Federal Register / Vol. 75, No. 223 / Friday, November 19, 2010 / Proposed Rules 70881 

1See Dodd-Frank Act, Public Law 111–203, 124 

Stat. 1376 (2010). The text of the Dodd-Frank Act 

may be accessed at: http://www.cftc.gov/ucm/ 

groups/public/@swaps/documents/file/hr4173_

enrolledbill.pdf. 

2 7 U.S.C. 1 et seq. 

3 7 U.S.C. 6d(d), 6s(k)(1). 

4 7 U.S.C. 6s(k)(2). 

5 7 U.S.C. 6s(k)(3)(A–B). 

6 7 U.S.C. 6s(k)(3)(A). 

7 7 U.S.C. 6d(d). 

limitations listed in the logbook that the 

instructor considers necessary for the 

safety of the flight; 

* * * * * 

PART 183—REPRESENTATIVES OF 

THE ADMINISTRATOR 

14. The authority citation for part 183 

continues to read as follows: 

Authority: 31 U.S.C. 9701; 49 U.S.C. 

106(g), 40113, 44702, 45303. 

15. Amend § 183.21 by revising 

paragraph (c) and removing and 

reserving paragraph (d) to read as 

follows: 

§ 183.21 Aviation Medical Examiners. 

* * * * * 

(c) Issue or deny medical certificates 

in accordance with part 67 of this 

chapter, subject to reconsideration by 

the Federal Air Surgeon or his or her 

authorized representatives within the 

FAA; and 

* * * * * 

Issued in Washington, DC, on November 

10, 2010. 

John M. Allen, 

Director, Flight Standards Service. 

[FR Doc. 2010–29192 Filed 11–18–10; 8:45 am] 

BILLING CODE 4910–13–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 3 

RIN 3038–AC96 

Designation of a Chief Compliance 

Officer; Required Compliance Policies; 

and Annual Report of a Futures 

Commission Merchant, Swap Dealer, 

or Major Swap Participant 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Proposed rule. 

SUMMARY: The Commodity Futures 

Trading Commission (Commission or 

CFTC) is proposing rules to implement 

new statutory provisions enacted by 

Title VII of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

(Dodd-Frank Act) regarding the 

compliance activities of certain 

registrants. The proposed rules require 

each futures commission merchant, 

swap dealer, and major swap participant 

to designate a chief compliance officer. 

The proposed rules also prescribe 

qualifications and duties of the chief 

compliance officer. Finally, the 

proposed rules require that the chief 

compliance officer prepare, certify, and 

furnish to the Commission an annual 

report containing an assessment of the 

registrant’s compliance activities. 

DATES: Comments must be received on 

or before January 18, 2011. 

ADDRESSES: You may submit comments, 

identified by RIN 3038–AC96 and CCO 

Designation, by any of the following 

methods: 

• Agency web site, via its Comments 

Online process at http:// 

comments.cftc.gov. Follow the 

instructions for submitting comments 

through the Web site. 

• Mail: David A. Stawick, Secretary of 

the Commission, Commodity Futures 

Trading Commission, Three Lafayette 

Centre, 1155 21st Street, NW., 

Washington, DC 20581. 

• Hand Delivery/Courier: Same as 

mail above. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

Please submit your comments using 

only one method. 

All comments must be submitted in 

English, or if not, accompanied by an 

English translation. Comments will be 

posted as received to http:// 

www.cftc.gov. You should submit only 

information that you wish to make 

available publicly. If you wish the 

Commission to consider information 

that you believe is exempt from 

disclosure under the Freedom of 

Information Act, a petition for 

confidential treatment of the exempt 

information may be submitted according 

to the procedures established in CFTC 

Regulation 145.9, 17 CFR 145.9. 

The Commission reserves the right, 

but shall have no obligation, to review, 

pre-screen, filter, redact, refuse or 

remove any or all of your submission 

from http://www.cftc.gov that it may 

deem to be inappropriate for 

publication, such as obscene language. 

All submissions that have been redacted 

or removed that contain comments on 

the merits of the rulemaking will be 

retained in the public comment file and 

will be considered as required under the 

Administrative Procedure Act and other 

applicable laws, and may be accessible 

under the Freedom of Information Act. 

FOR FURTHER INFORMATION CONTACT: 

Sarah E. Josephson, Associate Director, 

Division of Clearing and Intermediary 

Oversight, (202) 418–5684, 

sjosephson@cftc.gov; or Claire Noakes, 

Attorney Advisor, Division of Clearing 

and Intermediary Oversight, (202) 418– 

5444, cnoakes@cftc.gov; Commodity 

Futures Trading Commission, Three 

Lafayette Centre, 1155 21st Street, NW., 

Washington, DC 20581. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

On July 21, 2010, President Obama 

signed the Dodd-Frank Act.1 Title VII of 

the Dodd-Frank Act amended the 

Commodity Exchange Act (CEA) 2 to 

establish a comprehensive new 

regulatory framework to reduce risk, 

increase transparency, and promote 

market integrity within the financial 

system by, among other things: 

(1) Providing for the registration and 

comprehensive regulation of swap 

dealers and major swap participants; 

(2) imposing clearing and trade 

execution requirements on standardized 

derivative products; (3) creating 

rigorous recordkeeping and real-time 

reporting regimes; and (4) enhancing the 

Commission’s rulemaking and 

enforcement authorities with respect to 

all registered entities and intermediaries 

subject to the Commission’s oversight. 

The Dodd-Frank Act addresses the 

compliance activities of certain 

registrants in detail by requiring each 

futures commission merchant, swap 

dealer, and major swap participant to 

designate a chief compliance officer.3

The Dodd-Frank Act also establishes 

duties of the chief compliance officer of 

a swap dealer or major swap 

participant,4 and requires that the chief 

compliance officer of a swap dealer or 

major swap participant annually 

prepare, sign, and certify a report that is 

furnished to the Commission discussing 

the registrant’s compliance policies and 

activities.5 The Dodd-Frank Act requires 

the Commission to prescribe rules 

regarding the annual report prepared by 

the chief compliance officer of a swap 

dealer or major swap participant.6 With 

regard to futures commission 

merchants, the Dodd-Frank Act does not 

set forth specific duties for the chief 

compliance officer or establish specific 

procedures for the preparation and 

submission of an annual report. Rather, 

the Dodd-Frank Act states that the chief 

compliance officer shall ‘‘perform such 

duties and responsibilities as shall be 

set forth in regulations to be adopted by 

the Commission.’’ 7

The Commission has determined to 

apply the same duties and 

responsibilities to a chief compliance 

officer of a futures commission 

merchant as are required for a chief 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
70882 Federal Register / Vol. 75, No. 223 / Friday, November 19, 2010 / Proposed Rules 

8 7 U.S.C. 12a(2–3). 

9 7 U.S.C. 6s(k)(2)(A). 

10 7 U.S.C. 6s(k)(2)(B). 

11 7 U.S.C. 6s(k)(2)(E). 

12 7 U.S.C. 6s(k)(2)(D). 

13 7 U.S.C. 6s(k)(2)(C). 

compliance officer of a swap dealer or 

a major swap participant. In particular, 

the Commission is prescribing rules that 

(i) require the chief compliance officer 

of a registrant prepare, sign, and certify 

an annual report discussing the 

registrant’s compliance policies and 

activities that is furnished to the 

Commission; (ii) clarify that a chief 

compliance officer of a registrant would 

be a ‘‘principal’’ as defined under 

Commission regulation 3.1(a); and 

(iii) require that specified recordkeeping 

and inspection requirements for the 

compliance documents discussed in the 

proposed rule be satisfied. The 

proposed rules also would require that 

each futures commission merchant, 

swap dealer, and major swap participant 

provide the chief compliance officer 

with the responsibility and authority, in 

consultation with the board of directors 

or the senior officer, to develop and 

enforce appropriate policies and 

procedures to fulfill the assigned duties 

of the position. The Commission 

specifically requests comment on its 

decision to apply the duties and 

responsibilities for chief compliance 

officers set forth for swap dealers and 

major swap participants to futures 

commission merchants. 

The proposed rules reflect 

consultation with staff of the following 

agencies: (i) The Securities and 

Exchange Commission; (ii) the Board of 

Governors of the Federal Reserve 

System; (iii) the Office of the 

Comptroller of the Currency; and (iv) 

the Federal Deposit Insurance 

Corporation. Staff from each of these 

agencies has had the opportunity to 

provide oral and/or written comments 

to the proposal, and the proposed rules 

incorporate elements of the comments 

provided. 

The Commission requests comment 

on all aspects of the proposed rules, as 

well as comment on the specific 

provisions and issues highlighted in the 

discussion below. 

II. Proposed Regulations 

A. Chief Compliance Officers 

The Dodd-Frank Act requires that 

each futures commission merchant, 

swap dealer, and major swap participant 

designate an individual to serve as its 

chief compliance officer. The proposed 

rules codify this requirement, and 

prescribe certain qualifications of the 

position. The individual serving as chief 

compliance officer must have the 

appropriate background and skills to 

perform the compliance duties of the 

position, and must not fall into the 

categories that would disqualify him or 

her from registration under section 8a(2) 

and (3) of the CEA.8 Although the chief 

compliance officer would not register 

with the Commission, as the primary 

individual with responsibility for 

ensuring the registrant’s legal 

compliance, the chief compliance 

officer would have to meet the same 

standard as those individuals who are 

required to register, as set forth in the 

list of statutory disqualifications. 

Furthermore, the proposed rules amend 

the definition of ‘‘principal’’ that applies 

to all registrants under regulation 3.1(a) 

to clarify that the chief compliance 

officer position is considered to be 

similar in status and responsibility to 

the enumerated list of positions found 

in that definition, such as the chief 

executive officer. Like other principals 

of registrants, the chief compliance 

officer would have to submit a Form 8– 

R, and, if required, fingerprint cards to 

the National Futures Association, and 

would be subject to a background check. 

The Dodd-Frank Act requires that the 

chief compliance officer of a swap 

dealer or major swap participant ‘‘report 

directly to the board or to the senior 

officer’’ of the entity. The proposed rules 

establish the reporting structure to 

which the chief compliance officer 

would be subject by specifying that only 

the board of directors or the senior 

officer of the registrant would be 

permitted to take action to designate the 

chief compliance officer or determine 

the compensation of the chief 

compliance officer. The rule text 

substitutes the term ‘‘board of directors’’ 

for ‘‘board,’’ and the term ‘‘board of 

directors’’ is defined to include any 

governing body of an organization. The 

clarification is intended to account for 

all forms of business associations (for 

example, partnerships and limited 

liability companies) that may have 

forms of governing bodies other than 

boards of directors. The proposed rules 

also extend the reporting structure 

requirement to futures commission 

merchants. 

The Commission specifically seeks 

comment on the degree of flexibility in 

the reporting structure for chief 

compliance officers that should be 

afforded under the proposed rules. 

Specifically, the Commission requests 

comment on: (i) Whether it would be 

more appropriate for a chief compliance 

officer to report to the senior officer or 

the board of directors; (ii) whether the 

senior officer or board of directors 

generally is a stronger advocate of 

compliance matters within an 

organization; (iii) whether the proposed 

rules allow for sufficient flexibility with 

regard to a registrant’s business 

structure; (iv) whether the proposed 

reporting structure should be amended 

to address any issues related to 

affiliates; and (v) whether the rule 

should include a provision requiring a 

majority of a board of directors to 

remove the chief compliance officer. 

The Commission also is seeking 

comment on whether additional 

limitations should be placed on the 

persons who may be designated as a 

chief compliance officer. For example, 

should the Commission restrict the chief 

compliance officer position from being 

held by an attorney who represents the 

registrant or its board of directors, such 

as an in-house or general counsel? The 

rationale for such a restriction is based 

on the concern that the interests of 

defending the registrant would be in 

tension with the duties of the chief 

compliance officer. 

The Commission specifically seeks 

comment on whether there is a need to 

insulate the chief compliance officer of 

registrants from undue pressure and 

coercion. Is it necessary to adopt rules 

to address the potential conflict between 

and among compliance interests, 

commercial interests, and ownership 

interests of a futures commission 

merchant, swap dealer, and major swap 

participant? If there is no need for such 

a provision, how would such possible 

conflicts be addressed? 

The Dodd-Frank Act sets forth certain 

duties to be performed by a chief 

compliance officer of a swap dealer or 

major swap participant, and requires the 

Commission to promulgate rules 

concerning the duties of a chief 

compliance officer of a futures 

commission merchant. The proposed 

rules codify the duties set forth in the 

Act and apply them uniformly to futures 

commission merchants, swap dealers, 

and major swap participants. The 

Commission believes the statutory 

duties are largely self-explanatory, but 

in the interest of clarity, those duties 

will be discussed briefly below. 

