On December 16, 2005, the Board published a proposed rule with request for comments that proposed to amend 5 CFR, chapter II. (70 FR 74714). The Board received no comments during the 60 days allowed for public comment and this final rule makes no changes to the previously published proposed rule. See 70 FR 74714 for additional information concerning this amendment of 5 CFR, chapter II.

This rule is issued under Marketing Agreement Nos. 124 and 85, and Marketing Order Nos. 916 and 917 (7 CFR parts 916 and 917) regulating the handling of nectarines and peaches grown in California, respectively, hereinafter referred to as the “orders.” The orders are effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866.

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

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This rule: (1) Revises the nectarine and peach grade, size, maturity, and pack requirements to better reflect current industry operating and marketing practices; (2) authorizes continued shipments of “CA Utility” quality nectarines and peaches during the 2006 and subsequent seasons to meet buyer needs; (3) establishes weight-count standards for Peento type nectarines packed in volume-filled containers to assure pack uniformity; and (4) eliminates the varietal container marking requirements for nectarines and peaches to provide handlers more marketing flexibility.

Sections 916.52 and 917.41 of the orders provide authority for regulating the handling of fresh California nectarines and peaches. The regulations include grade, size, maturity, quality, pack, and container marking requirements. Such regulations are in effect on a continuing basis. The Nectarine Administrative Committee (NAC) and the Peach Commodity Committee (PCC), which are responsible for local administration of the orders, meet prior to and during each season to review the regulations effective on a continuing basis for California nectarines and peaches under the orders. Committee meetings are open to the public and interested persons are encouraged to express their views at these meetings. USDA reviews committee recommendations and information, as well as information from other sources, and determines whether modification, suspension, or termination of the rules and regulations would tend to effectuate the declared policy of the Act.

The committees held such meetings on February 3, 2006, and unanimously recommended that the handling requirements be revised for the 2006 season, which expected to begin at the end of March. No official crop estimate was available at the time of the committees' meetings because the nectarine and peach trees were dormant. The committees will recommend a crop estimate at their meetings in early spring. However, preliminary estimates indicate that the 2006 crop will be slightly larger than the 2005 crop, which totaled approximately 18,678,400 containers of nectarines and 20,098,100 containers of peaches.

Sections 916.52 and 917.41 of the orders authorize the establishment of maturity requirements for nectarines and peaches, respectively. The minimum maturity level currently specified for nectarines and peaches is “mature” as defined in the standards. For most varieties, “well-matured” determinations for nectarines and peaches are made using maturity guides (e.g., color chips, along with other maturity tests as applied by the inspection service). These maturity guides are reviewed each year by the Shipping Point Inspection Service (SPI) to determine whether they need to be changed, based upon the most recent information available on the individual characteristics of each nectarine and peach variety.

These maturity guides established under the handling regulations of the California tree fruit marketing orders have been codified in the Code of Federal Regulations as Table 1 in §§ 916.356 and 917.459, for nectarines and peaches, respectively.

The requirements in the 2006 handling regulations are the same as those that appeared in the 2005 handling regulations with a few exceptions. Those exceptions are explained in this rule.

Nectarines: Requirements for “well-matured” nectarines are specified in § 916.356 of the order's rules and regulations. This rule revises Table 1 of paragraph (a)(1)(iv) of § 916.356 to add maturity guides for seven varieties of nectarines. Specifically, SPI recommended adding maturity guides for the Ruby Fire variety to be regulated at the G maturity guide; for the Burnectten (Spring Flare® 19) variety to be regulated at the H maturity guide, for the Burnecttwelve (Sweet Flare® 21) variety to be regulated at the I maturity guide, for the Burnectseven (Summer Flare® 28) and Zee Fire varieties to be regulated at the J maturity guide, and for the Prima Diamond XIX and Summer Jewel varieties to be regulated at the L maturity guide.

Peaches: Requirements for “well-matured” peaches are specified in § 917.459 of the order's rules and regulations. This rule revises Table 1 of paragraph (a)(1)(iv) of § 917.459 to add maturity guides for seven peach varieties. Specifically, SPI recommended adding maturity guides for the Flavor Joy variety to be regulated at the H maturity guide; the King Sweet, Lady Lou, and Sugar Time (214LC68) varieties to be regulated at the I maturity guide; the August Dream variety to be regulated at the J maturity guide; and the Burpeachfive (July Flame®) and Burpeachsix (June Flame®) varieties to be regulated at the L maturity guide.

NAC and PCC recommended these maturity guide requirements based on SPI's continuing review of individual maturity characteristics and identification of the appropriate maturity guide corresponding to the “well-matured” level of maturity for nectarine and peach varieties in production.

Both orders provide authority (in §§ 916.52 and 917.41) to establish size requirements. Size regulations encourage producers to leave fruit on the tree longer, which improves both size and maturity of the fruit. Acceptable fruit size provides greater consumer satisfaction and promotes repeat purchases, and, therefore, increases returns to producers and handlers. In addition, increased fruit size results in increased numbers of packed containers of nectarines and peaches per acre, also a benefit to producers and handlers.

Varieties recommended for specific size regulations have been reviewed and such recommendations are based on the specific characteristics of each variety. The NAC and PCC conduct studies each season on the range of sizes attained by the regulated varieties and those varieties with the potential to become regulated, and determine whether revisions to the size requirements are appropriate.

Nectarines: Section 916.356 of the order's rules and regulations specifies minimum size requirements for fresh nectarines in paragraphs (a)(2) through (a)(9). This rule revises § 916.356 to establish variety-specific minimum size requirements for nine varieties of nectarines that were produced in commercially significant quantities of more than 10,000 containers for the first time during the 2005 season. This rule also removes the variety-specific minimum size requirements for seven varieties of nectarines whose shipments fell below 5,000 containers during the 2005 season.

For example, one of the varieties recommended for addition to the variety-specific minimum size requirements is the Burnectten (Spring Flare® 19) variety of nectarines, recommended for regulation at a minimum size 96. Studies of the size ranges attained by the Burnectten (Spring Flare® 19) variety revealed that 100 percent of the containers met the minimum size of 96 during the 2004 and 2005 seasons. Sizes ranged from size 40 to size 96, with 0.2 percent of the fruit in the 40 sizes, 4.9 percent of the packages in the 50 sizes, 27.0 percent in the 60 sizes, 35.8 percent in the 70 sizes, 24.4 percent in the 80 sizes, and 7.7 percent in size 96 for the 2005 season.

A review of other varieties with the same harvesting period indicated that the Burnectten (Spring Flare® 19) variety was also comparable to those varieties in its size ranges for that time period. Discussions with handlers known to handle the variety confirm this information regarding minimum size and harvesting period, as well. Thus, the recommendation to place the Burnectten (Spring Flare® 19) variety in the variety-specific minimum size regulation at a minimum size 96 is appropriate. This recommendation results from size studies conducted over a two-year period.

Historical data such as this provides the NAC with the information necessary to recommend the appropriate sizes at which to regulate various nectarine varieties. In addition, producers and handlers of the varieties affected are personally invited to comment when such size recommendations are deliberated. Producer and handler comments are also considered at both NAC and subcommittee meetings when the staff receives such comments, either in writing or verbally.

For reasons similar to those discussed in the preceding paragraph, the introductory text of paragraph (a)(3) of § 916.356 is revised to include the Burnectten (Spring Flare® 19) variety; the introductory text of paragraph (a)(4) of § 916.356 is revised to include the Gee Sweet variety; and the introductory text of paragraph (a)(6) of § 916.356 is revised to include the Arctic Belle, August Sweet, Autumn Blaze, Giant Pearl, Prima Diamond X, Prince Jim 3, and Summer Jewel nectarine varieties.

This rule also revises the introductory text of paragraphs (a)(3), (a)(4), and (a)(6) of § 916.356 to remove seven varieties from the variety-specific minimum size requirements specified in these paragraphs because less than 5,000 containers of each of these varieties were produced during the 2005 season. Specifically, the introductory text of paragraph (a)(3) of § 916.356 is revised to remove the Early Diamond nectarine variety; the introductory text of paragraph (a)(4) of § 916.356 is revised to remove the Arctic Rose, June Glo, May Diamond and Red Delight nectarine varieties; and the introductory text of paragraph (a)(6) of § 916.356 is revised to remove the Bright Sweet and Emelia nectarine varieties.

Nectarine varieties removed from the nectarine variety-specific minimum size requirements become subject to the non-listed variety size requirements specified in paragraphs (a)(7), (a)(8), and (a)(9) of § 916.356.

Peaches: Section 917.459 of the order's rules and regulations specifies minimum size requirements for fresh peaches in paragraphs (a)(2) through (a)(6), and paragraphs (b) and (c). This rule revises § 917.459 to establish variety-specific minimum size requirements for eleven peach varieties that were produced in commercially significant quantities of more than 10,000 containers for the first time during the 2005 season. This rule also removes the variety-specific minimum size requirements for seven varieties of peaches whose shipments fell below 5,000 containers during the 2005 season.

For example, one of the varieties recommended for addition to the variety-specific minimum size requirements is the Island Prince variety of peaches, which was recommended for regulation at a minimum size 88. Studies of the size ranges attained by the Island Prince variety revealed that 100 percent of the containers met the minimum size of 88 during the 2004 and 2005 seasons. The sizes ranged from size 30 to size 88, with 3.8 percent of the containers meeting the size 30, 4.0 percent meeting the size 40, 42.1 percent meeting the size 50, 28.1 percent meeting the size 60, 11.8 percent meeting the size 70, 9.9 percent meeting the size 80, and 0.3 percent meeting the size 88 in the 2005 season.

A review of other varieties with the same harvesting period indicated that the Island Prince variety was also comparable to those varieties in its size ranges for that time period. Discussions with handlers known to pack the variety confirm this information regarding minimum size and the harvesting period, as well. Thus, the recommendation to place the Island Prince variety in the variety-specific minimum size regulation at a minimum size 88 is appropriate.

Historical data such as this provides the PCC with the information necessary to recommend the appropriate sizes at which to regulate various peach varieties. In addition, producers and handlers of the varieties affected are personally invited to comment when such size recommendations are deliberated. Producer and handler comments are also considered at both PCC and subcommittee meetings when the staff receives such comments, either in writing or verbally.

For reasons similar to those discussed in the preceding paragraph, the introductory text of paragraph (a)(3) of § 917.459 is revised to include the Island Prince and Snow Peak peach varieties; the introductory text of § (a)(5) of § 917.459 is revised to include the Bright Princess, Burpeachnineteen (Spring Flame® 22), Honey Sweet, Sierra Snow, and Sweet Crest peach varieties; and the introductory text of paragraph (a)(6) of § 917.459 is revised to include the Glacier White, Jasper Treasure, Spring Candy, and Valley Sweet peach varieties.

This rule also revises the introductory text of paragraph (a)(6) of § 917.459 to remove the Autumn Ruby, Cherry Red, Early O'Henry, Gypsy Red, Pretty Lady, Supechfour (Amber Crest), and 244LE379 peach varieties from the variety-specific minimum size requirements specified in the section because less than 5,000 containers of each of these varieties was produced during the 2005 season.

Peach varieties removed from the peach variety-specific minimum size requirements become subject to the non-listed variety size requirements specified in paragraphs (b) and (c) of § 917.459.

NAC and PCC recommended these changes in the minimum size requirements based on a continuing review of the sizing and maturity relationships for these nectarine and peach varieties, and the consumer acceptance levels for various fruit sizes. This rule is designed to establish minimum size requirements for fresh nectarines and peaches consistent with expected crop and market conditions.

Sections 916.52 and 917.41 of the orders also authorize the establishment of grade and quality requirements for nectarines and peaches, respectively. Prior to the 1996 season, § 916.356 required nectarines to meet a modified U.S. No. 1 grade standard that included a slightly tighter requirement for scarring and a more liberal allowance for misshapen fruit. Prior to the 1996 season, § 917.459 required peaches to meet the requirements of a U.S. No. 1 grade, except for a more liberal allowance for open sutures that were not considered “serious damage.”

Since 1996, shipments of nectarines and peaches meeting “CA Utility” quality requirements have been permitted each season. “CA Utility” fruit is lower in quality than that meeting the modified U.S. No. 1 grade requirements. Nevertheless, the fruit is acceptable in many markets. Use of the “CA Utility” quality option has allowed handlers the opportunity to remove marginal fruit from the U.S. No. 1 containers and pack it in “CA Utility” containers instead, which results in better quality U.S. No. 1 packs without sacrificing fruit.

The committees have recommended continuation of the authorization to ship “CA Utility” quality fruit each year since 1996, and did so again at their meetings on February 3, 2006, for the 2006 and subsequent seasons. This rule revises paragraph (d) of §§ 916.350 and 917.442, and paragraph (a)(1) of §§ 916.356 and 917.459 to permit shipments of nectarines and peaches meeting “CA Utility” quality requirements during the 2006 and subsequent seasons.

Under the provisions of §§ 916.52 of the order, NAC is authorized to establish weight-count standards for packed containers of nectarines. These standards define a maximum number of nectarines in a 16-pound sample when such fruit, which may be packed in tray-packed containers, is converted to volume-filled containers. In §§ 916.350 of the order's rules and regulations, weight-count standards are established for all varieties of nectarines (except the Peento type), in Tables 1 and 2 of paragraph (a)(5)(iv).

According to NAC, Peento varieties of donut nectarines have traditionally been packed in trays because they have been marketed as a premium variety, whose value justified the added packing costs. However, as the volume has increased, the value of the variety has diminished in the marketplace, and some handlers now desire to pack Peento variety nectarines in volume-filled containers to meet market demands. However, weight-count standards for Peento type nectarines have not been established in the order's rules and regulations. Current weight-count standards for nectarines are for round nectarines. Peento type nectarines are shaped like donuts and fit into volume-filled containers differently, so the current weight count standards are inappropriate.

In an effort to standardize the conversion from tray-packing to volume-filling for Peento type nectarines, the committee staff conducted weight-count surveys during the 2005 season to determine optimum weight-counts for the varieties at various fruit sizes. As a result, the staff prepared a new weight-count table applicable to only the Peento varieties. The Tree Fruit Quality Subcommittee reviewed the weight-counts at their November 10, 2005, meeting. At its February 3, 2006, meeting, NAC approved the recommendation that the new weight-counts be implemented for the 2006 and subsequent seasons.

For those reasons, a new Table 3, establishing the weight-counts for Peento type nectarines, will be added to paragraph (a)(5)(iv) of § 916.350, following Tables 1 and 2. In a conforming change, the titles of Tables 1 and 2 will be revised by adding the words “except Peento type nectarines” between the words “nectarines” and “packed.” Conforming changes will also be made by adding the words “except for Peento type nectarines” at the end of paragraphs (a)(2)(ii), (a)(3)(ii), (a)(4)(ii), (a)(5)(ii), (a)(6)(ii), (a)(7)(ii), (a)(8)(ii), and (a)(9)(ii) of § 916.356.

The committee staff will continue to conduct weight-count surveys to ensure that the Peento varieties that are packed in volume-filled containers meet the weight-count standards established for tray-packed nectarines, and to ensure that the weight-counts continue to be appropriate.

Sections 916.350 and 917.442 of the orders' rules and regulations require that all containers and packages of nectarines and peaches (except for consumer packages in master containers or those mailed directly to consumers) shall be marked with the name of the variety of the fruit if it is known, or with “Unknown Variety” if the variety is not known.

Many industry members believe that variety recognition may limit the industry's ability to provide the best quality fruit at any given time during the harvest season. Factors such as weather can contribute to wide variability in harvest dates for individual varieties from year to year, making it difficult to meet customer demands on a timely basis. Eliminating the varietal container marking requirement would ease the transition that occurs when older trees are replaced with newly introduced varieties. New varieties could be substituted for obsolete varieties without risking the loss of market opportunities. Therefore, industry members have suggested that elimination of the varietal container marking requirement would enable them to supply whichever varieties are appropriately mature throughout the season without regard for variety identity.

The Tree Fruit Quality Subcommittee discussed this issue at many of their meetings in 2004 and 2005. They believe that eliminating the requirement that variety names be marked on containers will allow handlers greater flexibility to supply the best possible nectarines and peaches to customers throughout the marketing season without regard to variety. Consumer satisfaction would be raised, which will in turn increase returns to growers and handlers.

Upon recommendation by the Tree Fruit Quality Subcommittee, NAC and PCC voted unanimously at their meetings on February 3, 2006, to recommend elimination of the requirement that fruit variety be marked on containers of nectarines and peaches. Accordingly, paragraphs (a)(2) of §§ 916.350 and 917.442 have been amended by deleting the words, “and, except for consumer packages in master containers and consumer packages mailed directly to consumers, the name of the variety, if known, or, when the variety name is not known, the words “unknown variety.” A marketing name, trade mark, or brand name may be associated with a variety name, but cannot be substituted for the variety name.”

Additionally, paragraph (a)(11) of § 916.350 and paragraph (a)(12) of § 917.442 will be amended by deleting the words “the name of the variety, if known, or if the variety is not known, the words Unknown Variety.”

This rule reflects the need to revise the handling requirements for California nectarines and peaches, as specified. This rule will have a beneficial impact on producers, handlers, and consumers of fresh California nectarines and peaches.

This rule establishes handling requirements for fresh California nectarines and peaches consistent with expected crop and market conditions, and will help ensure that all shipments of these fruits made each season will meet acceptable handling requirements established under each of these orders. The changes: (1) Revise the nectarine and peach grade, size, maturity, and pack requirements; (2) authorize continued shipments of “CA Utility” quality nectarines and peaches during the 2006 and subsequent seasons; (3) establish weight-count standards for Peento type nectarines packed in volume-filled containers; and (4) eliminate the varietal container marking requirements for nectarines and peaches. This rule will also help the California nectarine and peach industries to provide fruit desired by consumers. This rule was unanimously recommended by the committees at their meetings on February 3, 2006, and is designed to establish and maintain orderly marketing conditions for these fruits in the interests of producers, handlers, and consumers.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility.

