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 10:10:2.0.1.1.15.0.121.1,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,,,,§ 75.1 Purpose.,NRC,,,"[83 FR 19609, May 4, 2018]","The purpose of this part is to implement the requirements established by the safeguards agreements between the United States (U.S.) and the International Atomic Energy Agency (IAEA). This part contains requirements to ensure that the U.S. meets its nuclear non-proliferation obligations under the safeguards agreements. These obligations include providing information to the IAEA on the physical location of applicant, licensee, or certificate holder activities; information on source and special nuclear materials; and access to the physical location of applicant, licensee, or certificate holder activities. These obligations are similar to the obligations accepted by other countries." 10:10:2.0.1.1.15.0.121.2,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,,,,§ 75.2 Scope.,NRC,,,"[83 FR 19609, May 4, 2018]","(a) The regulations in this part apply to all persons licensed by the Nuclear Regulatory Commission (NRC) or an Agreement State; who hold a certificate of compliance, construction permit or authorization issued by the NRC; who have filed an application with the NRC to construct a facility or to receive source or special nuclear material; or who possess source or special nuclear material subject to NRC regulation under 10 CFR Chapter I. (b) The regulations in this part do not apply to facilities or locations determined by the U.S. Government to be associated with activities or information of direct national security significance." 10:10:2.0.1.1.15.0.121.3,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,,,,§ 75.3 Exemptions.,NRC,,,"[83 FR 19609, May 4 2018]","The NRC may, upon application of any interested person or upon its own initiative, grant exemptions from the requirements of this part that it determines are authorized by law and consistent with the safeguards agreements, are not inimical to the common defense and security, and are otherwise in the public interest." 10:10:2.0.1.1.15.0.121.4,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,,,,§ 75.4 Definitions.,NRC,,,"[45 FR 50711, July 13, 1980, as amended at 46 FR 58283, Dec. 1, 1981; 53 FR 31683, Aug. 19, 1988; 57 FR 18393, Apr. 30, 1992; 57 FR 33432, July 29, 1992; 63 FR 26963, May 15, 1998; 66 FR 55816, Nov. 2, 2001; 73 FR 78608, Dec. 23, 2008; 83 FR 19609, May 4, 2018]","As used in this part: Unless otherwise defined in this section, the terms defined in §§ 40.4, 50.2, and 70.4 of this chapter have the same meaning when used in this part. Additional Protocol means the Protocol Additional to the Agreement Between the United States of America and the International Atomic Energy Agency for the Application of Safeguards in the United States of America, concluded between the United States and the IAEA in Vienna, Austria, on June 12, 1998, that follows the provisions of INFCIRC/540. Agreement State as designated in part 150 of this chapter means any State with which the Commission has entered into an effective agreement under subsection 274b. of the Act. Batch means a portion of nuclear material handled as a unit for accounting purposes at a key measurement point and for which the composition and quantity are defined by a single set of specifications or measurements. The nuclear material may be in bulk form or contained in a number of separate items. Complementary access means access provided to IAEA inspectors in accordance with the provisions of the Additional Protocol. Containment (with respect to IAEA safeguards) means containers, devices, or structures that are used to prevent undetected access to or movement of nuclear material. Effective kilogram means a unit used in safeguarding nuclear material. The quantity is: (1) For special nuclear material: The amount specified in § 70.4 of this chapter. (2) For source material: The amount specified in § 40.4 of this chapter. Eligible Facilities List means the list of facilities that are eligible for IAEA safeguards inspections under the US/IAEA Safeguards Agreement, which the Secretary of State or his designee last submitted for Congressional review and which was not disapproved. A copy of this list is available for inspection at the NRC Web site, http://www.nrc.gov, and/or at the NRC Public Document Room. In accordance with the provisions of the Safeguards Agreement, facilities of direct national security significance are excluded from the Eligible Facilities List. Environmental sampling (with respect to IAEA Safeguards) means the collection of environmental samples (e.g., air, water, vegetation, soil, or smears from surfaces) at a location specified by the IAEA for the purpose of assisting the IAEA to draw a conclusion about the absence of undeclared nuclear material or nuclear activities. Facility means: (1) A production facility or utilization facility as defined in § 50.2 of this chapter; (2) A plant that converts nuclear material from one chemical form to another (e.g., Uranium hexafluoride plant); (3) A fuel fabrication plant; (4) An enrichment plant or isotope separation plant for the separation of isotopes of uranium or to increase the abundance of 235 U. (5) An installation designed to store nuclear material, such as an independent spent fuel storage installation (ISFSI) or a monitored retrievable storage installation (MRS) as defined in § 72.3 of this chapter; or (6) Any plant or location where the possession of more than 1 effective kilogram of nuclear material is licensed pursuant to Parts 40, 50, 60, 61, 63, 70, 72, 76, or 150 of this chapter or an Agreement State license. Facility attachment means a document negotiated between the U.S. and the IAEA that establishes safeguards commitments for a particular facility. IAEA means the International Atomic Energy Agency or its duly authorized representatives. IAEA material balance area means an area established for IAEA accounting purposes, such that: (1) The quantity of nuclear material in each transfer into or out of each material balance area can be determined; and (2) The physical inventory of nuclear material in each material balance area can be determined when necessary in accordance with specified procedures. Initial protocol means the protocol to the Agreement Between the United States of America and the International Atomic Energy Agency for the Application of Safeguards in the United States of America that was concluded with the IAEA and provides the IAEA the right to select a facility for material accounting reporting only without the right to conduct inspections. Inventory change means an increase or decrease in the quantity of nuclear material in an IAEA material balance area. Key measurement point means a physical location where nuclear material appears in such a form that it may be measured to determine material flow or inventory. Key measurement points include, but are not limited to, inputs and outputs (including measured discards) and storages in IAEA material balance areas. Location means any geographical point or area subject to IAEA safeguards under the Additional Protocol because it was identified either by the U.S. in its declarations, or by the IAEA resulting from a question. Managed access means procedures to protect sensitive or classified information or, to meet safety or physical protection requirements, while allowing the IAEA to accomplish the purpose of a complementary access request. Nuclear fuel cycle-related manufacturing and construction means those activities related to the manufacture or construction of any of the following: Components for separating the isotopes of uranium or enriching uranium in the isotope 235, zirconium tubes, heavy water or deuterium, nuclear-grade graphite, irradiated fuel casks and canisters, reactor control rods, criticality safe tanks and vessels, irradiated fuel element chopping machines, and hot cells. Nuclear fuel cycle-related research and development means those activities specifically related to any process or system development aspect of any of the following: Conversion of nuclear material; enrichment of nuclear material; nuclear fuel fabrication; reactors; critical facilities; reprocessing of nuclear fuel; and processing of intermediate or high-level waste containing plutonium, high-enriched uranium, or uranium-233. Nuclear material means any source material or any special nuclear material. Nuclear material outside facilities means nuclear material in the U.S. Caribbean Territories that is not in a facility, and is customarily used in amounts of one effective kilogram or less. Person means: (1) Any individual, corporation, partnership, firm, association, trust, estate, public or private institution, group, government agency other than the Commission or the U.S. Department of Energy (except that the Department shall be considered a person within the meaning of the regulations in this part to the extent that its facilities and activities are subject to the licensing and related regulatory authority of the Commission pursuant to law) any State or any political subdivision of, or any political entity within a State, any foreign government or nation or any political subdivision of any such government or nation, or other entity; and (2) Any legal successor, representative, agent, or agency of the foregoing. Physical location means a specific geographical point or area, where either nuclear material subject to Safeguards Agreements resides or an activity subject to the Safeguards Agreements occurs. Safeguards Agreements means the Agreement between the United States of America and the IAEA for the Application of Safeguards in the United States (INFCIRC/288) and all protocols and subsidiary arrangements thereto, and the Agreement between the United States and the International Atomic Energy Agency for the Application of Safeguards in Connection with the Treaty for the Prohibition of Nuclear Weapons in Latin America (INFCIRC/366) and all protocols and subsidiary arrangements thereto. Small Quantities Protocol means the Small Quantities Protocol to the Agreement between the United States of America and the International Atomic Energy Agency for the Application of Safeguards in Connection with the Treaty for the Prohibition of Nuclear Weapons in Latin America (INFCIRC/366). Subsidiary Arrangement means a document, negotiated between the U.S. and the IAEA, that formally defines the technical and administrative procedures to implement the measures contained in the Safeguards Agreement. Surveillance (with respect to IAEA Safeguards) means instrumental or human observation aimed at detecting the movement of nuclear material. Transitional Facility Attachment means that portion of the “Transitional Subsidiary Arrangements to the Protocol to the Safeguards Agreement” that pertains to a particular facility that has been identified under the Initial Protocol. U.S. Caribbean Territories means those territories for which, de jure or de facto, the U.S. is internationally responsible and which lie within the limits of the geographical zone established in Article 4 of the Treaty for the Prohibition of Nuclear Weapons in Latin America and the Caribbean (Tlatelolco Treaty), which includes: Puerto Rico, the U.S. Virgin Islands, Navassa Island, Serranilla Bank, Baja Nuevo (Petrel Island), and the Guantanamo Bay Naval Base. U.S.-IAEA Caribbean Territories Safeguards Agreement means the Agreement between the United States of America and the IAEA for the Application of Safeguards in Connection with the Treaty for the Prohibition of Nuclear Weapons in Latin America (INFCIRC/366), and all protocols and subsidiary arrangements thereto. U.S.-IAEA Safeguards Agreement means the Agreement between the United States of America and the International Atomic Energy Agency for the Application of Safeguards in the United States (INFCIRC/288), and all protocols and subsidiary arrangements thereto." 10:10:2.0.1.1.15.0.121.5,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,,,,§ 75.5 Interpretations.,NRC,,,"[45 FR 50711, July 31, 1980, as amended at 90 FR 55633, Dec. 3, 2025]","Except as authorized specifically by the Commission in writing, no interpretation of the meaning of the regulations in this part by any officer or employee of the Commission other than a written interpretation by the General Counsel will be recognized to be binding upon the Commission. 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." 10:10:2.0.1.1.15.0.121.6,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,,,,"§ 75.6 Reporting requirements for facilities, locations, and nuclear material outside facilities.",NRC,,,"[73 FR 78609, Dec. 23, 2008, as amended at 80 FR 45844, Aug. 3, 2015; 83 FR 19610, May 4, 2018, 85 FR 65664, Oct. 16, 2020]","(a) Except where otherwise specified, all communications concerning the regulations in this Part shall be addressed to the U.S. Nuclear Regulatory Commission, ATTN: Document Control Desk, Washington, DC 20555-0001. Written communications may be delivered in person to the Nuclear Regulatory Commission at One White Flint North, 11555 Rockville Pike, Rockville, MD 20852-2738 between 7:30 a.m. and 4:15 p.m. eastern time. If a submittal deadline falls on a Saturday, Sunday, or a Federal holiday, the next Federal working day becomes the official due date. (b) Each applicant, licensee, certificate holder, or possessor of nuclear material outside facilities, who has been given notice by the NRC in writing that it is required to report under Safeguards Agreements for its facility, nuclear material outside facilities, or location, shall make its initial and subsequent reports, including attachments, in an appropriate format defined in the instructions. The DOE/NRC forms and their instructions may be accessed at https://www.nrc.gov/reading-rm/doc-collections/forms. The AP-A and associated forms may be accessed at www.AP.gov. (c) Facilities—Specific information regarding facilities is to be reported as follows: (d) Locations—Specific information regarding locations is to be reported as follows: (e) Nuclear material outside facilities—Specific information regarding nuclear material outside facilities in the U.S. Caribbean Territories is to be reported as follows:" 10:10:2.0.1.1.15.0.121.7,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,,,,§ 75.7 Notification of IAEA safeguards.,NRC,,,"[83 FR 19610, May 4, 2018]","(a) The NRC, by written notice, will inform the applicant, licensee, or certificate holder of those facilities subject to the application of IAEA safeguards under the U.S.-IAEA Safeguards Agreement. (b) The licensee must inform the NRC in accordance with § 75.6(c): (1) Before the licensee begins an activity that may be subject to the U.S-IAEA Safeguards Agreement; or (2) Within 30 days of beginning an activity subject to the Additional Protocol. (c) The notice provided under paragraph (a) of this section is effective until the NRC informs the licensee or certificate holder, in writing, that its facility is no longer so designated. Whenever a previously designated facility is no longer subject to the application of IAEA safeguards under the U.S.-IAEA Safeguards Agreement, the NRC will give the licensee or certificate holder prompt notice to that effect." 10:10:2.0.1.1.15.0.121.8,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,,,,§ 75.8 IAEA inspections.,NRC,,,"[73 FR 78609, Dec. 23, 2008, as amended at 83 FR 19610, May 4, 2018]","(a) As provided in the U.S.-IAEA Safeguards Agreement and Additional Protocol, inspections may be ad hoc, routine, special, or a complementary access (or a combination of the foregoing). As provided in the Small Quantities Protocol of the U.S.-IAEA Caribbean Territories Safeguards Agreement, inspections may be ad hoc or special. The objectives of the IAEA inspectors in the performance of inspections are as follows: (1) Ad hoc inspections to verify information contained in the licensee's, applicant's, certificate holder's, or possessor's of nuclear material outside facilities facility information or initial inventory report, or to identify and verify changes in the situation that have occurred after the inventory date under § 75.32(a) or (b) at any physical location where the initial inventory report or any inspections carried out indicate that nuclear material subject to safeguards pursuant to the Safeguards Agreements may be present; (2) Ad hoc inspections to identify and, if possible, verify the quantity and composition of the nuclear material referred to in notifications specified under § 75.43(b) (pertaining to exports) or § 75.43(c) (pertaining to imports) at any place where nuclear material may be located; (3) Routine inspections are conducted as specified by the facility attachments referred to in § 75.15 to verify nuclear material and as-built facility design at the strategic points and the records maintained under this part; (4) Special inspections may be conducted at any of the physical locations specified above and any additional places where the NRC (in coordination with other Federal agencies), in response to an IAEA request, finds access to be necessary; (5) Complementary access may be conducted at a location, using measures permitted under the Additional Protocol and as specified by managed access procedures, for the IAEA inspectors to verify the completeness and accuracy of the information provided on DOC/NRC Form AP-1 or AP-A and associated forms; and (6) Complementary access must be provided at any additional locations where the Commission (in coordination with other Federal agencies), in response to an IAEA request, finds access to be necessary. (b) The NRC will notify the applicant, licensee, certificate holder, or possessor of nuclear material outside facilities of each such inspection or complementary access in writing as soon as possible after receiving the IAEA's notice from the U.S. Department of State. The applicant, licensee, certificate holder, or possessor of nuclear material outside facilities should consult with the NRC immediately if the inspection or complementary access would unduly interfere with its activities or if its key personnel cannot be available. (c) Each applicant, licensee, certificate holder, or possessor of nuclear material outside facilities subject to the provisions of this part shall recognize as a duly authorized representative of the IAEA any person bearing IAEA credentials for whom the NRC has provided written or electronic authorization that the IAEA representative is permitted to conduct inspection activities on specified dates. If the IAEA representative's credentials have not been confirmed by the NRC, the applicant, licensee, certificate holder, or possessor of nuclear material outside facilities shall not admit the person until the NRC has confirmed the person's credentials. The applicant, licensee, certificate holder, or possessor of nuclear material outside facilities shall notify the NRC promptly, by telephone, whenever an IAEA representative arrives at a facility, nuclear material outside facilities, or location without advance notification. The applicant, licensee, certificate holder, or possessor of nuclear material outside facilities shall also contact the NRC, by telephone, within 1 hour with respect to the credentials of any person who claims to be an IAEA representative and shall accept written or electronic confirmation of the credentials from the NRC. Confirmation may be requested through the NRC Operations Center (commercial telephone number 301-816-5100). (d) Each applicant, licensee, certificate holder, or possessor of nuclear material outside facilities subject to the provisions of this part shall allow the IAEA opportunity to conduct an NRC-approved inspection or complementary access of the facility, nuclear material outside facilities, or location to verify the information submitted under §§ 75.10 through 75.12 and 75.31 through 75.43. The NRC will assign an employee to accompany IAEA representative(s) at all times during the inspection or complementary access. The applicant, licensee, certificate holder, or possessor of nuclear material outside facilities may accompany IAEA representatives who inspect or access the facility, nuclear material outside facilities, or location. The IAEA representatives should not be delayed or otherwise impeded in the exercise of their duties. (e) Each applicant, licensee, or certificate holder shall permit the IAEA, in conducting an ad hoc, routine, or special inspection at a facility, to: (1) Examine records kept under § 75.21; (2) Observe that the measurements of nuclear material at key measurement points for material balance accounting are representative; (3) Verify the function and calibration of instruments and other measurement control equipment; (4) Observe that samples at key measurement points for material balance accounting are taken in accordance with procedures that produce representative samples, observe the treatment and analysis of the samples, and obtain duplicates of these samples; (5) Arrange to use the IAEA's own equipment for independent measurement and surveillance; and (6) Perform other measures requested by the IAEA and approved by the NRC. (f) Each applicant, licensee, or certificate holder shall, at the request of an IAEA inspector during an ad hoc, routine, or special inspection at a facility: (1) Ship material accountancy samples taken for the IAEA's use, in accordance with applicable packaging and export licensing regulations, by the method of carriage and to the address specified by the inspector; and (2) Take other actions contemplated by the Safeguards Agreement, and included in the safeguards approach approved by the United States and the IAEA, including but not limited to the following examples: (i) Enabling the IAEA to arrange to install its equipment for measurement and surveillance; (ii) Enabling the IAEA to apply its seals and other identifying and tamper-indicating devices to containers; (iii) Making additional measurements and taking additional samples for the IAEA's use; (iv) Analyzing the IAEA's standard analytical samples; (v) Using appropriate standards in calibrating instruments and other equipment; and (vi) Carrying out other calibrations. (g) Each applicant, licensee, or certificate holder shall permit the IAEA, in conducting complementary access at a location, under the provisions of the Additional Protocol and subsidiary arrangements, to: (1) Perform visual observations and record observations as photographs; (2) Conduct environmental sampling, when authorized by the U.S. Government; (3) Use radiation detection and measurement devices; (4) Apply seals and other identifying and tamper-indicating devices; (5) Perform nondestructive measurements and sampling; (6) Examine records relevant to quantities, origin, and disposition of materials to confirm the accuracy of the information provided under § 75.11; (7) Examine safeguards-relevant production and shipping records; and (8) Other objective measures that have been demonstrated to be technically feasible and the use of which has been agreed upon by the IAEA Board of Governors and following consultations between the IAEA and U.S. Government. (h) Each possessor of nuclear material outside facilities shall permit the IAEA, in conducting an ad hoc or special inspection for nuclear material outside facilities, to: (1) Observe that the measurements of nuclear material at key measurement points for material balance accounting are representative; (2) Verify the function and calibration of instruments and other measurement control equipment; (3) Observe that samples at key measurement points for material balance accounting are taken in accordance with procedures that produce representative samples, observe the treatment and analysis of the samples, and obtain duplicates of these samples; (4) Arrange to use the IAEA's own equipment for independent measurement and surveillance; and (5) Perform other measures requested by the IAEA and approved by the NRC. (i) Each possessor of nuclear material outside facilities shall, at the request of an IAEA inspector during an ad hoc or special inspection for nuclear material outside facilities: (1) Ship material accountancy samples taken for the IAEA's use, in accordance with applicable packaging and export licensing regulations, by the method of carriage and to the address specified by the inspector; and (2) Take other actions contemplated by the U.S.-IAEA Caribbean Territories Safeguards Agreement and included in the safeguards approach approved by the United States and the IAEA, including but not limited to the following examples: (i) Enabling the IAEA to arrange to install its equipment for measurement and surveillance; (ii) Enabling the IAEA to apply its seals and other identifying and tamper-indicating devices to containers; (iii) Making additional measurements and taking additional samples for the IAEA's use; (iv) Analyzing the IAEA's standard analytical samples; (v) Using appropriate standards in calibrating instruments and other equipment; and (vi) Carrying out other calibrations. (j) Nothing in this section requires or authorizes an applicant, licensee, certificate holder, or possessor of nuclear material outside facilities to carry out any operation that would otherwise constitute a violation of the terms of any applicable license, regulation, or order of the NRC." 10:10:2.0.1.1.15.0.121.9,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,,,,§ 75.9 Information collection requirements: OMB approval.,NRC,,,"[49 FR 19628, May 9, 1984, as amended at 62 FR 52189, Oct. 6, 1997; 67 FR 67101, Nov. 4, 2002; 73 FR 78610, Dec. 23, 2008; 83 FR 19611, May 4, 2018; 85 FR 65664, Oct. 16, 2020]","(a) The Nuclear Regulatory Commission, or another U.S. Government agency, 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 3150-0055. (b) The approved information collection requirements contained in this Part appear in §§ 75.3, 75.6, 75.7a, 75.10, 75.11, 75.12, 75.21, 75.22, 75.23, 75.24, 75.31, 75.32, 75.33, 75.34, 75.35, 75.36, 75.43, 75.44, and 75.45. (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 § 75.10, Design Information Questionnaire forms are approved under control number 3150-0056. (2) In §§ 75.31, 75.32, 75.33, and 75.35, DOE/NRC Form 742 is approved under control number 3150-0004. (3) In §§ 75.33 and 75.34, DOE/NRC Form 741 is approved under control number 3150-0003. (4) In §§ 75.34 and 75.35, DOE/NRC Form 740M is approved under OMB control number 3150-0057. (5) In § 75.35, DOE/NRC Form 742C is approved under control number 3150-0058. (6) In §§ 75.10 and 75.11, DOC/NRC Forms AP-1, AP-A, and associated forms are approved under control number 0694-0135." 10:10:2.0.1.1.15.1.122.1,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.10 Facilities.,NRC,,,"[73 FR 78611, Dec. 23, 2008, as amended at 83 FR 19611, May 4, 2018; 85 FR 65664, Oct. 16, 2020]","(a) Each applicant, licensee, or certificate holder subject to the provisions of this Part shall submit facility information, in response to written notification from the NRC, with respect to any facility that the NRC indicates has been identified under the U.S.-IAEA Safeguards Agreement, the Initial Protocol to the Agreement, or meets the Additional Protocol reporting criteria, and in which the applicant, licensee, or certificate holder carries out licensed activities. (The NRC request must state whether the facility has been identified under Article 39(b) of the principal text of the U.S.-IAEA Safeguards Agreement or Article 2(a) of the Initial protocol.) The applicant, licensee, or certificate holder shall submit the requested information to the NRC within the period specified in the NRC's request. (b) Facility information includes: (1) The identification of the facility, stating its general character, purpose, nominal capacity (thermal power level, in the case of power reactors), and geographic physical location, and the name and address to be used for routine purposes; (2) A description of the general arrangement of the facility with reference, to the extent feasible, to the form, physical location and flow of nuclear material, and to the general layout of important items of equipment which use, produce, or process nuclear material; (3) A description of features of the facility relating to material accounting, containment, and surveillance; (4) A description of the existing and proposed procedures at the facility for nuclear material accounting and control, with special reference to material balance areas established by the licensee, measurement of flow, and procedures for physical inventory taking (As part of this description, the applicant, licensee, or certificate holder may identify a process step involving information that it deems to be commercially sensitive and for which it proposes that a special material balance area be established so as to restrict IAEA access to this information); and (5) A map of the site and information on the size of the buildings and on the general nature of the activities conducted in each building. (c) Each licensee or certificate holder shall thereafter submit to the NRC information with respect to any modification at the facility affecting the information referred to in paragraph (a) of this section. The following information must be submitted: (1) Regarding a modification of a type described in the license or certificate conditions: At least 180 days before the modification is scheduled to be started, except that in an emergency or other unforeseen situation a shorter period may be approved by the NRC. (2) Regarding any other modification relevant to the application of the provisions of the U.S.-IAEA Safeguards Agreement: At the time the first inventory change report is submitted after the modification is completed. (d) The information specified in paragraphs (b) and (c) of this section, except for the information specified in paragraph (b)(5) of this section, must be prepared on IAEA Design Information Questionnaire forms or other forms supplied by the NRC. The information must be sufficiently detailed to enable knowledgeable determinations to be made in the development of Facility Attachments or amendments thereto, including: (1) Identification of the features of facilities and nuclear material relevant to the application of safeguards to nuclear material in sufficient detail to facilitate verification; (2) Determination of IAEA material balance areas to be used for IAEA accounting purposes and selection of those strategic points which are key measurement points and which will be used to determine flow and inventory of nuclear material; (3) Establishment of the nominal timing and procedures for taking of physical inventories of nuclear material for IAEA accounting purposes; (4) Establishment of the records and reports requirements and records evaluation procedures; (5) Establishment of requirements and procedures for verification of the quantity and physical location of nuclear material; (6) Selection of appropriate combinations of containment and surveillance methods and techniques at the strategic points at which they are to be applied; and (7) Information on organizational responsibility for material accounting and control. (e) Information specified in paragraph (b)(5) of this section must be submitted as specified by instructions for DOC/NRC Form AP-A and associated forms and shall contain a site map drawn to scale as an attachment. (f) The applicant's, licensee's, or certificate holder's security rules for physical protection that will impact the IAEA inspectors at the facility must be included in the facility information only when and to the extent specifically requested by the NRC. (g) Health and safety rules that are to be observed by the IAEA inspectors at the facility must be included in the facility information. (h) Information must be provided on the need to manage IAEA access to the facility to protect health and safety or to protect classified, proprietary, or other sensitive information, and on other protective measures that should be implemented should an IAEA access be requested." 10:10:2.0.1.1.15.1.122.2,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.11 Locations.,NRC,,,"[73 FR 78611, Dec. 23, 2008, as amended at 83 FR 19611, May 4, 2018]","(a) As required by the Additional Protocol, each applicant, licensee, or certificate holder shall submit location information to the NRC as specified in the instructions for DOC/NRC Form AP-1 and associated forms. (b) Location information includes: (1) Nuclear fuel cycle-related research and development information including a general description of the activity and information specifying the physical location of the activity. (2) Nuclear fuel cycle-related manufacturing or construction information including a description of the scale of operations for the activity. (3) Uranium and thorium mine and concentration plant information including information on the physical location, operational status, and the estimated annual production capacity and current annual production of the activity. (4) Impure source material possession information including the quantities, the chemical composition, and the use or intended use of the material (e.g., nuclear or non-nuclear use). (5) Imports and exports of source material for non-nuclear end uses including the physical location, quantities, chemical compositions, and use of the imported or exported material. (6) IAEA-exempted and -terminated nuclear material information including information regarding the quantities, uses, and physical location of the nuclear material. (7) Imports and exports of non-nuclear material and equipment including the physical location, quantity and description of the materials and equipment. (c) Information specified in paragraphs (b)(1) through (b)(7) of this section must be supplied as specified in the instructions for DOC/NRC Form AP-1 and associated forms. The Information provided on DOC/NRC Form AP-1 and associated forms must be submitted annually. If the information has not changed, a “No change” report must be provided. NRC should also be notified when the activity is no longer performed. The annual report must be submitted by January 31 of each succeeding year after the initial report. The initial report must be submitted no later than 30 calendar days following the date of publication of this rule. (d) Information must be provided on the need to manage IAEA access to the location to protect health and safety or to protect classified, proprietary, or other sensitive information, and on other protective measures that should be implemented should an IAEA access be requested." 10:10:2.0.1.1.15.1.122.3,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.12 Nuclear material outside facilities.,NRC,,,"[83 FR 19611, May 4, 2018]","A possessor of nuclear material outside facilities shall provide to the NRC the possessor's name and mailing address, physical location of the nuclear material, use of nuclear material, and nuclear material accounting and control procedures, including organizational responsibilities for accountancy and control. This information must be provided annually with the material status report in accordance with §§ 75.6(e) and 75.35(c)." 10:10:2.0.1.1.15.1.122.4,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.13 Communication of information to the International Atomic Energy Agency (IAEA).,NRC,,,"[83 FR 19611, May 4, 2018]","(a) Except as otherwise provided in this section, the NRC will furnish to the IAEA all information submitted under §§ 75.10, 75.11, 75.12, and 75.31 through 75.43. (b)(1) An applicant, licensee, certificate holder, or possessor of nuclear material outside facilities may request that information of particular sensitivity, that it customarily holds in confidence, not be transmitted physically to the IAEA. An applicant, licensee, certificate holder, or possessor of nuclear material outside facilities who makes this request shall, at the time the information is submitted, identify the pertinent document or part thereof and make a full statement of the reasons supporting the request. (2) In considering such a request, it is the policy of the NRC to achieve an effective balance between legitimate concerns of licensees, applicants, certificate holders, or possessors of nuclear material outside facilities, including protection of the competitive position of the owner of the information, and the undertaking of the United States to cooperate with the IAEA to facilitate the implementation of the safeguards provided for in the Safeguards Agreements. The NRC will take into account the obligation of the IAEA to take every precaution to protect commercial and industrial secrets and other confidential information coming to its knowledge in the implementation of the safeguards agreements. (3) A request made under § 2.390 of this chapter will not be treated as a request under this section unless the application makes specific reference to this section, nor shall a determination to withhold information from public disclosure necessarily require a determination that such information not be transmitted physically to the IAEA. (4) If a request is granted, the NRC will determine a physical location where the information will remain readily available for examination by the IAEA and will so inform the applicant, licensee, certificate holder, or possessor of nuclear material outside facilities. (c) A request made under § 2.390(b) of this chapter will not be treated as a request under this section unless the application makes specific reference to this section, nor shall a determination to withhold information from public disclosure necessarily require a determination that this information not be transmitted physically to the IAEA. (d) Where consistent with the Safeguards Agreements, the NRC may at its own initiative, or at the request of a licensee, determine that any information submitted under §§ 75.10, 75.11, and 75.12 shall not be physically transmitted to, or made available for examination by, the IAEA." 10:10:2.0.1.1.15.1.122.5,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.15 Facility attachments.,NRC,,,"[73 FR 78612, Dec. 23, 2008, as amended at 83 FR 19612, May 4, 2018]","(a) The Facility Attachment or Transitional Facility Attachment will document the determinations referred to in § 75.10 and will contain other appropriate provisions. (b) The NRC will issue license or certificate amendments, as necessary, to implement the U.S.-IAEA Safeguards Agreement and the Facility Attachment (as amended from time to time). The license or certificate amendments through reference to the Facility Attachment or Transitional Facility Attachment, or otherwise, will specify: (1) IAEA material balance areas; (2) Types of modifications for which information is required, under § 75.10, to be submitted in advance; (3) Procedures, as referred to in § 75.21; (4) The extent to which isotopic composition must be included in batch data (under § 75.22) and advance notification (§ 75.45); (5) Items to be reported in the concise notes accompanying inventory change reports, as referred to in § 75.34; (6) Loss limits and changes in containment, as referred to in § 75.36 (pertaining to special reports); (7) Actions required to be taken under § 75.8(f) at the request of an IAEA inspector; (8) Procedures to be used for documentation of requests under § 75.46 (pertaining to expenses); and (9) Other appropriate matters. (c) The NRC will also issue license or certificate amendments, as necessary, for implementing the Initial Protocol to the U.S.-IAEA Safeguards Agreement and the Transitional Facility Attachment (as amended from time to time). (d) License or certificate amendments will be made under the NRC's rules of practice (part 2 of this chapter). Specifically, if the licensee or certificate holder does not agree to an amendment, an order modifying the license would be issued under § 2.204 of this chapter. (e) Subject to constraints imposed by the U.S.-IAEA Safeguards Agreement, the NRC will afford the applicant, licensee, or certificate holder a reasonable opportunity to participate in the development of the Facility Attachment or Transitional Facility Attachment applicable to the facility, and any amendments thereto, and to review and comment upon any instrument before it has been agreed to by the United States. The NRC will provide to the applicant, licensee, or certificate holder a copy of any such instrument that has been completed under the U.S.-IAEA Safeguards Agreement. (f) Locations reporting under the Additional Protocol, unless located in a facility selected under Article 39(b) of the main text of the U.S.-IAEA Safeguards Agreement, do not have Facility Attachments or Transitional Facility Attachments." 10:10:2.0.1.1.15.1.122.6,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.21 General requirements.,NRC,,,"[45 FR 50711, July 31, 1980, as amended at 53 FR 19263, May 27, 1988; 67 FR 78149, Dec. 23, 2002; 73 FR 78613, Dec. 23, 2008; 83 FR 19612, May 4, 2018]","(a) Each licensee or certificate holder who has been given notice by the NRC in writing that its facility has been identified under the U.S.-IAEA Safeguards Agreement shall establish, maintain, and follow written material accounting and control procedures. (b) Each possessor of nuclear material outside facilities in the U.S. Caribbean Territories shall establish, maintain, and follow written material accounting and control procedures. (c) The material accounting and control procedures required by paragraph (a) of this section shall include, as appropriate: (1) A measurement system for the determination of the quantities of nuclear material received, produced, shipped, lost or otherwise removed from inventory, and the quantities on inventory; (2) The evaluation of precision and accuracy of measurements and the estimation of measurement uncertainty; (3) Procedures for identifying, reviewing and evaluating differences in shipper/receiver measurements; (4) Procedures, including frequency, for taking a physical inventory; (5) Procedures for the evaluation of accumulations of unmeasured inventory and unmeasured losses; and (6) A system of accounting and operating records. (d)(1) The procedures must, unless otherwise specified in license or certificate conditions, conform to the facility information submitted by the licensee under § 75.10. (2) Until facility information has been submitted by the applicant, licensee, or certificate holder, the procedures must be sufficient to document changes in the quantity of nuclear material in or at its facility. Observance of the procedures described in §§ 40.61 or 74.15 of this chapter (or the corresponding provisions of the regulations of an Agreement State) by any applicant, licensee, or certificate holder subject thereto constitutes compliance with this paragraph. (e) The requirements of this section are in addition to any other requirements of this chapter, relating to material accounting and control, that may apply to the licensee." 10:10:2.0.1.1.15.1.122.7,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.22 Accounting records.,NRC,,,,"(a) The accounting records required by § 75.21 shall include, for each IAEA material balance area: (1) All inventory changes, so as to permit a determination of the book inventory at any time; (2) All measurement results that are used for determination of nuclear material quantities; and (3) All adjustments and corrections that have been made with respect to inventory changes, book inventories and physical inventories. (b) The records shall show, for each batch of nuclear material: material identification, batch data and source data. The batch data means a separate listing of the total weight of each element of nuclear material (including, as specified in the license conditions, isotopic composition for special nuclear material) with plutonium and enriched uranium measured in grams and natural or depleted uranium and thorium measured in kilograms. The source data are the data, recorded during measurement or calibration or used to derive empirical relationships, which identify nuclear material and provide batch data. (c) For each inventory change, the records shall show the date of the inventory change and, when appropriate, (1) the originating IAEA material balance area or the shipper, and (2) the receiving IAEA material balance area or the recipient." 10:10:2.0.1.1.15.1.122.8,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.23 Operating records.,NRC,,,,"The operating records required by § 75.21 shall include, as appropriate, for each IAEA material balance area: (a) Those operating data which are used to establish changes in the quantities and composition of nuclear material; (b) The data obtained from the calibration of tanks and instruments and from sampling and analyses, the procedures employed to control the quality of measurements, and the derived estimates of random and systematic error; (c) A description of the sequence of the actions taken in preparing for, and in taking, a physical inventory, to ensure that it is correct and complete; and (d) A description of the actions taken to ascertain the magnitude and cause of any accidental or unmeasured loss that might occur." 