section_id,title_number,title_name,chapter,subchapter,part_number,part_name,subpart,subpart_name,section_number,section_heading,agency,authority,source_citation,amendment_citations,full_text
10:10:1.0.1.1.21.0.91.1,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§ 31.1 Purpose and scope.,NRC,,,"[65 FR 79187, Dec. 18, 2000]",This part establishes general licenses for the possession and use of byproduct material and a general license for ownership of byproduct material. Specific provisions of 10 CFR Part 30 are applicable to general licenses established by this part. These provisions are specified in § 31.2 or in the particular general license.
10:10:1.0.1.1.21.0.91.10,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§ 31.10 General license for strontium 90 in ice detection devices.,NRC,,,"[30 FR 9905, Aug. 10, 1965, as amended at 38 FR 22220, Aug. 17, 1973; 40 FR 8785, Mar. 3, 1975; 42 FR 28896, June 6, 1977; 43 FR 6922, Feb. 17, 1978; 56 FR 23471, May 21, 1991; 56 FR 61352, Dec. 3, 1991; 58 FR 67659, Dec. 22, 1993]","(a) A general license is hereby issued to own, receive, acquire, possess, use, and transfer strontium 90 contained in ice detection devices, provided each device contains not more than fifty microcuries of strontium 90 and each device has been manufactured or initially transferred in accordance with the specifications contained in a license issued pursuant to § 32.61 of this chapter or in accordance with the specifications contained in a specific license issued to the manufacturer by an Agreement State which authorizes manufacture of the ice detection devices for distribution to persons generally licensed by the Agreement State.

(b) Persons who own, receive, acquire, possess, use, or transfer strontium 90 contained in ice detection devices pursuant to the general license in paragraph (a) of this section:

(1) Shall, upon occurrence of visually observable damage, such as a bend or crack or discoloration from overheating, to the device, discontinue use of the device until it has been inspected, tested for leakage and repaired by a person holding a specific license pursuant to part 30 or 32 of this chapter or from an Agreement State to manufacture or service such devices; or shall dispose of the device pursuant to the provisions of § 20.2001.

(2) Shall assure that all labels affixed to the device at the time of receipt, and which bear a statement which prohibits removal of the labels, are maintained thereon;

(3) Are exempt from the requirements of parts 19, 20, and 21, of this chapter except that such persons shall comply with the provisions of §§ 20.2001, 20.2201, and 20.2202 of this chapter.

(c) The general license does not authorize the manufacture, assembly, disassembly, repair, or import of strontium 90 in ice detection devices."
10:10:1.0.1.1.21.0.91.11,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§ 31.11 General license for use of byproduct material for certain in vitro clinical or laboratory testing.,NRC,,,"[33 FR 16553, Nov. 14, 1968]","(a) A general license is hereby issued to any physician, veterinarian in the practice of veterinary medicine, clinical laboratory or hospital to receive, acquire, possess, transfer, or use, for any of the following stated tests, in accordance with the provisions of paragraphs (b), (c), (d), (e), and (f) of this section, the following byproduct materials in prepackaged units:

(1) Iodine-125, in units not exceeding 10 microcuries each for use in in vitro clinical or laboratory tests not involving internal or external administration of byproduct material, or the radiation therefrom, to human beings or animals.

(2) Iodine-131, in units not exceeding 10 microcuries each for use in in vitro clinical or laboratory tests not involving internal or external administration of byproduct material, or the radiation therefrom, to human beings or animals.

(3) Carbon-14, in units not exceeding 10 microcuries each for use in in vitro clinical or laboratory tests not involving internal or external administration of byproduct material, or the radiation therefrom, to human beings or animals.

(4) Hydrogen-3 (tritium), in units not exceeding 50 microcuries each for use in in vitro clinical or laboratory tests not involving internal or external administration of byproduct material, or the radiation therefrom, to human beings or animals.

(5) Iron-59, in units not exceeding 20 microcuries each for use in in vitro clinical or laboratory tests not involving internal or external administration of byproduct material, or the radiation therefrom, to human beings, or animals.

(6) Selenium-75, in units not exceeding 10 microcuries each for use in in vitro clinical or laboratory tests not involving internal or external administration of byproduct material, or the radiation therefrom, to human beings or animals.

(7) Mock Iodine-125 reference or calibration sources, in units not exceeding 0.05 microcurie of iodine-129 and 0.005 microcurie of americium-241 each for use in in vitro clinical or laboratory tests not involving internal or external administration of byproduct material, or the radiation therefrom, to human beings or animals.

(8) Cobalt-57, in units not exceeding 0.37 megabecquerel (10 microcuries) each for use in in vitro clinical or laboratory tests not involving internal or external administration of byproduct material, or the radiation therefrom, to human beings or animals.

(b) A person shall not receive, acquire, possess, use, or transfer byproduct material under the general license established by paragraph (a) of this section unless that person:

(1) Has filed NRC Form 483, “Registration Certificate—In Vitro Testing with Byproduct Material Under General License,” with the Director, Office of Nuclear Material Safety and Safeguards , by an appropriate method listed in § 30.6(a) of this chapter, and has received from the Commission a validated copy of NRC Form 483 with a registration number assigned; or

(2) Has a license that authorizes the medical use of byproduct material that was issued under part 35 of this chapter.

(c) A person who receives, acquires, possesses, or uses byproduct material pursuant to the general license established by paragraph (a) of this section shall comply with the following:

(1) The general licensee shall not possess at any one time, under the general license in paragraph (a) of this section, at any one location of storage or use, a total amount of iodine-125, iodine-131, selenium-75, cobalt-57 and/or iron-59 in excess of 7.4 megabecquerels (200 microcuries).

(2) The general licensee shall store the byproduct material, until used, in the original shipping container or in a container providing equivalent radiation protection.

(3) The general licensee shall use the byproduct material only for the uses authorized by paragraph (a) of this section.

(4) The general licensee shall not transfer the byproduct material except by transfer to a person authorized to receive it by a license pursuant to this chapter or from an Agreement State, nor transfer the byproduct material in any manner other than in the unopened, labeled shipping container as received from the supplier.

(5) The general licensee shall dispose of the Mock Iodine-125 reference or calibration sources described in paragraph (a)(7) of this section as required by § 20.2001.

(d) The general licensee shall not receive, acquire, possess, or use byproduct material pursuant to paragraph (a) of this section:

(1) Except as prepackaged units which are labeled in accordance with the provisions of a specific license issued under the provisions of § 32.71 of this chapter or in accordance with the provisions of a specific license issued by an Agreement State, or before November 30, 2007, and the provisions of a specific license issued by a State with comparable provisions to § 32.71 that authorize manufacture and distribution of iodine-125, iodine-131, carbon-14, hydrogen-3 (tritium), selenium-75, iron-59, cobalt-57, or Mock Iodine-125 for distribution to persons generally licensed by the Agreement State or the State with comparable provisions to § 32.71.

(2) Unless the following statement, or a substantially similar statement which contains the information called for in the following statement, appears on a label affixed to each prepackaged unit or appears in a leaflet or brochure which accompanies the package: 
 1

1  Labels authorized by the regulations in effect on September 26, 1979, may be used until one year from September 27, 1979.

This radioactive material may be received, acquired, possessed, and used only by physicians, veterinarians in the practice of veterinary medicine, clinical laboratories or hospitals and only for in vitro clinical or laboratory tests not involving internal or external administration of the material, or the radiation therefrom, to human beings or animals. Its receipt, acquisition, possession, use, and transfer are subject to the regulations and a general license of the U.S. Nuclear Regulatory Commission or of a State with which the Commission has entered into an agreement for the exercise of regulatory authority.
 
 
 
 (Name of Manufacturer)

This radioactive material may be received, acquired, possessed, and used only by physicians, veterinarians in the practice of veterinary medicine, clinical laboratories or hospitals and only for in vitro clinical or laboratory tests not involving internal or external administration of the material, or the radiation therefrom, to human beings or animals. Its receipt, acquisition, possession, use, and transfer are subject to the regulations and a general license of the U.S. Nuclear Regulatory Commission or of a State with which the Commission has entered into an agreement for the exercise of regulatory authority.

(Name of Manufacturer)

(e) The registrant possessing or using byproduct materials under the general license of paragraph (a) of this section shall report in writing to the Director, Office of Nuclear Material Safety and Safeguards , any changes in the information furnished by him in the ”Registration Certificate—In Vitro Testing With Byproduct Material Under General License.” Form NRC-483. The report shall be furnished within 30 days after the effective date of such change.

(f) Any person using byproduct material pursuant to the general license of paragraph (a) of this section is exempt from the requirements of parts 19, 20, and 21, of this chapter with respect to byproduct materials covered by that general license, except that such persons using the Mock Iodine-125 described in paragraph (a)(7) of this section shall comply with the provisions of §§ 20.2001, 20.2201, and 20.2202."
10:10:1.0.1.1.21.0.91.12,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§ 31.12 General license for certain items and self-luminous products containing radium-226.,NRC,,,"[72 FR 55927, Oct. 1, 2007]","(a) A general license is hereby issued to any person to acquire, receive, possess, use, or transfer, in accordance with the provisions of paragraphs (b), (c), and (d) of this section, radium-226 contained in the following products manufactured prior to November 30, 2007.

(1) Antiquities originally intended for use by the general public. For the purposes of this paragraph, antiquities mean products originally intended for use by the general public and distributed in the late 19th and early 20th centuries, such as radium emanator jars, revigators, radium water jars, radon generators, refrigerator cards, radium bath salts, and healing pads.

(2) Intact timepieces containing greater than 0.037 megabecquerel (1 microcurie), nonintact timepieces, and timepiece hands and dials no longer installed in timepieces.

(3) Luminous items installed in air, marine, or land vehicles.

(4) All other luminous products, provided that no more than 100 items are used or stored at the same location at any one time.

(5) Small radium sources containing no more than 0.037 megabecquerel (1 microcurie) of radium-226. For the purposes of this paragraph, “small radium sources” means discrete survey instrument check sources, sources contained in radiation measuring instruments, sources used in educational demonstrations (such as cloud chambers and spinthariscopes), electron tubes, lightning rods, ionization sources, static eliminators, or as designated by the NRC.

(b) Persons who acquire, receive, possess, use, or transfer byproduct material under the general license issued in paragraph (a) of this section are exempt from the provisions of 10 CFR parts 19, 20, and 21, and § 30.50 and 30.51 of this chapter, to the extent that the receipt, possession, use, or transfer of byproduct material is within the terms of the general license; provided, however, that this exemption shall not be deemed to apply to any such person specifically licensed under this chapter.

(c) Any person who acquires, receives, possesses, uses, or transfers byproduct material in accordance with the general license in paragraph (a) of this section:

(1) Shall notify the NRC should there be any indication of possible damage to the product so that it appears it could result in a loss of the radioactive material. A report containing a brief description of the event, and the remedial action taken, must be furnished to the Director of the Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001 within 30 days.

(2) Shall not abandon products containing radium-226. The product, and any radioactive material from the product, may only be disposed of according to § 20.2008 of this chapter or by transfer to a person authorized by a specific license to receive the radium-226 in the product or as otherwise approved by the NRC.

(3) Shall not export products containing radium-226 except in accordance with part 110 of this chapter.

(4) Shall dispose of products containing radium-226 at a disposal facility authorized to dispose of radioactive material in accordance with any Federal or State solid or hazardous waste law, including the Solid Waste Disposal Act, as authorized under the Energy Policy Act of 2005, by transfer to a person authorized to receive radium-226 by a specific license issued under part 30 of this chapter, or equivalent regulations of an Agreement State, or as otherwise approved by the NRC.

(5) Shall respond to written requests from the NRC to provide information relating to the general license within 30 calendar days of the date of the request, or other time specified in the request. If the general licensee cannot provide the requested information within the allotted time, it shall, within that same time period, request a longer period to supply the information by providing the Director of the Office of Nuclear Material Safety and Safeguards, by an appropriate method listed in § 30.6(a) of this chapter, a written justification for the request.

(d) The general license in paragraph (a) of this section does not authorize the manufacture, assembly, disassembly, repair, or import of products containing radium-226, except that timepieces may be disassembled and repaired."
10:10:1.0.1.1.21.0.91.13,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§§ 31.13-31.20 [Reserved],NRC,,,,
10:10:1.0.1.1.21.0.91.14,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§ 31.21 Maintenance of records.,NRC,,,"[53 FR 19246, May 27, 1988. Redesignated at 72 FR 55927, Oct. 1, 2007, as amended at 90 FR 55628, Dec. 3, 2025]","Each record required by this part must be legible throughout the retention period specified by each Commission regulation. The record may be the original or a reproduced copy or a microform provided that the copy or microform is authenticated by authorized personnel and that the microform is capable of producing a clear copy throughout the required retention period. The record may also be stored in electronic media with the capability for producing legible, accurate, and complete records during the required retention period. Records such as letters, drawings, specifications, must include all pertinent information such as letters, stamps, initials, and signatures. The licensee shall maintain adequate safeguards against tampering with and loss of records. This section shall cease to have effect on January 8, 2027, unless the NRC determines that the cessation deadline should be extended to a date not more than 5 years in the future after offering the public an opportunity to provide input on the costs and benefits of this section and considering that input. The NRC will publish a document in the  Federal Register  announcing its determination and revising or removing this section accordingly."
10:10:1.0.1.1.21.0.91.15,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§ 31.22 Violations.,NRC,,,"[57 FR 55072, Nov. 24, 1992. Redesignated at 72 FR 55927, Oct. 1, 2007]","(a) The Commission may obtain an injunction or other court order to prevent a violation of the provisions of—

(1) The Atomic Energy Act of 1954, as amended;

(2) Title II of the Energy Reorganization Act of 1974, as amended; or

(3) A regulation or order issued pursuant to those Acts.

(b) The Commission may obtain a court order for the payment of a civil penalty imposed under section 234 of the Atomic Energy Act:

(1) For violations of—

(i) Sections 53, 57, 62, 63, 81, 82, 101, 103, 104, 107, or 109 of the Atomic Energy Act of 1954, as amended;

(ii) Section 206 of the Energy Reorganization Act;

(iii) Any rule, regulation, or order issued pursuant to the sections specified in paragraph (b)(1)(i) of this section;

(iv) Any term, condition, or limitation of any license issued under the sections specified in paragraph (b)(1)(i) of this section.

(2) For any violation for which a license may be revoked under section 186 of the Atomic Energy Act of 1954, as amended."
10:10:1.0.1.1.21.0.91.16,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§ 31.23 Criminal penalties.,NRC,,,"[57 FR 55073, Nov. 24, 1992. Redesignated at 72 FR 55927, Oct. 1, 2007, and amended at 77 FR 43690, July 25, 2012]","(a) Section 223 of the Atomic Energy Act of 1954, as amended, provides for criminal sanctions for willful violation of, attempted violation of, or conspiracy to violate, any regulation issued under sections 161b, 161i, or 161o of the Act. For purposes of section 223, all the regulations in part 31 are issued under one or more of sections 161b, 161i, or 161o, except for the sections listed in paragraph (b) of this section.

(b) The regulations in part 31 that are not issued under sections 161b, 161i, or 161o for the purposes of section 223 are as follows: §§ 31.1, 31.2, 31.4, 31.9, 31.22, and 31.23."
10:10:1.0.1.1.21.0.91.2,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§ 31.2 Terms and conditions.,NRC,,,"[65 FR 79187, Dec. 18, 2000]","The general licenses provided in this part are subject to the general provisions of Part 30 of this chapter (§§ 30.1 through 30.10), the provisions of §§ 30.14(d), 30.34(a) to (e), 30.41, 30.50 to 30.53, 30.61 to 30.63, and Parts 19, 20, and 21, of this chapter 
 1 
   unless indicated otherwise in the specific provision of the general license.

1  Attention is directed particularly to the provisions of Part 20 of this chapter concerning labeling of containers."
10:10:1.0.1.1.21.0.91.3,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§ 31.3 [Reserved],NRC,,,,
10:10:1.0.1.1.21.0.91.4,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§ 31.4 Information collection requirements: OMB approval.,NRC,,,"[62 FR 52186, Oct. 6, 1997, as amended at 67 FR 67099, Nov. 4, 2002; 72 FR 55926, Oct. 1, 2007]","(a) The Nuclear Regulatory Commission has submitted the information collection requirements contained in this part to the Office of Management and Budget (OMB) for approval as required by the Paperwork Reduction Act (44 U.S.C. 3501  et seq. ). The NRC 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. OMB has approved the information collection requirements contained in this part under control number 3150-0016.

(b) The approved information collection requirements contained in this part appear in §§ 31.5, 31.8, 31.11, and 31.12.

(c) This part contains information collection requirements in addition to those approved under the control number specified in paragraph (a) of this section. These information collection requirements and the control numbers under which they are approved are as follows:

(1) In § 31.11. NRC Form 483 is approved under control number 3150-0038.

(2) [Reserved]"
10:10:1.0.1.1.21.0.91.5,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,"§ 31.5 Certain detecting, measuring, gauging, or controlling devices and certain devices for producing light or an ionized atmosphere.",NRC,,,"[39 FR 43532, Dec. 16, 1974, as amended at 40 FR 8785, Mar. 3, 1975; 40 FR 14085, Mar. 28, 1975; 42 FR 25721, May 19, 1977; 42 FR 28896, June 6, 1977; 43 FR 6922, Feb. 17, 1978; 53 FR 19246, May 27, 1988; 56 FR 23471, May 21, 1991; 56 FR 61352, Dec. 3, 1991; 58 FR 67659, Dec. 22, 1993; 64 FR 42275, Aug. 4, 1999; 65 FR 79188, Dec. 18, 2000; 68 FR 58804, Oct. 10, 2003; 72 FR 55926, Oct. 1, 2007; 72 FR 58486, Oct. 16, 2007; 73 FR 5718, Jan. 31, 2008; 73 FR 42673, July 23, 2008]","2  Persons possessing byproduct material in devices under a general license in § 31.5 before January 15, 1975, may continue to possess, use, or transfer that material in accordance with the labeling requirements of § 31.5 in effect on January 14, 1975.

(a) A general license is hereby issued to commercial and industrial firms and research, educational and medical institutions, individuals in the conduct of their business, and Federal, State or local government agencies to acquire, receive, possess, use or transfer, in accordance with the provisions of paragraphs (b), (c) and (d) of this section, byproduct material contained in devices designed and manufactured for the purpose of detecting, measuring, gauging or controlling thickness, density, level, interface location, radiation, leakage, or qualitative or quantitative chemical composition, or for producing light or an ionized atmosphere.

(b)(1) The general license in paragraph (a) of this section applies only to byproduct material contained in devices which have been manufactured or initially transferred and labeled in accordance with the specifications contained in—

(i) A specific license issued under § 32.51 of this chapter; or

(ii) An equivalent specific license issued by an Agreement State; or

(iii) An equivalent specific license issued by a State with provisions comparable to § 32.51 of this chapter.

(2) The devices must have been received from one of the specific licensees described in paragraph (b)(1) of this section or through a transfer made under paragraph (c)(9) of this section.

(c) Any person who acquires, receives, possesses, uses or transfers byproduct material in a device pursuant to the general license in paragraph (a) of this section:

(1) Shall assure that all labels affixed to the device at the time of receipt and bearing a statement that removal of the label is prohibited are maintained thereon and shall comply with all instructions and precautions provided by such labels;

(2) Shall assure that the device is tested for leakage of radioactive material and proper operation of the on-off mechanism and indicator, if any, at no longer than six-month intervals or at such other intervals as are specified in the label; however:

(i) Devices containing only krypton need not be tested for leakage of radioactive material, and

(ii) Devices containing only tritium or not more than 100 microcuries of other beta and/or gamma emitting material or 10 microcuries of alpha emitting material and devices held in storage in the original shipping container prior to initial installation need not be tested for any purpose;

(3) Shall assure that the tests required by paragraph (c)(2) of this section and other testing, installation, servicing, and removal from installation involving the radioactive materials, its shielding or containment, are performed:

(i) In accordance with the instructions provided by the labels; or

(ii) By a person holding a specific license pursuant to parts 30 and 32 of this chapter or from an Agreement State to perform such activities;

(4) Shall maintain records showing compliance with the requirements of paragraphs (c)(2) and (c)(3) of this section. The records must show the results of tests. The records also must show the dates of performance of, and the names of persons performing, testing, installing, servicing, and removing from the installation radioactive material and its shielding or containment. The licensee shall retain these records as follows:

(i) Each record of a test for leakage or radioactive material required by paragraph (c)(2) of this section must be retained for three years after the next required leak test is performed or until the sealed source is transferred or disposed of.

(ii) Each record of a test of the on-off mechanism and indicator required by paragraph (c)(2) of this section must be retained for three years after the next required test of the on-off mechanism and indicator is performed or until the sealed source is transferred or disposed of.

(iii) Each record that is required by paragraph (c)(3) of this section must be retained for three years from the date of the recorded event or until the device is transferred or disposed of.

(5) Shall immediately suspend operation of the device if there is a failure of, or damage to, or any indication of a possible failure of or damage to, the shielding of the radioactive material or the on-off mechanism or indicator, or upon the detection of 185 bequerel (0.005 microcurie) or more removable radioactive material. The device may not be operated until it has been repaired by the manufacturer or other person holding a specific license to repair such devices that was issued under parts 30 and 32 of this chapter or by an Agreement State. The device and any radioactive material from the device may only be disposed of by transfer to a person authorized by a specific license to receive the byproduct material in the device or as otherwise approved by the Commission. A report containing a brief description of the event and the remedial action taken; and, in the case of detection of 0.005 microcurie or more removable radioactive material or failure of or damage to a source likely to result in contamination of the premises or the environs, a plan for ensuring that the premises and environs are acceptable for unrestricted use, must be furnished to the Director, Office of Nuclear Material Safety and Safeguards, ATTN: GLTS, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001 within 30 days. Under these circumstances, the criteria set out in § 20.1402 of this chapter, “Radiological criteria for unrestricted use,” may be applicable, as determined by the Commission on a case-by-case basis;

(6) Shall not abandon the device containing byproduct material;

(7) Shall not export the device containing byproduct material except in accordance with part 110 of this chapter;

(8)(i) Shall transfer or dispose of the device containing byproduct material only by export as provided by paragraph (c)(7) of this section, by transfer to another general licensee as authorized in paragraph (c)(9) of this section, or to a person authorized to receive the device by a specific license issued under parts 30 and 32 of this chapter, or part 30 of this chapter that authorizes waste collection, or equivalent regulations of an Agreement State, or as otherwise approved under paragraph (c)(8)(iii) of this section.

(ii) Shall, within 30 days after the transfer of a device to a specific licensee or export, furnish a report to the Director, Office of Nuclear Material Safety and Safeguards , ATTN: Document Control Desk/GLTS, using an appropriate method listed in § 30.6(a) of this chapter. The report must contain—

(A) The identification of the device by manufacturer's (or initial transferor's) name, model number, and serial number;

(B) The name, address, and license number of the person receiving the device (license number not applicable if exported); and

(C) The date of the transfer.

(iii) Shall obtain written NRC approval before transferring the device to any other specific licensee not specifically identified in paragraph (c)(8)(i) of this section; however, a holder of a specific license may transfer a device for possession and use under its own specific license without prior approval, if, the holder:

(A) Verifies that the specific license authorizes the possession and use, or applies for and obtains an amendment to the license authorizing the possession and use;

(B) Removes, alters, covers, or clearly and unambiguously augments the existing label (otherwise required by paragraph (c)(1) of this section) so that the device is labeled in compliance with § 20.1904 of this chapter; however the manufacturer, model number, and serial number must be retained;

(C) Obtains the manufacturer's or initial transferor's information concerning maintenance that would be applicable under the specific license (such as leak testing procedures); and

(D) Reports the transfer under paragraph (c)(8)(ii) of this section.

(9) Shall transfer the device to another general licensee only if—

(i) The device remains in use at a particular location. In this case, the transferor shall give the transferee a copy of this section, a copy of § 31.2, 30.51, 20.2201, and 20.2202 of this chapter, and any safety documents identified in the label of the device. Within 30 days of the transfer, the transferor shall report to the Director, Office of Nuclear Material Safety and Safeguards , ATTN: Document Control Desk/GLTS, using an appropriate method listed in § 30.6(a) of this chapter—

(A) The manufacturer's (or initial transferor's) name;

(B) The model number and the serial number of the device transferred;

(C) The transferee's name and mailing address for the location of use; and

(D) The name, title, and phone number of the responsible individual identified by the transferee in accordance with paragraph (c)(12) of this section to have knowledge of and authority to take actions to ensure compliance with the appropriate regulations and requirements; or

(ii) The device is held in storage by an intermediate person in the original shipping container at its intended location of use prior to initial use by a general licensee.

(10) Shall comply with the provisions of §§ 20.2201, and 20.2202 of this chapter for reporting radiation incidents, theft or loss of licensed material, but shall be exempt from the other requirements of parts 19, 20, and 21, of this chapter.

(11) Shall respond to written requests from the Nuclear Regulatory Commission to provide information relating to the general license within 30 calendar days of the date of the request, or other time specified in the request. If the general licensee cannot provide the requested information within the allotted time, it shall, within that same time period, request a longer period to supply the information by providing the Director, Office of Nuclear Material Safety and Safeguards , by an appropriate method listed in § 30.6(a) of this chapter, a written justification for the request.

(12) Shall appoint an individual responsible for having knowledge of the appropriate regulations and requirements and the authority for taking required actions to comply with appropriate regulations and requirements. The general licensee, through this individual, shall ensure the day-to-day compliance with appropriate regulations and requirements. This appointment does not relieve the general licensee of any of its responsibility in this regard.

(13)(i) Shall register, in accordance with paragraphs (c)(13)(ii) and (iii) of this section, devices containing at least 370 megabecquerels (10 millicuries) of cesium-137, 3.7 megabecquerels (0.1 millicurie) of strontium-90, 37 megabecquerels (1 millicurie) of cobalt-60, 3.7 megabecquerels (0.1 millicurie) of radium-226, or 37 megabecquerels (1 millicurie) of americium-241 or any other transuranic ( i.e. , element with atomic number greater than uranium (92)), based on the activity indicated on the label. Each address for a location of use, as described under paragraph (c)(13)(iii)(D) of this section, represents a separate general licensee and requires a separate registration and fee.

(ii) If in possession of a device meeting the criteria of paragraph (c)(13)(i) of this section, shall register these devices annually with the Commission and shall pay the fee required by § 170.31 of this chapter. Registration must be done by verifying, correcting, and/or adding to the information provided in a request for registration received from the Commission. The registration information must be submitted to the NRC within 30 days of the date of the request for registration or as otherwise indicated in the request. In addition, a general licensee holding devices meeting the criteria of paragraph (c)(13)(i) of this section is subject to the bankruptcy notification requirement in § 30.34(h) of this chapter.

(iii) In registering devices, the general licensee shall furnish the following information and any other information specifically requested by the Commission—

(A) Name and mailing address of the general licensee.

(B) Information about each device: the manufacturer (or initial transferor), model number, serial number, the radioisotope and activity (as indicated on the label).

(C) Name, title, and telephone number of the responsible person designated as a representative of the general licensee under paragraph (c)(12) of this section.

(D) Address or location at which the device(s) are used and/or stored. For portable devices, the address of the primary place of storage.

(E) Certification by the responsible representative of the general licensee that the information concerning the device(s) has been verified through a physical inventory and checking of label information.

(F) Certification by the responsible representative of the general licensee that they are aware of the requirements of the general license.

(iv) Persons generally licensed by an Agreement State with respect to devices meeting the criteria in paragraph (c)(13)(i) of this section are not subject to registration requirements if the devices are used in areas subject to NRC jurisdiction for a period less than 180 days in any calendar year. The Commission will not request registration information from such licensees.

(14) Shall report changes to the mailing address for the location of use (including change in name of general licensee) to the Director, Office of Nuclear Material Safety and Safeguards, ATTN: GLTS, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001 within 30 days of the effective date of the change. For a portable device, a report of address change is only required for a change in the device's primary place of storage.

(15) May not hold devices that are not in use for longer than 2 years. If devices with shutters are not being used, the shutter must be locked in the closed position. The testing required by paragraph (c)(2) of this section need not be performed during the period of storage only. However, when devices are put back into service or transferred to another person, and have not been tested within the required test interval, they must be tested for leakage before use or transfer and the shutter tested before use. Devices kept in standby for future use are excluded from the two-year time limit if the general licensee performs quarterly physical inventories of these devices while they are in standby.

(d) The general license in paragraph (a) of this section does not authorize the manufacture or import of devices containing byproduct material."
10:10:1.0.1.1.21.0.91.6,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§ 31.6 General license to install devices generally licensed in § 31.5.,NRC,,,"[30 FR 8189, June 26, 1965, as amended at 30 FR 10947, Aug. 24, 1965; 39 FR 43533, Dec. 16, 1974; 46 FR 44151, Sept. 3, 1981]","Any person who holds a specific license issued by an Agreement State authorizing the holder to manufacture, install, or service a device described in § 31.5 within such Agreement State is hereby granted a general license to install and service such device in any non-Agreement State and a general license to install and service such device in offshore waters, as defined in § 150.3(f) of this chapter:  Provided,  That:

(a) [Reserved]

(b) The device has been manufactured, labeled, installed, and serviced in accordance with applicable provisions of the specific license issued to such person by the Agreement State.

(c) Such person assures that any labels required to be affixed to the device under regulations of the Agreement State which licensed manufacture of the device bear a statement that removal of the label is prohibited."
10:10:1.0.1.1.21.0.91.7,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§ 31.7 Luminous safety devices for use in aircraft.,NRC,,,"[30 FR 8189, June 26, 1965, as amended at 33 FR 6463, Apr. 27, 1968; 38 FR 22220, Aug. 17, 1973; 42 FR 28896, June 6, 1977; 43 FR 6922, Feb. 17, 1978; 56 FR 23471, May 21, 1991; 56 FR 61352, Dec. 3, 1991; 58 FR 67659, Dec. 22, 1993]","(a) A general license is hereby issued to own, receive, acquire, possess, and use tritium or promethium-147 contained in luminous safety devices for use in aircraft, provided each device contains not more than 10 curies of tritium or 300 millicuries of promethium-147 and that each device has been manufactured, assembled or initially transferred in accordance with a license issued under the provisions of § 32.53 of this chapter or manufactured or assembled in accordance with a specific license issued by an Agreement State which authorizes manufacture or assembly of the device for distribution to persons generally licensed by the Agreement State.

(b) Persons who own, receive, acquire, possess or use luminous safety devices pursuant to the general license in this section are exempt from the requirements of parts 19, 20, and 21, of this chapter, except that they shall comply with the provisions of §§ 20.2201, and 20.2202 of this chapter.

(c) This general license does not authorize the manufacture, assembly, repair or import of luminous safety devices containing tritium or promethium-147.

(d) This general license does not authorize the export of luminous safety devices containing tritium or promethium-147.

(e) This general license does not authorize the ownership, receipt, acquisition, possession or use of promethium-147 contained in instrument dials."
10:10:1.0.1.1.21.0.91.8,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§ 31.8 Americium-241 and radium-226 in the form of calibration or reference sources.,NRC,,,"[72 FR 55927, Oct. 1, 2007]","(a) A general license is issued to those persons listed in this section to own, receive, acquire, possess, use, and transfer, in accordance with the provisions of paragraphs (b) and (c) of this section, americium-241 or radium-226 in the form of calibration or reference sources:

(1) Any person in a non-Agreement State who holds a specific license issued under this chapter which authorizes receipt, possession, use, and transfer of byproduct material, source material, or special nuclear material; and

(2) Any Government agency, as defined in § 30.4 of this chapter, which holds a specific license issued under this chapter which authorizes it to receive, possess, use, and transfer byproduct material, source material, or special nuclear material.

(b) The general license in paragraph (a) of this section applies only to calibration or reference sources which have been manufactured or initially transferred in accordance with the specifications contained in a specific license issued under § 32.57 of this chapter or in accordance with the specifications contained in a specific license issued to the manufacturer by an Agreement State which authorizes manufacture of the sources for distribution to persons generally licensed by the Agreement State, or in accordance with a specific license issued by a State with comparable provisions to § 32.57.

(c) The general license in paragraph (a) of this section is subject to the provisions of §§ 30.14(d), 30.34 (a) to (e), and 30.50 to 30.63 of this chapter, and to the provisions of parts 19, 20, and 21, of this chapter. In addition, persons who own, receive, acquire, possess, use, and transfer one or more calibration or reference sources under this general license:

(1) Shall not possess at any one time, at any one location of storage or use, more than 0.185 megabecquerel (5 microcuries) of americium-241 or 0.185 megabecquerel (5 microcuries) of radium-226 in such sources;

(2) Shall not receive, possess, use, or transfer a source unless the source, or the storage container, bears a label which includes the following statement or a substantially similar statement which contains the information called for in the following statement: 
 1

1  Sources generally licensed under this section before January 19, 1975, may bear labels authorized by the regulations in effect on January 1, 1975. Sources containing radium-226 generally licensed under this section and manufactured before November 30, 2007 shall be labeled in accordance with the applicable State regulations at the time of manufacture or import.

The receipt, possession, use, and transfer of this source, Model XX, Serial No. XX, are subject to a general license and the regulations of the United States Nuclear Regulatory Commission or of a State with which the Commission has entered into an agreement for the exercise of regulatory authority. Do not remove this label.
 
 CAUTION—RADIOACTIVE MATERIAL—THIS SOURCE CONTAINS AMERICIUM-241 [or RADIUM-226, as appropriate]. DO NOT TOUCH RADIOACTIVE PORTION OF THIS SOURCE.
 
 
 
 (Name of manufacturer or initial transferor)

The receipt, possession, use, and transfer of this source, Model XX, Serial No. XX, are subject to a general license and the regulations of the United States Nuclear Regulatory Commission or of a State with which the Commission has entered into an agreement for the exercise of regulatory authority. Do not remove this label.

CAUTION—RADIOACTIVE MATERIAL—THIS SOURCE CONTAINS AMERICIUM-241 [or RADIUM-226, as appropriate]. DO NOT TOUCH RADIOACTIVE PORTION OF THIS SOURCE.

(Name of manufacturer or initial transferor)

(3) Shall not transfer, abandon, or dispose of a source except by transfer to a person authorized by a license issued under this chapter or by an Agreement State to receive the source.

(4) Shall store a source, except when the source is being used, in a closed container adequately designed and constructed to contain americium-241 or radium-226 which might otherwise escape during storage.

(5) Shall not use a source for any purpose other than the calibration of radiation detectors or the standardization of other sources.

(d) This general license does not authorize the manufacture or import of calibration or reference sources containing americium-241 or radium-226.

(e) This general license does not authorize the export of calibration or reference sources containing americium-241 or radium-226."
10:10:1.0.1.1.21.0.91.9,10,Energy,I,,31,PART 31—GENERAL DOMESTIC LICENSES FOR BYPRODUCT MATERIAL,,,,§ 31.9 General license to own byproduct material.,NRC,,,"[30 FR 8189, June 26, 1965]","A general license is hereby issued to own byproduct material without regard to quantity. Notwithstanding any other provision of this chapter, a general licensee under this paragraph is not authorized to manufacture, produce, transfer, receive, possess, use, import or export byproduct material, except as authorized in a specific license."
14:14:1.0.1.3.17.1.283.1,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,A,Subpart A—General,,§ 31.1 Applicability.,FAA,,,"[Doc. No. 1437, 29 FR 8258, July 1, 1964, as amended by Amdt. 31-3, 41 FR 55474, Dec. 20, 1976]","(a) This part prescribes airworthiness standards for the issue of type certificates and changes to those certificates, for manned free balloons.

(b) Each person who applies under Part 21 for such a certificate or change must show compliance with the applicable requirements of this part.

(c) For purposes of this part—

(1) A captive gas balloon is a balloon that derives its lift from a captive lighter-than-air gas;

(2) A hot air balloon is a balloon that derives its lift from heated air;

(3) The envelope is the enclosure in which the lifting means is contained;

(4) The basket is the container, suspended beneath the envelope, for the balloon occupants;

(5) The trapeze is a harness or is a seat consisting of a horizontal bar or platform suspended beneath the envelope for the balloon occupants; and

(6) The design maximum weight is the maximum total weight of the balloon, less the lifting gas or air."
14:14:1.0.1.3.17.2.283.1,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,B,Subpart B—Flight Requirements,,§ 31.12 Proof of compliance.,FAA,,,"[Amdt. 31-4, 45 FR 60179, Sept. 11, 1980]","(a) Each requirement of this subpart must be met at each weight within the range of loading conditions for which certification is requested. This must be shown by—

(1) Tests upon a balloon of the type for which certification is requested or by calculations based on, and equal in accuracy to, the results of testing; and

(2) Systematic investigation of each weight if compliance cannot be reasonably inferred from the weights investigated.

(b) Except as provided in § 31.17(b), allowable weight tolerances during flight testing are + 5 percent and −10 percent."
14:14:1.0.1.3.17.2.283.2,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,B,Subpart B—Flight Requirements,,§ 31.14 Weight limits.,FAA,,,"[Amdt. 31-3, 41 FR 55474, Dec. 20, 1976]","(a) The range of weights over which the balloon may be safely operated must be established.

(b)  Maximum weight.  The maximum weight is the highest weight at which compliance with each applicable requirement of this part is shown. The maximum weight must be established so that it is not more than—

(1) The highest weight selected by the applicant;

(2) The design maximum weight which is the highest weight at which compliance with each applicable structural loading condition of this part is shown; or

(3) The highest weight at which compliance with each applicable flight requirement of this part is shown.

(c) The information established under paragraphs (a) and (b) of this section must be made available to the pilot in accordance with § 31.81."
14:14:1.0.1.3.17.2.283.3,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,B,Subpart B—Flight Requirements,,§ 31.16 Empty weight.,FAA,,,"[Amdt. 31-4, 45 FR 60179, Sept. 11, 1980]",The empty weight must be determined by weighing the balloon with installed equipment but without lifting gas or heater fuel.
14:14:1.0.1.3.17.2.283.4,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,B,Subpart B—Flight Requirements,,§ 31.17 Performance: Climb.,FAA,,,"[Amdt. 31-4, 45 FR 60179, Sept. 11, 1980]","(a) Each balloon must be capable of climbing at least 300 feet in the first minute after takeoff with a steady rate of climb. Compliance with the requirements of this section must be shown at each altitude and ambient temperature for which approval is sought.

(b) Compliance with the requirements of paragraph (a) of this section must be shown at the maximum weight with a weight tolerance of + 5 percent."
14:14:1.0.1.3.17.2.283.5,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,B,Subpart B—Flight Requirements,,§ 31.19 Performance: Uncontrolled descent.,FAA,,,"[Amdt. 31-4, 45 FR 60179, Sept. 11, 1980]","(a) The following must be determined for the most critical uncontrolled descent that can result from any single failure of the heater assembly, fuel cell system, gas value system, or maneuvering vent system, or from any single tear in the balloon envelope between tear stoppers:

(1) The maximum vertical velocity attained.

(2) The altitude loss from the point of failure to the point at which maximum vertical velocity is attained.

(3) The altitude required to achieve level flight after corrective action is inititated, with the balloon descending at the maximum vertical velocity determined in paragraph (a)(1) of this section.

(b) Procedures must be established for landing at the maximum vertical velocity determined in paragraph (a)(1) of this section and for arresting that descent rate in accordance with paragraph (a)(3) of this section."
14:14:1.0.1.3.17.2.283.6,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,B,Subpart B—Flight Requirements,,§ 31.20 Controllability.,FAA,,,"[Amdt. 31-3, 41 FR 55474, Dec. 20, 1976]","The applicant must show that the balloon is safely controllable and maneuverable during takeoff, ascent, descent, and landing without requiring exceptional piloting skill."
14:14:1.0.1.3.17.3.283.1,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,C,Subpart C—Strength Requirements,,§ 31.21 Loads.,FAA,,,,"Strength requirements are specified in terms of limit loads, that are the maximum load to be expected in service, and ultimate loads, that are limit loads multiplied by prescribed factors of safety. Unless otherwise specified, all prescribed loads are limit loads."
14:14:1.0.1.3.17.3.283.2,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,C,Subpart C—Strength Requirements,,§ 31.23 Flight load factor.,FAA,,,,"In determining limit load, the limit flight load factor must be at least 1.4."
14:14:1.0.1.3.17.3.283.3,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,C,Subpart C—Strength Requirements,,§ 31.25 Factor of safety.,FAA,,,"[Doc. No. 1437, 29 FR 8258, July 1, 1964, as amended by Amdt. 31-2, 30 FR 3377, Mar. 13, 1965]","(a) Except as specified in paragraphs (b) and (c) of this section, the factor of safety is 1.5.

(b) A factor of safety of at least five must be used in envelope design. A reduced factor of safety of at least two may be used if it is shown that the selected factor will preclude failure due to creep or instantaneous rupture from lack of rip stoppers. The selected factor must be applied to the more critical of the maximum operating pressure or envelope stress.

(c) A factor of safety of at least five must be used in the design of all fibrous or non-metallic parts of the rigging and related attachments of the envelope to basket, trapeze, or other means provided for carrying occupants. The primary attachments of the envelope to the basket, trapeze, or other means provided for carrying occupants must be designed so that failure is extremely remote or so that any single failure will not jeopardize safety of flight.

(d) In applying factors of safety, the effect of temperature, and other operating characteristics, or both, that may affect strength of the balloon must be accounted for.

(e) For design purposes, an occupant weight of at least 170 pounds must be assumed."
14:14:1.0.1.3.17.3.283.4,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,C,Subpart C—Strength Requirements,,§ 31.27 Strength.,FAA,,,"[Doc. No. 1437, 29 FR 8258, July 1, 1964, as amended by Amdt. 31-4, 45 FR 60179, Sept. 11, 1980]","(a) The structure must be able to support limit loads without detrimental effect.

(b) The structure must be substantiated by test to be able to withstand the ultimate loads for at least three seconds without failure. For the envelope, a test of a representative part is acceptable, if the part tested is large enough to include critical seams, joints, and load attachment points and members.

(c) An ultimate free-fall drop test must be made of the basket, trapeze, or other place provided for occupants. The test must be made at design maximum weight on a horizontal surface, with the basket, trapeze, or other means provided for carrying occupants, striking the surface at angles of 0, 15, and 30 degrees. The weight may be distributed to simulate actual conditions. There must be no distortion or failure that is likely to cause serious injury to the occupants. A drop test height of 36 inches, or a drop test height that produces, upon impact, a velocity equal to the maximum vertical velocity determined in accordance with § 31.19, whichever is higher, must be used."
14:14:1.0.1.3.17.4.283.1,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.31 General.,FAA,,,,The suitability of each design detail or part that bears on safety must be established by tests or analysis.
14:14:1.0.1.3.17.4.283.10,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.47 Burners.,FAA,,,"[Doc. No. 1437, 29 FR 8258, July 1, 1964, as amended by Amdt. 31-2, 30 FR 3377, Mar. 13, 1965; Amdt. 31-7, 61 FR 18223, Apr. 24, 1996; 61 FR 20877, May 8, 1996]","(a) If a burner is used to provide the lifting means, the system must be designed and installed so as not to create a fire hazard.

(b) There must be shielding to protect parts adjacent to the burner flame, and the occupants, from heat effects.

(c) There must be controls, instruments, or other equipment essential to the safe control and operation of the heater. They must be shown to be able to perform their intended functions during normal and emergency operation.

(d) The burner system (including the burner unit, controls, fuel lines, fuel cells, regulators, control valves, and other related elements) must be substantiated by an endurance test of at least 40 hours. Each element of the system must be installed and tested to simulate actual balloon installation and use.

(1) The test program for the main blast valve operation of the burner must include:

(i) Five hours at the maximum fuel pressure for which approval is sought, with a burn time for each one minute cycle of three to ten seconds. The burn time must be established so that each burner is subjected to the maximum thermal shock for temperature affected elements;

(ii) Seven and one-half hours at an intermediate fuel pressure, with a burn time for each one minute cycle of three to ten seconds. An intermediate fuel pressure is 40 to 60 percent of the range between the maximum fuel pressure referenced in paragraph (d)(1)(i) of this section and minimum fuel pressure referenced in paragraph (d)(1)(iii);

(iii) Six hours and fifteen minutes at the minimum fuel pressure for which approval is sought, with a burn time for each one minute cycle of three to ten seconds;

(iv) Fifteen minutes of operation on vapor, with a burn time for each one minute cycle of at least 30 seconds; and

(v) Fifteen hours of normal flight operation.

(2) The test program for the secondary or backup operation of the burner must include six hours of operation with a burn time for each five minute cycle of one minute at an intermediate fuel pressure.

(e) The test must also include at least three flameouts and restarts.

(f) Each element of the system must be serviceable at the end of the test."
14:14:1.0.1.3.17.4.283.11,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.49 Control systems.,FAA,,,"[Doc. No. 1437, 29 FR 8258, July 1, 1964, as amended by Amdt. 31-2, 30 FR 3377, Mar. 13, 1965]","(a) Each control must operate easily, smoothly, and positively enough to allow proper performance of its functions. Controls must be arranged and identified to provide for convenience of operation and to prevent the possibility of confusion and subsequent inadvertent operation.

(b) Each control system and operating device must be designed and installed in a manner that will prevent jamming, chafing, or interference from passengers, cargo, or loose objects. Precaution must be taken to prevent foreign objects from jamming the controls. The elements of the control system must have design features or must be distinctly and permanently marked to minimize the possibility of incorrect assembly that could result in malfunctioning of the control system.

(c) Each balloon using a captive gas as the lifting means must have an automatic valve or appendix that is able to release gas automatically at the rate of at least three percent of the total volume per minute when the balloon is at its maximum operating pressure.

(d) Each hot air balloon must have a means to allow the controlled release of hot air during flight.

(e) Each hot air balloon must have a means to indicate the maximum envelope skin temperatures occurring during operation. The indicator must be readily visible to the pilot and marked to indicate the limiting safe temperature of the envelope material. If the markings are on the cover glass of the instrument, there must be provisions to maintain the correct alignment of the glass cover with the face of the dial."
14:14:1.0.1.3.17.4.283.12,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.51 Ballast.,FAA,,,,"Each captive gas balloon must have a means for the safe storage and controlled release of ballast. The ballast must consist of material that, if released during flight, is not hazardous to persons on the ground."
14:14:1.0.1.3.17.4.283.13,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.53 Drag rope.,FAA,,,,"If a drag rope is used, the end that is released overboard must be stiffened to preclude the probability of the rope becoming entangled with trees, wires, or other objects on the ground."
14:14:1.0.1.3.17.4.283.14,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.55 Deflation means.,FAA,,,"[Amdt. 31-2, 30 FR 3377, Mar. 13, 1965]","There must be a means to allow emergency deflation of the envelope so as to allow a safe emergency landing. If a system other than a manual system is used, the reliability of the system used must be substantiated."
14:14:1.0.1.3.17.4.283.15,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.57 Rip cords.,FAA,,,,"(a) If a rip cord is used for emergency deflation, it must be designed and installed to preclude entanglement.

(b) The force required to operate the rip cord may not be less than 25, or more than 75, pounds.

(c) The end of the rip cord to be operated by the pilot must be colored red.

(d) The rip cord must be long enough to allow an increase of at least 10 percent in the vertical dimension of the envelope."
14:14:1.0.1.3.17.4.283.16,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,"§ 31.59 Trapeze, basket, or other means provided for occupants.",FAA,,,,"(a) The trapeze, basket, or other means provided for carrying occupants may not rotate independently of the envelope.

(b) Each projecting object on the trapeze, basket, or other means provided for carrying occupants, that could cause injury to the occupants, must be padded."
14:14:1.0.1.3.17.4.283.17,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.61 Static discharge.,FAA,,,"[Amdt. 31-2, 30 FR 3377, Mar. 13, 1965]","Unless shown not to be necessary for safety, there must be appropriate bonding means in the design of each balloon using flammable gas as a lifting means to ensure that the effects of static discharges will not create a hazard."
14:14:1.0.1.3.17.4.283.18,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.63 Safety belts.,FAA,,,"[Amdt. 31-2, 30 FR 3377, Mar. 13, 1965, as amended by Amdt. 31-3, 41 FR 55474, Dec. 20, 1976]","(a) There must be a safety belt, harness, or other restraining means for each occupant, unless the Administrator finds it unnecessary. If installed, the belt, harness, or other restraining means and its supporting structure must meet the strength requirements of subpart C of this part.

(b) This section does not apply to balloons that incorporate a basket or gondola."
14:14:1.0.1.3.17.4.283.19,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.65 Position lights.,FAA,,,"[Doc. No. 1437, 29 FR 8258, July 1, 1964, as amended by Amdt. 31-1, 29 FR 14563, Oct. 24, 1964; Amdt. 31-4, 45 FR 60179, Sept. 11, 1980]","(a) If position lights are installed, there must be one steady aviation white position light and one flashing aviation red (or flashing aviation white) position light with an effective flash frequency of at least 40, but not more than 100, cycles per minute.

(b) Each light must provide 360° horizontal coverage at the intensities prescribed in this paragraph. The following light intensities must be determined with the light source operating at a steady state and with all light covers and color filters in place and at the manufacturer's rated minimum voltage. For the flashing aviation red light, the measured values must be adjusted to correspond to a red filter temperature of at least 130 °F:

(1) The intensities in the horizontal plane passing through the light unit must equal or exceed the following values:

(2) The intensities in vertical planes must equal or exceed the following values. An intensity of one unit corresponds to the applicable horizontal plane intensity specified in paragraph (b)(1) of this section.

(c) The steady white light must be located not more than 20 feet below the basket, trapeze, or other means for carrying occupants. The flashing red or white light must be located not less than 7, nor more than 10, feet below the steady white light.

(d) There must be a means to retract and store the lights.

(e) Each position light color must have the applicable International Commission on Illumination chromaticity coordinates as follows:

(1)  Aviation red —

y  is not greater than 0.335; and  z  is not greater than 0.002.

y  is not greater than 0.335; and  z  is not greater than 0.002.

(2)  Aviation white —

x  is not less than 0.300 and not greater than 0.540; 
 
 y  is not less than  x −0.040 or  y o −0.010, whichever is the smaller; and 
 
 y  is not greater than  x  + 0.020 nor 0.636−0.0400  x ; 
 
 Where  y o  is the  y  coordinate of the Planckian radiator for the value of  x  considered.

x  is not less than 0.300 and not greater than 0.540;

y  is not less than  x −0.040 or  y o −0.010, whichever is the smaller; and

y  is not greater than  x  + 0.020 nor 0.636−0.0400  x ;

Where  y o  is the  y  coordinate of the Planckian radiator for the value of  x  considered."
14:14:1.0.1.3.17.4.283.2,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.33 Materials.,FAA,,,,"(a) The suitability and durability of all materials must be established on the basis of experience or tests. Materials must conform to approved specifications that will ensure that they have the strength and other properties assumed in the design data.

(b) Material strength properties must be based on enough tests of material conforming to specifications so as to establish design values on a statistical basis."
14:14:1.0.1.3.17.4.283.3,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.35 Fabrication methods.,FAA,,,,"The methods of fabrication used must produce a consistently sound structure. If a fabrication process requires close control to reach this objective, the process must be performed in accordance with an approved process specification."
14:14:1.0.1.3.17.4.283.4,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.37 Fastenings.,FAA,,,,"Only approved bolts, pins, screws, and rivets may be used in the structure. Approved locking devices or methods must be used for all these bolts, pins, and screws, unless the installation is shown to be free from vibration. Self-locking nuts may not be used on bolts that are subject to rotation in service."
14:14:1.0.1.3.17.4.283.5,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.39 Protection.,FAA,,,,"Each part of the balloon must be suitably protected against deterioration or loss of strength in service due to weathering, corrosion, or other causes."
14:14:1.0.1.3.17.4.283.6,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.41 Inspection provisions.,FAA,,,,There must be a means to allow close examination of each part that require repeated inspection and adjustment.
14:14:1.0.1.3.17.4.283.7,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.43 Fitting factor.,FAA,,,,"(a) A fitting factor of at least 1.15 must be used in the analysis of each fitting the strength of which is not proven by limit and ultimate load tests in which the actual stress conditions are simulated in the fitting and surrounding structure. This factor applies to all parts of the fitting, the means of attachment, and the bearing on the members joined.

(b) Each part with an integral fitting must be treated as a fitting up to the point where the section properties become typical of the member.

