portions of the new requirements that are the same as the existing
provisions of Guide 3.
    Because our estimates assume that 100% of public companies engage
in short-term borrowings from time to time, we estimate that the same
percentage of companies would be impacted by the proposed disclosure
requirements for short-term borrowings.\92\ Therefore, for those
companies that do not engage in short-term borrowing activities during
a reporting period, the incremental burdens and costs may be lower than
our estimate. However, because these

companies may still need to implement systems and controls to capture
short-term borrowings data that is not currently collected, we have
assumed that they would share the same average burden and cost
estimate. In addition, we assume that the burden hours of the proposed
amendments would be comparable to the burden hours related to similar
disclosure requirements, such as off-balance sheet arrangements
disclosure requirements,\93\ contractual obligations disclosure
requirements,\94\ and requirements for the qualitative and quantitative
disclosure of market risk,\95\ which call for quantitative and/or
qualitative discussion and analysis of financial data.
---------------------------------------------------------------------------

    \92\ We further assume that the proposed amendments would not
affect the number of filings.
    \93\ OBS Adopting Release, supra note 6, at 5994 (which we
estimated to be 14.5 hours for annual reports and proxy statements,
16 hours for registration statements and 10 hours for quarterly
reports).
    \94\ OBS Adopting Release, supra note 6, at 5994 (which we
estimated to be 7.5 hours for annual reports and proxy statements,
8.5 hours for registration statements and 3 hours for quarterly
reports).
    \95\ Disclosure of Accounting Policies for Derivative Financial
Instruments and Derivative Commodity Instruments and Disclosure of
Qualitative and Quantitative Information About Market Risk Inherent
in Derivative Financial Instruments, Other Financial Instruments and
Derivative Commodity Instruments, Release No. 33-7386 (Jan. 31,
1997) [62 FR 6044] (which we estimated to be 80 hours total per
registrant).
---------------------------------------------------------------------------

    We derived the estimates by estimating the total amount of time it
would take a company to implement systems to capture the data,
implement related disclosure controls and procedures, prepare and
review the disclosure pursuant to the proposed short-term borrowings
requirements. We first estimated the total amount of time it would take
a company to prepare and review the proposed disclosure for each form,
using the estimates for the comparable disclosure requirements
identified above as a starting point. Because we believe that the
proposed rules would impose an increased burden on companies in
connection with the implementation of data gathering systems and the
implementation of related disclosure controls and procedures as
compared to those comparable disclosure requirements, we added hours to
those estimates, to reflect our best estimate of the additional time
needed to implement the new systems.
    The tables below illustrate the total incremental annual compliance
burden of the collection of information in hours and in cost under the
proposed amendments for annual reports, proxy and information
statements, quarterly reports and current reports on Form 8-K under the
Exchange Act (Table 1) and for registration statements under the
Securities Act and Exchange Act (Table 2). There is no change to the
estimated burden of the collection of information under Regulation S-K
because the burdens that Regulation S-K imposes are reflected in our
revised estimates for the forms. The burden estimates were calculated
by multiplying the estimated number of annual responses by the
estimated average number of hours it would take a company to prepare
and review the proposed disclosure requirements. We recognize that some
registrants may need to include MD&A disclosure in more than one filing
covering the same period, accordingly actual numbers may be lower than
our estimates.
    We have based our estimated number of annual responses on the
actual number of filings during the 2009 fiscal year, with three
exceptions. First, we reduced the number of annual responses for
Schedules 14A and 14C, based on our belief that only a minimal number
of companies that file these schedules would need to prepare MD&A
disclosure for the filing, rather than incorporating by reference from
a periodic report. Second, we reduced the number of annual responses
for Form N-2, based on our estimate of the number of Form N-2 filings
made by business development companies in 2009 because only business
development companies are required to include MD&A disclosure in a Form
N-2.\96\ In addition, we recognize that smaller reporting companies
would be exempted from ``full'' interim period reporting in their
quarterly reports rather than only reporting material changes on a
quarterly basis. To reflect this, we reduced the number of annual
responses of Forms 10-Q by our estimate of the number of Forms 10-Q
filed by smaller reporting companies.\97\
---------------------------------------------------------------------------

    \96\ The current estimate of annual responses for Form N-2 is
205. Our best estimate of the total number of Forms N-2 filed in
2009 by business development companies is 29. Accordingly, for
purposes of Table 2, we reduced the current estimate of annual
responses for Form N-2 (205 Form N-2 filings) to 29 Form N-2
filings.
    \97\ This adjustment is based on our best estimate of the number
of Forms 10-Q filed by smaller reporting companies in 2009.
---------------------------------------------------------------------------

    For Exchange Act reports and proxy and information statements, we
estimate that 75% of the burden of preparation is carried by the
company internally and that 25% of the burden of preparation is carried
by outside professionals retained by the company at an average cost of
$400 per hour.\98\ For registration statements, we estimate that 25% of
the burden of preparation is carried by the company internally and that
75% of the burden of preparation is carried by outside professionals
retained by the company at an average cost of $400 per hour. The
portion of the burden carried by outside professionals is reflected as
a cost, while the portion of the burden carried by the company is
reflected in hours.
---------------------------------------------------------------------------

    \98\ For Form 20-F, we estimate that 25% of the burden is
carried by the company and 75% by outside professionals because we
assume that foreign private issuers rely more heavily on outside
counsel for preparation of the Form.

     Table 1--Incremental Paperwork Burden Under the Proposed Amendments for Annual Reports, Quarterly Reports, Forms 8-K and Proxy and Information
                                                                       Statements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Annual        Incremental        Total        75% Company         25%        Professional
                                                           responses 99    burden hours/    incremental  ----------------  Professional        costs
                                                         ----------------      form        burden hours                  -------------------------------
                                                                         --------------------------------  (D)=(C)*0.75
                                                                (A)             (B)         (C)=(A)*(B)                    (E)=(C)*0.25    (F)=(E)*$400
--------------------------------------------------------------------------------------------------------------------------------------------------------
10-K....................................................          13,545              40         541,800         406,350         135,450     $54,180,000
20-F....................................................             942              30          28,260           7,065          21,195       8,478,000
10-Q....................................................          28,841              20         574,840         431,130         143,710      57,484,000
8-K.....................................................         115,795               0               0               0               0               0
SCH 14A.................................................             365              30          10,950         8,212.5         2,737.5       1,095,000
SCH 14C.................................................              34              30           1,020             765             255         102,000
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................         159,522             150       1,156,860       853,522.5       303,347.5     121,339,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

                             Table 2--Incremental Paperwork Burden Under the Proposed Amendments for Registration Statements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Annual        Incremental        Total        25% Company         75%        Professional
                                                           responses 100   burden hours/    incremental  ----------------  Professional        costs
                                                         ----------------      form        burden hours                  -------------------------------
                                                                         --------------------------------  (D)=(C)*0.25
                                                                (A)             (B)         (C)=(A)*(B)                    (E)=(C)*0.75    (F)=(E)*$400
--------------------------------------------------------------------------------------------------------------------------------------------------------
S-1.....................................................           1,168              35          40,880          10,220          30,660     $12,264,000
F-1.....................................................              42              35           1,470           367.5         1,102.5         441,000
S-4.....................................................             619              35          21,665        5,416.25       16,248.75       6,499,500
F-4.....................................................              68              35           2,380             595           1,785         714,000
10......................................................             238              35           8,330         2,082.5         6,247.5       2,499,000
N-2.....................................................              29              35           1,015          253.75          761.25         304,500
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................           2,164             210          75,740          18,935          56,805      22,722,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

1. Annual Reports and Proxy/Information Statements
---------------------------------------------------------------------------

    \99\ Except as described above, the number of responses
reflected in the table equals the actual number of forms and
schedules filed with the Commission during the 2009 fiscal year.
    \100\ Except as described above, the number of responses
reflected in the table equals the actual number of forms filed with
the Commission during the 2009 fiscal year.
---------------------------------------------------------------------------

