The purpose of these meetings is to obtain stakeholder comments on the National Source Tracking Proposed Rule. The proposed rule would require licensees to report certain transactions involving certain sealed sources of concern to the National Source Tracking System. These transactions would include manufacture, transfer, receipt, or disposal of the nationally tracked source. The proposed rule would also require each licensee to provide its initial inventory of nationally tracked sources to the National Source Tracking System and annually verify and reconcile the information in the system with the licensee's actual inventory. In addition, the proposed rule would require manufacturers to assign a unique serial number to each nationally tracked source. The proposed rule is available on NRC's rulemaking Web site: http://ruleforum.llnl.gov.

Agenda: Welcome—10 minutes; NRC staff presentation on Rule Requirements—20 minutes; Public Comment—remainder. There will also be a poster board session on the transaction forms. To ensure that everyone who wishes has the chance to comment, we may impose a time limit on speakers.

Attendees are requested to notify Julie Ward, telephone (301) 415-5061, e-mail jaw2@nrc.gov or Ikeda King, telephone (301) 415-7278, e-mail ijk@nrc.gov to preregister for the meetings. You will be able to register at the meetings, as well.

In the Federal Deposit Insurance Act (“FDI Act”), the term “deposit” is defined at section 3(l) (12 U.S.C. 1813(l)). This section includes several paragraphs. At paragraph 3(l)(1), the term “deposit” is defined in part as “the unpaid balance of money or its equivalent received or held by a bank or savings association in the usual course of business and for which it has given or is obligated to give credit, either conditionally or unconditionally, to a commercial, checking, savings, time, or thrift account, or which is evidenced by its certificate of deposit, thrift certificate, investment certificate, certificate of indebtedness, or other similar name * * *.” 12 U.S.C. 1813(l)(1).

At paragraph 3(l)(3), the term “deposit” is defined in part as “money received or held by a bank or savings association, or the credit given for money or its equivalent received or held by a bank or savings association, in the usual course of business for a special or specific purpose, regardless of the legal relationship thereby established, including without being limited to, escrow funds, funds held as security for an obligation due to the bank or savings association or others (including funds held as dealers reserves) or for securities loaned by the bank or savings association, funds deposited by a debtor to meet maturing obligations, funds deposited as advance payment on subscriptions to United States Government securities, funds held for distribution or purchase of securities, funds held to meet its acceptances or letters of credit, and withheld taxes * * *.” 12 U.S.C. 1813(l)(3).

Finally, paragraph 3(l)(5) provides that the FDIC, in consultation with the other federal banking agencies, may define “deposit” through regulation. See 12 U.S.C. 1813(l)(5). In accordance with paragraph 3(l)(5), the FDIC is consulting with the other agencies in connection with this proposed rulemaking.

In 1996, the FDIC applied the statutory definition of “deposit” to funds at insured depository institutions underlying stored value cards. The FDIC concluded that the funds in some stored value card systems are “deposits” but that the funds in other systems are not “deposits.” The FDIC's interpretation was set forth in General Counsel's Opinion No. 8 (“GC8”). See 61 FR 40490 (August 2, 1996).

In GC8, the FDIC identified four types of stored value card systems that involve banks: (1) A “Bank Primary-Reserve System” (2) a “Bank Primary-Customer Account System”; (3) a “Bank Secondary-Advance System”; and (4) a “Bank Secondary-Pre-Acquisition System.” Each of these systems is described below.

In a “Bank Primary-Reserve System,” the insured depository institution issues stored value cards in exchange for cash from the cardholders. The depository institution does not maintain an individual account for each cardholder; rather, the institution maintains a pooled “reserve account” for all cardholders. In making payments to merchants or other payees (as the cardholders use their cards to purchase goods or services), the depository institution disburses funds from this “reserve account.” In GC8, the FDIC determined that such funds held by the insured depository institution do not satisfy the statutory definition of “deposit” at section 3(l) of the FDI Act. In making this determination, the FDIC specifically addressed the applicability of paragraphs 3(l)(1) and 3(l)(3) (quoted above). First, in finding that the funds do not satisfy paragraph 3(l)(1), the FDIC found that the stored value cards are not structured so that the institution credits a conventional commercial, checking, savings, time or thrift account. Rather, the institution credits the pooled “reserve account.” See 61 FR at 40492. Second, in finding that the funds do not satisfy paragraph 3(l)(3), the FDIC determined that the purpose of the funds is insufficiently “special or specific” because the cardholder might “engage in any of a number of unrelated transactions” with the result that the funds “could be associated with general or miscellaneous unrelated transactions.” 61 FR at 40493. On the basis of this reasoning, the FDIC concluded that the funds in this type of system are not “deposits.” See 61 FR at 40493, 40494.

A “Bank Primary-Customer Account System” is similar to a “Bank Primary-Reserve System” in that the insured depository institution issues stored value cards in exchange for cash from the cardholders. The two systems differ, however, in their accounting techniques. In a “Bank Primary-Customer Account System,” the depository institution does not maintain a pooled “reserve account” for all cardholders. Rather, the institution maintains an individual account for each cardholder. Citing paragraph 3(l)(1) of the statutory definition (quoted above), the FDIC in GC8 determined that the funds in these individual accounts are “deposits.” See 61 FR at 40492, 40494.

In a “Bank Secondary-Advance System,” the insured depository institution acts as an intermediary in collecting funds from cardholders in exchange for stored value cards issued by a third party or sponsoring company. The funds are held by the depository institution for a short period of time, then forwarded to the sponsoring company. See 61 FR at 40490. Later, when the cardholder uses the stored value card to make a purchase from a merchant, the sponsoring company (and not the depository institution) sends the appropriate amount of money to the merchant. In GC8, the FDIC determined that the funds collected by the depository institution are “deposits” belonging to the sponsoring company for the brief period before the funds are forwarded to the sponsoring company. The funds are not “deposits” belonging to the cardholders because the institution's liability for these funds is owed to the sponsoring company for whom the institution is temporarily holding the funds. See 61 FR at 40490-91, 40494.

Similarly, in a “Bank Secondary-Pre-Acquisition System,” the insured depository institution provides cardholders with cards issued by a third party or sponsoring company. Prior to selling the cards to the cardholders, however, the depository institution purchases the cards from the sponsoring company. See 61 FR at 40490. In this respect, the system is different than a “Bank Secondary-Advance System.” When the depository institution resells the cards to the cardholders, no money is owed to the sponsoring company. For this reason, the depository institution is free to retain the funds collected from the cardholders. Later, when a cardholder uses his/her stored value card to make a purchase from a merchant, the sponsoring company and not the depository institution sends the appropriate amount of funds to the merchant. In GC8, the FDIC determined that the funds collected by the depository institution in this system are not “deposits.” See 61 FR at 40491, 40494. This conclusion was based upon the fact that the depository institution, in collecting funds from cardholders, does not assume a responsibility to return or disburse the funds to the cardholders or the sponsoring company or any other party. Rather, the depository institution merely sells the right to collect funds from the sponsoring company ( i.e. , the issuer of the cards). Thus, the funds underlying the stored value cards are held by the sponsoring company, not by the depository institution. Under these circumstances, no “deposits” exist at the depository institution. See 12 U.S.C. 1813(l)(1) (defining “deposit” as an “unpaid balance of money or its equivalent”); 12 U.S.C. 1813(l)(3) (providing that the term “deposit” does not include “funds which are received by the bank or savings association for immediate application to the reduction of an indebtedness to the receiving bank or savings association, or under condition that the receipt thereof immediately reduces or extinguishes such an indebtedness”).

Following the publication of GC8, the banking industry developed new types of stored value cards and stored value card systems. Indeed, stored value cards are one of the fastest growing products in the financial industry.

Certain types of cards are being marketed to lower-income consumers, especially the unbanked and the underbanked. The use of stored value cards can serve as a point of entry into the banking system for consumers without bank accounts, as well as provide asset-building and credit-building opportunities. Industry innovation in this area is of considerable interest to regulatory agencies and banks reaching out to underserved markets.

With more than 10 million unbanked households in the United States, prepaid debit products such as stored value cards or reloadable “payroll cards” are increasingly being used by employers to remit wages electronically to their employees. These cards have been used to provide consumers with a viable means of accessing funds and making financial transactions. Payroll cards have also served as an alternative to paying high fees at non-bank check cashers. Functioning as “checkless bank accounts,” payroll debit cards have provided a convenient and safer way to store funds, pay for purchases, access automated teller machines (“ATMs”) and pay bills. In addition, foreign remittance services are one of the ways in which banks use debit cards to build relationships with a large population of unbanked customers. The ability of banks to reach out to low- and moderate-income consumers with products such as low-cost debit accounts, remittance services and individual development accounts may receive favorable consideration during Community Reinvestment Act examinations.

The evolving and increasing use of stored value cards is important to the banking industry. The FDIC and others in the banking industry recognize the importance of these cards to all consumers, including the underbanked. These cards provide banks with an opportunity to reach underserved markets.

While serving important needs, the development of new types of stored value cards has raised legal issues that the FDIC did not address in GC8. One of the new stored value card systems could be described as a “hybrid system” in that it combines the “Bank Primary-Reserve System” with the “Bank Primary-Customer Account System.” In this hybrid system, the insured depository institution issues stored value cards against a pooled “reserve account” but also maintains individual accounts or subaccounts for the various cardholders. In some cases, the individual accounts or subaccounts are maintained by a processing agent. GC8 did not address such hybrid systems.

The banking industry also developed a system in which stored value cards are issued by a sponsoring company against an account at an insured depository institution. The issuance of cards by a sponsoring company (as opposed to a depository institution) is not a new development: the “Bank Secondary-Advance System” and the “Bank Secondary-Pre-Acquisition System” both involve the issuance of stored value cards by sponsoring companies. The new development (or at least the feature of “secondary systems” not discussed by the FDIC in GC8) is the funding of a bank account by the sponsoring company for the purpose of making payments on the stored value cards. When a cardholder uses his/her card to make a purchase from a merchant, the funds are disbursed to the merchant from this bank account. In GC8, the FDIC never addressed the question of whether the funds in such an account qualify as “deposits.”

The “payroll card” is another type of card not specifically addressed in GC8. Such cards are distributed by employers to employees in lieu of paychecks. Prior to distributing the cards (or prior to activating the cards), the employer (directly or through a processing agent) places funds at a depository institution. After the distribution of the cards and the placement of the funds, the employees transfer or withdraw the funds through the use of their cards. In some cases, payroll cards are reloadable.

GC8 also included no specific discussion of “gift cards.” A person might buy a gift card from a retail store. In some cases, the gift card may be used to purchase goods or services wherever a major credit card may be used. Prior to the sales of such cards, the retail store (or some company under an agreement with the retail store) may place funds at a depository institution. After the sales of the cards and the placement of the funds, the cardholders transfer or withdraw the funds through the use of the cards.

In response to the development of these new types of stored value cards and stored value card systems, the FDIC published the First Proposed Rule. See 69 FR 20558 (April 16, 2004). The FDIC recognized the existence of three types of stored value card systems. First, the FDIC recognized systems in which an insured depository institution receives funds from cardholders, or receives funds from others on behalf of cardholders, in exchange for stored value cards issued by the depository institution. Under the First Proposed Rule, the funds held by the institution would be “deposits” unless (1) the institution records its liabilities for such funds in an account representing multiple cardholders; and (2) the institution (directly or through an agent) maintains no supplemental records or subaccounts reflecting the amount owed to each cardholder. Thus, in regard to “Bank Primary-Reserve Systems” and “Bank Primary-Customer Account Systems,” the First Proposed Rule followed GC8. In addition, the First Proposed Rule provided that the funds in a hybrid system (not addressed in GC8) would be “deposits.”

Second, the FDIC recognized systems in which an insured depository institution receives funds from cardholders in exchange for stored value cards issued by a sponsoring company ( e.g. , a “Bank Secondary-Advance System” or a “Bank Secondary-Pre-Acquisition System”). Under the First Proposed Rule, the funds would be “deposits” if the depository institution bears an obligation to forward the funds to the sponsoring company or to hold the funds for the sponsoring company. After the forwarding or withdrawal of such funds, of course, the funds would cease to be “deposits.” Also, the funds would never be “deposits” if the depository institution never bears an obligation to forward or hold the funds ( e.g. , the depository institution purchases stored value cards from the sponsoring company and then resells the cards to the cardholders). In other words, in regard to “Bank Secondary-Advance Systems” and “Bank Secondary-Pre-Acquisition Systems,” the First Proposed Rule simply followed GC8.

Third, the FDIC recognized systems in which funds are placed at an insured depository institution by a sponsoring company for the purpose of making payments on stored value cards issued by that company. As discussed above, this type of system was not addressed in GC8. Under the First Proposed Rule, the funds in such a system would be “deposits.”

The First Proposed Rule did not set forth specific rules for “payroll cards” or “gift cards.” Thus, under the First Proposed Rule, the funds underlying such cards would be subject to the general rules summarized above.

Finally, assuming that the funds in a particular system are “deposits,” the First Proposed Rule set forth no specific rules for determining whether the insured depositor is the cardholder as opposed to some other party (such as the employer in the case of payroll cards). Rather, the First Proposed Rule simply provided that the insurance coverage of the deposits would be governed by the same rules that apply to any other deposits. See 12 CFR part 330.

A separate issue is whether stored value cards should include mandatory disclosures as to whether the underlying funds are insured by the FDIC. In publishing the First Proposed Rule, the FDIC raised this issue but did not set forth any specific rules. Rather, the FDIC merely requested comments.

In response to the First Proposed Rule, the FDIC received 36 comments. 1 Approximately eight comments supported the proposed rule while approximately twenty comments opposed the rule. The other comments could be characterized as neutral. 2

In supporting the First Proposed Rule, some commenters emphasized the importance of protecting consumers ( i.e. , the persons who hold stored value cards). Others simply endorsed the proposed classification scheme (in which most funds held by banks would be “deposits” but some funds might not be “deposits”).

Those commenters who opposed the First Proposed Rule presented a variety of objections. One of the objections was that the scope of the First Proposed Rule was too narrow. This particular objection is discussed in section A below. This objection warrants a separate discussion because the FDIC agrees that the scope of the proposed rule must be reconsidered. In section B, the commenters' additional objections and arguments are discussed. These arguments include the following: (1) The proposed rule will trigger other laws and regulations; (2) the proposed rule is inconsistent with GC8; (3) cardholders do not expect to be insured; (4) the FDIC should recognize distinctions among types of stored value cards; (5) the funds underlying payroll cards should be insured but the funds underlying gift cards should not be insured; (6) adoption of the proposed rule will have a “chilling effect” on the development of stored value products; and (7) the adoption of a regulation is “premature.”

The stated purpose of the First Proposed Rule was “to clarify the meaning of ‘deposit’ as that term relates to funds at insured depository institutions underlying stored value cards.” The term “stored value card” was defined as “a device that enables the cardholder to transfer the underlying funds ( i.e. , the funds received by the issuer of the card in exchange for the issuance or reloading of the card) to a merchant at the merchant's point of sale terminal.” 69 FR at 20565-66. This stated purpose and this definition were based upon language in GC8. See 61 FR at 40490-91.

A number of commenters expressed the opinion that the proposed definition of “stored value card” is too narrow. They noted, for example, that some cards not only enable cardholders to transfer funds to merchants at point of sale terminals but also enable cardholders to make withdrawals at ATMs. Moreover, a device or mechanism that enables the user to make such transfers or withdrawals may not be a “card” at all. The mechanism could be a code or computer. Finally, some commenters noted that the term “stored value card” may be less common today than the term “prepaid card.”

Response: The FDIC agrees with these comments and is reconsidering the scope of the proposed rule.

Of course, no rule at all may be necessary if the funds underlying “stored value cards” or similar mechanisms do not differ in any material respects from the funds underlying ordinary checks or ATM cards ( i.e. , the funds in ordinary checking accounts). Although some of the literature suggests that stored value cards are different than checks because the funds are stored “on the card,” nothing is actually stored on the card except information (such as information about the amount available to the cardholder for transfers to merchants). In this respect, a stored value card is similar to a paper check. Both a card and a check serve as the means of transferring funds held at a bank. In both cases, the funds are delivered to merchants through a “clearing” process. This similarity was recognized in GC8. See 61 FR at 40490.

If a particular stored value card may be used to make withdrawals from ATM machines, then the card is similar to an ordinary ATM card. The use of a bank ATM machine to make withdrawals is a demonstration of the fact that the underlying funds are held at a bank, not “on the card.”

In short, stored value cards are very similar to traditional mechanisms for transferring or withdrawing funds from a bank. To the extent that the underlying funds have been placed at a bank, a self-described “stored value card” can serve as an access mechanism. 3 In this regard, a stored value card is no different than a check or bank-issued traveler's check or money order. None of these mechanisms actually stores money. All of these mechanisms merely provide access to money stored at a bank.

Perhaps the major difference between stored value cards and traditional access mechanisms is that the holder of a stored value card, unlike the holder of a book of checks or the holder of an ATM card, need not deal directly with a bank. Rather, the holder of a stored value card may deal with either a bank or a third party. 4

For example, in the case of payroll cards, the cardholders receive their cards from their employer (or agent company on behalf of the employer). The underlying funds are placed at a depository institution by the employer. After the distribution of the cards and the placement of the funds, the cards are used by the cardholders to transfer or withdraw the funds.

Similarly, in the case of gift cards, the cardholders may buy their cards from a retail store. Prior to selling the cards, the retail store (or some other company under an agreement with the retail store) may place the underlying funds at a depository institution. After the selling of the cards and the placement of the funds, the cards are used by the cardholders to transfer or withdraw the funds.

The fact that a depository institution holds the funds but might not deal directly with the cardholders creates the possibility that the institution will maintain no records as to the identities of the cardholders. In the event of the failure of the depository institution, the anonymity of the cardholders would create an obvious problem for the FDIC in attempting to pay deposit insurance to the cardholders. Concerns about the possible anonymity of cardholders played a large role in the FDIC's issuance of GC8 in 1996.

The problem of anonymity is not limited to persons with stored value cards. The same problem might exist in the case of persons who use other nontraditional means of transferring funds. For example, a company might provide customers with the service of purchasing goods or transferring funds over the Internet. In order to effectuate such transfers, the company might place funds at banks without providing the bank with information as to the identities of the customers. In such a scenario, an issue would exist as to whether the funds at the bank are “deposits” under paragraph 3(l)(1) of the statutory definition (as interpreted in GC8) because the funds would not be held in conventional checking or savings accounts. In addition, an issue would exist as to whether the funds are “deposits” under paragraph 3(l)(3) of the statutory definition (as interpreted in GC8) because the funds might be used by the customers to make general and miscellaneous purchases over the Internet. Finally, assuming that the funds are “deposits,” an issue would exist as to whether the funds should be insured to the company as opposed to the anonymous customers.

In short, the issues that exist with respect to the funds underlying stored value cards also exist with respect to the funds underlying other nontraditional access mechanisms. In order to resolve this broader set of issues, the FDIC has decided to replace the First Proposed Rule (dealing solely with funds underlying stored value cards) with the Second Proposed Rule (dealing with funds underlying all types of nontraditional access mechanisms). The Second Proposed Rule is explained in detail in section V, infra.

In response to the First Proposed Rule, commenters presented a number of objections that also might apply to the Second Proposed Rule. Each of the principal objections and arguments is discussed in turn below.