10:10:2.0.1.1.15.1.122.9,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.24 Retention of records.,NRC,,,"[83 FR 19612, May 4, 2018]","(a) The applicant, licensee, certificate holder, or possessor of nuclear material outside facilities shall retain as a record any request made pursuant to §§ 75.13(b)(1), 75.13(b)(4), and 75.21 and documents related to that request, which are either prepared or received by that entity, until the NRC terminates the license or certificate, or until the entity no longer possesses nuclear material, whichever occurs later. When records required by these sections are superseded, these records must be retained for 3 years after each change is made. (b) The applicant, licensee, certificate holder, or possessor of nuclear material outside facilities shall retain the records referred to in §§ 75.22 and 75.23 for at least 5 years." 10:10:2.0.1.1.15.1.123.10,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.26 Exemption from IAEA safeguards.,NRC,,,,"(a) The U.S. Government may request from the IAEA an exemption from IAEA safeguards with respect to nuclear material of the following types: (1) Source and special nuclear material in gram quantities or less as a sensing component in instruments; (2) Nuclear material used in nonnuclear activities; and (3) Plutonium with an isotopic concentration of plutonium-238 exceeding 80 percent. (b) Nuclear material exempted under paragraph (a) of this section must not exceed the quantity limits specified in the Safeguards Agreements. (c) The NRC shall provide a prompt notification of an exemption issued by the IAEA to the applicable licensee, certificate holder, or nuclear material outside facilities." 10:10:2.0.1.1.15.1.123.11,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,"§ 75.27 Requirements for facilities, locations, and nuclear material outside facilities after issuance of IAEA exemptions.",NRC,,,,"(a) Licensees of facilities. After the NRC has notified a licensee of a facility under § 75.26(c) that the IAEA has approved the exemption requested under § 75.26(a) of this part, the licensee: (1) Shall submit reports to the NRC pursuant to §§ 75.6(c) and 75.31(a); and (2) Shall not export any nuclear material identified under § 75.26 until the NRC notifies the licensee that IAEA safeguards under the U.S.-IAEA Safeguards Agreement have been re-applied. (b) Licensees of locations. A licensee of a location shall provide annual updates pursuant to § 75.11(c) following notification from the NRC that the IAEA has approved the exemption requested under § 75.26. (c) Possessors of nuclear material outside facilities. After the NRC has notified a possessor of nuclear material outside facilities under § 75.6(c) that the IAEA has approved the exemption requested under § 75.26(a), a possessor of nuclear material outside facilities: (1) Shall submit reports to the NRC pursuant to §§ 75.6(e) and 75.31(b); and (2) Shall not export out of the U.S. Caribbean Territories any nuclear material identified under § 75.26 until the NRC notifies the possessor that IAEA safeguards under the U.S.-IAEA Caribbean Territories Safeguards Agreement have been re-applied. (d) Prohibition against commingling of nuclear material in storage. Licensees of facilities, licensees of locations, and possessors of nuclear material outside facilities shall not store nuclear material exempted under § 75.26 together with nuclear material subject to Safeguards Agreements. (e) Nuclear material exempted from IAEA safeguards under § 75.26 is not subject to inspections by the IAEA." 10:10:2.0.1.1.15.1.123.12,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.28 Termination from IAEA safeguards.,NRC,,,,"(a) Upon request of the U.S. Government, the IAEA may terminate IAEA safeguards on nuclear material that has been consumed, or has been diluted in such a way that it is no longer usable for any nuclear activity relevant from the point of view of safeguards, or has become practicably irrecoverable. (b) The NRC will notify the affected licensees, certificate holders, and nuclear material outside facilities of the IAEA's termination of IAEA safeguards." 10:10:2.0.1.1.15.1.123.13,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,"§ 75.29 Requirements for facilities, locations, and nuclear material outside facilities after termination from IAEA safeguards.",NRC,,,,"(a) Licensees of facilities. A licensee of a facility shall submit an Inventory Change Report pursuant to §§ 75.6(c) and 75.31(a) following notification from the NRC that IAEA safeguards have been terminated as described in § 75.28. (b) Licensees of locations. A licensee of a location shall provide annual updates pursuant to § 75.11(c) following notification from the NRC that IAEA safeguards have been terminated as described in § 75.28. (c) Possessors of nuclear material outside facilities. A possessor of nuclear material outside facilities shall submit an Inventory Change Report pursuant to §§ 75.6(e) and 75.31(b) following notification from the NRC that IAEA safeguards have been terminated as described in § 75.28. (d) Nuclear material that has had IAEA safeguards terminated as described in § 75.28 is not subject to inspections by the IAEA." 10:10:2.0.1.1.15.1.124.14,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.31 General requirements.,NRC,,,"[83 FR 19613, May 4, 2018]","(a) Each licensee or certificate holder who has been given notice by the NRC under § 75.7 that its facility has been identified under the U.S.-IAEA Safeguards Agreement shall make, in an appropriate computer-readable format, an initial inventory report, and thereafter shall make accounting reports, with respect to the facility and, in addition, licensees or certificate holders who have been given notice, under § 75.7 that their facilities are subject to the application of IAEA safeguards, shall make the special reports described in § 75.36. These reports must be based on the records kept under § 75.21. At the request of the NRC, the licensee or certificate holder shall amplify or clarify any report with respect to any matter relevant to implementation of the U.S.-IAEA Safeguards Agreement. Any amplification or clarification must be in writing and must be submitted, to the address specified in the request, within 20 days of the date of the request or other time as may be specified by the NRC. (b) Each possessor of nuclear material outside facilities (possessor) subject to the U.S.-IAEA Caribbean Territories Safeguards Agreement shall make, in an appropriate computer-readable format, an initial inventory report in accordance with § 75.32 of this report. Thereafter, that possessor shall make accounting reports as described in §§ 75.33 through 75.35 and special reports as described in § 75.36. These reports must be based on the records kept under § 75.21(b). At the request of the NRC, the possessor shall amplify or clarify any report with respect to any matter relevant to implementation of the U.S.-IAEA Caribbean Territories Safeguards Agreement. Any amplification or clarification must be in writing and must be submitted, to the address specified in the request, within 20 days of the date of the request or other time as may be specified by the NRC." 10:10:2.0.1.1.15.1.124.15,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.32 Initial inventory report.,NRC,,,"[83 FR 19613, May 4, 2018]","(a) Licensees of facilities. The initial inventory report must show the quantities of nuclear material at a facility. The quantities reported in the initial inventory report must be accurate as of the last day of the calendar month in which the NRC gives notice to the licensee or certificate holder that an initial inventory report is required (the “inventory date” on DOE/NRC Form 742C). (b) Possessors of nuclear material outside facilities. The initial inventory report must show the quantities of nuclear material outside facilities. The quantities reported in the initial inventory report must be accurate as of the last day of the calendar month in which the possessor of nuclear material outside facilities becomes subject to the requirements of this part (the “inventory date” on DOE/NRC Form 742C). (c) Initial inventory report. The information in the initial inventory report may be based upon the accounting records. The initial inventory report must be submitted to the NRC on DOE/NRC Form 742C in accordance with the instructions in NUREG/BR-0007 and NMMSS Report D-24 “Personal Computer Data Input for NRC Licensees.” Copies of the instructions for completing DOE/NRC Form 742C and DOE/NRC Form 740M may be obtained from the following websites: http://www.nrc.gov/reading-rm/doc-collections/nuregs/brochures and https://nnsa.energy.gov/aboutus/ourprograms/nuclearsecurity/nmmsshome/nmmssinfo/nmmssreports. (d) Report forms. DOE/NRC Form 742C must be accompanied by DOE/NRC Form 740M if any batch of source material reported in DOE/NRC Form 742C is equal to or less than 0.4 kg. (e) Report submission. The initial inventory report must be submitted to the NRC no later than 20 days after the inventory date." 10:10:2.0.1.1.15.1.124.16,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.33 Accounting reports.,NRC,,,"[45 FR 50711, July 31, 1980, as amended at 49 FR 19629, May 9, 1984; 59 FR 35622, July 13, 1994; 73 FR 78613, Dec. 23, 2008; 83 FR 19613, May 4, 2018]","(a)(1) The accounting reports for each IAEA material balance area must consist of: (i) Inventory Change Reports (Nuclear Material Transaction Report); and (ii) Material status reports showing the material balance based on a physical inventory of nuclear material actually present. (2) These prescribed computer-readable forms replace the following forms which have been submitted in paper form: (i) The DOE/NRC Form 741; and (ii) The DOE/NRC Form 742. (b) The reports shall be based on data available as of the date of reporting and may be corrected at a later date, as required." 10:10:2.0.1.1.15.1.124.17,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.34 Inventory change reports.,NRC,,,"[83 FR 19613, May 4, 2018]","(a) Each licensee of a facility, certificate holder, or possessor of nuclear material outside facilities who transfers nuclear material subject to IAEA safeguards shall submit an Inventory Change Report (Nuclear Material Transaction Report) to the NRC no later than the close of business the next working day after each transfer, in accordance with the instructions in NUREG/BR-0006 and NMMSS Report D-24 “Personal Computer Data Input for NRC Licensees.” Each licensee of a facility, certificate holder, or possessor of nuclear material outside facilities who receives nuclear material subject to IAEA safeguards shall submit an Inventory Change Report to the NRC. Inventory Change Reports for receipts must be submitted within 10 days after the material is received, in accordance with the instructions in NUREG/BR-0006 and NMMSS Report D-24 “Personal Computer Data Input for NRC Licensees.” Copies of the instructions for completing DOE/NRC Form 741 and DOE/NRC Form 740M may be obtained from the following websites: http://www.nrc.gov/reading-rm/doc-collections/nuregs/brochures and https://nnsa.energy.gov/aboutus/ourprograms/nuclearsecurity/nmmsshome/nmmssinfo/nmmssreports. (b) An Inventory Change Report (Nuclear Material Transaction Report) must specify identification and batch data for each batch of nuclear material, the date of the inventory change, and, as appropriate: (1) The originating IAEA material balance area or the shipper; and (2) The receiving IAEA material balance area or the recipient. (3) Each person who receives any nuclear material from a foreign source shall complete both the supplier's and receiver's portion of DOE/NRC Form 741. (4) Each person in the U.S. Caribbean Territories who receives nuclear material from the U.S. outside the U.S. Caribbean Territories shall complete both the supplier's and receiver's portion of DOE/NRC Form 741. (c) An Inventory Change Report must be accompanied by DOE/NRC Form 740M whenever it is necessary to: (1) Explain the inventory changes set forth in the operating records required by § 75.23; or (2) Describe, to the extent specified in the license conditions, the anticipated operational program for the facility, including, but not limited to, the schedule for taking physical inventory. (d) Copies of the instructions for completing DOE/NRC Form 741 and DOE/NRC Form 740M may be obtained from the following websites: http://www.nrc.gov/reading-rm/doc-collections/nuregs/brochures and https://nnsa.energy.gov/aboutus/ourprograms/nuclearsecurity/nmmsshome/nmmssinfo/nmmssreports." 10:10:2.0.1.1.15.1.124.18,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.35 Material status reports.,NRC,,,"[83 FR 19614, May 4, 2018]","(a) Each licensee of a facility, certificate holder, or possessor of nuclear material outside facilities with nuclear materials subject to IAEA safeguards shall submit a material status report for each physical inventory taken in accordance with the material accounting and control procedures required by § 75.21. The material status report must include a DOE/NRC Form 742 and a DOE/NRC Form 742C, which lists all batches separately and specifies material identification and batch data for each batch. The reports described in this section must be prepared and submitted in accordance with instructions in NUREG/BR-0006, NUREG/BR-0007, and NMMSS Report D-24. (b) Unless otherwise specified in the license conditions, material status reports shall be submitted to the NRC as soon as possible, but in any event no later than 30 days after the start of the physical inventory. (c) Possessors of nuclear material outside facilities must submit a material status report to the NRC every 12 calendar months, for a reporting period that commences on May 1st and concludes on April 30th of the next calendar year. The annual inventory report must be dated April 30th. (d) A material status report must be accompanied by DOE/NRC Form 740M whenever it is necessary to: (1) Describe the anticipated operational program; (2) Provide additional explanation and clarification at the country, facility material balance area, report, or entry level; (3) Provide additional explanation not accommodated in any of the data elements of DOE/NRC Form 742 or DOE/NRC Form 742C; or (4) Report actual inventory values equal to or less than 0.4 kg of source material. (e) Copies of the instructions for completing DOE/NRC Form 742, DOE/NRC Form 742C, and DOE/NRC Form 740M may be obtained from the following websites: http://www.nrc.gov/reading-rm/doc-collections/nuregs/brochures and https://nnsa.energy.gov/aboutus/ourprograms/nuclearsecurity/nmmsshome/nmmssinfo/nmmssreports." 10:10:2.0.1.1.15.1.124.19,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.36 Special reports.,NRC,,,"[83 FR 19614, May 4, 2018]","(a) This section applies to licensees, certificate holders, and possessors of nuclear material outside facilities who: (1) Have been given notice under § 75.7(a) that their facilities are subject to the application of IAEA safeguards, or (2) Are subject to the U.S.-IAEA Caribbean Territories Safeguards Agreement. (b) Each entity subject to this section shall immediately make a special report to the NRC, by telephone, if: (1) There is a loss of nuclear material: (i) In excess of specified limits, as stated in license conditions, for those entities described in paragraph (a)(1) of this section, or (ii) In any amount, for those entities described in paragraph (a)(2) of this section, (2) There are unexpected changes in containment to the extent that unauthorized removal of nuclear material has become possible, or (3) Reporting is required under a license condition." 10:10:2.0.1.1.15.1.125.20,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.43 Circumstances requiring advance notification.,NRC,,,"[45 FR 50711, July 31, 1980, as amended at 73 FR 78613, Dec. 23, 2008; 83 FR 19614, May 4, 2018]","(a) Each person subject to the Safeguards Agreements shall give advance written notification to the NRC regarding the international and domestic transfers specified in this section. (b) Exports. Notification shall be given of any proposed shipment of nuclear material for peaceful purposes under an export license issued pursuant to part 110 of this chapter, in an amount exceeding one effective kilogram, directly or indirectly to any non-nuclear-weapon state (as referred to in Article III(2) of the Treaty on the Non-Proliferation of Nuclear Weapons, 21 U.S.T. 483). If the licensee anticipates that it will make two or more shipments for peaceful purposes, within any period of 90 days, directly or indirectly to destinations in the same non-nuclear-weapon state, notification shall be given of each shipment if the aggregate quantity of nuclear material to be transferred exceeds one effective kilogram. 2 2 All foreign countries, with the exception of the People's Republic of China, France, the Soviet Union, and the United Kingdom, are non-nuclear-weapon states. Treaty on the Non-Proliferation of Nuclear Weapons, Article IX(3). (c) Imports. (1) Notification shall be given (to the fullest extent possible on the basis of available information) with respect to nuclear material which immediately prior to export is subject to safeguards, under an agreement with the IAEA, in the country from which the material, directly or indirectly, is being exported. Such notification is only required, however, if the quantities of nuclear material are as specified in paragraph (c)(2) of this section. (2) Notification shall be given with respect to any proposed import of nuclear material described in paragraph (c)(1) of this section in an amount exceeding one effective kilogram. If the licensee anticipates that it will receive two or more shipments of such nuclear material, within any 90-day period from points of origin in the same country, notification shall be given with respect to each shipment if the aggregate quantity of such nuclear material to be received exceeds one effective kilogram. (d) Domestic transfers. Notification must be given regarding any shipments of nuclear material (other than small quantities in the form of samples containing less than 0.01 effective kilogram per sample) to a non-eligible destination. As used in this paragraph, a non-eligible destination means any destination in the United States other than a facility on the Eligible Facilities List." 10:10:2.0.1.1.15.1.125.21,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.44 Timing of advance notification.,NRC,,,"[45 FR 50711, July 31, 1980, as amended at 73 FR 78614, Dec. 23, 2008]","(a) Except as provided in paragraph (b) of this section, notification to the Commission, when required by § 75.43, must be given: (1) In the case of exports and domestic transfers, at least 20 days in advance of the preparation of the nuclear material for shipment from the facility. (2) In the case of imports, at least 12 days in advance of the unpacking of nuclear material at the facility. (b) For a particular receipt or shipment of nuclear material, the Commission will approve a shorter notice period than that specified by paragraph (a) of this section, for good cause, if it determines that observing the specified notification period would result in delay in shipment or unpackaging. (c) The licensee shall inform the Commission, by phone, as soon as possible, with respect to any delay in the receipt (or unpackaging) or the shipment (or preparation for shipment) of nuclear material for which advance notification is required. New dates should be provided, if known." 10:10:2.0.1.1.15.1.125.22,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.45 Content of advance notification.,NRC,,,"[45 FR 50711, July 31, 1980, as amended at 73 FR 78614, Dec. 23, 2008]","(a) The notifications required by § 75.43 must include the element weight of nuclear material being received or shipped, the chemical composition and physical form, the isotopic composition (to the extent specified by license conditions), the estimated date and place at the reporting facility where the nuclear material is to be unpackaged or prepared for shipment (and where the quantity and composition can be verified), the applicable IAEA material balance area at the reporting facility, the approximate number of items to be received or shipped, and the probable dates of receipt or shipment. The notification must indicate that the information is being supplied under § 75.43. (b) The notifications required with respect to export and import shipments shall also include (1) If available, a general description of containers (including, in the case of exports, features that would permit sealing); (2) Destination of export as authorized under an export license issued pursuant to part 110 of this chapter, or origin of import (by country and, if known, place); (3) Means of transport; and (4) Expected date and place of arrival in the destination country (for exports) or in the United States (for imports)." 10:10:2.0.1.1.15.1.125.23,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.46 Expenses.,NRC,,,"[45 FR 50711, July 31, 1980, as amended at 73 FR 78614, Dec. 23, 2008; 83 FR 19614, May 4, 2018]","(a) Under the Safeguards Agreements, the IAEA undertakes to reimburse any person subject to this part for extraordinary expenses incurred as a result of its specific request provided that the IAEA has agreed in advance to do so. The Safeguards Agreements also provide that the IAEA will reimburse that person for the cost of making additional measurements or taking samples at the specific request of an IAEA inspector. (b) The NRC will inform persons subject to this part, by license condition or by other means (e.g., written communication), of those items of extraordinary expense that the IAEA has agreed in advance to reimburse. (c) The NRC will inform persons subject to this part, by license condition or by other means (e.g., written communication), of the procedures to be used to document: (1) An IAEA inspector's request for making additional measurements or taking additional samples; and (2) An IAEA request for a particular action by the licensee that will give rise to reimbursable extraordinary expense. (d) The NRC will take appropriate action to assist persons subject to this part regarding the reimbursement of any expense that, under the Safeguards Agreements, is to be borne by the IAEA." 10:10:2.0.1.1.15.1.126.24,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.51 Violations.,NRC,,,"[57 FR 55079, Nov. 24, 1992]","(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)(l)(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. (c) The Commission may issue orders to secure compliance with the provisions of this part or to prohibit any violation of such provisions as may be proper to protect the common defense and security. Enforcement actions, including proceedings instituted with respect to Agreement State licensees, will be conducted in accordance with the procedures set forth in part 2, subpart B of this chapter. Only NRC licensees, however, are subject to license modification, suspension, or revocation as a result of enforcement action." 10:10:2.0.1.1.15.1.126.25,10,Energy,I,,75,PART 75—SAFEGUARDS ON NUCLEAR MATERIAL—IMPLEMENTATION OF SAFEGUARDS AGREEMENTS BETWEEN THE UNITED STATES AND THE INTERNATIONAL ATOMIC ENERGY AGENCY,0,"Information for Facilities, Locations, and Nuclear Material Outside Facilities",,§ 75.53 Criminal penalties.,NRC,,,"[73 FR 78614, Dec. 23, 2008, as amended at 83 FR 19614, May 4, 2018]","(a) Section 223 of the Atomic Energy Act of 1954, as amended, provides for criminal sanctions for willful violation of, or conspiracy to violate, any regulation issued under sections 161b., 161i., or 161o. of the Act. For purposes of criminal sanctions under section 223, all the regulations in Part 75 are issued under one or more of sections 161b., 161i., or 161o., except as provided in paragraphs (b) and (c) of this section. (b) The regulations in Part 75 that are not issued under sections 161b, 161i, or 161o for the purposes of section 223 are as follows: §§ 75.1, 75.2, 75.3, 75.4, 75.5, 75.7, 75.9, 75.12, 75.13, 75.15, 75.26, 75.27, 75.28, 75.29, 75.46, 75.51, and 75.53. (c) Any provision in Part 75 that implements the “Protocol Additional to the Agreement between the United States of America and the International Atomic Energy Agency for the Application of Safeguards in the United States of America,” known as the “Additional Protocol,” signed by the United States on June 12, 1998, is not issued under sections 161b., 161i., or 161o, for the purposes of criminal sanctions under section 223." 17:17:2.0.1.1.10.1.1.1,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,A,Subpart A—Authority and Definitions,,"§ 75.1 Authority, purpose, scope, and relationship to other authorities.",CFTC,,,"[79 FR 6048, Jan. 31, 2014, as amended at 84 FR 35021, July 22, 2019]","(a) Authority. This part is issued by the Commission under section 13 of the Bank Holding Company Act of 1956, as amended (12 U.S.C. 1851). (b) Purpose. Section 13 of the Bank Holding Company Act establishes prohibitions and restrictions on proprietary trading by, and investments in or relationships with covered funds by, certain banking entities. This part implements section 13 of the Bank Holding Company Act by defining terms used in the statute and related terms, establishing prohibitions and restrictions on proprietary trading and investments in or relationships with covered funds, and further explaining the statute's requirements. (c) Scope. This part implements section 13 of the Bank Holding Company Act with respect to banking entities for which the CFTC is the primary financial regulatory agency, as defined in section 2(12) of the Dodd-Frank Act, but does not include such entities to the extent they are not within the definition of banking entity in § 75.2(c). (d) Relationship to other authorities. Except as otherwise provided under section 13 of the BHC Act, and notwithstanding any other provision of law, the prohibitions and restrictions under section 13 of the BHC Act shall apply to the activities of an applicable banking entity, even if such activities are authorized for the applicable banking entity under other applicable provisions of law." 17:17:2.0.1.1.10.1.1.2,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,A,Subpart A—Authority and Definitions,,§ 75.2 Definitions.,CFTC,,,"[84 FR 62201, Nov. 14, 2019]","Unless otherwise specified, for purposes of this part: (a) Affiliate has the same meaning as in section 2(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(k)). (b) Bank holding company has the same meaning as in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841). (c) Banking entity. (1) Except as provided in paragraph (c)(2) of this section, banking entity means: (i) Any insured depository institution; (ii) Any company that controls an insured depository institution; (iii) Any company that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978 (12 U.S.C. 3106); and (iv) Any affiliate or subsidiary of any entity described in paragraph (c)(1)(i), (ii), or (iii) of this section. (2) Banking entity does not include: (i) A covered fund that is not itself a banking entity under paragraph (c)(1)(i), (ii), or (iii) of this section; (ii) A portfolio company held under the authority contained in section 4(k)(4)(H) or (I) of the BHC Act (12 U.S.C. 1843(k)(4)(H), (I)), or any portfolio concern, as defined under 13 CFR 107.50, that is controlled by a small business investment company, as defined in section 103(3) of the Small Business Investment Act of 1958 (15 U.S.C. 662), so long as the portfolio company or portfolio concern is not itself a banking entity under paragraph (c)(1)(i), (ii), or (iii) of this section; or (iii) The FDIC acting in its corporate capacity or as conservator or receiver under the Federal Deposit Insurance Act or Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act. (d) Board means the Board of Governors of the Federal Reserve System. (e) CFTC means the Commodity Futures Trading Commission. (f) Dealer has the same meaning as in section 3(a)(5) of the Exchange Act (15 U.S.C. 78c(a)(5)). (g) Depository institution has the same meaning as in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)). (h) Derivative. (1) Except as provided in paragraph (h)(2) of this section, derivative means: (i) Any swap, as that term is defined in section 1a(47) of the Commodity Exchange Act (7 U.S.C. 1a(47)), or security-based swap, as that term is defined in section 3(a)(68) of the Exchange Act (15 U.S.C. 78c(a)(68)); (ii) Any purchase or sale of a commodity, that is not an excluded commodity, for deferred shipment or delivery that is intended to be physically settled; (iii) Any foreign exchange forward (as that term is defined in section 1a(24) of the Commodity Exchange Act (7 U.S.C. 1a(24)) or foreign exchange swap (as that term is defined in section 1a(25) of the Commodity Exchange Act (7 U.S.C. 1a(25)); (iv) Any agreement, contract, or transaction in foreign currency described in section 2(c)(2)(C)(i) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(C)(i)); (v) Any agreement, contract, or transaction in a commodity other than foreign currency described in section 2(c)(2)(D)(i) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(D)(i)); and (vi) Any transaction authorized under section 19 of the Commodity Exchange Act (7 U.S.C. 23(a) or (b)); (2) A derivative does not include: (i) Any consumer, commercial, or other agreement, contract, or transaction that the CFTC and SEC have further defined by joint regulation, interpretation, or other action as not within the definition of swap, as that term is defined in section 1a(47) of the Commodity Exchange Act (7 U.S.C. 1a(47)), or security-based swap, as that term is defined in section 3(a)(68) of the Exchange Act (15 U.S.C. 78c(a)(68)); or (ii) Any identified banking product, as defined in section 402(b) of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27(b)), that is subject to section 403(a) of that Act (7 U.S.C. 27a(a)). (i) Employee includes a member of the immediate family of the employee. (j) Exchange Act means the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq. ). (k) Excluded commodity has the same meaning as in section 1a(19) of the Commodity Exchange Act (7 U.S.C. 1a(19)). (l) FDIC means the Federal Deposit Insurance Corporation. (m) Federal banking agencies means the Board, the Office of the Comptroller of the Currency, and the FDIC. (n) Foreign banking organization has the same meaning as in § 211.21(o) of the Board's Regulation K (12 CFR 211.21(o)), but does not include a foreign bank, as defined in section 1(b)(7) of the International Banking Act of 1978 (12 U.S.C. 3101(7)), that is organized under the laws of the Commonwealth of Puerto Rico, Guam, American Samoa, the United States Virgin Islands, or the Commonwealth of the Northern Mariana Islands. (o) Foreign insurance regulator means the insurance commissioner, or a similar official or agency, of any country other than the United States that is engaged in the supervision of insurance companies under foreign insurance law. (p) General account means all of the assets of an insurance company except those allocated to one or more separate accounts. (q) Insurance company means a company that is organized as an insurance company, primarily and predominantly engaged in writing insurance or reinsuring risks underwritten by insurance companies, subject to supervision as such by a state insurance regulator or a foreign insurance regulator, and not operated for the purpose of evading the provisions of section 13 of the BHC Act (12 U.S.C. 1851). (r) Insured depository institution has the same meaning as in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)), but does not include: (1) An insured depository institution that is described in section 2(c)(2)(D) of the BHC Act (12 U.S.C. 1841(c)(2)(D)); or (2) An insured depository institution if it has, and if every company that controls it has, total consolidated assets of $10 billion or less and total trading assets and trading liabilities, on a consolidated basis, that are 5 percent or less of total consolidated assets. (s) Limited trading assets and liabilities means with respect to a banking entity that: (1)(i) The banking entity has, together with its affiliates and subsidiaries, trading assets and liabilities (excluding trading assets and liabilities attributable to trading activities permitted pursuant to § 75.6(a)(1) and (2) of subpart B) the average gross sum of which over the previous consecutive four quarters, as measured as of the last day of each of the four previous calendar quarters, is less than $1 billion; and (ii) The CFTC has not determined pursuant to § 75.20(g) or (h) of this part that the banking entity should not be treated as having limited trading assets and liabilities. (2) With respect to a banking entity other than a banking entity described in paragraph (s)(3) of this section, trading assets and liabilities for purposes of this paragraph (s) means trading assets and liabilities (excluding trading assets and liabilities attributable to trading activities permitted pursuant to § 75.6(a)(1) and (2) of subpart B) on a worldwide consolidated basis. (3)(i) With respect to a banking entity that is a foreign banking organization or a subsidiary of a foreign banking organization, trading assets and liabilities for purposes of this paragraph (s) means the trading assets and liabilities (excluding trading assets and liabilities attributable to trading activities permitted pursuant to § 75.6(a)(1) and (2) of subpart B) of the combined U.S. operations of the top-tier foreign banking organization (including all subsidiaries, affiliates, branches, and agencies of the foreign banking organization operating, located, or organized in the United States). (ii) For purposes of paragraph (s)(3)(i) of this section, a U.S. branch, agency, or subsidiary of a banking entity is located in the United States; however, the foreign bank that operates or controls that branch, agency, or subsidiary is not considered to be located in the United States solely by virtue of operating or controlling the U.S. branch, agency, or subsidiary. For purposes of paragraph (s)(3)(i) of this section, all foreign operations of a U.S. agency, branch, or subsidiary of a foreign banking organization are considered to be located in the United States, including branches outside the United States that are managed or controlled by a U.S. branch or agency of the foreign banking organization, for purposes of calculating the banking entity's U.S. trading assets and liabilities. (t) Loan means any loan, lease, extension of credit, or secured or unsecured receivable that is not a security or derivative. (u) Moderate trading assets and liabilities means, with respect to a banking entity, that the banking entity does not have significant trading assets and liabilities or limited trading assets and liabilities. (v) Primary financial regulatory agency has the same meaning as in section 2(12) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5301(12)). (w) Purchase includes any contract to buy, purchase, or otherwise acquire. For security futures products, purchase includes any contract, agreement, or transaction for future delivery. With respect to a commodity future, purchase includes any contract, agreement, or transaction for future delivery. With respect to a derivative, purchase includes the execution, termination (prior to its scheduled maturity date), assignment, exchange, or similar transfer or conveyance of, or extinguishing of rights or obligations under, a derivative, as the context may require. (x) Qualifying foreign banking organization means a foreign banking organization that qualifies as such under § 211.23(a), (c) or (e) of the Board's Regulation K (12 CFR 211.23(a), (c), or (e)). (y) SEC means the Securities and Exchange Commission. (z) Sale and sell each include any contract to sell or otherwise dispose of. For security futures products, such terms include any contract, agreement, or transaction for future delivery. With respect to a commodity future, such terms include any contract, agreement, or transaction for future delivery. With respect to a derivative, such terms include the execution, termination (prior to its scheduled maturity date), assignment, exchange, or similar transfer or conveyance of, or extinguishing of rights or obligations under, a derivative, as the context may require. (aa) Security has the meaning specified in section 3(a)(10) of the Exchange Act (15 U.S.C. 78c(a)(10)). (bb) Security-based swap dealer has the same meaning as in section 3(a)(71) of the Exchange Act (15 U.S.C. 78c(a)(71)). (cc) Security future has the meaning specified in section 3(a)(55) of the Exchange Act (15 U.S.C. 78c(a)(55)). (dd) Separate account means an account established and maintained by an insurance company in connection with one or more insurance contracts to hold assets that are legally segregated from the insurance company's other assets, under which income, gains, and losses, whether or not realized, from assets allocated to such account, are, in accordance with the applicable contract, credited to or charged against such account without regard to other income, gains, or losses of the insurance company. (ee) Significant trading assets and liabilities means with respect to a banking entity that: (1)(i) The banking entity has, together with its affiliates and subsidiaries, trading assets and liabilities the average gross sum of which over the previous consecutive four quarters, as measured as of the last day of each of the four previous calendar quarters, equals or exceeds $20 billion; or (ii) The CFTC has determined pursuant to § 75.20(h) of this part that the banking entity should be treated as having significant trading assets and liabilities. (2) With respect to a banking entity, other than a banking entity described in paragraph (ee)(3) of this section, trading assets and liabilities for purposes of this paragraph (ee) means trading assets and liabilities (excluding trading assets and liabilities attributable to trading activities permitted pursuant to § 75.6(a)(1) and (2) of subpart B) on a worldwide consolidated basis. (3)(i) With respect to a banking entity that is a foreign banking organization or a subsidiary of a foreign banking organization, trading assets and liabilities for purposes of this paragraph (ee) means the trading assets and liabilities (excluding trading assets and liabilities attributable to trading activities permitted pursuant to § 75.6(a)(1) and (2) of subpart B) of the combined U.S. operations of the top-tier foreign banking organization (including all subsidiaries, affiliates, branches, and agencies of the foreign banking organization operating, located, or organized in the United States as well as branches outside the United States that are managed or controlled by a branch or agency of the foreign banking entity operating, located or organized in the United States). (ii) For purposes of paragraph (ee)(3)(i) of this section, a U.S. branch, agency, or subsidiary of a banking entity is located in the United States; however, the foreign bank that operates or controls that branch, agency, or subsidiary is not considered to be located in the United States solely by virtue of operating or controlling the U.S. branch, agency, or subsidiary. For purposes of paragraph (ee)(3)(i) of this section, all foreign operations of a U.S. agency, branch, or subsidiary of a foreign banking organization are considered to be located in the United States for purposes of calculating the banking entity's U.S. trading assets and liabilities. (ff) State means any State, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the United States Virgin Islands, and the Commonwealth of the Northern Mariana Islands. (gg) Subsidiary has the same meaning as in section 2(d) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(d)). (hh) State insurance regulator means the insurance commissioner, or a similar official or agency, of a State that is engaged in the supervision of insurance companies under State insurance law. (ii) Swap dealer has the same meaning as in section 1(a)(49) of the Commodity Exchange Act (7 U.S.C. 1a(49))." 17:17:2.0.1.1.10.2.1.1,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,B,Subpart B—Proprietary Trading,,§ 75.3 Prohibition on proprietary trading.,CFTC,,,"[79 FR 6048, Jan. 31, 2014, as amended at 84 FR 62203, Nov. 14, 2019]","(a) Prohibition. Except as otherwise provided in this subpart, a banking entity may not engage in proprietary trading. Proprietary trading means engaging as principal for the trading account of the banking entity in any purchase or sale of one or more financial instruments. (b) Definition of trading account —(1) Trading account. Trading account means: (i) Any account that is used by a banking entity to purchase or sell one or more financial instruments principally for the purpose of short-term resale, benefitting from actual or expected short-term price movements, realizing short-term arbitrage profits, or hedging one or more of the positions resulting from the purchases or sales of financial instruments described in this paragraph; (ii) Any account that is used by a banking entity to purchase or sell one or more financial instruments that are both market risk capital rule covered positions and trading positions (or hedges of other market risk capital rule covered positions), if the banking entity, or any affiliate with which the banking entity is consolidated for regulatory reporting purposes, calculates risk-based capital ratios under the market risk capital rule; or (iii) Any account that is used by a banking entity to purchase or sell one or more financial instruments, if the banking entity: (A) Is licensed or registered, or is required to be licensed or registered, to engage in the business of a dealer, swap dealer, or security-based swap dealer, to the extent the instrument is purchased or sold in connection with the activities that require the banking entity to be licensed or registered as such; or (B) Is engaged in the business of a dealer, swap dealer, or security-based swap dealer outside of the United States, to the extent the instrument is purchased or sold in connection with the activities of such business. (2) Trading account application for certain banking entities. (i) A banking entity that is subject to paragraph (b)(1)(ii) of this section in determining the scope of its trading account is not subject to paragraph (b)(1)(i) of this section. (ii) A banking entity that does not calculate risk-based capital ratios under the market risk capital rule and is not a consolidated affiliate for regulatory reporting purposes of a banking entity that calculates risk based capital ratios under the market risk capital rule may elect to apply paragraph (b)(1)(ii) of this section in determining the scope of its trading account as if it were subject to that paragraph. A banking entity that elects under this subsection to apply paragraph (b)(1)(ii) of this section in determining the scope of its trading account as if it were subject to that paragraph is not required to apply paragraph (b)(1)(i) of this section. (3) Consistency of account election for certain banking entities. (i) Any election or change to an election under paragraph (b)(2)(ii) of this section must apply to the electing banking entity and all of its wholly owned subsidiaries. The primary financial regulatory agency of a banking entity that is affiliated with but is not a wholly owned subsidiary of such electing banking entity may require that the banking entity be subject to this uniform application requirement if the primary financial regulatory agency determines that it is necessary to prevent evasion of the requirements of this part after notice and opportunity for response as provided in subpart D of this part. (ii) A banking entity that does not elect under paragraph (b)(2)(ii) of this section to be subject to the trading account definition in (b)(1)(ii) may continue to apply the trading account definition in paragraph (b)(1)(i) of this section for one year from the date on which it becomes, or becomes a consolidated affiliate for regulatory reporting purposes with, a banking entity that calculates risk-based capital ratios under the market risk capital rule. (4) Rebuttable presumption for certain purchases and sales. The purchase (or sale) of a financial instrument by a banking entity shall be presumed not to be for the trading account of the banking entity under paragraph (b)(1)(i) of this section if the banking entity holds the financial instrument for sixty days or longer and does not transfer substantially all of the risk of the financial instrument within sixty days of the purchase (or sale). (c) Financial instrument —(1) Financial instrument means: (i) A security, including an option on a security; (ii) A derivative, including an option on a derivative; or (iii) A contract of sale of a commodity for future delivery, or option on a contract of sale of a commodity for future delivery. (2) A financial instrument does not include: (i) A loan; (ii) A commodity that is not: (A) An excluded commodity (other than foreign exchange or currency); (B) A derivative; (C) A contract of sale of a commodity for future delivery; or (D) An option on a contract of sale of a commodity for future delivery; or (iii) Foreign exchange or currency. (d) Proprietary trading does not include: —(1) Any purchase or sale of one or more financial instruments by a banking entity that arises under a repurchase or reverse repurchase agreement pursuant to which the banking entity has simultaneously agreed, in writing, to both purchase and sell a stated asset, at stated prices, and on stated dates or on demand with the same counterparty; (2) Any purchase or sale of one or more financial instruments by a banking entity that arises under a transaction in which the banking entity lends or borrows a security temporarily to or from another party pursuant to a written securities lending agreement under which the lender retains the economic interests of an owner of such security, and has the right to terminate the transaction and to recall the loaned security on terms agreed by the parties; (3) Any purchase or sale of a security, foreign exchange forward (as that term is defined in section 1a(24) of the Commodity Exchange Act (7 U.S.C. 1a(24)), foreign exchange swap (as that term is defined in section 1a(25) of the Commodity Exchange Act (7 U.S.C. 1a(25)), or cross-currency swap by a banking entity for the purpose of liquidity management in accordance with a documented liquidity management plan of the banking entity that: (i) Specifically contemplates and authorizes the particular financial instruments to be used for liquidity management purposes, the amount, types, and risks of these financial instruments that are consistent with liquidity management, and the liquidity circumstances in which the particular financial instruments may or must be used; (ii) Requires that any purchase or sale of financial instruments contemplated and authorized by the plan be principally for the purpose of managing the liquidity of the banking entity, and not for the purpose of short-term resale, benefitting from actual or expected short-term price movements, realizing short-term arbitrage profits, or hedging a position taken for such short-term purposes; (iii) Requires that any financial instruments purchased or sold for liquidity management purposes be highly liquid and limited to financial instruments the market, credit, and other risks of which the banking entity does not reasonably expect to give rise to appreciable profits or losses as a result of short-term price movements; (iv) Limits any financial instruments purchased or sold for liquidity management purposes, together with any other financial instruments purchased or sold for such purposes, to an amount that is consistent with the banking entity's near-term funding needs, including deviations from normal operations of the banking entity or any affiliate thereof, as estimated and documented pursuant to methods specified in the plan; (v) Includes written policies and procedures, internal controls, analysis, and independent testing to ensure that the purchase and sale of financial instruments that are not permitted under § 75.6(a) or (b) of this subpart are for the purpose of liquidity management and in accordance with the liquidity management plan described in this paragraph (d)(3); and (vi) Is consistent with the CFTC's regulatory requirements regarding liquidity management; (4) Any purchase or sale of one or more financial instruments by a banking entity that is a derivatives clearing organization or a clearing agency in connection with clearing financial instruments; (5) Any excluded clearing activities by a banking entity that is a member of a clearing agency, a member of a derivatives clearing organization, or a member of a designated financial market utility; (6) Any purchase or sale of one or more financial instruments by a banking entity, so long as: (i) The purchase (or sale) satisfies an existing delivery obligation of the banking entity or its customers, including to prevent or close out a failure to deliver, in connection with delivery, clearing, or settlement activity; or (ii) The purchase (or sale) satisfies an obligation of the banking entity in connection with a judicial, administrative, self-regulatory organization, or arbitration proceeding; (7) Any purchase or sale of one or more financial instruments by a banking entity that is acting solely as agent, broker, or custodian; (8) Any purchase or sale of one or more financial instruments by a banking entity through a deferred compensation, stock-bonus, profit-sharing, or pension plan of the banking entity that is established and administered in accordance with the law of the United States or a foreign sovereign, if the purchase or sale is made directly or indirectly by the banking entity as trustee for the benefit of persons who are or were employees of the banking entity; (9) Any purchase or sale of one or more financial instruments by a banking entity in the ordinary course of collecting a debt previously contracted in good faith, provided that the banking entity divests the financial instrument as soon as practicable, and in no event may the banking entity retain such instrument for longer than such period permitted by the OCC; (10) Any purchase or sale of one or more financial instruments that was made in error by a banking entity in the course of conducting a permitted or excluded activity or is a subsequent transaction to correct such an error; (11) Contemporaneously entering into a customer-driven swap or customer-driven security-based swap and a matched swap or security-based swap if: (i) The banking entity retains no more than minimal price risk; and (ii) The banking entity is not a registered dealer, swap dealer, or security-based swap dealer; (12) Any purchase or sale of one or more financial instruments that the banking entity uses to hedge mortgage servicing rights or mortgage servicing assets in accordance with a documented hedging strategy; or (13) Any purchase or sale of a financial instrument that does not meet the definition of trading asset or trading liability under the applicable reporting form for a banking entity as of January 1, 2020. (e) Definition of other terms related to proprietary trading. For purposes of this subpart: (1) Anonymous means that each party to a purchase or sale is unaware of the identity of the other party(ies) to the purchase or sale. (2) Clearing agency has the same meaning as in section 3(a)(23) of the Exchange Act (15 U.S.C. 78c(a)(23)). (3) Commodity has the same meaning as in section 1a(9) of the Commodity Exchange Act (7 U.S.C. 1a(9)), except that a commodity does not include any security; (4) Contract of sale of a commodity for future delivery means a contract of sale (as that term is defined in section 1a(13) of the Commodity Exchange Act (7 U.S.C. 1a(13)) for future delivery (as that term is defined in section 1a(27) of the Commodity Exchange Act (7 U.S.C. 1a(27))). (5) Cross-currency swap means a swap in which one party exchanges with another party principal and interest rate payments in one currency for principal and interest rate payments in another currency, and the exchange of principal occurs on the date the swap is entered into, with a reversal of the exchange of principal at a later date that is agreed upon when the swap is entered into. (6) Derivatives clearing organization means: (i) A derivatives clearing organization registered under section 5b of the Commodity Exchange Act (7 U.S.C. 7a-1); (ii) A derivatives clearing organization that, pursuant to CFTC regulation, is exempt from the registration requirements under section 5b of the Commodity Exchange Act (7 U.S.C. 7a-1); or (iii) A foreign derivatives clearing organization that, pursuant to CFTC regulation, is permitted to clear for a foreign board of trade that is registered with the CFTC. (7) Exchange, unless the context otherwise requires, means any designated contract market, swap execution facility, or foreign board of trade registered with the CFTC, or, for purposes of securities or security-based swaps, an exchange, as defined under section 3(a)(1) of the Exchange Act (15 U.S.C. 78c(a)(1)), or security-based swap execution facility, as defined under section 3(a)(77) of the Exchange Act (15 U.S.C. 78c(a)(77)). (8) Excluded clearing activities means: (i) With respect to customer transactions cleared on a derivatives clearing organization, a clearing agency, or a designated financial market utility, any purchase or sale necessary to correct trading errors made by or on behalf of a customer provided that such purchase or sale is conducted in accordance with, for transactions cleared on a derivatives clearing organization, the Commodity Exchange Act, CFTC regulations, and the rules or procedures of the derivatives clearing organization, or, for transactions cleared on a clearing agency, the rules or procedures of the clearing agency, or, for transactions cleared on a designated financial market utility that is neither a derivatives clearing organization nor a clearing agency, the rules or procedures of the designated financial market utility; (ii) Any purchase or sale in connection with and related to the management of a default or threatened imminent default of a customer provided that such purchase or sale is conducted in accordance with, for transactions cleared on a derivatives clearing organization, the Commodity Exchange Act, CFTC regulations, and the rules or procedures of the derivatives clearing organization, or, for transactions cleared on a clearing agency, the rules or procedures of the clearing agency, or, for transactions cleared on a designated financial market utility that is neither a derivatives clearing organization nor a clearing agency, the rules or procedures of the designated financial market utility; (iii) Any purchase or sale in connection with and related to the management of a default or threatened imminent default of a member of a clearing agency, a member of a derivatives clearing organization, or a member of a designated financial market utility; (iv) Any purchase or sale in connection with and related to the management of the default or threatened default of a clearing agency, a derivatives clearing organization, or a designated financial market utility; and (v) Any purchase or sale that is required by the rules or procedures of a clearing agency, a derivatives clearing organization, or a designated financial market utility to mitigate the risk to the clearing agency, derivatives clearing organization, or designated financial market utility that would result from the clearing by a member of security-based swaps that reference the member or an affiliate of the member. (9) Designated financial market utility has the same meaning as in section 803(4) of the Dodd-Frank Act (12 U.S.C. 5462(4)). (10) Issuer has the same meaning as in section 2(a)(4) of the Securities Act of 1933 (15 U.S.C. 77b(a)(4)). (11) Market risk capital rule covered position and trading position means a financial instrument that meets the criteria to be a covered position and a trading position, as those terms are respectively defined, without regard to whether the financial instrument is reported as a covered position or trading position on any applicable regulatory reporting forms: (i) In the case of a banking entity that is a bank holding company, savings and loan holding company, or insured depository institution, under the market risk capital rule that is applicable to the banking entity; and (ii) In the case of a banking entity that is affiliated with a bank holding company or savings and loan holding company, other than a banking entity to which a market risk capital rule is applicable, under the market risk capital rule that is applicable to the affiliated bank holding company or savings and loan holding company. (12) Market risk capital rule means the market risk capital rule that is contained in 12 CFR part 3, subpart F, with respect to a banking entity for which the OCC is the primary financial regulatory agency, 12 CFR part 217 with respect to a banking entity for which the Board is the primary financial regulatory agency, or 12 CFR part 324 with respect to a banking entity for which the FDIC is the primary financial regulatory agency. (13) Municipal security means a security that is a direct obligation of or issued by, or an obligation guaranteed as to principal or interest by, a State or any political subdivision thereof, or any agency or instrumentality of a State or any political subdivision thereof, or any municipal corporate instrumentality of one or more States or political subdivisions thereof. (14) Trading desk means a unit of organization of a banking entity that purchases or sells financial instruments for the trading account of the banking entity or an affiliate thereof that is: (i)(A) Structured by the banking entity to implement a well-defined business strategy; (B) Organized to ensure appropriate setting, monitoring, and management review of the desk's trading and hedging limits, current and potential future loss exposures, and strategies; and (C) Characterized by a clearly defined unit that: ( 1 ) Engages in coordinated trading activity with a unified approach to its key elements; ( 2 ) Operates subject to a common and calibrated set of risk metrics, risk levels, and joint trading limits; ( 3 ) Submits compliance reports and other information as a unit for monitoring by management; and ( 4 ) Books its trades together; or (ii) For a banking entity that calculates risk-based capital ratios under the market risk capital rule, or a consolidated affiliate for regulatory reporting purposes of a banking entity that calculates risk-based capital ratios under the market risk capital rule, established by the banking entity or its affiliate for purposes of market risk capital calculations under the market risk capital rule." 17:17:2.0.1.1.10.2.1.2,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,B,Subpart B—Proprietary Trading,,§ 75.4 Permitted underwriting and market making-related activities.,CFTC,,,"[84 FR 62205, Nov. 14, 2019]","(a) Underwriting activities —(1) Permitted underwriting activities. The prohibition contained in § 75.3(a) does not apply to a banking entity's underwriting activities conducted in accordance with this paragraph (a). (2) Requirements. The underwriting activities of a banking entity are permitted under paragraph (a)(1) of this section only if: (i) The banking entity is acting as an underwriter for a distribution of securities and the trading desk's underwriting position is related to such distribution; (ii)(A) The amount and type of the securities in the trading desk's underwriting position are designed not to exceed the reasonably expected near term demands of clients, customers, or counterparties, taking into account the liquidity, maturity, and depth of the market for the relevant types of securities; and (B) Reasonable efforts are made to sell or otherwise reduce the underwriting position within a reasonable period, taking into account the liquidity, maturity, and depth of the market for the relevant types of securities; (iii) In the case of a banking entity with significant trading assets and liabilities, the banking entity has established and implements, maintains, and enforces an internal compliance program required by subpart D of this part that is reasonably designed to ensure the banking entity's compliance with the requirements of paragraph (a) of this section, including reasonably designed written policies and procedures, internal controls, analysis and independent testing identifying and addressing: (A) The products, instruments or exposures each trading desk may purchase, sell, or manage as part of its underwriting activities; (B) Limits for each trading desk, in accordance with paragraph (a)(2)(ii)(A) of this section; (C) Written authorization procedures, including escalation procedures that require review and approval of any trade that would exceed a trading desk's limit(s), demonstrable analysis of the basis for any temporary or permanent increase to a trading desk's limit(s), and independent review of such demonstrable analysis and approval; and (D) Internal controls and ongoing monitoring and analysis of each trading desk's compliance with its limits. (iv) A banking entity with significant trading assets and liabilities may satisfy the requirements in paragraphs (a)(2))iii)(B) and (C) of this section by complying with the requirements set forth below in paragraph (c) of this section; (v) The compensation arrangements of persons performing the activities described in this paragraph (a) are designed not to reward or incentivize prohibited proprietary trading; and (vi) The banking entity is licensed or registered to engage in the activity described in this paragraph (a) in accordance with applicable law. (3) Definition of distribution. For purposes of this paragraph (a), a distribution of securities means: (i) An offering of securities, whether or not subject to registration under the Securities Act of 1933, that is distinguished from ordinary trading transactions by the presence of special selling efforts and selling methods; or (ii) An offering of securities made pursuant to an effective registration statement under the Securities Act of 1933. (4) Definition of underwriter. For purposes of this paragraph (a), underwriter means: (i) A person who has agreed with an issuer or selling security holder to: (A) Purchase securities from the issuer or selling security holder for distribution; (B) Engage in a distribution of securities for or on behalf of the issuer or selling security holder; or (C) Manage a distribution of securities for or on behalf of the issuer or selling security holder; or (ii) A person who has agreed to participate or is participating in a distribution of such securities for or on behalf of the issuer or selling security holder. (5) Definition of selling security holder. For purposes of this paragraph (a), selling security holder means any person, other than an issuer, on whose behalf a distribution is made. (6) Definition of underwriting position. For purposes of this section, underwriting position means the long or short positions in one or more securities held by a banking entity or its affiliate, and managed by a particular trading desk, in connection with a particular distribution of securities for which such banking entity or affiliate is acting as an underwriter. (7) Definition of client, customer, and counterparty. For purposes of this paragraph (a), the terms client, customer, and counterparty, on a collective or individual basis, refer to market participants that may transact with the banking entity in connection with a particular distribution for which the banking entity is acting as underwriter. (b) Market making-related activities —(1) Permitted market making-related activities. The prohibition contained in § 75.3(a) does not apply to a banking entity's market making-related activities conducted in accordance with this paragraph (b). (2) Requirements. The market making-related activities of a banking entity are permitted under paragraph (b)(1) of this section only if: (i) The trading desk that establishes and manages the financial exposure, routinely stands ready to purchase and sell one or more types of financial instruments related to its financial exposure, and is willing and available to quote, purchase and sell, or otherwise enter into long and short positions in those types of financial instruments for its own account, in commercially reasonable amounts and throughout market cycles on a basis appropriate for the liquidity, maturity, and depth of the market for the relevant types of financial instruments; (ii) The trading desk's market-making related activities are designed not to exceed, on an ongoing basis, the reasonably expected near term demands of clients, customers, or counterparties, taking into account the liquidity, maturity, and depth of the market for the relevant types of financial instruments; (iii) In the case of a banking entity with significant trading assets and liabilities, the banking entity has established and implements, maintains, and enforces an internal compliance program required by subpart D of this part that is reasonably designed to ensure the banking entity's compliance with the requirements of paragraph (b) of this section, including reasonably designed written policies and procedures, internal controls, analysis and independent testing identifying and addressing: (A) The financial instruments each trading desk stands ready to purchase and sell in accordance with paragraph (b)(2)(i) of this section; (B) The actions the trading desk will take to demonstrably reduce or otherwise significantly mitigate promptly the risks of its financial exposure consistent with the limits required under paragraph (b)(2)(iii)(C) of this section; the products, instruments, and exposures each trading desk may use for risk management purposes; the techniques and strategies each trading desk may use to manage the risks of its market making-related activities and positions; and the process, strategies, and personnel responsible for ensuring that the actions taken by the trading desk to mitigate these risks are and continue to be effective; (C) Limits for each trading desk, in accordance with paragraph (b)(2)(ii) of this section; (D) Written authorization procedures, including escalation procedures that require review and approval of any trade that would exceed a trading desk's limit(s), demonstrable analysis of the basis for any temporary or permanent increase to a trading desk's limit(s), and independent review of such demonstrable analysis and approval; and (E) Internal controls and ongoing monitoring and analysis of each trading desk's compliance with its limits. (iv) A banking entity with significant trading assets and liabilities may satisfy the requirements in paragraphs (b)(2)(iii)(C) and (D) of this section by complying with the requirements set forth below in paragraph (c) of this section; (v) The compensation arrangements of persons performing the activities described in this paragraph (b) are designed not to reward or incentivize prohibited proprietary trading; and (vi) The banking entity is licensed or registered to engage in activity described in this paragraph (b) in accordance with applicable law. (3) Definition of client, customer, and counterparty. For purposes of paragraph (b) of this section, the terms client, customer, and counterparty, on a collective or individual basis refer to market participants that make use of the banking entity's market making-related services by obtaining such services, responding to quotations, or entering into a continuing relationship with respect to such services, provided that: (i) A trading desk or other organizational unit of another banking entity is not a client, customer, or counterparty of the trading desk if that other entity has trading assets and liabilities of $50 billion or more as measured in accordance with the methodology described in § 75.2(ee) of this part, unless: (A) The trading desk documents how and why a particular trading desk or other organizational unit of the entity should be treated as a client, customer, or counterparty of the trading desk for purposes of paragraph (b)(2) of this section; or (B) The purchase or sale by the trading desk is conducted anonymously on an exchange or similar trading facility that permits trading on behalf of a broad range of market participants. (ii) [Reserved] (4) Definition of financial exposure. For purposes of this section, financial exposure means the aggregate risks of one or more financial instruments and any associated loans, commodities, or foreign exchange or currency, held by a banking entity or its affiliate and managed by a particular trading desk as part of the trading desk's market making-related activities. (5) Definition of market-maker positions. For the purposes of this section, market-maker positions means all of the positions in the financial instruments for which the trading desk stands ready to make a market in accordance with paragraph (b)(2)(i) of this section, that are managed by the trading desk, including the trading desk's open positions or exposures arising from open transactions. (c) Rebuttable presumption of compliance —(1) Internal limits. (i) A banking entity shall be presumed to meet the requirement in paragraph (a)(2)(ii)(A) or (b)(2)(ii) of this section with respect to the purchase or sale of a financial instrument if the banking entity has established and implements, maintains, and enforces the internal limits for the relevant trading desk as described in paragraph (c)(1)(ii) of this section. (ii)(A) With respect to underwriting activities conducted pursuant to paragraph (a) of this section, the presumption described in paragraph (c)(1)(i) of this section shall be available to each trading desk that establishes, implements, maintains, and enforces internal limits that should take into account the liquidity, maturity, and depth of the market for the relevant types of securities and are designed not to exceed the reasonably expected near term demands of clients, customers, or counterparties, based on the nature and amount of the trading desk's underwriting activities, on the: ( 1 ) Amount, types, and risk of its underwriting position; ( 2 ) Level of exposures to relevant risk factors arising from its underwriting position; and ( 3 ) Period of time a security may be held. (B) With respect to market making-related activities conducted pursuant to paragraph (b) of this section, the presumption described in paragraph (c)(1)(i) of this section shall be available to each trading desk that establishes, implements, maintains, and enforces internal limits that should take into account the liquidity, maturity, and depth of the market for the relevant types of financial instruments and are designed not to exceed the reasonably expected near term demands of clients, customers, or counterparties, based on the nature and amount of the trading desk's market-making related activities, that address the: ( 1 ) Amount, types, and risks of its market-maker positions; ( 2 ) Amount, types, and risks of the products, instruments, and exposures the trading desk may use for risk management purposes; ( 3 ) Level of exposures to relevant risk factors arising from its financial exposure; and ( 4 ) Period of time a financial instrument may be held. (2) Supervisory review and oversight. The limits described in paragraph (c)(1) of this section shall be subject to supervisory review and oversight by the CFTC on an ongoing basis. (3) Limit Breaches and Increases. (i) With respect to any limit set pursuant to paragraph (c)(1)(ii)(A) or (B) of this section, a banking entity shall maintain and make available to the CFTC upon request records regarding: (A) Any limit that is exceeded; and (B) Any temporary or permanent increase to any limit(s), in each case in the form and manner as directed by the CFTC. (ii) In the event of a breach or increase of any limit set pursuant to paragraph (c)(1)(ii)(A) or (B) of this section, the presumption described in paragraph (c)(1)(i) of this section shall continue to be available only if the banking entity: (A) Takes action as promptly as possible after a breach to bring the trading desk into compliance; and (B) Follows established written authorization procedures, including escalation procedures that require review and approval of any trade that exceeds a trading desk's limit(s), demonstrable analysis of the basis for any temporary or permanent increase to a trading desk's limit(s), and independent review of such demonstrable analysis and approval. (4) Rebutting the presumption. The presumption in paragraph (c)(1)(i) of this section may be rebutted by the CFTC if the CFTC determines, taking into account the liquidity, maturity, and depth of the market for the relevant types of financial instruments and based on all relevant facts and circumstances, that a trading desk is engaging in activity that is not based on the reasonably expected near term demands of clients, customers, or counterparties. The CFTC's rebuttal of the presumption in paragraph (c)(1)(i) of this section must be made in accordance with the notice and response procedures in subpart D of this part." 17:17:2.0.1.1.10.2.1.3,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,B,Subpart B—Proprietary Trading,,§ 75.5 Permitted risk-mitigating hedging activities.,CFTC,,,"[79 FR 6048, Jan. 31, 2014, as amended at 84 FR 62207, Nov. 14, 2019]","(a) Permitted risk-mitigating hedging activities. The prohibition contained in § 75.3(a) does not apply to the risk-mitigating hedging activities of a banking entity in connection with and related to individual or aggregated positions, contracts, or other holdings of the banking entity and designed to reduce the specific risks to the banking entity in connection with and related to such positions, contracts, or other holdings. (b) Requirements. (1) The risk-mitigating hedging activities of a banking entity that has significant trading assets and liabilities are permitted under paragraph (a) of this section only if: (i) The banking entity has established and implements, maintains and enforces an internal compliance program required by subpart D of this part that is reasonably designed to ensure the banking entity's compliance with the requirements of this section, including: (A) Reasonably designed written policies and procedures regarding the positions, techniques and strategies that may be used for hedging, including documentation indicating what positions, contracts or other holdings a particular trading desk may use in its risk-mitigating hedging activities, as well as position and aging limits with respect to such positions, contracts or other holdings; (B) Internal controls and ongoing monitoring, management, and authorization procedures, including relevant escalation procedures; and (C) The conduct of analysis and independent testing designed to ensure that the positions, techniques and strategies that may be used for hedging may reasonably be expected to reduce or otherwise significantly mitigate the specific, identifiable risk(s) being hedged; (ii) The risk-mitigating hedging activity: (A) Is conducted in accordance with the written policies, procedures, and internal controls required under this section; (B) At the inception of the hedging activity, including, without limitation, any adjustments to the hedging activity, is designed to reduce or otherwise significantly mitigate one or more specific, identifiable risks, including market risk, counterparty or other credit risk, currency or foreign exchange risk, interest rate risk, commodity price risk, basis risk, or similar risks, arising in connection with and related to identified positions, contracts, or other holdings of the banking entity, based upon the facts and circumstances of the identified underlying and hedging positions, contracts or other holdings and the risks and liquidity thereof; (C) Does not give rise, at the inception of the hedge, to any significant new or additional risk that is not itself hedged contemporaneously in accordance with this section; (D) Is subject to continuing review, monitoring and management by the banking entity that: ( 1 ) Is consistent with the written hedging policies and procedures required under paragraph (b)(1)(i) of this section; ( 2 ) Is designed to reduce or otherwise significantly mitigate the specific, identifiable risks that develop over time from the risk-mitigating hedging activities undertaken under this section and the underlying positions, contracts, and other holdings of the banking entity, based upon the facts and circumstances of the underlying and hedging positions, contracts and other holdings of the banking entity and the risks and liquidity thereof; and ( 3 ) Requires ongoing recalibration of the hedging activity by the banking entity to ensure that the hedging activity satisfies the requirements set out in paragraph (b)(1)(ii) of this section and is not prohibited proprietary trading; and (iii) The compensation arrangements of persons performing risk-mitigating hedging activities are designed not to reward or incentivize prohibited proprietary trading. (2) The risk-mitigating hedging activities of a banking entity that does not have significant trading assets and liabilities are permitted under paragraph (a) of this section only if the risk-mitigating hedging activity: (i) At the inception of the hedging activity, including, without limitation, any adjustments to the hedging activity, is designed to reduce or otherwise significantly mitigate one or more specific, identifiable risks, including market risk, counterparty or other credit risk, currency or foreign exchange risk, interest rate risk, commodity price risk, basis risk, or similar risks, arising in connection with and related to identified positions, contracts, or other holdings of the banking entity, based upon the facts and circumstances of the identified underlying and hedging positions, contracts or other holdings and the risks and liquidity thereof; and (ii) Is subject, as appropriate, to ongoing recalibration by the banking entity to ensure that the hedging activity satisfies the requirements set out in paragraph (b)(2) of this section and is not prohibited proprietary trading. (c) Documentation requirement. (1) A banking entity that has significant trading assets and liabilities must comply with the requirements of paragraphs (c)(2) and (3) of this section, unless the requirements of paragraph (c)(4) of this section are met, with respect to any purchase or sale of financial instruments made in reliance on this section for risk-mitigating hedging purposes that is: (i) Not established by the specific trading desk establishing or responsible for the underlying positions, contracts, or other holdings the risks of which the hedging activity is designed to reduce; (ii) Established by the specific trading desk establishing or responsible for the underlying positions, contracts, or other holdings the risks of which the purchases or sales are designed to reduce, but that is effected through a financial instrument, exposure, technique, or strategy that is not specifically identified in the trading desk's written policies and procedures established under paragraph (b)(1) of this section or under § 75.4(b)(2)(iii)(B) as a product, instrument, exposure, technique, or strategy such trading desk may use for hedging; or (iii) Established to hedge aggregated positions across two or more trading desks. (2) In connection with any purchase or sale identified in paragraph (c)(1) of this section, a banking entity must, at a minimum, and contemporaneously with the purchase or sale, document: (i) The specific, identifiable risk(s) of the identified positions, contracts, or other holdings of the banking entity that the purchase or sale is designed to reduce; (ii) The specific risk-mitigating strategy that the purchase or sale is designed to fulfill; and (iii) The trading desk or other business unit that is establishing and responsible for the hedge. (3) A banking entity must create and retain records sufficient to demonstrate compliance with the requirements of paragraph (c) of this section for a period that is no less than five years in a form that allows the banking entity to promptly produce such records to the Commission on request, or such longer period as required under other law or this part. (4) The requirements of paragraphs (c)(2) and (3) of this section do not apply to the purchase or sale of a financial instrument described in paragraph (c)(1) of this section if: (i) The financial instrument purchased or sold is identified on a written list of pre-approved financial instruments that are commonly used by the trading desk for the specific type of hedging activity for which the financial instrument is being purchased or sold; and (ii) At the time the financial instrument is purchased or sold, the hedging activity (including the purchase or sale of the financial instrument) complies with written, pre-approved limits for the trading desk purchasing or selling the financial instrument for hedging activities undertaken for one or more other trading desks. The limits shall be appropriate for the: (A) Size, types, and risks of the hedging activities commonly undertaken by the trading desk; (B) Financial instruments purchased and sold for hedging activities by the trading desk; and (C) Levels and duration of the risk exposures being hedged." 17:17:2.0.1.1.10.2.1.4,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,B,Subpart B—Proprietary Trading,,§ 75.6 Other permitted proprietary trading activities.,CFTC,,,"[79 FR 6048, Jan. 31, 2014, as amended at 84 FR 62208, Nov. 14, 2019; 85 FR 46516, July 31, 2020]","(a) Permitted trading in domestic government obligations. The prohibition contained in § 75.3(a) does not apply to the purchase or sale by a banking entity of a financial instrument that is: (1) An obligation of, or issued or guaranteed by, the United States; (2) An obligation, participation, or other instrument of, or issued or guaranteed by, an agency of the United States, the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, a Federal Home Loan Bank, the Federal Agricultural Mortgage Corporation or a Farm Credit System institution chartered under and subject to the provisions of the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq. ); (3) An obligation of any State or any political subdivision thereof, including any municipal security; or (4) An obligation of the FDIC, or any entity formed by or on behalf of the FDIC for purpose of facilitating the disposal of assets acquired or held by the FDIC in its corporate capacity or as conservator or receiver under the Federal Deposit Insurance Act or Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act. (b) Permitted trading in foreign government obligations —(1) Affiliates of foreign banking entities in the United States. The prohibition contained in § 75.3(a) does not apply to the purchase or sale of a financial instrument that is an obligation of, or issued or guaranteed by, a foreign sovereign (including any multinational central bank of which the foreign sovereign is a member), or any agency or political subdivision of such foreign sovereign, by a banking entity, so long as: (i) The banking entity is organized under or is directly or indirectly controlled by a banking entity that is organized under the laws of a foreign sovereign and is not directly or indirectly controlled by a top-tier banking entity that is organized under the laws of the United States; (ii) The financial instrument is an obligation of, or issued or guaranteed by, the foreign sovereign under the laws of which the foreign banking entity referred to in paragraph (b)(1)(i) of this section is organized (including any multinational central bank of which the foreign sovereign is a member), or any agency or political subdivision of that foreign sovereign; and (iii) The purchase or sale as principal is not made by an insured depository institution. (2) Foreign affiliates of a U.S. banking entity. The prohibition contained in § 75.3(a) does not apply to the purchase or sale of a financial instrument that is an obligation of, or issued or guaranteed by, a foreign sovereign (including any multinational central bank of which the foreign sovereign is a member), or any agency or political subdivision of that foreign sovereign, by a foreign entity that is owned or controlled by a banking entity organized or established under the laws of the United States or any State, so long as: (i) The foreign entity is a foreign bank, as defined in § 211.2(j) of the Board's Regulation K (12 CFR 211.2(j)), or is regulated by the foreign sovereign as a securities dealer; (ii) The financial instrument is an obligation of, or issued or guaranteed by, the foreign sovereign under the laws of which the foreign entity is organized (including any multinational central bank of which the foreign sovereign is a member), or any agency or political subdivision of that foreign sovereign; and (iii) The financial instrument is owned by the foreign entity and is not financed by an affiliate that is located in the United States or organized under the laws of the United States or of any State. (c) Permitted trading on behalf of customers —(1) Fiduciary transactions. The prohibition contained in § 75.3(a) does not apply to the purchase or sale of financial instruments by a banking entity acting as trustee or in a similar fiduciary capacity, so long as: (i) The transaction is conducted for the account of, or on behalf of, a customer; and (ii) The banking entity does not have or retain beneficial ownership of the financial instruments. (2) Riskless principal transactions. The prohibition contained in § 75.3(a) does not apply to the purchase or sale of financial instruments by a banking entity acting as riskless principal in a transaction in which the banking entity, after receiving an order to purchase (or sell) a financial instrument from a customer, purchases (or sells) the financial instrument for its own account to offset a contemporaneous sale to (or purchase from) the customer. (d) Permitted trading by a regulated insurance company. The prohibition contained in § 75.3(a) does not apply to the purchase or sale of financial instruments by a banking entity that is an insurance company or an affiliate of an insurance company if: (1) The insurance company or its affiliate purchases or sells the financial instruments solely for: (i) The general account of the insurance company; or (ii) A separate account established by the insurance company; (2) The purchase or sale is conducted in compliance with, and subject to, the insurance company investment laws, regulations, and written guidance of the State or jurisdiction in which such insurance company is domiciled; and (3) The appropriate Federal banking agencies, after consultation with the Financial Stability Oversight Council and the relevant insurance commissioners of the States and foreign jurisdictions, as appropriate, have not jointly determined, after notice and comment, that a particular law, regulation, or written guidance described in paragraph (d)(2) of this section is insufficient to protect the safety and soundness of the covered banking entity, or the financial stability of the United States. (e) Permitted trading activities of foreign banking entities. (1) The prohibition contained in § 75.3(a) does not apply to the purchase or sale of financial instruments by a banking entity if: (i) The banking entity is not organized or directly or indirectly controlled by a banking entity that is organized under the laws of the United States or of any State; (ii) The purchase or sale by the banking entity is made pursuant to paragraph (9) or (13) of section 4(c) of the BHC Act; and (iii) The purchase or sale meets the requirements of paragraph (e)(3) of this section. (2) A purchase or sale of financial instruments by a banking entity is made pursuant to paragraph (9) or (13) of section 4(c) of the BHC Act for purposes of paragraph (e)(1)(ii) of this section only if: (i) The purchase or sale is conducted in accordance with the requirements of paragraph (e) of this section; and (ii)(A) With respect to a banking entity that is a foreign banking organization, the banking entity meets the qualifying foreign banking organization requirements of § 211.23(a), (c) or (e) of the Board's Regulation K (12 CFR 211.23(a), (c) or (e)), as applicable; or (B) With respect to a banking entity that is not a foreign banking organization, the banking entity is not organized under the laws of the United States or of any State and the banking entity, on a fully-consolidated basis, meets at least two of the following requirements: ( 1 ) Total assets of the banking entity held outside of the United States exceed total assets of the banking entity held in the United States; ( 2 ) Total revenues derived from the business of the banking entity outside of the United States exceed total revenues derived from the business of the banking entity in the United States; or ( 3 ) Total net income derived from the business of the banking entity outside of the United States exceeds total net income derived from the business of the banking entity in the United States. (3) A purchase or sale by a banking entity is permitted for purposes of this paragraph (e) if: (i) The banking entity engaging as principal in the purchase or sale (including relevant personnel) is not located in the United States or organized under the laws of the United States or of any State; (ii) The banking entity (including relevant personnel) that makes the decision to purchase or sell as principal is not located in the United States or organized under the laws of the United States or of any State; and (iii) The purchase or sale, including any transaction arising from risk-mitigating hedging related to the instruments purchased or sold, is not accounted for as principal directly or on a consolidated basis by any branch or affiliate that is located in the United States or organized under the laws of the United States or of any State. (4) For purposes of paragraph (e) of this section, a U.S. branch, agency, or subsidiary of a foreign banking entity is considered to be located in the United States; however, the foreign bank that operates or controls that branch, agency, or subsidiary is not considered to be located in the United States solely by virtue of operating or controlling the U.S. branch, agency, or subsidiary. (f) Permitted trading activities of qualifying foreign excluded funds. The prohibition contained in § 75.3(a) does not apply to the purchase or sale of a financial instrument by a qualifying foreign excluded fund. For purposes of this paragraph (f), a qualifying foreign excluded fund means a banking entity that: (1) Is organized or established outside the United States, and the ownership interests of which are offered and sold solely outside the United States; (2)(i) Would be a covered fund if the entity were organized or established in the United States, or (ii) Is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in financial instruments for resale or other disposition or otherwise trading in financial instruments; (3) Would not otherwise be a banking entity except by virtue of the acquisition or retention of an ownership interest in, sponsorship of, or relationship with the entity, by another banking entity that meets the following: (i) The banking entity is not organized, or directly or indirectly controlled by a banking entity that is organized, under the laws of the United States or of any State; and (ii) The banking entity's acquisition or retention of an ownership interest in or sponsorship of the fund meets the requirements for permitted covered fund activities and investments solely outside the United States, as provided in § 75.13(b); (4) Is established and operated as part of a bona fide asset management business; and (5) Is not operated in a manner that enables the banking entity that sponsors or controls the qualifying foreign excluded fund, or any of its affiliates, to evade the requirements of section 13 of the BHC Act or this part." 17:17:2.0.1.1.10.2.1.5,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,B,Subpart B—Proprietary Trading,,§ 75.7 Limitations on permitted proprietary trading activities.,CFTC,,,,"(a) No transaction, class of transactions, or activity may be deemed permissible under §§ 75.4 through 75.6 if the transaction, class of transactions, or activity would: (1) Involve or result in a material conflict of interest between the banking entity and its clients, customers, or counterparties; (2) Result, directly or indirectly, in a material exposure by the banking entity to a high-risk asset or a high-risk trading strategy; or (3) Pose a threat to the safety and soundness of the banking entity or to the financial stability of the United States. (b) Definition of material conflict of interest. (1) For purposes of this section, a material conflict of interest between a banking entity and its clients, customers, or counterparties exists if the banking entity engages in any transaction, class of transactions, or activity that would involve or result in the banking entity's interests being materially adverse to the interests of its client, customer, or counterparty with respect to such transaction, class of transactions, or activity, and the banking entity has not taken at least one of the actions in paragraph (b)(2) of this section. (2) Prior to effecting the specific transaction or class or type of transactions, or engaging in the specific activity, the banking entity: (i) Timely and effective disclosure. (A) Has made clear, timely, and effective disclosure of the conflict of interest, together with other necessary information, in reasonable detail and in a manner sufficient to permit a reasonable client, customer, or counterparty to meaningfully understand the conflict of interest; and (B) Such disclosure is made in a manner that provides the client, customer, or counterparty the opportunity to negate, or substantially mitigate, any materially adverse effect on the client, customer, or counterparty created by the conflict of interest; or (ii) Information barriers. Has established, maintained, and enforced information barriers that are memorialized in written policies and procedures, such as physical separation of personnel, or functions, or limitations on types of activity, that are reasonably designed, taking into consideration the nature of the banking entity's business, to prevent the conflict of interest from involving or resulting in a materially adverse effect on a client, customer, or counterparty. A banking entity may not rely on such information barriers if, in the case of any specific transaction, class or type of transactions or activity, the banking entity knows or should reasonably know that, notwithstanding the banking entity's establishment of information barriers, the conflict of interest may involve or result in a materially adverse effect on a client, customer, or counterparty. (c) Definition of high-risk asset and high-risk trading strategy. For purposes of this section: (1) High-risk asset means an asset or group of related assets that would, if held by a banking entity, significantly increase the likelihood that the banking entity would incur a substantial financial loss or would pose a threat to the financial stability of the United States. (2) High-risk trading strategy means a trading strategy that would, if engaged in by a banking entity, significantly increase the likelihood that the banking entity would incur a substantial financial loss or would pose a threat to the financial stability of the United States." 17:17:2.0.1.1.10.2.1.6,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,B,Subpart B—Proprietary Trading,,§§ 75.8-75.9 [Reserved],CFTC,,,, 17:17:2.0.1.1.10.3.1.1,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,C,Subpart C—Covered Fund Activities and Investments,,§ 75.10 Prohibition on acquiring or retaining an ownership interest in and having certain relationships with a covered fund.,CFTC,,,"[79 FR 6048, Jan. 31, 2014, as amended at 84 FR 35021, July 22, 2019; 84 FR 62208, Nov. 14, 2019; 85 FR 46516, July 31, 2020; 85 FR 60355, Sept. 25, 2020; 89 FR 78814, Sept. 26, 2024]","(a) Prohibition. (1) Except as otherwise provided in this subpart, a banking entity may not, as principal, directly or indirectly, acquire or retain any ownership interest in or sponsor a covered fund. (2) Paragraph (a)(1) of this section does not include acquiring or retaining an ownership interest in a covered fund by a banking entity: (i) Acting solely as agent, broker, or custodian, so long as; (A) The activity is conducted for the account of, or on behalf of, a customer; and (B) The banking entity and its affiliates do not have or retain beneficial ownership of such ownership interest; (ii) Through a deferred compensation, stock-bonus, profit-sharing, or pension plan of the banking entity (or an affiliate thereof) that is established and administered in accordance with the law of the United States or a foreign sovereign, if the ownership interest is held or controlled directly or indirectly by the banking entity as trustee for the benefit of persons who are or were employees of the banking entity (or an affiliate thereof); (iii) In the ordinary course of collecting a debt previously contracted in good faith, provided that the banking entity divests the ownership interest as soon as practicable, and in no event may the banking entity retain such ownership interest for longer than such period permitted by the Commission; or (iv) On behalf of customers as trustee or in a similar fiduciary capacity for a customer that is not a covered fund, so long as: (A) The activity is conducted for the account of, or on behalf of, the customer; and (B) The banking entity and its affiliates do not have or retain beneficial ownership of such ownership interest. (b) Definition of covered fund. (1) Except as provided in paragraph (c) of this section, covered fund means: (i) An issuer that would be an investment company, as defined in the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq. ), but for section 3(c)(1) or 3(c)(7) of that Act (15 U.S.C. 80a-3(c)(1) or (7)); (ii) Any commodity pool under section 1a(10) of the Commodity Exchange Act (7 U.S.C. 1a(10)) for which: (A) The commodity pool operator has claimed an exemption under § 4.7 of this chapter; or (B) ( 1 ) A commodity pool operator is registered with the CFTC as a commodity pool operator in connection with the operation of the commodity pool; ( 2 ) Substantially all participation units of the commodity pool are owned by qualified eligible persons defined under § 4.7(a)(6)(i) and (ii) of this chapter; and ( 3 ) Participation units of the commodity pool have not been publicly offered to persons who are not qualified eligible persons defined under § 4.7(a)(6)(i) and (ii) of this chapter; or (iii) For any banking entity that is, or is controlled directly or indirectly by a banking entity that is, located in or organized under the laws of the United States or of any State, an entity that: (A) Is organized or established outside the United States and the ownership interests of which are offered and sold solely outside the United States; (B) Is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in securities for resale or other disposition or otherwise trading in securities; and (C) ( 1 ) Has as its sponsor that banking entity (or an affiliate thereof); or ( 2 ) Has issued an ownership interest that is owned directly or indirectly by that banking entity (or an affiliate thereof). (2) An issuer shall not be deemed to be a covered fund under paragraph (b)(1)(iii) of this section if, were the issuer subject to U.S. securities laws, the issuer could rely on an exclusion or exemption from the definition of “investment company” under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq. ) other than the exclusions contained in section 3(c)(1) and 3(c)(7) of that Act. (3) For purposes of paragraph (b)(1)(iii) of this section, a U.S. branch, agency, or subsidiary of a foreign banking entity is located in the United States; however, the foreign bank that operates or controls that branch, agency, or subsidiary is not considered to be located in the United States solely by virtue of operating or controlling the U.S. branch, agency, or subsidiary. (c) Notwithstanding paragraph (b) of this section, unless the appropriate Federal banking agencies, the SEC, and the CFTC jointly determine otherwise, a covered fund does not include: (1) Foreign public funds. (i) Subject to paragraphs (c)(1)(ii) and (iii) of this section, an issuer that: (A) Is organized or established outside of the United States; and (B) Is authorized to offer and sell ownership interests, and such interests are offered and sold, through one or more public offerings. (ii) With respect to a banking entity that is, or is controlled directly or indirectly by a banking entity that is, located in or organized under the laws of the United States or of any State and any issuer for which such banking entity acts as sponsor, the sponsoring banking entity may not rely on the exemption in paragraph (c)(1)(i) of this section for such issuer unless more than 75 percent of the ownership interests in the issuer are sold to persons other than: (A) Such sponsoring banking entity; (B) Such issuer; (C) Affiliates of such sponsoring banking entity or such issuer; and (D) Directors and senior executive officers as defined in § 225.71(c) of the Board's Regulation Y (12 CFR 225.71(c)) of such entities. (iii) For purposes of paragraph (c)(1)(i)(B) of this section, the term “public offering” means a distribution (as defined in § 75.4(a)(3)) of securities in any jurisdiction outside the United States to investors, including retail investors, provided that: (A) The distribution is subject to substantive disclosure and retail investor protection laws or regulations; (B) With respect to an issuer for which the banking entity serves as the investment manager, investment adviser, commodity trading advisor, commodity pool operator, or sponsor, the distribution complies with all applicable requirements in the jurisdiction in which such distribution is being made; (C) The distribution does not restrict availability to investors having a minimum level of net worth or net investment assets; and (D) The issuer has filed or submitted, with the appropriate regulatory authority in such jurisdiction, offering disclosure documents that are publicly available. (2) Wholly-owned subsidiaries. An entity, all of the outstanding ownership interests of which are owned directly or indirectly by the banking entity (or an affiliate thereof), except that: (i) Up to five percent of the entity's outstanding ownership interests, less any amounts outstanding under paragraph (c)(2)(ii) of this section, may be held by employees or directors of the banking entity or such affiliate (including former employees or directors if their ownership interest was acquired while employed by or in the service of the banking entity); and (ii) Up to 0.5 percent of the entity's outstanding ownership interests may be held by a third party if the ownership interest is acquired or retained by the third party for the purpose of establishing corporate separateness or addressing bankruptcy, insolvency, or similar concerns. (3) Joint ventures. A joint venture between a banking entity or any of its affiliates and one or more unaffiliated persons, provided that the joint venture: (i) Is composed of no more than 10 unaffiliated co-venturers; (ii) Is in the business of engaging in activities that are permissible for the banking entity or affiliate, other than investing in securities for resale or other disposition; and (iii) Is not, and does not hold itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in securities for resale or other disposition or otherwise trading in securities. (4) Acquisition vehicles. An issuer: (i) Formed solely for the purpose of engaging in a bona fide merger or acquisition transaction; and (ii) That exists only for such period as necessary to effectuate the transaction. (5) Foreign pension or retirement funds. A plan, fund, or program providing pension, retirement, or similar benefits that is: (i) Organized and administered outside the United States; (ii) A broad-based plan for employees or citizens that is subject to regulation as a pension, retirement, or similar plan under the laws of the jurisdiction in which the plan, fund, or program is organized and administered; and (iii) Established for the benefit of citizens or residents of one or more foreign sovereigns or any political subdivision thereof. (6) Insurance company separate accounts. A separate account, provided that no banking entity other than the insurance company participates in the account's profits and losses. (7) Bank owned life insurance. A separate account that is used solely for the purpose of allowing one or more banking entities to purchase a life insurance policy for which the banking entity or entities is beneficiary, provided that no banking entity that purchases the policy: (i) Controls the investment decisions regarding the underlying assets or holdings of the separate account; or (ii) Participates in the profits and losses of the separate account other than in compliance with applicable requirements regarding bank owned life insurance. (8) Loan securitizations —(i) Scope. An issuing entity for asset-backed securities that satisfies all the conditions of this paragraph (c)(8) and the assets or holdings of which are composed solely of: (A) Loans as defined in § 75.2(t); (B) Rights or other assets designed to assure the servicing or timely distribution of proceeds to holders of such securities and rights or other assets that are related or incidental to purchasing or otherwise acquiring and holding the loans, provided that each asset that is a security (other than special units of beneficial interest and collateral certificates meeting the requirements of paragraph (c)(8)(v) of this section) meets the requirements of paragraph (c)(8)(iii) of this section; (C) Interest rate or foreign exchange derivatives that meet the requirements of paragraph (c)(8)(iv) of this section; (D) Special units of beneficial interest and collateral certificates that meet the requirements of paragraph (c)(8)(v) of this section; and (E) Debt securities, other than asset-backed securities and convertible securities, provided that: ( 1 ) The aggregate value of such debt securities does not exceed five percent of the aggregate value of loans held under paragraph (c)(8)(i)(A) of this section, cash and cash equivalents held under paragraph (c)(8)(iii)(A) of this section, and debt securities held under this paragraph (c)(8)(i)(E); and ( 2 ) The aggregate value of the loans, cash and cash equivalents, and debt securities for purposes of this paragraph is calculated at par value at the most recent time any such debt security is acquired, except that the issuing entity may instead determine the value of any such loan, cash equivalent, or debt security based on its fair market value if: ( i ) The issuing entity is required to use the fair market value of such assets for purposes of calculating compliance with concentration limitations or other similar calculations under its transaction agreements, and ( ii ) The issuing entity's valuation methodology values similarly situated assets consistently. (ii) Impermissible assets. For purposes of this paragraph (c)(8), except as permitted under paragraph (c)(8)(i)(E) of this section, the assets or holdings of the issuing entity shall not include any of the following: (A) A security, including an asset-backed security, or an interest in an equity or debt security other than as permitted in paragraphs (c)(8)(iii), (iv), or (v) of this section; (B) A derivative, other than a derivative that meets the requirements of paragraph (c)(8)(iv) of this section; or (C) A commodity forward contract. (iii) Permitted securities. Notwithstanding paragraph (c)(8)(ii)(A) of this section, the issuing entity may hold securities, other than debt securities permitted under paragraph (c)(8)(i)(E) of this section, if those securities are: (A) Cash equivalents—which, for the purposes of this paragraph, means high quality, highly liquid investments whose maturity corresponds to the securitization's expected or potential need for funds and whose currency corresponds to either the underlying loans or the asset-backed securities—for purposes of the rights and assets in paragraph (c)(8)(i)(B) of this section; or (B) Securities received in lieu of debts previously contracted with respect to the loans supporting the asset-backed securities. (iv) Derivatives. The holdings of derivatives by the issuing entity shall be limited to interest rate or foreign exchange derivatives that satisfy all of the following conditions: (A) The written terms of the derivatives directly relate to the loans, the asset-backed securities, the contractual rights or other assets described in paragraph (c)(8)(i)(B) of this section, or the debt securities described in paragraph (c)(8)(i)(E) of this section; and (B) The derivatives reduce the interest rate and/or foreign exchange risks related to the loans, the asset-backed securities, the contractual rights or other assets described in paragraph (c)(8)(i)(B) of this section, or the debt securities described in paragraph (c)(8)(i)(E) of this section. (v) Special units of beneficial interest and collateral certificates. The assets or holdings of the issuing entity may include collateral certificates and special units of beneficial interest issued by a special purpose vehicle, provided that: (A) The special purpose vehicle that issues the special unit of beneficial interest or collateral certificate meets the requirements in this paragraph (c)(8); (B) The special unit of beneficial interest or collateral certificate is used for the sole purpose of transferring to the issuing entity for the loan securitization the economic risks and benefits of the assets that are permissible for loan securitizations under this paragraph (c)(8) and does not directly or indirectly transfer any interest in any other economic or financial exposure; (C) The special unit of beneficial interest or collateral certificate is created solely to satisfy legal requirements or otherwise facilitate the structuring of the loan securitization; and (D) The special purpose vehicle that issues the special unit of beneficial interest or collateral certificate and the issuing entity are established under the direction of the same entity that initiated the loan securitization. (9) Qualifying asset-backed commercial paper conduits. (i) An issuing entity for asset-backed commercial paper that satisfies all of the following requirements: (A) The asset-backed commercial paper conduit holds only: ( 1 ) Loans and other assets permissible for a loan securitization under paragraph (c)(8)(i) of this section; and ( 2 ) Asset-backed securities supported solely by assets that are permissible for loan securitizations under paragraph (c)(8)(i) of this section and acquired by the asset-backed commercial paper conduit as part of an initial issuance either directly from the issuing entity of the asset-backed securities or directly from an underwriter in the distribution of the asset-backed securities; (B) The asset-backed commercial paper conduit issues only asset-backed securities, comprised of a residual interest and securities with a legal maturity of 397 days or less; and (C) A regulated liquidity provider has entered into a legally binding commitment to provide full and unconditional liquidity coverage with respect to all of the outstanding asset-backed securities issued by the asset-backed commercial paper conduit (other than any residual interest) in the event that funds are required to redeem maturing asset-backed securities. (ii) For purposes of this paragraph (c)(9) of this section, a regulated liquidity provider means: (A) A depository institution, as defined in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)); (B) A bank holding company, as defined in section 2(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)), or a subsidiary thereof; (C) A savings and loan holding company, as defined in section 10a of the Home Owners' Loan Act (12 U.S.C. 1467a), provided all or substantially all of the holding company's activities are permissible for a financial holding company under section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)), or a subsidiary thereof; (D) A foreign bank whose home country supervisor, as defined in § 211.21(q) of the Board's Regulation K (12 CFR 211.21(q)), has adopted capital standards consistent with the Capital Accord for the Basel Committee on Banking Supervision, as amended, and that is subject to such standards, or a subsidiary thereof; or (E) The United States or a foreign sovereign. (10) Qualifying covered bonds —(i) Scope. An entity owning or holding a dynamic or fixed pool of loans or other assets as provided in paragraph (c)(8) of this section for the benefit of the holders of covered bonds, provided that the assets in the pool are composed solely of assets that meet the conditions in paragraph (c)(8)(i) of this section. (ii) Covered bond. For purposes of paragraph (c)(10) of this section, a covered bond means: (A) A debt obligation issued by an entity that meets the definition of foreign banking organization, the payment obligations of which are fully and unconditionally guaranteed by an entity that meets the conditions set forth in paragraph (c)(10)(i) of this section; or (B) A debt obligation of an entity that meets the conditions set forth in paragraph (c)(10)(i) of this section, provided that the payment obligations are fully and unconditionally guaranteed by an entity that meets the definition of foreign banking organization and the entity is a wholly-owned subsidiary, as defined in paragraph (c)(2) of this section, of such foreign banking organization. (11) SBICs and public welfare investment funds. An issuer: (i) That is a small business investment company, as defined in section 103(3) of the Small Business Investment Act of 1958 (15 U.S.C. 662), or that has received from the Small Business Administration notice to proceed to qualify for a license as a small business investment company, which notice or license has not been revoked, or that has voluntarily surrendered its license to operate as a small business investment company in accordance with 13 CFR 107.1900 and does not make any new investments (other than investments in cash equivalents, which, for the purposes of this paragraph, means high quality, highly liquid investments whose maturity corresponds to the issuer's expected or potential need for funds and whose currency corresponds to the issuer's assets) after such voluntary surrender; (ii) The business of which is to make investments that are: (A) Designed primarily to promote the public welfare, of the type permitted under paragraph (11) of section 5136 of the Revised Statutes of the United States (12 U.S.C. 24), including the welfare of low- and moderate-income communities or families (such as providing housing, services, or jobs) and including investments that qualify for consideration under the regulations implementing the Community Reinvestment Act (12 U.S.C. 2901 et seq. ); or (B) Qualified rehabilitation expenditures with respect to a qualified rehabilitated building or certified historic structure, as such terms are defined in section 47 of the Internal Revenue Code of 1986 or a similar State historic tax credit program; (iii) That has elected to be regulated or is regulated as a rural business investment company, as described in 15 U.S.C. 80b-3(b)(8)(A) or (B), or that has terminated its participation as a rural business investment company in accordance with 7 CFR 4290.1900 and does not make any new investments (other than investments in cash equivalents, which, for the purposes of this paragraph, means high quality, highly liquid investments whose maturity corresponds to the issuer's expected or potential need for funds and whose currency corresponds to the issuer's assets) after such termination; or (iv) That is a qualified opportunity fund, as defined in 26 U.S.C. 1400Z-2(d). (12) Registered investment companies and excluded entities. An issuer: (i) That is registered as an investment company under section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8), or that is formed and operated pursuant to a written plan to become a registered investment company as described in § 75.20(e)(3) and that complies with the requirements of section 18 of the Investment Company Act of 1940 (15 U.S.C. 80a-18); (ii) That may rely on an exclusion or exemption from the definition of “investment company” under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq. ) other than the exclusions contained in section 3(c)(1) and 3(c)(7) of that Act; or (iii) That has elected to be regulated as a business development company pursuant to section 54(a) of that Act (15 U.S.C. 80a-53) and has not withdrawn its election, or that is formed and operated pursuant to a written plan to become a business development company as described in § 75.20(e)(3) and that complies with the requirements of section 61 of the Investment Company Act of 1940 (15 U.S.C. 80a-60). (13) Issuers in conjunction with the FDIC's receivership or conservatorship operations. An issuer that is an entity formed by or on behalf of the FDIC for the purpose of facilitating the disposal of assets acquired in the FDIC's capacity as conservator or receiver under the Federal Deposit Insurance Act or Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act. (14) Other excluded issuers. (i) Any issuer that the appropriate Federal banking agencies, the SEC, and the CFTC jointly determine the exclusion of which is consistent with the purposes of section 13 of the BHC Act. (ii) A determination made under paragraph (c)(14)(i) of this section will be promptly made public. (15) Credit funds. Subject to paragraphs (c)(15)(iii), (iv), and (v) of this section, an issuer that satisfies the asset and activity requirements of paragraphs (c)(15)(i) and (ii) of this section. (i) Asset requirements. The issuer's assets must be composed solely of: (A) Loans as defined in § 75.2(t); (B) Debt instruments, subject to paragraph (c)(15)(iv) of this section; (C) Rights and other assets that are related or incidental to acquiring, holding, servicing, or selling such loans or debt instruments, provided that: ( 1 ) Each right or asset held under this paragraph (c)(15)(i)(C) that is a security is either: ( i ) A cash equivalent (which, for the purposes of this paragraph, means high quality, highly liquid investments whose maturity corresponds to the issuer's expected or potential need for funds and whose currency corresponds to either the underlying loans or the debt instruments); ( ii ) A security received in lieu of debts previously contracted with respect to such loans or debt instruments; or ( iii ) An equity security (or right to acquire an equity security) received on customary terms in connection with such loans or debt instruments; and ( 2 ) Rights or other assets held under this paragraph (c)(15)(i)(C) of this section may not include commodity forward contracts or any derivative; and (D) Interest rate or foreign exchange derivatives, if: ( 1 ) The written terms of the derivative directly relate to the loans, debt instruments, or other rights or assets described in paragraph (c)(15)(i)(C) of this section; and ( 2 ) The derivative reduces the interest rate and/or foreign exchange risks related to the loans, debt instruments, or other rights or assets described in paragraph (c)(15)(i)(C) of this section. (ii) Activity requirements. To be eligible for the exclusion of paragraph (c)(15) of this section, an issuer must: (A) Not engage in any activity that would constitute proprietary trading under § 75.3(b)(l)(i), as if the issuer were a banking entity; and (B) Not issue asset-backed securities. (iii) Requirements for a sponsor, investment adviser, or commodity trading advisor. A banking entity that acts as a sponsor, investment adviser, or commodity trading advisor to an issuer that meets the conditions in paragraphs (c)(15)(i) and (ii) of this section may not rely on this exclusion unless the banking entity: (A) Provides in writing to any prospective and actual investor in the issuer the disclosures required under § 75.11(a)(8) of this subpart, as if the issuer were a covered fund; (B) Ensures that the activities of the issuer are consistent with safety and soundness standards that are substantially similar to those that would apply if the banking entity engaged in the activities directly; and (C) Complies with the limitations imposed in § 75.14, as if the issuer were a covered fund, except the banking entity may acquire and retain any ownership interest in the issuer. (iv) Additional Banking Entity Requirements. A banking entity may not rely on this exclusion with respect to an issuer that meets the conditions in paragraphs (c)(15)(i) and (ii) of this section unless: (A) The banking entity does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the issuer or of any entity to which such issuer extends credit or in which such issuer invests; and (B) Any assets the issuer holds pursuant to paragraphs (c)(15)(i)(B) or (i)(C)( l )( iii ) of this section would be permissible for the banking entity to acquire and hold directly under applicable federal banking laws and regulations. (v) Investment and Relationship Limits. A banking entity's investment in, and relationship with, the issuer must: (A) Comply with the limitations imposed in § 75.15, as if the issuer were a covered fund; and (B) Be conducted in compliance with, and subject to, applicable banking laws and regulations, including applicable safety and soundness standards. (16) Qualifying venture capital funds. (i) Subject to paragraphs (c)(16)(ii) through (iv) of this section, an issuer that: (A) Is a venture capital fund as defined in 17 CFR 275.203(l)-1; and (B) Does not engage in any activity that would constitute proprietary trading under § 75.3(b)(1)(i), as if the issuer were a banking entity. (ii) A banking entity that acts as a sponsor, investment adviser, or commodity trading advisor to an issuer that meets the conditions in paragraph (c)(16)(i) of this section may not rely on this exclusion unless the banking entity: (A) Provides in writing to any prospective and actual investor in the issuer the disclosures required under § 75.11(a)(8), as if the issuer were a covered fund; (B) Ensures that the activities of the issuer are consistent with safety and soundness standards that are substantially similar to those that would apply if the banking entity engaged in the activities directly; and (C) Complies with the restrictions in § 75.14 as if the issuer were a covered fund (except the banking entity may acquire and retain any ownership interest in the issuer). (iii) The banking entity must not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the issuer. (iv) A banking entity's ownership interest in or relationship with the issuer must: (A) Comply with the limitations imposed in § 75.15, as if the issuer were a covered fund; and (B) Be conducted in compliance with, and subject to, applicable banking laws and regulations, including applicable safety and soundness standards. (17) Family wealth management vehicles. (i) Subject to paragraph (c)(17)(ii) of this section, any entity that is not, and does not hold itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in securities for resale or other disposition or otherwise trading in securities, and: (A) If the entity is a trust, the grantor(s) of the entity are all family customers; and (B) If the entity is not a trust: ( 1 ) A majority of the voting interests in the entity are owned (directly or indirectly) by family customers; ( 2 ) A majority of the interests in the entity are owned (directly or indirectly) by family customers; ( 3 ) The entity is owned only by family customers and up to 5 closely related persons of the family customers; and (C) Notwithstanding paragraph (c)(17)(i)(A) and (B) of this section, up to an aggregate 0.5 percent of the entity's outstanding ownership interests may be acquired or retained by one or more entities that are not family customers or closely related persons if the ownership interest is acquired or retained by such parties for the purpose of and to the extent necessary for establishing corporate separateness or addressing bankruptcy, insolvency, or similar concerns. (ii) A banking entity may rely on the exclusion in paragraph (c)(17)(i) of this section with respect to an entity provided that the banking entity (or an affiliate): (A) Provides bona fide trust, fiduciary, investment advisory, or commodity trading advisory services to the entity; (B) Does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of such entity; (C) Complies with the disclosure obligations under § 75.11(a)(8), as if such entity were a covered fund, provided that the content may be modified to prevent the disclosure from being misleading and the manner of disclosure may be modified to accommodate the specific circumstances of the entity; (D) Does not acquire or retain, as principal, an ownership interest in the entity, other than as described in paragraph (c)(17)(i)(C) of this section; (E) Complies with the requirements of §§ 75.14(b) and 75.15, as if such entity were a covered fund; and (F) Except for riskless principal transactions as defined in paragraph (d)(11) of this section, complies with the requirements of 12 CFR 223.15(a), as if such banking entity and its affiliates were a member bank and the entity were an affiliate thereof. (iii) For purposes of paragraph (c)(17) of this section, the following definitions apply: (A) Closely related person means a natural person (including the estate and estate planning vehicles of such person) who has longstanding business or personal relationships with any family customer. (B) Family customer means: ( 1 ) A family client, as defined in Rule 202(a)(11)(G)-1(d)(4) of the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1(d)(4)); or ( 2 ) Any natural person who is a father-in-law, mother-in-law, brother-in-law, sister-in-law, son-in-law or daughter-in-law of a family client, or a spouse or a spousal equivalent of any of the foregoing. (18) Customer facilitation vehicles. (i) Subject to paragraph (c)(18)(ii) of this section, an issuer that is formed by or at the request of a customer of the banking entity for the purpose of providing such customer (which may include one or more affiliates of such customer) with exposure to a transaction, investment strategy, or other service provided by the banking entity. (ii) A banking entity may rely on the exclusion in paragraph (c)(18)(i) of this section with respect to an issuer provided that: (A) All of the ownership interests of the issuer are owned by the customer (which may include one or more of its affiliates) for whom the issuer was created; (B) Notwithstanding paragraph (c)(18)(ii)(A) of this section, up to an aggregate 0.5 percent of the issuer's outstanding ownership interests may be acquired or retained by one or more entities that are not customers if the ownership interest is acquired or retained by such parties for the purpose of and to the extent necessary for establishing corporate separateness or addressing bankruptcy, insolvency, or similar concerns; and (C) The banking entity and its affiliates: ( 1 ) Maintain documentation outlining how the banking entity intends to facilitate the customer's exposure to such transaction, investment strategy, or service; ( 2 ) Do not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of such issuer; ( 3 ) Comply with the disclosure obligations under § 75.11(a)(8), as if such issuer were a covered fund, provided that the content may be modified to prevent the disclosure from being misleading and the manner of disclosure may be modified to accommodate the specific circumstances of the issuer; ( 4 ) Do not acquire or retain, as principal, an ownership interest in the issuer, other than as described in paragraph (c)(18)(ii)(B) of this section; ( 5 ) Comply with the requirements of §§ 75.14(b) and 75.15, as if such issuer were a covered fund; and ( 6 ) Except for riskless principal transactions as defined in paragraph (d)(11) of this section, comply with the requirements of 12 CFR 223.15(a), as if such banking entity and its affiliates were a member bank and the issuer were an affiliate thereof. (d) Definition of other terms related to covered funds. For purposes of this subpart: (1) Applicable accounting standards means U.S. generally accepted accounting principles, or such other accounting standards applicable to a banking entity that the Commission determines are appropriate and that the banking entity uses in the ordinary course of its business in preparing its consolidated financial statements. (2) Asset-backed security has the meaning specified in section 3(a)(79) of the Exchange Act (15 U.S.C. 78c(a)(79)). (3) Director has the same meaning as provided in § 215.2(d)(1) of the Board's Regulation O (12 CFR 215.2(d)(1)). (4) Issuer has the same meaning as in section 2(a)(22) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(22)). (5) Issuing entity means with respect to asset-backed securities the special purpose vehicle that owns or holds the pool assets underlying asset-backed securities and in whose name the asset-backed securities supported or serviced by the pool assets are issued. (6) Ownership interest —(i) Ownership interest means any equity, partnership, or other similar interest. An “other similar interest” means an interest that: (A) Has the right to participate in the selection or removal of a general partner, managing member, member of the board of directors or trustees, investment manager, investment adviser, or commodity trading advisor of the covered fund, excluding: ( 1 ) The rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event; and ( 2 ) The right to participate in the removal of an investment manager for “cause” or participate in the selection of a replacement manager upon an investment manager's resignation or removal. For purposes of this paragraph (d)(6)(i)(A)( 2 ), “cause” for removal of an investment manager means one or more of the following events: (i) The bankruptcy, insolvency, conservatorship or receivership of the investment manager; (ii) The breach by the investment manager of any material provision of the covered fund's transaction agreements applicable to the investment manager; (iii) The breach by the investment manager of material representations or warranties; (iv) The occurrence of an act that constitutes fraud or criminal activity in the performance of the investment manager's obligations under the covered fund's transaction agreements; (v) The indictment of the investment manager for a criminal offense, or the indictment of any officer, member, partner or other principal of the investment manager for a criminal offense materially related to his or her investment management activities; (vi) A change in control with respect to the investment manager; (vii) The loss, separation or incapacitation of an individual critical to the operation of the investment manager or primarily responsible for the management of the covered fund's assets; or (viii) Other similar events that constitute “cause” for removal of an investment manager, provided that such events are not solely related to the performance of the covered fund or the investment manager's exercise of investment discretion under the covered fund's transaction agreements; (B) Has the right under the terms of the interest to receive a share of the income, gains or profits of the covered fund; (C) Has the right to receive the underlying assets of the covered fund after all other interests have been redeemed and/or paid in full (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event); (D) Has the right to receive all or a portion of excess spread (the positive difference, if any, between the aggregate interest payments received from the underlying assets of the covered fund and the aggregate interest paid to the holders of other outstanding interests); (E) Provides under the terms of the interest that the amounts payable by the covered fund with respect to the interest could be reduced based on losses arising from the underlying assets of the covered fund, such as allocation of losses, write-downs or charge-offs of the outstanding principal balance, or reductions in the amount of interest due and payable on the interest; (F) Receives income on a pass-through basis from the covered fund, or has a rate of return that is determined by reference to the performance of the underlying assets of the covered fund; or (G) Any synthetic right to have, receive, or be allocated any of the rights in paragraphs (d)(6)(i)(A) through (F) of this section. (ii) Ownership interest does not include: (A) Restricted profit interest, which is an interest held by an entity (or an employee or former employee thereof) in a covered fund for which the entity (or employee thereof) serves as investment manager, investment adviser, commodity trading advisor, or other service provider, so long as: ( 1 ) The sole purpose and effect of the interest is to allow the entity (or employee or former employee thereof) to share in the profits of the covered fund as performance compensation for the investment management, investment advisory, commodity trading advisory, or other services provided to the covered fund by the entity (or employee or former employee thereof), provided that the entity (or employee or former employee thereof) may be obligated under the terms of such interest to return profits previously received; ( 2 ) All such profit, once allocated, is distributed to the entity (or employee or former employee thereof) promptly after being earned or, if not so distributed, is retained by the covered fund for the sole purpose of establishing a reserve amount to satisfy contractual obligations with respect to subsequent losses of the covered fund and such undistributed profit of the entity (or employee or former employee thereof) does not share in the subsequent investment gains of the covered fund; ( 3 ) Any amounts invested in the covered fund, including any amounts paid by the entity in connection with obtaining the restricted profit interest, are within the limits of § 75.12 of this subpart; and ( 4 ) The interest is not transferable by the entity (or employee or former employee thereof) except to an affiliate thereof (or an employee of the banking entity or affiliate), to immediate family members, or through the intestacy, of the employee or former employee, or in connection with a sale of the business that gave rise to the restricted profit interest by the entity (or employee or former employee thereof) to an unaffiliated party that provides investment management, investment advisory, commodity trading advisory, or other services to the fund. (B) Any senior loan or senior debt interest that has the following characteristics: ( 1 ) Under the terms of the interest the holders of such interest do not have the right to receive a share of the income, gains, or profits of the covered fund, but are entitled to receive only: ( i ) Interest at a stated interest rate, as well as commitment fees or other fees, which are not determined by reference to the performance of the underlying assets of the covered fund; and ( ii ) Repayment of a fixed principal amount, on or before a maturity date, in a contractually-determined manner (which may include prepayment premiums intended solely to reflect, and compensate holders of the interest for, forgone income resulting from an early prepayment); ( 2 ) The entitlement to payments under the terms of the interest are absolute and could not be reduced based on losses arising from the underlying assets of the covered fund, such as allocation of losses, write-downs or charge-offs of the outstanding principal balance, or reductions in the amount of interest due and payable on the interest; and ( 3 ) The holders of the interest are not entitled to receive the underlying assets of the covered fund after all other interests have been redeemed or paid in full (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event). (7) Prime brokerage transaction means any transaction that would be a covered transaction, as defined in section 23A(b)(7) of the Federal Reserve Act (12 U.S.C. 371c(b)(7)), that is provided in connection with custody, clearance and settlement, securities borrowing or lending services, trade execution, financing, or data, operational, and administrative support. (8) Resident of the United States means a person that is a “U.S. person” as defined in rule 902(k) of the SEC's Regulation S (17 CFR 230.902(k)). (9) Sponsor means, with respect to a covered fund: (i) To serve as a general partner, managing member, or trustee of a covered fund, or to serve as a commodity pool operator with respect to a covered fund as defined in (b)(1)(ii) of this section; (ii) In any manner to select or to control (or to have employees, officers, or directors, or agents who constitute) a majority of the directors, trustees, or management of a covered fund; or (iii) To share with a covered fund, for corporate, marketing, promotional, or other purposes, the same name or a variation of the same name, except as permitted under § 75.11(a)(6). (10) Trustee. (i) For purposes of paragraph (d)(9) of this section and § 75.11, a trustee does not include: (A) A trustee that does not exercise investment discretion with respect to a covered fund, including a trustee that is subject to the direction of an unaffiliated named fiduciary who is not a trustee pursuant to section 403(a)(1) of the Employee's Retirement Income Security Act (29 U.S.C. 1103(a)(1)); or (B) A trustee that is subject to fiduciary standards imposed under foreign law that are substantially equivalent to those described in paragraph (d)(10)(i)(A) of this section; (ii) Any entity that directs a person described in paragraph (d)(10)(i) of this section, or that possesses authority and discretion to manage and control the investment decisions of a covered fund for which such person serves as trustee, shall be considered to be a trustee of such covered fund. (11) Riskless principal transaction. Riskless principal transaction means a transaction in which a banking entity, after receiving an order from a customer to buy (or sell) a security, purchases (or sells) the security in the secondary market for its own account to offset a contemporaneous sale to (or purchase from) the customer." 17:17:2.0.1.1.10.3.1.2,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,C,Subpart C—Covered Fund Activities and Investments,,"§ 75.11 Permitted organizing and offering, underwriting, and market making with respect to a covered fund.",CFTC,,,"[79 FR 6048, Jan. 31, 2014, as amended at 84 FR 35022, July 22, 2019; 84 FR 62208, Nov. 14, 2019]","(a) Organizing and offering a covered fund in general. Notwithstanding § 75.10(a), a banking entity is not prohibited from acquiring or retaining an ownership interest in, or acting as sponsor to, a covered fund in connection with, directly or indirectly, organizing and offering a covered fund, including serving as a general partner, managing member, trustee, or commodity pool operator of the covered fund and in any manner selecting or controlling (or having employees, officers, directors, or agents who constitute) a majority of the directors, trustees, or management of the covered fund, including any necessary expenses for the foregoing, only if: (1) The banking entity (or an affiliate thereof) provides bona fide trust, fiduciary, investment advisory, or commodity trading advisory services; (2) The covered fund is organized and offered only in connection with the provision of bona fide trust, fiduciary, investment advisory, or commodity trading advisory services and only to persons that are customers of such services of the banking entity (or an affiliate thereof), pursuant to a written plan or similar documentation outlining how the banking entity or such affiliate intends to provide advisory or similar services to its customers through organizing and offering such fund; (3) The banking entity and its affiliates do not acquire or retain an ownership interest in the covered fund except as permitted under § 75.12; (4) The banking entity and its affiliates comply with the requirements of § 75.14; (5) The banking entity and its affiliates do not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the covered fund or of any covered fund in which such covered fund invests; (6) The covered fund, for corporate, marketing, promotional, or other purposes: (i) Does not share the same name or a variation of the same name with the banking entity (or an affiliate thereof), except that a covered fund may share the same name or a variation of the same name with a banking entity that is an investment adviser to the covered fund if: (A) The investment adviser is not an insured depository institution, a company that controls an insured depository institution, or a company that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978 (12 U.S.C. 3106); and (B) The investment adviser does not share the same name or a variation of the same name as an insured depository institution, a company that controls an insured depository institution, or a company that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978 (12 U.S.C. 3106); and (ii) Does not use the word “bank” in its name; (7) No director or employee of the banking entity (or an affiliate thereof) takes or retains an ownership interest in the covered fund, except for any director or employee of the banking entity or such affiliate who is directly engaged in providing investment advisory, commodity trading advisory, or other services to the covered fund at the time the director or employee takes the ownership interest; and (8) The banking entity: (i) Clearly and conspicuously discloses, in writing, to any prospective and actual investor in the covered fund (such as through disclosure in the covered fund's offering documents): (A) That “any losses in [such covered fund] will be borne solely by investors in [the covered fund] and not by [the banking entity] or its affiliates; therefore, [the banking entity's] losses in [such covered fund] will be limited to losses attributable to the ownership interests in the covered fund held by [the banking entity] and any affiliate in its capacity as investor in the [covered fund] or as beneficiary of a restricted profit interest held by [the banking entity] or any affiliate”; (B) That such investor should read the fund offering documents before investing in the covered fund; (C) That the “ownership interests in the covered fund are not insured by the FDIC, and are not deposits, obligations of, or endorsed or guaranteed in any way, by any banking entity” (unless that happens to be the case); and (D) The role of the banking entity and its affiliates and employees in sponsoring or providing any services to the covered fund; and (ii) Complies with any additional rules of the appropriate Federal banking agencies, the SEC, or the CFTC, as provided in section 13(b)(2) of the BHC Act, designed to ensure that losses in such covered fund are borne solely by investors in the covered fund and not by the covered banking entity and its affiliates. (b) Organizing and offering an issuing entity of asset-backed securities. (1) Notwithstanding § 75.10(a), a banking entity is not prohibited from acquiring or retaining an ownership interest in, or acting as sponsor to, a covered fund that is an issuing entity of asset-backed securities in connection with, directly or indirectly, organizing and offering that issuing entity, so long as the banking entity and its affiliates comply with all of the requirements of paragraphs (a)(3) through (a)(8) of this section. (2) For purposes of paragraph (b) of this section, organizing and offering a covered fund that is an issuing entity of asset-backed securities means acting as the securitizer, as that term is used in section 15G(a)(3) of the Exchange Act (15 U.S.C. 78 o -11(a)(3)) of the issuing entity, or acquiring or retaining an ownership interest in the issuing entity as required by section 15G of that Act (15 U.S.C. 78 o -11) and the implementing regulations issued thereunder. (c) Underwriting and market making in ownership interests of a covered fund. The prohibition contained in § 75.10(a) of this subpart does not apply to a banking entity's underwriting activities or market making-related activities involving a covered fund so long as: (1) Those activities are conducted in accordance with the requirements of § 75.4(a) or (b) of subpart B, respectively; and (2) With respect to any banking entity (or any affiliate thereof) that: Acts as a sponsor, investment adviser or commodity trading advisor to a particular covered fund or otherwise acquires and retains an ownership interest in such covered fund in reliance on paragraph (a) of this section; or acquires and retains an ownership interest in such covered fund and is either a securitizer, as that term is used in section 15G(a)(3) of the Exchange Act (15 U.S.C. 78 o -11(a)(3)), or is acquiring and retaining an ownership interest in such covered fund in compliance with section 15G of that Act (15 U.S.C. 78 o -11) and the implementing regulations issued thereunder each as permitted by paragraph (b) of this section, then in each such case any ownership interests acquired or retained by the banking entity and its affiliates in connection with underwriting and market making related activities for that particular covered fund are included in the calculation of ownership interests permitted to be held by the banking entity and its affiliates under the limitations of § 75.12(a)(2)(ii); § 75.12(a)(2)(iii), and § 75.12(d) of this subpart." 17:17:2.0.1.1.10.3.1.3,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,C,Subpart C—Covered Fund Activities and Investments,,§ 75.12 Permitted investment in a covered fund.,CFTC,,,"[79 FR 6048, Jan. 31, 2014, as amended at 85 FR 46520, July 31, 2020]","(a) Authority and limitations on permitted investments in covered funds. (1) Notwithstanding the prohibition contained in § 75.10(a), a banking entity may acquire and retain an ownership interest in a covered fund that the banking entity or an affiliate thereof organizes and offers pursuant to § 75.11, for the purposes of: (i) Establishment. Establishing the fund and providing the fund with sufficient initial equity for investment to permit the fund to attract unaffiliated investors, subject to the limits contained in paragraphs (a)(2)(i) and (a)(2)(iii) of this section; or (ii) De minimis investment. Making and retaining an investment in the covered fund subject to the limits contained in paragraphs (a)(2)(ii) and (a)(2)(iii) of this section. (2) Investment limits —(i) Seeding period. With respect to an investment in any covered fund made or held pursuant to paragraph (a)(1)(i) of this section, the banking entity and its affiliates: (A) Must actively seek unaffiliated investors to reduce, through redemption, sale, dilution, or other methods, the aggregate amount of all ownership interests of the banking entity in the covered fund to the amount permitted in paragraph (a)(2)(i)(B) of this section; and (B) Must, no later than 1 year after the date of establishment of the fund (or such longer period as may be provided by the Board pursuant to paragraph (e) of this section), conform its ownership interest in the covered fund to the limits in paragraph (a)(2)(ii) of this section; (ii) Per-fund limits. (A) Except as provided in paragraph (a)(2)(ii)(B) of this section, an investment by a banking entity and its affiliates in any covered fund made or held pursuant to paragraph (a)(1)(ii) of this section may not exceed 3 percent of the total number or value of the outstanding ownership interests of the fund. (B) An investment by a banking entity and its affiliates in a covered fund that is an issuing entity of asset-backed securities may not exceed 3 percent of the total fair market value of the ownership interests of the fund measured in accordance with paragraph (b)(3) of this section, unless a greater percentage is retained by the banking entity and its affiliates in compliance with the requirements of section 15G of the Exchange Act (15 U.S.C. 78 o -11) and the implementing regulations issued thereunder, in which case the investment by the banking entity and its affiliates in the covered fund may not exceed the amount, number, or value of ownership interests of the fund required under section 15G of the Exchange Act and the implementing regulations issued thereunder. (iii) Aggregate limit. The aggregate value of all ownership interests of the banking entity and its affiliates in all covered funds acquired or retained under this section may not exceed 3 percent of the tier 1 capital of the banking entity, as provided under paragraph (c) of this section, and shall be calculated as of the last day of each calendar quarter. (iv) Date of establishment. For purposes of this section, the date of establishment of a covered fund shall be: (A) In general. The date on which the investment adviser or similar entity to the covered fund begins making investments pursuant to the written investment strategy for the fund; (B) Issuing entities of asset-backed securities. In the case of an issuing entity of asset-backed securities, the date on which the assets are initially transferred into the issuing entity of asset-backed securities. (b) Rules of construction —(1) Attribution of ownership interests to a covered banking entity. (i) For purposes of paragraph (a)(2) of this section, the amount and value of a banking entity's permitted investment in any single covered fund shall include any ownership interest held under § 75.12 directly by the banking entity, including any affiliate of the banking entity. (ii) Treatment of registered investment companies, SEC-regulated business development companies, and foreign public funds. For purposes of paragraph (b)(1)(i) of this section, a registered investment company, SEC-regulated business development companies, or foreign public fund as described in § 75.10(c)(1) will not be considered to be an affiliate of the banking entity so long as: (A) The banking entity, together with its affiliates, does not own, control, or hold with the power to vote 25 percent or more of the voting shares of the company or fund; and (B) The banking entity, or an affiliate of the banking entity, provides investment advisory, commodity trading advisory, administrative, and other services to the company or fund in compliance with the limitations under applicable regulation, order, or other authority. (iii) Covered funds. For purposes of paragraph (b)(1)(i) of this section, a covered fund will not be considered to be an affiliate of a banking entity so long as the covered fund is held in compliance with the requirements of this subpart. (iv) Treatment of employee and director investments financed by the banking entity. For purposes of paragraph (b)(1)(i) of this section, an investment by a director or employee of a banking entity who acquires an ownership interest in his or her personal capacity in a covered fund sponsored by the banking entity will be attributed to the banking entity if the banking entity, directly or indirectly, extends financing for the purpose of enabling the director or employee to acquire the ownership interest in the fund and the financing is used to acquire such ownership interest in the covered fund. (2) Calculation of permitted ownership interests in a single covered fund. Except as provided in paragraphs (b)(3) or (4) of this section, for purposes of determining whether an investment in a single covered fund complies with the restrictions on ownership interests under paragraphs (a)(2)(i)(B) and (ii)(A) of this section: (i) The aggregate number of the outstanding ownership interests held by the banking entity shall be the total number of ownership interests held under this section by the banking entity in a covered fund divided by the total number of ownership interests held by all entities in that covered fund, as of the last day of each calendar quarter (both measured without regard to committed funds not yet called for investment); (ii) The aggregate value of the outstanding ownership interests held by the banking entity shall be the aggregate fair market value of all investments in and capital contributions made to the covered fund by the banking entity, divided by the value of all investments in and capital contributions made to that covered fund by all entities, as of the last day of each calendar quarter (all measured without regard to committed funds not yet called for investment). If fair market value cannot be determined, then the value shall be the historical cost basis of all investments in and contributions made by the banking entity to the covered fund; (iii) For purposes of the calculation under paragraph (b)(2)(ii) of this section, once a valuation methodology is chosen, the banking entity must calculate the value of its investment and the investments of all others in the covered fund in the same manner and according to the same standards. (3) Issuing entities of asset-backed securities. In the case of an ownership interest in an issuing entity of asset-backed securities, for purposes of determining whether an investment in a single covered fund complies with the restrictions on ownership interests under paragraphs (a)(2)(i)(B) and (a)(2)(ii)(B) of this section: (i) For securitizations subject to the requirements of section 15G of the Exchange Act (15 U.S.C. 78o-11), the calculations shall be made as of the date and according to the valuation methodology applicable pursuant to the requirements of section 15G of the Exchange Act (15 U.S.C. 78o-11) and the implementing regulations issued thereunder; or (ii) For securitization transactions completed prior to the compliance date of such implementing regulations (or as to which such implementing regulations do not apply), the calculations shall be made as of the date of establishment as defined in paragraph (a)(2)(iv)(B) of this section or such earlier date on which the transferred assets have been valued for purposes of transfer to the covered fund, and thereafter only upon the date on which additional securities of the issuing entity of asset-backed securities are priced for purposes of the sales of ownership interests to unaffiliated investors. (iii) For securitization transactions completed prior to the compliance date of such implementing regulations (or as to which such implementing regulations do not apply), the aggregate value of the outstanding ownership interests in the covered fund shall be the fair market value of the assets transferred to the issuing entity of the securitization and any other assets otherwise held by the issuing entity at such time, determined in a manner that is consistent with its determination of the fair market value of those assets for financial statement purposes. (iv) For purposes of the calculation under paragraph (b)(3)(iii) of this section, the valuation methodology used to calculate the fair market value of the ownership interests must be the same for both the ownership interests held by a banking entity and the ownership interests held by all others in the covered fund in the same manner and according to the same standards. (4) Multi-tier fund investments —(i) Master-feeder fund investments. If the principal investment strategy of a covered fund (the “feeder fund”) is to invest substantially all of its assets in another single covered fund (the “master fund”), then for purposes of the investment limitations in paragraphs (a)(2)(i)(B) and (a)(2)(ii) of this section, the banking entity's permitted investment in such funds shall be measured only by reference to the value of the master fund. The banking entity's permitted investment in the master fund shall include any investment by the banking entity in the master fund, as well as the banking entity's pro-rata share of any ownership interest in the master fund that is held through the feeder fund; and (ii) Fund-of-funds investments. If a banking entity organizes and offers a covered fund pursuant to § 75.11 for the purpose of investing in other covered funds (a “fund of funds”) and that fund of funds itself invests in another covered fund that the banking entity is permitted to own, then the banking entity's permitted investment in that other fund shall include any investment by the banking entity in that other fund, as well as the banking entity's pro-rata share of any ownership interest in the fund that is held through the fund of funds. The investment of the banking entity may not represent more than 3 percent of the amount or value of any single covered fund. (5) Parallel Investments and Co-Investments. (i) A banking entity shall not be required to include in the calculation of the investment limits under paragraph (a)(2) of this section any investment the banking entity makes alongside a covered fund as long as the investment is made in compliance with applicable laws and regulations, including applicable safety and soundness standards. (ii) A banking entity shall not be restricted under this section in the amount of any investment the banking entity makes alongside a covered fund as long as the investment is made in compliance with applicable laws and regulations, including applicable safety and soundness standards. (c) Aggregate permitted investments in all covered funds. (1)(i) For purposes of paragraph (a)(2)(iii) of this section, the aggregate value of all ownership interests held by a banking entity shall be the sum of all amounts paid or contributed by the banking entity in connection with acquiring or retaining an ownership interest in covered funds (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 75.10(d)(6)(ii)), on a historical cost basis; (ii) Treatment of employee and director restricted profit interests financed by the banking entity. For purposes of paragraph (c)(1)(i) of this section, an investment by a director or employee of a banking entity who acquires a restricted profit interest in his or her personal capacity in a covered fund sponsored by the banking entity will be attributed to the banking entity if the banking entity, directly or indirectly, extends financing for the purpose of enabling the director or employee to acquire the restricted profit interest in the fund and the financing is used to acquire such ownership interest in the covered fund. (2) Calculation of tier 1 capital. For purposes of paragraph (a)(2)(iii) of this section: (i) Entities that are required to hold and report tier 1 capital. If a banking entity is required to calculate and report tier 1 capital, the banking entity's tier 1 capital shall be equal to the amount of tier 1 capital of the banking entity as of the last day of the most recent calendar quarter, as reported to its primary financial regulatory agency; and (ii) If a banking entity is not required to calculate and report tier 1 capital, the banking entity's tier 1 capital shall be determined to be equal to: (A) In the case of a banking entity that is controlled, directly or indirectly, by a depository institution that calculates and reports tier 1 capital, be equal to the amount of tier 1 capital reported by such controlling depository institution in the manner described in paragraph (c)(2)(i) of this section; (B) In the case of a banking entity that is not controlled, directly or indirectly, by a depository institution that calculates and reports tier 1 capital: ( 1 ) Bank holding company subsidiaries. If the banking entity is a subsidiary of a bank holding company or company that is treated as a bank holding company, be equal to the amount of tier 1 capital reported by the top-tier affiliate of such covered banking entity that calculates and reports tier 1 capital in the manner described in paragraph (c)(2)(i) of this section; and ( 2 ) Other holding companies and any subsidiary or affiliate thereof. If the banking entity is not a subsidiary of a bank holding company or a company that is treated as a bank holding company, be equal to the total amount of shareholders' equity of the top-tier affiliate within such organization as of the last day of the most recent calendar quarter that has ended, as determined under applicable accounting standards. (iii) Treatment of foreign banking entities —(A) Foreign banking entities. Except as provided in paragraph (c)(2)(iii)(B) of this section, with respect to a banking entity that is not itself, and is not controlled directly or indirectly by, a banking entity that is located or organized under the laws of the United States or of any State, the tier 1 capital of the banking entity shall be the consolidated tier 1 capital of the entity as calculated under applicable home country standards. (B) U.S. affiliates of foreign banking entities. With respect to a banking entity that is located or organized under the laws of the United States or of any State and is controlled by a foreign banking entity identified under paragraph (c)(2)(iii)(A) of this section, the banking entity's tier 1 capital shall be as calculated under paragraphs (c)(2)(i) or (ii) of this section. (d) Capital treatment for a permitted investment in a covered fund. For purposes of calculating compliance with the applicable regulatory capital requirements, a banking entity shall deduct from the banking entity's tier 1 capital (as determined under paragraph (c)(2) of this section) the greater of: (1)(i) The sum of all amounts paid or contributed by the banking entity in connection with acquiring or retaining an ownership interest (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 75.10(d)(6)(ii) of subpart C of this part), on a historical cost basis, plus any earnings received; and (ii) The fair market value of the banking entity's ownership interests in the covered fund as determined under paragraph (b)(2)(ii) or (b)(3) of this section (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 75.10(d)(6)(ii) of subpart C of this part), if the banking entity accounts for the profits (or losses) of the fund investment in its financial statements. (2) Treatment of employee and director restricted profit interests financed by the banking entity. For purposes of paragraph (d)(1) of this section, an investment by a director or employee of a banking entity who acquires a restricted profit interest in his or her personal capacity in a covered fund sponsored by the banking entity will be attributed to the banking entity if the banking entity, directly or indirectly, extends financing for the purpose of enabling the director or employee to acquire the restricted profit interest in the fund and the financing is used to acquire such ownership interest in the covered fund. (e) Extension of time to divest an ownership interest —(1) Extension period. Upon application by a banking entity, the Board may extend the period under paragraph (a)(2)(i) of this section for up to 2 additional years if the Board finds that an extension would be consistent with safety and soundness and not detrimental to the public interest. (2) Application requirements. An application for extension must: (i) Be submitted to the Board at least 90 days prior to the expiration of the applicable time period; (ii) Provide the reasons for application, including information that addresses the factors in paragraph (e)(3) of this section; and (iii) Explain the banking entity's plan for reducing the permitted investment in a covered fund through redemption, sale, dilution or other methods as required in paragraph (a)(2) of this section. (3) Factors governing the Board determinations. In reviewing any application under paragraph (e)(1) of this section, the Board may consider all the facts and circumstances related to the permitted investment in a covered fund, including: (i) Whether the investment would result, directly or indirectly, in a material exposure by the banking entity to high-risk assets or high-risk trading strategies; (ii) The contractual terms governing the banking entity's interest in the covered fund; (iii) The date on which the covered fund is expected to have attracted sufficient investments from investors unaffiliated with the banking entity to enable the banking entity to comply with the limitations in paragraph (a)(2)(i) of this section; (iv) The total exposure of the covered banking entity to the investment and the risks that disposing of, or maintaining, the investment in the covered fund may pose to the banking entity and the financial stability of the United States; (v) The cost to the banking entity of divesting or disposing of the investment within the applicable period; (vi) Whether the investment or the divestiture or conformance of the investment would involve or result in a material conflict of interest between the banking entity and unaffiliated parties, including clients, customers, or counterparties to which it owes a duty; (vii) The banking entity's prior efforts to reduce through redemption, sale, dilution, or other methods its ownership interests in the covered fund, including activities related to the marketing of interests in such covered fund; (viii) Market conditions; and (ix) Any other factor that the Board believes appropriate. (4) Authority to impose restrictions on activities or investment during any extension period. The Board may impose such conditions on any extension approved under paragraph (e)(1) of this section as the Board determines are necessary or appropriate to protect the safety and soundness of the banking entity or the financial stability of the United States, address material conflicts of interest or other unsound banking practices, or otherwise further the purposes of section 13 of the BHC Act and this part. (5) Consultation. In the case of a banking entity that is primarily regulated by another Federal banking agency, the SEC, or the CFTC, the Board will consult with such agency prior to acting on an application by the banking entity for an extension under paragraph (e)(1) of this section." 17:17:2.0.1.1.10.3.1.4,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,C,Subpart C—Covered Fund Activities and Investments,,§ 75.13 Other permitted covered fund activities and investments.,CFTC,,,"[79 FR 6048, Jan. 31, 2014, as amended at 84 FR 62208, Nov. 14, 2019; 85 FR 46521, July 31, 2020]","(a) Permitted risk-mitigating hedging activities. (1) The prohibition contained in § 75.10(a) of this subpart does not apply with respect to an ownership interest in a covered fund acquired or retained by a banking entity that is designed to reduce or otherwise significantly mitigate the specific, identifiable risks to the banking entity in connection with: (i) A compensation arrangement with an employee of the banking entity or an affiliate thereof that directly provides investment advisory, commodity trading advisory or other services to the covered fund; or (ii) A position taken by the banking entity when acting as intermediary on behalf of a customer that is not itself a banking entity to facilitate the exposure by the customer to the profits and losses of the covered fund. (2) The risk-mitigating hedging activities of a banking entity are permitted under this paragraph (a) only if: (i) The banking entity has established and implements, maintains and enforces an internal compliance program in accordance with subpart D of this part that is reasonably designed to ensure the banking entity's compliance with the requirements of this section, including: (A) Reasonably designed written policies and procedures; and (B) Internal controls and ongoing monitoring, management, and authorization procedures, including relevant escalation procedures; and (ii) The acquisition or retention of the ownership interest: (A) Is made in accordance with the written policies, procedures, and internal controls required under this section; (B) At the inception of the hedge, is designed to reduce or otherwise significantly mitigate one or more specific, identifiable risks arising: ( 1 ) Out of a transaction conducted solely to accommodate a specific customer request with respect to the covered fund; or ( 2 ) In connection with the compensation arrangement with the employee that directly provides investment advisory, commodity trading advisory, or other services to the covered fund; (C) Does not give rise, at the inception of the hedge, to any significant new or additional risk that is not itself hedged contemporaneously in accordance with this section; and (D) Is subject to continuing review, monitoring and management by the banking entity. (iii) With respect to risk-mitigating hedging activity conducted pursuant to paragraph (a)(1)(i) of this section, the compensation arrangement relates solely to the covered fund in which the banking entity or any affiliate has acquired an ownership interest pursuant to paragraph (a)(1)(i) and such compensation arrangement provides that any losses incurred by the banking entity on such ownership interest will be offset by corresponding decreases in amounts payable under such compensation arrangement. (b) Certain permitted covered fund activities and investments outside of the United States. (1) The prohibition contained in § 75.10(a) does not apply to the acquisition or retention of any ownership interest in, or the sponsorship of, a covered fund by a banking entity only if: (i) The banking entity is not organized or directly or indirectly controlled by a banking entity that is organized under the laws of the United States or of one or more States; (ii) The activity or investment by the banking entity is pursuant to paragraph (9) or (13) of section 4(c) of the BHC Act; (iii) No ownership interest in the covered fund is offered for sale or sold to a resident of the United States; and (iv) The activity or investment occurs solely outside of the United States. (2) An activity or investment by the banking entity is pursuant to paragraph (9) or (13) of section 4(c) of the BHC Act for purposes of paragraph (b)(1)(ii) of this section only if: (i) The activity or investment is conducted in accordance with the requirements of this section; and (ii)(A) With respect to a banking entity that is a foreign banking organization, the banking entity meets the qualifying foreign banking organization requirements of § 211.23(a), (c) or (e) of the Board's Regulation K (12 CFR 211.23(a), (c) or (e)), as applicable; or (B) With respect to a banking entity that is not a foreign banking organization, the banking entity is not organized under the laws of the United States or of one or more States and the banking entity, on a fully-consolidated basis, meets at least two of the following requirements: ( 1 ) Total assets of the banking entity held outside of the United States exceed total assets of the banking entity held in the United States; ( 2 ) Total revenues derived from the business of the banking entity outside of the United States exceed total revenues derived from the business of the banking entity in the United States; or ( 3 ) Total net income derived from the business of the banking entity outside of the United States exceeds total net income derived from the business of the banking entity in the United States. (3) An ownership interest in a covered fund is not offered for sale or sold to a resident of the United States for purposes of paragraph (b)(1)(iii) of this section only if it is not sold and has not been sold pursuant to an offering that targets residents of the United States in which the banking entity or any affiliate of the banking entity participates. If the banking entity or an affiliate sponsors or serves, directly or indirectly, as the investment manager, investment adviser, commodity pool operator or commodity trading advisor to a covered fund, then the banking entity or affiliate will be deemed for purposes of this paragraph (b)(3) to participate in any offer or sale by the covered fund of ownership interests in the covered fund. (4) An activity or investment occurs solely outside of the United States for purposes of paragraph (b)(1)(iv) of this section only if: (i) The banking entity acting as sponsor, or engaging as principal in the acquisition or retention of an ownership interest in the covered fund, is not itself, and is not controlled directly or indirectly by, a banking entity that is located in the United States or organized under the laws of the United States or of any State; (ii) The banking entity (including relevant personnel) that makes the decision to acquire or retain the ownership interest or act as sponsor to the covered fund is not located in the United States or organized under the laws of the United States or of any State; and (iii) The investment or sponsorship, including any transaction arising from risk-mitigating hedging related to an ownership interest, is not accounted for as principal directly or indirectly on a consolidated basis by any branch or affiliate that is located in the United States or organized under the laws of the United States or of any State. (5) For purposes of this section, a U.S. branch, agency, or subsidiary of a foreign bank, or any subsidiary thereof, is located in the United States; however, a foreign bank of which that branch, agency, or subsidiary is a part is not considered to be located in the United States solely by virtue of operation of the U.S. branch, agency, or subsidiary. (c) Permitted covered fund interests and activities by a regulated insurance company. The prohibition contained in § 75.10(a) of this subpart does not apply to the acquisition or retention by an insurance company, or an affiliate thereof, of any ownership interest in, or the sponsorship of, a covered fund only if: (1) The insurance company or its affiliate acquires and retains the ownership interest solely for the general account of the insurance company or for one or more separate accounts established by the insurance company; (2) The acquisition and retention of the ownership interest is conducted in compliance with, and subject to, the insurance company investment laws and regulations of the State or jurisdiction in which such insurance company is domiciled; and (3) The appropriate Federal banking agencies, after consultation with the Financial Stability Oversight Council and the relevant insurance commissioners of the States and foreign jurisdictions, as appropriate, have not jointly determined, after notice and comment, that a particular law or regulation described in paragraph (c)(2) of this section is insufficient to protect the safety and soundness of the banking entity, or the financial stability of the United States. (d) Permitted covered fund activities and investments of qualifying foreign excluded funds. (1) The prohibition contained in § 75.10(a) does not apply to a qualifying foreign excluded fund. (2) For purposes of this paragraph (d), a qualifying foreign excluded fund means a banking entity that: (i) Is organized or established outside the United States, and the ownership interests of which are offered and sold solely outside the United States; (ii)(A) Would be a covered fund if the entity were organized or established in the United States, or (B) Is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in financial instruments for resale or other disposition or otherwise trading in financial instruments; (iii) Would not otherwise be a banking entity except by virtue of the acquisition or retention of an ownership interest in, sponsorship of, or relationship with the entity, by another banking entity that meets the following: (A) The banking entity is not organized, or directly or indirectly controlled by a banking entity that is organized, under the laws of the United States or of any State; and (B) The banking entity's acquisition of an ownership interest in or sponsorship of the fund by the foreign banking entity meets the requirements for permitted covered fund activities and investments solely outside the United States, as provided in § 75.13(b); (iv) Is established and operated as part of a bona fide asset management business; and (v) Is not operated in a manner that enables the banking entity that sponsors or controls the qualifying foreign excluded fund, or any of its affiliates, to evade the requirements of section 13 of the BHC Act or this part." 17:17:2.0.1.1.10.3.1.5,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,C,Subpart C—Covered Fund Activities and Investments,,§ 75.14 Limitations on relationships with a covered fund.,CFTC,,,"[79 FR 6048, Jan. 31, 2014, as amended at 84 FR 62209, Nov. 14, 2019; 85 FR 46522, July 31, 2020]","(a) Relationships with a covered fund. (1) Except as provided for in paragraph (a)(2) of this section, no banking entity that serves, directly or indirectly, as the investment manager, investment adviser, commodity trading advisor, or sponsor to a covered fund, that organizes and offers a covered fund pursuant to § 75.11, or that continues to hold an ownership interest in accordance with § 75.11(b), and no affiliate of such entity, may enter into a transaction with the covered fund, or with any other covered fund that is controlled by such covered fund, that would be a covered transaction as defined in section 23A of the Federal Reserve Act (12 U.S.C. 371c(b)(7)), as if such banking entity and the affiliate thereof were a member bank and the covered fund were an affiliate thereof. (2) Notwithstanding paragraph (a)(1) of this section, a banking entity may: (i) Acquire and retain any ownership interest in a covered fund in accordance with the requirements of § 75.11, § 75.12, or § 75.13; (ii) Enter into any prime brokerage transaction with any covered fund in which a covered fund managed, sponsored, or advised by such banking entity (or an affiliate thereof) has taken an ownership interest, if: (A) The banking entity is in compliance with each of the limitations set forth in § 75.11 with respect to a covered fund organized and offered by such banking entity (or an affiliate thereof); (B) The chief executive officer (or equivalent officer) of the banking entity certifies in writing annually no later than March 31 to the CFTC (with a duty to update the certification if the information in the certification materially changes) that the banking entity does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the covered fund or of any covered fund in which such covered fund invests; and (C) The Board has not determined that such transaction is inconsistent with the safe and sound operation and condition of the banking entity; and (iii) Enter into a transaction with a covered fund that would be an exempt covered transaction under 12 U.S.C. 371c(d) or § 223.42 of the Board's Regulation W (12 CFR 223.42) subject to the limitations specified under 12 U.S.C. 371c(d) or § 223.42 of the Board's Regulation W (12 CFR 223.42), as applicable, (iv) Enter into a riskless principal transaction with a covered fund; and (v) Extend credit to or purchase assets from a covered fund, provided: (A) Each extension of credit or purchase of assets is in the ordinary course of business in connection with payment transactions; settlement services; or futures, derivatives, and securities clearing; (B) Each extension of credit is repaid, sold, or terminated by the end of five business days; and (C) The banking entity making each extension of credit meets the requirements of § 223.42(l)(1)(i) and (ii) of the Board's Regulation W (12 CFR 223.42(l)(1)(i) and(ii)), as if the extension of credit was an intraday extension of credit, regardless of the duration of the extension of credit. (3) Any transaction or activity permitted under paragraphs (a)(2)(iii), (iv) or (v) must comply with the limitations in § 75.15. (b) Restrictions on transactions with covered funds. A banking entity that serves, directly or indirectly, as the investment manager, investment adviser, commodity trading advisor, or sponsor to a covered fund, or that organizes and offers a covered fund pursuant to § 75.11, or that continues to hold an ownership interest in accordance with § 75.11(b), shall be subject to section 23B of the Federal Reserve Act (12 U.S.C. 371c-1), as if such banking entity were a member bank and such covered fund were an affiliate thereof. (c) Restrictions on other permitted transactions. Any transaction permitted under paragraphs (a)(2)(ii), (iii), or (iv) of this section shall be subject to section 23B of the Federal Reserve Act (12 U.S.C. 371c-1) as if the counterparty were an affiliate of the banking entity under section 23B." 17:17:2.0.1.1.10.3.1.6,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,C,Subpart C—Covered Fund Activities and Investments,,§ 75.15 Other limitations on permitted covered fund activities.,CFTC,,,,"(a) No transaction, class of transactions, or activity may be deemed permissible under §§ 75.11 through 75.13 if the transaction, class of transactions, or activity would: (1) Involve or result in a material conflict of interest between the banking entity and its clients, customers, or counterparties; (2) Result, directly or indirectly, in a material exposure by the banking entity to a high-risk asset or a high-risk trading strategy; or (3) Pose a threat to the safety and soundness of the banking entity or to the financial stability of the United States. (b) Definition of material conflict of interest. (1) For purposes of this section, a material conflict of interest between a banking entity and its clients, customers, or counterparties exists if the banking entity engages in any transaction, class of transactions, or activity that would involve or result in the banking entity's interests being materially adverse to the interests of its client, customer, or counterparty with respect to such transaction, class of transactions, or activity, and the banking entity has not taken at least one of the actions in paragraph (b)(2) of this section. (2) Prior to effecting the specific transaction or class or type of transactions, or engaging in the specific activity, the banking entity: (i) Timely and effective disclosure. (A) Has made clear, timely, and effective disclosure of the conflict of interest, together with other necessary information, in reasonable detail and in a manner sufficient to permit a reasonable client, customer, or counterparty to meaningfully understand the conflict of interest; and (B) Such disclosure is made in a manner that provides the client, customer, or counterparty the opportunity to negate, or substantially mitigate, any materially adverse effect on the client, customer, or counterparty created by the conflict of interest; or (ii) Information barriers. Has established, maintained, and enforced information barriers that are memorialized in written policies and procedures, such as physical separation of personnel, or functions, or limitations on types of activity, that are reasonably designed, taking into consideration the nature of the banking entity's business, to prevent the conflict of interest from involving or resulting in a materially adverse effect on a client, customer, or counterparty. A banking entity may not rely on such information barriers if, in the case of any specific transaction, class or type of transactions or activity, the banking entity knows or should reasonably know that, notwithstanding the banking entity's establishment of information barriers, the conflict of interest may involve or result in a materially adverse effect on a client, customer, or counterparty. (c) Definition of high-risk asset and high-risk trading strategy. For purposes of this section: (1) High-risk asset means an asset or group of related assets that would, if held by a banking entity, significantly increase the likelihood that the banking entity would incur a substantial financial loss or would pose a threat to the financial stability of the United States. (2) High-risk trading strategy means a trading strategy that would, if engaged in by a banking entity, significantly increase the likelihood that the banking entity would incur a substantial financial loss or would pose a threat to the financial stability of the United States." 17:17:2.0.1.1.10.3.1.7,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,C,Subpart C—Covered Fund Activities and Investments,,§ 75.16 Ownership of interests in and sponsorship of issuers of certain collateralized debt obligations backed by trust-preferred securities.,CFTC,,,"[79 FR 5228, Jan. 31, 2014]","(a) The prohibition contained in § 75.10(a)(1) does not apply to the ownership by a banking entity of an interest in, or sponsorship of, any issuer if: (1) The issuer was established, and the interest was issued, before May 19, 2010; (2) The banking entity reasonably believes that the offering proceeds received by the issuer were invested primarily in Qualifying TruPS Collateral; and (3) The banking entity acquired such interest on or before December 10, 2013 (or acquired such interest in connection with a merger with or acquisition of a banking entity that acquired the interest on or before December 10, 2013). (b) For purposes of this § 75.16, Qualifying TruPS Collateral shall mean any trust preferred security or subordinated debt instrument issued prior to May 19, 2010 by a depository institution holding company that, as of the end of any reporting period within 12 months immediately preceding the issuance of such trust preferred security or subordinated debt instrument, had total consolidated assets of less than $15,000,000,000 or issued prior to May 19, 2010 by a mutual holding company. (c) Notwithstanding paragraph (a)(3) of this section, a banking entity may act as a market maker with respect to the interests of an issuer described in paragraph (a) of this section in accordance with the applicable provisions of §§ 75.4 and 75.11. (d) Without limiting the applicability of paragraph (a) of this section, the Board, the FDIC and the OCC will make public a non-exclusive list of issuers that meet the requirements of paragraph (a). A banking entity may rely on the list published by the Board, the FDIC and the OCC." 17:17:2.0.1.1.10.3.1.8,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,C,Subpart C—Covered Fund Activities and Investments,,§§ 75.17-75.19 [Reserved],CFTC,,,, 17:17:2.0.1.1.10.4.1.1,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,D,Subpart D—Compliance Program Requirement; Violations,,§ 75.20 Program for compliance; reporting.,CFTC,,,"[79 FR 6048, Jan. 31, 2014, as amended at 84 FR 62209, Nov. 14, 2019; 85 FR 46522, July 31, 2020]","(a) Program requirement. Each banking entity (other than a banking entity with limited trading assets and liabilities or a qualifying foreign excluded fund under section 75.6(f) or 75.13(d)) shall develop and provide for the continued administration of a compliance program reasonably designed to ensure and monitor compliance with the prohibitions and restrictions on proprietary trading and covered fund activities and investments set forth in section 13 of the BHC Act and this part. The terms, scope, and detail of the compliance program shall be appropriate for the types, size, scope, and complexity of activities and business structure of the banking entity. (b) Banking entities with significant trading assets and liabilities. With respect to a banking entity with significant trading assets and liabilities, the compliance program required by paragraph (a) of this section, at a minimum, shall include: (1) Written policies and procedures reasonably designed to document, describe, monitor and limit trading activities subject to subpart B of this part (including those permitted under §§ 75.3 to 75.6), including setting, monitoring and managing required limits set out in §§ 75.4 and 75.5, and activities and investments with respect to a covered fund subject to subpart C of this part (including those permitted under §§ 75.11 through 75.14) conducted by the banking entity to ensure that all activities and investments conducted by the banking entity that are subject to section 13 of the BHC Act and this part comply with section 13 of the BHC Act and this part; (2) A system of internal controls reasonably designed to monitor compliance with section 13 of the BHC Act and this part and to prevent the occurrence of activities or investments that are prohibited by section 13 of the BHC Act and this part; (3) A management framework that clearly delineates responsibility and accountability for compliance with section 13 of the BHC Act and this part and includes appropriate management review of trading limits, strategies, hedging activities, investments, incentive compensation and other matters identified in this part or by management as requiring attention; (4) Independent testing and audit of the effectiveness of the compliance program conducted periodically by qualified personnel of the banking entity or by a qualified outside party; (5) Training for trading personnel and managers, as well as other appropriate personnel, to effectively implement and enforce the compliance program; and (6) Records sufficient to demonstrate compliance with section 13 of the BHC Act and this part, which a banking entity must promptly provide to the Commission upon request and retain for a period of no less than 5 years or such longer period as required by the Commission. (c) CEO attestation. The CEO of a banking entity that has significant trading assets and liabilities must, based on a review by the CEO of the banking entity, attest in writing to the CFTC, each year no later than March 31, that the banking entity has in place processes to establish, maintain, enforce, review, test and modify the compliance program required by paragraph (b) of this section in a manner reasonably designed to achieve compliance with section 13 of the BHC Act and this part. In the case of a U.S. branch or agency of a foreign banking entity, the attestation may be provided for the entire U.S. operations of the foreign banking entity by the senior management officer of the U.S. operations of the foreign banking entity who is located in the United States. (d) Reporting requirements under appendix A to this part. (1) A banking entity (other than a qualifying foreign excluded fund under section 75.6(f) or 75.13(d)) engaged in proprietary trading activity permitted under subpart B shall comply with the reporting requirements described in appendix A to this part, if: (i) The banking entity has significant trading assets and liabilities; or (ii) The CFTC notifies the banking entity in writing that it must satisfy the reporting requirements contained in appendix A to this part. (2) Frequency of reporting: Unless the CFTC notifies the banking entity in writing that it must report on a different basis, a banking entity subject to appendix A to this part shall report the information required by appendix A for each quarter within 30 days of the end of the quarter. (e) Additional documentation for covered funds. A banking entity with significant trading assets and liabilities (other than a qualifying foreign excluded fund under section 75.6(f) or 75.13(d)) shall maintain records that include: (1) Documentation of the exclusions or exemptions other than sections 3(c)(1) and 3(c)(7) of the Investment Company Act of 1940 relied on by each fund sponsored by the banking entity (including all subsidiaries and affiliates) in determining that such fund is not a covered fund; (2) For each fund sponsored by the banking entity (including all subsidiaries and affiliates) for which the banking entity relies on one or more of the exclusions from the definition of covered fund provided by § 75.10(c)(1), (5), (8), (9), or (10), documentation supporting the banking entity's determination that the fund is not a covered fund pursuant to one or more of those exclusions; (3) For each seeding vehicle described in § 75.10(c)(12)(i) or (iii) that will become a registered investment company or SEC-regulated business development company, a written plan documenting the banking entity's determination that the seeding vehicle will become a registered investment company or SEC-regulated business development company; the period of time during which the vehicle will operate as a seeding vehicle; and the banking entity's plan to market the vehicle to third-party investors and convert it into a registered investment company or SEC-regulated business development company within the time period specified in § 75.12(a)(2)(i)(B); (4) For any banking entity that is, or is controlled directly or indirectly by a banking entity that is, located in or organized under the laws of the United States or of any State, if the aggregate amount of ownership interests in foreign public funds that are described in § 75.10(c)(1) owned by such banking entity (including ownership interests owned by any affiliate that is controlled directly or indirectly by a banking entity that is located in or organized under the laws of the United States or of any State) exceeds $50 million at the end of two or more consecutive calendar quarters, beginning with the next succeeding calendar quarter, documentation of the value of the ownership interests owned by the banking entity (and such affiliates) in each foreign public fund and each jurisdiction in which any such foreign public fund is organized, calculated as of the end of each calendar quarter, which documentation must continue until the banking entity's aggregate amount of ownership interests in foreign public funds is below $50 million for two consecutive calendar quarters; and (5) For purposes of paragraph (e)(4) of this section, a U.S. branch, agency, or subsidiary of a foreign banking entity is located in the United States; however, the foreign bank that operates or controls that branch, agency, or subsidiary is not considered to be located in the United States solely by virtue of operating or controlling the U.S. branch, agency, or subsidiary. (f) Simplified programs for less active banking entities —(1) Banking entities with no covered activities. A banking entity that does not engage in activities or investments pursuant to subpart B or subpart C of this part (other than trading activities permitted pursuant to § 75.6(a)) may satisfy the requirements of this section by establishing the required compliance program prior to becoming engaged in such activities or making such investments (other than trading activities permitted pursuant to § 75.6(a)). (2) Banking entities with moderate trading assets and liabilities. A banking entity with moderate trading assets and liabilities may satisfy the requirements of this section by including in its existing compliance policies and procedures appropriate references to the requirements of section 13 of the BHC Act and this part and adjustments as appropriate given the activities, size, scope, and complexity of the banking entity. (g) Rebuttable presumption of compliance for banking entities with limited trading assets and liabilities —(1) Rebuttable presumption. Except as otherwise provided in this paragraph, a banking entity with limited trading assets and liabilities shall be presumed to be compliant with subpart B and subpart C of this part and shall have no obligation to demonstrate compliance with this part on an ongoing basis. (2) Rebuttal of presumption. If upon examination or audit, the CFTC determines that the banking entity has engaged in proprietary trading or covered fund activities that are otherwise prohibited under subpart B or subpart C of this part, the CFTC may require the banking entity to be treated under this part as if it did not have limited trading assets and liabilities. The CFTC's rebuttal of the presumption in this paragraph must be made in accordance with the notice and response procedures in paragraph (i) of this section. (h) Reservation of authority. Notwithstanding any other provision of this part, the CFTC retains its authority to require a banking entity without significant trading assets and liabilities to apply any requirements of this part that would otherwise apply if the banking entity had significant or moderate trading assets and liabilities if the CFTC determines that the size or complexity of the banking entity's trading or investment activities, or the risk of evasion of subpart B or subpart C, of this part does not warrant a presumption of compliance under paragraph (g) of this section or treatment as a banking entity with moderate trading assets and liabilities, as applicable. The CFTC's exercise of this reservation of authority must be made in accordance with the notice and response procedures in paragraph (i) of this section. (i) Notice and response procedures —(1) Notice. The CFTC will notify the banking entity in writing of any determination requiring notice under this part and will provide an explanation of the determination. (2) Response. The banking entity may respond to any or all items in the notice described in paragraph (i)(1) of this section. The response should include any matters that the banking entity would have the CFTC consider in deciding whether to make the determination. The response must be in writing and delivered to the designated CFTC official within 30 days after the date on which the banking entity received the notice. The CFTC may shorten the time period when, in the opinion of the CFTC, the activities or condition of the banking entity so requires, provided that the banking entity is informed of the time period at the time of notice, or with the consent of the banking entity. In its discretion, the CFTC may extend the time period for good cause. (3) Waiver. Failure to respond within 30 days or such other time period as may be specified by the CFTC shall constitute a waiver of any objections to the CFTC's determination. (4) Decision. The CFTC will notify the banking entity of the decision in writing. The notice will include an explanation of the decision." 17:17:2.0.1.1.10.4.1.2,17,Commodity and Securities Exchanges,I,,75,PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS,D,Subpart D—Compliance Program Requirement; Violations,,§ 75.21 Termination of activities or investments; penalties for violations.,CFTC,,,,"(a) Any banking entity that engages in an activity or makes an investment in violation of section 13 of the BHC Act or this part, or acts in a manner that functions as an evasion of the requirements of section 13 of the BHC Act or this part, including through an abuse of any activity or investment permitted under subparts B or C of this part, or otherwise violates the restrictions and requirements of section 13 of the BHC Act or this part, shall, upon discovery, promptly terminate the activity and, as relevant, dispose of the investment. (b) Whenever the Commission finds reasonable cause to believe any banking entity has engaged in an activity or made an investment in violation of section 13 of the BHC Act or this part, or engaged in any activity or made any investment that functions as an evasion of the requirements of section 13 of the BHC Act or this part, the Commission may take any action permitted by law to enforce compliance with section 13 of the BHC Act and this part, including directing the banking entity to restrict, limit, or terminate any or all activities under this part and dispose of any investment." 24:24:1.1.1.1.35.1.59.1,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,A,Subpart A—General Provisions,,§ 75.1 Purpose.,HUD,,,,"This part establishes the requirements to be followed to ensure the objectives of Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) (Section 3) are met. The purpose of Section 3 is to ensure that economic opportunities, most importantly employment, generated by certain HUD financial assistance shall be directed to low- and very low-income persons, particularly those who are recipients of government assistance for housing or residents of the community in which the Federal assistance is spent." 24:24:1.1.1.1.35.1.59.2,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,A,Subpart A—General Provisions,,§ 75.3 Applicability.,HUD,,,,"(a) General applicability. Section 3 applies to public housing financial assistance and Section 3 projects, as follows: (1) Public housing financial assistance. Public housing financial assistance means: (i) Development assistance provided pursuant to section 5 of the United States Housing Act of 1937 (the 1937 Act); (ii) Operations and management assistance provided pursuant to section 9(e) of the 1937 Act; (iii) Development, modernization, and management assistance provided pursuant to section 9(d) of the 1937 Act; and (iv) The entirety of a mixed-finance development project as described in 24 CFR 905.604, regardless of whether the project is fully or partially assisted with public housing financial assistance as defined in paragraphs (a)(1)(i) through (iii) of this section. (2) Section 3 projects. (i) Section 3 projects means housing rehabilitation, housing construction, and other public construction projects assisted under HUD programs that provide housing and community development financial assistance when the total amount of assistance to the project exceeds a threshold of $200,000. The threshold is $100,000 where the assistance is from the Lead Hazard Control and Healthy Homes programs, as authorized by Sections 501 or 502 of the Housing and Urban Development Act of 1970 (12 U.S.C. 1701z-1 or 1701z-2), the Lead-Based Paint Poisoning Prevention Act (42 U.S.C 4801 et seq. ); and the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851 et seq. ). The project is the site or sites together with any building(s) and improvements located on the site(s) that are under common ownership, management, and financing. (ii) The Secretary must update the thresholds provided in paragraph (a)(2)(i) of this section not less than once every 5 years based on a national construction cost inflation factor through Federal Register notice not subject to public comment. When the Secretary finds it is warranted to ensure compliance with Section 3, the Secretary may adjust, regardless of the national construction cost factor, such thresholds through Federal Register notice, subject to public comment. (iii) The requirements in this part apply to an entire Section 3 project, regardless of whether the project is fully or partially assisted under HUD programs that provide housing and community development financial assistance. (b) Contracts for materials. Section 3 requirements do not apply to material supply contracts. (c) Indian and Tribal preferences. Contracts, subcontracts, grants, or subgrants subject to Section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5307(b)) or subject to tribal preference requirements as authorized under 101(k) of the Native American Housing Assistance and Self-Determination Act (25 U.S.C. 4111(k)) must provide preferences in employment, training, and business opportunities to Indians and Indian organizations, and are therefore not subject to the requirements of this part. (d) Other HUD assistance and other Federal assistance. Recipients that are not subject to Section 3 are encouraged to consider ways to support the purpose of Section 3." 24:24:1.1.1.1.35.1.59.3,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,A,Subpart A—General Provisions,,§ 75.5 Definitions.,HUD,,,,"The terms HUD, Public housing, and Public Housing Agency (PHA) are defined in 24 CFR part 5. The following definitions also apply to this part: 1937 Act means the United States Housing Act of 1937, 42 U.S.C. 1437 et seq. Contractor means any entity entering into a contract with: (1) A recipient to perform work in connection with the expenditure of public housing financial assistance or for work in connection with a Section 3 project; or (2) A subrecipient for work in connection with a Section 3 project. Labor hours means the number of paid hours worked by persons on a Section 3 project or by persons employed with funds that include public housing financial assistance. Low-income person means a person as defined in Section 3(b)(2) of the 1937 Act. Material supply contracts means contracts for the purchase of products and materials, including, but not limited to, lumber, drywall, wiring, concrete, pipes, toilets, sinks, carpets, and office supplies. Professional services means non-construction services that require an advanced degree or professional licensing, including, but not limited to, contracts for legal services, financial consulting, accounting services, environmental assessment, architectural services, and civil engineering services. Public housing financial assistance means assistance as defined in § 75.3(a)(1). Public housing project is defined in 24 CFR 905.108. Recipient means any entity that receives directly from HUD public housing financial assistance or housing and community development assistance that funds Section 3 projects, including, but not limited to, any State, local government, instrumentality, PHA, or other public agency, public or private nonprofit organization. Section 3 means Section 3 of the Housing and Urban Development Act of 1968, as amended (12 U.S.C. 1701u). Section 3 business concern means: (1) A business concern meeting at least one of the following criteria, documented within the last six-month period: (i) It is at least 51 percent owned and controlled by low- or very low-income persons; (ii) Over 75 percent of the labor hours performed for the business over the prior three-month period are performed by Section 3 workers; or (iii) It is a business at least 51 percent owned and controlled by current public housing residents or residents who currently live in Section 8-assisted housing. (2) The status of a Section 3 business concern shall not be negatively affected by a prior arrest or conviction of its owner(s) or employees. (3) Nothing in this part shall be construed to require the contracting or subcontracting of a Section 3 business concern. Section 3 business concerns are not exempt from meeting the specifications of the contract. Section 3 project means a project defined in § 75.3(a)(2). Section 3 worker means: (1) Any worker who currently fits or when hired within the past five years fit at least one of the following categories, as documented: (i) The worker's income for the previous or annualized calendar year is below the income limit established by HUD. (ii) The worker is employed by a Section 3 business concern. (iii) The worker is a YouthBuild participant. (2) The status of a Section 3 worker shall not be negatively affected by a prior arrest or conviction. (3) Nothing in this part shall be construed to require the employment of someone who meets this definition of a Section 3 worker. Section 3 workers are not exempt from meeting the qualifications of the position to be filled. Section 8-assisted housing refers to housing receiving project-based rental assistance or tenant-based assistance under Section 8 of the 1937 Act. Service area or the neighborhood of the project means an area within one mile of the Section 3 project or, if fewer than 5,000 people live within one mile of a Section 3 project, within a circle centered on the Section 3 project that is sufficient to encompass a population of 5,000 people according to the most recent U.S. Census. Small PHA means a public housing authority that manages or operates fewer than 250 public housing units. Subcontractor means any entity that has a contract with a contractor to undertake a portion of the contractor's obligation to perform work in connection with the expenditure of public housing financial assistance or for a Section 3 project. Subrecipient has the meaning provided in the applicable program regulations or in 2 CFR 200.93. Targeted Section 3 worker has the meanings provided in § 75.11, § 75.21, or § 75.29, and does not exclude an individual that has a prior arrest or conviction. Very low-income person means the definition for this term set forth in section 3(b)(2) of the 1937 Act. YouthBuild programs refers to YouthBuild programs receiving assistance under the Workforce Innovation and Opportunity Act (29 U.S.C. 3226)." 24:24:1.1.1.1.35.1.59.4,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,A,Subpart A—General Provisions,,§ 75.7 Requirements applicable to HUD NOFAs for Section 3 covered programs.,HUD,,,,"All notices of funding availability (NOFAs) issued by HUD that announce the availability of funding covered by § 75.3 will include notice that this part is applicable to the funding and may include, as appropriate for the specific NOFA, points or bonus points for the quality of Section 3 plans." 24:24:1.1.1.1.35.2.59.1,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,B,Subpart B—Additional Provisions for Public Housing Financial Assistance,,§ 75.9 Requirements.,HUD,,,,"(a) Employment and training. (1) Consistent with existing Federal, state, and local laws and regulations, PHAs or other recipients receiving public housing financial assistance, and their contractors and subcontractors, must make their best efforts to provide employment and training opportunities generated by the public housing financial assistance to Section 3 workers. (2) PHAs or other recipients, and their contractors and subcontractors, must make their best efforts described in paragraph (a)(1) of this section in the following order of priority: (i) To residents of the public housing projects for which the public housing financial assistance is expended; (ii) To residents of other public housing projects managed by the PHA that is providing the assistance or for residents of Section 8-assisted housing managed by the PHA; (iii) To participants in YouthBuild programs; and (iv) To low- and very low-income persons residing within the metropolitan area (or nonmetropolitan county) in which the assistance is expended. (b) Contracting. (1) Consistent with existing Federal, state, and local laws and regulations, PHAs and other recipients of public housing financial assistance, and their contractors and subcontractors, must make their best efforts to award contracts and subcontracts to business concerns that provide economic opportunities to Section 3 workers. (2) PHAs and other recipients, and their contractors and subcontractors, must make their best efforts described in paragraph (b)(1) of this section in the following order of priority: (i) To Section 3 business concerns that provide economic opportunities for residents of the public housing projects for which the assistance is provided; (ii) To Section 3 business concerns that provide economic opportunities for residents of other public housing projects or Section-8 assisted housing managed by the PHA that is providing the assistance; (iii) To YouthBuild programs; and (iv) To Section 3 business concerns that provide economic opportunities to Section 3 workers residing within the metropolitan area (or nonmetropolitan county) in which the assistance is provided." 24:24:1.1.1.1.35.2.59.2,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,B,Subpart B—Additional Provisions for Public Housing Financial Assistance,,§ 75.11 Targeted Section 3 worker for public housing financial assistance.,HUD,,,,"(a) Targeted Section 3 worker. A Targeted Section 3 worker for public housing financial assistance means a Section 3 worker who is: (1) A worker employed by a Section 3 business concern; or (2) A worker who currently fits or when hired fit at least one of the following categories, as documented within the past five years: (i) A resident of public housing or Section 8-assisted housing; (ii) A resident of other public housing projects or Section 8-assisted housing managed by the PHA that is providing the assistance; or (iii) A YouthBuild participant. (b) [Reserved]" 24:24:1.1.1.1.35.2.59.3,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,B,Subpart B—Additional Provisions for Public Housing Financial Assistance,,§ 75.13 Section 3 safe harbor.,HUD,,,,"(a) General. PHAs and other recipients will be considered to have complied with requirements in this part, in the absence of evidence to the contrary, if they: (1) Certify that they have followed the prioritization of effort in § 75.9; and (2) Meet or exceed the applicable Section 3 benchmarks as described in paragraph (b) of this section. (b) Establishing benchmarks. (1) HUD will establish Section 3 benchmarks for Section 3 workers or Targeted Section 3 workers or both through a document published in the Federal Register. HUD may establish a single nationwide benchmark for Section 3 workers and a single nationwide benchmark for Targeted Section 3 workers, or may establish multiple benchmarks based on geography, the type of public housing financial assistance, or other variables. HUD will update the benchmarks through a document published in the Federal Register, subject to public comment, not less frequently than once every 3 years. Such notice shall include aggregate data on labor hours and the proportion of PHAs and other recipients meeting benchmarks, as well as other metrics reported pursuant to § 75.15 as deemed appropriate by HUD, for the 3 most recent reporting years. (2) In establishing the Section 3 benchmarks, HUD may consider the industry averages for labor hours worked by specific categories of workers or in different localities or regions; averages for labor hours worked by Section 3 workers and Targeted Section 3 workers as reported by recipients pursuant to this section; and any other factors HUD deems important. In establishing the Section 3 benchmarks, HUD will exclude professional services from the total number of labor hours as such hours are excluded from the total number of labor hours to be reported per § 75.15(a)(4). (3) Section 3 benchmarks will consist of the following two ratios: (i) The number of labor hours worked by Section 3 workers divided by the total number of labor hours worked by all workers funded by public housing financial assistance in the PHA's or other recipient's fiscal year. (ii) The number of labor hours worked by Targeted Section 3 workers, as defined in § 75.11(a), divided by the total number of labor hours worked by all workers funded by public housing financial assistance in the PHA's or other recipient's fiscal year." 24:24:1.1.1.1.35.2.59.4,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,B,Subpart B—Additional Provisions for Public Housing Financial Assistance,,§ 75.15 Reporting.,HUD,,,,"(a) Reporting of labor hours. (1) For public housing financial assistance, PHAs and other recipients must report in a manner prescribed by HUD: (i) The total number of labor hours worked; (ii) The total number of labor hours worked by Section 3 workers; and (iii) The total number of labor hours worked by Targeted Section 3 workers. (2) Section 3 workers' and Targeted Section 3 workers' labor hours may be counted for five years from when their status as a Section 3 worker or Targeted Section 3 worker is established pursuant to § 75.31. (3) The labor hours reported under paragraph (a)(1) of this section must include the total number of labor hours worked with public housing financial assistance in the fiscal year of the PHA or other recipient, including labor hours worked by any contractors and subcontractors that the PHA or other recipient is required, or elects pursuant to paragraph (a)(4) of this section, to report. (4) PHAs and other recipients reporting under this section, as well as contractors and subcontractors who report to PHAs and recipients, may report labor hours by Section 3 workers, under paragraph (a)(1)(ii) of this section, and labor hours by Targeted Section 3 workers, under paragraph (a)(1)(iii) of this section, from professional services without including labor hours from professional services in the total number of labor hours worked under paragraph (a)(1)(i) of this section. If a contract covers both professional services and other work and the PHA, other recipient, contractor, or subcontractor chooses not to report labor hours from professional services, the labor hours under the contract that are not from professional services must still be reported. (5) PHAs and other recipients may report on the labor hours of the PHA, the recipient, a contractor, or a subcontractor based on the employer's good faith assessment of the labor hours of a full-time or part-time employee informed by the employer's existing salary or time and attendance based payroll systems, unless the project or activity is otherwise subject to requirements specifying time and attendance reporting. (b) Additional reporting if Section 3 benchmarks are not met. If the PHA's or other recipient's reporting under paragraph (a) of this section indicates that the PHA or other recipient has not met the Section 3 benchmarks described in § 75.13, the PHA or other recipient must report in a form prescribed by HUD on the qualitative nature of its Section 3 compliance activities and those of its contractors and subcontractors. Such qualitative efforts may, for example, include but are not limited to the following: (1) Engaged in outreach efforts to generate job applicants who are Targeted Section 3 workers. (2) Provided training or apprenticeship opportunities. (3) Provided technical assistance to help Section 3 workers compete for jobs ( e.g., resume assistance, coaching). (4) Provided or connected Section 3 workers with assistance in seeking employment including: drafting resumes, preparing for interviews, and finding job opportunities connecting residents to job placement services. (5) Held one or more job fairs. (6) Provided or referred Section 3 workers to services supporting work readiness and retention ( e.g., work readiness activities, interview clothing, test fees, transportation, child care). (7) Provided assistance to apply for/or attend community college, a four-year educational institution, or vocational/technical training. (8) Assisted Section 3 workers to obtain financial literacy training and/or coaching. (9) Engaged in outreach efforts to identify and secure bids from Section 3 business concerns. (10) Provided technical assistance to help Section 3 business concerns understand and bid on contracts. (11) Divided contracts into smaller jobs to facilitate participation by Section 3 business concerns. (12) Provided bonding assistance, guaranties, or other efforts to support viable bids from Section 3 business concerns. (13) Promoted use of business registries designed to create opportunities for disadvantaged and small businesses. (14) Outreach, engagement, or referrals with the state one-stop system as defined in Section 121(e)(2) of the Workforce Innovation and Opportunity Act. (c) Reporting frequency. Unless otherwise provided, PHAs or other recipients must report annually to HUD under paragraph (a) of this section, and, where required, under paragraph (b) of this section, in a manner consistent with reporting requirements for the applicable HUD program. (d) Reporting by Small PHAs. Small PHAs may elect not to report under paragraph (a) of this section. Small PHAs that make such election are required to report on their qualitative efforts, as described in paragraph (b) of this section, in a manner consistent with reporting requirements for the applicable HUD program." 24:24:1.1.1.1.35.2.59.5,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,B,Subpart B—Additional Provisions for Public Housing Financial Assistance,,§ 75.17 Contract provisions.,HUD,,,,"(a) PHAs or other recipients must include language in any agreement or contract to apply Section 3 to contractors. (b) PHAs or other recipients must require contractors to include language in any contract or agreement to apply Section 3 to subcontractors. (c) PHAs or other recipients must require all contractors and subcontractors to meet the requirements of § 75.9, regardless of whether Section 3 language is included in contracts." 24:24:1.1.1.1.35.3.59.1,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,C,Subpart C—Additional Provisions for Housing and Community Development Financial Assistance,,§ 75.19 Requirements.,HUD,,,,"(a) Employment and training. (1) To the greatest extent feasible, and consistent with existing Federal, state, and local laws and regulations, recipients covered by this subpart shall ensure that employment and training opportunities arising in connection with Section 3 projects are provided to Section 3 workers within the metropolitan area (or nonmetropolitan county) in which the project is located. (2) Where feasible, priority for opportunities and training described in paragraph (a)(1) of this section should be given to: (i) Section 3 workers residing within the service area or the neighborhood of the project, and (ii) Participants in YouthBuild programs. (b) Contracting. (1) To the greatest extent feasible, and consistent with existing Federal, state, and local laws and regulations, recipients covered by this subpart shall ensure contracts for work awarded in connection with Section 3 projects are provided to business concerns that provide economic opportunities to Section 3 workers residing within the metropolitan area (or nonmetropolitan county) in which the project is located. (2) Where feasible, priority for contracting opportunities described in paragraph (b)(1) of this section should be given to: (i) Section 3 business concerns that provide economic opportunities to Section 3 workers residing within the service area or the neighborhood of the project, and (ii) YouthBuild programs." 