs or assignments designed to acquaint U.S. and foreign armed forces, law enforcement, homeland security, or related personnel with limited, specialized aspects of each other's practices or operations. These agreements are of a limited and specialized nature, and there has been no indication of public interest in their substance. *Bilateral Aviation Technical Assistance Agreements.* The United States enters into international agreements which provide for managerial, operational, and technical assistance to other countries in developing and modernizing their civil aviation infrastructure for specific aviation projects. These agreements address only identified aviation objectives and can sometimes be highly technical in nature. There has been no indication of public interest in the publication of these agreements. The Department of State does not intend to publish agreements in the above categories that were signed before publication of this notice and not previously published in the compilation entitled “United States Treaties and Other International Agreements.” Agreements in the above categories (except classified agreements) will continue to be listed in the Department of State's annual publication entitled “Treaties in Force.” These four additional categories of agreements that meet the non-publication criteria will be reflected in four additional subparagraphs in 22 CFR 181.8(a). *Sixth,* we propose to add a new paragraph to 22 CFR 181.8 (“Publication”) to implement a new, additional reporting requirement. In Public Law 108-458, Congress amended 1 U.S.C. 112b to add the following: (d)(1) The Secretary of State shall annually submit to Congress a report that contains an index of all international agreements, listed by country, date, title, and summary of each such agreement (including a description of the duration of activities under the agreement and the agreement itself), that the United States—
(A)Has signed, proclaimed, or with reference to which any other final formality has been executed, or that has been extended or otherwise modified, during the preceding calendar year; and
(B)Has not been published, or is not proposed to be published, in the compilation entitled “United States Treaties and Other International Agreements”. The Department submitted such an index for the past two years and has taken steps to continue to meet this reporting requirement. *Finally,* the Department proposes to add a new section 22 CFR 181.9 that implements an Internet publication requirement. Public Law 108-458 specifically added subsection
(d)to 1 U.S.C. 112a, establishing that “[t]he Secretary of State shall make publicly available through the Internet Web site of the Department of State each treaty or international agreement proposed to be published in the compilation entitled ‘United States Treaties and Other International Agreements' not later than 180 days after the date on which the treaty or agreement enters into force.” The Department of State has been meeting this requirement by making available through its Internet FOIA webpage copies of those agreements reported to Congress under 1 U.S.C. 112b. Regulatory Analysis Administrative Procedure Act In accordance with provisions of the Administrative Procedure Act governing rules promulgated by Federal agencies that affect the public (5 U.S.C. 553), the Department is publishing these proposed regulations and inviting public comment. Regulatory Flexibility Act/Executive Order 13272: Small Business These proposed changes to the regulations are hereby certified as not expected to have a significant impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act, 5 U.S.C. 601-612, and Executive Order No. 13272, section 3(b). The Small Business Regulatory Enforcement Fairness Act of 1996 These proposed regulations do not constitute a major rule, as defined by 5 U.S.C. 804, for purposes of congressional review of agency rulemaking under the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121. These regulations would not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based companies to compete with foreign based companies in domestic and export markets. The Unfunded Mandates Reform Act of 1995 Section 202 of the Unfunded Mandates Reform Act of 1995 (UFMA), Public Law 104-4, 109 Stat. 48, 2 U.S.C. 1532, generally requires agencies to prepare a statement before proposing any rule that may result in an annual expenditure of $100 million or more by State, local, or tribal governments, or by the private sector. These proposed regulations would not result in any such expenditure nor would it significantly or uniquely affect small governments. Executive Orders 12372 and 13132: Federalism These regulations would not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Nor would the regulations have federalism implications warranting the application of Executive Order No. 12372 and No. 13132. Executive Order 12866: Regulatory Review Because a portion of this proposed rule directly involves the participation of OMB, the Department of State has submitted it to OMB for its review. Executive Order 12988: Civil Justice Reform The Department has reviewed the regulations in light of sections 3(a) and 3(b)(2) of Executive Order No. 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden. The Paperwork Reduction Act of 1995 Under the Paperwork Reduction Act of 1995
(PRA)(44 U.S.C. 3501 et seq.), Federal agencies must obtain approval from OMB for each collection of information they conduct, sponsor, or require through regulation. The Department of State has determined that this proposal contains no new collection of information requirements for the purposes of the PRA. List of Subjects in 22 CFR Part 181 Treaties. For the reasons set forth above, part 181 is proposed to be amended as follows: PART 181—COORDINATION, REPORTING AND PUBLICATION OF INTERNATIONAL AGREEMENTS 1. The authority citation for part 181 will continue to read: Authority: 1 U.S.C. 112a, 112b; and 22 U.S.C. 2651a. 2. 22 CFR 181.2 is amended by: A. Adding a new sentence after the second sentence of paragraph
(a)(2); B. Removing the third and fourth sentences of paragraph
(a)(2); and C. Adding new paragraph (f). The additions read as follows: § 181.2 Criteria.
(a)* * *
(2)* * * The duration of the activities pursuant to the undertaking or the duration of the undertaking itself shall not be a factor in determining whether it constitutes an international agreement. * * *
(f)Notwithstanding the other provisions of this section, arrangements that constitute international agreements within the meaning of this section include
(1)Bilateral or multilateral counterterrorism agreements and
(2)Bilateral agreements with a country that is subject to a determination under section 6(j)(1)(A) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)(1)(A)), section 620A(a) of the Foreign Assistance Act of 1961 (22 U.S.C. 2371(a)), or section 40(d) of the Arms Export Control Act (22 U.S.C. 2780(d)). 3. 22 CFR 181.4 is amended in paragraph
(e)as follows: A. By designating the existing text as paragraph (e)(1); and B. Adding a new paragraph (e)(2) as follows: § 181.4 Consultations with the Secretary of State.
(1)* * *
(2)If a proposed agreement embodies a commitment that could reasonably be expected to require (for its implementation) the issuance of a significant regulatory action (as defined in section 3 of Executive Order 12866), the agency proposing the arrangement shall state what arrangements have been planned or carried out concerning timely consultation with the Office of Management and Budget
(OMB)for such commitment. The Department of State should receive confirmation that OMB has been consulted in a timely manner concerning the proposed commitment. § 181.7 [Amended] 4. 22 CFR 181.7 is amended as follows: A. In paragraph (b): By removing “Assistant Secretary of State for Congressional Relations” wherever it appears and adding “Assistant Legal Adviser for Treaty Affairs” in its place; and removing “House Committee on Foreign Affairs” wherever it appears and adding “House Committee on International Relations” in its place. B. In paragraph (c): By removing “, the negotiations, the effect of the agreement,” in the third sentence; and by removing, in the last sentence the phrase “Assistant Secretary of State for Congressional Relations” and adding “Assistant Legal Adviser for Treaty Affairs”, and removing “House Committee on Foreign Affairs” and adding “House Committee on International Relations” in its place. C. In paragraph (d), by removing “Assistant Secretary of State for Congressional Relations” wherever it appears and adding “Assistant Legal Adviser for Treaty Affairs” in its place. 5. 22 CFR 181.8 is amended as follows: A. By adding paragraphs (a)(10) through (13); B. By adding a sentence to the end of paragraph (b); and C. By adding a new paragraph
(d)to read as follows: § 181.8 Publication.
(a)* * *
(10)Bilateral agreements with other governments that apply to specific activities and programs financed with foreign assistance funds administered by the United States Agency for International Development pursuant to the Foreign Assistance Act, as amended, and the Agricultural Trade Development and Assistance Act of 1954, as amended;
(11)Letters of agreements and memoranda of understanding with other governments that apply to bilateral assistance for counter-narcotics and other anti-crime purposes furnished pursuant to the Foreign Assistance Act, as amended;
(12)Bilateral agreements that apply to specified education and leadership development programs designed to acquaint U.S. and foreign armed forces, law enforcement, homeland security, or related personnel with limited, specialized aspects of each other's practices or operations; and
(13)Bilateral agreements between aviation agencies governing specified aviation technical assistance projects for the provision of managerial, operational, and technical assistance in developing and modernizing the civil aviation infrastructure;
(b)* * * Agreements on the subjects listed in paragraphs (a)(10) through
(13)of this section that had not been published as of [date of publication of final rule in **Federal Register** ].
(d)The Assistant Legal Adviser for Treaty Affairs shall annually submit to Congress a report that contains an index of all international agreements, listed by country, date, title, and summary of each such agreement (including a description of the duration of activities under the agreement and the agreement itself), that the United States:
(1)Has signed, proclaimed, or with reference to which any other final formality has been executed, or that has been extended or otherwise modified, during the preceding calendar year; and
(2)Has not been published, or is not proposed to be published, in the compilation entitled “United States Treaties and Other International Agreements.” 6. Add new § 181.9 to read as follows: § 181.9 Internet Web site publication. The Office of the Assistant Legal Adviser for Treaty Affairs, with the cooperation of other bureaus in the Department, shall be responsible for making publicly available on the Internet Web site of the Department of State each treaty or international agreement proposed to be published in the compilation entitled “United States Treaties and Other International Agreements” not later than 180 days after the date on which the treaty or agreement enters into force. Dated: May 11, 2006. John J. Kim, Assistant Legal Adviser for Treaty Affairs, Department of State. [FR Doc. E6-7596 Filed 5-17-06; 8:45 am] BILLING CODE 4710-08-P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 165 [COTP Charleston 06-070] RIN 1625-AA00 Safety Zone; Lowcountry Splash, Charleston Harbor, Charleston, SC AGENCY: Coast Guard, DHS. ACTION: Notice of proposed rulemaking. SUMMARY: The Coast Guard proposes to create a temporary safety zone in the Wando River, Cooper River, and Charleston Harbor from Hobcaw Yacht Club to Charleston Harbor Marina along the coast of Mount Pleasant, SC, to approximately 150 yards offshore, during the Lowcountry Splash swimming event on June 24, 2006. A safety zone is necessary to prevent commercial or recreational boating traffic from interfering with swimmers on the racecourse. This rule provides for the safety of swimmers and vessels transiting the area. DATES: Comments and related material must reach the Coast Guard on or before June 19, 2006. ADDRESSES: You may mail comments and related material to, U.S. Coast Guard Sector Charleston, Waterways Management Division, Charleston, South Carolina 29401. Comments and material received from the public, as well as documents indicated in this preamble as being available in the docket, will become part of this docket and will be available for inspection or copying at U.S. Coast Guard Sector Charleston, Waterways Management Office between 8 a.m. and 4 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: Chief Warrant Officer James J. McHugh, U.S. Coast Guard Sector Charleston, Waterways Management Division,
(843)724-7647. SUPPLEMENTARY INFORMATION: Request for Comments We encourage you to participate in this rulemaking by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this rulemaking (COTP Charleston 06-070), indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this proposed rule in view of them. Public Meeting We do not now plan to hold a public meeting. But you may submit a request for a meeting by writing to Chief Warrant Officer James J. McHugh, address under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the **Federal Register** . Background and Purpose The Lowcountry Splash is a 2.4 mile open water swimming event in the Wando River and Charleson Harbor, parallel to Mt. Pleasant, SC This regulation is needed to provide for the safety of life on navigable waters because of the inherent dangers associated with an open-water swimming event in a highly transited body of water. The event sponsor will provide 20-30 kayaks to keep swimmers on course and assist the Coast Guard in patrolling the area. This rule creates a regulated area that will prohibit non-participant vessels from entering the regulated area during the event without the permission of the Coast Guard Patrol Commander. Discussion of Proposed Rule This rule allows the Coast Guard Captain of the Port Charleston, South Carolina, to establish a temporary safety zone in order to provide for a safe area for the swimming event. The safety zone will have patrol vessels to enforce the zone and the event sponsor will provide 20 to 30 kayaks in order to assist the swimmers and ensure they are staying within the designated areas. The safety zone is necessary to protect the swimmers from the dangers of commercial and recreational vessel traffic in the vicinity of the race. Sector Charleston will notify the maritime community of periods during which these safety zones will be in effect via a broadcast notice to mariners on VHF Marine Band Radio, Channel 16 (156.8 MHz), or by having on-scene assets inform vessel traffic as necessary. Regulatory Evaluation This proposed rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “Significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS). We expect the economic impact of this proposed rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of DHS is unnecessary, because the safety zone will only be in effect for a limited time and for a limited area. Small Entities Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: the owners or operators of vessels intending to transit or anchor in a portion of the Wando River, Cooper River, and Charleston Harbor from 7:00 a.m. to 11 a.m., June 24, 2006. If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance; please contact Chief Warrant Officer James J. McHugh, U.S. Coast Guard Sector Charleston, Waterways Management Division, at
(843)724-7647. The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard. Collection of Information This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.). Federalism A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this proposed rule under that Order and have determined that it does not have implications for federalism. Unfunded Mandates Reform Act The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this proposed rule would not result in such expenditure, we do discuss the effects of this rule elsewhere in this preamble. Taking of Private Property This proposed rule would not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. Civil Justice Reform This proposed rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. Protection of Children We have analyzed this proposed rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children. Indian Tribal Governments This proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. Energy Effects We have analyzed this proposed rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211. Technical Standards The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( *e.g.* , specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies. This proposed rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. Environment We have analyzed this proposed rule under Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969
(NEPA)(42 U.S.C. 4321-4370f), and have made a preliminary determination that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, we believe that this rule should be categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation because this is a temporary safety zone. A preliminary “Environmental Analysis Check List” is available in the docket where indicated under ADDRESSES . Comments on this section will be considered before we make the final decision on whether this rule should be categorically excluded from further environmental review. List of Subjects in 33 CFR Part 165 Harbors, Marine Safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways. For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 165 as follows: PART 165—REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS 1. The authority citation for part 165 continues to read as follows: Authority: 33 U.S.C. 1226, 1231; 46 U.S.C. Chapter 701; 50 U.S.C. 191, 195; 33 CFR 1.05-1(g), 6.04-1, 6.04-6, and 160.5; Pub. L. 107-295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1. 2. Add new temporary § 165.T07-70 to read as follows: § 165.T07-70 Safety Zone; Charleston, SC.
(a)*Regulated Area.* The waters of the Wando River, Cooper River, and Charleston Harbor from Hobcaw Yacht Club, in approximate position 32°49.324 N 079°53.813 W, South along the coast of Mt. Pleasant, S.C., to Charleston Harbor Marina, approximate position 32°47.198 N 079°54.639 W and encompasses an area 150 yards offshore between the two points.
(b)*Regulations.* In accordance with the general regulations of § 165.23 of this part, all persons and vessels are prohibited from entering, anchoring, mooring or transiting the Regulated Area unless authorized by the Coast Guard Captain of the Port or Coast Guard Patrol Commander.
(c)*Dates.* This rule is effective from 7 a.m. to 11 a.m. on June 24, 2006. Dated: April 24, 2006. J.E. Cameron, Captain, U.S. Coast Guard, Captain of the Port, Charleston, South Carolina. [FR Doc. 06-4628 Filed 5-17-06; 8:45 am]
Connectionstraces to 39
Traces to 39 documents
U.S. Code
22 references not yet in our index
  • 12 CFR 327
  • Pub. L. 109-171
  • 120 Stat. 9
  • Pub. L. 109-173
  • 119 Stat. 3601
  • Pub. L. 106-102
  • 113 Stat. 1338
  • Pub. L. 105-277
  • Pub. L. 101-73
  • Pub. L. 104-208
  • 14 CFR 39
  • 22 CFR 181
  • Pub. L. 108-458
  • 5 USC 601-612
  • Pub. L. 104-121
  • Pub. L. 104-4
  • 109 Stat. 48
  • 33 CFR 165
  • 44 USC 3501-3520
  • 2 USC 1531-1538
  • 42 USC 4321-4370f
  • Pub. L. 107-295
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cites case law
Proposed Rules
Notice of proposed rulemaking
U.S.C.§ 1817
U.S.C.§ 603
Pub. L.Public Law 118-137
Stat.Public Law 101–72
Stat.Public Law 105–1
U.S.C.§ 1441
U.S.C.§ 215
U.S.C.§ 601
U.S.C.§ 3501
Cite12 CFR 327
Pub. L.Pub. L. 109-171
Stat.120 Stat. 9
Cites 61 · showing 12Cited by 0 across 0 sources
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