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Code · REGISTER · 2006-07-13 · Food and Drug Administration, HHS · Rules and Regulations

Rules and Regulations. Final rule; technical amendment

31,197 words·~142 min read·/register/2006/07/13/06-6188

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

BILLING CODE 8040-01-M DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 520 Oral Dosage Form New Animal Drugs; Clindamycin Liquid AGENCY: Food and Drug Administration, HHS. ACTION: Final rule; technical amendment. SUMMARY: The Food and Drug Administration
(FDA)is amending the animal drug regulations to reflect approval of a supplemental abbreviated new animal drug application (ANADA) filed by Virbac AH, Inc. The supplemental ANADA provides for an expanded dose range and revised wording of indications for the oral use of clindamycin hydrochloride liquid in dogs and cats for the treatment of certain bacterial diseases. DATES: This rule is effective July 13, 2006. FOR FURTHER INFORMATION CONTACT: Daniel A. Benz, Center for Veterinary Medicine (HFV-104), Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855, 301-827-0223, e-mail: *daniel.benz @fda.hhs.gov* . SUPPLEMENTARY INFORMATION: Virbac AH, Inc., 3200 Meacham Blvd., Ft. Worth, TX 76137, filed a supplement to ANADA 200-291 for CLINSOL (clindamycin hydrochloride) Liquid. The supplement provides for an expanded dose range and revised wording of indications for the oral use of clindamycin hydrochloride liquid in dogs and cats for the treatment of certain bacterial diseases. The supplemental ANADA is approved as of June 12, 2006, and the regulations are amended in § 520.447 (21 CFR 520.447) to reflect the approval and a current format. In addition, FDA has found that a 2003 change of sponsorship for CLINSOL Liquid (68 FR 55823, September 29, 2003) is not reflected in the Code of Federal Regulations. Accordingly, § 520.447 is being revised to reflect the correct sponsor drug labeler code. This action is being taken to improve the accuracy of the regulations. Approval of this supplemental ANADA did not require review of additional safety or effectiveness data or information. Therefore, a freedom of information summary is not required. FDA has determined under 21 CFR 25.33(a)(1) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required. This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to congressional review requirements in 5 U.S.C. 801-808. List of Subjects in 21 CFR Part 520 Animal drugs. Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR part 520 is amended as follows: PART 520—ORAL DOSAGE FORM NEW ANIMAL DRUGS 1. The authority citation for 21 CFR part 520 continues to read as follows: Authority: 21 U.S.C. 360b. 2. In § 520.447, revise the section heading and paragraphs (b), (d)(1)(i), (d)(1)(ii), (d)(2)(i), and (d)(2)(ii) to read as follows: § 520.447 Clindamycin solution.
(b)*Sponsors* . See Nos. 000009, 051311, and 059130 in § 510.600(c) of this chapter.
(d)* * *
(1)* * *
(i)*Amount* . Wounds, abscesses, and dental infections: 2.5 to 15 mg per pound (/lb) body weight every 12 hours for a maximum of 28 days. Osteomyelitis: 5.0 to 15 mg/lb body weight every 12 hours for a minimum of 28 days.
(ii)*Indications for use* . For the treatment of skin infections (wounds and abscesses) due to susceptible strains of coagulase-positive staphylococci ( *Staphylococcus aureus* or *S. intermedius* ), deep wounds and abscesses due to susceptible strains of *Bacteroides fragilis* , *Prevotella melaninogenicus* , *Fusobacterium necrophorum* , and *Clostridium perfringens* ; dental infections due to susceptible strains of *S. aureus* , *B. fragilis* , *P. melaninogenicus* , * F. necrophorum * , and *C. perfringens* ; and osteomyelitis due to susceptible strains of *S. aureus* , *B. fragilis* , *P. melaninogenicus* , *F. necrophorum* , and *C. perfringens.*
(2)* * *
(i)*Amount* . 5.0 to 15.0 mg/lb body weight every 24 hours for a maximum of 14 days.
(ii)*Indications for use* . For the treatment of skin infections (wounds and abscesses) due to susceptible strains of *Staphylococcus aureus* , *S. intermedius* , *Streptococcus spp.* ; deep wounds and abscesses due to susceptible strains of *Clostridium perfringens* and *Bacteroides fragilis* ; and dental infections due to susceptible strains of *S. aureus* , *S. intermedius* , *Streptococcus spp.* , *C. perfringens* , and *B. fragilis.* Dated: June 30, 2006. Steven D. Vaughn, Director, Office of New Animal Drug Evaluation, Center for Veterinary Medicine. [FR Doc. E6-10971 Filed 7-12-06; 8:45 am] BILLING CODE 4160-01-S DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Parts 522 and 526 New Animal Drugs; Ceftiofur AGENCY: Food and Drug Administration, HHS. ACTION: Final rule. SUMMARY: The Food and Drug Administration
(FDA)is amending the animal drug regulations to reflect approval of four supplemental new animal drug applications (NADAs) filed by Pharmacia & Upjohn Co. The supplemental NADAs establish or revise preslaughter withdrawal periods in cattle injected with a solution made from ceftiofur sodium powder or with a suspension of ceftiofur hydrochloride, or receiving an intramammary infusion of ceftiofur hydrochloride. DATES: This rule is effective July 13, 2006. FOR FURTHER INFORMATION CONTACT: Joan C. Gotthardt, Center for Veterinary Medicine (HFV-130), Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855, 301-827-7571, e-mail: *joan.gotthardt@fda.hhs.gov* . SUPPLEMENTARY INFORMATION: Pharmacia & Upjohn Co., a Division of Pfizer, Inc., 235 East 42d St., New York, NY 10017, filed supplements to NADA 140-338 for NAXCEL (ceftiofur sodium) Sterile Powder for Injection and to NADA 140-890 for EXCENEL RTU (ceftiofur hydrochloride) Sterile Suspension. These products are approved for veterinary prescription use in livestock by injection for the treatment or control of various bacterial diseases. Pharmacia & Upjohn Co. also filed supplements to NADA 141-238 for SPECTRAMAST LC (ceftiofur hydrochloride) Sterile Suspension and to NADA 141-239 for SPECTRAMAST DC (ceftiofur hydrochloride) Sterile Suspension. These products are approved for veterinary prescription use by intramammary infusion in dairy cows for the treatment of bacterial mastitis. The supplemental NADAs establish or revise preslaughter withdrawal periods in cattle consistent with the tolerance for residues of ceftiofur in bovine kidney which was revised elsewhere in this issue of the **Federal Register** . The applications are approved as of June 2, 2006, and the regulations are amended in 21 CFR 522.313 and 526.314 to reflect the approval. The basis of approval is discussed in the freedom of information summaries. In accordance with the freedom of information provisions of 21 CFR part 20 and 21 CFR 514.11(e)(2)(ii), summaries of the safety and effectiveness data and information submitted to support approval of these applications may be seen in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday. The agency has determined under 21 CFR 25.33(a) that these actions are of a type that do not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required. This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808. List of Subjects in 21 CFR Parts 522 and 526 Animal drugs. Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR parts 522 and 526 are amended as follows: PART 522—IMPLANTATION OR INJECTABLE DOSAGE FORM NEW ANIMAL DRUGS 1. The authority citation for 21 CFR part 522 continues to read as follows: Authority: 21 U.S.C. 360b. 2. Redesignate § 522.314 as § 522.313b and amend as follows: a. Revise paragraph (a); b. Redesignate paragraph
(d)as paragraph (e); c. Add new paragraph (d); and d. Revise newly redesignated paragraphs (e)(1)(ii), (e)(1)(iii), (e)(2)(ii), and (e)(2)(iii). The redesignation, revisions, and addition read as follows: § 522.313b Ceftiofur hydrochloride.
(a)*Specifications* . Each milliliter of ceftiofur hydrochloride suspension contains 50 milligrams
(mg)ceftiofur equivalents.
(d)Special considerations. Federal law restricts this drug to use by or on the order of a licensed veterinarian.
(e)* * *
(1)* * *
(ii)*Indications for use* . For treatment and control of swine bacterial respiratory disease (swine bacterial pneumonia) associated with *Actinobacillus pleuropneumoniae* , *Pasteurella multocida* , *Salmonella choleraesuis* , and *Streptococcus suis* .
(iii)*Limitations* . Treated swine must not be slaughtered for 4 days following the last treatment.
(2)* * *
(ii)*Indications for use* . For treatment of bovine respiratory disease (BRD, shipping fever, pneumonia) associated with *Mannheimia haemolytica* , *P. multocida* , and *Histophilus somni* ; acute bovine interdigital necrobacillosis (foot rot, pododermatitis) associated with *Fusobacterium necrophorum* and *Bacteroides melaninogenicus* ; and acute metritis (0 to 14 days post-partum) associated with bacteria susceptible to ceftiofur.
(iii)*Limitations* . Treated cattle must not be slaughtered for 3 days following the last treatment. A withdrawal period has not been established in preruminating calves. Do not use in calves to be processed for veal. 3. Redesignate § 522.313 as § 522.313c and amend as follows: a. Revise the section heading and paragraphs
(a)and (b); b. Redesignate paragraph
(d)as paragraph (e); c. Add new paragraph (d); and d. Revise newly redesignated paragraph (e). The redesignation, revisions, and addition read as follows: § 522.313c Ceftiofur sodium.
(a)*Specifications* . Each milliliter of aqueous solution constituted from ceftiofur sodium powder contains 50 milligrams
(mg)ceftiofur equivalents.
(b)*Sponsor* . See No. 000009 in § 510.600(c) of this chapter.
(d)*Special considerations* . Federal law restricts this drug to use by or on the order of a licensed veterinarian.
(e)*Conditions of use* —(1) *Swine* —(i) *Amount* . 3 to 5 mg per kilogram (/kg) body weight by intramuscular injection for 3 consecutive days.
(ii)*Indications for use* . For treatment and control of swine bacterial respiratory disease (swine bacterial pneumonia) associated with *Actinobacillus pleuropneumoniae* , *Pasteurella multocida* , *Salmonella choleraesuis* , and *Streptococcus suis* .
(iii)*Limitations* . Treated pigs must not be slaughtered for 4 days following the last treatment.
(2)*Cattle* —(i) *Amount* . 0.5 to 1.0 mg/lb body weight by intramuscular or subcutaneous injection for 3 days. Additional treatments may be given on days 4 and 5 for animals which do not show satisfactory response.
(ii)*Indications for use* . For treatment of bovine respiratory disease (shipping fever, pneumonia) associated with *Mannheimia haemolytica* , *P. multocida* , and *Histophilus somni* in beef and dairy cattle; and for treatment of acute bovine interdigital necrobacillosis (foot rot, pododermatitis) associated with *Fusobacterium necrophorum* and *Bacteroides melaninogenicus* .
(iii)*Limitations* . Treated cattle must not be slaughtered for 4 days following the last treatment.
(3)*Sheep* —(i) *Amount* . 0.5 to 1.0 mg/lb body weight by intramuscular injection for 3 days. Additional treatments may be given on days 4 and 5 for animals which do not show satisfactory response.
(ii)*Indications for use* . For treatment of sheep respiratory disease (pneumonia) associated with *M. haemolytica* and *P. multocida* .
(4)*Goats* —(i) *Amount* . 0.5 to 1.0 mg/lb body weight by intramuscular injection for 3 days. Additional treatments may be given on days 4 and 5 for animals which do not show satisfactory response.
(ii)*Indications for use* . For treatment of caprine respiratory disease (goat pneumonia) associated with *M. haemolytica* and *P. multocida* .
(5)*Chickens* —(i) *Amount* . 0.08 to 0.20 mg as a single subcutaneous injection in the neck.
(ii)*Indications for use* . For control of early mortality associated with *Escherichia coli* organisms susceptible to ceftiofur in day-old chicks.
(6)*Turkeys* —(i) *Amount* . 0.17 to 0.5 mg as a single subcutaneous injection in the neck.
(ii)*Indications for use* . For control of early mortality associated with *E. coli* organisms susceptible to ceftiofur in day-old poults.
(7)*Horses* —(i) *Amount* . 2.2 to 4.4 mg/kg (1.0 to 2.0 mg/lb) body weight by intramuscular injection. Treatment should be repeated every 24 hours, continued for 48 hours after clinical signs have disappeared, and should not exceed 10 days. A maximum of 10 mL should be administered per injection site.
(ii)*Indications for use* . For treatment of respiratory infections in horses associated with *Streptococcus zooepidemicus* .
(iii)*Limitations* . Do not use in horses intended for human consumption.
(8)*Dogs* —(i) *Amount* . 1.0 mg/lb (2.2 mg/kg) body weight by subcutaneous injection. Treatment should be repeated at 24-hour intervals, continued for 48 hours after clinical signs have disappeared, for 5 to 14 days.
(ii)*Indications for use* . For treatment of canine urinary tract infections associated with *E. coli* and *Proteus mirabilis* . 4. Add new § 522.313 as a heading only to read as follows: § 522.313 Ceftiofur injectable dosage forms. PART 526—INTRAMAMMARY DOSAGE FORMS 5. The authority citation for 21 CFR part 526 continues to read as follows: Authority: 21 U.S.C. 360b. 6. Redesignate § 526.314 as § 526.313 and amend as follows: a. Revise paragraph (a); b. Redesignate paragraph
(d)as paragraph
(e)and add new paragraph (d); c. Revise newly redesignated paragraphs (e)(1)(i) and (e)(2)(i); d. In the second sentence of newly redesignated paragraph (e)(1)(iii), remove “no preslaughter withdrawal period” and add in its place “a 2-day pre-slaughter withdrawal period”; e. In the second sentence of newly redesignated paragraph (e)(2)(iii), remove “a 3-day preslaughter withdrawal period” and add in its place “a 16-day pre-slaughter withdrawal period”; and f. In newly redesignated paragraphs (e)(1)(iii) and (e)(2)(iii), remove “Federal law restricts this drug to use by or on the order of a licensed veterinarian.” The revisions and additions read as follows: § 526.313 Ceftiofur.
(a)*Specifications* . Each single-use, 10-milliliter syringe of ceftiofur hydrochloride suspension contains 125 milligrams
(mg)or 500 mg ceftiofur equivalents.
(d)*Special considerations* . Federal law restricts this drug to use by or on the order of a licensed veterinarian.
(e)* * *
(1)* * *
(i)*Amount* . Infuse 125 mg per affected quarter. Repeat treatment in 24 hours. Once daily treatment may be repeated for up to 8 consecutive days.
(iii)*Limitations* . Milk taken from cows during treatment (a maximum of eight daily infusions) and for 72 hours after the last treatment must not be used for human consumption. Following label use for up to eight consecutive days, a 2-day pre-slaughter withdrawal period is required.
(2)* * *
(i)*Amount* . Infuse 500 mg per affected quarter at the time of dry off.
(iii)*Limitations* . Milk taken from cows completing a 30-day dry off period may be used for food with no milk discard due to ceftiofur residues. Following intramammary infusion, a 16-day pre-slaughter withdrawal period is required for treated cows. Following label use, no pre-slaughter withdrawal period is required for neonatal calves from treated cows regardless of colostrum consumption. Dated: June 27, 2006. Steven D. Vaughn, Director, Office of New Animal Drug Evaluation, Center for Veterinary Medicine. [FR Doc. E6-10973 Filed 7-12-06; 8:45 am] BILLING CODE 4160-01-S DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Parts 522 and 556 New Animal Drugs; Ceftiofur AGENCY: Food and Drug Administration, HHS. ACTION: Final rule. SUMMARY: The Food and Drug Administration
(FDA)is amending the animal drug regulations to reflect approval of a supplemental new animal drug application
(NADA)filed by Pharmacia & Upjohn Co. The supplemental NADA provides for use of ceftiofur crystalline free acid suspension via a new injection site in beef and nonlactating dairy cattle, for use in lactating dairy cattle for the treatment of respiratory disease, and for the establishment of a 13-day pre-slaughter withdrawal period in cattle. FDA is also amending the regulations to revise the tolerance for residues of ceftiofur in bovine kidney to accommodate these new conditions of use. DATES: This rule is effective July 13, 2006. FOR FURTHER INFORMATION CONTACT: Joan C. Gotthardt, Center for Veterinary Medicine (HFV-130), Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855, 301-827-7571, e-mail: *joan.gotthardt@fda.hhs.gov* . SUPPLEMENTARY INFORMATION: Pharmacia & Upjohn Co., a Division of Pfizer, Inc., 235 East 42nd St., New York, NY 10017, filed a supplement to NADA 141-209 for EXCEDE (ceftiofur crystalline free acid) Sterile Suspension, approved for veterinary prescription use by injection in cattle for respiratory disease. The supplemental application provides for subcutaneous injection in beef and nonlactating dairy cattle in the posterior aspect of the ear where it attaches to the head (base of the ear), for use in lactating dairy cattle by subcutaneous injection in the base of the ear for the treatment of bovine respiratory disease, and for the establishment of a 13-day pre-slaughter withdrawal period in cattle. FDA is also amending the regulations to revise the tolerance for residues of ceftiofur in bovine kidney to accommodate these new conditions of use. The application is approved as of June 2, 2006, and the regulations are amended in 21 CFR 522.315 and 556.113 to reflect the approval. The basis of approval is discussed in the freedom of information summary. In accordance with the freedom of information provisions of 21 CFR part 20 and 21 CFR 514.11(e)(2)(ii), a summary of the safety and effectiveness data and information submitted to support approval of this application may be seen in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday. Under section 512(c)(2)(F)(iii) of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 360b(c)(2)(F)(iii)), this approval qualifies for 3 years of marketing exclusivity beginning June 2, 2006. The 3 years of marketing exclusivity applies only to the new administration site and new indication for which this supplement is approved. The agency has determined under 21 CFR 25.33(d)(5) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required. This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808. List of Subjects 21 CFR Parts 522 Animal drugs. 21 CFR Part 556 Animal drugs, Foods. Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR parts 522 and 556 are amended as follows: PART 522—IMPLANTATION OR INJECTABLE DOSAGE FORM NEW ANIMAL DRUGS 1. The authority citation for 21 CFR part 522 continues to read as follows: Authority: 21 U.S.C. 360b. 2. Amend § 522.315 as follows: a. Redesignate § 522.315 as § 522.313a; b. Revise paragraph (a); c. Redesignate paragraph
(d)as paragraph (e); d. Add new paragraph (d); and e. Revise newly redesignated paragraphs (e)(1)(iii) and (e)(2). The redesignations, revisions, and addition read as follows: § 522.313a Ceftiofur crystalline free acid.
