The FAA proposed to amend 14 CFR part 39 with a proposed AD. The proposed AD applies to IAE V2500-A1, V2522-A5, V2524-A5, V2527-A5, V2527E-A5, V2527M-A5, V2530-A5, V2533-A5, V2525-D5, and V2528-D5 turbofan engines. We published the proposed AD in the Federal Register on July 9, 2007 (72 FR 37126). That action proposed to require removing certain No. 4 bearing oil system components from service at the next shop visit or by an end date determined by the engine model.

You may examine the AD docket on the Internet at http://www.regulations.gov ; or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone (800) 647-5527) is provided in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

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

Three commenters, Air Transport Association, United Airlines, and Jet Blue Airways ask that we change the compliance:

• To require removing the parts only when they access the No. 4 bearing compartment, or

• For engines that don't require access to the No. 4 bearing compartment at the next shop visit, to permit them to defer removing the parts to the subsequent shop visit, but not later than June 30, 2011.

The commenters state that changing the compliance times will avoid an undue burden of forcing every engine visit to access the No. 4 bearing compartment and will avoid aircraft-on-ground situations due to lack of spare parts.

We don't agree. We developed the compliance requirements to maintain an acceptable level of safety for the entire V2500 fleet. Revising the compliance requirements will result in having to accelerate the program in order to maintain the same level of safety. That will most likely have an adverse impact on the fleet, due to forcing additional engine removals. The engine manufacturer, IAE, has also stated that a sufficient supply of spare parts exists to handle incorporation within the compliance requirements of the AD, including unexpected shop visit situations. However, operators who have special conditions may propose alternate compliance schedules, if they can show that the alternate compliance schedules provide an acceptable level of safety. We didn't change the AD.

One commenter, Jet Blue Airways, asks us to revise the AD to address design deficiencies in the HPT Stage 1-2 airseal as a contributor to HPT distress, rather than attributing the root cause of all HPT Stage 1-2 airseal distress to oil in the turbine. The commenter states that one of the reported “confirmed instances of oil loss” in the turbine is inaccurate. One investigation, which was categorized as an “oil in turbine” event, revealed no substantive evidence of oil loss in the turbine, or thermal oil ignition that could have caused the dimensional defects in the HPT Stage 1-2 airseal. It is not beyond reasonable speculation that, of the remaining 23 events, some percentage was incorrectly stated as related to “No. 4 bearing compartment oil loss.”

We don't agree. We have been involved in the manufacturer's Engineering Investigations for each of the subject “oil in turbine” (OIT) events, and agree with the manufacturer's conclusions. Due to the operating conditions surrounding the No. 4 bearing compartment, it can be extremely difficult, following engine operation, to detect either evidence of oil loss, or thermo oil ignition. The investigation concluded that the HPT Stage 1-2 airseal distress experienced is a result of thermo oil ignition and not due to design deficiencies in the HPT Stage 1-2 airseal. The investigation also concluded that measurement of specific HPT Stage 1-2 airseal dimensions is a reliable method of determining if oil ignition has occurred. We did not change the AD.

The same commenter, Jet Blue, asks us to revise the AD to eliminate the requirement to incorporate the “OIT Package 2” for compliance. The “OIT Package 2” includes mainly external hardware revisions to eliminate “oil traps” in the oil scavenge tubes for the No. 4 bearing compartment that may adversely impact oil scavenge capability. The commenter states “To our knowledge, no V2527-A5 engine incorporating the modification standards of `OIT Package' have been found with the reported defects or suspected of No. 4 bearing compartment loss.”

We don't agree. We have reviewed the results of the Engineering Investigation of the No. 4 bearing compartment oil loss events, and agree with the manufacturer's conclusions that all hardware identified in Tables 1, 2, and 3 of this AD contribute to the root cause of insufficient oil scavenging from the No. 4 bearing compartment. We didn't change the AD.

The same commenter, Jet Blue, asks us to revise the AD to state that the proposed rule would have a significant economic impact. The commenter states that the modification would cost more than $8,000,000 for its fleet.

We don't agree. In order for us to categorize an AD as a “significant economic impact” to operators, the total cost of the AD must exceed $100,000,000 per year. We based our economic assessment for this AD on actual hardware replacement cost (using the manufacturer's spare parts pricing), the estimated number of work-hours (at $80 per hour) required to comply with the AD, and the estimated number of shop visits per year. Based on those figures, we estimate the cost of the proposed AD to U.S. operators to be $45,037,165 per year, which is below the $100,000,000 threshold criterion. We didn't change the AD.

The same commenter, Jet Blue Airways, requests that we revise the AD to incorporate IAE Service Bulletin (SB) V2500-ENG-72-0541 into the AD. The commenter states that tracking all of the individual parts listed in the AD, especially from parts that are not serialized, is cumbersome and beyond reasonable and customary standards.

We don't agree. Due to the complexity of the various IAE SBs, we determined that it would be clearer to list in the AD, only the parts that operators must remove from service. We list IAE SB V2500-ENG-72-0541 in the Related Information section of the AD. That SB provides specific instructions and the current replacement part information. Listing only the parts that the operators must remove from service also provides operators with increased flexibility for installing other approved parts not listed in the IAE SB. However, we have added a statement in the Compliance section of the AD that states “If you have accomplished IAE Service Bulletin V2500-ENG-72-0541, Revision 4, dated March 12, 2008, you have complied with this AD.”

One commenter, IAE, asks us to correct certain information in the Compliance section of the AD.

We agree. We have:

• Corrected the part number (P/N) for the Seal Assembly, No. 4 Bearing, Front, in Table 2 of the AD, from P/N 2A0853 to P/N 2A2055.

• Deleted P/N 2A0830-01, Tube, Scavenge, No. 4 Bearing Assy, from Table 2 of the AD.

• Deleted P/N 2A1949-01, Tube, Scavenge, No. 4 Bearing Assy, from Table 2 of the AD.

• Deleted P/N 5R8111, Tube A/O Oil, No. 4 Bearing Scav Dif Case to Bif Panel, from Table 2 of the AD.

• Added paragraph (j) for V2525-D5 and V2528-D5 engines stating that with HPT stage 1 rotor assembly, P/Ns 2A9521-002 and 2A9621-002, the stage 1 HPT hub metering plug, P/N 2A3182, does not need to be removed.

• Replaced IAE Service Bulletin V2500-ENG-72-0541, Revision 1, dated February 26, 2007, in the Related Information paragraph, with IAE Service Bulletin V2500-ENG-72-0541, Revision 4, dated March 12, 2008.

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

We estimate that this AD will affect 686 engines installed on airplanes of U.S. registry. Of those 686 engines, the operators of nineteen V2500-A1 engines, thirty -A5 engines and twenty-one -D5 engines have already complied with the requirements in this AD.

Based on these figures, we estimate the total cost of this AD to U.S. operators to be $45,037,165 per year.

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

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

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

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

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

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

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

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

The FAA published a direct final rule with request for comments in the Federal Register January 30, 2008, (73 FR 5432) Docket No. FAA-2007-0275. In that rule, airspace was established to serve a landing site at the local High School, however, after publication, an error was discovered in the name used for the heliport. The correct name should have read “Cameron County Junior/Senior High School Heliport”. This action corrects this error.

The FAA uses the direct final rulemaking procedure for a noncontroversial rule where the FAA believes that there will be no adverse public comment. This direct final rule advised the public that no adverse comments were anticipated, and that unless a written adverse comment, or a written notice of intent to submit such an adverse comment were received within the comment period, the regulation would become effective on April 10, 2008. No adverse comments were received, and thus this notice also confirms that effective date.

On May 8, 2008, the FAA published in the Federal Register a notice of proposed rulemaking to establish controlled airspace at Fort Collins-Loveland Municipal Airport, Fort Collins, CO (73 FR 26048). Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.9R signed August 15, 2007, and effective September 15, 2007, which is incorporated by reference in 14 CFR part 71.1. The Class E airspace designations listed in this document will be published subsequently in that Order.

This action amends Title 14 Code of Federal Regulations (14 CFR) part 71 by establishing Class E airspace at Fort Collins, CO. Controlled airspace is necessary to enhance the safety of IFR aircraft operations at Fort Collins-Loveland Municipal Airport, Fort Collins, CO.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this regulation: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the U.S. Code. Subtitle 1, Section 106 discusses the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes additional controlled airspace at Fort Collins-Loveland Municipal Airport, Fort Collins, CO.

On March 25, 2008, the FAA published in the Federal Register a notice of proposed rulemaking (NPRM) to establish four Federal Airways in Alaska (73 FR 15685). Interested parties were invited to participate in this rulemaking effort by submitting written comments on this proposal. No comments were received in response to the NPRM. Based on further analysis of Air Traffic Control requirements, this rule incorporates the inclusion of two additional intersections along V-619. The description of V-619 will include the intersections of the Port Heiden 044° radial and the Saldo 200° radial and the Dillingham 099° radial. With the exception of editorial changes, and the change described above, this amendment is the same as that proposed in the NPRM.

Colored Federal airways and VOR Federal airways are published in paragraph 6009 and 6010, respectively, of FAA Order 7400.9R signed August 15, 2007 and effective September 15, 2007, which is incorporated by reference in 14 CFR 71.1. The Colored Federal airways and VOR Federal airways listed in this document will be published subsequently in the Order.

This action amends Title 14 Code of Federal Regulations (14 CFR) part 71 by establishing three VOR Federal airways designated V-351, V-414, V-619 and one Colored Federal airway designated Amber 6 (A-6), in Alaska. The FAA is taking this action for the following reasons: (1) The conversion of these uncharted nonregulatory routes to Federal airways adds to the IFR airway and route infrastructure in Alaska; (2) pilots will be provided with minimum en route altitudes and minimum obstruction clearance altitude information; (3) this amendment establishes controlled airspace, thus eliminating some of the commercial IFR operations in uncontrolled airspace; and (4) the addition of these routes improves the management of air traffic operations and thereby enhances safety.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this regulation: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

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

This rulemaking is promulgated under the authority described in subtitle VII, part A, subpart I, section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it will enhance aviation safety in the state of Alaska.

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1E, Environmental Impacts: Polices and Procedures. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

On May 30, 2008, the FAA published in the Federal Register a final rule establishing four low altitude T-routes in the San Francisco terminal area (73 FR 31021). This rule was originally scheduled to become effective July 31, 2008; however, a need for additional internal processing requires a delay in the effective date until September 25, 2008.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this regulation: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

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

This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes RNAV T-Routes at Sacramento and San Francisco, CA.

It is the policy of Customs and Border Protection (CBP) to periodically review its regulations (title 19 of the Code of Federal Regulations) to ensure that they are as accurate and up-to-date as possible so that the importing and general public are aware of CBP programs, requirements, and procedures regarding import-related activities. As part of this review policy, CBP has determined that certain corrections are necessary affecting parts 0, 4, 7, 12, 18, 24, 101, 103, 115, 123, 134, 141, 177, and 181 of the CBP regulations (19 CFR parts 0, 4, 7, 12, 18, 24, 101, 103, 115, 123, 134, 141, 177, 181).

Part 0 of the CBP regulations (19 CFR 0), concerning transferred or delegated authority, is being amended to replace all references to “Customs regulations” with “CBP regulations”. This is consistent with the transfer of the legacy U.S. Customs Service of the Department of the Treasury to the Department of Homeland Security (DHS) in 2003 and the subsequent renaming of the agency as U.S. Customs and Border Protection by DHS on March 31, 2007 ( see 72 FR 20131, dated April 23, 2007).

Certain specific authorities for part 4 of the CBP regulations (19 CFR part 4), concerning vessels in foreign and domestic trades, and coastwise procedures, are being amended to reflect the reorganization and re-codification of Title 46, United States Code (U.S.C.), pursuant to Pub. L. 109-304, 120 Stat. 1632 (October 6, 2006). Title 46 includes the coastwise laws (generally, the Jones Act and the Passenger Vessel Services Act), as well as other navigation laws that are administered by CBP. The re-codification does not change the substance of these laws, but merely reorganizes them. Accordingly, the outdated citations to the former Appendix to Title 46 in the specific authorities for part 4 are being removed, and the new citations to Title 46 are being added.

Part 4 of the CBP regulations contains references to the Great Lakes endorsement of the Certification of Documentation issued by the U.S. Coast Guard. Section 12107 of Title 46, United States Code (46 U.S.C. 12107), which pertained to the Great Lakes endorsement of U.S. vessel documentation laws, was repealed by Pub. L. 104-324, Title XI, § 1115(a), 110 Stat. 3972 (Oct. 19, 1996). Accordingly, the outdated references to the Great Lakes endorsement are being deleted from §§ 4.0(c), 4.60(b)(2), 4.80(a)(2), 4.80(d), 4.82(c), 4.87(a), 4.88(a), 4.90(d), and 4.92. In addition, § 4.80(e), relating to restrictions on coastwise trade, is being amended to reflect amendments to the first and second provisos to 46 U.S.C. App. 883 (first proviso now found at 46 U.S.C. 12132(a), and second proviso now found at 46 U.S.C. 12101(a) and 12132(b)) affected by § 1120(e) of Pub. L. 104-324.

Sections 7.2 through 7.4 of the CBP regulations (19 CFR 7.2-7.4), relating to customs relations with U.S. insular possessions, are being amended in this document to replace references to the “United States Customs Service” and “Customs” with “U.S. Customs and Border Protection” and “CBP”, respectively, consistent with the nomenclature changes effected by the transfer of CBP to the DHS.

Section 12.38 of the CBP regulations (19 CFR 12.38), involving the labeling requirements for shipments of liquor, contains a typographical error in the reference to “18 U.S.C. 1263 214”. This document amends § 12.38 to reflect the correct statutory citation, which is “18 U.S.C. 1263”.

Section 12.104b(a) of the CBP regulations (19 CFR 12.104b(a)) contains a table listing the State Parties to the Convention on the Means of Prohibiting and Preventing the Illicit Import, Export, and Transfer of Ownership of Cultural Property adopted by the General Conference of the United Nations Educational, Scientific, and Cultural Organization (UNESCO). As the State Party of Colombia, in the table, is misspelled, this document amends § 12.104b(a) to correct the spelling error.

Section 18.7(a) of the CBP regulations (19 CFR 18.7(a)), involving reporting requirements upon the arrival of any portion of an in-bond shipment at the port of exportation, contains an error in the parenthetical expression in the first sentence. The conjunction “and” is missing between the words “document” and “any”. This document amends § 18.7(a) to correct the error to make clear that the carrier is required to submit the in-bond document and any related carnet.

Section 24.3a(c)(1) of the CBP regulations (19 CFR 24.3a(c)(1)), concerning the determination of the rate of interest to be charged on overdue CBP bills, is being amended in this document to reflect that the applicable interest rates are determined by the Internal Revenue Service and published by CBP on a quarterly basis, rather than on a semiannual basis as this provision currently provides.

Section 24.3a(d)(1) of the CBP regulations (19 CFR 24.3a(d)(1)) provides for notification to the principal of bills from CBP and sets forth those elements that normally appear on billing notices. Currently, the regulation provides that the principal is to be notified at the time of the initial billing, and every 30 days after the due date until the bill is paid or otherwise closed. In order to remedy the situation where notifications are repeatedly returned to CBP for non-delivery, § 24.3a(d)(1) is being amended to state that when a notification is returned to CBP because of an incorrect mailing address, the billing may be stopped. Section 24.3a is also being updated in this document by replacing references to “Customs” with “CBP”.

Section 24.24(e) of the CBP regulations (19 CFR 24.24(e)), concerning the procedures for making quarterly payments and supplemental payments of harbor maintenance fees and for requesting refunds of such fees, contains incorrect mailing addresses in paragraphs (e)(1)(ii), (e)(2)(iii), and (e)(4)(i). The mailing addresses are being updated to reflect the Indianapolis, Indiana address to which payments should be sent. It is noted that payments sent to an outdated address will be automatically forwarded to the correct address. The mailing address in § 24.24(e) to which requests for refunds of harbor maintenance fees are to be sent is also being updated. In addition, § 24.24(e) is being amended by replacing references to “Customs” and “U.S. Customs Service” with “CBP” and “U.S. Customs and Border Protection”, respectively.

Section 24.24(g) of the CBP regulations (19 CFR 24.24(g)), concerning the maintenance of documentation necessary for Customs to verify the accuracy of fee computations, is being amended in this document to correct an outdated office name and mailing address.

Section 101.6 of the CBP regulations (19 CFR 101.6), pertaining to the hours of business for CBP offices, contains a list of national holidays in paragraph (a). This list is being updated in this document by adding the national holiday honoring the birthday of Martin Luther King, Jr. on the third Monday in January. This federal holiday was enacted by Congress in 1983 ( see 5 U.S.C. 6103). Section 101.6 is also being amended in this document by replacing references to “Customs” and “Commissioner of Customs” with “CBP” and “Commissioner of Customs and Border Protection”, respectively.

Section 103.31(e) of the CBP regulations (19 CFR 103.31(e)), providing for access to information on vessel manifests and summary statistical reports, and for the submission of written requests for manifest data on magnetic tapes, is being amended in this document to reflect the change in the agency name and to correct outdated office names, addresses and phone numbers. In addition, as CBP no longer issues magnetic tapes but instead uses CD-ROMs, this document also amends § 102.31(e) to reflect this current technology.

Section 115.6(c) of the CBP regulations (19 CFR 115.6(c)), regarding the designated certifying authority for containers and road vehicles for international transport, is being amended to update the address of the National Cargo Bureau, Inc.

The specific authority for § 123.2 of the CBP regulations (19 CFR 123.2), relating to penalties for failure to report arrival from Mexico or Canada or for proceeding without a permit, is cited as “19 U.S.C. 1460”. However, that provision was repealed by Pub. L. 99-570, title III, § 3115(b), 100 Stat. 3207-82 (October 27, 1986). Accordingly, part 123 of the CBP regulations (19 CFR part 123) is being amended in this document to reflect the correct authority citation for § 123.2, which is 19 U.S.C. 1459.

Paragraphs (a) and (b) of § 134.3 of the CBP regulations (19 CFR 134.3(a) and (b)), concerning the delivery and redelivery requirements applicable to imported goods that are not properly marked with their country of origin, is being amended in this document by replacing references to “Customs” with “CBP”. Section 134.3(b) is also being amended to correct a typographical error at the beginning of the second sentence by replacing the lower case “a” with an upper case “A”.

In § 141.102(a) of the CBP regulations (19 CFR 141.102(a)), regarding when the payment of internal revenue taxes for cigars and cigarettes is not required, the cross-reference to “§ 11.2(a)” should properly read “§ 11.2a”. This document amends § 141.102(a) accordingly.

Section § 177.21 of the CBP regulations (19 CFR 177.21), regarding the issuance of country-of-origin advisory rulings and final determinations for Government procurement purposes, contains outdated citations to the “Federal Procurement Regulations (41 CFR part 1-6)” and the “Defense Acquisition Regulations (32 CFR section VI)”. These regulations were re-codified and moved to Title 48 of the Code of Federal Regulations. The re-codification does not change the substance of these laws, but merely reorganizes them. This document amends § 177.21 to reflect that the Federal Acquisition Regulations are found in chapter 1 of Title 48, and the Defense Acquisition Regulations are found in chapter 2 of Title 48.

Section 181.93(a) of the CBP regulations (19 CFR 181.93(a)) is being amended in this document to reflect the change in the agency name, as well as to update the addresses to which NAFTA advance ruling requests should be sent.

Because the technical corrections set forth in this document merely conform to existing law and regulation, CBP finds that good cause exists for dispensing with notice and public procedure as unnecessary under 5 U.S.C. 553(b)(B). For this same reason, pursuant to 5 U.S.C. 553(d)(3), CBP finds that good cause exists for dispensing with the requirement for a delayed effective date.

Because this document is not subject to the notice and public procedure requirements of 5 U.S.C. 553, it is not subject to the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. )

These amendments do not meet the criteria for a “significant regulatory action” as specified in Executive Order 12866.

This document is limited to technical corrections of the CBP regulations. Accordingly, it is being signed under the authority of 19 CFR 0.1(b)(1).

On March 30, 2007, the Federal Register published proposed amendments (72 FR 15081) to the Income Tax Regulations (26 CFR part I) under section 901 of the Internal Revenue Code (Code) relating to the amount of taxes paid for purposes of the foreign tax credit (the “2007 proposed regulations”). The 2007 proposed regulations would revise § 1.901-2(e)(5) in two ways. First, for purposes of § 1.901-2(e)(5), the 2007 proposed regulations would treat as a single taxpayer all foreign entities in which the same U.S. person has a direct or indirect interest of 80 percent or more (a “U.S.-owned foreign group”). Second, the 2007 proposed regulations would treat amounts paid to a foreign taxing authority as noncompulsory payments if those amounts are attributable to certain structured passive investment arrangements. The 2007 proposed regulations provide that the regulations will be effective for foreign taxes paid or accrued during taxable years of the taxpayer ending on or after the date on which the regulations are finalized.

The IRS and Treasury Department received written comments on the 2007 proposed regulations, which are discussed in this preamble. A public hearing was held on July 30, 2007. In response to written comments, the IRS and Treasury Department determined that the proposed change to § 1.901-2(e)(5) relating to U.S.-owned foreign groups may lead to inappropriate results in certain cases. Accordingly, on November 19, 2007, the IRS and Treasury Department issued Notice 2007-95, 2007-49 IRB 1 (see § 601.601(d)(2)(ii)( b )). Notice 2007-95 provided that the proposed rule for U.S.-owned foreign groups would be severed from the portion of the 2007 proposed regulations addressing the treatment of foreign payments attributable to certain structured passive investment arrangements. Notice 2007-95 further provided that the proposed rules for U.S.-owned groups would be effective for taxable years beginning after final regulations are published in the Federal Register .

In light of comments, the IRS and the Treasury Department believe that it is appropriate to issue new proposed and temporary regulations addressing the treatment of foreign payments attributable to structured passive investment arrangements. These new regulations make several changes to the 2007 proposed regulations to take into account comments received, while adopting without amendment substantial portions of the 2007 proposed regulations. The new temporary and proposed regulations will permit the IRS to enforce the rules relating to structured passive investment arrangements, while also allowing taxpayers a further opportunity for comment. The significant comments and revisions are described in this preamble.

The temporary regulations address the application of § 1.901-2(e)(5) in cases in which a person claiming foreign tax credits is a party to a structured passive investment arrangement. These complex arrangements are intentionally structured to create a foreign tax liability when, removed from the elaborately engineered structure, the basic underlying business transaction generally would result in significantly less, or even no, foreign taxes. The parties use these arrangements to exploit differences between U.S. and foreign law in order to permit a person to claim a foreign tax credit for the purported foreign tax payments while also allowing the foreign counterparty to claim a duplicative foreign tax benefit. The person claiming foreign tax credits and the foreign counterparty share the cost of the purported foreign tax payments through the pricing of the arrangement.

The temporary regulations treat foreign payments attributable to such arrangements as noncompulsory payments under § 1.901-2(e)(5) and, thus, disallow foreign tax credits for such amounts. For periods prior to the effective date of the temporary regulations, the IRS will continue to utilize all available tools under current law to challenge the U.S. tax results claimed in connection with these and other similar abusive arrangements, including the substance over form doctrine, the economic substance doctrine, debt-equity principles, tax ownership principles, other provisions of § 1.901-2, section 269, and the partnership anti-abuse rules of § 1.701-2.

The temporary regulations retain the general rule in the existing regulations that a taxpayer need not alter its form of doing business or the form of any transaction in order to reduce its foreign tax liability. However, § 1.901-2T(e)(5)(iv)(A) provides that, notwithstanding the general rule, an amount paid to a foreign country (a “foreign payment”) is not a compulsory payment, and thus is not an amount of tax paid, if the foreign payment is attributable to a structured passive investment arrangement. For this purpose, § 1.901-2T(e)(5)(iv)(B) defines a structured passive investment arrangement as an arrangement that satisfies six conditions. The six conditions consist of features that are common to arrangements that are intentionally structured to generate the foreign payment.

The first condition provided in the 2007 proposed regulations is that the arrangement utilizes an entity that meets two requirements (an “SPV”). The first requirement is that substantially all of the gross income (for United States tax purposes) of the entity, if any, is attributable to passive investment income and substantially all of the assets of the entity are assets held to produce such passive investment income. The second requirement is that there is a purported foreign tax payment attributable to income of the entity. The purported foreign tax may be paid by the entity itself, by the owner(s) of the entity (if the entity is treated as a pass-through entity under foreign law) or by a lower-tier entity (if the lower-tier entity is treated as a pass-through entity under U.S. law).

For purposes of the first requirement, § 1.901-2(e)(5)(iv)(C)( 4 ) of the 2007 proposed regulations defines passive investment income as income described in section 954(c), with two modifications. The first modification excludes income of a holding company attributable to qualifying equity interests in lower-tier entities that are predominantly engaged in the active conduct of a trade or business (or that are themselves holding companies). The second modification is that passive investment income is determined by disregarding sections 954(c)(3) and 954(c)(6) and by treating income attributable to transactions with a counterparty as ineligible for the exclusions under sections 954(h) and 954(i).

One commentator recommended, in lieu of the holding company rules in the 2007 proposed regulations, applying look-through rules to income and assets of lower-tier entities similar to the rules of section 1297(c), under which a foreign corporation, if it owns at least 25 percent of the stock of another corporation, is treated as owning its proportionate share of the assets of the other corporation and receiving its proportionate share of the income of the other corporation. Alternatively, the commentator recommended that the holding company rules in the 2007 proposed regulations be modified to eliminate the requirement that substantially all of the assets of the tested entity must consist of qualified equity interests; to permit income other than dividends (for example, interest and royalties) received from a lower-tier entity that is predominantly engaged in an active business to qualify as active income; and to treat a lower-tier entity as an operating company if more than 50 percent of either its assets or its income meet the active business test. In addition, commentators suggested eliminating the requirement that the U.S. party and the counterparty must share the opportunity of gain or loss with respect to the lower-tier entity, or replacing it with a rule disqualifying the equity interest if contractual restrictions limit the counterparty's recourse against the lower-tier entity's income or assets. Finally, commentators suggested that preferred stock should be treated as a qualifying equity interest.

These comments were not adopted. The holding company exception is intended only to clarify that a joint venture arrangement is not treated as a structured passive investment arrangement solely because it is conducted through a holding company structure, not to liberalize the definition of structured passive investment arrangements. The requirement that the parties share the opportunity for gain and risk of loss with respect to the holding company's assets is intended to ensure that the arrangement between the parties is a bona fide joint venture. In this regard, a commentator recommended that the regulations be clarified to provide that the holding company exception is not satisfied if either the U.S. party or the counterparty is solely a creditor with respect to the entity because it either owns a hybrid instrument that is debt for U.S. tax purposes or purchases stock subject to an obligation to sell the stock back. This modification is reflected in § 1.901-2T(e)(5)(iv)(C)( 5 )( ii ) of the temporary regulations. In addition, Example 2 of § 1.901-2T(e)(5)(iv)(D) is modified to clarify that the holding company exception is not met if the counterparty's interest is acquired in a sale-repurchase transaction.

The IRS and Treasury Department recognize that under the regulations an entity conducting business through an active foreign subsidiary may fail to meet the holding company exception, even though the entity would not be treated as an SPV under the “substantially all” test if it operated the subsidiary's business directly through a branch operation. The IRS and Treasury Department believe this result is appropriate because the segregation of active business income and assets in a lower-tier entity may facilitate the use of an upper-tier entity to conduct a structured passive investment arrangement.

The IRS and Treasury Department remain concerned that taxpayers may continue to enter into structured passive investment arrangements designed to generate foreign tax credits through entities that meet the technical requirements of the holding company exception. The IRS and Treasury Department intend to monitor the use of holding companies to facilitate abusive foreign tax credit arrangements, utilize all available tools under current law to challenge the U.S. tax results claimed in connection with such arrangements (including the substance over form doctrine, the economic substance doctrine, debt-equity principles, tax ownership principles, other provisions of § 1.901-2, section 269, and the partnership anti-abuse rules of § 1.701-2) in appropriate cases, and to issue additional regulations modifying or eliminating the holding company exception if necessary to prevent abuse.

The second modification in the 2007 proposed regulations is that passive investment income is determined by disregarding sections 954(c)(3) and 954(c)(6) and by treating income attributable to transactions with a counterparty as ineligible for the exclusions under sections 954(h) and 954(i). The IRS and Treasury Department received a number of comments suggesting that the definition of passive investment income should be narrowed by excluding income that would be treated as non-subpart F income under section 954(c)(3) or 954(c)(6), excluding income from unrelated persons other than the counterparty, or eliminating the requirement in section 954(h) that the tested entity's activity be conducted in the entity's “home country.” Other commentators suggested substituting other tests for the active financing exception in section 954(h), such as exempting financial services income as defined in section 904(d), with or without modification. For example, commentators suggested various modifications, such as excluding income derived from unrelated persons or from direct activities of employees of the tested entity; exempting any income derived from or related to transactions with customers; exempting income that would be considered attributable to an active foreign trade or business under the principles of section 864 and § 1.367(a)-2T(b); or exempting income other than income from “tainted” assets such as cash or cash equivalents, stock or notes of persons related to the U.S. party or counterparty, or assets giving rise to U.S. source income. One commentator suggested that payments described in section 954(c)(3) should not be treated as passive investment income to the extent the payment was deductible under foreign law and the corresponding income inclusion by the tested entity did not result in a net increase in foreign taxes paid. This commentator suggested that the result in the U.S. borrower transaction described in Example 2 of the 2007 proposed regulations was inappropriate since the foreign tax paid by the SPV was offset by a reduction in tax paid by the CFC borrower.

The IRS and Treasury Department carefully considered these suggestions but ultimately determined that none of the suggested approaches has significant advantages over relying on section 954(h) to determine whether income from financing activities is sufficiently active that it should be excluded from passive investment income for purposes of these regulations. Section 954(h) includes detailed requirements that ensure that the entity is predominantly engaged in the active conduct of a banking, financing or similar business and conducts substantial activity with respect to such business. In addition, the IRS and Treasury Department continue to believe it is not appropriate to exclude income described in sections 954(c)(3) and 954(c)(6) from passive investment income, because financing arrangements between related parties that are engaged in the active conduct of a trade or business are commonly used in the structured transactions that are the target of these regulations. The IRS and Treasury Department also do not believe that U.S. borrower transactions should not be considered to result in a net increase in foreign tax, since in the absence of the structured passive investment arrangement the CFC borrower would still reduce its foreign tax by reason of the interest expense deduction but the U.S. party would not claim foreign tax credits for foreign payments attributable to income in the SPV that is in substance the foreign lender's interest income. Accordingly, § 1.901-2T(e)(5)(iv)(C)( 5 )( i ) generally retains the definition of passive investment income in the 2007 proposed regulations.

However, the temporary regulations include two modifications in response to comments. First, the IRS and Treasury Department agree it is appropriate to require the entity's activities to be conducted directly by its own employees rather than by employees of affiliates, because the purpose of the SPV condition is to distinguish between active entities and those with largely passive income, and it is reasonable to require an entity engaged in an active business to conduct that business through its own employees. Accordingly, § 1.901-2T(e)(5)(iv)(C)( 5 )( i ) provides that section 954(h)(3)(E) shall not apply, and that the entity must conduct substantial activity through its own employees.

Second, the IRS and Treasury Department agree that the requirement that activities be conducted in the entity's “home country” reflects a subpart F policy that is more restrictive than necessary for purposes of these regulations. Accordingly, § 1.901-2T(e)(5)(iv)(C)( 5 )( i ) provides that for purposes of these regulations the term home country means any foreign country.

Concerning the requirement in § 1.901-2(e)(5)(iv)(B)( 1 )( i ) of the 2007 proposed regulations that substantially all of the gross income of the entity be passive investment income and substantially all of the entity's assets are assets held to produce such passive investment income, one commentator recommended that the regulations provide examples illustrating situations in which such requirement is met. The IRS and Treasury Department did not adopt this comment because the “substantially all” test requires evaluation of all the facts and circumstances and cannot be satisfied by reference to a specific percentage benchmark.

Several commentators requested that the regulations clarify the time at which the six conditions must be met to result in a structured passive investment arrangement. Section 1.901-2T(e)(5)(iv)(B)( 1 )( ii ) of the temporary regulations is revised to clarify that the foreign payment must be made with respect to a U.S. tax year in which substantially all of the gross income (for U.S. tax purposes) of the entity, if any, is attributable to passive investment income and substantially all of the assets of the entity are assets held to produce such passive investment income. This clarification is intended to ensure that foreign tax credits are disallowed for foreign payments that relate primarily to passive investment income, but not for taxes that relate to active business income earned in an earlier or later year when the entity is not treated as an SPV. The regulations do not, however, require all six conditions to be met in the same tax year. For example, the regulations disallow credits for foreign payments with respect to income of an SPV even if the U.S. party acquires its interest, or a hybrid instrument is issued to the counterparty, after the foreign payments are made.

Other commentators recommended that the regulations eliminate the SPV condition and treat as noncompulsory payments only those foreign payments that directly relate to passive investment income, or with respect to which duplicative tax benefits are claimed. The IRS and Treasury Department did not adopt such an approach in the temporary regulations because of the administrative difficulty of tracing specific foreign payments to specific income or to the duplicative tax benefits. Accordingly, the temporary regulations retain the SPV condition and the approach of treating all foreign payments attributable to a structured passive investment arrangement as noncompulsory. However, the IRS and Treasury Department recognize that an element of the arrangements intended to be covered by the regulations is that they are designed to generate duplicative tax benefits, and that some connection between the counterparty's foreign tax benefit and the U.S. party's share of the foreign payments should be a pre-condition to the finding of a structured passive investment arrangement. Accordingly, as described in section D of this preamble, the foreign tax benefit condition is revised to provide that the counterparty's foreign tax benefit must correspond to 10 percent or more of the U.S. party's share of the foreign payments or the U.S. party's share (under U.S. tax principles) of the foreign tax base used to compute such payments.

Section 1.901-2T(e)(5)(iv)(B)( 2 ) of the temporary regulations adopts without change the second overall condition of the 2007 proposed regulations that a person (a “U.S. party”) would be eligible to claim a credit under section 901(a) (including a credit for foreign taxes deemed paid under section 902 or 960) for all or a portion of the foreign payment if such payment were an amount of tax paid.

One commentator requested that the regulations be amended to clarify that the “U.S. party” condition must be met at the same time as the other five conditions. The temporary regulations do not include this condition because the IRS and Treasury Department believe it is inappropriate to exempt arrangements that are structured so that the U.S. party claims a credit in a taxable year or period that is not the same taxable year or period in which the counterparty is entitled to a foreign tax benefit. In addition, the IRS and Treasury Department are concerned that this modification would allow a person to acquire an interest in an SPV and claim credits with respect to purported foreign taxes paid in an earlier period by the SPV in connection with an arrangement that met the other five conditions of the regulations.

The third overall condition provided in the 2007 proposed regulations is that the foreign payment or payments are (or are expected to be) substantially greater than the amount of credits, if any, that the U.S. party would reasonably expect to be eligible to claim under section 901(a) if such U.S. party directly owned its proportionate share of the assets owned by the SPV, other than through a branch, a permanent establishment or any other arrangement (such as an agency arrangement) that would subject the income generated by its share of the assets to a net basis foreign tax. Commentators recommended several changes to the direct investment condition, several of which are adopted in the temporary regulations. First, in order to reach appropriate results in cases where more than one person owns an equity interest in the SPV for U.S. tax purposes, the temporary regulations amend the direct investment test to compare the U.S. party's proportionate share of the foreign payment made by the SPV to the amount of foreign tax the U.S. party would be eligible to credit if the U.S. party directly owned its proportionate share of the assets. Second, the temporary regulations clarify that a dual resident corporation that is an SPV meets the direct investment condition since its ownership of the passive assets is treated the same as ownership through a branch operation. Third, a commentator suggested that the direct investment test of the 2007 proposed regulations could be avoided by entering into a sale-repurchase transaction using an SPV that acquires passive assets subject to foreign withholding tax. This commentator recommended that the direct investment condition be revised to reduce the value of the U.S. party's interest by any amount advanced by the foreign counterparty that is treated as debt for U.S. tax purposes but as equity for foreign tax purposes. The IRS and Treasury Department agree that situations where the SPV's income is subject to gross basis foreign taxes raise the same foreign tax credit policy concerns as situations where the SPV's income is subject to net basis foreign taxes. The IRS and Treasury Department, however, believe the commentator's recommended solution is incomplete, since the other conditions of the regulations can be met by structures employing techniques other than sale-repurchase agreements. Accordingly, the temporary regulations provide that the U.S. party's proportionate share of the SPV's assets does not include any assets that produce income subject to gross basis withholding tax.

Several commentators recommended that the regulations include an exception for certain transactions in which the amount of the foreign payments attributable to income of an SPV does not substantially exceed the amount of foreign taxes that would have been paid by a controlled foreign corporation that owns the SPV in the absence of the arrangement. The commentators suggested that such foreign payments should not be treated as noncompulsory payments because they effectively substitute for taxes that would have been imposed on the controlled foreign corporation in the absence of the arrangement.

These comments raise the fundamental question as to the appropriate baseline to which such transactions should be compared to determine if there has been a significant increase in the total amount of foreign taxes paid. Although the IRS and Treasury Department carefully considered an exception from the definition of structured passive investment arrangements for such transactions, the IRS and Treasury Department have been unable to develop an exception that can be administered by the IRS and that does not exclude abusive cases. Accordingly, the temporary regulations do not include this exception.

The fourth condition provided in the 2007 proposed regulations is that the arrangement is structured in such a manner that it results in a foreign tax benefit (such as a credit, deduction, loss, exemption or a similar tax benefit) for a counterparty or for a person that is related to the counterparty, but not related to the U.S. party. In response to comments, to relieve administrative burdens these regulations clarify that while the benefit must be reasonably expected, there is no requirement to show that the benefit be intended or actually realized. The temporary regulations also provide that the ability to surrender the use of a tax loss to another person is a foreign tax benefit because a foreign tax benefit need only be made available to a counterparty. See Example 9 of § 1.901-2T(e)(5)(iv)(D).

Several commentators recommended that the regulations be revised to require a causal relationship between one or more of the six conditions. For example, one commentator recommended adding a requirement that the foreign tax benefit either relate to the foreign tax paid by the SPV or result from the counterparty being treated for foreign but not U.S. tax purposes as owning an equity interest in the SPV or a portion of the SPV's assets. Another commentator suggested requiring that the inconsistent aspect of the arrangement be created or used to achieve the foreign tax benefit. Another commentator recommended requiring that the foreign tax benefit would not have been allowed or allowable “but for” the existence of one or more of the other conditions.

In response to the comments, the temporary regulations revise the “foreign tax benefit” condition to provide that the credit, deduction, loss, exemption, exclusion or other tax benefit must correspond to 10 percent or more of the U.S. party's share (for U.S. tax purposes) of the foreign payment or 10 percent or more of the foreign tax base with respect to which the U.S. party's share of the foreign payment is imposed. The revisions are intended to clarify that a joint venture that does not involve any duplication of tax benefits is not covered by the temporary regulations. At the same time, the temporary regulations provide that the duplication need not be direct. For example, while the U.S. party generally seeks to claim foreign tax credits in the United States for foreign payments attributable to income of the SPV, the counterparty's foreign tax benefit may consist of tax-exempt income paid out of the SPV's income with respect to which foreign payments claimed as credits by the U.S. party were made and deductions or losses attributable to payments of corresponding amounts to the SPV or U.S. party. See Example 3 of § 1.901-2T(e)(5)(iv)(D).

The 2007 proposed regulations define a counterparty as a person (other than the SPV) that is unrelated to the U.S. party and that (i) directly or indirectly owns 10 percent or more of the equity of the SPV under the tax laws of a foreign country in which such person is subject to tax on the basis of place of management, place of incorporation or similar criterion or otherwise subject to a net basis foreign tax or (ii) acquires 20 percent or more of the assets of the SPV under the tax laws of a foreign country in which such person is subject to tax on the basis of place of management, place of incorporation or similar criterion or otherwise subject to a net basis foreign tax.

Commentators proposed that the counterparty factor be amended to include certain related parties. Commentators noted that structured transactions engaged in by related persons under common foreign ownership present the same tax policy concerns as transactions between unrelated persons. However, these same commentators noted that structured transactions engaged in by related parties that are under common U.S. ownership do not pose the same tax policy concerns because the reduction in foreign tax liability obtained by the U.S.-controlled foreign counterparty will result in a corresponding increase in U.S. taxes when the foreign counterparty repatriates its earnings to the United States. The IRS and Treasury Department agree with these comments. Consequently, the temporary regulations amend the definition of a counterparty to include related persons, but excluding cases where the U.S. party is a U.S. corporation or individual that owns (directly or indirectly) at least 80 percent of the value of the potential counterparty and cases where at least 80 percent of the value of the U.S. party and the potential counterparty are owned (directly or indirectly) by the same U.S. corporation or individual.

Several commentators also suggested that the requirement that the counterparty own at least 10 percent (directly or indirectly) of the equity of the SPV or acquire at least 20 percent of the assets of the SPV should be revised. Some commentators proposed these thresholds be increased to 50 percent. Other commentators proposed that the ownership of all foreign parties deriving a foreign tax benefit should be aggregated to determine whether the thresholds are met. The IRS and Treasury Department agree that the regulatory conditions should be revised to better reflect that the counterparty is entitled to more than a nominal foreign tax benefit. Accordingly, the temporary regulations eliminate the percentage ownership thresholds from the counterparty definition, and modify the definition of a foreign tax benefit in § 1.901-2T(e)(5)(iv)(B)( 4 ), as described in section D of this preamble.

The sixth condition in the 2007 proposed regulations is that the U.S. and an applicable foreign country treat the arrangement differently under their respective tax systems. For this purpose, an applicable foreign country is any foreign country in which either the counterparty, a person related to the counterparty or the SPV is subject to net basis tax. To provide clarity and limit the scope of this factor, the 2007 proposed regulations provide that the arrangement must be subject to one of four specified types of inconsistent treatment. Specifically, the U.S. and the foreign country (or countries) must treat one or more of the following aspects of the arrangement differently, and the U.S. treatment of the inconsistent aspect must materially affect the amount of foreign tax credits claimed, or the amount of income recognized, by the U.S. party to the arrangement: (i) The classification of an entity as a corporation or other entity subject to an entity-level tax, a partnership or other flow-through entity or an entity that is disregarded for tax purposes; (ii) the characterization as debt, equity or an instrument that is disregarded for tax purposes of an instrument issued in the transaction; (iii) the proportion of the equity of the SPV (or an entity that directly or indirectly owns the SPV) that is considered to be owned directly or indirectly by the U.S. party and the counterparty; or (iv) the amount of taxable income of the SPV for one or more tax years during which the arrangement is in effect.

Commentators recommended that this condition be clarified so that the U.S. treatment of the inconsistent aspect must materially increase the amount of the U.S. party's foreign tax credits or materially decrease the U.S. party's income for U.S. tax purposes. The temporary regulations reflect this clarification. In addition, commentators requested that this factor be limited to instances when the inconsistent treatment is reasonably expected to result in a permanent difference in the U.S. party's income or foreign tax credits. The IRS and Treasury Department believe that the revisions to the foreign tax benefit condition described in Section D of this preamble are sufficient to establish the appropriate linkage between the inconsistent U.S. and foreign law treatment and the duplicative tax benefits. Accordingly, the temporary regulations retain the inconsistent treatment factor without further changes.

One commentator also recommended that the inconsistent treatment condition be narrowed to instances where the inconsistent treatment under U.S. and foreign law related to definitions of ownership and the amount of the SPV's taxable income. The IRS and Treasury Department have not adopted this recommendation because it would cause certain types of abusive arrangements to fall outside the scope of the regulations and because differences in entity classification are features common to structured passive investment arrangements.

Commentators also made suggestions that did not relate to any single factor. For example, commentators also requested clarification that the foreign payments treated as noncompulsory amounts under the regulation may be deductible payments under sections 162 and 212 and reduce a foreign corporation's earnings and profits for purposes of subpart F. The IRS and Treasury Department believe that providing guidance regarding sections 162, 212, and 964 is beyond the scope of this regulation project. The usual rules for determining the deductibility of a payment and determining the earnings and profits of a foreign corporation for subpart F purposes apply.

In addition, commentators requested that foreign payments attributable to a structured passive investment arrangement be excluded from the scope of the regulations if the arrangement has a valid business purpose. Other commentators suggested that the regulations adopt a broad anti-abuse rule that would deny a foreign tax credit in any case where allowance of the credit would be inconsistent with the purpose of the foreign tax credit regime. The IRS and Treasury Department are concerned that these approaches would create uncertainty for both taxpayers and the IRS. The IRS and Treasury Department have concluded that, at this time, a targeted rule denying foreign tax credits in arrangements described in the temporary regulations is more appropriate.

In response to comments, the temporary regulations include more examples illustrating additional variations of the structured passive investment arrangements that are covered by the regulations. For example, new Example 3 illustrates a U.S. borrower transaction in which a foreign lender acquires assets instead of an equity interest in the SPV and new Example 10 illustrates a joint venture in which the counterparty's foreign tax benefits do not correspond to the U.S. party's share of the base with respect to which the foreign payment is imposed. Modifications to examples in the 2007 proposed regulations were also necessary to reflect comments received and other changes to the regulations.

The 2007 proposed regulations were proposed to be effective for foreign taxes paid or accrued during taxable years of the taxpayer ending on or after the date on which the final regulations are published in the Federal Register . A commentator observed that the final regulations would potentially be retroactively effective because the regulations would apply, for example, to calendar year taxpayers as of January 1 of the year in which the final regulations are published in the Federal Register and to taxpayers that participated in structured passive investment arrangements involving entities with taxable years that differ from the U.S. taxpayers' taxable years. Commentators also requested clarification of whether the relevant taxable year for purposes of the effective date is the taxable year of the SPV in which it pays or accrues the purported foreign taxes, or the taxable year of the U.S. taxpayer in which it claims a credit. For example, commentators observed that if the taxable year of the U.S. taxpayer in which it claims a credit is the relevant taxable year, the final regulations would apply to U.S. shareholders of controlled foreign corporations where the shareholder claims a deemed paid credit under section 902 with respect to foreign taxes paid by the foreign corporation in years prior to the effective date of the regulations. These commentators recommended that the regulations provide that the relevant taxable year is the SPV's taxable year. Commentators also recommended that the final regulations apply only to foreign taxes paid or accrued in taxable years beginning after the date the final regulations are published, or only to foreign taxes paid or accrued with respect to income accrued after the date the final regulations are published.

The IRS and Treasury Department have not adopted the recommendation to delay the effective date of these regulations to apply only in tax years beginning after the regulations are published. The IRS and Treasury Department generally believe the regulations should apply to disallow credits for foreign payments that would otherwise be eligible to be claimed as credits in taxable years ending after the regulations are published. The IRS and Treasury Department agree, however, that the regulations should not apply to foreign taxes paid or accrued by a foreign corporation in a U.S. taxable year of the foreign corporation ending prior to the effective date of the regulations, provided that such year ends prior to the first taxable year of the domestic corporate shareholder for which these regulations are first applicable.

Accordingly, the effective date for these regulations is July 16, 2008. The regulations generally apply to foreign payments that, if they were an amount of tax paid, would be considered paid or accrued by a U.S. or foreign entity in taxable years ending on or after July 16, 2008. In the case of foreign payments by a foreign corporation that has a domestic corporate shareholder, the regulations also apply to such payments that would be considered paid or accrued in the foreign corporation's U.S. taxable years ending with or within taxable years of its domestic corporate shareholder ending on or after July 16, 2008. Finally, in the case of foreign payments by a partnership, trust or estate for which any partner or beneficiary would otherwise be eligible to claim a foreign tax credit, the regulations also apply to payments that would be considered paid or accrued in taxable years ending with or within taxable years of such partners or beneficiaries ending on or after July 16, 2008.

No inference is intended regarding the U.S. tax consequences of structured passive investment arrangements prior to the effective date of the regulations.

For periods after the effective date of the temporary regulations, the IRS and Treasury Department will continue to scrutinize other arrangements that are not covered by the regulations but are inconsistent with the purpose of the foreign tax credit. Such arrangements may include arrangements that are similar to arrangements described in the temporary regulations, but that do not meet all of the conditions included in the temporary regulations. The IRS will continue to challenge the claimed U.S. tax results in appropriate cases. In addition, the IRS and Treasury Department may issue additional regulations in the future in order to address such other arrangements.

The temporary regulations also amend § 1.901-1(a) and (b) to reflect statutory changes made by the Foreign Investors Tax Act of 1966 (Pub. L. 89-809 (80 Stat. 1539), section 106(b)), the Tax Reform Act of 1976 (Pub. L. 94-455 (90 Stat. 1520), section 1901(a)(114)), and the American Jobs Creation Act of 2004 (Pub. L. 108-357 (118 Stat. 1418-20), section 405(b)).

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. For applicability of the Regulatory Flexibility Act, please refer to the cross-referenced notice of proposed rulemaking published elsewhere in this issue of the Federal Register . Pursuant to section 7805(f) of the Internal Revenue Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small businesses.

The principal author of these regulations is Michael I. Gilman, Office of Associate Chief Counsel (International). However, other personnel from the IRS and the Treasury Department participated in their development.

Background

The final and temporary regulations that are the subjects of this document are under section 7216 of the Internal Revenue Code.

As published, final and temporary regulations (TD 9409) contain an error that may prove to be misleading and is in need of clarification.

The final regulations that are the subjects of this document are under sections 6343 and 7425 of the Internal Revenue Code.

As published, final regulations (TD 9410) contain an error that may prove to be misleading and is in need of clarification.

On May 22, 2006, the Department of Homeland Security (DHS) through the United States Coast Guard (Coast Guard) and the Transportation Security Administration (TSA) published a joint notice of proposed rulemaking entitled “Transportation Worker Identification Credential (TWIC) Implementation in the Maritime Sector; Hazardous Materials Endorsement for a Commercial Driver's License” in the Federal Register (71 FR 29396). This was followed by a 45-day comment period and four public meetings. The Coast Guard and TSA issued a joint final rule, under the same title, on January 25, 2007 (72 FR 3492) (hereinafter referred to as the original TWIC final rule). The preamble to that final rule contains a discussion of all the comments received on the NPRM, as well as a discussion of the provisions found in the original TWIC final rule, which became effective on March 26, 2007.

On May 7, 2008, the Coast Guard and TSA issued a final rule to realign the compliance date for implementation of the Transportation Worker Identification Credential. 73 FR 25562. The date by which mariners need to obtain a TWIC, and by which owners and operators of vessels, facilities, and outer continental shelf facilities, who have not otherwise been required to implement access control procedures utilizing TWIC, must implement those procedures, is now April 15, 2009 instead of September 25, 2008. Owners and operators of facilities that must comply with 33 CFR part 105 will still be subject to earlier, rolling compliance dates, as laid out in 33 CFR 105.115(e).

The Coast Guard will continue to announce rolling compliance dates, as laid out in 33 CFR 105.115(e), at least 90 days in advance via notices published in the Federal Register . The final compliance date for all COTP Zones will not be later than April 15, 2009.

Title 33 CFR 105.115(e) currently states that “[f]acility owners and operators must be operating in accordance with the TWIC provisions in this part by the date set by the Coast Guard in a Notice to be published in the Federal Register .” Through this Notice, the Coast Guard informs the owners and operators of facilities subject to 33 CFR 105.115(e) located within COTP Zones Cape Fear River, Corpus Christi, North Carolina, and Port Arthur that the deadline for their compliance with Coast Guard and TSA TWIC requirements is November 28, 2008.

The TSA and Coast Guard have determined that this date provides sufficient time for the estimated population required to obtain TWICs for these COTP Zones to enroll and for TSA to complete the necessary security threat assessments for those enrollment applications. We strongly encourage persons requiring unescorted access to facilities regulated by 33 CFR part 105 and located in one of these COTP Zones to enroll for their TWIC as soon as possible, if they haven't already. Information on enrollment procedures, as well as a link to the pre-enrollment Web site (which will also enable an applicant to make an appointment for enrollment), may be found at https://twicprogram.tsa.dhs.gov/TWICWebApp/ .

You may also visit our Web site at homeport.uscg.mil/twic for a framework showing expected future compliance dates by COTP Zone. This list is subject to change; changes in expected future compliance dates will appear on that Web site. The exact compliance date for COTP Zones will also be announced in the Federal Register at least 90 days in advance.

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when an agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because the permit application was not received in time to publish a NPRM followed by a final rule before the effective date.

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 . Delaying this rule would be contrary to the public interest of ensuring the safety of spectators and vessels during this event and immediate action is necessary to prevent possible loss of life or property.

This temporary safety zone is necessary to ensure the safety of vessels and spectators from hazards associated with a fireworks display. Based on accidents that have occurred in other Captain of the Port zones, and the explosive hazards of fireworks, the Captain of the Port Sault Ste. Marie has determined that fireworks launches proximate to watercraft pose significant risk to public safety and property. The likely combination of large numbers of recreation vessels, congested waterways, darkness punctuated by bright flashes of light, alcohol use, and debris falling into the water could easily result in serious injuries or fatalities. Establishing a safety zone to control vessel movement around the location of the launch platform will help ensure the safety of persons and property at these events and help minimize the associated risks.

A temporary safety zone is necessary to ensure the safety of spectators and vessels during the setup, loading and launching of a fireworks display in conjunction with the Mackinac Bridge Birthday Fireworks display. The fireworks display will occur between 9 p.m. and 11:59 p.m. on July 26, 2008.

The safety zone for the fireworks will encompass all waters of Lake Huron within a 500-foot radius from the fireworks launch site in East Moran Bay, with its center in position: 45°52.25′ N, 084°43.20′ W [DATUM: NAD 83].

All persons and vessels shall comply with the instructions of the Coast Guard Captain of the Port or the designated on-scene representative. Entry into, transiting, or anchoring within the safety zone is prohibited unless authorized by the Captain of the Port Sector Sault Ste. Marie, or his on-scene representative. The Captain of the Port or his on-scene representative may be contacted via VHF Channel 16.

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.

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.

This determination is based on the minimal time that vessels will be restricted from the zone and the zone is an area where the Coast Guard expects insignificant adverse impact to mariners from the zone's activation.

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 will affect the following entities, some of which may be small entities: The owners and operators of vessels intending to transit or anchor in a portion of Lake Huron off St. Ignace, Michigan between 9 p.m. and 11:59 p.m. on July 26, 2008.

This safety zone 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 fewer than three hours for one event. Vessel traffic can safely pass outside the safety zone during the event. In the event that this temporary safety zone affects shipping, commercial vessels may request permission from the Captain of the Port Sault Ste. Marie to transit through the safety zone. The Coast Guard will give notice to the public via a Broadcast to Mariners that the regulation is in effect.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about 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 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 would not result in such 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 concern an environmental risk to health or risk to 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 encouraged 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 procedure; and related management system practices) that are developed or adopted by voluntary consensus standards bodies.

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

We have analyzed this rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded, based on the Instruction, 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. This event establishes a safety zone therefore paragraph (34)(g) of the Instruction applies.

A final environmental analysis check list and categorical exclusion determination are available in the docket where indicated under ADDRESSES .

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when an agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because the permit application was not received in time to publish a NPRM followed by a final rule before the effective date.

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 . Delaying this rule would be contrary to the public interest of ensuring the safety of spectators and vessels during this event and immediate action is necessary to prevent possible loss of life or property.

This temporary safety zone is necessary to ensure the safety of vessels and spectators from hazards associated with a fireworks display. Based on accidents that have occurred in other Captain of the Port zones, and the explosive hazards of fireworks, the Captain of the Port Sault Ste. Marie has determined that fireworks launches proximate to watercraft pose significant risk to public safety and property. The likely combination of large numbers of recreation vessels, congested waterways, darkness punctuated by bright flashes of light, alcohol use, and debris falling into the water could easily result in serious injuries or fatalities. Establishing a safety zone to control vessel movement around the location of the launch platform will help ensure the safety of persons and property at these events and help minimize the associated risks.

A temporary safety zone is necessary to ensure the safety of spectators and vessels during the setup, loading and launching of a fireworks display in conjunction with the 100th Anniversary Chicago to Mackinac Race fireworks display. The fireworks display will occur between 9 p.m. and 11:59 p.m. on July 22, 2008.

The safety zone for the fireworks will encompass all waters of Lake Huron within a 600-foot radius from the fireworks launch site off of Bindle Point, with its center in position 45°50.57′ N, 084°37.54′ W [DATUM: NAD 83].

All persons and vessels shall comply with the instructions of the Coast Guard Captain of the Port or the designated on-scene representative. Entry into, transiting, or anchoring within the safety zone is prohibited unless authorized by the Captain of the Port Sector Sault Ste. Marie, or his on-scene representative. The Captain of the Port or his on-scene representative may be contacted via VHF Channel 16.

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.

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.

This determination is based on the minimal time that vessels will be restricted from the zone and the zone is an area where the Coast Guard expects insignificant adverse impact to mariners from the zone's activation.

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 will affect the following entities, some of which may be small entities: The owners and operators of vessels intending to transit or anchor in a portion of Lake Huron off Mackinac Island, Michigan between 9 p.m. and 11:59 p.m. on July 22, 2008.

This safety zone 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 fewer than three hours for one event. Vessel traffic can safely pass outside the safety zone during the event. In the event that this temporary safety zone affects shipping, commercial vessels may request permission from the Captain of the Port Sault Ste. Marie to transit through the safety zone. The Coast Guard will give notice to the public via a Broadcast to Mariners that the regulation is in effect.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about 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 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 would not result in such 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 concern an environmental risk to health or risk to 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 procedure; and related management system practices) that are developed or adopted by voluntary consensus standards bodies.

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

We have analyzed this rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded, based on the Instruction, 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. This event establishes a safety zone; therefore paragraph (34)(g) of the Instruction applies.

A final environmental analysis check list and categorical exclusion determination are available in the docket where indicated under ADDRESSES .

The Board is an administrative body within VA that decides appeals from denials by Agencies of Original Jurisdiction (AOJ) of claims for veterans' benefits, as well as a limited class of cases of original jurisdiction. The Board is under the administrative control and supervision of a Chairman who is directly responsible to the Secretary of Veterans Affairs. 38 U.S.C. 7101(a).

On March 26, 2007, VA published in the Federal Register (72 FR 14056) a Notice of Proposed Rulemaking (NPRM) that proposed to reduce the time limit for filing a response to a Supplemental Statement of the Case from 60 days to 30 days. Interested persons were invited to submit written comments on or before May 25, 2007.

Eight comments were received, all of which disagreed with the proposed rule for reasons summarized below. At least three commenters argued that 30 days was simply not enough time to respond to a Supplemental Statement of the Case. Those commenters also questioned the purpose of the time reduction, arguing that this action would not serve the stated purpose of expediting appeals adjudication. One commenter indicated that the proposed rule would add further confusion regarding the various time periods within which claimants must respond to VA documents. Another commenter expressed concern that the proposed rule did not consider individuals who have appeals pending and yet reside outside of the United States. Two commenters expressed concern over the process of requesting an extension for filing a response to a Supplemental Statement of the Case. Finally, several commenters provided general suggestions for improving the VA adjudication system.

A recurring theme among the comments received was that 30 days was simply not enough time to prepare a response to a Supplemental Statement of the Case. One commenter noted that many veterans are represented by veterans service organizations that are overworked and understaffed, which results in veterans having to wait 3 to 4 weeks just to get an appointment with their representative. Thus, the commenter concluded, 30 days would be an insufficient amount of time in which to prepare a response. The commenter also suggested that VA was implementing this time reduction in hopes of receiving fewer responses to Supplemental Statements of the Case. A second commenter noted that if additional medical evidence, such as a rebuttal medical opinion, was required to respond to evidence outlined in the Supplemental Statement of the Case, a 30-day response period leaves little time to obtain such evidence. Yet another commenter remarked that Supplemental Statements of the Case often contain only a brief description of the evidence added to the record, thus, requiring claimants to request complete copies of such evidence from the AOJ in order to prepare a response. The commenter argued that this process alone can take more than 30 days.

Although VA recognizes and appreciates the concerns expressed by these commenters, we believe that the 30-day response time offered under the proposed rule does in fact afford appellants a reasonable opportunity to meaningfully respond to a Supplemental Statement of the Case, and we decline to make any changes to the response time outlined in the proposed rule based on these comments. As explained in the NPRM, Supplemental Statements of the Case are issued at a late stage in the appellate process, often the last formal step prior to certification of an appeal to the Board. By that stage in the appeal period, appellants have already had extensive opportunity to gather evidence, including supportive medical opinions, for submission to the AOJ. Unlike a Statement of the Case, which must contain specific information about the evidence and issues in the case, the applicable laws and regulations, and the reasons for each determination, a Supplemental Statement of the Case is not required to contain the same degree of detail. As its name implies, a Supplemental Statement of the Case is a supplement to the Statement of the Case. The purpose of this document is to inform the appellant of any material changes in, or additions to, the information included in the Statement of the Case or any prior Supplemental Statement of the Case. 38 CFR 19.31(a). In no case will a Supplemental Statement of the Case be used to announce AOJ decisions on issues that were not previously addressed in a Statement of the Case. 38 CFR 19.31(a). Therefore, due to the limited purpose of a Supplemental Statement of the Case, less time should be needed to respond to a Supplemental Statement of the Case as compared to the Statement of the Case. Significantly, a response to a Supplemental Statement of the Case is optional and generally is not required to perfect an appeal. 38 CFR 20.302(c).

To the extent that certain cases involve a degree of medical or legal complexity so as to require additional time to craft an appropriate response to a Supplemental Statement of the Case, appellants can easily request an extension of the 30-day period for responding to a Supplemental Statement of the Case under the provisions of 38 CFR 20.303. Section 20.303 provides that an extension of the period for filing a response to a Supplemental Statement of the Case may be granted for good cause. Although good cause is not specifically defined by that regulation, it seems logical that a request for an extension on the basis that additional medical evidence was being sought would indeed be good cause for such an extension. Moreover, in response to one commenter's concern that the extension request may not be granted, the rule provides that a denial of a request for extension is appealable to the Board. 38 CFR 20.303.

We will, however, make one minor revision to the extension provisions of 38 CFR 20.303 to ensure that they have broad applicability. Currently, § 20.303 allows for an extension of the period to respond to a Supplemental Statement of the Case based on good cause only when a response to the Supplemental Statement of the Case “is required.” As noted above, however, in the vast majority of cases, a response to a Supplemental Statement of the Case is merely optional and is not mandatory to perfect an appeal. 38 CFR 20.302(c). A response to a Supplemental Statement of the Case is only “required” when a Substantive Appeal has not been submitted and the statutory period to file the same has not expired. Id. Because Supplemental Statements of the Case are typically issued after a Substantive Appeal has been filed, a response is rarely needed to perfect the appeal. Thus, as currently written, the extension request provisions of § 20.303 have narrow applicability in that they only apply in the rare case where a Substantive Appeal has not been filed and a response to a Supplemental Statement of the Case is required to perfect an appeal.

To ensure that all appellants are able to request an extension of the period to respond to a Supplemental Statement of the Case based on good cause, regardless of whether such response is required to perfect the appeal, we will delete the phrase “when such a response is required” from the first sentence of 38 CFR 20.303. This minor revision will ensure that all appellants will have a mechanism to request an extension, regardless of the procedural posture of their cases.

Even in the absence of an approved extension request, the appellant still has an additional opportunity to submit evidence and argument in his or her appeal. As noted in the NRPM, in addition to the 30-day period to respond to the Supplemental Statement of the Case, once an appeal has been certified and transferred to the Board, the appellant typically still has 90 days to submit further evidence. 38 CFR 20.1304(a). Although 38 CFR 20.1304(a) states that the appellant has 90 days or until the Board promulgates a decision to submit evidence, as a practical matter, with the exception of a limited class of cases, such as cases advanced on the Board's docket pursuant to 38 U.S.C. 7107(a)(2), the Board generally does not decide cases until after the 90-day period has passed. This effectively provides the vast majority of appellants with the full 90 days to submit additional evidence. Moreover, under 38 CFR 20.1304(b), even after the 90-day period expires an appellant may still move to submit additional evidence if he or she can demonstrate good cause for the delayed submission.

One commenter expressed concern that the aforementioned extension procedure imposes an “additional burden” upon appellants to request an extension of time and show good cause, which “suggests hostility toward their claims and is inconsistent with the notion of a veteran-friendly VA system.” VA respectfully disagrees with this comment for several reasons. First, the commenter is presupposing that this rulemaking will have adverse effects for veterans and other claimants seeking veterans' benefits. On the contrary, we believe that this rulemaking will add efficiency to the appeals process and lessen the time needed at the AOJ level to resolve appeals. Currently, due in part to the fact that a response to a Supplemental Statement of the Case is usually optional, many appellants choose not to file a response. However, VA must wait until the current 60-day time period expires before taking any further action in the appeal. Although a waiver form is sometimes used to ask appellants if they wish to waive this 60-day period, responses are not always received to that request. Therefore, the result is cases that sit without any action, simply waiting for a regulatory time period to expire. By shortening the turn-around time provided for a response to a Supplemental Statement of the Case, appeals can be certified and transferred to the Board sooner, thereby allowing that tribunal to adjudicate the claim sooner than if the claims file was allowed to linger at the AOJ for an additional 30 days.

VA emphasizes that the purpose of this rulemaking is not to saddle appellants with an additional obligation to make extension requests, but rather to streamline the appeals process for the vast majority of appellants who either need little time to formulate a response to a Supplemental Statement of the Case or who wish to submit no response at all.

In response to the criticism that this reduced time period will not serve the stated purpose of expediting appeals or that VA is taking this action in the hopes that few responses will be received, that is simply not true. The VA claims and adjudication process has grown tremendously over the years both regarding the volume of claims and appeals, and the legal and medical complexity of the cases. Along with this high volume has come an increased appeals resolution time. VA is closely examining its systems to determine where time can be reduced. Although this 30-day reduction may be small in the scheme of the average appeal, it is an initial step in the right direction. Reducing unnecessary wait times encourages efficiency and promotes case movement. There is no adverse effect on the appellant, as a process exists for requesting an extension, if one is desired. That extension request is itself an appealable issue, thus ensuring legal protection of the appellant's right to respond to a Supplemental Statement of the Case.

While an extension request may be needed in more complex cases or where extenuating circumstances are present, such cases constitute a relatively small percentage of the overall number of appeals in the VA system. We do not believe that requiring appellants to request an extension in these cases represents an overly burdensome task. The extension procedure is already an integral part of 38 CFR 20.303. This rulemaking merely reduces to 30 days, as opposed to 60, the period during which the extension request must be made. It also liberalizes the extension request procedure by allowing all appellants to make an extension request, regardless of whether a response to the Supplemental Statement of the Case is required to perfect the appeal. As outlined above, at the Supplemental Statement of the Case stage, the appellant has already been afforded ample opportunity to submit evidence and argument in support of his or her claim. In the relatively small number of cases where a 30-day response period may be inadequate to respond to the Supplemental Statement of the Case, an extension request provides an uncomplicated means to allow for the submission of additional evidence and argument. Again, should the AOJ deny such request, that denial is itself appealable to the Board. Moreover, as noted above, there is still generally a minimum period of 90 days for evidence submission after the appeal is certified and transferred to the Board. We therefore make no changes based on these comments.

Another commenter also expressed concern that a 30-day response time was inadequate for those individuals who have appeals pending but reside outside the United States. The commenter argued that a Supplemental Statement of the Case mailed to an address overseas presumably takes longer to be delivered than mail being delivered to an address close to the AOJ. While VA acknowledges that mail delivered to destinations at a distance from the AOJ may take longer to reach the intended recipient, we do not believe that such consideration warrants any change to the proposed rule. In fact, no other VA regulations pertaining to claims adjudication allow different time periods for overseas mailings. We do note, however, that while mailing to a distant destination may delay the appellant's actual receipt of the Supplemental Statement of the Case, it will not affect the timeliness of the response. The regulations currently provide that a response postmarked prior to the expiration of an applicable time limit will be accepted as having been timely filed. 38 CFR 20.305. In the event that the postmark is not of record, the postmark date will be presumed to be 5 days prior to the date of the receipt of the document by VA. Id. Thus, if a claimant's response to a Supplemental Statement of the Case is postmarked prior to the expiration of the 30-day period, it will be considered timely, even if the response is not received by VA within the 30-day period (including due to mailing delays). Accordingly, VA makes no change based on this comment.

As outlined above, Supplemental Statements of the Case are limited in scope and are issued for the sole purpose of informing the appellant of material changes in or additions to information found in the Statement of the Case or a prior Supplemental Statement of the Case. We again note that Supplemental Statements of the Case are issued well into the appeals process and after claimants have had adequate opportunity to submit or identify favorable evidence. Due to the limited purpose of a Supplemental Statement of the Case and its occurrence late in the appeals process, little time should be required to respond in most cases. Thus, most appellants should be able to timely respond even in situations where the Supplemental Statement of the Case is not immediately received by a claimant due to mailing delays. As with other cases, should 30 days prove insufficient, an extension may be granted where good cause is shown. In certain circumstances, good cause may include those situations where an appellant's response time is truncated due to mail delays.

Another commenter expressed concern that the change to a 30-day response period would “add further confusion regarding the time periods with which claimants must respond to VA documents.” We respectfully disagree. The revised period is not misleading or difficult to calculate. The 30-day response period established in this rulemaking is not inherently more confusing than the current 60-day period. Nor do we find confusing a 30-day period among other periods for responding to other documents. Response periods and filing deadlines are a necessary part of any regulatory system, including that governing the response to Supplemental Statements of the Case. While claimants and their representatives will need to adjust to a shortened time frame to craft a response to a Supplemental Statement of the Case, we believe that this change is quite straightforward in application. Therefore, we make no change based on this comment.

Finally, we acknowledge the comments containing general suggestions for improving the VA claims adjudication system. While VA welcomes any input regarding improvements in the system, these particular comments do not directly concern the subject of this rulemaking, and therefore, this document is not an appropriate venue to address such comments. Thus, VA makes no changes to the NPRM based on those comments.

Based on the rationale stated above, as well as the rationale outlined in the NPRM, the proposed rule is adopted with the minor change to 38 CFR 20.303 outlined above.

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

The Secretary hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. By reducing the period allowed for submitting an optional response to a Supplemental Statement of the Case to 30 days, this final rule will affect claimants for VA benefits who appeal to the Board. It may also affect a few small organizations appealing to the Board, including attorneys appealing the cancellation of their accreditation by the VA General Counsel and accredited attorneys appealing decisions affecting payment of their fees out of past-due benefits awarded to VA claimants. This final rule may also affect a few small governmental jurisdictions appealing to the Board, such as state agencies appealing VA decisions on per diem payments for services provided to veterans in state homes.

However, reducing the period permitted for submitting an optional response to a Supplemental Statement of the Case would not have a significant economic impact on a substantial number of these small entities. Rather, it will expedite the processing of their appeals to the Board. Therefore, pursuant to 5 U.S.C. 605(b), this final rule is exempt from the initial and final regulatory flexibility analysis requirement of 5 U.S.C. 603 and 604.

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

The economic, interagency, budgetary, legal, and policy implications of this final rule have been examined and it has been determined to be a significant regulatory action under Executive Order 12866.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in an expenditure by State, local, and tribal governments, in the aggregate, or by the private sector of $100 million or more (adjusted annually for inflation) in any 1 year. This final rule would have no such effect on State, local, and tribal governments, or on the private sector.

The Catalog of Federal Domestic Assistance program numbers and titles for this proposal are 64.100, Automobiles and Adaptive Equipment for Certain Disabled Veterans and Members of the Armed Forces; 64.101, Burial Expenses Allowance for Veterans; 64.102, Compensation for Service-Connected Deaths for Veterans' Dependents; 64.103, Life Insurance for Veterans; 64.104, Pension for Non-Service-Connected Disability for Veterans; 64.105, Pension to Veterans' Surviving Spouses, and Children; 64.106, Specially Adapted Housing for Disabled Veterans; 64.109, Veterans Compensation for Service-Connected Disability; 64.110, Veterans Dependency and Indemnity Compensation for Service-Connected Death; 64.114, Veterans Housing-Guaranteed and Insured Loans; 64.115, Veterans Information and Assistance; 64.116, Vocational Rehabilitation for Disabled Veterans; 64.117, Survivors and Dependents Educational Assistance; 64.118, Veterans Housing-Direct Loans for Certain Disabled Veterans; 64.119, Veterans Housing-Manufactured Home Loans; 64.120, Post-Vietnam Era Veterans' Educational Assistance; 64.124, All-Volunteer Force Educational Assistance; 64.125, Vocational and Educational Counseling for Servicemembers and Veterans; 64.126, Native American Veteran Direct Loan Program; 64.127, Monthly Allowance for Children of Vietnam Veterans Born with Spina Bifida; and 64.128, Vocational Training and Rehabilitation for Vietnam Veterans' Children with Spina Bifida or Other Covered Birth Defects.

Throughout this document whenever “we”, “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:

Illinois requested revisions to its ozone SIP which would add five compounds to the list of compounds exempt from VOC requirements because they are negligibly photochemicially reactive. Illinois uses the term “volatile organic matter” or “VOM” in place of VOC. The State requested the compounds 1,1,1,2,2,3,3-Heptafluoro-3-methoxypropane (“n-C 3 F 7 OCH 3 ”), 3-Ethoxy 1,1,1,2,3,4,4,5,5,6,6,6-dodecafluoro-2-(trifluoromethyl)hexane (“HFE-7500”), 1,1,1,2,3,3,3-Heptafluoropropane (“HFC-227ea”), Methyl formate, and tertiary-Butyl acetate (“t-butyl acetate”) be added to Title 35 of the Illinois Administrative Code (IAC) Section 211.7150(a), its list of compounds exempt from VOC requirements. Illinois also requested the addition of t-butyl acetate to the 35 IAC 211.7150(a) exemption list, with a separate provision that special requirements, 35 IAC 211.7150(e), apply to t-butyl acetate. T-butyl acetate is to be considered a VOC for recordkeeping, emissions reporting, modeling, and inventory requirements, but is not to be considered VOC for emission limits or content requirements.

On November 29, 2004, EPA added four compounds, n-C 3 F 7 OCH 3 , HFE-7500, HFC-227ea, and methyl formate, to its list of compounds exempt from VOC requirements, (69 FR 69290). On the same day, EPA also exempted t-butyl acetate from emission limitations and VOC content requirements, but continued in effect for that compound recordkeeping, emissions reporting, and inventory requirements, (69 FR 69298).

In its August 17, 2005, submission, Illinois requested that n-C 3 F 7 OCH 3 , HFE-7500, HFC-227ea, methyl formate, and t-butyl acetate be listed as compounds that are exempt from VOC requirements. The State's addition of the first four of these compounds to its list of exempt compounds can be approved, as EPA added them to its list of compounds exempt from VOC regulation on November 29, 2004. As to the fifth compound, t-butyl acetate, Illinois has limited the extent of its exemption from regulation (consistent with EPA's November 29, 2004 action), in its supplementary submission of January 29, 2008. In 35 IAC 211.7150(a), Illinois adds t-butyl acetate to the list of compounds exempt from VOC regulation. However, Illinois also specifically provides that t-butyl acetate will continue to be governed by recordkeeping, emissions reporting, and inventory requirements. Consequently, Illinois's rule revisions provide adequate notice to t-butyl acetate users that, while the compound is exempt from emission limitations and content requirements, it continues to be regulated by recordkeeping, emissions reporting and inventory requirements.

Volatile organic compounds are precursors to ozone formation. Complex photochemical reactions involving VOCs form tropospheric ozone.

Ozone decreases lung function, causing chest pain and coughing. It can aggravate asthma, reduce lung capacity, and increase risk of respiratory diseases like pneumonia and bronchitis. Children playing outside and healthy adults who work or exercise outside may also be harmed by elevated ozone levels. Ozone also reduces vegetation growth in economically important agricultural crops and wild plants.

EPA has determined that the five compounds make a negligible contribution to ozone formation. Thus, the compounds are no longer considered to be VOCs for emission control purposes, and the exemptions will not harm air quality. 1 In fact, if sources switch from the use of a VOC compound to one of the compounds that are no longer considered VOCs, ozone formation may be reduced.

EPA is approving VOC revisions to the Illinois SIP. Specifically, EPA is approving revisions to 35 IAC 211.7150(a) and (e). Illinois has added language to section 211.7150(a) that states that some compounds listed in that section must also follow the restrictions in section 211.7150(e). All five compounds are listed in section 211.7150(a), but the notation makes it clear that t-butyl acetate users must follow the special recordkeeping, emissions reporting, modeling, and inventory requirement restrictions from section 211.7150(e).

Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 15, 2008. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

For the purpose of this document, we are giving meaning to certain words or initials as follows:

(i) The words or initials Act or CAA mean or refer to the Clean Air Act, unless the context indicates otherwise.

(ii) The words EPA , we , us or our mean or refer to the United States Environmental Protection Agency.

(iii) The initials SIP mean or refer to State Implementation Plan.

(iv) The words State or Wyoming mean the State of Wyoming unless the context indicates otherwise.

EPA is taking final action to approve revisions to the State of Wyoming SIP regarding the Wyoming PSD program. On April 1, 2008 (73 FR 17289), EPA published an action of proposed rulemaking to approve Wyoming's revisions to their Prevention of Significant Deterioration regulations, Chapter 6, Section 4 of the Wyoming Air Quality Standards and Regulations (WAQS&R). The formal SIP revision was submitted to EPA by the State of Wyoming on December 13, 2006. EPA's proposed rule action published April 1, 2008 (73 FR 17289) provides more detailed information about the Wyoming SIP revisions being approved today. The public comment period for the proposed action ended on May 1, 2008. No comments, adverse or otherwise, were received on EPA's proposed action.

On December 31, 2002, EPA published revisions to the Federal PSD and non-attainment NSR regulations in 40 Code of Federal Regulations (CFR) Parts 51 and 52 (67 FR 80186). This action was reconsidered with minor changes on November 7, 2003 (68 FR 63021). Collectively, these two final actions are referred to as the “NSR Reform” regulations and became effective nationally in areas not covered by a SIP on March 3, 2003. These regulatory revisions included provisions for baseline emissions determinations, actual-to-future-actual methodology, plantwide applicability limits (PALs), Clean Units, and Pollution Control Projects (PCPs). As stated in the December 31, 2002 rulemaking, State and local permitting agencies must adopt and submit revisions to their part 51 permitting programs implementing the minimum program elements (67 FR 80240). With the December 13, 2006 submittal, Wyoming requested approval of program revisions into the State SIP that satisfy this requirement.

In the November 7, 2003 reconsideration noted earlier, EPA clarified two provisions in the regulations by including a definition of “replacement unit” and by clarifying that the PALs baseline calculation procedures for newly constructed units do not apply to modified units (68 FR 63021).

On October 27, 2003 EPA published a rulemaking action related to, but not part of, the 2002 NSR Reform. EPA published the Routine Equipment Replacement Provision (ERP) amendments (68 FR 61248) which specified at 40 CFR 51.166(b)(2)(iii)(a) the criteria for the routine replacement of equipment.

On December 24, 2003, the United States Court of Appeals for the District of Columbia Circuit, on challenges to the October 27, 2003 EPA rulemaking, stayed EPA's final Routine Equipment Replacement Provision, State of New York v. EPA, No. 03-1380. On March 17, 2006, the same Court vacated these provisions. On June 24, 2005, the same Appeals Court issued a ruling on challenges to the December 2002 NSR Reform revisions, State of New York et al. v. EPA, 413 F.3d 3 (D.C. Cir. 2005). Although the Court upheld most of EPA's rules, it vacated both the Clean Unit (CU) and the PCP provisions and remanded back to EPA the recordkeeping provisions at 40 CFR 52.21(r)(6) that required a stationary source to keep records of projects when there was a “reasonable possibility” that the project could result in a significant emissions increase.

EPA brought its NSR Reform regulations in conformity with the Court's June 24, 2005 ruling in final rulemakings published on June 13 and December 21, 2007 (72 FR 32526, 72 FR 32526). In these actions, EPA removed from the Code of Federal Regulations (CFR) the PCP and CU provisions contained in sections 40 CFR 51.165, 51.166, and 52.21(72 FR 32526), and identified the criteria triggering the “reasonable possibility” recordkeeping and reporting standard (72 FR 72607).

The revised Chapter 6, Section 4 of the WAQS&R submitted to EPA on December 13, 2006, consistent with the Court rulings noted above, does not include the vacated Clean Unit, PCP, and ERP provisions. As for the “reasonable possibility” phrase, the Wyoming revised PSD provisions included recordkeeping requirements omitting the “reasonable possibility” language objected to by the Court. This omission makes the Wyoming recordkeeping requirements, set at Chapter 6, Section 4(b)(i)(H)(I), more stringent than the equivalent EPA provisions in the 2002 NSR Reform rules, and therefore approvable. To make the State NSR SIP provisions we are approving consistent with the EPA December 21, 2007 rulemaking on the “reasonable possibility” recordkeeping and reporting standard (72 FR 72607), the State of Wyoming needs to submit a notice to EPA within 3 years to acknowledge that their regulations fulfill these requirements.

The Wyoming PSD revisions do not address the definition of “replacement unit” approved by EPA in the November 7, 2003 reconsideration of the 2002 NSR Reform. This omission was based on the State's understanding that the NSR Reform Rules contained “replacement unit” references only within the PCPs and CU provisions that Wyoming, as noted above, has not adopted. As the State realized that both its revised and its EPA-approved NSR SIPs include a reference to “replacement unit” in their definition of “Net emission increase” at Chapter 6, Section 4(a)(viii), the State addressed this issue to the satisfaction of EPA. In an exchange of e-mails with EPA on August 13 and September 5, 2007 (included as part of the docket for this action), the State of Wyoming indicated its agreement with EPA's interpretation of the definition of “replacement unit” detailed in the EPA “Technical Support Document (TSD) for the Prevention of Significant Deterioration (PSD) and Nonattainment Area New Source Review (NSR): Reconsideration.” As a result, EPA concluded that the omission of this definition from Chapter 6, Section 4 of Wyoming regulations is approvable, but also recommends that the State of Wyoming make these provisions formally consistent with the Federal language by adopting the definition of “replacement unit” in a future rulemaking.

EPA is taking final action to approve Wyoming's revisions to their Wyoming Air Quality Standards and Regulations, Chapter 6, Section 4, Prevention of Significant Deterioration, submitted to EPA by the State of Wyoming on December 13, 2006. These revisions to Chapter 6, Section 4 were adopted by the Wyoming Environmental Quality Council (EQC) on July 27, 2006, effective October 6, 2006, and supersede and replace the EPA-approved Chapter 6, Section 4 of the WAQS&R rules.

Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 15, 2008. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

EPA is approving a revision to the New Jersey Department of Environmental Protection's (New Jersey's) ozone State Implementation Plan (SIP) submitted on August 7, 2007. This SIP revision relates to New Jersey's NO X RACT determination for the Trigen-Trenton Energy Co. L.P. (Trigen) facility located in Trenton, Mercer County. The facility contains two stationary reciprocating internal combustion engines vented through a common stack. The reader is referred to the proposed rulemaking on this action (March 6, 2008, 73 FR 12041) for additional details.

No comments were received.

EPA has determined that New Jersey's SIP revision for New Jersey's NO X RACT determination for Trigen's internal combustion engines is consistent with New Jersey's RACT regulation and EPA's guidance. EPA has determined that the NO X emission limits identified in New Jersey's Conditions of Approval document represent RACT for Trigen's internal combustion engines. More specifically, EPA approves New Jersey's Conditions of Approval document which includes an alternative emissions limit for Trigen's engines while operating on dual fuel and low sulfur distillate oil. While burning dual fuel, Trigen's engines will comply with the NO X RACT limit of 2.3 g/bhp-hr. Under conditions specified for burning low sulfur distillate oil, emissions of NO X from the engines shall not exceed 12 g/bhp-hr. The use of low sulfur distillate oil is limited to 200 hours per year per engine during startup, shutdown, injector cleanout, major component break-in and during emergencies. Trigen is also limited to using low sulfur distillate oil for only one engine at any time, excluding times of natural gas curtailment or emergency. As a point of clarification, EPA's approval of the alternative emission limit applies only to Trigen's internal combustion engines and does not include boilers as stated in the proposed rule.

Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 15, 2008. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Throughout this document, “we,” “us” and “our” refer to EPA.

Table 1 lists the rules we are approving with the dates that they were adopted by the local air agencies and submitted by the California Air Resources Board.

On July 23, 2007, the submittal of MDAQMD Rule 1106 was found to meet the completeness criteria in 40 CFR Part 51 Appendix V, which must be met before formal EPA review. On October 24, 2006, the submittal of VCAPCD Rule 74.30 was found to meet the completeness criteria in 40 CFR Part 51 Appendix V, which must be met before formal EPA review.

There is no previous version of Rule 1106 in the MDAQMD SIP, although the MDAQMD adopted an earlier version of this rule on August 28, 2006, and CARB submitted it to us on May 8, 2007. While we can act on only the most recently submitted version, we have reviewed materials provided with previous submittals. A version of SCAQMD Rule 1106 adopted on November 4, 1988 and amended on August 2, 1991, was approved into the SIP on July 14, 1995 (60 FR 36227) and is federally enforceable for portions of the area now regulated by MDAQMD.

A version of VCAPCD Rule 74.30 was approved into the SIP on October 25, 2005 (70 FR 61561).

Section 110(a) of the CAA requires States to submit regulations that control volatile organic compounds, nitrogen oxides, particulate matter, and other air pollutants which harm human health and the environment. These rules were developed as part of local air districts' programs to control these pollutants.

MDAQMD Rule 1106 reduces VOC emissions from marine coatings operations. The provisions of this rule apply to all marine coating operations of both commercial boats and ships, pleasure craft and their appurtenances, and to coating of buoy and oil drilling rigs, or their parts and components intended for the marine environment.

VCAPCD Rule 74.30 revisions involve a reduction in reactive organic compound (ROC) content for surface preparation and cleanup material. Currently, the effective date of the revisions are 90 days from the date of adoption. The revisions are required because, under the provisions of Health and Safety Code Section 40914(b)(2), staff is required to demonstrate that the District's plan to attain the California ambient ozone standard provides for expeditious implementation of `every feasible measure' to reduce ozone precursor emission (including ROC). In addition, revisions include the removal of obsolete language and the rewording of certain subsections for clarity. EPA's technical support documents (TSD) have more information about these rules.

Generally, SIP rules must be enforceable (see section 110(a) of the Act), must require Reasonably Available Control Technology (RACT) for each category of sources covered by a Control Techniques Guidelines (CTG) document as well as each major source in nonattainment areas (see sections 182(a)(2) and 182(f)), and must not relax existing requirements (see sections 110(l) and 193). The MDAQMD and VCAPCD regulate ozone nonattainment areas (see 40 CFR part 81), so MDAQMD Rule 1106 and VCAPCD Rule 74.30 must fulfill RACT.

Guidance and policy documents that we use to help evaluate specific enforceability and RACT requirements consistently include the following:

1. Portions of the proposed post-1987 ozone and carbon monoxide policy that concern RACT, 52 FR 45044, November 24, 1987.

2. “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” EPA, May 25, 1988 (the Bluebook).

3. “Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” EPA Region 9, August 21, 2001 (the Little Bluebook).

4. Alternative Control Techniques Document: Surface Coating Operations at Shipbuilding and Ship Repair Facilities, EPA Region 9, April 1994 (EPA 453/R-94-932).

We believe these rules are consistent with the relevant policy and guidance regarding enforceability, RACT, and SIP relaxations. The TSDs have more information on our evaluation.

As authorized in section 110(k)(3) of the Act, EPA is fully approving the submitted rules because we believe they fulfill all relevant requirements. We do not think anyone will object to this approval, so we are finalizing it without proposing it in advance. However, in the Proposed Rules section of this Federal Register , we are simultaneously proposing approval of the same submitted rules. If we receive adverse comments by August 15, 2008, we will publish a timely withdrawal in the Federal Register to notify the public that the direct final approval will not take effect and we will address the comments in a subsequent final action based on the proposal. If we do not receive timely adverse comments, the direct final approval will be effective without further notice on September 15, 2008. This will incorporate these rules into the federally enforceable SIP.

Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

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

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

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

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 15, 2008. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected entities may include, but are not limited to:

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

In addition to accessing an electronic copy of this Federal Register document through the electronic docket at http://www.regulations.gov , you may access this “ Federal Register ” document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr . You may also access a frequently updated electronic version of 40 CFR part 180 through the Government Printing Office's pilot e-CFR site at http://www.gpoaccess.gov/ecfr .

Under section 408(g) of FFDCA, as amended by FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2007-0346 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before September 15, 2008.

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket that is described in ADDRESSES . Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit your copies, identified by docket ID number EPA-HQ-OPP-2007-0346, by one of the following methods.

• Federal eRulemaking Portal : http://www.regulations.gov . Follow the on-line instructions for submitting comments.

• Mail : Office of Pesticide Programs (OPP) Regulatory Public Docket (7502P), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001.

• Delivery : OPP Regulatory Public Docket (7502P), Environmental Protection Agency, Rm. S-4400, One Potomac Yard (South Bldg.), 2777 S. Crystal Dr., Arlington, VA. Deliveries are only accepted during the Docket's normal hours of operation (8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays). Special arrangements should be made for deliveries of boxed information. The Docket Facility telephone number is (703) 305-5805.

In the Federal Register of August 1, 2007 (72 FR 42075) (FRL-8129-8), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide tolerance petition (PP 6F7142) by Monsanto Company, 800 North Lindbergh Blvd. St. Louis, MO 63167. The petition requested that 40 CFR part 174 be amended by establishing an exemption from the requirement of a tolerance for residues of the Bacillus thuringiensis Cry 1A.105 protein in or on all food commodities when used as plant-incorporated protectant in all food commodities. This notice included a summary of the petition prepared by the petitioner Monsanto Company. One commenter objected to the petition, expressing concerns about Monsanto obtaining an exemption from tolerance and potential harmful effects. The Agency understands the commenter's concerns about potential effects of this particular plant-incorporated protectant to humans and the environment. Pursuant to its authority under the FFDCA, EPA conducted a comprehensive assessment of Cry 1A.105 protein, including a review of acute oral toxicity data on Cry 1A.105 protein, amino acid sequence comparisons to known toxins and allergens, as well as data demonstrating that Cry 1A.105 protein is rapidly degraded by gastric fluid in vitro , is not glycosylated, and is present at low levels in the tissues expressing the plant-incorporated protectant. Based on these data, the Agency has concluded that there is a reasonable certainty that no harm will result from dietary exposure to residues of Cry1A.105 protein in the food and feed commodities of corn; corn, field; corn, sweet; and corn, pop, when used as a plant-incorporated protectant. Thus, under the standard in FFDCA section 408(b)(2), a tolerance exemption is appropriate. In taking this action, EPA, pursuant to its authority under section 408(d)(4)(A)(i) of the FFDCA, is issuing a final regulation that varies from the regulation sought by Monsanto in its petition. Specifically, instead of issuing a tolerance exemption that covers residues of the subject plant-incorporated protectant in all food commodities, EPA is issuing a tolerance exemption that covers residues of the subject plant-incorporated protectant in those commodities in which it will be used as a plant-incorporated protectant— in this case, the food and feed commodities of corn; corn, field; corn, sweet; and corn, pop. In this way, the tolerance exemption is coextensive with the registered uses for this particular plant-incorporated protectant.

Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the exemption is “safe.” Section 408(c)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Pursuant to section 408(c)(2)(B) of FFDCA, in establishing or maintaining in effect an exemption from the requirement of a tolerance, EPA must take into account the factors set forth in section 408(b)(2)(C) of FFDCA, which require EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue.” Additionally, section 408(b)(2)(D) of FFDCA requires that the Agency consider “available information concerning the cumulative effects of a particular pesticide's residues” and “other substances that have a common mechanism of toxicity.”

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. First, EPA determines the toxicity of pesticides. Second, EPA examines exposure to the pesticide through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings.

Consistent with section 408(b)(2)(D) of FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness, and reliability and the relationship of this information to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

Mammalian Toxicity and Allergenicity Assessment. Monsanto has submitted acute oral toxicity data demonstrating the lack of mammalian toxicity at high levels of exposure to the pure Cry1A.105 protein. These data demonstrate the safety of the product at a level well above maximum possible exposure levels that are reasonably anticipated in corn using submitted Cry1A.105 expression values. Basing this conclusion on acute oral toxicity data without requiring further toxicity testing and residue data is similar to the Agency position regarding toxicity testing and the requirement of residue data for the microbial Bacillus thuringiensis products from which this plant-incorporated protectant was derived (See 40 CFR 158.2130). For microbial products, further toxicity testing and residue data are triggered by significant adverse acute effects in studies such as the mouse oral toxicity study, to verify the observed adverse effects and clarify the source of these effects (Tiers II & III).

An acute oral toxicity study in mice (MRID 46694603) indicated that Cry1A.105 is non-toxic to humans. The oral LD 50 for mice was greater than 2,072 milligrams/kiligrams (mg/kg) bodyweight. This dose level is above 2,000 mg/kg, which is above the limit dose (i.e., the highest dose used in acute toxicity testing).

When proteins are toxic, they are known to act via acute mechanisms and at very low dose levels (Sjoblad, Roy D., et al ., “Toxicological Considerations for Protein Components of Biological Pesticide Products,” Regulatory Toxicology and Pharmacology 15, 3-9 (1992)). Therefore, since no acute effects were shown to be caused by Cry1A.105, even at relatively high dose levels, the Cry1A.105 protein is not considered toxic. Further, amino acid sequence comparisons between the Cry1A.105 and known toxic proteins in protein databases showed no similarities that would raise a safety concern. In addition, the Cry1A.105 protein was shown to be substantially degraded by heat when examined by immunoassay. This instability to heat would also lessen the potential dietary exposure to intact Cry1A.105 protein in cooked or processed foods. These biochemical features along with the lack of adverse results in the acute oral toxicity test support the conclusion that there is a reasonable certainty no harm from toxicity will result from dietary exposure to residues of Cry1A.105 in or on the identified corn commodities.

Since Cry1A.105 is a protein, allergenic potential was also considered. Currently, no definitive tests for determining the allergenic potential of novel proteins exist. Therefore, EPA uses a weight-of- evidence approach where the following factors are considered: source of the trait; amino acid sequence comparison with known allergens; and biochemical properties of the protein, including in vitro digestibility in simulated gastric fluid (SGF) and glycosylation. This approach is consistent with the approach outlined in the Annex to the Codex Alimentarius “Guideline for the Conduct of Food Safety Assessment of Foods Derived from Recombinant-DNA Plants.” The allergenicity assessment for Cry1A.105 follows:

1. Source of the trait . Bacillus thuringiensis is not considered to be a source of allergenic proteins.

2. Amino acid sequence . A comparison of the amino acid sequence of Cry1A.105 with known allergens showed no overall sequence similarity (35% identity over 80 amino acids) or identity at the level of eight contiguous amino acid residues, indicating a lack of potential linear epitopes found in known food allergens.

3. Digestibility . The Cry1A.105 protein was digested within 30 seconds in simulated gastric fluid containing pepsin. The rapid degradation of Cry1A.105 in the gastric environment suggests little possible exposure to intact protein in the intestinal lumen where sensitization to food allergens occurs.

4. Glycosylation . Cry1A.105 expressed in corn was shown not to be glycosylated.

5. Conclusion . Considering all of the available information, EPA has concluded that the potential for Cry1A.105 to be a food allergen is minimal.

The information on the safety of pure Cry1A.105 protein provides adequate justification to address possible exposures in all corn crops.

In examining aggregate exposure, section 408 of FFDCA directs EPA to consider available information concerning exposures from the pesticide residue in food and all other non-occupational exposures, including drinking water from ground water or surface water and exposure through pesticide use in gardens, lawns, or buildings (residential and other indoor uses.)

The Agency has considered available information on the aggregate exposure levels of consumers (and major identifiable subgroups of consumers) to the pesticide chemical residue and to other related substances. These considerations include dietary exposure under the tolerance exemption and all other tolerances or exemptions in effect for the plant-incorporated protectants chemical residue, and exposure from non-occupational sources. Exposure via the skin or inhalation is not likely since the plant- incorporated protectant is contained within plant cells, which essentially eliminates these exposure routes or reduces these exposure routes to negligible. In addition, even if exposure can occur through inhalation, the potential for Cry1A.105 to be an allergen is low, as discussed in unit III. Although the allergenicity assessment focuses on potential to be a food allergen, the data (comparing amino acid sequence similarity to allergens, including aeroallergens) also indicate a low potential for Cry1A.105 to be an inhalation allergen. Exposure via residential or lawn use to infants and children is also not expected because the use sites for the Cry1A.105 protein are agricultural. Oral exposure, at very low levels, may occur from ingestion of processed corn products and, theoretically, drinking water. However oral toxicity testing showed no adverse effects.

Food. The data submitted and cited regarding potential health effects for the Cry1A.105 protein includes the characterization of the expressed Cry1A.105 protein in corn, as well as the acute oral toxicity study, amino acid sequence comparisons to known allergens and toxins, and in vitro digestibility of the protein. The results of these studies were used to evaluate human risk, and the validity, completeness, and reliability of the available data from the studies were also considered.

Adequate information was submitted to show that the Cry1A.105 test material derived from microbial culture was biochemically and functionally equivalent to the protein produced by the plant-incorporated protectant ingredient in the plant. Microbially produced protein was used in the studies so that sufficient material for testing was available.

The acute oral toxicity data submitted support the prediction that the Cry1A.105 protein would be non-toxic to humans. As mentioned in this unit, when proteins are toxic, they are known to act via acute mechanisms and at very low dose levels (Sjoblad, Roy D., et al ., “Toxicological Considerations for Protein Components of Biological Pesticide Products,” Regulatory Toxicology and Pharmacology 15, 3-9 (1992)). Since no treatment-related adverse effects were shown to be caused by the Cry1A.105 protein, even at relatively high dose levels (e.g., 2072 mg/kg body weight), the Cry1A.105 protein is not considered toxic. Basing this conclusion on acute oral toxicity data without requiring further toxicity testing or residue data is similar to the Agency position regarding toxicity and the requirement of residue data for the microbial Bacillus thuringiensis products from which this plant-incorporated protectant was derived (See 40 CFR 158.740(b)(2)(i)). For microbial products, further toxicity testing and residue data are triggered when significant adverse effects are seen in studies such as the acute oral toxicity study. Further studies verify the observed adverse effects and clarify the source of these effects (Tiers II and III).

Residue chemistry data were not required for a human health effects assessment of the subject plant-incorporated protectant because of the lack of mammalian toxicity. Nonetheless, data submitted demonstrated low levels of the Cry1A.105 protein in corn tissues (5-7 ppm in grain, 20-570 ppm in forage or leaf tissue), indicating a low potential for dietary exposure.

Since Cry1A.105 is a protein, potential allergenicity is also considered as part of the toxicity assessment. Considering all of the available information:

1. Cry1A.105 originates from a non-allergenic source;

2. Cry1A.105 has no sequence similarities with known allergens;

3. Cry1A.105 is not glycosylated; and

4. Cry1A.105 is rapidly digested in simulated gastric fluid; EPA has concluded that the potential for Cry1A.105 to be a food allergen is minimal.

The genetic material necessary for the production of the plant-incorporated protectant active ingredient include the nucleic acids (DNA, RNA) that encode these proteins and regulatory regions. The genetic material (DNA, RNA) necessary for the production of the Cry1A.105 protein has been exempted from the requirement of a tolerance under 40 CFR 174.507 (Nucleic acids that are part of a plant-incorporated protectant; exemption from the requirement of a tolerance).

Dermal and Inhalation exposure. Exposure via the skin or inhalation is not likely since the plant-incorporated protectant is contained within plant cells, which essentially eliminates these exposure routes or reduces these exposure routes to negligible. In addition, even if exposure can occur through inhalation, the potential for Cry1A.105 to be an allergen is minimal, as discussed in this unit. Although the allergenicity assessment focuses on potential to be a food allergen, the data also indicate a low potential for Cry1A.105 to be an inhalation allergen.

Pursuant to FFDCA section 408(b)(2)(D)(v), EPA has considered available information on the cumulative effects of such residues and other substances that have a common mechanism of toxicity. These considerations included the cumulative effects on infants and children of such residues and other substances with a common mechanism of toxicity. Because there is no indication of mammalian toxicity from the plant-incorporated protectant, we conclude that there are no cumulative effects for the Cry1A.105 protein.

FFDCA section 408(b)(2)(C) provides that EPA shall assess the available information about consumption patterns among infants and children, special susceptibility of infants and children to pesticide chemical residues and the cumulative effects on infants and children of the residues and other substances with a common mechanism of toxicity. In addition, FFDCA section 408(b)(2)(C) also provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database unless EPA determines that a different margin of safety will be safe for infants and children. In this instance, based on all the available information, the Agency concludes that there is a finding of no toxicity for the Cry1A.105 protein. Thus, there are no threshold effects of concern and, as a result, the provision requiring an additional tenfold margin of safety does not apply. Further, the considerations of consumption patterns, special susceptibility, and cumulative effects do not apply.

Neither available information concerning the dietary consumption patterns of consumers (and major identifiable subgroups of consumers including infants and children) nor safety factors that are generally recognized as appropriate for the use of animal experimentation data were evaluated. The lack of mammalian toxicity at high levels of exposure to the Cry1A.105 protein, as well as the minimal potential to be a food allergen, demonstrate the safety of the product at levels well above possible maximum exposure levels anticipated.

The pesticidal active ingredient is a protein, derived from a source that is not known to exert an influence on the endocrine system. Therefore, the Agency is not requiring information on the endocrine effects of the plant-incorporated protectant at this time.

A standard operating procedure for an enzyme-linked immunosorbent assay for the detection and quantification of Cry1A.105 in corn tissue has been submitted.

No Codex maximum residue level exists for the plant-incorporated protectant Bacillus thuringiensis Cry1A.105 protein.

There is a reasonable certainty that no harm will result from aggregate exposure to the U.S. population, including infants and children, to residues of the Cry1A.105 protein in or on all food and feed commodities of corn; corn, field; corn, sweet; and corn, pop. This includes all anticipated dietary exposures and all other exposures for which there is reliable information. The Agency has arrived at this conclusion because, as discussed in this unit, no toxicity to mammals has been observed, nor is there any indication of allergenicity potential for the plant-incorporated protectant.

This final rule establishes a tolerance exemption under section 408(d) of FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Because this final rule has been exempted from review under Executive Order 12866, this final rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq ., nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994).

Since tolerances and exemptions that are established on the basis of a petition under section 408(d) of FFDCA, such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq .) do not apply.

This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of FFDCA. As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 9, 2000) do not apply to this final rule. In addition, this final rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note).

The Congressional Review Act, 5 U.S.C. 801 et seq ., generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of this final rule in the Federal Register . This final rule is not a “major rule” as defined by 5 U.S.C. 804(2).

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected entities may include, but are not limited to:

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

In addition to accessing an electronic copy of this Federal Register document through the electronic docket at http://www.regulations.gov , you may access this “ Federal Register ” document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr . You may also access a frequently updated electronic version of 40 CFR part 174 through the Government Printing Office's pilot e-CFR site at http://www.gpoaccess.gov/ecfr .

Under section 408(g) of FFDCA, as amended by FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2007-1204 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before September 15, 2008.

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket that is described in ADDRESSES . Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit your copies, identified by docket ID number EPA-HQ-OPP-2007-1204, by one of the following methods.

• Federal eRulemaking Portal : http://www.regulations.gov . Follow the on-line instructions for submitting comments.

• Mail : Office of Pesticide Programs (OPP) Regulatory Public Docket (7502P), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001.

• Delivery : OPP Regulatory Public Docket (7502P), Environmental Protection Agency, Rm. S-4400, One Potomac Yard (South Bldg.), 2777 S. Crystal Dr., Arlington, VA. Deliveries are only accepted during the Docket's normal hours of operation (8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays). Special arrangements should be made for deliveries of boxed information. The Docket Facility telephone number is (703) 305-5805.

In the Federal Register of January 30, 2008 (73 FR 5563) (FRL-8348-4), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide tolerance petition (PP 7F7290) by Syngenta Seeds, Inc., P.O. Box 12257, 3054 E. Cornwallis Road, Research Triangle Park, NC 27709. The petition requested that 40 CFR part 174 be amended by establishing an exemption from the requirement of a tolerance for residues of Bacillus thuringiensis modified Cry1Ab protein containing an additional 26 amino acid sequence (“Geiser Motif”) in all crops and agricultural commodities. A summary of the petition prepared by the petitioner, Syngenta Seeds, Inc., was posted on www.regulations.gov in the docket for this action (EPA-HQ-OPP-2007-1204). After review, the Agency determined that the appropriate designation for the protein is Bacillus thuringiensis modified Cry1Ab protein as identified under OECD Unique Identifier SYN-IR67B-1 (hereafter referred to as modified Cry1Ab). There was one comment received in response to the notice of filing. The commenter objected to the petition, pesticide residues on food crops, and the widespread use of Bacillus thuringiensis (Bt). The Agency understands the commenter's concerns regarding tolerances of pesticide residues on food. Pursuant to its authority under the FFDCA, EPA conducted a comprehensive assessment of modified Cry1Ab protein, including a review of acute oral toxicity data on modified Cry1Ab protein, amino acid sequence comparisons to known toxins and allergens, as well as data demonstrating that modified Cry1Ab protein is rapidly degraded by gastric fluid in vitro , is not glycosylated, and is present in low levels in plant tissues. Based on these data, the Agency has concluded that there is a reasonable certainty that no harm will result from dietary exposure to this protein as expressed in plant-incorporated protectants. Thus, under the standard in FFDCA section 408(b)(2), a tolerance exemption is appropriate.

In taking this action, EPA, pursuant to its authority under section 408(d)(4)(A)(i) of the FFDCA, is issuing a final regulation that varies from the regulation sought by petitioner Syngenta Seeds, Inc. Specifically, instead of issuing a tolerance exemption that covers residues of the subject plant-incorporated protectant in all food commodities, EPA is issuing a tolerance exemption that covers such residues in those commodities in which it will be used as a plant-incorporated protectant - in this case, the food and feed commodities of cotton; cotton, undelinted seed; cotton, refined oil; cotton, meal; cotton, hay; cotton, hulls; cotton, forage; and cotton, gin byproducts. In this way, the tolerance exemption is coextensive with the registered uses for this particular plant-incorporated protectant.

Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the exemption is “safe.” Section 408(c)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Pursuant to section 408(c)(2)(B) of FFDCA, in establishing or maintaining in effect an exemption from the requirement of a tolerance, EPA must take into account the factors set forth in section 408(b)(2)(C) of FFDCA, which require EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue.... ” Additionally, section 408(b)(2)(D) of FFDCA requires that the Agency consider “available information concerning the cumulative effects of a particular pesticide's residues ” and “other substances that have a common mechanism of toxicity.”

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. First, EPA determines the toxicity of pesticides. Second, EPA examines exposure to the pesticide through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings.

Consistent with section 408(b)(2)(D) of FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness, and reliability and the relationship of this information to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

Syngenta Seeds, Inc. has submitted acute oral toxicity data demonstrating the lack of mammalian toxicity at high levels of exposure to the pure modified Cry1Ab protein as identified under the Organisation for Economic Co-operation and Development (OECD) Unique Identifier SYN-IR67B-1 (hereafter referred to as modified Cry1Ab). The modified Cry1Ab protein contains a 26 amino acid sequence that is found at the C-terminus of the pro-toxin portion of the modified Cry1Ab protein. This sequence naturally occurs in Cry1Ab protein expressed in microbial Bacillus thuringiensis (Bt). The pro-toxin containing the additional 26 amino acid sequence is enzymatically cleaved in the insect gut to produce active Cry1Ab. These toxicity data demonstrate the safety of the product at a level well above maximum possible exposure levels that are reasonably anticipated in the crop. Basing this conclusion on acute oral toxicity data without requiring further toxicity testing and residue data is similar to the Agency position regarding toxicity testing and the requirement of residue data for the microbial Bacillus thuringiensis products from which this plant-incorporated protectant was derived (See 40 CFR 158.2140). For microbial products, further toxicity testing (Tiers II and III) and residue data are triggered by significant adverse acute effects in studies such as the acute oral toxicity study, to verify the observed adverse effects and clarify the source of these effects.

An acute oral toxicity study in mice indicated that modified Cry1Ab is non-toxic to humans. Groups of five male and five female mice were given 0 or 1,830 mg/kg bodyweight microbially-produced modified Cry1Ab by oral gavage as a single dose. There were no effects on clinical condition, body weight, food consumption, clinical pathology, organ weight, or macroscopic or microscopic pathology that were attributed to the test substance.

When proteins are toxic, they are known to act via acute mechanisms and at very low dose levels (Ref. 1). Therefore, since no acute effects were shown to be caused by modified Cry1Ab, even at relatively high dose levels, the modified Cry1Ab protein is not considered toxic.

Since modified Cry1Ab is a protein, allergenic potential was also considered. Currently, no definitive tests for determining the allergenic potential of novel proteins exist. Therefore, EPA uses a weight-of- evidence approach where the following factors are considered: source of the trait; amino acid sequence comparison with known allergens; and biochemical properties of the protein, including in vitro digestibility in simulated gastric fluid (SGF) and glycosylation. This approach is consistent with the approach outlined in the Annex to the Codex Alimentarius “Guideline for the Conduct of Food Safety Assessment of Foods Derived from Recombinant-DNA Plants.” The allergenicity assessment for modified Cry1Ab follows:

1. Source of the trait . Bacillus thuringiensis is not considered to be a source of allergenic proteins.

2. Amino acid sequence . A comparison of the amino acid sequence of modified Cry1Ab with known allergens showed no significant sequence identity over 80 amino acids or identity at the level of 8 contiguous amino acid residues.

3. Digestibility . Modified Cry1Ab was rapidly digested in simulated gastric fluid containing pepsin.

4. Glycosylation . Modified Cry1Ab expressed in cotton was shown not to be glycosylated.

5. Conclusion . Considering all of the available information, EPA has concluded that the potential for modified Cry1Ab to be a food allergen is minimal.

Although modified Cry1Ab was only shown not to be glycosylated in cotton, it is unlikely to be glycosylated in any other crops because in order for a protein to be glycoslyated, it needs to contain specific recognition sites for the enzymes involved in glycosylation, and the mechanisms of protein glycosylation are similar in different plants (Ref. 2).

In examining aggregate exposure, section 408 of FFDCA directs EPA to consider available information concerning exposures from the pesticide residue in food and all other non-occupational exposures, including drinking water from ground water or surface water and exposure through pesticide use in gardens, lawns, or buildings (residential and other indoor uses).

The Agency has considered available information on the aggregate exposure levels of consumers (and major identifiable subgroups of consumers) to the pesticide chemical residue (i.e., the modified Cry1Ab protein) and to other related substances. These considerations include dietary exposure under the tolerance exemption and all other exposures from non-occupational sources. Exposure via the skin or inhalation is not likely since the plant-incorporated protectant is contained within plant cells, which essentially eliminates these exposure routes or reduces these exposure routes to negligible. In addition, even if exposure can occur through inhalation, the potential for modified Cry1Ab to be an allergen is low, as discussed above. Although the allergenicity assessment focuses on potential to be a food allergen, the data also indicate a low potential for modified Cry1Ab to be an inhalation allergen. Exposure via residential or lawn use to infants and children is also not expected because the use sites for the modified Cry1Ab protein is agricultural. Dietary exposure may occur from ingestion of processed cotton products but is expected to be very low because the already low expression levels in the seed would be reduced further by the heat and pressure used for processing. Also, dietary exposure may theoretically occur through exposure in drinking water because plant stubble may release modified Cry1Ab protein into ground water upon decay. This protein would not be expected to survive in the soil due to microbial degradation, adherence to soil components and removal upon exposure to drinking water treatment procedures. In addition, oral toxicity testing showed no adverse effects.

Pursuant to FFDCA section 408(b)(2)(D)(v), EPA has considered available information on the cumulative effects of such residues and other substances that have a common mechanism of toxicity. These considerations included the cumulative effects on infants and children of such residues and other substances with a common mechanism of toxicity. Because there is no indication of mammalian toxicity from the plant-incorporated protectant, there is no common mechanism of toxicity for this protein; therefore, section 408(b)(2)(D)(v) does not apply.

The data submitted and cited regarding potential health effects for the modified Cry1Ab protein includes the characterization of the expressed modified Cry1Ab protein in cotton, as well as the acute oral toxicity study, amino acid sequence comparisons to known allergens, and in vitro digestibility of the protein. The results of these studies were used to evaluate human risk, and the validity, completeness, and reliability of the available data from the studies were also considered.

Adequate information was submitted to show that the modified Cry1Ab test material derived from microbial culture was biochemically and functionally equivalent to the protein in the plant. Microbially produced protein was used in the safety studies so that sufficient material for testing was available.

The acute oral toxicity data submitted support the prediction that the modified Cry1Ab protein is non-toxic to humans. As mentioned above, when proteins are toxic, they are known to act via acute mechanisms and at very low dose levels (Ref. 1). Since no treatment-related adverse effects were shown to be caused by the Cry1Ab protein, even at relatively high dose levels, the modified Cry1Ab protein is not considered toxic. Basing this conclusion on acute oral toxicity data without requiring further toxicity testing and residue data is similar to the Agency position regarding toxicity and the requirement of residue data for the microbial Bacillus thuringiensis products from which this plant-incorporated protectant was derived (See 40 CFR 158.2140). For microbial products, further toxicity testing and residue data are triggered when significant adverse effects are seen in studies such as the acute oral toxicity study. Further studies verify the observed adverse effects and clarify the source of these effects.

Residue chemistry data were not required for a human health effects assessment of the subject plant-incorporated protectant ingredients because of the lack of mammalian toxicity. However, data submitted demonstrated low levels of the modified Cry1Ab protein in cotton tissues.

Since Cry1Ab is a protein, potential allergenicity is also considered as part of the toxicity assessment. Considering all of the available information (1) modified Cry1Ab originates from a non-allergenic source; (2) modified Cry1Ab has no sequence similarities with known allergens; (3) modified Cry1Ab is not glycosylated; and (4) modified Cry1Ab is rapidly digested in simulated gastric fluid; EPA has concluded that the potential for modified Cry1Ab to be an allergen is minimal.

Neither available information concerning the dietary consumption patterns of consumers (and major identifiable subgroups of consumers including infants and children) nor safety factors that are generally recognized as appropriate for the use of animal experimentation data were evaluated. The lack of mammalian toxicity at high levels of exposure to the modified Cry1Ab protein, as well as the minimal potential to be an allergen, demonstrate the safety of the product at levels well above possible maximum exposure levels anticipated.

The genetic material necessary for the production of the plant-incorporated protectant active ingredient include the nucleic acids (DNA, RNA) that encode these proteins and regulatory regions. The genetic material (DNA, RNA) necessary for the production of the modified Cry1Ab protein has been exempted from the requirement of a tolerance under 40 CFR 174.507—nucleic acids that are part of a plant-incorporated protectant.

FFDCA section 408(b)(2)(C) provides that EPA shall assess the available information about consumption patterns among infants and children, special susceptibility of infants and children to pesticide chemical residues and the cumulative effects on infants and children of the residues and other substances with a common mechanism of toxicity. In addition, FFDCA section 408(b)(2)(C) also provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database unless EPA determines that a different margin of safety will be safe for infants and children.

In this instance, based on all the available information, the Agency concludes that there is a finding of no toxicity for the modified Cry1Ab protein. Thus, there are no threshold effects of concern and, as a result, the provision requiring an additional margin of safety does not apply. Further, the considerations of consumption patterns, special susceptibility, and cumulative effects do not apply.

There is a reasonable certainty that no harm will result from aggregate exposure to the U.S. population, including infants and children, to the modified Cry1Ab protein and the genetic material necessary for its production. This includes all anticipated dietary exposures and all other exposures for which there is reliable information. The Agency has arrived at this conclusion because, as discussed above, no toxicity to mammals has been observed, nor any indication of allergenicity potential for the plant-incorporated protectant.

The pesticidal active ingredient is a protein, derived from a source that is not known to exert an influence on the endocrine system. Therefore, the Agency is not requiring information on the endocrine effects of this plant-incorporated protectant at this time.

A lateral flow enzyme-linked immunosorbent assay (ELISA) protocol has been provided to the Agency for detecting modified Cry1Ab in cotton.

No Codex maximum residue level exists for the plant-incorporated protectant Bacillus thuringiensis modified Cry1Ab protein.

1. Sjoblad, Roy D., et al ., “Toxicological Considerations for Protein Components of Biological Pesticide Products,” Regulatory Toxicology and Pharmacology 15, 3-9 (1992).

2. Lerouge, P., Cabanes-Macheteau, M., Rayon, C., Fichette-Lainè, A-C., Gomord, V., and Faye, L., “N-Glycoprotein biosynthesis in plants: recent developments and future trends,” Plant Molecular Biology 38: 31-48 (1998).

This final rule establishes a tolerance under section 408(d) of FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Because this final rule has been exempted from review under Executive Order 12866, this final rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq. , nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994).

Since tolerances and exemptions that are established on the basis of a petition under section 408(d) of FFDCA, such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) do not apply.

This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of FFDCA. As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 9, 2000) do not apply to this final rule. In addition, this final rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note).

The Congressional Review Act, 5 U.S.C. 801 et seq. , generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of this final rule in the Federal Register . This final rule is not a “major rule” as defined by 5 U.S.C. 804(2).

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

The 2008 Pacific ocean perch sideboard limit established for catcher processors participating in the limited access or opt-out fisheries that are subject to sideboard limits in the Central GOA Rockfish Program in the Western Regulatory Area is 864 mt. The sideboard limit is established by the 2008 and 2009 harvest specifications for groundfish of the GOA (73 FR 10562, February 27, 2008) and as posted as the 2008 Rockfish Program Catcher Processor Sideboards at http://alaskafisheries.noaa.gov/sustainablefisheries/goarat/default.htm .

In accordance with § 679.82(d)(7)(i)(A), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the 2008 Pacific ocean perch sideboard limit established for catcher processors participating in the limited access or opt-out fisheries in the Western Regulatory Area will soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 614 mt, and is setting aside the remaining 250 mt as bycatch to support other anticipated groundfish fisheries. In accordance with § 679.82(d)(7)(ii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for the Pacific ocean perch sideboard limit established for catcher processors participating in the limited access or opt-out fisheries in the Western Regulatory Area.

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

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of Pacific ocean perch sideboard limit for catcher processors participating in the limited access or opt-out fisheries in the Western Regulatory Area. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of July 10, 2008.

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

This action is required by § 679.82 and is exempt from review under Executive Order 12866.

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

NMFS closed the directed fishery for northern rockfish in the Western Regulatory Area of the GOA on July 7, 2008 (73 FR 39626, July 10, 2008).

NMFS has determined that approximately 1,560 mt of the 2008 TAC of northern rockfish in the Western Regulatory Area of the GOA remain in the directed fishing allowance. Therefore, in accordance with § 679.25(a)(1)(i), (a)(2)(i)(C), and (a)(2)(iii)(D), and to fully utilize the 2008 TAC of northern rockfish in the Western Regulatory Area of the GOA, NMFS is terminating the previous closure and is reopening directed fishing for northern rockfish in the Western Regulatory Area of the GOA. The opening is effective 1200 hrs, A.l.t., July 14, 2008, through 2400 hrs, A.l.t., December 31, 2008.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, (AA) finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such a requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the opening of the northern rockfish fishery in the Western Regulatory Area of the GOA. Immediate notification is necessary to allow for the orderly conduct and efficient operation of this fishery, to allow the industry to plan for the fishing season, and to avoid potential disruption to the fishing fleet and processors. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of July 10, 2008.

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

Without this inseason adjustment, NMFS could not allow the northern rockfish fishery in the Western Regulatory Area of the GOA to be harvested in an expedient manner and in accordance with the regulatory schedule. Under § 679.25(c)(2), interested persons are invited to submit written comments on this action to the above address until July 28, 2008.

This action is required by § 679.20 and § 679.25 and is exempt from review under Executive Order 12866.

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

NMFS closed the directed fishery for Pacific ocean perch in the Western Regulatory Area of the GOA on July 4, 2008 (73 FR 38931, July 8, 2008).

NMFS has determined that approximately 1,100 mt of the 2008 TAC of Pacific ocean perch in the Western Regulatory Area of the GOA remain in the directed fishing allowance. Therefore, in accordance with § 679.25(a)(1)(i), (a)(2)(i)(C), and (a)(2)(iii)(D), and to fully utilize the 2008 TAC of Pacific ocean perch in the Western Regulatory Area of the GOA, NMFS is terminating the previous closure and is reopening directed fishing for Pacific ocean perch in the Western Regulatory Area of the GOA. The opening is effective 1200 hrs, A.l.t., July 14, 2008, through 2400 hrs, A.l.t., December 31, 2008.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, (AA) finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such a requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the opening of the Pacific ocean perch fishery in the Western Regulatory Area of the GOA. Immediate notification is necessary to allow for the orderly conduct and efficient operation of this fishery, to allow the industry to plan for the fishing season, and to avoid potential disruption to the fishing fleet and processors. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of July 10, 2008.

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

Without this inseason adjustment, NMFS could not allow the Pacific ocean perch fishery in the Western Regulatory Area of the GOA to be harvested in an expedient manner and in accordance with the regulatory schedule. Under § 679.25(c)(2), interested persons are invited to submit written comments on this action to the above address until July 28, 2008.

This action is required by § 679.20 and § 679.25 and is exempt from review under Executive Order 12866.