24:24:1.1.1.1.35.3.59.2,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,C,Subpart C—Additional Provisions for Housing and Community Development Financial Assistance,,§ 75.21 Targeted Section 3 worker for housing and community development financial assistance.,HUD,,,,"(a) Targeted Section 3 worker. A Targeted Section 3 worker for housing and community development financial assistance means a Section 3 worker who is: (1) A worker employed by a Section 3 business concern; or (2) A worker who currently fits or when hired fit at least one of the following categories, as documented within the past five years: (i) Living within the service area or the neighborhood of the project, as defined in § 75.5; or (ii) A YouthBuild participant. (b) [Reserved]" 24:24:1.1.1.1.35.3.59.3,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,C,Subpart C—Additional Provisions for Housing and Community Development Financial Assistance,,§ 75.23 Section 3 safe harbor.,HUD,,,,"(a) General. Recipients will be considered to have complied with requirements in this part, in the absence of evidence to the contrary if they: (1) Certify that they have followed the prioritization of effort in § 75.19; and (2) Meet or exceed the applicable Section 3 benchmark as described in paragraph (b) of this section. (b) Establishing benchmarks. (1) HUD will establish Section 3 benchmarks for Section 3 workers or Targeted Section 3 workers or both through a document published in the Federal Register. HUD may establish a single nationwide benchmark for Section 3 workers and a single nationwide benchmark for Targeted Section 3 workers, or may establish multiple benchmarks based on geography, the nature of the Section 3 project, or other variables. HUD will update the benchmarks through a document published in the Federal Register, subject to public comment, not less frequently than once every 3 years. Such notice shall include aggregate data on labor hours and the proportion of recipients meeting benchmarks, as well as other metrics reported pursuant to § 75.25 as deemed appropriate by HUD, for the 3 most recent reporting years. (2) In establishing the Section 3 benchmarks, HUD may consider the industry averages for labor hours worked by specific categories of workers or in different localities or regions; averages for labor hours worked by Section 3 workers and Targeted Section 3 workers as reported by recipients pursuant to this section; and any other factors HUD deems important. In establishing the Section 3 benchmarks, HUD will exclude professional services from the total number of labor hours as such hours are excluded from the total number of labor hours to be reported per § 75.25(a)(4). (3) Section 3 benchmarks will consist of the following two ratios: (i) The number of labor hours worked by Section 3 workers divided by the total number of labor hours worked by all workers on a Section 3 project in the recipient's program year. (ii) The number of labor hours worked by Targeted Section 3 workers as defined in § 75.21(a), divided by the total number of labor hours worked by all workers on a Section 3 project in the recipient's program year." 24:24:1.1.1.1.35.3.59.4,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,C,Subpart C—Additional Provisions for Housing and Community Development Financial Assistance,,§ 75.25 Reporting.,HUD,,,,"(a) Reporting of labor hours. (1) For Section 3 projects, recipients must report in a manner prescribed by HUD: (i) The total number of labor hours worked; (ii) The total number of labor hours worked by Section 3 workers; and (iii) The total number of labor hours worked by Targeted Section 3 workers. (2) Section 3 workers' and Targeted Section 3 workers' labor hours may be counted for five years from when their status as a Section 3 worker or Targeted Section 3 worker is established pursuant to § 75.31. (3) The labor hours reported under paragraph (a)(1) of this section must include the total number of labor hours worked on a Section 3 project, including labor hours worked by any subrecipients, contractors and subcontractors that the recipient is required, or elects pursuant to paragraph (a)(4) of this section, to report. (4) Recipients reporting under this section, as well as subrecipients, contractors and subcontractors who report to recipients, may report labor hours by Section 3 workers, under paragraph (a)(1)(ii) of this section, and labor hours by Targeted Section 3 workers, under paragraph (a)(1)(iii) of this section, from professional services without including labor hours from professional services in the total number of labor hours worked under paragraph (a)(1)(i) of this section. If a contract covers both professional services and other work and the recipient or contractor or subcontractor chooses not to report labor hours from professional services, the labor hours under the contract that are not from professional services must still be reported. (5) Recipients may report their own labor hours or that of a subrecipient, contractor, or subcontractor based on the employer's good faith assessment of the labor hours of a full-time or part-time employee informed by the employer's existing salary or time and attendance based payroll systems, unless the project or activity is otherwise subject to requirements specifying time and attendance reporting. (b) Additional reporting if Section 3 benchmarks are not met. If the recipient's reporting under paragraph (a) of this section indicates that the recipient has not met the Section 3 benchmarks described in § 75.23, the recipient must report in a form prescribed by HUD on the qualitative nature of its activities and those its contractors and subcontractors pursued. Such qualitative efforts may, for example, include but are not limited to the following: (1) Engaged in outreach efforts to generate job applicants who are Targeted Section 3 workers. (2) Provided training or apprenticeship opportunities. (3) Provided technical assistance to help Section 3 workers compete for jobs ( e.g., resume assistance, coaching). (4) Provided or connected Section 3 workers with assistance in seeking employment including: drafting resumes, preparing for interviews, and finding job opportunities connecting residents to job placement services. (5) Held one or more job fairs. (6) Provided or referred Section 3 workers to services supporting work readiness and retention ( e.g., work readiness activities, interview clothing, test fees, transportation, child care). (7) Provided assistance to apply for/or attend community college, a four-year educational institution, or vocational/technical training. (8) Assisted Section 3 workers to obtain financial literacy training and/or coaching. (9) Engaged in outreach efforts to identify and secure bids from Section 3 business concerns. (10) Provided technical assistance to help Section 3 business concerns understand and bid on contracts. (11) Divided contracts into smaller jobs to facilitate participation by Section 3 business concerns. (12) Provided bonding assistance, guaranties, or other efforts to support viable bids from Section 3 business concerns. (13) Promoted use of business registries designed to create opportunities for disadvantaged and small businesses. (14) Outreach, engagement, or referrals with the state one-stop system as defined in Section 121(e)(2) of the Workforce Innovation and Opportunity Act. (c) Reporting frequency. Unless otherwise provided, recipients must report annually to HUD under paragraph (a) of this section, and, where required, under paragraph (b) of this section, on all projects completed within the reporting year in a manner consistent with reporting requirements for the applicable HUD program." 24:24:1.1.1.1.35.3.59.5,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,C,Subpart C—Additional Provisions for Housing and Community Development Financial Assistance,,§ 75.27 Contract provisions.,HUD,,,,"(a) Recipients must include language applying Section 3 requirements in any subrecipient agreement or contract for a Section 3 project. (b) Recipients of Section 3 funding must require subrecipients, contractors, and subcontractors to meet the requirements of § 75.19, regardless of whether Section 3 language is included in recipient or subrecipient agreements, program regulatory agreements, or contracts." 24:24:1.1.1.1.35.4.59.1,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,D,"Subpart D—Provisions for Multiple Funding Sources, Recordkeeping, and Compliance",,§ 75.29 Multiple funding sources.,HUD,,,,"(a) If a housing rehabilitation, housing construction or other public construction project is subject to Section 3 pursuant to § 75.3(a)(1) and (2), the recipient must follow subpart B of this part for the public housing financial assistance and may follow either subpart B or C of this part for the housing and community development financial assistance. For such a project, the following applies: (1) For housing and community development financial assistance, a Targeted Section 3 worker is any worker who meets the definition of a Targeted Section 3 worker in either subpart B or C of this part; and (2) The recipients of both sources of funding shall report on the housing rehabilitation, housing construction, or other public construction project as a whole and shall identify the multiple associated recipients. PHAs and other recipients must report the following information: (i) The total number of labor hours worked on the project; (ii) The total number of labor hours worked by Section 3 workers on the project; and (iii) The total number of labor hours worked by Targeted Section 3 workers on the project. (b) If a housing rehabilitation, housing construction, or other public construction project is subject to Section 3 because the project is assisted with funding from multiple sources of housing and community development assistance that exceed the thresholds in § 75.3(a)(2), the recipient or recipients must follow subpart C of this part, and must report to the applicable HUD program office, as prescribed by HUD." 24:24:1.1.1.1.35.4.59.2,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,D,"Subpart D—Provisions for Multiple Funding Sources, Recordkeeping, and Compliance",,§ 75.31 Recordkeeping.,HUD,,,,"(a) HUD shall have access to all records, reports, and other documents or items of the recipient that are maintained to demonstrate compliance with the requirements of this part, or that are maintained in accordance with the regulations governing the specific HUD program by which the Section 3 project is governed, or the public housing financial assistance is provided or otherwise made available to the recipient, subrecipient, contractor, or subcontractor. (b) Recipients must maintain documentation, or ensure that a subrecipient, contractor, or subcontractor that employs the worker maintains documentation, to ensure that workers meet the definition of a Section 3 worker or Targeted Section 3 worker, at the time of hire or the first reporting period, as follows: (1) For a worker to qualify as a Section 3 worker, one of the following must be maintained: (i) A worker's self-certification that their income is below the income limit from the prior calendar year; (ii) A worker's self-certification of participation in a means-tested program such as public housing or Section 8-assisted housing; (iii) Certification from a PHA, or the owner or property manager of project-based Section 8-assisted housing, or the administrator of tenant-based Section 8-assisted housing that the worker is a participant in one of their programs; (iv) An employer's certification that the worker's income from that employer is below the income limit when based on an employer's calculation of what the worker's wage rate would translate to if annualized on a full-time basis; or (v) An employer's certification that the worker is employed by a Section 3 business concern. (2) For a worker to qualify as a Targeted Section 3 worker, one of the following must be maintained: (i) For a worker to qualify as a Targeted Section 3 worker under subpart B of this part: (A) A worker's self-certification of participation in public housing or Section 8-assisted housing programs; (B) Certification from a PHA, or the owner or property manager of project-based Section 8-assisted housing, or the administrator of tenant-based Section 8-assisted housing that the worker is a participant in one of their programs; (C) An employer's certification that the worker is employed by a Section 3 business concern; or (D) A worker's certification that the worker is a YouthBuild participant. (ii) For a worker to qualify as a Targeted Section 3 worker under subpart C of this part: (A) An employer's confirmation that a worker's residence is within one mile of the work site or, if fewer than 5,000 people live within one mile of a work site, within a circle centered on the work site that is sufficient to encompass a population of 5,000 people according to the most recent U.S. Census; (B) An employer's certification that the worker is employed by a Section 3 business concern; or (C) A worker's self-certification that the worker is a YouthBuild participant. (c) The documentation described in paragraph (b) of this section must be maintained for the time period required for record retentions in accordance with applicable program regulations or, in the absence of applicable program regulations, in accordance with 2 CFR part 200. (d) A PHA or recipient may report on Section 3 workers and Targeted Section 3 workers for five years from when their certification as a Section 3 worker or Targeted Section 3 worker is established." 24:24:1.1.1.1.35.4.59.3,24,Housing and Urban Development,,,75,PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS,D,"Subpart D—Provisions for Multiple Funding Sources, Recordkeeping, and Compliance",,§ 75.33 Compliance.,HUD,,,,"(a) Records of compliance. Each recipient shall maintain adequate records demonstrating compliance with this part, consistent with other recordkeeping requirements in 2 CFR part 200. (b) Complaints. Complaints alleging failure of compliance with this part may be reported to the HUD program office responsible for the public housing financial assistance or the Section 3 project, or to the local HUD field office. (c) Monitoring. HUD will monitor compliance with the requirements of this part. The applicable HUD program office will determine appropriate methods by which to oversee Section 3 compliance. HUD may impose appropriate remedies and sanctions in accordance with the laws and regulations for the program under which the violation was found." 28:28:2.0.1.1.28.0.1.1,28,Judicial Administration,I,,75,PART 75—CHILD PROTECTION RESTORATION AND PENALTIES ENHANCEMENT ACT OF 1990; PROTECT ACT; ADAM WALSH CHILD PROTECTION AND SAFETY ACT OF 2006; RECORDKEEPING AND RECORD-INSPECTION PROVISIONS,,,,§ 75.1 Definitions.,DOJ,,,"[Order No. 2765-2005, 70 FR 29619, May 24, 2005, as amended at 73 FR 77468, Dec. 18, 2008]","(a) Terms used in this part shall have the meanings set forth in 18 U.S.C. 2257, and as provided in this section. The terms used and defined in these regulations are intended to provide common-language guidance and usage and are not meant to exclude technologies or uses of these terms as otherwise employed in practice or defined in other regulations or federal statutes ( i.e. , 47 U.S.C. 230, 231). (b) Picture identification card means a document issued by the United States, a State government, or a political subdivision thereof, or a United States territory, that bears the photograph, the name of the individual identified, and the date of birth of that individual, and provides specific information sufficient for the issuing authority to confirm its validity, such as a passport, Permanent Resident Card (commonly known as a “Green Card”), or employment authorization document issued by the United States, a driver's license or other form of identification issued by a State or the District of Columbia; or a foreign government-issued equivalent of any of the documents listed above when the person who is the subject of the picture identification card is a non-U.S. citizen located outside the United States at the time of original production and the producer maintaining the required records, whether a U.S. citizen or non-U.S. citizen, is located outside the United States on the original production date. The picture identification card must be valid as of the original production date. (c) Producer means any person, including any individual, corporation, or other organization, who is a primary producer or a secondary producer. (1) Primary producer is any person who actually films, videotapes, photographs, or creates a digitally- or computer-manipulated image, a digital image, or a picture of, or who digitizes an image of, a visual depiction of an actual human being engaged in actual or simulated sexually explicit conduct. When a corporation or other organization is the primary producer of any particular image or picture, then no individual employee or agent of that corporation or other organization will be considered to be a primary producer of that image or picture. (2) Secondary producer is any person who produces, assembles, manufactures, publishes, duplicates, reproduces, or reissues a book, magazine, periodical, film, videotape, or digitally- or computer-manipulated image, picture, or other matter intended for commercial distribution that contains a visual depiction of an actual human being engaged in actual or simulated sexually explicit conduct, or who inserts on a computer site or service a digital image of, or otherwise manages the sexually explicit content of a computer site or service that contains a visual depiction of, an actual human being engaged in actual or simulated sexually explicit conduct, including any person who enters into a contract, agreement, or conspiracy to do any of the foregoing. When a corporation or other organization is the secondary producer of any particular image or picture, then no individual of that corporation or other organization will be considered to be the secondary producer of that image or picture. (3) The same person may be both a primary and a secondary producer. (4) Producer does not include persons whose activities relating to the visual depiction of actual or simulated sexually explicit conduct are limited to the following: (i) Photo or film processing, including digitization of previously existing visual depictions, as part of a commercial enterprise, with no other commercial interest in the sexually explicit material, printing, and video duplication; (ii) Distribution; (iii) Any activity, other than those activities identified in paragraphs (c)(1) and (2) of this section, that does not involve the hiring, contracting for, managing, or otherwise arranging for the participation of the depicted performers; (iv) The provision of a telecommunications service, or of an Internet access service of Internet information location tool (as those terms are defined in section 231 of the Communications Act of 1934 (47 U.S.C. 231)); (v) The transmission, storage, retrieval, hosting, formatting, or translation (or any combination thereof) of a communication, without selection or alteration of the content of the communication, except that deletion of a particular communication or material made by another person in a manner consistent with section 230(c) of the Communications Act of 1934 (47 U.S.C. 230(c)) shall not constitute such selection or alteration of the content of the communication; or (vi) Unless the activity or activities are described in section 2257(h)(2)(A), the dissemination of a depiction without having created it or altered its content. (d) Sell, distribute, redistribute, and re-release refer to commercial distribution of a book, magazine, periodical, film, videotape, digitally- or computer-manipulated image, digital image, picture, or other matter that contains a visual depiction of an actual human being engaged in actual or simulated sexually explicit conduct, but does not refer to noncommercial or educational distribution of such matter, including transfers conducted by bona fide lending libraries, museums, schools, or educational organizations. (e) Copy , when used: (1) In reference to an identification document or a picture identification card, means a photocopy, photograph, or digitally scanned reproduction; (2) In reference to a visual depiction of sexually explicit conduct, means a duplicate of the depiction itself (e.g., the film, the image on a Web site, the image taken by a webcam, the photo in a magazine); and (3) In reference to an image on a webpage for purposes of §§ 75.6(a), 75.7(a), and 75.7(b), means every page of a Web site on which the image appears. (f) Internet means collectively the myriad of computer and telecommunications facilities, including equipment and operating software, which constitute the interconnected world-wide network of networks that employ the Transmission Control Protocol/Internet Protocol, or any predecessor or successor protocols to such protocol, to communicate information of all kinds by wire or radio. (g) Computer site or service means a computer server-based file repository or file distribution service that is accessible over the Internet, World Wide Web, Usenet, or any other interactive computer service (as defined in 47 U.S.C. 230(f)(2)). Computer site or service includes without limitation, sites or services using hypertext markup language, hypertext transfer protocol, file transfer protocol, electronic mail transmission protocols, similar data transmission protocols, or any successor protocols, including but not limited to computer sites or services on the World Wide Web. (h) URL means uniform resource locator. (i) Electronic communications service has the meaning set forth in 18 U.S.C. 2510(15). (j) Remote computing service has the meaning set forth in 18 U.S.C. 2711(2). (k) Manage content means to make editorial or managerial decisions concerning the sexually explicit content of a computer site or service, but does not mean those who manage solely advertising, compliance with copyright law, or other forms of non-sexually explicit content. (l) Interactive computer service has the meaning set forth in 47 U.S.C. 230(f)(2). (m) Date of original production or original production date means the date the primary producer actually filmed, videotaped, or photographed, or created a digitally- or computer-manipulated image or picture of, the visual depiction of an actual human being engaged in actual or simulated sexually explicit conduct. For productions that occur over more than one date, it means the single date that was the first of those dates. For a performer who was not 18 as of this date, the date of original production is the date that such a performer was first actually filmed, videotaped, photographed, or otherwise depicted. With respect to matter that is a secondarily produced compilation of individual, primarily produced depictions, the date of original production of the matter is the earliest date after July 3, 1995, on which any individual depiction in that compilation was produced. For a performer in one of the individual depictions contained in that compilation who was not 18 as of this date, the date of original production is the date that the performer was first actually filmed, videotaped, photographed, or otherwise depicted for the individual depiction at issue. (n) Sexually explicit conduct has the meaning set forth in 18 U.S.C. 2256(2)(A). (o) Simulated sexually explicit conduct means conduct engaged in by performers that is depicted in a manner that would cause a reasonable viewer to believe that the performers engaged in actual sexually explicit conduct, even if they did not in fact do so. It does not mean not sexually explicit conduct that is merely suggested. (p) Regularly and in the normal course of business collects and maintains means any business practice(s) that ensure that the producer confirms the identity and age of all employees who perform in visual depictions. (q) Individually identifiable information means information about the name, address, and date of birth of employees that is capable of being retrieved on the basis of a name of an employee who appears in a specified visual depiction. (r) All performers, including minor performers means all performers who appear in any visual depiction, no matter for how short a period of time. (s) Employed by means, in reference to a performer, one who receives pay for performing in a visual depiction or is otherwise in an employer-employee relationship with the producer of the visual depiction as evidenced by oral or written agreements." 28:28:2.0.1.1.28.0.1.2,28,Judicial Administration,I,,75,PART 75—CHILD PROTECTION RESTORATION AND PENALTIES ENHANCEMENT ACT OF 1990; PROTECT ACT; ADAM WALSH CHILD PROTECTION AND SAFETY ACT OF 2006; RECORDKEEPING AND RECORD-INSPECTION PROVISIONS,,,,§ 75.2 Maintenance of records.,DOJ,,,"[Order No. 2765-2005, 70 FR 29619, May 24, 2005, as amended at 73 FR 77469, Dec. 18, 2008]","(a) Any producer of any book, magazine, periodical, film, videotape, digitally- or computer-manipulated image, digital image, picture, or other matter that is produced in whole or in part with materials that have been mailed or shipped in interstate or foreign commerce, or is shipped, transported, or intended for shipment or transportation in interstate or foreign commerce, and that contains one or more visual depictions of an actual human being engaged in actual sexually explicit conduct (except lascivious exhibition of the genitals or pubic area of any person) made after July 3, 1995, or one or more visual depictions of an actual human being engaged in simulated sexually explicit conduct or in actual sexually explicit conduct limited to lascivious exhibition of the genitals or pubic area of any person made after March 18, 2009, shall, for each performer portrayed in such visual depiction, create and maintain records containing the following: (1) The legal name and date of birth of each performer, obtained by the producer's examination of a picture identification card prior to production of the depiction. For any performer portrayed in a depiction of an actual human being engaged in actual sexually explicit conduct (except lascivious exhibition of the genitals or pubic area of any person) made after July 3, 1995, or of an actual human being engaged in simulated sexually explicit conduct or in actual sexually explicit conduct limited to lascivious exhibition of the genitals or pubic area of any person made after March 18, 2009, the records shall also include a legible hard copy or legible digitally scanned or other electronic copy of a hard copy of the identification document examined and, if that document does not contain a recent and recognizable picture of the performer, a legible hard copy of a picture identification card. For any performer portrayed in a depiction of an actual human being engaged in actual sexually explicit conduct (except lascivious exhibition of the genitals or pubic area of any person) made after June 23, 2005, or of an actual human being engaged in simulated sexually explicit conduct or in actual sexually explicit conduct limited to lascivious exhibition of the genitals or pubic area of any person made after March 18, 2009, the records shall include a copy of the depiction, and, where the depiction is published on an Internet computer site or service, a copy of any URL associated with the depiction. If no URL is associated with the depiction, the records shall include another uniquely identifying reference associated with the location of the depiction on the Internet. For any performer in a depiction performed live on the Internet, the records shall include a copy of the depiction with running-time sufficient to identify the performer in the depiction and to associate the performer with the records needed to confirm his or her age. (2) Any name, other than the performer's legal name, ever used by the performer, including the performer's maiden name, alias, nickname, stage name, or professional name. For any performer portrayed in a visual depiction of an actual human being engaged in actual sexually explicit conduct (except lascivious exhibition of the genitals or pubic area of any person) made after July 3, 1995, or of an actual human being engaged in simulated sexually explicit conduct or in actual sexually explicit conduct limited to lascivious exhibition of the genitals or pubic area of any person made after March 18, 2009, such names shall be indexed by the title or identifying number of the book, magazine, film, videotape, digitally- or computer-manipulated image, digital image, picture, URL, or other matter. Producers may rely in good faith on representations by performers regarding accuracy of the names, other than legal names, used by performers. (3) Records required to be created and maintained under this part shall be organized alphabetically, or numerically where appropriate, by the legal name of the performer (by last or family name, then first or given name), and shall be indexed or cross-referenced to each alias or other name used and to each title or identifying number of the book, magazine, film, videotape, digitally- or computer-manipulated image, digital image, picture, URL, or other matter. (4) The primary producer shall create a record of the date of original production of the depiction. (b) A producer who is a secondary producer as defined in § 75.1(c) may satisfy the requirements of this part to create and maintain records by accepting from the primary producer, as defined in § 75.1(c), copies of the records described in paragraph (a) of this section. Such a secondary producer shall also keep records of the name and address of the primary producer from whom he received copies of the records. The copies of the records may be redacted to eliminate non-essential information, including addresses, phone numbers, social security numbers, and other information not necessary to confirm the name and age of the performer. However, the identification number of the picture identification card presented to confirm the name and age may not be redacted. (c) The information contained in the records required to be created and maintained by this part need be current only as of the date of original production of the visual depiction to which the records are associated. If the producer subsequently produces an additional book, magazine, film, videotape, digitally- or computer-manipulated image, digital image, or picture, or other matter (including but not limited to an Internet computer site or service) that contains one or more visual depictions of an actual human being engaged in actual or simulated sexually explicit conduct made by a performer for whom he maintains records as required by this part, the producer may add the additional title or identifying number and the names of the performer to the existing records maintained pursuant to § 75.2(a)(2). Producers of visual depictions made after July 3, 1995, and before June 23, 2005, may rely on picture identification cards that were valid forms of required identification under the provisions of part 75 in effect during that time period. (d) For any record of a performer in a visual depiction of actual sexually explicit conduct (except lascivious exhibition of the genitals or pubic area of any person) created or amended after June 23, 2005, or of a performer in a visual depiction of simulated sexually explicit conduct or actual sexually explicit conduct limited to lascivious exhibition of the genitals or pubic area of any person made after March 18, 2009, all such records shall be organized alphabetically, or numerically where appropriate, by the legal name of the performer (by last or family name, then first or given name), and shall be indexed or cross-referenced to each alias or other name used and to each title or identifying number of the book, magazine, film, videotape, digitally- or computer-manipulated image, digital image, or picture, or other matter (including but not limited to an Internet computer site or service). If the producer subsequently produces an additional book, magazine, film, videotape, digitally- or computer-manipulated image, digital image, or picture, or other matter (including but not limited to an Internet computer site or service) that contains one or more visual depictions of an actual human being engaged in actual or simulated sexually explicit conduct made by a performer for whom he maintains records as required by this part, the producer shall add the additional title or identifying number and the names of the performer to the existing records, and such records shall thereafter be maintained in accordance with this paragraph. (e) Records required to be maintained under this part shall be segregated from all other records, shall not contain any other records, and shall not be contained within any other records. (f) Records required to be maintained under this part may be kept either in hard copy or in digital form, provided that they include scanned copies of forms of identification and that there is a custodian of the records who can authenticate each digital record. (g) Records are not required to be maintained by either a primary producer or by a secondary producer for a visual depiction of sexually explicit conduct that consists only of lascivious exhibition of the genitals or pubic area of a person, and contains no other sexually explicit conduct, whose original production date was prior to March 18, 2009. (h) A primary or secondary producer may contract with a non-employee custodian to retain copies of the records that are required under this part. Such custodian must comply with all obligations related to records that are required by this Part, and such a contract does not relieve the producer of his liability under this part." 28:28:2.0.1.1.28.0.1.3,28,Judicial Administration,I,,75,PART 75—CHILD PROTECTION RESTORATION AND PENALTIES ENHANCEMENT ACT OF 1990; PROTECT ACT; ADAM WALSH CHILD PROTECTION AND SAFETY ACT OF 2006; RECORDKEEPING AND RECORD-INSPECTION PROVISIONS,,,,§ 75.3 Categorization of records.,DOJ,,,,"Records required to be maintained under this part shall be categorized alphabetically, or numerically where appropriate, and retrievable to: All name(s) of each performer, including any alias, maiden name, nickname, stage name or professional name of the performer; and according to the title, number, or other similar identifier of each book, magazine, periodical, film, videotape, digitally- or computer-manipulated image, digital image, or picture, or other matter (including but not limited to Internet computer site or services). Only one copy of each picture of a performer's picture identification card and identification document must be kept as long as each copy is categorized and retrievable according to any name, real or assumed, used by such performer, and according to any title or other identifier of the matter." 28:28:2.0.1.1.28.0.1.4,28,Judicial Administration,I,,75,PART 75—CHILD PROTECTION RESTORATION AND PENALTIES ENHANCEMENT ACT OF 1990; PROTECT ACT; ADAM WALSH CHILD PROTECTION AND SAFETY ACT OF 2006; RECORDKEEPING AND RECORD-INSPECTION PROVISIONS,,,,§ 75.4 Location of records.,DOJ,,,"[73 FR 77470, Dec. 18, 2008]","Any producer required by this part to maintain records shall make such records available at the producer's place of business or at the place of business of a non-employee custodian of records. Each record shall be maintained for seven years from the date of creation or last amendment or addition. If the producer ceases to carry on the business, the records shall be maintained for five years thereafter. If the producer produces the book, magazine, periodical, film, videotape, digitally- or computer-manipulated image, digital image, or picture, or other matter (including but not limited to Internet computer site or services) as part of his control of or through his employment with an organization, records shall be made available at the organization's place of business or at the place of business of a non-employee custodian of records. If the organization is dissolved, the person who was responsible for maintaining the records, as described in § 75.6(b), shall continue to maintain the records for a period of five years after dissolution." 28:28:2.0.1.1.28.0.1.5,28,Judicial Administration,I,,75,PART 75—CHILD PROTECTION RESTORATION AND PENALTIES ENHANCEMENT ACT OF 1990; PROTECT ACT; ADAM WALSH CHILD PROTECTION AND SAFETY ACT OF 2006; RECORDKEEPING AND RECORD-INSPECTION PROVISIONS,,,,§ 75.5 Inspection of records.,DOJ,,,"[Order No. 2765-2005, 70 FR 29619, May 24, 2005, as amended at 73 FR 77470, Dec. 18, 2008]","(a) Authority to inspect. Investigators authorized by the Attorney General (hereinafter “investigators”) are authorized to enter without delay and at reasonable times any establishment of a producer where records under § 75.2 are maintained to inspect during regular working hours and at other reasonable times, and within reasonable limits and in a reasonable manner, for the purpose of determining compliance with the record-keeping requirements of the Act and any other provision of the Act (hereinafter “investigator”). (b) Advance notice of inspections. Advance notice of record inspections shall not be given. (c) Conduct of inspections. (1) Inspections shall take place during normal business hours and at such places as specified in § 75.4. For the purpose of this part, “normal business hours” are from 9 a.m. to 5 p.m., local time, Monday through Friday, or, for inspections to be held at the place of business of a producer, any other time during which the producer is actually conducting business relating to producing a depiction of actual sexually explicit conduct. To the extent that the producer does not maintain at least 20 normal business hours per week, the producer must provide notice to the inspecting agency of the hours during which records will be available for inspection, which in no case may be less than 20 hours per week. (2) Upon commencing an inspection, the investigator shall: (i) Present his or her credentials to the owner, operator, or agent in charge of the establishment; (ii) Explain the nature and purpose of the inspection, including the limited nature of the records inspection, and the records required to be kept by the Act and this part; and (iii) Indicate the scope of the specific inspection and the records that he or she wishes to inspect. (3) The inspections shall be conducted so as not to unreasonably disrupt the operations of the establishment. (4) At the conclusion of an inspection, the investigator may informally advise the producer or his non-employee custodian of records of any apparent violations disclosed by the inspection. The producer or non-employee custodian or records may bring to the attention of the investigator any pertinent information regarding the records inspected or any other relevant matter. (d) Frequency of inspections. Records may be inspected once during any four-month period, unless there is a reasonable suspicion to believe that a violation of this part has occurred, in which case an additional inspection or inspections may be conducted before the four-month period has expired. (e) Copies of records. An investigator may copy, at no expense to the producer or to his non-employee custodian of records, during the inspection, any record that is subject to inspection. (f) Other law enforcement authority. These regulations do not restrict the otherwise lawful investigative prerogatives of an investigator while conducting an inspection. (g) Seizure of evidence. Notwithstanding any provision of this part or any other regulation, a law enforcement officer may seize any evidence of the commission of any felony while conducting an inspection." 28:28:2.0.1.1.28.0.1.6,28,Judicial Administration,I,,75,PART 75—CHILD PROTECTION RESTORATION AND PENALTIES ENHANCEMENT ACT OF 1990; PROTECT ACT; ADAM WALSH CHILD PROTECTION AND SAFETY ACT OF 2006; RECORDKEEPING AND RECORD-INSPECTION PROVISIONS,,,,§ 75.6 Statement describing location of books and records.,DOJ,,,"[Order No. 2765-2005, 70 FR 29619, May 24, 2005, as amended at 73 FR 77470, Dec. 18, 2008]","(a) Any producer of any book, magazine, periodical, film, videotape, digitally- or computer-manipulated image, digital image, or picture, or other matter (including but not limited to an Internet computer site or service) that contains one or more visual depictions of an actual human being engaged in actual sexually explicit conduct made after July 3, 1995, and produced, manufactured, published, duplicated, reproduced, or reissued after July 3, 1995, or of a performer in a visual depiction of simulated sexually explicit conduct or actual sexually explicit conduct limited to lascivious exhibition of the genitals or pubic area of any person made after March 18, 2009, shall cause to be affixed to every copy of the matter a statement describing the location of the records required by this part. A producer may cause such statement to be affixed, for example, by instructing the manufacturer of the book, magazine, periodical, film, videotape, digitally- or computer-manipulated image, digital image, picture, or other matter to affix the statement. In this paragraph, the term “copy” includes every page of a Web site on which a visual depiction of an actual human being engaged in actual or simulated sexually explicit conduct appears. (b) Every statement shall contain: (1) The title of the book, magazine, periodical, film, or videotape, digitally- or computer-manipulated image, digital image, picture, or other matter (unless the title is prominently set out elsewhere in the book, magazine, periodical, film, or videotape, digitally- or computer-manipulated image, digital image, picture, or other matter) or, if there is no title, an identifying number or similar identifier that differentiates this matter from other matters which the producer has produced; (2) [Reserved] (3) A street address at which the records required by this part may be made available. A post office box address does not satisfy this requirement. (c) If the producer is an organization, the statement shall also contain the title and business address of the person who is responsible for maintaining the records required by this part. (d) The information contained in the statement must be accurate as of the date on which the book, magazine, periodical, film, videotape, digitally or computer-manipulated image, digital image, picture, or other matter is produced or reproduced. (e) For the purposes of this section, the required statement shall be displayed in typeface that is no less than 12-point type or no smaller than the second-largest typeface on the material and in a color that clearly contrasts with the background color of the material. For any electronic or other display of the notice that is limited in time, the notice must be displayed for a sufficient duration and of a sufficient size to be capable of being read by the average viewer. (f) If the producer contracts with a non-employee custodian of records to serve as the person responsible for maintaining his records, the statement shall contain the name and business address of that custodian and may contain that information in lieu of the information required in paragraphs (b)(3) and (c) of this section." 28:28:2.0.1.1.28.0.1.7,28,Judicial Administration,I,,75,PART 75—CHILD PROTECTION RESTORATION AND PENALTIES ENHANCEMENT ACT OF 1990; PROTECT ACT; ADAM WALSH CHILD PROTECTION AND SAFETY ACT OF 2006; RECORDKEEPING AND RECORD-INSPECTION PROVISIONS,,,,§ 75.7 Exemption statement.,DOJ,,,"[73 FR 77471, Dec. 18, 2008]","(a) Any producer of any book, magazine, periodical, film, videotape, digitally- or computer-manipulated image, digital image, picture, or other matter may cause to be affixed to every copy of the matter a statement attesting that the matter is not covered by the record-keeping requirements of 18 U.S.C. 2257(a)-(c) or 18 U.S.C. 2257A(a)-(c), as applicable, and of this part if: (1) The matter contains visual depictions of actual sexually explicit conduct made only before July 3, 1995, or was last produced, manufactured, published, duplicated, reproduced, or reissued before July 3, 1995. Where the matter consists of a compilation of separate primarily produced depictions, the entirety of the conduct depicted was produced prior to July 3, 1995, regardless of the date of secondary production; (2) The matter contains only visual depictions of simulated sexually explicit conduct or of actual sexually explicit conduct limited to lascivious exhibition of the genitals or pubic area of any person, made before March 18, 2009; (3) The matter contains only some combination of the visual depictions described in paragraphs (a)(1) and (a)(2) of this section. (b) If the primary producer and the secondary producer are different entities, the primary producer may certify to the secondary producer that the visual depictions in the matter satisfy the standards under paragraphs (a)(1) through (a)(3) of this section. The secondary producer may then cause to be affixed to every copy of the matter a statement attesting that the matter is not covered by the record-keeping requirements of 18 U.S.C. 2257(a)-(c) or 18 U.S.C. 2257A(a)-(c), as applicable, and of this part." 28:28:2.0.1.1.28.0.1.8,28,Judicial Administration,I,,75,PART 75—CHILD PROTECTION RESTORATION AND PENALTIES ENHANCEMENT ACT OF 1990; PROTECT ACT; ADAM WALSH CHILD PROTECTION AND SAFETY ACT OF 2006; RECORDKEEPING AND RECORD-INSPECTION PROVISIONS,,,,§ 75.8 Location of the statement.,DOJ,,,"[Order No. 2765-2005, 70 FR 29619, May 24, 2005, as amended at 73 FR 77471, Dec. 18, 2008]","(a) All books, magazines, and periodicals shall contain the statement required in § 75.6 or suggested in § 75.7 either on the first page that appears after the front cover or on the page on which copyright information appears. (b) In any film or videotape which contains end credits for the production, direction, distribution, or other activity in connection with the film or videotape, the statement referred to in § 75.6 or § 75.7 shall be presented at the end of the end titles or final credits and shall be displayed for a sufficient duration to be capable of being read by the average viewer. (c) Any other film or videotape shall contain the required statement within one minute from the start of the film or videotape, and before the opening scene, and shall display the statement for a sufficient duration to be read by the average viewer. (d) A computer site or service or Web address containing a digitally- or computer-manipulated image, digital image, or picture shall contain the required statement on every page of a Web site on which a visual depiction of an actual human being engaged in actual or simulated sexually explicit conduct appears. Such computer site or service or Web address may choose to display the required statement in a separate window that opens upon the viewer's clicking or mousing-over a hypertext link that states, “18 U.S.C. 2257 [and/or 2257A, as appropriate] Record-Keeping Requirements Compliance Statement.” (e) For purpose of this section, a digital video disc (DVD) containing multiple depictions is a single matter for which the statement may be located in a single place covering all depictions on the DVD. (f) For all other categories not otherwise mentioned in this section, the statement is to be prominently displayed consistent with the manner of display required for the aforementioned categories." 