This rule has been determined to be not significant for purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget (OMB).

In accordance with this rule: (1) All State and local laws and regulations that are in conflict with this rule will be preempted, (2) no retroactive effect will be given to this rule, and (3) administrative proceedings in accordance with 7 CFR part 11 must be exhausted before bringing suit in court challenging action taken under this rule, unless those regulations specifically allow bringing suit at an earlier time.

The Administrator of the Rural Housing Service has determined that this rule will not have a significant economic impact on a substantial number of small entities as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). New provisions included in this rule will not impact a substantial number of small entities to a greater extent than large entities. Therefore, a regulatory flexibility analysis was not performed.

There are no new reporting and recordkeeping requirements associated with this rule.

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

This document has been reviewed in accordance with 7 CFR part 1940, subpart G, “Environmental Program.” RHS has determined that this action does not constitute a major Federal action significantly affecting the quality of the human environment, and, in accordance with the National Environmental Policy Act of 1969, Pub. L. 91-190, an Environmental Impact Statement is not required.

The programs affected are listed in the Catalog of Federal Domestic Assistance under Number 10.410, Very Low to Moderate Income Housing Loans, and Number 10.415, Rural Rental Housing Loans. Rural Rental Housing Loans will be affected for those construction contracts above the applicable Rural Development area loan limit.

RHS conducts intergovernmental consultation in the manner delineated in RD Instruction 1940-J, “Intergovernmental Review of Rural Development Programs and Activities,” and in 7 CFR part 3015, subpart V. The Very Low to Moderate Income Housing Loans Program, Number 10.410, is not subject to the provisions of Executive Order 12372, which requires intergovernmental consultation with State and local officials. Rural Rental Housing Loans Program, Number 10.415, conducts intergovernmental reviews on a case-by-case basis. An intergovernmental review for this revision is not required or applicable.

RHS administers the Direct Single Family Housing Loan and Grant program pursuant to 7 CFR part 3550, designed to assist very low and low-income households to obtain modest, decent, safe, and sanitary housing for use as permanent residences in rural areas. Direct loans may be used to buy, build, or improve the applicant's permanent residence. RHS regulations in 7 CFR part 1924, subpart A, contain requirements for construction which is funded with direct RHS loans, including direct single family housing loans. The regulation also applies to larger direct funded construction projects by other programs in the Rural Development mission area. This regulation was originally promulgated on March 13, 1987 in 52 FR 41833. One of the requirements in this regulation is that for construction work performed by the contract method (where the borrower contracts with a builder for the construction), the builder must obtain a surety bond guaranteeing payment and performance in the amount of the contract when the contract exceeds $100,000. This amount has remained unchanged since 1987. In 1987, a single family house constructed and financed under the direct single family housing loan program would not exceed $100,000. Since 1987, construction costs for single family houses financed by RHS have dramatically increased so that now construction costs frequently exceed $100,000. The requirement that builders obtain surety bonds when the construction contract exceeds $100,000 has made it difficult for contractors to compete for direct single family housing projects financed by RHS. While the regulation contains internal exceptions for the $100,000 requirement, none of these exceptions satisfactorily resolves the cost burden for builders of direct single family housing.

The revision to 7 CFR 1924.6(a)(3)(i)(A) will facilitate the process of construction by raising the threshold when the contractor must acquire surety bonds. The purpose of this regulation is to revise the existing surety bond requirement for direct funded single family housing. The new threshold will be when the contract exceeds the applicable RHS area single family housing loan limit as established pursuant to 7 CFR 3550.63. The limit for any particular area is available from any Rural Development office.

The provisions in 7 CFR 1924.6(a)(3)(i) that require payment and performance bonds when construction is under this threshold amount remain unchanged. RHS has determined that changing the threshold for payment and performance bonds provides for more flexibility, is locality based, borrowers are adequately protected, and housing costs are reduced.

Section 218(a) of the Nuclear Waste Policy Act of 1982, as amended (NWPA), requires that “[t]he Secretary [of the Department of Energy (DOE)] shall establish a demonstration program, in cooperation with the private sector, for the dry storage of spent nuclear fuel at civilian nuclear power reactor sites, with the objective of establishing one or more technologies that the [Nuclear Regulatory] Commission may, by rule, approve for use at the sites of civilian nuclear power reactors without, to the maximum extent practicable, the need for additional site-specific approvals by the Commission.” Section 133 of the NWPA states, in part, that “[t]he Commission shall, by rule, establish procedures for the licensing of any technology approved by the Commission under Section 218(a) for use at the site of any civilian nuclear power reactor.”

To implement this mandate, the NRC approved dry storage of spent nuclear fuel in NRC-approved casks under a general license by publishing a final rule in 10 CFR Part 72 entitled “General License for Storage of Spent Fuel at Power Reactor Sites” (55 FR 29181; July 18, 1990). This rule also established a new Subpart L within 10 CFR Part 72, entitled “Approval of Spent Fuel Storage Casks,” containing procedures and criteria for obtaining NRC approval of spent fuel storage cask designs.

On May 5, 2004, and as supplemented on July 6, August 16, October 11, October 28, November 19, 2004; February 18, March 7, April 14, May 20, May 24, August 16, 2005; and January 24 and February 15, 2006, the certificate holder, Transnuclear, Inc. (TN), submitted an application to the NRC to add the NUHOMS® HD cask system to the list of NRC approved casks for spent fuel storage in 10 CFR 72.214. The NUHOMS® HD System provides for the horizontal storage of high burnup spent pressurized water reactor fuel assemblies in a dry shielded canister that is placed in a horizontal storage module utilizing an OS187H transfer cask. The system is an improved version of the Standardized NUHOMS® System described in CoC 1004. The NUHOMS® HD System has been optimized for high thermal loads, limited space, and radiation shielding performance. The -32PTH dry shielded canister (DSC) included in this system is similar to the -24PTH DSC submitted for licensing as Amendment No. 8 to the Standardized NUHOMS® System. The -32PTH DSC will be transferred during loading operations using the OS-187H transfer cask (TC). The OS-187H TC is very similar to the OS-197 and OS-197 TCs described in the final safety analysis report for the Standardized NUHOMS® System. The -32PTH DSC will be stored in a horizontal storage module (HSM), designated the HSM-H. The HSM-H is virtually identical to the HSM-H submitted for licensing as Amendment No. 8 to the Standardized NUHOMS® System. The NRC finds that the TN NUHOMS® HD cask system, as designed and when fabricated and used in accordance with the conditions specified in its CoC, meets the requirements of 10 CFR Part 72. Thus, use of the TN NUHOMS® HD cask system, as approved by the NRC, will provide adequate protection of public health and safety and the environment. Simultaneously, the NRC is issuing a final SER and CoC that will be effective on July 17, 2006. Single copies of the CoC and SER are available for public inspection and/or copying for a fee at the NRC Public Document Room, O-1F21, 11555 Rockville Pike, Rockville, MD.

This direct final rule adds the NUHOMS® HD Storage System to the listing in 10 CFR 72.214 by adding CoC No. 1030.

The NUHOMS® HD Storage System, when used under the conditions specified in the CoC, the TS, and NRC regulations, will meet the requirements of Part 72; thus, adequate protection of public health and safety will continue to be ensured.

CoC No. 1030 is added to the list of approved spent fuel storage casks.

This rule is limited to the conditions contained in CoC No. 1030. The NRC is using the “direct final rule procedure” to issue this addition because it represents an improved version of the Standardized NUHOMS® System described in existing CoC 1004, and its addition to the list of approved spent fuel storage casks is expected to be noncontroversial. Adequate protection of public health and safety continues to be ensured. The amendment to the rule will become effective on July 17, 2006. However, if the NRC receives significant adverse comments by June 1, 2006, then the NRC will publish a document that withdraws this action and will address the comments received in response to the proposed amendments, published elsewhere in this issue of the Federal Register , in a subsequent final rule. The NRC will not initiate a second comment period on this action.

A significant adverse comment is a comment where the commenter explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. A comment is adverse and significant if:

(1) The comment opposes the rule and provides a reason sufficient to require a substantive response in a notice-and-comment process. For example, in a substantive response:

(a) The comment causes the NRC staff to reevaluate (or reconsider) its position or conduct additional analysis;

(b) The comment raises an issue serious enough to warrant a substantive response to clarify or complete the record; or

(c) The comment raises a relevant issue that was not previously addressed or considered by the NRC staff.

(2) The comment proposes a change or an addition to the rule, and it is apparent that the rule would be ineffective or unacceptable without incorporation of the change or addition.

(3) The comment causes the NRC staff to make a change (other than editorial) to the CoC or TS.

The National Technology Transfer and Advancement Act of 1995 (Pub. L. 104-113) requires that Federal agencies use technical standards that are developed or adopted by voluntary consensus standards bodies unless the use of such a standard is inconsistent with applicable law or otherwise impractical. In this direct final rule, the NRC will add the NUHOMS® HD System to the listing in § 72.214 (List of NRC-approved spent fuel storage cask designs). This action does not constitute the establishment of a standard that establishes generally applicable requirements.

Under the “Policy Statement on Adequacy and Compatibility of Agreement State Programs” approved by the Commission on June 30, 1997, and published in the Federal Register on September 3, 1997 (62 FR 46517), this rule is classified as Compatibility Category “NRC.” Compatibility is not required for Category “NRC” regulations. The NRC program elements in this category are those that relate directly to areas of regulation reserved to the NRC by the Atomic Energy Act of 1954, as amended (AEA), or the provisions of Title 10 of the Code of Federal Regulations. Although an Agreement State may not adopt program elements reserved to NRC, it may wish to inform its licensees of certain requirements via a mechanism that is consistent with the particular State's administrative procedure laws but does not confer regulatory authority on the State.

The Presidential Memorandum dated June 1, 1998, entitled “Plain Language in Government Writing,” directed that the Government's writing be in plain language. The NRC requests comments on this direct final rule specifically with respect to the clarity and effectiveness of the language used. Comments should be sent to the address listed under the heading ADDRESSES above.

Under the National Environmental Policy Act of 1969, as amended, and the NRC regulations in subpart A of 10 CFR part 51, the NRC has determined that this rule, if adopted, would not be a major Federal action significantly affecting the quality of the human environment and, therefore, an environmental impact statement is not required. The rule will add the CoC for the NUHOMS® HD System within the list of approved spent fuel storage casks that power reactor licensees can use to store spent fuel at reactor sites under a general license. The NUHOMS® HD System provides for the horizontal storage of high burnup spent pressurized water reactor fuel assemblies in a dry shielded canister that is placed in a horizontal storage module utilizing an OS187H transfer cask. The system is an improved version of the Standardized NUHOMS® System described in CoC 1004. The NUHOMS® HD System has been optimized for high thermal loads, limited space, and radiation shielding performance. The -32PTH dry shielded canister (DSC) included in this system is similar to the -24PTH DSC submitted for licensing as Amendment No. 8 to the Standardized NUHOMS® System. The -32PTH DSC will be transferred during loading operations using the OS-187H transfer cask (TC). The OS-187H TC is very similar to the OS-197 and OS-197 TCs described in the final safety analysis report for the Standardized NUHOMS® System. The -32PTH DSC will be stored in a horizontal storage module (HSM), designated the HSM-H. The HSM-H is virtually identical to the HSM-H submitted for licensing as Amendment No. 8 to the Standardized NUHOMS® System. The EA and finding of no significant impact on which this determination is based are available for inspection at the NRC Public Document Room, 11555 Rockville Pike, Rockville, MD. Single copies of the EA and finding of no significant impact are available from Jayne M. McCausland, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone (301) 415-6219, e-mail jmm2@nrc.gov .

This direct final rule does not contain a new or amended information collection requirement subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). Existing requirements were approved by the Office of Management and Budget, Approval Number 3150-0132.

The NRC may not conduct or sponsor, and a person is not required to respond to, a request for information or an information collection requirement unless the requesting document displays a currently valid OMB control number.

On July 18, 1990 (55 FR 29181), the Commission issued an amendment to 10 CFR Part 72. The amendment provided for the storage of spent nuclear fuel in cask systems with designs approved by the NRC under a general license. Any nuclear power reactor licensee can use cask systems with designs approved by the NRC to store spent nuclear fuel if it notifies the NRC in advance, the spent fuel is stored under the conditions specified in the cask's CoC, and the conditions of the general license are met. In that rule, four spent fuel storage casks were approved for use at reactor sites and were listed in 10 CFR 72.214. That rule envisioned that storage casks certified in the future could be routinely added to the listing in 10 CFR 72.214 through the rulemaking process. Procedures and criteria for obtaining NRC approval of new spent fuel storage cask designs were provided in 10 CFR part 72, subpart L.

The alternative to this action is to withhold approval of this new design and issue a site-specific license to each utility that proposes to use the casks. This alternative would cost both the NRC and utilities more time and money for each site-specific license. Conducting site-specific reviews would ignore the procedures and criteria currently in place for the addition of new cask designs that can be used under a general license, and would be in conflict with NWPA direction to the Commission to approve technologies for the use of spent fuel storage at the sites of civilian nuclear power reactors without, to the maximum extent practicable, the need for additional site reviews. This alternative also would tend to exclude new vendors from the business market without cause and would arbitrarily limit the choice of cask designs available to power reactor licensees. This final rulemaking will eliminate the above problems and is consistent with previous Commission actions. Further, the rule will have no adverse effect on public health and safety.

The benefit of this rule to nuclear power reactor licensees is to make available a greater choice of spent fuel storage cask designs that can be used under a general license. The new cask vendors with casks to be listed in 10 CFR 72.214 benefit by having to obtain NRC certificates only once for a design that can then be used by more than one power reactor licensee. The NRC also benefits because it will need to certify a cask design only once for use by multiple licensees. Casks approved through rulemaking are to be suitable for use under a range of environmental conditions sufficiently broad to encompass multiple nuclear power plants in the United States without the need for further site-specific approval by NRC. Vendors with cask designs already listed may be adversely impacted because power reactor licensees may choose a newly listed design over an existing one. However, the NRC is required by its regulations and NWPA direction to certify and list approved casks. This rule has no significant identifiable impact or benefit on other Government agencies.

Based on the above discussion of the benefits and impacts of the alternatives, the NRC concludes that the requirements of the final rule are commensurate with the Commission's responsibilities for public health and safety and the common defense and security. No other available alternative is believed to be as satisfactory, and thus, this action is recommended.

Under the Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b)), the NRC certifies that this rule will not, if issued, have a significant economic impact on a substantial number of small entities. This direct final rule affects only the licensing and operation of nuclear power plants, independent spent fuel storage facilities, and TN. The companies that own these plants do not fall within the scope of the definition of “small entities” set forth in the Regulatory Flexibility Act or the Small Business Size Standards set out in regulations issued by the Small Business Administration at 13 CFR part 121.

The NRC has determined that the backfit rule (10 CFR 50.109 or 10 CFR 72.62) does not apply to this direct final rule because this amendment does not involve any provisions that would impose backfits as defined. Therefore, a backfit analysis is not required.

Under the Congressional Review Act of 1996, the NRC has determined that this action is not a major rule and has verified this determination with the Office of Information and Regulatory Affairs, Office of Management and Budget.

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

The FAA proposed to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) with an airworthiness directive (AD) to revise AD 2004-03-15, amendment 39-13459 (69 FR 7111, February 13, 2004). The existing AD applies to certain Bombardier Model DHC-8-102, -103, -106, -201, -202, -301, -311, and -315 airplanes. The proposed AD was published in the Federal Register on February 8, 2006 (71 FR 6408) to, for certain airplanes, eliminate the requirement to modify electrical wires in certain sections.

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

We have corrected a typographical error in paragraph (i) of the NPRM by changing the date of the Canadian airworthiness directive.

We have also revised the model designations in the NPRM to match the format of the model designations in AD 2004-03-15.

We have carefully reviewed the available data and determined that air safety and the public interest require adopting the AD with the change described previously. We have determined that this change will neither increase the economic burden on any operator nor increase the scope of the AD.

This new AD adds no new costs to affected operators; in fact, it reduces the costs for airplanes that are not subject to the modification of certain wiring.

We estimate that 173 airplanes of U.S. registry will be subject to the inspection, installation of additional tie-mounts and tie-wraps, and application of sealant to rivet heads that are currently required by AD 2004-03-15. These actions take between 80 and 100 work hours per airplane, at an average labor rate of $65 per work hour. Required parts are provided by the manufacturer at no cost to the operator. Based on these figures, the estimated cost of these actions on U.S. operators is between $899,600 and $1,124,500, or between $5,200 and $6,500 per airplane.

We estimate that 103 airplanes of U.S. registry are subject to the modification of certain wiring that is currently required by AD 2004-03-15. This action takes approximately 10 work hours per airplane, at an average labor rate of $65 per work hour. Required parts are provided by the manufacturer at no cost to the operator. Based on these figures, the estimated cost of the modification on U.S. operators is $66,950, or $650 per airplane.

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

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

We have determined that this 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 DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

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

We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation.

On April 24, 2006, the Bureau of Industry and Security published a final rule to implement the Wassenaar Arrangement's December 2005 agreement to revise the formula for calculating computer performance from Composite Theoretical Performance (CTP) measured in Millions of Theoretical Operations Per Second (MTOPS) to Adjusted Peak Performance (APP) measured in Weighted TeraFLOPS (Trillion Floating point Operations Per Second) (WT) (71 FR 20876) and to make certain other technical changes to the EAR. One such change was to remove missile technology as a reason for control from some Export Control Classification Numbers (ECCNs). In the preamble to the rule, the discussion of the changes made to Missile Technology Controls contained two typographical errors. In the second sentence under the heading “Missile Technology Controls” in the third column on page 20878, the word “applies” should have been “applied” and the second reference to “9B005” should have been “9B006.” ECCN 9B006 controls certain acoustic vibration test equipment.

The rule also revised Export Control Classification Number (ECCN) 4E001. The regulatory text for ECCN 4E001 appeared on page 20894 and contained two errors. The first error was in the License Exception TSR paragraph of the License Exceptions section. The phrase “ ‘Adjusted Peak Performance’ (‘APP’) exceeding 0.1 Weighted TeraFLOPS (WT)” should have stated “ ‘Adjusted Peak Performance’ (‘APP’) not exceeding 0.1 Weighted TeraFLOPS (WT)” (emphasis added). The second error occurred in paragraph .b.2 of the Items paragraph in the “List of Items Controlled” section. The reference to “4D001.b.1” should have stated “4E001.b.1.” ECCN 4E001.b.1 controls certain technology that is specially designed or modified for the development or production of certain digital computers.

This document corrects all four errors.

1. This final rule has been determined to be not significant for purposes of E.O. 12866.

2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This rule involves three collections of information subject to the PRA. The first collection has been approved by OMB under control number 0694-0088, “Multi-Purpose Application,” and carries a burden hour estimate of 58 minutes for a manual or electronic submission. The second collection has been approved by OMB under control number 0694-0106, “Reporting and Recordkeeping Requirements under the Wassenaar Arrangement,” and carries a burden hour estimate of 21 minutes for a manual or electronic submission. The third collection has been approved by OMB under control number 0694-0073, “Export Controls of High Performance Computers,” and carries a burden hour estimate of 78 hours for a manual or electronic submission. This rule is expected to result in an immediate decrease in license applications, and in associated reporting and support documentation requirements, for high performance computers; however, this decrease may be reduced over time as higher performance systems are marketed. Send comments regarding these burden estimates or any other aspect of these collections of information, including suggestions for reducing the burden, to OMB Desk Officer, New Executive Office Building, Washington, DC 20503; and to the Office of Administration, Bureau of Industry and Security, Department of Commerce, 14th and Pennsylvania Avenue, NW., Room 6883, Washington, DC 20230.

3. This rule does not contain policies with Federalism implications as that term is defined under E.O. 13132.

4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military and foreign affairs function of the United States (5 U.S.C. 553(a)(1)). Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this final rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under the Administrative Procedure Act or by any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) are not applicable. Therefore, this regulation is issued in final form. Although there is no formal comment period, public comments on this regulation are welcome on a continuing basis. Comments should be submitted to Sharron Cook, Office of Exporter Services, Bureau of Industry and Security, Department of Commerce, P.O. Box 273, Washington, DC 20044.

FDA published a direct final rule on January 17, 2006 (71 FR 2458), that was intended to revise the current good manufacturing practice (CGMP) regulations for human drugs, including biological products, to exempt most investigational “Phase 1” drugs from complying with the requirements in FDA's regulations. In response to the direct final rule, the agency received significant adverse comments about the proposed revisions to the rule.

Under FDA's direct final rule procedures, the receipt of any significant adverse comment will result in the withdrawal of the direct final rule. Thus, this direct final rule is being withdrawn, effective immediately. Comments received by the agency regarding the withdrawn rule will be considered in developing a final rule using the usual Administrative Procedure Act notice-and-comment procedures.

For the reasons set forth in the preamble of this notice, and under the authority of the Federal Food, Drug, and Cosmetic Act, and under authority delegated to the Commissioner of Food and Drugs, the revision of 21 CFR part 210, published at 71 FR 2458 (January 17, 2006), is withdrawn.

The final regulations and removal of temporary regulations (TD 9253) that is the subject of this correction are under section 1441 of the Internal Revenue Code.

As published, TD 9253 contains an error that may prove to be misleading and is in need of clarification.

The Federal Alcohol Administration Act (the FAA Act, 27 U.S.C. 201 et seq. ) gives the Secretary of the Treasury the authority to issue regulations with respect to the labeling and advertising of wines, distilled spirits, and malt beverages. In particular, section 105(e) of the FAA Act, 27 U.S.C. 205(e), provides that such alcohol beverages must be labeled in compliance with regulations that prohibit deception of the consumer, provide the consumer with “adequate information” as to the identity and quality of the product, and prohibit false or misleading statements. The Secretary's authority to administer these regulations has been delegated to the Alcohol and Tobacco Tax and Trade Bureau (TTB).

Part 4 of the TTB regulations (27 CFR part 4) contains the rules governing labeling of wine. The current rules for the use of a vintage date on a wine label are found at 27 CFR 4.27. Section 4.27(a) provides that at least 95 percent of a vintage-dated wine must have been derived from grapes harvested in the calendar year shown on the label and, further, that the wine must be labeled with an appellation of origin other than a country (which does not qualify for vintage labeling).

Before 1972, regulations in part 4 defined the phrase “vintage wine” as wine that was made “wholly from grapes gathered in the same calendar year and grown and fermented in the same viticultural area, and conforming to the standards prescribed in Classes 1, 2, and 3 of § 4.21.” In T.D. 7185 (37 FR 7974), published on April 22, 1972, the Internal Revenue Service (IRS), which administered the FAA Act at the time, amended that definition to allow the addition of up to 5 percent of other wines to vintage wine. An industry association had requested this change in order to allow producers to replace wine lost by evaporation and leakage during the aging period. In adopting the change, the IRS recognized that requiring vintage wine to be derived wholly from grapes gathered in the stated year was “unnecessarily restrictive when viewed in the light of practices in some of the principal wine producing countries of the world.” The IRS also concluded that liberalization of the vintage date regulations “would not be adverse to the consumer interest.”

On August 23, 1978, our predecessor Agency, the Bureau of Alcohol, Tobacco and Firearms (ATF), again amended the vintage date regulations to remove the requirement that 95 percent of the grapes be grown in the same viticultural area. See T.D. ATF-53 (43 FR 37672). ATF stated, “We concur that the two provisions should be divorced, and that vintage should refer only to the year of harvest. * * * The percentage required to come from the labeled appellation of origin will vary with the type of appellation * * *.”

On April 12, 2005, the Wine Institute, a trade association of California wineries, submitted a petition to TTB to amend § 4.27(a) to allow wine labeled with a State, multistate, county, or multicounty appellation of origin (or the foreign equivalent of a State or county) to bear a vintage date if at least 85 percent of the wine is derived from grapes harvested in the labeled calendar year. In the case of wine with an American viticultural area (or its foreign equivalent) as an appellation of origin, the petitioner proposed to retain the current requirement that at least 95 percent of the grapes in a vintage-dated wine be harvested in the year shown on the label. The petitioner noted that TTB already set separate standards for viticultural areas and other appellations of origin with regard to the percentage of grapes that must be grown in the labeled appellation. We note in this regard that, pursuant to 27 CFR 4.25, wine is qualified for a country, State, or county appellation of origin if at least 75 percent of the wine is derived from grapes grown in the labeled area and other conditions are met, while the requirement for viticultural area appellations of origin is 85 percent.

In support of its request, the petitioner provided information on the vintage date labeling requirements of other wine producing countries. According to this material, Australia, New Zealand, and the Member States of the European Union have an 85-percent, same-year content requirement for vintage-dated wine, while Chile and South Africa require only that 75 percent of the grapes in a vintage-dated wine be grown in the year shown on the label. In addition to showing the widespread use of the 85-percent standard in other wine-producing countries, the petitioner stated that the disparity in standards raised a concern that domestic vintage wines may be competing with imported vintage wines that do not conform to the 95-percent standard.

The petitioner asserted that the proposed amendment would benefit both U.S. winemakers and American consumers because of the advantage derived from being able to use either a younger or older wine in a blend. The petitioner explained this advantage as follows:

The petitioner concluded that “[i]n the end, consumers would benefit from the U.S. winemaker's ability to produce better quality wine at the same cost.”

On July 1, 2005, TTB published in the Federal Register (70 FR 38058) a notice of proposed rulemaking, Notice No. 49, setting forth a proposed revision of § 4.27(a) substantively as set forth in the petition. Notice No. 49 invited comments from the public on the proposed regulatory change, and the public comment period closed on August 30, 2005.

TTB received 98 comments on Notice No. 49. A total of 37 commenters identified themselves as growers, 33 commenters identified themselves as representing wineries, and nine industry associations commented. The remaining commenters who could be identified as a particular type of commenter included two consumers, two brokers, a foreign government official, a journalist, and a retailer. Of the total comments received, 64 comments opposed the proposed change, 30 of which appeared to be form letters from growers. There were 32 comments in support of the proposal, and 2 commenters discussed issues in the rulemaking without taking a position. The submitted comments are discussed in more detail below.

Before discussing the substantive comments received in response to the proposal set forth in Notice No. 49, TTB will address some issues about imported vintage-dated wines that were reflected in the comments.

TTB first notes that the conditions for use of a vintage date on imported wine are set forth in § 4.27(c)(1), (2), and (3). Under paragraph (c)(1), the wine must be made in compliance with § 4.27(a). Under paragraph (c)(2), the wine must be bottled in containers of 5 liters or less before importation, or bottled in the United States from the original container showing a vintage date. Finally, under paragraph (c)(3), there must be a certificate issued in the country of origin that the wine conforms to the vintage date standards of the country of origin (if the country of origin authorizes the issuance of such a certificate).

A comment in response to Notice No. 49 from Argentina's Director for Multilateral Economic Negotiations noted that “Argentina is making use of the third option” for content of vintage wines, suggesting that Argentina views the three conditions for use of vintage dates on imported wines set forth in § 4.27(c) as separate options.

We wish to make it clear that these three conditions are to be read as connected requirements, rather than separate options. Therefore, if a standard in a foreign country is lower than the U.S. standard, the wine imported from the country must conform to the U.S. standard. TTB is not altering this longstanding position in this rulemaking proceeding.

On another point, several commenters interpreted the petition as arguing that the standards for vintage wines should be lowered because TTB is unable to enforce the current 95-percent standard applicable to both imported and domestic wines. These commenters called on TTB to better enforce the current rules with respect to imports rather than adopt a lower standard.

TTB must emphasize that this rulemaking initiative is not based on enforceability issues. The purpose of Notice No. 49 was to propose, and elicit comments on, a regulatory change to give greater flexibility to domestic industry members in blending wine to suit consumer tastes. Nonetheless, we believe it is important to point out that TTB has several tools at its disposal to enforce the current standards for imported wines. Although we do not have the same opportunity to visit producers of imported wine to verify records that we have in the case of domestic producers, we note that importers of wines are permittees and are responsible for ensuring compliance for the products they import. We also note in this regard that we have the authority under 27 CFR 4.38(h) to request substantiating information from importers about the contents of the containers to which labels are affixed. In addition, on the application for a certificate of label approval (COLA), the importer must certify, under penalties of perjury, that representations on the label “correctly represent the content of the containers to which these labels will be applied.” Importers who willfully violate these requirements may be subject to suspension or revocation of their permits or even, in appropriate cases, criminal sanctions.

TTB also investigates third-party complaints about specific labels, and we conduct field investigations and audits to verify wine label information. We also contact foreign governments to aid in our investigations of complaints regarding imported products. We therefore believe our enforcement framework is adequate to ensure the voluntary compliance of most importers and to correct instances of mislabeled wine when they are discovered.

Some commenters opposed to the proposed regulatory change expressed the belief that reducing the percentage of grapes from the labeled year in a vintage wine would harm growers by allowing wineries to use more grapes “from high production, lower priced years” in vintage wines. On the other hand, a comment in support of the petition from a California winegrape growers association suggested that if the rule change lowered the price of grapes in a year with high demand, it should also moderate the “downward market pressure” in years of greater supply, and provide a “stabilizing effect in the marketplace.”

TTB concludes from these comments that any overall effect our proposed rule change may have on grape prices is at best debatable and thus should not be a controlling factor in this rulemaking.

In Notice No. 49, TTB recited the technical or commercial reasons given by the petitioner for requesting amendment of § 4.27, specifically, that producers wish to make more consistent wines and that using small amounts of wines from different vintages can improve the flavor of the base wine. Many comments from wineries agreed with these reasons for amending the regulations. For example, one winery noted:

Other commenters suggested that the commercial issues raised by wineries in support of the proposed rule were not relevant to a rulemaking under the FAA Act. We disagree. Our predecessor Agency, the IRS, considered similar issues when it adopted the 95-percent standard in 1972. The issue of whether the current standard unnecessarily restricts the flexibility of winemakers in blending wines from different vintage dates is one that impacts both the industry and consumers, and it is not inappropriate to consider the impact of such a standard on winemakers as well as consumers.

Many commenters suggested that increased flexibility would allow wineries to produce a better quality vintage dated wine. As one commenter said:

Other commenters supported the proposed change because they believed it would bring the United States in line with a de facto international standard, and thus enhance the competitiveness of U.S. wines in a global marketplace. For example, the petitioner commented that “American winemakers are at a considerable disadvantage compared to their colleagues in most of the world's major wine producing countries in being able to use only 5 percent of wine from another vintage in the blend. The outcome is that U.S. wineries are placed at a competitive disadvantage in the global market because it is more costly and challenging to make wines of consistent quality at a given price point as compared to other countries * * *” The petitioner also commented that the current vintage date regulations result in increased production costs, because of less efficient tank utilization, and argued that pursuant to the proposed change in the regulations, “better tank efficiency would lead to lower production costs for these wineries, which will support more competitive pricing.”

A winery that commented in support of the proposed rule noted that increased flexibility allows wineries to respond better to crop and market changes, explaining as follows:

TTB concludes that the current regulations for use of a vintage date on a wine label unnecessarily restrict the flexibility of wineries, especially when compared to the vintage date standards of many other major wine-producing countries. The proposed amendment would provide greater leeway for wineries to blend relatively small quantities of wines from a different vintage into a vintage-dated wine labeled with an appellation of origin other than a country or a viticultural area. The comments support the conclusion that the revised standard would allow wineries to maintain the quality of their vintage-dated wines in response to fluctuations in grape harvests, and would generally enhance the competitiveness of U.S. wineries in a global marketplace.

We note that only two commenters identified themselves as consumers; both opposed the change to the vintage date requirements. A number of other commenters argued that lowering the percentage of grapes from the year on the label in vintage wine would be seen as a lowering of quality standards in the press, public opinion, or consumer perception, and some of these commenters called our proposal a “race to the bottom” or a “slippery slope.”

The California Association of Winegrape Growers (CAWG) submitted a summary of a consumer survey, without providing the full results of the survey. The summary states that while 71 percent of consumers place value on the presence of a vintage date, only a third of the consumers surveyed knew that the vintage date was the year in which the grapes were harvested. Asked to choose from 100, 95, 85, or less than 50 percent as the percentage of a vintage wine that must be derived from grapes grown in the labeled year, 52 percent of those surveyed chose “Don't know” as the answer, 23 percent answered 100 percent, and only 11 percent of the core group correctly answered 95 percent. The summary did not state how many consumers chose 85 percent or less than 50 percent as the answer. CAWG opposed the proposed change to the vintage date rules and commented that “[d]iluting the restrictions and meaning of the vintage date will only further contribute to consumer confusion.”

One commenter who expressed strong opposition to our proposal stated:

On the other hand, a commenter who wrote in support of the proposed change stated: “With the exception of the luxury-priced wine market where a particular vintage is often celebrated for its uniqueness, nearly all other wine consumers, both domestically and abroad, have specific style and quality expectations that are consistent from purchase to purchase.”

Other commenters noted that there were other ways consumers might use vintage date information. A commenter who partially supported the proposal said:

Another commenter similarly pointed out that consumers of moderately priced wines made with State or county appellations choose a brand first, and then “use the vintage date to ensure that they are not purchasing excessively old or unreasonably young wines based on their own preferences.”

Several wine producers discussed the comparable nature of vintage, varietal, and appellation of origin claims. One commenter noted, “If a wine that is 85% derived from Napa Valley grapes taste[s] like wine from Napa Valley, and is not misleading, it stands to reason that a wine that is 85% derived from the 2002 vintage will taste like wine from 2002, and will not be misleading.” Another commenter made a similar point:

The latter comment refers to T.D. ATF-53, in which our predecessor Agency adopted the current rules for varietal and appellation of origin labeling.

After carefully reviewing the comments on this issue, we conclude that the record does not support a conclusion that adoption of the 85-percent standard for vintage-dated wines labeled with an appellation of origin other than a viticultural area is likely to mislead consumers. The results of the consumer survey, as provided by CAWG in summary form, are incomplete, and are at best inconclusive on this issue. While those results purport to show that consumers are not aware of the current standards for use of a vintage date, they do not provide a basis for concluding that an 85-percent standard would mislead or confuse consumers. As illustrated by the other comments, vintage date information may be used by consumers in various ways. We believe the standard as proposed would continue to provide consumers with adequate information about the vintage date of the wine.

Many of the commenters who opposed the proposed rule expressed concern that the dual standard, one for wines labeled with a viticultural area and the other for wines labeled with other appellations of origin such as a county or State, would confuse or mislead consumers. Two commenters who favored the 85-percent rule said it should be applied to all wine, including wine from viticultural areas. However, most of the comments supported the 95-percent standard for wines labeled with a viticultural area, in that they either supported the proposed amendment or they supported retention of the 95-percent standard for all wines.

In the original petition, and again in its comment, the petitioner pointed out that there is a precedent for holding viticultural areas to a higher standard in TTB appellation of origin regulations. Pursuant to the provisions of 27 CFR 4.25, a grape wine is entitled to a country, State, or county appellation of origin if, among other things, at least 75 percent of the wine is derived from grapes grown in the labeled appellation area. In the case of a wine labeled with a viticultural area, at least 85 percent of the wine must be derived from grapes grown within the boundaries of the viticultural area. Furthermore, one of the commenters who generally opposed the proposal stated that while “the EU standard is 85% * * * member states are free to impose higher standards. We have been advised that some member states * * * set standards for some appellations ranging from 85% to 95%.”

After careful consideration of all the comments, TTB has concluded that the dual standard, as proposed, will not mislead consumers. There is nothing inherently misleading about having different vintage date standards for wines labeled with viticultural area appellations of origin, as these wines are already subject to more stringent standards. Furthermore, there was significant support among the commenters for retaining the current 95-percent standard for wines labeled with an American viticultural area or its foreign equivalent.

We do not believe that the current record supports adoption of a flat 85-percent standard for all wines, as suggested by two commenters. Furthermore, we note that this issue was not specifically aired for comment in this rulemaking proceeding. We would, of course, consider initiating a rulemaking action in response to a future petition for adoption of such a standard.

Several commenters noted that, if we adopt the 85-percent standard, winemakers could elect to use a higher percentage of grapes from the labeled vintage and make a claim to that effect in other information on their labels. In response, we note that 27 CFR 4.38(f) allows for additional information on labels, as long as it is truthful, accurate, and specific and is not misleading to the consumer. Accordingly, our practice is to consider the propriety of label usages such as this on a case-by-case basis.

One commenter suggested that if winemakers believe they can produce a better wine by blending vintages, they should do so but should tell the consumer, and another commenter suggested that we allow bottlers to show multiple vintage dates on the label. In regard to the latter comment, we note that in 1980, in response to a petition, ATF aired a proposal to allow multiple vintage dates in an advance notice of proposed rulemaking, (Notice No. 357, November 13, 1980, 45 FR 74942). Comments on that notice were evenly divided, and subsequently ATF issued a notice of proposed rulemaking setting forth specific proposals (Notice No. 378, August 5, 1981, 46 FR 39850). Because only a few comments (mainly opposed to allowing multiple vintage dates on labels) were received in response to that notice, on May 18, 1984, ATF published a Notice No. 529 withdrawing the proposal (49 FR 21083). We do not intend to reopen this issue at the present time.

In its comment, New Zealand Winegrowers, an association that represents the interests of New Zealand grape growers and wine makers, argued in favor of allowing vintage dates on the labels of wine with a country as the appellation of origin. They noted that “New Zealand is a long and narrow land mass of around the same size as California,” and added: “There are many other wine-producing countries of comparable size with USA appellations of origin that are similarly restricted.” In response, because we did not solicit comments on such a change in Notice No. 49, we believe this request is beyond the scope of the current rulemaking.

Only one commenter discussed the effective date issue raised in the comment solicitation portion of Notice No. 49. This commenter suggested that, as a general rule, new rules not dealing with health issues or mandated effective dates should have an effective date that takes into account the time needed to use up inventories of labels.

On further consideration of this matter, we conclude that, because wine that meets the current 95-percent standard will automatically meet the new 85-percent standard, there is no need for an effective date transition period.

Based on the above comment discussion and as a result of further review of this matter, TTB has decided to adopt the regulatory change as proposed in Notice No. 49 and to make some additional technical changes to the regulation in question. We believe that adopting the proposed change will allow an appropriate amount of flexibility for wineries that produce vintage wines, especially when compared to the vintage date standards of many other major wine-producing countries. We also believe that the amended standard will continue to provide consumers with adequate information about the vintage date of the wine, while maintaining the identity of the vintage dated wine.

Accordingly, in this document, TTB is adopting the proposal (1) to allow wine labeled with an appellation of origin other than a country or viticultural area to bear a vintage date if at least 85 percent of the wine is derived from grapes harvested in the labeled calendar year and (2) to retain the current requirement that at least 95 percent of the grapes in a vintage-dated wine be harvested in the year shown on the label for wine with an American viticultural area (or its foreign equivalent) as an appellation of origin.

In addition, we are revising § 4.27(c) to enhance its clarity, and we are removing from § 4.27 the outdated references to gallons. The metric standard has been in place since 1979, so we believe the references to gallons are no longer needed.

Finally, we are issuing this final rule with a 30-day delayed effective date. As stated above, we believe a longer transition period is not necessary because wines that meet the vintage date labeling requirement under the current rules will meet the requirement under the new standard.

We certify that this regulation will not have a significant economic impact on a substantial number of small entities. This regulation provides greater flexibility to wine producers and importers without imposing any new reporting, recordkeeping, or other administrative requirement. Therefore, no regulatory flexibility analysis is required.

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

Marjorie D. Ruhf of the Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, drafted this document. However, other personnel participated in its development.

Effective January 24, 2003, section 1111 of the Homeland Security Act of 2002 divided the former Bureau of Alcohol, Tobacco and Firearms (ATF), Department of the Treasury, into two separate agencies, the Bureau of Alcohol, Tobacco, Firearms and Explosives in the Department of Justice, and the Alcohol and Tobacco Tax and Trade Bureau in the Department of the Treasury. On January 24, 2003, the two Departments published a joint final rule in the Federal Register (68 FR 3744) that divided the ATF regulations contained in title 27, Code of Federal Regulations, between the two new agencies. That final rule placed the regulations administered by the Bureau of Alcohol, Tobacco, Firearms and Explosives in a newly created 27 CFR chapter II, while the regulations administrated by the Alcohol and Tobacco Tax and Trade Bureau (TTB) remained in 27 CFR chapter I.

On April 4, 2006, TTB published a final rule in the Federal Register making administrative changes to the majority of its regulations in 27 CFR chapter I, as a consequence of the changes made by section 1111 of the Homeland Security Act of 2002. With the exception of 27 CFR parts 28, 31, and 41, for which administrative changes were previously made, the final rule amended the remaining parts of 27 CFR chapter I that required nomenclature, organizational, and other administrative changes to conform them to the current name and organizational structure of TTB. For example, the final rule replaced references to ATF and its officers with appropriate TTB references. The final rule made no substantive change to the regulations in question.

After the publication of the final rule, two amendatory instructions were found to contain inadvertent errors. First, amendatory instruction 67a, regarding 27 CFR 19.11, referred to “Area Supervisor” and “Regional Director” when it should have referred to, respectively, “Area supervisor” and “Region director (compliance).” Second, amendatory instruction 131a, regarding section 40.11, referred to “Regions” and “Regional director” when it should have referred to “Region” and Regional Director (compliance),” respectively.

Throughout this document wherever “we,” “us,” or “our” is used, we mean the EPA.

When submitting comments, remember to:

1. Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number).

2. Follow directions—The agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.

3. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.

4. Describe any assumptions and provide any technical information and/or data that you used.

5. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.

6. Provide specific examples to illustrate your concerns, and suggest alternatives.

7. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.

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

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

EPA is taking direct final action to approve the delegation of certain NESHAPs to TCEQ. With this delegation, TCEQ has the primary responsibility to implement and enforce the delegated standards. See sections VI and VII, below, for a complete discussion of which standards are being delegated and which are not being delegated.

Section 112(l) of the CAA and 40 CFR part 63, subpart E, authorizes EPA to delegate authority to any state or local agency which submits adequate regulatory procedures for implementation and enforcement of emission standards for hazardous air pollutants. The hazardous air pollutant standards are codified at 40 CFR part 63.

Section 112(l) of the CAA enables EPA to approve State air toxics programs or rules to operate in place of the Federal air toxics program or rules. 40 CFR part 63, subpart E (subpart E) governs EPA's approval of State rules or programs under section 112(l).

EPA will approve an air toxics program if we find that:

(1) The State program is “no less stringent” than the corresponding Federal program or rule;

(2) The State has adequate authority and resources to implement the program;

(3) The schedule for implementation and compliance is sufficiently expeditious; and

(4) The program otherwise complies with Federal guidance.

In order to obtain approval of its program to implement and enforce Federal section 112 rules as promulgated without changes (straight delegation), only the criteria of 40 CFR 63.91(d) must be met. 40 CFR 63.91(d)(3) provides that interim or final Title V program approval will satisfy the criteria of 40 CFR 63.91(d) for part 70 sources.

As part of its Title V submission, TCEQ stated that it intended to use the mechanism of incorporation by reference to adopt unchanged Federal section 112 into its regulations. This applied to both existing and future standards as they applied to part 70 sources ((60 FR 30444 (June 7, 1995) and 61 FR 32699 (June 25, 1996)). On December 6, 2001, EPA promulgated final full approval of the State's operating permits program effective November 30, 2001 (66 FR 63318). The TCEQ was originally delegated the authority to implement certain NESHAPs effective May 17, 2005 (70 FR 13018). Under 40 CFR 63.91(d)(2), once a state has satisfied up-front approval criteria, it needs only to reference the previous demonstration and reaffirm that it still meets the criteria for any subsequent submittals. TCEQ has affirmed that it still meets the up-front approval criteria.

EPA received a request from TCEQ to update it's existing delegation of certain NESHAP subparts on July 26, 2005. The TCEQ requests delegation of certain NESHAP for all sources (both part 70 and non-part 70 sources). For the part 63 NESHAPs, Texas' request included the newly incorporated NESHAPs set forth in Table 1 below, and amendments to existing standards that are currently delegated.

EPA cannot delegate to a State any of the Category II Subpart A authorities set forth in 40 CFR 63.91(g)(2). These include the following provisions: § 63.6(g), Approval of Alternative Non-Opacity Standards; § 63.6(h)(9), Approval of Alternative Opacity Standards; § 63.7(e)(2)(ii) and (f), Approval of Major Alternatives to Test Methods; § 63.8(f), Approval of Major Alternatives to Monitoring; and § 63.10(f), Approval of Major Alternatives to Recordkeeping and Reporting. In addition, some MACT standards have certain provisions that cannot be delegated to the States. Therefore, any MACT standard that EPA is delegating to TCEQ that provides that certain authorities cannot be delegated are retained by EPA and not delegated. Furthermore, no authorities are delegated that require rulemaking in the Federal Register to implement, or where Federal overview is the only way to ensure national consistency in the application of the standards or requirements of CAA section 112. Finally, section 112(r), the accidental release program authority, is not being delegated by this approval.

All of the inquiries and requests concerning implementation and enforcement of the excluded standards in the State of Texas should be directed to the EPA Region 6 Office.

EPA must change the delegation status of part 63—Subpart J standards for Polyvinyl Chloride and Copolymers Production in this delegation action. This subpart was vacated by Mossville Environmental Action Now v. EPA, 370 F. 3d 1232 (D.C. Cir. 2004), and EPA's petition for rehearing was denied by the Court of Appeals for the D.C. Circuit on April 15, 2005. This subpart was previously delegated to TCEQ. In addition, this delegation to TCEQ to implement and enforce certain NESHAPs does not extend to sources or activities located in Indian country, as defined in 18 U.S.C. 1151. Under this definition, EPA treats as reservations, trust lands validly set aside for the use of a Tribe even if the trust lands have not been formally designated as a reservation. Consistent with previous federal program approvals or delegations, EPA will continue to implement the NESHAPs in Indian country because TCEQ has not submitted information to demonstrate authority over sources and activities located within the exterior boundaries of Indian reservations and other areas in Indian country.

In approving this delegation, TCEQ will obtain concurrence from EPA on any matter involving the interpretation of section 112 of the CAA or 40 CFR part 63 to the extent that implementation, administration, or enforcement of these sections have not been covered by EPA determinations or guidance.

We retain the right, as provided by CAA section 112(l)(7), to enforce any applicable emission standard or requirement under section 112. EPA also has the authority to make certain decisions under the General Provisions (subpart A) of part 63. We are granting TCEQ some of these authorities, and retaining others, as explained in sections VI and VII above. In addition, EPA may review and disapprove of State determinations and subsequently require corrections. (See 40 CFR 63.91(g) and 65 FR 55810, 55823, September 14, 2000.)

Furthermore, we retain any authority in an individual emission standard that may not be delegated according to provisions of the standard. Also, listed in the footnotes of the part 63 delegation table at the end of this rule are the authorities that cannot be delegated to any State or local agency which we therefore retain.

In delegating the authority to implement and enforce these rules and in granting a waiver of EPA notification requirements, we require TCEQ to input all source information into the Aerometric Information Retrieval System (AIRS) for both point and area sources. TCEQ must enter this information into the AIRS system and update the information by September 30 of every year. TCEQ must provide any additional compliance related information to EPA, Region 6, Office of Enforcement and Compliance Assurance within 45 days of a request under 40 CFR 63.96(a).

In receiving delegation for specific General Provisions authorities, TCEQ must submit to EPA Region 6 on a semi-annual basis, copies of determinations issued under these authorities. For part 63 standards, these determinations include: Applicability determinations (§ 63.1); approval/disapprovals of construction and reconstruction (§ 63.5(e) and (f)); notifications regarding the use of a continuous opacity monitoring system (§ 63.6(h)(7)(ii)); finding of compliance (§ 63.6(h)(8)); approval/disapprovals of compliance extensions (§ 63.6(i)); approvals/disapprovals of minor (§ 63.7(e)(2)(i)) or intermediate (§ 63.7(e)(2)(ii) and (f)) alternative test methods; approval of shorter sampling times and volumes (§ 63.7(e)(2)(iii)); waiver of performance testing (§ 63.7(e)(2)(iv) and (h)(2), (3)); approvals/disapprovals of minor or intermediate alternative monitoring methods (§ 63.8(f)); approval of adjustments to time periods for submitting reports (§ 63.9 and 63.10); and approvals/disapprovals of minor alternatives to recordkeeping and reporting (§ 63.10(f)).

Additionally, EPA's Emissions, Monitoring, and Analysis Division must receive copies of any approved intermediate changes to test methods or monitoring. (Please note that intermediate changes to test methods must be demonstrated as equivalent through the procedures set out in EPA method 301.) This information on approved intermediate changes to test methods and monitoring will be used to compile a database of decisions that will be accessible to State and local agencies and EPA Regions for reference in making future decisions. (For definitions of major, intermediate and minor alternative test methods or monitoring methods, see 40 CFR 63.90). The TCEQ should forward these intermediate test methods or monitoring changes via mail or facsimile to: Chief, Air Measurements and Quality Group, Emissions Monitoring and Analysis Division, Office of Air Quality Planning and Standards, Mailcode D205-02, Research Triangle Park, NC 27711, Facsimile telephone number: (919) 541-0516.

EPA must oversee TCEQ's decisions to ensure the delegated authorities are being adequately implemented and enforced. We will integrate oversight of the delegated authorities into the existing mechanisms and resources for oversight currently in place. If, during oversight, we determine that TCEQ made decisions that decreased the stringency of the delegated standards, then TCEQ shall be required to take corrective actions and the source(s) affected by the decisions will be notified, as required by 40 CFR 63.91(g)(1)(ii). We will initiate withdrawal of the program or rule if the corrective actions taken are insufficient.

For the NESHAPS being delegated and included in the table above, all of the information required pursuant to the general provisions and the relevant subpart of the Federal NESHAP (40 CFR part 63) should be submitted by sources located outside of Indian country, directly to the TCEQ at the following address: Texas Commission on Environmental Quality, Office of Permitting, Remediation and Registration, Air Permits Division (MC 163), P.O. Box 13087, Austin, Texas 78711-3087. The TCEQ is the primary point of contact with respect to delegated NESHAPs. Sources do not need to send a copy to EPA. EPA Region 6 waives the requirement that notifications and reports for delegated standards be submitted to EPA in addition to TCEQ in accordance with 40 CFR 63.9(a)(4)(ii) and 63.10(a)(4)(ii). For those standards that are not delegated, sources must continue to submit all appropriate information to EPA.

In the future, TCEQ will only need to send a letter of request to EPA, Region 6, for NESHAP regulations that TCEQ has adopted by reference. The letter must reference the previous up-front approval demonstration and reaffirm that it still meets the up-front approval criteria. We will respond in writing to the request stating that the request for delegation is either granted or denied. A Federal Register action will be published to inform the public and affected sources of the delegation, indicate where source notifications and reports should be sent, and to amend the relevant portions of the Code of Federal Regulations showing which NESHAP standards have been delegated to TCEQ.

The public was provided the opportunity to comment on the proposed approval of the program and mechanism for delegation of section 112 standards, as they apply to part 70 sources, on June 7, 1995, for the proposed interim approval of TCEQ's Title V operating permits program; and on October 11, 2001, for the proposed final approval of TCEQ's Title V operating permits program. In EPA's final full approval of Texas' Operating Permits Program on December 6, 2001, (66 FR 63318), the EPA discussed the public comments on the proposed final delegation of the Title V operating permits program. In today's action, the public is given the opportunity to comment on the approval of TCEQ's request for delegation of authority to implement and enforce certain section 112 standards for all sources (both part 70 and non-part 70 sources) which have been adopted by reference into Texas' state regulations. However, the Agency views the approval of these requests as a noncontroversial action and anticipates no adverse comments. Therefore, EPA is publishing this rule without prior proposal. However, in the “Proposed Rules” section of today's Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve the program and delegation of authority described in this action if adverse comments are received. This action will be effective July 3, 2006 without further notice unless the Agency receives relevant adverse comments by June 1, 2006.

If EPA receives relevant adverse comments, we will publish a timely withdrawal in the Federal Register informing the public the rule will not take effect. We will address all public comments in a subsequent final rule based on the proposed rule. The EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. Please note that if we receive relevant adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, we may adopt as final those provisions of the rule that are not the subject of a relevant adverse comment.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

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

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by July 3, 2006. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

On December 4, 2003, the HSAR was published in the Federal Register (68 FR 67867) as an interim rule and request for comment. Simultaneously, DHS promulgated the Homeland Security Acquisition Manual (HSAM), which provides procedural guidance on internal acquisition matters that need not be set out in a regulation.

The numbering scheme of the HSAR and HSAM parallels that of the FAR. The purpose of the HSAR is not to duplicate the FAR text. Instead, the HSAR supplements the FAR by providing specificity regarding DHS's organization, policies, procedures, and delegations, and by implementing unique authorities provided by the Homeland Security Act, Public Law 107-296, as amended. These authorities include: (1) Increased use of FAR part 12, simplified acquisition, and micro-purchase procedures where the Department's mission would be seriously impaired otherwise; (2) a prohibition against most contracts with corporate expatriates, also referred to as inverted domestic corporations; and (3) personal services contracting authority, including waiver of pay limitations when necessary for urgent homeland security purposes.

The HSAR (1) establishes the DHS Mentor Protégé Program to develop small business sources; (2) designates the Department of Transportation Board of Contract Appeals as the DHS Board of Contract Appeals; (3) creates uniform DHS provisions and clauses, as well as Organizational Element (OE) unique clauses; and (4) identifies OEs with procurement authority. There are no HSAR parts relating to FAR parts 7, 8, 10, 12, 14, 18, 20, 21, 25, 26, 29, 34, 38, 39, 40, 41, 43, 44, 48, 49, 50, or 51.

The final rule amends the HSAR in order to incorporate changes resulting from the comments, changes resulting from statutory requirements, and changes to carry out the intent of the interim rule. General changes made to HSAR by this rulemaking are provided in the list below. Of particular note, the rule—

• Revises (HSAR) 48 CFR 3001.104 to provide a forum for resolutions of Non-appropriated Fund Instrumentality (NAFI) contract disputes and to provide the option for appropriated fund contracting officers to follow the procurement regulations where feasible, even when the resulting contract does not use appropriated funds.

• Revises (HSAR) 48 CFR 3001.301-71 to include language similar to FAR 1.108 regarding application of regulatory changes to existing solicitations and contracts.

• Revises (HSAR) 48 CFR 3001.404 to include a requirement to consult with the Civilian Agency Acquisition Council Chairperson prior to issuing non-emergency FAR class deviations.

• Adds a definition for “sensitive information” in (HSAR) 48 CFR 3002.101 and (HSAR) 48 CFR 3052.204-71.

• Revises (HSAR) 48 CFR 3004.470 to prescribe clauses regarding security requirements for sensitive but unclassified information and contractor access to Information Technology resources.

• Adds (HSAR) 48 CFR 3006.1 and 3006.101-70 to define the terms “Agency Competition Advocate” and “Competition Advocate for the Procuring Activity.”

• Amends (HSAR) 48 CFR 3009.104-72, 3009.104-73, and 3009.104-74 to comport with statutory changes regarding the prohibition against contracting with companies treated as inverted domestic corporations and waivers to that prohibition.

• Removes the previous prescription at (HSAR) 48 CFR 3009.507, regarding (HSAR) 48 CFR 3052.209-72, which addressed organizational conflicts of interest, and inserts two new subsections, 3009.507-1 and 3009.507-2, which provide prescriptions for a revised provision at (HSAR) 48 CFR 3052.209-72 and a new clause at (HSAR) 48 CFR 3052.209-71.

• Removes (HSAR) 48 CFR 3011.204-90, 3013.106-190, and 3013.302-590 and the corresponding clauses at (HSAR) 48 CFR 3052.211-90 and 3052.213-90, which contained obsolete references and content.

• Removes (HSAR) 48 CFR 3015.404-470, which required withholding profit and fee payments until after definitization of a letter contract.

• Adds text at (HSAR) 48 CFR 3016.505(b)(5)(ii) to identify the DHS Task and Delivery Order Ombudsman as the Senior Competition Advocate.

• Adds a new subpart at (HSAR) 48 CFR 3017.204-90 to implement Public Law 106-553, Title I, Section 119, regarding contracts for detention and incarceration facilities for Immigration and Customs Enforcement (ICE).

• Corrects the text at (HSAR) 48 CFR 3019.201 to include all the current small business categories listed in (FAR) 48 CFR 19.201(a).

• Revises (HSAR) 48 CFR 3022.101-70(a) to distinguish between non-employee and contractor union employee representatives and to ensure appropriate access to facilities.

• Adds a new section at (HSAR) 48 CFR 3035.017 regarding Federally Funded Research and Development Centers (FFRDCs).

• Removes internal procedural matters in (HSAR) 48 CFR 3037.104-70 relating to personal services contracts.

• Amends (HSAR) 48 CFR 3046.7, regarding warranties, by removing the sections applying to DHS and all OEs other than the Coast Guard, and by clarifying the use of warranties in major systems acquisitions for the USCG.

• Removes the certification requirement from (HSAR) 48 CFR 3052.223-70 relating to the licenses and permits required by Federal, state, and local laws to perform hazardous substance(s) removal or disposal services.

• Redesignates (HSAR) 48 CFR 3052.237-70, Qualifications of Contractor Employees, as (HSAR) 48 CFR 3052.204-71, Contractor Employee Access, and revises the content of the redesignated clause with regard to access to sensitive information and to information technology resources.

Sixty-six sources submitted comments on the interim rule. All comments were considered in developing the final rule. The public comments received, and the actions taken, are summarized below:

We received comments from forty-seven small business entities and the Small Business Administration Office of Advocacy. Thirty of these small businesses submitted general comments expressing concern that the rule would have a negative impact on small businesses, without specifying how. These comments may have originated from an analysis posted on a private sector Web site, whose authors apparently believed that the HSAR excluded small businesses from competing for prime contracts and that DHS's small business programs included only those specifically set out in the HSAR.

Our response to these general comments is that the HSAR supplements, rather than replaces the FAR, and that DHS has implemented the FAR's small business programs. The additional small business programs in the HSAR, especially the Mentor-Protégé program, are expected to have a positive impact on small business subcontracting opportunities without adversely affecting prime contracting opportunities. We have included additional discussion under the Regulatory Flexibility Act section of this preamble.

The eighteen remaining commenters addressed specific small business issues, which we have summarized as follows:

1. Comment: Several comments expressed concern that the incentives provided to a large contractor participating as a mentor may actually penalize small business subcontractors that do not desire to participate in the program as protégés. Several comments recommended that DHS revise paragraph (d) of (HSAR) 48 CFR 3052.219-71 to clarify whether DHS will permit mentors to satisfy their subcontracting plans solely by awarding contracts and development assistance to protégés, and recommended that DHS perform a regulatory flexibility analysis. The Small Business Administration's Office of Advocacy letter of January 5, 2004, specifically questioned this same issue and recommended DHS provide the factual basis to support its decision to certify the rule under the Regulatory Flexibility Act.

Response: We disagree that, as a practical matter, large businesses can fulfill their entire subcontracting plan goals for a contract through Mentor-Protégé agreements, nor does DHS intend to approve any subcontracting plan that solely relies on Mentor-Protégé agreements. Because DHS intends the Mentor-Protégé Program as an extension of its Small Business Program—not its replacement—we have clarified (HSAR) 48 CFR 3052.219-71(d) regarding the limitations of the individual Mentor-Protégé agreements. DHS will use the Mentor-Protégé program in addition to the small business programs in (FAR) 48 CFR part 19: The business development program established under section 8(a) of the Small Business Act, 15 U.S.C. section 637(a) (the “8(a) program”), the HUBZone program, the service disabled veteran small business program, the traditional small business set-aside program, and the small business subcontracting program. It is expected that the protégé entities will directly benefit from the forms of mentoring provided for in this rule. Hence, the rule will not have a significant economic impact on a substantial number of small entities in the sense envisioned by the Regulatory Flexibility Act.

2. Comment: Several comments expressed concerns about TSA's exemption from the FAR and the HSAR, particularly from the small business requirements.

Response: TSA is statutorily exempt from the FAR, HSAR, and Small Business Act, under the Aviation and Transportation Security Act of 2001, and is bound instead by the Federal Aviation Administration (FAA) Acquisition Management System (AMS). Section 3.6.1 of the AMS, “Small Business Utilization,” sets out TSA's requirements with regard to small business acquisition programs. Nonetheless, TSA actively participates in DHS's small business programs, including taking part in small business outreach events, setting small business goals, and providing information for the annual Forecast of Contract Opportunities.

3. Comment: Fourteen comments requested language granting priority for small business prime contract acquisition in the HSAR.

Response: The requested language would unnecessarily duplicate (FAR) 48 CFR 19.201(a) and the “Rule of Two” set out at (FAR) 48 CFR 19.505-2, which require exclusive set-asides for small businesses in certain circumstances.

4. Comment: Multiple comments requested that “the DHS Director, Small Business Entities, be given the authority and responsibility for the final execution and management of subcontracting plans and program contracts. Such contracts must require the DHS contracting officer to include the Small Business Entity and the DHS Director, Small Business Entities, a place at the negotiating and evaluation table with the Large Prime Contractor.”

Response: We interpret the comments as requesting authority for small business offerors on DHS subcontracts and DHS's Director of Small and Disadvantaged Business Utilization to participate in contracting officers' discussions and negotiations with large business prime contract offerors. We believe that such a change would exceed the scope of the interim rule, and would require modification to statutory authority or the FAR.

5. Comment: DHS received multiple requests for a DHS-wide pilot to provide funds for small business demonstration projects, including financial incentives for individual small businesses and groups of small businesses to compete.

Response: DHS believes the requested demonstration projects would constitute financial assistance, and would require statutory authority.

6. Comment: DHS received several comments dealing with the structure of the regulations. One comment recommended clarification of the order of precedence to include court and administrative decisions. Another comment suggested including a cross reference between the FAR and the HSAR to minimize confusion over precedence, and an instruction to follow the FAR unless the HSAR provides specific supplemental regulations. One comment asked why the regulation is focused on U.S. Coast Guard acquisitions.

Response: The HSAM and HSAR, like other regulatory and administrative documents, implicitly incorporate interpretations from courts and administrative bodies. We do not believe that the HSAR needs additional cross references to the FAR; HSAR numbering corresponds to the FAR citations addressing the same subject matter, with the HSAR providing more specificity. Some HSAR numbers have no parallel FAR citations because they address issues unique to DHS. We have placed such regulations in HSAR parts that relate generally to the subject matter and numbered them with the suffix “70”, for example: 3019.70 (a DHS unique subpart), 3004.470-3 (a DHS unique section), or 3019.708-70 (a DHS unique subsection). Unique requirements applying to a particular Organizational Element, such as the U.S. Coast Guard, are numbered similarly, except that their suffixes begin with “90”, instead of “70”, for example, 3028.106-490 (unique section) and 3037.104-91 (unique subsection) . Finally, as a uniformed service, the Coast Guard is subject to unique statutory requirements. Hence, the HSAR contains several sections specific to the Coast Guard.

7. Comment: Two comments recommended that (HSAR) 48 CFR 3001.104(c) should be revised to explicitly provide a forum for resolution of Non-appropriated Funded Instrumentality (NAFI) contract disputes.

Response: We agree. The (HSAR) 48 CFR 3001.104(c) was revised to provide for appeal of NAFI contract disputes to the Department of Transportation Board of Contract Appeals.

8. Comment: The requirement at (HSAR) 48 CFR 3001.301-71(b) to obtain the Chief of the Contracting Office's (COCO's) determination to include new HSAR provisions in previously issued solicitations is “too inflexible.”

Response: We agree. The (HSAR) 48 CFR 3001.301-71 was revised to contain language similar to (FAR) 48 CFR 1.108 regarding effective dates and application of regulatory changes.

9. Comment: The final rule should include language similar to (FAR) 48 CFR 1.404(a)(2) that states, “An agency official who may authorize a class deviation, before doing so, shall consult with the chairperson of the Civilian Agency Acquisition Council (CAA Council), unless that agency official determines that urgency precludes such consultation.”

Response: We agree. (HSAR) 48 CFR 3001.404(a) was modified to include the requirement to consult with the CAA Council Chairperson for FAR class deviations.

10. Comment: One comment suggested addressing the “Special Emergency Procurement Authority,” granted by section 1443 of the Services Acquisition Reform Act of 2003, enacted as title XIV of the fiscal year 2004 National Defense Authorization Act (Pub. L. 108-136), in (HSAR) 48 CFR 3013.7004.

Response: We disagree. Federal Acquisition Circular (FAC) 2001-022, published on February 23, 2004, incorporated the new authorities listed in section 1443 of the Services Acquisition Reform Act (SARA) into the FAR. The authorities in section 1443 of SARA overlap the special authorities set out in section 833 of the Homeland Security Act, 6 U.S.C. 393. The definitions of “micro-purchase threshold,” at (HSAR) 48 CFR 3013.7003, and “simplified acquisition threshold,” at (HSAR) 48 CFR 3013.7004, apply only to DHS procurements that take place under the streamlined authority in section 833 of the Homeland Security Act, and not those under the similar authority in section 1443 of SARA. Any internal DHS requirements associated with the FAR rule will be addressed in the HSAM.

11. Comment: One comment recommended that the HSAR address DHS's Procurement Instrument Identification Descriptions (PIID) (contract numbers).

Response: DHS's PIID scheme is addressed in section 3004.602-71 of the HSAM.

12. Comment: Some of the comments indicated confusion over use of different terms in different places to refer to the Departmental and OE competition advocates, specifically in (HSAR) 48 CFR 3006.501 and 3006.502, FAR 6.5, and the office of Federal Procurement Policy (OFPP) Act.

Response: We have amended the HSAR to include language at 3006.1 and 3006.101-70 (previously located in the HSAM, at section 3006.101-70) to make clear that the different titles refer to the same individual.

13. Comment: The term “Departmental Advocates for Competition” should be replaced with “DHS SCA” at (HSAR) 48 CFR 3006.502 to be consistent with the title established in (HSAR) 48 CFR 3006.501 “Competition Advocates.”

Response: We agree. However, we have removed (HSAR) 48 CFR 3006.502 and included provisions in the HSAM because the procedures identified are internal policy matters.

14. Comment: DHS should provide additional details regarding bundled procurements in accordance with (FAR) 48 CFR 7.107(c), which states, “Without power of delegation, * * * the Deputy Secretary or equivalent for the civilian agencies may determine that bundling is necessary and justified when * * * .”

Response: The (FAR) 48 CFR 7.107(c) specifies that the Deputy Secretary of DHS must make the necessary determinations. The specific procedures for making such determinations are internal matters that are addressed in HSAM 3007.107(e).

15. Comment: The HSAR does not provide Departmental procedure to ensure compliance with section 803 of the National Defense Authorization Act for Fiscal Year 2002 (Pub. L. 107-107), which applies to orders for services over $100,000 placed by non-Department of Defense (DoD) agencies on behalf of DoD.

Response: DHS believes that the General Services Administration's (GSA) special ordering procedures for the Federal Supply Schedules and Defense Federal Acquisition Regulation Supplement (DFARS) 48 CFR 208.404-70, “Additional Ordering Procedures for Services,” adequately set out DHS's requirements when ordering off the schedules on behalf of DoD components.

16. Comment: The prohibition at (HSAR) 48 CFR 3009.104-71 implementing section 835(b) of the Homeland Security Act (HSA), 6 U.S.C. section 395(b), against contracting with a foreign incorporated entity treated as an inverted domestic corporation, does not state how it is to be applied with regard to purchases at or below the simplified acquisition threshold, or to task and delivery orders issued under contracts with other agencies.

Response: The HSA states, “The Secretary may not enter into any contract” with a company deemed under the statute to be an “inverted domestic corporation.” The statute provides a waiver for specific contracts if the Secretary determines that such a waiver is in the interests of national security. DHS employees and officials exercising the Secretary's delegated authority to enter into contracts are bound by this requirement. OEs are advised to consult with legal counsel if questions exist regarding the application of the language of section 835.

17. Comment: One comment recommended revising (HSAR) 48 CFR 3009.104-71 because it fails to recognize the Homeland Security Act's explicit authority to waive the prohibition in appropriate circumstances against contracting with corporate expatriates. The comment suggested adding a new lead-in phrase stating “Except as provided in (HSAR) 48 CFR 3009.104-74.”

Response: We modified (HSAR) 48 CFR 3009.104-71 as recommended. Also, we modified the text of (HSAR) 48 CFR 3009.104-72 to comport with changes in the 2005 Homeland Security Appropriations Act, Public Law 108-334, section 523 (General Provisions), regarding companies that are to be treated as inverted domestic corporations.

18. Comment: One comment recommended changing the heading of (HSAR) 48 CFR 3009.104, the text of (HSAR) 48 CFR 3009.104-75, and the section heading and the title of (HSAR) 48 CFR 3052.209-70 to refer to “Inverted Domestic Corporations,” instead of “corporate expatriates.”

Response: The current heading is consistent with section 835 of the Homeland Security Act, 6 U.S.C. 395, “Prohibition on Contracts with Corporate Expatriates.”

19. Comment: Several comments were submitted regarding (HSAR) 48 CFR 3009.104-74 and the clause, Prohibition on Contracts with Expatriates at (HSAR) 48 CFR 3052.209-70, which implement the Secretary's authority to waive the prohibition on contracting with inverted domestic corporations. The specific recommendations included referring to the substantive provisions of the HSAR rather than to the substantive provisions of the statute; adding language that encourages the contractor to submit waiver requests at the earliest time practicable; adding language permitting an offeror to submit an offer at its risk before a waiver has been granted; and adding an alternate certification permitting a company to state that it is an inverted corporation pursuant to the criteria of the Act but has submitted a request for waiver pursuant to (HSAR) 48 CFR 3009.104-74. Also, one comment noted that Public Law 108-7, Div. L, section 101(2), 117 Stat. 528 (February 20, 2003), limited waivers to those “in the interest of homeland security,” and suggested amending the regulation accordingly.

Response: We adopt the recommendation to cite the regulation rather than the Homeland Security Act and have also changed (HSAR) 48 CFR 3009.104-74(a) to comport with amendments to the Act. Additionally, we have amended (HSAR) 48 CFR 3052.209-70(f) to provide for offerors to submit one of three alternative representations: That the offeror is not an inverted domestic corporation, that the offeror should be treated as an inverted domestic corporation but has submitted a waiver request, and that the offeror should be treated as an inverted domestic corporation but plans to apply for a waiver. Adding such a representation will allow entities that do not meet the requirements to remain in line for award while their waiver requests are processed. We do not adopt recommendations to add language suggesting offerors submit waiver requests as early as possible or language allowing submission of an offer at the offeror's risk before a waiver is granted. In both cases, we believe that the suggested wording is common sense advice that need not be codified in formal regulations.

20. Comment: DHS received comments objecting to the burdens imposed by the Disclosure of Conflicts of Interest provision at (HSAR) 48 CFR 3052.209-72 and the lack of clarity at (HSAR) 48 CFR 3009.507 regarding the conditions for the provision's use.

Response: We have deleted the prescription in the interim rule at (HSAR) 48 CFR 3009.507 and the clause at (HSAR) 48 CFR 3052.209-72 and replaced them with a new prescription at (HSAR) 48 CFR 3009.507-1 and provision at (HSAR) 48 CFR 3052.209-72. Additionally, DHS has inserted a new clause at (HSAR) 48 CFR 3052.209-73, Limitation on Future Contracting, which the contracting officer shall insert into solicitations and contracts according to the new prescription at (HSAR) 48 CFR 3009.507-2. We believe that the new procedures will reduce the burden on offerors.

21. Comment: One comment recommended adding language to HSAR subpart 3010 to implement section 509(2) of the Homeland Security Act, 6 U.S.C. 319(2), which provides: “It is the sense of Congress that in order to further the policy of the United States to avoid competing commercially with the private sector, the Secretary should rely on commercial sources to supply the goods and services needed by the Department.”

Response: We have not added language to the HSAR for this purpose because we believe (FAR) 48 CFR parts 7, 10, and 11 adequately implement the Homeland Security Act's policy in favor of private sector performance of commercial functions.

22. Comment: One comment suggested including a statement at (HSAR) 48 CFR 3012.303 instructing contracting officers in commercial item acquisitions to use the format set out at (FAR) 48 CFR 12.303, instead of the uniform contract format.

Response: We disagree that additional regulatory language is required beyond the FAR. However, we will consider placing recommended language in the HSAM as internal guidance to DHS contracting officers.

23. Comment: One comment suggested adding special provisions for large dollar expedited acquisitions under emergency circumstances, to facilitate the ability for a quick national recovery.

Response: The special acquisition provisions found in (HSAR) 48 CFR parts 3002 (Definitions) and 3013.7000 through 3013.7005, which implement statutory authority in section 833 of the Homeland Security Act, 6 U.S.C. 393, address such acquisitions designed to facilitate quick national recovery.

24. Comment: One comment recommended referring to the FAR in (HSAR) 48 CFR subpart 3013.70 instead of including the specific micro-purchase and Simplified Acquisition Procedures dollar amounts.

Response: We agree. We changed (HSAR) 48 CFR 3013.7005 accordingly.

25. Comment: Several comments expressed concern regarding (HSAR) 48 CFR 3015.207-70(b), which allows releasing proposals and information outside the government “for evaluation and similar purposes if qualified personnel are not available” within the government to analyze the submissions. The comments included urging DHS to require a non-disclosure agreement for those outside the Department, asking DHS to establish qualifications for contractors and consultants to receive such material, and seeking establishment of an additional level of review before allowing such release.

Response: We do not believe that the regulation needs to be changed. (HSAR) 48 CFR 3009.507, 3052.204-70, 3052.204-71, and 3052.209-72 restrict the conditions under which the government may release contractor or offeror information. Furthermore, the HSAM requires DHS personnel to ensure that contractors receiving sensitive information execute non-disclosure agreements.

26. Comment: The (HSAR) 48 CFR 3015.404-470 imposes an unnecessary and unfair hardship on the contractor by withholding profit or fee payments until after definitization of a letter contract.

Response: We agree. We removed (HSAR) 48 CFR 3015.404-470.

27. Comment: One comment objected to the (HSAR) 48 CFR 3015.603(a) language stating costs associated with proposal preparation are solely the responsibility of the offeror submitting the proposal. Another comment stated that such costs should be reimbursable if a contract is awarded to that contractor.

Response: We agree in part. We removed (HSAR) 48 CFR 3015.603(a) because it potentially contradicts the FAR.

28. Comment: One comment recommended establishing a uniform Departmental policy for unsolicited proposals, to avoid separate requirements applicable to each OE.

Response: DHS issued Management Directive (MD) 0750.1, “Responding to Unsolicited Proposals” to provide uniform procedures. DHS will consider incorporating appropriate procedures into the HSAM.

29. Comment: (HSAR) 48 CFR 3016.505(b)(5)(iii) provides for complaint referrals from each OE Task and Delivery Order Ombudsman to the DHS Task and Delivery Order Ombudsman. Comments suggested that the regulations identify the DHS position title and organization of the individuals whose duties will include serving as DHS Task and Delivery Order Ombudsmen.

Response: We agree. We modified (HSAR) 48 CFR 3016.505(b)(5)(ii) to include the reporting requirements and to identify the DHS Task and Delivery Order Ombudsman as the Senior Competition Advocate.

30. Comment: One comment expressed concern that the term “definitized letter contracts” in the prescription at (HSAR) 48 CFR 3016.603-4, Contract clauses, has no meaning. The comment states that letter contracts and definitized contracts exist, but not “definitized letter contracts.”

Response: Although the term “definitized letter contract” is not described in the FAR, we believe the term is widely used to describe the act of completing the definitization (negotiation) of the preliminary contractual instrument (i.e., letter contract.) We have used the term “definitized letter contract” in the contract clause prescription to refer to the negotiated contractual instrument with agreed-to prices, terms and conditions.

31. Comment: Several comments addressed energy savings performance contracts. One comment noted that the statutory authority to engage in energy savings performance contracts, 42 U.S.C. 8287, expired on October 1, 2003.

Response: We removed (HSAR) 48 CFR 3017.7000, which addressed internal procedural matters pertaining to energy savings contracts. DHS will amend the HSAM to address internal procedural matters pertaining to the program's administration, reauthorized through Fiscal Year 2006 by the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005, Public Law No. 108-375, section 1090, 118 Stat 1811 (2004).

32. Comment: The clauses and provisions listed in 3017.9000(a) apply to “sealed bid fixed-price solicitations and contracts * * * to be performed within the United States, its possessions, or Puerto Rico.” The clauses and provisions listed in 3017.9000(b) apply to “* * * negotiated solicitations and contracts to be performed outside the United States.” What are the clauses applicable to sealed bid fixed-price solicitations and contracts to be performed outside the United States, its possessions, or Puerto Rico? What are the clauses applicable to negotiated solicitations and contracts to be performed inside the United States?

Response: There are no specific clauses and provisions required for sealed bid solicitations and contracts outside the United States or negotiated solicitations and contracts inside the United States. The contracting officer retains discretion to include the clauses and provisions listed in 3017.9000, if appropriate, for such solicitations and contracts.

33. Comment: One comment suggested that the HSAR implement section 119 of Public Law 106-553. That section authorizes the Bureau of Immigration and Customs Enforcement (ICE) to enter into Federal procurement contracts for detention or incarceration space or facilities, including related services, for any reasonable duration and on any reasonable basis “notwithstanding any other provision of law, including section 4(d) of the Service Contract Act of 1965 (41 U.S.C. 353(d)).”

Response: We agree. Public Law 106-553, Title I, section 119, 18 U.S.C.A. 4013 note (redesignated as section 118 by Public Law 106-554, section 213), authorized the Attorney General of the United States to enter into contracts exceeding five years in duration, notwithstanding any other provision of law, including section 4(d) of the Service Contract Act of 1965, 41 U.S.C. 353(d). As a result of sections 441 and 1511(d)(2) of the Homeland Security Act, 6 U.S.C. 251 and 551(d)(2), the Department of Homeland Security may exercise that authority. Accordingly, we added a new section, (HSAR) 48 CFR 3017.204-90, to implement the statutory authority for ICE.

34. Comment: One comment stated that the list of small business categories in (HSAR) 48 CFR 3019.201(d), assigning responsibility to the Director, Office of Small and Disadvantaged Business Utilization for small business programs, includes only small and small disadvantaged businesses, and should also include veteran-owned small businesses, service-disabled veteran-owned small businesses, HUBZone businesses, and women-owned small business concerns.

Response: We agree. We corrected the text at (HSAR) 48 CFR 3019.201(d) to include the business categories listed in (FAR) 48 CFR 19.201(a).

35. Comment: We received numerous comments regarding subpart 3019.7 and its associated provisions and clauses. One comment stated that (HSAR) 48 CFR subpart 3019.705-1 should begin with the phrase “Except when otherwise required,” to indicate that a subcontracting plan is mandatory in some circumstances and inappropriate in others. The comment continued that evaluation factors should focus on the plan's details, rewarding good faith efforts rather than only results. In contrast, another comment argued that (FAR) 48 CFR 42.1502 requires consideration of the offeror's past performance regarding previous subcontracting goals. Two other comments suggested changes to (HSAR) 48 CFR 3019.708-70, one to ensure the contracting officer includes an evaluation factor for Mentor-Protégé participation and one suggesting an addition to paragraph (c) requiring inclusion of (HSAR) 48 CFR 3052.219-71 and 3052.219-72 only “where involvement in subcontracting to small and disadvantaged businesses will be considered as a source selection evaluation factor.” Another comment recommended that (HSAR) 48 CFR 3052.219-71 be clarified by adding the word “additional” before the phrase “credit for purposes of determining” in paragraph (d), and address the Department's intent to permit a protégé to have more than one mentor. Finally, a comment recommended modifying (HSAR) 48 CFR 3052.219-72, which another comment noted is a provision—not a clause—to include a representation that an offeror has submitted a Mentor-Protégé agreement that has not yet been approved.

Response: DHS has adopted some of the recommendations. We have rewritten: (HSAR) 48 CFR 3019.705-1 to clarify the contracting officer's responsibility involving evaluation factors; HSAR (48 CFR 3019.708(a) and (c) to correct names of clauses and provisions; (HSAR) 48 CFR 3052.219-71(d) to include the word “additional” as suggested; and (HSAR) 48 CFR 3052.219-72 to clarify contracting officer's discretion for approval of credits. We have not adopted the suggestion to give automatic evaluation credit if the offeror receives approval of a Mentor-Protégé agreement before the final evaluation of proposals, because such a rigid requirement could lead to unfairness to other competitors. However, we believe that the contracting officer should have the discretion to grant such credit if appropriate, and have amended (HSAR) 48 CFR 3052.219-72 accordingly. We do not adopt the comment to affirm that a protégé may have more than one mentor. While we have permitted multiple mentors on a case-by-case basis through Mentor-Protégé Agreements, we have not yet decided whether to make this policy permanent and plan to address this matter through future rulemaking. Neither have we adopted the comment to incorporate (FAR) 48 CFR 42.1502, requiring past performance evaluations regarding subcontracting plans, into (HSAR) 48 CFR 3019.705-1 because we believe (FAR) 48 CFR part 42 applies during contract administration and not pre-award. Reports generated under (FAR) 48 CFR part 42 should be considered during evaluations on the same basis as other past performance information.

36. Comment: One comment suggested clarifying the term “union representative” in (HSAR) 48 CFR 3022.101-70 to distinguish between outside union representatives and contractor employee union representatives to ensure access for union representatives who are contractor employees. The same comment also expressed concerns about unlawful surveillance of union activities and urged adoption of a governmental appeal process for contractor employees who lose their jobs.

Response: We have amended (HSAR) 3022.101-70(a) to distinguish between non-employee and contractor union employee representatives, and to ensure appropriate access. With regard to concerns about unlawful investigation or surveillance of union activity, DHS does not believe that it has directly or indirectly proposed investigation or surveillance. We do not adopt the suggestion to provide an appeal process for aggrieved contractor employees in the acquisition regulations, because DHS believes the question of appeal rights is best addressed through other means.

37. Comment: One comment questioned the need for (HSAR) 48 CFR 3023.501(d) to delegate authority to the head of law enforcement Organizational Elements to determine that the Drug-Free Workplace requirements do not apply in particular circumstances.

Response: We disagree, but have reworded the (HSAR) 48 CFR 3023.501(d) for clarity.

38. Comment: Two comments sought incorporation of (FAR) 48 CFR part 25 and (DFARS) 48 CFR part 225 into the HSAR to assure compliance with procurement treaties. Another comment sought the adoption of provisions similar to (DFARS) 48 CFR 225.870 to allow DHS to contract with the Canadian Commercial Corporation, using individual Canadian companies to perform the actual contract work as subcontractors.

Response: We do not adopt these comments at this time. DHS plans to abide by applicable procurement treaties, and believes that the FAR provides sufficient protection for foreign companies seeking to do business with DHS. While DHS is not averse to amending the HSAR to address the role of the Canadian Commercial Corporation explicitly, the Department believes that such a change is not appropriate in a final rule.

39. Comment: One comment expressed concern that universities will be able to participate only in research contracts, and not in service contracts because of the contractor qualification requirements limiting access to information technology systems and other sensitive information. The same comment suggested deleting or modifying (HSAR) 48 CFR 3052.242-70(c) to permit press releases by universities without pre-clearance by DHS.

Response: The requirements of (HSAR) 48 CFR part 3037 (moved to subpart 3004.4), regarding contractor employee access and security matters involving sensitive but unclassified information, will not ordinarily apply to universities. We have included language to that effect in HSAR 48 CFR 3004.470-3(b). Because we agree that press releases from universities should not require pre-clearance, we have deleted (HSAR) 48 CFR 3052.242-70(c). Additionally, we have moved the prescription at (HSAR) 48 CFR 3042.202-70(a) to a new HSAR subpart 3035.70 and moved the clause to (HSAR) 48 CFR 3052.235-70.

40. Comment: One comment stated that (FAR) 48 CFR 31.205-32 adequately addresses the allowability of precontract costs and that (HSAR) 48 CFR 3031.205-32(a) is unnecessary.

Response: We disagree. DHS believes that the additional information contained in the HSAR will provide further clarification regarding precontract costs.

41. Comment: One comment recommended that the HSAR include guidance regarding the “other transaction” authority in section 831 of the Homeland Security Act, 6 U.S.C. 391. The comment also recommended adding language to (HSAR) 48 CFR 3035 to address the use of Federally Funded Research and Development Centers (FFRDCs) and national laboratories.

Response: Section 831 of the Homeland Security Act, 6 U.S.C. 391, provides the Secretary of Homeland Security temporary authority (until September 2007) to enter into “Other Transactions.” “Other Transactions” is the term commonly used to refer to the 10 U.S.C. 2371 authority to enter into transactions other than contracts, grants or cooperative agreements. Since the policies and procedures applicable to these instruments are outside the Federal Acquisition Regulation, a separate Management Directive and Guide was issued by the Office of the Chief Procurement Officer. With regard to the second part of the comment, new language regarding FFRDCs has been added to (HSAR) 48 CFR 3035.017.

42. Comment: One comment asked why the National Institutes of Health (NIH) Contractor Performance System (CPS) is used in the HSAR instead of the Past Performance Information Retrieval System (PPIRS).

Response: The NIH CPS is one tool in existence to collect contractor performance information. The DoD PPIRS is not a performance information collection tool, but a Web site that displays final collected performance reports. The two systems work together.

43. Comment: One comment asked why the HSAR did not contain more guidance on the use of Performance Based Contracting.

Response: There is adequate published guidance on the use of Performance-Based Contracting in the FAR, as well as industry associations and Federal Web sites. The HSAR sets out regulations unique to DHS.

44. Comment: One comment noted that the Office of Management and Budget's clearances for HSIF Form 3237, Contractor Personnel Access Application and HSIF Form 4024, Sensitive Information Non-Disclosure Agreement, were not included in (HSAR) 48 CFR 3037.103-71.

Response: These two forms have been removed from the DHS centrally managed forms program. We have removed (HSAR) 48 CFR 3037.103-70 and 3037.103-71 from the final rule.

45. Comment: One comment asked why (HSAR) 48 CFR 3037.104-90, granting authority to enter into medical personal service contracts, applies only to the U.S. Coast Guard. Another comment noted that 10 U.S.C. 1091(a)(2) now contains permanent authority to enter into personal services contracts for the performance of health care responsibilities at locations other than military medical treatment facilities.

Response: 10 U.S.C. 1091 specifically authorizes the Department of Defense and the U. S. Coast Guard to award medical personal services contracts. This authority does not apply to DHS civilian entities. We removed the expiration date from (HSAR) 48 CFR 3037.104-90(a).

46. Comment: One comment recommended that (HSAR) 48 CFR Part 3038 include the Department's specialized authority in Section 803 of the 2004 National Defense Authorization Act (Pub. L. 108-136) to permit cooperative purchasing by state and local governments.

Response: Consistent with section 803 of Public Law 108-136, DHS is presently working with the Administrator of the Office of Federal Procurement Policy to develop the scope and process for cooperative purchasing by states and units of local government.

47. Comment: One comment recommended amending subpart 3039 to implement section 509 of the Homeland Security Act, 6 U.S.C. 319, “the sense of Congress” to use off-the-shelf technologies “to collect, manage, share, analyze and disseminate information securely over multiple channels of communication.”

Response: We disagree. Existing FAR and HSAR language regarding the procurement of commercial items adequately implements the statute.

48. Comment: DHS received several comments concerning warranty requirements. One comment recommended that (HSAR) 48 CFR 3046.705(a)(3) be amended to exclude warranty liability resulting from terrorism. Another recommended rephrasing (HSAR) 48 CFR 3046.703(a)(1) to make clear when warranties are required for major systems acquisitions. A third stated that (HSAR) 48 CFR 3046.706(a) is more procedural than regulatory, and should be included in the HSAM. Finally, one comment recommended changing the (HSAR) 48 CFR 3046.702-70 to be consistent with the statutory (FASA) and regulatory (FAR) definition of a commercial item.

Response: We have amended the warranty requirements and renumbered subpart 3046 to make clear that the content applies only to the Coast Guard, in accordance with Public Law 99-190, Title I, Department of Transportation Appropriations, “Acquisition, Construction, and Improvements” (December 19, 1985) (mandating warranty procedures for the Coast Guard and setting out a combat exemption). We did not extend the exclusion from warranty liability to damage by terrorism because such an exclusion would exceed the statutory authority. We have also reworded the exclusion to apply to “combat damage” (as opposed to “in time of war or national emergency”) to comport with statutory language. Finally, DHS has removed (HSAR) 48 CFR 3046.702-70 and the internal instructions to contracting officers found in the interim rule at (HSAR) 48 CFR 3046.706. We will insert the latter into HSAM Chapter 3046.

49. Comment: One comment recommended that the HSAR implement the Support Anti-terrorism by Fostering Effective Technologies Act of 2002 (SAFETY Act), found in sections 861-865 of the Homeland Security Act, 6 U.S.C. 441-444, and address its extraordinary relief provisions in (HSAR) 48 CFR 3050.

Response: DHS believes a change is necessary to (FAR) 48 CFR part 50 with regard to extraordinary relief and provided our business case recommendation to the FAR Secretariat. Concurrent rulemaking is taking place in DHS to implement the SAFETY Act in general. After completion of that rulemaking process, we will consider adding any necessary provisions to the HSAR.

50. Comment: One comment expressed concern that while the introductory paragraph of (HSAR) 48 CFR 3052.209-70 identifies it as a clause, subparagraphs (f) and (g) make clear that it is a solicitation provision.

Response: We disagree. (HSAR) 48 CFR 3052.209-70 applies to both solicitations and contracts and is therefore a clause.

51. Comment: (HSAR) 48 CFR 3052.211-90 contains references to Military Standards (Mil-Std), 1189, “Bar Coding Symbology,” and 129H, “Marking for Shipment and Storage”. One comment stated that Mil-Std 1189 is an inactive standard and Mil-Std 129H has been replaced by Mil-Std 129P.

Response: We agree. We removed (HSAR) 48 CFR 3011.204-90, 3013.106-190, 3013.302-590, and the corresponding clauses at (HSAR) 48 CFR 3052.211-90 and 3052.213-90, all of which contain obsolete references.

52. Comment: One comment stated that the (HSAR) 48 CFR 3052.215-70 is too restrictive and firms should be able to replace key personnel without pre-approval.

Response: We disagree. The approval process is standard practice in federal contracting.

53. Comment: One comment recommended that “will be rejected” is too restrictive and should be changed to “may be rejected” in the first paragraph of (HSAR) 48 CFR 3052.216-70.

Response: We agree. We have changed the clause as suggested.

54. Comment: One comment recommended that (HSAR) 48 CFR 3052.216-73 permit provisional payment of award fees, similar to regulations recently implemented by the DoD in the DFARS.

Response: We decline to adopt the DoD policy concerning provisional payment of award fees. DHS believes that its own award fee system provides for flexibility and timely payment without adding the complexity of a provisional payment system.

55. Comment: One comment questioned why the vessel repair guarantee periods in paragraphs (a) and (e) of the (HSAR) 48 CFR 3052.217-100 are inconsistent.

Response: For consistency we changed the number of days in paragraph (e) of (HSAR) 48 CFR 3052.217-100 from 90 days to 60 days.

56. Comment: One comment stated that (HSAR) 48 CFR 3052.222-90, Local Hire, could be interpreted to mean that all hires must be from the local area.

Response: The comment correctly interprets the HSAR text and clause, which properly identify the restrictions placed on the U.S. Coast Guard under 14 U.S.C. 666. However, DHS has amended the language to parallel the statute.

57. Comment: One comment recommended revising (HSAR) 48 CFR 3052.223-70 to read: “The Contractor must have all licenses and permits required by Federal, state, and local laws to perform hazardous substance(s) removal or disposal services. If the Contractor does not currently possess the necessary licenses and permits, it must obtain them within _ days after date of award. The Contractor shall provide evidence of compliance to the Contracting Officer or designated Government representative prior to commencement of work under the contract.”

Response: We agree, and have amended (HSAR) 48 CFR 3052.223-70 to include the revised text, although we have revised the comment's suggested wording to provide additional clarity.

58. Comment: Several comments noted the stringency of the “contractor qualification” requirements. Some of the comments expressed concern that the interim regulation required citizenship or legal permanent resident alien status for all contractor employees.

Response: DHS did not intend the requirements to apply to all individuals employed by the contractor's organization, but only to those employed on DHS contracts. We have modified the restrictions to apply only to contracts involving access to information technology, sensitive information, or government facilities, and have clarified the requirements.

59. Comment: Several comments objected to the sweeping definition of “sensitive information” in (HSAR) 48 CFR 3052.237-70(a).

Response: DHS has narrowed the definition of “sensitive information” and moved it to (HSAR) Part 3002.101, the “Definition” section of the regulation. The amended text clarifies that the government must mark sensitive information that it furnishes to the contractor. The government may designate as “sensitive” information generated by the contractor during performance.

60. Comment: One comment recommended additional specificity in (HSAR) 48 CFR 3052.237-70(c) regarding the forms contractor employees must complete.

Response: The HSAM will be amended to include the relevant information.

61. Comment: One comment raised concerns that (HSAR) 48 CFR 3052.237-72, Contractor Screening for Unclassified Information Technology Access, provides the Department with virtually unlimited rights to inspect contractor facilities and question contractor personnel.

Response: We have removed the clause and plan to include administrative guidance in the HSAM.

62. Comment: Numerous comments provided edits for various parts of the HSAR.

Response: We have considered the comments relating to technical edits and corrections. We have addressed changes in the amended sections of the final rule.

We have made additional technical changes to the interim rule, examples of which follow. These revisions are not intended to change the substance of the rule. Typographical corrections include (HSAR) 48 CFR 3001.104(c), which was revised to correct “institutions” to “Instrumentality” and (HSAR) 48 CFR 3002.101, the definition section, where “Head of Contracting Activity” was corrected to read “Head of the Contracting Activity.” Typographical error corrections are identified in the amended text section of this rule. Each DHS form was modified to include the expiration date of September 27, 2007, in consonance with the expiration date of OMB Control Number 1600-0002 for the collection of information under (HSAR) 48 CFR chapter 30. (HSAR) 48 CFR parts 3002, 3005, 3009, 3013, 3035, 3037, and 3052, reflect the codified cites to the Homeland Security Act, which were not available when the interim rule was published, were added.

This rule is not considered by DHS to be a “significant regulatory action” under Executive Order 12866, section 3(f), Regulatory Planning and Review. Accordingly, the Office of Management and Budget has waived its review process under section 6(a)(3)(A). As identified in the interim rule, the HSAR is the supplemental regulation to the FAR, similar to all other Federal agencies' FAR supplements. Since the FAR is the controlling document for the conduct of most federal acquisitions, the HSAR provides necessary supplemental information regarding DHS acquisition procedures.

The Regulatory Flexibility Act (RFA) mandates that an agency conduct an RFA analysis when an agency is “required by section 553 * * *, or any other law, to publish general notice of proposed rulemaking for any proposed rule.” RFA analysis is not required when a rule is exempt from notice and comment rulemaking under 5 U.S.C. 553(b). DHS has determined that good cause exists under 5 U.S.C. 553(b)(B) to exempt this rule from the notice and comments requirements of 5 U.S.C. 553(b). Therefore no RFA analysis under 5 U.S.C. 603 is required for this rule. However, DHS did consider the impact of this rule on small entities and does not believe it will have an adverse impact. There were comments from small entities on the December 4, 2003, interim rule and those comments were previously addressed in the “Discussion of Public Comments” section of the preamble.

The Paperwork Reduction Act (Pub. L. 96-511) applies because the final rule contains information collection requirements which require OMB approval under 44 U.S.C. 3501, et seq. OMB has granted approval for a 3-year period under OMB Control Numbers 1600-0003 through 1600-0005.

DHS has determined that this final rule does not contain federalism implications and would not preempt State laws. Accordingly, DHS certifies that it will not have substantial direct effects on the States, on the relationship between the national government and the States, or the distribution of power and responsibilities among various levels of government, as specified in Executive Order 13132. Accordingly, this rule is not subject to the requirements of Executive Order 13132.

Section 648.22 of part 50 CFR requires NMFS to close the directed Loligo squid fishery in the EEZ in Quarters I, II and III when 80 percent of the quarterly quota has been harvested. The Administrator, Northeast Region, NMFS, based on dealer reports and other available information, determined that 80 percent of the Quarter II quota for Loligo squid would be harvested by April 21, 2006 (71 FR 20900, April 24, 2006). Therefore, effective 0001 hours, April 21, 2006, the directed fishery for Loligo squid was closed. However, analysis of more recent data indicated that the closure threshold level of Loligo harvest had not been attained. Therefore, NMFS announces that the directed Loligo squid fishery will reopen on April 27, 2006. Vessels issued a Federal moratorium permit to harvest Loligo squid in excess of the incidental catch allowance may continue fishing for, retaining and landing Loligo squid in excess of the incidental catch upon reopening.

This action is required by 50 CFR part 648 and is exempt from review under Executive Order 12866.

NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (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 second seasonal apportionment of the 2006 Pacific halibut bycatch allowance specified for the deep-water species fishery in the GOA is 300 metric tons as established by the 2006 and 2007 harvest specifications for groundfish of the GOA (71 FR 10870, March 3, 2006), for the period 1200 hrs, A.l.t., April 1, 2006, through 1200 hrs, A.l.t., July 1, 2006.

In accordance with § 679.21(d)(7)(i), the Administrator, Alaska Region, NMFS, has determined that the second seasonal apportionment of the 2006 Pacific halibut bycatch allowance specified for the trawl deep-water species fishery in the GOA has been reached. Consequently, NMFS is prohibiting directed fishing for the deep-water species fishery by vessels using trawl gear in the GOA. The species and species groups that comprise the deep-water species fishery are sablefish, rockfish, deep-water flatfish, rex sole and arrowtooth flounder.

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 deep-water species fishery by vessels using trawl gear in the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of April 26, 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.