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Code · REGISTER · 2007-08-08 · Department of Veterans Affairs, Office of Research and Development · Notices

Notices. Notice of intent

82,429 words·~375 min read·/register/2007/08/08/07-3857

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BILLING CODE 8320-01-M DEPARTMENT OF VETERANS AFFAIRS Notice of Intent To Grant an Exclusive License AGENCY: Department of Veterans Affairs, Office of Research and Development. ACTION: Notice of intent. SUMMARY: Notice is hereby given that the Department of Veterans Affairs, Office of Research and Development, intends to grant Preventative Nutrient Company, Inc., Northridge, CA USA, an exclusive license to practice the following patent applications: U.S. Patent 7,144,865 issued on December 5, 2006 entitled “Compositions and Methods for Treating Obesity”;
U.S. Patent Application 5,834,032 issued on November 10, 1998 entitled “Compositions and Methods for Treating Diabetes”; and U.S. Provisional Patent Application 60/892,785 filed on March 2, 2007 entitled “Compositions and Methods for Treating Alzheimer's Disease.” DATES: Comments must be received within fifteen
(15)days from the date of this published Notice. ADDRESSES: Send comments to: Amy E. Centanni, Director of Technology Transfer, Department of Veterans Affairs, Office of Research and Development, Attn: 12TT 810 Vermont Avenue, NW., Washington, DC 20420, Telephone:
(202)254-0199; Facsimile:
(202)254-0460; e-mail: *Amy.centanni@va.gov.* Copies of the published patent applications may be obtained from the U.S. Patent and Trademark Office at *http://www.uspto.gov.* SUPPLEMENTARY INFORMATION: It is in the public interest to so license these inventions as Preventative Nutrient Company, Inc., submitted a complete and sufficient application for a license. The prospective exclusive license will be royalty-bearing and will comply with the terms and conditions of 35 U.S.C. 209 and 37 CFR 404.7. The prospective exclusive license may be granted unless, within fifteen
(15)days from the date of this published Notice, the Department of Veterans Affairs Office of Research and Development receives written evidence and argument which establishes that the grant of the license would not be consistent with the requirements of 35 U.S.C. 209 and 37 CFR 404.7. Dated: August 1, 2007. Gordon H. Mansfield, Deputy Secretary of Veterans Affairs. [FR Doc. E7-15386 Filed 8-7-07; 8:45 am] BILLING CODE 8320-01-P 72 152 Wednesday, August 8, 2007 Proposed Rules Part II Department of Education 34 CFR Parts 668, 674, et al. Federal Student Aid Programs; Proposed Rule DEPARTMENT OF EDUCATION 34 CFR Parts 668, 674, 676, 682, 685, 690, and 691 [Docket ID ED-2007-OPE-0134] RIN 1840-AC91 Federal Student Aid Programs AGENCY: Office of Postsecondary Education, Department of Education. ACTION: Notice of proposed rulemaking. SUMMARY: The Secretary proposes to amend the regulations on Student Assistance General Provisions; Federal Perkins Loan (Perkins Loan) Program; Federal Supplemental Educational Opportunity Grant (FSEOG) Program; Federal Family Education Loan
(FFEL)Program; William D. Ford Federal Direct Loan (Direct Loan) Program; Federal Pell Grant (Pell Grant) Program; and Academic Competitiveness Grant
(ACG)and National Science and Mathematics Access to Retain Talent Grant (National SMART Grant) Programs. The proposed regulations would reduce administrative burden for program participants, provide benefits to students and borrowers, and protect taxpayers' interests. DATES: We must receive your comments on or before September 7, 2007. ADDRESSES: Submit your comments through the Federal eRulemaking Portal or via postal mail, commercial delivery, or hand delivery. We will not accept comments by fax or by e-mail. Please submit your comments only one time, in order to ensure that we do not receive duplicate copies. In addition, please include the Docket ID at the top of your comments. • *Federal eRulemaking Portal:* Go to *http://www.regulations.gov* . Under “Search Documents” go to “Optional Step 2” and select “Department of Education” from the “Federal Department or Agency” drop-down menu, then click “Submit.” In the Docket ID column, select ED-2007-OPE-0134 to add or view public comments and to view supporting and related materials available electronically. Information on using Regulations.gov, including instructions for submitting comments, accessing documents, and viewing the docket after the close of the comment period, is available through the site's “User Tips” link. • *Postal Mail, Commercial Delivery, or Hand Delivery.* If you mail or deliver your comments about these proposed regulations, address them to Michelle Belton, U.S. Department of Education, 1990 K Street, NW., room 8037, Washington, DC 20006-8502. *Privacy Note:* The Department's policy for comments received from members of the public (including those comments submitted by mail, commercial delivery, or hand delivery) is to make these submissions available for public viewing on the Federal eRulemaking Portal at *http://www.regulations.gov* . All submissions will be posted to the Federal eRulemaking Portal without change, including personal identifiers and contact information. FOR FURTHER INFORMATION CONTACT: For information related to *General definitions* and *Defining Independent Study for Direct Assessment Programs* , Michelle Belton. Telephone:
(202)502-7821 or via Internet: *michelle.belton@ed.gov* . For information related to *Payment periods, Treatment of Title IV grant and loan funds if a recipient does not begin attendance, Post-withdrawal disbursements of grant funds directly to a student,* and *Annual loan limit progression,* Wendy Macias. Telephone:
(202)502-7526 or via Internet: *wendy.macias@ed.gov* . For information related to all Cash Management issues and *Single disbursement provision for Perkins Loan and the FSEOG,* John Kolotos. Telephone:
(202)502-7762 or via Internet: *john.kolotos@ed.gov* . For information related to *Minimum period for certifying a loan,* and *Pell Grant calculations,* Brian Kerrigan. Telephone:
(202)219-7058 or via Internet: *brian.kerrigan@ed.gov* . If you use a telecommunications device for the deaf, you may call the Federal Relay Service at 1-800-877-8339. Individuals with disabilities may obtain this document in an alternative format (e.g., Braille, large print, audiotape, or computer diskette) on request to the first contact person listed under FOR FURTHER INFORMATION CONTACT . SUPPLEMENTARY INFORMATION: Invitation To Comment As outlined in the section of this notice entitled “Negotiated Rulemaking,” significant public participation, through four public hearings and three negotiated rulemaking sessions, has occurred in developing this NPRM. Therefore, in accordance with the requirements of the Administrative Procedure Act, the Department invites you to submit comments regarding these proposed regulations within 30 days. To ensure that your comments have maximum effect in developing the final regulations, we urge you to identify clearly the specific section or sections of the proposed regulations that each of your comments addresses and to arrange your comments in the same order as the proposed regulations. We invite you to assist us in complying with the specific requirements of Executive Order 12866 and its overall requirement of reducing regulatory burden that might result from these proposed regulations. Please let us know of any further opportunities we should take to reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the programs. During and after the comment period, you may inspect all public comments about these proposed regulations by accessing Regulations.gov. You may also inspect the comments, in person, in room 8037, 1990 K Street, NW., Washington, DC, between the hours of 8:30 a.m. and 4:00 p.m., Eastern time, Monday through Friday of each week except Federal holidays. Assistance to Individuals With Disabilities in Reviewing the Rulemaking Record On request, we will supply an appropriate aid, such as a reader or print magnifier, to an individual with a disability who needs assistance to review the comments or other documents in the public rulemaking record for these proposed regulations. If you want to schedule an appointment for this type of aid, please contact the first person listed under FOR FURTHER INFORMATION CONTACT . Negotiated Rulemaking Section 492 of the Higher Education Act of 1965, as amended (HEA), requires the Secretary, before publishing any proposed regulations for programs authorized by Title IV of the HEA, to obtain involvement in the development of the proposed regulations. After obtaining advice and recommendations from individuals and representatives of groups involved in the Federal student financial assistance programs, the Secretary must subject the proposed regulations to a negotiated rulemaking process. All proposed regulations that the Department publishes must conform to final agreements resulting from that process unless the Secretary reopens the process or provides a written explanation to the participants stating why the Secretary has decided to depart from the agreements. Further information on the negotiated rulemaking process can be found at: *http://www.ed.gov/policy/highered/reg/hearulemaking/2007/nr.html* . On August 18, 2006, the Department published a notice in the **Federal Register** (71 FR 47756) announcing our intent to establish up to four negotiated rulemaking committees to prepare proposed regulations. One committee would focus on issues related to the ACG and National SMART Grant programs. A second committee would address issues related to the Federal student loan programs. A third committee would address programmatic, institutional eligibility, and general provisions issues. Lastly, a fourth committee would address accreditation. The notice requested nominations of individuals for membership on the committees who could represent the interests of key stakeholder constituencies on each committee. The four committees met to develop proposed regulations over the course of several months, beginning in December 2006. This notice of proposed rulemaking
(NPRM)proposes regulations relating to the programmatic, institutional eligibility, and general provisions issues that were discussed by the third committee mentioned in this paragraph (the Committee or the General Provisions Committee). The Department developed a list of proposed regulatory changes from advice and recommendations submitted by individuals and organizations in testimony submitted to the Department in a series of four public hearings held on: • September 19, 2006, at the University of California-Berkeley in Berkeley, California. • October 5, 2006, at the Loyola University in Chicago, Illinois. • November 2, 2006, at the Royal Pacific Hotel Conference Center in Orlando, Florida. • November 8, 2006, at the U.S. Department of Education in Washington, DC. In addition, the Department accepted written comments on possible regulatory changes submitted directly to the Department by interested parties and organizations. A summary of all comments received orally and in writing is posted as background material in the docket. Transcripts of the regional meetings can be accessed at *http://www.ed.gov/policy/highered/reg/hearulemaking/2007/hearings.html.* Staff within the Department also identified issues for discussion and negotiation. At its first meeting, the General Provisions Committee reached agreement on its protocols and proposed agenda. These protocols provided that the non-Federal negotiators would not represent the interests of stakeholder constituencies, but would instead participate in the negotiated rulemaking process based on each Committee member's experience and expertise in the Title IV, HEA programs. The following members made up the General Provisions Committee: • Rebecca Thompson and Justin Klander (alternate), United States Student Association and Minnesota State College Student Association, respectively. • Elaine Neely-Eacona and Susan Little (alternate), Kaplan Higher Education and University of Georgia, respectively. • David Glezerman and Anne Gross (alternate), Temple University and National Association of College and University Business Officers, respectively. • Stephen Sussman and Maureen R. Budetti (alternate), Barry University and National Association of Independent Colleges and Universities, respectively. • Linda Michalowski and Carol Mowbray (alternate), California Community Colleges and Northern Virginia Community College, respectively. • Kay Noah Stroud and Beverly Young (alternate), Appalachian State University and California State University, respectively. • Stacey Ludwig and Paula Luff (alternate), Western Governors University and DePaul University, respectively. • Steven Dill, Robert Collins (alternate), and Nancy Broff (alternate), Lincoln Education Services, Inc., Apollo Group, Inc., and Career College Association, respectively. • Mary Ann Welch, representing National Association of State Student Grant and Aid Programs. • Starlith Chiquita Carter and Ray Testa (alternate), National Accrediting Commission of Cosmetology Arts and Sciences and National Motion Member Schools/Regis, respectively. • Lloyd Robertson, representing Chase EdFinance. • Brian Kerrigan, representing U.S. Department of Education. During the later two meetings, the General Provisions Committee reviewed and discussed drafts of proposed regulations. At the final meeting in April 2007, the General Provisions Committee reached consensus on all of the proposed regulations in this document. More information on the work of this Committee can be found at: *http://www.ed.gov.policy/highered/reg/hearulemaking/2007/gp.html.* Significant Proposed Regulations We discuss substantive issues under the sections of the proposed regulations to which they pertain. Generally, we do not address proposed regulatory provisions that are technical or otherwise minor in effect. General Definitions (§ 668.2) *Statute:* The HEA does not include these definitions. *Current Regulations:* Current § 668.2 contains definitions that are relevant to all of the Title IV, HEA Federal financial aid programs. However, separate definitions for full-time student, graduate or professional student, half-time student, three-quarter time student, and undergraduate student exist in other sections of the program regulations. Currently there is no definition for first professional degree. *Proposed Regulations:* The proposed regulations would harmonize and consolidate in § 668.2 definitions for the terms, *full-time student, graduate or professional student, half-time student, three-quarter time student,* and *undergraduate student.* The definition of *first professional degree* would be based on the definition currently used by the National Center for Educational Statistics (NCES). Under this definition a *first professional degree* would be limited to degree programs that require a level of professional skill beyond that normally required for a bachelor's degree as well as a professional license. The definition of *full-time student* in § 668.2(b) does not adequately address students in a nonstandard term program. The proposed regulation adds the calculation that the Pell Grant Program uses to determine whether or not such students are eligible to receive a full-time award. It also adds language to clarify the Department's position concerning the status of students in correspondence programs. The proposed regulations would move the definitions of *half-time student* and *three-quarter time* student from § 690.2(c), in the current Pell Grant regulations, to § 668.2(b). As a result, a half-time student and three-quarter time student would be defined as a student who is carrying a work load that is at least half or three-quarters, respectively, of the minimum full-time student definition contained in the regulations, rather than at least half or three-quarters, respectively, of the full-time student definition established by the institution, as it is currently defined for Title IV, HEA program loans and direct assessment programs. The proposed regulations would move the definition of * graduate or professional student * from § 674.2(b), in the current Perkins Loan Program regulations, to § 668.2 and rearrange the definition to highlight the Department's policy that graduate or professional students may not receive aid from undergraduate programs, such as the Pell Grant Program, while also receiving graduate or professional level aid. The proposed definition of *undergraduate student* incorporates requirements from the definitions of *undergraduate student* currently in different program regulations. It also defines students in postbacculaureate teacher certification programs as undergraduates for purposes of the Pell Grant Program. Upon consolidation in § 668.2(b), these definitions would be removed from the individual program regulations. *Reasons:* Prior to this negotiated rulemaking, there were six definitions for half-time student, four definitions of undergraduate student, and three definitions of graduate or professional student. To eliminate this redundancy and avoid confusion, the proposed regulations consolidate these definitions in one section of the regulations. As part of the rulemaking discussions, the Department also recommended changing the *full-time student* definition for clock hour programs by raising the required number of hours per week from 24 to 30 (this is the mathematical equivalent of 900 hours divided by 30 weeks). The Department later modified its proposal to have the clock hours per week for a full-time student be related to the weeks of instructional time associated with the academic year. For example, where 30 clock hours per week would be associated with a 30-week academic year, 35 clock hours per week would be associated with a 26-week academic year. Some non-Federal negotiators objected, arguing that the proposal would significantly increase the clock hour requirements, particularly for half-time students attending evening classes. They noted that the current requirements have been in effect for over 30 years without incident or concern. The Department withdrew its proposal. Payment Periods (§§ 668.4, 668.22, 668.164, 682.200, 682.604, 685.301) Payment Periods and Disbursements of Title IV Grant and Loan Funds *Statute:* Section 428G(a) of the HEA requires that the interval between the first and second installment of FFEL (and, by extension, Direct Loan) payments not be less than one-half of the period of enrollment, except in the case of programs offered in semesters, quarters, or a similar division of the period of enrollment. *Current Regulations:* Current regulations in § 668.4 define payment periods for Title IV, HEA program funds for three types of academic programs:
(1)Programs that measure progress in credit hours and have academic terms;
(2)programs that measure progress in credit hours and do not have terms; and
(3)programs that measure progress in clock hours. Also, § 668.164 requires an institution to disburse Title IV, HEA program funds, except for Federal Work Study
(FWS)funds, on a payment period basis. Accordingly, Pell Grant, ACG, National SMART Grant, FSEOG, Perkins Loan and some FFEL and Direct Loan funds are disbursed by the payment period. However, §§ 682.604(c) and 685.301(b) contain provisions that require an institution to disburse FFEL and Direct Loan funds on a different basis for
(1)nonstandard term credit hour programs with terms that are not substantially equal in length,
(2)nonterm credit hour programs, and
(3)clock hour programs. A chart that illustrates the current disbursement requirements is published as Appendix A to the preamble—Current Disbursement Requirements. Specifically, for a standard term (semester, trimester, or quarter) credit hour program or a nonstandard term credit hour program (with or without terms that are substantially equal in length), § 668.4(a) defines payment periods to be the terms. Title IV grant and loan funds are disbursed to students in these programs by the payment period—the term—except for nonstandard term credit hour programs with terms that are not substantially equal in length. For those programs, §§ 682.604(c)(7) and 685.301(b)(5) require an institution to make the second disbursement of FFEL and Direct Loan funds, respectively, at the later of
(1)the calendar midpoint of the loan period, or
(2)the date the student has completed half of the coursework in the loan period. For a nonterm credit hour program, under § 668.4(b) payment periods are considered to be completed when the student has completed half of the number of credit hours and half of the number of weeks of instructional time in the academic year or program, as appropriate. Title IV grant and loan funds are disbursed to students in these programs by the payment period (i.e., a second disbursement is made when the first payment period is complete), except for FFEL and Direct Loan funds. When paying FFEL and Direct Loan funds to a student in a nonterm credit hour program, an institution may not make a second disbursement until the later of
(1)the calendar midpoint of the loan period, or
(2)the date that the student has completed half of the academic coursework in the loan period (§§ 682.604(c)(7) and 685.301(b)(5)). Section 668.4(b)(3) provides that, if an institution is unable to determine when a student in a nonterm credit hour program has completed half of the credit hours in a program, academic year, or remainder of a program in order to determine when a student begins a new payment period, the student is considered to begin the second payment period at the later of the date, as determined by the institution, when the student has completed half of the academic coursework in the program, academic year, or remainder of a program, or the calendar midpoint of the program, academic year, or remainder of a program. For a clock hour program, § 668.4(c) defines the payment period as the point when a student has completed half of the clock hours in the academic year or program, as appropriate. Again, Title IV grant and loan funds are disbursed to students in these programs by the payment period, except for FFEL and Direct Loan funds. When paying FFEL and Direct Loan funds to a student in a clock hour program, an institution may not make a second disbursement until the later of
(1)the calendar midpoint of the loan period, or
(2)the date that the student has completed half of the clock hours in the loan period (§§ 682.604(c)(8) and 685.301(b)(6)). Section 668.164(b)(3) contains requirements that address when an institution may count excused absences as completed clock hours for purposes of determining completion of a payment period. Currently, for the remainder of a program equal to or less than one-half of an academic year for clock hour programs and nonterm credit hour programs, the remainder of the program is the payment period (§ 668.4(b)(2)(iii) and (c)(2)(iii)). The regulations contain a few exceptions to these disbursement regulations. Section 668.4(d) allows an institution to choose to have more than the defined two payment periods for nonterm credit hour programs and clock hour programs. In addition, the FFEL and Direct Loan regulations in §§ 682.604(c)(6)(ii) and 685.301(b)(3)(ii) require that, for a loan period that is one payment period, the loan funds must be paid in two installments, the second not being delivered until the calendar midpoint of the loan period, unless the institution is exempt under the cohort default rate exception in § 682.604(c)(10) or § 685.301(b)(8). In addition, FSEOG, Pell Grant, ACG, and National SMART Grant regulations permit an institution to pay the grant funds for the payment period in installments to best meet the student's needs (§§ 676.16(a)(3), 690.76, and 691.76). *Proposed Regulations:* By making a number of changes to the payment period definitions and disbursement requirements, these proposed regulations would, with a few exceptions, align disbursements for all Title IV grant and loan programs. A chart that illustrates the proposed disbursement requirements is published as Appendix B to the preamble—Proposed Disbursement Requirements. Section 668.164(b) would now specify that an institution must disburse all Title IV grant and loan funds on a payment period basis, and would require, generally, that an institution disburse all Title IV grant and loan funds once each payment period. As a result, FFEL and Direct Loan funds would now be disbursed using the payment period definitions in § 668.4 for all types of programs. To facilitate this change, several changes to the payment period definitions in § 668.4 would be necessary. First, the proposed regulations would divide nonstandard term credit hour programs into two categories. Nonstandard term credit hour programs with terms that are substantially equal in length would, along with standard term programs, continue to use the academic term as the payment period for both Title IV grant and loan funds. Payment periods for nonstandard term credit hour programs with terms that are not substantially equal in length would be addressed in new § 668.4(b). The proposed regulations would specify two sets of payment periods for these programs: one for Title IV grant and Perkins Loan funds, and one for FFEL and Direct Loan funds. The payment periods for Title IV grant and Perkins Loan funds would be the academic term, as in current regulations. The proposed FFEL/Direct Loan payment periods are based on the current FFEL/Direct Loan disbursement requirements found in §§ 682.604(c)(7) and 685.301(b)(5). However, an institution would not be permitted to make a second disbursement until a student had successfully completed half of the coursework and half of the weeks of instructional time rather than making that disbursement at the later of the calendar midpoint, or the student's completion of half of the coursework. The definition of terms that are *substantially equal in length* (if no term in the program is more than two weeks of instructional time longer than any other term in the program) would be moved from §§ 682.604(c)(7)(ii) and 685.301(b)(5)(ii) to new § 668.4(h)(1). The second change to § 668.4 would add a time component to the definition of payment periods for clock hour programs so that, in addition to requiring a student to complete half of the clock hours, the proposed regulations would require that a student complete half of the weeks of instructional time before a second disbursement may be made. As a result of this change and the change requiring FFEL and Direct Loan funds to be disbursed on a payment period basis, proposed § 668.4(c) would require that all Title IV grant and loan funds, including FFEL and Direct Loan funds, for students in nonterm credit hour and clock hour programs be disbursed when the student successfully completes half of the weeks of instructional time and half of the credit hours/clock hours in the academic year/program. The added time component (for clock hour programs) would be new for second disbursements of Title IV grant and Perkins Loan fund disbursements, and second disbursements of FFEL and Direct Loan funds would no longer be disbursed at the later of the calendar midpoint of the loan period, or the student's successful completion of half of the coursework/clock hours for nonterm credit hour and clock hour programs, respectively. In addition, the proposed regulations would remove current § 668.4(d) so that an institution would no longer be permitted to choose to have more than the defined two payment periods for nonterm credit hour programs and clock hour programs. The proposed regulations would require that, for example, an institution with a clock hour program of 900 hours, must disburse funds using two 450-hour payment periods, not three 300-hour payment periods. The requirements that address when an institution may count excused absences as completed clock hours for purposes of determining completion of a payment period would be moved from § 668.164(b)(3) to new § 668.4(e). Originally, the Department suggested changing the payment period definition for a remainder of a program equal to or less than one-half of an academic year for clock hour programs, nonterm credit hour programs, and nonstandard term credit hour programs with terms that are not substantially equal in length. Rather than treating the entire remainder of a program as the payment period, the Department suggested dividing the remainder into two payment periods to be consistent with how the HEA requires that FFEL and Direct Loan funds be disbursed. Some non-Federal negotiators felt that such a change would not be in the best interest of students who currently benefit from receiving the entire Title IV grant or Perkins Loan amount for the payment period up front. Ultimately, the Committee agreed to continue to define the payment period for a remainder of a program equal to or less than one-half of an academic year to be the remainder of the program for nonstandard term credit hour programs with terms that are not substantially equal in length, nonterm credit hour programs, and clock hour programs (see proposed §§ 668.4(b)(2)(ii) and 668.4(c)(2)(iii)). Disbursements of FFEL and Direct Loan funds for these payment periods would still have to be made in two installments. The regulations in §§ 682.604(c)(6)(ii) and 685.301(b)(3)(ii) would continue to require that, for a loan period that is one payment period, the loan funds must be paid in two installments, unless the institution is exempt under the cohort default rate exception in § 682.604(c)(10) or § 685.301(b)(8). However, instead of requiring that the institution not deliver a second installment until the calendar midpoint of the loan period, these proposed regulations would require an institution to wait until the student has successfully completed half of the number of credit hours or clock hours, as appropriate, and half of the number of weeks of instructional time in the payment period. Section 668.164(b) would include cross-references to this FFEL/Direct Loan exception to the requirement that an institution disburse Title IV grant and loan funds once each payment period. In addition, § 668.164(b) would include cross-references to the other existing exceptions to these regulations, whereby an institution is permitted to disburse a student's FSEOG, Pell Grant, ACG, and National SMART Grant for the payment period in installments to best meet the student's needs (§§ 676.16(a)(3), 690.76, and 691.76). Changes would be made to the definitions of payment periods for nonterm credit hour programs, clock hour programs and, with respect to the FFEL/Direct Loan payment periods definition, for nonstandard term credit hour programs with terms that are not substantially equal in length, to require that a student successfully complete half of the credit hours or clock hours, as appropriate, to progress to the next payment period. This same change would also be made to the requirement that, for a loan period that is one payment period, the loan funds must be paid in two installments; and the second installment may not be delivered until the student has successfully completed half of the number of credit hours or clock hours, as appropriate, and half of the number of weeks of instructional time in the payment period. *Successfully completes* would be defined in § 668.4(h)(2) to have occurred when the institution considers the student to have passed the coursework associated with those hours. Another change to the payment period definitions in § 668.4 would extend to clock hour programs the provision that addresses how to identify the end of a payment period when an institution is unable to determine when a student in a nonterm credit hour program has completed half of the credit hours in a program, academic year, or remainder of a program. In addition, the measure of time used to make the determination would be changed from the calendar midpoint to completion of half of the weeks of instructional time. Thus, under new § 668.4(c)(3), if an institution is unable to determine when a student in a nonterm credit hour program or a clock hour program has completed half of the hours in a program, academic year, or remainder of a program in order to determine when a student begins a new payment period, the student is considered to begin the second payment period at the later of
(1)the date, as determined by the institution, when the student has completed half of the academic coursework in the program, academic year, or remainder of a program, or
(2)the date, as determined by the institution, when the student has completed half of the number of weeks of instructional time in the program, academic year, or remainder of the program. Finally, a new paragraph
(d)would be added to § 668.4 to make clear that, when an institution qualifies for the cohort default rate exemption in § 682.604(c)(10) or § 685.301(b)(8) for a nonstandard term credit hour program, a nonterm credit hour program, or a clock hour program, the payment period for purposes of FFEL or Direct Loan funds is the loan period for those portions of the program to which the cohort default rate exemption applies. For example, if the loan period for a nonterm credit hour program is three months in length and the institution meets the cohort default rate exemption, that three-month loan period is the payment period and only one disbursement of the loan is required for that period. *Reasons:* The Department seeks to align disbursements for all Title IV grant and loan programs to the extent possible. Inconsistent requirements for disbursing Title IV grant and loan funds for certain types of programs can result in a student receiving the second or subsequent disbursements of his or her grant funds or Perkins Loan funds at a different point in time than second disbursements of his or her FFEL or Direct Loan funds. Changes to the regulations that would achieve greater consistency in the timing of the disbursements of Title IV grant and loan funds are proposed to reduce this burden and confusion for institutions and students. These proposed changes include—(1) Modifying § 668.164(b) to specify that an institution must disburse all Title IV grant and loan funds on a payment period basis;
(2)requiring, generally, that an institution disburse all Title IV grant and loan funds once each payment period;
(3)adding a time component to the payment period definitions for clock hour programs to make the disbursements of Title IV grant and Perkins Loan funds conform with the disbursements of FFEL and Direct Loan funds, which must, by law, include a time component;
(4)using weeks of instructional time as the time component for determining all Title IV grant and loan disbursements;
(5)removing the institutional option to have more than two payment periods for nonterm credit hour programs and clock hour programs; and
(6)extending to clock hour programs the provision that addresses how to identify the end of a payment period when an institution is unable to determine when a student in a nonterm credit hour program has completed half of the credit hours in a program, academic year, or remainder of a program. Where these proposed regulations would deviate from this alignment, they would do so for the reasons that follow. Traditionally, for credit hour term based programs, including nonstandard term credit hour programs with terms that are not substantially equal in length, the payment periods have been the terms. Because, under section 428G(a) of the HEA, disbursements of FFEL funds (and, by extension, Direct Loan funds) for these programs must be disbursed in two equal installments for the period of enrollment, Title IV grant and loan disbursements have not always aligned. To align them in all cases, Title IV grant and Perkins Loan funds would have to be disbursed on the same basis as FFEL and Direct Loan funds. However, the Committee agreed that inconsistency was acceptable in this case because of the benefit students receive from receiving Title IV grant and Perkins Loan funds more frequently. For this same reason, the Committee ultimately decided to define payment periods for the remainder of a program less than half of an academic year to be the remainder of the program for nonterm credit hour programs, clock hour programs, and, for FFEL and Direct Loan funds, nonstandard term credit hour programs with terms that are not substantially equal in length. Terms that are substantially equal in length would continue to be defined as they were in the FFEL and Direct Loan regulations. To continue to allow an institution some flexibility to meet a student's individual circumstances, no change would be made to the FSEOG, Pell Grant, ACG, and National SMART Grant regulations that permit an institution to pay the grant amount for the payment period at such times and in such installments in each payment period as the institution determines will best meet the student's needs. So, although, an institution with a 900 clock hour program that currently has three 300 clock hour payment periods would be required to change to two 450 clock hour payment periods, the institution could choose to pay FSEOG, Pell Grant, ACG, or National SMART Grant funds in, for example, two installments each payment period if it determines that apportioning those funds best meets the student's needs. New paragraph
(d)would be added to § 668.4 to reflect the statutory provisions that affect disbursements for institutions that qualify for the cohort default rate exemption in § 682.604(c)(1) or § 685.301(b)(8) for a nonstandard term credit hour program, a nonterm credit hour program, or a clock hour program. The proposed regulations would incorporate the Department's longstanding policy that a student must successfully complete half of the clock hours or credit hours, as appropriate, to progress to the next payment period for clock hour programs, for nonterm credit hour programs, and, under the FFEL/Direct Loan payment periods definition, for nonstandard term credit hour programs with terms that are not substantially equal in length. So that these requirements would be consistently applied by institutions, some non-Federal negotiators asked, and the Committee agreed, to add a definition of *successfully completes* to the proposed regulations. The proposed regulations base the definition on when the institution considers the student to have passed the coursework associated with those hours, rather than requiring a passing grade, because not all institutions assign grades to completed coursework. Transferring to a New Program at the Same Institution *Statute:* The HEA does not specifically address the issue of payment period requirements for students transferring to a new program at the same institution. *Current Regulations:* The payment period regulations in § 668.4(f) require an institution to calculate new payment periods for students who re-enter a program after 180 days or transfer to a new program at a different institution or the same institution at any time. *Proposed Regulations:* The payment period requirements for students who re-enter a program after 180 days or transfer to a new program would be amended to add in new § 668.4(g)(3) guidance currently found in the Federal Student Aid
(FSA)Handbook available at: *http://ifap.ed.gov/IFAPWebApp/currentSFAHandbooksPag.jsp.* The proposed regulations would permit an institution to consider a student who transfers into another program at the same institution to remain in the same payment period if four conditions are met:
(1)The student is continuously enrolled at the institution;
(2)the coursework in the payment period the student is transferring out of is substantially similar to the coursework the student will be taking upon beginning the new program;
(3)the payment periods are substantially equal in length in weeks of instructional time and credit hours or clock hours, as applicable; and
(4)there are little or no changes to the charges to the student for the payment period. *Reasons:* The Committee made this change to address situations where a student's transfer to a new program at the same institution results in very little change to the student's academic circumstance—for example, a change that is really nothing more than a change in majors. The Committee believes that when this occurs it is appropriate to spare the institution the burden of withdrawing a student, performing a Return of Title IV Funds calculation to determine how much of the student's Title IV grant or loan funds he or she has earned, potentially returning Title IV grant or loan funds, and awarding Title IV, HEA program funds for the new payment period(s). Disbursements of FFEL and Direct Loan Funds to Less Than Full-Time Students *Statute:* Section 428G(a) of the HEA requires that the interval between the first and second installment of FFEL funds (and, by extension, Direct Loan funds) may not be less than one-half of the period of enrollment, except in the case of programs offered in semesters, quarters, or a similar division of the period of enrollment. *Current Regulations:* Current disbursement requirements in §§ 682.604(c)(6), (7), and
(8)and 685.301(b)(3), (5), and
(6)use calendar time as the time component for determining when second disbursements of FFEL and Direct Loan funds are made to students in nonstandard term credit hour programs with terms that are not substantially equal in length, nonterm credit hour programs, and clock hour programs. In addition, §§ 682.200(b) and 685.102(b) require that a *period of enrollment* coincide with a bona fide academic term for which institutional charges are generally assessed, including a semester, trimester, quarter, or length of the student's program or academic year. As a result of the use of calendar time as the time component, second disbursements of FFEL and Direct Loan funds for less than full-time students in nonstandard term credit hour programs with terms that are not substantially equal in length, nonterm credit hour programs, and clock hour programs may be made at the midpoint of the period of enrollment in calendar time, even if the student has not completed half of the hours in the period of enrollment. That is, a less than full-time student in one of these programs may receive the annual loan limit for the period of enrollment regardless of his or her enrollment status. However, the student is not eligible for another loan until he or she has completed all the credit hours or clock hours, as applicable, and the weeks in the period of enrollment. *Proposed Regulations:* The proposed use of weeks of instructional time, rather than calendar time, as the time component for disbursements of Title IV grant and loan funds (see the discussion of this change under “Payment periods and disbursements of Title IV grant and loan funds”), would affect significantly the timing of second disbursements to less than full-time students in nonterm credit hour programs, clock hour programs, and, for the FFEL/Direct Loan payment periods definition, for nonstandard term credit hour programs with terms that are not substantially equal in length. Instead of receiving the second disbursement at the calendar midpoint of the period of enrollment (the academic year or program, as applicable), the student would receive the second disbursement after he or she completes half of the credit hours or clock hours, as applicable, and half of the weeks of instructional time in the payment period. An example of the effects of this change is published as Appendix C to the preamble—Title IV disbursements—Less-than-full-time enrollment. The example shows that, under current requirements, the student would receive the second loan disbursement at the calendar midpoint of the period of enrollment (the academic year). Under the proposed change, the student would receive the second disbursement after completion of half of the credit hours and half of the weeks of instructional time in the academic year. Because the student in the example is a half-time student, this would not occur until the student has successfully completed 24 credit hours and 30 weeks of instructional time. A conforming change would be made to the definition of *period of enrollment* in §§ 682.200(b) and 685.102(b) to specify that a period of enrollment is measured in weeks of instructional time. By definition an academic year is measured in weeks of instructional time, so no change would be necessary to that example of a period of enrollment. *Reasons:* Under the current approach, the period of time between a less than full-time student's first and second disbursement of an FFEL or Direct Loan would be relatively short compared to the period of time between the point when the student receives all of his or her first loan and when the student is eligible for a second loan. The Committee proposes that the disbursement of FFEL and Direct Loan funds be in line with our general approach that a student's award is paid in approximately equal increments over the course of the student's program—like the disbursement requirements for Perkins Loan and Title IV grant funds—as we believe it is more fiscally responsible and equitable between programs. Return of Title IV Funds Calculated on a Payment Period Basis *Statute:* Section 484B of the HEA provides that earned Title IV grant and loan funds for a student who withdraws from an institution may be calculated on a payment period or period of enrollment basis. *Current Regulations:* Section 668.22(e)(5) provides that, for students who withdraw from a nonstandard term credit hour program, nonterm credit hour, or clock hour program, an institution has the choice of calculating earned Title IV aid on either a payment period basis, as that term is defined in § 668.4, or on a period of enrollment basis. When an institution is not disbursing all types of Title IV, HEA program assistance for these programs by the same payment period (either because the regulations prohibit it or because the institution chooses to disburse this way), and it uses the payment period for a Return of Title IV Funds calculation, it must attribute any aid that should be associated with the payment period used, but that is not disbursed on that payment period, to the payment period used. Section 668.4(d) allows an institution to choose to have more than the defined two payment periods for nonterm credit hour programs and clock hour programs. *Proposed Regulations:* As noted under “Payment periods and disbursements of Title IV grant and loan funds” these proposed regulations would remove current § 668.4(d) so that an institution would no longer be able to choose to have more than the defined two payment periods for nonterm credit hour programs and clock hour programs. As a result, payment periods for nonterm credit hour programs and clock hour programs would always be the same for all Title IV grant and loan programs. For nonstandard term credit hour programs with terms that are not substantially equal in length, the proposed regulations would specify two sets of payment periods: One for Title IV grant and Perkins Loan funds, and one for FFEL and Direct Loan funds (again, see the discussion under “Payment periods and disbursements of Title IV grant and loan funds”). As only one payment period may be used for determining earned Title IV grant and loan funds for a student who withdraws, the institution would have to choose, or the regulations could provide, which payment period to use. Changes to § 668.22(e)(5) would require an institution to always use the payment period during which the student withdrew that ends later, for Return of Title IV Funds calculations for a credit hour program that is measured in nonstandard terms that are not substantially equal in length, when the student receives aid under both payment period definitions. Aid that is disbursed for the payment periods that overlap the payment period that ends later would have to be attributed to the payment period that ends later. An example of this change is published as Appendix D to the preamble—Return of Title IV Funds—Payment periods for nonstandard term credit hour programs with terms not substantially equal in length. The student in this example withdrew on the 50th day after the start of classes. The student's FFEL/Direct Loan funds were disbursed for the first FFEL/Direct Loan payment period—i.e., the first half of the academic year. The student's Pell Grant funds were disbursed for the first Pell Grant payment period—i.e., the first term, which is 10 weeks in length. The FFEL/Direct Loan payment period is the payment period during which the student withdrew that ends later, so that is the payment period that the institution would be required to use for the Return of Title IV Funds calculation under these proposed regulations. The first two Pell Grant payment periods overlap with the first FFEL/Direct Loan payment period, so aid that was disbursed or could have been disbursed for those two payment periods would be attributed to the first FFEL/Direct Loan payment period. All of the first Pell Grant payment period falls within the first FFEL/Direct Loan payment period, so all of the Pell Grant funds that were disbursed for the first payment period would be included in the calculation. The second Pell Grant payment period of six weeks overlaps with the first FFEL/Direct Loan payment period for five of those weeks. To determine the amount of Pell Grant funds that could have been disbursed that are attributable to the five weeks, the institution would take the full amount of Pell Grant funds that could have been disbursed for the second Pell Grant payment period, and multiply it by five-sixths. If a student who withdraws from a nonstandard term credit hour program with terms that are not substantially equal in length is disbursed aid or could have been disbursed aid using only one of the two payment period definitions, that is the payment period that would be used for the calculation of earned aid, and no attribution of funds would be necessary. *Reasons:* To simplify the Return of Title IV Funds calculation and ease administrative burden, we believe that institutions should use consistent FFEL/Direct Loan and Title IV grant/Perkins Loan payment periods to the extent permitted under the law and regulations. Removing the provision that allows an institution to choose to have more than the defined two payment periods for nonterm credit hour programs and clock hour programs would result in the use of the same payment period definition for Title IV grant and Perkins Loan funds and FFEL/Direct Loan funds for nonterm credit hour programs and clock hour programs. Because the payment periods would coincide for nonterm credit hour programs and clock hour programs, the calculation of a Return of Title IV Funds would be less burdensome as an institution would not have to attribute any Title IV, HEA program funds. In the one case where an institution would not be allowed to use consistent disbursement periods, i.e., for a credit hour program that is measured in nonstandard terms that are not substantially equal in length (see the discussion under “Payment periods and disbursements of Title IV grant and loan funds”), the Department originally suggested that § 668.22 be changed to require an institution to select and consistently use either the Title IV grants/Perkins loan payment period or the FFEL/Direct Loan payment period for the Return of Title IV Funds calculations and attribute to that payment period the aid that was disbursed or could have been disbursed for the overlapping payment periods. However, under this proposal, if the payment period that ended sooner is used and funds for the overlapping payment period that ended later had already been disbursed, an institution would have to return immediately the amount of Title IV funds attributed to a period beyond the payment period being used. Using the example in Appendix D to the preamble—Return of Title IV Funds—Payment periods for nonstandard term credit hour programs with terms not substantially equal in length, if the institution chose to use the Pell Grant payment period during which the student withdrew for the Return of Title IV Funds calculation, the funds from the FFEL/Direct Loan payment period, which ends five weeks after the Pell Grant payment period, would have to be attributed. To determine the amount of FFEL/Direct Loan funds attributable to the Pell Grant payment period, the institution would multiply the full amount of the FFEL/Direct Loan disbursement by ten-fifteenths (two-thirds). The remaining amount of the disbursed FFEL/Direct Loan would be attributed to the second Pell Grant payment period. Because the second Pell Grant payment period is after the period used in the Return of Title IV Funds calculation, all funds attributed to that period would have to be returned. Such a result would raise issues such as how soon the institution would have to return those funds, would the institution be required to return any amount disbursed directly to the student, or would the institution be required to help collect those funds from the student. As a result, the Department subsequently suggested requiring an institution to always use the payment period that ends later for Return of Title IV Funds calculations for a credit hour program that is measured in nonstandard terms that are not substantially equal in length. This was considered a simpler approach that would still treat students in an equitable manner. The Committee agreed with this approach. Defining Independent Study for Direct Assessment Programs (§ 668.10) *Statute:* The HEA does not include a definition of independent study. *Current Regulations:* The current regulations mention independent study, but the term is not defined. *Proposed Regulations:* The proposed regulations would define *independent study* as a course of study with predefined objectives where a student works with a faculty member to decide how those objectives will be met. In this context, the student and faculty member must agree on what the student will do, how the student's work will be evaluated, and the relative timeframe for completing the required work. In addition, the course of study would need to include regular and substantive interaction between the student and faculty member to assure that the student is progressing within the course or program. This definition would apply only to direct assessment programs. *Reasons:* Under § 668.10(a)(3)(iii) the term *independent study* is specifically identified as an educational activity in a direct assessment program, but that term is not currently defined in the regulations. The proposed regulations address this omission. The Department initially proposed a definition of *independent study* that would apply not only to direct assessment programs but to other courses and programs offered by institutions under other pedagogical methods. Several non-Federal negotiators were concerned about the last sentence in the proposed definition that would require “a student to interact with a faculty member on a regular and substantive basis to assure progress with the course or program.” The negotiators opined that it should be the sole responsibility of an institution to establish the level and frequency of the interaction between a student and a faculty member, and not left to the Department or another compliance entity to determine later that the interaction was inadequate. The Committee agreed to narrow the scope of the definition so that it would apply only to direct assessment programs. The phrase “regular and substantive interaction,” which is also used in the definition of *telecommunications course* in § 600.2, is not meant to dictate a particular teaching method. Rather, it is meant to establish a general requirement that interaction about academic issues between students and faculty members take place at regular intervals. Treatment of Title IV Grant and Loan Funds if a Recipient Does Not Begin Attendance (§§ 668.21, 682.604, and 685.303) *Statute:* The HEA does not specifically address the issue of the treatment of Title IV grant and loan funds if a recipient does not begin attendance at an institution. *Current regulations:* Section 668.21 prescribes the general regulations for the treatment of funds disbursed to a student who leaves the institution before beginning class. These regulations apply to all the Title IV program funds except for FFEL, Direct Loan, and FWS funds. Under these requirements, an institution must return any Perkins Loan, FSEOG, Pell Grant, ACG, and National SMART Grant funds that were disbursed to a student before the student begins attendance, even if those funds were disbursed directly to the student. There is no existing timeframe for returning these Title IV funds. A student is considered not to have begun attendance if the institution is unable to document the student's attendance at any class. The treatment of FFEL and Direct Loan funds when a student leaves the institution before beginning class is addressed in §§ 682.604(d)(3) and
(4)and 685.303(b)(3), respectively. An institution must return any loan proceeds credited to the student's account, as well as the amount paid to the institution by or on behalf of the student, not to exceed the total amount of loan funds disbursed. If any FFEL funds have been disbursed to the institution but have not been delivered to the student, the institution must return those funds in accordance with the Title IV cash management requirements in § 668.167. *Proposed regulations:* Section 668.21 would be changed to consolidate all the requirements addressing the treatment of Title IV funds (except FWS) when a student does not begin attendance in a payment period or period of enrollment by moving the requirements for FFEL and Direct Loan funds from §§ 682.604 and 685.303, respectively, to § 668.21. As under current regulations, an institution would be required to return any Perkins Loan, FSEOG, Pell Grant, ACG, and National SMART Grant funds that are disbursed to a student for a payment period or period of enrollment before the student begins attendance, even if those funds were disbursed directly to the student. The regulations for FFEL and Direct Loan funds would mirror existing requirements whereby, in addition to being required to return the amount of FFEL and Direct Loan funds credited to the student's account, an institution would be responsible for returning the amount paid to the institution by or on behalf of the student, not to exceed the total amount of loan funds disbursed. Also in accordance with current requirements, an institution would not be responsible for returning any FFEL and Direct Loan funds that are disbursed directly to a student before the student begins attendance, other than as noted above. The proposed regulations would specify that an institution must notify the lender or Secretary, as appropriate, of amounts disbursed directly to the student that are outstanding, so that the lender or Secretary can issue a 30-day demand letter to the student as required under current regulations. Institutions would not be responsible for returning loan funds that are disbursed directly to the student by the lender for a student in a study-abroad program or for a student attending a foreign school. A new requirement would be added to require an institution to return FFEL or Direct Loan funds that it disbursed directly to a student if the institution knew that the student would not begin attendance prior to disbursing the funds directly to the student. This would apply, for example, if a student notified the institution that he or she would not be attending or if the institution expelled the student prior to directly disbursing the funds. The proposed regulations would require an institution to return those funds as soon as possible, but no later than 30 days after the date that the institution becomes aware that the student will not attend or has not begun attendance. The proposed regulations would specify when a return is considered to have been made in a timely manner. Specifically, the regulations would provide that an institution returns funds when it—
(1)Deposits or transfers the funds into the bank account it maintains for Federal funds;
(2)initiates an electronic funds transfer
(EFT)to transfer the funds;
(3)initiates an electronic transaction that instructs an FFEL lender to adjust a borrower's loan for the amount of the “returned funds;” or
(4)issues a check. However, if a check is used to return funds, the proposed regulations would also require that
(1)the institution's records show that the check was issued no more than 30 days after the date it became aware that the student will not attend or has not begun attendance; or
(2)the check must be received by an FFEL lender or the Secretary no later than 45 days after the institution became aware that the student will not attend or has not begun attendance. The regulations would make clear that, as with the current requirements in § 668.21, these provisions apply if an institution is unable to document the student's attendance at any class. Finally, § 682.604 has been changed to clarify how to handle FFEL funds that an institution has delivered, versus those that were disbursed to the institution, but were not delivered by the institution. *Reasons:* The current FFEL and Direct Loan regulations for the treatment of Title IV funds when a student does not begin attendance are complex and contain numerous cross references, making them hard to follow. By consolidating the FFEL and Direct Loan regulations with those of the other Title IV programs in this area, as well as rewriting the FFEL and Direct Loan regulations, we hope to achieve greater consistency and clarity. The Department originally suggested changing the FFEL and Direct Loan requirements to mirror those applicable to Title IV grant and Perkins Loan funds. That is, an institution would be responsible for returning any FFEL and Direct Loan funds that were disbursed to a student before the student began attendance, even if the institution had disbursed the funds directly to the student. Some non-Federal negotiators felt, and the Department agreed, that such a change would cause institutions to reduce their potential liability by refusing to disburse FFEL and Direct Loan funds prior to the start of classes, thereby denying funds needed by students to begin classes. As a result, the Committee agreed to language that would reflect the current regulations for the treatment of FFEL and Direct Loan funds when a student does not begin attendance, with one addition. The Committee agreed that an institution should be liable for any FFEL and Direct Loan funds that the institution disbursed to a student if the institution knew that the student would not be beginning attendance because the institution should have known not to make the disbursement. The establishment of a 30-day timeframe for the return of funds for which an institution is responsible would ensure that institutions return Title IV funds in a timely manner. Some negotiators felt that the timeframe should be consistent with the 45-day timeframe for the return of funds by an institution in accordance with the “Return of Title IV Funds” requirement in § 668.22, which prescribes the requirements for returning Title IV grant and loan funds when a student withdraws during a payment period or period of enrollment. The Department stated that it does not believe the additional 15 days is necessary because, unlike the Return of Title IV Funds requirements, no calculation is required to determine the amount of funds an institution must return. The timely return requirements are the same as those currently found in § 668.173 and were added to provide consistency with the requirements applicable to returns made in accordance with the Return of Title IV Funds requirements in § 668.22 for students who withdraw during a payment period or period of enrollment. Post-Withdrawal Disbursements of Grant Funds Directly to a Student (§ 668.22) *Statute:* Section 484B(a)(4) of the HEA requires an institution to contact a borrower before making a post-withdrawal disbursement of Title IV loan funds to a student who has withdrawn, including post-withdrawal disbursements that would be disbursed directly to the student. No such statutory requirement exists for Title IV grant funds. *Current regulations:* Under § 668.22(a)(5), prior to making any disbursement of Title IV loan funds, an institution is required to notify and obtain the withdrawn student's (or parent's, for a parent PLUS loan) permission to make that disbursement regardless of whether the funds are credited to the student's account or disbursed directly to the student or parent, for a parent PLUS loan. For Title IV grant funds that make up a post-withdrawal disbursement, § 668.22(a)(5) requires an institution to notify and obtain the student's permission prior to making any disbursement directly to the student. An institution is not required to obtain the student's permission prior to crediting Title IV grant funds to the student's account. In accordance with § 668.22(a)(5)(iii)(C), if an institution receives confirmation from the student, or parent for a PLUS loan, that he or she wants the Title IV loan funds credited to the student's account or paid directly to the student or parent, the institution must make the post-withdrawal disbursement within 120 days of the date that it determined that the student withdrew. *Proposed regulations:* Under proposed § 668.22, an institution would no longer be required to notify and obtain the student's permission prior to making a direct disbursement of any Title IV grant funds that make up a post-withdrawal disbursement. An institution would be required to make a direct disbursement of Title IV grant funds that make up a post-withdrawal disbursement as soon as possible, but no later than 30 days after the date of the institution's determination that the student withdrew (as defined in current § 668.22(l)(3)). A corresponding change would make clear that, after receiving confirmation from a student, or parent in the case of a PLUS loan, that he or she wants a post-withdrawal disbursement of Title IV loan funds credited to his or her account, or disbursed directly, an institution must make the post-withdrawal disbursement as soon as possible, but no later than 120 days after the date of the institution's determination that the student withdrew (as defined in current § 668.22(l)(3)). *Reasons:* Non-Federal negotiators felt, and we agreed, that permission was not necessary to disburse Title IV grant funds directly to a student as potentially harmful consequences to the student do not exist, as may be the case when a student who withdraws incurs a loan debt. We believe that 30 days from the date that the institution determines that a student withdrew is an appropriate amount of time for an institution to make a direct disbursement of a post-withdrawal disbursement of grant funds. Although an institution has 45 days to return any unearned Title IV funds for which it is responsible when a student withdraws, the administrative functions that institutions have indicated they must perform with such a return do not apply to the direct disbursement of funds to a student. Therefore, the timeframe for making a direct disbursement need not be as long. Although the non-Federal negotiators agreed that it is implied that required institutional actions must be done as soon as possible, the Committee agreed that it was beneficial to specify this in the regulations. Prompt action is more likely to ensure that contact will be made with a student who is no longer in attendance at the institution. Cash Management—Recovery of Unclaimed Title IV Funds (§ 668.161) *Statute:* Under section 487(a) of the HEA, when an institution enters into a program participation agreement with the Secretary the institution agrees, in part, to use the funds it receives under any Title IV, HEA program (and any interest or other earnings on those funds) solely for the purpose of that program. *Current Regulations:* An institution's fiduciary responsibilities for using funds it receives under the Title IV, HEA programs are currently described in §§ 668.14(b)(1) and 668.161(b). The regulations provide that Title IV, HEA program funds are held in trust for the intended student beneficiary, the Secretary, FFEL lender, or guaranty agency and cannot be used for any other purpose. *Proposed Regulations:* The proposed regulations would incorporate in § 668.164 timeframes for returning Title IV, HEA program funds that an institution attempts to disburse directly to a student or parent, but the student or parent does not receive or negotiate those funds. If an institution issues a check but the check is not cashed or is returned as undeliverable to the institution, the proposed regulations would require the institution to send the funds back to the Secretary or FFEL lender no later than 240 days after the date the check was issued. In cases where an institution attempts to disburse the funds by issuing a check or initiating an EFT to the student's or parent's bank account, and the check or EFT is returned as undeliverable, the proposal would allow the institution to make subsequent attempts to disburse the funds as long as those attempts are made within 45 days of the date the check or EFT were returned. If the institution makes a subsequent attempt by issuing a check, and that check is not cashed or is returned as undeliverable, the institution would be required to send the funds back to the Department or lender no later than 240 days after the date it initially attempted to disburse the funds. In addition, the proposed regulations would make clear that Title IV, HEA program funds never escheat to a State, regardless of any State law. *Reasons:* These proposed regulations would establish for the first time in regulations timeframes for returning unclaimed or undeliverable funds for two reasons. First, as a program integrity matter the Department believes that Title IV, HEA program funds should not remain outstanding for long periods, which increases the risk the funds will be used for other purposes or that the funds would escheat to the State. Second, the Department believes it increases the likelihood that a student will receive the benefit of the funds in a more timely manner; either a concerted effort is made by an institution to disburse the funds (particularly for funds that are returned undeliverable) or the funds are returned more quickly to a lender or the Department to reduce the student's loan balance. Originally the Department proposed a 180-day timeframe for returning funds. The non-Federal negotiators noted that this timeframe would be difficult to meet since many checks are valid for 180 days. Instead, they suggested timeframes ranging from 210 days to one year or more (the 210-day timeframe would accommodate a typical 180-day check and allow for one monthly bank reconciliation to see if the check was still outstanding). The Department agreed that more time was needed and subsequently proposed a maximum 240-day timeframe. The Committee agreed to this timeframe. With regard to a check or EFT that is returned as undeliverable, the Department originally proposed that an institution could make one more attempt. This proposal was later modified to allow as many attempts as an institution wanted to make as long as it made those attempts promptly (within 45 days after the date the check or EFT is returned). Cash Management—Minor Prior-Year Charges (§ 668.164) *Statute:* Under Part E—Need Analysis of the HEA (particularly sections 471 through 473), a student's need for most Title IV, HEA program funds is determined by subtracting the expected family contribution
(EFC)and other estimated financial assistance from the student's cost of attendance. The cost of attendance is based on current year educational expenses. The EFC is the amount that can reasonably be contributed toward meeting the student's educational expenses for the academic year for which a need determination is made. *Current Regulations:* Under § 668.164(d)(2), an institution may use a student's current year Title IV, HEA program funds to pay for minor prior-award year charges if the charges are less than $100, or the charges are $100 or more and the payment of those charges does not prevent the student from paying his or her current educational costs. In either case, the institution must first obtain the student's permission. *Proposed Regulations:* The proposal would amend the regulations in three ways. First, the amount of prior-year charges that could be paid with current year funds would increase to not more than $200. Second, an institution would not have to obtain the student's permission to pay for prior-year charges for tuition and fees, or room or board. Finally, the provision allowing an institution to pay for prior-year charges of $100 or more (now more than $200) would be removed. *Reasons:* The non-Federal negotiators recommended revising these regulations. They argued that the $100 prior-year threshold, established approximately 10 years ago, should be increased to account for inflation. In addition, they questioned the need to obtain a student's permission to pay for prior-year tuition and fees, or room or board charges since the regulations allow an institution to pay these charges for the current year without getting the student's permission. The Department agreed. However, the Department proposed to limit the payment of prior-year charges to truly minor charges (i.e., those of not more than $200) to avoid potential conflicts with the statutory intent that current year awards are used for current year educational expenses. The Committee agreed to this $200 limitation. Cash Management—Electronic Disbursements of Title IV Funds (§§ 668.164(c) and 668.165(b)(i)) *Statute:* The HEA does not address the issue of electronic disbursement of Title IV funds. *Current Regulations:* The current regulations in § 668.164(c) provide that an institution issues a check on the date it releases or mails the check to a student, or on the date it notifies a student that the check is available for immediate pickup. The regulations also allow an institution to make a direct payment to a student by initiating an EFT to the student's bank account or by paying the student in cash. If an institution wishes to make an EFT, it must obtain the student's authorization under § 668.165(b)(1)(i). *Proposed Regulations:* The proposed regulations would modify the provisions for issuing a check and add new provisions expanding the use of EFTs to bank accounts that underlie stored-value cards and other transaction devices. In addition, § 668.165(b) would be amended to remove the requirement that an institution obtain a student's authorization to make an EFT payment and add a provision allowing an institution to issue a stored-value card or similar device. The proposed regulations would require an institution to identify in its notice to a student the specific location at the institution where the student can pick up his or her check. A student would have 21 days to pick up the check, after which the institution would have to mail the check to the student, initiate an EFT to the student's bank account, or return the funds to the appropriate Title IV, HEA program account. With regard to bank accounts, an institution may not require or rely on a student to open an account. In cases where the institution opens a bank account on behalf of a student, establishes a process the student follows to open a bank account, or similarly assists the student in opening the account, the institution would need to satisfy the following provisions: 1. It must obtain written consent from the student to open the bank account. 2. It must inform the student of the terms and conditions of accepting and using the account. 3. It must not make any claims against the funds in the account unless it obtains the student's permission or the institution is correcting an error in transferring funds in accordance with banking protocols. 4. It must ensure that the student does not incur any costs in opening the account or initially receiving any type of automated teller machine
(ATM)card, stored-value card, or other similar device that is used to access funds in the account. 5. It must ensure that the student has convenient access to a branch office of the bank or ATMs of the bank in which the account was opened (or ATMs of another bank) so that the student does not incur any cost in making cash withdrawals. 6. It must ensure that the debit card, stored-value card, ATM card, or other device can be widely used (the institution may not limit the use of the card or device to particular vendors). 7. It must not market or portray the account, card, or device as a credit card or subsequently convert it to a credit card. As used in the context of these proposed regulations, “bank account” means a Federal Deposit Insurance Corporation
(FDIC)insured account such as a checking or savings account, or a similar account that underlies a stored-value card or other transaction device. Also, the proposed regulations would amend the provision under which an institution (with the student's permission) holds credit balance funds for a student by providing that the institution may issue a stored-value card or other similar device that enables the student to access those funds. *Reasons:* The Department proposes the changes to issuing a check in response to situations where an institution notifies a student that a check is available for immediate pickup, but there is no check. Instead, the student is directed to take other actions to get his or her credit balance, and in some cases does not receive the credit balance until those actions are completed. We wish to make clear that under the current or proposed regulations, a student is not required to take any actions to obtain his her credit balance. It is the sole responsibility of the institution to pay, or make available, any Title IV credit balance within the 14-day regulatory timeframes. To address this situation, the Department initially proposed to the non-Federal negotiators that a check is issued on the date it is mailed, or handed over, to the student. The non-Federal negotiators argued that this approach was too limiting and would unnecessarily force institutions to mail checks to students who intended to pick up their checks or to students who did not update their mailing address. A compromise was reached under which the check pickup provision would be maintained, but if the student did not pick up the check within 21 days the institution would have to immediately disburse the credit balance funds some other way or return the funds. With regard to expanding the use of EFTs for making direct payments to students, the proposal generally mirrors the guidance published in the Department's Dear Colleague Letter GEN-05-16 of October 17, 2005, questions and answers 18 through 21, by identifying certain provisions that an institution must satisfy when it makes an EFT to a student's bank account. The Dear Colleague Letter is available at *http://ifap.ed.gov/dpcletters/GEN0516.html* . However, under the proposal these provisions would apply only to an institution that is purposefully and actively involved in opening bank accounts for or on behalf of students, or facilitating the opening of such bank accounts, including accounts underlying transaction devices. An institution that merely recommends a bank where a student might open an account, or simply invites banks to its campus to present their services to students and where students can open bank accounts, would not be subject to these provisions. Finally, in response to questions from the non-Federal negotiators relating to school-issued smart cards, or similar transaction devices, the proposal would allow the use of such cards where an institution already has the student's permission to hold Title IV credit balance funds on his or her behalf. Cash Management—Late Disbursements (§ 668.164(g)) *Statute:* The HEA does not specifically address the issue of late disbursements. *Current Regulations:* Section 668.164(g) allows a student who is no longer eligible to receive Title IV, HEA program funds to qualify for those funds if certain conditions are satisfied. If a student qualifies, an institution has 120 days from the date the student becomes ineligible to disburse the funds to the student. In cases where the institution does not disburse the funds within the 120-day period, and the reason the funds were not disbursed was not the student's fault, the institution may request approval from the Secretary to disburse the funds. *Proposed Regulations:* The proposed regulations would extend from 120 to 180 days the period within which an institution would be allowed to make a late disbursement, but would eliminate an institution's ability to request funds after that period expires. *Reasons:* We believe the current provision allowing an institution to request a late disbursement after 120 days is not always in keeping with the institution's fiduciary responsibilities to
(1)promptly identify students who should have but did not receive their funds either while they were eligible or within four months after they ceased to be eligible, and
(2)make disbursements to students in a timely manner. However, we recognize that in some cases, despite the best efforts of an institution, more time may be needed to resolve a complicated situation before a disbursement can be made. The Department initially proposed to maintain the current 120-day late disbursement period but eliminate any subsequent requests. Some non-Federal negotiators argued that the post 120-day late disbursement provision benefited students who did everything they were asked to do and should be maintained in its current form or as part of some type of appeal procedure. Other non-Federal negotiators believed that the 120-day period afforded institutions adequate time to make late disbursements. If the disbursements were not made, the negotiators stated that the institution should assume responsibility and use its own funds to make the disbursements. In the end, an agreement was reached providing 180 days to make a late disbursement. Loan Cancellation Notice and Affirmative Confirmation of a Loan (§ 668.165(a)) *Statute:* Section 432(m)(1)(D)(i) of the HEA provides that a master promissory note
(MPN)must allow eligible borrowers to receive initial and subsequent loans through a student confirmation process approved by the Secretary. *Current Regulations:* Section 682.401(d)(4)(vi) requires an institution and a lender to develop and document a confirmation process in accordance with guidelines established by the Secretary for loans made under the multi-year feature of an MPN. The guidelines allow an institution to use either an active or passive confirmation process. In addition, the regulations in § 668.165(a)(2) provide that an institution must notify a student whenever it credits a student's account with funds from a Title IV, HEA program loan. The institution must send the notice no earlier than 30 days before, and no later than 30 days after, it credits the student's account. A student then has 14 days to inform the institution if he or she wishes to cancel all or a portion of the loan or loan disbursement. If the institution receives a cancellation request within this 14-day period, it must comply with the student's request and cancel the loan, return the loan proceeds, or do both. *Proposed Regulations:* These proposed regulations would condition the loan cancellation provisions in § 668.165 on whether an institution obtains affirmative (active) confirmation from a student that he or she wants a loan. If the institution obtains affirmative confirmation, then it would continue to comply with the current loan cancellation provisions. If the institution does not obtain affirmative confirmation, it would be required to notify the student no earlier than 30 days before, but no later than seven days after, it credits the student's account with loan funds. Moreover, the institution would be required to give the student 30 days (instead of the current 14 days) to cancel all or a portion of the loan or loan disbursement. The proposed regulations would define *affirmative confirmation* as a process under which an institution obtains written confirmation of the types and amounts of Title IV, HEA program loans that a student wants for an award year before the institution credits the student's account with those loan funds. Also, the proposed regulations would clarify that, if an institution received a loan cancellation request, it would not have to return loan proceeds that the institution disbursed directly to a student or parent. *Reasons:* Under the current loan certification or origination processes, other than for the initial loan under an MPN, a student can continue to receive subsequent loans without doing anything. We believe that the process for obtaining a loan should, as an added consumer protection, provide the student with more control over the types and amounts of loans he or she wants. For this reason, we initially proposed that as part of the process for notifying a student of the amounts and types of loans he or she was eligible to receive for an award year, or through another process, the institution would obtain affirmative confirmation from the student for those loans. Some of the non-Federal negotiators noted that there are already several disclosures made to students regarding their loans and opined that affirmative confirmation was either not needed or that any marginal benefit would be outweighed by the cost and complexity of implementing it. Other non-Federal negotiators stated that their institutions currently use an affirmative confirmation process. In lieu of affirmative confirmation we then proposed to modify the loan cancellation provisions by
(1)requiring an institution to notify a student no later than the date that loan funds were credited to his or her account (instead of up to 30 days after that), and
(2)giving the student more time (30 days instead of 14) to cancel all or a portion of the loan. Some of the non-Federal negotiators countered by suggesting that the Department give institutions a choice between doing affirmative confirmation or complying with the expanded loan cancellation regulations. We agreed to provide this choice. Cash Management—Excess Cash (§ 668.166) *Statute:* The HEA does not specifically address the issue of excess cash. *Current Regulations:* Under § 668.166, excess cash is defined as any amount of Title IV, HEA program funds (except for Perkins Loan funds) an institution receives from the Secretary that is not disbursed to students or parents by the end of the third business day following the date the institution received those funds. An institution is allowed to maintain excess cash for seven days under two tolerance options. Under the first option, the institution may maintain excess cash for an amount up to one percent of the total amount of funds it drew down in the previous year. Under the second option, the institution may maintain excess cash for an amount up to three percent of its prior-year drawdowns, if the funds are drawn down during a period of peak enrollment. In instances where the Secretary finds that an institution maintains excess cash for an amount or time period greater than that allowed under the tolerance options, the regulations prescribe the method used to calculate a liability for maintaining those funds and provide that the Secretary may initiate a proceeding to fine, limit, suspend, or terminate the institution's participation in the Title IV, HEA programs. *Proposed Regulations:* The proposed regulations would expand the definition of excess cash to include Title IV, HEA program funds received from the Secretary that are deposited or transferred into the institution's Federal bank account as a result of an award cancellation, adjustment, or recovery. Also, the proposed regulations would eliminate the three percent excess cash tolerance option and simplify the provisions addressing the consequences for maintaining excess cash. *Reasons:* The proposed regulations clarify that any Title IV, HEA program funds that an institution has and does not use to make disbursements to students within three business days are considered excess cash. We initially proposed to eliminate both tolerance options in view of the progress the Department and institutions have made over the last 10 years in moving more and more to a student-level reporting and authorization process, and the timeliness and predictability of transferring funds electronically. Some of the non-Federal negotiators objected, arguing that some tolerance is still needed. We agreed to keep the one percent tolerance option. With regard to the consequences for maintaining excess cash, we believe the current regulations are unnecessarily complex in specifying the method used to calculate an interest liability. In addition, the provision alerting institutions that the Secretary may initiate an adverse action for maintaining excess cash is redundant, since the Secretary may take an adverse action for any finding, depending on the gravity and materiality of the violation. Instead, and perhaps more likely, we note that the Secretary may place an institution on cash monitoring or reimbursement. Single Disbursement for Perkins and FSEOG Awards (§§ 674.16 and 676.16) *Statute:* The HEA does not specifically address single disbursements for Perkins and FSEOG awards. *Current Regulations:* Under §§ 674.16(g) and 676.16(e), an institution may make a single disbursement of a Perkins Loan or FSEOG award if the total amount of that award for an academic year is less than $501. *Proposed Regulations:* We propose to eliminate these single disbursement provisions. *Reasons:* These regulations are no longer needed—they were published in 1978 in response to administrative burdens and costs associated with paying students small amounts each payment period by check and maintaining manual accounting records. Minimum Period for Certifying a Loan (§§ 682.603 and 685.301) *Statute:* The HEA does not specifically address the issue of the minimum period for certifying a loan. *Current Regulations:* The current regulations indicate the minimum period of enrollment for which a school may certify (for an FFEL loan) or originate (for a Direct Loan Program loan) a loan. The minimum period is based on whether the program
(1)measures academic progress in credit hours and uses a semester, trimester, or quarter credit hour system, or
(2)measures progress in credit hours but does not use a semester, trimester, or quarter credit hour system or measures progress in clock hours. For the first category, the school may certify or originate a loan for a single term. For the second category, the school may certify or originate a loan for the lesser of the length of the program or the academic year. *Proposed Regulations:* The proposed regulations make several changes. First, with respect to allowing a school to make a loan for a single term, the proposals in §§ 682.603(f)(1)(i) and 685.301(a)(9)(i) treat terms that are substantially equal in length with no term less than nine weeks in length in the same way that semesters, trimesters, or quarters are treated. Terms are considered substantially equal in length if no term is more than two weeks longer than any other term. Second, with respect to programs that measure progress in credit hours but do not use a semester, trimester, or quarter system and do not have terms that are substantially equal in length with no term less than nine weeks in length, or measure progress in clock hours, the proposal clarifies that the school may certify a loan for the remaining portion of the program. Third, the proposal indicates that, under certain specified conditions, a school may certify or originate a loan for the remaining portion of the program or academic year for a transfer student. This would be allowed at a school that measures academic progress in credit hours but does not have terms that are substantially equal in length with no term less than nine weeks in length, or at a school that measures progress in clock hours, where there would be overlapping loan periods for the student at the two schools involved. The loan at the new school could not exceed the remaining balance of the student's annual loan limit, taking into consideration the amount of loan proceeds that the student had received at the prior school. Fourth, the proposal indicates that, under certain specified conditions, a school may certify or originate a loan for the remaining portion of the academic year for a student who completes a degree program at a school and then immediately begins a new degree program at the same school. This would be allowed at a school that measures academic progress in credit hours but does not use a semester, trimester, or quarter system and does not have terms that are substantially equal in length with no term less than nine weeks in length, where the loan to complete the student's first degree program had been for less than an academic year. The second loan may not exceed the remaining balance of the student's annual loan limit at the loan level associated with the new program. For example, if a student in his or her third year at such a school received $1,500 for less than an academic year to complete his or her associate's degree program, and then immediately enrolled in a bachelor's degree program at the same school, the school could certify or originate a loan for $4,000 for the remainder of the academic year ($5,500 − $1,500 = $4,000). Once that period of time (the remainder of the academic year) is completed, the school could certify or originate a new loan for the next full academic year. *Reasons:* The Department proposed in §§ 682.603(f)(1)(i) and 685.301(a)(9)(i) to treat terms that are substantially equal in length with no term less than nine weeks in length in the same way as semesters, trimesters, or quarters for purposes of allowing schools to make a full loan for a single term. A quarter often is as short as 10 weeks long in a three-quarter, 30-week academic year. If a school were to have three substantially equal terms (i.e., no term more than two weeks longer than any other term) in a 30-week academic year, it would have to have three terms of nine weeks, 10 weeks, and 11 weeks. Such terms would be substantially similar to quarters. Therefore, the Department believes that the school should be allowed to make a full loan for such a single term in the same way that it can for a single quarter. However, several negotiators, while agreeing that there should be a minimum number of weeks associated with this concept, suggested that the minimum should be eight weeks for programs that had four eight-week terms in a 32-week academic year. After some discussion, the Committee agreed to the original Departmental proposal to consider nine weeks to be the minimum length for such a term to be a period for which a full loan could be made. Another topic addressed by the Committee was the minimum period of time for which a loan may be certified or originated for transfer students. Currently transfer students in a program that measures academic progress in credit hours but does not use a semester, trimester, or quarter system or measures progress in clock hours are allowed to borrow only the remaining balance of their loan amounts when they have already had a loan for an academic year (or a program of less than an academic year) made to them at a previous school where the loan period at the previous school overlaps the loan period at the school the students transfer into. Since the minimum period of time for which a school can certify a loan is the lesser of the program (or remaining portion of the program) or the academic year, transfer students with one academic year or more remaining in their program often are eligible to borrow only a small amount of money (the remaining balance) for a period of time associated with the first full academic year (usually 30 weeks) remaining in their program. One non-Federal negotiator believed that this was unfair, and suggested that transfer students in these types of programs should be allowed to obtain loans for the remaining portion of the program or academic year, instead of for the whole program or academic year when the prior school certified or originated a loan for a period of enrollment that overlaps the period of enrollment at the new school. That negotiator and other non-Federal negotiators argued that this should be the case because the new school is only certifying or originating a loan for the remaining balance of the students' annual loan amount, not for the entire annual loan limit. After discussion of this topic, the Committee agreed with this position. Another non-Federal negotiator pointed out that often when students complete a degree program at a school that measures academic progress in credit hours but does not use a semester, trimester, or quarter system, and then immediately start another degree program, they are allowed to borrow only the remaining balance of their annual loan amount for the first academic year of their second degree program. This occurs when the last loan made to complete the first degree program had been for less than an academic year. Since the minimum period of time for which a school can certify a loan is the lesser of the program (or remaining portion of the program) or the academic year, students finishing one degree program and starting a second degree program in the situation noted above are eligible to borrow only a small amount of money (the remaining balance) for a period of time associated with the first full academic year (usually 30 weeks) of their second degree program. Therefore, the Committee agreed that, for these students in these types of programs, where the school certified or originated a loan for less than an academic year for the completion of one degree program, it should be allowed to certify or originate a loan for the beginning of the second degree program for the remaining portion of the academic year, instead of for the whole academic year. Annual Loan Limit Progression (§§ 682.603 and 685.301) *Statute:* A student must complete an academic year to progress to the next FFEL or Direct Loan annual loan limit. Section 428(b)(1)(A) of the HEA authorizes insurance on a subsidized Stafford loan for any academic year. Unsubsidized Stafford loans, at the increased loan limits for such loans, are subject to the academic year limits in section 428(b)(1) of the HEA. Section 481(a)(2) of the HEA requires an academic year to be
(1)a 26-week minimum period of instructional time for clock hour programs and a 30-week minimum period of instructional time for credit hour programs, unless the Secretary authorizes a reduced period of not less than 26 weeks as specified in regulations; and
(2)for an undergraduate program, at least 24 semester or trimester credit hours, 36 quarter credit hours, or 900 clock hours. *Current regulations:* None. *Proposed regulations:* Under current policy, for a standard term based program, a student progresses to the next annual loan limit if he or she completes an academic year in calendar time. So, once the calendar time period associated with all of the terms in the academic year has elapsed, a student gains eligibility for a new annual loan limit. For nonstandard term credit hour, nonterm credit hour, and clock hour programs, a student does not progress to the next loan limit until he or she completes an academic year in both time and hours. The proposed regulations would incorporate this policy with one change. As in a standard term based program, a student would progress to the next loan limit if he or she completes an academic year in calendar time in a nonstandard term credit hour program if the terms in that program are substantially equal in length and are at least nine weeks in length. *Reasons:* The Department seeks to incorporate in regulations current policy regarding progression to the next annual loan limit to provide for greater clarity of the requirements. The change to apply the policy applicable to standard term credit hour programs to nonstandard term credit hour programs if the terms in those programs are substantially equal in length and are at least nine weeks in length would provide consistency with final regulations published in the **Federal Register** on November 1, 2000 (65 FR 65616), whereby the Department applied the disbursement requirements for standard term-based programs to credit hour programs measured in nonstandard terms that are substantially equal in length. The Committee agreed that the inclusion of these changes was desirable. Calculation of a Pell Grant (§§ 690.63 and 690.66) *Statute:* Section 401(e) of the HEA indicates that the Secretary will promulgate regulations to ensure that an eligible student is paid a Pell Grant for each academic year in the amount for which that student is eligible. *Current Regulations:* The current regulations provide institutions with a number of formulas for calculating a Pell Grant on a payment period basis depending on the academic calendar of the program that is being taken. Section 690.63(a)(1) indicates which formulas can be used for programs using standard terms with at least 30 weeks of instructional time, and provides the specific criteria that must be used to determine whether a program falls under that category. The section limits programs in that category to traditional semester, trimester, or quarter credit hour programs. Section 690.63(b), (c), and
(d)provides the formulas that are used for programs that use credit hours and academic terms. Section 690.63(e) provides the formula for programs using clock hours or credit hours without terms. And § 690.66 provides formulas for correspondence study programs. *Proposed Regulations:* The proposed regulations make several changes. First, the proposed regulations in § 690.63(a)(1) place semester, trimester, and quarter programs that have terms for different cohorts of students that start periodically (e.g., each month) in the same category as the traditional semester, trimester, or quarter programs and, thus, allow institutions with those types of programs to use the same formulas for those programs as are used for the traditional term programs. Second, the proposed regulations in § 690.63(e) would modify the calculation for programs using clock hours or credit hours without terms. The resulting calculation would determine the percentage of the academic year that would be used to determine the award amount for the payment period, considering both the hours and the weeks of instructional time in the payment period. The calculations would call for the student's scheduled award (the amount a full-time student would get for a full academic year) to be multiplied by the lesser of two fractions that represent
(1)the credit or clock hours in the payment period divided by the credit or clock hours in the academic year, and
(2)the weeks of instructional time in the payment period divided by the weeks of instructional time in the academic year. Third, the proposed regulations in § 690.66(a) make a similar modification to the calculation for correspondence study programs without terms. *Reasons:* The formula most often used for traditional semester, trimester, or quarter credit hour programs is specified in current § 690.63(b). These programs also have the option of using the formula specified in current § 690.63(d). Under the formula in § 690.63(b), a student's Pell Grant is calculated for a payment period (a term). The formula provides for a determination of the student's enrollment status for the term and use of the Payment Schedule or Disbursement Schedule associated with that enrollment status to determine the annual amount that the student would get at that enrollment status. The annual amount is then divided by the number of terms associated with the program's academic year. For example, for a full-time student in the fall semester in a traditional semester program, the formula calls for the Scheduled Award (the amount a full-time student would get for a full academic year) to be divided by two (the number of semesters associated with the academic year for that program). Or, for a half-time student in the fall quarter in a traditional quarter program, the formula calls for the annual amount from the half-time Disbursement Schedule to be divided by three (the number of quarters associated with the academic year for that program). Traditional term-based programs are allowed to use this formula if they meet the criteria in current § 690.63(a)(1). Under the proposed change to § 690.63(a)(1), traditional programs would continue to be allowed to use this formula. However, several non-Federal negotiators suggested that, because certain other programs (i.e., those that start their semesters, trimesters, or quarters on a periodic (e.g., monthly) basis for different cohorts of students) are substantially similar in nature to traditional semester, trimester, or quarter programs, they also should be allowed to use this formula. These negotiators suggested that this issue be added to the negotiated rulemaking agenda, and the Committee agreed to do so. After discussion of this issue, the Committee members agreed that, if these programs meet the criteria applicable to them in proposed § 690.63(a)(1), they should be allowed to use the same formulas that traditional semester, trimester, or quarter programs are allowed to use. The formula used for programs using credit hours without terms or clock hours is specified in current § 690.63(e). It is used for such programs regardless of the program length and it generally works well when applied to programs that are an academic year or more in length; however, a non-Federal negotiator pointed out that, for certain short programs (less than an academic year in length), application of the formula results in the student qualifying for less of an award than might be deemed appropriate based on the length of the program. For example, a student with a Scheduled Pell Grant Award of $4050, generally receives $4050 for a program that is one academic year in length (e.g., a program of 900 clock hours scheduled to be taken over a 30-week period). Such a student might expect to receive two-thirds of that Scheduled Award ($2700) for a shorter program that is two-thirds as long, e.g., a program of 600 clock hours scheduled to be taken over a 20-week period. However, currently such a student would receive only four-ninths of the Scheduled Award ($1800) instead of two-thirds of the Scheduled Award ($2700) for such a program. Therefore, the non-Federal negotiator suggested that this issue be added to the agenda, and the Committee agreed to do so. During negotiations, it was noted that the above result occurs because of the way the current formula addresses the fact that an academic year is measured in both (credit or clock) hours and weeks of instructional time. Consider, for example, the 600-hour, 20-week program mentioned above. Even though the program is less than an academic year long, it must have a defined academic year, and we will assume here that its defined academic year is 900 clock hours and 30 weeks of instructional time. Because the definition of *academic year* includes hours and weeks, the Pell Grant formula calls for a reduction based on both factors when the program is less than an academic year in both hours and weeks. In this example, the first part of the calculation reduces the full Scheduled Award of $4050 to two-thirds of that amount ($2700) to address the fact that the program consists of only 20 weeks; and then it reduces that figure ($2700) by another two-thirds to account for the fact that the program is only 600 hours. Note that the calculations are actually performed on a payment period basis and, while the numbers here show the result for the whole program, the program would actually be divided into two payment periods, and two separate calculations—each for one-third of the program—would actually be done. In response, the Department proposed an alternative calculation. This alternative continues to address the fact that an academic year is defined by both (credit or clock) hours and weeks of instructional time. However, the proposed calculation multiplies the student's Scheduled Award by only one of the two fractions that address reductions in program length and hours (the lesser of the two where the fractions are not the same), instead of multiplying the Scheduled Award by the two fractions sequentially. Note that while one of the two fractions used in the proposed regulations is slightly different than one of the two fractions in the current regulations, the two fractions in both the proposed and the current regulations basically attempt to account for
(1)the weeks of instructional time for which the student is being paid compared to the weeks of instructional time in the academic year, and
(2)the credit or clock hours for which the student is being paid compared to the credit or clock hours in the academic year. The first fraction in the current regulations was primarily designed to address course compression—that is, for example, to the extent that a one academic year program (in terms of credit or clock hours) was scheduled to be completed in fewer weeks of instructional time than was a similar program taken over the full 30 weeks in the defined academic year, the student's award was going to be reduced. However, to the extent that there would be a full complement of credit or clock hours in the program compared to the credit or clock hours in the academic year, the second fraction would not result in a further reduction. While this formula generally worked as intended for longer programs that were compressed, it ended up penalizing students in shorter programs that had not been compressed, because there would still be two reductions for those students instead of one. The first one occurred because there were fewer weeks of instructional time (even though the course had not been compressed) in the program compared to the weeks of instructional time in a full academic year, and the second one occurred because there were fewer credit or clock hours in the program compared to the credit or clock hours in a full academic year. Using the lesser of the two fractions (where they are not the same) to determine the amount for which the student qualifies results in the student's award being reduced by the greater amount when there could be a reduction in the award to account for
(1)the program having fewer hours, and
(2)the program having fewer weeks of instructional time. By using the lesser of the two fractions, the proposed regulations would continue to address both of these measures. However, because a student enrolling in a shorter program will attend school for fewer weeks compared to the time the student would have attended for enrollment in a longer program (other factors such as enrollment status being equal), having sequential reductions for both of those measures reduces the student's award twice for what is really only one reason, i.e., the program is just a shorter program. Therefore, to ensure that a student's award is not subject to such a double reduction, only the greater of the two possible reductions comes into play when those reductions would not be the same. The Committee agreed with this alternative approach proposed by the Department. Because the formula used for correspondence study programs without terms is similar to the formula used for programs using clock hours or credit hours without terms, the Department also proposed in § 690.66(a) to make a similar modification to the calculation for correspondence study programs without terms. Part of that modification would remove the requirement that the institution prepare a written schedule for submission of lessons that reflects a workload of at least 12 hours of preparation per week to determine the length of the correspondence program, as that information is no longer needed in the new calculation. The Committee agreed to this proposal. The Committee agreed that if the proposed changes related to calculating payments for a payment period were adopted for the Pell Grant Program, comparable changes should be adopted for the ACG and National SMART Grant programs. Therefore, proposed changes in § 691.63 that track the proposed changes in § 690.63 are also being published in this NPRM. The following appendices will not appear in the Code of Federal Regulations: BILLING CODE 4000-01-P EP08AU07.006 EP08AU07.007 EP08AU07.008 EP08AU07.009 BILLING CODE 4000-01-C Executive Order 12866 1. Regulatory Impact Analysis Under Executive Order 12866, the Secretary must determine whether the regulatory action is “significant” and therefore subject to the requirements of the Executive Order and subject to review by the Office of Management and Budget (OMB). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may
(1)have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities in a material way (also referred to as an “economically significant” rule);
(2)create serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(3)materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or
(4)raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive order. Pursuant to the terms of the Executive Order, we determined that this proposed regulatory action will not have an annual effect on the economy of more than $100 million. Therefore, this action is not “economically significant” and subject to OMB review under section 3(f)(1) of Executive Order 12866. In accordance with the Executive order, the Secretary has assessed the potential costs and benefits of this regulatory action and has determined that the benefits justify the costs. Need for Federal Regulatory Action These proposed regulations address a broad range of issues affecting students, borrowers, schools, lenders, guaranty agencies, secondary market participants, and third-party servicers participating in the Pell Grant, FSEOG, FWS, ACG, National SMART Grant, FFEL, Direct Loan, or Perkins Loan programs. Prior to the start of negotiated rulemaking, a list of proposed regulatory changes was developed from advice and recommendations by interested parties and organizations submitted through testimony at public hearings and written comments submitted directly to the Department of Education in Washington, DC. Staff within the Office of Postsecondary Education also identified issues for discussion and negotiation. Regulatory Alternatives Considered A broad range of alternatives to the proposed regulations was considered as part of the negotiated rulemaking process. These alternatives are reviewed in detail under the *Reasons* sections accompanying the discussion of each proposed provision. In assessing the budgetary impact of these alternatives, the Department considered the effect of possible changes on the size or timing of Federal student aid disbursements. In all cases, the alternatives considered-which generally dealt with the consolidation or clarification of existing definitions, procedures, or processes to simplify program administration-did not have a measurable effect on Federal costs. Benefits Many of the proposed regulations merely consolidate current regulations, codify the Department's guidance, or make relatively minor changes intended to establish consistent definitions or streamline program operations across the various Federal student aid programs; in the absence of data to the contrary, the Department believes the additional clarity and enhanced efficiency resulting from these changes represent benefits with little or no countervailing costs or additional burden. This belief is strongly supported by the fact that the Committee reached consensus on the proposed regulations. Nonetheless, the Department is interested in comments on possible administrative burdens related to the proposed regulations. Benefits provided in these regulations include the clarification or consolidation of regulations or definitions involving enrollment statuses, independent study for direct assessment programs, cash management rules, disbursement and payment periods, return of Title IV aid, and the calculation of Pell Grant awards. Costs Because entities affected by these regulations already participate in the Title IV, HEA programs, these lenders, guaranty agencies, and schools must already have established systems and procedures in place to meet program eligibility requirements. All the proposed regulations involve discrete changes in specific parameters associated with existing guidance and regulations rather than entirely new requirements. Accordingly, entities wishing to continue to participate in the Federal student aid programs have already absorbed most of the administrative costs related to implementing these proposed regulations. Marginal costs over this baseline are primarily related to one-time system changes that, while possibly significant in some cases, are an unavoidable cost of continued program participation. The Department is particularly interested in comments on possible administrative burdens related to these system or process changes. Elsewhere in this SUPPLEMENTARY INFORMATION section we identify and explain burdens specifically associated with information collection requirements. See the heading *Paperwork Reduction Act of 1995* . Accounting Statement As required by OMB Circular A-4 (available at *http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf)* , in Table 1 below, we have prepared an accounting statement showing the classification of the expenditures associated with the provisions of these proposed regulations. This table provides our best estimate of the changes in Federal student aid payments as a result of these proposed regulations. Table 1.—Accounting Statement: Classification of Estimated Savings [In millions] Category Transfers Annualized Monetized Transfers $0 2. Clarity of the Regulations Executive Order 12866 and the Presidential memorandum on “Plain Language in Government Writing” require each agency to write regulations that are easy to understand. The Secretary invites comments on how to make these proposed regulations easier to understand, including answers to questions such as the following: • Are the requirements in the proposed regulations clearly stated? • Do the proposed regulations contain technical terms or other wording that interferes with their clarity? • Does the format of the proposed regulations (grouping and order of sections, use of headings, paragraphing, etc.) aid or reduce their clarity? • Would the proposed regulations be easier to understand if we divided them into more (but shorter) sections? (A “section” is preceded by the symbol “§” and a numbered heading; for example, § 682.209 Repayment of a loan.) • Could the description of the proposed regulations in the “Supplementary Information” section of this preamble be more helpful in making the proposed regulations easier to understand? If so, how? • What else could we do to make the proposed regulations easier to understand? To send any comments that concern how the Department could make these proposed regulations easier to understand, see the instructions in the ADDRESSES section of this preamble. Regulatory Flexibility Act Certification The Secretary certifies that these proposed regulations would not have a significant economic impact on a substantial number of small entities. These proposed regulations would affect institutions of higher education, lenders, and guaranty agencies that participate in Title IV, HEA programs, individual students, and loan borrowers. The U.S. Small Business Administration
(SBA)Size Standards define these institutions as “small entities” if they are for-profit or nonprofit institutions with total annual revenue below $5,000,000 or if they are institutions controlled by governmental entities with populations below 50,000. Guaranty agencies are State and private nonprofit entities that act as agents of the Federal government, and as such are not considered “small entities” under the Regulatory Flexibility Act. Individuals are also not defined as “small entities” under the Regulatory Flexibility Act. A significant percentage of the schools and lenders participating in the Federal student loan programs meet the definition of “small entities.” While these schools and lenders fall within the SBA size guidelines, the proposed regulations would not impose significant new costs on these entities. The Secretary invites comments from small institutions and lenders participating in the Federal student loan programs as to whether they believe the proposed changes would have a significant economic impact on them and, if so, requests evidence to support that belief. Paperwork Reduction Act of 1995 Sections 668.4, 668.10, 668.21, 668.22, 668.164, 668.165, 674.16, 676.16, 682.200, 682.603, 682.604, 685.301, and 685.303, contain information collection requirements. Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the Department has submitted a copy of these sections to OMB for its review. *Collection of Information:* Student Assistance General Provisions; Perkins Loan Program; FSEOG Program; FFEL Program; and the Direct Loan Program. Sections 668.4, 668.22, 668.164, 682.200, 682.604, 685.301—Payment Periods and Disbursements of Title IV Grant and Loan Funds By making a number of changes to the payment period definitions and disbursement requirements, these proposed regulations would, with few exceptions, align disbursements for all Title IV grant and loan programs. Inconsistent requirements for disbursing Title IV grant and loan funds for certain types of programs can result in a student receiving second or subsequent disbursements of his or her grant funds or Perkins Loan funds at a different point in time than second disbursements of his or her FFEL or Direct Loan funds. Changes to the regulations that would achieve greater consistency in the timing of the disbursements of Title IV grant and loan funds are proposed to reduce this burden and confusion for institutions and students. These proposed changes include—(1) Specifying that an institution must disburse all Title IV grant and loan funds on a payment period basis;
(2)requiring, generally, that an institution disburse all Title IV grant and loan funds once each payment period;
(3)adding a time component to the payment period definitions for clock hour programs to make the disbursements of Title IV grant and Perkins Loan funds conform with the disbursements of FFEL and Direct Loan funds, which must, by law, include a time component;
(4)using weeks of instructional time as the time component for determining all Title IV grant and loan disbursements;
(5)removing the institutional option to have more than two payment periods for nonterm credit hour programs and clock hour programs; and
(6)extending to clock hour programs the provision that addresses how to identify the end of a payment period when an institution is unable to determine whether a student in a nonterm credit hour program has completed half of the credit hours in a program, academic year, or remainder of a program. We estimate that the proposed changes will decrease burden for individuals and schools. We estimate that the proposed changes will decrease burden for individuals and institutions by 3,599 hours and 14,397 hours, respectively. Thus, we estimate that these proposed regulations will reduce burden by 17,996 hours in OMB Control Number 1845-0022. Section 668.10—Defining Independent Study for Direct Assessment Programs These proposed regulations would add a definition of *independent study* for direct assessment programs. The new definition would identify the conditions that must exist for a student in a direct assessment program who is taking all or a portion of that program through independent study to be eligible for Title IV, HEA program assistance. For example, students who are engaged in independent study would be expected to have regular and substantive interaction with their professor to assure progress within the course or program. In the short-term, we expect no additional burden to be associated with direct assessment programs. We are currently aware of only one institution that utilizes such programs. Therefore, this section is not subject to the Paperwork Reduction Act of 1995. Sections 668.21, 682.604, and 685.303—Treatment of Title IV Grant and Loan Funds if a Recipient Does Not Begin Attendance The proposed regulations would consolidate requirements for returning any Perkins Loan, FSEOG, Pell Grant, ACG, National SMART Grant, and FFEL and Direct Loan funds under § 668.21, and eliminate these requirements from §§ 682.604(d)(3) and
(4)and 685.303(b)(3). The proposed regulations would hold the institution responsible for returning FFEL and Direct Loan funds disbursed or paid directly to the student, if the institution knew the student would not attend before the funds were disbursed and establishes a timeframe within which the FFEL and Direct Loan funds must be returned. Finally, the proposed regulations clarify the meaning of “delivered” vs. “disbursed” FFEL and Direct Loan funds. The proposed changes do not increase burden for institutions, lenders, or guaranty agencies. Section 668.22—Post-Withdrawal Disbursements of Grant Funds Directly to a Student The proposed regulations would eliminate the current requirement that an institution notify a student who has withdrawn from school and obtain the student's permission before making a post-withdrawal disbursement of Title IV grant funds directly to the student. In addition, the proposed regulations would require the institution to make a post-withdrawal disbursement of such grant funds to the student within 30 days of the date the institution determines that the student withdrew. The proposed changes to the requirements for direct disbursement of post-withdrawal grant proceeds would reduce burden to the institutions by eliminating a notification and confirmation process. The reduction in burden will be reflected in OMB 1845-0022. For loan funds instead of grant funds, a change is proposed for making a post-withdrawal disbursement of Title IV loan proceeds which, although retaining the borrower notice and confirmation process in the current regulations, requires the disbursement “as soon as possible,” but no later than 120 days after determination of the student's withdrawal. Adding the language “as soon as possible” to the current 120-day limit for disbursement of post-withdrawal Title IV loan proceeds will have no affect on paperwork burden. We estimate that the proposed changes will decrease burden for individuals and institutions by 201 hours and 302 hours, respectively. Thus, we estimate that this proposed regulation will reduce burden by 503 hours as reflected in OMB Control Number 1845-0022. Sections 668.164(c) and 668.165(b)(1)(i)—Electronic Disbursements of Title IV Funds The proposed regulations would modify current authorization and notification requirements related to making direct payments to a student. The proposed regulations would allow an institution to pay a student directly through expanded electronic funds transfer methods such as debit cards, stored-value cards, ATM cards or other transaction devices. We estimate that the proposed changes will decrease the burden for institutions through the ability to use expanded electronic processes for making direct payments. We estimate that the proposed changes will decrease burden for institutions by 254,475 hours as reflected in OMB Control Number 1845-0038. Section 668.165(a)—Loan Cancellation Notice and Affirmative Confirmation of a Loan The proposed regulations would provide institutions the choice between active and passive confirmation of a loan. In addition, the proposed regulations would codify existing practice that an institution is not responsible for returning loans that it disbursed directly to a student. If an institution chooses active confirmation, the process is unchanged from current requirements. If an institution chooses passive confirmation of a loan, the proposed regulations change the timeframes for notice to the student, but do not substantially change the content of such notice. Therefore, we estimate that there will be no change in the burden. Sections 682.603 and 685.301—Minimum Period for Certifying a Loan The proposed regulations would clarify existing requirements for certifying FFEL and Direct Loans in certain situations. We believe there will be no overall change in the burden. Sections 682.603 and 685.301—Annual Loan Limit Progression The proposed regulations would incorporate into §§ 682.603 and 685.301 the Department's longstanding policy that provides that
(1)for standard term, credit hour programs, a student regains eligibility for a new annual loan limit after the calendar period associated with the academic year has elapsed, and
(2)for nonstandard term credit hour, nonterm credit hour, and all clock hour programs, a student regains eligibility for a new annual loan limit only after completing both the credit or clock hours and the weeks of instructional time in the academic year. In addition, the proposed regulations would apply the policy for standard term, credit hour programs to nonstandard term credit hour programs with terms that are substantially equal in length and that are at least nine weeks in length regains. That is, a student enrolled in a nonstandard term, credit hour program with terms that are substantially equal in length and that are at least nine weeks in length would regain eligibility for a new annual loan limit when the calendar time associated with the academic year has elapsed. This proposed change would be consistent with final regulations published in the **Federal Register** on November 1, 2000 (65 FR 65616), which applied the same disbursement requirements to credit hour programs with standard terms and credit hour programs with nonstandard terms that are substantially equal in length. The proposed changes for §§ 682.603 and 685.301 have no effect on the burden for institutions, as they simply incorporate existing policy into the regulations. This existing burden has been approved by OMB under OMB 1845-0020. Section 674.16 and 676.16—Single Disbursement for Perkins Loan and FSEOG Awards The proposed regulations eliminate an exception in the regulations that allows an institution to make a single disbursement of a Perkins Loan or FSEOG award if the total amount of that loan or award for an academic year is less than $501. Eliminating the exception merely harmonizes the disbursement requirements for these programs and has no impact on burden. Consistent with the discussion above, the following chart describes the sections of the proposed regulations involving information collections, the information being collected, and the collections the Department will submit to the Office of Management and Budget for approval and public comment under the Paperwork Reduction Act. Regulatory section Information collection Collection § 668.4, 668.22, 668.164, 682.200, 682.604, 685.301 This proposed regulation will, with few exceptions, align disbursements for all Title IV grant and loan programs OMB 1845-0022 § 668.22 This proposed regulation will eliminate the current requirement that an institution notify a student who has withdrawn from school, and receive confirmation from the student, before making a post-withdrawal disbursement of Title IV grant funds directly to the student OMB 1845-0022 §§ 668.164 and 688.165 This proposed regulation provides authority for an institution to pay Title IV credit balances through electronic funds transfer, debit card, stored-value card, ATM card or other device OMB 1845-0038 If you want to comment on the proposed information collection requirements, please send your comments to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for U.S. Department of Education. Send these comments by e-mail to *OIRA_DOCKET@omb.eop.gov* or by fax to
(202)395-6974. Commenters need only submit comments via one submission medium. You may also send a copy of these comments to the Department contact named in the ADDRESSES section of this preamble. We consider your comments on these proposed collections of information in— • Deciding whether the proposed collections are necessary for the proper performance of our functions, including whether the information will have practical use; • Evaluating the accuracy of our estimate of the burden of the proposed collections, including the validity of our methodology and assumptions; • Enhancing the quality, usefulness, and clarity of the information we collect; and • Minimizing the burden on those who must respond. This includes exploring the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology; e.g., permitting electronic submission of responses. OMB is required to make a decision concerning the collections of information contained in these proposed regulations between 30 and 60 days after publication of this document in the **Federal Register** . Therefore, to ensure that OMB gives your comments full consideration, it is important that OMB receives the comments within 30 days of publication. This does not affect the deadline for your comments to us on the proposed regulations. Intergovernmental Review These programs are not subject to Executive Order 12372 and the regulations in 34 CFR part 79. Assessment of Educational Impact The Secretary particularly requests comments on whether these proposed regulations would require transmission of information that any other agency or authority of the United States gathers or makes available. Electronic Access to This Document You may view this document, as well as all other Department of Education documents published in the **Federal Register** , in text or Adobe Portable Document Format
(PDF)on the Internet at the following site: *http://www.ed.gov/news/fedregister.* To use PDF you must have Adobe Acrobat Reader, which is available free at this site. If you have questions about using PDF, call the U.S. Government Printing Office (GPO), toll free, at 1-888-293-6498; or in the Washington, DC, area at
(202)512-1530. Note: The official version of this document is the document published in the **Federal Register** . Free Internet access to the official edition of the **Federal Register** and the Code of Federal Regulations is available on GPO Access at: *http://www.gpoaccess.gov/nara/index.html.* (Catalog of Federal Domestic Assistance Numbers: 84.007 Federal Supplemental Educational Opportunity Grant Program; 84.032 Federal Family Education Loan Program; 84.037 Federal Perkins Loan Program; 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program; 84.375 Academic Competitiveness Grants; and 84.376 SMART Grants) List of Subjects 34 CFR Part 668 Administrative practice and procedure, Colleges and universities, Consumer protection, Education, Grant programs—education, Loan programs—education, Reporting and recordkeeping requirements, Student aid, Vocational education. 34 CFR Parts 674 and 676 Administrative practice and procedure, Colleges and universities, Consumer protection, Education, Employment, Grant programs—education, Loan programs—education, Reporting and recordkeeping requirements, Student aid, Vocational education. 34 CFR Parts 682 and 685 Administrative practice and procedure, Colleges and universities, Education, Loans program—education, Reporting and recordkeeping requirements, Student aid, Vocational education. 34 CFR Parts 690 and 691 Colleges and universities, Elementary and secondary education, Grant programs—education, Student aid. Dated: August 2, 2007. Margaret Spellings, Secretary of Education. For the reasons discussed in the preamble, the Secretary proposes to amend parts 668, 674, 676, 682, 685, 690, and 691 of title 34 of the Code of Federal Regulations as follows: PART 668—STUDENT ASSISTANCE GENERAL PROVISIONS 1. The authority citation for part 668 continues to read as follows: Authority: 20 U.S.C. 1001, 1002, 1003, 1085, 1088, 1091, 1092, 1094, 1099c, and 1099c-1, unless otherwise noted. 2. Section 668.2(b) is amended by adding, in alphabetical order, the definitions *First professional degree, Graduate or professional student* , *Half-time student* , *Three-quarter time student* , and *Undergraduate student* , and revising the definition of *Full-time student* to read as follows: § 668.2 General definitions.
(b)* * * *First professional degree:* A degree that signifies both completion of the academic requirements for beginning practice in a given profession and a level of professional skill beyond that normally required for a bachelor's degree. Professional licensure is also generally required. Examples of a first professional degree include but are not limited to Pharmacy (Pharm.D.), Dentistry (D.D.S. or D.M.D.), Veterinary Medicine (D.V.M.), Chiropractic (D.C. or D.C.M.), Law (L.L.B. or J.D.), Medicine (M.D.), Optometry (O.D.), Osteopathic Medicine (D.O.), Podiatry (D.P.M., D.P., or Pod.D.), and Theology (M.Div., or M.H.L.). (Authority: 20 U.S.C. 1082 and 1088) *Full-time student:* An enrolled student who is carrying a full-time academic workload as determined by the institution under a standard applicable to all students enrolled in a particular educational program. The student's workload may include any combination of courses, work, research, or special studies that the institution considers sufficient to classify the student as a full-time student. However, for an undergraduate student, an institution's minimum standard must equal or exceed one of the following minimum requirements:
(1)For a program that measures progress in credit hours and uses standard terms (semesters, trimesters, or quarters), 12 semester hours or 12 quarter hours per academic term.
(2)For a program that measures progress in credit hours and does not use terms, 24 semester hours or 36 quarter hours over the weeks of instructional time in the academic year, or the prorated equivalent if the program is less than one academic year.
(3)For a program that measures progress in credit hours and uses nonstandard terms (terms other than semesters, trimesters or quarters) the number of credits determined by—
(i)Dividing the number of weeks of instructional time in the term by the number of weeks of instructional time in the program's academic year; and
(ii)Multiplying the fraction determined under paragraph (b)(3)(i) of this definition by the number of credit hours in the program's academic year.
(4)For a program that measures progress in clock hours, 24 clock hours per week.
(5)A series of courses or seminars that equals 12 semester hours or 12 quarter hours in a maximum of 18 weeks.
(6)The work portion of a cooperative education program in which the amount of work performed is equivalent to the academic workload of a full-time student.
(7)For correspondence coursework, a full-time courseload must be—
(i)Commensurate with the full-time definitions listed in paragraphs
(1)through
(6)of this definition; and
(ii)At least one-half of the coursework must be made up of non-correspondence coursework that meets one-half of the institution's requirement for full-time students. (Authority: 20 U.S.C. 1082 and 1088) *Graduate or professional student:* A student who—
(1)Is not receiving title IV aid as an undergraduate student for the same period of enrollment;
(2)Is enrolled in a program or course above the baccalaureate level at an institution of higher education, or is enrolled in a program leading to a first professional degree; and
(3)Has completed the equivalent of at least three academic years of full-time study at an institution of higher education, either prior to entrance into the program or as part of the program itself. (Authority: 20 U.S.C. 1082 and 1088) *Half-time student:*
(1)Except as provided in paragraph
(2)of this definition, an enrolled student who is carrying a half-time academic work load, as determined by the institution, that amounts to at least half of the work load of the applicable minimum requirement outlined in the definition of a full-time student.
(2)A student enrolled solely in a program of study by correspondence who is carrying a work load of at least 12 hours of work per week, or is earning at least six credit hours per semester, trimester, or quarter. However, regardless of the work, no student enrolled solely in correspondence study is considered more than a half-time student. (Authority: 20 U.S.C. 1082 and 1088) *Three-quarter time student:* An enrolled student who is carrying a three-quarter-time academic work load, as determined by the institution, that amounts to at least three quarters of the work of the applicable minimum requirement outlined in the definition of a full-time student. (Authority: 20 U.S.C. 1082 and 1088) *Undergraduate student:*
(1)A student who is enrolled in an undergraduate course of study that usually does not exceed four academic years, or is enrolled in a longer program designed to lead to a first degree at the baccalaureate level. For purposes of 34 CFR 690.6(c)(5) students who have completed a baccalaureate program of study and who are subsequently completing a State-required teacher certification program are treated as undergraduates.
(2)In addition to meeting the definition in paragraph
(1)of this definition, a student is only considered an undergraduate for purposes of the Federal Supplemental Educational Opportunity Grant (FSEOG) Program, the Federal Pell Grant Program, the Academic Competitiveness Grant
(ACG)Program, and National Science and Mathematics Access to Retain Talent (SMART) Grant Program if the student has not yet earned a baccalaureate or first professional degree. However, for purposes of 34 CFR 690.6(c)(5) students who have completed a baccalaureate program of study and who are subsequently completing a State-required teacher certification program are treated as undergraduates.
(3)For purposes of dual degree programs that allow individuals to complete a bachelor's degree and either a graduate or first professional degree within the same program, a student is considered an undergraduate student for at least the first three academic years of that program. (Authority: 20 U.S.C. 1082 and 1088) 3. Section 668.4 is revised to read as follows: § 668.4 Payment period.
(a)*Payment periods for an eligible program that measures progress in credit hours and uses standard terms or nonstandard terms that are substantially equal in length.* For a student enrolled in an eligible program that measures progress in credit hours and uses standard terms (semesters, trimesters, or quarters), or for a student enrolled in an eligible program that measures progress in credit hours and uses nonstandard terms that are substantially equal in length, the payment period is the academic term.
(b)*Payment periods for an eligible program that measures progress in credit hours and uses nonstandard terms that are not substantially equal in length.* For a student enrolled in an eligible program that measures progress in credit hours and uses nonstandard terms that are not substantially equal in length—
(1)For Pell Grant, ACG, National SMART Grant, FSEOG, and Perkins Loan program funds, the payment period is the academic term;
(2)For FFEL and Direct Loan program funds—
(i)For a student enrolled in an eligible program that is one academic year or less in length—
(A)The first payment period is the period of time in which the student successfully completes half of the number of credit hours in the program and half of the number of weeks of instructional time in the program; and
(B)The second payment period is the period of time in which the student successfully completes the program; and
(ii)For a student enrolled in an eligible program that is more than one academic year in length—
(A)For the first academic year and any subsequent full academic year— ( *1* ) The first payment period is the period of time in which the student successfully completes half of the number of credit hours in the academic year and half of the number of weeks of instructional time in the academic year; and ( *2* ) The second payment period is the period of time in which the student successfully completes the academic year;
(B)For any remaining portion of an eligible program that is more than half an academic year but less than a full academic year in length— ( *1* ) The first payment period is the period of time in which the student successfully completes half of the number of credit hours in the remaining portion of the program and half of the number of weeks of instructional time remaining in the program; and ( *2* ) The second payment period is the period of time in which the student successfully completes the remainder of the program; and
(C)For any remaining portion of an eligible program that is not more than half an academic year, the payment period is the remainder of the program.
(c)*Payment periods for an eligible program that measures progress in credit hours and does not have academic terms or for a program that measures progress in clock hours.*
(1)For a student enrolled in an eligible program that is one academic year or less in length—
(i)The first payment period is the period of time in which the student successfully completes half of the number of credit hours or clock hours, as applicable, in the program and half of the number of weeks of instructional time in the program; and
(ii)The second payment period is the period of time in which the student successfully completes the program or the remainder of the program.
(2)For a student enrolled in an eligible program that is more than one academic year in length—
(i)For the first academic year and any subsequent full academic year—
(A)The first payment period is the period of time in which the student successfully completes half of the number of credit hours or clock hours, as applicable, in the academic year and half of the number of weeks of instructional time in the academic year; and
(B)The second payment period is the period of time in which the student successfully completes the academic year;
(ii)For any remaining portion of an eligible program that is more than half an academic year but less than a full academic year in length—
(A)The first payment period is the period of time in which the student successfully completes half of the number of credit hours or clock hours, as applicable, in the remaining portion of the program and half of the number of weeks of instructional time remaining in the program; and
(B)The second payment period is the period of time in which the student successfully completes the remainder of the program; and
(iii)For any remaining portion of an eligible program that is not more than half an academic year, the payment period is the remainder of the program.
(3)For purposes of paragraphs (c)(1) and (c)(2) of this section, if an institution is unable to determine when a student has successfully completed half of the credit hours or clock hours in a program, academic year, or remainder of a program, the student is considered to begin the second payment period of the program, academic year, or remainder of a program at the later of the date, as determined by the institution, on which the student has successfully completed—
(i)Half of the academic coursework in the program, academic year, or remainder of the program; or
(ii)Half of the number of weeks of instructional time in the program, academic year, or remainder of the program.
(d)*Application of the cohort default rate exemption.* Notwithstanding paragraphs (a), (b), and
(c)of this section, if 34 CFR 682.604(c)(10) or 34 CFR 685.301(b)(8) applies to an eligible program that measures progress in credit hours and uses nonstandard terms, an eligible program that measures progress in credit hours and does not have academic terms, or an eligible program that measures progress in clock hours, the payment period for purposes of FFEL and Direct Loan funds is the loan period for those portions of the program to which 34 CFR 682.604(c)(10) or 34 CFR 685.301(b)(8) applies.
(e)*Excused absences.* For purposes of this section, in determining whether a student successfully completes the clock hours in a payment period, an institution may include clock hours for which the student has an excused absence (i.e., an absence that a student does not have to make up) if—
(1)The institution has a written policy that permits excused absences; and
(2)The number of excused absences under the written policy for purposes of paragraph
(e)of this section does not exceed the lesser of—
(i)The policy on excused absences of the institution's accrediting agency or, if the institution has more than one accrediting agency, the agency designated under 34 CFR 600.11(b);
(ii)The policy on excused absences of any State agency that licenses the institution or otherwise legally authorizes the institution to operate in the State; or
(iii)Ten percent of the clock hours in the payment period.
(f)*Re-entry within 180 days.* If a student withdraws from a program described in paragraph
(c)of this section during a payment period and then reenters the same program within 180 days, the student remains in that same payment period when he or she returns and, subject to conditions established by the Secretary or by the FFEL lender or guaranty agency, is eligible to receive any title IV, HEA program funds for which he or she was eligible prior to withdrawal, including funds that were returned by the institution or student under the provisions of § 668.22.
(g)*Re-entry after 180 days or transfer* .
(1)Except as provided in paragraph (g)(3) of this section, and subject to the conditions of paragraph (g)(2) of this section, an institution calculates new payment periods for the remainder of a student's program based on paragraph
(c)of this section, for a student who withdraws from a program described in paragraph
(c)of this section, and—
(i)Reenters that program after 180 days;
(ii)Transfers into another program at the same institution within any time period; or
(iii)Transfers into a program at another institution within any time period.
(2)For a student described in paragraph (g)(1) of this section—
(i)For the purpose of calculating payment periods only, the length of the program is the number of credit hours and the number of weeks of instructional time, or the number of clock hours and the number of weeks of instructional time, that the student has remaining in the program he or she enters or reenters; and
(ii)If the remaining hours and weeks constitute half of an academic year or less, the remaining hours constitute one payment period.
(3)Notwithstanding the provisions of paragraph (g)(1) of this section, an institution may consider a student who transfers into another program at the same institution to remain in the same payment period if—
(i)The student is continuously enrolled at the institution;
(ii)The coursework in the payment period the student is transferring out of is substantially similar to the coursework the student will be taking when he or she first transfers into the new program;
(iii)The payment periods are substantially equal in length in weeks of instructional time and credit hours or clock hours, as applicable; and
(iv)There are little or no changes in institutional charges associated with the payment period to the student.
(h)*Definitions.* For purposes of this section—
(1)Terms are *substantially equal in length* if no term in the program is more than two weeks of instructional time longer than any other term in that program; and
(2)A student *successfully completes* credit hours or clock hours if the institution considers the student to have passed the coursework associated with those hours. (Authority: 20 U.S.C. 1070 *et seq.* ) 4. Section 668.10 is amended by: A. In paragraph (a)(3)(ii), removing the word “or” immediately after the figure “668.4(a)” and adding, in its place, the punctuation “,”, and by adding the words “, or (c),” immediately after the parenthetical “(b)”. B. Revising paragraph (a)(3)(iii). C. Removing paragraphs (a)(3)(v) and (3)(vi). The revision reads as follows: § 668.10 Direct Assessment Programs.
(a)* * *
(3)* * *
(iii)A week of instructional time in a direct assessment program is any seven-day period in which at least one day of educational activity occurs. Educational activity in a direct assessment program includes regularly scheduled learning sessions, faculty-guided independent study, consultations with a faculty mentor, development of an academic action plan addressed to the competencies identified by the institution, or, in combination with any of the foregoing, assessments. It does not include credit for life experience. For purposes of direct assessment programs, independent study occurs when a student follows a course of study with predefined objectives but works with a faculty member to decide how the student is going to meet those objectives. The student and faculty member agree on what the student will do (e.g., required readings, research, and work products), how the student's work will be evaluated, and on what the relative timeframe for completion of the work will be. The student must interact with the faculty member on a regular and substantive basis to assure progress within the course or program. 5. Section 668.21 is revised to read as follows: § 668.21 Treatment of title IV grant and loan funds if the recipient does not begin attendance at the institution.
(a)If a student does not begin attendance in a payment period or period of enrollment, the institution must—
(1)Return all title IV, HEA program funds that were credited to the student's account at the institution or disbursed directly to the student for that payment period or period of enrollment, for Federal Perkins Loan, FSEOG, Federal Pell Grant, ACG, and National SMART Grant program funds; and
(2)For FFEL and Direct Loan funds— (i)(A) Return all FFEL and Direct Loan funds that were credited to the student's account at the institution for that payment period or period of enrollment; and
(B)Return the amount of payments made directly by or on behalf of the student to the institution for that payment period or period of enrollment, up to the total amount of the loan funds disbursed;
(ii)For remaining amounts of FFEL or Direct Loan funds disbursed directly to the student for that payment period or period of enrollment, the institution is not responsible for returning the funds, but must immediately notify the lender or the Secretary, as appropriate, when it becomes aware that the student will not or has not begun attendance so that the lender or Secretary will issue a final demand letter to the borrower in accordance with 34 CFR 682.412 or 34 CFR 685.211, as appropriate; and
(iii)Notwithstanding paragraph (a)(2)(ii) of this section, if an institution knew that a student would not begin attendance prior to disbursing FFEL or Direct Loan funds directly to the student for that payment period or period of enrollment (e.g., the student notified the institution that he or she would not attend, or the institution expelled the student), the institution must return those funds.
(b)The institution must return those funds for which it is responsible under paragraph
(a)of this section to the respective title IV, HEA program as soon as possible, but no later than 30 days after the date that the institution becomes aware that the student will not or has not begun attendance.
(c)For purposes of this section, the Secretary considers that a student has not begun attendance in a payment period or period of enrollment if the institution is unable to document the student's attendance at any class during the payment period or period of enrollment.
(d)In accordance with procedures established by the Secretary or FFEL Program lender, an institution returns title IV, HEA funds timely if—
(1)The institution deposits or transfers the funds into the bank account it maintains under § 668.163 no later than 30 days after the date that the institution becomes aware that the student will not or has not begun attendance;
(2)The institution initiates an electronic funds transfer
(EFT)no later than 30 days after the date that the institution becomes aware that the student will not or has not begun attendance;
(3)The institution initiates an electronic transaction, no later than 30 days after the date that the institution becomes aware that the student will not or has not begun attendance, that informs an FFEL lender to adjust the borrower's loan account for the amount returned; or
(4)The institution issues a check no later than 30 days after the date that the institution becomes aware that the student will not or has not begun attendance. An institution does not satisfy this requirement if—
(i)The institution's records show that the check was issued more than 30 days after the date that the institution becomes aware that the student will not or has not begun attendance; or
(ii)The date on the cancelled check shows that the bank used by the Secretary or FFEL Program lender endorsed that check more than 45 days after the date that the institution becomes aware that the student will not or has not begun attendance. (Authority: 20 U.S.C. 1094) 6. Section 668.22 is amended by: A. Revising paragraph (a)(5). B. Adding paragraph (e)(5)(iii). The revision and addition read as follows: § 668.22 Treatment of title IV funds when a student withdraws.
(a)* * * (5)(i) A post-withdrawal disbursement must be made from available grant funds before available loan funds. (ii)(A) If outstanding charges exist on the student's account, the institution may credit the student's account up to the amount of outstanding charges with all or a portion of any— ( *1* ) Grant funds that make up the post-withdrawal disbursement in accordance with § 668.164(d)(1) and (d)(2); and ( *2* ) Loan funds that make up the post-withdrawal disbursement in accordance with § 668.164(d)(1), (d)(2), and (d)(3) only after obtaining confirmation from the student or parent, in the case of a parent PLUS loan, that they still wish to have the loan funds disbursed in accordance with paragraph (a)(5)(iii) of this section. (B)( *1* ) The institution must disburse directly to a student any amount of a post-withdrawal disbursement of grant funds that is not credited to the student's account. The institution must make the disbursement as soon as possible, but no later than 30 days after the date of the institution's determination that the student withdrew, as defined in paragraph (l)(3) of this section. ( *2* ) The institution must offer to disburse directly to a student, or parent in the case of a parent PLUS loan, any amount of a post-withdrawal disbursement of loan funds that is not credited to the student's account, in accordance with paragraph (a)(5)(iii) of this section. ( *3* ) The institution must make a direct disbursement of any loan funds that make up the post-withdrawal disbursement only after obtaining the student's, or parent's in the case of a parent PLUS loan, confirmation that the student or parent still wishes to have the loan funds disbursed in accordance with paragraph (a)(5)(iii) of this section. (iii)(A) The institution must provide within 30 days of the date of the institution's determination that the student withdrew, as defined in paragraph (l)(3) of this section, a written notification to the student, or parent in the case of parent PLUS loan, that— ( *1* ) Requests confirmation of any post-withdrawal disbursement of loan funds that the institution wishes to credit to the student's account in accordance with paragraph (a)(5)(ii)(A)( *2* ) of this section, identifying the type and amount of those loan funds and explaining that a student, or parent in the case of a parent PLUS loan, may accept or decline some or all of those funds; ( *2* ) Requests confirmation of any post-withdrawal disbursement of loan funds that the student, or parent in the case of a parent PLUS loan, can receive as a direct disbursement, identifying the type and amount of these title IV funds and explaining that the student, or parent in the case of a parent PLUS loan, may accept or decline some or all of those funds; ( *3* ) Explains that a student, or parent in the case of a parent PLUS loan, who does not confirm that a post-withdrawal disbursement of loan funds may be credited to the student's account may not receive any of those loan funds as a direct disbursement unless the institution concurs; ( *4* ) Explains the obligation of the student, or parent in the case of a parent PLUS loan, to repay any loan funds he or she chooses to have disbursed; and ( *5* ) Advises the student, or parent in the case of a parent PLUS loan, that no post-withdrawal disbursement of loan funds will be made, unless the institution chooses to make a post-withdrawal disbursement based on a late response in accordance with paragraph (a)(5)(iii)(C) of this section, if the student or parent in the case of a parent PLUS loan, does not respond within 14 days of the date that the institution sent the notification, or a later deadline set by the institution.
(B)The deadline for a student, or parent in the case of a parent PLUS loan, to accept a post-withdrawal disbursement under paragraph (a)(5)(iii)(A) of this section must be the same for both a confirmation of a direct disbursement of the post-withdrawal disbursement of loan funds and a confirmation of a post-withdrawal disbursement of loan funds to be credited to the student's account.
(C)If the student, or parent in the case of a parent PLUS loan, submits a timely response that confirms that they wish to receive all or a portion of a direct disbursement of the post-withdrawal disbursement of loan funds, or confirms that a post-withdrawal disbursement of loan funds may be credited to the student's account, the institution must disburse the funds in the manner specified by the student, or parent in the case of a parent PLUS loan, as soon as possible, but no later than 120 days after the date of the institution's determination that the student withdrew, as defined in paragraph (l)(3) of this section.
(D)If a student, or parent in the case of a parent PLUS loan, submits a late response to the institution's notice requesting confirmation, the institution may make the post-withdrawal disbursement of loan funds as instructed by the student, or parent in the case of a parent PLUS loan (provided the institution disburses all the funds accepted by the student, or parent in the case of a parent PLUS loan), or decline to do so.
(E)If a student, or parent in the case of a parent PLUS loan, submits a late response to the institution and the institution does not choose to make the post-withdrawal disbursement of loan funds, the institution must inform the student, or parent in the case of a parent PLUS loan, in writing of the outcome of the post-withdrawal disbursement request.
(F)If the student, or parent in the case of a parent PLUS loan, does not respond to the institution's notice, no portion of the post-withdrawal disbursement of loan funds that the institution wishes to credit to the student's account, nor any portion of loan funds that would be disbursed directly to the student, or parent in the case of a parent PLUS loan, may be disbursed.
(iv)An institution must document in the student's file the result of any notification made in accordance with paragraph (a)(5)(iii) of this section of the student's right to cancel all or a portion of loan funds or of the student's right to accept or decline loan funds, and the final determination made concerning the disbursement.
(e)* * *
(5)* * *
(iii)For a program that measures progress in credit hours and uses nonstandard terms that are not substantially equal in length, if the institution uses the payment period to determine the treatment of title IV grant or loan funds for a category of students found in paragraph (e)(5)(ii)(B) of this section, the institution must— (A)( *1* ) For students in the category who are disbursed or could have been disbursed aid using both the payment period definition in § 668.4(b)(1) and the payment period definition in § 668.4(b)(2), use the payment period during which the student withdrew that ends later; and ( *2* ) If in the payment period that ends later there are funds that have been or could have been disbursed from overlapping payment periods, the institution must include in the return calculation any funds that can be attributed to the payment period that ends later; and
(B)For students in the category who are disbursed or could have been disbursed aid using only the payment period definition in § 668.4(b)(1) or the payment period definition in § 668.4(b)(2), use the payment period definition for which title IV, HEA program funds were disbursed for a student's calculation under this section. 7. Section 668.161 is amended by revising paragraph
(b)to read as follows: § 668.161 Scope and purpose.
(b)*Federal interest in title IV, HEA program funds.* Except for funds received by an institution for administrative expenses and for funds used for the Job Location and Development Program under the FWS Programs, funds received by an institution under the title IV, HEA programs are held in trust for the intended student beneficiaries, the Secretary, or lender or a guaranty agency under the FFEL programs. The institution, as a trustee of Federal funds, may not use or hypothecate ( *i.e.* , use as collateral) title IV, HEA program funds for any other purpose. 8. Section 668.164 is amended by: A. Revising paragraphs (b), (c), and (d). B. Revising paragraph (g)(4)(i). C. Adding a new paragraph (h). The revisions and addition read as follows: § 668.164 Disbursing funds.
(b)*Disbursements by payment period.*
(1)Except as provided in paragraph (b)(2) of this section, an institution must disburse title IV, HEA program funds on a payment period basis. An institution must disburse title IV, HEA program funds once each payment period unless—
(i)For FFEL and Direct Loan funds, 34 CFR 682.604(c)(6)(ii) or 34 CFR 685.301(b)(3) applies; or
(ii)For FSEOG, Federal Pell Grant, ACG, and National SMART Grant funds, an institution chooses to make more than one disbursement in each payment period in accordance with 34 CFR 676.16(a)(3), 34 CFR 690.76, or 34 CFR 691.76, as applicable.
(2)The provisions of paragraph (b)(1) of this section do not apply to the disbursement of FWS Program funds.
(3)Except as provided in paragraph
(g)of this section, an institution may disburse title IV, HEA program funds to a student or parent for a payment period only if the student is enrolled for classes for that payment period and is eligible to receive those funds.
(c)*Direct payments.*
(1)An institution pays a student or parent directly by—
(i)Releasing to the student or parent a check provided by a lender to the institution under the FFEL Program;
(ii)Issuing a check payable to and requiring the endorsement of the student or parent. An institution issues a check on the date that it—
(A)Mails the check to the student or parent; or
(B)Notifies the student that the check is available for immediate pickup at a specified location at the institution. The institution may hold the check for up to 21 days after the date it notifies the student. If the student does not pick up the check within this 21-day period, the institution must immediately mail the check to the student or parent, initiate an EFT to the student's or parent's bank account, or return the funds to the appropriate title IV, HEA program;
(iii)Initiating an electronic funds transfer
(EFT)to a bank account designated by the student's or parent; or
(iv)Dispensing cash for which the institution obtains a signed receipt from the student or parent.
(2)For purposes of this section, “bank account” means an FDIC insured account such as a checking or savings account, or a similar account that underlies a stored-value card or other transaction device.
(3)An institution may request, but not require or rely on, the student or parent to open a bank account. If the institution opens a bank account on behalf of a student or parent, establishes a process the student or parent follows to open a bank account, or similarly assists the student or parent in opening a bank account, the institution must—
(i)Obtain in writing affirmative consent from the student or parent to open that account;
(ii)Before the account is opened, inform the student or parent of the terms and conditions associated with accepting and using the account;
(iii)Not make any claims against the funds in the account without the written permission of the student or parent, except for correcting an error in transferring the funds in accordance with banking protocols;
(iv)Ensure that the student or parent does not incur any cost in opening the account or initially receiving any type of debit card, stored-value card, other type of automated teller machine
(ATM)card, or similar transaction device that is used to access the funds in that account;
(v)Ensure that the student has convenient access to a branch office of the bank or ATMs of the bank in which the account was opened (or ATMs of an affiliated bank), so that the student does not incur any cost in making cash withdrawals from that office or ATMs;
(vi)Ensure that the debit, stored-value or ATM card, or other device can be widely used, *e.g.* , the institution may not limit the use of the card or device to particular vendors; and
(vii)Not market or portray the account, card, or device as a credit card or credit instrument, or subsequently convert the account, card, or device to a credit card or credit instrument.
(d)*Crediting a student's account at the institution.* An institution may use title IV, HEA program funds to credit a student's account at the institution to satisfy—
(1)Current year charges for—
(i)Tuition and fees;
(ii)Board, if the student contracts with the institution for board;
(iii)Room, if the student contracts with the institution for room; and
(iv)If the institution obtains the student's or parent's authorization under § 668.165(b), other educationally related charges incurred by the student at the institution; and
(2)Prior award year charges for a total of not more than $200 for—
(i)Tuition and fees, room, or board; and
(ii)If the institution obtains the student's or parent's authorization under § 668.165(b), other educationally related charges incurred by the student at the institution.
(g)* * *
(4)* * *
(i)An institution may not make a late disbursement later than 180 days after the date of the institution's determination that the student withdrew, as provided in § 668.22, or for a student who did not withdraw, 180 days after the date the student otherwise becomes ineligible. (h)(1) Notwithstanding any State law (such as a law that allows funds to escheat to the State), an institution must return to the Secretary, lender, or guaranty agency, as applicable, any title IV, HEA program funds that it attempts to disburse directly to a student or parent but the student or parent does not receive or negotiate those funds.
(2)If a disbursement is made by check and the check is not cashed, an institution must return those funds no later than 240 days of the initial attempt to disburse them.
(i)If a check is returned to the institution, or an EFT is rejected, the institution may, as long as it does so within 45 days of the funds being returned to the institution, make additional attempts to disburse the funds. If the institution has not made another attempt to disburse those funds, they must be returned to the Secretary, lender, or guaranty agency, as applicable, before the 45 day period ends.
(ii)All attempts to disburse the funds must end and the institution must return those funds to the Secretary, lender, or guaranty agency, as applicable, by the end of the 240-day period. 9. Section 668.165 is amended by: A. Revising paragraph (a). B. Revising paragraph (b)(1). The revisions read as follows: § 668.165 Notices and authorizations.
(a)*Notices.*
(1)Before an institution disburses title IV, HEA program funds for any award year, the institution must notify a student of the amount of funds that the student or his or her parent can expect to receive under each title IV, HEA program, and how and when those funds will be disbursed. If those funds include Direct Loan or FFEL Program funds, the notice must indicate which funds are from subsidized loans and which are from unsubsidized loans.
(2)Except in the case of a post-withdrawal disbursement made in accordance with § 668.22(a)(5), if an institution credits a student's account at the institution with Direct Loan, FFEL, or Federal Perkins Loan Program funds, the institution must notify the student or parent of—
(i)The anticipated date and amount of the disbursement;
(ii)The student's right or parent's right to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. However, if the institution releases a check provided by a lender under the FFEL Program, the institution is not required to provide this information; and
(iii)The procedures and time by which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement.
(3)The institution must provide the notice described in paragraph (a)(2) of this section in writing—
(i)No earlier than 30 days before, and no later than 30 days after, crediting the student's account at the institution, if the institution obtains affirmative confirmation from the student under paragraph (a)(6)(i) of this section; or
(ii)No earlier than 30 days before, and no later than seven days after, crediting the student account at the institution, if the institution does not obtain affirmative confirmation from the student under paragraph (a)(6)(i) of this section. (4)(i) A student or parent must inform the institution if he or she wishes to cancel all or a portion of a loan or loan disbursement.
(ii)The institution must return the loan proceeds, cancel the loan, or do both, in accordance with program regulations provided that the institution receives a loan cancellation request—
(A)The later of the first day of a payment period or 14 days after the date it notifies the student or parent of his or her right to cancel all or a portion of a loan, if the institution obtains affirmative confirmation from the student under paragraph (a)(6)(i) of this section; or
(B)Within 30 days of the date the institution notifies the student or parent of his or her right to cancel all or a portion of a loan, if the institution does not obtain affirmative confirmation from the student under paragraph (a)(6)(i) of this section.
(iii)If a student or parent requests a loan cancellation after the period set forth in paragraph (a)(4)(ii)(A) or
(B)of this section, the institution may return the loan proceeds, cancel the loan, or do both, in accordance with program regulations.
(5)An institution must inform the student or parent in writing regarding the outcome of any cancellation request.
(6)For purposes of this section—
(i)Affirmative confirmation is a process under which an institution obtains written confirmation of the types and amounts of title IV, HEA program loans that a student wants for an award year before the institution credits the student's account with those loan funds; and
(ii)An institution is not required to return any loan proceeds that it disbursed directly to a student or parent.
(b)* * *
(1)If an institution obtains written authorization from a student or parent, as applicable, the institution may—
(i)Use the student's or parent's title IV, HEA program funds to pay for charges described in § 668.164(d)(2) that are included in that authorization; and
(ii)Except if prohibited by the Secretary under the reimbursement or cash monitoring payment method, hold on behalf of the student or parent any title IV, HEA program, funds that would otherwise be paid directly to the student or parent under § 668.164(e). Under this provision, the institution may issue a stored-value card or other similar device that allows the student or parent to access those funds at his or her discretion to pay for educationally related expenses. 10. Section 668.166 is revised to read as follows: § 668.166 Excess cash.
(a)*General.*
(1)The Secretary considers excess cash to be any amount of title IV, HEA program funds, other than Federal Perkins Loan Program funds, that an institution does not disburse to students or parents by the end of the third business day following the date the institution—
(i)Received those funds from the Secretary; or
(ii)Deposited or transferred to its Federal account previously disbursed title IV, HEA program funds received from the Secretary, such as those resulting from award adjustments, recoveries, or cancellations.
(2)The provisions of this section do not apply to the title IV, HEA program funds that an institution receives from the Secretary under the just-in-time payment method.
(b)*Excess cash tolerances.* An institution may maintain for up to seven days an amount of excess cash that does not exceed one percent of the total amount of funds the institution drew down in the prior award year. The institution must return immediately to the Secretary any amount of excess cash over the one-percent tolerance and any amount remaining in its account after the seven-day tolerance period.
(c)*Consequences for maintaining excess cash.* Upon a finding than an institution maintains excess cash for any amount or timeframe over that allowed in the tolerance provisions in paragraph
(b)of this section, the actions the Secretary may take include, but are not limited to—
(1)Requiring the institution to reimburse the Secretary for the costs the Secretary incurred in providing that excess cash to the institution; and
(2)Providing funds to the institution under the reimbursement payment method or cash monitoring payment method described in § 668.163(d) and (e), respectively. (Authority: 20 U.S.C. 1094) PART 674—FEDERAL PERKINS LOAN PROGRAM 11. The authority citation for part 674 continues to read as follows: Authority: 20 U.S.C. 1087aa-1087hh and 20 U.S.C. 421-429 unless otherwise noted. § 674.2 [Amended] 12. Section 674.2 is amended by: A. In paragraph (a), adding to its list, in alphabetical order, the terms *Graduate or professional student, Half-time student,* and *Undergraduate student.* B. In paragraph (b), removing the definitions for *Graduate or professional student, Half-time graduate or professional student, Half-time Undergraduate student,* and *Undergraduate student.* § 674.16 [Amended] 13. Section 674.16 is amended by removing paragraph
(g)and redesignating paragraphs
(h)and
(i)as paragraphs
(g)and (h), respectively. PART 676—FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT PROGRAM 14. The authority citation for part 676 continues to read as follows: Authority: 20 U.S.C. 1070b-1070b-3, unless otherwise noted. § 676.2 [Amended] 15. Section 676.2 is amended by: A. In paragraph (a), adding to its list, in alphabetical order, the term *Undergraduate student.* B. In paragraph (b), removing the definition for *Undergraduate student.* § 676.16 [Amended] 16. Section 676.16 is amended by removing paragraph
(e)and redesignating paragraph
(f)as paragraph (e). PART 682—FEDERAL FAMILY EDUCATION LOAN
(FFEL)PROGRAM 17. The authority citation for part 682 continues to read as follows: Authority: 20 U.S.C. 1071 to 1087-2, unless otherwise noted. 18. Section 682.200 is amended by: A. In paragraph (a)(1), adding to its list, in alphabetical order, the terms *Graduate and professional student, Half-time student,* and *Undergraduate student.* B. In paragraph (b), removing the definitions for *Graduate or professional student, Half-time student,* and *Undergraduate student* and revising the definition of *Period of Enrollment.* The revision reads as follows: § 682.200 Definitions.
(b)* * * *Period of enrollment.* The period for which a Stafford, SLS, or PLUS loan is intended. The period of enrollment must coincide with a *bona fide* academic term established by the school for which institutional charges are generally assessed ( *e.g.* , semester, trimester, or quarter in weeks of instructional time, length of the student's program in weeks of instructional time or academic year). The period of enrollment is also referred to as the loan period. § 682.207 [Amended] 19. Section 682.207(e) is amended by removing the parenthetical “(10)” and adding, in its place, the parenthetical “(8)”. § 682.208 [Amended] 20. Section 682.208(f)(1)(iii)(A) is amended by removing the figure “§ 682.604(d)(4)” and adding, in its place, the figure “34 CFR 668.21(a)(2)(ii)”. 21. Section 682.603 is amended by: A. Revising paragraph (f)(1). B. Redesignating paragraphs (g), (h), and
(i)as paragraphs (h), (i), and (j), respectively. C. Adding a new paragraph (g). D. In the introductory text of newly redesignated paragraph (h)(1) and the text of newly redesignated paragraph (h)(2), removing the parenthetical “(10)” and adding, in its place, the parenthetical “(8)”. The revision and addition read as follows: § 682.603 Certification by a participating school in connection with a loan application. (f)(1)(i) The minimum period of enrollment for which a school may certify a loan application is—
(A)At a school that measures academic progress in credit hours and uses a semester, trimester, or quarter system, or has terms that are substantially equal in length with no term less than nine weeks in length, a single term (e.g., a semester or quarter); or
(B)Except as provided in paragraphs (f)(1)(ii) or
(iii)of this section, at a school that measures academic progress in clock hours, or measures academic progress in credit hours but does not use a semester, trimester, or quarter system and does not have terms that are substantially equal in length with no term less than nine weeks in length, the lesser of— ( *1* ) The length of the student's program (or the remaining portion of that program if the student has less than the full program remaining) at the school; or ( *2* ) The academic year as defined by the school in accordance with 34 CFR 668.3.
(ii)For a student who transfers into a school with credit or clock hours from another school, and the prior school certified or originated a loan for a period of enrollment that overlaps the period of enrollment at the new school, the new school may certify a loan for the remaining portion of the program or academic year. In this case the school may certify a loan for an amount that does not exceed the remaining balance of the student's annual loan limit.
(iii)For a student who completes a degree program at a school, where the student's last loan to complete that program had been for less than an academic year, and the student then begins a new degree program at the same school, the school may certify a loan for the remainder of the academic year. In this case the school may certify a loan for an amount that does not exceed the remaining balance of the student's annual loan limit at the loan level associated with the new program. (g)(1) If a school measures academic progress in an educational program in credit hours and uses either standard terms (semesters, trimesters, or quarters) or nonstandard terms that are substantially equal in length, and each term is at least nine weeks of instructional time in length, a student is considered to have completed an academic year and progresses to the next annual loan limit when the academic year calendar period has elapsed.
(2)If a school measures academic progress in an educational program in nonstandard terms that are not substantially equal in length or each term is not at least nine weeks of instructional time in length, or in credit hours and does not have academic terms, a student is considered to have completed an academic year and progresses to the next annual loan limit at the later of—
(i)The student's completion of the weeks of instructional time in the student's academic year; or
(ii)The date, as determined by the school, that the student has successfully completed the academic coursework in the student's academic year.
(3)If a school measures academic progress in an educational program in clock hours, a student is considered to have completed an academic year and progresses to the next annual loan limit at the later of—
(i)The student's completion of the weeks of instructional time in the student's academic year; or
(ii)The date, as determined by the school, that the student has successfully completed the clock hours in the student's academic year.
(4)For purposes of paragraphs (g)(1) and (g)(2) of this section, terms in a loan period are substantially equal in length if no term in the loan period is more than two weeks of instructional time longer than any other term in that loan period. 22. Section 682.604 is amended by: A. Revising paragraph (c)(6). B. Removing paragraphs (c)(7) and (c)(8). C. Redesignating paragraphs (c)(9), (c)(10), and (c)(11) as paragraphs (c)(7), (c)(8), and (c)(9), respectively. D. In newly redesignated paragraph (c)(9), removing the parenthetical “(g)” and adding, in its place, the parenthetical “(h)”. E. Revising paragraph (d)(3). F. Removing paragraph (d)(4). The revisions read as follows: § 682.604 Processing the borrower's loan proceeds and counseling borrowers.
(c)* * *
(6)Unless the provision of § 682.207(d) applies—
(i)If a loan period is more than one payment period, the school must deliver loan proceeds at least once in each payment period; and
(ii)If a loan period is one payment period, the school must make at least two deliveries of loan proceeds during that payment period. The school may not make the second delivery until the student successfully completes half of the number of credit hours or clock hours and half of the number of weeks of instructional time in the payment period.
(d)* * *
(3)If a student does not begin attendance in the period of enrollment—
(i)Disbursed loan proceeds must be handled in accordance with 34 CFR 668.21; and
(ii)Undelivered loan funds held by the school must be handled in accordance with 34 CFR 668.167. PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM 23. The authority citation for part 685 continues to read as follows: Authority: 20 U.S.C. 1087a *et. seq.* , unless otherwise noted. 24. Section 685.102 is amended by: A. In paragraph (a)(1), adding to its list, in alphabetical order, the terms *Full-time student, Graduate or professional student, Half-time student,* and *Undergraduate student.* B. In paragraph (a)(3), removing from its list, the terms *Full-time student,* *Graduate or professional student,* and *Undergraduate student.* C. In paragraph (b), removing the definition of *Half-time student* and revising the definition of *Period of enrollment.* The revision reads as follows: § 685.102 Definitions.
(b)* * * *Period of enrollment:* The period for which a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan is intended. The period of enrollment must coincide with one or more academic terms established by the school (such as semester, trimester, quarter in weeks of instructional time; academic year; and length of the program of study in weeks of instructional time), for which institutional charges are generally assessed. The period of enrollment is also referred to in this part as the loan period. 25. Section 685.301 is amended by: A. Redesignating paragraph (a)(9)(ii) as paragraph (a)(9)(iv). B. Revising paragraph (a)(9)(i). C. Adding new paragraphs (a)(9)(ii) and (iii). D. Revising paragraphs (b)(2) and (b)(3). E. Removing paragraphs (b)(5) and (b)(6). F. Redesignating paragraphs (b)(7) and (b)(8) as paragraphs (b)(5) and (b)(6), respectively. G. Redesignating paragraphs
(c)and
(d)as paragraphs
(d)and (e), respectively. H. Adding a new paragraph (c). The revisions and additions read as follows: § 685.301 Origination of a loan by a Direct Loan Program school.
(a)* * * (9)(i) The minimum period of enrollment for which a school may originate a Direct Loan application is—
(A)At a school that measures academic progress in credit hours and uses a semester, trimester, or quarter system, or has terms that are substantially equal in length with no term less than nine weeks in length, a single academic term (e.g., a semester or quarter); or
(B)Except as provided in paragraph (a)(9)(ii) or
(iii)of this section, at a school that measures academic progress in clock hours, or measures academic progress in credit hours but does not use a semester, trimester, or quarter system and does not have terms that are substantially equal in length with no term less than nine weeks in length, the lesser of— ( *1* ) The length of the student's program (or the remaining portion of that program if the student has less than the full program remaining) at the school; or ( *2* ) The academic year as defined by the school in accordance with 34 CFR 668.3.
(ii)For a student who transfers into a school with credit or clock hours from another school, and the prior school originated or certified a loan for a period of enrollment that overlaps the period of enrollment at the new school, the new school may originate a loan for the remaining portion of the program or academic year. In this case the school may originate a loan for an amount that does not exceed the remaining balance of the student's annual loan limit.
(iii)For a student who completes a degree program at a school, where the student's last loan to complete that program had been for less than an academic year, and the student then begins a new degree program at the same school, the school may originate a loan for the remainder of the academic year. In this case the school may originate a loan for an amount that does not exceed the remaining balance of the student's annual loan limit at the loan level associated with the new program.
(b)* * *
(2)An institution must disburse the loan proceeds on a payment period basis in accordance with 34 CFR 668.164(b).
(3)Unless paragraphs (b)(4) or (b)(8) of this section applies—
(i)If a loan period is more than one payment period, the school must disburse loan proceeds at least once in each payment period; and
(ii)If a loan period is one payment period, the school must make at least two payments during that payment period. The school may not make the second payment until the student successfully completes half of the number of credit hours or clock hours and half of the number of weeks of instructional time in the payment period.
(c)*Annual loan limit progression based on completion of an academic year.*
(1)If a school measures academic progress in an educational program in credit hours and uses either standard terms (semesters, trimesters, or quarters) or nonstandard terms that are substantially equal in length, and each term is at least nine weeks of instructional time in length, a student is considered to have completed an academic year and progresses to the next annual loan limit when the academic year calendar period has elapsed.
(2)If a school measures academic progress in an educational program in nonstandard terms that are not substantially equal in length or each term is not at least nine weeks of instructional time in length, or in credit hours and does not have academic terms, a student is considered to have completed an academic year and progresses to the next annual loan limit at the later of—
(i)The student's completion of the weeks of instructional time in the student's academic year; or
(ii)The date, as determined by the school, that the student has successfully completed the academic coursework in the student's academic year.
(3)If a school measures academic progress in an educational program in clock hours, a student is considered to have completed an academic year and progresses to the next annual loan limit at the later of—
(i)The student's completion of the weeks of instructional time in the student's academic year; or
(ii)The date, as determined by the school, that the student has successfully completed the clock hours in the student's academic year.
(4)For purposes of paragraphs (c)(1) and (c)(2) of this section, terms in a loan period are substantially equal in length if no term in the loan period is more than two weeks of instructional time longer than any other term in that loan period. 26. Section 685.303 is amended by revising paragraph (b)(3) to read as follows: § 685.303 Processing loan proceeds.
(b)* * *
(3)If a student does not begin attendance in the period of enrollment, disbursed loan proceeds must be handled in accordance with 34 CFR 668.21. PART 690—FEDERAL PELL GRANT PROGRAM 27. The authority citation for part 690 continues to read as follows: Authority: 20 U.S.C. 1070a, unless otherwise noted. § 690.2 [Amended] 28. Section 690.2 is amended by: A. In paragraph (b), adding to its list, in alphabetical order, the terms *Half-time student* , *Three-quarter-time student* , and *Undergraduate student* . B. In paragraph (c), removing the definitions for *Half-time student* , *Less-than-half-time student* , *Three-quarter-time student* , and *Undergraduate student* . 29. Section 690.63 is amended by revising paragraphs (a)(1) and
(e)to read as follows: § 690.63 Calculation of a Federal Pell Grant for a payment period. (a)(1) Programs using standard terms with at least 30 weeks of instructional time. A student's Federal Pell Grant for a payment period is calculated under paragraphs
(b)or
(d)of this section if—
(i)The student is enrolled in an eligible program that—
(A)Measures progress in credit hours;
(B)Is offered in semesters, trimesters, or quarters; and
(C)Requires the student to enroll for at least 12 credit hours in each term in the award year to qualify as a full-time student; and
(ii)The program uses an academic calendar that provides at least 30 weeks of instructional time in—
(A)Two semesters or trimesters in the fall through the following spring, or three quarters in the fall, winter, and spring, none of which overlaps any other term (including a summer term) in the program; or
(B)Any two semesters or trimesters, or any three quarters where— ( *1* ) The institution starts its terms for different cohorts of students on a periodic basis (e.g., monthly); ( *2* ) The program is offered exclusively in semesters, trimesters, or quarters; and ( *3* ) Students are not allowed to be enrolled simultaneously in overlapping terms and must stay with the cohort in which they start unless they withdraw from a term (or skip a term) and re-enroll in a subsequent term.
(e)*Programs using credit hours without terms or clock hours* . The Federal Pell Grant for a payment period for a student in a program using credit hours without terms or using clock hours is calculated by—
(1)Determining the student's Scheduled Federal Pell Grant using the Payment Schedule; and
(2)Multiplying the amount determined under paragraph (e)(1) of this section by the lesser of—
(i)EP08AU07.000 ; or
(ii)EP08AU07.001 30. Section 690.66 is amended by revising paragraph
(a)to read as follows: § 690.66 Correspondence study.
(a)An institution calculates the Federal Pell Grant for a payment period for a student in a program of study offered by correspondence courses without terms, but not including any residential component, by—
(1)Determining the student's annual award using the half-time Disbursement Schedule; and
(2)Multiplying the annual award determined from the Disbursement Schedule for a half-time student by the lesser of—
(i)EP08AU07.002 ; or
(ii)EP08AU07.003 PART 691—ACADEMIC COMPETITIVENESS GRANT
(ACG)AND NATIONAL SCIENCE AND MATHEMATICS ACCESS TO RETAIN TALENT GRANT (NATIONAL SMART GRANT) PROGRAMS 31. The authority citation for part 691 continues to read as follows: Authority: 20 U.S.C. 1070a-1, unless otherwise noted. § 691.2 [Amended] 32. Section 691.2 is amended by: A. In paragraph (b), adding to its list, in alphabetical order, the term *Undergraduate student.* B. In paragraph (d), removing the definition for *Undergraduate student* . § 691.8 [Amended] 33. Section 691.8 is amended by removing paragraph (c). 34. Section 691.63 is amended by revising paragraphs (a)(1) and
(e)to read as follows: § 691.63 Calculation of a grant for a payment period. (a)(1) *Programs using standard terms with at least 30 weeks of instructional time* . A student's grant for a payment period is calculated under paragraphs
(b)or
(d)of this section if —
(i)The student is enrolled in an eligible program that—
(A)Measures progress in credit hours;
(B)Is offered in semesters, trimesters, or quarters; and
(C)Requires the student to enroll for at least 12 credit hours in each term in the award year to qualify as a full-time student; and
(ii)The program uses an academic calendar that provides at least 30 weeks of instructional time in—
(A)Two semesters or trimesters in the fall through the following spring, or three quarters in the fall, winter, and spring, none of which overlaps any other term (including a summer term) in the program; or
(B)Any two semesters or trimesters, or any three quarters where— ( *1* ) The institution starts its terms for different cohorts of students on a periodic basis (e.g., monthly); ( *2* ) The program is offered exclusively in semesters, trimesters, or quarters; and ( *3* ) Students are not allowed to be enrolled simultaneously in overlapping terms and must stay with the cohort in which they start unless they withdraw from a term (or skip a term) and re-enroll in a subsequent term.
(e)*Programs using credit hours without terms or clock hours.* The grant for a payment period for a student in a program using credit hours without terms or using clock hours is calculated by—
(1)Determining that the student is attending at least full-time;
(2)Determining the student's ACG or National SMART Grant Scheduled Award; and
(3)Multiplying the ACG or National SMART Grant amount determined under paragraph (e)(2) of this section by the lesser of—
(i)EP08AU07.004 ; or
(ii)EP08AU07.005 [FR Doc. E7-15314 Filed 8-7-07; 8:45 am] BILLING CODE 4000-01-P 72 152 Wednesday, August 8, 2007 Rules and Regulations Part III Department of Transportation Federal Aviation Administration 14 CFR Part 25 Airplane Performance and Handling Qualities in Icing Conditions; Final Rule DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 25 [Docket No. FAA-2005-22840; Amendment No. 25-121] RIN 2120-AI14 Airplane Performance and Handling Qualities in Icing Conditions AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Final rule. SUMMARY: This action introduces new airworthiness standards to evaluate the performance and handling characteristics of transport category airplanes in icing conditions. This action will improve the level of safety for new airplane designs when operating in icing conditions, and harmonizes the U.S. and European airworthiness standards for flight in icing conditions. DATES: This final rule becomes effective October 9, 2007. FOR FURTHER INFORMATION CONTACT: Don Stimson, FAA, Airplane & Flight Crew Interface Branch, ANM-111, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW., Renton, Washington 98057-3356; telephone:
(425)227-1129; fax:
(425)227-1149, e-mail: *don.stimson@faa.gov.* SUPPLEMENTARY INFORMATION: Availability of Rulemaking Documents You can get an electronic copy using the Internet by:
(1)Searching the Department of Transportation's electronic Docket Management System
(DMS)Web page ( *http://dms.dot.gov/search* );
(2)Visiting the FAA's Regulations and Policies Web page at *http://www.faa.gov/regulations_policies;* or
(3)Accessing the Government Printing Office's Web page at *http://www.gpoaccess.gov/fr/index.html.* You can also get a copy by sending a request to the Federal Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence Avenue SW., Washington, DC 20591, or by calling
(202)267-9680. Make sure to identify the docket number or amendment number of this rulemaking. Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act statement in the **Federal Register** published on April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit *http://dms.dot.gov.* Small Business Regulatory Enforcement Fairness Act The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 requires the FAA to comply with small entity requests for information or advice about compliance with statutes and regulations within its jurisdiction. If you are a small entity and you have a question regarding this document, you may contact a local FAA official, or the person listed under FOR FURTHER INFORMATION CONTACT . You can find out more about SBREFA on the Internet at *http://www.faa.gov/regulations_policies/rulemaking/sbre_act/* . Authority for This Rulemaking The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, the FAA is charged with promoting safe flight of civil aircraft in air commerce by prescribing minimum standards required in the interest of safety for the design and performance of aircraft. This regulation is within the scope of that authority because it prescribes new safety standards for the design of transport category airplanes. I. Background A. Statement of the Problem Currently, § 25.1419, “Ice protection,” requires transport category airplanes with approved ice protection features be capable of operating safely within the icing conditions identified in appendix C of part 25. This section requires applicants to perform flight testing and conduct analyses to make this determination. Section 25.1419 only requires an applicant to demonstrate that the airplane can operate safely in icing conditions if the applicant is seeking to certificate ice protection features. Although an airplane's performance capability and handling qualities are important in determining whether an airplane can operate safely, part 25 does not have specific requirements on airplane performance or handling qualities for flight in icing conditions. In addition, the FAA does not have a standard set of criteria defining what airplane performance capability and handling qualities are needed to be able to operate safely in icing conditions. Finally, § 25.1419 fails to address certification approval for flight in icing conditions for airplanes without ice protection features. Service history shows that flight in icing conditions may be a safety risk for transport category airplanes. We found nine accidents since 1983 in the National Transportation Safety Board's accident database that may have been prevented if this rule had been in effect. In evaluating the potential for this rulemaking to avoid future accidents, we considered only past accidents involving tailplane stall or potential airframe ice accretion effects on drag or controllability. We did not consider accidents related to ground deicing since this amendment does not change the ground deicing requirements. We also limited our search to accidents involving aircraft certificated to the icing standards of part 25 (or its predecessor). B. NTSB Recommendations This amendment addresses the following National Transportation Safety Board
(NTSB)safety recommendations related to airframe icing: 1 1 Refer to appendix 3 of the NPRM for more details on these safety recommendations (except for A-96-056, which was not discussed in the NPRM). 1. NTSB Safety Recommendation A-91-087 2 recommended requiring flight tests where ice is accumulated in those cruise and approach flap configurations in which extensive exposure to icing conditions can be expected, and requiring subsequent changes in configuration to include landing flaps. This safety recommendation resulted from an accident that was attributed to tailplane stall due to ice contamination. 2 “Effect of Ice on Aircraft Handling Characteristics (1984 Trials),” Jetstream 31—G-JSSD, British Aerospace Flight Test Report FTR.177/JM, dated May 13, 1985. This amendment requires applicants to investigate the susceptibility of airplanes to ice-contaminated tailplane stall during airworthiness certification. An accompanying Advisory Circular
(AC)will provide detailed guidance on acceptable means of compliance, including flight tests in icing conditions where the airplane's configuration is changed from flaps and landing gear retracted to flaps and landing gear in the landing position. 2. NTSB Safety Recommendation A-96-056 3 recommended revising the icing certification testing regulation to ensure that airplanes are properly tested for all conditions in which they are authorized to operate, or are otherwise shown to be capable of safe flight into such conditions. Additionally, if safe operations cannot be demonstrated by the manufacturer, operational limitations should be imposed to prohibit flight in such conditions and flightcrews should be provided with the means to positively determine when they are in icing conditions that exceed the limits for aircraft certification. 3 National Transportation Safety Board, 1996. “In-Flight Icing Encounter and Loss of Control, Simmons Airlines, d.b.a.American Eagle Flight 4184, Avions de Transport Regional
(ATR)Model 72-212, N401AM, Roselawn, Indiana, October 31, 1994.” Aircraft Accident Report NTSB/AAR-96/01. Washington, DC. This amendment partially addresses safety recommendation A-96-056 by revising the certification standards to ensure that transport category airplanes are properly tested for the critical icing conditions defined in appendix C of part 25. We are considering future rulemaking action to address icing conditions beyond those covered by appendix C of part 25, and to provide flightcrews with a means to positively determine when they are in icing conditions that exceed the limits for aircraft certification. 3. NTSB Safety Recommendation A-98-094 4 recommended that manufacturers of all turbine-engine driven airplanes (including the EMB-120) provide minimum maneuvering airspeed information for all airplane configurations, phases, and conditions of flight (icing and non-icing conditions). Also, the NTSB recommended that minimum airspeeds should take into consideration the effects of various types, amounts, and locations of ice accumulations, including thin amounts of very rough ice, ice accumulated in supercooled large droplet icing conditions, and tailplane icing. 4 National Transportation Safety Board, 1998. “In-Flight Icing Encounter and Uncontrolled Collision With Terrain, Comair Flight 3272, Embraer EMB-120RT, N265CA, Monroe, Michigan, January 9, 1997.” Aircraft Accident Report NTSB/AR-98/04. Washington, DC. This amendment partially addresses safety recommendation A-98-094 by requiring the same maneuvering capability requirements at the minimum operating speeds in the most critical icing conditions defined in appendix C of part 25 as are currently required in non-icing conditions. We are considering future rulemaking action to address supercooled large droplet icing conditions. 4. NTSB Safety Recommendation A-98-096 is also a result of the same accident discussed under Safety Recommendation A-98-094, above. The NTSB recommended the FAA require, during type certification, that manufacturers and operators of all transport category airplanes certificated to operate in icing conditions install stall warning/protection systems that provide a cockpit warning (aural warning and/or stick shaker) before the onset of stall when the airplane is operating in icing conditions. This amendment requires adequate stall warning margin to be shown with the most critical ice accretion for transport category airplanes approved to fly in icing conditions. Except for the short time before icing conditions are recognized and the ice protection system activated, this stall warning must be provided by the same means as for non-icing conditions. Although neither an aural stall warning or stick shaker is required under this amendment, all recently certificated transport category airplanes have used either a stick shaker or an aural warning to warn the pilot of an impending stall. We do not anticipate any future transport category airplane designs without a cockpit warning of an impending stall. C. Summary of the NPRM This amendment is based on the notice of proposed rulemaking (NPRM), Notice No. 05-10, which was published in the **Federal Register** on November 4, 2005 (70 FR 67278). In the NPRM, we proposed to revise the airworthiness standards for type certification of transport category airplanes to add a comprehensive set of new requirements for airplane performance and handling qualities for flight in icing conditions. We also proposed to add requirements that define the ice accretion (that is, the size, shape, location, and texture of the ice) that must be considered for each phase of flight. These changes were proposed to ensure that minimum operating speeds determined during certification of all future transport category airplanes will provide adequate maneuver capability in icing conditions for all phases of flight and all airplane configurations. They would also harmonize the FAA's regulations with those expected to be adopted by the European Aviation Safety Agency (EASA). This harmonization would not only benefit the aviation industry economically, but also maintain the necessary high level of aviation safety. II. Discussion of the Final Rule A. General Summary Twelve commenters responded to the NPRM: Four private citizens, Airbus Industrie (Airbus), the Air Line Pilots Association (ALPA), The Boeing Company (Boeing), Dassault Aviation (Dassault), the General Aviation Manufacturers Association (GAMA), the National Transportation Safety Board (NTSB), Raytheon Aircraft Company (Raytheon), and the United Kingdom Civil Aviation Authority (U.K. CAA). Seven of these commenters explicitly expressed support for the rule, none opposed it. Many of the commenters suggested specific improvements or clarifications. Summaries of their comments and our responses (including explanations of changes to the final rule in response to the comments) are provided below. 5 5 The full text of each commenter's submission is available in the Docket. 1. Engine Bleed Configuration for Showing Compliance With § 25.119 The proposed § 25.119 would require applicants to comply with the landing climb performance requirements in both icing and non-icing conditions. Raytheon stated that proposed § 25.119(b) is unclear as to whether the engine bleed configuration for showing compliance should include bleed extraction for operation of the airframe and engine ice protection systems (IPS). Raytheon pointed out that engine bleed extraction for operating the airframe and engine IPS could affect engine acceleration time, which would affect the thrust level used for showing compliance. Raytheon noted that the means of compliance in the proposed AC addresses this issue, but recommended that it be clarified within the rule. While we agree that engine bleed extraction could affect the thrust level used to show compliance with § 25.119(b), we disagree that the rule needs to be revised to state the bleed configuration. For flight in icing conditions, § 25.21(g)(1) requires compliance to be shown assuming normal operation of the airplane and its IPS in accordance with the operating limitations and operating procedures established by the applicant and provided in the Airplane Flight Manual (AFM). The bleed configuration of the engines would be part of the AFM operating procedures that must be used to show compliance with § 25.119(b). As noted by Raytheon, the guidance provided in the AC accompanying this final rule reminds applicants that the engine bleed configuration should be considered when showing compliance with the requirements of this final rule. 2. Using the Landing Ice Accretion To Comply With § 25.121(d)(2)(ii) Boeing proposed using the landing ice accretion for showing compliance with the approach climb gradient requirement in icing conditions, rather than the holding ice accretion as proposed in § 25.121(d)(2)(ii). Boeing recommended this change to harmonize with EASA's proposed rule. We consider it inappropriate to use the landing ice accretion for compliance with § 25.121(d). Section 25.121(d) specifies the minimum climb capability, in terms of a climb gradient, that an airplane must be capable of achieving in the approach configuration with one engine inoperative. This requirement involves the approach phase of flight, which occurs before entering the landing phase. Depending on the IPS design and the procedures for its use, the landing ice accretion (which is defined as the ice accretion after exiting the holding phase and transitioning to the landing phase) may be smaller than the holding ice accretion. For example, there may be a procedure to use the IPS to remove the ice when transitioning to the landing phase so that the protected areas are clear of ice for landing. It would be inappropriate to allow any reduction in the ice accretion to be used for the approach climb gradient (in the approach phase) resulting from using the IPS in the landing phase. We note that neither EASA's Notice of Proposed Amendment
(NPA)covering the same icing-related safety issues (NPA 16/2004) nor our NPRM define an ice accretion specific to the approach phase of flight. Both proposals used holding ice for compliance in icing conditions because holding ice was considered to be conservative for this flight phase. Therefore, we believe that it is appropriate to define an additional ice accretion that would be specifically targeted at the approach phase of flight. We have added the following definition as paragraph (a)(5) in part II of appendix C: “Approach ice is the critical ice accretion on the unprotected parts of the airplane, and any ice accretion on the protected parts appropriate to normal IPS operation following exit from the holding flight phase and transition to the most critical approach configuration.” Section 25.121(d)(2)(ii) is also revised to refer to this definition. The definition of landing ice is revised to be the ice accretion after exiting from the approach phase (rather than after the holding phase as proposed) and redesignated as paragraph (a)(6). Finally, applicants would still have the option to use a more conservative ice accretion in accordance with paragraph
(b)of part II of appendix C. Therefore, applicants would have the option of using the holding ice accretion as proposed in the NPRM if it was more critical than the approach ice accretion. 3. V REF Comparison at Maximum Landing Weight Proposed § 25.125(a)(2) would require landing distances to be determined in icing conditions if the landing approach speed, V REF , for icing conditions exceeds V REF for non-icing conditions by more than 5 knots calibrated airspeed. Boeing proposed that the V REF speed comparison for icing and non-icing conditions in proposed § 25.125(a)(2) be made at the maximum landing weight. This proposal would harmonize the FAA's rule with the expected EASA final rule. Boeing also stated that the proposed rule was deficient in that it did not specify the weight or weights at which this comparison must be made. The results of this comparison can depend on the weight at which the comparison is made. We agree that this comparison should be made at the maximum landing weight and have revised § 25.125(a)(2) of the final rule accordingly. We consider this to be a clarifying change that will not impose an additional burden on applicants. 4. Landing Distance in Icing Conditions As noted in the discussion of the previous comment, proposed § 25.125(a)(2) would require the landing distance to be determined in icing conditions if the landing approach speed, V <sup>REF</sup> , for icing conditions exceeds the non-icing V <sup>REF</sup> by more than 5 knots calibrated airspeed. An increase in V <sup>REF</sup> for icing conditions is normally caused by an increase in stall speed in icing conditions because V <sup>REF</sup> must be at least 1.23 times the stall speed. Raytheon noted that a change in stall speed is not the only factor that might affect landing distance in icing conditions. For example, idle thrust might be adjusted by an engine control system designed to maintain sufficient bleed flow to support the demands of engine and airframe ice protection. Also, landing procedures for icing conditions might be different than for non-icing conditions. Raytheon suggested revising proposed § 25.125(a)(2) to require that the landing distance must also be determined in icing conditions if the thrust settings or landing procedures used in icing conditions would cause an increase in the landing distance. One of the primary safety concerns addressed by proposed § 25.125 is to maintain a minimum speed margin above the stall speed for an approach and landing in icing conditions. This is achieved by increasing the landing approach speed (V <sup>REF</sup> ) if ice on the airplane results in a significant increase in stall speed. Under proposed § 25.125(b)(2)(ii)(B), a significant increase in stall speed relative to this requirement is one that results in an increase in V <sup>REF</sup> of more than 5 knots calibrated airspeed, where V <sup>REF</sup> is not less than 1.23 times the stall speed. An increase in V <sup>REF</sup> will increase the distance required by the airplane to land and come to a stop since the airplane will touch down at a higher speed. A significant increase in stall speed in the landing configuration due to ice has a secondary effect of increasing the required landing distance. We proposed in § 25.125(a)(2) that this increase in landing distance be taken into account. Proposed § 25.125(a)(2) resulted from the secondary effect of a significant increase in stall speed in the landing configuration due to ice, not to an evaluation of all of the possible reasons why the required landing distance may need to be longer in icing conditions. The commenter correctly points out that a longer landing distance may also be needed if higher thrust settings or different landing procedures are used in icing conditions. In evaluating the potential costs and effects of the proposed change, we could not find any existing airplanes where, if the requirement proposed by the commenter had been in effect, it would have required an applicant to determine a longer landing distance in icing conditions. In nearly all cases, applicants have not used different thrust or power settings or different procedures for landing in icing conditions. Airplane manufacturers indicated that they did not anticipate this relationship to change for future designs. When different thrust or power settings or procedures have been used for landing in icing conditions, V <sup>REF</sup> has also increased by more than 5 knots. In these cases, applicants would be required by the proposed § 25.125(a) to determine the landing distance for icing conditions, and existing § 25.101(c) and
(f)require applicants to include the effects of different power or thrust settings or landing procedures on this landing distance. Therefore, we see no need to amend the proposed requirement as recommended by Raytheon. 5. Sandpaper Ice Accretion Proposed appendix C, part II(a)(6) defined sandpaper ice as a thin, rough layer of ice. A private citizen notes the NPRM did not specifically state how sandpaper ice should be used or considered in showing compliance with any of the proposed airplane performance and handling qualities requirements. This commenter suggested amending proposed § 25.143(i)(1) to add that if normal operation of the horizontal tail IPS allows ice to form on the tail leading edge, sandpaper ice must also be considered in determining the critical ice accretion. (Proposed § 25.143(i)(1) would require applicants to demonstrate the airplane is safely controllable, per the applicable requirements of § 25.143, with the ice accretion defined in appendix C that is most critical for the particular flight phase.) Appendix C, part II(a) requires applicants to use the most critical ice accretion to show compliance with the applicable subpart B airplane performance and handling requirements in icing conditions. The determination of the most critical ice accretion must consider the full range of atmospheric icing conditions of part I of appendix C as well as the characteristics of the IPS (per § 25.21(g)(1) and appendix C, part II(a)). This includes consideration of thin, rough layers of ice (known as sandpaper ice) as well as any other type of ice accretion that may occur in the applicable atmospheric icing conditions, taking into account the operating characteristics of the IPS and the flight phase. Since the requirement to use the most critical ice accretion includes consideration of sandpaper ice and sandpaper ice is not referenced elsewhere in the rule, we have removed appendix C, part II(a)(6) from the final rule. The AC that we are issuing along with this final rule, or shortly thereafter, provides further information on the use of sandpaper ice in showing compliance. (This AC will be available in the Regulatory Guidance Library
(RGL)when issued.) 6. Critical Ice Accretion for Showing Compliance With § 25.143(i)(1) As noted in the discussion of the previous comment, proposed § 25.143(i)(1) would require applicants to demonstrate the airplane is safely controllable, per the applicable requirements of § 25.143, with the ice accretion defined in appendix C that is most critical for the particular flight phase. Raytheon stated that because ice accretion before normal system operation is addressed separately in § 25.143(j), the controllability demonstration required by § 25.143(i)(1) should be limited to only the most critical ice accretion defined in appendix C part II(a) rather than all of appendix C. For purposes of the controllability demonstrations required by § 25.143(i)(1), appendix C, parts I and II(a), (b), (c), and
(d)apply. Appendix C, part II(e) only applies to §§ 25.143(j) and 25.207(h), which are the only subpart B requirements pertaining to flight in icing conditions before activation of the IPS. We acknowledge that this limited applicability of appendix C, part II(e) is unclear in the language proposed, and we have revised the final rule to include a sentence that specifies this limitation. 7. Pushover Maneuver for Ice-Contaminated Tailplane Stall Evaluation Raytheon stated that proposed § 25.143(i)(2), which states that a push force from the pilot must be required throughout a pushover maneuver down to zero g or full down elevator, is inconsistent with allowing a pull force for recovery from the maneuver. Raytheon noted that the FAA stated in the NPRM that a force reversal (that is, a push force becoming a pull force) is unacceptable, implying that the pilot should only be permitted to relax his or her push force to initiate recovery. The 50-pound limit for recovery in the proposed § 25.143(i)(2) appears to allow up to 50 pounds of force reversal to develop during the maneuver, including at the initiation of recovery from the maneuver. Raytheon stated that they object to the proposed requirement and continue to support the industry proposal for the pushover maneuver submitted to ARAC by the Flight Test Harmonization Working Group. The industry proposal specified there must be no force reversal down to 0.5 g (the limit of the operational flight envelope) and a prompt recovery from zero g (or full down elevator control if zero g cannot be obtained) with less than 50 pounds of stick force. Raytheon stated that the 50-pound pull force was not intended as a limit for the subsequent pull-up maneuver during recovery from the push-over test. The FAA continues to disagree with the industry proposal, and Raytheon did not offer any new evidence or rationale that would lead us to reconsider our position. As stated in the NPRM, certification testing and service experience have shown that testing to only 0.5 g is inadequate, considering the relatively high frequency of experiencing 0.5 g in operations. Since the beginning of the 1980s, the practice of many certification authorities has been to require testing to lower load factors. The industry proposal for determining the acceptability of a control force reversal (as described in the NPRM) was subjective and would have led to inconsistent evaluations. Requiring a push force to zero g removes subjectivity in the assessment of the airplane's controllability and provides readily understood criteria of acceptability. Any lesser standard would not give confidence that the problem has been fully addressed. We do not consider the requirement for a push force to be needed to reach zero g, coupled with allowing a pull force of up to 50 pounds during the recovery, to be inconsistent with our position that force reversals are unacceptable within the normal flight envelope. The pushover maneuver ends when zero g is reached (or when full down elevator is achieved if zero g cannot be reached). The recovery is a separate pull-up maneuver, initiated by the pilot, to regain the original flight path. It is acceptable for this maneuver to require a pull force, but the pull force must not exceed 50 pounds, which is the maximum pitch force permitted by the existing § 25.143(c) (renumbered as § 25.143(d) by this amendment) for short term application of force using one hand. No changes were made. 8. Pushover Maneuver Limited by Design Features Other Than Elevator Power Airbus noted that proposed § 25.143(i)(2) would allow the required pushover maneuver to end before zero g is reached if the airplane is limited by elevator power. Airbus commented that safe design characteristics other than limited elevator power may also prevent an aircraft from reaching zero g during the pushover maneuver (e.g., flight envelope protections designed into fly-by-wire control systems). Airbus proposed revising the proposed rule to allow the pushover maneuver to end before reaching zero g for other safe design characteristics that prevent reaching zero g. We agree with Airbus and have revised § 25.143(i)(2) to include consideration of other design characteristics of the flight control system that may prevent reaching zero g in the pushover maneuver. 9. Pitch Force Requirements During a Sideslip Maneuver Raytheon stated that the proposed requirement for flight in icing conditions is more stringent than the requirements applicable to non-icing conditions. Proposed § 25.143(i)(3) would require that any changes in force that the pilot must apply to the pitch control to maintain speed with increasing sideslip angle must be steadily increasing with no force reversals. Raytheon notes the non-icing subpart B static lateral-directional stability requirements of § 25.177 do not specify that the pitch forces cannot reverse. For example, a push force at small sideslip angles that changes to a pull force as sideslip increases is acceptable. Raytheon noted that it would not be unusual for an airplane to require an increase in pull force with increasing sideslip. If the tailplane or a portion of it developed aerodynamic separation as sideslip increases, then to maintain 1-g flight the elevator hinge moment would require further pull force that could be sudden or become excessive. Raytheon notes this undesirable characteristic would comply with proposed § 25.143(i)(3). Raytheon and another commenter (a private citizen) proposed that the proposed rule be revised to eliminate the requirements that the pitch force be steadily increasing with increasing sideslip and that there be no reversal. Instead, these commenters suggested that the requirement should be limited to ensuring that there is no abrupt or uncontrollable pitching tendency. The FAA agrees with the commenters that small, gradual changes in the pitch control force may not be objectionable or unsafe, and that the proposed requirement is unnecessarily more stringent than the requirements for non-icing conditions. The safety concern is sudden or large pitch force changes that would be difficult for the pilot to control. Therefore, we have changed § 25.143(i)(3) in the final rule to read as follows: “Any changes in force that the pilot must apply to the pitch control to maintain speed with increasing sideslip angle must be steadily increasing with no force reversals, unless the change in control force is gradual and easily controllable by the pilot without using exceptional piloting skill, alertness, or strength.” Under this new language, abrupt changes in the control force characteristic, unless so small as to be unnoticeable, would not be considered to meet the requirement that the force be steadily increasing. A gradual change in control force is a change that is not abrupt and does not have a steep gradient. It can be easily managed by a pilot of average skill, alertness, and strength. Control forces in excess of those permitted by § 25.143(d) would be considered excessive. 10. Stall Warning in Icing Conditions Existing § 25.207(c) requires at least a 3 knot or 3% speed margin between the stall warning speed (V <sup>SW</sup> ) and the reference stall speed (V <sup>SR</sup> ). Existing § 25.207(d) requires at least a 5 knot or 5% speed margin between V <sup>SW</sup> and the speed at which the behavior of the airplane gives the pilot a clear and distinctive indication of an acceptable nature that the airplane is stalled. Under proposed § 25.21(g), the stall warning requirements of § 25.207(c) and
(d)would apply only to non-icing conditions. For icing conditions, proposed § 25.207(e) requires that stall warning be sufficient to allow the pilot to prevent stalling when the pilot starts the recovery maneuver not less than 3 seconds after the onset of stall warning in a one knot per second deceleration. The U.K. CAA noted that proposed § 25.207(e) would allow stall warning in icing conditions to occur at a speed slower than the speed for the maximum lift capability of the wing (also known as the 1g stall speed). This would not be true for non-icing conditions because of § 25.207(c). According to U.K. CAA, if the stall warning speed is slower than the 1g stall speed, the airplane will have little or no maneuvering capability at the point that the airplane gives the pilot a warning of an impending stall. The U.K. CAA stated that in an operational scenario, if the airplane slows to a speed slightly above the stall warning speed, any attempt to maneuver the airplane or further reduce speed could lead to an immediate stall. This situation is of most concern to the U.K. CAA in the landing phase because, unlike the cruise or takeoff phases, there are limited options for the crew to recover from a stall. The airplane is already at low altitude and descending towards the ground, the power setting is low, and the potential to trade height for speed is extremely limited. Due to this concern, the U.K. CAA recommended making the non-icing stall warning speed margin requirements of § 25.207(c) and
(d)also apply to icing conditions, but only when the airplane is in the landing configuration. Since the proposed § 25.207(e) was intended to be used in place of § 25.207(c) and
(d)for icing conditions, the U.K. CAA suggested that, if § 25.207(c) and
(d)are applied to the landing configuration in icing conditions, then § 25.207(e) need not be applied to the landing configuration. In developing the proposed rule, the FAA accepted a determination by the Flight Test Harmonization Working Group (FTHWG) that the same handling qualities standards should generally apply to flight in icing conditions as apply to flight in non-icing conditions. In certain areas, however, the FTHWG decided that the handling qualities standards for non-icing conditions were inappropriate for flight in icing conditions. In these areas, the FTHWG recommended alternative criteria for flight in icing conditions. The stall warning margin was one of the areas where the FTHWG recommended alternative criteria for flight in icing conditions. The FTHWG determined that applying the existing stall warning margin requirements of § 25.207(c) and
(d)to icing conditions would be far more stringent than the best current practices and would unduly penalize designs that have not exhibited safety problems in icing conditions. The FTHWG further determined the stall warning requirements of the existing § 25.207(c) and
(d)could be made less stringent for icing conditions without compromising safety. As a result, we proposed the less stringent § 25.207(e) to address stall warning margin requirements for icing conditions in place of § 25.207(c) and (d). No changes have been made to this final rule as a result of the U.K. CAA's comment. We acknowledge that the U.K. CAA has pointed out a deficiency with safety implications in the proposed stall warning requirements. However, U.S. manufacturers' initial cost analysis of the U.K. CAA's recommended changes indicates these changes may significantly increase the costs of this rulemaking beyond the benefits provided due to uncertainties in how the increased stall warning margin requirement would affect airplane type certification testing, certification program schedules, and the design of stall warning systems. In addition, the U.K. CAA's recommended changes would introduce significant regulatory differences from EASA's airworthiness certification requirements, and might not completely resolve the potential safety issue. For these reasons we believe that additional time and aviation industry participation are needed to determine an appropriate way to address this safety concern. However, we do not believe it is appropriate to delay issuance of this final rule pending resolution of this issue. This final rule significantly improves the affected airworthiness standards and the benefits of these improvements should be achieved as soon as possible. It also satisfies a number of important NTSB recommendations. As these improvements are being implemented, we will continue to work closely with EASA and industry to address the issue raised by the U.K. CAA. This subject has been included on EASA's 2008 rulemaking agenda, and we will work with them in that context to agree on a harmonized approach. Once these efforts are completed, we will initiate new rulemaking, if appropriate, to adopt any necessary revisions to part 25. 11. Stall and Stall Warning Requirements Prior to Activation of the IPS Proposed § 25.207(h)(2)(ii) would require compliance with the stall characteristics requirements of § 25.203, using the stall demonstration prescribed by § 25.201, for flight in icing conditions before the IPS is activated. This requirement would apply if the stall warning required by § 25.207 is provided by a different means for flight in icing conditions than for non-icing conditions. The stall demonstration prescribed by § 25.201 requires that the stalling maneuver be continued to the point where the airplane gives the pilot a clear and distinctive indication of an acceptable nature that the airplane is stalled. Raytheon disagreed with this proposal because the ice accretion resulting from a delay in activating the IPS is a short term transient condition. According to Raytheon, the intent should be to demonstrate only the ability to prevent a stall, rather than to also ensure that the airplane has good stall characteristics. Raytheon stated that it is unnecessary to consider that the pilot might ignore the stall buffeting and continue to increase angle-of-attack until the airplane is stalled. To comply with the proposed rule, Raytheon argued that an airplane with a stick pusher stall identification system would be required to have its stick pusher activation based on a contaminated wing leading edge for non-icing conditions. This would require increased takeoff and landing speeds and negatively impact all takeoff and landing performance. Raytheon also stated that the cost impacts would be excessive for what is only a transient condition. Raytheon's position is that there is no need to consider the airplane's handling qualities after it has stalled. It should be sufficient to show that the pilot can prevent stalling if the recovery maneuver is not begun until at least three seconds after the onset of stall warning, which is also required by the proposed § 25.207(h)(2)(ii). We do not agree with Raytheon's comments. Because of human factors considerations, proposed § 25.207(b) generally requires that the same means of providing a stall warning be used in both icing and non-icing conditions. Therefore, if a stick shaker is used for stall warning in non-icing conditions (as is the case for most transport category airplanes) it must also be used for stall warning in icing conditions. The reason for this proposed requirement is that in icing accidents and incidents where the airplane stalled before the stick shaker activated, flightcrews have not recognized the buffeting associated with ice contamination in time to prevent stalling. Proposed § 25.207(h)(2)(ii) allows a different means of providing stall warning in icing conditions only for the relatively short time period between when the airplane first enters icing conditions and when the IPS is activated. (This exception to the proposed § 25.207(b) is further limited such that it only applies when the procedures for activating the IPS do not involve waiting until a certain amount of ice has been accumulated.) Because there is still a safety concern with flightcrews recognizing a stall warning that is provided by a different means than the flightcrew would normally experience, we consider it essential that the airplane also be shown to have safe stall characteristics. Poor stalling characteristics with an iced wing have directly contributed to the severity of icing accidents involving a stall in icing conditions. As for Raytheon's comment about the cost impacts, we evaluated these as part of the regulatory evaluation conducted for the NPRM, and we do not agree that the cost impacts associated with this requirement are excessive. In addition, the adopted § 25.207 will not require airplanes with stick pusher stall identification systems to have their stick pusher activation based on a contaminated wing leading edge for non-icing conditions. Section 25.207(h)(2)(ii) does not apply if the same stall warning means is used for non-icing and icing conditions. If a stick shaker is used for stall warning and if the stick shaker activation point must be advanced due to the effect of the ice accreted before activation of the IPS, this would result in the same negative effect on takeoff and landing speeds. However, if the procedures for activating the IPS ensure that it is activated before any ice accretes on the wings, neither the stick shaker activation point nor the takeoff and landing speeds will be affected. This could be accomplished, for example, by using an ice detector that would activate the IPS before ice accretes on the wings, or by procedures for activating the IPS based on environmental conditions conducive to icing, but before ice would actually accrete on the wings. 12. Dissipation of Ice Shapes at High Altitudes and High Mach Numbers Proposed § 25.253(c) specifies the maximum speed for demonstrating stability characteristics in icing conditions. Proposed § 25.253(c)(3) allows this speed to be limited to the speed at which it is demonstrated that the airframe will be free of ice accretion due to the effects of increased dynamic pressure. Raytheon stated that experience has shown that ice shapes dissipate quickly at high altitude and high Mach numbers. Raytheon suggested revising § 25.253(c)(3) to specify the altitude and/or Mach number range that ice shapes would dissipate. Although we agree that past experience shows that ice shapes dissipate or detach at high altitude and high Mach numbers, the applicable range may vary with airplane type. The particular conditions under which the ice accretions dissipate or detach should be justified as part of the certification program. Since this is consistent with proposed § 25.253(c), we made no changes to the final rule. 13. Critical Ice Shapes Proposed appendix C, part II(a) defines how to determine the critical ice accretions for each phase of flight. The NTSB commented that for each phase of flight, the applicant should be required to demonstrate that the shape, chordwise and spanwise, and the roughness of the shapes accurately reflect the full range of appendix C conditions in terms of mean effective drop diameter, liquid water content, and temperature during each phase of flight. Additionally, the NTSB suggested that we review the justification and selection of the most critical ice shape for each phase of flight. Although we believe the proposed requirements already address the NTSB's concerns, we have revised appendix C, part II(a) for additional clarity. We added text to state that applicants must demonstrate that the full range of atmospheric icing conditions specified in part I of appendix C have been considered, including the mean effective drop diameter, liquid water content, and temperature appropriate to the flight conditions. 14. Takeoff Ice Accretions ALPA noted that the takeoff ice accretions defined in proposed appendix C, part II(a)(2) do not include the entire takeoff flight path. As defined in § 25.111, the takeoff flight path ends at either 1,500 feet above the takeoff surface, or the height at which the transition from the takeoff to the en route configuration is completed and the final takeoff speed (V <sup>FTO</sup> ) is reached, whichever is higher. The takeoff flight path in proposed appendix C, part II(a)(2) ends at 1,500 feet above the takeoff surface. ALPA stated that there are many mountainous airport locations where the takeoff configuration must be maintained above 1,500 feet above the takeoff surface for terrain clearance at maximum takeoff gross weights. Since winter operations in these locations often involve icing conditions, ALPA requested that the takeoff flight path of Appendix C, part II(a)(2) be revised to match that of § 25.111. ALPA's comment points out an oversight in the text of the proposal. Appendix C, part II(a)(2) has been revised to include the entire takeoff flight path as defined in § 25.111. We consider this to be a technical clarification that does not impose a significant additional burden on applicants. 15. Size of Ice Accretion Before Activation of the IPS For the pre-activation ice identified in Appendix C, part II(e), ALPA did not support the 30-second time period for the flightcrew to see and respond to ice accreting on the airplane as stated in paragraphs 2c(4)(a) and
(b)of Appendix 1, Airframe Ice Accretion, of proposed AC 25.21-1X. ALPA believes that the ice accreted during a more operationally realistic timeframe and the potential degradations in aircraft performance and handling qualities must be accounted for during certification in order to make the proposed requirements and acceptable means of compliance an effective combination. While a well designed human factors study could determine an appropriate time, ALPA proposed that at least the 2-minute time period contained in 14 CFR 33.77, Foreign object ingestion—ice, be used as the time to visually recognize ice is accreting until definitive studies can be completed. The FAA believes that ALPA has misunderstood the use of the 30-second time period in the proposed AC 25.21-1X acceptable means of compliance. The FAA does not expect the flightcrew to see and respond to ice accumulating on the airplane within 30 seconds. In accordance with § 25.21(g), compliance must be shown using ice accretions consistent with the AFM operating procedures. First, applicants must determine the ice accretion that would be on the airplane when the AFM procedures call for activating the IPS. Then, the 30-second time period is used in combination with the continuous maximum icing environment, as defined in appendix C of part 25, as a standard for determining the additional ice that could accrete on the airplane before the pilot actually activates the IPS. Since the appendix C maximum continuous icing envelope represents at least the 99th percentile of encounters with continuous maximum icing (that is, 99% of the time, less icing would occur), it would take significantly longer than 30 seconds in nearly all actual icing events for the airplane to accrete this much ice. As a result of this comment, the FAA reviewed the proposed AC 25.21-1X text. Although the use of a-30 second time period in a continuous maximum icing environment is clearly stated, the FAA believes that the text is incomplete regarding what we expect applicants to consider in determining the ice accretion specified by the AFM procedures for activating the IPS. The FAA is revising the proposed AC to state that this ice accretion should be easily recognizable by the pilot under all foreseeable conditions (for example, at night in clouds). No changes have been made to the regulatory requirements. 16. Maximum Size of the Critical Ice Accretion Dassault noted that, in Europe, the critical ice accretion is limited to a maximum thickness of 3 inches. Dassault did not find such a limitation in the NPRM, nor in the proposed advisory circular
(AC)25.21-1X related to the NPRM. Dassault noted that this omission could result in carrying out performance and handling tests with unrealistic ice accretions (particularly those assumed to build up on the unprotected parts of the airplane during the 45-minute holding flight phase referenced in ACs 25.21-X and 25.1419-1A). We did not make any changes to the final rule because several existing ACs provide guidance for the size of the most critical ice accretions that should be considered. This longstanding guidance considers a 45-minute holding condition within an icing cloud. Since this guidance is not regulatory, we have accepted applicants' use of service history and other experience with other compliance criteria to determine the maximum ice accretion that needs to be considered. We will continue to address this issue in the same manner. The AC being issued along with this final rule refers to these alternative methods of compliance and provides guidance for their use. 17. Detection of Icing Conditions A private citizen commented that icing conditions should be monitored by more than the pilot's eyesight. We are unable to address the commenter's issue in this rulemaking because this rulemaking only addresses performance and handling qualities requirements for the current methods of ice detection (which include detection by visual means). However, we are pursuing separate rulemaking for future airplane designs relative to allowable methods for detecting icing and determining when to activate the IPS. In NPRM 07-07, “Activation of Ice Protection,” published in the **Federal Register** on April 26, 2007, we proposed to amend the airworthiness standards applicable to transport category airplanes to require a means to ensure timely activation of the airframe IPS. 18. Delayed Activation of the IPS ALPA recommended modifying all rule language to eliminate references and rule provisions for waiting until a finite amount of ice has accumulated before activating the IPS. ALPA stated that delayed activation of the IPS has been a factor in several accidents and incidents. ALPA also pointed out that the FAA has adopted 17 airworthiness directives requiring immediate activation of IPS at the first sign of ice accretion for a number of airplane types where the previous practice was to wait until a specified amount of ice had accumulated on the airplane. ALPA noted that after an exhaustive review of accident and incident data, ARAC recommended an operating rule that would remove the option of delaying activation of the IPS. Except for the airworthiness directives referenced by ALPA, current regulations do not prohibit AFM procedures that call for delaying activation of the IPS until a specified amount of ice has accreted. Although we strongly encourage activating the IPS at the first sign of ice accretion, there may be some designs for which delayed activation is currently acceptable, safe, and appropriate. For example, some thermal wing IPS can currently be used in either an anti-ice or deice mode. In the deice mode, the wing IPS is not activated until a certain amount of ice has accreted. This has not resulted in any safety issues, and can be a more economical way of operating the wing IPS. The purpose of this rulemaking is to provide appropriate performance and handling qualities requirements, considering the currently accepted procedures for activating the IPS. Establishing new requirements for acceptable methods for activating the IPS is beyond the scope of this rulemaking. As ALPA noted, however, ARAC has recommended the FAA adopt new requirements that would ensure flightcrews are provided with a clear means to know when to activate the IPS in a timely manner. We are pursuing separate rulemaking in response to this ARAC recommendation. In NPRM 07-07, “Activation of Ice Protection,” published in the **Federal Register** on April 26, 2007, we proposed to amend the airworthiness standards applicable to transport category airplanes to require a means to ensure timely activation of the airframe IPS. We will update the requirements adopted by this final rule related to the means of activating the IPS, if necessary, to be consistent with any final action resulting from NPRM 07-07, “Activation of Ice Protection.” 19. Harmonization With EASA's NPA Several commenters noted that the FAA did not fully harmonize the NPRM with the EASA's NPA covering the same icing-related safety issues. They recommended harmonizing the two rule proposals. We worked closely with EASA to ensure that there are no significant regulatory differences between this amendment and EASA's anticipated final rule. However, since EASA's final rule has not yet been issued, we cannot guarantee that the two final rules will be completely harmonized. We believe that any differences will be primarily editorial and not significant regulatory differences. 20. Accuracy of the Regulatory Flexibility Evaluation GAMA requested that the FAA review the regulatory flexibility evaluation in the interest of accuracy. We reviewed the regulatory flexibility evaluation and reaffirmed the determination that this proposed rule would not have a significant economic impact on a substantial number of small entities. All U.S. part 25 aircraft manufacturers exceed the Small Business Administration small-entity criteria of 1,500 employees for aircraft manufacturers. 21. Aircraft Population Used When Determining Cost Versus Benefit GAMA stated that it appeared the cost proposal considered U.S. manufactured aircraft while the benefit section included international products. GAMA believes that the same aircraft population should be used when determining cost versus benefit. Additionally, GAMA stated that it appeared it was assumed that cost was only attributed to entirely new TC products. GAMA believes it would be appropriate to consider the economic impact to some amount of amended TC and STC projects as well. Section 1 of Executive Order 12866 states “Federal agencies should promulgate only such regulations as are required by law, are necessary to interpret the law, or are made necessary by compelling public need, such as material failures of private markets to protect or improve the health and safety of the public, the environment, or the well-being of the American people.” Section 5 states “In order to reduce the regulatory burden on the American people, their families, their communities, their State, local, and tribal governments and their industries * * *.” Therefore, regulatory evaluations and flexibility analyses focus on American people and American industries. American industries, such as manufacturers and operators of aircraft, must comply with regulations promulgated by Federal agencies. Foreign firms are not required to comply with U.S. regulations unless they choose to sell or operate their aircraft in America. We determined the costs for this proposal by analyzing only American manufacturing industries, since foreign firms are not required to comply with U.S. regulations unless they choose to sell or operate their aircraft in America. While we do consider foreign manufactured aircraft in the benefit section, we determined the benefits by analyzing only American operators of those aircraft. Hence, the intent of Executive Order 12866 was satisfied. We did include amended TCs in the analysis. Each TC includes all derivatives for a particular aircraft model. For example, TC No. A16WE initially covered only the Boeing 737-100, but was later amended to include the -200 through -900 Boeing 737 models. Future applicants for approval of changed products are subject to § 21.101 (Changed Product Rule). There are several provisions of § 21.101 allowing future applicants of changed products to comply with earlier regulation amendments. We have already determined that benefits of the Changed Product Rule exceed the costs. Therefore, we do not estimate the benefits and costs of changed products for new certification rules. 22. Value of Fatalities Avoided A private citizen claimed that the value of the fatalities avoided by this proposal would be in the neighborhood of $20 billion. The number of averted fatalities and injuries is based on the historical accident rate extrapolated into the future. The FAA used $3.0 million for an avoided fatality and $132,700 for the additional associated medical and legal costs' for a fatality. The derivation for these values is discussed in the “Economic Values for FAA Investment and Regulatory Decisions, A Guide.” 6 Without the rule, we expect that over the 45-year analysis period, approximately three accidents will occur. These three accidents are expected to result in approximately 12 fatalities, six serious injuries, and two minor injuries. From these values, and expected future accidents based on past accident history, we estimated a benefit of about $90 million over the 45-year analysis period. 6 *http://www.faa.gov/regulations_policies/policy_guidance/benefit_cost/media/050404%20Critical%20Values%20Dec%2031%20Report%2007Jan05.pdf.* III. Rulemaking Analyses and Notices Paperwork Reduction Act There are no current or new requirements for information collection associated with this amendment. International Compatibility In keeping with U.S. obligations under the Convention on International Civil Aviation, it is FAA policy to comply with International Civil Aviation Organization
(ICAO)Standards and Recommended Practices to the maximum extent practicable. The FAA has determined that there are no ICAO Standards and Recommended Practices that correspond to these regulations. Economic Assessment, Regulatory Flexibility Determination, Trade Impact Assessment, and Unfunded Mandates Assessment Changes to Federal regulations must undergo several economic analyses. First, Executive Order 12866 directs each Federal agency to propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (19 U.S.C. 2531-2533) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, this Trade Act also requires agencies to consider international standards and, where appropriate, use them as the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation with the base year of 1995.) In conducting these analyses, FAA has determined this rule
(1)has benefits that justify its costs, is not a “significant regulatory action” as defined in section 3(f) of Executive Order 12866 and is not “significant” as defined in DOT's Regulatory Policies and Procedures;
(2)will not have a significant economic impact on a substantial number of small entities;
(3)will not reduce barriers to international trade; and
(4)does not impose an unfunded mandate on state, local, or tribal governments, or on the private sector. These analyses, available in the docket, are summarized below. Introduction This portion of the preamble summarizes the FAA's analysis of the economic impacts of a final rule amending part 25 of Title 14, Code of Federal Regulations (14 CFR) to change the regulations applicable to transport category airplanes certificated for flight in icing conditions. It also includes summaries of the regulatory flexibility determination, the international trade impact assessment, and the unfunded mandates assessment. We suggest readers seeking greater detail read the full regulatory evaluation, a copy of which we have placed in the docket for this rulemaking. Total Benefits and Costs of This Rulemaking The estimated potential benefits of avoiding 3 accidents over the 45-year analysis interval are $89.2 million ($23.6 million in present value at seven percent). To obtain these benefits, over the 45-year analysis interval, manufacturers will incur additional certification costs of $9.8 million and the operators of these airplanes will pay $52.5 million in additional fuel-burn. We estimate the total cost of this final rule to be about $62.3 million and the seven percent present value cost of the rule will be about $23.0 million. Who Is Potentially Affected by This Rulemaking • Operators of part 25 U.S.-registered aircraft conducting operations under FAR Parts 121, 129, and 135, and • Manufacturers of those part 25 aircraft. Our Cost Assumptions and Sources of Information This evaluation makes the following assumptions: 1. This final rule is assumed to become effective immediately. 2. The production runs for newly certificated part 25 airplane models is 20 years. 3. The average life of a part 25 airplane is 25 years. 4. We analyzed the costs and benefits of this final rule over the 45-year period (20 + 25 = 45) 2006 through 2050. 5. We used a 10-year certification compliance period. For the 10-year life-cycle period, the FAA calculated an average of four new certifications will occur. 6. We used $3.0 million as the value of an avoided fatality. 7. New airplane certifications will occur in year one of the analysis time period. Benefits of This Rulemaking The benefits of this final rule consist of the value of lives saved due to avoiding three accidents involving part 25 airplanes operating in icing conditions. Based on the historic accident rate, we estimate that a total of 12 fatalities could potentially be avoided by adopting the final rule. Over the 45-year period of analysis, the potential benefit of the propose rule will be $89.2 million ($23.6 million in present value at seven percent). Costs of This Rulemaking We estimate the costs of this final rule to be about $62.3 million ($23.0 million in present value at seven percent) over the 45-year analysis period. The total cost of $62.3 million equals the fixed certification costs of $9.8 million incurred in the first year plus the variable annual fuel burn cost of $52.5 million over the 45-year analysis period. Regulatory Flexibility Determination The Regulatory Flexibility Act of 1980 (Pub. L. 96-354)
(RFA)establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation. To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.” The RFA covers a wide-range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions. Agencies must perform a review to determine whether a rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA. However, if an agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear. In the interest of accuracy, one commenter requested we review the determination we made in the proposed rules regulatory flexibility evaluation. We reviewed the determination from the proposed rule and came to the same conclusions for this final rule for the reasons discussed below. Currently U.S. manufactured part 25 aircraft type certificate holders include: The Boeing Company, Cessna Aircraft Company (a subsidiary of Textron Inc.), Raytheon Company, and Gulfstream Aerospace Corporation (a wholly owned subsidiary of General Dynamics). All United States part 25 aircraft manufacturers exceed the Small Business Administration small-entity criteria of 1,500 employees for aircraft manufacturers. This rule will add an additional weighted average monthly fuel burn cost of about $42 per airplane, which is less than an hour of fuel burn and thus a minimal additional cost to all operators. Given that manufacturers are not small entities and operators incur a minimal additional cost, as the FAA Administrator, I certify that this final rule will not have a significant economic impact on a substantial number of small entities. International Trade Impact Assessment The Trade Agreements Act of 1979 (Pub. L. 96-39) prohibits Federal agencies from establishing any standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety, are not considered unnecessary obstacles. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. The FAA has assessed the potential effect of this final rule and determined that it will impose the same costs on domestic and international entities and thus has a neutral trade impact. Unfunded Mandates Assessment Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (adjusted annually for inflation with the base year 1995) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $128.1 million in lieu of $100 million. This final rule does not contain such a mandate. The requirements of Title II do not apply. Executive Order 13132, Federalism The FAA has analyzed this final rule under the principles and criteria of Executive Order 13132, Federalism. We determined that this action will not have a substantial direct effect on the States, or the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government, and therefore does not have federalism implications. Regulations Affecting Intrastate Aviation in Alaska Section 1205 of the FAA Reauthorization Act of 1996 (110 Stat. 3213) requires the FAA, when modifying its regulations in a manner affecting intrastate aviation in Alaska, to consider the extent to which Alaska is not served by transportation modes other than aviation, and to establish appropriate regulatory distinctions. In the NPRM, we requested comments on whether the proposed rule should apply differently to intrastate operations in Alaska. We didn't receive any comments, and we have determined, based on the administrative record of this rulemaking, that there is no need to make any regulatory distinctions applicable to intrastate aviation in Alaska. Environmental Analysis FAA Order 1050.1E identifies FAA actions that are categorically excluded from preparation of an environmental assessment or environmental impact statement under the National Environmental Policy Act in the absence of extraordinary circumstances. The FAA has determined this rulemaking action qualifies for the categorical exclusion identified in paragraph 312f and involves no extraordinary circumstances. Regulations That Significantly Affect Energy Supply, Distribution, or Use The FAA has analyzed this final rule under Executive Order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (May 18, 2001). We have determined that it is not a “significant energy action,” and it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. List of Subjects in 14 CFR Part 25 Aircraft, Aviation safety, Reporting and recordkeeping requirements. The Amendment In consideration of the foregoing, the Federal Aviation Administration amends part 25 of Title 14, Code of Federal Regulations, as follows: PART 25—AIRWORTHINESS STANDARDS: TRANSPORT CATEGORY AIRPLANES 1. The authority citation for part 25 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701, 44702, and 44704. 2. Amend § 25.21 by adding a new paragraph
(g)to read as follows: § 25.21 Proof of compliance.
(g)The requirements of this subpart associated with icing conditions apply only if the applicant is seeking certification for flight in icing conditions.
(1)Each requirement of this subpart, except §§ 25.121(a), 25.123(c), 25.143(b)(1) and (b)(2), 25.149, 25.201(c)(2), 25.207(c) and (d), 25.239, and 25.251(b) through (e), must be met in icing conditions. Compliance must be shown using the ice accretions defined in appendix C, assuming normal operation of the airplane and its ice protection system in accordance with the operating limitations and operating procedures established by the applicant and provided in the Airplane Flight Manual.
(2)No changes in the load distribution limits of § 25.23, the weight limits of § 25.25 (except where limited by performance requirements of this subpart), and the center of gravity limits of § 25.27, from those for non-icing conditions, are allowed for flight in icing conditions or with ice accretion. 3. Amend § 25.103 by revising paragraph (b)(3) to read as follows: § 25.103 Stall speed.
(b)* * *
(3)The airplane in other respects (such as flaps, landing gear, and ice accretions) in the condition existing in the test or performance standard in which V <sup>SR</sup> is being used; 4. Amend § 25.105 by revising paragraph
(a)to read as follows: § 25.105 Takeoff.
(a)The takeoff speeds prescribed by § 25.107, the accelerate-stop distance prescribed by § 25.109, the takeoff path prescribed by § 25.111, the takeoff distance and takeoff run prescribed by § 25.113, and the net takeoff flight path prescribed by § 25.115, must be determined in the selected configuration for takeoff at each weight, altitude, and ambient temperature within the operational limits selected by the applicant—
(1)In non-icing conditions; and
(2)In icing conditions, if in the configuration of § 25.121(b) with the takeoff ice accretion defined in appendix C:
(i)The stall speed at maximum takeoff weight exceeds that in non-icing conditions by more than the greater of 3 knots CAS or 3 percent of V <sup>SR</sup> ; or
(ii)The degradation of the gradient of climb determined in accordance with § 25.121(b) is greater than one-half of the applicable actual-to-net takeoff flight path gradient reduction defined in § 25.115(b). 5. Amend § 25.107 by revising paragraph (c)(3) and (g)(2) and adding new paragraph
(h)to read as follows: § 25.107 Takeoff speeds.
(c)* * *
(3)A speed that provides the maneuvering capability specified in § 25.143(h).
(g)* * *
(2)A speed that provides the maneuvering capability specified in § 25.143(h).
(h)In determining the takeoff speeds V <sup>1</sup> , V <sup>R</sup> , and V <sup>2</sup> for flight in icing conditions, the values of V <sup>MCG</sup> , V <sup>MC</sup> , and V <sup>MU</sup> determined for non-icing conditions may be used. 6. Amend § 25.111 by revising paragraph (c)(3)(iii), (c)(4), and adding a new paragraph (c)(5) to read as follows: § 25.111 Takeoff path.
(c)* * *
(3)* * *
(iii)1.7 percent for four-engine airplanes.
(4)The airplane configuration may not be changed, except for gear retraction and automatic propeller feathering, and no change in power or thrust that requires action by the pilot may be made until the airplane is 400 feet above the takeoff surface; and
(5)If § 25.105(a)(2) requires the takeoff path to be determined for flight in icing conditions, the airborne part of the takeoff must be based on the airplane drag:
(i)With the takeoff ice accretion defined in appendix C, from a height of 35 feet above the takeoff surface up to the point where the airplane is 400 feet above the takeoff surface; and
(ii)With the final takeoff ice accretion defined in appendix C, from the point where the airplane is 400 feet above the takeoff surface to the end of the takeoff path. 7. Revise § 25.119 to read as follows: § 25.119 Landing climb: All-engines-operating. In the landing configuration, the steady gradient of climb may not be less than 3.2 percent, with the engines at the power or thrust that is available 8 seconds after initiation of movement of the power or thrust controls from the minimum flight idle to the go-around power or thrust setting—
(a)In non-icing conditions, with a climb speed of V <sup>REF</sup> determined in accordance with § 25.125(b)(2)(i); and
(b)In icing conditions with the landing ice accretion defined in appendix C, and with a climb speed of V <sup>REF</sup> determined in accordance with § 25.125(b)(2)(ii). 8. Amend § 25.121 by revising paragraphs (b), (c), and
(d)to read as follows: § 25.121 Climb: One-engine inoperative.
(b)*Takeoff; landing gear retracted.* In the takeoff configuration existing at the point of the flight path at which the landing gear is fully retracted, and in the configuration used in § 25.111 but without ground effect:
(1)The steady gradient of climb may not be less than 2.4 percent for two-engine airplanes, 2.7 percent for three-engine airplanes, and 3.0 percent for four-engine airplanes, at V <sup>2</sup> with:
(i)The critical engine inoperative, the remaining engines at the takeoff power or thrust available at the time the landing gear is fully retracted, determined under § 25.111, unless there is a more critical power operating condition existing later along the flight path but before the point where the airplane reaches a height of 400 feet above the takeoff surface; and
(ii)The weight equal to the weight existing when the airplane's landing gear is fully retracted, determined under § 25.111.
(2)The requirements of paragraph (b)(1) of this section must be met:
(i)In non-icing conditions; and
(ii)In icing conditions with the takeoff ice accretion defined in appendix C, if in the configuration of § 25.121(b) with the takeoff ice accretion:
(A)The stall speed at maximum takeoff weight exceeds that in non-icing conditions by more than the greater of 3 knots CAS or 3 percent of V <sup>SR</sup> ; or
(B)The degradation of the gradient of climb determined in accordance with § 25.121(b) is greater than one-half of the applicable actual-to-net takeoff flight path gradient reduction defined in § 25.115(b).
(c)*Final takeoff.* In the en route configuration at the end of the takeoff path determined in accordance with § 25.111:
(1)The steady gradient of climb may not be less than 1.2 percent for two-engine airplanes, 1.5 percent for three-engine airplanes, and 1.7 percent for four-engine airplanes, at V <sup>FTO</sup> with—
(i)The critical engine inoperative and the remaining engines at the available maximum continuous power or thrust; and
(ii)The weight equal to the weight existing at the end of the takeoff path, determined under § 25.111.
(2)The requirements of paragraph (c)(1) of this section must be met:
(i)In non-icing conditions; and
(ii)In icing conditions with the final takeoff ice accretion defined in appendix C, if in the configuration of § 25.121(b) with the takeoff ice accretion:
(A)The stall speed at maximum takeoff weight exceeds that in non-icing conditions by more than the greater of 3 knots CAS or 3 percent of V <sup>SR</sup> ; or
(B)The degradation of the gradient of climb determined in accordance with § 25.121(b) is greater than one-half of the applicable actual-to-net takeoff flight path gradient reduction defined in § 25.115(b).
(d)* Approach.* In a configuration corresponding to the normal all-engines-operating procedure in which V <sup>SR</sup> for this configuration does not exceed 110 percent of the V <sup>SR</sup> for the related all-engines-operating landing configuration:
(1)The steady gradient of climb may not be less than 2.1 percent for two-engine airplanes, 2.4 percent for three-engine airplanes, and 2.7 percent for four-engine airplanes, with—
(i)The critical engine inoperative, the remaining engines at the go-around power or thrust setting;
(ii)The maximum landing weight;
(iii)A climb speed established in connection with normal landing procedures, but not exceeding 1.4 V <sup>SR</sup> ; and
(iv)Landing gear retracted.
(2)The requirements of paragraph (d)(1) of this section must be met:
(i)In non-icing conditions; and
(ii)In icing conditions with the approach ice accretion defined in appendix C. The climb speed selected for non-icing conditions may be used if the climb speed for icing conditions, computed in accordance with paragraph (d)(1)(iii) of this section, does not exceed that for non-icing conditions by more than the greater of 3 knots CAS or 3 percent. 9. Amend § 25.123 by revising paragraph
(a)introductory text and paragraph
(b)to read as follows: § 25.123 En route flight paths.
(a)For the en route configuration, the flight paths prescribed in paragraph
(b)and
(c)of this section must be determined at each weight, altitude, and ambient temperature, within the operating limits established for the airplane. The variation of weight along the flight path, accounting for the progressive consumption of fuel and oil by the operating engines, may be included in the computation. The flight paths must be determined at a speed not less than V <sup>FTO</sup> , with— * * *
(b)The one-engine-inoperative net flight path data must represent the actual climb performance diminished by a gradient of climb of 1.1 percent for two-engine airplanes, 1.4 percent for three-engine airplanes, and 1.6 percent for four-engine airplanes—
(1)In non-icing conditions; and
(2)In icing conditions with the en route ice accretion defined in appendix C, if:
(i)A speed of 1.18 V <sup>SR</sup> with the en route ice accretion exceeds the en route speed selected for non-icing conditions by more than the greater of 3 knots CAS or 3 percent of V <sup>SR</sup> ; or
(ii)The degradation of the gradient of climb is greater than one-half of the applicable actual-to-net flight path reduction defined in paragraph
(b)of this section. 10. Revise § 25.125 to read as follows: § 25.125 Landing.
(a)The horizontal distance necessary to land and to come to a complete stop (or to a speed of approximately 3 knots for water landings) from a point 50 feet above the landing surface must be determined (for standard temperatures, at each weight, altitude, and wind within the operational limits established by the applicant for the airplane):
(1)In non-icing conditions; and
(2)In icing conditions with the landing ice accretion defined in appendix C if V <sup>REF</sup> for icing conditions exceeds V <sup>REF</sup> for non-icing conditions by more than 5 knots CAS at the maximum landing weight.
(b)In determining the distance in paragraph
(a)of this section:
(1)The airplane must be in the landing configuration.
(2)A stabilized approach, with a calibrated airspeed of not less than V <sup>REF</sup> , must be maintained down to the 50-foot height.
(i)In non-icing conditions, V <sup>REF</sup> may not be less than:
(A)1.23 V <sup>SR</sup> 0;
(B)V <sup>MCL</sup> established under § 25.149(f); and
(C)A speed that provides the maneuvering capability specified in § 25.143(h).
(ii)In icing conditions, V <sup>REF</sup> may not be less than:
(A)The speed determined in paragraph (b)(2)(i) of this section;
(B)1.23 V <sup>SR</sup> 0 with the landing ice accretion defined in appendix C if that speed exceeds V <sup>REF</sup> for non-icing conditions by more than 5 knots CAS; and
(C)A speed that provides the maneuvering capability specified in § 25.143(h) with the landing ice accretion defined in appendix C.
(3)Changes in configuration, power or thrust, and speed, must be made in accordance with the established procedures for service operation.
(4)The landing must be made without excessive vertical acceleration, tendency to bounce, nose over, ground loop, porpoise, or water loop.
(5)The landings may not require exceptional piloting skill or alertness.
(c)For landplanes and amphibians, the landing distance on land must be determined on a level, smooth, dry, hard-surfaced runway. In addition—
(1)The pressures on the wheel braking systems may not exceed those specified by the brake manufacturer;
(2)The brakes may not be used so as to cause excessive wear of brakes or tires; and
(3)Means other than wheel brakes may be used if that means—
(i)Is safe and reliable;
(ii)Is used so that consistent results can be expected in service; and
(iii)Is such that exceptional skill is not required to control the airplane.
(d)For seaplanes and amphibians, the landing distance on water must be determined on smooth water.
(e)For skiplanes, the landing distance on snow must be determined on smooth, dry, snow.
(f)The landing distance data must include correction factors for not more than 50 percent of the nominal wind components along the landing path opposite to the direction of landing, and not less than 150 percent of the nominal wind components along the landing path in the direction of landing.
(g)If any device is used that depends on the operation of any engine, and if the landing distance would be noticeably increased when a landing is made with that engine inoperative, the landing distance must be determined with that engine inoperative unless the use of compensating means will result in a landing distance not more than that with each engine operating. 11. Amend § 25.143 by redesignating paragraphs
(c)through
(g)as paragraphs
(d)through
(h)respectively; adding a new paragraph (c); revising redesignated paragraphs (d), (e), and (f); amending redesignated paragraph
(h)by removing the words “Thrust power setting” in the fourth column of the table and replacing them with the words “Thrust/power setting”; and adding paragraphs (i), and
(j)to read as follows: § 25.143 General.
(c)The airplane must be shown to be safely controllable and maneuverable with the critical ice accretion appropriate to the phase of flight defined in appendix C, and with the critical engine inoperative and its propeller (if applicable) in the minimum drag position:
(1)At the minimum V <sup>2</sup> for takeoff;
(2)During an approach and go-around; and
(3)During an approach and landing.
(d)The following table prescribes, for conventional wheel type controls, the maximum control forces permitted during the testing required by paragraph
(a)through
(c)of this section: Force, in pounds, applied to the control wheel or rudder pedals Pitch Roll Yaw For short term application for pitch and roll control—two hands available for control 75 50 For short term application for pitch and roll control—one hand available for control 50 25 For short term application for yaw control 150 For long term application 10 5 20
(e)Approved operating procedures or conventional operating practices must be followed when demonstrating compliance with the control force limitations for short term application that are prescribed in paragraph
(d)of this section. The airplane must be in trim, or as near to being in trim as practical, in the preceding steady flight condition. For the takeoff condition, the airplane must be trimmed according to the approved operating procedures.
(f)When demonstrating compliance with the control force limitations for long term application that are prescribed in paragraph
(d)of this section, the airplane must be in trim, or as near to being in trim as practical.
(i)When demonstrating compliance with § 25.143 in icing conditions—
(1)Controllability must be demonstrated with the ice accretion defined in appendix C that is most critical for the particular flight phase;
(2)It must be shown that a push force is required throughout a pushover maneuver down to a zero g load factor, or the lowest load factor obtainable if limited by elevator power or other design characteristic of the flight control system. It must be possible to promptly recover from the maneuver without exceeding a pull control force of 50 pounds; and
(3)Any changes in force that the pilot must apply to the pitch control to maintain speed with increasing sideslip angle must be steadily increasing with no force reversals, unless the change in control force is gradual and easily controllable by the pilot without using exceptional piloting skill, alertness, or strength.
(j)For flight in icing conditions before the ice protection system has been activated and is performing its intended function, the following requirements apply:
(1)If activating the ice protection system depends on the pilot seeing a specified ice accretion on a reference surface (not just the first indication of icing), the requirements of § 25.143 apply with the ice accretion defined in appendix C, part II(e).
(2)For other means of activating the ice protection system, it must be demonstrated in flight with the ice accretion defined in appendix C, part II(e) that:
(i)The airplane is controllable in a pull-up maneuver up to 1.5 g load factor; and
(ii)There is no pitch control force reversal during a pushover maneuver down to 0.5 g load factor. 12. Amend § 25.207 by revising paragraph (b); redesignating paragraphs
(e)and
(f)as paragraphs
(f)and
(g)respectively; adding a new paragraph (e); revising redesignated paragraph
(f)and adding paragraph
(h)to read as follows: § 25.207 Stall warning.
(b)The warning must be furnished either through the inherent aerodynamic qualities of the airplane or by a device that will give clearly distinguishable indications under expected conditions of flight. However, a visual stall warning device that requires the attention of the crew within the cockpit is not acceptable by itself. If a warning device is used, it must provide a warning in each of the airplane configurations prescribed in paragraph
(a)of this section at the speed prescribed in paragraphs
(c)and
(d)of this section. Except for the stall warning prescribed in paragraph (h)(2)(ii) of this section, the stall warning for flight in icing conditions prescribed in paragraph
(e)of this section must be provided by the same means as the stall warning for flight in non-icing conditions.
(e)In icing conditions, the stall warning margin in straight and turning flight must be sufficient to allow the pilot to prevent stalling (as defined in § 25.201(d)) when the pilot starts a recovery maneuver not less than three seconds after the onset of stall warning. When demonstrating compliance with this paragraph, the pilot must perform the recovery maneuver in the same way as for the airplane in non-icing conditions. Compliance with this requirement must be demonstrated in flight with the speed reduced at rates not exceeding one knot per second, with—
(1)The more critical of the takeoff ice and final takeoff ice accretions defined in appendix C for each configuration used in the takeoff phase of flight;
(2)The en route ice accretion defined in appendix C for the en route configuration;
(3)The holding ice accretion defined in appendix C for the holding configuration(s);
(4)The approach ice accretion defined in appendix C for the approach configuration(s); and
(5)The landing ice accretion defined in appendix C for the landing and go-around configuration(s).
(f)The stall warning margin must be sufficient in both non-icing and icing conditions to allow the pilot to prevent stalling when the pilot starts a recovery maneuver not less than one second after the onset of stall warning in slow-down turns with at least 1.5 g load factor normal to the flight path and airspeed deceleration rates of at least 2 knots per second. When demonstrating compliance with this paragraph for icing conditions, the pilot must perform the recovery maneuver in the same way as for the airplane in non-icing conditions. Compliance with this requirement must be demonstrated in flight with—
(1)The flaps and landing gear in any normal position;
(2)The airplane trimmed for straight flight at a speed of 1.3 V <sup>SR</sup> ; and
(3)The power or thrust necessary to maintain level flight at 1.3 V <sup>SR</sup> .
(h)For flight in icing conditions before the ice protection system has been activated and is performing its intended function, the following requirements apply, with the ice accretion defined in appendix C, part II(e):
(1)If activating the ice protection system depends on the pilot seeing a specified ice accretion on a reference surface (not just the first indication of icing), the requirements of this section apply, except for paragraphs
(c)and
(d)of this section.
(2)For other means of activating the ice protection system, the stall warning margin in straight and turning flight must be sufficient to allow the pilot to prevent stalling without encountering any adverse flight characteristics when the speed is reduced at rates not exceeding one knot per second and the pilot performs the recovery maneuver in the same way as for flight in non-icing conditions.
(i)If stall warning is provided by the same means as for flight in non-icing conditions, the pilot may not start the recovery maneuver earlier than one second after the onset of stall warning.
(ii)If stall warning is provided by a different means than for flight in non-icing conditions, the pilot may not start the recovery maneuver earlier than 3 seconds after the onset of stall warning. Also, compliance must be shown with § 25.203 using the demonstration prescribed by § 25.201, except that the deceleration rates of § 25.201(c)(2) need not be demonstrated. 13. Amend § 25.237 by revising paragraph
(a)to read as follows: § 25.237 Wind velocities.
(a)For land planes and amphibians, the following applies:
(1)A 90-degree cross component of wind velocity, demonstrated to be safe for takeoff and landing, must be established for dry runways and must be at least 20 knots or 0.2 V <sup>SR0</sup> , whichever is greater, except that it need not exceed 25 knots.
(2)The crosswind component for takeoff established without ice accretions is valid in icing conditions.
(3)The landing crosswind component must be established for:
(i)Non-icing conditions, and
(ii)Icing conditions with the landing ice accretion defined in appendix C. 14. Amend § 25.253 by revising paragraph (b), and adding a new paragraph
(c)to read as follows: § 25.253 High-speed characteristics.
(b)*Maximum speed for stability characteristics.* V <sup>FC</sup> /M <sup>FC</sup> . V <sup>FC</sup> /M <sup>FC</sup> is the maximum speed at which the requirements of §§ 25.143(g), 25.147(E), 25.175(b)(1), 25.177, and 25.181 must be met with flaps and landing gear retracted. Except as noted in § 25.253(c), V <sup>FC</sup> /M <sup>FC</sup> may not be less than a speed midway between V <sup>MO</sup> /M <sup>MO</sup> and V <sup>DF</sup> /M <sup>DF</sup> , except that for altitudes where Mach number is the limiting factor, M <sup>FC</sup> need not exceed the Mach number at which effective speed warning occurs.
(c)*Maximum speed for stability characteristics in icing conditions.* The maximum speed for stability characteristics with the ice accretions defined in appendix C, at which the requirements of §§ 25.143(g), 25.147(e), 25.175(b)(1), 25.177, and 25.181 must be met, is the lower of:
(1)300 knots CAS;
(2)V <sup>FC</sup> ; or
(3)A speed at which it is demonstrated that the airframe will be free of ice accretion due to the effects of increased dynamic pressure. 15. Amend § 25.773 by revising paragraph (b)(1)(ii) to read as follows: § 25.773 Pilot compartment view.
(b)* * *
(1)* * *
(i)* * *
(ii)The icing conditions specified in § 25.1419 if certification for flight in icing conditions is requested. 16. Amend § 25.941 by revising paragraph
(c)to read as follows: § 25.941 Inlet, engine, and exhaust compatibility.
(c)In showing compliance with paragraph
(b)of this section, the pilot strength required may not exceed the limits set forth in § 25.143(d), subject to the conditions set forth in paragraphs
(e)and
(f)of § 25.143. 17. Amend § 25.1419 by revising the introductory text to read as follows: § 25.1419 Ice protection. If the applicant seeks certification for flight in icing conditions, the airplane must be able to safely operate in the continuous maximum and intermittent maximum icing conditions of appendix C. To establish this— 18. Amend appendix C to part 25 by adding a part I heading and a new paragraph
(c)to part I; and adding a new part II to read as follows: Appendix C of Part 25 Part I—Atmospheric Icing Conditions
(a)* * *
(c)*Takeoff maximum icing.* The maximum intensity of atmospheric icing conditions for takeoff (takeoff maximum icing) is defined by the cloud liquid water content of 0.35 g/m3, the mean effective diameter of the cloud droplets of 20 microns, and the ambient air temperature at ground level of minus 9 degrees Celsius (-9( C). The takeoff maximum icing conditions extend from ground level to a height of 1,500 feet above the level of the takeoff surface. Part II—Airframe Ice Accretions for Showing Compliance With Subpart B.
(a)*Ice accretions—General.* The most critical ice accretion in terms of airplane performance and handling qualities for each flight phase must be used to show compliance with the applicable airplane performance and handling requirements in icing conditions of subpart B of this part. Applicants must demonstrate that the full range of atmospheric icing conditions specified in part I of this appendix have been considered, including the mean effective drop diameter, liquid water content, and temperature appropriate to the flight conditions (for example, configuration, speed, angle-of-attack, and altitude). The ice accretions for each flight phase are defined as follows:
(1)*Takeoffice* is the most critical ice accretion on unprotected surfaces and any ice accretion on the protected surfaces appropriate to normal ice protection system operation, occurring between liftoff and 400 feet above the takeoff surface, assuming accretion starts at liftoff in the takeoff maximum icing conditions of part I, paragraph
(c)of this appendix.
(2)*Final takeoff ice* is the most critical ice accretion on unprotected surfaces, and any ice accretion on the protected surfaces appropriate to normal ice protection system operation, between 400 feet and either 1,500 feet above the takeoff surface, or the height at which the transition from the takeoff to the en route configuration is completed and V <sup>FTO</sup> is reached, whichever is higher. Ice accretion is assumed to start at liftoff in the takeoff maximum icing conditions of part I, paragraph
(c)of this appendix.
(3)*En route ice* is the critical ice accretion on the unprotected surfaces, and any ice accretion on the protected surfaces appropriate to normal ice protection system operation, during the en route phase.
(4)*Holding ice* is the critical ice accretion on the unprotected surfaces, and any ice accretion on the protected surfaces appropriate to normal ice protection system operation, during the holding flight phase.
(5)*Approach ice* is the critical ice accretion on the unprotected surfaces, and any ice accretion on the protected surfaces appropriate to normal ice protection system operation following exit from the holding flight phase and transition to the most critical approach configuration.
(6)*Landing ice* is the critical ice accretion on the unprotected surfaces, and any ice accretion on the protected surfaces appropriate to normal ice protection system operation following exit from the approach flight phase and transition to the final landing configuration.
(b)In order to reduce the number of ice accretions to be considered when demonstrating compliance with the requirements of § 25.21(g), any of the ice accretions defined in paragraph
(a)of this section may be used for any other flight phase if it is shown to be more critical than the specific ice accretion defined for that flight phase. Configuration differences and their effects on ice accretions must be taken into account.
(c)The ice accretion that has the most adverse effect on handling qualities may be used for airplane performance tests provided any difference in performance is conservatively taken into account.
(d)For both unprotected and protected parts, the ice accretion for the takeoff phase may be determined by calculation, assuming the takeoff maximum icing conditions defined in appendix C, and assuming that:
(1)Airfoils, control surfaces and, if applicable, propellers are free from frost, snow, or ice at the start of the takeoff;
(2)The ice accretion starts at liftoff;
(3)The critical ratio of thrust/power-to-weight;
(4)Failure of the critical engine occurs at V <sup>EF</sup> ; and
(5)Crew activation of the ice protection system is in accordance with a normal operating procedure provided in the Airplane Flight Manual, except that after beginning the takeoff roll, it must be assumed that the crew takes no action to activate the ice protection system until the airplane is at least 400 feet above the takeoff surface.
(e)The ice accretion before the ice protection system has been activated and is performing its intended function is the critical ice accretion formed on the unprotected and normally protected surfaces before activation and effective operation of the ice protection system in continuous maximum atmospheric icing conditions. This ice accretion only applies in showing compliance to §§ 25.143(j) and 25.207(h). Issued in Washington, DC, on July 25, 2007. Marion C. Blakey, Administrator. [FR Doc. E7-14937 Filed 8-7-07; 8:45 am] BILLING CODE 4910-13-P 72 152 Wednesday, August 8, 2007 Proposed Rules Part IV Department of Agriculture Agricultural Marketing Service 7 CFR Part 59 Livestock Mandatory Reporting; Reestablishment and Revision of the Reporting Regulation for Swine, Cattle, Lamb, and Boxed Beef; Proposed Rule DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 59 [Docket No. AMS-LS-07-0106; LS-07-01] RIN 0581-AC67 Livestock Mandatory Reporting; Reestablishment and Revision of the Reporting Regulation for Swine, Cattle, Lamb, and Boxed Beef AGENCY: Agricultural Marketing Service, USDA. ACTION: Proposed rule. SUMMARY: On April 2, 2001, the Agricultural Marketing Service
(AMS)implemented the Livestock Mandatory Reporting
(LMR)program as required by the Livestock Mandatory Reporting Act of 1999 (1999 Act). The statutory authority for the program lapsed on September 30, 2005. In October 2006, legislation was enacted to reauthorize the 1999 Act until September 30, 2010, and to amend the swine reporting requirements of the 1999 Act (Pub. L. 109-296) (Reauthorization Act). This rulemaking is necessary to re-establish the regulatory authority for the program's continued operation and incorporate the swine reporting changes contained within the Reauthorization Act as well as make other changes to enhance the program's overall effectiveness and efficiency based on AMS' experience in the administration of the program over the last 6 years. DATES: Written comments on the regulatory provisions of this proposed rule must be received on or before September 7, 2007 to be assured of consideration. Written comments on the information collection and recordkeeping provisions of this proposed rule must be received on or before October 9, 2007 to be assured of consideration. ADDRESSES: Comments can be submitted on the Internet at: *http://www.regulations.gov.* Written comments can be sent to Warren P. Preston, Chief, Livestock and Grain Market News Branch, Docket No. LS-07-01, 1400 Independence Ave., SW., Room 2619-S, Washington, DC 20250-0252, or by facsimile to
(202)690-3732. All comments received will be posted to the Web site at: *http://www.regulations.gov.* Comments that specifically pertain to the information collection and recordkeeping requirements of this action should also be sent to the Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, 725 17th Street, NW., Room 725, Washington, DC 20503. FOR FURTHER INFORMATION CONTACT: Warren P. Preston, Chief, Livestock and Grain Market News Branch at
(202)720-6231, fax
(202)690-3732, or e-mail *Warren.Preston@usda.gov.* SUPPLEMENTARY INFORMATION: Background The 1999 Act was enacted into law on October 22, 1999, (Pub. L. 106-78) as an amendment to the Agriculture Marketing Act of 1946 (7 U.S.C. 1621 *et seq.* ). In the December 1, 2000, **Federal Register** , AMS published a final rule implementing the program (65 FR 75464) (2000 final rule) with an effective date of January 30, 2001. This effective date was subsequently delayed until April 2, 2001. The statutory authority for the program lapsed on September 30, 2005. In October 2006, legislation was passed to reauthorize the 1999 Act until September 30, 2010, and amend swine reporting requirements. Because reauthorization was not completed by September 30, 2005, AMS sent letters to each packer required to report under the 1999 Act requesting their voluntary cooperation in continuing to submit information. Based on the response to AMS's request for voluntary packer participation in LMR, most reports have continued to be published. The only reports that are not being published are imported boxed lamb cuts and slaughter cow reports. AMS has continued compliance audits during the lapse in authority for the mandatory program for companies that agreed to continue submitting information and will continue this practice until the effective date of this regulatory action. The 1999 Act as originally passed provided for the mandatory reporting of market information by Federally inspected livestock processing plants that have slaughtered an average number of livestock during the immediately preceding 5 calendar years (125,000 for cattle and 100,000 for swine), including any processing plant that did not slaughter during the immediately preceding 5 calendar years if the Secretary determines that the plant should be considered a packer based on the plant's capacity. For entities that did not slaughter during the immediately preceding 5 calendar years, such as a new plant or existing plant that begins operations, AMS projects the plant's annual slaughter or production based upon the plant's estimate of annual slaughter capacity to determine which entities meet the definition of a packer as defined in this regulation. The 1999 Act also gave the Secretary of Agriculture (Secretary) the latitude to provide for the reporting of lamb information. Under the 2000 final rule implementing the program, Federally inspected lamb processing plants that slaughtered an average of 75,000 head of lambs or processed an average of 75,000 lamb carcasses during the immediately preceding 5 calendar years were required to submit information to AMS. Additionally, a lamb processing plant that did not slaughter an average of 75,000 lambs or process an average of 75,000 lamb carcasses during the immediately preceding 5 calendar years was required to report information if the Secretary determined the processing plant should be considered a packer based on its capacity. In addition, the final rule also established that for any calendar year, an importer of lamb that imported an average of 5,000 metric tons of lamb meat products per year during the immediately preceding 5 calendar years report information on the domestic sales of imported boxed lamb cuts. Additionally, an importer that did not import an average of 5,000 metric tons of lamb meat products during the immediately preceding 5 calendar years was required to report information if the Secretary determined that the person should be considered an importer based on their volume of lamb imports. On September 2, 2004, AMS published a final rule (69 FR 53783) (2004 final rule) that revised the threshold for importers to 2,500 metric tons and modified the definition of carlot when used in reference to boxed lamb cuts. Key Components of the Statute Cattle The Reauthorization Act did not modify the cattle reporting requirements contained in the 1999 Act. The 1999 Act requires that a cattle packer whose Federally inspected plant slaughtered an average of at least 125,000 cattle per year for the preceding 5 calendar years or did not slaughter cattle during the preceding 5 calendar years but is considered a packer based on plant capacity as determined by the Secretary, report market information to the Secretary. They are required to report the prices for each type of cattle purchase, categorized to clearly delineate imported from domestic market purchases, negotiated purchase, formula marketing arrangement, and forward contract; the quantity of cattle, categorized to clearly delineate imported from domestic market purchases, purchased on a live weight basis and a carcass basis; and the weight, the quality grade, and premiums and discounts. This information would be reported twice a day not later than 10 a.m. and 2 p.m. central time. The Secretary would issue reports to the public of this information at least three times each day. The 1999 Act further requires that a packer report marketing information not later than 9 a.m. central time on the first reporting day of each week for cattle bought by the type of purchase for the prior week. In addition, the 1999 Act states that packers must report weekly information on the first reporting day not later than 9 a.m. central time for cattle purchased on a formula or contract marketing arrangement and slaughtered the prior week. However, under this proposed regulation, the required information for the weekly submission for cattle purchased on a formula would be obtained by aggregating packers' daily submissions of this information. Therefore, no additional weekly submission would be required for this purchase type. The Secretary would issue a public report not later than 10 a.m. central time on the first reporting day of the current slaughter week. The 1999 Act also mandates that a packer report information on boxed beef cut sales to the Secretary at least twice each reporting day not less frequently than once before and once after 12 noon central time. This information includes the price per hundredweight, the quantity in each lot of boxed beef cuts sold, information regarding the characteristics of each lot (i.e., domestic vs. export sale, USDA Quality Grade, etc.), the type of beef cut and the trim specification. The Secretary would report this information to the public twice each reporting day. Swine The Reauthorization Act revised the requirements for swine reporting. Under the 1999 Act, the term packer includes a Federally inspected plant that slaughtered an average of at least 100,000 swine per year during the immediately preceding 5 calendar years. Under the Reauthorization Act, the term packer also includes a person that slaughtered an average of at least 200,000 sows, boars, or combination thereof per year during the immediately preceding 5 calendar years. Additionally, in the case of a swine processing plant or person that did not slaughter swine during the immediately preceding 5 calendar years, it shall be considered a packer if the Secretary determines the processing plant or person should be considered a packer under this subpart after considering its capacity. The Reauthorization Act separated the reporting requirements for sows and boars from barrows and gilts. For barrows and gilts, the packer must report to the Secretary not later than 7 a.m. central time on each reporting day information regarding all swine purchased or priced, during the prior business day of the packer. The Reauthorization Act modified the reporting time for information regarding all barrows and gilts slaughtered during the prior business day from not later than 7 a.m. central time to not later than 9 a.m. central time on each reporting day. The packer must report all purchase data including the number of barrows and gilts purchased, barrows and gilts scheduled for delivery and the base price and purchase data for slaughtered barrows and gilts for which a price has been established. The information also includes all slaughter data for the total number of barrows and gilts slaughtered including information concerning the net price, average net price, lowest net price, highest net price, average carcass weight, average sort loss, average backfat, average lean percentage, and total slaughter quantity. However, the information on the lowest net price and highest net price can be obtained from the LMR system from packers' submissions. Therefore, under this proposed rule, there is no requirement for packers to submit this information separately. Packers reporting the average lean percentage must report the manner in which the average lean percentage is calculated as well as whenever a change in such calculation is made. In doing so, the packer shall make available to the Secretary the underlying data, applicable methodology and formulae, and supporting materials used to determine the average lean percentage, which the Secretary will convert to the carcass measurements or lean percentage of the swine of the individual packer to correlate to a common percent lean measurement. Additionally, the information to be reported includes packer purchase commitments, which shall be equal to the number of barrows and gilts scheduled for delivery to a packer for slaughter each of the next 14 calendar days. The Secretary would publish the information in a prior day report not later than 8 a.m. central time for all swine purchased and 10 a.m. central time for all barrows and gilts slaughtered on the reporting day on which the information is received from the packer. In addition, as required by the Reauthorization Act, the Secretary shall publish a net price distribution for all barrows and gilts slaughtered on the previous day not later than 3 p.m. central time. The Reauthorization Act also requires packers that process barrows and gilts to report to the Secretary in the morning not later than 10 a.m. central time and in the afternoon not later than 2 p.m. central time each reporting day. The reporting requirements for the morning and afternoon reports contained in the Reauthorization Act for barrows and gilts were not altered from those contained in the 1999 Act. The information to be reported is the same for the morning and afternoon reports and includes an estimate of
(1)the total number of barrows and gilts purchased by each method of pricing,
(2)the total number of barrows and gilts purchased, and
(3)the base price paid for all negotiated purchases of market hogs and the base price paid for each type of purchase of market hogs other than through a negotiated purchase. This information must be submitted for all covered transactions made up to within one half hour of each specified reporting time. Packers completing transactions during the one half hour prior to the previous reporting time will report those transactions at the next prescribed reporting time. The Secretary will make the morning report available to the public not later than 11 a.m. central time and the afternoon report at 3 p.m. central time on each reporting day. The Reauthorization Act requires each packer of sows and boars to report to the Secretary not later than 9:30 a.m. central time, or such other time as the Secretary considers appropriate, on each reporting day, information regarding all sows and boars purchased or priced during the prior business day of the packer. The information to be reported includes the total number of sows and boars purchased, each divided into at least three weight classes specified by the Secretary, the number of sows and boars that qualify as packer-owned swine, the average price paid for all sows and boars, the average price paid for sows and boars in each weight class, the number of sows and boars for which prices are determined, by each type of purchase, and the average prices for sows and boars for which prices are determined, by each type of purchase. The Secretary would publish the information in a prior day report not later than 11 a.m. central time on the reporting day on which the information is received from the packer. Under the 1999 Act, the reporting requirements for sows and boars were the same as the reporting requirements for barrows and gilts. The Secretary will compile and issue a weekly noncarcass merit premium report on the first reporting day of the week not later than 5 p.m. central time. This report would be prepared from information furnished to the Secretary by packers who must report not later than 4 p.m. central time on the first reporting day of the week. The information required includes noncarcass merit premiums used and paid to producers during the prior slaughter week by category. The 1999 Act provides that the Secretary review the information required to be reported by packers at least once every two years. Also, the 1999 Act directs the Secretary to promulgate regulations that specify additional information to be reported by packers if the Secretary determines information currently reported does not accurately reflect the methods by which swine are valued or priced, or account for the fact that packers that slaughter a significant majority of the swine produced in the United States no longer use backfat or lean percentage factors as indicators of price. Lamb The Reauthorization Act did not change the lamb reporting provisions contained in the 1999 Act. The 1999 Act gives the Secretary the authority to establish a mandatory lamb price reporting program that will provide timely, accurate, and reliable market information. It does not specify the requirements for establishing a mandatory lamb price reporting program as it does for cattle and swine. Accordingly, in the 2000 final rule, AMS established a mandatory lamb price reporting program based upon its extensive knowledge of the lamb industry and market news reporting of lamb. Under the established program, a lamb packer whose Federally inspected plant slaughtered or processed an average of at least the equivalent of 75,000 lambs each year for the preceding 5 calendar years reports to the Secretary once daily the price of each type of lamb purchase, negotiated purchase, formula marketing arrangements, forward contract, quantity of lamb purchased on live weight or carcass weight, a range and average estimated live weights, quality grade, premiums and discounts, class type, pelt type, state of origin, and estimated dressing percentage. The Secretary issues a report to the public on this information not less than once each day. Lamb packers are required to report to the Secretary on a weekly basis on the second reporting day of the week information from the prior week. This information includes the quantity and certain carcass characteristics of lambs purchased through a formula marketing arrangement or forward contract that were slaughtered, and the quantity and carcass characteristics of packer owned lamb that were slaughtered. Reported information includes, by type of purchase, the quantity of lamb purchased on live weight and carcass weight basis that were slaughtered, the quality grade, premiums and discounts paid, and dressing percentage. In addition, a lamb packer is required to report the quantity and basis level for forward contracts, the range and average of intended premiums and discounts, and the expected slaughter date. Under this proposed rule, packers would also be required to report information on the quantity of lambs purchased on a negotiated basis. The Secretary makes available to the public the information on the second reporting day of the current slaughter week. Packers report information on daily sales of carcass lamb and sales of boxed lamb cuts each reporting day. Under this proposed rule, packers would also be required to report carcass purchases. Due to the changing structure of the lamb industry, an increasing number of transactions are not required to be reported under the existing regulation. Requiring packers to also report their carcass purchases would greatly increase the volume of covered transactions. For sales and purchases of carcass lamb, the information includes prices for each lot, the type of sale, the quantity of each sale quoted in number of carcasses, the USDA grade, the estimated weight range, and delivery date. For sales of boxed lamb cuts, the packer reports the price for each lot, the quantity for each lot quoted by product weight, the type of sale, branded product characteristics, if applicable, the USDA quality and yield grade, the cut of lamb, the product state of refrigeration, the weight range of each cut, and the delivery period. The Secretary issues to the public a report on carcass lamb sales and boxed lamb cut sales once each reporting day. For any calendar year, a lamb importer who imports an average of 2,500 metric tons of lamb meat products per year during the immediately preceding 5 calendar years reports to the Secretary weekly the prices received for imported lamb cuts sold on the domestic market. Additionally, an importer that does not import an average of 2,500 metric tons of lamb meat products during the immediately preceding 5 calendar years is also required to report the above information, if the Secretary determines that the person should be considered an importer based on their volume of lamb imports. Other Provisions of the Act Involving Administration The administrative provisions of the 1999 Act set forth the requirements for maintaining confidentiality regarding the packer reporting of proprietary information and list the conditions under which Federal employees can release such information. These administrative provisions also establish that the Secretary can make necessary adjustments in the information reported by packers and take action to verify the information reported, and directs the Secretary to report and publish reports by electronic means to the maximum extent practical. The 1999 Act provides for what constitutes violations of that Act, such as failure to report the required information on time or failure to report accurate information. The Reauthorization Act did not change any of these provisions. The section on enforcement establishes a civil penalty—$10,000—for each violation and provides for the Secretary's issuance of cease and desist orders. This section also provides for notice and hearing of violations before the Secretary, judicial review, issuance of an injunction or restraining order, and establishes a civil penalty for failure to obey a cease and desist order. The fees section directs the Secretary to not charge or assess fees for the submission, reporting, receipt, availability, or access to published reports or information collected through this program. The section on recordkeeping requires each packer to make available to the Secretary on request for 2 years the original contracts, agreements, receipts, and other records associated with any transaction relating to the purchase, sale, pricing, transportation, delivery, weighing, slaughter, or carcass characteristics of all livestock and livestock products, as well as such records or other information that is necessary or appropriate to verify the accuracy of information required to be reported. Also, the 1999 Act provides that reporting entities will not be required to report new or additional information that they do not generally have available or maintain, or the provisions of which would be unduly burdensome. Further, the 1999 Act provides that the Secretary may suspend any requirement if the Secretary determines that the application of the requirement would be inconsistent with the Act. Proposed Requirements Summary of Changes The requirements of this proposed regulation are discussed in detail in the sections immediately following. However, for the ease of the reader, this section contains descriptions and rationale of the substantive changes that have been made as compared to the December 1, 2000, and September 2, 2004, (that modified reporting requirements for lamb) final rules that were published in the **Federal Register** . Recordkeeping To reduce the recordkeeping burden on lamb importers, the Agency is proposing to modify the recordkeeping requirement to allow lamb importers to maintain a record of sale that evidences only the date the sale occurred rather than the time and date. Because lamb importers are required to report only weekly, the date the sale occurred is sufficient for recordkeeping purposes. Definitions The Agency is proposing to modify the definition of the term “discount” by adding “or other characteristic” to allow for the inclusion of other types of discounts such as a discount for an animal's age, which is currently utilized by several reporting packers. The Agency is also proposing to modify the definitions of the terms “negotiated purchased” and “negotiated sale” by removing the language “and agreement on a delivery day.” Under the current program, a transaction is not required to be reported if the specific delivery day is not known. Deleting this language would provide for more timely price reporting if the only piece of information not known is the delivery day. The Agency is proposing to add a definition for the term “negotiated grid purchase.” When the LMR program was first implemented on April 2, 2001, negotiated grid purchases, purchases in which the base price is determined by seller-buyer interaction from which premiums are added and discounts are subtracted, were coded in packer submissions as formulas, as the system was not initially configured to allow these two distinct transaction types to be coded separately. The Agency subsequently made a programming change to rectify this problem and is proposing this definition for clarity. The Agency is proposing to add a definition for the term “percent lean” for clarification with respect to cow and bull reporting requirements. The Agency is also proposing to add a definition for the term “person” for clarity. Cattle Reporting The majority of the changes that are being proposed with respect to cattle reporting relate to the separation of the reporting requirements for cows and bulls. Separation of the reporting requirements for cows and bulls is being proposed to minimize the reporting burden on cow and bull packers where possible and to make the information published for cows and bulls and the resulting meat products more meaningful to the industry. The Agency is proposing to modify the definition of the term “boxed beef” to remove references to age limitations on products and to require packers to report transactions for frozen primals, subprimals, and cuts in addition to the current requirement for packers to submit information on frozen beef trimmings and boneless processing beef. Neither the 1999 Act nor the Reauthorization Act defines the term “boxed beef.” Hence the term must be defined by regulation. These proposed modifications to the definition would provide for more complete reporting of the boxed beef trade, consistent with the law's purpose of improving the price and supply reporting conditions of USDA. Although the revised definition of “boxed beef” potentially would result in the reporting of more transactions by packers to AMS, the Agency believes that there would be little to practically no increase in the reporting burden to packers. The cost to packers of reporting all trades versus sorting out trades beyond certain parameters is minimal, and in many cases, may even be less burdensome than sorting out transactions prior to submission to AMS. In the 2000 final rule, the definition of “boxed beef” specified that the product not exceed one of three different dates from manufacture, depending on the specific item in question. For example, primals, subprimals, and cuts fabricated from subprimals were not to be older than 14 days from the date of manufacture, while fresh ground beef, beef trimmings, and boneless processing beef were not to be older than 7 days from the date of manufacture. By removing references to these different cutoff dates, there would be less confusion in terms of what information reporting packers are required to submit, and hence, less uncertainty regarding the information that is subsequently reported and disseminated by AMS. In addition, new technologies in packaging and processing continue to extend the shelf life of meat products, and product that may have been considered aged or distressed at the time of the 2000 final rule may now be well within its usable shelf life. Removing references to product age in the definition of “boxed beef” would reflect such changes in the state of the industry. The 2000 final rule defined “boxed beef” to include fresh primals, subprimals, cuts fabricated from subprimals, ground beef, beef trimmings, and boneless processing beef. The definition also included frozen beef trimmings and boneless processing beef. By removing the references to fresh or frozen product, the proposed rule would reduce confusion on the part of reporting packers regarding whether or not to submit information on particular trades. AMS believes that this modification of the definition of “boxed beef” would result in minimal to virtually no increase in burden to reporting packers. In the case of frozen products, numerous reporting packers already submit information on all frozen products. Due to the nature of their electronic systems, it is in many cases often less burdensome for packers to submit everything rather than having to sort through eligible transactions. AMS believes that reporting of trade in frozen products would provide a more accurate and comprehensive picture of the market for boxed beef, consistent with the purposes of the 1999 Act to improve the price and supply reporting services of USDA. For instance, trading of frozen product picked up with the reopening of foreign markets following the closures that resulted from the discovery of a cow with bovine spongiform encephalopathy in the United States in December 2003. Because a majority of packers are reporting frozen boxed beef trades, AMS has been able to show the number of frozen export loads in its comprehensive boxed beef cutout report. Requiring all packers to submit information on frozen product trades would ensure that such reporting would represent a more complete reflection of market conditions. Comments are invited on the proposed modifications to the definition of “boxed beef” with respect to removing references to the age of the product and whether it is fresh or frozen. In particular, comments are invited on the potential utility of obtaining information on trades that would be excluded under the definition of “boxed beef” in the 2000 final rule and on the change in reporting burden to packers. In any case, the Agency notes that it will accept all data submitted if reporting entities find that it is less burdensome to do so, provided that sufficient information is submitted to allow AMS to sort the information according to definitions in the final rule. The Agency is proposing to modify the definition of the term “carlot-based” such that for cow and bull boxed beef items, the term “carlot-based” would include any transaction between a buyer and seller consisting of 5,000 pounds or more of one or more individual items. This modification reflects current industry practice with respect to the marketing of cow and bull products. The Agency is proposing to modify the definition of the term “terms of trade” to clarify that the requirement to report the terms of trade applies only to steers and heifers to coincide with the proposed separation of reporting requirements for cows and bulls from steers and heifers. The definition of “terms of trade” has also been modified to require packers to distinguish between negotiated transactions that are scheduled for delivery not later than 14 days and those negotiated transactions that are scheduled for delivery more than 14 days, but fewer than 30 days. Under current guidance provided by AMS, transactions that are for delivery more than 14 days out are to be coded as forward contracts. This proposed modification would not require packers to submit additional transactions, but it would allow AMS to separately identify these types of transactions, which is a concern of some in the industry. The Agency is proposing to modify the definition of the term “type of purchase” to include “negotiated grid purchase” as a type of purchase. The Agency is proposing to add a definition for the term “white cow” to provide clarity to the cow and bull reporting requirements. The Agency has modified and renumbered the sections that relate to the daily and weekly reporting requirements for live cattle. Section 59.101 and section 59.103 contain the daily and weekly reporting requirements for steers and heifers. Section 59.102 contains the daily reporting requirements for cows and bulls. With regard to section 59.101, packers would no longer be required to report the range of weights of cattle purchased. In addition, the phrase “or other characteristics” has been added to the premium and discount reporting requirement to allow for the reporting of other kinds of premiums and discounts such as those associated with an animal’s age. Section 59.102 contains the reporting requirements for cow and bull purchases. In an effort to reduce the reporting burden on cow and bull packers, only the information that pertains to the way cows and bulls are marketed would be required to be reported. For example, cow and bull packers no longer have to report committed and delivered information. In addition, there would no longer be a weekly reporting requirement for cows and bulls. With regard to section 59.103, packers would be required to report the quantity of cattle purchased on a negotiated basis and on a negotiated grid basis that were slaughtered in addition to the current requirement to report the number of cattle purchased through forward contracts, formula marketing arrangements and the quantity and carcass characteristics of packer-owned cattle that were slaughtered. In addition, packers would be required to provide the basis level month and delivery year for all cattle purchased through forward contracts in addition to the current requirement to report the basis level and delivery month. These changes are necessary to make the information published in AMS market reports more meaningful and useable by the industry by providing a complete picture of the prior week's slaughter with respect to the numbers of cattle harvested under each purchase type. Prices for negotiated purchases and negotiated grid purchases are collected currently, but prior week slaughter numbers for these types of purchases are not now collected. However, the addition of this reporting requirement is expected to have little impact on the reporting burden to packers, while contributing to the completeness of the information disseminated under the program. Another change under section 59.103 is that packers would be required to provide the basis level month and delivery year for all cattle purchased through forward contracts in addition to the current requirement to report the basis level and delivery month. The basis level month and delivery year are necessary to provide a more accurate picture of the forward contract market and would allow AMS to publish more meaningful information. Also, the added information reflects the current industry practice of sometimes contracting out very far into the future, making it necessary to know the delivery year to categorize transactions properly according to not only the month but also the year of delivery. Finally, in another effort to reduce the burden on reporting packers, the weekly requirement to report information for cattle purchased through a formula marketing arrangement and slaughtered during the prior slaughter week has been removed as the Agency can obtain this information by aggregating packers’ daily submissions. Swine As required by the Reauthorization Act, the reporting requirements for sows and boars have been separated from the reporting requirements for barrows and gilts. Thus under this proposed rule, section 59.202 contains the reporting requirements for barrows and gilts and section 59.303 contains the reporting requirements for sows and boars. The Reauthorization Act also made a few other modifications to the swine reporting provisions. Specifically, the definition of a packer has been modified to also include a person that slaughtered an average of 200,000 head of sows, boars, or combination thereof per year during the immediately preceding 5 calendar years. Under the 1999 Act, a packer was defined as a swine processing plant that slaughtered an average of at least 100,000 swine per year during the immediately preceding 5 calendar years. The Reauthorization Act also changes the reporting timeframe for packers to submit prior day slaughtered swine information from 7 a.m. central time to 9 a.m. central time and requires the Secretary to publish a net price distribution on all barrows and gilts slaughtered the previous day. In addition to the changes required by the Reauthorization Act, the Agency has made a few other minor modifications to reduce the reporting burden on swine packers. A definition of the term “inferior hog” has been added to allow packers to exclude information on inferior hogs, which are discounted in the marketplace, from their data submissions to AMS. Also, the requirement to submit information on the lowest net price and the highest net price has been removed as the Agency can obtain this information from the LMR system from packer submissions. Lamb As previously discussed, the Reauthorization Act did not change the reporting provisions for lamb. However, the Agency is proposing a few changes to reduce the reporting burden on lamb packers where possible and to provide more meaningful information in AMS market reports. The Agency is proposing to delete the definitions for the terms “lambs committed” and “terms of trade” as the requirements to submit this information have been deleted to reduce the reporting burden on packers. The Agency is proposing to add a definition for the term “yield grade lamb carcass reporting” to add further clarification to the requirement to report yield grade information. With respect to weekly reporting, the Agency is proposing to require packers to submit information on the quantity of lambs purchased through a negotiated purchase that were slaughtered in addition to the current requirement to submit this type of information on packer-owned lambs, lambs purchased through forward contracts, and lambs purchased under a formula arrangement. This change would allow AMS to publish more meaningful market information in AMS market reports. With respect to reporting requirements for lamb carcasses, the Agency is proposing to require packers to submit information on their carcass purchases in addition to the current requirement to report carcass sales. Due to the changing structure of the lamb industry, an increasing number of transactions are not required to be reported under the existing regulation. Requiring packers to also report their carcass purchases will greatly increase the volume of covered transactions and will allow AMS to publish more meaningful information in AMS market reports. General Provisions Proposed Subpart A of Part 59, General Provisions, covers those requirements pertinent to all aspects of mandatory reporting. Section 59.10 details how packers and importers would be required to report information and how reporting will be handled over weekends and holidays. Electronic reporting would be required for all information collection. Electronic reporting would involve the transfer of data from a packer’s or importer’s existing electronic recordkeeping system to a centrally located AMS electronic database. The packer or importer would be required to organize the information in an AMS-approved format before electronically transmitting the information to AMS. Once the required information has been entered into the AMS database, it would be aggregated and processed into various market reports that would be released according to the daily and weekly time schedule set forth in these proposed regulations. Section 59.20 identifies the recordkeeping requirements imposed by the 1999 Act and these regulations on packers and importers. Reporting packers and importers would be required to maintain and to make available the original contracts, agreements, receipts, and other records associated with any transaction relating to the purchase, sale, pricing, transportation, delivery, weighing, slaughter, or carcass characteristics of all livestock. In addition, they would be required to maintain such records or other information as is necessary or appropriate to verify the accuracy of the information required to be reported under these regulations. All of the above mentioned paperwork must be maintained by packers and importers for at least 2 years. Further, packers would be required to maintain a record to indicate the time a lot of cattle or swine was purchased, or a unit of boxed beef cuts was sold, as occurring either before 10 a.m. central time, between 10 a.m. and 2 p.m. central time, or after 2 p.m. central time. Lamb packers would be required to maintain a record to indicate the time a lot of lambs was purchased or a lot of lamb carcasses was purchased or sold or boxed lamb cuts was sold, as occurring either before 2 p.m. central time or after 2 p.m. central time. For lamb importers, the record of sale shall evidence the date the sale occurred. However, to allow packers and importers time to collect, assemble and submit the information to AMS by the prescribed deadlines, all covered transactions up to within one half hour of the specified reporting times would be reported. Lastly, under Subpart A, Section 59.30 details the general definitions of terms used throughout the regulations, which would be applicable to all subparts. The majority of these definitions remain unchanged from those that were published in the 2000 final rule. However, as previously discussed, the following changes have been made: Minor modifications to the definitions of “discount”, “negotiated purchase”, and “negotiated sale”; the addition of a definition for “negotiated grid purchase”; the addition of a definition of “percent lean”; and the addition of a definition of “person”. Cattle Proposed Subpart B of Part 59 states what is required to be reported in the cattle and boxed beef sectors. For the most part, the reporting requirements are similar to those published in the December 1, 2000, final rule. The specific changes that are being proposed have been discussed in a previous section in this document. Section 59.100 provides definitions of cattle terms used in Subpart B, including the definition of packer, which identifies which entities would be required to report under this proposed rule. In any calendar year, the term cattle packer includes any Federally inspected cattle plant that slaughtered an average of 125,000 head of cattle a year for the immediately preceding 5 calendar years. Additionally, the term includes any processing plant that did not slaughter cattle during the immediately preceding 5 calendar years if the Secretary determines that the plant should be considered a packer based on its capacity. For entities that did not slaughter cattle during the immediately preceding 5 calendar years, such as a new plant or existing plant that begins operations, AMS will project the plant’s annual slaughter or production based upon the plant’s estimate of annual slaughter capacity to determine which entities meet the definition of a packer as defined in these regulations. The definition of “boxed beef” includes fresh and frozen primals, subprimals, cuts fabricated from subprimals (with some exclusions), and fresh and frozen ground beef, beef trimmings, and boneless processing beef. The definition of “terms of trade” applies to steers and heifers only and includes the percentage of steers and heifers purchased by a packer as a negotiated purchase that are scheduled to be delivered to the plant for slaughter not later than 14 days and the percentage of slaughter steers and heifers purchased by a packer as a negotiated purchase that are scheduled to be delivered to the plant for slaughter more than 14 days but fewer than 30 days. The term “type of purchase” with respect to cattle, means a negotiated purchase, negotiated grid purchase, a formula market arrangement, and a forward contract. The term “white cow” means a cow on a ration that tends to produce white fat. As previously discussed, the reporting requirements for cows and bulls have been separated from the reporting requirements for steers and heifers, which will reduce the reporting burden on cow and bull packers. Section 59.101 discusses the daily reporting requirements for steer and heifer transactions, including what information would be reported, when it would be reported, and when it would be published. Steer and heifer plants covered under the rule would report the details of their purchases twice each day to AMS (once by 10 a.m. central time, and once by 2 p.m. central time) and would include all covered transactions made up to within one half hour of the specified reporting time. Packers completing transactions during the one half hour prior to the previous reporting time would report those transactions at the next prescribed reporting time. The Secretary would publish the information not less than three times each day. Section 59.102 discusses the daily reporting requirements for cows and bulls, including what information would be reported, when it would be reported, and when it would be published. Cow and bull plants covered under this rule would be required to report the base bid price intended to be paid for slaughter cow and bull carcasses on that day not later than 10 a.m. central time and the prices for cattle purchased during the previous day not later than 2 p.m. central time. The Secretary would publish the information within one hour of the required reporting time on the reporting day on which the information is received by the packer. Section 59.103 discusses the requirements for weekly reporting for steers and heifers. Packers would be required to report information regarding the prior slaughter week on the first reporting day of each week not later than 9 a.m. central time. This information includes the quantity of cattle purchased through a negotiated basis that were slaughtered; the quantity of cattle purchased through a negotiated grid basis that were slaughtered; the quantity of cattle purchased through forward contracts that were slaughtered; the quantity of cattle delivered under a formula marketing arrangement that were slaughtered; the quantity and carcass characteristics of packer-owned cattle that were slaughtered; the quantity, basis level, basis level month, and delivery month and year for all cattle purchased through forward contracts; and the range and average of intended premiums and discounts that are expected to be in effect for the current slaughter week. This information would be published by the Secretary on the same day by 10 a.m. central time. Finally, under Subpart B, Section 59.104 details the information required to be reported concerning sales of boxed beef cuts including what would be reported, when it would be reported, and when it would be published. Cattle plants producing boxed beef cuts would be required to report their domestic and export sales of boxed beef cuts including branded boxed beef cuts to AMS twice each reporting day, once by 10 a.m. central time and once by 2 p.m. central time. This should include all covered transactions made up to within one half hour of the specified reporting time. Cattle plants completing transactions during the one half hour prior to the previous reporting time would report those transactions at the next prescribed reporting time. This information would be published by the Secretary twice each day. These plants would be required to reference the Institutional Meat Purchase Specifications
(IMPS)for Fresh Beef Products Series 100, United States Department of Agriculture, Agricultural Marketing Service, Livestock and Seed Program, when applicable. Swine The Reauthorization Act made several changes to the swine reporting provisions. The Agency made a few other minor modifications, which are discussed in detail in a previous section in this document, for clarity and to reduce the reporting burden on packers. Proposed Subpart C of Part 59 lists the requirements of swine reporting beginning with Section 59.200, which establishes definitions for terms used throughout the subpart including the definition of a packer. In any calendar year, the term swine packer includes a Federally inspected plant that slaughtered an average of at least 100,000 swine per year during the immediately preceding 5 calendar years and a person that slaughtered an average of at least 200,000 sows, boars, or combination thereof per year during the immediately preceding 5 calendar years. Additionally, in the case of a swine processing plant or person that did not slaughter swine during the immediately preceding 5 calendar years, it shall be considered a packer if the Secretary determines the processing plant or person should be considered a packer under this subpart after considering its capacity. For entities that did not slaughter swine during the immediately preceding 5 calendar years, such as a new plant or existing plant that begins operations, AMS will project the plant's annual slaughter or production based upon the plant's estimate of annual slaughter capacity to determine which entities meet the definition of a packer as defined in these regulations. Section 59.202 discusses the daily reporting requirements for barrows and gilts including what information would be reported, when it would be reported, and when it would be published. For barrows and gilts, packers required to report under this rule would report the details of their barrows and gilts purchases three times each day including a prior day report not later than 7 a.m. central time, a morning report not later than 10 a.m. central time, and an afternoon report not later than 2 p.m. central time, including all covered transactions made up to within one half hour of each specified reporting time. Packers completing transactions during the one half hour prior to the previous reporting time would report those transactions at the next prescribed reporting time. This information would be published by the Secretary each reporting day not later than 8 a.m. central time, 11 a.m. central time, and 3 p.m. central time, respectively. For barrows and gilts, packers required to report under this rule would also have to report not later than 9 a.m. central time on each reporting day information regarding all barrow and gilts slaughtered during the prior business day. This information would be published by the Secretary each reporting day not later than 10 a.m. central time. In addition, the Secretary would publish a net price distribution for all barrow and gilts slaughtered on the previous day not later than 3 p.m. central time. Section 59.203 details the reporting requirements for sows and boars. Under this proposed rule, each sow and boar packer would report to the Secretary not later than 7 a.m. central time on each reporting day information regarding all sows and boars purchased or priced during the prior business day of the packer. This information would be published by the Secretary each reporting day not later than 8 a.m. central time. Section 59.204 details the requirements for reporting weekly swine information to AMS including what would be reported, when it would be reported, and when it would be published. On the first reporting day of each week, not later than 4 p.m. central time, packers would be required to report information on noncarcass merit premiums used and paid to producers during the prior slaughter week by category. This information would be published on the first reporting day of each week not later than 5 p.m. central time. Lamb Proposed Subpart D of Part 59 covers the mandatory reporting of lambs. The 1999 Act gives the Secretary the authority to establish a mandatory lamb price reporting program but does not set forth the requirements. AMS proposes to resume the previously established mandatory lamb price reporting program with some modifications as discussed in a previous section in this document. Section 59.300 provides definitions for terms used throughout Subpart D including definitions for packer and for importer, which identifies the entities that would be required to report under this proposed rule. For any calendar year, the term lamb packer includes any Federally inspected lamb processing plant that slaughtered or processed the equivalent of an average of 75,000 head of lambs a year for the immediately preceding 5 calendar years. Additionally, the term includes any processing plant that did not slaughter or process an average of 75,000 lambs during the immediately preceding 5 calendar years if the Secretary determines that the plant should be considered a packer based on the capacity of the processing plant. For entities that did not slaughter lambs during the immediately preceding 5 calendar years, such as a new plant or existing plant that begins operations, AMS will project the plant's annual slaughter or production based upon the plant's estimate of annual slaughter capacity to determine which entities meet the definition of a packer as defined in these regulations. For any calendar year, the term lamb importer includes any importer that imported an average of 2,500 metric tons of lamb meat products per year during the immediately preceding 5 calendar years. Additionally, for any calendar year, the term importer includes any lamb importer that did not import an average of 2,500 metric tons of lamb meat products during the immediately preceding 5 calendar years if the Secretary determines that the person should be considered an importer based on their volume of lamb imports. For importers of lamb meat products, AMS will annually review import lamb volume data obtained from the United States Bureau of Customs and Border Protection to determine which importers are required to report imported boxed lamb cut sales information under these regulations. Under this proposed rule, several changes have been made to the definitions section that was published in the 2000 final rule. To facilitate the publication of more meaningful information in AMS market reports, a definition of “yield grade lamb carcass reporting” has been added, which will help clarify the requirements for reporting USDA yield grade information. In addition, the definitions of “lambs committed” and “terms of trade” have been deleted as the requirement to submit the information associated with these definitions has been removed as it is not used by the industry. Section 59.301 covers the daily reporting requirements for live lamb transactions including what would be reported, when it would be reported, and when it would be published. Lamb plants covered under the rule would report the details of their live lamb purchases once each day to AMS, to include all covered transactions made up to within one half hour of the specified reporting time. Lamb plants completing transactions during the one half hour prior to the previous reporting time would report those transactions at the next prescribed reporting time. The Secretary would publish this information not less than once each day. Section 59.302 covers the same type of information for weekly reporting of live lamb transactions. Packers would be required to report information regarding the prior slaughter week, including among other things the number of lambs purchased through a negotiated purchase that were slaughtered, on the first reporting day of each week to be published by the Secretary on the same day. Finally, Section 59.303 covers the reporting requirements for transactions of lamb carcasses and boxed lamb cuts including what would be reported, when it would be reported, and when it would be published. Packers would be required to report details of their sales and purchases of carcass lambs once each day and the Secretary would publish the information once each day. Packers would be required to report details of their sales of boxed lamb cuts, including applicable branded product. This information would be published once each day. These plants would be required to reference the Institutional Meat Purchase Specifications
(IMPS)for Fresh Lamb and Mutton Series 200, United States Department of Agriculture, Agricultural Marketing Service, Livestock and Seed Program, where applicable. Importers of boxed lamb cuts would be required to report the required information of their prior week sales of imported boxed lamb cuts on the domestic market, including applicable branded product on the first reporting day of each week and this information would be published by the Secretary on the same day. OMB Control Numbers Subpart E of Part 59 covers the OMB control number 0581-0186 assigned pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) for the information collection requirements listed in Subparts B through D of Part 59. All required information must be reported to AMS in a standardized format. The standardized format is embodied in 16 data collection forms that are included in Appendix E at the end of this document. Cattle packers will utilize up to seven of these forms (not all cattle packers must submit all cattle forms) (Appendix A) when reporting information to AMS including four for daily cattle reporting, two for weekly cattle reporting, and one for daily boxed beef cuts reporting. Swine packers will utilize up to three forms (not all swine packers must submit all swine forms) (Appendix B), two for daily reporting of swine purchases and one for weekly reporting of non-carcass merit premium information. Lamb packers will utilize up to six of these forms (not all lamb packers must submit all lamb forms) (Appendix C) when reporting information to AMS, including one for daily lamb reporting, three for weekly lamb reporting, one for daily and weekly boxed lamb cuts reporting, and one for daily lamb carcass reporting. Lamb importers will utilize one of these forms when reporting information to AMS for reporting weekly imported boxed lamb cut sales. Appendices The final section of this document contains a series of five appendices. These appendices will not appear in the Code of Federal Regulations. The first three appendices, Appendices A to C, have already been discussed above. They describe the forms that will be used by those required to report information under this program. Appendix D contains guidelines for those entities required to report information on how to use the forms. The actual forms are contained in Appendix E. Executive Order 12988 This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. Section 259 of the 1999 Act prohibits States or political subdivisions of a State to impose any requirement that is in addition to, or inconsistent with, any requirement of the 1999 Act with respect to the submission or reporting of information, or the publication of such information, on the prices and quantities of livestock or livestock products. In addition, the 1999 Act does not restrict or modify the authority of the Secretary to administer or enforce the Packers and Stockyards Act of 1921 (7 U.S.C. 181 *et seq.* ); administer, enforce, or collect voluntary reports under the 1999 Act or any other law; or access documentary evidence as provided under Sections 9 and 10 of the Federal Trade Commission Act (15 U.S.C. 49, 50). There are no administrative procedures that must be exhausted prior to any judicial challenge to the provisions of this rule. Civil Rights Review AMS has considered the potential civil rights implications of this rule on minorities, women, or persons with disabilities to ensure that no person or group shall be discriminated against on the basis of race, color, national origin, gender, religion, age, disability, sexual orientation, marital or family status, political beliefs, parental status, or protected genetic information. This review included persons that are employees of the entities that are subject to this regulation. This proposed rule does not require affected entities to relocate or alter their operations in ways that could adversely affect such persons or groups. Further, this proposed rule would not deny any persons or groups the benefits of the program or subject any persons or groups to discrimination. Executive Order 13132 This proposed rule has been reviewed under Executive Order 13132, Federalism. This Order directs agencies to construe, in regulations and otherwise, a Federal Statute to preempt State law only when the statute contains an express preemption provision. This rule is required by the 1999 Act. Section 259 of the 1999 Act, Federal Preemption, states, “In order to achieve the goals, purposes, and objectives of this title on a nationwide basis and to avoid potentially conflicting State laws that could impede the goals, purposes, or objectives of this title, no State or political subdivision of a State may impose a requirement that is in addition to, or inconsistent with, any requirement of this subtitle with respect to the submission or reporting of information, or the publication of such information, on the prices and quantities of livestock or livestock products.” Prior to the passage of the 1999 Act, several States enacted legislation mandating, to various degrees, the reporting of market information on transactions of cattle, swine, and lambs conducted within that particular State. However, since the National program was implemented on April 2, 2001, these State programs are no longer in effect. Therefore, there are no Federalism implications associated with this rulemaking. Executive Order 12866 This proposed rule has been determined to be significant for purposes of Executive Order 12866 and therefore has been reviewed by the Office of Management and Budget (OMB). In accordance with Executive Order 12866, this preliminary regulatory analysis contains a statement of the need for the proposed rule, an examination of alternative approaches, and an analysis of benefits and costs. Executive Summary This proposed rule implements the Reauthorization Act, which reauthorized the 1999 Act and amended the swine reporting provisions of that Act. As stated in the 1999 Act, the purpose of the Act is to establish a program of information regarding the marketing of cattle, swine, lambs, and the products of such livestock that provides information that can be readily understood by producers; improves the price and supply reporting services of the Department of Agriculture; and encourages competition in the marketplace for livestock and livestock products. (7 U.S.C. 1635) This proposed rule facilitates open, transparent price discovery and provides all market participants, both large and small, with comparable levels of market information. The proposed rule is expected to reduce the time and resources that market participants would otherwise expend to assess current market conditions, reduce risk and uncertainty, and contribute to considerations of fairness and equity to all participants in the marketplace. However, these anticipated benefits are difficult to measure and quantify. This proposed rule is strictly an informational measure and does not impose any restrictions on the form, timing, or location of procurement and sales arrangements in which subject packers and importers may engage. Therefore, costs of the proposed rule are simply the costs associated with system development and maintenance, data submission, and recordkeeping activities of the packers and importers required to report information under this proposed rule, plus the costs to the Federal government for operation of the program. However, most of the entities that would be required to report under this proposed rule already reported information prior to expiration of the 1999 Act on September 30, 2005, and have since continued to do so voluntarily. As a result, incremental costs for implementation of this proposed rule are negligible relative to total costs associated with the program. Moreover, total costs estimated for this proposed rule are lower than costs estimated in the 2000 final rule expressed in comparable current (May 2007) dollar values. Total costs to reporting packers and importers are estimated at approximately $724,000 per year, while costs to the Federal government for operation of the program total $6.3 million per year. By comparison, the total costs to reporting packers and importers in the 2000 final rule (65 FR 75464) were estimated at $836,000 per year in current dollars, while costs to the Federal government in FY 2001 were estimated at $6.9 million in current dollars. In current dollar terms, the proposed rule represents a reduction of $112,000 in estimated annual costs to reporting packers and importers, and a reduction of $600,000 in estimated annual costs to the Federal government. For both respondents and the Federal government, total costs for the proposed rule are estimated at approximately $7.0 million annually, while total costs for the 2000 final rule were estimated at $7.8 million annually in current dollars. Because the Act expires on September 30, 2010, the proposed rule is assumed to have a life cycle of 4 years. At a real discount rate of 3 percent, the discounted present value of the total private and public sector costs for the proposed rule is estimated at $26.9 million for the duration of the program, compared to $29.7 million for the 2000 final rule (expressed in current dollars over a 4-year life cycle). This represents a reduction of $2.8 million over the life of the proposed rule in comparison to the 2000 final rule. At a real discount rate of 7 percent, the discounted present value of the total private and public sector costs for the proposed rule is estimated at $25.5 million for the duration of the program, compared to $28.1 million for the 2000 final rule (expressed in current dollars over a 4-year life cycle). This represents a reduction of more than $2.6 million over the life of the proposed rule in comparison to the 2000 final rule. Need for Federal Regulatory Action This proposed rule implements the Reauthorization Act, which reauthorized the 1999 Act and amended the swine reporting provisions of that Act. The 1999 Act first became law on October 22, 1999, as an amendment to the Agricultural Marketing Act of 1946. The first reports disseminated under LMR were issued in April 2001. In December 2004, the 1999 Act was reauthorized through September 30, 2005. The legislative authority lapsed until October 5, 2006, when it was reauthorized through September 30, 2010, with the Reauthorization Act. During the two periods of lapsed mandatory reporting authority, most firms that would have been required to report information under the requirements of LMR continued to report the same information voluntarily. As a result, AMS continued to release most of the reports that would have been released under the mandatory reporting program. The 1999 Act as amended by the Reauthorization Act directs the Department of Agriculture
(USDA)“to establish a program of information regarding the marketing of cattle, swine, lambs, and products of such livestock.” This Act contains specific requirements that provide limited discretionary authority for regulatory implementation of many of the law's provisions. As a result, many of the provisions within this proposed rule represent straightforward implementation of the requirements of this Act. As stated in the 1999 Act, the purpose of the statute is to establish a program that—
(1)provides information that can be readily understood by producers, packers, and other market participants, including information with respect to the pricing, contracting for purchase, and supply and demand conditions for livestock, livestock production, and livestock products;
(2)improves the price and supply reporting services of the Department of Agriculture; and
(3)encourages competition in the marketplace for livestock and livestock products. (7 U.S.C. 1635) Increasingly, transactions between livestock producers and meat packers occur by way of private negotiations rather than through public trades. Compared to prices established in public markets, prices established in private transactions are difficult to observe, collect, summarize, and disseminate. Data reported by USDA's Grain Inspection, Packers and Stockyards Administration (GIPSA) show that of total cattle purchases by reporting packers, the share purchased in public markets declined from 30.2 percent in 1977 to 12.0 percent in 2004.1 For hogs, the decline was larger, dropping from 27.5 percent in 1977 to just 1.7 percent in 2004. 1 For sheep and lambs, public market purchases declined from 23.4 percent to 8.3 percent of total purchases by reporting packers over the same period. 1 GIPSAQ, USDA. Packers and Stockyards Statistical Report, 2005 Reporting Year. GIPSA SR-07-1, February 2007. Open, transparent price discovery provides all market participants with comparable levels of market information, providing each economic agent with similar information. The decline in public market trading of livestock over the years led to increasingly opaque price discovery in these markets. As stated in the 1999 Act, mandatory livestock reporting provides a means of providing information to market participants and improving the price and supply reporting services of USDA. Similar to many sectors of the economy, both the livestock production and meat packing industries have undergone substantial consolidation during the past few decades. However, the rate and extent of the consolidation among meat packers has been greater compared to livestock producers. The four-firm concentration ratio for steer and heifer slaughter increased from 35.7 percent in 1980 to 81.1 percent in 2004. 2 Over the same period, the four-firm concentration ratio for cow and bull slaughter increased from 9.7 percent to 48.0 percent. Hog slaughter concentration by the top four firms increased from 33.6 percent to 61.3 percent over the same period, while sheep and lamb slaughter concentration increased from 55.9 percent to 66.9 percent. Between 1986 and 2005, the number of bonded packers reporting to GIPSA declined from 691 to 312. 2 Ibid. According to the National Agricultural Statistics Service (NASS), the number of cattle operations in the United States declined from 1.6 million in 1980 to 983,000 in 2005. Over the same time period, the number of hog and pig operations declined from 667,000 to 67,000, while the number of sheep and lamb operations declined from 120,000 to 68,000. Thus, consolidation occurred among livestock production operations, but the number of livestock operations still far exceeds the number of livestock packers. For slaughter livestock, the predominant marketing relationship is characterized by comparatively small livestock operations dealing with large meat packing firms. In addition, markets for slaughter livestock are local or regional in geographic scope. The distances over which it is economically rational to transport slaughter livestock is dictated by differences in relative prices for livestock in different geographic areas versus shipping costs. Shipping costs include not only costs of trucking equipment, labor, fuel, insurance and other out-of-pocket expenses, but also include additional stress and weight shrink of animals hauled for greater distances and longer periods of time. In these regionalized trade areas, there typically are relatively large numbers of livestock operations, but only a handful of packers for any given type of slaughter animal. As a result, relatively few packers engage in many, frequent negotiations and completed transactions with a large number of producers. In contrast, even larger livestock operations typically engage in negotiations with a few packers within their economically viable trade area and may only complete transactions with one or two packers. Smaller livestock operations may only engage in sales transactions a few times per year, while packers procure livestock to run their plants every business day of the year. The 1999 Act and the Reauthorization Act were passed by Congress in light of these structural and organizational conditions present in the livestock and meat industries. The proposed rule does not constitute economic regulation of the permissible business practices in which meat packers and importers may engage. Affected entities are free to conduct their businesses in any manner consistent with other relevant Federal, State, and local laws and regulations. The proposed rule only requires that the subject entities disclose information about their livestock purchases and meat sales to AMS, which will then process, summarize, and disseminate the information. The identity of persons, including parties to a contract, and proprietary business information will be kept confidential in accordance with the 1999 Act. Alternative Regulatory Approaches AMS believes that the proposed rule represents the most cost effective means of fulfilling the statutory mandate of 1999 Act as amended by the Reauthorization Act. While this Act provides some discretionary authority for operation of the program, many of the definitions, reporting times, and disclosure requirements are specified in the law itself. Since the program was first implemented in April 2001, experience has proven that electronic reporting is the least-cost means for both subject entities and AMS to comply with the requirements of the Reauthorization Act. During the periods in which mandatory reporting requirements lapsed (including October 2005 through the present), entities that continued to report voluntarily did so through electronic submission of information in the same manner as had been required under mandatory reporting authority. The LMR system provides two methods for firms to transmit livestock mandatory reporting data to the system: A web interface and electronic data transfer. For most firms, electronic data transfer provides the most efficient mechanism for transferring required data. USDA provides a software utility for users to transfer comma-delimited ASCII files directly to the LMR system. The comma-delimited files can be generated electronically from livestock purchase and meat sales records. For smaller operations with relatively few transactions, the web interface may be more efficient than electronic data transfer. The web interface module is available over the Internet using a web browser, but requires more manual inputting of data compared to the electronic data transfer option. Nonetheless, the web interface option provides smaller operations with a mechanism for submitting the required data without the need to incur fixed costs of developing a software application to prepare data for electronic data transfer. Historically, about 90 percent of plants and importers have submitted data electronically, with the remaining 10 percent of respondents submitting data through the web interface. Analysis of Benefits and Costs The baseline for this analysis is the LMR program as it currently operates. Specifically, the baseline is the LMR program as directed by the 1999 Act and implemented by the 2000 final rule. Although the 2000 final rule expired when the 1999 Act expired on September 30, 2005, the current voluntary participation by most packers allows the LMR program to function nearly identically to how it operated under the mandatory authority of the 1999 Act. Despite the fundamental role played by market information for private and public decision-making, research, outlook, and analysis, there is comparatively little empirical research on market reporting in and of itself. Likewise, there is a paucity of quantitative research regarding the benefits and costs of LMR specifically. Perry, et al. note that some local and regional market news reports were no longer available after the implementation of LMR because of the program's confidentiality restrictions. 3 However, the authors also conclude that far more information on formula transactions became available, allowing for comparisons with negotiated transactions that had not been possible before. Formula prices for cattle were found to closely mirror prices for negotiated purchases. The study found that volatility in weekly reported cattle prices rose after implementation of LMR, but was unable to determine whether the change resulted from the change in the reporting system or from changes in cattle markets. The authors observed that the trend toward formula pricing arrangements in cattle markets slowed after LMR was implemented, and cautiously speculated that the program may have played a role in stabilizing the volume of negotiated transactions. 3 Perry, J., J. MacDonald, K. Nelson, W. Hahn, C. Arnade, and G. Plato. “Did the Mandatory Requirement Aid the Market? Impact of the Livestock Mandatory Reporting Act.” Economic Research Service, U.S. Department of Agriculture, LDP-M-135-01, September 2005. Ward provides perhaps the most comprehensive review and assessment of research relating to LMR. 4 Ward notes that satisfaction or dissatisfaction with mandatory reporting depends on individuals' expectations regarding what the Reauthorization Act would achieve or the problems that it would address. Ward concludes that mandatory reporting provides more information in some areas than what was previously available and has increased transparency and price reporting accuracy. He suggests that satisfaction with the program likely has increased due to increased familiarity with the data and information available through mandatory reporting and enhanced confidence in reported prices. 4 Ward, C.E. “An Assessment of the Livestock Mandatory Reporting Act.” Paper presented at the NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management, St. Louis, Missouri, April 17-18, 2006. *Benefits.* One of the fundamental conditions underlying the theory of competitive markets is that market participants possess relevant information necessary to make the correct economic decisions. This proposed rule seeks to ensure market transparency by providing current and potential participants in livestock and meat markets with timely, accurate, and comprehensive information about prices paid and received for livestock and meat products. Market transparency facilitates market efficiency by reducing search costs for market participants and by reducing risk and uncertainty. Widely available market information reduces the time and resources that market participants would otherwise expend to assess current market conditions. With reliable market information, market participants can make informed marketing decisions and thus reduce exposure to risks associated with buying or selling at prices inconsistent with the prevailing market norms. Unrestricted availability of market information may also contribute to considerations of equity and fairness in the marketplace. Unrestricted dissemination of market news reporting provides all market participants with comparable access to current market information regardless of the size or financial resources of their respective operations. Livestock mandatory reporting under this proposed rule will provide comprehensive information on slaughter livestock, beef, and lamb meat prices. Using the information submitted by packers under the provisions of the 1999 Act, AMS publishes over 100 daily, weekly, and monthly reports covering market transactions for fed cattle, swine, lamb, beef, and lamb meat. Based on the information available, AMS estimates that reports issued under LMR cover approximately 95 percent of slaughter hogs, 77 percent of the slaughter cattle, 60 percent of slaughter sheep, 41 percent of boxed lamb, 26 percent of the carcass lamb, and 93 percent of boxed beef. AMS market reports are utilized by producers and others in the marketing chain to formulate contracts and make marketing decisions, and by other Government agencies to make policy decisions, settle trade disputes, and in a variety of other functions. Despite the fundamental role played by price information in underpinning fair, competitive, and efficient markets, quantifying the impact of mandatory livestock reporting is difficult. There is a considerable economic literature addressing the value of information, but little research on the economics of market reporting in and of itself. 5 Research mainly has addressed the accuracy and adequacy of price reporting, but no published works have been identified that monetize the benefits of mandatory reporting programs such as that contained in this proposed rule. 5 Ward, op. cit. *Costs.* This proposed rule is strictly an informational measure and does not impose any restrictions on the form, timing, or location of procurement and sales arrangements in which subject packers and importers may engage. The proposed rule places no additional limitations on current or future business relationships into which affected firms may enter, although other local, State, and Federal laws and regulations regarding such relationships continue to apply. Therefore, costs of the proposed rule are simply the costs associated with system development and maintenance, data submission, and recordkeeping activities of the packers and importers that would be required to report information under this proposed rule, plus the costs to the Federal government for operation of the program. Although this proposed rule is not identical to the 2000 final rule, most of the regulatory provisions are the same or only slightly modified from that rule. As such, costs for firms subject to the proposed rule will be similar to costs required to comply with the 2000 final rule. Hence, the methods for developing the cost estimates presented in this preliminary impact analysis largely follow from the methods used in developing the cost estimates contained in the final impact analysis published in the **Federal Register** along with the 2000 final rule. As applicable, estimates of employer costs for employee compensation are updated using recent statistics from the Bureau of Labor Statistics. For reporting packers and importers, there are essentially three phases required to comply with this proposed rule:
(1)Development or modification of a system for electronic reporting of data and periodic system maintenance, updating, and compliance;
(2)ongoing submission of required data; and
(3)maintenance of records for a period of 2 years following submission of data to AMS. AMS estimates that most costs associated with this proposed rule will result from costs associated with ongoing submission of required data. As explained below, AMS expects that there will be relatively low costs imposed on reporting packers and importers for program startup, systems maintenance and updating, and records maintenance. AMS estimates that approximately 65 packers and importers, representing approximately 115 plants or establishments, would be required to submit information under this proposed rule. However, most of these firms already have established systems for reporting information to AMS because they were subject to the requirements of the program when it was in effect from 2001 through 2005. Moreover, most firms have continued to report data voluntarily to AMS during the period that the Act expired on September 30, 2005, to the present. These firms will need to modify their current data reporting systems to be compatible with the requirements of the proposed rule. AMS estimates that there will be an average of about three additional packers and importers annually that will reach the size thresholds for reporting under this proposed rule, but that had not previously reported under the requirements of the Act. Some of these firms will be new entrants to the industry and others will have increased their slaughter volume to the level at which they are required to submit data under the requirements of the law and this proposed rule. These firms will need to develop an electronic interface to translate the information from their existing computerized recordkeeping systems into the standardized format required for automated submission of the data to AMS. Firms with existing reporting systems will need to modify the electronic interface to accommodate changes in reporting requirements. AMS estimates that 15 hours of development and computer programming time per plant will be required to develop or modify the interface. Electronic data transmission of information is accomplished using an interface with an existing electronic recordkeeping system. In most cases, the information packers and importers are required to report already exists in internal computerized recordkeeping systems. Packers and importers will provide for the translation of the information from their existing electronic recordkeeping system into the required AMS standardized format. Once accomplished, the information will be electronically transmitted to AMS where it will be automatically loaded into an AMS database. AMS estimates that the development and computer programming to establish and maintain this interface will require an industry average of 15 hours per respondent per year. AMS estimates the employer costs for employee total compensation per hour to average $44.82, which is the average for all civilian management, professional, and related occupations for the second quarter of 2006 according to Bureau of Labor Statistics. The management, professional, related occupations category includes the managers who would oversee development and maintenance of the electronic interface and the computer systems and programming personnel who would actually implement and maintain the interface. With 15 hours of time, AMS estimates the total cost, on average, for the electronic interface development and maintenance to be $672.30 per year. Electronic Submission Development and Annual System Maintenance Cost per Respondent Hours to develop and maintain interface 15 Employee compensation cost per hour × $44.82 Total annual cost per respondent $672.30 * hours required annually to develop and maintain electronic interface between existing company electronic recordkeeping system and AMS required electronic submission format. Additionally, AMS estimates the annual cost per respondent for the storage of the electronic data files submitted to AMS in compliance with the reporting provisions of this rule to be $1,923.10 (see Paperwork Reduction Act section for a full discussion). This estimate includes the cost of electronic data storage media, backup electronic data storage media, and backup software required to maintain an estimated annual electronic recordkeeping and backup burden of 20 megabytes, on average, per respondent. In addition, this estimate includes the cost per employee to maintain such records which is estimated to average 70 hours per year at $21.33 per hour for a total employee compensation component cost of $1,493.10 per year. For this record maintenance activity, AMS estimates the employer costs for employee total compensation per hour to average $21.33, which is the average for all civilian office and administrative support occupations for the second quarter of 2006 according to data from the Bureau of Labor Statistics. Annual Recordkeeping Cost Per Respondent Labor hours per year 70 Labor cost per hour × $21.33 Sub-total labor cost per year $1,493.10 Electronic storage cost * + $430.00 Total Recordkeeping Cost $1,923.10 * includes cost of hard electronic storage (estimated to average 20 Megabytes/year), backup media, backup drive, and backup software. In this rule, information collection requirements include the submission of the required information on a daily and weekly basis in the standard format provided in the following forms:
(1)Live Cattle Daily Report (Current Established Prices),
(2)Live Cattle Daily Report (Committed and Delivered Cattle),
(3)Live Cattle Weekly Report,
(4)Cattle Premiums and Discounts Weekly Report,
(5)Cow/Bull Plant Delivered Bids (Dressed Basis),
(6)Live Cow/Bull Daily Purchase Report,
(7)Boxed Beef Daily Report,
(8)Swine Prior Day Report,
(9)Swine Daily Report,
(10)Swine Noncarcass Merit Premium Weekly Report,
(11)Live Lamb Daily Report (Current Established Prices),
(12)Live Lamb Weekly Report
(13)Live Lamb Weekly Report (Formula Purchases),
(14)Lamb Premiums and Discounts Weekly Report,
(15)Boxed Lamb Daily Report, and
(16)Lamb Carcass Report. Copies of these 16 forms are included in Appendices at the end of this proposed rule. Cattle packers will utilize up to seven of these forms (Appendix A) when reporting information to AMS including two for daily cattle reporting, three for weekly cattle reporting, and one for daily boxed beef cuts reporting. AMS estimates the total data submission cost burden to cattle packers to be $237,734. In comparison, the annual data submission cost burden to cattle packers was estimated at $266,560 in the 2000 final rule, which took effect in April 2001. According to the Bureau of Labor Statistics CPI inflation calculator, $1.00 in 2001 has the same buying power as $1.17 today. More precisely, the inflation factor to convert the average Consumer Price Index for 2001 to the current (May 2007) value is 1.174. In current dollar terms, then, the estimated data submission cost burden to cattle packers under the 2000 final rule equals $312,941. Thus, the total data submission cost burden to cattle packers is estimated at $75,207 less in the proposed rule compared to the 2000 final rule expressed in comparable current dollar terms. Swine packers will utilize up to three forms (Appendix B), two for daily reporting of swine purchases and one for weekly reporting of non-carcass merit premium information. AMS estimates the total data submission cost burden to swine packers to be $153,329. In comparison, the annual data submission cost burden to swine packers was estimated at $166,400 in the 2000 final rule. In current dollar terms using the CPI inflation calculator, the estimated data submission cost burden to swine packers under the 2000 final rule would be $195,354. Thus, the total data submission cost burden to swine packers is estimated at $42,025 less in the proposed rule compared to the 2000 final rule expressed in comparable current dollar terms. Lamb packers will utilize up to six of these forms (Appendix C) when reporting information to AMS including two for daily lamb reporting, three for weekly lamb reporting, one for daily and weekly boxed lamb cuts reporting and one for daily and weekly lamb carcass reporting. Lamb importers will utilize one of these forms when reporting information to AMS for reporting weekly imported boxed lamb cut sales. AMS estimates the total data submission cost burden to lamb packers and lamb importers to be $31,846. In comparison, the annual data submission cost burden to lamb packers and lamb importers was estimated at $48,390 in the 2000 final rule. In current dollar terms using the CPI inflation calculator, the estimated data submission cost burden to lamb packers and lamb importers under the 2000 final rule would be $56,810. Thus, the total data submission cost burden to lamb packers and lamb importers is estimated at $24,964 less in the proposed rule compared to the 2000 final rule expressed in comparable current dollar terms. The cost estimates for the proposed rule are discussed in detail in the Paperwork Reduction Act Section. Breakdown of Estimated Data Submission Cost Burden Form Reporting days × Responses = Total responses I. Number of Responses per Respondent per Year Cattle: LS-113 260 2 daily 520 LS-114 260 2 daily 520 LS-115 52 1 weekly 52 LS-117 52 1 weekly 52 LS-126 260 2 daily 520 LS-131 260 1 daily 260 LS-132 260 1 daily 260 Swine: LS-118 260 1 daily 260 LS-119 260 2 daily 520 LS-120 52 1 weekly 52 Lamb: Domestic: LS-121 260 1 daily 260 LS-123 52 1 weekly 52 LS-124 52 1 weekly 52 LS-125 52 1 weekly 52 LS-128 260 1 daily 260 LS-129 260 1 daily 260 Importer: LS-128 52 1 weekly 52 Form Submissions/year × Hours/ submission = Total hours/year II. Number of Submission Hours per Respondent per Year Cattle: LS-113 520 .17 88.40 LS-114 520 .17 88.40 LS-115 52 .25 13.00 LS-117 52 .08 4.16 LS-126 520 .125 65.00 LS-131 260 .08 20.80 LS-132 260 .17 44.20 Swine: LS-118 260 .25 65.00 LS-119 520 .17 88.40 LS-120 52 .25 13.00 Lamb: Domestic: LS-121 260 .34 88.40 LS-123 52 .25 13.00 LS-124 52 .25 13.00 LS-125 52 .08 4.16 LS-128 260 .167 43.42 LS-129 260 .167 43.42 Importer: LS-128 52 .084 4.37 Form Total hours/year × Cost/hour = Total dollars/year III. Total Submission Cost per Respondent per Year Cattle: LS-113 88.40 $21.33 $1,886 LS-114 88.40 21.33 1,886 LS-115 13.00 21.33 277 LS-117 4.16 21.33 89 LS-126 65.00 21.33 1,386 LS-131 20.80 21.33 444 LS-132 44.20 21.33 943 Totals 323.96 21.33 6,911 Swine: LS-118 65.00 21.33 1,386 LS-119 88.40 21.33 1,886 LS-120 13.00 21.33 277 Totals 166.40 21.33 3,549 Lamb: Domestic: LS-121 88.40 21.33 1,886 LS-123 13.00 21.33 277 LS-124 13.00 21.33 277 LS-125 4.16 21.33 89 LS-128 43.42 21.33 926 LS-129 43.42 21.33 926 Importer: LS-128 4.37 21.33 93 Totals 209.77 21.33 4,474 Form Total dollars/year × Respondents = Total cost IV. Total Yearly Submission Cost for All Respondents Cattle: LS-113 $1,886 34 $64,124 LS-114 1,886 34 64,124 LS-115 277 34 9,418 LS-117 89 34 3,026 LS-126 1,386 48 66,528 LS-131 444 22 9,768 LS-132 943 22 20,746 Subtotal 237,734 Swine: LS-118 1,386 52 72,072 LS-119 1,886 40 75,440 LS-120 277 21 5,817 Subtotal 153,329 Lamb: Domestic: LS-121 1,886 6 11,316 LS-123 277 5 1,385 LS-124 277 5 1,385 LS-125 89 6 534 LS-128 926 10 9,260 LS-129 926 8 7,408 Importer: LS-128 93 6 558 Subtotal 31,846 Grand total 422,909 The total cost burden to packers and importers required to submit information under this proposed rule includes initial startup and annual maintenance costs for electronic submission of data, annual recordkeeping costs, and annual data submission costs. Total reporting costs to cattle packers are estimated to be $7,548 per plant, $5,544 for swine packers, $5,724 for lamb slaughtering plants, and $2,688 for lamb importers. In comparison, total reporting costs in the 2000 final rule were estimated to be $7,420 per plant for cattle packers, $5,308 for swine packers, $7,860 for lamb slaughtering plants, and $2,070 for lamb importers. In current dollar values, however, estimated costs in the 2000 final rule equal $8,711 per plant for cattle packers, $6,232 for swine packers, $9,228 for lamb slaughtering plants, and $2,430 for lamb importers. With the exception of lamb importers, which have an increase of $258, estimated total reporting costs per plant for all respondents are lower in the proposed rule than in the 2000 final rule expressed in comparable current dollar values. Total Annual Cost Burden to Respondents Cost per respondent × Number of respondents = Total cost * Cattle: Startup/Maintenance $ 672 48 $32,256 Recordkeeping 1,923 48 92,304 Data Submission 4,953 48 237,734 362,294 Average Cost per Respondent: $362,294 / 48 = $7,548. Swine: Startup/Maintenance $ 672 52 $ 34,944 Recordkeeping 1,923 52 99,996 Data Submission 2,949 52 153,329 288,269 Average Cost per Respondent: $288,269 / 52 = $5,544. Lamb: Domestic: Startup/Maintenance $ 672 10 $6,720 Recordkeeping 1,923 10 19,230 Data Submission 3,129 10 31,288 57,238 Average Cost per Respondent: $57,238 / 10 = $5,724. Importer: Startup/Maintenance $ 672 6 $ 4,032 Recordkeeping 1,923 6 11,538 Data Submission 93 6 558 16,128 Average Cost per Respondent: $16,128 / 6 = $2,688. Grand total, all species $723,929 * Totals may reflect differences in numerical rounding. In addition to these costs to packers for submitting information, the mandatory price reporting program will cost approximately $6.3 million per fiscal year to the Federal government. The 50 staff years required to administer and produce high quality mandatory price reports include reporters, auditors, clerical personnel, and computer specialists. These employees will be located in three AMS offices located across the country. Salary-related costs are estimated at $4.9 million per year. Other costs include approximately $0.3 million for travel and transportation; and $1.1 million for miscellaneous costs such as office space, utilities, communications costs, printing, training, office supplies, equipment (including computers, software, and licenses), and contractual services necessary to maintain the system. In the 2000 final rule, costs to the Federal government for the program were estimated at $5.9 million for fiscal year 2001, which equals $6.9 million in current dollar value. Thus, estimated costs to the Federal government are $600,000 less in the proposed rule compared to the 2000 final rule expressed in current dollar values. The authority for the Act expires on September 30, 2010. Therefore, this proposed rule would be effective for approximately 4 years (2007-2010). Annual costs for this proposed rulemaking are estimated at approximately $7.0 million per year: $723,929 for respondents to submit and maintain data plus $6.3 million to USDA for operation of the LMR program. At a real discount rate of 3 percent, the discounted present value of the total cost to the private sector and the Federal government for the life of the program would be $26.9 million. Using estimated costs from the 2000 final rule and assuming the same 4-year duration, the comparable discounted present value for the life of the program would be $29.7 million expressed in current dollars. Thus, estimated total program costs are reduced by $2.8 million over the life cycle of the proposed rule in comparison to the 2000 final rule at the 3 percent discount rate. At a real discount rate of 7 percent, the discounted present value of the total cost to the private sector and the Federal government for the life of the program would be $25.5 million. Using estimated costs from the 2000 final rule and assuming the same 4-year duration, the comparable discounted present value for the life of the program would be $28.1 million expressed in current dollars. Estimated total program costs are reduced by more than $2.6 million over the life cycle of the proposed rule in comparison to the 2000 final rule at the 7 percent discount rate. The present values for the 4-year life of the program assume that all costs are incurred at the beginning of each year of the program. Regulatory Flexibility Act *In General.* This proposed rule has been reviewed under the requirements of the Regulatory Flexibility Act
(RFA)(5 U.S.C. 601 *et seq.* ). The purpose of the RFA is to consider the economic impact of a rule on small business entities. Alternatives, which would accomplish the objectives of the rule without unduly burdening small entities or erecting barriers that would restrict their ability to compete in the marketplace, have been evaluated. Regulatory action should be appropriate to the scale of the businesses subject to the action. The collection of information is necessary for the proper performance of the functions of AMS concerning the mandatory reporting of livestock information. The Act requires AMS to collect and publish livestock market information. The required information is only available directly from those entities required to report under these proposed regulations and exists nowhere else. Therefore, this proposed rule does not duplicate market information reasonably accessible to the Agency. *Objectives and Legal Basis.* The objective of this proposed rule is to improve the price and supply reporting services of USDA in order to increase the amount of information available to participants. This is accomplished through the establishment of a program of information regarding the marketing of cattle, swine, lambs, and products of such livestock as specifically directed by the Reauthorization Act and these regulations, as described in detail in the background section. *Estimated Number of Small Businesses.* AMS estimates that approximately 65 firms operating approximately 115 plants will be required to report market information under this proposed rule. AMS estimates that 60 of these firms represent cattle, swine, and sheep slaughtering companies, with approximately 5 additional firms that import lamb carcasses and lamb meat. According to Small Business Administration
(SBA)definitions, a meat packing firm having fewer than 500 employees is a small business. This criterion applies to most of the firms required to report under the proposed rule, including all of the cattle and swine packers. Some of the lamb importers required to report under this proposed rule are brokerage operations that do not slaughter lambs. For meat and meat product merchant wholesalers, the SBA defines a firm having fewer than 100 employees as a small business. In formulating this proposed rule, particular consideration was given to reducing the burden on entities while still achieving the objectives of the rule. Under the proposed rule, thresholds are set that define those entities that are required to report information on purchases of live cattle, swine and lambs, as well as information on domestic and export sales of boxed beef cuts including applicable branded product, and sales of lamb carcasses, boxed lamb cuts including applicable branded product, and imported boxed lamb cuts including applicable branded product. These packers and importers are required to report to AMS the details of all transactions involving purchases of livestock, domestic and export sales of boxed beef cuts including applicable branded product, sales of domestic boxed lamb cuts including applicable branded product, imported boxed lamb cuts including applicable branded product, and lamb carcasses. Cattle and swine information will be reported to AMS according to the schedule directed by this proposed rule with purchases of swine reported three times each day, purchases of cattle twice each day, and sales of domestic and exported boxed beef cuts, including applicable branded product, reported twice each day. Lamb information will be reported to AMS according to the schedule mandated by this rule with purchases of lambs reported once each day and sales of lamb carcasses reported once each day. Previous week sales of imported boxed lamb cuts including applicable branded boxed lamb cuts will be reported once weekly on the first reporting day of the week. In any calendar year, only Federally inspected cattle plants that slaughtered an average of 125,000 head of cattle a year for the immediately preceding 5 calendar years are required to report. Additionally, any Federally inspected cattle plant that did not slaughter cattle during the immediately preceding 5 calendar years is required to report if the Secretary determines that the plant should be considered a packer required to report based on its capacity. For entities that did not slaughter cattle during the immediately preceding 5 calendar years, such as a new plant or existing plant that resumes operations, the AMS will project the plant's annual slaughter or production based upon the plant's estimate of annual slaughter capacity to determine which entities meet the definition of a packer as defined in the law and these proposed regulations. This accounts for an expected 49 out of 636 Federally inspected cattle plants or 7.7 percent of all Federally inspected cattle plants. For any calendar year, any Federally inspected swine plant that slaughtered an average of 100,000 head of swine a year for the immediately preceding 5 calendar years is required to report information, as is any person that slaughtered and average of at least 200,000 sows, boars, or any combination thereof, per year during the immediately preceding 5 calendar years. Additionally, any Federally inspected swine plant or person that did not slaughter swine during the immediately preceding 5 calendar years if the Secretary determines that the plant should be considered a packer based on the capacity of the processing plant is required to report. This accounts for an expected 52 out of 614 Federally inspected swine plants or 8.5 percent of all Federally inspected swine plants. In any calendar year, a Federally inspected lamb plant that slaughtered the equivalent of an average of 75,000 head of lambs a year for the immediately preceding 5 calendar years is considered a packer and required to report. A packer includes a Federally inspected processing plant that purchases and processes an average of 75,000 lamb carcasses annually rather than slaughter live lambs. Additionally, any Federally inspected processing plant that did not slaughter an average of 75,000 lambs during the immediately preceding 5 calendar years if the Secretary determines that the plant should be considered a packer based on the capacity of the processing plant is required to report. This accounts for an expected 10 lamb plants and 6 importers. The expected total of 10 out of 484 lamb plants amounts to 2.1 percent of all Federally inspected lamb plants. For any calendar year, lamb importers that imported an average of 2,500 metric tons of lamb meat products per year during the immediately preceding 5 calendar years are required to report. Additionally, any lamb importer that did not import an average of 2,500 metric tons of lamb meat products during the immediately preceding 5 calendar years if the Secretary determines that the person should be considered an importer based on the volume of lamb imports is required to report. Some lamb plants may also be importers. An estimated 92.3 percent of all Federally inspected cattle plants, 91.5 percent of all Federally inspected swine plants, and 97.9 percent of all Federally inspected lamb plants in the U.S. are exempted by this proposed rule from reporting information. For all livestock species, there were 793 slaughter plants under Federal inspection and 2,060 slaughter plants under other forms of inspection (such as State inspection) on January 1, 2007. Plants that are not under Federal inspection are smaller operations that would be considered small businesses. An estimated 110 livestock slaughter plants will be required to report under this proposed rule. Conversely, 2,743 or 96.1 percent of all livestock plants in the United States would be exempt from mandatory reporting under this proposed rule. According to U.S. Census Bureau Statistics of U.S. Businesses, there were 1,718 animal (except poultry) slaughtering 6 firms with payroll in the United States in 2004. These firms operated 1,816 establishments. Of these concerns, there were 46 firms with 500 employees or more, accounting for 136 establishments. Conversely, there were 1,672 firms with fewer than 500 employees, accounting for 1,680 establishments. 6 North American Industry Classification System (NAICS) code 311611. U.S. Census Bureau 2004 Nonemployer Statistics show that there were 1,921 nonemployer establishments in the animal slaughtering and processing industry (NAICS code 31161), but nonemployer statistics at the more disaggregated NAICS six-digit level are not reported. A nonemployer is a business without paid employees that is subject to federal income tax. Most nonemployers are self-employed individuals operating very small unincorporated businesses. The NASS data on the number of livestock slaughter plants includes businesses with payroll as well as nonemployer firms, but does not report the size of firms nor the number of employees. Therefore, the NASS data provides the most accurate measure of the number of businesses potentially subject to the proposed rule, while the Census Bureau data provide a means for estimating the number of small businesses potentially subject to the proposed rule. The companies required to report under the Act and this proposed rule represent the largest slaughtering operations in each respective species. This proposed rule will require mandatory reporting by an estimated 60 livestock slaughtering firms representing the largest cattle, swine, and sheep slaughtering companies. This fact, coupled with the Statistics of U.S. Businesses data leads to the conclusion that 46 of the livestock slaughtering firms required to report under this proposed rule have 500 employees or more. Therefore, AMS estimates that 14 of the 60 livestock slaughtering firms required to report under this proposed rule are small businesses as defined by SBA. In percentage terms, about 23 percent of the animal slaughtering companies required to report under this proposed rule are small businesses. In terms of the industry, this rule requires reporting by only 0.8 percent of all small businesses in the animal (except poultry) slaughtering industry. Moreover, the firms required to report are the largest of the firms in the industry classified as small businesses. U.S. Census Bureau statistics are not sufficiently disaggregated to enable inferences to be drawn about the small business classification of the lamb carcass and lamb meat importers required to report under the proposed rule. However, based on its knowledge of the industry and previous experience with livestock mandatory reporting, AMS estimates that all of the lamb importers would be classified as small businesses under the SBA size standard of fewer than 100 employees for meat and meat product merchant wholesalers. 7 In combination with the animal slaughtering firms, AMS estimates that a total of 19 firms out of 65 firms required to report under this proposed rule meet the SBA definition for small businesses. In percentage terms, about 29 percent of the firms required to report under this proposed rule would be classified as small businesses. Although classified as small businesses, these firms are the largest firms in their respective specialties. 7 North American Industry Classification System code 424470. *Projected Reporting.* This proposed rule requires the reporting of specific market information regarding the buying and selling of livestock and livestock products. The information will be reported to AMS by electronic means. Electronic reporting involves the transfer of data from a packer's or importer's electronic recordkeeping system to a centrally located AMS electronic database. The packer or importer is required to organize the information in an AMS-approved format before electronically transmitting the information to AMS (Appendices A-C). Once the required information has been entered into the AMS database, it will be aggregated and processed into various market reports which will be released according to the daily and weekly time schedule set forth in these regulations. As an alternative, based on prior experience, AMS found that some of the smaller entities covered under mandatory reporting would benefit from a web-based system for data submission. Accordingly, AMS developed a system that will be available to firms that find it to be more cost effective than developing an electronic interface to submit data to AMS. AMS estimates the total annual burden on each cattle packer and boxed beef processing firm to average $7,548, including $4,953 for annual costs associated with electronically submitting data, $672 for startup/annual maintenance costs, and $1,923 for the storage and maintenance of electronic files that were submitted to AMS. This figure was calculated by estimating the time required to complete the necessary data submission and factoring by the number of times reporting is required per day for an estimated total of 260 reporting days in a year (see Paperwork Reduction Act section for a complete, detailed discussion). Because data submission costs are directly associated with the volume of data submissions, total annual costs for smaller operations likely will be less than the average, while costs for larger operations likely will exceed the average. AMS estimates the total annual burden on each swine packing firm to be $5,544, including $2,949 for annual costs associated with electronically submitting data, $672 for startup/annual maintenance costs, and $1,923 for the storage and maintenance of electronic files that were submitted to AMS. This estimate does not include costs associated with reporting sales of pork products, which are not required to be reported. As with cattle packers, annual costs for smaller swine packing operations likely will be less than the average, while costs for larger operations likely will exceed the average. AMS estimates the total annual burden on each lamb packer to be $5,724 including $3,129 for annual costs associated with electronically submitting data, $672 for startup/annual maintenance costs, and $1,923 for the storage and maintenance of electronic files that were submitted to AMS. AMS estimates the total annual burden on each importer of lamb to be $2,688, including $93 for annual costs associated with electronically submitting data, $672 for startup/annual maintenance costs, and $1,923 for the storage and maintenance of electronic files that were submitted to AMS. *Projected Recordkeeping.* Each packer and importer required to report information to the Secretary must maintain such records as are necessary to verify the accuracy of the information provided to AMS. This includes information regarding price, class, head count, weight, quality grade, yield grade, and other factors necessary to adequately describe each transaction. These records are already kept by the industry. Reporting packers and importers are required by these regulations to maintain and to make available the original contracts, agreements, receipts, and other records associated with any transaction relating to the purchase, sale, pricing, transportation, delivery, weighing, slaughter, or carcass characteristics of all livestock. Reporting packers and importers are also required to maintain copies of the information provided to AMS. All of the above-mentioned paperwork must be kept for at least 2 years. Packers and importers are not required to report any other new or additional information that they do not generally have available or maintain. Further, they are not required to keep any information that would prove unduly burdensome to maintain. The paperwork burden that is imposed on the packers and importers is further discussed in the section entitled Paperwork Reduction Act that follows. In addition, AMS has not identified any relevant Federal rules that are currently in effect that duplicate, overlap, or conflict with this proposed rule. AMS will continue to report market information collected through its voluntary market reporting program provided the collection of such information does not duplicate the information collection requirements of this proposed rule. Professional skills required for recordkeeping under this proposed rule are not different than those already employed by the reporting entities. Reporting will be accomplished using computers or similar electronic means. AMS believes the skills needed to maintain such systems are already in place in those small businesses affected by this proposed rule. *Alternatives.* This proposed rule, as directed by the Reauthorization Act, requires cattle and swine packing plants of a certain size to report information to the Secretary at prescribed times throughout the day and week. Further, lamb slaughter and processing plants and lamb importers of a certain size are required by these proposed regulations to report information to the Secretary at prescribed times throughout the day and week. The Act and these proposed regulations exempt the vast majority of small businesses by the establishment of slaughter, processing, and import capacity thresholds. AMS recognizes that most economic impact of this proposed rule on those small entities required to report involves the manner in which information must be reported to the Secretary. However, in developing this proposed rule, AMS considered other means by which the objectives of this rule could be accomplished, including reporting the required information by telephone, facsimile and regular mail. AMS believes these alternatives are not capable of meeting the program objectives, especially timely reporting. The Reauthorization Act prescribes specific times that reporting entities must report to AMS and similarly prescribes specific times for publication of reports by AMS. AMS believes electronic submission to be the only method capable of allowing AMS to collect, review, process, aggregate and publish reports while complying with the specific time-frames set forth in the Act. To respond to concerns of smaller operations, AMS developed a web-based input forms for submitting data online. Based on prior experience, AMS found that some of the smaller entities covered under mandatory price reporting would benefit from such a web-based submission system. Accordingly, AMS developed such a system for program implementation. Additionally, to further assist small businesses, AMS may provide for an exception to electronic reporting in emergencies, such as power failures or loss of Internet accessibility, or in cases when an alternative is agreeable to AMS and the reporting entity. Other than these alternatives, there are no other practical and feasible alternatives to the methods of data transmission that are less burdensome to small businesses. AMS will work actively with those small businesses required to report to minimize the burden on them to the maximum extent practicable. To assist the industry in achieving compliance with this rule, during the period between publication of this proposed rule and its effective date, AMS will provide assistance and training to covered entities as needed to ensure that they have been given the technical information necessary to comply with the electronic data transmission requirements. Paperwork Reduction Act. In accordance with OMB regulation (5 CFR Part 1320) that implements the Paperwork Reduction Act (44 U.S.C. 3501-3520) (PRA), the information collection requirements associated with this program have been previously approved by OMB and assigned OMB control number 0581-0186. A revised information collection package has been submitted to OMB for approval of a 2,862 hour decrease in total burden hours. In accordance with 5 CFR Part 1320, we have included below a description of the reporting and recordkeeping requirements and an estimate of the annual burden on packers that would be required to report information under this proposed rule. *Title:* Livestock Mandatory Reporting Act of 1999. *OMB Number:* 0581-0186. *Expiration Date:* December 31, 2007. *Type of Request:* Revision of currently approved information collection. *Abstract:* The information collection and recordkeeping requirements in this regulation are essential to operating a mandatory program of livestock and livestock products reporting. Based on the information available, AMS estimates that there are 48 beef packer plants, 52 pork packer plants, 12 lamb packer plants and 6 lamb importers that are required to report market information under this rule (1 lamb entity is both a packer and an importer). These companies have similar recordkeeping systems and business operation practices and conduct their operations in a similar manner. AMS believes that all of the information required under this rule can be collected from existing materials and systems. In addition, most of these firms already have established systems for reporting information to AMS because they were subject to the requirements of the program when it was in effect from April 2, 2001, through September 30, 2005. Moreover, most firms have continued to report data voluntarily to AMS. These firms will have minimal startup costs, requiring only minor modifications of their current data reporting systems to be compatible with the requirements of the proposed rule. The PRA also requires AMS to measure the recordkeeping burden. Under this proposed rule, each packer and importer required to report must maintain and make available upon request for 2 years such records as are necessary to verify the accuracy of the information required to be reported. These records include original contracts, agreements, receipts, and other records associated with any transaction relating to the purchase, sale, pricing, transportation, delivery, weighing, slaughter, or carcass characteristics of all livestock. Under this proposed rule, the electronic data files which the packers are required to utilize when submitting information to AMS will have to be maintained as these files provide the best record of compliance. The recordkeeping burden includes the amount of time needed to store and maintain records. AMS estimates that, since records of original contracts, agreements, receipts, and other records associated with any transaction relating to the purchase, sale, pricing, transportation, delivery, weighing, slaughter, or carcass characteristics of all livestock are stored and maintained as a matter of normal business practice by these companies for a period in excess of 2 years, additional annual costs will be nominal. AMS estimates the annual cost per respondent for the storage of the electronic data files which were submitted to AMS in compliance with the reporting provisions of this rule to be $1,923.10. This estimate includes the cost of electronic data storage media, backup electronic data storage media, and backup software required to maintain an estimated annual electronic recordkeeping and backup burden of 20 megabytes, on average, per respondent. In addition, this estimate includes the cost per employee to maintain such records, which is estimated to average 70 hours per year at $21.33 per hour for a total salary component cost of $1,493.10 per year. Annual Recordkeeping Cost per Respondent Labor hours per year 70 Labor cost per hour × $21.33 Sub-total labor cost per year $1,493.10 Electronic storage cost * + $430.00 Total Recordkeeping Cost $1,923.10 * Includes cost of hard electronic storage (estimated to average 20 Mb/year), backup tape media, backup tape drive, and backup software. In this rule, information collection requirements include the submission of the required information on a daily and weekly basis in the standard format provided in the following forms:
(1)Live Cattle Daily Report (Current Established Prices),
(2)Live Cattle Daily Report (Committed and Delivered Cattle),
(3)Live Cattle Weekly Report,
(4)Cattle Premiums and Discounts Weekly Report,
(5)Cow/Bull Plant Delivered Bids (Dressed Basis),
(6)Live Cow/Bull Daily Purchase Report,
(7)Boxed Beef Daily Report,
(8)Swine Prior Day Report,
(9)Swine Daily Report,
(10)Swine Noncarcass Merit Premium Weekly Report,
(11)Live Lamb Daily Report (Current Established Prices),
(12)Live Lamb Weekly Report,
(13)Live Lamb Weekly Report (Formula Purchases),
(14)Lamb Premiums and Discounts Weekly Report,
(15)Boxed Lamb Daily Report, and
(16)Lamb Carcass Report. Copies of these 16 forms are included in Appendices at the end of this rule. Cattle packers will utilize up to seven of these forms (not all cattle packers must submit all cattle forms) (Appendix A) when reporting information to AMS, including four for daily cattle reporting, two for weekly cattle reporting, and one for daily boxed beef cuts reporting. Swine packers will utilize up to three forms (not all swine packers must submit all swine forms) (Appendix B), two for daily reporting of swine purchases and one for weekly reporting of non-carcass merit premium information. Lamb packers will utilize up to six of these forms (not all lamb packers must submit all lamb forms) (Appendix C) when reporting information to AMS, including one for daily lamb reporting, three for weekly lamb reporting, one for daily and weekly boxed lamb cuts reporting, and one for daily lamb carcass reporting. Lamb importers will utilize one of these forms when reporting information to AMS for reporting weekly imported boxed lamb cut sales. These information collection requirements have been designed to minimize disruption to the normal business practices of the affected entities. Each of these forms requires the minimal amount of information necessary to properly describe each reportable transaction, as required under this proposed rule. The number of forms is a result of an attempt to reduce the complexity of each form. Live Cattle Daily Report (Current Established Prices): Form LS-113 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .17 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on live cattle purchases to the Secretary. *Estimated Number of Respondents:* 34 plants. *Estimated Number of Responses per Respondent:* 520 (2 per day for 260 days). *Estimated Total Annual Burden on Respondents:* 3,006 hours. *Total Cost:* $64,118. Live Cattle Daily Report (Committed and Delivered Cattle): Form LS-114 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .17 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on live cattle purchases to the Secretary. *Estimated Number of Respondents:* 34 plants. *Estimated Number of Responses per Respondent:* 520 (2 per day for 260 days). *Estimated Total Annual Burden on Respondents:* 3,006 hours. *Total Cost:* $64,118. Live Cattle Weekly Report: Form LS-115 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .25 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on live cattle purchases to the Secretary. *Estimated Number of Respondents:* 34 plants. *Estimated Number of Responses per Respondent:* 52 (1 per week for 52 weeks). *Estimated Total Annual Burden on Respondents:* 442 hours. *Total Cost:* $9,428. Cattle Premiums and Discounts Weekly Report: Form LS-117 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .08 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on live cattle purchases to the Secretary. *Estimated Number of Respondents:* 34 plants. *Estimated Number of Responses per Respondent:* 52 (1 per week for 52 weeks). *Estimated Total Annual Burden on Respondents:* 141 hours. *Total Cost:* $3,008. Cow/Bull Plant Delivered Bids (Dressed Basis): Form LS-131 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .08 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on bid prices for cows and bulls to the Secretary. *Estimated Number of Respondents:* 22 plants. *Estimated Number of Responses per Respondent:* 260 (1 per day for 260 days). *Estimated Total Annual Burden on Respondents:* 458 hours. *Total Cost:* $9,769. Live Cow/Bull Daily Purchase Report: Form LS-132 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .17 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on cow and bull purchases to the Secretary. *Estimated Number of Respondents:* 22 plants. *Estimated Number of Responses per Respondent:* 260 (1 per day for 260 days). *Estimated Total Annual Burden on Respondents:* 972 hours. *Total Cost:* $20,733. Boxed Beef Daily Report: Form LS-126 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .125 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on domestic and export boxed beef cut sales to the Secretary. *Estimated Number of Respondents:* 48 plants. *Estimated Number of Responses per Respondent:* 520 (2 per day for 260 days). *Estimated Total Annual Burden on Respondents:* 3,120 hours. *Total Cost:* $66,550. Swine Prior Day Report: Form LS-118 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .25 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on live swine purchases to the Secretary. *Estimated Number of Respondents:* 52 plants. *Estimated Number of Responses per Respondent:* 260 (1 per day for 260 days). *Estimated Total Annual Burden on Respondents:* 3,380 hours. *Total Cost:* $72,095. Swine Daily Report: Form LS-119 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .17 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on live swine purchases to the Secretary. *Estimated Number of Respondents:* 40 plants. *Estimated Number of Responses per Respondent:* 520 (2 per day for 260 days). *Estimated Total Annual Burden on Respondents:* 3,536 hours. *Total Cost:* $75,423. Swine Noncarcass Merit Premium Weekly Report: Form LS-120 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .25 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on live swine purchases to the Secretary. *Estimated Number of Respondents:* 21 plants. *Estimated Number of Responses per Respondent:* 52 (1 per week for 52 weeks). *Estimated Total Annual Burden on Respondents:* 273 hours. *Total Cost:* $5,823. Live Lamb Daily Report (Current Established Prices): Form LS-121 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .34 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on live lamb purchases to the Secretary. *Estimated Number of Respondents:* 6 plants. *Estimated Number of Responses per Respondent:* 260 (1 per day for 260 days). *Estimated Total Annual Burden on Respondents:* 530 hours. *Total Cost:* $11,305. Live Lamb Weekly Report: Form LS-123 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .25 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on live lamb purchases to the Secretary. *Estimated Number of Respondents:* 5 plants. *Estimated Number of Responses per Respondent:* 52 (1 per week for 52 weeks). *Estimated Total Annual Burden on Respondents:* 65 hours. *Total Cost:* $1,386. Live Lamb Weekly Report (Formula Purchases): Form LS-124 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .25 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on live lamb purchases to the Secretary. *Estimated Number of Respondents:* 5 plants. *Estimated Number of Responses per Respondent:* 52 (1 per week for 52 weeks). *Estimated Total Annual Burden on Respondents:* 65 hours. *Total Cost:* $1,386. Lamb Premiums and Discounts Weekly Report: Form LS-125 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .08 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on live lamb purchases to the Secretary. *Estimated Number of Respondents:* 6 plants. *Estimated Number of Responses per Respondent:* 52 (1 per week for 52 weeks). *Estimated Total Annual Burden on Respondents:* 25 hours. *Total Cost:* $533. Boxed Lamb Report: Form LS-128 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .167 hours per electronically submitted response for domestic packing plants and .084 hours per electronically submitted response for importers. *Respondents:* Packer processing plants and importers required to report information on boxed lamb cut sales to the Secretary. *Estimated Number of Respondents:* 16 entities (including 1 entity that both processes and imports). *Estimated Number of Responses per Respondent:* 260 (1 per day for 260 days) for domestic packing plants; 52 (1 per week for 52 weeks) for importers. *Estimated Total Annual Burden on Respondents:* 434 hours for domestic packing plants and 26 hours for importers. *Total Cost:* $9,257 for domestic packing plants and $555 for importers for a total of $9,812. Lamb Carcass Report: Form LS-129 *Estimate of Burden:* Public reporting burden for collection of information is estimated to be .167 hours per electronically submitted response. *Respondents:* Packer processing plants required to report information on lamb carcass sales to the Secretary. *Estimated Number of Respondents:* 8 entities. *Estimated Number of Responses per Respondent:* 260 (1 per day for 260 days). *Estimated Total Annual Burden on Respondents:* 347 hours. *Total Cost:* $7,402. Breakdown of Estimated Data Submission Cost Burden Form Reporting days × Responses = Total responses I. Number of Responses per Respondent per Year Cattle: LS-113 260 2 daily 520 LS-114 260 2 daily 520 LS-115 52 1 weekly 52 LS-117 52 1 weekly 52 LS-126 260 2 daily 520 LS-131 260 1 daily 260 LS-132 260 1 daily 260 Swine: LS-118 260 1 daily 260 LS-119 260 2 daily 520 LS-120 52 1 weekly 52 Lamb: Domestic: LS-121 260 1 daily 260 LS-123 52 1 weekly 52 LS-124 52 1 weekly 52 LS-125 52 1 weekly 52 LS-128 260 1 daily 260 LS-129 260 1 daily 260 Importer: LS-128 52 1 weekly 52 Form Submissions/year × Hours/submission = Total hours/year II. Number of Submission Hours per Respondent per Year Cattle: LS-113 520 .17 88.40 LS-114 520 .17 88.40 LS-115 52 .25 13.00 LS-117 52 .08 4.16 LS-126 520 .125 65.00 LS-131 260 .08 20.80 LS-132 260 .17 44.20 Swine: LS-118 260 .25 65.00 LS-119 520 .17 88.40 LS-120 52 .25 13.00 Lamb: Domestic: LS-121 260 .34 88.40 LS-123 52 .25 13.00 LS-124 52 .25 13.00 LS-125 52 .08 4.16 LS-128 260 .167 43.42 LS-129 260 .167 43.42 Importer: LS-128 52 .084 4.37 Form Total hours/year × Cost/hour = Total dollars/year III. Total Submission Cost per Respondent per Year Cattle: LS-113 88.40 $21.33 $1,886 LS-114 88.40 21.33 1,886 LS-115 13.00 21.33 277 LS-117 4.16 21.33 89 LS-126 65.00 21.33 1,386 LS-131 20.80 21.33 444 LS-132 44.20 21.33 943 Totals 323.96 21.33 6,911 Swine: LS-118 65.00 21.33 1,386 LS-119 88.40 21.33 1,886 LS-120 13.00 21.33 277 Totals 166.40 21.33 3,549 Lamb: Domestic: LS-121 88.40 21.33 1,886 LS-123 13.00 21.33 277 LS-124 13.00 21.33 277 LS-125 4.16 21.33 89 LS-128 43.42 21.33 926 LS-129 43.42 21.33 926 Importer: LS-128 4.37 21.33 93 Totals 209.77 21.33 4,474 Form Total dollars/year × Respondents = Total Cost IV. Total Yearly Submission Cost for All Respondents Cattle: LS-113 $1,886 34 $ 64,124 LS-114 1,886 34 64,124 LS-115 277 34 9,418 LS-117 89 34 3,026 LS-126 1,386 48 66,528 LS-131 444 22 9,768 LS-132 943 22 20,746 Subtotal 237,734 Swine: LS-118 1,386 52 72,072 LS-119 1,886 40 75,440 LS-120 277 21 5,817 Subtotal 153,329 Lamb: Domestic: LS-121 1,886 6 11,316 LS-123 277 5 1,385 LS-124 277 5 1,385 LS-125 89 6 534 LS-128 926 10 9,260 LS-129 926 8 7,408 Importer: LS-128 93 6 558 Subtotal 31,846 Grand total 422,909 *Estimated Total Annual Burden on Respondents by Species:* *Live Cattle and Boxed Beef:* $362,302 including $237,723 for annual costs associated with electronically submitted responses (11,145 annual hours @ $21.33 per hour), electronic submission development and annual system maintenance costs of $32,270 ($672.30 per 48 respondents), and $92,309 ($1,923.10 per 48 respondents) for the storage and maintenance of electronic files that were submitted to AMS. *Live Swine:* $288,302 including $153,341 for annual costs associated with electronically submitted responses (7,189 annual hours @ $21.33 per hour), electronic submission development and annual system maintenance costs of $34,960 ($672.30 per 52 respondents), and $100,001 ($1,923.10 per 52 respondents) for the storage and maintenance of electronic files that were submitted to AMS. *Live Lambs, Boxed Lamb, and Lamb Carcasses:* $83,620 including $57,224 for packers ($31,270 for annual costs associated with electronically submitted responses (1,466 annual hours @ $21.33 per hour), electronic submission development and annual system maintenance costs of $6,723 ($672.30 per 10 respondents), and $19,231 ($1,923.10 per 10 respondents) for the storage and maintenance of electronic files that were submitted to AMS) and $16,128 for importers ($555 for annual costs associated with electronically submitted responses (26 annual hours @ $21.33 per hour), electronic submission development and annual system maintenance costs of $4,034 ($672.30 per 6 respondents), and $11,539 ($1,923.10 per 6 respondents) for the storage and maintenance of electronic files that were submitted to AMS). AMS is committed to complying with the E-Government Act to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services and for other purposes. AMS is inviting comments from all interested parties concerning the information collection and recordkeeping requirements contained in this proposed rule. Comments are specifically invited on:
(1)The accuracy of the Agency's burden estimate of the proposed collection of information including the validity of the methodology and the assumptions used;
(2)ways to minimize the burden of the collection of information on those who would be required to respond, including through the use of appropriate electronic collection methods;
(3)whether the proposed collection of information was sufficient or necessary for the proper performance of the functions of the agency as mandated by the Act; and
(4)ways to enhance the quality, utility, and clarity of the information to be collected. Comments can be submitted on the Internet at: *http://www.regulations.gov* . Written comments can be sent to Warren P. Preston, Chief, Livestock and Grain Market News Branch, Docket No. LS-07-01, 1400 Independence Ave. SW., Room 2619-S, Washington, DC 20250-0252, or by facsimile to (202)-690-3732. All comments received will be posted to Web site at: *http://www.regulations.gov.* Comments that specifically pertain to the information collection and recordkeeping requirements of this action should also be sent to the Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, 725 17th Street, NW., Room 725, Washington, DC 20503, and should reference the date and page number of this issue of the **Federal Register** . All responses to this action will be summarized and included in the request for OMB approval. All comments will become a matter of public record. A 30-day comment period is provided for interested persons to comment on the regulatory provisions of this proposed rule. The 30-day period is deemed appropriate in order to provide a sufficient amount of time to comment while resuming the program's operation under the Act as soon as possible. The comment period for the information collection and recordkeeping requirements contained in this proposed rule is 60 days. List of Subjects in 7 CFR Part 59 Cattle, Hogs, Sheep, Livestock, Lamb. For the reasons set forth in the preamble, it is proposed that Title 7, Chapter I of the Code of Federal Regulations be amended as follows: 1. Part 59 is revised to read as follows: PART 59—LIVESTOCK MANDATORY REPORTING Subpart A—General Provisions Sec. 59.10 General administrative provisions. 59.20 Recordkeeping. 59.30 Definitions. Subpart B—Cattle Reporting 59.100 Definitions. 59.101 Mandatory daily reporting for steers and heifers. 59.102 Mandatory daily reporting for cows and bulls. 59.103 Mandatory weekly reporting for steers and heifers. 59.104 Mandatory reporting of boxed beef sales. Subpart C—Swine Reporting 59.200 Definitions. 59.201 General reporting provisions. 59.202 Mandatory daily reporting for barrows and gilts. 59.203 Mandatory daily reporting for sows and boars. 59.204 Mandatory weekly reporting for swine. Subpart D—Lamb Reporting 59.300 Definitions. 59.301 Mandatory daily reporting for lambs. 59.302 Mandatory weekly reporting for lambs. 59.303 Mandatory reporting of lamb carcasses and boxed lamb. Subpart E—OMB Control Number 59.400 OMB control number assigned pursuant to the Paperwork Reduction Act. Authority: 7 U.S.C. 1635-1636h Subpart A—General Provisions § 59.10 General administrative provisions.
(a)*Reporting by Packers and Importers.* A packer or importer shall report all information required under this Part on an individual lot basis.
(b)*Reporting Schedule.* Whenever a packer or importer is required to report information on transactions of livestock and livestock products under this Part by a set time, all covered transactions up to within one half hour of the reporting deadline shall be reported. Transactions completed during the one half hour prior to the previous reporting time, but not reported in the previous report, shall be reported at the next scheduled reporting time.
(c)*Regional Reporting and Aggregation.* The Secretary shall make information obtained under this Part available to the public only in a manner that:
(1)Ensures that the information is published on a national and a regional or statewide basis as the Secretary determines to be appropriate;
(2)Ensures that the identity of a reporting person or the entity which they represent is not disclosed; and
(3)Market information reported to the Secretary by packers and importers shall be aggregated in such a manner that the market reports issued will not disclose the identity of persons, packers and importers, including parties to a contract and packer's and importer's proprietary information.
(d)*Adjustments.* Prior to the publication of any information required under this Part, the Secretary may make reasonable adjustments in information reported by packers and importers to reflect price aberrations or other unusual or unique occurrences that the Secretary determines would distort the published information to the detriment of producers, packers, or other market participants.
(e)*Reporting of Activities on Weekends and Holidays.* Livestock and livestock products committed to a packer, or importer, or purchased, sold, or slaughtered by a packer or importer on a weekend day or holiday shall be reported to the Secretary in accordance with the provisions of this Part and reported by the Secretary on the immediately following reporting day. A packer shall not be required to report such actions more than once on the immediately following reporting day.
(f)*Reporting Methods.* Whenever information is required to be reported under this Part, it shall be reported by electronic means and shall adhere to a standardized format established by the Secretary to achieve the objectives of this Part, except in emergencies or in cases when an alternative method is agreeable to the entity required to report and AMS. § 59.20 Recordkeeping.
(a)*In General.* Each packer or importer required to report information to the Secretary under the Act and this Part shall maintain for 2 years and make available to the Secretary the following information on request:
(1)The original contracts, agreements, receipts, and other records associated with any transaction relating to the purchase, sale, pricing, transportation, delivery, weighing, slaughter, or carcass characteristics of all livestock or livestock products; and
(2)Such records or other information as is necessary or appropriate to verify the accuracy of the information required to be reported under the Act and this Part.
(b)*Purchases of Cattle and Swine and Sales of Boxed Beef Cuts.* A record of a purchase of a lot of cattle or swine, or a sale of a unit of boxed beef cuts, by a packer shall evidence whether the purchase or sale occurred:
(1)Before 10 a.m. central time;
(2)Between 10 a.m. and 2 p.m. central time; or
(3)After 2 p.m. central time.
(c)*Purchases of Lambs.* A record of a purchase of a lot of lambs by a packer shall evidence whether the purchase occurred:
(1)Before 2 p.m. central time; or
(2)After 2 p.m. central time.
(d)*Sales of Lamb Carcasses and Sales of Boxed Lamb Cuts.* A record of a sale by a packer of lamb carcasses and cuts, shall evidence time and date the sale occurred:
(1)Before 2 p.m. central time; or
(2)After 2 p.m. central time. A record of sale by an importer of lamb cuts shall evidence the date the sale occurred.
(e)*Reporting Sales of Boxed Beef Cuts and Sales of Boxed Lamb Cuts.*
(1)Beef packers must report all sales of boxed beef items by the applicable Institutional Meat Purchase Specifications
(IMPS)item number or the boxed beef items' cutting and trimming specifications.
(3)Lamb packers and importers must report all sales of boxed lamb items by the applicable Institutional Meat Purchase Specifications
(IMPS)item number or the boxed lamb items' cutting and trimming specifications. § 59.30 Definitions. The following definitions apply to this part. *Act.* The term “Act” means Subtitle B of the Agricultural Marketing Act of 1946, as amended; 7 U.S.C. 1635-1636h. *Base price.* The term ‘base price’ means the price paid for livestock, delivered at the packing plant, before application of any premiums or discounts, expressed in dollars per hundred pounds of hot carcass weight. *Basis level.* The term ‘basis level’ means the agreed on adjustment to a future price to establish the final price paid for livestock. *Current slaughter week.* The term ‘current slaughter week’ means the period beginning Monday, and ending Sunday, of the week in which a reporting day occurs. *Discount.* The term ‘discount’ means the adjustment, expressed in dollars per one hundred pounds, subtracted from the base price due to weight, quality characteristics, yield characteristics, livestock class, dark cutting, breed, dressing percentage, or other characteristic. *Exported.* The term ‘exported’ means livestock or livestock products that are physically shipped to locations outside of the 50 States. *F.O.B.* The term ‘F.O.B.’ means free on board, regardless of the mode of transportation, at the point of direct shipment by the seller to the buyer (e.g., F.O.B. Plant, F.O.B. Feedlot). *Imported.* The term ‘imported’ means livestock that are raised to slaughter weight outside of the 50 States or livestock products produced outside of the 50 States. *Institutional Meat Purchase Specifications.* Specifications describing various meat cuts, meat products, and meat food products derived from all livestock species, commonly abbreviated “IMPS”, and intended for use by any meat procuring activity. Copies of the IMPS may be obtained from the U.S. Department of Agriculture, Agricultural Marketing Service, Livestock and Seed Program located at Room 2603 South Building, 1400 Independence Ave, SW., Washington, DC 20250. Phone
(202)720-4486 or Fax
(202)720-1112. Copies may also be obtained over the Internet at: *http://www.ams.usda.gov/lsg/stand/st-pubs.htm.* *Livestock.* The term ‘livestock’ means cattle, swine, and lambs. *Lot.*
(1)When used in reference to livestock, the term ‘lot’ means a group of one or more livestock that is identified for the purpose of a single transaction between a buyer and a seller;
(2)When used in reference to lamb carcasses, the term ‘lot’ means a group of one or more lamb carcasses sharing a similar weight range category and comprising a single transaction between a buyer and seller; or
(3)When used in reference to boxed beef and lamb, the term ‘lot’ means a group of one or more boxes of beef or lamb items sharing cutting and trimming specifications and comprising a single transaction between a buyer and seller. *Marketing.* The term ‘marketing’ means the sale or other disposition of livestock, livestock products, or meat or meat food products in commerce. *Negotiated purchase.* The term ‘negotiated purchase’ means a cash or spot market purchase by a packer of livestock from a producer under which the base price for the livestock is determined by seller-buyer interaction. The livestock are scheduled for delivery to the packer not more than 14 days after the date on which the livestock are committed to the packer. *Negotiated grid purchase.* The term ‘negotiated grid purchase’ in reference to cattle means the negotiation of a base price determined by seller-buyer interaction from which premiums are added and discounts are subtracted. The livestock are scheduled for delivery to the packer not more than 14 days after the date on which the livestock are committed to the packer. *Negotiated sale.* The term ‘negotiated sale’ means a cash or spot market sale by a producer of livestock to a packer under which the base price for the livestock is determined by seller-buyer interaction. The livestock are scheduled for delivery to the packer not later than 14 days after the date on which the livestock are committed to the packer. When used in reference to sales of boxed beef or lamb cuts or lamb carcasses the term ‘negotiated sale’ means a sale by a packer selling boxed beef or lamb cuts or lamb carcasses to a buyer of boxed beef or lamb cuts or lamb carcasses under which the price for the boxed beef or lamb cuts or lamb carcasses is determined by seller-buyer interaction. *Origin.* The term ‘origin’ means the State where the livestock were fed to slaughter weight. *Percent lean.* The term ‘percent lean’ means the value equal to the average percentage of the carcass weight comprised of lean meat. *Person.* The term ‘person’ means any individual, group of individuals, partnership, corporation, association, or other entity. *Premium.* The term ‘premium’ means the adjustment, expressed in dollars per one hundred pounds, added to the base price due to weight, quality characteristics, yield characteristics, livestock class, and breed. *Priced.* The term ‘priced’ means the time when the final price is determined either through buyer-seller interaction and agreement or as a result of some other price determining method. *Prior slaughter week.* The term ‘prior slaughter week’ means the Monday through Sunday prior to a reporting day. *Producer.* The term ‘producer’ means any person engaged in the business of selling livestock to a packer for slaughter (including the sale of livestock from a packer to another packer). *Purchased.* The term ‘purchased’ means the agreement on a price, or the method for calculating a price, determined through buyer-seller interaction and agreement. *Reporting day.* The term ‘reporting day’ means a day on which a packer conducts business regarding livestock committed to the packer, or livestock purchased, sold, or slaughtered by the packer; the Secretary is required to make such information available to the public; and the Department of Agriculture is open to conduct business. *Secretary.* The term ‘Secretary’ means the Secretary of Agriculture of the United States or any other officer or employee of the Department of Agriculture to whom authority has been delegated or may hereafter be delegated to act in the Secretary's stead. *State.* The term ‘State’ means each of the 50 States. Subpart B—Cattle Reporting § 59.100 Definitions. The following definitions apply to this subpart. *Boxed Beef.* The term ‘boxed beef’ means those carlot-based portions of a beef carcass including fresh and frozen primals, subprimals, cuts fabricated from subprimals (excluding portion-control cuts such as chops and steaks similar to those portion cut items described in the Institutional Meat Purchase Specifications
(IMPS)for Fresh Beef Products Series 100), thin meats ( *e.g.* inside and outside skirts, pectoral meat, cap and wedge meat, and blade meat), and fresh and frozen ground beef, beef trimmings, and boneless processing beef. *Branded.* The term ‘branded’ means boxed beef cuts produced and marketed under a corporate trademark (for example, products that are marketed on their quality, yield, or breed characteristics), or boxed beef cuts produced and marketed under one of USDA's Meat Grading and Certification Branch, Certified Beef programs. *Carcass characteristics.* The term ‘carcass characteristics’ means the range and average carcass weight in pounds, the quality grade and yield grade (if applicable), and the average cattle dressing percentage. *Carlot-based.* The term ‘carlot-based’ means any transaction between a buyer and a seller destined for two or less delivery stops consisting of one or more individual boxed beef items. When used in reference to cow and bull boxed beef items, the term ‘carlot-based’ means any transaction between a buyer and seller consisting of 5,000 pounds or more of one or more individual items. *Cattle committed.* The term ‘cattle committed’ means cattle that are scheduled to be delivered to a packer within the 7-day period beginning on the date of an agreement to sell the cattle. *Cattle type.* The term ‘cattle type’ means the following types of cattle purchased for slaughter:
(1)Fed steers;
(2)Fed heifers;
(3)Fed Holsteins and other fed dairy steers and heifers;
(4)Cows; and
(5)Bulls. *Established.* The term ‘established’, when used in connection with prices, means that point in time when the buyer and seller agree upon a net price. *Formula marketing arrangement.*
(1)When used in reference to live cattle, the term ‘formula marketing arrangement’ means the advance commitment of cattle for slaughter by any means other than through a negotiated purchase or a forward contract, using a method for calculating price in which the price is determined at a future date.
(2)When used in reference to boxed beef, the term ‘formula marketing arrangement’ means the advance commitment of boxed beef by any means other than through a negotiated purchase or a forward contract, using a method for calculating price in which the price is determined at a future date. *Forward contract.*
(1)When used in reference to live cattle, the term ‘forward contract’ means an agreement for the purchase of cattle, executed in advance of slaughter, under which the base price is established by reference to prices quoted on the Chicago Mercantile Exchange, or other comparable publicly available prices.
(2)When used in reference to boxed beef, the term ‘forward contract’ means an agreement for the sale of boxed beef, executed in advance of manufacture, under which the base price is established by reference to publicly available quoted prices. *Packer.* The term ‘packer’ means any person engaged in the business of buying cattle in commerce for purposes of slaughter, of manufacturing or preparing meats or meat food products from cattle for sale or shipment in commerce, or of marketing meats or meat food products from cattle in an unmanufactured form acting as a wholesale broker, dealer, or distributor in commerce. For any calendar year, the term ‘packer’ includes only a federally inspected cattle processing plant that slaughtered an average of 125,000 head of cattle per year during the immediately preceding 5 calendar years. Additionally, in the case of a cattle processing plant that did not slaughter cattle during the immediately preceding 5 calendar years, it shall be considered a packer if the Secretary determines the processing plant should be considered a packer under this subpart after considering its capacity. *Packer-owned cattle.* The term ‘packer-owned cattle’ means cattle that a packer owns for at least 14 days immediately before slaughter. *Prices for cattle.* The term ‘prices for cattle’ includes the price per hundredweight; the purchase type; the quantity on a live and a dressed weight basis; the estimated live weight range; the average live weight; the estimated percentage of cattle of a USDA quality grade Choice or better; beef carcass classification; any premiums or discounts associated with weight, quality grade, yield grade, or type of purchase; cattle State of origin; estimated cattle dressing percentage; and price basis as F.O.B. feedlot or delivered at the plant. *Terms of trade.* The term ‘terms of trade’ means, with respect to the purchase of steers and heifers for slaughter:
(1)Whether a packer provided any financing agreement or arrangement with regard to the steers and heifers;
(2)Whether the delivery terms specified the location of the producer or the location of the packer's plant;
(3)Whether the producer is able to unilaterally specify the date and time during the business day of the packer that the cattle are to be delivered for slaughter; and
(4)The percentage of steers and heifers purchased by a packer as a negotiated purchase that are scheduled to be delivered to the plant for slaughter not later than 14 days and the percentage of slaughter steers and heifers purchased by a packer as a negotiated purchase that are scheduled to be delivered to the plant for slaughter more than 14 days, but fewer than 30 days. *Type of purchase.* The term ‘type of purchase’ with respect to cattle, means a negotiated purchase, negotiated grid purchase, a formula market arrangement, and a forward contract. *Type of sale.* The term ‘type of sale’ with respect to boxed beef, means a negotiated sale, a formula market arrangement, and a forward contract. *White cow.* Cow on a ration that tends to produce white fat. § 59.101 Mandatory daily reporting for steers and heifers.
(a)*In General.* The corporate officers or officially designated representatives of each steer and heifer packer processing plant shall report to the Secretary at least two times each reporting day not later than 10 a.m. central time and not later than 2 p.m. central time the following information, inclusive since the last reporting, categorized to clearly delineate domestic from imported market purchases as described in 59.10(b).
(1)The prices for cattle (per hundredweight) established on that day, categorized by:
(i)The type of purchase;
(ii)The quantity of cattle purchased on a live weight basis;
(iii)The quantity of cattle purchased on a dressed weight basis;
(iv)The estimated weights of cattle purchased;
(v)An estimate of the percentage of the cattle purchased that were of a quality grade of Choice or better; and
(vi)Any premiums or discounts associated with weight, quality grade, yield grade, or other characteristic expressed in dollars per hundredweight on a dressed basis.
(2)The quantity of cattle delivered to the packer (quoted in numbers of head) on that day, categorized by:
(i)The type of purchase;
(ii)The quantity of cattle delivered on a live weight basis; and
(iii)The quantity of cattle delivered on a dressed weight basis.
(3)The quantity of cattle committed to the packer (quoted in numbers of head) as of that day, categorized by:
(i)The type of purchase;
(ii)The quantity of cattle committed on a live weight basis; and
(iii)The quantity of cattle committed on a dressed weight basis.
(4)The terms of trade regarding the cattle, as applicable.
(b)*Publication.* The Secretary shall make the information available to the public not less frequently than three times each reporting day. § 59.102 Mandatory daily reporting for cows and bulls.
(a)*In General.* The corporate officers or officially designated representatives of each cow and bull packer processing plant shall report to the Secretary each reporting day the following information for each cattle type, inclusive since the last reporting, categorized to clearly delineate domestic from imported market purchases as described in § 59.10(b).
(1)The base bid price (per hundredweight) intended to be paid for slaughter cow and bull carcasses on that day not later than 10 a.m. central time categorized by:
(i)Weight; and
(ii)For slaughter cows, percent lean (e.g., breaker, boner, cutter (lean)).
(2)The prices for cattle (per hundredweight) purchased during the previous day not later than 2 p.m. central time categorized by:
(i)The type of purchase;
(ii)The quantity of cattle purchased on a live weight basis;
(iii)The quantity of cattle purchased on a dressed weight basis;
(iv)The estimated weight of the cattle purchased;
(v)The quality classification; and
(vi)Any premiums or discounts associated with weight or quality expressed in dollars per hundredweight on a dressed basis.
(3)The volume of cows and bulls slaughtered the previous day.
(b)*Publication.* The Secretary shall make the information available to the public within one hour of the required reporting time on the reporting day on which the information is received from the packer. § 59.103 Mandatory weekly reporting for steers and heifers.
(a)*In General.* The corporate officers or officially designated representatives of each steer and heifer packer processing plant shall report to the Secretary on the first reporting day of each week, not later than 9 a.m. central time, the following information applicable to the prior slaughter week, categorized to clearly delineate domestic from imported market purchases:
(1)The quantity of cattle purchased through a negotiated basis that were slaughtered;
(2)The quantity of cattle purchased through a negotiated grid basis that were slaughtered;
(3)The quantity of cattle purchased through forward contracts that were slaughtered;
(4)The quantity of cattle delivered under a formula marketing arrangement that were slaughtered;
(5)The quantity and carcass characteristics of packer-owned cattle that were slaughtered;
(6)The quantity, basis level, basis level month, and delivery month and year for all cattle purchased through forward contracts;
(7)The range and average of intended premiums and discounts (including those associated with weight, quality grade, yield grade, or type of cattle) that are expected to be in effect for the current slaughter week.
(b)*Publication.* The Secretary shall make available to the public the information obtained under paragraph
(a)of this section on the first reporting day of the current slaughter week by 10 a.m. central time. § 59.104 Mandatory reporting of boxed beef sales.
(a)*Daily Reporting.* The corporate officers or officially designated representatives of each packer processing plant shall report to the Secretary at least twice each reporting day (once by 10 a.m. central time, and once by 2 p.m. central time) the following information on total boxed beef domestic and export sales established on that day inclusive since the last reporting as described in § 59.10(b):
(1)The price for each lot of each boxed beef sale, quoted in dollars per hundredweight on a F.O.B. plant basis;
(2)The quantity for each lot of each sale, quoted by number of pounds sold; and
(3)The information regarding the characteristics of each sale is as follows:
(i)The type of sale;
(ii)The branded product characteristics, if applicable;
(iii)The grade for steer and heifer beef (e.g., USDA Prime, USDA Choice or better, USDA Choice, USDA Select, ungraded no-roll product);
(iv)The grade for cow beef or packer yield and/or quality sort for cow beef (e.g., Breakers, Boners, White Cow, Cutters (lean));
(v)The cut of beef, referencing the most recent version of the Institutional Meat Purchase Specifications (IMPS), when applicable;
(vi)The trim specification;
(vii)The weight range of the cut;
(viii)The product delivery period; and
(ix)The beef type (steer/heifer, dairy steer/heifer, or cow).
(b)*Publication.* The Secretary shall make available to the public the information obtained under paragraph
(a)of this section not less frequently than twice each reporting day. Subpart C—Swine Reporting § 59.200 Definitions. The following definitions apply to this subpart. *Affiliate.* The term ‘affiliate’, with respect to a packer, means:
(1)A person that directly or indirectly owns, controls, or holds with power to vote, 5 percent or more of the outstanding voting securities of the packer;
(2)A person 5 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by the packer; and
(3)A person that directly or indirectly controls, or is controlled by or under common control with, the packer. *Applicable reporting period.* The term ‘applicable reporting period’ means the period of time prescribed by the prior day report, the morning report, and the afternoon report, as provided in § 59.202. *Average carcass weight.* The term ‘average carcass weight’ means the weight obtained by dividing the total carcass weight of the swine slaughtered at the packing plant during the applicable reporting period by the number of these same swine. *Average lean percentage.* The term ‘average lean percentage’ means the value equal to the average percentage of the carcass weight comprised of lean meat for the swine slaughtered during the applicable reporting period. Whenever the packer changes the manner in which the average lean percentage is calculated, the packer shall make available to the Secretary the underlying data, applicable methodology and formulae, and supporting materials used to determine the average lean percentage, which the Secretary may convert either to the carcass measurements or lean percentage of the swine of the individual packer to correlate to a common percent lean measurement. *Average net price.* The term ‘average net price’ means the quotient (stated per hundred pounds of carcass weight of swine) obtained by dividing the total amount paid for the swine slaughtered at a packing plant during the applicable reporting period (including all premiums and less all discounts) by the total carcass weight of the swine (in hundred pound increments). *Average sort loss.* The term ‘average sort loss’ means the average discount (in dollars per hundred pounds carcass weight) for swine slaughtered during the applicable reporting period, resulting from the fact that the swine did not fall within the individual packer's established carcass weight range or lot variation range. *Backfat.* The term ‘backfat’ means the fat thickness (in inches) measured between the third and fourth rib from the last rib, 7 centimeters from the carcass split (or adjusted from the individual packer's measurement to that reference point using an adjustment made by the Secretary) of the swine slaughtered during the applicable reporting period. *Barrow.* The term ‘barrow’ means a neutered male swine, with the neutering performed before the swine reached sexual maturity. *Base market hog.* The term ‘base market hog’ means a barrow or gilt for which no discounts are subtracted from and no premiums are added to the base price. *Base price.* The term ‘base price’ means the price from which no discounts are subtracted and no premiums are added. *Boars.* The term ‘boar’ means a sexually-intact male swine. *Bred female swine.* The term ‘bred female swine’ means any female swine, whether a sow or gilt, that has been mated or inseminated, or has been confirmed, to be pregnant. *Formula price.* The term ‘formula price’ means a price determined by a mathematical formula under which the price established for a specified market serves as the basis for the formula. *Gilt.* The term ‘gilt’ means a young female swine that has not produced a litter. *Hog Class.* The term ‘hog class’ means, as applicable, barrows or gilts; sows; or boars or stags. *Inferior hogs.* The term ‘inferior hogs’ means swine that are discounted in the market place due to light-weight, health, or physical conditions that affects their value. *Loin depth.* The term ‘loin depth’ means the muscle depth (in inches) measured between the third and fourth ribs from the last rib, 7 centimeters from the carcass split (or adjusted from the individual packer's measurement to that reference point using an adjustment made by the Secretary) of the swine slaughtered during the applicable reporting period. *Net price.* The term ‘net price’ means the total amount paid by a packer to a producer (including all premiums, less all discounts) per hundred pounds of carcass weight of swine delivered at the plant. The total amount paid shall include any sum deducted from the price (per hundredweight) paid to a producer that reflects the repayment of a balance owed by the producer to the packer or the accumulation of a balance to later be repaid by the packer to the producer. The total amount paid shall exclude any sum earlier paid to a producer that must be repaid to the packer. *Noncarcass merit premium.* The term ‘noncarcass merit premium’ means an increase in the base price of the swine offered by an individual packer or packing plant, based on any factor other than the characteristics of the carcass, if the actual amount of the premium is known before the sale and delivery of the swine. *Other market formula purchase.* The term ‘other market formula purchase’ means a purchase of swine by a packer in which the pricing mechanism is a formula price based on any market other than the market for swine, pork, or a pork product. The term ‘other market formula purchase’ includes a formula purchase in a case which the price formula is based on 1 or more futures or options contracts. *Other purchase arrangement.* The term ‘other purchase arrangement’ means a purchase of swine by a packer that is not a negotiated purchase, swine or pork market formula purchase, or other market formula purchase; and does not involve packer-owned swine. *Packer.* The term ‘packer’ means any person engaged in the business of buying swine in commerce for purposes of slaughter, of manufacturing or preparing meats or meat food products from swine for sale or shipment in commerce, or of marketing meats or meat food products from swine in an unmanufactured form acting as a wholesale broker, dealer, or distributor in commerce. For any calendar year, the term ‘packer’ includes only a federally inspected swine processing plant that slaughtered an average of 100,000 head of swine per year during the immediately preceding 5 calendar years and a person that slaughtered an average of 200,000 head of sows, boars, or combination thereof per year during the immediately preceding 5 calendar years. Additionally, in the case of a swine processing plant or person that did not slaughter swine during the immediately preceding 5 calendar years, it shall be considered a packer if the Secretary determines the processing plant or person should be considered a packer under this subpart after considering its capacity. *Packer-owned swine.* The term ‘packer-owned swine’ means swine that a packer (including a subsidiary or affiliate of the packer) owns for at least 14 days immediately before slaughter. *Packer-sold swine.* The term ‘packer-sold swine’ means the swine that are owned by a packer (including a subsidiary or affiliate of the packer) for more than 14 days immediately before sale for slaughter; and sold for slaughter to another packer. *Pork.* The term ‘pork’ means the meat of a porcine animal. *Pork product.* The term ‘pork product’ means a product or byproduct produced or processed in whole or in part from pork. *Purchase data.* The term ‘purchase data’ means all of the applicable data, including base price and weight (if purchased live), for all swine purchased during the applicable reporting period, regardless of the expected delivery date of the swine, reported by:
(1)Hog class;
(2)Type of purchase; and
(3)Packer-owned swine. *Slaughter data.* The term `slaughter data' means all of the applicable data for all swine slaughtered by a packer during the applicable reporting period, regardless of whether the price of the swine was negotiated or otherwise determined, reported by:
(1)Hog class;
(2)Type of purchase; and
(3)Packer-owned swine. *Sow.* The term `sow' means an adult female swine that has produced 1 or more litters. *Stag.* The term `stag' means a male swine that was neutered after reaching sexual maturity. *Swine.* The term `swine' means a porcine animal raised to be a feeder pig, raised for seedstock, or raised for slaughter. *Swine committed.* The term `swine committed' means swine scheduled and delivered to a packer within the 14-day period beginning on the date of an agreement to sell the swine. *Swine or pork market formula purchase.* The term `swine or pork market formula purchase' means a purchase of swine by a packer in which the pricing mechanism is a formula price based on a market for swine, pork, or a pork product, other than a future or option for swine, pork, or a pork product. *Type of purchase.* The term ‘type of purchase,’ with respect to swine, means:
(1)A negotiated purchase;
(2)Other market formula purchase;
(3)A swine or pork market formula purchase; and
(4)Other purchase arrangement. § 59.201 General reporting provisions.
(a)*Packer-Owned Swine.* Information required under this section for packer-owned swine shall include quantity and carcass characteristics, but not price.
(b)*Type of Purchase.* If information regarding the type of purchase is required under this section, the information shall be reported according to the numbers and percentages of each type of purchase comprising:
(1)Packer-sold swine; and
(2)All other swine. § 59.202 Mandatory daily reporting for barrows and gilts.
(a)*Prior Day Report.* The corporate officers or officially designated representatives of each packer that processes barrows and gilts shall report to the Secretary for each business day of the packer not later than 7 a.m. central time on each reporting day information regarding all barrows and gilts purchased or priced, during the prior business day of the packer, and not later than 9 a.m. central time on each reporting day information regarding all barrows and gilts slaughtered, excluding inferior swine, as specified in § 59.10(b):
(1)All purchase data, reported by lot, including:
(i)The total number of barrows and gilts purchased;
(ii)The total number of barrows and gilts scheduled for delivery to a packer for slaughter;
(iii)The base price and weight for all barrows and gilts purchased on a live weight basis; and
(iv)The base price and premiums and discounts paid for carcass characteristics for all barrows and gilts purchased on a carcass basis for which a price has been established. For barrows and gilts that were not priced, this information shall be reported on the next prior day report after the price is established.
(2)The following slaughter data for the total number of barrows and gilts slaughtered:
(i)The average net price;
(ii)The average carcass weight;
(iii)The average sort loss;
(iv)The average backfat;
(v)The average loin depth;
(vi)The average lean percentage; and
(vii)Total quantity slaughtered.
(3)Packer purchase commitments, which shall be equal to the number of barrows and gilts scheduled for delivery to a packer for slaughter for each of the next 14 calendar days.
(4)The Secretary shall publish the information obtained under this paragraph
(a)in a prior day report not later than 8 a.m. central time for all barrows and gilts purchased and 10 a.m. central time for all barrows and gilts slaughtered on the reporting day on which the information is received from the packer. In addition, the Secretary shall publish a net price distribution for all barrows and gilts slaughtered on the previous day not later than 3 p.m. central time.
(b)*Morning Report.* The corporate officers or officially designated representatives of each packer processing plant that processes barrows and gilts shall report to the Secretary not later than 10 a.m. central time each reporting day as described in § 59.10(b):
(1)The packer's best estimate of the total number of barrows and gilts, and barrows and gilts that qualify as packer-owned swine, expected to be purchased throughout the reporting day through each type of purchase;
(2)The total number of barrows and gilts, and barrows and gilts that qualify as packer-owned swine, purchased up to that time of the reporting day through each type of purchase;
(3)All purchase data for base market hogs purchased up to that time of the reporting day through negotiated purchases; and
(4)All purchase data for base market hogs purchased through each type of purchase other than negotiated purchase up to that time of the reporting day, unless such information is unavailable due to pricing that is determined on a delayed basis. The packer shall report information on such purchases on the first reporting day or scheduled reporting time on a reporting day after the price has been determined.
(5)The Secretary shall publish the information obtained under this paragraph
(b)in the morning report as soon as practicable, but not later than 11 a.m. central time, on each reporting day.
(c)*Afternoon Report.* The corporate officers or officially designated representatives of each packer processing plant that processes barrows and gilts shall report to the Secretary not later than 2 p.m. central time each reporting day as described in § 59.10(b):
(1)The packer's best estimate of the total number of barrows and gilts, and barrows and gilts that qualify as packer-owned swine expected to be purchased throughout the reporting day through each type of purchase;
(2)The total number of barrows and gilts, and barrows and gilts that qualify as packer-owned swine, purchased up to that time of the reporting day through each type of purchase;
(3)The base price paid for all base market hogs purchased up to that time of the reporting day through negotiated purchases; and
(4)The base price paid for all base market hogs purchased through each type of purchase other than negotiated purchase up to that time of the reporting day, unless such information is unavailable due to pricing that is determined on a delayed basis. The packer shall report information on such purchases on the first reporting day or scheduled reporting time on a reporting day after the price has been determined.
(5)The Secretary shall publish the information obtained under this paragraph
(c)in the afternoon report as soon as practicable, but not later than 3 p.m. central time, on each reporting day. § 59.203 Mandatory daily reporting for sows and boars.
(a)*Prior Day Report.* The corporate officers or officially designated representatives of each packer of sows and boars shall report to the Secretary for each business day of the packer not later than 7 a.m. central time on each reporting day information regarding all sows and boars purchased or priced, excluding inferior swine, during the prior business day of the packer. All purchase data, reported by lot, including:
(1)The total number of sows and boars purchased divided into at least three weight groups as specified by the Secretary;
(2)The average price paid by each purchase type for all sows in each weight class specified by the Secretary; and
(3)The average price paid by each purchase type for all boars in each weight class specified by the Secretary.
(4)The packer is required to report only the volume of sows and boars that qualify as packer owned swine and shall omit packer owned sows and boars from all average price calculations.
(5)The Secretary shall publish the information obtained under this paragraph
(a)as soon as practicable, but not later than 8 a.m. central time, on the reporting day on which the information is received from the packer.
(b)[Reserved] § 59.204 Mandatory weekly reporting for swine.
(a)*Weekly Noncarcass Merit Premium Report.* Not later than 4 p.m. central time in accordance with § 59.10(b) on the first reporting day of each week, the corporate officers or officially designated representatives of each packer processing plant shall report to the Secretary a noncarcass merit premium report that lists:
(1)Each category of standard noncarcass merit premiums used by the packer in the prior slaughter week; and
(2)The dollar value (in dollars per hundred pounds of carcass weight) paid to producers by the packer, by category.
(b)*Premium List.* A packer shall maintain and make available to a producer, on request, a current listing of the dollar values (per hundred pounds of carcass weight) of each noncarcass merit premium used by the packer during the current or the prior slaughter week.
(c)*Publication.* The Secretary shall publish the information obtained under this subsection as soon as practicable, but not later than 5 p.m. central time, on the first reporting day of each week. Subpart D—Lamb Reporting § 59.300 Definitions. The following definitions apply to this subpart. *Boxed Lamb.* The term `boxed lamb' means those carlot-based portions of a lamb carcass including fresh primals, subprimals, cuts fabricated from subprimals (excluding portion-control cuts such as chops and steaks similar to those portion cut items described in the Institutional Meat Purchase Specifications
(IMPS)for Fresh Lamb and Mutton Series 200, and thin meats (e.g. inside and outside skirts, pectoral meat, cap and wedge meat, and blade meat) not older than 14 days from date of manufacture; fresh ground lamb, lamb trimmings, and boneless processing lamb not older than 7 days from date of manufacture; frozen primals, subprimals, cuts fabricated from subprimals, and thin meats not older than 180 days from date of manufacture; and frozen ground lamb, lamb trimmings, and boneless processing lamb not older than 90 days from date of manufacture. *Branded.* The term `branded' means boxed lamb cuts produced and marketed under a corporate trademark (for example, products that are marketed on their quality, yield, or breed characteristics), or boxed lamb cuts produced and marketed under one of USDA's Meat Grading and Certification Branch, Certified programs. *Carcass characteristics.* The term `carcass characteristics' means the range and average carcass weight in pounds, the quality grade and yield grade (if applicable), and the lamb average dressing percentage. *Carlot-based.* The term `carlot-based' means any transaction between a buyer and a seller destined for three or less delivery stops consisting of any combination of carcass weights. When used in reference to boxed lamb cuts the term `carlot-based' means any transaction between a buyer and seller consisting of 1,000 pounds or more of one or more individual boxed lamb items. *Established.* The term `established', when used in connection with prices, means that point in time when the buyer and seller agree upon a net price. *Formula marketing arrangement.*
(1)When used in reference to live lambs, the term `formula marketing arrangement' means the advance commitment of lambs for slaughter by any means other than through a negotiated purchase or a forward contract, using a method for calculating price in which the price is determined at a future date.
(2)When used in reference to boxed lamb, the term `formula marketing arrangement' means the advance commitment of boxed lamb by any means other than through a negotiated purchase or a forward contract, using a method for calculating price in which the price is determined at a future date. *Forward contract.*
(1)When used in reference to live lambs, the term `forward contact' means an agreement for the purchase of lambs, executed in advance of slaughter, under which the base price is established by reference to publicly available prices.
(2)When used in reference to boxed lamb, the term `forward contract' means an agreement for the sale of boxed lamb, executed in advance of manufacture, under which the base price is established by reference to publicly available quoted prices. *Importer.* The term ‘importer’ means any person engaged in the business of importing lamb meat products who takes ownership of such lamb meat products with the intent to sell or ship in U.S. commerce. For any calendar year, the term includes only those that imported an average of 2,500 metric tons of lamb meat products per year during the immediately preceding 5 calendar years. Additionally, the term includes those that did not import an average of 2,500 metric tons of lamb meat products during the immediately preceding 5 calendar years, if the Secretary determines that the person should be considered an importer based on their volume of lamb imports. *Packer.* The term ‘packer’ means any person engaged in the business of buying lambs in commerce for purposes of slaughter, of manufacturing or preparing meat products from lambs for sale or shipment in commerce, or of marketing meats or meat products from lambs in an unmanufactured form acting as a wholesale broker, dealer, or distributor in commerce. For any calendar year, the term includes only a federally inspected lamb processing plant which slaughtered or processed the equivalent of an average of 75,000 head of lambs per year during the immediately preceding 5 calendar years. Additionally, the term includes a lamb processing plant that did not slaughter or process an average of 75,000 lambs during the immediately preceding 5 calendar years if the Secretary determines that the processing plant should be considered a packer after considering its capacity. *Packer-owned lambs.* The term ‘packer-owned lambs’ means lambs that a packer owns for at least 14 days immediately before slaughter. *Type of purchase.* The term ‘type of purchase’ means a negotiated purchase, a formula market arrangement, and a forward contract. *Type of sale.* The term ‘type of sale’ with respect to boxed lamb, means a negotiated sale, a formula market arrangement, and a forward contract. *Yield grade lamb carcass reporting.* The term ‘yield grade lamb carcass reporting’ means if the lot includes 80 percent or more of one yield grade, the lot will be considered a single yield grade lot. If the lot contains less than 80 percent of one yield grade, the lot will be considered a mixed grade lot and all yield grades comprising 10 percent or more will be used to describe the lot. § 59.301 Mandatory daily reporting for lambs.
(a)*In General.* The corporate officers or officially designated representatives of each packer processing plant shall report to the Secretary at least once each reporting day not later than 2 p.m. central time the following information for lamb, categorized to clearly delineate domestic from imported market purchases as described in § 59.10(b):
(1)The prices for lambs (per hundredweight) established on that day as F.O.B. feedlot or delivered at the plant, categorized by:
(i)The type of purchase;
(ii)The class of lamb;
(iii)The quantity of lambs purchased on a live weight basis;
(iv)The quantity of lambs purchased on a dressed weight basis;
(v)A range and average of estimated live weights of lambs purchased;
(vi)An estimate of the percentage of the lambs purchased that were of a quality grade of Choice or better;
(vii)Any premiums or discounts associated with weight, quality grade, yield grade, or any type of purchase;
(viii)Lamb State of origin;
(ix)The pelt type; and
(x)The estimated lamb dressing percentage.
(2)The Secretary shall make the information available to the public not less than once each reporting day.
(b)[Reserved] § 59.302 Mandatory weekly reporting for lambs.
(a)*In General.* The corporate officers or officially designated representatives of each packer processing plant shall report to the Secretary the following information applicable to the prior slaughter week contained in paragraphs (a)(1) through (a)(5) and (a)(7) of this section not later than 9 a.m. central time on the second reporting day of the current slaughter week, and the following information applicable to the prior slaughter week contained in paragraph (a)(6) of this section not later than 9 a.m. central time on the first reporting day of the current slaughter week categorized to clearly delineate domestic from imported market purchases:
(1)The quantity of lambs purchased through a negotiated purchase that were slaughtered;
(2)The quantity of lambs purchased through forward contracts that were slaughtered;
(3)The quantity of lambs delivered under a formula marketing arrangement that were slaughtered;
(4)The quantity and carcass characteristics of packer-owned lambs that were slaughtered;
(5)The quantity, basis level, and delivery month for all lambs purchased through forward contracts;
(6)The following information applicable to the current slaughter week. The range and average of intended premiums and discounts (including those associated with weight, quality grade, yield grade, or type of lamb) that are expected to be in effect for the current slaughter week; and
(7)The following information for lambs purchased through a formula marketing arrangement and slaughtered during the prior slaughter week, categorized to clearly delineate domestic from imported market purchases:
(i)The quantity (quoted in both numbers of head and pounds) of lambs;
(ii)The weighted average price paid for a carcass, including applicable premiums and discounts;
(iii)The range of premiums and discounts paid;
(iv)The weighted average of premiums and discounts paid; and
(v)The range of prices paid.
(b)*Publication.* The Secretary shall make available to the public the information obtained under paragraphs (a)(1) through (a)(5) and (a)(7) of this section on the second reporting day of the current slaughter week and information obtained in paragraph (a)(6) of this section on the first reporting day of the current slaughter week. § 59.303 Mandatory reporting of lamb carcasses and boxed lamb.
(a)*Daily Reporting of Lamb Carcass Transactions.* The corporate officers or officially designated representatives of each packer shall report to the Secretary each reporting day the following information on total carlot-based lamb carcass transactions not later than 3 p.m. central time in accordance with § 59.10(b):
(1)The price for each lot of each lamb carcass transaction, quoted in dollars per hundredweight on an F.O.B. plant basis;
(2)The quantity for each lot of each transaction, quoted by number of carcasses sold and purchased; and
(3)The following information regarding the characteristics of each transaction:
(i)The type of transaction;
(ii)The USDA quality grade of lamb;
(iii)The USDA yield grade;
(iv)The estimated weight range of the carcasses; and
(v)The product delivery period.
(b)*Daily Reporting of Domestic Boxed Lamb Sales.* The corporate officers or officially designated representatives of each packer shall report to the Secretary each reporting day the following information on total domestic boxed lamb cut sales not later than 2:30 p.m. central time as described in § 59.10(b):
(1)The price for each lot of each boxed lamb cut sale, quoted in dollars per hundredweight on a F.O.B. plant basis;
(2)The quantity for each lot of each sale, quoted by product weight sold; and
(3)The following information regarding the characteristics of each transaction:
(i)The type of sale;
(ii)The branded product characteristics, if applicable;
(iii)The USDA quality grade of lamb;
(iv)The cut of lamb, referencing the most recent version of the Institutional Meat Purchase Specifications (IMPS), when applicable;
(v)USDA yield grade, if applicable;
(vi)The product state of refrigeration;
(vii)The weight range of the cut; and
(viii)The product delivery period.
(c)*Weekly Reporting of Imported Boxed Lamb Sales.* The corporate officers or officially designated representatives of each lamb importer shall report to the Secretary on the first reporting day of each week the following information applicable to the prior week for imported boxed lamb cut sales not later than 10 a.m. central time:
(1)The price for each lot of a boxed lamb cut sale, quoted in dollars per hundredweight on a F.O.B. plant basis;
(2)The quantity for each lot of a transaction, quoted by product weight sold; and
(3)The following information regarding the characteristics of each transaction:
(i)The type of sale;
(ii)The branded product characteristics, if applicable;
(iii)The cut of lamb, referencing the most recent version of the Institutional Meat Purchase Specifications (IMPS), when applicable;
(iv)The product state of refrigeration;
(v)The weight range of the cut; and
(vi)The product delivery period.
(d)*Publication.* The Secretary shall make available to the public the information required to be reported in paragraphs
(a)and
(b)of this section not less frequently than once each reporting day and the information required to be reported in paragraph
(c)of this section on the first reporting day of the current slaughter week. Subpart E—OMB Control Number § 59.400 OMB control number assigned pursuant to the Paperwork Reduction Act. The information collection and recordkeeping requirements of this part have been previously approved by the Office of Management and Budget
(OMB)under the provisions of 44 U.S.C. Chapter 35 and have been assigned OMB Control Number 0581-0186. Dated: July 27, 2007. Kenneth C. Clayton, Acting Administrator, Agricultural Marketing Service. Note: The following Appendices will not appear in the Code of Federal Regulations. Appendix A—Cattle Mandatory Reporting Forms The following 7 forms referenced in Subpart B Part 59 visually represent the mandatory cattle and boxed beef market information that is required to be reported to the Agricultural Marketing Service. Cattle LS-113 Live Cattle Daily Report (Current Established Prices). LS-114 Live Cattle Daily Report (Committed and Delivered Cattle). LS-115 Live Cattle Weekly Report. LS-117 Cattle Premiums and Discounts Weekly Report. LS-131 Cow/Bull Plant Delivered Bids (Dressed Basis). LS-132 Live Cow/Bull Daily Purchase Report. LS-126 Boxed Beef Daily Report. Appendix B—Swine Mandatory Reporting Forms The following 3 forms referenced in Subpart C of Part 59 visually represent the mandatory swine market information that is required to be reported electronically to the Agricultural Marketing Service. Swine LS-118 Swine Prior Day Report. LS-119 Swine Daily Report. LS-120 Swine Noncarcass Merit Premium Weekly Report. Appendix C—Lamb Mandatory Reporting Forms The following 6 forms referenced in Subpart D of Part 59 visually represent the mandatory lamb market information that is required to be reported electronically to the Agricultural Marketing Service. Lamb LS-121 Live Lamb Daily Report (Current Established Prices). LS-123 Live Lamb Weekly Report. LS-124 Live Lamb Weekly Report (Formula Purchases). LS-125 Lamb Premiums and Discounts Report. LS-128 Boxed Lamb Report. LS-129 Lamb Carcass Report. Appendix D—Mandatory Reporting Forms Guideline The following mandatory reporting form guidelines will be used by persons required to report electronically transmitted mandatory market information to the Agricultural Marketing Service. The first 10 fields of each mandatory reporting form provide the following information: identification number (plant establishment number or importer ID number), company name (name of parent company), plant street address (street address for plant), plant city (city where plant is located), plant state (state where plant is located), plant zip code (zip code where plant is located), contact name (the name of the corporate representative contact at the plant), phone number (full phone number for the plant including area code), reporting date (date the information was submitted (mm/dd/yyyy), and reporting time, if applicable (the submission time corresponding to the 10 a.m. and the 2 p.m. reporting requirements). The reporting time requirement is only applicable to forms LS-113 Live Cattle Daily Report (current established prices), LS-114 Live Cattle Daily Report (Committed and Delivered Cattle), LS-126 Boxed Beef Daily Report, LS-131 Cow/Bull Plant Delivered Bids (Dressed Basis) (10 a.m. submission only), LS-132 Live Cow/Bull Daily Purchase Report, and LS-119 Swine Daily Report.
(a)*Cattle Mandatory Reporting Forms.* (See Appendix E for samples).
(1)LS-113— Live Cattle Daily Report (current established prices).
(i)Lot identification (11). Enter code used to identify the lot to the packer.
(ii)Source (12). Enter ‘1’, domestic, if cattle were purchased inside of the 50 States, or ‘2’, imported, if cattle were purchased outside of the 50 States.
(iii)Purchase type code (13). Enter the code that describes the type of purchase.
(iv)Class code (14). Enter the code that best describes the type of cattle.
(v)Selling basis (15a-b). For 15a, enter ‘1’ if cattle were purchased on a live basis or ‘2’ if cattle were purchased on a dressed basis. For 15b, enter ‘1’ if cattle are shipped on an FOB feedlot basis or ‘2’ if cattle are delivered at the plant.
(vi)Head count (16). Enter the quantity of cattle in the lot in number of head.
(vii)Estimated average weight (17). Enter the estimated average weight of the lot in pounds.
(viii)Average price (18). Enter the price established on that day for the lot in dollars per hundredweight.
(I)For negotiated purchases, enter the price that was agreed upon.
(II)For formula purchases, enter the base price when established (with estimated grading information if not yet known). Then enter the final net price with all actual grading information when it is known.
(III)For forward contract purchases, enter the base price when established (with estimated grading information if not yet known). Then enter the final net price paid on the contract with actual grading information.
(IV)For negotiated grid purchases, enter the base price when established (with estimated grading information if not yet known). Then enter the final net price with all actual grading information.
(ix)Percent Choice or better (19). Enter the percentage of the number of cattle in the lot of a quality grade of Choice or better.
(x)Classification code (20). Enter the code which best describes the quality of the majority of the cattle in the lot.
(xi)Dressing percentage (21). Enter an average dressing percentage for the cattle in the lot. For negotiated purchases, enter an estimate. For all other purchase types, enter the actual average dressing percentage.
(xii)Origin (22). Enter the 2-letter postal abbreviation for the State in which the cattle were fed to slaughter weight. For imported cattle enter “CN” for Canada.
(xiii)Premiums and discounts paid (23a-h). Enter the total net value of the adjustment for the lot (in dollars per hundredweight) for any premiums associated with weight, quality, yield or other expressed as a positive value and for any discounts associated with weight, quality, yield or other expressed as a negative value in parenthesis.
(xiv)Terms of Trade (24a-d).
(I)Packer financing (24a). Enter ‘1’
(yes)or ‘2’
(no)in response to: “Did packer provide financing agreement or arrangement with regards to the cattle?”
(II)Delivery location (24b). Enter ‘1’ if delivery terms specify producer location, ‘2’ if they specify packer's plant location.
(III)Delivery Date (24c). Enter ‘1’ if producer sets date of delivery for slaughter unilaterally; otherwise enter ‘2’ for packer.
(IV)Delivered (24d). Enter ‘1’ if negotiated purchased cattle are to be delivered for slaughter 14 or less days from the committed, purchased, or priced date. Enter ‘2’ if they are to be delivered for slaughter between 15 and 30 days from the date the cattle were committed, purchased, or priced.
(2)LS-114—Live Cattle Daily Report (committed and delivered cattle).
(i)Lot identification (11). Enter code used to identify the lot to the packer.
(ii)Purchasing basis (12). Enter ‘1’ if cattle are delivered or ‘2’ if cattle are committed.
(iii)Source (13). Enter ‘1’, domestic, if cattle are purchased within the 50 States or ‘2’, imported, if cattle are purchased outside of the 50 States.
(iv)Purchase type code (14). Enter the code that best describes the type of purchase.
(v)Class Code (15). Enter the code that best describes the type of cattle in the lot.
(vi)Selling basis (16). Enter ‘1’ if cattle were purchased on a live basis or a ‘2’ if cattle were purchased on a dressed basis.
(vii)Head count (17). Enter the quantity of cattle in the lot in number of head.
(viii)Origin (18). Enter the 2-letter postal abbreviation for the State in which the cattle were fed to slaughter weight. For imported cattle, enter “CN” for Canada.
(ix)Terms of Trade (19a-d). Enter when applicable, otherwise leave blank.
(I)Packer financing (19a). Enter ‘1’
(yes)or ‘2’
(no)in response to: “Did packer provide financing agreement or arrangement with regards to the cattle?”
(II)Delivery location (19b). Enter ‘1’ if delivery terms specify producer location, ‘2’ if they specify packer's plant location.
(III)Delivery Date (19c). Enter ‘1’ if producer sets date of delivery for slaughter unilaterally; otherwise enter ‘2’ for packer.
(IV)Delivered (19d). Enter ‘1’ if negotiated purchased cattle are to be delivered for slaughter 7 or less days from the committed, purchased, or priced date. Enter ‘2’ if they are to be delivered for slaughter between 8 and 14 days from the date the cattle were committed, purchased, or priced.
(3)LS-115—Live Cattle Weekly Report
(i)Packer-Owned lot identification (11). Enter code used to identify the lot of packer-owned cattle to the packer.
(ii)Packer-Owned source (12). Enter ‘1’, domestic, if packer-owned cattle are from within the 50 States or ‘2’, imported, if cattle are from outside of the 50 States.
(iii)Packer-Owned head count (13). Enter the quantity of packer-owned cattle in the lot in number of head.
(iv)Packer-Owned actual carcass weight range (14). Enter the actual average carcass weight of the lot in pounds.
(v)Packer-Owned average dressing percentage (15). Enter the average dressing percentage of the lot of packer-owned cattle.
(vi)Percentage yield grade 3 or better (16). Enter the percentage of packer-owned cattle in the lot of a yield grade of 3 or better.
(vii)Quality grade percentage (17). Enter the percentage of packer-owned cattle in the lot of a quality grade of Choice or better.
(viii)Prior week slaughtered cattle head counts ( ) (18-25). Enter the total number of head of cattle slaughtered for the prior week that were purchased through forward contracts, the total number of head for cattle purchased through formula arrangements, the total number of head of cattle purchased through negotiated cash, and the total number of head purchased through negotiated grids, categorized by domestic or imported sources. Enter this information once per each week's submission.
(ix)Forward contract purchases lot identification ( ) (26). Enter code used to identify forward contracted cattle to the packer.
(x)Forward contract purchases head count (27). Enter quantity of forward contracted cattle in the lot in number of head.
(xi)Forward contract purchases basis level (28). Enter the agreed upon adjustment to a future price to establish the final price of the forward contracted cattle in dollars per one hundred pounds.
(xii)Forward contract purchases delivery month (29). Enter the delivery month of the cattle purchased through forward contracts as a 3-letter abbreviation.
(xiii)Forward contract purchases delivery year (30).
(xiv)Forward contract purchases basis level month (31). Enter the basis month which the contract was based off of. Use 3-letter abbreviation.
(4)LS-117—Cattle Premiums and Discounts Weekly Report.
(i)Enter the premiums and discounts (in dollars per hundredweight) expected to be in effect for the current slaughter week for each applicable category of premium and discount (11-34). For ‘other’ categories (35-39), provide a brief description of the basis for the premium/ discount along with the value of the premium/discount. Enter negative values in parenthesis.
(5)LS-131—Cow/Bull Plant Delivered Bids. Enter the plant delivered bids the plant expects to have in effect for that day in dollars per cwt. for each category.
(6)LS-132—Live Cow/Bull Daily Purchase report.
(i)Lot identification (11). Enter code used to identify the lot to the packer.
(ii)Source (12). Enter ‘1’, domestic, if cattle were purchased inside of the 50 States, or ‘2’, imported, if cattle were purchased outside of the 50 States.
(iii)Purchase type code (13). Enter the code that describes the type of purchase.
(iv)Class code (14). Enter the code that best describes the type of cattle.
(v)Selling basis (15a-b). For 15a, enter ‘1’ if cattle were purchased on a live basis or ‘2’ if cattle were purchased on a dressed basis. For 15b, enter ‘1’ if cattle are shipped on an FOB feedlot basis or ‘2’ if cattle are delivered at the plant.
(vi)Head count (16). Enter the quantity of cattle in the lot in number of head.
(vii)Estimated average weight (17). Enter the estimated average weight of the lot in pounds.
(viii)Average price (18). Enter the price established on that day for the lot in dollars per hundredweight.
(I)For negotiated purchases, enter the final net price that was paid.
(II)For formula purchases, enter the base price when established (with estimated grading info if not yet known). Then enter the final net price with all actual grading information when it is known.
(III)For forward contract purchases, enter the base price when established (estimated grading info if not yet known). Then enter the final net price paid on the contract with actual grading information.
(V)For negotiated grid purchases, enter the base price when established (estimated grading info if not yet known). Then enter the final net price with all actual grading information.
(ix)Classification code (19). Enter the code which best describes the quality of the majority of the cattle in the lot.
(x)Origin (20). Enter the 2-letter postal abbreviation for the State in which the cattle were fed to slaughter weight. For imported cattle enter “CN” for Canada.
(xi)Premiums and discounts paid (21a-f). Enter the total net value of the adjustment for the lot (in dollars per hundredweight) for any premiums associated with weight, quality, yield or other expressed as a positive value and for any discounts associated with weight, quality, yield or other expressed as a negative value in parenthesis.
(7)LS-126—Boxed Beef Daily Report. For lots comprising multiple items, provide information for each item in a separate record identified with the same lot identification or purchase order number.
(i)Lot identification or purchase order number (11). Enter code used to identify the lot to the packer.
(ii)Destination (12). Enter ‘1’, domestic, for product shipped within the 50 States; or ‘2’, exported, for product shipped overseas; or ‘3’, exported, for product shipped NAFTA (Canada or Mexico).
(iii)Purchase type code (13). Enter the code corresponding to the sale type of the lot of boxed beef.
(iv)Delivery period code (14). Enter the code corresponding to the delivery time period of the lot of boxed beef.
(v)Refrigeration (15). Enter ‘1’ if the product is sold in a fresh condition or ‘2’ if the product is sold in a frozen condition.
(vi)Class code (16). Enter the code that best describes the class of cattle from which the boxed beef was produced.
(vii)Classification code (17). Enter the code corresponding to the grade of the boxed beef.
(viii)Beef cut (18a-b). Enter the numerical code corresponding to the Institutional Meat Purchase Specifications
(IMPS)(3 to 4 characters)
(18a)or the internal corporate descriptor used to identify the product (18b). Descriptors must be entered consistently for all submissions.
(ix)Trim spec code (19). Enter the code corresponding to the trim level of the boxed beef.
(x)Weight (20). Enter the code corresponding to the relative weight of the product. Where weight is a factor, enter ‘1’ to signify the lighter weight range, ‘2’ to signify the middle weight range, or ‘3’ to signify the heavier weight range. Where weight is not a factor, enter ‘4’ to signify all weights or mixed.
(xi)Total product weight (21). Enter the total weight of the boxed beef cut in the lot in pounds.
(xii)Price (22). Enter the price received for each boxed beef cut in the lot in dollars per one hundred pounds, FOB Plant basis.
(xiii)USDA Certified schedule code (23). Enter the code for the USDA Certified Program schedule, if applicable (e.g.; G1, G2, etc.); otherwise leave blank.
(xiv)Branded product code (24a-b). Enter the quality grade code
(24a)and the yield grade code
(24b)that best describes the brand. Leave blank if not applicable.
(b)*Swine Mandatory Reporting Forms (see Appendix E for samples). *
(1)LS-118—Swine Prior Day Report.
(i)Slaughtered swine lot identification (11). Enter code used to identify the lot of slaughtered swine to the packer.
(ii)Slaughtered swine class code (12). Enter the code that best describes the type of slaughtered swine in the lot.
(iii)Slaughtered swine purchase type code (13). Enter the code that describes the type of purchase for the slaughtered swine in the lot.
(iv)Slaughtered swine head count (14). Enter the quantity of slaughtered swine in the lot in number of head.
(v)Slaughtered swine base price (15). Enter the base price established on that day for the lot of slaughtered swine in dollars per one hundred pounds.
(vi)Slaughtered swine average net price (16). Enter the average net price established on that day for the lot of slaughtered swine in dollars per one hundred pounds.
(vii)Slaughtered swine average live weight (17). Enter the average live weight of the lot of swine in pounds if slaughtered swine were purchased on a live basis, otherwise leave blank.
(viii)Slaughtered swine average carcass weight (18). Enter the average carcass weight of the lot of slaughtered swine in pounds.
(ix)Slaughtered swine average sort loss (19). Enter the average sort loss for the lot of slaughtered swine in dollars per one hundred pounds.
(x)Slaughtered swine average backfat (20). Enter the average backfat measurement for the lot of slaughtered swine in inches rounded to the nearest tenth of an inch.
(xi)Slaughtered swine average loin depth (21). Enter the average loin depth measurement for the lot of slaughtered swine in inches rounded to the nearest tenth of an inch.
(xii)Slaughtered swine average lean percentage (22). Enter the average lean percentage for the lot of slaughtered swine.
(xiii)Purchased swine lot identification (23). Enter code used to identify the lot of purchased swine to the packer.
(xiv)Purchased swine ownership code (24). Enter code which best describes the source of the purchased swine whether packer-owned, purchased from another packer, or all other swine.
(xv)Purchased swine class code (25). Enter the code that best describes the type of purchased swine.
(xvi)Purchased swine purchase type code (26). Enter the code that describes the type of purchase for the purchased swine.
(xvii)Purchased swine head count (27). Enter the quantity of purchased swine in the lot. (xviii) Purchased swine average live weight (28). Enter the average live weight of the lot of swine in pounds if swine were purchased on a live basis, otherwise leave blank.
(xix)Purchased swine base price (29). Enter the base price established on that day for the lot of purchased swine in dollars per one hundred pounds.
(xx)Purchased swine origin (30). Enter the 2-letter postal abbreviation for the State in which the swine were fed to slaughter weight.
(xxi)Scheduled swine (31-44). Enter the number of head of purchase commitment swine that were scheduled for delivery for each of the next 14 days. Enter the total quantity currently scheduled for each day at the time of reporting for each submission.
(2)LS-119—Swine Daily Report.
(i)Purchased swine lot identification (11). Enter code used to identify the lot of purchased swine to the packer.
(ii)Purchased swine purchase type code (12). Enter the code that describes the type of purchase for the swine in the lot.
(iii)Purchased swine average live weight (13). Enter the average live weight of the lot of swine in pounds if swine were purchased on a live basis, otherwise leave blank.
(iv)Purchased swine class code (14). Enter the code that best describes the type of swine in the lot.
(v)Purchased swine head count (15). Enter the quantity of swine in the lot in number of head.
(vi)Purchased swine base price (16). Enter the base price established on that day for the lot of swine in dollars per one hundred pounds.
(vii)Purchased swine origin (17). Enter the 2-letter postal abbreviation for the State in which the swine were fed to slaughter weight.
(viii)Packer-sold swine purchases (18-25). Enter the best estimate of the total number of packer-sold swine expected to be purchased throughout the reporting day for each purchase type and the total number of packer-sold swine purchased up to that time of the reporting day for each purchase type.
(ix)All other swine purchases (26-33). Enter the best estimate of the total number of all other swine expected to be purchased throughout the reporting day for each purchase type and the total number of all other swine purchased up to that time of the reporting day for each purchase type.
(3)LS-120—Swine Noncarcass Merit Premium Weekly Report. Enter the standard noncarcass merit premiums used during the prior slaughter week (11-15) in dollars per hundredweight. If a range of standard noncarcass merit premiums was used, enter the low side of the range
(a)and the high side of the range (b). If only one value was used, enter the same number in
(a)and (b). If no value for the specified merit was used, leave blank. For ‘other’ categories (16-20), provide a brief description of the basis for the premium along with the value of the premium.
(c)*Lamb Mandatory Reporting Forms. (See Appendix E for samples).*
(1)LS-121—Live Lamb Daily Report (current established prices).
(i)Lot identification (11). Enter code used to identify the lot to the packer.
(ii)Source (12). Enter ‘1’, domestic, if lambs were purchased inside of the 50 States, or ‘2’, imported, if lambs were purchased outside of the 50 States.
(iii)Purchase type code (13). Enter the code that describes the type of purchase.
(iv)Class code (14). Enter the code that best describes the type of lambs.
(v)Selling basis (15a-b). For 15a, enter ‘1’ if lambs were purchased on a live basis or ‘2’ if lambs were purchased on a dressed basis. For 15b, enter ‘1’ if lambs are shipped on an FOB feedlot basis or ‘2’ if lambs are delivered at the plant.
(vi)Head count (16). Enter the quantity of lambs in the lot in number of head.
(vii)Weight range (17a & 17b). Enter the lowest
(17a)and highest
(17b)weights for lambs in the lot in pounds.
(viii)Estimated average weight (18). Enter the estimated average weight of the lot in pounds.
(ix)Average price (19). Enter the price established on that day for the lot in dollars per hundredweight.
(I)For negotiated purchases, enter the final
(net)price paid.
(II)For formula purchases, enter the net price.
(III)For forward contract purchases, enter the final
(net)price paid.
(x)Percent Choice or better (20). Enter the percentage of the number of lambs in the lot of a quality grade of Choice or better.
(xi)Classification code (21). Enter the code which best describes the quality of the majority of the lambs in the lot.
(xii)Dressing percentage (22). Enter an average dressing percentage for the lambs in the lot. For negotiated purchases, enter an estimate. For all other purchase types, enter the actual average dressing percentage.
(xiii)Origin (23). Enter the 2-letter postal abbreviation for the State in which the lambs were fed to slaughter weight. Enter ‘CN’ if lambs originate from Canada.
(xiv)Pelt Code (24). Enter the code that best describes the type of pelt for the majority of lambs in the lot. (xv)Premiums and discounts paid (25a-f). Enter the total net value of the adjustment for the lot (in dollars per hundredweight) for any premiums associated with weight, quality, or yield expressed as a positive value and for any discounts associated with weight, quality, or yield expressed as a negative value in parenthesis.
(2)LS-123—Live Lamb Weekly Report.
(i)Packer-Owned lot identification (11). Enter code used to identify the lot of packer-owned lambs to the packer.
(ii)Packer-Owned source (12). Enter ‘1’, domestic, if packer-owned lambs are from within the 50 States or ‘2’, imported, if lambs are from outside of the 50 States.
(iii)Packer-Owned head count (13). Enter the quantity of packer-owned lambs in the lot in number of head.
(iv)Packer-Owned actual carcass weight range (14a & 14b). Enter the lowest
(14a)and highest
(14b)actual carcass weights for lambs in the lot in pounds.
(v)Packer-Owned actual average carcass weight (15). Enter the actual average carcass weight of the lot of packer-owned lambs in pounds.
(vi)Packer-Owned average dressing percentage (16). Enter the average dressing percentage of the lot of packer-owned lambs.
(vii)Percentage yield grade 3 or better (17). Enter the percentage of packer-owned lambs in the lot of a yield grade of 3 or better.
(viii)Quality grade percentage (18-). Enter the percentage of packer-owned lambs in the lot of a quality grade of Choice or better.
(ix)Prior week slaughtered lambs head counts ( ) (19-24). Enter the total number of head of lambs slaughtered for the prior week that were purchased through forward contracts, the total number of head for lambs purchased through formula arrangements, and the total number of head of lambs purchased through negotiated cash, categorized by domestic or imported sources. Enter this information once per each week's submission.
(x)Forward contract purchases lot identification (25). Enter code used to identify forward contracted lambs to the packer.
(xi)Forward contract purchases head count (26). Enter quantity of forward contracted lambs in the lot in number of head.
(xii)Forward contract purchases basis level (27). Enter the agreed upon adjustment to a future price to establish the final price of the forward contracted lambs in dollars per one hundred pounds.
(xiii)Forward contract purchases delivery month (28). Enter the delivery month of the lambs purchased through forward contracts as a 3-letter abbreviation.
(3)LS-124—Live Lamb Weekly Report (formula purchases).
(i)Lot identification (11). Enter code used to identify the lot to the packer.
(ii)Source (12). Enter ‘1’, domestic, if lambs are purchased within the 50 States or ‘2’, imported, if lambs are purchased outside of the 50 States.
(iii)Head count (13). Enter the quantity of lambs in the lot in number of head.
(iv)Total pounds (14). Enter the total quantity of lambs in the lot in pounds.
(v)Weighted average carcass price (15). Enter the average weighted average carcass price for the lambs in the lot in dollars per hundredweight.
(vi)Range of prices paid (16a-b). Enter the lowest
(16a)and the highest
(16b)prices paid for the lambs in the lot in dollars per hundredweight.
(vii)Range of premiums and discounts paid (17a-b). Enter the lowest
(17a)and the highest
(17b)premium and discount paid for the lot of lambs in dollars per hundredweight. Enter negative values in parenthesis.
(viii)Weighted average of premiums and discounts paid (18). Enter the weighted average of the premiums and discounts paid for the lot of lambs in dollars per hundredweight. Enter negative values in parenthesis.
(4)LS-125—Lamb Premiums and Discounts Weekly Report. Enter the premiums and discounts (in dollars per hundredweight) expected to be in effect for the current slaughter week for each applicable category of premium and discount (11-32). For ‘other’ categories (33-37), provide a brief description of the basis for the premium/discount along with the value of the premium/discount. Enter negative values in parenthesis.
(5)LS-128—Boxed Lamb Daily Report. For lots comprising multiple items, provide information for each item in a separate record identified with the same lot identification or purchase order number.
(i)Lot identification or purchase order number (11). Enter code used to identify the lot to the packer.
(ii)Destination/Source (12). Enter ‘1’, domestic, for product originating within the 50 States or ‘2’, imported, for product originating from outside of the 50 States.
(iii)Sale type code (13). Enter the code corresponding to the sale type of the lot of boxed lamb.
(iv)Delivery period code (14). Enter the code corresponding to the delivery time period of the lot of boxed lamb.
(v)Refrigeration (15). Enter ‘1’ if the product is sold in a fresh condition or ‘2’ if the product is sold in a frozen condition.
(vi)Classification code (16). Enter the code corresponding to the grade of the boxed lamb, if applicable.
(vii)Lamb cut (17a-b). Enter the numerical code corresponding to the Institutional Meat Purchase Specifications
(IMPS)(3 to 4 characters)(17a) or the internal corporate descriptor used to identify the product (17b). Descriptors must be entered consistently for all submissions.
(viii)Weight (18). Enter the code corresponding to the relative weight of the product. Where weight is a factor, enter `1' to signify the lighter weight range, `2' to signify the middle weight range, or `3' to signify the heavier weight range. Where weight is not a factor, enter `4' to signify all weights or mixed.
(ix)Total product weight (19). Enter the total weight of the boxed lamb cut in the lot in pounds.
(x)Price (20). Enter the price received for each boxed lamb cut in the lot in dollars per one hundred pounds, FOB Plant basis.
(xi)USDA Certified schedule code (21). Enter the code for the USDA Certified Program schedule, if applicable (e.g. CL, etc.); otherwise leave blank.
(xii)Branded product code (22a-b). Enter the quality grade code
(22a)and the yield grade code
(22b)that best describes the brand. Leave blank if not applicable.
(6)LS-129—Lamb Carcass Report. For lots comprised of distinct carcass weight range categories with different prices, provide information for each weight range in a separate record identified with the same lot identification or purchase order number.
(i)Lot identification or purchase order number (11). Enter code used to identify the lot to the packer.
(ii)Transaction type code (12). Enter the code corresponding to the transaction type of the lot of carcass lamb.
(iii)FOB Plant Price (13). Enter the price received for the lamb carcasses in dollars per one hundred pounds, FOB Plant basis.
(iv)Number of carcasses (14). Enter the total number of lamb carcasses in the lot.
(v)Classification code
(15)Enter the corresponding USDA quality grade code.
(vi)Yield grade code (16). Enter the corresponding USDA yield grade code.
(vii)Estimated carcass weight range (17a-b). Enter the lowest
(17a)and highest
(17b)weights (in pounds) that best describes the majority of the lamb carcasses in the lot.
(viii)Delivery period code (18). Enter the code corresponding to the time period the lamb carcasses will deliver.
(ix)Transaction basis (19). Enter `1' for purchased carcasses or `2' for sold carcasses. Appendix E—Mandatory Reporting Forms The cattle, swine, and lamb mandatory reporting forms follow: BILLING CODE 3410-02-P EP08AU07.026 EP08AU07.027 EP08AU07.028 EP08AU07.029 EP08AU07.030 EP08AU07.031 EP08AU07.032 EP08AU07.033 EP08AU07.034 EP08AU07.035 EP08AU07.036 EP08AU07.037 EP08AU07.038 EP08AU07.039 EP08AU07.040 EP08AU07.041 EP08AU07.042 [FR Doc. 07-3857 Filed 8-6-07; 8:45 am]
Connectionstraces to 35
Traces to 35 documents
18 references not yet in our index
  • 34 CFR 79
  • 34 CFR 668
  • 34 CFR 691.76
  • 20 USC 1087aa-1087hh
  • 20 USC 421-429
  • 20 USC 1070b-1070b
  • 14 CFR 25
  • 19 USC 2531-2533
  • Pub. L. 104-4
  • Pub. L. 96-354
  • Pub. L. 96-39
  • 110 Stat. 3213
  • 7 CFR 59
  • Pub. L. 109-296
  • Pub. L. 106-78
  • 5 CFR 1320
  • 44 USC 3501-3520
  • 7 USC 1635-1636h
Citation graph
cites case law
Notices
Notice of intent
U.S.C.§ 209
C.F.R.§ 404.7
Fed. Reg.Notices
U.S.C.§ 3507
Fed. Reg.Notices
U.S.C.§ 1001
U.S.C.§ 1082
C.F.R.§ 690.6
C.F.R.§ 682.604
Cite34 CFR 79
Cite34 CFR 668
Cite34 CFR 691.76
Cites 53 · showing 12Cited by 0 across 0 sources
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