17328 Federal Register / Vol. 77, No. 58 / Monday, March 26, 2012 / Rules and Regulations 

under Executive Order 12866; (2) is not 

a ‘‘significant rule’’ under DOT 

Regulatory Policies and Procedures (44 

FR 11034; February 26, 1979); and (3) 

does not warrant preparation of a 

regulatory evaluation as the anticipated 

impact is so minimal. Since this is a 

routine matter that will only affect air 

traffic procedures and air navigation, it 

is certified that this rule, when 

promulgated, will not have a significant 

economic impact on a substantial 

number of small entities under the 

criteria of the Regulatory Flexibility Act. 

The FAA’s authority to issue rules 

regarding aviation safety is found in 

Title 49 of the U.S. Code. Subtitle 1, 

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 I, Section 40103. Under that 

section, the FAA is charged with 

prescribing regulations to assign the use 

of airspace necessary to ensure the 

safety of aircraft and the efficient use of 

airspace. This regulation is within the 

scope of that authority as it amends 

controlled airspace in the Hastings, NE., 

area. 

List of Subjects in 14 CFR Part 71 

Airspace, Incorporation by reference, 

Navigation (Air) 

Adoption of the Amendment 

In consideration of the foregoing, the 

Federal Aviation Administration 

amends 14 CFR part 71 as follows: 

PART 71—DESIGNATION OF CLASS A, 

B, C, D, AND E AIRSPACE AREAS; AIR 

TRAFFIC SERVICE ROUTES; AND 

REPORTING POINTS 

■ 1. The authority citation for 14 CFR 

part 71 continues to read as follows: 

Authority: 49 U.S.C. 106(g), 40103, 40113, 

40120; E. O. 10854, 24 FR 9565, 3 CFR, 1959– 

1963 Comp., p. 389. 

§ 71.1 [Amended] 

■ 2. The incorporation by reference in 

14 CFR 71.1 of the Federal Aviation 

Administration Order 7400.9V, Airspace 

Designations and Reporting Points, 

dated August 9, 2011, and effective 

September 15, 2011, is amended as 

follows: 

Paragraph 6005 Class E airspace areas 

extending upward from 700 feet or more 

above the surface. 

* * * * * 

ACE NE E5 Hastings, NE [Amended] 

Hastings Municipal Airport, NE 

(Lat. 40°36′19′′ N., long. 98°25′40′′ W.) 

That airspace extending upward from 700 

feet above the surface within a 7.2-mile 

radius of Hastings Municipal Airport, and 

within 2 miles each side of the 150° bearing 

from the airport extending from the 7.2-mile 

radius to 10.4 miles southeast of the airport. 

Issued in Fort Worth, Texas, on March 14, 

2012. 

David P. Medina, 

Manager, Operations Support Group, ATO 

Central Service Center. 

[FR Doc. 2012–7104 Filed 3–23–12; 8:45 am] 

BILLING CODE 4910–13–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Parts 4, 145, and 147 

RIN 3038–AD30 

Commodity Pool Operators and 

Commodity Trading Advisors: 

Compliance Obligations 

Correction 

Editorial Note: FR DOC 2012–3390 

appearing on pages 11252–11344 in the issue 

of Friday, February 24, 2012 is being partially 

republished due to numerous errors. 

1. On page 11252, in the first column, 

the SUMMARY section is being 

republished in its entirety. 

SUMMARY: The Commodity Futures 

Trading Commission is adopting 

amendments to its existing part 4 

regulations and promulgating one new 

regulation regarding Commodity Pool 

Operators and Commodity Trading 

Advisors. The Commission is also 

adopting new data collections for CPOs 

and CTAs that are consistent with a data 

collection required under the DoddFrank Act for entities registered with 

both the Commission and the Securities 

and Exchange Commission. The 

adopted amendments rescind an 

exemption from registration as a CPO; 

rescind relief from the certification 

requirement for annual reports provided 

to operators of certain pools offered only 

to qualified eligible persons (‘‘QEPs’’); 

modify the criteria for claiming 

exclusion from the definition of CPO; 

and require the annual filing of notices 

claiming exemptive relief under several 

sections of the Commision’s regulations. 

Finally, the adopted amendments 

include new risk disclosure 

requirements for CPOs and CTAs 

regarding swap transactions. 

2. In 17 CFR Part 4, beginning on page 

11283, in the second column, in 31st 

line of text, amendatory instructions 1– 

8 and their corresponding amendments 

to the Code of Federal Regulations are 

being republished as follows: 

PART 4—COMMODITY POOL 

OPERATORS AND COMMODITY 

TRADING ADVISORS 

■ 1. The authority citation for part 4 

continues to read as follows: 

Authority: 7 U.S.C. 1a, 2, 4, 6(c), 6b, 6c, 6l, 

6m, 6n, 6o, 12a, and 23. 

■ 2. In § 4.5, add paragraphs (c)(2)(iii) 

and (c)(5) to read as follows: 

§ 4.5 Exclusion from the definition of the 

term ‘‘commodity pool operator.’’ 

* * * * * 

(c) * * * 

(2) * * * 

(iii) Furthermore, if the person 

claiming the exclusion is an investment 

company registered as such under the 

Investment Company Act of 1940, then 

the notice of eligibility must also 

contain representations that such person 

will operate the qualifying entity as 

described in Rule 4.5(b)(1) in a manner 

such that the qualifying entity: 

(A) Will use commodity futures or 

commodity options contracts, or swaps 

solely for bona fide hedging purposes 

within the meaning and intent of Rules 

1.3(z)(1) and 151.5 (17 CFR 1.3(z)(1) and 

151.5); Provided however, That in 

addition, with respect to positions in 

commodity futures or commodity 

option contracts, or swaps which do not 

come within the meaning and intent of 

Rules 1.3(z)(1) and 151.5, a qualifying 

entity may represent that the aggregate 

initial margin and premiums required to 

establish such positions will not exceed 

five percent of the liquidation value of 

the qualifying entity’s portfolio, after 

taking into account unrealized profits 

and unrealized losses on any such 

contracts it has entered into; and, 

Provided further, That in the case of an 

option that is in-the-money at the time 

of purchase, the in-the-money amount 

as defined in Rule 190.01(x) (17 CFR 

190.01(x)) may be excluded in 

computing such five percent; or 

(B) The aggregate net notional value of 

commodity futures, commodity options 

contracts, or swaps positions not used 

solely for bona fide hedging purposes 

within the meaning and intent of Rules 

1.3(z)(1) and 151.5 (17 CFR 1.3(z)(1) and 

151.5), determined at the time the most 

recent position was established, does 

not exceed 100 percent of the 

liquidation value of the pool’s portfolio, 

after taking into account unrealized 

profits and unrealized losses on any 

such positions it has entered into. For 

the purpose of this paragraph: 

(1) The term ‘‘notional value’’ shall be 

calculated for each futures position by 

multiplying the number of contracts by 

the size of the contract, in contract units 


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Federal Register / Vol. 77, No. 58 / Monday, March 26, 2012 / Rules and Regulations 17329 

(taking into account any multiplier 

specified in the contract), by the current 

market price per unit, for each such 

option position by multiplying the 

number of contracts by the size of the 

contract, adjusted by its delta, in 

contract units (taking into account any 

multiplier specified in the contract), by 

the strike price per unit, for each such 

retail forex transaction, by calculating 

the value in U.S. Dollars for such 

transaction, at the time the transaction 

was established, excluding for this 

purpose the value in U.S. Dollars of 

offsetting long and short transactions, if 

any, and for any cleared swap by the 

value as determined consistent with the 

terms of 17 CFR part 45; and 

(2) The person may net futures 

contracts with the same underlying 

commodity across designated contract 

markets and foreign boards of trade; and 

swaps cleared on the same designated 

clearing organization where appropriate; 

and (C) Will not be, and has not been, 

marketing participations to the public as 

or in a commodity pool or otherwise as 

or in a vehicle for trading in the 

commodity futures, commodity options, 

or swaps markets. 