    We estimate that the preparation of annual reports currently
results in a total annual compliance burden of 21,986,455 hours and an
annual cost of outside professionals of $3,591,562,980. We estimate
that the preparation of proxy and information statements currently
result in a total annual compliance burden of 735,122 hours and an
annual cost of outside professionals of $86,608,526.
    As set forth in Table 1 above, if the proposals were adopted, we
estimate that the incremental cost of outside professionals for annual
reports would be approximately $62,658,000 per year and the incremental
company burden would be approximately 413,415 hours per year; and, for
proxy and information statements, the total incremental cost of outside
professionals would be approximately $1,197,000 per year and the
incremental company burden would be approximately 8,978 hours per year.
For purposes of our submission to the OMB under the PRA, if the
proposals were adopted, the total cost of outside professionals for
annual reports would be approximately $3,654,220,980 per year and the
total company burden would be approximately 22,399,870 hours per year;
and the total cost of outside professionals for proxy and information
statements would be approximately $87,805,526 per year and the total
company burden would be approximately 744,100 hours per year.
2. Quarterly Reports
    We estimate that Form 10-Q preparation currently results in a total
annual compliance burden of 4,559,793 hours and an annual cost of
outside professionals of $607,972,400. As set forth in Table 1 above,
if the proposals were adopted, we estimate that the incremental cost of
outside professionals for quarterly reports would be approximately
$57,484,000 per year and the incremental company burden would be
approximately 431,130 hours per year. For purposes of our submission to
the OMB under the PRA, if the proposals were adopted, the total cost of
outside professionals for quarterly reports would be approximately
$665,456,400 per year and the total annual company burden for quarterly
reports would be approximately 4,990,923 hours per year.
3. Current Reports on Form 8-K
    Form 8-K prescribes information about significant events that a
registrant must disclose on a current basis. We are proposing
amendments to the definitions used in Items 2.03 and 2.04 of Form 8-K
that revise the terminology used, but which we assume would not
significantly impact the scope of information required to be disclosed
under those items. Accordingly, we estimate that the proposed
amendments would not increase the number of current reports filed on
Form 8-K nor add incremental costs and burdens to the existing
disclosure burden under Form 8-K. If the proposed revisions to Items
2.03 and 2.04 of Form 8-K were adopted, we estimate that, on average,
completing and filing a Form 8-K would require the same amount of time
currently spent by entities completing the form--approximately 4 hours.
    We estimate that Form 8-K preparation currently results in a total
annual compliance burden of 493,436 hours and an annual cost of outside
professionals of $65,791,500.
4. Registration Statements
    We estimate that the preparation of registration statements that
would be affected by the proposed amendments currently has a total
annual compliance burden of 1,023,273 hours and an annual cost of
outside professionals of $1,127,687,401. As set forth in Table 2 above,
if the proposals were adopted, we estimate that the incremental cost of
outside professionals for registration statements would be
approximately $22,722,000 per year and the incremental company burden
would be approximately 18,935 hours per year. For purposes of our
submission to the OMB under the PRA, if the proposals were adopted, the
total cost of outside professionals for registration statements would
be approximately $1,150,409,401 per year and the total company burden
would be approximately 1,042,208 hours per year.

C. Request for Comment

    Pursuant to 44 U.S.C. 3506(c)(2)(B), we request comment in order
to:
     Evaluate whether the proposed collections of information
are necessary for the proper performance of the functions of the
Commission, including whether the information would have practical
utility;
     Evaluate the accuracy of our estimates of the burden of
the proposed collections of information;
     Determine whether there are ways to enhance the quality,
utility, and clarity of the information to be collected;
     Evaluate whether there are ways to minimize the burden of
the collections of information on those who respond, including through
the use of automated collection techniques or other forms of
information technology; and
     Evaluate whether the proposed amendments would have any
effects on any other collections of information not previously
identified in this section.
    Any member of the public may direct to us any comments concerning
the accuracy of these burden estimates and any suggestions for reducing
the burdens. Persons who desire to submit comments on the collection of

information requirements should direct their comments to the OMB,
Attention: Desk Officer for the Securities and Exchange Commission,
Office of Information and Regulatory Affairs, Washington, DC 20503, and
send a copy of the comments to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-1090, with reference to File No. S7-22-10. Requests for materials
submitted to the OMB by us with regard to these collections of
information should be in writing, refer to File No. S7-22-10 and be
submitted to the Securities and Exchange Commission, Office of Investor
Education and Advocacy, 100 F Street, NE., Washington, DC 20549-0213.
Because the OMB is required to make a decision concerning the
collections of information between 30 and 60 days after publication,
your comments are best assured of having their full effect if the OMB
receives them within 30 days of publication.

V. Cost-Benefit Analysis

A. Introduction and Objectives of Proposals

    We are proposing amendments to enhance the disclosure that
companies provide about short-term borrowings in order to provide more
useful disclosure to investors about liquidity and short-term
financings and to enhance investor understanding of issuers' liquidity.
The proposed amendments are intended to improve disclosure by expanding
and supplementing existing requirements.
    First, the proposals would require a registrant to provide a
comprehensive explanation of its short-term borrowings, including both
quantitative and qualitative information. In addition, we are proposing
conforming amendments to Form 8-K so that the Form uses the terminology
contained in the proposed short-term borrowings disclosure requirement.
Finally, we are making technical amendments to Item 303 of Regulation
S-K to revise references to U.S. GAAP to reflect the FASB Codification.
    The proposals seek to improve transparency of a company's short-
term borrowings in order to provide investors with comprehensive
information about a company's liquidity profile and demands on capital
resources in each reporting period. The proposals also aim to clarify
existing MD&A requirements in these areas to assist registrants in
preparing disclosure that is meaningful, useful and clear. Ultimately,
the proposals are expected to enhance the ability of investors to make
informed investment decisions and to allocate capital on a more
efficient basis.
    We considered alternative regulatory approaches for achieving these
objectives, including providing further interpretive guidance on
existing MD&A disclosure requirements and encouraging companies to
voluntarily provide quantitative and qualitative information on short-
term borrowings where material to their financial condition. Although
some public companies are voluntarily providing more detailed
information as to short-term financings in their MD&A, we have observed
that some companies generally do not provided investors with the
desired level of detail in their disclosure absent a specific
disclosure requirement or guidance, such as Guide 3. To elicit more
detailed and comparable disclosures regarding a company's short-term
borrowings activities in each reporting period as part of its overall
liquidity profile, we are proposing mandated disclosure of short-term
borrowings to complement existing MD&A disclosures.

B. Benefits

    The proposed disclosures would benefit investors by informing them
about the fluctuations in short-term borrowings during the reporting
period. Information about the variability of borrowing levels and
variations in types of borrowing activities over the course of the
reporting period should enable investors to better understand the
ability of a registrant to obtain the financing it needs to conduct its
business operations and the costs of that financing, and how those may
vary during the reporting period. The transparency of the financial
statements should increase because investors would be able to learn
more about the amount of financial risk taken by the company, its
liquidity and capital resources, and the amount of capital deployed in
earning activities by the company on an on-going basis during the year,
including at quarter-ends. The proposed narrative discussion of the
short-term borrowings arrangements, including the importance of those
arrangements to the registrant in terms of its liquidity and capital
resources, should provide investors with insight into the magnitude of
the registrant's short-term borrowing activities, the specific material
impact of the short-term borrowing arrangements on the registrant, and
the factors that could affect its ability to continue to use those
short-term borrowing arrangements.
    The proposed disclosures would inform investors about the amount of
financial risk taken by the company.\101\ For some businesses, short-
term borrowings may decrease or increase at quarter- and year-ends due
to innate fluctuations in cash flow obligations. In other cases,
management may be deliberately reducing short-term debt at period
ends.\102\ Regardless of the cause, period-end financial statements
could be less informative regarding the financial risks taken by
companies during the period. The proposed disclosures should add
transparency to the ongoing risks taken by companies. These disclosures
should also help facilitate a more accurate understanding of a
company's liquidity and capital resources.
---------------------------------------------------------------------------

    \101\ K. Kelly et al., Big Banks Move To Mask Risk Levels--
Quarter-End Loan Figures Sit 42% Below Peak, Then Rise as New Period
Progresses, Wall St. J., Apr. 9, 2010; and M. Rappaport & T.
McGinty, supra note 16 (reporting that ``the practice, known as end-
of-quarter `window dressing' on Wall Street, suggests that the banks
are carrying more risk most of the time than their investors or
customers can easily see. This activity has accelerated since 2008 *
* *''.).
    \102\ M. Griffiths & D. Winters, The Turn of the Year in Money
Markets: Tests of the Risk-Shifting Window Dressing and Preferred
Habitat Hypotheses, J. BUS, 2005, vol. 78, no. 4.; M. Griffiths & D.
Winters, On a Preferred Habitat for Liquidity at the Turn-of-the-
Year: Evidence From the Term-Repo Market, 12 J. FIN. SERV. RES. 1,
1997; V. Kotomin & D. Winters, Quarter-End Effects in Banks:
Preferred Habitat or Window Dressing?, 29 J. FIN. SERV. RES. 1,
2006.
---------------------------------------------------------------------------

    The proposed disclosures should also inform investors about the
amount of capital deployed in earning activities by a company and thus
help evaluate its overall source of profitability. Investors should
benefit from knowing whether the period-end balance sheet fully
reflects all intra-period activities and assets. The disclosure should
also enable more accurate comparisons between companies that engage in
a pattern of borrowing and those that do not.
    Thus, the new disclosures should enhance transparency and
competition especially in industries where short-term borrowing
practices are common. Similar disclosure requirements exist in a more
limited fashion for banks and bank holding companies under applicable
banking regulations.\103\ Therefore, bank regulators find this
information to be useful in monitoring the risk of these
institutions.\104\
---------------------------------------------------------------------------

    \103\ Banks and bank holding companies report the quarterly
average for Federal funds sold and securities purchased under
agreements to resell (FFIEC 031 and 041 Schedule RC-K, and FR Y-9C
Schedule HC-K).
    \104\ See e.g., Board of Governors of the Federal Reserve
System, Announcement of Board Approval Under Delegated Authority and
Submission to OMB, (March. 18, 2006) [71 FR 11194]. (``The FR Y-9
family of reports historically has been, and continues to be, the
primary source of financial information on [bank holding companies]
between on-site inspections. Financial information from these
reports is used to detect emerging financial problems, to review
performance and conduct pre-inspection analysis, to monitor and
evaluate capital adequacy, to evaluate [bank holding company]
mergers and acquisitions, and to analyze a [bank holding company's]
overall financial condition to ensure safe and sound operations.'').

---------------------------------------------------------------------------

    The proposed amendments are likely to increase transparency.
Therefore, information asymmetry and information risk would be lower
and investors should demand a lower risk premium and rate of
return.\105\ Thus, the proposed disclosures would help reduce cost of
capital and improve capital allocation and formation in the overall
economy.
---------------------------------------------------------------------------

    \105\ See D. Easley & M. O'Hara, Information and the Cost of
Capital, 59 J. Fin. 1553 (2004) (arguing that the information
composition between public and non-public information affects the
cost of capital because investors demand a higher return from their
investments when they face asymmetric information); R. Lambert et
al., Accounting Information, Disclosure, and the Cost of Capital, 45
J. ACCT. RES. 385 (2007) (deriving conditions under which an
increase in information quality leads to an unambiguous decline in
the cost of capital).
---------------------------------------------------------------------------

C. Costs

    The proposals to require short-term borrowings disclosure on an
annual and quarterly basis are new. In connection with the new
disclosure requirements, registrants would be required to incur
additional direct costs to which they were previously not subject, and
could incur indirect costs as well. Because the proposed requirements
require additional disclosures that are not currently provided in
connection with Guide 3 compliance, bank holding companies would also
incur additional direct and indirect costs to which they were
previously not subject. Furthermore, as noted in our PRA analysis, we
estimate that registrants would incur higher costs in the initial
reporting periods than would be incurred in ongoing reporting periods.
    We estimate that the proposals would impose new disclosure
requirements on approximately 10,380 public companies.\106\ We estimate
that the collection of information and the preparation of the
disclosure would involve multiple parties, including in-house
preparers, senior management, in-house accounting staff, in-house
counsel, information technology personnel, outside counsel, outside
auditors and audit committee members. For purposes of our PRA analysis,
we estimated that company personnel would spend approximately 872,204
hours per year (84 hours per company) to prepare, review and file the
proposed disclosure. We also estimated that companies would spend
approximately $143,756,500 ($13,849 per company) on outside
professionals to comply with the proposed requirements.
---------------------------------------------------------------------------

    \106\ We estimate that all registrants who filed annual reports
in 2009 would be required to provide the proposed disclosures.
---------------------------------------------------------------------------

    We believe that the proposed amendments could increase the costs
for some companies to collect the information necessary to prepare the
disclosure. We also believe that the proposed amendments will impose
different costs for companies, depending on whether they are bank-
holding companies that currently provide Guide 3 information, financial
companies as defined in the proposed rule, non-financial companies, or
smaller reporting companies, as described below. Although management
must already consider short-term borrowing information as it prepares
its financial statements and MD&A under existing requirements, the
proposed amendments could impose significant incremental costs for the
collection and calculation of data, particularly in connection with the
registrant's initial compliance.
    In particular, this disclosure requires the production of new data
for companies that are not already reporting this type of data
voluntarily or to their primary regulators. In some industries,
companies may readily have access to this information in their systems
while others may not be producing it on a daily basis as would be
required for financial companies under the proposals. For example,
insurance companies may find it difficult to produce daily balances for
each day that is necessary for the average and maximum short-term
borrowing disclosures applicable to them. In addition, companies that
are not financial companies under the proposed definition, particularly
those with multi-national operations, may not currently be producing
the data necessary for the monthly average and maximum short-term
borrowings disclosures, and they may be faced with complex calculation
issues when gathering the data from multiple jurisdictions. For many
companies, the costs of data production may be high.
    For bank holding companies currently subject to Guide 3, costs will
likely arise primarily from the preparation of incremental disclosure
in MD&A (i.e., the proposed requirements for maximum daily amounts
instead of maximum monthly amounts and the proposed narrative
discussion of short-term borrowings arrangements) as well as quarterly
reporting of this information (rather than on an annual basis alone).
These bank holding companies already report to the Commission average
short-term borrowings data computed based on daily averages on an
annual basis, pursuant to Item VII of Guide 3. Of the approximately
10,380 public companies, we estimate that approximately 800 are bank
holding companies.
    For registrants that meet the proposed definition of ``financial
company'' but that are not bank holding companies, such as insurance
companies, broker-dealers, business development companies, and
financing companies, the costs imposed could be substantial because, as
requirements that are newly applicable to these entities, costs would
likely include implementing or adjusting data gathering systems to
capture daily balance information, implementing new disclosure controls
and procedures, time spent by internal accounting staff to compile the
data, as well as the preparation of narrative disclosure. As a portion
of these costs would arise from data collection, the costs of
compliance in the initial reporting period would likely be higher
because systems may need to be implemented or adjusted. We estimate
that, in addition to the approximately 800 bank holding companies,
approximately 700 registrants would meet the proposed definition of
``financial company.''
    Registrants that do not meet the definition of ``financial
companies'' could have lower costs than those registrants that are
financial companies, because they would not be required to compile data
based on daily balances. Again, the requirements would be newly
applicable, and could require these registrants to incur costs to
implement or adjust data gathering systems to capture month-end balance
information, the implementation of new disclosure controls and
procedures, time spent by internal accounting staff to compile the
data, as well as preparation of narrative disclosure. For companies
that do not currently close their books on a monthly basis, the costs
of gathering the data would likely be higher than those that do,
because monthly balances would not be readily available from existing
books and records systems. The implementation or adjustment of data
gathering systems would likely cause costs to be higher for these
companies in the initial compliance period. We estimate that the number
of registrants that are not financial companies and that are not
smaller reporting companies, is approximately 7,640.

    For smaller reporting companies, the proposed requirements would
also be newly applicable, and costs incurred would be similar to those
applicable to large reporting companies, except that, as proposed,
smaller reporting companies would only be required to provide two years
of annual short-term borrowings information, rather than three years,
and would not be required to provide quarterly disclosure on the same
level of detail as annual disclosure. Accordingly, in addition to the
costs to prepare and review the disclosure, smaller reporting companies
that do not currently track the data needed to compile the short-term
borrowings disclosure or that do not currently close their books on a
monthly basis, would incur costs to implement or adjust data collection
systems and disclosure controls and procedures. On the other hand,
small entities without such systems would be more likely to engage in
financing activities that are less complex, where the compilation and
calculation of such data would not raise significant burdens. In
addition, the cost estimates set forth in our PRA analysis may be lower
for a small entity to the extent its costs for personnel and outside
professionals are lower than our assumed amounts. As discussed
elsewhere in this release, we estimate that there are approximately
1,240 smaller reporting companies.
    In addition, registrants that are not smaller reporting companies
could incur increased costs in connection with the preparation of their
quarterly reports, as the amendments call for disclosure in quarterly
reports at the same level of detail as in annual reports. To provide
this increased level of detail, registrants may need to alter their
existing disclosure controls and procedures for quarterly reporting.
For purposes of our PRA analysis, we estimated that company personnel
would spend approximately 18 additional hours per year to prepare,
review and file the proposed disclosure in Form 10-Q. We estimate that
approximately 8,200 registrants (based on our estimated number of
annual report filers, less smaller reporting companies and foreign
private issuers) would be subject to the requirement to provide
quarterly disclosure at the same level of detail as in annual reports.
    Companies may also be faced with indirect costs arising from the
amendments. For example, companies may need to consider the impact of
the amendments on their financing plans, to the extent the gathering of
data and preparation of disclosure imposes significant time burdens.
Specifically, companies could decide to delay registered offerings or
conduct unregistered offerings if they are unable to gather data and
prepare the new disclosures without significant time and expense. This
indirect cost should decrease over time, as companies implement
disclosure controls and procedures to comply with the new disclosures.
In other cases, companies may alter their short-term borrowings
activities in response to the proposed disclosure, in order to avoid
incurring the cost of compliance, and in doing so could incur
transaction costs or opportunity costs that they would not face without
a mandatory disclosure requirement.
    In certain cases, mandatory required disclosure requirements can
have adverse effects for companies and their shareholders if the
disclosures reveal confidential information and trade secrets of a
company. In the case of the proposed short-term borrowings, however,
such indirect costs should be minimal due to the non-proprietary nature
of short-term borrowings. There is some possibility that a company's
competitors could be able to infer proprietary or sensitive information
about a company's business operations or strategy from disclosure about
short-term borrowings arrangements. If this were the case, it could
disproportionately impact companies that meet the proposed definition
of ``financial company,'' to the extent that amounts calculated based
on daily balance information provide a more accurate basis for such
inferences. We preliminarily believe that the likelihood of this impact
is low.

D. Request for Comment

    We request data to quantify the costs and the value of the benefits
described above. We seek estimates of these costs and benefits, as well
as any costs and benefits not already defined, that may result from the
adoption of these proposed amendments. We also request qualitative
feedback on the nature of the benefits and costs described above and
any benefits and costs we may have overlooked.

VI. Consideration of Impact on the Economy, Burden on Competition, and
Promotion of Efficiency, Competition, and Capital Formation

    Section 23(a)(2) of the Exchange Act requires us,\107\ when
adopting rules under the Exchange Act, to consider the impact that any
new rule would have on competition. In addition, Section 23(a)(2)
prohibits us from adopting any rule that would impose a burden on
competition not necessary or appropriate in furtherance of the purposes
of the Exchange Act.
---------------------------------------------------------------------------

    \107\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

    Section 2(b) of the Securities Act \108\ and Section 3(f) of the
Exchange Act\109\ require us, when engaging in rulemaking where we are
required to consider or determine whether an action is necessary or
appropriate in the public interest, to consider, in addition to the
protection of investors, whether the action will promote efficiency,
competition, and capital formation.
---------------------------------------------------------------------------

    \108\ 15 U.S.C. 77b(b).
    \109\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    The proposed amendments are intended to enhance disclosure in MD&A
relating to registrants' liquidity profile in each reporting period by
highlighting and expanding disclosure requirements for short-term
borrowings. The proposed amendments to Form 8-K, which would conform
the disclosure requirements in the Form to the proposed amendments to
Regulation S-K, are intended to continue to provide real-time
disclosure in connection with these topics.
    The proposed amendments may increase the usefulness of MD&A. The
ability of users of financial information to understand registrants'
financial statements and to determine the existence of trends in
borrowing and funding activity is expected to improve as a result of
the disclosure of average and maximum short-term borrowings during each
reporting period.
    The proposed amendments also should increase the efficiency of U.S.
capital markets by providing investors with additional and more timely
information about registrants' borrowing and funding activities,
including borrowing activities that are not apparent on the face of
period-end financial statements and exposures to market and funding
liquidity risks. This information could be used by investors in
allocating capital across companies, and toward companies where the
risk incentives appear better aligned with an investor's appetite for
risk. Furthermore, these reductions in the asymmetry of information
between registrants and investors could reduce registrants' cost of
capital as investors may demand a lower risk premium when they have
access to more information.\110\
---------------------------------------------------------------------------

    \110\ See D. Easley & M. O'Hara, supra note 98, and R. Lambert
et al., supra note 98.
---------------------------------------------------------------------------

    In certain cases, mandatory required disclosure requirements can
have adverse effects for companies and their shareholders if the
disclosures reveal confidential information and trade secrets of a
company. In the case of the proposed short-term borrowings,

however, such indirect costs should be minimal due to the non-
proprietary nature of short-term borrowings. There is some possibility
that a company's competitors could be able to infer proprietary or
sensitive information about a company's business operations or strategy
from disclosure about short-term borrowings arrangements. If this were
the case, it could disproportionately impact companies that meet the
proposed definition of ``financial company,'' to the extent that
amounts calculated based on daily balance information provide a more
accurate basis for such inferences. We preliminarily believe that the
likelihood of this impact is low.
    We request comment on whether the proposed amendments would promote
efficiency, competition, and capital formation or have an impact or
burden on competition. Commentators are requested to provide empirical
data and other factual support for their view to the extent possible.

VII. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (SBREFA)\111\ we solicit data to determine whether the
proposed rule amendments constitute a ``major'' rule. Under SBREFA, a
rule is considered ``major'' where, if adopted, it results or is likely
to result in:
---------------------------------------------------------------------------

    \111\ Public Law 104-121, tit. II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more
(either in the form of an increase or a decrease);
     A major increase in costs or prices for consumers or
individual industries; or
     Significant adverse effects on competition, investment or
innovation.
    Commentators should provide empirical data on (a) the potential
annual effect on the economy; (b) any increase in costs or prices for
consumers or individual industries; and (c) any potential effect on
competition, investment or innovation.

VIII. Initial Regulatory Flexibility Act Analysis

    This Initial Regulatory Flexibility Analysis (IRFA) has been
prepared in accordance with the Regulatory Flexibility Act.\112\ It
relates to proposed revisions to the rules and forms under the
Securities Act and Exchange Act to enhance disclosure that registrants
provide in MD&A regarding short-term borrowings.
---------------------------------------------------------------------------

    \112\ 5 U.S.C. 603.
---------------------------------------------------------------------------

A. Reasons for, and Objectives of, the Proposed Action

    The proposed amendments are intended to enhance disclosure in MD&A
relating to registrants' liquidity profile by highlighting and
expanding disclosure requirements for short-term borrowings. The
proposed amendments to Form 8-K, which would conform the disclosure
requirements in the Form to the proposed amendments to Regulation S-K,
are intended to continue to provide real-time disclosure in connection
with these topics. These amendments are being proposed to increase
transparency in the presentation of registrants' borrowing and funding
activities and exposure to liquidity risks in connection with that
activity. This increased transparency in areas of increasing importance
to investors is intended to maintain investor confidence in the full
and fair disclosure required of all registrants.

B. Legal Basis

    We are proposing the amendments pursuant to Sections 6, 7, 10,
19(a) and 28 of the Securities Act and Sections 12, 13, 14, 15(d),
23(a) and 36 of the Exchange Act.

C. Small Entities Subject to the Proposed Action

    The proposed amendments would affect some companies that are small
entities. The Regulatory Flexibility Act defines ``small entity'' to
mean ``small business,'' ``small organization,'' or ``small
governmental jurisdiction.'' \113\ The Commission's rules define
``small business'' and ``small organization'' for purposes of the
Regulatory Flexibility Act for each of the types of entities regulated
by the Commission. Securities Act Rule 157 \114\ and Exchange Act Rule
0-10(a) \115\ define a company, other than an investment company, to be
a ``small business'' or ``small organization'' if it had total assets
of $5 million or less on the last day of its most recent fiscal year.
We estimate that there are approximately 1,240 companies that may be
considered small entities.\116\ The proposed amendments would affect
small entities that (i) have a class of securities that are registered
under Section 12 of the Exchange Act, or are required to file reports
under Section 15(d) of the Exchange Act and (ii) are required to
provide MD&A disclosure under applicable rules and forms or disclosure
under Items 2.03 and 2.04 of Form 8-K. In addition, the proposals also
would affect small entities that file, or have filed, a registration
statement (that is required to include MD&A disclosure under the
applicable rules and forms) that has not yet become effective under the
Securities Act and that has not been withdrawn.
---------------------------------------------------------------------------

    \113\ 5 U.S.C. 601(6).
    \114\ 17 CFR 230.157.
    \115\ 17 CFR 240.0-10(a).
    \116\ This includes approximately 30 business development
companies that are small entities. For purposes of the Regulatory
Flexibility Act, an investment company (including a business
development company) is a small entity if it, together with other
investment companies in the same group of related investment
companies, has net assets of $50 million or less as of the end of
its most recent fiscal year. 17 CFR 270.0-10(a).
---------------------------------------------------------------------------

    The data underlying the proposed short-term borrowing disclosures
should be available from a company's books and records, although it may
not currently be collected on month-end basis or daily basis, as
proposed in the rule. As discussed in our PRA analysis, we believe that
the collection and calculation of short-term borrowing data in the form
proposed may have a cost impact on registrants, including small
entities, that do not currently maintain information technology systems
for the collection of the required data. On the other hand, small
entities without such systems would be more likely to engage in
financing activities that are less complex, where the compilation and
calculation of such data would not raise significant burdens. In
addition, the cost estimates set forth in our PRA analysis may be lower
for a small entity to the extent its costs for personnel and outside
professionals are lower than our assumed amounts.
    We are proposing an accommodation for smaller reporting companies,
such that expanded disclosures of short-term borrowings would not be
required for interim periods and annual period data would only be
required for two years rather than three years.

D. Reporting, Recordkeeping, and Other Compliance Requirements

    The proposed amendments are intended to enhance disclosure about
short-term borrowings. These proposals would require a small entity to:
     Provide, in a separately captioned subsection of MD&A, a
comprehensive explanation of its short-term borrowings, including both
quantitative and qualitative information; and
     Use a revised definition of ``direct financial
obligation'' for purposes of disclosure requirements in Items 2.03 and
2.04 of Form 8-K.

These proposed amendments largely would apply to both large and small
entities equally, except that smaller reporting companies would benefit
from the proposed exclusion from expanded interim reporting of short-
term borrowings and would provide two

years of annual data rather than three. As noted above, the proposed
short-term borrowings disclosure should be available from a company's
books and records and tracked with existing internal controls without a
significant incremental burden imposed on small entities, except to the
extent that it doesn't track the data on a monthly basis.

E. Duplicative, Overlapping, or Conflicting Federal Rules

    We believe the proposed amendments would not duplicate, overlap, or
conflict with other Federal rules. The proposed new requirements for
short-term borrowings disclosures provide specific, additional
information that would be complementary to existing MD&A requirements.

F. Significant Alternatives

    The Regulatory Flexibility Act directs us to consider alternatives
that would accomplish our stated objectives, while minimizing any
significant adverse impact on small entities. In connection with the
proposed disclosure amendments, we considered the following
alternatives:
     Establishing different compliance or reporting
requirements or timetables that take into account the resources
available to small entities;
     Clarifying, consolidating or simplifying compliance and
reporting requirements under the rules for small entities;
     Using performance rather than design standards; and
     Exempting small entities from all or part of the
requirements.
    Currently, small entities are subject to the same MD&A requirements
as larger registrants under Item 303 of Regulation S-K, except that
smaller reporting companies are permitted to exclude information as to
their contractual obligations.\117\ The proposed amendments would not
alter the exclusions applicable to smaller reporting companies, except,
as discussed above, an additional exclusion would be provided for
smaller reporting companies so that they would not need to provide the
proposed expanded interim period disclosures of short-term borrowings
and would be permitted to provide two years of annual data instead of
three years. The remaining proposed disclosure requirements would apply
to small entities to the same extent as larger registrants, and would
require clear, straightforward disclosure about short-term borrowings.
---------------------------------------------------------------------------

    \117\ Item 303(d) of Regulation S-K provides an exclusion for
smaller reporting companies from the requirements of Item 303(a)(5),
and permits smaller reporting companies to provide, if they meet
specified conditions, only two fiscal years of information on the
impact of inflation and changing prices pursuant to Item
303(a)(3)(iv).
---------------------------------------------------------------------------

    Except for the exclusions noted above, we are not proposing to
change existing alternative reporting requirements under Item 303 of
Regulation S-K, or establish additional different compliance
requirements or an exemption from coverage of the proposed amendments
for small entities. The proposed amendments would provide investors
with greater transparency into the liquidity profile of registrants, by
highlighting short-term borrowings. With potentially fewer financing
options available to small entities, information about critical funding
risks and future commitments is important to investors in the context
of small entities as it is in the context of larger entities.
Therefore, we do not believe it is appropriate to develop separate
requirements for small entities that would involve clarification,
consolidation, or simplification of the proposed disclosure
requirements, other than the proposed exclusions discussed above. We do
not believe that these proposed disclosures would create a significant
new burden for small entities, and, we believe that uniform, comparable
disclosures across all companies would be beneficial for investors and
the markets.
    We have used design standards and performance standards in
connection with the proposed amendments. We rely on design standards
for two reasons. First, based on our past experience, we believe that
the proposed requirements would result in disclosure that is more
useful to investors than if there were specific, enumerated
informational requirements. The proposed requirements are intended to
elicit more comprehensive and clear disclosure, while still affording
registrants the ability to tailor the disclosure to reflect their
specific activities and to provide the information that is most
important in the context of their specific business. Second, the
proposed amendments would promote consistent disclosure among all
companies, providing information that is increasingly important to
investors. Our existing MD&A requirements are largely performance
standards, designed to elicit disclosure unique to the particular
company.
    Finally, we believe that requiring additional short-term borrowings
information in MD&A is the most effective way to elicit the disclosure
both for small entities. MD&A's existing emphasis on liquidity and
capital resources, as well as identification of significant
uncertainties and events, makes the placement of the disclosure as part
of MD&A an appropriate choice. Because the proposed disclosure of
short-term borrowings is intended to supplement the discussions of
liquidity and capital resources already required to be provided by
smaller reporting companies under existing rules, we believe the
inclusion of the proposed requirements in MD&A would reduce redundant
disclosure requirements and promote investors' understanding of this
important and, at times highly complex, information.
    We seek comment on whether we should exempt small entities from any
of the proposed amendments or scale the proposed disclosure
requirements to reflect the characteristics of small entities and the
needs of their investors.

G. Solicitation of Comments

    We encourage the submission of comments with respect to any aspect
of this Initial Regulatory Flexibility Analysis. In particular, we
request comments regarding:
     How the proposed amendments can achieve their objective
while lowering the burden on small entities;
     The number of small entities that may be affected by the
proposed amendments;
     The existence or nature of the potential impact of the
proposed amendments on small entities discussed in the analysis; and
     How to quantify the impact of the proposed amendments.
    Respondents are asked to describe the nature of any impact and
provide empirical data supporting the extent of the impact. Such
comments will be considered in the preparation of the Final Regulatory
Flexibility Analysis, if the proposed rule amendments are adopted, and
will be placed in the same public file as comments on the proposed
amendments themselves.

IX. Statutory Authority and Text of the Proposed Amendments

    The amendments contained in this release are being proposed under
the authority set forth in Sections 6, 7, 10, 19(a) and 28 of the
Securities Act and Sections 12, 13, 14, 15(d), 23(a) and 36 of the
Exchange Act.

List of Subjects in 17 CFR Parts 229 and 249

    Reporting and recordkeeping requirements, Securities.

Text of the Proposed Amendments

    For the reasons set out in the preamble, the Commission proposes to

amend Title 17, Chapter II, of the Code of Federal Regulations as
follows:

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES
ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND
CONSERVATION ACT OF 1975--REGULATION S-K

    1. The authority citation for Part 229 continues to read in part as
follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2,
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj,
77nnn, 77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78u-5, 78w, 78ll,
78mm, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-31(c), 80a-37, 80a-
38(a), 80a-39, 80b-11, and 7201 et seq.; and 18 U.S.C. 1350, unless
otherwise noted.
* * * * *
    2. Amend Section 229.303 by:
    a. Removing the phrase ``paragraphs (a)(1) through (5) of this
Item'' and adding in its place ``paragraphs (a)(1) through (a)(6) of
this Item'' in the second sentence of the introductory text of
paragraph (a);
    b. Revising paragraphs (a)(4)(ii)(A), (a)(4)(ii)(C) and
(a)(4)(ii)(D), and (a)(5)(ii)(A), (a)(5)(ii)(B) and (a)(5)(ii)(C);
    c. Redesignating the ``Instructions to paragraph 303(a) (4)'' to
directly follow paragraph (a)(4)(ii)(D);
    d. Adding a new paragraph (a)(6) directly above the ``Instructions
to paragraph 303(a)'';
    e. Revising the fourth sentence of Instruction 8 to paragraph
303(a);
    f. Revising Instruction 9 to paragraph 303(a);
    g. Adding the phrase ``, except as provided in Instruction 8 to
paragraph 303(b)'' at the end of the first sentence of Instruction 3 of
the Instructions to paragraph (b) of Item 303;
    h. Adding Instruction 8 to the Instructions to paragraph (b) of
Item 303; and
    i. Revising paragraph (d).
    The revisions and additions read as follows:

Sec.  229.303  (Item 303) Management's Discussion and Analysis of
Financial Condition and Results of Operations.

* * * * *
    (a) * * *
    (4) * * *
    (ii) * * *
    (A) Any obligation under a guarantee contract that has any of the
characteristics identified in FASB ASC Topic 460, Guarantees, paragraph
460-10-15-4, as may be modified or supplemented, and that is not
excluded from the initial recognition and measurement provisions of
FASB ASC paragraphs 460-10-15-7, 460-10-25-1, and 460-10-30-1;
    (B) * * *
    (C) Any obligation, including a contingent obligation, under a
contract that would be accounted for as a derivative instrument, except
that it is both indexed to the registrant's own stock and classified in
stockholders' equity in the registrant's statement of financial
position, and therefore excluded from the scope of FASB ASC Topic 815,
Derivatives and Hedging, pursuant to FASB ASC subparagraph 815-15-
74(a), as may be modified or supplemented;
    (D) Any obligation, including a contingent obligation, arising out
of a variable interest (as defined in the FASB ASC Master Glossary, as
may be modified or supplemented) in an unconsolidated entity that is
held by, and material to, the registrant, where such entity provides
financing, liquidity, market risk or credit risk support to, or engages
in leasing, hedging or research and development services with, the
registrant.
    (5) * * *
    (ii) * * *
    (A) Long-Term Debt Obligation means a payment obligation under
long-term borrowings referenced in FASB ASC Topic 470, Debt, paragraph
470-10-50-1, as may be modified or supplemented.
    (B) Capital Lease Obligation means a payment obligation under a
lease classified as a capital lease pursuant to FASB ASC Topic 840,
Leases, as may be modified or supplemented.
    (C) Operating Lease Obligation means a payment obligation under a
lease classified as an operating lease and disclosed pursuant to FASB
ASC Topic 840, as may be modified or supplemented.
* * * * *
    (6) Short-term Borrowings. (i) In tabular format, provide for each
category of short-term borrowings specified in paragraph (a)(6)(iii) of
this Item and for the periods specified in paragraph (a)(6)(v) of this
Item:
    (A) The average amount outstanding during each reported period and
the weighted average interest rate thereon;
    (B) The amount outstanding at the end of each reported period and
the weighted average interest rate thereon;
    (C) (1) For registrants that are financial companies, the maximum
daily amount outstanding during each reported period or
    (2) For registrants that are not financial companies, the maximum
month-end amount outstanding during each reported period; and
    (D) For any of the amounts referred to in paragraphs (a)(6)(i)(A),
(B) or (C) of this Item, disaggregate the amounts in the table by
currency, interest rate or other meaningful category, to the extent
presentation of separate amounts is necessary to promote understanding
or to prevent aggregate amounts from being misleading, and include a
footnote to the table indicating the method of disaggregation and any
other pertinent data relating to the calculation of the amounts
presented, including, without limitation, the timing and exchange rates
used for currency translations.
    (ii) Discuss the registrant's short-term borrowings, including the
items specified in paragraphs (a)(6)(ii)(A) through (D) of this Item to
the extent necessary to an understanding of such borrowings and the
current or future effect on the registrant's financial condition,
changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources:
    (A) A general description of the short-term borrowings arrangements
included in each category (including any key metrics or other factors
that could reduce or impair the company's ability to borrow under any
of such arrangements and whether there are any collateral posting
arrangements) and the business purpose to the registrant of such short-
term borrowings;
    (B) The importance to the registrant of such short-term borrowings
in respect of its liquidity, capital resources, market-risk support,
credit-risk support or other benefits;
    (C) The reasons for any material differences between average short-
term borrowings and period-end borrowings; and
    (D) The reasons for the maximum outstanding amounts in each
reported period, including any non-recurring transactions or events,
use of proceeds or other information that provides context for the
maximum amount.
    (iii) As used in this paragraph (a)(6), the term ``short-term
borrowings'' includes amounts payable for short-term obligations that
are:
    (A) Federal funds purchased and securities sold under agreements to
repurchase;
    (B) Commercial paper;
    (C) Borrowings from banks;
    (D) Borrowings from factors or other financial institutions; and
    (E) Any other short-term borrowings reflected on the registrant's
balance sheet.
    (iv) As used in this paragraph (a)(6), the term ``financial
company'' means a registrant that, during the reported period, is
engaged to a significant extent in the business of lending, deposit-
taking, insurance underwriting or providing investment advice, or is a

broker or dealer as defined in Section 3 of the Exchange Act (15 U.S.C.
78c), and includes, without limitation, an entity that is, or is the
holding company of, a bank, a savings association, an insurance
company, a broker, a dealer, a business development company as defined
in Section 2(a)(48) of the Investment Company Act of 1940 (15 U.S.C.
80a-2(a)(48)), an investment adviser, a futures commission merchant, a
commodity trading advisor, a commodity pool operator, or a mortgage
real estate investment trust.
    (v) Information required by this paragraph (a)(6) shall be
presented for each of the three most recent fiscal years, and, in the
case of annual reports filed on Form 10-K (referenced in Sec.
249.310), information for the registrant's fourth fiscal quarter
presented in accordance with the requirements for interim periods set
forth in Instruction 8 to paragraph (b) of this Item 303; provided that
a registrant that is a smaller reporting company may provide the
information required for each of the two most recent fiscal years in
accordance with paragraph (d) of this Item 303 and, in the case of
annual reports filed on Form 10-K (referenced in Sec.  249.310), is not
required to include information for the fourth fiscal quarter.
    Instruction 1 to Paragraph 303(a)(6): Where a registrant meets the
definition of financial company, but also has operations that do not
involve lending, deposit-taking, insurance underwriting, providing
investment advice, or broker or dealer activities, it may present the
information specified in Item 303(a)(6)(i) separately for such
operations. In doing so, the registrant may disclose averages and
maximum amounts for such operations using the rules and instructions
applicable to registrants that are not financial companies, provided
that it must disclose averages computed on a daily average basis and
maximum daily amounts for its operations that fall within the
definition of financial company. For purposes of making this
segregation, the registrant should make the distinction assuming the
business in question were itself a registrant. Additional information
should be presented by footnote to enable readers to understand how the
registrant's operations have been grouped for purposes of the
disclosure.
    Instruction 2 to Paragraph 303(a)(6): For registrants that are
financial companies, averages called for by paragraph (a)(6) of this
Item are averages computed on a daily average basis (which means the
amount outstanding at the end of each day, averaged over the reporting
period). For all other registrants, the basis used for calculating the
averages must be identified, and the averaging period used must not
exceed a month.
    Instruction 3 to Paragraph 303(a)(6): As used in this Item
303(a)(6), the maximum daily amount outstanding during a reported
period means the largest amount outstanding at the end of any day in
the reported period, and the maximum month-end amount outstanding
during a reported period means the largest amount outstanding at the
end of the last day of any month in the reported period.
    Instructions to Paragraph 303(a):
* * * * *
    8. * * * However, registrants may elect to voluntarily disclose
supplemental information on the effects of changing prices as provided
for in FASB ASC Topic 255, Changing Prices, or through other
supplemental disclosures. * * *
    9. Registrants that elect to disclose supplementary information on
the effects of changing prices as specified by FASB ASC Topic 255 may
combine such explanations with the discussion and analysis required
pursuant to this Item or may supply such information separately with
appropriate cross-reference.
* * * * *
    (b) * * *
    Instructions to Paragraph 303(b):
* * * * *
    8. Notwithstanding anything to the contrary in this Item 303, a
registrant that is not a smaller reporting company must include the
disclosure required pursuant to (a)(6) of this Item for each interim
period for which financial statements are included or required to be
included by Article 3 of Regulation S-X (17 CFR 210.3-01 to 3.18), and
for the registrant's fourth fiscal quarter in the case of an annual
report filed on Form 10-K (referenced in Sec.  249.310), and must
provide an updated discussion and analysis of the information
presented. The discussion and analysis should also highlight any
material changes from prior periods. For purposes of interim period
disclosures of short-term borrowings required by paragraph (a)(6) of
this Item, the term ``reported period'' used in paragraph (a)(6) of
this Item means the most recent interim period presented or, in the
case of an annual report filed on Form 10-K (referenced in Sec.
249.310), the registrant's fourth fiscal quarter.
* * * * *
    (d) Smaller reporting companies. A smaller reporting company, as
defined in Sec.  229.10(f)(1) of this Chapter, may provide the
information required in paragraphs (a)(3)(iv) and (a)(6) of this Item
for the last two most recent fiscal years of the registrant if it
provides financial information on net sales and revenues and on income
from continuing operations for only two years. For interim periods, a
smaller reporting company is not required to follow Instruction 8 to
paragraph 303(b) and, instead, must discuss material changes to the
information specified in paragraphs (a)(4) and (a)(6) of this Item from
the end of the preceding fiscal year (and, if included, from the
corresponding interim balance sheet date of the preceding fiscal year)
to the date of the most recent interim balance sheet provided. In the
case of an annual report filed on Form 10-K (referenced in Sec.
249.310), a smaller reporting company is not required to provide
information for the fourth quarter of the most recent fiscal year.
* * * * *

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

    3. The authority citation for part 249 continues to read in part as
follows:

    Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; and 18 U.S.C.
1350, unless otherwise noted.
* * * * *
    4. Form 8-K (referenced in Sec.  249.308) is amended by:
    a. Revising paragraph (c)(4) of Item 2.03; and
    b. Removing paragraph (e) of Item 2.03.
    The revisions read as follows:

    Note: The text of Form 8-K does not, and this amendment will
not, appear in the Code of Federal Regulations.

Form 8-K

* * * * *

Item 2.03 Creation of a Direct Financial Obligation or an Obligation
Under an Off-Balance Sheet Arrangement of a Registrant

* * * * *
    (c)* * *
    (4) A short-term borrowing, as defined in Item 303(a)(6)(iii) of
Regulation S-K (17 CFR 229.303(a)(6)(iii)), that arises other than in
the ordinary course of business.
* * * * *
    5. Form 20-F (referenced in Sec.  249.220f) Item 5 is amended by:
    a. Revising paragraphs (a) and (d) of Item 5.E.2;
    b. Adding Item 5.H; and
    c. Adding Instructions to Item 5.H after the ``Instructions to Item
5.F''.
    The revisions and additions read as follows:

    Note: The text of Form 20-F does not, and this amendment will
not, appear in the Code of Federal Regulations.

Form 20-F

* * * * *

Item 5. Operating and Financial Review and Prospects

* * * * *
    E. Off-balance sheet arrangements.
* * * * *
    2. * * *
    (a) Any obligation under a guarantee contract that has any of the
characteristics identified in FASB ASC Topic 460, Guarantees, paragraph
460-10-15-4, as may be modified or supplemented, excluding the types of
guarantee contracts described in FASB ASC paragraphs 460-10-15-7, 460-
10-25-1, and 460-10-30-1;
    (b) * * *
    (c) * * *
    (d) Any obligation, including a contingent obligation, arising out
of a variable interest (as defined in the FASB ASC Master Glossary, as
may be modified or supplemented) in an unconsolidated entity that is
held by, and material to, the company, where such entity provides
financing, liquidity, market risk or credit risk support to, or engages
in leasing, hedging or research and development services with, the
company.
* * * * *
    H. Short-Term Borrowings
    1. In tabular format, provide for each category of short-term
borrowings specified in Item 5.H.3 of this Form and for the periods
specified in Item 5.H.5 of this Form:
    (a) The average amount outstanding during each reported period and
the weighted average interest rate thereon;
    (b) The amount outstanding at the end of each reported period and
the weighted average interest rate thereon;
    (c)(i) For companies that are financial companies, the maximum
daily amount outstanding during each reported period or
    (ii) For companies that are not financial companies, the maximum
month-end amount outstanding during each reported period; and
    (d) For any of the amounts referred to in (a), (b) or (c) of this
Item 5.H.1, disaggregate the amounts in the table by currency, interest
rate or other meaningful category, to the extent presentation of
separate amounts is necessary to promote understanding or to prevent
aggregate amounts from being misleading, and include a footnote to the
table indicating the method of disaggregation and any other pertinent
data relating to the calculation of the amounts presented, including,
without limitation, the timing and exchange rates used for currency
translations.
    2. Provide a discussion of the company's short-term borrowings,
including the items specified in paragraphs (a) through (d) of this
Item 5.H.2 to the extent necessary to an understanding of such
borrowings and the current or future effect on the company's financial
condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital
resources:
    (a) A general description of the short-term borrowings included in
each category (including any key metrics or other factors that could
reduce or impair the company's ability to borrow under any of such
arrangements and whether there are any collateral posting arrangements)
and the business purpose to the company of such short-term borrowings;
    (b) The importance to the company of such short-term borrowings in
respect of its liquidity, capital resources, market-risk support,
credit-risk support or other benefits;
    (c) The reasons for any material differences between average short-
term borrowings and period-end borrowings; and
    (d) The reasons for the maximum outstanding amounts in each
reported period, including any non-recurring transactions or events,
use of proceeds or other information that provides context for the
maximum amount.
    3. As used in this Item 5.H, the term ``short-term borrowings''
means amounts payable for short-term obligations that are:
    (a) Federal funds purchased and securities sold under agreements to
repurchase;
    (b) Commercial paper;
    (c) Borrowings from banks;
    (d) Borrowings from factors or other financial institutions; and
    (e) Any other short-term borrowings reflected in the company's
balance sheet.
    4. As used in this Item 5.H, the term ``financial company'' means a
company that, during the reported period, is engaged to a significant
extent in the business of lending, deposit-taking, insurance
underwriting or providing investment advice, or is a broker or dealer
as defined in Section 3 of the Exchange Act (15 U.S.C. 78c), and
includes, without limitation, an entity that is or is the holding
company of, a bank, a savings association, an insurance company, a
broker, a dealer, a business development company as defined in Section
2(a)(48) of the Investment Company Act of 1940 (15 U.S.C. 80a-
2(a)(48)), an investment adviser, a futures commission merchant, a
commodity trading advisor, a commodity pool operator, or a mortgage
real estate investment trust.
    5. Information required by this Item 5.H shall be presented for
each of the three most recent fiscal years.
* * * * *
    Instructions to Item 5.H:
    1. Notwithstanding Item 5.H.3, the categories of short-term
borrowings disclosed pursuant to Item 5.H of this Form may be based on
the classifications for such types of short-term borrowings used under
the comprehensive set of accounting principles that the company uses to
prepare its primary financial statements, so long as the disclosure is
provided at a level of detail that satisfies the objective of this Item
5.H disclosure requirement.
    2. Where a company meets the definition of financial company, but
also has operations that do not involve lending, deposit-taking,
insurance underwriting, providing investment advice, or broker or
dealer activities, it may present the information specified in Item
5.H.1 of this Form separately for such operations. In doing so, the
company may disclose averages and maximum amounts for such operations
using the rules and instructions applicable to companies that are not
financial companies, provided that it must disclose averages computed
on a daily average basis and maximum daily amounts for its operations
that fall within the definition of financial company. For purposes of
making this segregation, the company should make the distinction
assuming the business in question were itself a registrant. Additional
information should be presented by footnote to enable readers to
understand how the company's operations have been grouped for purposes
of the disclosure.
    3. For companies that are financial companies, averages called for
by this Item 5.H are averages computed on a daily average basis (which
means the amount outstanding at the end of each day, averaged over the
reporting period). For all other companies, the basis used for
calculating the averages must be identified, and the averaging period
used must not exceed a month.
    4. As used in this Item 5.H, the maximum daily amount outstanding
during a reported period means the largest amount outstanding at the
end of any day in the reported period, and the maximum month-end amount

outstanding during a reported period means the largest amount
outstanding at the end of the last day of any month in the reported
period.
* * * * *

    Dated: September 17, 2010.
    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-23743 Filed 9-27-10; 8:45 am]
BILLING CODE P


[Federal Register Volume 83, Number 183 (Thursday, September 20, 2018)]
[Rules and Regulations]
[Pages 47564-47566]
[FR Doc No: 2018-20447]

=======================================================================
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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R08-OAR-2018-0389; FRL-9983-50--Region 8]

Approval and Promulgation of Air Quality Implementation Plans;
Wyoming; Incorporation by Reference Updates

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Environmental Protection Agency (EPA) is approving eight
State Implementation Plan (SIP) revisions submitted by the State of
Wyoming; four submitted on March 27, 2017, and four submitted on March
28, 2018. The revisions include updates to incorporation by reference
within several parts of the Wyoming Air Quality Standards and
Regulations that are part of the SIP. Additional revisions are being
approved that: Correct an inconsistency regarding internal combustion
engine nitrogen oxide requirements; amend three state regulations to
maintain consistency with federal regulations; and update a state
internet address.

DATES: This final rule is effective on October 22, 2018.

ADDRESSES: The EPA has established a docket for this action under
Docket ID No. EPA-R08-OAR-2018-0389. All documents in the docket are
listed on the http://www.regulations.gov website. Although listed in
the index, some information is not publicly available, e.g., CBI or
other information whose disclosure is restricted by statute. Certain
other material, such as copyrighted material, is not placed on the
internet and will be publicly available only in hard copy form.
Publicly available docket materials are available through
www.regulations.gov, or please contact the person identified in the For
Further Information Contact section for additional availability
information.

FOR FURTHER INFORMATION CONTACT: Chris Dresser, Air Program, U.S.
Environmental Protection Agency (EPA), Region 8, Mail Code 8P-AR, 1595
Wynkoop Street, Denver, Colorado 80202-1129,<PHONE_NUMBER>,
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background Information

    In a rulemaking published on July 23, 2018 (83 FR 34811), the EPA
proposed approval of eight revisions to the Wyoming Air Quality
Standards and Regulations submitted by the State of Wyoming; four
submitted on March 27, 2017, and four submitted on March 28, 2018. The
revisions include updates to incorporation by reference within several
parts of the Wyoming Air Quality Standards and Regulations that are
part of the SIP. Additional revisions were proposed that: (1) Correct
an inconsistency regarding internal combustion engine nitrogen oxide
requirements; (2) amend three state regulations to maintain consistency
with federal regulations; and (3) update a state internet address. In
this rulemaking the EPA is taking final action to approve the proposed
revisions. The reasons for our approval are provided in the proposed
rule.

II. Response to Public Comments

    The EPA received three anonymous comments on the proposed SIP
amendments to the Wyoming Air Quality Standards and Regulations. After
reviewing the comments, the EPA has determined that the comments are
outside the scope of our proposed action or fail to identify any
material issue necessitating a response. All comments received on this
action are available for review in the docket for this rulemaking. This
rule will be finalized as proposed without revisions.

III. Final Action

    For the reasons expressed in the proposed rule, the EPA is
approving the eight SIP submittals to the Wyoming Air Quality Standards
and Regulations submitted by the State of Wyoming on March 27, 2017,
and March 28, 2018. This action updates: (1) Chapter 8 Non-attainment
Area Regulations, Section 10, Incorporation by reference (2017
Submittal); (2) Chapter 8, Non-attainment Area Regulations, Section 3,
Conformity of general federal actions to state implementation plans
(2018 Submittal), and Section 10, Incorporation by reference (2018
Submittal); (3) Chapter 6, Permitting Requirements, Section 4,
Prevention of significant deterioration, to remove an outdated Federal
Register citation under the definition of `tpy CO2
equivalent emission (CO2e),' portions of which had been
approved in a previous October 12, 2016 EPA action (2017 Submittal);
(4) Chapter 6, Permitting Requirements, Section 14, Incorporation by
reference (2018 Submittal); (5) Chapter 3, General Emission Standards,
Section 3, Emission standards for nitrogen oxides, which corrects an
inconsistency regarding internal combustion engines (2017 Submittal);
(6) Chapter 3, General Emission Standards, Section 9, Incorporation by
reference (2018 Submittal); (7) Chapter 2, Ambient Standards, Section
6, Ambient Standards for ozone, to include the latest ozone NAAQS (2017
Submittal); and (8) Chapter 2, Ambient Standards, Section 12,
Incorporation by reference (2018 Submittal).

IV. Incorporation by Reference

    In this rule, the EPA is finalizing regulatory text that includes
incorporation by reference. In accordance with requirements of 1 CFR
51.5, the EPA is finalizing the incorporation by reference of Wyoming
Air Quality Standards and Regulations described in the amendments set
forth to 40 CFR part 52, below. The EPA has made, and will continue to
make, these materials generally available through www.regulations.gov
and at the EPA Region 8 office (please contact the person identified in
the For Further Information Contact section of this preamble for more
information). Therefore, these materials have been approved by the EPA
for inclusion in the SIP, have been incorporated by reference by the
EPA into that plan, are fully federally enforceable under sections 110
and 113 of the CAA as of the effective date of the final rulemaking of
the EPA's approval, and will be incorporated by reference in the next
update to the SIP compilation.\1\
---------------------------------------------------------------------------

    \1\ 62 FR 27968 (May 22, 1997).
---------------------------------------------------------------------------

V. Statutory and Executive Orders Review

    Under the CAA, the Administrator is required to approve a SIP
submission that complies with the provisions of the Act and applicable
federal regulations (42 U.S.C. 7410(k), 40 CFR 52.02(a)). Thus, in
reviewing SIP submissions, the EPA's role is to approve state choices,
provided that they meet the criteria of the CAA. Accordingly, this
final action merely approves some state law as meeting federal
requirements; this final

action does not impose additional requirements beyond those imposed by
state law. For that reason, this final action:
     Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Order
12866 (58 FR 51735, Oct. 4, 1993) and 13563 (76 FR 3821, January 21,
2011);
     This action is not an Executive Order 13771 (82 FR 9339,
Feb. 2, 2017) regulatory action because actions such as approving SIPs
are exempted under Executive Order 12866;
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have federalism implications as specified in
Executive Order 13132 (64 FR 43255, Aug. 10, 1999);
     Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the CAA; and
     Does not provide the EPA with the discretionary authority
to address, as appropriate, disproportionate human health or
environmental effects, using practicable and legally permissible
methods, under Executive Order 12898 (59 FR 7629, Feb. 16, 1994).
    The SIP is not approved to apply on any Indian reservation land or
in any other area where the EPA or an Indian tribe has demonstrated
that a tribe has jurisdiction. In those areas of Indian country, the
rule does not have tribal implications and will not impose substantial
direct costs on tribal governments or preempt tribal law as specified
by Executive Order 13175 (65 FR 67249, November 9, 2000).
    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. The EPA will submit a report containing this action and
other required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).
    Under section 307(b)(1) of the CAA, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by November 19, 2018. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this action for the purposes of judicial review nor
does it extend the time within which a petition for judicial review may
be filed, and shall not postpone the effectiveness of such rule or
action. This action may not be challenged later in proceedings to
enforce its requirements. (See CAA section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide,
Incorporation by reference, Intergovernmental relations, Lead, Nitrogen
dioxide, Ozone, Particulate matter, Reporting and recordkeeping
requirements.

    Dated: September 14, 2018.
Douglas Benevento,
Regional Administrator, Region 8.

    40 CFR part 52 is amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart ZZ--Wyoming

0
2. In Sec.  52.2620, the table in paragraph (c) is amended by revising:
0
a. Under the center heading ``Chapter 02, Ambient Standards,'' the
table entries for Section 06 and Section 12;
0
b. Under the center heading ``Chapter 03, General Emission Standards,''
the table entries for Section 03 and Section 09;
0
c. Under the center heading ``Chapter 06, Permitting Requirements,''
Section 04 and Section 14; and
0
d. Under the center heading ``Chapter 08, Non-attainment Area
Regulations,'' Section 03 and Section 10.
    The revisions read as follows:

Sec.  52.2620   Identification of plan.

* * * * *
    (c) * * *

----------------------------------------------------------------------------------------------------------------
                                                  State         EPA
        Rule No.               Rule title       effective    effective   Final rule citation/      Comments
                                                   date         date             date
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                          Chapter 02. Ambient Standards
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Section 06..............  Ambient Standards     12/20/2016   10/22/2018  [Insert Federal
                           for ozone.                                     Register
                                                                          citation]. 9/20/
                                                                          2018.

                                                  * * * * * * *
Section 12..............  Incorporation by        2/5/2018   10/22/2018  [Insert Federal
                           reference.                                     Register
                                                                          citation]. 9/20/
                                                                          2018.
----------------------------------------------------------------------------------------------------------------
                                     Chapter 03. General Emission Standards
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Section 03..............  Emission standards    12/20/2016   10/22/2018  [Insert Federal
                           for nitrogen                                   Register
                           oxides.                                        citation]. 9/20/
                                                                          2018.

                                                  * * * * * * *
Section 09..............  Incorporation by        2/5/2018   10/22/2018  [Insert Federal
                           reference.                                     Register
                                                                          citation]. 9/20/
                                                                          2018.

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                       Chapter 06. Permitting Requirements
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Section 04..............  Prevention of         12/20/2016   10/22/2018  [Insert Federal
                           significant                                    Register
                           deterioration.                                 citation].
                                                                          September 20, 2018.

                                                  * * * * * * *
Section 14..............  Incorporation by        2/5/2018   10/22/2018  [Insert Federal
                           reference.                                     Register
                                                                          citation].
                                                                          September 20, 2018.

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                   Chapter 08. Non-attainment Area Regulations
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Section 03..............  Conformity of           2/5/2018   10/22/2018  [Insert Federal
                           general federal                                Register
                           actions to state                               citation].
                           implementation                                 September 20, 2018.
                           plans.

                                                  * * * * * * *
Section 10..............  Incorporation by        2/5/2018   10/22/2018  [Insert Federal
                           reference.                                     Register
                                                                          citation].
                                                                          September 20, 2018.

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

* * * * *
[FR Doc. 2018-20447 Filed 9-19-18; 8:45 am]
BILLING CODE 6560-50-P