[Federal Register: March 9, 2009 (Volume 74, Number 44)]
[Proposed Rules]
[Page 10136-10139]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09mr09-19]
[[Page 10136]]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 4
[Docket ID OCC-2009-0003]
RIN 1557-AD16
Standards Governing the Release of a Suspicious Activity Report
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Office of the Comptroller of the Currency (OCC) is
proposing to revise its regulations governing the release of non-public
OCC information. The primary change being proposed would clarify that
the OCC's decision to release a suspicious activity report (SAR) will
be governed by the standards set forth in proposed amendments to the
OCC's SAR regulation that are part of a separate, but simultaneous,
rulemaking.
DATES: Comments must be received by June 8, 2009.
ADDRESSES: Because paper mail in the Washington, DC area and received
by the OCC is subject to delay, commenters are encouraged to submit
comments by the Federal eRulemaking Portal or e-mail, if possible.
Please use the title ``SAR Release Standards'' to facilitate the
organization and distribution of the comments. You may submit comments
by any of the following methods:
Federal eRulemaking Portal--``Regulations.gov'': Go to http://
www.regulations.gov, under the ``More Search Options'' tab click next
to the ``Advanced Docket Search'' option where indicated, select
``Comptroller of the Currency'' from the agency drop-down menu, then
click ``Submit.'' In the ``Docket ID'' column, select ``OCC-2009-0003''
to submit or view public comments and to view supporting and related
materials for this notice of proposed rulemaking. The ``How to Use This
Site'' link on the Regulations.gov home page provides information on
using Regulations.gov, including instructions for submitting or viewing
public comments, viewing other supporting and related materials, and
viewing the docket after the close of the comment period.
E-mail: regs.comments@occ.treas.gov.
Mail: Office of the Comptroller of the Currency, 250 E
Street, SW., Mail Stop 2-3, Washington, DC 20219.
Fax: (202) 874-5724.
Hand Delivery/Courier: 250 E Street, SW., Mail Stop 2-3,
Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
``Docket Number OCC-2009-0003'' in your comment. In general, OCC will
enter all comments received into the docket and publish them on the
Regulations.gov Web site without change, including any business or
personal information that you provide such as name and address
information, e-mail addresses, or phone numbers. Comments received,
including attachments and other supporting materials, are part of the
public record and subject to public disclosure. Do not enclose any
information in your comment or supporting materials that you consider
confidential or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this notice of proposed rulemaking by any of the following methods:
Viewing Comments Electronically: Go to http://
www.regulations.gov, under the ``More Search Options'' tab click next
to the ``Advanced Document Search'' option where indicated, select
``Comptroller of the Currency'' from the agency drop-down menu, then,
click ``Submit.'' In the ``Docket ID'' column, select ``OCC-2009-0003''
to view public comments for this rulemaking action.
Viewing Comments Personally: You may personally inspect
and photocopy comments at the OCC, 250 E Street, SW., Washington, DC.
For security reasons, the OCC requires that visitors make an
appointment to inspect comments. You may do so by calling (202) 874-
4700. Upon arrival, visitors will be required to present valid
government-issued photo identification and submit to security screening
in order to inspect and photocopy comments.
Docket: You may also view or request available background
documents and project summaries using the methods described above.
FOR FURTHER INFORMATION CONTACT: James Vivenzio, Senior Counsel for
BSA/AML, (202) 874-5200; Ellen Warwick, Assistant Director, Litigation,
(202) 874-5280; or Patrick Tierney, Senior Attorney, Legislative and
Regulatory Activities, (202) 874-5090; Office of the Comptroller of the
Currency, 250 E Street, SW., Washington, DC 20219.
SUPPLEMENTARY INFORMATION:
I. Introduction
The OCC is proposing to amend its regulations set forth in 12 CFR
part 4, subpart C, governing the release of non-public OCC information.
First, the proposed amendments conform subpart C to amendments to the
OCC's SAR confidentiality rule, 12 CFR 21.11(k), that are being
proposed as part of a separate, but simultaneous, rulemaking that the
OCC is conducting together with the Financial Crimes Enforcement
Network (FinCEN) and is published elsewhere in this issue of the
Federal Register. Under the standards that the OCC is proposing to
incorporate into part 4, the OCC will only release a SAR, or any
information that would reveal the existence of a SAR (referred to in
this preamble as ``SAR information'') when ``necessary to fulfill
official duties consistent with Title II of the Bank Secrecy Act''
(BSA). The proposed standards also state that ``official duties'' does
not include the disclosure of SAR information for use in a private
legal proceeding or a request under Sec. 4.33. Thus, one effect of
these proposed amendments is that the OCC will not release SAR
information in response to a request from a private litigant arising
out of a private legal proceeding.
In addition to the clarification of the standards governing the
release of SAR information, the proposed amendments to subpart C also
clarify that the OCC will deny a request for non-public information
made under 12 CFR 4.33, if the release is prohibited by law. Finally,
the amendments include a technical correction to Sec. 4.37 that is
described in section III of this SUPPLEMENTARY INFORMATION.
II. Background
As described in greater detail below, this proposal amends part 4
to make subpart C consistent with the proposed amendments to the OCC's
SAR regulation that implement section 351 of the USA PATRIOT Act, to
ensure that the appropriate standard is applied to the OCC's disclosure
of SAR information. 12 CFR part 4, subpart C, contains the OCC's
standards and procedures for the release of ``non-public OCC
information,'' and sets forth the restrictions on the dissemination of
such information. Generally, ``non-public OCC information'' is
confidential and privileged information that is the property of the
OCC, and that the OCC is not required to release under the Freedom of
Information Act (5 U.S.C. 552 et seq.) or that the OCC has not yet
published or made available pursuant to 12 U.S.C. 1818(u), the statute
requiring publication of certain enforcement orders. Examples in
subpart C of ``non-public OCC information'' currently include ``a SAR
filed by the OCC, a national bank, or a Federal branch or agency of a
foreign bank licensed or
[[Page 10137]]
chartered by the OCC under 12 CFR 21.11.'' \1\
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\1\ See 12 CFR 4.32(b)(vii)
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Subpart C generally describes procedures for requesting non-public
OCC information from the OCC, such as where to submit a request, the
form of the request, information that must be included in any request
involving an adversarial matter, and various bases for the OCC's denial
of such a request.\2\ Subpart C also authorizes the OCC to make non-
public OCC information available to a supervised entity and to other
persons, at the sole discretion of the Comptroller, without a request
for records or testimony,\3\ and sets forth the OCC's policy regarding
the release of non-public OCC information to other government agencies
in response to a request.\4\ Subpart C also describes the conditions
and limitations that the OCC may place on information it discloses
under subpart C.
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\2\ See 12 CFR 4.33-4.35.
\3\ See 12 CFR 4.36.
\4\ See 12 CFR 4.37(c).
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Although SARs fall within the definition of ``non-public OCC
information,'' the release of a SAR is governed by standards set forth
in the BSA. The BSA and its implementing regulations require a
financial institution to file a SAR when it detects a known or
suspected violation of Federal law or a suspicious activity related to
money laundering, terrorist financing, or other criminal activity.\5\
SARs generally are unsubstantiated reports of possible violations of
law or of suspicious activities that are used for law enforcement or
regulatory purposes. The BSA provides that a financial institution, and
its officers, directors, employees, and agents are prohibited from
notifying any person involved in a suspicious transaction that the
transaction was reported.\6\ More importantly, in 2001, section 351 of
the USA PATRIOT Act added a new provision to the BSA prohibiting
officers or employees of the Federal government or any State, local,
tribal, or territorial government within the United States from
disclosing to any person \7\ involved in a suspicious transaction that
the transaction was reported, other than as necessary to fulfill the
official duties of such officer or employee.\8\ Accordingly, it is this
provision that now governs the ability of the OCC to disclose SAR
information to any person.
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\5\ 31 U.S.C. 5318(g)(1).
\6\ 31 U.S.C. 5318(g)(2)(A)(i).
\7\ The phrase ``any person involved in the transaction'' has
been construed to apply to ``any person'' because the disclosure of
SAR information to any outside party may make it likely that SAR
information would be disclosed to a person involved in the
transaction, which is expressly prohibited by the BSA. See Cotton v.
Private Bank and Trust Co., 235 F. Supp. 2d 809, 815 (N.D. Ill.
2002).
\8\ See USA PATRIOT Act, section 351(b). Pub. L. 107-56, Title
III, section 351, 115 Stat. 272, 321(2001).
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In 1999, the OCC amended the examples in its definition of ``non-
public OCC information'' to explicitly include a SAR filed by the OCC
or a supervised entity, making SARs subject to the procedures for the
release of non-public OCC information set forth in part 4.\9\ The
preamble to the final rule explained ``while the OCC has always taken
the position that SARs are non-public information, the OCC was
proposing this change to enhance the ability of banks and the OCC to
protect SARs from being disclosed when SARs are sought by private
litigants.'' \10\ Later, the preamble explains that SARs were being
added to the list of examples of non-public OCC information ``to
protect the confidentiality of SARs further, particularly in
litigation, not to make them more easily disclosable.'' \11\
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\9\ 64 FR 29214 (June 1, 1999).
\10\ 64 FR 29215 (June 1, 1999).
\11\ 64 FR 29216 (June 1, 1999).
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The OCC is revisiting the treatment of SAR information in subpart C
in light of the 2001 amendments to the BSA, added by section 351 of the
USA PATRIOT Act, that specifically address governmental disclosures of
SARs. Under the proposed amendments to subpart C, the OCC will decide
whether to release SAR information based upon the standard in the OCC's
proposed amendments to its SAR rules, 12 CFR 21.11(k), implementing
section 351, rather than upon any of the factors set out in subpart
C.\12\ The standard in the proposed amendments to the OCC's SAR rules
provides that the OCC will not, and an officer, employee or agent of
the OCC, shall not, disclose SAR information except as necessary to
fulfill official duties consistent with Title II of the BSA. In
addition, the standard provides that ``official duties'' shall not
include the disclosure of SAR information in response to a request for
use in a private legal proceeding or in response to a request for
disclosure of non-public information under 12 CFR 4.33.
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\12\ See, e.g., 12 CFR 4.33.
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The proposed SAR rules interpret ``official duties'' as ``official
duties consistent with the purposes of Title II of the BSA,'' meaning,
official disclosures necessary to accomplish a governmental purpose
entrusted to the agency, the officer, or employee, consistent with the
purposes of Title II of the BSA, namely, for ``criminal, tax, or
regulatory investigations or proceedings, or in the conduct of
intelligence or counterintelligence activities, including analysis, to
protect against international terrorism.'' \13\ This standard would
permit, for example, disclosures responsive to a grand jury subpoena; a
request from an appropriate Federal or State law enforcement or
regulatory agency; a request from an appropriate Congressional
committee or subcommittee; and prosecutorial disclosures mandated by
statute or the Constitution in connection with the statement of a
government witness to be called at trial, the impeachment of a
government witness, or as material exculpatory of a criminal
defendant.\14\
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\13\ 31 U.S.C. 5311 (setting forth the purposes of the BSA).
\14\ See, e.g., Giglio v. United States, 405 U.S. 150, 153-54
(1972); Brady v. State of Maryland, 373 U.S. 83, 86-87 (1963);
Jencks v. United States, 353 U.S. 657, 668 (1957).
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III. Section-by-Section Description of the Proposal
Section 4.31(b)(4) Purpose and Scope
Subpart C currently includes several standards for the release of
non-public OCC information. A person seeking non-public OCC information
generally must submit a request in writing to the OCC that addresses
the factors set forth in Sec. 4.33. Section 4.35 describes how the OCC
will make its determination to release the information, and contains an
illustrative list of possible bases for denial of a request.\15\
Section 4.36(a) provides that the OCC may release information to a
supervised entity or any person, even without a request, at the
discretion of the Comptroller when necessary or appropriate. In
addition, the scope section of subpart C makes clear that Sec. 4.37(c)
applies to requests for non-public OCC information from Federal and
foreign governments and state agencies with authority to investigate
violations of criminal law, and state bank regulatory agencies.\16\
Section 4.37(c) states that, when not prohibited by law, the
Comptroller may make non-public OCC information available to these
governmental entities for their use, when necessary in the performance
of their official duties.
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\15\ See 12 CFR 4.35(a)(2).
\16\ See 12 CFR 4.31(b)(3).
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This proposal adds a new paragraph (b)(4) to 12 CFR 4.31, the scope
section of subpart C, which states that the OCC's decision to disclose
records or testimony involving SAR information for purposes of 12 CFR
4.35(a)(1), 4.36(a), and 4.37(c), is governed solely by the standard in
12 CFR 21.11(k). Accordingly, the Comptroller's
[[Page 10138]]
discretion to disclose SAR information to any person or entity without
a request under Sec. 4.36, and the OCC's determination to disclose SAR
information in response to a request for use in private litigation
under Sec. 4.33 or to another government agency under Sec. 4.37, will
be circumscribed by the standard in the proposed amendments to 12 CFR
21.11(k) prohibiting the disclosure of SAR information ``except as
necessary to fulfill official duties consistent with Title II of the
Bank Secrecy Act.'' In accordance with the OCC's longstanding
commitment to protect the confidentiality of SARs, this proposed
standard also provides that ``official duties'' does not include the
disclosure of SAR information in response to a request for use in a
private legal proceeding or in response to a request for disclosure of
non-public information under 12 CFR 4.33.
Section 4.32(b) Definition of Non-Public OCC Information
This proposal amends the definition of ``non-public OCC
information'' in Sec. 4.32(b) to remove the reference to ``a SAR filed
by the OCC, a national bank, or a Federal branch or agency of a foreign
bank licensed or chartered by the OCC under 12 CFR 21.11'' from the
illustrative list of examples that follow the definition of ``non-
public OCC information.'' SAR information would still be covered by the
definition of ``non-public OCC information.'' However, the OCC is
proposing to remove the reference to SARs from the illustrative list
because highlighting SAR information as an example of non-public OCC
information would be misleading in light of the amendments to Sec.
4.31 described in the previous section. As described earlier, under the
amendments to subpart C, SAR information would become a unique subset
of non-public OCC information subject to release solely in accordance
with the standards set forth in 12 CFR 21.11(k).
Notwithstanding the OCC's deletion of the specific reference to
SARs as an example of ``non-public OCC information,'' SAR information
would continue to be otherwise subject to the provisions of subpart C
that are not superseded by the standards proposed in part 21. For
example, Sec. 4.37(d), which generally provides that the possession by
a person of non-public OCC information does not constitute a waiver by
the OCC of its right to control, or impose limitations on, the use and
dissemination of the information, would continue to apply to SAR
information.
Section 4.35(a)(2) Consideration of Requests
Section 4.35 generally describes how the OCC makes its
determination to release or to withhold non-public OCC information in
response to requests received under Sec. 4.33. Section 4.35(a)(2)
lists five examples of reasons for which the OCC will deny the release
of non-public OCC information.
The OCC is proposing to add ``when prohibited by law'' as a sixth
example of a reason for denial of requests made under Sec. 4.33. This
addition clarifies that the OCC may deny a request under Sec. 4.33
when prohibited by law, for example, when the standard in Sec.
21.11(k) is applicable to a request for SAR information.
Section 4.37(c) Disclosures to Government Agencies
The proposal also makes a technical correction to Sec. 4.37(c).
Section 4.37(c) describes the basis for disclosures of non-public OCC
information to government agencies. The last sentence in Sec. 4.37(c)
also states that any information that is made available under this
section is OCC property, and the OCC may condition its use on
appropriate confidentiality protections, ``including the mechanisms
identified in Sec. 4.37.'' However, the various mechanisms that
provide confidentiality protections are identified in Sec. 4.38 of
subpart C, rather than in Sec. 4.37. Therefore, the OCC is proposing
to replace the reference to ``Sec. 4.37'' with a reference to ``Sec.
4.38.''
IV. Request for Comments
The OCC welcomes comments on any aspect of these proposed
amendments to the SAR rules.
The OCC has timed the release of this proposal to coincide with the
issuance of the proposed rules to amend its SAR confidentiality rules
set forth in 12 CFR part 21.11(k), so that commenters can consider each
proposal in commenting on the other.
V. OCC Solicitation of Comments on Use of Plain Language
Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, sec.
722, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the OCC to use
plain language in all proposed and final rules published after January
1, 2000. Therefore, the OCC specifically invites your comments on how
to make this proposal easier to understand. For example:
Have we organized the material to suit your needs? If not,
how could this material be better organized?
Are the requirements in the proposal clearly stated? If
not, how could the requirements be more clearly stated?
Does the proposal contain language or jargon that is not
clear? If so, which language requires clarification?
Would a different format make the regulations easier to
understand? If so, what changes to the format would make them easier to
understand?
What else could we do to make the regulations easier to
understand?
VI. OCC Community Bank Comment Request
The OCC invites your comments on the impact of this proposal on
community banks. The OCC recognizes that community banks operate with
more limited resources than larger institutions and may present a
different risk profile. Thus, the OCC specifically requests comment on
the impact of the proposal on community banks' current resources and
available personnel with the requisite expertise, and whether the goals
of the proposal could be achieved, for community banks, through an
alternative approach.
VII. OCC Regulatory Analysis
Regulatory Flexibility Act
Under section 605(b) of the Regulatory Flexibility Act (RFA), 5
U.S.C. 605(b), the regulatory flexibility analysis otherwise required
under section 604 of the RFA is not required if the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities and publishes its certification
and a short, explanatory statement in the Federal Register along with
its rule.
The OCC has determined that the proposed amendments will not have a
significant economic impact on a substantial number of small entities.
The proposed changes in internal standards, which were prompted by a
statutory change, will simply affect the nature of the OCC's internal
deliberations regarding the agency's ability to disclose a SAR.
Therefore, pursuant to section 605(b) of the RFA, the OCC hereby
certifies that this proposal will not have a significant economic
impact on a substantial number of small entities. Accordingly, a
regulatory flexibility analysis is not needed.
Executive Order 12866
The OCC has determined that this proposal is not a significant
regulatory action under Executive Order 12866. The OCC has concluded
that the proposed change in the OCC's internal
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standards for determining whether a SAR should be disclosed will not
have an annual effect on the economy of $100 million or more. The OCC
further concludes that this proposal does not meet any of the other
standards for a significant regulatory action set forth in Executive
Order 12866.
Paperwork Reduction Act
We have reviewed the proposed amendments in accordance with the
Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR 1320, Appendix
A.1) (PRA) and have determined that they do not contain any
``collections of information'' as defined by the PRA.
Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law
104-4 (2 U.S.C. 1532) (Unfunded Mandates Act), requires that an agency
prepare a budgetary impact statement before promulgating any rule
likely to result in a Federal mandate that may result in the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector of $100 million or more (adjusted for
inflation) in any one year. If a budgetary impact statement is
required, section 205 of the Unfunded Mandates Act also requires an
agency to identify and consider a reasonable number of regulatory
alternatives before promulgating a rule.
The OCC has determined that these proposed amendments, which change
the standards the OCC will apply when determining whether to release a
SAR, will not result in expenditures by State, local, and tribal
governments, or by the private sector, of $100 million or more
(adjusted for inflation) in any one year. Accordingly, this proposal is
not subject to section 202 of the Unfunded Mandates Act.
List of Subjects in 12 CFR Part 4
Administrative practice and procedure, Freedom of information,
Individuals with disabilities, Minority businesses, Organization and
functions (Government agencies), Reporting and recordkeeping
requirements, Women.
Authority and Issuance
For the reasons set forth in the preamble, part 4, subpart C, of
title 12 of the Code of Federal Regulations is proposed to be amended
as follows:
PART 4--ORGANIZATION AND FUNCTIONS, AVAILABILITY AND RELEASE OF
INFORMATION, CONTRACTING OUTREACH PROGRAM, POST-EMPLOYMENT
RESTRICTIONS FOR SENIOR EXAMINERS
1. Revise the authority citation for part 4 to read as follows:
Authority: 12 U.S.C. 93a. Subpart A also issued under 5 U.S.C.
552. Subpart B also issued under 5 U.S.C. 552; E.O. 12600 (3 CFR
1987 Comp., p. 235). Subpart C also issued under 5 U.S.C. 301, 552;
12 U.S.C. 161, 481, 482, 484(a), 1442, 1817(a)(2) and (3), 1818(u)
and (v), 1820(d)(6), 1820(k), 1821(c), 1821(o), 1821(t), 1831m,
1831p-1, 1831o, 1867, 1951 et seq., 2601 et seq., 2801 et seq., 2901
et seq., 3101 et seq., 3401 et seq.; 15 U.S.C. 77uu(b), 78q(c)(3);
18 U.S.C. 641, 1905, 1906; 29 U.S.C. 1204; 31 U.S.C. 5318(g)(2),
9701; 42 U.S.C. 3601; 44 U.S.C. 3506, 3510. Subpart D also issued
under 12 U.S.C. 1833e.
2. Add Sec. 4.31(b)(4) to read as follows:
Sec. 4.31 Purpose and scope.
* * * * *
(b) * * *
(4) For purposes of Sec. Sec. 4.35(a)(1), 4.36(a) and 4.37(c), the
OCC's decision to disclose records or testimony involving a Suspicious
Activity Report (SAR) filed pursuant to the regulations implementing 12
U.S.C. 5318(g), or any information that would reveal the existence of a
SAR, is governed solely by 12 CFR 21.11(k).
* * * * *
Sec. 4.32 [Amended]
3. Amend Sec. 4.32(b) by:
a. Removing paragraph (b)(1)(vii).
b. Adding the word ``and'' at the end of paragraph (b)(1)(v); and
c. Removing, at the end of paragraph (b)(1)(vi), ``; and'' and
adding a period in its place;
4. Amend Sec. 4.35(a)(2) by:
a. Removing the word ``or'' at the end of paragraph (a)(2)(iv);
b. Removing, in paragraph (a)(2)(v), the period and by adding in
lieu thereof ``; or''; and
c. Adding a new paragraph (a)(2)(vi) to read as follows:
Sec. 4.35 Consideration of requests.
(a) * * *
(2) * * *
(vi) When prohibited by law.
* * * * *
Sec. 4.37 [Amended]
5. In paragraph Sec. 4.37(c), remove the reference to ``Sec.
4.37'' in the last sentence and add in lieu thereof ``Sec. 4.38.''
Dated: January 22, 2009.
John C. Dugan,
Comptroller of the Currency.
[FR Doc. E9-4700 Filed 3-6-09; 8:45 am]
BILLING CODE 4810-33-P