The Oriental fruit fly, Bactrocera dorsalis (Hendel), is a destructive pest of citrus and other types of fruit, nuts, vegetables, and berries. The short life cycle of the Oriental fruit fly allows rapid development of serious outbreaks, which can cause severe economic losses. Heavy infestations can cause complete loss of crops.

The Oriental fruit fly regulations, contained in 7 CFR 301.93 through 301.93-10 (referred to below as the regulations), were established to prevent the spread of the Oriental fruit fly into noninfested areas of the United States. Paragraph (a) of § 301.93-3 provides that the Administrator will list as a quarantined area each State, or each portion of a State, in which the Oriental fruit fly has been found by an inspector, in which the Administrator has reason to believe that the Oriental fruit fly is present, or that the Administrator considers necessary to regulate because of its proximity to the Oriental fruit fly or its inseparability for quarantine enforcement purposes from localities in which the Oriental fruit fly has been found. The regulations impose restrictions on the interstate movement of regulated articles from the quarantined areas. Quarantined areas are listed in § 301.93-3(c).

Less than an entire State will be designated as a quarantined area only if the Administrator determines that: (1) The State has adopted and is enforcing restrictions on the intrastate movement of the regulated articles that are substantially the same as those imposed on the interstate movement of regulated articles and (2) the designation of less than the entire State as a quarantined area will prevent the interstate spread of the Oriental fruit fly.

Recent trapping surveys by inspectors of California State and county agencies reveal that the Santa Ana area of Orange County, CA, is infested with the Oriental fruit fly.

State agencies in California have begun an intensive Oriental fruit fly eradication program in the quarantined area in Orange County. Also, California has taken action to restrict the intrastate movement of regulated articles from the quarantined area.

Accordingly, to prevent the spread of the Oriental fruit fly into noninfested areas of the United States, we are amending the regulations in § 301.93-3(c) by designating the Santa Ana area of Orange County, CA, as a quarantined area for the Oriental fruit fly. The quarantined area is described in the regulatory text at the end of this document.

In an interim rule published in the Federal Register on November 17, 2006 (71 FR 66831-66833, Docket No. APHIS-2006-0151), we quarantined a portion of San Bernardino County, CA, and restricted the interstate movement of regulated articles from the quarantined area.

Based on trapping surveys conducted by inspectors of California State and county agencies, we have determined that the Oriental fruit fly has been eradicated from the quarantined portion of San Bernardino County. The last finding of Oriental fruit fly in this quarantined area was August 29, 2006.

Since then, no evidence of Oriental fruit fly infestation has been found in this area. Based on our experience, we have determined that sufficient time has passed without finding additional flies or other evidence of infestation to conclude that the Oriental fruit fly no longer exists in San Bernardino County, CA. Therefore, we are removing the entry for San Bernardino County, CA, from the list of quarantined areas in § 301.93-3(c).

This rulemaking is necessary on an emergency basis to prevent the Oriental fruit fly from spreading to noninfested areas of the United States and is warranted to relieve restrictions that are no longer necessary. Under these circumstances, the Administrator has determined that prior notice and opportunity for public comment are contrary to the public interest and that there is good cause under 5 U.S.C. 553 for making this rule effective less than 30 days after publication in the Federal Register.

We will consider comments we receive during the comment period for this interim rule (see DATES above). After the comment period closes, we will publish another document in the Federal Register. The document will include a discussion of any comments we receive and any amendments we are making to the rule.

This rule has been reviewed under Executive Order 12866. For this action, the Office of Management and Budget has waived its review under Executive Order 12866.

This rule amends the Oriental fruit fly regulations by adding the Santa Ana area of Orange County, CA, to the list of quarantined areas. The regulations restrict the interstate movement of regulated articles from a quarantined area.

County records indicate that there are 11 farmers markets, 15 fruit sellers, 4 growers, 2 nurseries, 14 swapmeets, 1 mobile vendor, and 1 yard maintenance company within the quarantined area. We expect that any small entities located within the quarantined area that sell regulated articles do so primarily for local intrastate, not interstate, movement, so the effect, if any, of this rule on these entities appears to be minimal. The effect on any small entities that may move regulated articles interstate will be minimized by the availability of various treatments that, in most cases, will allow these small entities to move regulated articles interstate with very little additional cost.

This rule also amends the Oriental fruit fly regulations by removing San Bernardino County, CA, from the list of quarantined areas. County records indicate there are approximately 18 nurseries, 96 yard maintenance companies, 2 growers, 1 mobile vendor, 5 food banks, and 34 fruit sellers within the quarantined area that may be affected by the lifting of the quarantine in this interim rule.

We expect that the effect of this interim rule on the small entities referred to above will be minimal. Small entities located within the quarantined area that sell regulated articles do so primarily for local intrastate, not interstate, movement, so the effect, if any, of this rule on these entities appears likely to be minimal. In addition, the effect on any small entities that may move regulated articles interstate has been minimized during the quarantine period by the availability of various treatments that allow these small entities, in most cases, to move regulated articles interstate with very little additional cost. Thus, just as the previous interim rule establishing the quarantined area in San Bernardino County, CA, had little effect on the small entities in the area, the lifting of the quarantine in this interim rule will also have little effect.

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.

This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 7 CFR part 3015, subpart V.)

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are inconsistent with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.

This rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

This rule is issued under Marketing Agreement No. 115 and Marketing Order No. 982, both as amended (7 CFR part 982), regulating the handling of hazelnuts grown in Oregon and Washington, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

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

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is intended that this action apply to all merchantable hazelnuts handled during the 2006-2007 marketing year beginning July 1, 2006. This action applies to all 2006-2007 marketing year restricted hazelnuts until they are properly disposed of in accordance with marketing order requirements. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

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

This rule establishes free and restricted percentages which allocate the quantity of domestically produced hazelnuts which may be marketed in domestic inshell markets (free) and hazelnuts which must be exported, shelled, or otherwise disposed of by handlers (restricted). The Board met and, after determining that volume regulation would tend to effectuate the declared policy of the Act, developed a marketing policy to be employed for the duration of the 2006-2007 marketing year. Volume regulation is intended to stabilize the supply of domestic inshell hazelnuts to meet the limited domestic demand for such hazelnuts with the goal of providing producers with reasonable returns. Based on an estimate of the domestic inshell trade demand and total supply of domestically produced hazelnuts available for the 2006-2007 marketing year, the Board voted unanimously at their November 15, 2006, meeting to recommend to USDA that the final free and restricted percentages for the 2006-2007 marketing year be established at 8.2840 percent and 91.7160 percent, respectively.

The Board's authority to recommend volume regulation and use computations to determine the allocation of hazelnuts to individual markets is specified in § 982.40 of the order. Under the order's provisions, free and restricted market allocations of hazelnuts are expressed as percentages of the total hazelnut supply subject to regulation. The percentages are derived by dividing the estimated domestic inshell trade demand (computed by formula) by the Board's estimate of the total domestically produced supply of hazelnuts that are expected to be available over the course of the marketing year.

Inshell trade demand, the key component of the marketing policy, is the estimated quantity of inshell hazelnuts necessary to adequately supply the domestic inshell hazelnut market for the duration of the marketing year. The Board determines the domestic inshell trade demand for each year and uses that estimate as the basis for setting the percentage of the available supply of domestically produced hazelnuts that handlers may ship to the domestic inshell market throughout the marketing season. The order specifies that inshell trade demand be computed by averaging the preceding three years' trade acquisitions of inshell hazelnuts, allowing adjustments for abnormal crop or marketing conditions. In addition, the Board may increase the computed inshell trade demand by up to 25 percent, if market conditions warrant an increase.

As required by the order, prior to September 20 of each marketing year, the Board meets to establish its marketing policy for that year. If the Board determines that volume control would tend to effectuate the declared policy of the Act, the Board then follows a procedure, specified by the order, to compute and announce preliminary free and restricted percentages. The preliminary free percentage releases 80 percent of the adjusted inshell trade demand that handlers may ship to the domestic market. The purpose of releasing only 80 percent of the inshell trade demand under the preliminary stage of regulation is to guard against any potential underestimate of crop size. The preliminary free percentage is expressed as a percentage of the total hazelnut supply subject to regulation, where total supply is the sum of the estimated crop production less the three-year average disappearance plus the undeclared carry-in from the previous marketing year.

On August 22, 2006, the National Agricultural Statistics Service (NASS) released an estimate of 2006 hazelnut production for the Oregon and Washington area at 41,000 dry orchard-run tons. NASS uses an objective yield survey method to estimate hazelnut production which has historically been very accurate.

On August 24, 2006, the Board met for the purpose of (1) determining if volume control regulation would tend to effectuate the declared policy of the Act; (2) estimating the total available supply and the domestic inshell trade demand for hazelnuts; (3) establishing preliminary free and restricted marketing percentages for the 2006-2007 marketing year; and (4) authorizing market outlets for restricted hazelnuts.

After discussion, the Board unanimously determined that volume regulation would be necessary to effectively market the industry's 2006 crop and would tend to effectuate the declared policy of the Act. The determination was based on (1) the large size of the 2006 hazelnut crop; (2) the inability of the domestic inshell market to absorb such a large crop; (3) the projected record-setting world hazelnut crop and the probability of an oversupplied world market; and (4) the average price paid to Oregon-Washington growers has not exceeded the parity price in any one of the past 18 years.

The Board then estimated the total available supply for the 2006 crop year to be 39,234 tons. The Board arrived at that quantity by using the crop estimate compiled by NASS (41,000 tons) and then adjusting that estimate to account for disappearance and carry-in. The order requires the Board to reduce the crop estimate by the average disappearance over the preceding three years (1,792 tons) and to increase it by the amount of undeclared carry-in from previous years' production (26 tons.)

In the calculation, disappearance is defined as the difference between the estimated orchard-run production and the actual supply of merchantable product available for sale by handlers. Disappearance can consist of (1) unharvested hazelnuts; (2) culled product (nuts that are delivered to handlers but later discarded); (3) product used on the farm, sold locally, or otherwise disposed of by producers; and (4) statistical error in the orchard-run production estimate.

Undeclared carry-in is defined as hazelnuts that were produced in a previous marketing year but were not subject to regulation because they were not shipped during that marketing year. Undeclared carry-in is subject to regulation during the current marketing year and is accounted for as such by the Board.

Additionally, the Board estimated domestic inshell trade demand for the 2006-2007 marketing year to be 3,067 tons. The Board arrived at this estimate by taking the average of the domestic inshell trade acquisitions for the 2002-2005 marketing years (2,775 tons) and then reducing that quantity by the declared carry-in from last year's crop (124 tons). The trade acquisition data for the 2005-2006 marketing year was omitted from the Board's calculations, as allowed by the order, after it was determined to be abnormal due to crop and marketing conditions.

The declared carry-in represents product regulated under the order during a preceding marketing year but not shipped during that year. This inventory must be accounted for when estimating the quantity of product to make available to adequately supply the market.

After establishing estimates for total available hazelnut supply and domestic inshell trade demand, the Board used those estimates to compute and announce preliminary free and restricted percentages of 5.4055 percent and 94.5945 percent, respectively. The Board computed the preliminary free percentage by multiplying the adjusted inshell trade demand by 80 percent and dividing the result by the estimate of the total available supply subject to regulation (2,651 tons × 80 percent/39,234 tons = 5.4055 percent). The preliminary free percentage initially released 2,121 tons of hazelnuts from the 2006-2007 supply for domestic inshell use. The Board authorized the preliminary restricted percentage (37,113 tons) to be exported or shelled for the domestic kernel markets.

Under the order, the Board must meet again on or before November 15 to review and revise the preliminary estimate of the total available supply of hazelnuts and to recommend interim final and final free and restricted percentages. Initially, when establishing preliminary free and restricted percentages, the Board utilizes a pre-harvest objective yield survey, compiled by NASS on behalf of the Board, to estimate the upcoming crop size. After the hazelnut harvest has concluded, usually sometime in October, information is available directly from handlers to more accurately estimate crop size. The Board may use this information to amend their preliminary estimate of total available supply before calculating the interim final and final percentages.

Interim final percentages are calculated in the same way as the preliminary percentages but release 100 percent of the inshell trade demand, effectively releasing the additional 20 percent held back at the preliminary stage. Final free and restricted percentages may release up to an additional 15 percent of the average trade acquisitions of inshell hazelnuts for desirable carryout, to provide an adequate carryover of product into the following season. The order requires that final free and restricted percentages be effective 30 days prior to the end of the marketing year, or earlier, if recommended by the Board and approved by USDA. The Board is allowed to combine the interim final and the final stages of the marketing policy, if marketing conditions so warrant, by recommending final percentages which immediately release 100 percent of the inshell trade demand (the preliminary percentage plus the additional 20 held back) plus any percentage increase the Board determines for desirable carryout. Revisions in the marketing policy can be made until February 15 of each marketing year, but the inshell trade demand can only be revised upward, consistent with § 982.40(e).

The Board met on November 15, 2006, and reviewed and approved an amended marketing policy and recommended the establishment of final free and restricted percentages. During the meeting, the Board revised the crop estimate in the marketing policy to 38,688 tons (from 41,000 tons), which reflects the results of post-harvest handler survey information compiled by the Board. In addition, the Board decided that market conditions were such that the immediate release of an additional 15 percent of the three year average trade acquisitions to allow for desirable carryout would not adversely affect the 2006-2007 domestic inshell market. Final percentages were recommended at 8.2840 percent free and 91.1760 percent restricted. The final free percentage releases 3,067 tons of inshell hazelnuts from the 2006-2007 supply for domestic use, which includes 416 tons for desirable carryout. Accordingly, since the final percentages were recommended for immediate release, no recommendations for interim final free and restricted percentages were necessary.

The final marketing percentages are based on the Board's final production estimate and the following supply and demand information for the 2006-2007 marketing year:

In addition to complying with the provisions of the order, the Board also considered USDA's 1982 “Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders” (Guidelines) when making its computations in the marketing policy. This volume control regulation provides a method to collectively limit the supply of inshell hazelnuts available for sale in domestic markets. The Guidelines provide that the domestic inshell market has available a quantity equal to 110 percent of prior years' shipments before allocating supplies for the export inshell, export kernel, and domestic kernel markets. This provides for a plentiful supply of inshell hazelnuts for consumers and for market expansion, while retaining the mechanism for dealing with oversupply situations. The established final percentages make available approximately 416 additional tons to encourage increased sales. The total free supply for the 2006-2007 marketing year is estimated to be 3,067 tons of hazelnuts, which is 127 percent of the average of the last three prior years' sales and exceeds the goal of the Guidelines.

