Public Rulemaking Procedures, 68787-68790 [2019-27103]
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Federal Register / Vol. 84, No. 242 / Tuesday, December 17, 2019 / Rules and Regulations
Executive Order 13132
Executive Order 13132 encourages
independent regulatory agencies to
consider the impact of their actions on
state and local interests. The NCUA, an
independent regulatory agency as
defined in 44 U.S.C. 3502(5), voluntarily
complies with the principles of the
executive order to adhere to
fundamental federalism principles. This
final rule extends the effective date of
the 2015 Final Rule and the 2018
Supplemental Rule for two additional
years, until January 1, 2022. Therefore,
this final rule does not have a direct
effect on the states, on the relationship
between the National Government and
the states, and on the distribution of
power and responsibilities among the
various levels of government.
Assessment of Federal Regulations and
Policies on Families
The NCUA has determined this final
rule will not affect family well-being
within the meaning of section 654 of the
Treasury and General Government
Appropriations Act, 1999, Public Law
105–277, 112 Stat. 2681 (1998).
Small Business Regulatory Enforcement
Fairness Act
The Small Business Regulatory
Enforcement Fairness Act of 1996 (Pub.
L. 104–121) (SBREFA) generally
provides for congressional review of
agency rules.42 A reporting requirement
is triggered in instances where the
NCUA issues a final rule as defined by
Section 551 of the APA.43 An agency
rule, in addition to being subject to
congressional oversight, may also be
subject to a delayed effective date if the
rule is a ‘‘major rule.’’ 44 The NCUA
does not believe this rule is a ‘‘major
rule’’ within the meaning of the relevant
sections of SBREFA. As required by
SBREFA, the NCUA submitted this final
rule to the Office of Management and
Budget (OMB) for it to determine if the
final rule is a ‘‘major rule’’ for purposes
of SBREFA. OMB determined the final
rule was not a major rule. The NCUA
also will file appropriate reports with
Congress and the Government
Accountability Office so this rule may
be reviewed.
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List of Subjects in 12 CFR Part 702
Credit unions, Reporting and
recordkeeping requirements.
By the National Credit Union
Administration Board on December 12, 2019.
Gerard Poliquin,
Secretary of the Board.
[FR Doc. 2019–27141 Filed 12–16–19; 8:45 am]
BILLING CODE 7535–01–P
COMMODITY FUTURES TRADING
COMMISSION
17 CFR Part 13
RIN 3038–AE90
Public Rulemaking Procedures
Commodity Futures Trading
Commission.
ACTION: Final rule.
AGENCY:
The Commodity Futures
Trading Commission (the
‘‘Commission’’) is issuing a final rule
that amends the Commission’s
regulations to eliminate the provisions
that set forth the procedures for the
formulation, amendment, or repeal of
rules or regulations. Because the
Administrative Procedure Act (‘‘APA’’)
governs the Commission’s rulemaking
process, the Commission believes that it
is unnecessary to codify the rulemaking
process in a Commission regulation.
The amended regulation is comprised
solely of the procedure for filing
petitions for rulemakings, as the APA
does not address this process.
DATES: This rule is effective January 16,
2020.
FOR FURTHER INFORMATION CONTACT:
Herminio Castro, Senior Special
Counsel, (202) 418–6705, hcastro@
cftc.gov; Dhaval Patel, Counsel, (202)
418–5125, dpatel@cftc.gov; Office of the
General Counsel, Commodity Futures
Trading Commission, 1155 21st Street
NW, Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Introduction
Part 13 sets forth procedures for the
formulation, amendment, or repeal of
rules or regulations insofar as those
procedures directly affected the public.1
The Commission promulgated part 13
pursuant to former section 4a(j) of the
Commodity Exchange Act (‘‘CEA’’),2
which is currently section 2(a)(12) of the
CEA.3 Section 2(a)(12) states that the
Commission is authorized to promulgate
such rules and regulations as it deems
necessary to govern the operating
procedures and conduct of business of
the Commission. This section
CFR part 13.
41 FR 17536 (Apr. 27, 1976); Public Law
93–463, Sec. 101(a)(11), 88 Stat. 1391, 7 U.S.C. 4a(j).
3 7 U.S.C. 2(a)(12).
U.S.C. 801–804.
43 5 U.S.C. 551.
44 5 U.S.C. 804(2).
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authorizes, but does not require, the
Commission to promulgate regulations
governing its rulemaking process. The
Commission first adopted part 13 in
1976 and has not revised part 13 since
that time.
II. The Proposal
1 17
42 5
68787
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On September 20, 2019, the
Commission published a notice of
proposed rulemaking to amend part 13
of its regulations to eliminate the
provisions in part 13 that set forth the
process for rulemakings (‘‘NPRM’’).4
The Commission explained that as
originally adopted, part 13 was intended
to track the APA rulemaking process.
However, in its current form, part 13
does not fully conform to the APA,
which may have created ambiguity and
confusion about the procedures to be
followed by the Commission in
rulemakings.5 The NPRM further noted
that the APA governs Commission
rulemakings and that section 553 of the
APA provides for the procedures to be
followed by the Commission when
promulgating formal and informal
rulemakings.6 Because the APA governs
the Commission’s rulemaking process,
the Commission stated that it was
unnecessary to codify the rulemaking
process in a Commission regulation that
would be duplicative of the APA.7 The
Commission solicited comments on all
aspects of the NPRM. The comment
period closed on October 21, 2019.
III. Comments
The Commission received two
comment letters on the NPRM from
Better Markets, Inc. and the
Administrative Conference of the
United States (‘‘Better Markets’’ and
‘‘ACUS’’).8 The ACUS requested that the
Commission consider conforming
Commission regulation § 13.2 with
ACUS’s Recommendation 2014–6,
Petitions for Rulemaking.9 The ACUS in
particular calls for the Commission to
4 See Public Rulemaking Procedures, 84 FR 49490
(Sept. 20, 2019) (‘‘NPRM’’). The provisions being
eliminated are 17 CFR 13.1, 13.3, 13.4, 13.5, and
13.6. 17 CFR 13.2 is being retained and renumbered
as 17 CFR 13.1.
5 NPRM, 84 FR 49490. For example, § 13.4(b)
allows formal rulemakings to be conducted through
oral presentation or written submissions; in
contrast, APA sections 556 and 557 require a triallike process to be followed for formal rulemakings.
6 See 5 U.S.C. 551 et seq.; ATTORNEY
GENERAL’S MANUAL ON THE ADMINISTRATIVE
PROCEDURE ACT 9 (1947).
7 NPRM, 84 FR 49490.
8 See Better Markets Comment Letter No. 62219
(‘‘Better Markets Letter’’), dated October 21, 2019,
and ACUS Comment Letter No. 62213 (‘‘ACUS
Letter’’), dated October 9, 2019, available at https://
comments.cftc.gov/PublicComments/
CommentList.aspx?id=3030.
9 See ACUS Letter at 1.
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Federal Register / Vol. 84, No. 242 / Tuesday, December 17, 2019 / Rules and Regulations
implement procedures on petitions for
rulemaking that (1) include an
explanation of the type of data or
arguments that would be useful for the
agency to evaluate the petition, (2)
permit the electronic submission of
petitions, (3) invite public comment on
petitions for rulemaking, (4) provide a
reasoned explanation beyond a brief
statement of the grounds for denial and
make it public, and (5) leverage online
platforms like Regulations.gov to
implement the recommendations.
Better Markets agreed with the
Commission’s proposal to eliminate the
rulemaking procedures codified in part
13, stating that they provide little value
beyond that provided by the APA and
applicable case law. Better Markets,
however, recommended the
Commission implement ACUS’s
Recommendation 2014–4 concerning ex
parte communications.10
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IV. Final Rule
The Commission has considered the
comments by Better Markets and the
ACUS and is adopting part 13, as
proposed, with a few modifications.11
The Commission is amending part 13 of
its regulations to eliminate the
provisions that set forth the process for
issuing NPRMs. As noted in the
Proposal, part 13 was originally
intended to track the APA rulemaking
process, but in its current form, part 13
does not fully conform to the APA,
creating uncertainties about the
procedures to be followed by the
Commission in rulemakings. Because
the APA governs the Commission’s
rulemaking process, it is unnecessary to
codify the rulemaking process in a
Commission regulation that would be
duplicative of the APA.12
In response to ACUS’s comment, the
Commission notes that it has had
procedures for filing rulemaking
petitions since 1976 to ensure that the
public is engaged in the rulemaking
process at the Commission. Specifically,
regulation § 13.1 provides instructions
as to where the petition should be sent,
what information should be included in
the petition, and the manner in which
the Commission must respond to such
petition. The Commission believes that
retaining this provision is necessary as
the APA does not address this process.
Furthermore, a formalized process for
10 See Better Markets Letter at 5. Better Markets
cites to the ACUS Report on Ex Parte
Communications in Informal Rulemaking by Esa L.
Sferra-Bonistalli, issued on May 1, 2014. ACUS did
not comment on the elimination of the rulemaking
procedures in part 13.
11 Commission regulation § 13.2 is being
renumbered § 13.1.
12 NPRM, 84 FR 49490.
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petitions would promote consistency
and transparency in the way that the
Commission handles petitions for
rulemakings.
The Commission is adopting a change
in proposed regulation § 13.1 to allow
the electronic submission of petitions
through the Commission’s website, as
recommended by the ACUS.
Furthermore, it will be the
Commission’s policy to post the
petitions for rulemaking on the
Commission’s website.13 The electronic
submissions of petitions will facilitate
the submission of petitions for
rulemaking and thereby the public’s
engagement in the Commission’s
rulemaking process.
The Commission will decide on a
case-by-case basis whether to solicit
public comment on petitions for
rulemaking, e.g., when the Commission
seeks to obtain additional information
or to corroborate the petitioner’s
information.14 Providing the public
with an opportunity to view and
comment on petitions fosters the
public’s engagement in the rulemaking
process, but this goal may be
accomplished without a rule. Indeed,
should the Commission initiate a
rulemaking pursuant to a petition for
rulemaking, the APA requires that it
provide the public with an opportunity
to participate in the rulemaking.15 There
are also many factors involved in
posting petitions and requesting
comments, e.g., privacy concerns, trade
secrets, and resources, that the
Commission will need to consider on a
case-by-case basis that are outside the
scope of a rule. The Commission will
therefore retain its discretion whether to
request comments on the petitions.
Also, given resource constraints that the
Commission may face at any given time
and the subject matters that may be
involved, the Commission will not
specify a period for responding to
petitions for rulemaking and will retain
its discretion when to respond to a
petition.
Finally, regulation § 13.1 only
requires that the petition set forth the
text of the rule or amendment being
proposed or the rule petitioner wishes
to have repealed, and the nature of the
petitioner’s interest. It also provides that
the petition may advance arguments in
support of the petition. The Commission
is of the view that providing a
13 The Commission will retain its discretion
whether to post petitions that contain confidential
information (e.g., trade secrets, CEA section 8
material) and abusive or inappropriate language.
14 In such cases, the Commission will consider
the comments received on a petition for
rulemaking.
15 See 5 U.S.C. 553(c).
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prescriptive approach to the petition’s
constructs may have the effect of
constraining rather than aiding the
presentation of data and arguments by
petitioners. To be sure, the petitioner
should provide sufficient information
and data in order for the Commission to
make a determination on the petition for
rulemaking. In this regard, regulation
§ 13.1 provides that, except in affirming
a prior denial or when the denial is selfexplanatory, notice of a denial in whole
or in part of a petition will be
accompanied by a brief statement of the
grounds of denial. Nevertheless, in the
interest of transparency, the
Commission will endeavor to include an
explanation on a case-by-case basis
when the petition merits it.
The Commission also considered
whether to implement rules for ex parte
communications in informal
rulemaking, as suggested by Better
Markets. As Better Markets notes, the
APA does not prohibit such
communications and indeed ‘‘directs
. . . agencies to provide the public an
opportunity for meaningful public
comment, which may occur through any
type of interaction (e.g., verbally in a
meeting or in writing through a
comment letter).’’ 16 Thus, the
Commission is not promulgating a rule
on ex parte communications. In
addition, the NPRM did not propose a
rule regarding ex parte communications.
However, it is the Commission’s policy
to make public on the Commission’s
website substantive ex parte
communications, both written and oral,
that provide significant, material
information addressed to the merits of a
proposed rule. It is also the
Commission’s practice to make public
on its website all ex parte meetings held
on proposed rules, including the names
and affiliations of attendees. The
Commission is committed to
maintaining such transparency in ex
parte communications in all informal
rulemakings.
Accordingly, this final rulemaking
removes regulation §§ 13.1, 13.3, 13.4,
13.5, and 13.6 from part 13 and retains
former regulation § 13.2 as regulation
§ 13.1, as amended. In addition, the
Commission is revising the authority
citation for part 13. The authority cited
for part 13, 7 U.S.C. 4a(j), was incorrect
due to subsequent renumbering and it is
being changed to 7 U.S.C. 2(a)(12).
16 Better
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Federal Register / Vol. 84, No. 242 / Tuesday, December 17, 2019 / Rules and Regulations
V. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act 17
requires Federal agencies to consider
whether the rules they propose will
have a significant economic impact on
a substantial number of small entities
and, if so, to provide a regulatory
flexibility analysis regarding the
economic impact on those entities. This
rule would remove unnecessary and
potentially confusing provisions of part
13 and update the authority cited. As
stated above, section 553 of the APA
provides for the procedures to be
followed by the Commission when
promulgating formal and informal
rulemakings.18 Because the APA
governs the Commission’s rulemaking
process, the final rule does not change
how the Commission’s rulemaking
process is conducted. Likewise, the final
rule will not have a significant
economic impact on how small entities
would conduct themselves in the
promulgation of the Commission’s rules.
Part 13, as amended by the final rule
will not affect how entities participate
in the rulemaking process to submit
data, views or arguments. Moreover, the
final rule retains the current process for
submitting petitions for rulemakings to
the Commission. Accordingly, the
Chairman, on behalf of the Commission,
hereby certifies pursuant to 5 U.S.C.
605(b) that the final regulations will not
have a significant economic impact on
a substantial number of small entities.
B. Paperwork Reduction Act
The Paperwork Reduction Act
(‘‘PRA’’) 19 imposes certain
requirements on Federal agencies in
connection with their conducting or
sponsoring any collection of
information. This final rule does not
contain any new collection of
information requirements within the
meaning of the PRA. Accordingly, the
requirements imposed by the PRA are
not applicable to this rule.
D. Antitrust Considerations
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C. Cost-Benefit Considerations
Section 15(a) of the CEA 20 requires
the Commission to consider the costs
and benefits of its actions before
promulgating a regulation under the
CEA or issuing certain orders. Section
15(a) further specifies that the costs and
benefits shall be evaluated in light of
five broad areas of market and public
concern: (1) Protection of market
17 5
U.S.C. 601 et seq.
5 U.S.C. 551 et seq.; ATTORNEY
GENERAL’S MANUAL ON THE ADMINISTRATIVE
PROCEDURE ACT 9 (1947).
19 5 U.S.C. 3501 et seq.
20 7 U.S.C. 19(a).
18 See
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participants and the public; (2)
efficiency, competitiveness, and
financial integrity of the futures
markets; (3) price discovery; (4) sound
risk management practices; and (5) other
public interest considerations. The
Commission considers the costs and
benefits resulting from its discretionary
determinations with respect to the
section 15(a) factors.
As discussed above, the final rule
removes redundant and potentially
confusing provisions. The final rule is a
procedural rule that does not make any
substantive change to the Commission
rulemaking process. By simplifying the
rules setting forth the procedures to be
followed in rulemaking proceedings, the
Commission eliminates any confusion
about the rulemaking procedures that
apply, and thus makes them more
efficient and understandable to the
public and market participants. Further,
the final rule does not impose costs on
the public since the amendments being
finalized do not alter how the public
participates in the rulemaking process
to submit data, views or arguments.
Because the APA governs the
Commission’s rulemaking process, the
changes to part 13 do not affect the
protection of market participants and
the public as they will continue to enjoy
the ability to petition for rulemaking
and otherwise participate in the
Commission’s rulemaking process.