The duty to report to the board or the 

senior officer under section 4s(k)(2)(A) 

of the CEA 9 is addressed in the rule as 

discussed above. The duty to review 

compliance under section 4s(k)(2)(B) of 

the CEA 10 is combined with the duty to 

ensure compliance under section 

4s(k)(2)(E),11 and the duty to administer 

required policies under section 

4s(k)(2)(D).12 The duty to resolve 

conflicts of interest under section 

4s(k)(2)(C) of the CEA 13 is codified in 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
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14 7 U.S.C. 6s(k)(2)(F). 

15 7 U.S.C. 6s(k)(2)(G). 

16 7 U.S.C. 6s(k)(3)(A). 

17 7 U.S.C. 6s(k)(3)(B)(ii). 

the rules. The duty to identify 

noncompliance issues and establish 

procedures for their remediation in 

section 4s(k)(2)(F) of the CEA 14 is 

codified as well, as are other duties with 

respect to noncompliance issues in 

section 4s(k)(2)(G).15 Underlying all of 

these duties are two fundamental 

acknowledgements: The chief 

compliance officer can only ensure the 

registrant’s compliance to the full 

capacity of an individual person, and 

the duties of the chief compliance 

officer do not elevate the position above 

the board of directors, or otherwise 

contradict basic and well-established 

tenets of law regarding the allocation of 

responsibility within a business 

association. 

The Commission would also require 

the chief compliance officer to meet 

annually with the board of directors or 

the senior officer to discuss the 

effectiveness of the compliance policies 

adopted by the registrant, as well as the 

administration of those policies by the 

chief compliance officer. The session 

would create an opportunity for a chief 

compliance officer and the directors or 

the senior officer to speak freely about 

any sensitive issues of concern to any of 

them, including any reservations about 

the cooperativeness or compliance 

practices of the registrant’s employees. 

The term ‘‘compliance policies’’ is 

defined to include all the written 

policies and procedures that are 

required to be adopted or established by 

a registrant under the CEA and the rules 

of the Commission. Specifically, the 

Commission intends for chief 

compliance officers to administer 

compliance policies that include, but 

are not limited to, all the new policies 

and the code of ethics required to be 

established or adopted by a registrant 

under these proposed rules, as well as 

all the policies currently required to be 

established or adopted by a registrant 

under the existing rules, such as risk 

management policies, trading rules, 

customer record protection procedures, 

and safeguards for electronic signatures. 

Finally, the proposed rules include as a 

duty the statutory requirement to 

prepare, sign,16 and certify 17 the annual 

report, which is further discussed 

below. 

B. Annual Report 

The Dodd-Frank Act requires that the 

chief compliance officer of a swap 

dealer or major swap participant 

annually prepare, sign, and certify a 

report containing a description of the 

registrant’s compliance with the CEA 

and regulations promulgated under the 

CEA, and a description of each policy 

and procedure of the chief compliance 

officer, including the code of ethics and 

conflicts of interest policies. The DoddFrank Act also requires, and the 

Commission is codifying, that a swap 

dealer and major swap participant 

furnish the report to the Commission 

simultaneously with each appropriate 

financial report that is required to be 

furnished to the Commission. The 

report would include a certification by 

the chief compliance officer that, under 

penalty of law, the annual report is 

accurate and complete. As discussed 

below, the Commission is proposing to 

apply these requirements to futures 

commission merchants as well. 

More specifically, the Commission 

would require the annual report to be 

furnished simultaneously with the 

futures commission merchant’s Form 

1–FR–FCM or FOCUS report, and the 

swap dealer or major swap participant’s 

financial condition report, the scope of 

which shall be defined in a future 

rulemaking pursuant to new section 4s 

of the CEA. The proposed rules 

elaborate on the certification of the 

annual report by specifying that the 

chief compliance officer must sign a 

statement that to the best knowledge 

and reasonable belief of the chief 

compliance officer, and under penalty 

of law, the information contained in the 

annual report is accurate and complete. 

The proposed rules would also permit 

a registrant to request an extension of 

time to furnish the report; require that 

any material error or omission within a 

previously furnished annual report be 

promptly corrected; and allow for 

annual reports to cross-reference 

sections from recently furnished annual 

reports by the same entity, even in a 

different registration capacity. 

Regarding the last provision, for 

example, if a company has submitted an 

annual report in the previous reporting 

period with a description of a 

compliance policy that is unchanged, 

then the company could incorporate by 

reference that description in an annual 

report furnished in the current reporting 

period, if it remains an accurate 

description that fulfills a content 

requirement of the current year’s annual 

report. As another example, if a 

company is registered as both a swap 

dealer and a futures commission 

merchant, and the description of the 

company’s code of ethics is the same 

under each registrant’s annual report, 

then a cross-reference to one of the 

reports would satisfy the content 

requirements of the other report. 

Importantly, the Commission would 

extend to chief compliance officers of 

futures commission merchants the 

Dodd-Frank Act’s requirement that a 

chief compliance officer of a swap 

dealer or major swap participant 

prepare, sign, and certify an annual 

report to be furnished to the 

Commission. An annual report is 

intended to promote compliance 

behavior by requiring a registrant to 

conduct a periodic self-evaluation and 

to inform the Commission of possible 

compliance weaknesses that should be 

addressed. The Commission believes 

that it is beneficial to receive selfevaluation and compliance information 

from futures commission merchants as 

well as from swap dealers and major 

swap participants. Furthermore, the 

Commission believes this comports with 

Congressional intent in requiring that 

futures commission merchants 

designate a chief compliance officer 

under the Dodd-Frank Act. 

The contents of the annual report are 

specified in the Dodd-Frank Act to 

include a description of the compliance 

of the registrant with the CEA and the 

Commission’s rules, and each policy 

and procedure of the chief compliance 

officer of the registrant, including the 

code of ethics and conflict of interest 

policies. The proposed rules codify 

these requirements by reference to the 

defined term ‘‘compliance policies,’’ and 

also require a discussion of any material 

changes to the registrant’s compliance 

policies made during the reporting 

period. 

Additionally, the proposed rules 

would require that the annual report 

include a certification of compliance 

under the provisions of sections 619 and 

716 of the Dodd-Frank Act, which may 

impose obligations on registrants. 

Section 619, subject to limited 

exceptions, prohibits banking entities, 

as defined in that section, from engaging 

in proprietary trading or acquiring or 

retaining any equity, partnership, or 

other ownership interest in, or 

sponsoring, a hedge fund or private 

equity fund. Section 716 prohibits any 

swaps entity from receiving federal 

assistance, as defined in that section. 