* * * * * 

(5) Annual notice. Each person who 

has filed a notice of exclusion under 

this section must affirm on an annual 

basis the notice of exemption from 

registration, withdraw such exemption 

due to the cessation of activities 

requiring registration or exemption 

therefrom, or withdraw such exemption 

and apply for registration within 60 

days of the calendar year end through 

National Futures Association’s 

electronic exemption filing system. 

* * * * * 

■ 3. In § 4.7: 

■ a. Revise paragraphs (a)(3)(ix), 

(a)(3)(x), and (b)(3) to read as follows: 

§ 4.7 Exemption from certain part 4 

requirements for commodity pool operators 

with respect to offerings to qualified eligible 

persons and for commodity trading 

advisors with respect to advising qualified 

eligible persons. 

* * * * * 

(a) * * * 

(3) * * * 

(ix) A natural person whose 

individual net worth, or joint net worth 

with that person’s spouse at the time of 

either his purchase in the exempt pool 

or his opening of an exempt account 

would qualify him as an accredited 

investor as defined in § 230.501(a)(5) of 

this title; 

(x) A natural person who would 

qualify as an accredited investor as 

defined in § 203.501(a)(6) of this title; 

* * * * * 

(b) * * * 

(3) Annual report relief. (i) Exemption 

from the specific requirements of 

§ 4.22(c) of this part; Provided, that 

within 90 calendar days after the end of 

the exempt pool’s fiscal year or the 

permanent cessation of trading, 

whichever is earlier, the commodity 

pool operator electronically files with 

the National Futures Association and 

distributes to each participant in lieu of 

the financial information and statements 

specified by that section, an annual 

report for the exempt pool, affirmed in 

accordance with § 4.22(h) which 

contains, at a minimum: 

(A) A Statement of Financial 

Condition as of the close of the exempt 

pool’s fiscal year (elected in accordance 

with § 4.22(g)); 

(B) A Statement of Operations for that 

year; 

(C) Appropriate footnote disclosure 

and such further material information as 

may be necessary to make the required 

statements not misleading. For a pool 

that invests in other funds, this 

information must include, but is not 

limited to, separately disclosing the 

amounts of income, management and 

incentive fees associated with each 

investment in an investee fund that 

exceeds five percent of the pool’s net 

assets. The income, management and 

incentive fees associated with an 

investment in an investee fund that is 

less than five percent of the pool’s net 

assets may be combined and reported in 

the aggregate with the income, 

management and incentive fees of other 

investee funds that, individually, 

represent an investment of less than five 

percent of the pool’s net assets. If the 

commodity pool operator is not able to 

obtain the specific amounts of 

management and incentive fees charged 

by an investee fund, the commodity 

pool operator must disclose the 

percentage amounts and computational 

basis for each such fee and include a 

statement that the CPO is not able to 

obtain the specific fee amounts for this 

fund; 

(D) Where the pool is comprised of 

more than one ownership class or series, 

information for the series or class on 

which the financial statements are 

reporting should be presented in 

addition to the information presented 

for the pool as a whole; except that, for 

a pool that is a series fund structured 

with a limitation on liability among the 

different series, the financial statements 

are not required to include consolidated 

information for all series. 

(ii) Legend. If a claim for exemption 

has been made pursuant to this section, 

the commodity pool operator must make 

a statement to that effect on the cover 

page of each annual report. 

* * * * * 

■ 4. In § 4.13: 

■ a. Revise paragraphs (a)(3)(ii)(B)(1) 

and (2); 

■ b. Remove and reserve paragraph 

(a)(4); 

■ c. Revise paragraph (b)(1)(ii); 

■ d. Redesignate paragraph (b)(4) as 

paragraph (b)(5) and add new paragraph 

(b)(4); and 

■ e. Revise paragraph (e)(2). 

The revisions and additions read as 

follows: 

§ 4.13 Exemption from registration as a 

commodity pool operator. 

* * * * * 

(a) * * * 

(3) * * * 

(ii) * * * 

(B) * * * 

(1) The term ‘‘notional value’’ shall be 

calculated for each futures position by 

multiplying the number of contracts by 

the size of the contract, in contract units 

(taking into account any multiplier 

specified in the contract), by the current 

market price per unit, for each such 

option position by multiplying the 

number of contracts by the size of the 

contract, adjusted by its delta, in 

contract units (taking into account any 

multiplier specified in the contract), by 

the strike price per unit, for each such 

retail forex transaction, by calculating 

the value in U.S. Dollars of such 

transaction, at the time the transaction 

was established, excluding for this 

purpose the value in U.S. Dollars of 

offsetting long and short transactions, if 

any, and for any cleared swap by the 

value as determined consistent with the 

terms of 17 CFR part 45; and 

(2) The person may net futures 

contracts with the same underlying 

commodity across designated contract 

markets and foreign boards of trade; and 

swaps cleared on the same derivatives 

clearing organization where appropriate; 

and 

* * * * * 

(b) * * * 

(2) * * * 

(ii) Contain the section number 

pursuant to which the operator is filing 

the notice (i.e., § 4.13(a)(1), (2), or (3)) 

and represent that the pool will be 

operated in accordance with the criteria 

of that paragraph; and 

* * * * * 

(4) Annual Notice. Each person who 

has filed a notice of exemption from 

registration under this section must 


sroberts on DSK5SPTVN1PROD with RULES
17330 Federal Register / Vol. 77, No. 58 / Monday, March 26, 2012 / Rules and Regulations 

affirm on an annual basis the notice of 

exemption from registration, withdraw 

such exemption due to the cessation of 

activities requiring registration or 

exemption therefrom, or withdraw such 

exemption and apply for registration 

within 60 days of the calendar year end 

through National Futures Association’s 

electronic exemption filing system. 

* * * * * 

(e) * * * 

(2) If a person operates one or more 

commodity pools described in 

paragraph (a)(3) of this section, and one 

or more commodity pools for which it 

must be, and is, registered as a 

commodity pool operator, the person is 

exempt from the requirements 

applicable to a registered commodity 

pool operator with respect to the pool or 

pools described in paragraph (a)(3) of 

this section; Provided, That the person: 

(i) Furnishes in written 

communication physically delivered or 

delivered through electronic 

transmission to each prospective 

participant in a pool described in 

paragraph (a)(3) of this section that it 

operates: 

(A) A statement that it will operate 

the pool as if the person was exempt 

from registration as a commodity pool 

operator; 

(B) A description of the criteria 

pursuant to which it will so operate the 

pool; 

(ii) Complies with paragraph (c) of 

this section; and 

(iii) Provides each existing participant 

in a pool that the person elects to 

operate as described in paragraph (a)(3) 

of this section a right to redeem the 

participant’s interest in the pool, and 

informs each such participant of that 

right no later than the time the person 

commences to operate the pool as 

described in paragraph (a)(3) of this 

section. 

* * * * * 

■ 5. In § 4.14: 

■ a. Revise paragraph (a)(8)(i)(D); and 

■ b. Redesignate paragraph (a)(8)(iii)(D) 

as (a)(8)(iii)(E) and add a new paragraph 

(a)(8)(iii)(D). 

The revision and addition read as 

follows: 

§ 4.14 Exemption from registration as a 

commodity trading adviser. 

* * * * * 

(a) * * * 

(8) * * * 

(i) * * * 

(D) A commodity pool operator who 

has claimed an exemption from 

registration under § 4.13(a)(3), or, if 

registered as a commodity pool 

operator, who may treat each pool it 

operates that meets the criteria of 

§ 4.13(a)(3) as if it were not so 

registered; and 

* * * * * 

(iii) * * * 

(D) Annual notice. Each person who 

has filed a notice of exemption from 

registration under this section must 

affirm on an annual basis the notice of 

exemption from registration, withdraw 

such exemption due to the cessation of 

activities requiring registration or 

exemption therefrom, or withdraw such 

exemption and apply for registration 

within 60 days of the calendar year end 

through National Futures Association’s 

electronic exemption filing system. 

* * * * * 

■ 6. In § 4.24, add paragraph (b)(5) to 

read as follows: 

§ 4.24 General disclosures required. 

* * * * * 

(b) * * * 

(5) If the pool may engage in swaps, 

the Risk Disclosure Statement must 

further state: 

SWAPS TRANSACTIONS, LIKE 

OTHER FINANCIAL TRANSACTIONS, 

INVOLVE A VARIETY OF 

SIGNIFICANT RISKS. THE SPECIFIC 

RISKS PRESENTED BY A PARTICULAR 

SWAP TRANSACTION NECESSARILY 

DEPEND UPON THE TERMS OF THE 

TRANSACTION AND YOUR 

CIRCUMSTANCES. IN GENERAL, 

HOWEVER, ALL SWAPS 

TRANSACTIONS INVOLVE SOME 

COMBINATION OF MARKET RISK, 

CREDIT RISK, COUNTERPARTY 

CREDIT RISK, FUNDING RISK, 

LIQUIDITY RISK, AND OPERATIONAL 

RISK. 

HIGHLY CUSTOMIZED SWAPS 

TRANSACTIONS IN PARTICULAR 

MAY INCREASE LIQUIDITY RISK, 

WHICH MAY RESULT IN A 

SUSPENSION OF REDEMPTIONS. 

HIGHLY LEVERAGED TRANSACTIONS 

MAY EXPERIENCE SUBSTANTIAL 

GAINS OR LOSSES IN VALUE AS A 

RESULT OF RELATIVELY SMALL 

CHANGES IN THE VALUE OR LEVEL 

OF AN UNDERLYING OR RELATED 

MARKET FACTOR. 

IN EVALUATING THE RISKS AND 

CONTRACTUAL OBLIGATIONS 

ASSOCIATED WITH A PARTICULAR 

SWAP TRANSACTION, IT IS 

IMPORTANT TO CONSIDER THAT A 

SWAP TRANSACTION MAY BE 

MODIFIED OR TERMINATED ONLY BY 

MUTUAL CONSENT OF THE 

ORIGINAL PARTIES AND SUBJECT TO 

AGREEMENT ON INDIVIDUALLY 

NEGOTIATED TERMS. THEREFORE, IT 

MAY NOT BE POSSIBLE FOR THE 

COMMODITY POOL OPERATOR TO 

MODIFY, TERMINATE, OR OFFSET 

THE POOL’S OBLIGATIONS OR THE 

POOL’S EXPOSURE TO THE RISKS 

ASSOCIATED WITH A TRANSACTION 

PRIOR TO ITS SCHEDULED 

TERMINATION DATE. 

* * * * * 

■ 7. In § 4.34, add paragraph (b)(4) to 

read as follows: 

§ 4.34 General disclosures required. 

* * * * * 

(b) * * * 

(4) If the commodity trading advisor 

may engage in swaps, the Risk 

Disclosure Statement must further state: 

SWAPS TRANSACTIONS, LIKE 

OTHER FINANCIAL TRANSACTIONS, 

INVOLVE A VARIETY OF 

SIGNIFICANT RISKS. THE SPECIFIC 

RISKS PRESENTED BY A PARTICULAR 

SWAP TRANSACTION NECESSARILY 

DEPEND UPON THE TERMS OF THE 

TRANSACTION AND YOUR 

CIRCUMSTANCES. IN GENERAL, 

HOWEVER, ALL SWAPS 

TRANSACTIONS INVOLVE SOME 

COMBINATION OF MARKET RISK, 

CREDIT RISK, FUNDING RISK, AND 

OPERATIONAL RISK. 

HIGHLY CUSTOMIZED SWAPS 

TRANSACTIONS IN PARTICULAR 

MAY INCREASE LIQUIDITY RISK, 

WHICH MAY RESULT IN YOUR 

ABILITY TO WITHDRAW YOUR 

FUNDS BEING LIMITED. HIGHLY 

LEVERAGED TRANSACTIONS MAY 

EXPERIENCE SUBSTANTIAL GAINS 

OR LOSSES IN VALUE AS A RESULT 

OF RELATIVELY SMALL CHANGES IN 

THE VALUE OR LEVEL OF AN 

UNDERLYING OR RELATED MARKET 

FACTOR. 

IN EVALUATING THE RISKS AND 

CONTRACTUAL OBLIGATIONS 

ASSOCIATED WITH A PARTICULAR 

SWAP TRANSACTION, IT IS 

IMPORTANT TO CONSIDER THAT A 

SWAP TRANSACTION MAY BE 

MODIFIED OR TERMINATED ONLY BY 

MUTUAL CONSENT OF THE 

ORIGINAL PARTIES AND SUBJECT TO 

AGREEMENT ON INDIVIDUALLY 

NEGOTIATED TERMS. THEREFORE, IT 

MAY NOT BE POSSIBLE TO MODIFY, 

TERMINATE, OR OFFSET YOUR 

OBLIGATIONS OR YOUR EXPOSURE 

TO THE RISKS ASSOCIATED WITH A 

TRANSACTION PRIOR TO ITS 

SCHEDULED TERMINATION DATE. 

* * * * * 

■ 8. Effective July 2, 2012, revise § 4.27, 

as added November 16, 2011, at 76 FR 

71114, and effective March 31, 2012 to 

read as follows: 


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Federal Register / Vol. 77, No. 58 / Monday, March 26, 2012 / Rules and Regulations 17331 

§ 4.27 Additional reporting by advisors of 

certain large commodity pools. 

(a) General definitions. For the 

purposes of this section: 

(1) Commodity pool operator or CPO 

has the same meaning as commodity 

pool operator defined in section 1a(11) 

of the Commodity Exchange Act; 

(2) Commodity trading advisor or CTA 

has the same meaning as defined in 

section 1a(12); 

(3) Direct has the same meaning as 

defined in section 4.10(f); 

(4) Net asset value or NAV has the 

same meaning as net asset value as 

defined in section 4.10(b); 

(5) Pool has the same meaning as 

defined in section 1(a)(10) of the 

Commodity Exchange Act; 

(6) Reporting period means the 

reporting period as defined in the forms 

promulgated hereunder; 

(b) Persons required to report. A 

reporting person is: 

(1) Any commodity pool operator that 

is registered or required to be registered 

under the Commodity Exchange Act and 

the Commission’s regulations 

thereunder; or 

(2) Any commodity trading advisor 

that is registered or required to be 

registered under the Commodity 

Exchange Act and the Commission’s 

regulations thereunder. 

(c) Reporting. (1) Except as provided 

in paragraph (c)(2) of this section, each 

reporting person shall file with the 

National Futures Association, a report 

with respect to the directed assets of 

each pool under the advisement of the 

commodity pool operator consistent 

with appendix A to this part or 

commodity trading advisor consistent 

with appendix C to this part. 

(2) All financial information shall be 

reported in accordance with generally 

accepted accounting principles 

consistently applied. 

(d) Investment advisers to private 

funds. Except as otherwise expressly 

provided in this section, CPOs and 

CTAs that are dually registered with the 

Securities and Exchange Commission 

and are required to file Form PF 

pursuant to the rules promulgated under 

the Investment Advisers Act of 1940, 

shall file Form PF with the Securities 

and Exchange Commission in lieu of 

filing such other reports with respect to 

private funds as may be required under 

this section. In addition, except as 

otherwise expressly provided in this 

section, CPOs and CTAs that are dually 

registered with the Securities and 

Exchange Commission and are required 

to file Form PF pursuant to the rules 

promulgated under the Investment 

Advisers Act of 1940, may file Form PF 

with the Securities and Exchange 

Commission in lieu of filing such other 

reports with respect to commodity pools 

that are not private funds as may be 

required under this section. Dually 

registered CPOs and CTAs that file Form 

PF with the Securities and Exchange 

Commission will be deemed to have 

filed Form PF with the Commission for 

purposes of any enforcement action 

regarding any false or misleading 

statement of a material fact in Form PF. 

(e) Filing requirements. Each report 

required to be filed with the National 

Futures Association under this section 

shall: 

(1)(i) Contain an oath and affirmation 

that, to the best of the knowledge and 

belief of the individual making the oath 

and affirmation, the information 

contained in the document is accurate 

and complete; Provided, however, That 

it shall be unlawful for the individual to 

make such oath or affirmation if the 

individual knows or should know that 

any of the information in the document 

is not accurate and complete and 

(ii) Each oath or affirmation must be 

made by a representative duly 

authorized to bind the CPO or CTA. 

(2) Be submitted consistent with the 

National Futures Association’s 

electronic filing procedures. 

(f) Termination of reporting 

requirement. All reporting persons shall 

continue to file such reports as are 

required under this section until the 

effective date of a Form 7W filed in 

accordance with the Commission’s 

regulations. 

(g) Public records. Reports filed 

pursuant to this section shall not be 

considered Public Records as defined in 

§ 145.0 of this chapter. 

Editorial Note: FR DOC 2012–3390 

appearing on pages 11252–11344 in the issue 

of Friday, February 24, 2012 is being partially 

republished due to numerous errors. 

[FR Doc. C1–2012–3390 Filed 3–23–12; 8:45 a.m.] 

BILLING CODE 1505–01–D 

DEPARTMENT OF HOMELAND 

SECURITY 

U.S. Customs and Border Protection 

DEPARTMENT OF THE TREASURY 

19 CFR PARTS 4 and 24 

[CBP Dec. 12–04; USCBP–2008–0085] 

RIN 1515–AD74 

Interest on Untimely Paid Vessel 

Repair Duties 

AGENCY: U.S. Customs and Border 

Protection, Department of Homeland 

Security; Department of the Treasury. 

ACTION: Final rule. 

SUMMARY: This document adopts as a 

final rule, without change, the proposed 

amendments to the CBP regulations that 

provide that where an owner or master 

of a vessel documented under the laws 

of the United States fails to timely pay 

the duties determined to be due to CBP 

that are associated with the purchase of 

equipment for, or repair to, the vessel 

while it is outside the United States, 

interest will accrue on the amounts 

owed to CBP and that person will be 

liable for interest. The purpose of this 

document is to ensure that the CBP 

regulations reflect that CBP collects 

interest as part of its inherent revenue 

collection functions in situations where 

an owner or master of a vessel fails to 

pay the vessel repair duties determined 

to be due within 30 days of CBP issuing 

the bill. 

DATES: Effective Date: April 25, 2012. 

FOR FURTHER INFORMATION CONTACT: 

George F. McCray, Chief, Cargo 

Security, Carriers and Immigration 

Branch, Regulations and Rulings, Office 

of International Trade, (202) 325–0082. 

SUPPLEMENTARY INFORMATION: 

Background 

On April 1, 2011, U.S. Customs and 

Border Protection (CBP) published in 

the Federal Register (76 FR 18132) a 

proposal to amend title 19 of the Code 

of Federal Regulations (19 CFR) 

regarding the payment of interest on 

untimely paid vessel repairs. 

Specifically, CBP proposed amendments 

to the regulations to provide that where 

an owner or master of a vessel 

documented under the laws of the 

United States fails to timely pay the 

duties determined to be due to CBP that 

are associated with the purchase of 

equipment for, or repair to, the vessel 

while it is outside the United States, 

interest will accrue on the amounts 

owed to CBP and that person will be 

liable for interest. 

CBP solicited comments on the 

proposed rulemaking. 

Discussion of Comment 

One commenter responded to the 

solicitation of public comment in the 

proposed rule. The comment was 

favorable and recommended adoption of 

the proposed amendments as a final 

rule. 

Conclusion 

In light of the fact that a single 

favorable comment was submitted in 

response to CBP’s solicitation of public 

comment, CBP has determined to adopt 

as final the proposed rule published in 


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