Specifically, this decision amends the UMW order by: (1) Revising the supply plant performance standards so that milk seeking to be pooled on the order demonstrates consistent service to the Class I market; (2) preventing handlers located within the States that comprise the UMW marketing area from qualifying milk located outside of the States that comprise the marketing area; (3) eliminating diversions to nonpool plants outside of the States that comprise the UMW marketing area; and (4) establishing a limit of the receipt by handlers of a transportation credit to milk movements of 400 miles or less.

This administrative rule is governed by the provisions of sections 556 and 557 of title 5 of the United States Code and, therefore, is excluded from the requirements of Executive Order 12866.

This interim rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have a retroactive effect. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Agricultural Marketing Agreement Act of 1937 (the Act), as amended (7 U.S.C. 601-674), provides that administrative proceedings must be exhausted before parties may file suit in court. Under Section 608c(15)(A) of the Act, any handler subject to an order may request modification or exemption from such order by filing with the Department of Agriculture (Department) a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with the law. A handler is afforded the opportunity for a hearing on the petition. After a hearing, the Department would rule on the petition. The Act provides that the District Court of the United States in any district in which the handler is an inhabitant, or has its principal place of business, has jurisdiction in equity to review the Department's ruling on the petition, provided a bill in equity is filed not later than 20 days after the date of the entry of the ruling.

In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), the Agricultural Marketing Service has considered the economic impact of this action on small entities and has certified that this interim rule will not have a significant economic impact on a substantial number of small entities. For the purpose of the Regulatory Flexibility Act, a dairy farm is considered a “small business” if it has an annual gross revenue of less than $750,000, and a dairy products manufacturer is a “small business” if it has fewer than 500 employees.

For the purposes of determining which dairy farms are “small businesses,” the $750,000 per year criterion was used to establish a production guideline of 500,000 pounds per month. Although this guideline does not factor in additional monies that may be received by dairy producers, it should be an inclusive standard for most “small” dairy farmers. For purposes of determining a handler's size, if the plant is part of a larger company operating multiple plants that collectively exceed the 500-employee limit, the plant will be considered a large business even if the local plant has fewer than 500 employees.

During August 2004, the month during which the hearing occurred, there were 15,608 dairy producers pooled on, and 60 handlers regulated by, the UMW order. Approximately 15,082 producers, or 97 percent, were considered small businesses based on the above criteria. On the processing side, approximately 49 handlers, or 82 percent, were considered small businesses.

The adoption of the proposed pooling standards serves to revise established criteria that determines those producers, producer milk, and plants that have a reasonable association with, and are consistently serving the fluid needs of, the UMW milk marketing area. Criteria for pooling are established on the basis of performance levels that are considered adequate to meet the Class I fluid needs and, by doing so, determine those producers who are eligible to share in the revenue that arises from the classified pricing of milk. Criteria for pooling are established without regard to the size of any dairy industry organization or entity. The established criteria are applied in an identical fashion to both large and small businesses and do not have any different economic impact on small entities as opposed to large entities. The criteria established for transportation credits is also identically applied to both large and small businesses and do not have any different economic impact on small entities. Therefore, the proposed amendments will not have a significant economic impact on a substantial number of small entities.

Prior documents in this proceeding:

The findings and determinations hereinafter set forth supplement those that were made when the UMW order was first issued and when it was amended. The previous findings and determinations are hereby ratified and confirmed, except where they may conflict with those set forth herein.

The following findings are hereby made with respect to the UMW order:

(a) Findings upon the basis of the hearing record. Pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), and the applicable rules of practice and procedure governing the formulation of marketing agreements and marketing orders (7 CFR part 900), a public hearing was held upon certain proposed amendments to the tentative marketing agreement and to the order regulating the handling of milk in the UMW marketing area.

Upon the basis of the evidence introduced at such hearing and the record thereof it is found that:

(1) The UMW order, as hereby amended on an interim basis, and all of the terms and conditions thereof, will tend to effectuate the declared policy of the Act;

(2) The parity prices of milk, as determined pursuant to section 2 of the Act, are not reasonable in view of the price of feeds, available supplies of feeds, and other economic conditions which affect market supply and demand for milk in the marketing area, and the minimum prices specified in the order, as hereby amended on an interim basis, are such prices as will reflect the aforesaid factors, insure a sufficient quantity of pure and wholesome milk, and be in the public interest; and

(3) The UMW order, as hereby amended on an interim basis, regulates the handling of milk in the same manner as, and is applicable only to persons in the respective classes of industrial and commercial activity specified in, a marketing agreement upon which a hearing has been held.

(b) Additional Findings. It is necessary and in the public interest to make these interim amendments to the UMW order effective July 1, 2005. Any delay beyond that date would tend to disrupt the orderly marketing of milk in the aforesaid marketing area.

The interim amendments to this order are known to handlers. The final decision containing the proposed amendments to this order was issued on April 8, 2005.

The changes that result from these interim amendments will not require extensive preparation or substantial alteration in the method of operation for handlers. In view of the foregoing, it is hereby found and determined that good cause exists for making these interim order amendments effective on July 1, 2005.

(c) Determinations. It is hereby determined that:

(1) The refusal or failure of handlers (excluding cooperative associations specified in Section 8c(9) of the Act) of more than 50 percent of the milk, which is marketed within the specified marketing area, to sign a proposed marketing agreement, tends to prevent the effectuation of the declared policy of the Act;

(2) The issuance of this interim order amending the UMW order is the only practical means pursuant to the declared policy of the Act of advancing the interests of producers as defined in the order as hereby amended;

(3) The issuance of the interim order amending the UMW order is favored by at least two-thirds of the producers who were engaged in the production of milk for sale in the marketing area.

It is therefore ordered, that on and after the effective date hereof, the handling of milk in the UMW marketing area shall be in conformity to and in compliance with the terms and conditions of the order, as amended, and as hereby further amended on an interim basis, as follows:

The Council developed Amendment 13 in order to bring the FMP into conformance with all Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) requirements, including ending overfishing and rebuilding all overfished groundfish stocks. Amendment 13 was partially approved by the Secretary of Commerce on March 18, 2004. A final rule implementing the approved measures in the amendment was published April 27, 2004 (69 FR 22906) and became effective May 1, 2004. Because of the mixed-stock nature of the NE multispecies fishery, management measures to reduce mortality on overfished stocks adopted in Amendment 13, including effort reductions, are expected to reduce fishing mortality more than is necessary on other, healthy stocks. As a result, yield from healthy stocks may be sacrificed and the FMP may not provide for the fishery to harvest the optimum yield (OY), the amount of fish that will provide the greatest overall benefit to the Nation, from all stocks managed under the FMP for a given year.

Amendment 13 categorized the DAS allocated to each NE multispecies permit as Category A, B (Regular), B (Reserve), or C DAS. Category A DAS can be used to target any regulated groundfish stock, while Category B DAS are to be used only to target healthy groundfish stocks. Category C DAS cannot be used unless authorized at some time in the future. The regulations implementing Amendment 13 created one opportunity to use Category B DAS: A SAP designed to target GB yellowtail flounder in CA II. Framework Adjustment 40A (FW 40A), implemented November 19, 2004 (69 FR 67780), provided additional opportunities to use Category B DAS by creating two SAP's to target GB haddock and a pilot program designed for using Category B (Regular) DAS outside of a SAP ( i.e. , the Regular B DAS Pilot Program). These programs are intended to allow vessels to target healthy groundfish stocks without compromising the rebuilding programs of other groundfish stocks, thus enabling the industry to harvest OY from the healthy stocks.

Since the implementation of Amendment 13 and submission of FW 40A, several issues have been raised concerning the overall approach to controlling effort. FW 40B proposes to address these new issues by improving the effectiveness of the Amendment 13 effort control program, including the opportunities developed to target healthy stocks and other measures to facilitate adaptation to the Amendment 13 effort reductions, as well as collect additional information regarding the bycatch of regulated species in the herring fishery.

Thirteen letters were received regarding the proposed rule (March 29, 2005; 70 FR 15803) to implement FW 40B, including five letters from groups representing the fishing industry. Two letters were received that were not relevant to the proposed action, including one comment that was directed towards the recent closure of the Eastern U.S./Canada Area on April 1, 2005 (70 FR 16758). Since these comments were not directed at the proposed measures under FW 40B, NMFS has not responded to these comments.

Comment 1: Four commenters supported eliminating the tonnage criterion and reducing the conservation tax on DAS exchanged through the DAS Transfer Program. One industry group indicated that these revisions would improve the practical utility of the program. Another industry group supported this provision because it would also bring the DAS Transfer Program more in line with the DAS Leasing Program and would make this program more accessible to larger numbers of potential users.

Response: NMFS agrees that these modifications will facilitate and encourage the use of the DAS Transfer Program and implements these modifications through this final rule.

Comment 2: One industry group was concerned that the DAS Transfer Program has the potential to create distinct classes of vessel owners based on the allocation of DAS and the potential for vessels with excess capital to consolidate many DAS allocations onto one vessel. Because vessels that have consolidated DAS onto fewer vessels have a greater potential to continue fishing if future effort reductions are necessary, this group urged NMFS to evaluate the implications of the DAS Transfer Program for socio-economic affects.

Response: An evaluation of the economic and social impacts of the DAS Transfer Program was conducted during the development of Amendment 13. Sections 5.4 and 5.6 of the Final Supplemental Environmental Impact Statement (FSEIS) for Amendment 13 acknowledged that some vessels would be allocated more DAS under Amendment 13 than others. This analysis indicates that the DAS Leasing or Transfer Programs could help offset some of the impacts from the effort reductions. While some vessels have been allocated more DAS under Amendment 13 than others, access to sufficient capital to consolidate DAS allocations onto one vessel is independent of a vessel's DAS allocation. For example, a vessel with few NE multispecies DAS may have relied upon income generated from other fisheries instead of the NE multispecies fishery. A vessel's NE multispecies DAS allocation is not the only source of revenue for a particular vessel. Access to capital is dependent upon several factors, including the fixed costs of a business, assets of the vessel owner, and potential sources of revenue. Information specifying a vessel's fixed costs, the assets of the vessel owner, or sources of revenue outside of the NE multispecies fishery are currently not available. As a result, the analysis conducted for Amendment 13 and FW 40B, based on the best scientific information available, was not able to fully assess an individual's access to capital. Further, this analysis indicates that the benefits of the DAS Transfer Program would likely outweigh the costs associated with this program. Finally, the information available indicates that the DAS Transfer Program is consistent with applicable law. The Council is considering modifications to the DAS Transfer and Leasing Programs as part of FW 42 to the FMP for possible implementation during the 2006 fishing year. An evaluation of the DAS Transfer and Leasing Programs to address the industry group's concerns about the effect of DAS consolidation may be undertaken during the development of FW 42 if sufficient information capable of documenting a vessel's ability to access capital is available.

Comment 3: One commenter believed that the 20-percent conservation tax on DAS exchanged through the DAS Transfer Program was still too high to encourage vessel participation.

Response: Since no vessels have elected to participate in the DAS Transfer Program to date, there is no precise method to accurately determine whether the conservation tax or the other requirements (i.e., the transferring vessel must forfeit all state and Federal fishing permits) of the DAS Transfer Program are impeding vessel participation in this program. Based on Council deliberation and telephone conversations with members of the fishing industry, NMFS believes that reducing the conservation tax to 20 percent may be sufficient to encourage at least some vessels to participate in the DAS Transfer Program. Revisions to the other requirements of the DAS Transfer Program to encourage participation in the program were considered, including allowing vessels receiving DAS to obtain other non-groundfish permits and allowing the removal of a proxy vessel instead of the transferring vessel. However, these other measures were rejected by the Council during the development of FW 40B.

Comment 4: Four commenters supported the proposed one-time opportunity to downgrade a vessel's baseline for the purposes of participating in the DAS Leasing Program. However, the State of Maine Department of Marine Resources (State of Maine) expressed concerns that the downgraded baseline would cause confusion as to the baseline that applies when vessels are sold or replaced.

Response: NMFS supports measures that would facilitate participation in the DAS Leasing Program and implements this measure through this final rule. While the downgraded DAS Leasing Program baseline may be somewhat confusing at first, NMFS believes that this change is fairly straightforward and can be sufficiently explained in the Small Entity Compliance Guide permit holder letter it will mail to permit holder letters in conjunction with the publication of this final rule.

Comment 5: One commenter expressed general support for modifying the incidental catch TAC's for the purposes of allocating GOM cod and GOM haddock TAC to the Western Gulf of Maine (WGOM) Closure Area Rod/Reel Haddock SAP.

Response: NMFS has determined that the WGOM Closure Area Rod/Reel Haddock SAP as currently analyzed and recommended in FW 40B is inconsistent with National Standard 2 of the Magnuson-Stevens Act, as well as the objectives of the FMP. NMFS has therefore disapproved this provision and is not implementing it in this final rule. A full explanation of the reasons for the disapproval of the WGOM Rod/Reel Haddock SAP is contained in the preamble of this final rule under “Disapproved Measures.”

Comment 6: One industry group opposed the measure to set aside 10 percent of the GB cod incidental catch TAC to facilitate research, despite recognizing the need to account for the mortality associated with research activities. This commenter acknowledged the deficiencies in the proposed measure highlighted by NMFS in the proposed rule ( i.e. , insufficient detail to implement this measure) and recommended disapproving this measure in FW 40B and remanding it to the Council to consider in a future action.

Response: NMFS concurs that the details necessary to implement this provision were not adequately described in the FW 40B document. The FW 40B document did not establish criteria to evaluate which research projects should be allocated research set-aside TAC for GB cod. As a result, it is not possible to assess whether this measure would pose equity concerns under National Standard 4. Because this proposed provision would not set aside research TAC for other species, it could also undermine the conservation measures of the FMP. Therefore, NMFS has determined that this provision is not consistent with National Standards 1, 2, or 4, has disapproved this measure, and is not implementing this measure through this final rule. A full explanation of the reasons for the disapproval of the research set-aside TAC is contained in the preamble of this final rule under “Disapproved Measures.” Noting the proposed measure's deficiencies, NMFS has provided recommendations to the Council to specify criteria to evaluate applications to utilize GB cod research set-aside TAC as well as a mechanism to allocate this TAC during future fishing years. Additionally, NMFS has recommended that the Council specify research TAC's for other groundfish stocks to fully account for the mortality associated with research activities. The Council could clarify the noted deficiencies in this provision and implement these revisions through a future management action.

Comment 7: One industry group and the State of Maine supported the research set-aside TAC for GB cod. However, the industry group suggested that there is limited information provided in the proposed measure to evaluate the equity of this measure. This group noted that this measure would take away TAC available to all vessels through the Regular B DAS Pilot Program and allocate it to a limited pool of vessels conducting research. Further, this group was concerned that the benefits of this allocation may not accrue to the entire fishery, as research would likely be directed at establishing SAP's benefitting specific participants instead of measures that would benefit the fishery as a whole.

Response: NMFS agrees that there is limited information available to adequately assess the impacts of this proposed measure and to determine consistency with the Magnuson-Stevens Act, including National Standards 1 and 4. As specified in the proposed rule, there are no criteria to evaluate which research projects should be allocated research set-aside TAC for GB cod under this proposed measure. For these reasons, as well as those specified in the preamble of this final rule under “Disapproved Measures,” NMFS has disapproved this provision and is not implementing this measure in this final rule. NMFS supports research that would provide benefits to the entire fishery, but acknowledges that the Council's Research Steering Committee reviews research priorities for the NE multispecies fishery on a yearly basis.

Comment 8: Six commenters expressed general support for the WGOM Rod/Reel Haddock SAP, with one industry group expressing strong support for this SAP. Four commenters believed that there are sufficient controls on participation and mortality to minimize any adverse impacts resulting from this SAP.

Response: NMFS has determined that the information available to support this SAP was not representative of the action proposed and is of limited use in evaluating the potential impacts of the proposed measures. In addition, while this SAP includes measures that would limit the mortality of non-target species, including establishing a cap on the amount of GOM cod that may be caught and incentives to encourage vessels to avoid catching GOM cod, this SAP, as recommended by the Council and analyzed in FW 40B, fails to adequately justify that the amount of bycatch of GOM cod would be minimized to the extent practicable. Therefore, this proposed measure is inconsistent with National Standard 9 and section 303(a)(11) of the Magnuson-Stevens Act. Furthermore, this proposed SAP is not consistent with the suggested minimum criteria for the development and approval of a SAP as specified in the Amendment 13 FSEIS because the limited information available to support this SAP is not based on an experimental fishery and does not indicate that vessels could effectively minimize bycatch of GOM cod. Therefore, NMFS has disapproved this provision because the proposed SAP is not consistent with National Standard 2, National Standard 9, and section 303(a)(11) of the Magnuson-Stevens Act as well as the objectives of the proposed SAP and the FMP. A full explanation of the reasons for the disapproval of the WGOM Rod/Reel Haddock SAP is contained in the preamble of this final rule under “Disapproved Measures.”

Comment 9: Two commenters indicated that this SAP represents the only opportunity for vessels to use Category B DAS in the GOM and the only SAP allowing access to the WGOM Closure Area.

Response: NMFS disagrees that this SAP provides the only means of targeting healthy groundfish stocks in the GOM using a Category B DAS. While this proposed SAP would represent the only opportunity for limited access NE multispecies vessels to access a closed area to target groundfish in the GOM, the Regular B DAS Pilot Program implemented under FW 40A allows groundfish vessels to target healthy groundfish stocks throughout the GOM using Category B DAS.

Comment 10: Two commenters stated that NMFS should only allow limited access NE multispecies vessels to access this SAP due to concerns over the potential impact of open access Handgear B vessels fishing in this area.

Response: As recommended by the Council and approved by NMFS, only limited access NE multispecies vessels are allowed access to this SAP.

Comment 11: Two industry groups indicated that the information available to support this SAP is not the best scientific information available and is not sufficient to accurately estimate cod catch resulting from this SAP. The State of Maine acknowledged the limited data available to support this SAP, but suggested, along with one industry group, that NMFS consider the positive results of an ongoing experimental fishery in the WGOM Closure Area that preliminary data indicate is capable of targeting haddock without catching cod.

Response: NMFS is aware of the experimental fishery currently being conducted in the WGOM Closure Area. However, to date, no final reports documenting the results of the early experimental activities have been submitted to NMFS. In addition, NMFS is required to evaluate proposed measures based on the best scientific information available. Information from the experimental fishery is not considered the best scientific information available because it is currently not available for review and was not integrated into the EA to analyze the biological, social, and economic impacts of the proposed SAP. Therefore, at this time, the best scientific information available to assess the impacts of the proposed fishing activity for the WGOM Closure Area Rod/Reel Haddock SAP is contained in the FW 40B document. NMFS cannot use preliminary data from an ongoing experimental fishery to evaluate the impacts of this proposed SAP.

Comment 12: One industry group believed that the requirement to use a vessel monitoring system (VMS) in the WGOM Closure Area Rod/Reel Haddock SAP is inconsistent with National Standard 7 because VMS requirements do not minimize costs and duplicate information submitted via vessel trip reports (VTR's). This commenter was concerned that the yearly operational costs associated with VMS usage exceed the value of the expected catch of haddock and suggested that the SAP be approved without the VMS requirement.

Response: NMFS believes that the use of VMS is critical to the successful monitoring and enforcement of the provisions of recently approved SAP's. Without VMS, real-time monitoring of TAC's associated with SAP's, access to areas, and vessel activity for the purposes of enforcement would not be possible. Real-time monitoring of TAC's is not possible using VTR's alone due to the delay in obtaining and entering information from VTR's. VMS catch reports only require vessels to submit the amount of target species and specific stocks of concern anticipated to be caught in the SAP, unlike VTR's which require vessels to submit the amount of all species caught and discarded. Therefore, VMS catch reports do not duplicate the information submitted via VTR's, but augment this data to provide more real-time monitoring of SAP TAC's. Without such real-time monitoring, tracking catch rates of stocks of concern managed by small TAC's would not be possible, thereby increasing the likelihood of exceeding these TAC's and compromising the rebuilding objectives of the FMP. NMFS also disagrees that the costs associated with this SAP were not minimized. NMFS has certified two vendors to provide VMS services for the Northeast region. With the addition of this second vendor, a wider range of VMS units of varying costs are available to vessels, allowing vessels to choose the more economical vendor and unit. Furthermore, without adequate information to assess the expected catch of regulated species from operations proposed in this SAP, it is impossible to accurately predict expected revenues resulting from this SAP. Available information indicates that catch would primarily be composed of cod and haddock, though vessels would not be allowed to land cod. However, vessels would not be limited by a haddock possession limit. Therefore, it is possible that the catch of haddock alone could cover at least the operational costs of VMS.

Comment 13: One industry group suggested that NMFS change the regulations to allow Handgear A vessels to fish in the WGOM Closure Area Rod/Reel Haddock SAP between March 1 and March 20.

Response: As explained in the response to Comment 8, NMFS has disapproved the proposed WGOM Closure Area Rod/Reel Haddock SAP. Since NMFS has disapproved this SAP for the reasons specified in the “Disapproved Measures” section of the preamble of this final rule, no changes to this measure of the SAP were made.

Comment 14: One industry group indicated that it would not be fair and equitable under National Standard 4 if NMFS disapproved the WGOM Closure Area Rod/Reel Haddock SAP because hook fishermen would not have access to inshore areas where haddock could be profitably targeted, resulting in an unfair allocation of the haddock catch among all fishermen.

Response: The National Standard Guidelines indicate that management measures may have different effects on persons of different geographic locations, provided they are reasonably calculated to promote conservation. The WGOM Closure Area was implemented by Framework 25 on March 31, 1998 (63 FR 15326) to reduce fishing mortality on GOM cod. GOM cod are still considered overfished and overfishing is still occurring. Therefore, there is still a need to maintain the WGOM Closure Area to limit mortality on GOM cod and continue rebuilding this stock. Accordingly, NMFS believes that the disapproval of the WGOM Closure Area Rod/Reel Haddock SAP through this final rule would not constitute an unfair or inequitable allocation of the haddock catch among fishery participants, as specified in National Standard 4, because it is reasonably calculated to promote conservation as required by the Magnuson-Stevens Act. Despite the disapproval of the WGOM Closure Area Rod/Reel Haddock SAP through this final rule, vessels are still able to target GOM haddock throughout the GOM to help achieve OY for this stock.

Comment 15: The Council commented that the expected economic returns from the WGOM Closure Area Rod/Reel Haddock SAP would help mitigate revenue reductions to hook vessels and would justify administrative costs associated with this SAP.

Response: In their comment, the Council used the expected revenue returns resulting from the GOM haddock TAC being fully harvested. However, the SAP is also regulated by an incidental catch TAC for GOM cod. As proposed, the SAP would be closed if either of these TAC's are harvested. Based on information used to support this SAP, it is highly unlikely that vessels would be able to fully harvest the available haddock TAC without first catching the incidental catch TAC for GOM cod. Therefore, the economic benefits of this SAP could likely be less than the $140,000 used by the Council in support of this SAP. Due to limited data accurately depicting catch rates by commercial vessels operating within the SAP as proposed, it is difficult to accurately predict the expected economic revenues from this provision. The administrative costs associated with this SAP are not described in the FW 40B document. Therefore, based on the information available as provided in FW 40B, it is not possible to reliably estimate if the economic benefits of this SAP as recommended by the Council would justify the administrative costs associated with implementing this measure.

Comment 16: The Council noted that the proposed regulations regarding catch reports for this SAP were inconsistent with those specified in the FW 40B document.

Response: As explained in the response to Comment 8 and in the “Disapproved Measures” section of the preamble to this final rule, NMFS has disapproved the proposed WGOM Closure Area Rod/Reel Haddock SAP. Therefore, the proposed reporting requirements for this SAP are not revised by this final rule.

Comment 17: One industry group recommended that NMFS should approve the WGOM Closure Area Rod/Reel Haddock SAP and use data from this 2-year pilot program to evaluate the impacts of this SAP.

Response: For the reasons specified in the “Disapproved Measures” section of the preamble of this final rule, NMFS has determined that the information available to support this SAP indicates that this proposed measure is not consistent with the FMP, National Standard 9, and section 303(a)(11) of the Magnuson-Stevens Act. Therefore, it would be inappropriate to approve this SAP simply to provide more data on the efficacy of its proposed measures.

Comment 18: Three commenters expressed general support for the proposed measures to revise the CA II Yellowtail Flounder SAP. One industry group supported the proposed mechanism to adjust the number of trips into the CA II Yellowtail Flounder SAP based on the available GB yellowtail flounder TAC. Another industry group indicated that this mechanism, in allowing the Regional Administrator to authorize zero trips into this SAP for a particular fishing year, would increase vessel safety, enable vessels to utilize more of the GB haddock TAC, and maximize the benefit from the GB yellowtail flounder TAC.

Response: NMFS agrees that revising the CA II Yellowtail Flounder SAP as proposed would offer a suite of benefits to the fishing industry. During the 2004 fishing year, the rapid harvest of the GB yellowtail flounder TAC from the CA II Yellowtail Flounder SAP and the Regular B DAS Pilot Program implemented by FW 40A prompted NMFS to close and later reopen the Eastern U.S./Canada Area under reduced GB yellowtail flounder possession limits to ensure that the TAC remained available throughout the fishing year. However, these actions also limited the ability of vessels to harvest the available GB cod and GB haddock TAC from the Eastern U.S./Canada Area. The proposed measure to allow for the modification of the number of trips into the CA II Yellowtail Flounder SAP enables the Regional Administrator to adjust the number of trips more efficiently and effectively in response to changing stock conditions. In addition, this provision would help ensure that the GB yellowtail flounder TAC is not harvested prior to the end of the fishing year, thereby increasing the likelihood that the Eastern U.S./Canada Area will remain open as long as possible to allow vessels full opportunity to harvest the available GB cod and GB haddock TAC's and achieve OY from the fishery. Therefore, NMFS has approved this provision and is implementing it through this final rule.

Comment 19: The provision to reduce the GB yellowtail flounder trip limit from 30,000 lb (13,605 kg) to 10,000 lb (4,536 kg) per trip was opposed by one industry group. This group felt that this trip limit is insufficient to cover costs associated with trips into this SAP. Further, the State of Maine recommended that NMFS calculate the GB yellowtail flounder trip limits for vessels fishing under a Category A or B DAS based on projected effort using a Category A DAS effort and other uses of GB yellowtail flounder TAC.

Response: The reduction of the GB yellowtail flounder trip limit in FW 40B is intended to reduce the possibility that GB yellowtail flounder landings from the CA II Yellowtail Flounder SAP would result in the premature closure of the Eastern U.S./Canada Area that occurred during the 2004 fishing year. This reduction will also help ensure that the GB yellowtail flounder TAC is not exceeded in future fishing years. The analysis prepared for FW 40B indicates that, unless vessels are able to harvest greater amounts of species other than GB yellowtail flounder inside of the CA II Yellowtail Flounder SAP, or to redirect effort inside and outside of the SAP on the same trip, potential economic returns from a 10,000-lb (4,536-kg) GB yellowtail flounder trip limit may be insufficient to encourage participation in this SAP. Under the current regulations, vessels are able to fish inside the CA II Yellowtail Flounder SAP, in the Eastern U.S./Canada Haddock SAP Pilot Program, and in the Eastern U.S./Canada Area outside of these two SAP's on the same trip. Therefore, the current regulations enable vessels the flexibility to target other species in other areas during trips into the CA II Yellowtail Flounder SAP. This flexibility in operations could, as indicated in the EA prepared for FW 40B, increase the potential revenue available to vessels fishing in this SAP and may be sufficient to at least cover costs associated with trips into this SAP. In addition, while this final rule changes the GB yellowtail flounder trip limit to 10,000 lb (4,536 kg), the Regional Administrator has the authority to adjust this trip limit to a maximum of 30,000 lb (13,608 kg) after considering several factors related to TAC availability and fishery performance similar to those recommended by the State of Maine. Outside of the CA II Yellowtail Flounder SAP, there is no specified trip limit for GB yellowtail flounder, however. Under the current regulations, the Regional Administrator is authorized to modify the trip limits throughout the U.S./Canada Management Area, including implementing a trip limit for vessels fishing outside of the CA II Yellowtail Flounder SAP, once 30 percent and/or 60 percent of the U.S./Canada Management Area TAC allocations for GB cod, GB haddock, or GB yellowtail flounder are projected to be harvested. Therefore, the Regional Administrator can establish a GB yellowtail flounder trip limit as recommended by the State of Maine, but only when at least 30 percent of the TAC for GB cod, GB haddock, or GB yellowtail flounder has been harvested.