(a)*Specifications* . The product is a suspension of ceftiofur crystalline free acid.
(1)Each milliliter
(mL)contains 100 milligrams
(mg)ceftiofur equivalents.
(2)Each mL contains 200 mg ceftiofur equivalents. * * * * *
(d)*Special considerations* . Federal law restricts this drug to use by or on the order of a licensed veterinarian.
(e)* * *
(1)* * *
(iii)*Limitations* . Following label use as a single treatment, a 14-day pre-slaughter withdrawal period is required.
(2)* * *
(i)*Amount* . 6.6 mg ceftiofur equivalents per kg of body weight as a single injection. For subcutaneous injection in the middle third of the posterior aspect of the ear or in the posterior aspect of the ear where it attaches to the head (base of the ear) in beef and non-lactating dairy cattle. For subcutaneous injection in the posterior aspect of the ear where it attaches to the head (base of the ear) in lactating dairy cattle.
(ii)*Indications for use* . For the treatment of bovine respiratory disease (BRD, shipping fever, pneumonia) associated with *Mannheimia haemolytica* , *Pasteurella multocida* , and *Histophilus somni* in beef, non-lactating dairy, and lactating dairy cattle. For the control of respiratory disease in beef and non-lactating dairy cattle which are at high risk of developing BRD associated with *M. haemolytica* , *P. multocida* , and *H. somni* .
(iii)*Limitations* . Following label use as a single treatment, a 13-day pre-slaughter withdrawal period is required. A withdrawal period has not been established in preruminating calves. Do not use in calves to be processed for veal. PART 556—TOLERANCES FOR RESIDUES OF NEW ANIMAL DRUGS IN FOOD 3. The authority citation for 21 CFR part 556 continues to read as follows: Authority: 21 U.S.C. 342, 360b, 371. § 556.113 [Amended] 4. In § 556.113, in paragraph (b)(3)(i) remove “8” and add in its place “0.4”; remove paragraph (b)(3)(iv); and redesignate paragraph (b)(3)(v) as paragraph (b)(3)(iv). Dated: June 30, 2006. Steven D. Vaughn, Director, Office of New Animal Drug Evaluation, Center for Veterinary Medicine. [FR Doc. E6-10972 Filed 7-12-06; 8:45 am] BILLING CODE 4160-01-S DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 522 Implantation or Injectable Dosage Form New Animal Drugs; Mepivacaine AGENCY: Food and Drug Administration, HHS. ACTION: Final rule, technical amendment. SUMMARY: The Food and Drug Administration
(FDA)is amending the animal drug regulations to reflect approval of a supplemental new animal drug application
(NADA)filed by Pharmacia & Upjohn Co. The supplemental NADA provides for revised food safety labeling for mepivacaine injectable solution used in horses for local anesthesia. DATES: This rule is effective July 13, 2006. FOR FURTHER INFORMATION CONTACT: Melanie R. Berson, Center for Veterinary Medicine (HFV-110), Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855, 301-827-7543, e-mail: *melanie.berson@fda.hhs.gov.* SUPPLEMENTARY INFORMATION: Pharmacia & Upjohn Co., a Division of Pfizer, Inc., 235 East 42d St., New York, NY 10017, filed a supplement to NADA 100 703 for CARBOCAINE-V (mepivacaine hydrochloride) Sterile Aqueous Solution. The supplemental NADA provides for revised food safety labeling for mepivacaine injectable solution used in horses for local anesthesia. The application is approved as of June 2, 2006, and the regulations are amended in § 522.1372 (21 CFR 522.1372) to reflect the approval. In addition, FDA has found that the April 1, 2005, edition of parts 500 to 599 of title 21 of the Code of Federal Regulations
(CFR)does not accurately reflect the approved conditions of use for mepivacaine solution used in horses. These conditions of use were inadvertently deleted as a publication error. At this time, the regulations are being amended in § 522.1372 to correct this error and to format portions of this section to reflect a current format. This action is being taken to improve the accuracy of the regulations. Approval of this supplemental NADA did not require review of additional safety or effectiveness data or information. Therefore, a freedom of information summary is not required. The agency has determined under § 25.33(d)(1) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required. This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808. List of Subjects in 21 CFR Part 522 Animal drugs. Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR part 522 is amended as follows: PART 522—IMPLANTATION OR INJECTABLE DOSAGE FORM NEW ANIMAL DRUGS 1. The authority citation for 21 CFR part 522 continues to read as follows: Authority: 21 U.S.C. 360b. 2. Revise § 522.1372 to read as follows: § 522.1372 Mepivacaine .
(a)*Specifications* . Each milliliter
(mL)of solution contains 20 milligrams mepivacaine hydrochloride.
(b)*Sponsor* . See No. 000009 in § 510.600(c) of this chapter.
(c)*Conditions of use in horses* —(1) *Amount* . For nerve block, 3 to 5 mL; for epidural anesthesia, 5 to 20 mL; for intra-articular anesthesia, 10 to 15 mL; for infiltration, as required; for anesthesia of the laryngeal mucosa prior to ventriculectomy, by topical spray, 25 to 40 mL, by infiltration, 20 to 50 mL.
(2)*Indications for use* . For use as a local anesthetic for infiltration, nerve block, intra-articular and epidural anesthesia, and topical and/or infiltration anesthesia of the laryngeal mucosa prior to ventriculectomy.
(3)*Limitations* . Not for use in horses intended for human consumption. Federal law restricts this drug to use by or on the order of a licensed veterinarian. Dated: June 30, 2006. Steven D. Vaughn, Director, Office of New Animal Drug Evaluation, Center for Veterinary Medicine. [FR Doc. E6-10970 Filed 7-12-06; 8:45 am] BILLING CODE 4160-01-S DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 522 Implantation or Injectable Dosage Form New Animal Drugs; Furosemide AGENCY: Food and Drug Administration, HHS. ACTION: Final rule. SUMMARY: The Food and Drug Administration
(FDA)is amending the animal drug regulations to reflect approval of a supplemental new animal drug application
(NADA)filed by Intervet Inc. The supplemental NADA provides for the revision of a food safety warning on labeling of furosemide injectable solution for use in horses. DATES: This rule is effective July 13, 2006. FOR FURTHER INFORMATION CONTACT: Melanie R. Berson, Center for Veterinary Medicine (HFV-110), Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855, 301-827-7540, e-mail: *melanie.berson@fda.hhs.gov* . SUPPLEMENTARY INFORMATION: Intervet Inc., P.O. Box 318, 29160 Intervet Lane, Millsboro, DE 19966, filed a supplement to NADA 34-478 for SALIX (furosemide) Injection 5%. The supplemental NADA provides for the revision of a food safety warning on labeling of furosemide injectable solution for use in horses. The supplemental application is approved as of June 20, 2006, and the regulations are amended in 21 CFR 522.1010 to reflect the approval. Approval of this supplemental NADA did not require review of additional safety or effectiveness data or information. Therefore, a freedom of information summary is not required. The agency has determined under 21 CFR 25.33(a)(1) that these actions are of a type that do not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required. This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808. List of Subjects in 21 CFR Part 522 Animal drugs. Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR part 522 is amended as follows: PART 522—IMPLANTATION OR INJECTABLE DOSAGE FORM NEW ANIMAL DRUGS 1. The authority citation for 21 CFR part 522 continues to read as follows: Authority: 21 U.S.C. 360b. 2. In § 522.1010, revise paragraph (b)(3); and add paragraphs (b)(4) and (d)(2)(iii) to read as follows: § 522.1010 Furosemide.
(b)* * *
(3)No. 059130 as described in paragraph (a)(2) for use as in paragraphs (d)(1), (d)(2)(i), and (d)(3) of this section.
(4)No. 057926 as described in paragraph (a)(2) for use as in paragraphs (d)(1), (d)(2)(iii), and (d)(3) of this section.
(d)* * *
(2)* * *
(iii)*Amount* . 250 to 500 mg/animal once or twice daily, intramuscularly or intravenously.
(A)*Indications for use* . For the treatment of edema (pulmonary congestion, ascites) associated with cardiac insufficiency, and acute noninflammatory tissue edema.
(B)*Limitations* . Do not use in horses intended for human consumption. Dated: June 30, 2006. Steven D. Vaughn, Director, Office of New Animal Drug Evaluation, Center for Veterinary Medicine. [FR Doc. E6-10974 Filed 7-12-06; 8:45 am] BILLING CODE 4160-01-S DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9270] RIN 1545-AW72 Reporting of Gross Proceeds Payments to Attorneys AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final regulations. SUMMARY: This document contains final regulations relating to the reporting of payments of gross proceeds to attorneys. The regulations reflect changes to the law made by the Taxpayer Relief Act of 1997 (1997 Act). The final regulations will affect attorneys who receive payments of gross proceeds on behalf of their clients and will affect certain payors (for example, defendants in lawsuits and their insurance companies and agents) that, in the course of their trades or businesses, make payments to these attorneys. DATES: *Effective Dates:* These regulations are effective July 13, 2006. *Applicability Dates:* For dates of applicability, see § 1.6045-5(h). FOR FURTHER INFORMATION CONTACT: Nancy Rose,
(202)622-4940 (not a toll-free number). SUPPLEMENTARY INFORMATION: Paperwork Reduction Act The collection of information contained in these final regulations has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1545-1644. Comments on the collection of information should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, Washington, DC 20224. Comments on the collection of information should be received by September 11, 2006. Comments are specifically requested concerning: Whether the collection of information is necessary for the proper performance of the functions of the Internal Revenue Service, including whether the information will have practical utility; The accuracy of the estimated burden associated with the collection of information; How the quality, utility, and clarity of the information to be collected may be enhanced; How the burden of complying with the collection of information may be minimized, including through the application of automated collection techniques or other forms of information technology; and Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. The collections of information in the final regulations are in §§ 1.6041-3(p) and 1.6045-5(a). Section 1021(a) of the 1997 Act added section 6045(f) to the Internal Revenue Code
(Code)and requires the IRS to implement information reporting of certain payments made to attorneys. Section 1021(b) of the 1997 Act provides that the exception to information reporting in the regulations under section 6041 for payments to corporations does not apply to payments to attorneys and requires the IRS to implement information reporting for payments to attorneys. This information will be used to verify compliance with sections 6045(f) and 6041 and to determine that the amount of these payments has been reported correctly. The collections of information are mandatory. The likely respondents (payors) are businesses and other for profit institutions. Payors provide the information by completing Form 1099-MISC, “Miscellaneous Income,” for each attorney who has received one or more payments aggregating $600 of more from the payor during the calendar year. The burden for this requirement is reflected in the burden estimate for Form 1099-MISC. The estimated burden of information collection for the 2005 Form 1099-MISC is 16 minutes per return. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number assigned by the Office of Management and Budget. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and return information are confidential, as required by 26 U.S.C. 6103. Background This document contains amendments to the 26 CFR part 1 under sections 6041 and 6045 of the (Code). These amendments to the Income Tax Regulations revise existing §§ 1.6041-1 and 1.6041-3 and add new § 1.6045-5. This document finalizes proposed regulations relating to information reporting under section 6045(f) of the Code for gross proceeds paid to attorneys. The proposed regulations were contained in a notice of proposed rulemaking (REG-126024-01) published in the **Federal Register** on May 17, 2002 (67 FR 35064). Section 6045(f) was added to the Code by the 1997 Act (Pub. L. 105-34, section 1021 (111 Stat. 788)). Section 6045(f) generally requires information reporting for payments of gross proceeds made in the course of a trade or business to attorneys in connection with legal services (whether or not the services are performed for the payor). No information reporting is required under section 6045(f) for the portion of any payment that is required to be reported under section 6041(a) (relating to payments made in the course of a trade or business) (or that would be required to be reported under section 6041 but for the $600 limitation) or under section 6051 (relating to receipts for employees). The 1997 Act also provides that the general exception in § 1.6041-3(p)(1) for reporting payments made to corporations does not apply to payments of attorneys' fees. Public Law 105-34, section 1021(b). Proposed regulations under sections 6041 and 6045(f) were first published in the **Federal Register** on May 21, 1999 (64 FR 27730) (the 1999 proposed regulations). The IRS received written comments on the 1999 proposed regulations, and held a public hearing on September 22, 1999. After considering those comments and the testimony at the public hearing, the IRS and the Treasury Department decided to amend and repropose regulations under sections 6041 and 6045(f). Those proposed regulations (the reproposed regulations) were published in the **Federal Register** on May 17, 2002 (67 FR 35064), and incorporated the guidance in the 1999 proposed regulations with some modifications. A number of written comments were received in connection with the reproposed regulations. After considering those comments, the IRS is adopting the reproposed regulations with revisions, as discussed below. Summary of Comments Generally, the section 6045(f) information reporting requirement is intended to be broad, and few exceptions are warranted. See H. Conf. Rep. 105-220, at 546 (1997). As suggested by commentators, the final regulations adopt certain exceptions to the information reporting requirement, described below. Section 6045-5(c) of the reproposed regulations contains an exception to the information reporting requirement relating to payments made to an attorney who conducts settlements for sales or exchanges of real estate. Commentators suggested an expansion of this exception to include payments made in connection with a refinance of a mortgage and certain other loan closings. After consideration of the comments, and the nature of these transactions, these final regulations expand the exception to include payments made to attorneys in connection with the financing of real estate. The exception now covers, for example, payments made to attorneys in connection with refinancings and mortgages, not limited to purchase-money mortgages. Many commentators on the 1999 proposed regulations requested exceptions to the section 6045(f) information reporting requirements for payments to trustees and other fiduciaries such as administrators of estates and settlement funds. Those commentators suggested that the definition of legal services should be narrowed to except payments to those individuals, as the payments to attorneys acting as fiduciaries have no correlation to their income. The preamble to the reproposed regulations stated that this issue was considered, but reiterated that a broad definition of legal services is appropriate and consistent with the language and purpose of section 6045(f). (67 FR 35064) Although the reproposed regulations made an exception for payments to attorneys acting as real estate settlement agents, the reproposed regulations did not except payments to trustees and administrators. The preamble noted that in many situations, payments are or could be made to an estate or fund, rather than to an attorney acting as a trustee or administrator. If an estate or fund were the payee, information reporting under section 6045(f) would not be required. With respect to payments to bankruptcy trustees in particular, *Example 10* of the reproposed regulations describes a situation in which a bankrupt's employer withholds amounts from the bankrupt's earnings pursuant to a wage garnishment order, and forwards that amount to the bankruptcy trustee. Commentators argued that a bankruptcy trustee who receives such payments is not practicing law, and is not receiving these amounts in connection with legal services. They pointed out that many bankruptcy trustees are not attorneys. Commentators also discussed the unique position of a bankruptcy trustee, which would make the bankruptcy trustee reluctant to disclose his or her taxpayer identifying number (TIN). They also described numerous administrative burdens bankruptcy trustees would face in connection with the receipt of a large number of information returns. Further, numerous commentators stated that it is not always possible to avoid information reporting; in many bankruptcy situations, particularly in a Chapter 13 bankruptcy, a payor must write the check to the bankruptcy trustee and not to the bankrupt's estate. After considering the comments with respect to payments to bankruptcy trustees, and considering the unique position of attorneys acting in their capacity as bankruptcy trustees, it was determined that an exception for payments to bankruptcy trustees was appropriate. Therefore, the final regulations include an exception in § 1.6045-5(c)(7) for payments to attorneys acting in the capacity of bankruptcy trustees, and remove the example contained in the reproposed regulations relating to payments to bankruptcy trustees. Another commentator recommended that payments of life insurance made to an attorney on behalf of a client not be considered received in connection with legal services and therefore be excepted from the information reporting requirement. The IRS and the Treasury Department continue to believe that a broad definition of legal services is appropriate, and the final regulations do not adopt this suggestion. As in the fiduciary situation, information reporting under section 6045(f) would not be required if the attorney is not the named payee. Commentators requested additional clarification of the interplay between the information reporting rules in existing § 1.6041-1(e) and