Further, as a procedural rule, the final
rule will not impact the efficiency,
competitiveness, and financial integrity
of the futures markets, price discovery,
or sound risk management practices.
Finally, it is in the public interest to
make the Commission’s rulemaking
procedures more efficient and
understandable to the public and market
participants.
Section 15(b) of the CEA requires the
Commission to take into consideration
the public interest to be protected by the
antitrust laws and endeavor to take the
least anticompetitive means of
achieving the objectives of the CEA, in
issuing any order or adopting any
Commission rule or regulation. The
Commission has determined that the
final amendments to part 13 have no
anticompetitive effects. As the
Commission stated in the NPRM, the
final rule simply updates part 13 to
remove unnecessary and potentially
confusing provisions and makes
technical changes. The final rule is
procedural rule that will not cause a
change in behavior that would alter the
level playing fields of regulated entities.
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68789
List of Subjects in 17 CFR Part 13
Administrative practice and
procedure, Rulemaking procedures.
For the reasons stated in the
preamble, the Commodity Futures
Trading Commission revises 17 CFR
part 13 to read as follows:
PART 13—PROCEDURES FOR
PETITIONS FOR RULEMAKING
Sec.
13.1
Petition for issuance, amendment, or
repeal of a rule.
13.2 [Reserved]
Authority: 7 U.S.C. 2(a)(12).
§ 13.1 Petition for issuance, amendment,
or repeal of a rule.
Any person may file a petition with
the Secretariat of the Commission, by
mail or electronically through the
Commission website, for the issuance,
amendment or repeal of a rule of general
application. The petition shall be
directed to Secretariat, Commodity
Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street NW,
Washington, DC 20581, and shall set
forth the text of any final rule or
amendment or shall specify the rule the
repeal of which is sought. The petition
shall further state the nature of the
petitioner’s interest and may state
arguments in support of the issuance,
amendment or repeal of the rule. The
Secretariat shall acknowledge receipt of
the petition, refer it to the Commission
for such action as the Commission
deems appropriate, and notify the
petitioner of the action taken by the
Commission. Except in affirming a prior
denial or when the denial is selfexplanatory, notice of a denial in whole
or in part of a petition shall be
accompanied by a brief statement of the
grounds of denial.
§ 13.2
[Reserved]
Issued in Washington, DC, on December
11, 2019, by the Commission.
Christopher Kirkpatrick,
Secretary of the Commission.
Note: The following appendices will not
appear in the Code of Federal Regulations.
Appendices to Public Rulemaking
Procedures—Commission Voting
Summary and Commissioner’s
Statement
Appendix 1—Commission Voting Summary
On this matter, Chairman Tarbert and
Commissioners Quintenz, Behnam, Stump,
and Berkovitz voted in the affirmative. No
Commissioner voted in the negative.
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Federal Register / Vol. 84, No. 242 / Tuesday, December 17, 2019 / Rules and Regulations
Appendix 2—Statement of Commissioner
Dan M. Berkovitz
I support the final rule to eliminate the
obsolete provisions in part 13 of the
Commission’s regulations that specify
procedures for Commission rulemakings. Part
13, adopted by the Commission more than 40
years ago, does not conform fully to the
rulemaking procedures required by the
Administrative Procedure Act (‘‘APA’’) and
followed today by the Commission. The
repeal of these procedures will avoid
potential confusion regarding the
Commission’s rulemaking process.
Notice and comment rulemaking pursuant
to the APA relies on a transparent process
and an informed public that is able to
participate in agency rulemakings. In
conjunction with today’s final rule, the
Commission is posting on its website a plainEnglish summary of its rulemaking process.
I am particularly pleased to see that in
response to public comments, the preamble
to the final rule affirms the Commission’s
commitment to transparency during the
rulemaking process.1 Specifically, the
Commission affirms its policy to post on its
website notice of all ex parte meetings held
on proposed rules, as well as any significant
material information received in such
communications. I strongly support these
policies, which promote transparency, and
aid the public’s understanding of, and
participation in, the Commission’s
rulemakings.
In addition, the final rule also preserves
the public’s right to petition the Commission
for the issuance, amendment, or repeal of a
rule. It incorporates comments received in
response to the proposed rule by allowing for
the electronic submission of such petitions
through the Commission’s website. The
preamble to the final rule also establishes a
Commission policy of posting petitions for
rulemaking on the Commission’s website.
Each of these measures is a valuable addition
to the transparency and accessibility that the
public deserves when interacting with the
Commission.
[FR Doc. 2019–27103 Filed 12–16–19; 8:45 am]
BILLING CODE 6351–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9887]
RIN 1545–BN76
Dividend Equivalents From Sources
Within the United States
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
temporary regulations.
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AGENCY:
1 See Letter from Better Markets to CFTC, Re:
Public Comment on Public Rulemaking Procedures
(RIN Number 3038–AE90), October 21, 2019.
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This document contains final
regulations relating to certain financial
products providing for payments that
are contingent upon or determined by
reference to U.S. source dividend
payments.
SUMMARY:
DATES:
Effective date: These regulations are
effective on December 17, 2019.
Applicability dates: For dates of
applicability, see § 1.871–15(r).
FOR FURTHER INFORMATION CONTACT: D.
Peter Merkel or Karen Walny at (202)
317–6938 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains final
regulations under § 1.871–15 defining
the term broker for purposes of section
871(m) of the Internal Revenue Code
(the Code). In addition, the final
regulations provide guidance relating to
when the delta of an option that is listed
on a foreign regulated exchange may be
calculated based on the delta of that
option at the close of business on the
business day before the date of issuance.
The final regulations also provide
guidance identifying which party to a
potential section 871(m) transaction is
responsible for determining whether a
transaction is a section 871(m)
transaction when multiple brokers or
dealers are involved in the transaction.
Finally, this document withdraws
temporary regulations under § 1.871–
15T regarding these matters.
I. Background on Section 871(m)
Regulations
On January 23, 2012, the Federal
Register published temporary
regulations (TD 9572) at 77 FR 3108
(2012 temporary regulations), and a
notice of proposed rulemaking by crossreference to the temporary regulations
and notice of public hearing at 77 FR
3202 (2012 proposed regulations, and
together with the 2012 temporary
regulations, 2012 section 871(m)
regulations) under section 871(m). The
2012 section 871(m) regulations related
to dividend equivalents from sources
within the United States paid to
nonresident alien individuals and
foreign corporations. Corrections to the
2012 temporary regulations were
published on February 6, 2012, March 8,
2012, and August 31, 2012, in the
Federal Register at 77 FR 5700, 77 FR
13968, and 77 FR 53141, respectively.
The Department of the Treasury
(Treasury Department) and the IRS
received written comments on the 2012
proposed regulations, and a public
hearing was held on April 27, 2012.
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On December 5, 2013, the Federal
Register published final regulations and
removal of temporary regulations (TD
9648) at 78 FR 73079 (2013 final
regulations), which finalized a portion
of the 2012 section 871(m) regulations.
On the same date, the Federal Register
published a withdrawal of notice of
proposed rulemaking, a notice of
proposed rulemaking, and a notice of
public hearing at 78 FR 73128 (2013
proposed regulations). In light of
comments on the 2012 proposed
regulations, the 2013 proposed
regulations described a new approach
for determining whether a payment
made pursuant to a notional principal
contract (NPC) or an equity-linked
instrument (ELI) is a dividend
equivalent based on the delta of the
contract. In response to written
comments on the 2013 proposed
regulations, the Treasury Department
and the IRS released Notice 2014–14,
2014–13 IRB 881, on March 24, 2014
(see § 601.601(d)(2)(ii)(b)), stating that
the Treasury Department and the IRS
anticipated limiting the application of
the rules with respect to specified ELIs
described in the 2013 proposed
regulations to ELIs issued on or after 90
days after the date of publication of final
regulations.
On September 18, 2015, the Federal
Register published final regulations and
temporary regulations (TD 9734), at 80
FR 56866, which finalized a portion of
the 2013 proposed regulations and
introduced new temporary regulations
based on comments received with
respect to the 2013 proposed regulations
(2015 final regulations and 2015
temporary regulations, respectively, and
together, the 2015 regulations). On the
same date, the Federal Register
published a notice of proposed
rulemaking by cross-reference to
temporary regulations and a notice of
public hearing at 80 FR 56415 (2015
proposed regulations, and together with
the 2015 final regulations, 2015 section
871(m) regulations). A correcting
amendment to the 2015 final regulations
and the 2015 proposed regulations was
published on December 7, 2015, in the
Federal Register at 80 FR 75946 and 80
FR 75956, respectively.
The Treasury Department and the IRS
received written comments on the 2015
proposed regulations. The public
hearing scheduled for January 15, 2016,
was cancelled because no request to
speak was received.
On July 1, 2016, the Treasury
Department and the IRS released Notice
2016–42, 2016–29 IRB 67 (QI Notice),
containing a proposed amended
qualified intermediary agreement. The
QI Notice included the requirements
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]]>Agencies
[Federal Register Volume 84, Number 242 (Tuesday, December 17, 2019)]
[Rules and Regulations]
[Pages 68787-68790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27103]
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 13
RIN 3038-AE90
Public Rulemaking Procedures
AGENCY: Commodity Futures Trading Commission.
ACTION: Final rule.
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SUMMARY: The Commodity Futures Trading Commission (the ``Commission'')
is issuing a final rule that amends the Commission's regulations to
eliminate the provisions that set forth the procedures for the
formulation, amendment, or repeal of rules or regulations. Because the
Administrative Procedure Act (``APA'') governs the Commission's
rulemaking process, the Commission believes that it is unnecessary to
codify the rulemaking process in a Commission regulation. The amended
regulation is comprised solely of the procedure for filing petitions
for rulemakings, as the APA does not address this process.
DATES: This rule is effective January 16, 2020.
FOR FURTHER INFORMATION CONTACT: Herminio Castro, Senior Special
Counsel, (202) 418-6705, [email protected]; Dhaval Patel, Counsel, (202)
418-5125, [email protected]; Office of the General Counsel, Commodity
Futures Trading Commission, 1155 21st Street NW, Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
I. Introduction
Part 13 sets forth procedures for the formulation, amendment, or
repeal of rules or regulations insofar as those procedures directly
affected the public.\1\ The Commission promulgated part 13 pursuant to
former section 4a(j) of the Commodity Exchange Act (``CEA''),\2\ which
is currently section 2(a)(12) of the CEA.\3\ Section 2(a)(12) states
that the Commission is authorized to promulgate such rules and
regulations as it deems necessary to govern the operating procedures
and conduct of business of the Commission. This section authorizes, but
does not require, the Commission to promulgate regulations governing
its rulemaking process. The Commission first adopted part 13 in 1976
and has not revised part 13 since that time.
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\1\ 17 CFR part 13.
