Annually, CCC establishes sugar marketing allotments at a level estimated to prevent sugar loan collateral forfeitures to CCC. CCC establishes the overall allotment quantity, beet sugar and cane sugar allotments, State cane sugar allotments, and marketing allocations for processors marketing sugar domestically processed from sugar beets and domestically-produced sugarcane. If a processing mill closes, growers who delivered sugar beets or sugarcane to that mill may request a transfer of a portion of the closed mill's marketing allocation to another mill that reflects their production history at the closed mill.

CCC proposes to amend the regulations at 7 CFR 1435.308 to provide for an orderly and transparent method of distributing allocation to successor mills after growers have petitioned the Executive Vice President, CCC, to transfer allocation when their mill closes. CCC is proposing to use a formula to distribute the closed mill's allocation that will calculate grower shares based on the grower's contribution to the mill's allocation. Since the formula that determines a mill's allocation is different in the beet sector and among the cane states, the formula CCC will use to transfer allocation of closed mills will reflect these differences.

Since the enactment of the Farm Security and Rural Investment Act of 2002 (2002 Act), (Pub. L. 107-171), the only processing facilities to have closed have been cane processing facilities in Louisiana. The procedure used then to transfer allocations, while not explicit in the sugar program regulations, reflected the two main components of the cane marketing allocation formula, (1) past production history, which is a fixed value, and (2) current year production, known as the “ability to market,” a value that changed from year to year. CCC published an amendment to the regulations on September 13, 2004 (69 FR 35061), which fixed the “ability to market” factor in the allocation formula for each mainland cane State and cane processor until the program expires in 2008, under the 2002 Act. The other components of the mainland cane marketing allocation formulas were already fixed on the basis of historical production.

When two Louisiana mills announced they would not reopen for the 2005 crop, issues arose such as whether to allow growers with production history at the closed mill to petition if they had not delivered cane to the mill in the preceding year. There was also debate over which years to consider in the transfer formula, given that the “ability to market” change to the regulation had added more crop years in the allocation formula. In the end, CCC and successor mills were able to negotiate transfer shares that satisfied all parties. CCC considered allowing successor mills the opportunity to negotiate a distribution of allocation from the closed mill in the proposed rule. However, no mill can be expected to take less than it would under a formula, so CCC did not propose that option under this proposed rule. While the closure of cane mills precipitated this proposed rule, it applies to all beet and cane processors.

The second change CCC proposes is to include a due date in the information reporting provisions in 7 CFR 1435.200. This section requires every sugar beet processor, sugarcane processor, cane sugar refiner, and importer of sugar, syrup, and molasses to report to CCC, on a monthly basis, information necessary to administer the sugar programs. CCC established an informal reporting due date of the 20th of each month in 1991, which would be incorporated in the regulations. The chronic lateness of some reporters in recent times has delayed processing and analysis of all data, which is detrimental to the sound administration of the Sugar Program. The civil penalties provisions in section 156h(4) of the Federal Agriculture Improvement and Reform Act of 1996, as amended (7 U.S.C. 7272(h)(4)) and 7 CFR 1435.201 allow CCC to assess a civil penalty of no more than $10,000 to reporters who willfully fail or refuse to furnish the information, or who willfully furnish false data. CCC will consider a reporter to have willfully failed to provide the information and subject to penalty, if CCC does not receive the data by the 20th of the month.

The final proposal would require each reporting entity to have an independent third party verify each company's data submitted to CCC. CCC will require an Agreed-upon Procedures engagement, conducted by an independent Certified Public Accountant (CPA), to analyze the company data annually. The provisions of 7 CFR 1435.3, Maintenance and inspection of records give CCC, as well as any other U.S. Government agency, the right of access to the premises of any sugar beet processor, sugarcane processor, cane sugar refiner, importer of sugars, syrups, and molasses, or of any other person having custody of records that the examining agency deems necessary to verify compliance with this part's requirements. Since this information is necessary to determine whether a processor is in compliance with sugar marketing allotment program requirements, CCC proposes to require that an independent CPA conduct a yearly agreed-upon procedures engagement of each reporter to validate their materials balance. CCC will provide the procedures to be followed by each independent CPA.

This rule has been determined to be not significant under Executive Order 12866 and has not been reviewed by the Office of Management and Budget.

The requirements of the Regulatory Flexibility Act (5 U.S.C. 601—602) do not apply to this rule because CCC is not required to publish a notice of proposed rulemaking for the subject of this rule. Nonetheless, CCC has determined that this rule will not have a significant economic impact on a substantial number of small entities and a Regulatory Flexibility Analysis was not performed.

The environmental impacts of this rule have been considered under the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq. , the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and regulations of the Farm Service Agency (FSA) of the Department of Agriculture (USDA) for compliance with NEPA, 7 CFR part 799. An environmental evaluation was completed and the proposed action has been determined not to have the potential to significantly impact the quality of the human environment and no environmental assessment or environmental impact statement is necessary. A copy of the environmental evaluation is available for inspection and review upon request.

This rule has been reviewed in accordance with Executive Order 12988, Civil Justice Reform. In accordance with this Executive Order: (1) All State and local laws and regulations that are in conflict with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) administrative proceedings in accordance with 7 CFR part 11 must be exhausted before seeking judicial review.

This program is not subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. See the notice related to 7 CFR part 3015, subpart V, published at 48 FR 29115 (June 24, 1983).

This rule contains no Federal mandates, as defined under title II of the UMRA, for State, local, and tribal governments or the private sector. Thus, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Nor does this rule impose substantial direct compliance costs on State and local governments. Therefore, consultation with the States is not required.

Under 7 U.S.C 7991(c)(2)(A) these regulations may be promulgated and the program administered without regard to chapter 5 of title 44 of the United States Code (the Paperwork Reduction Act). Accordingly, these regulations and the forms and other information collection activities needed to administer the provisions authorized by these regulations are not subject to review by the Office of Management and Budget under the Paperwork Reduction Act.

CCC is committed to compliance with the Government Paperwork Elimination Act (GPEA) and the Freedom to E-File Act, which require Government agencies in general, and the FSA in particular, to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. Because of the nature of the forms and other information collection activities required for this program, they are not fully implemented in a way that would allow the public to conduct business with CCC electronically. Accordingly, at this time, all forms and information required to be submitted under this rule may be submitted to CCC by mail or FAX.

Accordingly, 7 CFR part 1435 is proposed to be amended as follows:

The Federal Housing Enterprises Safety and Soundness Act of 1992, Title XIII of Pub. L. 102-550, empowers the Director of OFHEO to undertake rulemaking and such other actions as the Director determines to be appropriate to oversee the activities and operations of Freddie Mac and Fannie Mae (the Enterprises). In the course of exercising such authority, the Director has promulgated regulations and issued guidelines and supervisory policies.

http://www.ofheo.gov/News.asp?formmode=Regulations creates a process for routine review and, where appropriate, revision of regulations by OFHEO. Such a process provides for planned reviews of the regulatory infrastructure and for considering information under uniform criteria that assists in determinations of whether an unnecessary burden exists. Once a review is completed, the Director will determine what steps may be necessary to relieve any unnecessary burden, including amendment to or repeal of existing regulations or issuance of less formal guidance.

The General Counsel, as the OFHEO Regulatory Policy Officer, is charged with undertaking the regulatory review and reporting findings and recommendations to the Director. The review process will be conducted by the Office of General Counsel, under the direction of the General Counsel, and will include internal consultation with other OFHEO offices and staff, guidance provided by the Director, as well as consideration of public comments. A review and report of findings and recommendations will be provided to the Director on a timely basis. The report of findings and recommendations will be privileged and confidential. Notably, the regulatory review to be conducted by the Office of the General Counsel under the Policy Guidance is not a formal or informal rulemaking proceeding under the Administrative Procedure Act and creates no right of action against OFHEO. Moreover, the determination of OFHEO to conduct or not to conduct a review of a regulation and any determination, finding, or recommendation resulting from any review under the Policy Guidance are not final agency actions and, as such, are not subject to judicial review.

The regulations of OFHEO that are subject to the regulatory review described in this Notice are codified in Title 12, Chapter XVII, Subchapters A, C, and D, Parts 1700-1780 of the Code of Federal Regulations (CFR). The regulations are listed in the CFR as follows:

In addition to being found in the CFR, the regulations (as well as the Policy Guidance referenced in this Notice) are available on the OFHEO Web site, http://www.ofheo.gov, by clicking on the “Regulations and Policy Guidance” category on the left side of the Web page.

Under the review process set forth in the Policy Guidance, criteria that may be used in the review of the existence of regulatory inefficiency or burden are as follows:

(i) Legal or regulatory developments, including new laws, executive orders or judicial decisions that have been adopted since the promulgation of a regulation that make such regulation inefficient, obsolete, contrary to controlling legal precedent or unduly burdensome;

(ii) Application by an Enterprise for revision of a regulation, because of reasonably discernible regulatory burden or inefficiency;

(iii) Marketplace developments, technological evolution and related changes that may have rendered an existing regulation, in whole or in part, inefficient, outmoded or outdated; and

(iv) Such other occurrences or developments as determined by the Director or General Counsel to be relevant to a review for inefficiency or unwarranted regulatory burden.

Among other factors that may be considered in reviewing possible inefficiency or unwarranted regulatory burden are the following:

(i) Compelling evidence that a consolidation of two or more regulations, elimination of a duplicative regulation, or other revision to regulatory requirements would facilitate compliance or supervision;

(ii) A demonstration of a better alternative method to effect a regulatory purpose or requirement supported by compelling evidence of significantly less intrusive means or of a substantially more efficient method of accomplishing the same supervisory purpose; and

(iii) Such other factors as determined by the Director to be relevant to determining and evaluating the need for, appropriateness of, and effectiveness of a particular regulation.

The Office of the General Counsel invites comments on all aspects of the proposed regulatory review, including legal and policy considerations, and will take all comments into consideration before issuing its report of findings and recommendations to the Director. The comment period has been set at 60 days to afford ample opportunity for comment.

All comments received will be posted without change to http://www.ofheo.gov, including any personal information provided. Copies of all comments received will be available for inspection by the public on business days between the hours of 10 a.m. and 3 p.m., at the Office of Federal Housing Enterprise Oversight, Fourth Floor, 1700 G Street NW., Washington, DC 20552. To make an appointment to inspect comments, please call the Office of General Counsel at (202) 414-6924.

We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Include the docket number “ FAA-2005-22321; Directorate Identifier 2005-NM-123- 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 website, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477-78), or you may visit http://dms.dot.gov.

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

We have received test data from the manufacturer indicating that the outboard overhead stowage bins are unable to withstand the 4.5g down-load standard intended to protect passengers during flight turbulence or a hard landing. The affected airplanes are certain Boeing Model 767-200 and -300 series airplanes. Under the 4.5g down-load condition, the threshold deflection of the stowage bins is too large and compromises the engagement of the doors. This condition, if not corrected, could result in the stowage bins opening during flight turbulence or a hard landing, which could result in the contents of the stowage bins falling onto the passenger seats below and injuring passengers, or blocking the aisles, impeding the evacuation of passengers in an emergency.

We have reviewed Boeing Special Attention Service Bulletin 767-25-0336, Revision 2, dated August 11, 2005. The service bulletin describes procedures for replacing the placards on certain stowage bins with new placards, installing partial dividers in certain other stowage bins, and installing straps on stowage bins containing life rafts. Although Revision 2 states that the original issue of Service Bulletin 767-25-0336 is dated September 18, 2003, the date that appears on that document is May 15, 2003.

For certain airplanes, Service Bulletin 767-25-0336, Revision 2, specifies prior or concurrent accomplishment of Boeing Service Bulletin 767-25-0211, Revision 1, dated July 14, 1994. Service Bulletin 767-25-0211, Revision 1, describes procedures for replacing the door latches, strikes, and thresholds on the outboard overhead stowage compartments with new, improved latches, strikes, and thresholds.

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

Boeing Special Attention Service Bulletin 767-25-0336, Revision 2, specifies that it is not necessary to modify all of the stowage bins at one time, provided the modification of an individual bin is completed prior to the airplane returning to service. We agree with this statement, but want to clarify that the modification of all affected stowage bins must be completed within 60 months after the effective date of the proposed AD. In developing an appropriate compliance time for this AD, we considered not only the manufacturer's recommendation, but the degree of urgency associated with addressing the subject unsafe condition, and the time necessary to perform the modifications. We have determined that a 60-month compliance time is an appropriate interval of time for affected airplanes to continue to operate without compromising safety. We have coordinated this compliance time with Boeing.

There are about 366 airplanes of the affected design in the worldwide fleet. The following tables provide the estimated costs for U.S. operators to comply with this proposed AD.

In 1986, Congress passed the Air Carrier Access Act (ACAA) which prohibits discrimination in airline service on the basis of disability. Since the Department issued the final rule implementing the ACAA, 14 CFR part 382 (part 382) in 1990, it has amended part 382 ten times. 1 Part 382 does not require any specific accommodations by air carriers for passengers who use supplemental medical oxygen during commercial flights. 2 In November 2004, the Department issued an NPRM proposing to revise part 382 to cover foreign air carriers (hereinafter Foreign Air Carrier NPRM). See 69 FR 64364. That Foreign Air Carrier NPRM does not contain any proposed substantive regulatory changes relating to the carriage and use of medical oxygen by passengers with disabilities aboard commercial flights.

The Department is proposing a rule at this time to address the carriage and use of supplemental oxygen devices by passengers on commercial flights. There are several reasons for this initiative. First, the Department consistently receives complaints from consumers regarding the lack of accommodations in air travel for passengers who use medical oxygen. These complaints generally allege that there are a limited number of carriers that provide supplemental oxygen service (several major carriers do not); that the service, when available, is prohibitively expensive, at times exceeding the cost of air transportation  3 ; and that those passengers who need supplemental oxygen have to independently arrange with medical supply companies for additional supplies of oxygen during layovers and connections between flights. As a result, many passengers with respiratory disabilities are not able to avail themselves of air transportation readily available to the general public. Because the Department views these consumer complaints and the issues they raise seriously, the Department is proposing to amend part 382 to address these matters.

Second, we believe a rulemaking is necessary because of the technological advances in oxygen-delivery systems. In April 2002, a letter from a coalition of medical and patient groups made the Department aware of state of the art technology in three types of oxygen delivery systems: portable oxygen concentrators, portable liquid oxygen units, and safety-sealed compressed oxygen. The Department then carefully considered how these devices could be approved for carriage and use by passengers during commercial flights within the existing safety regulatory scheme.

During this process, the Department's Pipeline and Hazardous Materials Safety Administration (PHMSA), formerly the Research and Special Programs Administration (RSPA), determined that the portable concentrator units manufactured by AirSep Inc. and Inogen Inc. do not contain hazardous materials and therefore are not subject to PHMSA's regulations. The other two devices (liquid oxygen units and safety-sealed compressed oxygen), unless exempted, would be subject to 49 CFR 175.75(a), PHMSA's safety regulation covering the carriage of hazardous materials aboard commercial aircraft.

The Federal Aviation Administration (FAA) also made several important determinations with respect to oxygen delivery systems. First, it decided that the carriage and use of all oxygen delivery devices, including portable concentrators deemed not to contain hazardous material, would require either an exemption from 14 CFR 121.574, 125.219, or 135.91, its rules covering oxygen delivery systems, or approval through a separate rulemaking. Because it did not receive an exemption petition from an air carrier prior to July 2004, the FAA issued an NPRM proposing to permit air carriers to allow passengers to use certain types of portable oxygen concentrators during commercial flights subject to certain conditions. See 69 FR 42324. On July 12, 2005, the FAA issued a final rule that permits air carriers to allow passengers to use Air Sep Lifestyle and Inogen One portable oxygen concentrator units during commercial flights provided carriers and passengers comply with certain conditions. See 70 FR 40156. As a corollary to the FAA rulemaking on allowing the use of certain portable oxygen concentrators, the Department is now proposing a rulemaking to address the treatment of these portable oxygen concentrators as an assistive device in air travel.

The FAA also determined that other passenger-owned medical oxygen devices could be used during commercial flights if the air carrier agrees to inspect and test the equipment in accordance with 14 CFR 121.574, 125.219, or 135.91, as appropriate, and then furnish the devices to the passengers for their flights.

Finally, the Department is proposing a rule because passengers who use other respiratory assistive devices such as respirators and ventilators have also complained that they have not been able to travel on certain flights because carriers were concerned about possible electromagnetic interference (EMI) with aircraft navigation and communication systems. Because portable electronic devices including portable electronic assistive devices emit some type of electromagnetic waves, FAA safety regulations require that air carriers test these devices to determine if the devices' radio frequencies interfere with its aircrafts' systems before permitting the devices to be used in flight. We believe a number of foreign governments have similar requirements.

Currently, part 382 requires carriers to permit the carriage and the use of ventilators and respirators in accordance with PHMSA and FAA regulations. As proposed, the Foreign Air Carrier NPRM would impose the same requirement on foreign air carriers. However, neither part 382 nor the Foreign Air Carrier NPRM requires carriers to conduct the necessary EMI evaluation required under FAA rules or applicable foreign rules to determine whether the use of these devices would cause interference with aircraft navigation and communication systems. Therefore, the Department is proposing this rule to address this gap in the regulations so that passengers who use ventilators or respirators can be assured greater access to air travel.

This NPRM has been formatted in accord with the format of the Foreign Air Carrier NPRM issued on November 4, 2004, which proposes to apply 14 CFR part 382 to foreign air carriers and convert part 382 into a question-and-answer format. The Department proposes that the instant NPRM apply to foreign carriers. Additionally, the Department will ultimately merge the final rule resulting from the instant NPRM with any final rule that results from the November 4, 2004, Foreign Air Carrier NPRM. Because of this, the instant NPRM is in a question-and-answer format and the section numbering is consistent with the November 4, 2004, NPRM.

This portion of the preamble discusses each section of the proposed rule.

This section proposes to supplement the proposed rule text of the November 2004 Foreign Air Carrier NPRM by adding the meaning of the term “PHMSA.”

This NPRM proposes to be applicable to certain U.S. and foreign air carriers. The instant NPRM applies to foreign air carriers in nearly the same manner as proposed in the November 4, 2004, Foreign Air Carrier NPRM since the proposed rule would apply to any flight that begins or ends at a U.S. airport, as the word “flight” is defined in the NPRM. To the extent that individuals have already submitted comments regarding the extension of part 382 to foreign carriers in response to the November 4, 2004, Foreign Air Carrier NPRM, those comments will be considered with regard to the final rule issued as a result of the instant NPRM.

However, this NPRM does not propose to make the requirements relating to the carriage and use of portable respiration assistive devices and medical oxygen devices aboard commercial flights applicable to all U.S. carriers and foreign air carriers operating to and from the U.S. but rather proposes to limit the applicability of the requirements to certain U.S. and foreign air carriers as described in sections 382.133 and 382.135. As a result, the instant NPRM would change section 382.5 as proposed in the Foreign Air Carrier NPRM by adding the phrase “except as otherwise indicated within this part” to section 382.5(a) which addresses the applicability of part 382 to U.S. carriers and 382.5(b) which addresses the applicability of part 382 to foreign air carriers. No other change to section 382.5 has been made.

FAA regulations state that U.S. air carriers may not permit passengers to operate portable electronic devices during a flight except for certain devices listed in those sections and any other device that the carrier has determined will not cause interference with the navigation or communication system of the aircraft on which it is to be used. See, 14 CFR 91.21, 121.306 and 135.144. The Department recognizes that foreign carriers operate under a variety of safety laws and regulations, and is proposing that foreign carriers permit passengers to carry and use electronic devices consistent with the foreign law involved. In proposed section 382.133, the Department is proposing that U.S. and foreign air carriers be required to (1) test certain types of electronic respiratory assistive devices in accordance with U.S. and foreign safety rules, as applicable, and (2) permit the use of those devices within applicable U.S. and foreign safety regulations during all phases of commercial flight if they have had positive safety determinations.

As proposed, section 382.133 applies to all U.S. carriers that conduct passenger-carrying service other than those carriers that are operating as on-demand air taxis. An on-demand air taxi is an air taxi operator which carries passengers or property and is not a commuter air carrier as defined in 14 CFR part 298. A commuter air carrier is an air taxi operator that carries passengers on at least 5 round trips per week on at least one route between two or more points according to its published flight schedules that specify the times, days of the week and places between which those flights are performed. See, 14 CFR 298.2. This proposal also applies to foreign air carriers operating to and from the United States that conduct passenger-carrying service and are not on demand air taxi operators. We specifically request comment as to whether the Department should limit coverage of this section to carriers operating larger than 60 seat aircraft, i.e. , excluding carriers operating only small aircraft. Do carriers that operate only small aircraft have special needs or problems with complying with proposed section 382.133 of which the Department should be aware? Also, should the scope of this section be further limited so that flights performed by commuter carriers would not be covered?

Section 382.133 proposes to address the carriage of four types of respiratory devices: ventilators, respirators, continuous positive airway pressure (CPAP) machines, and portable oxygen concentrators excepted from coverage under 14 CFR 121.574 and 135.91. The language of 382.133(a) is intended to make clear that this section covers only those oxygen concentrators that the FAA, through a rulemaking, has specifically excepted from 14 CFR 121.574 and 14 CFR 131.91 coverage. Currently, the Air Sep Lifestyle and Inogen One portable concentrator units have been excepted from such coverage and qualify under subsection (1).

If an applicable foreign safety regulation precludes a foreign carrier from permitting passengers to carry the four types of respiratory devices mentioned above, this section would not require their carriage or use. The language of 382.133(b) is intended to make clear that this section only covers those respirators, ventilators, CPAP machines and oxygen concentrators that are not restricted by foreign government safety rules. As stated previously, it is the Department's intention to address the carriage and use of electronic respiratory devices within applicable safety rules. Therefore, as an example, if a foreign carrier is prohibited from carrying an oxygen concentrator because of its homeland safety requirements, then that foreign carrier would not be required to test, carry, or permit the use of such device on flights to and from the U.S. The Department seeks comment and information from foreign governments, foreign carriers, and other interested parties on the following questions regarding foreign safety restrictions affecting the carriage and use of electronic respiratory assistive devices. What foreign governments, if any, prohibit the carriage and use of respiratory devices? What devices, if any, are specifically prohibited by foreign safety rules? Describe safety restrictions other than prohibitions on these types of devices. Other than safety prohibitions or restrictions, what other foreign restrictions apply to the carriage and use of electronic assistive devices?

Section 382.133 proposes to require that, upon a request from a person with a disability or manufacturer of a device described above to a U.S. or foreign air carrier, the carrier would make a one-time determination whether such respiration assistive device can be carried safely in accordance with FAA or applicable foreign safety rules. For U.S. carriers, the rule proposes that carriers first determine whether the device is electronic and therefore subject to FAA regulations, i.e. , 14 CFR 91.21, 121.306 or 135.144. If the device is subject to those regulations, proposed section 382.133(a)(2) would require that U.S. air carriers conduct the necessary evaluation and/or electromagnetic (EMI) testing to determine whether such a respiratory assistive device causes interference with aircraft communication and navigation systems. Under subsection 382.133(b) foreign air carriers would also be required to make any necessary evaluations or conduct any necessary testing under applicable foreign requirements to determine if such device can be safely used during flight. 4 The Department requests comments as to the benefit or detriment of requiring passengers requesting the testing of ventilators, respirators, CPAP machines, and portable oxygen concentrators to either provide carriers with the applicable manufacturer's contact information when submitting the device for testing or to have the manufacturer provide the device directly to the carrier.

This section also proposes that U.S. air carriers test each device model for each model of aircraft that they operate. With respect to foreign carriers, this section proposes to require that foreign carriers test each device model for each aircraft model that they operate on flights to and from the United States. The testing for a device model is intended to be limited to a one-time testing event for each aircraft model covered by the rule. The Department intends that once a carrier completes the review and testing of a device, then the carrier would permit all positively tested devices of the same model to be used by passengers with disabilities on that model of aircraft. In other words, if a carrier determines that “Acme ventilator” owned by Passenger X does not cause interference with its Airbus A-320 or Boeing 747-400 aircraft that it operates and therefore permits Passenger X to use it on his flight, then Passenger Y and all other qualified passengers should be permitted to use the same model of the “Acme ventilator” during all flights on A-320's or 747-400's operated by that carrier.

The Department expects that carriers will test any device submitted for use during all phases of flight, including take-offs and landings. Since these devices are used to assist a person to breathe, a passenger may need to use his or her device during ascent and descent. Of course if a device is found to interfere with navigation or communications equipment during a particular phase of a flight, then its use must be prohibited during that phase of flight.

The Department recognizes that this proposal could require a carrier to conduct a number of tests during the initial compliance phase that other carriers will conduct or have conducted. However, as noted by the FAA in its July 12, 2005, final rule on use of certain portable oxygen concentrator devices onboard aircraft, if a medical portable electronic device (M-PED) such as the Inogen One or the AirSep Lifestyle has been tested to meet the Radio Technical Commission for Aeronautics (RTCA) standard found in FAA Advisory Circular 91.21-1A, and the test results are provided to, and verified by, the aircraft operator, no further testing by the aircraft operator would be required. The Department seeks comment on other ways, if any, to streamline the testing requirement for respiratory devices, including whether aircraft manufacturers should have a role in evaluating devices for use on a given model of aircraft.

The Department is proposing that a carrier have 90 days from receipt of a request to test a device on each model of aircraft it operates, and 30 days from the date of a positive determination to implement procedures to permit the device's use. The Department is proposing a total of 120 days to conduct the evaluation and make operational decisions and changes, if any, because such a timeframe appears to be a reasonable time given the number of models of aircraft some carriers operate. The Department seeks comment with respect to the amount of time reasonably necessary to conduct required evaluations and testing.

Section 382.133(d) proposes to require that carriers allow passengers to carry on board and use a portable respiratory assistive device on any aircraft model on which the device passed its safety evaluation and testing. Consistent with the FAA final rule on portable oxygen concentrators, subsection (d) does not propose to permit carriers to prohibit the use of these respiratory assistive devices during the ascent and descent stages of the flight, assuming use of the device is determined to be safe. However, if a carrier determines that a respiratory device can not be safely used during the ascent and descent, but can be used during all other phases during a flight, the carrier must permit use of that device during those phases when it can be safely used. The reason for this proposal is that some users of CPAP machines and oxygen concentrators do not need to use their devices until they reach a certain altitude such as cruising altitude or can go without using their devices during takeoff and landing. Because this proposal deviates from some carriers' standard practice in which all electronic devices are turned off during take-off and landing, the Department seeks comments as to any issues that may arise as a result of this particular proposal.

The intent of section 382.133 as proposed is to create a system where on the day of flight a passenger with a disability can carry his or her approved respiratory device, such as a portable oxygen concentrator, from his or her home to the airport, through check-in, to the gate, and then on to the aircraft for use during flight. 5 It is also worth noting that section 382.41(c) of the current rule requires U.S. carriers to permit passengers with disabilities to stow assistive devices, including the four types of respiratory devices addressed in this NPRM, in the cabin consistent with FAA safety regulations. The November 4, 2004, NPRM proposed to extend this same requirement to foreign carriers in section 382.121. The instant NPRM maintains this requirement of the current rule and proposed section 382.121 of the November 4, 2004, NPRM. Further, it raises five additional issues on which the Department solicits comment:

(1) Passenger Information. We believe that a passenger who uses a respiratory device could have an extremely frustrating travel experience if he or she discovers on the day of the flight that the carrier will not accept his or her particular model of device because it can cause interference with the navigation or communication systems on the aircraft model the carrier is using to operate the passenger's flight. Part 382 currently requires that when a passenger with a disability requests information about an accommodation, the carrier must provide this passenger information on any limitation involved in providing the accommodation in question. See 14 CFR 382.45(a)(2). Also see , 14 CFR 382.41 in the November 4, 2004 Foreign Air Carrier NPRM. We have interpreted this section to mean that carriers must inform passengers who inquire about oxygen service or who make reference to a respiratory disability if accommodations such as the provision of medical oxygen are not offered for certain flights. Therefore, we believe that 382.45(a)(2) would require that carriers inform passengers, on request, about any restrictions on using their personal respiratory assistive devices aboard the carrier's flights. For example, we would expect that a carrier would explain to a passenger who requests to use an “Acme CPAP machine” on flight 123 that this device can only be used on flight 123 after takeoff and before landing, if appropriate. We would also expect that a carrier would inform the passenger, upon request, about the availability or lack thereof of electrical outlets on board aircraft that might be available to power the device.

To provide this type of information, we anticipate that carriers would need to maintain a list or some type of operational guidance for its reservations agents itemizing the devices the carriers have evaluated and the results of the evaluations. The Department seeks comments on the following questions: What issues are involved in air carriers maintaining a centralized list of approved and disapproved devices? To what extent should carriers be required to provide information to disabled air travelers? Should carriers be required to inform passengers if a device is in the process of being evaluated? Should information about evaluations and acceptance/rejection of particular devices be placed on each carrier's Web site? What issues are raised if carriers are required to provide information on the limitations of the carriers' codeshare partners to accommodate the use of respiratory devices? What issues are raised in connection with codeshares if the ticketing carrier is aware that the carrier operating the codeshared flight has not conducted the necessary testing to allow for the use of a respiratory device? What process or procedures do U.S. carriers use today to ensure their travel agents comply with current requirements in section 382.45 regarding providing information to passengers about the accessibility features of an aircraft ( e.g. , location of movable armrests, limitations on the ability of the aircraft to accommodate qualified individuals with disabilities)? Would carriers be able to use the same or similar method to ensure their travel agents inform passengers who inquire about oxygen service or who make reference to a respiratory disability if appropriate accommodations are not offered for certain flights?

(2) Advance Notice: Currently, section 382.33(b) permits carriers to require passengers who request medical oxygen service for their flight or who plan to hook up their respirator to the aircraft's electrical supply to provide 48 hours advance notice. What are the operational reasons, if any, in support of permitting carriers to require a passenger with a disability to provide advance notice of his or her intention to use a battery-operated CPAP machine, an approved portable oxygen concentrator, or a respirator or ventilator aboard a flight? What are the operational reasons, if any, in support of permitting carriers to require a passenger with a disability to provide advance notice of his or her intention to use the aircraft electrical system? What issues would arise for passengers with disabilities if carriers were permitted to require advance notice for use of a respiratory device? What is a reasonable amount of advance notice?

(3) Advance check-in time: Current section 382.33(b) also permits air carriers to require that passengers who request medical oxygen service for their flight or who plan to hook up their respirator to the aircraft's electrical supply to check in an hour prior to their flight. What are the operational reasons, if any, for requiring passengers who request to use their respiratory assistive device to comply with an advance check-in deadline? What issues would passengers who use respiratory assistive devices face if carriers were permitted to require an advance check-in deadline? What would be a reasonable length of time for the advance check-in? Would an hour before the check-in time set by the carriers for general boarding passengers to present themselves at the airport be a reasonable amount of time to conduct any necessary check-in procedures associated with the carriage of the device? Should the length of time for advance check-in differ for international flights?

(4) Seating accommodations: We believe that a passenger who uses electronic respiratory assistive devices ( e.g. , ventilator, respirator, CPAP machine, or portable oxygen concentrator) should be given priority over users of other types of electronic equipment that are not assistive devices ( e.g. , laptops) to plug the device into the aircraft's power supply consistent with FAA and foreign safety requirements. As such, we are seeking comment on whether to require that, if an electrical outlet is available on the aircraft and can safely be used, carriers must provide a seat, in the same class of service, closest to the electrical outlet to a passenger who self-identifies as using the electronic respiratory assistive device and requests such a seat. The Department also seeks comment on whether there are any practical problems to implementing the proposed seating accommodation. If there are problems, we seek comment on how to avoid them while still accommodating passengers in this situation.

(5) Batteries: Because respirators, ventilators, CPAP machines and the covered oxygen concentrators can be powered by batteries, the Department is seeking additional information in this area. More specifically, DOT requests comments as to whether it should allow carriers to require users of electronic respiratory devices to carry a certain number of batteries in instances where electrical outlets are not available on an aircraft. Should the Department also allow carriers to require users of electronic respiratory devices to carry a certain number of batteries even in instances where an aircraft has an electrical outlet available as a way of protecting against unexpected occurrences ( e.g. , the aircraft electrical system is inoperative or otherwise unusable or an aircraft without outlets is suddenly substituted for an aircraft with outlets)? The Department recognizes that the FAA final rule on use of certain portable oxygen concentrator devices onboard aircraft issued on July 12, 2005, states that the user of a portable oxygen concentrator must carry on the flight a sufficient number of batteries to power the device for the duration of the oxygen use specified in the user's physician statement, including a conservative estimate of any unanticipated delays. DOT seeks comment regarding what action it should authorize the carrier to take if a passenger does not have available to carry on a flight a sufficient number of batteries to power an electronic respiratory assistive device.

The Department further seeks comment and information as to whether manufacturers place labels on all ventilators, respirators, CPAP machines, and/or Air Sep Lifestyle and Inogen One portable oxygen concentrators which would provide carriers assurance that the batteries to be used for these devices are approved for air travel. If such a label is not present on a device, DOT seeks comment on whether carriers should be permitted to prohibit a passenger with a disability from carrying the device or using it during flight. The Department requests comments regarding the benefit or determinant of such an approach. DOT also seeks comment regarding what action it should authorize the carrier to take or what action to require the carrier to take if a passenger does not ensure that the electronic device batteries carried are packaged in a manner that protect them from physical damage as required by the FAA.

In this section, the Department is proposing to require carriers to provide in-flight medical oxygen to passengers with disabilities who request and require it on commercial flights in accordance with applicable safety rules.

As proposed, section 382.135 would apply to U.S. carriers that conduct passenger-carrying service with at least one aircraft having a designed seating capacity of more than 60 passengers and foreign air carriers operating to and from the United States that conduct passenger-carrying service with at least one aircraft having a designed seating capacity of more than 60 passengers. It is worth noting that under this NPRM if a U.S. carrier operates both large aircraft (aircraft with more than 60 seats) and small aircraft, then all flights of that airline are covered regardless of the size of the aircraft used on a particular flight. If a foreign airline operates both large and small airplanes to and from the United States, the flights on the small airplanes would be covered because the airline holds authority to fly large airplanes. We request comment about the feasibility and/or difficulties inherent in providing in-flight medical oxygen in small aircraft. Should the scope of this section be limited to large aircraft (aircraft with more than 60 seats)? What would be the harm or benefit of such a limitation? The kinds of foreign air carriers that we propose to cover under this NPRM in terms of scheduled carriers flying large aircraft are as similar as possible to the U.S. air carriers that we propose to cover considering the different legal authority applicable to foreign operators.

This NPRM is designed to create greater access to air travel for persons who use medical oxygen by proposing a system within the existing aviation safety regulatory structure concerning oxygen. U.S. and foreign air carriers are subject to 14 CFR 121.574 and 135.91. Sections 121.574 and 135.91 specifically apply to U.S. carriers. Although these two sections do not specifically apply to foreign carriers, foreign carriers are nonetheless required to follow 14 CFR 121.574 and 135.91 when providing medical oxygen because of the U.S. regulations regarding the carriage of hazardous materials. Specifically, 49 CFR 175.10(a) (7) requires foreign carriers to follow the standards set forth in 14 CFR 121.574 or 135.91 when providing medical oxygen on commercial flights in U.S. airspace.

Sections 121.574 and 135.91 set forth a number of safety requirements for carriers to follow when providing medical oxygen. Some of these requirements include: (1) The medical oxygen device used by the passenger must be provided by the carrier, (2) a passenger who uses a carrier-supplied medical oxygen device must demonstrate to the carrier that he or she has a medical need for such device by providing a medical statement signed by a licensed physician which specifies the maximum quantity of oxygen needed each hour and the maximum flow rate needed for the pressure altitude corresponding to the pressure in the cabin of the aircraft, and (3) no person, other than carrier personnel, may connect or disconnect a passenger to and from a gaseous oxygen cylinder while any other passenger is aboard the aircraft.

This section also proposes to require that U.S. and foreign air carriers adhere to any applicable Transportation Security Administration (TSA), FAA, PHMSA, and foreign safety regulations when providing medical oxygen service. The Department recognizes that in some situations more restrictive foreign aviation regulations rather than FAA, TSA, or PHMSA rules may govern the actions of foreign carriers with respect to the carriage and use of medical oxygen aboard aircraft.

Section 382.135 proposes a system where carriers would be required to provide oxygen devices covered by 14 CFR 121.574 or 135.91, such as compressed oxygen canisters. The Department understands that compressed medical oxygen dispensed from canisters can provide a purity of oxygen and flow rate that are required by most if not all individuals dependent on medical oxygen. The Department recognizes that devices such as the Air Sep AirLife oxygen concentrator unit,  6 Air Sep Lifestyle portable oxygen concentrator unit, and Inogen One portable oxygen concentrator unit did not exist when 14 CFR 121.574 or 135.91 were initially adopted by the FAA. However, it appears from the manufacturers' materials that oxygen concentrators can deliver a comparable purity of oxygen and flow rate to that of a canister. The Department would be willing to consider a carrier that provides a concentrator in lieu of a compressed oxygen canister to be in compliance with this proposed requirement if the concentrator provided the same medical oxygen service as a compressed oxygen canister. Therefore, the Department seeks comment from the medical professional community, manufacturers of oxygen devices, persons dependent on medical oxygen, air carriers, and all other interested parties to address the following questions: Do oxygen concentrators provide medical oxygen at a purity level and flow rate required by most individuals dependent on medical oxygen? What other devices dispense medical oxygen with the same or comparable purity and flow rate as compressed oxygen delivered from a canister? What medical reasons would prevent a person who requires medical oxygen from using a large ( e.g. the Air Life concentrator) or portable oxygen concentrator?

Proposed section 382.135 would require that U.S. and foreign carriers provide only in-flight medical oxygen service. This means that under this proposal, carriers are only required to provide a medical oxygen device to a requesting passenger with a disability for use on board the aircraft. Passengers who require medical oxygen in canisters in the airport must arrange with oxygen suppliers for separate airport service for several reasons. 7 First, FAA safety rules contemplate that carrier-supplied oxygen will only be provided on the aircraft itself and not in the airports. Second, the cost to provide medical oxygen service from a passenger's arrival at the curb for departing flight to the curb upon arrival of a passenger's flight would be prohibitively expensive because a carrier would have to train and assign personnel to stay with the oxygen device while in the airport in order to maintain control of the device as required by FAA rules.

This section would not amend the current requirement that carriers that provide medical oxygen to passengers with disabilities may require up to 48 hours' advance notice from the passenger for the service. Should the Department require a longer period of time for advance notice for international flights?

Carriers would have up to six months from the date the rule becomes final to establish a system to provide medical oxygen to passengers with disabilities upon request. The Department seeks comment on what a reasonable amount of time would be to establish a system to provide medical oxygen to passengers with disabilities.

The Department seriously considered proposing that U.S. and foreign air carriers be required to implement a system that would allow passengers before their trips to submit their own canisters of compressed oxygen to carriers for testing. The Department considered a system in which a passenger would have been permitted to submit his or her own canisters of compressed oxygen to a carrier at least five days prior to his or her flight for carrier inspection and maintenance of the canisters in accordance with applicable safety regulations. The carrier would then have been required to furnish the devices to the passenger for use during the passenger's flight if the canisters were deemed safe. If the canisters were not deemed safe, the Department considered proposing that the carrier be required to return the oxygen canisters to the passenger with a written explanation as to why the passenger's device was not acceptable no later than 24 hours prior to the passenger's flight and refund any unused portion of the passenger's ticket.

However, after further review, it became apparent that the above approach, if proposed, would create several problematic issues for both passengers and air carriers. First, the system would have deprived oxygen users of their oxygen canisters for at least 5 days in order to allow enough time for the carriers to conduct FAA-mandated testing, inspection, and maintenance of the canisters. This would have created a burden on passengers who would have had to order additional canisters from suppliers in order to be assured they had enough canisters to cover the 5 days the carrier had control of their devices.

This system also would have created a complicated procedure requiring coordination between passengers, air carriers, and oxygen suppliers. For example, a carrier would have had to create a place to accept and stow the devices, communicate clearly to the passenger where to deliver the devices and train employees to appropriately accept the devices in order to obtain the necessary information about the canisters. The carrier would then have had to either create an in-house system to inspect and test the canisters or create a system in which it transported the oxygen canisters to approved medical oxygen suppliers to conduct the testing. All carriers would also have had to arrange for the oxygen canisters to be delivered to the passenger's point of departure. This coordination would have had to have been accomplished at least 36 hours prior to the passenger's flight in order to provide the carrier with enough time to inform the passenger if the canister failed the required tests.

Most importantly, under current FAA regulations, an air carrier can only provide oxygen canisters to passengers for use during flight that the carrier has purchased new or those on which the carrier has performed its last hydrostatic safety test. In order to conduct a hydrostatic test on the canister, the canister must be purged of its compressed oxygen. Therefore, because of current FAA safety regulations, carriers would still be required to fill empty canisters after their testing and inspection by the carriers. Moreover, oxygen tanks can be subjected to hydrostatic testing only a limited number of times for safety reasons. For all of the reasons discussed above, the Department has concluded that an effective system in which a passenger submits his or her own compressed oxygen canister system for carrier inspection and maintenance cannot be created at this time. Therefore, the Department will address the use of medical oxygen tanks by proposing to require a system in which carriers' supply their own medical oxygen tanks to the passengers.

The Department has also received a letter from a coalition of medical professionals and users of supplemental oxygen asking the Department to consider creating a system for the provision of medical oxygen by using pre-approved oxygen delivery kits. The coalition asked if the Department would consider whether passengers could rent or purchase oxygen kits from an oxygen vendor approved by DOT, FAA or the Department of Homeland Security. A passenger would pick up his or her device from a pre-approved vendor and carry the device in its tamper proof container to the airport for check-in on the day of the flight. The passenger would present the unopened tamper-proof oxygen kit to the airline staff. The airline staff would be responsible for ensuring that the oxygen kit (1) has not been tampered with and (2) is an approved oxygen system. As a preliminary response, the Department notes that the provision of any oxygen delivery device that contains hazardous material or has not been the subject of a rulemaking or an exemption from FAA rules must comply with the requirements set forth in 14 CFR 121.574 or 135.91. Chief among these is the requirement that the carriers maintain and furnish any oxygen-delivery system. The Department seeks comments and information on how such a pre-approved delivery kit proposal could be implemented consistent with FAA and foreign government safety regulations.

This section proposes that respiratory assistive devices and oxygen delivery systems be accorded the same treatment as other assistive devices and disability-related services required under part 382 such that a passenger would not be charged a fee for carrier-supplied medical oxygen, excess baggage fees for a passenger's respiratory assistive device, or fees for the cost associated with inspecting or testing a passenger's respiratory assistive device.

The Department recognizes that this proposal would end the ability of air carriers to charge for the provision of medical oxygen, as they currently do. The Department also wishes to carefully evaluate the impact that the costs of such a required system would have on the airline industry. The regulatory evaluation prepared in conjunction with this NPRM found that the provision of a medical oxygen service at no cost to the disabled passengers would be a cost beneficial system. However, the Department is well aware that because of the unique characteristics of medical oxygen, the provision of medical oxygen can be costly. For example, medical oxygen is more costly than other type of compressed oxygen because it's required to be highly pure oxygen.

Generally, carriers may not charge passengers for disability-related services that provide equal access to air transportation because such charges would have a discriminatory effect. However, the Department seeks comment on whether the law would permit carriers to charge for the provision of medical oxygen? Specifically, the provision of medical oxygen may be distinguishable from other disability-related services because it requires a physician's prescription in order to obtain the service from the air carrier. In addition, the Department seeks comment on whether the Department has the authority to regulate the reasonableness of such charges under the ACAA or limit the charges to the carrier's costs if the law would permit carriers to charge for the provision of medical oxygen?

The Department also wishes to clarify that under this proposal carriers cannot charge passengers for an additional seat if the oxygen canisters or other dispensing equipment is stowed under the passenger's seat or beneath the seat in front of the passenger using the medical oxygen. However, if the passenger who requires medical oxygen must in fact use more than one passenger seat because the equipment takes the space of two seats, then that passenger can be charged for an additional seat. On lengthy flights, carriers would have to stow oxygen tanks not in use in other stowage space on a priority basis.

The Department has determined that this proposed rule is nonsignificant for purposes of both Executive Order 12866 and the Department of Transportation Regulatory Policies and Procedures. Because this NPRM will impose new requirements on U.S. and foreign carriers, however, the Department has produced a regulatory evaluation. The evaluation has determined that the proposals as set out in this NPRM are cost beneficial.

Specifically, the regulatory evaluation estimates that for all U.S. carriers covered by these proposals, the average annual costs associated with this NPRM for U.S. carriers, when discounted to present value, would range from $18.6 million to $39.1 million. The analysis determined that for U.S. carriers the total annual benefits, also discounted to present value, would range from $40.2 million to $100.6 million. For foreign carriers, the regulatory evaluation estimated that the average annual total costs associated with this NPRM would range from $4 million to $6.87 million and the total benefits would range between $18.52 million and $59.6 million. The Department seeks comment on the regulatory evaluation, its approach, and the accuracy of its estimates of costs and benefits.

This NPRM has been analyzed in accordance with the principles and criteria contained in Executive Order 13132 (“Federalism”). This notice of proposed rulemaking would not (1) have a substantial direct effect on the States, the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government; (2) impose substantial direct compliance costs on state and local governments; or (3) preempt State law. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.

This notice of proposed rulemaking has been analyzed in accordance with the principles and criteria contained in Executive Order 13084 (“Consultation and Coordination with Indian Tribal Governments”). Because this NPRM does not significantly or uniquely affect the communities of the Indian tribal governments and does not impose substantial direct compliance costs, the funding and consultation requirements of Executive Order 13084 do not apply.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires an agency to review regulations to assess their impact on small entities unless the agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities. I hereby certify that the rule proposed in this notice of proposed rulemaking will not have a significant economic impact on a substantial number of small entities. A direct air carrier or a foreign air carrier is a small entity if it provides air transportation only with small aircraft ( i.e. , aircraft designed to have a maximum passenger capacity of not more than 60 seats or a maximum payload capacity of not more than 18,000 pounds). See 14 CFR 399.73. This NPRM reduces costs to small carriers by proposing not to apply to them the more costly provision which would require a carrier to provide in-flight medical oxygen upon request. Taking into account the flexibility of the NPRM and the low overall costs, we conclude that the cost of compliance with this rule for small businesses will not have a significant impact on small businesses. Therefore, this rule will not have a significant economic impact on a substantial number of small businesses.

The proposed rule does not contain information collection requirements that require approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act (44 U.S.C. 2507 et seq. ).

The Department has determined that the requirements of Title II of the Unfunded Mandates Reform Act of 1995 do not apply to this rulemaking.

For the reasons set forth in the preamble, the Department of Transportation is further proposing to amend the proposed rule published at 69 FR 64364, November 4, 2004, as follows:

1. Pursuant to Subtitle A (Reliability Standards) of the Electricity Modernization Act of 2005, 1 which added a new section 215 to the Federal Power Act (FPA), the Commission is proposing to amend its regulations to incorporate:

(1) Criteria that an entity must satisfy in order to qualify to be the Electric Reliability Organization (ERO), which the Commission will certify as the organization that will propose and enforce Reliability Standards for the Bulk-Power System in the United States, subject to Commission approval;

(2) Procedures under which the ERO may propose new or modified Reliability Standards and procedures to enforce such standards, for Commission review;

(3) Procedures governing enforcement actions by the ERO and the Commission;

(4) Criteria under which the ERO may enter into an agreement to delegate authority to a Regional Entity for the purpose of proposing Reliability Standards to the ERO and enforcing Reliability Standards;

(5) Procedures for the establishment of Regional Advisory Bodies that may provide advice to the Commission, the ERO or a Regional Entity on matters of governance, applicable Reliability Standards, the reasonableness of proposed fees within a region, and any other responsibilities requested by the Commission;

(6) Regulations governing the issuance of periodic reliability reports by the ERO that assess the reliability and adequacy of the Bulk-Power System in North America; and

(7) Regulations pertaining to the funding of the ERO.

2. The Electricity Modernization Act of 2005 was enacted into law by President George W. Bush on August 8, 2005. Subtitle A of the Electricity Modernization Act amended the FPA by adding a new section 215, titled “Electric Reliability.” Prior to enactment of section 215, the Commission had acted primarily as an economic regulator of wholesale power markets and the interstate transmission grid. In this regard, the Commission acted to promote a more reliable electric system by promoting regional coordination and planning of the interstate grid through regional independent system operators (ISOs) and regional transmission organizations (RTOs), adopting transmission pricing policies that provide price signals for the most reliable and efficient operation and expansion of the grid, and providing pricing incentives at the wholesale level for investment in grid improvements and assuring recovery of costs in wholesale transmission rates. Section 215 of the FPA buttresses the Commission's efforts to strengthen the reliability of the interstate grid through the grant of new authority which provides for a system of mandatory Reliability Standards developed by the ERO and reviewed and approved by the Commission. The ERO can initiate an enforcement action and impose penalties for the violation of Reliability Standards, subject to Commission review; or the Commission can initiate its own enforcement action.

3. In the aftermath of the 1965 blackout in the northeast United States, the electric industry established the North American Electric Reliability Council (NERC), a voluntary reliability organization. Since its inception, NERC has developed Operating Policies and Planning Standards that provide voluntary guidelines for operating and planning the North American bulk-power system. In April 2005, NERC adopted “Version 0” reliability standards that translated the NERC Operating Policies, Planning Standards and compliance requirements into a comprehensive set of measurable standards. While NERC has developed a compliance enforcement program to ensure compliance with the reliability standards it has developed, industry compliance is still voluntary and not subject to mandatory enforcement penalties. Although NERC's efforts have been important in maintaining the reliability of the nation's bulk-power system, NERC itself has recognized the need for mandatory, enforceable reliability standards and has been a proponent of legislation to establish a Commission-jurisdictional ERO that would propose and enforce mandatory reliability standards.

4. A common cause of the past three major regional blackouts was violation of NERC's then Operating Policies and Planning Standards. During July and August 1996, the west coast of the United States experienced two cascading blackouts caused by violations of voluntary Operating Policies. 2 In response to the outages, the Secretary of Energy convened a task force to advise the U.S. Department of Energy (DOE) on issues needed to be addressed to maintain the reliability of the bulk-power system. In a September 1998 report, the task force recommended, among other things, that federal legislation should grant more explicit authority for the Commission to approve and oversee an organization having responsibility for bulk-power reliability standards. 3 Further, the task force recommended that such legislation provide for Commission jurisdiction for reliability of the bulk-power system and Commission implementation of mandatory, enforceable reliability standards.

5. On August 14, 2003, a blackout affected significant portions of the Midwest and Northeast United States, and Ontario, Canada. This blackout affected an area with an estimated 50 million people and 61,800 megawatts of electric load. A joint U.S.-Canada task force studied the causes of the August 14, 2003 blackout and determined that several entities violated NERC's then Operating Policies and Planning Standards, and those violations directly contributed to the start of the blackout. 4 The joint task force, in its recommendations to prevent or minimize the scope of future blackouts, identified the need for legislation to make reliability standards mandatory and enforceable, with penalties for non-compliance. 5

6. In the wake of the August 14, 2003 blackout, the Commission has taken a more direct and pro-active role in transmission reliability matters. Commission staff helped to lead and conduct the joint U.S.-Canada investigation of the August 2003 blackout. In April 2004, the Commission issued a Reliability Policy Statement, 6 which clarified its power grid reliability policies and objectives, and completed several Commission-designated recommendations of the 2003 Task Force.

7. Also, as part of the Commission's efforts to promote grid reliability, the Commission has created a new Division of Reliability within the Office of Markets, Tariffs and Rates. One task of this new division has been to participate in NERC's Reliability Readiness Reviews of balancing authorities, transmission operators and reliability coordinators in North America to determine their readiness to maintain safe and reliable operations. The Commission also directed transmission owners to report, by June 2004, on the vegetation management practices they use for transmission lines and rights-of-way. 7 The Commission's Reliability Division has also engaged in studies and other activities to assess the longer-term and strategic needs and issues related to power grid reliability. The Commission has held several workshops and technical conferences to address reliability issues including transition to the NERC reliability standards, operator tools, and reactive power.

8. Stakeholders in the electric utility industry have also participated in dialogues on the international implications of the ERO and Cross-Border Regional Entities during three public bilateral workshops held in the United States and Canada. On August 9, 2005, the Federal-Provincial-Territorial (FPT) Working Group in Canada and DOE jointly submitted to the Commission “Principles for an Electric Reliability Organization that Can Function on an International Basis'' (bilateral principles) based on these stakeholder dialogues  8 A number of bilateral principles are incorporated into the NOPR, and the Commission asks questions and seeks comment on the bilateral principles. In this regard, we note that the Commission's proposed rule would allow the approved ERO or a Cross-Border Regional Entity to take appropriate steps to be recognized in Mexico or Canada as embedded in the principles. For example, in accordance with section 215(c)(2)(E) of the FPA, we expect the ERO and any Regional Entities to take such steps as relevant Mexican and Canadian authorities may require to have standing in those nations. 9

9. Electric reliability legislation was first proposed after issuance of the September 1998 task force report, 10 and was a common feature of comprehensive electricity bills since that time. A stand-alone electric reliability bill was passed by the Senate unanimously in 2000. 11 In 2001, President Bush proposed making electric Reliability Standards mandatory and enforceable as part of the National Energy Policy. 12 On August 8, 2005, the Electricity Modernization Act of 2005 was enacted into law by President Bush. This important new energy legislation adds to the FPA a new provision which buttresses the Commission's efforts to strengthen the reliability of the interstate transmission grid. Specifically, the new section 215 of the FPA provides for a system of mandatory, enforceable Reliability Standards. Reliability Standards are to be developed by the ERO, subject to Commission review and approval; and, once approved, standards may be enforced by the ERO, subject to the Commission's review.

10. The statute directs the Commission to issue a final rule to implement the requirements of section 215 no later than 180 days after enactment, or by February 5, 2006. Below, we summarize the provisions of Subtitle A of the Electricity Modernization Act of 2005:

11. Section 215(a) defines relevant terms used in the Act.

12. Section 215(b) (Jurisdiction and Applicability) provides that, for purposes of approving Reliability Standards and enforcing compliance with such standards, the Commission shall have jurisdiction over the certified ERO, any Regional Entities, and all users, owners and operators of the bulk-power system, including but not limited to the public and governmental entities described in section 201(f) of the FPA. 13 Section 215(b)(2) requires the Commission to issue a final rule to implement the requirements of the section no later than 180 days after the date of enactment.

13. Section 215(c) (Certification) authorizes the Commission to certify a person as an ERO, provided that the applicant meets specified criteria.

14. Section 215(d) (Reliability Standards) provides the process for the ERO to propose Reliability Standards, subject to Commission review and approval. This subsection also directs the Commission to adopt rules to provide fair processes for the identification and timely resolution of any conflict between a Reliability Standard and any function, rule, order, tariff, rate schedule, or agreement accepted, approved, or ordered by the Commission applicable to a transmission organization.

15. Section 215(e) (Enforcement) authorizes the ERO, after notice and opportunity for hearing, to impose a penalty for a violation of a Reliability Standard; subject to review by the Commission. This section also provides for enforcement initiated by the Commission on its own motion. This subsection also requires that the Commission issue regulations under which the ERO will be authorized to enter into an agreement to delegate authority to a qualified Regional Entity for the purpose of proposing Reliability Standards to the ERO and enforcing such standards. Further, section 215(e) requires that any penalty imposed shall bear a reasonable relation to the seriousness of the violation and take into consideration timely remedial efforts.

16. Section 215(f) (Changes In Electric Reliability Organization Rules) requires Commission approval of any proposed ERO rule or proposed rule change.

17. Section 215(g) (Reliability Reports) requires that the ERO conduct periodic assessments of the reliability and adequacy of the North American bulk-power system.

18. Section 215(h) (Coordination With Canada and Mexico) urges the President to negotiate international agreements with the governments of Canada and Mexico to provide for effective compliance with Reliability Standards and the effectiveness of the ERO in the United States and Canada or Mexico.

19. Section 215(i) (Savings Provisions) states that the ERO shall have authority to develop and enforce compliance with Reliability Standards for only the bulk-power system and makes clear that section 215 of the FPA shall not be construed to preempt any authority of any state to take action to ensure the safety, adequacy, and reliability of electric service within that state, as long as such action is not inconsistent with any Reliability Standard.

20. Section 215(j) (Regional Advisory Bodies) requires the Commission to establish Regional Advisory Bodies upon petition of at least 2/3 of the states within a region that have more than 1/2 of their electric load served within the region; such Regional Advisory Bodies may provide advice to the ERO, a Regional Entity, or the Commission.

21. Section 215(k) (Application to Alaska and Hawaii) provides that section 215 of the FPA does not apply to Alaska or Hawaii.

22. Subtitle A of the Electricity Modernization Act of 2005 also includes two reliability-related provisions that are not part of new section 215 of the FPA. First, section 1211(b) of the Act provides that the ERO certified by the Commission as well as Regional Entities are not departments, agencies or instrumentalities of the United States Government. Second, section 1211(c) provides that federal agencies responsible for approving access to electric transmission or distribution facilities located on lands within the United States shall, in accordance with applicable law, expedite any federal agency approvals that are necessary to allow the owners or operators of such facilities to comply with a Commission-approved Reliability Standard that pertains to vegetation management, electric service restoration, or resolution of situations that imminently endanger the reliability or safety of the facilities.

23. The Commission's proposed reliability regulation is entitled, Rules Concerning Certification of the Electric Reliability Organization; and Procedures for the Establishment, Approval and Enforcement of Electric Reliability Standards . The proposed regulation is generally limited to developing and implementing the processes and procedures that section 215 of the FPA directs the Commission to develop and undertake with regard to the formation and functions of the ERO and Regional Entities. Section 215(b) obligates all users, owners and operators of the bulk-power system to comply with Reliability Standards that become effective pursuant to the processes set forth in the statute. The complete text of the proposed rule is provided in the Attachment to this notice of proposed rulemaking (NOPR).

24. The proposed regulation is organized into twelve sections:

25. Section 38.1 of the proposed regulations defines relevant terms used in the Act. Each definition is based on a corresponding definition contained in section 215 of the FPA, except as otherwise noted.

26. The term “Bulk-Power System” means facilities and control systems necessary for operating an interconnected electric energy transmission network (or any portion thereof), and electric energy from generating facilities needed to maintain transmission system reliability. The term does not include facilities used in the local distribution of electric energy.

27. The term “Cross-Border Regional Entity” means a Regional Entity for which the size and scope includes a portion of Canada or Mexico.

28. The term “Cybersecurity Incident” means a malicious act or suspicious event that disrupts, or was an attempt to disrupt, the operation of those programmable electronic devices and communications networks including hardware, software and data that are essential to the Reliable Operation of the Bulk-Power System.

29. The term “Electric Reliability Organization” or “ERO” means the organization certified by the Commission the purpose of which is to establish and enforce Reliability Standards for the Bulk-Power System, subject to Commission review.

30. The legislation distinguishes between the terms “Reliability Standards” and “rules.” The former refers to Commission-approved, substantive standards that provide for Reliable Operation of the Bulk-Power System. In contrast, “rules” refer to the internal procedures of the ERO or any particular Regional Entity. Accordingly, to maintain this distinction, the Commission proposes the following definition of the term “ERO Rules” for purposes of this NOPR: the bylaws, rules of procedure and other organizational rules and protocols of the ERO. The Commission proposes to define the term “Regional Entity Rules” as the bylaws, rules of procedure and other organizational rules and protocols of a Regional Entity.

31. The term “Interconnection” means a geographic area in which the operation of Bulk-Power System components is synchronized such that the failure of one or more of such components may adversely affect the ability of the operators of other components within the system to maintain Reliable Operation of the facilities within their control.

32. The term “Regional Advisory Body” is used in the statute but not defined. For purposes of our regulations, the Commission proposes to define the term as follows: an entity established upon petition to the Commission pursuant to section 215(j) of the FPA that is organized to advise the ERO, a Regional Entity, or the Commission regarding certain reliability-related matters in accordance with section 38.9 of the proposed regulation.

33. The term “Regional Entity” means an entity having enforcement authority pursuant to section 38.6 of the proposed regulation.

34. The term “Reliable Operation” means operating the elements of the Bulk-Power System within equipment and electric system thermal, voltage, and stability limits so that instability, uncontrolled separation, or cascading failures of such system will not occur as a result of a sudden disturbance, including a Cybersecurity Incident, or unanticipated failure of system elements.

35. The term “Reliability Standard” means a requirement, approved by the Commission under the instant proposed regulation, to provide for Reliable Operation of the Bulk-Power System. The term includes requirements for the operation of existing Bulk-Power System facilities, including cybersecurity protection, and the design of planned additions or modifications to such facilities to the extent necessary to provide for Reliable Operation of the Bulk-Power System. The term does not include any requirement to enlarge such facilities or to construct new transmission capacity or generation capacity.

36. The term “Transmission Organization” means an RTO, ISO, independent transmission provider, or other Transmission Organization finally approved by the Commission for the operation of transmission facilities.

37. Proposed regulation section 38.2 provides for Commission jurisdiction over the ERO, any Regional Entities, and all users, owners and operators of the Bulk-Power System within the United States (other than Alaska and Hawaii) including, but not limited to, the entities described in section 201(f) of the FPA, for the purposes of approving and enforcing Reliability Standards established by the Commission in accordance with this new regulation.

38. Proposed regulation section 38.3 provides that any person may submit an application to the Commission for certification as the ERO within sixty (60) days following the issuance of a new final regulation. This provision provides for the Commission to certify one applicant as the ERO, if the Commission determines such applicant meets certain criteria. Paragraph (b)(1) of proposed section 38.3 provides that the applicant must demonstrate that it has the ability to develop and enforce Reliability Standards that provide for an adequate level of reliability of the Bulk-Power System.

39. The Commission interprets section 215 of the FPA to mean that an ERO certified by the Commission shall comply with the certification criteria on an ongoing basis, and that a violation of the certification criteria constitutes a violation of the FPA. Accordingly, as discussed below with respect to section 38.6(a) and (b), the Commission will conduct periodic compliance audits and, if it finds a violation of the ERO certification criteria, the Commission may suspend the ERO's certification or decertify the ERO and solicit new applications for ERO certification.

40. Section 38.3(b)(2) provides that the applicant must document that it has established rules that assure its independence of the users, owners and operators of the Bulk-Power System while assuring stakeholder representation in the selection of its directors and balanced decisionmaking in any ERO committee or subordinate organizational structure. Pursuant to section 215(c)(2)(B) of the FPA, section 38.3(b)(2)also provides that such ERO rules allocate equitably reasonable dues, fees and charges among end users for all activities under this new reliability regulation. Section 38.3(b)(2) further provides that such ERO rules are to be fair and impartial procedures for enforcement of Reliability Standards through the imposition of penalties, including limitations on activities, functions or operations, or other appropriate sanctions.

41. In addition, section 38.3(b)(2) provides that such ERO rules are to provide for reasonable notice and opportunity for public comment, due process, openness, and balance of interests in developing Reliability Standards, and otherwise exercising its duties. Paragraph (b)(2) of proposed section 38.3 provides that such ERO rules must include appropriate steps, after certification by the Commission as the ERO, to gain recognition in Canada and Mexico.

42. Paragraph (c) of section 38.3 requires an ERO certified by the Commission to periodically submit to the Commission an application to be recertified as the ERO. We seek comments on what would constitute a reasonable length of time for such periodic certification to be effective. For example, is a five-year certification period appropriate? How far in advance should an ERO be required to submit its application for recertification before its current certification period expires?

43. In addition to seeking comment on the above proposal, we seek comments on whether the term “end users” should be defined for purposes of the ERO's equitable allocation of reasonable dues, fees and charges among end users? Should “end users” be defined as customers using net energy for load? Should the term “end users” be defined in terms of those who directly or indirectly use the transmission system since “Bulk-Power System” is defined to exclude facilities used in local distribution of electric energy? Should “end users” be limited to entities transmitting electricity through the transmission facilities of others? Or, might “end users” include the transmission facility owners and operators whose businesses depend on the reliable operations of the interconnected Bulk-Power System?

44. Paragraph (a) of proposed regulation section 38.4 provides that the ERO must consider and develop Reliability Standards and modifications to be applicable to the entire Bulk-Power System or a particular region or Interconnection. The ERO shall file each Reliability Standard or modification to a Reliability Standard that it proposes to be made effective under this section with the Commission. The ERO's filing shall state the purpose of the standard and a summary of its development.

45. Section 215(d)(2) of the FPA requires that the Commission give due weight to the technical expertise of the ERO with respect to the content of a proposed Reliability Standard or modification to a Reliability Standard. Likewise, the statute requires that the Commission give due weight to the technical expertise of a Regional Entity organized on an Interconnection-wide basis with respect to a Reliability Standard to be applicable within that Interconnection. Further, section 215(d)(3) of the FPA provides for a rebuttable presumption that a Reliability Standard or a modification to a Reliability Standard to be applicable on an Interconnection-wide basis is just, reasonable, not unduly discriminatory or preferential, and in the public interest, if such proposal is from a Regional Entity organized on an Interconnection-wide basis.

46. The statute, however, is silent regarding deference to Regional Entities not organized on an Interconnection-wide basis. Accordingly, the Commission interprets sections 215(d)(2) and (3) as not requiring the Commission to give due weight to the technical determinations of Regional Entities not organized on an Interconnection-wide basis or creating a presumption with regard to the reasonableness of any Reliability Standard proposed by such Regional Entities for consideration by the ERO. In addition, the Commission expects a greater level of uniformity among Reliability Standards approved for Regional Entities not organized on an Interconnection-wide basis.

47. Paragraph (b) provides that that the Commission may approve by rule or order a proposed Reliability Standard or a modification to a Reliability Standard if it determines that the standard is just, reasonable, not unduly discriminatory or preferential, and in the public interest. The Commission generally anticipates that it will provide notice and opportunity for hearing of any proposed Reliability Standard or a modification to a Reliability Standard. The Commission shall give due weight to the technical expertise of the ERO with respect to the content of a proposed Reliability Standard or modification to a Reliability Standard and give due weight to the technical expertise of a Regional Entity organized on an Interconnection-wide basis with respect to a Reliability Standard to be applicable within that Interconnection.

48. Proposed Section 38.4(b)(3) provides that the Commission will not defer to the ERO or a Regional Entity with respect to the effect of a Reliability Standard or modification to a Reliability Standard on competition. How should the Commission define “competition” in this context? Commenters are asked to provide examples regarding the effect of a Reliability Standard on competition.

49. Paragraph (c) provides that an approved Reliability Standard or a modification to a Reliability Standard shall take effect as approved by the Commission. Paragraph (d) provides that the ERO shall rebuttably presume that a proposal from a Regional Entity organized on an Interconnection-wide basis for a Reliability Standard or a modification to a Reliability Standard to be applicable on an Interconnection-wide basis is just, reasonable, not unduly discriminatory or preferential, and in the public interest, if such proposal is from a Regional Entity organized on an Interconnection-wide basis.

50. Consistent with section 215(d)(4) of the FPA, paragraph (e) of proposed regulation section 38.4 provides that the Commission shall remand to the ERO for further consideration a proposed Reliability Standard or modification to a Reliability Standard that the Commission disapproves in whole or part.

51. Paragraph (f) provides that the Commission may, upon its own motion or a complaint, order the ERO to submit a proposed Reliability Standard or modification to a Reliability Standard that addresses a specific matter if the Commission considers such a new or modified Reliability Standard appropriate to carry out section 215 of the FPA.

52. Paragraph (g) provides that the Commission may, upon its own motion or complaint, review a previously-approved Reliability Standard. If, after notice and opportunity for hearing, the Commission determines that the Reliability Standard, or any provision of the Reliability Standard, no longer meets the statutory (and regulatory) standard for approval of Reliability Standards, i.e. , it is found to be unjust or unreasonable, unduly discriminatory or preferential, or not in the public interest, the Commission may remand it to the ERO or the relevant Regional Entity. The statute allows us to order the ERO to submit a modification to a Reliability Standard, and we construe this authority as allowing a remand of a previously-approved Reliability Standard.

53. Because the Commission's options are limited by FPA section 215 to either accepting or remanding a proposed Reliability Standard, the Commission is concerned that, while a circumstance may arise where it is necessary to remand a proposed Reliability Standard to the ERO, this may result in a period of time in which there is no mandatory, enforceable standard in place for a particular area of bulk system reliability. Accordingly, to minimize this possibility, paragraph (h) provides that the Commission, when remanding a Reliability Standard, may state a deadline by which the ERO must resubmit the proposed Reliability Standard with revisions that address the reasons for the remand. Failure to meet such a deadline would constitute a violation of the FPA.

54. In addition to seeking comment on the above proposal, the Commission seeks comment on whether the Commission has authority to void a previously-accepted Reliability Standard. If the Commission has such authority, is it beneficial to have such a provision in the Commission's regulations?

55. Section 215(d) of the FPA and proposed regulation section 38.4 provide that the Commission may approve a proposed Reliability Standard or modification to a proposed Reliability Standard if it determines that the standard is “just, reasonable, not unduly discriminatory or preferential, and in the public interest.” The Commission seeks comment on how this standard should be applied in the context of reviewing proposed Reliability Standards.

56. We note that the bilateral principles specify that membership in the ERO should not be a condition for participation in the ERO's reliability development process. We seek comments on whether membership in the ERO or a Regional Entity should not be a condition for participation in the ERO's or a Regional Entity's standards development processes.

57. The Commission notes that the bilateral principles include a provision that if a standard is remanded by a regulatory authority, the ERO should notify all relevant regulatory authorities and should work to ensure that all concerns of such regulatory authorities are addressed prior to resubmission of the standard to the Commission and authorities in Canada. (1) Should the proposed rule specify this process? (2) What are the implications of the remand by a Canadian authority of a Reliability Standard that has been approved by the Commission? Also, should the ERO certification criteria specify that the number of board members representing each participating country in the ERO, and the opportunities for each country to have an equitable number of members on all committees, must be in rough proportion to total load?

58. Paragraph (a) of proposed regulation section 38.5 provides that the ERO or a Regional Entity meeting the requirements of section 215(e)(4)(A), (B) and (C) may impose, subject to paragraph (d), a penalty on a user, owner or operator of the Bulk-Power System for a violation of a Reliability Standard approved by the Commission if the ERO or the Regional Entity, after notice and opportunity for hearing, finds that the user, owner or operator has violated a Reliability Standard approved by the Commission and files notice and the record of the ERO's or the Regional Entity's proceeding with the Commission.

59. Paragraph (b) provides that a Regional Entity shall file notice with the ERO of any enforcement action it takes. Paragraph (c) provides that any notice of an enforcement action, whether by the ERO or a Regional Entity, shall consist of the name of the entity against whom the action was taken, and include statements describing the enforcement action and findings of fact with respect to the act or practice that led to the enforcement action, the sanction imposed, the record of the proceeding and other relevant matters.

60. Paragraph (d) provides that a penalty imposed under paragraph (a) may take effect not earlier than the thirty-first (31st) day after the ERO files with the Commission notice of penalty and the record of the proceedings. Such penalty shall be subject to review by the Commission, either on its own motion or upon application by the user, owner or operator of the Bulk-Power System that is the subject of the penalty filed within thirty (30) days after the date such notice is filed with Commission. If the review process is not initiated during the 30-day period, the enforcement action will be confirmed by operation of law.

61. Paragraph (d) also provides that an application to the Commission for review, or the initiation of review by the Commission on its own motion, shall not operate as a stay of such penalty unless the Commission otherwise orders upon its own motion or upon application by the user, owner or operator that is the subject of such penalty. In any proceeding to review a penalty imposed under paragraph (a), the Commission, after notice and opportunity for hearing (which hearing may consist solely of the record before the ERO and the opportunity for the presentation of supporting reasons to affirm, modify, or set aside the penalty), shall by order affirm, set aside or modify the penalty and, if appropriate, remand to the ERO for further proceedings.

62. Section 215(e) of the FPA as well as proposed section 38.5 of our regulations regarding enforcement of Reliability Standards provides for public notice and opportunity for a hearing with respect to both the ERO (or Regional Entity) enforcement proceedings and proceedings before the Commission involving review of a proposed penalty. Paragraph (d)(8) of proposed section 38.5 would provide a limited exception to this notice requirement and allow non-public proceedings for enforcement actions that involve a Cybersecurity Incident, unless the Commission determines on a case-by-case basis that such protection is not necessary. The Commission has in place procedures to prevent the disclosure of sensitive information, such as the use of protective orders and rules establishing critical energy infrastructure information (CEII). However, the Commission believes that the specific, limited area of Cybersecurity Incidents requires additional protections because it is possible that system security and reliability would be further jeopardized by the public dissemination of information involving incidents that compromise the cybersecurity system of a specific user, owner or operator of the Bulk-Power System. The specific user, owner or operator would be notified of the enforcement action and provided an opportunity for a hearing. The Commission believes that this will provide acceptable due process to the specific owner, user or operator while preventing a further compromise in reliability.

63. The Commission seeks comment on this proposal and, in addition, seeks comment on (1) whether the proposal provides sufficient due process and (2) the identification of other specific events that should be subject to non-public hearing procedures.

64. Further, section 215(e)(2) of the FPA directs the Commission to implement expedited hearing procedures for the review of penalties imposed by the ERO or Regional Entities. Accordingly, paragraph (d), subparagraphs (5) through (7), set forth expedited procedures for Commission review of penalties.

65. Paragraph (e) of proposed regulation section 38.5 provides that, on its own motion or upon complaint, the Commission may order compliance with a Reliability Standard and may impose a penalty against a user, owner or operator of the Bulk-Power System, if the Commission finds, after notice and opportunity for hearing, that the user, owner or operator of the Bulk-Power System has engaged or is about to engage in any acts or practices that constitute or will constitute a violation of a Reliability Standard.

66. Paragraph (f) provides that any penalty imposed for the violation of a Reliability Standard shall bear a reasonable relation to the seriousness of the violation and shall take into consideration efforts of such user, owner or operator of the Bulk-Power System to remedy the violation in a timely manner. The Commission believes that the imposition of penalties should not be limited to monetary penalties and may include limitations on activities, functions, operations, or other appropriate sanctions, including the establishment of a publicly available reliability watch list composed of major violators. Monetary penalties shall be paid in a timely manner. The Commission may also consider intensive compliance audits for entities that have a high incidence of violations or whose violations are serious or the installation of Commission staff onsite to monitor entities that have a high incidence of violations or whose violations are particularly serious.

67. In order that the Commission is able to perform its oversight function with regard to Reliability Standards that are proposed by the ERO and established by the Commission, it is essential that the Commission receive timely information regarding all potential violations of Reliability Standards. While section 215 of the FPA contemplates the filing of the record of an ERO or Regional Entity enforcement action, the Commission needs information regarding violations and potential violations at or near the time of occurrence. Accordingly, paragraph (g) of proposed section 38.5 requires that the ERO and all Regional Entities have in place procedures to notify the Commission of all violations and potential violations of Reliability Standards when the ERO or Regional Entity first notifies the user, owner or operator of the violation or potential violation. Such procedures must be submitted to the Commission within an application for certification as the ERO or an agreement to delegate authority to a Regional Entity. The Commission intends that notices of violations and potential violations will be filed electronically. All such reports of violations and potential violations shall include the entity's name, when the violation or potential violation occurred, what standard was violated or potentially violated, and the name of a person knowledgeable about the violation or potential violation to serve as a point of contact to provide the Commission with further details on the matter, as they develop, on an ongoing basis. The Commission will provide more details on the format of such electronic filings in the final rule.

68. In addition to comment on the above proposed rules, the Commission seeks comment on a number of enforcement and penalty issues. The ERO's and Regional Entities' enforcement role under new section 215 of the FPA is similar in some ways to the enforcement roles of existing self-regulatory organizations (SROs). For example, the National Association of Securities Dealers (NASD) and the National Futures Association (NFA), and securities and commodities exchanges, such as the New York Stock Exchange (NYSE), New York Mercantile Exchange (NYMEX), and the Chicago Board of Trade (CBOT), are SROs in the securities and commodities industries that are experienced in the enforcement of standards, assessment of penalties, and have penalty appeal processes, as summarized below.

69. In general terms, individuals or firms doing securities business with the American public must register with NASD. Similarly, all persons and organizations that intend to do business as futures professionals must register with the NFA under the Commodity Exchange Act. The National Adjudicatory Council (NAC), the adjudicatory body of the NASD, has established the NASD Sanction Guidelines that provide direction for adjudicators in imposing sanctions consistently and fairly. 14 The Sanction Guidelines also provide for non-monetary sanctions including: suspensions, bars, and expulsions. The NFA Compliance Rules also provide for both monetary and non-monetary sanctions, which may be imposed at the conclusion of a disciplinary hearing or appeal. 15

70. The NYSE, NYMEX, NASD, and the CBOT all have internal disciplinary procedures and rules, including the right to appeal a disciplinary decision. 16 Following a plenary disciplinary proceeding, the appellate processes at the above-mentioned SROs are largely the same. First, the respondent files a notice of appeal to the SRO within a specified time which stays any penalty imposed pending the outcome of the appellate review. Second the matter goes before an appellate committee of the SRO comprised of at least two disinterested parties who evaluate the decision, evidence and penalty. Third, the appellate committee renders its decision in writing. With the exception of the CBOT, this decision is the final determination of the SRO. 17 Fourth, the respondent may appeal the decision of the appellate committee (the Board of Directors in the case of CBOT) to the relevant federal regulatory body. The notice of appeal to the relevant regulatory body does not act as a stay of the complained of determination made by the self-regulatory organization unless the regulatory body otherwise orders. Finally, following a review by the relevant federal regulatory body, the respondent may pursue an appeal in the U.S. Courts of Appeals.

71. With the above discussion in mind, the Commission invites public comment on the following questions regarding penalties or sanctions for violations of reliability rules:

(1) What is the appropriate appeals process, if any, of an ERO or Regional Entity decision to impose a penalty? Would it be appropriate for the ERO or a Regional Entity with delegated enforcement authority to adopt enforcement, penalty and appeals processes similar to the SRO processes discussed above? Should appeals within the ERO be allowed before appeal to the Commission; should appeal of a penalty imposed by a Regional Entity be taken through the Regional Entity itself, with further appeal to the Commission; or should the appeal be through the ERO in the first instance, then to the Commission?

(2) Should the Commission approve a penalty range or guidelines before the ERO can levy any penalty or sanction for violations, and, if so, should the penalty range or guidelines for a violation be submitted for Commission approval at the same time that the corresponding Reliability Standard is submitted to the Commission for approval?

(3) Should a single monetary penalty be prescribed for a violation of a particular standard or should a schedule of monetary penalties be prescribed from which to select at the time of an infraction depending upon relevant circumstances such as the number of repeat offenses or length of time before adequate corrections are made to bring the violator into compliance?

(4) The Commission interprets section 316A of the FPA, as amended by Congress in the Electricity Modernization Act of 2005, as establishing limits on monetary penalties for violation of Reliability Standards that may be imposed by the ERO, Regional Entities and the Commission. The Commission seeks comment on this interpretation.

(5) Paragraph (d)(1) of proposed section 38.5 provides that the Commission will review a penalty on its own motion, or upon application of the entity that is the subject of the penalty. Should the Commission determine by rulemaking that certain categories of penalties should be automatically subject to Commission review? For example, should penalties above a certain dollar threshold automatically require Commission review?

(6) What types of nonmonetary penalties, if any, are appropriate?

(7) Who should receive, and what should be done with monies collected as monetary penalties? Should the monetary penalties collected by the ERO or Regional Entity be used to defray the cost of its enforcement program, or allocated to some other use? Would allowing the ERO or Regional Entity to use penalty money to fund an enforcement program create an appearance of impropriety?

(8) The Commission notes that the bilateral principles include a provision calling for rigorous audits by the ERO and Regional Entities to ensure the capability to comply with and actual compliance with the Reliability Standards. The bilateral principles also provide for the ERO to take steps to ensure that auditors are properly trained and that the same audit standards apply to all audits conducted by the ERO and Regional Entities. Should the proposed rule specify these audits requirements as part of the ERO certification requirements and the Regional Entity certification and delegation requirements?

(9) The Commission notes that the bilateral principles provide that RTOs and ISOs should not become Regional Entities, and that the Regional Entities should be distinct from the operators of the system, such as RTOs and ISOs. Should the proposed rule mandate this? What are the enforcement implications of an RTO or ISO that is a Regional Entity? Are there ways for an RTO or ISO to adequately separate its enforcement function from its ownership, use or operation of the Bulk-Power System to fully ensure the independence of the enforcement unit? What process should such an enforcement unit follow to insulate itself from its RTO or ISO organization so that it may undertake any enforcement actions that become necessary against the RTO or ISO? How would this comport with the requirements of section 215 of the FPA?

(10) Paragraph (e) of proposed section 38.5 states that the Commission may order compliance with a Reliability Standard and may impose a penalty if the Commission finds that the user, owner or operator of the Bulk-Power System has engaged or is about to engage in any acts or practices that constitute or will constitute a violation of a Reliability Standard. Should the Commission clarify in the rule that, in a situation where an entity is about to engage in an act that will constitute a violation of a Reliability Standard, Commission action will be in the form of a compliance order with the goal of preventing the violation from occurring; and further clarify that an entity that has engaged in an actual violation may be subject to both penalties and a compliance order? Are there situations that may warrant penalties where an entity is about to engage in activity that would violate a Reliability Standard but the activity was ultimately averted?

(11) Paragraph (g) of proposed section 38.5 requires that the ERO and all Regional Entities have in place procedures to notify the Commission of all violations and potential violations of Reliability Standards when the ERO or Regional Entity first notifies the user, owner or operator of the violation or potential violation. We seek comment on what confidentiality protections may be needed, particularly with regard to potential violations. For example, the Commission currently maintains confidential protection of other types of enforcement-related investigations pursuant to section 1b or our regulations, 18 CFR 1b (2005). Are similar protections needed here?

72. The Commission recognizes that the Nuclear Regulatory Commission (NRC) has developed a nuclear power plant assessment program to enable it to arrive at objective conclusions about a licensee's safety performance. The NRC's assessments of plant performance are based on inspections, as well as analysis of certain performance indicators reported by the licensees. With this information, the NRC assigns each plant to one of five categories in an Action Matrix. A plant's position in the Action Matrix determines the NRC's response, which may include actions ranging from performing supplemental inspections, to meeting with management, to ordering a plant to be shut down. A summary of the Action Matrix is posted on the NRC website and is updated quarterly. In addition, the NRC communicates its assessment of plant performance in letters to licensees, typically semi-annually. These letters are also posted on the NRC's website. The Commission seeks comment on the feasibility and appropriateness of adopting a reliability assessment program similar to the NRC's nuclear power plant assessment program. Also, should the Commission establish a reliability watch list modeled on the NRC's Action Matrix? What features of the NRC program should the Commission adopt? What other features might be added?

73. The Commission also recognizes that the nuclear electric utility industry has formed the Institute of Nuclear Power Operations (INPO). The INPO is a technical organization whose mission is to promote the highest levels of safety and reliability—to promote excellence—in the operation of nuclear electric generating plants. 18 All U.S. utilities that operate commercial nuclear power plants are members of the INPO. The INPO complements the regulatory role of the NRC by providing a technical forum for the industry to collectively ensure reliable and safe nuclear operations. The INPO's programs include an information sharing network, an equipment failure database, a national academy for nuclear training, events analysis, accreditation, operations evaluations, and monitoring of performance indicators. The Commission asks commenters to discuss which aspects of the INPO's programs would serve as useful models for the ERO. What lessons can be drawn from INPO's complementary role with the NRC?

74. Paragraph (a) of section 38.6 provides that the Commission may take such action as is necessary and appropriate against the ERO or a Regional Entity to ensure compliance with a Reliability Standard or any Commission order affecting the ERO or a Regional Entity. The first clause of this provision tracks section 215(e)(5) of the FPA. In addition, paragraph (a) states that the possible remedial action taken pursuant to this provision includes, but is not limited to, suspension or rescission of the ERO's certification or a Regional Entity's delegation of authority, and violations of the FPA may mean possible imposition of civil penalties. Entities will be provided notice and opportunity for comment before the Commission takes such remedial action.

75. Paragraph (b) of proposed section 38.6 provides that the Commission will periodically audit and review the ERO's and Regional Entities' compliance with the statutory and regulatory criteria for certification and delegation of functions, respectively.

76. What mechanism of review and methods of oversight should be used to assure the Commission that the ERO or a Regional Entity is meeting its responsibilities for monitoring compliance with the Reliability Standards?

77. With respect to any monetary penalties levied directly by the Commission against the ERO or a Regional Entity for violation of the FPA, should the ERO or a Regional Entity be able to recover such penalties through dues, fees, or other charges?

78. Section 215(e)(5) of the FPA provides that, “[t]he Commission may take such action as is necessary or appropriate against the ERO or a Regional Entity to ensure compliance with a Reliability Standard or any Commission order affecting the ERO or Regional Entity.” Since the ERO and Regional Entity provisions of the Electricity Modernization Act of 2005 are modeled on the SRO provisions of the securities law, and under those provisions, the Securities and Exchange Commission can impose monetary and nonmonetary penalties on SRO board members, should the Commission adopt the same approach with respect to the board members of the ERO and Regional Entities?

79. Paragraph (a) of proposed regulation section 38.7 provides that the ERO may enter into an agreement to delegate authority to a Regional Entity for the purpose of proposing Reliability Standards to the ERO and enforcing Reliability Standards under section 38.5. Paragraph (b) provides that a delegation agreement shall not be effective until it is approved by the Commission. Paragraph (c) provides that the ERO must file the delegation agreement with the Commission for approval. Such filing must also demonstrate that: the Regional Entity is governed by an independent board, a balanced stakeholder board, or a combination independent and balanced stakeholder board; the Regional Entity otherwise satisfies the ERO certification provisions of proposed regulation section 38.3; and the agreement promotes for effective and efficient administration of Bulk-Power System reliability.

80. The Commission interprets Subtitle A as meaning the only delegated authority a Regional Entity would possess would be the authority to enforce Reliability Standards approved by the Commission in a specific region. That interpretation is consistent with section 215(a)(7). A Regional Entity may also propose Reliability Standards to the ERO, that, if ultimately approved by the Commission, would become regional variances in a specific region. Any such regional variances would be ERO variances, not Regional Entity Reliability Standards, since it would be the ERO, not the Regional Entity, that submits the proposed Reliability Standard to the Commission for its review. The Commission anticipates that any such regional variances would supplement ERO Reliability Standards, not substitute for them. The Commission seeks comment on this interpretation.

81. The Commission interprets section 215 of the FPA to mean that a Regional Entity shall comply with the relevant ERO certification and delegation criteria on an ongoing basis, and that a violation of the certification or delegation criteria constitutes a violation of the FPA. Accordingly, as the Commission explained above with respect to the ERO in section 38.6(a) and (b), it will conduct periodic compliance audits of the Regional Entities and, if it finds a violation of the relevant ERO certification as it applies to the Regional Entities or the ERO delegation criteria, the Commission may suspend a Regional Entity's certification or delegation agreement, or decertify a Regional Entity. In addition, the ERO may petition the Commission or file a complaint if it believes that a Regional Entity is no longer in compliance with the relevant ERO certification or delegation criteria.

82. Paragraph (d) provides that the Commission may modify such delegation; however, the ERO and Commission shall rebuttably presume that a proposal for delegation to a Regional Entity organized on an Interconnection-wide basis promotes effective and efficient administration of Bulk-Power System reliability and should be approved.

83. Paragraph (e) provides that, if an entity seeking to enter into a delegation agreement is unable within 180 days after proposing a delegation agreement to the ERO to reach an agreement with the ERO, and it can demonstrate that continued negotiations with the ERO would not likely result in a delegation agreement within a reasonable amount of time, such entity may request that the Commission assign the ERO's authority to enforce Reliability Standards within a region to such entity. Paragraph (f) requires that an approved Regional Entity shall periodically submit to the Commission an application to be re-approved as a Regional Entity.

84. In addition to seeking comments on the rules relating to the delegation of ERO authority to Regional Entities discussed above, the Commission seeks comment on the following related issues:

(1) Should the Commission prescribe a size, scope, or configuration requirement for the Regional Entities? And, if so, what should it be?

(2) What is the role of the Regional Entities in relationship to the ERO?

(3) Beyond enforcement and the proposal of Reliability Standards to the ERO, what, if any, additional authority should the Regional Entities be given?

(4) Should the ERO be required to submit a standardized form of delegation agreement concurrently with the ERO application that would delineate a uniform relationship between the ERO and all Regional Entities or should delegation agreements be tailored to the individual needs and circumstances of each region and the ERO and submitted for approval as they are executed by the parties?

(5) To what extent should the ERO, when delegating responsibility to Regional Entities, require uniform processes in matters including, but not limited to, governance, collection of dues and fees, compliance monitoring, and enforcement action procedures?

(6) What role, if any, should the ERO play in the approval or appeal of an enforcement action undertaken by a Regional Entity?

(7) What, if any, responsibility or involvement should the ERO have with regard to the funding of the Regional Entities?

(8) Should the certification and delegation criteria for a Cross-Border Regional Entity specify that each country represented in the region should have the opportunity to have members from the country on the board of the Regional Entity in numbers that reflect the country's approximate percentage of net energy for load in that region, similar to that provided in the bilateral principles?

(9) Should the Commission set the standard by which Regional Entity applications to the ERO will be reviewed or should the ERO be allowed to determine this standard? Given that section 215(e)(4) of the FPA requires that the ERO and the Commission shall rebuttably presume that a proposal for a Regional Entity organized on an Interconnection-wide basis promotes effective and efficient administration of bulk-power reliability, should a higher standard apply to Regional Entities that are not organized on an Interconnection-wide basis? What should the higher standard specify? Should a Regional Entity not organized on an Interconnection-wide basis have the burden to demonstrate that it has appropriate regional scope and configuration to promote effective and efficient administration of Bulk-Power System reliability?

(10) Paragraph (f) of section 38.7 requires a Regional Entity approved by the Commission to periodically submit to the Commission an application to be re-approved as a Regional Entity. We seek comments on what would constitute a reasonable length of time for such periodic re-approval to be effective. For example, is a five-year approval period appropriate? How far in advance should a Regional Entity be required to submit its application for re-approval before its current approval period expires? What role, if any, should the ERO have in the re-approval process? Would the ERO have to resubmit a delegation agreement?

(11) Section 215(e)(4) of the FPA and proposed regulation section 38.7(c)(3) require that the ERO, when filing a delegation agreement, include a statement demonstrating that the agreement promotes effective and efficient administration of Bulk-Power System reliability. What standards, guidelines, measures or criteria should the Commission apply in determining whether a delegation agreement promotes effective and efficient administration of Bulk-Power System reliability? If the primary function of a Regional Entity is enforcement of Reliability Standards, in what ways will Regional Entities bring effective and efficient administration in the enforcement function?

85. Paragraph (a) of proposed regulation section 38.8 provides that the ERO shall file with the Commission for approval any proposed ERO rule or rule change, accompanied by an explanation of its basis and purpose. It also provides that a Regional Entity shall submit a Regional Entity Rule or rule change with the ERO and, upon approval by the ERO, the ERO shall file with the Commission for approval of any proposed Regional Entity Rule or rule change accompanied by an explanation of its basis and purpose. Paragraph (b) provides that the Commission, upon its own motion or complaint, may propose changes to the rules of the ERO or a Regional Entity.

86. Paragraph (c) provides that a proposed ERO rule or rule change, or Regional Entity rule or rule change, shall take effect upon a finding by Commission, after notice and opportunity for comment, that the change is just, reasonable, not unduly discriminatory or preferential, is in the public interest, and satisfies the requirements of section 38.3.

87. Section 215(d)(6) of the FPA requires that the Commission's final rule include fair processes for the identification and timely resolution of any conflict between a Reliability Standard and any function, rule, order, tariff, rate schedule, or agreement accepted, approved, or ordered by the Commission applicable to a Transmission Organization. If a participant in the ERO's standards development process perceives a potential conflict, the participant should inform the ERO of the potential conflict to help assure that proposed standards do not contain any such conflicts. However, if any person believes that a proposed standard that the ERO has submitted to the Commission for approval includes such a conflict, such person should inform the Commission of such conflict by intervening and commenting in the Commission proceeding to review the proposed Reliability Standard.

88. If, after the Commission has approved a Reliability Standard, a Transmission Organization becomes aware of a conflict between a Reliability Standard and any function, rule, order, tariff, rate schedule, or agreement accepted, approved, or ordered by the Commission applicable to such Transmission Organization, the Transmission Organization would be required to utilize the process set forth in this proposed regulation to resolve the conflict. Specifically, paragraph (a) of proposed regulation section 38.9 provides that, if a Transmission Organization determines that a Reliability Standard may conflict with a function, rule, order, tariff, rate schedule, or agreement accepted, approved, or ordered by the Commission with respect to such Transmission Organization, the Transmission Organization shall expeditiously notify the Commission, the ERO and the relevant Regional Entity of the conflict. If any person believes that an approved Reliability Standard includes such a conflict, such person should notify the Commission of such conflict.

89. Paragraph (b) provides that, unless the Commission orders otherwise, after notice and opportunity for hearing, within sixty (60) days after the date that a notice was filed, the Commission will issue an order determining whether a conflict does, in fact, exist. If the Commission finds that there is a conflict, it will seek to resolve the conflict by either directing the Transmission Organization to file a modification to the conflicting function, rule, order, tariff, rate schedule, or agreement pursuant to section 206 of the FPA (as set forth in the statute) or, if appropriate, directing the ERO to develop for Commission review a proposed modification to the conflicting Reliability Standard.

90. Paragraph (c) provides that, until a determination is made by the Commission and any ordered change becomes effective, the Transmission Organization shall continue to follow the function, rule, order, tariff, rate schedule, or agreement accepted, approved, or ordered by the Commission with respect to such Transmission Organization.

91. The Commission seeks examples of situations or areas of concern in which commenters believe that conflicts between reliability standards and Transmission Organization tariffs exist or may arise.

92. Paragraph (a) of proposed regulation section 38.10 provides that the Commission shall consider a petition to establish a Regional Advisory Body that is submitted by at least two-thirds of the states within a region that have more than one-half of their electric load served within the region. Paragraph (b) provides that a petition shall include all organizational documents and a statement that the Regional Advisory Body is composed of one member from each state in the region, appointed by the governor of each state, and may include representatives of agencies, states and provinces outside the United States.

93. Paragraph (c) provides that a Regional Advisory Body may provide advice to the Commission, ERO or a Regional Entity with respect to the governance of an existing or proposed Regional Entity within the same region; whether a Reliability Standard proposed to apply within the region is just, reasonable, not unduly discriminatory or preferential, and in the public interest; whether fees for all activities under this section proposed to be assessed within the region are just, reasonable, not unduly discriminatory or preferential, and in the public interest; and any other responsibilities requested by the Commission. Paragraph (d) provides that the Commission may give deference to the advice of any such Regional Advisory Body if it is organized on an Interconnection-wide basis.

94. In addition to comment on the proposed regulation discussed above, the Commission seeks comment on the scope of the term “region” as used in section 38.10. In particular, should the region represented by a Regional Advisory Body correspond to that of an existing or proposed Regional Entity?

95. Paragraph (a) of section 38.11 of the proposed regulations provides that the ERO shall conduct periodic assessments of the reliability and adequacy of the Bulk-Power System in North America. This first phrase of this subsection tracks the statutory language of section 215(g) of the FPA. In addition, this subsection would set forth the frequency of such periodic assessments and identify the entities to which the ERO must report the results of the periodic assessments, including the Commission, DOE, Regional Entities, and Regional Advisory Bodies. Paragraph (b) of this subsection would require either annual or quarterly reporting by the ERO and Regional Entities on their enforcement actions and the associated penalties assessed, in a manner to be prescribed by the Commission.

96. Consistent with section 215(i)(3) of the FPA, paragraph (a) of proposed regulation section 38.12 provides that nothing in this regulation shall be construed to preempt any authority of any state to take action to ensure the safety, adequacy, and reliability of electric service within that state, as long as such action is not inconsistent with any reliability standard.

97. Paragraph (b) of proposed regulation section 38.12 provides that, where a state takes action to ensure the safety, adequacy and reliability of electric service, the ERO, a Regional Entity or other party may apply to the Commission for an order determining whether such state action is inconsistent with a Reliability Standard. The Commission will, after notice and opportunity for hearing, and taking into consideration any recommendation of the ERO, issue a final order determining the matter within ninety (90) days.

98. Paragraph (c) provides that the Commission, after consultation with the ERO and the state taking action, may stay the effectiveness of the state action, pending the Commission's issuance of a final order.

99. FPA section 215 does not contain any specific requirements regarding the mechanism for funding the ERO, other than stating that the Commission may certify an ERO if it determines that such ERO, inter alia, has established rules that “allocate equitably reasonable dues, fees, and other charges among end users * * *” (FPA section 215(c)(2)(B)). The Commission believes that certainty regarding the funding of the ERO is essential for the stability and ultimate success of the organization. Accordingly, proposed section 38.13 provides requirements related to the funding and budget oversight of the ERO. In particular, paragraphs (a) and (b) of proposed regulation section 38.13, which are intended to make the ERO accountable to the Commission for its budget for activities within the United States, provide that the ERO must file its proposed annual budget for these activities and supporting materials in sufficient detail to justify the requested funding requirement 130 days in advance of the beginning of each fiscal year, and the Commission, after public notice and opportunity for comment, shall issue an order accepting, rejecting or remanding and modifying the proposed ERO budget no later than sixty (60) days in advance of the beginning of the ERO's fiscal year.

100. Paragraphs (c) and (d) of section 38.13 are intended to provide a Commission-approved mechanism for mandatory ERO funding. However, rather than the Commission dictating a funding mechanism, the NOPR would allow an ERO applicant the discretion to propose the funding mechanism for Commission approval. Specifically, paragraph (c) states that any person who submits an application for certification as the ERO must include a plan, formula and/or methodology for the allocation and assessment of ERO dues, fees and charges; and the certified ERO may subsequently file with the Commission a request to modify the plan, formula and/or methodology from time-to-time in the ERO's discretion. Paragraph (d) provides that all entities within the Commission's jurisdiction as set forth in section 215(b) of the FPA are required to pay the ERO's assessment of dues, fees and charges in a timely manner reasonably designated by the ERO.

101. Finally, paragraph (e) provides that any person who submits an application for certification as the ERO may include a plan for a transitional funding mechanism that would allow such person, if certified as the ERO, to continue existing operations without interruption as it transitions from one method of funding to another. The maximum duration of any proposed transitional funding mechanism is not to exceed eighteen (18) months from the date of certification.

102. The Commission notes that NERC currently is funded based on “net energy for load,” which represents the aggregate annual energy consumption of end use customers in a region, with costs of certain programs and tools which benefit only specific regions or parties billed only to the beneficiaries of the programs or tools. The Commission believes that a funding method based on net energy for load meets the standard of section 215(c)(3) of the FPA and would be appropriate for the allocation and assessment of ERO dues, fees and charges.

103. In addition to comments on the proposed ERO funding regulations, the Commission asks for comments on the following questions:

(1) Should the proposed funding requirements be extended to the Regional Entities?

(2) The Commission notes the bilateral principles include several funding principles: (a) A principle specifying that net energy for load should be the primary basis upon which the costs of the ERO are assigned and that costs for one region or entity should be directly assigned to that region or entity; (b) a principle specifying that funding mechanisms, budget direction and budget levels should reflect consultations with appropriate stakeholders and authorities in each country; and (c) a principle specifying that the appropriate authorities in each country should be responsible for approving and ensuring cost recovery by the ERO and Regional Entities within their respective jurisdictions in a timely manner. Should the proposed rule address these types of funding-related details or should the ERO and Cross-Border Regional Entities have the discretion to address these matters at a later time?

104. While the Electricity Modernization Act of 2005 can be read to suggest a two-step process in which an applicant will apply for ERO certification and then submit proposed Reliability Standards after certification as the ERO, the Commission interprets the statute as allowing an applicant to simultaneously apply for ERO certification and submit proposed Reliability Standards for Commission review. The Commission believes that a one-step process would allow for quicker implementation of Reliability Standards. Although the Commission is allowing an applicant to submit multiple Reliability Standards at the same time, the Commission interprets section 215 of the FPA as allowing the Commission to review each Reliability Standard individually, rather than as a package. Therefore, the Commission interprets section 215 as allowing it to reject or require modification of some individual Reliability Standards while at the same time affirming other individual standards submitted concurrently.

105. The Commission estimates the number of applicants to be recognized by the Commission under the proposed rule as the single ERO or as a Regional Entity as up to three (3) and up to eight (8), respectively. As these entities are select, special purpose entities of the new federal law and do not yet exist, it is not feasible to survey candidate organizations to project the anticipated burden of complying with the proposed rule.

Title:

Action: Proposed Information Collection.

OMB Control No: To be determined.

The applicant will not be penalized for failure to respond to this information collection unless the information collection displays a valid OMB control number or the Commission has provided justification as to why the control number should not be displayed.

Respondents: Non-profit service organizations.

Necessity of the Information: The information collected from the ERO or Regional Entities under the requirements of FERC-725 is used by the Commission to implement the statutory provisions of section 215 of the FPA and implemented by the Commission in the Code of Federal Regulations under 18 Part 38. As noted above, prior to the enactment of section 215 of the FPA under the Electricity Modernization Act of 2005, the Commission had acted primarily as an economic regulator of wholesale power markets and the interstate transmission grid promoting a more reliable electricity system by promoting regional coordination and planning of the interstate grid through ISOs and RTOs, adopting transmission pricing policies that provide price signals for the most reliable and efficient operation and expansion of the grid, and providing pricing incentives at the wholesale level for investment in grid improvements. The Electricity Modernization Act of 2005 buttresses the Commission's efforts to strengthen the interstate transmission grid through the grant of new authority pursuant to section 215 of the FPA which provides for a system of mandatory reliability rules developed by the ERO, established by the Commission, and enforced by the Commission, subject to Commission review.

106. Section 215 of the FPA provides that all users, owners and operators of the Bulk-Power System are subject to the jurisdiction of the Commission for the purposes of approving Reliability Standards and enforcing compliance with such standards. However, the NOPR is limited to developing and implementing the processes and procedures which section 215 of the FPA directs the Commission to develop and undertake with regard to the formation and functions of the ERO and Regional Entities.

Internal Review: The Commission has reviewed these requirements pertaining to the certification of an ERO, the establishment of Reliability Standards and Regional Entities and has determined the proposed requirements are necessary for the Commission to meet the statutory provisions of the Electricity Modernization Act of 2005. These requirements conform to the Commission's plan for efficient information collection, communication, and management within the bulk power system.

107. For submitting comments concerning the collection of information and the associated burden estimates, please send your comments to: (1) Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426 [Attention: Michael Miller, Office of the Executive Director, Phone (202) 502-8415, fax (202) 273-0873, e-mail: michael.miller@ferc.gov ] and (2) the Office of Management and Budget [Attention: Desk Officer for the Federal Energy Regulatory Commission, fax (202) 395-7285, e-mail oira_submission@omb.eop.gov ].

108. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment. 19 The Commission concludes that neither an Environmental Assessment or an Environmental Impact Statement is required for this NOPR pursuant to section 380.4(a)(2)(ii) of the Commission regulations, which provides a “categorical exclusion” for rules that do not substantively change the effect of legislation. 20

109. The Regulatory Flexibility Act of 1980 (RFA)  21 requires that a rulemaking contain either a description and analysis of the effect that the proposed rule will have on small entities or a certification that the rule will not have a significant economic impact on a substantial number of small entities. However, the RFA does not define “significant” or “substantial” instead leaving it up to an agency to determine the impact of its regulations on small entities.

110. In drafting this rule, the Commission has followed the provisions of both the RFA and the Paperwork Reduction Act to consider the potential impact of regulations on small business and other small entities. Specifically, the RFA directs agencies to consider four regulatory alternatives to lessen the impact on small entities: Tiering or establishment of different compliance or reporting requirements for small entities; classification, consolidation, clarification or simplification of compliance and reporting requirements; performance rather than design standards; and exemptions.

111. As noted above, the Electricity Modernization Act of 2005 directs the Commission to issue a final rule to implement the requirements of section 215 of the FPA within 180 days after the date of its enactment. In accordance with this directive, the proposed rule is intended to implement section 215 of the FPA. In particular, the proposed rule implements the statutory authority and responsibilities assigned to the ERO, Regional Entities, and Regional Advisory Bodies within the United States except Alaska and Hawaii. The Electricity Modernization Act specifies that the ERO and Regional Entities are not departments, agencies or instrumentalities of the United States Government.

However, the ERO and Regional Entities will not be like most other businesses, profit or not-for-profit. Congress created the concept of the ERO and Regional Entities as the select, special purpose entities that will transition the oversight of Bulk-Power System reliability from voluntary, industry organizations to independent organizations subject to Commission jurisdiction and oversight. As such, the ERO and Regional Entities should not be considered a small entity under the RFA. Accordingly, the proposed reliability rule is not likely to impact certain small entities.

112. The Commission invites interested persons to submit comments on the matters and issues proposed in this notice to be adopted, including any related matters or alternative proposals that commenters may wish to discuss. Comments are due October 7, 2005. Comments must refer to Docket No. RM05-30-000, and must include the commenter's name, the organization represented, if applicable, and the commenter's address. Comments may be filed either in electronic or paper format.

113. Comments may be filed electronically via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing formats and commenters may attach additional files with supporting information in certain other file formats. Commenters filing electronically do not need to make a paper filing. Commenters that are not able to file comments electronically must send an original and fourteen (14) copies of their comments to: Federal Energy Regulatory Commission, Office of the Secretary, 888 First Street NE., Washington, DC 20426.

114. All comments will be placed in the Commission's public files and may be viewed, printed, or downloaded remotely as described in the Document Availability section below. Commenters on this proposal are not required to serve copies of their comments on other commenters.

115. In addition to publishing the full text of this document in the Federal Register , the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through FERC's Home Page ( http://www.ferc.gov ) and in FERC's Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.

116. From the Commission's Home Page on the Internet, this information is available in the Commission's document management system, eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field.

117. User assistance is available for eLibrary and the FERC's Web site during normal business hours. For assistance, please contact FERC Online Support at 1-866-208-3676 (toll free) or 202-502-6652 (e-mail at FERCOnlineSupport@FERC.gov ), or the Public Reference Room at 202-502-8371, TTY 202-502-8659 (e-mail at public.referenceroom@ferc.gov ).

In consideration of the foregoing, the Commission proposes to amend Chapter I, Title 18, Code of Federal Regulations, by adding Part 38 to read as follows:

The FBI's whistleblower regulations are at 28 CFR part 27; the specific role of the OARM is at 28 CFR part 27.4. This is the basis for the new system of records, “Federal Bureau of Investigation Whistleblower Case Files, JMD-023.” The DOJ/JMD proposes to exempt this system of records from 5 U.S.C. 552a(c)(3) and (4); (d)(1), (2), (3), and (4); (e)(1), (2), (3), (5), and (8); and (g). The exemptions will be applied only to the extent that information in a record is subject to exemption pursuant to 5 U.S.C. 552a(j)(2) and (k).

This order relates to individuals rather than small business entities. Nevertheless, pursuant to the requirements of the Regulatory Flexibility Act, 5 U.S.C. 601-612, this order will not have a significant economic impact on a substantial number of small entities.

Pursuant to the authority vested in the Attorney General by 5 U.S.C. 552a and delegated to me by Attorney General Order No. 793-78, it is proposed to amend 28 CFR part 16 as follows:

1. The authority for part 16 continues to read as follows:

It has been determined that Privacy Act rules for the Department of Defense are not significant rules. The rules do not (1) have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive order.

It has been determined that Privacy Act rules for the Department of Defense do not have significant economic impact on a substantial number of small entities because they are concerned only with the administration of Privacy Act systems of records within the Department of Defense.

It has been determined that Privacy Act rules for the Department of Defense impose no information requirements beyond the Department of Defense and that the information collected within the Department of Defense is necessary and consistent with 5 U.S.C. 552a, known as the Privacy Act of 1974.

It has been determined that Privacy Act rulemaking for the Department of Defense does not involve a Federal mandate that may result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more and that such rulemaking will not significantly or uniquely affect small governments.

It has been determined that Privacy Act rules for the Department of Defense do not have federalism implications. The rules do 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.

Accordingly, 32 CFR part 310, Subpart A-DoD Policy, is proposed to be amended as follows:

This is a summary of the Commission's Notice of Inquiry in IB Docket No. 05-254, FCC 05-152, which was adopted on August 5, 2005. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC Reference Center (Room CY-A257), 445 12th Street, SW., Washington, DC 20554. The document may also be downloaded from the Commission's Web site at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-05-152A1.doc . The complete text may also be purchased from the Commission's copy contractor, Best Copy and Printing, Inc., in person at 445 12th Street, SW., Room CY-B402, Washington, DC 20554, via telephone at (202) 488-5300, via facsimile at (202) 488-5563, or via e-mail at FCC@BCPIWEB.COM .

On August 5, 2005, the Commission adopted a Notice of Inquiry on Modifying the Commission's Process to Avert Harm to U.S. Competition and U.S. Customers Caused by Anticompetitive Conduct. By this Notice of Inquiry , the Commission seeks to develop a record on ways to improve the process available to the Commission to protect U.S. consumers from the effect of anticompetitive conduct by foreign carriers and on alternative approaches the Commission may take to avert circuit disruptions or blockages.

In particular, this Notice of Inquiry seeks comment on the following issues: (1) What constitutes a circuit disruption or blockage that would trigger possible Commission action; (2) what should be the appropriate length of the pleading cycle associated with any action the Commission may take in response to reports of anticompetitive behavior on the part of foreign carriers; (3) whether the Commission should propose procedures for taking interim measures when U.S. carriers notify the Commission that foreign carriers have threatened to disrupt circuits; (4) how should the Commission assess the immediacy of such threats, and how should it coordinate any action with the appropriate U.S. government agencies; (5) what showing is required of U.S. carriers to demonstrate that the public interest will be served by Commission intervention, and what is the appropriate form of relief; (6) whether U.S. carriers are passing through settlement rate reductions to U.S. consumers; and (7) whether it is appropriate for U.S. ratepayers to subsidize universal service in other countries.

The Commission encourages all interested parties to respond to the questions and requests set forth in the Notice of Inquiry .

Pursuant to the authority contained in 47 U.S.C. 151, 4(i), 201-205, 208, 211, 303(r), 403 this Notice of Inquiry is adopted .

This is a summary of the Commission's document, DA 05-2266, released August 9, 2005. The full text of this document and copies of any subsequently filed documents in this matter will be available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554, (202) 418-0270. This document may be purchased from the Commission's duplicating contractor, Best Copy and Printing (BCPI), Inc., Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. Customers may contact BCPI, Inc. at their Web site: http://www.bcpiweb.com or by calling 1-800-378-3160.

To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format) send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY). This document can also be downloaded in Word or Portable Document Format (PDF) at http://www.fcc.gov/cgb/policy.

When filing comments, please reference CG Docket No. 02-386, DA 05-2266. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS) or by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings , 63 FR 24121, May 1, 1998. Comments filed through the ECFS can be sent as an electronic file via the Internet to http://www.fcc.gov/e-file/ecfs.html. Generally, only one copy of an electronic submission must be filed. In completing the transmittal screen, commenters should include their full name, U.S. Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic comment by Internet e-mail. To get filing instructions for e-mail comments, commenters should send e-mail to ecfs@fcc.gov , and should include the following words in the body of the message, “get form <your e-mail address>.” A sample form and directions will be sent in reply.

Parties who choose to file by paper must send an original and four (4) copies of each filing. Filings can be sent by hand or messenger delivery, by electronic media, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail (although the Commission continues to experience delays in receiving U.S. Postal Service mail). The Commission's contractor, Natek, Inc., will receive hand-delivered or messenger-delivered paper filings or electronic media for the Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building. Commercial and electronic media sent by overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service first-class mail, Express Mail, and Priority Mail should be addressed to 445 12th Street, SW., Washington, DC 20554. All filings must be addressed to the Commission's Secretary, Marlene H. Dortch, Office of the Secretary, Federal Communications Commission, 445 12th Street, SW., Room TW-B204, Washington, DC 20554. This proceeding shall be treated as a “permit but disclose” proceeding in accordance with the Commission's ex parte rules, 47 CFR 1.1200. Persons making oral ex parte presentations are reminded that memoranda summarizing the presentations must contain summaries of the substances of the presentations and not merely a listing of the subjects discussed. More than a one or two sentence description of the views and arguments presented is generally required. See 47 CFR 1.1206(b). Other rules pertaining to oral and written ex parte presentations in permit-but-disclose proceedings are set forth in section 1.1206(b) of the Commission's rules, 47 CFR 1.1206(b).

On February 25, 2005, the Commission adopted mandatory, minimum standards governing the exchange of customer account information between local exchange carriers (LECs) and interexchange carriers (IXCs). In adopting these mandatory, minimum standards, the Commission relied in large measure on a compromise proposal that was filed with the Commission by a coalition of IXCs and LECs, including representatives of AT&T, MCI, Sprint, BellSouth, Qwest, SBC, and Verizon (Coalition).

On April 15, 2005, and June 15, 2005, the Coalition proposed modifications and clarifications to the Order (final rules published at 70 FR 32258, June 2, 2005). In particular, the Coalition identified certain aspects of section 64.4002 of the Commission's rules that, in its view, should be clarified and/or modified by the Commission “in the interest of clarity and completeness.” The Coalition's proposed clarifications and modifications to section 64.4002 are described immediately below:

• Among the categories of information that LECs must provide to IXCs in certain identified situations, section 64.4002(a)(6), (b)(6), (d)(5) and (f)(5) currently include the “carrier identification code of the submitting LEC.” The Coalition suggests that this phrase should be modified to state “carrier identification code of the IXC.” According to the Coalition, this “mirroring” of information back to the IXC by the LEC serves as a kind of “handshake” and is needed to confirm that the LEC has properly identified the intended recipient of a particular notification.

• The Coalition asks the Commission to modify section 64.4002(d). In particular, it proposes that a LEC that has received a notification from an IXC indicating that the IXC's customer no longer wishes to be presubscribed to any IXC (customer has selected “no-PIC” status) be required to respond to the IXC with a confirmation or reject notification. As proposed by the Coalition, section 64.4002(d) would read in pertinent part:

(d) Customer contacts LEC or new IXC to change PIC, or current IXC to select no-PIC. When a LEC has removed at its local switch a presubscribed customer from an IXC's network, in response to a customer order, upon receipt of a properly verified PIC order submitted by another IXC, or upon receipt of the current IXC's request to change the PIC to no-PIC, the LEC must notify the customer's former IXC of this event.

• The Coalition proposes modifications to section 64.4002(e) and (g) to make those subsections consistent with other notification obligations of LECs adopted in the Order. First, it asks the Commission to modify section 64.4002(e) to include the effective date of a change to a customer's local service account as well as the carrier identification code of the IXC. Second, the Coalition asks the Commission to modify subsection (g) to include the customer's billing telephone number, working telephone, and billing name and address; the effective date of the change of local service provider; a description of the customer type (i.e., business or residential); the jurisdictional scope of the lines or terminals affected (i.e., intraLATA and/or interLATA and/or international); and the carrier identification code of the IXC.

• The Coalition suggests an additional clarification to section 64.4002(g) whereby the Commission would insert the phrase “in LEC” and remove the word “new” as specified in the bracketed portions of the following sentence: “If the customer also makes a PIC change, the customer's former LEC must notify the customer's former PIC(s) of the change [ in LEC ] and the new LEC must notify the customer's [ new ] PIC of the customer's PIC selection.”

The Regulatory Flexibility Act requires that an initial regulatory flexibility analysis be prepared for notice and comment rulemaking proceedings, unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.” The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA).

On March 25, 2004, the Commission released a Notice of Proposed Rulemaking (NPRM) seeking public comment on whether the Commission should establish mandatory, minimum standards governing the exchange of customer account information between local exchange carriers and interexchange carriers. As required by the RFA, the Commission incorporated into the NPRM an Initial Regulatory Flexibility Analysis ( IRFA ) and sought public comment on the specific issues raised in the IRFA. Two entities filed comments addressing the IRFA. On February 25, 2005, the Commission adopted the Order which, as discussed above, established extensive and detailed standards governing the exchange of customer account information between local exchange carriers and interexchange carriers. Consistent with the RFA, the Commission incorporated into the Order a Final Regulatory Flexibility Analysis ( FRFA ) addressing, among other things, the comments that had been filed in response to the IRFA.

In this document, the Commission seeks comment on the Coalition's proposed clarifications and modifications to § 64.4002 of the Commission's rules. The proposed clarifications and modifications are in the nature of technical corrections to the Commission's customer account record exchange rules that, if adopted, would not have a significant economic impact on entities subject to those rules. For example, the Coalition asserts that its proposed modification to § 64.4002(d) would make this provision consistent with similar notification requirements adopted in the Order simply by requiring a LEC to confirm its receipt of a particular IXC-initiated notification with an appropriate response. The Coalition similarly proposes modifications to §§ 64.4002(e) and (g) to include within the information exchanges prescribed by those subsections, the same standard categories of information that carriers routinely must provide in connection with other notification obligations adopted in the Order. If the Commission were to adopt the proposed modifications and clarifications, we believe that the compliance burden, and resulting economic impact on entities subject thereto, would be de minimus. Therefore, the Commission certifies for purposes of the RFA that the proposals in this document, if adopted, will not have a significant economic impact on a substantial number of small entities.

The Commission will send a copy of this document, including a copy of this Initial Regulatory Flexibility Certification, to the Chief Counsel for Advocacy of the SBA. This initial certification will also be published in the Federal Register .

This is a synopsis of the Commission's Report and Order, MM Docket No. 00-9, adopted August 17, 2005, and released August 19, 2005. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC Reference Information Center (Room CY-A257), 445 12th Street, SW., Washington, DC. The complete text of this decision may also be purchased from the Commission's copy contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20054, telephone 1-800-378-3160 or http://www.BCPIWEB.com . This document is not subject to the Congressional Review Act. (The Commission, is, therefore, not required to submit a copy of this Report and Order to GAO, pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A) because the proposed rule was dismissed.

A continuing interest is required before a channel will be allotted. Because the rulemaking petition and the expression of interest in the proposed allotment at Dayton have been withdrawn, no allotment at Dayton or change of community of license will be made.

The Arizona DPS of the pygmy-owl was listed as endangered on March 10, 1997 (62 FR 10730), and critical habitat was designated on July 12, 1999 (64 FR 37419). On January 9, 2001, a coalition of plaintiffs filed a lawsuit with the District Court of Arizona challenging the validity of our listing of the pygmy-owl as a DPS and the designation of its critical habitat. After the District Court of Arizona remanded the designation of critical habitat ( National Association of Home Builders et al. v. Norton , Civ.-00-0903-PHX-SRB), we proposed a new critical habitat designation on November 27, 2002 (67 FR 7102). Ultimately, as a result of this lawsuit, the United States Court of Appeals for the Ninth Circuit issued an opinion on August 19, 2003, stating that “the FWS acted arbitrarily and capriciously in designating the Arizona pygmy-owl population as a DPS under the DPS Policy ” ( National Association of Home Builders v. Norton , 340 F. 3d 835, 852 (9th Cir. 2003)). In making DPS determinations, we rely upon the Service's Policy Regarding the Recognition of Distinct Vertebrate Population Segments (DPS Policy) (61 FR 4722).

In light of the Ninth Circuit's opinion, we have reassessed the application of the DPS significance criteria to the Arizona pygmy-owl. Based on our assessment, we do not believe that the available information and science satisfy the criteria to indicate that pygmy-owls in Arizona are an entity that qualifies for listing under the Act. Accordingly, we published a proposed rule on August 3, 2005 (70 FR 44547) to remove the Arizona population of pygmy-owls from the list in 50 CFR 17.11, remove the critical habitat designation for this population at 50 CFR 17.95, and withdraw our November 27, 2002, proposed rule to designate new critical habitat. This document notifies the public that we are holding a public hearing on our August 3, 2005, proposed rule (see DATES and ADDRESSES ).

We intend that any final action resulting from the proposal will be based on the best available information. We have gathered and evaluated new information related to the pygmy-owl that has become available since the 1997 listing and are seeking any other pygmy-owl information. We will continue to support surveys of pygmy-owls in Mexico to further elucidate the status of the species in Mexico, and to identify threats to the population.

We are soliciting comments or suggestions from the public, other concerned governmental agencies, the scientific community, industry, or any other interested party concerning the proposed rule. Comments should be as specific as possible. We are particularly interested in comments concerning:

(1) Biological, genetic, and/or morphological data related to the taxonomic classification of the pygmy-owl throughout its current range;

(2) The location and characteristics of any additional populations not considered in previous work that might have bearing on the current population status;

(3) Additional information related to current versus historical range, current distribution, genetic diversity, and population sizes of the Arizona pygmy-owl population and its contribution to the taxon as a whole;

(4) Status of the pygmy-owl in Mexico, particularly threats to populations or habitat; and

(5) Information related to discreteness, significance, and conservation status of any potential pygmy-owl DPS.

All previous comments and information submitted on the proposed rule need not be resubmitted. We will take into consideration the comments and any additional information received, and such communications may lead to a final determination that differs from the proposal.

If you wish to provide comments and/or information, you may submit your comments and materials concerning the proposal by any one of several methods (see ADDRESSES ). Comments submitted electronically should be in the body of the e-mail message itself or attached as a text file (ASCII file format), and should not use special characters or any form of encryption. Please also include “Attn: Cactus Ferruginous Pygmy Owl Delisting,” your full name, and your return address in the body of your e-mail message. If you do not receive a confirmation from the system that we have received your e-mail message, contact us directly by calling our Arizona Ecological Services Field Office (see ADDRESSES ).

Our practice is to make comments, including names and home addresses of respondents, available for public review during regular business hours. Individual respondents may request that we withhold their home addresses from the rulemaking record, which we will honor to the extent allowable by law. There also may be circumstances in which we would withhold from the rulemaking record a respondent's identity, as allowable by law. If you wish us to withhold your name and/or address, you must state this prominently at the beginning of your comment. However, we will not consider anonymous comments. We will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public inspection in their entirety. Comments and materials received will be available for public inspection, by appointment, during normal business hours at the Arizona Ecological Services Field Office (see ADDRESSES ).

Persons needing reasonable accommodations in order to attend and participate in the public hearing should contact Steve Spangle, Field Supervisor, Arizona Ecological Services Field Office (see FOR FURTHER INFORMATION CONTACT ) as soon as possible. In order to allow sufficient time to process requests, please call no later than one week before the hearing. Information regarding the proposal is available in alternative formats upon request.

Section 9 of the ESA and Federal regulation prohibits the “taking” of a species listed as endangered or threatened. Under the ESA, the term “take” means to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect listed wildlife, or to attempt to engage in any such conduct. The Service may, under limited circumstances, issue permits to “incidentally take” listed species, if such taking is incidental to, and not the purpose of, otherwise lawful activities. Regulations governing permits for endangered species are promulgated in 50 CFR 17.22.

SMI has applied to the Service for an ITP pursuant to section 10(a) of the ESA. The applicant proposes to implement an HCP for the WVNFS that will allow construction within WVNFS habitat. The applicant's proposed activities may result in take, as defined in the ESA and its implementing regulations, of listed species. Authorized take would only affect WVNFS; take of other federally listed species is specifically excluded from the proposed action. This permit would authorize the incidental take of WVNFS at Snowshoe Mountain Resort through otherwise lawful activities, specifically the recreation and infrastructure expansion, occurring in WVNFS habitat. The HCP and permit would be in effect for a maximum of 10 years upon issuance.

The applicant proposes to construct additional downhill ski slopes and expand an existing trail at Snowshoe, to accommodate the projected increase in skiers, particularly beginners and intermediate skiers, and the demand for skiable terrain. In connection with ski slope expansion, SMI proposes to complete a parking area expansion to alleviate traffic congestion as a result of the projected increased recreational use of the resort. Finally, SMI is proposing to develop an area in which to store some equipment, including snowplows, bulldozers, buses, trucks, earth graders, backhoes, and landscaping equipment. It is necessary to house this equipment in a centrally located area to ensure that heavy equipment traffic on the main road is minimized. The proposed activities are expected to remove approximately 43 acres of forest.

The anticipated incidental take will be limited to harm through habitat loss as the result of the permanent loss of 43 acres of suitable WVNFS habitat. SMI proposes to implement measures to minimize, mitigate, and monitor impacts to the WVNFS and include surveying for WVNFS, following seasonal clearing restrictions, allowing when possible, natural forest regeneration in temporary construction zones, and establishing a permanent conservation area to provide refuge for the WVNFS.

The draft EA considers the environmental consequences of three alternatives, including a no-action alternative, the proposed action, and a reduced impact alternative.

The Service provides this notice pursuant to section 10(c) of the ESA. The Service will evaluate whether the issuance of a section 10(a)(1)(B) ITP complies with section 7 of the ESA by conducting an intra-Service section 7 consultation. The results of the biological opinion, in combination with the evaluation of the permit application, the HCP, EA, and comments submitted thereon, will be used in the final analysis to determine whether the application meets the requirements of section 10(a) of the ESA. If the requirements are met, the Service will issue a permit to SMI for the incidental take of WVNFS during the proposed recreation and infrastructure expansion activities. We will make the final permit decision no sooner than 60 days from the date of this notice.

CCA filed a petition for emergency or interim rulemaking on March 29, 2005. NMFS published a notice of receipt of petition for rulemaking on May 12, 2005 (70 FR 39700), and invited public comments for 60 days ending July 11, 2005. Summaries of and responses to comments are provided in the Response to Public Comments section below.

The petition filed by CCA states the red snapper stock in the Gulf of Mexico is overfished and undergoing overfishing. Although the petition acknowledges the directed red snapper commercial and recreational sectors share responsibility for rebuilding the stock, it asserts the failure of bycatch reduction devices (BRDs) required in the commercial shrimp fishery to meet established bycatch reduction standards makes recovery of the Gulf red snapper fishery unlikely and ensures years of continued overfishing of this stock. The petition states the directed recreational and commercial red snapper sectors have already adopted many measures necessary to rebuild the stock. The petition seeks emergency regulations or interim measures to stop the overfishing resulting from excessive bycatch of juvenile red snapper in the Gulf shrimp fishery. The petition also suggests management measures such as bag limits and total allowable catch restrictions would be applicable to the directed red snapper fishery.

The CCA petition states the prevention of overfishing and recovery of the red snapper stock is predicated on at least a 44-percent reduction from the average level of bycatch mortality on juvenile red snapper, age 0 and age 1, by the Gulf shrimp fishery during the years 1984-1989. Further, because recent research indicates current BRD use, in practice, yields only a 12-percent bycatch reduction, CCA argues that the existing plan for preventing overfishing and rebuilding the red snapper stock must be declared a failure. CCA asserts the fisheries regulatory establishment is plainly aware of red snapper overfishing by the shrimp trawl fishery, but has failed to take corrective action. The petition requests NMFS immediately initiate emergency regulations or interim measures resulting in bycatch reduction sufficient to allow the red snapper stock to rebuild within the time period established in the Reef Fish Fishery Management Plan (Reef Fish FMP). The petition states such bycatch reduction measures should include strict bycatch quotas tracked by observer data, time and area closures or restrictions, improved BRDs, season limitations, seasonal closures, and/or other reduction measures. In addition, the petition states a firm bycatch reduction target of 60-80 percent of historic levels should be set, with a time line to achieve the target within the shortest period possible. The petition also proposes a mandated effort reduction program for the Gulf shrimp fleet.

Efforts to rebuild the red snapper stock are complicated by significant amounts of bycatch in the shrimp fishery. Ending overfishing and allowing the stock to rebuild cannot occur through regulations on the directed red snapper fishery alone. The shrimp fishery annually removes 25 to 45 million juvenile red snapper (approximately 2-5 million lb (0.9-2.3 million kg)), primarily from the western Gulf, whereas the directed fishery removes approximately 4 million adult fish (approximately 9 million lb (4.1 million kg)) annually. The success of the red snapper rebuilding plan depends heavily on reductions in shrimp trawl bycatch.

The Council recognized the inherent need to reduce red snapper bycatch in the shrimp fishery in 1997 when they approved Amendment 9 to the Shrimp Fishery Management Plan (Shrimp FMP). The purpose of this amendment was to reduce unwanted bycatch of juvenile red snapper in the shrimp fishery and, to the extent practicable, not adversely affect the shrimp fishery. Because of substantial fishing mortality on juvenile red snapper and the need to rebuild the overfished stock, the Council considered development and use of BRDs and other management measures to reduce bycatch. The Council approved a goal for reducing red snapper bycatch by 44 percent from the average annual mortality of age-0 and age-1 red snapper during 1984-1989. Upon approval of Amendment 9, the fisheye BRD and Andrews Turtle Excluder Device (Andrews TED) were the only two devices determined to be capable of reducing bycatch by the required amount; however, the Andrews TED was proposed to be certified as a BRD only during a time when and in a geographical area where it is an approved TED. On December 19, 1997, approval of the Andrews TED, as a TED, was withdrawn; therefore, the Andrews TED was not certified as a BRD in the final rule implementing Amendment 9. However, the framework procedure approved by the Council in Amendment 9 allowed for additional BRDs to be certified by NMFS. Cooperative industry/government research available in 1997 indicated the approved BRDs would reduce red snapper bycatch by 58 to 77 percent.

In 1998, an intensive monitoring effort quantified the effectiveness of the mandatory use of certified BRDs and evaluated the effectiveness of uncertified BRDs. The study found there were performance problems with the fisheye BRD in some configurations, and regulations were amended to modify the allowable placement of the fisheye BRD to improve performance and bycatch reduction. In 1999, BRD testing and certification procedures were established, and two new BRDs, the Jones-Davis BRD and “Gulf” fisheye BRD, were certified by NMFS after determining they exceeded the bycatch reduction goal. Available data in 1999 indicated these BRDs reduced red snapper mortality by 52 to 70 percent.

Monitoring the performance of BRDs in the fishery continued through an observer program from 1999 to 2003, during which time the Council began development of a regulatory amendment, and subsequently Amendment 22 to the Reef Fish FMP. The Council submitted a rebuilding plan to NMFS through a regulatory amendment in 2001. This amendment was returned to the Council by NMFS with a request to further explore alternative rebuilding plans based on realistic expectations for future reductions in shrimp trawl bycatch, and to more fully evaluate the effects of alternatives to reduce bycatch through a supplemental environmental impact statement. In 2004, the Council approved Amendment 22, which established a rebuilding plan for red snapper based on the results of the 1999 stock assessment. The rebuilding plan was projected to end overfishing by 2009 or 2010, and rebuild the stock by 2032. The amendment called for large reductions in bycatch mortality from the shrimp fishery to be achieved either through technological means, such as improved BRD designs, and/or reductions in shrimp fishing effort. The selected rebuilding plan recognized the need for periodic reviews of the stock status to ensure the rebuilding plan was adequately progressing toward the rebuilding goal. Review of the plan was designed to incorporate new information and to address unanticipated developments in the red snapper and shrimp fisheries, and to make appropriate adjustments in red snapper regulations should insufficient or unexpectedly rapid rebuilding progress occur.

In May 2004, the Council was presented with the results of the ongoing BRD observer study mentioned above. This study indicated BRDs, under actual fishing conditions, were reducing red snapper bycatch by 11.7 percent, which was far less than previously documented during research trials. The study noted several changes in fishing practices and gear characteristics (e.g., increased haulback speeds, illegal BRD placement) reduced the performance of the fisheye BRD, the most commonly used BRD in the shrimp fishery. Results from a majority of trips where observers were aboard revealed BRDs were often placed in illegal net positions, resulting in poor BRD performance. However, BRD performance also was noted to be poor for legal installations due largely to alterations in fishing practices.

The results of this BRD observer study were incorporated into the 2005 red snapper stock assessment, which concluded red snapper continued to be overfished and undergoing overfishing. The conclusions of the assessment were consistent with previous assessments despite changes in stock status criteria and assessment methods. The Southeast Data, Assessment, and Review (SEDAR) Assessment Review Panel concluded red snapper fishing mortality rates are too high for both the directed fishery and shrimp fishery, and reductions in fishing mortality for both sectors would be needed to rebuild the stock.

NMFS disagrees with CCA's assertion that management has failed to take action to address the problem of shrimp trawl bycatch of red snapper. As new information and research have become available, NMFS and the Council have taken corrective action to improve BRD performance and reduce shrimp trawl bycatch. Changes in both fishing practices and gear characteristics have significantly reduced the overall performance of BRDs relative to bycatch reduction rates previously documented during field trials. NMFS recognizes the success of the rebuilding plan is heavily dependent on reductions in shrimp trawl bycatch and effort. Amendment 22 acknowledged additional reductions in bycatch may be required in the future if reductions are not adequate through technological improvements. The Council also specified a periodic review of the rebuilding plan in order to make appropriate adjustments in red snapper regulations when new information, such as the most recent stock assessment and BRD performance research, became available.

NMFS agrees with CCA's assertion that existing certified BRDs are now not achieving established reduction standards and additional reductions in shrimp trawl bycatch are needed to rebuild the stock. The rebuilding plan calls for large reductions in shrimp effort to occur through technological means and reductions in shrimp effort. Current BRD observer studies indicate only a 12-percent reduction in red snapper bycatch is occurring, which is well below the reduction needed to rebuild the stock. However, as indicated in Amendment 22 to the Reef Fish FMP, reductions in shrimp trawl bycatch are occurring as a result of reduced fishing effort associated with adverse economic conditions in the shrimp fishery resulting from increased competition from shrimp imports and rising fuel costs. Future declines in shrimp effort are predicted for large shrimp vessels (greater than or equal to 60 ft (18.3 m) in length). Such declines are likely to increase the rate of red snapper stock rebuilding and reduce fishing related bycatch in the early years of the rebuilding plan, aside from any management actions to reduce harvest. Since 2002, an 18-percent decrease in shrimp effort has occurred. Shrimp effort has decreased by 26-percent since the late 1980s, resulting in lower fishing mortality rates on juvenile red snapper in more recent years.

Based on the most recent stock assessment, fishing mortality rates in all sectors of the fishery are too high, and the Council will need to consider reducing fishing mortality rates to rebuild the stock. As explained in the Agency Decision section of this notice, NMFS believes actions to revise the red snapper rebuilding plan and reduce shrimp trawl bycatch are best addressed through Council regulatory amendment and FMP amendment, rather than emergency rule. The Council directed staff during their August 2005 Council meeting to begin immediately working on a regulatory amendment to modify certification procedures and protocols for BRDs, including decertification of ineffective BRDs and certification of new BRDs capable of achieving necessary reductions in finfish bycatch. The Council also directed staff to begin developing a joint reef fish/shrimp plan amendment that revises the red snapper rebuilding plan and addresses bycatch in both the directed red snapper fishery and shrimp fishery. NMFS agrees many of the measures proposed by CCA to address shrimp trawl bycatch should be considered in the plan amendment.

NMFS and the Council have already begun to address effort limitation in the shrimp fishery and monitoring of shrimp bycatch. In May 2005, the Council approved Amendment 13 to the Shrimp FMP. This amendment, if approved by NMFS, would establish a moratorium on shrimp licenses and allow for closer monitoring of the shrimp fishery in two ways. First, electronic logbook reporting, which tracks fishing effort (number of trips, length of trips, locations, etc.), would be required for commercial shrimp vessel permit holders. Second, the observer program would include bycatch reporting which will produce estimates of total annual finfish and invertebrate bycatch. The Council believes these actions will provide the best information to track effort and evaluate bycatch and modified BRD performance without unduly interfering with shrimp fishery operations. NMFS expects that Amendment 13, if approved, would be implemented early in 2006. The level of coverage for monitoring bycatch through the use of electronic logbooks and observers may vary with the availability of funding. Until such time as additional funding is available, management measures such as bycatch quotas would be impractical to consider for the shrimp fishery.

The Council previously considered area and seasonal closures for reducing finfish bycatch in Amendments 9 and 10 to the Shrimp FMP. The Council rejected these measures because they were deemed costly and ineffective, and research at the time indicated BRDs reduced bycatch at a lower cost. Current regulations include several seasonal and area closures throughout the Gulf of Mexico in which trawling is prohibited. Trawl gear is also precluded from numerous areas throughout the Gulf because of oil and gas platforms, hard bottom habitat, and artificial reefs. The intent of existing seasonal and area closures is to protect small shrimp and habitat and reduce user conflicts. These closures were not intended to reduce bycatch, although this is an indirect benefit of these management actions.

The Council considered a scoping document for Amendment 14 to the Shrimp FMP at their August 2005 meeting. The scoping document contained alternatives for further reducing shrimp bycatch, reducing shrimp effort, modifying bycatch reduction criteria, eliminating latent effort in the shrimp fishery, and requiring vessel monitoring systems aboard shrimp vessels. NMFS will continue to work closely with the Council to further develop a joint Shrimp and Reef Fish plan amendment evaluating these shrimp fishery bycatch alternatives, as well as alternatives for rebuilding the red snapper stock and reducing bycatch in the directed red snapper fishery.

The petition also proposes setting a firm target for bycatch reduction of between 60 and 80 percent of historic levels, with a time line established to achieve the target within the shortest period possible. NMFS believes the target bycatch reduction goal should be set based on the results of the most recent stock assessment, taking into account the time needed to rebuild the stock and the practicability of further reductions in shrimp trawl bycatch.

NMFS received 7,630 form letters in favor of the petition to end overfishing of red snapper by minimizing shrimp trawl bycatch. NMFS received an additional 23 letters in response to the petition. Of those 23 letters, 12 commenters supported the petition, and 11 commenters urged the petition be rejected or denied. NMFS' responses to these comments are provided below.

Comment 1: A group of commenters stated the Federal government has failed to end overfishing of red snapper by the shrimp fishery despite legal requirements, and significant action is necessary to reduce bycatch and restore the red snapper stock.

Response: The 2005 red snapper stock assessment indicated red snapper were overfished and undergoing overfishing. NMFS agrees action is needed to reduce bycatch in both the shrimp fishery and the directed red snapper fishery. Despite previous actions by NMFS and the Council to improve BRD performance and reduce shrimp trawl bycatch of red snapper, as explained in the History of NMFS and Council Efforts to Reduce Bycatch in the Shrimp Fishery section of this document, overfishing has continued. Changes in both fishing practices and gear characteristics have significantly reduced the overall effectiveness of BRDs relative to the bycatch reduction rates documented during field trials. The Council recognized the need to address such changes during rebuilding by periodically reviewing the status of the stock to ensure the rebuilding plan is adequately meeting rebuilding goals. Should insufficient or unexpectedly rapid rebuilding progress occur, NMFS and the Council intend to make appropriate adjustments to regulations to address unanticipated developments in the red snapper and shrimp fisheries.

Comment 2: Eight commenters in favor of the petition stated the shrimp fishery has impacted the recreational fishery economically and hindered further economic gains the recreational sector could experience.

Response: NMFS recognizes bycatch increases the mortality of any species over what would otherwise occur due to natural mortality and any directed fishery for that species. As such, this additional mortality reduces the potential harvest and economic activity associated with that species. This situation is not unique to shrimp trawl bycatch and recreational fisheries. In addition to requiring bycatch be reduced to the extent practicable, the Magnuson-Stevens Act requires management measures provide for the sustained participation of fishing communities. This requirement recognizes the sociocultural importance of fisheries and the impracticability of reducing all values associated with a resource to monetary terms. Thus, current regulations in the shrimp fishery have been developed to both minimize bycatch and maintain the fishing communities depending upon this fishery as well as other related fisheries.

Comment 3: Several commenters indicated the petition failed to address the recent decrease in shrimp effort and its effects on reducing red snapper bycatch. These commenters identified four reasons for reductions in shrimp effort: (1) The cap on the number of commercial shrimp licenses has decreased participation in the fishery to a huge degree; (2) the required use of TEDs and BRDs has made it more difficult for license holders to make a living; (3) fuel costs have increased drastically, and, (4) the amount of imported, farm-raised shrimp has been increasing and is unfairly driving down the price of domestic shrimp.

Response: NMFS agrees the petition did not address recent decreases in shrimp effort, nor the aforementioned reasons for that effort reduction. These reductions in effort have been factored into recent management actions for shrimp and red snapper, including Amendment 13 to the Shrimp FMP, Amendment 22 to the Reef Fish FMP, and the 2005 red snapper stock assessment. Although some individuals may dispute effort estimates, these estimates were thoroughly reviewed during the 2004-2005 SEDAR workshops for red snapper and are considered the best available scientific information. Analyses predict reductions in the number of large vessels (>60 ft (>18.3 m)), which primarily operate in offshore waters and are expected to encounter more red snapper than smaller vessels, will be the primary source of future reductions in shrimp trawl bycatch. Between 2002 and 2004, offshore shrimp effort was predicted to decline by 16 percent; actual reductions in shrimp effort during this time declined by 18 percent. Projections indicate effort for large shrimp vessels will continue to decline significantly through 2011, ending at a point 34 percent less than effort levels in 2002.

The Council approved Amendment 13 to the Shrimp FMP at their May 2005 meeting. If approved by NMFS, this amendment will establish several management measures, including a moratorium on commercial shrimp permits. NMFS has yet to implement the cap on commercial shrimp licenses and, therefore, the cap has not reduced participation in the shrimp fishery to date.

The use of TEDs and BRDs has likely made it more difficult for some shrimpers to make a living. TEDs and BRDs not only reduce finfish and turtle bycatch, they also result in some shrimp loss, which economically impacts the profits of shrimpers. When the Council approved Amendment 9 to the Shrimp FMP in 1997, research indicated BRDs reduced bycatch at a lower cost than other management measures, such as seasonal and area closures. Recent NMFS observer data indicate many shrimpers have changed fishing practices and gear characteristics to reduce shrimp loss; as a result, BRD performance has decreased.

The declining profitability of the shrimp industry is attributed to lower prices, due to competition from imports, and to higher fuel prices, which increased 21-29 percent from 2002 to 2003. Fuel costs represent a significant portion of the industry's operating expenses, and fluctuations in fuel costs can significantly affect the industry's economic performance. Increases in shrimp imports have been the primary cause of the recent decline in U.S. shrimp prices. Recent surges in imports have been caused by increases in the production of foreign, farm- raised shrimp.

Comment 4: One commenter stated the petition was based on old information and new information is now available. The commenter stated the new information was incorporated into the new assessment, but was not acknowledged in the petition, and taking action would be imprudent until completion of the new assessment.

Response: NMFS concurs that it would be prudent to wait for the findings of the new assessment before taking action. A red snapper stock assessment was completed in 2005 and represents the best available science regarding the current status of the stock. NMFS believes additional management measures to achieve reductions in bycatch mortality should take into account the results of this stock assessment and would best be addressed by the Council through regulatory amendment and development of a plan amendment. The Council discussed the results of the 2005 red snapper stock assessment at their August 2005 meeting and requested the NMFS Southeast Fisheries Science Center begin evaluating rebuilding scenarios for red snapper and the necessary shrimp trawl bycatch reductions associated with the scenarios.

Comment 5: Several commenters stated the impact of recreational fishing was not acknowledged in the petition, and this fishing was a huge factor in the red snapper decline.

Response: The petition acknowledges recovery of the red snapper stock is not based on bycatch reduction alone. However, the petition states the directed recreational and commercial fisheries have already adopted many management measures in an effort to rebuild the red snapper stock. Based on the most recent stock assessment, red snapper fishing mortality rates in both the directed fishery and the shrimp fishery are too high and each sector must share responsibility for rebuilding the stock.

Comment 6: One commenter stated the growth of offshore recreational fishing boats has had a huge impact on red snapper and all other reef fish species. Another commenter asserted recreational bag limits for red snapper are regularly exceeded with no penalties, and this was the primary problem with management of the stock.

Response: NMFS agrees the number of recreational fishing vessels and fishing effort have increased in recent years. Despite this increase in fishing effort and vessels, red snapper landings have been at or near the 4.47-million lb (2.03-million kg) quota. Recreational landings overages have occurred in some years, but landings have also been well below the quota during other years. Management measures imposed by the Council and NMFS, such as bag limits, closed seasons, size limits, and a moratorium on for-hire vessel permits, are intended to limit overall red snapper landings and effort. The U.S. Coast Guard, NMFS Law Enforcement, and state enforcement agencies enforce these regulations, and penalties exist if regulations are violated.

Comment 7: One commenter asserted the bycatch of undersized red snapper by recreational fishermen is substantial.

Response: NMFS agrees bycatch of undersized fish in the directed fishery should be addressed. The 2005 red snapper stock assessment used a range of release mortality rates for the directed commercial and recreational red snapper fisheries. These release mortality rates ranged from 15 to 80 percent depending on depth and time fished. The Council has begun developing a plan amendment to address bycatch in both the directed red snapper fishery and shrimp fishery.

Comment 8: One commenter stated studies show the importance of protecting large spawners to ensure red snapper sustainability, and implied recreational fishing has a much greater effect on these large fish than commercial fishing, such as longlining.

Response: NMFS agrees it is important to protect mature red snapper. Red snapper mature as early as 2 years of age and 10-12 inches (25-30 cm) fork length. They do not reach peak reproductive productivity until approximately 15 to 20 years of age. Current fishing practices directly affect the reproductive potential of the stock because red snapper are primarily caught well below the age at maximum fecundity. The commercial longline fishery typically harvests older red snapper (mean age of 7-8 years), while the commercial and recreational handline fisheries harvest younger red snapper (mean age of 2 to 4 years). However, the commercial longline fishery accounts for only a small portion of the overall commercial harvest of red snapper (less than 4 percent of the overall commercial harvest).

After considering the assertions and proposed management measures set forth in the CCA petition and all public comments, NMFS has determined the measures requested by the petition should not be addressed via emergency or interim rulemaking at this time. NMFS agrees bycatch mortality of red snapper in the Gulf shrimp fleet adversely affects red snapper and its ability to rebuild. NMFS believes it is important to address bycatch mortality of red snapper by the shrimp fleet, but this issue does not represent an emergency as defined in NMFS policy guidance for the use of emergency rules (62 FR 44421, August 21, 1997). Overfishing of red snapper is not an unforeseen event and, therefore, does not constitute an emergency.

Interim measures can be useful to address recently discovered issues for which no long-term strategies have been devised. However, NMFS believes long-term measures are more appropriate than interim measures to address overfishing of red snapper. The Council and NMFS have established, and are in the process of implementing, a long-term rebuilding plan for red snapper to phase-out overfishing by 2009 or 2010 and rebuild the fishery by 2032, as defined in the Magnuson-Stevens Act (§ 303(e)(4)). As anticipated in the rebuilding plan, implementation includes periodic adjustments based on new scientific information. The 2005 red snapper stock assessment indicates the level of reduction necessary to eliminate overfishing is dependent on the objectives and rebuilding scenario selected. The Council will need to evaluate those factors carefully prior to taking action to implement appropriate reductions to end overfishing and rebuild the stock.

Finally, emergency and interim regulations are not appropriate for addressing such actions as changes to BRDs, because these changes would require substantial time for gear development, manufacturing, and training and distribution for re-outfitting of shrimp nets. Emergency and interim measures can only be implemented for 180 days and can be extended for an additional 180 days if necessary conditions are met. It is likely that such measures would result in a regulatory lapse before longer-term measures could be implemented.

NMFS believes additional management measures to achieve reductions in bycatch mortality should take into account the results of the most recent red snapper stock assessment and would best be addressed through Council regulatory amendment and development of a plan amendment. The Council directed staff during their August 2005 Council meeting to begin immediately working on a regulatory amendment to modify certification procedures and protocols for BRDs, including decertification of ineffective BRDs and certification of new BRDs capable of achieving necessary reductions in finfish bycatch. This regulatory amendment is expected to be completed in mid-2006. The Council also directed staff to begin developing a joint reef fish and shrimp plan amendment that revises the red snapper rebuilding plan and addresses bycatch in both the directed red snapper fishery and shrimp fishery. This plan amendment is expected to be completed by late-2006. By addressing bycatch mortality, management measures, and the red snapper rebuilding plan in this way, the public will be afforded more opportunities to comment and participate in the rulemaking process, and long-term measures to address the issues can be implemented.

The Atlantic HMS fisheries are managed under the dual authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) and the Atlantic Tunas Convention Act (ATCA). The FMP for Atlantic Tunas, Swordfish, and Sharks, finalized in 1999, and the FMP for Atlantic Billfish, finalized in 1988, are implemented by regulations at 50 CFR part 635.

On August 19, 2005 (70 FR 48804), NMFS published a proposed rule that, among other things, announced the availability of the draft consolidated HMS FMP. Included in this proposed rule was a list of 24 public hearings throughout September and October 2005. These hearings are scheduled for NMFS to receive comments from fishery participants and other members of the public regarding the proposed rule and draft HMS FMP. Due to the damage caused by Hurricane Katrina, NMFS is cancelling two public hearings that were scheduled for September 6 and September 8, 2005, in Orange Beach, AL, and New Orleans, LA, respectively. NMFS intends to reschedule the public hearings once the amount of damaged caused by Hurricane Katrina in the affected Gulf region has been assessed and the appropriate locations can be determined. NMFS may extend the comment period, if necessary, to ensure adequate opportunities for public comment by constituents in the affected Gulf region. Notification of the new dates and locations would be published in the Federal Register .

In addition, NMFS has changed the location and time of the public hearing that was scheduled to be held in Fort Lauderdale, FL, on October 3, 2005, at the African American Arts and Cultural Center Research Library (see DATES and ADDRESSES ). This change was due to concerns raised by a constituent regarding public safety. NMFS verified these concerns with local law enforcement. The schedule for the other public hearings remains unchanged.

The public is reminded that NMFS expects participants at the public hearings to conduct themselves appropriately. At the beginning of each public hearing, a NMFS representative will explain the ground rules (e.g., alcohol is prohibited from the hearing room; attendees will be called to give their comments in the order in which they registered to speak; each attendee will have an equal amount of time to speak; and attendees should not interrupt one another). The NMFS representative will attempt to structure the hearing so that all attending members of the public will be able to comment, if they so choose, regardless of the controversial nature of the subject(s). Attendees are expected to respect the ground rules, and, if they do not, they will be asked to leave the hearing.

These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Heather Stirratt, (301) 713-2347, at least 7 days prior to the hearing in question.