28:28:2.0.1.1.28.0.1.9,28,Judicial Administration,I,,75,PART 75—CHILD PROTECTION RESTORATION AND PENALTIES ENHANCEMENT ACT OF 1990; PROTECT ACT; ADAM WALSH CHILD PROTECTION AND SAFETY ACT OF 2006; RECORDKEEPING AND RECORD-INSPECTION PROVISIONS,,,,§ 75.9 Certification of records.,DOJ,,,"[73 FR 77471, Dec. 18, 2008]","(a) In general. The provisions of §§ 75.2 through 75.8 shall not apply to a visual depiction of actual sexually explicit conduct constituting lascivious exhibition of the genitals or pubic area of a person or to a visual depiction of simulated sexually explicit conduct if all of the following requirements are met: (1) The visual depiction is intended for commercial distribution; (2) The visual depiction is created as a part of a commercial enterprise; (3) Either— (i) The visual depiction is not produced, marketed or made available in circumstances such that an ordinary person would conclude that the matter contains a visual depiction that is child pornography as defined in 18 U.S.C. 2256(8), or, (ii) The visual depiction is subject to regulation by the Federal Communications Commission acting in its capacity to enforce 18 U.S.C. 1464 regarding the broadcast of obscene, indecent, or profane programming; and (4) The producer of the visual depiction certifies to the Attorney General that he regularly and in the normal course of business collects and maintains individually identifiable information regarding all performers, including minor performers, employed by that person, pursuant to Federal and State tax, labor, and other laws, labor agreements, or otherwise pursuant to industry standards, where such information includes the name, address, and date of birth of the performer. (A producer of materials depicting sexually explicit conduct not covered by the certification regime is not disqualified from using the certification regime for materials covered by the certification regime.) (b) Form of certification. The certification shall take the form of a letter addressed to the Attorney General signed either by the chief executive officer or another executive officer of the entity making the certification, or in the event the entity does not have a chief executive officer or other executive officer, the senior manager responsible for overseeing the entity's activities. (c) Content of certification. The certification shall contain the following: (1) A statement setting out the basis under 18 U.S.C. 2257A and this part under which the certifying entity and any sub-entities, if applicable, are permitted to avail themselves of this exemption, and basic evidence justifying that basis. (2) The following statement: “I hereby certify that [name of entity] [and all sub-entities listed in this letter] regularly and in the normal course of business collect and maintain individually identifiable information regarding all performers employed by [name of entity]”; and (3) If applicable because the visual depictions at issue were produced outside the United States, the statement that: “I hereby certify that the foreign producers of the visual depictions produced by [name of entity] either collect and maintain the records required by sections 2257 and 2257A of title 18 of the U.S. Code, or have certified to the Attorney General that they collect and maintain individually identifiable information regarding all performers, including minor performers, employed by that person, pursuant to tax, labor, and other laws, labor agreements, or otherwise pursuant to industry standards, where such information includes the name, address, and date of birth of the performer, in accordance with 28 CFR part 75; and [name of entity] has copies of those records or certifications.” The producer may provide the following statement instead: “I hereby certify that with respect to foreign primary producers who do not either collect and maintain the records required by sections 2257 and 2257A of title 18 of the U.S. Code, or certify to the Attorney General that they collect and maintain individually identifiable information regarding all performers, including minor performers, whom they employ pursuant to tax, labor, or other laws, labor agreements, or otherwise pursuant to industry standards, where such information includes the names, addresses, and dates of birth of the performers, in accordance with 28 CFR part 75, [name of entity] has taken reasonable steps to confirm that the performers in any depictions that may potentially constitute simulated sexually explicit conduct or lascivious exhibition of the genitals or pubic area of any person were not minors at the time the depictions were originally produced.” “Reasonable steps” for purposes of this statement may include, but are not limited to, a good-faith review of the visual depictions themselves or a good-faith reliance on representations or warranties from a foreign producer. (d) Entities covered by each certification. A single certification may cover all or some subset of all entities owned by the entity making the certification. However, the names of all sub-entities covered must be listed in such certification and must be cross-referenced to the matter for which the sub-entity served as the producer. (e) Timely submission of certification. An initial certification is due June 16, 2009. Initial certifications of producers who begin production after December 18, 2008, but before June 16, 2009, are due on June 16, 2009. Initial certifications of producers who begin production after June 16, 2009 are due within 60 days of the start of production. A subsequent certification is required only if there are material changes in the information the producer certified in the initial certification; subsequent certifications are due within 60 days of the occurrence of the material change. In any case where a due date or last day of a time period falls on a Saturday, Sunday, or federal holiday, the due date or last day of a time period is considered to run until the next day that is not a Saturday, Sunday, or federal holiday." 29:29:1.1.1.1.42.0.81.1,29,Labor,,,75,PART 75—DEPARTMENT OF LABOR REVIEW AND CERTIFICATION PROCEDURES FOR RURAL INDUSTRIALIZATION LOAN AND GRANT PROGRAMS UNDER THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT OF 1972,,,,§ 75.1 Introduction.,DOL,,,"[40 FR 4394, Jan. 29, 1975, as amended at 72 FR 37103, July 9, 2007]","(a) Section 118 of the Consolidated Farm and Rural Development Act authorizes the Rural Development Administration (RDA) of the U.S. Department of Agriculture (USDA) to make or guarantee loans to finance industrial and business activities in rural areas (broadly defined to include any place with a population of less than 50,000), 7 U.S.C. 1932(d). The Act also permits RDA to make grants to public bodies for measures designed to facilitate the development of private business enterprises and for pollution control and abatement projects. (b) As a prior condition for the approval of such loans, guarantees and grants, the Act further specifies that the Secretary of Labor must certify to the Secretary of Agriculture within 30 days after referral, that the loan or grant is not calculated to or likely to result in the transfer from one area to another of any employment or business activity provided by operations of the applicant and is not calculated to or likely to result in an increase in the production of goods, materials, or commodities, or the availability of services or facilities in the area, when there is not sufficient demand for such goods, materials, commodities, services, or facilities, to employ the efficient capacity of existing competitive commercial or industrial enterprises, unless such financial or other assistance will not have an adverse effect upon existing competitive enterprises in the area. Responsibility within the Department of Labor (DOL) for the review and certification process has been assigned to the Employment and Training Administration (ETA). (c) The following procedures have been established by the Department of Labor in consultation with the USDA for the issuance of labor certifications under this program. These procedures are designed to insure the orderly and expeditious review of the applications by the Department of Labor (DOL) within 30 days after they have been received from the USDA. It is anticipated that the procedure will permit completion of all cases within the 30-day legal maximum processing period permitted under the law." 29:29:1.1.1.1.42.0.81.2,29,Labor,,,75,PART 75—DEPARTMENT OF LABOR REVIEW AND CERTIFICATION PROCEDURES FOR RURAL INDUSTRIALIZATION LOAN AND GRANT PROGRAMS UNDER THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT OF 1972,,,,§ 75.11 Standards for the review of applications.,DOL,,,"[40 FR 4394, Jan. 29, 1975, as amended at 72 FR 37103, July 9, 2007]","(a) Applications to be routinely approved without field review. The following types of applications will be routinely approved and certified by the Employment and Training Administration (ETA), provided that the required information is submitted by the applicant: (1) Loans which involve the change of ownership from one person or group to another or the refinancing of an existing loan. Provided, That such loans will not result in any transfer from one area to another of any employment or business activity provided by operations of the applicant and are not calculated to or likely to result in an increase in the production of goods, materials, or commodities, or the availability of services, or facilities, to employ the efficient capacity of existing competitive commercial or industrial enterprise. In transmitting such applications to ETA, RDA will include: (i) A letter of transmittal stating the name and location of the applicant and the amount of the loan, and certifying that the loan is either for the purpose of financing the sale of the business or for the purpose of refinancing a loan and is not calculated to or likely to result in the transfer or expansion of employment or operations: (ii) Three copies of Form RD 449-22, Certification of Non-Relocation; and (iii) Three copies of Form RD 449-23, Data Information Sheet. ETA will issue an affirmative certification on such applications, without further review, within 10 working days. (2) Loans of less than $100,000 where the loan proceeds are expected to result in the employment of not more than five workers. In such instances, the RDA transmittal letter will call attention to the fact that the application involved falls within this category. This should be supported by data in the revised Forms RD 449-22 and 449-23 to be forwarded in triplicate to the DOL. For loan applications in this category, the RDA will also attach a certification signed by the State RDA director indicating that he has reviewed the loan application and certifying that such a loan is not calculated to or likely to result in the transfer from one area to another of any employment or business activity provided by operations of the applicant and is not calculated to or likely to result in an increase in the production of goods, materials, or commodities, or the availability of services or facilities, when there is not sufficient demand for such goods, materials, commodities, services, or facilities in the area, to employ the efficient capacity of existing competitive commercial or industrial enterprises, unless such financial or other assistance will not have an adverse effect upon existing competitive enterprises in the area. Unless there is other evidence to indicate an adverse effect on unemployment or competitive business enterprises, ETA will accept this certificate and accompanying forms as the basis for an affirmative certification without further review and will so certify within 10 working days after receipt. (3) Grants where there are no known current or future occupants. In the case of such applications, e.g., a county's proposal to build an industrial park, RDA will send a transmittal letter to ETA stating the name and location of the applicant, and the amount and purpose of the grant, and certifying that there are no known current or future occupations. RDA will also forward with the letter a resolution or other statement from the local governing body agreeing to a prior review and certification by ETA of any person or organization which may occupy all or part of the facility within 3 years from the date of the certification, to insure that the requirements of the Act are being complied with. ETA will, within 10 days after receipt of such applications, issue an affirmative certification conditional upon the right of review and certification of each potential occupant within the 3-year period. (4) Grants where the occupants are known, and the improvement will not result in a transfer or increase in operations or employment by the occupants. The RDA transmittal letter shall provide, in addition to the information specified in paragraph (a)(3) of this section, the names of the occupants and a statement that this grant is not calculated to or likely to result in a transfer or increase in operations or employment. The applicant shall also be required to submit the same type of resolution as that specified in paragraph (a)(3) of this section. On the receipt of such data, ETA will issue a certification on the grant application and will certify the known occupants as well. The certification may require, however, that additional occupants or a change in occupants within the first 3 years after certification is subject to review and a redetermination. (b) Applications which will require field or other review. (1) All loan and grant applications other than those specified in paragraph (a) of this section will be subject to a full review by the ETA prior to the issuance of a certification. For each loan application, the RDA shall submit to ETA: (i) A letter of transmittal stating the name and location of the applicant and the amount of the loan; (ii) Six copies of the Certificate of Non-Relocation (Form RD 449-22); (iii) Six copies of the Data Information Sheet (Form RD 449-23); and (iv) Any supplemental information, including A-95 Clearinghouse Reports, which RDA believes may be of value to ETA in evaluating the application. For grant applications, the letter of transmittal shall also provide information about the purpose of the grant. Two copies of a resolution or other statement of the type specified under paragraph (a)(3) of this section shall also be submitted with each grant application. (2) Upon receipt of applications, ETA will review the materials for completeness and will inform RDA in writing of any missing items within 2 working days after the date of receipt. It is agreed that in such instances the statutory 30-day period will not begin until the file is complete. State workforce agencies will be requested, through the ETA regional offices, to provide labor market information needed to determine whether the loan would result in adverse competitive effect upon existing competitive enterprises in the area. Comments will be due in the ETA national office 3 weeks after receipt of the request in the ETA regional offices. (3) To assist in the review process, DOL will publish in the Federal Register a weekly listing of applications received (other than those to be routinely certified). The listing will include the name and location (City and State) of the applicant and the principal product or type of business activity. In the case of grant applications, the listing will also include the name and principal product or business activity of the occupant(s) of the facility for which the grant is being made. All interested parties will be afforded a 2-week period from the date of publication to comment in writing to ETA. In the event that adverse comments are received, the applicant will be sent copies of such comments by certified mail, and afforded an opportunity to provide such additional information as the applicant deems appropriate within 2 weeks from the date of transmittal. The Rural Development Administration will also be provided with copies of such adverse comments. (4) In some instances, involving particularly complex situations, ETA may request the Economic Development Administration (EDA) in the Department of Commerce, or other agencies to provide supplemental data. The number of such requests will depend upon the extent to which the DOL is capable of making resources available to EDA or other agencies to perform this function. (5) When all the data have been assembled, a determination will be made by ETA of whether the requested certifications may be certified or denied. RDA will be notified in writing of the determination. If DOL's investigation indicates the need for additional information, all material will be returned to RDA with instructions indicating the additional information needed to make a certification. Continuation of the 30-day time limit will begin again when the additional material is returned to Labor. (6) All denials will be given additional consideration if the applicant or the USDA provides additional evidence which they believe merits further consideration. If the DOL reaffirms its denial after a review of all available facts and such additional investigation as it may make, such denial shall be considered as final." 34:34:1.1.1.1.21.1.35.1,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,A,Subpart A—General,,§ 75.1 Programs to which part 75 applies.,ED,,,"[89 FR 70320, Aug. 29, 2024]","(a) General. (1) The regulations in this part apply to each direct grant program of the Department of Education, except as specified in these regulations for direct formula grant programs, as referenced in paragraph (c)(3) of this section. (2) The Department administers two kinds of direct grant programs. A direct grant program is either a discretionary grant program or a formula grant program other than a State-administered formula grant program covered by 34 CFR part 76. (3) If a direct grant program does not have implementing regulations, the Secretary implements the program under the applicable statutes and regulations and, to the extent consistent with the applicable statutes and regulations, under the General Education Provisions Act and the regulations in this part. With respect to the Impact Aid Program (Title VII of the Elementary and Secondary Education Act of 1965), see 34 CFR 222.19 for the limited applicable regulations in this part. (b) Discretionary grant programs. A discretionary grant program is one that permits the Secretary to use discretionary judgment in selecting applications for funding. (c) Formula grant programs. (1) A formula grant program is one that entitles certain applicants to receive grants if they meet the requirements of the program. Applicants do not compete with each other for the funds, and each grant is either for a set amount or for an amount determined under a formula. (2) The Secretary applies the applicable statutes and regulations to fund projects under a formula grant program. (3) For specific regulations in this part that apply to the selection procedures and grant-making processes for direct formula grant programs, see §§ 75.215 and 75.230. Note 1 to § 75.1: See 34 CFR part 76 for the general regulations that apply to programs that allocate funds by formula among eligible States." 34:34:1.1.1.1.21.1.35.2,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,A,Subpart A—General,,§ 75.2 Exceptions in program regulations to part 75.,ED,,,,"If a program has regulations that are not consistent with part 75, the implementing regulations for that program identify the sections of part 75 that do not apply." 34:34:1.1.1.1.21.1.35.3,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,A,Subpart A—General,,§ 75.4 [Reserved],ED,,,, 34:34:1.1.1.1.21.1.36.4,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,A,Subpart A—General,,§ 75.50 How to find out whether you are eligible.,ED,,,"[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, as amended at 52 FR 27803, July 24, 1987; 89 FR 70320, Aug. 29, 2024]",Eligibility to apply for a grant under a program of the Department is governed by the applicable statutes and regulations for that program. 34:34:1.1.1.1.21.1.36.5,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,A,Subpart A—General,,§ 75.51 How to prove nonprofit status.,ED,,,"[45 FR 22497, Apr. 3, 1980, as amended at 85 FR 82126, Dec. 17, 2020; 89 FR 15702, Mar. 4, 2024; 89 FR 70320, Aug. 29, 2024]","(a) Under some programs, an applicant must show that it is a nonprofit organization. (b) An applicant may show that it is a nonprofit organization by any of the following means: (1) Proof that the Internal Revenue Service currently recognizes the applicant as an organization to which contributions are tax deductible under section 501(c)(3) of the Internal Revenue Code; (2) A statement from a State taxing body or the State attorney general certifying that: (i) The organization is a nonprofit organization operating within the State; and (ii) No part of its net earnings may lawfully benefit any private shareholder or individual; (3) A certified copy of the applicant's certificate of incorporation or similar document if it clearly establishes the nonprofit status of the applicant; or (4) Any item described in paragraphs (b)(1) through (3) of this section if that item applies to a State or national parent organization, together with a statement by the State or parent organization that the applicant is a local nonprofit affiliate." 34:34:1.1.1.1.21.1.36.6,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,A,Subpart A—General,,§ 75.52 Eligibility of faith-based organizations for a grant and nondiscrimination against those organizations.,ED,,,"[85 FR 82126, Dec. 17, 2020, as amended at 89 FR 15702, Mar. 4, 2024]","(a)(1) A faith-based organization is eligible to apply for and to receive a grant under a program of the Department on the same basis as any other private organization. (2)(i) In the selection of grantees, the Department— (A) May not discriminate for or against a private organization on the basis of the organization's religious character, motives, or affiliation, or lack thereof, or on the basis of conduct that would not be considered grounds to favor or disfavor a similarly situated secular organization; and (B) Must ensure that all decisions about grant awards are free from political interference, or even the appearance of such interference, and are made on the basis of merit, not on the basis of religion or religious belief, or the lack thereof. (ii) Notices or announcements of award opportunities and notices of award or contracts must include language substantially similar to that in appendices A and B, respectively, to this part. (3) No grant document, agreement, covenant, memorandum of understanding, policy, or regulation that is used by the Department may require faith-based organizations to provide assurances or notices if they are not required of non-faith-based organizations. Any restrictions on the use of grant funds must apply equally to faith-based and non-faith-based organizations. All organizations that receive grants under a Department program, including organizations with religious character, motives, or affiliation, must carry out eligible activities in accordance with all program requirements, including those prohibiting the use of direct Federal financial assistance to engage in explicitly religious activities, subject to any accommodations that are granted to organizations on a case-by-case basis in accordance with the Constitution and laws of the United States, including Federal civil rights laws. (4) No grant document, agreement, covenant, memorandum of understanding, policy, or regulation that is used by the Department may disqualify faith-based organizations from applying for or receiving grants under a Department program on the basis of the organization's religious character, motives, or affiliation, or lack thereof, or on the basis of conduct that would not be considered grounds to disqualify a similarly situated secular organization. (5) Nothing in this section may be construed to preclude the Department from making an accommodation, including for religious exercise, with respect to one or more program requirements on a case-by-case basis in accordance with the Constitution and laws of the United States, including Federal civil rights laws. (6) The Department may not disqualify an organization from participating in any Department program for which it is eligible on the basis of the organization's indication that it may request an accommodation with respect to one or more program requirements, unless the organization has made clear that the accommodation is necessary to its participation and the Department has determined that it would deny the accommodation. (b) The provisions of § 75.532 apply to a faith-based organization that receives a grant under a program of the Department. (c)(1) A private organization that applies for and receives a grant under a program of the Department and engages in explicitly religious activities, such as worship, religious instruction, or proselytization, must offer those activities separately in time or location from any programs or services funded by a grant from the Department. Attendance or participation in any such explicitly religious activities by beneficiaries of the programs and services funded by the grant must be voluntary. (2) The limitations on explicitly religious activities under paragraph (c)(1) of this section do not apply to a faith-based organization that provides services to a beneficiary under a program supported only by “indirect Federal financial assistance.” (3) For purposes of 2 CFR 3474.15, this section, §§ 75.712 and 75.714, and appendices A and B to this part, the following definitions apply: (i) Direct Federal financial assistance means financial assistance received by an entity selected by the Government or a pass-through entity (under this part) to carry out a service (e.g., by contract, grant, or cooperative agreement). References to Federal financial assistance will be deemed to be references to direct Federal financial assistance, unless the referenced assistance meets the definition of indirect Federal financial assistance. (ii) Indirect Federal financial assistance means financial assistance received by a service provider when the service provider is paid for services rendered by means of a voucher, certificate, or other similar means of government-funded payment provided to a beneficiary who is able to make a choice of a service provider. Federal financial assistance provided to an organization is indirect under this definition if— (A) The government program through which the beneficiary receives the voucher, certificate, or other similar means of government-funded payment is neutral toward religion; and (B) The organization receives the assistance wholly as the result of the genuine and independent private choice of the beneficiary, not a choice of the Government. The availability of adequate secular alternatives is a significant factor in determining whether a program affords a genuinely independent and private choice. (iii) Federal financial assistance means assistance that non-Federal entities receive or administer in the form of grants, contracts, loans, loan guarantees, property, cooperative agreements, food commodities, direct appropriations, or other assistance, but does not include a tax credit, deduction, or exemption. (iii) Federal financial assistance means assistance that non-Federal entities receive or administer in the form of grants, contracts, loans, loan guarantees, property, cooperative agreements, food commodities, direct appropriations, or other assistance, but does not include a tax credit, deduction, or exemption. (iv) Pass-through entity means an entity, including a nonprofit or nongovernmental organization, acting under a contract, grant, or other agreement with the Federal Government or with a State or local government, such as a State administering agency, that accepts direct Federal financial assistance as a primary recipient or grantee and distributes that assistance to other organizations that, in turn, provide government-funded social services. (v) Religious exercise has the meaning given to the term in 42 U.S.C. 2000cc-5(7)(A). The definitions of direct Federal financial assistance and indirect Federal financial assistance do not change the extent to which an organization is considered a recipient of Federal financial assistance as those terms are defined under 34 CFR parts 100, 104, 106, and 110. (d)(1) A faith-based organization that applies for or receives a grant under a program of the Department will retain its independence, autonomy, right of expression, religious character, and authority over its governance. A faith-based organization that receives Federal financial assistance from the Department does not lose the protections of law. (2) A faith-based organization that applies for or receives a grant under a program of the Department may, among other things— (i) Retain religious terms in its name; (ii) Continue to carry out its mission, including the definition, development, practice, and expression of its religious beliefs; (iii) Use its facilities to provide services without concealing, removing, or altering religious art, icons, scriptures, or other symbols from these facilities; (iv) Select its board members on the basis of their acceptance of or adherence to the religious tenets of the organization; and (v) Include religious references in its mission statement and other chartering or governing documents. (e) An organization that receives any Federal financial assistance under a program of the Department shall not discriminate against a beneficiary or prospective beneficiary in the provision of program services, or in outreach activities related to such services, on the basis of religion or religious belief, a refusal to hold a religious belief, or a refusal to attend or participate in a religious practice. However, an organization that participates in a program funded by indirect Federal financial assistance need not modify its program activities to accommodate a beneficiary who chooses to expend the indirect aid on the organization's program. (f) If a grantee contributes its own funds in excess of those funds required by a matching or grant agreement to supplement federally funded activities, the grantee has the option to segregate those additional funds or commingle them with the funds required by the matching requirements or grant agreement. However, if the additional funds are commingled, this section applies to all of the commingled funds. (g) A religious organization's exemption from the Federal prohibition on employment discrimination on the basis of religion, in section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1, is not forfeited when the organization receives financial assistance from the Department. (h) The Department shall not construe these provisions in such a way as to advantage or disadvantage faith-based organizations affiliated with historic or well-established religions or sects in comparison with other religions or sects." 34:34:1.1.1.1.21.1.37.10,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,A,Subpart A—General,,§ 75.63 Severability.,ED,,,"[85 FR 82128, Dec. 17, 2020]","If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby." 34:34:1.1.1.1.21.1.37.7,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,A,Subpart A—General,,§ 75.60 Individuals ineligible to receive assistance.,ED,,,"[89 FR 70320, Aug. 29, 2024]","An individual is ineligible to receive a fellowship, scholarship, or discretionary grant funded by the Department if the individual— (a) Is not current in repaying a debt or is in default, as that term is used in 34 CFR part 668, on a debt— (1) Under a program administered by the Department under which an individual received a fellowship, scholarship, or loan that they are obligated to repay; or (2) To the Federal Government under a nonprocurement transaction; and (b) Has not made satisfactory arrangements to repay the debt." 34:34:1.1.1.1.21.1.37.8,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,A,Subpart A—General,,§ 75.61 Certification of eligibility; effect of ineligibility.,ED,,,"[57 FR 30337, July 8, 1992, as amended at 89 FR 70320, Aug. 29, 2024]","(a) An individual who applies for a fellowship, scholarship, or discretionary grant from the Department shall provide with his or her application a certification under the penalty of perjury— (1) That the individual is eligible under § 75.60; and (2) That the individual has not been debarred or suspended by a judge under section 421 of the Controlled Substances Act (21 U.S.C. 862). (b) The Secretary specifies the form of the certification required under paragraph (a) of this section. (c) The Secretary does not award a fellowship, scholarship, or discretionary grant to an individual who— (1) Fails to provide the certification required under paragraph (a) of this section; or (2) Is ineligible, based on information available to the Secretary at the time the award is made. (d) If a fellowship, scholarship, or discretionary grant is made to an individual who provided a false certification under paragraph (a) of this section, the individual is liable for recovery of the funds made available under the certification, for civil damages or penalties imposed for false representation, and for criminal prosecution under 18 U.S.C. 1001." 34:34:1.1.1.1.21.1.37.9,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,A,Subpart A—General,,§ 75.62 Requirements applicable to entities making certain awards.,ED,,,"[57 FR 30337, July 8, 1992, as amended at 89 FR 70320, Aug. 29, 2024]","(a) An entity that provides a fellowship, scholarship, or discretionary grant to an individual under a grant from, or an agreement with, the Secretary shall require the individual who applies for such an award to provide with his or her application a certification under the penalty of perjury— (1) That the individual is eligible under § 75.60; and (2) That the individual has not been debarred or suspended by a judge under section 421 of the Controlled Substances Act (21 U.S.C. 862). (b) An entity subject to this section may not award a fellowship, scholarship, or discretionary grant to an individual if— (1) The individual fails to provide the certification required under paragraph (a) of this section; or (2) The Secretary informs the entity that the individual is ineligible under § 75.60. (c) If a fellowship, scholarship, or discretionary grant is made to an individual who provided a false certification under paragraph (a) of this section, the individual is liable for recovery of the funds made available under the certification, for civil damages or penalties imposed for false representation, and for criminal prosecution under 18 U.S.C. 1001. (d) The Secretary may require an entity subject to this section to provide a list of the individuals to whom fellowship, scholarship, or discretionary grant awards have been made or are proposed to be made by the entity." 34:34:1.1.1.1.21.3.38.1,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,C,Subpart C—How To Apply for a Grant,,§ 75.100 Publication of an application notice; content of the notice.,ED,,,"[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, as amended at 45 FR 86297, Dec. 30, 1980; 51 FR 20824, June 9, 1986; 59 FR 30261, June 10, 1994]","(a) Each fiscal year the Secretary publishes application notices in the Federal Register that explain what kind of assistance is available for new grants under the programs that the Secretary administers. (b) The application notice for a program explains one or more of the following: (1) How to apply for a new grant. (2) If preapplications are used under the program, how to preapply for a new grant." 34:34:1.1.1.1.21.3.38.2,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,C,Subpart C—How To Apply for a Grant,,§ 75.101 Information in the application notice that helps an applicant apply.,ED,,,"[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, as amended at 45 FR 84059, Dec. 22, 1980; 46 FR 3205, Jan. 14, 1981; 51 FR 20824, June 9, 1986; 51 FR 21164, June 11, 1986; 60 FR 63873, Dec. 12, 1995; 61 FR 8455, Mar. 4, 1996; 89 FR 70320, Aug. 29, 2024]","(a) The Secretary may include such information as the following in an application notice: (1) How an applicant can obtain an application package. (2) The amount of funds available for grants, the estimated number of those grants, the estimated amounts of those grants and, if appropriate, the maximum award amounts of those grants. (3) If the Secretary plans to approve multi-year projects, the project period that will be approved. (4) Any priorities established by the Secretary for the program for that year and the method the Secretary will use to implement the priorities. (See § 75.105 Annual priorities. ) (5) Where to find the regulations that apply to the program. (6) The statutory authority for the program. (7) The deadlines established under § 75.102 (Deadline date for applications.) and 34 CFR 79.8 (How does the Secretary provide States an opportunity to comment on proposed Federal financial assistance?). (b) If the Secretary either requires or permits preapplications under a program, an application notice for the program explains how an applicant can get the preapplication form. See 34 CFR 77.1—definitions of “budget period” and “project period.”" 34:34:1.1.1.1.21.3.38.3,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,C,Subpart C—How To Apply for a Grant,,§ 75.102 Deadline date for applications.,ED,,,"[45 FR 22497, Apr. 3, 1980, as amended at 51 FR 20824, June 9, 1986; 69 FR 41201, July 8, 2004; 89 FR 70320, Aug. 29, 2024]","(a) The application notice for a program sets a deadline date for the transmittal of applications to the Department. (b)-(c) [Reserved] (d) If the Secretary allows an applicant to submit a paper application, the applicant must show one of the following as proof of mailing by the deadline date: (1) A legibly dated U.S. Postal Service postmark. (2) A legible mail receipt with the date of mailing stamped by the U.S. Postal Service. (3) A dated shipping label, invoice, or receipt from a commercial carrier. (4) Any other proof of mailing acceptable to the Secretary. (e) If an application is mailed through the U.S. Postal Service, the Secretary does not accept either of the following as proof of mailing: (1) A private metered postmark. (2) A mail receipt that is not dated by the U.S. Postal Service. The U.S. Postal Service does not uniformly provide a dated postmark. Before relying on this method, an applicant should check with its local post office." 34:34:1.1.1.1.21.3.38.4,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,C,Subpart C—How To Apply for a Grant,,§ 75.103 Deadline date for preapplications.,ED,,,"[57 FR 30337, July 8, 1992, as amended at 89 FR 70320, Aug. 29, 2024]","(a) If the Secretary invites or requires preapplications under a program, the application notice for the program sets a deadline date for preapplications. (b) An applicant shall submit its preapplication in accordance with the procedures for applications in § 75.102(d)." 34:34:1.1.1.1.21.3.38.5,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,C,Subpart C—How To Apply for a Grant,,§ 75.104 Additional application provisions.,ED,,,"[61 FR 8455, Mar. 4, 1996, as amended at 89 FR 70320, Aug. 29, 2024]","(a) The Secretary may make a grant only to an eligible party that submits an application. (b) If a maximum award amount is established in a notice published in the Federal Register, the Secretary may reject without consideration or evaluation any application that proposes a project funding level that exceeds the stated maximum award amount. (c) If an applicant wants a new grant, the applicant must submit an application in accordance with the requirements in the application notice." 34:34:1.1.1.1.21.3.38.6,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,C,Subpart C—How To Apply for a Grant,,"§ 75.105 Annual absolute, competitive preference, and invitational priorities.",ED,,,"[46 FR 3205, Jan. 14, 1981, as amended at 57 FR 30337, July 8, 1992; 60 FR 63873, Dec. 12, 1995; 89 FR 70320, Aug. 29, 2024]","(a) What programs are covered by this section? This section applies to any program for which the Secretary establishes priorities for selection of applications in a particular fiscal year. (b) How does the Secretary establish annual priorities? (1) The Secretary establishes final annual priorities by publishing the priorities in a notice in the Federal Register, usually in the application notice for that program. (2) The Secretary publishes proposed annual priorities for public comment, unless: (i) The final annual priorities will be implemented only through invitational priorities (Cross-reference: See 34 CFR 75.105(c)(1)); (ii) The final annual priorities are chosen from a list of priorities already established in the program's regulations; (iii) Publishing proposed annual priorities would be impracticable, unnecessary, or contrary to the public interest; (iv) The program statute requires or authorizes the Secretary to establish specified priorities; (v) The annual priorities are chosen from allowable activities specified in the program statute; or (vi) The final annual priorities are developed under the exemption from rulemaking for the first grant competition under a new or substantially revised program authority pursuant to section 437(d)(1) of GEPA, 20 U.S.C. 1232(d)(1), or an exemption from rulemaking under section 681(d) of the Individuals with Disabilities Education Act, 20 U.S.C. 1481(d), section 191 of the Education Sciences Reform Act, 20 U.S.C. 9581, or any other applicable exemption from rulemaking. (c) How does the Secretary implement an annual priority? The Secretary may choose one or more of the following methods to implement an annual priority: (1) Invitations. The Secretary may simply invite applications that meet a priority. If the Secetary chooses this method, an application that meets the priority receives no competitive or absolute preference over applications that do not meet the priority. (2) Competitive preference. The Secretary may give one of the following kinds of competitive preference to applications that meet a priority. (i) The Secretary may award some or all bonus points to an application depending on the extent to which the application meets the priority. These points are in addition to any points the applicant earns under the selection criteria (see § 75.200(b)). The notice states the maximum number of additional points that the Secretary may award to an application depending upon how well the application meets the priority. (ii) The Secretary may select an application that meets a priority over an application of comparable merit that does not meet the priority. (3) Absolute preference. The Secretary may give an absolute preference to applications that meet a priority. The Secretary establishes a separate competition for applications that meet the priority and reserves all or part of a program's funds solely for that competition. The Secretary may adjust the amount reserved for the priority after determining the number of high-quality applications received." 34:34:1.1.1.1.21.3.40.10,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,C,Subpart C—How To Apply for a Grant,,§ 75.117 Information needed for a multi-year project.,ED,,,"[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, as amended at 59 FR 30261, June 10, 1994; 89 FR 70321, Aug. 29, 2024]","An applicant that proposes a multi-year project shall include in its application: (a) Information that shows why a multi-year project is needed; and (b) A budget narrative accompanied by a budget form prescribed by the Secretary, that provides budget information for each budget period of the proposed project period." 34:34:1.1.1.1.21.3.40.11,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,C,Subpart C—How To Apply for a Grant,,§ 75.118 Requirements for a continuation award.,ED,,,"[59 FR 30261, June 10, 1994, as amended at 64 FR 50391, Sept. 16, 1999; 79 FR 76091, Dec. 19, 2014; 89 FR 70321, Aug. 29, 2024]","(a) A recipient that wants to receive a continuation award shall submit a performance report that provides the most current performance and financial expenditure information, as directed by the Secretary, that is sufficient to meet the reporting requirements of 2 CFR 200.328 and 200.329 and 34 CFR 75.590 and 75.720. (b) If a recipient fails to submit a performance report that meets the requirements of paragraph (a) of this section, the Secretary denies continued funding for the grant. See 2 CFR 200.327, Financial reporting, and 200.328, Monitoring and reporting program performance; and 34 CFR 75.117, Information needed for a multi-year project, 75.250 through 75.253, Approval of multi-year projects, 75.590, Evaluation by the grantee, and 75.720, Financial and performance reports." 34:34:1.1.1.1.21.3.40.12,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,C,Subpart C—How To Apply for a Grant,,§ 75.119 Information needed if private school students participate.,ED,,,"[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, as amended at 53 FR 49143, Dec. 6, 1988]","If a program requires the applicant to provide an opportunity for participation of students enrolled in private schools, the application must include the information required of subgrantees under 34 CFR 76.656." 34:34:1.1.1.1.21.3.40.13,34,Education,,,75,PART 75—DIRECT GRANT PROGRAMS,C,Subpart C—How To Apply for a Grant,,§ 75.125 Submit a separate application to each program.,ED,,,"[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, as amended at 52 FR 27803, July 24, 1987; 60 FR 46493, Sept. 6, 1995]",An applicant shall submit a separate application to each program under which it wants a grant.