Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices 1911

of the comments requested that the

underlying data be made available. One

comment noted that the capacity

requirements must be consistent with

historical information provided to law

enforcement. Two comments requested

that law enforcement compare law

enforcement data to carrier data and that

the two data sources be reconciled. One

of the comments urged that the capacity

requirements be established for actual

numbers of simultaneous interceptions

for the central office and that those

numbers be based on data and

information supplied by the carriers.

Another comment stated that the

capacity requirements should be based

on historical activity.

As stated in the methodology section

of this notice, law enforcement has

based the capacity requirements on the

historical baseline of interception

activity for specific geographic areas,

and included reasonable growth factors

to establish capacity levels for the

future. Historical baselines are provided

in the appendices of the Second Notice.

14. Methodology

Eight comments were received

questioning the methodology used for

determining capacity requirements.

Specifically, the comments asked law

enforcement to explain its methodology

and justify how actual and maximum

capacity requirements were determined.

In response to these comments, a

methodology section included as part of

the Second Notice describes that means

by which capacity requirements were

determined.

15. Funding and Cost Impact

Fifteen comments were received on

the issues of funding and cost impact.

Three of the comments requested

clarification on the cost impact of

complying with CALEA if Congress did

not appropriate funding. Two comments

requested that law enforcement provide

an equitable distribution plan for fund

disbursement, while another suggested

that law enforcement provide a

reasonable assessment of the level of

funding that was available for upgrades.

Ten of the comments addressed the

costs associated with compliance.

Issues pertaining to cost recovery and

funding are not the subject or intent of

this Notice. Detailed information on

funding and cost recovery issues is

provided in the proposed cost recovery

rules that were published in the Federal

Register, 61 FR 21396, on May 10, 1996.

A summary of these rules is included in

section IV.B of the Second Notice.

16. Impact on Small Carriers

Three comments were received on the

effect that CALEA may have on small

telephone companies. In particular, the

comments indicated that high

implementation costs might make

compliance difficult to achieve. In

addition, the comments stated that

unnecessarily high capacity

requirements might stifle the

advancement of new and emerging

telecommunications technologies in

rural markets.

Law enforcement recognizes that

many small carriers provide service to

geographic areas that historically have

had minimal or no electronic

surveillance activity. The capacity

requirements stated in this notice are

based on the historical interception

activity for a given area. In order for law

enforcement to effectively respond to

future incidents of unusual and

unexpected criminality, minimum

capacity requirements have been

established for areas with no history of

interceptions.

In response to the comment regarding

the effect of capacity requirements on

new and emerging technologies, law

enforcement also recognizes that

CALEA prohibits law enforcement from

specifying the design of equipment,

facilities, features, or systems, or

adoption of any equipment, facility,

service or feature by a

telecommunications carrier.

17. Manufacturers’ Concern

Three comments were received

expressing manufacturers’ concerns

with the capacity requirements. One of

the comments noted that the Initial

Notice might require capacity expansion

beyond current manufacturers’

capabilities. One comment stated that

SMR manufacturers might not have the

products required for SMR carriers to

comply with the capacity requirements.

One comment stated that equipment

should be designed only from the

perspective of the worst case scenario.

Law enforcement has provided

capacity estimates in this Second Notice

that can be used by manufacturers in

designing and developing CALEAcompliant solutions for wireline and

wireless (cellular and PCS)

technologies. Other technologies, such

as SMR, will be addressed in

subsequent Notices of Capacity.

18. Definitions of Installed or Deployed

and Significant Upgrade

One comment requested clarification

on the terms ‘‘installed’’ or ‘‘deployed’’,

inquiring as to whether equipment

ordered before January 1, 1995, but not

delivered until after January 1, 1995,

would be considered installed or

deployed. Another comment stated the

term significant upgrade must be clearly

defined.

The terms installed or deployed and

significant upgrade pertain to the

assistance capability requirements and,

therefore, are not within the purview of

the Notices on Capacity. (It should be

noted that the definition of installed or

deployed was included in the proposed

cost recovery rules published in the

Federal Register, 61 FR 21396, on May

10, 1996.)

Louis J. Freeh,

Director, FBI.

[FR Doc. 97–318 Filed 1–13–97; 8:45 am]

BILLING CODE 4410–02–M

DEPARTMENT OF LABOR

Employment and Training

Administration

[Unemployment Insurance Program Letter

(UIPL) No. 9–97]

Unemployment Compensation for

Federal Employees (UCFE)—Coverage

Ruling for Human Subjects for

Research Studies Conducted by U.S.

Department of Agriculture, Agricultural

Research Service

Pursuant to Employment and Training

Order No. 2–92, the Director,

Unemployment Insurance Service, has

determined that human subjects who

participate in nutritional research

studies conducted by the U.S.

Department of Agriculture, Agricultural

Research Service, do not perform

‘‘Federal Service’’ within the meaning of

5 U.S.C. 8501(1) for UCFE program

purposes. The UCFE Coverage Ruling

No. 97–1 is published below.

Dated: January 6, 1997.

Timothy M. Barnicle,

Assistant Secretary of Labor.

Directive: Unemployment Insurance Program

Letter No. 09–97.

To: All State Employment Security Agencies.

From: Mary Ann Wyrsch, Director,

Unemployment Insurance Service.

Subject: Unemployment Compensation for

Federal Employees (UCFE) Program

Coverage Ruling No. 97–1, Human

Subjects for Research Studies Conducted

by the U.S. Department of Agriculture,

Agricultural Research Service (ARS).

1. Purpose. To provide State Employment

Security Agencies (SESAs) with a copy of the

above UCFE program coverage ruling.

2. Background. For a complete discussion

of the background of the UCFE Program

Coverage Ruling No. 97–1, please refer to the

Discussion/Analysis section of the

attachment to this directive.
1912 Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices

On August 15, 1996, the Administrator of

the ARS requested that the Secretary of Labor

issue a UCFE program coverage ruling on

whether human subjects participating in

nutritional research studies conducted by the

ARS perform ‘‘Federal Service’’ within the

meaning of 5 U.S.C. 8501(1) for UCFE

program coverage purposes. The attached

Coverage Ruling held that these subjects did

not perform Federal service.

3. Action Required. SESAs should:

a. Provide copies of this directive, plus

attachment, to all appropriate staff, including

the Unemployment Insurance Tax and

Appeals Units.

b. Follow the guidance contained in the

attachment when determining the UCFE

program eligibility of individuals who

participated as human subjects in ARS

nutritional research studies.

4. Inquiries. Direct inquiries to the

appropriate Regional Office.

5. Attachment. UCFE Program Coverage

Ruling No. 97–1.

UCFE Program Coverage Ruling No. 97–1

Human Subjects for Research Studies

Conducted by U.S. Department of

Agriculture, Agricultural Research Service

Ruling: Human subjects who participate in

nutritional research studies conducted by

U.S. Department of Agriculture (USDA),

Agricultural Research Service (ARS), do not

perform ‘‘Federal Service’’ within the

meaning of 5 U.S.C. 8501(1).

Statement of Facts: In holding that human

subjects participating in ARS nutritional

studies do not perform ‘‘Federal service,’’ I

have considered the following factors:

1. Title XIV of the Food and Agriculture

Act of 1977 (Public Law 95–113) provides

that USDA is the lead Federal agency for

agricultural research in the field of human

nutrition and on the nutritive value of foods.

Since 1953, the ARS is the USDA agency in

charge of conducting nutritional studies.

2. Individuals who participate as ‘‘human

subjects’’ in these nutritional studies are

covered by the Common Rule for the

Protection of Human Subjects (45 CFR Part

46, 7 CFR Part 1c, and ARS Directive 605.1).

3. Human subjects do not earn annual

leave, sick leave, nor are they covered under

any Federal employee retirement system.

4. On August 2, 1990, the Internal Revenue

Service (IRS) ruled in a non-precedential

decision that human test subjects in medical

tests conducted by the Food and Drug

Administration are not employees and do not

receive ‘‘wages’’ for income tax withholding

or Federal employment tax purposes. Priv.

Ltr. Rul. 91–06–004 (Aug. 2, 1990).

5. On January 24, 1994, in a Federal

Employment Tax Determination letter mailed

to the Bionetics Corporation, the IRS ruled

that an individual’s participation as a human

test subject in USDA-sponsored research was

as an independent contractor and not an

employee of the firm conducting the

research. This letter was obtained from the

ARS on August 16, 1996.

Discussion/Analysis: The purpose of the

ARS nutritional research is to carry out the

policy of the United States as stated in

Section 1421(b) of the Food and Agricultural

Act of 1977: ‘‘It is hereby declared to be the

policy of the United States that the

Department of Agriculture conduct research

in the fields of human nutrition and on

nutritive value of foods and conduct human

nutrition education activities. . . .’’

The individuals who agree to be human

subjects for this research are treated

according to the principles contained in the

Common Rule for the Protection of Human

Subjects, and in accord with the Nuremburg

Code, the Declaration of Helsinki, and the

Public Health Service Guidelines. These

guiding principles are designed to ensure

that human subjects are fully informed of the

purpose and planned procedures to be

utilized in the research, and that the

individual’s decision to participate is

voluntary without coercion or undue

influence. The human subjects receive a $35

per day stipend for as long as they participate

in the study. The ARS considers the $35 per

day stipend to be too small to influence or

coerce an individual’s decision to volunteer

to be a human subject in its nutritional

research studies.

The human subjects participating in these

ARS nutritional studies enter into a consent

agreement with the ARS nutritional studies

enter into a consent agreement with the ARS.

The consent agreement stipulates that the

human subjects participating in the study

must observe the regimen prescribed by the

ARS. The human subjects agree to provide

blood and other bodily samples for analyses

by the research study staff. The human

subjects may elect to end their participation

in the study at any time prior to its

completion, and failure of the human subject

to comply with the experimental protocol

and/or established rules will result in the

human subject being asked by the ARS to

leave the study.

Prior to October 1995, the ARS utilized

contractors (e.g., the Bionetics Corporation)

for assistance in conducting the metabolic

research studies including the payment of the

human subjects’ stipends. In 1995, the

California Employment Development

Department (CEDD) informed the contractor

at the ARS’ Western Human Nutrition

Research Center (WHNRC) that human

subjects participating in nutritional studies at

the WHNRC were employees of the

contractor. Under California State law, the

contractor became liable for State

unemployment taxes based on the payment

of the $35 per day stipend. In October 1995,

the WHNRC assumed the responsibility for

the payment of the human subjects’ stipends,

and the issue arose whether these subjects

perform ‘‘Federal Service.’’ All stipends

provided to human subjects are now paid by

the ARS.

The Unemployment Compensation for

Federal Employees (UCFE) program provides

unemployment compensation coverage for

Federal civilian employees. In order to be

eligible to receive unemployment

compensation under the UCFE program, an

individual must perform ‘‘Federal Service’’

as defined at 5 U.S.C. 8501(1). The term

‘‘Federal Service,’’ in part, is defined to be

‘‘service performed after 1952 in the employ

of the United States or an instrumentality of

the United States which is wholly or partially

owned by the United States. * * *’’

(Emphasis added.) Therefore, for UCFE

program coverage purposes, an individual

must be a civilian employee of the United

States Federal Government and not an

independent contractor.

In reviewing this matter I have examined

the relevant statutes, regulations, and consent

agreements in addition to the decisions and

determinations of the CEED and the IRS in

determining whether human subjects

participating in nutritional research with the

ARS perform service as employees or are

independent contractors.

The question of whether an individual is

an independent contractor or an employee is

one of fact to be determined upon

consideration of the facts and the application

of the law and regulations in a particular

case. Individuals are employees for Federal

employment tax purposes if they have the

status of employees under the usual common

law rules applicable in determining the

relationship. Guidance for making the

determination is found in three substantially

similar sections of the IRS Employment Tax

Regulations: 26 CFR 31.3121(d)–1;

31.3306(i)–1; and 31.3401(c)–1, which relate

to the Federal Insurance Contributions Act,

the Federal Unemployment Tax Act, and

Federal Income Tax withholding

respectively, as well as IRS Revenue Ruling

87–41, 1987–1 C.B. 296. Generally, the

relationship of employer and employee exists

when the person for whom the services are

performed has the right to control and direct

the individual who performs the services not

only as to the result to be accomplished but

also as to the details and means by which

that result is obtained. In this connection, it

is not necessary that the firm actually direct

or control the manner in which the services

are performed; it is sufficient that the right

to do so be present.

Other factors characteristic of employment

are the right of the employer to discharge and

the furnishing of tools or a work place. An

individual who is not by statute an employee

and is not an employee under the common

law rules is an independent contractor.

Independent contractors are subject to

another’s control and direction only with

respect to the result to be accomplished and

not the means and methods to be used.

Consideration must also be given to such

factors as the continuity of the relationship

and whether the individual’s services are an

integral part of the business of the employer

as distinguished from an independent trade

or business of individual in which the

individual assumes the risk of realizing a

profit or suffering a loss.

The pertinent facts submitted for any

consideration indicate:

1. The ARS nutritional research studies are

conducted in accord with the Common Rule

for the Protection of Human Subjects (45 CFR

Part 46, 7 CFR Part 1c, and ARS Directive

605.1), and in accord with the Nuremburg

Code and the Declaration of Helsinki. These

require that human subjects’ participation in

research must be voluntary and uncoerced.

Since ARS nutritional research studies follow

the above regulations and international

agreements, it suggests that the human

subjects are volunteers, not employees, who

are subject to control and direction. Further,
Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices 1913

1For purposes of this proposed exemption,

references to the provisions of Title I of the Act,

unless otherwise specified, refer also to

corresponding provisions of the Code.

I agree with the ARS that the stipend paid

to the human subjects for each day they

participate in the research ($35 per day) is an

amount so small that it does not have an

undue influence on the decision of the

individual to participate in the research.

2. Human subjects who voluntarily

participate in the ARS nutritional research

studies enter into a consent agreement under

which they agree to follow research protocols

established by the ARS during the duration

of the research study. A continuing

relationship between the ARS and the human

subjects is not established.

3. The human subjects do not produce a

product or provide a service to the ARS

during these research studies. Providing

samples of blood and normal bodily

functions is not an activity pursued as a

livelihood by the human subjects.

4. The human subjects control the means

and methods used to accomplish the task,

i.e., the provision of samples of bodily

functions. While the ARS controls the

research protocols to be followed, including

the schedule of sample collection, the human

subjects control their own bodily functions.

5. The ARS provides no tools, supplies, or

equipment to the human subjects. The ARS

does use instruments during the nutritional

research to collect and analyze bodily

samples provided by the human subjects,

however these instruments are not used by

the human subjects.

6. Human subjects are not entitled to sick

leave or annual leave and are not covered

under any Federal Employee Retirement

System.

The reasons stated above indicate that an

employment relationship does not exist and

support the conclusion stated in the first

paragraph of this ruling that, for UCFE

program purposes, human subjects who

participate in nutritional research studies

conducted by the USDA, ARS, do not

perform ‘‘Federal Service’’ within the

meaning of 5 U.S.C. 8501(1).

This coverage ruling is issued pursuant to

redelegation of authority from the Assistant

Secretary, in Employment and Training

Order No. 2–92, dated April 10, 1992,

(published at 57 Fed. Reg. 13760), which is

authorized by Section 6 of Secretary’s Order

No. 4–75 (40 Fed. Reg. 18515) (as amended

by Secretary’s Order No. 14–75).

Dated: November 26, 1996.

Mary Ann Wyrsch,

Director, Unemployment Insurance Service.

[FR Doc. 97–839 Filed 1–13–97; 8:45 am]

BILLING CODE 4510–30–M

Pension and Welfare Benefits

Administration

[Application No. D–10172, et al.]

Proposed Exemptions; The Chicago

Corporation

AGENCY: Pension and Welfare Benefits

Administration, Labor.

ACTION: Notice of Proposed Exemptions.

SUMMARY: This document contains

notices of pendency before the

Department of Labor (the Department) of

proposed exemptions from certain of the

prohibited transaction restriction of the

Employee Retirement Income Security

Act of 1974 (the Act) and/or the Internal

Revenue Code of 1986 (the Code).

Written Comments and Hearing

Requests

All interested persons are invited to

submit written comments or request for

a hearing on the pending exemptions,

unless otherwise stated in the Notice of

Proposed Exemption, within 45 days

from the date of publication of this

Federal Register Notice. Comments and

request for a hearing should state: (1)

the name, address, and telephone

number of the person making the

comment or request, and (2) the nature

of the person’s interest in the exemption

and the manner in which the person

would be adversely affected by the

exemption. A request for a hearing must

also state the issues to be addressed and

include a general description of the

evidence to be presented at the hearing.

A request for a hearing must also state

the issues to be addressed and include

a general description of the evidence to

be presented at the hearing.

ADDRESSES: All written comments and

request for a hearing (at least three

copies) should be sent to the Pension

and Welfare Benefits Administration,

Office of Exemption Determinations,

Room N–5649, U.S. Department of

Labor, 200 Constitution Avenue, NW.,

Washington, DC 20210. Attention:

Application No. stated in each Notice of

Proposed Exemption. The applications

for exemption and the comments

received will be available for public

inspection in the Public Documents

Room of Pension and Welfare Benefits

Administration, U.S. Department of

Labor, Room N–5507, 200 Constitution

Avenue, NW., Washington, DC 20210.

Notice to Interested Persons

Notice of the proposed exemptions

will be provided to all interested

persons in the manner agreed upon by

the applicant and the Department

within 15 days of the date of publication

in the Federal Register. Such notice

shall include a copy of the notice of

proposed exemption as published in the

Federal Register and shall inform

interested persons of their right to

comment and to request a hearing

(where appropriate).

SUPPLEMENTARY INFORMATION: The

proposed exemptions were requested in

applications filed pursuant to section

408(a) of the Act and/or section

4975(c)(2) of the Code, and in

accordance with procedures set forth in

29 CFR Part 2570, Subpart B (55 FR

32836, 32847, August 10, 1990).

Effective December 31, 1978, section

102 of Reorganization Plan No. 4 of

1978 (43 FR 47713, October 17, 1978)

transferred the authority of the Secretary

of the Treasury to issue exemptions of

the type requested to the Secretary of

Labor. Therefore, these notices of

proposed exemption are issued solely

by the Department.

The applications contain

representations with regard to the

proposed exemptions which are

summarized below. Interested persons

are referred to the applications on file

with the Department for a complete

statement of the facts and

representations.

The Chicago Corporation (TCC) Located

in Chicago, IL

[Application No. D–10172]

Proposed Exemption

Based on the facts and representations

set forth in the application, the

Department is considering granting an

exemption under the authority of

section 408(a) of the Act and section

4975(c)(2) of the Code and in

accordance with the procedures set

forth in 29 CFR Part 2570, Subpart B (55

FR 32836, 32847, August 10, 1990.) 1

Section I. Covered Transactions

If the exemption is granted, the

restrictions of section 406(a) of the Act

and the sanctions resulting from the

application of section 4975 of the Code,

by reason of section 4975(c)(1) (A)

through (D) of the Code, shall not apply

to the proposed sale, for cash or other

consideration, by the Midwest Banc

Fund IV Group Trust (the BF IV Group

Trust) in which employee benefit plans

(the Plans) invest, of certain securities

(the Securities) that are held in the BF

IV Group Trust Portfolio, to a party in

interest with respect to a participating

Plan, where the party in interest

proposes to acquire or merge with a

bank company (the Bank Company) or

a financial services company (the

Financial Services Company) that

issued such securities.

In addition, the restrictions of section

406 (b)(1) and (b)(2) of the Act and the

sanctions resulting from the application

of section 4975 of the Code by reason of

section 4975(c)(1)(E) of the Code, shall

not apply to the payment of a

performance fee (the Performance Fee)

by Plans investing in the BF IV Group

Trust to TCC.