The Commission requests comment on 

this proposed rule, including the scope 

of its application. 

The annual report also would be 

required to contain a discussion of the 

execution of the chief compliance 

officer’s duty to resolve conflicts of 

interest and to identify and resolve 

noncompliance issues. Additionally, the 

annual report would be required to 

contain a description of the financial, 

managerial, operational, and staffing 

resources set aside for compliance with 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
70884 Federal Register / Vol. 75, No. 223 / Friday, November 19, 2010 / Proposed Rules 

18 7 U.S.C. 6s(b)(5). 19 5 U.S.C. 601–611. 20 47 FR 18618, Apr. 30, 1982. 21 Id. at 18619, 18620. 

22 Id. at 18620. 

23 44 U.S.C. 3501 et seq. 

the CEA and the Commission’s rules, 

including any deficiencies in such 

resources. The annual report would also 

be required to delineate the roles and 

responsibilities of various registrant 

personnel in addressing any conflicts, 

including any necessary coordination 

with, or notification of regulators, selfregulatory organizations, and others 

who may be involved in addressing the 

conflict. 

Finally, the Commission would 

require that both the annual report and 

any related records be subject to the 

record keeping and inspection 

provisions of regulation 1.31. The 

requirement with respect to records 

related to the annual report is intended 

to preserve the Commission’s ability to 

reconstruct why certain information was 

included or excluded in an annual 

report, in the event of an audit or 

investigation. 

The Commission specifically seeks 

comment regarding: (i) The required 

content of the annual report; (ii) 

whether any additional content should 

be included therein; (iii) whether the 

Commission should require explicit 

approval of the annual report by the 

registrant’s board of directors prior to 

the submission of the annual report to 

the Commission; (iv) whether additional 

provisions are necessary to ensure that 

individual directors or employees have 

an adequate opportunity to register their 

concerns or objections to the contents of 

the annual report; and (v) whether 

additional guidance is needed on what 

efforts by the chief compliance officer 

would be required to permit the chief 

compliance officer to certify that, to the 

best of his knowledge and reasonable 

belief, the annual report is accurate and 

complete. 

Liability for false, incomplete, or 

misleading statements or 

representations made in the annual 

report could rest with the registrant or 

the chief compliance officer or both, 

either directly or vicariously, and could 

be administrative, civil, and/or criminal. 

Possible violations could include, 

among other things, a claim of failure to 

supervise or false statements to the 

Commission. The Commission could 

seek an injunction against future 

violations, civil monetary penalties, 

and/or any other appropriate remedial 

relief. Criminal penalties could be 

sought by appropriate criminal 

authorities. 

III. Transition Period 

Futures commission merchants are 

currently required to be registered under 

regulation 3.10. The Dodd-Frank Act 

requires the Commission to promulgate 

rules providing for the registration of 

swap dealers and major swap 

participants no later than July 21, 

2011.18 In order to provide for sufficient 

time for existing and new registrants to 

come into compliance with these 

proposed rules, the Commission is 

proposing to establish a delayed 

compliance date. The Commission 

specifically seeks comment on how long 

it might take for a registrant to hire a 

chief compliance officer and how long 

it might take for the registrant to 

implement the required policies and 

procedures under these proposed rules. 

IV. Related Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(RFA),19 requires that agencies, in 

proposing rules, consider the impact of 

those rules on small businesses. The 

Commission previously has established 

certain definitions of ‘‘small entities’’ to 

be used by the Commission in 

evaluating the impact of its rules on 

such entities in accordance with the 

RFA.20 The proposed rules would affect 

futures commission merchants, swap 

dealers, and major swap participants, 

entities that are required to be registered 

with the Commission. The Commission 

previously has determined that 

registered futures commission 

merchants are not small entities for the 

purposes of the RFA. The Commission’s 

determination was based, in part, upon 

the obligation of futures commission 

merchants to meet minimum financial 

requirements established by the 

Commission to enhance the protection 

of customers’ segregated funds and 

protect the financial condition of futures 

commission merchants generally.21

Swap dealers and major swap 

participants are new categories of 

registrant. Accordingly, the Commission 

has not previously addressed the 

question of whether such persons are, in 

fact, small entities for the purposes of 

the RFA. However, like futures 

commission merchants, swap dealers 

will be subject to minimum capital and 

margin requirements. Swap dealers are 

expected to comprise the largest global 

financial firms, and the Commission is 

required to exempt from designation 

entities that engage in a de minimis 

level of swaps dealing in connection 

with transactions with or on behalf of 

customers. Accordingly, for purposes of 

the RFA for this rulemaking, the 

Commission is hereby proposing that 

swap dealers not be considered small 

entities for essentially the same reasons 

that futures commission merchants 

previously have been determined not to 

be small entities and in light of the 

exemption from the definition of swap 

dealer for those engaging in a de 

minimis level of swap dealing. The 

Commission anticipates that this 

exemption would tend to exclude small 

entities from registration. 

The Commission also has previously 

determined that large traders are not 

small entities for RFA purposes.22 In 

that determination, the Commission 

considered that a large trading position 

was indicative of the size of the 

business. Major swap participants, by 

the statutory definition, maintain 

substantial positions in swaps or 

maintain outstanding swap positions 

that create substantial counterparty 

exposure that could have serious 

adverse effects on the financial stability 

of the United States banking system or 

financial markets. Accordingly, for 

purposes of the RFA for this 

rulemaking, the Commission is hereby 

proposing that major swap participants 

not be considered small entities for the 

same reasons that large traders have 

previously been determined not to be 

small entities. 

The Commission is carrying out 

Congressional mandates by proposing 

this regulation. Specifically, the 

Commission is proposing these rules to 

comply with the Dodd-Frank Act, the 

aim of which is to reduce systemic risks 

presented by swap dealers and major 

swap participants through 

comprehensive regulation. The 

Commission does not believe that there 

are regulatory alternatives to those being 

proposed that would be consistent with 

the statutory mandate. Therefore, the 

Chairman, on behalf of the Commission, 

hereby certifies, pursuant to 5 U.S.C. 

605(b), that these proposed rules will 

not have a significant economic impact 

on a substantial number of small 

entities. 

B. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(PRA) 23 imposes certain requirements 

on Federal agencies in connection with 

their conducting or sponsoring any 

collection of information as defined in 

the PRA. Certain provisions of this 

proposed rule would result in new 

collection of information requirements 

within the meaning of the PRA. The 

Commission therefore is submitting this 

proposal to the Office of Management 

and Budget (OMB) for review in 

accordance with 44 U.S.C. 3507(d) and 

5 CFR 1320.11. The title for this 


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24 5 U.S.C. 552a. 25http://www.bls.gov/oes/current/oes131041.htm. 

collection of information is ‘‘Annual 

Report for Chief Compliance Officer of 

Registrants.’’ The OMB has not yet 

assigned this collection a control 

number. An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a currently valid 

control number. 

The collection of information under 

these proposed rules is necessary to 

implement certain provisions of the 

CEA, as amended by the Dodd-Frank 

Act, and to assure that futures 

commission merchants, swap dealers, 

and major swap participants maintain 

comprehensive policies and procedures. 

The Commission’s staff would use the 

information collected when conducting 

examination and oversight of futures 

commission merchants, swap dealers, or 

major swap participants for compliance 

with the CEA and Commission 

regulations. 

If adopted, responses to this new 

collection of information would be 

mandatory. The Commission will 

protect proprietary information 

according to the Freedom of Information 

Act and 17 CFR part 145, ‘‘Commission 

Records and Information.’’ In addition, 

section 8(a)(1) of the CEA strictly 

prohibits the Commission, unless 

specifically authorized by the CEA, from 

making public ‘‘data and information 

that would separately disclose the 

business transactions or market 

positions of any person and trade 

secrets or names of customers.’’ The 

Commission also is required to protect 

certain information contained in a 

government system of records according 

to the Privacy Act of 1974.24

1. Information Provided by Reporting 

Entities/Persons 

The burden associated with the 

proposed regulation is estimated to be 

136 hours, at a cost of $13,600 annually 

for each respondent. Burden means the 

total time, effort, or financial resources 

expended by persons to generate, 

maintain, retain, disclose, or provide 

information to or for a federal agency. 

This burden will result from the 

requirements that the respondent: (1) 

Prepare and file a Form 8–R designating 

the chief compliance officer; (2) draft 

and maintain various compliance 

policies and procedures; (3) annually 

prepare and furnish to the Commission 

an annual report that describes the 

respondent’s compliance policies and 

resources and the respondent’s 

compliance with the CEA and 

Commission regulations; (4) amend a 

previously furnished annual report 

when material errors or omissions are 

identified; and (5) maintain records 

related to respondent’s compliance 

policies and annual reports. 

The respondent burden for preparing 

and filing a Form 8–R designating the 

respondent’s chief compliance officer as 

a principal of the firm is expected to be 

1 hour. It is estimated that each 

respondent would spend 80 hours 

annually in connection with the 

proposed requirement that respondent’s 

chief compliance officer establish 

various compliance policies and 

procedures. This estimate includes the 

time needed to review applicable laws 

and regulations; develop compliance 

policies and procedures; and consult 

with respondent’s board of directors or 

senior officer on compliance policies, as 

required. It is estimated that each 

respondent will spend an additional 40 

hours drafting and submitting its annual 

report. This estimate includes the time 

needed to collect and analyze the 

information that underlies the contents 

of the annual report, to formulate 

recommendations to existing 

compliance policies, and to draft the 

report. The Commission notes that it has 

attempted to reduce the burden of this 

particular requirement by including a 

provision in the proposed regulation 

that: (1) Permits a respondent to 

incorporate by reference sections of an 

annual report that has been furnished 

within the current or immediately 

preceding reporting period and 

(2) where a respondent is registered in 

more than one capacity with the 

Commission, to incorporate by reference 

sections in the annual report that the 

registrant has furnished within the 

current or immediately preceding 

reporting period as another type of 

registrant. The Commission additionally 

estimates that a respondent may spend 

an average of 5 hours annually 

amending an annual report if material 

errors are found. Finally, each 

respondent is expected to spend 10 

hours annually satisfying the record 

retention requirements of the rule. This 

would include the time to be expended 

maintaining records of the firm’s 

compliance policies; compiling and 

indexing records relevant to the annual 

report; and maintaining reports and 

other materials furnished to the 

respondent’s board of directors or senior 

officer in connection with its review of 

the report. The Commission does not 

expect respondents to incur any start-up 

costs in connection with this proposed 

regulation as it anticipates that 

respondents already maintain 

compliance personnel and systems for 

regulatory reporting and recordkeeping. 

There are 159 futures commission 

merchants currently registered with the 

Commission and it is anticipated that 

there will be approximately 250 swap 

dealers and 50 major swap participants 

that will register with the Commission. 

Thus, the total number of respondents is 

expected to be 459. According to the 

Bureau of Labor Statistics, the mean 

hourly wage of an employee under 

occupation code 13–1041, ‘‘Compliance 

Officers, Except Agriculture, 

Construction, Health and Safety, and 

Transportation,’’ that is employed by the 

‘‘Securities and Commodity Contracts 

Intermediation and Brokerage’’ industry 

is $38.77.25 Because futures commission 

merchants, swap dealers and major 

swap participants include large 

financial institutions whose employee 

salaries may exceed the mean wage, the 

Commission has taken the more 

conservative approach of estimating the 

cost burden of these proposed 

regulations based upon an average 

compliance officer salary of $100 per 

hour. Accordingly, the estimated burden 

was calculated as follows: 

Preparation and Filing of Form 8–R 

Number of respondents: 459 

Estimated number of responses: 459 

Estimated total burden on 

respondents: 1 hour 

Frequency of collection: One initial 

collection and on occasion 

thereafter 

Aggregate reporting burden: 459 

respondents × 1.0 hours = 459 

burden hours 

Drafting and Updating Compliance 

Policies and Procedures 

Number of respondents: 459 

Estimated number of responses: 459 

Estimated total annual burden on 

respondents: 80 hours 

Frequency of collection: Annually 

Aggregate reporting burden: 459 

respondents × 80 hours = 36,720 

burden hours 

Preparation and Furnishing Annual 

Report 

Number of respondents: 459 

Estimated number of responses: 459 

Estimated total annual burden on 

respondents: 40 hours 

Frequency of collection: Annually 

Aggregate reporting burden: 459 

respondents × 40 hours = 18,360 

burden hours 

Preparation and Furnishing Amended 

Annual Report 

Number of respondents: 459 

Estimated number of responses: 459 

Estimated total annual burden on 

respondents: 5 hours 

Frequency of collection: Annually 

Aggregate reporting burden: 459 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
70886 Federal Register / Vol. 75, No. 223 / Friday, November 19, 2010 / Proposed Rules 

respondents × 5 hours = 2,295 

burden hours 

Recordkeeping Related to Compliance 

Policies and Annual Report 

Number of respondents: 459 

Estimated number of responses: 459 

Estimated total annual burden on 

respondents: 10 hours 

Frequency of collection: Annually 

Aggregate reporting burden: 459 

respondents × 10 hours = 4,590 

hours 

Based upon the above, the aggregate 

cost for all respondents is 62,424 burden 

hours [136 hours × 459 respondents] 

and $6,242,400 [62,424 burden hours × 

$100 per hour]. 

2. Information Collection Comments 

The Commission invites the public 

and other federal agencies to comment 

on any aspect of the reporting and 

recordkeeping burdens discussed above. 

Pursuant to 44 U.S.C. 3506(c)(2)(B), the 

Commission solicits comments in order 

to: (i) Evaluate whether the proposed 

collection of information is necessary 

for the proper performance of the 

functions of the Commission, including 

whether the information will have 

practical utility; (ii) evaluate the 

accuracy of the Commission’s estimate 

of the burden of the proposed collection 

of information; (iii) determine whether 

there are ways to enhance the quality, 

utility, and clarity of the information to 

be collected; and (iv) minimize the 

burden of the collection of information 

on those who are to respond, including 

through the use of automated collection 

techniques or other forms of information 

technology. 

Comments may be submitted directly 

to the Office of Information and 

Regulatory Affairs, by fax at (202) 395– 

6566 or by e-mail at 

OIRAsubmissions@omb.eop.gov. Please 

provide the Commission with a copy of 

submitted comments so that all 

comments can be summarized and 

addressed in the final rule preamble. 

Refer to the ADDRESSES section of this 

notice of proposed rulemaking for 

comment submission instructions to the 

Commission. A copy of the supporting 

statements for the collections of 

information discussed above may be 

obtained by visiting RegInfo.gov. OMB 

is required to make a decision 

concerning the collection of information 

between 30 and 60 days after 

publication of this document in the 

Federal Register. Consequently, a 

comment to OMB is most assured of 

being fully effective if received by OMB 

(and the Commission) within 30 days 

after publication. 

C. Cost-Benefit Analysis 

Section 15(a) of the CEA requires the 

Commission to consider the costs and 

benefits of its actions before issuing new 

rules under the Act. By its terms, it does 

not require the Commission to quantify 

the costs and benefits of new rules or to 

determine whether the benefits of the 

proposed rules outweigh their costs. 

Rather, it requires the Commission to 

‘‘consider the cost and benefits’’ of the 

subject rules. 

Section 15(a) of the CEA further 

specifies that the costs and benefits of 

the proposed rules shall be evaluated in 

light of five broad areas of market and 

public concern: (1) Protection of market 

participants and the public; 

(2) efficiency, competitiveness, and 

financial integrity of the futures 

markets; (3) price discovery; (4) sound 

risk management practices; and (5) other 

public interest considerations. The 

Commission may, in its discretion, give 

greater weight to any one of the five 

enumerated areas of concern and may, 

in its discretion, determine that, 

notwithstanding its costs, a particular 

rule is necessary or appropriate to 

protect the public interest or to 

effectuate any of the provisions or to 

accomplish any of the purposes of the 

CEA. 

The proposed rules would improve 

compliance by registrants with 

applicable laws and rules by requiring 

designation of a chief compliance 

officer, prescribing the duties of that 

position, and requiring preparation of a 

report on compliance activities of the 

registrant, to be furnished to the 

Commission for its review. 

With respect to costs, the Commission 

has determined that costs to futures 

commission merchants, swap dealers, 

and major swap participants include the 

costs associated with the designation of 

a chief compliance officer, maintaining 

compliance policies, preparing the 

annual report, and satisfying applicable 

recordkeeping requirements. As noted 

above, the Commission has estimated 

these costs of preparing the annual 

report and the recordkeeping costs to be 

$13,600 per year per respondent. 

However, there is little doubt that 

futures commission merchants, swap 

dealers, and major swap participants 

already expend resources on 

compliance activities and compliance 

personnel. For these entities, the 

proposed rule would not substantially 

increase costs. 

With respect to benefits, the 

Commission has determined that there 

would be benefits to both the registrants 

and to the financial system as a whole 

if registrants undertake regular and 

comprehensive self-evaluations 

regarding their level of compliance with 

laws and regulations. Also, the decision 

to devote sufficient resources to 

compliance with laws and regulations is 

a core component of sound risk 

management practices. Providing 

periodic notification to the Commission 

of how compliance is undertaken, 

whether there are compliance issues, 

and what resources are allocated for 

compliance activities would enable the 

Commission to better exercise its 

oversight authority and further the goal 

of avoiding market disruptions and 

financial losses to market participants 

and the general public. 

The Commission invites public 

comment on its cost-benefit 

considerations. Commenters are also 

invited to submit any data or other 

information that they may have 

quantifying or qualifying the costs and 

benefits of these proposed rules with 

their comment letters. 

List of Subjects in 17 CFR Part 3 

Administrative practice and 

procedure, Brokers, Commodity futures, 

Major swap participants, Reporting and 

recordkeeping requirements, Swap 

dealers. 

For the reasons stated in the 

preamble, the Commission proposes to 

amend 17 CFR part 3 as follows: 

PART 3—REGISTRATION 

Authority and Issuance 

1. The authority citation for part 3 is 

revised to read as follows: 

Authority: 5 U.S.C. 552, 552b; 7 U.S.C. 1a, 

2, 6a, 6b, 6b–1, 6c, 6d, 6e, 6f, 6g, 6h, 6i, 6k, 

6m, 6n, 6o, 6p, 6s, 8, 9, 9a, 12, 12a, 13b, 13c, 

16a, 18, 19, 21, 23, unless otherwise noted. 

2. Amend § 3.1 by revising paragraph 

(a)(1) and by adding paragraphs (g) and 

(h) to read as follows: 

§ 3.1 Definitions. 

(a) * * * 

(1) If the entity is organized as a sole 

proprietorship, the proprietor; if a 

partnership, any general partner; if a 

corporation, any director, the president, 

chief executive officer, chief operating 

officer, chief financial officer, and any 

person in charge of a principal business 

unit, division or function subject to 

regulation by the Commission; if a 

limited liability company or limited 

liability partnership, any director, the 

president, chief executive officer, chief 

operating officer, chief financial officer, 

the manager, managing member or those 

members vested with the management 

authority for the entity, and any person 

in charge of a principal business unit, 

division or function subject to 


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Federal Register / Vol. 75, No. 223 / Friday, November 19, 2010 / Proposed Rules 70887 

regulation by the Commission; and, in 

addition, any person occupying a 

similar status or performing similar 

functions, such as the chief compliance 

officer, having the power, directly or 

indirectly, through agreement or 

otherwise, to exercise a controlling 

influence over the entity’s activities that 

are subject to regulation by the 

Commission; 

* * * * * 

(g) Compliance policies. Compliance 

policies means all policies, procedures, 

codes, safeguards, rules, programs, and 

internal controls required to be adopted 

or established by a registrant pursuant 

to the Act and Commission regulations, 

including a code of ethics. 

(h) Board of directors. Board of 

directors means the board of directors, 

board of governors, or equivalent 

governing body of a registrant. 

3. Add § 3.3 to read as follows: 

§ 3.3 Chief compliance officer. 

(a) Designation. Each futures 

commission merchant, swap dealer, and 

major swap participant shall designate 

an individual to serve as its chief 

compliance officer, and provide the 

chief compliance officer with the full 

responsibility and authority to develop 

and enforce, in consultation with the 

board of directors or the senior officer, 

appropriate policies and procedures to 

fulfill the duties set forth in the Act and 

Commission regulations. 

(1) The chief compliance officer shall 

report to the board of directors or the 

senior officer of the futures commission 

merchant, swap dealer, or major swap 

participant. The board of directors or 

the senior officer shall approve the 

compensation of the chief compliance 

officer and meet with the chief 

compliance officer at least once a year 

to discuss the effectiveness of the 

compliance policies, as defined in 

§ 3.1(g), as well as the administration of 

those policies by the chief compliance 

officer. 

(2) The board of directors or the 

senior officer of the futures commission 

merchant, swap dealer, or major swap 

participant may not delegate its 

authority over the chief compliance 

officer, including authority to remove 

the chief compliance officer. 

(b) Qualifications. The individual 

designated to serve as chief compliance 

officer shall have the background and 

skills appropriate for fulfilling the 

responsibilities of the position. No 

individual disqualified from registration 

under section 8a(2)–(3) of the Act may 

serve as a chief compliance officer. 

(c) Submission with registration. Each 

application for registration as a futures 

commission merchant under § 3.10, a 

swap dealer under § 23.21, or a major 

swap participant under § 23.21, must 

include a designation of a chief 

compliance officer by submitting a Form 

8–R for the chief compliance officer as 

a principal of the applicant pursuant to 

§ 3.10(a)(2). 

(d) Chief compliance officer duties. 

The chief compliance officer’s duties 

shall include, but are not limited to: 

(1) Establishing, in consultation with 

the board of directors or the senior 

officer, compliance policies, as defined 

in § 3.1(g); 

(2) In consultation with the board of 

directors or the senior officer, resolving 

any conflicts of interest that may arise; 

(3) Reviewing and ensuring 

compliance by the futures commission 

merchant, swap dealer, or major swap 

participant with compliance policies, as 

defined in § 3.1(g), and all applicable 

laws, rules, and regulations, including, 

but not limited to the requirements set 

forth in the Act and Commission 

regulations; 

(4) Establishing procedures, in 

consultation with the board of directors 

or the senior officer, for the remediation 

of noncompliance issues identified by 

the chief compliance officer through a 

compliance office review, look-back, 

internal or external audit finding, selfreported error, or validated complaint; 

(5) Establishing procedures, in 

consultation with the board of directors 

or the senior officer, for the handling, 

management response, remediation, 

retesting, and closing of noncompliance 

issues; and 

(6) Preparing, signing, and certifying 

the annual report required under 

paragraph (d) of this section. 

(d) Annual report. The chief 

compliance officer annually shall 

prepare a written report that covers the 

most recently completed fiscal year of 

the futures commission merchant, swap 

dealer, or major swap participant, and 

provide the annual report to the board 

of directors or the senior officer. The 

annual report shall, at a minimum: 

(1) Contain a description of the 

compliance by the futures commission 

merchant, swap dealer, or major swap 

participant with respect to the Act and 

Commission regulations and each of the 

registrant’s compliance policies, as 

defined in § 3.1(g); 

(2) Review each applicable 

requirement under the Act and 

Commission regulations, and with 

respect to each: 

(i) Identify the policies and 

procedures that ensure compliance with 

the requirement under the Act and 

Commission regulations; 

(ii) Provide an assessment as to the 

effectiveness of these policies and 

procedures; and 

(iii) Discuss areas for improvement, 

and recommend potential or prospective 

changes or improvements to its 

compliance program and resources 

devoted to compliance; 

(3) Provide a statement of certification 

of compliance with sections 619 and 

716 of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, 

and any rules adopted pursuant thereto; 

(4) List any material changes to 

compliance policies during the coverage 

period for the report; 

(5) Describe the financial, managerial, 

operational, and staffing resources set 

aside for compliance with respect to the 

Act and Commission regulations, 

including any deficiencies in such 

resources; 

(6) Describe any non-compliance 

issues identified, and the corresponding 

action taken; and 

(7) Delineate the roles and 

responsibilities of its board of directors 

or senior officer, relevant board 

committees, and staff in addressing any 

conflicts of interest, including any 

necessary coordination with, or 

notification of, other entities, including 

regulators. 

(e) Furnishing the annual report to the 

Commission. 

(1) Prior to furnishing the annual 

report to the Commission, the chief 

compliance officer shall provide the 

annual report to the board of directors 

or the senior officer of the futures 

commission merchant, swap dealer, or 

major swap participant for its review. 

Furnishing the annual report to the 

board of directors or the senior officer 

shall be recorded in the board minutes 

or otherwise, as evidence of compliance 

with this requirement. 

(2) The annual report shall be 

furnished electronically to the 

Commission not more than 90 days after 

the end of the fiscal year of the futures 

commission merchant, swap dealer, or 

major swap participant, simultaneously 

with the submission of Form 1–FR– 

FCM, as required under § 1.10(b)(2)(ii), 

simultaneously with the Financial and 

Operational Combined Uniform Single 

Report, as required under § 1.10(h), or 

simultaneously with the financial 

condition report, as required under 

section 4s(f) of the Act, as applicable. 

(3) The report shall include a 

certification by the chief compliance 

officer that, to the best of his or her 

knowledge and reasonable belief, and 

under penalty of law, the information 

contained in the annual report is 

accurate and complete. 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
70888 Federal Register / Vol. 75, No. 223 / Friday, November 19, 2010 / Proposed Rules 

(4) The futures commission merchant, 

swap dealer, or major swap participant 

shall promptly furnish an amended 

annual report if material errors or 

omissions in the report are identified. 

An amendment must contain the 

certification required under paragraph 

(e)(3) of this section. 

(5) A futures commission merchant, 

swap dealer, or major swap participant 

may request from the Commission an 

extension of time to furnish its annual 

report, provided the registrant’s failure 

to timely furnish the report could not be 

eliminated by the registrant without 

unreasonable effort or expense. 

Extensions of the deadline will be 

granted at the discretion of the 

Commission. 

(6) A futures commission merchant, 

swap dealer, or major swap participant 

may incorporate by reference sections of 

an annual report that has been furnished 

within the current or immediately 

preceding reporting period to the 

Commission. If the futures commission 

merchant, swap dealer, or major swap 

participant is registered in more than 

one capacity with the Commission, and 

must submit more than one annual 

report, an annual report submitted as 

one registrant may incorporate by 

reference sections in the annual report 

furnished within the current or 

immediately preceding reporting period 

as the other registrant. 

(f) Recordkeeping. 

(1) The futures commission merchant, 

swap dealer, or major swap participant 

shall maintain: 

(i) A copy of the compliance policies, 

as defined in § 3.1(g), and all other 

policies and procedures adopted in 

furtherance of compliance with the Act 

and Commission regulations; 

(ii) Copies of materials, including 

written reports provided to the board of 

directors or the senior officer in 

connection with the review of the 

annual report under paragraph (d) of 

this section; and 

(iii) Any records relevant to the 

annual report, including, but not limited 

to, work papers and other documents 

that form the basis of the report, and 

memoranda, correspondence, other 

documents, and records that are created, 

sent or received in connection with the 

annual report and contain conclusions, 

opinions, analyses, or financial data 

related to the annual report. 

(2) All records or reports that a futures 

commission merchant, swap dealer, or 

major swap participant are required to 

maintain pursuant to this section shall 

be maintained in accordance with § 1.31 

and shall be made available promptly 

upon request to representatives of the 

Commission and to representatives of 

the applicable prudential regulator, as 

defined in 1a(39) of the Act. 

Issued in Washington, DC, on November 

10, 2010, by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

Statement of Chairman Gary Gensler 

Designation of a Chief Compliance Officer; 

Required Compliance Policies; and 

Annual Report of a Futures Commission 

Merchant, Swap Dealer, or Major Swap 

Participant 

I support the proposed rulemaking 

establishing requirements for the designation, 

qualifications and duties of a chief 

compliance officer of swap dealers, major 

swap participants and futures commission 

merchants. These rules are intended to 

ensure that sufficient resources are devoted 

to compliance with laws and regulations, 

which is a core component of sound risk 

management practices. The proposed rules 

fulfill the Dodd-Frank Act’s requirements 

that intermediaries have chief compliance 

officers and establish and administer 

compliance policies, as well as resolve 

certain conflicts of interest. 

[FR Doc. 2010–29021 Filed 11–18–10; 8:45 am] 

BILLING CODE 6351–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R08–OAR–2010–0909; FRL–9228–9] 

Finding of Substantial Inadequacy of 

Implementation Plan; Call for Utah 

State Implementation Plan Revision 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: Pursuant to sections 

110(a)(2)(H) and 110(k)(5) of the Clean 

Air Act, EPA is proposing to find that 

the Utah State Implementation Plan 

(SIP) is substantially inadequate to 

attain or maintain the national ambient 

air quality standards or to otherwise 

comply with the requirements of the 

Clean Air Act. Specifically, the SIP 

includes Utah rule R307–107, which 

exempts emissions during unavoidable 

breakdowns from compliance with 

emission limitations. This rule 

undermines EPA’s, Utah’s, and citizens’ 

ability to enforce emission limitations 

that have been relied on to ensure 

attainment or maintenance of the 

national ambient air quality standards 

or meet other Clean Air Act 

requirements. If EPA finalizes this 

proposed finding of substantial 

inadequacy, Utah will be required to 

revise its SIP to correct this deficiency 

within 12 months of the effective date 

of our final rule. If EPA finds that Utah 

has failed to submit a complete SIP 

revision as required by a final rule or if 

EPA disapproves such a revision, such 

finding or disapproval would trigger 

clocks for mandatory sanctions and an 

obligation for EPA to impose a Federal 

Implementation Plan. EPA is also 

proposing that if EPA makes such a 

finding or disapproval, sanctions would 

apply consistent with 40 CFR 52.31, 

such that the offset sanction would 

apply 18 months after such finding or 

disapproval and highway funding 

restrictions would apply six months 

later unless EPA first takes action to stay 

the imposition of the sanctions or to 

stop the sanctions clock based on the 

State curing the SIP deficiencies. EPA is 

also requesting comment on whether 

EPA should exercise its discretionary 

authority under the Clean Air Act to 

impose highway funding restrictions in 

all areas of the State, not just in 

nonattainment areas. 

DATES: Comments must be received on 

or before December 20, 2010. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–R08– 

OAR–2010–0909, by one of the 

following methods: 

• http://www.regulations.gov. Follow 

the on-line instructions for submitting 

comments. 

• E-mail: russ.tim@epa.gov. 

• Mail: Callie A. Videtich, Director, 

Air Program, Environmental Protection 

Agency, Region 8, Mailcode 8P–AR, 

1595 Wynkoop Street, Denver, Colorado 

80202–1129. 

• Fax: (303) 312–6064 (please alert 

the individual listed in FOR FURTHER

INFORMATION CONTACT if you are faxing 

comments). 

• Hand Delivery: Callie A. Videtich, 

Director, Air Program, Environmental 

Protection Agency (EPA), Region 8, 

Mailcode 8P–AR, 1595 Wynkoop Street, 

Denver, Colorado 80202–1129. Such 

deliveries are only accepted Monday 

through Friday, 8 a.m. to 4:30 p.m., 

excluding Federal holidays. Special 

arrangements should be made for 

deliveries of boxed information. 

Instructions: Direct your comments to 

Docket ID No. EPA–R08–OAR–2010– 

0909. EPA’s policy is that all comments 

received will be included in the public 

docket without change and may be 

made available online at http:// 

www.regulations.gov, including any 

personal information provided, unless 

the comment includes information 

claimed to be Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

Do not submit information that you 

consider to be CBI or otherwise 


emcdonald on DSK2BSOYB1PROD with PROPOSALS