On December 21, 2000 the Secretary established, within the NOP regulations [7 CFR part 205], the National List regulations (National List) (§§ 205.600 through 205.607). The National List identifies synthetic substances that are allowed and nonsynthetic substances that are prohibited in organic crop and livestock production. The National List also identifies nonsynthetic and synthetic substances that are allowed for use in certified handling operations. Under the authority of the Organic Foods Production Act of 1990 (OFPA), as amended, (7 U.S.C. 6501 et seq. ), the National List can be amended by the Secretary based on proposed amendments developed by the NOSB. Since established, the National List has been amended twice, October 31, 2003 (68 FR 61987), and November 3, 2003 (68 FR 62215).

This proposed rule would amend the National List to reflect one recommendation submitted to the Secretary by the NOSB on March 3, 2005. Based on their evaluation of a petition submitted by industry participants, the NOSB recommended that the Secretary amend § 205.603(d)(1) of the National List by revising the annotation of Methionine, a feed additive, to extend its use in organic poultry production until October 21, 2008. The use of Methionine in organic production was evaluated by the NOSB using the evaluation criteria specified in OFPA (7 U.S.C. 6517-6518).

A 15-day comment period has been deemed appropriate to allow interested persons to respond to this proposed rule. Fifteen days is deemed appropriate because, under the NOP regulations (7 CFR part 205.603(d)), the authorized use of Methionine will expire for organic poultry operations on October 21, 2005. Final rulemaking to extend the use of Methionine in organic poultry production, if adopted, should be completed before October 21, 2005. Any comments that are received timely will be considered before a final determination is made in this matter.

The following provides an overview of the proposed amendment made to § 205.603 of the National List:

This proposed rule would revise current paragraph (d)(1) of § 205.603 as follows:

DL-Methionine, DL-Methionine-hydroxyl analog, and DL-Methionine-hydroxyl analog calcium (CAS #-59-51-8; 63-68-3; 348-67-4)—for use only in organic poultry production until October 1, 2008.

Methionine was petitioned for its continued use as a synthetic feed additive in organic poultry operations. Methionine is a colorless or white crystalline powder that is soluble in water. It is classified as an amino acid and considered to be an essential amino acid that is regulated as an animal feed nutritional supplement by the Food and Drug Administration (21 CFR 582.5475).

Methionine was originally included on the National List on October 31, 2003 with an early expiration date of October 21, 2005, (the normal time period for the use of a substance contained in the National List is five years, beginning with the date the substance appears on the National List regulations). Methionine was petitioned by organic livestock producers as a part of the NOSB's 1995 initial review of synthetic amino acids considered for use in organic livestock production. The petitioners asserted that Methionine was a necessary dietary supplement for organic poultry, due to an inadequate supply of organic feeds containing sufficient concentrations of naturally-occurring Methionine. Petitioners suggested synthetic Methionine would be fed as a dietary supplement to organic poultry at levels ranging from 0.3 to 0.5 percent of the animal's total diet. The petitioners also asserted that a prohibition on the use of synthetic Methionine would contribute to nutritional deficiencies in organic poultry thereby jeopardizing the animal's health After consideration of the justification provided for the inclusion of Methionine and an assessment under the evaluation criteria provided in OFPA (7 U.S.C. 6517-6518), the NOSB considered the use of synthetic Methionine to be consistent with OFPA and recommended its inclusion onto the National List for use in organic poultry production with an early expiration on its use (October 21, 2005). The NOSB recommended an early expiration on the use of Methionine to encourage the organic poultry industry to phase out the use of synthetic Methionine in poultry diets and develop non-synthetic alternatives to its use as a feed additive.

Since the inclusion of Methionine on § 205.603(d)(1) of the National List on October 31, 2003, the organic poultry industry has been unable to develop suitable non-synthetic alternatives for the substitution of synthetic Methionine in organic poultry diets. As a result, on January 10, 2005, the two organic poultry producers petitioned the NOSB to extend the use of Methionine in organic poultry production beyond October 21, 2005, to provide additional time for development of non-synthetic alternatives. Preliminary research results on nonsynthetic alternatives to synthetic Methionine was provided to the NOSB. Although considered inconclusive, the preliminary results have demonstrated that research trials were underway to identify non-synthetic alternatives for phasing out synthetic Methionine in organic poultry diets.

The NOSB, at its February 28-March 3, 2005, meeting in Washington, DC, received and evaluated public comment on the petition to extend the use of Methionine in organic poultry production beyond October 21, 2005. The NOSB concluded that Methionine is consistent with the evaluation criteria of 7 U.S.C. 6517 and 6518 of the OFPA; however, the NOSB maintained that non-synthetic alternatives must be developed during the additional extension on the use of synthetic Methionine in organic poultry diets. Therefore, the NOSB recommended Methionine be added to the National List for use only in organic poultry production until October 1, 2008, so that the organic poultry industry could continue its research to develop non-synthetic alternatives for the use of synthetic Methionine.

In response to the NOSB recommendation regarding the use of DL-Methionine in organic livestock production, this action proposes to amend § 205.603(d)(1) of the National List regulation as follows:

DL-Methionine, DL-Methionine-hydroxyl analog, and DL-Methioninehydroxyl analog calcium (CAS #-59-51-8; 63-68-3; 348-67-4)—for use in organic poultry production until October 1, 2008.

Two notices were published regarding the meeting of the NOSB and its deliberations on the recommendation and substance petitioned for amending the National List. The substance and recommendation included in this proposed rule were announced for NOSB deliberation in the following Federal Register Notices: (1) 66 FR 48654, September 21, 2001, and (2) 70 FR 7224, February 11, 2005, (Methionine). The substance and recommendation in this proposed rule was initially submitted for proposed rulemaking in the Federal Register Notice, FR 68 18556, April 16, 2003, and added to the National List as final rule in the Federal Register Notice, FR 68 61987, October 31, 2003.

The Organic Foods Production Act of 1990 (OFPA), as amended (7 U.S.C. 6501 et seq. ), authorizes the Secretary, at § 6517(d)(1), to make amendments to the National List based on proposed amendments developed by the NOSB. Sections 6518(k)(2) and 6518(n) of OFPA authorize the NOSB to develop proposed amendments to the National List for submission to the Secretary and establish a petition process by which persons may petition the NOSB for the purpose of having substances evaluated for inclusion onto or deletion from the National List. The National List petition process is implemented under § 205.607 of the NOP regulations. The current petition process (65 FR 43259, July 13, 2000) can be accessed through the NOP Web site at http://www.ams.usda.gov/nop .

This action has been determined to be non-significant for purposes of Executive Order 12866, and therefore, does not have to be reviewed by the Office of Management and Budget.

Executive Order 12988 instructs each executive agency to adhere to certain requirements in the development of new and revised regulations in order to avoid unduly burdening the court system. The final rule adding Methionine to the National List was reviewed under this Executive Order and no additional related information has been obtained since then. This proposed rule is not intended to have a retroactive effect.

States and local jurisdictions are preempted under § 2115 of the OFPA (7 U.S.C. 6514) from creating programs of accreditation for private persons or State officials who want to become certifying agents of organic farms or handling operations. A governing State official would have to apply to USDA to be accredited as a certifying agent, as described in § 2115(b) of the OFPA (7 U.S.C. 6514(b)). States are also preempted under §§ 2104 through 2108 of the OFPA (7 U.S.C. 6503 through 6507) from creating certification programs to certify organic farms or handling operations unless the State programs have been submitted to, and approved by, the Secretary as meeting the requirements of the OFPA.

Pursuant to § 2108(b)(2) of the OFPA (7 U.S.C. 6507(b)(2)), a State organic certification program may contain additional requirements for the production and handling of organically produced agricultural products that are produced in the State and for the certification of organic farm and handling operations located within the State under certain circumstances. Such additional requirements must: (a) Further the purposes of the OFPA, (b) not be inconsistent with the OFPA, (c) not be discriminatory toward agricultural commodities organically produced in other States, and (d) not be effective until approved by the Secretary.

Pursuant to § 2120(f) of the OFPA (7 U.S.C. 6519(f)), this regulation would not alter the authority of the Secretary under the Federal Meat Inspection Act (21 U.S.C. 601 et seq. ), the Poultry Products Inspection Act (21 U.S.C. 451 et seq. ), or the Egg Products Inspection Act (21 U.S.C. 1031 et seq. ), concerning meat, poultry, and egg products, nor any of the authorities of the Secretary of Health and Human Services under the Federal Food, Drug and Cosmetic Act (21 U.S.C. 301 et seq. ), nor the authority of the Administrator of the Environmental Protection Agency (EPA) under the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. 136 et seq. ).

Section 2121 of the OFPA (7 U.S.C. 6520) provides for the Secretary to establish an expedited administrative appeals procedure under which persons may appeal an action of the Secretary, the applicable governing State official, or a certifying agent under this title that adversely affects such person or is inconsistent with the organic certification program established under this title. The OFPA also provides that the U.S. District Court for the district in which a person is located has jurisdiction to review the Secretary's decision.

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) requires agencies to consider the economic impact of each rule on small entities and evaluate alternatives that would accomplish the objectives of the rule without unduly burdening small entities or erecting barriers that would restrict their ability to compete in the market. The purpose is to fit regulatory actions to the scale of businesses subject to the action. Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities.

Pursuant to the requirements set forth in the RFA, the Agricultural Marketing Service (AMS) performed an economic impact analysis on small entities in the final rule published in the Federal Register on December 21, 2000 (65 FR 80548). The AMS has also considered the economic impact of this action on small entities and has determined that this proposed rule would have an impact on a substantial number of small entities. However, AMS has determined that the impact on entities affected by this proposed rule would not be significant. The effect of this proposed rule would be to allow the use of additional substances in agricultural production and handling. This action would relax the regulations published in the final rule and would provide small entities with more tools to use in day-to-day operations. The AMS concludes that the economic impact of this addition of allowed substances, if any, would be minimal and entirely beneficial to small agricultural service firms. Accordingly, the Administrator of the AMS hereby certifies that this rule will not have a significant economic impact on a substantial number of small entities.

Small agricultural service firms, which include producers, handlers, and accredited certifying agents, have been defined by the Small Business Administration (SBA) (13 CFR 121.201) as those having annual receipts of less than $6,000,000 and small agricultural producers are defined as those having annual receipts of less than $750,000.

The U.S. organic industry at the end of 2001 included nearly 6,600 certified crop and livestock operations, including organic production and handling operations, producers, and handlers. These operations reported certified acreage totaling more than 2.34 million acres, 72,209 certified livestock, and 5.01 million certified poultry. Data on the numbers of certified handling operations are not yet available, but likely number in the thousands, as they would include any operation that transforms raw product into processed products using organic ingredients. Growth in the U.S. organic industry has been significant at all levels. From 1997 to 2001, the total organic acreage grew by 74 percent, livestock numbers certified organic grew by almost 300 percent over the same period, and poultry certified organic increased by 2,118 percent over this time. Sales growth of organic products has been equally significant, growing on average around 20 percent per year. Sales of organic products were approximately $1 billion in 1993, but reached $15 billion in 2004. In addition, since the implementation of OPFA on October 21, 2002, USDA has accredited 97 certifying agents who have applied to USDA to be accredited in order to provide certification services to producers and handlers. A complete list of names and addresses of accredited certifying agents may be found on the AMS NOP Web site, at http://www.ams.usda.gov/nop . AMS believe that most of these entities would be considered small entities under the criteria established by the SBA.

Pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. 3501, et seq. , the existing information collection requirements for the NOP are approved under OMB number 0581-0181. No additional collection or recordkeeping requirements are imposed on the public by this proposed rule. Accordingly, OMB clearance is not required by section 350(h) of the Paperwork Reduction Act, or OMB's implementing regulation at 5 CFR part 1320.

This proposed rule reflects recommendations submitted to the Secretary by the NOSB for extending the use of Methionine, a synthetic substance, in organic poultry production until October 21, 2008. The NOSB evaluated this substance using criteria in the OFPA. The substance's evaluation was initiated by a petition from two organic poultry producers. The NOSB has determined that no wholly natural substitute product is presently available. Loss of the use of this substance would disrupt many well-established and accepted organic poultry operations. Therefore, this substance is presently a necessary component of a nutritionally adequate diet for organic poultry. Accordingly, AMS believes that a 15-day period for interested persons to comment on this rule is appropriate.

For the reasons set forth in the preamble, 7 CFR part 205, subpart G is proposed to be amended as follows:

Authorization of Secondary Capital. The NCUA Board is authorized by law to permit credit unions serving predominantly low-income members to receive payments on shares from non-natural persons under conditions the Board sets. 12 U.S.C. 1757(6). In 1996, the NCUA Board amended section 701.34 of its rules and regulations to authorize low-income designated credit unions (“LICUs”), 1 including State-chartered credit unions to the extent permitted by State law, to offer uninsured secondary capital (“SC”) accounts to non-natural person members and nonmembers. 12 CFR 701.34(b). The accounts were intended to provide LICUs a further means—beyond setting aside a portion of income—to build capital in order to serve two purposes: To support greater lending and financial services in their communities, and to absorb losses and prevent the credit union from failing. 61 FR 3788 (Feb. 2, 1996).

To ensure the safety and soundness of the LICUs that offered SC accounts, and to ensure that the accounts serve the intended purposes, existing section 701.34(b) imposes a variety of conditions. 61 FR at 3788. These conditions apply to State-chartered LICUs as well. 12 CFR 741.204. A LICU may offer SC accounts only after submitting a written plan for the use and repayment of the accounts. § 701.34(b)(1). The accounts must be established as uninsured, non-share instruments. § 701.34(b)(2) and (5). They must have a minimum maturity of 5 years and may not be redeemable prior to maturity. § 701.34(b)(3)-(4). An account holder's claim against an offering LICU must be subordinate to all other claims of shareholders, creditors and the Share Insurance Fund. § 701.34(b)(6). And most importantly, SC funds on deposit (including interest paid into the account) must be available to cover losses in excess of the LICU's net available reserves and undivided earnings. § 701.34(b)(7). The funds used to cover such losses may not be replenished or restored to the SC account. Id.

Net Worth Value. Beginning at 5 years remaining maturity, existing § 701.34(c)(1) requires an offering LICU to discount the capital value (now called “net worth value”) of its SC accounts at the rate of 20 percent per year. The purpose of discounting the net worth value is: To discourage overreliance on SC accounts to cover future operating losses; to encourage LICUs to continually replenish their sources of maturing SC; and to facilitate net worth growth to support the expansion of lending and financial services in their communities. 61 FR at 3788, 3789. Even as its capital value is discounted, however, the full amount of SC on deposit remains available to cover losses. § 701.34(c)(2).

Prompt Corrective Action. In 2000, pursuant to Congressional mandate, NCUA adopted a system of “prompt corrective action” (“PCA”) consisting of mandatory minimum capital standards indexed by a credit union's “net worth ratio” to five statutory net worth categories. 2 12 U.S.C. 1790d; 12 CFR 702; 65 FR 8560 (Feb. 18, 2000). A credit union whose net worth ratio puts it in the top category, “well capitalized”, is essentially free of PCA. But as a credit union's net worth ratio falls and its classification among the net worth categories declines below “well capitalized,” it is exposed to an expanding range of mandatory and discretionary supervisory actions designed to restore net worth. E.g., 12 CFR 702.201(a), 702.202(a), 702.204(b).

Effect on LICUs. The original purpose of discounting the net worth value of SC beginning at 5 years remaining remains vital today. Under PCA, however, the requirement to do so reduces a LICU's net worth ratio. While the “net worth” side of the ratio is discounted at the rate of 20 percent annually, the “assets” side of the ratio must remain the same because, as currently written, § 701.34(b) prohibits the redemption of SC accounts prior to maturity. § 701.34(b)(4). Redeeming SC accounts would correct the imbalance between the “net worth” and “assets” sides of the ratio. Without the ability to redeem SC accounts, discounting net worth value will dilute a LICU's net worth ratio, possibly causing its classification among the net worth categories to fall and triggering further PCA.

A significant number of LICUs are exposed to the possibility that discounting the value of their SC will dilute their net worth ratio. December 2004 Call Report data shows that 55 of the 1019 LICUs offer SC accounts. These accounts have an aggregate balance of $19.7 million. The number of LICUs offering SC accounts has remained relatively stable in recent years. Of the 55 LICUs presently offering SC accounts, 48 are classified “well capitalized” and 4 are classified “adequately capitalized,” indicating that 95 percent currently have net worth ratios that subject them to little or no PCA. A principal purpose of this rule is to prevent the discounting of SC from diluting the net worth of LICUs that offer SC accounts.

Existing § 701.34(b)(4) prohibits a LICU from redeeming SC accounts at any time prior to their maturity. As explained above, however, the requirement to discount SC threatens to dilute a LICU's net worth ratio if it cannot also redeem the SC no longer recognized as net worth (“discounted SC”) at the same time. To protect LICUs from this threat, the proposed rule adds new subsection (d) permitting LICU's to redeem discounted SC under certain conditions, and eliminates the restriction on redemption in existing § 701.34(b).

Approval to Redeem. To redeem SC, the proposed rule requires a LICU to first obtain the approval of the appropriate Regional Director (“RD”). If the LICU is State-chartered, the proposed rule adds a new subsection (d) to § 741.204, requiring the approval of the appropriate State Supervisory Authority (“SSA”) with the concurrence of the RD. A request to redeem must be submitted in writing for each year preceding maturity (unless the RD indicates in writing that the approval is for more than one year). If, within 45 days of the RD's receipt of its request to redeem, a LICU is not notified of the RD's and/or SSA's decision on the request, the LICU may proceed with the proposed redemption.

To obtain approval to redeem, the following redemption risks must be addressed:

First, the LICU must show sufficient post-redemption net worth to be “well capitalized.” See note 2 supra. Being classified in the top net worth category frees a credit union of PCA. But as soon as net worth declines below “well capitalized,” PCA forces that credit union to start rebuilding net worth by making quarterly transfers of earnings to net worth. 12 CFR 702.201(a). If not “well capitalized,” however, a LICU that is “adequately capitalized” may seek RD approval to redeem, which will be granted or denied on a case-by-case basis (provided the other redemption criteria below are met).

Second, the SC funds to be redeemed must have been on deposit for at least two years. This requirement only affects SC having a 5-year maturity; SC with a maturity greater than 5 years is ineligible for redemption. LICUs generally incorporate the receipt of SC into their long-term business plans and financial budgets. Allowing a LICU to redeem that SC within the first two years can impair its ability to implement its strategic and business plans, and to achieve its budget objectives and financial stability. For example, a LICU's business plan might call for a rapid and substantial expansion of products and services offered to members. In turn, the expenses associated with this expansion, including loan losses, could increase accordingly. Without a track record of the expenses these products and services entail, it is impossible to accurately project the full extent of these expenses; it can only be estimated. The purpose of the 2-year waiting period is to allow the actual expenses to be realized and to permit the expansion of products and services to stabilize. The track record that develops during that period will show the extent to which discounted SC may be needed to absorb the expenses and thus should not be redeemed.

Third, the LICU must demonstrate that the SC funds to be redeemed will not be needed to cover losses prior to maturity of the account. As previously noted, an essential feature of SC is its availability to cover operating losses in excess of net worth. For this reason, a redemption request should be denied when there is a reasonable expectation that discounted SC will be needed to cover post-redemption operating losses occurring prior to maturity of the account.

Fourth, the LICU must demonstrate that its books and records are current and reconciled. The purpose of this requirement is straightforward: To make sure the RD who is evaluating a redemption request has complete, accurate and up to date financial data to assess the LICU's financial condition and to verify its compliance with full and fair disclosure requirements.

Fifth, the LICU must identify any other funding that might be affected by the redemption of SC. For example, the Department of the Treasury's Community Development Financial Institutions (“CDFI”) Fund may provide a LICU funding in the form of SC subject to a contractual condition that the LICU raise and hold matching SC from another source. If the LICU redeems the matching SC, it may be contractually required to redeem an equal measure of CDFI funding. Non-SC matching nonmember deposits and grants also may be similarly impacted if SC is redeemed prior to maturity.

Finally, the request for approval to redeem must be authorized by a resolution of the LICU's board of directors. A board resolution documents that a majority of the board participated in a board decision. Maximum board member participation in deciding to redeem SC helps to overcome possible conflicts of interest between LICU officials and officials of the SC account holder.

Schedule for Redemption. For redemption requests that are approved, the proposed rule prescribes a schedule for redeeming SC accounts that is reciprocal to existing § 701.34(b)'s schedule for recognizing the net worth value of those accounts:

To the extent a proportion of SC is no longer recognized as net worth under the existing net worth recognition schedule, that same proportion may be redeemed under the redemption schedule. For example, when between “four to less than five years” remain until maturity, 80 percent of value of the account is recognized as net worth, meaning that 20 percent is not. See § 701.34(c)(1)(i). As the schedule above shows, the proposed rule allows the LICU to redeem the 20 percent that is no longer recognized as net worth. The last year of remaining maturity is omitted from the schedule because the maturity of the account effectively redeems the remaining SC. Balancing net worth recognition with redemption of SC protects a LICU's net worth ratio from being diluted.

Existing § 701.34(b) requires a LICU seeking to offer SC accounts to “adopt, and forward to the appropriate Regional Director, a written plan for the use of the funds” in those accounts and “subsequent liquidity needs” to repay them upon maturity. § 701.34(b)(1). In the case of a LICU that is State-chartered, that plan must be submitted to both the RD and the SSA. 12 CFR 741.204(c). But in neither case do the existing rules require an SC plan to be approved before a LICU can offer SC accounts.

Inappropriate Use of Secondary Capital. In practice, SC sometimes is not used to achieve the goals for which it was conceived, i.e. building capital to support expansion of lending and financial services in LICUs' communities, and serving as a cushion against losses. 61 FR 3788 (Feb. 2, 1996). Between 1999 and 2004, twenty-eight LICUs that offer SC accounts have been liquidated or merged, forcing the Share Insurance Fund to step in and absorb losses in nine cases. SC played a role in masking the magnitude of other problems (such as inefficient operations leading to an unreasonably high ratio of net operating expenses to assets, and inadequate underwriting) that led to most of these liquidations. To ensure safe and sound use of SC, the proposed rule requires prior approval—not just submission—of a LICU's SC plan, and establishes evaluation criteria for such plans.

Evaluation and Approval of Plan. The proposed rule revises existing § 701.34(b)(1) to require RD approval of the written SC plan that a LICU presently must submit before offering SC accounts. In the case of a State-chartered LICU, the rule revises § 741.204(c) to require SSA approval of the SC plan with the concurrence of the RD. Approval will be required only for plans submitted on or after the effective date of a final rule; existing SC plans will not be affected. If, within 45 days of an RD's receipt of an SC plan submitted for approval, a LICU is not notified of the RD's and/or SSA's decision on the plan, the LICU may proceed to offer SC accounts pursuant to the plan.

The proposed rule adds two more evaluation criteria to the two that existing § 701.34(b)(1) already prescribes for an SC plan ( i.e. , what the SC will be used for and how it will be repaid when the accounts mature): It must demonstrate that the proposed use of SC conforms to the offering LICU's strategic plan, business plan and budget; and it must be supported by accompanying pro forma financial statements, including any off-balance sheet items, covering a minimum of the next two years. The purpose of these criteria is to project and document the future financial performance of the LICU in relation to the risks associated with offering SC accounts.

Existing § 701.34(b)(11) requires that a “Disclosure and Acknowledgment” form “as set forth in the Appendix to this section be provided to and executed by” the SC account investor. The form recites the key terms and regulatory limitations that distinguish SC accounts ( e.g. , that they are uninsured, subordinate to all other claims, and available to cover operating losses in excess of net worth) as well as the individual terms of each investment ( e.g. , investor's name, amount, term, how accrued interest is to be paid). The purpose of the form is to make sure “there is no misunderstanding on the part of the investors as to the nature of the accounts and the risks involved.” 61 FR at 3788.

Proof of Disclosure. In many cases, the parties may see only a reprint or facsimile of the Appendix containing the “Disclosure and Acknowledgment” form without referring to § 701.34(b)(11), which clearly says who must sign it. But the Appendix itself does not specify who must sign the form—an official of the institutional investor or an official of the offering LICU—or require that person to date the form to show when it was provided to the investor. This ambiguity and lack of a date has led to misunderstandings, if not disputes, about when, if at all, the nature of SC accounts and the risks involved were disclosed to institutional investors.

A credit union official's signature on the form is no proof that the investor ever got the form, let alone when. And without a date, the signature of an institutional investor's official proves the form was received, but not when—before or after the funds were deposited in the SC account—thus failing to document that the investor was informed of the terms, limitations and risks before investing. 3 The proposed rule rectifies this problem simply by including at the bottom of the form a signature block specifically for an official of the institutional investor that reads: “ACKNOWLEDGED AND AGREED TO this ___ day of (month and year) by (name of investor's official, name of investor, address and phone number of investor, and investor's tax identification number).”

Option to Redeem. Consistent with new subsection (d) allowing SC accounts to be redeemed, the proposed rule eliminates the “Disclosure and Acknowledgment” form's provision barring redemption prior to maturity. To also ensure that the option to redeem SC accounts remains with the offering LICU throughout, the proposed rule goes a step further, adding a provision to the form stating that SC accounts are “redeemable only at the option of the offering credit union.” This will prevent LICUs and their institutional investors from agreeing by contract in advance of making an SC investment that the LICU will redeem it later on regardless of what circumstances may arise afterward.

Apart from the substantive modifications explained above, the proposed rule makes several conforming and clarifying adjustments to existing § 701.34. The references to “reserves and undivided earnings” in existing § 701.34(b)(7) and the corresponding provision of the Appendix have been changed to “net worth” to reflect the adoption of that term pursuant to PCA. See 12 U.S.C. 1790d(o)(2). Existing §§ 701.34(b)(12) and (13) have been combined in a single, abbreviated section explaining the PCA authority to prohibit payment of principal, interest and dividends on SC accounts established after August 7, 2000. Finally, the “scale” used in existing § 701.34(c)(1) to recognize the capital value of SC accounts has been converted to schedule form to match the form of the corresponding redemption schedule in new subsection (d).

The Regulatory Flexibility Act requires NCUA to prepare an analysis describing any significant economic impact a proposed regulation may have on a substantial number of small credit unions (those having under $10 million in assets). The proposed rule allows credit unions to redeem secondary capital accounts when they are within five years of maturity, without imposing any additional regulatory burden. If adopted, the proposed rule will not have a significant economic impact on a substantial number of small credit unions. Thus, a Regulatory Flexibility Analysis is not required.

NCUA has determined that the proposed rule would not increase paperwork requirements under the Paperwork Reduction Act of 1995 and regulations of the Office of Management and Budget.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their regulatory actions on State and local interests. NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily adheres to the fundamental federalism principles addressed by the executive order. This proposed rule would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, this proposed rule does not constitute a policy that has federalism implications for purposes of the Executive Order.

NCUA has determined that the proposed rule will not affect family well-being within the meaning of section 654 of the Treasury and General Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681 (1998).

NCUA's goal is to promulgate clear, understandable regulations that impose a minimal regulatory burden. The proposed rule seeks to improve and simplify the existing rule on uninsured secondary capital accounts. We request your comments on whether the proposed rule would be understandable and minimally intrusive if implemented as proposed.

For the reasons set forth above, 12 CFR parts 701 and 741 are proposed to be amended as follows:

The purpose of this amendment is to clarify the scope of § 741.8. This regulation identifies certain transactions that require NCUA approval and some exceptions. The confusion in the current regulation results from the fact that the Federal Credit Union Act (Act) requires NCUA approval for transactions that are not addressed specifically in the regulation. The Act requires prior approval for an insured credit union to “acquire the assets of, or assume liability to pay any member accounts in, any other insured credit union.” 12 U.S.C. 1785(b)(3). The regulation, however, currently only specifically requires approval for “for acquiring loans or assuming or receiving an assignment of deposits, shares or liabilities” from credit unions or other institutions that are not insured by the National Credit Union Share Insurance Fund (NCUSIF). 12 CFR 741.8(a) (emphasis added).

This amendment will clarify that transactions involving the sale or purchase of loans or other assets between federally insured credit unions (FICUs) do not require NCUA approval. NCUA notes that other regulations may limit or otherwise regulate those transactions, for example, the member business lending rule, the fixed asset rule, the eligible obligations rule, and so forth. 12 CFR Part 723, §§ 701.36, 701.23.

For those transactions that do require approval, the amendment adds a new subsection describing what a credit union seeking approval should submit and stating that a request for approval should be sent to the appropriate NCUA regional office.

The Act, in subsections 1785(b)(1) and (3), requires FICUs to obtain NCUA approval for various transactions. 12 U.S.C. 1785(b)(1), (3). Subsection (b)(1) concerns transactions with credit unions and other institutions not insured by NCUSIF. Subsection (b)(3) concerns transactions between insured credit unions. In addition to § 741.8, these sections in the Act provide the authority for Part 708a, which addresses conversions to mutual savings banks, and Part 708b, which addresses mergers generally and also conversions to private insurance. Section 741.8 also implements these sections to the extent that it identifies certain transactions that require NCUA approval.

The regulatory history of § 741.8 indicates the Board did not intend to require approval for certain transactions. In 1990, when § 741.8 was first proposed and adopted, NCUA was particularly concerned about FICUs acquiring loans or assuming responsibility for member or customer accounts from privately insured credit unions or any financial institution that was not insured by the NCUSIF. NCUA was concerned because this was a period marked by the failure of many privately insured credit unions as well as the failure of other financial institutions.

Recently, a FISCU asked whether NCUA approval was required for a transfer of one of its branch offices and associated member accounts to another FISCU. NCUA regulations are silent regarding the need for NCUA approval for the transaction. The proposed amendment clarifies NCUA's position.

Currently, § 741.8 is silent on transfers between two FICUs. It requires any FICU to receive Board approval before “either purchasing or acquiring loans or assuming or receiving an assignment of deposits, shares, or liabilities” from any credit union that is not federally insured or from any non-credit union financial institution. 12 CFR 741.8(a). The rule only excludes the purchase of particular student loans and real estate secured loans and the assumption of assets associated with member retirement accounts or in which the FICU has a security interest from the approval requirement.

The regulatory history of § 741.8 addresses the apparent gap under the current rule. In 1990, when first proposed, the current rule would have covered transfers of assets, including fixed assets like a brick and mortar branch office, in addition to transfers of loans and share liabilities and between FICUs. 55 FR 49059 (November 26, 1990). The final version of the rule, however, eliminated the requirement for Board approval of transfers between FICUs. The NCUA Board determined transfers between FICUs did not materially increase risk to the NCUSIF. 56 FR 35808 (July 29, 1991). Additionally, the Board believed transfers between FICUs should not unduly affect the safety and soundness of FICUs because of regulations applicable to these credit unions, the examination of FICUs for compliance with these regulations, and enforcement of the regulations by appropriate regulators. Id. Accordingly, NCUA did not require the approval of these individual transactions.

NCUA is aware of four transactions involving an FICU acquiring the assets of another non-liquidating FICU in the past two years. While the regulatory history acknowledges asset transfers between FICUs are permissible, the proposed regulation clarifies this authority by specifically excluding the transfer of assets between FICUs from the requirement to receive approval from the NCUA Board.

The proposed rule continues to except from coverage loan purchases involving the packaging of student loans and real estate secured loans by a federal credit union (FCU) under to § 701.23(b) of the NCUA regulations for sale on the secondary market. These transactions are subject to industry standards ensuring safety and soundness. Additionally, the window of opportunity to consummate these transactions is often limited, and agency review could disadvantage FCUs' ability to compete in doing these transactions.

FCUs have the authority to purchase “eligible obligations,” including member loans from any source, loans of a liquidating credit union, “student loans, from any source” and “real estate-secured loans, from any source” if the student and real estate loans are to be packaged for sale on the secondary market. 12 CFR 701.23(b)(1)(i-iv). If a purchase of loans from a failed thrift, bank, or credit union meets the criteria of an “eligible obligation” and other criteria in § 701.23 an FCU is permitted to purchase the asset. For this reason, the proposed rule does not include specific language regarding an FICU's purchase of loans from another FICU.

NCUA requests comment on revisions to the rules involving special reserves for nonconforming and credit union service organization (CUSO) investments by FISCUs. Comments from interested parties on these issues will assist NCUA in its regulatory review process.

NCUA is considering removing the requirement for FISCUs to establish special reserves under § 741.3(a)(2) for nonconforming investments and, in place of the requirement, requiring FISCU's nonconforming investments to be investment grade. The reason NCUA is considering this change is that some state-chartered credit unions may make investments beyond those authorized in the Act or NCUA regulations for FCUs, and these investments raise safety and soundness concerns. FISCUs are currently required to establish special reserves for these investments if their market value is less than book value. This rule differs from Generally Accepted Accounting Principles (GAAP). To reduce the risk to the NCUSIF and conform to GAAP, the NCUA believes FISCU investments should be limited to “investment grade” securities. By an “investment grade” security, NCUA means a security that at the time of purchase is rated in one of four highest rating categories by at least one nationally recognized statistical rating organization, which is similar to the definition for “investment grade” established by the National Association of Securities Dealers. 69 FR 40429 (July 2, 2004). The NCUA solicits comments on whether the current rule should be changed, whether FISCU investments should be limited to investment grade, or whether there is some other measure commenters believe would be more appropriate.

Finally, NCUA is considering extending some of the limits in the CUSO rule to FISCUs. State-chartered credit unions are not subject to the limitations and requirements of Part 712. FCUs can invest in and lend to a CUSO only if it is structured as a corporation, limited liability company, or limited partnership and primarily serves credit unions or their membership. 12 CFR 712.3. In addition to structure requirements and investments and loan limits, NCUA requires corporate separateness between an FCU and a CUSO. 12 CFR 712.4. NCUA is concerned about the potential liability for state-chartered credit unions, and the resulting potential liability for the NCUSIF, if their CUSOs do not observe corporate separateness. Therefore, NCUA solicits comments on whether its regulations should require FISCUs investing in CUSOs to comply with the limits on the structure, accounting, audits, NCUA access, and corporate separateness addressed in §§ 712.3 and 712.4 to protect the NCUSIF.

The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a proposed rule may have on a substantial number of small credit unions, or those with under ten million dollars in assets. The proposed rule is grounded in NCUA concerns about the safety and soundness of the transactions and their potential effects on FICUs and the NCUSIF. NCUA has knowledge of only four transactions that would be covered by the proposed rule in two years. Accordingly, the Board determines and certifies that this proposed rule does not have a significant economic impact on a substantial number of small credit unions and that a Regulatory Flexibility Analysis is not required.

This proposed regulation contains an application requirement. An FICU must apply for NCUA's written approval to purchase assets or assume liabilities from privately-insured credit unions, other financial institutions, or their successors in interest. NCUA has not mandated any specific requirements for this application, but anticipates it will consist of a letter requesting approval and briefly describing the nature of the transaction and any transaction documents created in the regular course of business as evidence of an agreement, contract or offer of a proposed purchase or assumption.

NCUA requests public comment on all aspects of the collection of information in this proposed rule. NCUA believes that little time will be necessary for the development of the application because FICUs may use their existing business records to support the approval request. NCUA estimates a nominal burden of one hour per FICU and will revisit this estimate in light of the comments NCUA receives.

NCUA will submit the collection of information requirements contained in the regulation to the OMB in accordance with the Paperwork Reduction Act of 1995. 44 U.S.C. 3507. NCUA will use any comments received to develop its new burden estimates. Comments on the collections of information should be sent to Office of Management and Budget, Reports Management Branch, New Executive Office Building, Room 10202, Washington, D.C. 20503; Attention: Mark Menchik, Desk Officer for NCUA. Please send NCUA a copy of any comments you submit to OMB.

The likely respondents are FICUs.

Estimated number of respondents: 5.

Estimated average annual burden hours per respondent: 1 hour.

Estimated total annual disclosure and recordkeeping burden: 5.

NCUA invites comment on:

(1) The accuracy of NCUA's estimate of the burden of the information collections;

(2) Ways to minimize the burden of the information collections on FICUs, including the use of automated collection techniques or other forms of information technology; and

(3) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

Recordkeepers are not required to respond to this collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. NCUA is currently requesting a control number for this information collection from OMB.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. The proposed rule may have an occasional direct affect on the states, the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. The proposed rule may supersede provisions of state law, regulation or approvals. Since the proposed rule might lead to conflicts between the NCUA and state financial institution regulators on occasion, comments are requested on means and methods to eliminate, or at least minimize, potential conflicts in this area. Commenters may wish to provide recommendations on the potential use of delegated authority, cooperative decision-making responsibilities, certification processes of federal standards, adoption of comparable programs by states requesting an exemption for their regulated institutions, or other ways of meeting the intent of the Executive Order.

The NCUA has determined that this proposed rule would not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681 (1998).

NCUA's goal is to promulgate clear and understandable regulations that impose minimal regulatory burden. We request your comments on whether the proposed rule is understandable and minimally intrusive.

For the reasons stated above, NCUA proposes to amend 12 CFR part 741 as follows:

Effective in 2002, the NCUA Board established a Regulatory Flexibility Program (“RegFlex”) that exempts qualifying credit unions in whole or in part from a series of regulatory restrictions, and grants them additional powers. 12 CFR part 742; 66 FR 58656 (Nov. 23, 2001). Under existing part 742, a credit union may qualify for RegFlex automatically or by application to the appropriate Regional Director.

RegFlex Designation. To qualify automatically under the existing RegFlex Program, a credit union must meet two criteria. First, it must have a composite CAMEL rating of “1” or “2” for two consecutive examination cycles. Second, it also must achieve a net worth ratio of 9 percent (200 basis points above the net worth ratio to be classified “well capitalized”) for a single Call Reporting period, unless it is subject to a risk-based net worth (“RBNW”) requirement. 12 CFR 742.1. In that case, the credit union's net worth must surpass its RBNW requirement by 200 basis points. As of December 31, 2004, 3457 credit unions automatically qualified for RegFlex.

Under existing part 742, a credit union that is unable to qualify for RegFlex automatically may be eligible to apply to the appropriate Regional Director for a RegFlex designation. To be eligible to apply, a credit union must have either a CAMEL rating of “3” or better or meet the 9 percent net worth criterion, but not both. 12 CFR 742.2. A credit union that neither has a CAMEL of “3” or better nor meets the net worth criterion is ineligible for RegFlex. A credit union that is eligible may be granted RegFlex relief in whole or in part, at the Regional Director's discretion. In 2004, four out of four applications for a RegFlex designation were granted.

Once attained under current part 742, RegFlex authority can be lost or revoked. A credit union that qualified for RegFlex automatically is disqualified once it fails, as the result of an examination (but not a supervision contact), to meet either the CAMEL or net worth criteria in § 742.2(a). 12 CFR 742.6. RegFlex authority can be revoked by action of the Regional Director for “substantive and documented safety and soundness reasons.” § 742.2(b). The decision to revoke may be appealed to NCUA's Supervisory Review Committee, 1 and thereafter to the NCUA Board. 12 CFR 742.7. In 2004, only one credit union's RegFlex authority was revoked, with no appeal.

RegFlex authority ceases when that authority is lost or revoked (even if an appeal of a revocation is pending). 12 CFR 742.6, 742.7. But past actions taken under that authority are “grandfathered,” i.e. , they will not be disturbed or undone.

RegFlex Relief. As originally adopted, the RegFlex program gave qualifying credit unions relief from a variety of regulatory restrictions, 12 CFR 742.4(a) and 742.5:

• The maximum limit on fixed assets (5 percent of shares and retained earnings), 12 CFR 701.36(c)(1).

• The maximum limit on non-member deposits (20 percent of total shares or $1.5 million, whichever is greater), 12 CFR 701.32(b).

• Conditions on making charitable contributions (relating to the charity's location, activities and purpose, and whether the contribution is in the credit union's best interest and is reasonable relative to its size and condition), 12 CFR 701.25.

• The maximum limit on investments over which discretionary control can be delegated (100 percent of credit union's net worth), 12 CFR 703.5(b)(1)(ii) and (2).

• The maximum limit on the maturity length of zero-coupon securities (10 years), 12 CFR 703.16(b).

• The mandate to “stress test” securities holdings to assess the impact of a 300-basis points shift in interest rates, 12 CFR 703.12(c) (2001).

• Restrictions on the purchase of eligible obligations, 12 CFR 701.23(b), thus expanding the range of loans RegFlex credit unions could purchase and hold as long as they are loans those credit unions would be authorized to make (auto, credit card, member business, student and mortgage loans, as well as loans of a liquidating credit union up to 5 percent of the purchasing credit union's unimpaired capital and surplus).

With the overhaul of parts 703 and 723 in 2003, 2 RegFlex credit unions received further relief from the following restrictions on member business lending and investments:

• The mandate that principals personally guarantee and assume liability for member business loans. 12 CFR 723.7(b).

• The maturity limit on investments purchased with the proceeds of a borrowing repurchase transaction. 12 CFR 703.13(d)(3).

• The prohibition on purchasing a commercial mortgage related security that is not permitted by the Federal Credit Union Act, 12 U.S.C. 1757(7)(E). 12 CFR 703.16(d).

The NCUA Board is reassessing the RegFlex program to ensure that it is available to credit unions that are least likely to encounter safety and soundness problems, thus minimizing the risk of loss to the Share Insurance Fund. Experience indicates that such credit unions consistently maintain a high net worth ratio and a high CAMEL rating. Accordingly, the proposed rule modifies the RegFlex eligibility criteria to fully reflect sustained superior performance as measured by net worth and CAMEL rating.

Net worth level. To qualify for RegFlex automatically or by application, existing part 742 requires a credit union to achieve a net worth of 9 percent—200 basis points in excess of the 7 percent net currently needed to be classified “well capitalized.”  3 The proposed rule brings the net worth criterion for RegFlex into alignment with the “well capitalized” net worth category under NCUA's system of prompt corrective action (“PCA”). 12 U.S.C. 1790d(c)(1)(A). Congress determined that it is unnecessary for credit unions in that category—the highest of the five net worth categories—to undertake any PCA whatsoever. The NCUA Board believes there is no reason to set a higher net worth standard to qualify for RegFlex than Congress has set for credit unions to be free of PCA. Accordingly, the proposed rule reduces the qualifying minimum net worth classification to “well capitalized,” requiring a minimum net worth of 7 percent under existing part 702. 4 Credit unions that are subject to an RBNW requirement would qualify for RegFlex if they remained “well capitalized” after applying any RBNW requirement applicable under part 702.

Net worth duration. To qualify for RegFlex, existing part 742 requires a credit union to achieve the minimum net worth for just a single quarter. This momentary “snapshot” of net worth is too fleeting to be evidence of sustained superior performance; only successive “snapshots” of net worth would suffice to demonstrate such performance. To that end, the proposed rule requires a credit union to meet a dual standard: to be “well capitalized” and to maintain that level for six consecutive quarters. The six-quarter period coincides with the eighteen-month examination schedule that applies to most RegFlex qualifying credit unions. A credit union that is unable to maintain the minimum net worth for six consecutive quarters still would be eligible to apply to the appropriate Regional Director for a RegFlex designation provided the credit union is rated a CAMEL “2” or better.

The proposed rule strikes a balance—decreasing the minimum net worth while compensating for the relative increase in risk exposure by extending the number of quarters that the minimum net worth must be maintained to qualify for RegFlex. For example, there is no limit on the amount of fixed assets a RegFlex credit union can acquire. 12 CFR 742.4(a). Thus, a RegFlex credit union is entitled to build or purchase a new building that increases its aggregate fixed assets to an inordinate proportion of total assets. If the credit union no longer qualifies for RegFlex in the next quarter due to a decline in net worth, the “grandfather” provision in both the existing and the proposed rule would leave intact all actions formerly taken under RegFlex authority. 12 CFR 742.8. That provision would entitle the ex-RegFlex credit union to keep the building, provided that it absorbs the expenses of maintenance, debt service and depreciation, etc., potentially having a negative affect on its profitability and net worth.

Under the existing rule, the ex-RegFlex credit union would have a net worth cushion of at least 300 basis points against possible losses due to expenses of maintaining its fixed assets. 5 But under the proposed rule, the net worth cushion against such losses dwindles to zero. Credit unions that demonstrate sustained superior performance as evidenced by a qualifying net worth ratio lasting over a series of quarters, instead of just one, are better able to prepare for and manage the risks to profitability and net worth. The NCUA Board invites public comment on what is the appropriate number of quarters the minimum net worth should be required to last before a credit union qualifies for RegFlex.

Notification. Existing part 742 requires NCUA to notify a credit union on three occasions: when it first qualifies automatically for RegFlex; during an examination to confirm whether it still qualifies or has become ineligible; and after it applies to the appropriate Regional Director for a RegFlex designation. These notification requirements are redundant in the case of credit unions that qualify automatically for RegFlex. Part 742's net worth and CAMEL criteria are discrete and as apparent to credit unions themselves as to NCUA, making it unnecessary for NCUA to notify each credit union that it has qualified for RegFlex, and then to notify it again during successive examinations that it still qualifies. Accordingly, the proposed rule eliminates the requirement that NCUA notify credit unions that qualify automatically for RegFlex. But left intact is the requirement for a Regional Director to notify a credit union that has applied for RegFlex designation whether or not it has been granted.

Other modifications. The substantive modifications to part 742 are limited to reducing the level and extending the duration of the minimum qualifying net worth, and eliminating the notification requirement for credit unions that qualify automatically for RegFlex. No substantive revisions at all are proposed for the RegFlex relief (fully described in section A. above) that existing part 742 provides qualifying credit unions. 12 CFR 742.4. However, the NCUA Board invites public comment on whether RegFlex credit unions should be exempt from any additional regulations.

To make part 742 more user-friendly, the proposed rule makes several fundamental changes to the existing format. First, the proposed rule abandons the question-and-answer format in favor of organizing the rule by stated subjects. Second, in several provisions of the rule, items listed within narrative text have been broken out into numbered and subtitled lists that make individual items more accessible. E.g. , 12 CFR 742.2. Finally, in the section on RegFlex relief, instead of incorporating the affected regulations simply by reference to other sections of chapter VII, the proposed rule lists and describes the regulatory requirements and restrictions that RegFlex credit unions are exempt from, as well as the obligations they are authorized to purchase and hold. 12 CFR 742.4.

Impact on Credit Unions. Were the NCUA Board to adopt the proposed substantive modifications, December 2004 Call Report data shows that 3,919 credit unions would qualify for RegFlex automatically—a 13.36 percent increase over the number of credit unions that qualify under existing part 742. Further, the proposed modifications would make an additional 462 credit unions that do not automatically qualify eligible to apply for a RegFlex designation.

The Regulatory Flexibility Act requires NCUA to prepare an analysis describing any significant economic impact a proposed regulation may have on a substantial number of small credit unions (those having under $10 million in assets). The proposed rule reduces the level and increases the duration of the minimum net worth required to qualify for RegFlex, without imposing any additional regulatory burden. If adopted, the proposed rule will not have a significant economic impact on a substantial number of small credit unions. Thus, a Regulatory Flexibility Analysis is not required.

NCUA has determined that the proposed rule would not increase paperwork requirements under the Paperwork Reduction Act of 1995 and regulations of the Office of Management and Budget.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their regulatory actions on State and local interests. NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily adheres to the fundamental federalism principles addressed by the executive order. This proposed rule would not have would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, this proposed rule does not constitute a policy that has federalism implications for purposes of the Executive Order.

NCUA has determined that the proposed rule will not affect family well-being within the meaning of section 654 of the Treasury and General Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681 (1998).

NCUA's goal is to promulgate clear, understandable regulations that impose a minimal regulatory burden. The proposed rule seeks to improve and simplify the existing RegFlex Program. We request your comments on whether the proposed rule would be understandable and minimally intrusive if implemented as proposed.

For the reasons set forth above, 12 CFR part 742 is proposed to be revised to read as follows:

On December 17, 2004, Congress enacted the Intelligence Reform Act, Public Law 108-458, creating new, post-employment restrictions for certain federal employees who examine banks and credit unions. The law requires NCUA to prescribe its own regulation implementing this section for federal examiners of federally insured credit unions and consult to the extent it deems necessary with the federal banking agencies. NCUA staff has consulted with their interagency group so that our proposed rule is consistent and comparable with the joint notice of proposed rulemaking the federal banking agencies are issuing.

The Board is proposing post-employment restrictions for certain NCUA examiners to implement recent amendments to the Federal Credit Union (FCU) Act. Pub. L. 108-458, § 6303(c), 118 Stat. 3754 (2004); 12 U.S.C. 1786(w). The post-employment restrictions will apply to senior examiners starting December 17, 2005. For a year after leaving NCUA employment, senior examiners would be prohibited from accepting employment with a federally insured credit union if they had continuing, broad responsibility for examination of that credit union for two or more months during their last 12 months of NCUA employment.

The proposed rule implements the statutory provisions by giving NCUA the authority to issue administrative orders removing a person from a position with a federally insured credit union and barring further participation with that credit union or any federally insured credit union for up to five years. Also, the proposed rule implements the statute by imposing civil money penalties for violations of up to $250,000.

The proposed rule clarifies the NCUA employees to whom the restriction will apply. 12 U.S.C. 1786(w)(3). Congress intended the one-year post-employment prohibition to apply to examiners with a “meaningful” relationship to the credit union. 1 Consistent with that intent, the proposal defines a “senior examiner” as an NCUA employee, commissioned as an examiner, who has continuing, broad, and lead responsibility for examining a particular federally insured credit union, routinely interacts with officers or employees of the credit union, and devotes a substantial portion of his or her time to supervising or examining that credit union.

The reference to a “substantial portion of time” in the definition of senior examiner is intended to address the situation in which an NCUA employee examines or inspects a group of federally insured credit unions. The Board believes such an examiner would be a senior examiner for purposes of the proposed rule only for those credit unions to which he or she devotes substantial time. The Board believes that an examiner who divides his or her time across a portfolio of federally insured credit unions is less likely to develop a meaningful relationship with any one credit union. The determination of whether an examiner devotes a substantial portion of his or her time is necessarily case by case.

While the one-year post-employment restriction can apply by its terms to all examiners, NCUA expects very few examiners to actually qualify as senior examiners. For example, NCUA expects most examiners in charge will not be subject to the one-year prohibition. Most NCUA examiners in charge examine multiple, federally insured credit unions in a single year and typically do not develop a sustained or meaningful relationship with any one credit union. Therefore, they would not be considered senior examiners under the proposal.

Although NCUA expects very few of its employees will be subject to the restriction, NCUA anticipates these few would involve specialty examiners, such as corporate examiners or problem case officers. These specialty examiners are sometimes assigned to be dedicated to and in residence at a credit union for an extended period of time. Thus, the proposed rule includes an example that an NCUA resident corporate credit union examiner assigned to work at a federally insured, corporate credit union for two or more months during the last 12 months of that individual's employment with NCUA will be subject to the one-year prohibition.

The proposal defines the term consultant to include individuals who work directly on matters for, or on behalf of, a federally insured credit union. NCUA construes this to mean that a covered employee may not join a consulting group and accept an assignment directly for the credit union for which he or she served as senior examiner in two of the last 12 months of his or her NCUA employment. The employee, however, may join the consulting firm as long as he or she does not directly participate in a matter involving the relevant credit union. NCUA requests comment on whether the meaning of consultant is sufficiently clear and whether there are other terms NCUA should define.

The proposed rule also implements the statutory provision authorizing the NCUA Board to grant waivers if the NCUA Chairman certifies that granting the waiver would not affect the integrity of NCUA's supervisory program. NCUA anticipates waivers would involve highly unusual circumstances. The Board invites comment on any provisions of the proposed rule.

The Regulatory Flexibility Act (RFA) requires NCUA to prepare an analysis to describe any significant economic impact any proposed regulation may have on a substantial number of small entities. NCUA considers credit unions having less than ten million dollars in assets to be small for purposes of RFA. Interpretive Ruling and Policy Statement (IRPS) 87-2 as amended by IRPS 03-2. The proposal prohibits senior examiners from accepting employment with a credit union if they had continuing, broad responsibility for examination of that credit union for two or more months during their last 12 months of NCUA employment. The NCUA has determined and certifies that this proposed rule, if adopted, will not have a significant economic impact on a substantial number of small credit unions. Accordingly, the NCUA has determined that an RFA analysis is not required. NCUA solicits comment on this analysis and welcomes any information that would suggest a different conclusion.

In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA), NCUA may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The Board has determined that the proposed rule does not contain any information collections and, therefore, no PRA number is required.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. It will not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined that this proposal does not constitute a policy that has federalism implications for purposes of the executive order.

The NCUA has determined that this proposed rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681 (1998).

NCUA's goal is to promulgate clear and understandable regulations that impose minimal regulatory burden. NCUA requests comments on whether the proposed rule is understandable and minimally intrusive if implemented as proposed.

Accordingly, NCUA proposes to add a new 12 CFR part 796 as follows:

We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Include the docket number “FAA-2005-21975; Directorate Identifier 2005-NM-122-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments.

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

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

The FAA has examined the underlying safety issues involved in recent fuel tank explosions on several large transport airplanes, including the adequacy of existing regulations, the service history of airplanes subject to those regulations, and existing maintenance practices for fuel tank systems. As a result of those findings, we issued a regulation titled “Transport Airplane Fuel Tank System Design Review, Flammability Reduction and Maintenance and Inspection Requirements” (67 FR 23086, May 7, 2001). In addition to new airworthiness standards for transport airplanes and new maintenance requirements, this rule included Special Federal Aviation Regulation No. 88 (“SFAR 88,” Amendment 21-78, and subsequent Amendments 21-82 and 21-83).

Among other actions, SFAR 88 requires certain type design ( i.e. , type certificate (TC) and supplemental type certificate (STC)) holders to substantiate that their fuel tank systems can prevent ignition sources in the fuel tanks. This requirement applies to type design holders for large turbine-powered transport airplanes and for subsequent modifications to those airplanes. It requires them to perform design reviews and to develop design changes and maintenance procedures if their designs do not meet the new fuel tank safety standards. As explained in the preamble to the rule, we intended to adopt airworthiness directives to mandate any changes found necessary to address unsafe conditions identified as a result of these reviews.

In evaluating these design reviews, we have established four criteria intended to define the unsafe conditions associated with fuel tank systems that require corrective actions. The percentage of operating time during which fuel tanks are exposed to flammable conditions is one of these criteria. The other three criteria address the failure types under evaluation: Single failures, single failures in combination with another latent condition(s), and in-service failure experience. For all four criteria, the evaluations included consideration of previous actions taken that may mitigate the need for further action.

Based on this process, we have determined that the actions identified in this AD are necessary to reduce the potential of ignition sources inside fuel tanks, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane.

The airplane manufacturer has also determined that, if a tripped circuit breaker for a fuel pump is reset, an ignition source may be created in the fuel tank. The tripping of a circuit breaker indicates an electrical fault. Resetting the circuit breaker may result in the electrical fault overriding the protective features of the circuit breaker, which could result in sparks inside the fuel tank, an ignition source for fuel vapors, and consequent fire or explosion.

We have evaluated all pertinent information and identified an unsafe condition that is likely to exist or develop on other airplanes of this same type design. For this reason, we are proposing this AD, which would prohibit the resetting of a tripped circuit breaker for a fuel pump, which could allow an electrical fault to override the protective features of the circuit breaker, and could result in sparks inside the fuel tank, ignition of fuel vapors, and consequent fire or explosion.

There are about 600 airplanes of the affected design in the worldwide fleet. This proposed AD would affect about 300 airplanes of U.S. registry. The proposed actions would take about 1 work hour per airplane, at an average labor rate of $65 per work hour. Based on these figures, the estimated cost of the proposed AD for U.S. operators is $19,500, or $65 per airplane.

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

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

We have determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

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

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

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

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

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

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

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

Communications should identify both docket numbers and be submitted in triplicate to the Docket Management System (see ADDRESSES section for address and phone number). You may also submit comments through the Internet at http://dms.dot.gov.

Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Nos. FAA-2003-15471 and Airspace Docket No. 03-AWA-6.” The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://dms.dot.gov. Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov or the Federal Register's Web page at http://www.gpoaccess.gov/fr/index.html.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. An informal docket may also be examined during normal business hours at the office of the Regional Air Traffic Division, Federal Aviation Administration, 2300 East Devon Avenue, Des Plaines, IL 60018.

Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's, Office of Rulemaking, (202) 267-9677, for a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

On November 24, 2003, the FAA published an NPRM in the Federal Register to modify the Minneapolis Class B airspace area (68 FR 65859). The FAA proposed this modification to address an increase in aircraft operations and accommodate aircraft operations to the new runway (Runway 17/35) at MSP.

In response to the NPRM, the Air Line Pilots Association, International and the National Business Aviation Association, Inc. commented that the “southeast cut-out” of the proposed Area E would result in aircraft not being contained in the Class B airspace when operating on the extended final approach course to Runway 35. They suggested reducing the size of the “southeast cut-out” by changing the western boundary of the cut-out from the Gopher 170° radial to the Gopher 160° radial.

The FAA's review of this comment confirmed that the suggested change is needed and also revealed that the floor of the Class B airspace in that area should be lowered from 7,000 feet MSL to 6,000 feet MSL to contain instrument operations to the new Runway 35 within the Class B airspace area. This SNPRM proposes a new area F that would provide the additional area required. Comments already received, other than described above, and comments to this SNPRM will be addressed in the final rule.

The ad hoc committee, sponsored by the Minnesota Department of Transportation, Office of Aeronautics, and comprised of representatives from AOPA, EAA, Minnesota Soaring Clubs, International Aerobatics, Ultralight Association, Air National Guard, Life Flight, flight instructors, and skydivers, has reviewed and concurred with the changes proposed herein.

The FAA is proposing an amendment to Title 14 Code of the Federal Regulations (14 CFR) part 71 to modify the MSP Class B airspace area. Specifically, this action (depicted on the attached chart) proposes to expand the upper limits of Area A, Area B, Area C, and Area D from 8,000 feet MSL to and including 10,000 feet MSL; expand the lateral limits of Area D to the northwest and southeast of MSP; and add an Area E and an Area F within 30 NM of the Minneapolis-St. Paul International (Wold-Chamberlain) Airport DME Antenna (I-MSP DME) excluding certain areas to the north and southeast of MSP to improve the containment of turbo-jet aircraft operations within the MSP Class B airspace area.

The following are the proposed revisions for the Minneapolis Class B airspace area:

Area A. The FAA proposes to expand the upper limit of Area A from 8,000 feet MSL to 10,000 feet MSL. The reason for this change is to provide additional airspace needed to ensure that aircraft departing and arriving MSP are contained within the MSP Class B airspace area.

Area B. The FAA proposes to expand the upper limit of Area B from 8,000 feet MSL to 10,000 feet MSL. The reason for this change is to provide additional airspace needed to ensure that aircraft departing and arriving MSP are contained within the MSP Class B airspace area.

Area C. The FAA proposes to expand the upper limit of Area C from 8,000 feet MSL to 10,000 feet MSL. The reason for this change is to provide additional airspace needed to ensure that aircraft departing and arriving MSP are contained within the MSP Class B airspace area.

Area D. The FAA proposes to modify Area D by expanding the upper limit of Area D from 8,000 feet MSL to 10,000 feet MSL and by expanding the boundaries of Area D to the northwest and southeast of MSP, incorporating airspace that lies on the extended ILS localizer course and downwind legs for Runways 12L/30R and 30L/12R, between the I-MSP DME 20-NM and 30-NM arcs. The reason for this change is to provide additional airspace needed to ensure that aircraft vectored for the ILS approaches to the above runways remain within the MSP Class B airspace area.

Area E. The FAA is proposing to add an Area E between the I-MSP DME 20-NM and 30-NM arcs, extending from 7,000 feet MSL to and including 10,000 feet MSL, excluding certain areas to the north and southeast of MSP. The reason for this change is to provide additional airspace needed to ensure that aircraft departing and arriving MSP are contained within the MSP Class B airspace area.

Area F. The FAA is proposing to add an Area F between the I-MSP DME 20-NM and 30-NM arcs from the Gopher 160° radial clockwise to the Gopher 170° radial, extending from 6,000 feet MSL to and including 10,000 feet MSL. The reason for this change is to provide additional airspace needed to ensure that aircraft departing and arriving MSP are contained within the MSP Class B airspace area.

These modifications would improve the management of aircraft operations in the MSP terminal area and enhance safety by expanding the dimensions of the Class B airspace area to protect the aircraft conducting instrument approaches to MSP. Additionally, this proposed action supports various efforts to enhance the efficiency and capacity of the National Airspace System.

The coordinates for this airspace docket are based on North American Datum 83. Class B airspace areas are published in paragraph 3000 of FAA Order 7400.9M, Airspace Designations and Reporting Points, dated August 30, 2004, and effective September 16, 2004, which is incorporated by reference in 14 CFR 71.1. The Class B airspace area listed in this document would be published subsequently in the Order.

Changes to Federal regulations must undergo several economic analyses. First, Executive Order 12866 directs that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act requires agencies to analyze the economic effect of regulatory changes on small businesses and other small entities. Third, the Office of Management and Budget directs agencies to assess the effect of regulatory changes on international trade. In conducting these analyses, the FAA has determined that this proposed rule: (1) Would generate benefits that justify its circumnavigation costs and is not a “significant regulatory action” as defined in the Executive Order; (2) is not significant as defined in the Department of Transportation's Regulatory Policies and Procedures; (3) would not have a significant impact on a substantial number of small entities; (4) would not constitute a barrier to international trade; and (5) would not contain any Federal intergovernmental or private sector mandate. These analyses are summarized here in the preamble, and the full Regulatory Evaluation is in the docket.

The NPRM would modify the Minneapolis-St. Paul, MN, Class B airspace area. The proposed rule would reconfigure the sub-area lateral boundaries, and raise the altitude ceiling in certain segments of the airspace.

The NPRM would generate benefits for system users and the FAA in the form of enhanced operational efficiency and simplified navigation in the MSP terminal area. These modifications would impose some circumnavigation costs on operators of non-compliant aircraft operating in the area around MSP. However, the cost of circumnavigation is considered to be small. Thus, the FAA has determined that the overall benefits generated by this proposed rule would be cost-beneficial.

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

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

However, if an agency determines that a proposed or final rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the 1980 Act provides that the head of the agency may so certify and an RFA is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear.

This proposed rule may impose some circumnavigation costs on individuals operating in the Minneapolis-St. Paul terminal area; but the proposed rule would not impose any costs on small business entities. Operators of general aviation aircraft are considered individuals, not small business entities and are not included when performing a regulatory flexibility analysis. Flight schools are considered small business entities. However, the FAA assumes that they provide instruction in aircraft equipped to navigate in Class B airspace given they currently provide instruction in the Minneapolis-St. Paul terminal area. Air taxis are also considered small business entities, but are assumed to be properly equipped to navigate Class B airspace because it is part of their current practice. Therefore, these small entities should not incur any additional costs as a result of the proposed rule. Accordingly, pursuant to the Regulatory Flexibility Act, 5 U.S.C. 605(b), the Federal Aviation Administration certifies this rule would not have a significant economic impact on a substantial number of small entities. The FAA solicits comments from affected entities with respect to this finding and determination.

The Trade Agreement Act of 1979 prohibits Federal agencies from engaging in any standards or related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety, are not considered unnecessary obstacles. The statute also requires consideration of international standards and where appropriate, that they be the basis for U.S. standards.

The proposed rule is not expected to affect trade opportunities for U.S. firms doing business overseas or for foreign firms doing business in the United States.

Title II of the Unfunded Mandates Reform Act of 1995 (the Act), enacted as Public Law 0104-4 on March 22, 1995, requires each Federal agency, to the extent permitted by law, to prepare a written assessment of the effects of any Federal mandate in a proposed or final agency rule that may result in the expenditure of $100 million or more (when adjusted annually for inflation) in any one year by State, local, and tribal governments in the aggregate, or by the private sector. Section 204(a) of the Act, 2 U.S.C. 1534(a), requires the Federal agency to develop an effective process to permit timely input by elected officers (or their designees) of State, local, and tribal governments on a proposed “significant intergovernmental mandate.” A “significant intergovernmental mandate” under the Act is any provision in a Federal agency regulation that would impose an enforceable duty upon State, local, and tribal governments in the aggregate of $100 million (adjusted annually for inflation) in any one year. Section 203 of the Act, 2 U.S.C. 1533, which supplements section 204(a), provides that, before establishing any regulatory requirements that might significantly or uniquely affect small governments, the agency shall have developed a plan, which, among other things, must provide for notice to potentially affected small governments, if any, and for a meaningful and timely opportunity for these small governments to provide input in the development of regulatory proposals.

This proposed rule does not contain any Federal intergovernmental or private sector mandates. Therefore, the requirements of Title II of the Unfunded Mandates Reform Act of 1995 do not apply.

In accordance with the Paperwork Reduction Act of 1980 (Pub. L. 96-511), there are no requirements for information collection associated with this proposed rule.

In view of the minimal or zero cost of compliance of the proposed rule and the enhancements to operational efficiency that do not reduce aviation safety, the FAA has determined that the proposed rule would be cost-beneficial.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

As part of its continuing efforts to provide better service to carriers, importers, and the general public, the Department of Homeland Security (DHS), Bureau of Customs and Border Protection (CBP) is proposing to amend 19 CFR 101.3(b)(1) by establishing a new port-of-entry at Tri-Cities Regional Airport and the area which it services in the states of Tennessee and Virginia. The new port-of-entry would include the same geographical boundaries of the current CBP User Fee Port No. 2082, which encompasses Sullivan County, Tennessee; Washington County, Tennessee; and Washington County, Virginia. The boundaries would include Tri-Cities Regional Airport, located in Blountville, Tennessee, which currently operates and is listed as a user-fee airport at 19 CFR 122.15(b). This proposed change of status for Tri-Cities Regional Airport from a user-fee airport to inclusion within the boundaries of a port-of-entry would subject the airport to the passenger processing fee provided for at 19 U.S.C. 58c(a)(5)(B).

The criteria considered by CBP in determining whether to establish a port-of-entry are found in Treasury Decision (T.D.) 82-37 (Revision of Customs Criteria for Establishing Ports of Entry and Stations, 47 FR 10137), as revised by T.D. 86-14 (51 FR 4559) and T.D. 87-65 (52 FR 16328). Under these criteria, CBP will evaluate whether there is a sufficient volume of import business (actual or potential) to justify the expense of maintaining a new office or expanding service at an existing location. Specifically, CBP will consider whether the proposed port-of-entry location can:

(1) Demonstrate that the benefits to be derived justify the Federal Government expense involved;

(2) Except in the case of land border ports, be serviced by at least two major modes of transportation (rail, air, water, or highway); and

(3) Except in the case of land border ports, have a minimum population of 300,000 within the immediate service area (approximately a 70-mile radius).

In addition, one of the following actual or potential workload criteria (minimum number of transactions per year), or an appropriate combination thereof, must be met in the area to be serviced by the proposed port-of-entry:

(1) 15,000 international air passengers;

(2) 2,500 formal consumption entries (each valued over $2,000), with the applicant location committing to optimal use of electronic data input means to permit integration with any CBP system for electronic processing of entries, with no more than half of the 2,500 entries being attributed to one private party;

(3) For land border ports, 150,000 vehicles;

(4) 2,000 scheduled international aircraft arrivals (passengers and/or crew); or

(5) 350 cargo vessel arrivals.

Finally, facilities at the proposed port of entry must include, where appropriate, wharfage and anchorage adequate for oceangoing vessels, cargo and passenger facilities, warehouse space for the secure storage of imported cargo pending final CBP inspection and release, and administrative office space, inspection areas, storage areas, and other space as necessary for regular CBP operations.

The proposal in this document to establish the Tri-Cites area as a port of entry is based on CBP's analysis of the following information:

1. Tri-Cities is serviced by three modes of transportation:

(a) Rail (The Norfolk Southern Railway and the CSX Corporation);

(b) Air (Tri-Cities Regional Airport); and

(c) Highway (three major U.S. highways: I-81; I-26; and U.S. 23).

2. The current population within a 60-mile service area of the Tri-Cities

Regional Airport is 1,905,491.

3. Regarding the five actual or potential workload criteria, 3,522 entries were filed at Tri-Cities Regional User Fee Airport in 2003, with no more than half of the entries attributable to any one private party. The airport has averaged 3,540 entries annually over the past several years with the average value of each entry being $24,620. In the past eight (8) years, Tri-Cities has experienced a growth rate of 409 percent in the number of entries filed. Approximately 251 companies (primarily importers) are currently serviced by the airport.

CBP facilities are already in place at the Tri-Cities Regional User Fee Airport. CBP believes that the establishment of this port will provide significant benefits to the local community, further enhancing the economic growth that is already being experienced in this area, by providing enhanced business competitiveness for existing enterprises and enabling the retention and expansion of the number of jobs in the area.

The Tri-Cities Regional Airport is committed to continue making the optimal use of electronic data transfer capability to permit integration with the CBP Automated Commercial System for processing entries. This commitment is shown in the current financial support, furnished by the Tri-Cities Airport Commission, of an interstate dedicated data line and computer upgrades. Since October 1, 2003, two companies, each with the automated capacity to interface with CBP, have occupied established offices in the Tri-Cities Airport.

The geographical limits of the proposed Tri-Cities, TN/VA, port of entry would be as follows:

The contiguous outer boundaries of Sullivan County, Tennessee; Washington County, Tennessee; and Washington County, Virginia.

If the proposed port of entry designation is adopted, the list of CBP ports of entry at 19 CFR 101.3(b)(1) will be amended to add Tri-Cities, TN/VA, as a port of entry in Tennessee, and “Tri-City Regional Airport” will be deleted from the list of user-fee airports at 19 CFR 122.15(b). Note that the regulations currently refer to the airport as “Tri-City” rather than the correct “Tri-Cities.”

Before adopting this proposal, consideration will be given to any written comments that are timely submitted to CBP. All such comments received from the public pursuant to this notice of proposed rulemaking will be available for public inspection in accordance with the Freedom of Information Act (5 U.S.C. 552) and 19 CFR 103.11(b), during regular business days between the hours of 9 a.m. and 4:30 p.m. at the Regulations Branch, Office of Regulations and Rulings, Customs and Border Protection, Department of Homeland Security, 799 9th Street, NW., Washington, DC. Arrangements to inspect submitted comments should be made in advance by calling Mr. Joseph Clark at (202) 572-8768. Comments may also be accessed on the EPA Partner EDOCKET Web site or Federal eRulemaking Portal. For additional information on accessing comments via the EPA Partner EDOCKET Web Site or Federal eRulemaking Portal, see the ADDRESSES section of this document.

This change is proposed under the authority of 5 U.S.C. 301 and 19 U.S.C. 2, 66, and 1624.

With DHS approval, CBP establishes, expands and consolidates CBP ports of entry throughout the United States to accommodate the volume of CBP-related activity in various parts of the country. The Office of Management and Budget has determined that this regulatory action is not significant within the meaning of Executive Order 12866. This proposed rule also will not have a significant economic impact on a substantial number of small entities. Accordingly, it is certified that this document is not subject to the additional requirements of the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ).

The signing authority for this document falls under 19 CFR 0.2(a) because the establishment of a new port-of-entry and the termination of the user-fee status of an airport are not within the bounds of those regulations for which the Secretary of the Treasury has retained sole authority. Accordingly, this notice of proposed rulemaking may be signed by the Secretary of Homeland Security (or his or her delegate).

In accordance with the provisions of the Controlled Substances Act (21 U.S.C. 811(a)), this action is a formal rulemaking “on the record after opportunity for a hearing.” Such proceedings are conducted pursuant to the provisions of the Administrative Procedure Act (5 U.S.C. 556 and 557). Interested persons are invited to submit their comments, objections or requests for a hearing with regard to this proposal. Requests for a hearing should be filed in accordance with 21 CFR 1308.44 and should state, with particularity, the issues concerning which the person desires to be heard. All correspondence regarding this matter should be submitted to the Drug Enforcement Administration using the address information provided above.

Embutramide is a central nervous system depressant drug. On May 20, 2005, the Food and Drug Administration (FDA) approved a New Animal Drug Application (NADA) that provides for veterinary prescription use of Tributame TM Euthanasia Solution containing embutramide, chloroquine phosphate, and lidocaine by intravenous injection for euthanasia of dogs (70 FR 36336). Embutramide as one of the ingredients in the veterinary euthanasia drug product, T-61, was previously marketed in the United States. T-61 was withdrawn from the market in 1991.

Embutramide is a derivative of gamma-hydroxybutyric acid (GHB). Its chemical name is N-[2-(m-methoxyphenyl)-2-ethyl-butyl]- gamma -hydroxybutyramide (CAS number 15687-14-6). Embutramide shares pharmacological similarities with other central nervous system (CNS) depressants such as barbiturates, GHB and ketamine. It produces a reversible stupor-like state (narcosis) in experimental animals.

The effects of embutramide on locomotor activity, rearing, forelimb grip strength, hind-limb splay, and the performance of inverted screen tests on rodents were similar to those of pentobarbital. Embutramide produces complete substitution for the pentobarbital discriminative stimulus in mice. Methohexital-trained rhesus monkeys self-administer embutramide.

The pharmacological data suggest that the abuse potential of embutramide may be similar to that of CNS depressants such as barbiturates and their products (Schedules II through IV) and GHB and its product (Schedules I and III) that are controlled under the CSA. Case reports of suicides, attempted suicides, and accidental exposures involving embutramide containing products have been published in the scientific literature. Embutramide is not currently marketed in the United States. From 1998 to 2004, there were no law enforcement encounters of embutramide including seizures or cases.

On January 26, 2005, the Acting Assistant Secretary for Health, DHHS, sent the Deputy Administrator of DEA a scientific and medical evaluation and a letter recommending that embutramide be placed into Schedule III of the CSA. Enclosed with the January 26, 2005, letter was a document prepared by the FDA entitled, “Basis for the Recommendation to Control Embutramide in Schedule III of the Controlled Substances Act (CSA).” The document contained a review of the factors which the CSA requires the Secretary to consider (21 U.S.C. 811(b)).

The factors considered by the Acting Assistant Secretary of Health and DEA with respect to embutramide were:

(1) Its actual or relative potential for abuse;

(2) Scientific evidence of its pharmacological effects;

(3) The state of current scientific knowledge regarding the drug;

(4) Its history and current pattern of abuse;

(5) The scope, duration, and significance of abuse;

(6) What, if any, risk there is to the public health;

(7) Its psychic or physiological dependence liability; and

(8) Whether the substance is an immediate precursor of a substance already controlled under this subchapter. (21 U.S.C. 811(c))

Based on the recommendation of the Acting Assistant Secretary for Health, received in accordance with section 201(b) of the Act (21 U.S.C. 811(b)), and the independent review of the available data by DEA, the Deputy Administrator of DEA, pursuant to sections 201(a) and 201(b) of the Act (21 U.S.C. 811(a) and 811(b)), finds that:

(1) Based on information now available, embutramide has a low potential for abuse relative to the drugs or other substances in Schedules I and II;

(2) Embutramide has a currently accepted medical use in treatment in the United States; and

(3) Abuse of embutramide may lead to moderate or low physical dependence or high psychological dependence.

Based on these findings, the Deputy Administrator of DEA concludes that embutramide warrants control in Schedule III of the CSA.

Interested persons are invited to submit their comments, objections or requests for a hearing with regard to this proposal. Requests for a hearing should state, with particularity, the issues concerning which the person desires to be heard. All correspondence regarding this matter should be submitted to the Deputy Administrator, Drug Enforcement Administration, Washington, DC 20537, Attention: DEA Federal Register Representative/ODL. In the event that comments, objections, or requests for a hearing raise one or more issues which the Deputy Administrator finds warrant a hearing, the Deputy Administrator shall order a public hearing by notice in the Federal Register , summarizing the issues to be heard and setting the time for the hearing.

If this rule is finalized as proposed, embutramide would be subject to Controlled Substances Act and Controlled Substances Import and Export Act regulatory controls and administrative, civil and criminal sanctions applicable to the manufacture, distribution, dispensing, importing and exporting of a Schedule III controlled substance, including the following:

Registration. Any person who manufactures, distributes, dispenses, imports, exports, engages in research or conducts instructional activities with embutramide, or who desires to manufacture, distribute, dispense, import, export, engage in instructional activities or conduct research with embutramide, would need to be registered to conduct such activities in accordance with Part 1301 of Title 21 of the Code of Federal Regulations.

Security. Embutramide would be subject to Schedule III-V security requirements and must be manufactured, distributed and stored in accordance with §§ 1301.71, 1301.72(b), (c), and (d), 1301.73, 1301.74, 1301.75(b) and (c), 1301.76, and 1301.77 of Title 21 of the Code of Federal Regulations.

Labeling and Packaging. All labels and labeling for commercial containers of embutramide which are distributed after finalization of this rule would need to comply with requirements of §§ 1302.03-1302.07 of Title 21 of the Code of Federal Regulations.

Inventory. Every registrant required to keep records and who possesses any quantity of embutramide would be required to keep an inventory of all stocks of embutramide on hand pursuant to §§ 1304.03, 1304.04 and 1304.11 of Title 21 of the Code of Federal Regulations. Every registrant who desires registration in Schedule III for embutramide would be required to conduct an inventory of all stocks of the substance on hand at the time of registration.

Records. All registrants would be required to keep records pursuant to §§ 1304.03, 1304.04, 1304.21, 1304.22, and 1304.23 of Title 21 of the Code of Federal Regulations.

Prescriptions. All prescriptions for embutramide or prescriptions for products containing embutramide would be required to be issued pursuant to 21 CFR 1306.03-1306.06 and 1306.21-1306.27. All prescriptions for embutramide or products containing embutramide issued after publication of the Final Rule, if authorized for refilling, would be limited to five refills.

Importation and Exportation. All importation and exportation of embutramide would need to be in compliance with part 1312 of Title 21 of the Code of Federal Regulations.

Criminal Liability. Any activity with embutramide not authorized by, or in violation of, the Controlled Substances Act or the Controlled Substances Import and Export Act occurring on or after finalization of this proposed rule would be unlawful.

In accordance with the provisions of the CSA (21 U.S.C. 811(a)), this action is a formal rulemaking “on the record after opportunity for a hearing.” Such proceedings are conducted pursuant to the provisions of 5 U.S.C. 556 and 557 and, as such, are exempt from review by the Office of Management and Budget pursuant to Executive Order 12866, section 3(d)(1).

The Deputy Administrator, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this proposed rule and by approving it certifies that it will not have a significant economic impact on a substantial number of small entities. Embutramide products will be prescription drugs used for the euthanasia of animals. Handlers of embutramide also handle other controlled substances used to euthanize animals which are already subject to the regulatory requirements of the CSA.

This regulation meets the applicable standards set forth in Sections 3(a) and 3(b)(2) of Executive Order 12988 Civil Justice Reform.

This rulemaking does not preempt or modify any provision of state law; nor does it impose enforcement responsibilities on any state; nor does it diminish the power of any state to enforce its own laws. Accordingly, this rulemaking does not have federalism implications warranting the application of Executive Order 13132.

This rule will not result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $115,000,000 or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under provisions of the Unfunded Mandates Reform Act of 1995.

This rule is not a major rule as defined by section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. This rule will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices: or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.

Under the authority vested in the Attorney General by section 201(a) of the CSA (21 U.S.C. 811(a)), and delegated to the Administrator of DEA by Department of Justice regulations (28 CFR 0.100), and redelegated to the Deputy Administrator pursuant to 28 CFR 0.104, the Deputy Administrator hereby proposes that 21 CFR part 1308 be amended as follows:

Under existing regulations, all cooperatives to which subchapter T applies (Subchapter T cooperatives) are required to make income tax returns. Except in the case of farmers' cooperatives, the regulations require that the return be made on Form 1120. In the case of farmers' cooperatives, the regulations require that the return be made on Form 990-C.

Most taxpayers required to make an income tax return on Form 1120 must file their return on or before the 15th day of the third month following the close of the taxpayer's taxable year (2 1/2 month deadline). Some Subchapter T cooperatives that make their returns on Form 1120 are required to file by the 2 1/2 month deadline, but others are not required to file their returns until the 15th day of the ninth month following the close of the taxpayer's taxable year (8 1/2 month deadline). Because the Form 1120 does not distinguish between Subchapter T cooperatives that must file by the 2 1/2 month deadline and those that must file by the 8 1/2 month deadline, the IRS has difficulty determining which filing deadline applies and deciding whether to assert delinquency and failure to pay penalties in the case of returns filed after the 2 1/2 month deadline.

The proposed regulations provide that all Subchapter T cooperatives must make their income tax returns on Form 1120-C, “U.S. Income Tax Return for Cooperative Associations,” or such other form as may be designated by the Commissioner. The information that Subchapter T cooperatives will be required to provide on new Form 1120-C will assist taxpayers and the IRS in determining the appropriate filing deadline. Having that information will reduce the burden on taxpayers and will help the IRS avoid asserting penalties in inappropriate cases. Having all Subchapter T cooperatives make their income tax returns on Form 1120-C will also eliminate confusion over which form to file and will promote efficiency in addressing income tax issues common to Subchapter T cooperatives.

The following publication is obsolete as of [ DATE THIS DOCUMENT IS PUBLISHED AS A FINAL RULE IN FEDERAL REGISTER ].

Announcement 84-26 (1984-11 I.R.B. 42).

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because these regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

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

The principal author of these regulations is Donnell M. Rini-Swyers, Office of Assistant Chief Counsel (Procedure & Administration).

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

We encourage you to participate in this rulemaking by submitting comments or related material. If you do so, please include your name and address, identify the docket number for this rulemaking (CGD01-05-061), indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know if they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this proposed rule in view of them.

We do not now plan to hold a public meeting. But you may submit a request for a meeting by writing to the First Coast Guard District, Bridge Branch, at the address under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

The Amtrak Portal Bridge has a vertical clearance of 23 feet at mean high water and 28 feet at mean low water in the closed position. The existing operating regulations are listed at 33 CFR 117.723(c).

The owner of the bridge, National Railroad Passenger Corporation (AMTRAK), requested a change to the drawbridge operation regulations that would expand the two time periods in the morning and afternoon, Monday through Friday, when the bridge may remain closed to vessel traffic.

Rail traffic during the morning and afternoon commuter periods has increased. Bridge openings during the two commuter time periods have caused delays to rail traffic prompting the bridge owner to request the expansion of the bridge closure periods Monday through Friday.

The Coast Guard decided to conduct a test to help determine if the proposed drawbridge operation schedule changes would not cause undue delays to vessel traffic.

On February 26, 2004, the Coast Guard published a temporary 90-day deviation, with request for comment, (69 FR 8817) to test changes to the drawbridge operation regulations for the Amtrak Portal Bridge identical to those proposed in this notice of proposed rulemaking. That temporary deviation was in effect from March 1, 2004, through May 29, 2004. We received nine comment letters in response to the temporary deviation and request for comment. All the comment letters were in favor of making the tested drawbridge operation schedule a permanent rule change.

On November 23, 2004, we published a second 90-day deviation (69 FR 68079) to test the same drawbridge operation schedule as above during the winter months of the year. The second test deviation was in effect from December 13, 2004 through March 12, 2005. We received eight comment letters in response to our second test deviation. All eight letters were in favor of the proposed rule change.

The existing drawbridge operation regulations allow the bridge to remain closed to vessel traffic, Monday through Friday, from 7:20 a.m. to 9:20 a.m. and from 4:30 p.m. to 6:50 p.m., daily. Under this proposed rule the Amtrak Portal Bridge would not open for vessel traffic, Monday through Friday, from 6 a.m. to 10 a.m. and from 4 p.m. to 8 p.m., daily. Additional bridge openings would be provided for commercial vessels from 6 a.m. to 7:20 a.m., from 9:20 a.m. to 10 a.m., from 4 p.m. to 4:30 p.m. and from 6:50 p.m. to 8 p.m., if at least a one-hour advance notice is given by calling the number posted at the bridge.

This proposed rule would amend 33 CFR 117.723 by revising paragraph (c), which details the Amtrak Portal Bridge operation schedule. Under this proposed rule the Amtrak Portal Bridge may remain closed for vessel traffic, Monday through Friday, from 6 a.m. to 10 a.m. and from 4 p.m. to 8 p.m.

Additional bridge openings would be provided for commercial vessels from 6 a.m. to 7:20 a.m., 9:20 a.m. to 10 a.m., 4 p.m. to 4:30 p.m. and from 6:50 p.m. to 8 p.m., provided at least a one-hour advance notice is given by calling the number posted at the bridge.

This proposed rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security.

We expect the economic impact of this proposed rule to be so minimal that a full Regulatory Evaluation, under the regulatory policies and procedures of DHS, is unnecessary.

This conclusion is based on the fact that the expansion of the existing bridge closures were previously tested successfully with no objections from the marine facilities or operators that use this waterway.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under section 5 U.S.C. 605(b), that this proposed rule would not have a significant economic impact on a substantial number of small entities.

This conclusion is based on the fact that the expansion of the existing bridge closures were previously tested successfully with no objections from the marine facilities or operators that use this waterway.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact us in writing at, Commander (obr), First Coast Guard District, Bridge Branch, 408 Atlantic Avenue, Boston, MA 02110-3350. The telephone number is (617) 223-8364. The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this proposed rule under that Order and have determined that it does not have implications for federalism.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

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

This proposed rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this proposed rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that may disproportionately affect children.

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would 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.

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g. , specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This proposed rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this proposed rule under Commandant Instruction M16475.1D, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (32)(e), of the Instruction, from further environment documentation because it has been determined that the promulgation of operating regulations or procedures for drawbridges are categorically excluded.

For the reasons set out in the preamble, the Coast Guard proposes to amend 33 CFR part 117 as follows:

We encourage you to participate in this rulemaking by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this rulemaking (CGD01-05-027), indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this proposed rule in view of them.

We do not now plan to hold a public meeting. But you may submit a request for a meeting by writing to the Waterways Management Division at the address under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

The Coast Guard received the annual application to hold the New York Super Boat Race on the waters of the Hudson River. With this application, the event sponsor requested that the event be permitted to take place on Saturday, September 10, 2005, rather than the usual Sunday following Labor Day, which falls on September 11, 2005. The temporary deviation from the permanent regulation was requested to avoid interfering with the events scheduled in the area associated with the observance of 9-11.

This rule would change the effective date for the safety zone established in 33 CFR 165.162 for the New York Super Boat Race for the current year only, and no other substantive regulatory changes are proposed. The proposed safety zone would be in effect from 10 a.m. until 4 p.m. on Saturday, September 10, 2005, and is needed to protect the waterway users from the hazards associated with high-speed powerboats racing in confined waters.

This proposed rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS).

The Coast Guard expects the economic impact of this proposed rule to be so minimal that a full Regulatory evaluation under paragraph 10e of the regulatory policies and procedures of DHS is unnecessary. Although this regulation prevents traffic from transiting a portion of the Lower Hudson River during the race, the effect of this regulation will not be significant for several reasons: It is an annual event with local support, the volume of commercial vessel traffic transiting the Lower Hudson River on a Saturday is similar to that on a Sunday and less than half of the normal weekday traffic volume; pleasure craft desiring to view the event will be directed to designated spectator viewing areas outside the safety zone; pleasure craft can take an alternate route through the East River and the Harlem River; the duration of the event is limited to six hours; extensive advisories will be made to the affected maritime community by Local Notice to Mariners, Safety Voice Broadcast, and facsimile notification. Additionally, commercial ferry traffic will be authorized to transit around the perimeter of the safety zone for their scheduled operations at the direction of the Patrol Commander.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities. This proposed rule would affect the following entities, some of which might be small entities: the owners or operators of vessels intending to transit or anchor in a portion of the Hudson River from 10 a.m. to 4 p.m. on September 10, 2005. This rule would not have a significant economic impact on a substantial number of small entities for the reasons stated in the Regulatory Evaluation section above.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment ( see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact Commander B. Willis, Waterways Management Division, Coast Guard Sector New York at (718) 354-4220. The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this proposed rule under that Order and have determined that it does not have implications for federalism.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

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

This proposed rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this proposed rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children.

This proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would 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.

We have analyzed this proposed rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g. , specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This proposed rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this proposed rule under Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a preliminary determination that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, we believe that this rule should be categorically excluded, under figure 2-1, paragraph (34)(g) of the Instruction, from further environmental documentation. This rule fits the category selected from paragraph (34)(g), as it would modify the effective period of an existing safety zone regulation.

A preliminary “Environmental Analysis Check List” is available in the docket where indicated under ADDRESSES. Comments on this section will be considered before we make the final decision on whether the rule should be categorically excluded from further environmental review.

For the reasons discussed in the preamble, the Coast Guard proposes to temporarily amend 33 CFR part 165 as follows:

On May 31, 2005, the State of Maryland submitted a formal revision to its State Implementation Plan (SIP). The SIP revision consists of a Consent Order establishing VOC RACT for Perdue Farms, Incorporated (Perdue) located at 6906 Zion Church Road, Wicomico County, Maryland.

Perdue operates a soybean oil extraction process that involves heating soybeans, pressing them into thin flakes, and extracting oil by rinsing the flakes with a hexane based solvent. The solvent is then evaporated from the solvent/oil mixture and the flakes, is condensed and reused. Hexane is a VOC and is discharged from the process in excess of the major source threshold.

Perdue has identified and implemented the following VOC RACT measures in order to reduce hexane emissions discharged from the process:

1. Installed and operates an automatic VOC leak monitoring system at Perdue. This system was installed and is operated in accordance with the manufacturer's specifications with appropriate set points to provide warning of leaks from the process;

2. Operates a mineral oil absorption system on the final VOC exhaust vent in accordance with the manufacturer's recommendations using groundwater as the cooling source that does not exceed 60 degrees F;

3. Installed screened sections in the desolventizing toaster to better provide product/steam contact to improve hexane recovery;

4. Installed a 10-inch diameter vapor line from the extractor to the distillation system to improve vacuum control in the extraction system; and

5. In order to minimize the loss of hexane in the soybean extraction process, prepared a standard operating procedures (SOP) document for the efficient operation of the soybean extraction process and a training manual which clearly and concisely identifies the operation of the process that is used for training new and existing operators. The manual includes good operating practices that will minimize VOC emissions and maximize hexane recovery. The SOP document and the training manual will be made available to the Maryland Department of the Environment (MDE) upon request.

In addition, Perdue has agreed to limit VOC emissions from the process to 0.3 gallons per ton of soybean processed in a calendar year to comply with RACT requirements. Perdue will prepare an annual hexane emissions report demonstrating compliance with the VOC emission standards and be made available to MDE upon request. Perdue will maintain the records required by this Consent Order for at least five years.

EPA is proposing to approve a revision to the State of Maryland SIP to establish VOC RACT for Perdue Farms, Inc. located in Wicomico County, Maryland submitted on May 31, 2005. EPA is soliciting public comments on the issues discussed in this document. These comments will be considered before taking final action.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this proposed action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355 (May 22, 2001)). This action merely proposes to approve state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule proposes to approve pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This proposed rule also does not have 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), nor will it 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), because it merely proposes to approve a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This proposed rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this proposed rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct. EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1988) by examining the takings implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings' issued under the executive order. This proposed rule pertaining to a Consent Order establishing VOC RACT for Perdue Farms, Inc. located in Wicomico County, Maryland, does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Maryland's OTC NO X Budget Program (OTC Program) implemented the State's portion of a regional cap and trade program to reduce NO X emissions generated within the OTR. The regional program consisted of an agreement by member states, called a Memorandum of Understanding (MOU), which recognized that further reductions of NO X beyond reasonably available control technology (RACT, termed Phase I) would be required for power plants and other large sources in order for the states in the OTR to meet the national ambient air quality standards (NAAQS). The OTC Program (termed Phase II) was implemented by Maryland and approved as part of the State's SIP on December 15, 2000 (65 FR 78416).

While the OTC Program was being implemented by certain states in the OTC, including Maryland, EPA finalized its rulemaking under the so-called “NO X SIP Call.” A discussion of the relationship between OTC Program and the NO X SIP Call may be found in EPA's Notice of Proposed Rulemaking (NPR) for the NO X SIP Call (62 FR 60345, November 7, 1997). As discussed in the NPR, EPA recognized that the OTC Program was necessary for OTC states to make progress towards attainment of the one-hour ozone standard, and that coordination between the programs could eventually be accomplished because the timing and amount of emission reductions required by the OTC's Phase III were very close to those of NO X SIP Call, although the reductions in the NO X SIP Call were expected to be more stringent. EPA published its final rulemaking for the NO X SIP Call on October 27, 1998 (63 FR 57356), which required 22 eastern states, including Maryland, as well as the District of Columbia, to submit SIP revisions to prohibit specified amounts of NO X . As in the OTC program, the NO X SIP Call established statewide NO X budgets for each state to meet during the ozone season (May 1 through September 30). The SIP call rule also made express certain provisions for states currently operating the OTC trading programs to transition elements of their OTC programs to the NO X SIP Call trading program. See 63 FR at 57356. Maryland adopted the model NO X budget trading rule of the NO X published with the NO X SIP as COMAR 26.11.29—NO X Reduction and Trading Program and COMAR 26.11.30—Policies and Procedures Relating to Maryland's NO X Reduction and Trading Program. On January 10, 2001 (66 FR 1866), these regulations were approved as part of the Maryland SIP as fully meeting the NO X SIP Call. Trading under Maryland's OTC Program ended in 2002. Pursuant to the NO X SIP Call, in May 2003, Maryland began implementing the federally-approved NO X SIP Call trading program, which contains more stringent, i.e., lower, caps on NO X emissions than the OTC program it replaced.

On December 1, 2003, the State of Maryland submitted a formal revision to its SIP. The SIP revision repeals Maryland's OTC NO X Budget Program under COMAR 26.11.27 (Post-RACT Requirements for NO X Sources) and COMAR 26.11.28 (Policies and Procedures Relating to Maryland's NO X Budget Program).

In Maryland, the NO X SIP Call applies to electric generating units larger than 25 megawatts, as compared to an applicability of 15 megawatts under the OTC Program. There are, therefore, some small units between 15 and 25 megawatts that were subject to the OTC program, but not the NO X SIP Call trading program. All of these units are peaking units which typically operate only a few days per year and are subject to RACT-based emissions limits. The OTC program state budget was 22,881 tons of NO X , which was established using an EGU NO X emission rate of 0.20 pounds NO X per million Btu (lbs/mmBtu). In comparison, the NO X SIP Call state budget is 15,603 tons of NO X , based on a NO X emission rate of 0.15 lbs/mmBtu for EGUs and 0.17 lbs/mmBtu for large non-EGUS. Maryland's requirements under the NO X SIP Call are more stringent than the OTC program, and as noted above, supplants the requirement for Phase III under the OTC MOU  1 . Further, in accordance with CAA 110(1), repeal of the OTC program, which has been, as EPA intended, replaced with the more stringently capped NO X SIP Call trading program, will not interfere with any applicable requirement concerning attainment or reasonable further progress or any other applicable requirement. The Metropolitan Washington, DC area attainment plan, the Philadelphia-Wilmington-Trenton area attainment plan, and the Baltimore attainment plan for one-hour ozone relied on the OTC NO X Budget program to help meet reductions required in 2002, and relies on the NO X SIP Call Program to help meet reductions required in 2005 and beyond.

Maryland's OTC Program has been superseded by its NO X Reduction and Trading Program, approved to satisfy the NO X SIP Call. Its budget under the NO X Reduction and Trading Program is lower than its budget under the OTC program, and repeal of the OTC program does not impact any attainment plan. EPA is proposing to approve Maryland's SIP revision to repeal its OTC NO X Budget Program under COMAR 26.11.27 and 26.11.28. EPA is soliciting public comments on the issues discussed in this document. These comments will be considered before taking final action.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this proposed action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355 (May 22, 2001)). This action merely proposes to approve state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule proposes to approve pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This proposed rule also does not have 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), nor will it 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), because it merely proposes to approve a state rule implementing a Federal requirement, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act.

This proposed rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this proposed rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct. EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1988) by examining the takings implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings” issued under the executive order.

This proposed rule to repeal Maryland's NO X Budget Trading Program under COMAR 29.11.27 and 29.11.28 does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplemental information section is arranged as follows:

In this action, EPA is proposing to approve into the Indiana SIP SO 2 emission limitations applicable in Lake County, Indiana. Specifically, EPA is proposing to approve amendments to rules 326 IAC 7-1.1-1, 326 IAC 7-1.1-2, 326 IAC 7-2-1, and newly created 326 IAC 7-4.1. The revised rules were adopted by the Indiana Air Pollution Control Board on March 2, 2005, and were submitted by IDEM to EPA on April 8, 2005. IDEM submitted a supplement to its submission on July 6, 2005, indicating that the revised rules became effective June 24, 2005 and were published in the Indiana Register on July 1, 2005. EPA is also proposing to approve the SO 2 redesignation request submitted by the State of Indiana to redesignate the Lake County SO 2 nonattainment area to attainment of the SO 2 NAAQS. Finally, EPA is proposing to approve the maintenance plan submitted for this area.

EPA is taking this action because the State's submittal for the Lake County SO 2 nonattainment area is fully approvable. The revised rules amend SO 2 requirements for many sources in the nonattainment area, and reflect a reduction of over 30,000 tons of SO 2 per year of allowable emissions compared to the emission limits in the previously approved 1989 SIP. The SIP revision provides for attainment and maintenance of the SO 2 NAAQS and satisfies the requirements of part D of the Act applicable to SO 2 nonattainment areas. Further, EPA is approving the maintenance plan and redesignating the Lake County SO 2 nonattainment area to attainment because the State has met the redesignation and maintenance plan requirements of the Act. Under the Act, EPA may redesignate nonattainment areas to attainment if sufficient data are available to warrant such changes and the area meets the criteria contained in section 107(d)(3)(E). This includes full approval of a maintenance plan for the area. The requirements for a maintenance plan are found in section 175A of the Act. A more detailed explanation of how the State's submittal meets these requirements is contained below.

Lake County is located in northwest Indiana and is surrounded by the Indiana counties of Porter, Jasper and Newton. On March 3, 1978, at 43 FR 8962, EPA designated a portion of Lake County as a primary SO 2 nonattainment area, based on monitored violations of the primary SO 2 NAAQS. The SO 2 nonattainment area of Lake County is bounded by Lake Michigan to the north, the Indiana-Illinois State line to the west, the Lake-Porter County line on the east, and on the south it is bounded by U.S. 30 from the State line to the intersection of I-65, then following I-65 to the intersection of I-94, then following I-94 to the Lake-Porter County line. EPA approved a SO 2 SIP revision for Lake County on January 19, 1989 (54 FR 2112), consisting of source specific emission limits and other requirements in Indiana's county-specific rules. There are numerous SO 2 sources in Lake County, including steel mills, an oil refinery, and other industrial processes, that have SO 2 limits established in 326 IAC 7-4-1.1. Because these limits were outdated and did not demonstrate attainment, IDEM worked with the affected sources to update their emission limits in the rule, and performed emission modeling based on these limits that demonstrates attainment of the SO 2 NAAQS in the Lake County area.

The SIP revision submitted by IDEM on April 8, 2005, and supplemented on July 6, 2005, consists of amendments to rules previously approved as part of the Lake County SO 2 SIP. In this submittal the State requested that we:

The June 21, 2005, submittal requests that we use parallel processing to redesignate the Lake County SO 2 nonattainment area to attainment of the SO 2 NAAQS and classify it as a maintenance area.

The amendments to 326 IAC 7-1.1-1, 326 IAC 7-1.1-2, and 326 IAC 7-2-1 consist of clerical corrections and updates to citations made for consistency.

Section 326 IAC 7-4-1.1 is repealed and is being replaced by 326 IAC 7-4.1 as follows:

A. 326 IAC 7-4.1-1 Lake County SO 2 emission limitations. This section restricts all new and existing fossil fuel-fired combustion sources and facilities located in Lake County to burning only natural gas unless an alternate SO 2 emission limit is provided in the rule. Facilities with fuel combustion units that have a maximum capacity of less than twenty (20) million British thermal units (MMBtu) per hour actual heat input not located at a source specifically listed in the rule, may burn distillate oil with SO 2 emissions limited to three-tenths (0.3) pound per MMBtu. The restriction to natural gas for new and existing units that are not listed in the rule is necessary for protection of the SO 2 NAAQS.

B. 326 IAC 7-4.1-2 Sampling and analysis protocol. This section requires facilities owned and/or operated by Cargill, Inc., BP Products North America Inc., Ispat Inland Inc., ISG Indiana Harbor Inc., Carmeuse Lime, and U.S. Steel-Gary Works to maintain a sampling and analysis protocol that specifies the frequency of sampling, analysis, and measurement for each fuel and material. This protocol will be incorporated into each facility's operating permit. The protocol may be revised as necessary to establish acceptable sampling, analysis, and measurement procedures and frequency, but the revised protocol must be submitted to IDEM for approval. The source may also be required to conduct a stack test at any facility listed in this section, subject to a thirty day written notification.

C. 326 IAC 7-4.1-3 through 326 IAC 7-4.1-21. The remaining sections of 326 IAC 7-4.1 revise the format and style from the Table in 326 IAC 7-4-1.1(c) for clarity and ease of future revision by placing facility-specific requirements into the separate sections as listed above. Since the last time the rule was amended, certain facilities are operating under new permits, variances, or other agency actions, including new or updated information or emission limits. IDEM has updated the rule to reflect the current information in these documents. The changes made in the revised rule include the following:

i. Emission limits in pounds per hour and operating and production restrictions consistent with the modeled attainment demonstration have been added for all facilities.

ii. Changes to facility names have been updated as follows: BP Products North America Inc. (formerly AMOCO), Carmeuse Lime (formerly Marblehead Lime), Cerestar USA (formerly AMAIZO), ISG Indiana Harbor Inc. (formerly LTV Steel), Ispat Inland Inc. (formerly Inland Steel), National Recovery Systems (formerly National Briquette), SCA Tissue North America LLC (formerly Georgia Pacific), Rhodia (formerly Stauffer), Unilever (formerly Lever Brothers), and U.S. Steel-Gary Works (formerly USX).

iii. Specific changes to emission limits have been made to be consistent with permitted limits or to demonstrate attainment, through modeling, with the SO 2 NAAQS. Facilities with emission limit changes include: BP Products North America Inc., Carmeuse Lime, Cerestar USA, ISG Indiana Harbor Inc., Ispat Inland Inc., Methodist Hospital, Safety Kleen Oil Recovery Company, Rhodia, and U.S. Steel-Gary Works.

iv. New facilities that were previously part of a facility listed in the Table in 326 IAC 7-4-1.1 have been added. These include: Indiana Harbor Coke Company and Cokenergy (both affiliated with Ispat Inland Inc.)

v. Closed facilities have been removed. These facilities include: C&A Wallcovering, East Chicago Incinerator, Kaiser, Lehigh Portland Cement, and U.S. Reduction.

vi. Units that burn only natural gas and facilities with only natural gas units listed are subject to the natural gas emission limit in 326 IAC 7-4.1-1 and are no longer listed individually in the rule. Facilities removed from the rule for this purpose include: ASF-Keystone (formerly American Steel-Hammond), Ferro Corporation (formerly Keil Chemical), Horace Mann School, Huhtamaki Foods (formerly Keyes Fibre), Premiere Candy, Resco Products (formerly Harbison Walker), Silgan Containers Corporation (formerly American Can Company), and U.S. Gypsum.

vii. Equipment inventories have been updated, either adding or deleting units.

viii. Source codes for each facility have been added.

ix. Other minor corrections and clarifications have been made, such as correcting unit descriptions.

The ambient impact of the SO 2 sources in Lake County was determined using the ISCST3 regulatory dispersion model (version 02035) with surface meteorological data from Hammond, Indiana from 1991 through 1995. The State ran the model with 1987 meteorological data as well, to show that the new SIP would be protective of the NAAQS using the worst-case year from the previous Lake County SO 2 SIP demonstration. The emission inventory for the Lake County attainment demonstration includes all the SO 2 emission points from the facilities subject to 326 IAC 7, and reflects an up-to-date inventory of the Lake County area's SO 2 emissions. For some facilities, the State performed separate modeling runs to evaluate alternate operating scenarios. This ensured that the facilities could be more flexible in their day-to-day operations, while still protecting the NAAQS. Representative background SO 2 concentrations were developed from monitored data at seven monitoring locations in Lake, LaPorte, and Porter Counties, and added to the final modeling results. The Lake County modeling demonstration, including background SO 2 levels, showed that the 3-hour, 24-hour, and annual SO 2 NAAQS would be protected under the current SO 2 rules.

The Part D SIP requirements for SO 2 nonattainment areas are contained in section 172(c) of the Act, and pertain to: Reasonably Available Control Measures; Reasonable Further Progress; Inventory; Identification and Quantification; Permits for New and Modified Major Stationary Sources; Other Measures; Compliance with section 110(a)(2); Equivalent Techniques; and, Contingency Measures.

With this submission, Indiana will have a fully approvable SO 2 SIP. As described below, Indiana's submitted revision to its SO 2 SIP for the Lake County nonattainment area fully complies with the Part D requirements as set forth in section 172(c) of the Act.

A. Reasonably Available Control Measures (RACM). The plan complies with the requirements to implement RACM by providing for immediate attainment of the SO 2 NAAQS through the emission limits and operating restrictions imposed on the relevant sources by the revised rules.

B. Reasonable Further Progress. Reasonable further progress is achieved due to the immediate effect of the emission limits required by the plan.

C. Inventory. An inventory of the SO 2 emissions in the Lake County nonattainment area was provided by the State and has been found to be acceptable.

D. Identification and Quantification. This information is unnecessary because the area has not been identified as a zone for which economic development should be targeted.

E. Permits for New and Modified Major Stationary Sources. Any new or modified sources constructed in the area must comply with a state submitted and federally approved New Source Review (NSR) program. The Federal requirements for NSR in nonattainment areas are contained in section 172(c)(5) of the Act. EPA guidance indicates the requirements of the part D NSR program will be replaced by the Prevention of Significant Deterioration (PSD) program when an area has reached attainment and been redesignated, provided there are assurances that PSD will become fully effective upon redesignation. Indiana's PSD program was approved into the Indiana SIP on May 20, 2004 (69 FR 29071). The PSD program will become fully effective in the Lake County area immediately upon redesignation.

F. Other Measures. The plan provides for immediate attainment of the SO 2 NAAQS through the emission limitations, operating requirements, and compliance schedules that are set forth within state rules.

G. Compliance with section 110(a)(2). This submission complies with section 110(a)(2) of the Act, which identifies the requirements that a SIP shall meet. All of the applicable provisions of section 110(a)(2) are already required by the statutory provisions discussed in this plan, or they have already been met by Indiana's original SIP submission to EPA.

H. Equivalent Techniques. The modeling for this SIP submittal was conducted using EPA's “Guideline on Air Quality Models (Revised).” No equivalent techniques were used for modeling, emission inventory, or planning procedures.

I. Contingency Measures. Section 172(c)(9) of the Act defines contingency measures as measures in a SIP which are to be implemented if an area fails to make RFP or fails to attain the NAAQS by the applicable attainment date and shall consist of other control measures that are not included in the control strategy. However, the General Preamble to the 1990 Amendments to the Act (57 FR 13498), states that SO 2 measures present special considerations because they are based upon what is necessary to attain the NAAQS. Because SO 2 control measures are well established and understood, they are far less prone to uncertainty. It is considered unlikely that an area would fail to attain the standards after it has demonstrated, through modeling, that attainment is reached after the limits and restrictions are fully implemented and enforced. Therefore, for SO 2 programs, contingency measures mean that the state agency has the ability to identify sources of violations of the SO 2 NAAQS and to undertake an aggressive follow-up for compliance and enforcement. In order to respond to NAAQS violations IDEM will: (1) Determine whether an exceedance could be classified as an exceptional event; (2) evaluate available meteorological data and conduct modeling studies to determine which SO 2 sources, if any, are the cause of the problem; and (3) review the operating records of SO 2 sources to identify equipment malfunctions or permit or rule violations. Although the point sources listed in the State's inventory will be the primary focus, the study will not be limited to only those sources but will encompass all potential sources of SO 2 . IDEM has the necessary enforcement and compliance programs, as well as the means to identify violators as described above, thus satisfying the contingency measures requirement.

Section 107(d)(3)(E) of the Act establishes the requirements to be met before an area may be redesignated from nonattainment to attainment. Approvable redesignation requests must meet the following conditions: The area has attained the applicable NAAQS; the area has a fully approved SIP under section 110(k) of the Act; the air quality improvement in the area is due to permanent and enforceable emission reductions; the maintenance plan for the area has met all the requirements of section 175A of the Act; and, the state has met all the requirements applicable to the area under section 110 and part D of the Act.

A. Demonstrated Attainment of the NAAQS. Indiana's June 21, 2005, submittal includes a table summarizing ambient air monitoring data showing no exceedances of the SO 2 NAAQS in Lake County since 1996. There are currently two monitors operating within the Lake County area, one in Gary and one in Hammond. The redesignation request is based upon air quality data collected and quality assured for the most recent three whole calendar years (2002-2004). This data indicates that the ambient air quality attains the annual and 24-hour health-based primary standards, and the 3-hour secondary standard.

Dispersion modeling is commonly used to demonstrate attainment of the SO 2 NAAQS. The State's modeling analysis was included in the April 8, 2005, submittal. The modeling demonstrates that, under all the operating scenarios allowed for in the SIP, the SO 2 emission limits for the relevant sources in Lake County are adequate to show attainment and maintenance of the SO 2 standards. A more detailed discussion of the modeling evaluation is included elsewhere in this notice.

B. Fully Approved SIP. The SIP for the area must be fully approved under section 110(k) of the Act and must satisfy all requirements that apply under section 110 and part D of the Act. To satisfy these requirements, EPA is proposing to approve the State's April 8, 2005, submittal containing Lake County SO 2 limits into the SIP, as discussed in other sections of this rulemaking. Therefore, both the SIP revision and the redesignation request for Lake County will comply with the section 110(k) and part D requirements of the Act upon final approval of these actions.

EPA approval of a transportation conformity SIP revision for the area is not required for this redesignation because the nature of the area's previous SO 2 nonattainment problem has been determined to be overwhelmingly attributable to stationary sources. The April 8, 2005, submittal contains a detailed emissions inventory of the allowable emissions for all of the major SO 2 sources in the area. Area and mobile source SO 2 emissions are insignificant in comparison to the emissions from stationary sources and estimated background concentrations used in the modeled attainment demonstration.

C. Permanent and Enforceable Reductions in Emissions. Lake County was designated nonattainment of the SO 2 NAAQS based on violations that occurred prior to 1978. Air quality improvement in the Lake County SO 2 nonattainment area is attributed to SO 2 emission limits and operating restrictions imposed on the facilities that contributed to the nonattainment status in Lake County. These limits are permanent and enforceable by means of non-expiring state regulations. Emissions from these sources were modeled with the control measures in place. The data submitted by the State shows modeled attainment of the SO 2 NAAQS in Lake County.

D. Fully Approved Maintenance Plan. EPA has concluded that the SO 2 emissions limitations contained in the plan submitted by the State will assure maintenance of the SO 2 standards. EPA is proposing to approve the maintenance plan in today's action as discussed below.

E. Part D and Other Section 110 Requirements. Section 107(d)(3)(E)(v) of the Act states that the Administrator may not redesignate an area to attainment unless the area has met the applicable requirements under section 110 and Part D. As, discussed above, the requirements under section 110 and Part D will be met upon final approval of the SIP revision submitted by the State on April 8, 2005, and supplemented on July 6, 2005.

Section 175A of the Act requires states to submit a SIP revision which provides for the maintenance of the NAAQS in the area for at least 10 years after approval of the redesignation. Consistent with the Act's requirements, EPA developed procedures for redesignation of nonattainment areas that are contained in a September 4, 1992, memorandum titled, “Procedures for Processing Requests to Redesignate Areas to Attainment.” This EPA guidance document contains a number of maintenance plan provisions that a State should consider before it can request a change in designation for a federally designated nonattainment area. The basic components needed to ensure proper maintenance of the NAAQS are: Attainment inventory, maintenance demonstration, ambient air monitoring network, verification of continued attainment, and a contingency plan.

A. Attainment Inventory. The air dispersion modeling included in the State's submittal contains the emission inventory of SO 2 sources for Lake County.

B. Maintenance Demonstration. The modeled attainment demonstration submitted by Indiana on April 8, 2005, shows attainment and maintenance of the SO 2 NAAQS. Steel mills, an oil refinery, and other industrial processes are the primary sources of SO 2 in the Lake County area. Permanent and enforceable reductions of SO 2 emissions in Lake County contributed to the attainment of the SO 2 standards. Reductions of SO 2 emissions between the year that violations occurred (pre-1979) and the year attainment was achieved (2004) are attributable to the closure of stationary sources or emissions units, substantial emissions reductions at U.S. Steel-Gary Works, and reduced emission limits for certain units at Cargill, Ispat Inland, and Carmeuse Lime facilities. Subsequent to redesignation, any future increases in emissions and/or significant changes to the stack configuration parameters from those modeled in the attainment demonstration due to new or modifying stationary sources, would be subject to the Indiana SIP's NSR and/or PSD requirements including a demonstration that the NAAQS and applicable PSD increments are protected. Although total SO 2 emissions from all sources are projected to increase between 2004 and 2015 due to economic growth, the submitted modeling results indicate future NAAQS maintenance of the area. Emissions in 2015 are projected to be higher than 2002 and 2003, however, emissions in 2001 and prior years were higher than the projections for 2015, and there were no exceedances of the SO 2 NAAQS recorded in 2001. Further, the attainment modeling assumes a potential to emit of 120,800 tons per year of SO 2 . This therefore confirms that the projected growth in actual emissions to 43,568 tons of SO 2 in 2015, will not cause a violation of the SO 2 NAAQS.

C. Monitoring Network. Indiana has indicated in the submitted maintenance plan that it will continue to monitor SO 2 in the Lake County area in accordance with 40 CFR parts 53 and 58 to verify continued attainment with the NAAQS for SO 2 . The data will continue to be entered into the Air Quality Subsystem (AQS) of the Aerometric Information Retrieval System (AIRS). IDEM will consult with EPA Region 5 staff prior to making any changes to the existing monitoring network should changes be necessary in the future.

D. Verification of Continued Attainment. Indiana has committed in the maintenance plan to review the monitored data annually, and to submit a maintenance plan update eight years after redesignation which will contain IDEM's plan for maintaining the SO 2 NAAQS for 10 years beyond the first 10-year period after redesignation (2015-2025). Further, IDEM commits to maintain the control measures listed above after redesignation and that any changes to its rules or emission limits applicable to SO 2 sources, as required for maintenance of the SO 2 standards in Lake County, will be submitted to EPA for approval as a SIP revision. This will include, where appropriate, a demonstration based on modeling that the standard will be maintained.

E. Contingency Plan . Section 175A of the Act requires that the maintenance plan include contingency provisions to correct any violation of the NAAQS after redesignation of the area. These contingency measures are distinguished from those generally required for nonattainment areas under section 172(c)(9). IDEM will rely on ambient air monitoring data in the Lake County area to track compliance with the SO 2 NAAQS and to determine the need to implement contingency measures. In the event that an exceedance of the SO 2 NAAQS occurs, the State will expeditiously investigate and determine the source(s) that caused the exceedance and/or violation, and enforce any SIP or permit limit that is violated. If there is a violation of the SO 2 NAAQS, and it is not due to an exceptional event, malfunction, or noncompliance with a permit condition or rule requirement, IDEM will determine additional control measures needed to assure future attainment of the SO 2 NAAQS. Control measures that can be implemented in a short time will be selected in order to be in place within eighteen (18) months from the time that IDEM is aware that the violation occurred. Although the point sources listed in the inventory will be the primary focus, the possibility that the problem is attributable to new or previously unknown SO 2 sources will also be considered. Indiana will submit to EPA an analysis to demonstrate the proposed measures are adequate to return the area to attainment. Adoption of any additional control measures is subject to the necessary administrative and legal process. This process will include publication of notices, an opportunity for public hearing, and other measures required by Indiana law for rulemaking by state environmental boards.

EPA is proposing to approve the SIP revision for the control of SO 2 emissions in Lake County, Indiana, as requested by the State on April 8, 2005, and supplemented on July 6, 2005. The revision consists of the amended rule at 326 Indiana Administrative Code (IAC) Article 7. In this rule, the requirements in the Table in 326 IAC 7-4-1.1 have been divided into separate sections for each facility for clarity and ease of future rule actions. The new rule, 326 IAC 7-4.1, replaces 326 IAC 7-4-1.1, which will be repealed. Because the State has complied with the requirements of section 107(d)(3)(E) of the Act, EPA is also proposing to approve the redesignation of the Lake County nonattainment area to attainment of the SO 2 NAAQS, as requested by the State on June 21, 2005. In conjunction with these actions, EPA is also proposing to approve Indiana's maintenance plan for the Lake County SO 2 nonattainment area as a SIP revision because it meets the requirements of section 175A of the Act.

You may submit comments electronically, by mail, or through hand delivery/courier. To ensure proper receipt by EPA, identify the appropriate rulemaking identification number by including the text “Public comment on proposed rulemaking Region 5 Air Docket R05-OAR-2005-IN-0004” in the subject line on the first page of your comment. Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked “late.” EPA is not required to consider these late comments.

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.

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

This proposed action merely proposes to approve State law as meeting Federal requirements and imposes no additional requirements beyond those imposed by State law. Accordingly, the Administrator certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ).

Because this rule proposes to approve pre-existing requirements under State law and does not impose any additional enforceable duty beyond that required by State law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

This proposed rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (59 FR 22951, November 9, 2000).

This action also does not have federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely proposes to approve a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act.

This proposed rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

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

This proposed rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Categories and entities potentially affected by today's notice include:

This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by today's notice. To determine whether your facility is affected by today's notice, you should examine the applicability criteria in section 63.2231 of the final rule. If you have questions regarding the applicability of today's notice to a particular entity, consult Ms. Mary Tom Kissell listed in the preceding FOR FURTHER INFORMATION CONTACT section.

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

In addition to being available in the docket, an electronic copy of today's notice also will be available on the World Wide Web (WWW) through EPA's Technology Transfer Network (TTN). Following the Administrator's signature, a copy of this notice will be posted on the TTN's policy and guidance page for newly proposed rules at http://www.epa.gov/ttn/oarpg . The TTN provides information and technology exchange in various areas of air pollution control.

We proposed NESHAP for the PCWP source category on January 9, 2003 (68 FR 1276). The preamble for the proposed rule described the rationale for the proposed rule and solicited public comments. The preamble for the proposed rule requested comment on how and whether we should incorporate risk-based approaches into the final rule to avoid imposition of regulatory controls on facilities that pose little risk to public health and the environment (see 68 FR 1296-1302, January 9, 2003).

Fifty-seven interested parties submitted comments on the proposed rule during the comment period. Comments were submitted by industry trade associations, PCWP companies, State regulatory agencies, local government agencies, and environmental groups. We summarized major public comments on the proposed rule, along with our responses to those comments, in the preamble to the final rule and in the background information document. We summarized major public comments on the proposed risk-based approaches, along with our responses to those comments, in the preamble to the final rule (see 69 FR 45983-46005, July 30, 2004).

The final rule (subpart DDDD in 40 CFR part 63) was published on July 30, 2004 (69 FR 45944). We adopted a risk-based approach in the final rule by establishing and delisting a low-risk subcategory of PCWP affected sources based on our authority under sections 112(c)(1) and (9) of the Clean Air Act (CAA). The methodology and criteria for PCWP affected sources to use in demonstrating that they are part of the delisted low-risk subcategory were promulgated in appendix B to subpart DDDD of 40 CFR 63 (see 69 FR 46040-46045, July 30, 2004). A description of the procedure for determining that an affected source is part of the low-risk subcategory was provided in the preamble to the final rule (see 69 FR 45953-45955, July 30, 2004).

Affected sources demonstrating that they are part of the delisted low-risk subcategory are not subject to the CAA section 112(d) maximum achievable control technology (MACT) emission limitations, operating requirements, and work practice requirements in the final PCWP rule (subpart DDDD of CFR part 63), or to any other requirements of CAA section 112. For an affected source to be part of the delisted low-risk subcategory, it must have a low-risk demonstration approved by EPA. It must then have federally enforceable conditions reflecting the parameters used in the EPA-approved demonstration incorporated into its title V permit to ensure that it remains low-risk. EPA conducted low-risk demonstrations for eight facilities, and EPA will not require further demonstration from them before they become part of the delisted low-risk subcategory. These facilities will, however, need to obtain title V permit terms reflecting their status in order to maintain their low-risk eligibility.

Following promulgation of the PCWP rule, the Administrator received a petition for reconsideration filed by the Natural Resources Defense Council (NRDC) and Environmental Integrity Project (EIP) pursuant to section 307(d)(7)(B) of the CAA. 1 The petition requested reconsideration of nine elements of the final rule: (1) Risk assessment methodology; (2) background pollution and co-located emission sources; (3) the dose-response value used for formaldehyde; (4) costs and benefits of establishing a low-risk subcategory; (5) ecological risk; (6) legal basis for the risk-based approach; (7) MACT compliance date for affected sources previously qualifying for the low-risk subcategory; (8) SSM provisions; and (9) title V implementation mechanism for the risk-based approach. With the exception of the petitioners' issue with the SSM provisions in subpart DDDD of 40 CFR part 63, all of the petitioners' issues relate to the risk-based approach adopted in the final rule. The petitioners stated that reconsideration of the above issues is appropriate because they claimed that the issues could not have been practicably raised during the public comment period. The petition for reconsideration also requested a stay of the effectiveness of the risk-based provisions.

In a letter dated December 6, 2004, EPA granted NRDC's and EIP's petition for reconsideration, indicating that the Agency would conduct rulemaking to respond to the petition. In that letter, we also declined the petitioners' request that we take action to stay the effectiveness of the risk-based provisions.

Following signature of the final rule, PCWP industry representatives raised several issues related to implementation of the requirements in appendix B to subpart DDDD, including the emissions testing procedures, stack height calculations, and permitting requirements required to be used by facilities demonstrating eligibility for the low-risk subcategory. Industry stakeholders and State regulatory agencies also expressed concern about a few narrow issues related to subpart DDDD of 40 CFR part 63. We are proposing amendments to the final rule in a separate Federal Register action to address these issues, correct any other inconsistencies that were discovered following promulgation, and clarify some common applicability questions. Because the issues raised by the petitioners broadly address the risk provisions, the proposed amendments are relevant to some of the petitioners' issues.

The purpose of today's notice is to request comments on the nine issues in the petition for reconsideration. Stakeholders who would like for us to consider comments relevant to today's reconsideration that were previously submitted, may reference the comments instead of resubmitting them. To reference previously submitted comments, identify the relevant docket entry numbers and page numbers.

In their petition for reconsideration (Docket ID No. OAR-2003-0048), NRDC and EIP requested that several of the risk-based provisions adopted in the final PCWP rule be reconsidered. The petitioners contend that there was inadequate opportunity for public comment on the issues prior to promulgation of the final rule and that the issues are of central relevance to the outcome of the rule. We are offering another opportunity for public comment on the risk-based approach included in the final PCWP rule and on the approach included in appendix B to subpart DDDD. The following text lists the issues raised by the petitioners for which we are requesting comment.

The petitioners believe that EPA's description of the low-risk demonstration procedures in the preamble to the proposed PCWP rule did not provide key details that would have allowed the public to fully comment on EPA's intended approach. The petitioners noted that the final PCWP rule contains a new appendix (appendix B to subpart DDDD).

The petitioners commented on: (1) The methodology for calculating the average stack height; (2) the assignment of zero to any hazardous air pollutants (HAP) for which EPA has yet to assign a unit risk estimate  2 (URE); (3) the treatment of all PCWP plants as though their local topography and climate are identical ( e.g. , factors such as prevailing winds are not considered); (4) the estimate of cancer risks for children; (5) the use of nearest residence rather than exposed individual, possibly closer to the facility, including workers at PCWP facilities; and (6) the facility's ability to choose which criteria to use in their site-specific risk demonstrations.

The approach we used to evaluate potential risks from PCWP sources and to develop the risk assessment methodology outlined in appendix B to subpart DDDD is discussed in the preamble to the final rule (69 FR 45953-45955 and 45983-46005, respectively), in the preamble to the proposed rule (68 FR 1297-1301), and in the supporting documentation (Docket ID No. OAR-2003-0048). Our approach to selecting the HAP listed in table 1 to appendix B to subpart DDDD is described in the preamble to the final rule at 69 FR 45991-45997.

The petitioners stated that the final rule does not require consideration of risks from other HAP sources located at the same plant site (co-located sources) or risks from background ambient HAP concentrations. Our final rule addressed background exposures (including co-located exposures) and hazard index in the preamble to the final rule (69 FR 45997-46001) and in the preamble to the proposed rule (68 FR 1298-1300).

The petitioners stated that the preamble to the proposed rule indicated that EPA would use the formaldehyde URE (1.3 × 10 − 5 1/(ug/m 3 )) from the Integrated Risk Information System (IRIS), the agency's toxicological database, to calculate whether or not a given source is low-risk. However, the final rule relied on a lower (less potent) URE (5.5 × 10 − 9 1/(ug/m 3 )) derived by the CIIT Centers for Health Research without offering an opportunity for public comment on the CIIT model. The petitioners asserted that the CIIT evaluation is limited in a number of important ways and that recent studies link formaldehyde to cancers other than those evaluated by CIIT.

In the preamble to the proposed PCWP rule, we stated that recent reassessments of formaldehyde carcinogenicity have been conducted by the World Health Organization and the Canadian Ministry of Health. These reassessments are based on the approach derived by CIIT. We also stated that the dose-response assessment for formaldehyde was undergoing revision by EPA (see 68 FR 1300). EPA is currently reassessing the scientific information on formaldehyde and will consider all of the available studies, including the CIIT and other studies to which the petitioners referred. The reasoning for our selection of the CIIT value for formaldehyde at the time of the final rule is discussed in the preamble to the final rule at 69 FR 45993-45994. Dose-response relationships are discussed in the preamble to the proposed rule at 68 FR 1300.

Given that the state of science with respect to dose-response values is constantly evolving, we are continuously monitoring the dose-response values for HAP emitted by the PCWP industry in addition to the 13 HAP listed in table 1 to appendix B to subpart DDDD. We are continuing to gather and review new information regarding formaldehyde toxicity. Development of an IRIS assessment for propionaldehyde is underway.

The final rule addresses changes in potency values. Section 13 in appendix B to subpart DDDD requires facilities to consider changes in dose-response values should they become more potent. Therefore, if the IRIS formaldehyde URE, when updated, is more potent than the CIIT value, PCWP facilities would be required to demonstrate that they are low-risk using the revised IRIS value.

If HAP emitted by PCWP sources, other than the 13 specified in appendix B to subpart DDDD, become significant contributors to risk, we reserve the right to amend the list of HAP that must be included in the low risk determinations. Such an amendment to appendix B to subpart DDDD would specify methods for PCWP facilities in the low-risk subcategory to determine emissions of the HAP and deadlines for submittal of revised low-risk demonstrations incorporating the effects of the HAP.

The petitioners questioned the basis of EPA's cost and benefit analyses. Our estimates of the costs and benefits of the final rule are presented in the preamble to the final rule (69 FR 45955-45958) and the supporting documentation (Docket ID No. OAR-2003-0048), “Cost, Environmental, and Energy Impacts Associated with Facilities Potentially Eligible for the Delisted Low-Risk Subcategory of Plywood and Composite Wood Products Facilities;” “Regulatory Impact Analysis for the Plywood and Composite Wood Products NESHAP;” “Regulatory Impact Analysis of the Final Plywood and Composite Wood Products NESHAP; Part 2 of 2.”)

The petitioners stated that the proposal preamble gave few details about how a low-risk subcategory delisting action would be accomplished and did not discuss how ecological risks would be considered. Our analysis of ecological effects is discussed the preamble to the final rule (69 FR 45998-45999) and in supporting documentation (Docket ID No. OAR-2003-0048). In response to the petitioners' concerns, we have prepared and placed in the docket additional supporting information titled, “Additional Explanation of the Ecological Risk Assessment for Members of the Plywood and Composite Wood Products (PCWP) Source Category—Appendix B”.

The petitioners objected to the legal rationale for the low-risk subcategory provided in the preamble to the final rule. The petitioners stated that the risk-based exemptions contravene the statutory language, structure and legislative history of the 1990 CAA Amendments. The preamble to the final PCWP rule presents the legal rationale for our inclusion of a delisted low-risk subcategory of PCWP affected sources in the final rule (see 69 FR 45984-45991, July 30, 2004) and in the preamble to the proposed rule at 68 FR 1297-1298. We request comment on the legal basis for the risk-based option included in the final rule. Because our approach in the final rule relied upon the authority in section 112(c)(9) of the CAA, we are not asking for comments relating to legal authority under the CAA section 112(d)(4) or de minimis principles (see 69 FR 45986-45987).

The petitioners objected to allowing facilities in the low-risk subcategory 3 years to come into compliance with the MACT standard if they are no longer low risk due to factors beyond their control. We discuss the compliance date for sources that become subject to the MACT standards because they no longer are part of the low-risk subcategory in the preamble to the final rule (69 FR 45955) and in section 13(b) of appendix B to subpart DDDD. As the petitioners noted, under EPA MACT rules, sources normally have 3 years following a rule's effective date to comply with a MACT standard to which they are subject. Under the final rule, sources that are no longer part of the low-risk subcategory because of factors within their control ( e.g. , process changes that increase HAP emissions) must comply with MACT immediately. Sources no longer part of the low-risk subcategory because of factors outside of their control ( e.g. , changes in dose-response values or population shifts) are allowed 3 years from the date they begin operating outside the low-risk subcategory to comply with MACT.

The petitioners contended that the PCWP proposal did not provide notice of the title V implementation approach for the CAA section 112(c)(9) low-risk subcategory adopted in the final rule. The petitioners also contended that the way we use title V to implement the low-risk subcategory is inappropriate and unsupportable for several reasons. Use of title V permits for the implementation of the low-risk subcategory is discussed throughout the preamble and final rule (69 FR 46002-46005).

The petitioners stated that EPA replaced the SSM approach from the proposed PCWP rule with an approach based on the amended General Provisions issued on May 30, 2003, following the close of the public comment period on the PCWP proposal. Thus, the petitioners claimed that the public had no opportunity to comment on the revised SSM approach in the context of the PCWP rule, which, according to the petitioners, does not allow public access to SSM plans. In addition, the petitioners noted that EPA removed the text “you must minimize emissions to the greatest extent possible” when combining proposed sections 63.2250(a) and (d) for the final PCWP rule.

Section 63.2250 of final PCWP rule references the amended sections of the General Provisions regarding public access to SSM plans (section 63.6(e)(3) of the final rule) and general duty to minimize emissions (section 63.6(e)(1)(i) of the final rule). The statement “you must minimize emissions to the greatest extent possible” was removed from the final PCWP rule because different language is included in the amended General Provisions. As stated in the preamble to the final PCWP rule (69 FR 45983), the General Provisions are referenced directly in the PCWP rule to avoid confusion and promote consistency. Although the amendments to the General Provisions are the subject of ongoing litigation and agency reconsideration, the requirements promulgated on May 30, 2003, apply to the final PCWP rule. Therefore, in today's PCWP notice of reconsideration, we seek comments only on the application of the General Provisions' SSM provisions to PCWP sources and on SSM issues specific to the PCWP industry.

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

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

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

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

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

Pursuant to the terms of Executive Order 12866, it has been determined that today's notice of reconsideration is a “significant regulatory action” because it raises novel legal or policy issues. As such, the notice was submitted to OMB for review under Executive Order 12866. Changes made in response to OMB suggestions or recommendations are documented in the public record (see ADDRESSES section of this preamble).

This action does not impose any new information collection burden. We are not proposing any new paperwork ( e.g. , monitoring, reporting, recordkeeping) as part of today's notice. With this action we are seeking additional comments on some of the provisions finalized in the July 2004 Federal Register Notice (69 FR 45943). However, OMB has previously approved the information collection requirements contained in the existing regulations (40 CFR part 63) under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. , and has assigned OMB control number 2060-0552, EPA ICR number 1984.02. A copy of the OMB approved Information Collection Request (ICR) may be obtained from Susan Auby, Collection Strategies Division; EPA (2822T); 1200 Pennsylvania Ave., NW., Washington, DC 20460 or by calling (202) 566-1672.

Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information.

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

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

For purposes of assessing the impacts of today's notice of reconsideration on small entities, a small entity is defined as: (1) A small business having no more than 500 to 750 employees, depending on the business' NAICS code; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and that is not dominant in its field.

After considering the economic impacts of today's notice of reconsideration on small entities, I certify that the notice will not have a significant economic impact on a substantial number of small entities. EPA has determined that none of the small entities will experience a significant impact because the notice imposes no additional regulatory requirements on owners or operators of affected sources.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any 1 year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least-burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least-costly, most cost-effective, or least-burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed, under section 203 of the UMRA, a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA's regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

EPA has determined that today's notice of reconsideration does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and tribal governments, in the aggregate, or the private sector in any 1 year. Although the final rule had annualized costs estimated to range from $74 to $140 million (depending on the number of facilities eventually demonstrating eligibility for the low-risk subcategory), today's notice does not add new requirements that would increase this cost. Thus, today's notice of reconsideration is not subject to the requirements of sections 202 and 205 of the UMRA. In addition, EPA has determined that today's notice does not significantly or uniquely affect small governments because it contains no requirements that apply to such governments or impose obligations upon them. Therefore, today's notice of reconsideration is not subject to section 203 of the UMRA.

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

Today's notice of reconsideration does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. None of the affected facilities are owned or operated by State governments, and the requirements discussed in today's notice will not supersede State regulations that are more stringent. Thus, Executive Order 13132 does not apply to today's notice of reconsideration.

Executive Order 13175 (65 FR 67249, November 6, 2000) requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” “Policies that have tribal implications” are 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 Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes.”

Today's notice of reconsideration does not have tribal implications. It 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. No affected facilities are owned or operated by Indian tribal governments. Thus, Executive Order 13175 does not apply to today's notice of reconsideration.

Executive Order 13045 (62 FR 19885, April 23, 1997) applies to any rule that: (1) is determined to be “economically significant,” as defined under Executive Order 12866, and (2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, EPA must evaluate the environmental health or safety effects of the planned rule on children and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by EPA.

Today's notice is not subject to the Executive Order because EPA does not believe that the environmental health or safety risks associated with the emissions addressed by the proposed amendments present a disproportionate risk to children. The noncancer human health toxicity values we used in our analysis at promulgation ( e.g. , reference concentrations) are protective of sensitive subpopulations, including children. In addition, for purposes of this rulemaking, EPA has not determined that any of the pollutants in question has the potential for a disproportionate impact on predicted cancer risks due to early-life exposure.

Executive Order 13211 (66 FR 28355, May 22, 2001) provides that agencies shall prepare and submit to the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, a Statement of Energy Effects for certain actions identified as “significant energy actions.” Section 4(b) of Executive Order 13211 defines “significant energy actions” as “any action by an agency (normally published in the Federal Register ) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking: (1)(i) that is a significant regulatory action under Executive Order 12866 or any successor order, and (ii) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (2) that is designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action.”

Today's notice of reconsideration is not a “significant energy action” as defined in Executive Order 13211 (66 FR 28355, May 22, 2001) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Further, we have concluded that today's notice of reconsideration is not likely to have any adverse energy effects.

As noted in the final rule, section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) of 1995 (Public Law No. 104-113; 15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in their regulatory and procurement activities unless to do so would be inconsistent with applicable law or otherwise impracticable. Voluntary consensus standards are technical standards ( e.g. , material specifications, test methods, sampling procedures, business practices) developed or adopted by one or more voluntary consensus bodies. The NTTAA requires EPA to provide Congress, through the OMB, with explanations when EPA decides not to use available and applicable voluntary consensus standards.

During the development of the final rule, EPA searched for voluntary consensus standards that might be applicable. The search identified two voluntary consensus standards that were considered practical alternatives to the specified EPA test methods. An assessment of these and other voluntary consensus standards is presented in the preamble to the final rule (see 69 FR 46010, July 30, 2004). Today's notice of reconsideration does not propose the use of any additional technical standards beyond those cited in the final rule. Therefore, EPA is not considering the use of any additional voluntary consensus standards for this notice.

For additional information, see the Direct Final Deletion which is located in the Rules section of this Federal Register .

The purpose of this rulemaking is to update various clauses within 48 CFR chapter 9 to specify contractor responsibility in the areas of performance, work authorization, and subcontract flow down provisions.

This rulemaking would modify current guidance contained in DEAR clauses concerning Debarment; Fast Payment Procedures; Laws, Regulations, and Directives; Work Authorization; Integration of Environment, Safety, and Health into Work Planning and Execution; and Facilities Management.

The Department of Energy proposes to amend the regulation as follows:

1. DEAR 909.406, Debarment, is proposed to be revised to permit a debarring official to debar a contractor, based upon a preponderance of the evidence, for falsely certifying or otherwise representing itself as a small, small disadvantaged, women- or veteran-owned, or similar concern.

2. DEAR subpart 913.4 Fast Payment Procedure is proposed to be deleted in its entirety. DEAR 913.402 currently prohibits the use of fast payment procedures. Upon review of the Department's policy and the Federal Acquisition Regulation (FAR), DOE has determined that fast payment procedures could be used by DOE and that FAR coverage in subpart 13.4, Fast Payment Procedure, is adequate to protect the Department's interests. Removal of this section would permit DOE to use fast payment procedures under FAR 13.4.

3. DEAR 970.5204-2, Laws, Regulations, and DOE Directives, is proposed to be revised by adding the following three sentences to the end of paragraph (e): “Unless the contract specifically instructs the contractor regarding subcontract flow-down, the contractor shall be responsible for determining the appropriate implementation of the requirements, including the extent to, and manner in which, requirements should be reflected in subcontracts. In doing so, the contractor retains the same responsibility for performance and cost management that it has for all contract efforts. Specifically, the contractor shall not unnecessarily or imprudently flow down requirements to subcontracts and shall only incur costs that would be incurred by a prudent person in the conduct of a competitive business.” This language is intended to emphasize the contractor's responsibility in effective cost management in flowing down prime contract requirements to its subcontractors.

4. DEAR 970.5211-1, Work Authorization, is proposed to be added, with prescriptive language in DEAR 970.1170-1 and a contract clause instruction in DEAR 970.1170-2. This clause incorporates requirements that are presently located in the contractor's requirements document attached to DOE Directive DOE O 412.1, Work Authorization System. The DOE O 412.1 currently establishes an assignment and control process for budget of estimated costs, description of work, and schedule of performance for individual work activities performed by designated contractors within the contract scope of work. The proposed clause would eliminate the need for a contractor requirements document by establishing the requirements as a DEAR clause.

5. DEAR 970.5223-1, Integration of Environment, Safety, and Health (ES&H) specifies contractor requirements pertaining to ES&H. It is proposed to be modified by making some editorial changes to paragraphs (d) and (e) and adding the following three sentences to paragraph (h): “Unless the contract specifically instructs the contractor regarding subcontract flow-down, the contractor shall be responsible for determining the appropriate implementation of the requirements, including the extent to which, and manner in which, requirements should be reflected in subcontracts. In doing so, the contractor retains the same responsibility for performance and cost management that it has for all contract efforts. Specifically, the contractor shall not unnecessarily or imprudently flow down requirements to subcontracts and shall only incur costs that would be incurred by a prudent person in the conduct of a competitive business.” This language is intended to emphasize the contractor's responsibility in effective cost management in flowing down prime contract requirements to its subcontractors.

6. DEAR 970.5237-2, Facilities Management, and the corresponding instruction at DEAR 970.37, Facilities Management Contracting, are proposed to be deleted. They currently provide guidance concerning site development planning, design criteria, energy management, and subcontract requirements. DOE directives, such as DOE O 430.1A, Life Cycle Asset Management, already provide sufficient guidance.

Today's regulatory action has been determined not to be a “significant regulatory action” under Executive Order 12866, “Regulatory Planning and Review,” (58 FR 51735, October 4, 1993). Accordingly, this rulemaking is not subject to review under that Executive Order by the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB).

With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (February 7, 1996), imposes on Executive agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct rather than a general standard and promote simplification and burden reduction. With regard to the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, these proposed regulations meet the relevant standards of Executive Order 12988.

This rulemaking has been reviewed under the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. , which requires preparation of an initial regulatory flexibility analysis for any rule that must be proposed for public comment and that is likely to have significant economic impact on a substantial number of small entities. The rulemaking would not have a significant economic impact on small entities. While rule requirements may flow down to subcontractors in certain circumstances, the costs of compliance are not estimated to be large and, in any event, would be reimbursable expenses under the contract or subcontract.

Accordingly, DOE certifies that this rulemaking would not have a significant economic impact on a substantial number of small entities, and, therefore, no regulatory flexibility analysis has been prepared.

Information collection or record keeping requirements contained in this rulemaking have been previously cleared under Office of Management and Budget paperwork clearance package Number 1910-0300. There are no new burdens imposed by this rulemaking.

DOE has concluded that promulgation of this proposed rule falls into a class of actions which would not individually or cumulatively have significant impact on the human environment, as determined by DOE's regulations (10 CFR part 1021, subpart D) implementing the National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq. ). Specifically, this proposed rule is categorically excluded from NEPA review because the amendments to the DEAR would be strictly procedural (categorical exclusion A6). Therefore, this proposed rule does not require an environmental impact statement or environmental assessment pursuant to NEPA.

Executive Order 13132 (64 FR 43255, August 4, 1999) imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. Agencies are required to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and carefully assess the necessity for such actions. The Executive Order does require agencies to have an accountability process to ensure meaningful and timely input by state and local officials in the development of regulatory policies that have federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations (65 FR 13735). DOE has examined today's proposed rule and has determined that it does not preempt State law and does not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. No further action is required by Executive Order 13132.

The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) generally requires a Federal agency to perform a written assessment of costs and benefits of any rule imposing a Federal Mandate with costs to State, local or tribal governments, or to the private sector, of $100 million or more. This proposed rulemaking would only affect private sector entities, and the impact is less than $100 million.

Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277), requires Federal agencies to issue a Family Policymaking Assessment for any rulemaking or policy that may affect family well-being. This rulemaking will have no impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.

Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001), requires Federal agencies to prepare and submit to the Office of Information and Regulatory Affairs (OIRA), Office of Management and Budget, a Statement of Energy Effects for any proposed significant energy action. A “significant energy action” is defined as any action by an agency that promulgates or is expected to lead to promulgation of a final rule, and that: (1) Is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a significant energy action. For any proposed significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use. Today's rule is not a significant energy action. Accordingly, DOE has not prepared a Statement of Energy Effects.

The Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516, note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). DOE has reviewed today's notice under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.

Issuance of this proposed rule has been approved by the Office of the Secretary of Energy.

For the reasons set out in the preamble, Chapter 9 of Title 48 of the Code of Federal Regulations is proposed to be amended as set forth below.