Amendment of Rules Governing the Delegation of Authority to Regional Directors and the Director of the Division of Corporation Finance

1 17 CFR 200.10 through 200.30–18. 2 17 CFR 200.30–6(a). 3 17 CFR 228.10 through 228.702. 4 17 CFR 200.30–6(b). 5 17 CFR 230.251 through 230.263. 6 17 CFR 200.30–6(c). 7 17 CFR 230.651 through 230.656, rescinded in Release No. 33–7300 (May 31, 1996) [61 FR 30397]. 8 17 CFR 200.30–1(b). 9 17 CFR 230.300 through 230.346, rescinded in Release No. 33–7300. 10 17 CFR 200.30–1(g)(2). 11 15 U.S.C. 77a through 77aa. 12 17 CFR 239.9. 13 17 CFR 239.10. 14 17 CFR 200.30–1(c)(2) and (3). 15Release No. 33–7373 (December 16, 1996) [61 FR 67200]. SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 200 [Release No. 33–7445] Amendment of Rules Governing the Delegation of Authority to Regional Directors and the Director of the Division of Corporation Finance AGENCY: Securities and Exchange Commission. ACTION: Final rule. SUMMARY: The Securities and Exchange Commission is adopting revisions to its rules of general organization to eliminate outdated provisions that delegate authority to the Regional Directors and the Director of the Division of Corporation Finance. DATES: The rule revisions are effective September 9, 1997. FOR FURTHER INFORMATION CONTACT:
Elliot Staffin, Attorney-Advisor, Division of Corporation Finance, (202) 942–2829, U.S. Securities and Exchange Commission, Washington, D.C. 20549. SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission (‘‘Commission’’) is eliminating the following ‘‘delegated authority’’ provisions in its rules of general organization:1 Rule 30–6(a),2 which delegates authority to its Regional Directors regarding Regulation S–B;3 Rule 30–6(b),4 which delegates authority to its Regional Directors regarding Regulation A;5 Rule 30–6(c),6 which delegates authority to its Regional Directors regarding Regulation F;7 Rule 30–1(b),8 which delegates authority to the Director of Corporation Finance regarding Regulation B;9 and Rule 30– 1(g)(2),10 which grants the same authority to the Director of Corporation Finance as that delegated to each Regional Director under Rule 30–6(a) and (c).
I. DISCUSSION
A. Revision of Regional Director ‘‘Delegation of Authority’’ Rules The Commission has delegated authority to its Regional Directors to perform several functions under the statutes that it administers. Rules 30– 6(a), (b) and (c) govern the delegation of authority to Regional Directors to perform functions under the Securities Act of 1933 (‘‘Securities Act’’).11 In particular, Rule 30–6(a) grants authority to each Regional Director to perform functions regarding Forms SB–112 and SB–2,13 the registration statements for small business issuers, and related documents filed under Regulation S–B. Rule 30–6(b) grants to each Regional Director the authority to perform certain functions under Regulation A. Regulation A provides a limited exemption from the registration requirements of the Securities Act for a securities offering by certain domestic and Canadian companies that meet the specific conditions of the exemption. Under Rule 30–6(b), each Regional Director possesses the same authority regarding Regulation A offering statements as that delegated to the Director of the Division of Corporation Finance under Rules 30–1(c)(2) and (3).14 This authority includes issuing orders that qualify offering statements or that declare them withdrawn or abandoned. This delegation of authority to Regional Directors regarding Regulations S–B and A documents was necessary because, until recently, a small business issuer conducting an initial public offering and a Regulation A issuer had the option of filing, respectively, its Regulation S–B registration statement and Form 1–A offering statement either at the Commission’s Headquarters in Washington, D.C. or in the Regional or District Office for the region closest to the registrant’s principal place of business. However, in December 1996, the Commission revised Forms SB–1, SB–2 and 1–A to eliminate the Regional Office filing option and to require these forms to be filed at the Commission’s Headquarters in Washington, D.C.15 These revisions were part of a broader Commission initiative to improve generally the regulatory conditions for small business by creating a new Headquarters operations unit that specializes in small company filings and addressing the concerns of small businesses. Since the Regional and District Offices no longer perform any role in administering Regulation S–B and Regulation A filings, the corresponding Regional Director ‘‘delegation of authority’’ provisions have ceased to serve a useful purpose. Accordingly, the Commission is rescinding Rule 30–6(a) and (b) in their entirety. Rule 30–6(c) governs the delegation of authority to Regional Directors concerning Regulation F documents. Until recently, Regulation F provided a conditional limited exemption from Securities Act registration for assessments levied on assessable stock

47368 Federal Register / Vol. 62, No. 174 / Tuesday, September 9, 1997 / Rules and Regulations 16 17 CFR 230.501 through 230.508. 17 15 U.S.C. 77d(2). 18Release No. 33–7300 [61 FR at 30398]. 19 17 CFR 200.30–1. 20Former 17 CFR 230.302(a). 21Release No. 33–7300 [61 FR at 30398]. 22Rule 30–1(a). 23 5 U.S.C. 553(b). 24 5 U.S.C. 601 through 612. 25 5 U.S.C. 603(a). 26 5 U.S.C. 553(d). 27 44 U.S.C. 3501 through 3520. 28 5 U.S.C. 804(3)(C). 29 15 U.S.C. 77s(a). and for resales of forfeited assessable stock. However, in May 1996, the Commission rescinded Regulation F in its entirety and accompanying Form 1– F after determining that the availability of other exemptions, such as the limited offering exemptions from registration set forth in Regulation D16 or the private placement exemption under Securities Act Section 4(2),17 have rendered the Regulation F exemption obsolete.18 Since Regulation F no longer exists, the corresponding Regional Director ‘‘delegation of authority’’ provision regarding Regulation F has become unnecessary as well. Therefore, the Commission is rescinding Rule 30–6(c) in its entirety. B. Revision of Rules Governing Delegation of Authority To Director of Corporation Finance Rule 30–1 governs the Commission’s delegation of authority to the Director of the Division of Corporation Finance (‘‘Director’’).19 Rule 30–1(b) concerns the Director’s delegated authority regarding Regulation B documents. Until recently, Regulation B provided a conditional limited exemption from Securities Act registration for offerings of ‘‘fractional undivided interests’’ in oil or gas rights of up to $250,000 per offering.20 However, the Commission rescinded Regulation B and all accompanying forms and schedules in May 1996 for reasons substantially similar to those justifying the rescinding of Regulation F.21 Since Regulation B no longer exists, the corresponding Director ‘‘delegation of authority’’ provision has become obsolete. Therefore, the Commission is rescinding Rule 30–1(b) in its entirety. Rule 30–1(g)(2) grants to the Director the same authority as that delegated to each Regional Director under Rule 30– 6(a) and (c). As previously explained, these latter provisions govern the delegation of authority to Regional Directors concerning Regulation S–B and Regulation F documents. Since the Commission is today rescinding Rule 30–6(a) and (c), it is rescinding Rule 30– 1(g)(2) as well. The Director will continue to have authority to administer the Regulation S–B registration regimen under the Commission’s rule of organization that delegates authority to the Director to perform functions regarding the registration of securities under the Securities Act.22
II. Effective Date
These revisions are effective on September 9, 1997.
III. Certain Findings
Because the revisions to the Director and Regional Director ‘‘delegation of authority’’ rules relate solely to agency organization, procedure, or practice, publication for notice and comment is not required under the Administrative Procedure Act.23 Therefore, the requirements of the Regulatory Flexibility Act 24 are inapplicable.25 These ‘‘delegation of authority’’ rule revisions are effective upon publication in the Federal Register. The Commission finds that there is good cause to dispense with the 30 day delay between publication and effectiveness normally required by the Administrative Procedure Act.26 Because the revisions relate solely to agency organization, procedure, or practice, there will be no hardship imposed on filers by their immediate implementation. Rather, the public will indirectly benefit by their immediate implementation since the primary purpose of the revisions is to conform the Commission’s ‘‘delegation of authority’’ rules of organization with previously adopted revisions to Securities Act regulations, which it has already determined to be of benefit to the public. Furthermore, by eliminating organizational or procedural rules that have become obsolete, the ‘‘delegation of authority’’ revisions will reduce confusion and promote simplicity and efficiency in the Commission’s regulatory framework. Balancing these benefits against the possible confusion and harm to filers and investors of leaving intact obsolete organizational or procedural rules, the Commission finds good cause for making these rules immediately effective. These ‘‘delegation of authority’’ revisions fail to fall within the scope of the Paperwork Reduction Act of 199527 because they do not constitute a substantive or material change to a collection of information. Under 5 U.S.C. 804, these rule revisions are exempt from the definition of the term ‘‘rule’’ for purposes of
Chapter 8, entitled ‘‘Congressional
Review of Agency Rulemaking,’’ since they constitute rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non-agency parties.28
IV. Cost-Benefit Analysis
Because these revisions relate to organizational or procedural rules, which will substantially impact the Commission rather than any filer or investor, a traditional cost-benefit analysis appears unnecessary. As previously mentioned, the revisions will indirectly benefit filers and investors by eliminating the possibility of confusion caused by leaving intact obsolete organizational or procedural rules. There do not appear to be any significant costs to the public as a result of enacting these revisions.
V. Statutory Basis
The Commission is adopting these ‘‘delegated authority’’ rule revisions pursuant to Section 19(a) of the Securities Act.29 List of Subjects in 17 CFR Part 200 Authority delegations (Government agencies), Organization and functions (Government agencies). Text of the Amendments In accordance with the foregoing, Title 17, Chapter II of the Code of Federal Regulations is amended as follows:
PART 200—ORGANIZATION;
CONDUCT AND ETHICS; AND INFORMATION AND REQUESTS Subpart A—Organization and Program Management

1. The authority citation for part 200,
   Subpart A continues to read in part as follows:
   Authority: 15 U.S.C. 77s, 78d–1, 78d–2, 78w, 78ll(d), 79t, 77sss, 80a–37, 80b–11, unless otherwise noted.

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2. Section 200.30–1 is amended by
   removing paragraphs (b) and (g)(2); redesignating paragraphs (c) through (f) as paragraphs (b) through (e), paragraph (g)(3) as paragraph (g)(2) and paragraphs (g) through (l) as paragraphs (f) through (k).
3. Section 200.30–6 is amended by
   removing paragraphs (a), (b) and (c) and redesignating paragraphs (d) through (h) as paragraphs (a) through (e). Dated: September 3, 1997.

Federal Register / Vol. 62, No. 174 / Tuesday, September 9, 1997 / Rules and Regulations 47369 By the Commission. Margaret H. McFarland, Deputy Secretary. [FR Doc. 97–23830 Filed 9–8–97; 8:45 am] BILLING CODE 8010–01–P