This rule is issued under Marketing Order No. 984, as amended (7 CFR part 984), regulating the handling of walnuts grown in California, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

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

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing order now in effect, California walnut handlers are subject to assessments. Funds to administer the order are derived from such assessments. It is intended that the assessment rate as established herein will be applicable to all assessable walnuts beginning on September 1, 2008, and continue until amended, suspended, or terminated. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

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

This rule increases the assessment rate established for the Board for the 2008-09 and subsequent marketing years from $0.0122 to $0.0158 per kernelweight pound of assessable walnuts. The 2008-09 marketing year begins on September 1, 2008, and ends on August 31, 2009.

The California walnut marketing order provides authority for the Board, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Board are producers and handlers of California walnuts. They are familiar with the Board's needs and the costs for goods and services in their local area and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed at a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

For the 2007-08 and subsequent marketing years, the Board recommended, and USDA approved, an assessment rate of $0.0122 per kernelweight pound of assessable walnuts that would continue in effect from year to year unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Board or other information available to USDA.

The Board met on May 28, 2008, and unanimously recommended 2008-09 expenditures of $4,594,300 and an assessment rate of $0.0158 per kernelweight pound of assessable walnuts. In comparison, 2007-08 budgeted expenditures were $3,777,120. The assessment rate of $0.0158 per kernelweight pound of assessable walnuts is $0.0036 per pound higher than the 2007-08 assessment rate. The increased assessment rate is necessary to cover increased expenses in the areas of domestic market promotion, production research activities, and Board operating expenses. The higher assessment rate should generate sufficient income to cover anticipated 2008-09 expenses.

The following table compares major budget expenditures recommended by the Board for the 2007-08 and 2008-09 marketing years:

The assessment rate recommended by the Board was derived by dividing anticipated expenses by expected shipments of California walnuts certified as merchantable. Merchantable shipments for the year are estimated at 290,773,800 kernelweight pounds which should provide $4,594,300 in assessment income and allow the Board to cover its expenses. Unexpended funds may be retained in a financial reserve, provided that funds in the financial reserve do not exceed approximately two year's budgeted expenses. If not retained in a financial reserve, unexpended funds may be used temporarily to defray expenses of the subsequent marketing year, but must be made available to the handlers from whom collected within 5 months after the end of the year, according to § 984.69 of the order.

The estimate for merchantable shipments is based on historical data, which is the prior year's production of 323,082 tons (inshell). Pursuant to § 984.51(b) of the order, this figure was converted to a merchantable kernelweight basis using a factor of 0.45 (323,082 tons × 2,000 pounds per ton × 0.45).

The assessment rate established in this rule will continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Board or other available information.

Although this assessment rate will be in effect for an indefinite period, the Board will continue to meet prior to or during each marketing year to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Board meetings are available from the Board or USDA. Board meetings are open to the public and interested persons may express their views at these meetings. USDA will evaluate Board recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking will be undertaken as necessary. The Board's 2008-09 budget and those for subsequent fiscal periods will be reviewed and, as appropriate, approved by USDA.

Pursuant to requirements set forth in the Regulatory Flexibility Act (5 U.S.C. 601-612) (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.

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

There are currently 58 handlers of California walnuts subject to regulation under the marketing order and approximately 4,000 producers in the production area. Small agricultural service firms are defined by the Small Business Administration (SBA) (13 CFR 121.201) as those whose annual receipts are less than $6,500,000, and small agricultural producers are defined as those whose annual receipts are less than $750,000.

Industry information for the most recent complete season indicates that 18 of 53 handlers (34 percent) shipped over $6,500,000 of merchantable walnuts and could be considered large handlers by the SBA. Thirty-five of 53 walnut handlers (66 percent) shipped under $6,500,000 of merchantable walnuts and could be considered small handlers.

The number of large walnut growers (annual walnut revenue greater than $750,000) can be estimated as follows. According to the National Agricultural Statistics Service (NASS), the two-year average yield per acre for 2005 and 2006 is approximately 1.63 tons. A grower with 287 acres with an average yield of 1.63 tons per acre would produce approximately 468 tons. The season average of grower prices for 2005 and 2006 published by NASS is $1,600 per ton. At that average price, the 468 tons produced on 287 acres would yield slightly less than $750,000 in annual revenue. The 2002 Agricultural Census indicated two percent of walnut farms were between 250 and 500 acres in size. The 287 acres would produce, on average, slightly less than the small business threshold level of $750,000 in annual revenue from walnuts, and is near the lower end of the 250 to 500 acreage range category of the 2002 census. Thus, it can be concluded that the number of large walnut farms in 2006 was likely around two percent. Based on the foregoing, it can be concluded that the majority of California walnut handlers and producers may be classified as small entities.

This rule increases the assessment rate established for the Board and collected from handlers for the 2008-09 and subsequent marketing years from $0.0122 per kernelweight pound of assessable walnuts to $0.0158 per kernelweight pound of assessable walnuts. The Board unanimously recommended 2008-09 expenditures of $4,594,300 and an assessment rate of $0.0158 per kernelweight pound of assessable walnuts. The assessment rate of $0.0158 is $0.0036 higher than the 2007-08 assessment rate. The quantity of assessable walnuts for the 2008-09 marketing year is estimated at 323,082 tons, or 290,773,800 kernelweight pounds. Thus, the $0.0158 rate should provide $4,594,300 in assessment income and be adequate to meet the year's expenses. The increased assessment rate is primarily due to increased budget expenditures.

The following table compares major budget expenditures recommended by the Board for the 2007-08 and 2008-09 fiscal years:

The Board reviewed and unanimously recommended 2008-09 expenditures of $4,594,300. Prior to arriving at this budget, the Board considered alternative expenditure levels, but ultimately decided that the recommended levels were reasonable to properly administer the order. The assessment rate recommended by the Board was derived by dividing anticipated expenses by expected shipments of California walnuts certified as merchantable. Merchantable shipments for the year are estimated at 290,773,800 kernelweight pounds which should provide $4,594,300 in assessment income and allow the Board to cover its expenses. Unexpended funds may be retained in a financial reserve, provided that funds in the financial reserve do not exceed approximately two year's budgeted expenses. If not retained in a financial reserve, unexpended funds may be used temporarily to defray expenses of the subsequent marketing year, but must be made available to the handlers from whom collected within 5 months after the end of the year, according to § 984.69 of the order.

According to NASS, the season average grower price for years 2006 and 2007 were $1,630 and $2,320 per ton, respectively. These prices provide a range within which the 2008-09 season average price could fall. Dividing these average grower prices by 2,000 pounds per ton provides an inshell price per pound range of $0.815 to $1.16. Dividing these inshell prices per pound by the 0.45 conversion factor (inshell to kernelweight) established in the order yields a 2008-09 price range estimate of $1.81 to $2.58 per kernelweight pound of assessable walnuts.

To calculate the percentage of grower revenue represented by the assessment rate, the assessment rate of $0.0158 per kernelweight pound is divided by the low and high estimates of the price range. The estimated assessment revenue for the 2008-09 marketing year as a percentage of total grower revenue would thus likely range between 0.612 and 0.873 percent.

This action increases the assessment obligation imposed on handlers. While assessments impose some additional costs on handlers, the costs are minimal and uniform on all handlers. Some of the additional costs may be passed on to producers. However, these costs are offset by the benefits derived by the operation of the marketing order. In addition, the Board's meeting was widely publicized throughout the California walnut industry and all interested persons were invited to attend the meeting and participate in Board deliberations on all issues. Like all Board meetings, the May 28, 2008, meeting was a public meeting and all entities, both large and small, were provided the opportunity to express views on this issue.

This rule imposes no additional reporting or recordkeeping requirements on either small or large California walnut handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

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

As noted in the initial regulatory flexibility analysis, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

A proposed rule concerning this action was published in the Federal Register on July 25, 2008 (73 FR 43378).

Copies of the proposed rule were also mailed or sent via facsimile to walnut handlers. Finally, the proposal was made available through the Internet by USDA and the Office of the Federal Register. A 15-day comment period ending August 11, 2008, was provided to allow interested persons to respond to the proposal.

One comment was received during the comment period in response to the proposed rule. The comment was submitted by the Executive Director of the Board. The commenter points out that the proposed rule would establish the 2008-09 marketing year as a 13-month period from August 1, 2008, through August 31, 2009, and the assessment rate increase would be effective as of August 1, 2008. The commenter further states that the order was recently amended to change the marketing year from August through July to September through August. Accordingly, when the Board formulated its 2007-08 budget in May 2007, it established a 13-month period beginning on August 1, 2007, and ending on August 31, 2008, as its marketing year to accommodate the order amendment. Expenditures were planned and budgeted accordingly. The Board subsequently recommended its 2008-09 marketing year budget in May 2008 to cover a 12-month period beginning September 1, 2008, and ending August 31, 2009. The Board also intended for the assessment rate to be effective with the new marketing year beginning September 1, 2008.

The commenter also noted that one section of the proposed rule incorrectly references total budgeted expenses of $4,954,300. The correct amount, as referenced correctly in another section of rule should be $4,594,300. The commenter also states that Budget Expense Category tables in the proposed rule are incorrect because it omits a $30,000 item for production research contingencies and should need $835,000 instead of $805,000. Finally, the commenter indicated that the statement at the asterisk, which explains that the Research Director's compensation is included in the Production Research budget, should be modified to state that production research contingencies are also included in that budget.

As a result of this comment, modifications to the proposed rule are being made in this final rule. In order to ensure consistency and continuity in the Board's financial planning and operations, and to recognize the recent order amendment revising the marketing year, the assessment rate change and the 2008-09 marketing year will become effective September 1, 2008. Additional modification is made to correct the erroneous references to the total expenditures. Finally, the rule is further modified to change the Budget Expense Category tables to include the amount budgeted for production research contingencies and the statement at the asterisk to indicate the production research contingencies are part of the Production Research budget. Although the tables were not necessarily intended to capture all the Board's expenses, the modifications may provide more clarity.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/AMSv1.0/ams.fetchTemplateData.do?template=TemplateN&page=MarketingOrdersSmallBusinessGuide. Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

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

Pursuant to 5 U.S.C. 553, it is also found and determined that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because the 2008-09 marketing year began on September 1, 2008, and the marketing order requires that the rate of assessment for each year apply to all assessable walnuts handled during the year; the Board needs to have sufficient funds to pay its expenses which are incurred on a continuous basis; and handlers are aware of this action which was unanimously recommended by the Board at a public meeting and is similar to other assessment rate actions issued in past years. Also, a 15-day comment period was provided for in the proposed rule and no comments in opposition to the rule were received.

Section 19(b)(2) of the Federal Reserve Act (12 U.S.C. 461(b)(2)) requires each depository institution to maintain reserves against its transaction accounts and nonpersonal time deposits, as prescribed by Board regulations, for the purpose of implementing monetary policy.

Section 11(a)(2) of the Federal Reserve Act (12 U.S.C. 248(a)(2)) authorizes the Board to require reports of liabilities and assets from depository institutions to enable the Board to conduct monetary policy. The Board's actions with respect to each of these provisions are discussed in turn below.

Pursuant to section 19(b) of the Federal Reserve Act (Act), transaction account balances maintained at each depository institution are subject to reserve requirement ratios of zero, three, or ten percent. Section 19(b)(11)(A) of the Act (12 U.S.C. 461(b)(11)(A)) provides that a zero percent reserve requirement shall apply at each depository institution to total reservable liabilities that do not exceed a certain amount, known as the reserve requirement exemption amount. Section 19(b)(11)(B) provides that, before December 31 of each year, the Board shall issue a regulation adjusting the reserve requirement exemption amount for the next calendar year if total reservable liabilities held at all depository institutions increase from one year to the next. No adjustment is made to the reserve requirement exemption amount if total reservable liabilities held at all depository institutions should decrease during the applicable time period. The Act requires the percentage increase in the reserve requirement exemption amount to be 80 percent of the increase in total reservable liabilities of all depository institutions over the one-year period that ends on the June 30 prior to the adjustment.

Total reservable liabilities of all depository institutions increased 13.0 percent (from $4,211 billion to $4,760 billion) between June 30, 2007, and June 30, 2008. Accordingly, the Board is amending Regulation D to increase the reserve requirement exemption amount by $1.0 million, from $9.3 million for 2008 to $10.3 million for 2009. 1

Pursuant to Section 19(b)(2) of the Act (12 U.S.C. 461(b)(2)), transaction account balances maintained at each depository institution over the reserve requirement exemption amount and up to a certain amount, known as the low reserve tranche, are subject to a three percent reserve requirement. Transaction account balances over the low reserve tranche are subject to a ten percent reserve requirement. Section 19(b)(2) also provides that, before December 31 of each year, the Board shall issue a regulation adjusting the low reserve tranche for the next calendar year. The Act requires the adjustment in the low reserve tranche to be 80 percent of the percentage increase or decrease in total transaction accounts of all depository institutions over the one-year period that ends on the June 30 prior to the adjustment.

Net transaction accounts of all depository institutions increased 1.4 percent (from $646 billion to $655 billion) between June 30, 2007 and June 30, 2008. Accordingly, the Board is amending Regulation D (12 CFR part 204) to increase the low reserve tranche for net transaction accounts by $0.5 million, from $43.9 million for 2008 to $44.4 million for 2009.

For depository institutions that file deposit reports weekly, the new low reserve tranche and reserve requirement exemption amount will be effective for the fourteen-day reserve computation period beginning Tuesday, December 2, 2008, and for the corresponding fourteen-day reserve maintenance period beginning Thursday, January 1, 2009. For depository institutions that report quarterly, the new low reserve tranche and reserve requirement exemption amount will be effective for the seven-day reserve computation period beginning Tuesday, December 16, 2008, and for the corresponding seven-day reserve maintenance period beginning Thursday, January 15, 2009.

Section 11(b)(2) of the Federal Reserve Act authorizes the Board to require depository institutions to file reports of their liabilities and assets as the Board may determine to be necessary or desirable to enable it to discharge its responsibility to monitor and control the monetary and credit aggregates. The Board screens depository institutions each year and assigns them to one of four deposit reporting panels (weekly reporters, quarterly reporters, annual reporters, or nonreporters). The panel assignment for annual reporters is effective in June of the screening year; the panel assignment for weekly and quarterly reporters is effective in September of the screening year.

In order to ease reporting burden, the Board permits smaller depository institutions to submit deposit reports less frequently than larger depository institutions. The Board permits depository institutions with net transaction accounts above the reserve requirement exemption amount but total transaction accounts, savings deposits, and small time deposits below a specified level (the “nonexempt deposit cutoff”) to report deposit data quarterly. Depository institutions with net transaction accounts above the reserve requirement exemption amount but with total transaction accounts, savings deposits, and small time deposits above the nonexempt deposit cutoff are required to report deposit data weekly. The Board requires certain large depository institutions to report weekly regardless of the level of their net transaction accounts if the depository institution's total transaction accounts, savings deposits, and small time deposits exceeds a specified level (the “reduced reporting limit”). The nonexempt deposit cutoff level and the reduced reporting limit are adjusted annually, by an amount equal to 80 percent of the increase, if any, in total transaction accounts, savings deposits, and small time deposits of all depository institutions over the one-year period that ends on the June 30 prior to the adjustment.

From June 30, 2007 to June 30, 2008, total transaction accounts, savings deposits, and small time deposits at all depository institutions increased 5 percent (from $6,144 billion to $6,443 billion). Accordingly, the Board is increasing the nonexempt deposit cutoff level to $224.6 million for 2009. The Board is also increasing the reduced reporting limit to $1,258 million for 2009. 2

Beginning in 2009, the boundaries of the four deposit reporting panels will be defined as follows. Those depository institutions with net transaction accounts over $10.3 million (the reserve requirement exemption amount) or with total transaction accounts, savings deposits, and small time deposits greater than or equal to $1,258 million (the reduced reporting limit) are subject to detailed reporting, and must file a Report of Transaction Accounts, Other Deposits and Vault Cash (FR 2900 report) either weekly or quarterly. Of this group, those with total transaction accounts, savings deposits, and small time deposits greater than or equal to $224.6 million (the nonexempt deposit cutoff level) are required to file the FR 2900 report each week, while those with total transaction accounts, savings deposits, and small time deposits less than $224.6 million are required to file the FR 2900 report each quarter. Those depository institutions with net transaction accounts less than or equal to $10.3 million (the reserve requirement exemption amount) and with total transaction accounts, savings deposits, and small time deposits less than $1,258 million (the reduced reporting limit) are eligible for reduced reporting, and must either file a deposit report annually or not at all. Of this group, those with total deposits greater than $10.3 million (but with total transaction accounts, savings deposits, and small time deposits less than $1,258 million) are required to file the Annual Report of Deposits and Reservable Liabilities (FR 2910a) report annually, while those with total deposits less than or equal to $10.3 million are not required to file a deposit report. A depository institution that adjusts reported values on its FR 2910a report in order to qualify for reduced reporting will be shifted to an FR 2900 reporting panel.

Notice and Regulatory Flexibility Act. The provisions of 5 U.S.C. 553(b) relating to notice of proposed rulemaking have not been followed in connection with the adoption of these amendments. The amendments involve expected, ministerial adjustments prescribed by statute and by the Board's policy concerning reporting practices. The adjustments in the reserve requirement exemption amount, the low reserve tranche, the nonexempt deposit cutoff level, and the reduced reporting limit serve to reduce regulatory burdens on depository institutions. Accordingly, the Board finds good cause for determining, and so determines, that notice in accordance with 5 U.S.C. 553(b) is unnecessary. Consequently, the provisions of the Regulatory Flexibility Act, 5 U.S.C. 601, do not apply to these amendments.

Section 1207 of the 1987 Defense Authorization Act (Pub. L. 99-661, codified in 10 U.S.C. 2323) for the first time established a 5 percent goal for all Department of Defense (DOD) contracts to be awarded to SDBs. To achieve the 5 percent SDB goal, the statute authorized the award of contracts to SDBs using less than full and open competitive procedures. Specifically, DOD developed through regulation a practice known as the “rule of two” for SDBs. Pursuant to the “rule of two,” whenever a contracting officer identified two or more SDBs that it believed could perform a specific procurement at a fair and reasonable price, the contracting officer was required to set the contract aside for bidding exclusively among SDBs. In addition, SDBs would receive a 10% price evaluation adjustment in the evaluation of offers in an unrestricted or full and open competition. The DOD's SDB program was a self-certification program. SBA established eligibility criteria, but firms certified their SDB status for particular procurements. SBA did, however, process protests and appeals relating to SDB status in connection with individual procurements.

In 1994, Congress extended the authority granted to DOD by 10 U.S.C. 2323 to all agencies of the Federal Government through enactment of the Federal Acquisition Streamlining Act (FASA), Public Law 103-355. However, as a result of the Supreme Court's decision in Adarand Constructors, Inc. v. Peña, 515 U.S. 200 (1995), President Clinton ordered the Department of Justice (DOJ) to work with Federal agencies to conduct a review of all race and gender conscious Federal contracting programs and implement necessary regulatory reforms to comply with the Court's ruling. Regulations to implement FASA were delayed until the completion of this review.

In 1996, DOJ completed its review and, on May 23, 1996, published in the Federal Register proposed reforms to these Federal preferential contracting programs. 61 FR 26042-6063. The “rule of two” and the corresponding SDB set-aside authority were put on hold pending further review. This left the price evaluation adjustment for SDBs on unrestricted or full and open competitions as the primary benefit for SDB contractors. The Department of Commerce was tasked with the responsibility to determine those industries in which a price evaluation adjustment could be used in Federal procurements. This included developing the methodology for determining the benchmark limitation and developing the methodology for calculating the size of the price evaluation adjustments for eligible industries.

DOJ also proposed governmental SDB certification for all firms seeking to submit offers as SDBs for Federal prime contracts and subcontracts. DOJ believed that a governmental certification would ensure that those who were receiving SDB benefits were truly SDB qualified in accordance with the standards established by SBA, and would readily meet the Adarand strict scrutiny test. The proposal included language that allowed procuring agencies to certify concerns as eligible for the SDB program, or “In the alternative, an agency may enter into an agreement with SBA to have SBA make all determinations, including the initial determination of eligibility.” Id. at 26044. Because of SBA's long-term experience in determining social and economic disadvantage for the 8(a) program and in connection with SDB protests, agencies were strongly encouraged to enter into an agreement with SBA. In August 1997 and June 1998, SBA published regulations, including standards and procedures, governing the SDB certification process.

On December 9, 2004, Congress allowed the price evaluation adjustment authority for SDBs to expire for the majority of Federal procuring agencies. Nevertheless, it remains in effect through 2009 for DOD, the National Aeronautics and Space Administration (NASA), and the Coast Guard. However, Section 801 of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999, Public Law, 105-261, amended 10 U.S.C. § 2323(e) to prohibit DOD from using the SDB price evaluation preference if the Secretary determines at the beginning of the fiscal year that DOD achieved the SDB 5% goal in the most recent fiscal year for which data are available. DOD has met the 5% goal each year since. As such, DOD has not used the SDB price evaluation preference in DOD prime contracts since 1999. Data in the Federal Procurement Data System indicates that NASA and the Coast Guard rarely use the price evaluation adjustment.

Thus, at this point, only two agencies (NASA and the Coast Guard) are currently able to use the SDB price evaluation preference, and their use is minimal. Considering this, having SBA certify SDBs Government-wide for prime contracts is no longer the most efficient or effective way to certify firms. This rule removes SBA from the SDB certification process. In terms of prime contracts, the rule will have those procuring agencies that have an SDB prime contracts program certify firms as SDBs where the need to do so arises. In other words, if an agency uses the Price Evaluation Adjustment, then they should develop procedures for certifying SDBs. But in all other cases, agencies can rely on self-certification of SDBs. The rule recognizes that the approximately 9,545 firms currently participating in the 8(a) Business Development (BD) program are deemed certified SDB firms during their tenure in the 8(a) BD program. In addition, the approximately 2,814 SBA-certified SDB firms will remain as SDB certified firms for a period of three years from the date of their certifications where they continue to meet all applicable requirements. Finally, the rule gives procuring agencies that have an SDB prime contracts program the authority to accept SDB certifications made by private certifying entities and state and local governments where the procuring agencies believe that it is appropriate to do so. For all of these reasons, SBA does not believe that there will be a great burden on these procuring agencies to certify firms as SDBs for their programs.

The rule's effect of having procuring agencies make SDB certifications is consistent with one of the alternatives set forth in the 1996 DOJ SDB proposal. In order to make the transition smoother, SBA will conduct training seminars designed to instruct personnel from other agencies on the procedures for making eligibility determinations. This training component is also consistent with the DOJ proposal.

Moreover, as noted above, any firm seeking to represent itself as a SDB for a subcontract on a federal prime contract must currently also be certified as an SDB by SBA. Requiring certification for subcontracts is not required by law, and may contradict the express language of the Small Business Act. In this regard, § 8(d)(3)(F) of the Small Business Act, 15 U.S.C. 637(d)(3)(F), states: “Contractors acting in good faith may rely on written representations by their subcontractors regarding their status as * * * a small business concern owned and controlled by socially and economically disadvantaged individuals * * *” (Emphasis added). This language clearly suggests that Congress intended to allow large business prime contractors to rely on the self representations of subcontractors claiming to be SDBs.

SBA believes that the clear language of the Small Business Act should be adhered to. As such, SBA's regulatory change permits firms to self-represent their status as SDBs for subcontracts.

Section 124.1001 is amended to eliminate references to SBA performing SDB certifications. It also changes the provisions regarding which firms can certify their status as SDBs for both federal prime contracts and subcontracts on federal prime contracts. The rule eliminates the requirement that a firm must have received an SDB certification from SBA before it can represent itself to be an SDB. In order for a concern to represent that it is an SDB in order to receive a benefit as a prime contractor on a Federal Government procurement, the rule states that a firm must: (1) Be a current Participant in SBA's 8(a) BD program; (2) have been certified by SBA as an SDB within three years of the date it seeks to certify as an SDB; (3) have received certification from the procuring agency that it qualifies as an SDB; or (4) have submitted an application for SDB certification to the procuring agency and must not have received a negative determination regarding that application. For subcontracts, the rule permits a firm to represent that it qualifies as an SDB if it believes in good faith that it is owned and controlled by one or more socially and economically disadvantaged individuals.

The rule eliminates current §§ 124.1003 through 124.1007 relating to Private Certifiers. When SBA first promulgated regulations implementing the Government-wide SDB program, SBA anticipated having entities called “Private Certifiers” to assist in processing SDB applications. The Private Certifier aspect of the SDB program never materialized. As such, there do not need to be regulations pertaining to them.

The rule moves the content of current § 124.1008, regarding how a firm becomes certified as an SDB, to § 124.1003. It also removes the elaborate procedures for applying to SBA (or a Private Certifier) to become certified as an SDB. While the procedures are eliminated from SBA's regulations, SBA expects that some of the substance would be preserved in any procedures developed by procuring agencies. For example, the provision requiring individuals who are not members of groups presumed to be socially disadvantaged to submit statements identifying personally how their entry into or advancement in the business world has been impaired due to their having one or more distinguishing features would be required by individual procuring agencies that process applications for SDB certification.

Section 124.1004 pertains to misrepresentations of SDB status, and evolves from current § 124.1011. On a prime contract, a firm that represents that it is an SDB will be deemed to have misrepresented its status as an SDB if it (1) is not currently a Participant in the 8(a) BD program; (2) did not receive an SBA SDB certification within three years of its representation; (3) has not received an SDB certification from the procuring agency, or has not applied to the procuring agency for SDB certification; or (4) has received a negative determination. For a subcontract, a misrepresentation will occur where there is not a good faith belief that the firm is owned and controlled by one or more socially and economically disadvantaged individuals. Any certification by a firm that SBA found not to qualify as an SDB in connection with an SDB protest or otherwise will be deemed a misrepresentation of SDB status if the firm has not overcome the reason(s) for the negative determination.

The rule also removes current sections 124.1012 and 124.1013. Because SBA will no longer certify firms as SDBs, provisions relating to firms reapplying to SBA after receiving a negative determination similarly will no longer be needed. In addition, other than its list of certified 8(a) firms, SBA will no longer maintain a list of certified SDB firms. As such, any references to such a list will be eliminated.

The substance of current §§ 124.1014 and 124.1016 is moved to §§ 124.1005 and 124.1006, respectively. Current § 124.1015 is removed as unnecessary.

Finally, under this rule, SBA continues to handle protests and appeals of SDB status in the same manner as it does currently. The protest procedures are similar to applying to SBA for SDB certification. SBA requires the same information and whatever forms or supporting materials deemed relevant. Current §§ 124.1017 through 124.1024 are redesignated as §§ 124.1007 through 124.1014, respectively. SBA's final decision in an SDB protest or appeal is binding on all interested parties. If for example a procuring agency had found a firm to qualify as an SDB and SBA, through an SDB protest or appeal, ruled that the firm did not qualify as an SDB, SBA's decision would overrule the procuring agency determination. In addition, if in connection with a protest SBA finds that a firm does not qualify as a SDB for a contract that has been awarded, the procuring agency cannot take SDB goaling credit for that contract.

In general, SBA publishes a rule for public comment before issuing a final rule, in accordance with the Administrative Procedure Act and SBA regulations. 5 U.S.C. 553 and 13 CFR 101.108. The Administrative Procedure Act provides an exception to this standard rulemaking process, however, where an agency finds good cause to adopt a rule without prior public participation. 5 U.S.C. 553(b)(3)(B). The good cause requirement is satisfied when prior public participation is impracticable, unnecessary, or contrary to the public interest. Under such circumstances, an agency may publish an interim final rule without soliciting public comment.

In enacting the good cause exception to standard rulemaking procedures, Congress recognized that emergency situations arise where an agency must issue a rule without public participation. SBA must cease performing SDB certifications as of September 30, 2008. If this rule is not effective before that date, SBA might risk a violation of the Anti-Deficiency Act. SBA does not receive any Congressional funding for processing applications for SDB certification, but instead seeks re-imbursement from those Federal Agencies that utilize SBA's certification in making SDB awards under the Economy Act, (31 U.S.C. 1535). Some of these top 20 procuring agencies have notified SBA that they will cease reimbursement for the SDB certification services as of September 30, 2008. The SDB Program is a statutory requirement for only two agencies, the Coast Guard and the NASA. Other Agencies have benefited from the SDB price evaluation preference in the past, but that law expired for most agencies in 2004. In order for an Agency to order and reimburse for services under the Economy Act, it must receive a benefit from those services. The benefit most procuring Agencies receive from the SDB certification services is minimal in their view, and some have notified SBA that they will not continue reimbursements in Fiscal Year 2009. Basically, the main residual benefit is for the procuring agencies to track their SDB goaling requirement in 15 U.S.C. 644(g)(1) (the SDB goal is 5 percent of all prime contract and subcontract awards for each fiscal year). The loss of so many paying agencies and the inability of SBA to use its own appropriations to make up for shortfalls, results in a lack of funding for a viable SDB certification program. SBA is unable to use its own funds to make up any shortfall because the SDB Program is not an SBA program; the SDB program is a government wide service that SBA agreed to provide under Economy Act through interagency shared funding in 1996. Therefore, SBA cannot provide these SDB certification services beyond the end of Fiscal Year 2008 using SBA appropriations.

SBA has 2,814 SDB firms other than 8(a) participants as eligible solely for SDB status. Without this Interim Final Rule, which will allow them to self-represent their SDB status in good faith to Agencies, there will be no way, after SBA ceases certification services, for Agencies to continue to meet their annual SDB goaling requirements or for any SDBs that are not certified to be considered for SDB procurements. It is critical that this rule be issued so these affected businesses can prepare for the self-representation process.

Accordingly, SBA finds that good cause exists to publish this rule as an interim final rule in light of the urgent need. Advance solicitation of comments for this rulemaking would be impracticable and contrary to the public interest, as it would harm those small businesses seeking SDB procurements. Any such delay would be extremely prejudicial to the affected businesses.

Although this rule is being published as an interim final rule, comments are hereby solicited from interested members of the public. These comments must be received on or before November 3, 2008. SBA may then consider these comments in making any necessary revisions to these regulations.

The APA requires that “publication or service of a substantive rule shall be made not less than 30 days before its effective date, except * * * as otherwise provided by the agency for good cause found and published with the rule.” 5 U.S.C. 553(d)(3). SBA finds that good cause exists to make this final rule effective the same day it is published in the Federal Register .

The purpose of the APA provision is to provide interested and affected members of the public sufficient time to adjust their behavior before the rule takes effect. For the reasons set forth above in II, Justification of Publication of Interim Final Status Rule, SBA finds that good cause exists for making this interim final rule effective immediately, instead of observing the 30-day period between publication and effective date.

SBA is aware of many entities that will be assisted by the immediate adoption of this rule.

OMB has determined that this rule is significant regulatory action for purposes of Executive Order 12866. OMB has also determined that this rule is not major under the Congressional Review Act.

Because this rule is a significant regulatory action, a Regulatory Impact Analysis, discussing the need, cost, benefits and alternatives to the rule is required.

Yes, there is a need for this regulatory action. Under the existing regulation, SBA is required to perform SDB certification services for other Agencies. 13 CFR s. 124.1001(c). In addition, the FAR defines an SDB as a small business that has received certification from SBA as a SDB consistent with 13 CFR 124, Subpart B. This Interim Final Rule is necessary since SBA must cease performing SDB certifications as of the end of Fiscal Year 2008 due to a lack of funding. By the time this Interim Final Rule has been published, SBA will have initiated a FAR case to make the conforming changes to the FAR. These changes will ensure that eligible SDBs will be able to continue to compete for SDB procurements that Agencies use to meet their SDB statutory goals, as well as use the SDB price evaluation preference for NASA and Coast Guard, by self-representing their SDB status. It may also open up other Agencies using either private SDB certifiers or establishing Agency-specific SDB programs. In addition, it will allow these SDBs to continue to participate in the Department of Transportation's (DOTs) Disadvantaged Business Enterprise Program, 49 CFR 26.5, which has relied upon the SBA and FAR SDBs status. Moreover, the SBA Office of Inspector General early on recognized that the current funding structure for the SDB Program is unreliable and unpredictable and that there was no legal basis that assured the other Agencies would continue funding the SDB Program. SBA OIG Audit Report No. 00-19, SDB Certification Program Obligations and Expenditures. Without continued interagency funding, SBA is unable to continue to support the existing rule process by certifying SDBs for the entire Federal Government.

Currently, SBA has certified only 2,814 firms other than 8(a) participants as eligible solely for SDB status. From FY 98 through FY 07 SBA has been reimbursed by procuring agencies over $27.5 million for these SDB certifications. The procuring agencies are obligated to reimburse SBA another $1.2 million in FY 2008, so total reimbursements from procuring agencies will exceed $28.7 million since FY 1998.

The SDB procurement goal achievement calculation includes 8(a) certified firms (9,994) and SDB certified firms (2,814). Firms certified as 8(a) are also considered to be SDB for statistical purposes. In FY 2005 Federal agencies reported SDB contracts awarded to SDBs totaling $21.7 billion. When 8(a) contract award dollars are subtracted, the contracts awarded to SDBs in dollars totaled $11.2 billion, of which DoD awarded $7.4 billion or 66%. DoD was successful in awarding this amount without the use of the SDB price evaluation adjustment. Based on conversations with the other Federal agencies, virtually all of the remaining SDB dollars, $3.8 billion, were awarded under full and open competition without the use of the SDB price evaluation adjustment. During this same period, the Federal Government exceeded the SDB 5% goal, reaching 6.92%.

The SDB certification process is time consuming and costly for many small businesses. During the past five years, the Federal Government has exceeded the statutory 5% SDB goal without the use of the SDB price evaluation adjustment. Eliminating SDB certification would have little negative impact on the SDB community as long as self-representation is allowed. Presently, there is minimal use of the SDB price evaluation adjustment at the Federal prime contract level. Specifically, Congress allowed the SDB price evaluation adjustment authority to expire on December 9, 2004 for all but two agencies. Authority for the two remaining agencies was reauthorized for another three years to 2009. However, for the most part these agencies are not using the price evaluation preference to meet the 5% SDB goal. Therefore, at the prime contract level, there is little or no benefit for a firm to expend substantial time and expense to obtain SDB certification.

Therefore, continuation of the existing SDB certification process is costly, time consuming and burdensome. As opposed to this, self-representation by firms of their status in good faith is cheaper, quicker and less burdensome. SBA will continue to provide an appeal process for contract protests and SDB status. Allowing firms to self represent at the subcontracting level appears to be consistent with Congressional intent.

SBA has identified three separate alternatives to this rule: (1) Self-representation; (2) private certification, and (3) agency specific SDB certification programs.

We believe self-representation is supported by the relevant statute. In terms of subcontracting, § 8(d)(3)(F) of the Small Business Act, 15 U.S.C. 637(d)(3)(F), states: “Contractors acting in good faith may rely on written representations by their subcontractors regarding their status as * * * a small business concern owned and controlled by socially and economically disadvantaged individuals, * * * ” (Emphasis added). This language suggests that Congress intended to allow large business prime contractors to rely on self certifications by companies claiming to be SDBs. Small business concerns would make the self-representation as an SDB in good faith and the determination would be subject to SBA SDB protest and appeal procedures.

Private certifiers were contemplated under the existing SBA SDB regulations, but none were ever approved. 13 CFR 124.1003-.1009. However, the Private Certifier structure is available if an Agency wanted to go replicate or approximate those regulations and proceed with that option. Since a Private Certifier must be compensated by the Agency hiring them under contract, this option does require a procurement action and Agency funding and oversight.

Agency-specific SDB certification programs could also be established by interested Agencies. We believe this would require rulemaking and the commitment of Agency resources to creation and maintenance of each Agency's SDB program. SBA will also provide training and educational assistance on how to implement and administer a SDB certification program to any interested Agency.

This action meets applicable standards set forth in Sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. The action does not have retroactive or preemptive effect.

For purposes of E.O. 13132, the SBA has determined that the rule will not have substantial, direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, for the purpose of Executive Order 13132, Federalism, SBA determines that this Interim Final Rule has no federalism implications warranting preparation of a federalism assessment.

For the purposes of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, SBA has determined that this Interim Final Rule 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.

SBA has determined that this proposed rule does not impose additional reporting or recordkeeping requirements under the Paperwork Reduction Act, 44 U.S.C., Chapter 35.

Because the rule is an interim final rule, there is no requirement for SBA to prepare an Initial Regulatory Flexibility Act (IRFA) analysis. The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires administrative agencies to consider the effect of their actions on small entities, small non-profit businesses, and small local governments. Pursuant to the RFA, when an agency issues a rule, the agency must prepare an IRFA which describes whether the impact of the rule will have a significant economic impact on a substantial number of small entities. However, the RFA requires analysis of a rule only where notice and comment rulemaking are required. Rules are exempt from Administrative Procedure Act (APA) notice and comment requirements and therefore from the RFA requirements when the agency for good cause finds (and incorporates the finding and a brief statement of reasons in the rules issued) that notice and public procedure thereon is impracticable, unnecessary, or contrary to the public interest. In this case it would be contrary to the public interest to delay the promulgation of the rule.

Background Steps Regarding Scope of the EAR

This rule revises paragraph 732.2(b) of the EAR, which sets forth instructions on how to determine if your technology or software is publicly available, by adding mass market encryption software with symmetric key length exceeding 64-bits classified under ECCN 5D992. The addition of this phrase harmonizes with the scope of publicly available encryption software that is considered to be subject to the EAR because of the criteria set forth in § 734.3(b)(3) of the EAR.

This rule adds a note to paragraph 734.3(a)(4) of the EAR, which sets forth the items that are subject to the EAR. The note reminds readers that certain foreign-manufactured items are subject to the EAR when developed or produced from U.S.-origin encryption items that were exported pursuant to § 740.17(a) of License Exception ENC.

This rule replaces the phrase “encryption software (including source code) transferred from the U.S. Munitions List to the Commerce Control List consistent with E.O. 13026 of November 15, 1996 (61 FR 58767) and pursuant to the Presidential Memorandum of that date” with “software controlled for “EI” reasons under ECCN 5D002 on the Commerce Control List” to clarify which software this sentence is referring to in the introductory paragraph of Supplement No. 1 to part 734 “Questions and Answers—Technology and Software subject to the EAR.”

This rule clarifies text in § 738.4(a)(1) of the EAR that not all license requirements set forth under the “License Requirements” section of an ECCN refer to the Commerce Country Chart, but in some cases this section will contain references to a specific section in the EAR that contain license requirements for that particular ECCN. In such cases, you could not determine whether a license is required based on the ECCN and Country Chart alone and section § 738.4(a)(1) of the EAR would not apply. For example, “EI” controls are not included in the Country Chart; however licensing requirements for “EI” controlled items are included in § 742.15(a) of the EAR. In addition, this rule removes the reference in § 738.4(a)(2)(ii)(B) to notification requirements described in paragraph 742.15(b) for items classified under ECCNs 5A992, 5D992, and 5E992, because this rule removes notification requirements for these items. This rule also clarifies the reminder about the review requirements for certain mass market encryption items under ECCNs 5A992 and 5D992, by removing the reference to 5E992 and harmonizing the citation reference with the changes in this rule.

This rule revises § 740.3(d)(5) to clarify that not only exports, but reexports of encryption components or spare parts are subject to the special restriction in this paragraph. In addition, the term “item” has been replaced by correct terminology.

This rule removes § 740.8 of the EAR “License Exception KMI” as it has become obsolete because of the developments in the use of encryption. A consequential revision is also made to § 746.3(c) of the EAR, where License Exception KMI was listed. Products previously eligible for License Exception KMI will be accorded equivalent treatment under license or license exception. As a result of this change, this rule also removes Supplement No. 4 to part 742 “Key Escrow or Key Recovery Products Criteria.”

In § 740.13(d) of the EAR, this rule removes the quotation marks around the term “mass market” in the title to paragraph (d), paragraph (d)(1), footnote 1, paragraph (d)(3)(i) and paragraph (d)(3)(ii), because in the EAR double quotation marks around a term indicate that the word is defined in part 772 of the EAR, and mass market is not a defined term in part 772 of the EAR.

This rule revises § 740.17 of the EAR by reformatting paragraphs, removing redundant text, and clarifying text as needed. This rule revises the title of this section to indicate that this license exception also authorizes technology. The introductory paragraph to § 740.17 of the EAR is condensed to set forth the scope of § 740.17 of the EAR and include information not found elsewhere in § 740.17 of the EAR.

While this rule reformats the paragraphs in § 740.17 of the EAR, it was BIS's goal to minimize revisions to the enumeration of paragraphs used to classify encryption items in the past, so as to alleviate confusion about previous classifications provided by BIS that reference specific paragraphs and to reduce the number of revisions to industry's current product matrices. That being said, the paragraph titles have been revised to reflect review request requirements instead of destinations, end-uses, or types of end-users.

This rule removes paragraphs 740.17(a)(2) and (b)(2)(i) that exempted commodities and software from review requirements based on a previous review by the U.S. Government prior to October 19, 2000. These commodities and software remain exempt from review requirements, and BIS did not see the necessity of retaining such text in the Export Administration Regulations.

Paragraph 740.17(a) now describes exports and reexports authorized by License Exception ENC that do not require prior government review or post export reporting. The former paragraph (a)(2) “Items previously reviewed by the U.S. Government” is removed by this rule, as this paragraph is no longer necessary because of the passage of time. Former paragraph (a)(3) for end-uses other than internal development is moved to new paragraph (b)(1), because a review request submission is required for eligibility under this paragraph. Former paragraph (b)(1) for U.S. subsidiaries is moved to (a)(2), because authorization under this paragraph does not require prior review. In addition, this rule amends former paragraph (b)(4)(i)(A) (exempting encryption items not exceeding certain key lengths from the 30 day waiting period) by moving it to (b)(1)(ii)(A).

This rule removes references in paragraph § 740.17(a)(1) to “technical assistance described in § 744.9 of the EAR,” because this rule removes 744.9, see explanation set forth below under “§ 744.9.” This rule clarifies text in paragraph (a)(1) so that it is understood that License Exception ENC can be used for not only internal development, but also internal production of new products.

Paragraph 740.17(a)(2) is former paragraph (b)(1).

Paragraph 740.17(b) now sets forth those items authorized under License Exception ENC that require prior review by the U.S. Government. This paragraph also sets forth the “open cryptographic interface” restriction that applies to all paragraphs in 740.17(b), except for paragraph § 740.17(b)(1)(i). This introductory paragraph also sets forth the restriction to export or reexport cryptanalytic items to any “government end-user.” There is also a reference in this paragraph to paragraph (e) “reporting requirements” for exports and reexports under § 740.17(b).

The new paragraph 740.17(b)(1) of the EAR authorizes exports and reexports under License Exception ENC that require prior government review, but allows the export or reexport to take place immediately upon registration of the review request with BIS.

Paragraph (b)(1)(i) authorizes the export and reexport of encryption items, including EI controlled commodities or software (excluding source code) that are pending review for mass market treatment (under § 742.15(b) of the EAR), to “government end-users” and non-“government end-users” located in the countries listed in Supplement 3 of part 740, as well as to foreign subsidiaries or offices of firms, organizations and governments headquartered in countries listed in Supplement 3 of part 740. This rule adds authorization under License Exception ENC for items pending mass market review, because it was not logical to temporarily classify commodities and software under ECCNs 5A992 or 5D992 that were pending mass market review under paragraph 742.15(b) and authorize export or reexport under the designation of “No License Required (NLR)” when the possible outcome of the BIS classification of the commodities and software could be ECCN 5A002 or 5D002.

New paragraph 740.17(b)(1)(ii) authorizes exports and reexports of specified encryption commodities and software to countries not listed in Supplement No. 3 to part 740. This rule revises the format of the parameters in this section from a range to an upper limit in paragraph (b)(1)(ii)(A), former paragraph (b)(4)(i)(A). In addition, the upper limit for symmetric algorithms has been raised from “key lengths not exceeding 64 bits” to “key lengths not exceeding 80 bits.” After review has been completed on these commodities or software, BIS will issue a CCATS that will indicate authorization is under paragraph (b)(2) or (b)(3) of § 740.17 of the EAR, whichever paragraph is appropriate.

Paragraph (b)(1)(ii)(B), former paragraph (b)(4)(i)(B), authorizes exports and reexports of encryption source code that would not be eligible for export or reexport under License Exception TSU, provided that a copy of the source code is included in the review request, to non-“government end-users” located in any country except a country listed in Country Group E:1 of Supplement No. 1 to part 740 of the EAR. After the review has been completed, BIS will issue a CCATS that will indicate authorization is under paragraph 740.17(b)(2) of the EAR. The text is clarified by replacing the phrase “considered publicly available” with “eligible” in order to avoid confusion about the scope of encryption source code eligible under this paragraph.

Paragraph (b)(2) of License Exception ENC authorizes exports and reexports to non-“government end-users” located in a country not listed in Supplement No. 3 to this part or Country Group E:1 that require a prior review and 30 day waiting period. Pursuant to the new scope paragraph 740.17(b), this rule expands the scope of (b)(2) to include ECCN 5B002 to be consistent with commodities and software eligible for License Exception ENC under paragraphs (b)(1) and (b)(3) of the EAR. In addition, former paragraph (b)(2)(i) concerning transactions previously reviewed prior to October 19, 2000 by the U.S. Government is removed as the passage of time has made this paragraph unnecessary. Former paragraph (b)(2)(ii) that set forth the review request requirement is removed, as the review request requirement has been moved to the introductory text of paragraph (b)(2). Former paragraph (b)(2)(iii) is replaced by the introductory text of paragraph (b)(2).

This rule revises new paragraph (b)(2)(i), (Network infrastructure software and commodities) by adding “digital packet telephony/media (voice/video/data) over internet protocol” to the list of capabilities described.

Also in this new paragraph (b)(2)(i), the former paragraph (b)(2)(iii)(A) reference to “64 bits for symmetric algorithms” is changed to “80 bits for symmetric algorithms”, commensurate with the key length change in new paragraph (b)(1)(ii)(B). (Note: Regarding key length with respect to the authorizations and restrictions set forth in both the current and former versions of License Exception ENC § 740.17(b)(2), only `network infrastructure' commodities and software (sub-paragraph (i) in this rule) are distinguished by key length. All encryption commodities and software now enumerated in sub-paragraphs (ii)-(vi) (former sub-paragraphs (iiii)(B)-(iii)(F)) of License Exception ENC paragraph (b)(2) are controlled to “government end-users” as described, regardless of key length.)

Former paragraph (b)(2)(iii)(A)(1), new paragraph § 740.17(b)(2)(i)(A) is clarified by this rule to add quotes around the term “government end-user(s)” and now reads as follows, “Been designed, modified, adapted or customized for “government end-user(s)” or government end-use (e.g., to secure police, state security, or emergency response communications).”

This rule further revises former paragraph (b)(2)(iii)(A)(1), new paragraph (b)(2)(i)(A), which addresses aggregate encrypted WAN, MAN, VPN or backhaul throughput, by increasing the parameter from 44 Mbps to 90 Mbps.

This rule further revises former paragraph (b)(2)(iii)(A)(2), new paragraph (b)(2)(i)(B). The Wire (line), cable or fiber optic WAN, MAN or VPN single-channel input data rate is revised from “44 Mbps” to “154 Mbps.”

These revisions are not expected to result in a decrease in the number of license applications submitted for exports and reexports of items described in paragraph (b)(2) to government end-users. Most network infrastructure items currently being exported to government end-uses exceed these performance parameters. However, BIS has determined that the parameters should be adjusted in recognition of technology advances, and to avoid maintaining controls on legacy systems.

This rule replaces the “Maximum number of concurrent encrypted data tunnels or channels * * *” parameter in former paragraph (b)(2)(iii)(A)(3), new paragraph (b)(2)(i)(C) with “Media (voice/video/data) encryption or centralized key management supporting more than 250 concurrent encrypted data channels, or encrypted signaling to more than 1,000 endpoints, for digital packet telephony/media (voice/video/data) over internet protocol communications.” These amendments update these provisions of License Exception ENC to reflect advances in encryption technology. Specifically, these amendments address cryptographic developments in Datagram Transport Layer Security (DTLS)—Secure Real-Time Transport Protocol (SRTP), and encrypted communications signaling, for large Voice over Internet Protocol (VoIP) network infrastructures.

This rule also revises former paragraph (b)(2)(iii)(A)(4)(i), new paragraph (b)(2)(i)(D)(1), which addresses Air-interface coverage capabilities, by changing “maximum data rates” to “maximum transmission data rates” and changing the parameter from “5 Mbps” to “10 Mbps.” By limiting this License Exception ENC provision to the transmit (upstream) data rates and doubling the licensing threshold, these amendments reflect technology developments for certain satellite and other long-range wireless devices.

Former paragraph (b)(2)(iii)(B) that addressed encryption source code that would not be eligible for export or reexport under License Exception TSU is moved to new paragraph (b)(2)(ii), but also appears in new paragraph (b)(1)(ii)(B) for review requests that include a copy of the source code, and may be exported or reexported without a waiting period under License Exception ENC when the review request is registered with BIS.

Former paragraph (b)(2)(iii)(C), new paragraph (b)(2)(iii) is revised by removing the reference to the open cryptographic interface restriction, because this restriction is now placed in the introductory text of paragraph 740.17(b).

Former paragraph (b)(2)(iii)(C)(1), new paragraph (b)(2)(iii)(A) is amended by revising the phrase “Been modified or customized for” to read “been designed, modified, adapted or customized for.” Quotes have been added around the term “government end-user(s)” to indicate that this term is defined in part 772 of the EAR.

This rule also revises the phrase “to secure departmental, police, state security, or emergency response communications” to read “to secure police, state, security, or emergency response communications, including encryption commodities and software for external Security Operations Center (SOC)/Network Operations Center (NOC) command and infrastructure, and digital forensics/computer forensics.” With this clarification, this rule provides examples of three such systems that are controlled for their inherent government end-use: External Security Operations Center (SOC)/Network Operations Center (NOC) command and infrastructure; public safety radio (e.g., implementing Terrestrial Trunked Radio (TETRA) and/or Association of Public-Safety Communications Officials International (APCO) Project 25 (P25) standards); and digital forensics/computer forensics.

Former paragraph (b)(2)(iii)(E), new paragraph (b)(2)(v) is revised by adding a clarifying phrase after the term “quantum cryptography” to read “as defined in ECCN 5A002 of the Commerce Control List.”

Former paragraph (b)(2)(iii)(F), new paragraph (b)(2)(vi) is revised by replacing the term “controlled” with “classified under” to clarify the scope of computers in this paragraph.

This rule revises paragraph § 740.17(b)(3) of the EAR for export or reexport of commodities and software not listed in § 740.17(b)(2) of the EAR by both “government end-users” and non-“government end-users” by removing the redundant former paragraph (b)(3)(ii)(B) that explained the review procedures and instead inserting a reference to paragraph § 740.17(d) that sets forth these procedures. In addition, former paragraph (b)(3)(ii)(A) concerning transactions previously reviewed by the U.S. Government is removed as the passage of time has made this paragraph unnecessary. Former paragraph (b)(3)(i)(A) that set forth the ineligibility of commodities and software that provide an “open cryptographic interface” is removed because this restriction is set forth in the introductory text of paragraph 740.17(b). This rule adds text that clarifies the eligible locations of the end-users, because 740.17(a) addresses all exports to Supplement No. 3 countries. This rule relocates the restriction in former paragraph (f)(1) concerning “cryptanalytic items” to the introductory text of paragraph (b)(3).

Former paragraph 740.17(b)(4)(i), setting forth commodities and software that are eligible for export immediately upon registration of a review request, is moved to new paragraph (b)(1)(ii). In addition, previous paragraph 740.17(b)(4)(ii), setting forth exclusions from review requirements for certain items, is reformatted as paragraph 740.17(b)(4).

Former paragraph (b)(4)(ii)(A) for short-range wireless encryption is now in new paragraph (b)(4)(i). This rule adds examples to this paragraph of short-range wireless commodities and software. An informative sentence is also added to notify the reader that certain items excluded by this paragraph may also be excluded from review under (b)(4)(iii) (personal area networks) or (b)(4)(iv) (commodities and software that provide “ancillary cryptography”).

Former paragraph (b)(4)(ii)(B) is replaced by the third, fourth, and fifth sentences of former paragraph (c), which pertains to foreign products developed with or incorporating U.S.-origin encryption source code, components, or toolkits.

This rule adds two new review requirement exclusion paragraphs. The first new paragraph (b)(4)(iii) is for wireless “personal area network” items. This rule adds the term “personal area network” and definition, as well as examples to part 772. The other new exclusion paragraph (b)(4)(iv) is for “ancillary cryptography,” which is also a newly added term/definition in part 772. The term/definition includes examples of “ancillary cryptography.” The U.S. Government has determined that it is not necessary to review the encryption functionality of such items.

This rule clarifies the second sentence in § 740.17(c) of the EAR (restricted transfers) by adding quotes around the term “government end-users” for consistency. The third and fourth sentences in this section concerning foreign products developed with or incorporating U.S.-origin encryption products are moved to new paragraph (b)(4)(ii), because it was misplaced and redundant to text already included in another paragraph of License Exception ENC.

This rule removes former paragraph (d)(1) “Instructions for requesting review” because these instructions were redundant and inconsistent with the instructions for submissions on Form BIS-748P (Multipurpose Application) found in Part 748 of the EAR. Instructions for such submissions belong in Part 748 of the EAR.

This rule reformats former paragraph (d)(2) “Action by BIS” because this paragraph was entirely too long and needed to be divided by subject matter. The new subparagraph titles are: (i) Notification; (ii) After 30 days; and (iii) Hold Without Action (HWA).

This rule moves former paragraph (d)(3), “key length increases,” to the reporting requirement section under new paragraph (e)(2), because this requirement is in actuality a reporting requirement and not a review requirement. This report is required for commodities and software that, after having been reviewed and authorized for License Exception ENC by BIS, are modified only to upgrade the key length used for confidentiality or key exchange algorithms. This rule also makes the new key length a required element of the report.

The reporting requirements for License Exception ENC are now split into two sections: Semiannual reporting requirement and reporting key length increases. This rule clarifies that the Commodity Classification Automated Tracking System (CCATS) number is a required element of the report. This rule removes former paragraph (e)(2)(iv), which required a report for exports of ECCN 5E002 items to be used for technical assistance that are not released by 744.9, because this rule removed section 744.9 of the EAR. This rule also clarifies the purpose and scope of paragraph (e)(3), regarding reportable information on foreign manufacturers and products that use encryption items in countries not listed in Supplement No. 3 to part 740.

This rule revises the exclusion set forth in former paragraph (e)(4)(i), new paragraph (e)(1)(iii)(A), by removing the reference to paragraph (b)(1), because (b)(1) did not require prior review or post export reporting, therefore this rule moved (b)(1) to new paragraph (a)(2).

In new paragraph (e)(1)(iii)(F), this rule expands the exclusion that was in former paragraph (e)(4)(vi) for components limited to providing short-range wireless encryption functions, by making the reporting exclusion apply to all of the items in the new paragraph (b)(4), which are those items that are excluded from review requirements (certain commodities and software that provide short-range wireless; foreign products developed with or incorporating U.S.-origin encryption source code (that have not entered United States for subsequent export), components, or toolkits; wireless “personal area network” items; and “ancillary cryptography” commodities and software).

Lastly, in new paragraph (e)(1)(iii)(J), this rule adds a new provision to exclude from reporting requirements exports of items that have been determined, on a case-by-case basis do not require the burden of semi-annual reporting. Certain exports of items that do not qualify for mass market treatment, but are authorized under License Exception ENC are not of interest for national security reasons, therefore do not warrant reporting requirements. Exporters will be notified of this exclusion on issued Commodity Classification Automated Tracking System (CCATS) documents.

Former paragraph § 740.17(f) “Restrictions” is removed, because the restrictions that were in this paragraph are integrated into the introductory paragraph to § 740.17 or specific paragraphs for which they apply.

This rule revises the title of Supplement No. 3 to part 740 to read “License Exception ENC Favorable Treatment Countries,” because the former title of “Countries Eligible for the Provisions of § 740.17(a)” is no longer correct, as these countries are now eligible for provisions of § 740.17(b)(1) of the EAR. This rule adds Bulgaria, Canada, Iceland, Romania, and Turkey to the list of countries in Supplement No. 3 to part 740 of the EAR. Bulgaria and Romania joined the European Union by accession on January 1, 2007. The addition of Canada is simply for clarity, as licenses are not required to Canada for Encryption Items (pursuant to § 742.15(a)(1)) and License Exception ENC has been available for subsidiaries and offices of the Canadian government and private-sector end-users (along with the previous Supplement No. 3 to part 740 list of countries). Turkey and Iceland are added because they are members of the North Atlantic Treaty Organization (NATO). This will increase eligibility under License Exception ENC under new paragraphs § 740.17(a)(1) and (b)(1) of the EAR, which will decrease the necessity for submitting license applications, review requests, and semiannual reports.

This revision will reduce the number of license applications submitted to BIS for the export or reexport of encryption products classified under ECCNs 5A002 and 5D002 to Bulgaria, Iceland, Romania, and Turkey by 95 percent (approximately $37 million in exports and reexports for CY 2007). This revision will not change the amount of license applications received by BIS for the export or reexport of encryption products to Canada, because Canada, while not included in the list of countries that received favorable treatment under License Exception ENC, already received such benefits.

Paragraph 742.15(a) is revised by more specifically describing what is EI controlled under ECCNs 5A002, 5D002, and 5E002. This revision harmonizes with changes this rule makes to the license requirements paragraphs of these ECCNs. In addition, a sentence is added that advises exporters to review License Exception ENC prior to submitting a license to BIS. Also, the phrase “on a computer system” is removed from the introductory text of § 742.15 in order to be more consistent with the first Note in the License Requirement section of ECCN 5D002.

This rule removes former paragraph 742.15(a)(2), which explained license requirements and review policy for items classified under ECCNS 5A992, 5D992, and 5E992, because the purpose of § 742.15 is to set forth the license requirements and review policies for items controlled for encryption item (EI) reasons and these items are controlled for anti-terrorism (AT) reasons only. The license requirements and review policy for these items are found under appropriate anti-terrorism sections of part 742.

This rule removes the second sentence of 742.15(a)(2), because the indefinite language did not add to the transparency of licensing policy. The sentence stated, “Exports and reexports of encryption items to governments, or to Internet and telecommunications service providers for the provision of services specific to governments, may be favorably considered.” This rule removes the extraneous phrase “including those which authorize exports and reexports of encryption technology to strategic partners (as defined in § 772.1 of the EAR) of U.S. companies.” To be more transparent, this rule adds the phrase “or pre-shipment notification” to explain that ELAs may require pre-shipment notification. This rule adds a note to paragraph (a)(2) to remind exporters that once mass market encryption commodities and software have been reviewed by BIS and the ENC Encryption Request Coordinator (Ft. Meade, MD) and released from “EI” and “NS” controls pursuant to § 742.15(b) of the EAR, they are classified under ECCN 5A992 and 5D992 respectively, and are thereafter outside the scope of this section.

This rule removes the notification and review requirements for items classified under ECCNs 5A992, 5D992, and 5E992, which were set forth in former paragraphs § 742.15(b) introductory paragraph and § 742.15 (b)(1) of the EAR.

This rule adds a reference to the ENC Encryption Request Coordinator (FT. Meade, MD) with regard to the requirement for review of mass market encryption commodities and software.

Specific instructions for how to fill out form 748P (multipurpose application) for submission of a review request has been removed, because these instructions were redundant and inconsistent with the instructions found in paragraph (r) of Supplement No. 2 to part 748 of the EAR. Instead, a reference to this paragraph (r) is added to new paragraph 742.15(b)(1) “Procedures for requesting review.”

This rule removes former paragraph (b)(2)(iii) that provided authorization under the designation of “no license required (NLR)” for exports and reexports of encryption commodities and software pending mass market treatment review by BIS to government and non-government end-users located in countries listed in Supp. No. 3 to part 740 of the EAR or for internal use of foreign subsidiaries or offices of firms, organizations and governments headquartered in Canada or in countries listed in Supp. No. 3 to part 740 of the EAR. This authorization was based on a temporary classification under ECCNs 5A992 and 5D992, which is inconsistent with the way other items are classified in the EAR, therefore this provision is removed. Instead, encryption commodities and software will remain under the classification of ECCN 5A002 and 5D002 until 30 days have passed since registration of the submitted review request or BIS issues a classification under ECCN 5A992 or 5D992. However, this rule creates a new authorization under License Exception ENC for such commodities and software pending a decision by BIS concerning mass market treatment under new paragraph 740.17(b)(1) of the EAR. This rule adds explanatory text about this new procedure in (b)(2) “Action by BIS.”

This rule removes the former exclusion paragraphs, because it is no longer applicable and is replaced by new exclusion paragraphs from mass market review requirements under § 742.15(b). There are three new exclusions: Certain short range wireless commodities and software, wireless “personal area network” items, and “ancillary cryptography” commodities and software.

This rule condenses this paragraph to remove text that pertained to ECCNs 5A992 and 5D992.

The phrase “designed for, bundled with, or pre-loaded on single CPU computes” is revised to read “designed for computers classified as ECCN 4A994 or EAR99.” This phrase was changed to remove outdated and confusing text related to computers. This rule also removes the last phrase “and commodities and software exported via free or anonymous downloads.” This phrase was removed because it confused the public, in that it led people to believe that if they incorporated free encryption software or open source encryption into their products that it was not subject to the EAR, which is not the case.

The option to fax support documents is removed, because that method has been replaced by either e-mailing the document in PDF or sending the document by mail. A requirement to obtain express mail certification of the mailing of support documentation is added for those that intend to rely on the 30 day registration provisions of the EAR.

Paragraph (a) is divided into 5 subparagraphs that clarify existing review requirements and procedures. Former paragraph (a) is now new subparagraph (a)(1), and is revised to add a requirement to include a brief non-technical description of the type of product being submitted, e.g. , routers, disk drives, cell phones, chips, etc. Part of the introductory paragraph to Supp. No. 6 that addressed prior reviews is moved to a new subparagraph (a)(2), and is revised to add a requirement, for products with minor changes in encryption functionality, to include a cover sheet with complete reference to the previous review (CCATS#, Application Control Number (ACN), ECCN, authorization paragraph) along with a clear description of the changes. New subparagraph (a)(3) requires a description of how encryption is used in the product and the categories of encrypted data ( i.e. , stored data, communications, management data, internal data, etc.). New subparagraph (a)(4) requires, for mass market reviews, a specific description of who will be receiving the product and how the product is being marketed, as well as how this method of marketing and other relevant information ( e.g. , cost of product and volume of sales) is described by the Cryptography Note (Note 3 to Category 5, Part 2). New subparagraph (a)(5) clarifies information about any encryption source code being used.

Subparagraph (c)(1) is amended by adding the phrase “including relevant parameters, inputs and settings” to the end of the first sentence. Subparagraph (c)(6) is amended by adding more examples of communication and cryptographic functions, as well as replacing the term “encryption protocols” with a more accurate term “cryptographic protocols and methods.” An additional requirement is added to (c)(6) to describe how the protocols that are supported are used. The text of (c)(11) is revised to more clearly describe the information that would assist BIS.

The introductory text for paragraphs (d) and (e) is clarified.

This rule removes § 744.9 of the EAR that required authorization from BIS for U.S. persons to provide technical assistance (including training) to foreign persons with the intent to aid a foreign person in the development or manufacture outside the United States of encryption commodities or software that, if of U.S.-origin, would be “EI” controlled under ECCNs 5A002 or 5D002. Section 744.9 was added to the EAR in 1996 when jurisdiction over dual-use encryption items was transferred from the Department of State to the Department of Commerce. Technical assistance is treated differently under the International Trade in Arms Regulations (ITAR) than it is in EAR. Technical assistance is considered a form of “technology” under the definition of “technology” in section 772.1 of the EAR. The EAR states that technical assistance “may take forms such as instruction, skills training, working knowledge, consulting services” and that it “may involve transfer of ‘technical data.’ ” When a person performs technical assistance, which draws upon “development,” “production,” or “use” “technology” obtained in the United States or that is of U.S.-origin, then a release of “technology” takes place, which is considered an export or reexport and may require authorization under the EAR. BIS has observed that there is rarely an application for a license submitted under the requirements of section 744.9; however, requests for authorization under section 744.9 are often included in license applications for export of ECCN 5E002 Technology. This has led BIS to conclude that people are submitting license applications for technology exports and reexports when involved in technical assistance. Therefore, to harmonize the understanding of technical assistance as it is understood in the EAR with the practical application of it by the public, BIS is removing section 744.9. This removal does not remove any license requirements for controlled encryption technology released while performing technical assistance. This amendment does not affect the scope of the note in former 744.9 in that the mere teaching or discussion of information about cryptography, including, for example, in an academic setting or in the work of groups or bodies engaged in standards development, by itself would not establish a license requirement under ECCN 5E002, even where foreign persons are present. Section 744.9 is replaced by a “license requirement” note in ECCN 5E002 on the Commerce Control List.

This rule adds a sentence instructing applicants to place an “X” in the box marked “classification request” in Block 5 (Type of Application) of Form BIS-748P or select “Commodity Classification” if filing electronically, because neither the electronic nor paper forms provide a separate Block to check for submission of encryption review requests.

This rule makes an editorial correction by removing paragraph (b)(2)(iv) and redesignating (b)(2)(v) as (b)(2)(iv). This paragraph referred to the Arms Control and Disarmament Agency (ACDA), which no longer exists. However, ACDA's personnel and functions were absorbed by the Department of State in 1999. Therefore, this rule revises paragraph (b)(2)(iii) by adding national security and nuclear nonproliferation to the description of State Department's concerns. Missile technology is also added as a State Department concern because the State Department chairs the Missile Technology Export control interagency working group.

This rule removes paragraph (c)(2), which explained how to amend your Encryption License Agreement (ELA) by letter. BIS has observed a trend that industry has been submitting license applications for replacement or new ELAs when they want a change. In addition, it is more efficient for applicants to apply and track applications than letters, because of BIS' electronic application system. It is also easier for BIS to process and track submissions of applications than letters for the same reason. Therefore, this provision is removed.

This rule removes the third and fourth sentences in the introductory text of paragraph (d) that pertain to the responsibilities of a licensee with regard to ELAs. These sentences are removed, because a licensee may not transfer its license responsibilities.

This rule removes paragraph (b)(8), which referred to records related to key escrow encryption items under License Exception KMI. This rule removes License Exception KMI and Supplement No. 4 to part 742 “Key Escrow or Key Recovery Products Criteria,” therefore this recordkeeping requirement no longer exists.

This rule moves paragraph (n) “Interpretation 14: Encryption commodity and software reviews,” to a new note under paragraphs 740.17(b) and 742.15(b), so that exporters do not miss this important information about when to submit a new product review when a change has occurred in the encryption product. The text of this paragraph is also revised for clarity. The note explains that a new product review is not required when a change involves: the subsequent bundling, patches, upgrades or releases of a product; name changes; or changes to a previously reviewed encryption product limited to updates in an encryption software component (e.g., version updates of an encryption library that is called by a product to provide encryption functionality where the encryption library has either already been reviewed or did not require prior review.)

This rule removes the definition of “strategic partner” as this term is not used in the control or licensing of encryption items. This rule also adds definitions for two new terms “ancillary cryptography” and “personal area network,” which are associated with new review and reporting exclusions in License Exception ENC.

This rule revises the Nota Bene to the Cryptography Note at the beginning of Category 5 Part 2 in order to harmonize it with the revisions in this rule.

This rule clarifies what is controlled for “EI” reasons in ECCNs 5A002, 5D002, and 5E002 by replacing the text “EI applies to encryption items transferred from the U.S. Munitions List to the Commerce Control List consistent with E.O.13026 of November 15, 1996 (61 FR 58767) and pursuant to the Presidential Memorandum of that date. Refer to § 742.15 of this subchapter.” with appropriate text that refers to specific paragraphs within those ECCNs for which EI applies. For ECCN 5A002, the new EI control reads “EI applies to 5A002.a.1, a.2, a.5, a.6 and a.9. Refer to § 742.15 of the EAR.” For ECCN 5D002, the new EI control reads, “EI applies to “software” in 5D002.a or c.1 for equipment controlled for EI reasons in ECCN 5A002. Refer to § 742.15 of the EAR.” For ECCN 5E002, the new EI control reads, “EI applies to “technology” for the “development,” “production,” or “use” of commodities or “software” controlled for EI reasons in ECCNs 5A002 or 5D002. Refer to § 742.15 of the EAR.” In addition, License Exception ENC is added to the License Exception section of each of these ECCNs, because it is the principal license exception for EI controlled items.

This rule removes the license requirement notes section from ECCN 5A002, because there is no Wassenaar reporting requirement for this ECCN. In addition, this rule makes editorial corrections to the Related Controls paragraph by replacing the use of the term “items” with commodities when referring to ECCN 5A002 and 5A992. Moreover, this rule clarifies that if commodities are listed in paragraphs (a) through (f) in the Note to 5A002, and therefore the commodities are classified under ECCN 5A992, then the related software and technology are classified under ECCNs 5D992 and 5E992, respectively. This rule also revises Related Controls note 2 to be consistent with the mass market review procedures of § 742.15 of the EAR. This note now reads “2) After a review and classification by BIS, mass market encryption commodities that meet eligibility requirements are released from “EI” and “NS” controls. These commodities are classified under ECCN 5A992.c. See § 742.15(b) of the EAR.”

This rule revises the anti-terrorism (AT) controls for ECCN 5A992, by placing the entire entry under AT Column 1 controls, for ease of understanding and compliance. This rule adds a new paragraph 5A992.c. This new paragraph clarifies that a mass market commodity is classified under ECCN 5A992 upon completion of Government review of a commodity in accordance with paragraph 742.15(b) of the EAR, when that review determines that the commodity meets the requirements for mass market treatment. Encryption items are no longer presumed eligible for mass market treatment while pending Government review.

This rule removes the third note in the License Requirement section, because the information in it does not harmonize with the revision made in this rule. In addition, this rule adds another note to the Related Controls paragraph to inform the public about the review and classification of mass market software.

This rule revises the anti-terrorism (AT) controls for ECCN 5D992, by placing the entire entry under AT Column 1 controls, for ease of understanding and compliance. Paragraphs 5D992.a.1 and a.2, and 5D992.b.1 and b.2, are combined as 5D992.a and 5D992.b, respectively, in order to simplify the entry. This rule also removes paragraph 5D992.c (“software” designed or modified to protect against malicious computer damage, e.g. , viruses) from ECCN 5D992, while adding a note in the Related Control stating, “This entry does not control “software” designed or modified to protect against malicious computer damage, e.g. , viruses, where the use of “cryptography” is limited to authentication, digital signature and/or the decryption of data or files.” Certain software for protection against malicious damage that meet the criteria of the Related Control note are thus now decontrolled and classified as EAR99, unless the software performs functions that are controlled under other ECCNs (whether under Category 5, part 2 or elsewhere in the Commerce Control List). Such software remains subject to the EAR and may be classified under ECCN 5D002 or 5D992 if it performs cryptographic functionality controlled by these Category 5, part 2 ECCNs ( e.g. , data or file encryption, including of user or system data under Secure Socket Layer (SSL) encryption, even if the cryptographic functionality is not directly user accessible.) Examples of software decontrolled by this change include certain firewall and other software for the screening of digital content and the detection and removal of viruses, spyware and unsolicited commercial e-mail.

This rule also adds a new paragraph 5D992.c. This paragraph clarifies that mass market software is classified under ECCN 5D992.c upon completion of Government review of the software in accord with § 742.15 of the EAR when that review determines that the software meets the requirements for mass market treatment. Encryption software is no longer presumed eligible for mass market treatment.

This rule adds a License Requirement Note to remind people to consider the possibility of the release of technology when performing technical assistance; the note reads, “When a person performs or provides technical assistance that incorporates, or otherwise draws upon, “technology” that was either obtained in the United States or is of U.S.-origin, then a release of the “technology” takes place. Such technical assistance, when rendered with the intent to aid in the “development” or “production” of encryption commodities or software that would be controlled for “EI” reasons under ECCN 5A002 or 5D002, may require authorization under the EAR even if the underlying encryption algorithm to be implemented is from the public domain or is not of U.S. origin.” In addition, in order to harmonize with the revisions in this rule and for consistency, this rule adds text to the Related Controls paragraph of the List of Items Controlled section to read “This entry does not control “technology” “required” for the “use” of equipment excluded from control under the Related Controls paragraph or the Technical Notes in ECCN 5A002 or “technology” related to equipment excluded from control under ECCN 5A002. This “technology” is classified as ECCN 5E992.”

This rule revises the anti-terrorism (AT) controls for ECCN 5E992, by placing the entire entry under AT Column 1 controls, for ease of understanding and compliance. This rule revises the references in 5E992.a and .b to conform to revisions included in this rule.

Although the Export Administration Act expired on August 20, 2001, the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as extended by the Notice of July 23, 2008, 73 FR 43603 (July 25, 2008), has continued the Export Administration Regulations in effect under the International Emergency Economic Powers Act.

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

2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et. seq. ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This rule involves two collections of information subject to the PRA. One of the collections has been approved by OMB under control number 0694-0088, “Multi Purpose Application,” and carries a burden hour estimate of 58 minutes for a manual or electronic submission. The other collection has been approved by OMB under control number 0694-0104, “Commercial Encryption Items Under the Jurisdiction of the Department of Commerce,” and carries a burden hour estimate of 7 hours for a manual or electronic submission. Send comments regarding these burden estimates or any other aspect of these collections of information, including suggestions for reducing the burden, to Jasmeet Seehra, OMB Desk Officer, by e-mail at jseehra@omb.eop.gov or by fax to (202) 395-7285; and to the Office of Administration, Bureau of Industry and Security, Department of Commerce, 14th and Pennsylvania Avenue, NW., Room 6622, Washington, DC 20230.

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

4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military and foreign affairs function of the United States (5 U.S.C. 553(a)(1)). Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this interim final rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under the Administrative Procedure Act or by any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et. seq. ) are not applicable. Therefore, this regulation is issued in interim final form. Although there is no formal comment period, public comments on this regulation are welcome on a continuing basis. Comments should be submitted to Sharron Cook, Office of Exporter Services, Bureau of Industry and Security, Department of Commerce, 14th and Pennsylvania Ave., NW., Room 2705, Washington, DC 20230.

The Federal Civil Penalties Inflation Adjustment Act of 1990 (FCPIAA), as amended by the Debt Collection Improvement Act of 1996 (DCIA), 1 requires the head of each Federal agency to adjust by regulation, at least once every four years, the maximum amount of CMPs provided by law within the jurisdiction of that agency by the cost of living adjustment defined in the FCPIAA, as amended. 2 Because the purposes of the inflation adjustments include maintaining the deterrent effect of CMPs and promoting compliance with the law, the Commission monitors the impact of inflation on its CMP maximums and adjusts them as needed to implement the requirements and purposes of the FCPIAA. 3

Congress this year enacted the CFTC Reauthorization Act of 2008 at Title XIII of the Food, Conservation, and Energy Act of 2008, P.L. 110-246, 122 Stat. 1651 (eff. May 22, 2008)(Farm Bill). Section 13103(a)-(c) amends sections 6(c), 6b and 6c of the Act, in each case increasing the maximum civil monetary penalty that may be imposed “in any case of manipulation or attempted manipulation” in violation of section 6(c), 6(d), or 9(a)(2) to “the greater of $1,000,000 or triple the monetary gain” to the violator. 4

The inflation adjustment requirement applies to:

[A]ny penalty, fine or other sanction that—

(A) Is for a specific monetary amount as provided by Federal law; or

(ii) Has a maximum amount provided for by Federal law; and

(B) Is assessed or enforced by an agency pursuant to Federal law; and

(C) Is assessed or enforced pursuant to an administrative proceeding or a civil action in the Federal courts[.] 28 U.S.C. 2661 note. The Act provides for CMPs that meet the above definition, and are therefore subject to the inflation adjustment, in three instances: Sections 6(c), 6b, and 6c of the Act. 5

1. The Commission in the last several years has expanded its capability to accept electronic filings. As part of this process, the Commission has sought to develop a means by which publicly regulated utilities could file tariffs, rate schedules, and other jurisdictional contracts and agreements electronically in a fashion that would permit the Commission to assemble and organize the disparate pieces of these agreements for display and for use by the Commission and the public. Commission staff in collaboration with the wholesale electric and gas quadrants of the North American Energy Standards Board (NAESB), and representatives from the Association of Oil Pipelines (AOPL) developed a set of standards to be used by companies in making tariff and tariff related filings at the Commission. The Commission is adopting these standards as the requirement for making tariff and tariff related filings.

2. The development of these standards began in 2004 with a Notice of Proposed Rulemaking  1 in which the Commission proposed to require public utilities, power administrations, interstate and intrastate gas pipelines, and oil pipelines to file tariff and tariff related material electronically. The Commission proposed to develop an electronic tariff database to store tariff and tariff related information for retrieval by Commission staff and the public. In order to implement a tariff database system that would permit such functionality, Commission staff developed a software system for tariff filings similar to that used in filing forms with the Commission. Commission staff worked with many industry representatives and experts to test this software and held public meetings to demonstrate and receive comment on the software.

3. While some commenters supported using the Commission-provided software as an acceptable solution, others were concerned that this software might not work well for making tariff filings. Some also were concerned that the Commission software would not integrate well with their existing tariff management systems and that formatting tariffs to fit the parameters of the software could be difficult or time consuming.

4. As a result of the review of the comments, on February 1, 2007, a public meeting was held with NAESB to discuss NAESB's assistance in the process of developing the protocols, standards, and data formats needed to provide tariff and related data to enable the Commission to develop a database to track electronic tariff and rate schedules filings. At the meeting, NAESB agreed to develop these standards and report back to the Commission.

5. NAESB established two committees, a business eTariff Subcommittee and an eTariff Technical Task Force. These committees included representatives from the wholesale natural gas industry, wholesale electric industry, oil pipelines, intrastate natural gas pipelines, and third party software developers who worked along with Commission staff to develop the applicable standards. Between February 1, 2007 and January 23, 2008, these committees held a total of 16 meetings in various cities over 24 days. Total attendance in all the meetings was 991 participants either in person or by electronic conferencing, with an average attendance of 62 people for each meeting.

6. The committees determined not to use the Commission developed software, but instead to develop standards that would enable individual companies to develop or procure software for making tariff filings that would best meet the needs of each company's business requirements. The Executive Committees for both the Wholesale Gas and Wholesale Electric Quadrants of NAESB approved the standards on March 4, 2008, and the NAESB membership ratified the standards on April 4, 2008.

7. On April 15, 2008, NAESB filed the standards with the Commission along with a record of the NAESB proceedings. This material included questions about the policies to be followed in using the standards to make tariff filings. NAESB also provided a copyright waiver stating: “While the eTariff standards are copyrighted by NAESB, a limited waiver is granted to the FERC to modify and post any excerpts of the eTariff standards and eTariff work products that they deem appropriate. These excerpts will be available for companies to reproduce only for their own internal use.”

8. On April 17, 2008, the Commission issued a Supplemental Notice of Proposed Rulemaking (NOPR) proposing to use the NAESB developed standards as the means to effectuate electronic tariff filing. 2 The NOPR also proposed solutions to several issues raised during the NAESB process, such as the filing process for shared and joint tariffs. Twenty comments were filed, with most generally favoring the use of the NAESB standards. 3

9. As the background indicated, this proceeding has followed a long and winding road, with a number of detours and U-turns, but we have reached the end of the road and are adopting a final set of standards for electronic tariff filings. 4 We again want to thank NAESB, its Board of Directors, and the numerous volunteers from across the spectrum of the gas, electric, and oil industries who were able to meet with staff and develop a set of standards and protocols that will achieve the Commission's goal of establishing a robust electronic filing environment for tariffs and tariff related material and will make it possible for the Commission staff and the public to retrieve this material from a database. We will adopt the standards and protocols developed through the NAESB collaborative process in place of providing Commission-created software. Adoption of these standards and protocols will provide each company with enhanced flexibility to develop software to better integrate tariff filings with their individual tariff maintenance and business needs. These standards and protocols also will provide an open platform permitting third-party software developers to create more efficient tariff filing and maintenance applications, which will spread the development costs over larger numbers of companies.

10. Over the last few years, the Commission has greatly expanded its ability to accept electronically filed material, including interventions, protests, rehearings, complaints, and applications for certificates and licenses. 5 We now are expanding these filings to include tariffs and tariff-related material, which comprise a large portion of the Commission's workload. But tariff filings raise special challenges that our current filing systems do not address. eLibrary is designed and works extremely well as a repository that stores, and permits retrieval of, all documents filed in individual docketed proceedings. But while an individual tariff filing is made in an individual docket, the tariff itself is an organically changing document that is comprised of individual filings made in many different dockets over time. In order for the Commission and the public to obtain a complete picture of a company's tariff, these various provisions need to be integrated into a single system that will provide information as to the status of tariff provisions, permit the assembly of a complete tariff, and permit tariff related research. Indeed, for tariffs filed on paper, the Commission has managed these tariffs as a database by keeping tariff books, open to the public at our headquarters, in which new pages are inserted to replace old pages to reflect revisions, and such changes are recorded in “numbering” sheets to ensure that the tariff reflects the currently effective tariff. 6 The standards we are adopting in this Final Rule merely replace this paper system with a very similar electronic database that will similarly track the tariff submissions and tariff history, but in a form that will make tariff information more widely available over the Internet.

11. The database will provide easier access to tariffs and allow the viewing of proposed tariff sections in context. One of the principal benefits of such a database is the ability to do historical research into tariffs. For example, proceedings such as complaints may involve past tariff provisions that have already been revised by the utility by the time the complaint is considered by the Commission. In order to expeditiously process such filings, the Commission, the parties, and the public need to be able to obtain the tariff provision that applies to the time period under review, rather than the currently effective tariff provision. In fact, the effectiveness of tariff provisions arises in a number of contexts, particularly in complaint cases, in which the Commission and the participants need to know the effective tariff at a particular point in time. 7

12. The set of NAESB standards provides a foundation for building such a database. The standards define an extensible markup language (XML) schema  8 that will permit filers to assemble an XML filing package that includes the tariff changes, the accompanying tariff-related documents, such as the transmittal letter, rate schedules, and spreadsheets that are required to accompany various tariff filings, and other required information such as the proposed effective date of the filing. Upon the receipt of the filing electronically, the XML schema will enable the Commission to parse  9 (divide) the filed package into its component parts, place the filed documents into its eLibrary system and provide the metadata  10 that will permit automated organization of the tariff and permit the Commission and the public to search that database. As an example of the expanded public access to tariffs, the Commission currently provides electronic access to approximately 150 NGA interstate pipeline tariffs utilizing the FASTR standards. That access under the NAESB standards should expand to at least 1600 companies' tariffs. The NAESB standards also will provide flexibility to companies making tariff filings by enabling each regulated company to design or purchase software for creating tariff filings that will best accommodate its filing patterns and needs.

13. Some of the principal requirements of the standards and regulations being adopted here are:

14. Although the comments generally supported the adoption of the NAESB standards, some commenters suggested the adoption of alternative approaches. As the Commission has previously stated: “Standardization, by definition, requires accommodation of varying interests and needs, and rarely can there be a perfect standard satisfactory to all.”  15 We find that the NAESB standards best accommodate the needs of regulated utilities in making filings electronically and the needs of the Commission and the public for an electronic system that will enable efficient, user-friendly retrieval of tariffs. We will discuss below the technical requirements applicable to electronic tariff filing and the comments received on various aspects of the standards.

15. The companies or entities covered by this Final Rule are those that submit tariffs, rates, or contracts with the Commission pursuant to the Natural Gas Act (NGA), the Natural Gas Policy Act of 1978 (NGPA), the Federal Power Act (FPA), the Interstate Commerce Act (ICA), the Flood Control Act, the Bonneville Power Act, the Northwest Power Planning Act, and other relevant statutes. Included among the companies or entities covered by the requirements are: RTOs and independent system operators (ISOs); power authorities and federal power marketing administrations which file rates, contracts, or tariffs at the Commission; intrastate natural gas pipelines that file rates and operating conditions pursuant to the NGPA; interstate natural gas pipelines subject to the NGA which serve only an industrial customer; and companies or entities that may make voluntary tariff filings, such as reciprocity filings pursuant to Order No. 888.

16. Using the new XML schema, companies, and all those authorized to make filings on behalf of the company, such as outside counsel, will make tariff related filings using the existing eFiling portal. As described below, the filing process will be modified slightly from the current eFiling process, in particular to include a company registration that will provide increased security for the filing, as well as additional e-mail notifications of potential problems with the filing.

17. The person making a tariff filing must have previously registered in eFiling (Filer). Upon successfully logging into the FERC eFiling portal, the Filer will be presented with the introductory screen indicating success in accessing the site, and presented with a link to the filing creation part of the site, which will include an option to make a Tariff filing (eTariff portal).

18. The eTariff portal will prompt the Filer to enter the company identification number assigned during the company registration process and an associated password. After successfully passing this step, the Filer will upload an eTariff XML filing package that conforms to the XML schema. Once the filing is uploaded, the eFiling web page will indicate the filing has been submitted.

19. After the filing has been submitted, a Confirmation of Receipt will be e-mailed to both the e-mail address of the Filer and to the e-mail address on file with FERC for the company identification number. This e-mail only acknowledges the receipt of the filing through the eFiling portal, provides a timestamp, and indicates that the filing is placed in the queue to be processed.

20. The XML filing package will be validated programmatically by an eTariff verification process. Depending upon the success of the verification process, a number of e-mails will be sent.

21. Once passed validation, the standard eFiling e-mail will be sent to indicate whether the Secretary of the Commission has accepted and docketed the filing or rejected it. As occurs with all filings, the docketing e-mail does not guarantee that other filing deficiencies will not result in rejection or other action pertaining to the filing later in the review processes within the Commission. After this step, the filing is passed on to eLibrary, the tariff database and other Commission systems.

22. INGAA requests that the Commission establish a procedure for submission of tariff filings in the event of an electronic failure of the Commission's eFiling and eTariff system. Such a request is beyond the scope of this rulemaking. In Order No. 703, the Commission delegated to the Secretary of the Commission the authority to develop procedures for electronic filing, including procedures to be followed in case of an electronic failure of the eFiling system. 17 Since the tariff filing component will be a part of the eFiling system, the same procedures followed by the Secretary for electronic failure will apply to eTariff as well.

23. Under the standards, the tariff filing must be made in conformance with the XML schema. The schema essentially is a method by which the filing entities can communicate information to the Commission. The schema proscribes the metadata elements and the textual information that must be included in the filing package. The data elements included in the XML package are required to properly identify the nature of the tariff filing, organize the tariff database, and maintain the proper relationship of tariff provisions in relation to other provisions. For example, these elements will identify which tariff provision is being revised so that the revised tariff provision can be placed electronically in the proper location within the tariff hierarchy. The filing package itself will include the text of tariff changes as well as all filing attachments, such as transmittal letters. 18 The XML schema will be maintained on the Commission Web site along with the required codes, descriptions, and other requirements, as well as information that may be useful to those developing filing software. 19 Contemporaneously with the issuance of this Final Rule, we are posting on the Web site the XML schema along with the descriptions of the fields used in the schema, the instruction manual and codes to be used with the XML schema.

24. Although we do not envision that the schema and related code values will need to be changed frequently, the Secretary of the Commission, under Order No. 703, has delegated authority to make modifications to them if necessary. 20 Before any such changes are made, a notice of the proposed change will be issued sufficiently in advance to permit companies to revise their software.

25. A few commenters object to the use of the XML schema for electronic filing and argue that the Commission should simply rely on filings in eLibrary. 21 They argue that documents are maintained in standard word processing formats and that filing such tariffs through eLibrary would be easier on the filer. They assert that any tracking of such filings could be accomplished by assigning a docket number. Nevada Power, for example, argues that managing tariffs is a document management, rather than a database function. It maintains that the ability to access prior tariffs can be solved by retaining all previous effective versions of the tariff.

26. As explained above, eLibrary is principally a system that manages and tracks filed documents based on individual proceedings (dockets). It was neither designed, nor will it function well, to retrieve individual sections or pages of tariffs that are filed in different dockets over the course of many years. The tariff database, on the other hand, will enable the Commission staff, as well as the public, to access all or portions of a company's tariffs and rate schedules compiled using date, text, and status criteria.

27. The use of a database to track individual pages or sections of tariffs is not inappropriate to the task of managing tariffs, as the comments suggest. The Commission has for over twenty years maintained the FASTR database for gas tariff filings and has made the results of that database available to the public. The XML schema on which the industry agreed will update the FASTR methodology to provide an even more effective database for managing tariffs and conducting tariff searches.

28. Some commenters suggest assigning a docket or other unique number to each tariff or rate schedule, and Nevada Power suggests that instead of an electronic database, each utility could file an updated history of changes to its tariff so that customers can determine where to find specific sheets in which they are interested. Nevada Power attached, as an example of its proposal, a history for its OATT that is only six pages long covering a relatively small number of tariff filings.

29. These solutions would require users to search through reams of filing materials to obtain the particular section or page of the tariff that they need. Such solutions are not a reasonable substitute for a database, given the large number of gas, oil, and electric companies, some of whom may make hundreds of tariff filings a year, with a list of changes that would eventually grow to hundreds of pages using the Nevada Power approach. PJM Interconnection, LLC for example made over 130 tariff related filings in a one year period. Trying to keep track of, and find, particular tariff provisions in this massive amount of data using only a docket or other numeric identifier and a spreadsheet would be a monumental task. 22 But the tariff database, using the metadata supplied with each filing, will be able to store and retrieve this information.

30. Those arguing for an eLibrary approach envision that tariff documents would not be filed in individual sections, but as entire documents. But not all industry members supported this entire document approach. The gas pipelines, for example, supported the continued use of sheet-based filings in which utilities file only the specific tariff sheet that is being revised. 23 Other tariffs are so large that filing them as a single document would be unwieldy. 24 The flexibility to file tariffs using different approaches was key to developing the NAESB standards, and the industry consensus supporting those standards. 25 The approach suggested by the commenters would not provide the flexibility the industry sought. The use of a database utilizing the NAESB standards provides that flexibility and is the most efficient method of processing such filings in a way that will permit the easy and efficient integration of such individual filings into an entire tariff.

31. As we have discussed above, the development of standards requires cooperation and accommodation between companies with different needs and requirements. The NAESB process provided a means by which various members of the affected industries and customers, including those from the oil pipeline industry, could develop a set of standards that reasonably meet the needs of a large range of different types of tariff filers, large and small companies, frequent and infrequent tariff filers, companies using different methods of storing tariffs, including databases, word processing software, and spreadsheets. After examining a variety of alternative approaches over 24 days of meetings, a consensus of the gas and electric industry  26 agreed upon the use of the data elements and XML schema as the most efficient means for electronically filing tariffs. 27 We therefore will adopt the database approach and standards as approved through the NAESB process.

32. CAISO asks that the RTOs not be required to provide all the metadata required by the standards or, if it is not possible to eliminate the metadata, that such metadata be kept to a minimum. The technical meetings with NAESB were designed to develop the minimum required metadata that would be necessary to feed and operate the database. The CAISO has not indicated specific metadata elements that can safely be eliminated and still maintain the integrity of the database.

33. The Commission's current regulations require companies to file tariff sheets that include specifically defined nomenclature to identify each sheet of the tariff. 28 A company is required to file only the tariff sheets containing the tariff revisions or changes.

34. Based on the NAESB meetings and the comments submitted, we will allow far more flexibility in the structure and identification of tariffs. Companies may determine to structure their tariffs either using the existing tariff sheet format or as sections. Companies will also be given more flexibility to file tariffs either by dividing the tariff into sheets or sections and filing only the revised sheet or section, or for a wide range of tariff documents, by filing the entire tariff document that is revised. In order to ensure that the Commission and the public have the ability to identify specific tariff provisions, versioning information is required to be included as part of the XML package. But, this information has been simplified and will no longer need to be included as text on individual sheets or sections, with the exception of certain documents filed as PDFs.

35. In order to compile the tariff database, the standards require companies to file tariff text as a specific data element. Companies, however, will be permitted to choose whether to continue to number tariff provisions as individual tariff sheets ( e.g. , Sheet No. 1) or sections ( e.g. , Section 1.1.1). Except as discussed in the following section with respect to open access tariffs, companies will be allowed to determine based on the nature of the tariff and frequency of filing whether to file tariffs by breaking the tariff into sheets or sections or by filing the tariff as an entire document. Companies that initially file using the entire document option will be allowed later to divide the tariff document into sections or sheets. However, a company that has already broken its tariff into sections or sheets, will not be able to recompile those sheets or sections and use the entire document option unless a company files a request for waiver.

36. The NAESB standards provide that tariff text must be filed either using the RTF file format or the PDF file format. 29 Tariffs filed under the entire document option may be filed either in RTF or PDF. Tariffs filed as sections or sheets must be filed in RTF, due to limitations on the ability to process and assemble PDF files. 30

37. The comments support the flexibility to use sheet, section, and entire document options using PDF format. 31 AOPL for example “strenuously supports this aspect of the rule which provides benefits to both shippers and pipelines.”  32

38. TransCanada asks that the Commission clarify whether and under what conditions companies that initially file using the sheet-based option may be allowed to later re-file using the section-based option, and vice-versa. For both the shipper and Commission staff benefit, we certainly would not encourage utilities to switch back and forth frequently between a sheet and a section-based system, because such a change will make the ability to research past provisions more difficult. 33 But because both the sheet and section approaches provide equivalent granularity and flexibility for users, utilities can make such a change without obtaining special permission. The only time special permission is required is if a utility wants to covert from a sheet or section based approach to entire document, because such a change does reduce usability.

39. AGA requests that tariffs be fully text searchable. As described above, all tariffs, including those filed using PDF, must be filed in text searchable format.

40. Tariffs for interstate natural gas pipelines and electric utilities must be filed by breaking the document into sheets or sections. Unlike individual service agreements or contracts that affect only the signatories to the agreements, the open access transmission tariffs affect a wide variety of customers and are the most frequently revised. Moreover, because of the breadth of these tariffs, and the need to review and research portions of these tariffs, it would not be efficient for staff or for the public to have these documents refiled in their entirety every time a company proposes to revise an individual tariff section or page.

41. We are revising §§ 35.9 and 154.102 to require that open access transmission tariffs, which will include other open access documents and documents of general applicability, such as ISO/RTO operating agreements and market rules, must be filed as sheets or sections. Because the electric OATTs are based on the Commission's pro forma OATT, we have specified the minimum required divisions for such filings. For non-ISO/RTO OATTs, the OATT must be divided at least at the section 1.0 level, with individual sections for each schedule or attachment. Because ISO/RTO OATTs are much more complex, ISO/RTOs will be required to divide their OATTs at the 1.1 level at a minimum. Filers are encouraged to use even smaller divisions that are appropriate to their individual tariffs and filing patterns. In addition, to aid electric utilities in filing their OATTs, we are posting on our Web site a pro forma OATT divided into the largest allowable sections, as well as information that will help companies develop Microsoft® Word macros to electronically divide tariffs at this level.

42. Because we have not specified a pro forma interstate natural gas transportation tariff, the regulation we adopt requires that the interstate natural gas pipeline open access tariffs filed as sections be divided so that each section includes only related subject matter and is of reasonable length. 34 Negotiated rate agreements and other non-conforming service agreements need not be divided, but can be filed as entire documents.

43. EEI requests that non-RTOs be allowed to file their OATTs as single documents, maintaining that these are relatively static documents and that allowing the filing of an entire document will reduce the time and expense necessary to break such tariffs into sections and may simplify the filing software that such companies need to build or acquire.

44. We will not relax the requirement to at least divide the pro forma OATTs at the 1.0 level. As described above, OATTs can be large and unwieldy documents and run to over 160 pages; dividing the document at the 1.0 level will ensure that Commission staff and the public can review and search for tariff provisions relating to the same subject matter. Dividing the OATT at the 1.0 level will result in only 57 sections, each addressing a different topic, and such division will only have to be done once. Moreover, EEI maintains that most OATTs are maintained as Microsoft Word documents. Commission staff has developed and will post a macro that in many cases will divide the OATT at the appropriate level. Commission staff also has posted a pro forma OATT divided into the requisite sections that can be used as a reference. Creating the sectionalized pro forma OATT manually only took one hour. In balancing the burden of a one-time conversion of an OATT into individual sections against the benefits of being able to easily locate and search for specific OATT sections, we find that the benefits of requiring that OATTs be broken into sections outweigh the costs.

45. AGA argues that the Commission should set a minimum requirement for gas pipelines similar to that set for electric utilities and suggests that the minimum should at least match the table of contents and include as a separate section each topic listed under General Terms and Conditions of Service. We find that this suggestion does provide useful guidance as to the minimum sections required and therefore revise the regulation in § 154.102 accordingly.

46. The Commission currently requires each tariff page to include a version number that can be used to identify the particular revision of that page ( e.g. , First Revised Sheet No. 1 would replace Original Sheet No. 1). Because tariff provisions change, often frequently, this convention is useful over time for identifying and referring to particular tariff provisions in orders. With the adoption of the NAESB standards, the versioning requirement will be modified and made less complicated.

47. The NAESB standards require that each sheet, section, or entire tariff document be identified with a version number in an x.y.z format. 35 The x.y.z format will accommodate the same level of identification as our existing nomenclature, including items such as squeezed and retroactive sheets. As long as each tariff section, sheet, or entire document is identified uniquely, companies can choose how complex to make their identification. Some companies may want to continue this detailed approach to better identify the placement and relative position of tariff sheets and sections, and the x.y.z format will accommodate such identification. Other companies may not choose to include such a detailed hierarchy of changes. Companies, for example, may choose simply to numerically number each section, sheet, or entire tariff document as they file it, using just the x field.

48. As proposed in the NOPR, and adopted in this Final Rule, identification of versioning need not be included in the text of the individual tariff revisions that are filed with the exception of tariffs filed in PDF format. Companies however may choose to include such identification in the tariff text if they desire. The XML schema requires that the requisite versioning information be included as metadata, and versioning information will be made available to staff and the public in the tariff database. Moreover, to ensure that the versioning information is available to the public on eLibrary, the Commission will use the metadata provided in the XML package to generate a document on eLibrary that contains the appropriate versioning information. Because we are creating this document by electronically combining information from the XML package, the formatting of the versions and tariff text may not appear identical to the filing made by the company.

49. The only exception to this rule is for tariff documents filed using PDF. Because PDF is not a textual format and does not permit easy electronic manipulation, we cannot generate a document for eLibrary that contains the correct versioning information. For these documents, therefore, the Instruction Guide requires that the first page of the tariff document include the required information: Company name, tariff title (if applicable), and the appropriate version number.

50. INGAA suggests that for gas tariffs, the regulations should continue to require that the first section or sheet of the tariff include: The FERC Gas Tariff Volume Number, the name of the natural gas company, as well as the name, title, address, telephone number, e-mail address and facsimile number of a person to whom communications concerning the tariff should be sent. We will modify the regulation to continue this requirement.

51. EEI recommends that the Commission eliminate various formatting requirements required under Order No. 614. 36 As we have discussed above, we are eliminating a variety of the required formatting requirements because they are included in the XML metadata and the other formatting requirements are included in the standards. As a result, the formatting and filing requirements of Order No. 614 have been supplanted by the regulations and requirements addressed in this rulemaking. 37

52. The Commission's current interstate natural gas pipeline (§ 154.201) and electric utility regulations (§ 35.10), require companies to provide a marked version of the tariff text in the tariff filing indicating the changes and deletions made to the existing tariff text. The oil pipeline regulations (§ 341.3) provide for the use of special symbols to denote changes.

53. We are continuing the requirement for filing marked versions of tariffs. We also are modifying the symbols used by the oil pipelines using the symbols proposed by AOPL so that the symbols can be entered into a find or search message box using keystrokes available on a keyboard. In contrast to past practice in which tariff changes were filed only as individual sheets or supplements, the standards permit tariff documents to be filed as large sections or as entire documents. Although we are confident that filing companies will not intentionally make unmarked changes to tariff text, we want to ensure that both staff and the public are not put in the position of having to read the entire tariff text of large sections or an entire document to ensure that unmarked changes were not made. As a precaution, therefore, we are revising our regulations to make clear that only the sections of the tariff document appropriately identified in the filing will be considered part of the filing and any acceptance of a filing by the Commission will not constitute acceptance of an unmarked tariff change.

54. INGAA supports the regulation, but requests that the Commission modify it to state that “interested parties may comment only on those revisions appropriately designated and marked to constitute the filing; provided, however, comments on unmarked and undesignated language will be permitted when such comments provide useful information to the Commission for the resolution of issues directly related to the filing.” We will not adopt the proposed language as part of the regulation because, as INGAA itself recognizes, determinations as to the appropriateness of such comments need to be made on a case by case basis. The Commission must in individual cases determine if the protest or comment on the unchanged tariff text bears upon the justness and reasonableness of the proposed tariff change or is a request for the Commission to take action under section 5 of the Natural Gas Act to revise the unchanged provision.

55. AOPL argues that the Commission should remove the proposed language in § 341.3 of the regulations arguing that a filed tariff change should be deemed effective even if a symbol is misplaced or incorrect. AOPL states that under long-standing ICA precedent the omission of a symbol in a tariff denoting a change in rate does not affect the validity or applicability of the tariff item.

56. We never meant for this provision of the regulations to constitute a trap that would penalize an oil pipeline if it simply used the wrong symbol or failed to include a symbol in the tariff as long as its overall filing was sufficient to provide notice of the proposed change. We therefore have revised the regulation from that proposed in the NOPR to make clear the regulation does not apply to an improper or omitted symbol so long as the change is identified in the tariff filing. 38 The purpose of this regulation is to ensure that shippers and the Commission receive the required notice of proposed changes by the pipeline and that shippers are not penalized by the failure of the pipeline to provide the requisite notice. As part of the NAESB process, agreement was reached on allowing oil pipelines to file entire tariffs as PDF files. Because of the nature of PDF files, however, it will be difficult for the Commission staff or the pipeline's customers to create a document comparison of a PDF document. Thus, the oil pipeline would be in the best position to create a document comparison, and we find the burden of ensuring proper notice legitimately should fall on the oil pipeline making the filing. The oil pipeline could for example satisfy this requirement by indicating its changes in the transmittal letter or attaching to the transmittal letter a redline-strikeout version of the tariff being revised.

57. Section 6(3) of the Interstate Commerce Act (ICA) recognizes that it is the responsibility of an oil pipeline in making a filing to change its tariff to “plainly state the changes proposed to be made in the schedule then in force.” ICC v. American Trucking Association, 39 cited by AOPL, does not establish the invalidity of the Commission's regulation. In American Trucking , the Interstate Commerce Commission (ICC) sought to reject tariff rates based on violations of rate bureau agreements. While the Court found that the ICC was without statutory authority retroactively to reject a tariff in violation of the rate bureau agreement after the tariff has taken effect, the Court found that the ICC did have authority to condition tariff approval in a manner reasonably tied to statutory objectives. In this regulation, we are not retroactively rejecting a tariff we have previously accepted; rather we are imposing a regulatory condition governing the filing prior to acceptance that will ensure that customers are protected in the event that the oil pipeline fails to provide sufficient notice of a tariff change. Moreover, the regulation does not determine the regulatory outcome of any challenge to the unidentified rate. We recognize the regulatory differences between the ICA and the FPA and NGA, 40 and that interpretations of the ICA have provided that, in some circumstances, the failure to identify a rate change could be deemed a technical defect that would not necessarily void an unidentified rate, but could subject the pipeline to damages or other remedies as provided in the ICA. 41

58. As discussed above, the tariff text for use by the database will be filed as a separate data element, and the Commission may not be able to generate a formatted version of that tariff text acceptable to the filer for inclusion in eLibrary. For this reason, the standards provide that companies will also include as an attachment to their filing a clean copy of the relevant tariff sheets, sections, or entire document formatted as the filer prefers. 42 The clean version of the tariff text may be filed using any electronic file format currently approved by the Secretary of the Commission for eFiling.

59. AOPL requests clarification as to which of the tariff documents included in the XML package, including the marked version made by the utility, constitutes the official version of the tariff filing. As stated above, no substantive differences should exist between the tariff provisions filed as part of the XML data and the tariff provisions filed as attachments. To the extent that such differences exist, and they are significant, they will need to be addressed on a case-by-case basis by the Commission.

60. All utilities, but principally the electric industry, may make joint and shared tariff filings. Joint filings refer to tariffs applicable to more than one company. Shared tariffs refer to a tariff that can be revised by one or more parties. Shared tariffs principally refer to ISO or RTO tariffs, sections of which can be revised by the ISO and RTO as well as by individual transmission owners. Section 206 tariff filings again relate principally to ISOs and RTOs, which may not have the ability to make tariff filings under section 205 of the FPA, but have the right under their operating agreements to make tariff filings under section 206 of the FPA. The following approaches should ensure that parties with filing rights can make appropriate filings without undue burden.

61. Section 35.1(a) of the Commission's regulations establishes two methods by which public utilities that are parties to the same rate schedule may file the rate schedule with the Commission: (1) Each public utility can file the rate schedule itself, or (2) “the rate schedule may be filed by one such public utility and all other parties having an obligation to file may post and file a certificate of concurrence.”  43 Prior to Order No. 614, when filers made a single filing, Commission staff would copy the rate schedule or tariff for the number of joint filers, place the appropriate designations on the documents, and put them in the tariff books. In Order No. 614, the Commission stated in the preamble that “on joint services, each utility offering a service must file its own tariff sheets.”  44 Currently, we therefore receive a single filing usually from a designated filer with identical tariff sheets for each joint filing utility, except that each utility's tariff contains the appropriate sheet designation for that utility.

62. In the Commission's current state of software development, we are not in a position to permit a single designated filer to submit tariff provisions on behalf of multiple entities as part of a single filing. We, however, recognize the inefficiency and confusion for the filer, the staff, and the public in having multiple identical filings made on behalf of different companies. To deal with this issue, the following approach will minimize the burden on the filer and also provide ready access to the tariff.

63. We will no longer require utilities to follow the Order No. 614 preamble instructions to file multiple copies of a tariff. Instead, the joint filers will be permitted to designate one filer to submit a single tariff filing for inclusion in its database that reflects the joint tariff, along with the requisite certificates of concurrence. The non-designated joint filers would include in their tariff database a tariff section consisting of a single page or section that would provide the appropriate name of the tariff and the identity of the utility designated as the filer for the joint tariff. In this way, the staff or the public will be able to find quickly the appropriate tariff in the database, without the need for multiple filings by each of the filers.

64. EEI maintains that parties with joint tariffs should have flexibility to make modifications to these tariffs, but it does not object to the procedure outlined above. We, therefore, will adopt this approach to joint tariffs.

65. Shared tariffs refer principally to ISO and RTO tariffs, portions of which may be revised by FPA section 205 filings by the ISO/RTO or other transmission owners. Depending on the tariff section involved, one party may have exclusive rights to modify the section or multiple parties may have rights to modify the section. The structure of all the ISO and RTO tariffs as well as their filings rights are different.

66. In order to file revisions to shared tariffs today, parties with shared filing rights have to share information about the tariff, such as the current section numbering and sheet designations as well as the text of the provisions. Some ISOs and RTOs provide in their tariffs that the ISO/RTO is responsible for administering the tariff. 45

67. The use of electronic filing will provide parties with shared tariffs with greater opportunities to develop electronic filing methods that fit their respective tariff structure, filing rights, and business processes. First, parties in organized markets can develop or obtain filing software to be shared among those with filing rights that imposes restrictions on filing rights as applicable under the individual ISO or RTO tariff. Second, ISOs and RTOs can agree to make all filings on behalf of the members in order to maintain administrative control over the tariff. Third, each of the respective parties with filing rights can continue to make individual filings as they do today by sharing certain relevant tariff and metadata among the parties with shared rights.

68. With respect to the third option, individual filings by each company, we have developed a method for making such filings. The party initiating the filing (Company A) would need to have an eRegistered party (Filer) log-on to make the filing. The Filer would have to know Company A's company identification number and password. In order to make such a filing, the ISO and RTO would have to share with Company A its company identification number (but not its password) and tariff identifier used in the XML schema for the ISO or RTO's tariff along with other required metadata for making the filing.

69. Currently, for some ISOs and RTOs, when a transmission owner makes a section 205 filing to revise an ISO or RTO tariff, the ISO or RTO is notified only through service. In order to provide greater security and more immediate notification to the ISO or RTO, we will provide an e-mail notification to the ISO or RTO when the XML filing passes verification checks. This notification will ensure that the ISO or RTO can detect immediately any potential unauthorized filing. Moreover, because the person making the filing will be eRegistered and will be using the company identification number of the filer (Company A), we will be able to easily identify who made the filing in case any questions are raised.

70. New England PTOs support the Commission's approach to shared document filings, but request that the Commission provide additional time for possible needed revisions to the OATT of ISO New England. As discussed later, the Commission will be providing sufficient time to develop software and implement the electronic filing requirements. Such time should be sufficient to make whatever tariff or other changes may be needed to accommodate shared document filings. If ISO New England can show that additional time is required, it may file for an extension of time.

71. While generally supporting the Commission's approach, ISO New England suggests that the Commission should provide additional security for shared tariff filers by developing and administering a database that would permit a tariff owner to control the parties authorized to file tariff changes to its tariff. 46 We have closely examined the potential security risks to the eTariff system and find that at this point the benefits of ISO New England's proposal for increased security do not justify the enhanced costs for the Commission to build and support an administrative Web site and database necessary to implement ISO New England's proposal.

72. The eTariff system will be more secure than the current paper filing system and the current eFiling system, and we have not experienced unauthorized filings to date through either our paper or eFiling system. In the current eFiling system, a filer need only be eRegistered. 47 The eTariff system, however, will provide additional security because in addition to eRegistration, the filer must possess both a company registration number and a password. These forms of identification will be limited to regulated utilities. The RTO's or ISO's password will be unique to each company and need not be shared with another utility having shared filing rights, thereby providing enhanced security. Further, any filing made using the RTO's or ISO's company registration number will generate an e-mail to the RTO or ISO, so that it can monitor actively any potential unauthorized filings.

73. After comparing the potential benefits of ISO New England's approach against the costs of implementation, we have decided not to try to implement the authorized filer proposal. If we find after implementation that additional security is necessary, we will reconsider this option at that time. 48

74. ISOs and RTOs sometimes have tariff or operating agreement provisions that require a certain percentage of stakeholder support for making FPA section 205 filings. As a result, if the requisite stakeholder approval is not obtained, ISOs and RTOs have retained rights to make filings pursuant to section 206 of the FPA, and may make a single filing under both section 205 and section 206. 49 In addition, transmission owners that are part of the RTO also may file complaints under FPA section 206 contending that the ISO or RTO tariff is unjust and unreasonable.

75. For ISO or RTO transmission owners filing a complaint against the ISO or RTO, the complaint must be filed pursuant to the standard complaint mechanism. While these transmission owners may have legal rights to make section 205 filings to change certain aspects of the ISO or RTO tariff, they do not have any different rights than any other party to file complaints under section 206. If the Commission agrees with the complainant, the ISO or RTO would then be directed to submit a compliance filing through the eTariff portal to make the required tariff changes.

76. However, the RTO or ISO making a filing to revise its own tariff pursuant to section 206 should make such a filing through the eTariff portal with the appropriate tariff revisions using the NAESB standards. Because such a filing relates to the ISO's or RTO's own tariff, and the ISO or RTO has a reserved right to make such a section 206 filing, such a filing is more similar to a standard tariff filing by a utility as opposed to a complaint filing. In addition, since RTOs or ISOs may make a single filing in one proceeding under both sections 205 and 206, it seems appropriate to have such a filing made using the standard eTariff mechanism. 50

77. In the NOPR, the Commission proposed to permit electronic service for initial filings. 51 We are revising our regulations to permit electronic service according to the same procedures and protocols used for other forms of service under the Commission's regulations. 52 Customers and state agencies wishing to receive service will be required to provide the company with an applicable e-mail address (since a service list will not exist at the time of an initial filing). Any customer believing it is unable to receive electronic service will need to request a waiver of electronic service as provided in the regulations. 53

78. EEI asks for further clarification of how electronic service should be made, including questions about the provision of e-mail addresses, suggestions related to the use of generic service e-mail addresses and the ability to serve after a filing has been posted. In this rulemaking, we have expanded the scope of electronic service to include initial filings. We have expressly provided in the regulations that customers must provide an e-mail address for initial service to the utility unless they obtain a waiver of electronic service under Part 390 of our regulations. Other than establishing a procedure for obtaining customer e-mail address, all other aspects of electronic service for initial filings will be the same as those for service in a proceeding with a service list, including the e-mail addresses to be used for service, and the use of a link to the filing in eLibrary as the means of providing service. 54

79. Under the standards, all attachments to a filing, such as the transmittal letter, testimony, and cost-of-service statements, will be included as part of the XML package. The attachments must meet the formatting requirements for any other eFiled document, as set forth by the Secretary of the Commission. AOPL suggests deleting the requirement to file a proposed form of protective agreement in the existing (and proposed) § 348.2. AOPL does not explain its suggestion, and we do not find that the adoption of electronic filing requirements for tariffs necessitates removal of the requirement to file proposed forms of protective agreements. Under the NAESB standards, proposed forms of protective agreements must be filed as attachment documents.

80. As discussed in the 2004 NOPR, the electric, gas, and oil industries have different procedures for withdrawing and amending a tariff filing. For example, the regulations governing oil pipelines permit withdrawal of proposed tariff filings before the tariff filing is effective, 55 while the regulations for electric and gas companies do not address withdrawal of tariff filings prior to suspension. 56 Because tariff withdrawal and amendment filings affect the status of tariff proposals, standardization of these procedures is needed in order to effectuate an electronic tariff system. We are therefore revising our regulations to permit a company to withdraw in its entirety a tariff filing, which has not become effective, and upon which no Commission or delegated order has been issued, by filing a withdrawal motion with the Commission. The withdrawal will become effective, and the filing deemed withdrawn, at the end of 15 days, so long as no answer in opposition to the withdrawal motion is filed within that period and the Commission has not acted to deny the withdrawal motion. If such an answer in opposition is made, the withdrawal is not effective until a Commission or delegated order accepting the withdrawal is issued. In order to ensure that the tariff database remains accurate, such withdrawal filings will need to be made through the eTariff portal using the XML filing requirement so that the appropriate data elements can be revised.

81. Electric utilities and interstate pipelines file amendments or modifications to tariff provisions to make substantive changes to their filings as well as to correct minor errors. Because such modifications can have substantive effect, we are revising § 35.17 and § 154.205 to make clear that the filing of an amendment or modification to a tariff provision will toll the period for action on the prior filing and establish a new period for action.

82. In the 2004 NOPR, we recognized that in the past, we have sought to process minor changes filed in NGA cases within the 30-day statutory period, and we will continue to try to do so for those amendments that are not significant or do not create a major substantive difference in the tariff proposal. INGAA filed a comment asking to include the following in the regulatory text: “For tariff filings containing minor changes in the tariff proposal, the Commission will seek to process minor changes filed in NGA cases, within the 30-day statutory notice period for the original filing.” While we intend to try to abide by our past practice, we find this language inappropriate for inclusion in our regulations, because it only reflects a goal or aim, and is not sufficiently precise to be included as a regulation.

83. Several types of motions may be made by regulated entities that do not include tariff sheets, but that affect the status of a tariff filing. For example, interstate natural gas pipelines may file motions to move suspended tariff sheets into effect, and other regulated companies may file motions to change the effective dates of tariff filings or to withdraw tariff filings. Because such filings affect the metadata associated with the tariff filing, such motions must be filed through the eTariff portal using the XML filing package.

84. Under the Commission's current regulations in section 284, subparts C and G, an intrastate or Hinshaw pipeline must provide the Commission with an election of how it will determine its interstate service rates. An intrastate or Hinshaw pipeline also is required to file with the Commission, within 30 days of the commencement of service, a statement of operating conditions, which includes the rate election it has made, but which currently does not require a statement of the interstate rates to be charged. The interstate rates are included only as part of the overall filing.

85. In implementing the proposal for electronic tariff filing, the statement of operating conditions will be placed in the tariff database. To facilitate easier access by the Commission and the public to the interstate service rates of intrastate and Hinshaw pipelines, we are revising § 284.123 of the regulations to require intrastate and Hinshaw pipelines to include a statement of their interstate service rates as part of the statement of operating conditions that will appear in the tariff database. Including a statement of interstate service rates in the statement of operating conditions will ensure that all relevant information related to interstate service will be accessible in the tariff database.

86. Many commenters submitted detailed proposals to revise regulatory text in a number of areas. We very much appreciate the interest that has been paid to trying to ensure that the regulatory text is as accurate as possible. We have carefully reviewed those suggestions, included the ones we find appropriate, and discussed above the substantive revisions we determined not to make. The suggestions we did not adopt were stylistic, linguistic, or syntactical revisions that, in some cases, did not conform to the requirements of the Federal Register , or that we did not find superior to the regulatory text we are adopting. We will not discuss each of these proposed revisions individually.

87. We recognize that after the Final Rule, companies and third-party vendors developing tariff filing software will need time for development as well as a mechanism for testing their software to make sure that their filings will be accepted by the Commission. We will therefore provide a testing site where companies can make test electronic filings to determine whether their XML packages can be received and can be parsed in order to determine if the XML package can be opened and broken into its constituent parts, and to verify whether the metadata supplied meets the requirements of the XML schema.

88. Further, as the development process continues, we think it will be useful to continue the dialog among FERC staff and the industries involved to help the industries better understand the use of the code values as well as to discuss issues that may arise regarding methods of implementing the standards. Commission staff will therefore hold technical conferences as needed during this process.

89. UNICON argues that the Commission's testing site should be permanent in the event the standards are revised. It also argues that the testing site should fully simulate FERC's live eTariff environment. It maintains that regulated companies could use this testing site to verify that the XML packages being submitted are valid and can be parsed by FERC's software and validate that the filing contents within the XML packages will be processed appropriately.

90. We are committed to providing as robust an electronic testing site as we are able, within resource and budgetary constraints. When, and if, the standards are revised we recognize that we may need to provide some additional testing, and depending on budgetary constraints we will try to maintain the electronic testing platform even after the implementation date as companies may need to experiment with different types of filings. Because much of the processing of tariff filings received by the Commission will not be automatic, but dependant on the human interaction with software on our end, we cannot commit to providing companies with a complete review of all test filings, including how these will be displayed on our web viewer. Our staff is, and has been, committed to making this program a success. As discussed above, staff will conduct, perhaps with NAESB, conferences on implementation issues and staff will continue to provide as much information on particular eTariff filing issues as their time permits.

91. EEI requests that the Commission post on its Web site all the required information necessary to implement the eTariff approach and place all information, including code values, into a single document. As discussed earlier, we will provide on our web site all the information needed to implement eTariff in as user friendly a means as possible. Because the industries during the NAESB process requested it, we have posted code values separately so that companies can download that information more efficiently. These technical issues can be discussed at the technical conferences, and we will continue to try to post information in the manner that will be most useful to industry.

92. Each regulated entity will be required to make a filing to establish its baseline tariffs. In the NOPR, we proposed to reduce the burden in making the baseline filing and limit such filings to tariffs of general applicability. As applied to filings by electric utilities, the baseline filing will include open access transmission tariffs (OATTs), power sales tariffs available to any customer, and market-based rate tariffs. Individually negotiated rate schedules and agreements will not have to be included as part of the baseline filing. Interstate natural gas pipelines will have to file their existing Volume No. 1 tariffs, but will not have to file special rate schedules included in Volume No. 2 tariffs, or any existing negotiated rate or non-conforming service agreements. Intrastate and Hinshaw pipelines will have to file their statement of operating conditions including their interstate service rates. Oil pipelines will need to file their tariff publications. Other pre-existing effective tariffs, rate schedules, and agreements do not need to be included in the baseline filing, although companies are free to include these agreements in their baseline filings, and we would encourage them to do so.

93. After implementation, all new tariffs and rates schedules would have to be filed using the NAESB standards. Existing tariffs and rate schedules not included as part of the baseline filing are required to be filed electronically only when they are revised or amended.

94. We recognize that some of the pre-existing tariffs and rates schedules, such as older rate schedules and contracts, may not exist in electronic form. Companies having or electing to file such agreements do not need to retype the entire agreement. They may scan these agreements into PDF or another image format and file them in that fashion as an entire document. 57 Although not required, companies are encouraged to run an optical character recognition program (OCR) to convert these scanned documents into a textual format so that the text of the tariff can be searched and copied. 58

95. The baseline tariff filing is not a substantive tariff revision. The baseline filing, therefore, should reflect the existing accepted tariff provisions, with no proposed substantive changes or revisions. The baseline tariff filings will be subject to notice and comment solely to permit customers to ensure that the proposed baseline tariff is an accurate reflection of the effective tariff. No protests involving other issues, such as the merits of various sections of the tariff, will be considered. We also are providing a one-time delegation of authority to the Director of OEMR to rule on protests.

96. If a regulated entity has a pending or suspended tariff change filing at the time of the filing of the baseline tariff, the regulated entity should not file these pending or suspended tariff sections as part of the baseline tariff filing. When the Commission acts on pending or suspended tariffs provisions, the companies will file the tariff provisions as a compliance filing through the eTariff portal for inclusion in the database.

97. As discussed above, in filing joint tariffs, utilities have the option of designating one utility as the designated filer, as opposed to each utility filing the identical tariff. For companies adopting the designated filer option, the designated filer will file the baseline tariff; the non-designated utility will need to include in its baseline filing a tariff section that provides the appropriate name of the tariff and identifies the utility that is the designated filer for the joint tariff.

98. EEI requests clarification whether a baseline filing or tariff filings by electric utilities would be limited to OATTs. First Energy requests that prior versions of the baseline tariffs will not need to be filed. As stated above, electric utilities need to include as part of their baseline tariff filings the following three types of documents: OATTs, power sales tariffs available to any customer, and market-based rate tariffs. Only the currently accepted versions of the baseline tariffs need to be filed; historic copies should not be filed.

99. EEI, Duke, and the CAISO request that companies be allowed to include pending compliance filings (which have not yet been accepted) in their baseline filings. They maintain that the tariff text in compliance filings reflects Commission directives that the utilities are implementing and that if compliance filings are not included in the baseline filings, the baseline tariff as displayed by the Commission could be inaccurate.

100. Because eTariff is a database system with no existing records, the baseline tariff needs to reflect the tariff as accepted by the Commission. Any subsequent tariff changes, including previously filed compliance filings, need to be filed separately so that the system can appropriately record the status of such filings. To reduce the burden on parties making baseline filings, we are limiting the baseline filing obligation only to the accepted tariff provisions. Pending tariff provisions in compliance filings will be added seriatim to the database as the Commission acts on a company's compliance filings. This will reduce the number of baseline filings companies are required to make.

101. However, we will permit companies wishing to place pending compliance filings into the database during the baseline filing process to do so. But we emphasize that baseline filings of compliance provisions are not required; this is only an option available to those companies wishing to avail themselves of it. The details of including compliance provisions as part of the baseline filing process can be discussed with staff during the technical conferences.

102. While we think the entire industry, both filers and customers alike, will benefit from quick implementation of eTariff, we recognize that we need to provide sufficient time for software development and testing to ensure that the filing of tariffs electronically has as few bugs as possible. In the NOPR, we generally proposed that compliance would begin within six months to one year after the Final Rule is issued.

103. Many of the commenters thought that six months was too short and requested implementation periods of one year or longer. 59 INGAA and AOPL urge the Commission not to set a firm implementation date, but rather focus on successful implementation.

104. In order to provide companies with sufficient time to develop and test software, we will provide 18 months for implementation, until April 1, 2010, with a staggered implementation schedule for companies over the next six months. Staff and industry should work out the schedule for staggered implementation during the technical conferences.

105. The Office of Management and Budget (OMB) regulations require that OMB approve certain reporting, recordkeeping, and public disclosure (information collections) imposed by an agency. Pursuant to OMB regulations, the Commission is providing notice of its information collections to OMB for review under section 3507(d) of the Paperwork Reduction Act of 1995.

106. The Commission identifies the information provided under Part 35 as contained in FERC-516 “Electric Rate Schedules and Tariff Filings; Part 154 as contained in FERC-545 Gas Pipeline Rates: Rate Change (Non-Formal); Part 284 as contained in FERC-549 Gas Pipeline Rates: NGPA Title III Transactions and Parts 341 and 344 as contained in FERC-550 “Oil Pipeline Rates: Tariff Filings.” The Commission solicited comments on the need for this information, whether the information will have practical utility, ways to enhance the quality, utility, and clarity of the information to be collected, and any suggested methods for minimizing respondents' burden, including the use of information technology. The Commission received specific comments regarding its burden estimates.

107. INGAA, EEI, TransCanada, and Southern California Edison contend that the burden estimates used by the Commission in the NOPR are understated. As part of the NAESB process, a consensus of all the industries chose the flexibility provided by using the NAESB standards, and the use of XML protocols for business communication, in place of using filing software furnished by the Commission. 60 The industries recognized that adopting such standards would entail the building or purchasing of software compatible with the XML protocols. By adopting these standards, companies opted for the enhanced flexibility to obtain software, or modify existing tariff maintenance software, in order to better integrate tariff filings with their individual tariff maintenance and business needs. The use of the NAESB standards, as opposed to the Commission distributed software, also provides an open framework for third-party software developers to develop filing and tariff maintenance applications or processes, which, by managing tariffs for multiple parties, will enable development costs to be spread over a large number of users. The industry consensus was that the flexibility offered by the standards outweighed the added costs of developing or purchasing software to implement the standards.

108. But this flexibility, and the likelihood that third-party providers will reduce the costs of constructing systems, makes computing burden estimates difficult, particularly given the difficulty in separating the costs of compliance from the other business functions provided by various software systems. INGAA contends that the costs for a tariff filing system should be in the range of $20,000 per tariff, but TransCanada argues the costs for its system suggest a $10,000 cost estimate.

109. We developed the burden estimates in the NOPR based only on the necessary costs of developing a bare-bones filing system that would enable a company to make a filing in compliance with the standards. 61 But we fully recognize that, while not strictly required by this Final Rule, companies making larger numbers of tariff filings will want to obtain a more robust software package that will provide various forms of tariff management and storage in addition to simply facilitating a tariff filing. Accordingly, we have determined to revise our burden estimates to include the greater cost of obtaining more robust software.

110. EEI maintains that companies will have multiple tariffs that need to be filed as baseline tariffs. But in this Final Rule, at EEI's request, we limited the baseline filing for electric companies to OATTs, power sales tariffs available to any customer, and market-based rate tariffs.

111. EEI maintains we have underestimated the time for legal review of certain data fields. We have included in these revised estimates additional time for legal review of the baseline tariff filings. Since the baseline filings consist only of already accepted tariff sheets, such legal review should not be significant. For ongoing tariff filings, this rulemaking does not entail additional legal review, since attorneys generally already review the substantive tariff and attachment data contained in such filings, and the metadata fields are not substantive.

112. EEI suggests that the estimates leave out one-time costs for evaluating software, and training on new systems. We recognize that we did overlook such costs, and we have added additional hours for evaluation and training of relevant personnel.

113. The following burden estimates reflect the cost to an individual company of obtaining software sufficient to meet the requirements of the regulation, as well as the cost of making the required baseline filing. Investment in electronic filing will reduce filing costs over time. Therefore, we include an estimate of the cost savings per year due to the savings in mail, messenger delivery, and copying. The public reporting and records retention burdens for the reporting requirements and the records retention requirement are as follows. 62

I. Background on the Wyoming Plan II. Submission of the Proposed Amendment III. Office of Surface Mining Reclamation and Enforcement's (OSM's) Findings IV. Summary and Disposition of Comments V. OSM's Decision VI. Procedural Determinations I. Background on the Wyoming Plan

The Abandoned Mine Land Reclamation Program was established by Title IV of the Act (30 U.S.C. 1201 et seq. ) in response to concerns over extensive environmental damage caused by past coal mining activities. The program is funded by a reclamation fee collected on each ton of coal that is produced. The money collected is used to finance the reclamation of abandoned coal mines and for other authorized activities. Section 405 of the Act allows States and Indian tribes to assume exclusive responsibility for reclamation activity within the State or on Indian lands if they develop and submit to the Secretary of the Interior for approval, a program (often referred to as a plan) for the reclamation of abandoned coal mines.

On February 14, 1983, the Secretary of the Interior approved Wyoming's AMLR Plan. You can find general background information on the Wyoming Plan, including the Secretary's findings and the disposition of comments, in the February 14, 1983, Federal Register (48 FR 6536). OSM announced in the May 25, 1984, Federal Register (49 FR 22139), the Director's decision accepting certification by Wyoming that it had addressed all known coal-related impacts in the State that were eligible for funding under the Wyoming Plan. Wyoming could then proceed in reclaiming low priority non-coal projects. The Director accepted Wyoming's proposal that it would seek immediate funding for reclamation of any additional coal-related problems that occur during the life of the Wyoming Plan. You can find later actions concerning Wyoming's Plan and plan amendments at 30 CFR 950.35.

By letter dated March 21, 2008, Wyoming submitted a proposed amendment to the Wyoming Reclamation Plan (Administrative Record Document ID OSM-2008-0008-0005). Wyoming submitted the amendment in response to a letter sent to the State dated January 18, 2008, from the Regional Director, Western Region of OSM (Administrative Record Document ID OSM-2008-0008-0007). Pursuant to 30 CFR 884.15(d), OSM directed Wyoming to resolve a statutory conflict regarding two accounts established to receive funds from the Federal government under the SMCRA program.

Specifically, OSM stated it appears that Wyoming's new statute at W.S. § 35-11-1210 conflicts with existing statute W.S. § 35-11-1203, which was established to receive funds to carry out the Reclamation Plan including coal reclamation. W.S. § 35-11-1210 was passed in 2007 and established an account to receive funding under new Section 411(h) of SMCRA. These funds are not required to be spent on reclamation projects.

Wyoming's proposed amendment clarifies that the account established by W.S. § 35-11-1210 is solely for the purpose of receiving funds from the Federal government pursuant to SMCRA Section 411(h)(1) and that these funds are separate and in addition to funds distributed to the account established by W.S. § 35-11-1203.

We announced receipt of the proposed amendment in the June 2, 2008, Federal Register (73 FR 31392). In the same document, we opened the public comment period and provided an opportunity for a public hearing or meeting on the amendment's adequacy (Administrative Record Document ID No. OSM-2008-0008-0001). We did not hold a public hearing or meeting because no one requested one. The public comment period ended on July 2, 2008. We received comments from two Federal agencies and one State entity.

Following are the findings we made concerning the amendment under SMCRA and the Federal regulations at 30 CFR 884.14 and 884.15. We are approving the amendment.

In response to a letter dated January 18, 2008, from the Regional Director, Western Region of OSM and pursuant to 30 CFR 884.15(d), Wyoming proposes a minor editorial change to subparagraph (b) of newly-created W.S. § 35-11-1210 and its Reclamation Plan that is intended to provide clarification and correct an inadvertent error in the statutory amendment that was enacted during the 2007 Wyoming Legislative Session. Specifically, new statute W.S. § 35-11-1210 was passed in 2007 and established the Abandoned Mine Land Funds Reserve Account pursuant to Section 411(h) of the SMCRA Amendments of 2006 that is not required to be spent on reclamation projects. Conversely, existing statute W.S. § 35-11-1203 established an account to receive funds to carry out the State Reclamation Plan, including coal reclamation. OSM's concern, as stated in the January 18, 2008 letter, was that establishment of these two funds creates a statutory conflict wherein funding of Wyoming's Reclamation Plan is not assured. Accordingly, OSM is seeking assurance that Wyoming will reclaim its remaining coal abandoned mine land problems.

Wyoming's proposed amendment to subparagraph (b) clarifies that the account established by W.S. § 35-11-1210 is established solely to receive funds from the Federal government pursuant to SMCRA amendments of 2006 to Section 411(h)(1) and that these funds are separate and in addition to funds distributed to the account established by W.S. § 35-11-1203, which remains in place to receive funds to carry out the State Reclamation Plan including coal reclamation. Wyoming had previously committed to spend a minimum of $30 million dollars per year on coal reclamation work until coal work is completed as a condition of OSM's payment to the State under SMCRA Section 411(h) in a letter dated February 4, 2007 (Administrative Record Document ID OSM-2008-0008-0006).

Wyoming's clarification and assurance that funds received through establishment of the Abandoned Mine Land Funds Reserve Account will not be commingled with monies received to carry out coal reclamation under the State Reclamation Plan is in accordance with section 405(h) of SMCRA, and addresses the programmatic concerns raised by OSM under 30 CFR 884.15(d). For these reasons, we are approving Wyoming's proposed statutory amendment.

We asked for public comments on the amendment (Administrative Record Document ID No. OSM-2008-0008-0008) and one comment was received.

Specifically, the University of Wyoming submitted a comment in support of the amendment by stating that it is in agreement with the proposed change to Wyoming Statute W.S. 35-11-1210 (Administrative Record Document ID No. OSM-2008-0008-0004).

Under 30 CFR 884.14(a)(2) and 884.15(a), we requested comments on the amendment from various Federal agencies with an actual or potential interest in the State plan (Administrative Record Document ID No. OSM-2008-0008-0008). We received comments from two Federal Agencies.

The Bureau of Reclamation (BOR) commented in an April 17, 2008 letter (Administrative Record Document ID No. OSM-2008-0008-0003), and the Bureau of Land Management (BLM) commented in a May 2, 2008 letter (Administrative Record Document ID No. OSM-2008-0008-0002).

The BOR indicated that it did not have comments on the proposed amendment.

The BLM commented that although it recognizes that OSM's priority under the 2006 Amendments [to SMCRA] is to fund reclamation of coal mines, it also wants to ensure that enough money is available to fund reclamation of non-coal abandoned mines on BLM lands. The BLM goes on to explain that work on many of these projects may be mothballed due to the requirements to finish the coal sites first, and notes that it is unclear whether these non-coal sites will be able to obtain SMCRA funding in the future. Lastly, the BLM states its wish to ensure that the State Legislature and OSM consider its needs when fund requests for grants to use monies in the Abandoned Mine Reclamation Fund are submitted.

In response, OSM agrees that there are hard rock abandoned mine land problems in Wyoming and we acknowledge that they present both health and safety concerns. Unfortunately, OSM can't provide assurance to the BLM that the Wyoming AML Program will continue to reclaim abandoned hard rock mine problems with funds the State receives under the 2006 Amendments to SMCRA. Specifically, it is solely up to the Wyoming Legislature to determine if it wants to fund reclamation of abandoned hard rock mine problems as part of giving priority to addressing impacts of mineral development with funds the State receives under Section 411(h)(1) of SMCRA.

Based on the above finding, we approve Wyoming's proposed amendment submitted on March 21, 2008.

To implement this decision, we are amending the Federal regulations at 30 CFR Part 950, which codify decisions concerning the State plan. We find that good cause exists under 5 U.S.C. 553(d)(3) to make this final rule effective immediately. Section 405(d) of SMCRA requires that the State have a program that is in compliance with the procedures, guidelines, and requirements established under the Act. Making this regulation effectively immediately will expedite that process. SMCRA requires consistency of Wyoming and Federal standards.

This rule does not have takings implications. This determination is based on the analysis performed for the counterpart Federal regulation.

This rule is exempted from review by the Office of Management and Budget (OMB) under Executive Order 12866 (Regulatory Planning and Review).

The Department of the Interior has conducted the reviews required by section 3 of Executive Order 12988 and has determined that, to the extent allowable by law, this rule meets the applicable standards of subsections (a) and (b) of that section. However, these standards are not applicable to the actual language of Wyoming's AMLR plans and revisions thereof because each plan is drafted and promulgated by a specific State, not by OSM. Decisions on proposed State AMLR plans and revisions thereof submitted by a State are based on a determination of whether the submittal meets the requirements of Title IV of SMCRA (30 U.S.C. 1231-1243) and the applicable Federal regulations at 30 CFR part 884.

This rule does not have federalism implications. SMCRA delineates the roles of the Federal and State governments with regard to the regulation of surface coal mining and reclamation operations. One of the purposes of SMCRA is to “establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations.” Section 503(a)(1) of SMCRA requires that State laws regulating surface coal mining and reclamation operations be “in accordance with” the requirements of SMCRA, and section 503(a)(7) requires that State programs contain rules and regulations “consistent with” regulations issued by the Secretary pursuant to SMCRA.

In accordance with Executive Order 13175, we have evaluated the potential effects of this rule on Federally recognized Indian Tribes and have determined that the rule does not have substantial direct effects 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. The rule does not involve or affect Indian Tribes in any way.

On May 18, 2001, the President issued Executive Order 13211 which requires agencies to prepare a Statement of Energy Effects for a rule that is (1) considered significant under Executive Order 12866, and (2) likely to have a significant adverse effect on the supply, distribution, or use of energy. Because this rule is exempt from review under Executive Order 12866 and is not expected to have a significant adverse effect on the supply, distribution, or use of energy, a Statement of Energy Effects is not required.

No environmental impact statement is required for this rule because agency decisions on proposed State AMLR plans and revisions thereof are categorically excluded from compliance with the National Environmental Policy Act (42 U.S.C. 4321 et seq. ) by the Manual of the Department of the Interior (516 DM 13.5(B)(29).

This rule does not contain information collection requirements that require approval by OMB under the Paperwork Reduction Act (44 U.S.C. 3501 et seq. ).

The Department of the Interior 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. ). The State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an economic analysis was prepared and certification made that such regulations would not have a significant economic effect upon a substantial number of small entities. In making the determination as to whether this rule would have a significant economic impact, the Department relied upon the data and assumptions for the counterpart Federal regulations.

This rule is not a major rule under 5 U.S.C. 804(2), of the Small Business Regulatory Enforcement Fairness Act. This rule:

a. Does not have an annual effect on the economy of $100 million.

b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions.

c. Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S. based enterprises to compete with foreign-based enterprises.

This determination is based upon the fact that the State submittal which is the subject of this rule is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation was not considered a major rule.

This rule will not impose an unfunded Mandate on State, local, or tribal governments or the private sector of $100 million or more in any given year. This determination is based upon the fact that the State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the federal regulation did not impose an unfunded mandate.

I. Background

In FR Doc. E8-17914 of August 19, 2008 (73 FR 48434), the final rule entitled Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2009 Rates; Payments for Graduate Medical Education in Certain Emergency Situations; Changes to Disclosure of Physician Ownership in Hospitals and Physician Self-Referral Rules; Updates to the Long-Term Care Prospective Payment System; Updates to Certain IPPS-Excluded Hospitals; and Collection of Information Regarding Financial Relationships Between Hospitals” (hereinafter referred to as the FY 2009 IPPS final rule) there were a number of technical and typographical errors that are identified and corrected in the Correction of Errors section below. We note that the FY 2009 IPPS final rule had several effective dates (see 73 FR 48343); and therefore, we are conforming the effective dates of the items listed in this notice with the effective dates specified in the FY 2009 IPPS final rule.

On page 48434, in the effective dates section of the final rule, we specified that § 411.357(p)(1)(i)(A) and (B) are effective on October 1, 2009. However, we made a technical error in codifying these paragraphs (see sections II.B. and IV.B.3.e.(B). of this notice). To ensure that the cross-reference is consistent with the regulations in § 411.357(p), we are correcting the cross-reference in section IV.A.1 of this notice.

On pages 48491, 48497, and 48773, we made inadvertent typographical errors in two figures and a date. We correct these errors in section IV.A.2, 3, and 8 of this notice.

On page 48509, we stated that we were finalizing several codes and that these codes will be added to the MCE edit for males only. However, through an inadvertent error the codes were not included in the final FY 2009 MCE edits. Therefore, in section IV.A.4. of this notice, we correct this discussion by adding language to note that the codes for MCE edit for males only will be added to the MCE codes for FY 2010.

On page 48566, we discuss the analysis conducted by Acumen comparing MedPAC's recommended wage indices to the current CMS wage index. In section IV.A.5 of this notice, we correct this discussion by adding a parenthetical statement to clarify that the wage index data that we provided did not include the effects of sections 505 and 508 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).

On page 48646, we discuss the deadline for submission of emergency Medicare graduate medical education (GME) affiliation agreements. In our example, we incorrectly stated the date by which hospitals are permitted to submit an emergency Medicare GME Affiliation agreement for the period from March 1, 2009, to June 30, 2009, and the period from July 1, 2009, to June 30, 2010. The dates referenced were August 28, 2009, and August 28, 2010, respectively. In section IV.A.6 of this correction notice, we corrected these inadvertent errors.

On page 48648, we discuss the rolling average and cap adjustments for FTE residents. In this discussion, we incorrectly stated that FTE residents training in new teaching hospitals and in new residency programs at existing teaching hospitals are excluded from the rolling average for the minimum accredited length of the program. In section IV.A.7. of this notice, we have corrected this error by revising this sentence to clarify that, in accordance with the regulations at § 413.79(d)(5), the exclusion from the rolling average applies for new programs that qualify for the cap adjustment under § 413.79(e).

On page 48751, in the regulations text for § 411.353(c)(1)(ii) and (iii) and (g)(1), we made grammatical and typographical errors. We are correcting these errors in section IV.B.1. of this notice.

On page 48752, in the regulations text for § 411.354(c)(1)(ii), we inadvertently omitted the quotation marks for the phrase “stand in the shoes”. In section IV.B.2. of this notice, we are correcting this error.

On pages 48752 and 48753, in the regulations text for § 411.357, we note the following errors:

• In paragraphs (a)(5)(ii)(B), (b)(4)(ii)(B), (l)(3)(ii), and (p)(1)(i)(B) regarding rental of office space, rental of equipment, fair market value compensation, and indirect compensation arrangements, respectively, we inadvertently included the phrase “between the parties” instead of the phrase “by the lessor to the lessee”. Therefore, our regulations text for these paragraphs do not accurately reflect our policy in the FY 2009 IPPS final rule (see 73 FR 48713 through 48714). We are correcting these errors in section IV.B.3., a., c., d., and e.D. of this notice.

• In paragraph (b)(4)(ii)(A) regarding rental changes, we made a grammatical error in using the term “by” instead of “through”. We are correcting this error in section IV.B.3.b. of this notice.

• In paragraph (p)(1)(i), we inadvertently included the last sentence as part of this paragraph instead of making that sentence the beginning of paragraph (p)(1)(ii). In section IV.B.3.e.B.., we are correcting this error by redesignating this language as paragraph (p)(1)(ii).

• In paragraph (p)(1)(i)(A) (redesignated as paragraph (p)(1)(ii)(A)) (see section IV.B.3.e.C. of this notice) regarding compensation for the rental of office space or equipment, we inadvertently omitted the term “on” from the phrase “performed or business generated through”. We are correcting this omission in section III.B.3.e.(3). of this notice.

• In paragraphs (p)(1)(ii) and (iii), we inadvertently included regulatory text that also appears in paragraphs (p)(2) and (3) and is applicable to paragraph (p) in its entirety. In section IV.B.3.e.A. of this notice, we are correcting these errors by removing paragraphs (p)(1)(ii) and (iii).

• In paragraph (r)(2)(ii) regarding remuneration of obstetrical malpractice insurance subsidies, we made grammatical errors when using the term “payments”. In section IV.B.3.f.A. of this notice, we are correcting the term to read “payment”.

• In paragraph (r)(3)(ii)(B) regarding the cost of malpractice insurance premiums, we inadvertently included the phrase “rural area or” which does not conform to the policy in the FY 2009 IPPS final rule (see 73 FR 48734). In section IV.B.3.f.B. of this notice, we are correcting this error by removing the phrase.

On pages 48827 and 48881, in Tables 2 and 3, we had erroneous wage data for provider number 300005 and rural New Hampshire, respectively. Therefore, we are correcting these errors in sections IV.C.1. and 2. of this notice. We note that the corrections to the wage data for the New Hampshire provider specified in this notice are consistent with our regulations at 42 CFR 412.64(k)(2)(ii). We also note that wage data corrections for this provider are also reflected in the FY 2009 final rates, wage indices, budget neutrality factors and tables included in the notice subsequent to the FY 2009 IPPS final rule published elsewhere in this Federal Register .

On pages 49044, 49046, and 49060, we made technical errors in the MS-LTC-DRG titles for several MS-LTC-DRGs (that is, MS-LTC-DRGs 154 through 156, 250, 251 and 864). We need to correct these titles so that they are consistent with the MS-DRG titles presented in Table 5 of the FY 2009 IPPS final rule since the patient classification system utilized under the LTCH PPS uses the same diagnosis-related groups (DRGs) as those used under the IPPS. Therefore, we are correcting these errors in section IV.C.3. of this notice.

We ordinarily publish a notice of proposed rulemaking in the Federal Register to provide a period for public comment before the provisions of a rule take effect in accordance with section 553(b) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). However, we can waive this notice and comment procedure if the Secretary finds, for good cause, that the notice and comment process is impracticable, unnecessary, or contrary to the public interest, and incorporates a statement of the finding and the reasons therefore in the notice.

Section 553(d) of the APA ordinarily requires a 30-day delay in effective date of final rules after the date of their publication in the Federal Register . This 30-day delay in effective date can be waived, however, if an agency finds for good cause that the delay is impracticable, unnecessary, or contrary to the public interest, and the agency incorporates a statement of the findings and its reasons in the rule issued. Therefore, we are waiving proposed rulemaking and the 30-day delayed effective date for the technical corrections in this notice. This notice merely corrects typographical and technical errors in the preamble, regulations text, and addendum of the FY 2009 IPPS final rule and does not make substantive changes to the policies or payment methodologies that were adopted in the final rule. As a result, this notice is intended to ensure that the FY 2009 IPPS final rule accurately reflects the policies adopted in the final rule. Therefore, we find that undertaking further notice and comment procedures to incorporate these corrections into the final rule or delaying the effective date of these changes is unnecessary and contrary to the public interest.

In FR Doc. E8-17914 of August 19, 2008 (73 FR 48434), make the following corrections:

1. On page 48434, second column, third full paragraph, line 8, the cross-reference “(p)(1)(i)(A) and (B)” is corrected to read “(p)(1)(ii)”.

2. On page 48491, top half of the page, in the untitled table, second column (CC/MCC (ICD-9-CM codes)), line 25, the figures “81.31-81.83” are corrected to read “81.31-81.38”.

3. On page 48497, first column, fourth full paragraph, last line, the phrase “October 1, 2009” is corrected to read “October 1, 2008”.

4. On page 48509, first column, fifth full paragraph, last line is corrected by adding the following sentences:

“However, there was an inadvertent omission of these codes from the MCE product. Therefore, we will add these codes in the MCE for FY 2010.”

5. On page 48566, third column, first full paragraph, line 11, after the phrase “FY 2007.” and before the word “Acumen's”, the text is corrected by adding the following parenthetical sentence:

“(Note that the CMS final wage index Acumen analyzed excludes or removes the effects of sections 505 and 508 of MMA.)”

6. On page 48646, first column, first paragraph

a. Line 36, the date “August 28, 2009” is corrected to read “December 29, 2009”.

b. Line 43, the date “August 28, 2010” is corrected to read “December 29, 2010”.

7. On page 48648, third column, first paragraph, line 7, the sentence “However, FTE residents training in new teaching hospitals and in new residency programs at existing teaching hospitals are excluded from the rolling average for the minimum accredited length of the program (dental and podiatry residents are always exempt from the rolling average.” is corrected to read “However, FTE residents training in new residency training programs that qualify for cap adjustments under § 413.79(e) are excluded from the rolling average for the minimum accredited length of the program.”

8. On page 48773, second column, last paragraph, line 8, the figure “0.09” is corrected to read “0.9”.

This document adopted on September 19, 2008 and released on September 19, 2008 by the Managing Director in DA 08-2062 revised 47 CFR 0.408 in its entirety.

1. Section 3507(a)(3) of the Paperwork Reduction Act of 1995, 44 U.S.C. 3507(a)(3), requires agencies to display a current control number assigned by the Director, Office of Management and Budget (“OMB”) for each agency information collection requirement.

2. Section 0.408 of the Commission's rules displays the OMB control numbers assigned to the Commission's public information collection requirements that have been review and approved by OMB.

3. Authority for this action is contained in Section 4(i) of the Communications Act of 1934 (47 U.S.C. 154(i)), as amended, and section 0.231 of the Commission's Rules. Since this amendment is a matter of agency organization procedure or practice, the notice and comment and effective date provisions of the Administrative Procedure Act do not apply. See 5 U.S.C. 553(b)(A)(d). For this reason, this rulemaking is not subject to the Congressional Review Act and will not be reported to Congress and the Government Accountability Office (GAO). See 5 U.S.C. 801(a)(1)(A).

4. Accordingly, it is ordered, that section 0.408 of the rules is revised as set forth in the revised text effective on October 3, 2008.

5. Persons having questions on this matter should contact Judith B. Herman at (202) 418-0214 or e-mail to Judith-B.Herman@fcc.gov .

This is a synopsis of the Commission's Report and Order, MB Docket No. 08-118, adopted September 2, 2008, and released September 3, 2008. The full text of this document is available for public inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY-A257, 445 12th Street, SW., Washington, DC 20554. This document will also be available via ECFS ( http://www.fcc.gov/cgb/ecfs/ ). (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) This document may be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-478-3160 or via e-mail http://www.BCPIWEB.com . To request this document in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4). Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding.

The Commission will send a copy of this Report and Order in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional review Act, see 5 U.S.C. 801(a)(1)(A).

This is a synopsis of the Commission's Report and Order, MB Docket No. 08-144, adopted September 3, 2008, and released September 10, 2008. The full text of this document is available for public inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY-A257, 445 12th Street, SW., Washington, DC, 20554. This document will also be available via ECFS ( http://www.fcc.gov/cgb/ecfs/ ). (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) This document may be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-478-3160 or via e-mail www.BCPIWEB.com. To request this document in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4). Provisions of the Regulatory Flexibility Act 0f 1980 do not apply to this proceeding.

The Commission will send a copy of this Report and Order in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional review Act, see 5 U.S.C. 801(a)(1)(A).

This is a synopsis of the Commission's Report and Order, MB Docket No. 08-112, adopted September 9, 2008, and released September 12, 2008. The full text of this document is available for public inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY-A257, 445 12th Street, SW., Washington, DC, 20554. This document will also be available via ECFS ( http://www.fcc.gov/cgb/ecfs/ ). (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) This document may be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-478-3160 or via e-mail http://www.BCPIWEB.com. To request this document in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4). Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding.

The Commission will send a copy of this Report and Order in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

NMFS manages the groundfish fishery in the BSAI exclusive economic zone according to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (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 Atka mackerel TAC allocated to vessels participating in the Amendment 80 limited access fishery in the Western Aleutian District of the BSAI is 9,298 metric tons (mt) as established by the 2008 and 2009 final harvest specifications for groundfish in the BSAI (73 FR 10160, February 26, 2008), reallocation (73 FR 44173, July 30, 2008), and correction (73 FR 47559, August 14, 2008).

In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the 2008 Atka mackerel TAC allocated to vessels participating in the Amendment 80 limited access fishery in the Western Aleutian District of the BSAI will soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 9,288 mt and is setting aside the remaining 10 mt as incidental catch to support other groundfish fisheries. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for Atka mackerel by vessels participating in the Amendment 80 limited access fishery in the Western Aleutian District of the BSAI.

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 Atka mackerel by vessels participating in the Amendment 80 limited access fishery in the Western Aleutian District of the BSAI. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of September 29, 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 § 679.20 and § 679.91 and is exempt from review under Executive Order 12866.