The Effect Upon Other Laws. Some commenters objected to the First Proposed Rule on the grounds that the adoption of a broad definition of “deposit” would trigger various laws and regulations that the commenters characterized as burdensome. Several commenters stated that the applicability of these laws and regulations could stifle development and increase costs of stored value products. The given examples of such laws and regulations included the Federal Reserve Act as implemented by Regulation D and the Electronic Fund Transfer Act as implemented by Regulation E. Commenters also cited Regulation P (privacy of consumer financial information), Regulation CC (availability of funds), Regulation DD (truth in savings), laws involving branches and mergers, the USA Patriot Act, and state laws involving escheat and liens.

Response: The laws and regulations cited by the commenters do not incorporate the definition of “deposit” in the FDI Act. Therefore, the FDIC's interpretation of “deposit” does not necessarily determine the applicability of these laws and regulations.

Regulation E is illustrative. This regulation provides certain protections to consumers who use electronic fund transfer services. See 12 CFR part 205. Nothing in Regulation E limits its application to consumers with “deposits” as defined in the FDI Act. Rather, Regulation E protects consumers with “a demand deposit (checking), savings, or other consumer asset account (other than an occasional or incidental credit balance in a credit plan) held directly or indirectly by a financial institution and established primarily for personal, family, or household purposes.” 12 CFR 205.2(b)(1) (emphasis added).

In September of 2004, the Board of Governors of the Federal Reserve System published a proposed rule that would provide that “payroll card accounts” are covered by Regulation E. See 69 FR 55996 (September 17, 2004). The proposed rule does not provide that Regulation E shall apply to all types of stored value card accounts or that Regulation E shall apply to all “deposits” as defined in the FDI Act. Thus, on its face, the proposed rule indicates that the applicability of Regulation E to consumers' accounts need not be coextensive with the insurance coverage of “deposits” as defined in the FDI Act. 5

Consistency With GC8. Some commenters who opposed the First Proposed Rule presented legal arguments based on the statutory definition of “deposit” at 12 U.S.C. 1813(l). Most of these commenters objected to the FDIC's proposed treatment of funds in hybrid systems ( i.e. , systems in which the depository institution maintains a pooled “reserve account” for all cardholders as in a “Bank Primary-Reserve System” but also maintains an account or subaccount for each cardholder as in a “Bank Primary-Customer Account System”). Under the First Proposed Rule, the funds in a hybrid system would be classified as “deposits.”

In objecting to the FDIC's proposed treatment of funds in hybrid systems, the commenters relied in large part upon the FDIC's analysis of “Bank Primary-Reserve Systems” in GC8. As previously discussed, the FDIC in GC8 found that the funds in such systems do not qualify as “deposits” under either paragraph 3(l)(1) or paragraph 3(l)(3) of the statutory definition (previously quoted). First, the FDIC found that the funds do not qualify as “deposits” under paragraph 3(l)(1) because the funds are not credited to conventional commercial, checking, savings, time or thrift accounts. Rather, the funds are credited to a pooled self-described “reserve account.” See 61 FR 40490. Second, the FDIC found that the funds do not qualify as “deposits” under paragraph 3(l)(3) because the purpose of the funds is insufficiently “special or specific.” In reaching this conclusion, the FDIC noted that the funds might be disbursed to any number of merchants as the cardholders use their cards in miscellaneous and unrelated transactions. See id.

On the basis of the same reasoning, some commenters argued that the funds in a hybrid system are not “deposits.” First, these commenters noted that the funds in a hybrid system are not credited to conventional commercial, checking, savings, time or thrift accounts (as those terms are interpreted in GC8). Rather, the funds are credited to the pooled “reserve account” and the individual stored value card subaccounts. Second, these commenters noted that the funds in the “reserve account” and the subaccounts are not “special or specific” in purpose (as that term is interpreted in GC8) because the funds might be disbursed to any number of merchants as the cardholders use their cards in miscellaneous and unrelated transactions. These commenters therefore argued that under the FDIC's own interpretation in GC8 of paragraphs 3(l)(1) and 3(l)(3), the funds should not be “deposits.”

Response: The commenters’ interpretation as summarized above is not the only possible interpretation of GC8 as to whether the funds in hybrid systems are “deposits.” As explained in the preamble to the First Proposed Rule, the issue simply was not resolved in GC8. See 69 FR 20558, 20562 (April 16, 2004).

The confusion regarding the applicability of GC8 is an important reason for replacing GC8 with a regulation. In the end, the question is not whether certain funds are “deposits” under GC8 but whether certain funds are “deposits” under the statute and regulations implementing and interpreting the statute. In publishing the First Proposed Rule, the FDIC attempted to clarify the meaning of the statute. In regard to funds in hybrid systems, the FDIC concluded that such funds are “deposits” under paragraph 3(l)(3) of the statutory definition because the funds in each subaccount are held for the “special or specific purpose” of satisfying the bank's obligations to a specific customer, i.e. , the individual cardholder. 6 See 69 FR at 20562. This conclusion is consistent with GC8, in which the FDIC found that the funds in a “Bank Primary-Customer Account System” are “deposits.” No apparent difference exists between the funds in an individual subaccount and the funds in an individual account.

In summary, the FDIC continues to believe that the funds in hybrid systems are “deposits.” The FDIC is not persuaded by the comments to the contrary. Moreover, even if the funds in a particular type of system (such as a hybrid system) are not “deposits” under paragraph 3(l)(1) or paragraph 3(l)(3), the FDIC may classify the funds as “deposits” under paragraph 3(l)(5) (subject to the FDIC's consultations with the other federal banking agencies). In light of the similarity between debit cards or ATM cards (providing access to traditional bank accounts) and stored value cards in a hybrid system (providing access to bank subaccounts), the FDIC believes that the funds in a hybrid system should be classified as “deposits.”

Cardholders' Expectations. Another argument advanced by some commenters is that the funds underlying certain types of stored value cards—especially gift cards—should not be classified as “deposits” because the cardholders do not perceive themselves as depositors.

Response: Whether cardholders expect their cards to be supported by insured deposits is a significant practical issue (discussed further below), but it is not determinative. First, the issue for the FDIC is not simply whether the funds underlying gift cards are “deposits.” Assuming that the funds are “deposits,” an additional issue is whether the insurance coverage protects the cardholders as opposed to some other party. For example, the funds underlying certain gift cards might be placed at an insured depository institution by a retail store. Assuming that the retail store retains control of the funds, or the store fails to satisfy the FDIC's requirements for obtaining “pass-through” insurance coverage, the FDIC would treat the store and not the cardholder as the depositor. Thus, the cardholders' alleged perceptions and expectations would be fulfilled (they would not be treated as depositors) and yet the funds held by the bank could be classified as “deposits” (insurable not to the cardholders but to the retail store).

Second, the commenters' argument does not address the fact that some cardholders receive periodic statements or balances from the depository institution (or such statements or balances are made available by the depository institution). The FDIC is concerned that a stored value cardholder who receives a statement or balance from an FDIC-insured depository institution would expect his or her funds to be protected by the FDIC. In other words, the cardholders may perceive themselves as depositors.

Third, the statutory definitions of “deposit” and “insured deposit” are very broad. They do not make reference to customers’ perceptions and expectations. See 12 U.S.C. 1813(l); 12 U.S.C. 1813(m). In light of the foregoing, the FDIC is reluctant to adopt a regulation that would rely on customers' alleged perceptions and expectations.

Distinctions Among Types of Cards. In response to the First Proposed Rule, some commenters argued that the FDIC should base deposit insurance determinations on certain characteristics of stored value cards. For example, one commenter stated that the underlying funds should be treated as “deposits” only in the case of “funds on cards that are the functional equivalent of a deposit in terms of longevity, purpose, usability, and ownership.” This commenter further argued that the funds should not be treated as “deposits” in the case of “funds on cards that are the functional equivalent of a payment mechanism more akin to cash.”

Response: Two points must be emphasized. First, under the FDI Act, insurance of “deposits” is not limited to funds owned by bank customers with formal or long-term relationships with the bank. For example, the term “deposit” includes funds underlying bank-issued travelers’ checks, official checks and money orders. See 12 U.S.C. 1813(l)(1); 1813(l)(4). Even though the payee of such an instrument may have established no formal relationship with the bank, the FDIC will provide insurance to the payee (in the event of the bank's failure) because the funds held by the bank are “deposits.”

Second, a stored value card is not “akin to cash.” Rather, a stored value card is more closely related to payment instruments such as checks or travelers' checks or money orders because the card must be backed-up by money at a bank. As previously explained, this money moves to merchants through a “clearing” process. In contrast, no “clearing” takes place in the case of cash.

Payroll Cards Versus Gift Cards. Some commenters argued that the FDIC should expressly differentiate between payroll cards and gift cards. These commenters suggested that the FDIC should adopt a rule that provides as follows: (1) the funds underlying payroll cards are “deposits”; but (2) the funds underlying gift cards are not “deposits.”

Response: Although the FDIC has not incorporated this suggestion in the Second Proposed Rule, additional comments are requested as to whether the FDIC should recognize a distinction between the funds underlying payroll cards and the funds underlying gift cards. In the case of gift cards, the insurance of the underlying funds may depend on whether the funds are held in an account solely in the name of the retail store ( i.e. , the party that places the funds into the bank) as opposed to being held in a custodial account that satisfies the FDIC's requirements for “pass-through” insurance coverage ( i.e. , coverage that “passes through” the retail store to the cardholders). If the gift cards have been issued by the bank itself and not issued by or through a retail store or other sponsoring company, one possibility might be to create a “ de minimis ” rule. For example, the FDIC could create a rule providing that the funds underlying cards with small balances ( e.g. , up to $100) are not “deposits.” Assuming that the gift cards have been issued directly by the bank (and not by or through a retail store or sponsoring company or any other party), another possibility might be to create a rule under which the funds underlying gift cards are not “deposits” if the insured depository institution maintains no records as to the identities of the cardholders or any other parties. Such an exception to the definition of “deposit” was included in the First Proposed Rule. Although the Second Proposed Rule does not include such exceptions to the definition of “deposit,” comments are requested.

In the case of funds underlying payroll cards, one possibility is to create a rule mandating satisfaction of the FDIC's “pass-through” requirements so that the funds always would be insured to the employees. For example, the FDIC might forbid insured depository institutions from accepting funds underlying payroll cards unless (1) the employer (or agent company on behalf of the employer) maintains records reflecting the identities of the employees and the amount payable to each employee; and (2) the employer relinquishes ownership of the funds to the employees so that the employer cannot recover the funds under any circumstances ( e.g. , upon the expiration of a card). Although the Second Proposed Rule does not include such a provision, comments are requested. The purpose of such a provision would be to protect the wages and salaries of employees. Assuming that the FDIC adopts such a provision, comments are requested as to whether this type of provision should apply only to payroll cards or whether the FDIC should extend this treatment to other cards such as those used to deliver welfare or medical benefits.

The manner in which an employer uses payroll cards may be affected by state labor laws and regulations. Most notably, it appears that at least some state labor laws, though perhaps written to address a different issue, would effectively require employers to satisfy “pass-through” requirements. Comments are requested as to the applicability of any such state laws, with particular focus on whether they effectively insure that employees will receive “pass-through” coverage in the absence of FDIC rules requiring satisfaction of “pass-through” requirements.

“Chilling Effect.” Some commenters argued that the adoption of a broad definition of “deposit” would have a “chilling effect” on the development of stored value products. This argument is based upon the proposition that the definition of “deposit” under the FDI Act is a trigger with respect to the operation of other laws and regulations (such as Regulation E or the USA Patriot Act).

Response: As previously explained, a determination by the FDIC that certain funds held by a bank are insurable as “deposits” under the FDI Act would not automatically trigger application of various other laws and regulations. Conversely, a determination by the FDIC that the funds underlying some, or all, classes of stored value cards are not “deposits” would not preclude application of these other laws and regulations.

“Premature.” Some commenters argued that the adoption of a rule is “premature.” These commenters urged the FDIC—together with the other banking agencies—to conduct a study of stored value products.

Response: The timeliness of this rulemaking must be viewed in light of the fact that the FDIC has not addressed many of the issues relating to stored value cards since 1996 (when GC8 was published). Since that time, the development of new types of stored value products and systems (such as hybrid systems) has created uncertainty as to the insurance coverage of the underlying funds. If the FDIC fails to provide guidance, the holders of access mechanisms will not know whether they are insured. Moreover, insured depository institutions will not know whether to report the funds as “deposits” in Call Reports. Under these circumstances, the FDIC believes that rulemaking may be necessary now.

The FDIC has considered the comments submitted by the public in response to the First Proposed Rule. These comments have increased the FDIC's understanding of the issues relating to stored value cards and other nontraditional access mechanisms.

As discussed in the preceding section, the funds underlying some nontraditional access mechanisms are placed at an insured depository institution by a party other than the holder of the mechanism. For example, in the case of payroll cards, the funds will be placed at the insured depository institution by the employer (or agent company on behalf of the employer) while the cards will be held by employees. 7 Similarly, in the case of gift cards, the funds may be placed at the insured depository institution by a retail store (or other company pursuant to an agreement with the retail store) while the cards may be held by customers of the retail store. These arrangements create the possibility that the insured depository institution will possess no records as to the identities of the holders of the access mechanisms. An absence of such records appears especially likely in the case of low-denomination, transferable gift cards. In the event of the failure of the insured depository institution, the anonymity of the holders of the access mechanisms would create an obvious problem for the FDIC in attempting to pay deposit insurance.

The issue described above is not addressed in section 3(l) of the FDI Act (defining “deposit”). The issue is addressed in section 12(c), which provides that the FDIC—in paying deposit insurance—is entitled to rely on the account records of the insured depository institution in identifying the owners of deposits. See 12 U.S.C. 1822(c). 8

In accordance with section 12(c), the FDIC has promulgated certain rules regarding the identification of the owners of deposits. These rules are set forth in section 330.5 of the insurance regulations. See 12 CFR 330.5. Section 330.5 provides that “the FDIC shall presume that deposited funds are actually owned in the manner indicated on the deposit account records of the insured depository institution.” 12 CFR 330.5(a)(1). If the party that places funds at an insured depository institution is not the actual owner of the funds but a mere agent or custodian, then certain disclosure requirements must be satisfied in order for the insurance coverage to “pass through” the agent to the actual owner(s). See 12 CFR 330.5(b); 12 CFR 330.7. First, the agency or custodial relationship must be disclosed in the account records of the insured depository institution. See 12 CFR 330.5(b)(1). Second, the interests of the actual owners must be disclosed in records of the insured depository institution or records maintained by the custodian or other party. See 12 CFR 330.5(b)(2). If the disclosure requirements are not satisfied, the funds will be insured to the custodian ( i.e. , the party that places the funds at the insured depository institution).

The FDIC is proposing to add a new paragraph to section 330.5. This new paragraph would extend the FDIC's rules regarding ownership of deposits to funds underlying nontraditional access mechanisms, including cards, codes, computers or other electronic means. This approach differs from the approach taken by the FDIC in the First Proposed Rule, which would have added a new section to 12 CFR part 303.

The Second Proposed Rule would be codified at 12 CFR 330.5(c). This new paragraph would include three subsections, which are summarized below.

Subsection 330.5(c)(1) would recognize that the term “deposit” includes “funds subject to transfer or withdrawal solely through the use of nontraditional access mechanisms, including cards, codes, computers or other electronic means, to the extent that such mechanisms provide access to funds received and held by an insured depository institution for payment to others.” This subsection also would state that the FDIC, in determining the owners of funds underlying such nontraditional access mechanisms, would apply the general disclosure rules in section 330.5 as well as the special rules set forth in subsections 330.5(c)(2) and 330.5(c)(3) (summarized below). To the extent that a stored value card does not provide access to funds at a bank (such as subway farecard), the FDIC's regulations would be inapplicable. See FDIC v. Philadelphia Gear Corporation , 476 U.S. 426 (1986).

Subsection 330.5(c)(2) would address cases in which funds are placed at an insured depository institution by one party for transfer or withdrawal by the same party. In such a case, no issue would exist as to whether the funds should be insured to the party that places the funds at the bank as opposed to the party holding the access mechanism. The parties would be the same person. Accordingly, the funds would be insured to that person. An example of funds covered by this subsection would be funds transferable by the customer through the Internet (as opposed to the funds in an ordinary checking account, which would be governed by the ordinary disclosure rules in section 330.5).

Subsection 330.5(c)(3) would address cases in which funds are placed at an insured depository institution by one party for transfer or withdrawal by other parties. An example would be the funds underlying payroll cards, in which the funds are placed at the bank by the employer but the funds are subject to transfer or withdrawal by the employees. Another example would be the funds underlying gift cards, in which the funds may be placed at the bank by a retail store (or other company under an agreement with the retail store) but the funds are subject to transfer or withdrawal by customers of the retail store. Under this subsection, the funds would be insured to the first party ( i.e. , the party that places the funds at the bank  9 ) unless (A) the account records of the insured depository institution reflect the fact that the first party is not the owner of the funds; and (B) either the first party or the depository institution (or an agent on behalf of the first party or the depository institution) maintains records reflecting the identities of the persons holding the access mechanisms and the amount payable to each such person. If both of these conditions are satisfied, then the funds would be insurable to the persons holding the access mechanisms. 10

Under subsection 330.5(c)(3), the involvement of a third-party processor for the bank would not preclude “pass-through” insurance coverage. As stated above, “pass-through” coverage to the holders of the stored value cards or other access mechanisms would be available under both of the following circumstances: (1) the depository institution itself maintains records reflecting the identities of the cardholders and the amount payable to each cardholder; or (2) a third-party processor on behalf of the depository institution maintains records reflecting the identities of the cardholders and the amount payable to each cardholder. In the latter case, the depository institution's own records ( i.e. , the records not maintained by the third-party processor) should reflect the fact that the funds are not owned by the party that placed the funds into the bank ( e.g. , the employer in the case of payroll cards or the retail store in the case of gift cards) but instead are owned by the cardholders.

Unlike the First Proposed Rule, the Second Proposed Rule does not address the following scenario: (1) The stored value cards or other nontraditional access mechanisms are sold or issued directly by the insured depository institution to the public (and not issued by or through a third party or sponsoring company); and (2) the depository institution maintains no accounts or subaccounts or other records reflecting the identities of the purchasers. The First Proposed Rule provided that the funds held by the depository institution, in this scenario, would not be “deposits.” The FDIC has not addressed this scenario in the Second Proposed Rule, however, because the FDIC is unsure that such a scenario actually exists. Comments are requested on this point. The FDIC is interested in learning whether any insured depository institution is selling stored value products directly to the public without maintaining any records as to the identities of any parties.

Assuming the existence of such a system, payment of insurance by the FDIC would be difficult in the event of the failure of the insured depository institution. In light of this difficulty, comments are requested as to whether the funds in any such system should be classified as “deposits.”

Arguably, the form of the access mechanism is unimportant. Whether the mechanism is traditional (such as an ATM card, book of checks or official check) or nontraditional (such as a stored value card), the access mechanism is merely a device for withdrawing or transferring the underlying money. The important thing is the underlying money. The receipt of money by the bank distinguishes a “deposit” liability from a “non-deposit” liability. In the case of a “non-deposit” liability, the bank generally does not receive money from the creditor but instead receives goods or services.

The appropriate model for the FDIC's treatment of funds underlying stored value cards and other nontraditional access mechanisms may be the FDIC's treatment of funds underlying traditional access mechanisms. In the case of traditional access mechanisms and payment instruments (such as checks, traveler's checks, cashier's checks and money orders), the underlying funds held at a bank are “deposits” with no exceptions except those limited exceptions expressly created by Congress (such as the exception for bank obligations payable solely outside the United States). See 12 U.S.C. 1813(l)(1); 12 U.S.C. 1813(l)(4); 12 U.S.C. 1813(l)(5). This means that the funds are “deposits” irrespective of whether the bank maintains records as to the identities of customers and irrespective of account labels (such as “reserve account”).

The FDIC could extend this simple approach to funds underlying nontraditional access mechanisms. Of course, the results would be somewhat different than the results under GC8 (or the First Proposed Rule) but the FDIC is not bound to incorporate GC8 in the proposed rule.

In short, the question is whether the FDIC should adopt a regulation that treats the funds underlying stored value cards and other nontraditional access mechanisms as “deposits” provided that the funds have been placed at an insured depository institution. This approach would be consistent with the FDIC's treatment of funds underlying traditional access mechanisms. An alternative approach would be to treat the funds as “non-deposits” in those cases (if any) in which the insured depository institution sells stored value cards directly to cardholders without keeping any information as to the identities of the cardholders or any other party. This approach would be different than the FDIC's treatment of funds underlying traditional access mechanisms. Comments are requested.

Finally, some discussion may be warranted regarding a type of stored value card system addressed in the First Proposed Rule but not addressed in the Second Proposed Rule. This type of system was characterized in GC8 as a “secondary system” ( i.e. , the “Bank Secondary-Advance System” or the “Bank Secondary-Pre-Acquisition System”). In this type of system, the insured depository institution collects funds from cardholders but does not hold the funds for the cardholders. Rather, the depository institution either forwards the funds to a sponsoring company or retains the funds as reimbursement for funds previously paid to the sponsoring company. In either case, the depository institution plays no role in the payment process. When the cardholders use their cards, funds are transferred or withdrawn from the sponsoring company and not transferred or withdrawn from the insured depository institution.

Since the publication of GC8 in 1996, the FDIC has received few if any inquiries about “secondary systems.” The FDIC is unsure whether any such systems currently exist. Under these circumstances, no reason may exist for addressing such systems in the Second Proposed Rule. Comments are requested. Assuming the existence of such systems, the FDIC could add a subsection providing that the funds received by the insured depository institution are “deposits” belonging to the sponsoring company for the brief period before the funds are forwarded to the sponsoring company (consistent with GC8's treatment of funds in a “Bank Secondary-Advance System”). This subsection also could provide that no “deposits” would exist if no obligation exists on the part of the depository institution to hold or forward any funds (consistent with GC8's treatment of funds in a “Bank Secondary-Pre-Acquisition System”). Assuming the existence of “secondary systems,” comments are requested as to whether the FDIC should add such provisions to the Second Proposed Rule.

The First Proposed Rule did not mandate that stored value cards disclose whether the underlying funds are insured by the FDIC. In publishing the First Proposed Rule, however, the FDIC discussed this question. See 69 FR 20558, 20564 (April 16, 2004). The FDIC stated that it “expects insured depository institutions to clearly and conspicuously disclose to customers the insured or non-insured status of the stored-value cards they offer to the public.” The Office of the Comptroller of the Currency (OCC) has informed the institutions under its supervision that it has the same expectation when they implement payroll card systems. See OCC Advisory Letter 2004-6 (May 6, 2004).

In response to the First Proposed Rule, a number of commenters addressed the issue of disclosures. Some commenters supported mandatory disclosures, but several commenters expressed the opinion that mandatory disclosures are unnecessary.

The FDIC recognizes that mandatory disclosures would impose a degree of burden on depository institutions. On the other hand, this burden may be outweighed by consumers' need for accurate information. While not mandating specific disclosures in the Second Proposed Rule, the FDIC is interested in receiving comments on this subject.

One option is to require specific disclosures when “pass-through” coverage is available to cardholders or when the depository institution has a good faith belief that the FDIC's requirements for “pass-through” coverage have been satisfied. In such a case, the following could be printed on the card:

Such a disclosure would not be mandated when “pass-through” coverage is unavailable to cardholders. Indeed, when “pass-through” coverage is unavailable, any statement about FDIC insurance coverage (such as a statement to the effect that the funds underlying a particular gift card are insured to the retail store that sold the card, not to the cardholder) could be very confusing. For this reason, the FDIC seeks comments on how to prevent misleading disclosures and whether certain disclosure practices should be prohibited.

Another question is whether a brief disclosure should be printed on the stored value card itself or whether a more substantive disclosure that clearly explains the scope of federal insurance coverage should be provided at the time that the card is issued. Possibly, the card could refer the consumer to a source of additional information about the insured status of the consumer's funds. An additional question is whether the name of the depository institution that holds the underlying funds should be printed on the card.

Comments are requested on each of these questions. The FDIC is interested in determining the feasibility of providing disclosures to consumers and the usefulness of any such disclosures to consumers.

The FDIC seeks comments on all aspects of the Second Proposed Rule.

The FDIC is seeking comments on whether to mandate disclosures to the holders of stored value cards (as discussed in section VII). Requiring the disclosure of information to the public may qualify as a “collection of information” for purposes of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. ). See 5 CFR 1320.3(c). The required disclosure would not be a “collection of information,” however, to the extent that the FDIC is providing specific language that insured depository institutions may use in disclosing information to the public. See 5 CFR 1320.3(c)(2). Moreover, insured depository institutions already must ascertain the information in question—whether funds underlying stored value cards qualify as “deposits”—in completing their Call Reports. Thus, nothing in this proposed rulemaking requires an insured depository institution to collect information that the institution otherwise would not collect.

In summary, no collections of information pursuant to the Paperwork Reduction Act are contained in the proposed rule. Accordingly, no information has been submitted to the Office of Management and Budget (OMB) for review. If the proposed rule is revised in response to the public comments, the FDIC will make another determination as to the applicability of the Paperwork Reduction Act and seek OMB approval as appropriate.

In accordance with section 3(a) of the Regulatory Flexibility Act (5 U.S.C. 603(a)), the FDIC must publish an initial regulatory flexibility analysis with this proposed rulemaking or certify that the proposed rule, if adopted, will not have a significant economic impact on a substantial number of “small entities” ( i.e. , depository institutions with total assets of $150 million or less). On the basis of the reasons set forth below, the FDIC hereby certifies pursuant to 5 U.S.C. 605(b) that the proposed rule, if adopted, will not have a significant economic impact on a substantial number of small entities.

Economic Impact. The proposed rulemaking is not intended to apply to any issue except the meaning of “deposit” under the FDI Act. The definition of “deposit” is applied consistently to all insured depository institutions, including “small” institutions with assets under $150 million. As of March 31, 2005, there were 5,322 “small” FDIC-insured institutions. Though this rulemaking may affect the manner in which some insured depository institutions report “deposits” in their Call Reports, the rulemaking generally will not impose new obligations on insured depository institutions because such institutions—irrespective of this rulemaking—must file Call Reports.

Notwithstanding the above, the FDIC may be imposing new obligations on insured depository institutions in directing such institutions—when issuing stored value cards—to make clear and conspicuous disclosures as to whether the underlying funds are insured (as discussed in section VII). The FDIC believes that clear, conspicuous disclosures are necessary in order to prevent confusion on the part of the public. See 12 U.S.C. 1819 (investing the FDIC with general rulemaking authority with respect to deposit insurance). In any event, the FDIC believes that the cost of adding clear and conspicuous disclosures to stored value cards will not result in a significant economic impact on a substantial number of small entities. This conclusion is based upon the fact that the cost will involve the design of a depository institution's stored value cards, not the production of such cards. Adding a one-sentence disclosure to a card should involve at most only a minimal cost. Indeed, the addition of a clear and conspicuous disclosure about insurance coverage may reduce the institution's costs in answering questions from the public about FDIC insurance coverage.

Although the proposed rulemaking should not create a significant adverse economic impact on an insured depository institution, and may even result in a modest net benefit, the FDIC believes that insured depository institutions should be given an opportunity to provide comments on the subject. Accordingly, comments are requested (below).

The FDIC is not aware of any federal rules that would duplicate, overlap or conflict with a requirement that stored value cards issued by insured depository institutions must include clear and conspicuous disclosures about insurance coverage.

Request for Comments. The FDIC requests comments as to the cost of adding a clear and conspicuous disclosure about insurance coverage to stored value cards by insured depository institutions. Commenters may wish to address the following: (1) The number of small entities that are issuing stored value cards or may issue stored value cards; (2) the manner and impact of adding a clear and conspicuous disclosure about insurance coverage to stored value cards; and (3) alternative methods of preventing confusion on the part of the public.

The proposed rule would not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, enacted as part of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 2681).

For the reasons set forth in the preamble, the Board of Directors of the Federal Deposit Insurance Corporation proposes to amend part 330 of Title 12 of the Code of Federal Regulations as follows:

We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed under ADDRESSES. Include “Docket No. FAA-2005-22034; Directorate Identifier 2004-NM-182-AD” in the subject line of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments submitted by the closing date and may amend the proposed AD in light of those comments.

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

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

We have received a report from the airplane manufacturer, Gulfstream, indicating that the damper shafts in two actuators broke under normal torquing requirements during assembly of the actuators for a Gulfstream Model GV-SP airplane. Approximately one week after the original occurrence, a third actuator was found with a cracked damper shaft. In each case, the cracks originated at the threaded base of the damper shaft. In addition, the third actuator was found to be from a manufacturing lot previous to that of the other two actuators. Parker Aerospace, the actuator manufacturer, notified Gulfstream that the production process used after 1998 to manufacture aileron and elevator actuator damper shafts (internal to the actuator) may induce cracks in the threaded portion of the shaft. This cracking could cause the retaining nut and the separated portion of the failed damper shaft to become dislodged from the damper body and block the movement of the assembly. This condition, if not corrected, could result in locking of an aileron or elevator actuator (hard-over condition), which would activate the hard-over protection system (HOPS), resulting in increased pilot workload and consequent reduced controllability of the airplane.

The affected aileron and elevator actuators installed on Gulfstream Model GV and GV-SP series airplanes are identical to those installed on Model G-1159, G-1159A, G-1159B, and G-IV series airplanes. Therefore, all of these models may be subject to the identified unsafe condition.

On October 4, 2004, we issued AD 2004-21-03, amendment 39-13824 (69 FR 61305, October 18, 2004), applicable to all Gulfstream Model G-1159, G-1159A, G-1159B, and G-IV series airplanes. That AD currently requires a one-time inspection of the left and right aileron and elevator actuators to determine the part and serial numbers of each actuator, repetitive inspections of suspect actuators to detect broken damper shafts, and replacement of any actuator having a broken damper shaft. That AD also requires that operators report any broken damper shaft(s) they find to the FAA. That AD also provides an optional terminating action for the repetitive inspection requirements of that AD. That AD was prompted by reports of broken or cracked damper shafts within the aileron and elevator actuator assemblies. The actions required by that AD are intended to detect and correct broken damper shafts, which could result in locking of an aileron or elevator actuator (hard-over condition), subsequent loss of aileron or elevator control, and consequent reduced controllability of the airplane.

We have reviewed the following Gulfstream customer bulletins:

The customer bulletins describe procedures for a one-time inspection of the left and right aileron and elevator actuators to determine the part number (P/N) and serial number (S/N) of each actuator. The customer bulletins also describe procedures for an inspection of the actuators with certain P/Ns and S/Ns to detect broken damper shafts, and replacement of any actuator having a broken damper shaft with a new or serviceable actuator.

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

1. A one-time inspection of the left and right aileron and elevator actuators to determine the part and serial numbers of each actuator;

2. Repetitive inspections of suspect actuators to detect broken damper shafts, and replacement of any actuator having a broken damper shaft; and

3. Any broken damper shaft found during the initial and repetitive inspections is to be reported to the FAA. These actions are to be done in accordance with the service information described previously, except as discussed under “Differences Between the Proposed AD and Customer Bulletins.”

We are not proposing to require the terminating action ( i.e. , replacement of all suspect actuators) at this time, because we have determined, and the actuator manufacturer has confirmed, that the necessary replacement actuators (with a P/N and/or S/N not listed in the applicable customer bulletin) are not yet available and will not be available for another 24 to 36 months. Therefore, we are providing the terminating action as an option for operators once those parts become available.

The customer bulletins do not specify what to do if an installed actuator has either a P/N or S/N that is missing or is unreadable. This proposed AD would require that those actuators also be inspected to detect broken damper shafts—as if they have a P/N and S/N listed in the customer bulletins.

The customer bulletins recommend a one-time inspection of the aileron and elevator actuators for broken damper shafts. However, a suspect damper shaft found undamaged during the initial inspection still has the potential to break at some time in the future. Because a one-time inspection alone would not provide the degree of safety necessary, we have determined that repetitive inspections of the suspect actuators are necessary to ensure an adequate level of safety for the affected transport airplane fleet. We have also determined that an interval of 500 flight hours is an appropriate compliance time for the repetitive inspections. Although the customer bulletins do not include repetitive inspections, they do note that a recurring inspection will be added to the applicable airplane maintenance manual.

The customer bulletins also do not specify the type of inspection to use to detect broken damper shafts. We have determined that a detailed inspection for this action is appropriate. Therefore, this proposed AD would require a detailed inspection to detect broken damper shafts, and we have included the definition of a detailed inspection in this proposed AD.

The customer bulletins specify replacing an actuator having a broken damper shaft, but they do not specify the type of replacement actuator. This proposed AD would require replacement with either:

• A new or serviceable actuator having a subject P/N and S/N listed in the customer bulletin, provided the actuator has been and continues to be inspected for broken damper shafts in accordance with the requirements of this proposed AD; or

• A new or serviceable actuator having a P/N and/or S/N different from any listed in the customer bulletin. Replacing an actuator with an actuator having a different P/N and/or S/N would terminate the requirements of this proposed AD for that actuator only.

The customer bulletins do not specify reporting findings of broken damper shafts. This proposed AD would require that findings of all broken damper shafts be reported to the FAA. When the unsafe condition addressed by an AD is likely due to a manufacturer's quality control (QC) problem, a reporting requirement is instrumental in ensuring that we can gather as much information as possible regarding the extent and nature of the QC problem or breakdown, especially in cases where the data may not be available through other established means. This information is necessary to ensure that proper corrective action will be taken. Based on the results of these reports, we may determine that further corrective action is warranted.

The Accomplishment Instructions of the customer bulletins specify to submit the Service Reply Card or compliance information to the manufacturer. This proposed AD does not include those actions.

These differences have been coordinated with the airplane manufacturer.

The effectivities of the customer bulletins include all Model GV and certain Model GV-SP series airplanes, equipped with aileron or elevator actuators having certain P/Ns and S/Ns. Because there is no way to determine if an actuator with a suspect P/N and S/N is installed without inspecting the airplane, this proposed AD would apply to all Model GV series airplanes and Model GV-SP series airplanes having certain S/Ns. This requirement would ensure that the actions specified in the service bulletins and required by this proposed AD are accomplished on all affected airplanes. Note that the first action in the customer bulletins is an inspection to determine if an actuator having a certain P/N and S/N is installed.

This proposed AD is considered to be interim action. The inspection reports that are required by this proposed AD will enable us to work with the manufacturer to obtain better insight into the nature and extent of the broken damper shafts, and eventually to develop final action to address the unsafe condition. Once final action has been developed and replacement parts are available, we may consider further rulemaking.

On July 10, 2002, the FAA issued a new version of 14 CFR part 39 (67 FR 47997, July 22, 2002), which governs the FAA's airworthiness directives system. The regulation now includes material that relates to altered products, special flight permits, and alternative methods of compliance (AMOC). This material is included in part 39, except that the office authorized to approve AMOCs is identified in each individual AD. However, as amended, part 39 provides for the FAA to add special requirements for operating an airplane to a repair facility to do the work required by an airworthiness directive. For the purposes of this proposed AD, we have determined that such a special flight permit would be prohibited if a broken damper shaft is found during the inspection of the subject aileron and elevator actuators provided by paragraph (i) of this proposed AD. Locking of an aileron or elevator actuator, which would activate the hard-over protection system (HOPS), would significantly reduce controllability of the airplane and increase pilot workload. Intentionally operating an airplane in this condition would inherently increase the risk of a major event.

There are about 214 airplanes of the affected design in the worldwide fleet. This proposed AD would affect about 174 airplanes of U.S. registry. The following table provides the estimated costs for U.S. operators to comply with this proposed AD.

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

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

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

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

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

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

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

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

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

We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed under ADDRESSES. Include “Docket No. FAA-2005-22031; Directorate Identifier 2004-NM-259-AD” in the subject line of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments submitted by the closing date and may amend the proposed AD in light of those comments.

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

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

We have received a report indicating that an unsafe condition may exist on transport category airplanes equipped with certain smoke detectors. The affected smoke detectors are Meggitt Model 602 smoke detectors approved under Technical Standard Order (TSO) TSO-C1C and having certain part numbers (P/Ns) 8930-( ). Testing indicated a design discrepancy involving the operation of these smoke detectors. During a test on McDonnell Douglas Model MD-11F airplanes, 31 of 33 smoke detectors “locked up” when the power to the smoke detectors was interrupted during power transfer from the auxiliary power unit (APU) to the engines. Investigation revealed that the smoke detector circuit does not meet power interrupt requirements during a power transfer between ground power, APU power, and main engine power sources on the airplane. When the smoke detector locks up, the flightcrew is unaware of the inoperative smoke detector unless they test the smoke detection system. The smoke detector remains inoperative until power to the unit is cycled off and on. Under these conditions, the flightcrew would not be alerted in the event of a fire.

This lock-up condition may also be produced by electrical power transfer on other airplanes equipped with an affected smoke detector. Included in that group are airplanes listed in the following table:

Therefore, all of these airplanes may be subject to the identified unsafe condition.

On January 12, 2005, we issued AD 2005-02-04, amendment 39-13949 (70 FR 3296, January 24, 2005), for all McDonnell Douglas Model MD-10-10F, MD-10-30F, MD-11F, DC-10-10F, and DC-10-30F airplanes. AD 2005-02-04 requires identifying the part number of the cargo compartment smoke detectors and, if necessary, revising the Limitations section of the airplane flight manual to include procedures for testing the smoke detection system after the last engine is started. That AD also provides for the optional replacement of the subject smoke detectors with modified smoke detectors, which would terminate the operational limitation.

Similar to this new proposed AD, AD 2005-02-04 was prompted by a report indicating that these smoke detectors can “lock up” during electrical power transfer from the APU to the engines. We issued that AD to identify and provide corrective action for a potentially inoperative smoke detector in the cargo compartment and to ensure that the flightcrew is alerted in the event of a cargo compartment fire.

When this new AD becomes effective, we will rescind AD 2005-02-04.

We have reviewed Meggitt Safety Systems Service Information Letter (SIL) 8930-26-01, dated November 8, 2004. The SIL provides procedures for, among other things, replacing the affected smoke detectors with modified smoke detectors, which is intended to adequately address the unsafe condition.

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

It would take about 1 work hour per airplane, at an average hourly labor rate of $65, to replace a smoke detector installed on the airplane. Replacement parts would be provided at no cost to the operators. We have been advised that about 4,637 smoke detectors have already been replaced. We estimate that affected smoke detectors are installed on 318 U.S.-registered airplanes. There may be as many as 28 affected smoke detectors on an airplane. This proposed AD could cost as much as $1,820 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:

We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Include the docket number “Docket No. FAA-2005-22032; Directorate Identifier 2005-NM-049-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments.

We will post all comments we receive, without change, to http://dms.dot.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of our docket Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the 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.

The Joint Aviation Authorities (JAA) has issued a regulation that is similar to SFAR 88. (The JAA is an associated body of the European Civil Aviation Conference (ECAC) representing the civil aviation regulatory authorities of a number of European States who have agreed to co-operate in developing and implementing common safety regulatory standards and procedures.) Under this regulation, the JAA stated that all members of the ECAC that hold type certificates for transport category airplanes are required to conduct a design review against explosion risks.

The Direction Générale de l'Aviation Civile (DGAC), which is the airworthiness authority for France, notified us that an unsafe condition may exist on certain Airbus Model A300 B4-620, A310-304, A310-324, and A310-325 airplanes. The DGAC advises that the electrical wiring for the fuel quantity indicators (FQIs) of the auxiliary center tank (ACT) is installed in harnesses that also contain 115V wiring that supplies other systems. The DGAC further advises that, pursuant to SFAR 88 and JAA reviews, the electrical routing of the ACT FQI wiring should be improved by segregating it from the 115V wiring. Wiring that is not segregated could result in an ignition source in the ACT, which, in combination with flammable fuel vapors, could result in a fuel tank explosion and consequent loss of the airplane.

Airbus has issued the service bulletins in the following table.

These service bulletins describe procedures for installing fused adaptors between the external wiring harness and the in-tank wiring at the connectors on the fuel tank wall of the ACT. Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. The DGAC mandated the service information and issued French airworthiness directive F-2005-021, dated February 2, 2005, to ensure the continued airworthiness of these airplanes in France.

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

Therefore, we are proposing this AD, which would require accomplishing the actions specified in the service information described previously.

The applicability of French airworthiness directive F-2005-021 excludes airplanes on which Airbus Service Bulletin A300-28-6073 or Airbus Service Bulletin A310-28-2149 was accomplished in service. However, we have not excluded those airplanes in the applicability of this proposed AD; rather, this proposed AD includes a requirement to accomplish the actions specified in those service bulletins. This requirement would ensure that the actions specified in the service bulletins and required by this proposed AD are accomplished on all affected airplanes. Operators must continue to operate the airplane in the configuration required by this proposed AD unless an alternative method of compliance is approved. This difference has been coordinated with the DGAC.

This proposed AD would affect about 2 airplanes of U.S. registry. The proposed actions would take about 52 work hours per airplane, at an average labor rate of $65 per work hour. Required parts would cost about $5,410 per ACT (up to two ACTs per airplane). Based on these figures, the estimated cost of the proposed AD for U.S. operators is $8,790 per ACT, per airplane.

Currently, there are no Model A300 B4-620 airplanes of U.S. registry with one or more ACTs. However, if an affected airplane is imported and placed on the U.S. Register in the future, the required actions would take about 52 work hours, at an average labor rate of $65 per work hour. Required parts would cost about $10,730 per ACT, per airplane. Based on these figures, we estimate the cost of this AD to be $14,110 per ACT.

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

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

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

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

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

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

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

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

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

We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed under ADDRESSES . Include “Docket No. FAA-2005-22033; Directorate Identifier 2004-NM-218-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments.

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

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

On April 21, 2003, we issued AD 2003-09-03, amendment 39-13132 (68 FR 22585, dated April 29, 2003), for certain EMBRAER Model EMB-135 airplanes and Model EMB-145, -145ER, -145MR, -145LR, -145XR, -145MP, and -145EP airplanes. That AD requires repetitive inspections of the spring cartridges of the elevator gust lock system to determine if the lock washer projection correctly fits the slots in the cartridge flange, and corrective action if necessary. That AD also provides for interim optional terminating action for the repetitive inspections for certain airplanes. That AD was prompted by reports of spring cartridges unscrewing in the electromechanical gust lock system. We issued that AD to prevent the elevator from jamming due to the spring cartridges unscrewing in the gust lock system, which could result in reduced controllability of the airplane.

Since we issued AD 2003-09-03, the Departmento de Aviacao Civil (DAC), which is the airworthiness authority for Brazil, issued Brazilian airworthiness directive 2003-01-03R1, dated July 26, 2004, to mandate replacing the existing spring cartridges with improved spring cartridges having a new part number.

EMBRAER has issued Service Bulletin 145LEG-27-0012, Revision 01, dated April 12, 2004 (for Model EMB-135BJ airplanes); and Service Bulletin 145-27-0102, Revision 02, dated January 20, 2005 (for Model EMB-135ER, -135KE, -135KL, -135LR, -145, -145ER, -145MR, -145LR, -145XR, -145MP, and -145EP airplanes). The service bulletins describe procedures for replacing the existing spring cartridges of the electromechanical elevator gust lock system with improved spring cartridges having a new part number, which would end the repetitive inspections of the spring cartridges. Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. The DAC mandated the service information and issued Brazilian airworthiness directive 2003-01-03R1, dated July 26, 2004, to ensure the continued airworthiness of these airplanes in Brazil.

Accomplishing EMBRAER Service Bulletin 145-27-0102 eliminates the need to accomplish certain actions specified in EMBRAER Service Bulletins 145-27-0086, Revision 04, dated March 21, 2005; and 145-27-0075, Revision 08, dated March 3, 2005. Those service bulletins are specified in notice of proposed rulemaking 2002-NM-89-AD (69 FR 56735; September 22, 2004) as applicable to certain airplanes.

These airplane models are manufactured in Brazil and are type certificated for operation in the United States under the provisions of section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, the DAC has kept the FAA informed of the situation described above. We have examined the DAC's findings, evaluated all pertinent information, and determined that AD action is necessary for airplanes of this type design that are certificated for operation in the United States.

This proposed AD would supersede AD 2003-09-03. This proposed AD would retain certain requirements of the existing AD and would also add a procedure for replacing the existing spring cartridges with improved spring cartridges having a new part number, which would provide for final terminating action for the repetitive inspections.

Therefore, we are proposing this AD, which would require accomplishing the actions specified in the service information described previously.

This proposed AD would retain certain requirements of AD 2003-09-03. Since AD 2003-09-03 was issued, the AD format has been revised, and certain paragraphs have been rearranged. As a result, the corresponding paragraph identifiers have changed in this proposed AD, as listed in the following table:

This proposed AD would affect about 380 airplanes of U.S. registry. The average labor rate is estimated to be $65 per work hour.

The inspections required by AD 2003-09-03 that are retained in this proposed AD take about 1 work hour per airplane. Based on these figures, the estimated cost of the required inspections is $24,700, or $65 per airplane, per inspection cycle.

The new proposed actions would take about 3 work hours per airplane. Required parts would cost about $79 per cartridge (2 per airplane). Based on these figures, the estimated cost of the new actions specified in this proposed AD for U.S. operators is $134,140, or $353 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:

We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Include the docket number “FAA-2005-22035; Directorate Identifier 2005-NM-016-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 the 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 Direction Générale de l'Aviation Civile (DGAC), which is the airworthiness authority for France, notified us that an unsafe condition may exist on certain Airbus Model A300 B2 and B4 series airplanes. The DGAC advises that it has received reports of several false stall warnings associated with stick-shaker activation, occurring during take-off. Investigation revealed that defective angle of attack (AOA) sensors caused the false stall warnings. This condition, if not corrected, could result in increased pilot workload as the pilot tries to determine the cause of the stall warning and possible reduction in the pilot's ability to control the airplane.

Airbus has issued Service Bulletin A300-34-0176, Revision 01, dated February 3, 2004, which describes the following procedures:

• Inspecting zone 120 to determine the part number (P/N) of all three AOA sensors.

• Repetitively replacing any Honeywell AOA sensor having P/N 965-4020-007 with a new or overhauled AOA sensor.

Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. The DGAC mandated the service information and issued French airworthiness directive F-2003-457 R1, dated December 22, 2004, to ensure the continued airworthiness of these airplanes in France.

Airbus has also issued Service Bulletin A300-34-0092, Revision 03, dated November 2, 2004. Service Bulletin A300-34-0092 describes the following procedures:

• Replacing Honeywell “pencil” AOA sensors having P/N 965-4020-007 with “vane” AOA sensors between frame (FR)18 and FR19.

• Replacing the current detectors in relay boxes 252VU and 107VU with new current detectors.

Airbus Service Bulletin A300-34-0092 also specifies that accomplishing the modification in that service bulletin cancels the actions specified in Airbus Service Bulletin A300-34-0176.

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

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

Operators should note that, although the Accomplishment Instructions of the Airbus Service Bulletin A300-34-0176, Revision 01, dated February 3,2004, describe procedures for reporting inspection findings, this proposed AD would not require that action. We do not need this information from operators.

The following table provides the estimated costs for U.S. operators to comply with this proposed AD.

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

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

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

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

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

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

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

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

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

We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed under ADDRESSES . Include “Docket No. FAA-2005-22036; Directorate Identifier 2005-NM-009-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments submitted by the closing date and may amend the proposed AD in light of those comments.

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

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

The Direction Générale de l'Aviation Civile (DGAC), which is the airworthiness authority for France, notified us that an unsafe condition may exist on certain Airbus Model A300 B2 and B4 series airplanes; Model A300 B4-600, B4-600R, and F4-600R series airplanes, and Model C4-605R Variant F airplanes (collectively called A300-600 series airplanes); and Model A310 series airplanes; equipped with General Electric CF6-80A3 or CF6-80C2 engines. The DGAC advises that the manufacturer has reassessed the thrust reverser systems of those airplanes and has determined that the thrust reverser could inadvertently deploy in flight. The manufacturer has developed a new, improved design of the thrust reversers, which provides an independent system to prevent deployment of the thrust reversers in flight. Inadvertent deployment of the thrust reversers in flight could result in reduced controllability of the airplane.

Airbus has issued the following service bulletins (SBs), which describe procedures for installing electro-pneumatic locking bar devices (TRAS lock system) and a dedicated and shielded electrical circuit that is segregated from the existing thrust reverser control system. The new electrical circuit commands the locking bar devices (TRAS locks), which would be installed in the engine nacelles. Implementation of the following SBs is intended to provide an independent system to prevent inadvertent deployment of thrust reversers during flight.

Airbus SB A310-78-2023, dated October 7, 2003 (for Model A310 series airplanes equipped with General Electric CF6-80C2 engines and not equipped with Full Authority Digital Engine Control (FADEC)), specifies previous or concurrent accomplishment of Airbus SB A310-78-2022, and describes modifying/retrofitting the electrical harness routine from each lock to the pylon interfaces of the engine/nacelle, and the existing monitoring wire; and activating the electrical system of the aircraft.

Airbus SB A310-78-2022, dated January 7, 2003 (for Airbus Model 310 series airplanes equipped with General Electric CF6-80C2 engines and not equipped with FADEC), describes modifying/retrofitting a new electrical circuit between the forward cargo compartment and the wing/pylon interfaces, a new electrical circuit in the engine pylons, and a new electrical circuit in the avionics compartment and the forward cargo compartment; and connecting the new electrical circuit. The SB indicates that Parts 1 and 2 of the SB can be accomplished independently and in any sequence, but Part 3 must be accomplished after the first two parts. Full function can be assured once Airbus SB A310-78-2023 has been accomplished.

Airbus SB A310-78-2025, dated July 23, 2004 (for Model A310 series airplanes equipped with General Electric CF6-80A3 engines), specifies previous or concurrent accomplishment of Airbus SB A310-78-2024, and references Goodrich Service Bulletin 71-065 as an additional source of service information. (After the issuance of Airbus SB A310-78-2025, dated July 23, 2004, the Goodrich Service Bulletin was reissued as Rohr Service Bulletin CF6-80A3, dated April 28, 2005.) Airbus SB A310-78-2025 also describes the following procedures:

• Modifying/retrofitting the existing monitoring wire and activating the electrical system of the aircraft.

• Modifying/retrofitting the electrical harness routine from each lock to the pylon interfaces of the engine/nacelle.

• Installing the support bracket for the electrical harness of the engine/nacelle.

• Modifying the stowed position of the hold-open rod bracket of the engine/nacelle.

• Replacing the lower end actuator gearbox with a gearbox that integrates the locking bar.

• Replacing the pneumatic tubing situated upstream from the pressure regulated shut-off valve (PRSOV) with a new PRSOV having a third line of defense (TLOD) tubing connector.

• Modifying the hold-open rod bracket of the fan cowl.

• Accomplishing the test job set-up, extended operational test of the circuit breaker monitoring system, and the test for the stow and deploy switches included in the thrust reverser functional and indicating/warning sensors test.

Airbus Service Bulletin A310-78-2024, dated October 15, 2003 (for Model A310 series airplanes equipped with CF6-80A3 engines), describes procedures for the airplane and the engine/nacelle that include the following:

• Modifying the hold-open rod bracket of the fan cowl.

• Installing the actuation system lock.

• Modifying the wiring in a certain circuit breaker panel.

Airbus Service Bulletin A300-78-6024, dated October 7, 2003 (for Model A300-600 series airplanes equipped with General Electric CF6-80C2 engines and equipped with FADEC), specifies previous or concurrent accomplishment of Airbus SB A300-78-6021, Revision 1, dated October 7, 2003, and describes procedures for the following:

• Installing an actuation system lock.

• Modifying the wiring in a certain circuit breaker panel.

• Accomplishing the test job set-up, extended operational test of the circuit breaker monitoring system, and the test for the stow and deploy switches included in the thrust reverser functional and indicating/warning sensors test.

Airbus SB A300-78-6021, Revision 1, dated October 7, 2003 (for Model A300-600 series airplanes equipped with General Electric CF6-80C2 engines and equipped with FADEC), describes procedures for the following:

• Part 1—Modifying/retrofitting a new electrical circuit between the forward cargo compartment and the wing/pylon interfaces.

• Part 2—Modifying/retrofitting a new electrical circuit in the engine pylons.

• Part 3—Modifying/retrofitting a new electrical circuit in the avionics compartment; modifying/retrofitting a new electrical circuit between the avionics compartment and the forward cargo compartment; and modifying/retrofitting a new electrical circuit.

Airbus SB A300-78-6025, dated October 7, 2003 (for Model A300-600 series airplanes equipped with General Electric CF6-80C2 engines not equipped with FADEC), specifies previous or concurrent accomplishment of Airbus SB A300-78-6022, and describes procedures for the following:

• Installing an actuation system lock.

• Modifying the wiring in a certain circuit breaker panel.

• Accomplishing the test job set-up, extended operational test of the circuit breaker monitoring system, and the test for the stow and deploy switches included in the thrust reverser functional and indicating/warning sensors test.

Airbus SB A300-78-6022, Revision 1, dated January 7, 2003 (for Model A300-600 airplanes equipped with General Electric CF6 80C2 engines and not equipped with FADEC), describes procedures for the following:

• Part 1—Modifying/retrofitting a new electrical circuit between the forward cargo-compartment and the wing/pylon interfaces.

• Part 2—Modifying/retrofitting a new electrical circuit in the engine pylons.

• Part 3—Modifying/retrofitting a new electrical circuit in the avionics compartment; modifying/retrofitting a new electrical circuit between the avionics compartment and the forward cargo compartment; and modifying/retrofitting a new electrical circuit.

Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. The DGAC mandated the above service bulletins and issued French airworthiness directive F-2004-165, dated October 13, 2004, to ensure the continued airworthiness of these airplanes in France.

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

This AD affects about 101 airplanes of U.S. registry. (The total number of airplanes in the following table totals more than 101 airplanes because most of the airplanes would be required to accomplish two of the specified service bulletins.) The following table provides the estimated costs for U.S. operators to comply with this proposed AD at an average labor rate per hour of $65.

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 (FAA Docket No. FAA-2005-20700 and Airspace Docket No. 04-AWA-8) 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 action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2005-20700 and Airspace Docket No. 04-AWA-8.” The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the 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 ( see ADDRESSES section for address and phone number) 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, 1701 Columbia Avenue College Park, GA 30337.

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.

Currently, the Sanford Airport Traffic Control Tower (ATCT) provides air traffic control (ATC) service to a varied mix of air carrier and other civil aircraft, including a dense volume of training traffic from the numerous flight schools located in the central Florida area. With the current Class D airspace configuration, the Sanford tower controller is required to take initial calls from inbound aircraft entering the traffic pattern and work departures out of the Class D airspace area. These tasks divert the controller's attention away from the busy runway operation. Consequently, delays and frequency congestion are problems, and runway incursions have been a concern at Sanford.

In addition, Sanford air carrier arrivals currently enter and leave the Orlando International Airport Class B airspace area twice before entering the Sanford Class D airspace area. During this transition, encounters with unknown aircraft are common, resulting in vectors off course, traffic alert and collision advance system (TCAS) alerts, and/or Near Midair Collision Reports. Further, the Sanford instrument landing system (ILS) glideslopes to runways 9L and 27R are both outside the current Orlando International Class B and Sanford Class D airspace areas until they reach a 4-mile final.

The number of passenger enplanements at Sanford have increased above 600,000. This exceeds the FAA threshold criteria of 250,000 enplanements for Class C airspace area candidacy. Based on this, in addition to the above mentioned problem areas, the projected growth of traffic at Sanford, and the need to enhance safety and reduce the potential for midair collisions in the Orlando terminal area, this proposal to establish the Sanford Class C airspace area was developed. A Class C airspace area at Sanford would keep instrument flight rules (IFR) aircraft arriving at Sanford in controlled airspace thus reducing traffic conflicts. In addition, the Sanford ATCT's workload would be reduced since the Orlando International Airport's Terminal Radar Approach Control (TRACON) would take over arrival sequencing responsibilities to the Sanford runway and would work all Sanford departures out of the proposed Class C airspace area. This would reduce Sanford Tower frequency congestion and enable the tower controller to focus on runway operations thereby increasing safety and efficiency.

FAA policy requires that, before action is initiated to establish Class C airspace, nonrulemaking alternatives that provide for an acceptable level of safety must be implemented. In compliance with that policy, a number of safety measures were implemented at Sanford and in the Orlando International Airport terminal area. Some of the safety measures that were implemented include: Sanford ATCT received Digital Bright Radar Indicator Tower Equipment radar in 1997; Operation Rain Check, a pilot-controller forum, is held yearly; controller groups attending local user meetings to discuss safety; Orlando TRACON established a procedure to keep large arriving aircraft at higher altitudes on downwind legs to avoid slower traffic; safety meetings with flight school operators resulted in preferred routings for COMAIR (now known as Delta Connection Academy) departures; standard visual flight rules (VFR) arrival areas were set up for flight school operations; Orlando Traffic Management implemented voluntary flow controls for flight school operations in the Orlando area; and introduced local use call signs and standard climb-out procedures for flight school aircraft. Although these procedures have enhanced safety at Sanford, their effectiveness is based on current traffic levels with little room to accommodate future growth. If established, the proposed Sanford Class C airspace area would replace the current Sanford Class D airspace area.

In 1990, the FAA issued a final rule establishing the Orlando Terminal Control Area (TCA) at Orlando International Airport (55 FR 9082). In 1993, the term “TCA” was replaced by “Class B airspace area” as a result of the Airspace Reclassification Final Rule (56 FR 65638). The Orlando Class B airspace was last modified in 1999 to adjust several areas within the existing lateral boundaries of the Class B airspace (64 FR 42585).

In 2004, a fourth runway (17L/35R) was commissioned at Orlando International Airport. As a result, the airport reference point (ARP) was shifted eastward affecting the published center point for the Class B airspace area. In addition, there is a need to further modify several areas within the Orlando International Airport Class B airspace to accommodate the proposed Sanford Class C airspace and to provide additional Class B airspace to ensure the containment of Orlando International Airport arrivals and departures. Operational experience with departures climbing off Orlando International to the west has shown areas of airspace in the Orlando terminal area that need to be brought into the Class B airspace area. Also, experience working air traffic north of Orlando Executive Airport, and near Sanford International Airport at low altitude, has shown that Class B airspace is not needed in those areas to support Orlando International Airport operations and that airspace can be released back to users. The proposed Orlando Class B airspace modifications would address these matters.

In 2002, the FAA initiated action to form an ad hoc committee to develop recommendations for designing a proposed Class C airspace at Sanford International Airport and for modifications to the Orlando Class B airspace. Participants in the committee included representatives from Sanford International, Orlando Executive, Kissimmee Gateway and Cedar Knoll Flying Ranch airports, AOPA, local Fixed Base Operators, and flight schools. Three ad hoc committee meetings were held. The first meeting was held at Sanford on January 14, 2003; the second meeting was held on February 25, 2003, at Kissimmee Gateway Airport (ISM); and the third meeting was held at Orlando Executive Airport on March 23, 2003.

As a result of the meetings, several operational procedures were developed and airspace modifications were incorporated into the proposed design. The Sanford Class C northern 10 nautical mile (NM) circle was changed to align with the current Orlando Class B airspace boundary. The proposed Class C airspace was modified to provide a cutout for Cedar Knoll Flying Ranch Airport (01FL). A draft letter of agreement was formulated to establish procedures and sterile routings out of the proposed Class C airspace, enabling VFR departures to stay with Sanford ATCT, if desired, and terminate ATC service at the 5-mile Class C airspace ring. Provisions were established to issue VFR codes to Orlando Executive Airport users on the ground. Finally, a VFR flyway east of Sanford International Airport below 3,000 feet outside the proposed Class C airspace was established.

In addition, as announced in the Federal Register (68 FR 53925), informal airspace meetings were held on November 6, 2003, at the Sanford International Airport, Terminal A, Vigilante Room, Sanford, FL; and November 7, 2003, at the Orlando Airport Marriott Hotel, Orlando, FL. These meetings provided interested airspace users with an opportunity to present their views and offer suggestions regarding the planned establishment of the Sanford Class C airspace and modification of the Orlando Class B airspace. All comments received as a result of the informal airspace meetings, along with the recommendations made by the ad hoc committee, were considered in developing this proposal.

One commenter was concerned that the Sanford Class C airspace would result in the loss of an aerobatic practice box at Sanford. The FAA assures users that the aerobatic box would not change if the Sanford Class C airspace is implemented.

Four commenters questioned whether ATC staffing levels were adequate at the Orlando TRACON and the Sanford ATCT to handle the additional Class C airspace workload. One commenter stated that staffing resources need further analysis. The FAA has determined that no additional staffing is required to support both the implementation of the Sanford Class C airspace and the modification of the Orlando Class B airspace.

Three commenters stated that the planned runway extension and installation of a parallel ILS at Sanford should be completed prior to implementation of a Class C airspace area. The FAA does not agree. Sanford has several construction projects scheduled during the next three years. During construction, runway closures at Sanford will compress traffic to the open runways reducing airport capacity and contributing to delays. During runway closure periods, the Sanford ATCT controller will need to devote maximum focus on the open runways. Under the current Class D airspace configuration, the Sanford ATCT controller responds to initial call-ups from VFR inbound traffic, which occupies much of the controller's attention. With the proposed Class C airspace configuration, Sanford inbounds would initially call Orlando TRACON, thus enabling the Sanford ATCT controller to focus more attention on runway operations, reducing delays and increasing the level of runway safety. Therefore, the FAA believes that the proposed Class C airspace is needed in the interest of both safety and operational efficiency.

One commenter contended that if the Class C airspace area is implemented, there should be a single, unified ATCT and TRACON at Sanford airport. The FAA does not agree. Orlando TRACON is fully capable of efficiently managing Sanford operations from its current location. In fact, many large and complex operations are worked from remote TRACONs such as Atlanta, New York, Baltimore-Washington, DC, and Southern California.

One commenter wrote that the local users were not adequately consulted during the development of the proposed Sanford Class C airspace establishment and Orlando Class B airspace modification. The FAA does not agree. An ad hoc committee was formed to develop recommendations to the FAA regarding the proposed design of the Class C airspace. Three ad hoc user meetings were held to solicit local input on the proposal. A number of issues were identified at these meetings and several recommendations have been incorporated into this proposal. In addition, as announced in the Federal Register (68 FR 53925, September 15, 2003), the FAA held Informal Airspace Meetings in the local area on November 6 and November 7, 2003 to inform users of the planned airspace changes and to gather facts and information relevant to the proposed airspace action. FAA representatives have also attended monthly user meetings at Orlando Executive Airport and Sanford International Airport and provided briefings on the Class C and Class B proposals. An internet link for user comments is advertised on the Orlando International Airport ATCT web page. Finally, this NPRM provides users with a 60-day period to submit comments or recommendations on the proposal. All comments received will be fully considered before the FAA makes its final determination on this proposal. The proposal may be changed in light of those comments.

Four commenters indicated that the Sanford Class C airspace area would have an adverse economic impact on operations at Sanford. The cost of these operations would rise significantly because Class C airspace would result in increased air traffic delays both on the ground and in the air. The FAA does not agree. The Class C airspace area is expected to reduce Sanford delays. Current traffic routings and proposed Class C routings have been compared and it was found that the Class C airspace area would have minimal negative impact on users. Procedures for the proposed Class C airspace operation would allow Sanford users to continue flying as much as they do today. A minimal increase in flying distance (5 miles further west or east of Sanford) may be required for pilots transiting the area outside the proposed Class C and Class B airspace areas. Since Sanford International Airport already lies within the Orlando Class B airspace Mode C Veil, no additional aircraft equipment would be required as a result of the proposed airspace changes. Notwithstanding, the FAA is soliciting comments regarding possible economic impacts from this proposal.

Two commenters stated that alternative airspace modifications should be evaluated before implementing Class C airspace. These commenters suggested that either the existing Sanford Class D airspace be extended outward beyond the Sanford final approach fixes, or the existing Orlando Class B airspace area be lowered to protect the Sanford final approach fixes, if needed. The FAA examined these alternatives and determined that they would not be suitable in this case. Class B airspace is designed to contain IFR operations at the primary airport (in this case, Orlando International). FAA Class B airspace design criteria requires that airspace over a satellite airport be excluded from the Class B area if it is not required for primary airport IFR operations. Expanding the MCO Class B airspace area over SFB as suggested would be overly restrictive for users. Extending the SFB Class D airspace beyond the final approach fixes would not resolve the SFB ATCT workload and frequency congestion issues discussed above.

Two commenters expressed concerns that radio frequency congestion could result from the implementation of Class C airspace and that the FAA should ensure that the Orlando TRACON has additional frequencies available to handle the proposed Class C traffic volume. The FAA believes that frequency congestion will not be an issue. Orlando TRACON recently added another control sector and frequency, covering the Sanford area, to reduce radio frequency congestion and prepare Orlando TRACON for the additional traffic volume. With the Class C airspace area the Orlando TRACON would take over responsibility for sequencing Sanford arrivals and would work all departures out of the proposed airspace. As a result, the Sanford ATCT local control frequency congestion would be reduced. Additionally, the Sanford ATCT clearance delivery position will be open during all busy periods, reducing congestion on the Sanford ATCT ground control frequency.

Several commenters stated that, if the Sanford Class C airspace area is established, the current practice of issuing transponder codes on the ground for VFR aircraft at Orlando Executive Airport should be continued.

The FAA agrees. Procedures are now in place to issue codes, upon request, to VFR pilots on a permanent basis.

Four commenters raised various issues regarding the airspace design reflected in the proposal. Two commenters believed that an overall evaluation of the Orlando terminal area airspace should take place. Another commenter stated that the east-west VFR corridor between Orlando Executive Airport and Sanford International Airport creates compression and puts aircraft near tall towers and practice areas. This commenter suggested that VFR waypoints be considered to assist pilots circumnavigating the complex Orlando terminal area and to identify entry and exit points on VFR corridors. The commenter also stated that there may be a need to redefine the areas within the Orlando TRACON's airspace to minimize frequency hand-offs.

Regarding an evaluation of the Orlando area airspace, such a review has been conducted in association with this proposal. The proposed design also reflects modifications made to accommodate user requests. Additionally, FAA directives require that Class B and Class C airspace be re-evaluated every two years to determine if any modifications should be made. Regarding concerns about the east-west corridor, located between the Orlando Executive Airport and Sanford, this proposal would widen the corridor (with its 2,000 feet mean sea level (MSL)) ceiling by approximately 3 NM. This would increase the amount of airspace available for VFR aircraft to transit while remaining outside of Class B and Class C airspace. The FAA agrees with the suggestion for additional VFR waypoints and these will be developed for the area. Regarding the issue of frequency changes, Orlando TRACON is developing procedures and designing its airspace sectors to minimize the need for frequency changes.

Several commenters questioned the validity of Sanford's candidacy for Class C airspace. One commenter wrote that Sanford does not have enough passenger carrying flights to qualify. Another wrote that General Aviation makes up the large majority of operations at Sanford and those users oppose the Class C airspace area. This commenter also believed that the Near Midair Collision (NMAC) and Traffic Alert and Collision Avoidance System Resolution Advisory (RA) data utilized in the study were not valid. A third commenter said that traffic count figures should be re-evaluated based on today's trends.

The FAA does not agree. For an airport to be considered as a candidate for Class C airspace, it must be served by an operational airport traffic control tower and a radar approach control. In addition, the airport must meet one of the following: (a) An annual instrument operations count of 75,000 at the primary airport; (b) an annual instrument operations count of 100,000 at the primary and secondary airports in the terminal area hub; or (c) an annual count of 250,000 enplaned passengers at the primary airport. Sanford qualifies as a Class C candidate based on its enplaned passenger count. In calendar year 2003 (the latest year for which validated counts are available), Sanford enplanements totaled 619,894; well above the candidacy criteria. Regarding NMAC and RA data, the reports cited in the staff study were submitted officially and met the required criteria. It should be noted that such information is but one of many factors that are considered when conducting an analysis of a Class C airspace candidate airport. A review of current traffic counts and trends at Sanford indicate steady growth.

One commenter stated that the proposed Sanford Class C airspace area would have a significant and potentially adverse effect on Orlando Executive Airport; therefore, it should only be considered if the best interest of safety requires it. The commenter further stated that, if Class C airspace is designated at Sanford, Orlando Executive Airport should also have a Class C airspace area. Another commenter wrote that the Orlando Executive Airport has a greater need for a Class C airspace area than Sanford.

The FAA does not believe that the Sanford Class C airspace would result in delays in the Orlando Executive Airport traffic. The proposed Sanford Class C airspace would not degrade ATC services provided to the users of the Orlando Executive Airport. The airspace classification at the Orlando Executive Airport is being evaluated by the FAA as a separate issue from this proposed rulemaking action.

The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 to establish Class C airspace and revoke the existing Class D airspace at Sanford International Airport, FL. In addition, the FAA is proposing to modify the Orlando International Airport Class B airspace to accommodate the Sanford Class C airspace; update the Orlando International Airport ARP coordinates in the Class B airspace legal description; provide additional Class B airspace to accommodate the new runway at Orlando International; and ensure that Orlando International arrival and departure traffic remains within Class B airspace. The specifics of this proposed action (depicted on the attached chart) are discussed in the following paragraphs.

The proposed Sanford Class C airspace area would be described as follows:

That airspace extending upward from the surface to but not including 3,000 feet MSL within a 5-mile radius of the Sanford International Airport (SFB), excluding that airspace from the surface to but not including 700 feet MSL in the vicinity of Cedar Knoll Flying Ranch Airport within the area beginning at lat.28°50′00″ N., long. 81°10′00″ W., thence clockwise along the SFB 5-mile radius arc to lat. 28°43′20″ N., long. 81°10′00″ W., thence north to the point of beginning; and that airspace extending upward from 1,300 feet MSL to but not including 3,000 feet MSL within the area beginning northeast of the primary airport at the intersection of the SFB 10-mile radius arc and lat. 28°53′00″ N., then clockwise along the SFB 10-mile radius arc to lat. 28°41′36″ N., then west along lat. 28°41′36″ N. to the intersection of the SFB 10-mile radius arc, then clockwise along the SFB 10-mile radius arc to lat. 28°53′00″ N., then east along lat. 28°53′00″ N., to the point of beginning.

The SFB Class C airspace area would be effective during times when the Orlando Sanford International ATCT is in operation. These times would be published in the Airport/Facility Directory.

If the Sanford Class C airspace is established, it would replace the existing Sanford Class D airspace area, which would be revoked.

The FAA is proposing to modify several areas within the Orlando Class B airspace to accommodate the proposed Sanford Class C airspace area; reflect the adjustment of the Orlando International Airport ARP as a result of the commissioning of the fourth runway at Orlando International; and provide additional Class B airspace to accommodate the new runway and to ensure that Orlando International Airport arrivals and departures are contained within Class B airspace. The existing outer boundaries of the Orlando Class B airspace area would remain unchanged by these modifications.

The following describes the proposed revisions to the Orlando Class B airspace area:

Area A. Area A would be recentered on lat. 28°25′46″ N., long. 81°18′32″ W. This represents a shift of Area A slightly to the east to recenter the area on the revised Orlando International Aiport ARP, which was adjusted due to the addition of the fourth runway at Orlando International.

Area B. The eastern boundary of Area B would be shifted approximately 1 NM east to long. 81°10′00″ W. to accommodate the new Orlando International Airport runway.

Area C. The section of Area C in the vicinity of Sanford International Airport would be removed and replaced by the Sanford Class C airspace area up to but not including 3,000 feet MSL, and by Area E from 3,000 feet MSL up to and including 10,000 feet MSL. Area C in the vicinity of Orlando Executive Airport would be reduced in size. The airspace removed from Area C to the west, north, and northeast of Orlando Executive Airport would be incorporated into Area D with its higher Class B airspace floor of 2,000 feet MSL. This change would increase the amount of airspace available to VFR aircraft allowing them to utilize that area below 2,000 feet and remain outside of Class B airspace. Also, the eastern boundary of the Area C segments located to the north and south of Orlando International Airport would be modified by moving the eastern boundary one degree east to long. 81°10′00″ W. to accommodate the new runway.

Area D. Area D would be expanded in size in the vicinity of Orlando Executive Airport by incorporating the airspace removed from Area C, as described above. This change would raise the floor of Class B airspace in the affected area from 1,600 feet MSL to 2,000 feet MSL, providing additional VFR flyway airspace between Sanford International Airport and Orlando Executive Airport while still protecting Orlando International Airport arrivals. Also, the eastern boundary of Area D would be moved eastward to long. 81°10′00″ W. to accommodate the new runway at Orlando International Airport.

Area E. The boundary of Area E to the east of Olando International, currently defined by long. 81°11′00″ W., would be moved eastward one degree to long. 81°10′00″ W. This modification accommodates the new Orlando International Airport runway. Additionally, Area E would be expanded in the vicinity of Sanford so that Area E would overlie the Sanford Class C airspace area and incorporate the airspace from 3,000 feet MSL up to and including 10,000 feet MSL over Sanford, that was formerly in Area C. Also, the southern boundary of Area E, located to the south of Sanford, would be moved further south by approximately 2.5 NM to align it with the southern boundary of the Sanford Class C airspace area, along lat. 28°41′36″ N.

Area F. That airspace described as Area F in the existing Orlando Class B airspace area would be renamed “Area G.” A new Area F would be inserted to the west of Orlando International, adjacent to, and west of, Area D and Area E. This new Area F would consist of that airspace located between long, 81°27′30″ W. and long. 81°32′00″ W., and bounded by the ORL VORTAC 30-mile radius on the south, and by lat. 28°53′00″ N., on the north. The floor of the new Area F would be set at 4,000 feet MSL instead of the 6,000 feet MSL floor in the existing Area F. The lower floor provided by the new Area F would ensure that departures climbing westbound off MCO and arrivals on downwind leg for landing at Orlando International remain within Class B airspace.

Area G. The remaining sections of the existing Area F would be renamed Area G as a result of the addition of a new Area F, described above.

Implementation of the proposed Sanford Class C airspace area and the modifications to the Orlando Class B airspace area would enhance the safe and efficient use of airspace and reduce the potential for midair collision in the Orlando terminal area.

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 minimal 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 FAA proposes to change the Orlando Class B and the Orlando Sanford Airport Class D airspace areas. The Orlando Class B airspace area modification would maintain the 10,000 feet mean sea level (MSL) airspace ceiling and redefine the lateral limits of several of the existing subareas to improve the management of air traffic operations in the Orlando terminal area. The Orlando Sanford Airport Class D airspace area upgrade to a Class C airspace area would lower the airspace area from 3,000 to 1,600 feet MSL and would include a radius of 4.4 NM from the Orlando Sanford Airport up to but not including 1,600 feet MSL.

The FAA has determined that the changes to the Orlando International Airport Class B and the Orlando Sanford International Airport Class D airspace areas would improve the operational efficiency while maintaining aviation safety in the terminal area. Also, clearer boundary definition and changes to lateral and vertical limits of some subareas would provide additional airspace for use by VFR aircraft transitioning to and from satellite airports. This proposal would impose only negligible costs on airspace users and could potentially reduce circumnavigation costs to some operators.

The proposed rule would result in negligible additional administrative costs to the FAA and no additional operational costs for personnel or equipment to the agency. Notices would be sent to pilots within a 100-mile radius of the Orlando International Airport at an estimated cost of $2,900.00 for postage. Printing of aeronautical charts which reflect the changes to the Class B and Class C airspace areas would be accomplished during a scheduled chart printing, and would result in no additional costs for plate modification and updating of charts. Furthermore, no staffing changes would be required to maintain the modified Class B airspace area and the upgraded Class D airspace area. Potential increase in FAA operations workload could be absorbed by current personnel and equipment.

In view of the negligible cost of compliance, enhanced aviation safety, and improved operational efficiency, the FAA has determined that the 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 rational 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.

The FAA has determined that the proposed rule would have a de minimus impact on small entities. All commercial and general aviation operators who presently use the Orlando International Airport are equipped to operate within the modified Class B airspace area. As for aircraft that regularly fly through the Orlando Sanford Airport Class D airspace area, since the airport is situated within the established Orlando Mode C Veil, all aircraft should already have the necessary equipment to transition the modified Class B airspace area. Therefore, there would be no additional equipment cost to these entities.

Accordingly, pursuant to the Regulatory Flexibility Act, 5 U.S.C. 605(b), the Federal Aviation Administration certifies that 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 establishing any standards or engaging in 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 FAA has assessed the potential effect of this (proposed/final) rule and determined that it would have only a domestic impact and therefore no affect on any trade-sensitive activity.

The Unfunded Mandates Reform Act of 1995 (the Act) is intended, among other things, to curb the practice of imposing unfunded Federal mandates on State, local, and tribal governments. Title II of the Act requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (adjusted annually for inflation) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $120.7 million in lieu of $100 million.

This proposed rule does not contain such a mandate. The requirements of Title II do not apply.

In view of the minimal cost of compliance of the proposed rule, compared to the improvements to operational efficiency without reducing 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:

See the information provided in the Direct Final action of the same title which is located in the Rules and Regulations section of this Federal Register .

Predictive emission monitoring systems are not currently required in any Federal rule. However, they may be used under the NSPS to predict nitrogen oxides emissions from small industrial, commercial, and institutional steam generating units. In some cases, PEMS have been approved as alternatives to CEMS for the initial 30-day compliance test at these facilities. Various State and Local regulations are incorporating PEMS as an emission monitoring tool. The major entities that are potentially affected by Proposed Performance Specification 16 and amendments to the subparts are included in the following tables.

These tables are not intended to be exhaustive, but rather provides an example of entities that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed in the preceding FOR FURTHER INFORMATION CONTACT section.

1. Docket. EPA has established an official public docket for this action under Docket ID No. OAR-2003-0074. The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public docket does not include Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Documents in the official public docket are listed in the index list in EPA's electronic public docket and comment system, EDOCKET. Documents may be available either electronically or in hard copy. Electronic documents may be viewed through EDOCKET. Hard copy documents may be viewed at Docket OAR-2003-0074, EPA Docket Center, (EPA/DC) EPA West, Room B102, 1301 Constitution Ave., NW., Washington, DC 20460; telephone (202) 566-1742. The docket facility is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744.

2. Electronic Access. You may access this Federal Register document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr/ or you can go to the federal wide eRulemaking site at http://www.regulations.gov.

An electronic version of the public docket is available through EDOCKET. You may use EPA Dockets at http://www.epa.gov/edocket/ to submit or view public comments, access the index listing of the contents of the official public docket, and to access those documents in the public docket that are available electronically. Once in the system, select “search,” then key in the appropriate docket identification number.

Certain types of information will not be placed in the EPA Dockets. Information claimed as CBI and other information whose disclosure is restricted by statute, which is not included in the official public docket, will not be available for public viewing in EPA's electronic public docket. The EPA's policy is that copyrighted material will not be placed in EPA's electronic public docket but will be available only in printed, paper form in the official public docket. To the extent feasible, publicly available docket materials will be made available in EPA's electronic public docket. When a document is selected from the index list in EDOCKET, the system will identify whether the document is available for viewing in EPA's electronic public docket. Publicly available docket materials that are not available electronically may be viewed at the docket facility identified in Unit I.B. The EPA intends to work towards providing electronic access to all of the publicly available docket materials through EPA's electronic public docket.

For public commenters, it is important to note that EPA's policy is that public comments, whether submitted electronically or on paper, will be made available for public viewing in EPA's electronic public docket as EPA receives them and without change, unless the comment contains copyrighted material, CBI, or other information whose disclosure is restricted by statute. When EPA identifies a comment containing copyrighted material, EPA will provide a reference to that material in the version of the comment that is placed in EPA's electronic public docket. The entire printed comment, including the copyrighted material, will be available in the public docket.

Public comments submitted on computer disks that are mailed or delivered to the docket will be transferred to EPA's electronic public docket. Public comments that are mailed or delivered to the Docket will be scanned and placed in EPA's electronic public docket. Where practical, physical objects will be photographed, and the photograph will be placed in EPA's electronic public docket along with a brief description written by the docket staff.

For additional information about EPA's electronic public docket, visit EDOCKET online or see 67 FR 38102, May 31, 2002.

You may submit comments electronically, by mail, by facsimile, or through hand delivery/courier. To ensure proper receipt by EPA, identify the appropriate docket identification number 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.” The EPA is not required to consider these late comments. However, late comments may be considered if time permits.

1. Electronically . If you submit an electronic comment as prescribed below, EPA recommends that you include your name, mailing address, and an e-mail address or other contact information in the body of your comment. Also include this contact information on the outside of any disk or CD ROM you submit and in any cover letter accompanying the disk or CD ROM. This ensures that you can be identified as the submitter of the comment and allows EPA to contact you in case EPA cannot read your comment due to technical difficulties or needs further information on the substance of your comment. The EPA's policy is that EPA will not edit your comment, and any identifying or contact information provided in the body of a comment will be included as part of the comment that is placed in the official public docket and made available in EPA's electronic public docket. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment.

i. EDOCKET . Your use of EPA's electronic public docket to submit comments to EPA electronically is EPA's preferred method for receiving comments. Go directly to EDOCKET at http://www.epa.gov/edocket , and follow the online instructions for submitting comments. To access EPA's electronic public docket from the EPA Internet Home Page, select “Information Sources,” “Dockets,” and “EDOCKET.” Once in the system, select “search,” and then key in Docket ID No. OAR-2003-0074. The system is an “anonymous access” system, which means EPA will not know your identity, e-mail address, or other contact information unless you provide it in the body of your comment.

ii. http://www.regulations.gov . Electronic comments may also be sent through the federal wide eRulemaking web site at http://www.regulations.gov .

iii. E-mail . Comments may be sent by electronic mail (e-mail) to a-and-r-docket@epamail.gov , Attention: Docket ID No. OAR-2003-0074. In contrast to EPA's electronic public docket, EPA's e-mail system is not an “anonymous access” system. If you send an e-mail comment directly to the Docket without going through EPA's electronic public docket, EPA's e-mail system automatically captures your e-mail address. E-mail addresses that are automatically captured by EPA's e-mail system are included as part of the comment that is placed in the official public docket and made available in EPA's electronic public docket.

iv. Disk or CD ROM . You may submit comments on a disk or CD ROM that you mail to the mailing address identified in Unit I.C.2. These electronic submissions will be accepted in WordPerfect or ASCII file format. Avoid the use of special characters and any form of encryption.

2. By Mail . Send duplicate copies of your comments to: “Performance Specification 16 for Predictive Emission Monitoring Systems,” Environmental Protection Agency, Mail Code 6102T, 1200 Pennsylvania Ave., NW., Washington, DC, 20460, Attention Docket ID No. OAR-2003-0074.

3. By Hand Delivery or Courier . Deliver your comments to: EPA Docket Center, EPA West, Room 108, 1301 Constitution Ave., NW., Washington, DC 20460, Attention: Docket ID No. OAR-2003-0074. Such deliveries are only accepted during the Docket's normal hours of operation as identified in Unit I.B.1.

4. By Facsimile . Fax your comments to: 202-566-1741, Attention: Docket ID. No. OAR-2003-0074.

Do not submit information that you consider to be CBI electronically through EPA's electronic public docket or by e-mail. Send or deliver information identified as CBI only to the docket address to the attention of Docket ID No. OAR-2003-0074. You may claim information that you submit to EPA as CBI by marking any part or all of that information as CBI (if you submit CBI on disk or CD ROM, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is CBI). Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR Part 2.

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

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

1. Explain your views as clearly as possible.

2. Describe any assumptions that you used.

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

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

5. Provide specific examples to illustrate your concerns.

6. Offer alternatives.

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

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

Outline . The information presented in this preamble is organized as follows:

Today we are proposing Performance Specification 16 for Predictive Emission Monitoring Systems to Appendix B, Part 60. Predictive emission monitoring systems are a new and innovative tool for monitoring pollutant emissions without the traditional hardware analyzers. The PEMS predicts a unit's emissions indirectly using process parameters that have a known relationship to pollutant concentration. Their principle of operation can range from a relatively simple relationship based on combustion principles to the more complex computer models that are trained to predict emissions using neural networks technology. They have been used for monitoring purposes at industrial, commercial, and institutional steam-generating units, gas turbines, internal combustion engines, and other combustion processes where process parameters have a predictable relationship to emissions. We are also proposing to make amendments to the testing and monitoring provisions of various NSPS and MACT rules.

The purpose of PS-16 is to establish the initial installation and performance procedures that candidate PEMS must meet to be acceptable for use. The specification stipulates equipment design and documentation, location, and addresses initial and periodic performance tests of the PEMS.

If adopted as a final rule, all PEMS that will be used to comply with 40 CFR Parts 60, 61, and 63 will be required to comply with PS-16. In addition to new PEMS that are installed after the effective date of PS-16, other PEMS may also be required to comply with PS-16 at the discretion of the applicable regulatory agency or permit writer.

The PS-16 requires owners and operators of affected PEMS to: (1) Select a PEMS that satisfies basic design criteria; (2) verify and document their PEMS; (3) validate their PEMS against a reference method using prescribed statistical procedures prior to placing it into operation; and (4) periodically reassess their PEMS's performance. The performance requirements for PS-16 follow the general performance requirements for continuous emission monitoring systems (CEMS) in Appendix B of Part 60. A relative accuracy (RA) test of the PEMS against a reference method is the primary assessment of accuracy. The number of runs prescribed for the RA test will depend upon the underlying regulation.

The Agency is allowing, but not requiring, PEMS use in a number of recently-promulgated rules, and a number of facilities regulated by State and Local agencies are considering their use. Past EPA approvals of PEMS were based on criteria provided in the draft performance specifications on the Agency's Emission Measurement Center website. In other cases, performance specifications developed by State or Local Agencies were used to evaluate the PEMS. We are proposing PS-16 to provide regulatory agencies a uniform procedure for assessing the capabilities of this new monitoring tool.

In the petroleum refinery NSPS in § 60.106(b)(3) the equation for determining the coke burnoff rate is being corrected.

In the monitoring provisions of the kraft pulp mills NSPS in § 60.284, a paragraph requiring continuous emission monitors be subject to the quality assurance provisions of Appendix F that was added by mistake in an October 17, 2000 amendment is being deleted.

Under the municipal solid waste landfill NSPS in § 60.752, the requirement to test open flares for heat content and flare exit velocity using Methods 18 and ASTM D1946 is being changed to require Method 3C. These open flares must comply with the general flare provisions of 40 CFR 60.18, which require that flare gas heat content and flare exit velocity be within prescribed limits. The heat content of flare gas is determined from an analysis of its organic compound and hydrogen content using Method 18 and ASTM D1946, respectively. Methane is the only significant organic compound in landfill gas and hydrogen is not likely to be present. Therefore, Method 18 and ASTM D1946 are not practical methods for landfill applications. Method 3C is less labor-intensive than Method 18 and has the preferred measuring range for methane levels encountered at landfills. In addition, Method 3C determines oxygen and nitrogen which are currently determined by an additional method and are needed to calculate the flare gas exit velocity. We are proposing that Method 3C be required as the test method for methane in place of Method 18 and ASTM D1946 for organics and hydrogen.

Method 24, Part 60, Appendix A is used to determine the contents and properties of surface coatings under NSPS applications. Method 24 currently references ASTM D2369 as the method for determining volatiles content. The American Society for Testing and Materials has recommended that ASTM D6419 be allowed as an alternative to D2369 in this case. We are proposing to amend Method 24 to allow this option.

In Performance Specification 2, Part 60, Appendix B, an inadvertent omission in an October 17, 2000 amendment removed an allowance for relative accuracy relief for low-emitters. We are proposing to reinstate the allowance.

The publication on January 12, 2004 of Performance Specification 11 for Appendix B and Procedure 2 for Part 60, Appendix F contained technical and typographical errors and unclear instructions. We are revising the definition of confidence interval half range to clarify the language, replacing the word “pairs” with “sets” to avoid possible confusion regarding the use of paired sampling trains, correcting errors in Equations 11-22, 11-27, and 11-37, correcting the procedures in paragraphs (4) and (5) of section 12.3 for determining confidence and tolerance interval half ranges for the exponential and power correlation models, and adding a note following paragraph (5)(v) concerning the application of correlation equations to calculate PM concentrations using the response data from an operating PM CEMS. We are also renumbering some equations and references for clarification, consistency, and accuracy.

In Method 303 of Appendix A of Part 63, we are proposing to add a statement on varying the time of day runs are taken that was deleted by mistake in a recent amendment of the method.

Under Executive Order 12866 (58 FR 51735 October 4, 1993), we must determine whether this regulatory action is “significant” and therefore subject to Office of Management and Budget (OMB) review and the requirements of this Executive Order. The Order defines “significant regulatory action” as one that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affects 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 interferes with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

We have determined that this rule is not a “significant regulatory action” under the terms of Executive Order 12866 and is therefore not subject to OMB review. We have determined that this regulation would result in none of the economic effects set forth in Section 1 of the Order because it does not impose emission measurement requirements beyond those specified in the current regulations, nor does it change any emission standard.

This action does not impose an information collection burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. This actions provides performance criteria for a new monitoring tool that may be used in some cases in place of current source monitoring requirements. These criteria do not add information collection requirements beyond those currently required under the applicable regulation. The additional amendments being made to the testing requirements in 40 CFR part 60 do no add information collection requirements but make minor corrections to existing testing methodology.

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

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

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

For purposes of assessing the impacts of today's rule on small entities, small entity is defined as: (1) A small business as defined by the Small Business Administration's regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. Entities potentially affected by this action include those listed in Table 1 of SUPPLEMENTARY INFORMATION .

After considering the economic impacts of today's proposed rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. We are allowing, but not requiring, PEMS use in a number of recently-promulgated rules, and a number of facilities regulated by State and Local agencies are considering their use. The intended effect of this action is to facilitate the use of PEMS by establishing levels of acceptability for candidate PEMS. In addition, we are proposing to make minor amendments to various testing provisions in the New Source Performance Standards (NSPS) and National Emission Standards for Hazardous Air Pollutants for Source Categories (MACT) to correct inadvertent errors, make needed updates, and add flexibility. We invite comments on all aspects of the proposal and its impacts on small entities.

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 to State, Local, and Tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

Today's rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, Local, or Tribal governments or the private sector. The rule imposes no enforceable duty on any State, Local, or Tribal governments or the private sector. In any event, EPA has determined that this rule does not contain a Federal mandate that may result in expenditures of $100 million or more for State, Local, and Tribal governments, in the aggregate, or the private sector in any one year. Thus, today's rule is not subject to the requirements of Sections 202 and 205 of the UMRA.

Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires 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.”

This rule does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. Thus, the requirements of Section 6 of the Executive Order do not apply to this rule.

In the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between EPA and State and Local governments, EPA specifically solicits comment on this proposed rule from State and Local officials.

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 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” is defined in the Executive Order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and the Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes.”

This proposed rule 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. In this proposed rule, we are simply allowing an alternative emission monitoring tool that applicable facilities may use. Thus, Executive Order 13175 does not apply to this rule.

Executive Order 13045 applies to any rule that EPA determines (1) is “economically significant” as defined under Executive Order 12866, and (2) the environmental health or safety risk addressed by the rule has a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.

The EPA interprets Executive Order 13045 as applying only to regulatory actions that are based on health or safety risks, such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This proposed rule is not subject to Executive Order 13045 because it is not based on health or safety risks.

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

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113 (15 U.S.C. 272), directs us to use voluntary consensus standards (VCSs) in our regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, business practices, etc.) that are developed or adopted by VCS bodies. The NTTAA requires us to provide Congress, through OMB, explanations when we decide not to use available and applicable VCSs. We are not proposing new test methods in this rulemaking but are adding performance requirements for a new monitoring tool that can be used as an alternative to what has already been mandated. Therefore, NTTAA does not apply.

For the reasons stated in the preamble, the Environmental Protection Agency proposes to amend title 40, chapter I of the Code of Federal Regulations as follows:

The Agency included in the proposed rule a list of those who may be potentially affected by this action. If you have questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

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

This document reopens the public comment period established in the Federal Register issued on June 1, 2005 (FRL-7712-7) (70 FR 31401). In that document, EPA sought comment on a proposed rule revoking 34 exemptions from the requirement of a tolerance that are associated with 31 inert ingredients because, according to Agency records, these substances are no longer contained in active FIFRA pesticide product registrations. EPA is hereby reopening the comment period, which ended on August 1, 2005. Comments are now due on or before August 31, 2005.

The proposed rule is issued pursuant to section 408(d) of FFDCA (21 U.S.C. 346a(d)). Section 408 of FFDCA authorizes the establishment of tolerances, exemptions from the requirement of a tolerance, modifications in tolerances, and revocation of tolerances for residues of pesticide chemicals in or on raw agricultural commodities and processed foods. Without a tolerance or tolerance exemption, food containing pesticide residues is considered to be unsafe and therefore “adulterated” under section 402(a) of FFDCA. If food containing pesticide residues is found to be adulterated, the food may not be distributed in interstate commerce (21 U.S.C. 331(a) and 342 (a)).

No. This action is not a rulemaking, it merely reopens the comment period by which public comments on a proposed rule must be submitted to EPA. For information about the applicability of the regulatory assessment requirements to the proposed rule, please refer to the discussion in Unit IV. of the June 1, 2005 document (70 FR 31403).

Amendment 13 was developed by the New England Fishery Management Council (Council) to end overfishing and rebuild NE multispecies stocks managed under the authority of the Magnuson-Stevens Act. NMFS proposed measures to implement Amendment 13 on January 29, 2004 (69 FR 4362). The proposed rule contained a detailed description of the development of Amendment 13. NMFS published final regulations to implement the approved measures in Amendment 13 in the Federal Register on April 27, 2004 (69 FR 22906). The majority of the measures in the final rule became effective on May 1, 2004.

However, the final rule implementing Amendment 13 contained several inadvertent errors and inconsistencies with the intent of Amendment 13, as specified below. This action proposes to correct these errors, and clarify or modify the current regulations to maintain consistency with Amendment 13 as proposed by the Council and partially approved by the Secretary of Commerce.

Framework 40-A was developed by the Council to provide additional opportunities for NE multispecies vessels to target healthy stocks in an effort to help achieve optimum yield from the fishery and to mitigate some of the economic impacts resulting from effort reductions implemented under Amendment 13. NMFS published a proposed rule to implement Framework 40-A on September 14, 2004 (69 FR 55388). The proposed rule contained a detailed description of the development of Framework 40-A. NMFS published an interim final rule implementing Framework 40-A measures on November 19, 2004 (69 FR 67780), which became effective on November 19, 2004. The measures proposed in this action that would modify provisions implemented through the interim final rule for Framework 40-A are not intended to be implemented on an interim basis.

The regulations at § 648.4(a)(9) establish four limited access monkfish permit categories based on the size of the vessel and whether the vessel also possesses a limited access NE multispecies or Atlantic sea scallop permit. The regulations at § 648.92(b), as amended by Amendment 2 to the monkfish FMP (April 28, 2005; 70 FR 21927), state that vessels currently possessing a limited access NE multispecies permit that also possess a valid limited access monkfish permit (i.e., currently a Category C or D monkfish permit) must use a multispecies DAS concurrently with their monkfish Days-at-Sea (DAS). These regulations do not differentiate between a limited access NE multispecies DAS category permit and other limited access NE multispecies permits, including the new Handgear A permit implemented under Amendment 13, thereby creating some confusion to its applicability. Since a limited access Handgear A permit is not a DAS category permit and does not require a vessel to use a DAS to fish for groundfish, this regulation essentially precludes those vessels that have been issued a limited access monkfish Category A or B permit (i.e., monkfish vessels not issued a limited access NE multispecies or scallop permit), and that qualify for a limited access Handgear A permit, from obtaining the new limited access Handgear A permit. Further, it is possible that a vessel currently issued a limited access monkfish Category C or D permit may also qualify for a limited access Handgear A permit based upon its previous fishing history. That is, the regulations at § 648.92(b) currently prohibit, unintentionally and contrary to the intent of the measure, a vessel issued a Category C or D monkfish permit that qualifies for a limited access NE multispecies Handgear A permit from obtaining such a permit, because Category C or D monkfish vessels must use a NE multispecies DAS when fishing under a monkfish DAS.

This action would clarify that limited access monkfish Category C and D permits may be issued only to those vessels that have been issued a limited access monkfish permit and a limited access NE multispecies DAS category permit or a limited access scallop DAS permit. This action would also clarify that limited access monkfish Category A and B permits may be issued to vessels without a NE multispecies DAS category permit or a limited access scallop DAS permit.

