The Consolidated Appropriations Act, 2004, Pub. L. 108-199, div. F, tit. VI, § 641, 188 Stat. 3, (the “2004 Appropriations Act”) amended the Federal Election Campaign Act of 1971, as amended, (“FECA”) to permit filers to use additional delivery options to satisfy the Commission's “timely filing” requirements for certain designations, reports, and statements filed on paper with the Commission or the Secretary of the Senate. Section 434(a) of FECA previously permitted reliance on a U.S. Postal Service (“USPS”) postmark date as the date the Commission considers certain documents timely filed, but only if the document was sent by either registered or certified mail. The 2004 Appropriations Act amended 2 U.S.C. 434(a)(2)(A)(i), (4)(A)(ii), and (5) to allow filers sending these documents via USPS Priority Mail and Express Mail also to rely on the date of the USPS postmark as the date of filing, so long as the mailing has a delivery confirmation. The amendments to 2 U.S.C. 434(a) also allow filers sending these documents with an overnight delivery service to rely on the date of deposit with the overnight delivery service as the date of filing, so long as the overnight delivery service has an on-line tracking system.

To implement these statutory amendments, the Commission proposes to amend 11 CFR 100.19, which sets forth when a document is “timely filed,” and 11 CFR 104.5, which specifies due dates for reports. 1

Under paragraph (b) of current 11 CFR 100.19, certain documents that are not required to be filed electronically are “timely filed” if they are deposited as registered or certified mail in a U.S. Post Office and are postmarked no later than 11:59 p.m. Eastern Standard/Daylight Time on the date the document is due to be filed. One exception in paragraph (b), however, is that pre-election reports filed by political committees must be postmarked at least 15 days before the election to be “timely filed,” which is three days earlier than such report's due date.

The Commission proposes to divide current paragraph (b) into three subparagraphs: (1) One subparagraph containing the definition of “timely filed” for documents that are sent by registered or certified mail, Priority Mail, Express Mail, or with an overnight delivery service; (2) one subparagraph retaining the current requirement that documents sent by first class mail are “timely filed” only upon receipt by the Commission or Secretary of the Senate, as appropriate; and (3) one subparagraph containing new definitions of “overnight delivery service” and “postmark.”

Proposed paragraph (b)(1) specifies that any paper document required to be filed under Commission regulations, other than those specified in 11 CFR 100.19(c)-(g), 2 will be considered “timely filed” so long as the document is postmarked  3 by the due date and was deposited: (1) As registered or certified mail in an established U.S. Post Office; (2) as Priority Mail or Express Mail with a delivery confirmation in an established U.S. Post Office; or (3) with an overnight delivery service, so long as the document was scheduled to be delivered within three business days of deposit and is recorded in the service's on-line tracking system.

The Commission interprets Congress's reference to “priority mail” and “express mail” as denoting USPS Priority Mail and Express Mail because both terms are registered trademarks of USPS. 4 The Commission invites comment on whether this interpretation is appropriate.

Additionally, the proposed rule would permit a filer using an overnight delivery service (the proposed definition of which is discussed below) to use any delivery option offered by such a delivery service, so long as the document is scheduled to be delivered to the Commission or the Secretary of the Senate, as appropriate, within three business days from the date of deposit, similar to the two-to-three day delivery time for USPS Priority Mail service. 5 In the alternative, the Commission invites comment on whether filers who use an overnight delivery service should be limited to using only a next day delivery option.

For any filer who uses an overnight delivery service and wishes to rely on the date of deposit, the 2004 Appropriations Act amendment to FECA requires that the filer use a delivery service that has an on-line tracking system. Because an on-line tracking system will provide a means to settle a dispute that may arise concerning the timely filing of a document ( i.e. , the date of deposit), the Commission interprets the statutory requirement to mean that a filer must in fact choose a delivery option that includes tracking of the document, thereby providing the filer, or any other person, with the ability to confirm deposit and delivery dates. 6 Accordingly, the proposed rule would require that a document deposited with an overnight delivery service be recorded in that delivery service's on-line tracking system. The Commission believes that a definition of “on-line tracking system” is not necessary. The Commission invites comment on whether the amended rule should require the use of an on-line tracking system when a document is sent via an overnight delivery service and on whether a definition for “on-line tracking system” is necessary.

Proposed paragraph (b)(1) retains the current requirement that a document must be postmarked no later than 11:59 p.m. Eastern Standard/Daylight Time on the due date, with the exception that pre-election reports must be postmarked three days earlier than the report's due date.

Proposed paragraph (b)(2) retains the current requirement that documents sent by first class mail must be received by the close of business on the prescribed filing date to be “timely filed.” However, the Commission proposes to add language to clarify that paper documents, other than those addressed in 11 CFR 100.19(c)-(g), sent by any means other than those specified in 11 CFR 100.19(b)(1) ( i.e. , by registered or certified mail, Priority Mail, Express Mail, or with an overnight delivery service) must be received by the close of business on the prescribed filing date in order to be “timely filed.” The Commission invites comments on this proposed clarification.

Proposed paragraph (b)(3) contains definitions of “overnight delivery service” and “postmark.” Proposed paragraph (b)(3)(i) would define “overnight delivery service” as a private delivery service of established reliability that offers an overnight delivery option. As discussed above, the Commission proposes to allow filers who use an overnight delivery service to select a two-to-three day delivery option; however, because the 2004 Appropriations Act specifies “deliver[y] to an overnight delivery service,” the Commission interprets this to mean that a delivery service used must offer an overnight ( i.e. , next day) delivery option, even if the sender does not choose that option. 2 U.S.C. 434(a), as amended by 2004 Appropriations Act. The Commission invites comment on this proposed definition.

Proposed paragraph (b)(3)(ii) would define “postmark” to include both a USPS postmark, as well as the verifiable date that a document is deposited with an overnight delivery service because filers may now also rely on the date of deposit with an overnight delivery service as the date of filing. 7 This proposed definition recognizes that overnight delivery services may record the date of deposit in different manners and provides flexibility for verification of deposit date. The Commission invites comment on this proposed definition of “postmark.”

As discussed above, the Commission's current rules specify that a filer may rely on the postmark as the date of filing for certain paper documents only if the document is sent by registered or certified mail. Consistent with the amendment to FECA resulting from the 2004 Appropriations Act, however, the proposed revision of section 100.19(b) would expand the Commission's definition of “timely filed” to allow reliance also on a postmark as the date of filing for these documents sent by Priority Mail, Express Mail, or with an overnight delivery service.

The Commission's rules at 11 CFR 104.5(a)(2)(i)(A) and (c)(1)(ii), which specify the filing due date for pre-election reports, and at 11 CFR 104.5(e), which specifies the date the Commission considers to be the filing date for certain reports required under section 104.5, also contain several references to reliance on a postmark as the date of filing for documents that are sent by registered or certified mail. Accordingly, the Commission proposes to modify these references within section 104.5 to include Priority Mail, Express Mail, and use of an overnight delivery service, consistent with the proposed changes to section 100.19(b), discussed above. Additionally, the Commission proposes to further amend 11 CFR 104.5(e) to clarify to which reports the proposed rules would apply. The Commission invites comment on these proposed changes.

The attached proposed rules, if promulgated, would not have a significant economic impact on a substantial number of small entities. The basis of this certification is that, to whatever limited extent these proposed rules would affect small entities, expanding options for delivering Commission-required reports provides more flexibility to filers in choosing the method of fulfilling their filing requirements and the new methods are permissive, not required. Therefore, the proposed rules would not increase costs of compliance and may decrease such costs.

For the reasons set forth in the preamble, the Federal Election Commission proposes to amend Subchapter A of Chapter I of Title 11 of the Code of Federal Regulations as follows:

With this notice, the Commission is publishing and seeking comments on a proposed amendment to its regulations regarding corporate use of payroll deduction or check-off systems 1 to collect and forward voluntary employee contributions to the SSF of a trade association of which the corporation is a member. The Commission's regulations currently prohibit member corporations from making payroll deduction or check-off systems available for employee contributions to a trade association's SSF. See 11 CFR 114.8(e)(3).

The Commission is publishing this proposed rule in response to a petition for rulemaking. See Notice of Availability, 68 FR 60887 (October 24, 2003). The Commission emphasizes, however, that it has not made any final decision on whether to amend the existing rules on this subject, and invites comments on the proposed rulemaking.

The Commission proposes to amend 11 CFR 114.8(e)(3) to remove the current prohibition on corporate use of a payroll deduction or check-off system for employee contributions to the SSF of a trade association of which the corporation is a member. The proposed rule would add a new paragraph 114.8(e)(4), which would specifically authorize a member corporation to provide incidental services to collect and forward contributions from its restricted class employees to a trade association's SSF, including a payroll deduction or check-off system, upon written request of the trade association. Further, the proposed rule would require any corporation that provides these incidental services also to make the same services available to a labor organization representing members who work for the corporation, upon written request by the labor organization and at a cost not to exceed any actual expenses incurred. Finally, the proposed rule would make a conforming change to 11 CFR 114.2(f), to clarify that the provision of incidental services pursuant to proposed 11 CFR 114.8(e)(4) is not a prohibited corporate facilitation.

The Federal Election Campaign Act of 1971, as amended (the “Act”), and the Commission's regulations permit any trade association to solicit contributions to the trade association's SSF from the stockholders and executive and administrative personnel, and their families, of the trade association's member corporations, if the member corporation involved has separately and specifically approved the solicitation and has not approved a solicitation by any other trade association for the same calendar year. See 2 U.S.C. 441b(b)(4)(D); 11 CFR 114.8(c). Once these conditions are met, “[t]here is no limitation on the method of soliciting voluntary contributions or the method of facilitating the making of voluntary contributions which a trade association may use.” 11 CFR 114.8(e)(3).

Although the regulations do not limit the methods that a trade association may use to solicit and facilitate the making of voluntary contributions to its SSF from the restricted class employees of consenting member corporations, the regulations do limit the methods that a consenting member corporation may use to collect and distribute those contributions. Specifically, a “member corporation may not use a payroll deduction or check-off system for executive or administrative personnel contributing to the separate segregated fund of the trade association.” Id. The Commission has interpreted this prohibition to extend to all employees of the corporation that may be solicited by the trade association ( i.e. , restricted class employees), including the member corporation's employee-stockholders. See Advisory Opinion 1989-3.

In recent years, the Commission has given corporations some latitude in collecting and transmitting contributions to a trade association's SSF, so long as the collection did not involve employee payroll deductions. For instance, in Advisory Opinion 2003-22, the Commission interpreted the regulations to permit a corporate member of a trade association to collect voluntary contributions in the form of paper checks from its executive and administrative personnel, and to transmit the contributions to the trade association's SSF. In that opinion, the Commission also interpreted the regulations to permit corporate executives who were collecting employee contribution checks to use the member corporation's inter-office mail system to help collect the checks, and to provide envelopes and postage in which contributors could send their contributions to the trade association's SSF.

Moreover, the Commission has permitted member corporations to deduct contributions electronically to a trade association's SSF, so long as the member corporations did not deduct the contributions from employee payrolls. See Advisory Opinions 2000-4 and 1998-19. In addition, the Commission has permitted a trade association to pay for electronically deducting monthly contributions to its SSF from the personal checking accounts of restricted class employees of consenting member corporations. See Advisory Opinion 1999-35. The Commission also has permitted State leagues of a federation of trade associations and the leagues' local corporate members to serve as collecting agents for contributions to the federation's SSF, and to pay expenses incurred in connection with that activity. See Advisory Opinion 1998-19; compare to Advisory Opinion 2000-4.

On September 3, 2003, the Commission received a Petition for Rulemaking (the “Petition”) from America's Community Bankers and its SSF, the America's Community Bankers Community Campaign Committee (collectively, “Petitioners”). Petitioners asked the Commission to amend the regulations to permit, rather than to prohibit, a member corporation to use a payroll deduction or check-off system for contributions by its restricted class employees to a trade association's SSF.

Petitioners advanced four arguments in support of their request. First, Petitioners asserted that the Act does not require the exclusion of payroll deduction and check-off systems from permissible methods of collecting and forwarding contributions to a trade association's SSF. Second, Petitioners asserted that the prohibition on payroll deduction and check-off systems is inconsistent with Commission advisory opinions and other Commission regulations. Third, Petitioners asserted that the concerns that prompted the prohibition in the first place, as discussed at a June 29, 1976 Commission meeting, (1) resulted from a misunderstanding on the part of some of the commissioners at the meeting, (2) are inconsistent with later Commission actions, and (3) could have been addressed by means other than the prohibition. 2 Finally, Petitioners asserted that factual and legal changes that have occurred since the prohibition was promulgated in 1976 warrant a change in the regulations.

In accordance with its usual procedures, the Commission published a notice stating that the Petition was available for public review and comment. See Notice of Availability, 68 FR 60887 (October 24, 2003). The comment period closed on November 24, 2003. The Commission received 30 comments in response to the Notice of Availability: 22 from trade associations, six from corporate members of one of the trade associations that submitted comments, one from a professional association, and one from a Member of Congress. The comments submitted by the six corporations were substantially identical both to each other and to comments submitted by the trade association to which the corporations belonged.

All of the comments received by the Commission supported the Petition for Rulemaking. The commenters' arguments in favor of the Petition fell into three categories: legal, policy and practical.

Almost all of the commenters addressed the question of whether the Act prohibits member corporations from using payroll deduction and check-off systems to collect voluntary contributions to a trade association's SSF from restricted class employees. All of the commenters that addressed the question concluded that the Act does not prohibit the use of payroll deduction and check-off systems.

Moreover, several commenters asserted that eliminating the prohibition would be consistent with the Act's broad grant of authority to trade associations to solicit contributions to their SSFs from the restricted class of consenting member corporations, as set out in 2 U.S.C. 441b(b)(4)(D). Several commenters also asserted that eliminating the regulatory prohibition would be consistent with the Act's exclusion of corporate, trade association and labor union payments for establishing, administering and soliciting contributions to an SSF from the definition of “contribution or expenditure,” as set out in 2 U.S.C. 441b(b)(2)(C).

With respect to the regulation itself, a few commenters perceived an inconsistency between the first sentence of 11 CFR 114.8(e)(3), which permits a trade association to use any method to solicit and facilitate the making of voluntary contributions from restricted class employees of consenting member corporations, and the second sentence of 11 CFR 114.8(e)(3), which contains the prohibition on member corporations' use of payroll deduction and check-off systems at issue here. The commenters opined that only the first sentence is consistent with the Act.

Several commenters indicated that the Commission's own advisory opinions support eliminating the prohibition. Specifically, the commenters argued that the prohibition is inconsistent with (1) Advisory Opinion 2003-22, which permits a member company to collect and forward employee contributions in the form of checks to a trade association's SSF; (2) Advisory Opinions 1995-28, 1995-17, 1989-18 and 1980-89, which allow a member corporation to contribute to a trade association to help defray the costs of establishing, administering and soliciting for the trade association's SSF; and (3) Advisory Opinions 1999-35, 1998-19, 1997-9 and 1986-7, which permit contributions to a trade association's SSF or a membership association's SSF to be automatically debited from contributors' accounts.

Several commenters perceived a lack of a policy rationale for the prohibition on corporate use of payroll deductions to collect voluntary employee contributions to a trade association's SSF. They argued that the lack of an underlying policy purpose was demonstrated by the Commission's issuance of advisory opinions permitting other methods of collecting contributions to a trade association's SSF.

In addition, a number of commenters asserted that any underlying policy rationale for the prohibition has been rendered obsolete by the growth in the use of electronic methods for making and receiving payments since 1976, including by federal government agencies such as the Internal Revenue Service and the Social Security Administration. The commenters noted the decreasing role of paper checks in American society. They cited to the growing prevalence of electronic payroll deductions in the workplace, the large number of employees who currently use payroll deductions and the variety of goods and services paid through payroll deductions, such as health and life insurance premiums, flexible spending accounts, retirement savings plans, charitable contributions, loan and mortgage payments, gym memberships and club dues.

One commenter stated that questions regarding the permissibility of various forms of electronic deductions are likely to increase, both in number and in complexity, as technology advances and as corporations provide more innovative financial services to their employees. This commenter suggested that amending the regulations to permit payroll deductions would eliminate the need for the Commission to answer these questions on a case-by-case basis through the advisory opinion process.

Several commenters also indicated that removing the regulatory prohibition could help to promote fairness. According to one commenter, the current regulation disadvantages SSFs sponsored by smaller trade associations that try to compete in the political arena against SSFs sponsored by larger trade associations, presumably because larger trade associations and their SSFs have greater resources to devote to SSF fundraising efforts. This commenter suggested that removing the regulatory prohibition on payroll deductions could help smaller trade associations' SSFs to raise funds and thus to compete with larger trade associations' SSFs in representing their members' political interests.

In addition, several commenters complained that SSFs sponsored by trade associations are at a disadvantage compared to SSFs sponsored by corporations and labor organizations, not only because the regulations permit payroll deductions of contributions to corporate and labor organization SSFs, but also because they require trade association SSFs to obtain prior approval before soliciting restricted class employees, without imposing any analogous prior approval requirement on corporate and labor organization SSFs. These commenters suggested that removing the prohibition on member corporations' use of payroll deductions to collect employee contributions to a trade association's SSF could help to rectify a perceived inequality in the fundraising abilities of trade association SSFs on the one hand, and corporate and labor organization SSFs on the other hand.

Finally, some commenters pointed out that not all corporate members of trade associations have their own SSFs, and that these companies may rely on their trade association's SSF to serve as their political voice. According to these commenters, a trade association's SSF is one of the most accessible mechanisms for political participation by restricted class employees of companies that do not have their own SSFs, and allowing payroll deduction and check-off systems would allow restricted class employees to spread out their contributions easily over time.

A number of commenters addressed the practical advantages of permitting member corporations to make payroll deductions available to their restricted class employees for contributions to a trade association's SSF. The commenters described payroll deductions as, among other things, widely available, reliable, simple to administer, convenient and imposing minimal or no cost on the corporations that offer them.

According to these commenters, the benefits of permitting a member corporation to collect voluntary employee contributions to a trade association's SSF through a payroll deduction or check-off system would extend to every party to the transaction. Contributing employees would find it more convenient and affordable to have smaller, regular contributions automatically deducted from their paychecks than to write a single check for a larger sum. Member corporations would find it more efficient and less costly to collect employee contributions through automatic payroll deductions, and those that did not would be free to use other methods of collecting contributions. Trade associations would be able to reduce their SSF fundraising expenses, and their SSFs would find it easier to track and document both contributing individuals and individual contributions. The end result, according to these commenters, would be increased participation by individuals in the political process and enhanced reporting of their contributions.

The Petition and comments raise a reasonable question as to whether the regulatory prohibition against payroll deduction and check-off systems continues to make sense. Accordingly, the Commission concludes that the goals of the Act and the interests of the regulated community would be best served by further examination of this issue and invites public comments on it.

The Commission proposes amending 11 CFR 114.8(e) to remove the prohibition on a corporation's use of a payroll deduction or check-off system for contributions by restricted class employees to the SSF of a trade association of which the corporation is a member. The Commission proposes to effect this change by deleting the second sentence of 11 CFR 114.8(e)(3) in its entirety and by adding a new paragraph 114.8(e)(4). Existing paragraph 114.8(e)(4) would be redesignated as 114.8(e)(5).

As proposed, new paragraph 114.8(e)(4) would permit, but not require, a corporation to provide incidental services to collect and forward contributions from its restricted class employees to the SSF of a trade association of which the corporation is a member, upon written request of the trade association. Based on information in the Petition and in the comments regarding the wide availability and minimal cost of payroll deductions, the proposed regulation would expressly authorize the use of a payroll deduction or check-off system as an incidental service. The Commission invites public comments on this issue.

In addition to permitting a member corporation to provide incidental services to collect and forward employee contributions to a trade association's SSF, proposed paragraph 114.8(e)(4) would require any corporation that provides these services to make the same services available to a labor organization representing employees of the corporation, upon written request of the labor organization and at a cost that does not exceed any actual expenses incurred. The Commission considers this requirement to be necessary to prevent circumvention of provisions in the Act and Commission regulations that seek to prevent corporate SSFs from gaining an unfair fundraising advantage over labor organization SSFs. See 2 U.S.C. 441b(b)(6) and 11 CFR 114.5(k)(1).

The Petitioners and some of the commenters noted that a corporation without its own SSF might rely exclusively on its trade association's SSF to represent its corporate interests in the political arena. Absent the requirement in proposed paragraph 114.8(e)(4) that a member corporation make incidental services available to a labor organization representing employees of the corporation if the corporation makes those services available to a trade association, a corporation could allow restricted class employees to contribute through payroll deductions to the corporation's proxy SSF administered by a trade association, without permitting employees who are members of a labor organization to contribute to their labor organization's SSF through payroll deductions. This outcome would create an inequality that could subvert the careful balance struck in the Act and Commission regulations between corporate SSFs and labor organization SSFs. The Commission invites public comments on this issue.

The only distinction in the proposed rule between providing incidental services to collect and forward employee contributions to a trade association's SSF on the one hand, and providing incidental services to collect and forward employee contributions to a labor organization's SSF on the other hand, is in the area of reimbursement. The proposed rule would not require a trade association or its SSF to reimburse the corporation for any actual expenses that the corporation incurs in providing the incidental services. As the Commission has stated previously, “incidental services by corporate members would not require reimbursement by the trade association since, in any event, reimbursement if required would come from membership dues paid to the trade association by its corporate members.” Advisory Opinion 1979-8 at 2, citing to Federal Election Regulations, Explanation and Justification, House Document No. 95-44, page 114. See also Advisory Opinion 1978-13.

A labor organization or its SSF that receives incidental services from a corporate employer of members of the labor organization, by contrast, would be required to reimburse the corporation for the cost of providing those services. The Commission has previously found that a prohibited corporate contribution would result from a failure by a labor organization to reimburse a corporation for actual expenses incurred by the corporation in providing a payroll deduction or check-off system for contributions to the labor organization's SSF. See Advisory Opinions 1981-39 and 1979-21. The Commission invites public comments on this issue.

The Commission proposes making a conforming change to the regulation that currently prohibits a corporation from facilitating the making of contributions to political committees, other than to the corporation's own SSF. See 11 CFR 114.2(f)(1). The term “facilitation” means using corporate resources or facilities to engage in fundraising activities in connection with any federal election. Id. Facilitation does not include, however, enrollment by a corporation or labor organization of members of the corporation's or labor organization's restricted class in a payroll deduction plan or check-off system to make contributions to the corporation's or labor organization's SSF. See 11 CFR 114.2(f)(4)(i).

The Commission proposes adding a new paragraph (5) to 11 CFR 114.2(f), to specify that facilitation also would not include the provision of incidental services by a corporation to collect and forward voluntary contributions from its restricted class employees to the SSF of a trade association of which the corporation is a member, pursuant to 11 CFR 114.8(e)(4), as revised. The new paragraph would state that a corporation could collect the contributions through a payroll deduction or check-off system. The Commission invites public comments on this proposal.

The attached proposed rules, if promulgated, would not have a significant economic impact on a substantial number of small entities. The basis for this certification is that the proposed rules permit, but do not require, a corporation to provide incidental services to collect and forward contributions from its restricted class employees to the separate segregated fund of a trade association of which the corporation is a member, including the use of a payroll deduction or check-off system. Under current law, a corporation is permitted to collect and transmit contributions manually to the SSF of a trade association to which the corporation belongs. If promulgated, the proposed rule should enable those corporations that wish to transmit employee contributions to trade association SSFs to do so more efficiently and using fewer resources.

For the reasons set out in the preamble, the Federal Election Commission proposes to amend subchapter A of chapter 1 of title 11 of the Code of Federal Regulations as follows:

We invite you to provide any written relevant data, views, or arguments on this proposal. Send your comments to an address listed under ADDRESSES. Include “AD Docket No. 93-ANE-07-AD” in the subject line of your comments. If you want us to acknowledge receipt of your mailed comments, send us a self-addressed, stamped postcard with the docket number written on it; we will date-stamp your postcard and mail it back to you. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. If a person contacts us verbally, and that contact relates to a substantive part of this proposed AD, we will summarize the contact and place the summary in the docket. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments.

You may examine the AD Docket (including any comments and service information), by appointment, between 8 a.m. and 4:30 p.m., Monday through Friday, except Federal holidays. See ADDRESSES for the location.

On May 29, 1996, the FAA issued AD 96-12-07, Amendment 39-9649 (61 FR 29934, June 13, 1996). That AD requires:

• An initial inspection of riveted and snap-ring impulse couplings before accumulating 500 hours time-since-new or overhauled (TSN) or time-since-last inspection (TSLI) on impulse couplings that have fewer than 450 hours TSN or TSLI on the effective date of that AD.

• An initial inspection of riveted and snap-ring impulse couplings before accumulating 50 hours time-in-service (TIS) after the effective date of that AD on impulse couplings that have 450 or more hours TSN or TSLI on the effective date of that AD.

• Repetitive inspections within 500 hours TSLI.

• Replacing impulse couplings that fail the inspection.

That AD was the result of redesigning the impulse coupling assembly to include snap-ring fastening technology, which strengthens the cam axle and reduces wear and reports of impulse couplings with the snap-ring design that were worn beyond limits. That condition, if not corrected, could result in failure of the magneto impulse coupling and possible engine failure.

Since we issued that AD, the manufacturer has added procedures and requirements for inspecting impulse couplings that have snap rings to the applicable Service Support Documents.

We have reviewed and approved the technical contents of TCM Mandatory Service Bulletin (MSB) MSB645, dated April 4, 1994, that describes procedures for:

• Inspecting the impulse coupling assemblies for wear and, if necessary, replacing the riveted assembly with a snap-ring impulse coupling, and

• Marking the magneto data plate with a letter “A” after installing a snap-ring impulse coupling.

We have evaluated all pertinent information and identified an unsafe condition that is likely to exist or develop on other products of this same type design. Therefore, we are proposing this AD, which would require:

• An initial visual inspection of riveted-impulse couplings that have 100 or more hours TSN or TSLI on the effective date of the proposed AD, within 10 hours TIS after the effective date of this AD, or

• An initial visual inspection of riveted-impulse couplings that have fewer than 100 hours TSN or TSLI on the effective date of the proposed AD, before accumulating 100 hours TSN or TSLI, and

• Repetitive inspections of riveted-impulse couplings within intervals of 100 hours TSLI.

• An initial visual inspection of snap-ring impulse couplings that have 450 or more hours TSN or TSLI on the effective date of the proposed AD, within 50 hours TIS after the effective date of the AD, or

• An initial visual inspection of snap-ring impulse couplings that have fewer than 450 hours TSN or TSLI before accumulating 500 hours TSN or TSLI, and

• Repetitive inspections of snap-ring impulse couplings within intervals of 500 hours TSLI.

• Replacing impulse couplings that fail the inspection.

The proposed AD would require that you do these actions using the service information described previously.

We estimate that this proposed AD would affect about 4,200 magnetos installed on airplanes of U.S. registry. We also estimate that it would take about 1 work hour per magneto to perform the proposed actions, and that the average labor rate is $65 per work hour. The reduced inspection interval would require doing the inspections about four times more often. Based on these figures, we estimate the total cost of the proposed AD to U.S. operators to be $1,092,000.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

We have determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD 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.

For the reasons discussed above, I certify that the proposed regulation:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

3. Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

We prepared a summary of the costs to comply with this proposal and placed it in the AD Docket. You may get a copy of this summary by sending a request to us at the address listed under ADDRESSES . Include “AD Docket No. 93-ANE-07-AD” in your request.

Accordingly, under the authority delegated to me by the Administrator, the Federal Aviation Administration proposes to amend 14 CFR part 39 as follows:

Temporary Regulations in the Rules and Regulations section of this issue of the Federal Register amend 26 CFR part 1 relating to section 1374. The temporary regulations provide that (a) section 1374(d)(8) applies to any transaction described in that section that occurs on or after December 27, 1994, regardless of the date of the S corporation's election under section 1362, and (b) for purposes of section 633(d)(8) of the Tax Reform Act of 1986, as amended by the Technical and Miscellaneous Revenue Act of 1988, a corporation's most recent S election, not an earlier election that has been revoked or terminated, determines whether or not it is subject to current section 1374. The text of those regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains the amendments.

It has been determined that this proposed regulation is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to § 1.1374-8(a)(2) of these regulations. Because § 1.1374-8(a)(2) does not impose a collection of information on small entities, it is not subject to the provisions of the Regulatory Flexibility Act (5 U.S.C. chapter 6). It is hereby certified that § 1.1374-10(c) of this regulation will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that § 1.1374-10(c) of this regulation addresses an uncommon fact situation not likely to affect a significant number of small entities. Therefore, a regulatory flexibility analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, these proposed regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.

Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. The IRS and Treasury Department specifically request comments on the clarity of the proposed rules and how they may be made easier to understand. All comments will be available for public inspection and copying. A public hearing may be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Register .

The principal author of these regulations is Stephen R. Cleary of the Office of Associate Chief Counsel (Corporate). Other personnel from Treasury and the IRS participated in their development.

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

The Secretary proposes to amend 34 CFR parts 606, 607, 637, 648, 656, 657, 658, 660, 661, 662, 663, 664, and 669 by removing the mandatory point values from the selection criteria in the regulations associated with the application process for discretionary grant programs. The current regulations that mandate specific point values to the selection criteria in these discretionary grant programs are out-of-date. The proposed regulations would give the Secretary the flexibility to select specific point values from year to year to address current priorities for the programs. The removal of the mandatory point values from the selection criteria for these grant programs is also consistent with the manner in which the Department assigns points to selection criteria for many other discretionary grant programs.

The Secretary also proposes to amend the regulations in 34 CFR part 611, which govern the Teacher Quality Enhancement Grants (TQE) program. The effect of these amendments would be to make discretionary the existing requirement that in competitions for grants under the program's Partnership and Teacher-Recruitment components, the Secretary conduct a two-stage process for selecting applicants involving the submission and review of pre-applications and full applications. We adopted the two-stage process in 2000 in the belief that by inviting full applications only from those applicants that, on the basis of the pre-applications, showed promise of being able to submit high-quality full applications, we would decrease total burden on all applicants and, at the same time, enable those who review and score applications to focus on those with the most promise of being funded. See the notice of proposed rulemaking published in the Federal Register on February 11, 2000 at 65 FR 6939. However, under this process, not only has the Department historically received many fewer applications than anticipated, but it also has little evidence that the use of a pre-application stage has helped to promote the Department's receipt of high-quality full applications for either component of the TQE program. As a result, burden has not been reduced but rather has been inadvertently increased without any commensurate return in quality applications. While wishing to reserve the ability to use a two-stage review process should circumstances change, and given its experience, the Department now wishes to have the option of utilizing a single-stage application process as is the typical procedure in other discretionary grant programs.

Under Executive Order 12866, we have assessed the potential costs and benefits of this regulatory action.

The potential costs associated with the proposed regulations are those resulting from statutory requirements and those we have determined to be necessary for administering these programs effectively and efficiently. Elsewhere in this SUPPLEMENTARY INFORMATION section we identify and explain burdens specifically associated with information collection requirements. See the heading Paperwork Reduction Act of 1995.

In assessing the potential costs and benefits—both quantitative and qualitative—of this regulatory action, we have determined that the benefits would justify the costs.

We have also determined that this regulatory action would not unduly interfere with State, local, and tribal governments in the exercise of their governmental functions.

Executive Order 12866 and the Presidential memorandum of June 11, 1988 on “Plain Language in Government Writing” require each agency to write regulations that are easy to understand.

The Secretary invites comments on how to make these proposed regulations easier to understand, including answers to questions such as the following:

• Are the requirements in the proposed regulations clearly stated?

• Do the proposed regulations contain technical terms or other working that interferes with their clarity?

• Does the format of the proposed regulations (grouping and order of sections, use of headings, paragraphing, etc. ) aid or reduce their clarity?

• Would the proposed regulations be easier to understand if we divided them into more (but shorter) sections? (A “section” is preceded by the symbol “§ ” and a numbered heading; for example, § 606.20 How does the Secretary choose applications for funding?)

• Could the description of the proposed regulations in the SUPPLEMENTARY INFORMATION section of this preamble be more helpful in making the proposed regulations easier to understand? If so, how?

• What else could we do to make the proposed regulations easier to understand?

Send any comments that concern how the Department could make these proposed regulations easier to understand to the person listed in the ADDRESSES section of the preamble.

The Secretary certifies that these proposed regulations would not have a significant economic impact on a substantial number of small entities. Small entities affected by these regulations are small institutions of higher education. The changes will not have a significant economic impact on the institutions affected.

Sections 606.20, 606.21, 606.22, 606.23, 607.20, 607.21, 607.22, 607.23, 611.2, 611.3, 637.31, 637.32, 648.30, 648.31, 656.20, 656.21, 656.22, 657.20, 657.21, 658.30, 658.31, 658.32, 658.33, 660.30, 660.31, 660.32, 660.33, 661.30, 661.31, 662.21, 663.21, 664.30, 664.31, 669.20, and 669.21 contain information collection requirements. Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3057(d)), the Department of Education has submitted a copy of these sections to the Office of Management and Budget (OMB) for its review.

The information collection would apply to applications for awards submitted under certain higher education discretionary grant programs and the Teacher Quality Program. The likely respondents would be State agencies and two and four-year degree granting institutions. This collection of information is necessary for applicants to apply for new grants under the regulations for these discretionary grant programs. Grants will be awarded on the basis of competitively reviewed applications submitted to the U.S. Department of Education, Office of Postsecondary Education.

If you want to comment on the information collection requirements, please send your comments to the Office of Information and Regulatory Affairs, OMB, room 10235, New Executive Office Building, Washington, DC 20503; Attention: Desk Officer for U.S. Department of Education. You may also send a copy of these comments to the Department representative named in the ADDRESSES section of this preamble.

We consider your comments on these proposed collections of information in—

• Deciding whether the proposed collections are necessary for the proper performance of our functions, including whether the information will have practical use;

• Evaluating the accuracy of our estimate of the burden of the proposed collections, including the validity of our methodology and assumptions;

• Enhancing the quality, usefulness, and clarity of the information we collect; and

• Minimizing the burden on those who must respond. This includes exploring the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology ( e.g. , permitting electronic submission of responses).

OMB is required to make a decision concerning the collections of information contained in these proposed regulations between 30 and 60 days after publication of this document in the Federal Register . Therefore, to ensure that OMB gives your comments full consideration, it is important that OMB receives the comments within 30 days of publication. This does not affect the deadline for your comments to us on the proposed regulations.

The discretionary grant programs and the Teacher Quality Enhancement Grants Program are not subject to Executive Order 12372 and the regulations in 34 CFR part 79.

The Secretary particularly requests comments on whether these proposed regulations would require transmission of information that any other agency or authority of the United States gathers or makes available.

You may view this document, as well as all other documents of this Department published in the Federal Register , in text or Adobe Portable Document Format (PDF) on the Internet at the following site: http://www.ed.gov/news/fedregister.

To use PDF you must have Adobe Acrobat Reader, which is available free at this site. If you have questions about using PDF, call the U.S. Government Printing Office (GPO), toll free, at 1-888-293-6498; or in the Washington, DC, area at (202) 512-1530.

For the reasons discussed in the preamble, the Secretary proposes to amend parts 606, 607, 611, 637, 648, 656, 657, 658, 660, 661, 662, 663, 664, and 669 of title 34 of the Code of Federal Regulations as follows:

Preamble Outline

The information in this preamble is organized as follows.

Method 301 affects/applies to you if you want to propose a test method to meet an EPA requirement in absence of a validated method.

1. Submitting CBI. Do not submit this information to the EPA through EDOCKET, regulations.gov, or e-mail. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD ROM that you mail to the EPA, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

2. Tips for Preparing Your Comments. When submitting comments, remember to:

i. Identify the rulemaking by docket number and other identifying information ( e.g. , subject heading, Federal Register proposal publication date and reference page number(s)).

ii. Follow directions.—The EPA may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.

iii. Explain why you agree or disagree; suggest alternatives and provide substitute language for your requested changes.

iv. Describe any assumptions and provide any technical information and/or data that you used.

v. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.

vi. Provide specific examples to illustrate your concerns, and suggest alternatives.

vii. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.

viii. Make sure to submit your comments by the specified comment period deadline.

Commenters wishing to submit proprietary information for consideration must clearly distinguish such information from other comments and clearly label it as CBI. Send submissions containing such proprietary information directly to the following address, and not to the public docket, to ensure that proprietary information is not inadvertently placed in the docket: Attention: Mr. Roberto Morales, U.S. Environmental Protection Agency, OAQPS Document Control Officer, 109 TW Alexander Drive, Room C404-02, RTP, NC 27711. The EPA will disclose information identified as CBI only to the extent allowed by the procedures set forth in 40 CFR part 2. If no claim of confidentiality accompanies a submission when it is received by the EPA, the information may be made available to the public without further notice to the commenter.

In addition to being available in the docket, an electronic copy of the proposed changes to Method 301 is also available on the Internet through the Technology Transfer Network (TTN). Following signature, a copy of Method 301 will be posted on the TTN's policy and guidance page for newly proposed or promulgated rules http://www.epa.gov/ttn/oarpg. The TTN provides information and technology exchange in various areas of air pollution control. If more information regarding the TTN is needed, call the TTN HELP line at (919) 541-5384.

Today's action proposes to amend EPA's Method 301; Field Validation of Pollutant Measurement Methods from Various Waste Media. Method 301 can be found in Appendix A of 40 CFR part 63 (Test Methods). Method 301 was promulgated with 40 CFR part 63 subpart D (Regulations Governing Compliance Extensions for Early Reductions of Hazardous Air Pollutants) (58 FR 27338, June 13, 1991) pursuant to section 112 of the Clean Air Act (as amended in 1990). You would use Method 301 whenever you propose to use a test method to meet an EPA requirement in absence of a validated method. The method specifies procedures for determining and documenting the precision and bias of measured concentrations from various media ( e.g. , sludge, exhaust gas, wastewater) at the level of an applicable standard for a source. Bias (or systemic error) is established by comparing your proposed method against a reference value. A correction factor is employed to eliminate/minimize bias. This correction factor is established from data obtained during your validation test. Methods that have bias correction factors outside a specified range are considered unacceptable. Method precision (or random error) at the level of the standard must be demonstrated to be as precise as the validated method for acceptance.

Today's action proposes to amend those provisions by correcting technical errors, and simplifying and clarifying procedures. Section II of this preamble discusses the proposed Method 301 rule, and section III presents the administrative requirements for this action.

In compliance with President Clinton's June 1, 1998, Executive Memorandum on Plain Language in government writing, Method 301 has been rewritten in plain language. The use of plain language clarifies the requirements of Method 301, thus, reducing the burden (time) associated with understanding the Method. When Method 301 refers to “you,” it means the owner or operator of the affected source.

We have reorganized the information in Method 301 to make it easier to follow the requirements and to understand the relationships among the various requirements. The reorganization did not create new requirements, but it does incorporate various corrections to technical errors and technical revisions. These corrections and revisions, as well as the rationale for the changes, are discussed in sections III C and D of this preamble.

Section 17.0 of today's rule (What detection limits must I use?) shall apply instead of section 9.0 (Practical Quantitation Limits) of the promulgated Method 301 rule. We have retained all other sections from the promulgated Method 301, but you will find them in new places. Where necessary for clarity, we have put the information from one section of Promulgated Method 301 into several new sections. Some information has been put into tables at the end of the Method. Section 2.0 presents new information. It has been added to explain when you must use Method 301 and to identify the requirement for receiving written approval from the Administrator before using the alternative test method. Table 1 of this preamble specifies where the sections in the promulgated Method 301 are found in the proposed Method 301 rule.

The equations of the promulgated Method 301 have also been amended. Some of the promulgated equations have been modified; some have been replaced by other equations, and some have simply been renumbered or reordered. The technical reasons for the changes to the equations are discussed in section III. D of this preamble. Table 2 indicates whether each equation in the proposed amended rule has changed from the promulgated rule. Equations 301-5 and 301-10 (correction factors when using isotopic spiking and paired sampling systems with a validated test method comparison) of promulgated Method 301 rule have been removed for the reasons discussed in section III D of this preamble.

Some of the equations in promulgated Method 301 are incorrect. We are proposing to correct these equations with today's action. For a discussion of new equations due to technical revisions, see section III D of this preamble. We revised several equations to clarify their intent. Under the new numbering system, the revised equations are 301-4 (numerical value of bias), 301-6 (t Test), 301-8 (relative standard deviation), 301-18 (standard deviation for spiked samples), and 301-19 (standard deviation for unspiked samples). These changes were editorial/defining changes and not technical changes. For example, we added or changed subscripts or redefined a variable.

We added Equations 301-1, 301-7, and 301-9. Equation 301-1 is used to calculate the difference in minimum and maximum storage times under the new sample stability procedures. Equation 301-7 is used to calculate relative magnitude of bias for isotopic spiking. This new equation was needed when we dropped the use of correction factors. Likewise, Equation 301-9 was needed for calculating relative magnitude of bias when comparing against a validated method using paired sampling systems.

We also added Equation 301-11 and changed Equations 301-12, 301-17, 301-18, and 301-19 to correct technical errors in promulgated Method 301. Equations 301-11 (Pooled Variance) and 301-12 (Alternative Test Method Variance) are being proposed to correct a technical error in the promulgated method. Addition and subtraction can only be performed on the variance. It cannot be performed on the standard deviation. The proposed Equation 301-11 is a new equation that calculates the pooled variance of both methods when comparing against validated methods using paired sampling systems. The proposed Equation 301-12 replaces the standard deviation with the variance.

Equations 301-17 (calculation of the test “t-statistic”) and 301-21 (calculation of the pooled standard deviation) were changed because the divisor was wrong. Equation 301-20 (F test) was added so that the tester could determine if the spiked and unspiked samples had the same precision, thereby allowing them to be pooled to calculate the overall precision.

The proposed Equation 301-2 (Standard Deviation) replaces the promulgated Equation 301-2 when comparing against validated methods using paired sampling systems. The text in promulgated 6.2.1.4 directs the analyst to determine the mean of the paired sample differences by substituting d m (mean of the paired sample differences) and d i (standard deviation of the differences) for S i and S m in the proposed Equation 301-2. We created the proposed Equation 301-2 to incorporate these changes.

We are proposing five major technical changes to Method 301. These technical changes include the following:

(1) Replacing the Practical Limit of Quantitation (PLQ) with a procedure to determine the Limit of Detection,

(2) Revising the bias acceptance criteria and eliminating correction factors,

(3) Revising precision acceptance criteria when using analyte spiking,

(4) Allowing analyte spiking even when there is an existing test method, and

(5) Establishing new procedures for ensuring sample stability.

1. Practical Limit of Quantitation. We are proposing to replace the determination of the PLQ with a procedure to determine the Limit of detection (LOD). The purpose of establishing a measurement limit is to ensure that a test method is appropriate for its intended use. The LOD is a better parameter for this purpose.

The PLQ is defined as the level or concentration at which the precision of a test method reaches an acceptable value. There are several problems with this concept. The first is the idea that there is an absolute value for acceptable precision. To a certain extent, a tester can compensate for imprecision by collecting additional data so there is no absolute level at which the imprecision of a test method becomes so great that the method is no longer useful. This concept works best when the precision of the test method is independent of the concentration of the analyte being measured. As the concentration of the analyte increases, the imprecision of the method as a percentage of the measured quantity decreases. In this case, the relative imprecision will actually decrease as the quantity measured increases.

However, for most environmental measurements, it appears that the precision is a function of the concentration of the analyte being measured. Thus, the relative imprecision will not decrease as the quantity measured increases. In this case, the PLQ has no meaning.

The LOD is the minimum level or concentration of an analyte that produces a signal or response that is distinguishable from the signal or response produced when no analyte is present. This is a measurable quantity that can be determined regardless of the method's precision or whether that precision varies with the level of the analyte. For all of these reasons, we believe that the LOD is a more useful parameter to characterize a test method's performance.

2. Bias Acceptance Criteria. We are also proposing to change the acceptance criteria for the bias in a proposed alternative method from ± 30% to ± 10% and concurrently to eliminate the requirement for correcting all data collected with the method. We believe that twelve pairs of results from a single source are not sufficient to allow us to establish a correction factor that can or should be applied to all future uses of the method. In addition, keeping track of correction factors to ensure that they are applied to future uses of the method is a huge administrative burden both for the users of the method and the regulatory agencies who oversee its use. If we do not use correction factors, method biases of up to 30 percent are undesirably large. Therefore, we are proposing to reduce the acceptable bias to + 10% and eliminate the requirement to correct the data. With this change, the bias of alternative methods will be acceptable; the criteria for using the alternative test method at similar sources will be clear, and the administrative burden will be reduced.

3. Precision Acceptance Criteria. We are proposing to change the acceptance criteria for method precision when using analyte spiking from ± 50% to ± 20%. In addition, we are proposing to eliminate the requirement for different numbers of replicate samples depending on the method's relative precision. All future testing using an alternative test method at similar sources will require only three replicate samples. The requirement in the existing procedure was an attempt to compensate for the poorer precision of some candidate alternative test methods by increasing the amount of data that the user was required to collect. While more data does compensate for the imprecision of any future data collected with the method, allowing candidate alternative test methods with poor precision creates other problems. One problem is that poor precision makes it more difficult to detect potential bias in a test method. For this reason, we are proposing to tighten the acceptance criteria for the precision of candidate alternative test methods.

4. Analyte Spiking. We are also proposing to allow the tester to use analyte spiking to evaluate an alternative test method even when there is an existing compliance test method. If the NESHAP specifies a test method, promulgated Method 301 requires the tester to evaluate an alternative method by direct comparison. We believe that this is too restrictive in some cases. For example, a change in process technology may cause a previously unbiased test method to develop an interference that biases its results. If the tester is required to compare the alternative test method to the existing test method, the alternative method could never demonstrate acceptable performance if it were unbiased. We believe that it is sufficient for an alternative method to demonstrate acceptable performance by using the analyte spiking procedure and that this is a reasonable alternative to direct comparison.

5. Sample Stability. Finally, we are proposing procedures for sample stability. Method 301 previously lacked specific procedures for ensuring that samples collected under proposed alternative methods were analyzed within an appropriate time. New Section 8.4 includes a requirement to calculate the difference in the sampling results at the minimum and maximum storage times, determine the standard deviation of the differences, and test the difference in the results for statistical significance by calculating the t-statistic and determining if the mean of the differences between the initial results and the results after storage is significant at the 95 percent confidence level. We have also added Table 1 to compare the calculated t-statistic with the critical value of the t-statistic. These procedures are necessary to ensure sample stability and should have been included in promulgated Method 301.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), the EPA must determine whether the regulatory action is “significant” and, therefore, subject to review by the Office of Management and Budget (OMB) and the requirements of the Executive Order. The Executive Order defines “significant regulatory action” as one that is likely to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities;

(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligation of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

It has been determined that this proposed regulatory action is not a “significant regulatory action” under the terms of Executive Order 12866 and is, therefore, not subject to OMB review.

This action does not impose or change the information collection burden under the provisions of the Paperwork Reduction Act 44 U.S.C. 3501, et seq. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the collection of information.

An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations are listed in 40 CFR part 9 and 48 CFR chapter 15.

The RFA generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions.

For the purposes of assessing the impacts of today's proposed rule on small entities, small entity is defined as: (1) A small business that meets the definitions for small business based on the Small Business Association (SBA) size standards which, for this proposed action, are operations that have fewer than 1,000 employees; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.

After considering the economic impacts of today's proposed rule on small entities, I certify that this proposed action will not have a significant economic impact on a substantial number of small entities. In determining whether a rule has significant economic impact on a substantial number of small entities, the impact of concern is any significant adverse economic impact on small entities since the primary purpose of the regulatory flexibility analysis is to identify and address regulatory alternatives “which minimize any significant economic impact of the proposed rule on small entities,” (5 U.S.C. 603 and 604). Thus, an agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, or otherwise has a positive economic effect on all of the small entities subject to the rule. This proposed rule will not impose any requirements on small entities. This rule establishes procedures for using alternative methods. As such, small entities and other sources are not required to comply with this proposed rule, but may elect to use Method 301. The proposed rule offers additional flexibility to all sources, including small entities that may be subject to requirements under the CAA. Additionally, this proposed amended rule clarifies and simplifies the procedures for using alternative methods. We continue to be interested in the potential impacts of the proposed rule on small entities and welcome comments on issues related to such impacts.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 1044, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, the EPA generally must prepare a written statement, including cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires the EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling official of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

We have determined that today's proposed amended rule does not contain Federal mandates for State, local, or tribal governments or the private sector. Therefore, this proposed amended rule is not subject to the requirements of sections 202 and 205 of the UMRA.

Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires the EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that 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.”

Under Executive Order 13132, the EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal Government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or the EPA consults with State and local officials early in the process of developing the proposed regulation. The EPA also may not issue a regulation that has federalism implications and that preempts State law unless the Agency consults with State and local officials early in the process of developing the proposed regulation.

Today's proposed amended rule will not have federalism implications. They will 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. Today's proposed amended rule clarifies and simplifies the procedures for using alternative methods. Thus, the requirements of section 6 of the Executive Order do not apply.

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” The proposed amended rule does not have tribal implications, as specified in Executive Order 13175. The proposed action serves to clarify and simplify procedures for using alternative methods. Therefore, Executive Order 13175 does not apply to the proposed amended rule.

Executive Order 13045, “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), applies to any rule that the EPA determines is: (1) “Economically significant” as defined under E.O. 12866; and (2) concerns an environmental health or safety risk that the EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the EPA must evaluate the environmental health or safety effects of the planned rule on children and explain why the planned regulation is preferable to other potentially effective and reasonable alternatives considered by the EPA.

The EPA interprets Executive Order 13045 as applying only to those regulatory actions that are based on health or safety risks, such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. The proposed amended rule is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866, and because this proposed amended rule is not based on health or safety risks. Thus, Executive Order 13045 does not apply to this proposed amended rule.

This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355(May 22, 2001)) because it is not a significant regulatory action under Executive Order 12866.

Section 112(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law No. 104-113, section 12(d) 915 U.S.C. 272 note), directs all Federal agencies to use voluntary consensus standards instead of government unique standards in their regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical.

Voluntary consensus standards are technical standards ( e.g. , materials specifications, test methods, sampling procedures, and business practices, etc.) that are developed or adopted by one or more voluntary consensus standards bodies. Examples of organizations, generally regarded as voluntary consensus standards bodies, include the American Society for Testing and Materials (ASTM), the National Fire Protection Association (NFPA), and the Society of Automotive Engineers (SAE). The NTTAA requires Federal agencies like EPA to provide Congress through OMB with explanations when an agency decides not to use available and applicable voluntary consensus standards. This proposed amended rule clarifies and simplifies, already promulgated, procedures for use of alternative standards. The intent of the Method 301 is to allow owners and operators of sources regulated by Part 63 standards the flexibility and option to use alternative standards. Today's proposed amended rule is intended to simplify and clarify the procedures for using alternative standards. Therefore, the EPA is not considering the use of any voluntary consensus standards with today's proposed action.

For the reasons stated in the preamble, title 40, chapter I, part 63, of the Code of the Federal Regulations is proposed to be amended as follows:

Comments that contain confidential business information should be submitted in two versions, one clearly marked “Public”, to be filed in the public docket, and the other clearly marked “Confidential” to be reviewed by authorized government personnel only. If the comments are not marked, EPA will assume they do not contain confidential business information and will docket them.

Do not submit information that you consider to be CBI electronically through EPA's electronic public docket or by e-mail. Send or deliver information identified as CBI only to the Essential Use Program Manager. You may claim information that you submit to EPA as CBI by marking any part or all of that information as CBI (if you submit CBI on disk or CD ROM, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is CBI). Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR Part 2.

In addition to one complete version of the comment that includes any information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket and EPA's electronic public docket. If you submit the copy that does not contain CBI on disk or CD ROM, mark the outside of the disk or CD ROM clearly that it does not contain CBI. Information not marked as CBI will be included in the public docket and EPA's electronic public docket without prior notice. If you have any questions about CBI or the procedures for claiming CBI, please consult the person identified in the FOR FURTHER INFORMATION CONTACT section.

Essential use allowances are allowances to produce or import certain ozone-depleting chemicals in the U.S. for purposes that have been deemed “essential” by the Parties to the Montreal Protocol and the U.S. Government.

The Montreal Protocol on Substances that Deplete the Ozone Layer (Protocol) is the international agreement to reduce and eventually eliminate the production and consumption  1 of all stratospheric ozone depleting substances (ODSs). The elimination of production and consumption of class I ODSs is accomplished through adherence to phase-out schedules for specific class I ODSs 2 , including: chlorofluorocarbons (CFCs), halons, carbon tetrachloride, and methyl chloroform. As of January 1, 1996, production and import of most class I ODSs were phased out in developed countries, including the United States.

However, the Protocol and the Clean Air Act (Act) provide exemptions that allow for the continued import and/or production of class I ODS for specific uses. Under the Protocol, exemptions may be granted for uses that are determined by the Parties to be “essential.” Decision IV/25, taken by the Parties to the Protocol in 1992, established criteria for determining whether a specific use should be approved as essential, and set forth the international process for making determinations of essentiality. The criteria for an essential use, as set forth in paragraph 1 of Decision IV/25, are the following:

“(a) that a use of a controlled substance should qualify as ‘essential’ only if:

(i) it is necessary for the health, safety or is critical for the functioning of society (encompassing cultural and intellectual aspects); and

(ii) there are no available technically and economically feasible alternatives or substitutes that are acceptable from the standpoint of environment and health;

(b) that production and consumption, if any, of a controlled substance for essential uses should be permitted only if:

(i) all economically feasible steps have been taken to minimize the essential use and any associated emission of the controlled substance; and

(ii) the controlled substance is not available in sufficient quantity and quality from existing stocks of banked or recycled controlled substances, also bearing in mind the developing countries' need for controlled substances.”

Title VI of the Act implements the Protocol for the United States. 3 Section 604(d) of the Act authorizes EPA to allow the production of limited quantities of class I ODSs after the phase out date for the following essential uses:

(1) Methyl Chloroform, “solely for use in essential applications (such as nondestructive testing for metal fatigue and corrosion of existing airplane engines and airplane parts susceptible to metal fatigue) for which no safe and effective substitute is available.” Decision X/6 by the Parties to the Protocol established that “* * * the remaining quantity of methyl chloroform authorized for the United States at previous meetings of the Parties [will] be made available for use in manufacturing solid rocket motors until such time as the 1999-2001 quantity of 176.4 tons (17.6 ODP-weighted tons) allowance is depleted, or until such time as safe alternatives are implemented for remaining essential uses.” Prior to 2004, EPA issued allowances for production of approximately 34 metric tons of methyl chloroform out of the authorized balance of 176 metric tons. Under section 604(d)(1) of the Act, EPA may no longer allocate essential use allowances for production and import of methyl chloroform as of January 1, 2005. In light of this deadline, in the allocation rulemaking for calendar year 2004 (69 FR 4059) EPA allocated the remaining authorized production allowances for methyl chloroform, approximately 142 metric tons, to the National Aeronautics and Space Administration.

(2) Medical Devices (as defined in section 601(8) of the Act), “if such authorization is determined by the Commissioner [of the Food and Drug Administration], in consultation with the Administrator [of EPA] to be necessary for use in medical devices.” EPA issues allowances to manufacturers of metered-dose inhalers, which use CFCs as propellant for the treatment of asthma and chronic obstructive pulmonary diseases.

(3) Aviation Safety, for which limited quantities of halon-1211, halon-1301, and halon 2402 may be produced “if the Administrator of the Federal Aviation Administration, in consultation with the Administrator [of EPA] determines that no safe and effective substitute has been developed and that such authorization is necessary for aviation safety purposes.” Neither EPA nor the Parties have ever granted a request for essential use allowances for halon, because alternatives are available or because existing quantities of this substance are large enough to provide for any needs for which alternatives have not yet been developed.

The Protocol, under Decision X/19, additionally allows a general exemption for laboratory and analytical uses. This exemption is reflected in EPA's regulations at 40 CFR part 82, subpart A. While the Act does not specifically provide for this exemption, EPA has determined that an allowance for essential laboratory and analytical uses is allowable under the Act as a de minimis exemption. The de minimis exemption is addressed in EPA's final rule of March 13, 2001 (66 FR 14760-14770). The Parties to the Protocol subsequently agreed (Decision XI/15) that the general exemption does not apply to the following uses: testing of oil and grease, and total petroleum hydrocarbons in water; testing of tar in road-paving materials; and forensic finger-printing. EPA incorporated this exclusion at Appendix G to Subpart A of 40 CFR part 82 on February 11, 2002 (67 FR 6352).

Before EPA may allocate essential use allowances, the Parties to the Protocol must first approve the United States' request to produce or import essential class I ODSs. The procedure set out by Decision IV/25 calls for individual Parties to nominate essential uses and the total amount of ODSs needed for those essential uses on an annual basis. The Protocol's Technology and Economic Assessment Panel evaluates the nominated essential uses and makes recommendations to the Protocol Parties. The Parties make the final decisions on whether to approve a Party's essential use nomination at their annual meeting. This nomination cycle occurs approximately two years before the year in which the allowances would be in effect. The allowances allocated through today's action were first nominated by the United States in January 2003.

Once the U.S. nomination is approved by the Parties, EPA allocates essential use exemptions to specific entities through notice-and-comment rulemaking in a manner consistent with the Act. For medical devices, EPA requests information from manufacturers about the number and type of devices they plan to produce, as well as the amount of CFCs necessary for production. EPA then forwards the information to the Food and Drug Administration (FDA), which determines the amount of CFCs necessary for metered-dose inhalers in the coming calendar year. Based on FDA's assessment, EPA proposes allocations to each eligible entity. Under the Act and the Protocol, EPA may allocate essential use allowances in quantities that together are below or equal to the total amount approved by the Parties. EPA may not allocate essential use allowances in amounts higher than the total approved by the Parties. For 2005, the Parties authorized the United States to allocate up to 1,902 metric tons of CFCs for essential uses.

The following is a step-by-step list of actions EPA and FDA have taken thus far to implement the exemption for medical devices found at section 604(d)(2) of the Act for the 2005 control period.

1. On February 24, 2004, EPA sent letters to MDI manufacturers requesting the following information under section 114 of the Act (“114 letters”):

a. The MDI product where CFCs will be used.

b. The number of units of each MDI product produced from 1/1/03 to 12/31/03.

c. The number of units anticipated to be produced in 2004.

d. The gross target fill weight per unit (grams).

e. Total amount of CFCs to be contained in the MDI product for 2005.

f. The additional amount of CFCs necessary for production.

g. The total CFC request per MDI product for 2005.

The 114 letters are available for review in the Air Docket ID No. OAR-2004-0063. The companies requested that their responses be treated as confidential business information; for this reason, EPA has not placed the responses in the docket.

2. On May 18, 2004, EPA sent FDA the information MDI manufacturers provided in response to the 114 letters with a letter requesting that FDA make a determination regarding the amount of CFCs necessary for MDIs for calendar year 2005. This letter is available for review in Air Docket ID No. OAR-2004-0063.

3. On July 28, 2004, FDA sent a letter to EPA stating the amount of CFCs determined by the Commissioner to be necessary for each MDI company in 2005. This letter is available for review in the Air Docket ID No. OAR-2004-0063. In their letter, FDA informed EPA that they had determined that 1524.58 metric tons of CFCs were necessary for use in medical devices in 2005.

In accordance with the determination made by FDA, today's action proposes to allocate essential use allowances for a total of 1524.58 metric tons of CFCs for use in MDIs for calendar year 2005. The amounts listed in this proposal are subject to additional review by EPA and FDA if new information demonstrates that the proposed allocations are either too high or too low. Commentors requesting increases or decreases of essential use allowances should provide detailed information supporting their claim for additional or fewer CFCs. Any company that needs less than the full amount listed in this proposal should notify EPA of the actual amount needed.

EPA proposes to allocate essential use allowances for calendar year 2005 to the entities listed in Table 1. These allowances are for the production or import of the specified quantity of class I controlled substances solely for the specified essential use. As explained in Section II.C. above, the amount of each allocation is based on the request of the company, which was reviewed by FDA to determine the quantities necessary for use in medical devices.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), the Agency must determine whether this regulatory action is “significant” and therefore subject to review by the Office of Management and Budget (OMB) and the requirements of the Executive Order. The Order defines “significant regulatory action” as one that is likely to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more, or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities;

(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

Pursuant to the terms of Executive Order 12866, OMB has notified EPA that it considers this a “significant regulatory action” within the meaning of the Executive Order. EPA submitted this action to OMB for review and incorporated changes as a result. A copy of the rule showing changes that were made is available in EPA Docket OAR-2004-0063.

Under Section 6(a)(3)(B)(ii) of Executive Order 12866, the Agency must provide to OMB's Office of Information and Regulatory Affairs an “assessment of the potential costs and benefits of the regulatory action, including an explanation of the manner in which the regulatory action is consistent with a statutory mandate and, to the extent permitted by law, promotes the President's priorities and avoids undue interference with State, local, and tribal governments in the exercise of their governmental functions.”

EPA is undertaking today's proposed action under the mandate established by Section 604(d) of the Clean Air Act Amendments of 1990, which directs the Administrator to authorize the production of limited quantities of class I substances solely for use in medical devices, if the Commissioner of FDA determines that the authorization is necessary. The proposed allocations in today's rule are the amounts determined by FDA to be necessary for calendar year 2005.

EPA has not assessed the costs and benefits specific to today's proposed action. The Agency examined the costs and benefits associated with a related regulation. The Agency's Regulatory Impact Analysis (RIA) for the entire Title VI phaseout program examined the projected economic costs of a complete phaseout of consumption of ozone-depleting substances, as well as the projected benefits of phased reductions in total emissions of CFCs and other ozone-depleting substances, including essential-use CFCs used for metered-dose inhalers (U.S. Environmental Protection Agency, “Regulatory Impact Analysis: Compliance with Section 604 of the Clean Air Act for the Phaseout of Ozone Depleting Chemicals,” July 1992).

This action does not add any information collection requirements or increase burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et. seq. MB previously approved the information collection requirements contained in the final rule promulgated on May 10, 1995, and assigned OMB control number 2060-0170 (EPA ICR No. 1432.21).

Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instruction; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information. An Agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations are listed in 40 CFR part 9 and 48 CFR Chapter 1.

The RFA generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions.

For purposes of assessing the impact of today's rule on small entities, small entity is defined as: (1) Pharmaceutical preparations manufacturing businesses (NAICS code 325412) that have less than 750 employees; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.

After considering the economic impacts of today's proposed rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. In determining whether a rule has a significant economic impact on a substantial number of small entities, the impact of concern is any significant adverse economic impact on small entities, since the primary purpose of the regulatory flexibility analyses is to identify and address regulatory alternatives “which minimize any significant economic impact of the rule on small entities.” 5 U.S.C. 603 and 604. Thus, an agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, or otherwise has a positive economic effect on all of the small entities subject to the rule.

This rule provides an otherwise unavailable benefit to those companies that are receiving essential use allowances by creating an exemption to the regulatory phaseout of chlorofluorocarbons. We have therefore concluded that today's proposed rule will relieve regulatory burden for all small entities. We continue to be interested in the potential impact of the proposed rule on small entities and welcome comments on issues related to such impacts.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. L. 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year.

Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective, or least burdensome alternative, if the Administrator publishes with the final rule an explanation why that alternative was not adopted.

Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed a small government agency plan under section 203 of the UMRA. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

Today's rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local, or tribal governments or the private sector, since it merely provides exemptions from the 1996 phase out of class I ODSs. Similarly, EPA has determined that this rule contains no regulatory requirements that might significantly or uniquely affect small governments, because this rule merely allocates essential use exemptions to entities as an exemption to the ban on production and import of class I ODSs.

Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that 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.”

This proposed rule does not have federalism implications. It will 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. Today's rule affects only the companies that requested essential use allowances. Thus, Executive Order 13132 does not apply to this rule.

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” This proposed rule does not have tribal implications, as specified in Executive Order 13175. Today's rule affects only the companies that requested essential use allowances. Thus, Executive Order 13175 does not apply to this rule.

Executive Order 13045, “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), applies to any rule that (1) is determined to be “economically significant” as defined under E.O. 12866, and (2) concerns an environmental health and safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency. EPA interprets E.O. 13045 as applying only to those regulatory actions that are based on health or safety risks, such that the analysis required under section 5-501 of the Order has the potential to influence the regulation. This rule is not subject to E.O. 13045 because it implements the phase-out schedule and exemptions established by Congress in Title VI of the Clean Air Act.

This rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 Fed. Reg. 28355, May 22, 2001) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The rule affects only the pharmaceutical companies that requested essential use allowances.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g. , materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards. This proposed rule does not involve technical standards. Therefore, EPA did not consider the use of any voluntary consensus standards.

40 CFR Part 82 is proposed to be amended as follows:

As indicated in the Summary, the proposed rule makes three changes to the DOSAR, as follows:

• DOSAR 619.000 is added to formalize the Department's policy regarding the application of the Small Business Act to contracts awarded by domestic contracting activities ( i.e. , those located in the United States) where contract performance takes place overseas. Currently, FAR 19.000(b) states that part 19, with the exception of subpart 19.6, applies “only in the United States or its outlying areas.” This language is ambiguous and subject to interpretation. While the application is clear with respect to contracts both awarded and performed in the United States (it applies) and to contracts both awarded and performed outside the United States (it does not apply), the gray area is its applicability to contracts awarded by contracting offices located in the United States but where contract performance takes place overseas. The Department has subsequently followed an informal policy of applying part 19 to such contracts. This DOSAR change, therefore, states this policy in explicit terms.

• A new DOSAR subpart 625.71 is added to address the issue of the Department's administrative, logistical, and security support of contractor personnel performing overseas in locations where a contingency operation is ongoing or in high-risk locations. Essentially, the policy requires that contractors furnish their own in-country non-U.S. Government administrative, logistical, and security support. If the Department authorizes the use of U.S. Government-provided support, that support shall be set forth in the Statement of Work. An associated contract clause is added at 652.225-72. The clause is mandatory in Department contracts when the contract is in support of the operations/missions at one or more U.S. diplomatic or consular missions, and the location of the U.S. diplomatic or consular mission at which the work is to be performed is designated as a contingency operation, as defined in FAR 2.101. The clause is optional for use in contracts in support of the operations/missions at one or more U.S. diplomatic or consular missions in situations where a military contingency operation does not exist, but a high risk to personnel or property is known or anticipated.

• Subpart 628.3 is revised to clarify the application of Defense Base Act (DBA) insurance to local and third country nationals. The Department of Labor (DOL) has granted the Department of State (DOS) waivers to cover local and third country nationals. These waivers state that DOS contractors need not provide DBA insurance for those DOS contractor employees who are local or third country nationals. However, the DOL waivers state that in lieu of DBA insurance, the DOS contractors must provide workers' compensation benefits to local and third country nationals in accordance with local law. The Department of State did not interpret the waivers as a DOL requirement for DOS contractors to provide DBA insurance to local or third country national contractor employees in countries where no workers' compensation law existed. Nevertheless, DOL recently stated that the absence of local workers' compensation laws in certain countries renders the DOL waivers “ineffective”, and that where there is no local workers” compensation law, DOS contractors must provide local and third country national employees with the DBA insurance. As a result, the Department is revising Subpart 628.3 to clarify this issue. In addition, the revision includes language regarding a statutory exemption from the DBA for contractor employees who perform work on an intermittent basis for not more than 90 days in a calendar year. This exemption is stated in Section 16 of the State Department Basic Authorities Act (22 U.S.C. 2680a), as amended. The DOSAR clause at 652.228-71 is revised accordingly. In addition, a new solicitation provision is added at 652.228-70. The purpose of the provision is to request information from prospective contractors on whether or not any covered contractor employees will be employed on the resultant contract. Finally, in looking at appropriate revisions to the DOSAR provisions at 652.228-74 and 652.228-76, it was determined that one provision to cover all types of contracts could be used. DOSAR 652.228-76 is therefore removed and 652.228-74 is revised to cover all contract types as opposed to just fixed-price.

In accordance with provisions of the Administrative Procedure Act governing rules promulgated by federal agencies that affect the public (5 U.S.C. 552), the Department is publishing this proposed rule and inviting public comment.

The Department of State, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation and, by approving it, certifies that this rule will not have a significant economic impact on a substantial number of small entities.

This rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This rule is not a major rule as defined by section 804 of the Small Business Regulatory Enforcement Act of 1996. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign based companies in domestic and import markets.

This regulation will 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. Therefore, in accordance with section 6 of Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement.

Information collection requirements have been approved under the Paperwork Reduction Act of 1980 by OMB, and have been assigned OMB control number 1405-0050.

Accordingly, for the reasons set forth in the preamble, title 48, chapter 6 of the Code of Federal Regulations is proposed to be amended as follows:

1. The authority citation for 48 CFR parts 619, 625, 628, and 652 continues to read as follows:

Docket: For access to the docket to read background documents or comments received, go to http://dms.dot.gov at any time or to Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

Privacy Act: Anyone is able to search the electronic form of all comments received into any of DOT's dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477). This statement is also available at http://dms.dot.gov.

We and our predecessor agencies, the Interstate Commerce Commission (ICC) and Federal Highway Administration, have regulated property brokers for many years. The ICC decided on May 16, 1949 (Ex Parte MC-39 “Practices of Property Brokers,” 49 M.C.C. 277, at 286) that it was necessary to regulate all property brokers, including HHG brokers  1 , in interstate or foreign commerce. In that proceeding, the ICC decided it was unnecessary to regulate HHG brokers separately from general freight brokers.

The Motor Carrier Safety Improvement Act of 1999, Pub. L. 106-159, December 9, 1999, 113 Stat. 1748, in establishing FMCSA, granted to us continued regulatory oversight of the property broker regulations.

Brokers generally, and HHG brokers in particular, have played an increasingly significant role over the last 26 years in the transportation industry. Their role, when executed properly, is that of an arranger of transportation. This role is very helpful to the small commercial shipper, and to the unsophisticated consumer that is shipping HHG. However, since Congress substantially deregulated the motor carrier, broker, and freight forwarder industry through the ICC Termination Act of 1995, Pub. L. 104-88, December 29, 1995, 109 Stat. 803 (ICCTA), FMCSA has received complaints that a segment of the industry may be engaging in unscrupulous business practices which defraud motor carriers as well as consumers. The Internet has become a very convenient medium that allows HHG brokers to expand their customer base by advertising their services to a wider range of customers. News media have reported that many consumers now use the Internet to seek the best possible prices for all of their consumer purchases, including transportation of HHG.

Many of the complaints the agency receives involve HHG brokers who mislead consumers with lures of inexpensive transportation charges. In a typical case, the HHG broker enters into a contract with the consumer, takes a sizeable deposit, and arranges to have a motor carrier handle the shipment. When the shipper's goods are in the possession of the carrier, the carrier then demands additional freight charges. The complaints we receive show when problems between the consumer and motor carrier arise, the HHG broker disavows any responsibility for the motor carrier's actions, despite the HHG broker's role in acquiring the carrier's services on behalf of the shipper. FMCSA has not proven collusion or conspiracy between brokers and carriers in these cases. However, we believe this is an area of transportation that deserves further attention. We need to determine how extensive our role should be in regulating the HHG broker industry.

HHG brokers must comply with the regulations in 49 CFR part 371, which apply to all regulated property brokers. We summarize these regulations below.

A broker must register with us in accordance with part 365.

A broker must file designations of persons upon whom court process may be served. Every broker must make a designation for each State in which its offices are located or in which contracts will be written.

A broker must have a surety bond or trust fund in effect for $10,000. The FMCSA will not issue a property broker license until a surety bond or trust fund for the full limits of liability prescribed is in effect. The broker license will remain valid or effective only as long as a surety bond or trust fund remains in effect and will ensure a minimum level of financial responsibility for the broker.

A broker must keep a record of each of its transactions, and keep the records for three years. Each party to a brokered transaction has the right to review the record of the transaction applicable to them. For example, motor carriers accepting transportation shipments from brokers have the right to review any of the required documents retained by brokers. Shippers also are entitled to examine broker records containing the motor carrier's address and USDOT number. Brokers may keep master lists of consignors and the address and registration number of the motor carrier, rather than repeating this information for each transaction. Each transaction record must show:

(1) The name and address of the consignor;

(2) The name, address, and registration number of the originating motor carrier;

(3) The bill of lading or freight bill number;

(4) The amount of compensation received by the broker for the brokerage service performed and the name of the payer;

(5) A description of any non-brokerage service performed in connection with each shipment or other non-brokerage activity, the amount of compensation received for the service, and the name of the payer; and

(6) The amount of any freight charges collected by the broker and the date of payment to the motor carrier.

A broker must not perform or offer to perform any brokerage service (including advertising) in any name other than that in which FMCSA or one of our predecessor agencies has issued its registration. A broker must not, directly or indirectly, represent its operations to be that of a motor carrier. Any advertising must show the true nature of the broker role in services offered.

A broker must not charge or receive compensation from a motor carrier for brokerage service where: (1) The broker owns or has a material beneficial interest in the shipment; or (2) the broker is able to exercise control over the shipment because it owns the shipper, the shipper owns the broker or there is common ownership of the two. A broker must not give or offer to give anything of value to any consumer, consignor, or consignee (or their officers or employees), except inexpensive advertising items given for promotional purposes.

Where the broker acts on behalf of a person bound by law, or our regulation, as to the transmittal of bills or payments, the broker must also abide by the law or regulations which apply to that person.

Each broker who engages in any other business must maintain accounts so that the revenues and expenses relating to the brokerage portion of its business are segregated from its other activities. Expenses that are common must be allocated on an equitable basis; however, the broker must be prepared to explain the basis for the allocation to us and the courts.

We published an Interim Final Rule (IFR) applying to operations of HHG motor carriers on June 11, 2003 (68 FR 35064). We developed the rule to improve public understanding of our commercial rules, and to help consumers understand their roles and responsibilities along with those of HHG motor carriers to prevent moving disputes. We inserted § 375.409 in the IFR in an effort to make HHG carriers more responsible for the actions of HHG brokers who provide estimates on their behalf. Twenty-seven years ago, the ICC concluded that brokers were prohibited from providing estimates because the duty to comply with the HHG regulations rests with the motor carrier, and shippers aggrieved by an act or omission of a broker would be unprotected by our regulations. In Entry Control of Brokers , 126 M.C.C. 476, 520 (1977), the ICC stated:

As we noted in the preamble to the IFR (June 11, 2003, 68 FR 35078), although brokers may not enter into agency agreements with HHG motor carriers because they are required to exercise discretion in allocating traffic among carriers, we believe it is permissible for a motor carrier to enter into a more limited type of agreement authorizing the broker to provide estimates on behalf of the motor carrier. Under such an agreement, the motor carrier must adopt the broker's estimate as a carrier-issued estimate and incorporate it into the order for service and bill of lading for purposes of compliance with part 375, particularly the 110 percent rule. We believe that under these circumstances, the individual shipper would not be deprived of the protections provided in part 375 because the carrier would still be held accountable for complying with that part. However, an HHG broker may not issue an estimate without entering into such an agreement with an HHG motor carrier because otherwise the requirements of part 375 would not apply to the broker-issued estimate. Thus, the IFR authorized an HHG broker to provide estimates, but only if it has a written agreement with the carrier under which the carrier agrees to adopt the estimate as its own.

The American Moving and Storage Association (AMSA) petitioned us on March 6, 2003, to initiate a rulemaking to amend 49 CFR part 371, “Brokers of Property,” by imposing specific requirements on HHG brokers. AMSA's petition is in the docket. Title 49 U.S.C. subtitle IV, part B and 49 CFR 1.73 authorize us to adopt regulations for property brokers of HHG in interstate or foreign commerce.

AMSA asserts there are increasing numbers of “moving-related” Web sites hosted by unscrupulous HHG brokers, which have resulted in numerous complaints from consumers who use the Internet to secure the services of an HHG motor carrier.

AMSA's petition states a significant number of the complaints it receives involve the same Internet companies, many of which are based in Florida. AMSA argues the fact these companies are involved in moves having no connection to Florida as an origin or destination demonstrates the impact of the Internet on these HHG broker arrangements and how the Internet is being used to entrap unsuspecting consumers. AMSA states it often receives complaints from consumers who have dealt with a Florida-based Internet broker, who in turn arranged a move from a non-Florida origin to another non-Florida destination. AMSA states once these brokers establish a business relationship with the consumer, they require payment of a deposit of several hundred dollars or more, fade from the picture, and leave the consumer to deal with, in most cases, a motor carrier who has failed to register with FMCSA. AMSA believes that a significant network of unscrupulous HHG brokers and HHG motor carriers is functioning with the sole purpose of bilking the moving public by demanding charges that bear no relation to the legitimate costs of moving, or by collecting charges for services that are not performed.

AMSA provided ten additional examples of complaints it has received to illustrate the nature of the problems being experienced by the moving public. The examples generally involve circumstances similar to the Florida example discussed in the previous paragraph.

AMSA wants us to amend our regulations to:

• Specifically name and include HHG brokers in 49 CFR part 371, Brokers of Property;

• Require an HHG broker to identify itself as a broker and provide its location and telephone number;

• Add a requirement for HHG brokers to provide consumers with 49 CFR part 375, Appendix A, the pamphlet “Your Rights and Responsibilities When You Move;”

• Add a requirement that an HHG broker must only use FMCSA-registered HHG motor carriers (those with a U.S. DOT identification number, insurance on file with us, and registered to transport HHG in interstate or foreign commerce);

• Add a requirement for full written disclosure concerning estimates in advance of the move;

• Add a requirement that the broker will refund consumer deposits if the consumer cancels the shipment;

• Add a requirement to advise the consumer about the existence of the HHG broker's surety bond/trust fund; and

• Add a requirement to report illegal operations of HHG carriers to us.

AMSA's concerns include lack of public awareness and advertising practices of unscrupulous HHG brokers. AMSA argues that its suggested regulations would:

• Fill an existing regulatory gap; and

• Ensure that HHG brokers do not use the Internet as a device to avoid regulation.

AMSA suggests that we consider a regulatory solution applying only to brokers of HHG. It explains that the primary concept underlying its regulatory solution is disclosure. Its regulatory alternative would apply regardless of the medium through which services are advertised and would therefore ensure that the Internet is not used as a device to avoid regulation.

AMSA suggests we consider adding paragraphs (e) and (f), defining “household goods broker” and “individual shipper.” AMSA said it designed its definitions to mirror the definitions of “household goods” and “brokers” contained in the statute, and the definition of “shipper” contained in the consumer protection regulations under 49 CFR part 375 applicable to HHG motor carriers. AMSA suggests we consider amending paragraph (c) to include the transportation of HHG within the definition of brokerage service.

AMSA suggests we consider adding a new § 371.14 applicable only to HHG brokers.

Suggested paragraph (a) would subject HHG brokers to both the existing and the new regulations.

Suggested paragraph (b) would require the HHG broker to identify whether it has HHG broker or HHG motor carrier authority, and reveal its location and telephone number so that customers can communicate with a person. AMSA states it designed this paragraph to remove the cloak of anonymity.

Suggested paragraph (c) would require HHG brokers to use only FMCSA-registered HHG motor carriers in an effort to eliminate or reduce the use of unauthorized carriers. AMSA believes this will help ensure that the HHG motor carrier performing service has insurance, offers arbitration, is a responsible entity in the event of a dispute, and otherwise is held to the requirements of the consumer protection regulations under 49 CFR part 375.

Suggested paragraph (d) would require HHG brokers to provide the pamphlet, “Your Rights and Responsibilities When You Move” to shippers, explain HHG motor carrier liability for loss and damage, and advise consumers of the availability of arbitration.

AMSA believes it is appropriate that the broker provide this information when first contacted by the consumer. AMSA argues our regulations presently require HHG motor carriers to furnish this information, but often times HHG motor carriers do not provide it. The overlapping requirement would serve to provide a safety net for consumers to ensure that they receive this important information.

Suggested paragraphs (e), (f), (g) and (h) would require full written disclosure in advance regarding shipment charges. A persistent source of disputes among HHG motor carriers, brokers, and shippers involves estimates of shipment charges. AMSA states some estimates are simply inaccurate, while others are deliberately deceptive. AMSA believes this is often the case with Internet quotes given solely on the basis of a customer's oral or electronic description of the goods to be transported without an actual physical shipment survey. AMSA also believes disputes arise when brokers do not inform individual shippers the estimate is not binding, and the actual weight of the shipment determines the charges or the estimate does not cover unanticipated services at delivery. AMSA states the customer is often simply given an oral quotation that HHG motor carriers subsequently disavow.

AMSA believes requiring full written disclosure in advance of the move could prevent many disputes. If brokers disclose at the outset of the transaction all of the factors that could affect the HHG motor carrier's charges, customers are less likely to claim surprise or that they are the subject of a bait and switch maneuver. Alternatively, AMSA believes that if the broker does not disclose to the customer that actual charges may differ from the quote, and the reasons why, the HHG motor carrier should not be authorized to collect a higher amount.

Suggested paragraph (i) would require full disclosure of the terms governing deposits and forfeiture requirements before payment of a deposit. A frequent complaint AMSA hears from consumers involves deposits required to secure broker service. Presently, AMSA states, there is no prohibition against requiring a deposit. Inasmuch as an Internet customer can disappear as readily as an unscrupulous broker, AMSA believes it may be prudent to permit a deposit from a customer to secure the transportation service. By the same token, AMSA states if the customer cancels the request for service before the move, the deposit could be returned in varying amounts, depending upon how close or far in advance the customer provides notice of cancellation. In any case, AMSA believes brokers should disclose the terms governing deposits and forfeitures before a deposit can be demanded.

Suggested paragraph (j) would require the HHG broker to advise the consumer/shipper about the existence of its surety bond or trust fund agreement. Due to the nature of the broker's business, AMSA believes unscrupulous brokers are able to “close shop” and disappear, leaving shippers and HHG motor carriers without any recourse. Accordingly, we require brokers to have a bond or trust agreement as a protective measure for shippers and carriers in such an event. See Property Broker Security For Protection of Public , 4 I.C.C. 2nd 358 (1988). The AMSA suggested regulation would require HHG brokers to disclose the existence of the bond or trust agreement, so the consumer is aware there is the potential for recourse.

Suggested paragraph (k) would require HHG brokers to identify and disclose to individual shippers AMSA's suggested regulations. AMSA states many consumers are unaware of their rights and the responsibilities of service providers prescribed by us. AMSA believes this requirement would serve to make consumers aware of these rights and responsibilities.

Suggested paragraph (l) would require HHG brokers to report violations of regulations by HHG motor carriers to us. AMSA believes this would enhance enforcement of our regulations. Some consumers, subjected to unlawful practices by HHG motor carriers failing to comply with, or who violate existing HHG regulations under 49 CFR part 375, do not know where or to whom such violations should be reported. Since brokers are typically the only independent point of contact a consumer may have with the service provider, AMSA believes it is appropriate to require the broker to report violations to us in an effort to improve the remedies available to consumers.

Suggested paragraph (m) would prohibit misleading and deceptive trade practices. Before the ICC revised the regulations in 1980, the broker regulations imposed an affirmative duty on brokers to fairly protect the interests of their shipper customers and prohibited misrepresentations and false promises. Former 49 CFR 1045.10 (1978). Given the practices AMSA described in its petition and the Congressional directive to protect shippers in 49 U.S.C. 13904, Registration of Brokers, AMSA suggests reviving the former prohibition against misleading and deceptive practices.

Further AMSA discussion and the text of its suggested regulations are contained in its petition, which is publicly available in docket FMCSA-2004-17008.

On December 11, 2003, we granted the AMSA petition and initiated this ANPRM to help determine whether the public, HHG brokers, motor carriers, and freight forwarders, as well as Federal and State regulatory agencies, believe there is sufficient need to amend 49 CFR part 371, as AMSA requested.

We request public comments regarding the need for any further regulatory changes, requirements, or non-regulatory alternatives specifically for HHG brokers. We would also like specific comments on what effects such regulatory or non-regulatory alternatives may have in deterring illegal HHG broker and motor carrier activities.

We request information on the economic structure of the property broker entities which would be subject to potential actions we might consider and may initiate in a subsequent regulatory action, and the effect that such potential actions may have on small property brokers. We also ask whether current surety bond or trust fund requirements are sufficient to ensure a minimum level of financial responsibility.

Sanctions and penalties for HHG brokers are addressed in 49 U.S.C. chapter 149—Civil and Criminal Penalties (sections 14901 through 14914), and 49 CFR part 386—Rules of Practice for Motor Carrier, Broker, Freight Forwarder, and Hazardous Materials Proceedings. Paragraph (c) of 49 U.S.C. 14901 requires that when we are determining and negotiating the amount of a civil penalty concerning the transportation of HHG, we are to take into account the degree of culpability, any history of such prior conduct, the degree of harm to shippers, ability to pay, the effect on ability to do business, whether the shipper has been adequately compensated before institution of the proceeding, and such other matters as fairness may require.

Section 14901(d) requires a motor carrier or freight forwarder of household goods, or their receiver or trustee, that does not comply with any regulation relating to the protection of individual shippers, to be liable for a minimum penalty of $1,100 per violation. 2 No comparable sanction or penalty relating to the protection of individual shippers, however, exists currently in 49 U.S.C. Chapter 149 for brokers or HHG brokers.

We seek comment on the enforcement strategies we should consider for any potential actions we may initiate in response to this ANPRM. We also seek comment on the range of appropriate sanctions or penalties we should consider for HHG brokers, alternative remedial actions we may consider, and whether we should seek Congressional action to extend 49 U.S.C. 14901(d) to property brokers, including HHG brokers.

We have determined this ANPRM is a significant regulatory action within the meaning of Executive Order 12866 and the Department of Transportation regulatory policies and procedures (44 FR 11034, February 26, 1979). We are considering setting up a new regulatory program for HHG brokers engaged in interstate and foreign commerce that could have an affect on other governments, particularly States. However, we are not yet in a position to analyze fully any potential actions we may initiate in response to this ANPRM, as there is some uncertainty as to the size of the specific HHG broker population that we may affect, given that the agency has not developed any specific set of alternatives.

There are approximately 535 active HHG brokers currently registered in the FMCSA Licensing and Insurance (L&I) database http://li-public.fmcsa.dot.gov/ . There are also 1,087 HHG brokers included in the L&I database that are listed either as inactive ( i.e. , they have allowed their authority to lapse) or had their applications dismissed by FMCSA for some reason. It is unclear whether some portion of these 1,087 inactive or dismissed HHG brokers may still be operating illegally in some capacity within the HHG broker industry, and would thus be affected by any potential actions we may initiate in response to this ANPRM. Additionally, we believe it is also logical to assume that there may be some HHG brokers operating illegally who have never registered with FMCSA. They of course would also be affected by any potential actions we may initiate. As the AMSA petition notes, there are “no fewer than several hundred websites offering to perform, arrange, or manage moving services in one form or another on behalf of consumers,” and presumably some portion of these entities have never registered with FMCSA and would therefore not appear in the above estimates of active and inactive/dismissed HHG brokers engaged in interstate or foreign commerce. Regardless, our initial research indicates that the population of HHG brokers potentially affected by any actions we may initiate is most likely less than 2,000 entities. However, to be sure, we are asking for comments from the public on our initial HHG broker population estimate as part of this ANPRM.

FMCSA receives approximately 4,000 to 6,000 HHG consumer complaints annually. We receive approximately 50 complaints that would be classified as hostage loads per week. While these estimates include complaints against HHG motor carriers, the FMCSA Offices of Communications and Household Goods Enforcement believe the majority of these consumer complaints are related to HHG brokers.

With regard to the economic impact on the HHG broker population, we do not anticipate that any potential action we may initiate would have a significant impact on the industry for two reasons. First, as noted above, we believe the total number of entities potentially affected is probably low. Secondly, while we have yet to recommend any specific sets of alternatives (without which we cannot conduct an economic evaluation), most appear to have a modest economic impact, in that they require greater disclosure to consumers or strengthen the opportunities for redress by the consumer. For instance, the AMSA petition recommends regulatory amendments to:

• Specifically name and include HHG brokers in 49 CFR part 371;

• Require an HHG broker to identify itself as an HHG broker, provide its location, and telephone number;

• Require an HHG broker to provide consumers shipping HHG with 49 CFR part 375, Appendix A, the pamphlet “Your Rights and Responsibilities When You Move;”

• Require an HHG broker to disclose estimates fully in writing in advance of an interstate or foreign HHG shipment;

• Require an HHG broker to refund consumer deposits, if the consumer cancels the interstate or foreign HHG shipment;

• Require an HHG broker to advise the consumer about the existence of the HHG broker's surety bond/trust fund agreement; and

• Require an HHG broker to report illegal operations of HHG motor carriers to FMCSA.

However, because of the uncertainties noted above, we seek specific comment on the costs and benefits to the public and the impact potential alternatives would create on State governments and others.

Before initiating an analysis, we must first determine whether there exists a significant failure or failings by HHG brokers to deal fairly and equitably with consumers. In particular, our analysis must distinguish actual failures from potential failures that can be resolved by non-regulatory means. If we find a significant failure by HHG brokers to deal fairly and equitably with consumers, our analysis must show how various alternatives will address the specified failures.

Even if comments in this proceeding confirm the HHG broker activities alleged in AMSA's petition, there may be no need for our regulatory intervention, if other means of addressing the HHG broker industry would adequately resolve the problem. We would like to know whether we should consider legislative measures that use economic incentives, such as changes in surety and trust fund provisions.

Another important factor to consider in assessing the appropriateness of a Federal regulation is whether State or local regulation of HHG brokers may be an option. In this case, AMSA has stated Florida-based brokers are its largest problem. Where our regulations appear appropriate, our analysis will need to attempt to determine whether the burdens on interstate and foreign commerce arising from different State and local regulations, including the compliance costs imposed on national and international firms, are greater than the potential advantages of uniform application.

We seek comments on these issues for our analysis of a possible notice of proposed rulemaking.

The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by the Small Business Regulatory Enforcement and Fairness Act (Pub. L. 104-121), (RFA) requires Federal agencies to analyze the impact of regulatory alternatives on small entities, unless we certify that a regulatory alternative will not have a significant economic impact on a substantial number of small entities, and to consider non-regulatory alternatives that could achieve our goal while minimizing the burden on small entities.

We are not yet in a position to analyze fully any potential actions we may initiate in response to this ANPRM. We need specific information about which industry classification designation is appropriate for property brokers under the Office of Management and Budget's (OMB) North American Industry Classification System (NAICS) 3 for the United States. We use the NAICS to analyze small entity impacts in accordance with the RFA. Some of the questions at the end of this ANPRM relate directly to the RFA and our need for NAICS information to assist us in properly analyzing small property broker entity impacts.

We believe property brokers of HHG would classify and identify themselves generally under the NAICS code 488510 Freight Transportation Arrangement. The OMB description for 488510 is “Shipping agents, Customs brokers, Freight forwarding, Marine shipping agency, Shipping agents (freight forwarding)” as seen at: http://www.census.gov/epcd/naics02/naicod02.htm and http://www.census.gov/epcd/naics02/def/NDEF488.HTM#N4885 . We request HHG brokers provide information on the NAICS code they believe best fits their operation.

The Statistics of U.S. Business (SUSB) for 2001 estimates that 11,716 firms engage primarily in freight transportation arrangement. See “Freight transportation arrangement NAICS 4885” on page 14 of “Employer Firms, and Employment by Employment Size of Firm by NAICS Codes, 2001” at: http://www.sba.gov/advo/stats/us_01_n6.pdf . The U.S. Census Bureau provides the SUSB with data on employer firm size by NAICS code to the Small Business Administration. See http://www.sba.gov/advo/stats/data.html . As we stated above, we believe HHG brokers would classify themselves as freight transportation arrangers, though we are asking for comment on this assumption.

One challenge facing us is identifying HHG brokers that should be registered with us, but are not. Another challenge is estimating the benefits to consumers from potential alternatives we might consider in response to this ANPRM. Although our Offices of Communications and Household Goods Enforcement believe a majority of our consumer complaints are related to HHG brokers, our HHG complaint database has very limited information on the exact nature of complaints received. Thus, it is difficult to determine what percentage of complaints, including complaints that are filed with our state divisions, could be averted by potential actions we may initiate.

We request comments from the public on how potential alternatives may impact HHG brokers. This information would represent a major input to estimating the costs of any potential alternatives. We also specifically request comments on the benefits of potential alternatives to prevent harm to those consumers who might otherwise suffer negative economic or other consequences, absent such alternative solutions. In addition, we ask entities and associations of small entities to identify their gross revenues.

We are not yet in a position to analyze fully any potential actions in accordance with the principles and criteria contained in Executive Order 13132, dated August 4, 1999 (64 FR 43255, August 10, 1999). As we have said earlier in this ANPRM, we and our predecessor agencies have regulated the brokering, arranging, and forwarding of property in interstate or foreign commerce, including the transportation of HHG, since 1949. We believe these issues are national in scope. Congress transferred the property broker regulations to DOT in the ICCTA. Title 49 U.S.C. 13904 confers authority on the Secretary of Transportation to register brokers and “provide for the protection of shippers by motor vehicle.” The Secretary subsequently delegated this authority to FMCSA under 49 CFR 1.73(a)(5).

The primary federalism issue is whether 49 U.S.C. 13904 preempts State and local attempts to regulate the business practices of interstate HHG brokers. Although 49 U.S.C. 14501(b)(1) prohibits a State, a political subdivision of a State, an intrastate agency, or other political agency of two or more States to enact or enforce any law, rule, regulation, standard, or other provision having the force and effect of law relating to intrastate rates, routes, or services of a broker, there is no express preemption regarding interstate broker operations.

The Carmack Amendment (June 29, 1906, ch. 3591, § 7 (pars. 11, 12), 34 Stat. 595) to the Interstate Commerce Act (Feb. 4, 1887, ch. 104, 24 Stat. 379) as amended, codified at 49 U.S.C. 14706, imposes a uniform system of motor carrier and freight forwarder liability for interstate and foreign shipments of property. Congress designed Carmack to eliminate uncertainty resulting from potentially conflicting State laws. Federal and State courts have consistently held that Carmack preempts a broad range of State consumer protection laws potentially applicable to HHG motor carriers and freight forwarders engaged in interstate or foreign commerce.

The Carmack Amendment by its terms applies to “carriers,” “motor carriers,” and “freight forwarders.” Therefore, we do not believe Carmack would apply to typical broker operations, especially since brokers seldom take possession of property. We invite comment regarding whether potential actions we may initiate in response to this ANPRM would preempt many, if not all, State regulations that directly, or indirectly regulate the brokerage of transportation of HHG subject to Federal jurisdiction.

We specifically request comment from State and local officials on any federalism issues. In particular, we request comment on whether we should seek legislative changes to allow States to assist FMCSA in enforcing regulations applicable to HHG brokers engaged in interstate or foreign commerce.

Because AMSA has reported the most problems with brokers allegedly doing business in Florida, we would specifically like to hear from State officials in Florida, including the Florida Attorney General.

The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4; 2 U.S.C. 1532) requires each agency to assess the effects of its regulatory actions on State, local, and tribal governments and the private sector. Any agency promulgating a final rule likely to result in a Federal mandate requiring expenditures by a State, local, or tribal government, or by the private sector of $100 million or more (adjusted for inflation) in any one year, must prepare a written statement incorporating various assessments, estimates, and descriptions that are delineated in the Act. We are not yet in a position to analyze fully any potential actions we may initiate and that may meet the requirements of the Unfunded Mandates Reform Act. We seek specific comments whether such impacts are likely for any regulatory or non-regulatory alternatives we might consider in our deliberations.

Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), a Federal agency must obtain approval from OMB for each collection of information it conducts, sponsors, or requires through regulations.

As referenced above, part 371 requires a broker to keep a record of each transaction and to retain the records for a period of three years. Each party to a brokered transaction has the right to review the record of the transaction applicable to them. Brokers may keep master lists of consignors and the address and registration number of the motor carrier, rather than repeating this information for each transaction. Under section 371.3, each transaction record must show:

(1) The name and address of the consignor;

(2) The name, address, and registration number of the originating motor carrier;

(3) The bill of lading or freight bill number;

(4) The amount of compensation received by the broker for the brokerage service performed and the name of the payer;

(5) A description of any non-brokerage service performed in connection with each shipment or other activity, the amount of compensation received for the service, and the name of the payer; and

(6) The amount of any freight charges collected by the broker and the date of payment to the motor carrier.

Each broker who engages in any other business, must maintain accounts so that the revenues and expenses relating to the brokerage portion of its business are segregated from its other activities. Expenses that are common must be allocated on an equitable basis; however, the broker must be prepared to explain the basis for the allocation.

The AMSA suggested alternative would also require an HHG broker to:

(1) Identify itself, the capacity in which it holds itself out, and reveal its location and telephone number;

(2) Use only FMCSA-registered motor carriers for HHG movements placed in interstate or foreign commerce;

(3) Provide to shippers the pamphlet “Your Rights and Responsibilities When You Move;'

(4) Explain motor carrier liability for loss and damage;

(5) Advise of the availability of arbitration;

(6) Require full written disclosure in advance regarding shipment charges;

(7) Require full disclosure of the terms governing deposits and forfeiture requirements before payment of a deposit;

(8) Advise the consumer about the existence of its surety bond or trust fund agreement;

(9) Direct the consumer to appropriate rights and responsibility assistance; and

(10) Report violations of regulations by HHG motor carriers to us.

We are not yet in a position to analyze fully any potential action we may initiate that may fall within the scope of the Paperwork Reduction Act. If we initiate a potential regulatory alternative in the future incorporating these or other relevant provisions, we would seek approval of any collection of information requirements to generate, maintain, retain, disclose, and provide information to, or for, the agency under 49 CFR part 371. The information collected would assist individual HHG consumers and HHG motor carriers in their commercial dealings with HHG brokers. The collection of information would be used by prospective HHG consumers to make informed decisions about contracts and services to be ordered, executed, and settled within the HHG motor carrier industry.

When the ICCTA transferred the current regulations to DOT, OMB assigned no control number to cover the information collection transfer of the six items in section 371.3. We seek specific comments from property brokers and HHG brokers concerning what information collection burdens they currently experience to comply with part 371, and what burdens they would anticipate under AMSA's suggested alternative and other alternatives we might consider for a possible subsequent regulatory action.

We are not yet in a position to analyze fully any potential actions under the requirements of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ) and our environmental procedures Order 5610.1 (issued on March 1, 2004, 69 FR 9680). We believe potential actions we may initiate in response to this ANPRM may be categorically excluded (CE) from further environmental documentation under Appendix 2 6.k. of Order 5610.1, which contains a categorical exclusion for regulations for all brokers of transportation by motor vehicle. In addition, we believe potential actions we may initiate would not involve extraordinary circumstances that would affect the quality of the environment.

We are not yet in a position to analyze fully any potential actions under the requirements of the Clean Air Act, as amended (CAA) section 176(c), (42 U.S.C. 7401 et seq. ) and implementing regulations promulgated by the Environmental Protection Agency. We believe potential actions we may initiate would be exempt from the CAA's general conformity requirement since they would involve policy development and civil enforcement activities, such as investigations, inspections, examinations, and the training of law enforcement personnel. See 40 CFR 93.153(c)(2). We anticipate potential actions we may initiate in response to this ANPRM would not result in any emissions increase or result in emissions that are above the general conformity rule's de minimis emission threshold levels because the AMSA suggested alternative or other potential actions would merely establish standards for arrangements between HHG brokers and shippers.

We seek comment on the effect on the environment of the AMSA suggested alternative and other potential action alternatives.

We are not yet in a position to analyze fully any potential actions that may constitute a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. We seek comment on whether potential actions we may initiate in response to this ANPRM would constitute a taking of private property or otherwise have implications under Executive Order 12630.

We are not yet in a position to analyze fully any potential actions that may require intergovernmental consultation on Federal programs and activities under Executive Order 12372, as amended. We seek comment on whether potential actions we may initiate in response to this ANPRM would require any intergovernmental consultation on Federal programs and activities under Executive Order 12372, as amended.

We are not yet in a position to analyze fully any potential actions that may affect energy supply, distribution, or use under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We seek comment on whether potential actions we may initiate in response to this ANPRM would affect any regulatory or non-regulatory alternatives that may significantly affect energy supply, distribution, or use.

We are not yet in a position to analyze fully any potential actions that may meet applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. We seek comment on whether potential actions we may initiate in response to this ANPRM would meet the standards in Executive Order 12988.

We would like the public to answer the following questions:

1. Is the statement/description of the problem accurate? Please explain.

2. What non-regulatory actions could address the problem?

3. What State or local actions could address the problem without our Federal regulatory action?

4. Is the problem of shipper abuse by HHG brokers serious enough to expedite the rulemaking process in some way? Please explain.

5. Are there other consumer protection models being utilized by other Federal or State agencies that we should study and/or emulate? Please explain.

6(a). How many entities in the United States sell, offer for sale, negotiate for, or hold themselves out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, HHG transportation by motor carrier in interstate or foreign commerce for compensation, and are not an HHG motor carrier or HHG freight forwarder?

6(b). How many entities outside the United States sell, offer for sale, negotiate for, or hold themselves out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, HHG transportation by motor carrier in the United States in interstate or foreign commerce for compensation, and are not an HHG motor carrier or HHG freight forwarder?

7. If you are a property broker of HHG, under what North American Industry Classification System code at http://www.census.gov/epcd/naics02/naicod02.htm would you classify yourself?

8. If you are a property broker of HHG, what was your gross revenue for your most recent fiscal year?

9. If you are a property broker, what are your current time and dollar burdens to generate, maintain, retain, disclose, and provide information to us or the public:

9(a). For each record of every transaction?

9(b). For each record for a period of three years?

9(c). To review each record of each transaction applicable to the parties of each transaction?

9(d). About your HHG broker operation advertising?

9(e). About how you maintain your accounts so that the public may see the revenues and expenses relating to the brokerage portion of your business are segregated from your other activities?

9(f). For allocating your expenses that are common on an equitable basis?

10. If you are a property broker, do you keep master lists of consignors and the address and registration number of the motor carriers, rather than repeating this information for each transaction?

11. If you are a property broker of HHG, what do you estimate your anticipated time and dollar burdens would be to generate, maintain, retain, and provide:

11(a). Full written disclosure in advance regarding your shipment charges?

11(b). Full disclosure of your terms governing deposits and forfeiture requirements before you demand payment of a deposit?

11(c). Information advising consumers about existence of your surety bond or trust fund agreement?

11(d). Information directly to consumers about their appropriate rights and responsibility assistance as requested by AMSA?

11(e). Information to us about violations of our regulations by HHG motor carriers, as requested by AMSA?

11(f). Information to us and the public to ensure you, your employees, and your agents do not provide misleading or deceptive information?

12. Does 49 U.S.C. 13904 preempt States from enforcing consumer protection laws potentially applicable to property brokers?

13. Have current interpretations of the Carmack Amendment frustrated the ability of States to use their consumer protection statutes in cases of HHG broker abuse? If so, will the AMSA suggested alternative or would a different alternative be helpful to your State? Is something else needed?

14. What role, if any, may State or local enforcement agencies and attorneys general provide in helping enforce potential action alternatives?

15. Do you believe only FMCSA should enforce regulations or other alternatives on HHG brokers?

16. Do you believe States and local government agencies should be involved in enforcing regulations or other alternatives on HHG brokers?

17. Should HHG brokers be required to provide consumers with the 49 CFR part 375, Appendix A, “Your Rights and Responsibilities When You Move” pamphlet?

18. Should HHG brokers be required to provide refunds of consumer deposits if the consumer cancels the shipment? Why or why not?

19. Should HHG brokers advise the consumer about the existence of the HHG broker's surety bond or trust fund? Please explain.

20. Should HHG brokers be required to report to us illegal operations of HHG motor carriers? Please explain.

21. What are the economic issues and impacts of the AMSA suggested alternative and other alternatives that we should evaluate?

22. What are the small entity economic issues and impacts of the AMSA suggested alternative and other alternatives that we should evaluate?

23. What are the potential unfunded mandates that may be involved in the AMSA suggested alternative and other alternatives?

24. What are the potential effects of the AMSA suggested alternative and other alternatives on the quality of the environment that we should consider in any potential NEPA analysis?

25. Would the AMSA suggested alternative and other alternatives constitute a taking of private property or otherwise have taking implications under Executive Order 12630? Please explain.

26. Would the AMSA suggested alternative and other alternatives require any intergovernmental consultations on other Federal programs and activities under Executive Order 12372? Please explain.

27. Would the AMSA suggested alternative and other alternatives affect any actions that significantly affect energy supply, distribution, or use under Executive Order 13211? Please explain.

28. Should HHG brokers be subject to more stringent surety bond/trust fund requirements than apply to brokers of general freight? If so:

28(a). Should the surety bond/trust fund requirements be increased?

28(b). What should the surety bond/trust fund requirement amount be to deter sufficiently non-compliant behavior and protect the public? What would be the impact of this requirement on small businesses?

29. Should HHG brokers be required to enter into specific contractual agreements for all motor carriers for which they provide estimates? Please explain.

30. The current § 375.409 places the responsibility of complying with the estimating requirements on the HHG motor carrier. Should the same responsibility be placed upon the HHG broker? Please explain.

31. How will the AMSA suggested alternative and other alternatives affect HHG motor carriers?

31(a). What additional paperwork burdens could reasonably be seen?

31(b). How important are HHG brokers and freight forwarders to HHG motor carrier business operations?

32(a). Are there any HHG freight forwarder problems similar to the problems reported by AMSA concerning HHG brokers?

32(b). Should a potential action FMCSA may initiate consider regulatory requirements for HHG freight forwarder operations?

33. How and to what extent should we protect HHG motor carriers from unscrupulous HHG broker activities?

34. Given the current e-business environment, what enforcement strategies should we use to protect HHG shippers from unscrupulous HHG broker activities?

35. What should be the range of appropriate sanctions or penalties for violating potential actions FMCSA may initiate?

36. Paragraph (d) of 49 U.S.C. 14901 requires a motor carrier or freight forwarder of household goods, or their receiver or trustee, that does not comply with any regulation relating to the protection of individual shippers, to be liable for a minimum penalty of $1,100 per violation, as adjusted for inflation. Should we seek Congressional action to extend applicability of 49 U.S.C. 14901(d) to HHG brokers? Why or why not?

A list of references cited in this notice is available via the Internet at http://www.nwr.noaa.gov . Additional information, including agency reports and written comments, is also available at this Internet address.

On May 2, 2001, we received a petition from the Center for Biological Diversity and 11 co-petitioners (CBD, 2001) to list Southern Resident killer whales as threatened or endangered under the ESA. On August 13, 2001, we provided notice of our determination that the petition presented substantial information that a listing may be warranted and requested information to assist with a status review to determine if Southern Resident killer whales warranted listing under the ESA (66 FR 42499). To assist in the status review, we formed a Biological Review Team (BRT) of scientists from our Alaska, Northwest, and Southwest Fisheries Science Centers. We convened a meeting on September 26, 2001, to gather technical information from co-managers, scientists, and individuals having research or management expertise pertaining to killer whale stocks in the North Pacific Ocean. Additionally, the BRT discussed its preliminary scientific findings with Tribal, State and Canadian co-managers on March 25, 2002. The BRT considered information from the petition, the September and March meetings, and comments submitted in response to our information request to prepare a final scientific document on Southern Resident killer whales (NMFS, 2002).

After conducting the status review, we determined that listing Southern Resident killer whales as a threatened or endangered species was not warranted because Southern Resident killer whales did not constitute a species as defined by the ESA. The population was considered in the context of the global taxon (i.e., all killer whales worldwide) and we found that Southern Resident killer whales did not meet the significance criteria for consideration as a DPS. The finding, along with supporting documentation, was published on July 1, 2002 (67 FR 44133). The 2002 status review and other documents supporting the “not warranted” finding are available on the Internet (see Electronic Access). Because of the uncertainties regarding killer whale taxonomy (i.e., whether the killer whale should be considered as one species or as multiple species and/or subspecies), we announced that it would reconsider the taxonomy of killer whales within 4 years.

The scientific information evaluated during the ESA status review indicated that Southern Resident killer whales may be depleted under the Marine Mammal Protection Act (MMPA). We initiated consultation with the Marine Mammal Commission (Commission) in a letter dated June 25, 2002, and published an advance notice of proposed rulemaking (ANPR) on July 1, 2002 (67 FR 44132), to request pertinent information regarding the status of the stock and potential conservation measures that may benefit these whales. After considering comments received in response to the ANPR and from the Commission, we published a proposed rule to designate the Southern Resident stock of killer whales as depleted (68 FR 4747; January 30, 2003) and solicited comments on the proposal. Based on the best scientific information available, consultation with the Commission, and consideration of public comment, we determined that the Southern Resident stock of killer whales was depleted under the MMPA (68 FR 31980; May 29, 2003) and announced our intention to prepare a Conservation Plan.

On December 18, 2002, the Center for Biological Diversity (and other plaintiffs) challenged our “not warranted” finding under the ESA in U.S. District Court. The U.S. District Court for the Western District of Washington issued an order on December 17, 2003, which set aside our “not warranted” finding and remanded the matter to us for redetermination of whether the Southern Resident killer whales should be listed under the ESA ( Center for Biological Diversity, et al., v. Robert Lohn, et al. , 296 F. Supp. 2d. 1223 W.D. Wash. 2003). The court order held that “[w]hen the best available science indicates that the 'standard taxonomic distinctions' are wrong . . . NMFS must rely on the best available science.”

Although we announced in 2002 that the status of killer whales would be revisited in 4 years, the schedule for reevaluating Southern Resident killer whales was expedited as a result of the court's order. We reconvened a BRT in 2004 to consider new scientific and commercial data available since 2002 and update the status review for Southern Residents in accordance with that order. We announced the status review update and requested that interested parties submit pertinent information to assist us with the update (69 FR 9809, March 2, 2004). In addition, we co-sponsored a Cetacean Taxonomy workshop in 2004, which included a special session on killer whales. The papers and reports from the workshop were made available to the BRT.

In August 2004, we met with Washington State and Tribal co-managers to provide information on the status review update and receive comments. These comments were evaluated by the BRT, who then prepared a final status review document for Southern Resident killer whales (NMFS, 2004).

Killer whales are one of the most strikingly pigmented of all cetaceans, making field identification easy. Killer whales are black dorsally and white ventrally, with a conspicuous white oval patch located slightly above and behind the eye. A highly variable gray or white saddle is usually present behind the dorsal fin. Saddle shape varies among individuals, pods, and from one side to the other on a single animal. Sexual dimorphism occurs in body size, flipper size, and height of the dorsal fin. More detailed information regarding this species' distribution, behavior, genetics, morphology, and physiology are contained in the BRT's status review documents (NMFS, 2002, 2004) and the Washington State Status Report for the Killer Whale (Wiles, 2004).

Killer whales are classified as top predators in the food chain and the world's most widely distributed marine mammal (Leatherwood and Dahlheim, 1978; Heyning and Dahlheim, 1988). Although observed in tropical waters and the open sea, they are most abundant in coastal habitats and high latitudes. In the northeastern Pacific Ocean, killer whales occur in the eastern Bering Sea (Braham and Dahlheim, 1982) and are frequently observed near the Aleutian Islands (Scammon, 1874; Murie, 1959; Waite et al. , 2001). They reportedly occur year-round in the waters of southeastern Alaska (Scheffer, 1967) and the intercoastal waterways of British Columbia and Washington State (Balcomb and Goebel, 1976; Bigg et al. , 1987; Osborne et al. , 1988). There are occasional reports of killer whales along the coasts of Washington, Oregon, and California (Norris and Prescott, 1961; Fiscus and Niggol, 1965; Rice, 1968; Gilmore, 1976; Black et al., 1997; NMFS, 2004), both coasts of Baja California (Dahlheim et al. , 1982), the offshore tropical Pacific (Dahlheim et al. , 1982), the Gulf of Panama, and the Galapagos Islands. In the western North Pacific, killer whales occur frequently along the Soviet coast in the Bering Sea, the Sea of Okhotsk, the Sea of Japan, and along the eastern side of Sakhalin and the Kuril Islands (Tomilin, 1957). There are numerous accounts of their occurrence off China (Wang, 1985) and Japan (Nishiwaki and Handa, 1958; Kasuya, 1971; Ohsumi, 1975). Data from the central Pacific are scarce. They have been reported off Hawaii, but do not appear to be abundant in these waters (Tomich, 1986; Caretta et al. , 2001).

The killer whale is the largest species within the family Delphinidae. Various scientific names have been assigned to the killer whale (Hershkovitz, 1966; Heyning and Dahlheim, 1988). These various names can be explained by sexual and age differences in the size of the dorsal fin, individual variations in color patterns, and the cosmopolitan distribution of the animals. The genus Orcinus is currently considered monotypic with geographical variation noted in size and pigmentation patterns. Two proposed Antarctic species, O. nanus (Mikhalev et al. , 1981) and O. glacialis (Berzin and Vladimirov, 1982; Berzin and Vladimirov, 1983), both appear to refer to the same type of smaller individuals. However, because of significant uncertainties regarding the limited specimen data, these new taxa have not been widely accepted by the scientific community. New observations of color pattern, size, habitat and feeding ecology have led to the conclusion that there are three types of killer whales in Antarctica (Pitman and Ensor, 2003). Recent genetic investigations note marked differences between some forms of killer whale (Hoelzel and Dover, 1991; Hoelzel et al. , 1998; Barrett-Lennard, 2000; Barrett-Lennard and Ellis, 2001). Killer whale taxonomy was reviewed as part of the “Workshop on Shortcomings of Cetacean Taxonomy in Relation to Needs of Conservation and Management” held on April 30 - May 2, 2004 in La Jolla, California, and the results were published in a report (Reeves et. al. , 2004).

Killer whales in the Eastern North Pacific region (which includes the petitioned whale pods) have been classified into three forms, or ecotypes, termed residents, transients, and offshore whales. Significant genetic differences occur among resident, transient, and offshore killer whales (Stevens et al. , 1989; Hoelzel and Dover, 1991; Hoelzel et al. , 1998; Barrett-Lennard, 2000; Barrett-Lennard and Ellis, 2001; Hoelzel et al. , 2002). The three forms also vary in morphology, ecology, and behavior. All of these characteristics play an important role in determining whether the monotypic species O. orca can be subdivided under the ESA.

Resident killer whales in the Eastern North Pacific are noticeably different from both the transient and offshore forms. The dorsal fin of resident whales is rounded at the tip and falcate (curved and tapering). Resident whales have a variety of saddle patch pigmentations with five different patterns recognized (Baird and Stacey, 1988). Resident whales occur in large, stable pods with membership ranging from 10 to approximately 60 whales. Their presence has been noted in the waters from California to Alaska. The primary prey of resident whales is fish. A recent summary of the differences between resident and transient forms is found in Baird (2000).

Resident killer whales in the North Pacific consist of the following groups: Southern, Northern, Southern Alaska (includes Southeast Alaska and Prince William Sound whales), western Alaska, and western North Pacific Residents.

Southern Residents: The Southern Resident killer whale assemblage contains three pods-- J pod, K pod, and L pod--and is considered a stock under the MMPA. Their range during the spring, summer, and fall includes the inland waterways of Puget Sound, Strait of Juan de Fuca, and Southern Georgia Strait. Their occurrence in the coastal waters off Oregon, Washington, Vancouver Island, and more recently off the coast of central California in the south and off the Queen Charlotte Islands to the north has been documented. Little is known about the winter movements and range of the Southern Resident stock. Southern Residents have not been seen to associate with other resident whales, and mitochondrial and nuclear genetic data suggest that Southern Residents interbreed with other killer whale populations rarely if at all (Hoelzel et al. , 1998; Barrett-Lennard, 2000; Barrett-Lennard and Ellis, 2001).

Northern Residents: The Northern Resident killer whale assemblage contains approximately 16 pods. They range from Georgia Strait (British Columbia) to Southeast Alaska (Ford et al. , 2000; Dahlheim, 1997). On occasion they have been known to occur in Haro Strait (west of San Juan Island, Washington). Although some overlap in range occurs between the Northern and Southern Residents, no intermixing of pods has been noted. However, in Southeast Alaska, Northern Resident whales are seen in close proximity to Southern Alaska Residents (Dahlheim et al. , 1997), and there may be limited gene flow between the two populations (Hoelzel et al. , 1998; Barrett-Lennard, 2000; Barrett-Lennard and Ellis, 2001).

Alaska Residents: There are two groups of Alaska Resident animals, Southern Alaska Residents and Western Alaska Residents. The resident whales of Southeast Alaska and Prince William Sound comprise the Southern Alaska Resident killer whale assemblage. At least 15 pods have been identified in these two regions. Resident killer whales photographed in Southeast Alaska travel frequently to Prince William Sound and intermix with all resident groups from this area (Dahlheim et al. , 1997; Matkin and Saulitis, 1997). Prince William Sound Resident whales have not been seen in Southeast Alaska, but have been noted off Kodiak Island intermixing with other, yet unnamed, resident pods (Dahlheim, 1997; NMFS, 2004). Vessel surveys in the southeastern Bering Sea have provided preliminary estimates of approximately 400 killer whales (Waite et al. , 2001) and preliminary counts, based on photo-identification, suggest a minimum of 800 individual resident whales inhabiting this region (NMFS, 2004).

Western North Pacific Residents: The presence of resident killer whales has been documented along the coastline of Russia (NMFS, 2004). It is likely that resident killer whales also occur along the coastline of Japan, but additional information is required to confirm this hypothesis.

Transient whales occur throughout the Eastern North Pacific with a preference towards coastal waters. Their geographical range overlaps that of the resident and offshore whales. Individual transient killer whales have been documented to move great distances reflecting a large home range (Goley and Straley, 1994). There are several differences between transient and resident killer whales; these have most recently been summarized by Baird (2000). The dorsal fin of transient whales tends to be more erect (i.e., straighter at the tip) than those of resident and offshore whales. Saddle patch pigmentation of Transient killer whales is restricted to three patterns (Baird and Stacey, 1988). Pod structure is small (e.g., fewer than 10 whales) and dynamic in nature. The primary prey of transient killer whales is other marine mammals. Transient whales are not known to intermix with resident or offshore whales. Recent genetic investigations indicate that up to three genetically different groups of transient killer whales exist in the eastern North Pacific (the “west coast” Transients, the “Gulf of Alaska Transients” and the AT1 pod) (Barrett-Lennard, 2000; Barrett-Lennard and Ellis, 2001).

Offshore killer whales are similar to resident whales, but can be distinguished (i.e., their fins appear to be more rounded at the tip with multiple nicks on the trailing edge, smaller overall size, less sexual dimorphism), but these characteristics need to be further quantified. Offshore whales have been seen in considerably larger groups (up to 200 whales) than residents or transients have. They are known to range from central coastal Mexico to Alaska and occur in both coastal and offshore waters (300 miles off Washington State). While foraging, it is assumed that the main target is fish, but observations of feeding events are extremely limited. Offshore whales are not known to intermingle with resident or transient whales. Genetic analysis suggests that offshore whales are substantially reproductively isolated from other killer whale populations (Barrett-Lennard, 2000; Hoelzel et al. , 2004).

The ESA defines a species to include “any subspecies of fish or wildlife or plants, and any distinct population segment of any species of vertebrate fish or wildlife which interbreeds when mature.” Guidance on what constitutes a DPS is provided by the joint NMFS-U.S. Fish and Wildlife Service (FWS) interagency policy on vertebrate populations (61 FR 4722; February 7, 1996). To be considered a DPS, a population, or group of populations, must be “discrete” from other populations and “significant” to the taxon (species or subspecies) to which it belongs. A population segment of a vertebrate species may be considered discrete if:

(1) It is markedly separated from other populations of the same taxon as a consequence of physical, physiological, ecological or behavioral factors. Quantitative measures of genetic or morphological discontinuity may also provide evidence of this separation; or

(2) It is delimited by international governmental boundaries within which differences in control of exploitation, management of habitat, conservation status, or regulatory mechanisms exist that are significant in light of section 4(a)(1)(D) of the ESA.

If a population segment is considered discrete, we must then consider whether the discrete segment is “significant” to the taxon to which it belongs. Criteria that can be used to determine whether the discrete segment is significant include:

(1) Persistence of the discrete population segment in an ecological setting unusual or unique for the taxon;

(2) Evidence that loss of the discrete population segment would result in a significant gap in the range of the taxon;

(3) Evidence that the discrete population segment represents the only surviving natural occurrence of a taxon that may be more abundant elsewhere as an introduced population outside its historic range; and

(4) Evidence that the discrete population segment differs markedly from other populations of the species in its genetic characteristics.

A population segment needs to satisfy only one of these criteria to be considered significant. Furthermore, the list of criteria is not exhaustive; other criteria may be used, as appropriate.

Correctly identifying the killer whale taxon is critical because the criteria used to evaluate “significance” of a DPS are defined relative to the larger taxon to which it belongs. Uncertainty about the taxonomic status of killer whales posed a problem for the 2002 BRT. In particular, it noted that the current designation of one global species for killer whales was likely inaccurate because there was increasing evidence to suggest that additional species or subspecies of killer whales probably exist. The previous prevailing concept of a single species has recently evolved into a diversity of views that include the possibility of multiple species. Recent new observations and data on morphology and genetics of both the Antarctic and North Pacific killer whales have re-opened the question, and two divergent bodies of expert opinion have emerged. At the 2004 Cetacean Taxonomy workshop, experts prepared cases for two taxonomic scenarios. Under one line of reasoning, killer whales are a single highly variable species, with locally differentiated forms, or ecotypes, representing recently evolved and relatively ephemeral forms not deserving species status. According to the opposing body of opinion, congruence of several lines of evidence for the distinctness of sympatrically (i.e., same place, same time) occurring forms support multiple species.

In the North Pacific, the seasonally sympatric resident and transient killer whale forms show consistent differences in mitochondrial and nuclear genetic markers, coloration, acoustic calls, and foraging habits. The majority of experts participating in the killer whale working group at the Cetacean Taxonomy workshop believed that the resident and transient ecotypes in the North Pacific might be distinct species or subspecies.

The 2004 BRT reviewed new information and the competing lines of evidence cited during the Cetacean Taxonomy workshop and considered whether killer whales are a single species or multiple species. After discussion of this information, the BRT reached consensus that, although multiple species may exist and may be confirmed in the future, the present data do not adequately support recognition of any new species. In particular, the BRT concluded that, provisionally, North Pacific transients and residents should be considered as belonging to a single species.

The 2004 BRT next considered the question of whether North Pacific residents, transients and offshore whales likely belong to different subspecies, although current standard taxonomic classification does not include any named subspecies. A number of differences between residents and transients have been suggested to support subspecific separation between the two groups: (1) Residents and transients differ on average in external morphology, including dorsal-fin size and shape, saddle-patch shape, and pigmentation; (2) differences between the two ecotypes have been found in skull features, although the sample size is still small and uncontrolled for age and sex; (3) residents and transients are sympatric in the summer range, but no intermingling or interbreeding has ever been observed; (4) the two groups have markedly different feeding specializations and social organization; (5) the two ecotypes exhibit markedly different acoustic dialects and acoustic practices that may relate to differences in feeding ecology; (6) the two forms are genetically divergent at both mitochondrial DNA (mtDNA) and nuclear DNA markers, and the average level of divergence between the residents and transients is higher than the average level of divergence within populations of either group; and (7) residents and transients fall into two different global mtDNA clades. The BRT concluded that Southern Residents likely belong to a subspecies separate from that of transients.

The 2004 BRT agreed that if the Southern Residents belong to a subspecies separate from that of the transients, the subspecies would include the Southern Residents and the Northern Residents, as well as the resident killer whales of Southeast Alaska, Prince William Sound, Kodiak Island, the Bering Sea and Russia. In short, the subspecies would include all of the resident, fish-eating killer whales of the North Pacific. The rationale for this decision was that all of these groups are apparently fish-eating specialists, occupy relatively similar habitats, and appear to be genetically more closely related to each other than to sympatric transient populations. After considering the arguments for existence of subspecies and the conclusions of the Cetacean Taxonomy workshop, the BRT concluded that the taxon to use for determining a DPS under the ESA should be the North Pacific residents, an unnamed subspecies of O. orca . After considering whether the North Pacific offshore or eastern Tropical Pacific killer whales belonged to the same taxon as the North Pacific residents, the BRT concluded that they did not.

The first criterion for determining if a population or group is a DPS is that it meets the test for discreteness. Two types of genetic data for killer whales have proven useful for identifying DPS boundaries in other species: microsatellite (nuclear) DNA and mitochondrial DNA (mtDNA). The magnitude of the genetic differences between Southern and Northern Residents was about half that found between residents and transients and about twice that found between Northern Residents and Southern Alaska Residents. These differences indicate that the Southern Resident, Northern Resident, and Alaska Resident populations are reproductively isolated populations and that the isolation of Southern and Northern Residents from each other is greater than the isolation between Northern and Southern Alaska Residents. There may be some gene flow between the Northern Residents and Southern Alaska Residents (Hoelzel et al. , 1998; Barrett-Lennard, 2000; Barrett-Lennard and Ellis, 2001).

Two mtDNA sequences have been found in North Pacific Resident killer whales. The Southern Residents have one sequence and the Northern Residents have another that differs by one DNA nucleotide. Southern Alaska Residents have both sequences. Both males and females inherit the mtDNA of their mother, so these data indicate that females from the Southern and Northern Resident populations have not been migrating between populations within at least the recent evolutionary history of these populations.

The understanding of killer whale population genetic structure has expanded considerably since the last status review in 2002. In particular, the mtDNA differentiation among eastern North Pacific resident, transient and offshore populations can now be seen in the context of variation worldwide. The most notable result from the new mtDNA data is the lack of strong mtDNA structure worldwide, suggesting that the current distribution of killer whales populations may be relatively young on an evolutionary scale (e.g., several hundred thousand years compared to the approximate 5 million year old age of the Orcinus genus and possibly associated with a population bottleneck followed by a worldwide expansion). With regard to identifying DPSs, one of the implications of the new data is that the relative degree of mtDNA divergence among populations is not necessarily a good predictor of the length of time that the populations have evolved independently. For example, animals with the “southern resident” haplotype have been found in populations from Washington (the Southern Residents), Alaska, Russia, Newfoundland and the United Kingdom. Evolutionarily, these populations are almost certainly more closely related to other geographically proximate populations than to each other (a hypothesis supported by the microsatellite data) and therefore, share a mtDNA haplotype purely by chance. Thus, it would be inappropriate to rely heavily on simple mtDNA divergence as a criterion for identifying a DPS, especially on a global scale. On a local scale, however, mtDNA remains useful for helping to identify populations, especially when combined with other types of information.

In addition to more mtDNA data, the amount of nuclear microsatellite data expanded greatly in the last 2 years, both in terms of numbers of whales and loci analyzed. Within the eastern North Pacific, both the mtDNA and microsatellite data remain consistent with a hypothesis of four to five resident populations, at least two to three transient populations and at least one offshore population. The issue of whether any contemporary gene flow occurs among eastern North Pacific populations remains unresolved, but the microsatellite data are consistent with low levels of gene flow (at most a few mating events among populations per generation). Despite some uncertainty about the evolutionary history that produced the current patterns of variation, both the mtDNA and the microsatellite data indicate a high degree of contemporary reproductive isolation among eastern North Pacific killer whale populations.

The BRT concluded that Southern Residents are an independent population that is discrete from other North Pacific resident killer whale populations. Southern Resident whales have a core summer range that is spatially separate from other North Pacific Resident whales including their closest neighbor, the Northern Residents. In addition, Southern Residents exhibit behaviors unique with respect to other North Pacific Residents. Southern Residents exhibit a distinct “greeting” behavior. They have not been observed using rubbing beaches or taking fish from longline gear, which appear to be unique to other North Pacific Resident Populations. Based on range, demography, behavior, and genetics, the BRT determined that Southern Residents meet the criterion for “discreteness” under the DPS policy.

The second test for determining if a population is a DPS is its significance to the taxon to which it belongs. The BRT discussed at length the significance of the Southern Residents with respect to the North Pacific resident taxon. The BRT concluded that the Southern Residents are significant with regard to the North Pacific resident taxon and, therefore, should be considered a DPS. The arguments favoring significance were as follows:

Ecological setting. The Southern Residents appear to occupy an ecological setting distinct from the other North Pacific resident populations. In particular, the Southern Residents are the only North Pacific resident population to spend a substantial amount of time in the California Current ecosystem, an ocean habitat that differs considerably from the Alaskan Gyre occupied by the Alaska Residents and Northern Residents. There is some evidence of differences in prey utilization, with Southern and Northern Residents favoring chinook salmon and certain Alaska Residents also eating groundfish such as halibut and turbot.

Range. The BRT discussed data related to the Southern Residents' year round and summer core ranges and concluded that loss of the Southern Residents would result in a significant gap in the range of the North Pacific resident taxon. In particular, the Southern Residents are the only North Pacific resident population to be sighted in the coastal areas off of California, Oregon and Washington and are the only population to regularly inhabit Puget Sound. Based on experience from other cetaceans, the BRT found little reason to believe that these areas would be repopulated by other North Pacific resident populations in the foreseeable future should the Southern Resident population become extinct.

This conclusion differs from that of the 2002 BRT for several reasons. New sightings of the Southern Residents in recent years have provided additional information on the amount of overlap in range between Southern Residents and other North Pacific resident populations. Also, the 2002 BRT considered transient, offshore, and other resident killer whales and their respective range overlap with Southern Resident killer whales when determining if the loss of Southern Resident would represent a significant gap in the range of the global taxon. The 2004 BRT considered only the overlap with other North Pacific residents.

Genetic differentiation. The Southern Residents differ markedly from other North Pacific resident populations at both nuclear and mitochondrial genes. The Southern Residents also differ from other North Pacific resident populations in the frequency of certain saddle patch variants, a trait believed to have a genetic basis.

Behavioral and cultural diversity. The BRT noted that culture (knowledge passed through learning from one generation to the next) is likely to play an important role in the viability of killer whale populations. For example, the Southern Residents may have unique knowledge of the timing and location of salmon runs in the southern part of the North Pacific Residents' range. The BRT also noted that there was some evidence that cultural traditions, such as greeting behavior, beach rubbing, and utilization of prey from longlines, differed among the resident populations.

The BRT concluded: (1) although multiple species of O. orca may exist and be confirmed in the future, there is currently insufficient evidence to describe any new species; and (2) provisionally the North Pacific Residents and transients should be considered to belong to one species; however, (3) there is sufficient information to indicate that there is likely a North Pacific Resident subspecies of O. orca . Given the District Court's direction, the BRT considered this unnamed subspecies as the reference taxon for making a DPS determination and concluded that Southern Resident killer whales are discrete from other populations within the North Pacific Resident taxon and are significant to the North Pacific Resident taxon. The BRT also considered the hypothesis that the North Pacific Residents and offshores belong to the same subspecies, and concluded that Southern Residents would also meet the DPS criteria under this alternative taxonomic scenario.

The 2002 BRT had also explored the plausibility of various taxa and DPS scenarios, including Southern Residents as a DPS of a North Pacific Resident taxon. The 2002 BRT was almost evenly split on the question of whether the Southern Residents would be a DPS of a putative North Pacific Resident taxon and there was only minor support to the idea that Southern Residents would be a DPS of a taxon consisting of North Pacific residents and offshores. In contrast, the 2004 BRT was more confident that the Southern Residents should be considered a DPS under either scenario. The 2004 BRT discussed this increase in support for the Southern Residents as a DPS and attributed it primarily to the amount of new information that has been collected since 2002. For example, knowledge about worldwide patterns of genetic variation in killer whales has increased dramatically and has demonstrated that sharing of a similar mitochondrial DNA haplotype does not necessarily indicate a close evolutionary relationship between two populations. This is important because the offshores and Southern Residents are characterized by very similar mtDNA haplotypes, a factor that influenced the conclusions of the 2002 BRT. In addition, the 2004 BRT was aware of recently collected information about the social structure, morphology, behavior and diet of offshore killer whales that was unavailable at the time of the 2002 status review. This information tends to suggest that the offshores are more distinct from resident killer whales than was appreciated by the 2002 BRT. Finally, knowledge about ecological and behavioral diversity within killer whales has increased as a result of ongoing studies in British Columbia, Alaska, and the Russian Far East. The BRT generally concluded that this new information tended to suggest substantial ecological differentiation between the Southern Residents and other populations.

Section 4(a)(1) of the ESA and the listing regulations (50 CFR part 424) set forth procedures for listing species. We must determine, through the regulatory process, if a species is endangered or threatened based upon any one or a combination of the following factors: (1) the present or threatened destruction, modification, or curtailment of its habitat or range; (2) overutilization for commercial, recreational, scientific, or educational purposes; (3) disease or predation; (4) inadequacy of existing regulatory mechanisms; or (5) other natural or human-made factors affecting its continued existence. The 2004 BRT identified the factors that currently pose a risk for Southern Residents and discussed whether they might continue in the future. Concern remains about whether reduced quantity or quality of prey are affecting the Southern Resident population. In addition, levels of organochlorine contaminants are not declining appreciably and those of many “newly emerging” contaminants (e.g., brominated flame retardants) are increasing, so Southern Residents are likely at risk for serious chronic effects similar to those demonstrated for other marine mammal species (e.g., immune and reproductive system dysfunction). Other important risk factors that may continue to impact Southern Residents are oil spills, as well as noise and disturbance from vessel traffic.

The BRT conducted a Population Viability Analysis (PVA) to synthesize the potential biological consequences of a small population size, a slowly increasing or a declining population trend, and potential risk factors. The probability of the Southern Resident population going extinct was estimated using demographic information from the yearly census through 2003. Both the probability of extinction (defined as <1 male or 1 female) as well as the probability of “quasi-extinction,” (defined as <10 males or 10 females) were determined, because the BRT believed that a population at the quasi-extinction level would be “doomed” to extinction, even though literal extinction might still take decades for long-lived organisms, such as killer whales. Under the assumption that population growth rates in the future will accurately be predicted by the full 29-year time series of available data (the most optimistic scenario considered), the model predicted the probability of Southern Residents becoming extinct was less than 0.1 to 3 percent in 100 years and 2 to 42 percent in 300 years. If a quasi-extinction threshold was used instead of actual extinction, the predicted probability of meeting the threshold ranged from 1 to 15 percent in 100 years and 4 to 68 percent in 300 years. For both scenarios, the higher percentages in each range were associated with higher probability and magnitude of potential catastrophic mortality events (e.g., oil spills, disease outbreaks), as well as with a smaller carrying capacity (i.e., K = 100). When it was assumed that the population survival for a subset (the last 10 years) of all data available would best predict the future (the most pessimistic scenario considered), the analysis predicted a probability of extinction of 6 to 19 percent in 100 years and 68 to 94 percent in 300 years. If a quasi-extinction threshold was used in lieu of actual demographic extinction, the predicted probability of meeting the threshold ranged from 39 to 67 percent in 100 years to 76 to 98 percent in 300 years.

The PVA modeled combinations of a variety of parameters, some of which are unknown (e.g., carrying capacity and probability of catastrophic mortality), so multiple scenarios were analyzed in order to address the uncertainty of how these parameters would affect the probability that the population would go extinct. For the unknown parameters, a range of inputs were used in the model and this resulted in a range of results. The PVA produced some high probabilities for extinction, which were associated with the highest levels of potential catastrophic mortality, small carrying capacity, and when only a subset of available data was used. Scenarios incorporating the most optimistic parameters produced probabilities for extinction that were low, but not insignificant. There is no indication that the optimistic scenario is the most likely and therefore, the PVA extinction probabilities, even under the most optimistic conditions, indicate that Southern Resident killer whales are at risk.

The population dynamics of the Southern Residents describe a population that is at risk of extinction, due either to incremental small-scale impacts over time (e.g., reduced fecundity or subadult survivorship) or to a major catastrophe (e.g., disease outbreak or oil spill). Additionally, the small size of this killer whale DPS makes it potentially vulnerable to Allee effects (e.g., inbreeding depression) that could cause a major decline. Furthermore, the small number of breeding males, as well as possible reduced fecundity and subadult survivorship in the L-pod, may limit the population's potential for rapid growth in the near future. Although the Southern Resident DPS has demonstrated the ability to recover from lower levels in the past and has shown an increasing trend over the last several years, the factors responsible for the decline are unclear, may still exist and may continue to persist, which would potentially preclude a substantial population increase.

Although multiple species of killer whales may exist and may be confirmed in the future, the 2004 BRT concluded that present data do not adequately support designation of any new species. Accordingly, North Pacific transients and residents should be considered to belong to a single species. The BRT agreed that Southern Residents likely belong to a subspecies that includes the Southern and Northern Residents, as well as the resident killer whales of Southeast Alaska, Prince William Sound, Kodiak Island, the Bering Sea and Russia (but not the transients or offshores). Thus, the smallest taxon to which the Southern Residents belong would be resident killer whales in the North Pacific, an unnamed subspecies of O. orca . The BRT unanimously concluded that the Southern Residents are discrete from other North Pacific resident killer whale populations. The BRT also concluded that the Southern Residents are significant with respect to the North Pacific resident taxon and therefore should be considered a DPS. Factors that might pose a future risk to the Southern Resident population are: reduced quantity and quality of prey; persistent pollutants that could cause immune or reproductive system dysfunction; oil spills; and noise and disturbance from vessel traffic. The BRT conducted a PVA and the most optimistic model (29-year data set) predicted that the probability of Southern Residents becoming extinct was less than 0.1 to 3 percent in 100 years and 2 to 42 percent in 300 years. Using the most pessimistic model (the last 10 years of data; quasi-extinction threshold), the probability of meeting the threshold ranged from 39 to 67 percent in 100 years to 76 to 98 percent in 300 years. For both scenarios, the higher percentages in each range were associated with higher probability and magnitude of potential catastrophic mortality events (e.g., oil spills), as well as with a smaller carrying capacity (i.e., K = 100).

Overall, the BRT was concerned about the viability of the Southern Resident DPS and concluded that it is at risk of extinction, because of either small-scale impacts over time (e.g., reduced fecundity or subadult survivorship) or a major catastrophe (e.g., disease outbreak or oil spill). Additionally, the small size of this killer whale DPS makes it potentially vulnerable to Allee effects (e.g., inbreeding depression).

The ESA defines an endangered species as any species in danger of extinction throughout all or a significant portion of its range, and a threatened species as any species likely to become an endangered species in the foreseeable future throughout all or a portion of its range (16 U.S.C. 1532 (6) and (20)). Section 4(b)(1) of the ESA requires that the listing determination be based solely on the best scientific and commercial data available, after conducting a review of the status of the species and after taking into account those efforts, if any, being made by any state or foreign nation to protect and conserve the species.

We have reviewed the petition, the reports of the BRT (NMFS, 2002, 2004), co-manager comments, Cetacean Taxonomy workshop papers and reports, and other available published and unpublished information, and we have consulted with species experts and other individuals familiar with killer whales. On the basis of the best available scientific and commercial information, the Southern Resident killer whale population meets the discreteness and significance criteria for a DPS. The genetic differences, spatial separation, unique behavior, and demography indicate that the Southern Resident killer whale population segment is discrete from other population segments. The gap in the range of the North Pacific Resident killer whale taxon that would occur if the Southern Resident killer whale population segment were to disappear is an important factor indicating that the Southern Resident killer whale population segment is significant with regard to the North Pacific Resident killer whale taxon, though other factors such as unique ecological setting, frequency of certain saddle patch variants, and greeting behavior lend further support.

This DPS is not presently in danger of extinction throughout all or a significant portion of its range. The small population increase in the past several years and population increases after previous declines, the presence of reproductive age males in each pod, several juvenile males reaching the age of sexual maturity in the next 2 to 6 years and several juvenile females reaching reproductive age in a few years all indicate that the Southern Resident killer whale DPS is not presently in danger of extinction. Based on our evaluation of the best available scientific information, however, the Southern Resident killer whale DPS is threatened (likely to become a endangered in the foreseeable future throughout all or a significant portion of its range). This threatened determination is based on concerns regarding the population decline from 1996-2001, the limited number of reproductive age males, the presence of females of reproductive age that are not having calves, and that the factors for the decline may continue to persist until more is known and actions are taken. The small population size of the Southern Residents and their socially cohesive nature makes them susceptible to catastrophic events such as oil spills and disease outbreaks. While the PVA included some high probabilities for extinction, particularly at the highest levels of catastrophic mortality, the PVA was conducted under the assumption that the Southern Residents are a closed population and also included Allee effects (e.g., inbreeding depression) for the small population. This is a conservative approach until the uncertainty regarding breeding patterns is more thoroughly understood. Therefore, NMFS proposes to list the Southern Resident killer whale DPS as threatened.

Conservation measures that may apply to listed species include conservation measures implemented by tribes, states, foreign nations, local governments, and private organizations. Also, Federal, tribal, state, and foreign nations' recovery actions (16 U.S.C. 1533(f)), Federal consultation requirements (16 U.S.C. 1536), and prohibitions on taking (16 U.S.C. 1538) constitute conservation measures. In addition, recognition through Federal government or state listing promotes public awareness and conservation actions by Federal, state, tribal governments, foreign nations, private organizations, and individuals.

The Southern Resident killer whale stock was designated as depleted under the MMPA, and a Conservation Plan is under development. In addition to the Conservation Planning process, NMFS has responded to requests for immediate conservation actions by implementing and supporting several programs. Working in partnerships with The Seattle Aquarium and The Whale Museum, we have supported education, outreach and stewardship activities to increase public awareness about the conservation status and needs of killer whales. To promote responsible viewing of killer whales, we have also provided support for additional hours of on-water stewardship through the Soundwatch program and enforcement presence through the Washington Department of Fish and Wildlife (WDFW).

On April 3, 2004, the Washington Fish and Wildlife Commission voted to add Washington State's killer whale population to the list of the State's endangered species. The State endangered designation is given to native Washington species that are seriously threatened with extinction throughout all or a significant portion of that range within the state (WAC 232-12-297). The designation directs special management attention and priority to recover the species in Washington. WDFW is working with us on conservation strategies for killer whales.

Southern Resident killer whales are listed as endangered and Northern Residents are listed as threatened under Canada's Species at Risk Act (SARA). Under SARA “endangered species” means a wildlife species that is facing imminent extirpation or extinction and “threatened species” means a wildlife species that is likely to become an endangered species if nothing is done to reverse the factors leading to its extirpation or extinction. Canada's Department of Fisheries and Oceans has convened a Recovery Team, which includes WDFW and NMFS staff members, and has begun developing a Recovery Plan for Southern and Northern Resident Whales under the SARA.

In addition to conservation and recovery planning efforts, our Northwest Fisheries Science Center (NWFSC) is engaged in an active research program for Southern Resident killer whales. Research that is currently being conducted is designed to fill identified data gaps and to improve our understanding of the risk factors that may be affecting the decline or recovery of the Southern Resident killer whales. The new information from research will be used to enhance our understanding of the risk factors affecting recovery thereby improving our ability to develop effective management measures. The Conservation Plan under the MMPA will contain both management measures based on the known current condition and research objectives from the NWFSC Long-Range Research Plan.

Section 9 of the ESA prohibits certain activities that directly or indirectly affect endangered species. These prohibitions apply to all individuals, organizations and agencies subject to U.S. jurisdiction. Section 4(d) of the ESA directs the Secretary of Commerce (Secretary) to implement regulations “to provide for the conservation of [threatened] species,” that may include extending any or all of the prohibitions of section 9 to threatened species. Section 9(a)(1)(g) also prohibits violations of protective regulations for threatened species implemented under section 4(d). We will evaluate protective regulations pursuant to section 4(d) for Southern Resident killer whales and if necessary propose such regulations in a forthcoming rule that will be published in the Federal Register .

Sections 7(a)(2) and (4) of the ESA require Federal agencies to consult with us to ensure that activities they authorize, fund, or conduct are not likely to jeopardize the continued existence of a listed species or a species proposed for listing, or to adversely modify critical habitat or proposed critical habitat. If a Federal action may affect a listed species or its critical habitat, the responsible Federal agency must enter into consultation with us.

Examples of Federal actions that may affect Southern Resident killer whales include coastal development, oil and gas development, seismic exploration, point and non-point source discharge of persistent contaminants, contaminated waste disposal, water quality standards, emerging chemical contaminant practices, vessel operations and noise level standards and fishery management practices.

Sections 10(a)(1)(A) and (B) of the ESA provide us with authority to grant exceptions to the ESA's Section 9 “take” prohibitions. Section 10(a)(1)(A) scientific research and enhancement permits may be issued to entities (Federal and non-Federal) for scientific purposes or to enhance the propagation or survival of a listed species. The type of activities potentially requiring a section 10(a)(1)(A) research/enhancement permit include scientific research that targets killer whales.

Section 10(a)(1)(B) incidental take permits may be issued to non-Federal entities performing activities that may incidentally take listed species, as long as the taking is incidental to, and not the purpose of, the carrying out of an otherwise lawful activity. The types of activities potentially requiring a section 10(a)(1)(B) incidental take permit include scientific research, not targeting killer whales, that incidentally takes Southern Resident killer whales.

On July 1, 1994, we and FWS published a series of policies regarding listings under the ESA, including a policy for peer review of scientific data (59 FR 34270) and a policy to identify, to the maximum extent possible, those activities that would or would not constitute a violation of section 9 of the ESA (59 FR 34272).

The intent of the peer review policy is to ensure that listings are based on the best scientific and commercial data available. Prior to a final listing, we will solicit the expert opinions of three qualified specialists, concurrent with the public comment period. Independent specialists will be selected from the academic and scientific community, Federal and state agencies, and the private sector.

The intent of this policy is to increase public awareness of the effect of our ESA listing on proposed and ongoing activities within the species' range. We will identify, to the extent known at the time of the final rule, specific activities that will be considered likely to result in violation of section 9, as well as activities that will not be considered likely to result in violation. Activities that we believe could result in violation of section 9 prohibitions against “take” of the Southern Resident killer whale DPS include, but are not limited to, the following:

1. Coastal development that adversely affects Southern Resident killer whales (e.g., dredging, land clearing and grading, waste treatment).

2. Discharging or dumping toxic chemicals or other pollutants into areas used by Southern Resident killer whales.

3. Operating vessels in a manner that disrupts foraging, resting or care for young or results in noise levels that disrupt foraging, communication, resting or care for young.

4. Land/water use or fishing practices that result in reduced availability of prey species during periods when Southern Resident killer whales are present.

We believe, based on the best available information, the following actions will not result in a violation of Section 9:

1. Federally funded or approved projects for which ESA section 7 consultation has been completed, and that are conducted in accordance with any terms and conditions we provide in an incidental take statement accompanying a biological opinion.

2. Takes of killer whales that we authorize pursuant to section 10 of the ESA.

These lists are not exhaustive. They are intended to provide some examples of the types of activities that we might or might not consider as constituting a take of Southern Resident killer whales under the ESA and its regulations.

Critical habitat is defined in section 3 of the ESA (16 U.S.C. 1532(3)) as: (1) the specific areas within the geographical area occupied by the species, at the time it is listed in accordance with the ESA, in which are found those physical or biological features (a) essential to the conservation of the species and (b) which may require special management considerations or protection; and (2) specific areas outside the geographical area occupied by the species at the time it is listed upon a determination that such areas are essential for the conservation of the species. “Conservation” means the use of all methods and procedures needed to bring the species to the point at which listing under the ESA is no longer necessary.

Section 4(a)(3)(a) of the ESA (16 U.S.C. 1533(a)(3)(A)) requires that, to the extent prudent and determinable, critical habitat be designated concurrently with the listing of a species. Designations of critical habitat must be based on the best scientific data available and must take into consideration the economic, national security, and other relevant impacts of specifying any particular area as critical habitat. Once critical habitat is designated, section 7 of the ESA requires Federal agencies to ensure that they do not fund, authorize or carry out any actions that are likely to destroy or adversely modify that habitat. This requirement is in addition to the section 7 requirement that Federal agencies ensure that their actions do not jeopardize the continued existence of listed species.

We are currently in the information-gathering phase, compiling information to prepare a critical habitat proposal for Southern Resident killer whales. In previous Federal Register notices (69 FR 9809, March 2, 2004; and 66 FR 42499, August 13, 2001) we requested specific information on critical habitat and are again seeking public input and information to assist in gathering and analyzing the best available scientific data to support critical habitat designations. We will continue to meet with comanagers and other stakeholders to review this information and the overall designation process. We will then initiate rulemaking with the publication of a proposed designation of critical habitat, opening a period for public comment and the opportunity for public hearings.

Joint NMFS/FWS regulations for listing endangered and threatened species and designating critical habitat at section 50 CFR 424.12(b) state that the agency “shall consider those physical and biological features that are essential to the conservation of a given species and that may require special management considerations or protection (hereafter also referred to as 'Essential Features').” Pursuant to the regulations, such requirements include, but are not limited to the following: (1) space for individual and population growth, and for normal behavior; (2) food, water, air, light, minerals, or other nutritional or physiological requirements; (3) cover or shelter; (4) sites for breeding, reproduction, rearing of offspring, germination, or seed dispersal; and generally; (5) habitats that are protected from disturbance or are representative of the historic geographical and ecological distributions of a species. These regulations go on to emphasize that the agency shall focus on essential features within the specific areas considered for designation. These features “may include, but are not limited to, the following: spawning sites, feeding sites, seasonal wetland or dryland, water quality or quantity, geological formation, vegetation type, tide, and specific soil types.”

Southern Resident killer whales reside for part of the year in the inland waterways of the Strait of Georgia, Strait of Juan de Fuca, and Puget Sound, particularly during the spring, summer and fall. Southern Residents visit coastal sites off Washington, Oregon and Vancouver Island and are known to travel as far south as central California and as far north as the Queen Charlotte Islands, British Columbia. Information on the range of Southern Residents along the outer Pacific Coast is limited, with only 27 confirmed coastal sightings over the last 20 years (NMFS, 2004). Killer whale habitat utilization is dynamic and does not appear to include use of specific breeding, nursing or resting areas. Foraging areas are dependent on variable temporal and spatial patterns of migratory prey species. These characteristics present challenges in identifying critical habitat for Southern Resident killer whales. The physical or biological features of their habitat include:

(1) Water quality to support growth and development;

(2) Prey species of sufficient quantity, quality and availability to support growth and development;

(3) Sound levels that do not exceed thresholds that inhibit communication or foraging activities or result in temporary or permanent hearing loss; and

(4) Safe passage conditions to support migration and foraging.

We are seeking information and comment on the appropriateness of considering these features for critical habitat designation.

The geographical area occupied by Southern Resident Killer Whales, where these features may be found, includes the Strait of Georgia, Strait of Juan de Fuca, Puget Sound, coastal Washington, Oregon and California. We are seeking comment and information on the specific areas within this geographical area where these features may be found.

Section 4(b)(2) of the ESA requires the Secretary to consider the “economic impact, impact on national security, and any other relevant impact,” of designating a particular area as critical habitat. For this, section 4(b)(2) authorizes the Secretary to exclude from a critical habitat designation those particular areas where the Secretary finds that the benefits of exclusion outweigh the benefits of designation, unless excluding that area will result in extinction of the species. As such, we seek information regarding the conservation benefits of designating areas in the Strait of Georgia, Strait of Juan de Fuca, Puget Sound, coastal Washington, Oregon and California as critical habitat. We also seek information on the economic benefit of excluding areas from the critical habitat designation, and the economic benefits of including an area as part of the critical habitat designation. In keeping with the guidance provided by the Office of Management and Budget (2000, 2003), we seek information that would allow it to monetize these effects to the extent possible, as well as information on qualitative impacts to economic values. We are also seeking information on impacts to national security and any other relevant impacts of designating critical habitat in these areas.

In accordance with the Secretarial Order on American Indian Tribal Rights, Federal-Tribal Trust Responsibilities, and the Endangered Species Act, we will coordinate with Federally recognized American Indian Tribes on a Government-to-Government basis to determine how to make critical habitat assessments in areas that may impact Tribal trust resources. In accordance with our regulations at 50 CFR 424.13, we will consult as appropriate with affected states, interested persons and organizations, other affected Federal agencies, and, in cooperation with the Secretary of State, with the country or countries in which the species concerned are normally found or whose citizens harvest such species from the high seas. Data reviewed may include, but are not limited to, scientific or commercial publications, administrative reports, maps or other graphic materials, information received from experts, and comments from interested parties.

We exercised our best professional judgment in developing this proposal to list Southern Resident killer whales. To ensure that the final action resulting from this proposal will be as accurate and effective as possible, we are soliciting comments and suggestions from the public, other governmental agencies, the Government of Canada, the scientific community, industry, and any other interested parties. Comments are encouraged on this proposal as well as on the Status Review (See DATES and ADDRESSES ) . Specifically, we are interested in information regarding: (1) the factors we considered in determining whether the Southern Resident killer whale population is significant to the North Pacific resident killer whale taxon; (2) biological or other relevant data concerning any threats to Southern Resident killer whales; (3) the range, distribution, and abundance of Southern Resident killer whales; (4) current or planned activities within the range of Southern Resident killer whales and their possible impact on Southern Resident killer whales; (5) efforts being made to protect Southern Resident killer whales; and (6) areas that may qualify as critical habitat.

We will review all public comments and any additional information regarding the status of Southern Resident killer whales and will complete a final determination within 1 year of publication of this proposed rule, as required under the ESA. Final promulgation of the regulation(s) on this species will consider the comments and any additional information we receive, and such communications may lead to a final regulation that differs from this proposal.

NMFS proposed 2005 and 2006 harvest specifications and PSC allowances for the groundfish fishery of the BSAI on December 8, 2004 (69 FR 70974). That rule lists proposed pollock allocations to the seven inshore catcher vessel pollock cooperatives. Allocations in the proposed rule reflect cooperative applications for 2005 that are due to NMFS by December 1 of each year. All of the changes based on these applications were not reflected in the proposed Table 8. This document corrects the proposed rule by reflecting accurately all of the applications received for the 2005 year.

As published, proposed rule FR Doc. 04-26952, December 8, 2004 (69 FR 70974) contains an error and needs to be corrected. The corrected table adds member vessel PACIFIC CHALLENGER to the Peter Pad Fleet Cooperative and corrects data in columns 2, 3, 4, and 5 for the Westward Fleet Cooperative. The corrected table reads as follows: