63922 Federal Register / Vol. 60, No. 239 / Wednesday, December 13, 1995 / Rules and Regulations

annuity would be $764,569 ($103,000 ×

7.4230). Assuming the presumption provided

in paragraph (b)(3) of this section does not

apply, because there is at least a 50 percent

probability that the donor will die within 1

year, the standard section 7520 annuity factor

may not be used to determine the present

value of the donor’s annuity interest. Instead,

a special section 7520 annuity factor must be

computed that takes into account the

projection of the donor’s actual life

expectancy.

(5) Additional limitations. Section

7520 does not apply to the extent as

may otherwise be provided by the

Commissioner.

(c) * * * The provisions of paragraph

(b) of this section are effective with

respect to gifts made after December 13,

1995.

Michael P. Dolan,

Acting Commissioner of Internal Revenue.

Approved: October 29, 1995.

Leslie Samuels,

Assistant Secretary of the Treasury.

[FR Doc. 95–30272 Filed 12–12–95; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation

and Enforcement

30 CFR Part 943

[SPATS No. TX–024–FOR]

Texas Regulatory Program

AGENCY: Office of Surface Mining

Reclamation and Enforcement (OSM),

Interior.

ACTION: Final rule; approval of

amendment.

SUMMARY: OSM is approving a proposed

amendment to the Texas regulatory

program (hereinafter referred to as the

‘‘Texas program’’) under the Surface

Mining Control and Reclamation Act of

1977 (SMCRA). Texas proposed

revisions to its regulations pertaining to

self-bonding. The amendment is

intended to revise the Texas program to

be consistent with the corresponding

Federal regulations, provide additional

safeguards, and improve operational

efficiency.

EFFECTIVE DATE: December 13, 1995.

FOR FURTHER INFORMATION CONTACT:

Jack R. Carson, Acting Director, Tulsa

Field Office, Office of Surface Mining

Reclamation and Enforcement, 5100

East Skelly Drive, Suite 470, Tulsa,

Oklahoma 74135–6548, Telephone:

(918) 581–6430.

SUPPLEMENTARY INFORMATION:

I. Background on the Texas Program

II. Submission of the Proposed Amendment

III. Director’s Findings

IV. Summary and Disposition of Comments

V. Director’s Decision

VI. Procedural Determinations

I. Background on the Texas Program

On February 16, 1980, the Secretary of

the Interior conditionally approved the

Texas program. Background information

on the Texas program, including the

Secretary’s findings, the disposition of

comments, and the conditions of

approval can be found in the February

27, 1980, Federal Register (45 FR

12998). Subsequent actions concerning

the conditions of approval and program

amendments can be found at 30 CFR

943.10, 943.15, 943.16.

II. Submission of the Proposed

Amendment

By letter dated August 11, 1995

(Administrative Record No. TX–593),

Texas submitted a proposed amendment

to its program pursuant to SMCRA.

Texas submitted the proposed

amendment at its own initiative. Texas

proposed to revise 16 Texas

Administrative Code 11.221, Texas Coal

Mining Regulations (TCMR) at

subsection 806.309(j)(2)(C)(iv)

concerning alternative criteria for

acceptance of self-bonds to ensure

reclamation performance.

OSM announced receipt of the

proposed amendment in the September

12, 1995, Federal Register (60 FR

47316), and in the same document

opened the public comment period and

provided an opportunity for a public

hearing on the adequacy of the proposed

amendment. The public comment

period would have closed on October

12, 1995.

During its review of the amendment,

OSM identified a concern relating to

TCMR 806.309(j)(2)(C)(iv)(II)(C).

Specifically OSM needed clarification

on what effect, if any, Texas’ existing 25

percent net worth limitation provision

at TCMR 806.309(j)(5)(A) would have on

the proposed 162⁄3 percent net worth

limitation provision at TCMR

806.309(j)(2)(C)(iv)(II)(C). OSM notified

Texas of this concern by telephone on

September 23, 1995 (Administrative

Record No. TX–593.03).

By letter dated September 25, 1995

(Administrative Record No. TX–593.02),

Texas responded to OSM’s concern by

submitting a revision to its proposed

program amendment. Texas proposed

an additional revision to TCMR

806.309(j)(2)(C)(iv) by adding the

following clarification provision.

The limitation contained in subparagraph

(II)(C) of this section applies to applicants or

guarantors qualifying pursuant to

subparagraph (II) only and does not affect the

limitation set out in Section 806.309(j)(5)(A)

for applicants or guarantors seeking

acceptance of a self-bond pursuant to

paragraphs i–iii or subparagraph (I) of this

section.

Based upon the additional

explanatory revision to the proposed

program amendment submitted by

Texas, OSM reopened the public

comment period in the October 16,

1995, Federal Register (60 FR 53567).

The public comment period closed on

October 31, 1995.

III. Director’s Findings

Set forth below, pursuant to SMCRA

and the Federal regulations at 30 CFR

732.15 and 732.17, are the Director’s

findings concerning the proposed

amendment.

TCMR 806.309(j)(2)(C)(iv) Self-Bonding:

Requirements for a Business and

Governmental Entities, Alternative

Financial Eligibility Criteria

1. Existing State Regulation

Requirements

Like the Federal self-bonding

regulations at 30 CFR 800.23(b)(3) (i),

(ii), and (iii), Texas has standard

financial criteria for self-bonding at

§ 806.309(j)(2)(C) (i), (ii), and (iii) that

are substantively identical to the

corresponding Federal regulations.

Under the State’s standard criteria, an

applicant can qualify for self-bonding by

meeting one of three criteria that pertain

to having either a bond rating of A or

higher; or $10 million net worth and

certain financial ratio values; or having

fixed assets of $20 million and certain

financial ratio values.

To provide additional flexibility to

financially strong firms, Texas proposed

an alternative four-part test at

§ 806.309(j)(2)(C)(iv) that was approved

by OSM on February 19, 1992, as an

alternative test under the Texas selfbonding program (57 FR 5983). Texas’

alternative test allows an applicant to

qualify if it meets four criteria in

combination. Specifically, an applicant

applying for self-bonding under

§ 806.309(j)(2)(C)(iv) must have an

investment-grade bond rating

(§ 806.309(j)(2)(C)(iv)(I)); tangible net

worth of at least $10 million and fixed

assets in the United States of $20

million (§ 806.309(j)(2)(C)(iv)(II)); a ratio

of total liabilities to net worth that is

equal to or less than the industry

median (§ 806.309(j)(2)(C)(iv)(III)); and a

ratio of current assets to current

liabilities that is equal to or greater than

the industry median or a current credit
Federal Register / Vol. 60, No. 239 / Wednesday, December 13, 1995 / Rules and Regulations 63923

rating of 4A2 or higher from Dun and

Bradstreet Corporation

(§ 806.309)(j)(2)(C)(iv)(IV)).

There is no direct Federal counterpart

regulation to Texas’ alternative test for

self-bonding. However, as explained in

the February 19, 1992, Federal Register

(57 FR 5983), the Director found that

when an applicant for self-bonding in

Texas meets the combined requirements

of the alternative test at

§ 806.309(j)(2)(C)(iv), the applicant is

complying with financial strength and

solvency requirements that are no less

effective than the standard financial

safeguards of the Federal regulations at

30 CFR 800.23(b)(3).

2. Proposed State Regulation

Requirements

On its own initiative, Texas proposes

to recodify and expand the existing

alternative financial criteria at

§ 806.309(j)(2)(C)(iv) to provide

applicants a choice between two, fourpart financial tests. The State’s intention

is to maintain consistency with the

Federal regulations while providing

flexibility to financially strong

applicants who apply for self-bonding

under its alternative eligibility criteria.

Texas proposes to recodify its existing

regulations at § 806.309(j)(2)(C)(iv) (I)–

(IV) as § 806.309(j)(2)(C)(iv)(I) (A), (B),

and (C). This remodified section serves

as the first optional financial test under

the State’s proposed alternative tests for

self-bonding. Texas proposes to add

§ 806.309(j)(2)(C)(iv)(II) (A), (B), and (C).

This new section constitutes the second

optional financial test under the State’s

proposed alternative tests for selfbonding.

The State’s proposal allows applicants

the option of qualifying for self-bonding

by meeting the combined requirements

of either subparagraph (I) or

subparagraph (II) of

§ 806.309(j)(2)(C)(iv). These proposed

requirements are further discussed

below:

a. Investment-Grade Bond Rating

(Applicable to both Alternative Test I

and Test II). TCMR § 806.309(j)(2)(C)(iv).

First, an applicant applying for selfbonding under either of the two

proposed alternative financial tests at

§ 806.309(j)(2)(C)(iv) (I) or (II) must have

an investment-grade rating for its most

recent bond issuance (Baa3 or higher

from Moody’s Investor Service and

BBB– or higher from Standard and

Poor’s Corporation). This requirement is

identical to the existing criteria at

§ 806.309(j)(2)(C)(iv)(I).

In the preamble to the final Federal

self-bonding regulations (48 FR 36418,

August 10, 1983), OSM stated that ‘‘The

services [bond rating services] are relied

upon heavily by creditors and maintain

a high rate of predictive success [about

a bond issuer’s ability to re-pay bond

issues].’’ OSM’s allowance of a bond

rating of ‘‘A or higher’’ in the Federal

regulations as a stand-alone test for selfbonding is based on reliance on the

expertise of the rating service to

evaluate the financial position of a firm.

In determining the rating of a bond

issue, rating services conduct an indepth financial analysis of the issuer.

Using Standard and Poor’s rating of

bonds issued by public utilities as an

example, some factors that it considers

include: (1) Legal considerations such as

the rate covenant (which defines the

size and source of the utility’s financial

reserve); the flow of funds (or the

priority of claims on the revenue

stream); and the legal implications of

energy sales contracts (the company’s

potential liabilities); (2) economic

considerations such as income trends;

diversification of the employment base

(analysis of key local industries); and

growth trends; and (3) systems

considerations such as projected energy

growth; generating capacity and fuel

sources; and whether customer profiles

indicate that end-users are balanced in

terms of including residential,

commercial and industrial customers.

Also considered are the company’s

capital improvement and financing

plans; the stability and predictability of

the revenue stream pledged to pay debt

service; the liquidity position and

equity position of the company; and the

financial implications of the regulatory

environment.

In the preamble to OSM’s final selfbonding regulations, OSM also

explained that since it was allowing a

self-bonding applicant to qualify by

meeting one financial test (unlike EPA

that requires more than one test, and

thus allows a lower, investment-grade

bond rating), an applicant that selected

the bond rating test would have to have

bonds rated ‘‘A or higher.’’ This is

because the bond rating of ‘‘A or higher’’

is a stand-alone test in the Federal

regulations. While not specifically

addressed by OSM in its final

regulations on self-bonding, it follows

that a State’s self-bonding program that

requires an applicant to meet multiple

financial criteria in addition to having

an investment-grade bond rating is no

less effective than the Federal

regulations that allow a bond rating of

‘‘A or higher’’ as a stand-alone financial

test.

As an additional safeguard, Texas is

requiring applicants to notify the

Commission of any rating change to a

lower bond rating than the applicant

had at the time the self-bond was

approved. If an applicant’s rating is

down-graded, then the Commission will

immediately hold a hearing to decide

whether the applicant may remain in

the self-bonding program. This

requirement is in addition to the

existing requirement at § 806.309(j)(8)

for applicants to notify the Commission

if it no longer meets the criteria at (2)(C)

and (2)(D) of the self-bonding

regulations.

b. Alternative Test I. TCMR

806.309(j)(2)(C)(iv)(I)(A). Under

subparagraph (I)(A), Texas proposes to

recodify the exiting requirements at

§ 806.309(j)(2)(C)(iv)(II) [wherein an

applicant must demonstrate that it has

a tangible net worth of at least $10

million and fixed assets in the United

States totaling at least $20 million].

Other than recodifying this section, no

changes are proposed; therefore, the

requirements at

§ 806.308(j)(2)(C)(iv)(I)(A) are no less

effective than the Federal self-bonding

requirements at 30 CFR 800.23(b)(3).

TCMR 806.309(j)(2)(C)(iv)(I)(B). Texas

is revising requirements at

§ 806.309(j)(2)(C)(iv)(III) to provide

flexibility under the recodified

subparagraph at

§ 806.309(j)(2)(C)(iv)(I)(B). The State is

revising this sub-part to provide an

optional test whereby an applicant must

demonstrate that it has either a ratio of

total liabilities to net worth of 2.5 or less

or a ratio of total liabilities to net worth

that is equal to or less than the industry

median reported by Dun and Bradstreet

Corporation for the applicant’s primary

SIC code. A ratio value of 2.5 or less is

the current standard test in the State’s

self-bonding program at

§ 806.309(j)(2)(C) (ii) and (iii), and in the

Federal regulations at 30 CFR

800.23(b)(3) (ii) and (iii). Therefore,

allowing applicants the option of

meeting either the standard ratio value

of 2.5 or less, or having a ratio value that

is equal to or less than the industry

median is no less effective than the

Federal regulations for reasons further

explained below.

The rationale for comparing an

applicant’s ratio of total liabilities to net

worth to the industry median was

discussed in detail in the preamble to

the final Texas rule (57 FR 5983,

February 19, 1992). Industry medians

reflect the relative financial status of

firms within an industry classified by

net worth. Comparing a firm with

current industry medians is more

meaningful than comparing it with

static values for financial ratios that

represent the conditions of an industry

at an historical point in time. OSM

determined that ratio values that are

keyed to an applicant’s industry
63924 Federal Register / Vol. 60, No. 239 / Wednesday, December 13, 1995 / Rules and Regulations

medians are an appropriate measure of

how the applicant performs financially

in comparison to the rest of its industry.

On this basis, OSM approved the use of

industry median values in lieu of the

standard value of 2.5 or less. However,

since OSM’s approval of Texas’

alternative self-bonding test on February

19, 1992, changes have occurred in

general financial accounting

requirements resulting in industry

median values that do not consistently

reflect the true comparative financial

strength of applicants for self-bonding.

For example, the Financial

Accounting Standards Board (FASB) has

issued new accounting standards that

firms must follow in order to be in

compliance with Generally Accepted

Accounting Principles (GAAP). One

such standard is the ‘‘Statement of

Financial Accounting Standards No.

109, ‘Accounting for Income Taxes’ ’’

(SFAS 109) issued in 1991. The effects

of SFAS 109 and another accounting

standard, ‘‘Employer’s Accounting for

Postretirement Benefits Other than

Pensions’’ (SFAS 106), are complex and

affect both sides of a firm’s balance

sheet in a variety of ways.

Upon review, ratio values for a firm

that has adopted SFAS 106 (post-retiree

health benefits) may not compare well

with ratio values for a firm that has not

yet adopted the standard or a firm that

is on different implementation

schedule. On the other hand, a firm that

has adopted SFAS 109 (accounting for

deferred income taxes) may appear

financially stronger than it actually is.

Accounting for deferred tax assets is an

example. In an article entitled

‘‘Evaluating Deferred-Tax Assets: Some

Guidance for Lenders’’ (Commercial

Lending Review, July 1994, pp. 12–25),

Eugene Comiskey and Charles Mulford

state that ‘‘deferred tax assets result in

increases to earnings, assets, and

shareholders’ equity which in essence

do not increase the financial strength of

the firm from that before adoption of

FASB 109 [SFAS 109].’’ The authors

advise that deferred tax assets

‘‘especially those recorded for various

tax carryforwards, share features with

intangible assets—assets that are often

deducted from equity in the

measurement of tangible net worth in

debt covenants.’’ These examples

illustrate the many complexities

involved in analyzing the

interdependent effects that recent FASB

standards have had on the financial

status of self-bonding applicants.

Therefore, Texas proposes to revise its

alternative test to allow financially

strong applicants the flexibility of

qualifying by either having a ratio of

total liabilities to net worth that meets

the standard criteria (2.5 or less) or a

ratio value that meets the industry

median test.

Changes to accounting standards

notwithstanding, ratio analysis based on

industry medians, (industry norms) has

merit when comparing firms with

similar conditions (net worth and asset

size) in the same industry. However, not

all firms are adopting the FASB

financial accounting standards during

the same accounting year and/or in the

same manner; so the industry medians

do not always reflect a level financial

playing field for the purpose of

comparing a firm to its industry.

Under the State’s proposal, an

applicant that meets the standard

criterion, 2.5 or less for the ratio of total

liabilities to net worth, satisfies the

Federal ceiling for this ratio under the

Federal regulations at 30 CFR

800.23(b)(3) (ii) and (iii). In addition,

the ratio criterion based on comparison

with the industry median is an

approved financial test in the State’s

existing alternative criteria for selfbonding. Therefore, Texas’ proposed

revision at § 806.309(j)(2)(C)(iv)(I)(B)

that allows an applicant the option of

qualifying under either of these two

ratio criteria is no less effective than the

Federal regulations.

TCMR 806.309(j)(2)(C)(iv)(I)(C). Under

subparagraph (I)(C), Texas proposes to

recodify the existing State requirement

at § 806.309(j)(2)(iv)(IV). Other than

recodifying this section, no changes are

proposed. Therefore, the State’s

proposed requirements at

§ 806.309(j)(2)(iv)(I)(C) are no less

effective than the Federal regulations.

c. Alternative Test II. TCMR

806.309(j)(2)(C)(iv)(II). Applicants

applying for self-bonding under the

Federal regulations at 30 CFR

800.23(b)(3) (ii) and (iii) and under the

State’s standard self-bonding test at

§ 806.309(j)(2)(C) (ii) and (iii) are

required to have certain financial ratio

values that indicate solvency and a

reasonable liquidity position. Rather

than measuring an applicant’s liquidity

position by requiring certain values for

the ratio of current assets to current

liabilities and the ratio of total liabilities

to net worth, Texas is proposing

alternative criteria to demonstrate

financial strength.

In OSM’s final self-bonding rules (48

FR 36418, August 10, 1983), OSM

indicated that the self-bonding program

was established at 30 CFR 800.23 for

firms that could demonstrate a low

likelihood of bankruptcy, debts that are

not disproportionate to assets, and

reasonable liquidity. OSM also stated

that the ‘‘New § 800.23 allows a State to

develop a comprehensive self-bonding

program to balance the risk of forfeiture

versus the benefits to financially sound

operators of a self-bonding program,’’

and that . . . ‘‘These final rules [Federal

regulations] contain standards general

enough to take into account statespecific conditions.’’ To recognize

variability among financially strong

industries mining coal in Texas, the

State proposes to add a second set of

alternative criteria to provide financially

strong applicants an additional option

for demonstrating liquidity and

financial strength. This proposed

alternative test will provide flexibility

and increase the availability of the selfbonding program without jeopardizing

the level of reclamation assurance.

Texas’ new proposed alternative test

at § 806.309(j)(2)(C)(iv)(II), consists of

three subparagraphs. All financial

criteria (including the investment-grade

bond rating discussed above) must be

met in combination in order for an

applicant to qualify for self bonding

under this proposed alternative test.

TCMR 806.309(j)(2)(C)(iv)(II)(A).

Texas is proposing that an applicant

applying for self-bonding have a net

worth of at least $100 million and fixed

assets in the United States totaling at

least $200 million. These proposed

levels of net worth and fixed assets are

ten times greater than the $10 and $20

million respective levels required by the

standard self-bonding criteria at

§ 806.309(j)(2)(C) (i), (ii), and (iii), and

the counterpart Federal regulations at 30

CFR 800.23(b)(3) (i), (ii), and (iii).

Intangible assets such as goodwill,

patents, royalties, and trademarks (if

any) are included in the calculation of

net worth in this proposal; whereas in

the existing approved alternative test

and standard criteria, intangible assets

are not counted in the calculation of net

worth. However, the Director finds that

a tenfold increase in the required level

of net worth from $10 million to $100

million provides assurance, no less

effective than the Federal regulations,

that sufficient assets should be available

to conduct reclamation and avoid

bankruptcy. Since the levels of net

worth and fixed assets under this

proposal require financial strength

levels that are higher than the existing

levels in the Federal counterpart

regulations at 30 CFR 800.23(b)(3) (i),

(ii), and (iii), the State’s requirements at

§ 806.309(j)(2)(C)(IV)(II)(A) are no less

effective than the Federal regulations.

TCMR 806.309(j)(2)(C)(IV)(II)(B).

Under subparagraph (II)(B), the Texas

proposal requires the applicant to have

issued securities in accordance with the

requirements of the Securities Act of

1933, and that the applicant is subject

to the periodic financial reporting
Federal Register / Vol. 60, No. 239 / Wednesday, December 13, 1995 / Rules and Regulations 63925

requirements established by the

Securities and Exchange Act of 1934. To

protect investors, the Securities and

Exchange Commission (SEC) has

stringent financial disclosure and

reporting requirements for issuers of

securities.

Annual reports filed with the SEC are

readily available public filings that

require disclosure of detailed financial

and business information that exceeds

the level of detail usually found in a

firm’s annual report to its stockholders.

Like the Federal self-bonding program,

whether or not Texas accepts a qualified

applicant’s self-bond is discretionary

with the State. In making this decision,

the State is not limited to the materials

filed by an applicant. In its analysis of

an applicant’s qualifications, Texas can

calculate financial ratios from the

applicant’s balance sheet data, compare

an applicant’s ratios to industry norms,

and conduct any number of other

financial tests to determine whether an

applicant is a good candidate for selfbonding. Having an applicant’s SEC

financial information at its disposal

places the State in a position to make an

informed decision about a self-bonding

applicant’s qualifications. For example,

in addition to requiring that financial

statements be prepared in conformance

with GAAP, Section 78m.(b)(2)(B) of the

Securities and Exchange Act requires

firms to assure that safeguards are

present to protect assets. Protecting

assets helps assure reasonable liquidity

which is one of the requirements for

qualifying under the Federal and Texas

self-bonding programs.

In lieu of using financial ratios to

measure liquidity, Texas is proposing

that under this alternative test

applicants meet a combination of

requirements including: stringent SEC

financial reporting, an investment-grade

bond rating, and net worth that is six

times the total amount of the applicant’s

outstanding and proposed self-bonds.

Meeting the combined financial

requirements of Texas’ proposed

alternative test will assure that an

applicant has reasonable liquidity and a

low risk of bankruptcy. The requirement

for net worth that is six times the total

self-bonded amount is further discussed

under subparagraph (C) below.

TCMR 806.309(j)(2)(C)(iv)(II)(C). Like

the Federal self-bonding regulations at

30 CFR 800.23, an applicant applying

for self-bonding under Texas’ standard

test at § 806.309(j)(2)(C) (i), (ii), and (iii)

and an applicant applying for selfbonding under the first of Texas’

alternative tests at

§ 806.309(j)(2)(C)(iv)(I) may not have

outstanding and proposed self-bonds

that are greater than 25 percent of the

applicant’s tangible net worth in the

United States. In other words, tangible

net worth must be four times the

outstanding and proposed self-bonded

amount. Tangible net worth is used as

the basis for comparison with the

amount of proposed and outstanding

self-bonds because intangible assets

such as goodwill, patents, royalties, and

trademarks are difficult to evaluate and

liquidate. Under the new alternative at

§ 806.309(j)(2)(C)(iv)(II)(C), Texas is

proposing that an applicant’s total

outstanding and proposed self-bond

amount not exceed 162⁄3 percent of the

applicant’s net worth in the United

States. In other words, net worth

[including intangible assets] must be six

times the amount of outstanding and

proposed self-bonds. Under this

proposal, Texas is allowing the basis of

comparison to be total net worth

including the calculation for intangible

assets. However, the Director finds that

the inclusion of intangible assets in this

calculation is offset by the State’s

proposal to increase the ratio of net

worth to self-bond amount to six times

rather than four times. This proposed

increase to the required level of net

worth should provide assurance that a

self-bonded permittee has sufficient

assets to perform reclamation and stave

off bankruptcy. Therefore, under this

proposed second alternative test at

§ 806.309(j)(2)(C)(iv)(II), Texas is

requiring that an applicant have a

greater financial cushion to protect the

State should it be required to attempt to

recover self-bonded amounts from the

applicant’s assets in the event the

applicant files for bankruptcy.

In the preamble to the final Federal

self-bonding regulations (48 FR 36418,

August 10, 1983), OSM responded to a

commenter who recommended a 6 to 1

ratio of net worth to self-bonded amount

in the Federal regulations ‘‘to be more

in keeping with the rates used by the

surety industry.’’ OSM responded by

saying that ‘‘Although the requirements

of these rules are such that only wellestablished, financially solvent business

entities will qualify for self-bonding,

there is always an element of risk

involved in underwriting the obligations

for such companies. The 25 percent

restriction provides a financial cushion,

in the event that a self-bonded entity

should fail, to allow the regulatory

authority to attempt to recoup selfbonded amounts from the assets of the

bankrupt entity. A 6 to 1 ratio is

considered overly restrictive, especially

in light of other required financial tests

[at 30 CFR 800.23(b)(3)].’’ The State’s

proposal for a 6 to 1 ratio of net worth

to self-bonded amount plus meeting a

combination of three additional

financial tests (investment-grade bond

rating, $100 million net worth plus $200

million domestic fixed assets, and SEC

financial reporting) is no less effective

than the Federal regulations that require

a 4 to 1 ratio of tangible net worth to

self-bonded amount plus meeting one of

three stand-alone financial tests (bond

rating of A or higher; or $10 million

tangible net worth plus 1.2 or greater

current ratio of assets to liabilities plus

2.5 or less ratio of total liabilities to net

worth; or $20 million domestic fixed

assets plus the same ratio values as

stated above).

d. Based on the above discussions, the

Director finds that Texas’ proposed

financial criteria at TCMR

806.309(j)(2)(C)(iv) (I) and (II) are either

already contained in Texas’ existing

approved alternative test for selfbonding or provide financial options for

the new proposed alternative test that

are no less effective at measuring

financial strength and reasonable

liquidity than the Federal self-bonding

regulations at 30 CFR 800.23(b)(3).

IV. Summary and Disposition of

Comments

Public Comments

The Director solicited public

comments and provided an opportunity

for a public hearing on the proposed

amendment. No one requested an

opportunity to speak at a public hearing;

therefore, no hearing was held.

Texas Utilities Services Inc. provided

written support for the proposed

amendment (Administrative Record No.

TX–593.07).

Federal Agency Comments

Pursuant to 30 CFR 732.17(h)(11((i),

the Director solicited comments on the

proposed amendment from various

Federal agencies with an actual or

potential interest in the Texas program

(Administrative Record No. 593.01).

On September 15, 1995

(Administrative Record No. TX–593.06),

the U.S. Bureau of Land Management

commented that the revised regulations

addressed by the documents appear to

exceed Federal coal standards. On

September 18, 1995 (Administrative

Record No. TX–593.04), the U.S. Army

Corps of Engineers acknowledged that

the revisions were satisfactory. On

October 2, 1995 (Administrative Record

No. TX–593.08), the Natural Resources

Conservation Services responded

without comment.

Environmental Protection Agency (EPA)

Pursuant to 30 CFR 732.17(h)(11)(ii),

OSM is required to obtain the written
63926 Federal Register / Vol. 60, No. 239 / Wednesday, December 13, 1995 / Rules and Regulations

concurrence of the EPA with respect to

those provisions of the proposed

program amendment that relate to air or

water quality standards promulgated

under the authority of the Clean Water

Act (33 U.S.C. 1251 et seq.) or the Clean

Air Act (42 U.S.C. 7401 et seq,).

However, none of the revisions that

Texas proposed to make in this

amendment pertain to air or water

quality standards. Therefore, OSM did

not request EPA’s concurrence.

Pursuant to 732.17(h)(11)(i), OSM

solicited comment on the proposed

amendment from EPA (Administrative

Record No. TX–593.01). EPA did not

respond to OSM’s request.

State Historical Preservation Officer

(SHPO) and the Advisory Council on

Historic Preservation (ACHP)

Pursuant to 30 CFR 732.17(h)(4), OSM

is required to solicit comments on

proposed amendments which may have

an effect on historic properties from the

SHPO and ACHP. OSM solicited

comments on the proposed amendment

from the SHPO and ACHP

(Administrative Record No. TX–593.01).

Neither SHPO nor ACHP responded to

OSM’s request.

V. Director’s Decision

Based on the above findings, the

Director approves the proposed

amendment as submitted by Texas on

August 11, 1995, and as revised on

September 25, 1995, concerning selfbonding alternative financial

requirements for a business and

governmental entities.

The Director approves the rules as

proposed by Texas with the provision

that they be fully promulgated in

identical form to the rules submitted to

and reviewed by OSM and the public.

The Federal regulations at 30 CFR

943, codifying decisions concerning the

Texas program, are being amended to

implement this decision. This final rule

is being made effective immediately to

expedite the State program amendment

process and to encourage States to bring

their programs into conformity with the

Federal standards without undue delay.

Consistency of State and Federal

standards is required by SMCRA.

VI. Procedural Determinations

Executive Order 12866

This rule is exempted from review by

the Office of Management and Budget

(OMB) under Executive Order 12866

(Regulatory Planning and Review).

Executive Order 12778

The Department of the Interior has

conducted the reviews required by

section 2 of Executive Order 12778

(Civil Justice Reform) and has

determined that, to the extent allowed

by law, this rule meets the applicable

standards of subsections (a) and (b) of

that section. However, these standards

are not applicable to the actual language

of State regulatory programs and

program amendments since each such

program is drafted and promulgated by

a specific State, not by OSM. Under

sections 503 and 505 of SMCRA (30

U.S.C. 1253 and 1255) and the Federal

regulations at 30 CFR 730.11, 732.15,

and 732.17(h)(10), decisions on

proposed State regulatory programs and

program amendments submitted by the

States must be based solely on a

determination of whether the submittal

is consistent with SMCRA and its

implementing Federal regulations and

whether the other requirements of 30

CFR Parts 730, 731, and 732 have been

met.

National Environmental Policy Act

No environmental impact statement is

required for this rule since section

702(d) of SMCRA (30 U.S.C. 1292(d))

provides that agency decisions on

proposed State regulatory program

provisions do not constitute major

Federal actions within the meaning of

section 102(2)(C) of the National

Environmental Policy Act (42 U.S.C.

4332(2)(C)).

Paperwork Reduction Act

This rule does not contain

information collection requirements that

require approval by OMB under the

Paperwork Reduction Act (44 U.S.C.

3507 et seq.).

Regulatory Flexibility Act

The Department of the Interior has

determined that this rule will not have

a significant economic impact on a

substantial number of small entities

under the Regulatory Flexibility Act (5

U.S.C. 601 et seq.). The State submittal

which is the subject of this rule is based

upon corresponding Federal regulations

for which an economic analysis was

prepared and certification made that

such regulations would not have a

significant economic effect upon a

substantial number of small entities.

Accordingly, this rule will ensure that

existing requirements previously

promulgated by OSM will be

implemented by the State. In making the

determination as to whether this rule

would have a significant economic

impact, the Department relied upon the

data and assumptions for the

corresponding Federal regulations.

List of Subjects in 30 CFR Part 943

Intergovernmental relations, Surface

mining, Underground mining.

Dated: February 1, 1995.

Brent Wahlquist,

Regional Director, Mid-Continent Regional

Coordinating Center.

For the reasons set out in the

preamble, Title 30, Chapter VII,

Subchapter T of the Code of Federal

Regulations is amended as set forth

below:

PART 943—TEXAS

1. The authority citation for Part 943

continues to read as follows:

Authority: 30 U.S.C. 1201 et seq.

2. Section 943.15 is amended by

adding paragraph (1) to read as follows:

§ 943.15 Approval of regulatory program

amendments.

* * * * *

(1) The revisions to the following

regulations at 16 Texas Administrative

Code 11.221, the Coal Mining

Regulations of the Railroad Commission

of Texas, as submitted to OSM on

August 11, 1995, and as revised on

September 25, 1995, are approved

effective December 13, 1995.

TCMR 806.309(j)(2)(C)(iv)

(I)(A), (B), and (C).

Self-bonding:

financial requirements

for a business and

governmental

entities, Alternative Financial Eligibility Criteria

Test I.

TCMR 806.309(j)(2)(C)(iv)

(II)(A), (B), and (C).

Self-bonding:

financial requirements

for a business and

governmental

entities, Alternative Financial Eligibility Criteria

Test II.

[FR Doc. 95–30330 Filed 12–12–95; 8:45 am]

BILLING CODE 4310–05–M

DEPARTMENT OF VETERANS

AFFAIRS

38 CFR Part 1

RIN 2900–AE28

Confidentiality of Certain Medical

Records

AGENCY: Department of Veterans Affairs.