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

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

Small agricultural producers are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less than $750,000, and small agricultural service firms are defined as those having annual receipts of less than $6,500,000. There are approximately 700 producers of hazelnuts in the production area and approximately 18 handlers subject to regulation under the order. Using statistics compiled by NASS, the average value of production received by producers in 2004 and 2005 was $57,912,000. Using those estimates, the average annual hazelnut revenue per producer would be approximately $82,700. The level of sales of other crops by hazelnut producers is not known. In addition, based on Board records, about 83 percent of the handlers ship under $6,500,000 worth of hazelnuts on an annual basis. In view of the foregoing, it can be concluded that the majority of hazelnut producers and handlers may be classified as small entities.

Board meetings are widely publicized in advance of the meetings and are held in a location central to the production area. The meetings are open to all industry members and other interested persons who are encouraged to participate in the deliberations and voice their opinions on topics under discussion. Thus, Board recommendations can be considered to represent the interests of small business entities in the industry.

Currently, U.S. hazelnut production is allocated among three main market outlets: Domestic inshell, export inshell, and kernel markets. Handlers and growers receive the highest return for sales in the domestic inshell market. They receive less for product going to export inshell, and the least for kernels. Based on Board records of average shipments for 1996-2005, the percentage going to each of these markets was 10 percent (domestic inshell), 51 percent (export inshell), and 37 percent (kernels). Other minor market outlets make up the remaining 2 percent.

The inshell hazelnut market can be characterized as having limited and inelastic demand with a very short primary marketing period. On average, 79 percent of domestic inshell hazelnut shipments occur between October 1 and November 30, primarily to supply holiday nut demand. The inshell market is, therefore, prone to oversupply and correspondingly low grower prices in the absence of supply restrictions. This volume control regulation provides a method for the U.S. hazelnut industry to limit the supply of domestic inshell hazelnuts available for sale in the continental U.S. and thereby mitigate market oversupply conditions.

Many years of marketing experience led to the development of the current volume control procedures. These procedures have helped the industry solve its marketing problems by keeping inshell supplies in balance with domestic needs. Volume controls ensure that the domestic inshell market is fully supplied while protecting the market from the negative effects of oversupply.

Although the domestic inshell market is a relatively small portion of total hazelnut sales (averaging 10 percent of total shipments for 1996-2005), it remains a profitable market segment. The volume control provisions of the marketing order are designed to avoid oversupplying this particular market segment, because that would likely lead to substantially lower grower prices. The other market segments, export inshell and kernels, are expected to continue to provide good outlets for U.S. hazelnut production into the future. Adverse climatic conditions that negatively impacted hazelnut production in the other hazelnut producing regions of the world in 2004 and 2005 have corrected and the total world supply in 2006-2007 is predicted to increase dramatically. Product prices in the world market have trended downward in the expectation of the greater supply. While the U.S. hazelnut industry continues to experience high demand for their large sized and high quality product, the prices that producers receive are tied to the global market. In light of the anticipated world oversupply situation, regulation of the domestic inshell market is important to the U.S. hazelnut industry to insulate that specialty market from the supply related challenges of the world hazelnut market.

In Oregon and Washington, high hazelnut production years typically follow low production years (a historically consistent pattern), and such was the case in 2006. The 2005 crop of 27,600 tons was 13 percent below the 10-year average (31,650 tons for 1996-2005) for hazelnut production. The 2006 crop is estimated to be 22 percent above the average. It is predicted that the 2007 crop will follow the recent production pattern and will be smaller than the current crop year. This cyclical trait also leads to inversely corresponding cyclical price pattern for hazelnuts. The intrinsic cyclical nature of the hazelnut industry lends credibility to the volume control measures enacted by the Board under the marketing order.

Recent production and price data reflect the stabilizing effect of volume control regulations. Industry statistics show that total hazelnut production has varied widely over the 10-year period between 1995 and 2004, from a low of 16,500 tons in 1998 to a high of 49,500 tons in 2001. Production in the smallest crop year and the largest crop year were 54 percent and 161 percent, respectively, of the 10-year average of 30,826 tons. Grower price, however, has not fluctuated to the extent of production. Prices in the lowest price year and the highest price year were 73 percent and 149 percent, respectively, of the 10-year average price of $963 per ton. The lower level of variability of price versus the variability of production provides an illustration of the order's price-stabilizing impact. The coefficient of variation (a standard statistical measure of variability; “CV”) for hazelnut production over the 10-year period is 0.36. In contrast, the coefficient of variation for hazelnut grower prices is 0.19, about half of the CV for production. The lower level of variability of price versus the variability of production provides an illustration of the order's price-stabilizing impact.

Comparing grower revenue to cost is useful in highlighting the impact on growers of recent product and price levels. A recent hazelnut production cost study from Oregon State University estimated cost-of-production per acre to be approximately $1,340 for a typical 100-acre hazelnut enterprise. Average grower revenue per bearing acre (based on NASS acreage and value of production data) equaled or exceeded that typical cost level only three times from 1996 to 2005. Average grower revenue was below typical costs in the other years. Without the stabilizing influence of the order, growers may have lost more money. While crop size has fluctuated, volume regulations contribute to orderly marketing and market stability by moderating the variation in returns for all producers and handlers, both large and small.

While the level of benefits of this rulemaking is difficult to quantify, the stabilizing effects of volume regulation impact both small and large handlers positively by helping them maintain and expand markets even though hazelnut supplies fluctuate widely from season to season. This regulation provides equitable allotment of the most profitable market, the domestic inshell market. That market is available to all handlers, regardless of size.

As an alternative to this regulation, the Board discussed not regulating the marketing of the 2006 hazelnut crop. However, without any regulation in effect, the Board believes that the industry would tend to oversupply the inshell domestic market. The 2006 hazelnut crop is larger than last year's crop and 22 percent above the ten-year average. The unregulated release of 38,688 tons on the domestic inshell market could easily oversupply the small, but lucrative domestic inshell market. The Board believes that any oversupply would completely disrupt the market, causing producer returns to decrease dramatically.

Section 982.40 of the order establishes a procedure and computations for the Board to follow in recommending to USDA establishment of preliminary, interim final, and final percentages of hazelnuts to be released to the free and restricted markets each marketing year. The program results in a plentiful supply of hazelnuts for consumers and for market expansion while retaining the mechanism for dealing with oversupply situations.

Hazelnuts produced under the order comprise virtually all of the hazelnuts produced in the U.S. This production represents, on average, less than 2 percent of total U.S. production of all tree nuts, and less than 7 percent of the world's hazelnut production.

Last season, 85 percent of the domestically produced hazelnut kernels were marketed in the domestic market and 15 percent were exported. Domestically produced kernels generally command a higher price in the domestic market than imported kernels. The industry is continuing its efforts to develop and expand other markets with emphasis on the domestic kernel market. Small business entities, both producers and handlers, benefit from the expansion efforts resulting from this program.

Inshell hazelnuts produced under the order compete well in export markets because of their high quality. Based on Board statistics, Europe has historically been the primary export market for U.S. produced inshell hazelnuts. Shipments have also been relatively consistent, not varying much from the 10 year average of 4,958 tons. Recent years, though, have seen a significant increase in export destinations. Last season, inshell shipments to Europe totaled 4,622 tons, representing just 38 percent of exports, with the largest share going to Germany. Inshell shipments to Southwest Pacific countries, and Hong Kong in particular, have increased dramatically in the past few years, rising to 50 percent of total exports of 12,042 tons for the 2005-2006 marketing year. The industry continues to pursue export opportunities.

There are some reporting, recordkeeping, and other compliance requirements under the order. The reporting and recordkeeping burdens are necessary for compliance purposes and for developing statistical data for maintenance of the program. The information collection requirements have been previously approved by the Office of Management and Budget under OMB No. 0581-0178. The forms require information which is readily available from handler records and which can be provided without data processing equipment or trained statistical staff. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. This rule does not change those requirements.

The AMS is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

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

Further, the Board's meetings were widely publicized throughout the hazelnut industry and all interested persons were invited to attend the meetings and participate in Board deliberations. Like all Board meetings, those held on August 24 and November 15, 2006, were public meetings and all entities, both large and small, were able to express their views on this issue. Finally, interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses.

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

This rule invites comments on the establishment of final free and restricted percentages for the 2006-2007 marketing year under the hazelnut marketing order. Any comments received will be considered prior to finalization of this rule.

After consideration of all relevant material presented, including the Board's recommendation, and other information, it is found that this interim final rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined upon good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect and that good cause exists for not postponing the effective date of this action until 30 days after publication in the Federal Register because: (1) The 2006-2007 marketing year began July 1, 2006, and the percentages established herein apply to all merchantable hazelnuts handled from the beginning of the crop year; (2) the percentages make the full trade demand available so handlers can take advantage of inshell marketing opportunities; (3) handlers are aware of this rule, which was recommended at an open Board meeting, and need no additional time to comply with this rule; and (4) interested persons are provided a 60-day comment period in which to respond, and all comments timely received will be considered prior to finalization of this action.

On November 1, 2004, we issued AD 2004-23-03, Amendment 39-13858 (69 FR 64653, November 8, 2004). That AD requires initial and repetitive borescope inspections of the HP-IP turbine internal and external oil vent tubes for coking and carbon buildup, and cleaning or replacing the vent tubes if necessary. That AD was the result of a report of an RB211 Trent 700 series engine experiencing a disk shaft separation, overspeed of the IP turbine rotor, and multiple blade release of IP turbine blades. The findings suggested these events resulted from an internal oil fire in the HP-IP turbine oil vent tubes due to coking and carbon buildup. This fire led to a second fire in the internal air cavity below the IP turbine disk drive shaft. That condition, if not corrected, could result in uncontained engine failure and damage to the airplane.

Since AD 2004-23-03 was issued, the European Aviation Safety Agency (EASA), which is the airworthiness authority for the European Union, notified us that an unsafe condition may exist on RB211 Trent 700 series turbofan engines. EASA advises that recently an oil vent tube ruptured as a result of blockage, leading to significant loss of engine oil, on an RB211 Trent 700 series turbofan engine. This incident indicates that further measures are necessary to control carbon buildup in the oil vent tubes.

We have reviewed and approved the technical contents of RR Alert Service Bulletin (ASB) No. RB.211-72-AE302, Revision 3, dated September 20, 2006. That ASB describes procedures for borescope inspections, cleaning, and replacement if necessary of the internal and external oil vent tubes. For internal oil vent tubes to pass inspection, they must allow cleaning tool, number HU80298 to pass through them. AD 2004-23-03 was less stringent in that it allowed tubes that an 8 mm or 6 mm diameter borescope could pass through, back into service. EASA classified this ASB as mandatory and issued AD 2006-0355, dated December 4, 2006, in order to ensure the airworthiness of these RB211 Trent 700 series turbofan engines in Europe.

These engine models are manufactured in the United Kingdom and are type certificated for operation in the United States under the provisions of section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Under this bilateral airworthiness agreement, EASA kept the FAA informed of the situation described above. We have examined the findings of EASA, reviewed all available information, and determined that AD action is necessary for products of this type design that are certificated for operation in the United States.

Although no airplanes that are registered in the United States use these RB211 Trent 700 series turbofan engines, the possibility exists that the engines could be used on airplanes that are registered in the United States in the future. The unsafe condition described previously is likely to exist or develop on other RB211 Trent 700 series turbofan engines of the same type design. This AD requires initial and repetitive borescope inspections of the HP-IP turbine internal and external oil vent tubes for coking and carbon buildup, and cleaning or replacing the vent tubes if necessary. We are issuing this AD to prevent internal oil fires due to coking and carbon buildup, that could cause uncontained engine failure and damage to the airplane. You must use the service information described previously to perform the actions required by this AD.

Since there are currently no domestic operators of this engine model, notice and opportunity for public comment before issuing this AD are unnecessary. Therefore, a situation exists that allows the immediate adoption of this regulation.

This AD is a final rule that involves requirements affecting flight safety and was not preceded by notice and an opportunity for public comment; however, we invite you to send us any written relevant data, views, or arguments regarding this AD. Send your comments to an address listed under ADDRESSES . Include “AD Docket No. FAA-2005-19559; Directorate Identifier 2004-NE-03-AD” in the subject line of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the rule that might suggest a need to modify it.

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

You may examine the docket that contains the AD, any comments received, and any final disposition in person at the Docket Management Facility Docket Office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Office (telephone (800) 647-5227) is located on the plaza level of the Department of Transportation Nassif Building at the street address stated in ADDRESSES . Comments will be available in the AD docket shortly after the DMS receives them.

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 the regulation:

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

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

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

We prepared a summary of the costs to comply with this AD and placed it in the AD Docket. You may get a copy of this summary by sending a request to us at the address listed under ADDRESSES .

The FAA is implementing a new process for streamlining the issuance of ADs related to MCAI. The streamlined process will allow us to adopt MCAI safety requirements in a more efficient manner and will reduce safety risks to the public. This process continues to follow all FAA AD issuance processes to meet legal, economic, Administrative Procedure Act, and Federal Register requirements. We also continue to meet our technical decision-making responsibilities to identify and correct unsafe conditions on U.S.-certificated products.

This AD references the MCAI and related service information that we considered in forming the engineering basis to correct the unsafe condition. The AD contains text copied from the MCAI and for this reason might not follow our plain language principles.

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the Federal Register on November 22, 2006 (71 FR 67506). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states that there are reports of interference between the wing spar lower boom and the wheel fairing attaching screw causing an unsafe condition. The interference could, if left uncorrected, reduce the fatigue life of the wing spar with potentially catastrophic results.

We gave the public the opportunity to participate in developing this AD. We have considered the comment received.

EADS SOCATA states:

Our cost estimate included both the inspection and screw displacement costs as well as repair costs. We developed the repair cost estimate based on the information provided and assumed the worst case scenario if a repair was required. Since EADS SOCATA did not provide an estimate (work-hours or parts cost) if a repair is required and the FAA is required to provide this estimate to the public, we are keeping the language the same as the NPRM to account for worst case repair situations.

We reviewed the available data, including the comment received, and determined that air safety and the public interest require adopting the AD as proposed.

We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information.

We might also have required different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are described in a separate paragraph of the AD, and take precedence over the actions copied from the MCAI.

We estimate that this AD will affect 270 products of U.S. registry. We also estimate that it will take about 15 work-hours per product to comply with this AD. The average labor rate is $80 per work-hour. Required parts will cost about $15,000 per product. Where the service information lists required parts costs that are covered under warranty, we have assumed that there will be no charge for these parts. As we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $4,374,000, or $16,200 per product.

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 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 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.

You may examine the AD docket on the Internet at http://dms.dot.gov; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone (800) 647-5227) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

The FAA is implementing a new process for streamlining the issuance of ADs related to MCAI. The streamlined process will allow us to adopt MCAI safety requirements in a more efficient manner and will reduce safety risks to the public. This process continues to follow all FAA AD issuance processes to meet legal, economic, Administrative Procedure Act, and Federal Register requirements. We also continue to meet our technical decision-making responsibilities to identify and correct unsafe conditions on U.S.-certificated products.

This AD references the MCAI and related service information that we considered in forming the engineering basis to correct the unsafe condition. The AD contains text copied from the MCAI and for this reason might not follow our plain language principles.

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the Federal Register on November 28, 2006 (71 FR 68762). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states that there was a report of a master cylinder yoke failure. The AD requirements are to detect defective yokes on aircraft and replace them. The aim of this AD is to ensure that normal braking is available at any time to prevent possible runway excursions in the event of failure of the master cylinder yoke.

We gave the public the opportunity to participate in developing this AD. We have considered the comments received.

EADS SOCATA gave comments addressing the following:

EADS SOCATA states:

The FAA does not agree. We are using the worst case scenario of all four yokes being replaced. If an operator needs to replace fewer yokes, the cost will be less.

EADS SOCATA states:

The FAA does not agree. Including the part number in the applicability is redundant. Per the AD, the operator has to verify whether the applicable part number is installed and, if so, take appropriate action. If a different part number from a different supplier is installed, then the AD does not apply.

EADS SOCATA states:

The FAA does not agree. Since these parts are not serialized and tracked, there would be no way of knowing if the part was delivered before or after January 2006. In addition, EADS SOCATA TBM Aircraft Mandatory Service Bulletin SB 70-136, ATA No. 32, dated December 2005, requires installation of yoke part number T700A324004810000. If an operator wants to use a different part numbered component and can show that it provides an acceptable level of safety, the operator can make a request to the FAA to approve an alternative method of compliance (AMOC) using the procedures in 14 CFR part 39 and this AD.

We reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting the AD as proposed.

We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information.

We might also have required different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are described in a separate paragraph of the AD, and take precedence over the actions copied from the MCAI.

We estimate that this AD will affect 270 products of U.S. registry. We also estimate that it will take about 1.5 work-hours per product to comply with this AD. The average labor rate is $80 per work-hour. Required parts will cost about $600 per product. Where the service information lists required parts costs that are covered under warranty, we have assumed that there will be no charge for these parts. As we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $194,400 or $720 per product.

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 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 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.

You may examine the AD docket on the Internet at http://dms.dot.gov; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone (800) 647-5227) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

The FAA proposed to amend 14 CFR part 39 with a proposed AD. The proposed AD applies to RRD Dart 528, 529, 532, 535, 542, and 555 series turboprop engines. We published the proposed AD in the Federal Register on July 11, 2006 (71 FR 39023). That action proposed to require a dimensional inspection of the IPT disk or an ultrasonic inspection of the seal arm contact between the HPT and the IPT disk seal arm and rework or replacement of the IPT disk if wear outside acceptable limits is found.

You may examine the docket that contains the AD, any comments received, and any final disposition in person at the Docket Management Facility Docket Office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Office (telephone (800) 647-5227) is located on the plaza level of the Department of Transportation Nassif Building at the street address stated in ADDRESSES . Comments will be available in the AD docket shortly after the DMS receives them.

We provided the public the opportunity to participate in the development of this AD. We have considered the comment received.

One commenter, the Modification and Replacement Parts Association (MARPA), requests that we incorporate by reference (IBR) the SBs referenced in the proposed AD. We agree. This final rule AD IBRs the documents necessary for accomplishing the requirements mandated by this AD. We did not change the AD.

MARPA also requests that we publish those SBs that we IBR, in Docket File FAA-2006-24825 of the Docket Management System (DMS). We are reviewing issues surrounding posting of service bulletins on the DMS as part of an AD docket. Once we have thoroughly examined all aspects of this issue and have made a final determination, we will consider whether our current practice needs to be revised. No change to the final rule is necessary in response to this comment.

We found it necessary to change the compliance date in paragraph (f)(2)(i), which requires performing a dimensional inspection and repairing or replacing the IPT disk, if necessary. We changed the date from December 30, 2006, to June 30, 2007.

We have carefully reviewed the available data, including the comment received, and determined that air safety and the public interest require adopting the AD with the changes described previously.

We estimate that this AD will affect 30 RRD Dart 528, 529, 532, 535, 542, and 555 series turboprop engines installed on airplanes of U.S. registry. We also estimate that it will take about 50 work-hours per engine to perform the actions, and that the average labor rate is $80 per work-hour. Required parts will cost about $50,000 per IPT disk. We estimate that 25 percent, or eight engines, will require IPT disk replacement. Based on these figures, we estimate the total cost of the AD to U.S. operators to be $500,000.

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 summary of the costs to comply with this AD and placed it in the AD Docket. You may get a copy of this summary at the address listed under ADDRESSES .

The FAA is implementing a new process for streamlining the issuance of ADs related to MCAI. This streamlined process will allow us to adopt MCAI safety requirements in a more efficient manner and will reduce safety risks to the public. This process continues to follow all FAA AD issuance processes to meet legal, economic, Administrative Procedure Act, and Federal Register requirements. We also continue to meet our technical decision-making responsibilities to identify and correct unsafe conditions on U.S.-certificated products.

This AD references the MCAI and related service information that we considered in forming the engineering basis to correct the unsafe condition. The AD contains text copied from the MCAI and for this reason might not follow our plain language principles.

The European Aviation Safety Agency (EASA), which is the aviation authority for the European Union, has issued emergency airworthiness directive 2006-0335-E, dated November 3, 2006 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states that during routine visual inspection, a crack has been found in the wing MLG (main landing gear) rib 5 forward attachment lug on two A310 in-service aircraft. Laboratory examination of one of the cracked ribs confirmed that the crack is due to the presence of pitting corrosion in the forward lug holes. Also on both aircraft medium to heavy corrosion was found in the forward lugs on the opposite wing after removal of the bushes. This situation if not detected, could affect the structural integrity of the MLG attachment. The aim of the EASA Emergency Airworthiness Directive (EAD) is to mandate repetitive detailed visual inspections of wing MLG rib 5 aft bearing forward lugs for thorough crack detection and replacement if necessary. You may obtain further information by examining the MCAI in the AD docket.

Airbus has issued Service Bulletin A310-57A2088, including Appendix 01, dated November 6, 2006. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with this State of Design Authority, they have notified us of the unsafe condition described in the MCAI and service information referenced above. We are issuing this AD because we evaluated all the information provided by the State of Design Authority and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design.

We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information.

We might also have required different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are described in a separate paragraph of the AD. These requirements take precedence over the actions copied from the MCAI.

An unsafe condition exists that requires the immediate adoption of this AD. The FAA has found that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because following routine visual inspection, two through-cracks have been found in the wing MLG rib 5 lug. The cracks were extended through the entire thickness of the forward lug. Failure of this attachment could result in gear collapse upon landing. Therefore, we determined that notice and opportunity for public comment before issuing this AD are impracticable and that good cause exists for making this amendment effective in fewer than 30 days.

This AD is a final rule that involves requirements affecting flight safety, and we did not precede it by notice and opportunity for public comment. We invite you to send any written relevant data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2007-26921; Directorate Identifier 2006-NM-247-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD because of those comments.

We will post all comments we receive, without change, to http://dms.dot.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this AD.

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

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

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

For the reasons discussed above, I certify this regulation:

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

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

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

We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

Commission Regulation 170.15  1 (“Regulation”) concerns membership by FCMs in an RFA. Section 17(p) of the Commodity Exchange Act (“Act” or “CEA”) requires each RFA to have a comprehensive program to audit the financial and sales practices of its members and their associated persons. 2 Section 17(q) of the Act requires each RFA to establish such programs “as soon as practicable but not later than September 30, 1985.” Currently, the National Futures Association (“NFA”) is the sole RFA under Section 17(a) of the Act, and it is also a self-regulatory organization (“SRO”).

In adopting the Regulation, the Commission found that comprehensive and effective self-regulation and the avoidance of duplicative regulation would be enhanced by adoption of a regulation mandating membership in an RFA by each person required to be registered as an FCM. The Commission also found that the need to maintain these extensive programs for the comparatively small number of persons likely to remain subject solely to the Commission's direct regulation would be inefficient and duplicative of the self-regulatory functions for which NFA would be responsible.

In December 2000, the CFMA was enacted into law. Among other things, it revised the supervisory functions of the Commission. Specifically, the CFMA transformed the role of the CFTC from a front-line regulator, with responsibility for direct supervision of the commodity futures markets and their participants and professionals, to an oversight agency. 3

In light of the Commission's new oversight role and the policies and purposes of the Act, including the goals of effective self-regulation and the avoidance of duplicative regulation, on November 1, 2006, the Commission published in the Federal Register a proposed revision to the Regulation (“Proposal”). 4 The Proposal would require that all persons that are registered with the Commission as an FCM, subject to an exception for persons that are notice-registered as BDs, 5 and regardless of whether any such person is required to be registered as an FCM, must become and remain a member of at least one RFA. As the Commission explained in the Federal Register release announcing the Proposal (“Proposing Release”), the purpose of the Proposal was “to ensure that all FCMs would come under direct supervision of at least one SRO.”  6 The Commission invites interested persons to read the Proposing Release for a fuller discussion of the purpose of the amendment contained in the Proposal.

The Commission received two comment letters on the Proposal. One was from NFA, which expressed support for the amendment. The other was from legal counsel representing clients who would be affected by the Proposal in the event the Commission adopted it. This latter commenter requested that, in the event the Commission adopted the Proposal, the Commission make the amendment effective 60 days after publication in the Federal Register . The additional 30 days was requested “in order to provide an orderly time for transition and permit sufficient time for registrants affected by the proposed amendment to determine their future course of action if the proposed amendment is approved.”

In response, the Commission notes that, as an agency of the Federal Government, in adopting regulations, it is subject to the provisions of the Administrative Procedure Act. Among other things, this means that, in the absence of certain specified circumstances, the Commission may not make a substantive regulation effective earlier than 30 days before the regulation is published in the Federal Register . 7 Thus, the Commission typically makes its substantive regulations effective 30 days after the date on which the regulation is published in the Federal Register . With respect to the instant matter, the Commission believes that 30 days is sufficient time to achieve compliance with the amended regulation, given the reasons cited by the commenter. Accordingly, the Commission has determined to adopt the amendment to Regulation 170.15(a) as proposed and to make the amendment effective 30 days after publication in the Federal Register .

The Regulatory Flexibility Act  8 requires that agencies, in issuing regulations, consider the impact of those regulations on small businesses. The amended Regulation would affect persons that are registered as FCMs, even if they are not required to be so registered. The Commission has previously established certain definitions of “small entities” to be used by the Commission in evaluating the impact of its regulations on such entities in accordance with the Regulatory Flexibility Act. 9 The Commission previously determined that registered FCMs are not small entities for the purpose of the Regulatory Flexibility Act. 10

The Commission did not receive any public comments relative to its analysis of the application of the Regulatory Flexibility Act to the Proposal.

Section 15(a) of the Act  11 requires the Commission to consider the costs and benefits of its action before issuing a new regulation under the Act. By its terms, Section 15(a) does not require the Commission to quantify the costs and benefits of a new regulation or to determine whether the benefits of the proposed regulation outweigh its costs. Rather, Section 15(a) simply requires the Commission to “consider the costs and benefits” of its action.

Section 15(a) further specifies that costs and benefits shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. The Commission, in its discretion, can choose to give greater weight to any one of the five enumerated areas and determine that, notwithstanding its costs, a particular regulation is necessary or appropriate to protect the public interest or to effectuate any of the provisions or to accomplish any of the purposes of the Act.

The Proposal contained an analysis of the Commission's consideration of these costs and benefits and solicited public comment thereon. 12 The Commission did not receive any public comments relative to its cost-benefit analysis of the Proposal.

Section 4011 of ERISA requires certain underfunded plans to give an annual notice to participants of plan funding status and the limits on the PBGC's guarantee. The PBGC's implementing regulations are at 29 CFR part 4011.

On August 17, 2006, the President signed into law the Pension Protection Act of 2006, Public Law 109-280 (PPA 2006). Section 501 of PPA 2006 repealed section 4011 of ERISA for plan years beginning after 2006 and replaced the disclosure requirement under that section with a disclosure requirement under Title I of ERISA (under the jurisdiction of the Department of Labor). The PBGC is amending its regulation implementing section 4011 of ERISA to reflect that statutory change. Section 4011 continues to apply for plan years beginning on or after January 1, 1995, and before January 1, 2007.

Because this rule is simply a technical amendment that conforms PBGC's regulation to the statutory change, PBGC has determined that notice and public comment on this amendment are unnecessary. Further, because the statutory change is effective for plan years beginning after 2006, PBGC finds good cause for making this amendment effective immediately.

The PBGC has determined that this action is not a “significant regulatory action” under the criteria set forth in Executive Order 12866. Because no general notice of proposed rulemaking is required for this amendment, the Regulatory Flexibility Act of 1980 does not apply. See 5 U.S.C. 601(2).

On August 16, 2005, we published a notice of proposed rulemaking (NPRM) entitled “Drawbridge Operation Regulations; Gulf Intracoastal Waterway, Anna Maria, FL” in the Federal Register (70 FR 48091). We received 28 comments on the proposed rule. On January 31, 2006, we published an announcement of a public meeting entitled “Announcement of Public Meeting Regarding the Proposed Drawbridge Schedule Change for the Anna Maria and Cortez Drawbridge, Anna Maria, FL,” in the Federal Register (71 FR 5033). The public meeting was held on March 29, 2006 at Holmes Beach City Hall, 5801 Marina Drive, Holmes Beach, Florida.

On November 8, 2006, as a result of the previous comments received, we published a supplemental notice of proposed rulemaking (SNPRM) entitled “Drawbridge Operation Regulations; Gulf Intracoastal Waterway, Anna Maria, FL” in the Federal Register (71 FR 65443). We received two comments on this proposed rule; one in favor of the proposed schedule and one against the new schedule.

The existing regulations of the Cortez (SR 684) Bridge, mile 87.4, and Anna Maria (SR 64) Bridge, mile 89.2 at Anna Maria, published in 33 CFR 117.287(d)(1) and (2) require the draw to open on signal, except that from 7 a.m. to 6 p.m., the draw need open only on the hour, twenty minutes past the hour and forty minutes past the hour if vessels are present.

On June 1, 2005, the City officials of Holmes Beach in cooperation with the cities of Anna Maria and Bradenton Beach and the Town of Longboat Key requested that the Coast Guard review the existing regulations governing the operation of the Cortez and Anna Maria (Manatee Avenue West) bridges. The review was requested by city officials because they believed the current drawbridge regulations were not meeting the needs of vehicle traffic.

This rule is necessary to assist the local community in determining additional corrective action that may be needed to alleviate the severe vehicle traffic congestion on Anna Maria Island during the winter season.

The Coast Guard received 45 responses to the initial Notice of Proposed Rulemaking and at the Public Meeting convened on March 29, 2006. The responses were supplied by 30 written comments and 15 oral comments and several persons provided more than one comment per letter or verbally. These responses consisted of 11 form letters in favor of the proposal, six additional comments also in favor of the proposal, seven comments against the morning and afternoon curfew hours, six comments against the nighttime closures, two comments requesting staggered hours between the two bridges rather than both opening on the same schedule, six comments requesting changes in the winter season only and nine comments against the proposed 30-minute schedules. Two comments suggested that there should be no regulations on these bridges and that the bridges should open on demand.

Additionally, the Coast Guard received two responses to the supplemental notice of proposed rulemaking (SNPRM). One response was in favor of both drawbridges being placed on the same 30 minute schedule and one comment was against placing both drawbridges on the same 30 minute schedule.

The Coast Guard thoroughly examined and considered all the comments and made adjustments to the final rule. These bridges will remain on the 20-minute opening schedule from 6 a.m. to 7 p.m. during the day and both will operate on the 30-minute schedule from 6 a.m. to 7 p.m. during the winter season from January 15 through May 15.

The Coast Guard considered placing these bridges on a staggered schedule. However, this schedule would be impracticable as only a limited number of vessels traveling at a high rate of speed would be able to make the next scheduled bridge opening.

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

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This proposed rule would affect the following entities, some of which may be small entities: The owners or operators of vessels needed to transit the Intracoastal Waterway in the vicinity of the Cortez and Anna Maria bridges, persons intending to drive over the bridges, and nearby business owners. The revision to the openings schedule would not have a significant impact on a substantial number of small entities. Vehicle traffic and small business owners in the area might benefit from the improved traffic flow that regularly scheduled openings will offer this area. Although bridge openings will be less frequent, vessel traffic will still be able to transit the Intracoastal Waterway in the vicinity of the Cortez and Anna Maria bridges pursuant to the revised opening schedule.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about the rule or any policy or action of the Coast Guard.

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

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

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

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

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

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

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

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

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

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

We have analyzed this rule under Commandant Instruction M16475.lD, and Department of Homeland Security Management Directive 5100.1, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (32)(e) of the Instruction, from further environmental documentation. Under figure 2-1, paragraph (32)(e_, of the Instruction, an “Environmental Analysis Check List” and a “Categorical Exclusion Determination” are not required for this rule.

Bridges.

The Saint Lawrence Seaway Development Corporation (SLSDC) and the St. Lawrence Seaway Management Corporation (SLSMC) of Canada, under international agreement, jointly publish and presently administer the St. Lawrence Seaway Regulations and Rules (Practices and Procedures in Canada) in their respective jurisdictions. Under agreement with the SLSMC, the SLSDC is amending the joint regulations by updating the Regulations and Rules in various categories. The changes update the following sections of the Regulations and Rules: Condition of Vessels; Preclearance and Security for Tolls; Seaway Navigation; Dangerous Cargo; and, General. These updates are necessary to take account of updated procedures which will enhance the safety of transits through the Seaway. Many of these changes are to clarify existing requirements in the regulations. Where new requirements or regulations are made, an explanation for such a change is provided below.

A Notice of Proposed Rulemaking was published on December 4, 2006 (71 FR 70336). Interested parties have been afforded an opportunity to comment. While no public comments were received, the SLSDC is making a few minor editorial changes to the final rule in order to ensure consistency between the final rules published in each jurisdiction.

Regulatory Notices: Privacy Act: Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit http://dms.dot.gov.

The SLSDC is making one clarification to the Interpretation section of the joint Seaway regulations. Under section 401.2, “Interpretation', after the definition of Seaway station, the SLSDC is adding a reference to section 401.62, “Seaway stations” for a list and location of the specific Seaway stations. In terms of Notice and Arrival requirements for vessels transiting the Seaway pursuant to section 401.79, “Advance notice of arrival, vessels requiring inspection”, there has been some confusion regarding the location of the nearest Seaway station. Inserting a reference to the list of Seaway Stations in the definition will aid in clarifying the location to which a vessel must provide its 96 hours notice of arrival.

The SLSDC is making two amendments to the joint regulations pertaining to the Condition of Vessels. Under section 401.8, “Landing booms”, the SLSDC is requiring vessels that are equipped with landing booms, but not using them, to use the Seaway's tie-up service at approach walls. This amendment clarifies which vessels are required to use the Seaway's tie-up service. Under section 401.12, “Minimum requirements—mooring lines and fairleads”, the SLSDC is providing flexibility to Seaway ship inspectors' ability to require an alternate mooring arrangement when a vessel cannot comply with the Seaway regulation due to design or other factors.

Two amendments to the joint regulations regarding Preclearance and Security for Tolls are being made. The amendment to section 401.22, “Preclearance of vessels”, will provide flexibility to an officer to preclear a vessel, such as a large private yacht or “Tall Ship” that would not be able to moor at the pleasure craft docks because of its unusual design and requirements for inspection. Section 401.24, “Application for Preclearance”, is revised to eliminate the requirement that a representative of a vessel must submit 3 copies of a preclearance form since the Manager no longer issues 3 copies of the form.

The SLSDC is making two amendments to the joint regulations pertaining to Seaway Navigation. Under section 401.40, “Entering a lock”, the SLSDC is renaming the section and adding language to make it clear that no vessel shall exit a lock in a manner that results in the stern passing the stop symbol on the lock wall nearest the closed gates. There have been instances in which vessels, when required to maintain position in a lock or upon entering or departing a lock, have drifted astern resulting in damage to Seaway property. This amendment requires a vessel entering, exiting or maintaining its position in a lock to adhere to firmly established Seaway procedures. Under section 401.58, “Pleasure craft scheduling”, language is added to clarify that the requirement to use the automated ticked dispensers only applies to vessels transiting Canadian locks since there are no automated ticket dispensers at the U.S. locks.

The SLSDC is making several clarifying/editorial changes in the joint Seaway regulations pertaining to Dangerous Cargo. Revised language throughout the following sections: 401.68, “Explosives Permission Letter”; 401.70, “Fendering—explosive and hazardous cargo vessels”; and, 401.72, “Reporting—explosive and hazardous cargo vessels”, clarifies that the Seaway(s) issue Seaway Explosives Permission Letters rather than permits.

In the regulations pertaining to general requirements, the SLSDC makes one amendment. Under section 401.93, “Access to Seaway property,” the word “swim” is removed in order to clarify that a person may not enter any Seaway canal or lock area regardless of the method of entry.

This regulation involves a foreign affairs function of the United States and therefore Executive Order 12866 does not apply and evaluation under the Department of Transportation's Regulatory Policies and Procedures is not required.

I certify this regulation will not have a significant economic impact on a substantial number of small entities. The St. Lawrence Seaway Regulations and Rules primarily relate to commercial users of the Seaway, the vast majority of whom are foreign vessel operators. Therefore, any resulting costs will be borne mostly by foreign vessels.

This regulation does not require an environmental impact statement under the National Environmental Policy Act (49 U.S.C. 4321, et seq. ) because it is not a major federal action significantly affecting the quality of the human environment.

The Corporation has analyzed this rule under the principles and criteria in Executive Order 13132, dated August 4, 1999, and has determined that this rule does not have sufficient federalism implications to warrant a Federalism Assessment.

The Corporation has analyzed this rule under Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48) and determined that it does not impose unfunded mandates on State, local, and tribal governments and the private sector requiring a written statement of economic and regulatory alternatives.

This regulation has been analyzed under the Paperwork Reduction Act of 1995 and does not contain new or modified information collection requirements subject to the Office of Management and Budget review.

Organization of This Document. The following outline is provided to aid in locating information in this preamble.

Regulated Entities. This final action on reconsideration potentially affects sewage sludge incinerators (SSI). Although there is not a specific North American Industrial Classification System (NAICS) code for SSI, these units may be operated by municipalities or other entities and the following NAICS codes apply: Non-hazardous incinerators (NAICS 562213); sludge disposal sites (NAICS 562212); and sewage treatment facilities (NAICS 221320). The categories and entities regulated by the final OSWI rules are very small municipal waste combustion (VSMWC) units and institutional waste incineration (IWI) units. The final OSWI emission guidelines and new source performance standards (NSPS) affect the following categories of sources:

This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities that were regulated by the final OSWI rules.

Docket. The docket number for this action and the final OSWI NSPS (40 CFR part 60, subpart EEEE) and emission guidelines (40 CFR part 60, subpart FFFF) is Docket ID No. EPA-HQ-OAR-2003-0156.

World Wide Web (WWW). In addition to being available in the docket, electronic copies of the final rule and the notice of final action on reconsideration are available on the WWW through the Technology Transfer Network Web site (TTN). Following signature, EPA posted a copy of the final rule on the TTN's policy and guidance page for newly proposed or promulgated rules at http://www.epa.gov/ttn/oarpg. The TTN provides information and technology exchange in various areas of air pollution control.

Section 129 of the Clean Air Act (CAA), entitled “Solid Waste Combustion,” requires EPA to develop and adopt NSPS and emission guidelines for solid waste incineration units pursuant to CAA section 111. Section 111(b) of the CAA requires EPA to establish NSPS for new sources, and CAA section 111(d) requires EPA to establish procedures for States to submit plans for implementing emission guidelines for existing sources. Congress specifically added CAA section 129 to the CAA to address concerns about emissions from solid waste combustion units. Section 129(a)(1) of the CAA identifies five categories of solid waste incineration units:

(1) Units with a capacity of greater than 250 tons per day (tpd) combusting municipal waste;

(2) Units with a capacity equal to or less than 250 tpd combusting municipal waste;

(3) Units combusting hospital, medical, and infectious waste;

(4) Units combusting commercial or industrial waste; and

(5) Unspecified “other categories of solid waste incineration units.”

EPA previously developed regulations for each of the listed categories of solid waste incineration units except for the undefined “other categories of solid waste incineration units.” On December 9, 2004 (69 FR 71472), EPA proposed NSPS and emission guidelines for OSWI units. EPA received and considered public comments and promulgated final regulations for OSWI units on December 16, 2005.

Following the promulgation of the final OSWI rule, EPA received a petition for reconsideration from the Sierra Club. On June 28, 2006 (71 FR 36726), we granted reconsideration and requested comment on one issue raised by the petitioner: specifically, whether SSI should be regulated under the OSWI rules.

The public comment period on the reconsideration ended on August 14, 2006. Twenty written public comments were received. The individual comment letters can be found in Docket ID No. EPA-HQ-OAR-2003-0156.

At this time, we are announcing our final action on reconsideration of one issue for which we asked for comment in our June 28, 2006, notice. We are also announcing our final decision on six remaining issues that were raised by petitioners.

On June 28, 2006 (71 FR 36726), we granted reconsideration of and requested comment on the SSI issue that was raised in the petition for reconsideration. Generally, the petitioner contended that SSI should be regulated as a type of OSWI under CAA section 129. The petitioner noted that the notice of proposal of the OSWI rules did not mention SSI, and claimed that there was no opportunity to comment on EPA's decision not to regulate SSI under OSWI. Moreover, the petitioner argued that EPA's rationale was advanced for the first time in the final rule and supporting documents.

In our June 28, 2006, notice of reconsideration (71 FR 36726), EPA acknowledged that the OSWI proposal notice (69 FR 71472, December 9, 2004) did not specifically mention or request comment on whether SSI should be regulated under the OSWI rules. EPA did publish notices on April 24, 2000 (65 FR 23459), and June 26, 2002 (67 FR 43113), stating that it had decided not to regulate SSI as a category under CAA section 129 and, instead, had listed it as an area source category to be regulated under CAA sections 112(c)(3) and 112(k)(3). These notices, however, did not request public comment on whether SSI should be regulated under CAA section 129 or 112. We decided to grant reconsideration of this issue in the interest of ensuring full opportunity for comment.

A total of 20 unique comments were received on the June 28, 2006, proposal notice including a comment by the petitioner, Sierra Club. Seventeen of the commenters wholly support EPA's proposed decision to regulate SSI under CAA section 112 rather than CAA section 129. One of the supporting commenters is a trade organization for publicly-owned treatment works, which are usually the SSI owners and operators. Sixteen member municipalities submitted separate comment letters endorsing the comments from the trade organization. Aside from the petitioner, two State agencies submitted comments that do not fully support EPA's proposal. All of the comments are addressed in the following discussion.

a. EPA's Position in OSWI Final Rule.

In promulgating the final OSWI rulemaking, EPA took the position that it was not required to regulate SSI as OSWI under the terms of CAA section 129. Section 129 of the CAA provides, in relevant part:

In the final OSWI rulemaking, EPA concluded that the provisions of CAA section 129(a)(1) do not mandate that SSI be regulated as OSWI under CAA section 129. Because EPA is in the process of regulating SSI under CAA section 112, EPA relied on CAA section 129(h)(2) as part of its basis for not regulating SSI under CAA section 129 (70 FR 74874-74875, December 16, 2005).

b. Comments. One commenter (EPA-HQ-OAR-2003-0156-0118) claims that EPA's failure to set CAA section 129 standards for SSI contravenes the CAA. The commenter contends that CAA section 129 unambiguously requires EPA to set CAA section 129 standards for any facility that combusts any solid waste, with the exception of the limited categories of facilities expressly exempt in CAA section 129(g)(1). To support its view, the commenter cites CAA section 129(a)(1)(A) and notes that CAA section 129(g)(1) defines “solid waste incineration unit” as “a distinct operating unit of any facility which combusts any solid waste material from commercial or industrial establishments or the general public. * * *”. The commenter adds that EPA recognized that “sludge generated by publicly owned treatment works (POTWs) is a solid waste from the general public, commercial and industrial establishments” (62 FR 1869, January 14, 1997) and that EPA admitted that sewage sludge is a solid waste (Unified Agenda, 65 FR 23549-01, April 24, 2000). The commenter concludes that a plain reading of the CAA shows that SSI cannot be exempt from CAA section 129. The commenter claims that emissions from SSI are comparable to other categories of waste incinerators regulated under CAA section 129. The commenter claims that the exclusion of SSI from the OSWI rules contravenes the CAA. 1

Conversely, another commenter (EPA-HQ-OAR-2003-0156-0127) asserts that EPA was well within its discretion to exclude SSI from the OSWI rule. The commenter states that CAA section 129 directs EPA to regulate certain categories of incinerators enumerated in CAA section 129(a)(1)(A)-(D), but the statute does not define the categories of “other” solid waste incineration units that must be regulated under CAA section 129(a)(1)(E). Therefore, inherent in EPA's implementation of CAA section 129 is the discretion to reasonably define what constitutes the statutorily undefined “other categories” and to determine which warrant regulation under CAA section 129. The commenter argues that this conclusion is supported by the fact that the CAA provides firm timelines for the specifically identified categories of incinerators, but states that EPA must publish only a schedule for the statutorily undefined “other categories.” The commenter claims that CAA section 129 plainly does not require EPA to promulgate OSWI standards for “every” or “all” possible categories of solid waste incineration units; if that had been Congress' intent, then Congress would have provided that direction in CAA section 129(a)(1)(E) by stating that EPA should regulate “all” or “every” other category of solid waste incineration units. The commenter also contends that legislative history shows Congress was focused on municipal waste combustion units, and was also concerned about other specific large incinerators, including medical waste incinerators and industrial incinerators, but that Congress did not once mention POTW sewage sludge or SSI when discussing CAA section 129. Several municipal agencies that operate SSI (EPA-HQ-OAR-2003-0156-0112, -0113, -0114, -0115, -0116, -0117, -0119, -0120, -0121, -0123, -0124, -0125, -0128, -0130, -0131, -0133) support these comments submitted by the commenter (EPA-HQ-OAR-2003-0156-0127), and support EPA's previous decision not to regulate SSI under CAA section 129.

Two commenters (EPA-HQ-OAR-2003-0156-0127, -0120) refer to CAA section 129 language that indicates the same category cannot be regulated under both CAA sections 112 and 129. The commenters state that because area source SSI are going to be regulated under CAA section 112, they cannot be regulated under CAA section 129. One of the commenters (EPA-HQ-OAR-2003-0156-0127) points out that EPA originally listed SSI as a hazardous air pollutants (HAP) source category under CAA section 112, but in 2002 determined that the SSI category did not have any major sources of HAP. Later in 2002, EPA included SSI in a list of area source categories to be regulated under CAA section 112 (67 FR 43112, June 26, 2002). Conversely, another commenter (EPA-HQ-OAR-2003-0156-0126) recommends regulating SSI under the CAA section 129 OSWI rules. A large waste water treatment plant with 14 SSI units is located in the commenter's State.

The commenter contends that these units are poorly controlled with few current applicable regulatory requirements. The commenter states that EPA has not pursued regulation of area source SSI under CAA section 112 in a timely manner. Rather than wait for potential regulations under CAA section 112, the commenter favors including SSI in the OSWI regulations.

c. Response to Comments; Legal and Record Basis for Decision Not to Regulate SSI Under OSWI Rules. EPA has decided not to regulate SSI under the OSWI rules. We are developing regulations for SSI under CAA section 112. For several reasons, we disagree with the petitioner's comment that any incinerator burning any solid waste must be regulated under CAA section 129. 2

First, the CAA is ambiguous regarding what categories of solid waste incineration units must be regulated under CAA section 129(a)(1)(E). Subparagraph (A) of CAA section 129(a)(1) provides, “The Administrator shall establish performance standards and other requirements pursuant to section 111 and this section for each category of solid waste incineration units.” Subparagraphs (B)-(D) discuss timelines for very specific categories of solid waste incinerators (e.g., large and small municipal waste combustors, commercial and industrial waste incinerators, and hospital and medical waste incinerators), while subparagraph (E) states only that EPA must publish a schedule for promulgating standards for “other categories of solid waste incineration units.” The directive under subparagraph (A) to regulate “each category of solid waste incineration units” should be read in conjunction with subparagraphs (B)-(E), so that the directive refers to the categories of solid waste incineration units that are identified under subparagraphs (B)-(E). Subparagraph (E) does not unambiguously require, as implied by one commenter, that the OSWI standards must apply to every other possible type of incineration unit burning any type of solid waste. If Congress had intended such a clear directive, it could have instructed EPA to regulate “every other category” of solid waste incineration unit, instead of, simply, “other categories.” Yet Congress did not use such unambiguous language, leaving it to EPA to interpret the CAA in a reasonable manner by determining which other categories to include under subparagraph (E).

Second, the position adopted by this commenter would lead to absurd results. Under the commenter's interpretation, a homeowner burning leaves in a barrel in his or her backyard must be subject to a CAA section 129 rule because the barrel is a unit combusting solid waste material. Congress cannot have intended that EPA regulate such sources under CAA section 129, with all the attendant requirements. The language of CAA section 129 suggests that Congress wanted to focus EPA's attention to specific, larger incineration units (e.g., municipal waste combustion (MWC) units and commercial and industrial solid waste incineration (CISWI) units). Under the commenter's interpretation of CAA section 129, however, EPA would have to establish emission standards  3 for dozens of different types of small incineration units with potentially minimal emissions. As discussed in the final rule (70 FR 74875, December 16, 2005), this interpretation would result in large burdens on these sources, and Congress cannot have intended that result merely by referencing an undefined “other” category of incineration units. Thus, the instructions to EPA to promulgate standards for “other categories” of solid waste incinerators inherently include the authority for EPA to reasonably delineate those “other” categories of solid waste incineration units.

Third, in the proposed and final rules, we also clarified that under CAA section 129(g)(1), certain types of units are not regulated by the OSWI rules. Some of these units are specifically excluded by CAA section 129(g)(1) (e.g., hazardous waste combustion, small power production facilities, cogeneration facilities burning homogenous waste). However, as stated in the final rule, we do not agree that the facilities explicitly described in CAA section 129(g)(1) are the only types of facilities that are properly excluded from the OSWI category. That is, we do not read CAA section 129(g)(1) to establish an exclusive list of excluded sources.

Fourth, our interpretation of CAA section 129(a)(1) and (g)(1) is consistent with legislative history. Congress added CAA section 129 as part of the 1990 CAA Amendments. Sen. Durenberger, one of the authors, indicated that he understood the provision to “require EPA to issue new source performance standards for municipal incinerators, for medical waste incinerators and for incinerators burning commercial and industrial waste.” S. PRT 103-38, Senate Committee on Environment and Public Works, A Legislative History of the Clean Air Act Amendments of 1990 (“ Legislative History ”, vol. IV, p. 7052 (statement of Sen. Durenberger during Senate floor debate, April 3, 1990)). Similarly, Sen. Baucus, another of the authors, stated that the provision “directs EPA to establish one set of standards for municipal incinerators, another set for hospital incinerators and small [municipal] units, and another set for industrial incinerators”. Id. at 7054 (statement of Sen. Baucus). Similarly, the Conference Report describes CAA section 129 as “a provision to control the air emissions from municipal, hospital, and other commercial and industrial incinerators.” H. Rep. 101-952 at 341, “Clean Air Act Amendments of 1990, Conference Report to Accompany S. 1630,” reprinted in id. , vol. I, at 1791.

The incinerators identified by these statements are included in subparagraphs (B)-(D) of CAA section 129(a)(1). These statements, and the various other statements in the legislative history of this provision, make no specific reference to any of the “other categories of solid waste incineration units” that may be covered under subparagraph (E). 4 Thus, the legislative history suggests that subparagraph (E) should not be read, by its terms, to sweep in all other types of solid waste incinerators. Such an expansive reading would not be consistent with the authors' statements. Thus, we have discretion to determine which categories of units constitute “other categories of solid waste incineration units.”

Fifth, we indicated in the final OSWI rules that units are not covered under OSWI if they are regulated under other CAA section 129 or CAA section 112 standards (e.g., small and large MWC, hospital, medical and infectious waste incinerators (HMIWI), CISWI, boilers, cement kilns). The language of CAA section 129(h) makes clear the Congressional intent for CAA regulations under CAA section 129 or CAA section 112 to be mutually exclusive (70 FR 24875, December 16, 2005). We reiterated these statements in the recent CISWI final rule amendments, including, among other things, the important policy objective of avoiding duplicative regulation (70 FR 55568, 55574-55575, September 22, 2005). We maintain that we have the discretion to determine which “other categories” of solid waste incinerator units to regulate under CAA section 129. This discretion includes the determination of which categories are best regulated under CAA section 112 rather than CAA section 129.

Accordingly, we determined in the final OSWI rules that sources subject to CAA section 112 standards are not OSWI units. 5 Regulation of certain types of units under CAA section 112, rather than CAA section 129, is sensible. From a policy standpoint, regulation under CAA section 112 generally offers EPA more flexibility than regulation under CAA section 129, and thus allows EPA to tailor regulatory requirements more appropriately to the level of HAP emitted by the source. In particular, under CAA section 112(d), EPA has the flexibility to regulate the full range of HAP from area (i.e., non-major) sources based on either maximum achievable control technology (MACT) or “generally available control technologies or management practices” (GACT), whereas CAA section 129 would require MACT regardless of the level of emissions from the source. EPA has interpreted CAA section 112(d)(5) to allow consideration of costs in determining GACT. In developing MACT standards, EPA cannot consider cost in setting the floor, which is the minimum level of control required by CAA section 112(d)(3). Thus, CAA section 112(d)(5) offers EPA flexibility to develop standards for area sources that account for some of the unique characteristics of area source categories, including the economic effects of regulation on smaller sources.

Because the SSI category is composed entirely of area sources of HAP, regulating SSI under the CAA section 112 area source program offers the advantage of this flexibility. Specifically, in proposing and promulgating regulations under CAA section 112 covering SSI, EPA will have the opportunity to evaluate cost constraints, which may be particularly important in light of the relatively small size of the units at issue here. EPA may decide, based on the circumstances of the source category, to promulgate GACT, as opposed to MACT, for SSI under CAA section 112. EPA has not yet regulated SSI and thus we cannot predict at this time what the proposed standards for this category will be, but the relevant issue here is that CAA section 112 provides important flexibilities that are absent in CAA section 129. In CAA section 112, Congress specifically recognized the need for providing such flexibilities to area sources.

Moreover, regulating SSI under the CAA section 112 area source program offers the additional flexibility of determining whether to require SSI units to obtain title V permits. By comparison, were EPA to regulate SSI under CAA section 129, SSI sources would be required to obtain title V permits. The cost to small sources, such as SSI units, of the title V permit program would be relatively high, so the flexibility that CAA section 112 provides with respect to title V requirements may be useful in tailoring the overall regulatory scheme.

To summarize, given the statutory provisions of CAA sections 129(a), (g) and (h), as interpreted above, and the legislative history and policy considerations noted above, we maintain that EPA has the discretion to define which categories of combustion units should be subject to regulation under CAA section 129 and hence, to which categories of solid waste combustion units the standards for “other categories of solid waste incineration units” apply. Thus, at the outset of the rulemaking process, EPA determined what universe of sources will be subject to the regulations. As explained further in the final rule, in determining the scope of OSWI, EPA collected and analyzed data to identify potential OSWI units. EPA determined that the regulations should focus on two categories of waste combustion units: IWI units and VSMWC units.

SSI are a source category that is being addressed under CAA section 112. EPA acknowledges that earlier notices indicated that SSI would be considered OSWI units (62 FR 1868, January 14, 1997; 63 FR 66087, December 1, 1998). However, as we discussed in the preamble to the final OSWI rules and the response to comment document, later notices conveyed the fact we intended to regulate SSI under CAA section 112, not under CAA section 129.

As early as April 2000, EPA indicated that it no longer intended to regulate SSI under CAA section 129 (Unified Agenda, 65 FR 23459-01, April 24, 2000). In addition, EPA's intent to regulate these sources under CAA section 112 was made clear when SSI were included as an additional area source category listed pursuant to CAA sections 112(c)(3) and 112(k)(3)(B)(ii) in the June 26, 2002 Federal Register (67 FR 43113). As discussed previously, source categories regulated by CAA section 112 should not also be subject to a CAA section 129 regulation. In previous regulatory activities, EPA was unable to identify any SSI that were major sources. (See 67 FR 6521, February 12, 2002.) Therefore, the entire SSI source category consists of area sources, and will be addressed by the CAA sections 112(c) and 112(k) regulations. In fact, EPA is under a court-ordered schedule to promulgate standards under CAA section 112(d) for those area source categories listed by EPA pursuant to CAA sections 112(c)(3) and (k)(3)(B). Sierra Club v. Johnson, No. 1:01CV01537 (D.D.C.) Order (March 31, 2006). EPA must promulgate standards for a specified number of area source categories every 6 months between December 15, 2006 and June 15, 2009. SSI is one of the listed categories, so EPA must promulgate CAA section 112 regulations for SSI no later than June 15, 2009. We believe that CAA section 112, by virtue of offering greater flexibility in allowing consideration of cost to determine the level of control required for area sources and in applying title V requirements is a reasonable vehicle for regulation of SSI, given that the SSI category is composed of area sources. We further believe that, in light of the plan to regulate SSI under CAA section 112, regulation of SSI under CAA section 129 is unnecessary and would be duplicative.

Regarding the comment from a State agency that a specific large SSI in their State is poorly controlled, a State or local agency is free to develop regulations to address a state or local air quality issue if they believe action is necessary prior to EPA's development of CAA section 112 standards for SSI.

Two commenters (EPA-HQ-OAR-2003-0156-0127, -0122) contend that EPA has no authority to regulate SSI under CAA section 129 for the definitional reasons that, in their view, (i) sludge from POTWs is not “solid waste” within the meaning of CAA section 129(g)(6); and (ii) SSI are not “solid waste incineration unit[s]” within the meaning of CAA section 129(g)(1). Under CAA section 129(g)(6), “solid waste” is given the same definition as the term is given under the Solid Waste Disposal Act. EPA provided a definition in the OSWI final rule (70 FR 74921, December 16, 2005) (40 CFR 60.3078): “ Solid waste means any garbage, refuse, sludge from a waste treatment plant * * * But does not include solid or dissolved material in domestic sewage * * *.”

The commenter appears to argue that sludge from a POTW constitutes “solid or dissolved material in domestic sewage.” In the April 2000 Unified Agenda, in which EPA announced that it would regulate SSI under CAA section 112, EPA stated that POTW-generated sewage sludge is “solid waste.” (65 FR 23459, April 24, 2000). EPA noted that statement in the OSWI final rule, in the context of explaining that EPA had a long-standing policy of regulating SSI under CAA section 112, citing the April 2000 Unified Agenda (70 FR 74880, December 16, 2005). However, because EPA has determined not to regulate SSI as OSWI under CAA section 129 for other reasons, it is not necessary to evaluate the comment that POTW-generated sewage sludge is not “solid waste.”

Under CAA section 129(g)(1), a “solid waste incineration unit” is defined, in relevant part, as a “unit * * * of any facility which combusts any solid waste material from commercial or industrial establishments or the general public * * *.” Some commenters argue that POTWs are municipal sources, not the sources described in the definition of “solid waste incineration unit[s]”, and therefore do not meet that definition. 6 EPA included a statement to this effect in the April, 2000 Unified Agenda (65 FR 23459, April 24, 2000). EPA cited this statement in the OSWI final rule in the context of explaining that EPA had a long-standing policy of regulating SSI under CAA section 112. As noted above, because EPA has determined not to regulate SSI under CAA section 129 for other reasons, it was not necessary for EPA to determine in the final OSWI rule whether SSI meet the definition of “solid waste incineration unit[s],” and for the same reason, it is not necessary to respond to the comments here.

One commenter (EPA-HQ-OAR-2003-0156-0118) dismisses EPA's argument that since April 2000 EPA has indicated it no longer intends to regulate SSI as incinerators under CAA section 129 but intends to regulate them as area sources of HAP under CAA section 112. The commenter says that EPA's announcement of this intent in the April 2000 semiannual regulatory agenda does not alter EPA's statutory obligation under CAA section 129.

As discussed above, we have decided not to regulate SSI under the OSWI regulations. These units will be regulated under a separate CAA section 112 area source regulation currently under development. This reconsideration process cures any defects in the notice-and-comment process that the commenter believes occurred in the past. 7

In support of EPA's decision to not regulate SSI under the OSWI rule, several commenters discuss the benefits of incineration and argue that the costs of regulation under CAA section 129 would cause adverse impacts to communities. For example, two commenters point out several benefits provided by incineration of sewage sludge. One commenter (EPA-HQ-OAR-2003-0156-0127) states that incineration of biosolids reduces waste volume, destroys pathogens, and degrades toxic organic compounds and is, therefore, an important, safe, and effective component of biosolids management practices used by POTWs. Another commenter (EPA-HQ-OAR-2003-0156-0122) adds that incineration is a viable and important management option for POTWs. The commenter states that incineration gives a municipality greater control of their operation by reducing dependency on others to accept and use biosolids, minimizes onsite and offsite odors, requires a small land area, can be operated continuously in all weather conditions, and can also be a source of energy. According to the commenters, approximately 17 percent of biosolids generated by POTWs are incinerated, and 150 municipalities in the United States use thermal oxidation to turn biosolids into an energy source to produce some or all of the energy they need to operate, provide an extra revenue source, and help reduce energy and transportation costs. One commenter provides references and attachments to demonstrate that EPA has recognized SSI as a viable option for local community management of biosolids. The other commenter attached a brochure on bioenergy from wastewater treatment. Both commenters argue that subjecting SSI to CAA section 129 rules could eliminate SSI as a viable option.

Regarding impacts of regulation under CAA section 129, one commenter (EPA-HQ-OAR-2003-0156-0127) states that including SSI in OSWI would impose substantial costs to SSI operators without corresponding benefits, and the costs that would be imposed on POTW ratepayers could eliminate SSI as a safe, viable, and cost-effective biosolids management option for many communities. The regulatory burden would be substantial without corresponding health or environmental benefits. The commenter is also concerned that limits for NO X and CO might not be simultaneously achievable. The commenter concludes that cost and regulatory burden of regulating SSI under CAA section 129 would be inconsistent with past EPA declarations that incineration is a safe and acceptable biosolids disposal practice and Congressional intent that EPA provide safe management practices for use and disposal of biosolids and not dictate preferred practices and eliminate others. Another commenter (EPA-HQ-OAR-2003-0156-0122) adds that a technology-based standard imposed by CAA section 129 would require major expenditure whether or not there are any risks to human health and the environment.

A few commenters provided estimates on the cost impacts that a CAA section 129 regulation would have on their SSI. As an example, one commenter (EPA-HQ-OAR-2003-0156-0112) says that incineration is the least costly method of sewage sludge disposal for Anchorage, AK. They haul two dump truck loads of SSI ash to the regional landfill weekly, a 50-mile round trip through residential neighborhoods. If SSI were eliminated because of costly regulations, hauling sludge to the landfill would require 28 more dump truck loads per week at a cost of $90,000 per month, and would increase air pollution from the dump trucks. In another comment, a commenter (EPA-HQ-OAR-2003-0156-0123) operates a POTW that serves a population of 450,000 people and has two multiple hearth SSI. The commenter's preliminary analysis of available technologies to meet CAA section 129 OSWI regulations indicate that those technologies have not been applied to multiple-hearth incinerators, are expensive, and may not provide consistent compliance. The commenter estimates that modification of their existing furnaces could cost over $18 million, and the option of replacing the existing furnaces with new fluidized bed SSI with emission controls that meet CAA section 129 emission limits would be $35 to 40 million. The commenter investigated an alternative to incineration, and estimated the cost to convert to anaerobic digestion with dewatered sludge disposal was $50 million. For this option, a landfill or land application site to dispose of the sludge would need to be found, and 25 to 30 trucks per day would be required to haul the district's sludge, which would be intrusive to neighborhoods and generate emissions.

As we have discussed earlier, we have decided not to regulate SSI under the OSWI regulations. These units will be regulated under a separate CAA section 112 area source regulation currently under development. We agree with the commenters that SSI are an important option for community management of biosolids from POTW that treat sewage sludge, and have environmental benefits. As discussed in section A.1, CAA section 112 allows EPA greater flexibility than CAA section 129 to establish emission limits that serve the overall purpose of protecting public health and the environment while avoiding unreasonable economic impacts and preserving the benefits of SSI cited by the commenters.

One commenter (EPA-HQ-OAR-2003-0156-0129) says the nine POTWs using SSI in their State have permits under State air rules and title V that include CO and volatile organic compound (VOC) emission limits. The commenter believes that all incinerators should have CO limits and CO continuous emissions monitoring (CEM) requirements because CO is a good indicator of combustion efficiency. The commenter states that current Federal Clean Water Act SSI regulations in 40 CFR part 503 have a hydrocarbon concentration limit, but do not have a CO limit. They recommend that either 40 CFR part 503 be revised to include an emission limit and CEM requirement for CO, or that SSI be subject to the OSWI rules.

As we have discussed fully earlier, we have decided not to regulate SSI under the OSWI regulations. These units will be regulated under a separate CAA section 112 area source regulation currently under development. We are unable to say what the final requirements for SSI will be under these regulations. We encourage all interested parties to provide comments on the CAA section 112 area source regulations for SSI once they are proposed.

Two commenters (EPA-HQ-OAR-2003-0156-0127 and EPA-HQ-OAR-2003-0156-0122) say EPA's decision not to regulate SSI under CAA section 129 is reasonable because SSI are already regulated by other regulations that protect public health and the environment. The commenters explain that since 1993, POTWs have been subject to a comprehensive, risk-based program for reducing potential environmental risks of sewage sludge under Clean Water Act (CWA) sections 405 and the implementing regulations in 40 CFR part 503. For disposal of sewage sludge by incineration, 40 CFR part 503, subpart E requires:

• Management practices and general requirements

• Risk-based, site-specific limits for arsenic, cadmium, chromium, lead, and nickel content in biosolids incinerated

• Compliance with national emission standards for hazardous air pollutants (NESHAP) for mercury and beryllium

• Emission limits for total hydrocarbon (THC) or an alternative emission limit for CO

• Monitoring, recordkeeping and reporting.

The commenters note that in developing 40 CFR part 503 rules, EPA also proposed a requirement for dioxin/furan, but decided such requirements were not warranted based on a risk assessment showing risks from dioxin were less than one in one million. The commenters argue that the 40 CFR part 503 standards are protective of health and the environment, and that the biennial review process in CWA section 405 provides an ample means for EPA to identify and regulate any additional concerns under 40 CFR part 503. Another commenter (EPA-HQ-OAR-2003-0156-0114) adds that the 40 CFR part 503 regulations are risked-based and were set (using conservative assumptions) to ensure protection from cancer risks at a level of 10−5 (i.e., one in ten thousand).

The commenters (EPA-HQ-OAR-2003-0156-0127 and EPA-HQ-OAR-2003-0156-0122) state that the mercury NESHAP (40 CFR part 61, subpart E) sets mercury emission limits, testing, and monitoring requirements for sources that incinerate wastewater treatment plant sludge; and the beryllium NESHAP (40 CFR part 61, subpart C) sets limits for incinerators that process beryllium containing waste. SSI constructed or modified since June 11, 1973 are subject to the SSI NSPS (40 CFR part 60, subpart O), which contain particulate matter, opacity, operating, testing and monitoring requirements. One of the commenters (EPA-HQ-OAR-2003-0156-0127) adds that SSI are subject to title V permits if they are major sources and to State and local requirements. Under CWA section 403, POTWs also implement, through local regulatory authority, pretreatment standards that reduce harmful constituents of biosolids. The commenters (EPA-HQ-OAR-2003-0156-0127 and EPA-HQ-OAR-2003-0156-0122) contend that the combination of CWA and CAA regulations address CAA section 129 pollutants that are of concern for SSI, and that further regulation under CAA section 129 is not needed.

Another commenter (EPA-HQ-OAR-2003-0156-0112) stated that their city's SSI is subject to emission limits for PM, opacity, beryllium, and mercury and is required to routinely monitor NO X and CO emissions. They believe these regulations adequately protect public health and the environment and additional regulation under CAA section 129 is not warranted.

We appreciate commenters' support of our decision to not regulate SSI under the CAA section 129 OSWI regulations. We also acknowledge that various CWA and CAA regulations currently apply to SSI. These other regulations provide some additional support for our decision not to regulate under CAA section 129 because these other regulations provide protection of human health and the environment for many of the pollutants regulated by CAA section 129 regulations. In addition, as discussed earlier, we are currently in the process of developing CAA section 112 regulations for HAP emitted from the SSI source category. At the moment, we are unable to say what the final requirements for SSI will be under these regulations. Therefore, we encourage all interested parties to provide comments on the CAA section 112 area source regulations for SSI once they are proposed.

We denied six issues contained in the petitioner's request for reconsideration because they failed to meet the standard for reconsideration under CAA section 307(d)(7)(B). Specifically, on these issues, the petitioner has failed to show the following: That it was impracticable to raise their objections during the comment period; or that the grounds for their objections arose after the close of the comment period; and/or that their concern is of central relevance to the outcome of the rules. We have concluded that no clarifications to the underlying rules are warranted for these six remaining issues, as described below.

The petitioner objects to the exclusion of human crematories from the OSWI rules. They contend that EPA raised new arguments regarding whether human bodies burned at crematories are solid waste during promulgation of the final OSWI rules.

We do not agree with the petitioner's claim. We took comment on human crematories as OSWI in the notice of proposed rulemaking published on December 9, 2004 (69 FR 71479). In the notice of proposed rulemaking, we made clear that the human body is not considered “solid waste” and human crematories are, therefore, not considered solid waste incineration units. Comments were received regarding human bodies and their juxtaposition to the definition of solid waste used in the OSWI rules. In the notice of final rulemaking (70 FR 74881, December 16, 2005), we responded to these comments, but we did not introduce a new definition of solid waste. Rather, in the final rule, we excluded human crematories from the OSWI rules for precisely the same reason as proposed. Therefore, EPA denies the request to reconsider human crematories in the OSWI rules.

The petitioner contends that the policy arguments that EPA advanced at proposal and promulgation of the OSWI rules for exempting incinerators in isolated areas of Alaska are not valid and contravene the requirements of CAA section 129. They further claim that EPA raised new arguments during promulgation of the OSWI rules that commercial/industrial incinerators that burn only municipal-type waste are not subject to the CISWI rules, and they argue that such incinerators should be regulated. An example is an incinerator that is owned by an industrial company, is located in an oil field in Alaska, and burns only household or municipal-type waste.

We deny the petitioner's request for reconsideration on this issue. We proposed and took comment on the exemption of incinerators and air curtain incinerators that are used at solid waste disposal sites operating in isolated areas of Alaska, and that are classified as Class II or Class III facilities under the Alaskan State codes (which, in turn, are authorized under the Solid Waste Disposal Act) (69 FR 71482-71483, December 9, 2004).

We received comments that certain incinerators are used to dispose of household- or municipal-type waste generated at oil fields and oil pipeline pumping stations and the commenters raised the issue of whether these units would be exempt from OSWI regulations. In the preamble to the final OSWI regulations, we noted that the comments did not provide specific enough information about those incinerators. In responding to the comment, we explained that only units that would otherwise be considered VSMWC or IWI could be subject to regulation as OSWIs, and that the Alaska exemption was limited to units that would, absent such exemption, be treated as VSMWC or IWI and, thereby, be subject to regulation as OSWI. Units that would not be treated as VSMWC or IWI would not be regulated as OSWI. We then noted that although the commenters provided insufficient information about the other incinerators, the information they did provide suggests that the incinerators would not qualify as VSMWC or IWI units (70 FR 74878, December 16, 2005). Petitioners have not demonstrated any basis for why this conclusion merits reconsideration and, as a result, we deny the petition for reconsideration on this point.

In the final OSWI rule, we further noted that the incinerators described by the commenters, i.e., those at oil fields and oil pipeline pumping stations, may potentially be considered CISWI units depending on the waste combusted. If they incinerate municipal-type waste, then “the final CISWI rules do not currently cover commercial/industrial-owned/operated incinerators that burn only municipal-type waste” (70 FR 74878, December 16, 2005). We added, “EPA intends to address regulation of such combustion units under future revisions to the final CISWI rules.” Id. Petitioners object to these statements, and state that the CISWI rules do cover these types of combustors, and further state that if the CISWI rules do not cover these types of combustors, then EPA is unlawfully deferring regulation under CISWI. 8

We disagree with the petitioners. Although the CISWI regulations promulgated in 2000 regulate incinerators located at commercial or industrial facilities that are used to combust industrial or commercial waste as defined in the CISWI rules, the CISWI regulations do not cover units located at commercial or industrial facilities that are used to combust more than 30 percent municipal-type wastes (e.g., food scraps, packaging, disposable eating utensils, etc.) (40 CFR 60.2020(c) and 40 CFR 60.2555(c)). Our promulgation of those regulations fulfilled our obligations to promulgate CISWI regulations. Continued review of those regulations, as we intend to do, does not amount to unlawful deferral of regulation.

At proposal, EPA exempted temporary-use incinerators used in disaster or emergency recovery efforts from the rule. Based on public comments, EPA narrowed the exemption to limit the potential for abuse. The petitioner contends that EPA did not provide an opportunity to comment on the revised exclusion in the final rule, and that the exclusion still exceeds EPA's authority under CAA section 129.

We are denying this request because we provided adequate opportunity to comment on temporary-use incinerators used in disaster recovery in the notice of proposed rulemaking for OSWI published on December 9, 2004 (69 FR 71483). Commenters pointed out a potential for abuse in the proposed exemption, which could allow incinerators to operate indefinitely in major disaster areas without having to comply with the regulations. To address these comments, as explained in the notice of final rulemaking (70 FR 74879-74880, December 16, 2005), and the response to comments document, EPA narrowed the exemption in the final OSWI regulations to temporary use incinerators in local, State and Federally proclaimed disaster areas; and, in addition, limited the amount of time an incinerator may operate in the recovery effort without seeking approval from EPA for an extension of operating time. Thus, the revisions in the final rule are a logical outgrowth of the proposed rule. Therefore, having taken comment on the issue and responded to those comments during the rulemaking, EPA denies the request to reconsider the exemption for temporary-use incinerators used in disaster recovery in the OSWI rules.

At proposal, EPA requested comments on whether it should provide an exclusion from the OSWI rules for incinerators that burn national security documents. At promulgation, EPA established exclusions for certain incinerators burning national security documents, and the petitioner contends that they did not have an opportunity to comment on the rationale for the exclusion.

We deny the petitioner's request for reconsideration of this issue. In the notice of proposed rulemaking, we took comment on providing an exclusion for “a subclass of IWI that burn national security documents,” so that such subclass would not be regulated as an OSWI (69 FR 71478, December 9, 2004). We received comments from both the public and other government agencies for and against the need for such an exclusion. On one hand, some public commenters do not believe that there was sufficient reason to provide an exclusion for these units. On the other hand, some public commenters and government agencies presented cases where sensitive documents must be destroyed quickly and thoroughly, and noted that document shredding and chemical treatment may be unavailable or infeasible. Such is the case for field military readiness training exercises, where it would be infeasible to carry hazardous chemicals and equipment needed to destroy classified documents in the field.

Moreover, the final rule does not provide an outright exclusion from OSWI for incinerators that burn national security documents (70 FR 74880-74881, December 16, 2005). However, to address the comments, we provided a narrow exemption for IWI units used solely during military training field exercises to destroy national security materials integral to the field exercises. In addition, because we realized that there may be particular instances where incineration may be the only viable method of destroying national security materials, we included provisions such that individual IWI sources could apply for this exclusion as necessary. One example arises when chemical/mechanical re-pulping is the primary method of destruction of national security documents; however, a mechanical malfunction prevents use of the system for an extended period of time. In the meantime, there are ongoing national security document destruction needs at the facility that must be met. It may be that a back-up incinerator is the only available alternative to adequately destroy the documents while repairs are being made to the re-pulping system. To operate the incinerator without meeting the requirements of the OSWI rules, the facility must apply for an exclusion for the incinerator and demonstrate that no other alternatives for destruction of the materials are presently available.

The exemptions added in the final rule are a logical outgrowth from the solicitation of comment in the proposed rule. Thus, EPA denies the request to reconsider incinerators used to burn national security documents in the OSWI rules.

The petitioner states that the proposed OSWI regulations included an exclusion for cement kilns, but this exclusion was not specifically discussed in the preamble to the proposed rule. The petitioner contends that EPA argued for the first time in the final rule that EPA does not need to set standards for cement kilns under CAA section 129 because they are already regulated under CAA section 112. The petitioner disagrees with this rationale.

We note that while the cement kiln exclusion was not discussed per se in the preamble to the proposed rules, the exclusion was clearly presented in the proposed regulatory language. In fact, the petitioner provided comments on the proposed exclusion for cement kilns, to which EPA provided a response in the response to comment document supporting the final OSWI regulations. As we noted in our response, cement kilns have been regulated under a CAA section 112 regulation since 1999, which covers both major and area source cement kilns.

As we discussed in both the proposal (69 FR 71475 and 71477, December 9, 2004) and promulgation preambles (70 FR 74872 and 74875, December 16, 2005), as well as the response to comment document for the OSWI rules, the language of CAA section 129(h) makes clear the Congressional intent for CAA regulations under CAA section 129 or CAA section 112 to be mutually exclusive. At proposal, in addition to submitting comments specifically on cement kilns, the petitioner also submitted comments on our general rationale that EPA has the discretion to determine which categories of incineration units should be regulated under CAA section 112 instead of CAA section 129, and that the same source category cannot be regulated under both sections of the CAA.

Therefore, having received comment on the issue and responding to said comments during the rulemaking, EPA denies the request to reconsider the exclusion of cement kilns from the OSWI rules.

The petitioner contends that EPA failed to mention plasma arcs and various other combustion technologies in the preamble to the proposed OSWI rules. The petitioner notes that EPA received comments on whether various technologies should be regulated. The petitioner argues that in the final rule, EPA seeks to “broadly exclude a wide variety of incinerators from regulation as incinerators and-in some cases-from any regulations at all” and that there was no opportunity to comment on EPA's rationale for such an exclusion.

As the commenter notes, we received, and responded to, comments on this issue in the preamble to the final rules (70 FR 74876-74877, December 16, 2005). It is unrealistic to expect EPA, or the commenter, to know of every available technology that is, or could be, used to function as a VSMWC or IWI. Therefore, the OSWI rules are written such that applicability is not limited to specific combustion technologies. (Although it should be noted that IWI are limited to units without energy recovery or with only waste heat recovery.) As we explained in the preamble to the final rules and in the supporting response to comment documents, if a combustion unit meets the definition of a VSMWC or IWI in the OSWI rules, and is not subject to one of the specific exclusions provided in the OSWI rules, then it would need to meet the requirements of the OSWI rules.

We do not provide specific exclusions in the final OSWI rules for particular combustion technologies, 9 as the petitioner seems to imply. Instead, our response to comments simply provides some examples from real-world applications of the technologies the commenter listed and examples of how these applications would fit into the regulatory boundaries of CAA section 129 and CAA section 112 regulations. As we pointed out in the preamble to the final OSWI rules (70 FR 74877, December 16, 2005), gasification, thermal oxidizers, catalytic cracking, etc. are typically, from what we have seen, used in industrial settings. The OSWI regulations do not apply to industrial combustion units. Furthermore, without further information on the specific design, materials combusted, and function of the other combustion technologies, we are not able to definitively say, as the petitioner requests, that the various combustion units are, or are not, subject to the final OSWI rules. Regardless of the technology, if a unit meets the definition of an IWI or VSMWC unit in the OSWI rules, and is not specifically excluded, then it would be subject to the OSWI rules.

In conclusion, having taken comment on this issue and have responded to said comments during the rulemaking process, we deny the request to reconsider setting standards specific to plasma arcs and other combustion technologies in the OSWI rules.

This action is not a “significant regulatory action” under the terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and is, therefore, not subject to review under the Executive Order.

This action does not impose any new information collection burden. We are not proposing any new paperwork as part of this action. However, the Office of Management and Budget (OMB) has previously approved the information collection requirements contained in the existing OSWI rules (40 CFR part 60, subparts EEEE and FFFF) under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned OMB control number 2060-0563 and EPA ICR No. 2163.02 for subpart EEEE, and OMB control number 2060-0562 and EPA ICR No. 2164.02 for subpart FFFF. A copy of the OMB approved Information Collection Requests (ICR), may be obtained from Susan Auby, Collection Strategies Division, U.S. EPA (2822T), 1200 Pennsylvania Avenue, NW., Washington, DC 20460, by e-mail at auby.susan@epa.gov , or by calling (202) 566-1672.

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

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

The Regulatory Flexibility Act generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of the final rules on small entities, small entity is defined as follows:

1. A small business that is an ultimate parent entity in the regulated industry that has a gross annual revenue less than $6.0 million (this varies by industry category, ranging up to $10.5 million for North American Industrial Classification System (NAICS) code 562213 (very small municipal waste combustors)), based on Small Business Administration's size standards;

2. A small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; or

3. A small organization that is any not-for-profit enterprise that is independently owned and operated and is not dominant in its field.

After considering the economic impact of this notice of final action on reconsideration on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. This action does not propose any changes to the final OSWI rules and will not impose any requirements on small entities. EPA has determined that it is not necessary to prepare a regulatory flexibility analysis in connection with this reconsideration notice.

Title II of the Unfunded Mandates Reform Act (UMRA) of 1995, Public Law 104-4, establishes requirements for Federal Agencies to assess the effects of their regulatory actions on State, local, and Tribal governments and the private sector. Under CAA section 202 of the UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more in any 1 year. Before promulgating an EPA rule for which a written statement is needed, CAA section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule. The provisions of CAA section 205 do not apply when they are inconsistent with applicable law. Moreover, CAA section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective, or least burdensome alternative if EPA publishes with the final rule an explanation why that alternative was not adopted.

Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including Tribal governments, EPA must have developed, under CAA section 203 of the UMRA, a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA's regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

EPA has determined that this notice of final action on reconsideration does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and Tribal governments, in the aggregate, or the private sector in any 1 year. We are not revising the final OSWI rule. Thus, this notice of final action on reconsideration is not subject to the requirements of CAA section 202 and 205 of the UMRA. In addition, EPA has determined that the notice of final action on reconsideration contains no regulatory requirements that might significantly or uniquely affect small governments. Therefore, the notice of final action on reconsideration is not subject to the requirements of CAA section 203 of the UMRA.

Executive Order 13132 (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have Federalism implications.” “Policies that have Federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among various levels of government.”

This notice of final action on reconsideration does not have Federalism implications. It will not have substantial direct effects on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. The notice of final action on reconsideration will not impose direct compliance costs on State or local governments, and will not preempt State law. Thus, Executive Order 13132 does not apply to this notice of final action on reconsideration.

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by Tribal officials in the development of regulatory policies that have Tribal implications.” “Policies that have Tribal implications” is defined in the Executive Order to include regulations that have “substantial direct effects on relationship between the Federal Government and the Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.”

This notice of final action on reconsideration does not have Tribal implications, as specified in Executive Order 13175. It will not have substantial direct effects on Tribal governments, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this notice of final action on reconsideration.

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

EPA interprets Executive Order 13045 as applying only to those regulatory actions that are based on health or safety risks, such that the analysis required under CAA section 5-501 of the Executive Order has the potential to influence the regulation. This notice of final action on reconsideration is not subject to Executive Order 13045 because it is not economically significant, and the original OSWI rules are based on technology performance and not on health and safety risks.

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

As noted in the notice of reconsideration and request for public comment, CAA section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) of 1995 (Pub. L. 104-113; 15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, business practices) developed or adopted by one or more voluntary consensus bodies. The NTTAA directs EPA to provide Congress, through OMB, with explanations when EPA does not use available and applicable voluntary consensus standards.

This notice of final action on reconsideration does not involve technical standards. EPA's compliance with CAA section 12(d) of the NTTAA has been addressed in the preamble of the underlying final OSWI rules (70 FR 74891, December 16, 2005).

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 submitted a report containing the final rules 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 final rules in the Federal Register on December 16, 2005. The final rules are not “major rules” as defined by 5 U.S.C. 804(2). The final emission guidelines were effective on February 14, 2006. The final NSPS were effective on June 16, 2006. The 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 U.S. prior to publication of the rule in the Federal Register .

A. Background

Item II of Federal Acquisition Circular 2005-11, published at 71 FR 38247 on July 5, 2006, added Part 18 to the Federal Acquisition Regulation (FAR). FAR Part 18 provides a single reference to Governmentwide acquisition flexibilities that may be used to facilitate and expedite acquisitions of supplies and services during emergency situations. This interim DFARS rule adds a new Part 218 to provide a single reference to the additional acquisition flexibilities available to DoD.

Consistent with the FAR, the flexibilities in DFARS Part 218 are divided into two subparts. The first subpart, entitled “Available Acquisition Flexibilities” identifies the DoD flexibilities that may be used anytime and do not require an emergency declaration. The second subpart, entitled “Emergency Acquisition Flexibilities” identifies the DoD flexibilities that may be used only after an emergency declaration or designation has been made by the appropriate official. The second subpart is further divided into three sections: Contingency operation; Defense or recovery from certain attacks; and Incidents of national significance, emergency declaration, or major disaster declaration.

DoD would like to hear the views of interested parties on the sufficiency of these provisions. In particular, DoD is interested in receiving input as to whether the provisions sufficiently clarify the existing DFARS flexibilities that can be used in emergency situations or whether more detailed, comprehensive coverage is needed.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

DoD does not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. , because the rule is a compilation of existing authorities, and makes no change to DoD contracting policy. Therefore, DoD has not performed an initial regulatory flexibility analysis. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2006-D036.

The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

A determination has been made under the authority of the Secretary of Defense that urgent and compelling reasons exist to publish an interim rule prior to affording the public an opportunity to comment. This action is necessary to improve DoD's ability to expedite acquisitions of supplies and services during emergency situations. Comments received in response to this interim rule will be considered in the formation of the final rule.

This final rule contains a new contract clause requiring contractors to notify the Government of any nonconformance or deficiency that could impact the safety of items acquired by or serviced for the Government. The rule is a result of Section 8143 of the Fiscal Year 2004 DoD Appropriations Act (Pub. L. 108-87), which required examination of appropriate standards and procedures to ensure timely notification to the Government and contractors regarding safety issues, including defective parts.

DoD published a proposed rule at 70 FR 44077 on August 1, 2005. Thirteen respondents submitted comments on the proposed rule. A discussion of the comments is provided below.

1. Comment: One respondent recommended amending the clause prescription at DFARS 246.371(a)(2) and (3) to change the term “system” to “critical safety system.”

DoD Response: The term “system” relates to an assemblage of subsystems, assemblies, and components that comprise an end item. Adding “critical safety” to the term “system” is unnecessary and would be confusing where major or less-than-major systems are not described in terms such as “critical safety.”

2. Comment: Five respondents suggested requiring the use of the Government-Industry Data Exchange Program (GIDEP) as the method for notification of safety issues and for reporting all types of technical data and reliability information.

DoD Response: The primary objective of this DFARS rule is to ensure that contractors who have delivered defective products with potential safety implications notify affected contracting offices quickly, using whatever method the contractor determines to be most expeditious. GIDEP may not be the most efficient or effective notification approach in many situations.

3. Comment: One respondent suggested DoD include integrated environmental safety and occupational health issues in the coverage.

DoD Response: Environmental safety and occupational health issues were not included in the mandate that resulted in the issuance of this DFARS rule (Section 8143 of the Fiscal Year 2004 DoD Appropriations Act (Pub. L. 108-87)).

4. Comment: One respondent recommended that the DFARS rule include a timeframe for reaction by the Government after notification.

DoD Response: The intent of the DFARS rule is to ensure timely notification of potential safety defects. The time required by the Government to respond to and effectively investigate each incident will depend upon the circumstances of the situation.

5. Comment: One respondent requested a more specific definition of “safety” in the rule.

DoD Response: DoD has reexamined all references to safety in the DFARS rule and has determined that the term is adequately explained in its context each time it is used.

6. Comment: Five respondents submitted comments regarding timeframes for notification of potential safety defects. One respondent indicated that the requirement for notifying the procuring contracting officer (PCO) and the administrative contracting officer (ACO) within 72 hours of potential safety issues may cause over-reporting, because the contractor will have insufficient time to investigate the situation internally. The respondent requested flexibility regarding notification but did not provide a proposed timeframe for notification. Another respondent questioned whether 72 hours would be realistic but provided no recommended time frame. Other respondents recommended notification periods of 3 business days; 5 business days; and 10-30 working days.

DoD Response: DoD concurs in lengthening the written notification period to 5 working days, but does not concur in making the initial reporting period for a potential safety defect flexible. The initial notification of 72 hours is intended to ensure that the customer is aware of potential safety issues in delivered products, has a basic understanding of the circumstances, and has a point of contact to begin addressing a mutually acceptable plan of action. Because of the potential safety implications, the initial notification is a matter of urgency. The 5-day written notification period is consistent with similar requirements in the civil sector. The Federal Aviation Administration regulations at 14 CFR 21.3(e) require reporting of aviation failures, malfunctions, or defects within 24 hours after it has been determined that the failure, malfunction, or defect has occurred. Similarly, federal regulations governing motor vehicles at 49 CFR 573.6(b) require submission of a report not more than 5 working days after a safety-related defect or noncompliance has been determined to exist.

7. Comment: One respondent expressed concern that the DFARS rule does not indicate what information has to be communicated or the distribution or communication method.

DoD Response: Paragraph (c) of the contract clause specifically describes the communication and information requirements.

8. Comment: One respondent stated that the definition of “replenishment part” in 246.101 is satisfactory, but the phrase “purchased after provisioning” in the definition needs to be clarified or deleted. The phrase, as currently written, can cause confusion on whether initial provisioning orders are covered.

DoD Response: DoD has amended the rule to remove the references to provisioning. The rule applies to all repairable and consumable parts identified as critical safety items.

9. Comment: One respondent recommended limiting notification to truly significant threats to safety from malfunctioning systems or subsystems.

DoD Response: Defining “truly significant threats to safety” would be difficult and could result in inconsistent application. Also, “build-to-print” manufacturers produce many critical safety items and may not have knowledge of an item's ultimate application or failure consequences.

10. Comment: One respondent expressed concern that a contracting officer might not know whether an item was a critical safety item and might include the notification requirement when it is unnecessary.

DoD Response: The contract clause specifies that the notification requirement for parts applies to those items identified as critical safety items. The contracting officer will receive input from technical/requirements personnel as to which items fall into that category, and will identify those items in the contract.

11. Comment: One respondent was concerned that the contracting officer may not know whether a system, subsystem, assembly, or subassembly is “integral to a system,” as stated in DFARS 246.371, and may unnecessarily impose the notification requirement.

DoD Response: The pertinent aspect of the rule is that notification be provided when there is a nonconformance or deficiency that may result in a safety impact for a system or its constituent components. A contracting officer or contractor involved with systems, subsystems, assemblies, or subassemblies will know the application of the product and whether it is integral to a system. The phrase “integral to a system” is used in FAR Part 34 in conjunction with items of supply that may be replaced during the service life of a system.

12. Comment: One respondent expressed confusion as to whether the notification requirement applies to repair, maintenance, logistics support, or overhaul services contracts where a system, subsystem, assembly, or subassembly is integral to a system and failure or malfunction poses a safety risk; or only to repairs that are integral to the overall system regardless of effects on subsystems, assemblies, and subassemblies.

DoD Response: Within the context of the DFARS rule, “integral to a system” means items of supply within a system that may be replaced during the service life of a system.

13. Comment: One respondent suggested moving the definition of “critical safety item” from the contract clause to 246.101.

DoD Response: The definition is appropriately placed within the contract clause, where the term is used.

14. Comment: One respondent stated that the notification requirement in paragraph (b)(2) of the contract clause was more expansive than the definition in 246.101, because it included the phrase “or parts.” The respondent also questioned whether the notification requirement applied to parts or software bugs that had no effect on the safety of the item as a whole.

DoD Response: The final rule excludes the definition of “replenishment part” from 246.101, and clarifies, in 246.371(a), that the contract clause applies to the acquisition of repairable or consumable parts identified as critical safety items. Paragraph (b) of the contract clause specifies that the notification requirement applies to all nonconformances for parts identified as critical safety items; and all nonconformances or deficiencies that may result in a safety impact for systems, or subsystems, assemblies, subassemblies, or parts integral to a system.

15. Comment: One respondent expressed concern that the DFARS clause permitted subcontractors to bypass the prime or higher-tier subcontractor and directly notify the PCO and the ACO. The respondent was concerned that this did not allow the prime or higher-tier subcontractor to independently evaluate the information and assess its credibility, accuracy, or impact.

DoD Response: Paragraph (f)(2)(i) of the contract clause specifically requires the subcontractor to notify the prime or higher-tier subcontractor. Paragraph (f)(2)(ii) of the clause requires the subcontractor to also notify the ACO and the PCO if the subcontractor is aware of the ACO and the PCO for the contract. Nothing in the clause precludes the prime contractor or higher-tier subcontractor from independently evaluating the information provided by the subcontractor.

16. Comment: Two respondents expressed concern regarding the flow-down requirements of the contract clause. One respondent expressed concern about flow-down to commercial item subcontractors and to any subcontractors whose work does not involve critical safety items. Another respondent recommended that flow-down be limited to only the acquisition of replacement or replenishment spares.

DoD Response: The final rule clarifies that the clause applies to contracts and subcontracts for both commercial and non-commercial items. This includes contracts and subcontracts for parts identified as critical safety items; systems and subsystems, assemblies and subassemblies integral to a system; and repair, maintenance, logistics support, or overhaul services for systems and subsystems, assemblies, subassemblies, and parts integral to a system.

17. Comment: One respondent stated that the Government should supply and maintain a comprehensive list of critical safety items that is accessible to contractors.

DoD Response: The parts that the Government has designated as critical safety items will be identified in the applicable contracts.

18. Comment: Two respondents recommended clarification of the term “technical nonconformance”.

DoD Response: DoD agrees that the term “technical nonconformance” could cause confusion and, therefore, has replaced this term with “nonconformance” in paragraph (b)(1) of the contract clause.

19. Comment: Two respondents stated that the term “safety impact” in the contract clause is not tangible or properly defined.

DoD Response: The definition is consistent with MIL-STD-882D, Standard Practice for System Safety, Appendix A, for critical mishap severity categorization and mishap risk impact.

20. Comment: One respondent recommended clarification that contractor notification is required only for parts sold to the Government and does not include parts scrapped by the contractor.

DoD Response: Paragraph (b) of the contract clause specifies that the notification requirement applies to items acquired by or serviced for the Government under the contract.

21. Comment: Three respondents requested clarification of the term “credible information” as used in the contract clause.

DoD Response: DoD has added a definition of “credible information” to the contract clause, based upon a recommended definition provided by one of the respondents.

22. Comment: One respondent recommended that, instead of all critical safety items being subject to the reporting requirements of the contract clause, the reporting be limited to those situations resulting in safety impacts.

DoD Response: A significant percentage of critical safety items purchased by DoD are provided by small businesses that may not know the end item application of the components they are supplying, nor the failure modes and effects of the items. Many of these small businesses may be unaware of whether a nonconformance would have a safety impact. Therefore, the recommended change was not adopted.

23. Comment: One respondent stated that the definition of “critical safety item” does not indicate the level of damage sufficient to constitute “serious” damage, and that it is unclear what level of risk of personal injury would be “unacceptable.” The respondent recommended that the language established for “safety impact” be used in the definition of “critical safety item” to preclude ambiguity.

DoD Response: DoD has revised the definition of “critical safety item” in the contract clause to replace the potentially ambiguous language with a reference to the definition of “safety impact” within the contract clause.

24. Comment: Two respondents expressed concern with the definition of “safety impact” and associated dollar thresholds for property damage. One respondent stated that “safety impact” should focus on risk of injury or loss of life instead of property damage. The respondent suggested deleting “loss of a weapon system; or property damage exceeding $200,000” from the definition of “safety impact” or, alternatively, replacing “$200,000” with “$1,000,000” to reflect realistic thresholds. Another respondent recommended that the definition of “safety impact” be revised for consistency with the MIL-STD-882 Risk Hazard Matrix, rather than the arbitrary property damage value of $200,000.

DoD Response: DoD does not agree that notification requirements should apply only to risk of injury or loss of life situations. However, the monetary value specified in the rule has been revised to $1,000,000 for consistency with MIL-STD-882D, Appendix A, Table A-I.

25. Comment: One respondent stated that the assertion in paragraph (e) of the contract clause, that notification of safety issues will neither be an admission of responsibility nor a release of liability, would not adequately protect contractors from potential law suits. The respondent suggested that the clause include language that would reimburse the contractor for liabilities and expenses incidental to such liabilities to third persons not compensated by insurance or otherwise without regard to and as an exception to any limitation of cost or the limitation of funds clause in the contract.

DoD Response: DoD cannot establish a clause that grants Government indemnification for liabilities to third parties arising from compliance with the clause. Absent express statutory authority, the Government may not enter into an agreement to hold harmless or indemnify where the amount of the Government's liability is indefinite, indeterminable, or potentially unlimited.

26. Comment: One respondent stated that the rule does not adequately define “critical safety items” and suggests that the probability of failure be incorporated in the definition.

DoD Response: The definition of “critical safety item” is based on public law and existing DoD policies. Further, probability of failure assumes a part will be manufactured as specified. The DFARS rule addresses notification when a delivered item is nonconforming or defective; thus, probability of failure may not be meaningful.

27. Comment: One respondent recommended that the requirement for notification of safety defects be limited to aviation products.

DoD Response: DoD does not agree that the notification requirement should be limited to the aviation community. While the initial focus of critical safety items resulted from Section 802 of the National Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136), Section 8143 of the Fiscal Year 2004 DoD Appropriations Act (Public Law 108-87) required DoD to examine appropriate standards and procedures for timely notification regarding safety issues, including defective parts. It is essential that the Government be notified of all potential safety defects, regardless of product line.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

DoD certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. , because the rule applies only in situations where nonconformances or deficiencies could impact item safety. The occurrence of such situations is expected to be limited.

This final rule contains a new information collection requirement. The Office of Management and Budget has approved the information collection for use through December 31, 2009, under Control Number 0704-0441.

A. Background

This interim rule amends DFARS 225.7002-1 and the corresponding contract clause at 252.225-7012 to implement Section 833(b) of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. 109-163). Section 833(b) amended 10 U.S.C. 2533a (the Berry Amendment) to expand the foreign source restrictions applicable to the acquisition of clothing to also include clothing materials and components, other than sensors, electronics, or other items added to, and not normally associated with, clothing and the materials and components thereof. The rule also includes examples of items subject to the restrictions.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

DoD has prepared an initial regulatory flexibility analysis consistent with 5 U.S.C. 603. A copy of the analysis may be obtained from the point of contact specified herein. The analysis is summarized as follows:

The objective of the rule is to provide for the acquisition of clothing, and clothing materials and components, from domestic sources in accordance with statutory requirements. The legal basis for the rule is 10 U.S.C. 2533a (the Berry Amendment), as amended by Section 833(b) of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. 109-163). The rule will apply to entities interested in receiving DoD contracts or subcontracts for the acquisition of clothing. Based on data generated from the DD Form 350, Individual Contracting Action Report, DoD awarded 6,072 contract actions relating to the acquisition of clothing items during fiscal year 2005. These actions had a total dollar value of $1.868 billion and involved 1,110 contractors. Of these actions, 4,087 totaling $.81 billion involved 906 contractors that were small business concerns. This rule may have a positive impact on small businesses that manufacture clothing materials and components, by reducing foreign competition. However, the rule could have a negative impact on small businesses that have been using foreign components in the manufacture of clothing products.

DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2006-D031.

The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

A determination has been made under the authority of the Secretary of Defense that urgent and compelling reasons exist to publish an interim rule prior to affording the public an opportunity to comment. This interim rule implements Section 833(b) of the National Defense Authorization Act for Fiscal Year 2006 (Public Law 109-163). Section 833(b) expands the foreign source restrictions applicable to the acquisition of clothing, to also include clothing materials and components, other than sensors, electronics, or other items added to, and not normally associated with, clothing and the materials and components thereof. Section 833(b) became effective upon enactment on January 6, 2006. Comments received in response to this interim rule will be considered in the formation of the final rule.