Prior documents in this proceeding: Notice of Hearing issued on July 18, 2006, and published in the July 24, 2006, issue of the Federal Register (71 FR 41740), and a Recommended Decision issued on March 23, 2007, and published in the March 30, 2007, issue of the Federal Register (72 FR 15056).

This action is governed by the provisions of sections 556 and 557 of Title 5 of the United States Code and is therefore excluded from the requirements of Executive Order 12866.

The proposed amendments are based on the record of a public hearing held August 16, 2006, in Homestead, Florida. The hearing was held to consider such amendments to the order. The hearing was held pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601 et seq. ), hereinafter referred to as the “Act,” and the applicable rules of practice and procedure governing the formulation of marketing agreements and marketing orders (7 CFR part 900). The Notice of Hearing was published in the Federal Register on July 24, 2006 (71 FR 41740), and contained amendment proposals submitted by the Committee.

The amendments included in this decision would:

1. Add the authority for the Committee to borrow funds;

2. Revise the voting requirements for changing the assessment rate;

3. Allow the District 1 nominations to be conducted by mail; and

4. Add the authority for the Committee to accept voluntary contributions.

In addition, AMS proposed to make changes as may be necessary to the order, if any of the proposed changes are adopted, so that all of the order's provisions conform to the effectuated amendments. To the extent necessary, conforming changes have been identified and made to the amendments.

Upon the basis of evidence introduced at the hearing and the record thereof, the Administrator of AMS on March 23, 2007, filed with the Hearing Clerk, U.S. Department of Agriculture, a Recommended Decision and Opportunity to File Written Exceptions thereto by April 30, 2007. That document also announced AMS's intent to request approval of new information collection requirements to implement the program. Written exceptions on the proposed information collection requirements were due by May 29, 2007. None were filed.

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

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions so that small businesses will not be unduly or disproportionately burdened. Marketing orders and amendments thereto are unique in that they are normally brought about through group action of essentially small entities for their own benefit.

Small agricultural producers have been defined by the Small Business Administration (SBA) (13 CFR 121.201) as those having annual receipts of less than $750,000. Small agricultural service firms, which include handlers regulated under the order, are defined as those with annual receipts of less than $6,500,000.

The record indicates that there are an estimated 352 producers of avocados in the production area and 32 handlers subject to regulation under the order.

According to the National Agricultural Statistics Service (NASS) and Committee data, the average price for Florida avocados during the 2005-06 season was around $46.75 per 55-pound bushel container, and total shipments were near 470,000 55-pound bushel equivalent. Using this average price and shipment information, the majority of avocado handlers could be considered small businesses under the SBA definition. In addition, based on avocado production, grower prices, and the total number of Florida avocado growers, the average annual grower revenue is less than $750,000. Thus, the majority of Florida avocado producers may also be classified as small entities.

The NASS reported that in 2005, total Florida avocado bearing acres were 5,300 and the average yield per acre was 2.26 tons. The total Florida production reported in 2005 was 12,000 tons, with growers receiving an average (farm gate) price of $940/ton. The estimated total value of 2005 Florida avocado production was $11.28 million.

Over the past 30 years the U.S. avocado industry has seen many changes. According to NASS, the total U.S. production acres for avocados have decreased by 13 percent, from 78,000 acres in 1982 to 67,600 acres in 2005. Prices have trended upward from 1959 to 2005, although there has been significant variability in prices from year to year. The average grower price for the U.S. in 1959 was $109 per ton and in 2005 the average grower price was $1,280 per ton. The total value of U.S. avocado production has increased dramatically since 1959, reaching a peak of $394 million in 2003. The per capital consumption of fresh avocados has risen significantly since 1970. Between 1970 and 2004, per capital consumption increased almost five-fold to 2.9 pounds per person in 2004. According to the hearing record, one of the factors that may be contributing to this increase is the new year-round availability of avocados due to the volume of imported avocados in addition to domestically produced avocados.

Comparatively, Florida's avocado industry has seen similar trends. According to NASS, the production acreage has decreased by 53 percent over the last three decades. According to record evidence, the rapid decrease in Florida production acreage compared to that of U.S. acreage can be directly associated with crop damage resulting from recent hurricanes. Florida's production trended upward to 34,700 tons in the early 1980's and has shown great variability since. Production in 2005 was at a 10 year low of 12,000 tons. After Hurricane Andrew, which affected the value of production in 1992 and 1993, the value of Florida's production has ranged from a high of $17.2 million in 2003 to a low of $11.3 million in 2005.

The amendments included in this decision would: Add authority for the Committee to borrow funds; revise voting requirements for changing the assessment rate; allow for District 1 nominations to be conducted by mail; and add authority for the Committee to accept voluntary contributions.

The proposals set forth in this Decision would streamline program organization, but are not expected to result in a significant change in industry production, handling or distribution activities. In discussing the impacts of the proposed amendments on growers and handlers, record evidence indicates that the changes are expected to be positive because the administration of the programs would be more efficient, and therefore more effective, in executing Committee duties and responsibilities. There would be no significant cost impact on either small or large growers or handlers.

Interested persons were invited to present evidence at the hearing on the probable regulatory and informational impact of the proposed amendments to the order on small entities. In addition, the Recommended Decision invited exceptions from interested persons on the information collection burden. None were received. The record evidence is that the amendments are designed to increase efficiency in the functioning of the order.

USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this proposed rule. These amendments are designed to enhance the administration and functioning of the order to benefit the South Florida avocado industry.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), this notice announces that AMS is seeking approval from OMB for a new information collection request for Avocados Grown in South Florida, Marketing Order No. 915, under OMB No. 0581-NEW. Upon OMB approval, the additional burden will be merged into the information collection currently approved under OMB No. 0581-0189, “Generic OMB Fruit Crops.”

Title: Avocados Grown in South Florida, Marketing Order No. 915.

OMB No.: 0581-NEW.

Expiration Date of Approval: Three years from OMB date of approval.

Type of Request: New collection.

Abstract: The information collection requirement in this request is essential to provide growers and handlers with ballots so that nominations for the Committee can be conducted by mail.

This information collected is used only by authorized representatives of USDA, including AMS, Fruit and Vegetable Programs regional and headquarters' staff, and authorized employees and agents of the Committee. Authorized Committee employees, agents, and the industry are the primary users of the information and AMS is the secondary user.

Avocado growers would use this ballot to nominate members and alternative members, either for District 1 or District 2 (whichever is applicable), to serve on the Committee. The ballot would be used when voting by mail.

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.083 hour per response.

Respondents: Avocado growers.

Estimated Number of Respondents: 352.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 29 hours.

Avocado handlers would use this ballot to nominate members and alternate members for either District 1 or District 2 (whichever is applicable), to serve on the Committee. This ballot would be used when voting by mail.

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.083 hour per response.

Respondents: Avocado handlers.

Estimated Number of Respondents: 32.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 3 hours.

The Committee recommended amending the nomination process to allow for District 1 nominations to be conducted by mail.

As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

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

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.

The amendments to Marketing Order 915 proposed herein have been reviewed under Executive Order 12988, Civil Justice Reform. They are not intended to have retroactive effect. If adopted, the proposed amendments would not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this proposal.

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 no later than 20 days after the date of the entry of the ruling.

The findings and conclusions, rulings, and general findings and determinations included in the Recommended Decision set forth in the March 30, 2007 issue of the Federal Register are hereby approved and adopted.

Annexed hereto and made a part hereof is the document entitled “Order Amending the Order Regulating the Handling of Avocados Grown in Florida.” This document has been decided upon as the detailed and appropriate means of effectuating the foregoing findings and conclusions.

It is hereby ordered , That this entire decision be published in the Federal Register .

It is hereby directed that a referendum be conducted in accordance with the procedure for the conduct of referenda (7 CFR part 900.400 et seq. ) to determine whether the annexed order amending the order regulating the handling of avocados grown in Florida is approved or favored by growers, as defined under the terms of the order, who during the representative period were engaged in the production of avocados in the production area.

The representative period for the conduct of such referendum is hereby determined to be April 1, 2006, through March 31, 2007.

The agents of the Secretary to conduct such referendum are hereby designated to be William G. Pimental and Christian D. Nissen, Southeast Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA; Telephone: (863) 324-3375, Fax: (863) 325-8793, or E-mail: William.Pimental@usda.gov or Christian.Nissen@usda.gov, respectively.

The findings and determinations hereinafter set forth are supplementary to the findings and determinations which were previously made in connection with the issuance of the marketing agreement and order; and all said previous findings and determinations are hereby ratified and affirmed, except insofar as such findings and determinations may be in conflict with the findings and determinations set forth herein.

(a) Findings and Determinations Upon the Basis of the Hearing Record.

Pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601 et seq. ), and the applicable rules of practice and procedure effective thereunder (7 CFR part 900), a public hearing was held upon the proposed amendments to the Marketing Agreement No. 121 and Order No. 915 (7 CFR part 915), regulating the handling of avocados grown in Florida. Upon the basis of the evidence introduced at such hearing and the record thereof, it is found that:

(1) The marketing agreement and order, as amended, and as hereby proposed to be further amended, and all of the terms and conditions thereof, would tend to effectuate the declared policy of the Act;

(2) The marketing agreement and order, as amended, and as hereby proposed to be further amended, regulate the handling of avocados grown in the production area in the same manner as, and are applicable only to, persons in the respective classes of commercial and industrial activity specified in the marketing agreement and order upon which a hearing has been held;

(3) The marketing agreement and order, as amended, and as hereby proposed to be further amended, are limited to their application to the smallest regional production area which is practicable, consistent with carrying out the declared policy of the Act, and the issuance of several orders applicable to subdivisions of the production area would not effectively carry out the declared policy of the Act;

(4) The marketing agreement and order, as amended, and as hereby proposed to be further amended, prescribe, insofar as practicable, such different terms applicable to different parts of the production area as are necessary to give due recognition to the differences in the production and marketing of avocados grown in the production area; and

(5) All handling of avocados grown in the production area as defined in the marketing agreement and order, is in the current of interstate or foreign commerce or directly burdens, obstructs, or affects such commerce.

It is therefore ordered, That on and after the effective date hereof, all handling of avocados grown in Florida shall be in conformity to, and in compliance with, the terms and conditions of the said order as hereby proposed to be amended as follows:

The provisions of the proposed marketing agreement and order amending the order contained in the Recommended Decision issued by the Administrator on March 23, 2007, and published in the Federal Register (72 FR 15056) on March 30, 2007, will be and are the terms and provisions of this order amending the order and are set forth in full herein.

The NRC has received a petition for rulemaking dated May 17, 2007, submitted by Raymond A Crandall (petitioner). The petitioner requests that the NRC amend 10 CFR Part 50, “Domestic Licensing of Production and Utilization Facilities.” Specifically, the petitioner requests that 10 CFR 50.67, “Accident source term” and “Criterion 19—Control room” in Appendix A to Part 50, “General Design Criteria for Nuclear Power Plants” be amended by eliminating the specific criteria related to the radiological doses for control room habitability at nuclear power plants.

The NRC has determined that the petition meets the threshold sufficiency requirements for a petition for rulemaking under 10 CFR 2.802. The petition was docketed by the NRC as PRM-50-87 on May 25, 2007. The NRC is soliciting public comment on the petition for rulemaking.

The petitioner notes that the current regulations provide specific dose criteria, based on deterministic radiological dose analyses performed by the licensee and reviewed by the NRC staff for demonstrating the acceptability of the control room design for radiological release events. NRC regulatory guides and standard review plans provide the methodologies used to perform dose analyses that are incorporated into a licensee's site-specific technical specifications (TS). However, the petitioner believes that the deterministic dose analysis methodology and associated regulatory process has resulted in several negative safety consequences. The petitioner states that these consequences include:

(1) Control designs that are not optimum for ensuring continued control room habitability and may increase the probability of control room evacuation.

(2) Site procedures for mitigation of dose consequences to control room personnel that are not optimum for ensuring control room habitability and are inconsistent with more effective mitigation strategies.

(3) Unnecessary challenges to safety systems, such as increased challenges to the Emergency Diesel Generators if control room ventilation system fans are used early in an accident to meet analysis assumptions.

(4) TS action statement requirements that require a plant shutdown for failure to meet a control room dose analysis input assumption and result in a net increase in the risk to the public.

(5) TS surveillance requirements that cannot be cost-justified based on the risk significance that results in expenditures that could be used on risk-significant improvements.

The petitioner believes the suggested amendments would eliminate the specific radiological dose acceptance criteria; the need for deterministic dose analyses; and the need for the associated regulatory process, including the TS imposed to ensure compliance. The petitioner also states that the proposed change does not eliminate the requirement for the control room to be designed to ensure safe conditions under accident conditions, but would eliminate what he believes are safety concerns with the current regulation.

The petitioner states that because the primary objective of control room habitability is to ensure continuous occupancy, the primary focus should be on minimization of whole body doses from noble gases. The petitioner believes that the current regulation is inconsistent with the goal of allowing the control room operator to remain in the control room to mitigate accident consequences. He states that some common designs focus on compliance with existing criteria, such as a filtered air-intake pressurization design, and increase the probability that the control room will have to be evacuated. The petitioner has concluded that the current requirements and operational criteria are established to minimize the thyroid dose at the expense of increasing the whole body dose. The petitioner notes that the dose from increased iodine concentration can be mitigated by use of potassium iodide (KI) or respiratory protection, but that the current requirements do not permit these mitigating techniques for radiological releases to be used in design analyses. The petitioner believes it is inconsistent that credit for respiratory protection is permitted in control room habitability toxic gas release evaluations, but not for design analyses.

The petitioner also states that current procedures for dose mitigation are simplified to be consistent with the licensing basis hypothetical analysis and that these analyses have resulted in procedures that may not be an optimum mitigation strategy for more likely conditions. The petitioner believes that mitigation strategies should be based on overall risk reduction that would involve strategies for more likely conditions. The petitioner has concluded that the current mitigation strategies are based on one set of fixed hypothetical conditions that are unlikely as a result of the required deterministic dose analysis specified in the existing regulation.

The petitioner states that procedures for dose mitigation must be consistent with the licensing basis and may not be the optimum mitigation strategy for the more likely conditions. The petitioner states that control room dose models do not model dispersion as a period during the day with higher concentrations while the plume is blowing towards the control room and then a period of zero concentration for the rest of the day. Instead, analysis methods simplify this effect by assuming that a lower concentration is present continuously. The petitioner states that if procedures were revised to include a purge mode strategy, a calculated increase in consequences in the simplistic design basis analysis would result.

The petitioner states that the design requirements in the current regulations result in unnecessary challenges to safety systems. The petitioner cites an example during an assumed loss-of-coolant accident (LOCA) and states that a common design requirement specifies that the normal control room ventilation must isolate when a safety injection or containment isolation signal occurs. The petitioner believes it would be more logical to delay control room isolation until radioactivity is detected in the control room or it is known that a radioactive plume is blowing towards the control room. The petitioner suggests that mitigating design strategies should be based on overall risk reduction designed for more likely conditions, not on one set of fixed hypothetical conditions that the petitioner believes is unlikely.

The petitioner states that current radiological dose mitigation analyses also result in inappropriate TS action statements. The petitioner explains that radiological dose analyses differ from other types of engineering calculations. The petitioner states that even though most engineering analyses involve some amount of uncertainty, the results reasonably match what can be expected during a real event. The petitioner cites the thermal hydraulic analyses for an assumed LOCA event and explains that conservatism is built into the model, and that numerous assumptions go into the analysis to demonstrate that fuel damage will not occur due to overheating. The petitioner states that for other assumptions such as the temperature of the safety injection water or the flow rate of the safety injection pump, uncertainty is limited by specifying an acceptable value for such a parameter in the TS. The petitioner believes that TS requirements for a safety injection system that cannot meet design requirements impose a shutdown requirement.

The petitioner states that a large break LOCA is usually the limiting accident for control room habitability design and that the associated radiological analysis requires multiple inputs, including the source term, which is the amount of radioactivity released from the reactor core that can reach the environment. The petitioner explains that the source term assumption can vary by many orders of magnitude and that total curies released is not the only consideration. The calculated and actual dose during an event depends on the nuclide mix of the release, decay time since reactor shutdown, the fraction of particulate nuclides that become airborne, and the chemical form of the source term. The petitioner also states that many uncertainties are considered in these models that include the removal mechanism for the various nuclides; the release pathway and forces that cause a release by that pathway; atmospheric dispersion; and dose modeling that depends on the size of an exposed individual, their breathing rate, biological removal mechanisms, etc.

The petitioner believes that the combined probability of all assumptions being at the high end of uncertainty is so small that the design basis event will not be realistic and makes each assumption meaningless for predicting actual results. The petitioner cites the Three Mile Island accident as an example when the dose analysis input assumptions had no significance in predicting the actual consequences of the event. The petitioner states that for control room habitability TS, the analyses assumptions and results are even further removed from any significance because there is no direct public impact from not meeting control room habitability system requirements, any dose an operator receives can be mitigated by KI, and the dose limit is overly restrictive. The petitioner states that the potential indirect impact on public safety of having to evacuate the control room can be easily avoided, regardless of the control room habitability system status. The petitioner has concluded that this means “there is insignificant safety significance to the TS associated with control room habitability and yet there are shutdown requirements.”

The petitioner notes that in the past, the NRC has specified on numerous occasions that the inability to meet the assumptions or criteria of control room habitability analyses has low safety significance. The petitioner states that the primary basis for the low safety significance was usually due to the existence of mitigating actions such as the issuance of KI tablets to ensure continued occupancy of the control room and to justify continued operation. The petitioner believes that to evaluate the net public safety risk associated with these TS shutdown requirements, small but quantifiable public risks associated with the shutdown of a nuclear power plant must be considered that include but are not limited to the:

(1) Risk associated with bringing the plant through a transient and another thermal cycle;

(2) Airborne pollutants released by the fossil units required to operate to make up for lost power; and

(3) Potential for challenging electric power grid stability with the public risk associated with the possibility of rolling blackouts or brownouts, or under the worst conditions of grid stability, the potential for a loss of offsite power at multiple nuclear power facilities.

The petitioner states that the shutdown requirement increases the net public risk and has concluded that the shutdown requirement needs to be eliminated because it is only imposed as a “matter of compliance” that he believes results from the way the input assumptions are treated when using deterministic calculations.

The petitioner also states that “individual input assumptions for radiological dose analyses have no significance in predicting reality or the acceptability of results. Even if actual conditions were such that one of the assumptions was non-conservative by a couple orders of magnitude, the ultimate result (in this case habitability of the control room) would still be acceptable due to the significant conservatisms in the other assumptions and the simplicity of effective mitigating actions such as the use of KI.”

The petitioner states that although most control room habitability surveillances can be performed with minimal resources, licensees have been required to demonstrate the accuracy of the assumption on unfiltered inleakage using a tracer gas testing method that costs approximately $100,000 per test and cannot be justified. The petitioner believes these tests have demonstrated that although inleakage values assumed in the analyses were non-conservative, there was no safety significance and continued operation was justified. The petitioner has concluded that the expenditure for tracer gas testing could be better used for improvements that would likely be more beneficial to plant safety and, therefore, the required performance of this test could have a net negative safety consequence. The petitioner states that previous surveillances, such as a pressurization test, combined with lessons learned from tracer gas testing results in an effective preventative maintenance program to provide a cost-justified approach to ensure that there are no significant failures of the control room habitability boundary and an insignificant potential for control room evacuation.

The petitioner suggests that the regulations should be revised to eliminate the specific radiological criteria for control room habitability. The petitioner believes this would result in the ability to revise the industry guidelines to eliminate the specified guidelines for performing deterministic dose analyses and eliminate all negative safety consequences discussed in the petition. Specifically, the petitioner recommends that 10 CFR 50.67(b)(2)(iii) and the second sentence of Criterion 19 of Appendix A to Part 50 that contain specific criteria for control room habitability be removed from the regulations.

The petitioner suggests that the current guidelines be replaced with guidelines that he believes would ensure that the control room remains habitable under most postulated conditions, such as:

(1) The control room ventilation system should isolate on the detection of high radiation or toxic gas intake.

(2) The control room should have a minimum of one foot of concrete shielding (or equivalent) on all surfaces.

(3) Self Contained Breathing Apparatus (SCBAs) and KI tablets should be readily available for operator use. Operators should maintain training in SCBAs.

(4) Procedural controls to maintain a low leakage boundary, such as preventive maintenance/routine inspection of door seals and dampers should be implemented.

(5) Procedures should be developed to ensure control room purging is considered when the outside concentration is less than the inside concentration.

(6) Existing emergency filtration systems should be maintained to practical performance criteria.

The petitioner also states that current TS for system performance would be eliminated and that the administrative portion of the TS could include a requirement to have a Control Room Habitability Program. The petitioner believes that because of the low public risk significance of being outside design guidelines in a Control Room Habitability Program, a plant shutdown would not be required if it is outside of the guidelines. Rather, the petitioner believes that the program could specify that timely actions should be taken to return the plant within the guidelines. If not complete within 30 days, the petitioner suggests that a special report would be sent to the NRC with a justification for continued operation and a proposed schedule for meeting the guidelines.

The petitioner states that removing the specific dose criteria would not eliminate the need to perform quantitative analyses as required to demonstrate the acceptability for certain conditions. The petitioner also states that although the current regulation has no specific quantitative limits for toxic gases, the guidelines require quantitative analyses for toxic gas habitability assessments under certain conditions. The petitioner suggests that as an alternative to total removal of dose guidelines from the regulations, most of his concerns could be resolved if the dose criteria were based solely on the whole body dose from noble gases that he believes is the only possible dose impact that may result in control room evacuation. The petitioner suggests, as another option, that most of his concerns would be resolved if credit for SCBAs and/or KI was allowed in the analysis of the dose from iodine and particulates. The petitioner also proposes that the TS be revised to eliminate shutdown requirements for failure to meet control room habitability requirements.

The notice of proposed rulemaking (REG-147171-05) that is the subject of this correction is under section 274(e) of the Internal Revenue Code.

As published, the notice of proposed rulemaking (REG-147171-05) contains an error that may prove to be misleading and is in need of clarification.

Accordingly, the notice of proposed rulemaking (REG-147171-05) that was the subject of FR Doc. E7-11445 is corrected as follows:

The Child Protection and Obscenity Enforcement Act of 1988, Public Law 100-690, codified at 18 U.S.C. 2257, imposes certain name- and age-verification, record-keeping, and labeling requirements on producers of visual depictions of actual human beings engaged in actual sexually explicit conduct. Specifically, section 2257 requires producers of such material to “ascertain, by examination of an identification document containing such information, the performer's name and date of birth,” to “ascertain any name, other than the performer's present and correct name, ever used by the performer including maiden name, alias, nickname, stage, or professional name,” and to record and maintain this information. 18 U.S.C. 2257(b). Violations of these record-keeping requirements are criminal offenses punishable by imprisonment for not more than five years for a first offense and not more than 10 years for subsequent offenses. See id. 2257(i). Any matter containing such visual depictions must be labeled with a statement indicating where the records are located, and those records are subject to inspection by the government. See id. 2257(c), (e). These provisions supplement the federal statutory provisions criminalizing the production and distribution of materials visually depicting minors engaged in sexually explicit conduct. See id. 2251, 2252.

The regulations in 28 CFR part 75 implement section 2257. On May 24, 2005, the Department of Justice (“the Department”) published a final rule that updated those regulations to account for changes in technology, particularly the Internet, and to implement the Prosecutorial Remedies and Other Tools to End the Exploitation of Children Today (PROTECT) Act of 2003, Public Law 108-21. See 70 FR 29607 (May 24, 2005).

On July 27, 2006, President George W. Bush signed into law the Adam Walsh Child Safety and Protection Act, Public Law 109-248 (“the Act”). As described in more detail below, the Act made a number of changes to section 2257. This proposed rule amends the regulations in part 75 to comport with these statutory changes.

In publishing the May 24, 2005, regulations, the Department explained the urgency of protecting children against sexual exploitation and, consequently, the need for more specific and clear regulations detailing the records and inspection process for sexually explicit materials to ensure the accurate identity and age of performers.

The identity of every performer is critical to determining and ensuring that no performer is a minor. The key congressional concern, evidenced by the child exploitation statutory scheme, is that all such performers verifiably not be minors, i.e. , not be younger than 18. See 18 U.S.C. 2256(1), 2257(b)(1). Congress has recognized that minors warrant special concern in this area. Children are incapable of giving voluntary and knowing consent to perform, or to enter into contracts to perform, in visual depictions of sexually explicit conduct. In addition, children often are involuntarily forced to engage in sexually explicit conduct. For these reasons, visual depictions of sexually explicit conduct that involve persons under the age of 18 constitute child pornography. See id. 2256(8).

The current regulations and this revised proposed rule provide greater details for the record-keeping and inspection process in order to ensure that minors are not exploited in visual depictions of actual sexually explicit conduct. Neither the current regulations nor this revised proposed rule restrict in any way the content of the depictions themselves. Instead, the rules clarify the identity verification, record-keeping, and labeling requirements pertaining to the depictions.

By requiring producers to ascertain the age of performers in their depictions, and maintain records evidencing such compliance, the statute helps to ensure that producers will not exploit minors, either through carelessness, recklessness, or deliberate indifference. As for those who intentionally produce material depicting minors engaged in sexually explicit conduct, the statute and regulations either require them to maintain records of their crimes or provide an additional basis for prosecuting such individuals besides the applicable child-exploitation statutes. In addition, by confirming that the statute and regulations apply to “secondary producers,” the revised proposed rule will make it more difficult for the purveyors of such material to access the market. As the U.S. Court of Appeals for the DC Circuit explained in partially upholding the constitutionality of an earlier version of the regulations, one of the reasons for the regulations is “to deprive child pornographers of access to commercial markets by requiring secondary producers to inspect (and keep a record of) the primary producers' proof that the persons depicted were adults at the time they were photographed or videotaped.” American Library Ass'n v. Reno, 33 F.3d 78, 86 (DC Cir. 1994).

The proposed revision of the existing regulations also reflect several significant changes to section 2257 made by the Act.

First, the Act corrected an anomaly in the definition of “sexually explicit conduct” to which section 2257's requirements apply. Prior to the enactment of the Act, section 2257 referenced the definition of “sexually explicit conduct” for purposes of Chapter 110 of the U.S. Code in section 2256(2)(A) and listed four of the five categories of conduct included in that section. Section 2257 did not include “lascivious exhibition of the genitals or pubic area of a person.” 18 U.S.C. 2256(2)(A)(v). The Act revised section 2257 to include that category along with the others. See Adam Walsh Child Safety and Protection Act, Public Law 109-248, section 502(a)(4). Because part 75 defines “sexually explicit conduct” by referencing that term in section 2256(2)(A), part 75 will apply to depictions of the “lascivious exhibition of the genitals or pubic area of a person.”

The proposed rule reflects this change by adding to the definitional section of the regulations at § 75.1(n). Although proposed part 75 applies to the “lascivious exhibition of the genitals or pubic area of a person,” it does not define this term beyond the language of section 2256(2)(A). Case law provides guidance as to the types of depictions that federal courts have considered as lascivious exhibition of the genitals or pubic area (hereinafter, “lascivious exhibition”), and the Department will rely on such precedent in the context of section 2257 investigations and prosecutions.

The leading case is United States v. Dost, 636 F. Supp. 828 (S.D. Cal. 1986), aff'd sub nom. United States v. Weigand, 812 F.2d 1239 (9th Cir. 1987), which provides a list of factors for determining whether a visual depiction constitutes lascivious exhibition:

It should be noted that, although these factors have been used to determine whether visual depictions of children constituted lascivious exhibition for purposes of criminal prosecution for violations of sections 2251, 2252, and 2252A of title 18, only the third factor is necessarily dependent on the age of the person depicted. The other factors provide guidance as to the types of depictions that would constitute lascivious exhibition for purposes of section 2257 and part 75, as well, even though those sections apply to any performers regardless of age.

The applicability of part 75 to lascivious exhibition is prospective from the effective date of the Act. The rule therefore applies only to depictions whose original production date is on or after July 27, 2006. That is, records are not required to be maintained either by a primary producer or by a secondary producer for a visual depiction of lascivious exhibition, the original production date of which was prior to July 27, 2006. In the case of a secondary producer, this means that even if the secondary producer “produces” (as defined in the regulation) such a depiction on or after July 27, 2006, he need not maintain records if the original production date of the depiction is prior to that date.

Along with adding the requirement that producers of lascivious exhibition maintain records under section 2257, the Act created a new section of the Federal criminal code, 18 U.S.C. 2257A. See Adam Walsh Child Safety and Protection Act, Public Law 109-248, section 503. Section 2257A requires that producers of visual depictions of simulated sexually explicit conduct maintain records documenting that performers in those depictions not be minors. It thus brings the record-keeping requirements in line with the definition of sexually explicit conduct in section 2256(2)(A), which includes both actual and simulated conduct. See 18 U.S.C. 2256(2)(A). The Department is preparing a separate rule to implement this section.

In section 503, the Act also created an exemption from the record-keeping requirements of section 2257, to the extent it applies to lascivious exhibition, and of section 2257A. One part of this exemption states that section 2257 (to the extent it applies to lascivious exhibition) and section 2257A do not apply to matter that is (i) Intended for commercial distribution, (ii) is created as a part of a commercial enterprise by a person who certifies to the Attorney General that he regularly and in the normal course of business collects and maintains individually identifiable name and age information regarding all performers for purposes such as Federal and State tax, labor, and other laws, and (iii) is not produced, marketed, or otherwise made available in circumstances such that an ordinary person would conclude that it is child pornography. See 18 U.S.C. 2257A(h)(1)(A). The other part of this exemption states that section 2257 (to the extent it applies to lascivious exhibition) and section 2257A do not apply to matter that is produced by someone subject to the Federal Communications Commission's authority to enforce federal bans on the broadcast of obscene, indecent, or profane programming, and is created as a part of a commercial enterprise by a person who certifies to the Attorney General that he regularly and in the normal course of business collects and maintains individually identifiable name and age information regarding all performers, for purposes such as Federal and State tax, labor, and other laws. See id. 2257A(h)(1)(B). The rule to implement section 2257A will also implement this exemption and the associated certification regime, which, as noted, will also apply to matter and producers covered by this proposed rule.

Second, the Act revised the exclusions in the statute for the operations of Internet companies. Specifically, the Act amended section 2257 by excluding from the definition of “produces” the “provision of a telecommunications service, or of an Internet access service or Internet information location tool * * * or the transmission, storage, retrieval, hosting, formatting, or translation (or any combination thereof) of a communication, without selection or alteration of the content of the communication.” These exclusions are based on the definitions in section 231 of the Communications Act of 1934, 47 U.S.C. 231.

Third, the Act made several changes in the terminology of the statute. In subsection 2257(e)(1), it added at the end the following: “In this paragraph, the term ‘copy’ includes every page of a Web site on which matter described in subsection (a) appears.” That change is reflected in the proposed rule at §§ 75.1(e)(3), 75.6(a), and 75.8(d). The change materially affects the regulations' labeling requirement as applied to Web sites. Section 75.8(d) of the current regulations permits a producer of a computer site of service or Web site to affix the label stating where the records required under the regulations are located “on its homepage, any known major entry points, or principal URL (including the principal URL of a subdomain), or in a separate window that opens upon the viewer's clicking a hypertext link that states, ‘18 U.S.C. 2257 Record-Keeping Requirements Compliance Statement.”’ Because of the change in the statute, the proposed rule eliminates this portion of the current regulations. The proposed rule requires, per the statute, that the statement describing the location of the records required by this part be affixed to every page of a Web site (controlled by the producer) on which visual depictions of sexually explicit conduct appear.

Finally, the Act confirmed that the statute applies to secondary producers as currently (and previously) defined in the regulations. Specifically, the Act defines any of the following activities as “produces” for purposes of section 2257:

It excludes from the definition of “produces,” however, the following activities, in pertinent part:

This language replaced the previous definition of “produces” in the statute, which stated, in pertinent part, as follows:

In enacting this language, Congress upheld the Department's consistently held position that the rule's requirements for secondary producers have been in effect since the rule's original publication. As explained by the sponsor of the Act in the House of Representatives:

Congress thus rejected the interpretation adopted by the court in Sundance Assocs., Inc. v. Reno, 139 F.3d 804 (10th Cir. 1998), in favor of the DC Circuit's decision upholding the application of the statute to secondary producers, Am. Library Ass'n v. Reno, 33 F.3d 78 (DC Cir. 1994). In upholding the constitutionality of the secondary-producer requirements, the DC Circuit both recognized the importance of these requirements and effectively rejected the argument that Congress lacked the authority to regulate secondary producers.

In accordance with current law, the proposed rule retains July 3, 1995, as the effective date of the rule's requirements for secondary producers. (The current regulations, published in 2005, adopted July 3, 1995, as the effective date of enforcement of section 2257 based on the Court's order in American Library Association v. Reno, No. 91-0394 (SS) (D.D.C. July 28, 1995)). The one exception is that the proposed rule would not penalize secondary producers for failing to maintain required records in connection with those acts of production that occurred prior to the effective date of the Act. While the law would permit the Department to apply the statute and regulations to actions that occurred prior to that date, the Department has determined that the rule shall not apply in such circumstances to avoid any conceivable ex post facto concern.

In addition to implementing the changes in the statute described above, the proposed rule clarifies several other issues. First, it clarifies that primary producers may redact non-essential information from copies of records provided to secondary producers, including addresses, phone numbers, social security numbers, and other information not necessary to confirm the name and age of the performer. However, the identification number of the picture identification card presented to confirm name and age—such as drivers' license number or passport number—may not be redacted, so that its validity may be confirmed. Second, the proposed rule clarifies that producers of visual depictions performed live on the Internet need not maintain a copy of the full running-time of every such depiction. Rather, they may maintain a copy that contains running-time sufficient to identify each and every performer in the depiction and associate each and every performer with the records needed to confirm his or her age.

Third, the proposed rule clarifies that, with regard to the government-issued photo identification required for records, a foreign-government-issued picture identification card is acceptable if the performer providing it is a foreign citizen and the producer maintaining the records produces the visual depiction of the performer in a foreign country, no matter whether the producer is a U.S. or foreign citizen. That is, a U.S. producer who produces a depiction of sexually explicit conduct while located in a foreign country may rely on a foreign-government-issued picture identification card of a performer in that depiction who is a foreign citizen. All other requirements of the regulations continue to apply mutatis mutandis—i.e. , the producer must examine and maintain a legible copy of the foreign-government-issued picture identification card in his records. Furthermore, a foreign-government-issued picture identification card is not sufficient to comply with the regulations for U.S. citizens, even when abroad. That is, if a U.S. producer travels to a foreign country to produce a depiction of sexually explicit conduct, all U.S. citizens performing in the depiction must have a U.S.-government-issued picture identification card, even though a foreign citizen performing in the same depiction may provide a foreign-government-issued picture identification card. And, as is the case in the current regulation, only a U.S.-government-issued picture identification card complies with the regulations in the United States, no matter whether a performer is a U.S. or foreign citizen. The regulation also states that producers of visual depictions made after July 3, 1995, the effective date of the regulations published in 1992, and before June 23, 2005, the effective date of the current regulations published in 2005, may rely on picture identification cards issued by private entities such as schools or private employers that were valid forms of required identification documentation under the provisions of part 75 in effect on the original production date.

Finally, although it is not necessary to change the text of the regulations for this purpose, the Department hereby clarifies that a producer need not keep a copy of a URL hosting a depiction that the producer produced but over which he exercises no control.

The Department has drafted this proposed rule in accordance with the Regulatory Flexibility Act, 5 U.S.C. 601-612. The Department drafted the rule to minimize its effect on small businesses while meeting its intended objectives. Based upon the preliminary information available to the Department through past investigations and enforcement actions involving the affected industry, the Department is unable to state with certainty that this rule, if promulgated as a final rule, will not have any effect on small businesses of the type described in 5 U.S.C. 601(3). Accordingly, the Department has prepared a preliminary Regulatory Flexibility Act analysis in accordance with 5 U.S.C. 604, as follows:

The identity of every performer is critical to determining and assuring that no performer is a minor. The key congressional concern, evidenced by the child exploitation statutory scheme, is that all such performers verifiably not be minors, i.e. , not younger than 18 years of age. See 18 U.S.C. 2256(1), 2257(b)(1). As discussed above, Congress has recognized that minors warrant special concern in this area. Children themselves are incapable of giving voluntary and knowing consent to perform or to enter into contracts to perform. In addition, children often are involuntarily forced to engage in sexually explicit conduct. For these reasons, visual depictions of sexually explicit conduct that involve persons under the age of 18 constitute unlawful child pornography. See 18 U.S.C. 2256(8).

This proposed rule amends certain provisions of the existing regulations to conform to the Act, as described above.

A “small business” is defined by the Regulatory Flexibility Act (“RFA”) to be the same as a “small business concern” under the Small Business Act (“SBA”), 15 U.S.C. 632. Under the SBA, a “small-business concern” is one that: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) meets any additional criteria established by the SBA. See 5 U.S.C. 601(3) (incorporating by reference the definition of “small business concern” in 15 U.S.C. 632).

Based upon the information available to the Department through past investigations and enforcement actions involving the affected industry, there are likely to be a number of small businesses that are producers of visual depictions of sexually explicit conduct as defined in the statute, as amended by the Act.

Pursuant to the RFA, the Department requests affected small businesses to estimate what these regulations will cost as a percentage of their total revenues in order to enable the Department to ensure that small businesses are not unduly burdened.

The proposed rule has no effect on State or local governmental agencies.

The proposed rule modifies existing requirements for private companies with regard to visual depictions of sexually explicit conduct to ensure that minors are not used in such depictions. One of these requirements that would specifically affect private companies is Congress's expansion of the coverage of the definition of “sexually explicit conduct” to cover lascivious exhibition.

This proposed rule has been drafted and reviewed in accordance with Executive Order 12866, section 1(b), Principles of Regulation. The Department has determined that this rule is a “significant regulatory action” under Executive Order 12866, section 3(f). Accordingly this rule has been reviewed by the Office of Management and Budget.

The benefit of the rule is that children will be better protected from exploitation in the production of visual depictions of sexually explicit conduct by ensuring that only those who are at least 18 years of age perform in such depictions. The costs to the industry include slightly higher record-keeping costs. The Department encourages all affected commercial entities to provide specific estimates, wherever possible, of the economic costs that this rule will impose on them.

This rule 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. Therefore, in accordance with Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.

This rule meets the applicable standards set forth in § 3(a) and 3(b)(2) of Executive Order 12988.

This rule will not result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1501 et seq.

This rule is not a major rule as defined by section 251 of the Small Business Regulatory Enforcement Fairness Act of 1996, codified at 5 U.S.C. 804. This rule will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.

This proposed rule modifies existing requirements to conform to newly enacted legislation. It contains a revised information collection that satisfies the requirements of existing regulations to clarify the means of maintaining and organizing the required documents. This information collection will be submitted to the Office of Management and Budget for regular approval and comments from the public, in accordance with the Paperwork Reduction Act of 1995. Any comments received during the comment period should address one or more of the following four points: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) how to enhance the quality, utility, and clarity of the information to be collected; and (4) how to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology; e.g. , permitting electronic submission of responses.

The Department of Justice has no way of estimating the annual cost burden because of the multitude of variables within the control of producers of depictions of actual sexually explicit conduct. In publishing the proposed rule for the current part 75, the Department estimated that there were 100,000 Web sites and 200 producers of DVDs, videos, and other images containing visual depictions of actually explicit conduct (as defined by the language of section 2257 at that time), constituting 2000 businesses. The Department invited comments on these estimates but received none. The Department estimates currently that there are 500,000 Web sites and at least 200 producers of DVDs, videos, and other images containing visual depictions of actually explicit conduct (as defined by the revised section 2257), constituting 5000 businesses. Again, the Department invites comments on these numbers. The Department also invites comments on the total number of visual depictions that will be subject to the proposed rule and the cost of compliance of the rule for each visual depiction.

All comments and suggestions, or questions regarding additional information, should be directed to Andrew Oosterbaan, Chief, Child Exploitation and Obscenity Section, Criminal Division, United States Department of Justice, Washington, DC 20530; (202) 514-5780. This is not a toll-free number. Comments should also be sent to: Lynn Bryant, Clearance Officer, United States Department of Justice, Policy and Planning Staff, Justice Management Division, Patrick Henry Building, 601 D Street, NW., Washington, DC 20530.

Accordingly, for the reasons set forth in the preamble, part 75 of chapter I of title 28 of the Code of Federal Regulations is proposed to be amended as follows:

It has been determined that 32 CFR part 903 is not a significant regulatory action. This rule does not:

(1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities;

(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of the recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.

It has been certified the 32 CFR part 903 does not contain a Federal Mandate that may result in the expenditure by State, local and tribal governments, in aggregate, or by the private sector, of $100 million or more in any one year.

It has been determined that this rule is not subject to the Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if promulgated, have a significant economic impact on a substantial number of small entities. This rule * * *.

It has been certified that 32 CFR part 903 does not impose any reporting or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

It has been certified that 32 CFR part 903 does not have federalism implications, as set forth in Executive Order 13132. This rule does not have substantial direct effects on:

(1) The States;

(2) The relationship between the National Government and the States; or

(3) The distribution of power and responsibilities among the various levels of government.

Therefore, for the reasons set forth in the preamble, 32 CFR part 903 is proposed to be revised to read as follows:

This document proposes to amend the VA “Medical” regulations in 38 CFR part 17 by adding a new § 17.86 and by making technical amendments in § 17.102. As indicated in paragraph (a) of proposed § 17.86, this proposed rule would implement the provisions of Public Law 107-287, the VA Emergency Preparedness Act of 2002, regarding hospital care and medical services provided to individuals responding to, involved in, or otherwise affected by certain disasters or emergencies (including individuals who otherwise do not have VA eligibility for such care and services). These provisions are codified as 38 U.S.C. 1785.

Paragraphs (b) and (c) of proposed § 17.86 would reflect the provisions of 38 U.S.C. 1785, which provide that during and immediately following a disaster or emergency VA may furnish hospital care and medical services to individuals (including those who otherwise do not have VA eligibility for such care and services) responding to, involved in, or otherwise affected by:

• A major disaster or emergency declared by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq. ) (“Stafford Act”), or

• A disaster or emergency in which the National Disaster Medical System established pursuant to section 2811(b) of the Public Health Service Act (42 U.S.C. 300hh-11(b)) is activated either by the Secretary of Health and Human Services under paragraph (3)(A) of that section or as otherwise authorized by law.

Paragraph (d) of proposed § 17.86 would define “hospital care” and “medical services” according to the existing definitions in 38 U.S.C. 1701(5) and 1701(6).

Under paragraph (e) of proposed § 17.86, charges for care and services furnished to an officer or employee of a department or agency of the United States (other than VA) or to a member of the Armed Forces would be calculated in accordance with the provisions of § 17.102(h). Section 1785 states that VA shall be reimbursed for the cost of any care or services furnished to an officer or employee of a department or agency of the United States (other than VA) or to a member of the Armed Forces at rates agreed upon based on the cost of the care or service provided. An established system for charging for care and services provided to beneficiaries of the Department of Defense or other Federal agencies is already in place in § 17.102(c), (e), and (h). The cost of such care is charged at rates agreed upon in a sharing agreement described in § 17.102(e), or pursuant to the cost-based system described in § 17.102(h). In accordance with § 17.102(h), which provides authority to periodically do so, the Office of Management and Budget (OMB) and VA have published a document in the “Notices” section of the Federal Register entitled “Cost-Based and Interagency Billing Rates for Medical Care or Services Provided by the Department of Veterans Affairs,” 70 FR 66,866—66,868 (November 3, 2005). If the head of another Federal agency or the Secretary of a branch of the Armed Forces seeks VA hospital care or medical services for an officer, employee, or member, this cost-based system is the agreed-upon method for calculating the cost of such care or service unless the care provided falls within an existing sharing agreement as described in § 17.102(e).

Section 1785 is silent regarding charges to other individuals ( i.e. , other than the Federal officers or employees or members of the Armed Forces discussed in the immediately preceding paragraph of this preamble) that are eligible for such care and services under section 1785 but would not otherwise be eligible for such care and services as VA beneficiaries. This issue is discussed in the legislative history of the VA Emergency Preparedness Act of 2002 in S. Rep. No. 107-229 (July 31, 2002), a report of the Senate Committee on Veterans' Affairs. The report states, at 9: “[Section 1785] would also allow VA to receive reimbursement for the cost of services provided to employees of other Federal agencies or departments, to be credited to the facility that provided care. VA would not be required to charge other individuals for emergency care offered during a disaster.” The language of the statute, when considered with this legislative history, suggests that Congress did not intend to require VA to seek reimbursement for hospital care or medical services provided to other individuals during a covered disaster or emergency. However, in addition to the statutory language in section 1785, VA's current appropriation act impacts the question of reimbursement for care provided to individuals who are not otherwise eligible for hospital care or medical services at VA expense.

VA appropriation acts (including the appropriation act for fiscal year 2006, Pub. L. 109-114) have historically included a provision stating (with certain exceptions) that no appropriated funds shall be available “for hospitalization or examination of any persons” (Pub. L. 109-114, sec. 204) unless reimbursement for such care is made to the medical services account at rates set by the Secretary. In the appropriation act for fiscal year 2006 there are three exceptions. The first exception is care provided to “beneficiaries entitled under the laws bestowing such benefits to veterans.” In this preamble we use the phrase “VA beneficiaries” to refer to individuals eligible for hospitalization and medical care under the laws bestowing those benefits to veterans. The other two exceptions are persons receiving care under 5 U.S.C. 7901-7904 (employee services) or under the Stafford Act. This means that unless there has been a Presidential declaration under the Stafford Act, VA must seek reimbursement for the hospital care and medical services provided under section 1785 to persons who are not VA beneficiaries.

Not all care authorized under 38 U.S.C. 1785 is provided under the Stafford Act. Section 1785 authorizes VA to provide care during a disaster or emergency declared under the Stafford Act or during activation of the National Disaster Medical System (NDMS) pursuant to section 2811(b) of the Public Health Service Act. Activation of the NDMS may take place without a Presidential declaration of a major disaster or emergency, and in that case would be without a Stafford Act declaration. If the care provided to other individuals ( i.e. , individuals other than the Federal officers or employees, members of the Armed Forces, or VA beneficiaries) does not fall under the Stafford Act (for example, if NDMS is activated without a Stafford Act declaration), the appropriation language referenced above compels VA to seek reimbursement for the care provided under 38 U.S.C. 1785 to individuals who are not otherwise eligible for hospital care or medical services at VA expense. Other than officers or employees of a non-VA department or agency of the United States, or members of the Armed Forces, those individuals would generally include, e.g. , an individual who is not a veteran or a veteran's child, survivor, or dependent; an individual who is a veteran but who is not eligible for enrollment in the VA healthcare system under 38 U.S.C. 1705 and § 17.36; or an individual who is a veteran's child, survivor, or dependent but who is not eligible for such care and services at VA expense under any laws regarding certain categories of those persons. Paragraph (e) of proposed § 17.86 would provide a process for billing such individuals (other than officers or employees of a non-VA department or agency of the United States, or members of the Armed Forces) pursuant to § 17.102(h).

Besides the situation where the care provided to such other individuals does not fall under the Stafford Act, situations arise where the care does fall under the Act but VA does not receive reimbursement from any other-than-VA Federal department or agency. In such situations, VA seeks reimbursement from the individual. This has been long-standing VA practice and we propose to incorporate this practice in paragraph (e) by stating that “[o]ther individuals who receive hospital care or medical services under this section are responsible for the cost of the hospital care or medical services when charges are mandated by Federal law (including applicable appropriation acts) or when the cost of care or services is not reimbursed by other-than-VA Federal departments or agencies.” (Emphasis added.)

Under paragraph (e) of proposed § 17.86, the charges would be calculated in accordance with the provisions of § 17.102(h). (This document proposes to make technical changes to update the provisions of § 17.102(h) by removing “Cost Distribution Report”, a report which documented costs through September, 2004, and by adding, in its place, “Monthly Program Cost Report (MPCR)”, the report that VA currently uses for purposes of § 17.102(h). This document also proposes to make in § 17.102(h) clarifying technical changes in the description of the report's contents regarding outpatient care. Changes that this document is proposing to make to § 17.102 for other reasons are described below in this preamble.) Paragraph (h) of § 17.102 provides a mechanism for charges to be based on the MPCR, which sets forth the actual basic costs and per diem rates by type of inpatient care, and actual basic costs and rates for outpatient care per visit or prescription filled, with additions based on:

• Factors for depreciation of buildings and equipment,

• Central Office overhead,

• Interest on capital investment, and

• Standard fringe benefit costs covering government employee retirement and disability costs.

The formula in § 17.102(h) provides an appropriate method for calculating charges for services provided under 38 U.S.C. 1785 during certain disasters or emergencies. As noted earlier, this formula is already used to charge for care to beneficiaries of the Department of Defense and other Federal agencies. It is also used to calculate charges for individuals who receive emergency hospital care or medical services on a humanitarian basis (38 U.S.C. 1784). Further, it is based on the cost of the care provided to non-otherwise-eligible beneficiaries, thereby ensuring that the medical services account is reimbursed for the cost of care provided, as required by the current appropriation act. The last sentence of paragraph (e) of proposed § 17.86 notes that VA would bill in accordance with § 17.102(h) “without applying the exception provided in the first paragraph of § 17.102.” The exception provided in the first paragraph of § 17.102 is a reference to the possible applicability of § 17.101, a regulation covering the collection or recovery by VA for medical care and services described in 38 U.S.C. 1729. The exception in the first sentence of § 17.102 would not be applicable in any situation where care is provided under section 1785, as veterans would be receiving hospital care and medical services pursuant to section 1785 rather than section 1729.

Paragraph (f) of proposed § 17.86 would clarify that VA may furnish care and services under § 17.86 to a veteran without regard to whether he or she is enrolled in the VA healthcare system. Paragraph (f) would reflect the provisions of 38 U.S.C. 1785(c), which state that VA may furnish care and services under section 1785 to an individual who is a veteran without regard to whether the veteran is enrolled in the VA patient enrollment system under 38 U.S.C. 1705. Section 1785(c) concerns the relationship of section 1785 and certain already existing provisions of law. It clarifies the possible impact of section 1705(c)(1) on section 1785. A provision in section 1705(c)(1) states that VA may not provide hospital care or medical services to certain veterans under 38 U.S.C. 1710 (the statutory authorization that is a key basis for VA's provision of hospital care and medical services to veterans through its medical benefits package) unless those veterans have enrolled in the system of patient enrollment mandated by section 1705(a). VA's regulation at 38 CFR 17.36 reflects this requirement and states that except in limited circumstances, a veteran must be enrolled in the VA healthcare system as a condition for receiving hospital care and medical services provided through VA's medical benefits package. The language in 38 U.S.C. 1705(c)(1) and the implementing regulations at 38 CFR 17.36, if the clarifying language in paragraph (c) had not been included in section 1785, could have led to an anomalous situation where VA would have been authorized to provide care to all individuals affected by a Presidentially-declared major disaster or emergency, or a disaster or emergency in which NDMS is activated, except certain veterans who were not previously enrolled for VA healthcare. Section 1785(c) addresses this unique situation, clarifying that a veteran is not ineligible for care or services under section 1785 merely because the veteran (either because his or her priority group is not eligible for enrollment at the time, or because he or she elected not to enroll for VA benefits) is not enrolled in the VA healthcare system.

This proposed rule would make a technical change to the existing regulations in § 17.102 regarding the authority to provide humanitarian care under 38 U.S.C. 1784. The current cross-reference to the regulation authorizing emergency hospital care on a humanitarian basis is incorrect. 38 CFR 17.102(b)(1) refers to care or services rendered as a humanitarian service “under § 17.43(c)(1).” There is no § 17.43(c)(1) in title 38 CFR. The cross-reference listed in § 17.102(b)(1) should be to § 17.43(b)(1), rather than to § 17.43(c)(1). The proposed rule reflects this technical correction. In addition, to conform to the provisions of new § 17.86, this proposed rule would amend § 17.102(h) by adding a reference to § 17.86.

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

This document contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The Executive Order classifies a “significant regulatory action,” requiring review by OMB unless OMB waives such review, as any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

The economic, interagency, budgetary, legal, and policy implications of this proposed rule have been examined and it has been determined to be a significant regulatory action under the Executive Order because it is likely to result in a rule that may raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

The Secretary hereby certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act. In addition to affecting individuals, this document would affect mainly large insurance companies. Further, where small entities would be involved, they would not be impacted significantly since an inconsequential portion of their business would be with VA. Accordingly, pursuant to 5 U.S.C. 605(b), this proposed rule is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are 64.005, Grants to States for the Construction of State Homes; 64.007, Blind Rehabilitation Centers; 64.008, Veterans Domiciliary Care; 64.009, Veterans Medical Care Benefits; 64.010, Veterans Nursing Home Care; 64.011, Veterans Dental Care; 64.012, Veterans Prescription Service; 64.013, Veterans Prosthetic Appliances; 64.014, Veterans State Domiciliary Care; 64.015, Veterans State Nursing Home Care; 64.016, Veterans State Hospital Care; 64.018, Sharing Specialized Medical Resources; 64.019, Veterans Rehabilitation Alcohol and Drug Dependence; and 64.022, Veterans Home Based Primary Care.

For the reasons set forth in the preamble, the Department of Veterans Affairs proposes to amend 38 CFR part 17 as follows:

Table of Contents I. What Actions Is EPA Proposing to Take? II. What Is the Regulatory History of CAIR and the CAIR FIPs? III. What Are the General Requirements of CAIR and the CAIR FIPs? IV. What Are the Types of CAIR SIP Submittals? V. Analysis of Alabama's CAIR SIP Submittal A. State Budgets for Allowance Allocations B. CAIR Cap-and-Trade Programs C. Applicability Provisions for non-EGU NO X SIP Call Sources D. NO X Allowance Allocations E. Allocation of NO X Allowances From Compliance Supplement Pool F. Individual Opt-in Units VI. Proposed Actions VII. Statutory and Executive Order Reviews I. What Action Is EPA Proposing to Take?

EPA is proposing to approve a revision to Alabama's SIP, submitted on March 7, 2007. In its SIP revision, Alabama would meet CAIR requirements by requiring certain electric generating units (EGUs) to participate in the EPA-administered State CAIR cap-and-trade programs addressing SO 2 , NO X annual, and NO X ozone season emissions. EPA is proposing to determine that the SIP, as revised, will meet the applicable requirements of CAIR. Any final action approving the SIP will be taken by the Regional Administrator for Region 4. As a consequence of the SIP approval, the Administrator of EPA will also issue a final rule to withdraw the FIPs concerning SO 2 , NO X annual, and NO X ozone season emissions for Alabama. This action will delete and reserve 40 CFR 52.54 and 40 CFR 52.55. The withdrawal of the CAIR FIPs for Alabama is a conforming amendment that must be made once the SIP is approved because EPA's authority to issue the FIPs was premised on a deficiency in the SIP for Alabama. Once the SIP is fully approved, EPA no longer has authority for the FIPs. Thus, EPA will not have the option of maintaining the FIPs following the full SIP approval. Accordingly, EPA does not intend to offer an opportunity for a public hearing or an additional opportunity for written public comment on the withdrawal of the FIPs. EPA will take action in a separate rulemaking regarding revisions to Chapters 335-3-1 and 335-3-17.

The CAIR rule was published by EPA on May 12, 2005 (70 FR 25162). In this rule, EPA determined that 28 states and the District of Columbia contribute significantly to nonattainment and interfere with maintenance of the national ambient air quality standards (NAAQS) for fine particles (PM 2.5 ) and/or 8-hour ozone in downwind states in the eastern part of the country. As a result, EPA required those upwind states to revise their SIPs to include control measures that reduce emissions of SO 2 , which is a precursor to PM 2.5 formation, and/or NO X , which is a precursor to both ozone and PM 2.5 formation. For jurisdictions that contribute significantly to downwind PM 2.5 nonattainment, CAIR sets annual state-wide emission reduction requirements (i.e., budgets) for SO 2 and annual state-wide emission reduction requirements for NO X . Similarly, for jurisdictions that contribute significantly to 8-hour ozone nonattainment, CAIR sets state-wide emission reduction requirements for NO X for the ozone season (May 1st to September 30th). Under CAIR, states may implement these reduction requirements by participating in the EPA-administered cap-and-trade programs or by adopting any other control measures.

CAIR explains to subject states what must be included in SIPs to address the requirements of section 110(a)(2)(D) of the Clean Air Act (CAA) with regard to interstate transport with respect to the 8-hour ozone and PM 2.5 NAAQS. EPA made national findings, effective on May 25, 2005, that the states had failed to submit SIPs meeting the requirements of section 110(a)(2)(D). The SIPs were due in July 2000, three years after the promulgation of the 8-hour ozone and PM 2.5 NAAQS. These findings started a two-year clock for EPA to promulgate a FIP to address the requirements of section 110(a)(2)(D). Under CAA section 110(c)(1), EPA may issue a FIP anytime after such findings are made and must do so within two years, unless a SIP revision correcting the deficiency is approved by EPA before the FIP is promulgated.

On April 28, 2006, EPA promulgated FIPs for all states covered by CAIR in order to ensure the emissions reductions required by CAIR are achieved on schedule. Each CAIR state is subject to the FIPs until the state fully adopts, and EPA approves, a SIP revision meeting the requirements of CAIR. The CAIR FIPs require EGUs to participate in the EPA-administered CAIR SO 2 , NO X annual, and NO X ozone season trading programs, as appropriate. The CAIR FIP SO 2 , NO X annual, and NO X ozone season trading programs impose essentially the same requirements as, and are integrated with, the respective CAIR SIP trading programs. The integration of the FIP and SIP trading programs means that these trading programs will work together to create effectively a single trading program for each regulated pollutant (SO 2 , NO X annual, and NO X ozone season) in all states covered by the CAIR FIP or SIP trading program for that pollutant. The CAIR FIPs also allow states to submit abbreviated SIP revisions that, if approved by EPA, will automatically replace or supplement certain CAIR FIP provisions (e.g., the methodology for allocating NO X allowances to sources in the state), while the CAIR FIP remains in place for all other provisions.

On April 28, 2006, EPA published two additional CAIR-related final rules that added the States of Delaware and New Jersey to the list of states subject to CAIR for PM 2.5 and announced EPA's final decisions on reconsideration of five issues, without making any substantive changes to the CAIR requirements.

CAIR establishes state-wide emission budgets for SO 2 and NO X and is to be implemented in two phases. The first phase of NO X reductions starts in 2009 and continues through 2014, while the first phase of SO 2 reductions starts in 2010 and continues through 2014. The second phase of reductions for both NO X and SO 2 starts in 2015 and continues thereafter. CAIR requires states to implement the budgets by either: (1) Requiring EGUs to participate in the EPA-administered cap-and-trade programs; or (2) adopting other control measures of the state's choosing and demonstrating that such control measures will result in compliance with the applicable state SO 2 and NO X budgets.

The May 12, 2005, and April 28, 2006, CAIR rules provide model rules that states must adopt (with certain limited changes, if desired) if they want to participate in the EPA-administered trading programs.

With two exceptions, only states that choose to meet the requirements of CAIR through methods that exclusively regulate EGUs are allowed to participate in the EPA-administered trading programs. One exception is for states that adopt the opt-in provisions of the model rules to allow non-EGUs individually to opt into the EPA-administered trading programs. The other exception is for states that include all non-EGUs from their NO X SIP Call trading programs in their CAIR NO X ozone season trading programs.

States have the flexibility to choose the type of control measures they will use to meet the requirements of CAIR. EPA anticipates that most states will choose to meet the CAIR requirements by selecting an option that requires EGUs to participate in the EPA-administered CAIR cap-and-trade programs. For such states, EPA has provided two approaches for submitting and obtaining approval for CAIR SIP revisions. States may submit full SIP revisions that adopt the model CAIR cap-and-trade rules. If approved, these SIP revisions will fully replace the CAIR FIPs. Alternatively, states may submit abbreviated SIP revisions. These SIP revisions will not replace the CAIR FIPs; however, the CAIR FIPs provide that, when approved, the provisions in these abbreviated SIP revisions will be used instead of or in conjunction with, as appropriate, the corresponding provisions of the CAIR FIPs (e.g., the NO X allowance allocation methodology).

A state submitting a full SIP revision may either adopt regulations that are substantively identical to the model rules or incorporate by reference the model rules. CAIR provides that states may only make limited changes to the model rules, if the states want to participate in the EPA-administered trading programs. A full SIP revision may change the model rules only by altering their applicability and allowance allocation provisions to:

1. Include NO X SIP Call trading sources that are not EGUs under CAIR in the CAIR NO X ozone season trading program;

2. Provide for state allocation of NO X annual or ozone season allowances using a methodology chosen by the state;

3. Provide for state allocation of NO X annual allowances from the compliance supplement pool (CSP) using the state's choice of allowed, alternative methodologies; or

4. Allow units that are not otherwise CAIR units to opt individually into the CAIR SO 2 , NO X annual, or NO X ozone season trading programs under the opt-in provisions in the model rules.

An approved CAIR full SIP revision addressing EGUs' SO 2 , NO X annual, or NO X ozone season emissions will replace the CAIR FIP for that state for the respective EGU emissions.

The CAIR NO X annual and ozone season budgets were developed from historical heat input data for EGUs. Using these data, EPA calculated annual and ozone season regional heat input values, which were multiplied by 0.15 pounds per million British thermal units (lb/mmBtu), for phase 1, and 0.125 lb/mmBtu, for phase 2, to obtain regional NO X budgets for 2009-2014 and for 2015 and thereafter, respectively. EPA derived the state NO X annual and ozone season budgets from the regional budgets using state heat input data adjusted by fuel factors.

The CAIR state SO 2 budgets were derived by discounting the tonnage of emissions authorized by annual allowance allocations under the Acid Rain Program under title IV of the CAA. Under CAIR, each allowance allocated in the Acid Rain Program for the years in phase 1 of CAIR (2010 through 2014) authorizes 0.5 ton of SO 2 emissions in the CAIR trading program, and each Acid Rain Program allowance allocated for the years in phase 2 of CAIR (2015 and thereafter) authorizes 0.35 ton of SO 2 emissions in the CAIR trading program.

In this action, EPA is proposing approval of Alabama's SIP revision that adopts the budgets established for the State in CAIR, i.e. , 69,020 (2009-2014) and 57,517 (2015-thereafter) tons for NO X annual emissions, 34,510 (2009-2014) and 29,146 (2015-thereafter) tons for NO X ozone season emissions, and 157,582 (2010-2014) and 110,307 (2015-thereafter) tons for SO 2 emissions. Alabama's SIP revision sets these budgets as the total amounts of allowances available for allocation for each year under the EPA-administered cap-and-trade programs.

The CAIR NO X annual and ozone-season model trading rules both largely mirror the structure of the NO X SIP Call model trading rule in 40 CFR part 96, subparts A through I. While the provisions of the NO X annual and ozone-season model rules are similar, there are some differences. For example, the NO X annual model rule (but not the NO X ozone season model rule) provides for a compliance supplement pool (CSP), which is discussed below and under which allowances may be awarded for early reductions of NO X annual emissions. As a further example, the NO X ozone season model rule reflects the fact that the CAIR NO X ozone season trading program replaces the NO X SIP Call trading program after the 2008 ozone season and is coordinated with the NO X SIP Call program. The NO X ozone season model rule provides incentives for early emissions reductions by allowing banked, pre-2009 NO X SIP Call allowances to be used for compliance in the CAIR NO X ozone-season trading program. In addition, states have the option of continuing to meet their NO X SIP Call requirement by participating in the CAIR NO X ozone season trading program and including all their NO X SIP Call trading sources in that program.

The provisions of the CAIR SO 2 model rule are also similar to the provisions of the NO X annual and ozone season model rules. However, the SO 2 model rule is coordinated with the ongoing Acid Rain SO 2 cap-and-trade program under CAA title IV. The SO 2 model rule uses the title IV allowances for compliance, with each allowance allocated for 2010-2014 authorizing only 0.50 ton of emissions and each allowance allocated for 2015 and thereafter authorizing only 0.35 ton of emissions. Banked title IV allowances allocated for years before 2010 can be used at any time in the CAIR SO 2 cap-and-trade program, with each such allowance authorizing 1 ton of emissions. Title IV allowances are to be freely transferable among sources covered by the Acid Rain Program and sources covered by the CAIR SO 2 cap-and-trade program.

EPA also used the CAIR model trading rules as the basis for the trading programs in the CAIR FIPs. The CAIR FIP trading rules are virtually identical to the CAIR model trading rules, with changes made to account for federal rather than state implementation. The CAIR model SO 2 , NO X annual, and NO X ozone season trading rules and the respective CAIR FIP trading rules are designed to work together as integrated SO 2 , NO X annual, and NO X ozone season trading programs.

In the SIP revision, Alabama chooses to implement its CAIR budgets by requiring EGUs to participate in EPA-administered cap-and-trade programs for SO 2 , NO X annual, and NO X ozone season emissions. Alabama has adopted a full SIP revision that adopts, with certain allowed changes discussed below, the CAIR model cap-and-trade rules for SO 2 , NO X annual, and NO X ozone season emissions.

In general, the CAIR model trading rules apply to any stationary, fossil-fuel-fired boiler or stationary, fossil-fuel-fired combustion turbine serving at any time, since the later of November 15, 1990, or the start-up of the unit's combustion chamber, a generator with nameplate capacity of more than 25 Megawatt electrical (MWe) producing electricity for sale.

States have the option of bringing in, for the CAIR NO X ozone season program only, those units in the state's NO X SIP Call trading program that are not EGUs as defined under CAIR. EPA advises states exercising this option to add the applicability provisions in the state's NO X SIP Call trading rule for non-EGUs to the applicability provisions in 40 CFR 96.304 in order to include in the CAIR NO X ozone season trading program all units required to be in the state's NO X SIP Call trading program that are not already included under 40 CFR 96.304. Under this option, the CAIR NO X ozone season program must cover all large industrial boilers and combustion turbines, as well as any small EGUs ( i.e. units serving a generator with a nameplate capacity of 25 MWe or less) that the state currently requires to be in the NO X SIP Call trading program.

Alabama has chosen to expand the applicability provisions of the CAIR NO X ozone season trading program to include all non-EGUs in the State's NO X SIP Call trading program.

Under the NO X allowance allocation methodology in the CAIR model trading rules and in the CAIR FIP, NO X annual and ozone season allowances are allocated to units that have operated for five years, based on heat input data from a three-year period that are adjusted for fuel type by using fuel factors of 1.0 for coal, 0.6 for oil, and 0.4 for other fuels. The CAIR model trading rules and the CAIR FIP also provide a new unit set-aside from which units without five years of operation are allocated allowances based on the units' prior year emissions.

States may establish in their SIP submissions a different NO X allowance allocation methodology that will be used to allocate allowances to sources in the states, if certain requirements are met concerning the timing of submission of units' allocations to the Administrator for recordation and the total amount of allowances allocated for each control period. In adopting alternative NO X allowance allocation methodologies, states have flexibility with regard to:

1. The cost to recipients of the allowances, which may be distributed for free or auctioned;

2. The frequency of allocations;

3. The basis for allocating allowances, which may be distributed, for example, based on historical heat input or electric and thermal output; and

4. The use of allowance set-asides and, if used, their size.

Alabama has chosen to replace the provisions of the CAIR NO X annual model trading rule concerning the allocation of NO X annual allowances with its own methodology. Alabama has chosen to distribute NO X annual allowances based upon allocation methods for existing, replacement, and new units. ADEM defines a baseline NO X unit as one that commenced operation on, or before January 1, 2004, or submitted an acceptable application to the Department before August 1, 2005. For the control periods in 2009 through 2014, ADEM will allocate NO X allowances to baseline CAIR units based in an amount equaling 0.15 lb/mmBtu, or the unit's permitted NO X limit, whichever amount is less, multiplied by the heat input and an adjustment ratio (to ensure that the total number of CAIR NO X Ozone Season allowances allocated under this paragraph equals the number of tons of CAIR NO X Ozone Season emissions in the State trading program budget) and rounded to the nearest whole NO X allowance as appropriate. For units with multiple allowable emissions limits, the allowances may be calculated based on actual operating data. For each control period in 2015 and thereafter, ADEM will allocate allowances equaling 0.125 lb/mmBtu, or the unit's NO X limit, whichever is less, multiplied by the heat input and an adjustment ratio.

A replacement unit is defined as a NO X unit, or the portion of a NO X unit, which replaces a baseline unit at the same facility, and has the same or greater maximum design heat input capacity. Allowances will be allocated for replacement units after all baseline units have received allowances. These allowances will be distributed from the Retired Unit Allowance Pool. After all baseline and replacement units have received allocations, ADEM will allocate allowances to new units from allowances remaining in the Retired Unit Allowance Pool.

ADEM defines a new unit as one that does not meet the definition for an existing unit or a replacement unit. New unit allocations, for each applicable control period, will be equal to 0.15 lb/mmBtu or the unit's permitted NO X limit, whichever is less, multiplied by the heat input and an adjustment ratio and rounded to the nearest whole NO X allowance as appropriate.

Allowances were to be allocated by October 31, 2006, for control periods of 2009, 2010 and 2011. Allowances will be allocated by October 31, 2008, for control periods 2012, 2013 and 2014. By October 31, 2011, and subsequently, on October 31 of every third year thereafter, NO X allowance allocations will be submitted for the control periods in the three years that are four, five, and six years, respectively, after the year of the applicable deadline for submission. Alabama has chosen not to use set-asides in their NO X annual allocations.

Alabama has chosen to replace the provisions of the CAIR NO X ozone season model trading rule concerning allowance allocations with its own methodology. Alabama has chosen to distribute NO X annual allowances based upon allocation methods for existing, replacement, and new units. ADEM defines a baseline NO X unit as one that commenced operation on, or before January 1, 2004, or submitted an acceptable application to the Department before August 1, 2005. For the control periods in 2009 through 2014, ADEM will allocate NO X allowances to baseline CAIR units based in an amount equaling 0.15 lb/mmBtu (0.17 lb/mmBtu, if the unit's maximum design heat input is greater than 250 mmBtu/hr), or the unit's permitted NO X limit, whichever amount is less, multiplied by the heat input and an adjustment ratio (to ensure that the total number of CAIR NO X Ozone Season allowances allocated under this paragraph equals the number of tons of CAIR NO X Ozone Season emissions in the State trading program budget) and rounded to the nearest whole NO X allowance as appropriate. For units with multiple allowable emissions limits, the allowances may be calculated based on actual operating data. For each control period in 2015 and thereafter, ADEM will allocate allowances equaling 0.125 lb/mmBtu, or the unit's NO X limit, whichever is less, multiplied by the heat input and an adjustment ratio.

A replacement unit is defined as one which replaces a baseline ozone season unit at the same facility, and has the same or greater maximum design heat input.

A new unit is defined as a unit that does not meet the definition of either an existing unit or a replacement unit.

NO X ozone season allowances were to be allocated by October 31, 2006, for control periods 2009, 2010, and 2011. Only the difference between the ozone season allowance allocations and the 2009 budget trading program will be submitted in 2009. By October 31, 2008, allocations for 2012, 2013, and 2014 will be submitted. Finally, by October 31, 2011, and October 31 of every third year thereafter, allocations will be submitted for control periods in the three years that are four, five, and six years after the applicable deadline for submission. Alabama has chosen not to use set-asides in their ozone season allocations.

CAIR establishes a CSP to provide an incentive for early reductions in NO X annual emissions. The CSP consists of 200,000 CAIR NO X annual allowances of vintage 2009 for the entire CAIR region, and a state's share of the CSP is based upon the projected magnitude of the emission reductions required by CAIR in that State. States may distribute CSP allowances, one allowance for each ton of early reduction, to sources that make NO X reductions during 2007 or 2008 beyond what is required by any applicable state or Federal emission limitation. States also may distribute CSP allowances based upon a demonstration of need for an extension of the 2009 deadline for implementing emission controls.

The CAIR annual NO X model trading rule establishes specific methodologies for allocations of CSP allowances. States may choose an allowed, alternative CSP allocation methodology to be used to allocate CSP allowances to sources in the states.

Alabama has chosen to modify the provisions of the CAIR NO X annual model trading rule concerning the allocation of allowances from the CSP. Alabama has chosen to distribute CSP allowances using an allocation methodology that allows the Department to allocate up to 10,166 additional CAIR NO X allowances for the control period in 2009. CAIR NO X units that achieve emissions reductions in 2007 and 2008, that are not necessary to comply with applicable emissions limitations during those years, may request early reduction credits. The units requesting CSP allocations must submit a request by May 1, 2009, to ADEM. Sources are eligible to receive CSP allowances only to the extent that that the total number of allowances issued does not exceed 15 percent of the total number of NO X allowances issued to that unit from the initial allowance allocation. Any remaining CSP allowances after the initial distribution will be allocated to eligible units on a pro rata basis, provided that no unit is issued more allowances than the early reduction credits requested by that unit in accordance with ADEM's CSP provisions.

The opt-in provisions of the CAIR SIP model trading rules allow certain non-EGUs (i.e., boilers, combustion turbines, and other stationary fossil-fuel-fired devices) that do not meet the applicability criteria for a CAIR trading program to participate voluntarily in (i.e., opt into) the CAIR trading program. A non-EGU may opt into one or more of the CAIR trading programs. In order to qualify to opt into a CAIR trading program, a unit must vent all emissions through a stack and be able to meet the monitoring, recordkeeping, and recording requirements of 40 CFR part 75. The owners and operators seeking to opt a unit into a CAIR trading program must apply for a CAIR opt-in permit. If the unit is issued a CAIR opt-in permit, the unit becomes a CAIR unit, is allocated allowances, and must meet the same allowance-holding and emissions monitoring and reporting requirements as other units subject to the CAIR trading program. The opt-in provisions provide for two methodologies for allocating allowances for opt-in units, one methodology that applies to opt-in units in general and a second methodology that allocates allowances only to opt-in units that the owners and operators intend to repower before January 1, 2015.

States have several options concerning the opt-in provisions. States may adopt the CAIR opt-in provisions entirely or may adopt them but exclude one of the methodologies for allocating allowances. States may also decline to adopt the opt-in provisions at all.

Alabama has chosen to allow non-EGUs meeting certain requirements to opt into the CAIR NO X annual trading program, including both of the opt-in allocation methods in the model rule.

Alabama has chosen to allow non-EGUs meeting certain requirements to opt into the CAIR NO X ozone season trading program, including both of the opt-in allocation methods in the model rule.

Alabama has chosen to allow certain non-EGUs to opt into the CAIR SO 2 trading program, and has chosen to incorporate the Federal rule by reference.

EPA is proposing to approve Alabama's full CAIR SIP revision submitted on March 7, 2007. Under this SIP revision, Alabama is choosing to participate in the EPA-administered cap-and-trade programs for SO 2 , NO X annual, and NO X ozone season emissions. The SIP revision meets the applicable requirements in 40 CFR 51.123(o) and (aa), with regard to NO X annual and NO X ozone season emissions, and 40 CFR 51.124(o), with regard to SO 2 emissions. EPA is proposing to determine that the SIP, as revised, will meet the requirements of CAIR. As a consequence of the SIP approval, the Administrator of EPA will also issue, without providing an opportunity for a public hearing or an additional opportunity for written public comment, a final rule to withdraw the CAIR FIPs concerning SO 2 , NO X annual and NO X ozone season emissions for Alabama. That withdrawal will delete and reserve 40 CFR 52.54 and 40 CFR 52.55.

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

This proposal also does not have tribal implications because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This proposed action also does not have Federalism implications because it would not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely proposes to approve a State rule implementing a Federal standard and will result, as a consequence of that approval, in the Administrator's withdrawal of the CAIR FIP. It does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This proposed rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it would approve a State rule implementing a Federal Standard.

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

EPA is proposing to approve a revision to Mississippi's SIP, submitted on January 16, 2007. In its SIP revision, Mississippi would meet CAIR requirements by requiring certain electric generating units (EGUs) to participate in the EPA-administered State CAIR cap-and-trade programs addressing SO 2 , NO X annual, and NO X ozone season emissions. EPA is proposing to determine that the SIP, as revised, will meet the applicable requirements of CAIR. Any final action approving the SIP will be taken by the Regional Administrator for Region 4. As a consequence of the SIP approval, the Administrator of EPA will also issue a final rule to withdraw the FIPs concerning SO 2 , NO X annual, and NO X ozone season emissions for Mississippi. This action will delete and reserve 40 CFR 52.1284 and 40 CFR 52.1285. The withdrawal of the CAIR FIPs for Mississippi is a conforming amendment that must be made once the SIP is approved because EPA's authority to issue the FIPs was premised on a deficiency in the SIP for Mississippi. Once the SIP is fully approved, EPA no longer has authority for the FIPs. Thus, EPA will not have the option of maintaining the FIPs following the full SIP approval. Accordingly, EPA does not intend to offer an opportunity for a public hearing or an additional opportunity for written public comment on the withdrawal of the FIPs.

CAIR was published by EPA on May 12, 2005 (70 FR 25162). In this rule, EPA determined that 28 States and the District of Columbia contribute significantly to nonattainment and interfere with maintenance of the national ambient air quality standards (NAAQS) for fine particles (PM 2.5 ) and/or 8-hour ozone in downwind States in the eastern part of the country. As a result, EPA required those upwind States to revise their SIPs to include control measures that reduce emissions of SO 2 , which is a precursor to PM 2.5 formation, and/or NO X , which is a precursor to both ozone and PM 2.5 formation. For jurisdictions that contribute significantly to downwind PM 2.5 nonattainment, CAIR sets annual State-wide emission reduction requirements (i.e., budgets) for SO 2 and annual State-wide emission reduction requirements for NO X . Similarly, for jurisdictions that contribute significantly to 8-hour ozone nonattainment, CAIR sets State-wide emission reduction requirements for NO X for the ozone season (May 1st to September 30th). Under CAIR, States may implement these reduction requirements by participating in the EPA-administered cap-and-trade programs or by adopting any other control measures.

CAIR explains to subject States what must be included in SIPs to address the requirements of section 110(a)(2)(D) of the Clean Air Act (CAA) with regard to interstate transport with respect to the 8-hour ozone and PM 2.5 NAAQS. EPA made national findings, effective on May 25, 2005, that the states had failed to submit SIPs meeting the requirements of section 110(a)(2)(D). The SIPs were due in July 2000, 3 years after the promulgation of the 8-hour ozone and PM 2.5 NAAQS. These findings started a 2-year clock for EPA to promulgate a FIP to address the requirements of section 110(a)(2)(D). Under CAA section 110(c)(1), EPA may issue a FIP anytime after such findings are made and must do so within two years, unless a SIP revision correcting the deficiency is approved by EPA before the FIP is promulgated.

On April 28, 2006, EPA promulgated FIPs for all states covered by CAIR in order to ensure the emissions reductions required by CAIR are achieved on schedule. Each CAIR State is subject to the FIPs until the State fully adopts, and EPA approves, a SIP revision meeting the requirements of CAIR. The CAIR FIPs require EGUs to participate in the EPA-administered CAIR SO 2 , NO X annual, and NO X ozone season trading programs, as appropriate. The CAIR FIP SO 2 , NO X annual, and NO X ozone season trading programs impose essentially the same requirements as, and are integrated with, the respective CAIR SIP trading programs. The integration of the FIP and SIP trading programs means that these trading programs will work together to create effectively a single trading program for each regulated pollutant (SO 2 , NO X annual, and NO X ozone season) in all states covered by the CAIR FIP or SIP trading program for that pollutant. The CAIR FIPs also allow states to submit abbreviated SIP revisions that, if approved by EPA, will automatically replace or supplement certain CAIR FIP provisions (e.g., the methodology for allocating NO X allowances to sources in the State), while the CAIR FIP remains in place for all other provisions.

On April 28, 2006, EPA published two additional CAIR-related final rules that added the States of Delaware and New Jersey to the list of states subject to CAIR for PM 2.5 and announced EPA's final decisions on reconsideration of five issues, without making any substantive changes to the CAIR requirements.

CAIR establishes State-wide emission budgets for SO 2 and NO X and is to be implemented in two phases. The first phase of NO X reductions starts in 2009 and continues through 2014, while the first phase of SO 2 reductions starts in 2010 and continues through 2014. The second phase of reductions for both NO X and SO 2 starts in 2015 and continues thereafter. CAIR requires states to implement the budgets by either: (1) Requiring EGUs to participate in the EPA-administered cap-and-trade programs; or (2) adopting other control measures of the State's choosing and demonstrating that such control measures will result in compliance with the applicable State SO 2 and NO X budgets.

The May 12, 2005, and April 28, 2006, CAIR rules provide model rules that states must adopt (with certain limited changes, if desired) if they want to participate in the EPA-administered trading programs.

With two exceptions, only states that choose to meet the requirements of CAIR through methods that exclusively regulate EGUs are allowed to participate in the EPA-administered trading programs. One exception is for states that adopt the opt-in provisions of the model rules to allow non-EGUs individually to opt into the EPA-administered trading programs. The other exception is for states that include all non-EGUs from their NO X SIP Call trading programs in their CAIR NO X ozone season trading programs.

States have the flexibility to choose the type of control measures they will use to meet the requirements of CAIR. EPA anticipates that most states will choose to meet the CAIR requirements by selecting an option that requires EGUs to participate in the EPA-administered CAIR cap-and-trade programs. For such States, EPA has provided two approaches for submitting and obtaining approval for CAIR SIP revisions. States may submit full SIP revisions that adopt the model CAIR cap-and-trade rules. If approved, these SIP revisions will fully replace the CAIR FIPs. Alternatively, states may submit abbreviated SIP revisions. These SIP revisions will not replace the CAIR FIPs; however, the CAIR FIPs provide that, when approved, the provisions in these abbreviated SIP revisions will be used instead of or in conjunction with, as appropriate, the corresponding provisions of the CAIR FIPs (e.g., the NO X allowance allocation methodology).

A State submitting a full SIP revision may either adopt regulations that are substantively identical to the model rules, or incorporate by reference the model rules. CAIR provides that states may only make limited changes to the model rules if the states want to participate in the EPA-administered trading programs. A full SIP revision may change the model rules only by altering their applicability and allowance allocation provisions to:

1. Include NO X SIP Call trading sources that are not EGUs under CAIR in the CAIR NO X ozone season trading program;

2. Provide for State allocation of NO X annual or ozone season allowances using a methodology chosen by the State;

3. Provide for State allocation of NO X annual allowances from the compliance supplement pool (CSP) using the State's choice of allowed, alternative methodologies; or

4. Allow units that are not otherwise CAIR units to opt individually into the CAIR SO 2 , NO X annual, or NO X ozone season trading programs under the opt-in provisions in the model rules.

An approved CAIR full SIP revision addressing EGUs' SO 2 , NO X annual, or NO X ozone season emissions will replace the CAIR FIP for that State for the respective EGU emissions.

The CAIR NO X annual and ozone season budgets were developed from historical heat input data for EGUs. Using these data, EPA calculated annual and ozone season regional heat input values, which were multiplied by 0.15 pounds per million British thermal units (lb/mmBtu), for phase 1, and 0.125 lb/mmBtu, for phase 2, to obtain regional NO X budgets for 2009-2014 and for 2015 and thereafter, respectively. EPA derived the State NO X annual and ozone season budgets from the regional budgets using State heat input data adjusted by fuel factors.

The CAIR State SO 2 budgets were derived by discounting the tonnage of emissions authorized by annual allowance allocations under the Acid Rain Program under title IV of the CAA. Under CAIR, each allowance allocated in the Acid Rain Program for the years in phase 1 of CAIR (2010 through 2014) authorizes 0.5 ton of SO 2 emissions in the CAIR trading program, and each Acid Rain Program allowance allocated for the years in phase 2 of CAIR (2015 and thereafter) authorizes 0.35 ton of SO 2 emissions in the CAIR trading program.

In this action, EPA is proposing approval of Mississippi's SIP revision that adopts the budgets established for the State in CAIR, i.e., 17,807 (2009-2014) and 14,839 (2015-thereafter) tons for NO X annual emissions, 8,714 (2009-2014) and 7,262 (2015-thereafter) tons for NO X ozone season emissions and 33,763 (2010-2014) and 23,634 (2015-thereafter) tons for SO 2 emissions. Mississippi's SIP revision sets these budgets as the total amount of allowances available for allocation for each year under the EPA-administered cap-and-trade program.

The CAIR NO X annual and ozone-season model trading rules both largely mirror the structure of the NO X SIP Call model trading rule in 40 CFR part 96, subparts A through I. While the provisions of the NO X annual and ozone-season model rules are similar, there are some differences. For example, the NO X annual model rule (but not the NO X ozone season model rule) provides for a CSP, which is discussed below and under which allowances may be awarded for early reductions of NO X annual emissions. As a further example, the NO X ozone season model rule reflects the fact that the CAIR NO X ozone season trading program replaces the NO X SIP Call trading program after the 2008 ozone season and is coordinated with the NO X SIP Call program. The NO X ozone season model rule provides incentives for early emissions reductions by allowing banked, pre-2009 NO X SIP Call allowances to be used for compliance in the CAIR NO X ozone-season trading program. In addition, states have the option of continuing to meet their NO X SIP Call requirement by participating in the CAIR NO X ozone season trading program and including all their NO X SIP Call trading sources in that program.

The provisions of the CAIR SO 2 model rule are also similar to the provisions of the NO X annual and ozone season model rules. However, the SO 2 model rule is coordinated with the ongoing Acid Rain SO 2 cap-and-trade program under CAA title IV. The SO 2 model rule uses the title IV allowances for compliance, with each allowance allocated for 2010-2014 authorizing only 0.50 ton of emissions and each allowance allocated for 2015 and thereafter authorizing only 0.35 ton of emissions. Banked title IV allowances allocated for years before 2010 can be used at any time in the CAIR SO 2 cap-and-trade program, with each such allowance authorizing 1 ton of emissions. Title IV allowances are to be freely transferable among sources covered by the Acid Rain Program and sources covered by the CAIR SO 2 cap-and-trade program.

EPA also used the CAIR model trading rules as the basis for the trading programs in the CAIR FIPs. The CAIR FIP trading rules are virtually identical to the CAIR model trading rules, with changes made to account for federal rather than state implementation. The CAIR model SO 2 , NO X annual, and NO X ozone season trading rules and the respective CAIR FIP trading rules are designed to work together as integrated SO 2 , NO X annual, and NO X ozone season trading programs.

In the SIP revision, Mississippi chooses to implement its CAIR budgets by requiring EGUs to participate in EPA-administered cap-and-trade programs for SO 2 , NO X annual, and NO X ozone season emissions. Mississippi has adopted a full SIP revision that adopts, with certain allowed changes discussed below, the CAIR model cap-and-trade rules for SO 2 , NO X annual, and NO X ozone season emissions.

In general, the CAIR model trading rules apply to any stationary, fossil-fuel-fired boiler or stationary, fossil-fuel-fired combustion turbine serving at any time, since the later of November 15, 1990, or the start-up of the unit's combustion chamber, a generator with nameplate capacity of more than 25 MWe producing electricity for sale.

States have the option of bringing in, for the CAIR NO X ozone season program only, those units in the State's NO X SIP Call trading program that are not EGUs as defined under CAIR. EPA advises states exercising this option to add the applicability provisions in the State's NO X SIP Call trading rule for non-EGUs to the applicability provisions in 40 CFR 96.304 in order to include in the CAIR NO X ozone season trading program all units required to be in the State's NO X SIP Call trading program that are not already included under 40 CFR 96.304. Under this option, the CAIR NO X ozone season program must cover all large industrial boilers and combustion turbines, as well as any small EGUs (i.e. units serving a generator with a nameplate capacity of 25 MWe or less) that the State currently requires to be in the NO X SIP Call trading program.

Because Mississippi was not included in the NO X SIP Call trading program, Mississippi did not have the option of expanding the applicability provisions of the CAIR NO X ozone season trading program.

Under the NO X allowance allocation methodology in the CAIR model trading rules and in the CAIR FIP, NO X annual, and ozone season allowances are allocated to units that have operated for five years, based on heat input data from a three-year period that are adjusted for fuel type by using fuel factors of 1.0 for coal, 0.6 for oil, and 0.4 for other fuels. The CAIR model trading rules and the CAIR FIP also provide a new unit set-aside from which units without five years of operation are allocated allowances based on the units' prior year emissions.

States may establish in their SIP submissions a different NO X allowance allocation methodology that will be used to allocate allowances to sources in the states, if certain requirements are met concerning the timing of submission of units' allocations to the Administrator for recordation and the total amount of allowances allocated for each control period. In adopting alternative NO X allowance allocation methodologies, states have flexibility with regard to:

1. The cost to recipients of the allowances, which may be distributed for free or auctioned;

2. The frequency of allocations;

3. The basis for allocating allowances, which may be distributed, for example, based on historical heat input or electric and thermal output; and

4. The use of allowance set-asides and, if used, their size.

Mississippi has not chosen to replace the provisions of the CAIR NO X annual model trading rule concerning the allocation of NO X annual allowances with its own methodology.

Mississippi has not chosen to replace the provisions of the CAIR NO X ozone season model trading rule concerning allowance allocations with its own methodology.

The CAIR establishes a CSP to provide an incentive for early reductions in NO X annual emissions. The CSP consists of 200,000 CAIR NO X annual allowances of vintage 2009 for the entire CAIR region, and a State's share of the CSP is based upon the projected magnitude of the emission reductions required by CAIR in that State. States may distribute CSP allowances, one allowance for each ton of early reduction, to sources that make NO X reductions during 2007 or 2008 beyond what is required by any applicable State or Federal emission limitation. States also may distribute CSP allowances based upon a demonstration of need for an extension of the 2009 deadline for implementing emission controls.

The CAIR annual NO X model trading rule establishes specific methodologies for allocations of CSP allowances. States may choose an allowed, alternative CSP allocation methodology to be used to allocate CSP allowances to sources in the States.

Mississippi has not chosen to modify the provisions of the CAIR NO X annual model trading rule concerning the allocation of allowances from the CSP. Mississippi has chosen to distribute CSP allowances using the allocation methodology provided in 40 CFR 96.143 and has adopted this section by reference.

The opt-in provisions of the CAIR SIP model trading rules allow certain non-EGUs (i.e., boilers, combustion turbines, and other stationary fossil-fuel-fired devices) that do not meet the applicability criteria for a CAIR trading program to participate voluntarily in (i.e., opt into) the CAIR trading program. A non-EGU may opt into one or more of the CAIR trading programs. In order to qualify to opt into a CAIR trading program, a unit must vent all emissions through a stack and be able to meet monitoring, recordkeeping, and recording requirements of 40 CFR part 75. The owners and operators seeking to opt a unit into a CAIR trading program must apply for a CAIR opt-in permit. If the unit is issued a CAIR opt-in permit, the unit becomes a CAIR unit, is allocated allowances, and must meet the same allowance-holding and emissions monitoring and reporting requirements as other units subject to the CAIR trading program. The opt-in provisions provide for two methodologies for allocating allowances for opt-in units, one methodology that applies to opt-in units in general and a second methodology that allocates allowances only to opt-in units that the owners and operators intend to repower before January 1, 2015.

States have several options concerning the opt-in provisions. States may adopt the CAIR opt-in provisions entirely or may adopt them but exclude one of the methodologies for allocating allowances. States may also decline to adopt the opt-in provisions at all.

Mississippi has chosen to allow non-EGUs meeting certain requirements to opt into the CAIR trading programs by adopting by reference EPA's model rule provisions for opt-in units in the CAIR SO 2 , CAIR NO X annual, and CAIR NO X ozone season trading programs.

EPA is proposing to approve Mississippi's full CAIR SIP revision submitted on January 16, 2007. Under this SIP revision, Mississippi is choosing to participate in the EPA-administered cap-and-trade programs for SO 2 , NO X annual, and NO X ozone season emissions. The SIP revision meets the applicable requirements in 40 CFR 51.123(o) and (aa), with regard to NO X annual and NO X ozone season emissions, and 40 CFR 51.124(o), with regard to SO 2 emissions. EPA is proposing to determine that the SIP, as revised, will meet the requirements of CAIR. As a consequence of the SIP approval, the Administrator of EPA will also issue, without providing an opportunity for a public hearing or an additional opportunity for written public comment, a final rule to withdraw the CAIR FIPs concerning SO 2 , NO X annual, and NO X ozone season emissions for Mississippi. This action will delete and reserve 40 CFR 52.1284 and 40 CFR 52.1285.

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

This proposal also does not have tribal implications because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This proposed action also does not have Federalism implications because it would not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely proposes to approve a State rule implementing a Federal standard and will result, as a consequence of that approval, in the Administrator's withdrawal of the CAIR FIP. It does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This proposed rule also is not subject to Executive Order 13045, “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it would approve a State rule implementing a Federal Standard.

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

The NPRM was adopted by the Commission on June 25, 2007, and released on June 27, 2007.

Initial Regulatory Flexibility Certification. Pursuant to the Regulatory Flexibility Act, the Commission certifies that the outcome of this rulemaking will not have a significant economic impact on a substantial number of small entities. Currently, only XM and Sirius hold licenses to provide SDARS service. Because SDARS service requires significant capital for operation, the Commission believes it is unlikely that a small entity, as defined by the Small Business Administration, would have the financial wherewithal to become an SDARS licensee. 1

Paperwork Reduction Act. The NPRM does not contain proposed information collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. Thus, it does not contain any new or modified “information collection burden for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198. See 44 U.S.C. 3506(c)(4).

Ex Parte Information. This is a permit-but-disclose notice and comment rulemaking proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period, provided that they are disclosed as provided in the Commission's rules. See generally 47 CFR 1.1202, 1.1203, and 1.1206(a).