[Federal Register Volume 76, Number 58 (Friday, March 25, 2011)]
[Proposed Rules]
[Pages 16707-16712]
[FR Doc No: 2011-6940]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 240

[Release No. 34-64099; File No. S7-11-11]
RIN 3235-AL11

Rule 17Ad-17; Transfer Agents', Brokers', and Dealers' Obligation
To Search for Lost Securityholders; Paying Agents' Obligation To Search
for Missing Securityholders

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: The Dodd-Frank Wall Street Reform and Consumer Protection Act
(``Dodd-Frank Act'') amended the Securities Exchange Act of 1934
(``Exchange Act'') by adding a subsection entitled, ``Due Diligence for
the Delivery of Dividends, Interest, and Other Valuable Property
Rights.'' The amendment directs the Securities and Exchange Commission
(``Commission'') to revise Exchange Act Rule 17Ad-17, ``Transfer
Agents' Obligation to Search for Lost Securityholders'' to: extend to
brokers and dealers the requirement of Rule 17Ad-17 to search for lost
securityholders; add to Rule 17Ad-17 a requirement that ``paying
agents'' notify ``missing security holders'' in writing that the paying
agent has sent the missing security holder a check that has not yet
been negotiated; add to Rule 17Ad-17 an exclusion for paying agents
from the notification requirements when the value of the not yet
negotiated check is less than $25; and add to Rule 17Ad-17 a provision
clarifying that the written notification requirements shall have no
effect on State escheatment laws. The amendment also requires the
Commission to ``adopt such rules, regulations, and orders necessary to
implement this subsection no later than 1 year after the date of
enactment of this subsection.'' The Commission is publishing for
comment proposed amendments to Rule 17Ad-17 to implement the statutory
requirements.

DATES: Comments should be received on or before May 9, 2011.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml);
     Send an e-mail to<EMAIL_ADDRESS>and include File
Number S7-11-11 on the subject line; or
     Use the Federal eRulemaking Portal (http://www.regulations.gov) and follow the instructions for submitting
comments.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number S7-11-11. To help us
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments
are also available for Web site viewing and printing in the
Commission's Public Reference Room, 100 F Street, NE., Washington, DC
20549, on official business days between the hours of 10 a.m. and 3
p.m. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
publicly available.

FOR FURTHER INFORMATION CONTACT: Jerry W. Carpenter, Assistant
Director, or Thomas C. Etter, Jr., Special Counsel, at<PHONE_NUMBER>,
Division of Trading and Markets, Securities and Exchange Commission,
100 F Street, NE., Washington, DC 20549-7010.

SUPPLEMENTARY INFORMATION:

I. Introduction

    On July 21, 2010, the President signed the Dodd-Frank Act into
law.\1\ The Dodd-Frank Act was enacted to, among other things, promote
the financial stability of the United States by improving
accountability and transparency in the financial system.\2\ Title IX of
the Dodd-Frank Act provides the Commission with new tools to protect
investors and improve the regulation of securities.\3\
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    \1\ Dodd-Frank Wall Street Reform and Consumer Protection Act,
Pub. L. 111-203, 124 Stat. 1376 (2010).
    \2\ See id. at Preamble.
    \3\ See id. Sec.  901 (``This section may be cited as the
`Investor Protection and Securities Reform Act of 2010'.''); Title
IX (``Investor Protections and Improvements to the Regulation of
Securities'').
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    Section 929W of the Dodd-Frank Act added subsection (g) to Section
17A of the Exchange Act (``Section 17A(g)''), which requires the
Commission to revise Rule 17Ad-17 under the Exchange Act (``Rule 17Ad-
17'') \4\ to extend the rule's requirement that transfer agents search
for ``lost securityholders'' to brokers and dealers.\5\
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    \4\ 17 CFR 240.17Ad-17.
    \5\ Rule 17Ad-17(b)(2) defines a ``lost securityholder'' to mean
``a securityholder: (i) To whom an item of correspondence that was
sent to the securityholder at the address contained in the transfer
agent's master securityholder file has been returned as
undeliverable; provided, however, that if such item is re-sent
within one month to the lost securityholder, the transfer agent may
deem the securityholder to be a lost securityholder as of the day
the resent item is returned as undeliverable; and (ii) for whom the
transfer agent has not received information regarding the
securityholder's new address.''
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    Section 17A(g) further directs the Commission to revise Rule 17Ad-
17 to provide a requirement that the ``paying agent provide a single
written notification to each missing security holder that the missing
security holder has been sent a check that has not yet been
negotiated.'' \6\ Under Section 17A(g), written notification must be
sent to a missing security holder no later than seven months after the
sending of the not yet negotiated check.\7\
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    \6\ Section 17A(g)(1)(A), 15 U.S.C. 78q-1(g)(1)(A). We note that
Congress, in drafting Exchange Act Section 17A(g), used a two-word
formulation of the term ``security holder.'' In Rule 17Ad-17,
however, there is a one-word formulation of the term
``securityholder.'' For the sake of consistency within Rule 17Ad-17,
we are proposing to use the term ``missing securityholder'' in Rule
17Ad-17. Throughout this release, we have used the term
``securityholder'' when discussing Rule 17Ad-17, and we have used
the term ``security holder'' when discussing Section 929W of the
Dodd-Frank Act or Section 17A(g) of the Exchange Act.
    \7\ Id. Section 17A(g) provides that written notification may be
sent along with a check or other mailing subsequently sent to the
missing security holder.
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    Section 17A(g)(1)(D)(ii) defines ``paying agent'' to include ``any
issuer,

transfer agent, broker, dealer, investment adviser, indenture trustee,
custodian, or any other person that accepts payments from the issuer of
a security and distributes the payments to the holders of the
security.'' \8\ In addition, Section 17A(g)(1)(D)(i) provides that ``a
security holder shall be considered a `missing security holder' if a
check is sent to the security holder and the check is not negotiated
before the earlier of the paying agent sending the next regularly
scheduled check or the elapsing of 6 months after the sending of the
not yet negotiated check.'' \9\
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    \8\ Section 17A(g)(1)(D)(ii), 15 U.S.C. 78q-1(g)(1)(D)(ii).
    \9\ Section 17A(g)(1)(D)(i), 15 U.S.C. 78q-1(g)(1)(D)(i).
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    Section 17A(g)(1)(B) and (C) also require that the revisions to the
rule: (i) Provide an exclusion for paying agents from the notification
requirements when the value of the not yet negotiated check is less
than $25 and (ii) add a provision to make clear that the notification
requirements imposed on paying agents shall have no effect on state
escheatment laws.\10\
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    \10\ See Section 17A(g)(1)(B) and (C), 15 U.S.C. 78q-1(g)(1)(B)
and (C).
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    Section 17A(g)(2) requires the Commission to adopt rules,
regulations, or orders necessary to implement the provisions of Section
17A(g)(1) no later than one year after the date of enactment of the
Dodd-Frank Act.\11\ Section 17A(g)(2) further requires the Commission,
in proposing such rules, to seek to minimize disruptions to the current
systems used by or on behalf of paying agents to process payments to
account holders and avoid requiring multiple paying agents to send
written notification to a missing security holder regarding the same
not yet negotiated check.\12\
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    \11\ Section 17A(g)(2), 15 U.S.C. 78q-1(g)(2).
    \12\ Id.
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II. Rule 17Ad-17

A. Background

    The Commission adopted Rule 17Ad-17 in 1997 to address situations
where recordkeeping transfer agents lose contact with securityholders
by requiring transfer agents to conduct database searches for lost
securityholders.\13\ As the Commission noted at that time, such loss of
contact can be harmful to securityholders because they no longer
receive corporate communications or the interest and dividend payments
to which they may be entitled.\14\ Additionally, their securities and
any related interest and dividend payments to which they may be
entitled are often placed at risk of being deemed abandoned under
operation of state escheatment laws.\15\ This loss of contact has
various causes, but it most frequently results from: (1) Failure of a
securityholder to notify the transfer agent of his/her correct address,
especially after relocating to a new address or (2) failure of the
estate of a deceased securityholder to notify the transfer agent of the
death of the securityholder and the name and address of the trustee for
the estate.\16\
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    \13\ See Exchange Act Release No. 39176 (Oct. 1, 1997), 62 FR
52229 (Oct. 7, 1997) (adopting Rule 17Ad-17).
    \14\ See id.
    \15\ See id. Generally, after expiration of a certain period of
time, which varies from state to state but is usually three to seven
years, an issuer or its transfer agent must remit abandoned property
(e.g., securities and funds of lost securityholders) to a state's
unclaimed property administrator pursuant to the state's escheatment
laws.
    \16\ See Exchange Act Release No. 37595 (Aug. 22, 1996), 61 FR
44249 (Aug. 28, 1996) (proposing Rule 17Ad-17).
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B. Discussion

    The proposed amendments would implement the statutory directive to
extend the application of Rule 17Ad-17 to brokers and dealers.
Specifically, the Commission proposes to revise paragraph (a) of Rule
17Ad-17 to add the words ``broker, or dealer'' following the rule's
existing references to transfer agents.\17\
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    \17\ The proposal also would amend paragraph (a)(1) of Rule
17Ad-17 by: (i) Inserting the words ``and every broker or dealer
that holds customer security accounts'' following the words
``accounts of lost securityholders;'' (ii) inserting the words ``and
each broker or dealer that holds customer security accounts''
following the words ``recordkeeping transfer agent;'' and (iii)
inserting the words ``and broker or dealer'' following the words
``The transfer agent.'' The proposal would amend paragraph (a)(2) by
inserting the words ``, or broker or dealer'' following the words
``transfer agent'' and paragraph (a)(3) by inserting the words ``,
or broker or dealer'' following the words ``transfer agent'' and the
words ``or customer security account records of the broker or
dealer'' following the words ``master securityholder files.'' In
addition, the proposal would amend paragraph (b)(2)(i) of Rule 17Ad-
17 by inserting ``or customer security account records of a broker
or a dealer'' following the words ``master securityholder file'' and
by inserting the words ``, or broker or dealer'' following the words
``securityholder, the transfer agent.'' The proposal would amend
paragraph (b)(2)(ii) by inserting the words ``or broker or dealer''
following the words ``transfer agent''.
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    The Exchange Act generally defines a ``broker'' as ``any person
engaged in the business of effecting transactions in securities for the
account of others,'' \18\ and a ``dealer'' as ``any person engaged in
the business of buying and selling securities for such person's own
account though a broker or otherwise.'' \19\ The proposed rule would
apply to all brokers and dealers. As a practical matter, however, the
Commission preliminarily believes that the only brokers and dealers
that would have obligations under the amended rule would be those that
carry securities for the accounts of ``customers'' within the meaning
of Exchange Act Rule 15c3-3.\20\ Such brokers and dealers generally are
referred to as ``clearing firms'' (as opposed to ``introducing firms'')
and tend to be the larger brokerage firms.
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    \18\ Exchange Act Section 3(a)(4)(A), 15 U.S.C. 78c(a)(4)(A).
    \19\ Exchange Act Section 3(a)(5)(A), 15 U.S.C. 78c(a)(5)(A).
    \20\ 17 CFR 240.15c3-3.
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    The Commission proposes to redesignate current paragraph (c) of
Rule 17Ad-17 as paragraph (d) of the rule, as discussed below. Proposed
new paragraph (c) would include a requirement that a ``paying agent''
must provide written notification no later than seven months after the
sending of any not yet negotiated check to each ``missing
securityholder'' to inform the missing securityholder that such missing
securityholder has been sent a check that has not yet been negotiated.
Proposed paragraph (c)(2) of Rule 17Ad-17 would define ``paying
agent,'' consistent with the definition in Section 17A(g),\21\ to
include ``any issuer, transfer agent, broker, dealer, investment
adviser, indenture trustee, custodian, or any other person'' that
accepts payments from an issuer of securities and distributes the
payments to securityholders. Proposed paragraph (c)(3) of Rule 17Ad-17
would, again consistent with Section 17A(g),\22\ provide that a person
would be considered a ``missing securityholder'' if a check is sent to
the securityholder and the check is not negotiated before the earlier
of the paying agent's sending the next regularly scheduled check or the
elapsing of six months after the sending of the not yet negotiated
check. Proposed paragraph (c)(4) of Rule 17Ad-17 would, as required by
Section 17A(g),\23\ exclude a paying agent from the notification
requirements if the value of the not yet negotiated check is less than
$25. Proposed paragraph (c)(5) of Rule 17Ad-17 would, again as required
by Section 17A(g),\24\ provide that the requirements of paragraph
(c)(1) of Rule 17Ad-17 would have no effect on state escheatment laws.
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    \21\ Section 17A(g)(1)(D)(ii), 15 U.S.C. 78q-1(g)(1)(D)(ii).
    \22\ Section 17A(g)(1)(D)(i), 15 U.S.C. 78q-1(g)(1)(D)(i).
    \23\ Section 17A(g)(1)(B), 15 U.S.C. 78q-1(g)(1)(B).
    \24\ Section 17A(g)(1)(C), 15 U.S.C. 78q-1(g)(1)(C).
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    Currently, Rule 17Ad-17(c) requires that every recordkeeping
transfer agent shall maintain records to demonstrate compliance with
the requirements of the

rule.\25\ The Commission is proposing to redesignate this provision as
paragraph (d) of the rule and to amend the paragraph to also require
recordkeeping transfer agents, brokers, dealers, and paying agents to
maintain records to demonstrate their compliance with the rule. The
rule would require that such records be maintained for a period of not
less than three years with the first year in an easily accessible
place.\26\
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    \25\ 17 CFR 240.17Ad-17(c).
    \26\ Currently, pursuant to Rule 17Ad-7(i), 17 CFR 240.17Ad-
7(i), transfer agents must maintain records to show their compliance
with Rule 17Ad-17. This same requirement for transfer agents,
brokers, dealers, and paying agents would be stated explicitly in
proposed amended Rule 17Ad-17. In order to maintain consistency with
proposed amended Rule 17Ad-17, we are also proposing a technical
change to Rule 17Ad-7(i) so that it would cross-reference proposed
amended Rule 17Ad-17(d) rather than proposed amended Rule 17Ad-
17(c).
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    Section 17A(g) further directs the Commission to avoid requiring
multiple paying agents to send written notification to a missing
security holder regarding the same not yet negotiated check.\27\ We do
not believe that multiple notifications by different paying agents for
a given check is a likely scenario under our proposed rule amendments
because we do not believe an issuer would use two paying agents for the
same distribution. We request comment on the likelihood of such an
occurrence and, if such an occurrence is probable with any frequency,
on ways to avoid it from happening.
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    \27\ See Section 17A(g)(2), 15 U.S.C. 78q-1(g)(2).
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    We are also proposing to amend the title of Rule 17Ad-17 to clarify
that it would apply to entities other than transfer agents.
Specifically, we propose to re-title the rule ``Transfer agents',
brokers', and dealers' obligation to search for lost securityholders;
paying agents' obligation to search for missing securityholders''.
    Finally, to provide brokers, dealers, and paying agents with
sufficient time to develop systems to comply with the proposed
amendments to Rule 17Ad-17, we propose to establish a compliance date
for the amendments of one year following the date on which the
Commission takes final action on this proposal. We preliminarily
believe that one year would provide brokers, dealers, and paying agents
with ample time to come into compliance without unduly delaying the
benefits to securityholders that Congress intended in enacting Section
17A(g).

III. Request for Public Comment

    The Commission requests comment on all aspects of the proposed
amendments to Rule 17Ad-17. We request comments on how brokers and
dealers anticipate complying with the proposed rule's requirement to
search for lost securityholders. We also request comment on whether the
new term ``missing securityholder,'' and its related requirements and
timeframes will be confused with the rule's existing term ``lost
securityholder'' and its related requirements and timeframes. We
particularly request comment regarding whether brokers, dealers, and
transfer agents, which are also included in the definition of ``paying
agent,'' foresee issues that may result from the use of the two
terms.\28\ With respect to Section 17A(g)(2)'s requirement that in
preparing these amendments to Rule 17Ad-17 the Commission shall seek to
``minimize disruptions to current systems,'' we request comment on any
potential disruptions that may result from the proposed revisions and
how to minimize any such potential disruptions.\29\ We are also
requesting cost data for implementation of the proposed revisions by
industry participants. We are soliciting comments on any burdens to
commerce that might result from the proposed rule amendments.
Commentators should provide empirical data to support their views.
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    \28\ We note that the term ``lost securityholder'' was adopted
as part of Rule 17Ad-17 in 1997, and Congress used the term
``missing security holder'' when it added new subsection (g) to
Exchange Act Section 17A. For the sake of consistency within Rule
17Ad-17, we are proposing to use the term ``missing securityholder''
in Rule 17Ad-17.
    \29\ Section 17A(g)(2), 15 U.S.C. 78q-1(g)(2).
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    Finally, we request comments on our proposal to establish a
compliance date for the amendments of one year following final action
by the Commission.

IV. Paperwork Reduction Act

    The proposed amendments to Rule 17Ad-17 would require a new and
mandatory ``collection of information'' within the meaning of the
Paperwork Reduction Act of 1995 (``PRA''),\30\ consisting of
maintaining records in order to comply with and to demonstrate
compliance with the rule by brokers and dealers who would be newly
added to paragraph (a) of the rule \31\ and by paying agents who would
be newly added to paragraphs (c) and (d) of the rule.\32\ Accordingly,
the PRA would be applicable to the proposed rule and would require
approval of the Office of Management and Budget. The relevant record
collection requirements would be covered by amendments to paragraph (a)
to Rule 17Ad-17, new paragraph (c) of Rule 17Ad-17, and amended and
renumbered paragraph (d) of Rule 17Ad-17.\33\
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    \30\ 44 U.S.C. 3501 et seq.
    \31\ 17 CFR 240.17Ad-17(a).
    \32\ 17 CFR 240.17Ad-17(c) and (d).
    \33\ Id.
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    The collection of information under the proposed paragraph (b) of
Rule 17Ad-17 is necessary to enable transfer agents, brokers, and
dealers and paying agents, as custodians of records that determine the
ownership of securities and the entitlement to corporate distributions,
to reduce the number of lost and missing securityholders.
    The term ``paying agents'' would include the following approximate
numbers of entities: 10,379 issuers that file reports with the
Commission; 5,063 broker-dealers registered with the Commission; 536
transfer agents registered with the Commission and the banking
agencies; 11,797 registered investment advisers registered with the
Commission; 264 indenture trustees; and 896 custodians; for a total of
approximately 28,931 entities plus an unknown number in the category of
``any other person.''
    Based on discussions with participants in the securities industry,
we are assuming for the purposes of proposed Rule 17Ad-17, that on an
annual basis, there will be approximately 250,000 searches by brokers
and dealers and 50,000 notifications by paying agents.

A. Paragraph (a)

    Under paragraph (a) of the proposed rule amendments, recordkeeping
transfer agents, brokers, and dealers would collect the names and
addresses of their lost securityholders, and the recordkeeping transfer
agents, brokers, and dealers would submit this information to
information data bases pursuant to paragraph (b) of the rule. Such data
base searches must be conducted without charge to the lost
securityholders. Much of the new information required to be collected
(such as the taxpayer identification numbers of lost securityholders)
generally is already maintained by brokers and dealers and transfer
agents so there should not be an additional cost. Therefore, the
Commission anticipates that the increased hourly burden imposed by
these aspects of the rule revisions would be about two minutes per
account per search.\34\ Based

upon discussions with market participants, adding a corrected address
in the event one is found would require approximately three minutes.
The burden per account would be no more than five minutes. Assuming
250,000 annual searches by brokers and dealers for lost security
holders, the increased hourly burden would be 1,250,000 minutes, or
20,833 hours (1,250,000 divided by 60).
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    \34\ Based on information provided by the industry, the
Commission estimates that broker and dealers will annually search
for approximately 250,000 lost securityholders. The Commission
estimates that approximately $3.00 will be spent per account in
order to conduct a search (comprised of approximately $2.00 for two
searches and approximately $1.00 in administration costs).
Therefore, the total cost for all brokers and dealers would be
$750,000 (250,000 multiplied by $3.00).
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B. Paragraph (c)

    Under proposed paragraph (c)(1) of the rule, a paying agent must
provide not less than one written notification to each missing
securityholder no later than seven months after such securityholder has
been sent a check that has not yet been negotiated. The notification
may be sent with a check or other mailing subsequently sent to the
missing securityholder but must be provided no later than seven months
after the sending of the not yet negotiated check. The rule further
provides that a paying agent shall be excluded from the notification
requirement where the value of the not yet negotiated check is less
than $25 and that the requirements of paragraph (c)(1) shall have no
effect on state escheatment laws.
    The paying agents could include approximately 28,931 identifiable
entities as noted previously in this section. However, despite the
large number of entities eligible to be paying agents, that number
would be limited to those firms that would be able to provide financial
services relevant to the rule. The Commission estimates that there
would likely be no more than 1,000 entities actually serving as paying
agents and that these entities would consist primarily of broker-
dealers and transfer agents (including bank transfer agents), the sort
of financial institutions that are accustomed to processing checks and
other commercial documents, dealing with securityholder issues,
maintaining financial records, and serving as intermediaries between
issuers and securityholders. We note that, technically, the startup
costs to enter the paying agent business, for a business entity already
in the financial industry, would appear to be exceedingly modest in
that the basic elements of being a paying agent simply involve mailing
notification letters, sometimes including checks, and maintaining
related financial records. While the entry costs would appear modest,
to operate this sort of low margin business profitably would require
economies of scale and existing business relationships that presumably
would limit the likely number of active paying agents.
    If we assume 1,000 paying agents notifying 50,000 missing
securityholders with each of the notifications requiring three minutes
of labor, we estimate the burden imposed by Rule 17Ad-17(c) on ``paying
agents'' for providing written notification to all ``missing
securityholders'' who have been sent checks that after seven months
have not yet been negotiated to be a total of 150,000 minutes or a
burden of 2,500 hours (150,000 divided by 60).

C. Paragraph (d)

    Proposed paragraph (d) of Rule 17Ad-17 would require that transfer
agents, brokers, dealers, and paying agents that are subject to the
rule to maintain records necessary to demonstrate their compliance with
the rule. The rule also would require transfer agents, brokers,
dealers, and paying agents to maintain written procedures that describe
their methodology for compliance. The records required by the proposed
rule must be maintained for a period of not less than three years, with
the first year in an easily accessible place, consistent with Exchange
Act Section 17A. Based on discussions with participants in the
securities industry, we believe that the annual recordkeeping function
for records, which would be processed electronically, would require
approximately one hour for every 500 missing securityholder accounts
and every 500 lost securityholder accounts. For 250,000 searches by
brokers and dealers, the recordkeeping time would be approximately 500
hours. For notification of 50,000 missing securityholders, the
recordkeeping time for the paying agents (including any issuer,
transfer agent, broker, dealer, investment advisor, indenture trustee,
custodian, and any other person) would be approximately 100 hours.
    In summary, assuming 250,000 searches by brokers and dealers
(20,833 hours + 500 hours = 21,333 hours) and 50,000 notifications by
paying agents (2,500 hours + 100 hours = 2,600 hours), the total
estimated burden would be 23,933 hours (21,333 hours + 2,600 hours).

V. Costs and Benefits of Proposed Amendments

    The costs of this proposal are imposed entirely by Section 929W of
the Dodd-Frank Act and Section 17A(g). These statutory costs include,
among other things, the application of the requirements of Rule 17Ad-
17(a) to brokers and dealers, and the requirements imposed on ``paying
agents'' by proposed Rule 17Ad-17(c) and (d). The costs are not imposed
on brokers and dealers or paying agents by the Commission. Accordingly,
it is not for the Commission to determine whether these costs are
justified by the anticipated benefits of the revised rule.
    Nevertheless, we request comment on the potential costs for any
necessary modifications to information gathering, management, and
record-keeping systems or procedures, as well as any potential costs or
benefits resulting from the proposal for brokers, dealers, issuers,
transfer agents, investment advisers, indenture trustees, custodians,
regulators, or others. Commenters should provide analysis and data to
support their views on the costs and benefits associated with the
proposal.
    The proposed rule changes should provide specific benefits to
issuers and U.S. investors, benefits which are not readily quantifiable
in terms of dollar value. Nevertheless, the proposal would: (1) Invoke
the services of transfer agents and brokers and dealers to reduce the
number of lost securityholders; (2) invoke the services of all paying
agents to reduce the number of missing securityholders; and (3) improve
the accuracy of securityholder records. We are seeking comment on how
we may better identify and quantify the benefits that may result from
the adoption of the proposed amendments.

VI. Initial Regulatory Flexibility Act Analysis

A. Reasons for Proposed Action

    This action was expressly directed by legislation (i.e., Section
929W of the Dodd-Frank Act, which added paragraph (g) to Section 17A of
the Exchange Act).

B. Objectives and Legal Basis

    The objectives of this proposal, as discussed above in Sections I
and II, are to help reduce the number of lost and missing
securityholders and to further the Commission's mission of protecting
investors. The legal basis for the proposal is set forth in Section
17A(g).

C. Small Entities Subject to the Rule

1. Brokers and Dealers
    According to Exchange Act Rule 0-10(c),\35\ a broker or dealer is a
small entity if it: (1) Had total capital (net worth plus subordinated
liabilities) of less than $500,000 on the date in the

prior fiscal year as of which its audited financial statements were
prepared pursuant to Section 240.17a-5(d) or, if not required to file
such statements, a broker or dealer that had total capital (net worth
plus subordinated liabilities) of less than $500,000 on the last
business day of the preceding fiscal year (or in the time that it has
been in business, if shorter); and (2) is not affiliated with any
person (other than a natural person) that is not a small business or
small organization as defined in this section.\36\ Of the 5,063 brokers
and dealers registered with the Commission, approximately 879 are small
brokers or dealers. We note that the proposed amendments to Rule 17Ad-
17 would, as a practical matter, apply only to brokers and dealers that
carry securities for customer accounts (i.e., clearing firms), which
tend to be the larger broker and dealer firms. There are 503 clearing
firms registered with the Commission, none of which qualifies as a
small business. Accordingly, we do not expect small brokers or dealers
to be affected by the amendments to Rule 17Ad-17.\37\
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    \35\ 17 CFR 240.0-10(c).
    \36\ Paragraph (i) of Rule 0-10, 17 CFR 240.0-10, discusses the
meaning of ``affiliated person'' as referenced in Paragraph (c) of
Rule 0-10.
    \37\ 17 CFR 240.17Ad-17.
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2. Paying Agents
    Section 17A(g)(D)(ii) defines the term ``paying agent'' as
including ``any issuer, transfer agent, broker, dealer, investment
adviser, indenture trustee, custodian, or any other person that accepts
payment from the issuer of a security and distributes the payments to
the holder of the security.'' With respect to data for these entities:
(1) 10,379 issuers file reports with the Commission of which 1,207
qualify as small businesses; \38\ (2) 536 transfer agents registered
with the Commission or with the Federal banking agencies of which 135
qualify as small businesses; \39\ (3) 5,063 brokers-dealers registered
with the Commission of which 879 qualify as small businesses; \40\ (4)
11,797 investment advisers registered with the Commission of which 718
qualify as small businesses; \41\ (5) 264 indenture trustees of which
four qualify as small businesses; \42\ and (6) 896 custodians of which
11 qualify as small businesses.\43\ The Commission has no supportable
basis to estimate the number of small entities with respect to the
remaining category (i.e., any other person). As noted herein in Section
IV, while approximately 28,931 entities have been identified as
potential ``paying agents,'' the Commission preliminarily believes that
no more than 1,000 such entities would actually serve as paying agents.
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    \38\ See Exchange Act Rule 0-10(a). 17 CFR 240.0-10(a).
    \39\ See Exchange Act Rule 0-10(h). 17 CFR 240.0-10(h).
    \40\ See Exchange Act Rule 0-10(c). 17 CFR 240.0-10(c).
    \41\ See Investment Advisers Act Rule 0-7(a). 17 CFR 275.0-7(a).
    \42\ See Trust Indenture Act Rule 0-7. 17 CFR 260.0-7.
    \43\ See 13 CFR 121.201.
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    We preliminarily believe that the bulk of paying agent services
would be provided by brokerage firms that handle customer securities
(which as discussed above, as clearing firms, would not be small
entities) and transfer agents (including bank transfer agents), both of
which are firms that typically serve as intermediaries between issuers
and securityholders.

D. Reporting, Recordkeeping, and Other Compliance Requirements

    Proposed new paragraph (d) of Rule 17Ad-17 would require
recordkeeping transfer agents, or brokers, or dealers, and paying
agents to demonstrate compliance with these provisions and to maintain
written procedures that describe the methodology for complying with the
provisions. Such records would be required to be maintained for not
less than three years, the first year in an easily accessible place.
Their maintenance would be subject to examination by the appropriate
regulatory agency as defined by Section 3(a)(34)(B) of the Exchange
Act.\44\
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    \44\ 15 U.S.C. 78c(a)(34)(B).
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E. Duplicative, Overlapping, or Conflicting Federal Rules

    The Commission preliminarily believes there are no rules that
duplicate, overlap, or conflict with the proposed rule.

F. Significant Alternatives

    With respect to small entities, the Commission considered whether
viable alternatives to the proposed rulemaking exist that could
accomplish the stated objectives of Section 17A(g) of the Exchange Act
and whether they would minimize any significant economic impact of
proposed rules on small entities. Specifically, the Commission
considered the following alternatives: (1) The establishment of
different procedures that take into account the resources available to
small entities; (2) the clarification, consolidation, or simplification
of compliance and reporting requirements under the proposed rules
insofar as they affect small entities; (3) the use of performance
rather than design standards; and (4) an exemption from coverage of the
rule, or any part thereof, for small entities. However, inasmuch as
Section 929W of the Dodd-Frank Act, which added Section 17A(g) to the
Exchange Act, expressly requires the proposed revisions, no alternative
to the proposed rule amendment appears available at this time.
    The Commission encourages the submission of written comments with
respect to any aspect of the Initial Regulatory Flexibility Analysis
(``IFRA'').\45\ Those comments should specify costs of compliance with
the proposed rule, and suggest alternatives that would accomplish the
objective of the proposed amendments to Rule 17Ad-17. A copy of the
IRFA may be obtained by contacting Thomas C. Etter, Jr., Division of
Trading and Markets, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-7010, telephone no.<PHONE_NUMBER>.
---------------------------------------------------------------------------

    \45\ 5 U.S.C. 603.
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VII. Consideration of Burden on Competition, and Promotion of
Efficiency, Competition, and Capital Formation

    The proposed amendments to the rule should have a neutral effect on
efficiency and capital formation and should have no material
anticompetitive effects. While we believe the proposed amendments to
the rule would apply to all transfer agents, brokers, dealers, and
paying agents, they could in theory create a barrier to entry for
potential new entrants if the compliance costs associated with
searching for and contacting lost or missing securityholders are high
enough. The Commission encourages the submission of written comments on
Section VII.

VIII. SBREFA Consideration of Impact on the Economy

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996,\46\ a rule is major if it has resulted in or is likely to
result in:
---------------------------------------------------------------------------

    \46\ 5 U.S.C. 801, et seq. The Regulatory Flexibility Act
requires regulatory agencies to consider the impact of their
proposed and final regulations on small entities.
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more;
     A major increase in costs or prices for consumers or
individual industries; or
     Significant adverse effects on competition, investment, or
innovation.

We request comment regarding the potential impact of the proposed rule
amendments on the economy on an annual basis. We also request that
commenters provide empirical data and other factual support for their
views.

IX. Statutory Basis and Text of Proposed Amendments

Statutory Basis

    Pursuant to Section 17A(g) of the Exchange Act, 15 U.S.C. 78q-1(g),
the Commission proposes to amend Sec.  240.17Ad-7 and Sec.  240.17Ad-17
under the Exchange Act in the manner set forth below.

List of Subjects in 17 CFR Part 240

    Reporting and recordkeeping requirements, Securities.

Text of the Amendments

    In accordance with the foregoing, the Commission proposes to amend
part 240 of Chapter II of Title 17 of the Code of Federal Regulations
as follows:

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934

    1. The general authority citation for part 240 is revised and the
following citation is added in numerical order to read as follows:

    Authority:  15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i,
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78mm, 78n, 78n-1, 78o, 78o-4, 78p,
78q, 78q-1, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-
29, 80a-37, 80b-3, 80b-4, 80b-11, and 7201 et seq.; 18 U.S.C. 1350;
and 12 U.S.C. 5221(e)(3) unless otherwise noted.
* * * * *
    Section 240.17Ad-17 is also issued under Pub. L. 111-203, Sec.
929W, 124 Stat. 1869 (2010).
* * * * *

Sec.  240.17Ad-7  [Amended]

    2. Section 240.17Ad-7(i) is amended by removing ``240.17Ad-17(c)''
and adding in its place ``240.17Ad-17(d)''.

    3. Section 240.17Ad-17 is amended by:
    a. Revising the heading.
    b. Revising paragraph (a)(1).
    c. In paragraph (a)(2) adding the phrase ``, or broker or dealer''
following the word ``agent''.
    d. In paragraph (a)(3) introductory text adding the phrase ``, or
broker or dealer'' following the word ``agent''.
    e. In paragraph (a)(3)(ii) adding the phrase ``or customer security
account records of the broker or dealer'' following the word ``files''.
    f. In paragraph (b)(2)(i) adding the phrase ``or customer security
account records of a broker or dealer'' following the word ``file'' and
adding the phrase ``, or broker or dealer'' following the phrase
``securityholder, the transfer agent''.
    g. In paragraph (b)(2)(ii) adding the phrase ``or broker or
dealer'' following the word ``agent''.
    h. Redesignating paragraph (c) as paragraph (d), and adding new
paragraph (c).
    i. Revising newly redesignated paragraph (d).
    The revisions and addition read as follows:

Sec.  240.17Ad-17  Transfer agents', brokers', and dealers' obligation
to search for lost securityholders; paying agents' obligation to search
for missing securityholders.

    (a)(1) Every recordkeeping transfer agent whose master
securityholder file includes accounts of lost securityholders and each
broker or dealer that holds customer security accounts shall exercise
reasonable care to ascertain the correct addresses of such
securityholders. In exercising reasonable care to ascertain such lost
securityholders' correct addresses, each recordkeeping transfer agent
and each broker or dealer shall conduct two data base searches using at
least one information data base service. The transfer agent and broker
or dealer shall search by taxpayer identification number or by name if
a search based on taxpayer identification number is not reasonably
likely to locate the securityholder. Such data searches must be
conducted without charge to a lost securityholder and with the
following frequency:
    (i) Between three and twelve months of such securityholder becoming
a lost securityholder and
    (ii) Between six and twelve months after the transfer agent's or
broker's or dealer's first search for such lost securityholder.
* * * * *
    (c)(1) The paying agent, as defined in paragraph (c)(2) of this
section, shall provide not less than one written notification to each
missing securityholder stating that such securityholder has been sent a
check that has not yet been negotiated. Such notification may be sent
with a check or other mailing subsequently sent to the missing
securityholder, but must be provided no later than seven (7) months
after the sending of the not yet negotiated check.
    (2) The term paying agent shall include any issuer, transfer agent,
broker, dealer, investment adviser, indenture trustee, custodian, or
any other person that accepts payments from the issuer of a security
and distributes the payments to the holder of the security.
    (3) The securityholder shall be considered a missing securityholder
if a check is sent to the securityholder and the check is not
negotiated before the earlier of the paying agent's sending the next
regularly scheduled check or the elapsing of six (6) months after the
sending of the not yet negotiated check.
    (4) A paying agent shall be excluded from any notification
requirement where the value of the not yet negotiated check is less
than $25.
    (5) The requirements of paragraph (c)(1) of this section shall have
no effect on state escheatment laws.
    (d) Every recordkeeping transfer agent, broker, or dealer carrying
securities for the accounts of customers, and every paying agent shall
maintain records to demonstrate compliance with the requirements set
forth in this section which shall include written procedures that
describe the transfer agent's, or broker's or dealer's, or paying
agent's methodology for complying with this section. Such records shall
be maintained for a period of not less than three (3) years with the
first year in an easily accessible place.

    By the Commission.

    Dated: March 18, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-6940 Filed 3-24-11; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 205 (Monday, October 24, 2011)]
[Notices]
[Page 65769]
[FR Doc No: 2011-27455]

=======================================================================
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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

Application of Friendship Airways, Inc. d/b/a Yellow Air Taxi for
Commuter Authority

AGENCY: Department of Transportation.

ACTION: Notice of Order to Show Cause (Order 2011-10-9), Docket DOT-
OST-2005-21533.

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SUMMARY: The Department of Transportation is directing all interested
persons to show cause why it should revoke the Commuter Air Carrier
Authorization issued to Friendship Airways, Inc. d/b/a Yellow Air Taxi
and deny its application to resume commuter operations, pursuant to 49
U.S.C. 40109(f) and 14 CFR part 298.

DATES: Persons wishing to file objections should do so no later than
November 1, 2011.

ADDRESSES: Objections and answers to objections should be filed in
Docket DOT-OST-2005-21533 and addressed to U.S. Department of
Transportation, Docket Operations, (M-30, Room W12-140), 1200 New
Jersey Avenue, SE., West Building Ground Floor, Washington, DC 20590,
and should be served upon the parties listed in Attachment A to the
order.

FOR FURTHER INFORMATION CONTACT: Catherine J. O'Toole, Air Carrier
Fitness Division (X-56, Room W86-489), U.S. Department of
Transportation, 1200 New Jersey Avenue, SE., Washington, DC 20590,
(202) 366-9721.

    Dated: October 18, 2011.
Susan L. Kurland,
Assistant Secretary for Aviation and International Affairs.
[FR Doc. 2011-27455 Filed 10-21-11; 8:45 am]
BILLING CODE P


1 SF 83 SUPPORTING STATEMENT ENVIRONMENTAL PROTECTION AGENCY STANDARDS OF PERFORMANCE NSPS Subpart VVV Polymeric Coating of Supporting Substrates Facilities 1. Identification of the Information Collection 1( a) Title of the Information Collection Standards of Performance for New Stationary Sources; Polymeric Coating of Supporting Substrates Facilities, Subpart VVV.

1( b) Short Characterization/ Abstract In general, all New Source Performance Standards ( NSPS) require initial notifications,

performance tests, and periodic reports. Owners or operators are also required to maintain records of the occurrence and duration of any startup, shutdown, or malfunction in the operation of an affected facility, or any period during which the monitoring system is inoperative. These notifications, reports, and records are essential in determining compliance, and are required of all sources subject to NSPS.

Any owner or operator subject to the provisions of this part shall maintain a file of these measurements, and retain the file for at least two years following the date of such measurements,

maintenance reports, and records. All reports are sent to the delegated State or Local authority.

In the event that there is no such delegated authority, the reports are sent directly to the Environmental Protection Agency ( EPA) Regional Office. 2 The NSPS for Subpart VVV, Polymeric Coating of Supporting Substrates Facilities, were proposed on April 30, 1987 and promulgated on September 11, 1989. These standards apply to each coating operation and any on site coating mix preparation equipment used to prepare coatings for the polymeric coating of supporting substrates for which construction, modification or reconstruction after the date of proposal. Any affected facility for which the amount of volatile organic compounds ( VOC) used is less than 95 Mg per 12 month period is subject only to the requirements of § § 60.744( b), 60.747( b) and 60.747( c). This information is being collected to assure compliance with 40 CFR Part 60 Subpart VVV.

Approximately 51 sources are currently subject to the standard, and it is estimated that an additional one plant per year will become subject to the standard in the next three years. This estimate is based on the number of sources (" coating operations and any onsite mix preparation equipment") subject to the NSPS listed in the Air Facility System ( AFS) database. The list of sources were estimated using the Standard Industry Classification ( SIC) codes listed under Section 4( a) of the Proposed Rule Federal Register of April 30, 1987. We have also assumed that: 1) each existing plant has one solvent borne coating operation subject to this NSPS; 2) a total of 5 new coating lines per year will be installed at existing plants, of which 4 are solventborne lines and one is a water borne line; and 3) the new plant will install at least one solventborne coating operation.

2. Need for and Use of the Collection 2( a) Need/ Authority for the Collection The EPA is charged under Section 111 of the Clean Air Act, as amended, to establish standards of performance for new stationary sources that reflect: 3 Application of the best technological system of continuous emissions reduction which ( taking into consideration the cost of achieving such emissions reduction, or any non air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated Section 111( a)( l).

The Agency refers to this charge as selecting the best demonstrated technology ( BDT). Section 111 also requires that the Administrator review and, if appropriate, revise such standards every four years.

In addition, Section 114( a) states that the Administrator may require any owner or operator subject to any requirement of this Act to:

( A) Establish and maintain such records; ( B) make such reports;

( C) install, use, and maintain such monitoring equipment, and use such audit procedures, or methods; ( D) sample such emissions ( in accordance with such procedures or methods, at such locations, at such intervals, during such periods, and in such manner as the Administrator shall prescribe); ( E) keep records on control equipment parameters, production variables or other indirect data when direct monitoring of emissions is impractical; ( F) submit compliance certifications in accordance with Section 114( a)( 3); and ( G) provide such other information as the Administrator may reasonably require.

In the Administrator's judgment, VOC emissions from polymeric coating of supporting 4 substrates facilities cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. Therefore, an NSPS was promulgated for this source category at 40 CFR Part 60 Subpart VVV.

2( b) Practical Utility/ Users of the Data The control of emissions of VOCs from polymeric coating of supporting substrates facilities requires not only the installation of properly designed equipment, but also the operation and maintenance of that equipment. Emissions of VOCs from polymeric coating of supporting substrates facilities are generated by each coating operation and the associated onsite coating mix preparation equipment used to prepare coatings for the polymeric coating of supporting substrates. These standards rely on: the capture of VOC emissions by a partial or total enclosure around the coating operation (" alternative standard"), and/ or by covers on each piece of affected mix preparation equipment; the reduction of VOC emissions to the atmosphere from the coating operation to a control device (" emission reduction standard"), and/ or from the affected covered equipment to a control device; and the recovery of VOC emissions at one coating operation if the liquid material balance is used to demonstrate compliance .

The required notifications are used to inform the Agency or delegated authority when a source becomes subject to the standard. The reviewing authority may then inspect the source to determine if pollution control devices are properly installed and operated, or the emission reduction standard is being met. Operating conditions that may be noted include: a measure of the gaseous volumetric flow rates; VOC emissions from the coating operation; capture efficiency of the control device; amount of coating applied at the coating applicator after all ingredients have been added to the coating; VOC content of all coatings; a measure of the cumulative amount of 5 VOC recovered by the control device over a nominal 1 month period; the average inward face velocity across all natural draft openings of a total enclosure; and other parameters that demonstrate a total enclosure has been properly installed. The initial notifications are used to determine the compliance provisions that would apply to an affected facility. Performance test reports are needed to document for the Agency that a source is capable of complying with the emission standard, and under what operating conditions compliance was achieved. The semiannual reports of no exceedances or of compliance, and the quarterly reports of periods of noncompliance are used for problem identification and for compliance determinations.

The information generated by the monitoring, recordkeeping and reporting requirements is used by the Agency to ensure that facilities affected by the NSPS achieve compliance with the NSPS. Adequate monitoring, recordkeeping, and reporting is necessary to ensure compliance with these standards, as required by the Clean Air Act. The information collected is also used for targeting inspections, and is of sufficient quality to be used as evidence in court.

3. Nonduplication, Consultations, and Other Collection Criteria The recordkeeping and reporting requested is required under 40 CFR Part 60 Subpart VVV.

3( a) Nonduplication If the standard has not been delegated, the information is sent to the appropriate EPA Regional Office. Otherwise, the information is sent directly to the delegated State or Local Agency. If a State or Local Agency has adopted their own similar regulation to implement the Federal Regulation, a copy of the report submitted to the State or Local agency can be sent to the Administrator in lieu of the report required by the Federal Standard. Therefore, no duplication 6 exists.

3( b) Public Notice Required Prior to ICR Submission to OMB An announcement of a public comment period for the renewal of this ICR was published in the Federal Register on September 15, 2000, ( 65FR55955). No comments were received on the burden published in the Federal Register.

3( c) Consultations No comments were received on the burden published in the Federal Register.

3( d) Effects of Less Frequent Collection Less frequent information collection would decrease the margin of assurance that facilities are continuing to meet the required standards. Requirements for information gathering and recordkeeping are useful techniques to ensure that good operation and maintenance practices are applied and emission limitations are met. If the information required by these standards was collected less frequently, the likelihood of detecting poor operation and maintenance of control equipment and noncompliance would decrease.

3( e) General Guidelines None of these reporting or recordkeeping requirements violate any of the regulations established by OMB in 5 CFR 1320.5.

3( f) Confidentiality The required information consists of emissions data and other information that have been determined not to be private. However, any information submitted to the Agency for which a claim of confidentiality is made will be safeguarded according to the Agency policies set forth in Title 40, Chapter 1, Part 2, Subpart B  Confidentiality of Business Information ( see 40 CFR 2; 41 7 FR 36902, September 1, 1976; amended by 43 FR 40000, September 8, 1978; 43 FR 42251,

September 20, 1978; 44 FR 17674, March 23, 1979).

3( g) Sensitive Questions None of the reporting or recordkeeping requirements contain sensitive questions.

4. The Respondents and the Information Requested 4( a) Respondents/ SIC Codes The respondents of the recordkeeping and reporting requirements are polymeric coating of supporting substrates facilities including:

Regulation SIC Codes NAICS Codes NSPS Subpart VVV  Polymeric Coating of Supporting Substrates Facilities 2241 2295 2296 2394 3052 3053 3069 313221 31332 314992 314912 32622 339991 31332 315299 315999 339113 33992 339932 326192 326299 4( b) Information Requested ( i) Data Items All data in this ICR that is recorded and/ or reported is required by 40 CFR Part 60 Subpart VVV.

A source must make the following reports: 8 Reports for NSPS SUBPART VVV Construction/ reconstruction. 60.7( a)( 1)

Actual startup. 60.7( a)( 3)

Initial performance test results. 60.8 ( a)

Initial performance test. 60.8( d)

Demonstration of continuous monitoring system. 60.7( a)( 5)

Physical or operational change. 60.7( a)( 4)

Projected and actual VOC use, if VOC use is less than 95.0Mg/ yr or less than 130 Mg/ yr. 60.747 Excess emissions or periods of noncompliance quarterly. 60.747( d)( 1)( 6) and 60.747( e)( 2)

No excess emissions/ no deviations from operating parameters semiannually. 60.747( d)( 7) and 60.747( e)( 1)

A source must maintain the following records:

Recordkeeping for NSPS SUBPART VVV Record startups, shutdowns, malfunctions, periods where the continuous monitoring system is inoperative. 60.7( b)

Records for performance test measurements. 60.8( a)

Record projected VOC use and actual 12 month VOC use, operating parameters ( e. g., concentration level of organic compounds, periods of actual coating operations, system efficiency, average combustion temperature, gas temperature before and after the catalytic bed) of the control device ( e. g., carbon absorption system, thermal incinerator, and catalytic incinerator) and other parameters depending on the compliance method being used 60.747 Records for sources with continuous monitoring systems. 60.7( f)

Records are required to be retained for 2 years. The first 2 years of records must be kept onsite. 60.747( h) 9 ii. Respondent Activities Respondent Activities Read instructions.

Install, calibrate, maintain, and operate required monitoring devices to continuously monitor the concentration level of organic compounds, the combustion temperature, gas temperature or other value of the chosen parameter, depending on the control device used. 60.744( c g)

Monitor projected and actual VOC use. 60.744( b)

Perform performance tests and use the appropriate reference methods: Reference Method 24 test to determine VOC content in coating or formulation data ( if approved by Administrator); Reference method 25 ( or alternative methods 18, or 25A) to determine incinerator VOC gas streams concentration, the efficiency of a fixed bed carbon adsorption system; Method 1 or 1A for sample and velocity traverses; Method 2, 2A, 2C or 2D for velocity and volumetric rates; Method 3 for gas analysis; and Method 4 for stack gas moisture measurements.

Write the notifications and reports listed above.

Enter information required to be recorded above.

Submit the required reports developing, acquiring, installing, and utilizing technology and systems for the purpose of collecting, validating, and verifying information.

Develop, acquire, install, and utilize technology and systems for the purpose of processing and maintaining information.

Develop, acquire, install, and utilize technology and systems for the purpose of disclosing and providing information.

Adjust the existing ways to comply with any previously applicable instructions and requirements.

Train personnel to be able to respond to a collection of information.

Transmit, or otherwise disclose the information.

5. The Information Collected  Agency Activities, Collection Methodology, and Information Management 10 5( a) Agency Activities EPA conducts the following activities in connection with the acquisition, analysis, storage,

and distribution of the required information.

Agency Activities Observe initial performance tests and repeat performance tests if necessary.

Review notifications and reports, including performance test reports, and excess emissions reports, required to be submitted by industry.

Audit facility records.

Input, analyze, and maintain data in the Aerometric Information Retrieval System ( AIRS) database.

5( b) Collection Methodology and Management Following notification of startup, the reviewing authority might inspect the source to determine whether the pollution control devices are properly installed and operated. Performance test reports are used by the Agency to discern a source's initial capability to comply with the emission standard, and note the operating conditions under which compliance was achieved. Data and records maintained by the respondents are tabulated and published for use in compliance and enforcement programs. The quarterly reports of non compliance and semiannual reports of compliance are used for problem identification, as a check on source operation and maintenance,

and for compliance determinations.

Information contained in the reports is entered into AIRS which is operated and maintained by EPA's Office of Air Quality Planning and Standards. AIRS is EPA's database for the collection, maintenance, and retrieval of compliance and annual emission inventory data for over 100,000 industrial and government owned facilities. EPA uses AIRS for tracking air pollution 11 compliance and enforcement by Local and State regulatory agencies, and EPA Regional Offices and Headquarters. EPA and its delegated Authorities can edit, store, retrieve and analyze the data.

The records required by this regulation must be retained by the owner or operator for two years.

5( c) Small Entity Flexibility The recordkeeping and reporting requirements were selected within the context of this specific subpart and the specific process equipment and pollutant( s). The impact on small businesses was accounted for in the regulation development and the requirements reflect the burden on small businesses. Even though the recordkeeping and reporting requirements are the same for small and larger businesses, to the extent that larger businesses can use economies of scale to reduce their burden, the overall burden will be reduced. The Agency considers these requirements the minimum needed to ensure compliance and, therefore, cannot reduce them further for small businesses.

5( d) Collection Schedule The specific frequency for each information collection activity within this request is shown in Table 2: Industry Burden.

6. Estimating the Burden and Cost of the Collection Table 2 documents the computation of individual burdens for the recordkeeping and reporting requirements applicable to the industry for each of the Subparts included in this ICR.

The individual burdens are expressed under standardized headings believed to be consistent with the concept of burden under the Paperwork Reduction Act. Where appropriate, specific tasks and major assumptions have been identified. Responses to this information collection are mandatory. 12 40 CFR Part 60.747.

The Agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

6( a) Estimating Respondent Burden The average annual burden to industry over the next three years from these recordkeeping and reporting requirements is estimated at 14,366 person hours. These hours are based on Agency studies and background documents from the development of the standards or test methods,

Agency knowledge and experience with the NSPS program, the previously approved ICR, and any comments received.

6( b) Estimating Respondent Costs ( i) Estimating Labor Costs This ICR uses the following labor rate: $ 57.12 per hour for Technical. This rate is from the United States Department of Commerce Bureau of Labor Statistics, March 2001, Table 10:

Employment Costs for Private Industry by Occupational and Industry Group. The rates are from column 1: Total compensation. The wage rates have been loaded by adding 110% overhead:

Technical $ 57.12 ($ 27.20 + 110%)

We assume a technical labor rate for all respondents' activities since most activities will be of this nature, and, therefore, is our best estimate for calculating respondent burden.

( ii) Estimating Capital and Operations and Maintenance Costs The type of industry costs associated with the information collection activity in the standards are labor, capital expenditures for monitoring devices, and operation and maintenance of those devices. The capital start up costs are one time costs when a facility becomes subject to the 13 standard. The annual operations and maintenance costs are the ongoing costs to maintain the monitor. Total respondent costs have been calculated on the addition of the capital start up costs and the annual operations and maintenance costs.

( iii) Capital/ Start up vs. Operating and Maintenance ( O& M) Costs Capital/ Start up vs. Operating and Maintenance ( O& M) Costs ( A)

Continuous Monitoring device ( B)

Start up cost ($) for 1 affected facility ( C)

# of new affected facilities to start up ( D)

Total start up ( B X C) ( E)

Annual O& M costs ($) for 1 affected facility ( F)

# of affected facilities with O& M ( G)

Total O& M ( E X F)

VOC monitor 35,000 1 35,000 7,500 56 420,000 Temperature monitor 7,500 1 7,500 1,800 56 100,800 The total capital/ start up costs for this ICR are $ 42,500. This is the total of column D.

This cost is shown on the OMB 83 I form in block 14 letter a: Total annualized capital/ startup costs. The numbers in block 14 of the OMB 83 I form are rounded to the nearest thousand and are truncated to show the cost in thousands of dollars.

The total operating and maintenance ( O& M) costs for this ICR are $ 520,800. This is the total of column G. This cost is shown on the OMB 83 I form in block 14 letter b: Total annual costs ( O& M). The numbers in block 14 of the OMB 83 I form are rounded to the nearest thousand and are truncated to show the cost in thousands of dollars.

The total respondent costs have been calculated on the addition of the capital start up costs and the annual operations and maintenance costs. The average annual cost for capital and 14 operations and maintenance costs to industry over the next three years of the ICR is estimated to be $ 564,000. This cost is shown on the OMB 83 I form in block 14 letter c: Total annualized cost requested. The numbers in block 14 of the OMB 83 I form are rounded to the nearest thousand and are truncated to show the cost in thousands of dollars.

6( c) Estimating Agency Burden and Cost The only Federal costs are user costs associated with analysis of the reported information.

Publication and distribution of the information are part of the AIRS program. Examination of records to be maintained by the respondents will occur as part of the periodic inspection of sources, which is part of EPA's overall compliance and enforcement program.

The average annual Federal Government cost during the 3 years of the ICR is estimated to be $ 27,947 ( from Table 1). This cost is based on an average labor rate of a GS 12 step 1 employee rate. This rate is from OPM's 2001 General Schedule ( GS) base annual salary data,

excluding locality pay, basic rates, and travel associated with compliance activities. To derive the hourly estimates, we divided annual compensation estimates by 2,080 which is the average number of hours worked during the Federal calendar year. We then multiplied hourly rates by the standard government benefits multiplication factor of 1.6 to account for overhead expenses. Details upon which this estimate is based appear in Table 1: Agency Burden.

6( d) Estimating the Respondent Universe and Total Burden and Costs 15 Respondent Universe Regulation Title ( A)

# new sources per year ( B)

# of initial reports for new sources ( C)

# existing sources ( D)

# of reports for existing sources ( E)

total annual responses ( A. xB.)+( CxD)

NSPS Subpart VVV  Polymeric Coating of Supporting Substrates Facilities 5 4 51 3 173 The number of total respondents is 56. This number is the sum of Column A and Column C of the Respondent Universe table. It is shown on the OMB 83 I form in block 13 a. This is the number of existing sources plus the number of new sources anticipated in one year.

The total annual responses is 173. This number is in column E of the Respondent Universe table. It is shown on the OMB 83 I form in block 13 b. The total annual labor costs are $ 820,557.

The total annual hours requested are 14,366. This number is shown on the OMB 83 I form in block 13 c. Details upon which this estimate is based appear in Table 2: Industry Burden.

The total annual capital and O& M costs to the regulated entity are $ 564,000. This number is shown on the OMB 83 I form in block 14 c. These costs are detailed in section 6 b ( iii)

Capital/ Start up vs. Operating and Maintenance ( O& M) Costs.

6( e) Bottom Line Burden Hours And Cost Tables See the attached Tables for both Government and Industry burden estimates.

6( f) Reasons for Change in Burden The increase in cost burden from the most recently approved ICR is due to an adjustment 16 in the number of facilities for monitor operation and maintenance ( O& M) costs, and the use of updated labor rates. In the previous ICR, the number of facilities used to calculate the O& M costs was only for the new sources. This ICR has included the O& M costs for the existing sources which increased the total O& M costs. The labor rate for industry is based on the United States Department of Commerce Bureau of Labor Statistics Employment Costs for Private Industry by Occupational and Industry Groups for technical personnel, Table 10, March 2001. The labor rate for federal employees is based on the annual wage of a government employee at a grade GS 12,

step 1.

The decrease in hour burden from the most recently approved ICR is due to a change in the rule which deleted the " anticipated startup date" as a reporting requirement. This change is reflected in the deletion of this reporting requirement and its associated burden in Table 2.

6( g) Burden Statement Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations are listed 17 in 40 CFR Part 9 and 48 CFR Chapter 15.

Send comments on the Agency's need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimizing respondent burden, including through the use of automated collection techniques to Ms. Susan Auby, Collection Strategies Division,

( Mail Code 2822), Office of Environmental Information ( OEI), United States Environmental Protection Agency, 1200 Pennsylvania Avenue, Washington, D. C. 20460 0001; and to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street, NW,

Washington, DC 20503, Attention: Desk Officer for EPA. Include the EPA ICR number 1284.06 and OMB Control Number 2060 0181 in any correspondence.

Part B of the Supporting Statement This part is not applicable because no statistical methods were used in collecting this information.


32. In Sec.  195.64, paragraph (c)(1)(iii) is removed.

0
33. Section 195.204 is revised to read as follows:

Sec.  195.204  Inspection--general.

    Inspection must be provided to ensure that the installation of pipe
or pipeline systems is in accordance with the requirements of this
subpart. Any operator personnel used to perform the inspection must be
trained and qualified in the phase of construction to be inspected. An
operator must not use operator personnel to perform a required
inspection if the operator personnel performed the construction task
requiring inspection. Nothing in this section prohibits the operator
from inspecting construction tasks with operator personnel who are
involved in other construction tasks.
0
34. In Sec.  195.214, paragraph (a) is revised to read as follows:

Sec.  195.214  Welding procedures.

    (a) Welding must be performed by a qualified welder or welding
operator in accordance with welding procedures qualified under section
5, section 12 or Appendix A of API Std 1104 (incorporated by reference,
see Sec.  195.3), or section IX of ASME Boiler and Pressure Vessel Code
(BPVC) (incorporated by reference, see Sec.  195.3). The quality of the
test welds used to qualify welding procedures must be determined by
destructive testing.
* * * * *

0
35. In Sec.  195.222 the heading, paragraph (a), the introductory text
of paragraph (b), and paragraph (b)(2) are revised to read as follows:

Sec.  195.222  Welders and welding operators: Qualification of welders
and welding operators.

    (a) Each welder or welding operator must be qualified in accordance
with section 6, section 12 or Appendix A of API Std 1104 (incorporated
by reference, see Sec.  195.3), or section IX of ASME Boiler and
Pressure Vessel Code (BPVC), (incorporated by reference, see Sec.
195.3), except that a welder or welding operator qualified under an
earlier edition than an edition listed in Sec.  195.3, may weld but may
not re-qualify under that earlier edition.
    (b) No welder or welding operator may weld with a welding process
unless, within the preceding 6 calendar months, the welder or welding
operator has--
* * * * *
    (2) Had one weld tested and found acceptable under section 9 or
Appendix A of API Std 1104 (incorporated by reference, see Sec.
195.3).
0
36. In Sec.  195.228, paragraph (b) is revised to read as follows:

Sec.  195.228  Welds and welding inspection: Standards of
acceptability.

* * * * *
    (b) The acceptability of a weld is determined according to the
standards in section 9 or Appendix A of API Std 1104 (incorporated by
reference, see Sec.  195.3). Appendix A of API Std 1104 may not be used
to accept cracks.

0
37. In Sec.  195.234, paragraph (d) is revised to read as follows:

Sec.  195.234  Welds: Nondestructive testing.

* * * * *
    (d) During construction, at least 10 percent of the girth welds
made by each welder and welding operator during each welding day must
be nondestructively tested over the entire circumference of the weld.
* * * * *

0
38. In Sec.  195.307 paragraphs (c) and (d) are revised to read as
follows:

Sec.  195.307  Pressure testing aboveground breakout tanks.

* * * * *
    (c) For aboveground breakout tanks built to API Std 650
(incorporated by reference, see Sec.  195.3) and first placed in
service after October 2, 2000, testing must be in accordance with
sections 7.3.5 and 7.3.6 of API Standard 650 (incorporated by
reference, see Sec.  195.3).
    (d) For aboveground atmospheric pressure breakout tanks constructed
of carbon and low alloy steel, welded or riveted, and non-refrigerated
tanks built to API Std 650 or its predecessor Standard 12 C that are
returned to service after October 2, 2000, the necessity for the
hydrostatic testing of repair, alteration, and reconstruction is
covered in section 12.3 of API Standard 653 (incorporated by reference,
see Sec.  195.3).
* * * * *

0
39. In Sec.  195.428, paragraph (c) is revised to read as follows:

Sec.  195.428  Overpressure safety devices and overfill protection
systems.

* * * * *
    (c) Aboveground breakout tanks that are constructed or
significantly altered according to API Std 2510 (incorporated by
reference, see Sec.  195.3) after October 2, 2000, must have an
overfill protection system installed according to API Std 2510, section
7.1.2. Other aboveground breakout tanks with 600 gallons (2271 liters)
or more of storage capacity that are constructed or significantly
altered after October 2, 2000, must have an overfill protection system
installed according to API RP 2350 (incorporated by reference, see
Sec.  195.3). However, an operator need not comply with any part of API
RP 2350 for a particular breakout tank if the operator describes in the
manual required by Sec.  195.402 why compliance with that part is not
necessary for safety of the tank.
* * * * *
0
40. In Sec.  195.452, paragraph (h)(4)(i) introductory text and
paragraph (m) are revised to read as follows:

Sec.  195.452  Pipeline integrity management in high consequence areas.

* * * * *
    (h) * * *
    (4) * * *
    (i) Immediate repair conditions. An operator's evaluation and
remediation schedule must provide for immediate repair conditions. To
maintain safety, an operator must temporarily reduce the operating
pressure or shut down the pipeline until the operator completes the
repair of these conditions. An operator must calculate the temporary
reduction in operating pressure using the formulas referenced in
paragraph (h)(4)(i)(B) of this section. If no suitable remaining
strength calculation method can be identified, an operator must
implement a minimum 20 percent or greater operating pressure reduction,
based on actual operating pressure for two months prior to the date of
inspection, until the anomaly is repaired. An operator must treat the
following conditions as immediate repair conditions:
* * * * *
    (m) How does an operator notify PHMSA? An operator must provide any
notification required by this section by:
    (1) Sending the notification by electronic mail to
<EMAIL_ADDRESS>or
    (2) Sending the notification by mail to ATTN: Information Resources
Manager, DOT/PHMSA/OPS, East Building, 2nd Floor, E22-321, 1200 New
Jersey Ave SE., Washington, DC 20590.

0
41. In Sec.  195.505 paragraph (i) is revised to read as follows:

Sec.  195.505  Qualification program.

* * * * *
    (i) After December 16, 2004, notify the Administrator or a state
agency participating under 49 U.S.C. Chapter 601 if the operator
significantly modifies the program after the administrator or state
agency has verified that it complies with this section. Notifications
to PHMSA may be submitted by electronic mail to
<EMAIL_ADDRESS>or by mail to ATTN: Information
Resources Manager DOT/PHMSA/OPS, East Building, 2nd Floor, E22-321, New
Jersey Avenue SE., Washington, DC 20590.

0
42. Section 195.571 is revised to read as follows:

Sec.  195.571  What criteria must I use to determine the adequacy of
cathodic protection?

    Cathodic protection required by this subpart must comply with one
or more of the applicable criteria and other considerations for
cathodic protection contained paragraphs 6.2.2, 6.2.3, 6.2.4, 6.2.5 and
6.3 in NACE SP 0169 (incorporated by reference, see Sec.  195.3).

    Issued in Washington, DC, on February 26, 2015, under authority
delegated in 49 CFR 1.97.
Timothy P. Butters,
Acting Administrator.
[FR Doc. 2015-04440 Filed 3-10-15; 8:45 am]
 BILLING CODE 4910-60-P