Under the Plant Protection Act (7 U.S.C. 7701-7772), plant pest is defined as: “Any living stage of any of the following that can directly or indirectly injure, cause damage to, or cause disease in any plant or plant product: A protozoan, a nonhuman animal, a parasitic plant, a bacterium, a fungus, a virus or viroid, an infectious agent or other pathogen, or any article similar to or allied with any of the these articles.” The Plant Protection Act defines noxious weed as: “Any plant or plant product that can directly or indirectly injure or cause damage to crops (including nursery stock or plant products), livestock, poultry, or other interests of agriculture, irrigation, navigation, the natural resources of the United States, the public health, or the environment.” Under the Plant Protection Act, the Secretary of Agriculture is authorized to undertake such actions as may be necessary to prevent the introduction and spread of plant pests and noxious weeds within the United States. The Secretary has delegated this responsibility to the Administrator of the Animal and Plant Health Inspection Service (APHIS).

The regulations in 7 CFR part 319 prohibit or restrict the importation of certain plants and plant products into the United States to prevent the introduction or spread of plant pests and noxious weeds. The regulations contained in “Subpart—Nursery Stock, Plants, Roots, Bulbs, Seeds, and Other Plant Products,” §§ 319.37 through 319.37-14 (referred to below as the regulations), restrict, among other things, the importation of living plants, plant parts, seeds, and plant cuttings for or capable of propagation. (The regulations in 7 CFR part 360, “Noxious Weed Regulations,” contain restrictions on the movement of noxious weed plants or plant products listed in that part into or through the United States and interstate; the importation of some plants and seeds is subject to both the nursery stock regulations and the noxious weed regulations.) To refer to the articles subject to the nursery stock regulations collectively in this document, we will use the term plants for planting, which the International Plant Protection Convention defines as: “Living plants and parts thereof, including seeds and germplasm, intended to remain planted, to be planted, or to be replanted to ensure their subsequent growth, reproduction or propagation.” This definition matches the scope of the articles subject to the nursery stock regulations.

APHIS’ nursery stock regulations prohibit or restrict the importation of certain taxa of plants for planting that pose a risk of introducing plant pests of quarantine concern (referred to below as quarantine pests ) into the United States. We use the word taxon (plural: taxa) in this document to refer to any grouping within botanical nomenclature, such as family, genus, species, or cultivar. A quarantine pest is defined by the International Plant Protection Convention as: “A pest of potential economic importance to the area endangered thereby and not yet present there, or present but not widely distributed and being officially controlled.” (In this definition, pest includes “any species, strain or biotype of plant, animal or pathogenic agent injurious to plants or plant products.”)

Plants for planting that APHIS has determined cannot be feasibly inspected, treated, or handled to prevent quarantine pests that may accompany them from being introduced into the United States are listed in the regulations as prohibited articles. Prohibited articles may not be imported into the United States, unless imported by the U.S. Department of Agriculture (USDA) for experimental or scientific purposes under specified safeguards.

Plants for planting that APHIS has determined can be inspected, treated, or handled to prevent quarantine pests that may accompany them from being introduced into the United States are listed in the regulations as restricted articles. Restricted articles may be imported into the United States if they are imported in compliance with conditions that may include permit and phytosanitary certificate requirements, inspection, treatment, postentry quarantine, or combinations of these safeguards.

Finally, under the regulations in § 319.37-14(a), plants for planting that are required to be imported under a written permit under § 319.37-3(a)(1) through (a)(6) may be imported or offered for importation only at a Federal plant inspection station. Such stations are designated by asterisks in the list of ports of entry in § 319.37-14(b). Plants for planting offered for importation at a Federal plant inspection station are inspected and, if necessary, treated before being allowed entry into the United States. All other plants for planting whose importation is restricted by the regulations must be presented for inspection and may be inspected and treated, if necessary, at any of the ports listed in § 319.37-14(b) or, in certain limited cases, at another Customs designated port of entry.

The importation of plants for planting is further restricted or prohibited if there is specific evidence that such importation could introduce a quarantine pest into the United States. If we have reason to believe that the importation of a currently admissible taxon of plants for planting may pose a risk of introducing a quarantine pest, a pest risk assessment (PRA) is completed to examine the available evidence on the subject; if the PRA indicates that the risk posed by the importation of the taxon warrants restrictions on or the prohibition of its importation, we undertake rulemaking to amend the regulations to impose the necessary restrictions or prohibition.

We estimate that plants for planting from representative species of more than 2,000 genera are being imported or have been imported in the past. Most of the taxa of plants for planting currently being imported have not been thoroughly studied to determine whether their importation presents a risk of introducing a quarantine pest into the United States. We typically rely on inspection at a Federal plant inspection station or port of entry to mitigate the risks of pest introduction associated with the importation of these taxa.

When the regulations were originally established, we believed that most taxa of plants for planting could be imported safely without such thorough study, as the volume and types of plants for planting that were imported and the phytosanitary conditions of their importation were significantly different than they are today. Typically, the permits we issued for the importation of plants for planting limited such importation to either seed or, for cultivars that could not be propagated by seed, small amounts of plant material (usually 100 or fewer plants). The intent was to limit the number of plants for planting imported to the minimum necessary to establish a specific species or cultivar within the United States. The plants for planting that were then imported were thus not intended for immediate sale to U.S. consumers; these imported species or cultivars were only sold to U.S. consumers after they had been established and propagated for sale within the United States. As such, importation of living plant material was limited to species or cultivars that were not grown in the United States and would not breed true from seed or were difficult to establish from seed. Thus, both the quantity of living plant material and the number of types of plants for planting that were imported into the United States were originally very limited.

In addition, when the regulations were originally established, all plants for planting that were imported into the United States were required to be fumigated with methyl bromide or otherwise treated for insect pests as a condition of entry. Fumigation with methyl bromide often has a severe adverse effect on plants for planting in consignments offered for importation into the United States; however, since the plants for planting were being imported to establish specific species or cultivars, the adverse effects were not a concern as long as enough plants for planting survived the treatment to allow for such establishment. Treatment was mandatory and was performed regardless of whether there was evidence that the plants for planting offered for importation could serve as a pathway for the introduction of a quarantine arthropod pest. Because these pests were eliminated by fumigation, the regulations were mainly intended to prevent the introduction of pathogens that fumigation could not control and that were associated with imported plants for planting. When it was determined that the entry of a certain taxon of plants for planting could introduce a pathogen into the United States, regulations were established that prohibited the entry of that taxon, as listed in § 319.37-2, or prescribed specific phytosanitary mitigation conditions, as specified in the regulations in §§ 319.37-3 through 319.37-8 or in departmental permit conditions, that would eliminate the pathogen or allow APHIS inspectors to determine that it was not present in the plants for planting offered for importation. These circumstances prevailed from the first years after the regulations were established until the 1970s.

While allowing the importation of most taxa of plants for planting with few restrictions may have been a reasonable course of action when the regulations were established, the circumstances of the importation of plants for planting have since changed greatly. APHIS no longer limits the number of plants for planting that may be imported to the amount necessary to establish a species or cultivar in the United States, primarily due to industry requests to import large amounts of commercial plants for planting for immediate sale to U.S. consumers rather than for further cultivation within the United States. (As mentioned above, limits on the number of plants for planting had been imposed through the permitting process rather than through the regulations governing the importation of plants for planting.) Since this change was made, importation of plants for planting has steadily increased, as producers have found that many plants for planting can be grown in other countries under more favorable conditions than those available in the United States. In addition, many importers have found that there is a large domestic market for new and rare taxa of plants for planting, further driving increases in the number of taxa imported, the number of foreign areas from which plants for planting are imported, and the overall volume of imported plants for planting.

These increases are reflected in all the data available to us. For example, the Federal plant inspection station at Miami International Airport handles about 76 percent of all plants for planting that are offered for importation into the United States. Between fiscal year 1995 and fiscal year 2002, the total number of plant shipments imported through that inspection station almost doubled, the number of plants imported through that inspection station increased by 250 percent, and the number of quarantine pests found in those shipments increased by 275 percent. While, as noted above, importation of plants for planting was at one time limited to 100 articles of any given taxon, over 1 million apple rootstocks per year were imported through various ports of entry into the State of Washington alone in the early 1990s. The overall volume of imports of field crop, grass, and garden seed for sowing has doubled between 1995 and 2002, to 332,538 metric tons. 1 The recent increases in the volume of imports of plants for planting have been dramatic.

In part due to the fact that plants for planting are now imported for immediate sale to U.S. consumers, imported plants for planting are no longer routinely fumigated with methyl bromide or otherwise treated as a condition of entry; as noted previously in this document, the adverse effects resulting from the fumigation of plants for planting with methyl bromide are quite severe, which means that importing plants for planting for immediate sale to U.S. consumers would be impractical if fumigation were required. We will not resume routine fumigation. Under the Montreal Protocol and Subchapter VI of the Clean Air Act (42 U.S.C. 7671-7671p), the United States is obligated to minimize its use of substances such as methyl bromide that deplete stratospheric ozone. In addition, Article 2 of the World Trade Organization Agreement on the Application of Sanitary and Phytosanitary Measures requires that any restrictions APHIS imposes on the importation of plants for plants be based on scientific principles and is not maintained without sufficient scientific evidence; as mentioned previously, routine fumigation was conducted regardless of whether there was evidence that the plants for planting offered for importation could serve as a pathway for the introduction of a quarantine pest.

As noted previously, the only remaining restriction on the importation of most shipments of plants for planting is that they must enter the United States through a Federal plant inspection station, at which the plants for planting are randomly sampled and visually inspected for quarantine pests. However, this inspection may not always provide an adequate level of protection against quarantine pests, particularly if the pest is rare, small in size, borne within the plant, an asymptomatic plant pathogen, or not yet recognized and regulated as a quarantine pest.

Appropriately mitigating the risks of quarantine pest introduction associated with the importation of plants for planting is especially important because quarantine pests introduced via imported plants for planting are much more likely to become established than quarantine pests introduced via other imported articles, such as fruits and vegetables. The introduced plants for planting themselves may serve as hosts for quarantine pests for months or years, while the shelf life of most fruits and vegetables is days or weeks. In addition, the destinations of imported plants for planting, such as plant nurseries, farms, greenhouses, orchards, and gardens, are likely to be favorable environments for plant growth and pest development in general, which could present problems in the event that a taxon of imported plants for planting turns out to be a carrier of a pathogen or pest or is itself an invasive plant warranting further consideration as a noxious weed. Other host material for quarantine pests is also usually abundant in the environment surrounding imported plants for planting. Under these circumstances, the introduction of even a few individuals of a quarantine pest via imported plants for planting may lead to the establishment of that pest in the United States.

In addition, concern has grown in recent years among national plant protection organizations (NPPOs), State plant protection organizations, and members of the plants for planting industry and the scientific community that there may be many little-known quarantine pests that could be introduced into the United States via the importation of plants for planting or by other articles. In many countries, research capabilities are limited due to a shortage of funds for research as well as a shortage of trained weed scientists, entomologists, plant pathologists, and nematologists. Given this shortage, NPPOs in these countries are likely to concentrate their limited research capabilities on studying crops of local economic importance. Such crops are mostly agronomic crops and fruits and vegetables grown for domestic consumption or export; non-agronomic or ornamental plants are less likely to be studied for possible pest risks. Therefore, quarantine pests of plants for planting in these countries are generally not well known. If research is done on potential pests, it may not be readily available to the international community. Resources in many countries, particularly developing countries, may also be concentrated on locally serious pest problems that may not be of quarantine concern to the United States; conversely, pests that would be of concern to us if they were to be introduced via the importation of plants for planting may not be considered a significant problem in other countries. In addition, pests that may not have serious consequences in one environment may pose great risks in another, and the conditions that increase the risk posed by pests can be difficult to predict.

The National Plant Board's 1999 “Safeguarding American Plant Resources” report  2 (referred to below as the Safeguarding Report) contrasted the approach of the regulations governing the importation of plants for planting with the approach of the regulations governing the importation of fruits and vegetables, which are found in “Subpart—Fruits and Vegetables” (§§ 319.56 through 319.56-8) within 7 CFR part 319. While quarantine pests that enter the United States via imported fruits and vegetables are less likely to become established than quarantine pests that enter the United States via imported plants for planting, many of the other problems associated with the importation of plants for planting, such as a lack of research or information concerning the plant pests that may be associated with an article, can be an issue in the importation of fruits and vegetables as well.

However, the importation of fruits and vegetables is generally prohibited under the regulations in “Subpart—Fruits and Vegetables,” and the importation of a fruit or vegetable is only allowed if sufficient information is available to prove that its importation is safe. The process of allowing the importation of a fruit or vegetable from a particular area or country begins when APHIS receives an import request from an importer or an exporting country or when there is a request to reconsider the entry status of a commodity previously denied entry. If the request is for a fruit or vegetable for which no previous entry decision has been made, or if new evidence indicates that the previous entry decision may no longer be applicable, then a PRA is performed to determine the sources of pest risk associated with the requested importation. The fruit or vegetable is only allowed to be imported if the PRA indicates that the risk can be effectively mitigated and if notice-and-comment rulemaking to allow the importation is successfully completed. In other words, all commodities whose importation is governed by “Subpart—Fruits and Vegetables” are prohibited from importation pending risk evaluation and approval.

By contrast, as described above, the nursery stock regulations do not require that a PRA be completed prior to the importation of a new taxon of plants for planting or prior to the taxon's importation from a new area; most plants for planting are allowed to be imported after visual inspection at a Federal plant inspection station or port of entry. APHIS can take administrative action to prohibit or restrict the entry or subsequent interstate movement of a taxon of plants for planting under the Plant Protection Act if it poses an immediate danger of introducing or spreading a plant pest or noxious weed in the United States; in such an emergency situation, rulemaking may be completed after the prohibition or restrictions are imposed. However, in routine situations, the entry of a taxon of plants for planting is only prohibited or restricted after a PRA and subsequent notice-and-comment rulemaking are completed. This difference between the regulatory approaches for plants for planting and for fruits and vegetables means that the risks associated with the importation of specific taxa of plants for planting are generally much less well known than the risks associated with the importation of taxa of fruits and vegetables under the regulations in 7 CFR part 319.

As the Safeguarding Report states, the regulations' current approach to restricting the importation of plants for planting “is based solely on known pest and disease problems of the plants on the established lists [of prohibited and restricted articles]. Everything is admissible unless specifically listed as restricted or prohibited. This assumes there is no risk associated with the unknown, an alarming assumption given the resources at stake and the quality of information available.” It can be assumed that some taxa of plants for planting that are presently being imported pose risks of introducing quarantine pests that are currently unknown to us; as the Safeguarding Report states, “new species of plant that have not been subjected to risk assessment can enter channels of trade with no regulation. Since these are not listed, they are by default admissible and subject to the least stringent protocol regardless of their potential to carry pests or diseases, or become invasive themselves.”

As the importation of plants for planting has increased dramatically over the last decade, there has not been a commensurate increase in available resources to determine the number and distribution of pests that could be introduced via imported plants for planting, to initiate PRAs, and, when necessary, to amend the regulations to address risks presented by quarantine pests and noxious weeds after their importation. A significant number of pests that could be introduced to the United States via imports of plants for planting need to be evaluated for quarantine significance, but their evaluation has been delayed by this lack of resources. Although we have been able to initiate rulemaking to mitigate risks posed by certain exotic pests, in general our ability to quickly apply new scientific research and information has been hampered by this lack of resources.

These conditions are believed to have led to several pest introductions in recent years. For example, articles of Pelargonium spp. that were contaminated with Ralstonia solanacearum race 3 biovar 2, a bacterium that is listed in our regulations in 7 CFR 331.3(a) as an agent capable of posing a severe threat to plant health or plant products, have been imported into the United States multiple times, most recently in February 2003. In the February 2003 outbreak, contaminated articles of Pelargonium spp. were imported from both Guatemala and, subsequently, Kenya. The articles were required to be inspected at the port of entry, but at the time of their importation they may not have been showing symptoms of the wilt disease that R. solanacearum race 3 biovar 2 causes in geraniums. The bacterium was eradicated in greenhouse plants before it could become established in the U.S. environment, where it could have severely affected the U.S. potato crop; more than 2.1 million plants at 471 greenhouses throughout the United States were destroyed as part of the eradication effort. The eradication effort was costly to APHIS, State plant health authorities, and the U.S. plants for planting industry. In response to this outbreak, we amended the regulations by establishing requirements at § 319.37-5(r) for the importation of articles of Pelargonium spp. and Solanum spp., two hosts of the bacterium. However, it would have been preferable to establish regulations, including conditions of entry, that would have allowed us to avoid the outbreak entirely.

The factors described above led the National Plant Board to recommend in the Safeguarding Report that the plants for planting regulations be revised to better protect U.S. plant resources from quarantine pests. Specifically, the Safeguarding Report recommended that APHIS:

• Review the plants for planting regulations for conformance with the Plant Protection Act and adherence to international standards for quarantine regulations (recommendation E-2);

• Develop a strategy of quarantine development tied to pest risk potential that is reasonable, enforceable, and transparent (recommendation E-3);

• Begin its quarantine revision process with the revision of the fruits and vegetables and plants for planting quarantine regulations (recommendation E-4):

• Consider adopting a modified “clean list” approach for propagative material, specifying what is permissible subsequent to risk assessment, rather than the current “dirty list” approach that prohibits or restricts specific articles only (recommendation E-46); and

• Purge lists of “phantom diseases,” like the rose wilt virus, that are not recognized by the scientific community (recommendation E-48).

In response to these recommendations, this advance notice of proposed rulemaking solicits public comment on five measures we are considering as part of an effort to revise the regulations. We believe these measures, taken together, would enable APHIS to provide a more appropriate level of protection against the risk of introduction of quarantine pests via imported plants for planting than the current regulations provide. The measures we are considering are: (1) Collecting data on the current importation of taxa of plants for planting; (2) establishing a new category for certain taxa of plants for planting that would be excluded from importation pending risk evaluation and approval; (3) establishing programs to reduce the risk of importation and establishment of quarantine pests; (4) combining existing regulations governing the importation of plants for planting; and (5) reevaluating taxa whose importation is currently prohibited. These measures are described in more detail below.

To effectively determine what changes may need to be made to the regulations and the possible impact of those changes, we must have accurate and complete data regarding the volume, types, and origin of plants for planting that are currently being imported into the United States. We do not currently have such data.

Although the regulations in § 319.37-4 require that all imported plants for planting must be accompanied by a phytosanitary certificate, the phytosanitary certificates accompanying these articles often do not contain the data we would need to evaluate current imports of plants for planting. Currently, importers are not required to provide the scientific name or even the genus of the plants for planting being imported on the phytosanitary certificate, and several genera may be included in one broad category (such as “tropical foliage”) on the certificate, although we anticipate amending the regulations to require that importers provide genus and species information. In addition, estimates of the volume of imports derived from phytosanitary certificates may not be reliable.

The Foreign Agricultural Service (FAS) reports data on imports of plants for planting into the United States according to certain categories developed by FAS, and these data are generally considered to accurately indicate the volume of trade in any given category. However, the categories FAS uses typically include many genera of plants for planting, meaning that the FAS data also do not provide the detailed information about imports of plants for planting that we need.

We are considering what sources to use to acquire data regarding the volume, types, and origin of plants for planting that are currently being imported into the United States and how to use those sources. APHIS records could provide some of the data, although, as noted above, there are gaps in APHIS’ data set. We could ask importers to provide data on the volume, types, and origin of past and present importations of plants for planting. Other potential data sources we identified include professional societies, horticultural groups, trade groups, businesses, researchers, universities, arboretums, and individuals. We are also considering making changes to the regulations that would allow us to more easily obtain such data; for example, we could require that, for any consignment of plants for planting offered for importation into the United States, the importer provide or the phytosanitary certificate include the quantity in which the plants for planting are being offered.

Once we collect the data, we would analyze the information to determine what taxa of plants for planting are already being imported in significant amounts. This would allow us to make better informed decisions about whatever changes to the regulations may be necessary.

We invite responses to the following questions in particular on the data collection activities we are considering:

1. Are there any sources other than those listed above from which we should solicit or obtain data?

2. What should we do to ensure that the data we receive accurately reflect actual importations of plants for planting?

3. What are the taxa or types of plants for planting for which obtaining accurate data might be especially difficult?

As described above under the heading “Scope and Approach of the Current Regulations,” the regulations currently either prohibit the importation of plants for planting, allow the importation of plants for planting subject to specific restrictions such as additional declarations on phytosanitary certificates or postentry quarantine, or allow the importation of plants for planting subject to general restrictions such as phytosanitary certificates and inspection at a Federal plant inspection station or port of entry. We plan to retain these categories in the regulations for plants for planting. We are considering adding an additional category for certain taxa of plants for planting that would be excluded from importation pending risk evaluation and approval. These taxa would be listed in the regulations under a heading separate from the prohibited and restricted articles.

A taxon excluded from importation pending risk evaluation and approval could be removed entirely from the list if a PRA was completed and the PRA indicated that the taxon could be imported safely. The PRA would identify any phytosanitary mitigation measures that might be necessary for plants for planting of the taxon to be imported safely; we would then amend the regulations through notice-and-comment rulemaking to require those measures.

While a taxon is excluded from importation pending risk evaluation and approval, we would allow it to be imported into the United States if the producer that wishes to export the taxon to the United States is participating in an approved clean stock program. We would additionally allow the importation of small quantities of such a taxon under the conditions of a best management practices program so that it could be tested within the United States. We would establish a permit system to allow and control such importation. (The clean stock and best management practices programs are another measure we are considering to improve the effectiveness of the regulations. Both programs would be designed to mitigate the risks posed by all types of plant pests, not just the specific plant pests a PRA would identify and address. They are discussed in more detail below under the heading “Programs To Reduce the Risk of Importation and Establishment of Quarantine Pests.”) Thus, under the plan we are considering, the exclusion of taxa of plants for planting listed in this category would not be total, nor would it necessarily be permanent.

We are considering two possible options for determining which taxa of plants for planting would be added to this category. In the first option, taxa of plants for planting that are currently being imported in significant amounts and whose importation is subject to general restrictions in the regulations would, in most cases, be presumed to be safe and would not be excluded from importation pending risk evaluation and approval. (We would determine which taxa are currently being imported in significant amounts by analyzing the importation data we are interested in collecting, as described below under the heading “Collecting Data on the Current Importation of Taxa of Plants for Planting.”) All taxa of plants for planting that are not currently being imported in significant amounts would then be excluded pending risk evaluation and approval.

This first option would allow the continued importation of taxa of plants for planting that are being imported in significant amounts because the risks associated with such taxa are generally better known than the risks associated with taxa that are being imported in smaller amounts. In general, the risks associated with taxa of plants for planting that have not previously been imported into the United States, in small quantities, or from different areas than those from which they have previously been imported are the least well-known risks associated with plants for planting; thus, these are the plants for planting that we would want to exclude pending risk evaluation and approval. For example, if a taxon is being imported in significant amounts, it is more likely that some study of its potential risks has been undertaken in either the exporting country or the United States. In addition, inspectors have more experience with taxa of plants for planting that are being imported in significant amounts, and thus can better recognize potential risks associated with such plants for planting than may be possible with taxa that are being imported in smaller amounts. If other evidence, such as a PRA or evidence required by the second option that is described below, indicated that a taxon of plants for planting that was currently being imported in significant amounts could introduce a quarantine pest, we would reserve the right to restrict or prohibit its importation, perhaps by excluding it pending risk evaluation and approval.

In accordance with the above information, with regard to this option, we are considering whether to treat a taxon of plants for planting that is being imported in significant quantities from one area but is not being imported in significant quantities from another area as two separate taxa for the purposes of exclusion pending risk evaluation and approval. For example, a taxon that is currently being imported in significant quantities from Africa but has never been imported from Asia may pose different pest risks when it is imported from the new area and therefore could be excluded pending risk evaluation and approval.

However, the first option has some potential problems. If this option were implemented without also increasing the resources available to us for conducting and completing PRAs, the volume of requests for importation of new taxa of plants for planting would likely overwhelm our ability to evaluate the new taxa for possible risk in a timely manner. In addition, since we do not currently have detailed data on what taxa of plants for planting are being imported into the United States, implementation of this approach would take some time.

In the second option that we are considering, we would exclude taxa of plants for planting from importation pending risk evaluation and approval when evidence other than a PRA was available that indicated either that the importation of the plant could introduce a quarantine pest into the United States or that the plant itself could be a quarantine pest or a noxious weed. Evidence used in such an evaluation would be drawn from sources such as scientific literature, government reports, professional organizations, and international databases. We would publish criteria regarding the sources of information that could be used and the volume of evidence that would be necessary to exclude a taxon. We anticipate that most taxa of plants presently being imported in significant amounts would continue to be allowed to be imported under the second option, although, for reasons discussed above under the heading “Collecting Data on the Current Importation of Taxa of Plants for Planting,” we lack the data to make a definite prediction on this subject.

Although under this option, taxa of plants for planting would be added to this category through notice-and-comment rulemaking, removing the obligation to complete a PRA before such rulemaking could be initiated would allow us to respond more quickly when other evidence indicates that the importation of certain taxa of plants for planting could pose a risk of introducing quarantine pests into the United States. Because it would require fewer resources to exclude a taxon pending risk evaluation and approval under this option than conducting a PRA in order to prohibit or restrict a taxon's importation does under the current regulations, the second option could be implemented with the resources presently available; however, it would be more effective if additional resources were available to search for and evaluate available information.

The two options for adding taxa of plants for planting to the category of excluded pending risk evaluation and approval could be combined to some extent. If the options were combined and implemented, taxa of plants for planting that are currently being imported in significant quantities but whose importation poses an uncertain risk of introducing quarantine pests into the United States could still be excluded from importation pending risk evaluation and approval if evidence other than a PRA supported such an exclusion. For example, a taxon that is currently being imported but which an importer wishes to import from a different area than the area from which it is currently being imported could be placed in the category of excluded pending risk evaluation and approval if we had evidence that a quarantine pest existed in the new area.

We invite responses to the following questions in particular on the “excluded pending risk evaluation and approval” category we are considering:

1. How would each of the two options for adding taxa of plants for planting to this category affect the sectors of the horticultural industry that propagate and sell imported plants for planting? Which option would disrupt current trade in plants for planting the least?

2. If the first option were implemented, what should constitute a “significant” amount for taxa of plants for planting that are already being imported?

3. If the second option were implemented, what sources of information and what minimum criteria should be used to determine whether a specific taxon should be excluded pending risk evaluation and approval?

4. Should taxa of plants for planting imported from different regions be considered separate regulated articles for the purposes of this category? For example, if a taxon is currently being imported in significant quantities from Africa but has never been imported from Asia, should imports of this taxon from Asia be excluded pending risk evaluation and approval?

The regulations currently contain a few programs that prescribe procedures for growing establishments in foreign countries that wish to export plants for planting to the United States. For example, § 319.37-4(c) describes a voluntary program for greenhouse-grown plants from Canada that includes requirements for identification of exported plants, recordkeeping, shipping, and pest management practices; if growers in Canada participate in this program, their plants may be offered for importation into the United States without a phytosanitary certificate. Under § 319.37-5(b), to prevent the introduction of certain pathogens of fruit trees into the United States, exporters of various plants for planting in Belgium, Canada, Germany, France, Great Britain, or the Netherlands must present phytosanitary certificates with an additional declaration that the NPPO of the exporting country had examined the stock from which the plants for planting have been derived and found the stock to be free of the pathogens of concern. True seed (botanical seed) of Solanum tuberosum imported from Chile under § 319.37-5(o) must be sampled by the NPPO of that country and tested for various diseases before being exported; growers must also agree to undertake various pest management and exclusion practices to be eligible to export Solanum tuberosum true seed into the United States. Certain plants for planting may be imported in growing media if they meet the conditions in § 319.37-8(e), which include a mandatory compliance agreement, greenhouse phytosanitary standards, growing requirements, and, for some articles, treatment and inspection requirements. These programs have all been effective at excluding quarantine pests from shipments of these articles that are imported into the United States.

We are considering establishing similar programs that exporters would have to participate in if they wished to export certain plants for planting to the United States. Participants in these programs would follow practices that would be designed to mitigate the risks posed by all pests, whether known or unknown to APHIS, that could be introduced into the United States via imported plants for planting. These programs would be broadly divided into two types. Clean stock programs would establish procedures for foreign exporters to ensure through testing that the stock from which plants for planting are derived is free of disease and to exclude pests from the growing environment of these plants for planting. Best management practices programs would allow U.S. importers to establish methods of excluding quarantine pests from plants for planting that importers test for propagation or propagate within the United States and prevent the establishment of those pests in the United States, or, if the plants for planting themselves appear to be potential noxious weeds, to prevent their establishment in the United States. The regulations in § 319.37-5(b) are an example of a clean stock program; the Draft Voluntary Codes of Conduct developed as part of the Saint Louis Declaration, a product of the Workshop on Linking Ecology and Horticulture to Prevent Plant Invasion held in St. Louis, Missouri, in December 2001, are collectively an example of a best management practices program. 3

Clean stock programs could be established in countries that wish to export plants for planting to the United States. Many clean stock-type programs already exist in the nursery and floriculture industry; some have been established independently by industry, while others are based on regulatory requirements. In general, the clean stock programs we envision would have several basic elements:

• Production facilities would generate plants for planting from propagative material that is free or nearly free of pests.

• Production facilities would have an International Organization for Standardization-like set of standard operating procedures that include adequate pest control, regular inspection and testing, and detailed recordkeeping of all aspects of plant production, including the origin of plants for planting that are eventually exported so that they may be traced back if necessary. 4

• The NPPO of the country in which the production facility is located would have oversight over the production facility and perform regular audits to ensure that all elements of the production system were in compliance with program standards.

• APHIS would have the ability to perform on-site audits of the production system as well. APHIS would also perform audits upon importation to ensure that these plants for planting meet the approved standards for the clean stock program. Because these programs would be designed to exclude all pests, the presence of non-quarantine pests above established tolerance levels could be used as an indication of program failure. Such audits could take the form of inspections or laboratory testing.

• Penalties and remedial action would be required in the case of noncompliance. Shipments of plants for planting exported under a clean stock program would be held or rejected if an audit revealed that the plants for planting were not grown in compliance with the clean stock program.

These general standards, if adequately developed, could be used as a template to develop specific regulatory approaches. For example, the regulations in § 319.37-5(r)(3) that govern the importation of articles of Pelargonium spp. and Solanum spp. from countries where R. solanacearum race 3 biovar 2 is known to occur were developed after we had drafted these general guidelines; collectively, the requirements in that paragraph satisfy the basic elements listed above. We believe that, had a clean stock program been in place for the importation of articles of Pelargonium spp., it would have excluded R. solanacearum race 3 biovar 2 from articles of Pelargonium spp. imported into the United States.

While the clean stock programs would allow exporters to address pest risk before plants for planting are offered for importation into the United States, the best management practices programs would be established so that U.S. entities could detect and eliminate quarantine pests that may be associated with imported plants for planting and determine whether an imported plant for planting has the potential to become a noxious weed. Participants in these programs would be domestic producers and importers of plants for planting that wish to grow small amounts of a taxon of plants for planting within the United States to determine the taxon's biological and commercial viability, in addition to the risks its importation may pose.

The best management practices programs would be used within the United States to allow the importation for testing purposes of small quantities of plants and plant parts from taxa that were excluded from importation pending risk evaluation and approval, in tandem with the permit system mentioned in the discussion of this possible new category. Following the best management practices prescribed in these programs would greatly reduce the risk that any quarantine pest that might escape detection and enter the United States via the imported plants for planting would then become established in the United States. In the case that the plants for planting themselves proved to be noxious weeds, the best management practices would also reduce the risk that those plants for planting could become established in the United States.

The best management practices programs we envision would include several basic elements, including:

• A code of conduct or documented standard operating procedures that include pest control practices, inspection and testing, and recordkeeping, similar to that described above in the clean stock program;

• Oversight and audits by a professional organization or a State agricultural organization to ensure compliance with the agreed-upon code of conduct or standard operating procedures;

• Some form of Federal oversight; and

• Penalties and remedial action for noncompliance.

General principles under which these programs would operate and performance standards these programs would have to achieve would be specified in the regulations. To develop the clean stock programs, APHIS would consult with the NPPOs of exporting countries to develop workplans that would specify how these principles and standards would be achieved in local conditions for each country or for areas within countries. The NPPO would share with APHIS responsibility for ensuring that participants in the programs comply with the requirements of the program. To develop the best management practices program, APHIS could cooperate with professional organizations or work directly with importers.

Penalties for not complying with the requirements of the programs would be imposed in a graded manner, to encourage compliance. Penalties would ultimately include suspension or removal from the program. Facilities, exporters, importers, and countries could all ultimately be removed from the programs if major or repeated violations of program requirements occurred.

Participants would have a continuing incentive to satisfy the requirements of the programs, as the importation of certain plants for planting would be contingent on satisfying the programs' requirements. For example, taxa of plants for planting that would be excluded from importation pending risk evaluation and approval could be imported if they were exported by producers that participated in a clean stock program or were imported by participants in a best practices program; plants for planting exported by producers in full compliance with the requirements of a clean stock program would likely be free of both pathogens and insect pests upon importation into the United States, while domestic firms participating in a best practices program would minimize the risk that any pathogens or insect pests that might still be present would be introduced into the United States. In addition, it is possible that we could allow importation of plants for planting from countries in which certain pathogens or other pests are prevalent if the specific facility that wished to export such plants for planting participated in a clean stock program.

We invite responses to the following questions in particular on the clean stock programs we are considering:

1. Is it feasible to use this type of program in producing large volumes of taxa of plants for planting other than those that are currently exported to the United States under the programs in our regulations? What additional costs might be associated with growing other taxa of plants for planting under this type of program? What benefits might be associated with implementing such a program?

2. What specific aspects of these programs could prove problematic or would require detailed attention?

3. How could a clean stock program be designed to ensure that quarantine pests are not inadvertently brought to the United States along with plants for planting?

4. Are there any foreign clean stock programs not mentioned in our regulations that could serve as models for a general clean stock program?

We invite responses to the following questions in particular on the best management practices program we are considering:

1. As noted above, draft codes of conduct that could form the core of a best management practices program already exist. Are these codes a feasible starting point from which to develop a best management practices program?

2. Do other applicable best management practices programs exist? Which of these is the best one, and why? What additional costs might be associated with growing plants for planting under this type of program? What benefits might be associated with implementing such a program?

3. What existing industry practices should be incorporated into this program?

4. What permit conditions would help to reduce the risk that quarantine pests associated with plants for planting imported in limited quantities for testing could become established, or that the plants for planting themselves, if the taxon proves to be invasive, could become established?

5. What would be the best way to identify and assess any environmental risks that might be associated with the importation of plants for planting under a best management practices program?

As described above, the nursery stock regulations restrict, among other things, the importation of living plants, plant parts, seeds, and plant cuttings for planting or propagation. Other subparts in 7 CFR part 319 also contain regulations restricting, among other things, the importation of plants for planting. These subparts address the risks associated with the importation of specific articles or the prevention of the introduction and establishment of specific diseases, as opposed to the more general scope of the nursery stock regulations. Subparts containing such restrictions include “Subpart—Foreign Cotton and Covers” (§§ 319.8 through 319.8-26), “Subpart—Sugarcane” (§§ 319.15 and 319.15a), “Subpart—Citrus Canker” (§ 319.19), “Subpart—Corn Diseases” (§§ 319.24 through 319.24-5), “Subpart—Indian Corn or Maize, Broomcorn, and Related Plants” (§§ 319.41 through 319.41-6), “Subpart—Rice” (§§ 319.55 through 319.55-7), “Subpart—Wheat” (§§ 319.59 through 319.59-2), and “Subpart—Coffee” (§§ 319.73-1 through 319.73-4). In addition, the regulations in 7 CFR part 361, “Importation of Seed and Screenings Under the Federal Seed Act,” requires shipments of imported agricultural and vegetable seeds to be labeled correctly and to be tested for the presence of seeds of certain noxious weed seeds as a condition of entry into the United States, while the regulations in 7 CFR part 360, “Noxious Weed Regulations,” contain restrictions on the movement of noxious weed plants and plant parts listed in that part into or through the United States and interstate.

We are considering whether to incorporate all the regulations regarding the importation of plants for planting into a single subpart. We would change the name of this subpart from “Subpart—Nursery Stock, Plants, Roots, Bulbs, Seeds, and Other Plant Products” to “Subpart—Plants for Planting” to reflect this change. We would also include the weed taxa whose importation is restricted by 7 CFR part 360 as restricted articles in the new plants for planting regulations. Our intent in making such a change would be to improve the clarity and transparency of our regulations governing the importation of plants for planting by allowing users of the regulations to find all these regulations in one subpart. By making it easier for users of the regulations to find and follow the regulations relevant to their situation, this action could also improve compliance.

We invite responses to the following questions in particular on the reorganization of the regulations for plants for planting we are considering:

1. Should all the regulations governing the importation of plants for planting in the subparts listed above be incorporated into one subpart? If not, which subparts should be excluded, and why?

2. If we should incorporate the regulations governing the importation of plants for planting in the subparts listed above into one subpart, which subparts should we incorporate first? Should we combine them all at once?

The regulations in § 319.37-2(a) list taxa whose importation is prohibited because the importation of plants for planting from these taxa poses a risk of introducing a quarantine pest into the United States. Several of the other subparts listed above also prohibit the importation of certain taxa of plants for planting. Many of these taxa were prohibited from being imported after the discovery of a single quarantine pest as found in a shipment offered for importation into the United States or as reported in the scientific literature. Complete quarantine pest lists are not available for each of these taxa. In addition, the regulations in § 319.37-2(b) prohibit the importation of certain taxa of plants for planting if the plants for planting exceed certain sizes or ages. These limits have not been reviewed recently.

In accordance with recommendation E-48 in the Safeguarding Report, we are considering reviewing the taxa of plants for planting whose importation is currently prohibited to determine whether the pests of concern presently qualify as quarantine pests by the definition cited above. Since the time these plant taxa were designated as prohibited, the pest of concern may have become established in the United States, or scientific evidence may have become available that indicates that the pest of concern does not qualify as a quarantine pest. If we undertake this review, we will begin by conducting a PRA to determine the pests of quarantine concern associated with these taxa and whether prohibition is the only approach to mitigation that would prevent quarantine pests associated with these taxa of plants for planting from becoming established in the United States.

We invite responses to the following question on our potential reevaluation of taxa of plants for planting whose importation is currently prohibited:

1. Which taxa should be candidates for review? Which of these taxa should be assigned the highest priority for review? Please identify the taxa by scientific name and provide scientific information to support your suggestion. Please also provide information, if known, on any quarantine pests other than the pest(s) of concern listed in the regulations that may be associated with the taxa.

2. Which prohibitions on the basis of size or age should be candidates for review? Which of these prohibitions should be assigned the highest priority for review?

We further invite comment on which of the five measures above should be assigned the highest priority for implementation, if any.

Except for combining existing regulations governing the importation of plants for planting, which would be an administrative change, all the measures we are considering for revising the regulations would be likely to have an economic impact on numerous entities considered “small” according to the size standards established by the Small Business Administration (SBA). 5 After we receive answers to the specific questions listed above regarding the five measures we are considering, we may issue a proposal or proposals with the goal of implementing one or more of these measures. In order to conduct the economic analysis required by the Regulatory Flexibility Act for those potential proposals and assess the impact of any changes we might propose on small entities, we will need more economic data about the plants for planting industry than are currently available to us. Therefore, we invite the public to provide us with data regarding the structure of the plants for planting industry, including the number of firms in the industry, the number of firms that could be considered small according to the SBA's size standards, the number of firms whose business directly involves the importation of plants for planting, and any other data that would assist us in conducting economic analyses associated with these measures.

We would also appreciate any suggestions the public may have for improving other aspects of the regulations to reduce the risk of introducing quarantine pests into the United States.

This proposal is issued under Marketing Agreement and Order No. 930 (7 CFR part 930), regulating the handling of tart cherries produced in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866.

This proposal has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing order provisions now in effect, final free and restricted percentages may be established for tart cherries handled by handlers during the crop year. This rule would establish final free and restricted percentages for tart cherries for the 2004-2005 crop year, beginning July 1, 2004, through June 30, 2005. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with the Secretary a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempt therefrom. Such handler is afforded the opportunity for a hearing on the petition. After the hearing, the USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction in equity to review the USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

The order prescribes procedures for computing an optimum supply and preliminary and final percentages that establish the amount of tart cherries that can be marketed throughout the season. The regulations apply to all handlers of tart cherries that are in the regulated districts. Tart cherries in the free percentage category may be shipped immediately to any market, while restricted percentage tart cherries must be held by handlers in a primary or secondary reserve, or be diverted in accordance with § 930.59 of the order and § 930.159 of the regulations, or used for exempt purposes (and obtaining diversion credit) under § 930.62 of the order and § 930.162 of the regulations. The regulated districts for this season are: District one—Northern Michigan; District two—Central Michigan; District three—Southwest Michigan; District four—New York; District seven—Utah; District eight—Washington, and District nine—Wisconsin. Districts five and six (Oregon and Pennsylvania, respectively) would not be regulated for the 2004-2005 season.

The order prescribes under § 930.52 that those districts to be regulated shall be those districts in which the average annual production of cherries over the prior three years has exceeded six million pounds. A district not meeting the six million-pound requirement shall not be regulated in such crop year. Because this requirement was not met in the Districts of Oregon and Pennsylvania, handlers in those districts would not be subject to volume regulation during the 2004-2005 crop year.

Demand for tart cherries at the farm level is derived from the demand for tart cherry products at retail. Demand for tart cherries and tart cherry products tends to be relatively stable from year to year. The supply of tart cherries, by contrast, varies greatly from crop year to crop year. The magnitude of annual fluctuations in tart cherry supplies is one of the most pronounced for any agricultural commodity in the United States. In addition, since tart cherries are processed into cans or frozen, they can be stored and carried over from crop year to crop year. This creates substantial coordination and marketing problems. The supply and demand for tart cherries is rarely balanced. The primary purpose of setting free and restricted percentages is to balance supply with demand and reduce large surpluses that may occur.

Section 930.50(a) of the order prescribes procedures for computing an optimum supply for each crop year. The Board must meet on or about July 1 of each crop year, to review sales data, inventory data, current crop forecasts and market conditions. The optimum supply volume shall be calculated as 100 percent of the average sales of the prior three years (taking into account sales of exempt and restricted percentage cherries qualifying for diversion credit) to which is added a desirable carryout inventory not to exceed 20 million pounds or such other amount as may be established with the approval of USDA. The optimum supply represents the desirable volume of tart cherries that should be available for sale in the coming crop year.

The order also provides that on or about July 1 of each crop year, the Board is required to establish preliminary free and restricted percentages. These percentages are computed by deducting the actual carryin inventory from the optimum supply figure (adjusted to raw product equivalent—the actual weight of cherries handled to process into cherry products) and subtracting that figure (referred to as the current crop year requirement) from the current year's USDA crop forecast or by an average of such other crop estimates the Board votes to use. If the resulting number is positive, this represents the estimated over-production, which would be the restricted percentage tonnage. The restricted percentage tonnage is then divided by the sum of the crop forecast(s) for the regulated districts to obtain a preliminary restricted percentage, rounded to the nearest whole number, for the regulated districts. If subtracting the current crop year requirement, from the current crop forecast, results in a negative number, the Board is required to establish a preliminary free tonnage percentage of 100 percent with a preliminary restricted percentage of zero. The Board is required to announce the preliminary percentages in accordance with paragraph (h) of § 930.50.

The Board met on June 24, 2004, and computed, for the 2004-2005 crop year, an optimum supply volume of 177 million pounds. The Board recommended that the desirable carryout figure be zero pounds. Desirable carryout is the amount of fruit required to be carried into the succeeding crop year and is set by the Board after considering market circumstances and needs. This figure can range from zero to a maximum of 20 million pounds. The Board calculated preliminary free and restricted percentages as follows: The USDA estimate of the crop for the entire production area was 215 million pounds; a 24 million pound carryin (based on Board estimates) was subtracted from the optimum supply of 177 million pounds which resulted in 2004-2005 tonnage requirements (adjusted optimum supply) of 153 million pounds. The carryin figure reflects the amount of cherries that handlers actually had in inventory at the beginning of the crop year. Subtracting the adjusted optimum supply of 153 million pounds from the 215 million pound USDA crop estimate (for the entire production area) results in a surplus of 62 million pounds of tart cherries. The surplus was then divided by the production in the regulated districts (207 million pounds) and this resulted in a restricted percentage of 30 percent for the 2004-2005 crop year. The free percentage was 70 percent (100 percent minus 30 percent). The Board established these percentages and announced them to the industry as required by the order.

The table below summarizes the preliminary percentage computations made by the Board at its June meeting for the 2004-2005 year:

Between July 1 and September 15 of each crop year, the Board may modify the preliminary free and restricted percentages by announcing interim free and restricted percentages to adjust to the actual pack occurring in the industry. No interim adjustments were made.

USDA establishes final free and restricted percentages through the informal rulemaking process. These percentages would make available the tart cherries necessary to achieve the optimum supply figure calculated by the Board. The difference between any final free percentage designated by USDA and 100 percent is the final restricted percentage. The Board met on September 10, 2004, to recommend final free and restricted percentages.

The actual production reported by the Board for the entire production area was 209 million pounds, which is a 6 million pound decrease from the USDA crop estimate of 215 million pounds.

A 25 million pound carryin (based on handler reports) was subtracted from the Board's optimum supply of 177 million pounds, yielding an adjusted optimum supply for the current crop year of 152 million pounds. The adjusted optimum supply of 152 million pounds was subtracted from the actual production of 209 million pounds, which resulted in a 57 million pound surplus. The total surplus of 57 million pounds was then divided by the 202 million-pound volume of tart cherries produced in the regulated districts. This results in a 28 percent restricted percentage and a corresponding 72 percent free percentage for the regulated districts.

The final percentages are based on the Board's reported production figures and the following supply and demand information available in September for the 2004-2005 crop year:

The Department's “Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders” specify that 110 percent of recent years' sales should be made available to primary markets each season before recommendations for volume regulation are approved. This goal would be met by the establishment of final percentages which release 100 percent of the optimum supply volume and the additional release of tart cherries provided under § 930.50(g). This release of tonnage, equal to 10 percent of the average sales of the prior three years sales, is made available to handlers each season.

The Board recommended that such release should be made available to handlers the first week of December and the first week of May. Handlers can decide how much of the 10 percent release they would like to receive on the December and May release dates. Once released, such cherries are released for free use by such handler.

Approximately 18 million pounds would be made available to handlers this season in accordance with Department Guidelines. These cherries would be made available to every handler and released in proportion to the handler's percentage of the total regulated crop handled. If a handler does not take his/her proportionate amount, such amount remains in the inventory reserve.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility.

There are approximately 40 handlers of tart cherries who are subject to regulation under the tart cherry marketing order and approximately 900 producers of tart cherries in the regulated area. Small agricultural service firms, which includes handlers, have been defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less than $5,000,000, and small agricultural producers are defined as those having annual receipts of less than $750,000. A majority of the producers and handlers are considered small entities under SBA's standards.

The principal demand for tart cherries is in the form of processed products. Tart cherries are dried, frozen, canned, juiced, and pureed. During the period 1998/99 through 2003/04, approximately 92 percent of the U.S. tart cherry crop, or 252.8 million pounds, was processed annually. Of the 252.8 million pounds of tart cherries processed, 59 percent was frozen, 29 percent was canned, and 12 percent was utilized for juice and other products.

Based on National Agricultural Statistics Service data, acreage in the United States devoted to tart cherry production has been trending downward. Bearing acreage has declined from a high of 50,050 acres in 1987/88 to 37,000 acres in 2003/04. This represents a 26 percent decrease in total bearing acres. Michigan leads the nation in tart cherry acreage with 73 percent of the total and produces about 75 percent of the U.S. tart cherry crop each year.

The 2004/05 crop is moderate in size at 209 million pounds. The largest crop occurred in 1995 with production in the regulated districts reaching a record 395.6 million pounds. The price per pound received by tart cherry growers ranged from a low of 7.3 cents in 1987 to a high of 46.4 cents in 1991. These problems of wide supply and price fluctuations in the tart cherry industry are national in scope and impact. Growers testified during the order promulgation process that the prices they received often did not come close to covering the costs of production.

The industry demonstrated a need for an order during the promulgation process of the marketing order because large variations in annual tart cherry supplies tend to lead to fluctuations in prices and disorderly marketing. As a result of these fluctuations in supply and price, growers realize less income. The industry chose a volume control marketing order to even out these wide variations in supply and improve returns to growers. During the promulgation process, proponents testified that small growers and processors would have the most to gain from implementation of a marketing order because many such growers and handlers had been going out of business due to low tart cherry prices. They also testified that, since an order would help increase grower returns, this should increase the buffer between business success and failure because small growers and handlers tend to be less capitalized than larger growers and handlers.

Aggregate demand for tart cherries and tart cherry products tends to be relatively stable from year-to-year. Similarly, prices at the retail level show minimal variation. Consumer prices in grocery stores, and particularly in food service markets, largely do not reflect fluctuations in cherry supplies. Retail demand is assumed to be highly inelastic which indicates that price reductions do not result in large increases in the quantity demanded. Most tart cherries are sold to food service outlets and to consumers as pie filling; frozen cherries are sold as an ingredient to manufacturers of pies and cherry desserts. Juice and dried cherries are expanding market outlets for tart cherries.

Demand for tart cherries at the farm level is derived from the demand for tart cherry products at retail. In general, the farm-level demand for a commodity consists of the demand at retail or food service outlets minus per-unit processing and distribution costs incurred in transforming the raw farm commodity into a product available to consumers. These costs comprise what is known as the “marketing margin.”

The supply of tart cherries, by contrast, varies greatly. The magnitude of annual fluctuations in tart cherry supplies is one of the most pronounced for any agricultural commodity in the United States. In addition, since tart cherries are processed either into cans or frozen, they can be stored and carried over from year-to-year. This creates substantial coordination and marketing problems. The supply and demand for tart cherries is rarely in equilibrium. As a result, grower prices fluctuate widely, reflecting the large swings in annual supplies.

In an effort to stabilize prices, the tart cherry industry uses the volume control mechanisms under the authority of the Federal marketing order. This authority allows the industry to set free and restricted percentages. These percentages are only applied to states or districts with a 3-year average of production greater than six million pounds, and to states or districts in which the production is 50 percent or more of the previous 5-year processed production average.

The primary purpose of setting restricted percentages is an attempt to bring supply and demand into balance. If the primary market is over-supplied with cherries, grower prices decline substantially.

The tart cherry sector uses an industry-wide storage program as a supplemental coordinating mechanism under the Federal marketing order. The primary purpose of the storage program is to warehouse supplies in large crop years in order to supplement supplies in short crop years. The storage approach is feasible because the increase in price—when moving from a large crop to a short crop year—more than offsets the costs for storage, interest, and handling of the stored cherries.

The price that growers' receive for their crop is largely determined by the total production volume and carryin inventories. The Federal marketing order permits the industry to exercise supply control provisions, which allow for the establishment of free and restricted percentages for the primary market, and a storage program. The establishment of restricted percentages impacts the production to be marketed in the primary market, while the storage program has an impact on the volume of unsold inventories.

The volume control mechanism used by the cherry industry results in decreased shipments to primary markets. Without volume control the primary markets (domestic) would likely be over-supplied, resulting in lower grower prices.

To assess the impact that volume control has on the prices growers receive for their product, an econometric model has been developed. The econometric model provides a way to see what impacts volume control may have on grower prices. The three districts in Michigan, along with the districts in Utah, New York, Washington, and Wisconsin are the restricted areas for this crop year and their combined total production is 202 million pounds. A 28 percent restriction means 145 million pounds is available to be shipped to primary markets from these five states. Production levels of 3.9 million pounds for Oregon, and 2.8 million pounds for Pennsylvania (the unregulated areas in 2004-2005), result in an additional 6.7 million pounds available for primary market shipments.

In addition, USDA requires a 10 percent release from reserves as a market growth factor. This will result in an additional 18 million pounds being available for the primary market. The 145 million pounds from Michigan, New York, Utah, Washington, and Wisconsin, the approximately 7 million pounds from the other producing states, the 18 million pound release, and the 25 million pound carryin inventory gives a total of 195 million pounds being available for the primary markets.

The econometric model is used to estimate the difference between grower prices with and without restrictions. With volume controls, grower prices are estimated to be approximately $0.08 higher than without volume controls.

The use of volume controls is estimated to have a positive impact on growers' total revenues. With restriction, revenues are estimated to be $10.7 million higher than without restrictions. The without restrictions scenario assumes that all tart cherries produced would be delivered to processors for payments. This scenario is likely since the total available supply in this crop year is very similar to last year's when there was a full release of the reserve pool, and handlers appear to be encouraging growers to deliver their entire crop this year. Although carryout inventories are 25 million pounds, only 1 million pounds is in the reserve while 24 million pounds are held in free inventories held by packers.

It is concluded that the 28 percent volume control would not unduly burden producers and handlers, particularly smaller growers and handlers. The 28 percent restriction would be applied in Michigan, New York, Utah, Washington, and Wisconsin. The growers and handlers in the other two states covered under the marketing order will benefit from the market stability anticipated to result from this restriction.

Recent grower prices have been as high as $0.44 per pound in the 2002-2003 crop year. At current production and yield levels, the cost of production is reported to be $0.43 per pound. Thus, the estimated $0.43 per pound received by growers under the regulation scenario just covers the cost of production. Under the no regulation scenario, estimated grower prices would not cover the total cost of production. Lower yields and production result in higher costs of production. Overhead or fixed costs are spread over lower levels of production which results in higher costs of production per acre. Even in years when no production is harvested, growers face fixed costs of production and additional costs associated with maintaining the orchard for future years of production. The use of volume controls is believed to have little or no effect on consumer prices and will not result in fewer retail sales or sales to food service outlets.

Without the use of volume controls, the industry could be expected to start to build large amounts of unwanted inventories. These inventories would have a depressing effect on grower prices. The econometric model shows for every 1 million-pound increase in carryin inventories, a decrease in grower prices of $0.0033 per pound occurs. The use of volume controls allows the industry to supply the primary markets while avoiding the disastrous results of over-supplying these markets. In addition, through volume control, the industry has an additional supply of cherries that can be used to develop secondary markets such as exports and the development of new products. The use of reserve cherries in the production shortened 2002-2003 crop year proved to be very useful and beneficial to growers and packers.

In discussing the possibility of marketing percentages for the 2004-2005 crop year, the Board considered the following factors contained in the marketing policy: (1) The estimated total production of cherries; (2) the estimated size of the crop to be handled; (3) the expected general quality of such cherry production; (4) the expected carryover as of July 1 of canned and frozen cherries and other cherry products; (5) the expected demand conditions for cherries in different market segments; (6) supplies of competing commodities; (7) an analysis of economic factors having a bearing on the marketing of cherries; (8) the estimated tonnage held by handlers in primary or secondary inventory reserves; and (9) any estimated release of primary or secondary inventory reserve cherries during the crop year.

The Board's review of the factors resulted in the computation and announcement in September 2004 of the free and restricted percentages proposed to be established by this rule (72 percent free and 28 percent restricted).

One alternative to this action would be not to have volume regulation this season. Board members stated that no volume regulation would be detrimental to the tart cherry industry due to the size of the 2004-2005 crop. Returns to growers would not cover their costs of production for this season which might cause some to go out of business.

As mentioned earlier, the Department's “Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders” specify that 110 percent of recent years' sales should be made available to primary markets each season before recommendations for volume regulation are approved. The quantity available under this rule is 110 percent of the quantity shipped in the prior three years.

The free and restricted percentages established by this rule release the optimum supply and apply uniformly to all regulated handlers in the industry, regardless of size. There are no known additional costs incurred by small handlers that are not incurred by large handlers. The stabilizing effects of the percentages impact all handlers positively by helping them maintain and expand markets, despite seasonal supply fluctuations. Likewise, price stability positively impacts all producers by allowing them to better anticipate the revenues their tart cherries will generate.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this regulation.

While the benefits resulting from this rulemaking are difficult to quantify, the stabilizing effects of the volume regulations impact both small and large handlers positively by helping them maintain markets even though tart cherry supplies fluctuate widely from season to season.

In compliance with Office of Management and Budget (OMB) regulations (5 CFR part 1320) which implement the Paperwork Reduction Act of 1995 (Pub. L. 104-13), the information collection and recordkeeping requirements under the tart cherry marketing order have been previously approved by OMB and assigned OMB Number 0581-0177.

Reporting and recordkeeping burdens are necessary for compliance purposes and for developing statistical data for maintenance of the program. The forms require information which is readily available from handler records and which can be provided without data processing equipment or trained statistical staff. As with other, similar marketing order programs, reports and forms are periodically studied to reduce or eliminate duplicate information collection burdens by industry and public sector agencies. This rule would not change those requirements.

A 30-day comment period is provided to allow interested persons to respond to this proposal. Thirty days is deemed appropriate because this rule would need to be in place as soon as possible since handlers are already shipping tart cherries from the 2004-2005 crop. All written comments timely received will be considered before a final determination is made on this matter.

For the reasons set forth in the preamble, 7 CFR part 930 is proposed to be amended as follows:

This rule is issued under Marketing Agreement and Order No. 983, regulating the handling of pistachios grown in California, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing order now in effect, pistachio handlers are subject to assessments. Funds to administer the order are derived from such assessments. It is intended that the assessment rate as proposed herein would be applicable to all assessable pistachios beginning September 1, 2004, and continue until amended, suspended, or terminated. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. Such handler is afforded the opportunity for a hearing on the petition. After the hearing USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This rule would establish a continuing assessment rate for the Committee for the 2004-05 and subsequent fiscal periods of $0.0014 per pound of pistachios received for processing and would establish reporting requirements under the California pistachio order. The quantity of pistachios received by the handler for processing is converted to an assessed weight pursuant to § 983.6 and the assessment rate is applied to that weight in determining a handler's assessment obligation for the fiscal period. Requiring handlers to file annual Receipts/Assessment Reports with the Committee would facilitate the Committee's collection of handler assessments.

Sections 983.52 and 983.53 of the pistachio order provide authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and to collect assessments from handlers to administer the marketing order. Each handler who receives pistachios for processing in each production year (fiscal year) is required to pay an assessment based on the pro rata share of the expenses authorized by USDA which are reasonable and likely to be incurred by the Committee during that year. The assessment obligation for each handler is computed by applying the assessment rate set by USDA to each handler's assessed weight computed pursuant to § 983.6 of the pistachio order.

The members of the Committee are producers and handlers of California pistachios. They are familiar with the Committee needs and with the costs for goods and services in their local area, and are, thus, in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

The Committee met on August 17, 2004, and unanimously recommended 2004-05 expenditures of $271,499 and an assessment rate of $0.0014 per pound of pistachios received for processing. This was the first public meeting of the newly formed Committee since the pistachio marketing order became effective on April 6, 2004 (69 FR 17944). The major expenditures recommended by the Committee for the 2004-05 fiscal period include $ 110,249 for administrative expenses; $34,500 for compliance expenses; $101,750 for salaries; and $25,000 for a contingency reserve.

Because this is a new order and there is no carry-in income, the Committee is borrowing funds from the California Pistachio Commission (Commission) until assessments are collected in March 2005. The Committee discussed the necessity of setting a relatively high assessment rate for the 2004-05 fiscal period because it is necessary to generate sufficient funds to reimburse the Commission, to cover the Committee's 2004-05 expenditures, and to build an adequate reserve to cover Committee expenditures until the 2005-06 fiscal period's assessments are available in December 2005.

The assessment rate recommended by the Committee was derived by dividing anticipated expenses plus funds to establish a reserve by expected receipts (the assessed weight) of pistachios grown in California during 2004-05 ($271,499 plus $190,501 divided by 330,000,000 pounds = $0.0014. With pistachio receipts for the year estimated at 330,000,000 pounds, assessment income is expected to total of $462,000.

The Committee may carry over excess funds into subsequent production years (fiscal years) as a reserve, provided that funds already in the reserve do not exceed approximately two production years' budgeted expenses. In the event that funds exceed two production years' budgeted expenses, future assessments would be reduced to bring the reserves to an amount that is less than or equal to two production years' budgeted expenses (§ 983.56). Funds in the reserve would be kept within the maximum permitted by the order.

Under § 983.53 the Committee, prior to the beginning of each production year, shall recommend and the Secretary shall set the assessment for the following production year, which shall not exceed one-half of one percent of the average price received by producers in the preceding production year. According to the Commission's Annual Report for the 2003-04 crop year, the average price received by producers was $1.15 per pound. One half of one percent equals $0.005. Taking ($0.005) × ($1.15) = $0.00575 for the maximum assessment rate allowed. The rates considered by the Committee ranged from $0.001 to $0.0014. The recommended assessment rate of $0.0014 is less than the maximum provided for in the order.

The proposed assessment rate would continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate would be in effect for an indefinite period, the Committee would continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA would evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking would be undertaken as necessary. The Committee's 2004-05 budget and those for subsequent fiscal periods would be reviewed and, as appropriate, approved by USDA.

Section 983.47 of the pistachio order provides authority for establishing reporting requirements. Under the order, the Committee may, with the approval of the Secretary, establish reporting requirements to collect necessary information or data.

At its first meeting, the Committee also unanimously recommended that handlers file a Receipts/Assessment Report with the Committee to facilitate the Committee's collection of handler assessments.

Handlers, including custom hullers, who receive pistachios for processing (removal of green hulls and drying pistachios to 5 percent moisture), would be required to pay an assessment attributable to the assessed weight of pistachios received by that handler and to report that assessed weight to the Committee on the Receipts/Assessment Form. Pursuant to § 983.6 of the order, the term “assessed weight” means the pounds of inshell pistachios, free of internal defects as defined in § 983.39(b)(4) and (5), with the weight computed at 5 percent moisture, received for processing by a handler within each production year: Provided, That for loose kernels, the actual weight shall be multiplied by two to obtain an inshell weight.

A final order published on July 26, 2004, (69 FR 44460), delayed the implementation date for § 983.39(b)(4) and (5), of the order until February 1, 2005. Therefore, for the 2004-05 fiscal period, each handler who receives pistachios for processing would be required to furnish the Receipts/Assessment Report to the Committee and pay all due assessments to the Committee by March 15, 2005. For subsequent fiscal periods, each handler who receives pistachios for processing would be required to furnish the Receipts/Assessment Report and pay all due assessments to the Committee by December 15 of the applicable fiscal period.

The recommended reporting requirements are similar to those required by the Commission. Because the Commission is prohibited from sharing confidential handler information, the Committee recommended that a Receipt/Assessment Report be developed for Committee use and that the receipts information already compiled for the Commission be attached to the newly developed Committee form. Thus, handlers would not be duplicating their efforts and both agencies would receive necessary receipts/assessment data. The Committee estimates this action would affect 20 handlers of pistachios and further estimates that, on average, handlers would expend approximately 4 minutes per year to prepare and submit this report to the Committee. These actions are in the interest of producers and handlers. Detailed information on these burdens is contained in the Paperwork Reduction Act section of this document.

To facilitate assessment collections under the order, the Committee unanimously recommended establishing § 983.253. This section sets the continuing assessment rate and establishes the reporting requirements necessary to verify that each handler has paid the correct assessment. Section 925.253 would read as follows: “§ 983.253 Assessment rate. (a) On and after September 1, 2004, an assessment rate of $0.0014 per pound of pistachios received for processing is established for California Pistachios. The assessment obligation of each handler would be computed by applying the assessment rate to the assessed weight computed pursuant to § 983.6. (b) For the 2004-05 fiscal period each handler who receives pistachios for processing shall furnish the Receipts/Assessment Report to the Committee and pay all due assessments to the Committee by March 15, 2005. For subsequent fiscal periods, each handler who receives pistachios for processing shall furnish the Receipts/Assessment Report and pay all due assessments to the Committee by December 15 of the applicable fiscal period.”

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility.

There are approximately 20 handlers of California pistachios subject to regulation under the order and approximately 741 producers in the production area. Small agricultural producers are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $5,000,000. Eight of the 20 handlers subject to regulation have annual pistachio receipts of at least $5,000,000. In addition, 722 producers have annual receipts less than $750,000. Thus, the majority of handlers and producers of California pistachios may be classified as small entities.

This rule would establish a continuing assessment rate for the Committee and collected from handlers for the 2004-05 and subsequent fiscal periods of $0.0014 per pound of pistachios received for processing and would establish reporting requirements under the California pistachio order. Requiring handlers to file annual Receipts/Assessment Reports with the Committee would facilitate the Committee's collection of handler assessments. Pistachios harvested and received in August of any year shall be applied to the subsequent production year for order purposes.

The California pistachio order provides authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Committee are producers and handlers of California pistachios. They are familiar with the Committee needs and with the costs for goods and services in their local area, and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

The Committee met on August 17, 2004, and unanimously recommended 2004-05 expenditures of $271,499 and an assessment rate of $0.0014 per pound of pistachios received for processing. This was the first public meeting of the newly formed Committee since the pistachio marketing order became effective on April 6, 2004 (69 FR 17944). The major expenditures recommended by the Committee for the 2004-05 fiscal period include $110,249 for administrative expenses; $34,500 for compliance expenses; $101,750 for salaries; and $25,000 for a contingency reserve.

Because this is a new order and there is no carry-in income, the Committee is borrowing funds from the Commission until assessments are collected in March 2005. The Committee discussed the necessity of setting a relatively high assessment rate for the 2004-05 fiscal period because it is necessary to generate sufficient funds to reimburse the Commission, to cover the Committee's 2004-05 expenditures, and to build an adequate reserve to cover Committee expenditures until the 2005-06 fiscal period's assessments are available in December 2005.

The assessment rate recommended by the Committee was derived by dividing anticipated expenses plus funds to establish a reserve by expected receipts of pistachios grown in California ($271,499 plus $190,501 divided by 330,000,000 pounds = $0.0014. With pistachio receipts for the year estimated at 330,000,000 pounds, assessment income should total $462,000.

The Committee may carry over such excess into subsequent production years as a reserve, provided that funds already in the reserve do not exceed approximately two production years' budgeted expenses. In the event that funds exceed two productions years' budgeted expenses, future assessments would be reduced to bring the reserves to an amount that is less than or equal to two production years' budgeted expenses. Funds in the reserve would be kept within the maximum permitted by the order (§ 983.56).

The proposed assessment rate would continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate would be in effect for an indefinite period, the Committee would continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA would evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking would be undertaken as necessary. The Committee's 2004-05 budget and those for subsequent fiscal periods would be reviewed and, as appropriate, approved by USDA.

The Committee discussed alternative 2004-05 expenditures of $246,499, which did not include $25,000 for a contingency reserve. However, the Committee believes that it is important to establish a contingency reserve for unforeseen expenditures, and, thus, unanimously recommended expenditures in the amount of $271,499.

A review of historical information and preliminary information pertaining to the upcoming fiscal period indicates that the grower price for the 2004-05 season could range between $1.30 and $1.40 per pound of assessed weight pistachios. Therefore, the estimated assessment revenue for the 2004-05 fiscal period as a percentage of total grower revenue could range between .11 and .10 percent.

Section 983.47 of the pistachio order provides authority for establishing reporting requirements. Under the order, the Committee may, with the approval of the Secretary, establish reporting requirements to collect necessary information or data.

To facilitate the collection of handler assessments, the Committee also unanimously recommended that handlers file a Receipts/Assessment Report with the Committee. Both small and large handlers would be required to file the report and to pay assessments. The report would be filed by handlers (including custom hullers) who receive pistachios for processing (removal of green hulls and drying pistachios to 5 percent moisture).

Handlers who receive pistachios for processing, would be required to pay an assessment attributable to the assessed weight of pistachios received by that handler and to report that assessed weight to the Committee on the Receipts/Assessment Form. The term “assessed weight” is defined in § 983.6 of the pistachio order.

The computation of assessed weight involves requirements specified in §§ 983.39(b)(4) and (5). A final order published on July 26, 2004, (69 FR 44460), delayed the implementation date of those sections until February 1, 2005. Therefore, for the 2004-05 fiscal period, each handler who receives pistachios for processing would be required to furnish the Receipts/Assessment Report to the Committee and pay all due assessments to the Committee by March 15, 2005. For subsequent fiscal periods, each handler who receives pistachios for processing would be required to furnish the Receipts/Assessment Report and pay all due assessments to the Committee by December 15 of the applicable fiscal period.

While assessments impose some additional costs on handlers, the costs are minimal and uniform on all handlers. Some of the additional costs may be passed on to producers. However, these costs would be offset by the benefits derived by the operation of the marketing order. In addition, the Committee's meeting was widely publicized throughout the production area commodity industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the August 17, 2004, meeting was a public meeting and all entities, both large and small, were able to express views on this issue.

Interested persons are invited to submit comments on the informational and regulatory impacts of this action on small businesses. A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html . Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

This rule would impose some additional reporting and recordkeeping on both small and large pistachio handlers. This action would require one new Committee form. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. In addition, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), AMS is submitting to the Office of Management and Budget a revision to approved information collection OMB No. 0581-0215, “Pistachios Grown in California.”

These information collection requirements are essential to carry out the intent of the Act, to provide respondents the type of service they request, and to administer the California pistachio marketing order program, which was established in 2004.

Under the order, the committee may, with the approval of the Secretary, establish reporting requirements to collect necessary information or data.

On August 17, 2004, the Committee met and unanimously recommended establishing a reporting requirement under the order similar to that applied under the California Pistachio Commission. Because the Commission is prohibited from sharing confidential handler information, the committee recommended that a receipt/assessment report be developed for committee use and that the receipts information already compiled for the Commission be attached to the newly developed committee form. Thus, handlers would not be duplicating their efforts and both agencies would receive necessary receipts/assessment data.

The information collected will be used only by authorized representatives of the USDA, including AMS, Fruit and Vegetable Programs regional and headquarters' staff, and authorized Committee employees. Authorized Committee employees are the primary users of the information and AMS is the secondary user. The name of the form is the Administrative Committee for Pistachios (ACP)-1; Receipts/Assessment Report.

The total burden for the information collection under the order is as follows:

Estimate of Burden: 4 minutes per response.

Respondents: Qualified handlers or producers.

Estimated Number of Respondents: 20.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Average Burden on Respondents): 1 hour and 20 minutes.

Comments: Sixty days are provided for comments. Comments are invited on: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information would have practical utility; (2) the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.

Comments should reference OMB No. 0581-0215 and the marketing order for pistachios grown in California, and be sent to USDA in care of the Docket Clerk at the previously mentioned address. All comments received will be available for public inspection during regular business hours at the same address. All responses to this notice on informational impacts will be summarized and included in the request for OMB approval of the above described form. All comments will become a matter of public record.

For the reasons set forth in the preamble, 7 CFR part 983 is proposed to be amended as follows:

This rule is issued under Marketing Agreement and Order No. 989 (7 CFR part 989), both as amended, regulating the handling of raisins produced from grapes grown in California, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing order now in effect, California raisin handlers are subject to assessments. Funds to administer the order are derived from such assessments. It is intended that the assessment rate as proposed herein would be applicable to all assessable raisins beginning on August 1, 2004, and continue until amended, suspended, or terminated. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. Such handler is afforded the opportunity for a hearing on the petition. After the hearing USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This rule would increase the assessment rate established under the order for the 2004-05 and subsequent crop years from $8.00 to $11.00 per ton of free tonnage raisins acquired by handlers, and reserve tonnage raisins released or sold to handlers for use in free tonnage outlets. Authorization to assess raisin handlers enables the Committee to incur expenses that are reasonable and necessary to administer the program. The 2004-05 crop is smaller than normal, and no volume regulation will be implemented this year. As a result, some expenses funded by handler assessments will increase. The $8.00 per ton assessment rate will not generate enough revenue to cover expenses. This action was recommended by the Committee at a meeting on October 5, 2004.

Sections 989.79 and 989.80, respectively, of the order provide authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Committee are producers and handlers of California raisins. They are familiar with the Committee's needs and with the costs of goods and services in their local area and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

Section 989.79 also provides authority for the Committee to formulate an annual budget of expenses likely to be incurred during the crop year in connection with reserve raisins held for the account of the Committee. A certain percentage of each year's raisin crop may be held in a reserve pool during years when volume regulation is implemented to help stabilize raisin supplies and prices. The remaining “free” percentage may be sold by handlers to any market. Reserve raisins are disposed of through various programs authorized under the order. Reserve pool expenses are deducted from proceeds obtained from the sale of reserve raisins. Net proceeds are returned to the pool's equity holders, primarily producers.

When volume regulation is in effect, an administrative budget funded by handler assessments is developed, and a reserve pool budget funded by the current year's reserve pool is developed. Committee costs are apportioned between the two revenue sources. When volume regulation is not implemented, the Committee develops an administrative budget funded solely from handler assessments.

When the Committee met on August 12, 2004, it recommended two budget scenarios for the 2004-2005 crop year to accommodate both situations, because it was not known at that time if volume regulation would be implemented. At that time, it appeared the crop may be short, but the initial crop estimate would not be available until a later date.

The first budget scenario recommended was premised on the assumption that volume regulation would be implemented. Under this scenario, the Committee recommended an administrative budget of expenses totaling $2,200,000 and a reserve pool budget of $2,839,225. The assessment rate would remain unchanged at $8.00 per ton. This assessment rate applied to estimated acquisitions of raisins by handlers of 275,000 tons would provide adequate revenue to fund the administrative budget.

The second budget scenario recommended was based on the premise that volume regulation would not be implemented for the 2004-05 season. Under this scenario, various expenses typically split between the reserve pool budget and the administrative budget would be funded by the administrative budget. In addition, some expense categories would be eliminated, some reduced, and another would be allocated to the existing 2003-04 reserve pool budget. The administrative budget would increase to $3,025,000, thus necessitating an increase in the assessment rate to $11.00 per ton.

The Committee met on October 5, 2004, and determined that no volume regulation for the 2004-05 crop year was warranted because of a short crop. The crop estimate for Natural (sun-dried) Seedless raisins, the major raisin variety produced, was 199,344 tons. If realized, this would be the smallest crop in over 20 years. Production of other varietal types was also estimated to be relatively low. The lack of volume regulation triggered implementation of the Committee's recommendation for an administrative budget of $3,025,000 and an increased assessment rate from $8.00 per ton to $11.00 per ton.

In developing this budget, the Committee reviewed and identified those expenses that were considered reasonable and necessary to continue operation of the raisin marketing order program. Several costs normally associated with administering a reserve pool would be eliminated, such as insurance coverage ($400,000), costs for repairing reserve storage bins ($300,000), raisin hauling costs ($65,000), auditing fees ($20,000), and bank charges ($20,000). Other costs usually split between the administrative and reserve pool budgets would also be eliminated, such as production of industry brochures ($20,000) and research and communication activities ($70,000). It was determined that these activities, while desirable, could be eliminated without adversely impacting Committee operations.

Other expenses traditionally split between the reserve and administrative budgets would be reduced. For example, total compliance activity costs budgeted at $500,000 ($250,000 allocated to the reserve budget and $250,000 allocated to the administrative budget) would be reduced to $320,000, to be funded from the administrative budget. Purchase of equipment would also be reduced, from a combined amount of $50,000, to $25,000 funded from the administrative budget.

Other costs usually split between the reserve pool and administrative budgets that would be funded by the administrative budget include general overhead costs such as salaries, taxes, retirement and other benefits, insurance, rent, office supplies, and Committee travel. These costs remain the same regardless of whether there is a reserve pool, as they are necessary to continue administration of the program. Finally, $836,000 in costs associated with administering export programs would be funded by the existing 2003-04 reserve pool budget, and $536,000 would be funded under administrative budget for 2004-05.

A direct comparison of expenses between the recommended 2004-05 budget and the 2003-04 budget is difficult because the 2004-05 budget is only administrative, whereas in 2003-04 there was an administrative and a reserve pool budget. In total, the 2004-05 recommended administrative budget of $3,025,000 compares to the 2003-04 administrative budget of $2,000,000. However, the $3,025,000 administrative budget is $1,609,800 less than the combined 2003-04 administrative and reserve pool budgets of $4,634,800.

Major expense categories include $1,000,000 for salaries, $536,000 for export program activities (administrative budget only), $320,000 for compliance activities, $150,000 for group health insurance, $110,000 for rent, $120,000 for Committee member and staff travel, and $110,000 for computer software and programming.

A continuous assessment rate of $8.00 per ton has been in effect since the 2002-03 crop year. For the 2004-05 crop year, the Committee recommended increasing the assessment rate to $11.00 per ton of assessable raisins to cover recommended administrative expenditures of $3,025,000. The recommended $11.00 per ton assessment rate was derived by dividing the $3,025,000 in anticipated expenses by an estimated 275,000 tons of assessable raisins. Sufficient income should be generated at the higher assessment rate for the Committee to meet its anticipated expenses. Pursuant to § 989.81(a) of the order, any unexpended assessment funds from the crop year must be credited or refunded to the handlers from whom collected.

The proposed assessment rate would continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and other information submitted by the Committee or other available information.

Although this assessment rate would be in effect for an indefinite period, the Committee would continue to meet prior to or during each crop year to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA would evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking would be undertaken as necessary. The Committee's 2004-05 budget and those for subsequent crop years would be reviewed and, as appropriate, approved by USDA.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility.

There are approximately 20 handlers of California raisins who are subject to regulation under the order and approximately 4,500 raisin producers in the regulated area. Small agricultural firms are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less that $5,000,000, and small agricultural producers are defined as those having annual receipts of less than $750,000. Thirteen of the 20 handlers subject to regulation have annual sales estimated to be at least $5,000,000, and the remaining 7 handlers have sales less than $5,000,000. No more than 7 handlers, and a majority of producers, of California raisins may be classified as small entities.

This rule would increase the assessment rate established for the Committee and collected from handlers for the 2004-05 and subsequent crop years from $8.00 to $11.00 per ton of assessable raisins acquired by handlers. The 2004-05 crop is estimated to be smaller than normal, and as a result, the Committee determined that volume regulation for the season was not warranted.

When volume regulation is in effect, the Committee establishes two budgets; one for administrative expenses funded by handler assessments, and one for expenses incurred in connection with a reserve pool. Many of the Committee costs are split between the reserve pool budget and the administrative budget.

When no volume regulation is in effect during a crop year, there is no reserve pool budget for that crop year. However, the Committee continues to incur fixed costs associated with administering the marketing order program. Therefore, the Committee reviewed and identified the expenses that would be reasonable and necessary to continue program operations without a reserve pool in effect during the 2004-05 crop year. Operating expenses typically split between the administrative and reserve pool budgets were allocated to the administrative budget, some expenses were reduced, some expenses were eliminated, and some export program activity expenses were allocated to the existing 2003-04 reserve pool budget.

The resulting administrative budget recommended includes expenses totaling $3,025,000 for the 2004-05 crop year. While this is an increase from the 2003-04 administrative budget of $2,000,000, it represents a decrease in the 2003-04 combined administrative and reserve pool budgets which totaled $4,634,800.

Because the 2004-05 administrative budget funded some of the costs typically allocated to a reserve budget, a direct comparison to 2003-04 administrative costs would be difficult. A comparison of 2004-05 recommended administrative expenditures to combined 2003-04 administrative and reserve pool budget expenditures therefore follows: 2004-05 salaries, $1,000,000 (2003-04 combined budgeted expenditures for salaries was $1,000,000); $456,000 for export program activities, ($1,246,000); $320,000 for compliance activities, ($320,000); $150,000 for group health insurance, ($165,000); $110,000 for rent, ($106,000); $120,000 for Committee member and staff travel, ($120,000); and $110,000 for computer software and programming, ($107,800).

With anticipated assessable tonnage at 275,000 tons, sufficient income should be generated at the $11.00 per ton assessment rate to meet expenses. Pursuant to § 989.81(a) of the order, any unexpended assessment funds from the crop year must be credited or refunded to the handlers from whom collected.

The industry considered an alternative assessment rate and budget prior to arriving at the $11.00 per ton and $3,025,000 administrative budget recommendation. The Committee's Audit Subcommittee met on July 1, 2004, to review preliminary budget information. The subcommittee was aware that the 2004-05 crop may be short and no volume regulation may be implemented. The subcommittee thus developed two budgets and assessment rates to accommodate a scenario with volume regulation and another scenario with no volume regulation. If volume regulation was to be implemented, the assessment rate would remain at $8.00 per ton. If volume regulation was not implemented, costs typically allocated to a reserve pool budget would be absorbed by the administrative budget, thus necessitating an increased assessment rate to $11.00 per ton. The Committee approved these budget and assessment recommendations on August 12, 2004.

The Committee met again on October 5, 2004, and determined that volume regulation was not warranted for the season. This triggered implementation of the Committee's recommendation for an administrative budget of $3,025,000 and assessment rate of $11.00 per ton.

A review of statistical data on the California raisin industry indicates that assessment revenue has consistently been less than one percent of grower revenue in recent years. A grower price of a minimum of $1,210 per ton for the 2004-05 crop raisins has been announced by the Raisin Bargaining Association. If this price is realized, assessment revenue would continue to be less than one percent of grower revenue in the 2004-05 crop year, even with the increased assessment rate.

Regarding the impact of this action on affected entities, this action would increase the assessment obligation imposed on handlers. While assessments impose some additional costs on handlers, the costs are minimal and uniform on all handlers. Some of the additional costs may be passed on to producers. However, these costs would be offset by the benefits derived by the operation of the marketing order.

Additionally, the Audit Subcommittee and full Committee meetings held on July 1, 2004, and August 12, 2004, respectively, where this action was deliberated were public meetings widely publicized throughout the California raisin industry. All interested persons were invited to attend the meetings and participate in the industry's deliberations. Finally, all interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses.

This proposed rule would impose no additional reporting or recordkeeping requirements on either small or large raisin handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. Finally, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

A 10-day comment period is provided to allow interested persons to respond to this proposed rule. Ten days is deemed appropriate because a final decision on increasing the rate as proposed should be made as soon as possible so the Committee can begin billing handlers for assessments at the higher rate. The Committee usually begins assessment billings in November.

For the reasons set forth in the preamble, 7 CFR part 989 is proposed to be amended as follows:

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this document must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2004-19237/Airspace Docket No. 04-AGL-19.” The postcard will be date/time stamped and returned to the commenter. All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the Rules Docket, FAA, Great Lakes Region, Office of the Regional Counsel, 2300 East Devon Avenue, Des Plaines, Illinois, both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://dms.dot.gov. Recently published rulemaking documents can also be accessed through the FFA's Web page at http://www.faa.gov or the Superintendent of Document's Web page at http://www.access.gpo.gov/nara.

Additionally, any person may obtain a copy of this notice by submitting a request to the Federal Aviation Administration, Office of Air Traffic Airspace Management, ATA-400, 800 Independence Avenue, SW., Washington, DC 20591, by calling (202) 267-8783. Communications must identify both docket numbers for this notice. Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking, (202) 267-9677, to request a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is considering an amendment to 14 CFR part 71 to establish Class E airspace at Tracy, MN, for Tracy Municipal Airport. Controlled airspace extending upward from 700 feet or more above the surface of the earth is needed to contain aircraft executing instrument approach procedures. The area would be depicted on appropriate aeronautical charts. Class E airspace areas extending upward from 700 feet or more above the surface of the earth are published in paragraph 6005 of FAA Order 7400.9M dated August 30, 2004, and effective September 16, 2004, which is incorporated by reference in 14 CFR 71.1. The Class E designations listed in this document would be published subsequently in the Order.

The FAA has determined that this proposed regulation only involves an establishment body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this proposed regulation—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

A notice of proposed rulemaking and notice of public hearing that appeared in the Federal Register on Tuesday, September 7, 2004, (69 FR 54067), announced that a public hearing was scheduled for December 15, 2004, at 10 a.m., in the IRS Auditorium, Internal Revenue Service Building, 1111 Constitution Avenue, NW., Washington, DC. The subject of the public hearing is under section 269B of the Internal Revenue Code.

The public comment period for these regulations expired on December 6, 2004. The notice of proposed rulemaking and notice of public hearing, instructed those interested in testifying at the public hearing to submit a request to speak and an outline of the topics to be addressed. As of Tuesday, December 7, 2004, no one has requested to speak. Therefore, the public hearing scheduled for December 15, 2004, is cancelled.

We encourage you to participate in this rulemaking by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this rulemaking (CGD07-04-090), indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know that your submission reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this proposed rule in view of them.

If, as we anticipate we make this temporary final rule effective less than 30 days after publication in the Federal Register , we will explain in that publication, as required by 5 U.S.C. (d)(3), our good cause for doing so.

We do not plan to hold a public meeting. The United States Coast Guard, along with other state and federal law enforcement agencies, has conducted numerous outreach meetings with port users and the affected maritime community regarding port restrictions. However, you may submit a request for a meeting by writing to Coast Guard Marine Safety Office Jacksonville at the address under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a separate notice in the Federal Register .

In light of terrorist attacks on New York City and the Pentagon in Arlington, VA, on September 11, 2001, and the continuing concern for future terrorist and or subversive acts against the United States, especially at high visibility events where a large number of persons are likely to congregate, the Coast Guard proposes to establish temporary regulated navigation areas and security zones in certain waters of the St. Johns River.

The Super Bowl is a sporting event, hosted each year in a different city in the United States, sponsored by the National Football League (NFL). Super Bowl XXXIX will be held in Jacksonville, FL, on Sunday, February 6, 2005, at ALLTEL Stadium. Security measures for Super Bowl XXXIX and the events preceding it, including temporary regulated navigation areas, security zones and anchorages proposed herein, are necessary from February 2, 2005, to February 7, 2005, and are needed to safeguard the maritime transportation infrastructure, the public, and designated participants from potential acts of violence or terrorism during Super Bowl XXXIX activities.

The planning for these regulated navigation areas and security zones has been conducted in conjunction with federal, state and local law enforcement agencies. There is significant national security interest during the Super Bowl in protecting the waterways surrounding downtown Jacksonville, cruise ships, nearby vessels, and the public from destruction, loss, or injury from sabotage or other subversive acts, accidents or other causes of a similar nature.

These proposed regulations include amends of existing security zones established at 33 CFR 165.759 to increase the fixed security zones around cruise ships docked at the Talleyrand Marine Terminal and the Jacksonville Cruise Ship Passenger Terminal from 100 yards to 400 yards.

These proposed regulations also amend existing anchorage regulations established at 33 CFR 110.183 by removing Anchorage A, modifying Anchorage B, and establishing various temporary anchorages marked by buoys. Some of the temporary anchorages will be exclusively for use by small recreational vessels and others will be for larger recreational vessels and commercial vessels.

The Coast Guard proposes to establish regulated navigation areas and security zones on the St. Johns River, Jacksonville, FL, to include the waters from Winter Point to the Intracoastal Waterway. The regulated navigation areas and security zones are necessary to protect national security interests during Super Bowl XXXIX and for the safety of navigation on the waterway.

Temporary regulated navigation areas are proposed from Wednesday, February 2, 2005, commencing at 6 a.m. (EST) until Monday, February 7, 2005 at 6 p.m. (EST) for: (1) Winter Point to the Matthews Bridge and (2) the Matthews Bridge to St. Johns Bluff Reach.

All vessels entering the regulated navigation areas must comply with orders from the Coast Guard Captain of the Port, Jacksonville, Florida, or that officer's designated representatives, and accordingly regulate their course, direction and movements within the regulated navigation areas. Vessels must exercise continuous transit at minimum safe speed while within 400 yards of the federal channel as marked by buoys and day boards.

The public will be reminded of the locations and effective periods of the regulated navigation areas, security zones and temporary anchorage regulations by a local notice to mariners. No commercial vessels will be permitted to anchor between the Fuller Warren Bridge and the Matthews Bridge.

In addition to the regulated navigation areas described as (1) and (2), the following temporary security zones described as (3), (4), (5) and (6) are proposed for the waters of the St. Johns River. Security Zone (3): the waters between the Fuller Warren Bridge and the Matthews Bridge to be enforced Friday, February 4, 2005, beginning at 11:59 p.m. (EST) until Monday, February 7, 2005, at 3 a.m. (EST). Vessel operators entering the security zone outlined as (3) must receive express permission from local, state or federal enforcement personnel designated by the Captain of the Port; not transport or possess certain dangerous cargo as defined in 33 CFR 160.204; and not operate or place in the water jet skis or other motorized personal watercraft at any time while this security zone, or security zones (4), (5) and (6) are in effect. Vessel operators may not enter or remain in the security zone outlined as (3) without completing a satisfactory security screening.

Security Zones (4), (5) and (6) are smaller zones located geographically within security zone (3) which will be enforced at various times and present additional restrictions. Security zone (4): a 25-yard zone (entry prohibited without prior approval by the Captain of the Port or his designated representatives) around the passenger terminals at JEA Park and the Transportation Hub, to be enforced Wednesday, February 2, 2005, commencing at 6 a.m. (EST) until Monday, February 7, 2005, at 11:59 a.m. (EST).

Security zone (5): A “no move” zone (in addition to permission to enter the zone, all vessels will be required to obtain approval by the Captain of the Port or his designated representatives prior to getting underway from the pier or anchorage, including vessels which previously received permission to enter the zone) on the north bank of the St. Johns River from the Main Street Bridge to the Hart Bridge, extending 25 yards offshore, to be enforced Sunday, February 6, 2005, beginning at 11:59 a.m. (EST) until Monday, February 7, 2005 at 3 a.m. (EST).

Security zone (6): Restricts entry into the zone without prior approval by the Captain of the Port or his designated representatives, north bank to south bank, between JEA Park and the Transportation Hub, to be enforced Sunday, February 6, 2005, from 11:59 a.m. (EST) until Monday, February 7, at 3 a.m. (EST).

The temporary security zones described as (3), (4), (5) and (6) prohibit the transport or possession on vessels of certain dangerous cargo as defined in 33 CFR 160.204.

Regulations currently exist at 33 CFR 165.759 which establish 100 yard moving security zones around all cruise ships entering or departing the Port of Jacksonville, Florida. Fixed security zones are established 100 yards around all cruise ships docked in the Port of Jacksonville. This proposed regulation temporarily suspends these security zones and replaces them with a 400 yard security zone for all cruise ships docked at the Talleyrand Marine Terminal and Jacksonville Cruise Ship Passenger Terminal to be enforced Wednesday, February 2, 2005, commencing at 6 a.m. (EST) until Monday, February 7, 2005, at 11:59 p.m. (EST).

These proposed regulations also amend existing anchorage regulations established at 33 CFR 110.183 which regulate the anchoring of vessels on the St. Johns River from the Main Street Bridge to the ocean. The rule proposes to amend the regulations to temporarily close Anchorage A and reduce the size of Anchorage B. Further, anchoring anywhere between the Fuller Warren Bridge and the Matthews Bridge will be limited to recreational vessels 40 feet or less in length within marked areas to be identified by temporary buoys. Rafting of vessels outboard of one another in these marked areas will be limited to 20 rafted vessels. Anchorage B will be reduced in size and will retain its existing restrictions. In addition to anchoring availability in Anchorage B, recreational vessels in excess of 40 feet in length and commercial vessels may seek Captain of the Port permission to anchor north of the Matthews Bridge within marked areas to be identified by temporary buoys. The Captain of the Port Jacksonville, Florida, will continue to notify the maritime community of the periods during which the regulated navigation areas and security zones will be effective. Broadcast notifications will be made to the maritime community advising them of the boundaries of these zones.

Section 182 of the Clean Air Act (Act) specifies the required State Implementation Plan (SIP) submissions and requirements for areas classified as nonattainment for ozone and when these submissions and requirements are to be submitted to EPA by the states. The specific requirements vary depending upon the severity of the ozone problem. The New York-Northern New Jersey-Long Island and Philadelphia-Trenton nonattainment areas are nonattainment areas classified as a severe. Under section 182, severe ozone nonattainment areas were required to submit demonstrations of how they would attain the 1-hour ozone standard. On December 16, 1999 (64 FR 70380), EPA proposed approval of New Jersey's 1-hour ozone attainment demonstration SIP for the New Jersey portion of the New York-Northern New Jersey-Long Island nonattainment area and the New Jersey portion of the Philadelphia-Trenton nonattainment area. In that rulemaking, EPA identified an emission reduction shortfall associated with New Jersey's 1-hour ozone attainment demonstration SIPs, and required New Jersey to address the shortfalls. In a related matter, the Ozone Transport Commission (OTC) developed control measures into model rules for a number of source categories and estimated emission reduction benefits from implementing these model rules. These model rules were designed for use by states in developing their own regulations to achieve additional emission reductions to close emission shortfalls.

On February 4, 2002 (67 FR 5152), EPA approved New Jersey's 1-hour ozone attainment demonstration SIPs. This approval included an enforceable commitment submitted by New Jersey to adopt additional control measures to close the shortfalls identified by EPA for attainment of the 1-hour ozone standard.

On June 22, 2004, Bradley M. Campbell, Commissioner, New Jersey Department of Environmental Protection (NJDEP), submitted to EPA a revision to the SIP which included an adopted revision to subchapter 24, “Prevention of Air Pollution From Consumer Products,” which contained two control programs. The two control programs are consumer products and portable fuel container spillage control. This SIP revision will provide volatile organic compound (VOC) emission reductions to address, in part, the shortfall identified by EPA when New Jersey's one-hour ozone attainment demonstrations were approved. New Jersey used the OTC model rules as guidelines to develop its rules.

On May 2, 1997 as part of the New Jersey SIP EPA previously approved subchapter 24 (62 FR 24036) which included the innovative product exemption as a method of compliance and the option of variances. The innovative product exemption and variance provision was fully discussed in the proposed approval (January 21, 1997, 62 FR 2984). As part of the SIP revision, New Jersey commited to forwarding all innovative product exemptions and variances that the State accepts to EPA, Region 2, in order for EPA to be able to determine compliance with the New Jersey SIP.

The revised Subchapter 24 now regulates 45 separate consumer product categories and applies statewide. It requires that, on or after January 1, 2005, no person shall sell, supply, offer for sale, or manufacture consumer products which contain VOCs in excess of the VOC content limits specified by New Jersey for those products. Subchapter 24 includes specific exemptions, as well as registration and product labeling requirements, recordkeeping and reporting requirements, and test methods and procedures.

Consumer products that are sold in New Jersey for shipment and use outside of the State of New Jersey are exempt from the VOC content limits, and administrative and testing requirements of Subchapter 24. This exemption reflects the intent to regulate only the manufacture and distribution of consumer products that actually emit VOCs into New Jersey's air and not to interfere in the transportation of goods that are destined for use outside of the State.

In addition, subchapter 24 contains provisions for accepting innovative products exemptions (IPEs), alternative compliance plans (ACPs), and variances that have been approved by the California Air Resources Board (CARB) or other states with adopted consumer product regulations based on the Ozone Transport Commission (OTC) “Model Rule for Consumer Products” dated November 29, 2001.

The Subchapter 24 IPE and ACP provisions provide alternatives to complying with the VOC content limits specified in the Table 1—VOC Content Limits For Chemically Formulated Consumer Products of Subchapter 24. The IPE provisions require a manufacturer to demonstrate that due to some characteristics of the formulation, design, delivery system or other factor, VOC emissions resulting from the use of the innovative product would be less than the emissions resulting from the use of a representative product that meets the VOC content standard. The ACP provisions specify a method for averaging the emissions from several consumer products manufactured by the same company such that the total emissions from the products included in the plan will have emissions equal to or less than the sum of emissions from products that actually complied with the individual product emission limitations. The variance provision allows for a temporary exemption based on an extraordinary economic hardship that is beyond the reasonable control of the manufacturer of the regulated consumer product.

The State provisions specify the required documentation that must be submitted and the conditions under which New Jersey will recognize a IPE, ACP or variance that was granted by CARB or another state with equivalent provisions. The IPE, ACP or variance can become effective in New Jersey for the period of time that the approved IPE, ACP or variance remains in effect, provided that all the consumer products within the IPE, ACP or variance are regulated by Subchapter 24.

Paragraph 24.7(b)(2) of subchapter 24 provides for alternate test methods for consumer products provided that the alternate method is at least as accurate, precise, and appropriate as the test methods included in Subchapter 24 and that the alternate test method is first approved by both the NJDEP and the EPA.

Subchapter 24 (sections 24.8-24.12) also reduces refueling emissions from those equipment and engines in the off-road categories that are predominantly refueled with portable fuel containers. Subchapter 24 applies to any person who sells, supplies, offers for sale, or manufactures for sale in New Jersey portable fuel container(s) or spout(s) or both for use in New Jersey. Subchapter 24 includes exemptions; administrative requirements which include date coding and labeling; recordkeeping and reporting requirements; a manufacturer warranty requirement; and test methods and procedures.

Subchapter 24 establishes performance standards applicable on or after January 1, 2005, which are divided into two sections. One standard specifically addresses spill-proof systems and the other addresses spill-proof spouts for use in portable fuel containers. Included are performance standards for automatic shut off, automatic closure, container openings, fuel flow rates and fill levels. Subchapter 24 also includes a permeation rate for spill-proof systems only.

Portable fuel containers or spouts or both portable fuel containers and spouts manufactured before January 1, 2005 may continue to be sold until January 1, 2006 provided the date of manufacture or a date-code representing the date of manufacture is clearly displayed on the product.

Subchapter 24 also establishes IPE provisions which allow for alternatives to complying with the performance standards specified in subchapter 24 and a variance provision for situations where there is extraordinary economic hardships. Also as in the case for consumer products, the portable fuel container provisions provide for accepting IPE or variances that have been granted by CARB or another state with equivalent provisions. The IPE or variance can become effective in New Jersey for the period of time that the approved IPE or variance remains in effect in the state which originally granted the IPE or variance.

Paragraph 24.11(c) of subchapter 24 provides for alternate test methods for portable fuel containers provided that the alternate method is at least as accurate, precise, and appropriate as the test methods included in subchapter 24 and that the alternate test method is first approved by both the NJDEP and the EPA.

EPA has evaluated New Jersey's submittal for consistency with the Act, EPA regulations, and EPA policy. EPA has determined that the revisions made to subchapter 24 “Prevention of Air Pollution From Consumer Products” of title 7, Chapter 27 of the New Jersey Administrative Codes, meet the SIP revision requirements of the Act with the following exception. While the provisions related to variances, IPE and ACP pursuant to subchapter 24, “Consumer Products” are acceptable, each specific application of those provisions will not be recognized as meeting Federal requirements until it is approved by EPA as a SIP revision. Therefore, EPA is proposing to approve the regulation as part of the New Jersey SIP with the exception that any specific application of provisions associated with variances, IPE and ACP, must be submitted as SIP revisions.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this proposed action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This proposed action merely proposes to approve state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule proposes to approve pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

This proposed rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely proposes to approve a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Act. This proposed rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Act. In this context, in the absence of a prior existing requirement for the state to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This proposed rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Section 1128B(b) of the Social Security Act (the Act) (42 U.S.C. 1320a-7b(b)) provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit or receive remuneration in order to induce or reward business reimbursable under the Federal health care programs. The offense is classified as a felony and is punishable by fines of up to $25,000 and imprisonment for up to 5 years. The OIG may also impose civil money penalties, in accordance with section 1128A(a)(7) of the Act (42 U.S.C. 1320a-7a(a)(7)), or exclusion from the Federal health care programs, in accordance with section 1128(b)(7) of the Act (42 U.S.C. 1320a-7(b)(7)).

Since the statute on its face is so broad, concern has been expressed for many years that some relatively innocuous commercial arrangements may be subject to criminal prosecution or administrative sanction. In response to the above concern, the Medicare and Medicaid Patient and Program Protection Act of 1987, section 14 of Public Law 100-93, specifically required the development and promulgation of regulations, the so-called “safe harbor” provisions, specifying various payment and business practices which, although potentially capable of inducing referrals of business reimbursable under the Federal health care programs, would not be treated as criminal offenses under the anti-kickback statute and would not serve as a basis for administrative sanctions. The OIG safe harbor provisions have been developed “to limit the reach of the statute somewhat by permitting certain non-abusive arrangements, while encouraging beneficial and innocuous arrangements” (56 FR 35952, July 29, 1991). Health care providers and others may voluntarily seek to comply with these provisions so that they have the assurance that their business practices will not be subject to any enforcement action under the anti-kickback statute or related administrative authorities.

To date, OIG has developed and codified in 42 CFR 1001.952 a total of 22 final safe harbors that describe practices that are sheltered from liability.

The OIG has also periodically issued Special Fraud Alerts to give continuing guidance to health care providers with respect to practices OIG finds potentially fraudulent or abusive. The Special Fraud Alerts encourage industry compliance by giving providers guidance that can be applied to their own practices. The OIG Special Fraud Alerts are intended for extensive distribution directly to the health care provider community, as well as to those charged with administering the Federal health care programs.

In developing these Special Fraud Alerts, OIG has relied on a number of sources and has consulted directly with experts in the subject field, including those within OIG, other agencies of the Department, other Federal and State agencies, and those in the health care industry. To date, OIG has issued 12 individual Special Fraud Alerts.

Section 205 of Public Law 104-191 requires the Department to develop and publish an annual notice in the Federal Register formally soliciting proposals for modifying existing safe harbors to the anti-kickback statute and for developing new safe harbors and Special Fraud Alerts.

In developing safe harbors for a criminal statute, OIG is required to engage in a thorough review of the range of factual circumstances that may fall within the proposed safe harbor subject area so as to uncover potential opportunities for fraud and abuse. Only then can OIG determine, in consultation with the Department of Justice, whether it can effectively develop regulatory limitations and controls that will permit beneficial and innocuous arrangements within a subject area while, at the same time, protecting the Federal health care programs and their beneficiaries from abusive practices.

In accordance with the requirements of section 205 of Public Law 104-191, OIG last published a Federal Register solicitation notice for developing new safe harbors and Special Fraud Alerts on December 12, 2003 (68 FR 69366). As required under section 205, a status report of the public comments received in response to that notice is set forth in Appendix G to the OIG's Semiannual Report covering the period April 1, 2004 through September, 30, 2004. 1 The OIG is not seeking additional public comment on the proposals listed in Appendix G at this time. Rather, this notice seeks additional recommendations regarding the development of proposed or modified safe harbor regulations and new Special Fraud Alerts beyond those summarized in Appendix G to the OIG Semiannual Report referenced above.

In accordance with section 205 of HIPAA, we will consider a number of factors in reviewing proposals for new or modified safe harbor provisions, such as the extent to which the proposals would affect an increase or decrease in—

• Access to health care services;

• The quality of services;

• Patient freedom of choice among health care providers;

• Competition among health care providers;

• The cost to Federal health care programs;

• The potential overutilization of the health care services; and

• The ability of health care facilities to provide services in medically underserved areas or to medically underserved populations.

In addition, we will also take into consideration other factors, including, for example, the existence (or nonexistence) of any potential financial benefit to health care professionals or providers that may take into account their decisions whether to (1) order a health care item or service, or (2) arrange for a referral of health care items or services to a particular practitioner or provider.

In determining whether to issue additional Special Fraud Alerts, we will also consider whether, and to what extent, the practices that would be identified in a new Special Fraud Alert may result in any of the consequences set forth above, as well as the volume and frequency of the conduct that would be identified in the Special Fraud Alert.

A detailed explanation of justifications for, or empirical data supporting, a suggestion for a safe harbor or Special Fraud Alert would be helpful and should, if possible, be included in any response to this solicitation.

Comments Invited

TSA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. See ADDRESSES above for information on where to submit comments.

With each comment, please include your name and address, identify the docket number TSA-2004-19845 at the beginning of your comments, and give the reason for each comment. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. You may submit comments and material electronically, in person, or by mail as provided under ADDRESSES, but please submit your comments and material by only one means. If you submit comments by mail or delivery, submit them in two copies, in an unbound format, no larger than 8.5 by 11 inches, suitable for copying and electronic filing.

If you want the TSA to acknowledge receipt of your comments on this rulemaking, include with your comments a self-addressed, stamped postcard on which the docket number appears. We will stamp the date on the postcard and mail it to you.

Except for comments containing confidential information and SSI, we will file in the public docket all comments we receive, as well as a report summarizing each substantive public contact with TSA personnel concerning this rulemaking. The docket is available for public inspection before and after the comment closing date.

We will consider all comments we receive on or before the closing date for comments. We will consider comments filed late to the extent practicable. We may change this rulemaking in light of the comments we receive.

You can get an electronic copy using the Internet by—

(1) Searching the Department of Transportation's electronic Docket Management System (DMS) Web page ( http://dms.dot.gov/search );

(2) Accessing the Government Printing Office's Web page at http://www.access.gpo.gov/su_docs/aces/aces140.html ; or

(3) Visiting the TSA's Law and Policy Web page at http://www.tsa.dot.gov/public/index.jsp.

In addition, copies are available by writing or calling the individual in the FOR FURTHER INFORMATION CONTACT section. Make sure to identify the docket number of this rulemaking.

In conjunction with the establishment of a new system of records, Transportation Security Intelligence Service (TSIS) Operations Files (DHS/TSA 011), TSA proposes to exempt portions of the system from several provisions of the Privacy Act; the exemptions are claimed in accordance with the reasons explained below. The purpose of this system is to maintain records on intelligence, counterintelligence, transportation security, and information systems security matters as they relate to TSA's mission of protecting the nation's transportation systems. TSA also proposes to add 5 U.S.C. 552a(k)(1) as an authority to exempt the Personnel Background Investigation File System (DHS/TSA 004) from the provisions previously claimed for this system that allows TSA to maintain investigative and background records used to make suitability and eligibility determinations for employment. See 68 FR 49410, Aug. 18, 2003. The system is exempt from provisions of the Privacy Act in accordance with the reasons explained below. Finally, TSA proposes to add 5 U.S.C. 552a(j)(2) as an authority to exempt the Transportation Security Enforcement Record System (DHS/TSA 001) and the Internal Investigation Record System (DHS/TSA 005) from the provisions previously claimed for those two systems and to now include subsection (e)(3) of the Privacy Act. See 68 FR 49410, Aug. 18, 2003. The systems are exempt from provisions of the Privacy Act in accordance with the reasons explained below. DHS/TSA 001 serves as an enforcement docket system while DHS/TSA 005 is maintained to facilitate the management of investigations into allegations or appearances of misconduct by current and former TSA employees or contractors and is being modified to cover investigations of security-related incidents and reviews of TSA programs and operations.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that TSA consider the impact of paperwork and other information collection burdens imposed on the public. We have determined that there are no current or new information collection requirements associated with this proposed rule.

This proposal is not a “significant regulatory action” within the meaning of Executive Order 12886. Because the economic impact should be minimal, further regulatory evaluation is not necessary. Moreover, I certify that this proposal would not have a significant economic impact on a substantial number of small entities, because the reporting requirements themselves are not changed and because it applies only to information on individuals.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), (Pub. L. 104-4, 109 Stat. 48), requires Federal agencies to assess the effects of certain regulatory actions on State, local, and tribal governments, and the private sector. UMRA requires a written statement of economic and regulatory alternatives for proposed and final rules that contain Federal mandates. A “Federal mandate” is a new or additional enforceable duty, imposed on any State, local, or tribal government, or the private sector. If any Federal mandate causes those entities to spend, in aggregate, $100 million or more in any one year the UMRA analysis is required. This proposal would not impose Federal mandates on any State, local, or tribal government or the private sector.

TSA has analyzed this proposed rule under the principles and criteria of Executive Order 13132, Federalism. We determined that this action would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government, and therefore would not have federalism implications.

TSA has reviewed this action for purposes of the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4347) and has determined that this action will not have a significant effect on the human environment.

The energy impact of this document has been assessed in accordance with the Energy Policy and Conservation Act (EPCA) Public Law 94-163, as amended (42 U.S.C. 6362). We have determined that this rulemaking is not a major regulatory action under the provisions of the EPCA.

In consideration of the foregoing, the Transportation Security Administration proposes to amend part 1507 of chapter XII, title 49 of the Code of Federal Regulations, as follows:

Representatives from the Service, the Service's Migratory Bird Regulations Committee, and Flyway Council Consultants will meet on January 27, 2005, at 8:30 a.m. to identify preliminary issues concerning the 2005-06 migratory bird hunting regulations for discussion and review by the Flyway Councils at their March meetings.

In accordance with Departmental policy regarding meetings of the Service Regulations Committee attended by any person outside the Department, these meetings are open to public observation. Members of the public may submit written comments on the matters discussed to the Director.

Atlantic tunas are managed under the dual authority of the Magnuson-Stevens Act and ATCA. ATCA authorizes the Secretary of Commerce (Secretary) to promulgate regulations, as may be necessary and appropriate, to implement ICCAT recommendations. The authority to issue regulations under the Magnuson-Stevens Act and ATCA has been delegated from the Secretary to the Assistant Administrator for Fisheries, NOAA (AA).

On May 28, 1998, NMFS published in the Federal Register (64 FR 29090) final regulations, effective July 1, 1999, implementing the Fishery Management Plan for Atlantic Tunas, Swordfish, and Sharks (HMS FMP) that were adopted and made available to the public in April 1999.

In November 2002, ICCAT recommended a Total Allowable Catch (TAC) of BFT for the United States in the western Atlantic management area of 1,489.6 metric tons (mt), effective beginning in 2003 and continuing in subsequent fishing years until revised by ICCAT. Also in the 2002 recommendation, ICCAT allocated 25 mt annually to account for incidental catch of BFT by pelagic longline fisheries directed on other species “in the vicinity of the management boundary area.” This area was defined in the 2003 BFT annual specification rulemaking process as the Northeast Distant statistical area (NED) (68 FR 56783, October 2, 2003). The TAC of 1,489.6 mt is inclusive of the annual 25 mt pelagic longline set-aside in the NED. The initial specifications within this proposed rule are published in accordance with the HMS FMP and are necessary to implement the 2002 ICCAT quota recommendation, as required by ATCA, and to achieve domestic management objectives under the Magnuson-Stevens Act.

This proposed rule would (1) establish initial quota specifications consistent with the BFT rebuilding program as set forth in the HMS FMP by allocating the 2002 ICCAT-recommended quota for the 2004 fishing year (June 1, 2004 - May 31, 2005); (2) establish the General category effort controls, including time-period subquotas and restricted fishing days (RFDs), for the 2004 fishing season; and (3) establish a catch-and-release provision for recreational and commercial handgear vessels once their respective quota categories have been closed.

After consideration of public comment, NMFS will issue final initial quota specifications and effort controls and publish them in the Federal Register , along with NMFS' response to those comments. The specifications and effort controls may subsequently be adjusted during the course of the fishing year, consistent with the provisions of the HMS FMP, and will be published in the Federal Register .

NMFS acknowledges that a number of other issues regarding the domestic management of BFT have been discussed over the prior year, including a Petition for Rulemaking, at the 2003 HMS Advisory Panel (AP) meeting held in Silver Spring, MD and at public scoping hearings relating to Amendment 2 of the HMS FMP. Some of these issues have been addressed in separate rulemakings. For instance, at the end of 2003, a final rule was published (68 FR 74504, December 24, 2003) that (1) extended the General category season from December 31 to January 31, (2) established a Harpoon category end date of November 15 (or when the quota is reached, whichever comes first), (3) adjusted the Harpoon category tolerance limits for large medium BFT, and (4) adjusted the Purse seine category opening date and large medium BFT tolerance limits. Some additional issues may be addressed in Amendment 2 to the HMS FMP or in other future rulemaking. These issues may include, but are not limited to, adjustment of domestic quota allocation percentages and General category time-period subquotas and addressing concerns raised in the Petition for Rulemaking submitted by the North Carolina Department of Marine Fisheries (see Notice of Receipt of Petition, 67 FR 69502, November 18, 2002).

NMFS has prepared a draft Environmental Assessment (EA), Regulatory Impact Review (RIR), and an Initial Regulatory Flexibility Analysis (IRFA) which present and analyze anticipated environmental, social, and economic impacts of several alternatives for each of the three major issues contained in this proposed rule. The complete list of alternatives and their analysis is provided in the draft EA/RIR/IRFA, and is not repeated here in its entirety. A copy of the draft EA/RIR/IRFA prepared for this proposed rule is available from NMFS (see ADDRESSES ).

The HMS FMP and its implementing regulations established baseline percentage quota shares for the domestic fishing categories. These percentage shares were based on allocation procedures that NMFS developed over several years. The baseline percentage quota shares established in the HMS FMP for fishing years beginning June 1, 1999, to the present are as follows: General category - 47.1 percent; Harpoon category - 3.9 percent; Purse seine category - 18.6 percent; Angling category - 19.7 percent; Longline category - 8.1 percent; Trap category - 0.1 percent; and Reserve category - 2.5 percent. The 2002 ICCAT-recommended U.S. BFT quota of 1,464.6 mt, not including the annual 25 mt set aside for pelagic longline vessels, would be allocated in accordance with these percentages. However, in addition to the 2002 ICCAT quota recommendation, quota allocations are adjusted based on overharvest or underharvest from prior fishing year's activity and on U.S. data on dead discards as they relate to the ICCAT dead discard allowance. Each of these adjustments is discussed below and then applied to the results of the above percentage shares to determine the 2004 fishing year proposed initial quota specifications.

The current ICCAT BFT quota recommendation allows, and U.S. regulations require, the addition or subtraction, as appropriate, of any underharvest or overharvest in a fishing year to the following fishing year, provided that the total of the adjusted category quotas does not result in overharvest of the total annual BFT quota and remains consistent with all applicable ICCAT recommendations, including restrictions on landings of school BFT. Therefore, NMFS proposes to adjust the 2004 fishing year quota specifications for the BFT fishery to account for underharvest or overharvest in the 2003 fishing year, which in turn were adjusted due to revised information on 2002 fishing year underharvests and overharvests.

Overall U.S. landings figures for the 2002 and 2003 fishing years are still preliminary and may be updated before the 2004 fishing year specifications are finalized. Should adjustments to the final initial 2004 BFT quota specifications be required based on final 2002 and/or 2003 BFT landing figures, NMFS will publish the adjustments in the Federal Register . For the 2003 fishing year, NMFS has preliminarily determined that General category landings were higher than the adjusted General category quota by approximately 30.8 mt; that Harpoon category landings were less than the adjusted Harpoon category quota by approximately 24.3 mt; that Longline category landings were less than the adjusted Longline category quota by approximately 27.6 mt; that 2003 Angling category landing estimates, inclusive of revised 2002 fishing year Angling category landing estimates, were in excess of the adjusted Angling category quota by approximately 440.7 mt; and that Purse seine category landings were less than the adjusted Purse seine category quota by approximately 117.0 mt. Regulations at 50 CFR 635.27(a)(9)(i) require that Purse seine category underharvests or overharvests be subtracted from or added to each individual vessel's quota allocation, as appropriate. Based on the estimated amount of Reserve that NMFS maintains for the landing of BFT taken during ongoing scientific research projects and/or potential overharvests in certain categories, NMFS estimates that 209.8 mt of Reserve remains from the 2003 fishing year. This remaining Reserve quota will be used to partially address the Angling category overharvest. For categories with under or overharvests from the 2003 fishing year, these initial specifications will subtract the overharvest from, or add the underharvest to, that quota category for the 2004 fishing year.

As part of the BFT rebuilding program, ICCAT recommends an allowance for dead discards. The U.S. dead discard allowance is 68 mt. The estimate for the 2003 calendar year was used as a proxy to calculate the amount to be added to, or subtracted from, the U.S. BFT landings quota for 2004. The 2003 calendar year preliminary estimate of U.S. dead discards, as reported per the longline discards calculated from logbook tallies, adjusted as warranted when observer counts in quarterly/geographic stratum exceeded logbook reports, totaled 52.4 mt. Estimates of dead discards from other gear types and fishing sectors that do not use the pelagic longline vessel logbook are unavailable at this time, and thus, are not included in this calculation. As U.S. fishing activity is estimated to have resulted in fewer dead discards than its allowance, the ICCAT recommendation and U.S. regulations state that the United States may add one half of the difference between the amount of dead discards and the allowance (i.e., 68.0 mt 52.4 mt = 15.6 mt, 15.6 mt/2 = 7.8 mt) to its total allowed landings for the following fishing year, to individual fishing categories, or to the Reserve category. NMFS proposes to allocate the 7.8 mt to the Reserve category quota to assist in covering potential overharvests from the previous fishing years.

The 2002 calendar year preliminary dead discard estimate, as reported in pelagic longline vessel logbooks and published in 2003 Final Initial Quota Specifications (68 FR 56783, October 2, 2003), totaled 38.0 mt. This preliminary estimate has been revised using the longline discards calculated from logbook tallies, adjusted as warranted when observer counts in stratum exceeded logbook reports. The revised 2002 calendar year dead discard estimate is 41.6 mt.

In accordance with the 2002 ICCAT quota recommendation, the ICCAT recommendation regarding the dead discard allowance, the HMS FMP percentage shares for each of the domestic categories, and regulations regarding annual adjustments at § 635.27(a)(9)(ii), NMFS proposes initial quota specifications for the 2004 fishing year as follows: General category - 659.0 mt; Harpoon category - 81.4 mt; Purse Seine category - 389.4 mt; Angling category - 65.5 mt; Longline category - 171.2 mt; and Trap category - 2.3 mt. Additionally, 36.6 mt would be allocated to the Reserve category for inseason adjustments, including providing for a late season General category fishery, or allocated to cover scientific research collection and potential overharvest in any category except the Purse seine category.

Based on the above proposed initial specifications, the Angling category quota of 65.5 mt would be further subdivided as follows: School BFT 21.0 mt, with 8.1 mt to the northern area (north of 39°18′ N. latitude), 9.1 mt to the southern area (south of 39°18′ N. latitude), plus 3.8 mt held in reserve; large school/small medium BFT - 42.7 mt, with 20.2 mt to the northern area and 22.5 mt to the southern area; and large medium/giant BFT - 1.8 mt, with 0.6 mt to the northern area and 1.2 mt to the southern area.

The 2002 ICCAT recommendation includes an annual 25 mt set-aside quota to account for bycatch of BFT related to directed longline fisheries in the vicinity of the management area boundary and referred to as the NED hereafter. This set-aside quota is in addition to the overall incidental longline quota to be subdivided in accordance to the North/South allocation percentages mentioned below. Thus, the proposed Longline category quota of 171.2 mt would be subdivided as follows: 58.2 mt to pelagic longline vessels landing BFT north of 31° N. latitude and 63.8 mt to pelagic longline vessels landing BFT south of 31° N. latitude, and 49.2 mt (24.2 mt from 2003 + 25.0 mt for 2004) to account for bycatch of BFT related to directed pelagic longline fisheries in the NED. The bycatch allocation by ICCAT for pelagic longline vessels in the NED would be allocated to the Longline north subcategory. Accounting for landings under this additional quota would be maintained separately from other landings under the Longline north subcategory. Finally, regulations regarding BFT target catch requirements for pelagic longline vessels within the NED do not apply until the landings equal the available quota (§ 635.23(f)(3)). After the available quota has been landed target catch requirements at § 635.23(f)(1) will then apply.

For the last several years, NMFS has implemented General category time-period subquotas to increase the likelihood that fishing would continue throughout the entire General category season. The subquotas are consistent with the objectives of the HMS FMP and are designed to address concerns regarding the allocation of fishing opportunities, to assist with distribution and achievement of optimum yield, to allow for a late season fishery, and to improve market conditions and scientific monitoring.

The regulations implementing the HMS FMP divide the annual General category quota into three time-period subquotas as follows: 60 percent for June-August, 30 percent for September, and 10 percent for October-January. These percentages would be applied to the adjusted 2004 coastwide quota for the General category of 659.0 mt, minus 10.0 mt reserved for the New York Bight set aside fishery. Therefore, of the available 649.0 mt coastwide quota, 389.4 mt would be available in the period beginning June 1 and ending August 31, 2004; 194.7 mt would be available in the period beginning September 1 and ending September 30, 2004; and 64.9 mt would be available in the period beginning October 1, 2004 and ending January 31, 2005.

In addition to time-period subquotas, NMFS also has implemented General category RFDs to extend the General category fishing season. The RFDs are designed to address the same issues addressed by time-period subquotas and provide additional fine scale inseason flexibility. For the 2004 fishing year, NMFS proposes a series of solid blocks of RFDs to extend the General category for as long as possible through the October through January time-period.

Therefore, NMFS proposes that persons aboard vessels permitted in the General category would be prohibited from fishing, including catch-and-release and tag-and-release, for BFT of all sizes on the following days: all Fridays, Saturdays, and Sundays through January 31, 2005, inclusive, while the fishery is open. These proposed RFDs would improve distribution of fishing opportunities without increasing BFT mortality.

Prior to 1998, ICCAT designated quotas for BFT harvested in the western Atlantic management area as “scientific monitoring quotas.” Under this designation, after a quota category had closed, NMFS required vessels fishing for BFT to tag-and-release all BFT as a means to collect further scientific monitoring data. In 1998, ICCAT established a rebuilding plan for western Atlantic BFT and no longer referred to BFT quotas as “scientific monitoring quotas.”

Currently, permitted recreational and commercial BFT handgear vessel owner/operators are required to tag-and-release all BFT that are caught after their respective quota categories have been closed. Therefore, vessel owner/operators are also required to obtain, possess and utilize an approved tagging kit onboard their vessel while engaged in directed BFT fishing after a closure has taken place.

Over the last few years, NMFS has received comments from the public that vessel owner/operators are not comfortable in tagging-and-releasing BFT due to a combination of their inexperience, and concerns regarding unintentional injury and mortality of a BFT. NMFS also has concerns that the current regulations may lead to unnecessary post-release mortality associated with anglers, who are inexperienced with proper tagging techniques and may improperly place the tag on the BFT, unintentionally killing or injuring the fish. Other commenters have stated that, on occasion, substantial time delays can be experienced in obtaining an approved tagging kit, thus limiting their ability to go fishing for BFT.

Therefore, NMFS proposes to allow vessels participating in the BFT recreational and commercial handgear fisheries to practice catch-and-release after a quota category has been closed. This proposal would also allow vessel owner/operators to tag-and-release BFT, but would not require them to do so.

This proposed rule is published under the authority of the Magnuson-Stevens Act and ATCA. The Assistant Administrator for Fisheries (AA) has preliminarily determined that the regulations contained in this proposed rule are necessary to implement the recommendations of ICCAT and to manage the domestic Atlantic HMS fisheries.

The purpose of this proposed action is to: (1) implement the 2002 ICCAT recommendation regarding the BFT quota, by proposing 2004 specifications for the BFT fishery that allocates the quota among domestic fishing categories, including 25 mt of BFT quota to the Longline category, (2) implement General category effort controls, and (3) implement a catch-and-release provision for recreational and commercial BFT handgear vessels.

NMFS has prepared a RIR and an IRFA that examine the impacts of the selected alternatives discussed previously in this rulemaking. The analysis for the IRFA assesses the impacts of the various alternatives on the vessels that participate in the BFT fisheries, all of which are considered small entities. For the quota allocation alternatives, NMFS has estimated the average impact of the alternatives on individual categories and the vessels within those categories. As mentioned above, the 2002 ICCAT recommendation increased the BFT quota allocation to 1,489.6 mt. This increase, in comparison to pre-2002 levels, includes 77.6 mt to be redistributed to the domestic fishing categories based on the allocation percentages established in the HMS FMP, as well as a set-aside quota of 25 mt to account for incidental catch of BFT related to directed pelagic longline fisheries in the NED. In 2003, preliminary annual gross revenues from the commercial BFT fishery were approximately $11.5 million. There are approximately 10,914 vessels that are permitted to land and sell BFT under four BFT quota categories. The four quota categories and their preliminary 2003 gross revenues are General ($7,476,461), Harpoon ($772,810), Purse Seine ($2,546,236), and Incidental Longline ($635,498). Note that all dollars have been converted to 1996 dollars using the Consumer Price Index Conversion Factors for comparison purposes. The analysis for the IRFA assumes that all category vessels have similar catch and gross revenues. While this assumption may not be entirely valid, the analyses are sufficient to show the relative impact of the various preferred alternatives on vessels.

For the allocation of BFT quota among domestic fishing categories, three alternatives were considered: no action, a preferred alternative that would allocate the ICCAT-recommended quota to domestic categories in accordance with the 2002 ICCAT recommendation and the HMS FMP, and a slight variation of the preferred alternative, that includes a 25-mt limit on the amount of quota that can accumulate from year-to-year within the pelagic longline quota set-aside in the NED.

The no action alternative would not be consistent with the purpose and need for this action, ATCA, and the HMS FMP. It would maintain U.S. BFT quota levels at a scale and distribution similar to the 2002 fishing year and would deny fishermen additional fishing opportunities as recommended by the ICCAT, an estimated $1,000,000 in potential, additional gross revenues. The 2002 ICCAT quota recommendation specified a 1,489.6 mt total quota for the United States, a 102.6 mt increase from pre-2002 quota levels. Under ATCA, the United States is obligated to implement ICCAT-approved recommendations. The preferred alternative would increase the overall quota by 77.6 mt resulting in an approximate increase in gross revenues of $750,000, and would also create a set-aside quota of 25 mt to account for incidental harvest of BFT in the NED by pelagic longline vessels, resulting in a potential increase in gross revenues of $250,000. Unharvested quota from this set aside would be allowed to roll from one fishing year to the next. The preferred alternative is expected to have positive economic impacts for fishermen, because of the modest increase in quota. Under the slight variation of the preferred alternative, the annual specification process would limit the NED set-aside to 25 mt and would not take into account any unharvested set-aside quota from the prior fishing year. Unharvested quota would not be rolled over from the previous fishing year, nor would it be transferred or allocated to other domestic fishing categories. This alternative is also expected to have overall positive economic impacts for fishermen due to the increase in gross revenues associate with the 77.6 mt quota increase.

For the General category effort controls, two alternatives were considered: The preferred alternative to designate RFDs according to a schedule published in the initial BFT specifications and the no action alternative (no RFDs published with the initial specifications, but implemented during the season as needed). In the past, when catch rates have been high, series of solid blocks of RFDs, the preferred alternative, has had positive economic consequences by avoiding market gluts and extending the season as late as possible. Implementing RFDs to assist a late season fishery would have positive economic impacts to those south Atlantic fishermen, but could have potentially negative economic impacts to those northern area fishermen who would have otherwise caught and sold fish earlier in the season. However, these adverse impacts would be slightly mitigated if northern area fishermen are willing to travel south late in the season. Overall, extending the season as late as possible would enhance the likelihood of increasing participation by southern area fishermen and access to the fishery over a greater range of the fish migration.

The no action alternative, would not implement any RFDs with publication of the initial specifications but rather would use inseason management authority established in the HMS FMP to implement RFDs during the season should catch rates increase. This alternative is based on a season of low catch rates and would have positive economic consequences if slow catch rates were to persist. Overall, the season would regulate itself and fishermen could choose when to fish or not based on their own preferences. However, even with low catch rates and no RFDs, it is unlikely that there will be enough quota in the General category to sustain a late season commercial handgear fishery off south Atlantic states especially now that the General category is extended through January. Thus, if the 2004 season should be similar to the 2003 fishery, there may be negative economic impacts to fishermen in southern states unless inseason management actions (similar to those in 2003, i.e., inseason transfers) are taken to directly address these concerns and potential impacts.

For the catch-and-release provision, NMFS considered three alternatives: No action (maintain the tag-and-release requirement once a handgear quota category has been closed), disallow all fishing for BFT once a handgear quota category has been closed, and the preferred alternative to allow vessels to catch-and-release BFT once a handgear quota category has been closed.

Although NMFS believes that recreational HMS fisheries have a large influence on the economies of coastal communities, even when vessels are engaged in tag-and-release or catch-and-release fishing, NMFS has little current information on the costs and expenditures of anglers or the businesses that rely on them. Based on conversations with representatives of the handgear sectors of the BFT fishery, NMFS has assessed that the no action alternative would have slightly negative economic impacts. This assessment is attributed to vessel owner/operators, who are not comfortable tagging BFT, or those owner/operators who are unable to obtain a tagging kit in a timely fashion, not taking trips to pursue BFT. The second alternative would have even greater negative economic impacts by prohibiting vessels from taking trips targeting BFT after a quota is attained. The preferred alternative would have positive economic impacts on those associated with the BFT handgear fishery. This alternative, would positively impact numerous economic aspects of the BFT handgear fishery due to the willingness of more vessel owner/operators to actively take trips targeting BFT after a closure has taken place. This alternative would also allow for the tagging of BFT, but would not require owner/operators to do so.

None of the proposed alternatives in this document would result in additional reporting, recordkeeping, compliance, or monitoring requirements for the public. This proposed rule has also been determined not to duplicate, overlap, or conflict with any other Federal rules.

NMFS prepared a draft EA for this proposed rule, and the AA has preliminarily concluded that there would be no significant impact on the human environment if this proposed rule were implemented. The EA presents analyses of the anticipated impacts of these proposed regulations and the alternatives considered. A copy of the EA and other analytical documents prepared for this proposed rule, are available from NMFS via the Federal e-Rulemaking Portal (see ADDRESSES ).

This proposed rule has been determined to be not significant for purposes of Executive Order 12866.

This proposed rule contains no new collection-of-information requirements subject to review and approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act (PRA). Notwithstanding any other provisions of the law, no person is required to respond to, nor shall any person be subject to, a penalty for failure to comply with a collection of information subject to the requirements of the PRA unless that collection of information displays a currently valid OMB control number.

On September 7, 2000, NOAA Fisheries reinitiated formal consultation for all HMS commercial fisheries under section 7 of the Endangered Species Act (ESA). A Biological Opinion (BiOp) issued June 14, 2001, concluded that continued operation of the Atlantic pelagic longline fishery is likely to jeopardize the continued existence of endangered and threatened sea turtle species under NOAA Fisheries jurisdiction. NOAA Fisheries has implemented the reasonable and prudent alternatives required by this BiOp. This BiOp also concluded that the continued operation of the purse seine and handgear fisheries may adversely affect, but is not likely to jeopardize, the continued existence of any endangered or threatened species under NOAA Fisheries jurisdiction. NOAA Fisheries has implemented the reasonable and prudent alternative (RPA) required by this BiOp.

Subsequently, based on the management measures in several proposed rules, a new BiOp on the Atlantic pelagic longline fishery was issued on June 1, 2004. The 2004 BiOp found that the continued operation of the fishery was not likely to jeopardize the continued existence of loggerhead, green, hawksbill, Kemp's ridley, or olive ridley sea turtles, but was likely to jeopardize the continued existence of leatherback sea turtles. The 2004 BiOp identified RPAs necessary to avoid jeopardizing leatherbacks, and listed the Reasonable and Prudent Measures (RPMs) and terms and conditions necessary to authorize continued take as part of the revised incidental take statement. On July 6, 2004, NOAA Fisheries published a final rule (69 FR 40734) implementing additional sea turtle bycatch and bycatch mortality mitigation measures for all Atlantic vessels with pelagic longline gear onboard. NOAA Fisheries is implementing the other RPMs in compliance with the 2004 BiOp. On August 12, 2004, NOAA Fisheries published an Advance Notice of Proposed Rulemaking (69 FR 49858) to request comments on potential regulatory changes to further reduce bycatch and bycatch mortality of sea turtles, as well as comments on the feasibility of framework mechanisms to address unanticipated increases in sea turtle interactions and mortalities, should they occur. NOAA Fisheries will undertake additional rulemaking and non-regulatory actions, as required, to implement any management measures that are required under the 2004 BiOp. The majority of the measures that will be implemented by this current rule are not expected to have adverse impacts. However, the 2002 ICCAT recommendation increased the BFT quota which may result in a slight increase in effort which could potentially increase the number of protected species interactions. Due to current restrictions on the BFT fishery and more specifically the pelagic longline fishery, NOAA Fisheries does not expect this slight increase in effort to alter current fishing patterns.

The area in which this proposed action is planned has been identified as Essential Fish Habitat (EFH) for species managed by the New England Fishery Management Council, the Mid-Atlantic Fishery Management Council, the South Atlantic Fishery Management Council, the Gulf of Mexico Fishery Management Council, the Caribbean Fishery Management Council, and the HMS Management Division of the Office of Sustainable Fisheries at NMFS. It is not anticipated that this action will have any adverse impacts to EFH and, therefore, no consultation is required.

NMFS has determined that the list of actions in this proposed rule are consistent to the maximum extent practicable with the enforceable policies of the coastal states in the Atlantic, Gulf of Mexico, and Caribbean that have Federally approved coastal zone management programs under the Coastal Zone Management Act (CZMA). The proposed rule establishing quota specifications and effort controls will be submitted to the responsible state agencies for their review under section 307 of the CZMA.

For the reasons set out in the preamble, 50 CFR part 635 is proposed to be amended as follows:

1. The authority citation for part 635 continues to read as follows:

2. In § 635.23, paragraphs (a)(2) and (a)(4) are revised to read as follows:

3. In § 635.26, paragraph (a)(1) is revised to read as follows: