See the supplementary information provided in the direct final rule located in the Rules and Regulations direct final rule section of this Federal Register for the applicable supplementary information on this action.

The Bipartisan Campaign Reform Act of 2002, Pub. L. 107-155, 116 Stat. 81 (March 27, 2002) (“BCRA”), amended the Federal Election Campaign Act of 1971, as amended, 2 U.S.C. 431 et seq. (the “Act”), in many respects. Four of these amendments are germane to this rulemaking.

First, section 441i(b) of BCRA requires state, district, and local political party committees to use only Federal funds 1 for certain types of “Federal election activity,” including for any “public communication that refers to a clearly identified candidate for Federal office * * * and that promotes or supports a candidate for that office, or attacks or opposes a candidate for that office[.]” 2 2 U.S.C. 431(20)(A)(iii) (emphasis added). BCRA defines a “public communication” as “a communication by means of any broadcast, cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to the general public, or any other form of general public political advertising.” 2 U.S.C. 431(22) (emphasis added).

Second, section 441i(b) of BCRA also restricts the funds that state, district, and local political party committees may use for certain “generic campaign activity.” 2 U.S.C. 431(20)(A)(ii); 11 CFR 100.24(2)(ii). BCRA defines “generic campaign activity” as “campaign activity that promotes a political party and does not promote a [Federal] candidate or non-Federal candidate.” 2 U.S.C. 431(21). “Generic campaign activity” by state, district, and local party committees conducted in connection with an election in which a candidate for Federal office appears on the ballot (regardless of whether a candidate for state or local office also appears on the ballot) must be paid for either entirely with Federal funds or with an allocated mix of Federal funds and Levin funds.3 See 2 U.S.C. 441i(b)(2)(A); 11 CFR 300.32(b)(1)(ii), 300.32(c) and 300.33.

Third, BCRA expressly repealed the Commission's then-existing rules on “coordinated general public political communication” at former 11 CFR 100.23, Public Law 107-155, sec. 214(b) (March 27, 2002), and instructed the Commission to promulgate new regulations on “coordinated communications paid for by persons other than candidates, authorized committees of candidates, and party committees.” Public Law 107-155, sec. 214(c) (March 27, 2002).

Fourth, Congress revised the “disclaimer” requirements in 2 U.S.C. 441d, by requiring a disclaimer when a “disbursement” (rather than an “expenditure”) is made for certain communications.

The Commission promulgated regulations in 2002 to implement BCRA's provisions regarding (1) “public communication,” (2) “generic campaign activity,” (3) coordination with candidates and political parties, and (4) disclaimers. See Final Rules on Prohibited and Excessive Contributions; Non-Federal Funds or Soft Money, 67 FR 49,064 (July 29, 2002) (“Soft Money Final Rules”); Coordinated and Independent Expenditures, 68 FR 421 (Jan. 3, 2003); Disclaimers, Fraudulent Solicitation, Civil Penalties, and Personal Use of Campaign Funds, 67 FR 76,962 (Dec. 13, 2002).

In Shays v. Federal Election Commission, 337 F.Supp.2d 28 (D.D.C.) appeal filed, No. 04-5352 (DC Cir. Sept. 28, 2004) (“Shays”), the United States District Court for the District of Columbia overturned some of these regulations. First, the district court held that excluding all Internet communications from the Commission's rule defining “public communication” in 11 CFR 100.26 was inconsistent with Congress's use of the phrase “or any other form of general public political advertising” in BCRA's definition of “public communication.” 4 Shays at 69. The district court concluded that “[w]hile all Internet communications do not fall within [the scope of ‘any other form of general public political advertising’], some clearly do.” Id. at 67. The court left it to the Commission to determine “what constitutes ‘general public political advertising’ in the world of the Internet,” and thus should be treated as a “public communication”. Id. at 70.

Second, the district court found the Commission's rule defining the term “generic campaign activity” to be “an impermissible construction of the Act,” to the extent it incorporated the regulatory definition of “public communication,” which excludes all forms of Internet communications. Id. at 112. Although the court specifically approved the definition of “generic campaign activity” as a “public communication,” the Shays court found that the 2002 Notice of Proposed Rulemaking for “generic campaign activity” did not provide adequate notice to the public that the Commission might define “generic campaign activity” as a “public communication” in the final rules. Id. at 112; see also Notice of Proposed Rulemaking on Prohibited and Excessive Contributions; Non-Federal Funds or Soft Money, 67 FR 35,654, 35,675 (May 20, 2002).

Third, the district court invalidated the “content prong” of the Commission's coordinated communications rule at 11 CFR 109.21(c), which incorporates the definition of “public communication” at 11 CFR 100.26. The Shays court found that expenditures for communications that have been coordinated with a candidate, a candidate's authorized committee, or a political party committee have value for, and therefore are in-kind contributions to, that candidate or committee, regardless of the content, timing, or geographic reach of the communications. Shays at 63-64. Accordingly, the court held that certain regulatory exclusions contained in the “content prong” “undercut [the Act's] statutory purpose of regulating campaign finance and preventing circumvention of the campaign finance rules.” Id. at 63.

The district court remanded each of these rules to the Commission for further action consistent with its opinion. Accordingly, the Commission is issuing this Notice of Proposed Rulemaking (“NPRM”), which addresses several topics. First, the proposed rules in 11 CFR 100.26 would identify the types of Internet communications that are forms of “general public political advertising” and that therefore would qualify as public communications. Specifically, the Commission proposes to retain a general exclusion of Internet communications from the definition of “public communication,” except for those advertisements where another person or entity has been paid to carry the advertisement on its Web site, because these communications would constitute “general public political advertising.” This proposed change addresses the Shays court's concern about the wholesale exclusion of all Internet communications from the definition of “public communication.” Because only Internet communications that constitute “general public political advertising,” as defined by the regulation, would be included in the proposed definition of “public communication” in section 100.26, the Commission anticipates that the proposed definition would have an extremely limited impact, if any, on the use of the Internet by individuals as a means of communicating their political views, obtaining information regarding candidates and elections, and participating in political campaigns.

Second, this NPRM republishes and invites comment on the current definition of “generic campaign activity” in section 100.25, which includes the term “public communication.” The Commission notes that any changes to the underlying definition of “public communication” pertaining to the Internet would automatically apply to “generic campaign activity.”

Third, the Commission proposes to modify somewhat its rules at 11 CFR 110.11(a) as to which Internet communications require disclaimers. Political committee Web sites would continue to need disclaimers. Individuals and entities other than political committees, however, would need to place disclaimers only on paid Internet advertisements (i.e., Internet communications that constitute “general public political advertising” under the proposed definition of “public communication”) if the advertisements either solicit contributions or expressly advocate the election or defeat of a clearly identified candidate for Federal office. The Commission also proposes to clarify the current requirement that disclaimers be included in “unsolicited electronic mail of more than 500 substantially similar communications” by defining “unsolicited” as “those e-mails that are sent to electronic mail addresses purchased from a third party.” The goal of this proposed change would be to continue to require disclaimers on political “spam,” without interfering with individuals who participate in large on-line communities.

In addition, the Commission is proposing to add new rules specifically excepting certain volunteer activity on the Internet from the definitions of “contribution” and “expenditure,” and by clarifying that the rules in section 114.9 regarding the use of corporate or labor organization facilities apply to the use of computers, software, and other Internet equipment and services. Lastly, the proposed rules seek to establish an Internet exception from the definitions of “contribution” and “expenditure” for certain media activity.

The Commission has announced plans to initiate a separate rulemaking on certain non-Internet aspects of the coordinated communication rules at 11 CFR 109.21(c) in the coming months. For purposes of this rulemaking, the coordinated communication rules are referenced only to provide notice that the proposed changes to the definition of “public communication” in 11 CFR 100.26 would have an impact on the scope of the coordinated communication rules.

BCRA defines a “public communication” as “a communication by means of any broadcast, cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing or telephone bank to the general public, or any other form of general public political advertising.” 2 U.S.C. 431(22). The Commission's current rules at 11 CFR 100.26 track the statutory definition, except that the definition in the rules explicitly excludes all communications over the Internet.

As a consequence, Internet communications are excluded from other rules governing the funding of a “public communication.” For example, State, district, and local political party committees and organizations must use only Federal funds for any “public communication” that promotes, supports, attacks or opposes (“PASOs”) a Federal candidate. See 2 U.S.C. 431(20)(A)(iii) and 441i(b); 11 CFR 100.24(b)(3) and (c)(1), 300.32(a)(1) and (2). In addition, these party committees must use all Federal funds or an allocable mix of Federal funds and Levin funds for any “public communication” that constitutes “generic campaign activity” in connection with an election in which a candidate for Federal office appears on the ballot. See 11 CFR 100.25; 11 CFR 300.33(a)(2).

The term “public communication” is also used to determine whether a disclaimer is needed on certain communications under 11 CFR 110.11. Moreover, the “public communication” definition is one key element in determining what qualifies as a coordinated communication under 11 CFR 109.21 and a party coordinated communication under 11 CFR 109.37. “Public communication” may also be used to determine whether a person is an agent of a candidate for State or local office in 11 CFR 300.2(b)(4), and whether certain expenses must be allocated between Federal and non-Federal accounts by separate segregated funds (“SSFs”) and nonconnected committees under 11 CFR 106.6(b) and (f).

In light of the Shays decision, the Commission is reconsidering which Internet communications would qualify as “general public political advertising,” and thus would be a “public communication.” The Commission's proposed rule attempts to strike a balance between provisions of the Act that regulate “general public political advertising” and significant public policy considerations that encourage the Internet as a forum for free or low-cost speech and open information exchange.

The Internet has unique characteristics that distinguish it from traditional media.5 Unlike traditional media, “the Internet can hardly be considered a ‘scarce’ expressive commodity. It provides relatively unlimited, low-cost capacity for communication of all kinds.” Reno v. ACLU, 521 U.S. 844, 870 (1997) (“Reno”). Additionally, because an Internet communication is not limited in format and is not necessarily limited in duration, unlike television and radio programming, the Internet provides a means to communicate with a large and geographically widespread audience, often at little cost.6

The Internet also differs from traditional media because individuals must generally be proactive in order to access information over the Internet, unlike users of traditional media. The Supreme Court has found that communications over the Internet are not as “invasive” as communications through traditional media. Reno at 870. In further contrast to passive, one-way traditional media, the Internet can provide interactive, real-time, two-way communications.

The Internet's accessibility, low-cost, and interactive features make it a popular choice for sending and receiving information. In 2004, an estimated 201 million people in the United States used the Internet.7 At the end of 2004, an estimated 63 percent of the adult American population, and 81 percent of American teenagers, used the Internet; on average, some 70 million American adults logged onto the Internet daily.8

A growing segment of the American population uses the Internet as a supplement to, or as a replacement for, more traditional sources of information and entertainment, such as newspapers, magazines, television, and radio. In mid-2004, 92 million Americans reported obtaining news from the Internet.9

As the public has turned increasingly to the Internet for information and entertainment, advertisers have embraced the Internet and its new marketing opportunities. Internet advertising revenue increased by 21 percent between 2002 and 2003 and reached $4.6 billion in the first six months of 2004.10

The 2004 election cycle marked a dramatic shift in the scope and manner in which citizens used Web sites, blogs,11 listservs,12 and other Internet communications to obtain information on a wide range of issues and candidates.13 The number of Americans who used the Internet as a source of campaign news more than doubled between 2000 and 2004, from 30 million to 63 million.14 An estimated 11 million people relied on politically oriented blogs as a primary source of information during the 2004 presidential campaign,15 and a full 18 percent of all Americans cited the Internet as their leading source of news about the 2004 presidential election.16

Because the Internet is a unique form of communication, the Commission proposes to preserve the general exclusion of Internet communications from the definition of “public communication” in 11 CFR 100.26.

At the same time, however, the Commission recognizes that Internet communications may, in some circumstances, constitute “general public political advertising” within the definition of “public communication” in 11 CFR 100.26.

Accordingly, the Commission proposes to amend 11 CFR 100.26 to include “general public political advertising” in the form of paid Internet advertisements placed on another person's or entity's Web site. Such advertisements could take the form, for example, of streaming video that appears in banner advertisements 17 or “pop-up” advertisements.18

The Commission invites comment on whether announcements placed for a fee on another entity's Web site should be considered “general public political advertising,” and therefore, a “public communication” under 11 CFR 100.26. Is this approach consistent with BCRA's definition of “public communication” to include broadcast, cable or satellite communications, newspaper, magazines and outdoor advertising facilities, all of which typically charge fees to those who run political advertisements?

If a mode of communication does not cost any money, can it be “general public political advertising” and therefore a “public communication” within the meaning of the statute? For example, a person might appear in a public square and give a campaign speech before 500 or more people. If such a public speech does not cost any money to undertake, is it outside the scope of “general public political advertising” under the statute and therefore not a “public communication”? Likewise, is such a public speech outside the scope of an “expenditure” or “contribution” under the statute? Also, should “general public political advertising” include Internet advertisements where the advertising space is provided in exchange for something of value other than a monetary payment, for example through an exchange of comparable advertising? Although the Commission's proposed rule would exclude Internet activity that is not placed for a fee, should the Commission amend its regulation to explicitly state that it is not including “bloggers” in the definition of “public communication”?

The Act and Commission regulations recognize that corporations and labor organizations can communicate with their restricted class, but not with the general public, on “any subject,” and that membership organizations may similarly communicate with their members. See 2 U.S.C. 431(9)(B)(iii) and 441b(b)(2)(A); 11 CFR 100.134(a) and 114.3(c)(3); see also AO 1997-16. Should the Commission consider excluding from the definition of “general public political advertising” paid advertisements appearing on corporate and labor organization Web sites if access to those sites is restricted to the restricted class of a corporation or labor organization, or to only the members of a membership organization?

BCRA defines “Federal election activity” to include “a public communication that refers to a clearly identified candidate for Federal office * * * and that promotes or supports a candidate for that office, or attacks or opposes a candidate for that office[.]” 2 U.S.C. 431(20)(A)(iii); see also 11 CFR 100.24(b)(3). State, district, and local political party committees and organizations, State and local officeholders and candidates, and their agents, are prohibited from using non-Federal funds to pay for this type of Federal election activity. See 2 U.S.C. 441i(b) and (f); 11 CFR 100.24(b)(3) and (c)(1), 300.32(a)(1) and (2), and 300.71.

The Commission notes that the original definition of “public communication” in 11 CFR 100.26 was promulgated to permit state, district, and local committees to make references to their Federal candidates on the committees' official Web sites without automatically federalizing the year-round costs of maintaining such a site. It should be noted that this effect of the Internet exclusion was not rejected by the Shays court. The proposed rule would continue to allow this exclusion for these Web sites, while requiring that state, district, and local party committees use exclusively Federal dollars to place advertisements that PASO a Federal candidate on another individual's or entity's Web site. State, district, and local committee Web sites would still have to maintain disclaimers as required under 11 CFR 110.11(a)(1). The Commission invites comment on this approach and on whether the Commission should consider further changing its definition of “public communication.”

The Commission also seeks comment on the consequences of alternative approaches. For example, if a mere PASO reference to a Federal candidate on a State, district, or local committee's Web site were to constitute a public communication, does that require that the entire Web site be paid for with hard dollars? If not, the Commission seeks comment on how to allocate that portion of the Web site that must be paid for with hard dollars—for example, based on the time and space of the Web site that contains PASO communications as compared to the site overall, or should another allocation method be required? In addition, what costs should be included in the allocation calculations—all of the costs associated with establishing and maintaining the Web site, or only the marginal costs of creating and maintaining the PASO communication, or some other formulation?

The Commission seeks comment on whether any payment by a State, district, or local party to an outside vendor for content that PASOs a Federal candidate that is exclusively placed on the party's Web site should constitute “general public political advertising” and be deemed a “public communication,” thus requiring regulation under 2 U.S.C. 441i(b)(1).

“Federal election activity” includes “generic campaign activity” conducted in connection with an election in which a candidate for Federal office appears on the ballot. 2 U.S.C. 431(20)(A) and 11 CFR 100.24. BCRA defines “generic campaign activity” to mean “campaign activity that promotes a political party and does not promote a candidate or non-Federal candidate.” 2 U.S.C. 431(21). The Commission's regulations construe this statutory term to mean “a public communication that promotes or opposes a political party and does not promote or oppose a clearly identified Federal candidate or a non-Federal candidate.” 11 CFR 100.25 (emphasis added).

As noted above, the Shays court rejected the Commission's definition of “generic campaign activity” on two grounds: first, that it improperly excluded all Internet communications and, second, for lack of notice to the public that it would be limited to “public communications” as defined in 11 CFR 100.26. The Commission proposes to address the district court's first concern by revising the definition of “public communication” to remove the wholesale exclusion of all Internet communications and to replace it with a more limited exclusion, as explained above. The Commission is addressing the court's second concern by providing the public with notice and an opportunity to comment at this time on whether the Commission should continue to define the term “generic campaign activity” as “a public communication,” which, as proposed, would include some types of Internet advertisements. Given that Shays specifically approved the existing definition of “generic campaign activity,” except for the exclusion of Internet communications and the notice issue, the Commission is not proposing to revise the definition of “generic campaign activity” at this time. The Commission invites comments on this approach.

With its relatively low cost, wide availability, and ease of access, the Internet is used by millions of individuals daily to share information and air their views on a variety of subjects. The Commission recognizes that significant policy reasons support the continued exclusion of most Internet communications from the disclaimer requirements.

As the Commission has stated previously, the Internet “is a medium that allows almost limitless, inexpensive communication across the broadest possible cross-section of the American population. Unlike media such as television and radio, where the constraints of the medium make access financially prohibitive for the general population, the Internet is by definition a bastion of free political speech, where any individual has access to almost limitless political expression with minimal cost.” Soft Money Final Rules, 67 FR at 49,072. To this extent, the Internet can be the modern equivalent of a soapbox in a public square. See Reno, 521 U.S. at 870 (“Through the use of chat rooms, any person with a phone line can become a town crier with a voice that resonates farther than it could from any soapbox. Through the use of Web pages, mail exploders, and newsgroups, the same individual can become a pamphleteer.”)

The Commission notes that with respect to most Internet Web sites and blogs, the burden of complying with a disclaimer requirement, and the resources needed for the Commission to monitor such a requirement, could outweigh the value of disclosure. This is particularly true given that the identity of the sponsor of an Internet communication is often already apparent from the face of the communication. The Commission seeks comment on these policy rationales and alternative approaches to the disclaimer requirement.

The Act and the Commission's rules require certain communications to include clear and conspicuous statements to the public regarding the sources of their funding. See 2 U.S.C. 441d; 11 CFR 110.11. This disclaimer notice must identify the payor and disclose either the name of the candidate's committee that authorized the communication or the fact that no candidate or candidate's committee authorized the communication. See 2 U.S.C. 441d(a); 11 CFR 110.11(b). If the disclaimer notice states that the communication was not authorized by a candidate or candidate's committee, the notice must disclose the payor's full name and street address, telephone number, or World Wide Web address. See 2 U.S.C. 441d(a)(3); 11 CFR 110.11(b)(3). Political committees must include a disclaimer on any “public communication” for which they make disbursements. See 11 CFR 110.11(a)(1). For all other persons, a disclaimer is required for any “public communication” that expressly advocates the election or defeat of a clearly identified candidate for Federal office or that solicits contributions. See 11 CFR 110.11(a)(2) and (3).19 The Commission notes that the lack of an affirmative disclaimer requirement for most Internet activities does not alleviate a duty to comply with 2 U.S.C. 441h prohibitions against fraudulent misrepresentation. The Commission originally promulgated these regulations to focus on what is commonly referred to as “spam” e-mail.

In the existing disclaimer regulations in section 110.11(a), the term “public communication” differs slightly from the term “public communication” as defined in 11 CFR 100.26. Specifically, “public communication” as defined in current 11 CFR 100.26 expressly excludes Internet communications, whereas “public communication” as defined in the current disclaimer regulations includes “unsolicited electronic mail of more than 500 substantially similar communications and Internet Web sites of political committees available to the general public.” 11 CFR 110.11(a). Thus, political committees must include disclaimers on their Web sites available to the general public, and in unsolicited e-mail of more than 500 substantially similar communications. Other persons must also provide disclaimers in unsolicited e-mail of more than 500 substantially similar communications that expressly advocate the election or defeat of a clearly identified Federal candidate or solicit a contribution.

The Commission is concerned that the current regulation emphasizes the number of e-mail communications sent, rather than focusing on whether an expenditure was made that would justify governmental regulation. The Commission notes that the statute generally seems to be predicated on an “expenditure” or “disbursement” being made. The Commission is not interested in requiring disclaimers on the personal communications of private citizens. The Commission is concerned that the lack of definition for the term “unsolicited,” could have the effect of discouraging individuals from engaging in discussion and advocacy that is core political speech protected by the First Amendment and that is virtually cost-free.

Therefore, the Commission is proposing to change the disclaimer requirement in 11 CFR 110.11(a) to focus on those e-mail communications for which the e-mail addresses of the recipients were acquired through a commercial transaction. Such a disclaimer requirement is intended to strike a balance between the disclosure purposes of the Act and regulation of expenditures, and the protection of individual free speech and robust communication. The Commission seeks comment on this approach. Should the Commission continue to include a 500-e-mail threshold? Given the ease of sending large numbers of e-mail, would a larger numerical threshold be appropriate? The Commission also seeks comment on whether a minimum cost should be included in this disclaimer requirement, such as the $250 threshold contained in the statute for independent expenditures. See 2 U.S.C. 434(c)(1). Should a dollar threshold be included in concert with or in lieu of the 500-piece requirement? Is there a more appropriate definition of “unsolicited” e-mail in this context? Should “unsolicited” e-mail include e-mail where the recipients” e-mail addresses were acquired from a third party in a non-cash transaction, either through an e-mail list “swap,” or other multi-party transactions where list of e-mail addresses is acquired at no cost? The Commission, alternatively, seeks comments on whether the disclaimer requirement for e-mail should be removed entirely from the regulation.

The proposed revisions to the disclaimer provisions in 11 CFR 110.11(a) would still require disclaimers for any “public communication” as defined at 11 CFR 100.26 made by a political committee, and for any “public communication” by any person that expressly advocates the election or defeat of a clearly identified Federal candidate or that solicits a contribution. See 11 CFR 110.11(a). The proposed definition of “public communication” in section 100.26 would have the effect of expanding the scope of the disclaimer requirements in section 110.11 to any advertisement placed for a fee on another party's Web site that expressly advocates the election or defeat of a clearly identified Federal candidate or solicits a contribution. In addition, political committees would continue to be required to post disclaimers on their Web sites provided that they are “available to the general public.”

The Commission seeks comments on these proposed revisions to 11 CFR 110.11(a).

News reports indicate that in the 2004 elections some individual bloggers received significant fees from the campaign committees of at least one presidential candidate and one Senate candidate to promote the candidates' campaigns on their blogs.20 For example, the operator of the ninth most “linked” blog on the Internet, which received as many as one million visits daily, reportedly received $12,000 over a four-month period from one presidential candidate.21 The news reports further indicate that not all of the bloggers disclosed the payments to the blogs' readers.

The Commission notes that its current rules require a political committee to disclose this type of disbursement on its publicly available reports filed with the Commission. The Commission does not therefore propose to change the disclaimer regulation in 11 CFR 110.11(a) to require bloggers to disclose payments from a candidate, a campaign, or a political committee. The Commission seeks comment on this approach. Could or should bloggers be required to disclose such payments? Could or should a blogger be required to disclose payments only if the blogger expressly advocates the election or defeat of a clearly identified candidate or solicits a contribution? Would a payment by a political committee to a blogger for promotional content on the blog constitute “general public political advertising” within the meaning of section 100.26?

Payments for certain communications that are coordinated with a candidate, a candidate's authorized committee, a political party committee, or any of their agents, are treated as in-kind contributions to the candidate, the candidate's authorized committee, or the political party committee. See 2 U.S.C. 441a(a)(7); 11 CFR 109.21. The Commission's regulations set out a three-pronged test for determining whether a communication has been “coordinated.” See 11 CFR 109.21. The three-pronged test looks, in part, at whether the communication satisfies the “content prong” of 11 CFR 109.21(c).22 To satisfy the “content prong” of the coordinated communication test, a communication must: (1) Be an electioneering communication, as defined in 11 CFR 100.29; (2) be a public communication that disseminates, distributes, or republishes, in whole or in part, campaign materials prepared by a Federal candidate, the candidate's authorized committee, or their agents; (3) be a public communication that expressly advocates the election or defeat of a clearly identified candidate for Federal office; or (4) be a public communication that refers to a political party or a clearly identified candidate for Federal office, is publicly distributed or disseminated within 120 days of an election for Federal office, and is directed to voters within the jurisdiction of the clearly identified candidate or to voters in a jurisdiction in which one or more candidates of the political party appear on the ballot. See 11 CFR 109.21(c)(1)-(c)(4).

In Shays, the court struck down the “content prong” of the coordinated communication test. The Commission announced its intention to propose changes regarding the non-Internet aspects of the coordinated communication regulations in a separate rulemaking to take place later this year, with final rules pending the outcome of the Commission's appeal of certain aspects of the Shays decision.

Because of the pending appeal and the upcoming rulemaking on coordinated communications, the Commission is not proposing to revise 11 CFR 109.21 in this rulemaking. The Commission notes, however, that revising the definition of “public communication” to include certain Internet communications would render such Internet communications subject to the current coordinated communication provisions of section 109.21.23 The Commission invites comments on this approach.

The Commission's rule would exempt from the coordinated communication rules advertisements that require payments to outside vendors to create, but that are placed only on the payor's own Web site. This could include a corporation or other prohibited source. The Commission seeks comment on whether this approach is appropriate, and on whether any other parts of the Commission's regulations, e.g. those provisions at 11 CFR 114.4 that deal with corporate and labor communications beyond the restricted class, can be interpreted to nonetheless place restrictions on such activity. The Commission's rule would also exempt from the coordinated communication rules advertisements that are placed on a prohibited source's Web site for free, even though a fee would normally be charged. Is this an appropriate course? Do any of the Commission's other rules already regulate this so that such activity would be prohibited?

Under the current Commission regulations, a person makes a contribution by financing a public communication that disseminates, distributes, or republishes, in whole or in part, campaign materials prepared by a candidate, the candidate's authorized committee, or an agent of any of the foregoing,” unless certain exceptions apply. 11 CFR 109.21(c)(2). A candidate's principal campaign committee need not report the dissemination, distribution, or republication of its campaign materials as an in-kind contribution, however, unless such activity is a “coordinated communication” under 11 CFR 109.21. See 11 CFR 109.23(a).

The Commission notes that the proposed changes to the definition of “public communication” would expand the reach of this regulation to individuals or entities that place announcements for a fee on another individual's or entity's Web site, when the advertisement content otherwise constitutes a republication regulated under 11 CFR. 109.21(d)(6).

The Commission notes that the proposed change to the definition of “public communication” would not affect content placed by an individual on his or her own Web site, blog, or e-mail. Because republishing campaign materials on one's own Web site, blog, or e-mail would not be a public communication, it would not be a contribution to the candidate under 11 CFR 109.21. The Commission notes that Senator Russ Feingold, one of BCRA's sponsors, stated recently that “linking campaign Web sites, quoting from, or republishing campaign materials and even providing a link for donations to a candidate, if done without compensation, should not cause a blogger to be deemed to have made a contribution to a campaign or trigger reporting requirements.”24 Should the Commission amend 11 CFR 109.21(c)(2) to exempt all dissemination, distribution, or republication of campaign materials on the Internet generally, or keep the reference in the regulation to “public communication”?

We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed under ADDRESSES. Include “Docket No. FAA-2005-20799; Directorate Identifier 2004-NM-264-AD” in the subject line of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments submitted by the closing date and may amend the proposed AD in light of those comments.

We will post all comments we receive, without change, to http://dms.dot.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of that Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You can review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477-78), or you can visit http://dms.dot.gov.

You can examine the AD docket on the Internet at http://dms.dot.gov, or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone (800) 647-5227) is located on the plaza level of the Nassif Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the DMS receives them.

Boeing has performed a quality analysis on float switches removed from Model 737-200 series airplanes. Investigation revealed cracked potting material, which permitted moisture and fuel to enter the switch cavity. Fuel and moisture contamination inside the float switch reed cavity could provide an electrical path between the switch and the airplane structure that could result in electrical arcing that could lead to a fuel tank explosion. Also, Boeing reported worn float switch wiring insulation in the center fuel tank due to chafing of the wires against the walls of the conduit housing the wires. Wire chafing against the conduit could present an ignition source inside the fuel tank that could cause a fire or explosion.

The float switch wiring installation is similar on Model 727 and 737-200 series airplanes. Therefore, the unsafe condition could exist on Model 727 airplanes equipped with the same float switch model found on the 737-200 series airplanes.

We have reviewed Boeing Alert Service Bulletin 727-28A0127, dated August 26, 2004. The service bulletin describes procedures for replacing Ametek Model F8300-146 float switches with new switches and installing a liner system inside the electrical cable conduit in the main and auxiliary fuel tanks.

We have evaluated all pertinent information and identified an unsafe condition that is likely to exist or develop on other airplanes of this same type design. Therefore, we are proposing this AD, which would require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between the Proposed AD and the Service Bulletin.”

The service bulletin affects Model 727 airplanes “with active Boeing fueling float switch shutoff systems installed” and requires replacing the float switches and installing a liner system. However, this proposed AD would apply to all Model 727 airplanes and would require first determining whether any fuel float switches are installed in the fuel tanks. For those airplanes with float switches, this proposed AD would then require identifying the float switches, replacing Ametek Model F8300-146 float switches with new switches, and installing the liner system. We have determined that the effectivity in the service bulletin may not encompass all possible scenarios involving the subject float switches. Because the auxiliary fuel tanks have been moved from airplane to airplane—via field approval or supplemental type certificate, the proposed applicability and requirements would ensure that all subject float switch designs are replaced.

These differences have been coordinated with Boeing and are intended to adequately address the unsafe condition.

There are about 1,300 airplanes of the affected design in the worldwide fleet. This proposed AD would affect about 800 airplanes of U.S. registry.

The proposed inspections (for presence and model of float switch) would take about 1 work hour, at an average labor rate of $65 per hour. Based on these figures, the estimated cost of the proposed inspections for U.S. operators is $52,000, or $65 per airplane.

The following table provides the estimated costs for U.S. operators to replace the float switches, if necessary. We estimate that about 162 airplanes may require parts replacement.

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. Will 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 regulatory evaluation of the estimated costs to comply with this proposed AD. See the ADDRESSES section for a location to examine the regulatory evaluation.

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

We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed under ADDRESSES. Include “Docket No. FAA-2005-20796; Directorate Identifier 2004-NM-160-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments submitted by the closing date and may amend the proposed AD in light of those comments.

We will post all comments we receive, without change, to http://dms.dot.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of our docket website, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You can review the DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477-78), or you can visit http://dms.dot.gov.

You can examine the AD docket on the Internet at http://dms.dot.gov, or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone (800) 647-5227) is located on the plaza level of the Nassif Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the DMS receives them.

The Direction Generale de l'Aviation Civile (DGAC), which is the airworthiness authority for France, notified us that an unsafe condition may exist on all Airbus Model A300 B2 and A300 B4 series airplanes; Model A300 B4-600, B4-600R and F4-600R series airplanes, and Model A300 C4-605R Variant F airplanes (collectively called A300-600); and Model A310 series airplanes. The DGAC advises that, during takeoff on a Model A300 B2 series airplane, an operator reported the temporary loss of six cathode ray tube (CRT) flight displays and the integral lighting of the standby horizon indicator in the cockpit due to failure of the normal electrical power circuit. The temporary loss of the CRTs is still under investigation. Power for the integral lighting of the standby horizon indicator is supplied through the normal electrical power circuit. In the event of failure of the normal electrical power circuit, modifying the logic for the integral lighting of the standby horizon will allow automatic switching from the normal to the essential electrical power circuit. Loss of the integral lighting due to such failure could result in loss of the backup source of attitude data, consequent inability of the pilot to access attitude information during takeoff, and possible deviation from the intended flight path.

The integral lighting logic system on Model A300 B4 series airplanes; Model A300 B4-600, B4-600R and F4-600R series airplanes, and Model A300 C4-605R Variant F airplanes; and Model A310 series airplanes is identical to the integral lighting logic system on the affected Model A300 B2 series airplane. Therefore, those airplanes may be subject to the same unsafe condition identified on Model A300 B2 series airplanes.

We have reviewed the following Airbus service bulletins:

Service Bulletins A300-31-0077, A300-31-6105, and A310-31-2120 describe procedures for modifying the electrical power supply for the standby horizon indicator.

Service Bulletins A300-33-0126, A300-33-6049, and A310-33-2047 describe procedures for accomplishing repetitive operational tests (inspections) of the integral lighting logic system. The service bulletins also recommend sending an inspection report to Airbus.

Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. The DGAC mandated the service information and issued French airworthiness directive F-2004-098, dated July 7, 2004, to ensure the continued airworthiness of these airplanes in France.

These airplane models are manufactured in France and are type certificated for operation in the United States under the provisions of section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, the DGAC has kept us informed of the situation described above. We have examined the DGACs findings, evaluated all pertinent information, and determined that we need to issue an AD for products of this type design that are certificated for operation in the United States.

Therefore, we are proposing this AD, which would require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between the Proposed AD and Service Information.”

Service Bulletins A300-33-0126, A300-33-6049, and A310-33-2047 recommend sending an inspection report to Airbus, but this proposed AD does not contain that requirement.

Service Bulletins A300-33-0126, A300-33-6049, and A310-33-2047 do not specify repair procedures for failure of the operational test, but this proposed AD would require you to repair those conditions using a method that we or the DGAC (or its delegated agent) approve. In light of the type of repair that would be required to address the unsafe condition, and consistent with existing bilateral airworthiness agreements, we have determined that, for this proposed AD, a repair we or the DGAC approve would be acceptable for compliance with this proposed AD.

This proposed AD would affect about 189 airplanes of U.S. registry.

It would take between approximately 10 and 36 work hours per airplane to accomplish the proposed modification (depending on the number of kits needed), at an average labor rate of $65 per work hour. Required parts would cost approximately between $310 and $4,880 per airplane. Based on these figures, the estimated cost of the proposed modification is between $960 and $7,220 per airplane.

It would take about 1 work hour per airplane to accomplish the proposed operational test, at an average labor rate of $65 per work hour. Based on these figures, the estimated cost of the proposed test is $12,285, or $65 per airplane, per test cycle.

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 will not have federalism implications under Executive Order 13132. This proposed AD will 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. Will 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 regulatory evaluation of the estimated costs to comply with this proposed AD. See the ADDRESSES section for a location to examine the regulatory evaluation.

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

We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed under ADDRESSES. Include “Docket No. FAA-2005-20798; Directorate Identifier 2004-NM-257-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments.

We will post all comments we receive, without change, to http://dms.dot.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of our docket Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You can review the DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477-78), or you can visit http://dms.dot.gov.

You can examine the AD docket on the Internet at http://dms.dot.gov, or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone (800) 647-5227) is located on the plaza level of the Nassif Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the DMS receives them.

On November 27, 1995, we issued AD 95-25-03, amendment 39-9447 (60 FR 63617, December 12, 1995), for certain Learjet Model 23, 24, 25, 35, and 36 airplanes. That AD requires repetitive inspections to detect deterioration of both flappers of the tip tank in each wing of the airplane, and various follow-on actions. That AD also requires replacing the flappers with new flappers, and repetitively performing certain other follow-on actions. That AD was prompted by reports of imbalance of the fuel loads in the wings of the airplane due to failed or cracked flappers. We issued that AD to prevent significant reduction in the lateral control of the airplane due to imbalance of the fuel loads in the wings of the airplane.

Since we issued AD 95-25-03, we have reviewed Learjet Service Bulletin 23/24/25-28-7, Revision 2, dated May 9, 2001 (for Model 23, 24, and 25 airplanes); and Learjet Service Bulletin 35/36-28-14, Revision 2, dated May 9, 2001 (for Model 35 and 36 airplanes). The service bulletins describe procedures for replacing flappers with new flappers or replacing the flapper assemblies with new or modified and reidentified assemblies, which eliminates the need for the repetitive inspections required by AD 95-25-03. Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition.

The unsafe condition described previously is likely to exist or develop on other airplanes of the same type design that may be registered in the U.S. at some time in the future.

We can better ensure long-term continued operational safety by design changes to remove the source of the problem, rather than by repetitive inspections. Long-term inspections, as required by AD 95-25-03, may not provide the degree of safety necessary for the transport airplane fleet. This determination, along with a better understanding of the human factors and other systems effects associated with numerous continual inspections, has led us to consider placing less emphasis on inspections and more emphasis on design improvements. The proposed replacement requirement is consistent with these conditions.

We are proposing to supersede AD 95-25-03. This proposed AD would retain the requirements of the existing AD. This proposed AD would also require accomplishing the actions specified in service bulletins described previously in this proposed AD, which would end the repetitive inspection requirements of the existing AD. This proposed AD would also require an inspection of the flappers and flapper assemblies of the tip tank in each wing, or a review of the airplane maintenance records, to determine the part numbers.

This proposed AD would retain all requirements of AD 95-25-03. Since AD 95-25-03 was issued, the AD format has been revised, and certain paragraphs have been rearranged. As a result, the corresponding paragraph identifiers have changed in this proposed AD, as listed in the following table:

There are about 1,459 airplanes of the affected design in the worldwide fleet. This proposed AD would affect about 882 airplanes of U.S. registry.

The actions that are required by AD 95-25-03 and retained in this proposed AD take about 16 work hours per airplane, at an average labor rate of $65 per work hour. Required parts cost about $708 per airplane. Based on these figures, the estimated cost of the currently required actions is $1,541,736, or $1,748 per airplane.

The new proposed actions would take about 2 work hours per airplane, at an average labor rate of $65 per work hour. Required parts would cost about $327 or $1,262 per airplane (depending on the kit installed). Based on these figures, the estimated cost of the new actions specified in this proposed AD for U.S. operators is $457 or $1,392, per airplane (depending on the kit installed).

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. Will 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 regulatory evaluation of the estimated costs to comply with this proposed AD. See the ADDRESSES section for a location to examine the regulatory evaluation.

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

We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed under ADDRESSES. Include “Docket No. FAA-2005-20836; Directorate Identifier 2005-NM-028-AD” in the subject line of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments submitted by the closing date and may amend the proposed AD in light of those comments.

We will post all comments we receive, without change, to http://dms.dot.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of that Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You can review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477-78), or you can visit http://dms.dot.gov.

You can examine the AD docket on the Internet at http://dms.dot.gov, or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone (800) 647-5227) is located on the plaza level of the Nassif Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the DMS receives them.

Based on research experiments and in-service experience in the mid-1990's, the FAA initiated an investigation into the adequacy of the existing Bunsen burner flammability criteria for thermal/acoustic insulation.

Thermal/acoustic insulation is usually constructed in the form of what is commonly referred to as a “blanket.” Insulation blankets are typically composed of:

1. A batting material generically referred to as fiberglass; and

2. A film covering to contain the batting and to resist moisture penetration.

Metallized polyethyleneteraphthalate (MPET) and AN-26 are specific manufacturers' examples of these film covering materials.

Our investigation included large-scale fire testing, as well as tests for ignitability; these tests covered a broad range of materials. By the late 1990's, we had concluded that the Bunsen burner test method required by the existing rules was not adequate. That is, the test method did not discriminate between materials with desirable and undesirable flammability characteristics under realistic in-service conditions. A new certification standard was therefore needed.

In order to develop a new standard, we had to quantify the potential hazard. This involved additional large scale fire testing and tests to correlate the large scale tests with a laboratory scale test method. A necessary element of any new certification test method is that it must screen out materials that would be considered unacceptable for future installation because those materials would create the potential hazard that the new test standard is intended to prevent. The new test standard was adopted into the regulations and includes changes to the operating rules for newly manufactured airplanes. (Reference “Improved Flammability Standards for Thermal/Acoustic Insulation Materials Used in Transport Category Airplanes” (68 FR 45046, July 31, 2003).) The operating rule changes become effective in September of this year.

In developing the new test standard, we also developed criteria by which materials already in service could be judged as safe to remain in service. This involved measuring their susceptibility to an ignition source (such as an electrical arc or sparks) and their tendency to propagate a fire once ignited.

Materials that are susceptible to ignition by electrical arc or sparks and that would propagate a fire are considered unsafe. Using these criteria, we have published airworthiness directives (AD) to address a particular material. The following ADs require removal of MPET:

• AD 2000-11-01, amendment 39-11749 (65 FR 34321, May 26, 2000), applicable to certain McDonnell Douglas Model DC-9-80 and MD-90-30 series airplanes, and Model MD-88 airplanes;

• AD 2000-11-02, amendment 39-11750 (65 FR 34341, May 26, 2000), applicable to certain McDonnell Douglas Model DC-10-10F, DC-10-15, DC-10-30, DC-10-30F, and DC-10-40 series airplanes, and Model MD-11 and -11F series airplanes; and

• AD 2003-08-10, amendment 39-13122 (68 FR 19326, April 21, 2003), applicable to certain Aerospatiale Model ATR42-500 series airplanes, and Model ATR72-102, -202, -212, and -212A series airplanes.

At that time, MPET was the only material identified that had demonstrated the propensity to propagate a fire from an ignition source such as electrical arcing and sparks. We indicated then that we would take the same action, should any other materials be identified.

Even though we did extensive testing on a variety of materials, we could not identify and test every material produced, as the permutations of material combinations were too extensive to accomplish such testing in a prudent time frame. As a result, we were not aware of AN-26 as a unique insulation material until a review of subsequent service data indicated that this material might not have adequate flammability resistance. We conducted a review of the service history and subjected AN-26 material to a variety of tests. In November 2003, we established that AN-26 could propagate a fire from an electrical arc. As part of our review, we also worked with industry to explore the potential ramifications of aging and contamination on material performance. Opinions differ on the significance of these effects. After careful consideration of this complex issue, we have concluded that the flammability characteristics of AN-26 are more a factor of fundamental material properties than a factor of aging or contamination.

We have received reports of in-flight and ground fires on certain Boeing Model 737, 747, 757, and 767 series airplanes that were manufactured with insulation material covered with AN-26. Investigation has revealed that AN-26 covered insulation blankets may contribute to the propagation of a fire. The results of extensive flammability testing, conducted by the airplane manufacturer and the FAA, revealed that even though AN-26 met the certification standards in place at the time of original certification in 1981, this type of insulation material will propagate a fire when subjected to electrical arcing and sparks. The FAA used the insulation blankets' response to electrical arcing and spark testing as the basis for identifying the unsafe condition with MPET and has determined that these same safety criteria are applicable to AN-26. In addition, research data have shown that contamination, such as dust, lint, grease, corrosion-inhibiting compounds, etc., can increase susceptibility to ignition and flame propagation.

Insulation blankets constructed of AN-26 installed throughout the fuselage, if not corrected, could propagate a fire that is the result of electrical arcing or sparking.

We have determined that Boeing's preferred supplier of insulation blankets produced blankets constructed of AN-26 between July 1981 and December 1988. Therefore, it is likely that these blankets are installed on almost all Boeing airplanes produced during that period, as listed in the following table:

Eleven Boeing Model 747-400 series airplanes were built in 1988 that are also likely to have AN-26 installed. However, the type certificate was not amended to include these airplanes until 1989. Therefore, these airplanes did not have an original Airworthiness Certificate or original Export Certificate of Airworthiness before January 1989.

The other affected airplanes were issued an original Airworthiness Certificate or original Export Certificate of Airworthiness between July 1981 and December 1988.

Unlike MPET, which is easily distinguishable from other types of insulation, AN-26 is similar in appearance to other types of insulation that are acceptable. At this time, there is no documented method for distinguishing between AN-26 and these other types of insulation.

The FAA issued Flight Standards Information Bulletin for Airworthiness (FSAW) 00-09, “Special Emphasis Inspection on Contamination of Thermal/Acoustic Insulation,” effective September 28, 2000, to ensure that operators have procedures defined in their approved maintenance programs for the inspection for contamination and corrective action. The airplane manufacturer also has recently revised its service letters alerting operators to methods for preventing and removing contamination.

We have evaluated all pertinent information and identified an unsafe condition that is likely to exist or develop on other airplanes of this same type design. Therefore, we are proposing this AD to require removing all insulation blankets within the pressurized areas of the affected airplanes and installing a new insulation blanket meeting the requirements of Section 25.856(a) of Title 14 of the Code of Federal Regulations (CFR) (14 CFR 25.856(a)). The proposed AD would also allow operators to develop methods for distinguishing between insulation blankets constructed of AN-26 and other materials. If the FAA's Seattle Aircraft Certification Office (ACO) approves such a method, operators would not be required to remove blankets they determine are not constructed of AN-26.

As of the effective date of this AD, paragraph (h)(1) of this proposed AD would prohibit installation of AN-26 insulation blankets. 14 CFR 91.613(b)(1), 121.312(e)(1), 125.113(c)(1), and 135.170(c)(1) already prohibit installation of this type of insulation blanket after September 2, 2005. Some international civil aviation authorities have not adopted similar regulations. Therefore, this prohibition is included in this proposed AD to inform them of the need to prevent such installation.

As of six months after the effective date of this AD, paragraph (h)(2) of this proposed AD would also prohibit re-installation of any insulation blanket that has been removed for any reason unless the insulation blanket either has been determined not to be constructed of AN-26, or has been modified to comply with 14 CFR 25.856(a). For example, during normal maintenance, operators frequently remove insulation to perform inspections and other maintenance actions on systems and structure located behind the insulation blanket. Under this proposal, when insulation is removed for this or any other purpose, it must either be determined not to be constructed of AN-26, or replaced with insulation meeting 14 CFR 25.856(a). This paragraph would require operators to correct the identified unsafe condition when they have an opportunity to do so.

The airplane manufacturer has been developing a proposed alternative method of compliance (AMOC) that involves modification of existing AN-26 insulation blankets. This method of compliance may significantly reduce the number of required replacement blankets and labor costs. The manufacturer has indicated that the service information for this method will be available in April 2006. We anticipate that the manufacturer's approach is similar to AMOCs approved for ADs 2000-11-01 and 2000-11-02. The criteria that will be used to evaluate proposed modifications of existing AN-26 insulation blankets (in-place) can be obtained from the Manager, Seattle ACO, upon request.

There are about 1,613 airplanes of the affected design in the worldwide fleet. The following table provides the estimated costs for U.S. operators to comply with the proposed replacement, if necessary. The average labor rate is $65 per hour.

The Regulatory Flexibility Act of 1980 (RFA) establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objective of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the business, organizations, and governmental jurisdictions subject to regulation.” To achieve that principle, the RFA requires agencies to solicit and consider flexible regulatory proposals and to explain the rationale for their actions. The RFA covers a wide-range of small entities, including small businesses, not-for-profit organizations and small governmental jurisdictions.

Agencies must perform a review to determine whether a proposed or final rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the Act.

The proposed AD would require operators of certain Boeing transport category airplanes, including about 20 small business operators, to retrofit their airplanes. We believe that this proposed AD would have a significant impact on a substantial number of small entities. Accordingly, an initial regulatory flexibility analysis, as required by the RFA, is included as part of the Initial Regulatory Analysis that is in the docket.

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 have a significant economic impact on a substantial number of small entities, and as a result, an initial regulatory flexibility analysis has been conducted.

See the ADDRESSES section for a location to examine the regulatory evaluation.

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

We have had two sets of rules governing airline computer reservations systems (“CRSs” or “systems”) (although the systems now are also commonly called global distribution systems, or GDSs, we will refer to them as CRSs for purposes of this rulemaking). One set of rules, 14 CFR Part 255, established comprehensive requirements governing the systems' relationships with airlines and the systems' travel agency customers. These rules covered any system that was owned or marketed by an airline or airline affiliate. 14 CFR 255.2. The other set, 14 CFR Part 256, concerned the systems' treatment of airlines that share the same two-symbol designator code, the code used by the systems and other sources of airline information to identify the airline offering the seats being sold (the codes for America West and U.S. Airways, for example, are HP and US). This set of rules prohibits the airlines that own, control, or operate each system from denying access to the system to two or more airlines whose flights share a single designator code and from discriminating against any airline because that airline uses the same designator code as another airline.

The federal agency formerly responsible for the economic regulation of the airline industry, the Civil Aeronautics Board (“the Board”), adopted both the comprehensive rules (Part 255) and the rules governing the treatment of airlines that code-share (Part 256) in the same year, 1984, on the basis of a common economic and competitive analysis. 49 FR 12675 (March 30, 1984) (Part 256); 49 FR 32540 (August 15, 1984) (Part 255). The Board adopted the rules barring systems from discriminating against code-sharing airlines in an expedited proceeding to keep Apollo, the system then controlled by United, from carrying out its plan to deny access to any airline that used another airline's code.

Our comprehensive CRS rules included a sunset date to ensure that we would reexamine whether the rules remained necessary and were effective. 57 FR 43780, 43829-43830 (September 22, 1992). As a result of our most recent reexamination of those rules, completed in 2003, we determined that the CRS rules had become unnecessary. We allowed most of the rules to expire on January 31, 2004, their sunset date, and terminated the remaining rules on July 31, 2004. 69 FR 976, 977 (January 7, 2004).

The rules governing the systems' treatment of code-sharing airlines, Part 256, have not had a sunset date. However, because the Board adopted those rules and the comprehensive rules governing CRS operations, Part 255, on the basis of the same factual analysis and competitive rationale, our findings that industry changes have made the comprehensive rules unnecessary requires us to reexamine whether the rules on the treatment of code-sharing airlines are still necessary. After considering that question, we are proposing to terminate these rules as well.

We ask the parties to submit comments that thoroughly discuss the factual and policy issues raised by our proposal to eliminate the rules and to provide detailed information on the proposal and on the amount of its likely benefits and costs.

Comments will be due thirty days after publication of this notice, and reply comments will be due fifteen days thereafter. After considering the comments, we will issue a final rule.

As we have explained in our other CRS rulemakings, the systems efficiently provide travel agents with comprehensive information and booking capabilities on airlines and other travel suppliers, such as hotel and rental car companies. See, e.g., 67 FR 69366, 69370 (November 15, 2002). Each system provides information and booking capabilities on the airlines that “participate” in the system, that is, agree to make their services saleable through the system and to pay the fees required for participation. A CRS presents displays that integrate the services of all participating airlines. The displays show schedules and fares and whether specific flights and fares are available. A travel agent can compare the services offered by different airlines and determine which would best meet a customer's needs. The agent can reserve seats and issue tickets through the system. 67 FR 69370.

The basis for our past adoption of CRS regulations was the systems' important role in the distribution of airline tickets (and their ownership by airlines). Airlines obtained a large majority of their bookings from travel agents, and travel agents relied on a system to determine what services and fares were available for their customers and to make bookings. Each travel agency office typically relied entirely or almost entirely on one system to carry out these functions. If an airline did not participate in one of the systems, the travel agents using that system could not readily obtain information and make bookings on that airline, which would therefore lose a significant amount of business. As a result, almost every airline had to participate in each of the systems, so airlines had no bargaining leverage with the systems. 67 FR 69375-69382; 69 FR 980.

With one small exception, each of the systems operating in the United States was developed and owned by one airline, which had the ability and incentive to operate its system in ways that would prejudice airline competition. 67 FR 69367, 69375-69376.

Soon after the systems were first offered to travel agencies, the systems' impact on airline competition became a matter of concern. For example, an airline owning a system would bias the system's display of airline services so that flights operated by rival airlines were difficult to find, even when a competitor's flights met the travel agency customer's needs better than did the owner airline's flights. The Board therefore began a rulemaking to determine whether it should adopt regulations governing the systems' role in airline distribution. The Board first issued an advance notice of proposed rulemaking. 48 FR 41171 (September 14, 1983). After considering the comments responding to that notice, the Board decided that it should propose comprehensive rules governing CRS operations, and submitted a draft notice of proposed rulemaking to the Office of Management and Budget for review. While the Board's proposal was under review at OMB, several smaller airlines complained to the Board that Apollo, the system controlled by United, had announced that it would no longer display services operated by one airline under another airline's code. They alleged that Apollo's change in policy would substantially injure their marketing efforts. 49 FR 9430-9431.

As a result of the competitive harm that could result from Apollo's proposed policy change, the Board proposed and, after reviewing the comments, adopted as Part 256 the rules that prohibit airlines that own, control, or operate a system from discriminating against an airline because the airline offered its services under another airline's code. As noted, the Board relied on the industry and competitive analysis developed in its rulemaking on the comprehensive CRS regulations. 49 FR 9430; 49 FR 12675.

Soon after the Board proposed the rules governing the treatment of code-sharing airlines, the Board issued its notice of proposed rulemaking on the adoption of comprehensive CRS rules. 49 FR 11644 (March 27, 1984). The Board later adopted those proposed rules, with some revisions, as Part 255. Among other things, those rules barred systems from biasing their primary displays and from charging discriminatory booking fees. 49 FR 32540 (August 15, 1984).

The Board adopted both the comprehensive rules and the rules governing the treatment of code-sharing airlines under its authority under section 411 of the Federal Aviation Act, then 49 U.S.C. 1381, later recodified as 49 U.S.C. 41712, to prohibit unfair and deceptive practices and unfair methods of competition (we will refer to the section under its traditional name, section 411).

The Court of Appeals affirmed the Board's adoption of Parts 255 and 256. United Air Lines v. CAB, 766 F.2d 1107 (7th Cir. 1985).

The factual basis for our recent decision to terminate all of the comprehensive CRS rules suggests that we should also terminate the rule governing the treatment of code-sharing airlines. As noted above, we concluded that the on-going developments in airline distribution and the CRS business in recent years had substantially eroded the basis for CRS regulations and made the rules unnecessary. The two major developments were the increasing importance of the Internet in airline distribution and the divestiture by U.S. airlines of all CRS ownership interests.

The Internet's growing use by consumers and travel agents has created alternative channels for airline bookings and the dissemination of information on schedules and fares. Airlines have been encouraging many consumers to book their travel directly through an airline website rather than through a travel agent. 67 FR 69373-69374. Travel agents are increasingly checking Internet sites to see whether better fares and flights are available than those displayed in the system they use. 69 FR 980. Airlines also began offering special discounts, commonly known as webfares, to consumers who booked tickets through the airline's own website, and they have used their control over access to their webfares to obtain better terms for CRS participation. 67 FR 69373; 69 FR 979-980. Because these developments are establishing market discipline for the terms and quality of the systems' services offered airlines, we concluded that the comprehensive rules had become unnecessary. 69 FR 984.

Secondly, all of the U.S. airlines that held an ownership interest in a system have divested those interests. The Board had adopted the original rules because each significant system was then controlled by an airline, and the airline owner had the incentive and the ability to use its system to distort airline competition. 67 FR 69373. Now, in contrast, none of the systems is owned or controlled by any U.S. airline or airline affiliate, and only Amadeus has any airline owners. 69 FR 979. In our final decision in our reexamination of the comprehensive rules, we found that the systems should have no incentive to operate in ways designed to distort airline competition, because none of them are owned or controlled by U.S. airlines or airline affiliates. 69 FR 990-991. While Amadeus is owned in part by three European airlines, it also has substantial public ownership, its airline owners should have no motive to undermine airline competition within the United States, and its U.S. market share is less than ten percent. 69 FR 986. We recognized that a system might be willing to take steps to prejudice airline competition if compensated for doing so by an airline, for example, by selling display bias, but there is no certainty that such conduct will occur or, if it did, that it would substantially harm consumers. We accordingly concluded that the possibility of display bias did not warrant the continuation of industry-wide rules, especially in light of the systems' declining market power. 69 FR 994. While we could not predict precisely how systems will respond to the industry's deregulation, we expected that consumers and participants in the airline distribution business will benefit from the rules' termination. 69 FR 978. We stated, moreover, that we intend to monitor the effects of the CRS industry's deregulation and that we will take appropriate action if a system engages in conduct that would violate section 411. 69 FR 978, 986.

The rules on the treatment of code-sharing airlines, unlike the comprehensive rules, have never contained a sunset date that would cause us to reconsider whether the rules remained necessary. However, the findings on which we based our decision to terminate the comprehensive rules suggest that we should also terminate the Part 256 rules governing the systems' treatment of airlines that share codes. The Board adopted those rules largely to protect airline competition from potential efforts by the airlines that controlled the systems to create displays that discriminated against competing airlines that shared codes. As noted, the Board began the rulemaking due to United's plan to eliminate code-sharing airlines from Apollo's displays. The complete divestiture of their CRS ownership interests by the U.S. airlines that had controlled the systems has eliminated the primary basis for the Board's original adoption of these rules.

Furthermore, as we found in our reexamination of the comprehensive rules, because the Internet has created alternative sources of information and booking capabilities for airlines and travel agents, market forces are beginning to discipline the systems' prices and terms for airline participation. If an airline believes that a system's display of its services is unreasonable or unfair, the airline should have some ability at least to lower its level of participation. The airlines' ability to reject unacceptable terms for CRS participation should continue to grow. Furthermore, travel agencies have an interest in obtaining full, accurate, and useful information on airline services, and they have the ability to choose between systems. 69 FR 1005. These factors should encourage the systems to display information on airline services in a manner that will meet the needs of travel agents. Eliminating the rules may give a system additional flexibility to tailor its displays to meet travel agent and consumer demands and may result in more useful displays. We therefore have tentatively determined that the rules governing the systems' treatment of code-sharing airlines are no longer necessary and should be ended.

In addition, as noted above, these rules cover only airlines that own, control, or operate a system, not the systems themselves, and Amadeus' airline owners are therefore the only firms required to comply with the rules. Applying the rules only to Amadeus' owner airlines appears illogical and potentially inequitable, when Amadeus has the smallest market share in the United States and has airline owners that should have little interest in distorting competition within this country.

We do not expect systems to adopt the practices now barred by Part 256, denials of system access to airlines that code-share and discrimination against such airlines. Code-sharing has become a widespread practice and, among other things, has formed the basis for the development of international alliances between U.S. and foreign airlines, such as the Star Alliance, oneworld, and SkyTeam. We have found that code-sharing can provide significant consumer benefits. 67 FR 69396-69397. As a result, we assume that travel agents will demand that systems provide displays that show airline services marketed under code-share arrangements. Systems may also choose to offer displays that limit the display of code-share services, as some have being doing. 69 FR 1005. Any decision by a system to change or limit the display of code-sharing services, however, should reflect the system's response to market demands, not a decision to distort airline competition by creating displays that discriminate against all code-share services. The systems' vigorous competition for travel agency customers should cause them to provide displays that satisfy travel agent preferences.

The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538, requires Federal agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal or private mandate likely to result in the expenditures by State, local, or tribal governments, in the aggregate, or by the private sector, of more than $100 million annually.

The proposed rule would not result in expenditures by the private sector or by State, local, or tribal governments because we propose to eliminate the rules. In addition, no such government operates a system or airline that is or has been subject to our regulations.

Executive Order 12866, Regulatory Planning and Review (58 FR 51735, October 4, 1993), defines a significant regulatory action as one that is likely to result in a rule that may have an annual effect on the economy of $100 million or more, or that may 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. Regulatory actions are also considered significant if they are likely to create a serious inconsistency or interfere with the actions taken or planned by another agency, if they establish novel policy issues, or if they materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of the recipients of such programs.

The Department's Regulatory Policies and Procedures (44 FR 11034, February 26, 1979) outline similar definitions and requirements with the goal of simplifying and improving the quality of the Department's regulatory process. They state that a rule will be significant if it is likely to generate much public interest.

This proposed regulation would be a significant regulatory action under the Executive Order, since CRS rules have long been a subject of public controversy. The Department's tentative assessment of the likely costs and benefits for this proposal is set forth below. This proposal has been reviewed by the Office of Management and Budget under the Executive Order.

This preliminary economic analysis seeks to assess the potential economic and competitive consequences of our proposed rules on computer reservations systems, airlines, and travel agencies and to evaluate the benefits to the industry and the traveling public. We tentatively find, as discussed below, that the elimination of the rules barring airline-owned systems from discriminating against airlines that code-share should not harm airlines, travel agencies, or consumers, or have a material effect on firms in the airline or airline distribution businesses or on consumers.

The Civil Aeronautics Board originally adopted the rules barring discrimination against airlines that shared the same code when each of the systems was owned by an airline and when each airline owner had the ability and the incentive to use its system to prejudice the competitive position of rival airlines. The systems' conduct at that time justified the Board's action. The Board proposed these rules as a result of United's plan to eliminate code-share services from the displays offered by Apollo, the system then owned by United, a plan that would harm several of United's competitors. Airlines then relied on travel agents for the large majority of their revenues, and travel agents relied on the systems to determine what airline services were available, to make bookings, and to issue tickets.

The industry conditions that caused the Board to adopt the rules barring discrimination against code-sharing airlines no longer exist. No system is currently owned by a U.S. airline or airline affiliate. No system should have an incentive to discriminate against code-share services in order to distort airline competition. The share of airline revenues produced by travel agents has been falling. Many travel agents now use multiple sources of information to investigate options for their customers and no longer rely almost entirely on one of the systems to determine what airline flights and fares are available. As a result, airlines have been obtaining some bargaining leverage against the systems, and a system's failure to display airline services in an unbiased manner will no longer deny travel agents the ability to electronically obtain complete information on airline service options. The systems' competition for travel agency customers will give the systems an incentive to provide displays that meet the travel agents' needs for more accurate, complete, and useful information. The airlines' growing bargaining leverage with the systems should encourage systems to provide access to their services on terms which are consistent with airline marketing strategies.

The rules barring discrimination against code-sharing airlines may limit the ability of Amadeus, the only system now subject to the rules, to respond to travel agency preferences to create displays less cluttered with code-shares, and may keep travel agents from obtaining displays that meet their needs. Even if the rules impose no burden on Amadeus, however, there is no apparent justification for maintaining them.

For the same reasons on which we based our decision to terminate the comprehensive rules, our elimination of the rules barring discrimination against airlines that share codes should have no significant economic impact on airlines, travel agencies, or consumers. First, because the existing rule covers only airlines that own, operate, or control a system, only the smallest of the four systems operating in the United States—Amadeus—is subject to the rule. Secondly, no system should have an incentive to distort competition in the U.S. airline industry, because no system is owned or controlled by a U.S. airline or airline affiliate. Amadeus' principal owners are three European airlines. In addition, public shareholders own a substantial amount of Amadeus' stock, and Amadeus' management must operate the business for the benefit of all of its shareholders, not just its airline shareholders. Code-sharing is a much more widespread practice now than it was when the Board adopted these rules, and no system is likely to block the display of services operated under code-share arrangements. For these reasons, we do not expect Amadeus or any other system to begin discriminating against airlines that share codes.

We request interested persons to provide us with detailed information about the possible consequences of this proposal, including its benefits, costs, and economic and competitive impacts.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601 et seq., was enacted by Congress to ensure that small entities are not unnecessarily and disproportionately burdened by government regulations. The act requires agencies to review proposed regulations that may have a significant economic impact on a substantial number of small entities. For purposes of this rule, small entities include smaller U.S. and foreign airlines and smaller travel agencies. This notice of proposed rulemaking sets forth the reasons for our rule proposal and its objectives and legal basis.

Our proposed termination of the existing rules would not have a significant economic impact on a substantial number of small business entities. The rules impose obligations only on airlines that own, control, or operate a system, and none of the airlines that now own, or have owned, a system has been a small entity. The rules may indirectly affect smaller airlines and travel agencies, which are small entities, because they may affect how code-share services are displayed in the systems used by travel agents. Eliminating the rules should have no significant impact on smaller airlines or travel agencies.

First, the rules currently govern only Amadeus, the system with the smallest market share in the United States, because the other three systems have no airline owners. Secondly, the rules prohibit a system from discriminating against code-share services offered by airlines. The Board adopted the rules because one of the airline-owned systems was then planning to stop displaying flights operated by any airline if they were sold under another airline's code, a change that would undermine the marketing efforts of a major competitor of the system's airline owner. 49 FR 9435. It seems unlikely that any system would adopt a similar policy on the display of code-share services, because all major U.S. and European airlines have code-share operations. Furthermore, travel agencies have a substantial degree of bargaining leverage with the systems, as shown by the record in our last reexamination of the comprehensive rules, 69 FR 981-983, which should cause the systems to offer displays that meet the needs of travel agents. Airlines are obtaining more bargaining power with the systems, which should also keep systems from offering displays that would significantly interfere with airline marketing programs. Because code-sharing is now a widespread practice, a system's refusal to display services operated under code-share arrangements would probably undermine that system's ability to obtain travel agency customers, and it would displease its major airline customers. Finally, the Internet has provided new sources of airline information for travel agents to use, so travel agents no longer rely so greatly on the systems for airline information. Furthermore, as discussed, there no longer appears to be any rationale for maintaining these rules.

The Regulatory Flexibility Act requires us to publish an initial regulatory flexibility analysis that considers such matters as the impact of a proposed rule on small entities if the rule would have “a significant economic impact on a substantial number of small entities.” 5 U.S.C. 605(b). For the reasons stated above, I certify that the elimination of our rule on the treatment of code-share operations which is proposed by this notice would not have a significant economic impact on a substantial number of small entities. No initial regulatory flexibility analysis is therefore required for this action.

Our proposed rule contains no direct reporting, record-keeping, or other compliance requirements that would affect small entities. There are no other federal rules that duplicate, overlap, or conflict with our proposed rules.

Interested persons may address our tentative conclusions under the Regulatory Flexibility Act in their comments submitted in response to this notice of proposed rulemaking.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, we want to assist small entities in understanding the proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the proposed rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please consult Thomas Ray at (202) 366-4731.

The proposed rule contains no collection-of-information requirements subject to the Paperwork Reduction Act, Pub. L. 96-511, 44 U.S.C. Chapter 35. See 57 FR at 43834.

Our proposal would have no 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 Executive Order 13132, dated August 4, 1999, we have determined that it does not present sufficient federalism implications to warrant consultations with State and local governments.

This proposed rule would not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Government Actions and Interference with Constitutionally Protected Property Rights.

This proposed rule meets 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 have analyzed this proposed rule under Executive Order 13045, Protection of Children from Environmental Heath Risks and Safety Risks. This rule does not concern an environmental risk to health or risk to safety that may disproportionately affect children.

This proposed rule will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not preempt tribal law. Therefore, it is exempt from the consultation requirements of Executive Order 13175. If tribal implications are identified during the comment period, we will undertake appropriate consultations with the affected Indian tribal officials.

We have analyzed this proposed rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that this is not classified as a “significant energy action” under that order because it is a “significant regulatory action” under Executive Order 12866 and it would not have a significant adverse effect on the supply, distribution, or use of energy.

The proposed rule would have no significant impact on the environment.

In the Federal Register of March 20, 2002 (67 FR 12918) (the proposed rule), FDA proposed to amend its voluntary nutrition labeling regulations by updating the names and nutrition labeling values for the 20 most frequently consumed raw fruits, vegetables, and fish in the United States based upon new data submitted or made available to the agency. In that document, we requested comments on the proposal by June 3, 2002. In the Federal Register of June 6, 2002 (67 FR 38913), we corrected the proposed rule that published with an incorrect docket number (i.e., Docket No. 01N-0458) and provided additional time to submit comments, until August 20, 2002.

In a comment to the proposed rule, USDA submitted nutrient data from its 2001-2002 nationwide sampling of fruits and vegetables (see http://www.fda.gov/ohrms/dockets/dailys/02/Aug02/080602/01n-0548-c000006-vol1.pdf). USDA provided data for 16 of the 20 most frequently consumed fruits: Apple, avocado (California), banana, cantaloupe, grapefruit, honeydew melon, kiwifruit, nectarine, orange, peach, pear, pineapple, plums, strawberries, sweet cherries, and watermelon; and 12 of the top 20 vegetables: Bell pepper, broccoli, carrot, celery, cucumber, iceberg lettuce, leaf lettuce, onion, potato, radish, sweet potato, and tomato. At the time USDA submitted the comment, the data results for vitamin C, sodium, and potassium were not yet available, and the analysis of carotenoids for carrots, sweet potatoes, cucumbers, onions, and sweet peppers had not been completed. In June and July of 2003, after the close of the comment period, USDA provided sodium, potassium, and some carotenoid values that it did not submit earlier (Ref. 1). It also submitted vitamin C values for pineapple.

In other comments to the proposed rule, the Citrus Research Board and Food Research, Inc., provided nutrient data from 1998 for oranges, grapefruit, tangerines (Mandarin oranges), and lemons (see http://www.fda.gov/ohrms/dockets/dailys/02/Aug02/081602/8001f4e1.pdf, http://www.fda.gov/ohrms/dockets/dailys/02/Aug02/082902/01N-0548-cr00001-01-vol1.htm, and http://www.fda.gov/ohrms/dockets/dailys/02/Aug02/082902/8002574a.doc).

Two comments recommended that Chinook salmon be included with the revised species of fish (see http://www.fda.gov/ohrms/dockets/dailys/02/Aug02/082102/800222f0.pdf and http://www.fda.gov/ohrms/dockets/dailys/02/Aug02/082202/8002239d.pdf). One comment noted that according to nutrient data from the USDA Nutrient Database for Standard Reference, the nutrient profile of Chinook salmon is most similar to the proposed category and values for Atlantic, Coho, and Sockeye salmon (Ref. 2).

Based upon data received during the comment period and USDA data received after the comment period, we have calculated updated nutrition labeling values for some of the 20 most frequently consumed raw fruits, vegetables, and fish. FDA is now reopening the comment period to allow the raw produce and fish industries and other interested parties the opportunity to review and react to updated nutrition labeling values based upon data FDA received within and after the comment period. Reopening the comment period may also provide an impetus for completion of additional nutrient analyses. We will evaluate any new data submissions received during this reopened comment period and will consider use of those data in a final rule.

We are reopening the comment period to revise the nutrition labeling values of the 20 most frequently consumed raw fruits, vegetables, and fish, which are included in appendices C and D to part 101. The proposed appendices C and D that we are publishing in this document include the updated values described in tables 1 and 2 of this document. As noted in the proposed rule, the agency believes that the values in proposed appendices C and D could be used on an interim basis prior to completion of the rulemaking, provided that the nutrition information is presented in a manner consistent with this document. However, firms should be aware that values included in a final rule may differ and would need to be changed.

Reference 3 provides complete documentation of the derivation of each nutrition labeling value for the 20 most frequently consumed raw fruits, vegetables, and fish.

Originally, for the proposed rule, we completed outlier screening of the data using the Grubbs outlier screening method to determine influential observations in the distributions of data for each nutrient and food. However, based upon comments received in response to the proposed rule and discussion of outliers in the statistical literature, we have determined not to conduct Grubbs outlier screening on the nutrient data for raw produce and fish.

In developing the nutrient values in the proposed rule, we took a conservative approach to outliers and deleted those data points identified through outlier screening.

There were several comments in response to the proposed rule that addressed outlier screening. Comments questioned the validity of using Grubbs outlier screening for fruits and recommended the use of visual scattergrams and bar graphs. Another comment questioned the removal of outliers.

The National Institute of Standards and Technology (NIST) e-Handbook of Statistical Methods states that the Grubbs test is based on the assumption of normality and should only be used with data that are normally distributed (Ref. 4). NIST also recommends that the test should not be used for sample sizes of six or less since it frequently tags most of the points as outliers. Many of the nutrient levels in the voluntary nutrition labeling program are based on small sample sizes because that is all the data that are available to FDA. Small sample sizes simply do not contain enough information to make inferences about the shape of the distribution in the entire population (Ref. 5).

Therefore, based on the information in the previous paragraphs, we have decided not to conduct Grubbs outlier screening on the nutrient data.

The following is a summary of tentative changes from the nutrition labeling values in the proposed rule for some of the 20 most frequently consumed raw fruits and vegetables. FDA derived the updated values from the raw data provided by USDA and the Citrus Research Board during the comment period, as well as existing data. We also considered data for sodium, potassium, carotenoids, and vitamin C that USDA submitted after the comment period. Other changes were related to discontinuance of outlier screening. As explained in the proposed rule, when possible, FDA used compliance calculations based on 95 percent intervals to derive nutrition labeling values.

The following is a summary of tentative changes from the nutrition labeling values in the proposed rule for some of the 20 most frequently consumed raw fish. Changes were related to discontinuance of outlier screening and to inclusion of raw Chinook salmon with Atlantic, Coho, and Sockeye salmon. FDA derived values for fish using data from the USDA National Nutrient Databank (Ref. 6). When possible, FDA used compliance calculations based on 95 percent intervals to derive nutrition labeling values. When raw data were unavailable, FDA used data from the newest version of USDA Nutrient Database for Standard Reference, Release 17 (Ref. 2).

Interested persons may submit to the Division of Dockets Management (see ADDRESSES) written or electronic comments regarding this document. Submit a single copy of electronic comments or two paper copies of any mailed comments, except that individuals may submit one paper copy. Identify comments with the docket number found in brackets in the heading of this document. Received comments may be seen in the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

The Federal Food, Drug, and Cosmetic Act (the act) as amended by the Nutrition Labeling and Education Act of 1990 (NLEA) (Public Law 101-535), together with FDA's implementing regulations, established mandatory nutrition labeling for packaged foods to enable consumers to make more informed and healthier food product choices in the context of their daily diet. The cornerstone of the NLEA is the requirement that packaged foods bear a Nutrition Facts Panel (NFP), which provides product-specific information on serving size, calories, and nutrient content. FDA's final regulations establishing nutrition labeling were published in 1993 (58 FR 2079, January 6, 1993) (the nutrition labeling final rule).

With respect to calorie information, FDA's nutrition labeling final rule requires the listing of total calories and calories from fat, with the exception that “Calories from fat” information is not required on products that contain less than 0.5 gram of fat in a serving (§ 101.9(c)(1)(ii). When “Calories from fat” is not listed, the statement “Not a significant source of calories from fat” must be placed at the bottom of the nutrition label (§ 101.9(c)(1)(ii) (21 CFR 101.9(c)(1)(ii))). In addition, manufacturers may voluntarily list calories from saturated fat (§ 101.9(c)(1)(iii)).

The nutrition labeling final rule specifies the format and content for the listing of calories in the NFP and provides that “Calories” must be in a type size no smaller than 8 point (§ 101.9(d)(1)(iii)) and be highlighted (§ 101.9(d)(1)(iv)). The nutrition labeling final rule also provides that information on “Calories” and “Calories from fat” in the NFP must follow the heading “Amount Per Serving” and be declared in one line with enough space to clearly differentiate between “Calories” and “Calories from fat” unless “Calories from saturated fat” is voluntarily declared, in which case they should appear in a column, with “Calories” at the top, followed by “Calories from fat” and “Calories from saturated fat” (§ 101.9(d)(5)). Exceptions to some of these provisions are provided for foods that contain two or more separately packaged foods that are intended to be eaten individually (§ 101.9(d)(13)), foods that contain insignificant amounts of seven or more of certain specified nutrients (§ 101.9(f)), foods intended for infants and children less than 2 years of age (§ 101.9(j)(5)), dietary supplements (§ 101.9(j)(6)), and foods in small and intermediate-sized packages (§ 101.9(j)(13)).

In August 2003, the Commissioner created the OWG and charged it to develop an action plan covering the critical dimensions of the obesity problem in America to help consumers lead healthier lives through better nutrition. The OWG was composed of professionals across FDA who provided a range of expertise in areas such as food labels; communication and education efforts; the role of industry and restaurants; and therapeutic interventions for obesity. The OWG met eight times and received briefings from several invited experts from other government agencies. In addition, the OWG held one public meeting, one workshop, two round table discussions (one with health professionals/academicians, and one with consumer groups), and solicited comments on obesity-related issues, directing them to a docket established in July 2003 (Docket No. 2003N-0338) (referred to in this ANPRM as “the Obesity docket”). The final report issued by the OWG centered on the scientific fact that weight control is primarily a function of the balance of calories eaten and calories expended; and therefore, focused on a “calories count” emphasis for FDA actions (Ref. 1).

A principal aspect of the Commissioner's charge was for the OWG to “develop an approach for enhancing and improving the food label to assist consumers in preventing weight gain and reducing obesity.” After considering the legal requirements concerning food labeling and the limited data on consumer familiarity with, and use of, food label information (described in section I.C of this document), the OWG recommended that FDA: (1) Develop options for revising or adding caloric and other nutritional information on food packaging, (2) obtain information on the effectiveness of these options in affecting consumer understanding and behavior relevant to caloric intake, and (3) evaluate this information to make evidence-based decisions on which options to pursue. This ANPRM will focus only on the OWG recommendations pertaining to giving more prominence to calories.

The OWG reviewed research conducted by FDA and others, described more fully in “Calories Count” (Ref. 1), that shows that most consumers are familiar with the nutrition information on food labels and that they use this information primarily for evaluating the nutrition quality of specific food products. However, the percentage of consumers who use the NFP information productively for weight management purposes is low (Ref. 1). In addition, the OWG also reviewed results of focus group research conducted by FDA in November and December 2003 to provide, among other things, preliminary information on the participants' attitudes and behaviors towards nutrition information on food labels. In this research, among other things, FDA asked participants questions aimed at determining consumer attitudes and behaviors towards changes in the presentation of calorie information in the NFP and calorie information on the front label of food packages.

Participants in FDA focus groups cared about nutrition labeling and reported using the NFP. While many participants said they were interested in calories, many also pointed to multiple concerns that went beyond the labeling of calories such as the level of saturated fat, total fat, cholesterol, carbohydrates and sodium (Ref. 1).

In terms of calorie-related variations in the NFP, the focus groups tested participant understanding of several food label designs, including one similar to the current NFP but with some modifications. These included a relatively larger font size for the calories line, a %DV (daily value) for calories, and removal of the listing for “Calories from fat.” Many of the participants in these studies did not comment on the changes in the label until they were pointed out to them (Ref. 1).

Focus group participants were also shown a design that included a “starburst” with the amount of calories per serving placed on the front of the label (i.e., the principal display panel (PDP)), as a way to give greater prominence to calories. The respondents felt that this design was misleading, i.e., that the manufacturer was trying to indicate that the entire product (as opposed to a single serving) had fewer calories than it actually had. Other groups were shown a design that included a white square with the amount of calories for the entire package. The responses of those shown this white square design were mixed (Ref. 1).

Findings from focus group research yield only qualitative data and should not be viewed as nationally representative of consumers' views. Quantitative experimental data are necessary to make reliable and verifiable conclusions of consumers' views. However, focus group research can shed some interesting light on the complex issues covered by the OWG and are useful for identifying quantitative research needs.

In addition to the literature review and focus group research described more fully in Ref. 1, we have also reviewed the written and public comments submitted to the Obesity docket. Several of these comments suggested that FDA develop ways to emphasize calories on the food label. In particular, these comments suggested that the label should focus less on fat and more on calories and overall diet, and that calories should be listed on the front, or on the PDP of the package in clear, bold lettering. Other comments noted that research should be conducted to determine whether the current calorie listing is meaningful to consumers. We agree with the comments that more research is needed, and that the highlighted comments are important considerations. However, before recommending changes to the food label, the agency wants to develop a better understanding of how consumers currently use calorie information on the NFP, and then assess whether the NFP requires modification to be effective in facilitating positive dietary change (Ref. 1).

Based on information presented to and gathered by the OWG, its Report observed that, despite evidence of a positive correlation between label use and certain positive dietary choices (e.g., selection of lower sodium or lower fat content foods), the trend towards obesity has accelerated over the last decade (Ref. 1). The OWG hypothesized that consumers may not take advantage of the available information on the food label to control their weight, may not appreciate how the information could be used for weight management purposes, or may find it to hard to apply the available information to such purposes (Ref. 1). Therefore, the OWG recommended that FDA issue an ANPRM to solicit public comments on how to give more prominence to calories on the food label. Possible changes suggested by the OWG were as follows: (1) Increasing the font size for calories; (2) providing for a %DV for calories; and (3) eliminating the “Calories from fat” listing, as this may take the emphasis away from the listing of “Calories” (Ref. 1).

The ability to determine the caloric content of packaged foods is critical for consumers, especially consumers who are trying to control total caloric intake and manage their weight. While the current NFP does allow consumers to determine the caloric content of packaged foods, it may be, as suggested by the OWG Report, that modifying the food label to give more emphasis to calorie information would benefit consumers in weight control and maintenance. To help the agency determine which regulatory options provide consumers with information that is most useful in weight control and weight management, and for any future analysis of benefits and costs associated with those regulatory options, we request comments and available data on the following questions.

• Would consumer awareness of the caloric content of packaged foods be increased by amending nutrition labeling regulations to give more prominence to the declaration of calories per serving? Why or why not?

• How would a more prominent listing of calorie information change the way consumers use the NFP in deciding what to eat?

• What methods could be considered for increasing prominence? For example, should the font size be increased for the listing of “Calories” from the current requirement of 8-point type, and/or should extra bold type or a different style of type be used?

• Would providing for a %DV disclosure for total calories assist consumers in understanding the caloric content of the packaged food in the context of a 2,000 calorie diet? Why or why not?

The Federal Food, Drug, and Cosmetic Act (the act), as amended by the Nutrition Labeling and Education Act of 1990 (NLEA) (Public Law 101-535), together with FDA's implementing regulations, established mandatory nutrition labeling for packaged foods to enable consumers to make more informed and healthier food product choices in the context of their daily diet. Section 403(q)(1)(A)(i) of the act (21 U.S.C. 343(q)(1)(A)(i)) requires that most foods under FDA's jurisdiction bear nutrition information based on a serving size that reflects the amount of food customarily consumed and is expressed in a common household measure appropriate to the food. The NLEA also required that FDA issue regulations that establish standards to define serving size.

To implement the serving size requirements of the NLEA, FDA underwent extensive notice-and-comment rulemaking (56 FR 60394, November 27, 1991 (the 1991 serving size proposed rule); 58 FR 2229, January 6, 1993 (the serving size final rule); and 58 FR 44039, August 18, 1993 (the serving size technical amendments)). Consistent with the act, the serving size regulations established a system to define “serving size” that was composed of two basic elements: (1) Reference amounts customarily consumed per eating occasion (reference amounts or RACCs) for specific food product categories; and (2) procedures for determining serving sizes for use on product labels derived from the reference amounts. The second element was necessary because the RACCs are provided primarily in metric units (based on data from nationwide food consumption surveys that are expressed in grams); however, the act requires that serving sizes be expressed in common household measures that are appropriate to the particular food.

In § 101.9(b)(1) (21 CFR 101.9(b)(1)), we defined the term “serving” or “serving size” to mean:

In § 101.12(b) (21 CFR 101.12(b)), we established RACCs (upon which label serving sizes are to be determined) for 129 food product categories representing the general food supply and 11 categories for infant and toddler foods. The general principles and factors that FDA considered in arriving at the RACCs are described in § 101.12(a). Among these principles, FDA sought to ensure that foods that have similar dietary usage, product characteristics, and customarily consumed amounts have a uniform reference amount so that consumers could make nutritional comparisons of like products in the marketplace.

The RACCs represent the amount of food customarily consumed per eating occasion for each product category, and were derived primarily from data obtained from the 1977-1978 and 1987-1988 Nationwide Food Consumption Surveys conducted by the U.S. Department of Agriculture (58 FR 2229 at 2236-2237). We reviewed food consumption data for the foods in each product category and considered three statistical estimates, i.e., the mean (average), the median (50th percentile), and the mode (most frequent value). Following the procedures detailed in the 1991 serving size proposed rule (56 FR 60394 at 60403-60406), we determined the reference amount that was most likely to represent the amount customarily consumed for each product category.

In § 101.9(b), we established procedures for converting RACCs into appropriate label serving sizes. Among these provisions is § 101.9(b)(6), where we defined the criteria for products to be labeled as single-serving containers. (See 58 FR 2229 at 2232-2235 for FDA's evaluation of comments.) Most products packaged and sold individually that contain less than 200 percent of the applicable RACC must currently be labeled as a single serving. An exception to this rule occurs for products that contain between 150 percent and 200 percent of the RACC and that have a RACC of 100 grams (g) or 100 milliliters (mL) or larger. In this case, the product may be labeled as one or two servings, at the manufacturer's option.

For example, the RACC for carbonated beverages is 240 mL (i.e., 8 fluid (fl) ounces (oz)). Containers of carbonated beverages that weigh 360 mL (i.e., 12 fl oz, 150 percent of 240 mL) or less must be labeled as a single serving. Containers weighing between 360 mL and 480 mL (i.e., 16 fl oz, 200 percent of 240 mL) may be labeled as a single serving or as “about 2” servings per container (§ 101.9(b)(8)(i)).

For products packaged and sold individually that contain 200 percent or more of the RACC, it is the manufacturer's option to label the product as a single-serving container if the entire content of the package can reasonably be consumed at a single-eating occasion. For example, the RACC for muffins is 55 g. If a single large muffin weighs 110 g (200 percent of 55 g), there are two options for the serving size declaration: “1 muffin (110 g)” or “1/2 muffin (55 g).”

In August 2003, the Commissioner created the OWG and charged it to develop an action plan covering the critical dimensions of the obesity problem in America to help consumers lead healthier lives through better nutrition. The OWG was composed of professionals across FDA who provided a range of expertise in areas such as food labels, communication and education efforts, the role of industry and restaurants, and therapeutic interventions for obesity. The OWG met eight times and received briefings from several invited experts from other government agencies. In addition, the OWG held one public meeting, one workshop, two round table discussions (one with health professionals/academicians, and one with consumer groups), and solicited comments on obesity-related issues, directing them to a docket established in July 2003 (Docket No. 2003N-0338). The final report issued by the OWG centered on the scientific fact that weight control is primarily a function of the balance of calories eaten and calories expended; and therefore, focused on a “calories count” emphasis for FDA actions (Ref. 1).

A principal aspect of the Commissioner's charge was for the OWG to “develop an approach for enhancing and improving the food label to assist consumers in preventing weight gain and reducing obesity.” To address this issue, among other actions, the OWG recommended that FDA reexamine its regulations on serving sizes by soliciting comment on the following topics: (1) Whether to require food packages that can reasonably be consumed at one eating occasion to declare the whole package as a single serving; (2) which, if any, RACCs of food categories need to be updated; and (3) whether to provide for comparative calorie claims for smaller portions of identical foods.

FDA's research on consumers' use of the Nutrition Facts panel (NFP) has indicated that consumers' ability to quickly read and understand the NFP is an important factor in determining whether consumers use the NFP and whether the NFP is helpful to them. In focus groups, participants indicated that they cared about nutrition and reported using the NFP, but also said that they did not want to spend a lot of time reading labels and did not always consider nutrition when deciding what to eat. They were interested in calories, but were also concerned about saturated fat, total fat, cholesterol, carbohydrates, and sodium. Most participant comments indicated that they incorrectly thought a serving size was a recommended portion size, rather than a standardized unit of measure. Some participants said that typical serving sizes, as a recommended portion, are unrealistic and pointed out that some people need to eat different amounts, depending on their age, body type, and lifestyle. In the 2002 Health and Diet Survey (Ref. 2), respondents were asked how they used the NFP. The most common answers were: (1) To see if the product was high or low in a specific nutrient, (2) to decide how much to eat, and (3) to help in meal planning. To address these issues, we request comments on the following questions:

• How can FDA make serving size information on the NFP easier for consumers to use when deciding what foods and how much of these foods they should eat?

• Do consumers recognize the differences between serving sizes on food labels and servings recommended in dietary guidance? If so, what do consumers think the differences are? What information on a label would help make this distinction clearer? For example, should the serving size and/or servings per container on the food label be made more prominent? If so, how?

• Are there some alternative, simpler ways to help consumers determine their nutrient intake based on what they eat? If so, please describe. What are the advantages and disadvantages of these options?

The serving size is critical to nutrition labeling since all of the information on nutrient levels depends on the amount of the product represented. Because there is evidence that the U.S. population is eating larger portion sizes than they did in the 1970s and 1980s (Refs. 3 through 6), the OWG recommends that FDA determine whether to update the RACCs, and if so, how to update the RACCs. Changes to the RACCs, in most instances, would require changes to the serving size on products, which in turn would require changes to the nutrient values listed on the nutrition label.

Newer food consumption data are available from the 1999-2000 and the 2001-2002 National Health and Nutrition Examination Surveys (NHANES) (Ref. 7), and these data provide a more current indication of the amount of food being consumed by individuals. However, we do not want consumers to confuse the serving size on the food label (which is required by the act to be based on the amount customarily consumed) with an amount that is recommended for consumption. For example, if data show that consumers are drinking larger amounts of carbonated beverages and FDA increases the RACC, which will likely increase the serving size on the food label, additional educational efforts may be required to reinforce to consumers that a larger serving size on the container is not a “recommended” serving size.

We request comments on these issues and specifically on the following questions:

• How do recent food consumption data, such as data from the 1999-2000 and 2001-2002 NHANES, factor into the determination of which, if any, RACCs need to be updated? Are there other food consumption data sources that are available or that could be provided to the agency for our consideration?

• If we revise the RACCs, what criteria should be used as the basis for change? For example, would a percentage (e.g., 20 percent, 25 percent, or 30 percent) increase or decrease from current RACCs be a valid rationale for change?

• Would consumers think that an increase in serving size on food labels means more of the food should be eaten? What additional education efforts should be provided to consumers to avoid such a conclusion?

• We previously stated in the preamble to the serving size final rule under part 101 (21 CFR part 101) (58 FR 2229 at 2235): “Section 403(q)(1)(A)(i) of the act, which states that a serving size is the amount customarily consumed, effectively requires the use of food consumption data as the primary basis for determining serving sizes.” However, considering the issues raised previously in this document, should the agency reconsider its definition of “serving” and “serving size” or how the agency interprets “customarily consumed”?

Several comments to the OWG docket strongly opposed the practice of individually packaged foods that appear to be single-serving containers, declaring two or more servings on the label—such as sodas and snack packs. In addition, as noted in the OWG report, FDA initiated eight focus groups around the country and, among other questions, asked consumers about serving size information on small packages. Examples of food labels were presented for a 20 fl oz soda and an individually packaged large muffin. In general, focus group participants thought that having multiple servings listed on the label for these products was misleading and confusing. Many participants did realize that if the entire package of food is eaten, the number of servings should be multiplied by the amount of the nutrient of interest; though some participants were confused and made mistakes when trying to calculate the total amount in their heads.

To address this issue, we ask for comments on the following questions:

• Should FDA initiate rulemaking to require packages that can reasonably be consumed at one eating occasion to provide the nutrition information for the entire package? If so, what criteria should FDA use to determine which multiserving products would require nutrition information for the entire package? Should it be based on the total amount in the container, the type of food, or something else?

• Should such products be required to include an additional column within the NFP to list the quantitative amounts and % Daily Value for the entire package, as well as the preexisting columns listing the quantitative amounts and % Daily Value for a serving that is less than the entire package (i.e., the serving size derived from the RACC)? Alternatively, should the nutrition information only be declared for the entire package as a single serving?

• If the nutrient amount per serving size (derived from the RACC) and per package were listed side-by-side in separate columns, how would this affect consumers' ability to understand the label?

The current cutoff criteria for single serving containers (200 percent of the RACC (or 150 percent for products that have a RACC of 100 g or 100 mL or larger)) does not appear to be appropriate across the board for all food categories. As previously noted in this document, participants in focus groups said they thought that having multiple servings listed on the label of a 20 fl oz soda (250 percent of the RACC) was misleading and confusing.

• Should the current cutoff criteria to define single-serving containers be changed? Should criteria vary for different types of products? Explain why or why not. What criteria should be used to designate which package sizes should be required to list nutrition information for the entire package?

In addition to the three statistical estimates previously mentioned in this document (i.e., the mean, median, and mode), food consumption surveys allow calculation of intake estimates for individuals who eat a greater amount of food than average (e.g., those in the 90th and 95th percentiles). Should package sizes falling at these amounts (e.g., 90th or 95th percentile), as reported from nationwide food consumption surveys, be used as cut points at or below which nutrition information should be included for the entire package? If so, the RACC tables in § 101.12(b) would have to be modified to include a column for the amount specific to each product category as a cut point for when a product must be labeled as a single-serving container. Is this a viable option? If not, how can single-serving containers be defined?

New regulations can have indirect effects, such as the repackaging of a product by the manufacturer.

• If FDA requires that manufacturers list the nutrient content for the entire package for packages up to specified sizes, are manufacturers likely to repackage products in larger sizes to avoid this requirement? If so, what are the likely impacts of this repackaging?

• Conversely, manufacturers may have an incentive to lower the size, and therefore the total calories, of single serving packages. Would this be an option that manufacturers would consider? If so, what would be the likely consequences of this repackaging?

As noted in the OWG Report, the Federal Trade Commission has suggested that FDA consider “allowing food marketers to make truthful, non-misleading label claims comparing foods of different portion sizes.” Our current regulations for comparative nutrient content claims, including calorie claims, require that all such comparisons be based on a uniform amount of food, i.e., per RACC for individual foods or per 100 g for meals and main dishes. Consequently, the current regulations (§ 101.60(b)) require that comparisons reflect actual nutrient differences in the same quantity of similar foods (e.g., “Reduced calorie chocolate ice cream, 25% fewer calories than the leading brand of chocolate ice cream. The leading brand contains 150 calories per 1/2 cup serving. Our ice cream contains 100 calories per 1/2 cup serving”). The current regulations do not permit claims that compare the amount of calories based on different sized portions of the same food.

Nevertheless, as noted in the OWG report, “using the food label to promote consumption of smaller portions may have merit [particularly] if consumers understand that (1) the calorie reduction is solely a function of the reduction in portion size and (2) the smaller portion size is actually less than what they usually consume.” Thus, we solicit comments regarding the appropriateness of label claims based on the amount of calories in a specified portion of a product (i.e., the amount of food specified by the claim, e.g., one 15 g cookie) vs. claims based on the RACC and specified in the labeled serving size of a product (i.e., the amount specified in the Nutrition Facts panel, e.g., two 15 g cookies). We ask for specific comments on the following questions:

• Because all currently approved comparative claims are based on the difference in the amount of the nutrient in a uniform amount of food such as per RACC, or per 100 g, will it be confusing to consumers to have claims made only on the basis of the difference in the amount of calories in two different labeled servings (i.e., the serving size specified in two different Nutrition Facts panels, e.g., an 8 fl oz can vs. a 12 fl oz can of soda) or two different portions (i.e., amounts specified by the claim, e.g., one 15 g cookie vs. two 15 g cookies) of the same food? Explain why or why not.

• If a claim is made based only on the difference in the amount of calories in two different serving sizes or portions of the same food, what words should be used to ensure that consumers understand that comparisons are made only on this basis (i.e., the difference in the amount of product) and that there is not a difference based on product reformulation, e.g., “the caloric savings is based on a smaller than normal portion?”

• Should the size of the compared servings, portions, or packages be part of the claim (e.g., “this 8 fl oz bottle of juice has 33 percent fewer calories than our 12 fl oz bottle”)? Explain why or why not.

• Should these types of claims be limited to products that are identical except for the specified serving or portion size?

• Will such claims be misleading if the claim is based on the number of calories that are in an amount of food other than what is specified in the Nutrition Facts panel (e.g., claims based on half a “labeled serving”—one cookie, compared to the amount specified in the Nutrition Facts panel—two cookies)?

Section 503(a) of the Act permits a State to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its program includes, among other things, “a State law which provides for the regulation of surface coal mining and reclamation operations in accordance with the requirements of this Act * * *; and rules and regulations consistent with regulations issued by the Secretary pursuant to this Act.” See 30 U.S.C. 1253(a)(1) and (7). On the basis of these criteria, the Secretary of the Interior conditionally approved the Illinois program on June 1, 1982. You can find background information on the Illinois program, including the Secretary's findings, the disposition of comments, and the conditions of approval of the Illinois program in the June 1, 1982, Federal Register (47 FR 23858). You can also find later actions concerning the Illinois program and program amendments at 30 CFR 913.10, 913.15, 913.16, and 913.17.

By letter dated February 1, 2005 (Administrative Record No. IL-5088), Illinois sent us an amendment to its program under SMCRA (30 U.S.C. 1201 et seq.). Illinois sent the amendment at its own initiative. Illinois is proposing to amend its regulations at 62 Illinois Administrative Code (IAC) Parts 1816, 1817, and 1823. Below is a summary of the changes proposed by Illinois. The full text of the program amendment is available for you to read at the locations listed above under ADDRESSES.

Illinois proposes to amend its regulations at 62 IAC 1816.116 to (1) incorporate a new productivity alternative to the Agricultural Lands Productivity Formula (ALPF), for determining success of revegetation of cropland, pasture land, hayland, and/or grazing land; (2) to update references to and requirements in existing regulations concerning the new productivity alternative; (3) to update requirements pertaining to adjustment for abnormal, catastrophic, growing conditions when the ALPF or the new productivity alternative is used for determining success of revegetation, (4) to remove references to oats as a crop that may be used to prove productivity success; (5) to update information in the soil master file, county average yield file, the agricultural lands productivity formula sampling methods, and Exhibit A in the ALPF, and (6) to delete Tables A through D from the ALPF.

1. 62 IAC 1816.116(a)(3)(C) and (E). At subsections (a)(3)(C) and (E), Illinois proposes to add a reference to new subsection (a)(6) and to add the following requirement at the end of each of the subsections:

Once chosen by the permittee, the productivity alternative in subsection (a)(6) may not be modified without approval from the Department.

2. 62 IAC 1816.116(a)(4). At subsection (a)(4), Illinois proposes to reference the new productivity alternative in subsection (a)(6); to update requirements pertaining to adjustment for abnormal, catastrophic, growing conditions when the ALPF or the new productivity alternative is used for determining success of revegetation; and to remove a reference to oat crops from several provisions.

a. In the introductory paragraph of subsection (a)(4), Illinois proposes to add a reference to the new productivity alternative at subsection (a)(6).

b. Illinois proposes to change the requirements of subsection (a)(4)(C) concerning adjustments for abnormal growing conditions to read as follows:

c. At subsection (a)(4)(D), Illinois proposes to remove a reference to “oats” as a type of crop commonly grown on surrounding unmined cropland and as a crop that may be used for one year to demonstrate productivity on prime farmland and other cropland areas. Illinois also proposes to add the following requirement concerning deep tillage of prime farmland and other cropland areas:

3. 62 IAC 1816.116(a)(6). Illinois proposes a new productivity alternative at new subsection (a)(6). It reads as follows:

4. 62 IAC 1816. Appendix A—ALPF. Illinois proposes to update information in the soil master file, county cropped acreage file, county average yield file, the agricultural lands productivity formula sampling methods, and Exhibit A in the ALPF and to delete Tables A through D from the ALPF.

a. Citation Corrections. In the soil master file and the county cropped acreage file, Illinois is changing a citation reference to the Illinois Department of Agriculture from “20 [Illinois Compiled Statutes] ILCS 205/40.38” to “20 ILCS 205-115.”

b. Soil Master File. Illinois proposes to revise the introductory paragraph by changing the word “high” to the word “optimum” in its reference to the “high level of management yields” and by adding the following sentence at the end of the paragraph:

Illinois also proposes to remove the information on additional components of the soil master file.

c. County Average Yield File. In the fifth paragraph, Illinois proposes to remove its reference to “oats” as a grain crop. In the seventh paragraph, Illinois proposes to change the word “high” to the word “optimum” in the phrase “high management yield.” In the eighth paragraph, Illinois proposes to change the word “high” to the word “optimum” in the phrase “high management yield” and to add the following new information:

d. Agricultural Lands Productivity Formula Sampling Methods. In the introductory paragraph, Illinois proposes to remove its reference to “oats” as a grain crop. Illinois proposes to revise Step 10 under the section heading “Corn Sampling Technique” by removing the existing information on the row factor and replacing this information with “average row width in feet × 15 feet of row ÷ 43560 square feet/acre.” Illinois also proposes to remove the sections “Oats Sampling Technique (Rows <8″)” and “Oats Sampling Technique (Discernible Rows)” from the ALPF.

e. Exhibit A, County Crop Yields by Soil Mapping Unit. Illinois proposes to change the word “high” to the word “optimum” in columns E and F and to remove a reference to oats.

f. Illinois proposes to delete tables A through D from the ALPF.

Illinois proposes to update statutory citations, to correct regulation references, and to add clarifying language to several regulations.

1. 62 IAC 1817.42 Hydrologic Balance-Water Quality Standards and Effluent Limitations. Illinois proposes to change the statutory citation for the Illinois Environmental Protection Act from “(Ill. Rev. Stat. 1991, ch. 1111/2, pars. 1001 et seq.)” to “[415 ILCS 5].”

2. 62 IAC 1817.43 Diversions:

a. At subsection (a)(2)(D) Illinois proposes to change the statutory citation for the Illinois Rivers, Lakes, and Streams Act from “(Ill. Rev. Stat. 1991, ch. 19, pars. 52-79)” to “[615 ILCS 5].”

b. At subsections (b) and (c), Illinois is proposing to simplify its use of numbers.

3. 62 IAC 1817.116 Revegetation Success Standards:

a. At subsections (a)(3)(C) and (E), Illinois proposes to add a reference to the newly proposed productivity alternative at 62 IAC 1816.116(a)(6) and to add the following requirement at the end of each subsection:

Once chosen by the permittee, the productivity alternative in subsection (a)(6) may not be modified without approval from the Department.

b. At subsection (a)(4), Illinois proposes to add a reference to the newly proposed productivity alternative at 62 IAC 1816.116(a)(6).

c. At subsection (b)(2), Illinois proposes to correct a regulation citation reference by changing it from “62 IAC 1785.15” to “62 IAC 1823.15.”

4. 62 IAC 1817.121 Subsidence Control:

a. At subsection (c), Repair of Damage, Illinois proposes to add the following new introductory paragraph:

The requirements of this subsection apply only to subsidence-related damage caused by underground coal extraction conducted after February 1, 1983, except as noted in Section 1817.41(j).

b. At subsection (c)(2), Illinois proposes to remove the last sentence.

a. At subsection (b)(2), Illinois proposes to add a reference to the newly proposed productivity alternative under 62 IAC 1816.116(a)(6).

b. At subsection (b)(3), Illinois proposes to add a reference to the newly proposed productivity alternative under 62 IAC 1816.116(a)(6), to simplify its use of numbers, and to add the following new requirement:

Once chosen by the permittee, the productivity alternative in subsection (a)(6) may not be modified without approval from the Department.

Under the provisions of 30 CFR 732.17(h), we are seeking your comments on whether the amendment satisfies the applicable program approval criteria of 30 CFR 732.15. If we approve the amendment, it will become part of the State program.

Send your written or electronic comments to OSM at the address given above. Your written comments should be specific, pertain only to the issues proposed in this rulemaking, and include explanations in support of your recommendations. We will not consider or respond to your comments when developing the final rule if they are received after the close of the comment period (see DATES). We will make every attempt to log all comments into the administrative record, but comments delivered to an address other than the Indianapolis Area Office may not be logged in.

Please submit Internet comments as an ASCII or Word file avoiding the use of special characters and any form of encryption. Please also include “Attn: Docket No. IL-103-FOR” and your name and return address in your Internet message. If you do not receive a confirmation that we have received your Internet message, contact the Indianapolis Area Office at (317) 226-6700.

We will make comments, including names and addresses of respondents, available for public review during normal business hours. We will not consider anonymous comments. If individual respondents request confidentiality, we will honor their request to the extent allowable by law. Individual respondents who wish to withhold their name or address from public review, except for the city or town, must state this prominently at the beginning of their comments. We will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public review in their entirety.

If you wish to speak at the public hearing, contact the person listed under FOR FURTHER INFORMATION CONTACT by 4 p.m., e.s.t. on April 19, 2005. If you are disabled and need special accommodations to attend a public hearing, contact the person listed under FOR FURTHER INFORMATION CONTACT. We will arrange the location and time of the hearing with those persons requesting the hearing. If no one requests an opportunity to speak, we will not hold a hearing.

To assist the transcriber and ensure an accurate record, we request, if possible, that each person who speaks at the public hearing provide us with a written copy of his or her comments. The public hearing will continue on the specified date until everyone scheduled to speak has been given an opportunity to be heard. If you are in the audience and have not been scheduled to speak and wish to do so, you will be allowed to speak after those who have been scheduled. We will end the hearing after everyone scheduled to speak and others present in the audience who wish to speak, have been heard.

If only one person requests an opportunity to speak, we may hold a public meeting rather than a public hearing. If you wish to meet with us to discuss the amendment, please request a meeting by contacting the person listed under FOR FURTHER INFORMATION CONTACT. All such meetings are open to the public and, if possible, we will post notices of meetings at the locations listed under ADDRESSES. We will make a written summary of each meeting a part of the administrative record.

This rule does not have takings implications. This determination is based on the analysis performed for the counterpart Federal regulation.

This rule is exempted from review by the Office of Management and Budget (OMB) under Executive Order 12866.

The Department of the Interior has conducted the reviews required by section 3 of Executive Order 12988 and has determined that this rule meets the applicable standards of subsections (a) and (b) of that section. However, these standards are not applicable to the actual language of State regulatory programs and program amendments because each program is drafted and promulgated by a specific State, not by OSM. Under sections 503 and 505 of SMCRA (30 U.S.C. 1253 and 1255) and the Federal regulations at 30 CFR 730.11, 732.15, and 732.17(h)(10), decisions on proposed State regulatory programs and program amendments submitted by the States must be based solely on a determination of whether the submittal is consistent with SMCRA and its implementing Federal regulations and whether the other requirements of 30 CFR parts 730, 731, and 732 have been met.

This rule does not have Federalism implications. SMCRA delineates the roles of the Federal and State governments with regard to the regulation of surface coal mining and reclamation operations. One of the purposes of SMCRA is to “establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations.” Section 503(a)(1) of SMCRA requires that State laws regulating surface coal mining and reclamation operations be “in accordance with” the requirements of SMCRA, and section 503(a)(7) requires that State programs contain rules and regulations “consistent with” regulations issued by the Secretary pursuant to SMCRA.

In accordance with Executive Order 13175, we have evaluated the potential effects of this rule on Federally-recognized Indian tribes and have determined that the rule does not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. This determination is based on the fact that the Illinois program does not regulate coal exploration and surface coal mining and reclamation operations on Indian lands. Therefore, the Illinois program has no effect on Federally-recognized Indian tribes.

On May 18, 2001, the President issued Executive Order 13211 which requires agencies to prepare a Statement of Energy Effects for a rule that is (1) considered significant under Executive Order 12866, and (2) likely to have a significant adverse effect on the supply, distribution, or use of energy. Because this rule is exempt from review under Executive Order 12866 and is not expected to have a significant adverse effect on the supply, distribution, or use of energy, a Statement of Energy Effects is not required.

This rule does not require an environmental impact statement because section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that agency decisions on proposed State regulatory program provisions do not constitute major Federal actions within the meaning of section 102(2)(C) of the National Environmental Policy Act (42 U.S.C. 4332(2)(C)).

This rule does not contain information collection requirements that require approval by OMB under the Paperwork Reduction Act (44 U.S.C. 3507 et seq.).

The Department of the Interior certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an economic analysis was prepared and certification made that such regulations would not have a significant economic effect upon a substantial number of small entities. In making the determination as to whether this rule would have a significant economic impact, the Department relied upon the data and assumptions for the counterpart Federal regulations.

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule: (a) Does not have an annual effect on the economy of $100 million; (b) Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; and (c) Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. This determination is based upon the fact that the State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation was not considered a major rule.

This rule will not impose an unfunded mandate on State, local, or tribal governments or the private sector of $100 million or more in any given year. This determination is based upon the fact that the State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation did not impose an unfunded mandate.

Entities potentially affected by the subject rule for today's action include sources in all industry groups. The majority of sources potentially affected are expected to be in the following groups.

Entities potentially affected by the subject rule for today's action also include State, local, and Tribal governments that are delegated authority to implement these regulations.

You may find the following suggestions helpful for preparing your comments.

• Explain your views as clearly as possible.

• Describe any assumptions that you used.

• Provide any technical information and/or data you used that support your views.

• If you estimate potential burden or costs, explain how you arrived at your estimate.

• Provide specific examples to illustrate your concerns.

• Offer alternatives.

• Make sure to submit your comments by the comment period deadline identified.

• To ensure proper receipt by EPA, identify the appropriate docket identification number in the subject line on the first page of your response. It would also be helpful if you provided the name, date, and Federal Register citation related to your comments.

In addition to being available in the docket, an electronic copy of today's notice is also available on the World Wide Web. Following signature by the EPA Administrator, a copy of today's notice will be posted in the regulations and standards section of the New Source Review home page located at http://www.epa.gov/nsr.

The public hearing will be held at the EPA's facility at 109 TW Alexander Drive, Research Triangle Park, NC, or at an alternate facility nearby. Please check our Web site at http://www.epa.gov/nsr/ for information and updates concerning the public hearing.

The public hearing will provide interested parties the opportunity to present data, views, or arguments concerning the issues raised in this notice. People interested in attending or presenting oral testimony are encouraged to register in advance by contacting Ms. Chandra Kennedy, OAQPS, Integrated Implementation Group, Information Transfer and Program Integration Division (C339-03), U.S. Environmental Protection Agency, Research Triangle Park, NC 27711; telephone number (919) 541-5319 or e-mail kennedy.chandra@epa.gov no later than April 14, 2005. Presentations will be limited to 5 minutes each. We will assign speaking times to speakers who make a timely request to speak at the hearing. We will notify speakers of their assigned times by April 18, 2005. We will attempt to accommodate all other people who wish to speak, as time allows.

The EPA's planned seating arrangement for the hearing is theater style, with seating available on a first come first served basis for about 250 people. Attendees should note that the use of pickets or other signs will not be allowed on either government or hotel property.

As of the date of this announcement, the Agency intends to proceed with the hearing as announced; however, unforeseen circumstances may result in a postponement. Therefore, we advise members of the public who plan to attend the hearing to contact Ms. Chandra Kennedy at the above referenced address to confirm the location and date of the hearing. You may also check our New Source Review Web site at http://www.epa.gov/nsr for any changes in the date or location.

The record for this action will remain open until May 19, 2005, to accommodate submittal of information related to the public hearing.

The information presented in this notice is organized as follows:

On July 18, 1997, we revised and strengthened the ozone NAAQS to change from a standard measured over a 1-hour period (1-hour standard) to a standard measured over an 8-hour period (8-hour standard). Previously, the 1 hour standard was 0.12 ppm. We established the new 8-hour standard at 0.08 ppm. See 62 FR 38856. Following revision of the standard, we promulgated an implementation rule that provided for implementation of the 8-hour standard under the general nonattainment area provisions of Subpart 1 of Part D of the Act. See 62 FR 38421. Subsequently, the Supreme Court ruled that our implementation approach was unreasonable because we did not provide a role for the generally more stringent ozone specific provisions of Subpart 2 of Part D of the Act in implementing the 8-hour standard. See Whitman v. Amer. Trucking Assoc., 531 U.S. 457, 471-476, 121 S.Ct. 903, 911-914 (2001). The Court remanded the implementation strategy to EPA to develop a reasonable approach for implementation. Id. Accordingly, on June 2, 2003 (68 FR 32802), we proposed various options for transitioning from the 1-hour to the 8-hour standard, and for how the 8-hour standard would be implemented under both subpart 1 and subpart 2. On August 6, 2003 (68 FR 46536), we published a notice of availability of draft regulatory text to implement the 8-hour standard. Among other things, this proposed rule included certain provisions for implementing major NSR. Specifically, we proposed that major NSR would generally be implemented in accordance with an area's 8-hour ozone nonattainment classification, but we would provide an exception for areas that were designated nonattainment for the 1-hour standard at the time of designation for the 8-hour standard. If the classification for a 1-hour nonattainment area is higher than its classification under the 8-hour standard, then under the proposed rule, the major NSR requirements in effect for the 1-hour standard would have continued to apply under the 8-hour standard even after we revoked the 1-hour standard. (68 FR 32821).

On April 30, 2004 (69 FR 23951), we promulgated Phase I of the new implementation rule. In response to comments received on the proposal, we revised the implementation approach for major NSR under the 8-hour standard. Specifically, we determined that major NSR would be implemented in accordance with an area's 8-hour ozone nonattainment classification. For those areas that we classify moderate and above, major NSR is implemented under subpart 2. We also indicated that, when we revoke the 1-hour standard, a State is no longer required to retain a nonattainment major NSR program in its SIP based on the requirements that applied by virtue of the area's previous classification under the 1-hour standard. We further indicated that we would approve a request to remove these requirements from a State's SIP because we determined based on section 110(l) of the Act that such changes will not interfere with any applicable requirements of the Act, including a State's ability to reach attainment of the 8-hour standard or reasonable further progress (RFP) (69 FR 23985). We noted that States will be required to implement a major NSR program based on the 8-hour classifications. We also emphasized that emission limitations and other requirements in major NSR permits issued under 1-hour major NSR programs will remain in effect even after we revoke the 1-hour standard (69 FR 23986).

Following publication of the April 30, 2004 final rule, the Administrator received three petitions, pursuant to section 307(d)(7)(B) of the Act, requesting reconsideration of certain aspects of the final rule.1 On June 29, 2004, Earthjustice submitted one of the three petitions that we received. This petition seeks reconsideration of certain elements of the Phase I Ozone Implementation Rule, including elements of the major NSR provisions. With respect to major NSR, Petitioners contend that the final rules are unlawful because the rules violate Section 110(l) and Section 172(e) of the Act by not requiring 8-hour ozone nonattainment areas to continue to apply major NSR requirements based on the area's 1-hour ozone nonattainment classification. Petitioners also allege that EPA acted unlawfully by stating that we will approve a State's request to remove 1-hour requirements from the SIP based on our finding that such a revision would not violate Section 110(l) for any State. Petitioners assert that these major NSR provisions and our rationale for them were added to the final action after the close of the public comment period. Thus, Petitioners claim, EPA failed to provide notice and opportunity for public comment concerning these provision as required under CAA Section 307(d)(5). On September 23, 2004, we granted reconsideration of three issues raised in the Earthjustice Petition. In an action dated February 3, 2005, we issued a Federal Register notice addressing two of those issues: (1) The provision that section 185 fees would no longer apply for a failure to attain the 1-hour standard once we revoke the 1-hour standard; and (2) the timing for determining what is an “applicable requirement.” 70 FR 5593.

Today, we seek comment on the third issue raised in that petition, which related to elements of the major NSR program. Specifically, we request comment on: (1) Whether we must interpret the Act to require States to continue major NSR requirements under the 8-hour standard based on an area's higher classification under the 1-hour standard; and (2) whether revising a State SIP to remove 1-hour major NSR requirements is consistent with Section 110(l) of the Act. As previously discussed, we proposed an approach concerning whether 1-hour nonattainment major NSR requirements must remain in the SIP after we revoke the 1-hour standard. (68 FR at 32821-22.) The public had an opportunity to comment on the approach we proposed, and in fact some commenters advocated replacing the 1-hour major NSR program with the 8-hour program. Nonetheless, we want Petitioners and others to have every opportunity to comment on our approach and to provide additional information that they believe to be relevant. For these reasons, we provide further explanation of our rationale for this action and request public comment on this approach. We will consider these comments and then make a final decision regarding the implementation of the NSR program under the 8-hour standard.

We plan to take final action on our grant of reconsideration by the end of May 2005. A State can only remove 1-hour NSR SIP provisions after we revoke the 1-hour standard. We plan to revoke the standard on June 15, 2005. Accordingly, no changes in 1-hour major NSR SIP programs could occur before June 15, 2005. The final rules concerning applicability of major NSR under the 8-hour standard remain in effect as promulgated until our final action on this reconsideration.

It is a basic tenet of administrative law that expert agencies have discretion to interpret ambiguous statutory terms. Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 387 (1984). We exercised this discretion in determining how to implement subpart 2 requirements for major NSR under the 8-hour standard, an issue that the Supreme Court has recognized is “ambiguous.” 2

In determining how to implement the provisions of subpart 2 for the major NSR program under the 8-hour standard, we considered the statutory requirements, Congressional intent as expressed in the CAA legislative history, the history of the NSR regulatory program, and our actions on 1-hour ozone Rate of Progress (ROP) plans and attainment demonstrations in general as they relate to nonattainment major NSR programs. We discuss this information below.

Our review of this information, as well as public comments on the proposed rule, supports our conclusion that once we revoke the 1-hour standard, the Act does not require States to retain a nonattainment major NSR program in their SIPs based on the requirements that applied by virtue of the area's previous classification under the 1-hour standard. It also supports our conclusion that, based on section 110(l) of the Act, removing the 1-hour major NSR program does not interfere with any applicable requirements of the Act, including a State's ability to reach attainment of the 8-hour standard and RFP.

Section 172(e) applies when we relax a NAAQS. It specifies that we “shall provide for controls which are not less stringent than the controls applicable to areas designated nonattainment before such relaxation.” By its terms, it does not directly apply to requirements to implement the 8-hour standard, because we strengthened the ozone NAAQS when we enacted the 8-hour standard. Nonetheless, we view this provision as an expression of Congressional intent that States may not remove control measures in areas which are not attaining a NAAQS when EPA revises that standard to make it more stringent, as is the case with the 8-hour standard. See 68 FR 32819. Accordingly, we required States to retain certain requirements associated with the 1-hour ozone nonattainment classification in implementing the 8-hour standard. See generally 69 FR 23951.

Notwithstanding the requirement to retain certain 1-hour control measures, we determined that Section 172(e) and our interpretation of Congressional intent does not mandate that States retain 1-hour major NSR requirements under the 8-hour standard, because the major NSR program does not impose emissions “controls” that reduce a nonattainment area's emissions below that area's baseline year inventory. In this respect, major NSR is not a “control” within the meaning of Section 172(e). Thus, we concluded that because major NSR programs based on 1-hour classifications would not contribute emissions reductions below baseline levels, those provisions are not “controls” that need to be preserved in implementing the 8-hour standard.

The term “controls” as used in Section 172(e) is ambiguous. In determining whether the reference to “controls” in Section 172(e) covers 1-hour NSR requirements, and thus whether we should interpret the Act as requiring such controls to remain effective after revocation of the 1-hour standard, we looked first to the CAA statutory language and structure. We reasoned that “[t]he role of the NSR permitting program as a growth measure, rather than a control measure, is evidenced in the structure of the Act, which delineates nonattainment NSR and control measures as separate SIP requirements,” citing, among other things, Section 110(a)(2)(A) and 110(a)(2)(C). (69 FR at 23986). Similarly, Section 172(c), which identifies the requirements for nonattainment plans, lists requirements for implementation of control measures separately from the provision requiring permits for new and modified major stationary sources. Compare Sections 172(c)(1) and (c)(6) (referring to control measures) with Section 172(c)(5) (referring to permits for new and modified major stationary sources).

Second, to resolve the ambiguity over whether the term “controls” in section 172(e) covers 1-hour NSR requirements, we further looked to Congress' purpose in creating the major NSR program. The 1970 statute did not contain any provisions concerning permitting of new sources, either in attainment or nonattainment areas. The statute set 1975 as the deadline to meet the NAQQS in most regions, with some extensions until 1977. By the time of the 1977 Amendments, many areas had missed their attainment deadlines, and it became apparent that, despite significant progress, SIPs were inadequate to achieve the NAAQS in many areas of the country.

In 1977 Congress considered whether new source growth could be allowed in areas not attaining the NAAQS.

Congress thus recognized the need for a balance between the goals of attaining air quality standards and providing for new economic growth. As part of the 1977 Amendments, Congress amended the Act to, among other things, establish a statutory approach to permit growth in polluted areas, while requiring attainment of the NAAQS by specific deadlines.3 This approach established the basic SIP process and requirements for attaining the NAAQS.

The major NSR program's purpose “is to permit States to allow continued growth or expansion in nonattainment areas, so long as this growth or expansion is undertaken in a manner consistent with the goals and objectives of the Clean Air Act.” See H.R. Rpt. 95-294 at 210 (May 12, 1977). Section 172(a)(2) of the Act requires attainment as expeditiously as practicable considering the availability and feasibility of control measures and Section 172(c)(1) and (c)(6) require implementation of all reasonably available control measures as expeditiously as practicable to provide for attainment of the NAAQS by the area's attainment date. Conversely, Section 173(a)(1)(A) requires only that growth due to proposed sources, when considered together with the other plan provisions required under Section 172, be sufficient to ensure RFP toward attainment. Thus, unlike the control measures required by Section 172(c)(1) and (c)(6), major NSR is not a measure to reduce emissions to assure attainment; nor did Congress identify the program as a control measure to help areas achieve attainment “as expeditiously as practicable.” Rather, Congress intended that the effectiveness of major NSR in minimizing the impact of increased emissions should be considered together with the State's other SIP measures to assure, consistent with Section 172(a)(2), that emissions from new sources will be consistent with RFP. Our interpretation is supported by the legislative record wherein Congress stated that

We note that recent case law upheld the Agency's approach of looking to Section 110 to determine the meaning of a similar phrase, “measures with respect to the control,” of pollutants in Section 175A of the Act concerning maintenance plans.4 Greenbaum v. U.S. EPA, 370 F.3d 527, 536-37 (7th Cir. 2004). In reviewing EPA's determination that the phrase did not include nonattainment major NSR, the court found the phrase ambiguous, and stated:

Petitioners cite EPA's past characterization of major NSR in a Supreme Court brief and a Federal Register notice as a “pollution-control measure” and “pollution control technology program.” Pet. at 5 (June 29, 2004) (quoting EPA Opening Merits Brief in Chevron, U.S.A. v. NRDC, S.Ct. 82-1005 (Aug. 31, 1983), 1982 Lexis U.S. Briefs 1005, at n.5; accord, 67 FR 80187 (Dec. 31 2002)). These citations are somewhat misleading, however, because petitioners isolate single phrases and ignore the broader context in which we wrote the words. The Supreme Court brief addresses whether EPA reasonably used a plantwide definition of “source” in the NSR program, and the quoted phrase occurs in the context of comparing the NSR and New Source Performance Standards (NSPS) programs. See Chevron U.S.A., Inc. v. NRDC, 1982 LEXIS Briefs 1005 at n.55 (Aug. 31, 1983). The Federal Register notice provision cited by Petitioners makes the statement in a background section generally describing the NSR program as a combination of an air quality planning and control technology program. In that same paragraph of the notice, we also stated that one of the program's purposes is “* * * to maximize opportunities for economic development consistent with the preservation of clean air resources.” Moreover, this alleged characterization has no persuasive value in interpreting the meaning of “controls” in Section 172(e) nor the appropriateness of interpreting the Act as a whole with respect to backsliding because the cited brief and Federal Register notice do not address this issue, nor even touch on the subject of antibacksliding generally.

Petitioners also reference a 1990 House Report describing the Subpart 2 classification system as a “graduated control program”. Pet. at 7. That Report states:

First, unlike control measures for which emissions reductions can be quantified and relied on in a modeling demonstration to show how the measure helps an area reach attainment, the benefits of offsets are uncertain. This is because States generally do not know in advance when and if any major stationary source will become subject to the major NSR offsetting requirements. Accordingly, as discussed further below, States do not use the higher offset ratios as a SIP control strategy within their attainment plans. But even if a State could project the number of sources that would trigger the offset requirement, the State, still could not necessarily rely on the higher emissions offset ratios to reduce emissions in the area. This is because, in Section 173(c)(1), Congress allows a major stationary source to obtain offsets from other nonattainment areas. Such an area may be located in another State. In this context, offsets serve as a valuable tool in reducing regional pollutant transport, but may achieve no actual reductions in the area where the new emissions are locating. Accordingly, it would be inappropriate for a State to expressly rely on offsets as a State-imposed regulatory measure or “control” to achieve a defined quantity of emissions reductions from sources within the State for the purpose of reducing the existing emissions inventory. Based on this information, and because the legislative history does not address the issue of Congress's intent in using the term “controls” in Section 172(e), or the subject of antibacksliding generally, we conclude that it lacks persuasive value in interpreting the term “controls” in Section 172(e) or elsewhere in the Act.

Petitioners further claim that CAA Sections 173(d) and 173(a)(5), referring to lowest achievable emission reduction (LAER) requirements as a control technology and control technique, indicate NSR is a control measure. As we discuss in this proposed rule, the statute, our regulations, and our guidance have established NSR as a growth measure for SIP planning purposes. LAER is not a control measure, but instead is an emission limitation based on application of a particular control technology. Control measures such as reasonably available control technology (RACT), transportation control measures (TCM), and inspection and maintenance programs (I/M) reduce base year emissions to assure RFP and meet attainment. The LAER's purpose is to minimize the amount of emissions increase resulting from new or modified major stationary sources, not reduce emissions below the base year inventory. CAA Sections 173(d) and 173(a)(5) instead contain specific requirements related to LAER. CAA Section 173(d) requires States to report information on LAER to the RACT/BACT/LAER Clearinghouse.5 CAA Section 173(a)(5) requires consideration of LAER in the alternative sites analysis.

While petitioners present a possible interpretation of the term “controls” as used by Congress in Section 172(e), we do not believe that the Statute compels this interpretation. Moreover, to accept the Petitioners' interpretation would essentially define “controls” in a way that would require States to retain all requirements in a SIP upon relaxation of the standard. If Congress meant to require States to retain all requirements, Congress would have stated so expressly. Instead, by using only the term “controls,” Congress implied an intent that some requirements under the old standard would no longer apply under the new standard. We think it is reasonable to interpret the term “controls” to exclude major NSR, whose purpose is to ensure that emissions growth does not interfere with attainment, and for which States can not reliably estimate the benefits of mitigating emissions increases for SIP planning purposes.

Section 110(l) provides us the legal authority to approve revisions to SIPs when we determine that such revisions will not “interfere with any applicable requirement concerning attainment and reasonable further progress (as defined in section 171), or any other applicable requirement of the Act.” Petitioners suggest that Section 110(l) limits the Administrator's ability to approve any change in a State SIP if that change would relax requirements previously contained in the SIP. We disagree. Rather, we interpret Section 110(l) to allow such changes if the revision is consistent with reasonable further progress, and will not interfere either with the area's ability to achieve attainment or with any other requirement of the Act.

To determine whether a change in major NSR requirements could satisfy these criteria, we first reviewed the statutory role of major NSR. As discussed above, Congress designed the major NSR program to mitigate emission increases from economic growth—not as a program to generate emissions reductions to bring an area into attainment. Congress distinguished those “reasonably available control measures” required to bring an area into attainment “as expeditiously as practicable” as specified in Section 172(c)(1) from the requirements of the major NSR program specified in Section 172(c)(4) and (5). Moreover, Congress recognized in allowing for growth in nonattainment areas, that some worsening of air quality may be inevitable. Accordingly, States do not rely on major NSR to achieve emissions reductions and reach attainment as expeditiously as practicable and thus a change in the program will not interfere with any applicable requirement concerning attainment and reasonable further progress.

We also reviewed the role major NSR plays in State attainment planning. While we disagree with Petitioners' assertion that the Section 110(l) analysis requires us to analyze changes relative to the 1-hour standard (after we revoke that standard), and we are not granting reconsideration on that issue, we nonetheless looked at the effect of removing the major NSR requirements on the State's existing 1-hour attainment plans to determine what effect it may have for future planning under the 8-hour standard.

Before 1990, Congress provided States with two options for managing the impact of economic growth on emissions. A State could either provide a case-by-case review of each new or modified major source and require such source to obtain offsetting emissions, or the State could implement a waiver provision which allowed the State to develop an alternative to the case-by-case emissions offset requirement. This alternative program became known as the “growth allowance” approach. In 1990, Congress invalidated some of the existing growth allowances and shifted the emphasis for managing growth from using growth allowances to using the case-by-case offset approach. Nonetheless, we still interpreted the inventory and SIP demonstration requirements in the Act to require States to continue to account for future growth in their demonstrations. See 57 FR 13554, 13567. In this way, State SIPs analyze the impact of growth on emissions in two overlapping ways: (1) By establishing a growth projection in the attainment demonstration, and (2) by requiring major sources to comply with the major NSR requirements.

In general, States use information from the Bureau of Economic Analysis (BEA) to derive growth factors which are then applied to different industrial categories to project emissions growth within the nonattainment area. Some States project growth based on industry data that is specific to their jurisdiction, rather than using national BEA data to project the source category increases. A few States project growth based on NOX emissions caps imposed by SIP-approved regulations (e.g. NOX-SIP call). Finally, a few States project no point source growth based on SIP-approved rules that limit VOC and NOX emissions in the area. Regardless of which process is used, each State arrives at a specific tonnage of emissions that represents the expected increase in emissions due to economic growth in the State. This growth projection represents increases in emissions that come from a variety of different activities such as major and minor modifications and increases in utilization at existing sources. The SIPs then provide sufficient emissions reductions to bring the areas into attainment and provide reasonable further progress even accounting for this projected growth.

The next critical question in determining what effect a change in the major NSR requirements might have is whether States adjust this growth projection based on applicability of the major NSR program. A survey of current nonattainment areas shows that in general States do not discount the growth projection based on an assumption of the quantity of emissions increases that may be “offset.” In fact, we discourage States from including offsets as a source of emissions reductions in the attainment model because of the difficulties in accurately predicting the number of sources that will trigger offset reductions and the number of offsets actually achieved. Moreover, the method used to derive the growth projection allows no consideration of the major stationary source thresholds that apply under the 1-hour ozone classification. Finally, we are aware of only one district in California that discounts the growth projection assuming a LAER level of control in projecting emissions. However, this particular district also has a very stringent SIP-approved nonattainment major NSR rule in which LAER applies to all sources with potential to emit (PTE) greater than 1 lb/day and offsets are required for all sources with PTE greater than 4 tpy VOC or NOX. A lower classification under the 8-hour standard than under the 1-hour standard thus would not change the number of sources in this district subject to LAER or offsets. Therefore, this district similarly did not rely on the major stationary source thresholds or the offset ratios that applied under the 1-hour classification as opposed to those that would apply under the 8-hour standard to assure RFP or attainment of the 1-hour standard.6

Once a State computes the growth projection, these emissions are added to the base year emissions inventory and used to project growth for rate of progress plan purposes, and to project growth through the attainment year in the attainment demonstration model. In the attainment demonstration model, States must demonstrate that other emissions reduction programs in the SIP will allow the area to reduce emissions over time to achieve attainment by the attainment date despite the economic growth. Furthermore, the State must also demonstrate that the phasing in of emission reductions over time is sufficient to achieve reasonable further progress toward attainment. This effectively means that whether or not major NSR applies to a given activity that increases emissions, the area is projected to reach attainment based on other control measures in the SIP.

This information shows that States have not directly relied on the major NSR program as a control measure to achieve reductions and move the area toward attainment. For the 8-hour standard, States will generally account for growth in the same manner to show attainment of the 8-hour standard. The only change may be that some States rely on EPA's Economic Growth Analysis System rather than BEA information, but these two systems are fundamentally similar in that they rely on economic forecasts to project growth in emissions. Accordingly, EPA concludes that the removal of 1-hour major NSR requirements from the SIP will not interfere with reasonable further progress or attainment in any area because all States' attainment demonstrations will account for emissions increases related to growth within the attainment demonstration, and these projections will not differ based upon the major NSR program applicable to the area under its ozone classification.

Petitioners argue that if this logic is accepted, “ a state could pluck out any other requirement (including requirements such as enhanced I/M or stage II) * * * and argue that the requirement is dispensable in light of the area's attainment and RFP plans.” Pet. at 12. We disagree that our logic as described here would lead to the same conclusion for all programs, because States rely on these other programs to generate emissions reductions in the modeling demonstration. Nonetheless, we agree with Petitioners that Congress “prescribed specific program elements like NSR” and each State must show how these statutory requirements are being met through their SIP programs. Id.

States satisfy this requirement by having the authority to issue permits in 8-hour nonattainment areas consistent with the requirements of major NSR for the 8-hour standard. Major NSR plays a role in assuring that growth from major stationary sources occurs consistent with States' plans for meeting reasonable further progress and reaching attainment. In 1990, Congress recognized that some States were not accurately predicting the growth within their attainment demonstrations. Accordingly, in Subpart 2 of the Act, Congress specified that areas with more severe ozone nonattainment problems should implement higher offset ratios and lower major stationary source thresholds. Likewise, we followed the same approach for the 8-hour standard by basing the major NSR requirements on the severity of the area's 8-hour ozone nonattainment problem. As a policy matter, we believe that it is appropriate to look at areas' present day air quality in determining what major NSR program requirements are necessary to assure future air quality improvements, because an area's ability to accommodate economic growth is related to its current air quality conditions. An area's classification under the 8-hour standard is a more accurate reflection of current day air quality then the classification we assigned under a different standard as far back as the early 1990's.

Together, the growth projection methods used in preparing attainment demonstrations and the 8-hour major NSR program requirements provide overlapping assurance that removing the 1-hour major NSR program from the SIP, will not “interfere with any applicable requirement concerning attainment and reasonable further progress (as defined in section 171), or any other applicable requirement of the Act.”

For the reasons discussed in this section, we continue to assert that at the time we revoke the 1-hour standard, a State is no longer required to retain a nonattainment major NSR program in its SIP based on the requirements that applied by virtue of the area's previous classification under the 1-hour standard. Instead, States must have authority to issue major NSR permits consistent with the requirements that are associated with the area's designation and classification under the 8-hour standard. For the reasons discussed in this section, we also continue to assert, based on section 110(l) of the Act, that removing the 1-hour nonattainment major NSR program will not interfere with any State's ability to achieve attainment of the 8-hour standard and will be consistent with RFP.

We request comment on our determination that the Act does not require States to apply major NSR requirements under the 8-hour standard based on an area's higher classification under the 1-hour standard after we revoke the 1-hour standard, and on our interpretation that the term “control” as used in Section 172(e) of the Act does not include major NSR requirements. We also request comment on our conclusion that a State's removal of 1-hour major NSR programs from its SIP will not interfere with any applicable requirements of the Act including attainment and RFP. We specifically request comment on our discussion regarding State and local agency emission projections used for RFP and attainment, including whether the statements we have made regarding those emission projections are accurate. We also request specific information on any instance in which a State or local agency relied on major NSR as a control measure to reduce overall base year emissions in a rate of progress plan or attainment demonstration.

On April 30, 2004, we took final action on key elements of the program to implement the 8-hour NAAQS, including applicability of the nonattainment major NSR programs under the 8-hour ozone NAAQS. In that action, we did not revise the nonattainment major NSR regulations. With today's action we are also proposing no changes to the nonattainment major NSR rules. However, we are seeking additional comments on some of the provisions finalized in the April 2004 Federal Register notice (69 FR 23951).

Under Executive Order 12866 (58 FR 51735, October 4, 1993), the Agency must determine whether the regulatory action is “significant” and therefore subject to Office of Management and Budget (OMB) review 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, it has been determined that this proposed rule is not a “significant regulatory action.” Today's reconsideration notice proposes to retain the position we adopted in the final Phase I rule.

This action does not impose an information collection burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. This rule interprets the requirements to develop State or tribal implementation plans to satisfy the statutory requirements for major NSR. We are not imposing any new paperwork requirements. However, OMB previously approved the information collection requirements contained in the existing regulations (40 CFR parts 51 and 52) under the provisions of the Paperwork Reduction Act. A copy of the OMB approved Information Collection Request (ICR) may be obtained from Susan Auby, Collection Strategies Division, U.S. Environmental Protection Agency (2822T), 1200 Pennsylvania Ave., NW., Washington, DC 20460, or by calling (202) 566-1672. Please refer to OMB control number 2060-0003, EPA ICR number 1230.17 when making your request.

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 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 in 40 CFR are listed in 40 CFR part 9.

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 Procedures 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 impacts of today's proposed rule on small entities, small entity is defined as: (1) A small business that is a small industrial entity as defined in the U.S. Small Business Administration (SBA) size standards (See 13 CFR 121.201); (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; or (3) a small organization that is any not-for-profit enterprise that 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. This proposed rule will not impose any requirements on small entities. The Phase 1 Rule addressed key elements of the program to implement the 8-hour ozone NAAQS, including the obligations under the major NSR program. This reconsideration notice addresses the statutory obligations for States and Tribes to implement the major NSR program for the 8-hour ozone NAAQS. For the same reasons that we concluded that the Phase 1 Rule will not have a significant economic impact on a substantial number of small entities, we conclude that our further action on aspects of that rule also not have a significant impact on small entities.

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 1 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 as to 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 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.

In promulgating the Phase 1 Rule we determined that this proposed rule does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and Tribal governments, in the aggregate, or the private sector in any 1 year. Therefore, we concluded that the Phase 1 Rule is not subject to the requirements of sections 202 and 205 of the UMRA. For the same reasons stated when we promulgated the Phase I Rule, we conclude that the issues addressed in this notice on reconsideration of an aspect of that rule is not subject to the UMRA.

EPA also determined that this rule contains no regulatory requirements that might significantly or uniquely affect small governments, including tribal governments.

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. This rule specifies the statutory obligations of States and Tribes in implementing the major NSR program in 8-hour ozone nonattainment areas. The Act establishes the scheme whereby States take the lead in developing plans for EPA to approve into the state plan for implementing the major NSR program. This rule would not modify the relationship of the States and EPA for purposes of developing programs to implement major NSR. Thus, Executive Order 13132 does not apply to this rule. Nonetheless, in the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between EPA and State and local governments, EPA specifically solicits comment on this proposed rule from State and local officials.

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. The purpose of this proposed rule is to seek comment on EPA's reconsideration of an aspect of the Phase 1 8-hour ozone rule specifying the statutory obligations of States and Tribes in implementing the major NSR program in 8-hour ozone nonattainment areas. The tribal authority rule (TAR) gives Tribes the opportunity to develop and implement Act programs such as the major NSR program, but it leaves to the discretion of the Tribe whether to develop these programs and which programs, or appropriate elements of a program, they will adopt. For the same reasons that we stated in the Phase 1 Rule, we conclude that this proposed rule does not have Tribal implications as defined by Executive Order 13175. To date, no Tribe has chosen to implement a major NSR program. Moreover, this rule does not affect the relationship or distribution of power and responsibilities between the Federal government and Indian Tribes. 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 Executive Order 12866, and (2) concerns an environmental health or 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.

This proposed rule relates to reconsideration of one aspect of the Phase 1 Rule to implement the 8-hour ozone NAAQS. For the same reasons stated with respect to the Phase 1 Rule, we do not believe the Rule, or this reconsideration notice, is subject to Executive Order 13045. The Phase 1 Rule implements a previously promulgated health based Federal standard, the 8-hour ozone NAAQS. Nonetheless, we have evaluated the environmental health or safety effects of the 8-hour ozone NAAQS on children. The results of this evaluation are contained in 40 CFR Part 50, National Ambient Air Quality Standards for Ozone, Final Rule (62 FR 38855-38896; specifically, 62 FR 38855, 62 FR 38860 and 62 FR 38865).

This rule is not a “significant energy action” as defined in Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355 (May 22, 2001)) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy.

Information on the methodology and data regarding the assessment of potential energy impacts in implementing programs under the 8-hour ozone NAAQS is found in Chapter 6 of U.S. EPA 2003, Cost, Emission Reduction, Energy, and Economic Impact Assessment of the Proposed Rule Establishing the Implementation Framework for the 8-hour, 0.08 ppm Ozone National Ambient Air Quality Standard, prepared by the Innovative Strategies and Economics Group, Office of Air Quality Planning and Standards, Research Triangle Park, N.C. April 24, 2003.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Pub. L. 104-113, 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 (for example, 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.

Today's proposed rule does not involve technical standards. Therefore, EPA is not considering the use of any voluntary consensus standards.

Executive Order 12898 requires that each Federal agency make achieving environmental justice part of its mission by identifying and addressing, as appropriate, disproportionate high and adverse human health or environmental effects of its programs, policies, and activities on minorities and low-income populations.

The EPA concluded that the Phase 1 Rule should not raise any environmental justice issues; for the same reasons, the issues raised in this reconsideration notice should not raise any environmental justice issues. The health and environmental risks associated with ozone were considered in the establishment of the 8-hour, 0.08 ppm ozone NAAQS. The level is designed to be protective with an adequate margin of safety. The proposed rule provides a framework for improving environmental quality and reducing health risks for areas that may be designated nonattainment.

The statutory authority for this action is provided by sections 307(d)(7)(B), 101, 111, 114, 116, and 301 of the Act as amended (42 U.S.C. 7401, 7411, 7414, 7416, and 7601). This notice is also subject to section 307(d) of the Act (42 U.S.C. 7407(d)).

For further information, please see the information provided in the direct final action, with the same title, that is located in the “Rules and Regulations” section of this Federal Register publication. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

For further information, please see the information provided in the direct final action, with the same title, that is located in the “Rules and Regulations” section of this Federal Register publication. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

Table of Contents I. What Changes to the Kentucky SIP Were Submitted for EPA Approval? II. What Authorities Apply To Moving the Northern Kentucky I/M Program to a Contingency Measure in the Kentucky SIP? III. What Is EPA's Analysis of Kentucky's Demonstration of Non-Interference With the 1-Hour Ozone and Carbon Monoxide (CO) National Ambient Air Quality Standard (NAAQS)? A. EPA's Analysis of Kentucky's Demonstration of Non-Interference With the 1-Hour Ozone NAAQS B. Updated MVEBs for 2010 C. EPA's Analysis of Kentucky's Demonstration of Non-Interference With the CO NAAQS IV. What Is EPA's Analysis of Kentucky's Demonstration of Non-Interference With the 8-Hour Ozone and Fine Particulate Matter NAAQS? A. What Criteria Must Be Met? B. What Is EPA's Analysis of Whether the Proposed Reductions Meet the Criteria of Contemporaneous, Equivalent, Quantifiable, Permanent, Enforceable, and Surplus? 1. Contemporaneous 2. Equivalent a. Selection of the Year 2005 To Estimate Emission Increases From Closure of the Northern Kentucky Vehicle Emissions Testing (VET) Program. b. Methodology for Substituting Volatile Organic Compound (VOC) for Nitrogen Oxides (NOX) To Determine “All VOC-Equivalent” Needed To Replace the VET Program. c. Equivalent Emissions Reductions From Two Kentucky Rules 3. Quantifiable 4. Permanent 5. Enforceable 6. Surplus V. What Is EPA's Proposed Action? VI. Statutory and Executive Order Reviews I. What Changes to the Kentucky SIP Were Submitted for EPA Approval?

In response to a Kentucky Legislative action signed by the Governor on April 9, 2004, Kentucky submitted to EPA a proposed revision to the Kentucky SIP on November 12, 2004, for parallel processing. This revision affects regulation 401 KAR 65:010, “Vehicle emission control programs,” which is a SIP-approved regulation underlying the Northern Kentucky I/M program, also known as the Northern Kentucky Vehicle Emissions Testing (VET) Program. Kentucky has requested to move the VET Program regulation from the active control measures portion of the SIP to the contingency measures portion of the Northern Kentucky 1-Hour Ozone Maintenance Plan, which is part of the Kentucky SIP. The Northern Kentucky VET Program is a basic I/M program that includes on-board diagnostics (i.e., OBD) and results in emissions reductions of nitrogen oxides (NOX), volatile organic compounds (VOC), and carbon monoxide (CO). The VET Program began testing vehicles in Boone, Campbell, and Kenton Counties in September 1999, to help meet nonattainment area requirements for the ozone NAAQS effective at the time.

The Northern Kentucky area is comprised of the Kentucky Counties of Boone, Campbell, and Kenton, and is part of the Cincinnati-Hamilton Metropolitan Statistical Area (MSA). Presently, Boone, Campbell, and Kenton Counties comprise the Northern Kentucky portion of the Cincinnati 1-Hour Ozone Maintenance Area. This maintenance status means these counties were formerly designated nonattainment for the 1-hour ozone standard, are now attaining this standard, and have since been redesignated to attainment for the 1-hour ozone standard effective July 5, 2000 (July 31, 2002, 67 FR 49600). This area was previously classified as a moderate ozone nonattainment area. As such, the area was required to implement a basic I/M program under section 182(b)(4) of the Clean Air Act.

Kentucky's November 12, 2004, draft SIP submittal proposes to implement new emission reductions to compensate for the NOX and VOC emission increases resulting from removing the Northern Kentucky VET Program as an active control measure in the SIP. To demonstrate non-interference with applicable requirements of the Act through replacement emissions reductions, the compensating emissions reductions must be equivalent to or greater than those achieved with the VET Program. Equivalent emissions reductions are needed to replace an anticipated increase of 0.78 tons per summer day (tpsd) of VOC and 0.29 tpsd of NOX in the year 2005 due to closure of the VET Program. These replacement VOC and NOX emissions reductions must also occur in a time period contemporaneous to the VET Program's closure, as explained further in section IV. The VOC and NOX replacement emissions reductions are needed to support a demonstration of non-interference with the 8-hour ozone and fine particulate matter (PM2.5) NAAQS.

The VET Program also reduces CO emissions. In response to EPA comments on the November proposal, Kentucky will also include a demonstration of non-interference with the CO NAAQS in the final SIP submittal to address the CO emission increases due to discontinuation of the VET Program.

The November 12, 2004, submittal proposes VOC emissions reductions from two Kentucky rules. The revisions to Kentucky rule 401 KAR 59:185, “New solvent metal cleaning equipment,” requires the use of VOC solvents with lower vapor pressures in batch cold cleaning machines used in specified facilities located in the Northern Kentucky Counties of Boone, Campbell, and Kenton. These revisions were originally submitted to EPA on July 16, 2004. Kentucky's public hearing on the proposed amendments to 401 KAR 59:185 was held August 25, 2004, with written comments due by August 31, 2004. In a letter dated August 31, 2004, EPA concurred with the revisions and the analysis for estimating VOC emissions reductions from these rule changes. (A copy of this letter is located on the RME Web site under the Docket ID, R04-OAR-2004-KY-0003.) The November 12, 2004, submittal, which replaces the July 16, 2004, proposed SIP revision, also proposes to add a new rule, 401 KAR 59:760, “Commercial Motor Vehicle and Mobile Equipment Refinishing Operations,” to the Kentucky SIP. This new regulation requires the use of high transfer efficiency application techniques at auto body repair and refinishing operations, and prescribes operating procedures to minimize the emissions of VOCs. The Commonwealth also enacted and included in the November 12, 2004, submittal an emergency version of rule 401 KAR 59:760, i.e., 401 KAR 59:760E, with a State effective date of November 15, 2004, and a compliance date of February 1, 2005. EPA is not taking action on this emergency regulation, 401 KAR 59:760E. The public hearing on rule 401 KAR 59:760 and movement of the VET Program to the contingency measures list was held on January 4, 2005.

Under the parallel processing procedure, the Commonwealth of Kentucky submits a copy of the proposed regulation or other revisions to EPA before conducting its public hearing. EPA reviews this proposed State action, and prepares a notice of proposed rulemaking for publication in the Federal Register within the same general time frame as Kentucky's public comment period. After the Commonwealth submits a final SIP revision (including a response to public comments raised during the Commonwealth's public participation process) to EPA, the Agency will prepare a final rulemaking notice. If the Commonwealth's final SIP submittal contains changes which occur after EPA's notice of proposed rulemaking, such changes must be described in EPA's final rulemaking action. If the Commonwealth's changes are significant, then EPA must decide whether it is appropriate to re-propose the Commonwealth's action.

Section 110(l) of the Clean Air Act (i.e., “Act”) states:

The States' obligation to comply with each of the NAAQS is considered as “any applicable requirement(s) concerning attainment.” A demonstration is necessary to show that this revision will not interfere with attainment or maintenance of the NAAQS, including those for ozone, CO, and PM2.5, or any other requirement of the Act.

With respect to the 1-hour ozone NAAQS, EPA redesignated the Kentucky portion of the Cincinnati-Hamilton area to attainment for the 1-hour ozone standard in a final action published July 31, 2002 (67 FR 49600). The Cincinnati-Hamilton moderate 1-hour ozone nonattainment area (Cincinnati-Hamilton area) includes the Ohio Counties of Hamilton, Butler, Clermont, and Warren, and the Kentucky Counties of Boone, Campbell, and Kenton. As part of its redesignation to attainment for a NAAQS, the area must have a plan to maintain the standard, called a “maintenance plan.” Under section 175A(a) of the Act, emission reduction programs in a maintenance plan for a NAAQS must be continued unless a demonstration is made that the future, projected emissions for the area, without credit for reductions due to the emission reduction program being removed, remain at or below the baseline attainment level of emissions identified in the maintenance plan. If such a demonstration is made, that program is eligible for removal from the SIP. However, section 175A(d) of the Act requires that available contingency measures in the maintenance plan include all measures in the SIP for the area before that area was redesignated to attainment. Since the VET Program was in the SIP prior to redesignation to attainment for the 1-hour ozone NAAQS, the VET Program must be listed in the contingency portion of the 1-hour ozone maintenance plan as required by section 175A(d). Kentucky was able to demonstrate continued maintenance of the 1-hour ozone standard for the requisite timeframe without taking credit for reductions from the Northern Kentucky VET Program, as summarized in section III below.

In addition, provisions in EPA's I/M rule, set forth in 40 CFR 51.372(c) under the heading “Redesignation requests,” apply to the Northern Kentucky VET Program situation. These provisions were published January 5, 1995, at 60 FR 1735. The provisions allow certain areas seeking redesignation to submit only the authority for an I/M program rather than an implemented program in satisfaction of the applicable I/M requirements. Under these I/M rule provisions, a basic I/M area (i.e., was required to adopt a basic I/M program) which has been redesignated to attainment for the 1-hour ozone NAAQS can convert the I/M program to a contingency measure as part of the area's 1-hour ozone maintenance plan, notwithstanding the new antibacksliding provisions in EPA's 8-hour ozone implementation rule published April 30, 2004 (69 FR 23858). A basic I/M area which is designated nonattainment for the 8-hour ozone NAAQS, yet not required to have an I/M program based on its 8-hour ozone designation, continues to have the option to move its I/M program to a contingency measure as long as the 8-hour ozone nonattainment area can demonstrate that doing so will not interfere with its ability to comply with any NAAQS or any other applicable Clean Air Act requirement pursuant to section 110(l) of the Act. For further details on the application of 8-hour ozone anti-backsliding provisions to basic I/M programs in 1-hour ozone maintenance areas, please refer to the May 12, 2004, EPA Memorandum from Tom Helms, Group Leader, Ozone Policy and Strategies Group, Office of Air Quality Planning and Standards, and Leila H. Cook, Group Leader, State Measures and Conformity Group, Office of Transportation and Air Quality, to the Air Program Managers, the subject of which is “1 Hour Ozone Maintenance Plans Containing Basic I/M Programs.” A copy of this memorandum may be obtained at http://www.epa.gov/ttn/oarpg/t1pgm.html under the file date “5-12-04.”

The November 12, 2004, Kentucky SIP revision seeking removal of the VET Program includes an evaluation for the 1-hour ozone NAAQS of the potential emission impacts associated with increased emissions that would result from removal of the Northern Kentucky VET Program as an active control measure in the SIP. For the 1-hour ozone NAAQS, the submittal provides VOC and NOX emission inventory data for the Northern Kentucky portion (i.e., Boone, Campbell, and Kenton Counties) of the Cincinnati-Hamilton MSA for 1996, the year the area met the 1-hour ozone NAAQS, and projected emissions through 2010. The emission inventory data for the “Mobile” source category are calculated using MOBILE6.2 because this same model was used to determine the emissions reductions from the VET Program needing to be replaced. MOBILE6.2 is a model which provides estimates of emissions from onroad mobile sources. The mobile source data updated with MOBILE 6.2 are to replace the MOBILE5a emissions data in the currently approved Northern Kentucky 1-Hour Ozone Maintenance Plan, which results in updated MVEBs for the year 2010 of 7.68 tons per summer day (tpsd) VOC and 17.42 tpsd NOX.

In Tables 1 and 2 below, the emission inventory projections for 2005, 2008, and 2010 are updated to reflect the changes proposed by the November 12, 2004, submittal, namely removal of the VET Program as an active control measure and application of two rules to further control VOCs in the Northern Kentucky area. The VOC and NOX emission totals for this area include emissions from the point, area, mobile, and non-highway (or nonroad) source categories. As shown in Tables 1 and 2 below, the projected, total VOC and NOX emissions without the VET Program for 2005, 2008, and 2010 for the Northern Kentucky area all fall below the 1996 attainment year emission levels of 45.10 tpsd VOC and 74.13 tpsd NOX. For example, Table 1 shows the current 2005 total VOC emissions projected for the area are 34.16 tpsd. By adding the predicted increase of 0.78 tpsd VOC in 2005 due to the closure of the VET Program, this results in 34.94 tpsd of VOC in 2005, which is below the 1996 attainment level of 45.10 tpsd VOC. This same analysis proves true when comparing the VOC emissions in tpsd of 34.01 in 2008 and 34.40 in 2010 to the 1996 attainment level of 45.10, and when comparing the NOX emissions in tpsd for 2005, 2008, and 2010 of 69.13, 65.13, and 64.06, respectively, to the 1996 attainment level of 74.13 tpsd. The area does not exceed its 1-hour ozone maintenance level of emissions, even after removal of the VET Program. Thus, the Northern Kentucky area demonstrates continued maintenance of the 1-hour ozone NAAQS without the Northern Kentucky VET Program.

FEMA proposes to make determinations of BFEs and modified BFEs for each community listed below, in accordance with Section 110 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and 44 CFR 67.4(a).

These proposed base flood and modified BFEs, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own, or pursuant to policies established by other Federal, state or regional entities. These proposed elevations are used to meet the floodplain management requirements of the NFIP and are also used to calculate the appropriate flood insurance premium rates for new buildings built after these elevations are made final, and for the contents in these buildings.

National Environmental Policy Act. This proposed rule is categorically excluded from the requirements of 44 CFR Part 10, Environmental Consideration. No environmental impact assessment has been prepared.

Regulatory Flexibility Act. The Mitigation Division Director of the Emergency Preparedness and Response Directorate certifies that this proposed rule is exempt from the requirements of the Regulatory Flexibility Act because proposed or modified BFEs are required by the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are required to establish and maintain community eligibility in the NFIP. As a result, a regulatory flexibility analysis has not been prepared.

Regulatory Classification. This proposed rule is not a significant regulatory action under the criteria of Section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 12612, Federalism. This proposed rule involves no policies that have federalism implications under Executive Order 12612, Federalism, dated October 26, 1987.

Executive Order 12778, Civil Justice Reform. This proposed rule meets the applicable standards of Section 2(b)(2) of Executive Order 12778.

Accordingly, 44 CFR Part 67 is proposed to be amended as follows: