24308 Federal Register / Vol. 66, No. 93 / Monday, May 14, 2001 / Proposed Rules

1See Commodity Futures Modernization Act of

2000, Appendix E of Pub. L. 106–554, 114 Stat.

2763 (2000).

2For purposes of this release, use of the term

‘‘derivatives clearing organization’’ means an

applicant seeking registration as a DCO, or a DCO

registered or required to be registered, with the

Commission pursuant to section 5b of the Act.

3The Commission will consider, however, under

the exemptive authority provided by section 4(c) of

the Act, requests to clear transactions through

alternative means.

4Thus, under the CFMA, DCOs are treated as

entities that are separate and distinct from the

markets for which they provide clearing services.

5Under section 409 of the Federal Deposit

Insurance Corporation Act of 1991, as amended by

section 112 of the CFMA, OTC derivatives also may

be cleared by a multilateral clearing organization

supervised by federal banking authorities, a clearing

agency registered under the Securities Exchange

Act of 1934, or a clearing organization supervised

by a foreign financial regulator that satisfies

appropriate standards as determined by the

Comptroller of the Currency, the Board of

Governors of the Federal Reserve System, the

Federal Deposit Insurance Corporation, the

Securities and Exchange Commission, or the CFTC.

This approach to clearing is consistent with the

Report of the President’s Working Group on

Financial Markets (‘‘PWG’’), which encouraged the

development of clearing systems for OTC

derivatives to reduce systemic risk. See Over-theCounter Derivatives Markets and the Commodity

Exchange Act, Report of the PWG (Nov. 1999). The

Commission believes that appropriate standards

referred to above include regulating and overseeing

the organization pursuant to principles comparable

to the core principles set forth in section 5b of the

Act and a requirement to participate in appropriate

and adequate information sharing arrangements.

6 66 FR 14262. That release, when it is published

as a final rulemaking, will be conformed to this

release insofar as this release clarifies the

application of the DCO-related provisions of the

CFMA.

7Section 1a(9) of the Act defines the term DCO

to encompass entities that, ‘‘with respect to an

agreement, contract, or transaction—(i) enables each

party to the agreement * * * to substitute, through

novation or otherwise, the credit of the [DCO] for

the credit of the parties; (ii) arranges or provides,

on a multilateral basis, for the settlement or netting

of obligations resulting from such agreements * * *

executed by participants in the [DCO]; or (iii)

otherwise provides clearing services or

arrangements that mutualize or transfer among

participants in the [DCO] the credit risk arising

from such agreements * * * executed by the

participants.’’

8The CFMA’s definition of DCO does not

necessitate the performance of a direct credit

enhancement function. See section 1a(9)(ii). Thus,

the provision of certain settlement or netting

services in the absence of direct credit enhancement

would generally meet the definition of a DCO. An

organization that intends to provide settlement or

other clearing-type services to a designated contract

21.197 and 21.199) to operate the airplane to

a location where the requirements of this AD

can be accomplished.

Issued in Renton, Washington, on May 8,

2001.

Donald L. Riggin,

Acting Manager, Transport Airplane

Directorate, Aircraft Certification Service.

[FR Doc. 01–12009 Filed 5–11–01; 8:45 am]

BILLING CODE 4910–13–U

COMMODITY FUTURES TRADING

COMMISSION

17 CFR Part 39

RIN 3038–AB66

A New Regulatory Framework for

Clearing Organizations

AGENCY: Commodity Futures Trading

Commission.

ACTION: Proposed rulemaking.

SUMMARY: The Commodity Futures

Trading Commission (Commission or

CFTC) is proposing rules to implement

various provisions of the Commodity

Futures Modernization Act of 2000

(‘‘CFMA’’), which fundamentally alters

the regulation of derivatives clearing

organizations. These proposed rules

apply to derivatives clearing

organizations that are, are required to, or

seek to become registered with the

Commission and implement the

statutory framework in the CFMA

governing those entities.

DATES: Comments must be received by

June 13, 2001.

ADDRESSES: Comments should be sent to

the Commodity Futures Trading

Commission, Three Lafayette Centre,

1155 21st Street, N.W., Washington,

D.C. 20581, attention: Office of the

Secretariat. Comments may be sent by

facsimile transmission to (202) 418–

5521 or, by e-mail to secretary@cftc.gov.

Reference should be made to ‘‘Clearing

Organizations.’’

FOR FURTHER INFORMATION CONTACT:

Alan L. Seifert, Deputy Director,

Division of Trading and Markets, Lois J.

Gregory, Special Counsel, or David P.

Van Wagner, Associate Director,

Division of Trading and Markets,

Commodity Futures Trading

Commission, Three Lafayette Centre,

1155 21st Street, N.W., Washington,

D.C. 20581. Telephone (202) 418–5260

or e-mail ASeifert@cftc.gov.,

LGregory@cftc.gov, or

DVanWagner@cftc.gov.

SUPPLEMENTARY INFORMATION:

I. Background

Congress on December 15, 2000,

passed, and the President on December

21, 2000, signed into law, the CFMA,1

which substantially amended the

Commodity Exchange Act, 7 U.S.C. 1 et

seq. (‘‘Act’’). New Section 5b(a) of the

Act, added by the CFMA, requires that

contracts of sale of a commodity for

future delivery, options on such

contracts, and options on a commodity

be cleared only by a derivatives clearing

organization (‘‘DCO’’) registered with

the Commission,2 unless the contracts

are: (i) Excluded under the Act, (ii)

exempted under the Act, or (iii) security

futures products cleared by a securities

clearing agency. Contracts traded on a

designated contract market, if cleared,

must be cleared by a DCO.3 Excluded or

exempted contracts, including those

elected pursuant to section 5a(g) to be

traded on a registered derivatives

transaction execution facility, are not

required to be cleared by a DCO,

although a clearing organization that

clears these contracts may voluntarily

apply, pursuant to section 5b(b), to

register with the Commission as a DCO.4

In addition, a DCO may clear other

contracts, agreements, or transactions,

including, but not limited to, certain

over-the-counter (‘‘OTC’’) derivative

instruments referenced in section 5b(b)

of the Act and transactions in spot and

forward contracts.5

To be registered as a DCO, an

applicant must demonstrate that it

complies with fourteen core principles

set forth in the CFMA. Section 5b

requires any person desiring to so

register to submit to the Commission an

application in such form and containing

such information as the Commission

may require for the purpose of

determining whether the applicant

meets the core principles.

The Commission is now proposing

rules to implement section 5b of the

Act. This proposal follows the

Commission’s proposal of regulations to

implement the CFMA’s provisions

governing trading facilities, which was

published for comment on March 9,

2001.6 Part 39 would stipulate the form

and provide guidance for the content of

applications for DCO registration, as

well as procedures for processing such

applications. Other provisions would

assist the Commission in carrying out its

oversight responsibilities with respect to

the operations and activities of DCOs,

enforcing compliance by DCOs with the

core principles and other provisions of

the Act and regulations, protecting

clearing participants from fraud, and

ensuring the enforceability of contracts

cleared on DCOs. Part 39 does not apply

to the execution of transactions cleared

by DCOs; its provisions apply

specifically and only to the clearing of

transactions by DCOs.7

II. Proposed Part 39

A. Application and Approval

Procedures

Proposed part 39 would apply to any

DCO, as defined under section 1a(9) of

the Act,8 that is registered with the

Federal Register / Vol. 66, No. 93 / Monday, May 14, 2001 / Proposed Rules 24309

market without accompanying credit enhancement

must still demonstrate compliance with all section

5b core principles to obtain unconditional

registration as a DCO. Otherwise, the Commission

may grant DCO registration with conditions when

and as appropriate.

9The Act does not include an express time limit

for Commission consideration of applications to

become registered DCOs.

10 66 FR 14262 (March 9, 2001).

11This includes one organization, namely,

FutureCom Commodity Exchange, Ltd.

12Commission Regulation 1.31 is reserved in part

39. Regulation 1.31 was updated and amended by

the Commission in 1999 so as to provide broad,

flexible performance standards for recordkeeping.

In addition, Regulation 1.31 is substantially similar

to the recordkeeping requirements maintained by

the Securities and Exchange Commission. Pursuant

to the guidance provided in the appendix to part

39, a DCO’s recordkeeping has to satisfy the

performance standards in Regulation 1.31.

13Section 5c(d) of the Act provides a mechanism

for notifying DCOs (and other registered entities)

that they are violating a core principle. The request

for a demonstration of compliance operates

independently of the section 5c(d) procedure.

Indeed, the request for such a demonstration from

a registered entity, and the Commission’s

consideration of the entity’s response may

constitute a useful alternative to the more formal

procedures of section 5c(d) of the Act. It would be

the Commission’s intent to explore such informal

methods of resolving issues of compliance with

core principles by DCOs prior to invoking more

formal mechanisms.

14The Act limits a registered entity seeking

approval to request approval only ‘‘prior’’ to

implementation. Thus, the Commission is

proposing to use its section 4(c) exemptive

authority with respect to this provision. The

Commission believes that this exercise of exemptive

authority should provide DCOs with greater

procedural flexibility and would be consistent with

the public interest.

Commission, is required to become so

registered, or which voluntarily seeks to

become so registered. If certain

conditions were met, an organization

would be deemed to be registered with

the Commission as a DCO under part 39

or, as determined by Commission order,

registered upon conditions, sixty days

after receipt by the Commission of an

application for registration, unless

notified otherwise.9 This would include

submission of the applicant’s rules, a

demonstration that the applicant

satisfies the core principles of the Act,

submission of any agreements with

third parties that enable the applicant to

meet one or more of the core principles,

and descriptions of any system test

procedures and results.

Appendix A to part 39 would provide

guidance that applicants could use to

meet the core principles. The CFMA

provides that an applicant shall have

reasonable discretion in establishing the

manner in which it complies with the

core principles. The guidance in

proposed Appendix A is intended

merely to illustrate the manner in which

a clearing organization may meet a core

principle and is not intended to be a

mandatory checklist.

If an applicant did not meet

registration requirements, Commission

staff would inform the applicant of the

shortcomings and notify it that the

Commission was terminating review

under part 39 and would continue

review of its application under section

6 of the Act. Within ten days of being

notified, the applicant could ask the

Commission to either register it or

commence registration denial

proceedings. An applicant also could

withdraw its application.

An applicant may request that the

Commission approve any of its rules. If

an applicant requests approval of one or

more of its rules, it would be required

to do so pursuant to the applicable

provisions of proposed § 40.5 in

proposed part 40 governing the

procedures and timeframes for rule

approval.10 An applicant may request

approval of one or more of its rules at

the time it makes its initial application

or thereafter. In accordance with new

section 5b(c)(3) of the Act, an applicant

also may request that the Commission

issue an order concerning whether a

rule or practice of the applicant is the

least anticompetitive means of

achieving the objectives, purposes, and

policies of the Act. In considering any

requests for such orders, the

Commission intends to apply section

15(b) of the Act in a manner consistent

with its previous application of section

15(b) to contract markets.

B. Existing Derivatives Clearing

Organizations

New section 5b(d) of the Act provides

that existing DCOs shall be deemed to

be registered with the Commission to

the extent that the DCO clears

agreements, contracts, or transactions

for a board of trade that has been

designated by the Commission as a

contract market for such agreements,

contracts, or transactions prior to

enactment of the CFMA. This provision

captures all futures clearing

organizations regulated by the

Commission that have ever cleared any

futures contracts for designated contract

markets prior to December 21, 2000, the

effective date of the CFMA. This

language does not capture any

organization approved to clear futures

in connection with a pre-CFMA contract

market designation which has not yet

cleared any contracts.11 However, since

review and approval of such an

organization took place pursuant to

criteria comparable to that contained in

the fourteen core principles set forth in

the amended Act, the Commission

clarifies that any such organization will

be deemed by the Commission to be

registered with the Commission as a

DCO upon receipt by the Commission of

a certification that the organization

currently meets and will continue to

meet the core principles and all

applicable requirements of the Act and

Commission regulations.

C. Derivatives Clearing Organizations

Under proposed part 39, a DCO and

the clearing of transactions on a DCO

are exempt from all Commission

regulations except for proposed parts 39

and 40, and certain select regulations

relating to, for example, the segregation

of customer funds and recordkeeping.12

To maintain registration as a DCO, part

39 would require DCOs to remain in

compliance at all times with the core

principles. The Commission could ask a

DCO to submit in writing at any time,

any information that the Commission

deemed necessary to demonstrate that

the DCO is in compliance with one or

more of the core principles.13 The

guidance in Appendix A with respect to

applicants may be used by registrants as

well, for guidance on ongoing

compliance with the core principles. A

DCO may request that the Commission

approve any of its rules either prior to

or after implementation of the rule(s).14

Such requests would be handled under

the applicable procedures of proposed

part 40. Any new or amended rule not

voluntarily submitted to the

Commission for approval must be

submitted with a certification that the

new rule or amendment complies with

the Act, pursuant to applicable

procedures of proposed part 40. As

noted above, a DCO also may request

that the Commission issue an order

concerning whether a rule or practice of

the applicant is the least

anticompetitive means of achieving the

objectives, purposes, and policies of the

Act. The Commission intends to apply

section 15(b) of the Act in a manner

consistent with its previous application

of section 15(b) to contract markets.

In addition to the information

requests relevant to demonstrating

compliance with core principles,

proposed rule 39.5 requires that large

trader information be provided to the

Commission by futures commission

merchants, clearing members and

foreign brokers. This requirement

complements the rules relating to large

trader position reports for transaction

execution facilities. The Commission

has also proposed special call authority

parallel to that proposed for transaction

execution facilities.

Proposed part 39 also contains an

antifraud provision. This provision

24310 Federal Register / Vol. 66, No. 93 / Monday, May 14, 2001 / Proposed Rules

would be specifically limited to prohibit

fraudulent actions by persons in or in

connection with the clearing of

transactions on a DCO. Part 39’s

antifraud provision is proposed

pursuant to the authority provided by

section 8a(5) of the Act to make such

rules, as in the judgment of the

Commission, are reasonably necessary

to effectuate the provisions of the Act.

Section 5b of the Act grants new

authority to the Commission to regulate

DCOs, which is separate from the

authority to regulate the trading

facilities for which they clear. In this

context, the proposed antifraud

provision is necessary to address fraud

in or in connection with clearing, which

might not be covered by any other

antifraud provision or by one of the core

principles. As is the case with the other

provisions of part 39, the antifraud rule

would apply specifically and only to the

activity of clearing.

Proposed part 39 would not interfere

with the enforceability of contracts

cleared on DCOs. It provides that a

contract or transaction cleared pursuant

to the rules of a DCO shall not be void,

voidable, subject to rescission, or

otherwise invalidated or rendered

unenforceable as a result of a violation

by the DCO of the provisions of section

5b of the Act or part 39, or as a result

of any Commission proceeding to alter,

supplement, or require the DCO to

adopt a specific rule or procedure or

refrain from taking a specific action.

III. Section 4(c) Findings

One of the provisions of the proposal

contained in this Federal Register

notice is being proposed under section

4(c) of the Act, which grants the

Commission broad exemptive authority.

Section 4(c) of the Act provides that, in

order to promote responsible economic

or financial innovation and fair

competition, the Commission may by

rule, regulation or order exempt any

class of agreements, contracts, or

transactions, either unconditionally or

on stated terms or conditions, from any

of the requirements of any provision of

the Act (except certain provisions

governing a group or index of securities

and security futures products). As

relevant here, when granting an

exemption pursuant to section 4(c), the

Commission must find that the

exemption would be consistent with the

public interest.

The Commission is proposing to use

its section 4(c) exemptive authority here

to provide registered entities with

greater procedural flexibility than is

contained in the Act. Pursuant to

proposed rule 39.4, a DCO may request

that the Commission approve its rules or

rule amendments prior to their

implementation or any time thereafter,

notwithstanding the Act’s limitation on

registered entities seeking approval to

do so only prior to implementation. The

Commission believes that this exercise

of exemptive authority should provide

DCOs with greater procedural flexibility

and would be consistent with the public

interest.

IV. Cost-Benefit Analysis

Section 15 of the Act, as amended by

section 119 of the CFMA, requires the

Commission to consider the costs and

benefits of its action before issuing a

new regulation under the Act. The

Commission is applying the cost-benefit

provisions of section 15 in this

rulemaking and understands that, by its

terms, section 15 as amended does not

require the Commission to quantify the

costs and benefits of a new regulation or

to determine whether the benefits of the

proposed regulation outweigh its costs.

Rather, section 15 simply requires the

Commission to ‘‘consider the costs and

benefits’’ of its action.

The amended section 15 further

specifies that costs and benefits shall be

evaluated in light of five broad areas of

market and public concern: protection

of market participants and the public;

efficiency, competitiveness, and

financial integrity of futures markets;

price discovery; sound risk management

practices; and other public interest

considerations. Accordingly, the

Commission could, in its discretion,

give greater weight to any one of the five

enumerated areas of concern and could

in its discretion determine, that,

notwithstanding its costs, a particular

rule was necessary or appropriate to

protect the public interest or to

effectuate any of the provisions or to

accomplish any of the purposes of the

Act.

Part 39 is part of a package of related

rule provisions implementing the

CFMA. The Commission has considered

the costs and benefits of proposed part

39 and the costs and benefits of the

related rule provisions. Significantly,

part 39 would limit the period of time

for Commission review of DCO

applications to 60 days, thereby

providing the important benefit of an

expedited review, even though the Act

does not specify any time limit for

review of DCO applications. The rules

also provide the benefit of substantial

additional, non-binding guidance to

DCO applicants and DCOs as to how

they may comply with the statutory core

principles. The rules only impose

reporting, recordkeeping and other

informational requirements on DCOs

that either are mandated by or carry out,

or are fully consistent with the new

provisions of the CFMA concerning

DCOs.

The Commission has considered the

costs and benefits of this rule package

in light of the specific areas of concern

identified in the CFMA. The rules

would impose limited costs on the

entities in requiring them to gather,

compile, and submit certain information

that the Commission needs in order to

perform its function of overseeing

futures and clearing and enforcing

compliance by DCOs with the

provisions of the Act. The proposed

rules would not increase costs related to

market competitiveness and would not

affect the price discovery function of

markets. The Commission believes that

part 39’s antifraud provision would

benefit market participants and the

public interest by deterring illegal

behavior and that its enforceability

provision would benefit the public

interest by furthering legal certainty.

After considering these factors, the

Commission has determined to propose

part 39. Commenters are invited to

submit any data that they may have

quantifying the costs and benefits of the

proposed rules.

V. Implementation

The provisions of the Act governing

DCOs contained in the CFMA became

effective on December 21, 2000, the

same date that the CFMA was signed

into law. In light of the need to

promulgate implementing regulations

without delay, the Commission

encourages commenters to submit their

comments on the proposed rulemaking

as early as possible during the comment

period, but in any event, by the end of

the comment period. The Commission

believes at this time that any extension

of the comment period would be

contrary to the public interest. The

Commission will not bring any

enforcement action against any person

who complies with the rules proposed

herein. Persons who do comply with the

proposed rules, however, will be

required to bring their conduct into

compliance with the final rules to the

extent that the final rules differ from the

proposed rules.

VI. Related Matters

A. Regulatory Flexibility Act

The Regulatory Flexibility Act

(‘‘RFA’’), 5 U.S.C. 601–612, requires that

agencies, in proposing regulations,

consider the impact of those regulations

on small entities. The rules adopted

herein would affect DCOs. The

Commission has previously established

certain definitions of ‘‘small entities’’ to

Federal Register / Vol. 66, No. 93 / Monday, May 14, 2001 / Proposed Rules 24311

15 47 FR 18618 (April 30, 1982).

16 47 FR 18618, 18619 (discussing contract

markets).

be used by the Commission in

evaluating the impact of its rules on

such entities in accordance with the

RFA.15 In its previous determinations,

the Commission has concluded that

contract markets are not small entities

for the purpose of the RFA.16 DCOs

clear contracts executed on contract

markets and other trading facilities.

DCOs, as defined in the CFMA, should

not be considered small entities.

Accordingly, the Commission does not

expect the rules, as proposed herein, to

have a significant economic impact on

a substantial number of small entities.

Therefore, the Acting Chairman, on

behalf of the Commission, hereby

certifies, pursuant to 5 U.S.C. 605(b),

that the proposed amendments will not

have a significant economic impact on

a substantial number of small entities.

The Commission invites the public to

comment on whether DCOs covered by

these rules should be considered small

entities for purposes of the RFA.

B. Paperwork Reduction Act

Part 39 contains information

collection requirements. As required by

the Paperwork Reduction Act of 1995

(44 U.S.C. 3507(d)), the Commission has

submitted a copy of this part to the

Office of Management and Budget

(‘‘OMB’’) for its review.

Collection of Information: Clearing

Organizations, OMB Control Number

3038–0051.

The proposed rules will not change

the burden previously approved by

OMB. The burden associated with the

proposed new rules is estimated to be

2,000 hours that will result from new

submission requirements for first-time

applicants for registration as DCOs. The

estimated burden of the new part 39 was

calculated as follows:

Estimated number of respondents: 10.

Reports annually by each respondent:

1.

Total annual responses: 10.

Estimated Average number of hours

per response: 200.

Annual burden in fiscal year: 2,000.

Organizations and individuals

desiring to submit comments on the

information collection requirements

should direct them to the Office of

Information and Regulatory Affairs,

OMB, Room 10202 New Executive

Office Building, 725 17th Street, NW.,

Washington, DC 20503, Attention: Desk

Officer for the Commodity Futures

Trading Commission.

The Commission considers comments

by the public on this proposed

collection of information in:

• Evaluating whether the proposed

collection of information is necessary

for the proper performance of the

functions of the Commission, including

whether the information will have a

practical use;

• Evaluating the accuracy of the

Commission’s estimate of the burden of

the proposed collection of information,

including the validity of the

methodology and assumptions used;

• Enhancing the quality, usefulness,

and clarity of the information to be

collected; and

• Minimizing the burden of collection

of information on those who are to

respond, including through the use of

appropriate automated electronic,

mechanical, or other technological

collection techniques or other forms of

information technology, e.g., permitting

electronic submission of responses.

OMB is required to make a decision

concerning the collection of information

contained in these proposed regulations

between 30 and 60 days after

publication of this document in the

Federal Register. A comment to OMB is

best assured of having its full effect if

OMB receives it within 30 days of

publication. This does not affect the

deadline for the public to comment to

the Commission on the proposed

regulations.

Copies of the information collection

submission to OMB are available from

the CFTC Clearance Officer, 1155 21st

Street, NW., Washington, DC 20581,

(202) 418–5160.

List of Subjects in 17 CFR Part 39

Commodity futures, Consumer

protection.

In consideration of the foregoing, and

pursuant to the authority contained in

section 7b of title 7 of the U.S.C., as

added by the Commodity Futures

Modernization Act of 2000, Appendix E

of Pub. L. 106–554, 114 Stat. 2763

(2000), the Commission proposes to

amend Chapter I of Title 17 of the Code

of Federal Regulations by adding part 39

to read as follows:

PART 39—DERIVATIVES CLEARING

ORGANIZATIONS

Sec.

39.1 Scope.

39.2 Exemption.

39.3 Procedures for registration.

39.4 Procedures for implementing

derivatives clearing organization rules.

39.5 Information relating to derivatives

clearing organization operations.

39.6 Enforceability.

39.7 Fraud in connection with the clearing

of transactions on a derivatives clearing

organization.

Appendix A to Part 39—Application

Guidance and Compliance With Core

Principles

Authority: 7 U.S.C. 7b as added by the

Commodity Futures Modernization Act of

2000, Appendix E of Pub. L. 106–554, 114

Stat. 2763 (2000).

§ 39.1 Scope.

The provisions of this part apply to

any derivatives clearing organization as

defined under section 1a(9) of the Act

which is registered with the

Commission as a derivatives clearing

organization, is required to register as

such with the Commission pursuant to

section 5b(a) of the Act, or which

voluntarily applies to register as such

with the Commission pursuant to

section 5b(b) or otherwise.

§ 39.2 Exemption.

A derivatives clearing organization

and the clearing of agreements,

contracts and transactions on a

derivatives clearing organization are

exempt from all Commission regulations

except for the requirements of this part

39 and §§ 1.12(f)(1), 1.3, 1.20, 1.24, 1.25,

1.26, 1.27, 1.29, 1.31, 1.36, 1.38, 33.10,

part 40 and part 190 of this chapter, and

as applicable to the agreement, contract

or transaction cleared, parts 15 through

18 of this chapter, which are applicable

to a derivatives clearing organization

and its activities as though they were set

forth in this section and included

specific reference to derivatives clearing

organizations.

§ 39.3 Procedures for registration.

(a) Registration by application. An

organization shall be deemed to be

registered as a derivatives clearing

organization sixty days after receipt by

the Commission of an application for

registration as a derivatives clearing

organization unless notified otherwise

during that period, or, as determined by

Commission order, registered upon

conditions, if:

(1) The application is labeled as being

submitted pursuant to this part 39;

(2) The applicant meets the definition

of derivatives clearing organization

contained in section 1a(9) of the Act;

(3) The application includes a copy of

the applicant’s rules;

(4) To the extent it is not self evident

from the applicant’s rules, the

application demonstrates how the

applicant satisfies each of the core

principles specified in section 5b(c)(2)

of the Act;

(5) The applicant submits any

agreements entered into or to be entered

into between or among the applicant, its

24312 Federal Register / Vol. 66, No. 93 / Monday, May 14, 2001 / Proposed Rules

operator or its participants that enable

or empower the applicant to comply

with the core principles specified in

section 5b(c)(2) of the Act, and

descriptions of any system test

procedures, tests conducted or test

results;

(6) The applicant does not amend or

supplement the application except as

requested by the Commission or for

correction of typographical errors,

renumbering or other nonsubstantive

revisions, during that period; and

(7) The applicant has not instructed

the Commission in writing during the

review period to review the application

pursuant to the time provisions of and

procedures under section 6 of the Act.

(b) Termination of part 39 review. If,

during the sixty-day period for review

provided by paragraph (a) of this

section, it appears that the application’s

form or substance fails to meet the

requirements of this part, the

Commission shall notify the applicant

seeking registration that the

Commission is terminating review

under this section and will review the

proposal under the time period and

procedures of section 6 of the Act. This

termination notification will state the

nature of the issues raised and the

specific condition of registration that

the applicant would violate, appears to

violate, or the violation of which cannot

be ascertained from the application.

Within ten days of receipt of this

termination notification, the applicant

seeking registration may request that the

Commission render a decision whether

to register the applicant or to institute

a proceeding to deny the proposed

application under procedures specified

in section 6 of the Act by notifying the

Commission that the applicant views its

submission as complete and final as

submitted.

(c) Withdrawal of application for

registration. An applicant for

registration may withdraw its

application by filing with the

Commission such a request. Withdrawal

of an application for registration shall

not affect any action taken or to be taken

by the Commission based upon actions,

activities, or events occurring during the

time that the application for registration

was pending with the Commission.

(d) Guidance for applicants and

registrants. Appendix A to this part

provides guidance to applicants and

registrants on how the core principles

specified in section 5b(c)(2) of the Act

may be satisfied.

(e) Delegation of authority. (1) The

Commission hereby delegates, until it

orders otherwise, to the Director of the

Division of Trading and Markets or the

Director’s delegatees, with the

concurrence of the General Counsel or

the General Counsel’s delegatees, the

authority to exercise the functions

under paragraphs (a) and (b) of this

section and under § 39.5.

(2) The Director of the Division of

Trading and Markets may submit to the

Commission for its consideration any

matter which has been delegated in this

paragraph.

(3) Nothing in this paragraph

prohibits the Commission, at its

election, from exercising the authority

delegated in paragraph (e)(1) of this

section.

§ 39.4 Procedures for implementing

derivatives clearing organization rules.

(a) Request for approval of rules. An

applicant for registration, or a registered

derivatives clearing organization, may

request, pursuant to the procedures of

§ 40.5 of this chapter, that the

Commission approve any or all of its

rules and subsequent amendments

thereto, including operational rules,

prior to their implementation or,

notwithstanding the provisions of

section 5c(c)(2) of the Act, at any time

thereafter, under the procedures of

§ 40.5 of this chapter. A derivatives

clearing organization may label as,

‘‘Approved by the Commission,’’ only

those rules that have been so approved.

(b) Self-certification of rules. Proposed

new or amended rules of a derivatives

clearing organization not voluntarily

submitted for prior Commission

approval pursuant to paragraph (a) of

this section must be submitted to the

Commission with a certification that the

proposed new rule or rule amendment

complies with the Act and rules

thereunder pursuant to the procedures

of § 40.6 of this chapter.

(c) Orders regarding competition. An

applicant or a registered derivatives

clearing organization may request that

the Commission issue an order

concerning whether a rule or practice of

the organization is the least

anticompetitive means of achieving the

objectives, purposes, and policies of the

Act.

§ 39.5 Information relating to derivatives

clearing organization operations.

(a) Upon request by the Commission,

a derivatives clearing organization shall

file with the Commission such

information related to its business as a

clearing organization, including

information relating to trade and

clearing details, in the form and manner

and within the time as specified by the

Commission in the request.

(b) Upon request by the Commission,

a derivatives clearing organization shall

file with the Commission a written

demonstration, containing such

supporting data, information and

documents, in the form and manner and

within such time as the Commission

may specify that the derivatives clearing

organization is in compliance with one

or more core principles as specified in

the request.

(c) Information regarding transactions

by large traders cleared by a derivatives

clearing organization shall be filed with

the Commission, in a form and manner

acceptable to the Commission, by

futures commission merchants, clearing

members, foreign brokers or registered

entities other than a derivatives clearing

organization, as applicable. Provided,

however, that if no such person or entity

is required to file large trader

information with the Commission, such

information must be filed with the

Commission by a derivatives clearing

organization.

(d) Upon special call by the

Commission, each person registered as a

futures commission merchant, clearing

member or foreign broker shall provide

information to the Commission

concerning customer accounts or related

positions cleared on a derivatives

clearing organization or other

multilateral clearing organization in the

form and manner and within the time

specified by the Commission in the

special call.

§ 39.6 Enforceability.

An agreement, contract or transaction

cleared pursuant to the rules of a

derivatives clearing organization shall

not be void, voidable, subject to

rescission, or otherwise invalidated or

rendered unenforceable as a result of:

(a) A violation by the derivatives

clearing organization of the provisions

of section 5b of the Act or this part 39;

or

(b) Any Commission proceeding to

alter or supplement a rule under section

8a(7) of the Act, to declare an

emergency under section 8a(9) of the

Act, or any other proceeding the effect

of which is to alter, supplement, or

require a derivatives clearing

organization to adopt a specific rule or

procedure, or to take or refrain from

taking a specific action.

§ 39.7 Fraud in connection with the

clearing of transactions on a derivatives

clearing organization.

It shall be unlawful for any person,

directly or indirectly, in or in

connection with the clearing of

transactions by a derivatives clearing

organization:

(a) To cheat or defraud or attempt to

cheat or defraud any other person;

(b) Willfully to make or cause to be

made to any other person any false

Federal Register / Vol. 66, No. 93 / Monday, May 14, 2001 / Proposed Rules 24313

report or statement thereof or cause to

be entered for any person any false

record thereof; or

(c) Willfully to deceive or attempt to

deceive any other person by any means

whatsoever.

Appendix A to Part 39—Application

Guidance and Compliance With Core

Principles

This appendix provides guidance

concerning the core principles with which a

clearing organization must demonstrate

compliance to be granted and to maintain

registration as a derivatives clearing

organization under section 5b of the Act and

§ 39.3 and § 39.5 of the Commission’s

regulations. The guidance follows each core

principle and can be used to demonstrate

core principle compliance under § 39.3(a)(iv)

and § 39.5(d). The guidance for each core

principle is illustrative only of the types of

matters a clearing organization may address,

as applicable, and is not intended to be a

mandatory checklist. Addressing the criteria

set forth in this appendix would help the

Commission in its consideration of whether

the clearing organization is in compliance

with the core principles. To the extent that

compliance with, or satisfaction of, a core

principle is not self-explanatory from the face

of a clearing organization’s rules, an

application pursuant to § 39.3 or a

submission pursuant to § 39.5 should include

an explanation or other form of

documentation demonstrating that the

clearing organization complies with the core

principles.

Core Principle A: In General—To be

registered and to maintain registration as a

derivatives clearing organization, an

applicant shall demonstrate to the

Commission that the applicant complies with

the core principles specified in this

paragraph. The applicant shall have

reasonable discretion in establishing the

manner in which it complies with the core

principles.

An entity preparing to submit to the

Commission an application to operate as a

derivatives clearing organization is

encouraged to contact Commission staff for

guidance and assistance in preparing its

application. Applicants may submit a draft

application for review prior to the

submission of an actual application without

triggering the application review procedures

of § 39.3 of the Commission’s regulations.

The Commission also may require a

derivatives clearing organization to

demonstrate to the Commission that it is

operating in compliance with one or more

core principles.

Core Principle B: Financial Resources—

The applicant shall demonstrate that the

applicant has adequate financial,

operational, and managerial resources to

discharge the responsibilities of a derivatives

clearing organization.

In addressing Core Principle B, applicants

and registered derivatives clearing

organizations may describe or otherwise

document:

1. The amount of resources dedicated to

supporting the clearing function:

a. The amount of resources available to the

clearing organization and the sufficiency of

those resources to assure that no break in

clearing operations would occur in a variety

of market conditions; and

b. The level of member/participant default

such resources could support as

demonstrated through use of hypothetical

default scenarios that explain assumptions

and variables factored into the illustrations.

2. The nature of resources dedicated to

supporting the clearing function:

a. The type of the resources, including

their liquidity, and how they could be

accessed and applied by the clearing

organization promptly;

b. How financial and other material

information will be updated and reported to

members, the public, and the Commission on

an ongoing basis; and

c. Any legal or operational impediments or

conditions to access.

Core Principle C: Participant and Product

Eligibility—The applicant shall establish (i)

appropriate admission and continuing

eligibility standards (including appropriate

minimum financial requirements) for

members of and participants in the

organization; and (ii) appropriate standards

for determining eligibility of agreements,

contracts, or transactions submitted to the

applicant. 

In addressing Core Principle C, applicants

and registered derivatives clearing

organizations may describe or otherwise

document:

1. Member/participant admission criteria:

a. How admission standards for its clearing

members/participants would contribute to

the soundness and integrity of operations;

and

b. Matters such as whether these criteria

would be in the form of organization rules

that apply to all clearing members/

participants, whether different levels of

membership/participation would relate to

different levels of net worth, income, and

creditworthiness of members/participants,

and whether margin levels, position limits

and other controls would vary in accordance

with these levels.

2. Member/participant continuing

eligibility criteria:

a. A program for monitoring the financial

status of its members/participants; and

b. Whether and how the clearing

organization would be able to change

continuing eligibility criteria in accordance

with changes in a member’s/participant’s

financial status.

3. Criteria for instruments acceptable for

clearing:

a. How the clearing organization would

establish specific criteria for the types of

agreements, contracts, or transactions it will

clear; and

b. How those criteria take into account the

different risks inherent in clearing different

agreements, contracts, or transactions and

how they affect maintenance of assets to

support the guarantee function in varying

risk environments.

4. The clearing function for each

instrument the organization undertakes to

clear.

Core Principle D: Risk Management—The

applicant shall have the ability to manage

the risks associated with discharging the

responsibilities of a derivatives clearing

organization through the use of appropriate

tools and procedures. 

In addressing Core Principle D, applicants

and registered derivatives clearing

organizations may describe or otherwise

document:

1. Use of risk analysis tools and

procedures:

a. How the adequacy of the overall level of

financial resources would be tested on an

ongoing periodic basis in a variety of market

conditions;

b. How the organization would use specific

risk management tools such as stress testing

and value at risk calculations; and

c. What contingency plans the applicant

has for managing extreme market events.

2. Use of collateral:

a. How appropriate forms and levels of

collateral would be established and collected;

b. How amounts would be adequate to

secure prudentially obligations arising from

clearing transactions and performing as a

central counterparty;

c. The process for determining appropriate

margin levels for an instrument cleared and

for clearing members/participants;

d. The appropriateness of required or

allowed forms of margin given the liquidity

and related requirements of the clearing

organization;

e. How the clearing organization would

value open positions and collateral assets;

and

f. The proposed margin collection schedule

and how it would relate to changes in the

value of market positions and collateral

values.

1. Use of credit limits:

If systems would be implemented that

would prevent members/participants and

other market participants from exceeding

credit limits and how they would operate.

Core Principle E: Settlement Procedures—

The applicant shall have the ability to (i)

complete settlements on a timely basis under

varying circumstances; (ii) maintain an

adequate record of the flow of funds

associated with each transaction that the

applicant clears; and (iii) comply with the

terms and conditions of any permitted

netting or offset arrangements with other

clearing organizations.

In addressing Core Principle E, applicants

and registered derivatives clearing

organizations may describe or otherwise

document:

1. Settlement timeframe:

a. Procedures for completing settlements

on a timely basis during times of normal

operating conditions; and

b. Procedures for completing settlements

on a timely basis in varying market

circumstances including during a period

when one or more significant members/

participants have defaulted.

2. Recordkeeping:

a. The nature and quality of the

information collected concerning the flow of

funds involved in clearing and settlement;

and

b. How such information would be

recorded, maintained and accessed.

3. Interfaces with other clearing

organizations:

24314 Federal Register / Vol. 66, No. 93 / Monday, May 14, 2001 / Proposed Rules

How compliance with the terms and

conditions of netting or offset arrangements

with other clearing organizations would be

met, including, among others, common

banking or common clearing programs.

Core Principle F: Treatment of Funds—The

applicant shall have standards and

procedures designed to protect and ensure

the safety of member and participant funds.

In addressing Core Principle F, applicants

and registered derivatives clearing

organizations may describe or otherwise

document:

1. Safe custody:

a. The safekeeping of funds, whether in

accounts, in depositories, or with custodians,

and how it would meet industry standards of

safety;

b. Any written terms regarding the legal

status of the funds and the specific

conditions or prerequisites for movement of

the funds; and

c. The extent to which the deposit of funds

in accounts in depositories or with

custodians would limit concentration of risk.

2. Segregation between customer and

proprietary funds:

Requirements or restrictions regarding

commingling customer with proprietary

funds, obligating customer funds for any

purpose other than to purchase, clear, and

settle the products the clearing organization

is clearing, or procedures regarding customer

funds which are subject to cross-margin or

similar agreements, and any other aspects of

customer fund segregation.

3. Investment standards:

a. How customer funds would be invested

consistent with high standards of safety; and

b. How the organization will gather and

keep associated records and data regarding

the details of such investments.

Core Principle G: Default Rules and

Procedures—The applicant shall have rules

and procedures designed to allow for

efficient, fair, and safe management of events

when members or participants become

insolvent or otherwise default on their

obligations to the derivatives clearing

organization. 

In addressing Core Principle G, applicants

and registered derivatives clearing

organizations may describe or otherwise

document:

1. Definition of default:

a. The definition of default and how it

would be established and enforced; and

b. How the organization would address

failure to meet margin requirements, the

insolvent financial condition of a member/

participant, failure to comply with certain

rules, failure to maintain eligibility

standards, actions taken by other regulatory

bodies, or other events.

2. Remedial action:

The authority pursuant to which, and how,

the clearing organization may take

appropriate action in the event of the default

of a member/participant which may include,

among other things, closing out positions,

replacing positions, set-off, and applying

margin.

3. Process to address shortfalls:

Procedures for the prompt application of

clearing organization and/or member/

participant financial resources to address

monetary shortfalls resulting from a default.

4. Use of cross-margin programs:

How cross-margining programs would

provide for clear, fair, and efficient means of

covering losses in the event of a program

participant default.

5. Customer priority rule:

Rules and procedures regarding priority of

customer accounts over proprietary accounts

of defaulting members/participants and,

where applicable, in the context of

specialized margin reduction programs such

as cross-margining or trading links with other

exchanges.

Core Principle H: Rule Enforcement—The

applicant shall (i) maintain adequate

arrangements and resources for the effective

monitoring and enforcement of compliance

with rules of the applicant and for resolution

of disputes; and (ii) have the authority and

ability to discipline, limit, suspend, or

terminate a member’s or participant’s

activities for violations of rules of the

applicant.

In addressing Core Principle H, applicants

and registered derivatives clearing

organizations may describe or otherwise

document:

1. Surveillance:

Arrangements and resources for the

effective monitoring of compliance with rules

relating to clearing practices and financial

surveillance.

2. Enforcement:

Arrangements and resources for the

effective enforcement of rules and authority

and ability to discipline and limit or suspend

a member’s/participant’s activities pursuant

to clear and fair standards.

3. Dispute resolution:

Where applicable, arrangements and

resources for resolution of disputes between

customers and members/participants, and

between members/participants.

Core Principle I: System Safeguards—The

applicant shall demonstrate that the

applicant (i) has established and will

maintain a program of oversight and risk

analysis to ensure that the automated

systems of the applicant function properly

and have adequate capacity and security;

and (ii) has established and will maintain

emergency procedures and a plan for disaster

recovery, and will periodically test backup

facilities sufficient to ensure daily processing,

clearing, and settlement of transactions. 

In addressing Core Principle I, applicants

and registered derivatives clearing

organizations may describe or otherwise

document:

1. Oversight/risk analysis program:

a. Whether a program addresses

appropriate principles and procedures for the

oversight of automated systems to ensure that

its clearing systems function properly and

have adequate capacity and security. The

Commission believes that the guidelines

issued by the International Organization of

Securities Commissions (IOSCO) in 1990 and

adopted by the Commission on November 21,

1990 (55 FR 48670), as supplemented in

October 2000, are appropriate guidelines for

an automated clearing system to apply.

b. Emergency procedures and a plan for

disaster recovery; and

c. Periodic testing of back-up facilities and

ability to provide timely processing, clearing,

and settlement of transactions.

2. Appropriate periodic objective system

reviews/testing:

a. Any program for the periodic objective

testing and review of the system, including

tests conducted and results; and

b. Confirmation that such testing and

review would be performed or assessed by

qualified independent professionals.

Core Principle J: Reporting—The applicant

shall provide to the Commission all

information necessary for the Commission to

conduct the oversight function of the

applicant with respect to the activities of the

derivatives clearing organization. 

In addressing Core Principle J, applicants

and registered derivatives clearing

organizations may describe or otherwise

document:

1. Information available to or generated by

the clearing organization that will be made

routinely available to the Commission, upon

request and/or as appropriate, to enable the

Commission to perform properly its oversight

function, including counterparties and their

positions, stress test results, internal

governance, legal proceedings, and other

clearing activities;

2. Information the clearing organization

will make available to the Commission on a

non-routine basis and the circumstances

which would trigger such action;

3. The information the organization

intends to make routinely available to

members/participants and/or the general

public; and

4. Provision of information:

a. The manner in which all relevant

routine or non-routine information will be

provided to the Commission whether by

electronic or other means; and

b. The manner in which any information

will be made available to members/

participants and/or the general public.

Core Principle K: Recordkeeping—The

applicant shall maintain records of all

activities related to the business of the

applicant as a derivatives clearing

organization in a form and manner

acceptable to the Commission for a period of

5 years.

In addressing Core Principle K, applicants

and registered derivatives clearing

organizations may describe or otherwise

document:

1. The different activities related to the

entity as a clearing organization for which it

must maintain records; and

2. How the entity would satisfy the

performance standards of Commission

Regulation 1.31 (17 CFR 1.31), reserved in

this part 39 and applicable to derivatives

clearing organizations, including:

a. What ‘‘full’’ or ‘‘complete’’ would

encompass with respect to each type of book

or record that would be maintained;

b. The form and manner in which books or

records would be compiled and maintained

with respect to each type of activity for

which such books or records would be kept;

c. Confirmation that books and records

would be open to inspection by any

representative of the Commission or of the

U.S. Department of Justice;

d. How long books and records would be

readily available and how they would be

made readily available during the first two

years; and

Federal Register / Vol. 66, No. 93 / Monday, May 14, 2001 / Proposed Rules 24315

e. How long books and records would be

maintained (and confirmation that, in any

event, they would be maintained for at least

five years).

Core Principle L: Public Information—The

applicant shall make information concerning

the rules and operating procedures governing

the clearing and settlement systems

(including default procedures) available to

market participants. 

In addressing Core Principle L, applicants

and registered derivatives clearing

organizations may describe or otherwise

document:

Disclosure of information regarding rules

and operating procedures governing clearing

and settlement systems:

a. Which rules and operating procedures

governing clearing and settlement systems

should be disclosed to the public, to whom

they would be disclosed, and how they

would be disclosed;

b. What other information would be

available regarding the operation, purpose

and effect of the clearing organization’s rules;

c. How members/participants may become

familiar with such procedures before

participating in operations; and

d. How members/participants will be

informed of their specific rights and

obligations preceding a default and upon a

default, and of the specific rights, options

and obligations of the clearing organization

preceding and upon the member’s/

participant’s default.

Core Principle M: Information Sharing—

The applicant shall (i) enter into and abide

by the terms of all appropriate and

applicable domestic and international

information-sharing agreements; and (ii) use

relevant information obtained from the

agreements in carrying out the clearing

organization’s risk management program. 

In addressing Core Principle M, applicants

and registered derivatives clearing

organizations may describe or otherwise

document:

1. Applicable appropriate domestic and

international information-sharing agreements

and arrangements including the different

types of domestic and international

information-sharing arrangements, both

formal and informal, which the clearing

organization views as appropriate and

applicable to its operations.

2. How information obtained from

information-sharing arrangements would be

used to carry out risk management and

surveillance programs:

a. How information obtained from any

information-sharing arrangements would be

used to further the objectives of the clearing

organization’s risk management program and

any of its surveillance programs including

financial surveillance and continuing

eligibility of its members/participants;

b. How accurate information is expected to

be obtained and the mechanisms or

procedures which would make timely use

and application of all information; and

c. The types of information expected to be

shared and how that information would be

shared.

Core Principle N: Antitrust

Considerations—Unless appropriate to

achieve the purposes of this Act, the

derivatives clearing organization shall avoid

(i) adopting any rule or taking any action that

results in any unreasonable restraint of trade;

or (ii) imposing any material anticompetitive

burden on trading on the contract market. 

Pursuant to section 5b(c)(3) of the Act, a

registered derivatives clearing organization or

an entity seeking registration as a derivatives

clearing organization may request that the

Commission issue an order concerning

whether a rule or practice of the organization

is the least anticompetitive means of

achieving the objectives, purposes, and

policies of the Act. The Commission intends

to apply section 15(b) of the Act to its

consideration of issues under this core

principle in a manner consistent with that

previously applied to contract markets.

Dated: May 8, 2001.

By the Commission.

Jean A. Webb,

Secretary.

[FR Doc. 01–12084 Filed 5–11–01; 8:45 am]

BILLING CODE 6351–01–P

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 2

[FRL–6978–6]

Public Information and Confidentiality:

Advance Notice of Proposed

Rulemaking; Notice of Reopening of

Comment Period

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Reopening of comment period.

SUMMARY: On December 21, 2000 (65 FR

80394), EPA published an advance

notice of proposed rulemaking

(ANPRM) regarding potential revision of

the confidential business information

(CBI). EPA is reopening the comment

period in order to afford the public the

opportunity to provide additional

comments concerning the ANPRM. The

comment period will close on June 13,

2001. We believe it is necessary to

reopen the comment period as a

courtesy to the public in response to

public requests for additional time to

consolidate comments on the proposal

following the public meeting held on

March 7, 2001.

DATES: EPA must receive comments on

the ANPRM by June 13, 2001.

ADDRESSES: Written comments should

be submitted (in duplicate if possible) to

Docket Number EC–2000–004,

Enforcement and Compliance Docket

and Information Center (ECDIC), U.S.

Environmental Protection Agency, 1200

Pennsylvania Ave., NW., Room 4033,

Mail Code 2201A, Washington, DC

20460; Phone, 202–564–2614 or 202–

564–2119; Fax, 202–501–1011 E–Mail,

docket.oeca@epa.gov. Documents

related to this advance notice of

proposed rulemaking are available for

public inspection and viewing by

contacting the ECDIC at this same

address. The ECDIC is open from 8 a.m.

to 4 p.m., Monday through Friday,

excluding Federal holidays.

FOR FURTHER INFORMATION CONTACT:

Alan Margolis, Office of Information

Collection, Office of Environmental

Information, U.S. Environmental

Protection Agency, 1200 Pennsylvania

Ave., NW, Mail Code 2822, Washington,

DC 20460; Phone, 202–260–9329; Fax,

202–401–4544; Email,

margolis.alan@epa.gov.

Dated: May 7, 2001.

Margaret N. Schneider,

Acting Assistant Administrator, Office of

Environmental Information.

[FR Doc. 01–12044 Filed 5–11–01; 8:45 am]

BILLING CODE 6560–50–P

FEDERAL EMERGENCY

MANAGEMENT AGENCY

44 CFR Part 67

[Docket No. FEMA–D–7508]

Proposed Flood Elevation

Determinations

AGENCY: Federal Emergency

Management Agency, FEMA.

ACTION: Proposed rule.

SUMMARY: Technical information or

comments are requested on the

proposed base (1% annual chance) flood

elevations and proposed base flood

elevation modifications for the

communities listed below. The base

flood elevations are the basis for the

floodplain management measures that

the community is required either to

adopt or to show evidence of being

already in effect in order to qualify or

remain qualified for participation in the

National Flood Insurance Program

(NFIP).

DATES: The comment period is ninety

(90) days following the second

publication of this proposed rule in a

newspaper of local circulation in each

community.

ADDRESSES: The proposed base flood

elevations for each community are

available for inspection at the office of

the Chief Executive Officer of each

community. The respective addresses

are listed in the following table.

FOR FURTHER INFORMATION CONTACT:

Matthew B. Miller, P.E., Chief, Hazards

Study Branch, Mitigation Directorate,

Federal Emergency Management