Amendment 13 included a provision to allow vessels issued a limited access NE multispecies permit to turn off their VMS units for a minimum period of one calendar month by obtaining a letter of exemption. This measure provides an opportunity to reduce costs, since a vessel operator can choose to turn the vessel′s VMS off, if the vessel is exiting the fishery for an extended period. The use of one calendar month as the minimum participation period was intended to facilitate the administration of the power-down exemption. However, industry has indicated that this requirement represents an unnecessary burden on vessels (e.g., if a vessel requested a letter of exemption on September 15, it would be required to remain under the exemption until November 1) and has requested that NMFS modify this minimum participation period to 30 calendar days. Changing the participation period to a minimum of 30 calendar days would satisfy the intent of the measure as defined in Amendment 13 without unnecessarily limiting the operations of the fishing industry to the beginning of a calendar month, and would not add to NMFS′s burden in administering the VMS power-down exemption. Therefore, this action would change the participation period for the VMS power-down exemption specified at § 648.9(c)(2)(i)(B) from one calendar month to 30 calendar days.

Amendment 13 included provisions to allow for the formation of fishing sectors. The final rule implementing Amendment 13 included several prohibitions to enforce the regulations governing Sector vessel operations. The prohibition at § 648.14(a)(55) states that it is unlawful for any dealer to purchase, possess, or receive species in excess of the possession limits specified in § 648.85 or 648.86. According to the regulations at § 648.87(c)(3), Sector vessels may be issued letters of authorization exempting these vessels from any Federal fishing regulation, including the possession limits specified in § 648.85 or 648.86, in accordance with an approved Sector Operations Plan, provided such exemptions are consistent with the goals and objectives of the FMP. Accordingly, this existing prohibition is inconsistent with the possibility of a Sector receiving an exemption from the possession limits, and prevents dealers from receiving species from Sector participants, should an approved Sector Operations Plan specify possession limits in excess of those specified in § 648.85 or 648.86. To be consistent with the exemption provision, this action would modify the prohibition at § 648.14(a)(55) to allow dealers to receive species from Sector participants in accordance with an approved Operations Plan as specified in § 648.87.

Amendment 13 approved the formation of the GB Cod Hook Sector. The existing prohibition at § 648.14(a)(156) inadvertently states that vessels fishing under the GB Cod Hook Sector may not fish in the NE multispecies DAS program in a given fishing year. Each approved Sector is allocated a portion of the overall total allowable catch (TAC), based upon the fishing history of Sector participants. The prohibition at § 648.14(a)(156) is inconsistent with the intent of Amendment 13 to allow an approved Sector to set its own rules to ensure that the TAC allocated will not be exceeded through the implementation of Sector hard TACs or DAS allocations, as described in section 3.4.16.1 of the FSEIS to Amendment 13. This action would modify the prohibition at § 648.14(a)(156) to allow vessels participating in the GB Cod Hook Sector to fish under the NE multispecies DAS program as authorized by their Sector Operations Plan, which was approved by NMFS on May 4, 2005 (70 FR 23096).

Regulations implementing the current seasonal GOM Rolling Closure Areas were originally published on May 5, 1999 (64 FR 24066), as part of the final rule implementing Framework Adjustment 27 to the FMP. The August 1, 2002, interim final rule (67 FR 50292) retained the previous GOM Rolling Closure Areas II and V, but modified the GOM Rolling Closure Areas I, III, and IV.

The August 1, 2002, interim final rule contained inaccurate coordinate points defining the GOM Rolling Closure Area II specified at § 648.81(g)(1)(ii). The final two coordinate points for the GOM Rolling Closure Area II were erroneously defined as GM6, at 42°30′ N. lat. and 68°30′ W. long.; and GM9, at 42°30′ N. lat. and the intersection with the Massachusetts shoreline. The correct coordinate points are GM13, at 43°00′ N. lat. and 68°30′ W. long.; and GM10, at 43°00′ N. lat. and the intersection with the New Hampshire shoreline. On March 25, 2003, NMFS published a final rule amendment to an interim final rule (68 FR 14347) to correct the inaccurate coordinates contained within the August 1, 2002, interim final rule. While the actual coordinates were corrected in the March 25, 2003, final rule, the coordinate point GM9 was not corrected to read GM10.

The August 1, 2002, interim final rule also contained an additional error in the coordinate points defining the GOM Rolling Closure Area III at § 648.81(g)(1)(iii). This error was continued in the final rule implementing Amendment 13, but specified at § 648.81(f)(1)(iii). The final coordinate point for the GOM Rolling Closure Area III should read GM18, instead of GM10. These inadvertent errors only apply to the names assigned to specific coordinate points and do not affect the actual coordinates contained in the rule. Accordingly, this proposed rule would amend the final rule implementing Amendment 13 by correcting the erroneous coordinate point names by replacing point GM9 with point GM10 for the GOM Rolling Closure Area II at § 648.81(f)(1)(ii), and by replacing point GM10 with point GM18 for the GOM Rolling Closure Area III at § 648.81(f)(1)(iii).

The GB Seasonal Closure Area was first implemented through Framework 33 to the FMP (April 24, 2000; 65 FR 21658). This closure area stretches from the eastern shore of Cape Cod to the western boundary of Closed Area (CA) II and prohibits vessels capable of catching NE multispecies from fishing in this area from May 1 through May 31.

As specified above, the management measures in Framework 40-A were implemented on November 19, 2004. Framework 40-A included several new programs that allow vessels to target healthy stocks using a Category B Regular DAS, including the Eastern U.S./Canada Haddock Special Access Program (SAP)Pilot Program. The Eastern U.S./Canada Haddock SAP Pilot Program allows vessels to fish for haddock in an area bordering the western edge of CA II and a small portion of the northern tip of the CA II from May 1 through December 31. The regulations implementing Framework 40-A inadvertently excluded a provision that would exempt vessels fishing under this SAP from the GB Seasonal Closure Area. This omission is inconsistent with the Council′s intent in Framework 40-A.

Therefore, this action would revise § 648.81(g)(2) to include a provision to exempt vessels fishing under the Eastern U.S./Canada Haddock SAP Pilot Program provisions at § 648.85(b)(8) from the GB Seasonal Closure Area.

The FSEIS for Amendment 13 included several alternatives for the CA II Habitat Closure Area. The FSEIS indicated that the Council selected Habitat Alternative 10B instead of Habitat Alternative 10A. Habitat Alternative 10A was considered, but rejected by the Council. However, in both the proposed and the final rule implementing Amendment 13, the coordinates for the CA II Habitat Closure Area inadvertently reflected the coordinates under Habitat Alternative 10A of the FSEIS instead of the correct coordinates defined under Habitat Alternative 10B.

This action would replace the inaccurate coordinates at § 648.81(h)(1)(v) for Habitat Alternative 10A with the correct coordinates for Habitat Alternative 10B from the FSEIS. While this correction would change the area closed to all bottom tending mobile gear within CA II, this action would not affect current fishing operations within CA II.

The final rule implementing Amendment 13 included gear restrictions for vessels targeting regulated groundfish within the Eastern U.S./Canada Area. These gear restrictions are intended to reduce cod bycatch within this area. The final rule required that trawl vessels fishing within this area use a haddock separator trawl or one of two types of flounder trawl nets, as defined at § 648.85(a)(3)(iii).

An informal trawl workshop was held at the NMFS Northeast Regional Office on May 27, 2004, to solicit input on the above gear definitions specified in Amendment 13. This workshop was intended to gather together a range of expertise regarding trawl gear to identify possible deficiencies within these definitions and to suggest refinements of these definitions, if necessary. This workshop resulted in a number of suggestions to refine these definitions based on input from the participants. As a result of this workshop, this action proposes several revisions to the gear definitions specified at § 648.85(a)(3)(iii) and solicits additional public input on the proposed revisions.

Participants in the May 27, 2004, trawl workshop indicated that the use of “balloon nets” may compromise the effectiveness of the haddock separator panel as defined in Amendment 13. They indicated that balloon nets contain a greater number of meshes in the top panel of the net than in the bottom panel of the net, allowing the top panel of the net to extend higher than the bottom panel of the net. Participants agreed that this would result in a higher fishing circle (i.e., opening of the net) than if both panels were made of an equal number of meshes. In accordance with the regulations at § 648.85(a)(3)(iii)(A), a separator panel may be constructed such that the forward edge of the separator panel is 80-85 percent of the width of the after edge of the larger top panel of a balloon net, instead of 80-85 percent of the width of the after edge of the smaller bottom panel of the net. A separator panel constructed in this manner would be wider than intended under the current regulations and may be equal to or greater than the width of the smaller bottom panel of the net. A net that has been designed so that the separator panel is the same width or larger than the width of the bottom panel of the net may result in the separator panel dropping down and mimicking the bottom panel of the net by resting on top of the bottom panel under normal operations. This could potentially close off the bottom portion of the net, resulting in all fish being retained in the upper portion of the net with the closed codend, instead of allowing the cod to escape through the opened bottom portion of the net. To avoid this, participants suggested modifying the haddock separator trawl description to state that the separator panel shall be constructed such that the forward edge of the panel is no less than 80 percent, but not greater than 85 percent, and no less than 90 percent, but not greater than 95 percent, of the after edge of the first bottom belly of the net where the panel is attached for both two-seam and four-seam bottom trawl nets, respectively. This action proposes to revise the haddock separator trawl specified at § 648.85(a)(3)(iii)(A) as described above.

The May 27, 2004, trawl workshop also resulted in a number of suggested revisions to the two flounder net definitions specified at § 648.85(a)(3)(iii). For both net descriptions, the participants agreed that the language restricting the vertical dimension of the forward wing end to 3.0 ft (0.91 m) would not affect the height of the fishing circle (i.e., opening of the net) unless combined with restrictions on the headrope/footrope length. While the flounder trawl net defined at § 648.85(a)(3)(iii)(B)(1) includes a restriction on the headrope, it was decided that the current definition without the restriction on the vertical dimension of the forward wing end would maintain a relatively shallow fishing circle under normal operations. Participants also recommended removing the prohibition on floats in the center 50 percent of this net, stating that it would negatively affect the performance of the net and prevent the center portion of the headrope from maintaining the proper shape of the fishing circle.

The flounder net defined at § 648.85(a)(3)(iii)(B)(2) specifies that the mesh composing the square of the top panel of the net shall not be smaller than 12-inch (30.5-cm) square mesh. The intent of this provision was to allow vessels to target flounder while allowing cod to escape through the large mesh in the square of top panel of the net. This provision should not have included the requirement for square mesh within the square of the top panel of the net. The inclusion of the square mesh requirement within the definition was the result of a misinterpretation of information used to define this flounder trawl net. Twelve-inch (30.5-cm) square mesh is not commercially available at this time, while 12-inch (30.5-cm) diamond mesh is available. Larger square mesh is available, but at a greater cost. As a result, gear manufacturers have had to purchase 12-inch (30.5-cm) diamond mesh and reorient it to meet the square mesh requirements. This is not only an additional expense to comply with the current regulations, but it also results in a weaker net design that may change shape during normal fishing operations. Participants in the May 27, 2004, trawl workshop indicated that, due to variations in the design and construction of various flounder nets, the potential exists for different interpretations of the square of the net and where to place the 12-inch (30.5-cm) mesh specified in the definition of the flounder trawl net at § 648.85(a)(3)(iii)(B)(2).

Accordingly, this action would remove the regulations restricting the vertical dimension of the forward wing end to 3.0 ft (0.91 m) from §§ 648.85(a)(3)(iii)(B)(1) and (2), and the prohibition of floats in the center 50 percent of the headrope for the flounder trawl net specified at § 648.85(a)(3)(iii)(B)(1). In addition, this action would change the definition of the flounder net at § 648.85(a)(3)(iii)(B)(2) to allow for the use of diamond mesh in the top panel of the net, remove references to the square of the net, and insert language requiring that the top panel of the net contain a section of mesh at least 10-ft (3.05-m) long, stretching from selvedge to selvedge, composed of at least 12-in (30.5-cm) mesh, inserted no farther than 4.5 meshes behind the headrope. Participants at the May 27, 2004, trawl workshop were uncertain about the appropriate length for the trouser extension of the bottom codend of a haddock separator trawl. NMFS, therefore, specifically requests public comment on the appropriate length for the trouser extension of the bottom codend of a haddock separator trawl. Since square mesh is more costly than diamond mesh, this action would reduce the costs associated with complying with this provision, eliminate unnecessary restrictions on gear, and simplify the gear requirements for the Eastern U.S./Canada Area.

The U.S./Canada Resource Sharing Understanding implemented by Amendment 13 included provisions to authorize the Regional Administrator to revise the gear requirements, modify access to the U.S./Canada Management Area, adjust the trip limits, and revise the total number of trips into the U.S./Canada Management Area to prevent the over-harvesting or under-harvesting of the specified U.S./Canada Management Area TAC allocations. According to the regulations at § 648.85(a)(3)(iv)(D), this adjustment could be made when 30 percent and/or 60 percent of the U.S./Canada Management Area TAC allocations are projected to be harvested. The current language is ambiguous as to whether such adjustments may be made only at the precise event when 30 percent or 60 percent of the TAC's would be landed or at any time after those percentage levels have been reached. NMFS believes that the Council intended the Regional Administrator to have flexibility in adjusting measures at different times during the fishing season. Therefore, to eliminate the current ambiguity, this action would clarify the regulations at § 648.85(a)(3)(iv)(D) to specify that adjustments to the U.S./Canada Management Area provisions may be made when 30 percent and/or 60 percent of the TAC allocations are projected to be, or have been, harvested. This allows more flexibility for the Regional Administrator in implementing such adjustments to ensure that the TAC allocations are not over-harvested or under-harvested for a particular fishing year.

The final rule implementing Amendment 13 included an administrative measure for the purpose of selecting vessels for observer coverage. Vessel owners who choose to fish in either of the two U.S./Canada Areas, including the CA II Yellowtail Flounder SAP, must provide notice to NMFS of the vessel name; contact name for coordination of observer deployment; telephone number for contact; date, time, and port of departure at least five working days prior to the beginning of any trip that is declared into the U.S./Canada Management Area. The goal of this requirement was to obtain a level of observer coverage on NE multispecies vessels fishing in the U.S./Canada Management Area that is consistent with the rest of the fishery. The provision provides notification to the NMFS Observer Program of planned trips, prior to the departure of the trips, so that the Observer Program has sufficient time to contact and deploy observers.

Although a notification period of five working days was determined, at the time of the implementation of the final rule for Amendment 13, to be optimal in terms of the operational requirements of the NMFS Observer Program, public comments received from numerous industry members have indicated that a shorter notification requirement would provide vessels greater flexibility to react to contingencies such as weather developments. Upon further consideration, NMFS has determined that a notification period of 72 hours represents an acceptable balance between the requirements of the Observer Program and the interests of the fishing industry, while still meeting the objectives of Amendment 13. On June 14, 2004, a final rule, regulatory amendment was published in the Federal Register (69 FR 32900) correcting this regulation for the U.S./Canada Area at § 648.85(a)(3)(ii). However, this rule inadvertently did not correct the observer declaration for vessels fishing in the CA II Yellowtail Flounder SAP as specified at § 648.85(b)(3)(v). Therefore, this proposed rule would reduce the notification time for groundfish DAS vessels prior to departure of a trip into the CA II Yellowtail Flounder SAP from five working days to 72 hours.

On March 29, 2000, NMFS published the final rule implementing provisions in Amendment 12 to the FMP (65 FR 16766). That rule contained revisions to the regulations governing possession limits for small-mesh multispecies. On the same day, NMFS also published the final rule implementing Framework Adjustment 32 (Framework 32) to the FMP (65 FR 16780). Framework 32 revised the regulations at § 648.86(d) governing small-mesh multispecies, superceding the regulations implemented under Amendment 12. On June 19, 2000, the final rule to implement provisions under Framework Adjustment 13 to the Atlantic Sea Scallop FMP and Framework Adjustment 34 to the NE Multispecies FMP (Frameworks 13/34) was published (65 FR 37903). However, when revising the regulations governing small-mesh multispecies possession limits at §§ 648.86(d)(1)(i) through (iii), the final rule for Frameworks 13/34 inadvertently modified the regulations implemented under Amendment 12 rather than the regulations implemented under Framework 32 that superceded those in Amendment 12. This inadvertent error was not discovered until recently.

This action would correct § 648.86(d) to accurately reflect the intent of the regulations implemented under Framework 32, as well as any revisions made to these regulations under Amendment 13. Consistent with Council intent, this correction would remove the requirement that a letter of authorization is necessary to fish for, and/or possess, silver hake and offshore hake caught with small mesh where such a requirement should not exist as a result of measures previously implemented by Framework 32. This paragraph would be further clarified to maintain consistency with existing regulations while at the same time decreasing the complexity of the current regulations pertaining to the net size requirements and possession limits.

The regulations at §§ 648.86(g)(1) and (2) specify the yellowtail flounder possession limits for vessels fishing within the Cape Cod (CC)/Gulf of Maine (GOM) Yellowtail Flounder Area and the Southern New England (SNE)/Mid-Atlantic (MA) Yellowtail Flounder Area, respectively. These provisions require that vessels fishing within either of these areas possess on board a yellowtail flounder possession/landing authorization letter (or letter of authorization(LOA)) issued by the Regional Administrator. The LOA specifies seasonal landing limits for each area. Vessels possessing such an LOA may fish outside of the CC/GOM or SNE/MA Yellowtail Flounder Areas, provided the vessels comply with the possession/landing limits specified in the LOA during the period of participation.

Amendment 13 implemented the U.S./Canada Management Area and the CA II Yellowtail Flounder SAP to allow U.S. vessels to fish for shared yellowtail flounder resources within these areas. These provisions established a yellowtail flounder possession limit of 30,000 lb (13,608 kg) per trip for vessels fishing within the CA II Yellowtail Flounder SAP, while vessels fishing outside of the SAP within the U.S./Canada Management Area are not restricted by daily or trip limits for yellowtail flounder. The final rule implementing Framework 40B (June 1, 2005; 70 FR 31323) revised the GB yellowtail flounder trip limit for the CA II Yellowtail Flounder SAP to 10,000 lb (4,536 kg), but did not change the trip limit in the U.S./Canada Management Area outside of the SAP.

Under the current regulations, vessels issued an LOA as specified above that wish to participate in the U.S./Canada Management Area or the CA II Yellowtail Flounder SAP would be required to abide by the restrictive yellowtail flounder possession limits of the CC/GOM or SNE/MA Yellowtail Flounder Areas when operating within the U.S./Canada Management Area during the participation period. To participate in the U.S./Canada Management Area and its approved SAP's, and to be subject to the less restrictive yellowtail flounder landing limits for these areas, a vessel issued a yellowtail flounder LOA would have to wait a minimum of seven days before cancelling its LOA before it may begin a trip into the U.S/Canada Management Area or an approved SAP. Given that the provisions of the U.S./Canada Management Area are very tightly controlled (e.g., VMS, daily catch reporting, etc.), this requirement imposes unnecessary restrictions on vessel activities, causes difficulties in planning fishing trips, and makes participation in these programs administratively burdensome for NMFS. As a result, this action would modify the yellowtail flounder possession limit restrictions by allowing vessels possessing a yellowtail flounder LOA to abide by the less restrictive yellowtail flounder possession limits of the U.S./Canada Management Area and the CA II Yellowtail Flounder SAP when operating within these areas as specified in §§ 648.85(a)(3) and 648.85(b)(3).

The current regulations are not explicit as to the disposition of a vessel's catch upon the completion of a fishing trip. The regulations at §§ 648.10(b)(2)(iii) and (c)(3) state that DAS counting, and therefore a fishing trip, ends when a vessel has either crossed the VMS demarcation line defined at § 648.10(a), or has called out of the DAS program, respectively. The regulations at § 648.85 specify the possession restrictions for species managed by the U.S./Canada Resource Sharing Understanding, while the regulations at § 648.86 specify the haddock, cod, Atlantic halibut, small-mesh multispecies, and yellowtail flounder possession restrictions for vessels fishing outside of the U.S./Canada Management Area. Possession restrictions include landing limits specified for each species on a per DAS or per trip basis.

This action proposes to include an explicit provision in the regulations at § 648.86 requiring a vessel that has ended its trip (i.e., by crossing the VMS demarcation line or calling out of the DAS program) to offload species regulated by a daily landing limit (i.e., pounds per DAS) prior to leaving port and beginning a subsequent fishing trip. Offloading species for which there is a daily landing limit is necessary to effectively enforce these limits. Conversely, a vessel that has ended its trip could retain on board species regulated by an overall trip limit (i.e., pounds per trip) for a subsequent trip, provided the vessel abides by the overall trip limit for those species during that subsequent trip.

The January 29, 2004, proposed rule to implement Amendment 13 specified that the Sector and its participants would be held liable for any violations of applicable Federal regulations. The April 27, 2004, final rule expanded upon this, specifying that it shall be unlawful for any Sector, Sector vessel, and Sector vessel operator and/or owner to violate the conditions of an approved Operations Plan or the LOA exempting Sector vessels from specific regulations. However, both the GB Cod Hook Sector representatives and the Council expressed concern that the regulations, as written in the final rule implementing Amendment 13, could be interpreted to expand NMFS′s enforcement authority beyond that which was intended in Amendment 13 and would make all violations of the Operations Plan, including non-payment of Sector dues, a violation of Federal law.

Section 3.4.16 of the FEIS for Amendment 13 indicates that the intent of Sector provisions is to encourage self-governance of fishing activities. Further, this section assigns responsibility to enforce the provisions of an approved Operations Plan to each Sector. Finally, section 3.4.16.1.2.2 specifies that a Sector is a legal entity that can be subject to NMFS enforcement action for violations of the regulations pertaining to Sectors. Because the current regulations could be broadly interpreted to mean that any violation of an approved Sector Operations Plan would constitute a violation of Federal regulations, NMFS proposes to clarify the regulations at § 648.87(b)(2)(x) to indicate that it would be unlawful for Sector participants to violate the conditions of an approved Sector Operations Plan unless such conditions and restrictions are identified as administrative only in the Operations Plan.

Both the January 29, 2004, proposed rule and the April 27, 2004, final rule implementing Amendment 13 incorrectly specified the intended coordinates defining the GB Cod Hook Sector Area. Within both rules, the latitude and longitude for each coordinate point defining this area were inadvertently reversed such that the latitude of each coordinate point appeared in the longitude column and the longitude of each coordinate point appeared in the latitude column. The coordinates specified in the current regulations are not only geographically impossible (e.g., 70°00′ N. Lat. does not intersect the east-facing shoreline of Cape Cod, MA), but many of the other coordinates would also require GB Cod Hook Sector vessels to fish outside of the jurisdiction of NMFS. In addition, it was observed that there were two coordinate points named “HS3.” To correct this inadvertent error, the final three coordinate points should be renamed “HS4,” “HS5,” and “HS6” instead of “HS3,” “HS4,” and “HS5.” Accordingly, this proposed rule would modify the final rule implementing Amendment 13 by renaming the coordinate points as specified above and by correcting the erroneous latitude and longitude for each coordinate point for the GB Cod Hook Sector Area specified at § 648.87(d)(1)(i).

In addition to the changes specified above, the following changes to the final rule implementing Amendment 13 are proposed to correct inaccurate references and to further clarify the intent of Amendment 13. The changes listed below are in the order in which they appear in the regulations.

In § 648.2, the reference to the specifications of pelagic gillnet gear at “§ 648.81(g)(2)(ii)” in the definition for “Gillnet gear capable of catching multispecies” would be corrected to read “§ 648.81(f)(2)(ii)."

In § 648.14, paragraph (a)(134) would be revised to include a cross reference to the authority of the Regional Administrator to close the Eastern U.S./Canada Area as described under § 648.85(a)(3)(iv)(D) and a reference to the Eastern U.S./Canada Haddock SAP Pilot Program in § 648.85(b)(8).

In § 648.81(b)(2)(ii), the reference to paragraph “(h)(v)” would be changed to read “(h)(1)(v).

In § 648.81(b)(2)(iii), the reference to the coordinates for the CA II Yellowtail Flounder SAP in § 648.85(b)(3)(ii) and the Eastern U.S./Canada Haddock SAP Pilot Program in § 648.85(b)(8)(ii) would be inserted to further clarify where vessels may fish within CA II.

In § 648.82, in paragraph (b)(4), the reference to “paragraphs (a)(3)(iii), (a)(4)(iii), (b)(2)(iii), and (c)(2)(ii) of this section” would be revised to read “paragraphs §§ 648.80(a)(3)(iii), (a)(4)(iii), (b)(2)(iii), and (c)(2)(ii).” Further, in paragraph (f), the reference to “§ 648.53(f)” would be changed to read “§ 648.53(g).”

In § 648.85, the word “calendar” would be inserted in front of the word “month” in paragraph (b)(3)(vi) to clarify that vessels may only take a maximum of two trips into the CA II Yellowtail Flounder SAP per calendar month as proposed in Amendment 13. In addition, paragraph (b)(3)(x) would be revised to clarify regulatory references and to add language that would allow gear other than a haddock separator trawl or a flounder net to be carried on board, provided this gear is stowed in accordance with § 648.23(b).

In § 648.87(b)(2)(ix), the reference to paragraph “(b)(2)(v)” would be corrected to read “(b)(1)(v).”

In § 648.90(a)(2)(iv), the reference to paragraph “(a)(1)(vii)” would be corrected to read “(a)(2)(vii).”

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

NMFS has prepared an IRFA that describes the economic impact this proposed rule, if adopted, would have on small entities. The IRFA prepared for this action follows NMFS′s “Guidelines for Economic Analysis of Fishery Management Actions” (NMFS′s guidelines). A description of the action, why it is being considered, and the legal basis for this action are contained at the beginning of this section in the preamble and in the SUMMARY . A summary of the analysis follows:

The universe of vessels impacted by this action are those vessels that have currently been issued an active limited access NE multispecies permit, an open access NE multispecies Handgear B permit, or a limited access monkfish permit. Vessels that have currently been issued a NE multispecies Handgear B permit were formerly issued an open access Handgear permit prior to the implementation of Amendment 13 and may qualify for a limited access Handgear A permit under Amendment 13. Data from the NE permit application database show that, as of October 4, 2004, there were 2,622 vessels issued a limited access NE multispecies permit or an open access NE multispecies Handgear B permit, including a total of 1,304 vessels issued an open access Handgear B permit. There were a total of 712 vessels issued a limited access monkfish permit. All of these vessels are considered to be small entities according to the definition provided by the Small Business Administration and described in the Regulatory Flexibility Act.

Section 5.4 of the FSEIS prepared for Amendment 13 and section 7.2.4 of the EA prepared for Framework 40-A provide an analysis of the economic impacts resulting from the measures implemented under Amendment 13 and Framework 40-A, respectively. This action references and builds upon the analysis presented in the FSEIS and the FRFA prepared for Amendment 13 and the EA and the FRFA prepared for Framework 40-A to assess the impacts of this action. Due to a lack of data reflecting costs associated with fishing, changes in total revenue are considered to be a proxy for changes in profitability in this action. This analysis indicates that individual vessels would be likely to increase profitability under most measures proposed in this action. This action would allow limited access monkfish vessels qualified to be issued a limited access NE multispecies Handgear A permit to be issued such a permit. The issuance of this permit to Category A and B monkfish vessels would allow these vessels additional opportunities to fish, thereby increasing vessel revenue. This action would also eliminate some of the more restrictive gear requirements for vessels operating in the Eastern U.S./Canada Area. These Amendment 13 restrictions pose further economic costs for gear modifications and reduced gear efficiency to vessels without effectively increasing the conservation benefits of the gear requirements. Modification of these gear requirements would reduce these unnecessary costs and therefore increase vessel revenues.

The administrative nature of the revisions to the regulations proposed under this action do not facilitate the development of alternatives to this action. Alternatives to the substantive provisions revised through this action have previously been developed as part of the development of Amendment 13 and Framework 40-A.

This proposed rule does not contain any new, nor does it revise any existing reporting, recordkeeping, and other compliance requirements.This proposed rule does not duplicate, overlap or conflict with other Federal rules, and does not contain new reporting or recordkeeping requirements.

A copy of this analysis is available from NMFS (see ADDRESSES ).

For the reasons stated in the preamble, 50 CFR part 648 is proposed to be amended as follows:

1. The authority citation for part 648 continues to read as follows:

2. In § 648.2, the definition for “Gillnet gear capable of catching multispecies” is revised to read as follows:

3. In § 648.4, paragraphs (a)(9)(i)(A)( 1 ) through ( 4 ) are revised to read as follows:

4. In § 648.9, paragraph (c)(2)(i)(B) is revised to read as follows:

5. In § 648.14, paragraphs (a)(55), (a)(134), and (a)(156) are revised, and paragraph (a)(169) is revised to read as follows:

6. In § 648.81, paragraphs (b)(2)(ii), (b)(2)(iii), (f)(1)(ii), (f)(1)(iii), (g)(2)(ii), (g)(2)(iii), and (h)(1)(v) are revised, and paragraph (g)(2)(iv) is added to read as follows:

NMFS manages the U.S. groundfish fisheries of the Bering Sea and Aleutian Islands Management Area (BSAI) and Gulf of Alaska (GOA) in the Exclusive Economic Zone under their respective FMPs. The North Pacific Fishery Management Council (Council) has prepared the FMPs pursuant to the Magnuson-Stevens Fishery Conservation and Management Act. Regulations implementing the FMPs appear at 50 CFR part 679. General regulations that pertain to U.S. fisheries appear at subpart H of 50 CFR part 600.

The Council adopted and NMFS approved and implemented the current “interim” Observer Program (Observer Program) in 1996 (61 FR 56425, November 1, 1996). The requirements of the Observer Program were extended through 1998 (62 FR 67755, December 30, 1997), then through 2000 (63 FR 69024, December 15, 1998), through 2002 (65 FR 80381, December 21, 2000), and again through 2007 (67 FR 72595, December 6, 2002). The Observer Program provides the regulatory framework for the collection of data by observers to obtain information necessary for the conservation and management of the groundfish fisheries managed under the FMPs. Regulations implementing the Observer Program at § 679.50 require observer coverage aboard catcher vessels, catcher/processors, motherships, and shoreside and stationary floating processors that participate in the groundfish fisheries off Alaska and establish vessel, processor, and observer provider responsibilities relating to the Observer Program.

Timely electronic communication between the fishing industry and NMFS of catch reports submitted to NMFS by industry and observers is crucial to the effective in-season monitoring of groundfish quotas and protected species catch allowances. In July 1995, NMFS issued a final rule that required all catcher/processors, motherships, and shoreside processors that process groundfish to have computer hardware and software that would enable observers to send electronic data to NMFS (60 FR 34904, July 5, 1995). In October 2003, a final rule was published (68 FR 58038, October 8, 2003) that extended these requirements to all catcher vessels that are required to carry an observer at all times during fishing operations.

Regulations describing hardware and software requirements for electronic submission of observer reports on all catcher/processors, motherships, catcher vessels required to carry an observer at all times, and shoreside or stationary floating processors are found at § 679.50(g)(1) and (g)(2). This electronic data submission and communications system is called the observer communications system (OCS, previously referred to as “ATLAS).” This system is comprised of computers and communications equipment supplied by catcher vessels, catcher/processors, motherships, and shoreside or stationary floating processors, and custom software provided by NMFS. The OCS system allows observers to rapidly process and report the data they collect to NMFS. Its use on catcher vessels, catcher/processors, motherships, and shoreside or stationary floating processors has led to more timely and accurate fisheries data.

Observer Program staff are engaged in upgrading the software component of the OCS. The upgraded OCS software is intended to increase overall data quality by increasing the functionality and efficiency of the OCS system. In this action, NMFS proposes to require catcher vessels, catcher/processors, motherships, and shoreside or stationary floating processors already subject to OCS requirements to install hardware upgrades to meet current technology standards necessary to support OCS software and facilitate its installation. Presently, regulations at § 679.50(g)(1)(iii)(B)( 1 ) and (g)(2)(iii)(B)( 1 ) require a minimum of a Windows 9x or NT compatible operating system, both of which are older, now unsupported operating systems. This action would amend those regulations to require a Windows 98 or more recent operating system such as Windows 2000, Millennium, or XP. Only Windows-based operating systems would be acceptable because the upgraded software component would only be compatible with Windows-based operating systems. These regulations also would be revised to require catcher vessels, catcher/processors, motherships, and shoreside or stationary floating processors subject to OCS requirements to ensure that the personal computer provided for use by the observer contains a functioning compact disc (CD) drive. Additionally, the minimum random access memory (RAM) requirement would be upgraded to 256 megabytes.

The revisions described above are necessary to accommodate the larger, more sophisticated software and database programs provided by NMFS. The new software would require an upgraded operating system to function and would be stored on CDs to avoid storage on multiple floppy discs and facilitate installation. Additionally, Windows 95 is no longer supported by the manufacturer.

Regulations at § 679.2 contain definitions for terms used elsewhere in part 679. Regulations at § 679.50(c) describe observer coverage requirements for catcher vessels, catcher/processors, and motherships engaged in directed fishing for groundfish. However, the first paragraph of the current definition of “directed fishing” is contained under the heading, “With respect to groundfish recordkeeping and reporting.” This action proposes to revise the heading of the first paragraph of the definition for “directed fishing” to read, “Unless otherwise indicated” to clarify that the definition also applies to observer coverage regulations.

Regulations at § 679.28 describe requirements for scales, observer sampling stations, bins for volumetric estimates, and vessel monitoring system hardware. Section 679.28(g)(1) describes catch monitoring control plans (CMCPs) generally and § 679.28(g)(4)(iii) describes a component of the inspection process for CMCPs. However, these sections incorrectly cross reference performance standards in § 679.28(g)(6). This action proposes to correct this error and replace the reference to (g)(6) in § 679.28(g)(1) and (g)(4)(iii) with (g)(7).

Regulations at § 679.50(i)(2)(vi)(A)( 1 ) describe travel and logistics requirements for observer providers when deploying observers. For a variety of reasons, including incorrect routing of luggage or weight restrictions on airplanes, observers occasionally become separated from their personal belongings and gear necessary to conduct sampling duties during travel to an assignment. If this occurs, luggage normally will be delivered on a subsequent flight. However, an observer provider recently encouraged an observer who had become separated from personal belongings and gear necessary to conduct sampling duties to borrow personal belongings from other observers so the observer could be deployed in a timely manner. The observer was deployed to a vessel without the observer's personal belongings or gear necessary to conduct sampling duties. Such a failure compromises an observer's safety, comfort, and ability to complete the observer's duties. This action proposes to require an observer provider to provide all necessary transportation, including arrangements and logistics, to ensure the observer and the observer's gear and personal belongings arrive at the initial location of deployment and to all subsequent vessel and shoreside or stationary floating processor assignments during that deployment.

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

NMFS prepared an initial regulatory flexibility analysis (IRFA) as required by section 603 of the Regulatory Flexibility Act. The IRFA describes the economic impact this proposed rule, if adopted, would have on small entities. A description of the action, why it is being considered, and the legal basis for this action are contained at the beginning of the preamble and in the SUMMARY section of this document. A copy of the IRFA is available from NMFS (see ADDRESSES ). A summary of the analysis follows.

This proposed rule would require vessels and shoreside or stationary floating processors already subject to OCS requirements to adopt hardware upgrades to meet current technology standards necessary to support the OCS software. This includes all motherships, catcher/processors, shoreside or stationary floating processors and catcher vessels required to carry an observer at all times. Additionally, the proposed rule includes several clarifications and corrections to current regulations. These proposed actions are intended to revise requirements for the facilitation of observer data transmission, improve support for observers, and provide consistency with current regulations.

All motherships have gross revenues in excess of $3.5 million and are considered large entities. Data available for 2003, indicate that 22 of the 82 catcher/processors active in the groundfish fisheries that year would be considered small entities. All four permitted observer provider companies would be considered small entities. Confidentiality restrictions require NMFS to report gross revenue information in aggregate of four or more entities. These restrictions prevent NMFS from reporting the number of catcher vessels and shoreside or stationary floating processors regulated under this proposed action for small entities.

Alternative 1 described in the EA/RIR/IRFA is the status quo alternative. Current regulations regarding retention and discards would remain in effect.

Alternative 2 would: (1) require all catcher vessels, catcher/processors, motherships, and shoreside or stationary floating processors currently subject to OCS requirements to upgrade their computing hardware to a minimum operating system of Windows 98 and 256k of RAM; (2) require observer providers to ensure observers are deployed with their personal belongings and gear; and (3) provide other non-substantive administrative changes to current regulations.

In addition to the requirements in Alternative 2, Alternative 3 would also require all catcher vessels, catcher/processors, motherships, and shoreside or stationary floating processors currently subject to OCS requirements to upgrade their computer hardware to a CD drive.

The one-time upgrade cost for OCS equipment that would be required for all catcher/processors, motherships, shoreside and stationary floating processors, and catcher vessels required to carry an observer at all times under the proposed action would be about $500 for each of these affected small entities. For the 22 catcher/processors considered small entities, the cost is estimated at about .02 percent of one year's gross revenues. As noted above, NMFS is unable to report gross revenues for catcher vessels and shoreside or stationary floating processors considered small entities under this action. Therefore, OCS upgrade costs cannot be reported as a percentage of gross revenues for these entities.

Under the proposed action, observer provider companies would be responsible for ensuring that observers are deployed with their gear and personal belongings. While proposed regulations would require observer providers to be responsible for transportation, logistics and arrangements, observer providers typically pass these costs on to the vessel or shoreside or stationary floating processor. However, arrangements (and subsequent costs) between these entities and observer providers, where the observer is separated from his or her gear and personal belongings, are not known. Additionally, vessels may be required to remain in port until an observer's gear and personal belongings arrive, and the vessel may incur costs associated with missed fishing opportunity. Instances where observers have not been deployed with their gear and personal belongings are rare, and the frequency of these occurrences is impossible to estimate. However, these costs are expected to be small.

This proposed rule contains a collection-of-information requirement subject to the Paperwork Reduction Act (PRA) and which has been approved by OMB under control number OMB 0648-0330. Public reporting burden for Catch Monitoring and Control Plan (CMCP) is estimated to average 40 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate, or any other aspect of this data collection, including suggestions for reducing the burden to NMFS (see ADDRESSEES ) and to OMB.

Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.

The analysis did not reveal any Federal rules that duplicate, overlap, or conflict with the proposed action.

For the reasons set out in the preamble, 50 CFR part 679 is proposed to be amended as follows:

1. The authority citation for part 679 continues to read as follows:

2. In § 679.2, the definition of “directed fishing”, paragraph (1), is revised to read as follows:

3. In § 679.28, paragraphs (g)(1) and (g)(4)(iii) are revised to read as follows:

4. In § 679.50, paragraphs (g)(1)(iii)(B)( 1 ), (g)(2)(iii)(B)( 1 ), and (i)(2)(vi)(A)( 1 ) are revised to read as follows: