Public Rulemaking Procedures
| Published date | 17 December 2019 |
| Citation | 84 FR 68787 |
| Record Number | 2019-27103 |
| Section | Rules and Regulations |
| Court | Commodity Futures Trading Commission |
Federal Register, Volume 84 Issue 242 (Tuesday, December 17, 2019)
[Federal Register Volume 84, Number 242 (Tuesday, December 17, 2019)]
[Rules and Regulations]
[Pages 68787-68790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27103]
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 13
RIN 3038-AE90
Public Rulemaking Procedures
AGENCY: Commodity Futures Trading Commission.
ACTION: Final rule.
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SUMMARY: The Commodity Futures Trading Commission (the ``Commission'')
is issuing a final rule that amends the Commission's regulations to
eliminate the provisions that set forth the procedures for the
formulation, amendment, or repeal of rules or regulations. Because the
Administrative Procedure Act (``APA'') governs the Commission's
rulemaking process, the Commission believes that it is unnecessary to
codify the rulemaking process in a Commission regulation. The amended
regulation is comprised solely of the procedure for filing petitions
for rulemakings, as the APA does not address this process.
DATES: This rule is effective January 16, 2020.
FOR FURTHER INFORMATION CONTACT: Herminio Castro, Senior Special
Counsel, (202) 418-6705, [email protected]; Dhaval Patel, Counsel, (202)
418-5125, [email protected]; Office of the General Counsel, Commodity
Futures Trading Commission, 1155 21st Street NW, Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
I. Introduction
Part 13 sets forth procedures for the formulation, amendment, or
repeal of rules or regulations insofar as those procedures directly
affected the public.\1\ The Commission promulgated part 13 pursuant to
former section 4a(j) of the Commodity Exchange Act (``CEA''),\2\ which
is currently section 2(a)(12) of the CEA.\3\ Section 2(a)(12) states
that the Commission is authorized to promulgate such rules and
regulations as it deems necessary to govern the operating procedures
and conduct of business of the Commission. This section authorizes, but
does not require, the Commission to promulgate regulations governing
its rulemaking process. The Commission first adopted part 13 in 1976
and has not revised part 13 since that time.
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\1\ 17 CFR part 13.
\2\ See 41 FR 17536 (Apr. 27, 1976); Public Law 93-463, Sec.
101(a)(11), 88 Stat. 1391, 7 U.S.C. 4a(j).
\3\ 7 U.S.C. 2(a)(12).
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II. The Proposal
On September 20, 2019, the Commission published a notice of
proposed rulemaking to amend part 13 of its regulations to eliminate
the provisions in part 13 that set forth the process for rulemakings
(``NPRM'').\4\ The Commission explained that as originally adopted,
part 13 was intended to track the APA rulemaking process. However, in
its current form, part 13 does not fully conform to the APA, which may
have created ambiguity and confusion about the procedures to be
followed by the Commission in rulemakings.\5\ The NPRM further noted
that the APA governs Commission rulemakings and that section 553 of the
APA provides for the procedures to be followed by the Commission when
promulgating formal and informal rulemakings.\6\ Because the APA
governs the Commission's rulemaking process, the Commission stated that
it was unnecessary to codify the rulemaking process in a Commission
regulation that would be duplicative of the APA.\7\ The Commission
solicited comments on all aspects of the NPRM. The comment period
closed on October 21, 2019.
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\4\ See Public Rulemaking Procedures, 84 FR 49490 (Sept. 20,
2019) (``NPRM''). The provisions being eliminated are 17 CFR 13.1,
13.3, 13.4, 13.5, and 13.6. 17 CFR 13.2 is being retained and
renumbered as 17 CFR 13.1.
\5\ NPRM, 84 FR 49490. For example, Sec. 13.4(b) allows formal
rulemakings to be conducted through oral presentation or written
submissions; in contrast, APA sections 556 and 557 require a trial-
like process to be followed for formal rulemakings.
\6\ See 5 U.S.C. 551 et seq.; ATTORNEY GENERAL'S MANUAL ON THE
ADMINISTRATIVE PROCEDURE ACT 9 (1947).
\7\ NPRM, 84 FR 49490.
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III. Comments
The Commission received two comment letters on the NPRM from Better
Markets, Inc. and the Administrative Conference of the United States
(``Better Markets'' and ``ACUS'').\8\ The ACUS requested that the
Commission consider conforming Commission regulation Sec. 13.2 with
ACUS's Recommendation 2014-6, Petitions for Rulemaking.\9\ The ACUS in
particular calls for the Commission to
[[Page 68788]]
implement procedures on petitions for rulemaking that (1) include an
explanation of the type of data or arguments that would be useful for
the agency to evaluate the petition, (2) permit the electronic
submission of petitions, (3) invite public comment on petitions for
rulemaking, (4) provide a reasoned explanation beyond a brief statement
of the grounds for denial and make it public, and (5) leverage online
platforms like Regulations.gov to implement the recommendations.
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\8\ See Better Markets Comment Letter No. 62219 (``Better
Markets Letter''), dated October 21, 2019, and ACUS Comment Letter
No. 62213 (``ACUS Letter''), dated October 9, 2019, available at
https://comments.cftc.gov/PublicComments/CommentList.aspx?id=3030.
\9\ See ACUS Letter at 1.
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Better Markets agreed with the Commission's proposal to eliminate
the rulemaking procedures codified in part 13, stating that they
provide little value beyond that provided by the APA and applicable
case law. Better Markets, however, recommended the Commission implement
ACUS's Recommendation 2014-4 concerning ex parte communications.\10\
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\10\ See Better Markets Letter at 5. Better Markets cites to the
ACUS Report on Ex Parte Communications in Informal Rulemaking by Esa
L. Sferra-Bonistalli, issued on May 1, 2014. ACUS did not comment on
the elimination of the rulemaking procedures in part 13.
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IV. Final Rule
The Commission has considered the comments by Better Markets and
the ACUS and is adopting part 13, as proposed, with a few
modifications.\11\ The Commission is amending part 13 of its
regulations to eliminate the provisions that set forth the process for
issuing NPRMs. As noted in the Proposal, part 13 was originally
intended to track the APA rulemaking process, but in its current form,
part 13 does not fully conform to the APA, creating uncertainties about
the procedures to be followed by the Commission in rulemakings. Because
the APA governs the Commission's rulemaking process, it is unnecessary
to codify the rulemaking process in a Commission regulation that would
be duplicative of the APA.\12\
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\11\ Commission regulation Sec. 13.2 is being renumbered Sec.
13.1.
\12\ NPRM, 84 FR 49490.
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In response to ACUS's comment, the Commission notes that it has had
procedures for filing rulemaking petitions since 1976 to ensure that
the public is engaged in the rulemaking process at the Commission.
Specifically, regulation Sec. 13.1 provides instructions as to where
the petition should be sent, what information should be included in the
petition, and the manner in which the Commission must respond to such
petition. The Commission believes that retaining this provision is
necessary as the APA does not address this process. Furthermore, a
formalized process for petitions would promote consistency and
transparency in the way that the Commission handles petitions for
rulemakings.
The Commission is adopting a change in proposed regulation Sec.
13.1 to allow the electronic submission of petitions through the
Commission's website, as recommended by the ACUS. Furthermore, it will
be the Commission's policy to post the petitions for rulemaking on the
Commission's website.\13\ The electronic submissions of petitions will
facilitate the submission of petitions for rulemaking and thereby the
public's engagement in the Commission's rulemaking process.
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\13\ The Commission will retain its discretion whether to post
petitions that contain confidential information (e.g., trade
secrets, CEA section 8 material) and abusive or inappropriate
language.
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The Commission will decide on a case-by-case basis whether to
solicit public comment on petitions for rulemaking, e.g., when the
Commission seeks to obtain additional information or to corroborate the
petitioner's information.\14\ Providing the public with an opportunity
to view and comment on petitions fosters the public's engagement in the
rulemaking process, but this goal may be accomplished without a rule.
Indeed, should the Commission initiate a rulemaking pursuant to a
petition for rulemaking, the APA requires that it provide the public
with an opportunity to participate in the rulemaking.\15\ There are
also many factors involved in posting petitions and requesting
comments, e.g., privacy concerns, trade secrets, and resources, that
the Commission will need to consider on a case-by-case basis that are
outside the scope of a rule. The Commission will therefore retain its
discretion whether to request comments on the petitions. Also, given
resource constraints that the Commission may face at any given time and
the subject matters that may be involved, the Commission will not
specify a period for responding to petitions for rulemaking and will
retain its discretion when to respond to a petition.
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\14\ In such cases, the Commission will consider the comments
received on a petition for rulemaking.
\15\ See 5 U.S.C. 553(c).
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Finally, regulation Sec. 13.1 only requires that the petition set
forth the text of the rule or amendment being proposed or the rule
petitioner wishes to have repealed, and the nature of the petitioner's
interest. It also provides that the petition may advance arguments in
support of the petition. The Commission is of the view that providing a
prescriptive approach to the petition's constructs may have the effect
of constraining rather than aiding the presentation of data and
arguments by petitioners. To be sure, the petitioner should provide
sufficient information and data in order for the Commission to make a
determination on the petition for rulemaking. In this regard,
regulation Sec. 13.1 provides that, except in affirming a prior denial
or when the denial is self-explanatory, notice of a denial in whole or
in part of a petition will be accompanied by a brief statement of the
grounds of denial. Nevertheless, in the interest of transparency, the
Commission will endeavor to include an explanation on a case-by-case
basis when the petition merits it.