(f)and the reproposed regulations under section 6045(f). In response, many of the examples in the final regulations include more cross-references to other information reporting rules, and some examples illustrate the correct reporting under sections other than section 6045(f). Some commentators asked that the IRS develop a new form for reporting settlement payments made to plaintiffs and their attorneys that would show the names and TINs of both plaintiff and attorney, the amounts paid to each, and backup withholding if applicable. The commentators proposed new Form 1099-SET, “Settlement Proceeds,” to satisfy the reporting obligations set forth under both sections 6045 and 6041 with respect to these payments. The IRS already has several different forms in the Form 1099 series that allow for reporting of a variety of types of payments, including payments under section 6045(f). Adding another form to the Form 1099 series limited to only one type of payment would not increase efficiency for the IRS or taxpayers. Moreover, payors could not use the proposed Form 1099-SET in connection with settlement payments that constitute wages reportable on Form W-2, “Wage and Tax Statement.” For these reasons, the final regulations do not adopt this suggestion. A number of commentators correctly pointed out that under the reproposed regulations, information reporting for amounts paid to attorneys may be required even though the payors also must report these amounts to the attorneys' clients pursuant to section 6041. Commentators stated that duplicate reporting would be a problem under automated systems for generating information returns. In many cases, their systems are designed to generate only one Form 1099 for a payment. Nevertheless, Congress mandated reporting by a payor under both section 6045(f) (to an attorney) and 6041 (to the attorney's client) with respect to the same payment. Section 6045(f)(2)(B) provides an exception for payments required to be reported under section 6041. The IRS and the Treasury Department interpret the exception in section 6045(f)(2)(B) as applying only where the section 6045(f) payment otherwise would be required to be reported under section 6041 with respect to the same payee (i.e., the attorney), and not where section 6041 imposes a separate reporting requirement with respect to another payee (i.e., the client). See § 1.6045-5(c)(4). In cases in which the payment is made to the attorney for the benefit of the client, section 6041 requires reporting with respect to the client, and section 6045(f) requires reporting with respect to the attorney. Each of these statutory reporting requirements serves an independent purpose—reporting the amount paid for the benefit of the client who has to include that amount in income, and reporting a gross proceeds payment to the attorney. Section 1.6041-1(a)(1) was revised to clarify that there is a requirement to report to both the attorney and client in that situation. Other commentators discussed the requirement to backup withhold on payments to an attorney if the attorney does not provide an accurate TIN to the payor. The commentators suggested that there are both practical and ethical problems with respect to backup withholding on payments to attorneys. They noted that the amounts paid to the attorney generally belong to the attorney's client and that there may be difficulty in determining how to claim the withholding on the client's income tax return. The IRS and the Treasury Department believe that payments to attorneys for legal services are reportable payments under section 3406(b)(3)(C), and are thus subject to backup withholding. The legislative history to section 6045(f) makes clear that Congress intended such payments to be subject to backup withholding. H. Conf. Rep. 105-220, at 546 (1997). As the commentators point out, backup withholding on a payment to an attorney that constitutes the income of the attorney's client raises some practical concerns, but it is nonetheless required by the statute. Backup withholding can be avoided as long as the attorney provides an accurate TIN to the payor. Furthermore, there are procedures in place affording an opportunity to correct an inaccurate TIN before backup withholding is required. See § 31.3406(d)-5; Rev. Proc. 93-37 (1993-2 C.B. 477). A comment was received with respect to the exception in § 1.6045-5(c)(5) of the reproposed regulations for payments to certain non-residents that are not engaged in a trade or business within the United States and that do not perform any labor or personal services within the United States. The commentator stated that, as drafted, the exception is too narrow and will result in unnecessary information reporting. The commentator suggested that the exception should be based solely on whether the payment to the non-resident alien individual, foreign partnership, or foreign corporation is in connection with legal services performed outside the United States. The commentator suggested that a payor be entitled to rely for purposes of making this determination on a signed statement by the attorney or law firm to the effect that the services for which payment is made were performed outside the United States, provided that the payor does not know that the statement is inaccurate. The commentator noted that payments of gross proceeds to non-resident alien attorneys may be reportable under this section although attorneys fees paid to such attorneys would not be reportable under section 6041. The gross proceeds reporting requirement under section 6045(f) is intended to be broad and has a different purpose than information reporting under section 6041 for payments for services. Congress expressed its intent with respect to section 6045(f) “that the IRS will administer this provision so that it will not apply to foreign attorneys who can clearly demonstrate that they are not subject to U.S. tax.” Joint Committee on Taxation Staff, General Explanation of Tax Legislation Enacted in 1997, 105th Cong., 1st Sess. 215 (1997). Foreign persons not engaged in trade or business within the United States are subject to U.S. tax on amounts of certain types of income received from sources within the United States (e.g., under section 871(a)). Foreign persons engaged in trade or business within the United States are subject to U.S. tax on taxable income effectively connected with the conduct of such trade or business within the United States (e.g., under section 871(b)). Thus, a foreign person can demonstrate clearly that it is not subject to U.S. tax only if it clearly demonstrates both that the income in question would not be subject to U.S. tax if the foreign person were not engaged in trade or business in the United States and that the income in question is not effectively connected with the conduct of a trade or business within the United States. The commentator's proposed approach would not produce a clear demonstration that both conditions are satisfied and so would be inconsistent with the intent expressed by Congress. Therefore, the final regulations do not adopt the commentator's suggestion. In addition to written comments, a number of telephone calls were received with questions and comments regarding the reproposed regulations. Many of the callers raised questions as to whether an attorney is the payee of a check where the check is made out to the attorney's client, but “in care of” the attorney, or to the attorney's client trust account, or other scenarios. Since these questions were raised by a number of callers, the final regulations address them. Generally, an attorney is the payee on a check written to the attorney's client trust fund, but not on a check which the attorney may not negotiate. (§ 1.6045-5(d)(4)). The reproposed regulations indicated in § 1.6045-5(h) that the regulations would become effective with payments made during the first calendar year that begins at least two months after the publication of the regulations as final regulations. Consequently, the final regulations will apply to payments made in or after 2007. This delayed effective date affords time to implement any changes required in automated information processing systems. Section 6724(a) states that no penalty relative to information reporting shall be imposed with respect to a failure that is due to reasonable cause and not to willful neglect. Section 301.6724-1(a) provides in part that a penalty is waived for reasonable cause if the filer establishes that there are significant mitigating factors with respect to the failure, or that the failure arose from events beyond the filer's control, and that the filer acted in a responsible manner. Under § 301.6724-1(b)(1), significant mitigating factors include the fact that prior to the failure the filer was never required to file the particular type of return with respect to which the failure occurred. Under § 301.6724- 1(d)(1)(i), acting in a responsible manner means that the filer exercised reasonable care, which is that standard of care that a reasonably prudent person would use under the circumstances in the course of its business in determining its filing obligations. Pursuant to these provisions, a penalty waiver may apply, for example, if an information report would have been required under the reproposed regulations, but not under the final regulations. Special Analyses It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. It is hereby certified that the collection of information in these regulations will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. This certification is based on the facts that:
(1)The time required to prepare and file a 2005 Form 1099-MISC, “Miscellaneous Income,” is minimal (currently estimated at 16 minutes per form); and
(2)it is not anticipated that, as a result of these regulations, many small entities will have to prepare and file more than a few forms per year. Pursuant to section 7805(f) of the Code, the Notice of Proposed Rulemaking preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Drafting Information The principal author of these regulations is Nancy L. Rose of the Office of Associate Chief Counsel (Procedure and Administration), Administrative Provisions and Judicial Practice Division. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows: PART 1—INCOME TAXES **Paragraph 1.** The authority citation for part 1 continues to read, in part, as follows: Authority: 26 U.S.C. 7805 * * * **Par. 2.** Section 1.6041-1(a)(1) is amended as follows: 1. In paragraph (a)(1)(ii), the first sentence is removed and two sentences are added in its place. 2. Paragraph (a)(1)(iii) is added. The revision and addition read as follows: § 1.6041-1 Return of information as to payments of $600 or more.
(a)* * *
(1)* * *
(ii)* * * The payments described in paragraphs (a)(1)(i)(A) and
(B)of this section shall not include any payments of amounts with respect to which an information return is required by, or may be required under authority of, section 6042(a)(relating to dividends), section 6043(a)(2)(relating to distributions in liquidation), section 6044(a)(relating to patronage dividends), section 6045(relating to brokers' transactions with customers and certain other transactions), sections 6049(a)(1) and
(2)(relating to interest), section 6050N(a) (relating to royalties), or section 6050P(a) or (b)(relating to cancellation of indebtedness). For information returns required under section 6045(f) (relating to payments to attorneys), see special rules in §§ 1.6041-1(a)(1)(iii) and 1.6045-5(c)(4). * * *
(iii)Information returns required under section 6045(f) on or after January 1, 2007. For payments made on or after January 1, 2007 to which section 6045(f)(relating to payments to attorneys) applies, the following rules apply. Notwithstanding the provisions of paragraph (a)(1)(ii) of this section, payments to an attorney that are described in paragraph (a)(1)(i) of this section but which otherwise would be reportable under section 6045(f) are reported under section 6041 and this section and not section 6045(f). This exception applies only if the payments are reportable with respect to the same payee under both sections. Thus, a person who, in the course of a trade or business, pays $600 of taxable damages to a claimant by paying that amount to the claimant's attorney is required to file an information return under section 6041 with respect to the claimant, as well as another information return under section 6045(f) with respect to the claimant's attorney. For provisions relating to information reporting for payments to attorneys, see § 1.6045-5. **Par. 3.** Section 1.6041-3 is amended as follows: 1. Revising the first sentence in paragraph (p)(1). 2. In paragraph (p)(8), removing the language “(q)” and adding “(p)” in its place. The revision reads as follows: § 1.6041-3 Payments for which no return of information is required under section 6041.
(p)* * *
(1)A corporation described in § 1.6049-4(c)(1)(ii)(A), except with respect to payments made to a corporation after December 31, 1997 for attorneys' fees, and except a corporation engaged in providing medical and health care services or engaged in the billing and collecting of payments in respect to the providing of medical and health care services. * * * **Par. 4.** Section 1.6045-5 is added to read as follows: § 1.6045-5 Information reporting on payments to attorneys.
(a)*Requirement of reporting* —(1) *In general.* Except as provided in paragraph
(c)of this section, every payor engaged in a trade or business who, in the course of that trade or business, makes payments aggregating $600 or more during a calendar year to an attorney in connection with legal services (whether or not the services are performed for the payor) must file an information return for such payments. The information return must be filed on the form and in the manner required by the Commissioner. For the time and place for filing the form, see § 1.6041-6. For definitions of the terms under this section, see paragraph
(d)of this section. The requirements of this paragraph (a)(1) apply whether or not—
(i)A portion of a payment is kept by the attorney as compensation for legal services rendered; or
(ii)Other information returns are required with respect to some or all of a payment under other provisions of the Internal Revenue Code and the regulations thereunder.
(2)*Information required.* The information return required under paragraph (a)(1) of this section must include the following information:
(i)The name, address, and taxpayer identifying number
(TIN)(as defined in section 7701(a)) of the payor;
(ii)The name, address, and TIN of the payee attorney;
(iii)The amount of the payment or payments (as defined in paragraph (d)(5) of this section); and
(iv)Any other information required by the Commissioner in forms, instructions or publications.
(3)*Requirement to furnish statement.* A person required to file an information return under paragraph (a)(1) of this section must furnish to the attorney a written statement of the information required to be shown on the return. This requirement may be met by furnishing a copy of the return to the attorney. The written statement must be furnished to the attorney on or before January 31 of the year following the calendar year in which the payment was made.
(b)*Special rules* —(1) * Joint or multiple payees* —(i) *Check delivered to one payee attorney* . If more than one attorney is listed as a payee on a check, an information return must be filed under paragraph (a)(1) of this section with respect to the payee attorney to whom the check is delivered.
(ii)*Check delivered to payee nonattorney* . If an attorney is listed as a payee on a check but the check is delivered to a nonattorney who is a payee on the check, an information return must be filed under paragraph (a)(1) of this section with respect to the payee attorney listed on the check. If more than one attorney is listed as a payee on a check but the check is delivered to a nonattorney who is a payee on the check, the information return must be filed with respect to the first-listed payee attorney on the check.
(iii)* Check delivered to nonpayee* . If two or more attorneys are listed as payees on a check, but the check is delivered to a person who is not a payee on the check, an information return must be filed under paragraph (a)(1) of this section with respect to the first-listed payee attorney on the check.
(2)*Attorney required to report payments made to other attorneys.* If an information return is required to be filed with respect to a payee attorney under paragraph (b)(1) of this section, the attorney with respect to whom the information return is required to be filed (tier-one attorney) must file an information return under this section for any payment that the tier-one attorney makes to other payee attorneys with respect to that check, regardless of whether the tier-one attorney is a payor under paragraph (d)(3) of this section.
(c)*Exceptions.* Notwithstanding paragraphs
(a)and
(b)of this section, a return of information is not required under section 6045(f) with respect to the following payments:
(1)Payments of wages or other compensation paid to an attorney by the attorney's employer.
(2)Payments of compensation or profits paid or distributed to its partners by a partnership engaged in providing legal services.
(3)Payments of dividends or corporate earnings and profits paid to its shareholders by a corporation engaged in providing legal services.
(4)Payments made by a person to the extent that the person is required to report with respect to the same payee the payments or portions thereof under section 6041(a) and § 1.6041-1(a) (or would be required to so report the payments or portions thereof but for the dollar amount limitation contained in section 6041(a) and § 1.6041-1(a)).
(5)Payments made to a nonresident alien individual, foreign partnership, or foreign corporation that is not engaged in trade or business within the United States, and does not perform any labor or personal services in the United States, in the taxable year to which the payment relates. For how a payor determines whether a payment is subject to this exception, see § 1.6041-4(a)(1).
(6)Payments made to an attorney in the attorney's capacity as the person responsible for closing a transaction within the meaning of § 1.6045-4(e)(3) for the sale or exchange or financing of any present or future ownership interest in real estate described in § 1.6045-4(b)(2)(i) through (iv).
(7)Payments made to an attorney in the attorney's capacity as a trustee in bankruptcy under Title 11, United States Code.
(d)*Definitions.* The following definitions apply for purposes of this section:
(1)*Attorney* means a person engaged in the practice of law, whether as a sole proprietorship, partnership, corporation, or joint venture.
(2)*Legal services* means all services related to, or in support of, the practice of law performed by, or under the supervision of, an attorney.
(3)*Payor* means a person who makes a payment if that person is an obligor on the payment, or the obligor's insurer or guarantor. For example, a payor includes—
(i)A person who pays a settlement amount to an attorney of a client who has asserted a tort, contract, violation of law, or workers' compensation claim against that person; and
(ii)The person's insurer if the insurer pays the settlement amount to the attorney.
(4)*Payments to an attorney* include payments by check or other method such as cash, wire or electronic transfer. Payment by check to an attorney means a check on which the attorney is named as a sole, joint, or alternative payee. The attorney is the payee on a check written to the attorney's client trust fund. However, the attorney is not a payee when the attorney's name is included on the payee line as “in care of,” such as a check written to “client c/o attorney,” or if the attorney's name is included on the check in any other manner that does not give the attorney the right to negotiate the check.
(5)*Amount of the payment* means the amount tendered ( *e.g.* , the amount of a check) plus the amount required to be withheld from the payment under section 3406(a)(1), because a condition for withholding exists with respect to the attorney for whom an information return is required to be filed under paragraph (a)(1) of this section.
(e)*Attorney to furnish TIN.* A payor that is required to file an information return under this section must solicit a TIN from the attorney at or before the time the payor makes a payment to the attorney. The attorney must furnish the correct TIN to the payor, but is not required to certify the TIN. A payment for which a return of information is required under this section is subject to backup withholding under section 3406 and the regulations thereunder.
(f)* Examples.* The following examples illustrate the provisions of this section. The examples assume that P is not a payor with respect to A, the attorney, under section 6041. See section 6041 and the regulations thereunder for rules regarding whether P is required under section 6041 to file information returns with respect to C. The examples are as follows: Example 1. One check—joint payees—taxable to claimant. Employee C, who sues employer P for back wages, is represented by attorney A. P settles the suit for $300,000. The $300,000 represents taxable wages to C under existing legal principles. P writes a settlement check payable jointly to C and A in the amount of $200,000, net of income and FICA tax withholding with respect to C. P delivers the check to A. A retains $100,000 of the payment as compensation for legal services and disburses the remaining $100,000 to C. P must file an information return with respect to A for $200,000 under paragraph (a)(1) of this section. P also must file an information return with respect to C under sections 6041 and 6051, in the amount of $300,000. See §§ 1.6041-1(f) and 1.6041-2. Example 2. One check—joint payees—excludable to claimant. C, who sues corporation P for damages on account of personal physical injuries, is represented by attorney A. P settles the suit for a $300,000 damage payment that is excludable from C's gross income under section 104(a)(2). P writes a $300,000 settlement check payable jointly to C and A and delivers the check to A. A retains $120,000 of the payment as compensation for legal services and remits the remaining $180,000 to C. P must file an information return with respect to A for $300,000 under paragraph (a)(1) of this section. P does not file an information return with respect to tax-free damages paid to C. Example 3. Separate checks—taxable to claimant. C, an individual plaintiff in a suit for lost profits against corporation P, is represented by attorney A. P settles the suit for $300,000, all of which will be includible in C's gross income. A requests P to write two checks, one payable to A in the amount of $100,000 as compensation for legal services and the other payable to C in the amount of $200,000. P writes the checks in accordance with A's instructions and delivers both checks to A. P must file an information return with respect to A for $100,000 under paragraph (a)(1) of this section. Pursuant to § 1.6041-1(a) and (f), P must file an information return with respect to C for the $300,000. Example 4. Check made payable to claimant, but delivered to nonpayee attorney. Corporation P, is a defendant in a suit for damages in which C, the plaintiff, has been represented by attorney A throughout the proceeding. P settles the suit for $300,000. Pursuant to a request by A, P writes the $300,000 settlement check payable solely to C and delivers it to A at A's office. P is not required to file an information return under paragraph (a)(1) of this section with respect to A, because there is no payment to an attorney within the meaning of paragraph (d)(4) of this section. Example 5. Multiple attorneys listed as payees. Corporation P, a defendant, settles a lost profits suit brought by C, for $300,000 by issuing a check naming C's attorneys, Y, A, and Z, as payees in that order. Y, A, and Z do not belong to the same law firm. P delivers the payment to A's office. A deposits the check proceeds into a trust account and makes payments by separate checks to Y of $30,000 and to Z of $15,000, as compensation for legal services, pursuant to authorization from C to pay these amounts. A also makes a payment by check of $155,000 to C. A retains $100,000 as compensation for legal services. P must file an information return for $300,000 with respect to A under paragraphs (a)(1) and (b)(1)(i) of this section. A, in turn, must file information returns with respect to Y of $30,000 and to Z of $15,000 under paragraphs (a)(1) and (b)(2) of this section because A is not required to file information returns under section 6041 with respect to A's payments to Y and to Z because A's role in making the payments to Y and to Z is merely ministerial. See § 1.6041-1(e)(1), (e)(2) and (e)(5) *Example 7* for information reporting requirements with respect to A's payments to Y and Z. As described in *Example 3* , P must also file an information return with respect to C, pursuant to § 1.6041-1(a) and (f). Example 6. Amount of the payment—attorney does not provide TIN.
(i)Corporation P, a defendant, settles a suit brought by C for $300,000 of damages. P will pay the damages by a joint check to C and his attorney, A. A failed to furnish P with A's TIN. P is required to deduct and withhold 28 percent tax from the $300,000 under section 3406(a)(1)(A) and paragraph
(e)of this section. P writes the check to C and A as joint payees, in the amount of $216,000. P also must file an information return with respect to A under paragraph (a)(1) of this section in the amount of $300,000, as prescribed in paragraph (d)(5) of this section. If the damages are reportable under section 6041 because they are not excludable from gross income under existing legal principles, and are not subject to any exception under section 6041, P must also file an information return with respect to C pursuant to § 1.6041-1(a) and
(f)in the amount of $300,000.
(ii)Rather than paying by joint check to C and A, P will pay the damages by a joint check to C and F, A's law firm. F failed to furnish its TIN to P. P is required to deduct and withhold 28 percent tax from the $300,000 under section 3406(a)(1)(A) and paragraph
(e)of this section. P writes the check to C and F as joint payees, in the amount of $216,000. P also must file an information return with respect to F under paragraph (a)(1) of this section in the amount of $300,000, as prescribed in paragraph (d)(5) of this section. If the damages are reportable under section 6041 because they are not excludable from gross income under existing legal principles, and are not subject to any exception under section 6041, P must also file an information return with respect to C pursuant to § 1.6041-1(a) and
(f)in the amount of $300,000. Example 7. Home mortgage lending transaction.
(i)Individual P agrees to purchase a house that P will use solely as a residence. P obtains a loan from lender L to finance a portion of the cost of acquiring the house. L disburses loan proceeds of $300,000 to attorney A, who is the settlement agent, by a check naming A as the sole payee. A, in turn, writes checks from the loan proceeds and from other funds provided by P to the persons involved in the purchase of the house, including a check for $800 to attorney B, whom P hired to provide P with legal services relating to the closing.
(ii)P, not L, is the payor of the payment to A under paragraph (d)(3) of this section. P, however, is not required to file an information return with respect to A under paragraph (a)(1) of this section because the payment was not made in the course of P's trade or business. Even if P made the payment in the course of P's trade or business, P would not be required to file an information return under section 6045(f) with respect to A because P is excepted under paragraph (c)(6) of this section.
(iii)A is not required to file an information return under paragraph (a)(1) of this section with respect to the payment to B because A is not the payor as that term is defined under paragraph (d)(3) of this section. A is not required to file an information return under paragraph (b)(2) with respect to the payment to B because A was listed as sole payee on the check it received from P. See section 6041 and § 1.6041-1(e) for whether A or L must file information returns under that section. See section 6045(e) and § 1.6045-4 for whether A is required to file an information return under that section. Example 8. Business mortgage lending transaction. The facts are the same as in *Example 7* except that P buys real property that P will use in a trade or business. P, not L, is the payor of the payment to A under paragraph (d)(3) of this section. P, however, is not required to file an information return under section 6045(f) with respect to A because P is excepted under paragraph (c)(6) of this section. A is not required to file an information return under paragraphs
(a)or (b)(2) of this section with respect to the payment to B. See section 6041 and § 1.6041-1(e) to determine whether P or L must file an information return under that section with respect to the payment to A, and whether P or A must file a return with respect to the payment to B. See section 6045(e) for rules regarding whether A is required to file information returns under that section. Example 9. Qualified settlement fund. Corporation P agrees to settle for $300,000 a class action lawsuit brought by attorney A on behalf of a claimant class. Pursuant to the settlement agreement and a preliminary order of approval by a court, A establishes a bank account in the name of Q Settlement Fund, which is a qualified settlement fund
(QSF)under § 1.468B-1. A is also designated by the court as the administrator of the QSF. Corporation P transfers $300,000 by wire in Year 1 to A, who deposits the funds into the Q Settlement Fund. In Year 2, the court approves an award of attorney's fees of $105,000 for A. In Year 2, Q Settlement Fund delivers $105,000 to A. P is required to file an information return under paragraph
(a)of this section with respect to A for Year 1 for the $300,000 payment it made to A. The Q Settlement Fund is required to file an information return under section 6041(a) and § 1.468B-2(l)(2) with respect to A for Year 2 for the $105,000 payment it made to A.
(g)*Cross reference to penalties* . See the following sections regarding penalties for failure to comply with the requirements of section 6045(f) and this section:
(1)Section 6721 for failure to file a correct information return.
(2)Section 6722 for failure to furnish a correct payee statement.
(3)Section 6723 for failure to comply with other information reporting requirements (including the requirement to furnish a TIN).
(4)Section 7203 for willful failure to supply information (including a TIN).
(h)*Effective date* . The rules in this section apply to payments made on or after January 1, 2007. Approved: June 8, 2006. Mark E. Matthews, Deputy Commissioner for Services and Enforcement. Eric Solomon, Acting Deputy Assistant Secretary of the Treasury (Tax Policy). [FR Doc. E6-11010 Filed 7-12-06; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF THE TREASURY 31 CFR Part 103 RIN 1506-AA82 Financial Crimes Enforcement Network; Amendment to the Bank Secrecy Act Regulations—Imposition of Special Measure Against VEF Banka, as a Financial Institution of Primary Money Laundering Concern AGENCY: Financial Crimes Enforcement Network, Department of the Treasury. ACTION: Final rule. SUMMARY: The Financial Crimes Enforcement Network is issuing a final rule imposing a special measure against joint stock company VEF Banka (“VEF”, “VEF Bank”, or the “bank”) as a financial institution of primary money laundering concern, pursuant to the authority contained in 31 U.S.C. 5318A of the Bank Secrecy Act. DATES: This final rule is effective on August 14, 2006. FOR FURTHER INFORMATION CONTACT: Regulatory Policy and Programs Division, Financial Crimes Enforcement Network,
(800)949-2732. SUPPLEMENTARY INFORMATION: I. Background A. Statutory Provisions On October 26, 2001, the President signed into law the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (“USA PATRIOT Act”). Title III of the USA PATRIOT Act amends the anti-money laundering provisions of the Bank Secrecy Act, codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5314 and 5316-5332, to promote the prevention, detection, and prosecution of money laundering and the financing of terrorism. Regulations implementing the Bank Secrecy Act appear at 31 CFR part 103. The authority of the Secretary of the Treasury (the “Secretary”) to administer the Bank Secrecy Act and its implementing regulations has been delegated to the Director of the Financial Crimes Enforcement Network (the “Director”). 1 The Bank Secrecy Act authorizes the Director to issue regulations requiring all financial institutions defined as such in the Bank Secrecy Act to maintain or file certain reports or records that have been determined to have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counter-intelligence activities, including analysis, to protect against international terrorism, and to implement anti-money laundering programs and compliance procedures. 2 1 Therefore, references to the authority of the Secretary of the Treasury under section 311 of the USA PATRIOT Act apply equally to the Director of the Financial Crimes Enforcement Network. 2 Language expanding the scope of the Bank Secrecy Act to intelligence or counter-intelligence activities to protect against international terrorism was added by section 358 of the USA PATRIOT Act. Section 311 of the USA PATRIOT Act added section 5318A to the Bank Secrecy Act, granting the Secretary the authority, after finding that reasonable grounds exist for concluding that a foreign jurisdiction, foreign financial institution, international class of transactions, or type of account is of “primary money laundering concern,” to require domestic financial institutions and domestic financial agencies to take certain “special measures” against the primary money laundering concern. Section 311 identifies factors for the Secretary to consider and Federal agencies to consult before he may find that reasonable grounds exist for concluding that a jurisdiction, financial institution, class of transactions, or type of account is of primary money laundering concern. The statute also provides similar procedures, including factors and consultation requirements, for selecting the specific special measures to be imposed against the primary money laundering concern. Taken as a whole, section 311 provides the Secretary with a range of options that can be adapted to target specific money laundering and terrorist financing concerns most effectively. These options provide the authority to bring additional and useful pressure on those jurisdictions and institutions that pose money laundering threats and the ability to take steps to protect the U.S. financial system. Through the imposition of various special measures, we can: Gain more information about the concerned jurisdictions, financial institutions, transactions, and accounts; monitor more effectively the respective jurisdictions, financial institutions, transactions, and accounts; and ultimately protect U.S. financial institutions from involvement with jurisdictions, financial institutions, transactions, or accounts that pose a money laundering concern. Before making a finding that reasonable grounds exist for concluding that a foreign financial institution is of primary money laundering concern, the Secretary is required by the Bank Secrecy Act to consult with both the Secretary of State and the Attorney General. In addition to these consultations, when finding that a foreign financial institution is of primary money laundering concern, the Secretary is required by section 311 to consider “such information as the Secretary determines to be relevant, including the following potentially relevant factors:” • The extent to which such financial institution is used to facilitate or promote money laundering in or through the jurisdiction; • The extent to which such financial institution is used for legitimate business purposes in the jurisdiction; and • The extent to which such action is sufficient to ensure, with respect to transactions involving the institution operating in the jurisdiction, that the purposes of the Bank Secrecy Act continue to be fulfilled, and to guard against international money laundering and other financial crimes. If we determine that reasonable grounds exist for concluding that a foreign financial institution is of primary money laundering concern, we must determine the appropriate special measure(s) to address the specific money laundering risks. Section 311 provides a range of special measures that can be imposed, individually or jointly, in any combination, and in any sequence. 3 In the imposition of special measures, we follow procedures similar to those for finding a foreign financial institution to be of primary money laundering concern, but we also engage in additional consultations and consider additional factors. Section 311 requires us to consult with other appropriate Federal agencies and parties 4 and to consider the following specific factors: 3 Available special measures include requiring:
(1)Recordkeeping and reporting of certain financial transactions;
(2)collection of information relating to beneficial ownership;
(3)collection of information relating to certain payable-through accounts;
(4)collection of information relating to certain correspondent accounts; and
(5)prohibition or conditions on the opening or maintaining of correspondent or payable-through accounts. 31 U.S.C. 5318A(b)(1)-(5). For a complete discussion of the range of possible countermeasures, see 68 FR 18917 (April 17, 2003) (proposing to impose special measures against Nauru). 4 Section 5318A(a)(4)(A) requires the Secretary to consult with the Chairman of the Board of Governors of the Federal Reserve System, any other appropriate Federal banking agency, the Secretary of State, the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, the National Credit Union Administration, and, in our sole discretion, “such other agencies and interested parties as the Secretary may find to be appropriate.” The consultation process must also include the Attorney General, if the Secretary is considering prohibiting or imposing conditions upon the opening or maintaining of a correspondent account by any domestic financial institution or domestic financial agency for the foreign financial institution of primary money laundering concern. • Whether similar action has been or is being taken by other nations or multilateral groups; • Whether the imposition of any particular special measure would create a significant competitive disadvantage, including any undue cost or burden associated with compliance, for financial institutions organized or licensed in the United States; • The extent to which the action or the timing of the action would have a significant adverse systemic impact on the international payment, clearance, and settlement system, or on legitimate business activities involving the particular institution; and • The effect of the action on U.S. national security and foreign policy. 5 5 Classified information used in support of a section 311 finding of primary money laundering concern and imposition of special measure(s) may be submitted by the Department of the Treasury to a reviewing court ex parte and in camera. See section 376 of the Intelligence Authorization Act for Fiscal Year 2004, Pub. L. 108-177 (amending 31 U.S.C. 5318A by adding new paragraph (f)). In this final rule, we are imposing the fifth special measure (31 U.S.C. 5318A(b)(5)) against VEF, a commercial bank in the Republic of Latvia (“Latvia”). The fifth special measure allows for the imposition of conditions upon, or the prohibition of, the opening or maintaining of correspondent or payable-through accounts in the United States for or on behalf of a foreign financial institution of primary money laundering concern. Unlike the other special measures, this special measure may be imposed only through the issuance of a regulation. B. VEF VEF is headquartered in Riga, the capital of Latvia. VEF is one of the smallest of Latvia's 23 banks, and in 2004 was reported to have approximately $80 million in assets and 87 employees. Total assets for the bank as of June 30, 2005 were 27.3 million LATS, equivalent to approximately $47.4 million. For the first six months of 2005, the bank made a profit of 288,410 LATS, equivalent to over $501,000. The bank has one subsidiary, Veiksmes li zings, which offers financial leasing and factoring services. In addition to its headquarters in Riga, VEF has one branch in Riga and one representative office in the Czech Republic. VEF offers corporate and private banking services, issues a variety of credit cards for non-Latvians, and provides currency exchange through Internet banking services, i.e., virtual currencies. In addition, according to VEF's financial statements, VEF maintains correspondent accounts in countries worldwide, but currently reports none in the United States. 6 However, many of the foreign financial institutions from which VEF obtains financial services in turn maintain correspondent accounts with financial institutions in the United States. Accordingly, it appears that VEF may still have indirect access to the U.S. financial system. 6 Some covered financial institutions closed their correspondent accounts with VEF before, and another closed its account with VEF after, the issuance of the notice of proposed rulemaking in April 2005. II. The 2005 Finding and Subsequent Developments A. The 2005 Finding Based upon review and analysis of pertinent information, consultations with relevant Federal agencies and parties, and after consideration of the factors enumerated in section 311, in April 2005 the Secretary, through his delegate, the Director of the Financial Crimes Enforcement Network, found that reasonable grounds exist for concluding that VEF is a financial institution of primary money laundering concern. This finding was published in a notice of proposed rulemaking, which proposed prohibiting covered financial institutions from, directly or indirectly, opening or maintaining correspondent accounts in the United States for VEF or any of its branches, offices, or subsidiaries, pursuant to the authority under 31 U.S.C. 5318A. 7 7 See 70 FR 21369 (April 26, 2005). The notice of proposed rulemaking outlined the various factors supporting the finding and proposed prohibition. In finding VEF to be of primary money laundering concern, we determined that: • VEF was used by criminals to facilitate or promote money laundering. In particular, we determined that VEF was an important banking resource for illicit shell companies and financial fraud rings, allowing criminals to pursue illegal financial activities. VEF permitted ATM withdrawals in significant amounts, an essential component to the execution of large financial fraud schemes typically associated with carding networks. • Any legitimate business use of VEF appeared to be significantly outweighed by its use to promote or facilitate money laundering and other financial crimes. • A finding that VEF is of primary money laundering concern and prohibiting the maintenance of correspondent accounts for that institution would prevent suspect accountholders at VEF from accessing the U.S. financial system to facilitate money laundering and would bring criminal conduct occurring at or through VEF to the attention of the international financial community and thus serve the purposes of the Bank Secrecy Act as well as guard against international money laundering and other financial crime. We determined, based on a variety of sources, that VEF Bank has been used to facilitate or promote money laundering based in part on its lax identification and verification of accountholders and on its weak internal controls. In addition, the proceeds of alleged illicit activity have been transferred to or through accounts held by VEF Bank at covered financial institutions. B. Jurisdictional Developments Latvia's geographical position, situated by the Baltic Sea and bordering Russia, Estonia, Belarus, and Lithuania, makes it an attractive transit country for both legitimate and illegitimate trade. Sources of illegitimate trade include counterfeiting, arms trafficking, contraband smuggling, and other crimes. It is believed that most of Latvia's narcotics trafficking is conducted by organized crime groups that began with cigarette and alcohol smuggling and then progressed to narcotics. Latvian authorities recently have sought tighter legislative controls designed to fight money laundering and other financial crime. However, Latvia's role as a regional financial center, the number of commercial banks (23), and those banks' sizeable non-resident deposit base continue to make it vulnerable to money laundering. Latvia has taken a number of significant steps to address the reported money laundering risks and corruption highlighted in the notice of proposed rulemaking. The Parliament of Latvia recently passed a new law, *On the Declaration of Cash on the State Border* , which will go into effect on July 1, 2006. 8 The law is aimed at preventing money laundering consistent with the United Nations Convention Against Transnational Organized Crime and the European Union draft regulation on the control of cash leaving and entering the European Community. In 2005, Latvian law was amended to broaden supervisory authority to revoke banking licenses and to allow enforcement agencies greater access to bank account information. The amendments also provide for fines of between 5,000 and 100,000 LATS (equivalent to over $8,687.50 and over $173,750.00, respectively) against banks in violation of the anti-money laundering laws; include a definition of and procedures for determining who qualifies as a “true beneficiary”; and introduce criminal liability for providing false information to banks. Additionally, Latvia has: Banned the establishment of shell banks; clarified the authority of Latvian financial institutions to demand customer disclosure regarding the source of funds; and allowed for the sharing of information between financial institutions on suspicious activities. 8 The law requires that individuals crossing the Latvian border with the equivalent of 10,000 Euros (€10,000) in coins, cash, and/or certain monetary instruments to complete a form stating the origin of the currency or monetary instruments, the purpose or use of the currency or monetary instruments, and the receiver of the currency or monetary instruments. In terms of implementation, the Latvian authorities have made strides in strengthening their anti-money laundering regulation and supervision and in developing more robust anti-money laundering examination procedures. To ensure proper protection of Latvia's financial sector, authorities will need to continue their efforts to effectively implement and enforce their strengthened anti-money laundering regime. C. VEF's Subsequent Developments We acknowledge that VEF has taken steps to address many of the money laundering concerns that we previously identified. For example, the bank revised its policies and procedures, including training procedures; created an Anti-Money Laundering Manual; closed approximately 600 questionable accounts; changed some of its management personnel; 9 and retained the services of an independent international accounting firm to identify weaknesses in its anti-money laundering program and to assist the bank in its goal of reaching a best practices standard for its anti-money laundering program and controls. 9 In September 2005, VEF removed its Head of Department for the Supervision of Clients and its Chief Manager for Remote Attraction of Clients, as well as dismissed some of the members of its Board and appointed new members. Despite the steps VEF has taken, based on a variety of sources including classified information, we continue to have serious concerns about the commitment of the bank to implement its revised policies and procedures. Specifically, we have continued concern with reported links between the bank's ownership and organized crime groups that reportedly facilitate money laundering. Accordingly, we find that VEF continues to be a financial institution of primary money laundering concern. III. Imposition of the Fifth Special Measure Consistent with the finding that VEF is a financial institution of primary money laundering concern, and based upon additional consultations with required Federal agencies and parties as well as consideration of additional relevant factors, including the comments received on the proposed rule, we are imposing the special measure authorized by 31 U.S.C. 5318A(b)(5) with regard to VEF. 10 That special measure authorizes the prohibition of, or the imposition of conditions upon, the opening or maintaining of correspondent or payable-through accounts 11 by any domestic financial institution or domestic financial agency for, or on behalf of, a foreign financial institution found to be of primary money laundering concern. A discussion of the additional section 311 factors relevant to the imposition of this particular special measure follows. 10 *Supra* footnote 3. 11 For purposes of the rule, a correspondent account is defined as an account established to receive deposits from, or make payments or other disbursements on behalf of, a foreign bank, or handle other financial transactions related to the foreign bank (see 31 U.S.C. 5318A(e)(1)(B) as implemented in 31 CFR 103.175(d)(1)(ii)). A. Similar Actions Have Not Been or May Not Be Taken by Other Nations or Multilateral Groups Against VEF Bank At this time, other countries and multilateral groups have not taken any action similar to the imposition of the fifth special measure pursuant to section 311, which allows the prohibition of U.S. financial institutions and financial agencies from opening or maintaining a correspondent account in the United States for or on behalf of VEF and requires those institutions and agencies to guard against indirect use by VEF. We are encouraging other countries to take similar action based on our finding that VEF is a financial institution of primary money laundering concern. B. The Imposition of the Fifth Special Measure Would Not Create a Significant Competitive Disadvantage, Including Any Undue Cost or Burden Associated With Compliance, for Financial Institutions Organized or Licensed in the United States The fifth special measure imposed by this rule prohibits covered financial institutions from opening or maintaining correspondent accounts in the United States for, or on behalf of, VEF. As a corollary to this measure, covered financial institutions also are required to take reasonable steps to apply due diligence to all of their correspondent accounts to ensure that no such account is being used indirectly to provide services to VEF. The burden associated with these requirements is not expected to be significant, given that we are not aware of any covered financial institution that maintains a correspondent account directly for VEF. Moreover, there is a minimal burden involved in transmitting a one-time notice to all correspondent accountholders concerning the prohibition on indirectly providing services to VEF. In addition, covered financial institutions generally apply some degree of due diligence in screening their transactions and accounts, often through the use of commercially available software, such as that used for compliance with the economic sanctions programs administered by the Department of the Treasury's Office of Foreign Assets Control. As explained in more detail in the section-by-section analysis below, financial institutions should be able to adapt their existing screening procedures to comply with this special measure. Thus, the due diligence that is required by this rule is not expected to impose a significant additional burden upon covered financial institutions. C. The Action or Timing of the Action Will Not Have a Significant Adverse Systemic Impact on the International Payment, Clearance, and Settlement System, or on Legitimate Business Activities Involving VEF Bank VEF is not a major participant in the international payment system and is not relied upon by the international banking community for clearance or settlement services. Thus, the imposition of the fifth special measure against VEF will not have a significant adverse systemic impact on the international payment, clearance, and settlement system. In addition, we believe that any legitimate use of VEF is significantly outweighed by its reported use to promote or facilitate money laundering. Moreover, in light of the existence of approximately 15 larger banks in Latvia, we believe that imposition of the fifth special measure against VEF will not impose an undue burden on legitimate business activities in Latvia. D. The Action Enhances U.S. National Security and Complements U.S. Foreign Policy The exclusion from the U.S. financial system of banks such as VEF that serve as conduits for significant money laundering activity and that participate in other financial crime enhances U.S. national security by making it more difficult for criminals to access the substantial resources and services of the U.S. financial system. In addition, the imposition of the fifth special measure against VEF complements the U.S. Government's overall foreign policy strategy of making entry into the U.S. financial system more difficult for high-risk financial institutions. IV. Notice of Proposed Rulemaking and Comments We received 13 comment letters on the notice of proposed rulemaking: Three on behalf of VEF; 12 one comment letter from a securities industry trade association; one from a U.S. firm providing search software to U.S. financial institutions; one from Latvia's banking regulator, the Financial and Capital Markets Commission; five comment letters from VEF accountholders; and two comment letters from foreign companies that do business with VEF accountholders. Additionally, we met with representatives of VEF on several occasions. 12 One comment letter is from VEF, through its U.S. legal counsel, and two comment letters are from the chairman of the Supervisory Council, who owns between 33 and 50 percent of VEF. Most of the comments raised by VEF were unrelated to our request for comment on the proposed imposition of the fifth special measure. VEF claims: That it was unaware of accountholders funneling illicit proceeds through its accounts; that the references in the notice of proposed rulemaking were too vague to rebut; and that we did not provide the bank notice before issuing the proposed rule. The bank also claims that we did not respond fully to certain statutory criteria. VEF asserts that we did not address whether the imposition of the fifth special measure would have a significant adverse systemic impact on the international payment, clearance, and settlement system. However, we addressed this issue when we stated in the notice of proposed rulemaking that VEF is not a major participant in the international payment system and is not relied upon by the international banking community for clearance or settlement services and, therefore, imposing the fifth special measure would not have a significant adverse impact on the international payment, settlement, and clearance system. 13 Furthermore, although we recognize that certain current accountholders at VEF will be affected by this final rule, Latvia has 22 other banks that can meet their legitimate business needs. The statutory criteria for finding VEF to be a financial institution of primary money laundering concern and for imposing the fifth special measure have been fully addressed. 14 13 See 70 FR at 21373. 14 See note 7, *supra* . The Latvian regulator commented on representations that we made about Latvian financial institutions. In response to our concern that Latvian financial institutions did not appear to serve the Latvian community, it stated that foreign deposits have always been a central feature in Latvia, which is a regional financial center due to its geographic location. The regulator also took issue with our representation that Latvia had material weaknesses in the implementation and enforcement of its anti-money laundering laws. As previously stated in section II.B., *supra* , Latvia has significantly enhanced its anti-money laundering laws. The remaining commenters were companies that were accountholders at VEF (five commenters), companies that conducted business with accountholders at VEF (two commenters), a trade association, and a U.S. search software solutions company. The VEF accountholders and the companies that conducted business with VEF accountholders maintained that VEF operated lawfully and professionally and that the issuance of the proposed rule adversely impacted them. Some of the accountholders expressed concern that the closure of correspondent accounts held by VEF at covered financial institutions might require accountholders to:
(1)Open new accounts with other banks that are unfamiliar with their businesses and products; and
(2)revise many contracts that include banking details for the parties involved. We specifically solicited comment on the impact of the fifth special measure on legitimate business involving VEF, and we understand that the measure may require legitimate businesses to make alternative banking arrangements with any one of the other 22 available Latvian banking institutions. Despite the difficulty this may pose for some businesses, we continue to believe that legitimate business use involving VEF is outweighed by its use to promote or facilitate money laundering and other financial crimes. V. Section-by-Section Analysis The final rule prohibits covered financial institutions from opening or maintaining any correspondent account for, or on behalf of, VEF. Covered financial institutions are required to apply due diligence to their correspondent accounts to guard against their indirect use by VEF. At a minimum, that due diligence must include two elements. First, a covered financial institution must notify its correspondent accountholders that the account may not be used to provide VEF with access to the covered financial institution. Second, a covered financial institution must take reasonable steps to identify any indirect use of its correspondent accounts by VEF, to the extent that such indirect use can be determined from transactional records maintained by the covered financial institution in the normal course of business. A covered financial institution must take a risk-based approach when deciding what, if any, additional due diligence measures it should adopt to guard against the indirect use of correspondent accounts by VEF, based on risk factors such as the type of services offered by, and geographic locations of, its correspondents. A. Section 103.192(a)—Definitions 1. VEF Section 103.192(a)(4) of the rule defines VEF to include all branches, offices, and subsidiaries of VEF operating in the Republic of Latvia or in any other jurisdiction. The one known VEF subsidiary, Veiksmes li zings, and any of its branches or offices, is included in the definition. We will provide information regarding the existence or establishment of any other subsidiaries as it becomes available; however, covered financial institutions should take commercially reasonable measures to determine whether a customer is a branch, office, or subsidiary of VEF. 2. Correspondent Account Section 103.192(a)(1) defines the term “correspondent account” by reference to the definition contained in 31 CFR 103.175(d)(1)(ii). Section 103.175(d)(1)(ii) defines a correspondent account to mean an account established for a foreign bank to receive deposits from, or make payments or other disbursements on behalf of the foreign bank, or to handle other financial transactions related to the foreign bank. In the case of a depository institution in the United States, this broad definition of account includes most types of banking relationships between the depository institution and a foreign bank that are established to provide regular services, dealings, and other financial transactions including a demand deposit, savings deposit, or other transaction or asset account, and a credit account or other extension of credit. In the case of securities broker-dealers, futures commission merchants, introducing brokers in commodities, and investment companies that are open-end companies (“mutual funds”), we are using the same definition of “account” for purposes of this rule that was established in the final rule implementing section 312 of the USA PATRIOT Act. 15 15 See 31 CFR 103.175(d)(2)(ii)-(iv). 3. Covered Financial Institution Section 103.192(a)(2) of the rule defines covered financial institution to include the following: • An insured bank (as defined in section 3(h) of the Federal Deposit Insurance Act (12 U.S.C. 1813(h)); • A commercial bank; • An agency or branch of a foreign bank in the United States; • A federally insured credit union; • A savings association; • A corporation acting under section 25A of the Federal Reserve Act (12 U.S.C. 611 *et seq.* ); • A trust bank or trust company that is federally regulated and is subject to an anti-money laundering program requirement; • A broker or dealer in securities registered, or required to be registered, with the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a *et seq.* ), except persons who register pursuant to section 15(b)(11) of the Securities Exchange Act of 1934; • A futures commission merchant or an introducing broker registered, or required to be registered, with the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 *et seq.* ), except persons who register pursuant to section 4(f)(a)(2) of the Commodity Exchange Act; and • A mutual fund, which means an investment company (as defined in section 3(a)(1) of the Investment Company Act of 1940 ((“Investment Company Act”) (15 U.S.C. 80a-3(a)(1)) that is an open-end company (as defined in section 5(a)(1) of the Investment Company Act (15 U.S.C. 80a-5(a)(1)) and that is registered, or is required to register, with the U.S. Securities and Exchange Commission pursuant to the Investment Company Act. In the notice of proposed rulemaking, we defined “covered financial institution” by reference to 31 CFR 103.175(f)(2), the operative definition of that term for purposes of the rules implementing sections 313 and 319 of the USA PATRIOT Act, and we also included in the definition futures commission merchants, introducing brokers, and mutual funds. The definition of “covered financial institution” we are adopting for purposes of this final rule is substantially the same as in 31 CFR 103.175(f)(2). B. Section 103.192(b)—Requirements for Covered Financial Institutions For purposes of complying with the final rule's prohibition on the opening or maintaining in the United States of correspondent accounts for, or on behalf of, VEF Bank, we expect a covered financial institution to take such steps that a reasonable and prudent financial institution would take to protect itself from loan or other fraud or loss based on misidentification of a person's status. 1. Prohibition of Direct Use of Correspondent Accounts Section 103.192(b)(1) of the rule prohibits all covered financial institutions from opening or maintaining a correspondent account in the United States for, or on behalf of, VEF Bank. The prohibition requires all covered financial institutions to review their account records to ensure that they maintain no accounts directly for, or on behalf of, VEF Bank. 2. Due Diligence Upon Correspondent Accounts To Prohibit Indirect Use As a corollary to the prohibition on the opening or maintaining of correspondent accounts directly for VEF Bank, § 103.192(b)(2) requires a covered financial institution to apply due diligence to its correspondent accounts 16 that is reasonably designed to guard against their indirect use by VEF Bank. At a minimum, that due diligence must include notifying correspondent accountholders that correspondent accounts may not be used to provide VEF Bank with access to the covered financial institution. For example, a covered financial institution may satisfy this requirement by transmitting the following notice to all of its correspondent accountholders: 16 Again, for purposes of the final rule, a correspondent account is defined as an account established by a covered financial institution for a foreign bank to receive deposits from, or to make payments or other disbursements on behalf of, a foreign bank, or to handle other financial transactions related to the foreign bank. For purposes of this definition, the term account means any formal banking or business relationship established to provide regular services, dealings, and other financial transactions. See 31 CFR 103.175(d)(2). *Notice:* Pursuant to U.S. regulations issued under section 311 of the USA PATRIOT Act, 31 CFR 103.192, we are prohibited from opening or maintaining a correspondent account for, or on behalf of, VEF Bank (Republic of Latvia) or any of its subsidiaries (including Veiksmes li zings). The regulations also require us to notify you that your correspondent account with our financial institution may not be used to provide VEF Bank or any of its subsidiaries with access to our financial institution. If we become aware that VEF Bank or any of its subsidiaries is indirectly using the correspondent account you hold at our financial institution, we will be required to take appropriate steps to prevent such access, including terminating your account. The purpose of the notice requirement is to help ensure that VEF is denied access to the U.S. financial system, as well as to increase awareness within the international financial community of the risks and deficiencies of VEF. However, we do not require or expect a covered financial institution to obtain a certification from its correspondent accountholders that indirect access will not be provided in order to comply with this notice requirement. Instead, methods of compliance with the notice requirement could include, for example, transmitting a one-time notice by mail, fax, or e-mail to a covered financial institution's correspondent accountholders, informing those accountholders that their correspondent accounts may not be used to provide VEF Bank with indirect access to the covered financial institution, or including such information in the next regularly occurring transmittal from the covered financial institution to its correspondent accountholders. In its comment letter, the trade association requested that we consider permitting other methods of providing notice to correspondent accountholders or allowing sufficient flexibility so that covered financial institutions can use systems already established under other provisions of the USA PATRIOT Act to provide notice. As we indicated in the notice of proposed rulemaking, a covered financial institution is not obligated to use any specific form or method in notifying its correspondent accountholders of the special measure. We suggested the provision of written notice containing certain language as only one example of how a covered financial institution could comply with its obligation to notify its correspondents. The trade association further suggested that we specifically consider means such as including the notice within the certificates used by financial institutions to comply with the rules issued under sections 313 and 319 of the USA PATRIOT Act. Although there may be circumstances where this would be appropriate, we note that those certificates are renewable only every three years and that relying solely on the certification process for notice purposes would not be reasonable where a re-certification would not be made within a reasonable time following the issuance of this final rule. Furthermore, as noted above, we are not requiring that covered financial institutions obtain a certification regarding compliance with the final rule from each correspondent accountholder. This final rule also requires a covered financial institution to take reasonable steps to identify any indirect use of its correspondent accounts by VEF, to the extent that such indirect use can be determined from transactional records maintained by the covered financial institution in the normal course of business. For example, a covered financial institution is expected to apply an appropriate screening mechanism to be able to identify a funds transfer order that, on its face, lists VEF as the originator's or beneficiary's financial institution, or otherwise references VEF in a manner detectable under the financial institution's normal business screening procedures. We acknowledge that not all institutions are capable of screening every field in a funds transfer message and that the risk-based controls of some institutions may not necessitate such comprehensive screening. Alternatively, other institutions may perform more thorough screening as part of their risk-based determination to perform “additional due diligence,” as described below. An appropriate screening mechanism could be the mechanism currently used by a covered financial institution to comply with various legal requirements, such as the commercially available software used to comply with the sanctions programs administered by the Office of Foreign Assets Control. In its letter, the software company commenter sought clarification on how covered financial institutions were expected to prevent indirect use of correspondent services to VEF. In particular, the software company asked if a one-time search was sufficient to determine if the financial institution was being used indirectly by a subject to a section 311 special measure and whether the proposed rule also extends to wire transfer activity, payable-through accounts, debit and credit card transactions, and any other financial activities through which a U.S. financial institution may eventually directly transact or act as an intermediary. After we issue a final section 311 rulemaking and impose the fifth special measure with regard to a financial institution (“section 311 institution”), a covered financial institution is required to apply due diligence to its correspondent accounts that is reasonably designed to guard against their indirect use by the section 311 institution. Specifically, a covered financial institution must:
(1)Notify its correspondent accountholders that the correspondent account may not be used to provide the section 311 institution with access to the covered financial institution; and
(2)take reasonable steps to identify any indirect use of its correspondent accounts by the section 311 institution. We gave an example above of how a one-time transmittal notice to correspondent accountholders would satisfy the notification requirement. With respect to the second requirement, a covered financial institution has an ongoing—as opposed to a one-time—obligation to take reasonable steps to identify all correspondent account services it may directly or indirectly provide to the section 311 institution. This commenter also suggested that section 311 institutions, like VEF, be included in the Office of Foreign Assets Control Specially Designated Nationals List to avoid compelling covered financial institutions to comply with two separate lists and, therefore, alleviate regulatory burden. 17 However, the suggestion is problematic given that the Financial Crimes Enforcement Network and the Office of Foreign Assets Control are distinct governmental entities with different policy objectives. The Office of Foreign Assets Control administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals, while the intent of imposing the fifth special measure under a section 311 rulemaking is to prevent entities of primary money laundering concern from accessing the U.S. financial system. The two lists referenced are not comparable and have separate statutory criteria and legal bases and are, therefore, not equivalent or interchangeable. 17 The software company commenter also requested that we provide a list of section 311 institutions in an electronic format available for download on its Web site in the same formats as our section 314(a) (mandatory law enforcement information sharing request) lists and lists provided by the Office of Foreign Assets Control. This request presupposes that the section 311 list is as massive or frequent as the other lists and merits our providing it in a downloadable format. However, the number of section 311 rulemakings issued in one year does not merit such treatment. We maintain a list of section 311 rulemakings and withdrawals at *http://www.fincen.gov* under *Regulatory/Section 311.* Nonetheless, as stated above, covered financial institutions may seek to monitor for section 311 institutions by using software that they are currently using, such as the commercially available software used to comply with the sanctions programs administered by the Office of Foreign Assets Control to flag certain entities. Using existing screening software should alleviate regulatory burden for covered financial institutions in complying with this rulemaking. However, each covered financial institution has the flexibility to establish and apply a screening mechanism appropriate for its business. Notifying correspondent accountholders and taking reasonable steps to identify any indirect use of correspondent accounts by VEF in the manner discussed above are the minimum due diligence requirements under this final rule. Beyond these minimum steps, a covered financial institution should adopt a risk-based approach for determining what, if any, additional due diligence measures it should implement to guard against the indirect use of its correspondent accounts by VEF, based on risk factors such as the type of services it offers and the geographic locations of its correspondent accountholders. A covered financial institution that obtains knowledge that a correspondent account is being used by a foreign bank to provide indirect access to VEF must take all appropriate steps to prevent such indirect access, including, when necessary, terminating the correspondent account. A covered financial institution may afford such foreign bank a reasonable opportunity to take corrective action prior to terminating the correspondent account. We have added language in the final rule clarifying that, should the foreign bank refuse to comply, or if the covered financial institution cannot obtain adequate assurances that the account will not be available to VEF, the covered financial institution must terminate the account within a commercially reasonable time. This means that the covered financial institution should not permit the foreign bank to establish any new positions or execute any transactions through the account, other than those necessary to close the account. A covered financial institution may reestablish an account closed under this rule if it determines that the account will not be used to provide banking services indirectly to VEF. 3. Reporting Not Required Section 103.192(b)(3) of the rule clarifies that the rule does not impose any reporting requirement upon any covered financial institution that is not otherwise required by applicable law or regulation. However, a covered financial institution must document its compliance with the requirement that it notify its correspondent accountholders that the accounts may not be used to provide VEF with access to the covered financial institution. VI. Regulatory Flexibility Act It is hereby certified that this rule will not have a significant economic impact on a substantial number of small entities. It appears that VEF no longer holds correspondent accounts in the United States. The correspondent accounts that the bank previously held in the United States were closed, and any correspondent accounts that may still be held in the United States for foreign banks that still maintain a correspondent relationship with VEF are held with large banks. Thus, the prohibition on establishing or maintaining such correspondent accounts will not have a significant impact on a substantial number of small entities. In addition, all covered financial institutions currently must exercise some degree of due diligence in order to comply with various legal requirements. The tools used for such purposes, including commercially available software used to comply with the economic sanctions programs administered by the Office of Foreign Assets Control, can be modified to monitor for the use of correspondent accounts by VEF. Thus, the due diligence that is required by this rule—i.e., the one-time transmittal of notice to correspondent accountholders and screening of transactions to identify any indirect use of a correspondent account—is not expected to impose a significant additional economic burden on small covered financial institutions. VII. Paperwork Reduction Act of 1995 The collection of information contained in the final rule has been approved by the Office of Management and Budget
(OMB)in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), and has been assigned OMB Control Number 1506-0041. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB. The only requirements in the final rule that are subject to the Paperwork Reduction Act are the requirements that a covered financial institution notify its correspondent accountholders that the correspondent accounts maintained on their behalf may not be used to provide VEF with access to the covered financial institution and the requirement that a covered financial institution document its compliance with this obligation to notify its correspondents. The estimated annual average burden associated with this collection of information is one hour per affected financial institution. We received no comments on this information collection burden estimate. Comments concerning the accuracy of this information collection estimate and suggestions for reducing this burden should be sent (preferably by fax (202-395-6974)) to Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503 (or by the Internet to *Alexander_T._Hunt@omb.eop.gov* ), with a copy to the Financial Crimes Enforcement Network by paper mail to FinCEN, P.O. Box 39, Vienna, VA 22183, “ATTN: Section 311—Imposition of Special Measure Against VEF” or by electronic mail to *regcomments@fincen.treas.gov* with the caption “ATTN: Section 311—Imposition of Special Measure Against VEF” in the body of the text. VIII. Executive Order 12866 This rule is not a significant regulatory action for purposes of Executive Order 12866, “Regulatory Planning and Review.” List of Subjects in 31 CFR Part 103 Administrative practice and procedure, Banks and banking, Brokers, Counter-money laundering, Counter-terrorism, and Foreign banking. Authority and Issuance For the reasons set forth in the preamble, part 103 of title 31 of the Code of Federal Regulations is amended as follows: PART 103—FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND FINANCIAL TRANSACTIONS 1. The authority citation for part 103 continues to read as follows: Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 and 5316-5332; title III, sec. 314 Pub. L. 107-56, 115 Stat. 307. Subpart I—[Amended] 2. Subpart I of part 103 is amended by adding new § 103.192 as follows: § 103.192 Special measures against VEF Bank.
(a)*Definitions.* For purposes of this section:
(1)*Correspondent account* has the same meaning as provided in § 103.175(d)(1)(ii).
(2)*Covered financial institution* includes:
(i)An insured bank (as defined in section 3(h) of the Federal Deposit Insurance Act (12 U.S.C. 1813(h)));
(ii)A commercial bank;
(iii)An agency or branch of a foreign bank in the United States;
(iv)A federally insured credit union;
(v)A savings association;
(vi)A corporation acting under section 25A of the Federal Reserve Act (12 U.S.C. 611 *et seq.* );
(vii)A trust bank or trust company that is federally regulated and is subject to an anti-money laundering program requirement;
(viii)A broker or dealer in securities registered, or required to be registered, with the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a *et seq.* ), except persons who register pursuant to section 15(b)(11) of the Securities Exchange Act of 1934;
(ix)A futures commission merchant or an introducing broker registered, or required to be registered, with the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 *et seq.* ), except persons who register pursuant to section 4(f)(a)(2) of the Commodity Exchange Act; and
(x)A mutual fund, which means an investment company (as defined in section 3(a)(1) of the Investment Company Act of 1940 ((“Investment Company Act”) (15 U.S.C. 80a-3(a)(1))) that is an open-end company (as defined in section 5(a)(1) of the Investment Company Act (15 U.S.C. 80a-5(a)(1))) and that is registered, or is required to register, with the U.S. Securities and Exchange Commission pursuant to the Investment Company Act.
(3)*Subsidiary* means a company of which more than 50 percent of the voting stock or analogous equity interest is owned by another company.
(4)*VEF Bank* means any branch, office, or subsidiary of joint stock company VEF Banka operating in the Republic of Latvia or in any other jurisdiction. The one known VEF Bank subsidiary, Veiksmes li zings, and any branches or offices, are included in the definition.
(b)*Requirements for covered financial institutions—*
(1)*Prohibition on direct use of correspondent accounts.* A covered financial institution shall terminate any correspondent account that is opened or maintained in the United States for, or on behalf of, VEF Bank.
(2)*Due diligence of correspondent accounts to prohibit indirect use.*
(i)A covered financial institution shall apply due diligence to its correspondent accounts that is reasonably designed to guard against their indirect use by VEF Bank. At a minimum, that due diligence must include:
(A)Notifying correspondent accountholders that the correspondent account may not be used to provide VEF Bank with access to the covered financial institution; and
(B)Taking reasonable steps to identify any indirect use of its correspondent accounts by VEF Bank, to the extent that such indirect use can be determined from transactional records maintained in the covered financial institution's normal course of business.
(ii)A covered financial institution shall take a risk-based approach when deciding what, if any, additional due diligence measures it should adopt to guard against the indirect use of its correspondent accounts by VEF Bank.
(iii)A covered financial institution that obtains knowledge that a correspondent account is being used by the foreign bank to provide indirect access to VEF Bank shall take all appropriate steps to prevent such indirect access, including, where necessary, terminating the correspondent account.
(iv)A covered financial institution required to terminate a correspondent account pursuant to paragraph (b)(2)(iii) of this section:
(A)Should do so within a commercially reasonable time, and should not permit the foreign bank to establish any new positions or execute any transaction through such correspondent account, other than those necessary to close the correspondent account; and
(B)May reestablish a correspondent account closed pursuant to this paragraph if it determines that the correspondent account will not be used to provide banking services indirectly to VEF Bank.
(3)*Recordkeeping and reporting.*
(i)A covered financial institution is required to document its compliance with the notice requirement set forth in paragraph (b)(2)(i)(A) of this section.
(ii)Nothing in this section shall require a covered financial institution to report any information not otherwise required to be reported by law or regulation. Dated: July 5, 2006. Robert W. Werner, Director, Financial Crimes Enforcement Network. [FR Doc. E6-11043 Filed 7-12-06; 8:45 am] BILLING CODE 4810-02-P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 100 [CGD05-06-036] RIN 1625-AA08 Special Local Regulations for Marine Events; Chesapeake Bay, Cape Charles, VA AGENCY: Coast Guard, DHS. ACTION: Temporary final rule. SUMMARY: The Coast Guard is establishing special local regulations for the “East Coast Boat Racing Club power boat race”, a marine event to be held over the waters of the Chesapeake Bay adjacent to Cape Charles, Virginia. These special local regulations are necessary to provide for the safety of life on navigable waters during the event. This action is intended to restrict vessel traffic on the Chesapeake Bay in the vicinity of Cape Charles Beach, Cape Charles, Virginia during the event. DATES: This rule is effective from 11:30 a.m. on August 5, 2006 to 4:30 p.m. on August 6, 2006. ADDRESSES: Documents indicated in this preamble as being available in the docket, are part of docket [CGD05-06-036] and are available for inspection or copying at Commander (dpi), Fifth Coast Guard District, 431 Crawford Street, Portsmouth, Virginia 23704-5004, between 9 a.m. and 2 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: Dennis Sens, Project Manager, Fifth Coast Guard District, Inspections and Investigations Branch, at
(757)398-6204. SUPPLEMENTARY INFORMATION: Regulatory Information On May 19, 2006, we published a Notice of proposed rulemaking
(NPRM)entitled Special Local Regulations for Marine Events; Chesapeake Bay, Cape Charles, VA in the **Federal Register** (71 FR 29115). We received no letters commenting on the proposed rule. No public meeting was requested, and none was held. Background and Purpose On August 5, 2006, the East Coast Boat Racing Club of New Jersey will sponsor a power boat race, on the waters of the Chesapeake Bay, Cape Charles, Virginia. The event will consist of approximately 20 New Jersey Speed Garveys and Jersey Speed Skiffs conducting high-speed competitive races along an oval race course in close proximity to Cape Charles Beach, Cape Charles, Virginia. A fleet of spectator vessels is expected to gather nearby to view the competition. Due to the need for vessel control during the event, vessel traffic will be temporarily restricted to provide for the safety of participants, spectators and transiting vessels. Discussion of Comments and Changes The Coast Guard did not receive comments in response to the Notice of proposed rulemaking
(NPRM)published in the **Federal Register** . Accordingly, the Coast Guard is establishing temporary special local regulations on specified waters of the Chesapeake Bay, Cape Charles, Virginia. Regulatory Evaluation This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS). We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of DHS is unnecessary. Although this regulation will prevent traffic from transiting a portion of the Chesapeake Bay during the event, the effect of this regulation will not be significant due to the limited duration that the regulated area will be in effect and the extensive advance notifications that will be made to the maritime community via the Local Notice to Mariners, marine information broadcasts, and area newspapers, so mariners can adjust their plans accordingly. Additionally, the regulated area has been narrowly tailored to impose the least impact on general navigation yet provide the level of safety deemed necessary. Vessel traffic will be able to transit the regulated area between heats, when the Coast Guard Patrol Commander deems it is safe to do so. Small Entities Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule would not have a significant economic impact on a substantial number of small entities. This rule would affect the following entities, some of which might be small entities: The owners or operators of vessels intending to transit or anchor in this portion of the Chesapeake Bay adjacent to Cape Charles Beach during the event. This rule would not have a significant economic impact on a substantial number of small entities for the following reasons. This rule would be in effect for only a limited period. Vessel traffic will be able to transit the regulated area between heats, when the Coast Guard Patrol Commander deems it is safe to do so. Before the enforcement period, we will issue maritime advisories so mariners can adjust their plans accordingly. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the address listed under ADDRESSES . The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). Collection of Information This rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.). Federalism A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism. Unfunded Mandates Reform Act The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble. Taking of Private Property This rule would not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. Civil Justice Reform This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. Protection of Children We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children. Indian Tribal Governments This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. Energy Effects We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211. Technical Standards The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies. This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. Environment We have analyzed this rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969
(NEPA)(42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(h), of the Instruction, from further environmental documentation. Special local regulations issued in conjunction with a regatta or marine parade permit are specifically excluded from further analysis and documentation under that section. Under figure 2-1, paragraph (34)(h), of the Instruction, an “Environmental Analysis Check List” and a “Categorical Exclusion Determination” are not required for this rule. List of Subjects in 33 CFR Part 100 Marine safety, Navigation (water), Reporting and recordkeeping requirements, Waterways. For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows: PART 100—SAFETY OF LIFE ON NAVIGABLE WATERS 1. The authority citation for part 100 continues to read as follows: Authority: 33 U.S.C. 1233; Department of Homeland Security Delegation No. 0170.1. 2. Add a temporary *§ 100.35-T05-036* to read as follows: § 100.35-T05-036 Chesapeake Bay, Cape Charles, Virginia.
(a)*Definitions:* The following definitions apply to this section:
(1)*Coast Guard Patrol Commander* means a commissioned, warrant, or petty officer of the Coast Guard who has been designated by the Commander, Coast Guard Sector Hampton Roads.
(2)*Official Patrol* means any vessel assigned or approved by Commander, Coast Guard Sector Hampton Roads with a commissioned, warrant, or petty officer on board and displaying a Coast Guard ensign.
(3)*Participant* includes all vessels participating in the East Coast Boat Racing Club power boat race under the auspices of a Marine Event Permit issued to the event sponsor and approved by Commander, Coast Guard Sector Hampton Roads.
(b)*Regulated area:* A regulated area is established for the waters of the Chesapeake Bay, along the shoreline adjacent to Cape Charles, Virginia, to and including waters up to 300 yards offshore, parallel with the Cape Charles Beach shoreline in this area. The area is bounded on the south by a line running northwesterly from the Cape Charles shoreline at latitude 37°16′.2″ North, longitude 076°01′28.5″ West, to a point offshore approximately 300 yards at latitude 37°16′3.4″ North, longitude 076°01′36.6″ West, and bounded on the north by a line running northwesterly from the Cape Charles shoreline at latitude 37°16′26.2″ North, longitude 076°01′14″ West, to a point offshore approximately 300 yards at latitude 37°16′28.9″ North, longitude 076°01′24.1″ West. All coordinates reference Datum NAD 1983.
(c)*Special local regulations:*
(1)Except for event participants and persons or vessels authorized by the Coast Guard Patrol Commander, no person or vessel may enter or remain in the regulated area.
(2)The operator of any vessel in the regulated area shall:
(i)Stop the vessel immediately when directed to do so by any Official Patrol.
(ii)Proceed as directed by any Official Patrol.
(iii)When authorized to transit the regulated area, all vessels shall proceed at the minimum speed necessary to maintain a safe course that minimizes wake near the race course.
(d)*Effective Period:* This section is effective from 11:30 a.m. on August 5, 2006 to 4:30 p.m. on August 6, 2006.
(e)*Enforcement period:* This section will be enforced from 11:30 a.m. to 4:30 p.m. on August 5, 2006. If the race is postponed due to weather, then the temporary special local regulations will be enforced during the same time period the next day, August 6, 2006. Dated: June 29, 2006. Larry L. Hereth, Rear Admiral, U.S. Coast Guard, Commander, Fifth Coast Guard District. [FR Doc. E6-10981 Filed 7-12-06; 8:45 am] BILLING CODE 4910-15-P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 100 [CGD05-06-067] RIN 1625-AA08 Special Local Regulations for Marine Events; Assateague Channel, Chincoteague, VA AGENCY: Coast Guard, DHS. ACTION: Notice of enforcement of regulation. SUMMARY: The Coast Guard is implementing the special local regulations for the 2006 Annual Chincoteague Pony Swim, a marine event to be held July 26 and July 28, 2006, on the waters of Assateague Channel at Chincoteague, Virginia. These special local regulations are necessary to control vessel traffic due to the confined nature of the waterway and to provide for the safety of life on navigable waters during the event. The effect will be to restrict general navigation in the regulated area for the safety of spectators and vessels transiting the event area. DATES: *Enforcement Dates:* 33 CFR 100.519 will be enforced from 5 a.m. July 26 to 4:30 p.m. on July 28, 2006. FOR FURTHER INFORMATION CONTACT: Marine Events Coordinator, Commander, Coast Guard Sector Field Office Hampton Roads, 3823 Main Street, Chincoteague, VA 23336-1809, and
(757)336-2891. SUPPLEMENTARY INFORMATION: The Chincoteague Volunteer Fire Company, Inc., will sponsor the Annual Pony Swim on the waters of the Assateague Channel, near Chincoteague, Virginia from 5 a.m. to 4:30 p.m on 26 and 28 July, 2006. Approximately 75 ponies will cross Assateague Channel from Assateague Island to Chincoteague, VA. In order to ensure the safety of participants, spectators and transiting vessels, 33 CFR 100.519 will be enforced for the duration of the event. Under the provisions of 33 CFR 100.519, vessels may not enter the regulated area without permission from the Coast Guard Patrol Commander. Spectator vessels may anchor outside the regulated area but may not block a navigable channel. Because these restrictions will be enforced for a limited period, they should not result in a significant disruption of maritime traffic. In addition to this notice, the maritime community will be provided extensive advance notification via the Local Notice to Mariners, marine information broadcasts, local newspapers and radio stations so mariners can adjust their plans accordingly. Dated: June 13, 2006. Larry L. Hereth, Rear Admiral, U.S. Coast Guard, Commander, Fifth Coast Guard District. [FR Doc. E6-10977 Filed 7-12-06; 8:45 am] BILLING CODE 4910-15-P DEPARTMENT OF HOMELAND SECURITY Coast Guard [CGD05-06-039] 33 CFR Part 117 RIN 1625-AA09 Drawbridge Operation Regulations; James River, Between Isle of Wight and Newport News, VA AGENCY: Coast Guard, DHS. ACTION: Temporary final rule. SUMMARY: The Coast Guard is temporarily changing the regulations that govern the operation of the James River Bridge, at mile 5.0, between Isle of Wight and Newport News, Virginia. The temporary final rule will provide vessel openings of the drawbridge upon two hours advance notice 24 hours a day beginning at 7 a.m. July 13, 2006. This action was requested by the contractor, on behalf of Virginia Department of Transportation (DOT), to facilitate sandblasting and painting operations. DATES: This temporary rule is effective 7 a.m. July 13, 2006 until 11 p.m. on December 31, 2006. ADDRESSES: Documents indicated in this preamble as being available in the docket, are part of docket CGD05-06-039 and are available for inspection or copying at Commander (dpb), Fifth Coast Guard District, Federal Building, 1st Floor, 431 Crawford Street, Portsmouth, VA 23704-5004 between 8 a.m. and 4 p.m., Monday through Friday, except Federal holidays. The Fifth Coast Guard District maintains the public docket for this rulemaking. FOR FURTHER INFORMATION CONTACT: Bill H. Brazier, Bridge Management Specialist, Fifth Coast Guard District, at
(757)398-6422. SUPPLEMENTARY INFORMATION: Good Cause for Not Publishing an NPRM We did not publish a notice of proposed rulemaking
(NPRM)for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM, because it is impracticable and contrary to the public interest to delay in making this rule effective. This temporary final rule needs to be published as soon as possible so that necessary repairs can be made to the James River Bridge. Good Cause for Making Rule Effective in Less Than 30 Days Under 5 U.S.C. 553(d)(3), the Coast Guard finds good cause exists for making this rule effective less than 30 days after publication in the **Federal Register** for the same reasons stated in the preceding paragraph. Background and Purpose Alpha Painting & Construction Company, Inc. (the contractor), on behalf of the Virginia DOT who owns and operates this vertical lift-type bridge, requested a temporary change to the operating regulations for the James River Bridge, at mile 5.0, between Isle of Wight and Newport News, VA to perform sandblasting and painting. The Coast Guard held numerous pre-construction meetings with known users of the waterway (Ship Agent—T. Parker Host, Inc., the Virginia Pilots Association, the Steamship Trade Committee and the Armed Forces—U.S. Army and Navy) to inform them that this work will reduce the available vertical clearance of the lift span to 58 feet, at mean high water, in the closed-to-navigation position and to 143 feet, at mean high water, in the full open-to-navigation position; and by calling the bridge tender at
(757)247-2133 or via marine radio on channel 13 VHF will provide for advance opening requests. Regulatory Evaluation This final rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS). We expect the economic impact of this temporary final rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of DHS is unnecessary. We reached this conclusion based on the fact that this rule will have only a minimal impact on maritime traffic transiting the bridge. Mariners requiring drawbridge openings can plan their trips in accordance with the two-hour advance request, to minimize delays. Small Entities Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule would not have a significant economic impact on a substantial number of small entities. Vessel operators with mast height lower than 58 feet still can transit through the drawbridge during the cleaning and painting and openings of draw span for larger vessels will be provided with a two-hour advance notice to the bridge tender. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule so that they can better evaluate its effects on them and participate in the rulemaking process. No assistance was requested from any small entity. Collection of Information This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). Federalism A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism. Unfunded Mandates Reform Act The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble. Taking of Private Property This rule would not affect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. Civil Justice Reform This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminates ambiguity, and reduce burden. Protection of Children We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children. Indian Tribal Governments This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. Energy Effects We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211. Technical Standards The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( *e.g.* , specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies. This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. Environment We have analyzed this rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969
(NEPA)(42 U.S.C. 4321-4370f), and have made a preliminary determination that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, we believe that this rule should be categorically excluded, under figure 2-1, paragraph (32)(e) of the Instruction, from further environmental documentation because it has been determined that the promulgation of operating regulations for drawbridges are categorically excluded. List of Subjects in 33 CFR Part 117 Bridges. Regulations For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 117 as follows: PART 117—DRAWBRIDGE OPERATION REGULATIONS 1. The authority citation for part 117 continues to read as follows: Authority: 33 U.S.C. 499; Department of Homeland Security Delegation No. 0170.1; 33 CFR 1.05-1(g); section 117.255 also issued under the authority of Public Law 102-587, 106 Stat. 5039. 2. From 7 a.m. July 13, 2006, to 11 p.m. on December 31, 2006, add temporary § 117.T1012 to read as follows: § 117.T1012 James River. From 7 a.m. July 13, 2006, until 11 p.m. on December 31, 2006, the draw of the James River Bridge, mile 5.0, between Isle of Wight and Newport News, shall open on signal if at least two hours notice is given to the bridge tender at
(757)247-2133 or via marine radio on channel 13 VHF. Dated: June 29, 2006. L.L. Hereth, Rear Admiral, U.S. Coast Guard, Commander, Fifth Coast Guard District. [FR Doc. E6-10979 Filed 7-12-06; 8:45 am] BILLING CODE 4910-15-P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 165 [COTP San Diego 06-051] RIN 1625-AA00 Safety Zone; North San Diego Bay, San Diego, CA AGENCY: Coast Guard, DHS. ACTION: Temporary final rule. SUMMARY: The Coast Guard is establishing a temporary safety zone on the navigable waters of San Diego Bay in support of a fireworks display series near the maritime navigational channel in the vicinity of the North Embarcadero. The safety zone is necessary to provide for the safety of the crew, spectators, participants of the event, participating vessels and other vessels and users of the waterway. Persons and vessels are prohibited from entering into, transiting through, or anchoring within this safety zone unless authorized by the Captain of the Port, or his designated representative. DATES: This rule is effective from 9 p.m. (local) through 10 p.m. (local) on the following dates: June 30, July 1, July 2, July 7, July 8, July 14, July 15, July 21, July 22, July 28, July 29, August 4, August 5, August 11, August 12, August 18, August 19, August 20, August 25, August 26, August 31, September 1, September 2, and September 3, 2006. ADDRESSES: Documents indicated in this preamble as being available in the docket are part of docket COTP San Diego 06-051 and are available for inspection or copying at Coast Guard Sector San Diego, 2710 N. Harbor Drive, San Diego, CA 92101-1028, between 8 a.m.
(PST)and 3 p.m. (PST), Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: Chief Petty Officer Eric Carroll, USCG, c/o U.S. Coast Guard Captain of the Port,
(619)278-7277. SUPPLEMENTARY INFORMATION: Regulatory Information We did not publish a notice of proposed rulemaking
(NPRM)for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. Logistical details surrounding the fireworks show were not finalized nor presented to the Coast Guard in time to draft and publish an NPRM. As such, the event would occur before the rulemaking process was complete. Under 5 U.S.C. 553(d)(3), the Coast Guard also finds that good cause exists for making this rule effective less than 30 days after publication in the **Federal Register** for the safety zones established on the following dates: June 30, July 1, July 2, July 7, July 8, July 14, July 15, July 21, and July 22, 2006. The issuance of final approval and permitting was so recent that the rule would be made effective less than 30 days after publication. In addition, it would be contrary to the public interest not to publish this rule because the event has been permitted and participants and the public require protection from the inherent dangers present to fireworks displays. This rule will be published 30 days prior to all other safety zones established by this rule. Background and Purpose The Coast Guard is establishing a temporary safety zone on a portion of navigable waters of San Diego Bay in support of a fireworks show near the maritime navigational channel in San Diego Bay located off of the North Embarcadero. The safety zone is will consist of a 150-yard radius around the anchored firing barge. This temporary safety zone is necessary to provide for the safety of the show's crew, spectators, participants of the event, participating vessels and other vessels and users of the waterway. Persons and vessels are prohibited from entering into, transiting through, or anchoring within this safety zone unless authorized by the Captain of the Port, or his designated representative. Discussion of Rule The event involves one anchored barge, which will be used as a platform for launching fireworks. The safety zone is required because the barge's planned firing location is near the navigation channel. This safety zone will be enforced from 9 p.m. (local) through 10 p.m. (local) on the following dates: June 30, July 1, July 2, July 7, July 8, July 14, July 15, July 21, July 22, July 28, July 29, August 4, August 5, August 11, August 12, August 18, August 19, August 20, August 25, August 26, August 31, September 1, September 2, and September 3, 2006. The limits of this temporary safety zone include all areas within a 150 yard radius of the firing location at approximately 32°42′309″ N, 117°10′173″ W (approximately 450 ft southwest of the North Embarcadero). This temporary safety zone is necessary to provide for the safety of the crews, spectators, participants of the event, participating vessels and other vessels and users of the waterway. Persons and vessels are prohibited from entering into, transiting through, or anchoring within this safety zone unless authorized by the Captain of the Port, or his designated representative. U.S. Coast Guard personnel will enforce this safety zone. Other Federal, State, or local agencies may assist the Coast Guard, including the Coast Guard Auxiliary. Section 165.23 of Title 33, Code of Federal Regulations, prohibits any unauthorized person or vessel from entering or remaining in a safety zone. Vessels or persons violating this section will be subject to both criminal and civil penalties. Regulatory Evaluation This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. Although the safety zone will restrict boating traffic within the navigable waters of San Diego Bay, the effect of this regulation will not be significant as the safety zone will encompass only a small portion of the waterway and will be short in duration. The entities most likely to be affected are pleasure craft engaged in recreational activities and sightseeing. As such, the Coast Guard expects the economic impact of this rule to be minimal. Small Entities Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of entities. This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit or anchor in a portion of North San Diego Bay from 9 p.m.
(PST)to 10 p.m.
(PST)on the following dates: June 30, July 1, July 2, July 7, July 8, July 14, July 15, July 21, July 22, July 28, July 29, August 4, August 5, August 11, August 12, August 18, August 19, August 20, August 25, August 26, August 31, September 1, September 2, and September 3, 2006. Although the safety zone will restrict boating traffic within a portion of the navigable waters of San Diego Bay, the Coast Guard expects the economic impact of this rule to be minimal. This safety zone will not have a significant economic impact on a substantial number of small entities for the following reasons: The safety zone only encompasses a small portion of the waterway, it is short in duration at a late hour when commercial traffic is low, vessel traffic can pass safely around the safety zone, and the Captain of the Port or his designated representative may authorize entry into the zone, if necessary. Before the effective period, we will issue maritime advisories widely available to users of this area. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process. If your small business or organization is affected by this rule or you have questions concerning its provisions or options for compliance, please contact Chief Petty Officer Eric Carroll, U.S. Coast Guard Sector San Diego at
(619)278-7277. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). Collection of Information This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). Federalism A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism. Unfunded Mandates Reform Act The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble. Taking of Private Property This rule will not affect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. Civil Justice Reform This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. Protection of Children We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children. Indian Tribal Governments This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. Energy Effects We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211. Technical Standards The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies. This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. Environment We have analyzed this rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969
(NEPA)(42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation because it establishes a safety zone. A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” will be available in the docket where indicated under ADDRESSES . List of Subjects in 33 CFR Part 165 Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways. For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows: PART 165—REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS 1. The authority citation for part 165 continues to read as follows: Authority: 33 U.S.C. 1225, 1231; 46 U.S.C. Chapter 701; 50 U.S.C. 191, 195; 33 CFR 1.05-1(g), 6.04-1, 6.04-6, and 160.5; Public Law 107-295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1. 2. Add § 165.T11-105 to read as follows: § 165.T11-105 Safety Zone: North San Diego Bay, CA.
(a)*Location* . The safety zone is comprised of a 150-yard radius around the anchored barge. The anchoring location is at the approximate position 32°42′309″ N, 117°10′173″ W (approximately 450 ft southwest of the North Embarcadero.)
(b)*Effective Period* . This safety zone will be in effect from 9 p.m. (local) through 10 p.m. (local) on the following dates: June 30, July 1, July 2, July 7, July 8, July 14, July 15, July 21, July 22, July 28, July 29, August 4, August 5, August 11, August 12, August 18, August 19, August 20, August 25, August 26, August 31, September 1, September 2, and September 3, 2006. The events are scheduled to conclude no later than 10 p.m. (local). However, if displays conclude prior to the scheduled termination time, the Captain of the Port will cease enforcement of this safety zone and will announce that fact via Broadcast Notice to Mariners.
(c)*Regulations* . In accordance with the general regulations in § 165.23 of this part, entry into, transit through, or anchoring within this zone by all vessels is prohibited, unless authorized by the Captain of the Port, or his designated representative. Mariners requesting permission to transit through the safety zone may request authorization to do so from the U.S. Coast Guard Patrol Commander. The U.S. Coast Guard Patrol Commander may be contacted via VHF-FM Channel 16.
