28806 Federal Register / Vol. 61, No. 110 / Thursday, June 6, 1996 / Proposed Rules

A. Classification Under Executive Order

12866

These proposed regulations establish

procedures and criteria for certifying

that certain actions to modernize NWS

will not result in any degradation of

weather services to the affected service

area. They will not result in any direct

or indirect economic impacts, and have

been determined not to be significant for

purposes of E.O. 12866.

B. Regulatory Flexibility Act Analysis

These regulations set forth the criteria

for certifying that certain modernization

actions will not result in a degradation

of service to the affected area. These

criteria will be appended to the Weather

Service Modernization regulations. The

Assistant General Counsel for

Legislation and Regulation of the

Department of Commerce has certified

to the Chief Counsel for Advocacy of the

Small Business Administration that

these criteria, if adopted as proposed,

will not have a significant economic

impact on a substantial number of small

entities. These proposed criteria are

intended for internal agency use, and

will not directly affect small business.

The proposed criteria do not directly

affect ‘‘small government jurisdictions’’

as defined by Pub. L. 96–354, the

Regulatory Flexibility Act. Accordingly,

no initial regulatory flexibility analysis

has been prepared.

C. Paperwork Reduction Act of 1980

These regulations will impose no

information collection requirements of

the type covered by Pub. L. 96–511, the

Paperwork Reduction Act of 1980.

D. E.O. 12612

This rule does not contain policies

with sufficient Federalism implications

to warrant preparation of a Federalism

assessment under Executive Order

12612.

E. National Environmental Policy Act

NOAA has concluded that publication

of this proposed rule does not constitute

a major Federal action significantly

affecting the quality of the human

environment. Therefore, an

environmental impact statement is not

required. A programmatic

Environmental Impact Statement (EIS)

regarding NEXRAD was prepared in

November 1984, and an Environmental

Assessment to update the portion of the

EIS dealing with the bioeffects of

NEXRAD non-ionizing radiation was

issued in 1993.

List of Subjects in 15 CFR Part 946

Administrative practice and

procedure, Certification,

Commissioning, Decommissioning,

National Weather Service, Weather

service modernization.

Dated: June 1, 1996.

Elbert W. Friday, Jr.,

Assistant Administrator for Weather Services.

For the reasons set out in the

preamble, 15 CFR part 946 is proposed

to be amended as follows:

PART 946—[AMENDED]

1. The authority citation for part 946

continues to read as follows:

Authority: Title VII of Pub. L. 102–567, 106

Stat 4303 (15 U.S.C. 313n).

Appendix A to Part 946—[Amended]

2. Appendix A to part 946 is amended

by adding a new Subsection (E) under

Section II. Criteria for Modernization

Actions Requiring Certification, to read

as follows:

(E) Proposed Modernization Criteria

Unique to Closure Certifications.

1. Consolidation Certification; If the field

office proposed for closure has or will be

consolidated, as defined in § 946.2 of the

basic modernization regulations, this action

has been completed as evidenced by the

approved certification or can be completed as

evidenced by all of the documentation that

all of the requirements of sections II.A. and

II.B. of this Annex have been completed.

2. Automation Certification: If the field

office proposed for closure has or will be

automated, as defined in § 946.2 of the basic

modernization regulations, this action has

been completed as evidenced by the

approved certification or can be completed as

evidenced by documentation that all of the

requirements of sections II.A. and II.C. of this

Annex have been completed.

3. Remaining Services and/or

Observations: All remaining service and/or

observational responsibilities, if applicable to

the field office proposed for closure, have

been transitioned as addressed in the MIC’s

recommendation for certification.

4. User Confirmation of Services: Any valid

user complaints received related to provision

of weather services have been satisfactorily

resolved and the issues addressed in the

MIC’s recommendation for certification.

5. Warning and Forecast Verification:

Warning and forecast verification statistics,

produced in accordance with the Closure

Certification Verification Plan, have been

utilized in support of the MIC’s

recommendation for certification.

Attachment 1

Appendix A to Part 946—National Weather

Service Modernization Criteria (Relevant

portions)

II. Criteria for Modernization Actions

Requiring Certification

(A). Criteria Common to all Types of

Certifications (except as noted)

1. Notification: Advanced notification and

the expected date of the proposed

certification have been provided in the

National Implementation Plan.

2. Local Weather Characteristics and

Weather Related Concerns: A description of

local weather characteristics and weather

related concerns which affect the weather

services provided to the affected service area

is provided.

3. Comparison of Services: A comparison

of services before and after the proposed

action demonstrates that all services

currently provided to the affected service

area will continue to be provided.

4. Recent or Expected Modernization of

NWS Operations in the Affected Service

Area: A description of recent or expected

modernization of NWS operations in the

affected service area is provided.

5. NEXRAD Network Coverage: NEXRAD

network coverage or gaps in coverage at 10

feet over the affected service area are

identified.

6. Air Safety Appraisal (applies only to

relocation and closure of field offices at an

airport): Verification that there will be no

degradation of service that affects aircraft

safety has been made by conducting an air

safety appraisal in consultation with the

Federal Aviation Administration.

7. Evaluation of Service to In-state Users

(applies only to relocation and closure of the

only field office in a state): Verification that

there will be no degradation of weather

services provided to the state has been made

by evaluating the effects on weather services

provided to in-State users.

8. Liaison Officer: Arrangements have been

made to retain a Liaison Officer in the

affected service area for at least two years to

provide timely information regarding the

activities of the NWS which may affect

service to the community, including

modernization and restructuring; and to work

with area weather service users, including

persons associated with general aviation,

civil defense, emergency preparedness, and

the news media, with respect to the provision

of timely weather warnings and forecasts.

9. Meteorologist-In-Charge’s (MIC)

Recommendation to Certify: The MIC of the

future WFO that will have responsibility for

the affected service area has recommended

certification in accordance with 15 CFR

946.7(a).

10. Regional Director’s Certification: The

cognizant Regional Director has approved the

MIC’s recommended certification of no

degradation of service to the affected service

area in accordance with 15 CFR 946.8.

[FR Doc. 96–14254 Filed 6–5–96; 8:45 am]

BILLING CODE 3510–12–M

COMMODITY FUTURES TRADING

COMMISSION

17 CFR Part 1

Rule Amendment Concerning Trading

Records

AGENCY: Commodity Futures Trading

Commission.

ACTION: Proposed rule amendment.

SUMMARY: The Commodity Futures

Trading Commission (‘‘Commission’’)
Federal Register / Vol. 61, No. 110 / Thursday, June 6, 1996 / Proposed Rules 28807

1 55 FR 8127 (March 7, 1990).

2Regulation 1.35(j)(1) requires that each contract

market maintain in effect rules which require,

among other things, that trading records prepared

pursuant to paragraphs (a–1) and (d) of this section

be submitted to contract market personnel or the

clearing member within 15 minutes of designated

intervals not to exceed 30 minutes. Paragraph (a–

1) requires the creation of order tickets; paragraph

(d) requires the preparation of trading cards or other

records showing purchases or sales executed on or

subject to the rules of a contract market.

3Regulation 1.35(a–1) (2) and (4).

4Regulation 1.35(d)(7)(ii) and (j)(8). Regulation

1.35(j)(8) requires that each contract market

maintain in effect rules which require that members

complete trades in non-erasable ink as prescribed

by paragraph (d)(7)(ii).

5With regard to trading cards only, the member

could still correct erroneous information by

rewriting the trading card. Pursuant to paragraph

(d)(6), the member would remain accountable for

any trading card that is subsequently rewritten. The

Commission requests comments regarding the

continued advisability of this provision.

proposes to amend its Regulation to

clarify a procedure specified for the

correction of erroneous information on

trading cards and to make that

procedure applicable to other trading

records. The amendment would specify

that a member of a contract market who

needs to correct an error on a trading

record may do so only by crossing out

the erroneous information with no more

than a single line through each

character, without obliterating or

otherwise making illegible any of the

originally recorded information.

Contract markets would be required to

maintain rules that require errors on

trading records to be corrected in the

prescribed manner.

DATES: Comments on the proposed

amendment must be submitted on or

before July 8, 1996.

ADDRESSES: Comments on the proposed

amendment should be sent to:

Commodity Futures Trading

Commission, Three Lafayette Centre,

1155 21st Street, NW., Washington, DC

20581, Attention: Secretariat.

FOR FURTHER INFORMATION CONTACT:

Duane C. Andresen, Special Counsel,

Division of Trading and Markets,

Commodity Futures Trading

Commission, Three Lafayette Centre,

1155 21st Street, NW., Washington, DC

20581. Telephone: (202) 418–5490.

SUPPLEMENTARY INFORMATION:

I. Introduction

On March 7, 1990 the Commission

published in the Federal Register a

number of final amendments to

Regulation 1.35,1 which governs the

records of cash commodity, futures, and

options transactions which must be

prepared and maintained for all

purchases and sales of commodities for

future delivery or commodity options

on designated contract markets. These

amendments were intended, among

other things, to limit the opportunity for

the fabrication or alteration of trading

records and to enhance exchange audit

trails and trade surveillance. The

amendments imposed obligations

directly on contract market members

and required each contract market to

promulgate implementing rules to that

effect.

Although many of the amendments’

provisions were targeted to trading

cards, other provisions were made

specifically applicable to all trading

records in order to limit the opportunity

to alter or fabricate such trading records.

The trading record collection

requirement of Regulation 1.35(j)(1),

designed to expeditiously transfer

control of the documents from the

executing members, is applicable to all

trading records on which the contract

market or clearing member relies as an

original source document for clearing

submission purposes.2 The requirement

that trades be recorded in non-erasable

ink, designed to provide added

protection against improper alteration of

trading records through erasures, is

applicable to customer order tickets,3as

well as trading cards.4

Notwithstanding these provisions, the

Commission has found, based upon its

oversight activities, instances in which

it appears that members have altered or

created fictitious trading records to

facilitate illegal purposes. It appears

that, in some instances, trade prices and

quantities have been altered subsequent

to trade execution to the detriment of

customers and favorable trades for

customers have been allocated to

traders’ personal accounts. The

Commission believes that this type of

activity may be facilitated by the

manner in which traders, under the

guise of correcting erroneous

information on a trading record, obscure

the information originally recorded.

This practice, which has been observed

to occur with respect to both trading

cards and order tickets, also makes it

more difficult to detect potentially

fraudulent activity.

The Commission believes that

obscuring the trade information

originally recorded can be used to

facilitate or itself constitute illegal

fraudulent conduct. As previously

stated, the amendments to Regulation

1.35 were intended, among other things,

to limit the opportunity for fabrication

or alteration of trading records and to

enhance exchange audit trails and trade

surveillance. Correcting erroneous

information by obliteration of the

original data enhances the opportunity

to facilitate illegal purposes and

increases the difficulty involved in

creating and maintaining adequate audit

trail and trade practice surveillance

programs. Nonetheless, in order to

eliminate any ambiguity in this area, the

Commission is now proposing to

expressly address the issue by amending

the method by which a member of a

contract market may correct errors on a

hard copy trading record.

II. Proposed Amendment

In light of the foregoing, the

Commission proposes to amend

Regulation 1.35 in two respects. First,

paragraph (d)(7), which addresses,

among other things, the preparation of

trading cards, would be made applicable

to all trading records. Second, paragraph

(d)(7)(ii), which requires the use of nonerasable ink and addresses correction of

errors, would be modified to require

that erroneous trade information be

crossed out with no more than a single

line through each character, without

obliterating or otherwise making

illegible any of the originally recorded

information.

A. Proposed Paragraph (d)(7)

The Commission proposes to amend

paragraph (d)(7) to make it applicable to

all trading records. In so doing, the

Commission is making the error

correction provisions of paragraph

(d)(7)(ii) applicable to all trading

records, not just trading cards. Thus,

this amendment places other trading

records under the same standards

currently in existence with regard to the

correction of errors on trading cards.5

Further, it requires contract markets to

maintain in effect rules that require

errors on other trading records to be

corrected in the manner prescribed by

paragraph (d)(7)(ii).

The other trading records to which

this provision applies include order

tickets prepared under Regulation

1.35(a-1), as well as order tickets

received on the floor through electronic

order routing systems and trading

records prepared for ‘‘flashed’’ orders. It

is the Commission’s belief that

preventing the obliteration of data is

effectively a prophylactic requirement

intended to prevent fraudulent

alteration of trading records.

B. Proposed Paragraph (d)(7)(ii)

The Commission proposes to amend

paragraph (d)(7)(ii) to require that

erroneous information crossed out on a

trading record must be crossed out with

no more than a single line through each

character, without obliterating or

otherwise making illegible any of the
28808 Federal Register / Vol. 61, No. 110 / Thursday, June 6, 1996 / Proposed Rules

originally recorded information. Thus,

the erroneous information being crossed

out would not be obliterated and an

audit should reveal the original

information recorded on the trading

record, as well as any information

subsequently recorded. Because the

amendment to paragraph (d)(7) would

make this provision applicable to all

trading records, the Commission

believes that this amendment would

further limit the opportunity for the

fabrication or alteration of trading

records.

The Commission believes that

erroneous data normally should be

crossed out using the same or a similar

pen as is used by the member to record

trade executions. In any event, the use

of a felt pen or marker that obliterates

the original recorded information, even

if the information is crossed out with no

more than a single line, would not be in

compliance with this amended

regulation. Overwriting erroneous

information with corrected information,

rather than crossing out the erroneous

information in the prescribed manner,

also would not be in compliance with

this amended regulation.

III. Other Matters

A. Regulatory Flexibility Act

The Regulatory Flexibility Act

(‘‘RFA’’), 5 U.S.C. 601 et. seq., requires

that agencies, in proposing rules,

consider the impact of those rules on

small businesses. The Commission has

previously determined that contract

markets are not ‘‘small entities’’ for

purposes of the RFA, and that the

Commission need not, therefore,

consider the effect of proposed

amendments on contract markets in

relation to the RFA. 47 FR 18618, 18619

(April 30, 1982). The Commission has

also determined that FCMs should be

excluded from the definition of ‘‘small

entity’’ based upon the fiduciary nature

of the FCM/customer relationships as

well as the fact that FCMs must meet

minimum financial requirements. 47 FR

18618, 18619 (April 30, 1982).

With respect to contract market

members, the Commission has stated

that it is appropriate to evaluate within

the context of a particular rule proposal

whether some or all members that

would be affected by the rule should be

considered small entities and, if so, to

analyze the economic impact on such

entities at that time. 47 FR 18618, 18620

(April 30, 1982). The contract market

members affected by the proposed

amendment, other than clearing

members, would be floor brokers and

floor traders.

The Commission recognizes that

contract market members would be

subject to the proposed amendments

and that certain contract market

members could be considered to be

small entities for the purposes of the

RFA. However, the Commission

believes that the proposed amendment,

as designed, would not impose a

significant economic burden on

members.

Accordingly, the Acting Chairman, on

behalf of the Commission, hereby

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

that the action taken herein will not

have a significant economic impact on

a substantial number of small entities.

B. Paperwork Reduction Act: Comment

Request

The Paperwork Reduction Act of 1980

(‘‘ACT’’), 44 U.S.C. 3501 et. seq.,

imposes certain requirements on federal

agencies (including the Commission) in

connection with their conducting or

sponsoring any collection of

information as defined by the Act.

While this proposed rule has no burden,

the group of rules (3038–0022) of which

this is a part has the following burden:

Average burden hours per response3,546.

Number of Respondents—15,286.

Frequency of Response—On occasion.

Persons wishing to comment on the

information which would be required

by this proposed/amended rule should

contact Jeff Hill, Office of Management

and Budget, Room 3228, NEOB,

Washington, DC 20503, (202) 395–7340.

Copies of the information collection

submission to OMB are available from

Joe F. Mink, CFTC Clearance Officer,

Three Lafayette Centre, 1155 21st Street

NW., Washington, DC 20581, (202) 418–

5170.

List of Subjects in 17 CFR Part 1

Commodity futures, Commodity

options, Contract markets, Customers,

Members of contract markets,

Noncompetitive trading, Reporting and

recordkeeping requirements.

In consideration of the foregoing, and

pursuant to the authority contained in

the Commodity Exchange Act and, in

particular, Sections 5, 5a, 5b, 6(a), 6b,

8a(7), 8a(9) and 8c, 7 U.S.C. 7, 7a, 7b,

8(a), 8b, 12a(7), 12a(9), and 12c, the

Commission hereby proposes to amend

Part 1 of Chapter I of Title 17 of the

Code of Federal Regulations as follows:

PART 1—GENERAL REGULATIONS

UNDER THE COMMODITY EXCHANGE

ACT

1. The authority citation for Part 1

continues to read as follows:

Authority: 7 U.S.C. 2, 2a, 4, 4a, 6, 6a, 6b,

6c, 6d, 6e, 6f, 6g, 6h, 6i, 6j, 6k, 6l, 6m, 6n,

6o, 6p, 7, 7a, 7b, 8, 9, 12, 12a, 12c, 13a, 13a1, 16, 16a, 19, 21, 23 and 24.

2. Section 1.35 is proposed to be

amended by revising paragraph (d)(7) to

read as follows:

§ 1.35 Records of Cash Commodity,

Futures, and Option Transactions.

* * * * *

(d) * * *

(7) Trading records prepared by a

member of a contract market pursuant to

contract market rules must:

(i) Be submitted in accordance with

contract market rules adopted pursuant

to paragraph (j)(1) of this section; and

(ii) Be completed in non-erasable ink.

A member may correct any errors (A) by

crossing out erroneous information with

no more than a single line through each

character, without obliterating or

otherwise making illegible any of the

originally recorded information or (B)

with regard to trading cards only, by

rewriting the trading card; provided,

however, that the member is

accountable pursuant to paragraph

(d)(6) of this section for any trading card

that is subsequently rewritten.

* * * * *

Issued in Washington, DC on May 31, 1996

by the Commission.

Jean A. Webb,

Secretary of the Commission.

[FR Doc. 96–14129 Filed 6–05–96; 8:45 am]

BILLING CODE 6351–01–P

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 19, 113 and 144

RIN 1515–AB86

Duty-Free Stores

AGENCY: U.S. Customs Service,

Department of the Treasury.

ACTION: Proposed rule.

SUMMARY: This document proposes to

amend the Customs Regulations

principally with respect to duty-free

stores in order to reduce the overall

paperwork burden for proprietors

thereof as well as for Customs. In

particular, for purposes of Customs

audit of, and control over, such

facilities, greater reliance would be

placed on the use of records generated

and maintained by proprietors and

importers in the ordinary course of

business, instead of on the use of

specially prepared Customs forms. The

proposed amendments would provide