\2\ See 41 FR 17536 (Apr. 27, 1976); Public Law 93-463, Sec.
101(a)(11), 88 Stat. 1391, 7 U.S.C. 4a(j).
\3\ 7 U.S.C. 2(a)(12).
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II. The Proposal
On September 20, 2019, the Commission published a notice of
proposed rulemaking to amend part 13 of its regulations to eliminate
the provisions in part 13 that set forth the process for rulemakings
(``NPRM'').\4\ The Commission explained that as originally adopted,
part 13 was intended to track the APA rulemaking process. However, in
its current form, part 13 does not fully conform to the APA, which may
have created ambiguity and confusion about the procedures to be
followed by the Commission in rulemakings.\5\ The NPRM further noted
that the APA governs Commission rulemakings and that section 553 of the
APA provides for the procedures to be followed by the Commission when
promulgating formal and informal rulemakings.\6\ Because the APA
governs the Commission's rulemaking process, the Commission stated that
it was unnecessary to codify the rulemaking process in a Commission
regulation that would be duplicative of the APA.\7\ The Commission
solicited comments on all aspects of the NPRM. The comment period
closed on October 21, 2019.
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\4\ See Public Rulemaking Procedures, 84 FR 49490 (Sept. 20,
2019) (``NPRM''). The provisions being eliminated are 17 CFR 13.1,
13.3, 13.4, 13.5, and 13.6. 17 CFR 13.2 is being retained and
renumbered as 17 CFR 13.1.
\5\ NPRM, 84 FR 49490. For example, Sec. 13.4(b) allows formal
rulemakings to be conducted through oral presentation or written
submissions; in contrast, APA sections 556 and 557 require a trial-
like process to be followed for formal rulemakings.
\6\ See 5 U.S.C. 551 et seq.; ATTORNEY GENERAL'S MANUAL ON THE
ADMINISTRATIVE PROCEDURE ACT 9 (1947).
\7\ NPRM, 84 FR 49490.
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III. Comments
The Commission received two comment letters on the NPRM from Better
Markets, Inc. and the Administrative Conference of the United States
(``Better Markets'' and ``ACUS'').\8\ The ACUS requested that the
Commission consider conforming Commission regulation Sec. 13.2 with
ACUS's Recommendation 2014-6, Petitions for Rulemaking.\9\ The ACUS in
particular calls for the Commission to
[[Page 68788]]
implement procedures on petitions for rulemaking that (1) include an
explanation of the type of data or arguments that would be useful for
the agency to evaluate the petition, (2) permit the electronic
submission of petitions, (3) invite public comment on petitions for
rulemaking, (4) provide a reasoned explanation beyond a brief statement
of the grounds for denial and make it public, and (5) leverage online
platforms like Regulations.gov to implement the recommendations.
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\8\ See Better Markets Comment Letter No. 62219 (``Better
Markets Letter''), dated October 21, 2019, and ACUS Comment Letter
No. 62213 (``ACUS Letter''), dated October 9, 2019, available at
https://comments.cftc.gov/PublicComments/CommentList.aspx?id=3030.
\9\ See ACUS Letter at 1.
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Better Markets agreed with the Commission's proposal to eliminate
the rulemaking procedures codified in part 13, stating that they
provide little value beyond that provided by the APA and applicable
case law. Better Markets, however, recommended the Commission implement
ACUS's Recommendation 2014-4 concerning ex parte communications.\10\
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\10\ See Better Markets Letter at 5. Better Markets cites to the
ACUS Report on Ex Parte Communications in Informal Rulemaking by Esa
L. Sferra-Bonistalli, issued on May 1, 2014. ACUS did not comment on
the elimination of the rulemaking procedures in part 13.
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IV. Final Rule
The Commission has considered the comments by Better Markets and
the ACUS and is adopting part 13, as proposed, with a few
modifications.\11\ The Commission is amending part 13 of its
regulations to eliminate the provisions that set forth the process for
issuing NPRMs. As noted in the Proposal, part 13 was originally
intended to track the APA rulemaking process, but in its current form,
part 13 does not fully conform to the APA, creating uncertainties about
the procedures to be followed by the Commission in rulemakings. Because
the APA governs the Commission's rulemaking process, it is unnecessary
to codify the rulemaking process in a Commission regulation that would
be duplicative of the APA.\12\
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\11\ Commission regulation Sec. 13.2 is being renumbered Sec.
13.1.
\12\ NPRM, 84 FR 49490.
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In response to ACUS's comment, the Commission notes that it has had
procedures for filing rulemaking petitions since 1976 to ensure that
the public is engaged in the rulemaking process at the Commission.
Specifically, regulation Sec. 13.1 provides instructions as to where
the petition should be sent, what information should be included in the
petition, and the manner in which the Commission must respond to such
petition. The Commission believes that retaining this provision is
necessary as the APA does not address this process. Furthermore, a
formalized process for petitions would promote consistency and
transparency in the way that the Commission handles petitions for
rulemakings.
The Commission is adopting a change in proposed regulation Sec.
13.1 to allow the electronic submission of petitions through the
Commission's website, as recommended by the ACUS. Furthermore, it will
be the Commission's policy to post the petitions for rulemaking on the
Commission's website.\13\ The electronic submissions of petitions will
facilitate the submission of petitions for rulemaking and thereby the
public's engagement in the Commission's rulemaking process.
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\13\ The Commission will retain its discretion whether to post
petitions that contain confidential information (e.g., trade
secrets, CEA section 8 material) and abusive or inappropriate
language.
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The Commission will decide on a case-by-case basis whether to
solicit public comment on petitions for rulemaking, e.g., when the
Commission seeks to obtain additional information or to corroborate the
petitioner's information.\14\ Providing the public with an opportunity
to view and comment on petitions fosters the public's engagement in the
rulemaking process, but this goal may be accomplished without a rule.
Indeed, should the Commission initiate a rulemaking pursuant to a
petition for rulemaking, the APA requires that it provide the public
with an opportunity to participate in the rulemaking.\15\ There are
also many factors involved in posting petitions and requesting
comments, e.g., privacy concerns, trade secrets, and resources, that
the Commission will need to consider on a case-by-case basis that are
outside the scope of a rule. The Commission will therefore retain its
discretion whether to request comments on the petitions. Also, given
resource constraints that the Commission may face at any given time and
the subject matters that may be involved, the Commission will not
specify a period for responding to petitions for rulemaking and will
retain its discretion when to respond to a petition.
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\14\ In such cases, the Commission will consider the comments
received on a petition for rulemaking.
\15\ See 5 U.S.C. 553(c).
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Finally, regulation Sec. 13.1 only requires that the petition set
forth the text of the rule or amendment being proposed or the rule
petitioner wishes to have repealed, and the nature of the petitioner's
interest. It also provides that the petition may advance arguments in
support of the petition. The Commission is of the view that providing a
prescriptive approach to the petition's constructs may have the effect
of constraining rather than aiding the presentation of data and
arguments by petitioners. To be sure, the petitioner should provide
sufficient information and data in order for the Commission to make a
determination on the petition for rulemaking. In this regard,
regulation Sec. 13.1 provides that, except in affirming a prior denial
or when the denial is self-explanatory, notice of a denial in whole or
in part of a petition will be accompanied by a brief statement of the
grounds of denial. Nevertheless, in the interest of transparency, the
Commission will endeavor to include an explanation on a case-by-case
basis when the petition merits it.
The Commission also considered whether to implement rules for ex
parte communications in informal rulemaking, as suggested by Better
Markets. As Better Markets notes, the APA does not prohibit such
communications and indeed ``directs . . . agencies to provide the
public an opportunity for meaningful public comment, which may occur
through any type of interaction (e.g., verbally in a meeting or in
writing through a comment letter).'' \16\ Thus, the Commission is not
promulgating a rule on ex parte communications. In addition, the NPRM
did not propose a rule regarding ex parte communications. However, it
is the Commission's policy to make public on the Commission's website
substantive ex parte communications, both written and oral, that
provide significant, material information addressed to the merits of a
proposed rule. It is also the Commission's practice to make public on
its website all ex parte meetings held on proposed rules, including the
names and affiliations of attendees. The Commission is committed to
maintaining such transparency in ex parte communications in all
informal rulemakings.
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\16\ Better Markets Letter at 2.
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Accordingly, this final rulemaking removes regulation Sec. Sec.
13.1, 13.3, 13.4, 13.5, and 13.6 from part 13 and retains former
regulation Sec. 13.2 as regulation Sec. 13.1, as amended. In
addition, the Commission is revising the authority citation for part
13. The authority cited for part 13, 7 U.S.C. 4a(j), was incorrect due
to subsequent renumbering and it is being changed to 7 U.S.C. 2(a)(12).
[[Page 68789]]
V. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act \17\ requires Federal agencies to
consider whether the rules they propose will have a significant
economic impact on a substantial number of small entities and, if so,
to provide a regulatory flexibility analysis regarding the economic
impact on those entities. This rule would remove unnecessary and
potentially confusing provisions of part 13 and update the authority
cited. As stated above, section 553 of the APA provides for the
procedures to be followed by the Commission when promulgating formal
and informal rulemakings.\18\ Because the APA governs the Commission's
rulemaking process, the final rule does not change how the Commission's
rulemaking process is conducted. Likewise, the final rule will not have
a significant economic impact on how small entities would conduct
themselves in the promulgation of the Commission's rules. Part 13, as
amended by the final rule will not affect how entities participate in
the rulemaking process to submit data, views or arguments. Moreover,
the final rule retains the current process for submitting petitions for
rulemakings to the Commission. Accordingly, the Chairman, on behalf of
the Commission, hereby certifies pursuant to 5 U.S.C. 605(b) that the
final regulations will not have a significant economic impact on a
substantial number of small entities.
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\17\ 5 U.S.C. 601 et seq.
\18\ See 5 U.S.C. 551 et seq.; ATTORNEY GENERAL'S MANUAL ON THE
ADMINISTRATIVE PROCEDURE ACT 9 (1947).
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B. Paperwork Reduction Act
The Paperwork Reduction Act (``PRA'') \19\ imposes certain
requirements on Federal agencies in connection with their conducting or
sponsoring any collection of information. This final rule does not
contain any new collection of information requirements within the
meaning of the PRA. Accordingly, the requirements imposed by the PRA
are not applicable to this rule.
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\19\ 5 U.S.C. 3501 et seq.
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C. Cost-Benefit Considerations
Section 15(a) of the CEA \20\ requires the Commission to consider
the costs and benefits of its actions before promulgating a regulation
under the CEA or issuing certain orders. Section 15(a) further
specifies that the costs and benefits shall be evaluated in light of
five broad areas of market and public concern: (1) Protection of market
participants and the public; (2) efficiency, competitiveness, and
financial integrity of the futures markets; (3) price discovery; (4)
sound risk management practices; and (5) other public interest
considerations. The Commission considers the costs and benefits
resulting from its discretionary determinations with respect to the
section 15(a) factors.
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\20\ 7 U.S.C. 19(a).
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As discussed above, the final rule removes redundant and
potentially confusing provisions. The final rule is a procedural rule
that does not make any substantive change to the Commission rulemaking
process. By simplifying the rules setting forth the procedures to be
followed in rulemaking proceedings, the Commission eliminates any
confusion about the rulemaking procedures that apply, and thus makes
them more efficient and understandable to the public and market
participants. Further, the final rule does not impose costs on the
public since the amendments being finalized do not alter how the public
participates in the rulemaking process to submit data, views or
arguments.
Because the APA governs the Commission's rulemaking process, the
changes to part 13 do not affect the protection of market participants
and the public as they will continue to enjoy the ability to petition
for rulemaking and otherwise participate in the Commission's rulemaking
process. Further, as a procedural rule, the final rule will not impact
the efficiency, competitiveness, and financial integrity of the futures
markets, price discovery, or sound risk management practices. Finally,
it is in the public interest to make the Commission's rulemaking
procedures more efficient and understandable to the public and market
participants.
D. Antitrust Considerations
Section 15(b) of the CEA requires the Commission to take into
consideration the public interest to be protected by the antitrust laws
and endeavor to take the least anticompetitive means of achieving the
objectives of the CEA, in issuing any order or adopting any Commission
rule or regulation. The Commission has determined that the final
amendments to part 13 have no anticompetitive effects. As the
Commission stated in the NPRM, the final rule simply updates part 13 to
remove unnecessary and potentially confusing provisions and makes
technical changes. The final rule is procedural rule that will not
cause a change in behavior that would alter the level playing fields of
regulated entities.
List of Subjects in 17 CFR Part 13
Administrative practice and procedure, Rulemaking procedures.
For the reasons stated in the preamble, the Commodity Futures
Trading Commission revises 17 CFR part 13 to read as follows:
PART 13--PROCEDURES FOR PETITIONS FOR RULEMAKING
Sec.
13.1 Petition for issuance, amendment, or repeal of a rule.
13.2 [Reserved]
Authority: 7 U.S.C. 2(a)(12).
Sec. 13.1 Petition for issuance, amendment, or repeal of a rule.
Any person may file a petition with the Secretariat of the
Commission, by mail or electronically through the Commission website,
for the issuance, amendment or repeal of a rule of general application.
The petition shall be directed to Secretariat, Commodity Futures
Trading Commission, Three Lafayette Centre, 1155 21st Street NW,
Washington, DC 20581, and shall set forth the text of any final rule or
amendment or shall specify the rule the repeal of which is sought. The
petition shall further state the nature of the petitioner's interest
and may state arguments in support of the issuance, amendment or repeal
of the rule. The Secretariat shall acknowledge receipt of the petition,
refer it to the Commission for such action as the Commission deems
appropriate, and notify the petitioner of the action taken by the
Commission. Except in affirming a prior denial or when the denial is
self-explanatory, notice of a denial in whole or in part of a petition
shall be accompanied by a brief statement of the grounds of denial.
Sec. 13.2 [Reserved]
Issued in Washington, DC, on December 11, 2019, by the
Commission.
Christopher Kirkpatrick,
Secretary of the Commission.
Note: The following appendices will not appear in the Code of
Federal Regulations.
Appendices to Public Rulemaking Procedures--Commission Voting Summary
and Commissioner's Statement
Appendix 1--Commission Voting Summary
On this matter, Chairman Tarbert and Commissioners Quintenz,
Behnam, Stump, and Berkovitz voted in the affirmative. No
Commissioner voted in the negative.
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Appendix 2--Statement of Commissioner Dan M. Berkovitz
I support the final rule to eliminate the obsolete provisions in
part 13 of the Commission's regulations that specify procedures for
Commission rulemakings. Part 13, adopted by the Commission more than
40 years ago, does not conform fully to the rulemaking procedures
required by the Administrative Procedure Act (``APA'') and followed
today by the Commission. The repeal of these procedures will avoid
potential confusion regarding the Commission's rulemaking process.
Notice and comment rulemaking pursuant to the APA relies on a
transparent process and an informed public that is able to
participate in agency rulemakings. In conjunction with today's final
rule, the Commission is posting on its website a plain-English
summary of its rulemaking process.
I am particularly pleased to see that in response to public
comments, the preamble to the final rule affirms the Commission's
commitment to transparency during the rulemaking process.\1\
Specifically, the Commission affirms its policy to post on its
website notice of all ex parte meetings held on proposed rules, as
well as any significant material information received in such
communications. I strongly support these policies, which promote
transparency, and aid the public's understanding of, and
participation in, the Commission's rulemakings.
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\1\ See Letter from Better Markets to CFTC, Re: Public Comment
on Public Rulemaking Procedures (RIN Number 3038-AE90), October 21,
2019.
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In addition, the final rule also preserves the public's right to
petition the Commission for the issuance, amendment, or repeal of a
rule. It incorporates comments received in response to the proposed
rule by allowing for the electronic submission of such petitions
through the Commission's website. The preamble to the final rule
also establishes a Commission policy of posting petitions for
rulemaking on the Commission's website. Each of these measures is a
valuable addition to the transparency and accessibility that the
public deserves when interacting with the Commission.
[FR Doc. 2019-27103 Filed 12-16-19; 8:45 am]
BILLING CODE 6351-01-P