(d)*Enforcement* . All persons and vessels shall comply with the instructions of the Coast Guard Captain of the Port or the designated on-scene patrol personnel. Patrol personnel can be comprised of commissioned, warrant, and petty officers of the Coast Guard onboard Coast Guard, Coast Guard Auxiliary, local, state, and federal law enforcement vessels. Upon being hailed by U.S. Coast Guard patrol personnel by siren, radio, flashing light, or other means, the operator of a vessel shall proceed as directed. The Coast Guard may be assisted by other Federal, state, or local agencies. Dated: June 26, 2006. C.V. Strangfeld, Captain, U.S. Coast Guard, Captain of the Port. [FR Doc. E6-10999 Filed 7-12-06; 8:45 am] BILLING CODE 4910-15-P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 165 [COTP San Francisco 06-021] RIN 1625-AA00 Safety Zone; BART Transbay Tube Seismic Upgrade; San Francisco, CA AGENCY: Coast Guard, DHS. ACTION: Temporary final rule. SUMMARY: The Coast Guard is establishing a moving temporary safety zone in the navigable waters of San Francisco Bay, California during vibro penetration testing for a seismic upgrade of the Bay Area Rapid Transit
(BART)Transbay tube. The testing will require placement of a barge at test sites along the BART Transbay tube. The safety zone will surround the barge and move with the barge as it conducts the tests at seven sites along the BART Transbay tube. This safety zone is necessary to protect persons and vessels from hazards, injury, and damage associated with the vibro penetration testing. Unauthorized persons or vessels are prohibited from entering into, transiting through, or remaining in the safety zone without permission of the Captain of the Port San Francisco or his designated representative. DATES: This rule is effective from June 26, 2006 through September 24, 2006. ADDRESSES: Documents indicated in this preamble as being available in the docket are part of docket COTP San Francisco 06-021 and are available for inspection or copying at the Waterways Safety Branch of Sector San Francisco, Yerba Buena Island, Bldg. 278, San Francisco, California, 94130, between 9 a.m. and 4 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: Ensign Erin Bastick, U.S. Coast Guard Sector San Francisco, at
(415)556-2950 or Sector San Francisco 24 hour Command Center at
(415)399-3547. SUPPLEMENTARY INFORMATION: Regulatory Information We did not publish a notice of proposed rulemaking
(NPRM)for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. The dates for the vibro penetration testing along the Transbay tube were not finalized and presented to the Coast Guard in time to draft and publish an NPRM. Consequently, the testing would commence before the rulemaking process could be completed. Any delay in implementing this rule is contrary to the public interest since immediate action is necessary in order to protect the maritime public from the hazards associated with the vibro penetration testing. Under 5 U.S.C. 553(d)(3), the Coast Guard also finds that good cause exists for making this rule effective less than 30 days after publication in the **Federal Register** . The dates for the vibro penetration testing along the Transbay tube were not finalized and presented to the Coast Guard in time to publish this rule 30 days prior to its effective date. Consequently, the testing would commence before the rulemaking process could be completed. Delay in the effective date of this rule would expose the mariners and waterways users to undue hazards associated with the vibro penetration testing. Background and Purpose Bay Area Rapid Transit has contracted Hayward Baker, Soletanche, Traylor, A Joint Venture, to conduct BART marine demonstration tests in support of their earthquake safety efforts. They will be conducting vibro penetration tests for future seismic upgrade of the BART Transbay tube. The scope of work involves four primary activities carried out on the water. These activities include vibro penetration tests, vibro ground improvement, drilling, sampling and sonic borings. The Joint Venture's work will involve outfitting the barge DOGBONE with a crane and vibratory densification equipment and locating it over the tube alignment to perform the ground improvement within the test areas. At times, there will be an additional barge lashed to the barge DOGBONE for material handling. Approximately ten 5-foot tall tripods with acoustic transponders will be deployed on the bay bottom to determine specific test locations along the BART Transbay. At each specified location, the crane-suspended vibrator will be lowered into the bay floor and then proceed to densify the granular backfill placed around the tubes shortly after they were originally placed into position. Discussion of Rule This safety zone will encompass the navigable waters from the surface to the sea floor, located in the San Francisco Bay, encompassing a circular safety zone with a 750-foot radius extending from the Crane Barge DOGBONE. The Barge DOGBONE will transit and conduct testing along the BART Transbay tube between two points: 37°47′50.97″ N Latitude by 122°23′17.01″ W Longitude at the western extreme and 37°48′25.65″ N Latitude by 122°21′03.59″ W Longitude on the eastern extreme. This area between the two points will be used to maneuver and anchor the Barge DOGBONE as it conducts the vibro penetration tests from June 26, 2006 through September 24, 2006. The BART Project manager coordinated the test locations with the local Bar Pilots and the Vessel Traffic Service to ensure the testing would result in minimum impact to vessel traffic. This moving safety zone around the Barge DOGBONE is necessary to protect persons and vessels from hazards, injury, and damage associated with the vibro penetration testing. U.S. Coast Guard personnel will enforce this safety zone. Other Federal, State, or local agencies may assist the Coast Guard, including the Coast Guard Auxiliary. Section 165.23 of Title 33, Code of Federal Regulations, prohibits any unauthorized person or vessel from entering or remaining in a safety zone. Vessels or persons violating this section will be subject to both criminal and civil penalties. Regulatory Evaluation This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation is unnecessary. Although this rule restricts access to the waters encompassed by the safety zone, the effect of this rule will not be significant because the local waterway users have been contacted to ensure the closure will result in minimum impact. The entities most likely to be affected are pleasure craft engaged in recreational activities. Not only is the safety zone small in size, but there will be ample space to navigate around the safety zone as well. Small Entities Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: the owners or operators of vessels intending to transit or anchor in a portion of the San Francisco Bay from June 26, 2006 through September 24, 2006. Although this regulation prevents traffic from transiting a portion of San Francisco Bay during the testing, the effect of this regulation will not be significant because small vessels will be able to transit around the regulated area. The entities most likely to be affected are pleasure craft engaged in recreational activities and sightseeing. Small entities and the maritime public will also be advised of this safety zone via public broadcast notice to mariners. In addition, vessels will be able to pass through the zone on a case-by-case basis. Therefore, the economic impact of this waterway closure is not expected to be significant. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). Collection of Information This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). Federalism A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism. Unfunded Mandates Reform Act The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble. Taking of Private Property This rule will not affect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. Civil Justice Reform This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. Protection of Children We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children. Indian Tribal Governments This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. Energy Effects We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211. Technical Standards The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies. This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. Environment We have analyzed this rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969
(NEPA)(42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation. Paragraph (34)(g) is applicable because this rule establishes a safety zone. A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” will be available in the docket where indicated under ADDRESSES . List of Subjects in 33 CFR Part 165 Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways. For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows: PART 165—REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS 1. The authority citation for part 165 continues to read as follows: Authority: 33 U.S.C. 1226, 1231; 46 U.S.C. Chapter 701; 50 U.S.C. 191; 33 CFR 1.05-1(g), 6.04-1, 6.04-6, and 160.5; Public Law 107-295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1. 2. Add § 165.T11-110, to read as follows: § 165.T11-110 Safety Zone; San Francisco Bay, California.
(a)*Location.* The following area is a safety zone: All navigable waters in the San Francisco Bay, from the surface to the sea floor, encompassed by a circle with a radius of 750-feet extending from and around the Crane Barge DOGBONE. This safety zone will move and continue to extend 750-feet from the Barge DOGBONE while it operates along the charted BART Transbay tube between the following two points: 37°47′50.97″; N Latitude, by 122°23′17.01″ W Longitude at the western extreme, and 37°48′25.65″ N Latitude by 122°21′03.59″ W Longitude at the eastern extreme.
(b)*Effective Dates.* This rule is effective from June 26, 2006 through September 24, 2006. If the need for the safety zone ends prior to the scheduled termination time, the Captain of the Port will cease enforcement of the safety zone.
(c)*Regulations.* In accordance with the general regulations in § 165.23 of this part, entry into, transit through, or anchoring within this safety zone by all vessels and persons is prohibited, unless specifically authorized by the Captain of the Port San Francisco, or his designated representative.
(d)*Enforcement.* All persons and vessels shall comply with the instructions of the Coast Guard Captain of the Port, or the designated on-scene patrol personnel. Patrol personnel can be comprise of commissioned, warrant, and petty officers of the Coast Guard onboard Coast Guard, Coast Guard Auxiliary, local, state, and Federal law enforcement vessels. Upon being hailed by U.S. Coast Guard patrol personnel by siren, radio, flashing light, or other means, the operator of a vessel shall proceed as directed. The U.S. Coast Guard may be assisted in the patrol and enforcement of these two safety zones by local law enforcement as necessary. Dated: June 23, 2006. W.J. Uberti, Captain, U.S. Coast Guard, Captain of the Port, San Francisco, California. [FR Doc. E6-10980 Filed 7-12-06; 8:45 am] BILLING CODE 4910-15-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R03-OAR-2005-VA-0015; FRL-8196-8] Approval and Promulgation of Air Quality Implementation Plans; Virginia; NSR in the Ozone Transport Region AGENCY: Environmental Protection Agency (EPA). ACTION: Final rule. SUMMARY: EPA is approving a State Implementation Plan
(SIP)revision submitted by the Commonwealth of Virginia. This revision establishes and requires major new and major modified sources of volatile organic compounds
(VOCs)or nitrogen oxides (NO <sup>X</sup> ) to meet certain nonattainment New Source Review
(NSR)requirements if they are located (or are proposing to locate) in Virginia's portion of the Ozone Transport Region (OTR). The intended effect of this action is the approval of a State Implementation Plan
(SIP)revision submitted by the Commonwealth of Virginia for NSR in the OTR. DATES: *Effective Date:* This final rule is effective on August 14, 2006. ADDRESSES: EPA has established a docket for this action under Docket ID Number EPA-R03-OAR-2005-VA-0015. All documents in the docket are listed in the *http://www.regulations.gov* Web site. Although listed in the electronic docket, some information is not publicly available, i.e., confidential business information
(CBI)or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through *http://www.regulations.gov* or in hard copy for public inspection during normal business hours at the Air Protection Division, U.S. Environmental Protection Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania 19103. Copies of the State submittal are available at the Virginia Department of Environmental Quality, 629 East Main Street, Richmond, Virginia 23219. FOR FURTHER INFORMATION CONTACT: Sharon McCauley,
(215)814-3376 or by e-mail at *mccauley.sharon@epa.gov* . SUPPLEMENTARY INFORMATION: I. Background On January 6, 2006 (71 FR 890), EPA published a notice of proposed rulemaking
(NPR)for the Commonwealth of Virginia. The NPR proposed approval of nonattainment NSR in the OTR. The formal SIP revision was submitted by Virginia on March 28, 2005. The applicable regulations requiring implementation of nonattainment NSR in the Virginia portion of the OTR were adopted by the Virginia State Air Pollution Control Board on September 29, 2004. The Clean Air Act requires 13 states including the District of Columbia to submit revisions to their State Implementation Plans that will require major new and modified sources of VOCs or NO <sup>X</sup> to meet certain NSR requirements if they are located (or planning to locate) in the OTR.The OTR consists of the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont and the Consolidated Metropolitan Statistical Area that includes the District of Columbia and portions of Virginia. The areas designated as in the Virginia portion of the OTR are as follows: Arlington County, Fairfax County, Loudoun County, Prince William County, Strafford County, Alexandria City, Fairfax City, Falls Church City, Manassas City, and Manassas Park City. II. Summary of SIP Revision The Commonwealth of Virginia amended its regulations to clarify that areas located in the Virginia portion of the OTR must meet the requirements of Virginia Code Article 9 VAC 5 Chapter 80 (Permits for Major Stationary Sources and Major Modifications Locating in Nonattainment Areas) as if they were classified as moderate nonattainment for ozone, except that the threshold for major stationary sources of VOCs would be 50 tons instead of 100 tons. The changes that are approved in this SIP revision are those that identify and define the OTR locations in Virginia while providing direction to what State regulations sources will need to follow when they are either planning to locate in or are already located in the Virginia portion of the OTR. Changes were made to the State provisions at 9 VAC 5-80-2000, Applicability and 9 VAC 5-80-2010, Definitions. Sources in the Virginia portion of the OTR are also required to meet offset requirements in 9 VAC 5-80-2120 B 2 for areas classified as moderate nonattainment for ozone. These provisions require all increases of VOC and/or NO <sup>X</sup> emissions attributable to the new or modified source to be offset with emission reductions elsewhere in the Virginia portion of the OTR at a ratio of 1.15 to 1.00. This approved SIP revision amends the SIP to add new regulatory language indicating that sources in the Virginia portion of the OTR are subject to the requirements of 9 VAC 5-80-2000, et seq. regardless of the nonattainment status of the area where the source is located. This SIP revision also provides that sources located or planning to locate in areas within the OTR that are classified as “serious” or “severe” nonattainment areas are required to meet the respective emission thresholds listed within the State's definition of a “major stationary source” at 9 VAC 5-80-2010 C Section a
(1)and
(2)and the more restrictive offset requirements located in 9 VAC 5-80-2120 B 3 and B 4, respectively. III. General Information Pertaining to SIP Submittals From the Commonwealth of Virginia In 1995, Virginia adopted legislation that provides, subject to certain conditions, for an environmental assessment (audit) “privilege” for voluntary compliance evaluations performed by a regulated entity. The legislation further addresses the relative burden of proof for parties either asserting the privilege or seeking disclosure of documents for which the privilege is claimed. Virginia's legislation also provides, subject to certain conditions, for a penalty waiver for violations of environmental laws when a regulated entity discovers such violations pursuant to a voluntary compliance evaluation and voluntarily discloses such violations to the Commonwealth and takes prompt and appropriate measures to remedy the violations. Virginia's Voluntary Environmental Assessment Privilege Law, Va. Code Sec. 10.1-1198, provides a privilege that protects from disclosure documents and information about the content of those documents that are the product of a voluntary environmental assessment. The Privilege Law does not extend to documents or information
(1)that are generated or developed before the commencement of a voluntary environmental assessment;
(2)that are prepared independently of the assessment process;
(3)that demonstrate a clear, imminent and substantial danger to the public health or environment; or
(4)that are required by law. On January 12, 1998, the Commonwealth of Virginia Office of the Attorney General provided a legal opinion that states that the Privilege law, Va. Code Sec. 10.1-1198, precludes granting a privilege to documents and information “required by law,” including documents and information “required by Federal law to maintain program delegation, authorization or approval,” since Virginia must “enforce Federally authorized environmental programs in a manner that is no less stringent than their Federal counterparts * * *” The opinion concludes that “[r]egarding § 10.1-1198, therefore, documents or other information needed for civil or criminal enforcement under one of these programs could not be privileged because such documents and information are essential to pursuing enforcement in a manner required by Federal law to maintain program delegation, authorization or approval.” Virginia's Immunity law, Va. Code Sec. 10.1-1199, provides that “[t]o the extent consistent with requirements imposed by Federal law,” any person making a voluntary disclosure of information to a state agency regarding a violation of an environmental statute, regulation, permit, or administrative order is granted immunity from administrative or civil penalty. The Attorney General's January 12, 1998 opinion states that the quoted language renders this statute inapplicable to enforcement of any Federally authorized programs, since “no immunity could be afforded from administrative, civil, or criminal penalties because granting such immunity would not be consistent with Federal law, which is one of the criteria for immunity.” Therefore, EPA has determined that Virginia's Privilege and Immunity statutes will not preclude the Commonwealth from enforcing its NSR program consistent with the Federal requirements. In any event, because EPA has also determined that a state audit privilege and immunity law can affect only state enforcement and cannot have any impact on Federal enforcement authorities, EPA may at any time invoke its authority under the Clean Air Act, including, for example, sections 113, 167, 205, 211 or 213, to enforce the requirements or prohibitions of the state plan, independently of any state enforcement effort. In addition, citizen enforcement under section 304 of the Clean Air Act is likewise unaffected by this, or any, state audit privilege or immunity law. Other specific requirements of NSR in the Virginia Ozone Transport Region and the rationale for EPA's proposed action are explained in the NPR and will not be restated here. No public comments were received on the NPR. IV. Final Action EPA is approving NSR in the Ozone Transport Region as a revision to the Virginia SIP. V. Statutory and Executive Order Reviews A. General Requirements Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal requirement, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant. In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ). B. Submission to Congress and the Comptroller General 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** . This rule is not a “major rule” as defined by 5 U.S.C. 804(2). C. Petitions for Judicial Review Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 11, 2006. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action to approve NSR in the Virginia portion of the Ozone Transport Region may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).) List of Subjects in 40 CFR Part 52 Environmental protection, Air pollution control, Carbon monoxide, Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds. Dated: July 6, 2006. William T. Wisniewski, Acting Regional Administrator, Region III. 40 CFR part 52 is amended as follows: PART 52—[AMENDED] 1. The authority citation for part 52 continues to read as follows: Authority: 42 U.S.C. 7401 *et seq.* Subpart VV—Virginia 2. In § 52.2420, the table in paragraph
(c)is amended by revising the entries for Chapter 80, Article 9, Sections 5-80-2000 and 5-80-2010 to read as follows: § 52.2420 Identification of plan.
(c)* * * EPA-Approved Virginia Regulations and Statutes State citation (9 VAC 5) Title/subject State effective date EPA approval date Explanation [former SIP citation] * * * * * * * Chapter 80 Permits for Stationary Sources [Part VIII] * * * * * * * Article 9 Permits for Major Stationary Sources and Modifications—Nonattainment Areas 5-80-2000 Applicability 9/29/04 7/13/06 [Insert page number where the document begins] 5-80-2010 Definitions 9/29/04 7/13/06 [Insert page number where the document begins] * * * * * * * [FR Doc. 06-6188 Filed 7-12-06; 8:45 am]
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U.S. Code
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  • 21 CFR 520
  • 5 USC 801-808
  • 21 CFR 522.313
  • 21 CFR 20
  • 21 CFR 522
  • 21 CFR 526
  • 21 CFR 522.315
  • 21 CFR 556
  • 26 CFR 1
  • T.D. 9270
  • Pub. L. 105-34
  • 111 Stat. 788
  • Rev. Proc. 93-37
  • 31 CFR 103
  • 31 USC 5318A
  • Pub. L. 107-56
  • 12 USC 1951-1959
  • 31 USC 5311-5314
  • 31 USC 5318A(b)(1)
  • Pub. L. 108-177
  • 31 USC 5318A(b)(5)
  • 31 USC 5318A(e)(1)(B)
  • 31 CFR 103.175(d)(1)(ii)
  • 31 CFR 103.175(d)(2)(ii)
  • 31 CFR 103.175(f)(2)
  • 31 CFR 103.175(d)(2)
  • 31 CFR 103.192
  • 115 Stat. 307
  • 33 CFR 100
  • 5 USC 601-612
  • Pub. L. 104-121
  • 44 USC 3501-3520
  • 2 USC 1531-1538
  • 42 USC 4321-4370f
  • 33 USC 1233
  • 33 CFR 100.519
  • 33 CFR 117
  • Pub. L. 102-587
  • 106 Stat. 5039
  • 33 CFR 165
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Rules and Regulations
Final rule; technical amendment
C.F.R.§ 520.447
C.F.R.§ 25.33
U.S.C.§ 804
U.S.C.§ 360b
C.F.R.§ 514.11
U.S.C.§ 342
C.F.R.§ 522.1372
C.F.R.§ 522.1010
U.S.C.§ 3507
Cite21 CFR 520
Cite5 USC 801-808
Cite21 CFR 522.313
Cites 79 · showing 12Cited by 0 across 0 sources
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