Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices 9221

additional information, no civil penalty

would have been assessed for these

violations, in accordance with the civil

penalty assessment process described in

VI.B.2 of the Enforcement Policy. However,

the NRC utilized its enforcement discretion,

as described in Section VII.A.1 of the

Enforcement Policy, to assess a civil penalty

in the amount of $100,000. This section of

the policy permits the NRC to assess a

penalty where none might otherwise be

proposed, or to increase the amount of a civil

penalty, to reflect the safety or regulatory

significance of the violations. In this case, the

NRC utilized its discretion to propose a

$100,000 civil penalty for two primary

reasons. First, the Supply System had been

cited in August 1995, for violations in the

Supply System’s surveillance requirements

program as part of an escalated enforcement

action (EA 95–096). The number of similar

violations that occurred over a relatively

short period of time in 1996 demonstrated

serious weaknesses in the Supply System’s

surveillance requirements program and

showed that the Supply System’s 1995

corrective actions had not gone far enough to

address these weaknesses. Secondly, the NRC

utilized discretion to emphasize the

fundamental importance of the surveillance

program and to express its concern that, at

this stage in the operation of this facility,

weaknesses would exist as serious as those

evidenced by the numerous violations

forming the basis of this enforcement action.

The NRC determined that a civil penalty

larger than the $50,000 civil penalty assessed

in 1995 was warranted in these

circumstances and proposed a $100,000 civil

penalty for this matter.

2. The Supply System stated that there was

no systemic breakdown in operational

activities.

NRC Response: The NRC accepts this

statement, but it has little relevance to the

current enforcement action. The NRC based

its action on the serious weaknesses in the

surveillance program at WNP–2, as

evidenced by several surveillance-related

violations occurring over a relatively short

period of time, and the ineffectiveness of

previous corrective actions to preclude

recurrence. These violations were considered

collectively as a Severity Level III problem in

accordance with Supplement I of the

Enforcement Policy. The Supply System’s

assertion that these violations did not

represent a ‘‘systemic breakdown’’ in

operational activities does not affect the

NRC’s perspective or the enforcement action.

There was clearly a programmatic issue.

3. The Supply System stated that

additional credit should be given for its

prompt and comprehensive corrective

actions.

NRC Response: As stated above, the NRC

recognized that the Supply System took

prompt and comprehensive corrective

actions. The penalty was not based on any

perceived shortcomings in the Supply

System’s corrective actions for the current

(1996) violations. The NRC’s concern about

corrective actions was based on the

aforementioned 1995 enforcement action (EA

95–096), in which surveillance-related

violations made up part of a Severity Level

III problem that resulted in a $50,000 civil

penalty being assessed. In EA 95–096, issued

on August 17, 1995, nine violations were

considered in the aggregate as a Severity

Level III problem. Violations E(1), E(2) and F

of EA 95–096 involved changing operational

conditions (modes) with equipment

inoperable, a violation of the Technical

Specifications. In the current enforcement

action, the violations involved changing

modes with equipment inoperable and

changing modes without having conducted

required surveillances. All of these violations

involved the programs and processes in place

to assure that equipment was operable and

that required surveillances had been

conducted prior to changing modes. In taking

its action in 1995, the NRC specifically stated

that it had limited the civil penalty to

$50,000 ‘‘in recognition of the fact that you

have proposed comprehensive corrective

actions.’’ Since those actions were not

effective with respect to surveillance-related

problems that form the basis for this

enforcement action, as well as to emphasize

the fundamental importance of surveillance

program compliance, the NRC proposed a

civil penalty ($100,000) that was larger than

the civil penalty proposed for EA 95–096

($50,000). The NRC notes that the Supply

System’s corrective actions for the 1995

enforcement action did not extend to its

processes for assuring compliance with

surveillance requirements and that, as of the

occurrence of the violations in 1996, no

checklist or other verification method existed

to ensure that surveillances had been

completed prior to changing modes, a

commonly used method of verifying

compliance.

4. The Supply System stated in its

response that the enforcement action placed

too much emphasis on the prior surveillancerelated violation, noting that only one current

violation was similar to a previous violation

only in that it involved errors in LCO

tracking prior to plant mode changes.

NRC Response: The NRC does not agree

that the similarities between the 1995 and

1996 enforcement actions are limited to one

example. As noted above, Violations E(1),

E(2) and F in the 1995 enforcement action

involved making mode changes with

required equipment inoperable. In the

current enforcement action, Violations A, B

(with 3 examples) and C involved changing

modes without having conducted required

surveillances to show equipment operable.

The NRC placed emphasis on this similarity,

and in fact relied upon it as one of the

primary reasons for utilizing enforcement

discretion, to emphasize that escalated

enforcement action had been taken in August

1995, less than one year prior to the current

violations occurring. The NRC’s expectation

is that licensees who receive escalated

enforcement action will take corrective

action that is broad and comprehensive such

that a recurrence of the violations is

precluded or minimized. In this case, it was

apparent that the Supply System’s previous

corrective actions did not address

weaknesses in WNP–2’s programs for

assuring that surveillances were conducted

and that equipment was operable prior to

changing plant modes. Thus, the NRC does

not agree that too much emphasis was placed

on the similarities between the 1995 and

1996 enforcement actions. In addition, as

discussed in response to other arguments

above, the NRC exercised discretion to

emphasize its concern about serious

weaknesses in such a fundamental aspect of

complying with plant Technical

Specifications.

NRC Conclusion

The NRC concludes that its use of

enforcement discretion to propose a $100,000

civil penalty was appropriate and in

accordance with the Enforcement Policy’s

emphasis in Section VII.A.1 of assuring that

the enforcement action reflects the

significance of the circumstances and

conveys the appropriate regulatory message.

Consequently, the proposed civil penalty in

the amount of $100,000 should be imposed

by order.

[FR Doc. 97–5000 Filed 2–27–97; 8:45 am]

BILLING CODE 7590–01–P

OFFICE OF MANAGEMENT AND

BUDGET

Discount Rates for Cost-Effectiveness

Analysis of Federal Programs

AGENCY: Office of Management and

Budget.

ACTION: Revisions to Appendix C of

OMB Circular A–94.

SUMMARY: The Office of Management

and Budget revised Circular A–94 in

1992. The revised Circular specified

certain discount rates to be updated

annually when the interest rate and

inflation assumptions used to prepare

the budget of the United States

Government were changed. These

discount rates are found in Appendix C

of the revised Circular. The updated

discount rates are shown below. The

discount rates in Appendix C are to be

used for cost-effectiveness analysis,

including lease-purchase analysis, as

specified in the revised Circular. They

do not apply to regulatory analysis.

DATES: The revised discount rates are

effective immediately and will be in

effect through February 1998.

FOR FURTHER INFORMATION CONTACT:

Robert B. Anderson, Office of Economic

Policy, Office of Management and

Budget, (202) 395–3381.

Joseph J. Minarik,

Associate Director for Economic Policy, Office

of Management and Budget.

Appendix C

(Revised February 1997)

Discount Rates for Cost-Effectiveness,

Lease Purchase, and Related Analyses

Effective Dates. This appendix is

updated annually around the time of the
9222 Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices

1Cedel Bank is a wholly-owned subsidiary of

Cedel International. On January 1, 1995, Cedel,

which was established in 1970, was converted into

Cedel Bank to perform lending, clearing, and

settlement activities, and a parent company, Cedel

International, was created into which Cedel

transferred the nonbanking subsidiaries. Cedel Bank

is licensed in Luxembourg both as a bank and as

a ‘‘professionnel du secteur financier’’ (‘‘PSF’’) and

is under the supervision of the Institute Monetaire

Luxembourgeois (‘‘IML’’), Luxembourg’s banking

and securities regulatory authority. Cedel

International is licensed as a non-bank PSF and also

is under the supervision of the IML. The IML

establishes capital and liquidity requirements,

evaluates the financial condition and performance

of all Luxembourg financial institutions, conducts

on-site inspections, and monitors all financial

institutions and their controlling companies for

adherence to Luxembourg laws and regulations. On

April 24, 1996, the Federal Reserve Board granted

Cedel’s request to establish a representative office

in New York.

2Copies of the application for exemption are

available for inspection and copying at the

Commission’s Public Reference Room, in File No.

600–29.

3 15 U.S.C. 78q–1.

4 17 CFR 240.17Ab2–1.

5Securities Exchange Act Release No. 37309

(June 12, 1996), 61 FR 31201 (Notice of filing of

application for exemption from registration as a

clearing agency) (‘‘Cedel notice’’).

6Securities Exchange Act Release No. 38328

(February 24, 1997), (order approving application

for exemption from registration as a clearing

agency) (‘‘Cedel exemption order’’). The definition

of ‘‘eligible U.S. government securities’’ is set forth

in Section II of this notice.

7For a more detailed description of Cedel’s

clearance, settlement, and credit support services,

see the Cedel notice, 61 FR at 31201–04.

8 GCSS became operational on a limited basis on

September 30, 1996, with four institutions

participating (Bank of America, Banque Paribas,

Dresdner Bank, and Salomon Brothers). Pursuant to

the Cedel exemption order, eligible U.S.

government securities can be included in GCSS.

However, the Cedel exemption order does not

permit Cedel to provide securities processing

services through GCSS or otherwise for other U.S.

debt or equity securities transactions involving U.S.

entities.

President’s budget submission to

Congress. This version of the appendix

is valid through the end of February,

1998. Copies of the updated appendix

and the Circular can be obtained from

the OMB Publications Office (202–395–

7332) or in an electronic form through

the OMB home page on the world-wide

WEB, http://www.whitehouse.gov/WH/

EOP/omb. Updates of this appendix are

also available upon request from OMB’s

Office of Economic Policy (202–395–

3381), as is a table of past years’ rates.

Nominal Discount Rates. Nominal

interest rates based on the economic

assumptions from the budget are

presented below. These nominal rates

are to be used for discounting nominal

flows, which are often encountered in

lease-purchase analysis.

NOMINAL INTEREST RATES ON TREASURY NOTES AND BONDS OF SPECIFIED MATURITIES

[In percent]

3-year 5-year 7-year 10-

year

30-

year

5.8 5.9 6.0 6.1 6.3

Real Discount Rates. Real interest

rates based on the economic

assumptions from the budget are

presented below. These real rates are to

be used for discounting real (constantdollar) flows, as is often required in

cost-effectiveness analysis.

REAL INTEREST RATES ON TREASURY

NOTES AND BONDS OF SPECIFIED

MATURITIES

[In percent]

3-year 5-year 7-year 10-

year

30-

year

3.2 3.3 3.4 3.5 3.6

Analyses of programs with terms

different from those presented above

may use a linear interpolation. For

example, a four-year project can be

evaluated with a rate equal to the

average of the three-year and five-year

rates. Programs with durations longer

than 30 years may use the 30-year

interest rate.

[FR Doc. 97–4992 Filed 2–27–97; 8:45 am]

BILLING CODE 3110–01–P

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38329; International Series

Release No. 1059; File No. 600–29]

Self-Regulatory Organizations; Cedel

Bank, Notice of Filing To Amend Order

Exempting Cedel Bank From

Registration as a Clearing Agency

February 24, 1997.

Introduction

On August 31, 1995, Cedel Bank,

socie ́te ́ anonyme, Luxembourg

(‘‘Cedel’’) 1 filed with the Securities and

Exchange Commission (‘‘Commission’’)

an application on Form CA–2 2 for

exemption from registration as a

clearing agency pursuant to Section 17A

of the Securities Exchange Act of 1934

(‘‘Exchange Act’’) 3 and Rule 17Ab2–1

thereunder.4 Notice of Cedel’s

application was published in the

Federal Register on June 19, 1996.5 On

February 24, 1997, the Commission

granted Cedel’s application for

exemption from registration as a

clearing agency to permit Cedel to offer

clearance, settlement, and credit

support services to U.S. entities for

transactions in eligible U.S. government

securities.6 The exemption is subject to

certain conditions and limitations

which are set forth in the Cedel

exemption order.

Contemporaneously with the granting

of Cedel’s limited exemption from

registration as a clearing agency, the

Commission is publishing this notice to

solicit comments from interested

persons on the specific issue of whether

Cedel should be permitted, without

registering as a clearing agency, to offer

its securities processing and collateral

management services to U.S. entities for

U.S. debt and equity securities in

addition to U.S. government securities.

The Commission seeks comment on this

issue because the Commission believes

that the provision of clearance,

settlement, and collateral management

services by a non-U.S. clearing agency

for U.S. entities in U.S. debt and equity

securities raises issues that were not

addressed sufficiently in the Cedel

notice or the comments thereto.

II. Description of the Proposal

As more fully described in the Cedel

notice and the Cedel exemption order,

Cedel offers to its customers

international clearance and settlement,

trade confirmation, securities custody,

and securities lending services.7 Cedel

also offers to its customers its Global

Credit Support Service (‘‘GCSS’’) which

is a book-entry, real-time collateral

management service for cross-border

securities collateralization.8 In its

application for exemption, Cedel

requested that it be permitted to provide

clearance and settlement, securities

lending, and GCSS services for

transactions involving U.S. securities,

including equity and debt securities.

The comment letters regarding the

Cedel notice generally indicated that the

ability to provide clearance, settlement,

and collateral management services for

transactions involving U.S. Treasury

securities (‘‘U.S. Treasuries’’) appeared

to be the most critical element of Cedel’s

proposed services. This is especially

true for GCSS because U.S. Treasuries

appear to be the preferred securities for

use as collateral in securing

international credit obligations.

Commenters did not specifically discuss

any unique or additional benefits to be