The Commission also considered whether to implement rules for ex
parte communications in informal rulemaking, as suggested by Better
Markets. As Better Markets notes, the APA does not prohibit such
communications and indeed ``directs . . . agencies to provide the
public an opportunity for meaningful public comment, which may occur
through any type of interaction (e.g., verbally in a meeting or in
writing through a comment letter).'' \16\ Thus, the Commission is not
promulgating a rule on ex parte communications. In addition, the NPRM
did not propose a rule regarding ex parte communications. However, it
is the Commission's policy to make public on the Commission's website
substantive ex parte communications, both written and oral, that
provide significant, material information addressed to the merits of a
proposed rule. It is also the Commission's practice to make public on
its website all ex parte meetings held on proposed rules, including the
names and affiliations of attendees. The Commission is committed to
maintaining such transparency in ex parte communications in all
informal rulemakings.
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\16\ Better Markets Letter at 2.
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Accordingly, this final rulemaking removes regulation Sec. Sec.
13.1, 13.3, 13.4, 13.5, and 13.6 from part 13 and retains former
regulation Sec. 13.2 as regulation Sec. 13.1, as amended. In
addition, the Commission is revising the authority citation for part
13. The authority cited for part 13, 7 U.S.C. 4a(j), was incorrect due
to subsequent renumbering and it is being changed to 7 U.S.C. 2(a)(12).
[[Page 68789]]
V. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act \17\ requires Federal agencies to
consider whether the rules they propose will have a significant
economic impact on a substantial number of small entities and, if so,
to provide a regulatory flexibility analysis regarding the economic
impact on those entities. This rule would remove unnecessary and
potentially confusing provisions of part 13 and update the authority
cited. As stated above, section 553 of the APA provides for the
procedures to be followed by the Commission when promulgating formal
and informal rulemakings.\18\ Because the APA governs the Commission's
rulemaking process, the final rule does not change how the Commission's
rulemaking process is conducted. Likewise, the final rule will not have
a significant economic impact on how small entities would conduct
themselves in the promulgation of the Commission's rules. Part 13, as
amended by the final rule will not affect how entities participate in
the rulemaking process to submit data, views or arguments. Moreover,
the final rule retains the current process for submitting petitions for
rulemakings to the Commission. Accordingly, the Chairman, on behalf of
the Commission, hereby certifies pursuant to 5 U.S.C. 605(b) that the
final regulations will not have a significant economic impact on a
substantial number of small entities.
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\17\ 5 U.S.C. 601 et seq.
\18\ See 5 U.S.C. 551 et seq.; ATTORNEY GENERAL'S MANUAL ON THE
ADMINISTRATIVE PROCEDURE ACT 9 (1947).
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B. Paperwork Reduction Act
The Paperwork Reduction Act (``PRA'') \19\ imposes certain
requirements on Federal agencies in connection with their conducting or
sponsoring any collection of information. This final rule does not
contain any new collection of information requirements within the
meaning of the PRA. Accordingly, the requirements imposed by the PRA
are not applicable to this rule.
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\19\ 5 U.S.C. 3501 et seq.
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C. Cost-Benefit Considerations
Section 15(a) of the CEA \20\ requires the Commission to consider
the costs and benefits of its actions before promulgating a regulation
under the CEA or issuing certain orders. Section 15(a) further
specifies that the costs and benefits shall be evaluated in light of
five broad areas of market and public concern: (1) Protection of market
participants and the public; (2) efficiency, competitiveness, and
financial integrity of the futures markets; (3) price discovery; (4)
sound risk management practices; and (5) other public interest
considerations. The Commission considers the costs and benefits
resulting from its discretionary determinations with respect to the
section 15(a) factors.
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\20\ 7 U.S.C. 19(a).
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As discussed above, the final rule removes redundant and
potentially confusing provisions. The final rule is a procedural rule
that does not make any substantive change to the Commission rulemaking
process. By simplifying the rules setting forth the procedures to be
followed in rulemaking proceedings, the Commission eliminates any
confusion about the rulemaking procedures that apply, and thus makes
them more efficient and understandable to the public and market
participants. Further, the final rule does not impose costs on the
public since the amendments being finalized do not alter how the public
participates in the rulemaking process to submit data, views or
arguments.
Because the APA governs the Commission's rulemaking process, the
changes to part 13 do not affect the protection of market participants
and the public as they will continue to enjoy the ability to petition
for rulemaking and otherwise participate in the Commission's rulemaking
process. Further, as a procedural rule, the final rule will not impact
the efficiency, competitiveness, and financial integrity of the futures
markets, price discovery, or sound risk management practices. Finally,
it is in the public interest to make the Commission's rulemaking
procedures more efficient and understandable to the public and market
participants.
D. Antitrust Considerations
Section 15(b) of the CEA requires the Commission to take into
consideration the public interest to be protected by the antitrust laws
and endeavor to take the least anticompetitive means of achieving the
objectives of the CEA, in issuing any order or adopting any Commission
rule or regulation. The Commission has determined that the final
amendments to part 13 have no anticompetitive effects. As the
Commission stated in the NPRM, the final rule simply updates part 13 to
remove unnecessary and potentially confusing provisions and makes
technical changes. The final rule is procedural rule that will not
cause a change in behavior that would alter the level playing fields of
regulated entities.
List of Subjects in 17 CFR Part 13
Administrative practice and procedure, Rulemaking procedures.
For the reasons stated in the preamble, the Commodity Futures
Trading Commission revises 17 CFR part 13 to read as follows:
PART 13--PROCEDURES FOR PETITIONS FOR RULEMAKING
Sec.
13.1 Petition for issuance, amendment, or repeal of a rule.
13.2 [Reserved]
Authority: 7 U.S.C. 2(a)(12).
Sec. 13.1 Petition for issuance, amendment, or repeal of a rule.
Any person may file a petition with the Secretariat of the
Commission, by mail or electronically through the Commission website,
for the issuance, amendment or repeal of a rule of general application.
The petition shall be directed to Secretariat, Commodity Futures
Trading Commission, Three Lafayette Centre, 1155 21st Street NW,
Washington, DC 20581, and shall set forth the text of any final rule or
amendment or shall specify the rule the repeal of which is sought. The
petition shall further state the nature of the petitioner's interest
and may state arguments in support of the issuance, amendment or repeal
of the rule. The Secretariat shall acknowledge receipt of the petition,
refer it to the Commission for such action as the Commission deems
appropriate, and notify the petitioner of the action taken by the
Commission. Except in affirming a prior denial or when the denial is
self-explanatory, notice of a denial in whole or in part of a petition
shall be accompanied by a brief statement of the grounds of denial.
Sec. 13.2 [Reserved]
Issued in Washington, DC, on December 11, 2019, by the
Commission.
Christopher Kirkpatrick,
Secretary of the Commission.
Note: The following appendices will not appear in the Code of
Federal Regulations.
Appendices to Public Rulemaking Procedures--Commission Voting Summary
and Commissioner's Statement
Appendix 1--Commission Voting Summary
On this matter, Chairman Tarbert and Commissioners Quintenz,
Behnam, Stump, and Berkovitz voted in the affirmative. No
Commissioner voted in the negative.
[[Page 68790]]
Appendix 2--Statement of Commissioner Dan M. Berkovitz
I support the final rule to eliminate the obsolete provisions in
part 13 of the Commission's regulations that specify procedures for
Commission rulemakings. Part 13, adopted by the Commission more than
40 years ago, does not conform fully to the rulemaking procedures
required by the Administrative Procedure Act (``APA'') and followed
today by the Commission. The repeal of these procedures will avoid
potential confusion regarding the Commission's rulemaking process.
Notice and comment rulemaking pursuant to the APA relies on a
transparent process and an informed public that is able to
participate in agency rulemakings. In conjunction with today's final
rule, the Commission is posting on its website a plain-English
summary of its rulemaking process.
I am particularly pleased to see that in response to public
comments, the preamble to the final rule affirms the Commission's
commitment to transparency during the rulemaking process.\1\
Specifically, the Commission affirms its policy to post on its
website notice of all ex parte meetings held on proposed rules, as
well as any significant material information received in such
communications. I strongly support these policies, which promote
transparency, and aid the public's understanding of, and
participation in, the Commission's rulemakings.
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\1\ See Letter from Better Markets to CFTC, Re: Public Comment
on Public Rulemaking Procedures (RIN Number 3038-AE90), October 21,
2019.
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In addition, the final rule also preserves the public's right to
petition the Commission for the issuance, amendment, or repeal of a
rule. It incorporates comments received in response to the proposed
rule by allowing for the electronic submission of such petitions
through the Commission's website. The preamble to the final rule
also establishes a Commission policy of posting petitions for
rulemaking on the Commission's website. Each of these measures is a
valuable addition to the transparency and accessibility that the
public deserves when interacting with the Commission.
[FR Doc. 2019-27103 Filed 12-16-19; 8:45 am]
BILLING CODE 6351-01-P
