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Code · REGISTER · 2006-06-26 · Environmental Protection Agency (EPA) · Rules and Regulations

Rules and Regulations. Final rule

26,600 words·~121 min read·/register/2006/06/26/06-5330·

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

BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 271 [EPA-R10-RCRA-2006-0064; FRL-8188-8] Oregon: Final Authorization of State Hazardous Waste Management Program Revision AGENCY: Environmental Protection Agency (EPA). ACTION: Final rule. SUMMARY: On December 14, 2005, Oregon applied to EPA for authorization of changes to its hazardous waste management program under the Resource Conservation and Recovery Act (RCRA). EPA reviewed Oregon's application and published a proposed rule on April 14, 2006 (71 FR 19471) seeking public comment on EPA's preliminary determination to grant authorization of the changes.
Since EPA received no comments on the proposed rule, EPA is granting final authorization of the state's changes in this final rule. DATES: Final authorization for the revisions to the hazardous waste program in Oregon shall be effective at 1 p.m. E.S.T. on June 26, 2006. ADDRESSES: EPA established a docket for this action under Docket ID No. EPA-R10-RCRA-2006-0064. All documents in the docket are available electronically on the Web site *http://www.regulations.gov.* A hard copy of the authorization application is also available for viewing during normal business hours at the U.S.
Environmental Protection Agency Region 10, Office of Air, Waste & Toxics, 1200 Sixth Ave., Seattle, Washington, contact: Jeff Hunt, phone number:
(206)553-0256; or Oregon Department of Environmental Quality, 811 SW Sixth, Portland, Oregon, contact: Scott Latham, phone number
(503)229-5953. FOR FURTHER INFORMATION CONTACT: Jeff Hunt, U.S. Environmental Protection Agency Region 10, Office of Air, Waste & Toxics (AWT-122), 1200 Sixth Ave., Seattle, Washington 98101, phone number:
(206)553-0256, e-mail: *hunt.jeff@epa.gov.* SUPPLEMENTARY INFORMATION: A. Why Are Revisions to State Programs Necessary? States which have received final authorization from EPA under RCRA section 3006(b), 42 U.S.C. 6926(b), must maintain a hazardous waste program that is equivalent to, consistent with, and no less stringent than the federal program. As the federal program changes, states must change their programs and ask EPA to authorize the changes. Changes to state programs may be necessary when federal or state statutory or regulatory authority is modified or when certain other changes occur. Most commonly, states must change their programs because of changes to EPA's regulations in 40 Code of Federal Regulations
(CFR)parts 124, 260 through 266, 268, 270, 273 and 279. B. What Decisions Have We Made in This Rule? EPA has determined that Oregon's application to revise its authorized program meets all of the statutory and regulatory requirements established by RCRA. Therefore, we are granting Oregon final authorization to operate its hazardous waste program with the changes described in the authorization application. Oregon will have responsibility for permitting Treatment, Storage, and Disposal Facilities (TSDFs) within its borders (except in Indian country (18 U.S.C. 1151) and for carrying out the aspects of the RCRA program described in its revised program application, subject to the limitations of the Hazardous and Solid Waste Amendments of 1984 (HSWA). New federal requirements and prohibitions imposed by federal regulations that EPA promulgates under the authority of HSWA take effect in authorized states before the states are authorized for the requirements. Thus, EPA will implement those requirements and prohibitions in Oregon, including issuing permits, until the State is granted authorization to do so. C. What Will Be the Effect of This Action? A facility in Oregon subject to RCRA will have to comply with the authorized State requirements in lieu of the corresponding federal requirements in order to comply with RCRA. Additionally, such persons will have to comply with any applicable federally-issued requirements, such as, for example, HSWA regulations issued by EPA for which the State has not received authorization, and RCRA requirements that are not supplanted by authorized State-issued requirements. Oregon continues to have enforcement responsibilities under its state hazardous waste management program for violations of its program, but EPA continues to have enforcement authority under RCRA sections 3007, 3008, 3013, and 7003, which includes, among others, the authority to: • Perform inspections; require monitoring, tests, analyses or reports; • Enforce RCRA requirements; suspend or revoke permits; and • Take enforcement actions regardless of whether Oregon has taken its own actions. The action to approve these revisions does not impose additional requirements on the regulated community because the changes to Oregon's authorized hazardous waste program are already effective under State law and are not changed by this action. D. What Were the Comments to EPA's Proposed Rule? EPA received no comments during the public comment period which ended May 15, 2006. E. What Has Oregon Previously Been Authorized for? Oregon initially received final authorization on January 30, 1986, effective January 31, 1986 (51 FR 3779), to implement the RCRA hazardous waste management program. EPA granted authorization for changes to their program on March 30, 1990, effective on May 29, 1990 (55 FR 11909); August 5, 1994, effective October 4, 1994 (59 FR 39967); June 16, 1995, effective August 15, 1995 (60 FR 31642); October 10, 1995, effective December 7, 1995 (60 FR 52629); and September 10, 2002, effective September 10, 2002 (67 FR 57337). F. What Changes Are We Authorizing With This Action? EPA is authorizing revisions to the hazardous waste program described in Oregon's official program revision application, submitted to EPA on December 14, 2005, and deemed complete by EPA on December 22, 2005. The following table, Table 1, identifies equivalent State regulatory analogues to the Federal regulations which are authorized by this action. All of the referenced analogous State authorities were legally adopted and effective as of October 24, 2003. Table 1.—Equivalent Analogues to the Federal Regulations Description federal requirements CL No. 1 Federal Register Analogous state authority (OAR 340-* * *) Requirements for Preparation, Adoption, and Submittal of Implementation Plans, CL 125 58 FR 38816, 7/20/1993 -100-0002 LDR Restrictions Phase III, Emergency Extension of the K088 Capacity Variance, CL 155 62 FR 1992, 1/14/97 -100-0002 LDR Restrictions Phase III, Emergency Extension of the K088 Capacity Variance, CL 160 62 FR 37694, 7/14/97 -100-0002 Petroleum Refining Process Wastes—Clarification, CL 187 65 FR 36365, 6/8/2000 -100-0002 Hazardous Air Pollutant Standards, Technical Corrections, CL 188 65 FR 42292, 7/10/2000 -100-0002, -101-0001, -104-0001, -105-0001 Chlorinated Aliphatics Listing and LDRs for Newly Identified Wastes, CL 189 65 FR 67068, 11/8/2000 -100-0002, -101-0001 LDRs Phase IV—Deferral for PCBs in Soil, CL 190 65 FR 81373, 12/26/2000 -100-0002 Mixed Waste rule, CL 191 66 FR 27218, 5/16/2001 -100-0002 Mixture and Derived-From Rules Revisions, CL 192A 66 FR 27266, 5/16/2001 -100-0002,-101-0001 LDR Restrictions Correction, CL 192B 66 FR 27266, 5/16/2001 -100-0002 Change of Official EPA Mailing Address, CL 193 66 FR 34374, 6/28/2001 -100-0002 Mixture and Derived-From Rules Revision II, CL 194 66 FR 50332, 10/3/2001 -100-0002, -101-0001 Inorganic Chemical Manufacturing Wastes Identification & Listing, CL 195 66 FR 58258, 11/20/2001; 67 FR 17119, 4/9/2002 -100-0002, -101-0001 CAMU Amendments, CL 196 67 FR 2962, 1/22/2002 -100-0002 Hazardous Air Pollutant Standards for Combustors; Interim Standards, CL 197 67 FR 6792, 2/13/2002 -100-0002, -104-0001, -105-0001 Hazardous Air Pollutant Standards for Combustors; Corrections, CL 198 67 FR 6968, 2/14/2002 -100-0002, 105-0001 Vacatur of Mineral Processing Spent Materials Being Reclaimed as Solid Wastes & TCLP Use with MGP Waste, CL 199 67 FR 11251, 3/13/2002 100-0002, 101-0001, 102-0010 Zinc Fertilizer Rule, CL 200 67 FR 48393, 7/24/2002 100-0002; 101-0004; -102-0010 1 CL No. (Checklist) generally reflects changes made to the Federal regulations pursuant to a particular Federal Register notice. EPA publishes these checklists as aids for States to use for the development of their authorization applications. See EPA's RCRA State Authorization web page at *http://www.epa.gov/epaoswer/hazwaste/state/.* G. What Other Revisions Are We Authorizing in This Action? During a review of Oregon's regulations, we identified a variety of changes that Oregon had made to previously authorized hazardous waste provisions. EPA brought these changes to the attention of Oregon and confirmed with the State that the State-initiated changes generally correct typographical errors and printing errors, clarify and make the State's regulations more internally consistent, or bring the State regulations closer to the Federal language. In this rulemaking we are also correcting errors made by EPA in previous authorization **Federal Register** notices for Oregon. The State's authorized hazardous waste program, as amended by these provisions, remains equivalent to, consistent with, and no less stringent than the Federal RCRA program. The table below, Table 2, shows both the state initiated and the EPA initiated changes authorized by this action. All of the referenced analogous State authorities were legally adopted and already in effect as of December 22, 2005, when EPA determined that the authorization application was complete. Table 2.—Revisions to Previously Authorized Rules 1 Description of Federal Requirements, CL No. 2 Federal Register Analogous State authority (OAR 340-* * *) Availability of Information -100-0003, -100-00005(1)-(5); -105-0012. Generator Requirements, CL II -100-0002; 102-0011(2), -0012, -0040, -0041, -0050. Permitting Requirements, CL V -100-0002; -105-0010, -0012, -0030, -0061; -106-0002. Small Quantity Generators, CL 23 51 FR 10174, 3/24/86 -100-0002; 101-0033;102-0034, -0041, -0044; -105-0010. LDRs (Solvents and Dioxins), CL 34 51 FR 40572, 11/7/86 -100-0002, -100-0010, -102-0011(2)(d) & (e), -105-0014. Changes to Interim Status Facilities for Hazardous Waste Management Permits; Procedures for Post-Closure Permitting, CL 61 54 FR 9596, 3/7/89 -100 -0002; -105-0001(3) & (4), -0010; -106-0002. Burning of Hazardous Waste in Boilers and Industrial Furnaces, Corrections & Technical Amendments, CL 94 56 FR 32688, 7/17/91 -100-0002 -100-0004; -105-0010. Recycled Used Oil Management Standards, CL 112 57 FR 41566, 9/10/92 -100-0002(2); -111-0000. Recycled Used Oil Management Standards; Technical Amendments and Corrections, CL 122 58 FR 33341, 5/3/93; 58 FR 33341, 6/17/93 -100-0002(2); -111-0000, -0010, -0020, -0032, -0035, -0040, -0050, -0060, -0070. Recycled Used Oil Management Standards; Technical Amendments and Corrections II, CL 130 59 FR 10550, 3/4/94 -100-0002; -111-0000; -111-0010. Universal Waste Rule: General Provisions, CL 142A 60 FR 26942, 5/11/95 -100-0002; -102-0011(e); -113-0000, -0020, -0020(1)-(4), -0030, -0040, -0050. LDRs Phase III—Decharacterized Wastewaters Carbamate Wastes, and Spent Potliners, CL 151 61 FR 15566, 4/8/96 -100-0002. Recycled Used Oil Management Standards; Technical Correction and Clarification, CL 166 63 FR 24963, 5/6/98 -100-0002; -111-0000, -0032, -0050. Belvill Exclusion Revisions and Clarification, CL 167E 63 FR 28556, 5/26/98 -100-0002; -101-0001, -0004. Hazardous Remediation Waste Management Requirement (HWIR-Media), CL 175 63 FR 65874, 11/30/98 -100-0002; -100-0010; -105-0003, -105-0115. Hazardous Air Pollutant Standards for Combustors, CL 182 64 FR 62828, 9/30/99 -100-0002; -101-0001; -104-0001, -0340; -105-0001. Universal Waste Rule as of 12/31/02, Special Consolidated Checklist 60 FR 25492, 5/11/95; 63 FR 71225, 12/24/98; 64 FR 36466, 7/6/99 100-0002, -0010(3)(j); -102-0011(e); -113-0000, -0010, -0020, -0030, -0040, -0050, -0060, -0070. 1 For further discussion on where the revised State rules differ from the Federal Rules refer to the authorization revision application and the administrative record for this rule. 2 CL No. (Checklist) generally reflects changes made to the Federal regulations pursuant to a particular Federal Register notice. EPA publishes these checklists as aids for States to use for the development of their authorization applications. See EPA's RCRA State Authorization web page at *http://www.epa.gov/epaoswer/hazwaste/state/.* H. Who Handles Permits After This Authorization Takes Effect? Oregon will continue to issue permits for all the provisions for which it is authorized and will administer the permits it issues. For permits issued by EPA prior to this authorization, these permits would continue in force until the effective date of the State's issuance or denial of a State hazardous waste permit, at which time EPA would modify the existing EPA permit to expire at an earlier date, terminate the existing EPA permit for cause, or allow the existing EPA permit to otherwise expire by its term, except for those facilities located in Indian Country. EPA will not issue new permits or new portions of permits for provisions for which Oregon is now authorized. EPA will continue to implement and issue permits for HSWA requirements for which Oregon is not yet authorized. I. What Is Codification and Is EPA Codifying Oregon's Hazardous Waste Program as Authorized in This Rule? Codification is the process of placing the State's statutes and regulations that comprise the State's authorized hazardous waste program into the Code of Federal Regulations. This is done by referencing the authorized State rules in 40 CFR Part 272. EPA is reserving the amendment of 40 CFR Part 272, Subpart MM for codification of this current revision to Oregon's program at a later date. J. How Does This Authorization Action Affect Indian Country (18 U.S.C. 1151) in Oregon? Oregon is not authorized to carry out its hazardous waste program in Indian country, as defined in 18 U.S.C. 1151. Indian country includes: 1. All lands within the exterior boundaries of Indian reservations within or abutting the State of Oregon; 2. Any land held in trust by the U.S. for an Indian tribe; and 3. Any other land, whether on or off an Indian reservation that qualifies as Indian country. Therefore, this action has no effect on Indian country. EPA will continue to implement and administer the RCRA program in these lands. K. Statutory and Executive Order Reviews This rule revises the State of Oregon's authorized hazardous waste program pursuant to section 3006 of RCRA and imposes no requirements other than those currently imposed by State law. This rule complies with applicable executive orders and statutory provisions as follows: 1. Executive Order 12866 Under Executive Order 12866 (58 FR 51735, October 4,1993), the Agency must determine whether the regulatory action is “significant,” and therefore subject to OMB review and the requirements of the Executive Order. The Order defines “significant regulatory action” as one that is likely to result in a rule that may:
(1)Have an annual effect on the economy of $100 million or more, or adversely affect in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities;
(2)create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(3)materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or
(4)raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. It has been determined that this rule is not a “significant regulatory action” under the terms of Executive Order 12866 and is therefore not subject to OMB review. 2. Paperwork Reduction Act This action does not impose an information collection burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501, *et seq.* , because this rule does not establish or modify any information or recordkeeping requirements for the regulated community and only seeks to authorize the pre-existing requirements under State law and imposes no additional requirements beyond those imposed by State law. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information. An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR Part 9. 3. Regulatory Flexibility The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA), 5 U.S.C. 601, *et seq.* , generally requires federal agencies to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of this rule on small entities, small entity is defined as:
(1)A small business defined by the Small Business Administrations' Size Regulations at 13 CFR part 121.201;
(2)a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and
(3)a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. EPA has determined that this action will not have a significant economic impact on small entities because the rule will only have the effect of authorizing pre-existing requirements under State law and imposes no additional requirements beyond those imposed by State law. After considering the economic impacts of this rule, I certify that this action will not have a significant economic impact on a substantial number of small entities. 4. Unfunded Mandates Reform Act Title II of the Unfunded Mandates Reform Act
(UMRA)of 1995 (Pub. L. 104-4) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local and tribal governments and the private sector. Under section 202 of the UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective or least burdensome alternative if the Administrator publishes with the rule an explanation why the alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements. This rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local or tribal governments or the private sector. It imposes no new enforceable duty on any State, local or tribal governments or the private sector. Similarly, EPA has also determined that this rule contains no regulatory requirements that might significantly or uniquely affect small government entities. Thus, this rule is not subject to the requirements of sections 202 and 203 of the UMRA. 5. Executive Order 13132: Federalism Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have Federalism implications.” “Policies that have Federalism implications” is defined in the Executive Order to include regulations that 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 various levels of government.” This rule does not have Federalism implications. It will 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 various levels of government, as specified in Executive Order 13132. This rule seeks authorization of pre-existing State rules. Thus, Executive Order 13132 does not apply to this rule. 6. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (59 FR 22951, November 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” This rule does not have tribal implications, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this rule. 7. Executive Order 13045: Protection of Children From Environmental Health and Safety Risks Executive Order 13045 applies to any rule that:
(1)Is determined to be “economically significant” as defined under Executive Order 12866, and
(2)concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency. This rule is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866 and because the Agency does not have reason to believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. 8. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use This rule is not subject to Executive Order 13211, “Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) because it is not a “significant regulatory action” as defined under Executive Order 12866. 9. National Technology Transfer and Advancement Act Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law 104-113, 12(d) (15 U.S.C. 272) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( *e.g.* , materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus bodies. The NTTAA directs EPA to provide Congress, through the OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards. This rule does not involve “technical standards” as defined by the NTTAA. Therefore, EPA is not considering the use of any voluntary consensus standards. 10. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low Income Populations To the greatest extent practicable and permitted by law, and consistent with the principles set forth in the report on the National Performance Review, each Federal agency must make achieving environmental justice part of its mission by identifying and addressing, as appropriate, disproportionately high and adverse human health and environmental effects of its programs, policies, and activities on minority populations and low-income populations in the United States and its territories and possessions, the District of Columbia, the Commonwealth of Puerto Rico, and the Commonwealth of the Mariana Islands. Because this rule authorizes pre-existing State rules and imposes no additional requirements beyond those imposed by State law and there are no anticipated significant adverse human health or environmental effects, the rule is not subject to Executive Order 12898. 11. Congressional Review Act The Congressional Review Act, 5 U.S.C. 801 *et seq.* , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the **Federal Register** . A major rule cannot take effect until 60 days after it is published in the **Federal Register** . This action is not a “major rule” as defined by 5 U.S.C. 804(2). List of Subjects in 40 CFR Part 271 Environmental protection, Administrative practice and procedure, Confidential business information, Hazardous materials transportation, Hazardous waste, Indians-lands, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements. Authority: This action is issued under the authority of sections 2002(a), 3006 and 7004(b) of the Solid Waste Disposal Act as amended 42 U.S.C. 6912(a), 6926, 6974(b). Dated: June 7, 2006. Ronald A. Kreizenbeck, Acting Regional Administrator, Region 10. [FR Doc. E6-10021 Filed 6-23-06; 8:45 am] BILLING CODE 6560-50-P 71 122 Monday, June 26, 2006 Proposed Rules DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 7 CFR Parts 305 and 319 [Docket No. APHIS-2006-0025] Importation of Table Grapes From Namibia AGENCY: Animal and Plant Health Inspection Service, USDA. ACTION: Proposed rule. SUMMARY: We are proposing to amend the fruits and vegetables regulations to allow the importation into the United States of fresh table grapes from Namibia under certain conditions. As a condition of entry, the grapes would have to undergo cold treatment and fumigation with methyl bromide and would have to be accompanied by a phytosanitary certificate with an additional declaration stating that the commodity has been inspected and found free of the specified pests. In addition, the grapes would also be subject to inspection at the port of first arrival. This action would allow for the importation of grapes from Namibia into the United States while continuing to provide protection against the introduction of quarantine pests. DATES: We will consider all comments that we receive on or before August 25, 2006. ADDRESSES: You may submit comments by either of the following methods: *• Federal eRulemaking Portal:* Go to *http://www.regulations.gov* and, in the lower “Search Open Regulations and Federal Actions” box, select “Animal and Plant Health Inspection Service” from the agency drop-down menu, then click on “Submit.” In the Docket ID column, select APHIS-2006-0025 to submit or view public comments and to view supporting and related materials available electronically. Information on using Regulations.gov, including instructions for accessing documents, submitting comments, and viewing the docket after the close of the comment period, is available through the site's “User Tips” link. *• Postal Mail/Commercial Delivery:* Please send four copies of your comment (an original and three copies) to Docket No. APHIS-2006-0025, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please state that your comment refers to Docket No. APHIS-2006-0025. *Reading Room:* You may read any comments that we receive on this docket in our reading room. The reading room is located in room 1141 of the USDA South Building, 14th Street and Independence Avenue, SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call
(202)690-2817 before coming. *Other Information:* Additional information about APHIS and its programs is available on the Internet at *http://www.aphis.usda.gov.* FOR FURTHER INFORMATION CONTACT: Ms. Sharon Porsche, Import Specialist, Commodity Import Analysis and Operations, Plant Health Programs, PPQ, APHIS, 4700 River Road Unit 133, Riverdale, MD 20737-1231;
(301)734-8758. SUPPLEMENTARY INFORMATION: Background The regulations in “Subpart—Fruits and Vegetables” (7 CFR 319.56 through 319.56-8, referred to below as the regulations) prohibit or restrict the importation of fruits and vegetables into the United States from certain parts of the world to prevent the introduction and dissemination of plant pests that are new to or not widely distributed within the United States. The national plant protection organization
(NPPO)of Namibia has requested that the Animal and Plant Health Inspection Service (APHIS) amend the regulations to allow fresh table grapes from Namibia to be imported into the United States. As part of our evaluation of Namibia's request, we prepared a pest risk assessment
(PRA)and a risk management document. Copies of the PRA and risk management document may be obtained from the person listed under FOR FURTHER INFORMATION CONTACT or viewed on the Regulations.gov Web site (see ADDRESSES above for instruction for accessing Regulations.gov). The PRA, titled “Qualitative Pathway—Initiated Risk Assessment of the Importation of Fresh Table Grapes *Vitis vinifera* L. from Namibia into the United States” (November 2005), evaluates the risks associated with the importation of table grapes into the United States from Namibia. The PRA and supporting documents identified 30 pests of quarantine significance present in Namibia or in nearby countries 1 that could be introduced into the United States via table grapes. These pests include 28 insect pests and 2 mollusks. Four of the insect pests are internal feeders: The moths *Cryptophlebia leucotreta* and *Epichoristodes acerbella* and the fruit flies *Ceratitis capitata* and *Ceratitis rosa.* The other 24 insect pests are external feeders: The whitefly *Aleurocanthus spiniferus;* the twig borer *Apate monachus;* the weevils *Bustomus setulosus* and *Phlyctinus callosus;* the scales *Ceroplastes rusci* and *Icerya seychellarum;* the moth *Cryptoblabes gnidiella;* the beetles *Dischista cincta, Eremnus atratus, Eremnus cerealis, Eremnus setulosus,* and *Pachnoda sinuata;* the cotton jassid *Empoasca lybica;* the mite *Eutetranychus orientalis;* the bollworm *Helicoverpa armigera;* the chinch bug *Macchiademus diplopterus;* the mealybugs *Maconellicoccus hirsutus, Nipaecoccus vastator,* and *Rastrococcus iceryoides;* the cottonseed bug *Oxycarenus hyalinipennis;* the thrips *Scirtothrips aurantii* and *Scirtothrips dorsalis;* the leafworm *Spodoptera littoralis;* and the bud nibbler *Tanyrhynchus carinatus.* The two mollusks, *Cochlicella ventricosa* and *Theba pisana,* are also external feeders. 1 Due to Namibia being a part of South Africa until 1990 and grape production in Namibia as a commercial export being relatively new, the PRA takes into account pest data from grape growing regions in neighboring regions of southern Africa as well as Namibia. APHIS has determined that measures beyond standard port of entry inspection are required to mitigate the risks posed by these plant pests. Therefore, we propose to require that the grapes be subjected to a combined treatment of cold treatment in accordance with schedule T107-e and methyl bromide fumigation in accordance with schedule T104-a-1. Cold treatment schedule T107-e is described in § 305.16 of the phytosanitary treatments regulations in 7 CFR part 305. Under that schedule, the grapes would have to be held at a temperature of 31 °F (−0.55 °C) or colder for a period of 22 days. The 22-day treatment period would begin only after all temperature sensors indicate the grapes have been precooled to 31 °F or below. If the temperature exceeds 31.5 °F, the treatment period would have to be extended by one-third of a day for each day or part of a day that the temperature is above 31.5 °F. If the exposure period is extended, the temperature during the extension period must be 34 °F or below. If the temperature exceeds 34 °F at any time, the treatment is nullified. This cold treatment schedule has been proven effective in treating false codling moth ( *Cryptophlebia leucotreta* ) on grapes from South Africa. This treatment would also mitigate the risks associated with the fruit flies *Ceratitis capitata* and *Ceratitis rosa* and the moth *Epichoristodes acerbella,* which are less adaptable to colder temperatures than false codling moth. In addition, we would require that the grapes be fumigated with methyl bromide fumigation in accordance with schedule T104-a-1, which is described in § 305.6(a) of the phytosanitary treatments regulations. Treatment schedule Pressure Temperature (°F) Dosage rate (lb/1,000 cubic feet) Exposure period (hours) T104-a-1 NAP 1 80 or above 1.5 2 70-79 2 2 60-69 2.5 2 50-59 3 2 40-49 4 2 1 Normal atmospheric pressure. This methyl bromide fumigation treatment schedule has been proven effective in treating external pests on imported fruits and vegetables from around the world, except for mealybugs. Therefore this treatment will effectively mitigate the risks associated with *Aleurocanthus spiniferus, Apate monachus, Bustomus setulosus, Ceroplastes rusci, Cryptoblabes gnidiella, Dischista cincta, Empoasca lybica, Eremnus atratus, Eremnus cerealis, Eremnus setulosus, Eutetranychus orientalis, Helicoverpa armigera, Icerya seychellarum, Macchiademus diplopterus, Oxycarenus hyalinipennis, Pachnoda sinuata, Phlyctinus callosus, Scirtothrips aurantii, Spodoptera littoralis,* and *Tanyrhynchus carinatus.* Because the cold and methyl bromide treatments we would require do not effectively mitigate the pest risk posed by the mealybugs, *Maconellicoccus hirsutus, Nipaecoccus vastator, Rastrococcus iceryoides,* or the mollusks, *Cochlicella ventricosa* and *Theba pisana,* the NPPO of Namibia would be required to conduct phytosanitary inspections for those pests. Each shipment of grapes would have to be accompanied by a phytosanitary certificate bearing the additional declaration: “The grapes in this shipment have been inspected and found free of *Maconellicoccus hirsutus, Nipaecoccus vastator, Rastrococcus iceryoides, Cochlicella ventricosa* and *Theba pisana.* ” Specifically listing the pests on the additional declaration alerts U.S. inspectors to the specific pests of concern. In addition, we would restrict the importation of fresh table grapes from Namibia to commercial shipments only. Produce grown commercially is less likely to be infested with plant pests than noncommercial shipments. Noncommercial shipments are more prone to infestations because the commodity is often ripe to overripe and is often grown with little or no pest control. Commercial shipments, as defined in § 319.56-1, are shipments of fruits and vegetables that an inspector identifies as having been produced for sale and distribution in mass markets. Identification of a particular shipment as commercial is based on a variety of indicators, including, but not limited to, the quantity of produce, the type of packaging, identification of a grower or packinghouse on the packaging, and documents consigning the shipment to a wholesaler or retailer. The proposed conditions described above for the importation of table grapes from Namibia into the United States would be added to the fruits and vegetables regulations as a new § 319.56-2ss. In addition, we would also amend the table in § 305.2(h)(2)(i) of the phytosanitary treatments regulations to add an entry for grapes from Namibia and designate methyl bromide schedule T104-a-2 and cold treatment schedule T107-e as approved treatments for the specific pests named in this document. Executive Order 12866 and Regulatory Flexibility Act This proposed rule has been reviewed under Executive Order 12866. The rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget. We are proposing to amend the fruits and vegetables regulations to allow the importation into the United States of fresh table grapes from Namibia under certain conditions. As a condition of entry, the grapes would have to undergo cold treatment and fumigation with methyl bromide and would have to be accompanied by a phytosanitary certificate with an additional declaration stating that the commodity has been inspected and found free of the specified pests. In addition, the grapes would also be subject to inspection at the port of first arrival. This action would allow for the importation of grapes from Namibia into the United States while continuing to provide protection against the introduction of quarantine pests. According to the Trade Law Center for Southern Africa, 7 grape companies in Namibia are currently cultivating 1,300 hectares, irrigated by water from the Orange River, and another 2,000 hectares are expected to be put to cultivation soon. Because of the climate in Namibia, grapes mature in November, which gives producers there a competitive advantage over producers in other southern hemisphere countries where the grape harvest begins in December. Imports of Namibian table grapes into the United States in the first year are expected to reach 22.5 40-foot containers (approximately 744,000 pounds), which would account for less than one-tenth of 1 percent of current U.S. fresh table grape imports. The Regulatory Flexibility Act requires agencies to specifically consider the economic effects of their rules on small entities. The Small Business Administration
(SBA)has established size criteria based on the North American Industry Classification System (NAICS) to determine which economic entities meet the definition of a small firm. The proposed rule may affect producers and wholesalers of table grapes in the United States. The small business size standards for grape farming without making wine, as identified by the SBA based upon NAICS code 111332, is $750,000 or less in annual receipts. 2 While the available data do not provide the number of U.S. grape-producing entities according to size distribution as it relates to annual receipts, it is reasonable to assume that the majority of the operations are considered small businesses by SBA standards. According to the 2002 Census of Agriculture data, there were a total of 23,856 grape farms in the United States in 2002. 3 It is estimated that approximately 93 percent of these grape farms had annual sales in 2002 of $500,000 or less, and are considered to be small entities by SBA standards. 2 Based upon 2002 Census of Agriculture—State Data and the “Small Business Size Standards by NAICS Industry,” Code of Federal Regulations, Title 13, Chapter 1. 3 The number of grape farms in the United States, as reported by the 2002 Census of Agriculture, is the total number of grape-producing operations, which also include grapes produced for processed utilization. The United States is a net importer of fresh table grapes. In 2004, the United States imported 1,322.8 million pounds of fresh table grapes with approximately 79 and 19 percent arriving from Chile and Mexico, respectively. In that same year, the United States exported approximately 606.3 million pounds of table grapes. Canada is the largest importer of U.S. fresh grapes, accounting for 44 percent of U.S. exports. The second and third largest importers of U.S. fresh grapes are Malaysia and Mexico, accounting for approximately 9 and 7 percent of U.S. grape exports, respectively. 4 U.S. imports of table grapes experienced an average increase of 6.6 percent annually over the last decade while exports have increased an average of 3.4 percent. 5 Fresh utilization of U.S. grape production only accounts, on average, for 13 percent of total utilized U.S. grape production annually. U.S. wine production and raisin production account for an average of 60 percent and 25 percent, respectively, of U.S. grape utilization annually. 6 4 Source: Global Trade Atlas. 5 Source: USDA FAS, PS&D Online. “Table Grapes: Production, Supply and Distribution in Selected Countries,” *http://www.fas.usda.gov/psd/complete_tables/HTP-table6-104.htm.* 6 USDA ERS Briefing Room, Fruit and Tree Nut Yearbook, 2005. Domestic consumers would benefit because Namibian table grapes mature a month earlier than table grapes from other countries in the southern hemisphere, providing access to an increased supply of fresh table grapes for a longer period of time. The competitive impact of imports from Namibia would likely be minimal for domestic producers, whose grapes are mainly intended for processed utilization. As noted previously, forecast Namibian table grape imports would comprise less than one-tenth of 1 percent of total U.S. table grape imports. Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action would not have a significant economic impact on a substantial number of small entities. Executive Order 12988 This proposed rule would allow table grapes to be imported into the United States from Namibia. If this proposed rule is adopted, State and local laws and regulations regarding table grapes imported under this rule would be preempted while the fruit is in foreign commerce. Fresh fruits are generally imported for immediate distribution and sale to the consuming public and would remain in foreign commerce until sold to the ultimate consumer. The question of when foreign commerce ceases in other cases must be addressed on a case-by-case basis. If this proposed rule is adopted, no retroactive effect will be given to this rule, and this rule will not require administrative proceedings before parties may file suit in court challenging this rule. Use of Methyl Bromide Under this proposed rule, table grapes imported into the United States from Namibia must be fumigated with methyl bromide in accordance with schedule T104-a-1 to kill external feeder insects. We estimate that between 1 and 22.5 40-foot containers of fresh table grapes would be imported from Namibia during the first shipping season. Importations may increase in future years. Fumigation using schedule T104-a-1 would require no more than 10 pounds of methyl bromide per container. No alternative treatment is currently available for these pests. The United States is fully committed to the objectives of the Montreal Protocol, including the reduction and ultimately the elimination of reliance on methyl bromide for quarantine and pre-shipment uses in a manner that is consistent with the safeguarding of U.S. agriculture and ecosystems. APHIS reviews its methyl bromide policies and their effect on the environment in accordance with the National Environmental Policy Act of 1969, as amended (42 U.S.C. 4321 *et seq.* ) and Decision XI/13 (paragraph 5) of the 11th Meeting of the Parties to the Montreal Protocol, which calls on the Parties to review their “national plant, animal, environmental, health, and stored product regulations with a view to removing the requirement for the use of methyl bromide for quarantine and pre-shipment where technically and economically feasible alternatives exist.” The United States Government encourages methods that do not use methyl bromide to meet phytosanitary standards where alternatives are deemed to be technically and economically feasible. In some circumstances, however, methyl bromide continues to be the only technically and economically feasible treatment against specific quarantine pests. In addition, in accordance with Montreal Protocol Decision XI/13 (paragraph 7), APHIS is committed to promoting and employing gas recapture technology and other methods whenever possible to minimize harm to the environment caused by methyl bromide emissions. In connection with this rulemaking, we welcome comments, especially data or other information, regarding other treatments that may be efficacious and technically and economically feasible that we may consider as alternatives to methyl bromide. National Environmental Policy Act To provide the public with documentation of APHIS' review and analysis of any potential environmental impacts associated with the proposed importation into the United States of table grapes from Namibia, we have prepared an environmental assessment. The environmental assessment was prepared in accordance with:
(1)The National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321 *et seq.* ),
(2)regulations of the Council on Environmental Quality for implementing the procedural provisions of NEPA (40 CFR parts 1500-1508),
(3)USDA regulations implementing NEPA (7 CFR part 1b), and
(4)APHIS' NEPA Implementing Procedures (7 CFR part 372). The environmental assessment may be viewed on the Regulations.gov Web site or in our reading room. (Instructions for accessing Regulations.gov and information on the location and hours of the reading room are provided under the heading ADDRESSES at the beginning of this proposed rule.) In addition, copies may be obtained by calling or writing to the individual listed under FOR FURTHER INFORMATION CONTACT . Paperwork Reduction Act In accordance with section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ), the information collection or recordkeeping requirements included in this proposed rule have been submitted for approval to the Office of Management and Budget (OMB). Please send written comments to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for APHIS, Washington, DC 20503. Please state that your comments refer to Docket No. APHIS-2006-0025. Please send a copy of your comments to:
(1)Docket No. APHIS-2006-0025, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road Unit 118, Riverdale, MD 20737-1238, and
(2)Clearance Officer, OCIO, USDA, room 404-W, 14th Street and Independence Avenue, SW., Washington, DC 20250. A comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication of this proposed rule. This proposed rule would amend the fruits and vegetables regulations to allow the importation into the United States of fresh table grapes from Namibia. As a condition of entry, the grapes would have to undergo cold treatment and fumigation with methyl bromide, and would have to be accompanied by a phytosanitary certificate with an additional declaration stating that the commodity has been inspected and found free of the specified pests. In addition, the grapes would also be subject to inspection at the port of first arrival. We are soliciting comments from the public (as well as affected agencies) concerning our proposed information collection and recordkeeping requirements. These comments will help us:
(1)Evaluate whether the proposed information collection is necessary for the proper performance of our agency's functions, including whether the information will have practical utility;
(2)Evaluate the accuracy of our estimate of the burden of the proposed information collection, including the validity of the methodology and assumptions used;
(3)Enhance the quality, utility, and clarity of the information to be collected; and
(4)Minimize the burden of the information collection on those who are to respond (such as 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). *Estimate of burden:* Public reporting burden for this collection of information is estimated to average 0.16 hours per response. *Respondents:* Growers of grapes, the Namibian NPPO. *Estimated annual number of respondents:* 16,000. *Estimated annual number of responses per respondent:* 1. *Estimated annual number of responses:* 16,000. *Estimated total annual burden on respondents:* 2,560 hours. (Due to averaging, the total annual burden hours may not equal the product of the annual number of responses multiplied by the reporting burden per response.) Copies of this information collection can be obtained from Mrs. Celeste Sickles, APHIS' Information Collection Coordinator, at
(301)734-7477. Government Paperwork Elimination Act Compliance The Animal and Plant Health Inspection Service is committed to compliance with the Government Paperwork Elimination Act (GPEA), which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. For information pertinent to GPEA compliance related to this proposed rule, please contact Mrs. Celeste Sickles, APHIS' Information Collection Coordinator, at
(301)734-7477. List of Subjects 7 CFR Part 305 Irradiation, Phytosanitary treatment, Plant diseases and pests, Quarantine, Reporting and recordkeeping requirements. 7 CFR Part 319 Coffee, Cotton, Fruits, Imports, Logs, Nursery stock, Plant diseases and pests, Quarantine, Reporting and recordkeeping requirements, Rice, Vegetables. Accordingly, we propose to amend 7 CFR parts 305 and 319 as follows: PART 305—PHYTOSANITARY TREATMENTS 1. The authority citation for part 305 would continue to read as follows: Authority: 7 U.S.C. 7701-7772 and 7781-7786; 21 U.S.C. 136 and 136a; 7 CFR 2.22, 2.80, and 371.3. 2. In paragraph (h)(2)(i) of § 305.2, the table would be amended by adding, in alphabetical order, an entry for Namibia to read as follows: § 305.2 Approved treatments.
(h)* * *
(2)* * *
(i)* * * Location Commodity Pest Treatment schedule * * * * * * * Namibia Grape External feeders MB T104-a-1 *Cryptophlebia leucotreta, Ceratitis capitata, Ceratitis rosa, Epichoristodes acerbella* CT T107-e * * * * * * * PART 319—FOREIGN QUARANTINE NOTICES 3. The authority citation for part 319 would continue to read as follows: Authority: 7 U.S.C. 450, 7701-7772, and 7781-7786; 21 U.S.C. 136 and 136a; 7 CFR 2.22, 2.80, and 371.3. 4. A new § 319.56-2ss would be added to read as follows: § 319.56-2ss Conditions governing the entry of grapes from Namibia. Grapes ( *Vitis vinifera* ) may be imported into the United States from Namibia only under the following conditions:
(a)The grapes must be cold treated for *Cryptophlebia leucotreta, Ceratitis capitata* , *Ceratitis rosa* , and *Epichoristodes acerbella* in accordance with part 305 of this chapter.
(b)The grapes must be fumigated for *Aleurocanthus spiniferus, Apate monachus, Bustomus setulosus, Ceroplastes rusci,Cryptoblabes gnidiella, Dischista cincta, Empoasca lybica, Eremnus atratus, Eremnus cerealis, Eremnus setulosus, Eutetranychus orientalis, Helicoverpa armigera, Icerya seychellarum, Macchiademus diplopterus, Oxycarenus hyalinipennis* , *Pachnoda sinuata* , *Phlyctinus callosus* , *Scirtothrips aurantii* , *Scirtothrips dorsalis* , *Spodoptera littoralis* , and *Tanyrhynchus* carinatus in accordance with part 305 of this chapter.
(c)Each shipment of grapes must be accompanied by a phytosanitary certificate of inspection issued by the national plant protection organization of Namibia bearing the following additional declaration: “The grapes in this shipment have been inspected and found free of *Maconellicoccus hirsutus* , *Nipaecoccus vastator* , *Rastrococcus iceryoides* , *Cochlicella ventricosa* , and *Theba pisana* .”
(d)The grapes may be imported in commercial shipments only. Done in Washington, DC, this 20th day of June 2006. Kevin Shea, Acting Administrator, Animal and Plant Health Inspection Service. [FR Doc. E6-10017 Filed 6-23-06; 8:45 am] BILLING CODE 3410-34-P DEPARTMENT OF ENERGY Office of Energy Efficiency and Renewable Energy 10 CFR Part 451 RIN 1904-AB62 Renewable Energy Production Incentives AGENCY: Office of Energy Efficiency and Renewable Energy, Department of Energy. ACTION: Notice of proposed rulemaking. SUMMARY: The Department of Energy
(DOE)Office of Energy Efficiency and Renewable Energy today proposes to amend its regulations for the Renewable Energy Production Incentives
(REPI)program to incorporate changes made to the enabling statute by section 202 of the Energy Policy Act of 2005. The REPI program provides for production incentive payments to owners or operators of qualified renewable energy facilities, subject to the availability of appropriations. The statutory changes that DOE is proposing to implement through amendments to Part 451 relate primarily to allocation of available funds between owners or operators of two categories of qualified facilities, incorporation of additional ownership categories, extension of the eligibility window and program termination date, and expansion of applicable renewable energy technologies. In addition to the changes required by the Energy Policy Act of 2005 (EPAct 2005), DOE is modifying the method for accrued energy accounting in light of the new law. DOE also is taking this opportunity to make minor changes to update the regulations. DATES: Public comments on this proposed rule will be accepted until July 26, 2006. ADDRESSES: You may submit comments, identified by RIN 1904-AB62, by any of the following methods: 1. Federal eRulemaking Portal: *http://www.regulations.gov* . Follow the instructions for submitting comments. 2. E-mail to *repi.rulemaking@ee.doe.gov* . Include RIN 1904-AB62 in the subject line of the e-mail. Please include the full body of your comments in the text of the message or as an attachment. 3. Mail: Address the comments to Teresa Carroll, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, EE-2K, 1000 Independence Avenue, SW., Washington, DC 20585. Comments should be identified on the outside of the envelope and on the documents themselves with the designation “REPI NOPR, RIN 1904-AB62.” Due to potential delays in DOE's receipt and processing of mail sent through the U.S. Postal Service, we encourage respondents to submit comments electronically to ensure timely receipt. You may obtain copies of comments received by DOE by contacting Teresa Carroll of the Office of Energy Efficiency and Renewable Energy at the address and telephone number given in the FOR FURTHER INFORMATION CONTACT section below. FOR FURTHER INFORMATION CONTACT: Daniel Beckley, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, EE-2K, 1000 Independence Avenue, SW., Washington, DC 20585,
(202)586-7691. For questions regarding the administrative file maintained for this rulemaking, contact Teresa Carroll, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, EE-2K, 1000 Independence Avenue, SW., Washington, DC 20585,
(202)586-6477. SUPPLEMENTARY INFORMATION: I. Background II. Description of Rule Amendments III. Opportunity for Public Comment IV. Regulatory Review V. Approval of the Office of the Secretary I. Background The Energy Policy Act of 1992, Pub. L. 102-486, established the REPI program to encourage production of electric energy by State-owned (or political subdivisions of a State) entities and non-profit electric cooperative utilities using certain renewable energy resources. Subject to availability of appropriations, DOE was authorized to pay 1.5 cents, adjusted annually for inflation, to facility owners or operators for each kilowatt-hour of electric energy produced by qualified renewable energy facilities. As specified in the statute as originally enacted, the first energy production year was fiscal year 1994 and a ten-year eligibility window was prescribed. Therefore, DOE did not accept applications for the REPI program after September 30, 2003. Qualified facility owners are eligible for payment for ten successive years beginning with the first year for which an energy payment is made. As a result, incentive payments were expected to continue through 2013. DOE has continued to make incentive payments, based on available appropriations, to those applicants whose ten successive years of participation in the program have not expired. Section 202 of EPACT 2005 (Pub. L. 109-58) modifies the REPI program by:
(a)Extending the eligibility window,
(b)extending the termination date for the program,
(c)increasing the number of renewable energy technologies eligible under the program,
(d)broadening the category of qualified owners, and
(e)altering the procedure for determining payment distributions if insufficient funds are appropriated to make full incentive payments for all approved applications. This proposed rule would amend the current REPI program regulations (10 CFR Part 451) to implement these statutory amendments. Additionally, this proposed rule would modify the method of incorporating accrued energy into *pro rata* calculations when insufficient funds are appropriated to cover all qualified kilowatt-hours. DOE is proposing the accrued methodology change to avoid inequity or unfairness that it believes may otherwise result from the new funds distribution method specified by the new law. The changes made by EPACT 2005 reinforce the program as it has been conducted by DOE for over 12 years and do not alter its basic structure. Consequently, the rule amendments that DOE is proposing today are limited to changes needed to implement EPACT 2005 and to revise provisions that have become outdated since DOE initially implemented the program in 1995. II. Description of Rule Amendments *Section 451.1 (Purpose and scope)* . In describing the purpose and scope of the REPI program, DOE proposes to revise references to the types of organizations that qualify for payment by:
(a)Substituting the EPACT 2005 term “not-for-profit” for “non-profit” when referring to electric cooperative utilities;
(b)describing public utilities by reference to section 115 of the Internal Revenue Service Code;
(c)citing State, Commonwealth, U.S. territory or possession, and the District of Columbia as eligible facility owners as indicated in EPACT 2005; and
(d)including as eligible recipients Indian tribal governments and Native corporations, as required by EPACT 2005. *Section 451.2 (Definitions)* . DOE proposes to add a definition of “ocean,” which was made an eligible renewable energy source by EPACT 2005. Because the REPI program is available only for renewable energy generated in the United States, DOE is proposing to define the term “ocean” to mean the parts of the Atlantic Ocean (including the Gulf of Mexico) and the Pacific Ocean that are contiguous to the United States coastline and from which energy may be derived through application of tides, waves, currents, thermal differences, or other means. DOE also proposes a definition for the term “biomass.” The proposed definition codifies the broad interpretation of the term that has been used by the program to date, and which EPACT 2005 implicitly recognizes by including landfill gas and livestock methane among the technologies included in the definition of qualified renewable energy facility (42 U.S.C. 13317(b)). DOE proposes to add a definition for the term “date of first use.” This proposed definition would accommodate the new statutory language regarding use of permits to establish first use (42 U.S.C. 13317(d)) and add clarity to the Part 451 provisions discussing time of first use. DOE proposes to update the existing definition of “Deciding Official” to reflect DOE's designation of the Manager of the Golden Field Office as the Deciding Official shortly after the REPI program was established. DOE proposes to replace the definition of “non-profit electrical cooperative” with the term “not-for-profit electrical cooperative” in § 451.2 to conform to the change in terminology made by EPACT 2005. DOE also proposes to add definitions for “Indian tribal government” and for “Native corporation.” Section 202 of EPACT 2005 amends 42 U.S.C. 13317(b) to include Indian tribal governments and subdivisions thereof among the owners of qualified renewable energy facilities, but it does not define the term “Indian tribal government.” DOE proposes to define “Indian tribal government” to mean the governing body of an Indian tribe as defined in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b). This definition of “Indian tribe” is incorporated into Title XXVI of the Energy Policy Act of 1992 by section 503 of EPACT 2005 (amending 25 U.S.C. 3501). The proposed definition of “Native corporation” follows section 202(b)(1) of EPACT 2005, which adopts the definition of the term in section 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602). DOE proposes to amend the definition of “renewable energy source” to include “ocean” as a qualified renewable source. The ocean, as well as landfill gas and livestock methane captured by DOE's proposed definition of “biomass,” were added by section 202(b)(1) of EPACT 2005 to the list of eligible sources of energy. DOE proposes to amend the definition of “State” to specifically reference Commonwealths, consistent with section 202(b)(1) of EPACT 2005. *Section 451.4 (What is a qualified renewable energy facility)* . DOE proposes five changes to this section to conform to the EPACT 2005 amendments:
(a)The description of owner qualifications includes Indian tribal governments and Native corporations;
(b)the date on which a renewable energy facility must first be used is extended to 2016;
(c)a designated date of first use is provided for facilities placed in operation after the expiration date for new applicants specified in the statute as originally enacted and prior to the first fiscal year of energy production receiving payment under this proposed rule;
(d)ocean energy is added to the provisions describing the conversion of non-qualified facilities; and
(e)U.S. territorial waters are included as an acceptable facility location. In regard to the date of first use, DOE notes that nearly one year and ten months elapsed between expiration of the original eligibility period for new facilities (September 30, 2003) and the extension of the eligibility period enacted by EPACT 2005 (August 8, 2005). DOE interprets the extension to apply to the interim period without interruption. As a result, qualifying facilities for which date of first use occurred in fiscal years 2004 (October 1, 2003-September 30, 2004) and 2005 (October 1, 2004-September 30, 2005) become eligible participants. Those facilities for which date of first use and subsequent energy production occur in fiscal year 2005 may apply for payment from fiscal year 2006 available funds as provided under these proposed rule amendments. Facilities with date of first use in fiscal year 2004 are deemed to have a date of first use of October 1, 2004, and may apply for fiscal year 2005 energy production under these same rule amendments. For the latter applicants, fiscal year 2004 energy production will be disregarded and fiscal year 2005, assuming application for payment for qualifying energy produced therein is made, will be deemed the first year of the ten-year eligibility period for payments. *Section 451.5 (Where and when to apply)* . DOE proposes to eliminate the special provision, at § 451.5(b)(2), regarding the application period for the program's initial 1994 fiscal year because it is no longer applicable. In its place, DOE is proposing a new paragraph (b)(2) that would provide an extended application submission period for owners or operators of facilities whose date of first use occurs during the period October 1, 2003, and September 30, 2005. *Section 451.8 (Application content requirements)* . DOE proposes changes to the required content of each annual application for payment that are made necessary by other proposed rule amendments. Because DOE proposes to maintain a permanent record of accrued energy for each participant, the submission of accrued energy totals, currently required by § 451.8 (h), would no longer be required with each annual application. Proposed § 451.8
(i)identifies supporting materials to be submitted by entities claiming date of first use based on receipt of construction permits. Because the Federal Government has adopted electronic funds transfer as the preferred method for financial transactions with commercial and institutional entities, DOE proposes to remove the option to select other methods of payment from § 451.8 (j). Lastly, DOE proposes to substitute the new statutory term “not-for-profit” for “non-profit” when referring to an electrical cooperative. *Section 451.9 (Procedures for processing applications.)* To conform to EPACT 2005 requirements, DOE proposes several amendments in the procedures for processing applications. As specified in EPACT 2005, available funds will be divided in a 60:40 ratio between two categories of eligible renewable energy facility types. The composition of the 60 percent category corresponds to Tier 1 under the existing regulations except for the addition of ocean energy as a qualifying technology. The 40 percent category will be identical to the prior Tier 2. Also as specified in EPACT 2005, the rule adds the provision to allow the Secretary to modify the 60:40 distribution for any given year, provided that Congress is notified of the reasons for such change. DOE anticipates that this option would be employed primarily in the event that one of the two categories of payment has excess available funds for the year under the standard distribution ratio, while the other has insufficient funds. DOE also proposes to amend the provisions dealing with incentive payments when there are insufficient funds to make payments for all qualifying energy. Under both the existing and proposed amended rule, the total qualified electrical energy consists of
(a)the energy produced in the most recent year and
(b)the accrued energy (which is the qualified energy produced in all preceding years for which payment was not made). To more fairly accommodate the change to the 60:40 funds allocation, DOE proposes to amend the process for partial payment calculations. After funds have been determined to be insufficient and the 60:40 allocations have been made to the respective categories, the amended rule would require DOE to calculate potential payments, on a *pro rata* basis if necessary, based on the prior year's energy production. Excess funds in either of the 60 percent or 40 percent categories would be reallocated to the category still insufficiently funded and *pro rata* calculations based on prior year energy would continue. If funding is not exhausted by this first set of calculations, remaining funds are allocated to the two categories on a 60:40 basis and a second set of calculations is undertaken based on accrued energy. Under this approach, recent annual energy competes for energy payments with recent annual energy, and accrued energy competes with accrued energy. To support its accrued energy calculations, DOE would maintain a record of each applicant's accrued energy total. To illustrate, assume applicants A and B have equivalent eligible facilities that produced 100 kWh of qualified energy in the prior year and that A has no accrued energy and B has 200 kWh accrued energy total. Under the existing rule, B's energy basis for all calculations would be 300 kWh, while A's would be 100 kWh and B would receive three times the energy payment of A regardless of the funding levels. Under the proposed amended process, if available funds were sufficient to make payments for the total qualified energy, B (with total energy basis of 300 kWh) would receive three times the payment of A as before. If funds were sufficient to make payments for only part (or all) of the prior year energy production, A and B (each with prior year energy basis of 100 kWh) would receive equal payments as determined by *pro rata* calculations. If funds were sufficient to exceed prior year energy payments, but insufficient to make full accrued energy payments, B (with accrued energy basis of 200 kWh) would receive an additional payment as determined by *pro rata* calculations, while A (with accrued energy basis of zero) would receive no further payment. DOE believes that this proposed method of accounting for accrued energy would be more equitable for all program participants in view of the potential for both payment categories to be subject to *pro rat* a calculations in any given year. Without this proposed amendment, applicants with several years in the REPI program and large accrued energy backlogs, who have already received multiple REPI payments, would be weighted more heavily than newer applicants who have facilities producing equal annual energy, but have zero or small accrued energy backlogs. This would have had minor effect in the original program where the two categories, or tiers, were paid successively and Tier 1 was fully compensated or nearly so. Under these prior conditions, *pro rata* calculations affected small percentages of the total qualified electrical energy and/or a small fraction of program participants. Under the new 60:40 funding division and with the 60 percent and 40 percent categories being considered in parallel, insufficient funding and *pro rata* calculations may occur for both categories and, therefore, apply to all participants. This could result in accrued energy having excessive influence on funding distributions. DOE's proposed amendment would require DOE to consider annual energy first, and accrued energy thereafter, when making *pro rata* calculations. DOE believes the proposed approach is consistent with the legislation. Both the statute as originally enacted and the amendments prescribed in EPACT 2005 describe a REPI program based on annual energy production and annual incentive payments, and neither includes provisions for addressing backlog or accrued energy. Accrued energy was introduced in DOE's implementation of the REPI program to allow for potential payment of backlogged unpaid energy in the event that available funding exceeded the total payments needed for qualified annual energy production. The proposed amendment would not alter the 60:40 division between categories and would not change DOE's continued recording and recognition of accrued energy totals. The proposed provisions would alter slightly, and more equitably, funding distribution within each category, while maintaining the 60:40 legislative intent. DOE emphasizes that, irrespective of the method used to calculate incentive payments, no owner or operator should assume that all, or any, accrued energy will ultimately receive incentive payments. III. Opportunity for Public Comment Interested persons are invited to participate in this rulemaking by submitting data, views, or comments with respect to the proposed rule. Written comments should be submitted to the address given in the ADDRESSES section of this notice of proposed rulemaking and must be received by the date given in the DATES section of this notice. Comments should be identified on the outside of the envelope and on the documents themselves with the designation “REPI NOPR, RIN 1904-AB62.” Due to potential delays in DOE's receipt and processing of mail sent through the U.S. Postal Service, we encourage respondents to submit comments electronically to ensure timely receipt. All written comments received will be available for public inspection as part of the administrative record on file for this rulemaking maintained by the Office of Energy Efficiency and Renewable Energy at the address provided at the beginning of this notice of proposed rulemaking. Pursuant to the provisions of 10 CFR 1004.11, any person submitting information which that person believes to be confidential and which may be exempt by law from public disclosure, should submit one complete copy of the document, as well as two copies from which the information claimed to be confidential has been deleted. DOE reserves the right to determine the confidential status of the information and to treat it according to its determination. DOE has determined that this rulemaking does not raise the kinds of substantial issues or impacts that, pursuant to 42 U.S.C. 7191, would require DOE to provide an opportunity for oral presentation of views, data and arguments. Therefore, DOE has not scheduled a public hearing on these proposed amendments to Part 451. DOE may reconsider this determination based on the written comments it receives. IV. Regulatory Review A. Executive Order 12866 Today's proposed rule has been determined to not be a “significant regulatory action” under Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (October 4, 1993). Accordingly, this action was not subject to review under that Executive Order by the Office of Information and Regulatory Affairs of the Office of Management and Budget. B. National Environmental Policy Act DOE has determined that this proposed rule is covered under the Categorical Exclusion found in the Department's National Environmental Policy Act regulations at paragraph A.6 of Appendix A to Subpart D, 10 CFR Part 1021, which applies to rulemakings that are strictly procedural. Accordingly, neither an environmental assessment nor an environmental impact statement is required. C. Regulatory Flexibility Act The Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ) requires preparation of an initial regulatory flexibility analysis for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. As required by Executive Order 13272, “Proper Consideration of Small Entities in Agency Rulemaking,” 67 FR 53461 (August 16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that the potential impacts of its rules on small entities are properly considered during the rulemaking process (68 FR 7990). DOE has made its procedures and policies available on the Office of General Counsel's Web site: *http://www.gc.doe.gov* . DOE has reviewed today's proposed procedures under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003. These proposed amendments revise DOE's regulations for its program for making production incentive payments to owners or operators of qualified renewable energy facilities, subject to the availability of appropriations. The regulations are procedural in nature and affect only entities that choose to apply for incentive payments under the program. The proposed procedures will not have a significant economic impact on any class of entities. On the basis of the foregoing, DOE certifies that the proposed procedures, if implemented would not have a significant economic impact on a substantial number of small entities. Accordingly, DOE has not prepared a regulatory flexibility analysis for this rulemaking. DOE's certification and supporting statement of factual basis will be provided to the Chief Counsel for Advocacy of the Small Business Administration pursuant to 5 U.S.C. 605(b). D. Paperwork Reduction Act This proposed rule would not impose any new collection of information subject to review and approval by the Office of Management and Budget
(OMB)under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 *et seq.* E. Unfunded Mandates Reform Act of 1995 The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) generally requires Federal agencies to examine closely the impacts of regulatory actions on State, local, and tribal governments. Subsection 101(5) of title I of that law defines a Federal intergovernmental mandate to include any regulation that would impose upon State, local, or tribal governments an enforceable duty, except a condition of Federal assistance or a duty arising from participating in a voluntary Federal program. Title II of that law requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and tribal governments, in the aggregate, or to the private sector, other than to the extent such actions merely incorporate requirements specifically set forth in a statute. Section 202 of that title requires a Federal agency to perform a detailed assessment of the anticipated costs and benefits of any rule that includes a Federal mandate which may result in costs to State, local, or tribal governments, or to the private sector, of $100 million or more. Section 204 of that title requires each agency that proposes a rule containing a significant Federal intergovernmental mandate to develop an effective process for obtaining meaningful and timely input from elected officers of State, local, and tribal governments. These proposed procedures would not impose a Federal mandate on State, local or tribal governments. The proposed rule would not result in the expenditure by State, local, and tribal governments in the aggregate, or by the private sector, of $100 million or more in any one year. Accordingly, no assessment or analysis is required under the Unfunded Mandates Reform Act of 1995. F. Treasury and General Government Appropriations Act, 1999 Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any proposed rule that may affect family well being. The proposed rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment. G. Executive Order 13132 Executive Order 13132, “Federalism,” 64 FR 43255 (August 4, 1999) imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. Agencies are required to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and carefully assess the necessity for such actions. DOE has examined this proposed rule and has determined that it would not preempt State law and 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. No further action is required by Executive Order 13132. H. Executive Order 12988 With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (February 7, 1996), imposes on Executive agencies the general duty to adhere to the following requirements:
(1)Eliminate drafting errors and ambiguity;
(2)write regulations to minimize litigation; and
(3)provide a clear legal standard for affected conduct rather than a general standard and promote simplification and burden reduction. With regard to the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation:
(1)Clearly specifies the preemptive effect, if any;
(2)clearly specifies any effect on existing Federal law or regulation;
(3)provides a clear legal standard for affected conduct, while promoting simplification and burden reduction;
(4)specifies the retroactive effect, if any;
(5)adequately defines key terms; and
(6)addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, the proposed procedures meet the relevant standards of Executive Order 12988. I. Treasury and General Government Appropriations Act, 2001 The Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). DOE has reviewed today's notice under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines. J. Executive Order 13211 Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to the OMB, a Statement of Energy Effects for any proposed significant energy action. A “significant energy action” is defined as any action by an agency that promulgated or is expected to lead to promulgation of a final rule, and that:
(1)Is a significant regulatory action under Executive Order 12866, or any successor order; and
(2)is likely to have a significant adverse effect on the supply, distribution, or use of energy, or
(3)is designated by the Administrator of the Office of Information and Regulatory Affairs (OIRA), as a significant energy action. For any proposed significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use. Today's regulatory action would not have a significant adverse effect on the supply, distribution, or use of energy and is therefore not a significant energy action. Accordingly, DOE has not prepared a Statement of Energy Effects. V. Approval of the Office of the Secretary The Secretary of Energy has approved publication of today's Notice of Proposed Rulemaking. Issued in Washington, DC, on June 19, 2006. List of Subjects in 10 CFR Part 451 Electric utilities, Grant programs, Renewable energy. Alexander A. Karsner, Assistant Secretary, Energy Efficiency and Renewable Energy. For the reasons set forth in the preamble, DOE proposes to amend part 451 of title 10, chapter II of the Code of Federal Regulations as follows: PART 451—RENEWABLE ENERGY PRODUCTION INCENTIVES 1. The authority citation for part 451 is revised to read as follows: Authority: 42 U.S.C. 7101, *et seq.* ; 42 U.S.C. 13317. 2. Section 451.1(a) is revised to read as follows: § 451.1 Purpose and scope.
(a)The provisions of this part cover the policies and procedures applicable to the determinations by the Department of Energy
(DOE)to make incentive payments, under the authority of 42 U.S.C. 13317, for electric energy generated in a qualified renewable energy facility owned by: A not-for-profit electric cooperative; a public utility described in section 115 of the Internal Revenue Code of 1986; a State, Commonwealth, territory or possession of the United States, the District of Columbia, or political subdivision thereof; an Indian tribal government or subdivision thereof; or a Native corporation as defined in section 3 of the Alaskan Native Claims Settlement Act (43 U.S.C. 1602). 3. Section 451.2 is amended by: a. Adding in alphabetical order new definitions of “Biomass,” “Date of first use,” “Indian tribal government,” “Native corporation,” “Not-for-profit electrical cooperative,” and “Ocean”. b. Revising the definitions of “Closed loop biomass,” “Deciding Official,” “Renewable energy source” and “State.” c. Removing the definition of “Nonprofit electrical cooperative.” The revisions and additions read as follows: § 451.2 Definitions. *Biomass* means biologically generated energy sources such as heat derived from combustion of plant matter, or from combustion of gases or liquids derived from plant matter, animal wastes, or sewage, or from combustion of gases derived from landfills, or hydrogen derived from these same sources. *Closed-loop biomass* means any organic material from a plant which is planted exclusively for purposes of being used at a qualified renewable energy facility to generate electricity. *Date of first use* means, at the option of the facility owner, the date of the first kilowatt-hour sale, the date of completion of facility equipment testing, or the date when all approved permits required for facility construction are received. *Deciding Official* means the Manager of the Golden Field Office of the Department of Energy (or any DOE official to whom the authority of the Manager of the Golden Field Office may be redelegated by the Secretary of Energy). *Indian tribal government* means the governing body of an Indian tribe as defined in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b). *Native corporation* has the meaning set forth in the Alaska Native Claims Settlement Act (25 U.S.C. 1602). *Not-for-profit electrical cooperative* means a cooperative association that is legally obligated to operate on a not-for-profit basis and is organized under the laws of any State for the purpose of providing electric service to its members. *Ocean* means the parts of the Atlantic Ocean (including the Gulf of Mexico) and the Pacific Ocean that are contiguous to the United States coastline and from which energy may be derived through application of tides, waves, currents, thermal differences, or other means. *Renewable energy source* means solar heat, solar light, wind, ocean, geothermal heat, and biomass, except for—
(1)Heat from the burning of municipal solid waste; or
(2)Heat from a dry steam geothermal reservoir which—
(i)Has no mobile liquid in its natural state;
(ii)Is a fluid composed of at least 95 percent water vapor; and
(iii)Has an enthalpy for the total produced fluid greater than or equal to 2.791 megajoules per kilogram (1200 British thermal units per pound). *State* means the District of Columbia, Puerto Rico, and any of the States, Commonwealths, territories, and possessions of the United States. 4. Section 451.4 is amended by: a. Revising paragraphs (a)(2) and (a)(3) and adding new paragraphs (a)(4) and (a)(5). b. Revising paragraph (e). c. Adding the word “ocean” after the word “wind” in paragraphs (f)(1) and (f)(2). d. Adding the words “or in U.S. territorial waters” after the word “State” in paragraph (g). The revisions and additions read as follows: § 451.4 What is a qualified renewable energy facility.
(a)* * *
(2)A public utility described in section 115 of the Internal Revenue Code of 1986;
(3)A not-for-profit electrical cooperative;
(4)An Indian tribal government or subdivision thereof; or
(5)A Native corporation.
(e)*Time of first use.* The date of the first use of a newly constructed renewable energy facility, or a facility covered by paragraph
(f)of this section, must occur during the inclusive period beginning October 1, 1993, and ending on September 30, 2016. For facilities whose date of first use occurred in the period October 1, 2003, through September 30, 2004, the time of first use shall be deemed to be October 1, 2004. 5. Section 451.5 is amended by revising paragraphs (b)(1) and (b)(2) to read as follows: § 451.5 Where and when to apply.
(b)* * *
(1)An application for an incentive payment for electric energy generated and sold in a fiscal year must be filed during the first quarter (October 1 through December 31) of the next fiscal year, except as provided in paragraph
(2)of this section.
(2)For facilities whose date of first use occurred in the period October 1, 2003, through September 30, 2005, applications for incentive payments for electric energy generated and sold in fiscal year 2005 must be filed by August 31, 2006. § 451.6 [Amended] 6. Section 451.6 is amended by adding the word “consecutive” before the words “fiscal years” in the first sentence, and in the last sentence, by removing the date “2013” and adding in its place the date “2026”. 7. Section 451.8 is amended by: a. Removing the comma after the word “owner,” where it is first used in paragraph (a). b. Removing paragraph
(h)and redesignating
(i)as paragraph (h). c. Revising redesignated paragraph (h). d. Adding a new paragraph (i). e. Revising paragraph (j). f. Removing the word “nonprofit” and adding in its place the term “not-for-profit” in paragraph (m). The revisions and additions read as follows: § 451.8 Application content requirements.
(h)The total amount of electric energy for which payment is requested, including the net electric energy generated in the prior fiscal year, as determined according to paragraph
(f)or
(g)of this section;
(i)Copies of permit authorizations if the date of first use is based on permit approvals and this is the initial application;
(j)Instructions for payment by electronic funds transfer; 8. Section 451.9 is amended by revising paragraphs (c), (d), and
(e)to read as follows: § 451.9 Procedures for processing applications.
(c)*DOE determinations.* The Assistant Secretary for Energy Efficiency and Renewable Energy shall determine the extent to which appropriated funds are available to be obligated under this program for each fiscal year. Subject to paragraph
(e)of this section and upon evaluating each application and any other relevant information, DOE shall further determine:
(1)Eligibility of the applicant for receipt of an incentive payment, based on the criteria for eligibility specified in this part;
(2)The number of kilowatt-hours to be used in calculating a potential incentive payment, based on the net electric energy generated from a qualified renewable energy source at the qualified renewable energy facility and sold during the prior fiscal year;
(3)The number of kilowatt-hours to be used in calculating a potential additional incentive payment, based on the total quantity of accrued energy generated during prior fiscal years;
(4)The amounts represented by 60% of available funds and by 40% of available funds; and
(5)Whether justification exists for altering the 60:40 payment ratio specified in paragraph
(e)of this section.
(d)*Calculating payments.* Subject to the provisions of paragraph
(e)of this section, potential incentive payments under this part shall be determined by multiplying the number of kilowatt-hours determined under § 451.9(c)(2) by 1.5 cents per kilowatt-hour, and adjusting that product for inflation for each fiscal year beginning after calendar year 1993 in the same manner as provided in section 29(d)(2)(B) of the Internal Revenue Code of 1986, except that in applying such provisions, calendar year 1993 shall be substituted for calendar year 1979. Using the same procedure, a potential additional payment shall be determined for the number of kilowatt-hours determined under paragraph (c)(3) of this section. If the sum of these calculated payments does not exceed the funds determined to be available by the Assistant Secretary for Energy Efficiency and Renewable Energy under § 451.9(c), DOE shall make payments to all qualified applicants.
(e)*Insufficient funds.* If funds are not sufficient to make full incentive payments to all qualified applicants, DOE shall—
(1)Calculate potential incentive payments, if necessary on a *pro rata* basis, not to exceed 60% of available funds to owners or operators of qualified renewable energy facilities using solar, wind, ocean, geothermal, and closed-loop biomass technologies based on prior year energy generation;
(2)Calculate potential incentive payments, if necessary on a *pro rata* basis, not to exceed 40% of available funds to owners or operators of all other qualified renewable energy facilities based on prior year energy generation;
(3)If the amounts calculated in paragraphs (e)(1) and
(2)of this section result in one owner group with insufficient funds and one with excess funds, allocate excess funds to the owner group with insufficient funds and calculate additional incentive payments, on a pro rata basis if necessary, to such owners or operators based on prior year energy generation.
(4)If potential payments calculated in paragraphs (e)(1), (2), and
(3)of this section do not exceed available funding, allocate 60% of remaining funds to paragraph (e)(1) recipients and 40% to paragraph (e)(2) recipients and calculate additional incentive payments, if necessary on a *pro rata* basis, to owners or operators based on accrued energy;
(5)If the amounts calculated in paragraph (e)(4) of this section result in one owner group with insufficient funds and one with excess funds, allocate excess funds to the owner group with insufficient funds and calculate additional incentive payments, on a *pro rata* basis if necessary, to such owners or operators based on accrued energy.
(6)Notify Congress if potential payments resulting from paragraphs (e)(3) or
(5)of this section will result in alteration of the 60:40 payment ratio;
(7)Make incentive payments based on the sum of the amounts determined in paragraphs (e)(1) through
(5)of this section for each applicant;
(8)Treat the number of kilowatt-hours for which an incentive payment is not made as a result of insufficient funds as accrued energy for which future incentive payment may be made; and
(9)Maintain a record of each applicant's accrued energy. [FR Doc. E6-9998 Filed 6-23-06; 8:45 am] BILLING CODE 6450-01-P DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Office of Federal Housing Enterprise Oversight 12 CFR Part 1750 RIN 2550-AA35 Risk-Based Capital Regulation Amendment AGENCY: Office of Federal Housing Enterprise Oversight, HUD. ACTION: Notice of Proposed Rulemaking. SUMMARY: The Office of Federal Housing Enterprise Oversight (OFHEO) is proposing technical amendments to Appendix A to Subpart B Risk-Based Capital Regulation Methodology and Specifications of 12 CFR part 1750, (Risk-Based Capital Regulation). The proposed amendments are intended to enhance the accuracy and transparency of the calculation of the risk-based capital requirement for the Enterprises and updates the Risk-Based Capital Regulation to incorporate approved new activities treatments. DATES: Comments regarding this Notice of Proposed Rulemaking must be received in writing on or before July 26, 2006. For additional information, see SUPPLEMENTARY INFORMATION. ADDRESSES: You may submit your comments on the proposed rulemaking, identified by “RIN 2550-AA35,” by any of the following methods: • U.S. Mail, United Parcel Post, Federal Express, or Other Mail Service: The mailing address for comments is: Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2550-AA35, Office of Federal Housing Enterprise Oversight, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. • Hand Delivery/Courier: The hand delivery address is: Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2550-AA35, Office of Federal Housing Enterprise Oversight, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. The package should be logged at the Guard Desk, First Floor, on business days between 9 a.m. and 5 p.m. • E-mail: Comments to Alfred M. Pollard, General Counsel, may be sent by e-mail at RegComments@OFHEO.gov. Please include “RIN 2550-AA35” in the subject line of the message. FOR FURTHER INFORMATION CONTACT: Isabella W. Sammons, Deputy General Counsel, telephone
(202)414-3790 or Jamie Schwing, Associate General Counsel, telephone
(202)414-3787 (not toll free numbers), Office of Federal Housing Enterprise Oversight, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. The telephone number for the Telecommunications Device for the Deaf is
(800)877-8339. SUPPLEMENTARY INFORMATION: I. Comments The Office of Federal Housing Enterprise Oversight (OFHEO) invites comments on all aspects of the proposed regulation, and will take all comments into consideration before issuing the final regulation. OFHEO requests that comments submitted in hard copy also be accompanied by the electronic version in Microsoft® Word or in portable document format
(PDF)on 3.5″ disk or CD-ROM. Copies of all comments will be posted on the OFHEO Internet web site at http://www.ofheo.gov. In addition, copies of all comments received will be available for examination by the public on business days between the hours of 10 a.m. and 3 p.m., at the Office of Federal Housing Enterprise Oversight, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. To make an appointment to inspect comments, please call the Office of General Counsel at
(202)414-3751. II. Background Title XIII of the Housing and Community Development Act of 1992, Pub. L. 102-550, titled the Federal Housing Enterprise Financial Safety and Soundness Act of 1992
(Act)(12 U.S.C. 4501 *et seq.* ) established OFHEO as an independent office within the Department of Housing and Urban Development to ensure that the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the Enterprises) are adequately capitalized, operate safely and soundly, and comply with applicable laws, rules and regulations. In furtherance of its regulatory responsibilities, OFHEO published a final regulation setting forth a risk-based capital test which forms the basis for determining the risk-based capital requirement for each Enterprise. 1 The Risk-Based Capital Test has been amended to incorporate corrective and technical amendments that enhance the accuracy and transparency of the calculation of the risk-based capital requirement. 2 Since the last amendment to the Risk-Based Capital Regulation, additional experience with the regulation has raised further operational and technical issues. OFHEO now proposes technical amendments to address four aspects of the Risk-Based Capital Regulation. The proposed technical amendments would incorporate additional interest rates indices, clarify definitions, incorporate approved new Enterprise activities and update treatment of certain mark-to-market accounting issues. These amendments are capital neutral and largely codify existing practice undertaken pursuant to the current Risk-Based Capital Regulation. In addition to the proposed technical amendments, OFHEO plans additional future rulemakings to address substantial topics such as making adjustments to the loss severity equations used to calculate Enterprise risk-based capital and the appropriateness of incorporating mark-to-market accounting into the Risk-Based Capital Regulation. OFHEO also plans to update the Minimum Capital Regulation to address fair value accounting and other issues. 3 1 Risk-Based capital, 66 FR 47730 (September 13, 2001), 12 CFR part 1750. 2 Risk-Based Capital, 66 FR 47730 (September 13, 2001), 12 CFR part 1750, as amended, 67 FR 11850 (March 15, 2002), 67 FR 19321 (April 19, 2002), 68 FR 7309 (February 13, 2003). 3 Minimum Capital, 61 FR 35607 (July 8, 1996), 12 CFR 1750, as amended, 67 FR 19321 (April 19, 2002). Although the changes set forth in this amendment are technical and are being proposed to incorporate proxy treatments, new activities, and updates already used to calculate Enterprise capital requirements, OFHEO welcomes comment as to whether these changes are optimal and on any additional issues mentioned herein. The proposed technical amendments are discussed in greater detail below. A. Additional Interest Rate Indices Due to developments in the mortgage and financial markets since the promulgation of the Risk-Based Capital Regulation and the introduction of a number of approved new activities at each Enterprise, OFHEO is proposing additions to the interest rate indices used to measure Enterprise risk. These new indices would be incorporated into the Risk-Based Capital Regulation through revisions to Table “3-18, Interest Rate and Index Inputs,” and Table “3-27, Non-Treasury Interest Rates,” of Appendix A to Subpart B. The new interest rate indices are the Constant Maturity Mortgage Index, 12 month Moving Treasury Average, One month Freddie Mac Reference Bill, Certificate of Deposits Index, 2 Year Swap, 3 Year Swap, 5 Year Swap, 10 Year Swap, and 30 Year Swap. B. Revised Risk-Based Capital Regulation Definitions Additional operational experience with the Risk-Based Capital Regulation, as well as financial and mortgage market developments, have led OFHEO to conclude that a number of defined terms in the Risk-Based Capital Regulation lack clarity or were otherwise insufficient. Proposed technical amendments in this area include changes to recognize that single family loans with interest-only periods have become common and that the Enterprises have acquired or guaranteed such loans. Sections 3.1.2.1, 3.6.3.3.1, and 3.6.3.3.2 of Appendix A to Subpart B, currently provide a treatment for loans with interest-only periods. However, the data definitions in sections 3.1.2.1, 3.6.3.3.1, and 3.6.3.3.2 assume only multifamily loans have this feature. OFHEO proposes modifications to the data definitions in those sections of the Risk-Based Capital Regulation to accommodate single family interest-only loans. In addition to the single family interest-only issue, there are more than 30 definitions related to deferred balances throughout the Risk-Based Capital Regulation. These definitions are not clear or consistent throughout the Risk-Based Capital Regulation and across product type. Finally, the Risk-Based Capital Regulation definition of “float days” in sections 3.1.2.1.1 and 3.6.3.7.2 would be revised to indicate more accurately that amounts referred to in that definition are based on weighted averages for a given loan group. C. Incorporation of New Enterprise Activities Section 3.11 of the Risk-Based Capital Regulation provides a method for recognizing and quantifying the capital impact of the innovations in the financial and mortgage markets that impact the risk profiles of the Enterprises. Section 3.11.3, Treatment of New Activities, sets forth the procedures by which new Enterprise activities are reported to OFHEO, analyzed by OFHEO to determine an appropriately conservative treatment, and incorporated into the risk-based capital calculation. The section also describes how each newly incorporated treatment is made available to the public for comment and possible further revision. Since the promulgation of the Risk-Based Capital Regulation, many new activities treatments have been incorporated into the capital calculation and posted on the OFHEO web site for public comment. Because these new activities appear to be permanent and their treatments have proved effective, OFHEO is proposing to incorporate them into the text of the Risk-Based Capital Regulation. The proposed technical amendments regarding new activities treatments in section 3.6, whole loan cash flows, include treatments concerning reverse mortgages and split-rate arm loans. New activities treatments in section 3.8, nonmortgage instrument cash flows, relate to futures and options on futures, swaptions, consumer price index coupon linked instruments, and pre-refunded tax-exempt municipal bonds. The proposed amendments would appear at sections 3.6.3.3.1 and 3.8.3.6.2. D. Update of Mark-to-Market Accounting Treatment During the notice and comment development of the Risk-Based Capital Regulation, commenters raised concerns regarding treatment of the impact of mark-to-market accounting. At that time, Financial Accounting Standard
(FAS)115 and FAS 133 required mark-to-market accounting for certain instruments. In response to the requirements of FAS 115 and FAS 133, and taking into account public comments, OFHEO determined to implement simplified procedures to allow the efficient and practical implementation of the stress test. Generally, the simplified procedures provide for the removal of the effects of mark-to-market accounting from the balance sheet such that the balance sheet is stated on an amortized cost basis. Since the adoption of the Risk-Based Capital Regulation, a number of new accounting standards have been adopted by the Financial Accounting Standards Board that introduce fair values to the balance sheet and that are similar in complexity to FAS 115 and FAS 133. OFHEO is proposing a technical amendment to Section 3.10.3.6.2 [a] of the Risk-Based Capital Regulation that would extend the current risk-based capital regulatory treatment of FAS 115 and FAS 133 to other accounting standards that require mark-to-market accounting. Under current guidance from OFHEO, the Enterprises back out the impact of the new mark-to-market accounting standards from their respective balance sheets prior to submitting their Risk-Based Capital Reports to OFHEO. The treatment set forth in the proposed amendment would codify this practice. Regulatory Impacts Executive Order 12866, Regulatory Planning and Review The proposed technical amendments address provisions of the Risk-Based Capital Regulation. The proposed technical amendments incorporate new activities treatments of the Enterprises adopted in accordance with the Risk-Based Capital Regulation, corrections to certain definitions, updates to interest-rate indices and recognition of accounting rule changes adopted since the Risk-Based Capital Regulation was promulgated. The proposed technical amendments to the Risk-Based Capital Regulation are not classified as an economically significant rule under Executive Order 12866 because they would not result in an annual effect on the economy of $100 million or more or a major increase in costs or prices for consumers, individual industries, Federal, state or local government agencies, or geographic regions; or have significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in foreign or domestic markets. Accordingly, no regulatory impact assessment is required. Nevertheless, the proposed technical amendments were submitted to the Office of Management and Budget
(OMB)for review under the provisions of Executive Order 12866 as a significant regulatory action. Executive Order 13132, Federalism Executive Order 13132 requires that Executive departments and agencies identify regulatory actions that have significant federalism implications. A regulation has federalism implications if it has substantial direct effects on the states, on the relationship or distribution of power between the Federal Government and the states, or on the distribution of power and responsibilities among various levels of government. The Enterprises are federally chartered entities supervised by OFHEO. The proposed technical amendments to the Risk-Based Capital Regulation address matters which the Enterprises must comply with for Federal regulatory purposes. The proposed technical amendments to the Risk-Based Capital Regulation address matters regarding the risk-based capital calculation for the Enterprises and therefore do not affect in any manner the powers and authorities of any state with respect to the Enterprises or alter the distribution of power and responsibilities between Federal and state levels of government. Therefore, OFHEO has determined that the proposed amendments to the Capital regulation have no federalism implications that warrant preparation of a Federalism Assessment in accordance with Executive Order 13132. Paperwork Reduction Act These amendments do not contain any information collection requirements that require the approval of OMB under the Paperwork Reduction Act (44 U.S.C. 3501 *et seq.* ). Regulatory Flexibility Act The Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ) requires that a regulation that has a significant economic impact on a substantial number of small entities, small businesses, or small organizations must include an initial regulatory flexibility analysis describing the regulation's impact on small entities. Such an analysis need not be undertaken if the agency has certified that the regulation does not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 605(b). OFHEO has considered the impact of the proposed technical amendments to the Risk-Based Capital Regulation under the Regulatory Flexibility Act. The General Counsel of OFHEO certifies that the proposed technical amendments to the Risk-Based Capital Regulation are not likely to have a significant economic impact on a substantial number of small business entities because the regulation is applicable only to the Enterprises, which are not small entities for purposes of the Regulatory Flexibility Act. List of Subjects in 12 CFR Part 1750 Capital classification, Mortgages, Risk-based capital. Accordingly, for the reasons stated in the preamble, OFHEO amends 12 CFR part 1750 as follows: PART 1750—CAPITAL 1. The authority citation for part 1750 continues to read as follows: Authority: 12 U.S.C. 4513, 4514, 4611, 4612, 4614, 4615, 4618. 2. Amend Appendix A to subpart B of part 1750 as follows: a. Revise Table 3-2 in paragraph 3.1.2.1 [c]; b. Revise Table 3-4 in paragraph 3.1.2.1 [c]; c. Revise Table 3-5 in paragraph 3.1.2.1.1; d. Revise Table 3-8 in paragraph 3.1.2.1.1; e. Revise Table 3-9 in paragraph 3.1.2.1.1; f. Revise Table 3-12 in paragraph 3.1.2.2 [a]; g. Revise Table 3-13 in paragraph 3.1.2.2 [b]; h. Revise Table 3-14 in paragraph 3.1.2.2 [c]; i. Revise Table 3-15 in paragraph 3.1.2.3; j. Revise Table 3-16 in paragraph 3.1.2.4; k. Revise Table 3-18 in paragraph 3.1.3.1 [c]; l. Revise Table 3-27 in paragraph 3.3.3 [a] 3. b.; m. Redesignate paragraphs 3.6.3.3.1 [d] and [e] as new paragraphs 3.6.3.3.1. [c] 5. and [c] 6., respectively; n. Add new paragraphs 3.6.3.3.1 [c] 7. and [c] 8.; o. Revise Table 3-32 in paragraph 3.6.3.3.2; p. Revise Table 3-51 in paragraph 3.6.3.7.2; q. Revise Table 3-54 in paragraph 3.6.3.8.2; r. Revise Table 3-56 in paragraph 3.7.2.1.1; s. Revise Table 3-57 in paragraph 3.7.2.1.2 [a]; t. Revise Table 3-58 in paragraph 3.7.2.1.3 [a]; u. Revise Table 3-66 in paragraph 3.8.2 [a]; v. Redesignate paragraph 3.8.3.6.2 [d] as new paragraph 3.8.3.6.2 [h]; w. Add new paragraphs 3.8.3.6.2 [d] thru [g]; x. Revise Table 3-70 in paragraph 3.9.2; y. Amend paragraphs 3.10.3.6.2 [a] 1. a. and b. The revisions and additions read as follows: Appendix A to Subpart B of Part 1750—Risk-Based Capital Test Methodology and Specifications 3.1.2.1 * * * [c] * * * Table 3-2—Whole Loan Classification Variables Variable Description Range Reporting Date The last day of the quarter for the loan group activity that is being reported to OFHEO YYYY0331 YYYY0630 YYYY0930 YYYY1231 Enterprise Enterprise submitting the loan group data Fannie Mae Freddie Mac Business Type Single family or multifamily Single family Multifamily Portfolio Type Retained portfolio or Sold portfolio Retained Portfolio Sold Portfolio Government Flag Conventional or Government insured loan Conventional Government Original LTV Assigned LTV classes based on the ratio, in percent, between the original loan amount and the lesser of the purchase price or appraised value LTV<=60 60 <LTV<=70 70 <LTV<=75 75 <LTV<=80 80 <LTV<=90 90 <LTV<=95 95 <LTV<=100 100 <LTV Interest-only Flag Indicates if the loan is currently paying interest-only. Loans that started as I/Os and are currently amortizing should be flagged as ‘N’ Yes No Current Mortgage Interest Rate Assigned classes for the current mortgage interest rate 0.0<=Rate<4.0 4.0<=Rate<5.0 5.0<=Rate<6.0 6.0<=Rate<7.0 7.0<=Rate<8.0 8.0<=Rate<9.0 9.0<=Rate<10.0 10.0<=Rate<11.0 11.0<=Rate<12.0 12.0<=Rate<13.0 13.0<=Rate<14.0 14.0<=Rate<15.0 15.0<=Rate<16.0 Rate=>16.0 Original Mortgage Interest Rate Assigned classes for the original mortgage interest rate 0.0<=Rate<4.0 4.0<=Rate<5.0 5.0<=Rate<6.0 6.0<=Rate<7.0 7.0<=Rate<8.0 8.0<=Rate<9.0 9.0<=Rate<10.0 10.0<=Rate<11.0 11.0<=Rate<12.0 12.0<=Rate<13.0 13.0<=Rate<14.0 14.0<=Rate<15.0 15.0<=Rate<16.0 Rate=>16.0 Mortgage Age Assigned classes for the age of the loan 0<=Age<=12 12<Age<=24 24<Age<=36 36<Age<=48 48<Age<=60 60<Age<=72 72<Age<=84 84<Age<=96 96<Age<=108 108<Age<=120 120<Age<=132 132<Age<=144 144<Age<=156 156<Age<=168 168<Age<=180 Age>180 Rate Reset Period Assigned classes for the number of months between rate adjustments Period=1 1<Period<=4 4<Period<=9 9<Period<=15 15<Period<=60 60<Period<999 Period=999 (not applicable) Payment Reset Period Assigned classes for the number of months between payment adjustments after the duration of the teaser rate Period<=9 9<Period<=15 15<Period<999 Period=999 (not applicable) ARM Index Specifies the type of index used to determine the interest rate at each adjustment FHLB 11th District Cost of Funds. 1 Month Federal Agency Cost of Funds. 3 Month Federal Agency Cost of Funds. 6 Month Federal Agency Cost of Funds. 12 Month Federal Agency Cost of Funds. 24 Month Federal Agency Cost of Funds. 36 Month Federal Agency Cost of Funds. 60 Month Federal Agency Cost of Funds. 120 Month Federal Agency Cost of Funds. 360 Month Federal Agency Cost of Funds. Overnight Federal Funds (Effective). 1 Week Federal Funds 6 Month Federal Funds 1 month LIBOR 3 Month LIBOR 6 Month LIBOR 12 Month LIBOR Conventional Mortgage Rate. 15 Year Fixed Mortgage Rate. 7 Year Balloon Mortgage Rate. Prime Rate 1 Month Treasury Bill 3 Month CMT 6 Month CMT 12 Month CMT 24 Month CMT 36 Month CMT 60 Month CMT 120 Month CMT 240 Month CMT 360 Month CMT Cap Type Flag Indicates if a loan group is rate-capped, payment-capped or uncapped Payment Capped Rate Capped No periodic rate cap OFHEO Ledger Code OFHEO-specific General Ledger account number used in the Stress Test Appropriate OFHEO Ledger Code based on the chart of accounts. 3.1.2.1 * * * [c] * * * Table 3-4—Additional Multifamily Loan Classification Variables Variable Description Range Multifamily Product Code Identifies the mortgage product types for multifamily loans Fixed Rate Fully Amortizing Adjustable Rate Fully Amortizing 5 Year Fixed Rate Balloon 7 Year Fixed Rate Balloon 10 Year Fixed Rate Balloon 15 Year Fixed Rate Balloon Balloon ARM Other New Book Flag “New Book” is applied to Fannie Mae loans acquired beginning in 1988 and Freddie Mac loans acquired beginning in 1993, except for loans that were refinanced to avoid a default on a loan originated or acquired earlier New Book Old Book Ratio Update Flag Indicates if the LTV and DCR were updated at origination or at Enterprise acquisition Yes No Current DCR Assigned classes for the Debt Service Coverage Ratio based on the most recent annual operating statement DCR<1.00 1.00<=DCR<1.10 1.10<=DCR<1.20 1.20<=DCR<1.30 1.30<=DCR<1.40 1.40<=DCR<1.50 1.50<=DCR<1.60 1.60<=DCR<1.70 1.70<=DCR<1.80 1.80<=DCR<1.90 1.90<=DCR<2.00 2.00<=DCR<2.50 2.50<=DCR<4.00 DCR>=4.00 Prepayment Penalty Flag Indicates if prepayment of the loan is subject to active prepayment penalties or yield maintenance provisions Yes No 3.1.2.1.1* * * Table 3-5—Mortgage Amortization Calculation Inputs Variable Description Rate Type (Fixed or Adjustable) Product Type (30/20/15-Year FRM, ARM, Balloon, Government, etc.) UPB <sup>ORIG</sup> Unpaid Principal Balance at Origination (aggregate for Loan Group) UPB <sup>0</sup> Unpaid Principal Balance at start of Stress Test (aggregate for Loan Group), adjusted by UPB scale factor MIR <sup>0</sup> Mortgage Interest Rate for the Mortgage Payment prior to the start of the Stress Test, or Initial Mortgage Interest Rate for new loans (weighted average for Loan Group) (expressed as a decimal per annum) PMT <sup>0</sup> Amount of the Mortgage Payment (Principal and Interest) prior to the start of the Stress Test, or first Payment for new loans (aggregate for Loan Group), adjusted by UPB scale factor AT Original loan Amortizing Term in months (weighted average for Loan Group) RM Remaining term to Maturity in months (i.e., number of contractual payments due between the start of the Stress Test and the contractual maturity date of the loan) (weighted average for Loan Group) A <sup>0</sup> Age of the loan at the start of Stress Test, in months (weighted average for Loan Group) IRP Initial Rate Period, in months Interest-only Flag RIOP Remaining Interest-only period, in months (weighted average for loan group) UPB Scale Factor Factor determined by reconciling reported UPB to published financials Additional Interest Rate Inputs GFR Guarantee Fee Rate (weighted average for Loan Group) (decimal per annum) SFR Servicing Fee Rate (weighted average for Loan Group) (decimal per annum) Additional Inputs for ARMs (weighted averages for Loan Group, except for Index) INDEX <sup>m</sup> Monthly values of the contractual Interest Rate Index LB Look-Back period, in months MARGIN Loan Margin (over index), decimal per annum RRP Rate Reset Period, in months Rate Reset Limit (up and down), decimal per annum Maximum Rate (life cap), decimal per annum Minimum Rate (life floor), decimal per annum NAC Negative Amortization Cap, decimal fraction of UPB <sup>ORIG</sup> Unlimited Payment Reset Period, in months PRP Payment Reset Period, in months Payment Reset Limit, as decimal fraction of prior payment 3.1.2.1.1 * * * Table 3-8—Miscellaneous Whole Loan Cash and Accounting Flow Inputs Variable Description GF Guarantee Fee rate (weighted average for Loan Group) (decimal per annum) FDS Float Days for Scheduled Principal and Interest (weighted average for Loan Group) FDP Float Days for Prepaid Principal (weighted average for Loan Group) FREP Fraction Repurchased (weighted average for Loan Group) (decimal) RM Remaining Term to Maturity in months UPD <sup>0</sup> Sum of all unamortized discounts, premiums, fees, commissions, etc., for the loan group, such that the unamortized balance equals the book value minus the face value for the loan group at the start of the Stress Test, adjusted by the Unamortized Balance Scale Factor Unamortized Balance Scale Factor Factor determined by reconciling reported Unamortized Balance to published financials 3.1.2.1.1 * * * Table 3-9—Additional Inputs for Repurchased MBS Variable Description Wtd Ave Percent Repurchased For sold loan groups, the percent of the loan group UPB that gives the actual dollar amount of loans that collateralize single class MBSs that the Enterprise holds in its own portfolio. SUPD <sup>0</sup> The aggregate sum of all unamortized discounts, premiums, fees, commissions, etc., associated with the securities modeled using the Wtd Ave Percent Repurchased, such that the unamortized balance equals the book value minus the face value for the relevant securities at the start of the Stress Test, adjusted by the percent repurchased and the Security Unamortized Balance Scale Factor. Security Unamortized Balances Scale Factor Factor determined by reconciling reported Security Unamortized Balances to published financials 3.1.2.2 * * * [a] * * * Table 3-12—Inputs for Single Class MBS Cash Flows Variable Description Pool Number A unique number identifying each mortgage pool CUSIP Number A unique number assigned to publicly traded securities by the Committee on Uniform Securities Identification Procedures Issuer Issuer of the mortgage pool Government Flag Indicates Government insured collateral Original UPB Amount Original pool balance adjusted by UPB scale factor and multiplied by the Enterprise's percentage ownership Current UPB Amount Initial Pool balance (at the start of the StressTest), adjusted by UPB scale factor and multiplied by the Enterprise's percentage ownership Product Code Mortgage product type for the pool Security Rate Index If the rate on the security adjusts over time, the index that the adjustment is based on Unamortized Balance The sum of all unamortized discounts, premiums, fees, commissions, etc., such that the unamortized balance equals book value minus face value, adjusted by Unamortized Balance Scale Factor Wt Avg Original Amortization Term Original amortization term of the underlying loans, in months (weighted average for underlying loans) Wt Avg Remaining Term of Maturity Remaining maturity of the underlying loans at the start of the Stress Test (weighted average for underlying loans) Wt Avg Age Age of the underlying loans at the start of the Stress Test (weighted average for underlying loans) Wt Avg Current Mortgage Interest rate Mortgage Interest Rate of the underlying loans at the start of the Stress Test (weighted average for underlying loans) Wt Avg Pass-Through Rate Pass-Through Rate of the underlying loans at the start of the Stress Test (Sold loans only) (weighted average for underlying loans) Wtg Avg Original Mortgage Interest Rate The current UPB weighted average mortgage interest rate in effect at origination for the loans in the pool Security Rating The most current rating issued by any Nationally Recognized Statistical Rating Organization (NRSRO) for this security, as of the reporting date Wt Avg Gross Margin Gross margin for the underlying loans (ARM MBS only) (weighted average for underlying loans) Wt Avg Net Margin Net margin (used to determine the security rate for ARM MBS) (weighted average for underlying loans) Wt Avg Rate Reset Period Rate reset period in months (ARM MBS only) (weighted average for underlying loans) Wt Avg Rate Reset Limit Rate reset limit up/down (ARM MBS only) (weighted average for underlying loans) Wt Avg Life Interest Rate Ceiling Maximum rate (lifetime cap) (ARM MBS only) (weighted average for underlying loans) Wt Avg Life Interest Rate Floor Minimum rate (lifetime floor) (ARM MBS only) (weighted average for underlying loans) Wt Avg Payment Reset Period Payment reset period in months (ARM MBS only) (weighted average for underlying loans) Wt Avg Payment Reset Limit Payment reset limit up/down (ARM MBS only) (weighted average for underlying loans) Wt Avg Lockback Period The number of months to look back from the interest rate change date to find the index value that will be used to determine the next interest rate. (weighted average for underlying loans) Wt Avg Negative Amortization Cap The maximum amount to which the balance can increase before the payment is recast to a fully amortizing amount. It is expressed as a fraction of the original UPB. (weighted average for underlying loans) Wt Avg Original Mortgage Interest Rate The current UPB weighted average original mortgage interest rate for the loans in the pool Wt Avg Initial Interest Rate Period Number of months between the loan origination date and the first rate adjustment date (weighted average for underlying loans) Wt Avg Unlimited Payment Reset Period Number of months between unlimited payment resets, i.e., not limited by payment caps, starting with origination date (weighted average for underlying loans) Notional Flag Indicates if the amounts reported in Original Security Balance and Current Security Balance are notional UPB Scale Factor Factor determined by reconciling reported UPB to published financials Unamortized Balance Scale Factor Factor determined by reconciling reported Unamortized Balance to published financials Whole Loan Modeling Flag Indicates that the Current UPB Amount and Unamortized Balance associated with this repurchased MBS are included in the Wtg Avg Percent Repurchased and Security Unamortized Balance fields FAS 115 Classification The financial instrument's classification according to FAS 115 HPGR <sup>K</sup> Vector of House Price Growth Rates for quarters q=1...40 of the Stress Period. 3.1.2.2 * * * [b] * * * Table 3-13—Information for Multi-Class and Derivative MBS Cash Flows Inputs Variable Description CUSIP Number A unique number assigned to publicly traded securities by the Committee on Uniform Securities Identification Procedures Issuer Issuer of the security: FNMA, FHLMC, GNMA or other Original Security Balance Original principal balance of the security (notional amount for interest-only securities) at the time of issuance, adjusted by UPB scale factor, multiplied by the Enterprise's percentage ownership Current Security Balance Initial principal balance, or notional amount, at the start of the Stress Period, adjusted by UPB scale factor, multiplied by the Enterprise's percentage ownership Current Security Percentage Owned The percentage of a security's total current balance owned by the Enterprise Notional Flag Indicates if the amounts reported in Original Security Balance and Current Security Balance are notional Unamortized Balance The sum of all unamortized discounts, premiums, fees, commissions, etc., such that the unamortized balance equals book value minus face value, adjusted by the Unamortized Balance Scale Factor Unamortized Balance Scale Factor Factor determined by reconciling reported Unamortized Balance to published financials UPB Scale Factor Factor determined by reconciling the reported current security balance to published financials Security Rating The most current rating issued by any Nationally Recognized Statistical Rating Organization (NRSRO) for this security, as of the reporting date 3.1.2.2 * * * [c] * * * Table 3-14—Inputs for MRBs and Derivative MBS Cash Flows Inputs Variable Description CUSIP Number A unique number assigned to publicly traded securities by the Committee on Uniform Securities Identification Procedures Original Security Balance Original principal balance, adjusted by UPB scale factor and multiplied by the Enterprise's percentage ownership Current Security Balance Initial principal balance (at start of Stress Period), adjusted by UPB scale factor and multiplied by the Enterprise's percentage ownership Unamortized Balance The sum of all unamortized discounts, premiums, fees, commissions, etc., such that the unamortized balance equals book value minus face value, adjusted by Unamortized Balance scale factor Unamortized Balance Scale Factor Factor determined by reconciling reported Unamortized Balance to published financials UPB Scale Factor Factor determined by reconciling the reported current security balance to published financials Floating Rate Flag Indicates the instrument pays interest at a floating rate Issue Date The issue date of the security Maturity Date The stated maturity date of the security Security Interest Rate The rate at which the security earns interest, as of the reporting date Principal Payment Window Starting Date, Down-Rate Scenario The month in the Stress Test that principal payment is expected to start for the security under the statutory “down” interest rate scenario, according to Enterprise projections Principal Payment Window Ending Date, Down-Rate Scenario The month in the Stress Test that principal payment is expected to end for the security under the statutory “down” interest rate scenario, according to Enterprise projections Principal Payment Window Starting Date, Up-Rate Scenario The month in the Stress Test that principal payment is expected to start for the security under the statutory “up” interest rate scenario, according to Enterprise projections Principal Payment Window Ending Date, Up-Rate Scenario The month in the Stress Test that principal payment is expected to end for the security under the statutory “up” interest rate scenario, according to Enterprise projections Notional Flag Indicates if the amounts reported in Original Security Balance and Current Security Balance are notional Security Rating The most current rating issued by any Nationally Recognized Statistical Rating Organization (NRSRO) for this security, as of the reporting date Security Rate Index If the rate on the security adjusts over time, the index on which the adjustment is based Security Rate Index Coefficient If the rate on the security adjusts over time, the coefficient is the number used to multiply by the value of the index Security Rate Index Spread If the rate on the security adjusts over time, the spread is added to the value of the index multiplied by the coefficient to determine the new rate Security Rate Adjustment Frequency The number of months between rate adjustments Security Interest Rate Ceiling The maximum rate (lifetime cap) on the security Security Interest Rate Floor The minimum rate (lifetime floor) on the security Life Ceiling Interest Rate The maximum interest rate allowed throughout the life of the security Life Floor Interest Rate The minimum interest rate allowed throughout the life of security 3.1.2.3 * * * Table 3-15—Input Variables for Nonmortgage Instrument Cashflows Data Elements Description Amortization Methodology Code Enterprise method of amortizing deferred balances (e.g., straight line) Asset ID CUSIP or Reference Pool Number identifying the asset underlying a derivative position Asset Type Code Code that identifies asset type used in the commercial information service (e.g., ABS, Fannie Mae pool, Freddie Mac pool) Associated Instrument ID Instrument ID of an instrument linked to another instrument Coefficient Indicates the extent to which the coupon is leveraged or de-leveraged Compound Indicator Indicates if interest is compounded Compounding Frequency Indicates how often interest is compounded Counterparty Credit Rating NRSRO's rating for the counterparty Counterparty Credit Rating Type An indicator identifying the counterparty's credit rating as short-term (‘S’) or long-term (‘L’) Counterparty ID Enterprise counterparty tracking ID Country Code Standard country codes in compliance with Federal Information Processing Standards Publication 10-4 Credit Agency Code Identifies NRSRO (e.g., Moody's) Current Asset Face Amount Current face amount of the asset underlying a swap adjusted by UPB scale factor Current Coupon Current coupon or dividend rate of the instrument Current Unamortized Discount Current unamortized premium or unaccreted discount of the instrument adjusted by Unamortized Balance Scale Factor. If the proceeds from the issuance of debt or derivatives or the amount paid for an asset were greater than par, the value should be positive. If the proceeds or the amounts paid were less than par, the value should be negative Current Unamortized Fees Current unamortized fees associated with the instrument adjusted by Unamortized Balance Scale Factor. Generally fees associated with the issuance of debt or derivatives should be negative numbers. Fees associated with the purchase of an asset should generally be reported as positive numbers Current Unamortized Hedge Current unamortized hedging gains (positive) or losses (negative) associated with the instrument adjusted by the Unamortized Balance Scale Factor Current Unamortized Other Any other unamortized items originally associated with the instrument adjusted by Unamortized Balance Scale Factor. If the proceeds from the issuance of debt or derivatives or the amount paid for an asset were greater than par, the value should be positive. If the proceeds or the amounts paid were less than par, the value should be negative CUSIP_ISIN CUSIP or ISIN Number identifying the instrument Day Count Day count convention (e.g., 30/360) End Date The last index repricing date EOP Principal Balance End of Period face, principal or notional, amount of the instrument adjusted by UPB scale factor Exact Representation Indicates that an instrument is modeled according to its contractual terms Exercise Convention Indicates option exercise convention (e.g., American Option) Exercise Price Par=1.0; Options First Coupon Date Date first coupon is received or paid Index Cap Indicates maximum index rate Index Floor Indicates minimum index rate Index Reset Frequency Indicates how often the interest rate index resets on floating-rate instruments Index Code Indicates the interest rate index to which floating-rate instruments are tied (e.g., LIBOR) Index Term Point on yield curve, expressed in months, upon which the index is based Instrument Credit Rating NRSRO credit rating for the instrument Instrument Credit Rating Type An indicator identifying the instruments credit rating as short-term (‘S’) or long-term (‘L’) Instrument ID An integer used internally by the Enterprise that uniquely identifies the instrument Interest Currency Code Indicates currency in which interest payments are paid or received Interest Type Code Indicates the method of interest rate payments (e.g., fixed, floating, step, discount) Issue Date Indicates the date that the instrument was issued Life Cap Rate The maximum interest rate for the instrument throughout its life Life Floor Rate The minimum interest rate for the instrument throughout its life Look-Back Period Period from the index reset date, expressed in months, that the index value is derived Maturity Date Date that the instrument contractually matures Notional Indicator Identifies whether the face amount is notional Instrument Type Code Indicates the type of instrument to be modeled (e.g., ABS, Cap, Swap) Option Indicator Indicates if instrument contains an option Option Type Indicates option type (e.g., Call option) Original Asset Face Amount Original face amount of the asset underlying a swap adjusted by UPB scale factor Original Discount Original premium or discount associated with the purchase or sale of the instrument adjusted by Unamortized Balance Scale Factor. If the proceeds from the issuance of debt or derivatives or the amount paid for an asset were greater than par, the value should be positive. If the proceeds or the amounts paid were less than par, the value should be negative Original Face Original face, principal or notional, amount of the instrument adjusted by UPB scale factor Original Fees Fees or commissions paid at the time of purchase or sale adjusted by the Unamortized Balance Scale Factor. Generally fees associated with the issuance of debt or derivatives should be negative numbers. Fees associated with the purchase of an asset should generally be reported as positive numbers Original Hedge Gains (positive) or losses (negative) from closing out a hedge associated with the instrument at settlement, adjusted by the Unamortized Balance Scale Factor Original Other Any other items originally associated with the instrument to be amortized or accreted adjusted by the Unamortized Balance Scale Factor. If the proceeds from the issuance of debt or derivatives or the amount paid for an asset were greater than par, the value should be positive. If the proceeds of the amounts paid were less than par, the value should be negative Parent Entity ID Enterprise internal tracking ID for parent entity Payment Amount Interest payment amount associated with the instrument (reserved for complex instruments where interest payments are not modeled) adjusted by UPB scale factor Payment Frequency Indicates how often interest payments are made or received Performance Date “As of” date on which the data is submitted Periodic Adjustment The maximum amount that the interest rate for the instrument can change per reset Position Code Indicates whether the Enterprise pays or receives interest on the instrument Principal Currency Code Indicates currency in which principal payments are paid or received Principal Factor Amount EOP Principal Balance expressed as a percentage of Original Face Principal Payment Date A valid date identifying the date that principal is paid Settlement Date A valid date identifying the date the settlement occurred Spread An amount added to an index to determine an instrument's interest rate Start Date The date, spot or forward, when some feature of a financial contract becomes effective (e.g., Call Date), or when interest payments or receipts begin to be calculated Strike Rate The price or rate at which an option begins to have a settlement value at expiration, or, for interest-rate caps and floors, the rate that triggers interest payments Submitting Entity Indicates which Enterprise is submitting information Trade ID Unique code identifying the trade of an instrument Transaction Code Indicates the transaction that an Enterprise is initiating with the instrument (e.g., buy, issue reopen) Transaction Date A valid date identifying the date the transaction occurred UPB Scale Factor Factor determined by reconciling reported UPB to published financials Unamortized Balances Scale Factor Factor determined by reconciling reported Unamortized Balances to published financials 3.1.2.4 * * * Table 3-16—Inputs for Alternative Modeling Treatment Items Variable Description TYPE Type of item (asset, liability or off-balance-sheet item) BOOK Book Value of item (amount outstanding adjusted for deferred items) FACE Face Value or notional balance of item for off-balance sheet items REMATUR Remaining Contractual Maturity of item in whole months. Any fraction of a month equals one whole month RATE Interest Rate INDEX Index used to calculate Interest Rate FAS 115 Designation that the item is recorded at fair value, according to FAS 115 RATING Instrument or counterparty rating FHA In the case of off-balance-sheet guarantees, a designation indicating 100% of collateral is guaranteed by FHA MARGIN Margin over an Index 3.1.3.1 * * * [c]* * * Table 3-18—Interest Rate and Index Inputs Interest rate index Description Source 1 MO Treasury Bill One-month Treasury bill yield, monthly simple average of daily rate, quoted as actual/360 Bloomberg Generic 1 Month U.S. Treasury bill Ticker: GB1M (index) 3 MO CMT Three-month constant maturity Treasury yield, monthly simple average of daily rate, quoted as bond equivalent yield Federal Reserve H.15 Release 6 MO CMT Six-month constant maturity Treasury yield, monthly simple average of daily rate, quoted as bond equivalent yield Federal Reserve H.15 Release 1 YR CMT One-year constant maturity Treasury yield, monthly simple average of daily rate, quoted as bond equivalent yield Federal Reserve H.15 Release 2 YR CMT Two-year constant maturity Treasury yield, monthly simple average of daily rate, quoted as bond equivalent yield Federal Reserve H.15 Release 3 YR CMT Three-year constant maturity Treasury yield, monthly simple average of daily rate, quoted as bond equivalent yield Federal Reserve H.15 Release 5 YR CMT Five-year constant maturity Treasury yield, monthly simple average of daily rate, quoted as bond equivalent yield Federal Reserve H.15 Release 10 YR CMT Ten-year constant maturity Treasury yield, monthly simple average of daily rate, quoted as bond equivalent yield Federal Reserve H.15 Release 20 YR CMT Twenty-year constant maturity Treasury yield, monthly simple average of daily rate, quoted as bond equivalent yield Federal Reserve H.15 Release 30 YR CMT Thirty-year constant maturity Treasury yield, monthly simple average of daily rate, quoted as bond equivalent yield; after February 15, 2002, estimated according to the Department of the Treasury methodology using long-term average rates and extrapolation factors as referenced in OFHEO guideline 402 Federal Reserve H.15 Release, Extrapolation Factors used for estimation, U.S. Dept. of the Treasury 12-mo Moving Treasury Average
(MTA)12-month Federal Reserve cumulative average 1 year CMT, monthly simple average of daily rate. Bloomberg Ticker: 12MTA (Index) Overnight Fed Funds (Effective) Overnight effective Federal Funds rate, monthly simple average of daily rate Federal Reserve H.15 Release Certificate of Deposits Index
(CODI)12-month average of monthly published yields on 3-month certificates of deposit, based on the Federal Reserve Board statistical release, H-15 Bloomberg Ticker: COF CODI (index) 1 Week Federal Funds 1 week Federal Funds rate, monthly simple average of daily rates Bloomberg Term Fed Funds U.S. Domestic Ticker: GFED01W (index) 6 Month Fed Funds 6 month Federal Funds rate, monthly simple average of daily rates Bloomberg Term Fed Funds U.S. Domestic Ticker: GFED06M (index) Conventional Mortgage Rate FHLMC (Freddie Mac) contract interest rates for 30 YR fixed-rate mortgage commitments, monthly average of weekly rates Federal Reserve H.15 Release Constant Maturity Mortgage
(CMM)Index Bond equivalent yield on TBA mortgage-backed security which prices at the par price TradeWeb 1-mo Freddie Mac Reference Bill 1-month Freddie Mac Reference Bill, actual price and yield by auction date Freddiemac.com Web site: *http://www.freddiemac.com/debt/data/cgi-bin/refbillaucres.cgi?order=AD* FHLB 11th District COF 11th District (San Francisco) weighted average cost of funds for savings and loans, monthly Bloomberg Cost of Funds for the 11th District Ticker: COF11 (index) 1 MO LIBOR One-month London Interbank Offered Rate, average of bid and asked, monthly simple average of daily rates, quoted as actual/360 British Bankers Association Bloomberg Ticker: US0001M (index) 3 MO LIBOR Three-month London Interbank Offered Rate, average of bid and asked, monthly simple average of daily rates, quoted as actual/360 British Bankers Association Bloomberg Ticker: US0003M (index) 6 MO LIBOR Six-month London Interbank Offered Rate, average of bid and asked, monthly simple average of daily rates, quoted as actual/360 British Bankers Association Bloomberg Ticker: US0006M (index) 12 MO LIBOR One-year London Interbank Offered Rate, average of bid and asked, monthly simple average of daily rates, quoted as actual/360 British Bankers Association Bloomberg Ticker: US0012M (index) Prime Rate Prevailing rate as quoted, monthly average of daily rates Federal Reserve H.15 Release 1 MO Federal Agency COF One-month Federal Agency Cost of Funds, monthly simple average of daily rates, quoted as actual/360 Bloomberg Generic 1 Month Agency Discount Note Yield. Ticker: AGDN030Y (index) 3 MO Federal Agency COF Three-month Federal Agency Cost of Funds, monthly simple average of daily rates, quoted as actual/360 Bloomberg Generic 3 Month Agency Discount Note Yield. Ticker: AGDN090Y (index) 6 MO Federal Agency COF Six-month Federal Agency Cost of Funds, monthly simple average of daily rates, quoted as actual/360 Bloomberg Generic 6 Month Agency Discount Note Yield. Ticker: AGDN180Y (index) 1 YR Federal Agency COF One-year Federal Agency Cost of Funds, monthly simple average of daily rates, quoted as actual/360 Bloomberg Generic 12 Month Agency Discount Note Yield. Ticker: AGDN360Y (index) 2 YR Federal Agency COF Two-year Federal Agency Fair Market Yield, monthly simple average of daily rates Bloomberg Generic 2 Year Agency Fair Market Yield. Ticker: CO842Y (index) 3 YR Federal Agency COF Three-year Federal Agency Fair Market Yield, monthly simple average of daily rates Bloomberg Generic 3 Year Agency Fair Market Yield. Ticker: CO843Y (index) 5 YR Federal Agency COF Five-year Federal Agency Fair Market Yield, monthly simple average of daily rates Bloomberg Generic 5 Year Agency Fair Market Yield. Ticker: CO845Y (index) 10 YR Federal Agency COF Ten-year Federal Agency Fair Market Yield, monthly simple average of daily rates Bloomberg Generic 10 Year Agency Fair Market Yield. Ticker: CO8410Y (index) 30 YR Federal Agency COF Thirty-year Federal Agency Fair Market Yield, monthly simple average of daily rates Bloomberg Generic 30 Year Agency Fair Market Yield. Ticker: CO8430Y (index) 15 YR fixed-rate mortgage FHLMC (Freddie Mac) contract interest rates for 15 YR fixed-rate mortgage commitments, monthly average of FHLMC (Freddie Mac) contract interest rates for 15 YR Bloomberg FHLMC 15 YR, 10 day commitment rate. Ticker: FHCR1510 (index) 7-year balloon mortgage rate Seven-year balloon mortgage, equal to the Conventional Mortgage Rate less 50 basis points Computed 2-yr Swap 2-yr U.S. Dollar Swap Rate, quoted as semi-annually fixed rate vs. 3-mo U.S. dollar Bloomberg Ticker: USSWAP2 (index) 3-yr Swap 3-yr U.S. Dollar Swap Rate, quoted as semi-annually fixed rate vs. 3-mo U.S. dollar LIBOR Bloomberg Ticker: USSWAP3 (Index) 5-yr Swap 5-yr U.S. Dollar Swap Rate, quoted as semi-annually fixed rate vs. 3-mo U.S. dollar LIBOR Bloomberg Ticker: USSWAP5 (Index) 10-yr Swap 10-yr U.S. Dollar Swap Rate, quoted as semi-annually fixed rate vs. 3-mo U.S. dollar LIBOR Bloomberg Ticker: USSWAP10 (Index) 30-yr Swap 30-yr U.S. Dollar Swap Rate, quoted as semi-annually fixed rate vs. 3-mo U.S. dollar LIBOR Bloomberg Ticker: USSWAP30 (Index) 3.3.3 * * * [a] * * * 3. * * * b. * * * Table 3-27—Non-Treasury Interest Rates Mortgage Rates Spread Based on 15-year Fixed-rate Mortgage Rate 10-year CMT 30-year Conventional Mortgage Rate 10-year CMT 7-year Balloon Mortgage Rate (computed from Conventional Mortgage Rate) Constant Maturity Mortgage Index 10-year CMT Other Non-Treasury Interest Rates Overnight Fed Funds 1-month Treasury Yield 7-day Fed Funds 1-month Treasury Yield 1-month LIBOR 1-month Treasury Yield 1-month Federal Agency Cost of Funds 1-month Treasury Yield 12-mo Moving Treasury Average 1-month Treasury Yield 3-month LIBOR 3-month CMT 3-month Federal Agency Cost of Funds 3-month CMT PRIME 3-month CMT 6-month LIBOR 6-month CMT 6-month Federal Agency Cost of Funds 6-month CMT 6-month Fed Funds 6-month CMT FHLB 11th District Cost of Funds 1-year CMT 12-month LIBOR 1-year CMT 1-mo Freddie Mac Reference Bill 1-year CMT Certificate of Deposits Index 1-year CMT 1-year Federal Agency Cost of Funds 1-year CMT 2-year Federal Agency Cost of Funds 2-year CMT 3-year Federal Agency Cost of Funds 3-year CMT 5-year Federal Agency Cost of Funds 5-year CMT 10-year Federal Agency Cost of Funds 10-year CMT 30-year Federal Agency Cost of Funds 30-year CMT 2-yr Swap 2-year CMT 3-yr Swap 3-year CMT 5-yr Swap 5-year CMT 10-yr Swap 10-year CMT 30-yr Swap 30-year CMT 3.6.3.3.1 * * * [c] * * * 7. *Reverse Mortgages.* In a reverse mortgage, a borrower receives one or more payments from the lender and the lender is repaid with a lump sum when the borrower dies, sells the property or moves out of the home permanently. The stress test models reverse mortgages as a ladder of zero-coupon securities: a. 11 proxy securities for each reverse mortgage program are created. b. A 10% conditional payment rate is used to create the zero-coupon securities that will mature in every year of the stress test. The zero-coupon securities are a laddered series of floating-rate coupon-bearing accreting bonds with a first payment date at maturity. c. The 11th zero-coupon security will mature three months after the stress test to reflect the 35% of UPB not paid down during the stress period. d. An OFHEO credit rating equivalent to AAA for the FHA insured programs and AA for other reverse mortgage programs is assigned. 8. *Split-Rate ARM Loans.* In split-rate ARM loans, the principal portion of the payment is based on a fixed-rate amortization schedule while the interest portion is based on a floating rate index. These multifamily loans are available as fully amortizing product or with a balloon feature. The stress test model does not provide treatment for split-rate ARM loans. Split-rate loans shall be treated as ARMs when they are issued without a balloon payment feature or as Balloon ARMs when the loans contain a balloon payment feature. 3.6.3.3.2 * * * Table 3-32—Loan Group Inputs for Mortgage Amortization Calculation Variable* Description Source Rate Type (Fixed or Adjustable) RBC Report Product Type (30/20/15-Year FRM, ARM, Balloon, Government, etc.) RBC Report UPB <sup>ORIG</sup> Unpaid Principal Balance at Origination (aggregate for Loan Group) RBC Report UPB <sup>0</sup> Unpaid Principal Balance at start of Stress Test (aggregate for Loan Group) RBC Report MIR <sup>0</sup> Mortgage Interest Rate for the Mortgage Payment prior to the start of the Stress Test, or Initial Mortgage Interest Rate for new loans (weighted average for Loan Group) (expressed as a decimal per annum) RBC Report PMT <sup>0</sup> Amount of the Mortgage Payment (Principal and Interest) prior to the start of the Stress Test, or first payment for new loans (aggregate for Loan Group) RBC Report AT Original loan Amortizing Term in months (weighted average for Loan Group) RBC Report RM Remaining term to Maturity in months (i.e., number of contractual payments due between the start of the Stress Test and the contractual maturity date of the loan) (weighted average for Loan Group) RBC Report A <sup>0</sup> Age immediately prior to the start of the Stress Test, in months (weighted average for Loan Group) RBC Report Interest-only Flag RBC Report RIOP Remaining Interest-only period, in months (weighted average for loan group) RBC Report Additional Interest Rate Inputs GFR Guarantee Fee Rate (weighted average for Loan Group) (decimal per annum) RBC Report SFR Servicing Fee Rate (weighted average for Loan Group) (decimal per annum) RBC Report Additional Inputs for ARMs (weighted averages for Loan Group, except for Index) INDEX <sup>m</sup> Monthly values of the contractual Interest Rate Index section 3.3, Interest Rates LB Look-Back period, in months RBC Report MARGIN Loan Margin (over index), decimal per annum RBC Report RRP Rate Reset Period, in months RBC Report Rate Reset Limit (up and down), decimal per annum RBC Report Maximum Rate (life cap), decimal per annum RBC Report Minimum Rate (life floor), decimal per annum RBC Report NAC Negative Amortization Cap, decimal fraction of UPB <sup>ORIG</sup> RBC Report Unlimited Payment Reset Period, in months RBC Report PRP Payment Reset Period, in months RBC Report Payment Reset Limit, as decimal fraction of prior payment RBC Report IRP Initial Rate Period, in months RBC Report *Variable name is given when used in an equation 3.6.3.7.2 * * * Table 3-51—Inputs for Final Calculation of Stress Test Whole Loan Cash Flows Variable Description Source UPB <sup>m</sup> Aggregate Unpaid Principal Balance in month m=0...RM section 3.6.3.3.4, Mortgage Amortization Schedule Outputs NYR <sup>m</sup> Net Yield Rate in month m=1...RM section 3.6.3.3.4, Mortgage Amortization Schedule Outputs GF Guarantee Fee rate (weighted average for Loan Group) (decimal per annum) RBC Report PTR <sup>m</sup> Pass-Through Rate in month m=1...RM section 3.6.3.3.4, Mortgage Amortization Schedule Outputs SP <sup>m</sup> Aggregate Scheduled Principal (Amortization) in month m=1...RM section 3.6.3.3.4, Mortgage Amortization Schedule Outputs PRE <sup>m</sup> SF PRE <sup>m</sup> MF Prepaying Fraction of original Loan Group in month m=1...RM section 3.6.3.4.4, Single Family Default and Prepayment Outputs and, section 3.6.3.5.4, Multifamily Default and Prepayment Outputs DEF <sup>m</sup> SF DEF <sup>m</sup> MF Defaulting Fraction of original Loan Group in month m=1...RM section 3.6.3.4.4, Single Family Default and Prepayment Outputs and, section 3.6.3.5.4, Multifamily Default and Prepayment Outputs PERF <sup>m</sup> SF PERF <sup>m</sup> MF Performing Fraction of original Loan Group in month m=1...RM section 3.6.3.4.4, Single Family Default and Prepayment Outputs and, section 3.6.3.5.4, Multifamily Default and Prepayment Outputs FDS Float Days for Scheduled Principal and Interest (weighted average for Loan Group) RBC Report FDP Float Days for Prepaid Principal (weighted average for Loan Group) RBC Report FER <sup>m</sup> Float Earnings Rate in month m=1...RM 1 week Fed Funds Rate; section 3.3, Interest Rates LS <sup>m</sup> SF Loss Severity Rate in month m=1...RM section 3.6.3.6.5.2, Single Family and Multifamily Net Loss Severity Outputs FREP Fraction Repurchased (weighted average for Loan Group) (decimal) RBC Report 3.6.3.8.2 * * * Table 3-54—Inputs for Whole Loan Accounting Flows Variable Description Source RM Remaining Term to Maturity in months RBC Report UPD <sup>0</sup> Sum of all unamortized discounts, premiums, fees, commissions, etc., for the loan group, such that the unamortized balance equals the book value minus the face value for the loan group at the start of the Stress Test, adjusted by the Unamortized Balance Scale Factor RBC Report NYR <sup>0</sup> Net Yield Rate at time zero section 3.6.3.3.4, Mortgage Amortization Schedule Outputs PUPB <sup>m</sup> Performing Loan Group UPB in months m=0...RM section 3.6.3.7.4, Stress Test Whole Loan Cash Flow Outputs PTR <sup>0</sup> Pass-Through Rate at time zero section 3.6.3.3.4, Mortgage Amortization Schedule Outputs SPUPB <sup>m</sup> Security Performing UPB in months m=0...RM section 3.6.3.7.4, Stress Test Whole Loan Cash Flow Outputs SUPD <sup>0</sup> The sum of all unamortized discounts, premiums, fees, commissions, etc. associated with the securities modeled using the Wtd Ave Percent Repurchased, such that the unamortized balance equals the book value minus the face value for the relevant securities at the start of the Stress Test, adjusted by the percent repurchased and the Security Unamortized Balance Scale Factor RBC Report 3.7.2.1.1 * * * Table 3-56—RBC Report Inputs for Single Class MBS Cash Flows Variable Description Pool Number A unique number identifying each mortgage pool CUSIP Number A unique number assigned to publicly traded securities by the Committee on Uniform Securities Identification Procedures Issuer Issuer of the mortgage pool Original UPB Amount Original pool balance multiplied by the Enterprise's percentage ownership Current UPB Amount Initial Pool balance (at the start of the Stress Test), multiplied by the Enterprise's percentage ownership Product Code Mortgage product type for the pool Security Rate Index If the rate on the security adjusts over time, the index that the adjustment is based on Unamortized Balance The sum of all unamortized discounts, premiums, fees, commissions, etc., such that the unamortized balance equals book value minus face value, adjusted by the Unamortized Balance Scale Factor Wt Avg Original Amortization Term Original amortization term of the underlying loans, in months (weighted average for underlying loans) Wt Avg Remaining Term of Maturity Remaining Maturity of the underlying loans at the start of the Stress Test (weighted average for underlying loans) Wt Avg Age Age of the underlying loans at the start of the Stress Test (weighted average for underlying loans) Wt Avg Current Mortgage Interest rate Mortgage Interest Rate of the underlying loans at the start of the Stress Test (weighted average for underlying loans) Wt Avg Pass-Through Rate Pass-Through Rate of the underlying loans at the start of the Stress Test (weighted average for underlying loans) Wtg Avg Original Mortgage Interest Rate The current UPB weighted average Mortgage Interest Rate in effect at Origination for the loans in the pool Security Rating The most current rating issued by any Nationally Recognized Statistical Rating Organization (NRSRO) for this security, as of the reporting date. In the case of a “split” rating, the lowest rating should be given Wt Avg Gross Margin Gross margin for the underlying loans (ARM MBS only) (weighted average for underlying loans) Wt Avg Net Margin Net margin (used to determine the security rate for ARM MBS) (weighted average for underlying loans) Wt Avg Rate Reset Period Rate reset period in months (ARM MBS only) (weighted average for underlying loans) Wt Avg Rate Reset Limit Rate reset limit up/down (ARM MBS only) (weighted average for underlying loans) Wt Avg Life Interest Rate Ceiling Maximum rate (lifetime cap) (ARM MBS only) (weighted average for underlying loans) Wt Avg Life Interest Rate Floor Minimum rate (lifetime floor) (ARM MBS only) (weighted average for underlying loans) Wt Avg Payment Reset Period Payment reset period in months (ARM MBS only) (weighted average for underlying loans) Wt Avg Payment Reset Limit Payment reset limit up/down (ARM MBS only) (weighted average for underlying loans) Wt Avg Lookback Period The number of months to look back from the interest rate change date to find the index value that will be used to determine the next interest rate (ARM MBS only) (weighted average for underlying loans) Wt Avg Negative Amortization Cap The maximum amount to which the balance can increase before the payment is recast to a fully amortizing amount. It is expressed as a fraction of the original UPB. (ARM MBS only) (weighted average for underlying loans) Wt Avg Initial Interest Rate Period Number of months between the loan origination date and the first rate adjustment date (ARM MBS only) (weighted average for underlying loans) Wt Avg Unlimited Payment Reset Period Number of months between unlimited payment resets i.e., not limited by payment caps, starting with Origination date (ARM MBS only) (weighted average for underlying loans) Notional Flag Indicates that amounts reported in Original UPB Amount and Current UPB Amount are notional UPB Scale Factor Factor applied to the current UPB that offsets any timing adjustments between the security level data and the Enterprise's published financials Whole Loan Modeling Flag Indicates that the Current UPB Amount and Unamortized Balance associated with this Repurchased MBS are included in the Wtg Avg Percent Repurchased and Security Unamortized Balance fields FAS 115 Classification The financial instrument's classification according to FAS 115 HPGR <sup>K</sup> Vector of House Price Growth Rates for quarters q=1...40 of the Stress Period 3.7.2.1.2 * * * [a] * * * Table 3-57—RBC Report Inputs for Multi-Class and Derivative MBS Cash Flows Variable Description CUSIP Number A unique number assigned to publicly traded securities by the Committee on Uniform Securities Identification Procedures Issuer Issuer of the security: FNMA, FHLMC, GNMA or other Original Security Balance Original principal balance of the security (notional amount for Interest-Only securities) at the time of issuance, multiplied by the Enterprise's percentage ownership Current Security Balance Initial principal balance, or notional amount, at the start of the Stress Period multiplied by the Enterprise's percentage ownership Current Security Percentage Owned The percentage of a security's total current balance owned by the Enterprise Unamortized Balance The sum of all unamortized discounts, premiums, fees, commissions, etc., such that the unamortized balance equals book value minus face value, adjusted by the Unamortized Balance Scale Factor 3.7.2.1.3 * * * [a] * * * Table 3-58—RBC Report Inputs for MRBs and Derivative MBS Cash Flows Variable Description CUSIP Number A unique number assigned to publicly traded securities by the Committee on Uniform Securities Identification Procedures Original Security Balance Original principal balance, multiplied by the Enterprise's percentage ownership Current Security Balance Initial principal balance (at start of Stress Period), multiplied by the Enterprise's percentage ownership Unamortized Balance The sum of all unamortized discounts, premiums, fees, commissions, etc., such that the unamortized balance equals book value minus face value, adjusted by the Unamortized Balance Scale Factor Issue Date The Issue Date of the security Maturity Date The stated Maturity Date of the security Security Interest Rate The rate at which the security earns interest, as of the reporting date Principal Payment Window Starting Date, Down-Rate Scenario The month in the Stress Test that principal payment is expected to start for the security under the statutory “down” interest rate scenario, according to Enterprise projections Principal Payment Window Ending Date, Down-Rate Scenario The month in the Stress Test that principal payment is expected to end for the security under the statutory “down” interest rate scenario, according to Enterprise projections Principal Payment Window Starting Date, Up-Rate Scenario The month in the Stress Test that principal payment is expected to start for the security under the statutory “up” interest rate scenario, according to Enterprise projections Principal Payment Window Ending Date, Up-Rate Scenario The month in the Stress Test that principal payment is expected to end for the security under the statutory “up” interest rate scenario, according to Enterprise projections Security Rating The most current rating issued by any Nationally Recognized Statistical Rating Organization (NRSRO) for this security, as of the reporting date. In the case of a “split” rating, the lowest rating should be given Security Rate Index If the rate on the security adjusts over time, the index on which the adjustment is based Security Rate Index Coefficient If the rate on the security adjusts over time, the coefficient is the number used to multiply by the value of the index Security Rate Index Spread If the rate on the security adjusts over time, the spread is added to the value of the index multiplied by the coefficient to determine the new rate Security Rate Adjustment Frequency The number of months between rate adjustments Security Interest Rate Ceiling The maximum rate (lifetime cap) on the security Security Interest Rate Floor The minimum rate (lifetime floor) on the security 3.8.2 * * * [a] * * * Table 3-66—Input Variables for Nonmortgage Instrument Cash flows Data Elements Description Amortization Methodology Code Enterprise method of amortizing deferred balances (e.g., straight line) Asset ID CUSIP or Reference Pool Number identifying the asset underlying a derivative position Asset Type Code Code that identifies asset type used in the commercial information service (e.g. ABS, Fannie Mae pool, Freddie Mac pool) Associated Instrument ID Instrument ID of an instrument linked to another instrument Coefficient Indicates the extent to which the coupon is leveraged or de-leveraged Compound Indicator Indicates if interest is compounded Compounding Frequency Indicates how often interest is compounded Counterparty Credit Rating NRSRO's rating for the counterparty Counterparty Credit Rating Type An indicator identifying the counterparty's credit rating as short-term
(S)or long-term
(L)Counterparty ID Enterprise counterparty tracking ID Country Code Standard country codes in compliance with Federal Information Processing Standards Publication 10-4 Credit Agency Code Identifies NRSRO (e.g., Moody's) Current Asset Face Amount Current face amount of the asset underlying a swap Current Coupon Current coupon or dividend rate of the instrument Current Unamortized Discount Current unamortized premium or unaccreted discount of the instrument adjusted by the Unamortized Balance Scale Factor. If the proceeds from the issuance of debt or derivatives or the amount paid for an asset were greater than par, the value should be positive. If the proceeds or the amounts paid were less than par, the value should be negative Current Unamortized Fees Current unamortized fees associated with the instrument adjusted by the Unamortized Balance Scale Factor. Generally fees associated with the issuance of debt or derivatives should be negative numbers. Fees associated with the purchase of an asset should generally be reported as positive numbers Current Unamortized Hedge Current unamortized hedging gains (positive) or losses (negative) associated with the instrument adjusted by the Unamortized Balance Scale Factor Current Unamortized Other Any other unamortized items originally associated with the instrument adjusted by the Unamortized Balance Scale Factor. If the proceeds from the issuance of debt or derivatives or the amount paid for an asset was greater than par, the value should be positive. If the proceeds or the amounts paid were less than par, the value should be negative. CUSIP_ISIN CUSIP or ISIN Number identifying the instrument Day Count Day count convention (e.g. 30/360) End Date The last index repricing date EOP Principal Balance End of Period face, principal or notional, amount of the instrument Exact Representation Indicates that an instrument is modeled according to its contractual terms Exercise Convention Indicates option exercise convention (e.g., American Option) Exercise Price Par=1.0; Options First Coupon Date Date first coupon is received or paid Index Cap Indicates maximum index rate Index Floor Indicates minimum index rate Index Reset Frequency Indicates how often the interest rate index resets on floating-rate instruments Index Code Indicates the interest rate index to which floating-rate instruments are tied (e.g., LIBOR) Index Term Point on yield curve, expressed in months, upon which the index is based Instrument Credit Rating NRSRO credit rating for the instrument Instrument Credit Rating Type An indicator identifying the instruments credit rating as short-term
(S)or long-term
(L)Instrument ID An integer used internally by the Enterprise that uniquely identifies the instrument Interest Currency Code Indicates currency in which interest payments are paid or received Interest Type Code Indicates the method of interest rate payments (e.g., fixed, floating, step, discount) Issue Date Indicates the date that the instrument was issued Life Cap Rate The maximum interest rate for the instrument throughout its life Life Floor Rate The minimum interest rate for the instrument throughout its life Look-Back Period Period from the index reset date, expressed in months, that the index value is derived Maturity Date Date that the instrument contractually matures Notional Indicator Identifies whether the face amount is notional Instrument Type Code Indicates the type of instrument to be modeled (e.g., ABS, Cap, Swap) Option Indicator Indicates if instrument contains an option Option Type Indicates option type (e.g., Call option) Original Asset Face Amount Original face amount of the asset underlying a swap Original Discount Original premium or discount associated with the purchase or sale of the instrument adjusted by the Unamortized Balance Scale Factor. If the proceeds from the issuance of debt or derivatives or the amount paid for an asset were greater than par, the value should be positive. If the proceeds or the amounts paid were less than par, the value should be negative Original Face Original face, principal or notional, amount of the instrument Original Fees Fees or commissions paid at the time of purchase or sale adjusted by the Unamortized Balance Scale Factor. Generally fees associated with the issuance of debt or derivatives should be negative numbers. Fees associated with the purchase of an asset should generally be reported as positive numbers Original Hedge Gains (positive) or losses (negative) from closing out a hedge associated with the instrument at settlement, adjusted by the Unamortized Balance Scale Factor Original Other Any other amounts originally associated with the instrument to be amortized or accreted adjusted by the Unamortized Balance Scale Factor. If the proceeds from the issuance of debt or derivatives or the amount paid for an asset were greater than par, the value should be positive. If the proceeds or the amounts paid were less than par, the value should be negative Parent Entity ID Enterprise internal tracking ID for parent entity Payment Amount Interest payment amount associated with the instrument (reserved for complex instruments where interest payments are not modeled) Payment Frequency Indicates how often interest payments are made or received Performance Date “As of” date on which the data is submitted Periodic Adjustment The maximum amount that the interest rate for the instrument can change per reset Position Code Indicates whether the Enterprise pays or receives interest on the instrument Principal Currency Code Indicates currency in which principal payments are paid or received Principal Factor Amount EOP Principal Balance expressed as a percentage of Original Face Principal Payment Date A valid date identifying the date that principal is paid Settlement Date A valid date identifying the date the settlement occurred Spread An amount added to an index to determine an instrument's interest rate Start Date The date, spot or forward, when some feature of a financial contract becomes effective (e.g., Call Date), or when interest payments or receipts begin to be calculated Strike Rate The price or rate at which an option begins to have a settlement value at expiration, or, for interest-rate caps and floors, the rate that triggers interest payments Submitting Entity Indicates which Enterprise is submitting information Trade ID Unique code identifying the trade of an instrument Transaction Code Indicates the transaction that an Enterprise is initiating with the instrument (e.g. buy, issue reopen) Transaction Date A valid date identifying the date the transaction occurred UPB Scale Factor Factor applied to UPB to adjust for timing differences Unamortized Balances Scale Factor Factor applied to Unamortized Balances to adjust for timing differences 3.8.3.6.2 * * * [a] * * * [b] * * * [c] * * * [d] Futures and Options on Futures also require special treatment: 1. Settle positions on their expiration dates. Exercise only in-the-money options (settlement value greater than zero). 2. Settle all contracts for cash. 3. Calculate the cash settlement amount—the change in price of a contract from the contract trade date to its expiration date. Calculate the price on the expiration date based on stress test interest rates (or, as necessary, forward rates extrapolated from these rates). 4. Amortize amounts received or paid at the expiration date into income or expense on a straight-line basis over the life of the underlying instrument (in the case of an option on a futures contract, the life of the instrument underlying the futures contract). 5. Amortize an option premium on a straight-line basis over the life of the option. (Amortize any remaining balances upon option exercise.) [e] Swaptions also require special treatment: 1. Assume swap settlement ( *i.e.* , initiation of the underlying swap) when a swap option is exercised. 2. Calculate a “normalized” fixed-pay coupon by subtracting the spread over the index, if any, from the coupon on the fixed-rate swap leg. 3. For all exercise types (American, Bermudan, and European), consistent with RBC Rule section 3.8.3.7, assume exercise by the party holding the swap option if the equivalent maturity Enterprise Cost of Funds is more than a. 50 basis points above the normalized fixed-pay coupon, for a pay-fixed swaption (a call or ‘payor’ swaption), or b. 50 basis points below the normalized fixed pay coupon for a receive-fixed swaption (a put or ‘receiver’ swaption). 4. Amortize option premiums on a straight-line basis over the option term. (Amortize any remaining balances upon option exercise). [f] CPI-Linked Instruments also require special treatment. The stress test lacks the ability to accommodate floating-rate instruments that reset in response to changes in the consumer price index
(CPI)as published by the Bureau of Labor Statistics. Enterprise issuance of CPI-linked instruments is tied to swap market transactions intended to create desired synthetic debt structure and terms. In such cases, the true economic position nets to the payment terms of the related derivative contract. Accordingly, in order to accommodate and address the existence of CPI-linked instruments in the Enterprises' portfolios, the net synthetic position shall be evaluated in the stress test. That is, for CPI-linked instruments tied to swap transactions that are formally linked in a hedge accounting relationship, the Enterprise should substitute the CPI-linked instrument's coupon payment terms with those of the related swap contract. [g] Pre-refunded municipal bonds also require special treatments. Pre-refunded municipal bonds are collateralized by securities that are structured to fund all the cash flows of the refunded municipal bonds until the bonds are callable. Since the call date for the bonds, also referred to as the pre-refunded date, is a more accurate representation of the payoff date than the contractual maturity date of the bonds, the stress test models the bonds to mature on the call date. 3.9.2 * * * Table 3-70—Alternative Modeling Treatment Inputs Variable Description TYPE Type of item (asset, liability or off-balance sheet item) BOOK Book Value of item (amount outstanding adjusted for deferred items) FACE Face Value or notional balance of item for off-balance sheet items REMATUR Remaining Contractual Maturity of item in whole months. Any fraction of a month equals one whole month. RATE Interest Rate INDEX Index used to calculate Interest Rate FAS115 Designation that the item is recorded at fair value, according to FAS 115 RATING Instrument or counterparty rating FHA In the case of off-balance sheet guarantees, a designation indicating 100% of collateral is guaranteed by FHA MARGIN Margin over an Index 3.10.3.6.2 * * * [a] * * * 1. Fair Values a. The valuation impact of any Applicable Fair Value Standards (AFVS), cumulative from their time of implementation, will be reversed out of the starting position data, by debiting any accumulated credits, and crediting any accumulated debits.
(1)AFVS are defined as GAAP pronouncements that require recognition of periodic changes in fair value, *e.g.* , EITF 99-20, FAS 65, FAS 87, FAS 115, FAS 133, FAS 140, FAS 149 and FIN 45.
(2)The GAAP pronouncements covered by this treatment are subject to OFHEO review. The Enterprises will submit a list of standards and pronouncements which are being reversed in the RBC Reports. b. After reversing the valuation impact of AFVS, any affected activities are rebooked as follows:
(1)If absent the adoption of the AFVS, the affected transactions would have been accounted for on an historical cost basis, they are rebooked and presented as if they had always been accounted for on an historical cost basis. (The historical cost basis may include amortization from the time of the activity to the beginning of the stress test.)
(2)To the extent that transactions would not have been accounted for on an historical cost basis, they are accounted for as if they were income and expense activities. Dated: June 6, 2006. James B. Lockhart III, Acting Director, Office of Federal Housing Enterprise Oversight. [FR Doc. 06-5330 Filed 6-23-06; 8:45 am]
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Traces to 31 documents
19 references not yet in our index
  • 40 CFR 271
  • 40 CFR 272
  • 40 CFR 9
  • Pub. L. 104-4
  • Pub. L. 104-113
  • 7 CFR 319.56
  • 7 CFR 305
  • 7 CFR 1
  • 7 CFR 372
  • 7 CFR 319
  • 7 USC 7701-7772
  • 7 CFR 2.22
  • 10 CFR 451
  • Pub. L. 102-486
  • Pub. L. 109-58
  • 10 CFR 1021
  • Pub. L. 105-277
  • 12 CFR 1750
  • Pub. L. 102-550
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C.F.R.§ 121.201
Fed. Reg.Proposed Rules
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Cite40 CFR 271
Cite40 CFR 272
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