(c) The fitting factor need not be used if the joint design is made in accordance with approved practices and is based on comprehensive test data."
14:14:1.0.1.3.17.4.283.8,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.45 Fuel cells.,FAA,,,"[Amdt. 31-3, 41 FR 55474, Dec. 20, 1976]","If fuel cells are used, the fuel cells, their attachments, and related supporting structure must be shown by tests to be capable of withstanding, without detrimental distortion or failure, any inertia loads to which the installation may be subjected, including the drop tests prescribed in § 31.27(c). In the tests, the fuel cells must be loaded to the weight and pressure equivalent to the full fuel quantity condition."
14:14:1.0.1.3.17.4.283.9,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,D,Subpart D—Design Construction,,§ 31.46 Pressurized fuel systems.,FAA,,,"[Amdt. 31-3, 41 FR 55474, Dec. 20, 1976]","For pressurized fuel systems, each element and its connecting fittings and lines must be tested to an ultimate pressure of at least twice the maximum pressure to which the system will be subjected in normal operation. No part of the system may fail or malfunction during the test. The test configuration must be representative of the normal fuel system installation and balloon configuration."
14:14:1.0.1.3.17.5.283.1,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,E,Subpart E—Equipment,,§ 31.71 Function and installation.,FAA,,,"[Amdt. 31-4, 45 FR 60180, Sept. 11, 1980]","(a) Each item of installed equipment must—

(1) Be of a kind and design appropriate to its intended function;

(2) Be permanently and legibly marked or, if the item is too small to mark, tagged as to its identification, function, or operating limitations, or any applicable combination of those factors;

(3) Be installed according to limitations specified for that equipment; and

(4) Function properly when installed.

(b) No item of installed equipment, when performing its function, may affect the function of any other equipment so as to create an unsafe condition.

(c) The equipment, systems, and installations must be designed to prevent hazards to the balloon in the event of a probable malfunction or failure."
14:14:1.0.1.3.17.6.283.1,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,F,Subpart F—Operating Limitations and Information,,§ 31.81 General.,FAA,,,"[Amdt. 31-4, 45 FR 60180, Sept. 11, 1980]","(a) The following information must be established:

(1) Each operating limitation, including the maximum weight determined under § 31.14.

(2) The normal and emergency procedures.

(3) Other information necessary for safe operation, including—

(i) The empty weight determined under § 31.16;

(ii) The rate of climb determined under § 31.17, and the procedures and conditions used to determine performance;

(iii) The maximum vertical velocity, the altitude drop required to attain that velocity, and altitude drop required to recover from a descent at that velocity, determined under § 31.19, and the procedures and conditions used to determine performance; and

(iv) Pertinent information peculiar to the balloon's operating characteristics.

(b) The information established in compliance with paragraph (a) of this section must be furnished by means of—

(1) A Balloon Flight Manual; or

(2) A placard on the balloon that is clearly visible to the pilot."
14:14:1.0.1.3.17.6.283.2,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,F,Subpart F—Operating Limitations and Information,,§ 31.82 Instructions for Continued Airworthiness.,FAA,,,"[Amdt. 31-4, 45 FR 60180, Sept. 11, 1980]","The applicant must prepare Instructions for Continued Airworthiness in accordance with appendix A to this part that are acceptable to the Administrator. The instructions may be incomplete at type certification if a program exists to ensure their completion prior to delivery of the first balloon or issuance of a standard certificate of airworthiness, whichever occurs later."
14:14:1.0.1.3.17.6.283.3,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,F,Subpart F—Operating Limitations and Information,,§ 31.83 Conspicuity.,FAA,,,,"The exterior surface of the envelope must be of a contrasting color or colors so that it will be conspicuous during operation. However, multicolored banners or streamers are acceptable if it can be shown that they are large enough, and there are enough of them of contrasting color, to make the balloon conspicuous during flight."
14:14:1.0.1.3.17.6.283.4,14,Aeronautics and Space,I,C,31,PART 31—AIRWORTHINESS STANDARDS: MANNED FREE BALLOONS,F,Subpart F—Operating Limitations and Information,,§ 31.85 Required basic equipment.,FAA,,,"[Amdt. 31-2, 30 FR 3377, Mar. 13, 1965, as amended by Amdt. 31-3, 41 FR 55474, Dec. 20, 1976; Amdt. 31-4, 45 FR 60180, Sept. 11, 1980]","In addition to any equipment required by this subchapter for a specific kind of operation, the following equipment is required:

(a) For all balloons:

(1) [Reserved]

(2) An altimeter.

(3) A rate of climb indicator.

(b) For hot air balloons:

(1) A fuel quantity gauge. If fuel cells are used, means must be incorporated to indicate to the crew the quantity of fuel in each cell during flight. The means must be calibrated in appropriate units or in percent of fuel cell capacity.

(2) An envelope temperature indicator.

(c) For captive gas balloons, a compass."
17:17:1.0.1.1.24.0.7.1,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§§ 31.1-31.2 [Reserved],CFTC,,,,
17:17:1.0.1.1.24.0.7.10,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.11 Disclosure.,CFTC,,,"[49 FR 5532, Feb. 13, 1984; 49 FR 25427, June 21, 1984, as amended at 50 FR 29, Jan. 2, 1985; 50 FR 36415, Sept. 6, 1985; 54 FR 41080, Oct. 5, 1989; 54 FR 46503, Nov. 3, 1989]","(a) Except as provided in paragraph (i) of this section, prior to the opening of a leverage customer account, a leverage transaction merchant soliciting an order for any leverage contract shall furnish to the prospective leverage customer a dated Disclosure Document and receive from such prospective leverage customer a signed and dated copy of the risk disclosure statement contained in such document which acknowledges that the customer received and understood the Disclosure Document. The Disclosure Document shall contain then current information with respect to the leverage contract being offered by the person soliciting the order therefor, and shall contain:

(1) The following bold-faced risk disclosure statement in at least ten-point type on the first page of the Disclosure Document:

BECAUSE OF THE UNPREDICTABLE NATURE OF THE PRICES OF PRECIOUS AND OTHER METALS, LEVERAGE CONTRACTS INVOLVE A HIGH DEGREE OF RISK AND ARE NOT SUITABLE FOR MANY MEMBERS OF THE PUBLIC. THE LEVERAGE CUSTOMER SHOULD BE AWARE THAT THE VALUE OF A LEVERAGE CONTRACT ORIGINALLY PURCHASED BY A CUSTOMER (“LONG LEVERAGE CONTRACT”) MUST EXCEED THE BREAK-EVEN PRICE BEFORE IT IS POSSIBLE TO REALIZE A PROFIT ON THE CONTRACT. SIMILARLY, THE VALUE OF A LEVERAGE CONTRACT ORIGINALLY SOLD BY A LEVERAGE CUSTOMER (“SHORT LEVERAGE CONTRACT”) MUST BE LESS THAN THE BREAK-EVEN PRICE BEFORE IT IS POSSIBLE TO REALIZE A PROFIT ON THE CONTRACT. A FILLED IN VERSION OF THE CUSTOMER CONFIRMATION STATEMENT REFLECTING A SINGLE TRANSACTION IN A REPRESENTATIVE LEVERAGE COMMODITY FOR A LONG LEVERAGE TRANSACTION AND A SHORT LEVERAGE TRANSACTION WHICH INCLUDES A FORMULA FOR CALCULATING AN ESTIMATE OF THE LEVERAGE CONTRACT'S BREAK-EVEN VALUE IS ATTACHED TO THIS DOCUMENT. THIS IS IN THE SAME FORMAT AS THE CONFIRMATION STATEMENT YOU WILL RECEIVE TO CONFIRM YOUR ACTUAL TRANSACTION. BE CERTAIN THAT YOU UNDERSTAND THE INFORMATION PROVIDED BY THIS STATEMENT BEFORE YOU ENTER INTO A LEVERAGE TRANSACTION.
 
 YOU SHOULD ALSO UNDERSTAND THAT THE CHARGES FOR SIMILAR LEVERAGE CONTRACTS WHICH ARE REFLECTED ON THE FILLED-IN CONFIRMATION STATEMENT AS ESTIMATED MAY VARY AMONG LEVERAGE FIRMS, AND THAT SUCH FIRMS HAVE COMPLETE DISCRETION IN SETTING THEIR CHARGES AND THE PRICE OF THE LEVERAGE CONTRACTS THEY OFFER. PRIOR TO ENTERING INTO ANY LEVERAGE CONTRACT A PROSPECTIVE LEVERAGE CUSTOMER SHOULD COMPARE THE CHARGES AND PRICES OF SUCH FIRMS WITH EACH OTHER AND WITH THE COMMISSIONS FOR AND PRICES OF FUTURES CONTRACTS TRADED ON DESIGNATED EXCHANGES.
 
 YOU SHOULD ALSO BE AWARE THAT YOU ARE SUBJECT TO MARGIN CALLS. THE LEVERAGE FIRM RESERVES THE RIGHT TO LIQUIDATE YOUR POSITION IF YOU DO NOT RESPOND TO A MARGIN CALL WITHIN THE TIME SPECIFIED IN YOUR LEVERAGE AGREEMENT. IN ANY EVENT, IF THE EQUITY IN YOUR CONTRACT AT ANY TIME FALLS BELOW 50% OF THE MINIMUM MARGIN, YOUR CONTRACT MAY BE LIQUIDATED WITHOUT PRIOR NOTICE. YOU MUST, HOWEVER, BE NOTIFIED OF LIQUIDATION WITHIN NO MORE THAN 24 HOURS THEREAFTER AND PERMITTED TO REESTABLISH YOUR CONTRACT FOR A PERIOD OF 5 BUSINESS DAYS. LEVERAGE CONTRACTS PURCHASED FROM A LEVERAGE TRANSACTION MERCHANT ARE RE-ESTABLISHED AT THE THEN PREVAILING BID PRICE AND LEVERAGE CONTRACTS SOLD TO A LEVERAGE TRANSACTION MERCHANT ARE RE-ESTABLISHED AT THE THEN PREVAILING ASK PRICE WITHOUT COMMISSIONS, FEES OR OTHER MARK-UPS OR CHARGES UNDER RULES SET BY THE COMMODITY FUTURES TRADING COMMISSION, AS MORE COMPLETELY DESCRIBED IN THIS DISCLOSURE DOCUMENT. IN CASE OF LIQUIDATION, ALL OF YOUR FUNDS MAY BE USED TO SETTLE THE DEFICIT IN THE ACCOUNT, AND YOU MAY BE LIABLE FOR ADDITIONAL FUNDS TO SETTLE IN FULL.
 
 IF YOU ARE A FIRST-TIME LEVERAGE CUSTOMER, YOU MAY RESCIND YOUR FIRST LEVERAGE TRANSACTION SUBJECT ONLY TO ACTUAL PRICE LOSSES BUT OTHERWISE WITHOUT PENALTY FOR THREE BUSINESS DAYS FOLLOWING AND INCLUDING THE DAY OF RECEIPT OF THE CONFIRMATION.
 
 YOU SHOULD BE AWARE THAT IN ORDER TO REALIZE ANY VALUE FROM A LONG LEVERAGE CONTRACT, THE LEVERAGE TRANSACTION MERCHANT WHICH SOLD YOU THE LEVERAGE CONTRACT MUST REPURCHASE IT, OR YOU MUST PAY THE LEVERAGE TRANSACTION MERCHANT THE FULL PURCHASE PRICE FOR THE LEVERAGE CONTRACT, TAKE DELIVERY OF THE LEVERAGE COMMODITY, AND THEN SELL THE LEVERAGE COMMODITY, POSSIBLY AT A LOWER PRICE THAN THE PRICE PAID TO PURCHASE THE LEVERAGE COMMODITY FROM THE LEVERAGE TRANSACTION MERCHANT. YOU SHOULD ALSO BE AWARE THAT IN ORDER TO REALIZE ANY VALUE FROM A SHORT LEVERAGE CONTRACT, THE LEVERAGE TRANSACTION MERCHANT TO WHICH YOU SOLD THE LEVERAGE CONTRACT MUST RESELL IT TO YOU, OR YOU MUST ACQUIRE THE LEVERAGE COMMODITY IN ORDER TO MAKE DELIVERY TO THE LEVERAGE TRANSACTION MERCHANT, POSSIBLY AT A HIGHER PRICE THAN THE PRICE YOU WILL RECEIVE FROM THE LEVERAGE TRANSACTION MERCHANT.
 
 THERE IS NO MARKET FOR THE LEVERAGE CONTRACT ITSELF OTHER THAN TO HAVE IT REPURCHASED BY OR RESOLD TO THE LEVERAGE TRANSACTION MERCHANT. A LEVERAGE TRANSACTION MERCHANT IS UNDER NO OBLIGATION TO OFFER TO REPURCHASE OR RESELL A LEVERAGE CONTRACT AT ALL TIMES, ALTHOUGH THE LEVERAGE TRANSACTION MERCHANT MUST OFFER TO REPURCHASE ANY LONG LEVERAGE CONTRACT PREVIOUSLY PURCHASED BY A LEVERAGE CUSTOMER AND MUST ALSO OFFER TO RESELL ANY SHORT LEVERAGE CONTRACT PREVIOUSLY SOLD BY A LEVERAGE CUSTOMER AT ANY TIME DURING WHICH THE LEVERAGE TRANSACTION MERCHANT IS OFFERING TO ENTER INTO NEW LONG OR SHORT LEVERAGE CONTRACTS WITH CUSTOMERS INVOLVING THE SAME LEVERAGE COMMODITY. AS NOTED ABOVE, HOWEVER, A LEVERAGE TRANSACTION MERCHANT HAS COMPLETE DISCRETION IN SETTING THE PRICE AND ANY CHARGES RELATED THERETO.
 
 THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF THESE LEVERAGE CONTRACTS AS AN INVESTMENT VEHICLE NOR UPON THE ACCURACY OR ADEQUACY OF THIS DISCLOSURE DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A VIOLATION OF THE COMMODITY EXCHANGE ACT AND THE REGULATIONS THEREUNDER.

BECAUSE OF THE UNPREDICTABLE NATURE OF THE PRICES OF PRECIOUS AND OTHER METALS, LEVERAGE CONTRACTS INVOLVE A HIGH DEGREE OF RISK AND ARE NOT SUITABLE FOR MANY MEMBERS OF THE PUBLIC. THE LEVERAGE CUSTOMER SHOULD BE AWARE THAT THE VALUE OF A LEVERAGE CONTRACT ORIGINALLY PURCHASED BY A CUSTOMER (“LONG LEVERAGE CONTRACT”) MUST EXCEED THE BREAK-EVEN PRICE BEFORE IT IS POSSIBLE TO REALIZE A PROFIT ON THE CONTRACT. SIMILARLY, THE VALUE OF A LEVERAGE CONTRACT ORIGINALLY SOLD BY A LEVERAGE CUSTOMER (“SHORT LEVERAGE CONTRACT”) MUST BE LESS THAN THE BREAK-EVEN PRICE BEFORE IT IS POSSIBLE TO REALIZE A PROFIT ON THE CONTRACT. A FILLED IN VERSION OF THE CUSTOMER CONFIRMATION STATEMENT REFLECTING A SINGLE TRANSACTION IN A REPRESENTATIVE LEVERAGE COMMODITY FOR A LONG LEVERAGE TRANSACTION AND A SHORT LEVERAGE TRANSACTION WHICH INCLUDES A FORMULA FOR CALCULATING AN ESTIMATE OF THE LEVERAGE CONTRACT'S BREAK-EVEN VALUE IS ATTACHED TO THIS DOCUMENT. THIS IS IN THE SAME FORMAT AS THE CONFIRMATION STATEMENT YOU WILL RECEIVE TO CONFIRM YOUR ACTUAL TRANSACTION. BE CERTAIN THAT YOU UNDERSTAND THE INFORMATION PROVIDED BY THIS STATEMENT BEFORE YOU ENTER INTO A LEVERAGE TRANSACTION.

YOU SHOULD ALSO UNDERSTAND THAT THE CHARGES FOR SIMILAR LEVERAGE CONTRACTS WHICH ARE REFLECTED ON THE FILLED-IN CONFIRMATION STATEMENT AS ESTIMATED MAY VARY AMONG LEVERAGE FIRMS, AND THAT SUCH FIRMS HAVE COMPLETE DISCRETION IN SETTING THEIR CHARGES AND THE PRICE OF THE LEVERAGE CONTRACTS THEY OFFER. PRIOR TO ENTERING INTO ANY LEVERAGE CONTRACT A PROSPECTIVE LEVERAGE CUSTOMER SHOULD COMPARE THE CHARGES AND PRICES OF SUCH FIRMS WITH EACH OTHER AND WITH THE COMMISSIONS FOR AND PRICES OF FUTURES CONTRACTS TRADED ON DESIGNATED EXCHANGES.

YOU SHOULD ALSO BE AWARE THAT YOU ARE SUBJECT TO MARGIN CALLS. THE LEVERAGE FIRM RESERVES THE RIGHT TO LIQUIDATE YOUR POSITION IF YOU DO NOT RESPOND TO A MARGIN CALL WITHIN THE TIME SPECIFIED IN YOUR LEVERAGE AGREEMENT. IN ANY EVENT, IF THE EQUITY IN YOUR CONTRACT AT ANY TIME FALLS BELOW 50% OF THE MINIMUM MARGIN, YOUR CONTRACT MAY BE LIQUIDATED WITHOUT PRIOR NOTICE. YOU MUST, HOWEVER, BE NOTIFIED OF LIQUIDATION WITHIN NO MORE THAN 24 HOURS THEREAFTER AND PERMITTED TO REESTABLISH YOUR CONTRACT FOR A PERIOD OF 5 BUSINESS DAYS. LEVERAGE CONTRACTS PURCHASED FROM A LEVERAGE TRANSACTION MERCHANT ARE RE-ESTABLISHED AT THE THEN PREVAILING BID PRICE AND LEVERAGE CONTRACTS SOLD TO A LEVERAGE TRANSACTION MERCHANT ARE RE-ESTABLISHED AT THE THEN PREVAILING ASK PRICE WITHOUT COMMISSIONS, FEES OR OTHER MARK-UPS OR CHARGES UNDER RULES SET BY THE COMMODITY FUTURES TRADING COMMISSION, AS MORE COMPLETELY DESCRIBED IN THIS DISCLOSURE DOCUMENT. IN CASE OF LIQUIDATION, ALL OF YOUR FUNDS MAY BE USED TO SETTLE THE DEFICIT IN THE ACCOUNT, AND YOU MAY BE LIABLE FOR ADDITIONAL FUNDS TO SETTLE IN FULL.

IF YOU ARE A FIRST-TIME LEVERAGE CUSTOMER, YOU MAY RESCIND YOUR FIRST LEVERAGE TRANSACTION SUBJECT ONLY TO ACTUAL PRICE LOSSES BUT OTHERWISE WITHOUT PENALTY FOR THREE BUSINESS DAYS FOLLOWING AND INCLUDING THE DAY OF RECEIPT OF THE CONFIRMATION.

YOU SHOULD BE AWARE THAT IN ORDER TO REALIZE ANY VALUE FROM A LONG LEVERAGE CONTRACT, THE LEVERAGE TRANSACTION MERCHANT WHICH SOLD YOU THE LEVERAGE CONTRACT MUST REPURCHASE IT, OR YOU MUST PAY THE LEVERAGE TRANSACTION MERCHANT THE FULL PURCHASE PRICE FOR THE LEVERAGE CONTRACT, TAKE DELIVERY OF THE LEVERAGE COMMODITY, AND THEN SELL THE LEVERAGE COMMODITY, POSSIBLY AT A LOWER PRICE THAN THE PRICE PAID TO PURCHASE THE LEVERAGE COMMODITY FROM THE LEVERAGE TRANSACTION MERCHANT. YOU SHOULD ALSO BE AWARE THAT IN ORDER TO REALIZE ANY VALUE FROM A SHORT LEVERAGE CONTRACT, THE LEVERAGE TRANSACTION MERCHANT TO WHICH YOU SOLD THE LEVERAGE CONTRACT MUST RESELL IT TO YOU, OR YOU MUST ACQUIRE THE LEVERAGE COMMODITY IN ORDER TO MAKE DELIVERY TO THE LEVERAGE TRANSACTION MERCHANT, POSSIBLY AT A HIGHER PRICE THAN THE PRICE YOU WILL RECEIVE FROM THE LEVERAGE TRANSACTION MERCHANT.

THERE IS NO MARKET FOR THE LEVERAGE CONTRACT ITSELF OTHER THAN TO HAVE IT REPURCHASED BY OR RESOLD TO THE LEVERAGE TRANSACTION MERCHANT. A LEVERAGE TRANSACTION MERCHANT IS UNDER NO OBLIGATION TO OFFER TO REPURCHASE OR RESELL A LEVERAGE CONTRACT AT ALL TIMES, ALTHOUGH THE LEVERAGE TRANSACTION MERCHANT MUST OFFER TO REPURCHASE ANY LONG LEVERAGE CONTRACT PREVIOUSLY PURCHASED BY A LEVERAGE CUSTOMER AND MUST ALSO OFFER TO RESELL ANY SHORT LEVERAGE CONTRACT PREVIOUSLY SOLD BY A LEVERAGE CUSTOMER AT ANY TIME DURING WHICH THE LEVERAGE TRANSACTION MERCHANT IS OFFERING TO ENTER INTO NEW LONG OR SHORT LEVERAGE CONTRACTS WITH CUSTOMERS INVOLVING THE SAME LEVERAGE COMMODITY. AS NOTED ABOVE, HOWEVER, A LEVERAGE TRANSACTION MERCHANT HAS COMPLETE DISCRETION IN SETTING THE PRICE AND ANY CHARGES RELATED THERETO.

THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF THESE LEVERAGE CONTRACTS AS AN INVESTMENT VEHICLE NOR UPON THE ACCURACY OR ADEQUACY OF THIS DISCLOSURE DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A VIOLATION OF THE COMMODITY EXCHANGE ACT AND THE REGULATIONS THEREUNDER.

(2) Immediately following the statement required by paragraph (a)(1) of this section, a section, captioned “Provisions of Leverage Contract” in at least ten point type, containing the terms and conditions of the leverage contract being offered. This information must be provided in the order specified in paragraphs (a)(2) (i) through (xi) of this section, with a clear demarcation or separation between each item according to the paragraph of the section to which it corresponds, and include:

(i) The duration or expiration date of the leverage contract;

(ii) The distinguishing characteristics of the contract and of the leverage commodity, including, in particular, those characteristics of the leverage commodity enumerated in § 31.4(g)(1)-(4) of this part;

(iii) A description of the following charges for each leverage contract:

(A) Initial charges;

(B) Carrying charges;

(C) Termination charges;

(iv) A description of the bid and ask prices of each leverage contract;

(v) An explanation of the margins applicable to each leverage contract, including, as required, initial margins, minimum margins and maintenance margins;

(vi) A description of the leverage customer's responsibilities with respect to margin calls, including the timing of such calls and, if applicable, the circumstances under which, time after which, and the order in which the leverage transaction merchant may, consistent with § 31.18 liquidate a customer's position in the leverage contract;

(vii) A description of the manner in which a leverage customer may seek to have a leverage contract repurchased or resold by the leverage transaction merchant, including an explanation of the procedure to be followed by the leverage transaction merchant to effect such repurchase or resale and the manner in which the repurchase or resale price is determined;

(viii) A statement to the effect that other persons may be unwilling to buy from the leverage customer the leverage commodity that is deliverable on the leverage contract without first requiring an inspection or assay at the expense of the leverage customer; a statement to the effect that the leverage transaction merchant may be unwilling to accept delivery and pay for such leverage commodity without first requiring an inspection or assay at the expense of the leverage customer; and a description of any other requirements for the delivery of a leverage commodity by a leverage customer to a leverage transaction merchant in connection with a short leverage contract;

(ix) A clear explanation of any  force majeure  clauses pertaining to each leverage contract;

(x) A description of any material risks not included in the statements required by paragraph (a)(1) of this section; and

(xi) An identification of the commercial or retail cash price series filed in accordance with § 31.6, along with clearly specified premiums and discounts, if applicable, which the leverage customer or prospective leverage customer can use to evaluate a leverage contract and a widely available source from which such price quotes may be obtained on a timely basis.

(3) A filled-in version of the customer Confirmation Statement in the format specified by the Commission for a representative single long leverage contract and a representative single short leverage contract which includes a formula which can be used to estimate the break-even price.

(4)(i) The name, address of the main business office, main business telephone number and form of organization of the leverage transaction merchant. If the address of the main business office is a post office box number, the leverage transaction merchant must state where its books and records will be kept;

(ii) The name of each principal of the leverage transaction merchant;

(iii) The business background, for the five years preceding the date of the statement, of:

(A) The leverage transaction merchant; and

(B) Each principal of the leverage transaction merchant.

The leverage transaction merchant must include in the description of the business background of each such person the name and main business of that person's employers, business associations or business ventures and the nature of the person's duties performed for the employers or in connection with the associations or ventures.

(5)(i) A statement whether any principal of the leverage transaction merchant has entered into or intends to enter into long or short leverage contracts for his own account and, if so, whether leverage customers will be permitted to inspect the records of that person's trades; and

(ii) If principals of the leverage transaction merchant will not enter into or do not intend to enter into long or short leverage contracts for their own account, the leverage transaction merchant must so state with respect to each principal.

(6)(i) Any material administrative or civil action involving any activity or conduct, or related to any statute, set forth in sections 8a(2) or 8a(3) of the Act, or any material criminal action brought within the five years preceding the date of the document against the leverage transaction merchant or any principal of the leverage transaction merchant; and

(ii) If there has been no such action against any of the foregoing persons, the leverage transaction merchant must make a statement to that effect with respect to each such person.

(b)(1) If the leverage transaction merchant knows or should know that the Disclosure Document is materially inaccurate or incomplete in any respect, it must correct that defect and must distribute the correction to:

(i) All existing leverage customers within 30 calendar days after the date upon which the leverage transaction merchant first knows or has reason to know of the defect; and

(ii) Each prospective leverage customer prior to opening an account for such person.

The leverage transaction merchant may furnish the correction by means of an amended document, a sticker on the document, a notice in a monthly statement or by other similar means.

(2) The leverage transaction merchant may not use the document until such correction is made.

(c) The leverage transaction merchant must date each document and amendment thereto as of the date it is first used.

(d) Subject to the provisions of paragraph (b) of this section, all information contained in the document must be current as of the date of the document.

(e)(1) The leverage transaction merchant must file with the National Futures Association three copies and with the Commission at its Washington, DC headquarters, Attn: Secretariat, one copy of the document for each leverage contract that it offers or that it intends to offer not less than 21 calendar days prior to the date the leverage transaction merchant first intends to furnish the document to a prospective leverage customer. The leverage transaction merchant must specify with the filing the date it first intends to deliver the document to a prospective leverage customer;

(2) Subject to paragraphs (h) and (m) of this section, the leverage transaction merchant must file with the National Futures Association three copies and with the Commission at its Washington, DC headquarters, Attn: Secretariat, one copy of all subsequent amendments to the document for each leverage contract that it offers or that it intends to offer within 30 calendar days after the date upon which the leverage transaction merchant first knows or has reason to know of the defect requiring the amendment.