There are approximately 180 California nectarine and peach handlers subject to regulation under the orders covering nectarines and peaches grown in California, and about 800 producers of these fruits in California. Small agricultural service firms, which include handlers, are defined by the Small Business Administration (13 CFR 121.201) as those whose annual receipts are less than $6,000,000. Small agricultural producers are defined by the Small Business Administration as those having annual receipts of less than $750,000. A majority of these handlers and producers may be classified as small entities.

The committees' staff has estimated that there are fewer than 26 handlers in the industry who could be defined as other than small entities. For the 2005 season, the committees' staff estimated that the average handler price received was $10.00 per container or container equivalent of nectarines or peaches. A handler would have to ship at least 600,000 containers to have annual receipts of $6,000,000. Given data on shipments maintained by the committees' staff and the average handler price received during the 2005 season, the committees' staff estimates that small handlers represent approximately 86 percent of all the handlers within the industry.

The committees' staff has also estimated that fewer than 10 percent of the producers in the industry could be defined as other than small entities. For the 2005 season, the committees' estimated the average producer price received was $5.25 per container or container equivalent for nectarines and peaches. A producer would have to produce at least 142,858 containers of nectarines and peaches to have annual receipts of $750,000. Given data maintained by the committees' staff and the average producer price received during the 2005 season, the committees' staff estimates that small producers represent more than 90 percent of the producers within the industry.

With an average producer price of $5.25 per container or container equivalent, and a combined packout of nectarines and peaches of approximately 38,776,500 containers, the value of the 2005 packout is estimated to be $203,576,600. Dividing this total estimated grower revenue figure by the estimated number of producers (800) yields an estimated average revenue per producer of about $254,471 from the sales of peaches and nectarines.

Under authority provided in §§ 916.52 and 917.41 of the orders, grade, size, maturity, pack, and container marking requirements are established for fresh shipments of California nectarines and peaches, respectively. Such requirements are in effect on a continuing basis. NAC and PCC met on February 3, 2006, and unanimously recommended that these handling requirements be revised for the 2006 season. These recommendations had been presented to the committees by various subcommittees, each charged with review and discussion of the changes. The changes: (1) Revise varietal size, maturity, and pack requirements to reflect changes in production and marketing practices; (2) authorize continued shipments of “CA Utility” quality nectarines and peaches during the 2006 and subsequent seasons; (3) establish weight-count standards for Peento type nectarines packed in volume-filled containers; and (4) eliminate the varietal container marking requirements for nectarines and peaches.

Sections 916.356 and 917.459 establish minimum fruit maturity levels. This rule makes adjustments to the maturity requirements for several varieties of nectarines and peaches. Maturity requirements are based on measurements suggested by maturity guides (e.g., color chips), as reviewed and recommended by SPI annually to determine the appropriate guide for each nectarine and peach variety. These annual adjustments reflect refinements in measurements of the maturity characteristics of nectarines and peaches as observed during previous seasons' inspections. Adjustments in the guides utilized ensure acceptable fruit maturity and increased consumer satisfaction while benefiting nectarine and peach producers and handlers.

Sections 916.356 and 917.459 of the orders' rules and regulations also establish minimum sizes for various varieties of nectarines and peaches. This rule makes adjustments to the minimum sizes authorized for certain varieties of each commodity for the 2006 season. Minimum size regulations are put in place to encourage producers to leave fruit on the trees for a longer period of time, increasing both maturity and fruit size. Increased fruit size increases the number of packed containers per acre, and coupled with heightened maturity levels, also provides greater consumer satisfaction, which in turn fosters repeat purchases that benefit producers and handlers alike.

Annual adjustments to minimum sizes of nectarines and peaches, such as these, are recommended by NAC and PCC based upon historical data, producer and handler information regarding sizes attained by different varieties, and trends in consumer purchases.

An alternative to such action would include not establishing minimum size regulations for these new varieties. Such an action, however, would be a significant departure from the committees' practices and represent a significant change in the regulations as they currently exist; would ultimately increase the amount of less acceptable fruit being marketed to consumers; and would be contrary to the long-term interests of producers, handlers, and consumers. For these reasons, this alternative was not recommended.

In 1996, §§ 916.350 and 917.442 were revised to permit shipments of “CA Utility” quality nectarines and peaches as an experiment during the 1996 season only. Such shipments have subsequently been permitted each season. Although “CA Utility” fruit is lower in quality than that meeting the modified U.S. No. 1 grade requirements, it has been accepted in many markets. Between 1996 and 2004, shipments of “CA Utility” quality fruit ranged from 1 to 6 percent of total nectarine and peach shipments. In 2005, shipments of “CA Utility” quality fruit were 8.6 percent and 7.1 percent of total nectarine and peach shipments, respectively.

This rule authorizes continued shipments of “CA Utility” quality nectarines and peaches during the 2006 and subsequent seasons. Not authorizing such shipments would curtail shipments of fruit for which there is an appropriate market. Because “CA Utility” is widely accepted, it is no longer necessary to reconsider this authorization on an annual basis.

Section 916.350 also establishes weight-count standards for nectarines packed in volume-filled containers. These standards define a maximum number of nectarines in a 16-pound sample when such fruit, which may be packed in tray-packed containers, is converted to volume-filled containers.

Peento type nectarines were formerly packed exclusively in trays because of their high market value. With increased production and lowered market value, retailers have begun requesting that packers place the donut-shaped fruit in volume-filled containers. Peento type nectarines fit into the boxes differently than spherical nectarines, so it is necessary to assign appropriate weight counts for Peento type nectarines in volume-filled containers.

The committee staff was directed to collect data during the 2005 season from which recommendations for change could be made. Extensive sampling of Peento type nectarines of various sizes provided the information needed for the committee to make recommendations regarding the new weight-count standards. The Tree Fruit Quality subcommittee reviewed these standards at their meeting on November 10, 2005. The standards were then presented to NAC, who unanimously recommended adding the new weight count standards for Peento type nectarines to the regulations at their meeting on February 3, 2006.

Without the appropriate weight-counts, Peento type nectarines cannot be packed in volume-filled containers. NAC believes that the recommended weight-count standards will satisfy the stated needs of retailers, will open additional market opportunities for the industry and will provide for uniformity of sizes between nectarines packed in tray- and volume-filled containers.

Sections 916.350 and 917.442 of the orders’ rules and regulations require that all containers of nectarines and peaches be marked with the fruit's varietal name, if known.

Many industry members believe that variety recognition may limit the industry's ability to provide the best quality fruit at any given time during the harvest season. Factors such as weather can contribute to wide variability in harvest dates for individual varieties from year to year, making it difficult to meet customer demands on a timely basis. Eliminating the varietal container marking requirement would ease the transition that occurs when older trees are replaced with newly introduced varieties. New varieties could be substituted for obsolete varieties without risking the loss of market opportunities. Therefore, industry members have suggested that elimination of the varietal container marking requirement would enable them to supply whichever varieties are appropriately mature throughout the season without regard for variety identity. Consumer satisfaction would be raised, which would in turn increase returns to growers and handlers.

The Tree Fruit Quality Subcommittee discussed the issue at many of their recent meetings. Some members suggested that the requirement be left in place so that marketers and consumers would know what varieties of fruit they purchased and be encouraged to make repeat purchases. But the majority of subcommittee members voted to recommend elimination of the varietal container marking requirement, citing brand and commodity recognition in the market and easier transition to newer varieties as justification for the change. The Tree Fruit Subcommittee made the recommendation to both NAC and PCC, who agreed that varietal markings are no longer necessary or prudent, and in turn recommended at their February 3, 2006, meetings that the varietal container marking requirement be eliminated.

The committees make recommendations regarding the revisions in handling requirements after considering all available information, including recommendations by various subcommittees, comments of persons at subcommittee meetings, and comments received by committee staff. Such subcommittees include the Tree Fruit Quality Subcommittee, the Size Nomenclature Review Group, the Marketing Order Amendment Task Force, and the Executive Committee.

At the meetings, the impact of and alternatives to these recommendations are deliberated. These subcommittees, like the committees themselves, frequently consist of individual producers and handlers with many years of experience in the industry who are familiar with industry practices and trends. Like all committee meetings, subcommittee meetings are open to the public and comments are widely solicited. In the case of the Tree Fruit Quality Subcommittee, many growers and handlers who are affected by the issues discussed by the subcommittee attend and actively participate in the public deliberations, or call and/or write in their concerns and comments to the staff for presentation at the meetings. In addition, minutes of all subcommittee meetings are distributed to committee members and others who have requested them, and are also available on the committees' Web site, thereby increasing the availability of this critical information within the industry.

Each of the recommended handling requirement changes for the 2006 season is expected to generate financial benefits for producers and handlers through increased fruit sales, compared to the situation that would exist if the changes were not adopted. Both large and small entities are expected to benefit from the changes, and the costs of compliance are not expected to be substantially different between large and small entities.

This rule imposes minimal additional reporting and recordkeeping requirements concerning identification of varieties at inspection that is within the currently approved burden by OMB. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

AMS is committed to compliance with the Government Paperwork Elimination Act (GPEA), which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule. However, as previously stated, nectarines and peaches under the orders have to meet certain requirements set forth in the standards issued under the Agricultural Marketing Act of 1946 (7 CFR 1621 et seq.). Standards issued under the Agricultural Marketing Act of 1946 are otherwise voluntary.

In addition, the committees' meetings are widely publicized throughout the nectarine and peach industry and all interested parties are encouraged to attend and participate in committee deliberations on all issues. These meetings are held annually in the fall, winter, and spring. During the February 3, 2006, teleconference meeting all entities, large and small, were encouraged to express views on these issues. These regulations were also reviewed and thoroughly discussed at public subcommittee meetings held on November 30, 2004, and April 19, September 2, October 5, and November 10, 2005. Finally, interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at the following Web site: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

This rule invites comments on changes to the handling requirements currently prescribed under the marketing orders for California fresh nectarines and peaches. Any comments received will be considered prior to finalization of this rule.

After consideration of all relevant matters presented, the information and recommendations submitted by the committees, and other information, it is found that this interim final rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined, upon good cause, that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect, and that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because: (1) This rule should be implemented as soon as possible, since shipments of California nectarines and peaches are expected to begin in early April; (2) this rule relaxes grade requirements for nectarines and peaches; (3) appropriate subcommittees met and made recommendations to the committees, the committees met and unanimously recommended these changes at public meetings, and interested persons had opportunities to provide input at all those meetings; and (4) the rule provides a 60-day comment period, and any written comments timely received will be considered prior to any finalization of this interim final rule.

This rule is issued under Marketing Agreement and Order No. 923 (7 CFR part 923) regulating the handling of sweet cherries grown in designated counties in Washington, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866.

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

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. Such handler is afforded the opportunity for a hearing on the petition. After the hearing USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This rule removes the container regulations prescribed under the Washington sweet cherry order. Specifically, this rule removes the requirement that dark-colored sweet cherries must be handled in containers having a certain net weight. By eliminating the container requirements, this relaxation provides handlers with the ability to meet the rapidly changing wholesale, retail, and consumer demand for innovative product packaging, thereby enhancing industry marketing flexibility and efficiency.

Section 923.52 of the order authorizes the issuance of regulations for grade, size, quality, maturity, pack, and container for any variety of sweet cherries grown in the production area. Section 923.52(a)(3) specifically authorizes the establishment of the container regulations found in § 923.322. Section 923.53 authorizes the modification, suspension, or termination of regulations issued pursuant to § 923.52.

Authority to regulate the size, capacity, weight, dimension, markings or pack of containers used in the handling of fresh sweet cherries was included in the order when promulgated in 1957. This authority was included in the order to facilitate container standardization and thus help establish orderly marketing conditions and increase producer returns.

The Committee meets prior to each season to consider recommendations for modification, suspension, or termination of any regulatory requirements for Washington sweet cherries that are issued on a continuing basis. Committee meetings are open to the public and interested persons may express their views at these meetings. The USDA reviews the Committee recommendations along with any supportive information submitted by the Committee, as well as information from other available resources, and determines whether modification, suspension, or termination of the regulatory requirements would tend to effectuate the declared policy of the Act.

At its February 28, 2006, meeting, the Committee recommended that the container regulations be entirely removed from the handling regulations. The Committee recommended that this rule be effective as early as May 1, 2006, to ensure that the earliest shipments of sweet cherries benefit from the relaxed regulations, and that container manufacturers have adequate time prior to the beginning of the shipping season to retool if new containers are ordered by the industry.

The container requirements provide the Washington cherry industry with container standardization to help ensure orderly marketing conditions and increased producer returns. Section 923.322(d) provides that: “No handler shall handle any lot of cherries, except cherries of the Rainier, Royal Anne, and similar varieties commonly referred to as “light sweet cherries”, unless such cherries are in containers which meet each of the following applicable requirements:

(1) The net weight of loose packed (jumble-filled) cherries in any container shall be 12 pounds or less, or 20 pounds or more. The net weight of face packed cherries in any container shall be 15 pounds, or 12 pounds or less: Provided, That containers with a net weight of 12 pounds or less may be packed together with like containers in a master shipping container.

(2) Subject to the provisions of paragraphs (b)(2)(i) and (ii) of this section, shipments of cherries may be handled in such experimental containers as have been approved by the Washington Cherry Marketing Committee.”

Paragraph (2) above refers to the provisions of § 923.322(b)(2)(i) and (ii), which specify that: “(i) All shipments handled in such containers shall be under the supervision of the committee; and (ii) at least 90 percent, by count, of the cherries in any lot of such containers shall measure not less than 54/64 inch in diameter, and not more than 5 percent, by count, may be less than 52/64 inch in diameter.” Because the provisions of (b)(2)(i) and (ii) refer to experimental containers exempt under 923.322(d)(2), this rule also removes both paragraphs from the handling regulations.

Comments made at the public meeting indicate that container standardization has contributed to orderly marketing in the past. Due to the changing dynamics in the fresh produce industry, however, buyers—at the wholesale, retail and consumer level—are seeking many more packaging options than have been available in the past. Handlers report that buyers are increasingly interested in non-traditional packaging options designed for better handling and greater consumer acceptance. Handlers also desire greater latitude in choosing the optimum weight for a particular type of pack. Of specific concern to this industry is the ability to pack cherries in containers with net weights of between 12 and 20 pounds—a weight range specifically barred under the container regulation. Packaging options could also include consumer-friendly “clam shell” containers of any desired net weight, or other similar containers designed to enhance the appearance of individual pieces of fruit.

Although § 923.322(d)(2) provides for experimental container exemptions, those handlers who have utilized this exemption in the past feel that the process is too cumbersome and time-consuming, thus failing to provide the optimal flexibility they need under current marketing conditions.

Regardless of the size, capacity, or type containers the industry may eventually use, the Committee believes that the Washington cherry industry desires flexibility in packaging dark-colored sweet cherries. This action will provide the industry with needed flexibility.

This rule not only removes the container regulations in § 923.322(d)), but also makes necessary conforming changes by removing § 923.322(b)(2)(i) and (ii), and removing references to container requirements in § 923.322(f)(1)(ii) and § 923.322(g).

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility.

There are approximately 1,500 cherry producers within the regulated production area and approximately 53 regulated handlers. Small agricultural producers are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $6,000,000.

For the 2005 shipping season, the Washington Agricultural Statistics Service has prepared a preliminary report showing that the total 113,000 ton fresh market sweet cherry utilization sold for an average of $2,830 per ton. Based on the number of producers in the production area, the average producer revenue from the sale of sweet cherries in 2005 is estimated at approximately $213,200 per year. In addition, the Committee reports that most of the industry's 53 handlers would have each averaged gross receipts of less than $6,000,000 from the sale of fresh sweet cherries last season. Thus, the majority of producers and handlers of Washington sweet cherries may be classified as small entities.

At its February 28, 2006, meeting the Committee recommended that the container regulations in § 923.322(d) be removed from the order's rules and regulations. Section 923.52(a)(3) of the order specifically authorizes the establishment of container regulations. Further, § 923.53 authorizes the modification, suspension, or termination of regulations issued pursuant to § 923.52. This relaxation in the regulations provides handlers with the ability to meet the rapidly changing wholesale, retail, and consumer demand for innovative product packaging, thus enhancing industry marketing flexibility and efficiency.

The Committee anticipates that this rule will not negatively impact small businesses. This rule removes the container requirements found under § 923.322(d) of the order's rules and regulations, and, thus, should provide the industry with greater marketing opportunities. The Committee believes that any additional costs this rule may have on the industry would be associated with the development and use of new containers. Such costs would likely be offset by new marketing opportunities.

The Committee discussed alternatives to its recommendation to remove the container regulations. The Committee explored the option of leaving the container regulations intact without change. This option was rejected as being an inadequate response to the demand for greater flexibility in the packaging of fresh cherries. Temporary suspension of the regulations was considered, and then discarded, as also being inadequate for the current marketing situation.

This rule will not impose any additional reporting or recordkeeping requirements on either small or large cherry handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

AMS is committed to compliance with the Government Paperwork Elimination Act (GPEA), which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.

In addition, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.

The Committee's meeting was widely publicized throughout the Washington cherry industry and all interested persons were invited to attend the meeting and participate in Committee deliberations. Like all Committee meetings, the February 28, 2006, meeting was a public meeting and all entities, both large and small, were able to express their views on this issue.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

This rule invites comments on removal of the container regulations under the Washington cherry marketing order. Any comments received will be considered prior to finalization of this rule.

After consideration of all relevant material presented, including the Committee's recommendation, and other information, it is found that the regulation removed by this action no longer tends to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined upon good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect and that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because: (1) This rule removes the container regulations for Washington sweet cherries for the 2006 shipping season and subsequent seasons; (2) this rule should be in effect by May 15, 2006, the date 2006 season shipments of the Washington sweet cherry crop are expected to begin, and this action should apply to the entire season's shipments; (3) the removal of the container regulations was recommended by the Committee at a public meeting and all interested persons had an opportunity to express their views and provide input; (4) Washington cherry handlers are aware of this recommendation and need no additional time to comply with the relaxed requirements; and (5) this rule provides a 60-day comment period, and any comments received will be considered prior to finalization of this rule.

The Direct and Counter-Cyclical Program (DCP), authorized by Farm Security and Rural Investment Act of 2002 (Pub. L. 107-171, May 13, 2002) (“2002 Act”), provides payments to eligible producers on farms enrolled for the 2002 through 2007 crop years. There are two types of DCP payments—direct payments and counter-cyclical payments. These payments provide income support to producers of eligible commodities and are based on historically-based acreage and yields and do not depend on the current production choices of the farmer. DCP replaces the Production Flexibility Contract (PFC) payments made under the Federal Agriculture Improvement and Reform Act of 1996 for the crop years 1996 through 2002. In addition to the commodities that were eligible for PFC payments, the 2002 Act also provides for direct and counter-cyclical payments for peanuts, soybeans, sunflower seed and other oilseeds.

This rule implements section 1102 of Title I of Subtitle A of the Deficit Reduction Act of 2005 (Pub. L. 109-171, February 8, 2006). This section provides that DCP advance direct payment percentages will be reduced for fiscal years 2006 and 2007 from 50 percent to 40 percent for the 2006 fiscal year, and to 22 percent for the 2007 program year. This rule amends the direct and counter-cyclical program regulations at 7 CFR 1412.502(b) to reduce the advance direct payment rate percentages accordingly. Producers will continue to have the option to receive advance direct payments during any month from December through September of the applicable fiscal year.

Section 1601(c) of the Farm Security and Rural Investment Act of 2002 (7 U.S.C 7991(c)), provides that the regulations needed to implement Title I of the 2002 Act (7 U.S.C. 7901 et seq.), including those involved here, may be promulgated without regard to the notice and comment provisions of 5 U.S.C. 553 or the Statement of Policy of the Secretary of Agriculture effective July 24, 1971 relating to notices of proposed rulemaking and public participating in rulemaking.

This rule is issued in conformance with Executive Order 12866, was determined to be economically significant and was reviewed by the Office of Management and Budget. The economic effects of this rule are summarized below.

It has been determined that the Regulatory Flexibility Act is not applicable to this rule because the CCC is not required by 5 U.S.C. 533 or any other law to publish a notice of proposed rulemaking for the subject matter of this rule.

The environmental impacts of this rule have been considered consistent with the provisions of 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 the FSA regulations for compliance with NEPA, 7 CFR part 799. FSA concluded that the rule requires no further environmental review because it is administrative in nature and no extraordinary circumstances or other unforeseeable factors exist which would require preparation of an environmental assessment or environmental impact statement.

This rule has been reviewed in accordance with Executive Order 12988. This rule will preempt State laws that are inconsistent with it. Before any legal action may be brought regarding a determination under this rule, the administrative appeal provisions set forth at 7 CFR parts 11 and 780 must be exhausted.

This program is not subject to the provisions of Executive Order 12372, which require intergovernmental consultation with State and local officials. See the notice related to 7 CFR part 3014, subpart V, published at 48 FR 29115 (June 24, 1983).

The rule contains no Federal mandates under the regulatory provisions of Title II of the Unfunded Mandates Reform Act of 1995 (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 the UMRA.

Section 1601(c) of the 2002 Act (7 U.S.C. 7991(c)) provides that the promulgation of regulations and the administration of Title I of the 2002 Act shall be made 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 program authorized by these regulations are not subject to review by OMB under the Paperwork Reduction Act.

This rule does not have sufficient Federalism implications to warrant the preparation of a Federalism Assessment. The provisions contained in this rule will not have substantial direct effect on States or their political subdivisions or on the distribution of power and responsibilities among the various levels of government.

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 FSA in particular to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. The forms and other information collection activities required for participation in the program are available electronically through the USDA eForms Web site at http://www.sc.egov.usda.gov for downloading. Applications may be submitted at the FSA county offices, by mail or by FAX. At this time, electronic submission is not available. Full development of electronic submission is underway.

The title and number of the Federal assistance program found in the Catalog of Federal Domestic Assistance to which this final rule applies are: 10.055—Direct and Counter-cyclical Payments Program (DCP).

Changing the advance direct payment percentage shifts about $0.305 billion of 2006-crop direct payments from FY 2006 to FY 2007 direct payments among FY's and shifts about $1.47 billion of 2007-crop direct payments from FY 2007 to FY 2008. About $90 million of 2007-crop direct payments is expected to shift from calendar year 2006 into calendar year 2007 because of the direct payment percentage change from 50 percent to 22 percent. While no net impact in nominal dollars on income is expected, the postponement of some advance payments does have some time value. The reduction in the real value of payments will be approximately $5 million for the 2006 crop and $22 million for the 2007 crop.

On June 15, 2005, we issued a proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an AD that would apply to Grob Model G 103 C Twin III SL sailplanes. This proposal was published in the Federal Register as a notice of proposed rulemaking (NPRM) on June 21, 2005 (70 FR 35568). The NPRM proposed to supersede AD 97-24-09 with a new AD that would require you to modify the propeller bearing and upper pulley wheel by installing a new securing plate and tightening the grooved nut to the new torque values.

We provided the public the opportunity to participate in developing this AD. We received no comments on the proposal or on the determination of the cost to the public.

We have carefully reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed except for minor editorial corrections. We have determined that these minor corrections:

• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

We estimate that this AD affects 8 sailplanes in the U.S. registry.

We estimate the following costs to do the modification:

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

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

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

For the reasons discussed above, I certify that this AD:

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

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

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

We prepared a summary of the costs to comply with this AD (and other information as included in the Regulatory Evaluation) and placed it in the AD Docket. You may get a copy of this summary by sending a request to us at the address listed under ADDRESSES. Include “Docket No. FAA-2005-20768; Directorate Identifier 2005-CE-16-AD” in your request.

This Federal Register document is accessible via the Internet at http://www.archives.gov/federal-register/publications.

In 1996, NMFS published a final rule (61 FR 34570, July 2, 1996) that consolidated six parts of the Code of Federal Regulations (CFR) into one new CFR part (50 CFR part 660). Among the actions in that rule was consolidation of regulations that implemented fishery conservation and management measures for fisheries operating in the exclusive economic zone (EEZ) off the west coast and in the western Pacific. The 1996 action reorganized the rules into a more logical and cohesive order, removed duplicative and outdated provisions, and made editorial changes for readability, clarity and uniformity in the regulatory language. The current action makes the regulations even better organized, and easier for the public to use.

Since the 1996 reorganization, there have been significant changes in the fisheries managed under 50 CFR part 660 and in the associated fishery regulations. New subparts have been added that cover west coast highly migratory species fisheries and western Pacific coral reef fisheries. Subparts that apply specifically to fisheries in the western Pacific are currently intermingled with subparts that apply to fisheries off the west coast, and several subparts have been changed substantially.

In 2004, NMFS established a new Pacific Islands Region and Pacific Islands Regional Office with responsibility for administering NMFS conservation and management programs in the western Pacific. Those responsibilities are no longer in the purview of the NMFS Southwest Region. Thus, the realignment of regulations for fisheries in the western Pacific is consistent with the new regional office that is responsible for their administration.

In addition to the above reasons for regulatory reorganization, the Western Pacific Fishery Management Council is in the process of creating fishery ecosystem plans that will apply ecosystem management principles to fisheries, consistent with the Magnuson-Stevens Fishery Conservation and Management Act. Those plans will shift management from a fishery or species basis (e.g., pelagic species, crustaceans, etc.) to one based on geographical areas (e.g., American Samoa, Hawaii, etc.). The move to ecosystems management will require reorganization of the regulations for western Pacific fisheries into geographic areas; such a reorganization will be facilitated by the current action.

This action redesignates those regulations in 50 CFR part 660 that cover fisheries in the western Pacific as regulations in a new 50 CFR part 665. Fisheries for pelagic species, crustaceans, bottomfish and seamount groundfish, precious corals and coral reef ecosystems in the western Pacific are managed by these regulations. After the reorganization, the regulations remaining in 50 CFR part 660 will include those fisheries that are managed by NMFS off the west coast. The restructuring allows interested fishermen, managers and the general public to readily access the regulations.

No substantive changes are being made to the regulations, but several administrative titles and telephone numbers are updated. In 50 CFR part 660, subpart A (general provisions) is not redesignated, but is edited to apply solely to west coast fisheries, and a new 50 CFR part 665, subpart A, is created for western Pacific fisheries.

The following table lists the redesignation of the subparts and sections:

Section 3507 of the PRA requires that agencies inventory and display a current control number assigned by the Director, Office of Management and Budget (OMB), for each agency information collection, and 15 CFR 902.1(b) identifies the location of NOAA regulations for which OMB approvals have been issued. Because this final rule codifies many recordkeeping and reporting requirements, 15 CFR 902.1(b) is revised to reference correctly the new sections resulting from the reorganization.

The following table lists the redesignation of the NOAA PRA approvals for regulatory requirements.

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

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

The following collection of information requirements have already been approved by OMB for U.S. fishing activities:

1. Approved under 0648-0214. (1) Pacific Islands Region (PIR) logbook family of forms estimated at 5 minutes (min) per reporting action; and (2) pre-trip and post-landing notifications estimated at 5 min per reporting action; (3) experimental fishing reports estimated at 4 hours (hr) per reporting action; (4) sales and transshipment reports estimated at 5 min per reporting action; (5) report on gear left at sea estimated at 5 min per reporting action; (6) claims for reimbursement for lost fishing time estimated at 4 hr per claim; (7) request for pelagics area closure exemption estimated at 1 hr per request; and (8) observer placement meetings estimated at 1 hr per reporting action (§§ 665.14, 665.17, 665.23, 665.28, 665.43, 665.63, and 665.65).

2. Approved under 0648-0360. PIR gear identification estimated at 0.5 hr per reporting action (§§ 665.16, 665.24, 665.48, and 665.606).

3. Approved under 0648-0441. PIR vessel monitoring system, (1) installation, estimated at 4 hr per reporting action; (2) repair and maintenance, estimated at 2 hr per reporting action; and (3) hourly automated position reports, estimated at 24 sec per day (§ 665.25).

4. Approved under 0648-0456. PIR seabird interaction reporting, (1) at-sea notification, estimated at 1 hr per reporting action; (2) reporting on recovery data form, estimated at 1 hr per reporting action; and (3) specimen tagging, estimated at 0.5 hr per reporting action (§ 665.35).

5. Approved under 0648-0462. PIR coral reef logbook reporting, (1) at-sea notification, estimated at 3 min per reporting action; (2) logbook reporting, estimated at 0.5 hr per reporting action; and (3) transshipment reports, estimated at 15 min per reporting action (§ 665.604).

6. Approved under 0648-0463. PIR coral reef special permit, (1) application, estimated at 2 hr per application; and (2) special permit appeals, estimated at 3 hr per appeal (§ 665.602).

7. Approved under 0648-0490. (1) PIR permit family of forms estimated at 0.5 hr per permit action; (2) experimental fishing permits, estimated at 2 hr per application (§§ 665.13, 665.17, and 665.21(k)); and (3) appeals from permit actions estimated at 2 hr per permit appeal (§§ 665.13, 665.21(k), 665.27, 665.41, 665.61, and 665.81).

Pursuant to 5 U.S.C. 553(b)(B), the Assistant Administrator for Fisheries, NOAA, (AA) finds good cause to waive prior notice and opportunity for public comment, as such notice and comment would be unnecessary. These procedures are unnecessary because no substantive changes are being made pursuant to this final rule. The only action currently being taken is to reorganize the western Pacific regulations into a new part, and to change the cross references to the previous part so as to reflect the reorganization. For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).

In FR Doc. 06-3011 appearing on page 16424 in the Federal Register of Friday, March 31, 2006, the following correction is made:

The collection of information in these final regulations was not proposed in the preceding notice of proposed rulemaking. The collection of information has been reviewed in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) and, pending receipt and evaluation of public comments, approved by the Office of Management and Budget under control number 1545-1990.

The collection of information is in §§ 1.338-11T(e)(2), 1.338(i)-1(c), 1.381(c)(22)-1(c), 1.1060-1(a)(2). This information is required by the IRS to allow an insurance company permission to cease using its historical loss payment pattern and to allow parties to a transaction under section 338, to an applicable asset acquisition under section 1060, or to a distribution or reorganization to which section 381 applies to file a retroactive election to apply these regulations to transactions completed before the effective dates of these regulations. The likely recordkeepers are business or other for-profit institutions.

The estimated burden is as follows:

Estimated total annual reporting and/or recordkeeping burden: 12 hours.

Estimated average annual burden per respondent: 1 hour.

Estimated number of respondents: 12.

Estimated annual frequency of responses: once.

Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, Washington, DC 20224. Any such comments should be submitted not later than June 9, 2006.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number assigned by the Office of Management and Budget.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

On March 8, 2002, the IRS and the Department of Treasury published a notice of proposed rulemaking in the Federal Register (REG-118861-00, 2002-1 C.B. 651 [67 FR 10640]) (the proposed regulations) that sets forth rules applying to taxable acquisitions and dispositions of insurance businesses, including those that are deemed to occur when an election under section 338 of the Internal Revenue Code (Code) is made.

The proposed regulations generally treat the transfer of insurance or annuity contracts and the assumption of related reserve liabilities that are deemed to occur when an election under section 338 is made consistently with the treatment of assumption reinsurance transactions entered into in the ordinary course of business under § 1.817-4(d) (and other provisions of subchapter L of chapter 1, subtitle A of the Code and the regulations promulgated thereunder). The proposed regulations provide similar rules for acquisitions of insurance businesses governed by section 1060, whether effected through assumption or indemnity reinsurance. Thus, in the case of both a deemed and an actual transfer of an insurance business, the proposed regulations provide that the ceding company (in the case of a section 338 election, old target) is treated as having income in the amount of the reduction in its reserves and having a deduction for the consideration paid for the reinsurer's assumption of those liabilities, and the reinsurer (in the case of a section 338 election, new target) is treated as receiving premium income for its assumption of reserve liabilities and having a deduction for its increase in reserves (the latter usually offsetting in amount the former). The proposed regulations also provide that the consideration allocated to the value of the insurance contracts acquired in the assumption reinsurance transaction is treated as an amount paid by the reinsurer to purchase intangible assets and as ordinary income to the ceding company.

The proposed regulations depart from the rules governing assumption reinsurance transactions effected in the ordinary course of business in some circumstances to account for differences that occur because the assumption reinsurance transaction occurs as part of a larger acquisitive transaction. In an assumption reinsurance transaction effected in the ordinary course of business, the total consideration paid for the transfer of insurance contracts and assumption of related liabilities is known. Furthermore, the rules in § 1.817-4(d) assume that the only intangible asset transferred in such an assumption reinsurance transaction is the insurance in force which can then be valued using the residual method. Thus, if premiums and ceding commissions are not separately stated, they can be extrapolated from the known elements with a reasonable degree of accuracy. However, when the assumption reinsurance transaction occurs as part of a larger acquisitive transaction, the total consideration paid by the purchaser is not solely for the acquisition of insurance contracts and the liabilities assumed are not solely for the risk on the insurance contracts. In these circumstances, the extrapolated values would not accurately reflect the amount of the items. Accordingly, the proposed regulations modify the general rules for assumption reinsurance transactions to account for these differences.

Written comments were received in response to the proposed regulations, and a public hearing was held on September 18, 2002. Two commentators requested to speak at the hearing. After consideration of all the comments, the proposed regulations are adopted as amended by this Treasury decision. In general, the final regulations follow the approach of the proposed regulations with some revisions. The more significant comments and revisions are discussed in the order in which they appear in the regulations. In addition to the revisions discussed, the final regulations revise the language of the proposed regulations in some places to clarify the intent of the IRS and Treasury Department or to make the regulations better conform to the terminology and usage of the general section 338 regulations.

Section 197(f)(5) provides that, in the case of any amortizable section 197 intangible resulting from an assumption reinsurance transaction, the amount taken into account as the adjusted basis of such intangible is the excess of (A) the amount paid or incurred by the acquirer under the assumption reinsurance transaction over (B) the amount required to be capitalized under section 848 in connection with the transaction. Under section 848, an insurance company is required to capitalize an amount of otherwise deductible expenses equal to a percentage of the net premiums for the taxable year for certain categories of insurance contracts. The capitalized amounts, commonly referred to as deferred acquisition costs, or “DAC,” are amortized on a straight-line basis over 120 months.

Section 197(f)(5) is designed to ensure that the DAC amounts attributable to an assumption reinsurance transaction are amortized over the period specified by section 848 rather than the longer period under section 197. To achieve this result, the adjusted basis of the amortizable section 197 intangible resulting from an assumption reinsurance transaction is recognized only to the extent that the amount paid or incurred by the acquirer for the relevant contracts exceeds the DAC taken into account under section 848 as a result of the transaction.

The proposed regulations provide rules to determine the amounts paid or incurred for amortizable section 197 intangibles with respect to contracts acquired as a result of assumption reinsurance transactions occurring as part of transactions governed by section 1060 or section 338. The proposed regulations also provide rules for purposes of determining the DAC amounts for the transactions. See proposed § 1.197-2(g)(5).

Under the proposed regulations, the amount paid or incurred by the acquirer under the assumption reinsurance transaction in a transaction governed by section 338 or 1060 is the amount of adjusted grossed up basis (AGUB) or consideration allocable to the insurance contracts under the residual method. The amount required to be capitalized under section 848 in connection with the assumption reinsurance transaction is determined by multiplying the acquirer's specified policy acquisition expenses for the taxable year by a fraction, the numerator of which is the total tentative positive capitalization amount for the relevant group of acquired insurance contracts and the denominator of which is the total tentative required capitalization amount for the taxable year for all specified insurance contracts. The tentative positive capitalization amount for the relevant group of acquired insurance contracts is the net positive consideration received for the contracts in the assumption reinsurance transaction multiplied by the percentage factor applicable to the contracts under section 848(c).

An insurance company's DAC amount may not exceed the company's general deductions for the taxable year. See section 848(c). The amortization of intangibles under section 197 is a general deduction relevant in computing DAC. However, the amount of amortization under section 197 cannot be calculated until section 197(f)(5) is applied. To avoid complex calculations, for purposes of calculating the basis of amortization, the proposed regulations presume that one-half of the consideration allocated to the insurance contracts is amortizable under section 197. See proposed § 1.197-2(g)(5)(i)(D)(2). Comments were requested regarding alternative approaches to calculating the basis for DAC amounts and section 197 amortization.

A number of comments were received relating to the proposed regulations under section 197(f)(5). Commentators requested that the final regulations clarify that section 197(f)(5) applies only to assumption reinsurance transactions, and not to indemnity reinsurance transactions. Commentators asked that the final regulations clarify that the full amount of consideration allocable to the reinsured contracts is currently deductible under section 848(g) when the provisions of section 848 apply to an indemnity reinsurance transaction that occurs as part of a section 1060 acquisition of an insurance business. Commentators also expressed concern that the proposed regulations could cause an acquirer's DAC under section 848 to be subject to the general deductions cap in section 848(c) despite the existence of a substantial ceding commission. Commentators requested that the final regulations clarify that the election under § 1.848-2(g)(8) is available to allow old target and new target in a deemed asset sale governed by section 338(h)(10) to determine the amount of DAC attributable to the transaction without regard to the general deductions limitation.

The temporary and proposed regulations generally follow the proposed rules under section 197(f)(5), subject to several modifications. In particular, the temporary and proposed rules build on the method under § 1.848-2(g) of the existing regulations for determining the amounts capitalized under section 848 for a reinsurance agreement. Under the temporary and proposed rules, the amount of expenses capitalized under section 848 as a result of an assumption reinsurance transaction equals the lesser of (A) the required capitalization amount for the transaction, or (B) the amount of general deductions allocable to the transaction. The temporary and proposed rules also clarify that in the event that the acquirer purchases more than one category of specified insurance contracts, the determination of the amount capitalized under section 848 is made as if each category were transferred in a separate assumption reinsurance transaction.

The temporary and proposed regulations also modify the special rule in the proposed regulations with respect to the interplay between section 197(f)(5) and section 848 as regards the determination of the acquirer's general deductions under section 848(c)(2). Under the temporary and proposed rules, an acquirer will determine its general deductions as if the entire amount paid or incurred for the acquired contracts were allocable to an amortizable section 197 intangible.

If the acquirer has a capitalization shortfall (i.e., the amount of general deductions allocable to the assumption reinsurance transaction is less than the required capitalization amount for the transaction), the temporary and proposed regulations permit the acquirer and the ceding company to elect under § 1.848-2(g)(8) to determine the amount capitalized under section 848 without regard to the general deductions limitation. The additional amounts capitalized by the acquirer as a result of the election are treated as first reducing the adjusted basis of the amortizable section 197 intangible with regard to the insurance contracts acquired in the assumption reinsurance transaction, before reducing the acquirer's otherwise deductible expenses. The temporary and proposed rules generally allow the acquirer to amortize a larger amount over the period specified by section 848 as compared to the proposed regulations.

The temporary and proposed regulations generally apply, on a cut-off basis, to acquisitions and dispositions on or after April 10, 2006. Thus, there is no adjustment under section 481(a). Taxpayers must make the change on their income tax return and should not file a Form 3115, Application for Change in Accounting Method. Taxpayers are permitted, however, to apply the regulations to acquisitions before that date on a transaction-by-transaction basis, with an adjustment under section 481(a). The temporary and proposed regulations provide a procedure for taxpayers to obtain automatic consent of the Commissioner to do so.

Proposed § 1.197-2(g)(5)(ii)(A)(2) provides that basis recovery with respect to a section 197(f)(5) intangible transferred through indemnity reinsurance is permitted when sufficient economic rights relating to the insurance contracts that gave rise to the section 197(f)(5) intangible have been transferred. Sufficient economic rights are treated as transferred when the ceding company transfers the right to future income on the contracts. The proposed regulations also provide rules governing the amount of loss recognized on the disposition of a section 197(f)(5) intangible. The proposed regulations requested comments whether additional guidance should address other situations or issues.

Several commentators requested that the final regulations clarify when sufficient economic rights in a section 197(f)(5) intangible are transferred through indemnity reinsurance as well as additional examples to address situations relating to transfers through indemnity reinsurance of less than 100 percent of the insurance contracts that gave rise to the section 197(f)(5) intangible. The IRS and Treasury Department continue to believe that the rules contained in these regulations should refer to general tax principles, and will as needed, address these issues in future published guidance.

When a section 338 election is made for an insurance company, § 1.338-11(d) of the proposed regulations provides that new target must capitalize its increases in reserves for any acquired contracts in the deemed asset sale. Similar principles apply for an applicable asset acquisition of an insurance business under section 1060. The proposed regulations generally require capitalization of increases in reserves for the acquired contracts in excess of cumulative annual increases of two percent per year from the acquisition date reserves. However, the proposed regulations do not require capitalization to the extent the increases in reserves reflect the time value of money, to the extent the increases in reserves occur while new target is under state receivership, or to the extent the deduction for the increases in reserves is spread over the 10 succeeding taxable years under section 807(f).

Many commentators objected to the rule requiring capitalization for increases in reserves after the transaction date. They questioned the justification for the rule, stating that the rule was inconsistent with, and overrode, principles established under subchapter L for determining losses incurred. Commentators argued that, under subchapter L principles, reserve liabilities are not treated like contingent liabilities and that it was inappropriate to treat the reserves as contingent liabilities even for the limited purposes of the regulation. Commentators also requested that the application of the rule be restricted to cases of abuse because the ceding company's reserves assumed in the transaction are fair and reasonable estimates under Subchapter L as of the transaction date.

The commentators' objections largely ignore the fact that the proposed regulations blend elements of the asset purchase model common to most taxpayers that dispose of or acquire assets for consideration that includes the discharge of liabilities and the services model that generally applies to insurance companies. Treating increases in reserves for acquired contracts similarly to contingent liabilities under the asset purchase model is just one aspect of that amalgam.

Under the asset purchase model, assumed contingent liabilities are an element of the consideration for which a buyer acquires assets. Thus, a buyer includes the contingent liability in its cost for the acquired assets. However, a buyer may not include the contingent liability in its cost until the liability is incurred for Federal income tax purposes. The buyer must capitalize the liability in the cost of the acquired assets even if the buyer could have currently deducted the liability had it arisen in the buyer's historic business. Under the asset purchase model, the buyer does not realize any income for the assumption of the contingent liability; the buyer merely has bought assets. See Commissioner v. Oxford Paper, 194 F.2d 190 (2d Cir. 1951).

Under the services model, the seller (or ceding company) is treated as paying a premium to the buyer (or reinsurer) to assume the risk on its insurance contracts. The reinsurer includes in income the receipt of the premium and has a deduction for its increase in reserves for the additional risks assumed in the transaction. The amount of the premium income is generally equal to the consideration paid by the ceding company, that is, the fair market value of the assets that the ceding company transfers to the reinsurer in the transaction (though it may not be less than the amount of the reinsurer's increase in tax reserves, see § 1.817-4(d)(2)(iii)). Thus, when the fair market value of the assets that the ceding company transfers exceeds the reinsurer's increase in tax reserves for the additional risks assumed in the transaction, the reinsurer has net income. See § 1.817-4(d)(3) Example 4. Under the services model, no liabilities are treated as contingent liabilities. The reserve rules effectively treat increases to reserves for new risks as fixed liabilities and increases to reserves for existing risks as period expenses (similar to interest).

The proposed regulations blend the asset purchase model and the services model by—

(1) Using the residual method of sections 338 and 1060 to determine the value of goodwill and going concern value (which assumes that the value of all assets other than goodwill and going concern value is readily determinable) rather than the residual method of § 1.817-4(d) to determine the value of insurance in force (which assumes that the value of all assets other than insurance in force is readily determinable);

(2) Treating the amount of old target's tax reserves as a fixed liability as of the close of the acquisition date that is taken into account in determining the seller's aggregate deemed sales price (ADSP) under § 1.338-4 and the buyer's AGUB under § 1.338-5;

(3) Treating certain of new target's increases in reserves for any insurance contracts acquired in the deemed asset sale as a contingent liability as of the close of the acquisition date that becomes fixed when new target increases its reserves;

(4) Assuming that the amount of reinsurance premium is equal to the amount of old target's tax reserves, even though the ceding company would have to pay the reinsuring company an amount greater than the tax reserves in an arm's length reinsurance transaction. This rule ensures that the acquirer of an insurance business will not have immediate net taxable income merely as a result of the acquisition; and

(5) Not requiring capitalization for new target's increases in reserves due to the time value of money for any insurance contracts acquired in the deemed asset sale.

The proposed regulations generally treat an insurance company's assumption of contingent liabilities related to insurance contracts more favorably than a noninsurance company's assumption of a similar contingent liability. The proposed regulations also treat an insurance company's assumption of contingent liabilities related to insurance contracts more favorably than subchapter L does. As discussed previously, under subchapter L, a reinsurer may have net income when entering into an assumption reinsurance transaction. The amount of the income is the amount of the bargain, that is, the excess of fair market value of the assets the seller transfers over the amount of the consideration the buyer pays at closing (in an assumption reinsurance transaction, the latter measured by the reinsurer's increase in tax reserves for the risks assumed in the transaction). The proposed regulations, unlike subchapter L, require income to be recognized if there is an increase in certain reserves for the acquired insurance contracts.

The IRS and Treasury Department believe that a rule requiring capitalization of increases to reserves is a necessary corollary to the rule in the proposed regulations linking the amount of reinsurance deemed paid to the amount of old target's tax reserves at the time of the assumption reinsurance transaction (with the concomitant result that new target has no income). The logical implication of the commentators' arguments would be that the buyer should have premium income in a bargain purchase. In addition, without requiring capitalization of at least some increases to reserves, there is an incentive for sellers to defer increases in reserves. This incentive results from the fact that while the seller is generally indifferent to an increase in reserves (the immediate deduction to the seller would be offset by a corresponding increase in amount realized of ADSP in the sale), a buyer would be entitled to an immediate deduction rather than increased basis from an increase in the seller's reserves.

In response to comments, the IRS and Treasury Department have decided to issue temporary regulations with these final regulations that continue to require capitalization (and concomitant treatment as premium) of certain reserve increases, but further limit the capitalization rule of the proposed regulations in a manner consistent with the application of subchapter L principles. See § 1.338-11T(d). After the deemed asset sale, the temporary regulations apply subchapter L principles to new target. Under the temporary regulations, capitalization is required only for increases in reserves that clearly reflect a so called “bargain purchase” (that is, when the application of the residual method clearly indicates the initial understatement of the reserve). The amount of the bargain purchase is the amount of income the reinsurer would have otherwise recognized under § 1.817-4(d) if the final regulations (and proposed regulations) had not adopted the convention that the reinsurance premium paid by the seller to the buyer is deemed to equal the seller's closing tax reserves, and were it not necessary to employ a residual method to account for the presence of non-insurance intangible assets.

Under the temporary regulations, new target is required to capitalize any increases in reserves for acquired contracts if the AGUB allocated to assets in Class I through Class V is less than the fair market value of the assets in those classes. Any deductions would continue to be capitalized until the basis of the assets in Class I through Class V is equal to their fair market value. This mechanism avoids the problem of valuing Class VI and Class VII intangibles. The approach of the temporary regulations essentially treats the ceding company as transferring no Class VI or Class VII assets to the reinsurer for the reinsurer's assumption of the liabilities on the acquired contracts. Because the temporary regulations limit the total amount of capitalization for increases in reserves for acquired contracts, the IRS and Treasury Department believe that it is no longer necessary to provide a time limit on when increases in reserves for acquired contracts are to be capitalized or to provide a floor below which increases in reserves are not capitalized. However the temporary regulations retain the other limits on capitalization in the proposed regulations.

Proposed § 1.338-11(b)(2) provides a rule that for purposes of allocating AGUB and ADSP, the fair market value of a specific insurance contract or group of insurance contracts is the amount of the ceding commission a willing reinsurer would pay a willing ceding company in an arm's length transaction for the reinsurance of the contracts if the gross reinsurance premium for the contracts were equal to old target's tax reserves for the contracts.

Commentators questioned the reliance of the proposed regulations upon tax reserves as a basis for valuing the contracts and asked that the value of the contracts be based on GAAP or statutory reserves, or an amount upon which the parties agree. The IRS and Treasury Department believe that using tax reserves as a basis for valuing the contracts is consistent with other areas in which tax reserves, not GAAP or statutory reserves, are used to compute taxable income. See, e.g., section 807 (prescribing rules for taking life insurance reserves and certain other reserves into account for purposes of computing life insurance company taxable income); section 846 (prescribing a methodology for discounting unpaid loss reserves for purposes of computing insurance company taxable income); and Rev. Proc. 90-36, (1990-2 C.B. 357) (computing up-front ceding commission paid by a reinsurer as the increase in the reinsurer's tax reserve liabilities resulting from the reinsurance transaction, minus the value of the net assets received, for purposes of capitalizing ceding commissions to comply with the Supreme Court decision in Colonial American Life Insurance Company v. Commissioner, 491 U.S. 244 (1989), (1989-2 C.B. 110, Ct. D. 2045). Moreover, in the context of a transaction governed by section 338 or 1060, the use of old target's tax reserves as a means of valuing the contracts is consistent with both (i) the treatment of old target's closing tax reserves as a liability in the computation of the seller's ADSP and the buyer's AGUB, and (ii) the general rule of § 1.817-4(d)(2)(iii), which treats the assuming company in an assumption reinsurance transaction as receiving premium income equal to at least the increase in its reserves.

The proposed regulations do not provide any special rules under section 846 for new target to apply old target's historical loss payment pattern as a result of a section 846(e) election made by old target because new target is generally treated as a new corporation that may adopt its own accounting methods without regard to the methods used by old target. See § 1.338-1(b).

Commentators believed that this result was inconsistent with the purpose of allowing a company to make a section 846(e) election. Commentators noted that a section 846(e) election is made for all eligible lines of business, determined by reference to the accident years for the line of business shown on the insurance company's annual statement. Additionally, commentators noted that the availability of the election should not depend upon the tax identity of new target after the section 338 election because the historical loss payment pattern is not a tax account, the pattern is determined by reference to nontax factors, and new target continues to operate in the same manner and legal form as old target.

In response to these comments, the temporary regulations contain a new rule that treats new target and old target as the same corporation for purposes of a section 846(e) election to use an insurance company's historical loss payment pattern. See § 1.338-1T(b)(2)(vii). Therefore, if old target has a section 846(e) election in effect, new target will continue to use the historical loss payment pattern of old target to discount unpaid losses, unless new target chooses to revoke the election. If new target revokes old target's section 846(e) election, new target will use the industry-wide factors determined by the Secretary to discount unpaid losses incurred in accident years beginning on or after the acquisition date. See § 1.338-11T(e)(2).

Section 1.381(c)(22)-1(b)(7)(i) of the proposed regulations provides that if one corporation distributes or transfers a substantial portion (50 percent or more) of an insurance business to another corporation in a transaction to which section 381 applies, then the acquiring corporation succeeds to the distributor or transferor corporation's shareholders surplus account, policyholders surplus account, and other accounts. However, under § 1.381(c)(22)-1(b)(7)(ii) of the proposed regulations, if an acquiring corporation in the section 381 transaction acquires less than 50 percent of the distributor or transferor corporation's insurance business, then the acquiring corporation succeeds only to a ratable portion (determined by reference to reserves) of the distributor or transferor corporation's shareholders surplus account, policyholders surplus account, and other accounts.

Commentators questioned whether the IRS and Treasury Department have the authority to relate the carryover of PSA to the percentage of business that was transferred to the acquiring corporation in a section 381 transaction. The IRS and Treasury Department believe that the rule in the proposed regulations is appropriate and that there is sufficient authority for the proposed rule. The legislative history to the 1984 Tax Reform Act indicates that the term indirect distribution is to be interpreted broadly to include any use of PSA funds for the indirect benefit of shareholders. H.R. Rep. No. 432, pt. 2, 98th Cong., 2d Sess. at 1410-11; Staff of the Joint Committee on Taxation, 98th Cong., 2d Sess., General Explanation of the Revenue Provisions of the Tax Reform Act of 1984, at 594 (1984), as well as Bankers Life and Casualty Co. v. United States, 79 AFTR2d (RIA) 1726 (N.D. Ill. 1996), aff'd on other grounds, 142 F.3d 973 (7th Cir. 1998), cert denied, 525 U.S. 961 (1998) (section 338(g) transaction results in an indirect distribution of old target's PSA). Accordingly, the final regulations adopt the rule as proposed in §§ 1.338-11(f) and 1.381(c)(22)-1(b)(7).

Section 1.381(c)(22)-1(b)(13) of the proposed regulations provides that any remaining balances of DAC or excess negative DAC carry over to a successor insurance company in a section 381 transaction. One commentator questioned whether a nonlife insurance company may succeed to DAC attributes under § 1.381(c)(22)-1. Another commentator believed positive DAC should not be carried over to a successor corporation in a section 381 transaction.

The IRS and Treasury Department believe that in a section 381 transaction, positive DAC, like negative DAC, is an attribute that is carried over to the acquiring corporation. Thus, the final regulations retain the rule in the proposed regulations that the remaining balances of DAC or excess negative DAC carry over to a successor insurance company in a section 381 transaction. See § 1.381(c)(22)-1(b)(13). However, the IRS and Treasury Department believe that a proportionality rule similar to the one the final regulations adopt at § 1.381(c)(22)-1(b)(7) for policyholder surplus accounts is appropriate because DAC is a tax accounting convention that relates to a line of business. Thus, the final regulations provide that when the acquiring corporation acquires 50 percent or more of the distributor or transferor corporation's insurance business (measured by its reserves for all of its contracts immediately before the earlier of the distribution or transfer or the adoption of the plan of liquidation or reorganization), the acquiring corporation will succeed to the distributor or transferor corporation's entire positive or negative DAC amount. To the extent an acquiring corporation in the section 381 transaction acquires less than 50 percent of the distributor or transferor corporation's insurance business, then only that percentage of positive or negative DAC remains. In addition, because some attributes under section 381(c)(22) and § 1.381(c)(22)-1 are equally relevant for life and nonlife insurance companies, the final regulations clarify that, except as otherwise provided, the rules in § 1.381(c)(22)-1 apply to any insurance company, whether a life or a nonlife company.

The final and temporary regulations are effective for transactions on or after April 10, 2006. Commentators asked for an election to apply the final regulations to transactions completed before April 10, 2006. The IRS and Treasury Department believe that the elective retroactivity of the final regulations is warranted and administrable. Thus, the final regulations permit new target and old target an election to apply the final regulations, in whole, to qualified stock purchases occurring before April 10, 2006 if all taxable years for which the consequences of the section 338 election affect the computation of tax are open. In the case of a section 338 election for which a section 338(h)(10) election is made (or a section 338 election for a foreign target), new target's ability to elect to retroactively apply the final regulations does not depend upon old target making the election. Similarly, old target's ability to elect to retroactively apply the final regulations does not depend upon new target making the election. However, in the case of a section 338 election for a domestic target for which no section 338(h)(10) election is made, the purchasing corporation generally controls both the filing of new target's returns and old target's final return. Accordingly, when no section 338(h)(10) election is made and the target is a domestic corporation, new target and old target must both elect to retroactively apply the final regulations. If one of new target or old target cannot make the election, the other is not permitted to make the election. See § 1.338(i)-1(c).

It has been determined that the final regulations issued with respect to section 197 and section 338 are not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It is hereby certified that the collection of information requirement in these regulations will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that these regulations do not have a substantial economic impact because they merely provide guidance about the operation of the tax law in the context of acquisitions of insurance companies and businesses. Moreover, they are expected to apply predominantly to transactions involving larger businesses. In addition, the collection of information requirement merely requires a taxpayer to prepare a written representation that contains minimal information relating to the making of an election. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Under section 7805(f) of the Code, the notice of proposed rulemaking preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. The Chief Counsel for Advocacy did not submit any comments on the regulations.

It has been determined that the temporary regulations issued with respect to sections 197 and 338 are not a significant regulatory action as defined in Executive Order 12866. Therefore a regulatory assessment is not required. These regulations provide guidance relating to the taxable acquisition and disposition of insurance companies. Additionally, these regulations provide rules by which a party to the transaction may elect to apply these rules to transactions which occur prior to April 10, 2006. Based on these considerations, it is determined that these temporary regulations will provide taxpayers with the necessary guidance and authority to ensure equitable administration of the tax laws. Because of the need for immediate guidance, notice and public procedure are impracticable and contrary to the public interest pursuant to 5 U.S.C. 533(b) and the delayed effective date is not required pursuant to 5 U.S.C. 553(d). For applicability of the Regulatory Flexibility Act to these temporary regulations, please refer to the cross-reference notice of proposed rulemaking published elsewhere in this Federal Register. Pursuant to section 7805(f) of the Code, these temporary regulations will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.

It has been determined that the final regulations issued with respect to sections 381, 846 and 1060 are not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and, because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Under section 7805(f) of the Code, the notice of proposed rulemaking preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. The Chief Counsel for Advocacy did not submit any comments on the regulations.

The principal author of the final regulations is Mark J. Weiss, Office of Chief Counsel (Corporate), IRS. However, other personnel from the IRS and Treasury Department participated in their development.

The proposed rule was published in the January 27, 2006, Federal Register (71 FR 4541) for a 45-day public comment period. NARA received no comments on the proposed rule. The final rule is published without change.

This final rule is being issued pursuant to the provisions of section 102(b)(1) of Executive Order 12829, January 6, 2003 (58 FR 3479), as amended by Executive Order 12885, December 14, 1993, (58 FR 65863). The purpose of this Directive is to assist in implementing the Order; users of the Directive shall refer concurrently to that Order for guidance. As of November 17, 1995, ISOO became a part of NARA. The drafting, coordination, and issuance of this Directive fulfills one of the responsibilities of the implementation delegated to the ISOO Director. ISOO maintains oversight over Executive Order 12958, as amended, and policy oversight over Executive Order 12829, as amended. Nothing in this directive shall be construed to supersede the authority of the Secretary of Energy or the Nuclear Regulatory Commission under the Atomic Energy Act of 1954, as amended (42 U.S.C. 2011 et seq.), or the authority of the Director of Central Intelligence under the National Security Act of 1947, as amended, or Executive Order No. 12333 of December 8, 1981, or the authority of the Director of National Intelligence under the Intelligence Reform and Terrorism Prevention Act of 2004. Requirements of the latter Act will necessitate additional future changes to Executive Order 12829 and this implementing Directive. The interpretive guidance contained in this rule will assist agencies in implementing Executive Order 12829, as amended.

This rule is not a significant regulatory action for the purposes of Executive Order 12866. The rule is not a major rule as defined in 5 U.S.C. Chapter 8, Congressional Review of Agency Rulemaking. As required by the Regulatory Flexibility Act, we certify that this rule will not have a significant impact on a substantial number of small entities because it applies only to Federal agencies.

The Board is an administrative body that decides appeals from denials by agencies of original jurisdiction of claims for veterans' benefits, as well as occasional cases of original jurisdiction. The Freedom of Information Act (FOIA) requires federal agencies to make available for public inspection and copying final opinions made in the adjudication of cases. 38 U.S.C. 552(a)(2)(A).

The regulation in effect until April 10, 2006 provided a system for indexing Board decisions to facilitate access to the contents of the decisions. The index (BVA Index I-01-1) was published quarterly in microfiche form with an annual cumulation, and was made available to the public for review at VA offices around the country. However, technological advances in information management rendered this system obsolete. In fact, the Board has not indexed Board decisions in microfiche form for many years.

Currently, redacted Board decisions (i.e., decisions in which all personal identifiers except the Board-assigned docket number are removed) issued on or after January 1, 1992, are accessible to the public for inspection and copying on the Internet at http://www.index.va.gov/search/va/bva.html, as well as some commercial Web sites. The former indexing system for Board decisions was upgraded and replaced by a comprehensive word-searching system, by which the public may identify particular decisions issued. Redacted Board decisions are also available for public inspection and copying in the Board's Research Center.

In light of these improvements, we are revising Rule 1301(b) (38 CFR 20.1301(b)) of the Board's Rules of Practice to reflect current practice and procedure, and to allow flexibility in implementing future advances in technology and information management when necessary. We are adding a new section, designated as 38 CFR 20.1301(b)(1), which sets forth a general description of how the Board will fulfill its responsibility under FOIA to make available for public inspection and copying final opinions made in the adjudication of cases. Section 20.1301(b)(1) is crafted in general terms to encompass future advances in technology and information management, while setting forth the principles of popular accessibility and availability for public inspection and copying, as required by FOIA.

We are also revising some of the existing language in section 20.1301(b) to clarify that Board decisions issued prior to January 1, 1992, are archived and indexed in microfiche form. This section is designated as 38 CFR 20.1301(b)(2) and sets forth details regarding the indexing methods that are used to retrieve Board decisions issued prior to January 1, 1992. The regulation in effect until April 10, 2006 provided the address of a private company that previously prepared and maintained the BVA Index I-01-1. We removed this name and address and, as an alternative, direct the public to contact the Board's Research Center for further information on obtaining a copy of the index.

This final rule concerns agency organization, procedure or practice and, pursuant to 5 U.S.C. 553, is exempt from notice and comment and delayed effective date requirements.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in an expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any given year. This rule would have no such effect on State, local, or tribal governments, or the private sector.

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The Order classifies a rule as a significant regulatory action requiring review by the Office of Management and Budget if it meets any one of a number of specified conditions, including: having an annual affect on the economy of $100 million or more, creating a serious inconsistency or interfering with an action of another agency, materially altering the budgetary impact of entitlements or the rights of entitlement recipients, or raising novel legal or policy issues. VA has examined the economic, legal, and policy implications of this final rule and has concluded that it is not a significant regulatory action under Executive Order 12866.

The Secretary hereby certifies that this final rule contains no provisions constituting a collection of information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

The Secretary hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. This rule will affect VA beneficiaries and will not affect small businesses. Therefore, pursuant to 5 U.S.C. 605(b), this final rule is exempt from the initial and final regulatory flexibility analyses requirement of sections 603 and 604.

There is no Catalog of Federal Domestic Assistance number for this proposed rule.

1. Docket. EPA has established a docket for this action under Docket ID No. EPA-HQ-OAR-2004-0025; FRL-8053-5. Publicly available docket materials are available either electronically at http://www.regulations.gov or in hard copy at the Air and Radiation Docket in the EPA Docket Center, (EPA/DC) EPA West, Room B102, 1301 Constitution Ave., NW., Washington, DC. The EPA Docket Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the Air and Radiation Docket is (202) 566-1742. These documents are also available for review in hard-copy form at the following three EPA WIPP informational docket locations in New Mexico: in Carlsbad at the Municipal Library, Hours: Monday-Thursday, 10 a.m.-9 p.m., Friday-Saturday, 10 a.m.-6 p.m., and Sunday, 1 p.m.-5 p.m., phone number: 505-885-0731; in Albuquerque at the Government Publications Department, Zimmerman Library, University of New Mexico, Hours: vary by semester, phone number: 505-277-2003; and in Santa Fe at the New Mexico State Library, Hours: Monday-Friday, 9 a.m.-5 p.m., phone number: 505-476-9700. As provided in EPA's regulations at 40 CFR part 2, and in accordance with normal EPA docket procedures, if copies of any docket materials are requested, a reasonable fee may be charged for photocopying.

2. Electronic Access. You may access this Federal Register document electronically through the EPA Internet under the “Federal Register” listings at http://www.epa.gov/fedrgstr/.

The Waste Isolation Pilot Plant (WIPP) is a disposal system for transuranic (TRU) radioactive waste. Developed by the Department of Energy (DOE), WIPP is located near Carlsbad in southeastern New Mexico. At WIPP, radioactive waste is disposed of 2,150 feet underground in an ancient layer of salt which will eventually “creep” and encapsulate the waste. WIPP has a total capacity of 6.2 million cubic feet of waste.

Congress authorized the development and construction of WIPP in 1980 “for the express purpose of providing a research and development facility to demonstrate the safe disposal of radioactive wastes resulting from the defense activities and programs of the United States.” 1 The waste which may be emplaced in the WIPP is limited to TRU radioactive waste generated by defense activities associated with nuclear weapons; no high-level waste or spent nuclear fuel from commercial power plants may be disposed of at the WIPP. TRU waste is defined as materials containing alpha-emitting radioisotopes, with half lives greater than twenty years and atomic numbers above 92, in concentrations greater than 100 nano-curies per gram of waste.2

Most TRU waste proposed for disposal at the WIPP consists of items that have become contaminated as a result of activities associated with the production of nuclear weapons (or with the clean-up of weapons production facilities), e.g., rags, equipment, tools, protective gear, and organic or inorganic sludges. Some TRU waste is mixed with hazardous chemicals. Some of the waste proposed for disposal at the WIPP is currently located at Federal facilities across the United States, including locations in Idaho, New Mexico, Nevada, Ohio, South Carolina, Tennessee, and Washington.

The WIPP LWA, passed initially by Congress in 1992 and amended in 1996, is the statute that provides EPA the authority to oversee and regulate the WIPP. (Prior to the passage of the WIPP LWA in 1992, DOE was self-regulating with respect to WIPP; that is, DOE was responsible for determining whether its own facility complied with applicable regulations for radioactive waste disposal.) The WIPP LWA delegated to EPA three main tasks, to be completed sequentially, for reaching an initial compliance certification decision. First, EPA was required to finalize general regulations which apply to all sites—except Yucca Mountain—for the disposal of highly radioactive waste.3 These disposal regulations, located at Subparts B and C of 40 CFR Part 191, were published in the Federal Register in 1985 and 1993.4

Second, EPA was to develop criteria, by rulemaking, to implement and interpret the general radioactive waste disposal regulations specifically for the WIPP. In 1996, the Agency issued the WIPP Compliance Criteria, which are found at 40 CFR Part 194.5

Third, EPA was to review the information submitted by DOE and publish a certification decision.6 The Agency issued its certification decision on May 18, 1998, as required by Section 8 of the WIPP LWA (63 FR 27354-27406).

The WIPP LWA, as amended, required EPA to evaluate whether the WIPP site complied with EPA's standards for the disposal of radioactive waste. On May 18, 1998 (63 FR 27354-27406), EPA determined that the WIPP met the standards for radioactive waste disposal. This decision allowed the emplacement of radioactive waste in the WIPP to begin, provided that all other applicable health and safety standards, and other legal requirements, had been met. The first shipment of TRU waste was received at WIPP on March 26, 1999.

Although EPA determined that DOE met all of the applicable requirements of the WIPP Compliance Criteria in its original certification decision (63 FR 27354-27406; May 18, 1998), EPA also found that it was necessary for DOE to take additional steps to ensure that the measures actually implemented at the WIPP (and thus the circumstances expected to exist there) were consistent with DOE's Compliance Certification Application (CCA) and with the basis for EPA's compliance certification. To address these situations, EPA amended the WIPP Compliance Criteria, 40 CFR Part 194, and appended four explicit conditions to its certification of compliance for the WIPP.

Condition 1 of the certification applies to the panel closure system, which is intended, over the long-term, to block brine flow between waste panels in WIPP. In the CCA, DOE presented four options for the design of the panel closure system, but did not specify which one would be constructed at the WIPP facility. The Agency based its certification decision on DOE's use of the most robust design (referred to in the CCA as “Option D”). The Agency found the Option D design to be adequate, but also determined that the use of a Salado mass concrete—using brine rather than fresh water—would produce concrete seal permeabilities in the repository more consistent with the values used in DOE's performance assessment. Therefore, Condition 1 of EPA's certification required DOE to implement the Option D panel closure system at WIPP, with Salado mass concrete replacing fresh water concrete.

Conditions 2 and 3 of the final certification decision apply to activities conducted at waste generator sites that produce TRU waste proposed for disposal at WIPP. The WIPP Compliance Criteria (§§ 194.22 and 194.24) require DOE to have, in place, a system of controls to measure and track important waste components, and to apply quality assurance (QA) programs to waste characterization activities. At the time of EPA's proposed certification decision, the Los Alamos National Laboratory (LANL) was the only site to demonstrate the execution of the required QA programs and the implementation of the required system of controls. Therefore, EPA's certification constituted final approval under the WIPP LWA for DOE to ship waste for disposal at the WIPP only from LANL, and only for retrievably-stored (legacy) debris waste at LANL for which EPA had inspected and approved the applicable system of controls.

Before other waste can be shipped for disposal at WIPP, Conditions 2 and 3 state that EPA must separately approve the QA programs for other generator sites (Condition 2) and the waste characterization system of controls for other waste streams (Condition 3). The approval process includes an opportunity for public comment, and an inspection or audit of the waste generator site by EPA. The Agency's approval of waste characterization systems of controls and QA programs are conveyed by letter from EPA to DOE. In response to public comments on these conditions, the process for EPA approvals for waste generator site programs were incorporated into the body of the WIPP Compliance Criteria, in § 194.8. EPA also recently made changes to the compliance criteria in July 2004 (69 FR 42571-42583). The new provisions provide equivalent or improved oversight and better prioritization of technical issues in EPA inspections to evaluate waste characterization activities at DOE WIPP waste generator sites. The new provisions also offer more direct public input into EPA's decisions about what waste can be disposed of at WIPP. The Agency continues to conduct independent inspections to evaluate a site's waste characterization capabilities, consistent with Conditions 2 and 3.

Condition the certification applies to passive institutional controls (PICs). The WIPP Compliance Criteria require DOE to use both records and physical markers to warn future societies about the location and contents of the disposal system, and thus to deter inadvertent intrusion into the WIPP (§ 194.43). In the CCA, DOE provided a design for a system of PICs, but stated that many aspects of the design would not be finalized for many years (even up to 100) after closure. The PICs actually constructed and placed in the future must be consistent with the basis for EPA's certification decision. Therefore, Condition 4 of the certification requires DOE, prior to the submission of the final recertification application, to submit a revised schedule showing that markers and other measures will be implemented as soon as possible after closure of the WIPP. The Department also must provide additional documentation showing that it is feasible to construct markers and place records in archives as described in the CCA. After WIPP's closure, DOE will not be precluded from implementing additional PICs beyond those described in the application.

The complete record and basis for EPA's 1998 certification decision can be found in Air Docket A-93-02 in each of the dockets (in Washington, DC and the three locations in New Mexico) listed in Section 1.A.1 of this document.

WIPP must comply with EPA's radioactive waste disposal regulations, located at Subparts B and C of 40 CFR Part 191. These regulations limit the amount of radioactive material which may escape from a disposal facility, and protect individuals and ground water resources from dangerous levels of radioactive contamination. In addition, the Compliance Recertification Application (CRA) and other information submitted by DOE must meet the requirements of the WIPP Compliance Criteria at 40 CFR Part 194. The WIPP Compliance Criteria implement and interpret the general disposal regulations specifically for WIPP, and clarify the basis on which EPA's certification decision is made.

The WIPP must also comply with a number of other environmental and safety regulations in addition to EPA's disposal regulations—including, for example, the Solid Waste Disposal Act and EPA's environmental standards for the management and storage of radioactive waste. Various regulatory agencies are responsible for overseeing the enforcement of these Federal laws. For example, enforcement of some parts of the hazardous waste management regulations has been delegated to the State of New Mexico. The State is authorized by EPA to carry out the State's Resource Conservation and Recovery Act (RCRA) programs in lieu of the equivalent Federal programs. New Mexico's Environment Department reviews DOE's permit applications for treatment, storage, and disposal facilities for hazardous waste, under Subtitle C of RCRA. The State's authority for such actions as issuing a hazardous waste operating permit for the WIPP is in no way affected by EPA's recertification decision. It is the responsibility of the Secretary of Energy to report the WIPP's compliance with all applicable Federal laws pertaining to public health and the environment to EPA and the state of New Mexico.7 Compliance with environmental or public health regulations other than EPA's disposal regulations and WIPP Compliance Criteria is not addressed by today's action.

Since EPA's 1998 certification decision, the Agency has been monitoring and evaluating changes to the activities and conditions at WIPP. EPA monitors and ensures continuing compliance with EPA regulations through a variety of activities, including: Review and evaluation of DOE's annual change reports, monitoring of the conditions of compliance, site inspections and technical information exchanges.

At any time, DOE must report any planned or unplanned changes in activities pertaining to the disposal system that differ significantly from the most recent compliance application (§ 194.4(b)(3)). The Department must also report any releases of radioactive material from the disposal system (§ 194.4(b)(3)(iii), (v)). Finally, EPA may request additional information from DOE at any time (§ 194.4(b)(2)). This information allows EPA to monitor the performance of the disposal system and evaluate whether the certification must be modified, suspended, or revoked to prevent or quickly reverse any potential danger to public health and the environment.

Under § 194.4(b) DOE was required to submit a report of any changes to the conditions and activities at WIPP within six months of the 1998 certification decision and annually thereafter. DOE met this requirement by submitting the first change report in November 1998 and annually thereafter.

Since 1998, DOE's annual change reports have reflected the progress of quality assurance and waste characterization inspections, minor changes to DOE documents, information on monitoring activities, and any additional EPA approvals for changes in activities and conditions. All correspondence and approvals regarding the annual change reports can be found in EPA's Air Docket A-98-49, Categories II-B2 and II-B3.

As discussed previously, Condition 1 of the WIPP certification requires DOE to implement the Option D panel closure system at WIPP, with Salado mass concrete used in place of fresh water concrete. Since the 1998 certification decision, DOE has indicated that they would like to change the design of the Option D panel closure system selected by EPA (Air Docket A-98-49, Item II-B3-19). At the same time, EPA chose to defer review of a new panel closure design until after we issue the first recertification decision (Air Docket A-98-49, Item II-B3-42).

In November 2002, DOE requested permission to install only the explosion isolation portion of the Option D panel closure design until EPA and NMED can render their respective final decisions on DOE's request to approve a new design for the WIPP panel closure system. In December 2002, EPA approved DOE's request to install only the explosion wall and to extend the panel closure schedule until a new design is approved (Air Docket A-98-49, Item II-B3-44). As of March 2006, DOE has installed the isolation explosion wall for Panels 1 and 2. EPA expects DOE to re-submit a new panel closure design soon after this recertification decision.

Since 1998, the Agency has conducted numerous audits and inspections at waste generator sites in order to implement Conditions 2 and 3 of the compliance certification. Notices announcing EPA inspections or audits to evaluate implementation of QA and waste characterization (WC) requirements at waste generator facilities were published in the Federal Register and also announced on EPA's WIPP Web site (http://www.epa.gov/radiation/wipp) and WIPP e-mail listserv. The public has had the opportunity to submit written comments on the waste characterization and QA program plans submitted by DOE in the past, and based on the newly-revised WIPP Compliance Criteria, are now able to submit comments on EPA's proposed waste characterization approvals (See 69 FR 42571-42583). As noted above, EPA's decisions on whether to approve waste generator QA program plans and waste characterization systems of controls—and thus, to allow shipment of specific waste streams for disposal at WIPP—are conveyed by a letter from EPA to DOE. The procedures for EPA's approval are incorporated in the amended WIPP Compliance Criteria in § 194.8.

Since 1998, EPA has audited and approved the QA programs at Carlsbad Field Office (CBFO), Washington TRU Solutions (WTS), Sandia National Laboratory (SNL), and at 11 other DOE organizations. Following the initial approval of a QA program, EPA conducts follow-up audits to ensure continued compliance with EPA's QA requirements. EPA's main focus for QA programs has been the demonstration of operational independence, qualification, and authority of the QA program at each location.

EPA has approved waste characterization (WC) activities at eight waste generator sites since 1998, including Idaho National Laboratory, Hanford, Rocky Flats Environmental Technology Site, Savannah River Site, and the Nevada Test Site. EPA inspects waste generator sites to ensure that waste is being characterized and tracked according to EPA requirements. EPA's WC inspections focus on the personnel, procedures and equipment involved in WC. A record of EPA's WC and QA correspondences and approvals can be found in Air Docket A-98-49, Categories II-A1 and II-A4.

EPA will evaluate DOE's compliance with Condition 4 of the certification when DOE submits a revised schedule and additional documentation regarding the implementation of PICs. This documentation must be provided to EPA no later than the final recertification application. Once received, the information will be placed in EPA's public dockets, and the Agency will evaluate the adequacy of the documentation. During the operational period when waste is being emplaced in WIPP (and before the site has been sealed and decommissioned), EPA will verify that specific actions identified by DOE in the CCA, CRA, and supplementary information (and in any additional documentation submitted in accordance with Condition 4) are being taken to test and implement passive institutional controls.

The WIPP Compliance Criteria provide EPA the authority to conduct inspections of activities at the WIPP and at all off-site facilities which provide information included in certification applications (§ 194.21). Since 1998, the Agency conducted periodic inspections to verify the adequacy of information relevant to certification applications. EPA has conducted annual inspections at the WIPP site to review and ensure that the monitoring program meets the requirements of § 194.42. EPA has also inspected the emplacement and tracking of waste in the repository. The Agency's inspection reports can be found in Air Docket A-98-49, Categories II-A1 and II-A4.

EPA and DOE held numerous technical exchanges since the 1998 certification decision. At these exchanges, EPA and DOE discussed preparations for recertification, activity schedules, changes that may be requested by DOE, and other technical issues. The materials distributed at these meetings can be found in EPA Air Docket A-98-49, Category II-B3.

EPA recertifies that DOE's WIPP continues to comply with the requirements of Subparts B and C of 40 CFR Part 191. The following information describes EPA's determination of compliance with each of the WIPP Compliance Criteria specified by 40 CFR Part 194.

40 CFR part 194 sets out those elements which the Agency requires to be in any complete compliance application. In general, compliance applications must include information relevant to demonstrating compliance with each of the individual sections of 40 CFR Part 194 to determine if the WIPP will comply with the Agency's radioactive waste disposal regulations at 40 CFR Part 191, Subparts B and C. The Agency published the “Compliance Application Guidance for the Waste Isolation Pilot Plant: A Companion Guide to 40 CFR Part 194” (CAG) which provided detailed guidance on the submission of a complete compliance application (EPA Pub. No. 402-R-95-014, Air Docket A-93-02, Item II-B2-29).8

To make its decision, EPA evaluated basic information about the WIPP site and disposal system design, as well as information which addressed all the provisions of the compliance criteria. As required by § 194.15(a), DOE's recertification application updated the previous compliance application with sufficient information for the Agency to determine whether or not WIPP continues to be in compliance with the disposal regulations.

The first step in recertification is termed the “completeness determination.” “Completeness” is a key, administrative step that EPA uses to determine that the CRA addresses all the required regulatory elements and provides sufficient information for EPA to conduct a full, technical review. Following receipt of the CRA on March 26, 2004, EPA began to identify areas of the application where additional information was needed. A May 24, 2004, Federal Register notice announced availability of the CRA and opened the official public comment period on the CRA. Over the course of the following 19 months, the Agency submitted six official letters (May 20, 2004; July 12, 2004; September 2, 2004; December 17, 2004; February 3, 2005; and March 4, 2005) to DOE requesting additional information regarding the CRA. The Department responded with a series of 11 letters (July 15, 2004; August 16, 2004; September 7, 2004; September 29, 2004; October 20, 2004; November 1, 2004; December 17, 2004; January 19, 2005; March 21, 2005; May 11, 2005; and September 20, 2005) submitting all of the requested supplemental information to EPA. On September 29, 2005, EPA announced that DOE's recertification application was complete (70 FR 61107-61111).

EPA also relied on materials prepared by the Agency or submitted by DOE in response to EPA requests for specific additional information necessary to address technical sufficiency concerns. For example, EPA directed DOE to conduct a revised performance assessment—referred to as the performance assessment baseline calculation (PABC)—to address technical issues. All requests for additional technical information and the DOE responses are located in EPA's Air Docket A-98-49, Categories II-B2 and II-B3. Though not an official rulemaking, the Agency also considered public comments related to recertification, concerning both completeness and technical issues.

In summary, EPA's recertification decision is based on the entire record available to the Agency, which is located in EPA's Air Docket A-98-49 (FMDS Docket ID No. EPA-HQ-OAR-2004-0025). The record consists of the complete CRA, supplementary information submitted by DOE in response to EPA requests for additional information, technical reports generated by EPA, EPA audit and inspection reports, and public comments submitted on EPA's proposed recertification decision during the public comment period. (Most of these documents can also be found on EPA's WIPP Web site at http://www.epa.gov/radiation/wipp).

EPA's technical review evaluated compliance of the CRA with each section of the WIPP Compliance Criteria. The Agency focused its review on areas of change relative to the original certification decision as identified by DOE, in order to ensure that the effects of the changes have been addressed. As with its original certification decision, EPA's evaluation of DOE's demonstration of continuing compliance with the disposal regulations is based on the principle of reasonable expectation. 40 CFR 191.13(b) states, “proof of the future performance of a disposal system is not to be had in the ordinary sense of the word in situations that deal with much shorter time frames. Instead, what is required is a reasonable expectation, on the basis of the record before the implementing agency, that compliance with § 191.13 (a) will be achieved.” As discussed in 40 CFR Part 191, and applied to the 1998 certification decision, reasonable expectation is used because of the long time period involved and the nature of the events and processes at radioactive waste disposal facilities. There are inevitable and substantial uncertainties in projecting disposal system performance over long time periods. EPA applies reasonable expectation to the evaluation of both quantitative (i.e., performance assessment) and qualitative (i.e., assurance requirements) aspects of any compliance application.

According to § 194.14, any compliance application must include, at a minimum, basic information about the WIPP site and disposal system design. This section focuses on the geology, hydrology, hydrogeology, and geochemistry of the WIPP disposal system. A compliance application must also include information on WIPP materials of construction, standards applied to design and construction, background radiation in air, soil, and water, as well as past and current climatological and meteorological conditions. Section 194.15 states that recertification applications shall update this information to provide sufficient information for EPA to determine whether or not WIPP continues to be in compliance with the disposal regulations.

In Chapter 1 of the CRA, DOE identified changes to the disposal system since the 1998 certification decision. DOE correctly reviewed changes that were approved by EPA between the 1998 certification decision and the submission of the CRA. Changes included facility design changes such as the early closure of Panel 1, moving the repository horizon up 2.4 meters to clay seam G, and reducing the amount of magnesium oxide (MgO). EPA's evaluation and approval of these changes can be obtained from Air Docket A-98-49, Category II-B3.

The CRA also identified several changes to technical information relevant to §§ 194.14 and 194.15. The technical changes initiated by DOE or directed by EPA include: increased drilling rate, updated understanding of Culebra transmissivity and new transmissivity field calculations, new monitoring data including Culebra water levels, modified gas generation rate, updated actinide solubility and actinide solubility uncertainty values, and an increase in the uranium (+VI) solubility. Items related to the waste inventory were also updated: inclusion of supercompacted waste from Idaho National Laboratory (INL), new estimate of radionuclides, and DOE's use of pipe overpacks and ten-drum overpacks storage containers.

Although EPA considers these updates important to the current understanding of the disposal system, EPA determined that the changes, both individually and collectively, do not have a significant impact on the performance of the disposal system. EPA's Compliance Application Review Documents (CARDs) and Technical Support Documents (TSDs) thoroughly document EPA's review of the changes in DOE's compliance application. Today's notice summarizes the most important of these changes.

Culebra Dolomite: The Culebra Dolomite is considered by DOE to be the prime pathway for long-term radionuclide transport in ground water. As part of the required monitoring program, DOE has identified that the water levels in the Culebra have continued to fluctuate and generally increase, for unknown reasons. DOE hypothesizes that human influences, such as potash mining and petroleum production, may be responsible. DOE concluded that these human influences would be short-lived compared to the 10,000-year regulatory time period, and that effects on water levels are captured in the current performance assessment (PA). The CRA used water levels that were measured in 2000. These showed a change in water levels across the site since the CCA. The hydraulic gradient, or driving force across the site, is less for the CRA than the CCA, increasing estimated radionuclide travel times.

DOE used the Culebra hydrologic data in combination with new geologic information and new modeling software to develop transmissivity fields for the PA modeling. The approach DOE used was based on generally accepted approaches, which EPA considers as adequate. The new CRA geologic information provides better understanding of broad transmissivity changes than in the CCA, but it still lacks prediction power for transmissivity at specific points. EPA's review is discussed more thoroughly in the Performance Assessment Baseline Calculation (PABC) Technical Support Document (TSD) (Air Docket A-98-49, Item II-B1-16).

Chemistry changes: During the completeness review, EPA reviewed PA issues related to chemistry and identified several areas where DOE needed to further update or correct information. First, EPA required DOE to change the solubility of uranium (+VI) to a fixed value of 1×10−3 M based on experimental data that has become available since the CCA. Second, EPA required DOE to update the actinide solubility uncertainty range based on the fracture matrix transport (FMT) database and currently available experimental solubility data. Third, EPA required DOE to assume that microbial degradation would occur in 100% of the vectors because of new data on microbial survival in extreme environments. Prior to the PABC, DOE requested to update the gas generation rates used in PA calculations with results from the gas generation experiments which indicated a two-stage rate that was faster initially, but slower after several years. EPA agreed to the change based on new experimental data, which is discussed and documented in its TSDs (Air Docket A-98-49, Items II-B1-3 and II-B1-16).

Inventory changes: DOE updated the CCA inventory with data calls to the waste generator sites, in a process similar to the one used for the CCA. The waste inventory numbers have changed since the CCA because the waste generator sites have an improved understanding of the waste that is in storage. As DOE characterizes more waste, EPA expects the estimates to continue to change. EPA reviewed the information in the inventory, conducted several waste generator site visits, conducted corroborating decay calculations and determined that DOE's process is adequate. DOE's supplemental waste inventory documentation provided this information (Air Docket A-98-49, Category II-B2; see also CRA CARD 24).

In conclusion, EPA finds that DOE has adequately characterized and assessed the site characteristics for the purposes of the PA and has demonstrated continued compliance with §§ 194.14 and 194.15.

In addition to the technical changes identified by DOE and EPA, the Agency received comments regarding the geology surrounding the WIPP site. Some stakeholders commented that the recertification application does not properly characterize the shallow geology around WIPP. The stakeholders believe that karst features are prevalent in the vicinity of WIPP. Karst is a type of topography in which there are numerous sinkholes and large voids, such as caves. Karst is caused when soluble rock dissolves. Karst may form when rainwater reacts with carbon dioxide from the air, forms carbonic acid, and seeps through the soil into the subsurface rock. Soluble rock includes limestone and evaporite rocks, such as halite (salt) and gypsum. If substantial and abundant karst features were present at WIPP, they could increase the speed at which releases of radionuclides travel away from the repository through the subsurface to the accessible environment.

In the 1998 certification decision, EPA reviewed existing information to understand the issue of karst around the WIPP site. As a result of that review, EPA concluded that, although it is possible that dissolution has occurred in the vicinity of the WIPP site sometime in the past (e.g., Nash Draw was formed ~500,000 years ago), dissolution is not an ongoing, pervasive process at the WIPP site. Therefore, karst feature development would not impact the containment capabilities of the WIPP for at least the 10,000-year regulatory period (Air Docket A-93-02, Item III-B-2, CCA CARD 14).

Following the 1998 certification decision, several groups challenged EPA's decision in the United States Court of Appeals for the District of Columbia Circuit (No. 98-1322). One of the issues in this lawsuit was EPA's conclusions regarding karst at the WIPP site. The petitioners argued that EPA denied and ignored evidence of karst features at WIPP, and failed to address public comments regarding karst. On June 28, 1999, the U.S. Court of Appeals upheld all aspects of EPA's 1998 certification decision, including EPA's conclusion that karst is not a feature that will likely impact the containment capabilities of the WIPP.

In comments to EPA on the CRA, some stakeholders continue to assert that the geologic characterization of the subsurface surrounding the WIPP repository does not adequately identify the presence of karst. As a result of these concerns, EPA agreed to evaluate any new information on the potential of karst at WIPP and the possible impacts of the long-term containment of waste for WIPP recertification.

For recertification, EPA conducted a thorough review of the geologic and hydrologic information related to karst. Most of the information was reviewed prior to the 1998 certification decision. In addition, DOE had collected and analyzed additional data since the submission of the CCA. Certain stakeholders also identified additional documentation (e.g., the “Hill report”—Air Docket A-98-49, Item II-B3-95) that they wanted EPA to review and consider.

As part of this effort, EPA made a site visit to re-examine the evidence of karst around the WIPP site. During the site visit, EPA searched for karst indicators such as sinkholes, evidence of large-scale water exchange underground, or springs in the vicinity of WIPP. EPA found no evidence of these features at the WIPP site.

EPA prepared a technical support document (TSD) that discusses EPA's in-depth review of the karst issue for recertification (Air Docket A-98-49, Item II-B1-15). Our review again concludes as follows: The WIPP site does not exhibit evidence of karst; it is highly unlikely that reactive water could reach and dissolve the Rustler dolomites; and the hydrologic regime at WIPP is adequately modeled without modeling karst features. EPA is convinced that its 1998 conclusion is still valid after this CRA review.

The Agency also requested that DOE/SNL conduct a separate analysis of the potential for karst and address some general and specific issues raised by stakeholders. The major issues reviewed in the SNL report were: Insoluble residues, negative gravity anomalies, specific well results, water in the exhaust shaft, and recharge and discharge issues. DOE's report reaffirmed the previous analysis demonstrating that pervasive karst processes have been active outside the WIPP site but not directly at WIPP. Additional information on this topic is also found in EPA's CRA Compliance Application Review Document (CARD) 15. (CARDs contain the detailed technical rationale for EPA's recertification decision and are found in Air Docket A-98-49, Item V-B2-1).

The disposal regulations at 40 CFR Part 191 include requirements for containment of radionuclides. The containment requirements at 40 CFR 191.13 specify that releases of radionuclides to the accessible environment must be unlikely to exceed specific limits for 10,000 years after disposal. At WIPP, the specific release limits are based on the amount of waste in the repository at the time of closure (§ 194.31). Assessment of the likelihood that WIPP will meet these release limits is conducted through the use of a process known as performance assessment, or PA.

The WIPP PA process culminates in a series of computer simulations that attempts to describe the physical attributes of the disposal system (site characteristics, waste forms and quantities, engineered features) in a manner that captures the behaviors and interactions among its various components. The computer simulations require the use of conceptual models that represent physical attributes of the repository based on features, events, and processes that may impact the disposal system. The conceptual models are then expressed as mathematical relationships, which are solved with iterative numerical models, which are then translated into computer codes. (§ 194.23) The results of the simulations are intended to show estimated releases of radioactive materials from the disposal system to the accessible environment over the 10,000-year regulatory time frame.

The PA process must consider both natural and man-made processes and events which have an effect on the disposal system (§§ 194.32 and 194.33). The PA must consider all reasonably probable release mechanisms from the disposal system and must be structured and conducted in a way that demonstrates an adequate understanding of the physical conditions in the disposal system. The PA must evaluate potential releases from both human-initiated activities (e.g., via drilling intrusions) and natural processes (e.g., dissolution) that may occur independently of human activities. DOE must justify the omission of events and processes that could occur but are not included in the final PA calculations.

The results of the PA are used to demonstrate compliance with the containment requirements in 40 CFR 191.13. The containment requirements are expressed in terms of “normalized releases.” The results of the PA are assembled into complementary cumulative distribution functions (CCDFs) which indicate the probability of exceeding various levels of normalized releases. (§ 194.34)

To demonstrate continued compliance with the disposal regulations, DOE submitted a new PA as part of the recertification application. The new PA incorporated changes to a few conceptual models and some parameter values. DOE made modifications to the PA computer codes and parameter values after the original CCA. EPA monitored and reviewed these changes, as summarized below.

DOE modified four conceptual models after the original CCA: Disposal System Geometry, Repository Fluid Flow, Disturbed Rock Zone, and the Spallings conceptual model. The first three conceptual models were changed to incorporate the EPA mandated Option D panel closure system (CCA Condition 1). The new Spallings conceptual model was developed to account for certain deficiencies identified by the CCA peer review panel.

DOE updated its analysis of features, events and processes (FEPs) that could impact WIPP. This update of FEPs did not result in any changes to the scenarios used in the CRA PA. The CRA PA included calculations of the same scenarios as the original CCA PA: (1) The undisturbed scenario, where the repository is not impacted by human activities, and three drilling scenarios, (2) the E1 Scenario, where one or more boreholes penetrate a Castile brine reservoir and also intersect a repository waste panel, (3) the E2 Scenario, where one or more boreholes intersect a repository waste panel but not the brine reservoir, and (4) the E1E2 Scenario, where there are multiple penetrations of waste panels by boreholes of the E1 or E2 type, at many possible combinations of intrusions times, locations, and E1 or E2 drilling events.

For the CRA PA, DOE changed, updated, or corrected several parameter values that were used in the CCA PA (see CRA CARD 23 for details). Some of the changed parameters included: Waste inventory estimates, chemistry related parameters, actinide solubility values, disturbed rock zone values, retardation coefficient values, and drilling rate.

During EPA's review of the CRA PA, both EPA and DOE independently identified several technical changes and corrections that were necessary. These changes included using more complete and up-to-date waste inventory projections and correcting the implementation of calculational requirements that ensure appropriate statistical confidence in the PA results. In a March 2005 letter to DOE, EPA informed DOE that a new PA was required to demonstrate continued compliance for recertification (Air Docket A-98-49, Item II-B3-80). In the letter, EPA notified DOE that the new PA must be comprised of three full replicates (i.e., 300 iterations of the models) according to the requirements of § 194.34(f). EPA also provided direction for changes and updates to other aspects of the PA, such as: Uranium (+VI) solubility, solubility uncertainty ranges, actinide solubilities, the probability of microbial degradation, revised gas generation rates, modification of the methanogenesis assumption, inclusion of waste packaging materials in the calculation of amounts cellulosic, plastic, and rubber materials, and corrections to the Culebra transmissivity fields.

In response to EPA's direction to conduct a new performance assessment for recertification, DOE produced the Performance Assessment Baseline Calculations (PABC). The Agency's review of the PABC found that DOE made all the changes required by EPA, and that the PABC demonstrates compliance with the containment requirements specified in 40 CFR Part 191. Although the results of the PABC indicate more potential releases from a human intrusion event, the releases remain well within the limits established by 40 CFR Part 191. EPA considers the PABC to be a sufficiently conservative and current representation of the knowledge of the WIPP and how it will interact with the surrounding environment. EPA also finds that DOE is in continued compliance with our 40 CFR 194.23 and 194.31 through 194.34 requirements. EPA found that DOE calculated the release limits properly (§ 194.31), adequately defined the scope of the PA (§ 194.32), included drilling scenarios as in the original CCA (§ 194.33), and calculated and presented the results of the CRA PA and PABC properly (§ 194.34). EPA analysis of compliance with the performance assessment related requirements of 40 CFR 194 may be found in its aforementioned TSD (Air Docket A-98-49, Item II-B1-16). Additional information on these issues can also be found in CRA CARDs 23 and 31-34.

EPA received public comments related to the CRA performance assessment. Commenters questioned the appropriateness of the drilling rate used in the PA, which is described below. They also raised concerns about the accuracy of WIPP waste inventory parameters, which is discussed further in Section VI.B.4 of this document.

Public comments expressed concern that the drilling rate was underestimated in the CRA's performance assessment calculations given the amount of drilling that is currently taking place throughout the Delaware Basin. Commenters suggested that the drilling rate be doubled to demonstrate compliance. Although EPA determined that DOE appropriately calculated and implemented a drilling rate of 52.2 boreholes/km2/year in compliance with § 194.33(b) for recertification, EPA requested that DOE evaluate the impacts of doubling the current drilling rate to respond to public concerns.

DOE performed the calculations for this analysis by assuming the drilling rate was increased to 105 boreholes per square kilometer per year for 10,000 years. The results of computer modeling showed that doubling the drilling rate would increase releases from the repository. However, this increase was relatively small and still well below EPA's regulatory release limits. (See CRA CARD 23)

DOE monitors natural resource related issues in the Delaware Basin annually. Through this monitoring, DOE identified that the drilling rate in the surrounding area increased from 46.8 to 52.2 boreholes per km2 per 10,000 years since the original certification. EPA reviewed the documentation provided by DOE and has conducted annual inspections of DOE's information collection process and determined that DOE has done due diligence in keeping abreast of all drilling information. DOE also identified that the fluid injection rate per well is the same as that used for the original CCA. EPA finds that DOE adequately characterized drilling related issues.

EPA codified the requirements of § 194.8 at the time of the 1998 certification decision. Under these requirements, EPA evaluates site specific waste characterization and QA plans to determine that DOE can adequately characterize and track waste for disposal at WIPP.

Since 1998, EPA has conducted numerous inspections and approvals pursuant to § 194.8. For more information on activities related to § 194.8, please refer to CRA CARD 8.

Section 194.21 provides EPA with the right to inspect all activities at WIPP and all activities located off-site which provide information in any compliance application. EPA did not exercise its authority under this section prior to the 1998 certification decision.

Since 1998, EPA has inspected WIPP site activities, waste generator sites, monitoring programs, and other activities. For all inspections, DOE provided EPA with access to facilities and records, and supported our inspection activities. Additional information on EPA's 194.21 inspection activities can be found in CRA CARD 21.

Section 194.22 establishes QA requirements for WIPP. QA is a process for enhancing the reliability of technical data and analyses underlying compliance applications. Section 194.22 requires DOE to demonstrate that a Nuclear Quality Assurance (NQA) program has been established and executed/implemented for items and activities that are important to the long-term isolation of transuranic waste. In the CRA, DOE extensively revised Chapter 5, Quality Assurance, to better match the structure of the NQA standards and to update information since the CCA.

EPA determined that the CRA provides adequate information to demonstrate the establishment of each of the applicable elements of the NQA standards. EPA also verified the continued proper implementation of the NQA Program during its CRA review and during previous audits conducted in accordance with § 194.22(e).

EPA's determination of compliance with § 194.22 can be found in CRA CARD 22.

Section 194.24, waste characterization, generally requires DOE to identify, quantify, and track the chemical, radiological and physical components of the waste destined for disposal at WIPP. In order to compile the waste inventory for recertification, DOE required data reporting and collection from the waste generator sites. Based on the WIPP LWA's timeline for recertification, DOE's cut-off date for including waste in the WIPP recertification inventory was September 30, 2002.

Descriptions of the chemical, radiological, and physical components of the waste were thoroughly documented in the CRA and supporting documents. This information was collected using similar methods as during the 1998 certification decision. DOE classified the wastes as emplaced, stored or projected (to-be-generated). DOE used the data from the WIPP Waste Information System (WWIS) to identify the characteristics of the waste that has been emplaced at WIPP since 1999. DOE listed the projected wastes in waste profile tables in the CRA (Appendix DATA, Attachment F). The projected wastes were categorized similarly to existing waste (e.g., heterogeneous debris, filter material, soil).

Although DOE's recertification waste inventory was largely the same as the inventory evaluated for the 1998 certification decision, there were some changes. As of September 30, 2002, 7.7 × 103 m3 of contact-handled (CH) waste had been emplaced at WIPP. This volume was used in the PABC. DOE estimated the combination of emplaced, stored, and projected waste to be 145,000 m3 versus the 112,000 m3 estimated for the CCA. Although EPA approved DOE's general framework for the characterization of remote-handled (RH) waste on March 26, 2004 (Air Docket A-98-49, Item II-B2-21), RH has not yet been approved for disposal at WIPP. (The current projected volume of remote-handled waste at WIPP is greater than the 7,080 m3 in the consent agreement with the State of New Mexico.) Despite the changes in the volume of CH and RH waste, the total number of curies projected for a full repository was reduced from 3.44 million curies in the CCA to 2.32 million curies in the CRA.

Some commenters noted that the recertification waste inventory clearly contains amounts of CH and RH waste that exceed the WIPP capacity. The Agency agrees that the inventory of RH does exceed the capacity of WIPP as it did in the CCA inventory; however, EPA does not consider this a problem in demonstrating compliance with the disposal regulations. EPA recognizes that the WIPP waste inventory is a dynamic projection of the waste that may or may not be disposed of at WIPP. The Agency's acceptance of a waste inventory is not an authorization to dispose of a particular waste at WIPP. Before any waste is disposed at WIPP, EPA seeks to ensure that the waste meets the waste acceptance criteria for WIPP and that DOE can characterize and track the waste. To demonstrate continuing compliance, the performance assessment reflects a repository that meets the capacity requirements for CH and RH wastes, as limited by the LWA and the consent agreement with the State of New Mexico.

During EPA's evaluation of the completeness of the CRA, EPA identified updates and additional information needs for the waste chemistry and waste inventory. For waste chemistry, EPA evaluated issues such as: The modified gas generation rate, actinide solubility and associated uncertainty values, and uranium (+VI) solubility. For more information on EPA's review of the waste chemistry, please refer to CRA CARDs 15, 23 and 24 and applicable TSDs (Air Docket A-98-49, Category II-B1).

As previously mentioned, EPA directed DOE to conduct a new performance assessment for recertification in March 2005 (Air Docket A-98-49, Item II-B3-80)—the PABC. For the PABC, EPA required DOE to update information on the waste inventory. In the PABC, DOE modified the CRA inventory to correct errors identified in the inventory, including modifying a CH waste stream from LANL that had RH characteristics, and correcting the amounts of a Hanford waste stream. DOE also included buried waste from INL.

EPA reviewed the CRA and supplemental information provided by DOE to determine whether they provided a sufficiently complete description of the chemical, radiological and physical composition of the emplaced, stored and projected wastes proposed for disposal in WIPP. The Agency also reviewed DOE's description of the approximate quantities of waste components (for both existing and projected wastes). EPA considered whether DOE's waste descriptions were of sufficient detail to enable EPA to conclude that DOE did not overlook any component that is present in TRU waste and has significant potential to influence releases of radionuclides.

The CRA did not identify any significant changes to DOE's waste characterization program in terms of measurement techniques, or quantification and tracking of waste components. Since the 1998 certification decision, EPA has conducted numerous inspections and approvals of generator site waste characterization programs to ensure compliance with §§ 194.22, 194.24, and 194.8. For a summary of EPA's waste characterization approvals, please refer to CRA CARD 8.

Public comments identified some wastes in the WIPP recertification inventory from the Hanford site in Washington State as high-level waste (HLW) and spent nuclear fuel (SNF), which are prohibited by the LWA from disposal at WIPP. The public commented that these wastes are not transuranic and should not be allowed in the WIPP waste inventory. According to public comments, EPA should not recertify WIPP or should exclude these wastes from the WIPP waste inventory. In a December 2005 letter to DOE, EPA requested additional information from DOE on the basis for considering these wastes as TRU waste instead of high-level waste.

DOE provided additional information on the Hanford Tank wastes that indicate that the Hanford Tank wastes will be treated and will eventually be able to meet the WIPP waste acceptance criteria (Air Docket A-98-49, Items II-B2-47 and II-B2-50). DOE stated that the tank wastes that may eventually be disposed of at WIPP are TRU waste or would be TRU waste. DOE also stated that the tank wastes have not been designated as HLW but have been managed as HLW, in accordance with their radioactive waste management procedures. DOE has committed to removing these wastes from the tanks and treating them, if needed, to meet the WIPP waste acceptance criteria. DOE also stated that the HLW fission products, precipitated salts and other solids will be removed, to the extent practicable, from the Hanford K-basin sludges. DOE stated that this waste would then be RH TRU waste and would meet the WIPP waste acceptance criteria.

DOE has provided information stating that the waste in question will be processed so that high-level waste will be removed, to the extent practical, in its preparation to meet the WIPP waste acceptance criteria. DOE may be able to show that this waste will have a TRU designation in the future. Thus, EPA allowed these wastes to be included in the performance assessment inventory for recertification. By doing so, DOE is demonstrating that with or without the Hanford Tank wastes, WIPP continues to comply with EPA's disposal regulations. The Agency believes that this is a conservative approach to the performance assessment of the WIPP repository because a broad inventory of waste is being considered. Inclusion in the performance assessment of the facility does not imply or otherwise provide for EPA's approval of such waste for disposal at WIPP.

EPA will not allow high-level waste or spent nuclear fuel to be shipped to WIPP. All wastes must meet the WIPP waste acceptance criteria and all requirements of EPA's waste characterization program, and EPA must officially notify DOE before they are allowed to ship waste to WIPP.

Public commenters stated that EPA must conduct a rulemaking regarding how the Agency will make determinations about what waste is high-level waste. EPA does not make waste determinations. DOE is responsible for making waste determinations, classifications, or reclassifications. In recognition of the public's concern about the possible future designation of the Hanford Tank wastes as TRU waste, DOE has proposed a process for developing or changing determinations for wastes such as the Hanford Tank wastes. In a February 2006 letter to EPA, DOE proposed a process (Air Docket A-98-49, Item II-B2-57) for the evaluation of tank waste that includes multiple opportunities for public input prior to the request to EPA for disposal at WIPP. The Agency considers it appropriate for DOE to conduct a public process that will determine the designation or classification of waste prior to requesting EPA's approval for disposal at WIPP.

The Agency currently has a process in place to ensure that waste disposed of at WIPP is TRU waste, as outlined in the requirements listed at 40 CFR 194.8, 194.22, and 194.24. The first step in this process is DOE's official request to dispose of TRU waste at WIPP from one of the waste generator sites. Once EPA receives all required information and documentation, the Agency then inspects waste characterization activities at a waste generator site to ensure that the site has the technical ability to adequately characterize and track TRU waste. Confirmation of waste designation is then completed through the waste characterization process at the site. EPA believes that it currently has an adequate process in place for evaluating any DOE requests for approval of waste for disposal at WIPP. The Agency does not believe that it is necessary to conduct a rulemaking for certain waste streams.

Waste that is not designated as TRU waste will not be considered for disposal at WIPP by EPA. The Agency agrees with commenters that the LWA does not provide for waste determinations to be made during recertification. Prior to disposal at WIPP, EPA will ensure that all wastes meet the legal and technical requirements for disposal. It is important to remember that just because waste is included in the WIPP waste inventory, it does not mean that DOE will necessarily seek to ship it to WIPP or that EPA will approve it for disposal at WIPP. Before any waste is approved to be shipped or disposed of at WIPP, EPA ensures that the waste meets the waste acceptance criteria for WIPP and that DOE can characterize and track the waste. For more information on tank wastes and EPA's determination of compliance with § 194.24, please refer to CRA CARD 24.

Section 194.25 stipulates that performance assessments and compliance assessments “shall assume that characteristics of the future remain what they are at the time the compliance application is prepared, provided that such characteristics are not related to hydrogeologic, geologic or climatic conditions.” Section 194.25 also requires DOE to provide documentation of the effects of potential changes of hydrogeologic, geological, and climatic conditions on the disposal system over the regulatory time frame. Section 194.25 focuses the PA and compliance assessments on the more predictable significant features of disposal system performance, instead of allowing unbounded speculation on all developments over the 10,000-year regulatory time frame.

For the CRA, DOE updated its assessment of the features, events and processes (FEPs) and subsequent scenarios that are used in performance and compliance assessments. As a result of this assessment, DOE eliminated sixteen FEPs using the Future State assumption (40 CFR 194.25 (a)), which assumes that these activities will not change in the future.

EPA assessed whether all FEPs and appropriate future state assumptions were identified and developed by DOE. EPA evaluated DOE's criteria to eliminate (screen out) inapplicable or irrelevant FEPs and associated assumptions. EPA also analyzed whether there were potential variations in DOE's assumed characteristics and determined whether the future state assumptions were in compliance with § 194.25(a).

EPA concludes that DOE adequately addressed the impacts of potential hydrogeologic, geologic and climate changes to the disposal system. The CRA includes all relevant elements of the performance assessment and compliance assessments and is consistent with the requirements of § 194.25. For more information regarding EPA's evaluation of compliance with this section, see CRA CARDs 25 and 32, and the corresponding TSD for FEPs (Air Docket A-98-49, Item II-B1-11).

The requirements of § 194.26 apply to expert judgment elicitation, which is a process for obtaining data directly from experts in response to a technical problem. Expert judgment may be used to support a compliance application, provided that it does not substitute for information that could reasonably be obtained through data collection or experimentation. EPA prohibits expert judgment from being used in place of experimental data, unless DOE can justify why the necessary experiments cannot be conducted. The 2004 CRA did not identify any expert judgement activities that were conducted since the 1998 certification decision. Therefore, EPA determines that DOE remains in compliance with the requirements of § 194.26. (For more information regarding EPA's evaluation of compliance with § 194.26, see CRA CARD 26.)

Section 194.27 of the WIPP Compliance Criteria requires DOE to conduct peer review evaluations related to conceptual models, waste characterization analyses, and a comparative study of engineered barriers. A peer review involves an independent group of experts who are convened to determine whether technical work was performed appropriately and in keeping with the intended purpose. The required peer reviews must be performed in accordance with the Nuclear Regulatory Commission's NUREG-1297, “Peer Review for High-Level Nuclear Waste Repositories,” which establishes guidelines for the conduct of a peer review exercise. DOE performed two conceptual model peer reviews between the submission of the CCA and CRA: the Salado Flow Conceptual Model Peer Review in March 2003 (see CRA Chapter 9, Section 9.3.1.3.4) and the Spalling Model Peer Review in September 2003 (see CRA Chapter 9, Section 9.3.1.3.5). EPA reviewed each of the conceptual model peer reviews as they were performed and all documents related to each peer review. EPA's review verified that the process DOE used to perform these peer reviews was compatible with NUREG-1297 requirements. Therefore, EPA determines that DOE remains in compliance with the requirements of § 194.27. (For more information regarding EPA's evaluation of compliance with § 194.27, see CRA CARD 27.)

The assurance requirements were included in the disposal regulations to compensate in a qualitative manner for the inherent uncertainties in projecting the behavior of natural and engineered components of the repository for many thousands of years (50 FR 38072). The assurance requirements included in the WIPP Compliance Criteria are active institutional controls (§ 194.41), monitoring (§ 194.42), passive institutional controls (§ 194.43), engineered barriers (§ 194.44), presence of resources (§ 194.45), and removal of waste (§ 194.46).

The CRA did not reflect any significant changes to demonstrating compliance with the assurance requirements. DOE appropriately updated the information for the assurance requirements in Chapter 7 of the CRA and accurately reflected EPA decisions since the 1998 certification decision, such as reduction in the safety factor for the magnesium oxide engineered barrier (194.44). EPA's specific evaluation of compliance with the assurance requirements can be found in CRA CARDs 41-46.

Sections 194.51 through 194.55 of the compliance criteria implement the individual protection requirements of 40 CFR 191.15 and the ground-water protection requirements of Subpart C of 40 CFR Part 191 at WIPP. Assessment of the likelihood that the WIPP will meet the individual dose limits and radionuclide concentration limits for ground water is conducted through a process known as compliance assessment. Compliance assessment uses methods similar to those of the PA (for the containment requirements) but is required to address only undisturbed performance of the disposal system. That is, compliance assessment does not include human intrusion scenarios (i.e., drilling or mining for resources). Compliance assessment can be considered a “subset” of performance assessment, since it considers only natural (undisturbed) conditions and past or near-future human activities (such as existing boreholes), but does not include the long-term future human activities that are addressed in the PA.

Sections 194.51 through 194.55 describe specific requirements for compliance with 40 CFR 191 requirements at WIPP. Section 194.51 states that the protected individual must be located at the location expected to receive the highest dose from any radioactive release. All potential exposure pathways are to be considered and compliance assessments (CAs) must assume that individuals consume 2 liters of water per day according to 40 CFR 194.52. 40 CFR 194.53 requires that all underground sources of drinking water be considered and that connections to surface water be factored in any CA. In 40 CFR 194.54 potential processes and events are to be considered and selected in any CA and that existing boreholes or other drilling activities be considered. 40 CFR 194.55 also requires that the impact of uncertainty on any CA analysis and that committed effective dose to individuals be calculated. Radionuclide concentrations in underground sources of drinking water (USDWs) and dose equivalent received from USDWs must also be calculated.

In the CRA, DOE reevaluated each of the individual and ground water requirements. DOE updated parameters related to the individual and groundwater requirements for the undisturbed scenario, for example, changes in population and water use (water use increased from 282 gallons per person per day in the CCA to 305 in the CRA). In addition to updating information for the compliance assessment, as a result of water wells that have been drilled since the original CCA, DOE was able to confirm original water source assumptions (CRA Chapter 8.2). DOE did not conduct new detailed bounding dose calculations for the CRA because the releases predicted by the CRA performance assessment for the undisturbed scenario were lower than those used in the original CCA (CRA Chapter 8.0).

EPA reviewed DOE's CRA approach to compliance with 40 CFR 194.51 to 40 CFR 194.55. EPA verified that DOE's approach to addressing the individual and groundwater requirements was the same as the original CCA (CRA CARDs 51/52, 53, 54, 55 for details). EPA agrees with DOE's conclusion that the CRA PA results are lower than the original CCA and that the recalculation of doses was not necessary for the CRA (CRA Chapter 8.1.2.2). Because DOE was required to correct, update, and rerun the CRA PA, called the PABC, EPA reevaluated the impact of these new results on compliance with 40 CFR 194.51 to 40 CFR 194.55. EPA found the results of the PABC to be much like the CRA PA results—showing fewer releases for the undisturbed scenario than the original CCA. EPA finds DOE in continued compliance with 40 CFR 194.51-194.55 requirements.

Since the 1998 certification decision, EPA has kept the public informed of our continuing compliance activities at WIPP and our preparations for recertification. EPA's main focus has been on distributing information via the EPA Web site, and WIPP-NEWS e-mail messages. In addition, EPA has published periodic WIPP Bulletins and kept the WIPP Information line up-to-date.

Throughout the recertification process, the Agency posted any new information or updates on its Web page. Many of our recertification documents (including DOE-submitted recertification materials, correspondence, Federal Register notices, outreach materials, hearings transcripts, as well as technical support documents) are available for review or download (in Adobe .pdf format) from the EPA Web site at http://www.epa.gov/radiation/wipp.

Since February 2004, EPA has sent out numerous announcements regarding the recertification schedule, availability of documents on the EPA WIPP Web site, and upcoming inspections at waste generator sites, as well as details for the Agency's July 2004 and June 2005 stakeholder meetings in New Mexico.

As discussed in the WIPP LWA, the recertification process is not a rulemaking, therefore public hearings were not required. However, EPA held a series of public meetings in New Mexico in both July 2004 and June 2005 to provide information about the recertification process. In an effort to make these meetings as informative as possible to all attending parties, EPA listened to stakeholder input and concerns and tailored the meetings around the public as much as possible.

The first meetings were held from July 26-29, 2004, in Carlsbad, Albuquerque, and Santa Fe, New Mexico. The main purpose of these meetings was to discuss EPA's recertification process and timeline, as well as DOE's application and important changes at WIPP since its opening. The meetings featured presentations and poster sessions on specific WIPP technical issues and facilitated discussions. In response to stakeholder suggestions, DOE staff was also on hand to provide information and answer any stakeholder questions. Participants were encouraged to provide comments to EPA for our consideration during review of DOE's WIPP application.

The second public session was held on June 7, 2005, in Albuquerque, New Mexico. The main purpose of this meeting was to update the public on EPA's recertification schedule and provide more in-depth, technical information related to stakeholder questions and comments raised at the first series of meetings.

Summaries of EPA's stakeholder meetings are posted on the EPA Web site and in the dockets. Many of the issues raised by the public are identified in the meeting summaries and have been addressed by EPA in the Compliance Application Review Documents (CARDs) under the relevant section.

EPA posted the recertification application on its Web site immediately following receipt. EPA announced receipt of the recertification application in the Federal Register on May 24, 2004. The notice also officially opened the public comment period on the recertification application.

For recertification, EPA sought public comments and input related to the changes in DOE's application that may have a potential impact on WIPP's ability to remain in compliance with EPA's disposal regulations.

The comment period on the recertification application closed 560 days after it opened, on December 5, 2005. This was 45 days after EPA's announcement in the Federal Register that the recertification application was complete.

EPA received four sets of written public comments during the public comment period. EPA considered significant comments from the written submissions and the stakeholder meetings in its evaluation of continuing compliance. EPA addresses these comments in CARDs that are relevant to each topic.

In addition to comments on specific sections of 40 CFR Part 194, EPA received comments on general issues. Some people commented on the content of the CRA throughout the recertification process. With EPA submitting numerous requests for additional information to DOE, commenters believed that the CRA was “grossly flawed and incomplete,” and thus, there was not adequate information for the public to review for comment in the allotted timeframe. Certain commenters also suggested that EPA and DOE should discuss the initial recertification process to ensure that the next application would be more timely and adequate.

EPA provided guidance to DOE on its expectations for the first recertification application (see correspondence in Air Docket A-98-49, Category II-B3). Upon submission of the CRA by DOE, the Agency found it necessary to request a considerable amount of supplemental information. Following receipt of the additional information, EPA promptly made the completeness determination. Once the recertification application was deemed complete, EPA conducted its technical evaluation and issued the recertification decision within the six-month timeframe specified by the WIPP LWA.

EPA believes that future recertification processes should not be as lengthy. The Agency intends to meet with DOE to discuss and work on improving future recertification applications and processes.

The Compliance Application Review Documents, or CARDs, contain the detailed technical rationale for EPA's recertification decision. The CARDs discuss DOE's compliance with each of the individual requirements of the WIPP Compliance Criteria. The document discusses background information related to each section of the compliance criteria, restates the specific requirement, reviews the original 1998 certification decision, summarizes changes in the CRA, and describes EPA's compliance review and decision—most notably, any changes that have occurred since the original certification. The CARDs also list additional EPA technical support documents and any other references used by EPA in rendering its decision on compliance. All technical support documents and references are available in Air Docket A-98-49, with the exception of generally available references and those documents already maintained by DOE or its contractors in locations accessible to the public. For more detailed information on EPA's recertification decision, there are a number of technical support documents available. These are found in Air Docket A-98-49, Category II-B1.

For more general information and updates on EPA's WIPP activities, please visit our WIPP Internet homepage at http://www.epa.gov/radiation/wipp. A number of documents (including DOE-submitted recertification materials, letters, Federal Register notices, outreach materials, hearings transcripts, as well as technical support documents) are available for review or download (in Adobe .pdf format). The Agency's WIPP-NEWS service, which automatically e-mails subscribers with up-to-date WIPP announcements and information, is also available online. Any individuals wishing to subscribe to the listserv can join by visiting https://lists.epa.gov/read/all_forums/subscribe?name=wipp-news or by following the instructions listed on our WIPP Web site. Interested citizens may also contact EPA's toll-free WIPP Information Line at 1-800-331-WIPP. The information line offers a recorded message regarding current EPA WIPP activities, upcoming meetings, and publications. Callers are also offered the option of joining EPA's WIPP mailing list. Periodic mailings, including a WIPP Bulletin and fact sheets related to specific EPA activities, are sent to members of the mailing list (currently over 2,000 members).

In accordance with 40 CFR 194.67, EPA maintains public dockets (FDMS Docket ID No. EPA-HQ-OAR-2004-0025 and Air Docket A-98-49) that contain all the information used to support the Agency's decision on recertification. The Agency established and maintains the formal rulemaking docket in Washington, DC, as well as informational dockets in three locations in the State of New Mexico (Carlsbad, Albuquerque, and Santa Fe). The docket consists of all relevant, significant information received to date from outside parties and all significant information considered by EPA in reaching a recertification decision regarding whether the WIPP facility continues to comply with the disposal regulations. EPA placed copies of the CRA in Category II-B2 of Air Docket A-98-49. The Agency placed supplementary information received from DOE in response to EPA requests in Category II-B2.

As part of the eRulemaking Initiative under the President's Management Agenda, the Federal Docket Management System (FDMS) was established in November 2005. FDMS was created to better serve the public by providing a single point of access to all federal rulemaking activities.

The final recertification decision and supporting documentation can be found in hard-copy form primarily in the following categories of Docket A-98-49: Category II-B1 (technical support documents, reports, etc.), Category II-B2 (DOE submissions and responses to EPA requests), Category II-B3 (EPA correspondence to DOE, public comments) and Category II-B4 (final recertification Federal Register notice, CARDs). Interested parties may also search online in FDMS Docket ID No. EPA-HQ-OAR-2004-0025 for any of these documents by title or key word(s). For more information related to EPA's public dockets (including locations and hours of operation), please refer to Section 1.A.1 of this document.

EPA's regulatory role at WIPP does not end with its first recertification decision. The Agency's future WIPP activities will include additional recertifications every five years, review of DOE reports on conditions and activities at WIPP, assessment of waste characterization and QA programs at waste generator sites, announced and unannounced inspections of WIPP and other facilities, and if necessary, modification, revocation, or suspension of the certification.

Although not required by the Administrative Procedures Act (APA), the WIPP LWA, or the WIPP Compliance Criteria, EPA intends to continue docketing all inspection or audit reports and annual reports by DOE on conditions and activities at the WIPP.

Future recertification processes will be similar to the process completed by EPA for this first recertification, as described in today's action. For example, EPA will publish a Federal Register notice announcing its receipt of the next compliance application and our intent to conduct such an evaluation. The application for recertification will be placed in the docket, and at least a 30-day period will be provided for submission of public comments. Following the completeness determination, EPA's decision on whether to recertify the WIPP facility will again be announced in a Federal Register notice (§ 194.64).

NMFS manages the groundfish fishery in the BSAI exclusive economic zone according to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

The 2006 red king crab PSC limit specified for the RKCSS is 42,495 animals as established by the 2006 and 2007 final harvest specifications for groundfish in the BSAI (71 FR 10894, March 3, 2006).

In accordance with § 679.21(e)(7)(ii)(B), the Administrator, Alaska Region, NMFS, has determined that the amount of the 2006 red king crab PSC limit specified for the RKCSS has been caught. Consequently, NMFS is closing the RKCSS to directed fishing for groundfish with non-pelagic trawl gear.

After the effective date of this closure the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of the RKCSS to directed fishing for groundfish with non-pelagic trawl gear. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of April 4, 2006.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

This action is required by § 679.21 and is exempt from review under Executive Order 12866.