Comment 20: The State of Maine expressed concern that the proposed 4,000-mt TAC for GB yellowtail flounder for the 2005 fishing year may be insufficient to maintain a yellowtail flounder fishery outside of the CA II Yellowtail Flounder SAP, resulting in the premature closure of the Eastern U.S./Canada Area during the 2005 fishing year. The State of Maine was also concerned that premature closure of this area could lead to underharvesting the U.S./Canada Management Area TAC's, leading to future reductions in TAC allocations for the Area based upon this underharvest.

Response: The information used to support the proposed TAC of 4,260 mt for GB yellowtail flounder for the 2005 fishing year indicates that the current fishing mortality on GB yellowtail flounder is still higher the appropriate level of fishing mortality required to rebuild the stock. NMFS concurs that the proposed GB yellowtail flounder TAC of 4,260 mt in the U.S./Canada Management Area may be insufficient to support both the CA II Yellowtail Flounder SAP and a yellowtail flounder fishery outside of the SAP without likelihood of an early closure of the Eastern U.S./Canada Area. Therefore, NMFS has approved the proposed revisions to the measures regulating the CA II Yellowtail Flounder SAP and is implementing these revisions through this final rule. Further, based on the authority granted the Regional Administrator in this final rule and specified in the “Approved Measures” section of this final rule, it may be appropriate for the Regional Administrator to authorize zero trips into the CA II Yellowtail Flounder SAP for the 2005 fishing year, after consulting with the Council at its June meeting. A final notification of such a determination would be published in the Federal Register , consistent with the Administrative Procedure Act. This determination would help to ensure that the entire GB yellowtail flounder TAC would be available for vessels fishing outside of the CA II Yellowtail Flounder SAP, increasing the likelihood that the TAC would not be harvested during the 2005 fishing year and reducing the chance that the Eastern U.S./Canada Area would be prematurely closed.

Comment 21: Four commenters, including Senator Collins, the State of Maine, the Council, and one industry group supported allocating 10 Category B Reserve DAS to vessels allocated zero Category A and B DAS under Amendment 13. Addressing the equity concerns expressed by NMFS in the proposed rule for FW 40B, Senator Collins indicated that it is unfair that vessels were not allocated DAS under Amendment 13. Both Senator Collins and the Council noted that Category A DAS are more valuable and allow more opportunities to fish than only Category B Reserve DAS. The Council suggested that vessels issued any Category A DAS under Amendment 13 have more opportunities to fish for groundfish or benefit from their limited DAS allocation through leasing DAS than those who did not receive any DAS under Amendment 13. The Council further contended that Amendment 13 anticipated different allocations among individual vessels.

Response: Amendment 13 did anticipate that DAS allocations would be different among vessels based upon the qualification criteria implemented. These criteria were implemented to eliminate latent effort and ensure that vessels recently active in the fishery would be able to continue to participate in the fishery. All vessels issued a limited access NE multispecies permit were subject to the same qualification criteria under Amendment 13. However, the proposed measure would allocate 10 Category B Reserve DAS only to the 448 vessels that did not receive any Category A or B (Regular or Reserve) DAS under Amendment 13. These vessels did not qualify for DAS under Amendment 13 because they have not recently participated in the fishery and therefore failed to meet the qualification criteria approved by the Council and implemented under Amendment 13. Under Amendment 13, only vessels that were recently active in the fishery received a DAS allocation. Nineteen vessels were allocated fewer than 10 Category A and B (Regular and Reserve) DAS in total under Amendment 13. Although these vessels have recently participated in the fishery and therefore met the qualification criteria for continued participation in the fishery under Amendment 13, under the proposed measure they would receive fewer DAS than those who have not been recently active in the fishery and did not qualify for DAS under Amendment 13. As a result, these 19 vessels would potentially bear more of the burden for the effort reductions under Amendment 13 than vessels receiving additional DAS under this proposed measure, without any conservation justification. NMFS acknowledges that vessels allocated at least some Category A DAS have the flexibility to fish these DAS and could lease these DAS to another vessel, thereby gaining at least some benefit from these DAS. However, vessels that were not allocated any DAS under Amendment 13 could still participate in the fishery by leasing DAS from another vessel. Since this measure would not ensure that all vessels are allocated the same minimum level of DAS, NMFS interprets this measure to be inconsistent with National Standard 4 of the Magnuson-Stevens Act because it allocates DAS to a particular group of vessels without providing any conservation justification. Therefore, for these reasons and the reasons presented in the “Disapproved Measures” section of the preamble of this final rule, NMFS has disapproved this measure and is not implementing this measure in this final rule.

Comment 22: The Council indicated that some Council members believed the proposed measure to allocate 10 Category B Reserve DAS to vessels allocated zero DAS under Amendment 13 was an implicit promise when Amendment 13 was voted on.

Response: Notwithstanding the Council's intent to address the minimum effective effort issue in a future management action, the measure proposed in FW 40B to allocate a minimum amount of DAS to vessels allocated zero DAS under Amendment 13 is not fair and equitable to all limited access NE multispecies permit holders as described in the “Disapproved Measures” section of this final rule. For this reason and the reasons described in the “Disapproved Measures” section of this final rule, NMFS has disapproved this measure.

Comment 23: One industry group supported allocating 10 Category B Reserve DAS to vessels allocated zero Category A and B DAS under Amendment 13, but suggested that NMFS expand this measure to ensure that all vessels are allocated a minimum of 10 B Reserve DAS. This group indicated that the proposed measure would not be fair and equitable to vessels allocated fewer than 10 DAS total under Amendment 13, stating that these vessels would be disadvantaged by the proposed measure.

Response: NMFS agrees that this measure, as proposed, is not fair and equitable to all vessels participating in the NE multispecies fishery. The potential solution proposed by the industry group to ensure that all vessels are allocated a minimum amount of DAS might be fair and equitable to all vessels under the Magnuson-Stevens Act. However, since NMFS does not have the authority to add substantial measures to the provisions recommended by the Council, NMFS had disapproved this proposed measure for the reasons specified in the “Disapproved Measures” section of the preamble of this final rule.

Comment 24: One industry group supported revisions to the GB Cod Hook Sector provisions that would allow all vessels, regardless of fishing history, to join the GB Cod Hook Sector and apply their landings of GB cod, regardless of gear used, towards the GB Cod Hook Sector's GB cod TAC. This group indicated that these revisions properly address fairness and equity issues and are consistent with the Council intent when approving the GB Cod Hook Sector.

Response: NMFS has approved the new GB Cod Hook Sector provisions.

Comment 25: The State of Maine expressed concern that the GB Cod Hook Sector TAC allocation could result in other groups seeking similar TAC allocations resulting in the entire GB cod TAC being allocated to such groups. The State of Maine recommended that the proposed revisions should not be considered a precedent for future allocations.

Response: The current regulations allow any person to submit a Sector allocation proposal. These regulations limit any Sector's allocation to 20 percent of a stock's TAC. If additional Sectors are approved, these Sectors could, taken together, be allocated the majority of a stock's TAC. However, it is highly unlikely that several Sectors could be allocated the entire TAC for a particular stock because a Sector's TAC allocation is based upon the fishing history of all NE multispecies vessels that have landed that particular stock. Therefore, unless approved Sectors incorporate every individual vessel that landed a particular stock during the 5-year period prior to submission of the Sectors' allocation proposals, these Sectors would not be able to capture the entire TAC for a particular stock. The general requirements applicable to all Sector allocations adopted by Amendment 13 specify that members of the Sector bring all of their catch history into the Sector, regardless of how it was caught. Therefore, while the original requirements specifying the allocation for the GB Cod Hook Sector were based on the landings by hook gear, the proposed measure revises these regulations consistent with the intent of Amendment 13. Therefore, no mandatory precedent is set by this revision as any future Sector would be able to bring all of its catch history into the Sector, regardless of how it was caught. Based on the above rationale, NMFS has approved this measure.

Comment 26: Responding to a statement in the proposed rule that a higher Sector GB cod TAC would result in a small increase in the probability that the GB cod target TAC would be exceeded, one industry group suggested that increased participation in the GB Cod Hook Sector would actually decrease the chance that the non-Sector portion of the GB cod TAC would be exceeded. The group reasoned that a larger GB Cod Hook Sector TAC would correspond to more vessels in the GB Cod Hook Sector and fewer non-Sector vessels available to catch the GB cod target TAC. Based on the performance of the Sector during the 2004 fishing year, in which only 50 percent of the GB Cod Hook Sector's GB cod allocation was harvested (although the GB Cod Hook Sector was unable to start fishing until July 21, 2004 (69 FR 43535), a higher Sector GB cod TAC in the future would increase the likelihood that GB Cod Hook Sector vessels would not be able to harvest their full GB cod TAC allocation.

Response: NMFS maintains that an increased Sector TAC on GB cod could potentially increase the chance that the GB cod target TAC could be exceeded by non-Sector vessels. However, this contention assumes that the GB Cod Hook Sector is capable of catching its entire allocation of GB cod. If the GB Cod Hook Sector is unable to catch its entire allocation, there is less of a chance that the GB cod target TAC would be exceeded.

Comment 27: Three commenters expressed general support for DAS credit for vessels standing by an entangled whale.

Response: This provision would provide incentives through a DAS credit for vessels to report entangled whales and track the locations of such whales so that rescue teams could attempt to disentangle the animal. NMFS has approved this provision and is implementing it through this final rule.

Comment 28: Three commenters expressed general support for measures requiring Category 1 herring vessels to notify the NMFS Observer Program and the NMFS Office of Law Enforcement when fishing in the GOM or GB Regulated Mesh Area (RMA). One industry group supported increased observer coverage for herring vessels and requested that NMFS provide the Council with annual reports on the amount of regulated species caught and discarded by the herring fishery.

Response: Several herring vessel offloading operations were observed by NMFS Office of Law Enforcement during the 2004 fishing year, indicating some level of groundfish bycatch by herring vessels. This proposed measure would facilitate the observation of herring vessel offloading operations by providing the date, time, and port of landing by these vessels. Increased observation of herring catches would increase the amount of information available to assess the amount of regulated species bycatch in the herring fishery. For these reasons, NMFS has approved this measure and is implementing it through this final rule. Information obtained through this measure will be made available to the Council.

Comment 29: One individual and one industry group suggested that Observer Program notification measures for Category 1 herring vessels should be implemented on an interim basis.

Response: As explained in the response to Comment 27, NMFS has approved this measure because it facilitates acquiring additional information necessary to assess the amount of regulated species caught and discarded in the herring fishery. The Council, in developing this measure, did not specify a sunset date for this provision. It is anticipated that further action to address groundfish bycatch in the herring fishery on a more permanent basis is necessary. A future action could modify or eliminate the requirements implemented by this final rule.

Comment 30: One individual indicated that purse seine vessels do not catch regulated species and suggested that the proposed notification requirements should not apply to purse seine vessels.

Response: During the development of FW 40B, the Council considered specifying different measures for the different gear types in the herring fishery. However, the information available was insufficient to support such differential regulations in this action. Accordingly, NMFS has approved the Council's recommendation to collect bycatch information from the entire herring fishery to more accurately understand the problem so that future management actions could effectively address this issue.

Comment 31: One individual and one industry group indicated that the 72-hour Observer Program notice requirement for Category 1 herring vessels is inconsistent with the sporadic operations of the herring fishery and suggested that NMFS find alternative means of accomplishing the intent of this measure.

Response: The 72-hour Observer Program notice is necessary to effectively identify the herring vessels that intend to fish in the GOM or GB RMA's to ensure that sufficient observers are placed on these vessels and that the fishery is adequately monitored to achieve the objectives of the Observer Program. Currently, the NMFS Observer Program needs a minimum of 72 hours to determine whether an observer is required for a particular trip and to coordinate the deployment of an observer, if necessary. NMFS recognizes that this requirement may not coincide with the normal fishing operations of the herring fishery and will encourage the herring fishing industry to work with the NMFS Observer Program to comply with the requirements implemented by this final rule without compromising vessel operations.

Comment 32: One industry group indicated that some Category 1 herring vessels fish shoreward of the VMS demarcation line and suggested that NMFS clarify the reporting requirements for these vessels.

Response: Based upon the information provided by this industry group, NMFS has clarified the regulations at § 648.80(d)(7) and (e)(6) to allow vessels fishing landward of the VMS demarcation line to notify NMFS Office of Law Enforcement of the time and place of offloading at least 12 hours before landing.

Comment 33: The Council commented that while the proposed regulations for the Category 1 herring vessel notification requirements are consistent with the draft proposed rule submitted by the Council, the proposed regulations are not consistent with the FW 40B document because the proposed rule specified that the Observer Program and NMFS notification requirements for herring vessels apply to the GOM/GB Exemption Area. The Council suggested NMFS revise these regulations to refer to the GOM/GB RMA's as specified in the FW 40B document.

Response: The current regulations specify that herring vessels are only exempt from the minimum mesh size requirements of the GOM or GB RMA's when fishing in the GOM/GB Exemption Area specified at § 648.80(a)(17), which is a slightly smaller area than the GOM or GB RMA. Accordingly, in order to use small mesh necessary to pursue the herring fishery in the GOM or GB RMA's, herring vessels are required fish in the GOM/GB Exemption Area. While FW 40B does specify that the proposed notification requirements would apply to herring vessels intending to fish in the GOM or GB RMA's, it would be inconsistent with the current regulations governing the fishery and confusing to the industry to include this provision because it adds a requirement to fish in an area where herring vessels are not permitted to fish. Therefore, NMFS declines to revise the regulations as suggested by the Council. Because herring vessels could not fish outside the GOM/GB Exemption Area anyway, retaining the language of the proposed rule will not meaningfully affect herring vessel activities subject to these regulations.

Comment 34: Four commenters, including Senator Collins, the State of Maine, and two industry groups, expressed support for removing the net limit for Trip gillnet vessels. The State of Maine and one industry group indicated that the net limit is unnecessary and the gillnet tag requirements used to enforce this net limit pose operational difficulties to vessels.

Response: NMFS concurs that the net limit for Trip gillnet vessels is unnecessary because Trip gillnet vessels are required to remove all gear from the water prior to returning to port. Unlike Day gillnet vessels, gear fished by Trip gillnet vessels is not left in the water upon returning to port. Trip gillnet vessels must remove gillnet gear from the water before returning to port, thereby greatly dissipating the advantage of fishing unlimited amounts of gillnets. The capacity of the vessel to carry additional gillnets often limits the number of nets that are fished by a vessel. In addition, the analysis prepared for this action indicates that, while the number of nets used by vessels may increase by removing the net limit for Trip gillnet vessels, the expected increase in mortality will be minor. For these reasons, NMFS approved the removal of the net limits and the associated gillnet tagging requirements for Trip gillnet vessels.

Comment 35: Two industry groups expressed support for the principle behind prohibiting discard in management programs allowing the use of Category B DAS. One group strongly supported the proposed dumping prohibition for vessels fishing under a Category B DAS, indicating that prohibiting discards is fundamental to the ability of these programs to achieve their stated objectives. The other group cautioned that this dumping prohibition seems to apply only to trawl gear and could increase mortality of bycatch.

Response: NMFS agrees that prohibiting the discarding of legal-sized regulated species in programs that allow the use of Category B DAS is critical to accurately monitoring catch of regulated species and accounting for additional mortality resulting from the use of Category B DAS. According to the regulations at 50 CFR 600.10, “discarding” means to return fish to the sea, whether or not such fish are brought fully on board a fishing vessel. This prohibition on removing any fish caught before the gear is brought on board the vessel clarifies that this practice constitutes discarding and is therefore prohibited. Because vessels may use longline gear ( i.e. , gear other than nets) to fish in the Regular B DAS Pilot Program, NMFS has revised the proposed prohibition to further clarify that removing any fish caught using any gear, including the dumping of nets before the gear is brought on board the vessel, is prohibited. In addition, prohibiting the removal of fish caught before the gear is brought on board the vessel is necessary to ensure an accurate accounting of the amount of fish caught in these programs. While releasing the fish in the water may increase their chance of survival, there is no way to accurately determine the amount of fish that was released unless the gear is hauled aboard. Without accurate accounting of discards, the effectiveness of catch monitoring in these programs is undermined.

Comment 36: One commenter supported a general provision to prohibit the discard of legal-sized regulated species of concern when fishing on a Category B (regular or reserve) DAS ( i.e. , when fishing in the Regular B DAS Pilot Program or any approved SAP).

Response: The regulations currently prohibit the discard of legal-sized regulated groundfish in the Regular B DAS Pilot Program and cod in the CA II Yellowtail Flounder SAP and the Eastern U.S./Canada Haddock SAP Pilot Program. Expansion of this prohibition would have to be addressed through a future Council action.

Comment 37: One commenter supported monitoring catches of stocks of concern though VTR, VMS, and by dealer reporting.

Response: Currently, regulations require the reporting of all species through VTR and dealer reporting. Regulations specific to approved SAP's and the U.S./Canada Management Area require vessels to declare through the VMS the amount of species kept and discarded based on which stocks are expected to be caught in a particular SAP and which stocks are managed under hard TAC's, respectively. NMFS and the Council are currently investigating the feasibility of pursuing the commenter's suggestion of expanding the VMS reporting requirements for approved SAP's and the U.S./Canada Management Area to collect information on additional species caught under a Category B (regular or reserve) DAS for possible implementation in a future Council action.

Comment 38: Responding to a request for comments by NMFS in the proposed rule, two commenters, including one industry group, opposed publishing the DAS allocations of NE multispecies vessels on the Northeast Regional Office website. Both commenters felt that posting DAS allocations online should be voluntary. One individual felt that posting DAS allocations online would be an invasion of privacy.

Response: NMFS will take these comments into consideration when determining whether to publish this information online.

FW 40B proposed to set aside up to 10 percent of the GB cod incidental catch TAC to facilitate research. As proposed, this TAC would be distributed to research proposals submitted to NMFS by May 1 of every year. However, the FW 40B document does not specify criteria for determining which proposals should be allocated this set-aside research TAC. Further, the document does not describe a mechanism by which this TAC should be distributed to researchers. NMFS supports setting aside TAC to facilitate fisheries research. Such research set-aside TAC's in the NE multispecies fishery would account for mortality associated with this research, while supporting vessel participation in this research without the use of DAS. However, FW 40B proposes to set aside research TAC for only one species. Given the nature of the NE multispecies fishery, this provision would only account for the mortality of GB cod during research activities. The mortality of other species in the conduct of research set-aside projects would not be accounted for, potentially undermining the conservation measures of the FMP. Further, without sufficient detail about how to administer this provision, including the process and mechanism by which proposals to use the GB incidental cod TAC research set-aside would be considered and TAC distributed, there is insufficient information to implement this provision. Without such details, there is no way to assess the likely costs and benefits of this provision. Further, as highlighted in the response to Comments 6 and 7, there is insufficient information to determine whether this provision would be equitable. The proposed measure would potentially take away a portion of the GB cod TAC available to all vessels through the Regular B DAS Pilot Program, resulting in a possible disproportionate impact on the fleet. Accordingly, there is insufficient information to make a determination that this provision is consistent with applicable law. Thus, NMFS has determined that this provision is not consistent with National Standards 1, 2, or 4 and has disapproved this provision.

Amendment 13 established a process to provide vessels the opportunity to target healthy groundfish stocks without undermining efforts to rebuild overfished stocks. According to Section 3.4.5.1 of the FSEIS prepared for Amendment 13, a SAP should avoid or minimize impacts on stocks of concern, as well as minimize bycatch. In addition, for a SAP to be approved, sufficient information should be available to indicate that the SAP would minimize bycatch of non-target species and minimize the mortality of such bycatch. If such information is not available, an experimental fishery should be conducted before a SAP could be approved.

The WGOM Closure Area Rod/Reel Haddock SAP proposes to allow rod/reel vessels to target GOM haddock in the WGOM Closure Area while minimizing the bycatch of GOM cod (GOM cod is considered a stock of concern because it is currently overfished). No experimental fishery was conducted that would support the proposed SAP. Instead, the analysis in the EA relied upon VTR's from party/charter vessels in the WGOM Closure Area. This information is not indicative of the proposed vessel operations for this SAP as party/charter vessels target cod instead of haddock and the possession limits for these trips were based on the party/charter regulations and are substantially different from commercial possession limits. Despite these limitations, this information indicated that more cod was caught than haddock when fishing in the WGOM Closure Area. VTR's for commercial handline trips within the GOM, but outside of the WGOM Closure Area were also examined, but they too indicated that more cod would be caught than haddock. The proposed SAP included a provision where the Regional Administrator could close this SAP if the catch of cod to haddock exceeds a ratio of 1:2, by weight. The data in the EA suggests that the amount of cod and haddock caught under this proposed SAP would likely exceed a ratio of 1:2.

While NMFS supports the creation of SAP's within the GOM to allow vessels to target healthy groundfish stocks and mitigate some of the economic and social impacts resulting from Amendment 13 effort reductions, NMFS must ensure that the provisions of the FMP are consistent with the Magnuson-Stevens Act and appropriate law. Based on the best available information, vessel operations under this SAP would be inconsistent with the purpose and intent of this SAP. The information available indicates that vessel operations would likely exceed the required ratio of cod to haddock, requiring the Regional Administrator to close access to this SAP. In addition, the fact that no experiment was conducted to document whether non-target species could be avoided in this SAP and that the information available to support this SAP indicates that this SAP would likely catch more cod (a stock of concern) than haddock demonstrate that this SAP is not consistent with the intent and principles behind the establishment of SAP's as described in section 3.4.5.1 of the FSEIS for Amendment 13. Further, this SAP is not consistent with Objective 10 of the FMP, as specified in Amendment 13, in that this SAP would not minimize regulatory discards. Instead, this SAP would facilitate regulatory discards by prohibiting vessels from retaining any GOM cod caught while fishing in this SAP. Furthermore, while this proposed SAP includes measures that would minimize the mortality of non-target species and encourage vessels to avoid catching cod, the analysis of this SAP in FW 40B fails to sufficiently justify that the amount of bycatch of GOM cod would be minimized to the extent practicable, and, therefore, the measure is inconsistent with National Standard 9 and section 303(a)(11) of the Magnuson-Stevens Act. Therefore, based on the above, NMFS has disapproved this measure and is implementing it through this final rule.

FW 40B proposes to re-categorize 10 Category C DAS to Category B Reserve DAS for any vessel allocated zero Category A or B (Regular and Reserve) DAS under Amendment 13. These DAS could only be used in a SAP that does not contain a DAS flipping requirement. Currently, the only SAP that does not have a DAS flipping requirement is the CA I Hook Gear Haddock SAP, which is currently limited to members of the GB Cod Hook Sector as discussed below, because the WGOM Closure Area Rod/Reel Haddock SAP was disapproved in this final rule. This proposed action would grant approximately 448 vessels a DAS allocation of 10 Category B Reserve DAS. However, based on DAS allocation data from February 9, 2005, 277 vessels were allocated fewer than 10 Category B Reserve DAS under Amendment 13. Of these vessels, fully 121 vessels were allocated fewer than 10 Category B (Regular and Reserve) combined. Furthermore, there are 19 vessels that qualified for Category A and B (Regular and Reserve) DAS, but were allocated fewer than 10 Category A and B (Regular and Reserve) DAS combined under Amendment 13. These vessels would receive fewer Category A and B (Regular and Reserve) DAS than the 448 vessels that did not qualify for any Category A or B (Regular and Reserve) DAS under Amendment 13. As a result, an inequitable situation would be created in this fishery, because vessels that actually have a recent history in the fishery and initially qualified for some Category A or B (Regular or Reserve) DAS, could have less of an opportunity to fish than vessels that do not have a recent history in the fishery. Further, FW 40B did not provide any justification for this disproportionate allocation of DAS based on conservation purposes. The National Standard Guidelines indicate that any allocation shall be reasonably calculated to promote conservation. While the information used to support this measure indicates that the proposed measure would control the catch of target and non-target species through the measures of approved SAP's and would therefore not increase impacts on groundfish, the FW 40B document does not provide any information how this measure promotes conservation within the fishery. In fact, this measure may lead to the TAC's for species regulated by the SAP's to be caught more quickly, thereby limiting opportunities to fish in this area by vessels currently qualifying for Category A and B (Regular and Reserve) DAS. Furthermore, this additional allocation of DAS may have other unanalyzed negative consequences due to the potential of this measure to increase effective effort in the fishery. Based on this disparity being created without promoting conservation and the absence of an adequate analysis of the effects of this measure, NMFS has determined that this measure is not consistent with National Standard 4.

The 448 vessels that would benefit under this proposed measure ( i.e. , vessels that were allocated zero Category A or B DAS under Amendment 13) would be allocated 4,480 Category B DAS to use in specific SAP's. However, it is estimated that only 50 percent of these vessels would actually use these DAS to participate in an approved SAP based on fishing activity during the 2003 fishing year in which these vessels were allocated a minimum of 10 DAS (reduced to 8 DAS) under the August 1, 2002, interim final rule (67 FR 50292). During this time, only 26 vessels relied on groundfish for a majority of fishing revenue, indicating that most of these vessels were heavily engaged in fisheries other than groundfish. Opportunities to use DAS allocated under the proposed measure in FW 40B would be limited to the CA I Hook Gear Haddock SAP during the 2005 fishing year because this is the only currently approved SAP that does not contain a DAS flipping provision. However, participation in this SAP is limited to vessels participating in the GB Cod Hook Sector, unless modified by FW 41. FW 41, which has recently been submitted to NMFS, proposes to allow non-Sector vessels to fish in the CA I Hook Gear Haddock SAP. Because none of the 448 vessels that would benefit from this measure are members of the GB Cod Hook Sector, unless FW 41 is approved, these 448 vessels would not be able to use these 10 Category B Reserve DAS at all during the 2005 fishing year. If approved, however, FW 41 would limit non-Sector participation in this SAP to November 16, 2005 through December 31, 2005. Therefore, any benefits from this proposed measure would be minimal during the 2005 fishing year.

Finally, NMFS believes that the FW 40B document fails to adequately justify the purpose of this measure other than for economic reasons, since neither conservation nor social benefits were cited to support this measure. The economic analysis concludes that, while this proposed measure would be positive for vessels receiving DAS, this measure would also result in possible negative economic impacts to vessels that would not receive DAS under this measure. Further, the economic benefits of SAP's would be dissipated among more vessels, resulting in decreased economic returns to individual vessels. Moreover, this proposed measure represents a potential transfer of income opportunities from vessels with a recent history in the fishery to vessels without a recent history in the fishery. Based on the above, NMFS has concluded that the sole purpose for this measure appears to be an allocation for economic purposes only that would benefit vessels that do not have a recent history in the NE multispecies fishery. For this reason, this measure is not consistent with National Standard 5. Therefore, NMFS has disapproved this measure and is not implementing it in this final rule.

NMFS has approved the remainder of the measures proposed in FW 40B. A description of the approved measures follows.

The DAS Transfer Program allows for the permanent exchange of DAS between vessels with limited access NE multispecies permits for the purpose of reducing fishing capacity and mitigating some of the adverse economic impacts of effort reductions under Amendment 13. FW 40B modifies the current DAS Transfer Program to provide additional incentive for vessels to participate in this Program. Under FW 40B, Category A and B DAS that are permanently exchanged through the DAS Transfer Program are reduced by 20 percent. As implemented under Amendment 13, Category C DAS will continue to be reduced by 90 percent.

Under the DAS Transfer Program, the baseline characteristics of the vessel receiving DAS must be within 10 percent of the baseline length overall and within 20 percent of the baseline horsepower of the transferring vessel. This action makes the size restrictions for the DAS Transfer Program consistent with the DAS Leasing Program, which requires vessels to meet size restrictions for only length overall and horsepower.

The DAS Leasing Program allows vessels to temporarily exchange DAS on a yearly basis. Vessels involved in leasing DAS under the DAS Leasing Program must have permit baseline characteristics for length and horsepower that fall within the current size restrictions of the DAS Leasing Program. The vessel baseline characteristics used for the DAS Leasing Program are the vessel baseline characteristics on file with NMFS as of January 29, 2004, the date of publication of the proposed rule for Amendment 13 (January 29, 2004; 69 FR 4362).

Under FW 40B, vessels participating in this program have a one-time opportunity to downgrade the permit baseline characteristics for the DAS Leasing Program to the physical characteristics of the vessel currently using the permit. This one-time downgrade only applies to the DAS Leasing Program permit baseline and does not affect any other permit baselines currently specified for the permit ( i.e. , the baseline used for vessel upgrades or replacements). In effect, if a permit holder were to exercise this option, the permit would have two NE multispecies permit baselines: One for the DAS Leasing Program and another that applies to all other permit transactions (vessel upgrades or replacements or the DAS Transfer Program). If the permit is moved to another vessel during a vessel replacement, the downgraded DAS Leasing Program baseline reverts to the original DAS Leasing Program baseline established on January 29, 2004, and could not be downgraded again for the purposes of the DAS Leasing Program. This downgraded DAS Leasing Program baseline remains valid until the permit is placed on a replacement vessel as specified above, or until the DAS Leasing Program expires.

FW 40B modifies the start date of the CA II Yellowtail Flounder SAP to enable vessels to target GB yellowtail flounder in CA II outside of the spawning period of GB yellowtail flounder. Thus, the season for the CA II Yellowtail Flounder SAP is revised to July 1 through December 31. In addition, FW 40B revises the limit on trips into this SAP by specifying that vessels participating in this SAP are limited to only one trip per month. Also, the possession limit for GB yellowtail flounder is reduced to 10,000 lb (4,536 kg), unless adjusted by the Regional Administrator.

This SAP is regulated by the maximum number of trips allowed into the SAP and by the availability of the GB yellowtail flounder TAC allocated to the U.S./Canada Management Area. FW 40B provides the Regional Administrator with the authority to adjust the trip limit and the total number of trips allowed into this SAP every fishing year to adapt to changing stock and fishery conditions. Under FW 40B, the Regional Administrator will consider specific criteria and may use a formula based on the available TAC and recent catch rates of GB yellowtail flounder to determine the number of trips into this SAP and the appropriate trip limit for a particular fishing year. The formula suggested to determine the number of trips into this SAP was specified in the FW 40B proposed rule. If the Regional Administrator determines that the available catch is not sufficient to support 150 trips per year with a GB yellowtail flounder trip limit of 15,000 lb (6,803 kg), the Regional Administrator may choose not to authorize any trips into this SAP for the fishing year. One hundred fifty trips at 15,000 lb (6,803 kg) per trip amounts to 1,020 mt of GB yellowtail flounder necessary to support the CA II Yellowtail Flounder SAP. Based on the proposed TAC of GB yellowtail flounder for the 2005 fishing year (4,260 mt) and using the formula specified in FW 40B, only 260 mt of GB yellowtail flounder would be estimated to be available to allow for the CA II Yellowtail Flounder SAP. Therefore, because the available GB yellowtail flounder TAC is less than the 1,020 mt that may be necessary to allow for this SAP, the Regional Administrator will consult with the Council at its June meeting to determine whether to set the number of trips into the CA II Yellowtail Flounder SAP at zero for the 2005 fishing year.

Amendment 13 established the GB Cod Hook Sector and allocated GB cod to the Sector based on the history of the Sector participants. FW 40B modifies the regulations implementing the GB cod Hook Sector by allowing any vessel, regardless of gear used in previous fishing years, to join the Sector. All landings of GB cod by Sector participants, regardless of gear previously used, will be used to determine the Sector's GB cod allocation for a particular fishing year. All Sector participants are required to use hook gear once in the Sector. The maximum share of the GB cod TAC that the Sector could obtain remains capped at 20 percent of the overall GB cod TAC.

In order to encourage fishing vessels to report entangled whales, FW 40B provides a mechanism for a limited access groundfish vessel to obtain DAS credit for the time spent standing by an entangled whale. A vessel requesting such a credit must notify the USCG and the appropriate organization of the entangled whale (currently, the Center for Coastal Studies); remain in contact with the Center for Coastal Studies; and be available to answer questions on the condition of the animal, including, but not limited to, possible species identification, severity of entanglement, and gear entangling the animal. To receive credit for time standing by an entangled whale, a vessel must submit a written request to the Regional Administrator.

To more accurately document and monitor groundfish bycatch from the herring fishery, FW 40B requires vessels with a Category I herring permit that intend to fish in the GOM or GB RMA's to notify the NMFS Observer Program at least 72 hours before beginning a trip. In addition, if an observer is not provided for the trip, the vessel must notify NMFS Office of Law Enforcement via VMS of the time and place of landing at least 12 hours prior to crossing the VMS demarcation line on returning to port, or 12 hours before landing if the vessel fishes landward of the VMS demarcation line for the entire trip. This requirement to notify NMFS Office of Law Enforcement at least 12 hours prior to crossing the VMS demarcation line or landing was determined to be necessary to allow sufficient time for NMFS Office of Law Enforcement personnel to coordinate efforts to observe herring vessel landings and to accommodate Category 1 herring vessels fishing inshore of the VMS demarcation line.

FW 40B removes the limit on the number of nets that can be carried onboard Trip gillnet vessels. By doing so, FW 40B also eliminates the gillnet tagging requirements for Trip gillnet vessels.

To minimize the mortality on stocks of concern from vessel activities in programs designed to target healthy groundfish stocks, ( i.e. , the Eastern U.S./Canada Haddock SAP Pilot Program, the Regular B DAS Pilot Program, and the CA II Yellowtail Flounder SAP), FW 40A implemented measures that prohibit vessels from discarding legal-sized cod and other regulated groundfish when fishing under a Category B DAS. These measures also require vessels to initiate a DAS flip ( i.e. , change the category of DAS used on that trip to Category A DAS) if vessels harvest more legal-sized cod or other regulated groundfish than the applicable maximum landing limits per trip under a Category B DAS. FW 40B clarifies that the prohibition on discarding of fish also includes the removal of any fish caught using any gear, including the dumping of nets, before the gear is brought on board when operating under a Category B DAS in the CA II Yellowtail Flounder SAP, the Eastern U.S./Canada Haddock SAP Pilot Program, or the Regular B DAS Pilot Program because it is considered to be discarding as defined at 50 CFR 600.10.

In addition to the approved measures described here, the following revisions to existing regulations are made to correct inaccurate references in the regulations. The changes listed below are in the order in which they currently appear in the regulations.

In 15 CFR 902.1(b), the inventory of OMB control numbers for NOAA actions is updated to include approved control numbers and the corresponding regulatory citations for the information collections related to the measures approved in Amendment 13 and FW 40A to the FMP. This inventory was inadvertently not updated in the final rule and interim final rule implementing these actions, respectively.

In 50 CFR 648.10, the periods ending paragraphs (b)(1)(vi) and (b)(1)(vii) are corrected to semicolons.

In § 648.14, the reference to the restrictions and conditions for the CA II Yellowtail Flounder SAP in paragraph (a)(136) is expanded to include § 648.85(b)(3)(xi).

In § 648.14, under paragraph (a)(139), the reference to the number of trips specified under § 648.85(b)(3)(vii) is expanded to include the monthly trip limits for vessels specified in § 648.85(b)(3)(vi).

In § 648.82, paragraphs (k)(4)(ix) and (l)(1)(ii) are revised to clarify that vessels can lease or transfer DAS to a vessel with a baseline length overall and horsepower that is no more than 10 percent and 20 percent greater than the baseline length overall and horsepower of the lessor or transferor vessel, respectively. This revision corrects the regulations to maintain consistency with the intent of Amendment 13 as outlined in the FSEIS.

NMFS has made several changes to the proposed rule as a result of public comment and because of the disapproval of several management measures proposed in FW 40B. Other changes are technical or administrative in nature and clarify or otherwise enhance enforcement and administration of the FMP. These changes are listed below in the order that they appear in the regulations.

In § 648.2, a new definition for a Category 1 herring vessel is inserted to clarify which vessels are affected by the regulations specified at §§ 648.80(d) and (e).

In § 648.14, paragraph (a)(165) is revised to clarify that vessels are prohibited from removing any fish caught using any gear, including the dumping of nets, before the gear is brought on board the vessel.

In § 648.14, the reference to the GOM/GB Exemption area specified at § 648.80(a)(17) in paragraphs (bb)(19) and (bb)(20) is revised to read the GOM or GB Regulated Mesh Areas specified at § 648.80(a)(1) and (2).

In § 648.80, paragraphs (d)(6) and (e)(5) are revised to correct an inaccurate reference to § 648.4(a)(10) that should accurately read § 648.205(b). In addition, language referring to the intent of a vessel to fish in the GOM or GB RMA's was removed.

In § 648.80, to facilitate the monitoring of herring offloading operations by NMFS Office of Law Enforcement personnel and to accommodate herring vessels fishing inshore of the VMS demarcation line, the language in paragraphs (d)(7) and (e)(6) is revised to require that vessels “must notify NMFS Office of Law Enforcement through VMS of the time and place of offloading at least 12 hours prior to crossing the VMS demarcation line on its return trip to port, or, for vessels that have not fished seaward of the VMS demarcation line, at least 12 hours prior to landing.” This 12-hour notice is required to provide the NMFS Office of Law Enforcement with sufficient time to meet vessels at the dock prior to offloading. These regulations are revised under the authority provided in section 305(d) of the Magnuson-Stevens Act.

In § 648.82(k)(4)(ix), the word “vessel” is added after the word “Lessor” to clarify that a Lessor vessel may only lease DAS to a Lessee vessel consistent with the size restrictions of the DAS Leasing Program.

In § 648.82, the title of paragraph (k)(4)(xi) is revised to read “One-time downgrade of DAS Leasing Program Baseline” to clarify the intent of this paragraph and maintain consistency with paragraphs (k)(4)(xi)(A) and (B) of this section. Further, language is added to the introductory text to specify that the intent of this measure is to determine eligibility for leasing DAS only.

In § 648.82, the title of paragraph (k)(4)(xi)(B) is revised to read “Duration and applicability of the one-time DAS Leasing Program baseline downgrade” to clarify the intent of this paragraph. In addition, the phrase “or any other provision” is added to the last sentence of this paragraph to specify that the DAS Leasing Program baseline downgrade would not affect any other provision in Subpart F.

In § 648.85, the title of paragraph (b)(3)(vii) is revised to specify that this paragraph describes the maximum number of trips into the CA II Yellowtail Flounder SAP per fishing year. Further, paragraphs (b)(3)(vii)(A) and (B) are combined into one paragraph. Finally, language is inserted into this paragraph to clarify that the available catch of GB yellowtail flounder is determined by subtracting the potential catch of GB yellowtail flounder by all vessels outside of the SAP from the GB yellowtail flounder TAC specified for the U.S./Canada Management Area at § 648.85(a)(2).

In § 648.87, the word “with” is replaced by the word “issued” in paragraph (d)(1)(ii) to clarify that all vessels issued a valid limited access NE multispecies DAS permit may participate in the GB Cod Hook Sector.

Under NOAA Administrative Order 205-11, 07/01, dated December 17, 1990, the under Secretary for Oceans and Atmosphere has delegated authority to sign material for publication in the Federal Register to the Assistant Administrator for Fisheries, NOAA.

The Regional Administrator determined that the management measures implemented by this final rule are necessary for the conservation and management of the NE multispecies fishery, and are consistent with the Magnuson-Stevens Act and other applicable laws.

This final rule has been determined to be not significant for the purposes of Executive Order (E.O.) 12866.

This final rule does not contain policies with Federalism or “takings” implications as defined in E.O. 13132 and E.O. 12630, respectively.

An EA was prepared for this action that analyzed the environmental impacts of the measures being implemented, as well as alternatives to such measures. The EA considered the extent to which the impacts could be mitigated, and considered the objectives of the action in light of statutory mandates, including the Magnuson-Stevens Act. NMFS also considered public comments received during the comment period of the proposed rule. A copy of the Finding of No Significant Impact for FW 40B is available from the Regional Administrator ( see ADDRESSES ).

Pursuant to 5. U.S.C. 553(b)(A), the Assistant Administrator waives prior notice and opportunity for public comment for the revisions to 15 CFR 902.1(b) because this portion of this final rule specifies actions of agency organization, procedure, or practice. Revisions to 15 CFR 902.1(b) in this action are necessary to maintain an accurate inventory of valid OMB control numbers for NOAA actions. This inventory was inadvertently not updated based upon the information collections approved by the OMB for the measures contained in Amendment 13 and FW 40A to the FMP. The public has already been provided opportunity to comment on these information collections through the publication of the proposed and final rules for Amendment 13 and the proposed and interim final rules for FW 40A. Further, because this final rule makes only minor, non-substantive changes and does not affect the operating practices of the NE multispecies fishery, it is unnecessary to provide for additional notice and opportunity for public comment. Further, pursuant to 5 U.S.C. 553(d)(3), the Assistant Administrator finds good cause to waive the 30-day delayed effectiveness for revisions to 15 CFR 902.1(b) in this final rule because these revisions are necessary for the purposes of agency procedure and practice to comply with the requirements of the PRA. These non-substantive revisions are necessary to ensure that the public is informed of the accurate OMB control number associated with particular regulatory citations. These revisions do not affect vessel operations.

The Assistant Administrator finds good cause, under 5 U.S.C. 553(d)(3), to waive the 30-day delayed effectiveness of the rest of the measures in this final rule. NMFS cannot initiate rulemaking for actions recommended by the Council until the final FW 40B package is received from the Council. NMFS did not receive the final FW 40B package until February 15, 2005. This delay limited the ability of NMFS to adequately review and implement FW 40B, after consideration of public comment, in time to allow delayed effectiveness before the beginning of the 2005 fishing year on May 1, 2005, or the opening of the CA II Yellowtail Flounder SAP on June 1, 2005. Failure to waive the 30-day delayed effectiveness would allow the SAP to open on June 1, 2005 (instead of July 1, 2005, as modified in this final rule), resulting in potentially high landings of GB yellowtail flounder that could depress market prices for yellowtail flounder as observed during the 2004 fishing year. In addition, since June is part of the spawning season for GB yellowtail flounder, allowing the SAP to open on June 1 by delaying the effectiveness would result in lower ex-vessel prices due to the lower quality of fish landed during the spawning period. Effort reductions implemented by Amendment 13 resulted in substantial adverse economic impacts to the groundfish fishery. Additional economic impacts resulting from a delayed effectiveness of the measures included in this final rule, taken cumulatively, represents further economic hardships to an already struggling industry. Moreover, opening on June 1 would allow vessels to continue to disrupt spawning aggregations of GB yellowtail flounder.

Although not overfished, the GB yellowtail flounder stock is currently below a level consistent with maximum sustainable yield (MSY). Therefore, under the Magnuson-Stevens Act, this stock must be rebuilt to a level consistent with MSY. Consequently, allowing the SAP to open due to a delayed effectiveness would enable vessels to continue to harvest spawning fish, thereby undermining efforts to protect spawning aggregations of GB yellowtail flounder and rebuild this stock as required by the Magnuson-Stevens Act. Further, opening on June 1 could contribute to the premature harvest of the GB Yellowtail Flounder TAC, resulting in the closure of access to the Eastern U.S./Canada Area and a prohibition on the retention of GB yellowtail flounder in the entire U.S./Canada Management Area by limited access NE multispecies DAS vessels during the 2005 fishing year. Such a closure and retention prohibition could cause unnecessary additional discards of GB yellowtail flounder, reducing economic benefits to the fishery and further increasing mortality and the potential that the fishery will exceed the yearly TAC. Exceeding the yearly TAC would result in any TAC overages being deducted from the available TAC allocated to the following fishing year. Additionally, since the Regional Administrator has indicated in this action that there is justification to not authorize any trips into CA II Yellowtail Flounder SAP for the 2005 fishing year, a delayed effectiveness could result in the SAP opening on June 1, 2005, only to be closed again once such a decision is made and a notice published, thereby causing confusion to the industry. Therefore, a delayed effectiveness would be contrary to the public interest because it would (1) prevent the agency from protecting spawning aggregations of GB yellowtail flounder as required by the Magnuson-Stevens Act; (2) result in lower market prices, reduced economic returns to the fishing industry, and further adverse economic impacts; and (3) increase confusion in the fishing industry through rapid closure of the SAP.

This final rule contains five new collection-of-information requirements subject to the Paperwork Reduction Act (PRA). The collection of this information has been approved by OMB. The public's reporting burden for the collection-of-information requirements includes the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection-of-information requirements. The new reporting requirements and the estimated average time for a response are as follows:

1. Notice requirements for observer deployment prior to every trip for Category 1 herring vessels intending to fish in the GOM or GB RMA's, OMB# 0648-0521, (2 min/response);

2. NMFS Office of Law Enforcement landings notice requirement for Category 1 herring vessels operating with an observer waiver, OMB# 0648-0521, (5 min/response);

3. Notification and Communication with USCG and Center for Coastal Studies, OMB# 0648-0521, (10 min/response);

4. Written requests to receive a DAS credit for standing by an entangled whale, OMB# 0648-0521, (30 min/response);

5. Vessel baseline downgrade request for the DAS Leasing Program, OMB# 0648-0475, (1 hr/response).

Notwithstanding any other provision of the law, no person is required to respond to, and no person shall be subject to penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB control number.

NMFS, pursuant to section 604 of the Regulatory Flexibility Act (RFA), prepared this FRFA in support of the approved measures in FW 40B. The FRFA describes the economic impacts that this final rule will have on small entities.

The FRFA incorporates the economic impacts summarized in the Initial Regulatory Flexibility Analysis (IRFA) for the proposed rule to implement FW 40B based upon the corresponding economic analysis prepared for FW 40B (FW 40B RIR), the comment and response section of this final rule, and the analysis contained in FW 40B. For the most part, those impacts are not repeated here. A copy of the IRFA, the FRFA, the RIR, and FW 40B are available from NMFS, Northeast Regional Office and are available on the Northeast Regional Office Web site (see ADDRESSES ). A description of why this action was considered, the objectives of, and the legal basis for this final rule are contained in the preamble to this final rule and in the FW 40B document and are not repeated here.

NMFS received thirteen comments on the proposed rule. Of these, there was one comment on the IRFA and the economic impacts to small entities (vessels) resulting from the management measures presented in the proposed rule. A summary of the economic issues raised, and NMFS's responses, follow:

Issue: One industry group suggested that NMFS has not calculated the overall expenses ( i.e. , fuel, ice, bait, etc.) incurred by vessels that intend to participate in the WGOM Rod/Reel Haddock SAP as compared to the expected daily catch resulting from their participation in this SAP. This commenter indicated that the VMS operational costs, in addition to other costs, are too high for the expected returns from haddock caught, and recommended that the requirements to use VMS should be removed.

Response: The IRFA prepared for this action fulfills the requirements of the RFA to determine economic impacts based on available information. Apart from VMS operational cost information, data specifying other vessel costs in this SAP were not available for the analysis conducted for this provision. This is another reason why the analysis for this measure was insufficient to justify its approval. Accordingly, no further analysis of this measure was done because NMFS determined to disapprove this SAP for the reasons specified in the preamble of this final rule under “Disapproved Measures.” Therefore, no changes in response to this comment were made to the final rule.

This final rule implements measures that have the potential to affect any vessel currently issued a limited access NE multispecies permit and vessels issued a Category 1 herring permit. Currently, there are approximately 1,500 vessels issued a limited access NE multispecies permit and 105 vessels issued a Category 1 herring permit. However, it is very unlikely that every vessel issued a limited access NE multispecies permit or a Category 1 herring permit would be affected by this proposed action because of past and recent participation in the fishery, the voluntary nature of specific programs proposed in this action, and the associated regulatory and economic cost burdens for some of the proposed provisions. Except for the notification requirements for Category 1 herring vessels, all of the provisions in the proposed rule are voluntary. Therefore, vessels that participate in these programs would likely have determined that the potential benefits of their participation outweigh costs associated with these programs.

Based upon the information in the EA prepared for FW 40B, up to 1,409 vessels ( i.e. , vessels issued a limited access NE multispecies DAS permit) may participate in the DAS Leasing and DAS Transfer Programs, the CA II Yellowtail Flounder SAP, or elect to stand by an entangled whale. Up to 1,351 vessels issued a limited access NE multispecies DAS permit that are currently not members of the GB Cod Hook Sector are eligible to enter the GB Cod Hook Sector. Currently, the 53 vessels designated as Trip gillnet vessels are no longer restricted in the number of gillnets that they may use and are not required to purchase gillnet tags for their gillnets.

The Small Business Administration (SBA) size standard for small commercial fishing entities is $3.5 million in gross receipts and would apply to limited access NE multispecies permit holders and vessels issued a Category 1 herring permit. Data analyzed for Amendment 13 indicated that the maximum gross receipt for any single commercial fishing vessel for the period 1998 to 2001 was $1.3 million. Data analyzed in FW 40B indicate that Category 1 herring vessels averaged approximately $1.26 million in gross sales. For this reason, each vessel in this analysis is treated as a single entity for the purposes of size determination and impact assessment. All commercial fishing entities affected by this proposed rule would fall under the SBA size standard for small commercial fishing entities, and there would be no disproportionate impacts between small and large entities.

The measures implemented by this final rule include the following provisions requiring either new or revised reporting and recordkeeping requirements: (1) Notice requirements for observer deployment prior to every trip for Category 1 herring vessels intending to fish in the GOM or GB RMA's; (2) NMFS Office of Law Enforcement landings notice requirement for Category 1 herring vessels operating with an observer waiver; (3) notification and communication with USCG and Center for Coastal Studies for standing by an entangled whale; (4) request for DAS Credit for standing by an entangled whale; and (5) vessel baseline downgrade request for the DAS Leasing Program.

The measures proposed under FW 40B would result in several costs to participants. To participate in the herring fishery, Category 1 vessels are required to use VMS. The cost of the purchase and installation of VMS units to vessels participating in the herring fishery have already been considered and approved in a previous PRA submission. VMS operational costs that have not been previously authorized under the PRA include the costs associated with VMS notifications to NMFS Office of Law Enforcement for Category 1 herring vessels that are not issued an observer waiver. These costs total approximately $3 per vessel every year, assuming every vessel issued a Category 1 herring permit fishes in the GOM or GB RMA's, a 50-percent observer coverage rate, and a total of 1,337 trips per year. There are no costs associated with communicating with the USCG or the Center for Coastal Studies regarding standing by an entangled whale as these communications would likely occur via radio. Written requests to receive a DAS credit for standing by an entangled whale will cost the public $3.70 for postage, assuming 10 such requests are submitted per year. The costs associated with vessel baseline downgrade requests for the DAS Leasing Program total $518, assuming every eligible vessel would downgrade their DAS Leasing Program baseline in one year and a postage cost of $0.37 per submission.

Only the minimum data to meet the requirements of the above data needs are requested from all participants. Since all of the respondents are small businesses, separate requirements based on the size of the business have not been developed.

As discussed in the preamble of this final rule, NMFS has disapproved three of the proposed management measures in FW 40B. These measures are: A research TAC set-aside for GB cod, the WGOM Rod/Reel Haddock SAP, and the minimum effective effort provision. The GB cod research set-aside TAC was disapproved because of insufficient detail regarding how to implement this measure. This lack of detail prevented NMFS from accurately assessing the potential biological and economic impacts of this measure. This disapproval will likely result in increased economic benefits, at least in the short-term, to the entire fishery compared to those specified in the proposed rule because this research TAC set-aside would have reduced the amount of the GB cod incidental catch TAC available to Category B DAS programs implemented under FW 40A ( i.e. , the Regular B DAS Pilot Program and the Eastern U.S./Canada Haddock SAP Pilot Program). Without this research set-aside TAC, participants in the Regular B DAS Pilot Program and the Eastern U.S./Canada Haddock SAP Pilot Program will have more opportunities to harvest healthier groundfish stocks because of the larger GB cod incidental catch TAC's allocated to these programs. Further, with higher incidental catch TAC's available for the 2005 fishing year, benefits to these vessels will be higher than anticipated in the proposed rule and will be equivalent with the economic benefits resulting from the no action alternative.

The disapproval of the WGOM Rod/Reel Haddock SAP will reduce the economic benefits described in the proposed rule. The IRFA estimated the benefits of this SAP at $140,000, assuming that vessels would be able to catch the entire haddock TAC allocated for this SAP. However, estimated benefits from this SAP would likely have been lower as the catch of GOM cod in this SAP would have likely limited the potential of participating vessels from realizing the maximum benefits from the haddock TAC. The IRFA noted that this SAP would have provided an opportunity for vessels, particularly small vessels in the GOM, to target healthy groundfish stocks using a Category B DAS. Despite the potential economic benefits of this SAP, NMFS is required to ensure that such SAP's are consistent with the FMP, and meet the requirements of the Magnuson-Stevens Act and other applicable law. As explained in the preamble of this final rule, the information used to justify this SAP was not representative of the fishing operations proposed and the analysis of the proposed measures did not adequately show that the amount of bycatch of GOM cod were minimized to the extent practicable. For these reasons, the proposed SAP is inconsistent with National Standard 2, National Standard 9, section 303(a)(11) of the Magnuson-Stevens Act, as well as the objectives of the FMP. The GOM cod incidental catch TAC that was allocated to this SAP is instead allocated to the Regular B DAS Pilot Program. This provides vessels with greater economic benefits from increased opportunities to target healthy groundfish stocks in the GOM under this program. These benefits would be equivalent with the economic benefits resulting from the no action alternative.

FW 40B proposed to re-categorize 10 Category C DAS as Category B Reserve DAS for all vessels allocated zero Category A or B DAS under Amendment 13. These DAS could only have been used in specific SAP's that do not contain a DAS flipping provision. As described in the preamble of this final rule, NMFS concluded that this measure posed equity concerns, not justified by conservation benefits, and was therefore not consistent with National Standard 4. The IRFA indicated that the economic benefits of this provision would be positive for vessels receiving a minimum DAS allocation. However, this measure would also reduce economic benefits to other vessels that were allocated Category A and B DAS under Amendment 13 by increasing the number of participants in specific SAP's and spreading the limited potential benefits of these SAP's among more vessels. With the disapproval of this measure, the economic impacts of this action would be equivalent with the economic impacts of the no action alternative.

This final rule implements measures that will increase the economic efficiency of several programs implemented in previous actions to help mitigate some of the negative economic impacts of effort reductions under Amendment 13, including facilitating participation in the DAS Leasing and Transfer Programs and revising measures that will help maximize the benefits of the GB yellowtail flounder TAC in the CA II Yellowtail Flounder SAP.

This final rule reduces the conservation tax for Category A and B DAS exchanged through the DAS Transfer Program to facilitate consolidation of the groundfish fleet through market-based incentives. Currently, Category A and B DAS exchanged through the DAS Transfer Program are subject to a 40 percent conservation tax, while Category C DAS are subject to a 90-percent conservation tax. In addition, the vessel selling its DAS must exit all fisheries. This action reduces the conservation tax for Category A and B DAS exchanged to 20 percent, but would retain the 90-percent conservation tax for Category C DAS and the requirement that the vessel selling its DAS exit all fisheries. This conservation tax reduction increases the potential value of a DAS exchanged under the DAS Transfer Program. It is currently not known whether the conservation tax itself has inhibited vessels from participating in this program to date. Unless the selling vessel holds no other limited access permits, the selling vessel may not be able to recoup the full value of the permit by selling the NE multispecies DAS alone. Because the vessel is required to retire from all other fisheries, the opportunity cost to the seller could be quite high. However, overall, this action is expected to increase the potential return to both buyers and sellers and have a beneficial impact on small entities of uncertain magnitude.

This action also removes the tonnage requirement for the DAS Transfer Program, requiring that vessels receiving DAS exchanged through the DAS Transfer Program only meet the size requirements for length overall and horsepower. This would bring the size restrictions of the DAS Transfer Program in line with those of the DAS Leasing Program. These revisions are expected to increase participation in the DAS Transfer Program by increasing the potential pool of compatible vessels capable of exchanging DAS under the DAS Transfer Program. Therefore, these revisions are expected to increase the potential economic benefits associated with increased fleet efficiency. It is unknown if this provision would facilitate additional DAS transfers, but it is likely that economic impacts from this provision would be positive. Reducing the conservation tax and removing the tonnage criterion through this final rule will likely yield greater economic benefits than the no action alternative because to date no vessels have participated in the DAS Transfer Program under the 40 percent conservation tax on Category A and B DAS.

FW 40B allows vessels the one-time opportunity to downgrade the permit baseline characteristics established for the DAS Leasing Program to reflect the physical characteristics of the vessel currently using the permit. This is expected to increase the potential pool of vessels available to lease DAS. The economic impact of this provision is likely to be positive compared to the no action alternative, though the number of vessels that might downgrade their DAS Leasing Program baseline and the economic value of that downgrade is not quantifiable.

The CA II Yellowtail Flounder SAP was implemented under Amendment 13. This final rule revises the season, adjusts the trip limit, limits the number of trips that could be taken during a fishing year, and establishes a process that allows the Regional Administrator to help achieve OY from the yellowtail flounder TAC and ensure that the SAP does not conflict with the management objectives outside of the SAP. Changing the start date for this SAP from June 1 to July 1 will likely increase the price received by vessels landing GB yellowtail flounder from the SAP because ex-vessel prices for GB yellowtail flounder have been historically lower in June compared to July. Reducing the GB yellowtail flounder landing limit from 30,000 lb (13,605 kg) per trip to 10,000 lb (4,536 kg) per trip and reducing vessels from two trips into the SAP per month to one trip per month will likely spread out landings of GB yellowtail flounder throughout the fishing year. This will likely lead to more consistently higher ex-vessel prices throughout the fishing year by avoiding dramatic drops in ex-vessel price that result when large amounts of yellowtail flounder are landed at one time. While regulating the supply of yellowtail flounder through restrictive trip limits may offer vessels higher ex-vessel prices, these restrictions could also increase costs by increasing the number of trips necessary to harvest the available TAC. However, current regulations allow vessels to fish in the CA II Yellowtail Flounder SAP and the Eastern U.S./Canada Haddock SAP Pilot Program and/or the Eastern U.S./Canada Area on the same trip, enabling vessels to target other species and potentially earn sufficient revenue to cover associated vessel costs. However, the Regional Administrator, after consulting with the Council, may determine that there is insufficient GB yellowtail flounder TAC available to support the opening of the CA II Yellowtail Flounder SAP without jeopardizing the GB yellowtail fishery outside of the SAP. If this determination is made, the Regional Administrator may reduce trips taken into this SAP to zero during the 2005 fishing year. This would further ensure that the large amounts of GB yellowtail flounder that were landed from this SAP during the 2004 fishing year that resulted in depressed market prices and the premature closing of the Eastern U.S./Canada Area do not negatively affect the fishery in a similar manner during the 2005 fishing year. A lower GB yellowtail flounder trip limit for the CA II Yellowtail Flounder SAP and the ability to close access to this SAP when there is insufficient GB yellowtail flounder TAC to support the SAP and a fishery outside the SAP would allow vessels greater opportunity to fully harvest the available GB cod and GB haddock TAC allocated to the Eastern U.S./Canada Area and achieve the full economic benefit from the U.S./Canada Management Area for vessels operating under a Category A DAS. These revisions may help mitigate the derby effects and the resulting decreases in economic benefits from the U.S./Canada Management Area experienced during the 2004 fishing year and would result in increased economic benefits than the no action alternative.

FW 40B also changes the manner in which the GB Cod Hook Sector allocation is calculated by allowing all vessels and all landings, regardless of gear, to count towards the Sector's GB cod allocation. This will increase the Sector's share of the overall GB cod TAC for the 2005 fishing year. While Sector vessels would be able to increase overall fishing revenues from the increased allocation of GB cod, this provision may reduce the amount of GB cod target TAC available to non-Sector vessels. Even though the TAC available to non-Sector vessels is a target TAC and would not automatically result in area closures, the diminished non-Sector GB cod target TAC could potentially slightly increase the probability that the GB cod target TAC would be exceeded, necessitating possible additional restrictions on non-Sector vessels to ensure the target TAC is not exceeded. Therefore, compared to the no action alternative, this action would result in positive economic benefits to members of the GB Cod Hook Sector associated with an increase in the TAC of 0.33-percent, or 14 mt for the 2005 fishing year. Non-Sector vessels may potentially see future minimal restrictions on fishing and income opportunities associated with a decrease in available TAC of 14 mt for the 2005 fishing year. However, any reduction in fishing opportunities for non-Sector vessels caused by additional vessels joining the GB Cod Hook Sector and therefore increasing the GB Cod Hook Sector's GB cod TAC allocation could potentially be offset by the resulting reduction in the number of non-Sector vessels.

This final rule implementing FW 40B establishes a mechanism to provide a DAS credit for vessels standing by an entangled whale. This incentive for vessels to report and stand by an entangled whale is expected to increase the likelihood that entangled whales could be found, tracked, and potentially disentangled. Increasing the possibility that an entangled whale could be successfully tracked and disentangled would result in positive existence and non-consumptive use values to the public.

FW 40B requires that Category 1 herring vessels notify the NMFS Observer Program at least 72 hours prior to fishing for herring in the GOM or GB RMA's. In addition, if an observer is not provided for the trip, the vessel must notify NMFS Office of Law Enforcement via VMS at least 12 hours prior to offloading the catch. These requirements are likely to impose some costs associated with reduced trip flexibility. However, it is not known the extent to which this provision would compromise economic efficiency of herring vessel operations.

Finally, this action removes the net limit for Trip gillnet vessels. Removing the net limit also eliminates the need for vessels to purchase gillnet tags for groundfish gillnets (a reduction in costs of $180 per vessel). This also eliminates the need to switch the limited number of gillnet tags over to different sized nets during vessel operations. This provides greater flexibility in vessel operations, resulting in unknown positive economic benefits. This provision could increase the number of gillnets used by Trip gillnet vessels leading to potential increases in vessel revenue associated with higher landings.

FW 40B analyzed the aggregate economic benefits of four other non-selected alternatives. These alternatives consisted of various combinations of all of the provisions described in FW 40B, including some that were not specified in the selected alternative. Alternative 1, includes every provision described in FW 40B, including additional options for the DAS Leasing and Transfer Programs, the GB Haddock SAP North of CA I, an option that would restrict participation in the WGOM Closure Area Rod/Reel Haddock SAP to only NE multispecies DAS vessels, options to prohibit herring vessels from fishing in the NE multispecies closed areas, and a minimum observer requirement for vessels to participate in Category B DAS programs. Some of the provisions included in Alternative 1 (specifically, the GB Haddock SAP North of CA I and options to revise the DAS Transfer Program) would have resulted in greater economic benefits than the selected alternative, while others would have resulted in greater adverse impacts to specific groups of vessels. Given the restrictive measures and monitoring requirements involved with the GB Haddock SAP North of CA I, this measure would likely provide few additional opportunities for fishermen at the cost of considerable additional complexity in the fishery. Further, under Alternative 1, vessels participating in the DAS Leasing Program would have been adversely affected by a conservation tax for the DAS Leasing Program as well as Category 1 herring vessels that would have been prohibited from fishing in the NE multispecies closed areas. Finally, the minimum observer requirements to participate in a SAP would have likely resulted in greater costs to smaller vessels that do not have the required safety equipment necessary to carry an observer. These measures would have resulted in substantial adverse economic impacts than the selected alternative.

Alternative 2 is identical to the selected alternative without specifying certain options for the measures included, and would have resulted in the same economic impacts.

Alternative 3 differs from the selected alternative in that it would not change the current conservation tax for the DAS Leasing and Transfer Programs, includes modifications to the non-groundfish permit transfer provisions of the DAS Transfer Program, and does not include modifications to the GB Cod Hook Sector allocation calculation. This alternative would likely result in economic benefits similar to the no action alternative, although modifications to the DAS Transfer Program would have likely increased the value of DAS exchanged under that program. Alternative 4 differs from the proposed alternative in that it includes the GB Haddock SAP North of CA I, but does not include modifications to the GB Cod Hook Sector allocation calculation. Alternative 4 would result in greater economic benefit than the selected alternative because of the GB Haddock SAP North of CA I; however, as specified above, this measure would have likely provided few additional fishing opportunities for fishermen at the cost of considerable additional complexity in the fishery. The measures implemented by this final rule will provide greater economic efficiency than the non-selected alternatives without increasing the complexity of the fishery, compromising opportunities for Category 1 herring vessels to fish in the GOM or GB RMA's, or increasing the costs for vessels to comply with Observer Program requirements.

Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) states that for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules. In conjunction with this rule making process, a small entity complaince guide was prepared. Copies of the guide will be sent to all holders of limited access multispecies permits and Category 1 herring permits. The guide will be available on the Internet at http://www.nero.noaa.gov. Copies of the guide can also be obtained from the Regional Administrator (see ADDRESSES ).

Section 105(e) of the Federal Alcohol Administration Act (the FAA Act, 27 U.S.C. 201 et seq. ) requires that alcohol beverage labels provide the consumer with adequate information regarding a product's identity and prohibits the use of misleading information on such labels. The FAA Act also authorizes the Secretary of the Treasury to issue regulations to carry out its provisions. The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers these regulations.

Part 4 of the TTB regulations (27 CFR part 4) allows the establishment of definitive viticultural areas and the use of their names as appellations of origin on wine labels and in wine advertisements. Part 9 of the TTB regulations (27 CFR part 9) contains the list of approved viticultural areas.

Section 4.25(e)(1)(i) of the TTB regulations (27 CFR 4.25(e)(1)(i)) defines a viticultural area for American wine as a delimited grape-growing region distinguishable by geographical features, the boundaries of which have been recognized and defined in part 9 of the regulations. These designations allow vintners and consumers to attribute a given quality, reputation, or other characteristic of a wine made from grapes grown in an area to its geographic origin. The establishment of viticultural areas allows vintners to describe more accurately the origin of their wines to consumers and helps consumers to identify wines they may purchase. Establishment of a viticultural area is neither an approval nor an endorsement by TTB of the wine produced in that area.

Section 4.25(e)(2) of the TTB regulations outlines the procedure for proposing an American viticultural area and provides that any interested party may petition TTB to establish a grape-growing region as a viticultural area. Section 9.3(b) of the TTB regulations requires the petition to include—

• Evidence that the proposed viticultural area is locally and/or nationally known by the name specified in the petition;

• Historical or current evidence that supports setting the boundary of the proposed viticultural area as the petition specifies;

• Evidence relating to the geographical features, such as climate, soils, elevation, and physical features, that distinguish the proposed viticultural area from surrounding areas;

• A description of the specific boundary of the proposed viticultural area, based on features found on United States Geological Survey (USGS) maps; and

• A copy of the appropriate USGS map(s) with the proposed viticultural area's boundary prominently marked.

The North Willamette Valley AVA Group petitioned TTB for the establishment of the “Ribbon Ridge” viticultural area in northern Yamhill County, Oregon. The 3,350-acre viticultural area is about 4 miles northwest of Dundee, 22 miles southwest of Portland, and 40 miles inland from the Pacific Ocean. The Ribbon Ridge viticultural area lies within the larger, established Willamette Valley viticultural area (27 CFR 9.90). As of 2002, the petitioned-for area contained 3 commercial wineries and 14 vineyards covering about 286 acres.

Geographically, Ribbon Ridge is a distinct, 3.5 mile long by 1.75-mile wide ridge separated from the surrounding mountains and hills on all sides by creek valleys. According to the petition, the geographic isolation of Ribbon Ridge, its soils, and, to a lesser extent, its climate distinguish it from surrounding Willamette Valley grape-growing regions. Evidence supporting establishment of the Ribbon Ridge viticultural area is described below.

Colby Carter, an early settler from Missouri, named Ribbon Ridge in 1865, and the ridge has been known by that name ever since. The first official use of the Ribbon Ridge name dates to 1888 with the creation of Ribbon Ridge School District No. 68. Built along Ribbon Ridge Road, which runs along the ridge's spine, the school operated from 1889 to about 1953. A reference to Ribbon Ridge also appears in the “Oregon Historical Quarterly,” vol. XLIV, page 307, March-December 1943. It reads, “Ribbon Ridge is a spur in the southwest part of the Chehalem Mountains, about east of Yamhill. The top of the ridge twists like a ribbon, hence the name.”

The USGS Dundee Quadrangle map and other commercial maps show “Ribbon Ridge” as the name of the ridge encompassed by the Ribbon Ridge viticultural area. The Dundee Quadrangle map also shows Ribbon Ridge Road running north and south along the spine of the ridge. In addition, a search of the U.S. Geological Survey's Geonames database (see http://geonames.usgs.gov/ ) shows “Ribbon Ridge” to be the name of the ridge encompassed by the viticultural area's boundary. This search also shows the site of the historic Ribbon Ridge School to be within the viticultural area's boundary.

Ribbon Ridge is geographically distinct from the surrounding hills and mountains due to its topographic isolation. Creek valleys surround Ribbon Ridge on all sides, giving the ridge an “island-like” appearance as it rises above the Chehalem Valley floor, according to the petition. Two creeks, Ayres Creek in the north and Dopp Creek in the east, separate Ribbon Ridge from the Chehalem Mountains. Chehalem Creek separates Ribbon Ridge from the Coast Range to the west and from the Dundee Hills to the south.

A 10-mile long loop of county roads also surrounds Ribbon Ridge at or near its base. Beginning at the ridge's northern end, this loop follows Dopp Road south along the ridge's eastern side, and then follows North Valley Road along its southern and western sides, and after traveling east a short distance on Albertson Road, the loop is closed along the ridge's northern side. Since these roads largely follow the base of Ribbon Ridge, the petitioners used these roads to help delineate the proposed viticultural area.

Local residents also view Ribbon Ridge as a distinct farming district, with its own mix of crops, separate from the adjoining Chehalem Valley, Kings Grade, and Rex Hills regions, according to the petition. Winegrowing activity began on Ribbon Ridge in 1980, with the planting of Ridgecrest Vineyards. The first commercial vineyard was established in 1982, with the planting of 54 acres of Pinot Noir and Chardonnay. Yamhill Valley Vineyards first used grapes from these vineyards in wine production in 1985. Vineyards and winery operations now own in excess of 700 total acres on Ribbon Ridge. Approximately 1,000 to 1,400 acres are suited for premium wine grape planting within the Ribbon Ridge viticultural area boundaries, the petition states.

As noted above, creek valleys separate Ribbon Ridge from the higher, surrounding landmasses. The “island” of Ribbon Ridge, which extends southward from the Chehalem Mountains, rises to a maximum height of 683 feet from the 200-foot Chehalem Valley floor. Ayres Creek, which flows west then north, and Dopp Creek, which flows south, separate Ribbon Ridge from the Chehalem Mountains along, respectively, the ridge's north and east sides. On the western side of Ribbon Ridge, the Chehalem Creek valley separates the ridge from the Coast Range hillsides associated with the Yamhill-Carlton District viticultural area (27 CFR 9.183). After a gorge-like drop of 300 feet into the quarter-mile wide ravine of Chehalem Creek, the creek's valley widens at the southern foot of Ribbon Ridge into the broad, flat Chehalem Valley, separating the Chehalem Mountains and Ribbon Ridge from the Dundee Hills to the south.

Ribbon Ridge is a distinct geological formation of eastward-tilted, marine sedimentary strata that dates to the upper Eocene geological era and is unusual in having only two geological strata—the Keasey and Pittsburgh Bluff Formations. The ridge is ancient and stable, and the soils formed from the fine sedimentary parent materials are well weathered. Consequently the Ribbon Ridge viticultural area's soils are, on the average, deeper in profile and more finely structured than soils in surrounding areas. The soils of Ribbon Ridge are relatively uniform, all being formed of fine-textured marine sediment (mainly Willakenzie series) at vineyard elevations, and neither slides nor erosion have significantly altered them.

The soils found within the Ribbon Ridge viticultural area differ from the alluvial sedimentary soils found the Chehalem Valley flood plain, and the area's soils also differ from the adjacent volcanic soils of the Chehalem Mountains and Dundee Hills. Finally, the Ribbon Ridge soils are related to, but have significant differences from, the marine sedimentary hillsides (mainly Willakenzie and Peavine series) to the west of the Chehalem Creek valley in the Yamhill-Carlton District viticultural area (27 CFR 9.183) in that they are younger, finer, and more uniform, due to finer parent materials of sandstone, siltstone, and mudstone.

Ribbon Ridge's “island-like” topography and the proximity of the surrounding, higher landmasses tend to shield and protect the proposed Ribbon Ridge viticultural area from many of the extremes that affect the other agricultural microclimates in the northern Willamette Valley. Low clouds tend to accumulate on the hilltops surrounding Ribbon Ridge, and fog settles on the valley floor in the early and late parts of the growing season. To the west, the Coast Range and Yamhill Mountains encourage weather systems to drop their moisture before reaching Ribbon Ridge and serve to block the severe winds of Pacific storms. To the north, the Chehalem Mountains, Bald Peak, and Portland Hill tend to protect the Ribbon Ridge viticultural area from Columbia Gorge and eastern Oregon weather systems, which deliver cold temperatures in the winter and heat or winds in the summer. To the south, the Dundee Hills shield Ribbon Ridge from the extreme winds that funnel coastal weather systems through the Van Duzer corridor, whether hot, cold, or wet in the summer or winter.

Ribbon Ridge's grape-growing hillsides are slightly warmer and drier when compared to valley floor sites within the northern Willamette Valley. These climatic differences are especially significant during the April to October grape-growing season. During that time, hillside warming is especially important in achieving grape ripening similar to that found at warm valley sites, but without the risk of frost or excess soil moisture. The ridge's hillsides have higher minimum (2-3° F) and maximum (2-7° F) daily temperatures during the early and late portions of the growing season than do exposed valley floor sites. These moderate temperatures permit early growth in the spring, consistent and even ripening—with retention of acids—over the summer, and a long, full maturing season in the fall.

Ribbon Ridge's annual rainfall is less than that of other wine growing regions in the northern Willamette Valley. Annual precipitation on the protected hillsides of the Ribbon Ridge viticultural area is up to 10 inches (approximately 25 percent) less than that of nearby unprotected valley floor sites. Growing season precipitation within the Ribbon Ridge area is reduced even further, with 7.7 inches accumulating April through October, on average. This is approximately 35 percent less than the amount received at Coast Range and valley floor sites. Rainfall in the Ribbon Ridge area is also less than that of the nearby Yamhill-Carlton District (27 CFR 9.183) and Dundee Hills (27 CFR 9.180) viticultural areas.

As proposed, the boundary of the Ribbon Ridge viticultural area followed a 9.85-mile loop of county roads around the base of the ridge, but the proposed regulatory text limited the viticultural area to land at or above 240 feet in elevation within that loop. Since the road loop largely follows the 200- to 240-foot base of Ribbon Ridge, we have revised the regulatory text to eliminate the 240-foot elevation restriction, slightly expanding the size of the viticultural area. The area now includes land below 240 feet along the western side of Dopp Road and a small area around the Lake View School south of Albertson Road. In addition, we have also revised the wording of the boundary description in the regulatory text for clarity, and we have revised the beginning point from the intersection of the 240-foot contour line and North Valley Road to the intersection of Albertson and Dopp Roads. For a complete description of the viticultural area's boundary, see the regulatory text published at the end of this notice.

The petitioner(s) provided the required maps, and we list them below in the regulatory text.

TTB published a notice of proposed rulemaking, Notice No. 21, in the Federal Register on November 3, 2003 (68 FR 62259), regarding the establishment of the Ribbon Ridge viticultural area. In that notice, TTB requested comments by January 2, 2004, from anyone interested. We received one supporting comment and no opposing comments.

After careful review, TTB finds that the evidence submitted with the petition supports the establishment of the proposed viticultural area. Therefore, under the authority of the Federal Alcohol Administration Act and part 4 of our regulations, we establish the “Ribbon Ridge” viticultural area in Yamhill County, Oregon, effective 60-days from this document's publication date.

Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. With the establishment of this viticultural area and its inclusion in part 9 of the TTB regulations, its name, “Ribbon Ridge,” is recognized as a name of viticultural significance. Consequently, wine bottlers using “Ribbon Ridge” in a brand name, including a trademark, or in another label reference as to the origin of the wine, must ensure that the product is eligible to use the viticultural area's name as an appellation of origin.

For a wine to be eligible to use as an appellation of origin the name of a viticultural area specified in part 9 of the TTB regulations, at least 85 percent of the grapes used to make the wine must have been grown within the area represented by that name, and the wine must meet the other conditions listed in 27 CFR 4.25(e)(3). If the wine is not eligible to use the viticultural area name as an appellation of origin and that name appears in the brand name, then the label is not in compliance and the bottler must change the brand name and obtain approval of a new label. Similarly, if the viticultural area name appears in another reference on the label in a misleading manner, the bottler would have to obtain approval of a new label.

Different rules apply if a wine has a brand name containing a viticultural area name that was used as a brand name on a label approved before July 7, 1986. See 27 CFR 4.39(i)(2) for details.

We certify that this regulation will not have a significant economic impact on a substantial number of small entities. This regulation imposes no new reporting, recordkeeping, or other administrative requirement. Any benefit derived from the use of a viticultural area name is the result of a proprietor's efforts and consumer acceptance of wines from that area. Therefore, no regulatory flexibility analysis is required.

This rule is not a significant regulatory action as defined by Executive Order 12866 (58 FR 51735). Therefore, it requires no regulatory assessment.

N. A. Sutton of the Regulations and Procedures Division drafted this document.

On March 21, 2000, the National Park Service published a regulation (36 CFR 3.24) on the management of personal watercraft (PWC) use within all units of the national park system (65 FR 15077). This regulation prohibits PWC use in all national park units unless the NPS determines that this type of water-based recreational activity is appropriate for the specific park unit based on the legislation establishing that park, the park's resources and values, other visitor uses of the area, and overall management objectives. The regulation banned PWC use in all park units effective April 20, 2000, except 21 parks, lakeshores, seashores, and recreation areas. The regulation established a 2-year grace period following the final rule publication to provide these 21 park units time to consider whether PWC use should be allowed.

Bighorn Canyon National Recreation Area was established by an act of Congress on October 15, 1966, following the construction of the Yellowtail Dam by the Bureau of Reclamation. This dam, named after the famous Crow chairman Robert Yellowtail, harnessed the waters of the Bighorn River and turned this variable stream into a lake. The most direct route to the southern end of Bighorn Canyon NRA is via Montana State road 310 from Billings, Montana, or U.S. Highway 14A from Sheridan, Wyoming.

Bighorn Lake extends approximately 60 miles through Wyoming and Montana, 55 miles of which are held within Bighorn Canyon. The Recreation Area is composed of more than 70,000 acres of land and water, which straddle the northern Wyoming and southern Montana borders. There are two visitor centers and other developed facilities in Fort Smith, Montana, and near Lovell, Wyoming. The Afterbay Lake below the Yellowtail Dam is a good spot for trout fishing and wildlife viewing for ducks, geese, and other animals. The Bighorn River below the Afterbay Dam is a world class trout fishing area.

The purpose and significance statements listed below are from Bighorn Canyon's Strategic Plan and Master Plan. Bighorn Canyon National Recreation Area was established to:

1. Provide for public outdoor recreation use and enjoyment of Bighorn Lake (also referred to as Yellowtail Reservoir) and lands adjacent thereto within the boundary of the National Recreation Area on NPS lands.

2. Preserve the scenic, scientific, and historic features contributing to public enjoyment of such lands and waters.

3. Coordinate administration of the recreation area with the other purposes of the Yellowtail Reservoir project so that it will best provide for: (1) Public outdoor recreation benefits, (2) preservation of scenic, scientific, and historic features contributing to public enjoyment, and (3) management, utilization, and disposal of renewable natural resources that promotes or is compatible with and does not significantly impair public recreation or scenic, scientific, or historic features contributing to public enjoyment.

Bighorn Canyon National Recreation Area is significant for the following reasons:

1. The outstanding scenic and recreational values of the 60-mile long, 12,700 acre Bighorn Lake.

2. The history of over 10,000 years of continuous human habitation.

3. The contribution the recreation area is making to the preservation of wild horses on the Pryor Mountain Wild Horse Range, of which one-third is located within the recreation area, as well as the preservation of a Bighorn sheep herd that repatriated the area in the early 1970s.

4. The 19,000 acre Yellowtail Wildlife Habitat, which preserves one of the best examples of a Cottonwood Riparian area remaining in the western United States.

Under the National Park Service's Organic Act of 1916 (Organic Act) (16 U.S.C. 1 et seq. ) Congress granted the NPS broad authority to regulate the use of the Federal areas known as national parks. In addition, the Organic Act (16 U.S.C. 3) allows the NPS, through the Secretary of the Interior, to “make and publish such rules and regulations as he may deem necessary or proper for the use and management of the parks* * *”

16 U.S.C. 1a-1 states, “The authorization of activities shall be conducted in light of the high public value and integrity of the National Park System and shall not be exercised in derogation of the values and purposes for which these various areas have been established * * *”

As with the United States Coast Guard, NPS's regulatory authority over waters subject to the jurisdiction of the United States, including navigable waters and areas within their ordinary reach, is based upon the Property and Commerce Clauses of the U.S. Constitution. In regard to the NPS, Congress in 1976 directed the NPS to “promulgate and enforce regulations concerning boating and other activities on or relating to waters within areas of the National Park System, including waters subject to the jurisdiction of the United States * * *” (16 U.S.C. 1a-2(h)). In 1996 the NPS published a final rule (61 FR 35136, July 5, 1996) amending 36 CFR 1.2(a)(3) to clarify its authority to regulate activities within the National Park System boundaries occurring on waters subject to the jurisdiction of the United States.

Personal watercraft use on Bighorn Lake began during the early 1990s. During 2001, personal watercraft comprised approximately 5% of the boat use on Bighorn Lake. Before the ban was imposed in November 2002, personal watercraft were allowed to operate throughout the national recreation area, but most personal watercraft use occurred at the north end of the lake in the vicinity of Ok-A-Beh Marina. The primary use season is mid-May through mid-September. During the other months the water is generally too cold for PWC use.

Bighorn Canyon has two marinas: Horseshoe Bend and Ok-A-Beh. Both provide gas, rental docks, food, and boater supplies, typically from Memorial Day through Labor Day. Personal watercraft (before the ban) and other watercraft could also enter the lake at Barry's Landing, which has a launching ramp but no marina. Primitive access to the lake is available at the causeway, and access to the Bighorn and Shoshone Rivers is available throughout the Yellowtail Wildlife Habitat. Watercraft may be launched at the Afterbay launch ramp and on the river at the Afterbay and Three-Mile access areas.

Personal watercraft (before the ban) and other watercraft are piloted over the main surface of the lake, along the lakeshore, and in coves and back bays. Boaters may camp at one of the national recreation area's 156 developed campsites or at one of nearly 30 primitive campsites.

No surveys have been conducted regarding the operating hours of personal watercraft at Bighorn Canyon National Recreation Area, though most personal watercraft probably operate between the hours of dawn to dusk. There are currently no State regulations regarding hours of operation in either Montana or Wyoming. Due to the narrowness of Bighorn Lake, most watercraft activity, including use of personal watercraft before the ban, occurs in the several wide sections of the lake, or watercraft traverse back and forth across the lake. Some thrill-seeking activity by personal watercraft users did occur.

Before the ban on PWC use, PWC use was such a small percentage of the overall boating use within Bighorn Canyon that accidents involving PWC operators varied greatly from year to year. Two accidents were recorded at Bighorn Canyon National Recreation Area during the 2000 and 2001 seasons. Both accidents were attributed to the operators' inexperience in operating personal watercraft, allowing them to run into other vessels. Statistics for other vessel accidents per year are similar.

Complaints regarding misuse of personal watercraft are infrequent, and the most commonly reported are wakes in the flat-wake zones near boat launch areas. Bighorn Canyon National Recreation Area has issued citations under Montana and Wyoming State law to personal watercraft users for acts such as wake jumping, under-age riding, and failing to wear flotation devices. The most common citation has been for under-age riding. Montana State law requires riders age 13 and 14 to have a certificate, and riders 12 and younger must be accompanied by an adult. Wyoming State law requires riders to be 16 years old.

On May 5, 2004, the National Park Service published a Notice of Proposed Rulemaking (NPRM) for the operation of PWC at Bighorn Canyon National Recreation Area (NRA) (69 FR 25043). The proposed rule for PWC use was based on alternative B in the Environmental Assessment (EA) prepared by NPS for Bighorn Canyon NRA. The EA was available for public review and comment from June 9, 2003, through July 11, 2003, and the NPRM was available for public comment from May 5, 2004, through July 6, 2004.

The purpose of the EA was to evaluate a range of alternatives and strategies for the management of PWC use at Bighorn Canyon to ensure the protection of park resources and values while offering recreational opportunities as provided for in the National Recreation Area's enabling legislation, purpose, mission, and goals. The assessment assumed alternatives would be implemented beginning in 2002 and considered a 10-year period, from 2002 to 2012. The assessment also compared each alternative to PWC use before November 7, 2002, when the service-wide closure took effect.

The EA evaluated three alternatives addressing the use of personal watercraft at Bighorn Canyon National Recreation Area. Alternative A reinstates PWC use under those restrictions that applied to PWC use before November 7, 2002, as defined in the park's Superintendent's Compendium. Alternative B manages PWC use by imposing management prescriptions in addition to those restrictions in effect before November 7, 2002. In addition to those areas closed to PWC use in alternative A, alternative B includes a closure of the Bighorn Lake and shoreline south of the area known as the South Narrows. Bighorn Canyon National Recreation Area would also install buoys to delineate this boundary and personal watercraft users would be required to stay north of this boundary. Under alternative B, Bighorn Canyon would also establish a PWC user education program implemented through vessel inspections, law enforcement contacts, and signing. In addition to alternatives A and B, the National Park Service considered a no-action alternative that takes no action to reinstate the use of personal watercraft at Bighorn Canyon National Recreation Area. Under this alternative, NPS would continue the ban on personal watercraft use at Bighorn Canyon National Recreation Area begun in November 2002.

Based on the analysis, NPS determined that alternative B is the park's preferred alternative because it best fulfills the park responsibilities as trustee of the sensitive habitat; ensures safe, healthful, productive, and aesthetically and culturally pleasing surroundings; and attains a wider range of beneficial uses of the environment without degradation, risk of health or safety, or other undesirable and unintended consequences. This final rule contains regulations to implement alternative B at Bighorn Canyon National Recreation Area.

A proposed rule was published for public comment on May 5, 2004, with the comment period lasting until July 6, 2004. The National Park Service received 2,550 timely written responses regarding the proposed regulation. Of the responses, 2,486 were form letters in 4 different formats, and 64 were separate letters. Of the 64 separate letters, 56 were from individuals, 5 from organizations, and 3 from government agencies. Within the following discussion, the term “commenter” refers to an individual, organization, or public agency that responded. The term “comments” refers to statements made by a commenter.

1. Bluewater Network stated that the Environmental Assessment (EA) failed to use the best data available and picked Alternative B without adequate scientific justification.

NPS Response: Where data was lacking, best professional judgment prevailed using assumptions and extrapolations from scientific literature, other park units where personal watercraft are used, and personal observations of park staff. The NPS believes that the EA is in full compliance with National Environmental Policy Act (NEPA) and that the Findings of No Significant Impacts (FONSI) shows Alternative B (continued PWC use with restrictions) as the Preferred Alternative and that decision has been adequately analyzed and explained.

2. Several commenters stated that allowing PWC use with additional restrictions violates the park's enabling legislation and NPS mandate to protect resources from harm.

NPS Response: NPS analysis of PWC use has found that the use is appropriate and consistent with the Bighorn Canyon National Recreation Area's enabling legislation. The authorizing legislation for Bighorn Canyon was considered when developing alternatives for the EA. The objective of the EA, as described in the “Purpose and Need” chapter, was derived from the enabling legislation for Bighorn Canyon. The recreation area's enabling legislation also states that the “Secretary shall administer Bighorn Canyon National Recreation Area for general purposes of public outdoor recreation.” The recreation area was established as a unit of the national park system. The goal of the national recreation area is to provide each visitor with an educational, enjoyable, safe and memorable experience.

As a result, the alternatives presented in the EA protect resources and values while providing recreational opportunities at Bighorn Canyon National Recreation Area. As required by NPS policies, the impacts associated with personal watercraft and other recreational uses are evaluated under each alternative to determine the potential for impairment to park resources. Implementation of Alternative B in the final rule will not result in impairment of park resources and values for which the Bighorn Canyon National Recreation Area was established.

3. One commenter stated the analysis did not adequately consult with and seek the expertise of various agencies, which appears to violate the NPS' PWC regulations.

NPS Response: The final PWC regulation published by the NPS in March 2000 indicates that we intend to seek the expertise of the U.S. Environmental Protection Agency (EPA), OSHA and other relevant agencies and literature when deciding whether to allow continued PWC use in units of the National Park System. The EA references EPA and OSHA regulations and studies throughout.

We sent out 68 letters to other Federal, State, local agencies including U.S. Fish and Wildlife, Wyoming Game and Fish Department, Montana Fish Wildlife and Parks, Bureau of Reclamation, Wyoming Department of Environmental Quality, Montana Department of Environmental Quality (the State agencies charged with application of EPA regulations in Wyoming and Montana), Bighorn National Forest, Gallatin National Forest, Bureau of Land Management, U.S. Environmental Protection Agency, U.S. Department of the Army Corps of Engineers, Wyoming State Historic Preservation Office, Montana State Historic Preservation Office, Crow Indian tribe, The Wilderness Society, American Watercraft Association, National Parks Conservation Association-Northern Rockies Regional Office, Zoo Montana Science and Conservation Center, Big Horn Mountain Country Coalition, State and Federal representatives and senators, and multiple Chambers of Commerce. We have met the requirements for consultation as well as the intent of the March 2000 PWC regulations.

4. Several commenters stated that the decision violates the Organic Act and will result in the impairment of resources.

NPS Response: The “Summary of Laws and Policies” section in the “Environmental Consequences” chapter of the PWC Use EA summarizes the three overarching laws that guide the National Park Service in making decisions concerning protection of park resources. These laws, as well as others, are also reflected in the NPS Management Policies. An explanation of how the National Park Service applied these laws and policies to analyze the effects of personal watercraft on Bighorn Canyon National Recreation Area resources and values can be found under “Impairment Analysis” in the “Methodology” section of that chapter.

An impairment to a particular park resource or park value must rise to the magnitude of a major impact, as defined by its context, duration, and intensity and must also affect the ability of the National Park Service to meet its mandates as established by Congress in the park's governing legislation. “Impairment” is clearly defined in the EA (page 83) and is the most severe of the five potential impact categories. The other impact categories starting with the least severe are: negligible, minor, moderate, and major. For each resource topic, the EA establishes thresholds or indicators of magnitude of impact. An impact approaching a “major” level of intensity is one indication that impairment could result. For each impact topic, when the intensity approached “major,” the park would consider mitigation measures to reduce the potential for “major” impacts, thus reducing the potential for impairment.

The National Park Service has determined that under the final rule implementing the preferred alternative, Alternative B, there will be no negative impacts on park resources or values, nor impairment of any park resources or values for which the Bighorn Canyon National Recreation Area was established.

5. Several commenters stated that the proposed restrictions under Alternative B discriminate against PWC because Alternative B regulates PWC use on Bighorn Lake more restrictively than other motorized vessels without any reasonable justification.

NPS Response: The EA was written in response to a lawsuit by Bluewater Network and the subsequent settlement agreement regarding the appropriateness of PWC use within the National Park System. The objective of the Environmental Assessment, as described in the “Purpose and Need” Chapter, was to evaluate a range of alternatives and strategies for the management of PWC use in order to ensure the protection of park resources and values, while offering recreational opportunities as provided in the enabling legislation, purpose, mission, and goals. A special analysis on the management of personal watercraft was provided under each alternative to meet the terms of the settlement agreement between the Bluewater Network and the NPS. The plan was designed to determine if PWC use, not motorized boat use in general, was consistent with the park's enabling legislation and management goals and objectives.

6. The U.S. EPA suggested that PWC in the NRA be limited to 4-stroke engines, which will be the best way to meet NPS management policies for protection of air, natural soundscapes, and for the use of motorized equipment.

NPS Response: Impacts on water and air from PWC use are discussed in the EA on pages 76 to 100, and are negligible to minor for Alternative B. Impacts on soundscapes, discussed on pages 100 to 108, are negligible to moderate for Alternative B. PWC use at Bighorn Canyon is small, and limiting the use to only 4-stroke engines would not appreciably affect air, water or soundscape resources.

7. One commenter stated that the analysis failed to mention the impact of PWC permeation losses on local air quality.

NPS Response: Permeation losses of volatile organic compounds (VOCs) from personal watercraft were not included in the calculation of air quality impacts primarily because these losses are insignificant relative to emissions from operating watercraft. Using the permeation loss numbers in the comment (estimated to be half the total of 7 grams of losses per 24 hours from the fuel system), the permeation losses per hour are orders of magnitude less than emissions from operating personal watercraft. Therefore, including permeation losses would have no effect on the results of the air quality impact analyses. Also, permeation losses were not included because of numerous related unknown contributing factors such as the number of personal watercraft refueling at the reservoir and the location of refueling (inside or outside of the airshed).

8. One commenter stated that the use of air quality data from Cody, Wyoming, and Billings, Montana, some 50 miles and 90 miles from Bighorn Canyon NRA, in the analysis does not provide the best representation of air quality at the lake.

NPS Response: The Cody and Billings monitoring stations are the closest air quality monitoring sites to the study area. The data from these sites were discussed in the EA; however, these data were not used in the impact analysis. The analysis was based on the results of an EPA air emissions model, which used estimated PWC and boat usage at Bighorn Canyon NRA as inputs.

9. One commenter expressed concern that PWC emissions were declining faster than forecasted by the EPA. As the Sierra Report documents, in 2002, hydrocarbon (HC) and nitrogen oxides (NO X ) emissions from the existing fleet of PWC were already 23% lower than they were before the EPA regulations became effective, and will achieve reductions greater than 80% by 2012.

NPS Response: The U.S. EPA's data incorporated into the 1996 Spark Ignition Marine Engine rule were used as the basis for the assessment of air quality, and not the Sierra Research data. It is agreed that these data show a greater rate of emissions reductions than the assumptions in the 1996 Rule and in the EPA's NONROAD Model, which was used to estimate emissions. However, the level of detail included in the Sierra Research report has not been carried into the EA for reasons of consistency and conformance with the model predictions. Most States use the EPA's NONROAD Model for estimating emissions from a broad array of mobile sources. To provide consistency with State programs and with the methods of analysis used for other similar NPS assessments, the NPS has elected not to base its analysis on focused research such as the Sierra Report for assessing PWC impacts.

It is agreed that the Sierra Research report provides data on “worst case” scenarios. However worst case or short-term scenarios were not analyzed for air quality impacts in this or other NPS EAs.

It is agreed that the relative quantity of HC and NO X are a very small proportion of the county based emissions and that this proportion will continue to be reduced over time. The EA takes this into consideration in the analysis.

California Air Resources Board (CARB) certified PWCs may be used, however the degree of certainty of overall use of this engine type nationwide is not well established. For consistency and conformity in approach, the NPS has elected to rely on the assumptions in the 1996 Spark Ignition Engine Rule which are consistent with the widely used NONROAD emissions estimation model. The outcome is that estimated emissions from combusted fuel may be in the conservative range, if compared to actual emissions.

10. Several commenters stated that research indicated that direct-injection 2-stroke engines are dirtier than 4-stroke engines.

NPS Response: It is agreed that two-stroke carbureted and two-stroke DI engines generally emit greater amounts of pollutants than four-stroke engines. Only 4 of the 20 PAHs included in the analyses were detected in water: naphthalene, 2-methylnaphthalene, fluorene, and acenaphthylene. Some pollutants (benzene, toluene, ethylbenzene, and xylene, collectively referred to as BTEX, and formaldehyde) were reported by CARB in the test tanks after 24 hours at approximately 50% the concentrations seen immediately following the test. No results for PAH concentrations after 24 hours were seen in the CARB (2001) results, but a discussion of sampling/analyses of PAHs in the six environmental compartments was presented.

EPA NONROAD model factors differ from those of CARB. As a result of the EPA rule requiring the manufacturing of cleaner PWC engines, the existing carbureted 2-stroke PWC will, over time, be replaced with PWC with less-polluting models. This replacement, with the anticipated resultant improvement in air quality, is parallel to that experienced in urban environments as the automobile fleet becomes cleaner over time.

Regarding the rate of evaporation of gasoline constituents, data provided in CARB (2001), EPA (2001), and Verschuren (1983) do not support the contention in the comment that “most of the unburned gasoline and gasoline additives * * * evaporate from water within the first hour and 15 minutes after they are released.” In CARB (2001), the observation was made that at least 70% of the contaminant concentrations remained in the water 2 hours after running the engines. In most cases, often 40% or more of the concentration was still present the following day. The loss rate observed by CARB (2001) is supported by the EPA (2001) and Verschuren (1983) volatilization rate for benzene. These two sources give the half-life of benzene as approximately 5 hours at a water temperature of 30 degrees C. This estimate of the benzene half-life was considered in evaluation of the threshold volumes calculated for benzene.

11. One commenter stated that the analysis disregarded or overlooked relevant research regarding impacts to water quality from PWC use as well as the impact to downstream resources and long term site specific water quality data on PWC pollutants.

NPS Response: The EA states that in 2002 impacts to water quality from PWC on a high-use day would be negligible for all chemicals evaluated based on ecological and human health benchmarks and for benzo(a)pyrene based on human health benchmarks. The EA states that in 2012, impacts would also be negligible based on all ecological and human health benchmarks. Impacts to water quality downstream from the lake are not expected to be more severe when the environmental processes affecting concentrations of organics ( e.g. , evaporation, dilution, deposition) are considered.

12. One commenter stated that the analysis represents an outdated look at potential emissions from an overstated PWC population of conventional 2-stroke engines, and underestimates the accelerating changeover to 4-stroke and newer 2-stroke engines. The net effect is that the analysis overestimates potential PWC hydrocarbon emissions, including benzene and polyaromatic hydrocarbons (PAHs), to the water in Bighorn Lake. In addition, the water quality analysis uses assumptions that result in overestimation of potential PWC hydrocarbon emission to the water in Bighorn Lake. For example, the analysis states that benzo(a)pyrene concentrations in gasoline can be “up to 2.8 mg/kg.”

NPS Response: Assumptions regarding PWC use (5 per day in 2002 and 6 per day in 2012) were based on actual count data from the month of July 2002. PWC use at other times of the year ranged from 0 to 4 PWC per day. Data for the years 2001 and 2002 were the only data available for Bighorn Canyon (EA, page 75). Because data from other years were not available, trends in PWC use at Bighorn Canyon could not be determined for use in the EA. The July 2002 data can be considered a “worst case” estimate, but it is not “unrealistic” since it is based on actual Bighorn Canyon data. Despite these conservative estimates, impacts to water quality from personal watercraft are judged to be negligible for all alternatives evaluated. Cumulative impacts from personal watercraft and other outboard motorboats are expected to be negligible. If the assumptions used were less than conservative, the conclusions could not be considered protective of the environment, while still being within the range of expected use.

The NPS recognizes that the assumption of all personal watercraft using 2-stroke engines in 2002 is conservative but believes it was appropriate to be protective of park resources. The assumption is consistent with emission data available in CARB (1998) and Bluewater Network (2001). The emission rate of 3 gallons per hour at full throttle is a mid-point between 3 gallons in two hours (1.5 gallons per hour; NPS 1999) and 3.8 to 4.5 gallons per hour for an average 2000 model year personal watercraft (Personal Watercraft and Bluewater Network 2001). The assumption also is reasonable in view of the initiation of production line testing in 2000 (EPA 1997) and expected full implementation of testing by 2006 (EPA 1996).

Reductions in emissions used in the water quality impact assessment are in accordance with the overall hydrocarbon emission reduction projections published by the EPA (1996). EPA (1996) estimates a 52% reduction by personal watercraft by 2010 and a 68% reduction by 2015. The 50% reduction in emissions by 2012 (the future date used in the EA) is a conservative interpolation of the emission reduction percentages and associated years (2010 and 2015) reported by the EPA (1996) but with a one-year delay in production line testing (EPA 1997).

The estimate of 2.8 mg/kg for benzo(a)pyrene in gasoline used in the calculations is considered conservative, yet realistic, since it is within the range of concentrations measured in gasoline, according to Gustafson et al. (1997).

13. One commenter stated that the analysis lacked site-specific data for impacts to wildlife, fish, and threatened and endangered species at Bighorn Lake.

NPS Response: The scope of the EA did not include the conduct of site-specific studies regarding potential effects of PWC use on wildlife species at Bighorn Lake National Recreation Area. Analysis of potential impacts of PWC use on wildlife at the national recreation area was based on best available data, input from park staff, and the results of analysis using that data. The EA still includes a thorough analysis of impacts on wildlife and threatened and endangered species using this approach.

14. One commenter stated that PWC use and human activities associated with their use may not be any more disturbing to wildlife species than any other type of motorized or non-motorized watercraft. The commenter cites research by Dr. James Rodgers of the Florida Fish and Wildlife Conservation Commission, whose studies have shown that PWC are no more likely to disturb wildlife than any other form of human interaction. PWC posed less of a disturbance than other vessel types. Dr. Rodgers' research clearly shows that there is no reason to differentiate PWC from motorized boating based on claims on wildlife disturbance.

NPS Response: We agree that some research indicates that personal watercraft are no more apt to disturb wildlife than are small outboard motorboats; however, disturbance from both PWC and outboard motor boats does occur. Dr. Rogers recommends that buffer zones be established, creating minimum distances between boats (personal watercraft and outboard motorboats) and nesting and foraging waterbirds. Under Alternative B, the area south of the South Narrows will be closed to PWC use, but there will be no other shoreline restrictions related to wildlife and wildlife habitat. “No-wake” speeds must be maintained when within 200 feet of a dock, swimmer, swimming raft, non-motorized boat or anchored vessel in Montana, and within 100 feet in Wyoming. Impacts to wildlife and wildlife habitat under all the alternatives were judged to be negligible to moderate from all visitor activities.

15. One commenter stated that continued PWC use in the Bighorn Canyon NRA will not result in sound emissions that exceed the applicable Federal or State noise abatement standards, and technological innovations by the PWC companies will continue to result in substantial sound reductions.

NPS Response: The NPS concurs that on-going and future improvements in engine technology and design would likely further reduce the noise emitted from PWC. However, given the low level of PWC use, a reduction in ambient noise levels in the recreation area is unlikely even with improved technology and would unlikely reduce impacts beyond minor to moderate through out the recreation area.

16. One commenter stated that the NPS places too much hope in new technologies significantly reducing PWC noise since there is little possibility that the existing fleet of more than 1.1 million machines (most of which are powered by conventional two-stroke engines) will be retooled to reduce noise. This commenter was also concerned that the conclusions of relevant PWC noise studies, such as Drowning in Noise, Noise Costs of PWC in America, were disregarded.

NPS Response: The analysis of the preferred alternative states that noise from PWC would continue to have minor to moderate, temporary adverse impacts, and that impact levels would be related to number of PWC and sensitivity of other visitors. This recognizes that noise will occur and will bother some visitors, but site-specific modeling was not needed to make this assessment. The availability of noise reduction technologies is also growing, and we are not aware of any scientific studies that show these technologies do not reduce engine noise levels. Also, the analysis did not rely heavily on any future noise reduction technology. It recognizes that the noise from the operation of PWC will always vary, depending on the speed, manner of use, and wave action present.

Although PWC use does occur throughout the lake, it is concentrated more in certain areas, and this is noted in the soundscapes impact analysis that follows the introductory statements and assumptions listed on page 105 of the EA. The analysis of impacts states that “minor adverse impacts would occur at times and places where use is infrequent and distanced from other park users, for example, as PWC users operated far from shore. Moderate adverse impacts would occur at landings on the lake on days of relatively consistent PWC operation with more than one PWC operating at one time. Moderate adverse impacts would occur from highly concentrated PWC use in one area and in areas where PWC noise is magnified off the surrounding cliffs.” The analysis did not assume even distribution of PWC and predicted moderate impacts from concentrated PWC use in one area.

The noise annoyance costs in the “Drowning in Noise” study are recognized in the EA by the moderate impacts predicted, although no monetary costs are assigned. These costs would vary by type and location of user. Given the intended usage of the higher use marina/beach areas of Bighorn Canyon and visitor expectations and tolerances at these areas, it is unlikely that the PWC noise experienced there would meet the definition of “major” impact, as defined in the EA.

17. One commenter stated that the analysis refers to a potential concern that the ability of PWC operators to access remote areas of the park unit might make certain cultural, archeological and ethnographic sites vulnerable to looting or vandalism. However, there is no indication of any instances where these problems have occurred. Nor is there any reason to believe that PWC users are any more likely to pose these concerns than canoeists, kayakers, hikers, or others who might access these same areas.

NPS Response: The EA was focused on the analysis of impacts from PWC use. PWC can make it easier to reach some remote upstream areas, compared to hiking to these areas, but we agree that the type of impacts to cultural resources from any users of remote areas of the park would be similar if they can reach these areas.

18. One commenter stated that the accident data used in the analysis was outdated and incorrect because PWC accidents are reported more often than other boating accidents. Further, there have been few PWC accidents reported in the Bighorn Canyon NRA.

NPS Response: The mediating factors described in the comment are recognized. However, these factors are unlikely to fully explain the large difference in percentages (personal watercraft are only 7.5% of nationally registered vessels, yet they are involved in 36% of reported accidents). In other words, personal watercraft are 5 times more likely to have a reportable accident than are other boats. This difference is even more significant when canoes and kayaks, which are not required to be registered but are included in the total number of accidents, are considered. Despite these national boating accident statistics, impacts of PWC use and visitor conflicts are judged to be negligible relative to swimmers and minor relative to other motorboats at the national recreation area.

Incidents involving watercraft of all types, including personal watercraft, are reported to and logged by National Park Service staff. A very small proportion of incidents in the recreation area are estimated to go unreported.

19. One commenter stated that there was no discussion regarding PWC fire and explosion hazards. According to the U.S. Coast Guard, the PWC industry has recalled more than 280,000 watercraft over the past ten years with production/design problems that could lead to fires and explosions.

NPS Response: According to the National Marine Manufacturers Association, PWC manufacturers have sold roughly 1.2 million watercraft during the last ten years. Out of 1.2 million PWC sold the U.S. Coast Guard had only 90 reports of fires/explosions in the years from 1995-1999. This is less than 1% of PWC boats having reports of problems associated with fires/explosions. As far as the recall campaigns conducted by Kawasaki and Bombardier, the problems that were associated with fuel tanks were fixed. Kawasaki conducted a recall for potentially defective fuel filler necks and fuel tank outlet gaskets on 23,579 PWCs from the years 1989 and 1990. The fuel tank problems were eliminated in Kawasaki's newer models, and the 1989 and 1990 models are most likely not in use anymore since life expectancy of a PWC is only five to seven years, according to PWIA. Bombardier also did a recall for its 1993, 1994, and 1995 models to reassess possible fuel tank design flaws. However, the number of fuel tanks that had to be recalled was a very small percent of the 1993, 1994, and 1995 fleets because fuel tank sales only amounted to 2.16% of the total fleet during this period (Bombardier Inc.). The replacement fuel tanks differed from those installed in the watercraft subject to the recall in that the replacement tanks had revised filler neck radiuses, and the installation procedure now also requires revised torque specifications and the fuel system must successfully complete a pressure leak test. Bombardier found that the major factor contributing to PWC fires/explosions was over-torquing of the gear clamp. Bombardier was legally required by the U.S. Coast Guard to fix 9.72% of the recalled models. Out of 125,349 recalls, the company repaired 48,370 units, which were approximately 38% of the total recall, far exceeding its legal obligation to repair units with potential problems.

Further fuel tank and engine problems that could be associated with PWC fires have been reduced significantly since the National Marine Manufacturers Association (NMMA) set requirements for meeting manufacturing regulations established by the U.S. Coast Guard. Many companies even choose to participate in the more stringent Certification Program administered by the NMMA. The NMMA verifies annually, or whenever a new product is put on the market, boat model lines to determine that they satisfy not only the U.S. Coast Guard Regulations but also the more rigorous standards based on those established by the American Boat and Yacht Council.

20. One commenter stated that several of the restrictions under Alternative B, such as the PWC-only exclusion zone south of the South Narrows and the PWC-user education program discriminate without any justification against PWC users.

NPS Response: The EA was designed to determine if personal watercraft use was consistent with the park's enabling legislation and management goals and objectives, not to determine if these restrictions should also apply to boats. That analysis must be completed as part of a separate EA.

21. One commenter is concerned that PWC operators are not being cited for violating regulations.

NPS Response: Park officials have issued citations under Montana and Wyoming state law to PWC users for acts such as wake jumping, under-age riding, and failing to wear floatation devices. Due to the size and configuration of the lake, and the fact that PWC comprise only approximately 4% of the boat use on Bighorn Lake, it is unlikely that a visitor would witness a PWC operator being cited for a violation.

22. One commenter is concerned that a PWC ban would have severe economic effects on the local economies surrounding the NRA, which receive their livelihoods from PWC users as well as other recreationalists.

NPS Response: The economic analysis evaluated the socioeconomic impact of each alternative. NPS anticipates that the final rule implementing Alternative B will actually increase benefits to local businesses compared to the baseline of continuing the PWC ban. Increased benefits to local businesses from this alternative are estimated between $33,110 and $156,300 per year. These increased benefits will result from the permitted PWC use under this alternative.

23. The U.S. EPA commented that the rule is unclear about the Crow Indian Tribe's comments or reservations about the action, and if there was any consultation with the Tribe.

NPS Response: The Crow Tribe received a copy of the EA in August 2003. Although no written comments were received from the tribe, Bighorn Canyon staff had conversations with the tribe about the project, and no issues were raised.

Alternative A would permit PWC use as previously managed within the park before the November 7, 2002, ban, while Alternative B would permit PWC use with additional management strategies. Alternative B is the preferred alternative, and includes a closure of the reservoir and shoreline south of the area known as the South Narrows, and a PWC user education program implemented through vessel inspections, law enforcement contacts, and signing. Alternative C is the no action alternative and represents the baseline conditions for this economic analysis. Under that alternative, the November 7, 2002, ban would be continued. All benefits and costs associated with Alternatives A and B are measured relative to that baseline.

The primary beneficiaries of Alternatives A and B would be the park visitors who use PWCs and the businesses that provide services to PWC users such as rental shops, restaurants, gas stations, and hotels. Additional beneficiaries include individuals who use PWCs outside the park due to the November 7, 2002 ban. Over a ten-year horizon from 2003 to 2012, the present value of benefits to PWC users is expected to range between $540,900 and $693,650, depending on the alternative analyzed and the discount rate used. The present value of benefits to businesses over the same timeframe is expected to range between $27,420 and $210,640. These benefit estimates are presented in Table 1. The amortized values per year of these benefits over the ten-year timeframe are presented in Table 2.

The primary group that would incur costs under Alternatives A and B would be the park visitors who do not use PWCs and whose park experiences would be negatively affected by PWC use within the park. At Bighorn Canyon National Recreation Area, non-PWC uses include boating, canoeing, fishing, and hiking. Additionally, the public could incur costs associated with impacts to aesthetics, ecosystem protection, human health and safety, congestion, nonuse values, and enforcement. However, these costs could not be quantified because of a lack of available data. Nevertheless, the magnitude of costs associated with PWC use would likely be greatest under Alternative A, and lower for Alternative B due to increasingly stringent restrictions on PWC use.

Because the costs of Alternatives A and B could not be quantified, the net benefits associated with those alternatives (benefits minus costs) also could not be quantified. However, from an economic perspective, the selection of Alternative B as the preferred alternative was considered reasonable even though the quantified benefits are smaller than under Alternative A. That is because the costs associated with non-PWC use, aesthetics, ecosystem protection, human health and safety, congestion, and nonuse values would likely be greater under Alternative A than under Alternative B. Quantification of those costs could reasonably result in Alternative B having the greatest level of net benefits.

Based on the preceding comments and responses, the NPS has made no changes to the proposed rule language with regard to PWC operations.

This document is not a significant rule and has not been reviewed by the Office of Management and Budget under Executive Order 12866.

(1) This rule will not have an effect of $100 million or more on the economy. It will not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. The National Park Service has completed the report entitled “Economic Analysis of Management Alternatives for Personal Watercraft in Bighorn Canyon National Recreation Area” (MACTEC Engineering and Consulting, Inc., July 2003).

(2) This rule will not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency. Actions taken under this rule will not interfere with other agencies or local government plans, policies or controls. This rule is an agency specific rule.

(3) This rule does not alter the budgetary effects of entitlements, grants, user fees, or loan programs or the rights or obligations of their recipients. This rule will have no effects on entitlements, grants, user fees, or loan programs or the rights or obligations of their recipients. No grants or other forms of monetary supplements are involved.

(4) This rule does not raise novel legal or policy issues. This rule is one of the special regulations being issued for managing PWC use in National Park Units. The National Park Service published general regulations (36 CFR 3.24) in March 2000, requiring individual park areas to adopt special regulations to authorize PWC use. The implementation of the requirement of the general regulation continues to generate interest and discussion from the public concerning the overall effect of authorizing PWC use and National Park Service policy and park management, but the specific effects of this rule are nominal.

The Department of the Interior certifies that this rulemaking will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). This certification is based on a report entitled “Economic Analysis of Management Alternatives for Personal Watercraft in Bighorn Canyon National Recreation Area” (MACTEC Engineering and Consulting, Inc., July 2003).

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This proposed rule:

a. Does not have an annual effect on the economy of $100 million or more.

b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions.

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 rule does not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million per year. The rule does not have a significant or unique effect on State, local or tribal governments or the private sector. This rule is an agency specific rule and does not impose any other requirements on other agencies, governments, or the private sector.

In accordance with Executive Order 12630, the rule does not have significant takings implications. A taking implication assessment is not required. No taking of personal property will occur as a result of this rule.

In accordance with Executive Order 13132, the rule does not have sufficient Federalism implications to warrant the preparation of a Federalism Assessment. This rule only affects use of NPS administered lands and waters. It has no outside effects on other areas by allowing PWC use in specific areas of the park.

In accordance with Executive Order 12988, the Office of the Solicitor has determined that this rule does not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of the Order.

This regulation does not require an information collection from 10 or more parties and a submission under the Paperwork Reduction Act is not required. An OMB Form 83-I is not required.

As a companion document to the NPRM, NPS issued the Personal Watercraft Use Environmental Assessment for Bighorn Canyon National Recreation Area. The EA was available for public review and comment for the period June 9, 2003, through July 11, 2003. A Finding of No Significant Impact (FONSI) was signed on April 26, 2005. To request a copy of these documents call (406) 666-2412 or write Bighorn Canyon National Recreation Area, Attn: PWC EA, P.O. Box 7458, Fort Smith, Montana 59035. Requests may be e-mailed to James_Charles@nps.gov. A copy of the EA and FONSI may also be found at www.nps.gov/bica/pphtml/documents.html.

In accordance with the President's memorandum of April 29, 1994, “Government to Government Relations with Native American Tribal Governments” (59 FR 22951) and 512 DM 2, we have evaluated potential effects on Federally recognized Indian tribes and have determined that there are no potential effects.

This final rule is effective upon publication in the Federal Register . In accordance with the Administrative Procedure Act, specifically, 5 U.S.C. 553(d)(1), this rule, 36 CFR 7.92(d), is exempt from the requirement of publication of a substantive rule not less than 30 days before its effective date.

As discussed in this preamble, the final rule is a part 7 special regulation for Bighorn Canyon National Recreation Area that relieves the restrictions imposed by the general regulation, 36 CFR 3.24. The general regulation, 36 CFR 3.24, prohibits the use of PWC in units of the national park system unless an individual park area has designated the use of PWC by adopting a part 7 special regulation. The proposed rule was published in the Federal Register (69 FR 25043) on May 5, 2004, with a 60-day period for notice and comment consistent with the requirements of 5 U.S.C. 553(b). The Administrative Procedure Act, pursuant to the exception in paragraph (d)(1), waives the section 553(d) 30-day waiting period when the published rule “grants or recognizes an exemption or relieves a restriction.” In this rule the NPS is authorizing the use of PWCs, which is otherwise prohibited by 36 CFR 3.24. As a result, the 30-day waiting period before the effective date does not apply to the Bighorn Canyon National Recreation Area final rule.

Throughout this document, “we,” “us” and “our” refer to EPA.

Under sections 179(c)(1) and 186(b)(2) of the Clean Air Act (CAA or “Act”), EPA has the responsibility for determining whether a nonattainment area has attained the carbon monoxide (CO) national ambient air quality standard (NAAQS) by the applicable attainment date. In this case, the EPA was required to make a determination concerning the Las Vegas Valley CO nonattainment area. As a “serious” CO nonattainment area, Las Vegas Valley was subject to a December 31, 2000 attainment date.

On January 21, 2005 (70 FR 3174), we published a notice announcing a proposed finding that the Las Vegas Valley nonattainment area had attained the CO NAAQS by the applicable attainment date (December 31, 2000) and that, based on our proposed finding of attainment, certain CAA requirements [specifically, the contingency provisions under sections 172(c)(9) and 187(a)(3)] would no longer apply to this area. A detailed discussion of EPA's proposal is contained in the January 21, 2005 proposed rule and will not be restated here. The reader is referred to the proposed rule for more details.

We received no comments in response to our proposed action.

EPA finds, pursuant to sections 179(c)(1) and 186(b)(2) of the Act, that the Las Vegas Valley “serious” nonattainment area has attained the NAAQS for CO by the applicable attainment date. This finding relieves the State of Nevada from the obligation under section 187(g) of the Act to prepare and submit a SIP revision providing for a reduction of CO emissions within Las Vegas Valley by at least five percent per year in each year after approval of the SIP revision until the CO NAAQS is attained.

It should be noted that this action does not redesignate this area from “nonattainment” to “attainment”. Under section 107(d)(3)(E), the Clean Air Act requires that, for an area to be redesignated from nonattainment to attainment, five criteria must be satisfied including the submittal by the State (and approval by EPA) of a maintenance plan as a SIP revision. Therefore, the designation status of Las Vegas Valley in 40 CFR part 81 is unaffected by this action, and Las Vegas Valley will remain a “serious” nonattainment area for CO until such time as EPA finds that the State of Nevada has met the Clean Air Act requirements for redesignation to attainment.

Based on our finding of attainment by the applicable attainment date, we also find that the CAA's requirement for the SIP to provide for CO contingency provisions under CAA sections 172(c)(9) and 187(a)(3) no longer applies to Las Vegas Valley and that our remaining obligation to promulgate a Federal implementation plan (“FIP”) for CO contingency provisions in Las Vegas Valley under CAA section 110(c) is permanently lifted.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely finds that an area has attained a national ambient air quality standard based on an objective review of measured air quality data and finds that certain Clean Air Act requirements no longer apply. This action will not impose any new regulations, mandates, or additional enforceable duties on any public, nongovernmental, or private entity. Accordingly, the Administrator 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. ). Because this rule does not impose any additional enforceable duty, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Public Law 104-4).

This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely finds that an area has attained a national ambient air quality standard and is therefore not subject to certain specific requirements, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

This rule does not involve establishment of technical standards, and thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 1, 2005. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2).)

EPA issued a final rule on May 6, 2005, (70 FR 24280) that amended the transportation conformity rule (40 CFR part 93) to include the following transportation-related PM 2.5 precursors: nitrogen oxides (NO X ), volatile organic compounds (VOCs), sulfur oxides (SO X ), and ammonia (NH 3 ). The final rule specifies when each of these precursors must be considered in conformity determinations in PM 2.5 nonattainment and maintenance areas before and after PM 2.5 state air quality implementation plans (SIPs) are submitted. The preamble to the May 6, 2005, final rule contains two minor errors. This notice is intended to correct these errors.

First, EPA is correcting one paragraph and its corresponding footnote in the discussion on Volatile Organic Compounds in Section III.B. Rationale for This Final Rule (70 FR 24284). This paragraph discusses the contribution of VOC emissions from biogenic sources ( e.g. , trees) to PM 2.5 air quality issues. The version of the paragraph printed in the May 6 final rule preamble incorrectly characterizes the existing data and analyses of biogenic source VOC emissions obtained from the PM Supersites Program. This notice corrects the paragraph regarding EPA's understanding of the PM Supersites research and provides the public with the most current reference information.

The incorrect paragraph begins at the bottom of the second column on page 24284 of the May 6 notice with “Additional research is also needed to determine * * *” This paragraph should be stricken and replaced with the following:

“Additional research is also needed to determine the sources of VOC emissions that contribute most to PM 2.5 air quality issues. For example, according to the NARSTO Fine Particle Assessment, 5 secondary sources may contribute up to 50 percent of secondary organic mass, particularly in areas where photochemical transformations of emissions from biogenic sources ( e.g. , trees) are significant. In addition, data obtained from the Particulate Matter Supersites Program suggest that biogenic emissions may contribute significantly to secondary organic aerosols during days of peak PM 2.5 . Analysis of air quality samples collected in Pittsburgh from 2001 through 2002 indicates that as much as half of the organic aerosol during peak periods may be attributable to biogenic sources ( e.g. , trees) as opposed to anthropogenic sources ( i.e. , man-made sources such as power plants and motor vehicles). 6   7 The Supersites Program has also collected data on the contribution of biogenic source emissions in other locations in the U.S., including Atlanta, Georgia. 8   9 However, these findings have not yet been published and peer-reviewed. The contribution of biogenic emissions to PM 2.5 air quality issues is important because biogenic emissions cannot be controlled.”

The footnote five on page 24284 of the May 6 notice should be stricken and replaced with the footnote five below. In addition, new footnotes six through nine are added in the corrected paragraph:

Second, EPA is correcting a footnote in Section III.C.5. State of the Science (70 FR 24288) and renumbering two footnotes in this section. Footnotes six and seven in the May 6 final rule should be renumbered as footnotes 10 and 11 in the text referencing the footnotes at the top of the third column on page 24288, and in the footnotes themselves. Footnote seven in the May 6 final rule (corrected to be footnote 11 in this notice) provides a reference to the draft NARSTO Fine Particulate Assessment issued in February 2003. EPA is correcting this footnote to include the reference for the final NARSTO report. EPA believes it is important to make this correction to avoid confusion and provide the public with the most current published information.

The correct footnote is as follows:

No changes are being made to the final rule language or other preamble language published on May 6, 2005, through this action. EPA finds good cause to make this correction notice effective less than 30 days after publication in the Federal Register . The final rule published on May 6 will become effective on June 6, 2005. Today's correction notice does not make any changes to the final rule. This correction notice only clarifies explanatory text and corrects reference citations in the preamble to the final rule which are intended to provide the public with EPA's rationale for its decision. Therefore EPA concludes that it will be in the public interest to have this correction notice also become effective on June 6, 2005.

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected entities may include, but are not limited to:

• Crop production (NAICS 111)

• Animal production (NAICS 112)

• Food manufacturing (NAICS 311)

• Pesticide manufacturing (NAICS 32532)

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities.

In addition to using EDOCKET (http://www.epa.gov/edocket/) , you may access this Federal Register document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr/ . A frequently updated electronic version of 40 CFR part 180 is available at E-CFR Beta Site Two at http://www.gpoaccess.gov/ecfr/ .

EPA, on its own initiative, in accordance with sections 408(e) and 408 (l)(6) of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a, is establishing tolerances for residues of the fungicide tetraconazole, [1-[2-(2,4-dichlorophenyl)-3-(1,1,2,2-tetrafluoroethoxy) propyl]-1H-1,2,4-triazole], in or on soybean seed at 0.05 part per million (ppm); poultry meat at 0.0003 ppm; poultry fat at 0.004 ppm; poultry liver at 0.03 ppm; poultry meat byproducts (excluding liver) at 0.002 ppm; and egg at 0.03 ppm. These tolerances will expire and are revoked on December 31, 2009. EPA will publish a document in the Federal Register to remove the revoked tolerances from the Code of Federal Regulations.

Section 408(l)(6) of the FFDCA requires EPA to establish a time-limited tolerance or exemption from the requirement for a tolerance for pesticide chemical residues in food that will result from the use of a pesticide under an emergency exemption granted by EPA under section 18 of FIFRA. Such tolerances can be established without providing notice or period for public comment. EPA does not intend for its actions on section 18 related tolerances to set binding precedents for the application of section 408 of the FFDCA and the new safety standard to other tolerances and exemptions. Section 408(e) of the FFDCA allows EPA to establish a tolerance or an exemption from the requirement of a tolerance on its own initiative, i.e., without having received any petition from an outside party.

Section 408(b)(2)(A)(i) of the FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” section 408(b)(2)(A)(ii) of the FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of the FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”

Section 18 of the FIFRA authorizes EPA to exempt any Federal or State agency from any provision of FIFRA, if EPA determines that “emergency conditions exist which require such exemption.” This provision was not amended by the Food Quality Protection Act of 1996 (FQPA). EPA has established regulations governing such emergency exemptions in 40 CFR part 166.

The States of Minnesota and South Dakota, as lead state agencies in what is essentially a “national” section 18 request for all soybean growing States, have petitioned the Agency requesting an emergency exemption for tetraconazole to control soybean rust under section 18 of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA). On November 10, 2004, U.S. Department of Agriculture's Animal and Plant Health Inspection Service (USDA/APHIS) confirmed the presence of Phakopsora pachyrhizi, the pathogen that causes soybean rust, on soybean leaf samples taken from two plots associated with a Louisiana State University research farm. Soybean rust has been designated as a biosecurity threat and therefore, it is important that control measures be available for the disease. EPA has authorized under FIFRA section 18 the use of tetraconazole on soybeans for control of soybean rust in Minnesota, South Dakota, and all the other States that have requested an exemption for this use. After having reviewed the submissions, EPA concurs that emergency conditions exist for these States.

As part of its assessment of these emergency exemptions, EPA assessed the potential risks presented by residues of tetraconazole in or on soybean, poultry, meat and egg commodities. In doing so, EPA considered the safety standard in section 408(b)(2) of the FFDCA, and EPA decided that the necessary tolerances under section 408(l)(6) of the FFDCA would be consistent with the safety standard and with FIFRA section 18. The data and other relevant material have been evaluated and discussed in the final rule entitled “Tetraconazole; Time-Limited Pesticide Tolerance” published in the Federal Register of April 22, 2005 (70 FR 20821) (FRL-7702-4). The risk assessment discussed in that document included contribution to risk from this soybean use. Based on that data and information considered, the Agency concludes that establishing these time-limited tolerances will meet the requirements of section 408(l)(6) of the FFDCA.

Consistent with the need to move quickly on the emergency exemption in order to address an urgent non-routine situation and to ensure that the resulting food is safe and lawful, EPA is issuing these tolerances without notice and opportunity for public comment as provided in section 408(l)(6) of the FFDCA. Although these tolerances will expire and are revoked on December 31, 2009, under section 408(l)(5) of the FFDCA, residues of the pesticide not in excess of the amounts specified in the tolerances remaining in or on soybean, poultry, meat and egg commodities after that date will not be unlawful, provided the pesticide is applied in a manner that was lawful under FIFRA, and the residues do not exceed levels that were authorized by these tolerances at the time of that application. EPA will take action to revoke these tolerances earlier if any experience with, scientific data on, or other relevant information on this pesticide indicate that the residues are not safe.

Because these tolerances are being approved under emergency conditions, EPA has not made any decisions about whether tetraconazole meets EPA's registration requirements for use on soybeans or whether permanent tolerances for this use would be appropriate. Under these circumstances, EPA does not believe that these tolerances serve as a basis for registration of tetraconazole by a State for special local needs under FIFRA section 24(c). Nor do these tolerances serve as the basis for any State other than those which have been granted exemptions as part of the soybean rust section 18 to use this pesticide on this crop under section 18 of FIFRA without following all provisions of EPA's regulations implementing FIFRA section 18 as identified in 40 CFR part 166. For additional information regarding the emergency exemption for tetraconazole, contact the Agency's Registration Division at the address provided under FOR FURTHER INFORMATION CONTACT .

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. For further discussion of the regulatory requirements of section 408 of the FFDCA and a complete description of the risk assessment process, see the final rule on Bifenthrin Pesticide Tolerances November 26, 1997 (62 FR 62961) (FRL-5754-7).

Consistent with section 408(b)(2)(D) of the FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of tetraconazole and to make a determination on aggregate exposure, consistent with section 408(b)(2) of the FFDCA, for time-limited tolerances for residues of tetraconazole in or on soybean seed at 0.05 ppm; poultry meat at 0.0003 ppm; poultry fat at 0.004 ppm; poultry liver at 0.03 ppm; poultry meat byproducts at 0.002 ppm (excluding liver); and egg at 0.03 ppm. For purposes of this section 18 petition, parent tetraconazole is being considered. The Agency does have concern about potential toxicity of 1,2,4-triazole and two conjugates, triazolylalanine and triazolyl acetic acid. These three compounds are metabolites to most of the triazole-containing fungicides. To support the extension of existing parent triazole-derivative fungicide tolerances, EPA conducted an interim human health assessment for aggregate exposure to 1,2,4-triazole. The exposure and risk estimates presented in this assessment are overestimates of actual likely exposures and therefore, should be considered to be highly conservative. Based on this assessment EPA concluded that for all exposure durations and population subgroups, aggregate exposures to 1,2,4-triazole are not expected to exceed its level of concern. This assessment should be considered interim due to the ongoing series of studies being conducted by the U.S. Triazole Task Force (USTTF). Those studies are designed to provide the Agency with more complete toxicological and residue information for free triazole and are expected to be submitted to the Agency in late 2004. Upon completion of the review of these data, EPA will prepare a more sophisticated assessment based on the revised toxicological and exposure databases.

The most recent estimated aggregate risks resulting from the use of tetraconazole, are discussed in the Federal Register of April 22, 2005 (70 FR 20821) (FRL-7702-4), final rule establishing tolerances for residues of tetraconazole in/on sugarbeet and livestock commodities. In that prior action, risk was estimated assuming tolerance level residues in all commodities for established and proposed tolerances, including the tolerances for soybean and animal commodities discussed in this document. Therefore, establishing these tolerances will not change the most recent estimated aggregate risks resulting from use of tetraconazole, as discussed in the April 22, 2005 Federal Register document. Refer to the April 22, 2005 Federal Register document for a detailed discussion of the aggregate risk assessments and determination of safety. EPA relies upon that risk assessment and the findings made in that Federal Register document in support of this action.

Available residue data indicate that the use pattern for the emergency exemptions for soybean will not result in residues of tetraconazole over the following levels: Soybean seed at 0.05 ppm; poultry meat at 0.0003 ppm; poultry fat at 0.004 ppm; poultry liver at 0.03 ppm; poultry meat byproducts (excluding liver) at 0.002 ppm; and egg at 0.03 ppm. Therefore, tolerances are being established for these commodities at these levels. Based on the risk assessments discussed in the final rule published in the Federal Register of April 22, 2005, EPA concludes that there is a reasonable certainty that no harm will result to the general population and to infants and children from aggregate exposure to tetraconazole residues.

Adequate enforcement methodology (capillary gas chromatography with electron capture detector (GC/ECD)) is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; e-mail address: residue methods@epa.gov .

There are no established Codex, Canadian, or Mexican Maximum Residue Limits established for tetraconazole.

Therefore, the tolerances are established for residues of tetraconazole, 1-[2-(2,4-dichlorophenyl)-3-(1,1,2,2- tetrafluoroethoxy) propyl]-1H-1,2,4-triazole, in or on soybean, seed at 0.05 ppm; poultry, meat at 0.0003 ppm; poultry, fat at 0.004 ppm; poultry, liver at 0.03 ppm; poultry, meat byproducts, except liver at 0.002 ppm; and egg at 0.03 ppm.

Under section 408(g) of the FFDCA, as amended by the FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. Although the procedures in those regulations require some modification to reflect the amendments made to the FFDCA by the FQPA, EPA will continue to use those procedures, with appropriate adjustments, until the necessary modifications can be made. The new section 408(g) of the FFDCA provides essentially the same process for persons to “object” to a regulation for an exemption from the requirement of a tolerance issued by EPA under new section 408(d) of the FFDCA, as was provided in the old sections 408 and 409 of the FFDCA. However, the period for filing objections is now 60 days, rather than 30 days.

You must file your objection or request a hearing on this regulation in accordance with the instructions provided in this unit and in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number OPP-2005-0078 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before August 1, 2005.

1. Filing the request . Your objection must specify the specific provisions in the regulation that you object to, and the grounds for the objections (40 CFR 178.25). If a hearing is requested, the objections must include a statement of the factual issues(s) on which a hearing is requested, the requestor's contentions on such issues, and a summary of any evidence relied upon by the objector (40 CFR 178.27). Information submitted in connection with an objection or hearing request may be claimed confidential by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. A copy of the information that does not contain CBI must be submitted for inclusion in the public record. Information not marked confidential may be disclosed publicly by EPA without prior notice.

Mail your written request to: Office of the Hearing Clerk (1900L), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. You may also deliver your request to the Office of the Hearing Clerk in Suite 350, 1099 14th St., NW., Washington, DC 20005. The Office of the Hearing Clerk is open from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Office of the Hearing Clerk is (202) 564-6255.

2. Copies for the Docket . In addition to filing an objection or hearing request with the Hearing Clerk as described in Unit VII.A., you should also send a copy of your request to the PIRIB for its inclusion in the official record that is described in ADDRESSES . Mail your copies, identified by the docket ID number OPP-2005-0078, to: Public Information and Records Integrity Branch, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. In person or by courier, bring a copy to the location of the PIRIB described in ADDRESSES . You may also send an electronic copy of your request via e-mail to: opp-docket@epa.gov . Please use an ASCII file format and avoid the use of special characters and any form of encryption. Copies of electronic objections and hearing requests will also be accepted on disks in WordPerfect 6.1/8.0 or ASCII file format. Do not include any CBI in your electronic copy. You may also submit an electronic copy of your request at many Federal Depository Libraries.

A request for a hearing will be granted if the Administrator determines that the material submitted shows the following: There is a genuine and substantial issue of fact; there is a reasonable possibility that available evidence identified by the requestor would, if established resolve one or more of such issues in favor of the requestor, taking into account uncontested claims or facts to the contrary; and resolution of the factual issues(s) in the manner sought by the requestor would be adequate to justify the action requested (40 CFR 178.32).

This final rule establishes time-limited tolerances under section 408 of the FFDCA. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Because this rule has been exempted from review under Executive Order 12866 due to its lack of significance, this rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq. , or impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4). Nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994); or OMB review or any Agency action under Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note). Since tolerances and exemptions that are established on the basis of a FIFRA section 18 exemption under section 408 of the FFDCA, such as the tolerances in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) do not apply. The Agency hereby certifies that this rule will not have significant negative economic impact on a substantial number of small entities. In addition, the Agency has determined that this action will not have a substantial direct effect on 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, entitled Federalism (64 FR 43255, August 10, 1999). Executive Order 13132 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 final rule directly regulates growers, food processors, food handlers, and food retailers, not States. This action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of the FFDCA. For these same reasons, the Agency has determined that this rule does not have any “tribal implications” as described in Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 6, 2000). Executive Order 13175, 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.” “Policies that have tribal implications” is defined in the Executive Order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and the Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.” This rule will not have substantial direct effects on tribal governments, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this rule.

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of this final rule in the Federal Register . This final rule is not a “major rule” as defined by 5 U.S.C. 804(2).

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected entities may include, but are not limited to:

• Crop production (NAICS code 111)

• Animal production (NAICS code 112)

• Food manufacturing (NAICS code 311)

• Pesticide manufacturing (NAICS code 32532)

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

In addition to using EDOCKET at ( http://www.epa.gov/edocket/ ), you may access this Federal Register document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr/ . A frequently updated electronic version of 40 CFR part 180 is available at E-CFR Beta Site Two at http://www.gpoaccess.gov/ecfr/ .

In the Federal Register of July 16, 2003 (68 FR 42035) (FRL-7316-2), EPA issued a notice pursuant to section 408 of the FFDCA, 21 U.S.C. 346a, as amended by the FQPA (Public Law 104-170), announcing the filing of a pesticide petition (PP 3E6589) by Syngenta Crop Protection, Inc, Box 18300, Greensboro, NC 27419.

The petition requested that 40 CFR part 180 be amended by establishing an exemption from the requirement of a tolerance for residues of cis -3-hexen-1-ol which is also known as leaf alcohol or 3-hexen-1-ol, (3Z)- (CAS Reg. No. 928-96-1). That notice included a summary of the petition prepared by Syngenta Crop Protection, Inc. The notice specifically requested a limited inert ingredient use pattern for cis -3-hexen-1-ol. The petitioner intends to use the cis-3-hexen-1-ol as an odorant or alerting agent to warn pesticide handlers that a pesticide formulation had been or is being used. Syngenta, in that Notice, described their intent to use cis -3-hexen-1-ol in pesticide formulations containing the active ingredient paraquat dichloride and at a concentration not to exceed 4 grams/liter (g/L) in the formulated pesticide product.

One comment was received in response to the notice of filing. The Agency's response to this comment is in Unit X.E.

Section 408(b)(2)(A)(i) of the FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of the FFDCA defines “safe.” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of the FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . . ”

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. First, EPA determines the toxicity of pesticides. Second, EPA examines exposure to the pesticide through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings.

Inert ingredients are all ingredients that are not active ingredients as defined in 40 CFR 153.125 and include, but are not limited to, the following types of ingredients (except when they have a pesticidal efficacy of their own): Solvents such as alcohols and hydrocarbons; surfactants such as polyoxyethylene polymers and fatty acids; carriers such as clay and diatomaceous earth; thickeners such as carrageenan and modified cellulose; wetting, spreading, and dispersing agents; propellants in aerosol dispensers; microencapsulating agents; and emulsifiers. The term “inert” is not intended to imply nontoxicity; the ingredient may or may not be chemically active. Generally, EPA has exempted inert ingredients from the requirement of a tolerance based on the low toxicity of the individual inert ingredients.

Consistent with section 408(b)(2)(D) of the FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness and reliability and the relationship of this information to human risk. The physical/chemical properties of cis-3-hexen-1-ol are given in this unit.

Cis-3-Hexen-1-ol is a six carbon unsaturated alcohol with a molecular formula of C 6 H 12 O and a structural formula of CH 3 CH 2 CHCHCH 2 CH 2 OH. It is a colorless liquid with a pine needle or grassy odor. Cis-3-Hexen-1-ol is also referred to as leaf alcohol, because of its presence in the fragrance released by green leaves. The vapor pressure of cis-3-hexen-1-ol is estimated as 0.86 millimeter (mm) mercury (Hg). It's solubility in water is greater than 10 g/L at 25°C.

EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. The nature of the toxic effects caused by cis-3-hexen-1-ol are discussed in this unit.

For cis-3-hexen-1-ol, toxicity was assessed, in part, by a process called structure-activity relationship (SAR). In this process, the chemical's structural similarity to other chemicals (for which data are available) is used to determine toxicity. For human health, this process, can be used to assess absorption and metabolism, mutagenicity, carcinogenicity, developmental and reproductive effects, neurotoxicity, systemic effects, immunotoxicity, and sensitization and irritation. This is a qualitative assessment using terms such as good, not likely, poor, moderate, or high.

For cis-3-hexen-1-ol the conclusions of the team performing the SAR assessment are as follows: Cis-3-hexen-1-ol is absorbed via all routes of exposure. There is concern for irritation to all tissues and neurotoxicity based on solvent properties of the material. A concern for liver toxicity based on cis- 3-hexen-1-ol's structural relationship to several long chain alcohols was noted. Various concerns based on the 98-day drinking water study (discussed below) are also noted. The overall rating for human health is low-moderate concern.

Cis-3-Hexen-1-ol is not structurally related to any known mutagens, carcinogens or developmental/reproductive toxicants. The SAR did note a concern for solvent neurotoxicity, i.e., neurotoxic effects that can occur due to “high” and/or “prolonged” dermal and inhalation exposures to organic solvents. It should be noted that the indication of concerns for solvent-type neurotoxicity in the SAR assessment does not necessarily indicate chemical-specific concerns. By including this statement, those performing the assessment are acknowledging that the chemical is a member of a class of chemicals that can exhibit solvent neurotoxicity.

The metabolism of alcohols such as cis-3-hexen-1-ol in the mammalian body is well-understood. The mammalian body would effectively metabolize the alcohol to the corresponding aldehyde, which would then be metabolized to the corresponding carboxylic acid. The mammalian body has well-understood pathways for metabolism of carboxylic acids to carbon dioxide and water.

1. Acute toxicity . As shown in the following Table, rat and mouse lethal dose (LD) 50 values range from 7.0 to 10.1 g/kilogram (kg).

Signs of toxicity in these oral studies included ataxia, lethargy and comatose-like state. Dermal LD 50 values of greater than 5,000 milligrams (mg)/kg have been reported for rabbits. No irritation was associated with a 24-hour dermal application of neat (undiluted) cis-3-hexen-1-ol with an occlusive dressing to either intact or abraded rabbit skin. Similarly, human subjects exhibited no signs or symptoms of irritation following a 48-hour dermal exposure to 4% cis-3-hexen-1-ol (in petrolatum) under an occlusive patch. In maximization tests using human volunteers, there was no evidence of sensitization.

2. Subchronic toxicity . In a 98-day drinking water study, 15 male and 15 female weanling rats were given cis-3-hexen-1-ol in drinking water at concentration levels of 0, 310, 1,250, or 5,000 parts per million (ppm). The dose levels were calculated as 0, 30, 127, or 410 mg/kg/day (males); and 0, 42, 168, or 721 mg/kg/day (females). There were no effects on food consumption or body weight gain, and no indications of clinical toxicity. Reduced water intake was recorded for high-dose males, which was attributed to reduced palatability. Evidence of a renal effect was observed in high-dose males as shown by increased relative kidney weights and increased specific gravity of urine following water loading challenge. There were also increases in adrenal weights at the high-dose level. High-dose females exhibited transitory anemia (reduced hemoglobin concentration) during the 6th week of treatment. The 1,250 ppm or 127/168 mg/kg/day (M/F) is considered a no observed adverse effect level (NOAEL). The lowest observed adverse effect level (LOAEL) of 5,000 ppm is based on effects to the kidneys, blood and adrenal glands.

The mammalian body effectively metabolizes alcohols such as cis-3-hexen-1-ol to the corresponding aldehyde and then to the corresponding carboxylic acid.

The SAR assessment did not identify any concerns for mutagenicity, carcinogenicity or developmental/reproductive toxicity. One of the concerns identified was for possible solvent neurotoxicity. Solvent neurotoxicity concerns usually stem from dermal and inhalation exposures. Exposures generally need to be “high” and/or “prolonged” for these solvent toxicity effects to occur. Also, for acute exposures, such effects, generally, are reversible. Concerns are for occupational exposures since the potential for day in/day out exposure can occur in the workplace. Such concerns are addressed through product labeling and the use of protective equipment such as gloves and respirators.

Another SAR concern is for irritation to all tissues. However, acute dermal skin irritation and sensitization studies indicate no evidence of sensitization or irritation.

Alcohols, in general, are considered to be hepatotoxic, i.e. impacting the liver. However, the target organs in the 98 day drinking water study were the kidneys, blood and adrenal glands. And, the reduced hemoglobin concentration was transitory, that is, the test animals recovered during the study.

Thus, the mammalian body can effectively metabolize cis-3-hexen-1-ol. It is not acutely toxic. The SAR assessment did not identify any concerns for mutagenicity, carcinogenicity or developmental/reproductive toxicity. The NOAEL in the 98-day drinking water study is 127/168 mg/kg/day (M/F).

The petitioner has proposed to limit the use of cis-3-hexen-1-ol to a concentration not to exceed 4 g/L in the formulated pesticide product. This is equivalent to 0.4%. At this low percentage in the formulated product, the residues from the use of cis-3-hexen-1-ol as an inert ingredient, an odorant or alerting agent, will be much lower than the level at which an adverse effect could occur.

In examining aggregate exposure, section 408 of the FFDCA directs EPA to consider available information concerning exposures from the pesticide residue in food and all other non-occupational exposures, including drinking water from ground water or surface water and exposure through pesticide use in gardens, lawns, or buildings (residential and other indoor uses).

EPA establishes exemptions from the requirement of a tolerance only in those cases where it can be clearly demonstrated that the risks from aggregate exposure to pesticide chemical residues under reasonably foreseeable circumstances will pose no appreciable risks to human health. In order to determine the risks from aggregate exposure to pesticide inert ingredients, the Agency considers the toxicity of the inert in conjunction with possible exposure to residues of the inert ingredient through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings. If EPA is able to determine that a finite tolerance is not necessary to ensure that there is a reasonable certainty that no harm will result from aggregate exposure to the inert ingredient, an exemption from the requirement of a tolerance may be established.

1. Food . Cis-3-Hexen-1-ol is naturally-occurring in common food sources such as green leafy vegetables. In fact, low molecular weight alcohols, aldehydes, and acids such as cis-3-hexen-1-ol are ubiquitous in nature, in our foods as the flavors and fragrances which give foods their distinctive tastes. Such chemicals have been detected (at low levels) in almost every known fruit and vegetable. Given the natural occurrence, there is a background (naturally occurring) level of exposure to cis-3-hexen-1-ol, that cannot be regulated and cannot be decreased.

Cis-3-Hexen-1-ol is also used as a direct food additive, a flavoring, under 21 CFR 172.515: Synthetic Flavoring Substances and Adjuvants. In its 1999 evaluation (Food Additives Series 42; see http://www.inchem.org/documents/jecfa/jecmono/v042je16.htm. ) of the safety of various linear and branched-chain aliphatic, unsaturated chemicals used as flavoring substances, the Joint FAO/WHO (Food and Agriculture Organization/World Health Organization) Expert Committee on Food Additives estimated the per capita intake of cis-3-hexen-1-ol when used as a food additive. In Europe, the estimate is 71 micrograms (ug)/kg/day. In the US, the estimate is 18 ug/kg/day, or 0.018 mg/kg/day.

Exposure resulting from the use of cis-3-hexen-1-ol at less than 0.4% in the formulated product is anticipated to be much smaller than the naturally occurring background level of exposure, or exposure from its use as a flavoring agent.

2. Drinking water exposure . The SAR assessment also estimated the fate properties of cis-3-hexen-1-ol. Based on these properties, the team performing the SAR judged that the potential for cis-3-hexen-1-ol to migrate to ground water as very small. The estimated water solubility of cis-3-hexen-1-ol is greater than 10 g/L. However, based on cis-3-hexen-1-ol's vapor pressure of 0.86 mm Hg, the Agency modeled a volatilization half-life of 39 hours in rivers and 21 days in lakes. Primary biodegradation begins rapidly, within days, as the cis-3-hexen-1-ol is degraded to other chemicals. Based on biodegradation models and on the Agency's professional judgement, cis-3-hexen-1-ol is completely biodegraded to water and carbon dioxide in days to weeks. Given the lack of migration to ground water, the rapid biodegradation (i.e. lack of persistence), and the volatilization of cis-3-hexen-1-ol, significant concentrations of cis-3-hexen-1-ol are very unlikely in sources of drinking water.

Cis-3-Hexen-1-ol has been used since the 1940s in soaps, detergents, and personal care products. Because it constitutes such a low percentage of the formulation, exposure is likely to be minimal.

Cis-3-Hexen-1-ol is released to the atmosphere from deciduous, coniferous, and herbaceous vegetation, and also agricultural crops. These naturally-occurring emissions vary according to the season, and the maturity of the vegetation, which would include growth stages such as flowering. Again, this is a background (naturally occurring) level of exposure to cis-3-hexen-1-ol, that cannot be regulated and cannot be decreased.

Section 408 (b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance or tolerance exemption, the Agency consider “available information” concerning the cumulative effects of a particular chemical's residues and “other substances that have a common mechanism of toxicity.”

Unlike other pesticide chemicals for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, EPA has not made a common mechanism of toxicity finding as to cis-3-hexen-1-ol and any other substances, and cis-3-hexen-1-ol does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has not assumed that cis-3-hexen-1-ol has a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see the policy statements released by EPA's Office of Pesticide Programs concerning common mechanism determinations and procedures for cumulating effects from substances found to have a common mechanism on EPA's website at http://www.epa.gov/pesticides/cumulative/ .

FFDCA section 408 provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the data base unless EPA concludes that a different margin of safety will be safe for infants and children. 3-Hexen-1-ol, (3Z)- which is also known as cis -3-hexen-1-ol or leaf alcohol (CAS Reg. No. 928-96-1) is naturally-occurring in both the human diet and in the atmosphere. The SAR assessment did not indicate any concerns for developmental or reproductive toxicity. Exposure resulting from the use of 3-hexen-1-ol, (3Z)- at less than 0.4% in the formulated product is anticipated to be much smaller than the naturally occurring background level of exposure. Given the available information on toxicity and exposure, EPA has not used a safety factor analysis to assess the risk of 3-hexen-1-ol, (3Z)-. For the same reasons the additional tenfold safety factor is unnecessary.

Based on the available information on toxicity and exposure (including the limitation on the amount of 3-hexen-1-ol, (3Z)- that can be used in a pesticide formulation), EPA concludes that there is a reasonable certainty of no harm from aggregate exposure to residues of 3-hexen-1-ol, (3Z)- (CAS Reg. No. 928-96-1). EPA finds that establishing an exemption from the requirement of a tolerance for 3-hexen-1-ol, (3Z)- (CAS Reg. No. 928-96-1) will be safe for the general population including infants and children.

FQPA requires EPA to develop a screening program to determine whether certain substances, including all pesticide chemicals (both inert and active ingredients), “may have an effect in humans that is similar to an effect produced by a naturally occurring estrogen, or such other endocrine effect. . . . ” EPA has been working with interested stakeholders to develop a screening and testing program as well as a priority setting scheme. As the Agency proceeds with implementation of this program, further testing of products containing 3-hexen-1-ol, (3Z)- for endocrine effects may be required.

An analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance without any numerical limitation.

There are no existing tolerances or tolerance exemptions for 3-hexen-1-ol, (3Z)-.

The Agency is not aware of any country requiring a tolerance for 3-hexen-1-ol, (3Z)- nor have any CODEX Maximum Residue Levels (MRLs) been established for any food crops at this time.

One comment was received from a private citizen requesting that all pesticides be banned. The Agency understands the commentor's concerns and recognizes that some individuals believe that pesticides should be banned completely. However, under the existing legal framework provided by section 408 of the FFDCA EPA is authorized to establish pesticide tolerances or exemptions where persons seeking such exemptions have demonstrated that the pesticide meets the safety standard imposed by that statute. The commentor has not provided the Agency with a specific rationale or additional information pertaining to the legal standards in FFDCA section 408 for opposing the establishment of a tolerance exemption for 3-hexen-1-ol, (3Z)-. In the absence of any additional information of a factual nature, the Agency can not effectively respond to the commentor's disagreement with the Agency's decision.

Accordingly, an exemption from the requirement for a tolerance is established for 3-hexen-1-ol, (3Z)- (CAS Reg. No. 928-96-1) with the limitation that not more than 0.4% may be used in the pesticide formulation.

Under section 408(g) of the FFDCA, as amended by the FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. Although the procedures in those regulations require some modification to reflect the amendments made to the FFDCA by the FQPA, EPA will continue to use those procedures, with appropriate adjustments, until the necessary modifications can be made. The new section 408(g) of the FFDCA provides essentially the same process for persons to “object” to a regulation for an exemption from the requirement of a tolerance issued by EPA under new section 408(d) of the FFDCA, as was provided in the old FFDCA sections 408 and 409 of the FFDCA. However, the period for filing objections is now 60 days, rather than 30 days.

You must file your objection or request a hearing on this regulation in accordance with the instructions provided in this unit and in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number OPP-2005-0028 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before August 1, 2005.

1. Filing the request . Your objection must specify the specific provisions in the regulation that you object to, and the grounds for the objections (40 CFR 178.25). If a hearing is requested, the objections must include a statement of the factual issues(s) on which a hearing is requested, the requestor's contentions on such issues, and a summary of any evidence relied upon by the objector (40 CFR 178.27). Information submitted in connection with an objection or hearing request may be claimed confidential by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. A copy of the information that does not contain CBI must be submitted for inclusion in the public record. Information not marked confidential may be disclosed publicly by EPA without prior notice.

Mail your written request to: Office of the Hearing Clerk (1900L), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. You may also deliver your request to the Office of the Hearing Clerk in Suite 350, 1099 14th St., NW., Washington, DC 20005. The Office of the Hearing Clerk is open from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Office of the Hearing Clerk is (202) 564-6255.

2. Copies for the Docket . In addition to filing an objection or hearing request with the Hearing Clerk as described in Unit XI.A., you should also send a copy of your request to the PIRIB for its inclusion in the official record that is described in ADDRESSES . Mail your copies, identified by docket ID number OPP-2005-0028, to: Public Information and Records Integrity Branch, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. In person or by courier, bring a copy to the location of the PIRIB described in ADDRESSES . You may also send an electronic copy of your request via e-mail to: opp-docket@epa.gov . Please use an ASCII file format and avoid the use of special characters and any form of encryption. Copies of electronic objections and hearing requests will also be accepted on disks in WordPerfect 6.1/8.0 or ASCII file format. Do not include any CBI in your electronic copy. You may also submit an electronic copy of your request at many Federal Depository Libraries.

A request for a hearing will be granted if the Administrator determines that the material submitted shows the following: There is a genuine and substantial issue of fact; there is a reasonable possibility that available evidence identified by the requestor would, if established resolve one or more of such issues in favor of the requestor, taking into account uncontested claims or facts to the contrary; and resolution of the factual issues(s) in the manner sought by the requestor would be adequate to justify the action requested (40 CFR 178.32).

This final rule establishes an exemption from the tolerance requirement under section 408(d) of the FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Because this rule has been exempted from review under Executive Order 12866 due to its lack of significance, this rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq ., or impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4). Nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994); or OMB review or any Agency action under Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note). Since tolerances and exemptions that are established on the basis of a petition under section 408(d) of the FFDCA, such as the exemption in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq .) do not apply. In addition, the Agency has determined that this action will not have a substantial direct effect on 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, entitled Federalism (64 FR 43255, August 10, 1999). Executive Order 13132 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 final rule directly regulates growers, food processors, food handlers and food retailers, not States. This action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of the FFDCA. For these same reasons, the Agency has determined that this rule does not have any “tribal implications” as described in Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 6, 2000). Executive Order 13175, 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.” “Policies that have tribal implications” is defined in the Executive Order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and the Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.” This rule will not have substantial direct effects on tribal governments, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this rule.

The Congressional Review Act, 5 U.S.C. 801 et seq ., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of this final rule in the Federal Register . This final rule is not a “major rule” as defined by 5 U.S.C. 804(2).

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected entities may include, but are not limited to:

• Crop production (NAICS code 111)

• Animal production (NAICS code 112)

• Food manufacturing (NAICS code 311)

• Pesticide manufacturing (NAICS code 32532)

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

In addition to using EDOCKET at ( http://www.epa.gov/edocket/ ), you may access this Federal Register document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr/ . A frequently updated electronic version of 40 CFR part 180 is available at E-CFR Beta Site Two at http://www.gpoaccess.gov/ecfr/ .

In the Federal Register of March 17, 1999 (64 FR 13195) (FRL-6065-5) EPA issued a notice pursuant to section 408 of the FFDCA, 21 U.S.C. 346a, as amended by the FQPA (Public Law 104-170), announcing the filing of pesticide petitions (PP 8E4990 and 8E4956) by Rhodia Inc, CN 7500, Cranbury, NJ 08512-7500.

The petitions requested that 40 CFR 180.1001(d) newly re-designated as 40 CFR 180.920 be amended to include exemptions from the requirement of a tolerance for residues of 2-Propanamine, compound with α-phosphono- ω- butoxypoly (oxy-1,2-ethanediyl) (2:1) (CAS Reg. No. 43140-31-2) and 2-Propanamine, compounds with polyethylene glycol dihydrogen phosphate C 8- 10 - alkyl ether (2:1) (CAS Reg. No. 431062-72-5). The 1999 notice included a summary of the petition prepared by the petitioner requesting, to amend 40 CFR part 180 to establish an exemption from the requirement of a tolerance for these two chemicals when used as inert ingredients in pesticide formulations applied only to growing crops. There were no comments received in response to the notice of filing.

Section 408(b)(2)(A)(i) of the FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of the FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of the FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. First, EPA determines the toxicity of pesticides. Second, EPA examines exposure to the pesticide through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings.

Inert ingredients are all ingredients that are not active ingredients as defined in 40 CFR 153.125 and include, but are not limited to, the following types of ingredients (except when they have a pesticidal efficacy of their own): Solvents such as alcohols and hydrocarbons; surfactants such as polyoxyethylene polymers and fatty acids; carriers such as clay and diatomaceous earth; thickeners such as carrageenan and modified cellulose; wetting, spreading, and dispersing agents; propellants in aerosol dispensers; microencapsulating agents; and emulsifiers. The term “inert” is not intended to imply nontoxicity; the ingredient may or may not be chemically active. Generally, EPA has exempted inert ingredients from the requirement of a tolerance based on the low toxicity of the individual inert ingredients.

Consistent with section 408(b)(2)(D) of the FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness and reliability and the relationship of this information to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. The nature of the toxic effects caused by these 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters are discussed in this unit.

The petitioner has also submitted supporting toxicity information to the Agency which is summarized in Table 1.

The acute toxicity profile is presented in Table 1.

The petitioner also submitted the following mutagenicity assays, as described in Table 2:

Toxicity for these 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters was assessed, in part, by a process called structure-activity relationship (SAR). In this process, the chemical's structural similarity to other chemicals (for which data are available) is used to determine toxicity. For human health, this process, can be used to assess absorption and metabolism, mutagenicity, carcinogenicity, developmental and reproductive effects, neurotoxicity, systemic effects, immunotoxicity, and sensitization and irritation. This is a qualitative assessment using terms such as good, not likely, poor, moderate, or high.

The SAR conclusions for these 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters and several structurally related analogs were as follows: Absorption would be poor through the skin, good through the lungs, and moderate through the GI tract. Absorption of the amine will be good through the lungs and GI tract based on analogs. The SAR also indicated a concern for lung toxicity and irritation to mucous membranes if inhaled based on surfactancy. There is concern for neurotoxicity from the amine salt. No concerns for developmental or reproductive effects, carcinogenicity, or mutagenicity were noted. The overall rating for human health is low/ moderate concern.

EPA has reviewed the toxicity data for these 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters and concludes as follows:

The acute toxicity data demonstrated that these 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters exhibited low acute toxicity, Category III, based on the Agency's rating of toxicity categories I through IV, highest to lowest. These 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters are slight eye irritants. Other data reviewed by the Agency indicated that these two salts are not mutagenic.

The SAR indicated that absorption would be poor through the skin, good through the lungs, and moderate through the GI tract. The SAR also reflected the typical concerns for lung toxicity and irritation to mucous membranes if inhaled based on surfactancy. Such concerns are addressed by use of personal protection equipment as determined by end-product acute inhalation testing, or by limitations on the amount of surfactant in a formulated pesticide. There are also typical concerns for neurotoxicity based on the inclusion of an amine salt in the chemical structure, and for lung toxicity and irritation to mucous membranes if inhaled based on surfactancy. As a chemical class amine salts are generally reported to have neurotoxic effects. However, there is an overall lack of documentation in the public literature to support a specific concern for neurotoxicity for isopropylamine salts. The SAR rated these two isopropylamine salts as low to moderate for human health concerns. This rating reflects the concerns associated with the irritation to mucous membranes commonly caused by surfactants.

The SAT in OPPT (Office of Pollution Prevention and Toxics) has reviewed information on several surfactants. As a broad class of chemicals surfactants are often corrosive and irritating to mucous membranes. These properties make animal toxicity testing of surfactants difficult, and require interpretation of the test results as to whether the effects are attributed to the corrosive/irritant effects or other mechanisms of toxicity.

Based on the SAR assessment, the review and evaluation of the submitted data, and given the Agency's understanding of the toxicological properties of surfactants, EPA concludes that these 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters are of lower toxicity. There is a concern for corrosive/irritation effects of these 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters. Based on these concerns which are those of surfactants as a class, EPA is requiring a limitation on the use of these 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters, not to exceed 15% in the formulated product. Based on previously conducted quantitative and qualitative risk assessments on related surfactant chemicals which the Agency has exempted from the requirement of a tolerance, the Agency believes that this limitation is sufficiently protective for the corrosive effects common to the surfactancy of these two salts.

In examining aggregate exposure, section 408 of the FFDCA directs EPA to consider available information concerning exposures from the pesticide residue in food and all other non-occupational exposures, including drinking water from ground water or surface water and exposure through pesticide use in gardens, lawns, or buildings (residential and other indoor uses).

EPA establishes exemptions from the requirement of a tolerance only in those cases where it can be clearly demonstrated that the risks from aggregate exposure to pesticide chemical residues under reasonably foreseeable circumstances will pose no appreciable risks to human health. In order to determine the risks from aggregate exposure to pesticide inert ingredients, the Agency considers the toxicity of the inert in conjunction with possible exposure to residues of the inert ingredient through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings. If EPA is able to determine that a finite tolerance is not necessary to ensure that there is a reasonable certainty that no harm will result from aggregate exposure to the inert ingredient, an exemption from the requirement of a tolerance may be established.

1. Dietary exposure — Food. In order to assess dietary exposure the Agency considered that these two isopropylamine salts could be present in all raw and processed agricultural commodities. The Agency has estimated a generic dietary exposure estimate for an inert ingredient of 0.12 milligrams/kilogram/day (mg/kg/day). To assure that the exposure is not underestimated, it is assumed that the inert ingredients are used on all crops and 100% of all crops are “treated” with the inert ingredient. The generic dietary exposure estimate is based on an application rate of 5 pounds per acre. Information from the petitioner indicates that the anticipated use rate of these 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters is expected to be much less than one pound per acre. The expected dietary exposure estimate would therefore be considerably less than 0.024 mg/kg/day. Given the low levels of exposure and the low systemic toxicity of these 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters, the concern for risk to human health is low.

2. Drinking water . Based on its biodegradation models, the Agency estimated that the time for complete ultimate biodegradation is weeks to months. There is also strong to very strong sorption to soils and sediments. Due to the strong adherence to soils and sediments, and ready biodegradation the substances would only be minimally available in surface waters. Thus, only low drinking water exposure is expected, and the concern for risk to human health is low.

Section 408 (b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance or tolerance exemption, the Agency consider “available information” concerning the cumulative effects of a particular chemical's residues and “other substances that have a common mechanism of toxicity.”

Unlike other pesticide chemicals for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, EPA has not made a common mechanism of toxicity finding as to these 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters and any other substances. These 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters do not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has not assumed that these 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see the policy statements released by EPA's Office of Pesticide Programs concerning common mechanism determinations and procedures for cumulating effects from substances found to have a common mechanism on EPA's website at http://www.epa.gov/pesticides/cumulative/ .

FFDCA section 408 provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the data unless EPA concludes that a different margin of safety will be safe for infants and children. For 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters, the SAR did not identify any concerns for developmental or reproductive toxicity. The identified concerns for 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters are corrosion/irritation. EPA has not used a safety factor analysis to assess the risk. For the same reasons a tenfold safety factor is unnecessary.

Based on the information in this preamble, EPA concludes that there is a reasonable certainty of no harm from aggregate exposure to residues of 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters, and that under reasonably foreseeable circumstances aggregate exposure to 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters will pose no appreciable risk to human health. Accordingly, EPA finds that exempting 2-Propanamine, compound with α-phosphono -ω- butoxypoly (oxy-1,2-ethanediyl) (2:1) (CAS Reg. No. 43140-31-2)and 2-Propanamine, compounds with polyethylene glycol dihydrogen phosphate C 8- 10 - alkyl ether (2:1) (CAS Reg. No. 431062-72-5) from the requirement of a tolerance will be safe for the general population including infants and children.

FQPA requires EPA to develop a screening program to determine whether certain substances, including all pesticide chemicals (both inert and active ingredients), “may have an effect in humans that is similar to an effect produced by a naturally occurring estrogen, or such other endocrine effect. . .” EPA has been working with interested stakeholders to develop a screening and testing program as well as a priority setting scheme. As the Agency proceeds with implementation of this program, further testing of these products, 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters, for endocrine effects may be required.

An analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance without any numerical limitation.

There are no existing tolerances or tolerance exemptions for these 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters.

The Agency is not aware of any country requiring a tolerance for these 2 isopropylamine salts of alkyl C 4 and alkyl C 8- 10 ethoxyphosphate esters nor have any CODEX Maximum Residue Levels (MRLs) been established for any food crops at this time.

Therefore, an exemption from the requirement for a tolerance is established for 2-Propanamine, compound with α-phosphono -ω- butoxypoly (oxy-1,2-ethanediyl) (2:1) (CAS Reg. No. 43140-31-2) and 2-Propanamine, compounds with polyethylene glycol dihydrogen phosphate C 8- 10 - alkyl ether (2:1) (CAS Reg. No. 431062-72-5).

Under section 408(g) of the FFDCA, as amended by the FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. Although the procedures in those regulations require some modification to reflect the amendments made to the FFDCA by the FQPA, EPA will continue to use those procedures, with appropriate adjustments, until the necessary modifications can be made. The new section 408(g) of the FFDCA provides essentially the same process for persons to “object” to a regulation for an exemption from the requirement of a tolerance issued by EPA under new section 408(d) of the FFDCA, as was provided in the old FFDCA sections 408 and 409 of the FFDCA. However, the period for filing objections is now 60 days, rather than 30 days.

You must file your objection or request a hearing on this regulation in accordance with the instructions provided in this unit and in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number OPP-2005-0115 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before August 1, 2005.

1. Filing the request . Your objection must specify the specific provisions in the regulation that you object to, and the grounds for the objections (40 CFR 178.25). If a hearing is requested, the objections must include a statement of the factual issues(s) on which a hearing is requested, the requestor's contentions on such issues, and a summary of any evidence relied upon by the objector (40 CFR 178.27). Information submitted in connection with an objection or hearing request may be claimed confidential by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. A copy of the information that does not contain CBI must be submitted for inclusion in the public record. Information not marked confidential may be disclosed publicly by EPA without prior notice.

Mail your written request to: Office of the Hearing Clerk (1900L), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. You may also deliver your request to the Office of the Hearing Clerk in Suite 350, 1099 14th St., NW., Washington, DC 20005. The Office of the Hearing Clerk is open from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Office of the Hearing Clerk is (202) 564-6255.

2. Copies for the Docket . In addition to filing an objection or hearing request with the Hearing Clerk as described in Unit XI.A., you should also send a copy of your request to the PIRIB for its inclusion in the official record that is described in ADDRESSES . Mail your copies, identified by docket ID number OPP-2005-0115, to: Public Information and Records Integrity Branch, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. In person or by courier, bring a copy to the location of the PIRIB described in ADDRESSES . You may also send an electronic copy of your request via e-mail to: opp-docket@epa.gov . Please use an ASCII file format and avoid the use of special characters and any form of encryption. Copies of electronic objections and hearing requests will also be accepted on disks in WordPerfect 6.1/8.0 or ASCII file format. Do not include any CBI in your electronic copy. You may also submit an electronic copy of your request at many Federal Depository Libraries.

A request for a hearing will be granted if the Administrator determines that the material submitted shows the following: There is a genuine and substantial issue of fact; there is a reasonable possibility that available evidence identified by the requestor would, if established resolve one or more of such issues in favor of the requestor, taking into account uncontested claims or facts to the contrary; and resolution of the factual issues(s) in the manner sought by the requestor would be adequate to justify the action requested (40 CFR 178.32).

In compliance with the Paperwork Reduction Act, the Federal Maritime Commission is issuing this technical revision to 46 CFR 531.99 and Form FMC-78 to reflect the current Office of Management and Budget (“OMB”) information collection control number for 46 CFR part 531, reflected in 46 CFR 531.99 and Form FMC-78. The former OMB control number was 3072-0067, expiring May 31, 2005. The current OMB control number is 3072-0070, expiring March 31, 2008. This technical rule makes no other changes to the part.

This is a summary of the Commission's Order , ET Docket No. 96-2, RM-8165, adopted April 13, 2005 and released April 14, 2005. The full text of this document is available on the Commission's Internet site at http://www.fcc.gov . It is also available for inspection and copying during regular business hours in the FCC Reference Center (Room CY-A257), 445 12th Street, SW., Washington, DC 20554. The full text of this document also may be purchased from the Commission's duplication contractor, Best Copy and Printing Inc., Portals II, 445 12th St., SW., Room CY-B402, Washington, DC 20554; telephone (202) 488-5300; fax (202) 488-5563; e-mail FCC@BCPIWEB.COM.

1. In the Order , the Office of the Managing Director (“OMD”) amends twelve sections of the Commission's Rules by updating the postal address of the Arecibo Radio Astronomy Observatory (“Observatory”) near Arecibo, Puerto Rico.

2. In October 1997, the Commission established a Coordination Zone covering the islands of Puerto Rico, Desecheo, Mona, Vieques, and Culebra within the Commonwealth of Puerto Rico. The Coordination Zone requires applicants for new and modified radio facilities in various communications services within the Coordination Zone to provide notification of their proposed operations to the Observatory at the time their applications are submitted to the Commission.

3. On March 4, 2005, Counsel for Cornell University (“Cornell”), operator of the Observatory, informed the Commission's Office of Engineering and Technology (OET) that the postal address for the Observatory had changed, and the Post Office is no longer forwarding mail sent to the old address listed in the Commission's Rules. Accordingly, Counsel for Cornell requests that the postal address for the Observatory be amended in all applicable Commission Rules to “Interference Office, Arecibo Observatory, HC3 Box 53995, Arecibo, Puerto Rico 00612.”

4. Authority for adoption of the foregoing revisions is contained in 47 CFR 0.231(b).

5. Amending the postal address for the Observatory in all applicable Commission rules is ministerial and does not change the substance of the rule or any party's obligations or rights, and thus can be undertaken under OMD delegated authority without a notice and comment period rulemaking. OMD has examined the entirety of the Commission's rules and finds twelve sections that require amendment to reflect the Observatory's new postal address.

6. Pursuant to section 4(i) and 4(j) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i) and 154(j), and sections 0.11 and 0.231 of the Commission's rules, 47 CFR 0.11 and 0.231, the Orde r and the rules specified in the Appendix, are amended , effective April 14, 2005.

The primary purpose of this rulemaking is to provide for additional OPM oversight of the FEHB Program carriers' contract costs that are charged to the Government. Since the beginning of the Program, we have maintained oversight of FEHB carriers' costs, including subcontractor costs. We have specified standard contracting requirements for review and audit of costs and have routinely updated our requirements as necessary. Historically, we have not considered providers of healthcare services or supplies to be subcontractors, as the term is defined in the Federal Acquisition Regulation (FAR), because hundreds of thousands of such agreements between carriers and providers are in place, and until recently, the dollar value of each agreement was relatively small. However, the healthcare delivery system has changed and new large healthcare delivery entities now play a significant role in the industry. FEHB carriers now contract with these entities for services that represent a significant portion of individual carriers' total costs charged to the FEHB Program, and in the aggregate represent a sizeable portion of overall Program costs. Because of the impact of these costs on the FEHB Program, we are expanding our oversight in this area. Even though Large Providers of healthcare services or supplies are not defined as subcontractors under the FEHB Program, these regulatory changes would bring them under the umbrella of the FEHBAR and subject them to audit requirements currently applicable to carriers and their subcontractors. Some, but not all, FEHB carriers' Large Provider Agreements already provide for a limited right to audit. We believe this provision should be in regulation rather than in individual contracts to make the context clear and consistent for all experience-rated carriers by mirroring the regulatory requirements for oversight of FEHB subcontracting arrangements. As with audit findings in subcontract arrangements, any audit findings regarding Large Providers would be referred to the FEHB carrier holding the Large Provider Agreement.

For FAR audit purposes, we define a “Large Provider Agreement” as an agreement between (1) an FEHB carrier, at least 25 percent of whose total enrollee contracts are comprised of FEHB enrollee contracts, and (2) a provider of services, where the total costs charged to the FEHB carrier for a contract term for FEHB members, including benefits and services, are reasonably expected to exceed five percent of the carrier's total FEHB benefits costs, or five percent of the carrier's total FEHB administrative costs (where the provider is not responsible for benefits costs under the agreement). We will use the FEHB Program Annual Accounting Statement for the prior contract year to determine the five percent threshold.

Large Provider Agreements include mail order pharmacy services, pharmacy benefit management services, mental (behavioral) health and/or substance abuse management services, preferred provider organizations (including organizations that own and/or contract with direct providers of medical services and supplies), utilization review services, and/or large case or disease management services. Large Provider Agreements do not include carriers' contracts with hospitals.

This regulation requires experience-rated carriers to meet minimum notification and information requirements with respect to any new procurement, renewal, significant modification, or option relating to a Large Provider Agreement. Information to be provided includes: a description of the supplies or services required, basis for reimbursement, reason the proposed provider was selected, method of contracting and competition obtained, methodology used to compute profit, and provider risk provisions. This new oversight reflects OPM's need to be informed of the types of carriers' Large Provider Agreements and their terms and conditions because of the value and cost of such agreements to the FEHB Program. The clause describing the Large Provider Agreement review requirement is applicable to Large Provider Agreements and significant modifications effective January 1, 2004. However, to allow for an appropriate transition period, OPM will apply this requirement only to those Agreements and modifications that take effect on or after 90 days following the effective date of this final regulation.

This regulation authorizes the contracting officer to request additional information after he or she receives the carrier's notification and required information prior to the award of a Large Provider Agreement, as well as any time during the performance of the agreement. The contracting officer will give the carrier either written comments on the agreement, or written notice that there will be no comments. If the contracting officer provides comments, the carrier must inform the contracting officer how it intends to address those comments.

Under the regulation, Large Providers must retain and make available for Government inspection all records applicable to the carrier's Large Provider contractual agreement. The Government will have audit rights with respect to Large Provider Agreements that are the same for all carriers. The contract clauses at 1652.204-74, Large Provider Agreements, and 1652.246-70, FEHB Inspection, contain provisions that require carriers to insert the applicable clauses in their Large Provider Agreements.

This regulation also updates our policy on FEHB Program subcontracting consent which previously required advance approval of carriers' subcontracts or modifications when the amount charged to the FEHB Program was at least $100,000 and at least 25 percent of the total subcontract costs. Consistent with FAR changes, we are increasing the threshold to require advance approval if the amount charged to the FEHB Program equals or exceeds $550,000 and is at least 25 percent of the total subcontract costs. The regulation also clarifies the cost components the carrier must consider in determining the $550,000 threshold. 1644.170, Policy for FEHB Program subcontracting, has been clarified to reflect that (a) General Policy and (b) Consent work together, along with the FEHB Program Clause Matrix.

We have added a new section to Part 1631, Contract Cost Principles and Procedures, concerning the inferred reasonableness of a subcontract's costs. If the carrier follows the notification and consent requirements of 1652.244-70, Subcontracts, and later obtains the contracting officer's consent or ratification of the subcontract's costs, then the reasonableness of the subcontract's costs will be inferred.

We have modified the definitions of Cost or Pricing Data and Experience-rate to incorporate mental (behavioral) health benefits capitation rates, thereby reflecting the implementation of mental (behavioral) health parity in the FEHB Program as of the 2001 contract year. Mental (behavioral) health capitation rates are considered to be cost or pricing data and are included as actual paid claims and administrative expenses in experience rating.

We have updated the contractor records retention requirement for carrier rate submissions, patient claims, Large Provider Agreements, and subcontracts to six years. Earlier in the history of the Program when virtually all records were maintained in paper format, we established a requirement for carriers to retain claims records for three years and financial records for five years. Since electronic data storage significantly reduces the maintenance burden and the Program can benefit from having records available for a slightly longer period, we have modified and standardized the records retention requirement. Carriers' records are subject to the Health Insurance Portability and Accountability Act (HIPAA) standards for privacy of individually identifiable health information.

To conform to current FAR sections, we have re-designated and/or re-titled certain sections and references in FEHBAR Parts 1615, 1632, and 1652. No material changes were made to these three Parts. Old FEHBAR 1615.1, General Requirements for Negotiation, is retitled “Source Selection Processes and Techniques.” Old FEHBAR 1615.170, Negotiation authority, is now Section 1615.070. Old FEHBAR 1615.4, Solicitations and Receipt of Proposals and Quotations, is now 1615.2, Solicitations and Receipt of Proposals and Information. Old 1615.401, Applicability, is now 1615.270. Old FEHBAR 1615.6, Source Selection, is now 1615.3. Old FEHBAR 1615.602, Applicability, is now 1615.370. We moved the provisions in old FEHBAR Subparts 1615.8, Price Negotiation, and 1615.9, Profit, to Subpart 1615.4, Contract Pricing, to correspond with the FAR. We removed and reserved sections 1615.8 and 1615.9 because there are no longer corresponding references in the FAR. Old Section 1615.802, Policy, is now 1615.402, Pricing policy. Old paragraph 1615.804-70, Certificate of accurate cost or pricing data for community-rated carriers, is now 1615.406-2, Certificate of accurate cost or pricing data for community-rated carriers. Old paragraph 1615.804-72, Rate reduction for defective pricing or defective cost or pricing data, is now 1615.407-1. Old paragraph 1615.805-70, Carrier investment of FEHB funds, is now 1615.470. Old paragraph 1615.805-71, Investment income clause, is now 1615.470-1. Old Section 1615.902, Policy, is now 1615.404-4, Profit, and old Section 1615.905, Profit analysis factors, is now 1615.404-70.

In 1632.170, Recurring premium payments to carriers, we removed paragraph (c) relating to the 3-Year Department of Defense (DoD) Demonstration Project (10 U.S.C. 1108) because the term of the demonstration project expired December 31, 2002.

In 1632.771, Non-commingling of FEHB Program funds, and 1632.772, Contract clause, we removed the incorrect reference to paragraph 1652.232-70 and replaced it with the reference to 1652.232-72.

We removed the reference to “1615.804-72” in the introductory text of “1652.215-70, Rate reduction for defective pricing or defective cost or pricing data,” and replaced it with “1615.407-1.” In the same section, we removed the reference to “15.804-2(a)(1)” and replaced it with “15.403-4(a)(1).” We also replaced the clause date with “2003.” In paragraph (a) of the clause, we replaced “1615.804-70” with “1615.406-2.” We also removed paragraph (d) relating to the 3-Year DoD Demonstration Project (10 U.S.C. 1108) because the term of the demonstration project expired December 31, 2002.

In the introductory text of 1652.215-71, Investment income, we replaced “1615.805-71” with “1615.470-1.”

In 1652.216-70, Accounting and price adjustment, we changed the clause date to “2003” and removed paragraph (c) because the term of the 3-Year DoD Demonstration Project (10 U.S.C. 1108) expired December 31, 2002.

In 1652.216-71, Accounting and allowable cost, we changed the clause date to “2003” and removed paragraph (d) because the term of the 3-Year DoD Demonstration Project (10 U.S.C. 1108) expired December 31, 2002.

In 1652.222-70, Notice of significant events, we revised paragraph (d) of the clause to increase the threshold for inserting the clause in the carrier's subcontracts and subcontract modifications.

In 1652.232-70, Payments—Community-rated contracts, we changed the clause date to “2003” and removed paragraph (f) because the term of the 3-Year DoD Demonstration Project (10 U.S.C. 1108) expired December 31, 2002.

In 1652.232-71, Payments—Experience-rated contracts, we changed the clause date to “2003” and removed paragraph (f) because the term of the 3-Year DoD Demonstration Project (10 U.S.C. 1108) expired December 31, 2002.

We updated the FEHB Program Clause Matrix by removing three clauses that relate to the Cost Accounting Standards (FAR 52.230-2, FAR 52.230-3, and FAR 52.230-6) that are waived and no longer apply.

On August 15, 2003, OPM published a proposed rule in the Federal Register (68 FR 48851). OPM received comments from an association representing fee-for-service health plans participating in the FEHB Program, three individual FEHB fee-for-service health plans, and one Federal employee union. The fee-for-service association recommended that we change the term “Large Provider Agreements” to “Managed Care Agreements” because certain preferred provider organization contractors and utilization review contractors do not want to be referred to as health providers because of liability concerns. The association also recommended that we clarify the organizations that would be considered Large Providers. We believe the Large Provider definition adequately reflects our intent but for clarification, we have added a representative sample of providers to the definition of Large Provider Agreement in FEHBAR 1602.170-15.

The association also commented that most “Managed Care Agreements” are price analysis based contracts, not cost reimbursement contracts, are not subject to the inclusion of FAR§ 52.215-2, “Audit and Records—Negotiation” clause, and the flow down provision to Large Provider Agreements would not apply. They stated that the FEHBAR already contains FEHB Inspection clauses at 48 CFR 1646.301, 1652.246-70, for underwriting and administrative services and recommended that we revise these clauses to include review of “Managed Care Agreements”. This would permit audit of cost analysis contracts under the Audit and Records—Negotiation clause, and price analysis contracts under the FEHB Inspection clause. We agree with the association's comment and have revised the regulation accordingly. This same principle applies to both Large Provider and subcontract arrangements.

The association commented that Large Provider audit findings should be treated pursuant to the overpayments clause of the fee-for-service contract (§ 2.3(g)) because they are not defective pricing situations under the Truth in Negotiations Act (TINA) which calls for liability to be placed initially on the prime contractor. We agree these audit findings are not defective pricing situations under TINA. However we do not agree that findings are overpayments. Rather, we will consider findings to be unallowable costs to the contract. The association stated that they select many vendors using price-analysis/price reasonableness, including competitive bidding, which by definition do not include evaluation of the underlying costs and profit. They recommended we revise the subcontract notification requirement on describing the vendor's profit to “only when applicable”. We believe that this is not necessary because if there are no costs or profit to be described, the carrier can so state.

The association commented that the additional notice requirements for subcontracts should be defined more narrowly ( e.g. , when the price change in the subcontract is above the threshold, not when the price change plus the initial price exceeds the threshold). We believe it is appropriate to review a subcontract modification that causes the total outlay for the subcontract to equal or exceed the $550,000 threshold.

The association stated that the 60-day advanced notice for subcontract consent is commercially unworkable. We have revised the notice period to 30 days for subcontracts. The association recommended that the $550,000 threshold be adjusted by the same amount and at the same time as any change to the threshold for application of the “Truth in Negotiations Act” (TINA). We agree and have made the appropriate change to the regulation. The association commented that it did not think the $550,000 threshold should apply to evergreen contracts, e.g. , contracts that renew automatically unless terminated by one of the parties and recommended we clarify that evergreen contracts not be considered option contracts. We expect advance notification of any subcontract (initial, option or evergreen) where the total price equals or exceeds the $550,000 threshold. Evergreen contracts and contracts that include an initial contract term with options for renewal would meet the requirement for advance approval when the $550,000 threshold is expected to be met. For example, if an initial contract is for $547,000, and a subsequent year's option is for $5,000, OPM would expect to receive a request for advance approval upon receipt of the $5,000 option. OPM would need to obtain copies of both the initial and option components of the contract to conduct its review.

The association commented that OPM eliminated the threshold that the subcontract amount charged to the FEHB must be no less that 25 percent of the subcontract's cost. We have restored the 25 percent threshold to the final regulation. The association commented that Federal procurement law does not require TINA's certified cost or pricing data to be submitted to the contracting officer when the subcontract's cost is based on adequate price competition or subcontracts whose price is set by law or regulation, as well as those for commercial items. We agree and have revised the regulation accordingly.

The association commented that our proposed regulation appears to require carriers to comply with the FAR in conducting subcontracting activities. The association stated that the FAR's contract formation rules are directly applicable only to the Federal Government. We disagree and have not made revisions to the regulation. The association objected to increasing the records retention period from three to six years for patient records and from five to six years for operations records, but recommended that any change to the retention period be made prospectively. We have maintained the uniform six year retention period consistent with existing FAR requirements, but agree to apply the requirement prospectively. Further, any carrier that believes this additional requirement may increase costs may ask the contracting officer for consideration during negotiations on the annual administrative cost ceiling.

We also received comments from a large FEHB fee-for-service plan which agreed with the fee-for-service association's comments and made additional comments of its own. The plan recommended that we clarify the definition of Large Provider Agreement to ensure the requirements applied only to the plan's parent association and not to its individual servicing entities. The plan further indicated that none of its servicing entities constitutes 25 percent of the plan's enrollment. The Large Provider Agreement requirement is intended to apply to carriers' contracts, not local plans that serve under an umbrella arrangement with a carrier. Therefore, we have clarified the definition. Further, since the definition of Large Provider Agreement contains a 25 percent of FEHB enrollment threshold, none of the individual servicing entities in the FEHB would be impacted by our new notice and audit requirements. This means the Large Provider Agreement requirement would apply to such entities as the Blue Cross and Blue Shield Association's Federal Employee Program.

The plan also commented that we should include the 25 percent threshold to the flow-down provision at 1652.222-70, Notice of Significant Events, because without this clause the plan would be required to insert the clause into many subcontracts with minor impact on the Federal contract. We agree and have added the 25 percent threshold.

We received comments from two of the fee-for-service plan's servicing entities that stated if the Large Provider contract auditing requirement was applied to them individually, it would be so administratively onerous as to potentially prohibit their continued participation in the program. As noted above, we have clarified the definition.

We also received comments from a Federal employee union that stated the definition of Large Provider Agreement could result in inequitable results. The union stated that a relatively small provider could be subject to the definition merely because its subscriber base is disproportionately comprised of FEHB members and a very large insurer could be excluded because its FEHB subscribers do not comprise 25 percent of the plan's enrollees. The union recommended that no provider be considered a Large Provider unless it has a minimum of $25 million in FEHB subscriber income and any provider with $50 million or more of FEHB subscriber income be considered a Large Provider. We believe it is reasonable that we should have input on any Large Provider contract that affects a large number of Federal enrollees relative to the health plan's commercial business, regardless of the actual dollar amount of the contract. On the other hand, we do not believe that it is reasonable for us to try and influence a Large Provider contract where FEHB enrollment comprises a minor proportion of the contract's enrollees, compared to the health plan's other commercial business. The union disagreed with our newly proposed section 1631.205-81, Inferred Reasonableness and stated the clause weakened existing procurement law. We believe it is in the best interest of the FEHB Program to provide an incentive to carriers to obtain advanced notification of subcontracts. The union also disagreed with the removal of the three Cost Accounting Standards clauses from the FEHB Program Clause Matrix. The Federal Acquisition Regulation 30.201-5(b)(2) permits the head of an agency to waive the Cost Accounting Standards (CAS) for a particular contract or subcontract under exceptional circumstances when necessary to meet the needs of the agency. We determined that there are sufficient reasons and granted waivers for certain health plans under the FEHB Program. In October 2002, OPM determined that it was appropriate to grant CAS waivers for certain health plans under the FEHB Program for the reasons outlined below. First, OPM determined that the Program has adequate cost accounting requirements in its Federal Employees Health Benefits Acquisition Regulations (FEHBAR), which supplement the Federal Acquisition Regulation. The FEHBAR requires carriers to file annual financial statements. The carriers, and their third party servicing agents, must also adhere to financial and other related standards, comply with an FEHB Program audit guide, and submit to audits by Independent Public Accountants. Second, because OPM has contracted with carriers for twenty to forty years, it has been able to collect extensive data on each carrier, thus making disclosure statements superfluous. Their existing systems are and have been their benchmarks. Third, the OPM Office of the Inspector General audits health carriers on a regular basis; contract rates, which are negotiated annually, are subject to adjustment for audit findings. Fourth, insurance carriers are subject to State regulatory authorities and must meet State statutory reserve requirements in order to conduct business; in addition, many carriers are required to submit to State rate setting procedures. Accordingly, OPM's statutory oversight and regulatory requirements already in place are sufficient to meet the Government's interests in a much less burdensome way than applying CAS. This new regulation will enhance the financial integrity of the Program and demonstrate to the public and any other interested parties that accounting methods and related financial disclosures by carriers are consistent with sound business practices.

This rulemaking imposes additional oversight and audit requirements on individual Federal contractors. The requirements do not represent routine information collection. Carriers are required to provide the information on an individual case-by-case basis only when they are initiating a new Large Provider contract or renewing an existing contract. It does not impose information collection and recordkeeping requirements that meet the definition of the Paperwork Reduction Act of 1995's term “collection of information” which means obtaining, causing to be obtained, soliciting, or requiring the disclosure to third parties or the public, of facts or opinions by or for an agency, regardless of form or format, calling for either answers to identical questions posed to, or identical reporting or recordkeeping requirements imposed on ten or more persons, other than agencies, instrumentalities, or employees of the United States; or answers to questions posed to agencies, instrumentalities, or employees of the United States which are to be used for general statistical purposes. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Regulatory Flexibility Act (RFA) requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies with revenues of $11.5 million or less in any one year. This rulemaking affects FEHB Program experience-rated carriers and their Large Provider contractual arrangements which exceed that dollar threshold. Therefore, I certify that this regulation will not have a significant economic impact on a substantial number of small entities.

We have examined the impact of this final rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the RFA (September 16, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995, (Pub. L. 104-4), and Executive Order 13132. Executive Order 12866 (as amended by Executive Order 13258, which merely assigns responsibility of duties) directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any one year). This rule is not considered a major rule, as defined in title 5, United States Code, Section 804(2), because we estimate its impact will only affect FEHB carriers and their Large Provider Agreements and mirrors current FEHB Program practice with regard to carriers' subcontract arrangements. Any economic impact resulting from oversight or audit efforts would not be expected to exceed the dollar threshold.

This rule has been reviewed by the Office of Management and Budget in accordance with Executive Order 12866.

We are enhancing our oversight of experience-rated FEHB contracts by requiring carriers to apply additional cost principles and procedures. We currently contract with thirty-two experience-rated fee-for-service carriers and Health Maintenance Organizations (HMOs). Under the FEHB law, 5 U.S.C. 8902, it is part of OPM's responsibility to ensure that rates charged by health benefits plans reasonably and equitably reflect the cost of the benefits provided. Our interest, from a financial standpoint, is to pay a reasonable price for the health care coverage we purchase from private contractors on behalf of FEHB enrollees. OPM's independent Inspector General regularly audits experience-rated carriers to determine if they are in compliance with the Cost Principles in part 31 of title 48, Code of Federal Regulations (the Federal Acquisition Regulation (FAR)) and chapter 16 of title 48, Code of Federal Regulations (FEHBAR)). In addition, we have other requirements and practices in place to provide assurance to FEHB Program administrators that carriers' financial reporting and contractual requirements are met.

The FEHBAR and part 31 of the FAR are the sole sources of cost accounting principles and practices for FEHB contracts. The basic cost accounting principles in the FAR Part 31 have been in place for over 40 years. During this time period, significant improvements in cost accounting principles and practices have been made. Advances in information technology have enabled FEHB contractors to implement cost accounting practices more complex than those generally used when we adopted the FAR cost principles. Also, we have observed some differences in interpretation regarding the allocation of costs to carriers' contracts. Therefore, we are updating the FEHBAR to allow carriers to use more current contract cost accounting principles and practices and to provide for consistent interpretation of our requirements across the Program. These final regulations may apply to contractors that also allocate costs to other federal contracts subject to CAS-coverage or FAR provisions related to cost-based contracts. OPM plans to contact other federal agencies that contract with the FEHB contractors to discuss how cost accounting practices are applied to business units that may have other cost-based contracts for federal programs, such as Medicare or Tricare, to determine if a consistent standard is appropriate governmentwide.

FAR Part 31 provides criteria that govern the allocation of indirect costs to contracts. This regulation provides guidance to carriers on allocating certain indirect costs to FEHB experience-rated contracts. For example, we have included a section to supplement FAR 31.203 that describes techniques for accumulating and allocating groupings of indirect costs (FEHBAR 1631.203-70). The new section provides guidance for determining logical cost groupings as required by FAR 31.203(c). It also provides methods for achieving the FAR 31.201-4 requirement that costs are to be allocated on the basis of relative benefits received or other equitable relationship. We have also provided more guidance on the allocation of business unit general and administrative (G&A) expenses (FEHBAR 1631.203-71) and home office expenses to carriers' business segments (FEHBAR 1631.203-72) to supplement FAR 31.203. Our intent is to supplement, but not to supplant FAR. Therefore, we believe that the provisions of FAR 31.203 dealing with the allocation of indirect costs, including G&A expenses and home office expenses, are rendered more useful for our purposes when supplemented by FEHBAR 1631.203 -70, 71, and 72. In addition, we have modified the FEHBAR to specifically recognize that monthly indirect cost rates are a practice of the insurance industry and are therefore permitted by FAR 31.203.

We have added subrogation settlements, prescription drug rebates, and volume discounts to the list of FEHB credits in FEHBAR 1631.201-70. This guidance specifies that the applicable portion of any credit relating to any allowable cost and received by or accruing to the carrier must be credited to the FEHB Program. We have always expected carriers to ensure that the Program actually receives these credits. Identifying them makes it even clearer that they are to be credited to the Program. While the list of credits is not intended to be exhaustive, we have added these examples to demonstrate how all credits should be treated. Other enhancements include modifying FAR 31.205-10 to make facilities cost of money (COM) allowable under certain circumstances, even if it is not specifically identified in a carrier proposal (FEHBAR 1631.205-10). This change is intended to more closely reflect the procedures we follow in our annual negotiation process with carriers.

We have added a provision to establish that compensated personal absence must be assigned to the cost accounting period in which the entitlement was earned (FEHBAR 1631.205-72). This section is included to ensure all carriers are following GAAP requirements applicable to accrual procedures. We also provided a transition rule to permit carriers to recover prior years' allocable liability for compensated personal absence not previously charged to FEHB contracts. We believe that the provisions of this section ensure that there is compatibility between the applicable requirements of GAAP, FAR and FEHBAR. It should also be stressed that the transition rule dealing with the recovery of prior years' costs applies only to costs that have not been previously charged to contracts or other final cost objectives.

Consistent with OPM's waiver of Cost Accounting Standards (CAS) requirements, a new FEHBAR Subpart 1699.70 is added to clarify they do not apply to experience-rated FEHB contracts.

We have worked collaboratively with carriers to develop procedures that are consistent with insurance industry practices and assure an equitable allocation of costs to the FEHB Program. When added to our current financial reporting and disclosure requirements, these new provisions will enhance our oversight of the FEHB Program. Because they have been developed in coordination with the standard practices used by experience-rated carriers, we expect they can be implemented within the FEHB Program promptly and without impediments.

On March 26, 2004, OPM published a proposed rule in the Federal Register (69 FR 15774). We received comments from two FEHB Program carriers and one Federal employee union. One carrier commented on the provision in 1631.205-72, which establishes that compensated personal absence must be assigned to the cost accounting period in which the entitlement was earned. The carrier asked that we clarify in the preamble that a contractor subject to this provision be permitted to draw the amount of the allowable compensated personal absence from the Plan's letter of credit (LOC) reserves in the cost accounting period in which the contractor determines that an entitlement had been earned. We agree. Further, if it is later determined that the compensated personal absence entitlement was not earned in the cost accounting period to which it was assigned, the contractor will make an appropriate adjustment and credit the LOC reserves. Another carrier commented that it is important and highly appropriate that section 1699.70 provides that the cost accounting standards do not apply to experience-rated contracts, adding that this will avoid unnecessary and burdensome costs to the Program. The carrier also commented on an anomaly in 1631.203 of the proposed regulation which was created when the FAR Councils published a final rule on April 5, 2004, after the publication date of OPM's proposed regulation. The FAR Councils' rule revised FAR 31.203 regarding base periods for allocating indirect costs, stating “ * * * the base period for allocating indirect costs shall be the contractor's fiscal year used for financial reporting purposes in accordance with generally accepted accounting principles. The fiscal year will normally be 12 months, but a different period may be appropriate ( e.g. when a change in fiscal year occurs due to a business combination or other circumstances.” Historically, the practice in the insurance industry has been to base the allocation of indirect costs on monthly rates, unadjusted for annual differences. The FEHBAR allows for continuation of normal business practices when there would be no material gain from asserting a change. The practice of allocating indirect costs on a monthly basis is in accordance with GAAP in the insurance industry. Imposing a change would incur additional costs for the Government which would have to pay for the cost of implementing and maintaining the change in administrative systems. Therefore, this clause remains unchanged except to adopt the new paragraph numbering reflected in the updated FAR 31.203. The Federal employee union stated its objection to OPM's waiver of the CAS and, subsequently to all the provisions in the proposed rule except for one. The FAR 30.201-5(b)(2) permits the head of an agency to waive the CAS for a particular contract or subcontract under exceptional circumstances when necessary to meet the needs of the agency. We determined there were sufficient reasons and granted waivers for certain health plans under the FEHB Program. In October 2002, OPM determined that it was appropriate to grant CAS waivers for certain health plans under the FEHB Program for the reasons outlined below. First, OPM determined that the Program has adequate cost accounting requirements in its Federal Employees Health Benefits Acquisition Regulations (FEHBAR), which supplement the Federal Acquisition Regulation. The FEHBAR requires carriers to file annual financial statements. The carriers, and their third party servicing agents, must also adhere to financial and other related standards, comply with an FEHB Program audit guide, and submit to audits by Independent Public Accountants. Second, because OPM has contracted with carriers for twenty to forty years, it has been able to collect extensive data on each carrier, thus making disclosure statements superfluous. Their existing systems are and have been their benchmarks. Third, the OPM Office of the Inspector General audits health carriers on a regular basis; contract rates, which are negotiated annually, are subject to adjustment for audit findings. Fourth, insurance carriers are subject to State regulatory authorities and must meet State statutory reserve requirements in order to conduct business; in addition, many carriers are required to submit to State rate setting procedures. Accordingly, OPM's statutory oversight and regulatory requirements already in place are sufficient to meet the Government's interests in a much less burdensome way than applying CAS. This new regulation will enhance the financial integrity of the Program and demonstrate to the public and any other interested parties that accounting methods and related financial disclosures by carriers are consistent with sound business practices.

I certify that this regulation will not have a significant economic impact on a substantial number of small entities because it is based on requirements already in place in the Federal Acquisition Regulation (FAR).

This rule has been reviewed by the Office of Management and Budget in accordance with Executive Order 12866.