(f) This section does not relieve a leverage transaction merchant from any obligation under the Act or the regulations thereunder, including the obligation to disclose all material information to existing or prospective leverage customers even if the information is not specifically required by this section.

(g) If any contract term set forth in accordance with paragraph (a)(2) of this section provides that such term is subject to change, the leverage transaction merchant must ensure that this fact, the conditions under which the change may take place, and the foreseeable consequences of the change are clearly stated in the Disclosure Document, in describing that contract term.

(h) A leverage transaction merchant must transmit a notification to each leverage customer within 24 hours of making any change not otherwise permitted under the contract terms set forth in accordance with paragraph (a)(2) of this section. A notification of any change in the interest rate charged by the leverage transaction merchant must also be transmitted to each leverage customer within twenty-four hours of each change:  Provided, however,  That no notification is required if the change in interest rate is one percent or less as compared to the rate charged at the prior month-end and the new interest rate is made available to customers by means of a toll-free telephone call, and such availability is set forth in the Disclosure Document. The notification required by this paragraph must be transmitted by first class mail or other, at least equivalent, means of communication.

(i) A person soliciting or accepting an order for a leverage contract is not required to deliver a Disclosure Document leverage to a leverage customer, as required by paragraph (a) of this section, if a disclosure document meeting all of the requirements of this section previously has been delivered by the person to the leverage customer:  Provided, however,  That such a Disclosure Document must be delivered:

(1) Upon the request of a leverage customer, or

(2) If the previously delivered Disclosure Document has become outdated or has become inaccurate in any material respect.

(j) Prior to the entry into a leverage contract, the person soliciting the order therefor shall inform the leverage customer or the prospective leverage customer, to the extent these amounts are known or can reasonably be approximated, of all charges for the initiation, carrying and termination of a leverage contract and the leverage transaction merchant's bid-ask spread on the leverage contract as set forth in paragraph (a)(2)(iii) and (a)(2)(iv), respectively, of this section and the margins applicable to such contracts as set forth in paragraph (a)(2)(v) and (a)(2)(vi) of this section.

(k)(1) Not later than the next business day after the entry into a long leverage contract with a customer, each leverage transaction merchant shall furnish to such customer, by first-class mail or other, at least equivalent, means of communication, a written Confirmation Statement in a format specified by the Commission containing:

(i) For a leverage customer's first leverage transaction, the following bold-faced statement in at least ten-point type:

IF YOU ARE A FIRST-TIME LEVERAGE CUSTOMER, YOU MAY RESCIND YOUR FIRST LEVERAGE TRANSACTION SUBJECT ONLY TO ACTUAL PRICE LOSSES BUT OTHERWISE WITHOUT PENALTY FOR THREE BUSINESS DAYS FOLLOWING AND INCLUDING RECEIPT OF THIS CONFIRMATION. ACTUAL LOSSES ON A LEVERAGE CONTRACT PURCHASED FROM A LEVERAGE TRANSACTION MERCHANT ARE CALCULATED BY SUBTRACTING THE ASK PRICE OF THE LEVERAGE CONTRACT AT THE TIME OF THE CUSTOMER'S RESCISSION FROM THE ASK PRICE AT WHICH THE LEVERAGE CONTRACT WAS PURCHASED AND WHICH APPEARS ON THIS CONFIRMATION. TO RESCIND THIS CONTRACT SEND A TELEGRAM TO (name and address of LTM) OR YOU MAY TELEPHONE (name of LTM) AT (telephone number). IF YOU RESCIND BY TELEPHONE, YOU MUST ALSO SEND IMMEDIATE WRITTEN AFFIRMATION BY TELEGRAM, CERTIFIED LETTER OR BY AT LEAST EQUIVALENT MEANS TO THE ADDRESS PROVIDED ABOVE; and

IF YOU ARE A FIRST-TIME LEVERAGE CUSTOMER, YOU MAY RESCIND YOUR FIRST LEVERAGE TRANSACTION SUBJECT ONLY TO ACTUAL PRICE LOSSES BUT OTHERWISE WITHOUT PENALTY FOR THREE BUSINESS DAYS FOLLOWING AND INCLUDING RECEIPT OF THIS CONFIRMATION. ACTUAL LOSSES ON A LEVERAGE CONTRACT PURCHASED FROM A LEVERAGE TRANSACTION MERCHANT ARE CALCULATED BY SUBTRACTING THE ASK PRICE OF THE LEVERAGE CONTRACT AT THE TIME OF THE CUSTOMER'S RESCISSION FROM THE ASK PRICE AT WHICH THE LEVERAGE CONTRACT WAS PURCHASED AND WHICH APPEARS ON THIS CONFIRMATION. TO RESCIND THIS CONTRACT SEND A TELEGRAM TO (name and address of LTM) OR YOU MAY TELEPHONE (name of LTM) AT (telephone number). IF YOU RESCIND BY TELEPHONE, YOU MUST ALSO SEND IMMEDIATE WRITTEN AFFIRMATION BY TELEGRAM, CERTIFIED LETTER OR BY AT LEAST EQUIVALENT MEANS TO THE ADDRESS PROVIDED ABOVE; and

(ii) For every leverage transaction, the following information:

(A) The date the leverage contract was entered into;

(B) The transaction identification number;

(C) The name of the leverage commodity;

(D) The expiration date of the leverage contract;

(E) The total cost of the leverage contracts covered in the Confirmation Statement, which equals the leverage transaction merchant's ask price in dollars per unit multiplied by the number of units multiplied by the number of contracts;

(F) The total unpaid balance for this transaction;

(G) The total initial charges for the transaction;

(H) The total initial margin for the transaction, in dollars and as a percentage of the contract price;

(I) The total amount due (or paid) to initiate the transaction, which equals the total initial charges plus the total initial margin in dollars;

(J) The current equity in the individual customer's account as of the date of this transaction, but excluding this transaction;

(K) The total variable carrying charges to be billed each period, in dollars and as an annual percentage rate, based on the carrying charge rate prevailing at the time the contract is entered into;

(L) The total bid/ask spread, based on prices prevailing at the time the contract is entered into;

(M) The total termination charges incurred if the contract is repurchased, liquidated by the leverage transaction merchant or settled by delivery, based on charges prevailing at the time the contract is entered into;

(N) Any other charges associated with terminating the transaction, based on charges prevailing at the time the contract is entered into;

(O) Any special charges associated with liquidating the transaction, based on charges prevailing at the time the contract is entered into;

(P) The total delivery charges incurred if the customer takes delivery on the contract, based on charges prevailing at the time the contract is entered into;

(Q) The following formula enabling a customer to calculate the estimated total contract value to break-even: Initial contract value plus the bid-ask spread plus the intitial charges plus any other charges plus the termination charges plus the carrying charges for the period the contract is intended to be held open;

(R) The total minimum margin, in dollars and as a percentage of contract price, based on the rate prevailing at the time the contract is entered into;

(S) The total maintenance margin, in dollars and as a percentage of contract price, based on the rate prevailing at the time the contract is entered into;

(T) The commercial or retail cash price series filed in accordance with § 31.6 available to the leverage customer to evaluate the leverage contract (including any applicable premiums or discounts), and where quotes of this series can be obtained on a timely basis; and

(2) Not later than the next business day after entry into a short leverage contract with a customer, each leverage transaction merchant shall furnish to such customer by first-class mail or other, at least equivalent, means of communication, a written Confirmation Statement in a format specified by the Commission containing:

(i) For a leverage customer's first leverage transaction, the following bold-faced statement in at least ten-point type:

IF YOU ARE A FIRST-TIME LEVERAGE CUSTOMER, YOU MAY RESCIND YOUR FIRST LEVERAGE TRANSACTION SUBJECT ONLY TO ACTUAL PRICE LOSSES BUT OTHERWISE WITHOUT PENALTY FOR THREE BUSINESS DAYS FOLLOWING AND INCLUDING RECEIPT OF THIS CONFIRMATION. ACTUAL LOSSES ON A LEVERAGE CONTRACT SOLD TO A LEVERAGE TRANSACTION MERCHANT ARE CALCULATED BY SUBTRACTING THE BID PRICE AT WHICH THE CONTRACT WAS SOLD TO THE LEVERAGE TRANSACTION MERCHANT AND WHICH APPEARS ON THIS CONFIRMATION FROM THE BID PRICE OF THE LEVERAGE CONTRACT AT THE TIME OF THE CUSTOMER'S RESCISSION. TO RESCIND THIS CONTRACT SEND A TELEGRAM TO (name and address of LTM) OR YOU MAY TELEPHONE (name of LTM) AT (telephone number). IF YOU RESCIND BY TELEPHONE, YOU MUST ALSO SEND IMMEDIATE WRITTEN AFFIRMATION BY TELEGRAM, CERTIFIED LETTER OR BY AT LEAST EQUIVALENT MEANS TO THE ADDRESS PROVIDED ABOVE: and

IF YOU ARE A FIRST-TIME LEVERAGE CUSTOMER, YOU MAY RESCIND YOUR FIRST LEVERAGE TRANSACTION SUBJECT ONLY TO ACTUAL PRICE LOSSES BUT OTHERWISE WITHOUT PENALTY FOR THREE BUSINESS DAYS FOLLOWING AND INCLUDING RECEIPT OF THIS CONFIRMATION. ACTUAL LOSSES ON A LEVERAGE CONTRACT SOLD TO A LEVERAGE TRANSACTION MERCHANT ARE CALCULATED BY SUBTRACTING THE BID PRICE AT WHICH THE CONTRACT WAS SOLD TO THE LEVERAGE TRANSACTION MERCHANT AND WHICH APPEARS ON THIS CONFIRMATION FROM THE BID PRICE OF THE LEVERAGE CONTRACT AT THE TIME OF THE CUSTOMER'S RESCISSION. TO RESCIND THIS CONTRACT SEND A TELEGRAM TO (name and address of LTM) OR YOU MAY TELEPHONE (name of LTM) AT (telephone number). IF YOU RESCIND BY TELEPHONE, YOU MUST ALSO SEND IMMEDIATE WRITTEN AFFIRMATION BY TELEGRAM, CERTIFIED LETTER OR BY AT LEAST EQUIVALENT MEANS TO THE ADDRESS PROVIDED ABOVE: and

(ii) For every leverage transaction, the following information:

(A) The date the leverage contract was entered into;

(B) The transaction identification number;

(C) The name of the leverage commodity;

(D) The expiration date of the leverage contract;

(E) The total cost of the leverage contracts covered in the Confirmation Statement, which equals the leverage transaction merchant's bid price in dollars per unit multiplied by the number of units multiplied by the number of contracts;

(F) The total initial charges for the transaction;

(G) The total initial margin for the transaction, in dollars and as a percentage of the contract price;

(H) The total amount due (or paid) to initiate the transaction, which equals the total initial charges plus the total initial margin in dollars;

(I) The current equity in the individual customer's account as of the date of this transaction, but excluding this transaction;

(J) The total variable carrying charges to be credited each period, in dollars and as an annual percentage rate, based on the carrying charge rate prevailing at the time the contract is entered into;

(K) The total bid/ask spread, based on prices prevailing at the time the contract is entered into;

(L) The total termination charges incurred if the contract is resold, liquidated by the leverage transaction merchant or settled by delivery, based on charges prevailing at the time the contract is entered into;

(M) Any other charges associated with terminating the transaction, based on charges prevailing at the time the contract is entered into;

(N) Any special charges associated with liquidating the transaction, based on charges prevailing at the time the contract is entered into;

(O) The total delivery (including assay) charges incurred if the customer makes delivery on the contract, based on charges prevailing at the time the contract is entered into;

(P) The following formula enabling a customer to calculate the estimated total contract value to break-even: Initial contract value plus carrying charges for the period the contract is intended to be held open, minus the bid-ask spread, minus the initial charges, minus any other charges, minus the termination charges;

(Q) The total minimum margin, in dollars and as a percentage of contract price, based on the rate prevailing at the time the contract is entered into;

(R) The total maintenance margin, in dollars and as a percentage of contract price, based on the rate prevailing at the time the contract is entered into;

(S) The commercial or retail cash price series filed in accordance with § 31.6 available to the leverage customer to evaluate the leverage contract (including any applicable premiums or discounts), and where quotes of this series can be obtained on a timely basis.

(l) Each leverage transaction merchant shall furnish, upon request, by first-class mail or other generally accepted means of communication, to all leverage customers with open leverage contracts and to prospective leverage customers who are being solicited to enter leverage contracts with it, a true copy of portions of the quarterly unaudited or annual audited financial statement most recently filed with the Commission pursuant to § 31.13, except that the portions of those statements which will generally be accorded non-public treatment by the Commission need not be so furnished.

(m)(1) Notwithstanding any other provision in this section, if a leverage transaction merchant is not offering to enter into, entering into or confirming the execution of, soliciting or accepting a leverage customer's order for, or accepting any leverage customer funds from a leverage customer to enter into or maintain any short leverage contract, the leverage transaction merchant may delete or disregard references to short leverage contracts in its Disclosure Document as follows:

(i) The third sentence of the first paragraph of the required bold-faced risk disclosure statement in paragraph (a)(1) of this section;

(ii) The words “and a short leverage transaction” in the fourth sentence of the first paragraph of the required bold-faced risk disclosure statement in paragraph (a)(1) of this section;

(iii) The words “and leverage contracts sold to a leverage transaction merchant are re-established at the then prevailing ask price” in the fifth sentence of the third paragraph of the required bold-faced risk disclosure statement in paragraph (a)(1) of this section;

(iv) The second sentence of the fifth paragraph of the required bold-faced risk disclosure statement in paragraph (a)(1) of this section;

(v) The words “or resold to” in the first sentence of the sixth paragraph of the required bold-faced risk disclosure statement in paragraph (a)(1) of this section;

(vi) The words “or resell,” “and must also offer to resell any short leverage contract previously sold by a leverage customer,” and “or short” in the second sentence of the sixth paragraph of the required bold-faced risk disclosure statement in paragraph (a)(1) of this section;

(vii) The words “or resold” and “or resale” (twice) in paragraph (a)(2)(vii) of this section;

(viii) All of the words following the first semicolon in paragraph (a)(2)(viii) of this section;

(ix) The words “and a representative single short leverage contract” in paragraph (a)(3) of this section; and

(x) The words “or short” in paragraphs (a)(5)(i) and (a)(5)(ii) of this section.

(2) Any leverage transaction merchant using a Disclosure Document that deletes or disregards references to short leverage contracts as permitted by paragraph (m)(1) of this section must file, in accordance with the provisions of paragraph (e)(2) of this section, a new Disclosure Document meeting all of the requirements of paragraphs (a) through (i) of this section at least 30 calendar days before it begins to offer any short leverage contract."
17:17:1.0.1.1.24.0.7.11,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.12 Segregation.,CFTC,,,"[49 FR 5535, Feb. 13, 1984, as amended at 50 FR 31, Jan. 2, 1985, 50 FR 34616, Sept. 6, 1985; 50 FR 40964, Oct. 8, 1985; 54 FR 41081, Oct. 5, 1989; 54 FR 46503, Nov. 3, 1989]","(a) Any person that accepts leverage customer funds from a leverage customer to enter into or maintain a leverage contract shall treat and deal with such leverage customer funds as belonging to that leverage customer. Such leverage customer funds: (1) Shall be separately accounted for and segregated as belonging to the leverage customer, (2) shall be kept in the United States, (3) shall not be commingled with the funds of any other person, and (4) shall not be used to secure or extend the credit of any leverage customer or person other than the one for whom the leverage customer funds are held:  Provided, however,  That the leverage customer funds treated as belonging to a leverage customer may for convenience be commingled with other leverage customer funds and deposited in the same account or accounts with a futures commission merchant or with a bank or trust company located in the United States under conditions set forth in paragraph (b) of this section. Any leverage customer funds when so deposited with a futures commission merchant, bank or trust company, shall be deposited under an account name which clearly indicates that the account contains leverage customer funds that are segregated as required by this section. Each person so depositing any leverage customer funds shall obtain and retain in its files for the period provided in § 1.31 of this chapter an acknowledgment from the futures commission merchant, bank or trust company wherein the leverage customer funds have been deposited that the futures commission merchant, bank or trust company has been informed that the leverage customer funds deposited with it are being treated by the depositing person as belonging to leverage customers and are being held in accordance with the provisions of this section. The futures commission merchant, bank or trust company shall allow inspection of such segregated accounts, including all documents pertaining thereto, at any reasonable time by any representative of the Commission or designated self-regulatory organization, if any. Notwithstanding the foregoing, a leverage transaction merchant may exclude from its segregation requirements commissions and other charges lawfully accruing in connection with leverage contracts provided such charges have actually been made to leverage customers' accounts and are shown on the customers' statements.

(b) No leverage customer funds deposited in accordance with paragraph (a) of this section shall be held, disposed of, used or treated as belonging to the depositing person or any person other than the leverage customers from whom the leverage customer funds were received:  Provided, however,  That leverage customer funds may be used to purchase obligations of the United States, general obligations of any state or of any political subdivision thereof, obligations fully guaranteed as to principal and interest by the United States, or unencumbered warehouse receipts for inventory held in approved contract market depositories or in commercial banks located in the United States which represent cover for leverage contracts purchased by such leverage customers, or may be deposited in a commodity account with a futures commission merchant to margin futures contracts or to purchase commodity options traded on or subject to the rules of a contract market which are permissible cover as described in § 31.8(a) (2) and (3) for leverage contracts entered into by such leverage customers. Any use of leverage customer funds as described in this paragraph (b) shall be made through an account or accounts used for the deposit of leverage customer funds, and proceeds from any sale, liquidation or other disposition of obligations or warehouse receipts obtained by such use shall be redeposited in these accounts. Each person that uses leverage customer funds to purchase obligations or warehouse receipts of the type described in this paragraph (b) shall separately account for and segregate the obligations or warehouse receipts as belonging to leverage customers. The obligations or warehouse receipts shall be deposited with a futures commission merchant, bank or trust company in the United States and shall be deposited under an account name which clearly indicates that it contains obligations or warehouse receipts treated as belonging to leverage customers, segregated as required by this section. Each person so depositing any obligations or warehouse receipts shall obtain and retain in its files for the period provided in § 1.31 of this chapter an acknowledgment from the futures commission merchant, bank or trust company wherein the obligations or warehouse receipts have been deposited that the futures commission merchant, bank or trust company has been informed that the obligations or warehouse receipts are being treated by the depositing person as belonging to leverage customers and are being held in accordance with the provisions of this section. The futures commission merchant, bank or trust company shall allow inspection of such obligations or warehouse receipts at any reasonable time by any representative of the Commission or designated self-regulatory organization, if any. Each person that uses leverage customer funds to margin futures contracts or to purchase commodity options traded on or subject to the rules of a contract market which represent permissible cover for leverage contracts entered into by such leverage customers shall use a commodity account separate from any other commodity account containing futures contracts which do not represent cover. The leverage customer funds deposited in a commodity account with a futures commission merchant to margin futures contracts or to purchase commodity options traded on or subject to the rules of a contract market which represent permissible cover for leverage contracts entered into by such leverage customers shall be deposited under an account name which clearly indicates that it contains obligations treated as belonging to leverage customers, segregated as required by this section. Each person so depositing any leverage customer funds shall obtain and retain in its files for the period provided in § 1.31 of this chapter an acknowledgment from the futures commission merchant wherein the leverage customer funds have been deposited that:

(1) The futures commission merchant has been informed that the commodity account is being treated by the depositing person as belonging to leverage customers and is being held in accordance with the provisions of this section,

(2) The customers on whose behalf the account is maintained by the leverage transaction merchant shall not be liable for any margin calls or other required deposits related to such account, and

(3) Upon liquidation of the open contracts in the account the futures commission merchant's claim in the account balance will be subordinate to that of leverage customers.

(c) Each person that uses leverage customer funds to purchase obligations or unencumbered warehouse receipts as permitted by paragraph (b) of this section shall keep a written record which includes the following:

(1) The date on which the purchase was made;

(2) The name of the person through which the purchase was made;

(3) The amount of funds so used;

(4) A description of such obligations or warehouse receipts, including the receipt number and the issuer's name;

(5) The identity of the futures commission merchant, bank or trust company wherein the obligations or warehouse receipts are segregated;

(6) The date on which the obligation, warehouse receipt, or portion thereof, is liquidated or otherwise disposed of;

(7) The amount of money, if any, received upon such liquidation or disposition; and

(8) The name of the person to or through which the obligation or warehouse receipt was disposed.

(d) Persons that use leverage customer funds to purchase obligations or unencumbered warehouse receipts described in paragraph (b) of this section shall include such obligations or unencumbered warehouse receipts in segregated accounts at values which do not exceed the lesser of current market value or a value calculated on the basis of a commercial or retail cash price series used to compute the market value of the physical commodities subject to leverage contracts in accordance with § 31.9(a)(1).

(e) The provisions of paragraphs (a) and (b) of this section shall not operate to prevent any person that uses leverage customer funds to purchase government obligations as described therein from receiving and retaining as its own any increment or interest resulting from such government obligations:  Provided, however,  That the leverage transaction merchant fulfills its obligation to pay carrying charges on a short leverage contract, including any margin deposit made in connection with such a contract, in accordance with § 31.25(b).

(f) The amount of leverage customer funds which are and which must be in a segregated account in order to comply with the requirements of this section shall be computed as of the close of each business day by each person required to segregate such leverage customer funds. A written record of this computation shall be made and kept, together with all supporting data, in accordance with the provisions of § 1.31 of this chapter. This daily computation shall be made by noon on the next business day and shall be identical in format to the Schedule of Segregation Requirements and Funds in Segregation contained in Form 2-FR.

(g) Each leverage transaction merchant shall maintain, as provided in § 1.31, a record of all securities and property received from leverage customers in lieu of money to purchase, guarantee or secure the entry into a leverage contract. Such record shall show separately for each leverage customer a description of the securities or property received; the name and address of such leverage customer; the dates when the securities or property were received; the identity of the depositories or other places where such securities or property are segregated; the dates of deposits and withdrawals from such depositories; and the date of return of such securities or property to such leverage customer, or other disposition thereof, together with the facts and circumstances of such other disposition.

(h) The requirements of paragraphs (a) through (g) of this section shall not be applicable if the leverage transaction merchant is a member of a designated self-regulatory organization and conforms to minimum segregation standards and related reporting requirements set by such designated self-regulatory organization in its bylaws, rules, regulations or resolutions approved by the Commission pursuant to section 19 of the Act and § 31.28 of this part."
17:17:1.0.1.1.24.0.7.12,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.13 Financial reports of leverage transaction merchants.,CFTC,,,"[49 FR 5536, Feb. 13, 1984, as amended at 54 FR 41081, Oct. 5, 1989; 62 FR 10445, Mar. 7, 1997; 67 FR 62352, Oct. 7, 2002; 69 FR 41426, July 9, 2004; 78 FR 22419, Apr. 16, 2013; 89 FR 71811, Sept. 4, 2024]","(a) Each leverage transaction merchant who files an application for registration with the National Futures Association under § 3.17 of this chapter shall submit concurrently with the filing of such application either:

(1) A Form 2-FR certified by an independent public accountant as of a date not more than 45 days prior to the date on which such report is filed; or

(2) A Form 2-FR as of a date not more than 45 days prior to the date on which such report is filed and an Form 2-FR certified by an independent public accountant as of a date not more than 1 year prior to the date on which such report is filed. Each such person must include with such financial report a statement describing the source of his current assets and representing that his capital has been contributed for the purpose of operating his business and will continue to be used for such purpose.

(b)(1) Each leverage transaction merchant must file, in accordance with the requirements of paragraph (e) of this section, a Form 2-FR for each fiscal quarter of each fiscal year. The Form 2-FR filed as of the close of the leverage transaction merchant's fiscal year must be certified by an independent public accountant. Each Form 2-FR must be filed no later than 45 days after the date for which the report is made:  Provided, however,  That any Form 2-FR which must be certified by an independent public accountant must be filed no later than 90 days after the close of the leverage transaction merchant's fiscal year.

(2) The provisions of paragraph (b)(1) of this section may be met by any person registered as a leverage transaction merchant who is a member of a designated self-regulatory organization and conforms to minimum financial standards and related reporting requirements set by such designated self-regulatory organization in its bylaws, rules, regulations, or resolutions and approved after April 13, 1984, by the Commission pursuant to section 19 of the Act and § 31.28 of this part:  Provided, however,  That each such registrant shall promptly file with the Commission a true and exact copy of each financial report which it files with such designated self-regulatory organization.

(c) Each Form 2-FR which must be certified by an independent public accountant in accordance with the provisions of paragraphs (a)(1), (a)(2) and (b)(1) of this section, must be certified in accordance with § 1.16 of this chapter, and must be accompanied by the accountant's report on material inadequacies in accordance with the provisions of § 1.16(c)(5) of this chapter. In all other respects, the independent public accountant shall act in accordance with the provisions of § 1.16 (except paragraph (f)) of this chapter:  Provided, however,  That the term “Form 2-FR” shall be substituted for “Form 1-FR” in § 1.16(c)(5) of this chapter, the term “§ 31.9” shall be substituted for the term “§ 1.17,” the term “leverage transaction merchant” shall be substituted for the term “futures commission merchant,” and “the segregation requirements of § 31.12” shall be substituted for “the segregation requirements of section 4d(a)(2) of the Act and these regulations and the secured amount requirement of the Act and these regulations.”

(d) Upon receiving written notice from any representative of the Commission or any self-regulatory organization of which it is a member, a leverage transaction merchant shall, on a monthly basis or at such other times as specified, furnish the Commission and the self-regulatory organization, if any, with a Form 2-FR or such other financial information as requested by the representative of the Commission or the self-regulatory organization. Each such Form 2-FR or such other information must be furnished within the time specified in the written notice.

(e) The reports provided for in this section will be considered filed when received by the regional office of the Commission with jurisdiction over the state wherein the principal place of business of the leverage transaction merchant is located, in accordance with § 140.2 of this chapter, and by the designated self-regulatory organization, if any.

(f) Each Form 2-FR filed pursuant to this section which is not required to be certified by an independent public accountant must be completed in accordance with the instructions to the form and contain:

(1) A statement of financial condition as of the date for which the report is made;

(2) A statement of changes in ownership equity for the period between the date of the most recent statement of financial condition filed with the Commission and the date for which the report is made;

(3) A statement of changes in liabilities subordinated to claims of general creditors for the period between the date of the most recent statement of financial condition filed with the Commission and the date for which the report is made;

(4) A statement of the computation of the minimum capital requirements pursuant to § 31.9, a schedule of coverage requirements and coverage provided, and a schedule of segregation requirements and funds on deposit in segregation, as of the date for which the report is made; and

(5) In addition to the information expressly required, such further information as may be necessary to make the required statements and schedules not misleading.

(g) Each Form 2-FR filed pursuant to this § 31.13 which is required to be certified by an independent public accountant must be completed in accordance with the instructions to the form and contain:

(1) A statement of financial condition as of the date for which the report is made;

(2) Statements of: income (loss); cash flows; changes in ownership equity; and changes in liabilities subordinated to claims of general creditors, for the period between the date of the most recent statement of financial condition filed with the Commission and the date for which the report is made:  Provided, however,  That for an applicant filing pursuant to paragraph (a) of this section, the period must be the year ending as of the date of the statement of financial condition;

(3) A statement of the computation of the minimum capital requirements pursuant to § 31.9, a schedule of coverage requirements and coverage provided, and a schedule of segregation requirements and funds on deposit in segregation, as of the date for which the report is made;

(4) Appropriate footnote disclosures; and

(5) In addition to the information expressly required, such further information as may be necessary to make the required statements and schedules not misleading.

(h) The statements required by paragraphs (g) (1) and (2) of this section may be presented in accordance with generally accepted accounting principles in the certified reports filed as of the close of the registrant's fiscal year pursuant to paragraph (b) of this section, or accompanying the application for registration pursuant to paragraph (a) of this section, rather than in the format specifically prescribed by these regulations:  Provided, however,  That the statement of financial condition is presented in a format as consistent as possible with the Form 2-FR and a reconciliation is provided reconciling such statement of financial condition to the statement of the computation of the minimum capital requirements pursuant to § 31.9. Such reconciliation must be certified by an independent public accountant in accordance with § 1.16 of this chapter.

(i) Attached to each Form 2-FR filed pursuant to this section must be an oath or affirmation that to the best knowledge and belief of the individual making such oath or affirmation the information contained in the Form 2-FR is true and correct. If the leverage transaction merchant is a sole proprietorship, then the oath or affirmation must be made by the proprietor; if a partnership, by a general partner; or, if a corporation, by the chief executive officer or chief financial officer.

(j) Any leverage transaction merchant wishing to establish a fiscal year other than the calendar year may do so by notifying the National Futures Association of its election of such fiscal year in writing, concurrently with the filing of Form 2-FR pursuant to paragraph (a) of this section, but in no event may such fiscal year end more than one year from the date of the Form 2-FR filed pursuant to paragraph (a) of this section. A leverage transaction merchant which does not so notify the National Futures Association will be deemed to have elected the calendar year as its fiscal year. A leverage transaction merchant must continue to use its elected fiscal year, calendar or otherwise, unless a change in such fiscal year is approved upon written application to the designated self-regulatory organization.

(k) In the event any leverage transaction merchant finds that it cannot file its report for any period within the time specified in paragraphs (b) or (d) of this section without substantial undue hardship, it may file with the designated self-regulatory organization an application for an extension of time to a specified date which may not be more than 90 days after the date as of which the financial report was to have been filed. The application must state the reasons for the requested extension and must contain an agreement to file the report on or before the specified date. The application must be received by the designated self-regulatory organization before the time specified in paragraphs (b) or (d) of this section for filing the report. Within 10 calendar days after receipt of the application for an extension of time, the designated self-regulatory organization shall: (1) Notify the leverage transaction merchant of the grant or denial of the requested extension; or (2) indicate that additional time is required to analyze the request, in which case the amount of time needed will be specified.

(l)(1) In the event a leverage transaction merchant finds that it cannot file its certified financial report and schedules for any year within the time specified in paragraph (b) of this section without substantial undue hardship, it may file with the designated self-regulatory organization an application for an extension of time to a specified date not more than 90 days after the date as of which the certified financial report and schedules were to have been filed. The application must be submitted by the leverage transaction merchant and must:

(i) State the reasons for the requested extension;

(ii) Indicate that the inability to make a timely filing is due to circumstances beyond the control of the leverage transaction merchant, if such is the case, and describe briefly the nature of such circumstances;

(iii) Be accompanied by the latest available formal computation of its adjusted net capital and minimum financial requirements computed in accordance with § 31.9;

(iv) Be accompanied by the latest available computation of required segregation and by a computation of the amount of leverage customer funds segregated pursuant to § 31.12 as of the date of the latest available computation;

(v) Be accompanied by the latest available computation of required cover and by a computation of cover provided pursuant to § 31.8 as of the date of the latest available computation;

(vi) Contain an agreement to file the report on or before the date specified by the leverage transaction merchant in the application;

(vii) Be received by the designated self-regulatory organization prior to the date on which the report is due; and

(viii) Be accompanied by a letter from the independent public accountant answering the following questions:

(A) What specifically are the reasons for the extension request?

(B) On the basis of that part of your audit to date, do you have any indication that may cause you to consider commenting on any material inadequacies in the accounting system, internal accounting controls or procedures for safeguarding customer or firm assets?

(C) Do you have any indication from the part of your audit completed to date that would lead you to believe that the firm was or is not meeting the minimum capital requirements specified in § 31.9 or the cover or segregation requirements of these regulations, or has any significant financial or recordkeeping problems?

(2) Within 10 calendar days after receipt of an application for extension of time, the designated self-regulatory organization shall:

(i) Notify the leverage transaction merchant of the grant or denial of the requested extension; or

(ii) Indicate that additional time is required to analyze the request, in which case the amount of time needed will be specified.

(3) On the written request of a leverage transaction merchant, or on its own motion, the designated self-regulatory organization may grant an extension of time or an exemption from any of the certified financial reporting requirements of this section either unconditionally or on specified terms and conditions.

(m) The following portions of Form 2-FR filed pursuant to this section will be public: The statement of financial condition, the computation of the minimum capital requirements pursuant to § 31.9, the schedule of coverage requirements and cover provided, and the schedule of segregation requirements and funds on deposit in segregation. The other financial statements (including the statement of income (loss)), footnote disclosures and schedules of Form 2-FR, trade secrets and certain other commercial or financial information on such other statements and schedules, will be treated as nonpublic for purposes of the Freedom of Information Act and the Government in the Sunshine Act and parts 145 and 147 of this chapter. All information on such other statements, footnote disclosures and schedules will, however, be available for official use by any official or employee of the United States or any State, by any self-regulatory organization of which the person filing such report is a member, by the National Futures Association in the case of an applicant, and by any other person to whom the Commission believes disclosure of such information is in the public interest. The independent public accountant's opinion filed pursuant to this section will be deemed to be public information.

(n)(1) Until such time as the Commission orders, otherwise, the Commission hereby delegates to the Director of the Market Participants Division or their designee the authority to perform all functions reserved to the Commission in this section.

(2) The Director of the Market Participants Division may submit to the Commission for its consideration any matter which has been delegated to them pursuant to paragraph (n)(1) of this section."
17:17:1.0.1.1.24.0.7.13,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.14 Recordkeeping.,CFTC,,,"[50 FR 32, Jan. 2, 1985; 50 FR 2283, Jan. 16, 1985, as amended at 67 FR 62352, Oct. 7, 2002; 78 FR 22419, Apr. 16, 2013; 89 FR 71811, Sept. 4, 2024]","(a) All books, records and other documents required to be kept by this part shall be kept in accordance with the provisions of § 1.31 of this chapter. In addition, information concerning leverage transactions shall be made available upon request of the Executive Director, the Director of the Market Participants Division, the Director of the Division of Market Oversight or the Director of the Division of Enforcement, or other designees, at a time and place and in such form and manner as may be specified in the request.

(b) Each leverage transaction merchant shall:

(1) Keep full, complete, and systematic records, together with all pertinent data and memoranda, of all transactions relating to leverage contracts, commodity futures, commodity options and cash commodities and furnish true and correct information and reports as to the contents or the meaning thereof when and as requested by any authorized representative of the Commission, designated self-regulatory organization, if any, or the U.S. Department of Justice. Included among such records shall be: All leverage contract orders; signature cards; journals; ledgers; canceled checks; bank statements; loan agreements; invoices; copies of confirmations; copies of statements of purchase, sale, repurchase, resale, liquidation, rescission and delivery; copies of month-end statements; monthly trial balances, and a monthly listing as described in paragraph (d) of this section; reports, letters and copies of disclosure statements signed by leverage customers as described in § 31.11; promotional material, circulars, memoranda, publications, writings, and all other literature or written advice distributed to leverage customers or prospective leverage customers; and all other records, data and memoranda which have been prepared in the course of the business of the leverage transaction merchant concerning leverage contracts, commodity futures, commodity options, and cash commodities;

(2) Keep a record in permanent form which shall show for each leverage customer's account carried by such leverage transaction merchant:

(i) The true name and address of the person for whom such account is carried;

(ii) The principal occupation and/or type of business of the person for whom such account is carried;

(iii) The name and address of any other person who assumes or purports to assume any financial responsibility for or operational control of such account; and

(iv) The names of the persons who have solicited and are responsible for each leverage customer's account.

(c) Each leverage transaction merchant shall, as a minimum requirement, prepare regularly and promptly, and keep systematically and in permanent form, the following:

(1) A financial ledger which will show separately for each leverage customer's account all charges against and credits to such leverage customer's account, including but not limited to all charges and credits for purchases, repurchases, sales, resales, liquidations, rescissions and settlements by delivery of leverage contracts (including the corresponding transaction identification numbers) and all funds transferred, desposited into, or withdrawn from the leverage customer's account.

(2) A record of transactions which will show separately for each leverage customer's account in chronological sequence all leverage contracts entered into with such customer. This record will show for each transaction: The date of the transaction; the commodity involved; a transaction identification number; the maturity date; the number of contracts; whether the transaction represents an initial purchase, initial sale, closing repurchase, closing resale, a liquidating transaction, a rescission or a delivery; and, if a closing or liquidating transaction or a rescission, the total amount realized.

(3) A daily record or journal which will show separately by leverage commodity complete details of all leverage transactions executed on that day, including the person for whom such transaction was made, the leverage commodity and contract involved, the number of leverage contracts, the transaction identification number for each leverage contract, whether the transaction was an initial purchase, repurchase, initial sale, resale, liquidating transaction, rescission or delivery, and the total value of the transaction.

(4) The acknowledgement specified in § 31.11(a).

(5) A record of all notifications under § 31.11(h).

(6) Where reproductions on microfilm of the records required by this paragraph (c) are substituted for hard copy in accordance with the provisions of paragraph (a) of this section, the requirement of paragraphs (c)(1) and (c)(2) of this section will be considered met if the person required to keep such records is ready at all times to provide, and immediately provides at such time and place as required by the Commission and at the expense of such person, reproduced copies which show the records as specified in paragraphs (c)(1) and (c)(2) of this section, on request by any representative of the Commission, designated self-regulatory organization or the U.S. Department of Justice.

(d) Each leverage transaction merchant shall prepare, as of the close of the last business day of each calendar month, a listing of all open leverage contracts carried for leverage customs. Such listing shall be by leverage commodity and contract and separately by long leverage contracts and short leverage contracts, and shall include the following details with respect to each leverage contract:

(1) The customer account identification number;

(2) The name of the leverage commodity and contract;

(3) The date of execution and the maturity date;

(4) The transaction identification number;

(5) The value of the leverage contract when initiated; and

(6) The unrealized profit or loss on each open leverage contract marked to the market on the basis of the leverage transaction merchant's bid price for a long leverage contract and ask price for a short leverage contract."
17:17:1.0.1.1.24.0.7.14,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.15 Reporting to leverage customers.,CFTC,,,"[49 FR 5539, Feb. 13, 1984, as amended at 50 FR 33, Jan. 2, 1985; 50 FR 2283, Jan. 16, 1985]","Each leverage transaction merchant shall furnish in writing directly to each leverage customer:

(a) Promptly upon the repurchase, resale, liquidation, rescission or delivery of a leverage contract, a statement showing the financial result of the transactions involved, including the gain or loss on the leverage contract as well as the commission and other charges;

(b) As of the close of the last business day of each calendar month or as of any regular monthly date selected a statement which clearly shows:

(1) All leverage contracts which were terminated for or by the leverage customer during the monthly reporting period by leverage commodity and contract, the number of contracts involved, the transaction identification number for each leverage contract, whether the terminating transaction involved repurchase, resale, liquidation, rescission, or delivery, the date the contract was initially entered into, the value of the contract when initiated, the date the contract was terminated, the value of the contract when terminated, and the realized profit or loss on the contract;

(2) The open leverage contract positions carried for the leverage customer by leverage commodity and contract, whether the position is a long or short leverage contract, the dates on which such contracts were executed and their maturity dates, the number of contracts, the total value of the contracts when initiated, and the unrealized profit or loss on each such contract marked to the market on the basis of the leverage transaction merchant's bid price for a long leverage contract and ask price for a short leverage contract.

(3) The net ledger balance carried in the leverage customer's account as of the monthly closing date and a complete accounting of any leverage customer funds held for the leverage customer;

(4) A detailed accounting of all financial charges and credits to the previous ledger balance during the monthly reporting period, including all leverage customer funds received from or disbursed to the leverage customer, and all commissions and fees incidental to the contract which have been charged and received, as well as all realized profits and losses; and

(5) Any securities or other property which the leverage customer has deposited with the leverage transaction merchant that represent leverage customer funds.

The monthly statement must also contain the following bold-faced legend in at least ten-point type: IF YOU BELIEVE YOUR MONTHLY STATEMENT IS INACCURATE YOU SHOULD PROMPTLY CONTACT ( name of LTM ) AT ( telephone number ).

(c) With respect to any leverage account controlled by any person other than the leverage customer for whom the account is carried, except such leverage customer's spouse, parent or child, a copy of the statements required by paragraphs (a) and (b) of this section shall be sent to the controller of the account as well as to the leverage customer for whom such account is carried."
17:17:1.0.1.1.24.0.7.15,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.16 Monthly reporting requirements.,CFTC,,,"[54 FR 41082, Oct. 5, 1989]","(a)  Monthly activity.  Each leverage transaction merchant shall file written monthly reports with the National Futures Association in the format specified by the National Futures Association, by the tenth business day of the month following the month covered by the report and shall include the following information separately for each leverage commodity and each long and short leverage contract:

(1) The total number of leverage contracts that are open as of the close of business on the last business day of the month for:

(i) All customer accounts, and

(ii) Separately for commercial leverage accounts.

(2) The total number of leverage contracts entered into by leverage customers during the month for:

(i) All customer accounts, and

(ii) Separately for commercial leverage accounts.

(3) The total number of leverage contracts which were repurchased or resold by the leverage transaction merchant during the month.

(4) The total number of leverage contracts which were liquidated by the leverage transaction merchant during the month ( i.e.,  as a result of overdue or unanswered margin calls).

(5) The total number of deliveries on leverage contracts during the month.

(6) The total number of leverage contracts which were rescinded during the month.

(b)  Prices.  The monthly report shall also show the following information separately for each leverage commodity and each long and short leverage contract: the leverage transaction merchant's last bid price offered and last ask price offered as of the close of business on each business day."
17:17:1.0.1.1.24.0.7.16,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.17 Records of leverage transactions.,CFTC,,,"[49 FR 5540, Feb. 13, 1984, as amended at 50 FR 34, Jan. 2, 1985]","(a) Each leverage transaction merchant receiving a leverage customer's order shall immediately upon receipt thereof prepare a written record of such order, including the account identification and order number, and shall record thereon, by time-stamp or other timing device, the date and time, to the nearest minute, such order is received.

(b) Each leverage transaction merchant executing the order of a leverage customer shall record on a written record of such order, including the account identification and order number, by time-stamp or other timing device, the date and time, to the nearest minute, such order is executed.

(c) For the purposes of this section, the term “order” shall include, but not be limited to, any order for the purchase, sale, repurchase, resale, rescission, settlement by delivery, or liquidation of a leverage contract.

(d) Each leverage transaction merchant shall establish and maintain a record of the bid and ask prices of each leverage contract on each leverage commodity that the leverage transaction merchant offers to sell or sells, or offers to purchase or purchases. The record shall include the times these prices were in effect to the nearest ten seconds."
17:17:1.0.1.1.24.0.7.17,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.18 Margin calls.,CFTC,,,"[49 FR 5540, Feb. 13, 1984, as amended at 50 FR 34, Jan. 2, 1985; 50 FR 36416, Sept. 6, 1985]","(a) No leverage transaction merchant shall liquidate a leverage contract because of a margin deficiency without effecting personal contact with the leverage customer. If a leverage transaction merchant is unable to effect personal contact with a leverage customer, a telegram sent to the leverage customer at the address furnished by the customer to the leverage transaction merchant shall be sufficient contact.

(b) A leverage transaction merchant shall allow a leverage customer a reasonable time after contact is effected in which to respond to a margin call. Twenty-four hours, excluding Saturdays, Sundays, and holidays, will be a reasonable time:  Provided, however,  That in the event the leverage customer's leverage account equity falls below 50 percent of aggregate minimum margin with respect to the leverage contracts therein, the leverage transaction merchant may liquidate sufficient contracts to restore minimum margin without prior notice:  Provided, further,  That the leverage customer must be notified of such liquidation within no more than 24 hours thereafter and must be permitted to re-establish his contract for a period of 5 business days at the then prevailing bid price in the case of a long leverage contract and at the then prevailing ask price in the case of a short leverage contract, without commissions, fees or other mark-ups or charges. If a termination charge was assessed by the leverage transaction merchant upon liquidation of a contract in accordance with the first proviso of this paragraph, such a charge must be rescinded upon re-establishment of the contract in accordance with the second proviso of this paragraph.

(c) A record of all margin calls, including all contacts with leverage customers and attempts to contact leverage customers with respect to such calls, shall be kept by the leverage transaction merchant in accordance with the provisions of § 31.14.

(d) Leverage contracts liquidated by a leverage transaction merchant because of a margin deficiency must be liquidated in declining order of loss, commencing with the leverage contract with the greatest loss."
17:17:1.0.1.1.24.0.7.18,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.19 Unlawful representations.,CFTC,,,"[49 FR 5540, Feb. 13, 1984, as amended at 50 FR 34, Jan. 2, 1985]","It shall be unlawful for any person:

(a) Required to be registered with the Commission in accordance with §§ 3.17 and 3.18 of this chapter expressly or impliedly to represent that the commission, by registering that person or by registering the leverage commodity which underlies contracts offered for sale or purchase, or sold or purchased by that person, or otherwise, has directly or indirectly approved that person, the person's method of operation, or any leverage commodity or leverage contract solicited or accepted by that person;

(b) To represent in writing that it is registered with the Commission or that it is offering any leverage commodity registered with the Commission without also stating in writing in connection with that representation that the Commission, by registering that person or the leverage commodity which underlies contracts offered for sale or purchase or sold or purchased by that person, has not directly or indirectly approved the person, the person's method of operation, or any leverage commodity or contract solicited or accepted by that person; or

(c) In or in connection with an offer to enter into, the entry into, the confirmation of the execution of, or the maintenance of any leverage contract, expressly or impliedly to represent that compliance with the provisions of the Act and these regulations constitutes a guarantee of the fulfillment of the leverage contract."
17:17:1.0.1.1.24.0.7.19,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.20 Prohibition of guarantees against loss.,CFTC,,,"[49 FR 5540, Feb. 13, 1984]","(a) No leverage transaction merchant shall in any way represent that it will, with respect to any leverage contract in any account carried by the leverage transaction merchant for or on behalf of any person:

(1) Guarantee such person against loss;

(2) Limit the loss of such person; or

(3) Not call for or attempt to collect initial, minimum or maintenance leverage margin established for customers.

(b) No person shall in any way represent that a leverage transaction merchant will engage in any of the acts or practices described in paragraphs (a)(1), (a)(2) or (a)(3) of this section.

(c) This section shall not be construed to prevent a leverage transaction merchant from assuming or sharing in the losses resulting from an error or mishandling of an order.

(d) This section shall not affect any guarantee entered into prior to the effective date of this section, but this section shall apply to any extension, modification or renewal thereof entered into after such date."
17:17:1.0.1.1.24.0.7.2,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,"§ 31.3 Fraud in connection with certain transactions in silver or gold bullion or bulk coins, or other commodities.",CFTC,,,"[43 FR 58554, Dec. 15, 1978. Redesignated at 49 FR 5526, Feb. 13, 1984]","It shall be unlawful for any person, by use of the mails or any means or instrumentality of interstate commerce, directly or indirectly:

(a) To employ any device, scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made in the light of the circumstances under which they were made, not misleading, or

(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in, or in connection with (1) an offer to make or the making of, any transaction for the purchase, sale or delivery of silver bullion, gold bullion, bulk silver coins, bulk gold coins, or any other commodity pursuant to a standardized contract commonly known to the trade as a margin account, margin contract, leverage account, or leverage contract, or pursuant to any contract, account, arrangement, scheme, or device that serves the same function or functions as such a standardized contract, or is marketed or managed in substantially the same manner as such a standardized contract, or (2) the maintenance or carrying of any such contract.

The provisions of this section shall not apply to any transaction expressly prohibited by section 19(a) of the Act."
17:17:1.0.1.1.24.0.7.20,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,"§ 31.21 Leverage contracts entered into prior to April 13, 1984; subsequent transactions.",CFTC,,,"[54 FR 41082, Oct. 5, 1989]","Nothing contained in these regulations shall be construed to affect any lawful activities that occurred prior to April 13, 1984. All leverage contracts offered or entered into on or after April 13, 1984 shall be subject to the terms and conditions of these regulations."
17:17:1.0.1.1.24.0.7.21,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.22 Prohibited trading in leverage contracts.,CFTC,,,"[54 FR 41082, Oct. 5, 1989]","No futures commission merchant or introducing broker shall offer to enter into, enter into, confirm the execution of, or solicit or accept orders for any leverage contract."
17:17:1.0.1.1.24.0.7.22,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.23 Limited right to rescind first leverage contract.,CFTC,,,"[49 FR 5540, Feb. 13, 1984, as amended at 50 FR 34, Jan. 2, 1985]","(a) A leverage customer who is entering a leverage contract or contracts for the first time with a particular leverage transaction merchant may rescind such contract or contracts during a period of not less than three business days from and including the day on which the leverage customer receives the Confirmation Statement pursuant to the following provisions:

(1) Such customer may be assessed actual price losses accruing to the customer's position from the time at which the customer entered into a leverage contract to the time that the leverage contract was rescinded. Such losses do not extend to any other charges or fees, such as account initiation, carrying, margin or account termination;

(2) In the case of a leverage customer whose initial leverage transaction was a purchase of a leverage contract from a leverage transaction merchant (long leverage contract), actual losses accruing to the position may be calculated only by subtracting the ask price of the leverage contract offered by the leverage transaction merchant at the time when the leverage contract was rescinded from the ask price at which the leverage contract was purchased by the leverage customer and which appears on the Confirmation Statement. In the case of a leverage customer whose initial leverage transaction was a sale of a leverage contract to a leverage transaction merchant (short leverage contract), actual losses are calculated by subtracting the bid price at which the leverage contract was sold by the leverage customer and which appears on the Confirmation Statement from the bid price of the leverage contract offered by the leverage transaction merchant at the time when the leverage contract was rescinded.

(3) Such customer may rescind the contract by telegram sent to the leverage transaction merchant at the address provided on the confirmation statement, or by telephone to a telephone number provided by the leverage transaction merchant on the Confirmation Statement with immediate written affirmation of rescission by telegram, certified letter or at least equivalent means.

(b) A leverage transaction merchant must make complete refund of all monies received except for actual price losses as calculated in paragraph (a)(2) of this section, to the leverage customer who has rescinded a contract pursuant to paragraph (a) of this section within 24 hours of notification of rescission."
17:17:1.0.1.1.24.0.7.23,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.24 [Reserved],CFTC,,,,
17:17:1.0.1.1.24.0.7.24,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.25 Bid and ask prices; carrying charges.,CFTC,,,"[50 FR 36416, Sept. 6, 1985, as amended at 54 FR 41082, Oct. 5, 1989]","(a) A leverage transaction merchant must use the same bid price at any particular point in time to purchase a leverage contract from a leverage customer (initiation of a short transaction) and to repurchase a leverage contract from a leverage customer (close-out of a long transaction), and a leverage transaction merchant must use the same ask price at any particular point in time to sell a leverage contract to a leverage customer (initiation of a long transaction) and to resell a leverage contract to a leverage customer (close-out of a short transaction), with respect to contracts involving the same leverage commodity.

(b) A leverage transaction merchant must apply a carrying charge rate on a short leverage contract that is within one percent per annum of the carrying charge rate that it applies to a long leverage contract. In the case of a short leverage contract, the leverage customer must be credited with carrying charges computed on the total initial value of the contract, using the bid price when the contract was executed, plus any margin deposits made by the leverage customer in connection with the contract, and the same carrying charge rate must be applied to the total initial value of the contract and to the margin deposits. In the case of a long leverage contract, the leverage customer must be assessed carrying charges only on the unpaid balance of the contract, which is the total initial value of the contract, using the ask price when the contract was executed, minus any margin deposits made in connection with the contract:  Provided, however,  That in the case of a long leverage contract, interest on unpaid carrying charges may be assessed at the same rate as the interest rate component of the carrying charges and, if such an assessment were made and if the leverage transaction merchant offers short leverage contracts, payment of interest on carrying charges that have been credited to the leverage customer's account and not withdrawn must be made at the same rate as the interest rate component of the carrying charges."
17:17:1.0.1.1.24.0.7.25,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.26 Quarterly reporting requirement.,CFTC,,,"[50 FR 36416, Sept. 6, 1985; 50 FR 37519, Sept. 16, 1985, as amended at 54 FR 41083, Oct. 5, 1989]","Each leverage transaction merchant must file, in accordance with the instructions of, and in the format specified by, the National Furtures Association a quarterly report with the National Futures Association by the fifteenth business day of the month following the quarter covered by the report. The report must list all leverage contracts which were either repurchased, resold, liquidated or settled by delivery by or to the leverage transaction merchant during the quarter and, with respect to each leverage contract, must include the following information:

(a) The leverage commodity and contract involved;

(b) Whether a long or short leverage contract was involved;

(c) The date the leverage contract was entered into;

(d) The maturity date of the leverage contract at initiation;

(e) The price at which the leverage contract was entered into;

(f) Whether the leverage contract was repurchased, resold, liquidated or settled by delivery;

(g) The date the leverage contract was repurchased, resold, liquidated or settled by delivery;

(h) The price at which the leverage contract was repurchased, resold or liquidated;

(i) The leverage customer account identification number;

(j) Whether the leverage customer had a commercial or noncommercial leverage account;

(k) Whether the leverage customer was the owner or holder of a proprietary leverage account as defined in § 31.4(e); and

(l) The profit or loss incurred by the leverage customer on the contract. In the case of a long leverage contract, profit or loss shall be determined by subtracting, from the total value of the contract based on the leverage transaction merchant's bid price at the time of repurchase or liquidation, the total value of the contract based on the ask price at which the contract was entered into, minus any amounts paid or owed by the leverage customer to the leverage transaction merchant, including initial, carrying and termination charges, plus any amounts paid or credited by the leverage transaction merchant to the leverage customer, in connection with the leverage contract. In the case of a short leverage contract, profit or loss shall be determined by subtracting, from the total value of the contract based on the bid price at which the contract was entered into, the total value of the contract based on the leverage transaction merchant's ask price at the time of resale or liquidation, minus any amounts paid or owed by the leverage customer to the leverage transaction merchant, including initial and termination charges, plus any amounts paid or credited by the leverage transaction merchant to the leverage customer, including carrying charges, in connection with the leverage contract."
17:17:1.0.1.1.24.0.7.26,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.27 Registered futures association membership.,CFTC,,,"[54 FR 41083, Oct. 5, 1989]","Each person registered or required to register as a leverage transaction merchant must become and remain a member of at least one futures association which is registered under section 17 of the Act and which provides for the membership therein of such leverage transaction merchant, unless no such futures association is so registered."
17:17:1.0.1.1.24.0.7.27,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,"§ 31.28 Self-regulatory organization adoption and surveillance of minimum financial, cover, segregation and sales practice requirements.",CFTC,,,"[54 FR 41083, Oct. 5, 1989, as amended at 89 FR 71811, Sept. 4, 2024]","(a) Each self-regulatory organization must adopt, and submit for Commission approval, rules prescribing minimum financial, cover, segregation and sales practice, and related reporting requirements for all its members who are registered leverage transaction merchants. Each self-regulatory organization shall submit for Commission approval any modification or other amendments to such rules. Such requirements must be the same as, or more stringent than, those contained in this part 31 and the definition of adjusted net capital must be the same as that prescribed in § 31.9(b)(4) of this part.

(b) Each self-regulatory organization which has members who are registered leverage transaction merchants shall have in effect and enforce rules submitted to the Commission pursuant to paragraph (a) of this section and approved by the Commission.

(c) Any two or more self-regulatory organizations may file with the Commission a plan for delegating to a designated self-regulatory organization, for any registered leverage transaction merchant which is a member of more than one such self-regulatory organization, the responsibility of:

(1) Monitoring and auditing for compliance with the minimum financial, cover, segregation and sales practice, and related reporting requirements adopted by such self-regulatory organizations in accordance with paragraph (a) of this section; and

(2) Receiving the reports necessitated by such minimum financial, cover, segregation and sales practice, and related reporting requirements.

(d) Any plan filed under this section may contain provisions for the allocation of expenses reasonably incurred by the designated self-regulatory organization among the self-regulatory organizations participating in such a plan.

(e) A plan's designated self-regulatory organization must report to that plan's other self-regulatory organizations any violation of such other self-regulatory organizations' rules and regulations for which the responsibility to monitor, audit or examine has been delegated to such designated self-regulatory organization under this section.

(f) The self-regulatory organizations may, among themselves, establish programs to provide access to any necessary information.

(g) After appropriate notice and opportunity for comment, the Commission may, by written notice, approve such a plan, or any part of the plan, if it finds that the plan, or any part of it:

(1) Is necessary or appropriate to serve the public interest;

(2) Is for the protection and in the interest of leverage customers;

(3) Reduces multiple monitoring and auditing for compliance with the minimum financial, cover, segregation and sales practice, and related reporting requirements of the self-regulatory organizations submitting the plan for any leverage transaction merchant which is a member of more than one self-regulatory organization;

(4) Reduces multiple reporting of the information necessitated by such minimum financial, cover, segregation and sales practice, and related reporting requirements by any leverage transaction merchant which is a member of more than one self-regulatory organization;

(5) Fosters cooperation and coordination among the self-regulatory organizations; and

(6) Does not hinder the development of a registered futures association under section 17 of the Act.

(h) After the Commission has approved a plan or part of one under paragraph (g) of this section, a self-regulatory organization relieved of responsibility must notify each of its members which is subject to such a plan:

(1) Of the limited nature of its responsibility for such a member's compliance with its minimum financial, cover, segregation and sales practice, and related reporting requirements; and

(2) Of the identity of the designated self-regulatory organization which has been delegated responsibility for such a member.

(i) The Commission may at any time, after appropriate notice and opportunity for hearing, withdraw its approval of any plan or part of one established under this section, if such plan or part of one ceases to effectuate adequately the purposes of section 19 of the Act or of this section.

(j) Whenever a registered leverage transaction merchant holding membership in a self-regulatory organization ceases to be a member in good standing of that self-regulatory organization, such self-regulatory organization must, on the same day that event takes place, give electronic notice of that event to  MPDAlerts@cftc.gov  and send a copy of that notification to such leverage transaction merchant.

(k) Nothing in this section shall preclude the Commission from examining any leverage transaction merchant for compliance with the minimum financial, cover, segregation and sales practice, and related reporting requirements to which such leverage transaction merchant is subject.

(l) In the event a plan is not filed and/or approved for each registered leverage transaction merchant which is a member of more than one self-regulatory organization, the Commission may design and, after notice and opportunity for comment, approve a plan for those leverage transaction merchants which are not the subject of an approved plan (under paragraph (g) of this section), delegating to a designated self-regulatory organization the responsibilities described in paragraph (c) of this section."
17:17:1.0.1.1.24.0.7.28,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.29 Arbitration or other dispute settlement procedures.,CFTC,,,"[54 FR 41084, Oct. 5, 1989; 54 FR 46503, Nov. 3, 1989]","Each self-regulatory organization which has members who are registered as leverage transaction merchants must be able to demonstrate its capability to promulgate rules and to conduct proceedings which provide a fair, equitable and expeditious procedure, through arbitration or otherwise, for the voluntary settlement of a leverage customer's claim or grievance brought against any member leverage transaction merchant or any employee of a member leverage transaction merchant. Such rules shall be consistent with the rules set forth in part 180 of this chapter governing contract market arbitration and dispute settlement procedures."
17:17:1.0.1.1.24.0.7.3,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.4 Definitions.,CFTC,,,"[49 FR 5527, Feb. 13, 1984, as amended at 49 FR 25428, June 21, 1984; 50 FR 26, Jan. 2, 1985; 50 FR 36414, Sept. 6, 1985; 54 FR 41078, Oct. 5, 1989]","For the purposes of this part:

(a)-(b) [Reserved]

(c)  Promotional material  includes:

(1) Any text of a standard oral presentation, or any communication for publication in any newspaper, magazine or similar medium or for broadcast over television, radio, or other electronic medium which is disseminated or directed to a leverage customer or prospective leverage customer;

(2) Any standardized form of report, letter, circular, memorandum, or publication which is disseminated or directed to a leverage customer or prospective leverage customer; or

(3) Any other written literature or advice disseminated or directed to a leverage customer or prospective leverage customer for the purpose of soliciting the entry into a leverage contract;

(d)  Leverage customer  means any person who, directly or indirectly, enters into, purchases, sells, or otherwise acquires for value any interest in a leverage contract with, from or to a leverage transaction merchant:  Provided, however,  That an owner or holder of a proprietary leverage account as defined in paragraph (e) of this section shall not be deemed to be a customer within the meaning of §§ 31.11(a)-(j) and (l), 31.12 and 31.26, and such an owner or holder of such a proprietary leverage account shall otherwise be deemed to be a leverage customer within the meaning of all other sections of these rules.

(e)  Proprietary leverage account  means a leverage account carried on the books and records of an individual, a partnership, corporation or other type association (1) for one of the following persons, or (2) of which ten percent or more is owned by one of the following persons, or an aggregate of ten percent or more of which is owned by more than one of the following persons:

(i) Such individual himself, or such partnership, corporation or association itself;

(ii) In the case of a partnership, a general partner in such partnership;

(iii) In the case of a limited partnership, a limited or special partner in such partnership whose duties include:

(A) The management of the partnership business or any part thereof,

(B) The handling of the trades of leverage customers or of the leverage customer funds of such partnership,

(C) The keeping of records pertaining to the trades of leverage customers or to the leverage customer funds of such partnership, or

(D) The signing or co-signing of checks or drafts on behalf of such partnership;

(iv) In the case of a corporation or association, an officer, director or owner of ten percent or more of the capital stock, of such organization;

(v) An employee of such individual, partnership, corporation or association whose duties include:

(A) The management of the business of such individual, partnership, corporation or association or any part thereof,

(B) The handling of the trades of leverage customers or of the leverage customer funds of such individual, partnership, corporation or association,

(C) The keeping of records pertaining to the trades of leverage customers or to the leverage customer funds of such individual, partnership, corporation or association, or

(D) The signing or co-signing of checks or drafts on behalf of such individual, partnership, corporation or association;

(vi) A spouse or minor dependent living in the same household of any of the foregoing persons;

(vii) A business affiliate that, directly or indirectly, controls such individual, partnership, corporation or association;

(viii) A business affiliate that, directly or indirectly, is controlled by or is under common control with, such individual, partnership, corporation or association.

(f)  Commercial leverage account  means an account of a commercial enterprise, such as a producer, processor, dealer or end user of a leverage commodity which is the subject of a leverage contract, or the products or by-products thereof;

(g)  Leverage commodity  means a commodity (gold bullion, silver bullion, bulk gold coins, bulk silver coins, or platinum) which is the subject of a leverage contract offered for purchase or sale, or purchased or sold, by a particular leverage transaction merchant, the value of which is reflected in a widely accepted and broadly disseminated commercial or retail cash price series for cash market transactions, which price series reasonably reflects the price for the leverage commodity which the customer can expect to pay or receive in normal commercial or retail market channels, including, if applicable, specified premiums or discounts; each leverage commodity is defined by reference to the following distinguishing characteristics:

(1) The nominal size, composition and tolerable ranges of the delivery pack or the actual size, composition and tolerable range of the component of the delivery pack;

(2) Minimum guaranteed quality, deliverable countries of origin, deliverable markings or imprints, and deliverable refiners or mints;

(3) The method of pricing; and

(4) The delivery specifications or alternatives including type and location of delivery facilities, packaging, transportation, registration and associated costs.

(h)  Ask price of a leverage contract  means the price at which a leverage transaction merchant sells or is willing to sell a long leverage contract to a leverage customer or the price at which a leverage transaction merchant resells or is willing to resell a short leverage contract to a leverage customer;

(i)  Bid price of a leverage contract  means the price at which a leverage transaction merchant purchases or is willing to purchase a short leverage contract from a leverage customer, or the price at which a leverage transaction merchant repurchases or is willing to repurchase a long leverage contract from a leverage customer;

(j)  Bid-ask spread of a leverage contract  means the difference between a leverage transaction merchant's ask price and bid price;

(k)  Initial charges for a leverage contract  includes all fees and commissions payable to a leverage transaction merchant which are incurred when a leverage contract is initially entered into by a leverage customer;

(l)  Carrying charges for a leverage contract  includes all service and interest changes paid periodically by a leverage customer to a leverage transaction merchant, or accrued by a leverage transaction merchant, while a long leverage contract remains open, or all service and interest charges paid periodically by a leverage transaction merchant to a leverage customer, or accrued by a leverage customer, while a short leverage contract remains open;

(m)  Termination charges for a leverage contract  includes all fees and commission payable to a leverage transaction merchant which are associated with the liquidation, repurchase, resale or settlement by delivery on a leverage contract;

(n)  Liquidation of a leverage contract  means the unilateral termination of a leverage contract by a leverage transaction merchant due to a leverage customer's failure to meet one or more margin calls or to make other required deposits on a timely basis or as otherwise permitted under § 31.18;

(o)  Repurchase or resale of a leverage contract  means the voluntary termination of a leverage contract by mutual agreement between the leverage customer and the leverage transaction merchant, which agreement is effected by entering into a transaction which is the opposite of the initial transaction. A repurchase by a leverage transaction merchant takes place if the initial transaction by the leverage customer was a purchase of a long leverage contract from the leverage transaction merchant, and a resale by a leverage transaction merchant takes place if the initial transaction by the leverage customer was a sale of a short leverage contract to the leverage transaction merchant;

(p)  Delivery on a leverage contract  means the making (in the case of an initial sale by a leverage customer) or taking (in the case of an initial purchase by a leverage customer) of delivery by a leverage customer of the commodity subject to a leverage contract;

(q)  Initial leverage margin  means the amount of funds, excluding initial charges, which a leverage customer is required to deposit with a leverage transaction merchant when entering into a leverage contract;

(r)  Minimum leverage margin  means the amount of funds which a leverage transaction merchant requires a leverage customer to maintain on deposit for each open leverage contract in the leverage customer's account.

(s)  Maintenance leverage margin  means the level to which the funds in a leverage customer's account must be restored after a margin call to the leverage customer has been effected by the leverage transaction merchant.

(t)  Leverage account equity  means:

(1) For all long leverage contracts in a leverage customer's account, the amount equal to the aggregate value of such leverage contracts in the leverage customer's account, based on the leverage transaction merchant's current bid prices for such contracts, less the amount owed to the leverage transaction merchant by the leverage customer pursuant to such contracts; and

(2) For all short leverage contracts in a leverage customer's account, the aggregate amount owed to the leverage customer by the leverage transaction merchant pursuant to all such contracts less the amount equal to the value of all such leverage contracts in the leverage customer's account, based on the leverage transaction merchant's current ask prices for such contracts;

(u)-(v) [Reserved]

(w)  Leverage contract  means a contract, standardized as to terms and conditions, for the long-term (ten years or longer) purchase (“long leverage contract”) or sale (“short leverage contract”) by a leverage customer of a leverage commodity which provides for:

(1) Participation by the leverage transaction merchant as a principal in each leverage transaction;

(2) Initial and maintenance margin payments by the leverage customer;

(3) Periodic payment by the leverage customer or accrual by the leverage transaction merchant of a variable carrying charge or fee on the unpaid balance of a long leverage contract, and periodic payment or crediting by the leverage transaction merchant to the leverage customer of a variable carrying charge or fee on the initial value of the contract plus any margin deposits made by the leverage customer in connection with a short leverage contract;

(4) Delivery of a commodity in an amount and form which can be readily purchased and sold in normal commercial or retail channels;

(5) Delivery of the leverage commodity after satisfaction of the balance due on the contract; and

(6) Determination of the contract purchase and repurchase, or sale and resale prices by the leverage transaction merchant; and

(x)  Leverage transaction  means the purchase or sale of any leverage contract, the repurchase or resale of any leverage contract, the delivery of the leverage commodity, or the liquidation or rescission of any such leverage contract by or to the leverage transaction merchant."
17:17:1.0.1.1.24.0.7.4,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.5 Unlawful conduct.,CFTC,,,"[49 FR 5528, Feb. 13, 1984, as amended at 54 FR 41078, Oct. 5, 1989; 59 FR 5703, Feb. 8, 1994]","(a) On and after April 13, 1984, it shall be unlawful for any person:

(1) To offer to enter into, enter into or confirm the execution of a leverage contract to or with a leverage customer, or to solicit or accept a leverage customer's order for a leverage contract, or to accept any leverage customer funds from a leverage customer to enter into or maintain a leverage contract, unless the leverage commodity which is the subject of the leverage contract has been registered with the Commission in accordance with § 31.6;

(2) Except as provided in paragraph (a)(3) of this section, to offer to enter into, enter into or confirm the execution of a leverage contract to or with a leverage customer, or to solicit or accept a leverage customer's order for a leverage contract, or to accept any leverage customer funds from a leverage customer to enter into or maintain a leverage contract, unless that person is registered with the Commission in accordance with § 3.17 of this chapter and that registration has not expired, been suspended (and the period of suspension has not expired) or been revoked; or

(3) Except as provided in paragraph (a)(2) of this section, if such person is a natural person, to offer to enter into, enter into or confirm the execution of a leverage contract to or with a leverage customer, or to solicit or accept a leverage customer's order (other than in a clerical capacity) for a leverage contract, or to supervise any person or persons so engaged, unless that person is registered with the Commission in accordance with § 3.18 of this chapter and that registration has not expired, been suspended (and the period of suspension has not expired) or been revoked.

(b) On and after April 13, 1984, it shall be unlawful for any leverage transaction merchant to permit any natural person to become or remain associated with it as a partner, officer or employee (or in any similar status or position involving similar functions) in any capacity which involves the offering to enter into, the entry into, or the confirmation of the execution of a leverage contract with a leverage customer, or the solicitation or acceptance of a leverage customer's order (other than in a clerical capacity) for a leverage contract, or the supervision of any person or persons so engaged, if the leverage transaction merchant knew or should have known that the person was not registered with the Commission in accordance with § 3.18 of this chapter or that the person's registration had expired, been suspended (and the period of suspension had not expired) or been revoked.

(c) On and after November 10, 1986, it shall be unlawful for any person to offer to enter into, enter into or confirm the execution of a leverage contract to or with a leverage customer, or to solicit or accept a leverage customer's order for a leverage contract, or to accept any leverage customer funds from a leverage customer to enter into or maintain a leverage contract, unless the leverage commodity which is the subject of the leverage contract has been registered with the Commission in accordance with § 31.6 of this part and involves silver bullion, gold bullion, bulk silver coins, bulk gold coins, or platinum. This paragraph shall not affect any rights or obligations arising out of any leverage contract involving any other leverage commodity that was entered into, or the execution of which was confirmed, before November 10, 1986.

(d)  Denial, suspension, or revocation of registration of a leverage commodity.  The failure or refusal of any leverage transaction merchant to comply with any of the provisions of the Act or any of the Commission's rules, regulations, or orders thereunder shall be cause for refusing to register a leverage commodity, for suspending registration of a leverage commodity for a period not to exceed six months, and for revoking registration of such leverage commodity with respect to that leverage transaction merchant. Any such denial, suspension, or revocation proceedings shall be conducted in accordance with the procedures set forth in sections 6 and 6(b) of the Act."
17:17:1.0.1.1.24.0.7.5,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.6 Registration of leverage commodities.,CFTC,,,"[49 FR 5529, Feb. 13, 1984, as amended at 50 FR 27, Jan. 2, 1985; 50 FR 2283, Jan. 16, 1985; 54 FR 41079, Oct. 5, 1989; 67 FR 62352, Oct. 7, 2002]","(a)  Registration of leverage commodities.  Each leverage commodity upon which a leverage contract is offered for sale or purchase or is sold or purchased by a particular leverage transaction merchant must be separately registered with the Commission. Registration will be granted only when the following conditions are, and continue to be, met:

(1) The person requesting registration of a leverage commodity is a registered leverage transaction merchant;

(2) The commodity to be registered is a leverage commodity as defined in § 31.4(g);

(3) There exists a widely accepted and broadly disseminated commercial or retail cash price series for the commodity;

(4) The commodity can be readily purchased or sold in normal commercial or retail channels by leverage customers making or taking delivery on a leverage contract;

(5) The terms and conditions of the leverage contracts based on the leverage commodity are consistent with the Act and the regulations thereunder, and are not contrary to the public interest; and

(6) The terms and conditions of the leverage contracts based on the leverage commodity do not include substantial characteristics of other interests, such as options, certificates of deposit, or other regulated instruments.

(b)  Application for registration.  Applications to register leverage commodities should be filed with the Commission at its Washington, DC headquarters. Attn: Secretariat. Three copies of each such submission should be filed. The Commission may return any application which does not comply with the form and content requirements of this section. Each applicant must:

(1) Provide evidence that the person applying for registration of the leverage commodity is registered or has applied to the National Futures Association for registration as a leverage transaction merchant;

(2) Provide an explanation of the distinguishing characteristics of the leverage commodity for which registration is sought, including a complete description of the cash market for the leverage commodity, and for the spot, forward, and futures markets for the generic commodity;

(3) Specify a commercial or retail cash price series including prevailing premiums or discounts governing cash market transactions in the quantities specified by the leverage contract and justify the use of such price series with respect to the particular leverage commodity for which registration is sought;

(4) Provide evidence and a complete evaluation of how the distinguishing characteristics of the leverage commodity would be expected to affect the ability of leverage customers electing to make or take delivery of the commodity at an economic price in normal cash market channels;

(5) Include a description of the commodity inspection and/or certification procedures typically required for commercial or retail sales of the specified commodity. Such description must be accompanied by information regarding the availability of any normally required certification or inspection service at the delivery points including those of the leverage transaction merchant; and

(6) Include copies of all leverage contracts which are to be offered by the leverage transaction merchant on the leverage commodity.

(c)  Continuing registration of leverage commodities.  A registered leverage transaction merchant must submit to the Commission for its review, at least forty-five (45) days before their effective date, any proposed changes in the specifications of the leverage commodity and the terms and conditions of the leverage contract from those submitted as part of the registration application unless such contract specifically provides that such terms and conditions are subject to change. Three copies of each such submission must be furnished to the Commission at its Washington, DC headquarters. Attn: Secretariat. The Commission may return any submission which does not comply with the form and content requirements of this section. Each such submission must, in the following order:

(1) Explain how any such changes might affect the ability of leverage customers to realize the leverage commodity's economic value and how such amendments might affect the ability of leverage customers making or taking delivery to buy or sell the leverage commodity;

(2) Explain the effect of such changes upon the continued appropriateness of the commercial or retail cash price series submitted pursuant to paragraph (b)(3) of this section, or, as an alternative, submit a new price series and a justification of its use; and

(3) Indicate whether, if such changes are applied to existing leverage commodities, there will be a change in the economic value of such commodities and, if so, quantify the extent of such changes.

(d)  Authority to disapprove amendments.  The Commission may disapprove, alter, or amend changes to the distinguishing characteristics of the registered leverage commodity, or to the terms and conditions of the leverage contracts offered thereon, after appropriate notice and opportunity for hearing, when the Commission determines that such a change is in violation of any of the provisions of the Act or any of the regulations thereunder, or that it is necessary or appropriate to ensure the financial solvency of leverage transactions or prevent manipulation or fraud. Upon notification by the Commission of its determination to disapprove, alter or amend such changes, the proposed changes will not become effective pending a final determination by the Commission to disapprove, alter, or amend such changes.

(e)  Authority to alter or amend specifications of the registered leverage commodity or the terms and conditions of leverage contract.  The Commission may alter or amend specific distinguishing characteristics of the registered leverage commodity or the terms and conditions of leverage contracts after appropriate notice and opportunity for hearing when the Commission determines that, in light of intervening events, such alterations or amendments would be necessary or appropriate to ensure the financial solvency of leverage transactions or prevent manipulation or fraud.

(f)(1) The Commission hereby delegates to the Director of the Division of Market Oversight until such time as the Commission orders otherwise, all functions reserved to the Commission in paragraphs (b) and (c) of this section.

(2) The Director of the Division of Market Oversight may submit any matter which has been delegated to the Director under paragraph (f)(1) of this section to the Commission for its consideration."
17:17:1.0.1.1.24.0.7.6,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,"§ 31.7 Maintenance of minimum financial, cover and segregation requirements by leverage transaction merchants.",CFTC,,,"[49 FR 5530, Feb. 13, 1984, as amended at 50 FR 28, Jan. 2, 1985; 54 FR 41079, Oct. 5, 1989]","(a) Each person registered as a leverage transaction merchant or who files an application for registration as a leverage transaction merchant, who knows or should have known that its adjusted net capital at any time is less than the minimum required by § 31.9, or that its cover at any time is less than the minimum required by § 31.8, or that the amount of leverage customer funds in segregation is less than is required by § 31.12 or by the capital, cover or segregation rules of any designated self-regulatory organization to which such person is subject, if any, must:

(1) Give telegraphic notice as set forth in § 1.12(g) of this chapter that such applicant's or registrant's adjusted net capital is less than is required by § 31.9, or its cover is less than is required by § 31.8, or the amount of leverage customer funds in segregation is less than is required by § 31.12 or by such other capital, cover or segregation rule, identifying the applicable capital, cover or segregation rule. This notice must be given within 24 hours after such applicant or registrant knows or should have known that its adjusted net capital or its cover or the amount of leverage customer funds in segregation is less than is required by any of the aforesaid rules to which such applicant or registrant is subject; and

(2) Within 24 hours after giving such notice file a statement of financial condition, a statement of the computation of the minimum capital requirements pursuant to § 31.9 (computed in accordance with the applicable capital rule), a schedule of coverage requirements and coverage provided, and a schedule of segregation requirements and funds on deposit in segregation, all as of the date such applicant's or registrant's adjusted net capital or its cover or the amount of leverage customer funds in segregation became less than the minimum required.

(b) Each person registered as a leverage transaction merchant, or who files an application for registration as a leverage transaction merchant, who knows or should have known that its adjusted net capital at any time is less than 120 percent of the amount required by § 31.9 must file written notice to that effect as set forth in § 1.12(g) of this chapter within five business days of such event. Such applicant or registrant must also file a Form 2-FR or such other financial statement designated by the Commission and/or the designated self-regulatory organization, if any, as of the close of business for the month during which such event takes place and as of the close of business for each month thereafter until three successive months have elapsed during which the applicant's or registrant's adjusted net capital is at all times equal to or in excess of the minimums set forth in this paragraph (b). Each financial report required by this paragraph (b) must be filed within 30 calendar days after the end of the month for which such report is being made.

(c) The requirements of §§ 1.12(c), 1.12(d), 1.12(e) and 1.12(g) of this chapter shall apply to registered leverage transaction merchants and to persons who have applied for registration as leverage transaction merchants, as if in those paragraphs the term “leverage transaction merchant or applicant therefor” were substituted for the phrase “applicant or registrant.”"
17:17:1.0.1.1.24.0.7.7,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.8 Cover of leverage contracts.,CFTC,,,"[49 FR 5531, Feb. 13, 1984, as amended at 50 FR 28, Jan. 2, 1985; 54 FR 41079, Oct. 5, 1989]","(a)(1) Each leverage transaction merchant must at all times maintain cover of at least 90 percent of the amount of physical commodities subject to open long leverage contracts entered into with leverage customers, and must at all times also maintain cover of at least 90 percent of the amount of physical commodities subject to open short leverage contracts entered into with leverage customers. At least 25 percent of the amount of physical commodities subject to open long leverage contracts must be covered by the types of permissible cover set forth in paragraphs (a)(2) (i) and (ii) of this section.

(2) Permissible cover for a long leverage contract is limited to:

(i) Warehouse receipts for the leverage commodity subject to the leverage contract held in commercial banks located in the United States or in approved contract market depositories:  Provided,  That the balance of the principal and accrued interest on any loan against such warehouse receipts does not exceed 70 percent of the current market value of the commodity represented by each receipt.

(ii) Warehouse receipts for gold bullion in the case of leverage contracts on bulk gold coins, bulk gold coins in the case of leverage contracts on gold bullion, silver bullion in the case of leverage contracts on bulk silver coins, bulk silver coins in the case of leverage contracts on silver bullion, one type of bulk gold coins for leverage contracts involving another type of bulk gold coins on an ounce-for-ounce basis if each type of bulk gold coins used as cover is the subject of a leverage contract offered by the leverage transaction merchant pursuant to registration under § 31.6 of this part, and one type of bulk silver coins for leverage contracts involving another type of bulk silver coins on an ounce-for-ounce basis if each type of bulk silver coins used as cover is the subject of a leverage contract offered by the leverage transaction merchant pursuant to registration under § 31.6 of this part, which are held in commercial banks located in the United States or in approved contract market depositories:  Provided,  That the balance of the principal and accrued interest on any loans against such warehouse receipts does not exceed 70 percent of the current market value of the commodity for which it represents cover.

(iii) Purchase, in physical form, of the leverage commodity subject to the leverage contract, or of the same alternative commodities provided for in paragraph (a)(2)(ii) of this section, with settlement within two business days shall be considered permissible cover from the time the purchase order is confirmed, even though the leverage transaction merchant does not have possession or control of a warehouse receipt until settlement:  Provided, however,  That such purchases are not made from an affiliated firm, and such purchases at no time constitute more than 10 percent of the amount of physical commodities subject to open long leverage contracts entered into with leverage customers:  And, provided further,  That the leverage transaction merchant maintains, in accordance with § 31.14 of this part, detailed records of these transactions which will be subject to inspection, copying and audit by the Commission and a designated self-regulatory organization.

(iv) A long spot futures contract on the leverage commodity subject to the leverage contract, or of the same alternative commodities provided for in paragraph (a)(2)(ii) of this section, if the leverage transaction merchant has stopped a delivery notice which is non-transferable with respect to that futures contract and has otherwise complied with any procedures, including payment, necessary for taking delivery, even though the leverage transaction merchant does not have possession or control of a warehouse receipt for two business days:  Provided, however,  That the amount of physical commodities subject to such long spot futures contracts at no time constitutes more than 10 percent of the amount of physical commodities subject to open long leverage contracts entered into with leverage customers:  And, provided further,  That the leverage transaction merchant maintains, in accordance with § 31.14 of this part, detailed records of its deliveries on futures contracts, which will be subject to inspection, copying and audit by the Commission and a designated self-regulatory organization.

(v)(A) Purchases for future delivery on or subject to the rules of the contract market of the same generic commodity subject to the leverage contract, or of the same alternative commodities provided for in paragraph (a)(2)(ii) of this section; or

(B) Purchases of call commodity options for the same generic commodity subject to the leverage contract, or of the same alternative commodities provided for in paragraph (a)(2)(ii) of this section, on or subject to the rules of a contract market in accordance with the provisions of part 33 of this chapter:  Provided,  That the market value of the actual commodity or futures contract which is the subject of such option is more than the value of the underlying commodity based on the strike price of the option.

(3) Permissible cover for a short leverage contract is limited to:

(i) Sales for future delivery on or subject to the rules of a contract market of the same generic commodity subject to the leverage contract, or of the same alternative commodities provided for in paragraph (a)(2)(ii) of this section; or

(ii) Purchases of put commodity options for the same generic commodity subject to the leverage contract, or of the same alternative commodities provided for in paragraph (a)(2)(ii) of this section, on or subject to the rules of a contract market in accordance with the provisions of part 33 of this chapter:  Provided,  That the market value of the actual commodity or futures contract which is the subject of such option is less than the value of the underlying commodity based on the strike price of the option.

(b) Such leverage transaction merchant must be in compliance with paragraph (a) of this section at all times and must be able to demonstrate such compliance to the satisfaction of the Commission and/or the designated self-regulatory organization. A leverage transaction merchant who is not in compliance with paragraph (a) of this section or in unable to demonstrate such compliance must immediately cease engaging in the business of offering to enter into, entering into, or confirming the execution of, any leverage contract until such time as the leverage transaction merchant is able to demonstrate such compliance. Nothing in this paragraph (b) shall be construed as preventing the Commission or the designated self-regulatory organization from taking action against a leverage transaction merchant for non-compliance with any of the provisions of this section.

(c) The amount of cover which is actually maintained by a leverage transaction merchant, and the amount of cover which must be maintained by a leverage transaction merchant in order to comply with the requirements of this section, shall be computed as of the close of each business day by the leverage transaction merchant. A written record of this computation shall be made and kept, together with all supporting data, in accordance with the provisions of § 1.31 of this chapter. This daily computation shall be made by noon on the next business day and shall be computed in a format identical to the Schedule of Coverage Requirements and Coverage Provided contained in Form 2-FR. In computing the amount of cover actually maintained, the leverage transaction merchant shall include only those warehouse receipts which are unencumbered or against which the balance of the principal and accrued interest on cash loans for which such receipts serve as collateral does not exceed 70 percent of the current market value of the commodities underlying such receipts.

(d) A leverage transaction merchant who uses as collateral for cash loans warehouse receipts held as cover for leverage contracts shall maintain a separate record for such loans which contains the following information:

(1) The date on which the loan was made;

(2) The name of the commercial bank or futures commission merchant making such loan;

(3) The purpose for which the loan was made;

(4) The amount of the loan;

(5) The interest rate on the loan;

(6) The loan's maturity date;

(7) The date of any partial or complete liquidation of the loan; and

(8) A description of the warehouse receipt collateralizing such loan including the receipt number, the issuer's name, and the total quantity of the commodity covered by the warehouse receipt. Such loans shall be evidenced in a written agreement executed by the leverage transaction merchant and the lender. The leverage transaction merchant shall retain such agreement and any related notes in accordance with the requirements of § 31.14 of this part.

(e) The requirements of paragraphs (a) through (d) of this section shall not be applicable if the leverage transaction merchant is a member of a designated self-regulatory organization and conforms to minimum cover standards and related reporting requirements set by such designated self-regulatory organization in its bylaws, rules, regulations or resolutions approved by the Commission pursuant to section 19 of the Act and § 31.28 of this part."
17:17:1.0.1.1.24.0.7.8,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.9 Minimum financial requirements.,CFTC,,,"[49 FR 5531, Feb. 13, 1984; 49 FR 25427, June 21, 1984, as amended at 50 FR 36414, Sept. 6, 1985; 54 FR 41079, Oct. 5, 1989]","(a) Each leverage transaction merchant must at all times maintain adjusted net capital equal to or in excess of $2,500,000, plus 20 percent of the market value of the amount of physical commodities subject to leverage contracts entered into by the leverage transaction merchant which are uncovered, plus 2
 1/2  percent of the market value of the amount of physical commodities subject to short leverage contracts entered into by the leverage transaction merchant which are covered.

(1) For purposes of determining compliance with the provisions of paragraph (a) of this section, each leverage transaction merchant must compute the market value of the physical commodities subject to leverage contracts which it has entered into by using the widely accepted and broadly disseminated commercial or retail cash price series submitted with the leverage transaction merchant's application for registration of the leverage commodity in accordance with § 31.6, and cannot include any mark-ups or discounts of the leverage transaction merchant.

(2) The requirements of paragraph (a) of this section shall not be applicable if the applicant or registrant is a member of a designated self-regulatory organization and conforms to minimum financial standards and related reporting requirements set by such designated self-regulatory organization in its bylaws, rules, regulations or resolutions approved by the Commission pursuant to section 19 of the Act and § 31.28 of this part.

(3) No person applying for registration as a leverage transaction merchant shall be so registered unless such person affirmatively demonstrates to the satisfaction of the Commission that it complies with the financial requirements of this section. Each leverage transaction merchant must be in compliance with this section at all times and must be able to demonstrate such compliance to the satisfaction of the Commission and/or the designated self-regulatory organization.

(4) A leverage transaction merchant who is not in compliance with this section, or is unable to demonstrate such compliance as required by paragraph (a)(3) of this section, must immediately cease engaging in the business of offering to enter into, entering into, or confirming the execution of, any leverage contract until such time as the leverage transaction merchant is able to demonstrate such compliance. Nothing in this paragraph shall be construed as preventing the Commission or the designated self-regulatory organization from taking action against a leverage transaction merchant for non-compliance with any of the provisions of this section. Any leverage transaction merchant required immediately to cease doing business under this paragraph shall remain liable on all leverage contracts previously entered into until all rights of and obligations owing to the customers thereunder have been fulfilled.

(b) For the purposes of this section:

(1) Where the applicant or registrant has an asset or liability which is defined in Securities Exchange Act rule 15c3-1 (§ 240.15c3-1 of this title), the inclusion or exclusion of all or part of such asset or liability for the computation of adjusted net capital shall be in accordance with § 240.15c3-1 of this title, unless specifically stated otherwise in this section;

(2)(i) The term “customer” means customer as defined in § 31.4(d);

(ii) The term “proprietary account” means a commodity futures, option or leverage account carried on the books of the applicant or registrant itself, or for general partners of the applicant or registrant; and

(iii) The term “noncustomer account” means a leverage account carried on the books of the applicant or registrant for a person which is not included in the definition of customer (as defined in paragraph (b)(2)(i) of this section) or proprietary account (as defined in paragraph (b)(2)(ii) of this section);

(3) The term “Business day” means any day other than a Saturday, Sunday or legal holiday;

(4) The term “net capital” has the same meaning as in § 1.17 of this chapter:  Provided, however,  That the term “leverage transaction merchant” shall be substituted for the term “futures commission merchant” in § 1.17 of this chapter. In determining net capital, the provisions set forth in § 1.17(c)(1) of this chapter shall apply;

(5) The term “current assets” has the same meaning as in § 1.17(c)(2) of this chapter:  Provided,  That the provisions of § 1.17(c)(2)(i) of this chapter shall apply to leverage contract accounts as well as commodity futures and option accounts;

(6) The provisions set forth in § 1.17(c)(3) of this chapter shall apply;

(7) The term “liabilities” has the same meaning as in § 1.17(c)(4) of this chapter;

(8) In computing adjusted net capital, the safety factors set forth in § 1.17(c)(5) of this chapter shall apply:  Provided, however,  That the safety factors set forth in § 1.17(c)(5)(ii) (B) and (C) of this chapter shall not apply to inventory, to the extent such inventory represents cover for leverage contracts entered into by a leverage transaction merchant;  And, provided further,  That the safety factors set forth in § 1.17(c)(5) (x) and (xii) of this chapter shall not apply to any futures contracts or commodity options traded on contract markets held in proprietary accounts which represent cover for leverage contracts entered into by a leverage transaction merchant;

(9) The safety factors set forth in § 1.17(c)(5) (viii) and (ix) of this chapter for undermargined commodity futures and commodity option customer and noncustomer accounts shall apply in a like manner to undermargined leverage customer and noncustomer accounts, respectively, and the term “leverage transaction merchant” shall be substituted for the terms “applicable boards of trade” or “clearing organization”; and

(10) The provisions set forth in § 1.17 (d), (e), (f), (h) and (j) of this chapter shall apply.

(c) No person shall be registered as a leverage transaction merchant unless, commencing on the date the person applies for such registration, the person prepares, and keeps current, ledgers or other similar records which show or summarize, with appropriate references to supporting documents, each transaction affecting his asset, liability, income, expense and capital accounts, and in which (except as otherwise permitted in writing by the Commission) all his asset, liability and capital accounts are classified into either the account classification subdivisions specified on Form 2-FR or categories that are in accord with generally accepted accounting principles. Each person so registered shall prepare and keep current such records.

(d) Each registered leverage transaction merchant, and each person who has applied for registration as a leverage transaction merchant, must make and keep as a record in accordance with § 31.14 of this part formal computations of its adjusted net capital and of its minimum financial requirements pursuant to this section as of the close of business each month. Such computations must be completed and made available for inspection by any representative of the National Futures Association, in the case of an applicant, or of the Commission, the designated self-regulatory organization, if any, or the United States Department of Justice in the case of a registrant, within 30 days after the date for which the computations are made, commencing the first month-end after the date the application for registration is filed."
17:17:1.0.1.1.24.0.7.9,17,Commodity and Securities Exchanges,I,,31,PART 31—LEVERAGE TRANSACTIONS,,,,§ 31.10 Repurchase and resale of leverage contracts by leverage transaction merchants.,CFTC,,,"[50 FR 36414, Sept. 6, 1985]","(a) No leverage transaction merchant shall offer to sell or sell a long leverage contract involving a leverage commodity to any leverage customer at any time when such leverage transaction merchant is not offering to repurchase from any of its leverage customers any long leverage contract, and is not offering to resell to any of its leverage customers any short leverage contract, involving the same leverage commodity previously sold or purchased by the leverage transaction merchant to or from a leverage customer.

(b) No leverage transaction merchant shall offer to purchase or purchase a short leverage contract involving a leverage commodity from any leverage customer at any time when such leverage transaction merchant is not offering to resell to any of its leverage customers any short leverage contract, and is not offering to repurchase from any of its leverage customers any long leverage contract, involving the same leverage commodity previously purchased or sold by the leverage transaction merchant from or to a leverage customer."
28:28:1.0.1.1.32.1.10.4,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,A,Subpart A—Formula Grants,,§§ 31.100-31.103 [Reserved],DOJ,,,,
28:28:1.0.1.1.32.1.11.5,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,A,Subpart A—Formula Grants,,§§ 31.200-31.202 [Reserved],DOJ,,,,
28:28:1.0.1.1.32.1.11.6,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,A,Subpart A—Formula Grants,,§ 31.203 Open meetings and public access to records.,DOJ,,,,The State advisory group established pursuant to section 223(a)(3) will follow applicable State open meeting and public access laws and regulations in the conduct of meetings and the maintenance of records relating to their functions.
28:28:1.0.1.1.32.1.12.10,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,A,Subpart A—Formula Grants,,§ 31.303 Substantive requirements.,DOJ,,,,"(a) [Reserved]

(b) [Reserved]

(c)  Deinstitutionalization of status offenders and non-offenders (DSO).  Pursuant to section 223(a) (11) of the JJDP Act, the State shall:

(1) Describe its plan, procedure, and timetable covering the three-year planning cycle, for assuring that the requirements of this section are met. Refer to paragraph (f)(3) of this section for the rules related to the valid court order exception to this Act requirement.

(2) Describe the barriers the State faces in achieving full compliance with the provisions of this requirement.

(3) Apply this requirement to alien juveniles under Federal jurisdiction who are held in State or local facilities.

(4) Those States which, based upon the most recently submitted monitoring report, have been found to be in full compliance with section 223(a)(11) may, in lieu of addressing paragraphs (c)(1) and (2) of this section, provide an assurance that adequate plans and resources are available to maintain full compliance.

(5) [Reserved]

(d)  Separation.  (1) Pursuant to section 223(a)(12) of the JJDP Act the State shall:

(i) Describe its plan and procedure, covering the three-year planning cycle, for assuring that the requirements of this section are met. Separation must be accomplished architecturally or through policies and procedures in all secure areas of the facility which include, but are not limited to, such areas as admissions, sleeping, and shower and toilet areas. Brief and inadvertent sight or sound contact between juveniles alleged to be or found to be delinquent or those within the purview of 34 U.S.C. 11133(a)(11)(A) and adult inmates in secure areas of a facility that are not dedicated to use by juveniles and which are nonresidential, which may include dining, recreational, educational, vocational, health care, sally ports or other entry areas, and passageways (hallways), would not require a facility or the State to document or report such contact as a violation. However, any contact in a dedicated juvenile area, including any residential area of a secure facility, between juveniles in a secure custody status and adult inmates would be a reportable violation.

(ii) In those instances where accused juvenile criminal-type offenders are authorized to be temporarily detained in facilities where adults are confined, the State must set forth the procedures for assuring no sight or sound contact between such juveniles and adult inmates.

(iii) Describe the barriers which may hinder the separation of alleged or adjudicated criminal type offenders, status offenders and non-offenders from adult inmates in any particular jail, lockup, detention or correctional facility.

(iv) Those States which, based upon the most recently submitted monitoring report, have been found to be in compliance with section 223(a)(12) may, in lieu of addressing paragraphs (d)(1)(i), (ii), and (iii) of this section, provide an assurance that adequate plans and resources are available to maintain compliance.

(v) Assure that adjudicated delinquents are not reclassified administratively and transferred to an adult (criminal) correctional authority to avoid the intent of separating juveniles from adult criminals in jails or correctional facilities. A State is not prohibited from placing or transferring an alleged or adjudicated delinquent who reaches the State's age of full criminal responsibility to an adult facility when required or authorized by State law. However, the administrative transfer, without statutory direction or authorization, of a juvenile offender to an adult correctional authority, or a transfer within a mixed juvenile and adult facility for placement with adult criminals, either before or after a juvenile reaches the age of full criminal responsibility, is prohibited. A State is also precluded from transferring adult offenders to a juvenile correctional authority for placement in a juvenile facility. This neither prohibits nor restricts the waiver or transfer of a juvenile to criminal court for prosecution, in accordance with State law, for a criminal felony violation, nor the detention or confinement of a waived or transferred criminal felony violator in an adult facility.

(2) [Reserved]

(e)  Removal of juveniles from adult jails and lockups.  Pursuant to section 223(a)(13) of the JJDP Act, the State shall:

(1) Describe its plan, procedure, and timetable for assuring that requirements of this section will be met.

(2) Describe the barriers that a State faces in removing all juveniles from adult jails and lockups, except as provided in section 223(a)(13).

(3)(i) Determine whether or not a facility in which juveniles are detained or confined is an adult jail or lockup. The JJDP Act prohibits the detention of juveniles in adult jails and lockups, except as otherwise provided under the Act and implementing OJJDP regulations. Juvenile facilities collocated with adult facilities are considered adult jails or lockups absent compliance with criteria established in paragraphs (e)(3)(i)(C)( 1 ), ( 2 ), and ( 4 ) of this section.

(A) A collocated facility is a juvenile facility located in the same building as an adult jail or lockup, or is part of a related complex of buildings located on the same grounds as an adult jail or lockup. A complex of buildings is considered “related” when it shares physical features such as walls and fences, or services beyond mechanical services (heating, air conditioning, water and sewer).

(B) The State must determine whether a collocated facility qualifies as a separate juvenile detention facility under the criteria set forth in paragraphs (e)(3)(i)(C)( 1 ), ( 2 ), and ( 4 ) of this section for the purpose of monitoring compliance with section 223(a)(12)(A), (13) and (14) of the JJDP Act.

(C) Each of the following criteria must be met in order to ensure the requisite separateness of a juvenile detention facility that is collocated with an adult jail or lockup:

( 1 ) Separation between juveniles and adult inmates such that there could be no sustained sight or sound contact between juveniles and adult inmates in the facility. Separation can be achieved architecturally or through time-phasing of common use nonresidential areas; and

( 2 ) Separate juvenile and adult programs, including recreation, education, vocation, counseling, dining, sleeping, and general living activities. There must be an independent and comprehensive operational plan for the juvenile detention facility which provides for a full range of separate program services. No program activities may be shared by juveniles and adult inmates. Time-phasing of common use nonresidential areas is permissible to conduct program activities. Equipment and other resources may be used by both populations subject to security concerns; and

( 3 ) [Reserved]

( 4 ) In States that have established standards or licensing requirements for juvenile detention facilities, the juvenile facility must meet the standards (on the same basis as a free-standing juvenile detention center) and be licensed as appropriate. If there are no State standards or licensing requirements, OJJDP encourages States to establish administrative requirements that authorize the State to review the facility's physical plant, staffing patterns, and programs in order to approve the collocated facility based on prevailing national juvenile detention standards.

(ii) The State must determine that all of the criteria are fully met. It is incumbent upon the State to make the determination through an on-site facility (or full construction and operations plan) review and, through the exercise of its oversight responsibility, to ensure that the separate character of the juvenile detention facility is maintained by continuing to fully meet the criteria set forth in paragraphs (e)(3)(i)(C)( 1 ), ( 2 ), and ( 4 ) of this section.

(iii) [Reserved]

(iv) An annual on-site review of the facility must be conducted by the compliance monitoring staff person(s) representing or employed by the State agency administering the JJDP Act Formula Grants Program. The purpose of the annual review is to determine if compliance with the criteria set forth in paragraphs (e)(3)(i)(C)( 1 ), ( 2 ), and ( 4 ) of this section is being maintained.

(4) Those States which, based upon the most recently submitted monitoring report, have been found to be in full compliance with section 223(a)(13) may, in lieu of addressing paragraphs (e)(1) and (2) of this section, provide an assurance that adequate plans and resources are available to maintain full compliance.

(f)  Monitoring of jails, detention facilities and correctional facilities.  (1)  Elements of a compliance monitoring system.  Pursuant to section 223(a)(14) of the JJDP Act, and except as provided by paragraph (f)(7) of this section, the State shall:

(i) Describe its plan, procedure, and timetable for annually monitoring jails, lockups, detention facilities, and correctional facilities. The plan must at a minimum describe in detail each of the following tasks including the identification of the specific agency(s) responsible for each task.

(A)  Identification of monitoring universe:  This refers to the identification of all facilities which might hold juveniles pursuant to public authority and thus must be classified to determine if it should be included in the monitoring effort. This includes those facilities owned or operated by public and private agencies.

(B)  Classification of the monitoring universe:  This is the classification of all facilities to determine which ones should be considered as a secure detention or correctional facility, adult correctional institution, jail, lockup, or other type of secure facility.

(C)  Inspection of facilities:  Inspection of facilities is necessary to ensure an accurate assessment of each facility's classification and record keeping. The inspection must include:

( 1 ) A review of the physical accommodations to determine whether it is a secure or non-secure facility or whether adequate sight and sound separation between juvenile and adult offenders exists and

( 2 ) A review of the record keeping system to determine whether sufficient data are maintained to determine compliance with section 223(a)(11), (12) and/or (13).

(D)  Data collection and data verification:  This is the actual collection and reporting of data to determine whether the facility is in compliance with the applicable requirement(s) of section 223(a)(11), (12) and/or (13). The length of the reporting period should be 12 months of data. If the data is self-reported by the facility or is collected and reported by an agency other than the State agency designated pursuant to section 223(a)(1) of the JJDP Act, the plan must describe a statistically valid procedure used to verify the reported data.

(ii) Provide a description of the barriers which the State faces in implementing and maintaining a monitoring system to report the level of compliance with section 223(a)(11), (12), and (13) and how it plans to overcome such barriers.

(iii) Describe procedures established for receiving, investigating, and reporting complaints of violation of section 223(a)(11), (12), and (13). This should include both legislative and administrative procedures and sanctions.

(2)  Monitoring for compliance with DSO.  For the purpose of monitoring for compliance with section 223(a)(11)(A) of the Act, a secure detention or correctional facility is any secure public or private facility used for the lawful custody of accused or adjudicated juvenile offenders or nonoffenders, or used for the lawful custody of accused or convicted adult criminal offenders. Accused status offenders or nonoffenders in lawful custody can be held in a secure juvenile detention facility for up to twenty-four hours, exclusive of weekends and holidays, prior to an initial court appearance and for an additional twenty-four hours, exclusive of weekends and holidays, following an initial court appearance.

(3)  Valid court order.  For the purpose of determining whether a valid court order exists and a juvenile has been found to be in violation of that valid order all of the following conditions (in addition to the requirements set out in section 223(a)(23) of the Act) must be satisfied prior to secure incarceration:

(i) The juvenile must have been brought into a court of competent jurisdiction and made subject to an order issued pursuant to proper authority. The order must be one which regulates future conduct of the juvenile. Prior to issuance of the order, the juvenile must have received the full due process rights guaranteed by the Constitution of the United States.

(ii) The court must have entered a judgment and/or remedy in accord with established legal principles based on the facts after a hearing which observes proper procedures.

(iii) [Reserved]

(iv) [Reserved]

(v) Prior to and during the violation hearing the following full due process rights must be provided:

(A) The right to have the charges against the juvenile in writing served upon him a reasonable time before the hearing;

(B) The right to a hearing before a court;

(C) The right to an explanation of the nature and consequences of the proceeding;

(D) The right to legal counsel, and the right to have such counsel appointed by the court if indigent;

(E) The right to confront witnesses;

(F) The right to present witnesses;

(G) The right to have a transcript or record of the proceedings; and

(H) The right of appeal to an appropriate court.

(vi) [Reserved]

(4) [Reserved]

(5)  Reporting requirement.  The State shall report annually to the Administrator of OJJDP on the results of monitoring for the core requirements in the JJDPA at 34 U.S.C. 11133(a)(11), (12), and (13). The reporting period should provide 12 months of data for each federal fiscal year, for 85% of facilities within the State that are required to report compliance data, and States must extrapolate and report, in a statistically valid manner, data for the remaining 15% of facilities. The report shall be submitted to the Administrator of OJJDP by February 28 of each year, except that the Administrator may grant an extension of the reporting deadline to March 31st, for good cause, upon request by a State.

(i) To demonstrate the extent of compliance with section 223(a)(11)(A) of the JJDP Act, the report must include, at a minimum, the following information for the current reporting period:

(A) Dates covered by the current reporting period;

(B) Total number of public and private secure detention and correctional facilities, the total number reporting, and the number inspected on-site;

(C) The total number of accused status offenders and nonoffenders, including out-of-State runaways and Federal wards, held in any secure detention or correctional facility for longer than twenty-four hours (not including weekends or holidays), excluding those held pursuant to the valid court order provision as set forth in paragraph (f)(3) of this section or pursuant to section 922(x) of title 18, United States Code (which prohibits the possession of a handgun by a juvenile), or a similar State law. A juvenile who violates this statute, or a similar state law, is excepted from the deinstitutionalization of status offenders requirement;

(D) The total number of accused status offenders (including valid court order violators, out of state runaways, and Federal wards, but excluding title 18 922(x) violators) and nonoffenders detained in any adult jail, lockup, or nonapproved collocated facility for any length of time;

(E) The total number of adjudicated status offenders and nonoffenders, including out-of-state runaways and Federal wards, held for any length of time in a secure detention or correctional facility, excluding those held pursuant to the valid court order provision or pursuant to title 18 U.S.C. 922(x);

(F) The total number of status offenders held in any secure detention or correctional facility pursuant to the valid court order provision set forth in paragraph (f)(3) of this section; and

(G) The total number of juvenile offenders held pursuant to title 18 U.S.C. 922(x).

(ii) To demonstrate the extent to which the provisions of section 223(a)(11)(B) of the JJDP Act are being met, the report must include the total number of accused and adjudicated status offenders and nonoffenders placed in facilities that are:

(A) Not near their home community;

(B) Not the least restrictive appropriate alternative; and

(C) Not community-based.

(iii) To demonstrate the extent of compliance with section 223(a)(12) of the JJDP Act, the report must include, at a minimum, the following information for the current reporting period:

(A) Dates covered by the current reporting period;

(B) The total number of facilities used to detain or confine both juvenile offenders and adult inmates during the past 12 months and the number inspected on-site;

(C) The total number of facilities used for detention and confinement of both juvenile offenders and adult inmates which did not provide sight and sound separation;

(D) The total number of juvenile offenders and nonoffenders not separated from adult inmates in facilities used for the detention and confinement of both juveniles and adults;

(E) The total number of State approved juvenile detention centers located within the same building or on the same grounds as an adult jail or lockup, including a list of such facilities;

(F) The total number of juveniles detained in State approved collocated facilities that were not separated from the management, security or direct care staff of the adult jail or lockup;

(G) The total number of juvenile detention centers located within the same building or on the same grounds as an adult jail or lockup that have not been approved by the State, including a list of such facilities; and

(H) The total number of juveniles detained in collocated facilities not approved by the State that were not sight and sound separated from adult inmates.

(iv) To demonstrate the extent of compliance with section 223(a)(13) of the JJDP Act, the report must include, at a minimum, the following information for the current reporting period:

(A) Dates covered by the current reporting period;

(B) The total number of adult jails in the State AND the number inspected on-site;

(C) The total number of adult lockups in the State AND the number inspected on-site;

(D) The total number of adult jails holding juveniles during the past twelve months;

(E) The total number of adult lockups holding juveniles during the past twelve months;

(F) The total number of accused juvenile criminal-type offenders detained in adult jails, lockups, and unapproved collocated facilities in excess of six hours, including those held pursuant to the “removal exception” as set forth in 34 U.S.C. 11133(a)(13)(B);

(G) The total number of accused juvenile criminal-type offenders detained in adult jails, lockups and unapproved collocated facilities for less than six hours for purposes other than identification, investigations, processing, release to parent(s), transfer to court, or transfer to a juvenile facility following initial custody;

(H) The total number of adjudicated juvenile criminal-type offenders detained in adult jails or lockups and unapproved collocated facilities in excess of six hours prior to or following a court appearance or for any length of time not related to a court appearance;

(I) The total number of accused and adjudicated status offenders (including valid court order violators) and nonoffenders detained in adult jails, lockups and unapproved collocated facilities for any length of time;

(J) The total number of adult jails, lockups, and unapproved collocated facilities in areas meeting the “removal exception” as noted in 34 U.S.C. 11133(a)(13)(B), including a list of such facilities and the county or jurisdiction in which each is located;

(K) The total number of juveniles accused of a criminal-type offense who were held in excess of six hours but less than 24 hours in adult jails, lockups and unapproved collocated facilities pursuant to the “removal exception” as set forth in 34 U.S.C. 11133(a)(13)(B);

(L) The total number of juveniles accused of a criminal-type offense who were held in excess of 24 hours, but not more than an additional 48 hours, in adult jails, lockups and unapproved collocated facilities pursuant to the “removal exception” as noted in 34 U.S.C. 11133(a)(13)(B), due to conditions of distance or lack of ground transportation; and

(M) The total number of juveniles accused of a criminal-type offense who were held in excess of 24 hours, but not more than an additional 24 hours after the time such conditions as adverse weather allow for reasonably safe travel, in adult jails, lockups and unapproved collocated facilities, in areas meeting the “removal exception” as noted in 34 U.S.C. 11133(a)(13)(B).

(6)  Compliance.  The State must demonstrate the extent to which the requirements of sections 223(a)(11), (12), and (13) of the Act are met.

(i) [Reserved]

(ii) [Reserved]

(iii) In determining the compliance standards to be applied to States' compliance monitoring data, the Administrator shall take the average of the States' compliance monitoring data from not less than two years prior to the compliance reporting period with respect to which the compliance determination will be made (removing, when applicable, one negative outlier in each data collection period for DSO, separation, and jail removal) and apply a standard deviation of not less than one to establish the compliance standards to be applied, except that the Administrator may make adjustments to the methodology described in this paragraph as he deems necessary and shall post the compliance standards on OJJDP's website by August 31st of each year.

(7)  Monitoring report exemption.  States which have been determined by the OJJDP Administrator to have achieved full compliance with sections 223(a)(11)(A), (a)(13), and compliance with section 223(a)(12) of the JJDP Act and wish to be exempted from the annual monitoring report requirements must submit a written request to the OJJDP Administrator which demonstrates that:

(i) The State provides for an effective system of monitoring jails, law enforcement lockup, detention facilities, to enable an annual determination of State compliance with sections 223(a)(11)(A), (12), and (13) of the JJDP Act;

(ii) State legislation has been enacted which conforms to the requirements of sections 223(a)(11)(A), (12), and (13) of the JJDP Act; and

(iii) The enforcement of the legislation is statutorily or administratively prescribed, specifically providing that:

(A) Authority for enforcement of the statute is assigned;

(B) Time frames for monitoring compliance with the statute are specified; and

(C) Adequate procedures are set forth for enforcement of the statute and the imposition of sanctions for violations.

(g) [Reserved]

(h)  Annual performance report.  Pursuant to section 223(a)(22)(B), the State plan shall provide for submission of an annual performance report. The State shall report on its progress in the implementation of the approved programs, described in the three-year plan. The performance indicators will serve as the objective criteria for a meaningful assessment of progress toward achievement of measurable goals. The annual performance report shall describe progress made in addressing the problem of serious juvenile crime, as documented in the juvenile crime analysis pursuant to section 223(a)(7). The annual performance report must be submitted to OJJDP no later than June 30 and address all formula grant activities carried out during the previous complete calendar year, federal fiscal year, or State fiscal year for which information is available, regardless of which year's formula grant funds were used to support the activities being reported on,  e.g.,  during a reporting period, activities may have been funded from two or more formula grant awards.

(i)  Technical assistance.  States shall include, within their plan, a description of technical assistance needs. Specific direction regarding the development and inclusion of all technical assistance needs and priorities will be provided in the “Application Kit for Formula Grants under the JJDPA.”

(j) [Reserved]

(k) [Reserved]"
28:28:1.0.1.1.32.1.12.11,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,A,Subpart A—Formula Grants,,§ 31.304 Definitions.,DOJ,,,,"(a)  Criminal-type offender.  A juvenile offender who has been charged with or adjudicated for conduct which would, under the law of the jurisdiction in which the offense was committed, be a crime if committed by an adult.

(b)  Detain or confine  means to hold, keep, or restrain a person such that he is not free to leave, or such that a reasonable person would believe that he is not free to leave, except that a juvenile held by law enforcement solely for the purpose of returning him to his parent or guardian or pending his transfer to the custody of a child welfare or social service agency is not detained or confined within the meaning of this definition.

(c)  Facility.  A place, an institution, a building or part thereof, set of buildings or an area whether or not enclosing a building or set of buildings which is used for the lawful custody and treatment of juveniles and may be owned and/or operated by public and private agencies.

(d)  Juvenile offender.  An individual subject to the exercise of juvenile court jurisdiction for purposes of adjudication and treatment based on age and offense limitations by defined as State law,  i.e.,  a criminal-type offender or a status offender.

(e)  Juvenile who has been adjudicated as having committed an offense.  A juvenile with respect to whom the juvenile court has determined that such juvenile is a juvenile offender,  i.e.,  a criminal-type offender or a status offender.

(f)  Juvenile who is accused of having committed an offense.  A juvenile with respect to whom a petition has been filed in the juvenile court or other action has occurred alleging that such juvenile is a juvenile offender,  i.e.,  a criminal-type offender or a status offender, and no final adjudication has been made by the juvenile court.

(g)  Lawful custody.  The exercise of care, supervision and control over a juvenile offender or non-offender pursuant to the provisions of the law or of a judicial order or decree.

(h)  Local private agency.  For the purposes of the pass-through requirement of section 223(a)(5), a local private agency is defined as a private non-profit agency or organization that provides program services within an identifiable unit or a combination of units of general local government.

(i)  Non-offender.  A juvenile who is subject to the jurisdiction of the juvenile court, usually under abuse, dependency, or neglect statutes for reasons other than legally prohibited conduct of the juvenile.

(j)  Other individual accused of having committed a criminal offense.  An individual, adult or juvenile, who has been charged with committing a criminal offense in a court exercising criminal jurisdiction.

(k)  Other individual convicted of a criminal offense.  An individual, adult or juvenile, who has been convicted of a criminal offense in court exercising criminal jurisdiction.

(l)  Private agency.  A private non-profit agency, organization or institution is:

(1) Any corporation, foundation, trust, association, cooperative, or accredited institution of higher education not under public supervision or control; and

(2) Any other agency, organization or institution which operates primarily for scientific, education, service, charitable, or similar public purposes, but which is not under public supervision or control, and no part of the net earnings of which inures or may lawfully inure to the benefit of any private shareholder or individual, and which has been held by IRS to be tax-exempt under the provisions of section 501(c)(3) of the 1954 Internal Revenue Code.

(m)  Secure.  As used to define a detention or correctional facility this term includes residential facilities which include construction features designed to physically restrict the movements and activities of persons in custody such as locked rooms and buildings, fences, or other physical structures. It does not include facilities where physical restriction of movement or activity is provided solely through facility staff."
28:28:1.0.1.1.32.1.12.7,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,A,Subpart A—Formula Grants,,§ 31.300 [Reserved],DOJ,,,,
28:28:1.0.1.1.32.1.12.8,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,A,Subpart A—Formula Grants,,§ 31.301 Funding.,DOJ,,,,"(a) [Reserved]

(b)  Funds for local use.  At least two-thirds of the formula grant allocation to the state (other than the section 222(d) State Advisory Group set aside) must be used for programs by local government, local private agencies, and eligible Indian tribes, unless the State applies for and is granted a waiver by the OJJDP. The proportion of pass-through funds to be made available to eligible Indian tribes shall be based upon that proportion of the state youth population under 18 years of age who reside in geographical areas where the tribes perform law enforcement functions.

(1) [Reserved]

(2) [Reserved]

(3) To carry out this requirement, OJJDP will annually provide each state with the most recent Bureau of Census statistics on the number of persons under age 18 living within the state, and the number of persons under age 18 who reside in geographical areas where Indian tribes perform law enforcement functions.

(4) Pass-through funds available to tribal entities under section 223(a)(5)(C) shall be made available within states to Indian tribes, combinations of Indian tribes, or to an organization or organizations designated by such tribe(s). Where the relative number of persons under age 18 within a geographic area where an Indian tribe performs law enforcement functions is too small to warrant an individual subgrant or subgrants, the state may, after consultation with the eligible tribe(s), make pass-through funds available to a combination of eligible tribes within the state, or to an organization or organizations designated by and representing a group of qualifying tribes, or target the funds on the larger tribal jurisdictions within the state.

(5) [Reserved]

(c) [Reserved]

(d) [Reserved]

(e)  Nonparticipating States.  Formula grant funds allocated to a State which has failed to submit an application, plan, or monitoring data establishing its eligibility for the funds will be reallocated to the nonparticipating State program on September 30 of the fiscal year for which the funds were appropriated. Reallocated funds will be competitively awarded to eligible recipients pursuant to program announcements."
28:28:1.0.1.1.32.1.12.9,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,A,Subpart A—Formula Grants,,§ 31.302 Applicant State agency.,DOJ,,,,"(a) [Reserved]

(b)  Advisory group.  Pursuant to section 223(a)(3) of the JJDP Act, the State shall provide a list of all current advisory group members, indicating their respective dates of appointment and how each member meets the membership requirements specified in this section of the Act.

(c) [Reserved]"
28:28:1.0.1.1.32.1.13.12,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,A,Subpart A—Formula Grants,,§§ 31.400-31.401 [Reserved],DOJ,,,,
28:28:1.0.1.1.32.1.13.13,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,A,Subpart A—Formula Grants,,§ 31.402 Application on file.,DOJ,,,,"Any Federal funds awarded pursuant to an application must be distributed and expended pursuant to and in accordance with the programs contained in the applicant State's current approved application. Any departures therefrom, other than to the extent permitted by current program and fiscal regulations and guidelines, must be submitted for advance approval by the Administrator of OJJDP."
28:28:1.0.1.1.32.1.13.14,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,A,Subpart A—Formula Grants,,§§ 31.403-31.404 [Reserved],DOJ,,,,
28:28:1.0.1.1.32.1.9.1,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,A,Subpart A—Formula Grants,,§ 31.1 General.,DOJ,,,,"(a) This implements subpart I of part B of the Juvenile Justice and Delinquency Prevention Act of 1974, which authorizes a formula grant program.

(b) In addition to this subpart, other rules or regulations may be applicable to the formula grant program described in paragraph (a) of this section; see,  e.g.,  2 CFR part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards), as adopted by the Department of Justice through 2 CFR part 2800 or other applicable regulation; and 28 CFR part 42 (Nondiscrimination in Federally Assisted Programs—Implementation of title VI of the Civil Rights Act of 1964).

(c) Unless expressly provided otherwise, any reference in this subpart to any provision of Federal law not in this subpart shall be understood to constitute a general reference and thus to include any subsequent amendments to the provision."
28:28:1.0.1.1.32.1.9.2,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,A,Subpart A—Formula Grants,,§ 31.2 Statutory authority.,DOJ,,,,"The Statute establishing the Office of Juvenile Justice and Delinquency Prevention and giving authority to make grants for juvenile justice and delinquency prevention improvement programs is the  Juvenile Justice and Delinquency Prevention Act of 1974,  as amended (34 U.S.C. 11101  et seq. )"
28:28:1.0.1.1.32.1.9.3,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,A,Subpart A—Formula Grants,,§ 31.3 [Reserved],DOJ,,,,
28:28:1.0.1.1.32.2.14.1,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,B,Subpart B—Juvenile Accountability Incentive Block Grants,,§ 31.500 Program purposes.,DOJ,,,,"Funds are available under the Juvenile Accountability Incentive Block Grants (JAIBG) in FY 1998, FY 1999, and each subsequent fiscal year as funds are made available, for State and local grants to support the following program purposes:

(a)  Program purpose no. 1:  Building, expanding, renovating, or operating temporary or permanent juvenile correction or detention facilities, including the training of correctional personnel;

(b)  Program purpose no. 2:  Developing and administering accountability-based sanctions for juvenile offenders;

(c)  Program purpose no. 3:  Hiring additional juvenile judges, probation officers, and court-appointed defenders, and funding pre-trial services for juveniles, to ensure the smooth and expeditious administration of the juvenile justice system;

(d)  Program purpose no. 4:  Hiring additional prosecutors, so that more cases involving violent juvenile offenders can be prosecuted and backlogs reduced;

(e)  Program purpose no. 5:  Providing funding to enable prosecutors to address drug, gang, and youth violence more effectively;

(f)  Program purpose no. 6:  Providing funding for technology, equipment, and training to assist prosecutors in identifying and expediting the prosecution of violent juvenile offenders;

(g)  Program purpose no. 7:  Providing funding to enable juvenile courts and juvenile probation offices to be more effective and efficient in holding juvenile offenders accountable and reducing recidivism;

(h)  Program purpose no. 8:  The establishment of court-based juvenile justice programs that target young firearms offenders through the establishment of juvenile gun courts for the adjudication and prosecution of juvenile firearms offenders;

(i)  Program purpose no. 9:  The establishment of drug court programs for juveniles so as to provide continuing judicial supervision over juvenile offenders with substance abuse problems and to provide the integrated administration of other sanctions and services;

(j)  Program purpose no. 10:  Establishing and maintaining interagency information sharing programs that enable the juvenile and criminal justice system, schools, and social services agencies to make more informed decisions regarding the early identification, control, supervision, and treatment of juveniles who repeatedly commit serious delinquent or criminal acts;

(k)  Program purpose no. 11:  Establishing and maintaining accountability-based programs that work with juvenile offenders who are referred by law enforcement agencies, or which are designed, in cooperation with law enforcement officials, to protect students and school personnel from drug, gang, and youth violence; and,

(l)  Program purpose no. 12:  Implementing a policy of controlled substance testing for appropriate categories of juveniles within the juvenile justice system."
28:28:1.0.1.1.32.2.14.2,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,B,Subpart B—Juvenile Accountability Incentive Block Grants,,§ 31.501 Eligible applicants.,DOJ,,,,"(a)  Eligible applicants.  Eligible applicants in FY 1998, FY 1999, and each subsequent fiscal year as funds are made available, are States whose Governor (or other Chief Executive Officer for the eligible jurisdictions that are not one of the 50 States but defined as such for purposes of this program) certifies, consistent with guidelines established by the Attorney General in consultation with Congress and incorporated into OJJDP's Program Guidance Manual, that the State is actively considering (or already has in place), or will consider within one year from the date of such certification, legislation, policies, or practices which, if enacted, would qualify the State for a grant. Specific information regarding qualifications can be found in the JAIBG Program Guidance Manual.

(b)  Qualifications.  Each State Chief Executive Officer must designate a state agency to apply for, receive, and administer JAIBG funds."
28:28:1.0.1.1.32.2.14.3,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,B,Subpart B—Juvenile Accountability Incentive Block Grants,,§ 31.502 Assurances and plan information.,DOJ,,,"[64 FR 19676, Apr. 21, 1999, as amended by Order No. 2703-2004, 69 FR 2838, Jan. 21, 2004]","(a) In its application for a Juvenile Accountability Incentive Block Grant (JAIBG), each State must provide assurances to the Office of Juvenile Justice and Delinquency Prevention (OJJDP), absent a waiver as provided in the JAIBG Program Guidance Manual, that:

(1) The State will subgrant at least 75% of the State's allocation of funds to eligible units of local government to implement authorized programs at the local level; and

(2) The State, and each unit of local government applying for a subgrant from the State, will expend not less than 45% of any grant provided to such State or unit of local government, other than funds set aside for administration, for program purposes 3-9 in § 31.500 (c) through (i) of this subpart, and will not spend less than 35% for program purposes 1, 2, and 10 in § 31.500 (a), (b), and (j) of this subpart, unless the State certifies to OJJDP, or the unit of local government certifies to the State, that the interests of public safety and juvenile crime control would be better served by expending the grant award for purposes set forth in the twelve program areas in a different ratio. Such certification shall provide information concerning the availability of existing structures or initiatives within the intended areas of expenditure (or the availability of alternative funding sources for those areas), and the reasons for the State or unit of local government's alternative use.

(3) The funds provided under this part shall be administered in compliance with the standards set forth in part 38 (Equal Treatment for Faith-based Organizations) of this chapter.

(b) Following award of JAIBG funds to a State by OJJDP, but prior to obligation of program funds by the State or of subgrant funds by a unit of local government for any authorized program purpose, a State administering JAIBG funds must provide to OJJDP information that demonstrates that the State, or a unit of local government that receives JAIBG funds, has established a coordinated enforcement plan for reducing juvenile crime, developed by a Juvenile Crime Enforcement Coalition (JCEC).

(c) State coordinated enforcement plans must be developed by a Juvenile Crime Enforcement Coalition consisting of representatives of law enforcement and social service agencies involved in juvenile crime prevention. To assist in developing the State's coordinated enforcement plan, States may choose to utilize members of the State Advisory Group (SAG) established by the State's Chief Executive under section 223(a)(3) of Part B of the Juvenile Justice and Delinquency Prevention (JJDP) Act of 1974, as amended, codified at 42 U.S.C. 5633(a)(3), if appropriate membership exists, or use or establish another planning group that constitutes a coalition of law enforcement and social service agencies.

(d) When establishing a local Juvenile Crime Enforcement Coalition (JCEC), units of local government must include, unless impracticable, individuals representing:

(1) Police,

(2) Sheriff,

(3) Prosecutor,

(4) State or local probation services,

(5) Juvenile court,

(6) Schools,

(7) Business, and

(8) Religious affiliated, fraternal, nonprofit, or social service organizations involved in crime prevention.

(e) Units of local government may utilize members of Prevention Policy Boards established pursuant to section 505(b)(4) of Title V of the JJDP Act, codified at 42 U.S.C. 5784(b)(4), to meet the JCEC requirement, provided that each JCEC meets the membership requirements listed in paragraph (d) of this section."
28:28:1.0.1.1.32.2.14.4,28,Judicial Administration,I,,31,PART 31—OJJDP GRANT PROGRAMS,B,Subpart B—Juvenile Accountability Incentive Block Grants,,§ 31.503 Notice of proposed use of funds.,DOJ,,,,"The mechanism for a State to report on the proposed use of funds by the State or by a subgrantee unit of local government is by electronic submission of a “Follow Up Information Form” to be provided to each participating State. The purpose of this report is for the State to provide assurances to OJJDP that funds expended by the State and its subgrantee units of local government will be used for authorized program purpose areas. Although no actual program descriptions will be required, information about the distribution of funds among the authorized program purpose areas must be provided. Upon receipt and review of the “Follow Up Information Form” by OJJDP, States may obligate program funds retained for expenditure at the State level. Similarly, the State shall require that each recipient unit of local government submit its proposed use of non-administrative funds to the State prior to drawdown of subgrant funds to implement local programs and projects. Upon receipt and review of the local unit of government's proposed fund use, the State shall authorize the local unit of government to obligate local subgrant funds. The State shall electronically submit a copy of the local subgrant information to OJJDP, as provided in the award package, within 30 days of the date that the local unit of government is authorized to obligate program funds under its subgrant award."
29:29:1.1.1.1.30.0.66.1,29,Labor,,,31,PART 31—NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS OF THE DEPARTMENT OF LABOR—EFFECTUATION OF TITLE VI OF THE CIVIL RIGHTS ACT OF 1964,,,,§ 31.1 Purpose.,DOL,,,,"The purpose of this part is to effectuate the provisions of title VI of the Civil Rights Act of 1964 to the end that no person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program or activity receiving Federal financial assistance from the Department of Labor."
29:29:1.1.1.1.30.0.66.10,29,Labor,,,31,PART 31—NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS OF THE DEPARTMENT OF LABOR—EFFECTUATION OF TITLE VI OF THE CIVIL RIGHTS ACT OF 1964,,,,§ 31.10 Decisions and notices.,DOL,,,"[29 FR 16284, Dec. 4, 1964. Redesignated and amended at 38 FR 17958, July 5, 1973; 68 FR 51367, Aug. 26, 2003]","(a)  Decision by a hearing examiner.  If the hearing is held by a hearing examiner such hearing examiner shall either make an initial decision, if so authorized, or certify the entire record including his recommended findings and proposed decision to the Secretary for a final decision, and a copy of such initial decision or certification shall be mailed to the applicant or recipient and the complainant. Where the initial decision is made by the hearing examiner the applicant or recipient may within 30 days of the mailing of such notice of initial decision file with the Secretary his exceptions to the initial decision, with his reasons therefor. In the absence of exceptions, the Secretary may on his own motion within 45 days after the initial decision serve on the applicant or recipient a notice that he will review the decision. Upon the filing of such exceptions or of such notice of review the Secretary shall review the initial decision and issue his own decision thereon including the reasons therefor. The decision of the Secretary shall be mailed promptly to the applicant or recipient and the complainant, if any. In the absence of either exceptions or a notice of review the initial decision shall constitute the final decision of the Secretary.

(b)  Decisions on record or review by the Secretary.  Whenever a record is certified to the Secretary for decision or he reviews the decision of a hearing examiner pursuant to paragraph (a), or whenever the Secretary conducts the hearing, the applicant or recipient shall be given reasonable opportunity to file with him briefs or other written statements of its contentions, and a copy of the final decision of the Secretary shall be given in writing to the applicant or recipient and the complainant, if any.

(c)  Decisions on record where a hearing is waived.  Whenever a hearing is waived pursuant to § 31.9(a) a decision shall be made by the Secretary on the record and a copy of such decision shall be given in writing to the applicant or recipient and to the complainant, if any.

(d)  Rulings required.  Each decision of a hearing officer or the Secretary shall set forth his ruling on each finding, conclusion, or exception presented, and shall identify the requirement or requirements imposed by or pursuant to this part with which it is found that the applicant or recipient has failed to comply.

(e)  Content of orders.  The final decision may provide for suspension or termination of, or refusal to grant or continue Federal financial assistance, in whole or in part, to which this regulation applies, and may contain such terms, conditions, and other provisions as are consistent with and will effectuate the purposes of the Act and this part, including provisions designed to assure that no Federal financial assistance to which this regulation applies will thereafter be extended to the applicant or recipient determined by such decision to be in default in its performance of an assurance given by it pursuant to this part, or to have otherwise failed to comply with this part, unless and until it corrects its noncompliance and satisfies the Secretary that it will fully comply with this part.

(f)  Post-termination proceedings.  (1) An applicant or recipient adversely affected by an order issued under paragraph (c) of this section shall be restored to full eligibility to receive Federal financial assistance if it satisfies the terms and conditions of that order for such eligibility or if it brings itself into compliance with this regulation and provides reasonable assurance that it will fully comply with this regulation.

(2) Any applicant or recipient adversely affected by an order entered pursuant to paragraph (c) of this section may at any time request the Secretary to restore fully its eligibility to receive Federal financial assistance. Any such request shall be supported by information showing that the applicant or recipient has met the requirements of paragraph (f)(1) of this section. If the Secretary determines that those requirements have been satisfied, he shall restore such eligibility.

(3) If the Secretary denies any such request, the applicant or recipient may submit a request for a hearing in writing, specifying why it believes the Secretary to have been in error. It shall thereupon be given an expeditious hearing, with a decision on the record, in accordance with rules of procedure issued by the Secretary. The applicant or recipient will be restored to such eligibility if it proves at such a hearing that it satisfied the requirements of paragraph (f)(1) of this section. While proceedings under this paragraph are pending, the sanctions imposed by the order issued under paragraph (e) of this section shall remain in effect."
29:29:1.1.1.1.30.0.66.11,29,Labor,,,31,PART 31—NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS OF THE DEPARTMENT OF LABOR—EFFECTUATION OF TITLE VI OF THE CIVIL RIGHTS ACT OF 1964,,,,§ 31.11 Judicial review.,DOL,,,"[29 FR 16284, Dec. 4, 1964. Redesignated at 38 FR 17958, July 5, 1973]",Action taken pursuant to section 602 of the Act is subject to judicial review as provided in section 603 of the Act.