This document contains amendments to 26 CFR part 1 under section 704 of the Internal Revenue Code (Code). On November 18, 2005, proposed regulations (REG-144620-04) regarding the substantiality of allocations to partners that are look-through entities or members of a consolidated group were published in the Federal Register (70 FR 69919). Because no requests to speak were submitted by January 25, 2006, no public hearing was held (see 71 FR 7453). The IRS did receive a number of written comments responding to the proposed regulations, and, after consideration of the comments, the proposed regulations are adopted as revised by this Treasury decision.

Section 704(a) provides that a partner's distributive share of partnership income, gain, loss, deduction, or credit shall, except as otherwise provided, be determined by the partnership agreement. Section 704(b) provides that a partner's distributive share of income, gain, loss, deduction, or credit (or item thereof) shall be determined in accordance with the partner's interest in the partnership (determined by taking into account all facts and circumstances) if the allocation to the partner under the partnership agreement of income, gain, loss, deduction, or credit (or item thereof) does not have substantial economic effect.

In order for an allocation to have substantial economic effect, it must have economic effect and such economic effect must be substantial. For an allocation to have economic effect, it must be consistent with the underlying economic arrangement of the partners. This means that, in the event there is an economic benefit or burden that corresponds to the allocation, the partner to whom the allocation is made must receive the economic benefit or bear such economic burden. See § 1.704-1(b)(2)(ii).

Allocations to a partner will have economic effect if, and only if, throughout the full term of the partnership, the partnership agreement provides for: (i) The proper maintenance of the partners' capital accounts, (ii) upon liquidation of the partnership (or any partner's interest in the partnership) liquidating distributions are required to be made in accordance with the positive capital account balances of the partners, as determined after taking into account all necessary adjustments for the partnership's taxable year during which the liquidation occurs, by the end of such taxable year, or if later, 90 days after the date of such liquidation, and (iii) if such partner has a deficit balance in the partner's capital account following the liquidation of the interest after taking into account all necessary adjustments for the partnership taxable year during which the liquidation occurs, the partner is unconditionally obligated to restore the deficit balance by the end of such taxable year (or, if later, within 90 days after the date of the liquidation), which amount is paid to the partnership's creditors or distributed to the other partners in accordance with their positive capital account balances. See § 1.704-1(b)(2)(ii)( b ).

Even if the partnership agreement does not require an unlimited deficit restoration obligation of a partner, the allocation may still have economic effect to the extent such allocation does not cause or increase a deficit balance in the partner's capital account (in excess of any limited dollar amount of such partner's deficit restoration obligation) if requirements (1) and (2) of § 1.704-1(b)(2)(ii)( b ) are satisfied and the partnership agreement contains a “qualified income offset.” Section 1.704-1(b)(2)(ii)( d ). Finally, allocations that do not otherwise have economic effect under the foregoing rules shall be deemed to have economic effect if at the end of each partnership taxable year a liquidation of the partnership at the end of such year or at the end of any future year would produce the same economic results to the partners if such rules had been satisfied regardless of the economic performance of the partnership. Section 1.704-1(b)(2)(ii)( i ).

As a general rule, the economic effect of an allocation (or allocations) is substantial if there is a reasonable possibility that the allocation (or allocations) will affect substantially the dollar amounts to be received by the partners from the partnership, independent of tax consequences. See § 1.704-1(b)(2)(iii). Even if the allocation affects substantially the dollar amounts to be received by the partners from the partnership, the economic effect of the allocation (or allocations) is not substantial if, at the time the allocation (or allocations) becomes part of the partnership agreement, (1) the after-tax economic consequences of at least one partner may, in present value terms, be enhanced compared to such consequences if the allocation (or allocations) were not contained in the partnership agreement, and (2) there is a strong likelihood that the after-tax economic consequences of no partner will, in present value terms, be substantially diminished compared to such consequences if the allocation (or allocations) were not contained in the partnership agreement. See § 1.704-1(b)(2)(iii).

This test is commonly referred to as the after-tax test. In determining the after-tax economic benefit or detriment of an allocation to a partner, the tax consequences that result from the interaction of the allocation with such partner's tax attributes that are unrelated to the partnership will be taken into account. Finally, the economic effect of an allocation is not substantial in two situations described in § 1.704-1(b)(2)(iii)( b ) and (b)(2)(iii)( c ). The latter two situations are generally described as “shifting” and “transitory” allocations, respectively.

If the partnership agreement provides for an allocation of income, gain, loss, deduction, or credit (or item thereof) to a partner that does not have substantial economic effect, then the partner's distributive share of the income, gain, loss, deduction, or credit (or item thereof) is determined in accordance with the partner's interest in the partnership. References in section 704(b) or § 1.704-1 to a partner's interest in the partnership, or to the partners' interests in the partnership, signify the manner in which the partners have agreed to share the economic benefit or burden (if any) corresponding to the income, gain, loss, deduction, or credit (or item thereof) that is allocated, taking into account all facts and circumstances relating to the economic arrangement of the partners. See § 1.704-1(b)(3).

Section 1.704-1(b)(1)(iii) provides that an allocation that is respected under section 704(b) nevertheless may be reallocated under other provisions, such as section 482, section 704(e)(2), section 706(d) (and related assignment of income principles), and § 1.751-1(b)(2)(ii).

The proposed regulations clarify several aspects of the regulations under section 704. The proposed regulations generally provide a “look-through rule” for purposes of testing the substantiality of an allocation. The proposed regulations provide that in determining the after-tax economic benefit or detriment of a partnership allocation to any partner that is a look-through entity, the look-through rule takes into account the tax consequences that result from the interaction of the allocation with the tax attributes of any owner of the look-through entity. Similarly, in determining the after-tax economic benefit or detriment to any partner that is a member of a consolidated group, the proposed regulations generally provide that the tax consequences that result from the interaction of the allocation with the tax attributes of the consolidated group and with the tax attributes of another member with respect to a separate return year must be taken into account. The proposed regulations provide that a look-through entity means a partnership, subchapter S corporation, trust, an entity disregarded for Federal tax purposes, or certain controlled foreign corporations (CFCs).

The proposed regulations clarify that, for purposes of § 1.704-1(b)(2)(iii)( a ), the after-tax economic consequences of an allocation contained in the partnership agreement was compared to the after-tax economic consequences of the allocation made in accordance with the partners' interest in the partnership (within the meaning of § 1.704-1(b)(3)). For that purpose, the partners' interest in the partnership was determined as if the allocations tested were not contained in the partnership agreement. Also, the proposed regulations remove the per capita presumption in § 1.704-1(b)(3)(i). Finally, the proposed regulations include an example illustrating one circumstance where a provision other than section 704(b) may be used to reallocate partnership items.

The final regulations adopt the proposed regulations with clarification of certain aspects in response to the comments received.

For purposes of applying the after-tax, shifting, and transitory tests to a partner that is a look-through entity, the final regulations provide that the tax consequences that result from the interaction of an allocation with the tax attributes of any person that is an owner, or in the case of a trust or estate, the beneficiary, of an interest in such partner must be taken into account.

The final regulations define a look-through entity as a partnership, subchapter S corporation, trust, estate, an entity disregarded for Federal tax purposes, or certain controlled foreign corporations (CFCs). The final regulations change the look-through rule for CFCs (CFC look-through rule) to provide an ownership threshold that must be met in order to trigger look-through treatment. One comment suggested that, for administrative reasons, the look-through rule should apply only in cases involving partnerships (whether U.S. or foreign) that meet the control test in section 6038. The IRS and the Treasury Department agree that administrative concerns justify limiting the CFC look-through rule but are concerned that limiting the application of the rule as suggested would provide opportunities for abuse. Accordingly, the final regulations limit application of the CFC look-through rule to cases in which United States shareholders (within the meaning of section 951(b)) of the CFC in the aggregate own, directly or indirectly, at least 10 percent of the capital or profits interests of the partnership.

In addition, the final regulations clarify that a CFC is treated as a look-through entity, but only with respect to allocations of items of income, gain, loss, or deduction that enter into the computation of a United States shareholder's inclusion under section 951(a) with respect to the controlled foreign corporation, enter into any person's income attributable to a United States shareholder's inclusion under section 951(a) with respect to the controlled foreign corporation, or would enter into the computations described in this paragraph if such items were allocated to the controlled foreign corporation. The Treasury Department and the IRS are further considering whether a CFC partner should be treated as a look-through entity in all cases and how any impact on the tax liability of a direct or indirect owner of the CFC partner resulting from actual or anticipated distributions of property by the CFC partner under section 301 should be taken into account in testing the substantiality of an allocation.

Comments were also received on other aspects of the look-through rule. One comment suggested that the definition of look-through entity be expanded to include estates. Because estates generally pass through attributes in the same manner as trusts, this comment is adopted. Another comment questioned the inclusion of disregarded entities in the list of look-through entities. The proposed regulations included disregarded entities because such entities are the actual state law partners in the partnership. The final regulations include disregarded entities in the list of look-through entities for this reason only.

Several comments requested modifications to the look-through rule based upon their contention that the rule was burdensome. One comment suggested the abandonment of the look-through rule entirely, believing the application of § 1.701-2 would protect the concerns underlying the proposed regulations and would be less burdensome. Another comment suggested that a five year presumption be included with respect to the after-tax test in § 1.704-1(b)(2)(iii)( a ), such that the economic effect of any allocation occurring five years after the date upon which the allocation became a part of the partnership agreement would be presumed to be substantial. Finally, several comments requested either that the look-through rule apply only to partners owning more than 20 percent of the profits or capital of the partnership or that the look-through rule provide procedures to help partnerships ease the burden of considering the tax attributes of their partners and indirect owners.

One proposal to simplify the application of the look-through rule was to include a presumption that the partnership did not know and would not be required to investigate the tax attributes of any partner unless that partner directly or indirectly owns more than a 25 percent interest in the partnership's capital or profits. Alternatively, it was suggested that the final regulations provide certification procedures pursuant to which a partnership would be entitled to rely on a statement from its direct or indirect owner regarding such person's tax attributes.

The substantiality test in its present form was adopted in 1986. The Treasury Department and the IRS believe that the final regulations merely confirm the proper application of the substantiality test in those instances in which the partnership is owned by one or more look-through entities. In that respect, the look-through rule in the final regulations is not a change to the substantiality test. The Treasury Department and the IRS do not believe that it is necessary at this time to simplify the application of the substantiality test as suggested by the comments. However, to address the concerns expressed regarding the burden of the substantiality test as it applies to partnerships with look-through entity partners, the final regulations include a de minimis rule that provides that, for purposes of determining substantiality, the tax attributes of de minimis partners need not be taken into account. A de minimis partner is any partner, including a look-through entity, that owns less than 10 percent of the capital and profits of a partnership, and who is allocated less than 10 percent of each partnership item. Because of the inclusion of this de minimis rule, the final regulations do not provide for a certification procedure.

Some comments requested that the final regulations clarify what constitutes a “tax attribute” and an “interaction.” The IRS and the Treasury Department believe that this issue is sufficiently addressed under the current regulations, and, therefore, no further guidance is provided in the final regulations.

Finally, one comment requested that the final regulations provide guidance for situations in which the interaction of an allocation to a look-through entity, such as a trust or estate, and the tax attributes of the beneficiary of the entity are dependent on other factors such as the timing and amount of distributions from the trust or estate to the beneficiary. For example, it may be difficult to evaluate an allocation to a partner that is a trust where it is not known what distributions the trust will make. The IRS and the Treasury Department believe that this issue is addressed by the “strong likelihood” language of the substantiality test and, therefore, the final regulations do not provide additional guidance.

Section 1.704-1(b)(2)(iii)( a ) provides that the economic effect of an allocation is not substantial if, at the time the allocation becomes part of the partnership agreement, the after-tax economic consequences of at least one partner may, in present value terms, be enhanced compared to such consequences if the allocation were not contained in the partnership agreement, and there is a strong likelihood that the after-tax economic consequences of no partner will, in present value terms, be substantially diminished compared to such consequences if the allocation were not contained in the partnership agreement. Because taxpayers have suggested that the baseline comparison required by this provision is unclear, the proposed regulations clarified this rule, consistent with the provisions of § 1.704-1(b)(1)(i), by explaining that the after-tax economic consequences that result from the allocation must be compared to such consequences that would result if the allocations were not contained in the partnership agreement and were determined in accordance with the partners' interests in the partnership.

One comment suggested that an inconsistency existed between identifying the partners' interests in the partnership as the baseline for comparison in § 1.704-1(b)(2)(iii)( a )( 1 ) and (2) and the conclusions reached by § 1.704-1(b)(5) Example 5. According to this comment, paragraph (ii) of § 1.704-1(b)(5) Example 5 provides that the sharing percentages under the partners' interests in the partnership standard was 36 percent for one partner and 64 percent for the other partner. Comparing the after-tax economic consequences of the allocations contained in the partnership agreement with the 36/64 sharing percentages results in the after-tax economic consequences of one partner being enhanced and those of the other partner being substantially diminished. Thus, according to the comment, the conclusion in paragraph (i) of § 1.704-1(b)(5) Example 5 cannot be correct. The after-tax test, however, is applied by comparing the allocations contained in the partnership agreement with the consequences determined in accordance with the partners' interests in the partnership had the allocations not been part of the partnership agreement. In Example 5 , aside from the allocations being tested, the partners shared all other items equally and made equal capital contributions. To apply the substantiality test to the special allocations in that example, the results were compared to what would have occurred if the partners had 50/50 sharing percentages. This comparison revealed that one partner's after-tax economic return was enhanced and no partner's after-tax return was substantially diminished. Thus, the specially allocated items had to be reallocated under the partners' interests in the partnership. Under the facts of Example 5 , the partners' interests in the partnership were the 36/64 sharing percentages, which were the same percentages in which they actually shared the partnership's total income for the year. The reallocation did not change the percentages in which the partners shared total income, but rather, required that each item of income (that is, tax-exempt income and taxable interest and dividends included in total income) be shared in those same percentages. Thus, in Example 5 the partners' interests in the partnership for purposes of reallocating the items that lacked substantial economic effect was determined to be different than the partners' interests in the partnership used to test substantiality.

One comment suggested that the comparison to the partners' interests in the partnership is equally applicable when testing shifting and transitory allocations under § 1.704-1(b)(2)(iii)( b ) and ( c ) as it is to the after-tax test under § 1.704-1(b)(2)(iii)( a ), and suggested that the final regulations so provide. This comment is adopted and, in order to further clarify that the partners' interests in the partnership (determined without regard to the allocation or allocations being tested) is the baseline for comparison when testing the substantiality of an allocation, whether under the after-tax test or the shifting or transitory allocation test, the final regulations remove the parenthetical clauses inserted by the proposed regulations and add a sentence to the end of § 1.704-1(b)(2)(iii)( a )( 1 ) that provides that references in § 1.704-1(b)(2)(iii) to an allocation (or allocations) not contained in the partnership agreement mean that the allocation (or allocations) is determined in accordance with the partners' interests in the partnership (within the meaning of paragraph § 1.704-1(b)(3)), disregarding the allocation (or allocations) being tested under § 1.704-1(b)(2)(iii).

The proposed regulations removed the per capita presumption in § 1.704-1(b)(3). Because this section generally does not contain mechanical rules to determine the partners' interests in the partnership, one comment suggested that the presumption was necessary to reduce complexity, and therefore recommended that the final regulations reinsert the presumption. However, because the per capita presumption failed to consider factors relevant to a determination of the manner in which the partners agreed to share the economic benefits or burdens corresponding to the allocation of partnership items, the correct result was reached in very few cases. Accordingly, the Treasury Department and IRS believe that any benefits of the presumption are outweighed by the potential for incorrect determinations.

In Example 29 of the proposed regulations, B, a domestic corporation, and C, a controlled foreign corporation, form BC, a partnership organized under the laws of a foreign jurisdiction, with equal capital contributions. B and C are both wholly owned by A, a domestic corporation. Substantially all of BC's income would not be subpart F income if earned directly by C. For the first fifteen years of the partnership, gross income is allocated 10 percent to B and 90 percent to C, and all deductions and losses will be allocated 90 percent to B and 10 percent to C. After the initial fifteen year period, BC's gross income will be allocated 90 percent to B and 10 percent to C, and all deductions and losses will be allocated 10 percent to B and 90 percent to C. The example concludes that, apart from the application of section 704(b), the Commissioner may reallocate or otherwise not respect the allocations under other Code sections.

One comment questioned why Example 29 did not contain a substantial economic effect analysis. Another comment inferred from the absence of a citation to § 1.701-2 in Example 29 that the partnership anti-abuse rule did not apply and would not be asserted by the IRS. Example 29 was included in the proposed regulations only to reiterate the provisions contained in § 1.704-1(b)(1)(iii) regarding the effect other sections may have on partnership allocations. Accordingly, the Treasury Department and IRS do not believe that any further analysis is necessary. Moreover the list of other sections that can affect the validity of a partnership allocation in § 1.704-1(b)(1)(iii) is not an exhaustive list and, accordingly, the absence of a citation to § 1.701-2 or other potentially applicable sections does not preclude the applicability of those provisions of law in the appropriate circumstances. The Treasury Department and IRS continue to consider issuing additional guidance addressing the proper treatment of special allocations of items of a partnership that is owned primarily by related parties. Examples 29 and 30 in the proposed regulations have been renumbered as Examples 28 and 29 , respectively, in these final regulations.

The amendments made by these final regulations apply to partnership taxable years beginning on or after May 19, 2008.

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because these regulations do not impose on small entities a collection of information requirement, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Therefore, a Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Code, the notice of rulemaking preceding these regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

The principal authors of this regulation are Jonathan E. Cornwell and Kevin I. Babitz, Office of the Associate Chief Counsel (Passthroughs & Special Industries). However, other personnel from the IRS and Treasury Department participated in its development.

On April 3, 2008, we published a notice of rulemaking (NPRM) entitled Annual Events Requiring Safety Zones in the Captain of the Port Buffalo zone in the Federal Register (73 FR 18225). We received no letters commenting on the rule. No public meeting was requested, and none was held.

On July 22, 2005, the Coast Guard consolidated the Captain of the Port Cleveland zone and the Captain of the Port Buffalo zone into one zone re-defining the Captain of the Port Buffalo zone. This rule will consolidate the regulations found in 33 CFR 165.202, Safety Zones; Annual Fireworks Events in the Captain of the Port Cleveland Zone, the regulations found in 33 CFR 165.914, Safety Zones; Annual Fireworks Events in the Captain of the Port Buffalo Zone so that all the annual fireworks events in the current Captain of the Port Buffalo Zone are found in one CFR section. In addition this rule adds events not previously published in the CFR.

These safety zones are necessary to protect vessels and people from the hazards associated with fireworks displays or other events. Such hazards include obstructions to the waterway that may cause marine casualties and the explosive danger of fireworks and debris falling into the water that may cause death or serious bodily harm.

No comments were received regarding this rule.

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

We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation is unnecessary.

The Coast Guard's use of these safety zones will be periodic, of short duration, and designed to minimize the impact on navigable waters. These safety zones will only be enforced immediately before, during, and after the time the events occur. Furthermore, these safety zones have been designed to allow vessels to transit unrestricted to portions of the waterways not affected by the safety zones. The Coast Guard expects insignificant adverse impact to mariners from the activation of these safety zones.

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule would not have a significant economic impact on a substantial number of small entities.

This rule will affect the following entities, some of which might be small entities: The owners of operators of vessels intending to transit or anchor in the areas designated as safety zones in subparagraphs (1) through (26) during the dates and times the safety zones are being enforced.

These safety zones will not have a significant economic impact on a substantial number of small entities for the following reasons: This rule will be in effect for short periods of time, and only once per year, per zone. The safety zones have been designed to allow traffic to pass safely around the zone whenever possible and vessels will be allowed to pass through the zones with the permission of the Captain of the Port.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), in the NPRM we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

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

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

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

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

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

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

The Coast Guard recognizes the treaty rights of Native American Tribes. Moreover, the Coast Guard is committed to working with Tribal Governments to implement local policies and to mitigate tribal concerns. We have determined that these regulations and fishing rights protection need not be incompatible. We have also determined that this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. Nevertheless, Indian Tribes that have questions concerning the provisions of this rule or options for compliance are encourage to contact the point of contact listed under FOR FURTHER INFORMATION CONTACT .

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

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

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

We have analyzed this rule under Commandant Instruction M16475.lD which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph 34(g) of the Instruction, from further environmental documentation.

A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” are available in the docket where indicated under ADDRESSES .

We encourage you to participate in this rulemaking by submitting comments and related materials. All comments received will be posted, without change, to http://www.regulations.gov and will include any personal information you have provided. We have an agreement with the Department of Transportation (DOT) to use the Docket Management Facility. Please see DOT's “Privacy Act” paragraph below.

If you submit a comment, please include the docket number for this rulemaking (USCG-2008-0203), indicate the specific section of this document to which each comment applies, and give the reason for each comment. We recommend that you include your name and a mailing address, an e-mail address, or a phone number in the body of your document so that we can contact you if we have questions regarding your submission. For example, we may ask you to resubmit your comment if we are not able to read your original submission. You may submit your comments and material by electronic means, mail, fax, or delivery to the Docket Management Facility at the address under ADDRESSES ; but please submit your comments and material by only one means. If you submit them by mail or delivery, submit them in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying and electronic filing. If you submit them by mail and would like to know that they reached the Facility, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this rule in view of them.

To view comments, as well as documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov at any time. Enter the docket number for this rulemaking (USCG-2008-0203) in the Search box, and click “Go >>.” You may also visit either the Docket Management Facility in Room W12-140 on the ground floor of the DOT West Building, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays or the Coast Guard Sector Jacksonville Prevention Department, 4200 Ocean Street, Atlantic Beach, Florida 32233, between 8 a.m. and 4 p.m., Monday through Friday, except Federal holidays.

Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review the Department of Transportation's Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477), or you may visit http://DocketsInfo.dot.gov .

We do not now plan to hold a public meeting. But you may submit a request for one to the Docket Management Facility at the address under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. Publishing a NPRM and delaying the effective date would be contrary to public interest since the security zones around escorted vessels are necessary to ensure the safe transit of the escorted vessels as well as the public. Certain vessel movements are more vulnerable to terrorist acts and it would be contrary to the public interest to publish an NPRM that would delay the effective date of this rule. The Coast Guard coordinates escorts for vessels in this waterway for the port's safety and security. Recently, recreational boaters have endangered themselves and others by not following the verbal guidance of on scene law enforcement officials. To ensure safe boating, it is imperative that a standard exclusionary zone be broadcast and safe speeds be followed for all escorted vessels.

For the same reasons above, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register .

The terrorist attacks of September 2001 heightened the need for development of various security measures throughout the seaports of the United States, particularly around vessels and facilities whose presence or movement creates a heightened vulnerability to terrorist acts; or those for which the consequences of terrorist acts represent a threat to national security. The President of the United States has found that the security of the United States is and continues to be endangered following the attacks of September 11 (E.O. 13,273, 67 FR 56215, Sep. 3, 2002 and 72 FR 54205, Sep. 21, 2007). Additionally, national security and intelligence officials continue to warn that future terrorist attacks are likely.

King's Bay, GA, and the Ports of Jacksonville, FL, and Canaveral, FL frequently receive vessels that require additional security, including, but not limited to, vessels that carry sensitive Department of Defense cargoes, vessels that carry dangerous cargoes, and foreign naval vessels. The Captain of the Port (COTP) Jacksonville has determined that these vessels have a significant vulnerability to subversive activity by vessels or persons or, in some cases, themselves pose a risk to a port and the public, within the Jacksonville Captain of the Port Zone, as described in 33 CFR 3.35-20. This rule enables the COTP Jacksonville to provide effective port security, while minimizing the public's confusion and ease the administrative burden of implementing separate temporary security zones for each escorted vessel.

This rule establishes a security zone that prohibits persons and vessels from coming within 500 yards of all escorted vessels within the navigable waters of the Captain of the Port Zone Jacksonville, FL, as described in 33 CFR 3.35-20. Persons or vessels that receive permission to enter the security zone must proceed at a minimum safe speed and must comply with all orders issued by the COTP or a designated representative. No vessel or person may enter within a 100-yard radius of an escorted vessel.

An escorted vessel is defined as a vessel, other than a large U.S. naval vessel as defined in 33 CFR 165.2015, that is accompanied by one or more Coast Guard assets or other Federal, State or local law enforcement agency assets clearly identifiable by lights, vessel markings, or with agency insignia as listed below:

Coast Guard surface or air asset displaying the Coast Guard insignia.

State and/or local law enforcement asset displaying the applicable agency markings and/or equipment associated with the agency.

When escorted vessels are moored, dayboards or other visual indications such as lights or buoys may be used. In all cases, broadcast notice to mariners will be issued to advise mariners of these restrictions.

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

We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of DHS is unnecessary. The limited geographic area impacted by the security zone will not restrict the movement or routine operation of commercial or recreational vessels through the Ports within the Captain of the Port Zone Jacksonville.

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule may affect the following entities, some of which may be small entities: the owners or operators of vessels intending to transit in the vicinity of escorted vessels. This rule would not have a significant impact on a substantial number of small entities because the zones are limited in size, in most cases leaving ample space for vessels to navigate around them. The zones will not significantly impact commercial and passenger vessel traffic patterns, and mariners will be notified of the zones via Broadcast Notice to Mariners. Where such space is not available and security conditions permit, the Captain of the Port will attempt to provide flexibility for individual vessels to transit through the zones as needed.

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

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

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

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

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

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

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

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

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

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

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

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

We have analyzed this rule under Commandant Instruction M16475.lD which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation. A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” are available in the docket where indicated under ADDRESSES .

The Vietnam Era Veterans' Readjustment Assistance Act of 1974 (“VEVRAA”), 38 U.S.C. 4212(d), requires that Federal contractors report annually to the Secretary of Labor about their employment of certain categories of veterans. The Department of Labor has promulgated regulations found at 41 CFR part 61-250, which require contractors to use the Federal Contractor Veterans' Employment Report VETS-100 (“VETS-100 Report”) form for reporting information on the number of covered veterans in their workforces.

On November 7, 2002, the President signed the Jobs for Veterans Act (JVA) (Pub. L. 107-288, 116 Stat. 2033). Section 2(d)(1)(A) of JVA amended the Federal contractor reporting requirements contained in 38 U.S.C. 4212(d). Section (2)(b)(3) of JVA made the amendments applicable to Government contracts entered into on or after December 1, 2003.

Prior to amendment by JVA, VEVRAA required contractors with a Government contract of $25,000 or more to report at least annually to the Secretary on the number of employees in their workforces, by job category and hiring location, who are “special disabled veterans, veterans of the Vietnam era, recently separated veterans, or other veterans who served on active duty during a war or in a campaign or expedition for which a campaign badge has been authorized.” In addition, prior to amendment by JVA, VEVRAA required contractors to report on the number of employees hired during the period covered by the report who belong to the specified categories of covered veterans.

The JVA amendments to VEVRAA made two changes to the reporting requirements applicable to contracts entered into on or after December 1, 2003. First, the JVA amendments increased from $25,000 to $100,000, the dollar amount of the contract that subjects a Government contractor to the requirement to report the number of employees in their workforces who are covered veterans.

Second, the JVA amendments changed the categories of covered veterans under VEVRAA and thus the categories of veterans that contractors are required to track and report on annually. JVA eliminated the coverage category of Vietnam era veterans. However, many Vietnam era veterans may remain covered in other categories. JVA added a new category of covered veterans—those “veterans who, while serving on active duty in the Armed Forces, participated in a United States military operation for which an Armed Forces service medal was awarded pursuant to Executive Order 12985.” In addition, the JVA amendments expanded the coverage of recently separated veterans from one year after discharge or release from active duty, to three years. Finally, JVA expanded the coverage of veterans with disabilities. Prior to amendment by JVA, VEVRAA covered veterans rated as having 10% to 20% serious employment handicap or a disability rated 30% or more by the Department of Veterans Affairs. As a result of the JVA amendments, all veterans who were discharged or released from active duty because of a service-connected disability are covered under VEVRAA.

On August 8, 2006, VETS published a Notice of Proposed Rulemaking (NPRM), (71 FR 44945), to implement the changes made by JVA to the reporting requirements under VEVRAA. The NPRM proposed to adopt a new set of regulations that would be codified in a new 41 CFR part 61-300. The NPRM also proposed to adopt a new form for reporting the information on veterans' employment required by the JVA amendments to VEVRAA and name it the “VETS-100A Report.”

VETS received a total of six comments: Two from employer associations whose members include Federal contractors, one from a management consulting firm that specializes in human resources, one from a government agency, one from a human resources professional, and one from an attorney. Generally, the comments discussed the confusion that might result from VETS maintaining two sets of VEVRAA regulations and requested clarification of certain provisions. VETS reviewed and carefully considered the comments in the development of this final rule.

VETS recognized that contractors will need time to update their recordkeeping systems to collect the data required by the VETS-100A Report, and stated in the NPRM that the reporting requirements in the new part 61-300 would become effective for the calendar year 2007, and would be reported in the VETS-100A Report to be filed by September 30, 2008. We received two comments on the proposed effective date of the final rule. One commenter asked that VETS extend the effective date of the new reporting requirements to 2008, and the date for filing the VETS-100A Report for the first time to September 30, 2009, in order to allow contractors sufficient time to adjust their computer systems. Another commenter requested that VETS clarify in the final rule that contractors do not have to begin collecting and maintaining data required for the 2008 VETS-100A Report until the first day of the 12-month period for which new hire data will be reported on the 2008 report.

When the effective dates stated in the NPRM were proposed, VETS anticipated that today's final rule and its information collection requirements would be effective by a date that would allow contractors sufficient time to collect the data needed to complete and file a VETS-100A Report for the 2008 reporting cycle. The VETS-100A Report calls for contractors to provide data on veterans' employment for a 12-month period ending on a date in the report year between July 1 and August 31 that represents the end of a payroll period. However, today's final rule will not take effect in time for contractors to collect data for the entire 12-month period ending on a date between July 1 and August 31, 2008. Accordingly, VETS has decided to extend the effective date for the reporting requirements in the new part 61-300 regulations. Contractors are to collect and maintain the data prescribed by the new part 61-300 regulations beginning in the calendar year 2008, and report the data in the VETS-100A Report to be filed by September 30, 2009.

The final regulations implementing the JVA changes to the reporting requirements under VEVRAA will be codified in a new 41 CFR part 61-300. As was explained in the NPRM, the provisions in part 61-300 are modeled after the existing regulations in part 61-250 implementing the reporting requirements under VEVRAA prior to amendment by JVA. The part 61-300 regulations differ from the regulations in part 61-250 in two ways: The part 61-300 regulations reflect the changes to the requirements under VEVRAA made by JVA, and certain provisions in the part 61-300 have been revised to improve the readability of the rule. The Section-by-Section Analysis of the NPRM highlighted the differences between the provisions in the proposed rule and existing part 61-250. Throughout the regulation, changes have been made to clarify the wording in accordance with plain language principles. Unless specified below, the minor language differences are not intended to create a difference in substantive meaning between the final rule and parallel provisions in part 61-250.

The final rule, for the most part, adopts the provisions that were proposed in the NPRM. However, a few provisions have been modified in response to the public comments. The discussion that follows identifies the significant issues raised in the comments received in response to the NPRM, provides VETS responses to those comments, and explains any resulting changes to the proposed rule.

This section outlines the purpose and scope of the regulations. Proposed paragraph (a) states that each contractor or subcontractor who enters into a contract on or after December 1, 2003, in the amount of $100,000 or more with any department or agency of the United States, and who is subject to 38 U.S.C. 4212(a) (the affirmative action provisions of VEVRAA), must submit a report according to the requirements of part 61-300. In addition, proposed paragraph (a) states that any contractor or subcontractor whose only contract was entered into before December 1, 2003, must follow the regulations in part 61-250. Further, proposed paragraph (a) provides that any contractor that has a contract of $25,000 or more entered into before December 1, 2003, and has a contract of $100,000 or more entered into on or after December 1, 2003, is required to file both the VETS-100 Report and the VETS-100A Report as instructed in parts 61-250 and 61-300.

Three commenters—two employer associations and a consulting firm—were critical of the requirement in paragraph (a) that contractors holding a covered contract entered into before December 1, 2003, as well as a covered contract entered into on or after December 1, 2003, comply with both the regulations in existing part 61-250 and new part 61-300. They maintained that it would be confusing and burdensome for contractors to collect and report data about the same workforce on both the VETS-100 Report required under part 61-250 and the VETS-100A Report prescribed by new part 61-300 for the same reporting period, where each form calls for data on the number of employees in four different categories of covered veterans, and only one of those categories is found on both forms. All of the commenters offered a recommendation for minimizing the recordkeeping and reporting burden.

One commenter asserted that VETS has flexibility, and as a matter of enforcement policy the agency could adopt a rule that requires contractors to comply with only one set of VEVRAA regulations. The commenter argued that VETS could state in the final rule that contractors with a contract of at least $100,000 entered into on or after December 1, 2003, are required to file only the VETS-100A Report, even if the contractors also have covered contracts that were entered into before December 1, 2003. Further, the commenter stated that the final rule could provide that, if a contractor with contracts subject to the regulations in part 61-250 enters into a contract that is subject to new part 61-300 regulations after the start of the Affirmative Action Program (AAP) year, the contractor has the option of continuing to comply only with the reporting requirements under the part 61-250 regulations until the end of the AAP year.

VETS disagrees with the assertion that the final rule could provide that contractors need comply with the reporting requirements of only one set of VEVRAA regulations. Some employees may be counted in more than one of the covered veteran categories. For example, an employee may be both a Vietnam era veteran and an other protected veteran. Thus, some veterans in the pre-JVA categories will be included in one or more of the categories covered under the JVA as well. However, a small number of Vietnam era veterans do not belong to any other covered veteran category and would not be tracked and reported if VETS were to adopt a rule requiring contractors with contracts entered into both before and on or after December 1, 2003, to comply only with the new part 61-300 regulations. Conversely, some categories of veterans that are covered under the JVA were not previously covered under VEVRAA, and therefore, would not be tracked and reported if VETS were to allow contractors to comply only with the existing part 61-250 regulations.

The rulemaking authority of VETS can only be exercised in a manner that carries out the provisions of the statute. Here, Congress expressly made the JVA reporting requirements applicable to contracts entered into on or after December 1, 2003, and thereby provided that contracts entered before December 1, 2003, would continue to be subject to the pre-JVA reporting requirements. Consequently, VETS has no authority to allow contractors with contracts entered into both before and on or after December 1, 2003, to track and report only the categories of covered veterans covered under the JVA. Likewise, VETS cannot adopt a rule that allows contractors with contracts entered into both before and on or after December 1, 2003, to track and report only the pre-JVA categories. Accordingly, the final rule provides that a contractor with covered contracts entered into both before and on or after December 1, 2003, must comply with the regulations in existing part 61-250 and new part 61-300 and file both the VETS-100 Report and the VETS-100A Report. However, a contractor that is covered under existing part 61-250 that enters into a contract of $100,000 or more after the start of the AAP year does not have to file a VETS-100A Report during that year. The instructions for completing the VETS-100A Report state “[e]ntering into a covered federal contract or subcontract during a given calendar year establishes the requirement to file a VETS-100A Report during the following calendar year.”

Another commenter recommended that VETS adopt a rule allowing contractors to comply with only one set of VEVRAA regulations. This commenter suggested that VETS permit those contractors that are subject to both sets of regulations “to use the regulations covering the majority of their employees.” The commenter stated that this approach would allow contractors to submit a report for all employees based on whether a majority of their employees are covered under contracts dated prior to December 1, 2003, or after that date. The date of the Government contract determines the categories of veterans contractors must track and report. However, the date of the Government contract does not affect whether the particular employees are covered by the reporting requirement. Once a business or organization is awarded a covered Government contract, all of the establishments or facilities of the business or organization are subject to the same regulatory requirements, regardless of where the Government contract is to be performed. Consequently, if a contractor is subject to the reporting requirements under VEVRAA, the contractor is required to report the number of employees in its entire workforce, by job category, and by hiring location, who belong to the specified categories of covered veterans. Thus, the commenter's suggestion that contractors be permitted to comply with the regulations that cover the “majority of their employees” misconstrues the scope of coverage under VEVRAA, and does not address the concern about the burdens of dual reporting.

The remaining commenter recommended that to minimize duplicative reporting for those with covered contracts entered into both before December 1, 2003, and on or after that date, VETS should clarify that modification of a pre-December 1, 2003, contract for at least $100,000 will incorporate the VETS-100A reporting requirements in today's final rule. We agree that modification of an otherwise covered contract on or after December 1, 2003, will substitute the VETS-100A requirements of 41 CFR 61-300 for the VETS-100 requirements of 41 CFR 61-250 in the modified contract.

Two Department of Labor agencies have promulgated regulations implementing 38 U.S.C. 4212. VETS has published regulations at 41 CFR part 61-250 (and now 41 CFR part 61-300) implementing the reporting requirements, and OFCCP has published regulations at 41 CFR parts 60-250 and 60-300 implementing the affirmative action provisions. Because the requirements of Section 4212 apply to the same Federal contractors and apply to the same categories of veterans, VETS and OFCCP use the same definitions for common terms found in both rules. Section 61-300.2(a) of the final rule states that, unless otherwise indicated, the terms set forth in part 61-300 have the same meaning as those set forth in part 60-300. Accordingly, the definitions pertinent to contract coverage under part 61-300 are contained in 41 CFR 60-300.2.

The term “Government contract” is defined at 41 CFR 60-300.2(i) as “any agreement or modification thereof between any contracting agency and any person for the purchase, sale, or use of personal property or nonpersonal services (including construction).” A “modification” is “any alteration in the terms and conditions of a contract, including supplemental agreements, amendments and extensions.” 41 CFR 60-300.2(i)(1) JVA applies to Government contracts entered on or after December 1, 2003. Because a contract modification is a “Government contract” JVA applies to modifications of otherwise covered contracts made on or after December 1, 2003. Consequently, modification of a contract that would otherwise be covered by 41 CFR 61-300 on or after December 1, 2003, but for the date the contract was entered into would have the effect of modifying the VEVRAA reporting clause; the new VETS-100A requirements of 41 CFR 61-300 would be applicable to the modified contract, rather than the old VETS-100 requirements of 41 CFR 61-250.

The effect of contract modification is addressed in § 61-300.10, which provides that the VETS-100A reporting clause must be included in each covered Government contract or subcontract “and modifications, renewals, or extensions thereof if not included in the original contract.” To further clarify the effect of modifying a contract on the reporting requirements applicable after modification, language has been added to § 61-300.1(a) addressing the issue. In the final rule, § 61-300.1(a) has been revised to state “[e]ach contractor or subcontractor who enters into or modifies a contract or subcontract on or after December 1, 2003, in the amount of $100,000 or more with any department or agency of the United States * * * must submit a report according to the requirements of part 61-300.” In addition, § 61-300.1(a) of the final rule states “[a]ny contractor or subcontractor whose only contract with any department or agency * * * was entered into before December 1, 2003 (and not modified as described above), must follow part 61-250.”

Paragraph (c) of this section states that reporting requirements of part 61-300 will be deemed waived in those instances where the Deputy Assistant Secretary for Federal Contract Compliance has granted a waiver under 41 CFR 60-300.4(b)(1) (waiver granted in the “national interest”) or under 41 CFR 60-300.4(b)(3) (separate facility waiver). Paragraphs (b) and (d) refer to the obligations of contractors to comply with the regulations implementing the affirmative action provisions of VEVRAA found in 41 CFR part 60-300 that are administered by OFCCP.

Except for the clarification set forth in paragraph (a) regarding the reporting requirements that apply to contract modifications entered into on or after December 1, 2003, § 61-300.2 is adopted in the final rule as proposed.

In the NPRM, VETS proposed to incorporate many of the definitions in existing § 61-250.2 without any changes. The proposal called for some definitions to be incorporated in § 61-300.2 with modifications necessary to implement the JVA. Likewise, some definitions in existing § 61-250.2 were not carried over to § 61-300.2.

Paragraph (b)(4) defines “disabled veteran,” paragraph (b)(5) defines “other protected veteran,” paragraph (b)(6) defines “Armed Forces service medal veteran,” paragraph (b)(7) defines “recently separated veteran,” paragraph (b)(8) defines “covered veteran,” and paragraph (b)(9) defines the term “qualified,” as required by the JVA.

The definition of “eligibility period” has not been carried over from the part 61-250 regulations because it is not used in this regulation. Lastly, a definition for the phrase “covered incumbent veteran,” has been added to paragraph (b)(14) to provide a shorthand phrase that can be used for collectively referring to all categories of protected veterans.

Two comments addressed the proposed definition of the term “job category” in paragraph (b)(3), which referenced the job categories that are used in the EEO-1 Standard Employer Information Report EEO-1 Report (“EEO-1 Report”). The commenters pointed out that the job categories described in proposed paragraph (b)(3) were used for the final time in the EEO-1 Report filed for the 2006 reporting period, which ended on September 30, 2006. On November 28, 2005, EEOC published a notice setting forth the final revisions to the EEO-1 Report (70 FR 71294), which were approved by OMB following a 30-day period for public comment. Employers, including Government contractors with 50 or more employees and a contract of $50,000 or more, must use the revised EEO-1 Report form beginning with the report that must be filed by September 30, 2007. The approved revisions to the EEO-1 Report include an increase in the number of job categories as a result of dividing the Officials and Managers category into two subgroups—Executives/Senior Level Officials and Managers and First/Mid Level Officials and Managers, as well as changes in the definitions of the job categories. The revisions to the EEO-1 job categories and other changes are discussed in the Federal Register notice published on November 28, 2005 (70 FR 71294); available on EEOC's Web site at http://www.eeoc.gov/eeo1/index.html .

The commenters urged VETS to change the definition of job category in the final rule to reflect the revised EEO-1 job categories. In response to these comments, VETS has revised the definition of “job category” in paragraph (b)(3) of the final rule. In addition, during the course of reviewing the revisions made to EEO-1 job categories we noted that the definition of “employee” in proposed paragraph (b)(2) was consistent with the definition of “employee” used in the 2006 EEO-1 Report, but did not track the definition of that term found in the EEO-1 Report for 2007. Accordingly, in the final rule, the definition of “employee” in paragraph (b)(2) has been revised to conform to the definition of “employee” adopted in the revised EEO-1 Report. Finally, VETS added clarifying language to the definitions for the terms “disabled veteran” in paragraph (b)(4) and “recently separated veteran” in paragraph (b)(7) to indicate that the reporting requirements under VEVRAA apply to veterans of the United States armed forces, as opposed to veterans of the armed forces of other nations. The definitions for the terms “other protected veteran” in paragraph (b)(5) and “Armed Forces service medal veteran” in paragraph (b)(8) already contain this clarification.

The remaining definitions in § 61-300.2 have been adopted in the final rule as proposed.

This section is identical to existing § 61-250.10 except for updates necessary to implement the JVA. Section 61-300.10 sets forth the reporting requirements clause that is to be included in each covered Government contract or subcontract (and modifications, renewals, or extensions thereof if not included in the original contract). Paragraph (a)(1) states that covered contractors and subcontractors agree to report at least annually the total number of employees who are disabled veterans, other protected veterans, Armed Forces service medal veterans, and recently separated veterans. Paragraph (a)(1) differs from the parallel provision of part 61-250 in that the word “total” has been added to clarify that the report must reflect the total number of employees in the workforce of the contractor.

Paragraph (b) provides that the required information on veterans' employment is to be reported by completing the VETS-100A Report form. Paragraph (c), which prescribes the date for filing a VETS-100A Report, is the same as the parallel provision in § 61-250.10 except for editing to improve readability and designating the name of the report as “VETS-100A Report.”

Paragraphs (d) and (e) are identical to the parallel provisions in § 61.250.10, except that this section references the “VETS-100A Report.” Paragraph (d) addresses the dates of the reporting period, and paragraph (e) discusses the methods contractors may use to acquire information about the veterans status of their employees.

No comments were received on this section. Accordingly, the final rule adopts § 61-300.10 as proposed.

This section states that the data on veterans employment specified in the reporting requirements clause set forth in § 61-250.10 must be reported on the VETS-100A Report. A major difference between this section and existing § 61-250.11 involves the instructions for completing the report. Some instructions for completing the VETS-100 Report are located in the regulations (§ 61-250.11) and additional instructions are located in the VETS-100 Report form (Appendix A.) The instructions for completing the VETS-100A Report are provided only in Appendix A (discussed below), and not in the regulations. Paragraph (a) provides that a copy of the VETS-100A Report and instructions may be found in Appendix A.

Another difference between this section and existing § 61-250.11 is that paragraph (a) states that the report is “provided” annually to contractors who are included in the VETS-100 database, while existing § 61-250.11(a) states that the VETS-100 Report is “mailed” annually to contractors who are included in the VETS-100 database. The use of the term “provided” will allow VETS greater flexibility in distribution format of the VETS-100A Report. Paragraph (a) also states that VETS' failure to provide a contractor with a VETS-100A Report does not excuse a contractor from the requirement of submitting a VETS-100A Report.

Paragraph (b) is identical to paragraph (b) in existing § 61-250.11.

Paragraph (c) contains the same information found in existing paragraph (c) of existing § 61-250.11(c), however, the text has been simplified in accordance with plain language principles. Paragraphs (d) and (e) are also identical to the parallel provisions in § 61-250.11, except that an updated Internet address has been provided for requesting copies of the VETS-100A Report form.

Section 61-300.11 is adopted in the final rule without change.

This section is identical to existing § 61-250.20. No comments were received on this section. Accordingly, it is adopted in the final rule as proposed.

This section has been revised in the final rule to indicate that OMB has assigned Control Number 1293-0005 to the information collection requirements of this part.

Appendix A contains the VETS-100A Report form as well as the instructions for completing the report form. Appendix A to the final rule differs substantially from Appendix A to the existing part 61-250 regulations. A section-by-section description of those differences was provided in the NPRM's preamble discussion of Appendix A. As was previously mentioned, a major difference between the two Appendices is that all the instructions for completing the VETS-100A Report form are set forth in Appendix A to part 61-300, while the instructions for completing the VETS-100 Report are found in both § 61-250.11 and Appendix A to part 61-250. Other differences between Appendix A to the final rule and Appendix A to the existing part 61-250 regulations reflect the changes made by JVA to the contract coverage threshold and the categories of covered veterans.

VETS received a few comments on Appendix A. One commenter noted that the VETS-100A Report contained the category “newly separated veterans” while the term used in the statute and the part 61-300 regulations is “recently separated veterans.” VETS has corrected this error in the final rule. Other comments recommended several minor technical corrections to the VETS-100A Report form, which have been incorporated in the final rule.

In addition, VETS revised proposed Appendix A to reflect the changes made to § 61-300.1(a) and § 61-300.2 in response to the public comments. Thus, in the instructions regarding “Who must file” and “How to prepare forms” VETS clarified that modification of an otherwise covered contract on or after December 1, 2003, will mean that the contractor must comply with the VETS-100A Report requirements of 41 CFR part 61-300, and not the VETS-100 Report requirements of 41 CFR part 61-250. Further, the definition of “job categories” set forth in the instructions has been changed to reflect the job categories adopted in the revised EEO-1 Report, and the revised EEO-1 job categories have been added to the VETS-100A Report form set forth in Appendix A.

This final rule contains information collection requirements that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA). This final rule adopts a new set of regulations to implement the JVA amendments to the reporting requirements under VEVRAA, and is applicable to covered Government contracts entered into or modified on or after December 1, 2003. The information collection in this final rule relates to the requirement under the JVA amendments that contractors track and report annually the number of new hires and incumbent employees, by job category and hiring location, who are disabled veterans, other protected veterans, Armed Forces service medal veterans, and recently separated veterans (within three years from the date of discharge or release from active duty). This final rule adopts a new form titled the “Federal Contractor Veterans” Employment Report VETS-100A Report” (“VETS-100A Report”) for reporting the information on veterans' employment required by the JVA amendments.

This final rule impacts the information collection request for the Federal Contractor Veterans' Employment Report VETS-100 (“VETS-100 Report”) that is currently approved under OMB No. 1293-0005. The existing regulations in 41 CFR part 61-250, which apply to covered contracts of $25,000 or more entered into before December 1, 2003, require contractors to use the VETS-100 Report for reporting information on the number of new hires and incumbent employees who are special disabled veterans, veterans of the Vietnam era, other protected veterans, and recently separated veterans (within one year from the date of discharge or release from active duty). Some contractors with Government contracts that were entered into before December 1, 2003, are still subject to the VETS-100 reporting requirement in 41 CFR part 61-250. Therefore, VETS has determined that it will be necessary to maintain two sets of regulations to implement the reporting requirements under VEVRAA, and use two different forms for providing the required information on the employment of covered veterans.

On October 2, 2007, VETS issued a Federal Register notice (72 FR 56103) providing a 60-day public comment period under the Paperwork Reduction Act (PRA) on its proposal to revise the currently approved information collection request for the VETS-100 Report to include the VETS-100A Report. In the Federal Register notice, VETS invited the public to comment on: (1) Whether the proposed collection of information is necessary to the proper performance of the agency, including whether the information will have practical utility; (2) the accuracy of agency's estimate of the burden of the proposed collection, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information collected; and (4) ways 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.

One comment was received in response to the 60-day notice from the management consulting firm specializing in human resources that also submitted comments in response to the NPRM. The consulting firm again asserted that the proposed regulations “would place an enormous burden on contractors” by requiring those contractors that have contracts dated prior to December 1, 2003, and contracts dated after that date, to file both the VETS-100 Report and the VETS-100A Report. The consulting firm maintained that the lack of correlation between the two reports places great burden on contractors to collect and maintain two sets of data.

VETS appreciates the burdens imposed on those contractors that are required to file both the VETS-100 and the VETS-100A Reports, but the agency is constrained to carry out the provisions of the statute. However, as previously explained in the preamble, VETS estimates that only a small percentage of contractors will be required to file both reports. Because a contract modification is a “Government contract,” modification of a contract that otherwise would be covered under the JVA amendments but for the date the contract was entered into renders the contract subject to the VETS-100A reporting requirements, rather than the VETS-100 reporting requirements. Consequently, VETS estimates that the vast majority of contractors (80%) will file either the VETS-100 Report or the VETS-100A Report, but not both.

The consulting firm also argued that it is burdensome for contractors to report on the VETS-100A Report the total number of employees in the workforce, when there is no such requirement under the VETS-100 Report. The JVA amendments to VEVRAA require that contractors report on the total number of employees in their workforces by job category and hiring location, and the VETS-100A merely implements the statutory requirement. The VETS-100 Report implements the reporting requirements prior to amendment by the JVA, which did not call for contractors to report on their total employment. Further, the consulting firm asserted that the proposed regulations do not provide clear guidance on what contractors are obligated to do to comply with the proposed new regulations. However, VETS maintains that the final regulations and the instructions for completing the VETS-100A Report adequately explain what is required for reporting on veterans' employment. VETS will provide additional technical support through the http://www.VETS100.com Web site to further assist contractors in understanding the reporting requirements.

Finally, the consulting firm maintained that the Department “substantially underestimated” the time and costs for contractors required to comply with reporting requirements of two sets of regulations. We disagree. The consulting firm seemed to believe that most contractors will have to file both the VETS-100 and VETS-100A Reports, but as explained above, VETS estimates that fewer contractors will be subject to filing both the VETS-100 and the VETS-100A Reports than the consulting firm's comment suggests. Further, that number will decrease as the contracts entered into before December 1, 2003, are either completed or modified.

On February 15, 2008, VETS submitted the information collection request for the VETS-100 and the VETS-100A Reports to the Office of Management and Budget (OMB) for review and clearance in accordance with the PRA. VETS also published a notice in the Federal Register (73 FR 8905, February 15, 2008) advising the public the information collection request for the VETS-100 and VETS-100A Reports had been submitted to OMB, and inviting the public to submit comments within 30 days. In its final submission to OMB, VETS estimated that a total of 264,000 reports will be filed annually and that the total annual filing burden will be 156,000 hours. On April 23, 2008, OMB approved the information collection request for the VETS-100 Report and the VETS-100A Report under OMB Control Number 1293-0005.

The Department is issuing this final rule in conformance 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), Regulatory Planning and Review, but is not economically significant as defined in section 3(f)(1). Therefore, the information enumerated in section 6(a)(3)(C) of the order is not required. Pursuant to Executive Order 12866, this rule has been reviewed by the Office of Management and Budget.

Executive Order 12875—This rule will not create an unfunded Federal Mandate upon any State, local, or tribal government.

Unfunded Mandate Reform Act of 1995—This rule does not include any Federal mandate that may result in increased expenditures by State, local and tribal governments in the aggregate of $100 million or more, or increased expenditures by the private sector of $100 million or more.

The Department has reviewed this rule in accordance with Executive Order 13132 regarding federalism, and has determined that it does not have “federalism implications.” This rule does not “have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.”

This rule does not substantively change existing reporting requirements for Federal contractors. Therefore, the Department concludes that this rule will not have a significant economic impact on a substantial number of small entities. The Secretary has certified to the Chief Counsel for Advocacy of the Small Business Administration to this effect. Therefore, a regulatory flexibility analysis under the Regulatory Flexibility Act is not required.

A final rule was published in the Federal Register on May 7, 2008 (73 FR 25539). This document makes corrections to that final rule.

This is a summary of the Commission's Order of Reconsideration (Order) in MB Docket No. 07-148, FCC 08-119, adopted April 23, 2008 and released April 23, 2008. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street, SW., CY-A257, Washington, DC 20554. These documents will also be available via ECFS ( http://www.fcc.gov/cgb/ecfs/ ). (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) The complete text may be purchased from the Commission's copy contractor, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. To request this document in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

1. In this Order on Reconsideration, we reconsider in part, sua sponte , our March 3, 2008, decision in this proceeding, in which we adopted digital television (DTV) transition consumer education and outreach requirements for a number of industry participants, and clarify some of those requirements. In the DTV Consumer Education Order we required, among other things, that consumer electronics manufacturers include information about the DTV transition with certain products and eligible telecommunications carriers (ETC) include information about the DTV transition in customer bills. 73 FR 15431 March 24, 2008. In this Order, we modify our requirements regarding the timing, scope, and content of manufacturer notices and the method of delivery of ETC notices, and clarify other manufacturer requirements.

2. In the DTV Consumer Education Order the Commission sought to ensure widespread consumer understanding of the benefits and mechanics of the transition by promoting a coordinated, national DTV consumer education campaign. One facet of this campaign was the establishment of a requirement that manufacturers of television receivers and related devices include information with those devices explaining the DTV transition and what effect, if any, it would have on the use of the device, and providing contact information for consumers to find out more. In particular, we required that such information had to be included with receivers and “related devices” (a term defined only by a non-exclusive list) that were “shipped” between the effective date of the rules and March 31, 2009, by any party that manufactured, imported, or shipped the device. The rules as adopted also required ETCs that receive federal universal service funds to provide DTV transition information to low-income subscribers and potential subscribers. In particular, we required that ETCs provide notice to their Lifeline and Link-Up customers, by notices in their monthly bills or billing notices. The rules also required education by a number of industry groups not at issue in the instant Order. For example, full-power broadcasters are required to engage in extensive on-air education via public service announcements and other efforts, and must file quarterly reports with the Commission on their voluntary and mandatory efforts and make those reports available to the public. Id . at Appendix A.

3. Following release of the DTV Consumer Education Order , we received a number of ex parte filings and pleadings raising concerns about the manufacturer requirements and the manner of notification required by ETCs. Specifically, the Consumer Electronics Retailers Coalition (CERC), along with the Consumer Electronics Association (CEA) and several individual retailers and manufacturers, ask the Commission to clarify the parties responsible for inclusion of the notices, and the point in the manufacturing process that is relevant for application of the rules. CEA and CERC also seek delayed implementation of the rules with respect to manufacturers, the removal of manufacturers from the list of contacts from which consumers can seek further information, and a narrowing of the list of devices covered. On the separate issue of ETC education, Rural Cellular Corporation (RCC), followed by a number of other ETCs, filed petitions for reconsideration, or in the alternative, limited waiver, seeking authorization for using alternative methods ( i.e., not bill notices) to notify Lifeline and Link-Up customers of the transition.

4. In this Order on Reconsideration, we provide manufacturers and those acting on their behalf with greater certainty regarding the devices that are covered by these rules, additional time to prepare to include the required notices, and a modified list of contact points to list in those notices. We also clarify the parties responsible for inclusion of the notices, and the relevant point in the manufacturing process at which the requirement begins, and take this opportunity to revise the rules to better capture the devices and parties to which they apply. Finally, we revise our rules to permit ETCs to educate their low-income customers via targeted monthly mailings, as an alternative to inclusion of notices in or on billing statements.

5. Every consumer electronics commenter supported changes to the “related devices” standard in § 15.124 paragraph (a) of the Commission's rules. CEA, in its initial ex parte filing, argues for excluding “related devices” from the rule entirely, and requiring notices only with television receivers. The consumer electronics commenters initially supported this proposal, but offered a number of variations over the course of their presentations to the Commission. See generally, e.g. , Pioneer March 12 ex parte and Pioneer April 2 ex parte . We note that CERC's March 17 ex parte contained three distinct proposals, each of which, if adopted, would cover slightly different groups of devices. Our decision, sua sponte , is largely consistent with these proposals but eliminates the inconsistency and ambiguity. We agree with the essential thrust of these ex partes , that the group of “related devices” to which the notice requirement applies should be certain and clear. They support: (1) A discrete list of devices rather than the open ended category of “related devices,” and (2) limiting that list to devices that work closely with television receivers.

6. Upon reconsideration, we will limit the “related devices” covered by this rule to the following categories, which are derived in large part from existing rule requirements, with specific adjustments that are appropriate to these consumer education requirements. The “related devices” included within this rule by no means constitute a full list of devices related to televisions. When used in the context of this Order, the term refers to the devices covered by the rule. Its use in this manner, however, reflects neither the limits of the term's meaning or the limits of the Commission's authority. The categories are: Television broadcast receivers as defined in § 15.3 paragraph (w) of the rules; TV interface devices as defined in § 15.3 paragraph (y) of the rules; devices that record and/or display signals received from television broadcast receivers (This category includes only those devices designed for use with television receivers, such as DVD and Blu-ray recorders. It also includes only those monitors with at least one baseband NTSC input, thus excluding monitors intended solely for use with computer equipment.); and set-top boxes available for sale at retail that receive video programming provided by multi-channel video programming distributors (MVPDs). This definition creates a discrete and definable universe of “related devices,” most of which interact directly with a television receiver either by receiving information from it or relying on its presence to convey information to a viewer. The rule also requires manufacturers to provide information with MVPD set-top boxes even if they do not contain or rely on a television receiver. This information is needed to counter consumer confusion about the functioning of such boxes in light of the over-the-air digital transition. In this instance, for example, the information provided could explain that the transition does not affect the use or functioning of these boxes or clarify that such boxes are not eligible for NTIA coupons.

7. We make these modest changes because we believe that some of the concerns of the consumer electronics commenters regarding scope are well taken. The devices related to televisions and television use are many and varied, and, upon reconsideration, we are convinced that requiring that notices be included with every such device will create a greater burden on consumer electronics manufacturers and importers than is justified by the incremental gains in consumer awareness. Because we find that this revised rule more clearly reflects the best approach to educating consumers, the Commission will exercise its enforcement discretion and decline to penalize entities for not adhering to the requirements of the original rule while waiting for the modified rule to go into effect.

8. The DTV Consumer Education Order imposed responsibility for compliance with the manufacturer rules on parties that “manufacture, import, or ship interstate television receivers and related devices.” CERC, the first consumer electronic manufacturer to file an ex parte raising concern about this language, argued that the language was “potentially highly misleading,” and, at best, “entirely redundant” because “law and regulation already define the parties responsible for part 15 compliance.” Over the course of its filings, CERC argued that the language as written could impose responsibility and liability on parties far beyond “the party responsible as the `manufacturer,' ” and that this would expand the rule beyond that contemplated in the Notice of Proposed Rulemaking. Furthermore, as noted, CERC argued that the parties responsible for compliance were already clear under the rules, and that to go beyond that existing understanding would add burden by making it unclear which party was responsible for the notices without reaching any additional consumers. Subsequent filers agreed, and Pioneer in its April 4 filing proposed to revise § 15.124 paragraph (c) of the rules to explicitly cite to § 2.909 of the Commission's rules.

9. Upon reconsideration, we revise § 15.124 paragraph (c) of the Commission's rules to clarify that the party responsible for inclusion of the notice is the “manufacturer,” or the party acting as the manufacturer under our rules. We are revising the rule in accordance with the suggestion of Pioneer (speaking with the concurrence of all the consumer electronics commenters), to simply direct parties to § 2.909 of the rules in order to determine the “responsible party” for the purposes of enforcement of this rule. Because we find that this revised rule more clearly reflects the best approach to educating consumers, the Commission will exercise its enforcement discretion and decline to penalize entities for not adhering to the requirements of the original rule while waiting for the modified rule to go into effect.

10. The consumer electronics commenters, including LG, Hitachi, and Samsung, argue that the current language of the rules, under which devices “shipped” during the effective period of the rules are covered by the rules, is neither clear as to its intent nor, on its face, limited to manufacturers and those acting in their stead. Instead, they argue that the word “manufactured” should be used to clarify that our rules do not “require notices to be applied at secondary logistics centers, which would require opening or repackaging, or to products staged in containers for delivery to dealers after such products had already been imported or shipped from the point of manufacture.” Indeed, CERC argues that “a rule that would apply to all interstate shipments, whether or not from the factory, would be unworkable because identical products could be in various stages of preparation, shipment, and storage when the regulation becomes effective,” and indeed under such a regime that it would be “impossible” to determine whether compliance was required for any given product. The industry commenters on this question ask the Commission to clarify that we are applying the rules to devices “packed and sealed” for eventual retail purchase, not simply devices shipped by any party during the effective period of the rules.

11. Upon reconsideration, we find that it is in the public interest to revise the language of our rules, replacing “shipped” with “manufactured” to more accurately and clearly reflect the intent of the rule. The requirement to ensure that each covered device include, on or in the packaging, the required consumer education information, rests with the responsible party. Therefore, as under the existing rule, we will require notices to be included with any television receiver or related device if the date of manufacture of the final product occurs during the effective period of the rules. Because we find that this revised rule more clearly reflects the best approach to educating consumers, the Commission will exercise its enforcement discretion and decline to penalize entities for not adhering to the requirements of the original rule while waiting for the modified rule to go into effect.

12. The DTV Consumer Education Order created consumer notice requirements requiring printed notices for three groups: MVPDs, ETCs, and manufacturers. In the Order as adopted, both MVPDs and ETCs were given 30 days from the effective date of the rules to begin complying, but manufacturers were required to begin compliance immediately ( i.e. , on March 31, 2008). Shortly after the release of the DTV Consumer Education Order , CERC, CEA, Sony Electronics, Inc. (Sony), Pioneer North America, Inc. (Pioneer), and Panasonic Corporation of North America (Panasonic) (collectively, “the consumer electronics commenters”) made ex parte presentations requesting that manufacturers be granted the same time period for implementation of the DTV notice requirements as MVPDs and ETCs. The parties argued that a certain “lead time” is necessary to ensure compliance with the Commission requirements, due to the time necessary for reconfiguring packaging equipment and printing notices. CEA in particular expressed concern that the rules as drafted would put manufacturers out of compliance immediately upon becoming effective. Thus, they request that the Commission delay their effective date, as the Commission had done for the other groups who were required by the Order to provide written notice to consumers.

13. We find upon reconsideration that it is in the public interest to revise the start date for our manufacturer notice requirements. Due to the urgent need for consumer education, we found good cause to make the original rules effective immediately upon publication in the Federal Register . As a result, manufacturers did not get the more common 30 day lead time after notice of publication before the rules became effective. We are persuaded that they need additional time to come into compliance, and the approval and publication process associated with implementation of the amended rules will give manufacturers sufficient time to fully comply. As noted above, CEA, later joined by CERC and other consumer electronics commenters, sought a delay of enforcement of the manufacturer notice rules, requesting “the same time period for implementation of the notice requirement that is required of MVPDs” and ETCs. CEA March 6 ex parte at 1. MVPDs and ETCs will be required to be compliant with the rules governing them on April 30, 2008. Because of the approval and publication process through which these revised manufacturer rules must go, they will be effective no earlier than May 30, 2008. Thus, consumer electronics commenters will have sufficient time to comply. To further assist the manufacturers in ensuring their readiness for compliance, we are establishing a date certain, May 30, 2008, as the effective date for these rules. The rule revisions adopted in this Order on Reconsideration modify information collections and will be effective May 30, 2008. We will be seeking emergency review by OMB, and will note in our request that the amended rules give manufacturers additional flexibility beyond that granted in the rules already in place, which were granted emergency review. Furthermore, as discussed above, the Commission will refrain from enforcement of any manufacturer rules until the new rules go into effect. Consequently, manufacturers will have ample time after adoption and release of this Order to come into compliance before the rules take effect.

14. The DTV Consumer Education Order required that the notices included with television receivers and related devices contain a number of contact points in order for consumers to be able to find more information about the transition. The rules required that one of these contact points be the “manufacturer at [telephone number].” CERC and CEA point out that “in many cases a manufacturer does not maintain an appropriate telephone number, so this requirement could result in consumer confusion.” The notices also must contain Web site addresses and contact information to allow consumers to find additional information about the DTV transition.

15. Upon reconsideration, we recognize and share the consumer electronics commenters' concerns. We also recognize the importance of providing consumers with a variety of effective resources. Therefore, in order to ensure that consumers have straightforward access to the best sources of information about the transition, we will eliminate the requirement that manufacturers include their phone number on the notices shipped with televisions and certain related devices, but will require that manufacturers include the FCC Call Center's number on these notices.

16. As discussed above, the ETC education rules require that ETCs include transition notices in the monthly bills or bill notices of their low-income (Lifeline/Link-Up) customers. The Commission has received two independent Petitions for Reconsideration, on behalf of several ETCs in the Midwest, which seek expedited reconsideration of the DTV Consumer Education Order , or, in the alternative, limited waivers, to allow ETCs to provide notice via monthly postcards, rather than in the bills themselves. The ETCs argue that a monthly postcard would be significantly less expensive than a bill notice. They also argue that it would be, at a minimum, impractical to include notices in the bills of only Lifeline and Link-Up customers, and that a portion of the cost savings will come from targeting Lifeline/Link-up subscribers, as our Order required, instead of distributing the notices to all customers. The ETCs also argue that a postcard will be a better vehicle for customer education than a bill notice, because it is more noticeable than information included with a bill.

17. We find, upon reconsideration, that it is in the public interest to revise our rules to permit alternative methods of monthly outreach by ETCs to Lifeline and Link-Up customers. We adopt the proposal of RCC, to permit use of a monthly stand-alone mailer to these customers in lieu of inclusion of transition information in bills or billing notices. This change has no impact on the information which must be conveyed in the notice, it simply expands the permissible forms in which the notice may be provided. We also remind ETCs of their obligation to include DTV transition information in all Lifeline and Link-Up publicity and advertising, and that this obligation is not affected by these revisions. We note that the revised rules will not be effective until May 30, 2008, but that, pursuant to the existing effective rules, beginning April 30, 2008, ETCs must provide monthly DTV transition notices to their low-income customers. We intend to enforce these existing rules, beginning on April 30. However, we will apply our prosecutorial discretion, and will not enforce the existing rules against ETCs that use a monthly stand-alone mailer ( e.g. , postcard, brochure), rather than a billing insert, prior to May 30, so long as they otherwise comply with the customer notice rules.

18. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated into the Notice of Proposed Rulemaking (NPRM) . The Commission sought written public comment on the proposals in the NPRM , including comment on the IRFA. This present Supplemental Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

19. Following release of the DTV Consumer Education Order , we received a number of ex parte filings and pleadings raising concerns about the manufacturer requirements and the manner of notification required by eligible telecommunications carriers (ETCs). Specifically, the Consumer Electronics Retailers Coalition (CERC), along with the Consumer Electronics Association (CEA) and several individual retailers and manufacturers, ask the Commission to clarify the parties responsible for inclusion of the notices, and the point in the manufacturing process that is relevant for application of the rules. CEA and CERC also seek delayed implementation of the rules with respect to manufacturers, and a narrowing of the list of devices covered. On the separate issue of ETC education, Rural Cellular Corporation (RCC), followed by a number of other ETCs, filed petitions for reconsideration, or in the alternative, limited waiver, seeking authorization for using alternative methods (i.e., not bill notices) to notify Lifeline and Link-Up customers of the transition. This Order on Reconsideration provides manufacturers and those acting on their behalf with greater certainty regarding the devices that are covered by the consumer education rules, and additional time to prepare to include the required notices. We also clarify the parties responsible for inclusion of the notices, and the relevant point in the manufacturing process at which the requirement begins, and take this opportunity to revise the rules to better capture the devices and parties to which they apply. Finally, we revise our rules to permit ETCs to educate their low-income customers via targeted monthly mailings, as an alternative to inclusion of notices in or on billing statements. We make these modest changes because we believe that some of the concerns of the consumer electronics and ETC commenters are appropriate, and find that these revised rules more clearly reflect the best approach to educating consumers.

20. We received no filings directly in response to the previous FRFA.

21. The RFA directs the Commission to provide a description of and, where feasible, an estimate of the number of small entities that will be affected by the rules adopted herein. The RFA defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small business concern” under section 3 of the Small Business Act. Under the Small Business Act, a small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). The rules adopted herein will directly affect small consumer electronics (CE) manufacturers and those acting in that capacity (frequently CE retailers) and small eligible telecommunications carriers (ETCs). A description of these small entities, as well as an estimate of the number of such small entities, is provided below.

22. Incumbent Local Exchange Carriers (LECs) . Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local exchange services. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 1,307 carriers have reported that they are engaged in the provision of incumbent local exchange services. Of these 1,307 carriers, an estimated 1,019 have 1,500 or fewer employees and 288 have more than 1,500 employees. Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses.

23. Competitive Local Exchange Carriers, Competitive Access Providers (CAPs), “Shared-Tenant Service Providers,” and “Other Local Service Providers.” Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 859 carriers have reported that they are engaged in the provision of either competitive access provider services or competitive local exchange carrier services. Of these 859 carriers, an estimated 741 have 1,500 or fewer employees and 118 have more than 1,500 employees. In addition, 16 carriers have reported that they are “Shared-Tenant Service Providers,” and all 16 are estimated to have 1,500 or fewer employees. In addition, 44 carriers have reported that they are “Other Local Service Providers.” Of the 44, an estimated 43 have 1,500 or fewer employees and one has more than 1,500 employees. Consequently, the Commission estimates that most providers of competitive local exchange service, competitive access providers, “Shared-Tenant Service Providers,” and “Other Local Service Providers” are small entities.

24. Audio and Video Equipment Manufacturing . These establishments manufacture “electronic audio and video equipment for home entertainment, motor vehicle, public address and musical instrument amplifications.” The SBA has developed a small business size standard for this category of manufacturing; that size standard is 750 or fewer employees. According to Census Bureau data, there were 571 establishments in this category that operated with payroll during 2002. Of these, 560 had employment of under 500, and ten establishments had employment of 500 to 999. Consequently, we estimate that the majority of these establishments are small entities.

25. Other Communications Equipment Manufacturing. The Census Bureau defines this category as follows: “This industry comprises establishments primarily engaged in manufacturing communications equipment (except telephone apparatus, and radio and television broadcast, and wireless communications equipment).” The SBA has developed a small business size standard for Other Communications Equipment Manufacturing, which is: All such firms having 750 or fewer employees. According to Census Bureau data for 2002, there were a total of 503 establishments in this category that operated for the entire year. U.S. Census Bureau, American FactFinder, 2002 Economic Census, Industry Series, Industry Statistics by Employment Size, NAICS code 334290 (released May 26, 2005); http://factfinder.census.gov. The number of “establishments” is a less helpful indicator of small business prevalence in this context than would be the number of “firms” or “companies,” because the latter take into account the concept of common ownership or control. Any single physical location for an entity is an establishment, even though that location may be owned by a different establishment. Thus, the numbers given may reflect inflated numbers of businesses in this category, including the numbers of small businesses. In this category, the Census breaks-out data for firms or companies only to give the total number of such entities for 2002, which was 471. Of this total, 493 had employment of under 500, and an additional 7 had employment of 500 to 999. Id. An additional 3 establishments had employment of 1,000 or more. Thus, under this size standard, the majority of firms can be considered small.

26. Retailers. The rules adopted herein will apply only to retailers that are subject to the Commission's rules governing manufacturers because they qualify as the “responsible party” under § 2.909 of the Commission's rules. The SBA has developed a small business size standard for Radio, Television, and Other Electronics Stores, which is: all such firms having $8 million or less in annual receipts. This standard is described below.

27. Radio, Television, and Other Electronics Stores. The Census Bureau defines this economic census category as follows: “This U.S. industry comprises: (1) Establishments known as consumer electronics stores primarily engaged in retailing a general line of new consumer-type electronic products; (2) establishments specializing in retailing a single line of consumer-type electronic products (except computers); or (3) establishments primarily engaged in retailing these new electronic products in combination with repair services.” The SBA has developed a small business size standard for Radio, Television, and Other Electronics Stores, which is: all such firms having $8 million or less in annual receipts. According to Census Bureau data for 2002, there were 10,380 firms in this category that operated for the entire year. Of this total, 10,080 firms had annual sales of under $5 million, and 177 firms had sales of $5 million or more but less than $10 million. Id. An additional 123 firms had annual sales of $10 million or more. As a measure of small business prevalence, the data on annual sales are roughly equivalent to what one would expect from data on annual receipts. Thus, the majority of firms in this category can be considered small.

28. Electronic Shopping. According to the Census Bureau, this economic census category “comprises establishments engaged in retailing all types of merchandise using the Internet.” The SBA has developed a small business size standard for Electronic Shopping, which is: all such entities having $23 million or less in annual receipts. According to Census Bureau data for 2002, there were 4,959 firms in this category that operated for the entire year. Of this total, 4,742 firms had annual sales of under $10 million, and an additional 133 had sales of $10 million to $24,999,999. Id. An additional 84 firms had annual sales of $25 million or more. Thus, the majority of firms in this category can be considered small.

29. The rules adopted by this Order on Reconsideration impose reporting and other compliance requirements on small entities. These burdens are less than those imposed by prior rules. Manufacturers or those acting in their stead must include DTV transition notices with certain devices manufactured between June 16, 2008, and March 31, 2009. ETCs must provide DTV transition notices to their low-income customers on a monthly basis, either via targeted mailings or by inclusion with or on bills or bill notices.

30. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

31. The rules adopted by this Report and Order limit the existing requirements on consumer electronics (CE) manufacturers and those acting in their stead, and provide greater flexibility to ETCs in their required consumer notifications. The rules clarify that only one party is the “responsible party” for purposes of enforcement of the manufacturer rules, and provide those responsible parties with additional time to come into compliance. They also more clearly delineate the devices to which the rules apply, and reduce the number of such devices. Finally, we revise our rules to permit the use of an alternative method by which ETCs may educate their low-income customers, as requested by several small ETCs. These reductions in burden apply to both small and non-small entities, while retaining the requirements for consumer education that are necessary to ensure the success of the transition. Thus, no alternative rules would be appropriate.

32. The Commission will send a copy of the Order on Reconsideration, including this supplemental FRFA, in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act. In addition, the Commission will send a copy of the Order on Reconsideration, including this FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the Order on Reconsideration and FRFA (or summaries thereof) will also be published in the Federal Register .

33. This Order on Reconsideration was analyzed with respect to the Paperwork Reduction Act of 1995 (PRA) and contains modified information collection requirements, relating to the following approved collections: (1) Manufacturers of television receivers and related devices must provide notice to consumers buying their devices of the transition's impact on that equipment; and (2) ETCs that receive federal universal service funds must provide notice of the transition to their low income customers and potential customers. The Commission will publish a separate Federal Register document seeking comments from OMB, the general public, and other Federal agencies on the final information collection requirements contained in this proceeding. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, we will also seek specific comment on how we might “further reduce the information collection burden for small business concerns with fewer than 25 employees” in the Federal Register document seeking comment on the information collections.

34. The Commission will send a copy of this Order on Reconsideration in a report to be sent to Congress and the Government Accountability Office, pursuant to the Congressional Review Act.

35. For more information on this Order on Reconsideration and Further Notice of Proposed Rulemaking, please contact Lyle Elder, Lyle.Elder@fcc.gov, or Eloise Gore, Eloise.Gore@fcc.gov, of the Media Bureau, Policy Division, (202) 418-2120.

36. It is ordered that, pursuant to the authority contained in sections 1, 2, 4(i), 7, 254, 303, and 309 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 157, 254, 303, and 309, this Order on Reconsideration is adopted and parts 15 and 54 of the Commission's rules are amended as set forth in Appendix A. These amended rules will be effective beginning May 30, 2008. We anticipate that the summary of the Order will be published in the Federal Register at least 30 days before the effective date of May 30, 2008. In the event that publication is delayed, however, we find good cause for these rules to be effective on May 30, 2008, to ensure that consumers are informed about the digital television transition on February 17, 2009, the statutory deadline for all full power television broadcasters to transition to all digital service.

37. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Order on Reconsideration and Further Notice of Proposed Rulemaking , including the Supplemental Final and Initial Regulatory Flexibility Analyses, to the Chief Counsel for Advocacy of the Small Business Administration.

NMFS manages the U.S. groundfish fisheries of the Bering Sea and Aleutian Islands (BSAI) in the Exclusive Economic Zone (EEZ) under the FMP. The FMP was prepared by the North Pacific Fishery Management Council (Council) under the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1801 et seq. ) (Magnuson-Stevens Act) and is implemented by regulations at 50 CFR part 679. General regulations that pertain to U.S. fisheries appear at subpart H of 50 CFR part 600. NMFS manages fishing for sablefish ( Anoplopoma fimbria ) through regulations established under the authority of the Magnuson-Stevens Act. Sablefish is managed as a groundfish species under the FMP, as well as under the IFQ Program that allocates sablefish and Pacific halibut (Hippoglossus stenolepis) harvesting privileges among U.S. fishermen.

The International Pacific Halibut Commission (IPHC) and NMFS manage fishing for Pacific halibut through regulations established under the authority of the Convention between the United States and Canada for the Preservation of the Halibut Fishery of the Northern Pacific Ocean and Bering Sea (Convention) and the Halibut Act. The IPHC promulgates regulations pursuant to the Convention. The IPHC's regulations are subject to approval by the Secretary of State with concurrence from the Secretary of Commerce (Secretary). After approval by these two officials, the IPHC regulations are published in the Federal Register as annual management measures pursuant to 50 CFR 300.62 (73 FR 12280; March 7, 2008). Federal regulations governing the halibut fisheries in the BSAI management area appear at 50 CFR parts 300 and 679.

The background and need for this action were described in detail in the preamble to the proposed rule published in the Federal Register on March 5, 2008 (73 FR 11851). The proposed rule's comment period ended April 4, 2008. NMFS received two responses that contained four unique comments. These comments are summarized under “Response to Comments.”

In summary, this final rule removes a regulation that prohibits using longline pot gear in the Bering Sea during the month of June and amends regulations to allow military reservists and National Guard members to temporarily transfer their IFQ if mobilized to active duty. This action also makes several administrative changes to amend certain modifiers that describe IFQ and CDQ permits in paragraphs (d) and (e) of § 679.4. This includes revising terms such as “original,” “copy,” and “valid” to read “legible copy.” These changes are intended to make the descriptors used in association with such permits consistent throughout these paragraphs.

The following sections explain in detail the regulatory amendments contained in this final rule.

This rule will amend regulations in 50 CFR part 679 to remove a prohibition against the use of longline pot gear in the Bering Sea sablefish fishery during the month of June. Existing regulations prohibit deployment of longline pot gear during this month, due to past concerns about conflicts between vessel operators that use different types of fishing gear. Specifically, § 679.24(c)(4) is revised to remove a June closure for longline pot gear in the Bering Sea sablefish fishery.

The use of longline pot gear in the Bering Sea sablefish fishery became an issue in 1991. The nature of longline pot gear and strategies used in fishing with longline pot gear were once thought to deter fishermen from deploying hook-and-line gear on fishing grounds where longline pot gear is set. The groundline (to which baited pots are attached) used with longline pot gear is heavier and stronger than that used for longline hook-and-line gear. If longline pot gear is set over previously deployed longline hook-and-line gear, the weaker hook-and-line gear could be damaged or lost while being retrieved. The Council recommended a prohibition against longline pot gear in the Bering Sea subarea to avoid potential conflicts between vessel operators using different gear types on common fishing grounds. Final regulations prohibiting the use of longline pot gear and the rationale for implementing this gear restriction were published on August 21, 1992 (57 FR 37906).

In 1995, the IFQ Program extended the fishing season for halibut and sablefish in Federal waters off Alaska to approximately eight months. Prior seasons typically consisted of one or two day openings of concentrated effort. By allowing the sablefish fleet to spread its operations over time, the IFQ Program reduced the likelihood of congestion and preemption of common fishing grounds.

During the first IFQ season, fishing industry representatives reported to the Council that the annual Bering Sea sablefish quota had been under-harvested due, in part, to fishery interactions with orcas and sperm whales. Whales are able strip hooked fish from fishing gear, reducing the amount of sablefish landed by fishermen using hook-and-line gear. Attempts to deter whales from preying on fish caught on hook-and-line gear by various non-lethal means have proven unsuccessful. One viable method for reducing whale predation is to harvest sablefish with longline pot gear instead of hook-and-line gear. This realization led to a reconsideration of the ban on longline pot gear in the sablefish fishery. On September 18, 1996, a Bering Sea closure to longline pot gear from June 1 through June 30 replaced the year-round longline pot gear prohibition (61 FR 49076).

The reintroduction of longline pot gear into the Bering Sea fisheries posed less of a concern for fishing grounds preemption in 1996 than in 1992, when longline pot gear originally was prohibited. Authorizing the use of longline pot gear, with limitations, in the Bering Sea directed sablefish fishery allowed fishermen to use this gear and reduce interactions with whales. When recommending the removal of the ban on longline pots, the Council expressed concern that, despite the decreased likelihood of grounds preemption, fishermen using traditional hook-and-line gear in relatively small boats may be preempted from grounds by fishermen in larger boats using longline pot gear. Thus, a June closure was retained for the benefit of small vessels using hook-and-line gear to fish for sablefish. June was chosen for the closure because it generally has fair weather, a safety advantage for small vessels.

In October 2004, a representative for longline pot fishermen proposed that gear competition between the sablefish longline pot fleet and other fisheries had not occurred in June, and asserted that such potential conflicts were no longer a valid concern (as described below) and that the regulatory prohibition was unnecessary and burdensome. No public testimony was received in opposition to this proposal. As a result, the Council initiated an analysis of allowing longline pot gear during June in both the fixed gear Bering Sea IFQ and CDQ sablefish fisheries.

This action will implement the Council's June 2006 recommendation to remove the June longline pot gear closure. Doing so may provide an opportunity for longline pot fishermen to harvest additional amounts of the annual sablefish IFQ and sablefish CDQ allocations. These allocations historically have not been fully harvested. In 2007, 67 percent of the Bering Sea sablefish IFQ allocation was harvested, compared with 94 to 100 percent in the four different Gulf of Alaska sablefish regulatory areas. The fixed gear sablefish CDQ fishery caught 79 percent of the Bering Sea sablefish fixed gear CDQ allocation that year. On average, 56 percent of the annual Bering Sea sablefish IFQ allocation was harvested during the years 2003 through 2007. The existing June longline pot gear prohibition in the Bering Sea sablefish fisheries creates operational inefficiencies because of the constraints that are placed on vessel operators using longline pot gear during the middle of the sablefish season. Allowing this gear type to be used in June may provide additional harvesting opportunities for participants in the sablefish fishery.

This action will not change the catch monitoring and accounting practices in place for the sablefish IFQ and sablefish CDQ fisheries. Removing the June closure will mean that enforcement personnel would no longer have to monitor whether vessels fishing with longline pot gear in June are targeting sablefish, which was a prohibited activity. Neither the NOAA Office for Law Enforcement nor the U.S. Coast Guard have indicated any concerns or objections to the removal of this prohibition.

This action will amend IFQ Program regulations to allow military reservists and members of the National Guard to temporarily transfer their halibut or sablefish IFQ to other eligible IFQ recipients, should they be mobilized to active duty. This change is intended to allow reservists and guardsmen the potential to gain some economic benefit from their quota share (QS), should they be unavailable to fish their IFQ during a given year due to active military duty or deployment. Specifically, this rule will add a new paragraph to § 679.41 to establish the conditions and criteria for allowing the temporary transfer of annual IFQ issued to reservists and National Guardsmen to other eligible IFQ recipients.

Existing QS and IFQ transfer regulations generally do not allow temporary transfers (leasing) of catcher vessel IFQ. Such restrictions are intended to ensure that QS holders also fish the IFQ associated with their QS, rather than leasing or otherwise assigning their IFQ to other parties to fish on their behalf. Thus, mobilized reservists and guardsmen (who are not otherwise authorized to hire a master to harvest their IFQ) may not temporarily transfer their annual IFQ so that it may be fished by another party. The inability to temporarily transfer IFQs during a military mobilization could constitute an economic hardship to affected service members and their dependents.

This action will implement the Council's recommendation to allow halibut and sablefish QS holders to request temporary IFQ transfers, if the applicant meets specified requirements related to eligibility and evidence of military mobilization or activation. This regulatory change does not jeopardize the Council's policy of having an owner-operator IFQ fleet. This alternative may further promote stable, owner-operated businesses in the halibut and sablefish IFQ fisheries. The Council modeled the policy elements associated with temporary military transfers (TMT) on those associated with emergency medical IFQ transfers.

This type of transfer will be limited to guardsmen and reservists that are deemed eligible to make such transfers, based on eligibility criteria established by this final rule. Such criteria includes evidence of active duty military service that precludes the QS holder from fishing his or her IFQ during a given time period. A transfer would be temporary and restricted to a given fishing year. Qualified applicants would be required to request a TMT annually, even if the length of their deployment or mobilization exceeded one year.

The application process for a TMT will be similar to existing transfer applications under the IFQ Program. The application, provided by NMFS, will describe the requirements necessary to receive a TMT. Information collected on these applications will include basic identifying information about the proposed transferor and transferee, documentation of the transferor's active duty military service, as well as identifying characteristics of the IFQ being transferred. If NMFS denies an application for a TMT, the applicant may appeal the decision by following the existing appeal procedures at § 679.43.

This action amends certain terms (such as “original,” “copy,” and “valid”) that are used to describe some of the different IFQ and CDQ permits that are required in regulations at § 679.4(d) and (e). These paragraphs are associated with halibut IFQ and sablefish IFQ permits, and halibut CDQ permits, respectively. Each of these paragraphs describes the different types of permits required to participate in the IFQ and CDQ fisheries, the activities authorized by different permit types, and other conditions of use, inspection, and validity. These two paragraphs were amended on August 9, 2007 (72 FR 44795), to replace the obsolete terms “IFQ card” and “CDQ card” with “IFQ hired master permit” and “CDQ hired master permit,” respectively.

This rule removes the word “original” from the description of IFQ hired master permits in paragraphs § 679.4(d)(2)(ii) and § 679.4(d)(6)(i)(B). This word will be replaced by the term “legible copy.” Regulations at § 679.4(d)(1)(ii) previously required that an “original IFQ hired master permit” must be onboard a vessel used to harvest halibut IFQ or sablefish IFQ. NMFS intended to change “original” to “legible copy” when it revised this paragraph to replace the term “IFQ card” with “IFQ hired master permit,” as described previously. However, the deletion of the word “original” was inadvertently omitted. The requirement to have the original permit onboard is a holdover from a requirement for IFQ fishermen to have their original, plastic IFQ landing card (similar to a credit or debit card) onboard the harvesting vessel. This requirement has since been revised.

Requiring fishermen to possess an original IFQ hired master permit currently is unnecessary for administrative or enforcement purposes. No ready means exist to distinguish an original hired master permit from a high quality copy. Additionally, NMFS notes that the time necessary to mail or otherwise convey an original IFQ hired master permit to a recipient is often lengthy, given the remote location of many of the Alaska communities to which such permits are sent. Allowing a copy of an IFQ hired master permit to be onboard a vessel will enhance the speed and efficiency of transmitting such permits to IFQ hired masters via facsimile or other electronic formats.

Furthermore, this action makes several other changes to the descriptive language associated with IFQ permits and CDQ hired master permits. The word “copy” associated with IFQ permits is replaced with the term “legible copy” in paragraphs § 679.4(d)(6)(i)(A) and (B), as well as § 679.4(e)(2). The word “valid” associated with CDQ hired master permits in § 679.4(e)(3) is replaced with the term “legible copy.” This clarifies and makes consistent how IFQ permits and CDQ permits are described in § 679.4(d) and (e) with respect to the need for copies of permits to be legible.

Finally, this action replaces the term “without a CDQ card” with “without a CDQ hired master permit” in a prohibition at § 679.7(f)(6)(iii). Recent regulatory revisions to 50 CFR part 679 replaced the term “CDQ card” with the term “CDQ hired master permit.” However, due to an inadvertent error, this change was not made to § 679.7(f)(6)(iii); this final rule corrects that error.

Comment 1: The use of longline pot gear should be prohibited in the Bering Sea at all times, not just during June.

Response: This final rule implements a revision to a seasonal gear restriction applicable to the Bering Sea sablefish IFQ and CDQ fisheries. Longline pot gear is one of several types of fixed gear that are legally permissible to use to harvest various groundfish species in the Bering Sea. This action will remove a one month closure specifically applicable to the Bering Sea sablefish fisheries. Prohibiting the use of longline pot gear at all times in the Bering Sea is outside of the scope of this action.

Comment 2: Members of the National Guard or military personnel should not be allowed to give away their IFQ to anyone else. IFQ holders who do not use their IFQ should lose it.

Response: NMFS disagrees. This final rule implements regulations to allow military reservists and National Guard members to temporarily transfer their IFQ to other eligible IFQ fishermen. This is intended to allow such QS holders to avoid the economic hardship associated with being unable to catch their IFQ. QS holders already may permanently transfer their QS and associated IFQ to other parties. Such transfers are an integral part of the halibut and sablefish IFQ program, and allow fishing privileges to move between fishermen based on market forces.

Comment 3: The ability to purchase and process Bering Sea sablefish IFQ and CDQ during June is operationally important to small seafood processors in the Aleutian Islands.

Response: Support is noted.

Comment 4: Given their service and sacrifice to the Nation, it is more than appropriate to allow military reservists and members of the National Guard the flexibility to either use or transfer their IFQ.

Response: Support is noted.

This final rule revises § 679.41(m)(3)(iii) to clarify that the range of serial numbers that must be included with a TMT application are the serial numbers associated with the QS from which the IFQ being transferred are derived. QS represents the percentage of an annual catch limit that a QS holder may catch. It is used to calculate the annual amount of halibut or sablefish IFQ that is allocated to a QS holder. There are no serial numbers associated with IFQ.

The Administrator, Alaska Region, NMFS determined that this final rule is necessary for the conservation and management of the groundfish fisheries, and that it is consistent with the Magnuson-Stevens Act and other applicable laws.

This final rule has been determined to be not significant for the purposes of Executive Order 12866.

NMFS is not aware of any other Federal rules that would duplicate, overlap, or conflict with this action.

Because this rule relieves a restriction on using longline pot gear to fish for sablefish IFQ and CDQ during June, the revision to § 679.24(c)(4) is not subject to the 30-day delayed effectiveness provision of the Administrative Procedures Act pursuant to 5 U.S.C. 553(d)(1). Existing regulations prohibit the use of longline pot gear in the Bering Sea sablefish fishery during June. This restriction originally was intended to protect vessel operators using hook-and-line gear from potential conflicts on the fishing grounds with operators using longline pot gear. Changes in the operational characteristics of the Bering Sea sablefish fishery have rendered this protection measure obsolete. The sablefish IFQ season lasts approximately eight months, opening in mid-March and closing in mid-November. Requiring vessel operators using longline pot gear to stand down from fishing for sablefish with this gear type for one month during the middle of the fishing season is operationally inefficient and economically disadvantageous. The remainder of the changes in this rule will be effective 30 days after publication of the rule in the Federal Register .

A final regulatory flexibility analysis (FRFA) was prepared. The FRFA incorporates the initial regulatory flexibility analysis (IRFA), a summary of the significant issues raised by the public comments in response to the IRFA, NMFS's responses to those comments, and a summary of the analyses completed to support the action. A copy of the FRFA is available from NMFS (see ADDRESSES ). A description of the action, why it is being considered, and the legal basis for this action are presented in the preamble to this rule.

NMFS received four public comments about the proposed rule prepared for this action. This includes one comment apiece in support, and one comment apiece in opposition, of the two primary actions that will be implemented by this rule. Both of the comments expressing opposition are outside of the scope of this action; none of the comments contained specific comments about the economic effects of this action. A summary of the remainder of the FRFA follows.

Two different classes of small entities were identified in the FRFA to remove the longline pot gear restriction in the Bering Sea during June. The first includes holders of Bering Sea sablefish QS. This action may directly affect approximately 115 sablefish QS holders (as of 2006) in the Bering Sea regulatory area. The 2006 ex-vessel value of the sablefish IFQ harvested in the Bering Sea was approximately $4 million. Based on available data, and more general information concerning the probable economic activity of vessels in these IFQ fisheries, no vessel operation subject to the June gear closure restrictions could have been used to land more than $4 million in combined gross receipts in 2006 (the maximum gross revenue threshold for a small catcher vessel). Therefore, all sablefish QS holders who would be directly regulated by this action are assumed to be small entities for purposes of the Regulatory Flexibility Act (RFA). At present, NMFS does not have sufficient ownership and affiliation information to determine precisely the number of small entities in the IFQ Program, the subset of Bering Sea sablefish QS holders, or the number of such small entities that could benefit from the removal of a regulatory restriction.

The second class of small entities that would be directly regulated by this action includes the six CDQ groups that receive allocations of Bering Sea sablefish CDQ. CDQ groups are non-profit corporations that manage the fisheries allocations and other business matters for communities participating in the CDQ Program. Each of these groups is organized as a not-for-profit entity and none is dominant in its field; consequently, each is a small entity under the RFA.

Testimony from participants in this fishery suggests that approximately six vessels may choose to use longline pot gear to fish for sablefish in June if the longline pot gear prohibition is removed from regulation. Such vessels may participate in either the IFQ or CDQ sablefish fisheries during the sablefish fishing season. These vessels also may concurrently harvest IFQ and CDQ allocations on the same fishing trip.

The FRFA prepared for this action examined two alternatives. Alternative 1, status quo, would maintain the June closure for longline pot gear for the fixed gear sablefish fishery in the Bering Sea. As such, it would continue to impose adverse economic impacts on the small entities currently participating in this fishery, without offsetting benefits. Alternative 2, the preferred alternative, would amend regulations to remove the June closure, per the request of participants in the Bering Sea sablefish fishery. This alternative would result in a regulatory change that would reduce economic and operational burdens on those small entities that use longline pot gear in the Bering Sea sablefish fisheries. The sablefish IFQ and CDQ season begins in March and ends in November. Entities that begin harvesting sablefish IFQ or CDQ prior to June, but that do not catch all of their annual sablefish allocation during this time must cease fishing for sablefish with longline pot gear during June, prior to resuming fishing. A June stand-down presumably requires additional costs to entities, such as removing longline pot gear from the fishing grounds, switching to another fishery or to another gear type to continue fishing for sablefish, as well as transit costs to and from fishing grounds. NMFS does not have sufficient cost information to approximate the actual costs associated with the effects of the June closure on entities involved in the longline pot gear fishery for sablefish.

No adverse economic impacts on other user groups, including operators of hook-and-line vessels that also are small entities, were identified. Such entities fish concurrently with longline pot gear vessels during the remainder of the IFQ season without reported gear or fishing grounds conflicts. NMFS is not aware of any additional alternatives to those considered that would accomplish the objectives of the Magnuson-Stevens Act and other applicable statutes and that would minimize the adverse economic impact of this action on small entities. The objective for this action was to relieve an operational restriction, and associated adverse economic effects, by eliminating a one month fishery closure that is specific to longline pot gear vessels. The original impetus for the June longline pot gear closure has been superseded by ongoing changes in the characteristics of the sablefish IFQ and CDQ fisheries; specifically, the increased use of longline pot gear to prosecute this fishery and the decreased use of hook-and-line gear.

This action would amend regulations in 50 CFR part 679 that govern quota transfers conducted under the Pacific Halibut and Sablefish IFQ Program. Existing regulations allow permanent QS and IFQ transfers, but preclude temporary transfers of IFQ except under limited circumstances.

At present, NMFS does not have sufficient ownership and affiliation information to determine precisely the number of small entities in the IFQ program that could be affected by this action. The number of military reservists or guardsmen that hold the category of QS that may not be legally fished by a hired master under current rules cannot be determined with available information. The number of these “citizen soldiers” who hold such restricted QS and who may be mobilized to active duty status during their fishing career cannot be estimated. Given these uncertainties, it is not possible to know how many QS holders could be expected to request a temporary military transfer of IFQs, if the final rule were adopted. Thus, the FRFA prepared for this action assumes that all halibut and sablefish QS holders are small entities, for RFA purposes. Based on this assumption, this action has the potential to directly regulate any of the 3,467 small entities (as of 2006) that hold halibut QS and sablefish QS.

The FRFA prepared for this action examined two alternatives. Under Alternative 1, mobilized military reservists or guardsmen would not be able to temporarily transfer their IFQ. This could impose a financial burden on such QS holders because they would have to forego the economic benefit that could accrue from leasing their IFQ to other fishermen. It is not possible to quantify what such foregone benefits could be, absent information about how many reservists and guardsmen hold QS, whether and when such persons could be mobilized, and the amount of annual IFQ that could be left unharvested due to a QS holder's inability to catch their IFQ. Based on the standard prices used to assess IFQ fees (for all ports with IFQ landings, as of November 30, 2007), halibut was worth $4.37 per pound and sablefish was worth $2.95 per pound. This approximates the value of each pound of halibut and sablefish IFQ to those QS holders whose harvesting operations could be affected by being mobilized or ordered to active duty.

Alternative 2, the preferred alternative, would amend regulations to allow temporary IFQ transfers for mobilized guardsmen and reservists, decreasing the likelihood that such QS holders would suffer economic hardship from being unable to catch his or her halibut or sablefish IFQ. Furthermore, Alternative 2 would minimize adverse impacts that may be attributable to idled IFQ that could accrue to processors, fishery dependent communities, and other fishing support businesses. However, absent information about the number of QS holders that could be affected by this change, as well as the amount of QS and corresponding IFQ that could be left unharvested, NMFS is unable to provide the total estimate of the impacts of this rule. NMFS is not aware of any additional alternatives to those considered that would accomplish the objectives of the Halibut Act and the Magnuson-Stevens Act and other applicable statutes that would minimize the economic impact of this action on small entities. The objective of this action is to relax the policy of requiring halibut and sablefish QS holders to be onboard a vessel when associated IFQ is caught and landed for a specific class of QS holders.

Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules.

The preamble to this final rule serves as the small entity compliance guide. This action does not require any additional compliance from small entities that is not described in the preamble. Copies of this final rule are available from NMFS (see ADDRESSES ) and at the following website: http://www.fakr.noaa.gov .

This final rule contains a collection-of-information requirement subject to the Paperwork Reduction Act (PRA) and which has been approved by OMB under control number OMB Control No. 0648-0569. Public reporting burden for Application for Temporary Military Transfer of IFQ is estimated to average two hours per response and four hours per response for appeal of a denied application per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate, or any other aspect of this data collection, including suggestions for reducing the burden, to NMFS (see ADDRESSES ) and by e-mail to David_Rostker@omb.eop.gov , or fax to (202) 395-7285.

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