This final rule is issued under Marketing Order No. 915, as amended (7 CFR part 915), regulating the handling of avocados grown in South Florida, 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 final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

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

This final rule changes the grade and container requirements currently prescribed under the order. This rule establishes a minimum grade of a U.S. No. 2 for shipments within the production area, requiring these shipments to meet the same grade as currently prescribed for shipments leaving the production area. This final rule also makes changes to the container and container marking requirements established under the order. These changes provide a grade and pack to meet consumer demand and improve the identification and traceability of avocado shipments. These changes were unanimously recommended by the Committee during a number of meetings over the past several months.

Section 915.51 of the order provides, in part, the authority to issue regulations establishing specific grade and container requirements for avocados. Section 915.52 of the order provides the authority for the modification, suspension or termination of established regulations. The requisite grade and container requirements are specified under §§ 915.305 and 915.306. These sections specify, in part, the grade, container, and container marking requirements for fresh shipments of avocados grown in South Florida.

Standard containers refer to those containers specifically authorized in § 915.305(a), which can be used for shipments both inside and outside of the production area. Nonstandard containers refer to containers other than those authorized in § 915.305(a), and can only be used when shipping avocados within the production area.

This final rule makes several changes to the grade and container provisions established under the order. This rule establishes a minimum grade of a U.S. No. 2 for all avocados sold within the production area. It also requires that all nonstandard containers used for shipments within the production area be one bushel in size and that these containers be marked with the registered handler number or the name and address of the handler. This final rule also requires that all avocados sold be packed in new containers and that the containers be marked with the grade packed.

The first change establishes a minimum grade of a U.S. No. 2 for all avocados sold within the production area. Prior to this change, only avocados handled in standard containers had to meet the grade requirement of a U.S. No. 2. Avocados sold within the production area in nonstandard containers were not required to meet a minimum grade. This rule modifies § 915.306 so that all avocados sold to the fresh market in the production area, regardless of what type of container, must meet the minimum grade requirement of a U.S. No. 2.

In 1992, Hurricane Andrew decimated the Florida avocado production area leaving both avocados and containers in short supply. The industry recommended that the grade requirement be suspended for avocados sold within the production area in containers other than the standard containers defined in § 915.305. This change made more fruit available for shipment and allowed handlers to pack fruit in any obtainable container for shipment within the production area.

The industry has since recovered from the devastation caused by the hurricane. Production for the 2007-08 season was approximately 1.1 million bushels of avocados, nearly matching the level of production prior to Hurricane Andrew. However, since the grade change made following the hurricane, avocados shipped within the production area in nonstandard containers have not had to meet any specific grade requirements.

At the time of Hurricane Andrew, avocado shipments to production area markets accounted for around 12 percent of total shipments. Since that time, shipments to the production area have nearly doubled. For the last five seasons, shipments to the production area have accounted for around 23 percent of total shipments, making the production area one of the largest markets for Florida avocados.

In discussing this issue, Committee members stated that the absence of a grade requirement has resulted in poor quality avocados being offered for sale inside the production area. The past few seasons, the Committee office and members of the industry have been receiving an increasing number of negative comments regarding the quality of fruit sold in the production area. These comments indicate there is an increasing demand for higher quality fruit within the production area.

Production area produce buyers and brokers are looking for higher quality fruit to meet the demands of production area consumers. However, buyers have expressed that without a minimum grade requirement it is difficult to know the quality of the avocados being purchased. The level of quality received varies between good and poor quality. In an effort to address this issue, several handlers have already begun packing to meet a U.S. No. 2 for all their production area shipments. Still, absent a minimum grade requirement, avocados that would not meet a U.S. No. 2 are still making it to production area fresh market channels.

The Committee believes these poor quality avocados have depressed prices for better quality avocados and resulted in lower overall returns to producers. Poor quality fruit normally returns the lowest price when compared to quality fruit. Because there is no minimum grade requirement for nonstandard containers, buyers are often unsure of the level of quality they are purchasing. This tends to drive the price offered towards the lowest level for all avocados. Further, when a consumer purchases a poor piece of fruit, it can affect repurchases, reducing demand. Reduced demand also has a negative effect on price.

The Committee believes eliminating lower grade avocados from the marketplace addresses consumer demand, and helps ensure the industry is providing all their customers with a quality product. This encourages repeat purchases, which helps increase returns to producers and handlers. The Committee agreed this change will strengthen market conditions for shipments within the production area. Therefore, the Committee recommended establishing a minimum grade of a U.S. No. 2 for all avocados sold to markets within the production area.

This rule also makes changes to the container marking requirements established under the order. Prior to this action, the only container marking requirement for nonstandard containers was that the containers be marked with a Federal State Inspection Service (FSIS) lot stamp number, which is applied to an adhesive tape seal affixed to the container. While the lot stamp indicates the date the product was inspected, it does not provide any information that would identify the handler. Some handlers pay to have the adhesive tape seal preprinted with their registered handler number, and this number can be used to identify the handler. However, this is not the case for all handlers.

The Committee is concerned that the use of containers with no identifying markings poses problems with the positive identification and traceability of avocados. Such containers are almost impossible to trace back to the original handler. In cases such as marketing order compliance, it is important to be able to identify the source of avocados which are found to be in violation of order requirements. Committee members agreed that the ability to positively identify product and trace its origin is a necessity in today's marketplace. Proper handler identification on a container is an important part of this traceability.

In discussing this issue, the Committee agreed that an adhesive tape seal that is pre-printed with the registered handler number is sufficient to indicate the identity of the handler and to provide trace back. In cases where the tape seal is not printed with a registered handler number, the Committee concurred that the name and address of the handler should appear on the container. The Committee believes requiring all containers handled within the production area to be marked with a registered handler number or the name and address of the handler improve the identification and traceability of Florida avocados.

The Committee also recommended that all nonstandard containers be marked with the grade packed. Prior to this action, only standard containers were required to be marked with the grade and only from the first Monday after July 15 until the first Monday after January 1. In its discussion of this change, the Committee agreed that for nonstandard containers the grade should be marked in letters at least 3 inches in height, rather than match the 1 inch requirement for standard containers. Nonstandard containers tend to be oversized, and as such, Committee members believe the grade markings need to be in larger letters, which is more in scale with the larger containers. Also, in the production area, avocados are often displayed in the container in which they were packed. Having recommended that all avocados packed be required to meet a U.S. No. 2 to address the concerns of their customers, Committee members thought it was important that the grade be clearly displayed on the container.

Further, the Committee also agreed it was important to have the grade marked on all containers throughout the season. Therefore, the Committee recommended that the language in the rules and regulations stating that the grade only needs to appear on standard containers from the first Monday after July 15 until the first Monday after January 1 be removed, and that the grade packed be required to appear on all standard and nonstandard containers for the entire shipping season.

This rule also makes two changes to the container requirements specified under § 915.305. Before this change, there were no specific container requirements for weight and dimension for nonstandard containers, except that handlers are prohibited from using 20 bushel plastic field bins to ship avocados to markets inside the production area. As such, many different containers have been used for shipments within the production area. However, the vast majority of nonstandard containers used in the production area are new one bushel containers or used one bushel containers that were previously packed with bananas.

The use of used banana boxes for shipping avocados within the production area increased dramatically following Hurricane Andrew, when containers were in short supply. Now, with many of the avocados sold in the production area displayed in the container in which they were packed, the Committee is concerned that the practice of packing in used containers has had a negative effect on the sale of production area avocados. These containers often have marks and stains from their previous use, and can be in poor condition. The Committee is concerned that the condition of the boxes is affecting the perception of the avocados packed inside.

With production area shipments accounting for 23 percent of total shipments, the Committee believes it is important to provide production area markets with a quality pack. The Committee believes requiring avocados to be packed in new containers is more sanitary, improves the appearance of the overall pack, and could increase sales. Consequently, the Committee recommended that all containers used to pack avocados be required to be new.

The other container change the Committee recommended was that all nonstandard containers be required to be one bushel containers. Most nonstandard containers in use are used banana boxes or new containers with dimensions similar to banana boxes. These containers hold approximately one bushel of avocados, which the industry has found to be a useful size for shipments within the production area. Rather than permitting the use of any size container within the production area, the Committee believes requiring the use of a one bushel container provides some additional uniformity to the pack.

With many handlers already utilizing the one bushel container for production area shipments, this sized container is readily available throughout the production area. Also, because all containers to be used are now required to be new, and handlers will be purchasing containers, the Committee believes this is a good time to establish requirements for nonstandard containers. Requiring all nonstandard containers to be one bushel provides for a uniform pack that is attractive to the consumer. Therefore, the Committee recommended that one bushel containers be used for all shipments within the production area.

These changes to the grade and container requirements improve the overall quality and pack, which meets the demands of production area customers. Responding to market preferences is expected to benefit producers and handlers of Florida avocados. Further, requiring container marking requirements improves the identification and traceability of production area avocados. Consequently, the Committee recommended the above changes to the rules and regulations under the order.

This final rule also makes a minor correction to § 915.306(a)(1). This change removes language which only pertained to the period November 2, 1992, through March 31, 1993. This language is obsolete, and as such is no longer necessary.

Section 8e of the Act provides that when certain domestically produced commodities, including avocados, are regulated under a Federal marketing order, imports of that commodity must meet the same or comparable grade, size, quality, and maturity requirements. This final rule does not change the minimum grade of a U.S. No. 2 established for avocados shipped outside the production area or the maturity requirements established under the order. This rule just requires all avocados shipped within the production area to meet the same minimum grade of a U.S. No. 2, and changes the container requirements under the domestic handling regulation. Consequently, no corresponding changes to the import regulations are required.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this 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 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 approximately 35 handlers of Florida avocados subject to regulation under the order and approximately 300 producers of avocados in the production area. Small agricultural service firms, which include avocado handlers, are defined by the Small Business Administration (SBA) as those whose annual receipts are less than $7,000,000, and small agricultural producers are defined as those having annual receipts of less than $750,000 (13 CFR 121.201).

According to Committee data, the average price for Florida avocados during the 2007-08 season was around $12.00 per 55-pound bushel container, and total shipments were near 1.1 million 55-pound bushels. Using the average price and shipment information provided by the Committee, the majority of avocado handlers could be considered small businesses under SBA's definition. In addition, based on avocado production, producer prices, and the total number of Florida avocado producers, the average annual producer revenue is less than $750,000. Consequently, the majority of avocado handlers and producers may be classified as small entities.

This final rule revises the grade and container requirements currently prescribed under the order. This rule establishes a minimum grade of a U.S. No. 2 for shipments within the production area, requiring these shipments to meet the same grade as currently prescribed for shipments leaving the production area. It also requires that all nonstandard containers used for shipments within the production area be one bushel in size and that these containers be marked with the registered handler number or the name and address of the handler. This final rule also requires that all avocados sold be packed in new containers and that the containers be marked with the grade packed. These changes provide a grade and pack to meet consumer demand, which will increase producer returns. This rule also improves the identification and traceability of production area avocados. This rule revises §§ 915.305 and 915.306, which specify the requisite grade and container requirements. Authority for these actions is provided in §§ 915.51 and 915.52 of the order. These changes were unanimously recommended by the Committee during a number of meetings over the past several months.

This final rule could result in some additional costs. These potential costs stem primarily from the application of the minimum grade to nonstandard containers, the new container marking requirements, and the requirement that all containers packed be new containers.

The grade requirement for nonstandard containers could result in the loss of some sales, as handlers will no longer be able to sell fruit not meeting a U.S. No. 2 inside the production area. However, these losses are expected to be minimal. Several handlers have already started packing their nonstandard containers to meet a U.S. No. 2 in response to consumer demand. Further, the volume of fruit failing to meet a U.S. No. 2 represents only a small percentage of production area shipments. The Committee estimates lower grade avocados account for only around 6 percent of production area shipments. Last year, the industry shipped nearly 264,000 55-pound containers to production area markets. Using these numbers, lower grade avocados accounted for only 15,840 of the containers shipped to the production area last year, or 1 percent of total industry shipments. Consequently, this rule is not expected to appreciably impact the total number of shipments.

Further, the grade change is not expected to result in perceptibly higher inspection costs. Currently, all avocados shipped in the production area must meet maturity requirements regardless of the container in which they are packed. Consequently, all avocados are already inspected, so any increase in inspection costs will be minimal.

The costs associated with the recommended changes in marking requirements are also expected to be nominal. Larger operations use automated stamping, and already print necessary information on standard containers. A small reconfiguration would allow them to meet this requirement. Some operations order their containers preprinted with the needed information. As this rule requires the use of new containers, handlers will be purchasing containers. The added cost of the additional marking requirements for preprinted containers should be minor. Smaller operations stamp the containers by hand. These operations will be able to meet the new requirements with a one-time purchase of a grade stamp and a name and address stamp.

This rule could also result in a slight increase in cost for handlers that were using used containers. However, Committee members stated that plain, one bushel containers are readily available on the market at reasonable prices. Also, dealers collect and sell the used containers, so used containers are not cost free. Further, the available quantities of used containers are not sufficient to handle all production area shipments; so many new nonstandard containers are already being purchased. Consequently, the cost associated with this change should also be minimal.

While this rule could result in some additional costs, the changes are expected to have a positive effect in the marketplace. The production area is an important market for the industry, accounting for nearly 23 percent of shipments for the last five seasons. The availability of poor quality avocados has had a price depressing effect on the market. Without change, there could be a continued erosion of market confidence and producer returns.

Requiring nonstandard containers to meet the minimum grade of a U.S. No. 2 addresses consumer demand and helps protect the production area market from the price depressing effects of poor quality avocados. In addition, requiring all production area avocados to be packed in new containers clearly marked with the grade packed also improves the overall avocado pack sold in the production area. These new requirements allow handlers to respond to market preferences which are expected to benefit producers and handlers of Florida avocados. Consumers also benefit as a result of the higher quality pack available in the marketplace. This rule also provides improved traceability and identification of Florida avocados. Consequently, the benefits of this rule outweigh the potential costs associated with these changes. The costs and benefits of this rule are not expected to be disproportionately different for small or large entities.

The Committee discussed alternatives to these changes. One alternative considered was to not make any changes to the rules and regulations. However, the Committee agreed making these changes makes the industry more responsive to consumer demand. It also provides for better identification and traceability of production area avocados. Therefore, this alternative was rejected. The Committee also considered the alternative of requiring the grade to be stamped on nonstandard containers in letters and numbers at least 1 inch in height as is required for standard containers. However, with nonstandard containers being larger in size and with production area avocados sold in the container, the Committee determined that the grade should be clearly visible, and that 1 inch was not large enough. Therefore, this alternative was also rejected.

This final rule revises the grade and container requirements currently prescribed under the avocado marketing order. Accordingly, this action will not impose any additional reporting or recordkeeping requirements on either small or large avocado 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 the 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 final rule. In addition, the Committee's meetings were widely publicized throughout the avocado industry and all interested persons were invited to attend the meetings and participate in Committee deliberations on all issues. Like all Committee meetings, the August 8, 2007, September 9, 2007, January 9, 2008, and February 13, 2008, meetings were public meetings and all entities, both large and small, were able to express views on these issues.

A proposed rule concerning this action was published in the Federal Register on September 23, 2008 (73 FR 54740). Copies of the rule were mailed or sent via facsimile to all Committee members and avocado handlers. Finally, the rule was made available through the Internet by USDA and the Office of the Federal Register. A 15-day comment period ending October 8, 2008, was provided to allow interested persons to respond to the proposal. No comments were received.

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 matter presented, including the information and recommendation submitted by the Committee 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.

It is further found that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register (5 U.S.C. 553) because handlers are already shipping Florida avocadoes from the 2008-2009 crop. Further, handlers are aware of this rule, which was recommended at a public meeting. Also, a 15-day comment period was provided for in the proposed rule.

This rule is issued under Marketing Order No. 981, as amended (7 CFR part 981), regulating the handling of almonds 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.”

USDA is issuing this rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

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

This rule continues in effect a relaxation of the incoming quality control requirements prescribed under the order by changing the date by which almond handlers must satisfy their inedible disposition obligation from August 31 to September 30 of each year. This provides handlers more flexibility in their operations in light of larger almond crops.

Section 981.42 of the order provides authority for a quality control program. Paragraph (a) of this section requires handlers to obtain incoming inspections on almonds received from growers to determine the percent of inedible kernels in each lot of any variety. Inedible kernels are poor quality kernels or pieces of kernels as defined in § 981.408. A handler's inedible disposition obligation is based on the percentage of inedible kernels in lots received by such handler during a crop year, as determined by the Federal-State inspection service. Handlers must satisfy their obligation by disposing of inedible kernels and other almond material in Board-accepted, non-human consumption outlets like oil and animal feed. Section 981.42(a) also provides authority for the Board, with approval of the Secretary, to establish rules and regulations necessary to administer this program.

Prior to publication of the interim final rule, § 981.442(a)(5) of the order's administrative rules and regulations specified that handlers must satisfy their inedible disposition obligation no later than August 31 succeeding the crop year in which the obligation was incurred. The crop year runs from August 1 through July 31.

Since the mid-1990's, almond crops have doubled in size and are now over 1 billion pounds annually. Larger crops have resulted in larger quantities of inedible kernels. Between the 1993-94 and 1997-98 crop years, almond production averaged about 570 million pounds and inedible disposition obligations averaged about 7 million pounds annually. Between the 2003-04 and 2007-08 crop years, production averaged about 1 billion pounds and inedible disposition obligations averaged about 10 million pounds annually.

Many handlers now operate year-round and dispose of their inedible kernels at one time after the end of the crop year. With larger crops, it has become difficult for handlers to meet the August 31 inedible-disposition deadline because of the larger volume of inedible kernels that must be disposed of under the program. Thus, the Board recommended extending the deadline from August 31 to September 30, giving handlers an additional month to meet their prior year's obligation. This provides handlers more flexibility in their operations in light of larger almond crops. The revision of § 981.442(a)(5) continues in effect, accordingly.

This rule also continues in effect the removal of obsolete language in § 981.442(a)(5). That section was modified in 2006 to specify that at least 50 percent (increased from 25 percent) of a handler's crop year inedible disposition obligation must be satisfied with dispositions consisting of inedible kernels. The 50 percent requirement does not apply to handlers with total inedible obligations of less than 1,000 pounds. However, that section still contained the sentence referencing the 25 percent requirement. This rule continues in effect both the removal of that sentence and the revision of § 981.442(a)(5), accordingly.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this 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 approximately 6,200 producers of almonds in the production area and approximately 100 handlers subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $6,500,000.

Data for the 2006-07 crop year indicate that about 50 percent of the handlers shipped under $6,500,000 worth of almonds. Dividing average almond crop value for 2006-07 reported by the National Agricultural Statistics Service of $2.258 billion by the number of producers (6,200) yields an average annual producer revenue estimate of about $364,190. Based on the foregoing, about half of the handlers and a majority of almond producers may be classified as small entities.

This rule continues in effect both the revision and relaxation of § 981.442(a)(5) of the order's administrative rules and regulations, whereby handlers are permitted to satisfy their inedible disposition obligation no later than September 30 of each year for obligations incurred in the previous crop year, rather than the previous deadline of August 31 of each year. This rule also continues in effect the removal of an obsolete sentence in that section that referenced handler dispositions containing 25 percent inedible kernels. Authority for this action is provided in § 981.42(a) of the order.

Regarding the impact of this action on affected entities, extending the disposition deadline provides handlers with additional flexibility in light of larger almond crops. Handlers who operate year round and dispose of their inedible kernels at one time after the end of the crop year have an additional month to satisfy their prior year's inedible obligation.

The Board considered alternatives to this action. The Board's Food Quality and Safety Committee (committee) met in September and November 2007 and discussed the difficulties that handlers were experiencing with meeting the August 31 disposition deadline. The committee recommended revising the regulation to allow July dispositions to be counted towards either the current year or the following year's obligation. However, the intent of the inedible program is to ensure that poor quality almonds from the current crop year are removed from the market. Thus, allowing July dispositions to count towards the following year's obligation would not meet the intent of the program.

The committee deliberated on this issue again in April 2008. The committee considered the option of extending the August 31 deadline to September 30. The Board concurred with this option at its meeting on April 2, 2008, and referred the issue back to the committee for full discussion. The committee met again on April 22, 2008, to discuss the potential change. Ultimately, the committee recommended this option to the Board, and the Board subsequently unanimously recommended this change at its May 2008 meeting.

This rule will not impose any additional reporting or recordkeeping requirements on either small or large almond 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. In addition, as noted in the initial regulatory flexibility analysis, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.

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

Further, the committee and Board meetings where this issue was discussed were widely publicized throughout the almond industry and all interested persons were invited to attend the meetings and encouraged to participate in Board deliberations. Like all committee and Board meetings, the meetings held in September and November 2007, and in April and May 2008 were all public meetings and all entities, both large and small, were able to express their views on this issue.

An interim final rule concerning this action was published in the Federal Register on July 24, 2008. Copies of the rule were provided to all Board members and almond handlers by the Board's staff. In addition, the rule was made available through the Internet by USDA and the Office of the Federal Register. That rule provided for a 60-day comment period which ended on September 22, 2008. No comments were received.

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 Board's recommendation, and other information, it is found that finalizing the interim final rule, without change, as published in the Federal Register on July 24, 2008 (73 FR 43056), will tend to effectuate the declared policy of the Act.

Section 136 of the Energy Independence and Security Act of 2007 (“EISA”), enacted on December 19, 2007, Public Law 110-140, authorizes the Secretary of Energy (“Secretary”) to make grants and direct loans to eligible applicants for projects that reequip, expand, or establish manufacturing facilities in the United States to produce qualified advanced technology vehicles, or qualifying components and also for engineering integration costs associated with such projects.

On September 30, 2008, President Bush signed into law the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009. (Pub. L. 110-329; “Continuing Resolution, 2009”). Section 129(a) of the Continuing Resolution, 2009, appropriated $7,500,000,000 for the “Advanced Technology Vehicles Manufacturing Loan Program Account” for the cost of direct loans as authorized by EISA section 136(d) and states that commitments for direct loans using such amount shall not exceed $25,000,000,000 in total loan principal, and $10 million for DOE's administrative expenses for implementing the program.

Further, section 129(c) of the Continuing Resolution, 2009, also made several substantive amendments to section 136. Specifically, section 136 was amended to provide:

1. That the Department will pay the full credit subsidy cost of the loans;

2. The Department with limited flexibility from the general rules applicable to the hiring of Federal staff and consultants necessary to administer the program; and

3. That, not later than 60 days after enactment of the Continuing Resolution, 2009, the Secretary shall promulgate an interim final rule establishing regulations that the Secretary deems necessary to administer section 136 and any loans made by the Secretary pursuant thereto.

By directing the Department to issue an interim final rule, Congress required the Department to issue a rule without having first issued a proposed rule for public comment. Though under no obligation to accept public comment prior to issuance, the Department received comments at a series of meetings it held with a variety of stakeholders. The comments received at those meetings were considered in the development of this interim final rule. A list of the meetings held and the written comments that were received can be viewed at: http://www.atvmloan.energy.gov . Through publication of this interim final rule, the Department is also providing a comment period until December 12, 2008. Comments submitted during this period will be reviewed and a final rule, responding to those comments as well as reflecting the experience the Department gains in implementing this interim final rule, will be issued at a later date.

Today's interim final rule establishes regulations necessary to implement the loan and grant programs authorized by section 136 of EISA, as amended by the Continuing Resolution, 2009 (hereinafter referred to as “section 136”). Additionally, concurrent with the release of today's interim final rule, the Department is announcing that applications for the first tranche of loans must be submitted to the Department on or before the effective date of today's interim final rule. The deadline for loan applications for subsequent tranches of loans will be every 90 days thereafter as funds and available loan authority permit.

Section 136 authorizes the Secretary to issue grants and direct loans to applicants for the costs of reequipping, expanding, or establishing manufacturing facilities in the United States to produce qualified advanced technology vehicles, or qualifying components. Section 136 also authorizes the Secretary to issue grants and direct loans for the costs of engineering integration performed in the United States of qualifying advanced technology vehicles and qualifying components. Section 136 sets forth certain specific conditions pertaining to the grant and direct loan programs, but also leaves to the Secretary's discretion the interpretation of other criteria. This interim final rule sets forth eligibility criteria, application procedures, outlines specific terms and conditions for the receipt of grants and direct loans, and sets forth interpretations of other provisions that section 136 requires the Department to address.

Section 136 defines “advanced technology vehicle” as a “light duty vehicle that meets—(A) the Bin 5 Tier II emission standard established in regulations issued by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act (42 U.S.C. 7521(i)), or a lower-numbered Bin emission standard; (B) any new emission standard in effect for fine particulate matter prescribed by the Administrator under that Act (42 U.S.C. 7401 et seq. ); and (C) at least 125 percent of the average base year combined fuel economy for vehicles with substantially similar attributes.”

Section 136 defines the term “qualifying components” to mean “components that the Secretary determines to be—(A) designed for advanced technology vehicles; and (B) installed for the purpose of meeting the performance requirements of advanced technology vehicles.”

Section 136 defines “engineering integration costs” to include the cost of engineering tasks relating to “(A) incorporating qualifying components into the design of advanced technology vehicles; and (B) designing tooling and equipment and developing manufacturing processes and material suppliers for production facilities that produce qualifying components or advanced technology vehicles.”

In today's interim final rule DOE adopts several definitions and provisions contained in the corporate average fuel economy (CAFE) regulations established by the National Highway Traffic Safety Administration (NHTSA) (codified at 49 CFR Parts 523-538). DOE recognizes that NHTSA has proposed to amend some of these definitions and provisions, in part, in response to EISA. See , 73 FR 24352; May 2, 2008. It is anticipated that any amendments to the CAFE definitions that may result from NHTSA issuing a final rule will not impact the regulations established in today's interim final rule. However, if necessary, DOE may amend, in a future rulemaking document, today's interim final rule in response to future amendments to the CAFE regulations.

Section 136, as amended, directs the Secretary to establish “regulations that the Secretary deems necessary to administer this section and any loans made by the Secretary pursuant to this section.” The statute requires the Department's regulations to establish eligibility requirements for both the grant and direct loan programs. To that end, section 136 lays out specific criteria for the Secretary to use to determine an applicant's eligibility, and directs the Secretary to make other determinations relating to eligibility prior to issuance of any loan or award of any grant.

Section 136 contains a requirement that the Department promulgate regulations regarding eligibility of automobile manufacturers. There is no similar statutory eligibility requirement for component manufacturers. With regard to automobile manufacturers, section 136 requires the Department's regulations to establish that

To determine the relevant fuel economy baselines for a new manufacturer or for a manufacturer that has not previously produced equivalent vehicles, the statute allows the Secretary to substitute industry averages. (42 U.S.C. 17013(e))

Today's interim final rule establishes the regulations necessary to determine whether an automobile manufacturer meets the minimum fuel economy improvement threshold. If the applicant is an automobile manufacturer that manufactured vehicles in model year (MY) 2005 that were subject to the CAFE standards (existing manufacturers), that manufacturer must demonstrate that the fuel economy of its vehicle fleet (the manufacturer's passenger and light-duty truck fleets) for the most recent MY that data are available is no less than the fuel economy of its MY 2005 fleet.

The statute requires that an existing manufacturer's MY 2005 average fuel economy is to be compared to the adjusted average fuel economy of that manufacturer's light-duty fleet from the most recent year for which there is available data, but the statute does not specify which data. DOE interprets the “most recent year for which data are available” to mean the most recent model year for which a manufacturer has final data for the purpose of compliance with the fuel economy standards for passenger automobiles (49 CFR Part 531) and light trucks (49 CFR Part 533). 1 By relying on the most recent MY for which final CAFE compliance data are available, the fuel economy comparison for existing manufacturers will be based on data approved by the U.S. Environmental Protection Agency (EPA) under 10 CFR Part 600. 1

Section 136 directs that this fuel economy comparison is to be based on an adjusted average fuel economy. Although the statute does not define “adjusted average fuel economy,” DOE, for purposes of today's interim final rule, has defined “adjusted average fuel economy” to mean a harmonic production weighted average of the combined fuel economy, as determined under the Energy Policy and Conservation Act (Pub. L. 94-163; “EPCA”), as amended, of the vehicles within a manufacturer's vehicle fleet. In MY 2005, there was a CAFE standard applicable to vehicles defined as passenger automobiles  2 and a CAFE standard applicable to vehicles defined as light trucks. 3 The adjusted average fuel economy combines a manufacturer's passenger automobile fleet and light truck fleet, measured in miles per gallon (mpg).

The fuel economy improvement threshold for eligibility specified in section 136(e) requires that automobile manufacturers applying under either the loan or grant program demonstrate a history of maintaining or improving the fuel economy of its fleet. Consistent with section 136, DOE is requiring that an existing manufacturer demonstrate that the fuel economy of its passenger automobile and light duty truck fleet is at least as efficient as that manufacturer's MY 2005 fleet.

To demonstrate compliance with the fuel economy level as required by subsection (e) of section 136, the adjusted average fuel economy of an existing automobile manufacturer's MY 2005 passenger automobile and light truck fleet is compared to the adjusted average fuel economy of that manufacturer's passenger automobile and light truck fleet for the most recent year in which final CAFE compliance data are available. The adjusted average fuel economy of an existing automobile manufacturer's fleet in the most recent year for which CAFE compliance data are available must be no less than the adjusted average fuel economy of that manufacturer's fleet in MY 2005.

For example, if in MY 2005 a manufacturer produced vehicles as follows:

If an automobile manufacturer is a new manufacturer, or has not previously produced “equivalent vehicles” (new automobile manufacturer), section 136 permits the Secretary to base the fuel economy improvement comparison on “industry averages.” Section 136 does not define “new manufacturer”' nor does it define “equivalent vehicles.” Based on the statute's specification of MY 2005 as the MY against which the fuel economy is compared, DOE interprets “new manufacturer” to mean a manufacturer that did not manufacture vehicles in MY 2005 that were subject to the CAFE standards.

Further, section 136 does not define the term “equivalent vehicles.” The comparison for new automobile manufacturers is in terms of “equivalent vehicles,” which indicates a comparison at a level other than the fleet wide comparison required for existing manufacturers, i.e., a comparison of “light duty vehicles produced by the manufacturer.” However, use of “equivalent vehicles” in section 136(e) does not indicate that the fuel economy comparison should be at a level as narrow as the comparison between vehicles with “substantially similar attributes” as the statute specifies for criteria in determining whether a vehicle is an “advanced technology vehicle.” DOE interprets “equivalent vehicle” to mean a vehicle within the same class as is defined for the purpose of CAFE compliance, i.e., a passenger automobile or a light truck.

For a new automobile manufacturer, eligibility under subsection (e) of section 136 is based on the fuel economy of the vehicle or vehicles that are the subject of the application. The projected combined fuel economy of the vehicles that are the subject of the application must be at least equal to the adjusted average fuel economy for all vehicles that were in the same vehicle class as the subject vehicles in MY 2005. It is likely that a new manufacturer will not have CAFE compliance data for a vehicle that is the subject of an application. In demonstrating the projected combined fuel economy of a vehicle for CAFE compliance data are not available, a new manufacturer must rely on a peer reviewed model (e.g., the Powertrain System Analysis Toolkit © (PSAT)  4 ). A new automobile manufacturer is eligible if the demonstrated combined fuel economy of the subject vehicle is at least as efficient as the industry average for that vehicle class in MY 2005.

As noted above, an applicant that is a manufacturer of a qualifying component does not need to make a showing of improved fuel economy for the purpose of threshold applicant eligibility for a section 136 grant or loan. However, a component manufacturer will be required to demonstrate the contributions to fuel economy improvements of the qualifying component that is the subject of the grant or loan application. The necessary demonstration of a qualifying component's improvement to fuel economy is discussed later in this document.

Section 136 directs the Secretary to make certain determinations with regard to applicants for direct loans. First, the Secretary must determine that the applicant is “financially viable without the receipt of additional Federal funding associated with the proposed project [.]” In today's interim final rule, the Department interprets the term “financially viable” to mean that an applicant must demonstrate a reasonable prospect that the Applicant will be able to make payments of principal and interest on the loan as and when such payments become due under the terms of the loan documents, and that the applicant has a net present value which is positive, taking all costs, existing and future, into account. Determining whether an applicant has met this criterion is a decision committed by law to the Secretary. In making that determination, today's regulations provide that the Secretary will consider a number of factors, including, but not limited to:

(1) The applicant's debt-to-equity ratio as of the date of the loan application;

(2) The applicant's earnings before interest, taxes, depreciation, and amortization (EBITDA) for the applicant's most recent fiscal year prior to the date of the loan application;

(3) The applicant's debt to EBITDA ratio as of the date of the loan application;

(4) the applicant's interest coverage ratio (calculated as EBITDA divided by interest expenses) for the applicant's most recent fiscal year prior to the date of the loan application;

(5) the applicant's fixed charge coverage ratio (calculated as EBITDA plus fixed charges divided by fixed charges plus interest expenses) for the applicant's most recent fiscal year prior to the date of the loan application;

(6) the applicant's liquidity as of the date of the loan application;

(7) statements from applicant's lenders that the applicant is current with all payments due under loans made by those lenders at the time of the loan application; and

(8) financial projections demonstrating the applicant's solvency through the period of time that the loan is outstanding.

As stated in section 136, the Secretary must find that the loan recipient is financially viable without “additional Federal funding associated with the proposed project.” In today's interim final rule, the Department interprets the term “additional Federal funding” to mean any loan, grant, guarantee, insurance, payment, rebate, subsidy, credit, tax benefit, or any other form of direct or indirect assistance from the Federal government, or any agency or instrumentality thereof, other than the proceeds of a loan approved under section 136, that is, or is expected to be made available with respect to, the project or activities for which the loan is sought under section 136, and is to be received by the applicant after entering into an Agreement with DOE.

Section 136 also requires the Secretary to ensure that the proceeds of the direct loan are expended “efficiently and effectively.” The Secretary will carry out this obligation by reviewing documents required in 611.109 for purposes of loan monitoring and audit. Loan funds will be considered as being expended “efficiently and effectively” if that documentation demonstrates, in the sole judgment of the Secretary, that the borrower is making appropriate progress toward achieving the purpose for which the loan was originally made. The Department anticipates that in order to meet this requirement, loan proceeds will be disbursed through periodic drawdowns that correspond to actual project expenses.

Section 136 also requires applicants to submit to the Secretary written assurance that “(A) all laborers and mechanics employed by contractors or subcontractors during construction, alteration, or repair that is financed, in whole or in part, by a loan under this section shall be paid wages at rates not less than those prevailing on similar construction in the locality, as determined by the Secretary of Labor in accordance with sections 3141-3144, 3146, and 3147 of title 40, United States Code; and (B) the Secretary of Labor shall, with respect to the labor standards described in this paragraph, have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (5 U.S.C. App.) and section 3145 of title 40, United States Code.” Accordingly, section 611.101(m) of today's interim final rule requires applicants to submit this required assurance as part of any direct loan application.

Under section 136, grants and direct loans may be provided for the costs of reequipping, expanding, or establishing manufacturing facilities in the United States to produce qualified advanced technology vehicles, or qualifying components. Section 136 also authorizes the Secretary to issue grants and direct loans for the costs of engineering integration performed in the United States of qualifying advanced technology vehicles and qualifying components. Specifically, subsection (b) of section 136 directs that for the grant program  5 —

Under the loan provisions of section 136, the Secretary is directed “to provide a total of not more than $25,000,000,000 in loans to eligible individuals and entities (as determined by the Secretary) for the costs of activities described in subsection (b).” (42 U.S.C. 17013(d)(1)). Section 136 provides two categories of projects eligible for direct loans: (1) Manufacturing facilities in the United States designed to produce qualified advanced technology vehicles or qualified components; and (2) engineering integration performed in the United States of qualifying advanced technology vehicles and qualifying components. Eligible costs of such projects are: (a) Those costs that are reasonably related to the reequipping, expanding, or establishing a manufacturing facility in the United States to produce qualifying advanced technology vehicles or qualifying components; (b) costs of engineering integration performed in the United States for qualifying vehicles or qualifying components. Costs eligible for payment with loan proceeds are costs incurred, but not yet paid by the borrower, after a substantially complete application has been submitted to DOE and costs incurred after the closing of the loan.

The statute defines “advanced technology vehicle” as—

As stated above, the statute does not define “light duty vehicle.” DOE interprets “light duty vehicles” to be vehicles currently subject to the CAFE requirements under EPCA, (i.e., passenger automobiles and light trucks).

The first two provisions of the statutory definition of “advanced technology vehicle” ensure that such a vehicle has low emissions. Pursuant to its authority under the Clean Air Act, on February 10, 2000, the EPA published a final rule establishing new Federal emission standards for passenger cars and light trucks (see 65 FR 6698 ). Known as the Tier II Program, the emissions standards in EPA's final rule cover light-duty vehicles (i.e., passenger cars and light trucks with a gross vehicle weight rating (GVWR) of 6,000 pounds or less, as well as “medium-duty passenger vehicles” (MDPVs)). 7

The Tier II standards are designed to reduce the emissions most responsible for the ozone and particulate matter impact from these vehicles (e.g., nitrous oxides and non-methane organic gases) and contributing to ambient volatile organic compounds.

The Tier II emission standards are based on a system of emission bins in which light-duty vehicles are certified in one of eight bins; Bin 1 represents the cleanest or lowest emitting vehicles, and Bin 8 represents the highest emitting vehicles of the Tier II bins. The emission standards for a manufacturer's vehicle fleet must comply on average with the Tier II Bin 5 level. Thus, the Tier II Bin 5 emission certification levels are the average of the Tier II emission levels with lower bins (i.e., 4, 3, 2, or 1) representing lower emitting vehicles and higher bins (i.e., 6, 7, or 8) representing vehicles that are more polluting. 72 FR 29102, 29103 (May 24, 2007). Section 136 limits “advanced technology vehicles” to those vehicles that, at a minimum, comply with Bin 5 levels at the time an application is submitted to DOE.

The grant and loan programs provide assistance for the production of vehicles and components that demonstrate advanced fuel economy improvements. In order to qualify as an “advanced technology vehicle” a vehicle must meet at least 125 percent of the average base year combined fuel economy for vehicles with substantially similar attributes. 8 It should be noted that the at least 25 percent improvement in fuel economy performance necessary for a vehicle to qualify as an advanced technology vehicle is the minimum improvement necessary for eligibility under the section 136 grant and loan programs. As discussed later in this notice, in prioritizing projects to receive either a grant or a loan, DOE will consider the extent to which an advanced technology vehicle exceeds the 125 percent minimum.

For the purpose of demonstrating the at least 25 percent improvement, vehicle fuel economies are compared without consideration of whether the vehicles are dual fueled automobiles under CAFE. A “dual fueled automobile” is an automobile that is capable of operating on alternative fuel or a mixture of biodiesel and diesel, and on gasoline or diesel. 49 U.S.C. 32901(a)(9). Dual fueled vehicles are commonly referred to as flexible fuel vehicles.

The CAFE statute specifies special calculations for determining the fuel economy of dual fueled automobiles that give those vehicles higher fuel economy ratings than automobiles that are identical except that they are not dual fueled. 9 49 U.S.C. 32905(b). The incentive provided to dual fueled vehicles was enacted to encourage the production of vehicles that would promote consumer acceptance and ultimately lead to the development of infrastructure to distribute and make alternative fuel available. (See 69 FR 7689, 7691; February 19, 2004.) While DOE supports the development and increased distribution of dual fueled vehicles, we have determined not to consider dual fueled capabilities under the criteria for identifying an advanced technology vehicle. For the purpose of determining whether a vehicle achieves a fuel economy performance of at least 125 percent of the average base year combined fuel economy for vehicles with substantially similar attributes, DOE will consider the fuel economy performance of vehicles as calculated for non-dual fueled vehicles.

Section 136 does not define the term “base year” and therefore DOE may exercise its sound policy discretion in defining that term. DOE is defining “base year” as MY 2005.

DOE recognizes that the fuel economy standard for light trucks increases in stringency through MY 2010, and that NHTSA has proposed to increase the stringency of both the passenger car and further increase the light truck fuel economy standard beginning MY 2011. See 49 CFR 533.5 and 73 FR 24352, respectively. Given the potential for a vehicle that is the subject of an application to begin being manufactured in a future MY, DOE considered using a future MY for the base year. However, the definition of “advanced technology vehicle” requires a fuel economy performance comparison to be in terms of vehicles with “substantially similar attributes.”

At present, DOE does not have sufficient data on the types of vehicles to be manufactured in future MYs, including the fuel economy performance of vehicles yet to be manufactured. Although manufacturers have product plans for future years, that information is subject to change. DOE considered relying on fuel economy targets established for specific vehicle footprint values (i.e., area calculated by multiplying vehicle width by vehicle length). In the MYs 2008-2010, standards for light trucks, NHTSA assigns a fuel economy target for each light truck based on vehicle footprint. 49 CFR 533.5. There are currently no similar targets established for passenger automobiles.

As a result of the lack of sufficient data for future MYs and the lack of attribute-based fuel economy targets for passenger cars, DOE has decided that the “base year” should be a year for which CAFE compliance data are available. To date, NHTSA has not received all of the approved compliance data from EPA for MY 2007. 10 DOE notes that the total fleet fuel economy for MY 2006 is higher than in MY 2005 (25.8 mpg as compared to 25.4 mpg), the industry average for passenger automobile fuel economy is higher in MY 2005 than in MY 2006 (30.3 mpg as compared to 30.1 mpg). 11 However, relying on MY 2006 as a base year would not necessarily result in a more stringent fuel economy comparison for determining whether a particular vehicle is an advanced technology vehicle. Furthermore, MY 2005 CAFE data are fully available and known at the present time, and using MY 2005 would promote efficient and effective administration of the section 136 program. Thus, and consistent with the model year for which Congress established automobile manufacturer eligibility under section 136(e), DOE has interpreted base year for the purpose of defining an “advanced technology vehicle” to mean MY 2005.

A determination of whether a vehicle has sufficiently improved fuel economy to qualify as an advanced technology vehicle is further refined by section 136's reference to vehicles with “substantially similarly attributes.” To identify those vehicles with substantially similar attributes, DOE first relied on the vehicle classes used for EPA's fuel economy guidelines. EPA, in conjunction with DOE, publishes information on the fuel economy performance of the vehicle fleet for each model year. 12 EPA segments the vehicle fleet by size classes to permit more practicable comparisons of fuel economy performance between vehicles. The size class for cars is based on interior passenger and cargo volumes as described below. The size class for trucks is defined by GVWR, which is the weight of the vehicle and its carrying capacity. For MY 2005, EPA has identified the various classes as follows.

DOE notes that in MY 2005 not every EPA vehicle class was populated by vehicle models manufactured in that model year (i.e., small pickups and large wagons). If an EPA class did not have a representative MY 2005 model, DOE combined that class with another EPA class in a manner consistent with the grouping of vehicles by “substantially similar attributes.”

DOE further categorized vehicles by performance. Performance vehicles generally have lower fuel economy ratings than non-performance vehicles in the same EPA class. Also, different fuel economy technologies may be applicable to performance as opposed to non-performance vehicles (i.e., additional aerodynamic improvements may not be available for performance vehicles). In order to distinguish between vehicles that are manufactured to achieve higher performance from other similarly sized non-performance vehicles, DOE evaluated the peak horsepower to curb weight ratio of each vehicle in a size class. DOE plotted the peak horsepower to curb weight ratio for each vehicle by EPA class. Generally, if there was at least a doubling of the peak horsepower to curb weight ratio along the plotted line, as compared to the lowest plotted value, DOE then looked at the plotted data to see if there was a reasonably identifiable point beyond the doubling that divided the vehicles, i.e., a break point. For those classes in which DOE was able to identify a break point, DOE created an additional “performance” class. DOE identified a point in several of the EPA classes at which there was a substantial increase in the ratio. In those instances in which there was a marked increase, the more powerful vehicles were placed into a “performance class.” This additional analysis resulted in a total of 17 classes.

In order to determine the average combined fuel economy for each class, DOE will calculate the harmonic production weighted average for each class. As previously stated, DOE relied on the MY 2005 CAFE compliance data that are available, and assumed each vehicle was a non-dual fueled vehicle.

A project eligible for a grant or loan under section 136 may include a project for “reequipping, expanding, or establishing a manufacturing facility in the United States to produce” a “qualifying component.” (42 U.S.C. 17031(b)(1)) Section 136 defines “qualifying component” as a component that

Although a component needs to be designed for an advanced technology vehicle and installed to assist meeting performance requirements of an advanced technology vehicle, DOE does not interpret the statutory definition to mean that the use of these components in either other conventional vehicles or in aftermarket sales is precluded. In making a determination on component eligibility, the Secretary will consider factors such as the overall impact of the component and extent to which the component contributes to the efficiency of advanced technology vehicles.

Eligible costs for facilities that manufacture qualified components may include the costs of “engineering integration performed in the United States of qualifying vehicles and qualifying components.” (42 U.S.C. 17013(b)(2)) “Engineering integration” is defined to include—

In both the specification of eligible activities and the definition of “engineering integration,” eligible engineering integration costs relate to those costs associated with advanced technology vehicles and qualifying components. Subsection (b) of section 136 states that facility funding awards are for the cost of engineering integration performed in the United States for qualifying vehicles and qualifying components. (42 U.S.C. 17013(b)(2)) “Engineering integration” is statutorily defined to include the cost of incorporating qualifying components into the design of an advanced technology vehicle and the costs of design and development for production facilities producing qualifying components or advanced technology vehicles. Engineering costs not associated with the production of an advanced technology vehicle or the production of a qualifying component, are not eligible costs under section 136.

Section 136 prescribes certain specific terms for loan documents. First, the statute establishes that the loans will have an interest rate that, “as of the date on which the loan is made, is equal to the cost of funds to the Department of the Treasury for obligations of comparable maturity[.]” In determining the date upon which the interest rate will be calculated, the Department of the Treasury will set the loan rate at the time the loan funds are disbursed. Additionally, the statute prescribes that the loans shall have a term “equal to the lesser of—(i) the projected life, in years, of the eligible project to be carried out using funds from the loan, as determined by the Secretary; and (ii) 25 years[.]”

The statute also states that loans may be subject to a deferral in repayment for “not more than 5 years after the date on which the eligible project carried out using funds from the loan first begins operations, as determined by the Secretary[.]” Section 136 is silent as to whether a deferral is available for interest on the loan. In today's interim final rule, the Department interprets the deferral of repayment option to apply to only loan principal, not interest. Allowing a deferral of interest would have the effect of increasing the principal amount of the loan, perhaps beyond the authority provided by Congress for this program. Moreover, the statute allows only for deferral of “repayment” of a loan. The principal amount of a loan is the amount that is actually being “repaid” to the Government. Finally, the statute requires that all loans be made by the Federal Financing Bank.

In addition to the minimum terms prescribed in section 136, today's interim final rule sets forth other parameters for loan terms intended to protect the significant taxpayer costs for this program. Accordingly, the rule states that the Secretary must have a first lien or security interest in all property acquired with loan funds. This requirement may be waived only by the Secretary on a non-delegable basis. Additionally, DOE must also have a lien on any other property of the applicant pledged to secure the loan.

Section 136 states that applicants for direct loans shall submit applications “at such time, in such manner, and containing such information as the Secretary may require[.]” To further the statutory purpose of providing funding to assist in the development and production of advanced technology vehicles and qualifying components, applications for the first tranche of direct loans will be due on the date the interim final rule becomes effective. The deadline for loan applications for subsequent tranches of loans will be every 90 days thereafter as funds and available loan authority permit. The Department will evaluate and make decisions on a tranche of loan applications before proceeding to evaluate and make decisions on a subsequent tranche of loan applications. Application requirements are set forth in section 611.101. These application materials are intended to provide adequate information for the Department to comply with the requirements and goals of section 136 and other applicable legal and regulatory requirements. One such requirement, written assurance that all laborers and mechanics are paid prevailing wages, explicitly appears in section 136(d)(2) and appears in today's interim final rule. Other requirements in section 136 relate to Secretarial determinations of applicant eligibility such as: (i) Financial viability absent receipt of additional Federal funding associated with the proposed project and (ii) the efficient and effective expenditure of loan proceeds. Today's interim final rule specifies the information to be submitted by an applicant in order for the Secretary to be able to make such determinations.

To date, Congress has appropriated $7,500,000,000 to cover the subsidy cost of the direct loans issued under section 136, and provided an overall cap of $25,000,000,000 on the principal amount of the loans that may be issued. Under the Federal Credit Reform Act of 1990, the subsidy cost reflects “the estimated long-term cost to the Government of the direct loan, calculated on a net present value basis, excluding administrative costs and any incidental effects on governmental receipts or outlays.” 2 U.S.C. 661a(5)(A). This amount will be unique for each loan issued under section 136, and is dependent on the particular circumstances of the borrower and the project for which the loan will be issued. While Congress has appropriated funds at approximately a 30 percent subsidy rate, the subsidy cost for individual borrowers and projects may be valued at more or less than 30 percent. If the subsidy costs are estimated to be higher than 30 percent the Department will only be able to issue loans which may be covered by the actual amount appropriated for use as the subsidy, an amount which will not reach the $25,000,000,000 cap. Thus, while there is a limit on the total amount of loans the Department is able to make, the value of the loans the Department is able to make with the credit subsidy amount appropriated may be less than $25,000,000,000.

Section 136 states that awards under the grant program for eligible projects shall pay “not more than 30 percent” of project cost. On the other hand, section 136 does not impose a maximum percentage of funding associated with a particular project for the direct loan program. In accordance with Federal credit policies under OMB Circular A-129, the Department will adhere to requirements for a significant borrower stake. Under the interim final rule, the Federal loan may only constitute up to 80% of a project's cost. Section 611.102 sets forth the types of costs the Department will consider to be eligible project costs—i.e., costs for which grant or loan proceeds may be expended. Eligible costs are: (a) Those costs that are reasonably related to the reequipping, expanding, or establishing a manufacturing facility in the United States to produce qualifying advanced technology vehicles or qualifying components; (b) costs of engineering integration performed in the United States for qualifying vehicles or qualifying components. Costs eligible for payment with loan proceeds are costs incurred, but not yet paid by the borrower, after a substantially complete application has been submitted to DOE and costs incurred after the closing of the loan. In determining the overall total cost of an Eligible Project, DOE and the applicant may include significant costs already incurred and capitalized by the applicant in accordance with Generally Accepted Accounting Principles and these costs may be considered by DOE in determining the Borrower's contribution to total project costs.

Section 136(f) states that administrative costs “shall be no more than $100,000 or 10 basis points of the loan.” The Department interprets this subsection as authorizing DOE to charge borrowers an administrative fee, which shall be deposited into the U.S. Treasury, and as providing DOE with the flexibility to choose either monetary option set forth in the statute. DOE has decided that administrative costs for a particular loan will be 10 basis points of the loan to be paid by the borrower on the closing date of the loan. No application fee will be charged, and therefore applicants that do not receive a loan will pay no administrative fee. The Department bases its decision on the need for fairness among applicants and the belief that administrative costs for a loan will be in excess of 10 basis points. By including a fee provision in section 136, Congress demonstrated an intent that applicants should pay a fee in connection with a loan. By selecting 10 basis points as the fee for all loans, the Department assures that applicants for smaller loans will pay smaller fees.

All applications received will be reviewed to determine whether the applicant is eligible and that the application contains all information required of an applicant by section 136, this interim final rule and other applicable law. Applications that are determined to be eligible and substantially complete will undergo a substantive review by DOE based upon certain evaluation factors. These factors include, but are not limited to, the technical merit of the proposed advanced technology vehicles or qualifying components, with greater weight given for improved vehicle fuel economy above the minimum required for an advanced technology vehicle, potential contributions to improved fuel economy of the U.S. light-duty vehicle fleet, promotion of the use of advanced fuel (e.g., E85, ultra-low sulfur diesel), and potential reductions in petroleum use by the U.S. light-duty fleet. DOE will also assess the adequacy of the proposed provisions to protect the Government, including offers of participation in project gains, sufficiency of Security, the priority of the lien position in the Security, and the percentage of the project to be financed with the loan.

Section 611.101 of this interim final rule sets forth the information DOE will need an applicant to submit in order to make the determinations required in section 136 and this interim final rule for issuance of a loan or award. Applicants may submit loan requests for multiple eligible projects in a single application provided that the application provides a way to segregate each proposed eligible project in such a way that permits DOE to evaluate each project in the application. Applications for the first tranche of loans may be submitted or hand delivered to the Postal Mail address listed in ADDRESSES . DOE will consider and evaluate substantially complete applications as and when they are submitted during the first tranche period, which will close December 31, 2008. DOE may make decisions on such applications and close loans with respect to such applications at any time. After December 31, 2008, subsequent tranche periods will close on the last day of each calendar year quarter (i.e., March 31, 2009; June 30, 2009, etc.) For applications submitted during those subsequent periods, no final decisions will be made with respect to such applications until after the close of the particular tranche period.

Today's interim final rule has been determined to be an economically significant regulatory action under Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (October 4, 1993). Accordingly, this action was subject to review under that Executive Order by the Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB).

Through the issuance of this rule, DOE is making no decision relative to the approval of a loan or grant for a particular project. DOE has, therefore, determined that publication of this rule is covered under the Categorical Exclusion found at paragraph A.6 of Appendix A to Subpart D, 10 CFR Part 1021, which applies to the establishment of procedural rulemakings. Accordingly, neither an environmental assessment nor an environmental impact statement is required at this time. However, appropriate NEPA project review will be conducted in connection with a section 136 loan or grant.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires preparation of an initial regulatory flexibility analysis for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. As required by Executive Order 13272, “Proper Consideration of Small Entities in Agency Rulemaking,” 67 FR 53461 (August 16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that the potential impacts of its rules on small entities are properly considered during the rulemaking process (68 FR 7990). DOE has made its procedures and policies available on the Office of the General Counsel's Web site: http://www.gc.doe.gov .

Because a notice of proposed rulemaking is not required pursuant to 5 U.S.C. 553, EISA section 136, as amended, or any other law, prior to issuance of this interim final rule, the analytical requirements of the Regulatory Flexibility Act are inapplicable. As such, DOE is not obliged to prepare a regulatory flexibility analysis for this rulemaking.

This rule contains a collection-of-information requirement subject to the Paperwork Reduction Act (PRA) and which has been submitted to OMB with a request for emergency processing. DOE will publish a notice of approval once received from OMB.

Public reporting burden for this collection of information is estimated to average 256.5 hours per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate, or any other aspect of the data collection, including suggestions for reducing the burden, to DOE (see Postal Mail in ADDRESSES ) or to the Office of Management and Budget, Office of Information and Regulatory Affairs, 725 17th Street, NW., Washington, DC 20503.

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

Title II of the Unfunded Mandates Reform Act of 1995 (Act) (2 U.S.C. 1531 et seq. ) requires each federal agency, to the extent permitted by law, to prepare a written assessment of the effects of any federal mandate in an agency rule that may result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. The Act also requires a federal agency to develop an effective process to permit timely input by elected officials of state, tribal, or local governments on a proposed “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity to provide timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect small governments.

The term “federal mandate” is defined in the Act to mean a federal intergovernmental mandate or a federal private sector mandate (2 U.S.C. 658(6)). Although the rule will impose certain requirements on non-federal governmental and private sector applicants for loans, the Act's definitions of the terms “federal intergovernmental mandate” and “federal private sector mandate” exclude, among other things, any provision in legislation, statute, or regulation that is a condition of federal assistance or a duty arising from participation in a voluntary program (2 U.S.C. 658(5) and (7), respectively). Today's interim final rule establishes requirements that persons voluntarily seeking loans for projects that would use certain advanced vehicle technologies must satisfy as a condition of a federal loan. Thus, the interim final rule falls under the exceptions in the definitions of “federal intergovernmental mandate” and “federal private sector mandate” for requirements that are a condition of federal assistance or a duty arising from participation in a voluntary program. Accordingly, the Unfunded Mandates Reform Act of 1995 does not apply to this rulemaking.

Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any proposed rule that may affect family well being. This rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.

Executive Order 13132, “Federalism,” 64 FR 43255 (August 4, 1999) imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. Agencies are required to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and carefully assess the necessity for such actions. DOE has examined this interim final rule and has determined that it would not preempt State law and would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, no further action is required by Executive Order 13132.

With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (February 7, 1996), imposes on Executive agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct rather than a general standard and promote simplification and burden reduction. With regard to the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this rule meets the relevant standards of Executive Order 12988.

The Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB.

OMB's guidelines were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). DOE has reviewed today's final rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.

Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001) requires Federal agencies to prepare and submit to the OMB, a Statement of Energy Effects for any proposed significant energy action. A “significant energy action” is defined as any action by an agency that promulgated or is expected to lead to promulgation of a final rule, and that: (1) Is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a significant energy action. For any proposed significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use. Today's regulatory action would not have a significant adverse effect on the supply, distribution, or use of energy and is therefore not a significant energy action. Accordingly, DOE has not prepared a Statement of Energy Effects.

As required by 5 U.S.C. 801, DOE will submit to Congress a report regarding the issuance of today's interim final rule. The report will state that it has been determined that the interim final rule is a “major rule” as defined by 5 U.S.C. 804(2). Pursuant to 5 U.S.C. 808(2), DOE finds good cause that the effective date of this major rule need not be delayed because notice and public procedure thereon are unnecessary, impracticable, and contrary to the public interest. In the Continuing Resolution, 2009, Congress amended section 136 of EISA to require DOE to act with extreme expedition in the establishment and implementation of the Advanced Technology Vehicle Manufacturing Incentive Program. Specifically, Congress mandated that the Secretary issue an interim final rule—a rule that is issued and becomes effective without prior public notice and comment. Furthermore, Congress mandated that this interim final rule be promulgated no later than 60 days after enactment of the Continuing Resolution 2009. In addition, the Department is cognizant of the current extraordinary and adverse credit market conditions, and believes it would be contrary to the public interest to delay the effective date of regulations implementing a program that may help respond to those conditions. Thus, it would be inconsistent with that Congressional mandate, and thereby unnecessary, impracticable and contrary to the public interest, for the effective date of this interim final rule to be delayed beyond the date of its publication. For the reasons stated above, DOE also finds good cause, pursuant to 5 U.S.C. 553(d)(3), to waive the 30-delay in effective date required by the rulemakings provisions of the Administrative Procedure Act.

The Secretary of Energy has approved the issuance of this interim final rule.

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an airworthiness directive (AD) that would apply to all Boeing Model 747SP series airplanes. That NPRM was published in the Federal Register on May 23, 2008 (73 FR 30007). That NPRM proposed to require repetitive lubrication of the rudder tab hinges and repetitive replacement of the rudder tab control rods.

We gave the public the opportunity to participate in developing this AD. We considered the comment received from the one commenter.

Boeing requests that we revise the Discussion section of the NPRM to remove the statement that the affected control surfaces on Boeing Model 727, 737, 757, and 767 airplanes and Boeing Model 747SP airplanes are similar in design. Boeing states that the only similarity between Model 727, 737, 757, and 767 airplanes and Model 747SP airplanes pertains to flutter-critical unbalanced control surfaces of the identified unsafe condition. Boeing requests that we revise that section of the NPRM to state: “There have been no reports of freeplay-induced vibration of the 747SP rudder tabs. However, there have been reports pertaining to flutter-critical unbalanced control surfaces on 727, 737, 757 and 767 airplanes. This lubrication and replacement will help prevent conditions which allow excessive freeplay of control surfaces.”

We agree with Boeing that the Discussion section could be clarified as Boeing specified. However, since that section of the preamble does not reappear in the final rule, no change to the final rule is necessary.

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

We estimate that this AD affects 7 airplanes of U.S. registry. The following table provides the estimated costs for U.S. operators to comply with this AD. The average labor rate is $80 per work hour.

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an airworthiness directive (AD) that would apply to certain Boeing Model 767-200 and -300 series airplanes. That NPRM was published in the Federal Register on December 19, 2007 (72 FR 71834). That NPRM proposed to require replacing the wire segments of the four Fuel Quantity Indicating System (FQIS) wire bundles with new, improved wire segments.

We gave the public the opportunity to participate in developing this AD. We considered the comments received from a single commenter.

Boeing asks that we clarify the scope of the NPRM with regard to a specific FQIS design that is affected by corrosion of the FQIS wire bundle. Boeing states that Boeing Alert Service Bulletin 767-28A0064, Revision 2, dated October 27, 2005 (referred to in the NPRM as the appropriate source of service information for accomplishing the specified actions), indicates that the NPRM is applicable only to airplanes on which the Honeywell system is installed; but the name of the affected system is not specified in the NPRM. Simmonds FQIS was installed on certain Model 767 airplanes in production; some airlines retrofitted their airplanes with the Simmonds system, but other airlines continue to use the Honeywell system. Boeing adds that the NPRM should apply only to airplanes on which the Honeywell system is installed.

We acknowledge Boeing's concern that the airplanes affected by this AD should be clearly defined. However, the applicability specified in paragraph (c) of the NPRM already refers to the effectivity in Revision 2 of the referenced service bulletin, which identifies affected airplanes as those having a Honeywell FQIS installed. Therefore, we have made no change to the AD in this regard.

Boeing asks that we add a sub-paragraph to paragraph (g) of the NPRM to give credit for airplanes retrofitted with a Simmonds FQIS in accordance with Boeing Service Bulletin 767-28A0043, Revision 2, dated December 20, 2002. Boeing states that this action is also considered an acceptable means to comply with the NPRM.

We do not agree with Boeing. The effectivity specified in Revision 2 of Boeing Alert Service Bulletin 767-28A0064 states, in part, “This service bulletin is for the airplanes with Honeywell FQIS . . .” If the FQIS on the airplane has been changed to a Simmonds FQIS, it is no longer a Group 1 airplane, as identified in the effectivity of Boeing Alert Service Bulletin 767-28A0064, Revision 2, and is not affected by this AD. We have made no change to the AD in this regard.

Boeing asks that we identify the origin of the number of affected airplanes specified in the Costs of Compliance section of the NPRM because Boeing is unable to verify the specified number. Boeing states that the referenced service bulletin lists the total number of affected airplanes with a Honeywell FQIS as 433.

We acknowledge Boeing's comment and provide the following clarification. We determined the number of airplanes in the worldwide fleet by extracting the number from the fleet database. We agree with Boeing that the number of worldwide airplanes referenced in the “Costs of Compliance” section of the NPRM should agree with the number referenced in Boeing Alert Service Bulletin 767-28A0064, Revision 2, which was developed using Boeing's records of Model 767 airplanes equipped with a Honeywell FQIS. Changing the number of worldwide airplanes will not affect the cost estimate in the AD. Therefore, we have changed the number of affected worldwide airplanes to 433 in the “Costs of Compliance” section below. The number of airplanes of U.S. registry remains the same.

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

There are 433 airplanes of the affected design in the worldwide fleet. This AD affects about 169 airplanes of U.S. registry. The replacement takes about 42 work hours per airplane, at an average labor rate of $80 per work hour. Required parts will cost about $1,756 per airplane. Based on these figures, the estimated cost of the AD for U.S. operators is $864,604, or $5,116 per airplane.

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

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

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

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

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

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

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

You can find our regulatory evaluation and the estimated costs of compliance in the AD Docket.

Discussion

We issued a supplemental notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an airworthiness directive (AD) that would apply to certain Boeing Model 757-200 and 757-300 series airplanes. That supplemental NPRM was published in the Federal Register on April 8, 2008 (73 FR 19015). That supplemental NPRM proposed to require installing a bonding jumper between a ground and the clamp on the tube of the forward and aft gray water composite drain masts. For certain airplanes, that supplemental NPRM also proposed to require inspecting existing aft bonding jumper assemblies that might be too short, repair if necessary, and replacing the bonding jumper assembly with a new, longer bonding jumper assembly if necessary.

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

Boeing concurs with the contents of the supplemental NPRM. Continental Airlines has no objection to the supplemental NPRM. Northwest Airlines (NWA) is in general concurrence with the modification requirements and concurs with the 60-month compliance time. The Air Transport Association (ATA), on behalf of member airlines, states that its members agree with the intent of the NPRM.

American Airlines (AAL) requests that Boeing Special Attention Service Bulletin 757-30-0024, Revision 1, dated October 25, 2007, be revised to change the pilot hole dimensions in Figure 2, Sheet 2. (We referred to Boeing Special Attention Service Bulletin 757-30-0024, Revision 1, dated October 25, 2007, as the appropriate source of service information for the proposed actions in the NPRM.) AAL points out that the new bracket is provided without pilot holes, but the service bulletin specifies the hole location: “Tolerance on linear dimensions, other than rivet and bolt edge margins, is plus or minus 0.03 inch.” AAL is concerned that it may be an unreasonable expectation, within the on-aircraft environment in which the work is being performed, to locate the holes in the bracket to within 0.03 inch of the specified location. Therefore, AAL recommends that the service bulletin be revised to change the hole location dimensions to be “0.43 minimum.” As a supporting argument for this change, AAL points out that the new grounding bracket is installed in a different location to meet the same intent for the forward drain mast and does not include dimensional location information, which AAL believes implies that the hole location in the bracket is not critical to meeting the intent of the service bulletin.

While we do agree that the on-airplane environment can sometimes be a difficult place to work, we disagree that the service bulletin should be revised as requested by AAL. Boeing has pointed out that the edge margin requirement for the fasteners on the bonding bracket is not as critical as the placement of the fastener through stringer S-25 right. This fastener location must be drilled to within 0.35 inch, plus or minus 0.03 inch, from the top edge of the stringer on the airplane. If it is possible to maintain this drawing requirement for on-airplane installation, it should also be possible to maintain the edge margin requirements for the bonding bracket. We have confirmed that Boeing has no plans to revise the service bulletin to change the pilot hole dimensions in Figure 2, Sheet 2. We have not changed the AD in this regard.

The ATA, on behalf of NWA, requests that we revise the proposed Costs of Compliance provided in the supplemental NPRM. NWA states that Boeing Special Attention Service Bulletin 757-30-0024, Revision 1, dated October 25, 2007, estimates 5.35 work-hours to do the proposed modification. NWA considers this estimate to be low because of the limited access to the area to be modified. Further, NWA notes that the cost estimate provided in the supplemental NPRM reduced the work-hour estimate to only 2 work-hours. Therefore, NWA believes that we have underestimated the costs of compliance imposed on operators.

We do not agree to revise the proposed work-hour estimate. The work-hour estimate of 5.35 pointed out by NWA includes time necessary for access and close. The cost information below describes only the direct costs of the specific actions required by this AD. Based on the best data available, the manufacturer provided the number of work-hours (2) necessary to do the required actions. This number represents the time necessary to perform only the actions actually required by this AD.

We recognize that, in doing the actions required by an AD, operators might incur incidental costs in addition to the direct costs. The cost analysis in AD rulemaking actions, however, typically does not include incidental costs such as the time required to gain access and close up, time necessary for planning, or time necessitated by other administrative actions. Those incidental costs, which might vary significantly among operators, are almost impossible to calculate. We have not changed the AD in this regard.

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

There are about 83 airplanes of the affected design in the worldwide fleet. The following table provides the estimated costs for U.S. operators to comply with this AD.

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

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

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

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

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

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

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

You can find our regulatory evaluation and the estimated costs of compliance in the AD Docket.

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an airworthiness directive (AD) that would apply to all Boeing Model 727 airplanes. That NPRM was published in the Federal Register on February 8, 2008 (73 FR 7489). That NPRM proposed to require repetitive inspections for any crack in the area of the elevator side fitting/hinge fitting joint and for any crack or elongation inside and outside of the holes in the clevis and in the lug, corrective actions if necessary, and other specified actions.

We gave the public the opportunity to participate in developing this AD. We considered the comments received from the two commenters.

Boeing concurs with the NPRM.

FedEx requests that we extend the compliance time from 18 months to 30 months for doing the initial inspections of the side and hinge fittings of the elevator control quadrant upper support assembly. FedEx states that, prior to issuance of the AD, it will take immediate action to accomplish the inspections within the required timetable, but that the 18-month compliance time will likely cause FedEx to do the inspections outside of scheduled heavy maintenance. FedEx, therefore, requests an extension of the compliance time, so that it may accomplish the initial inspections for its entire fleet during its next scheduled C-check. FedEx states that it prefers to do the inspections at a maintenance facility during a scheduled heavy maintenance check because of the difficulty associated in providing safe and adequate access to the inspection areas, the availability of the requisite tooling, and the presence of skilled mechanics.

FedEx also requests that we extend the calendar time from 24 months to 30 months for doing the repetitive inspections. (The NPRM proposed accomplishing those inspections within 24 months, 4,000 flight hours, or 3,000 flight cycles, whichever occurs first.) FedEx states that an increase in calendar time should provide an equivalent level of safety because it operates its airplanes at a low, daily-utilization rate, thereby, keeping the flight cycle and flight hour count significantly below the proposed requirement, even after 30 months of calendar time has elapsed. FedEx also states that increasing the calendar time for the repetitive inspections in this way will allow FedEx to accomplish the inspections within its heavy maintenance schedule.

We disagree with the FedEx's request to extend the compliance times for the initial inspection and repetitive interval. In developing appropriate compliance times for these actions, we considered the urgency associated with the subject unsafe condition, the average utilization rate of the affected fleet, and the practical aspect of accomplishing the required actions within a period of time that corresponds to the normal scheduled maintenance for most affected operators. Although FedEx did not submit any technical data to support its request, its airplane utilization rate might possibly support an extension in the compliance time. However, FedEx's airplane utilization rate might not be typical for most operators, and we believe that the required compliance times specified in the referenced service bulletins coincides with most operators' utilization rates. If FedEx's airplane utilization rate and maintenance program for the inspection area prove that the new compliance time would provide an acceptable level of safety, FedEx may apply for an AMOC according to the provisions in paragraph (i) of this AD. We have not changed the AD in this regard.

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

We estimate that this AD affects 401 airplanes of U.S. registry. We also estimate that it takes about 2 work-hours per product to comply with this AD. The average labor rate is $80 per work-hour. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $64,160, or $160 per product, per inspection cycle.

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

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

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

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

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

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

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

You can find our regulatory evaluation and the estimated costs of compliance in the AD Docket.

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the Federal Register on August 7, 2008 (73 FR 45891). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states:

We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public.

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

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

We might also have required different actions in this AD from those in the MCAI in order to follow our FAA policies. Any such differences are highlighted in a Note within the AD.

We estimate that this AD will affect about 33 products of U.S. registry. We also estimate that it will take about 8 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $80 per work-hour. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $21,120, or $640 per product.

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

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

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

For the reasons discussed above, I certify this AD:

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

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

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

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

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the Federal Register on June 24, 2008 (73 FR 35603). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states:

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

Northwest Airlines (NWA) requests that we reconsider eliminating the provision for flight with certain cracks. NWA states that the MCAI and Airbus service bulletins (that were referenced in the NPRM as appropriate sources of service information) provide for flight with certain cracks if follow-on inspections are accomplished in accordance with the service bulletin.

We do not concur. Our policy specifies the requirement to repair known cracks before further flight (though we may make exceptions to this policy in certain cases of unusual need, as discussed below). This policy is based on the fact that such damaged airplanes do not conform to the FAA-certificated type design and, therefore, are not airworthy until a properly approved repair is made. While recognizing that repair deferrals might be necessary at times, our policy is intended to minimize adverse human factors relating to the lack of reliability of long-term repetitive inspections, which might reduce the safety of the type-certificated design if such repair deferrals are practiced routinely.

As noted above, we may make an exception to this policy in certain cases, if there is an unusual need for a temporary deferral. Unusual needs include such circumstances as legitimate difficulty in acquiring parts to accomplish repairs. Under such conditions, we may allow a temporary deferral of the repair, subject to a stringent inspection program acceptable to the FAA. We acknowledge that the manufacturer has specified inspection intervals that are intended to allow continued operation with known cracks, and to prevent the need for extensive repairs. However, since we are not aware of any unusual need for repair deferral in regard to this AD, we have not evaluated these inspection intervals.

Under the provisions of paragraph (g)(1) of this AD, we will consider requests for approval of an AMOC if sufficient data are submitted to substantiate that temporary deferral of repair with follow-on inspections would provide an acceptable level of safety. We have not changed the AD in this regard.

Airbus has issued revisions to two service bulletins referenced in the NPRM as appropriate sources of service information. Airbus Mandatory Service Bulletins A330-53-3168 and A340-53-4174, both Revision 01, both dated February 15, 2008, are essentially the same as the original versions of those service bulletins except for clarifications, and no additional work is required for airplanes modified per the original issue. We have changed the references in paragraphs (f)(1), (f)(2)(i), and (h) of this AD to include Revision 01 of those service bulletins, and added paragraph (f)(4) to this AD to give credit for actions performed according to the original issues.

We reviewed the available data, including the comment received, and determined that air safety and the public interest require adopting the AD with the changes described previously. We determined that these changes will not increase the economic burden on any operator or increase the scope of the AD.

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

We might also have required different actions in this AD from those in the MCAI in order to follow our FAA policies. Any such differences are highlighted in a Note within the AD.

We estimate that this AD will affect about 26 products of U.S. registry. We also estimate that it will take about 202 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $80 per work-hour. Required parts will cost about $19,020 per product. Where the service information lists required parts costs that are covered under warranty, we have assumed that there will be no charge for these parts. As we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $914,680, or $35,180 per product.

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

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

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

For the reasons discussed above, I certify this AD:

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

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

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

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

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

In general, the FCPIAA (28 U.S.C. 2461 note, as amended by the Debt Collection Improvement Act of 1996 (31 U.S.C. 3701)) requires Federal agencies to issue regulations to adjust for inflation each civil monetary penalty provided by law within their jurisdiction. The FCPIAA directs agencies to adjust the civil monetary penalties by October 23, 1996, and to make additional adjustments at least once every 4 years thereafter. The adjustments are based on changes in the cost of living, and the FCPIAA defines the cost of living adjustment as: “* * * the percentage (if any) for each civil monetary penalty by which—(1) the Consumer Price Index for the month of June of the calendar year preceding the adjustment, exceeds (2) the Consumer Price Index for the month of June of the calendar year in which the amount of such civil monetary penalty was last set or adjusted pursuant to law”(28 U.S.C. 2461 note, section 5(b)).

The FCPIAA also prescribes a rounding method based on the size of the penalty after the calculated increase, but states that the first adjustment of a civil monetary penalty may not exceed 10 percent of the penalty.

The FCPIAA defines a civil monetary penalty as: “any penalty, fine, or other sanction that—(A)(i) 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. 2461 note, section 3(2)).

Congress enacted the FCPIAA, in part, because it found that the impact of civil monetary penalties had been reduced by inflation and that reducing the impact of civil monetary penalties had weakened their deterrent effect.

In the Federal Register of July 20, 2004 (69 FR 43299), we published a final rule that identified 14 civil monetary penalties that fall within our jurisdiction and are subject to adjustments under the FCPIAA. The final rule amended our regulations governing civil money penalties hearings found at part 17 (21 CFR part 17) to establish a new § 17.2 entitled “Maximum penalty amounts” to show the maximum civil monetary penalty amounts that were adjusted under the FCPIAA. The final rule also revised § 17.1, which lists statutory provisions authorizing civil money penalties governed by the civil money penalty regulations as of August 28, 1995, updating the statutory citations.

FDA is publishing this rule as a direct final rule without prior proposal and comment because we view this as a noncontroversial amendment and anticipate no significant adverse comment. This rule incorporates requirements specifically set forth in the FCPIAA requiring FDA to issue a regulation implementing inflation adjustments for all its civil penalty provisions. These technical changes, required by law, do not substantively alter the existing regulatory framework, nor do they in any way affect the terms under which civil penalties are assessed by FDA. The formula for the amount of the penalty adjustment is prescribed by Congress in the FCPIAA, and these changes are not subject to the exercise of discretion by FDA. In addition, FDA has made conforming changes to the regulations, which have no substantive effect, to reflect the new penalties prescribed by Congress in FDAAA.

We revised the list of statutory monetary penalties in § 17.1 to include the new penalties prescribed by the Federal Food, Drug, and Cosmetic Act, as amended by FDAAA in 2007. These new penalties have been added as new paragraphs (c) and (d). The table in § 17.2 has also been amended to include the new penalties, and the adjusted maximum penalty amounts for the pre-FDAAA penalties have been updated to account for the inflation between June 2004 (the year of the last adjustment) and June 2007 as prescribed by FCPIAA. The per violation amount for 21 U.S.C. 333(f)(1)(A), the per violation per person amount for 21 U.S.C. 360pp(b)(1), and the per violation amount for 42 U.S.C. 263b(h)(3) have not been adjusted because the rounding rules of FCPIAA prevent an inflation adjustment in these cases. The new FDAAA penalties have also not been adjusted because Congress only recently passed FDAAA on September 27, 2007. Finally, the “Description of the Violation” column in the table in § 17.2 has been removed, as it is unnecessary for purposes of merely showing the adjustment in penalty amounts.

In brief, the direct final rule:

• Revises § 17.1 to update the statutory citations regarding the new civil monetary penalties prescribed by FDAAA, and

• Revises the table in § 17.2 to include the new FDAAA penalties, and adjusts the pre-FDAAA maximum civil penalty amounts for inflation as prescribed by FCPIAA.

We have determined under 21 CFR 25.30(a) and (h) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

We conclude that the civil monetary penalties adjustments in this final rule are not subject to review by the Office of Management and Budget because they do not constitute a “collection of information” under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The adjustments do not require disclosure of any information to FDA, third parties, or the public.

FDA has analyzed this final rule in accordance with the principles set forth in Executive Order 13132. FDA has determined that the rule does not contain policies that 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. Accordingly, the agency has concluded that the rule does not contain policies that have federalism implications as defined in the Executive order and, consequently, a federalism summary impact statement is not required.

FDA has examined the impacts of the final rule under Executive Order 12866 and the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The agency believes that this final rule is not a significant regulatory action under the Executive order.

The Regulatory Flexibility Act requires agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because the final rule simply adjusts the maximum amount of civil monetary penalties administered by FDA, and because the adjustment is required by the FCPIAA, the agency certifies that the final rule will not have a significant economic impact on a substantial number of small entities.

Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $130 million, using the most current (2007) Implicit Price Deflator for the Gross Domestic Product. FDA does not expect this final rule to result in any 1-year expenditure that would meet or exceed this amount.

Interested persons may submit to the Division of Dockets Management (see ADDRESSES ) written or electronic comments regarding this document. Submit a single copy of electronic comments or two paper copies of any mailed comments, except that individuals may submit one paper copy. Comments are to be identified with the docket number found in brackets in the heading of this document. Received comments may be seen in the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

Please note that on January 15, 2008, the FDA Division of Dockets Management Web site transitioned to the Federal Dockets Management System (FDMS). FDMS is a Government-wide, electronic docket management system. Electronic comments or submissions will be accepted by FDA only through FDMS at http://www.regulations.gov .

In FR Doc. E8-22730, appearing on page 56477 in the Federal Register of September 29, 2008, the following correction is made:

1. On page 56481, in the second column, starting in the forth line, the sentence “Therefore, because of the limited use of the current calcium and osteoporosis health claim, the agency certifies that the final rule will not have a significant economic impact on a substantial number of small entities.” is corrected to read “Therefore, because of the limited use of the current calcium and osteoporosis health claim, the agency believes that the final rule will not have a significant economic impact on a substantial number of small entities.”

The Deputy Chief of Staff, G-1, is the proponent for the regulation represented in 32 CFR Part 578. The objective of the Department of the Army Military Awards Program is to provide tangible recognition for acts of valor, exceptional service or achievement, special skills or qualifications, and acts of heroism not involving actual combat. Implementation of the program is a command responsibility, with the goal of fostering mission accomplishment by recognizing excellence of both military and civilian members of the force and motivating them to high levels of performance and service. As such, the program does not have the general applicability and legal effect required to publish rules pertaining to this program in the Code of Federal Regulations.

The PCT enables United States applicants to file one application (a PCT international application) in a standardized format in English in a Receiving Office (either the United States Patent and Trademark Office or the International Bureau of the World Intellectual Property Organization (WIPO)) and have that application acknowledged as a regular national or regional filing by PCT member countries. See Manual of Patent Examining Procedure (MPEP) § 1801 (8th ed. 2001) (Rev. 7, July 2008). The primary benefit of the PCT system is the ability to delay the expense of submitting papers and fees to the PCT national offices. See MPEP § 1893.

The Office acts as a Receiving Office for United States residents and nationals. See 35 U.S.C. 361(a), 37 CFR 1.412(a), and MPEP § 1801. A Receiving Office functions as the filing and formalities review organization for PCT international applications. See MPEP § 1801. The Office, in its capacity as a Receiving Office, received over 50,000 PCT international applications in each of fiscal years 2006 and 2007. The Office also acts as an International Searching Authority (ISA). See 35 U.S.C. 362(a), 37 CFR 1.413(a), and MPEP § 1840. The primary functions of an ISA are to establish: (1) International search reports, and (2) written opinions of the ISA. See MPEP § 1840.

The transmittal and search fees for a PCT international application are provided for in 35 U.S.C. 376. See 35 U.S.C. 376 (the Office “may also charge” a “transmittal fee,” “search fee,” “supplemental search fee,” and “any additional fees” (35 U.S.C. 376(a)), and the “amounts of [these] fees * * * shall be prescribed by the Director” (35 U.S.C. 376(b)). In addition, 35 U.S.C. 41(d) provides that fee amounts set by the Office “recover the estimated average cost to the Office of such processing, services, or materials.” See 35 U.S.C. 41(d). The current PCT transmittal, search, and supplemental search fees are set at amounts that do not recover the estimated average cost to the Office of performing these functions for PCT international applications. Therefore, the Office is adjusting the PCT transmittal fee, search fee, and supplemental search fee to recover the estimated average cost to the Office of processing PCT international applications and preparing international search reports and written opinions for PCT international applications.

The Office uses an Activity Based Information (ABI) methodology to determine the estimated average costs on a per process, service, or material basis. The ABI analysis includes compiling the Office costs for a specified activity, including the direct costs ( e.g. , direct personnel compensation, contract services, maintenance and repairs, communications, utilities, equipment, supplies, materials, and training), an appropriate allocation of direct allocated costs ( e.g. , rent, program-related automation, and personnel compensation benefits such as medical insurance and retirement), and an appropriate allocation of indirect allocated costs ( e.g. , general financial and human resource management, non-program specific automation, and general Office expenses). The direct cost for an activity plus its direct allocated costs and indirect allocated costs is the “fully burdened” cost for that activity. The “fully burdened” cost for an activity is then divided by production measures (number of that activity completed) to arrive at the fully burdened per-unit cost for that activity. The cost for a particular process is then determined by ascertaining which activities occur for the process, and how often each such activity occurs for the process.

The ABI analysis in this final rule is based upon fiscal year 2007 costs, as fiscal year 2007 is the most recent fiscal year for which complete cost and production measure information is available. The Office is adjusting the fiscal year 2007 cost by the change in the Consumer Price Index for All Urban Consumers (CPI-U) between fiscal year 2007 and fiscal year 2009 as the CPI-U is a reasonable basis for determining the changes in Office costs between fiscal year 2007 and fiscal year 2009. Thus, the Office will adjust the fiscal year 2007 costs by five percent to account for the increase in Office costs between fiscal year 2007 and fiscal year 2009 to determine the estimated fiscal year 2009 costs. The Office plans to revalidate these costs every three to five years, and use the CPI-U as the basis for adjustment of these fees in the intervening years as the changes in the CPI-U is a reasonable basis for determining the year-to-year changes in Office costs.

Finally, the fiscal year 2009 cost amounts are rounded by applying standard arithmetic rules to the nearest five dollars for fee setting purposes so that the resulting fee amounts will be convenient to patent users.

The processing of PCT international applications involves the following activities, with the fiscal year 2007 costs of the activity per PCT international application indicated in parentheses: (1) Application capture and initial processing ($20); (2) application scanning ($96); (3) application formalities review ($107); and (4) classification and security review ($7). Thus, the Office estimates that the average fiscal year 2007 cost to the Office of processing a PCT international application was $230. Therefore, the estimated average fiscal year 2009 cost to the Office of processing a PCT international application is $241 ($230 multiplied by 1.05). Accordingly, this final rule sets the transmittal fee at $240.00.

The Office currently prepares an international search report and written opinion for a PCT international application by one of three methods: (1) Transcribing an Office action for a prior-filed application under 35 U.S.C. 111(a), if possible; (2) having an Office examiner prepare the international search report and written opinion; and (3) acquiring the international search report and written opinion from a competitive source.

Obtaining an international search report and written opinion for a PCT international application by transcribing an Office action for a prior-filed application under 35 U.S.C. 111(a) involves having Office personnel transcribe the Office action for the prior-filed application into an international search report and written opinion. The Office estimates that the average fiscal year 2007 cost to the Office of this activity per international search report and written opinion was $218.

Acquiring the international search report and written opinion by having an Office examiner prepare the international search report and written opinion involves at least the following activities, with the fiscal year 2007 costs of the activity per international search report and written opinion indicated in parentheses: (1) Fee processing and classification of the application by technology center art unit ($108); and (2) analysis, search of prior art, and preparation of an international search report and written opinion by an Office examiner ($2,284). Thus, the Office estimates that the average fiscal year 2007 cost to the Office of acquiring an international search report and written opinion by having an Office examiner prepare the international search report and written opinion was $2,392.

Acquiring the international search report and written opinion from a competitive source involves the following activities, with the fiscal year 2007 costs of the activity per international search report and written opinion indicated in parentheses: (1) Contract for an international search report and written opinion ($1,837) (direct allocated costs are excluded from this cost amount because the use of Office space is not involved); and (2) contract oversight and quality review of international search report and written opinion ($237). Thus, the Office estimates that the average fiscal year 2007 cost to the Office of acquiring the international search report and written opinion by acquiring the international search report and written opinion from a competitive source was $2,074.

Preparing an international search report and written opinion for a PCT international application by transcribing an Office action for a prior-filed application under 35 U.S.C. 111(a) is a viable option for only an incidental number (five percent) of PCT international applications due to the current pendency to first Office action. Therefore, to meet the time frames established in the PCT, the Office must rely upon having an Office examiner prepare the international search report and written opinion, or acquiring the international search report and written opinion from a competitive source, in the vast majority (ninety-five percent) of PCT international applications. The Office is migrating towards obtaining international search reports and written opinion for a PCT international application from a competitive source in the ninety-five percent of applications for which transcribing an Office action for a prior-filed application under 35 U.S.C. 111(a) is not a viable option. Therefore, the fiscal year 2009 average cost of obtaining an international search report and written opinion for a PCT international application is estimated on the basis of the Office transcribing an Office action for a prior-filed application under 35 U.S.C. 111(a) in five percent of applications and acquiring the international search report and written opinion from a competitive source in ninety-five percent of applications, resulting in a composite fiscal year 2007 cost of $1,981 ($2,074 multiplied by 0.95 plus $218 multiplied by 0.05). Therefore, the estimated average fiscal year 2009 cost of preparing an international search report and written opinion for a PCT international application is $2,080 ($1,981 multiplied by 1.05). Accordingly, this final rule sets the search fee and supplemental search fee at $2,080.

Title 37 of the Code of Federal Regulations, Part 1, is amended as follows:

Section 1.445: Section 1.445(a)(1) is amended to change the transmittal fee from $300.00 to $240.00. Section 1.445(a)(2) is amended to change the search fee from $1,800.00 to $2,080.00. Section 1.445(a)(3) is amended to change the supplemental search fee from $1,800.00 to $2,080.00.

Response to Comments: The Office published a notice proposing to adjust the transmittal and search fees for international applications filed under the PCT to recover the estimated average cost to the Office of processing PCT international applications and preparing international search reports and written opinions for PCT international applications. See Fiscal Year 2009 Changes to Patent Cooperation Treaty Transmittal and Search Fees, 73 FR 34672 (June 18, 2008), 1332 Off. Gaz. Pat. Office 295 (July 15, 2008) (proposed rule), and Fiscal Year 2009 Changes to Patent Cooperation Treaty Transmittal and Search Fees, 73 FR 38027 (July 2, 2008), 1332 Off. Gaz. Pat. Office 421 (July 29, 2008) (correction).

Comment: The Office received one comment (from the American Intellectual Property Law Association (AIPLA)) in response to the proposed rule making notice. The comment supported the principle that patent users should pay the average costs incurred by the Office in providing services but raised a number of concerns with respect to the proposed changes to the transmittal and search fees. The comment first requested information on how the transmittal and international search fees under § 1.445 were calculated so that the patent user community can determine whether the proposed increases in fees are necessary or reasonable. The comment also stated that the international search fee under § 1.445 overcharges and discriminates against U.S. nationals using the PCT because the costs for search and examination of national applications are subsidized by issue and maintenance fees, and PCT applications from U.S. nationals generally result in national stage applications which will generate issue and maintenance fees to the same extent as other national applications. The comment also stated that the international search fee under § 1.445 overcharges and discriminates against U.S. applicants who file PCT applications claiming priority of an earlier-filed U.S. national application, as such applicants will pay both the full national search fee and the full international search fee thus effectively paying twice for the same search. The comment also questioned why the transmittal fee set forth in § 1.445(a)(1) is higher than transmittal fees charged by other PCT Receiving Offices and suggested that instead of increasing the transmittal fee, the Office should determine how it can perform its Receiving Office functions at costs in line with the rest of the world.

Response: The basis for the estimated average costs to the Office of processing PCT international applications and preparing international search reports and written opinions for PCT international applications has been discussed previously. The patent fee structure set forth in 35 U.S.C. 41 is a combination of specified patent fees (35 U.S.C. 41(a), (b), (d)(1), and (d)(2)(A) through (C)) that cover enumerated processing, services, and materials, and a provision (35 U.S.C. 41(d)(2)) directing the Office to establish fees for all other processing, services, or materials relating to patents that are not otherwise specified in 35 U.S.C. 41. The provisions of 35 U.S.C. 41(d)(2) apply to the PCT fees by the Office under the authority provided in 35 U.S.C. 376. See H. Rep. 97-542, at 8 (1982) (noting that the “other processing” and “services” covered by 35 U.S.C. 41(d)(2) (then 35 U.S.C. 41(d)) include inter alia the processing of PCT international applications). The transmittal and international search fees under § 1.445 are not fees specified under 35 U.S.C. 41, but rather are processing or services pertaining to PCT international applications. Thus, 35 U.S.C. 41(d)(2) provides for the Office to set the transmittal and international search fees to recover their estimated average costs to the Office.

The application filing fees (filing, search, and examination fees) for an application under 35 U.S.C. 111(a), which currently total $1090.00 ($545.00 small entity) for an original nonprovisional patent application (other than plant or design), do not recover the Office's costs of initial processing and examination of an application, but rather this cost is subsidized by patent issue and maintenance fees. See H.R. Rep. 108-241, at 15 (2003) (noting that the Office's costs of examining applications are subsidized by issue and maintenance fees). 35 U.S.C. 41(a) and (b) provide a fee structure under which the application filing fees for an application under 35 U.S.C. 111(a) are lower than the Office's costs of initial processing and the examination provided for in 35 U.S.C. 132(a) and are subsidized by patent issue and maintenance fees. 35 U.S.C. 41 and 376 do not provide for the Office to establish PCT international stage fees lower than the Office's costs and to subsidize the costs by revenue generated from patent issue and maintenance fees. Rather, 35 U.S.C. 41(d)(2) provides for fees that recover the estimated average cost to the Office of the processing, services, or materials, which is incongruous with setting a fee lower than the cost of the processing, service, or material and to be subsidized by revenue generated from other fees. In any event, since international applications under the PCT do not themselves mature into patents, it is appropriate that the fees paid in PCT international applications accurately reflect the costs to the Office of the processing, search, and examination of these applications.

The Office provides a reduced search fee for applications entering the national stage under 35 U.S.C. 371 where the search fee has been paid on the PCT international application to the Office as an International Searching Authority. See § 1.492(b)(2).

The Office does not provide a reduced search fee for PCT international applications where there has been a prior-filed application under 35 U.S.C. 111(a). As discussed previously, the Office's current pendency to first Office action does not allow for the use of the search in the prior-filed application under 35 U.S.C. 111(a) for the preparation of an international search report and written opinion for a PCT international application for the vast majority of applications, if the Office is to meet the time frames established in the PCT. Thus, the Office generally incurs the cost of conducting separate searches for the PCT international application and the prior-filed application under 35 U.S.C. 111(a) in this situation.

The PCT transmittal fee being adopted in this final rule is lower than what some Receiving Offices charge and higher than what other Receiving Offices charge. What transmittal and search fees other Receiving Offices and International Searching Authorities charge are immaterial. The Office encounters different costs than do other Receiving Offices and International Searching Authorities for a number of reasons beyond the control of the Office. In addition, it is not clear that other Receiving Offices and International Searching Authorities set their transmittal or search fees on a cost-recovery basis as provided for in 35 U.S.C. 41(d)(2).

The Office is revising the rules of practice to adjust the transmittal and search fees for international applications filed under the PCT. The Office is adjusting the PCT transmittal and search fees to recover the estimated average cost to the Office of processing PCT international applications and preparing international search reports and written opinions for PCT international applications.

The Office is adjusting the PCT transmittal and search fees to recover the estimated average cost to the Office of processing PCT international applications and preparing international search reports and written opinions for PCT international applications. The changes in this final rule are authorized by 35 U.S.C. 41(d) and 376.

The Small Business Administration (SBA) small business size standards applicable to most analyses conducted to comply with the Regulatory Flexibility Act are set forth in 13 CFR 121.201. These regulations generally define small businesses as those with fewer than a maximum number of employees or less than a specified level of annual receipts for the entity's industrial sector or North American Industry Classification System code. The Office, however, has formally adopted an alternate size standard for the purpose of conducting an analysis or making a certification under the Regulatory Flexibility Act for patent-related regulations. See Business Size Standard for Purposes of United States Patent and Trademark Office Regulatory Flexibility Analysis for Patent-Related Regulations , 71 FR 67109 (Nov. 20, 2006), 1313 Off. Gaz. Pat. Office 60 (Dec. 12, 2006). This alternate small business size standard is the previously established size standard that identifies the criteria entities must meet to be entitled to pay reduced patent fees. See 13 CFR 121.802. If patent applicants identify themselves on a patent application as qualifying for reduced patent fees, the Office captures this data in the Patent Application Location and Monitoring (PALM) database system, which tracks information on each patent application submitted to the Office.

Unlike the SBA small business size standards set forth in 13 CFR 121.201, this size standard is not industry-specific. Specifically, the Office's definition of small business concern for Regulatory Flexibility Act purposes is a business or other concern that: (1) Meets the SBA's definition of a “business concern or concern” set forth in 13 CFR 121.105; and (2) meets the size standards set forth in 13 CFR 121.802 for the purpose of paying reduced patent fees, namely an entity: (a) Whose number of employees, including affiliates, does not exceed 500 persons; and (b) which has not assigned, granted, conveyed, or licensed (and is under no obligation to do so) any rights in the invention to any person who made it and could not be classified as an independent inventor, or to any concern which would not qualify as a non-profit organization or a small business concern under this definition. See Business Size Standard for Purposes of United States Patent and Trademark Office Regulatory Flexibility Analysis for Patent-Related Regulations , 71 FR at 67112, 1313 Off. Gaz. Pat. Office at 63.

The changes in this final rule will apply to any small entity who files a PCT international application in the United States Receiving Office and to any small entity who requests a search by the United States International Searching Authority. The Office received between 52,000 and 53,000 PCT international applications in each of fiscal years 2006 and 2007. There is no provision in 35 U.S.C. 376 (or elsewhere) for a small entity reduction for the transmittal or search fees for a PCT international application. Thus, PCT applicants do not indicate and the Office does not record whether a PCT international application is filed by a small entity or a non-small entity. The Office's PALM and Revenue Accounting and Management (RAM) systems indicate that 12,043 of the PCT international applications in fiscal year 2006 claim priority to a prior application (nonprovisional or provisional) that has small entity status, and that 2,559 of the PCT international applications in fiscal year 2006 do not claim priority to any prior nonprovisional application or provisional application. The Office's PALM and RAM systems indicate that 12,716 of the PCT international applications in fiscal year 2007 claim priority to a prior application (nonprovisional or provisional) that has small entity status, and that 4,016 of the PCT international applications in fiscal year 2007 do not claim priority to any prior nonprovisional application or provisional application.

This final rule does not involve any reporting, recordkeeping and other compliance requirements. This final rule only adjusts the PCT transmittal and search fees. As discussed previously, there is no provision in 35 U.S.C. 376 (or elsewhere) for a small entity reduction for the transmittal or search fees for a PCT international application. The following table (Table 1) indicates the PCT international stage fee, the number of payments of the fee received by the Office in fiscal year 2007 (number of entities who paid the applicable fee in fiscal year 2007), the former fee amount, the revised fee amount, and the net amount of the fee adjustment.

The PCT international search fee and supplemental search fee were adjusted from $1,000.00 to $1,800.00 in November of 2007. See April 2007 Revision of Patent Cooperation Treaty Procedures , 72 FR 51559 (Sept. 10, 2007), 1323 Off. Gaz. Pat. Office 26 (Oct. 2, 2007) (final rule). Thus, the change to the search fee and supplemental search fee in this final rule is a $280.00 increase over the current search fee and supplemental search fee set in November of 2007, and a $1,080.00 increase over the search fee and supplemental search fee that was in effect prior to November of 2007.

The PCT does not preclude United States applicants from filing patent applications directly in the patent offices of those countries which are Contracting States of the PCT (with or without previously having filed a regular national application under 35 U.S.C. 111(a) or 111(b) in the United States) and taking advantage of the priority rights and other advantages provided under the Paris Convention and the World Trade Organization (WTO) administered Agreement on Trade-Related Aspects of Intellectual Property (TRIPs Agreement). See MPEP § 1801. That is, the PCT is not the exclusive mechanism for seeking patent protection in foreign countries, but is instead simply an optional alternative route available to United States patent applicants for seeking patent protection in those countries that are Contracting States of the PCT. See id .

In addition, an applicant filing an international application under the PCT in the United States Receiving Office (the United States Patent and Trademark Office) is not required to use the United States Patent and Trademark Office as the International Searching Authority. The European Patent Office (except for applications containing business method claims) or the Korean Intellectual Property Office may be selected as the International Searching Authority for PCT international applications filed in the United States Receiving Office. The applicable search fee if the European Patent Office is selected as the International Searching Authority European is currently $2665.00 (set by the European Patent Office), and the applicable search fee if the Korean Intellectual Property Office is selected as the International Searching Authority is currently $244.00 (set by the Korean Intellectual Property Office). The Office also recently entered into an agreement with IP Australia under which IP Australia may be selected as the International Searching Authority for certain PCT international applications filed in the United States Receiving Office.

The alternative of not adjusting the PCT transmittal and search fees would have a lesser economic impact on small entities, but would not accomplish the stated objectives of applicable statutes. See 35 U.S.C. 41(d) (provides that fees set by the Office recover the estimated average cost to the Office of the processing, services, or materials).

The Office is the sole agency of the United States Government responsible for administering the provisions of title 35, United States Code, pertaining to the examination of patent applications and granting of patents. Therefore, no other federal, state, or local entity shares jurisdiction over the examination and granting of patents.

The Office previously adjusted the patent fees set by statute to reflect fluctuations in the Consumer Price Index (CPI). See Revision of Patent Fees for Fiscal Year 2009 , 73 FR 47534 (Aug. 14, 2008), 1334 Off. Gaz. Pat. Office 45 (Sept. 2, 2008) (final rule). The Office is also in the process of studying the cost of a number of processes and services covered by the cost-recovery provisions of 35 U.S.C. 41(d)(2) ( e.g. , reexamination proceeding costs), and the Office will propose adjustments to the fees for these processes and services if appropriate. The changes that would be proposed in any rule makings resulting from this study would also not duplicate, overlap, or conflict with the changes proposed in this notice.

Other countries, however, have their own patent laws, and an entity desiring a patent in a particular country must make an application for patent in that country, in accordance with the applicable law. Although the potential for overlap exists internationally, such overlap cannot be avoided except by treaty harmonizing the patent laws for all countries (such as the Paris Convention for the Protection of Industrial Property, or the PCT).

Nevertheless, the Office believes that there are no other duplicative or overlapping rules.

This rulemaking does not contain policies with federalism implications sufficient to warrant preparation of a Federalism Assessment under Executive Order 13132 (Aug. 4, 1999).

This rulemaking has been determined to be significant for purposes of Executive Order 12866 (Sept. 30, 1993), as amended by Executive Order 13258 (Feb. 26, 2002) and Executive Order 13422 (Jan. 18, 2007).

This rulemaking will not: (1) Have substantial direct effects on one or more Indian tribes; (2) impose substantial direct compliance costs on Indian tribal governments; or (3) preempt tribal law. Therefore, a tribal summary impact statement is not required under Executive Order 13175 (Nov. 6, 2000).

This rulemaking is not a significant energy action under Executive Order 13211 because this rulemaking is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, a Statement of Energy Effects is not required under Executive Order 13211 (May 18, 2001).

This rulemaking meets applicable standards to minimize litigation, eliminate ambiguity, and reduce burden as set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 (Feb. 5, 1996).

This rulemaking does not concern an environmental risk to health or safety that may disproportionately affect children under Executive Order 13045 (Apr. 21, 1997).

This rulemaking will not effect a taking of private property or otherwise have taking implications under Executive Order 12630 (Mar. 15, 1988).

Under the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq. ), prior to issuing any final rule, the United States Patent and Trademark Office will submit a report containing this final rule and other required information to the U.S. Senate, the U.S. House of Representatives and the Comptroller General of the Government Accountability Office. The changes in this final rule are not expected to result in an annual effect on the economy of 100 million dollars or more, a major increase in costs or prices, or significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. Therefore, this final rule is not a “major rule” as defined in 5 U.S.C. 804(2).

The changes in this final rule do not involve a Federal intergovernmental mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, of 100 million dollars (as adjusted) or more in any one year, or a Federal private sector mandate that will result in the expenditure by the private sector of 100 million dollars (as adjusted) or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 1501 et seq.

This rulemaking will not have any effect on the quality of environment and is thus categorically excluded from review under the National Environmental Policy Act of 1969. See 42 U.S.C. 4321 et seq.

The requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) are inapplicable because this rulemaking does not contain provisions which involve the use of technical standards.

The changes in this final rule involve information collection requirements which are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). The collection of information involved in this notice has been reviewed and approved by OMB under OMB control number 0651-0021. The Office did not resubmit an information collection package to OMB for its review and approval because the changes in this final rule concern revised fees for existing information collection requirements associated with the information collection under OMB control number 0651-0021. The Office will submit fee revision changes to the inventory of the information collection under OMB control number 0651-0021.

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

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

On April 25, 2008 (73 FR 22307), EPA proposed the following actions:

• Approval of the State of California's request to revise the designation for the SJV serious PM-10 nonattainment area by splitting the area into two separate nonattainment areas, the SJVAB serious PM-10 nonattainment area and the East Kern serious PM-10 nonattainment area.

• Redesignation of the SJVAB nonattainment area to attainment for the PM-10 NAAQS and approval of the maintenance plan, motor vehicle emissions budgets and conformity trading mechanism for the SJVAB area.

• Exclusion from use in determining that the SJVAB area has attained the standard two exceedances that EPA has concluded were caused by exceptional events that occurred on July 4, 2007, and January 4, 2008.

• Approval of enforceable commitments by the Kern County Air Pollution Control District (KCAPCD) and the California Air Resources Board (CARB) to install a PM-10 monitor in the East Kern nonattainment area and to address CAA requirements under section 189(d) as necessary for the East Kern area.

Subsequently, On May 23, 2008, EPA extended the public comment period for two weeks, until June 10, 2008. 73 FR 30029. EPA issued the extension in order to notify the public of a minor change in the motor vehicle emissions budgets and to provide the public with the opportunity to consider these technical corrections.

Under section 107(d)(3)(D) of the CAA, the Governor of any state may, on the Governor's own motion, submit to EPA a revised designation of any area or portion thereof within the state. 1 EPA is required to approve or deny the revised designation within 18 months of receipt. On January 31, 2008, the State submitted to EPA a revised designation that involves a boundary change only and not a change in status (e.g., from “nonattainment,” to “attainment” or “unclassifiable”) of any area.

Section 107(d)(3)(E) of the CAA states that an area can be redesignated to attainment if the following conditions are met:

(1) EPA has determined that the area has attained the NAAQS.

(2) The applicable implementation plan has been fully approved by EPA under section 110(k) of the CAA.

(3) EPA has determined that the improvement in air quality is due to permanent and enforceable reductions in emissions.

(4) The State has met all applicable requirements for the area under section 110 and Part D of the CAA.

(5) EPA has fully approved a maintenance plan, including a contingency plan, for the area under section 175A of the CAA. These requirements are discussed in more detail in a September 4, 1992, EPA memorandum, “Procedures for Processing Request To Redesignate Areas to Attainment,” John Calcagni, Director, Air Quality Management Division (Calcagni memorandum).

The proposed rule provides a more detailed discussion of the background pertinent to this final action.

EPA received one letter in support of EPA's proposed actions from the San Joaquin Valley Air Pollution Control District (SJVAPCD or the District) and two letters with adverse comments. As EPA sets forth in detail in its responses to comments below, in taking final action EPA has fully considered all data pertinent for regulatory use in determining attainment in the SJVAB area and EPA continues to believe that the area has attained the PM-10 standard. EPA has also determined that the State's request for redesignation and the maintenance plan for the SJVAB area meet the applicable requirements of the CAA. In addition, EPA is granting the State's request for a boundary revision for the area based on a multiplicity of factors. The available monitoring data for the East Kern area, while limited, also indicate that concentrations are well below the NAAQS. Thus, for the reasons set forth in the responses to comments below, as well as in the proposed rule, EPA is finalizing its proposed determinations as fully meeting the requirements of the CAA.

Comment 1: Earthjustice (EJ) states that the first condition that a nonattainment area must meet in order to be redesignated to attainment under CAA section 107(d)(3)(E) is that EPA has determined that the area has actually attained the NAAQS. EJ alleges that the SJV nonattainment area has recorded multiple exceedances of the standard during the period that EPA is relying on to demonstrate attainment and that EPA is thus ignoring a serious air quality problem and the health impacts associated with it. EJ incorporates by reference and attaches its previous comments on EPA's attainment determination that claim the problem EPA is ignoring has existed for many years, is part of what led EPA to designate the SJV area nonattainment in the first place and is caused by ongoing human activity that is not reasonably controlled.

Response 1: The previous comments to which EJ refers in its June 10, 2008 comment letter on the proposed rule are contained in its August 18, 2006 comment letter with attachments A-H, October 26, 2007 comment letter, December 29, 2006 Petition for Reconsideration and March 21, 2007 Petition for Withdrawal, with attached declarations from Sarah Jackson and Jan Null. EJ raised the same issues as it raises here during EPA's rulemakings regarding the 2006 determination of attainment for the SJV nonattainment area and 2008 affirmation of that determination. EPA fully responded to EJ's comments at that time. See the final rules at 71 FR 63642 (October 30, 2006) and 73 FR 14687 (March 19, 2008). See also the proposed rules for these actions at 71 FR 40952 (July 19, 2006) and 72 FR 49046 (August 27, 2007). As we explained in our responses to EJ's comments in the final rules, EPA believes that the SJV area has attained the PM-10 NAAQS and that the exceedances noted by EJ were properly excluded from consideration under the Agency's Exceptional Events Rule (EER)(72 FR 13560; March 22, 2007).

EJ subsequently filed petitions for review of the October 2006 and March 2008 final rules in the U.S. Court of Appeals for the Ninth Circuit. Latino Issues Forum, et al. v. EPA, Nos. 06-75831 and 08-71238. 2 In its opening brief in these cases, filed on June 16, 2008, EJ again raises these issues. In its brief in opposition, filed on September 3, 2008, EPA again responds to EJ's arguments. EJ was required to raise any issues regarding the 2006 attainment determination and 2008 affirmation of that determination during those rulemakings and in the Ninth Circuit in Latino Issues Forum and cannot relitigate the same issues here.

Moreover, in the proposed rule for today's final action we proposed to exclude under the EER data showing exceedances in the SJV nonattainment area on July 4, 2007 and January 8, 2008, and concluded that the area continued to attain the PM-10 standard through February 2008. We did not receive any adverse comments on this aspect of our proposed rule. In this final action, for the reasons set forth in the proposed rule and in EPA's concurrence letters to which it refers, we are concurring with the State's flagging of those data as caused by fireworks and high wind exceptional events, and excluding those data from consideration in determining that the SJVAB area continues to attain the standard.

Finally, EPA is aware of PM-10 exceedances recorded on May 21, 2008 at the Corcoran and Bakersfield Federal Equivalent Method (FEM) monitors and the Corcoran Federal Reference Method (FRM) monitor, and on May 22, 2008 at the Corcoran FEM. On June 24, 2008, the District posted on its website documentation that these exceedances were caused by a natural event, i.e., high winds. The comment period ended on July 24, 2008 and no public comments were received. The documentation was submitted to EPA on August 12, 2008 and EPA has concurred that these exceedances should be flagged as exceptional events. Letter from Wayne Nastri, EPA to Mary D. Nichols, CARB, September 24, 2008.

EPA is not taking comment on whether the May 2008 exceedances should be excluded from the determination in this final rule that the SJVAB area continues to attain the PM-10 standard. The determination of whether an area has attained the PM-10 standard is based on the most recent three consecutive calendar years of data. As mentioned above and in other EPA actions, the SJVAB area has attained the PM-10 standard based on data for the three-year period from 2003 through 2005 and the three-year period from 2005 through 2007. See 71 FR 63642 and 73 FR 14687. Because 2008 has not ended, EPA cannot determine whether the area has attained the standard based on the three-year period from 2006 through 2008. We can, however, determine with less than three years of data whether the SJVAB area has failed to attain in the period from 2006 to date. See 40 CFR part 50, appendix K, section 2.3(c) and 71 FR 63642, footnote 26.

Because the May 21 and 22, 2008 exceedances are the only exceedances at the Corcoran monitors since 2006 not excluded through notice and comment rulemaking from regulatory consideration, the expected number of exceedances recorded at the FRM monitor, based on the May 21 exceedance, is three and the expected number of exceedances recorded at the FEM monitor on May 21 and May 22 is two. 3 Similarly, because the May 21, 2008 exceedance is the only exceedance recorded at the Bakersfield monitor since 2006 not excluded from regulatory consideration through notice and comment rulemaking, the expected number of exceedances at the Bakersfield monitor is one. Thus, even if EPA does not exclude the May 21 and 22, 2008 exceedances from regulatory consideration, the SJVAB area continues to attain the PM-10 NAAQS to date because both Corcoran and Bakersfield have an expected number of exceedances of less than or equal to one per year, averaged over the three year period 2005-2007 and through 2008 to date. All other monitors in the SJV area had an expected number of exceedances of less than or equal to one per year during these periods. EPA thus determines that the SJVAB area has attained the PM-10 NAAQS as required by section 107(d)(3)(E)(i).

Comment 2: EJ states that the second condition for redesignation under section CAA section 107(d)(3)(E) is that an area seeking redesignation must have a fully approved state implementation plan (SIP) and must satisfy all requirements that apply to the area and that the SJV nonattainment area does not have such a SIP. EJ argues that while EPA concedes that it has never approved contingency measures for the area and has instead suspended this requirement under the Agency's Clean Data Policy, neither the policy nor the cases EPA cites addresses PM-10 nonattainment areas and therefore do not square EPA's action with the mandate under CAA section 189(c) that such areas continue to achieve the milestones for emission reductions in order to demonstrate reasonable further progress (RFP) “until the area is redesignated to attainment.” EJ believes that because contingency measures are also necessary to ensure this progress is achieved, EPA cannot suspend the requirement for these measures. Citing Engine Mfrs. Ass'n v. EPA, 88 F.3d 1075, 1089 (D.C. Cir. 1996), EJ asserts that EPA does not have the authority to waive statutory requirements and circumvent redesignation provisions because it believes compliance with those requirements is unnecessary.

Response 2: In 2006 EPA approved the entire nonattainment plan for the SJV area, 4 including the CAA section 189(c)(1) reasonable further progress milestones, except for the CAA section 172(c)(9) contingency measures, on which EPA deferred action. 69 FR 30006 (May 26, 2004). EPA subsequently determined that the contingency measures requirement for the SJV area was suspended as a result of its October 2006 determination that the area has attained the PM-10 standard. 71 FR 63642, 63663. During that rulemaking, EJ raised the same issues with regard to EPA's Clean Data Policy  5 and statutory construction as it raises here. EPA responded to EJ's arguments in the final rule. See id. at 63643-63647. EJ again raises these issues in its opening brief in Latino Issues Forum. EPA again responds to EJ's arguments in its brief in opposition. EJ was required to raise any issues regarding the suspension of the contingency measures requirement during EPA's 2006 attainment determination rulemaking and in Latino Issues Forum. EJ did so and cannot relitigate the same issues here. Because EPA has approved SIP provisions submitted by California for the SJVAB area that address all applicable CAA requirements, EPA has concluded that the CAA section 107(d)(3)(E) requirement for a fully approved SIP has been met.

In addition, in the context of evaluating the area's eligibility for redesignation, there is a separate and additional justification for finding that the section 172(c)(9) contingency measures are not an applicable SIP requirement for purposes of redesignation. Prior to and independently of that policy, and specifically in the context of redesignations, EPA interpreted the contingency measure requirement as not applicable for purposes of redesignation. In the General Preamble EPA stated that:

Comment 3: EJ states that a 1992 guidance memorandum from John Calcagni lays out the steps that an area must take to show that the improvement in air quality is attributable to permanent and enforceable reductions in emissions, the third condition for redesignation to attainment under CAA section 107(d)(3)(E). EJ claims that this analysis should include estimating the percentage reductions achieved from the federal and state controls implemented in the area, taking into account permitted emission rates, production capacities and other related information. EJ states that EPA, banking on its waiver of all the violations during the period of interest, neglected to perform the proper analyses in the Calcagni memorandum and merely repeats the District's belief, based on four observations (comments 4 through 7 below), that the area is attaining the standard.

Response 3: As discussed in our proposed rule, the Calcagni memorandum states that the state must be able to reasonably attribute the improvement in air quality to emission reductions which are permanent and enforceable, and the improvement should not be a result of temporary reductions (e.g., economic downturns or shutdowns) or unusually favorable meteorology. The Calcagni memorandum also states that in making this showing the state should estimate the emission reductions from adopted and implemented federal, state and local control measures, and consider the emission rates, production capacities, and other related information to show that the air quality improvements are the result of implemented controls. Our proposed rule discusses how each of these factors is addressed by the State in the “2007 PM10 Maintenance Plan and Request for Redesignation,” September 20, 2007, SJVAPCD (2007 Plan). 73 FR 22307; 2008, footnote 8; 22311-22312.

In general, the 2007 Plan shows that there has been a significant improvement in PM-10 air quality since 1990, noting that there were 33 estimated exceedance days during 1990-1992 and 2.9 exceedance days during 2002-2004. This decrease in exceedance days (and emissions) occurred during a period of rapid economic growth in the SJVAB area as indicated by the increases in population and vehicle miles traveled (VMT). The 2007 Plan did not find any evidence of significant shutdowns that would cause the decline in exceedance days. The 2007 Plan analyzed the meteorology in the SJVAB area during 2003-2006 by comparing the average annual wind speeds, precipitation levels and stability levels to long-term averages and found that there was no consistent pattern to show that there was favorable meteorology leading to the improvement in PM-10 levels during 2003-2006.

The 2007 Plan states that over 500 new rules and rule amendments have been adopted, reducing NO X and PM-10 emissions from a wide range of source categories, and it shows decreases in the overall emissions of NO X and PM-10 (which include all emissions from area sources as well as from permitted major sources) since 2000. A more detailed discussion of these analyses can be found in our proposed rule and in the 2007 Plan. EPA's analysis is based on the State's assessment and EPA continues to believe that the State has demonstrated that the improvement in PM-10 air quality in the SJVAB area is a result of permanent and enforceable reductions in emissions and has adequately addressed the provisions of the Calcagni memorandum.

Finally, as discussed in the response to comment 1 above, EPA has determined that the SJV area has attained the PM-10 standard. 71 FR 63642; 73 FR 14687. These determinations included EPA's concurrence with the State's and Santa Rosa Rancheria Tribe's conclusion that a number of exceedances were caused by exceptional events and thus should be excluded from regulatory consideration. Id. EJ seems to suggest that EPA's analyses should include these exceedances even though they have been properly excluded from regulatory consideration. EPA disagrees.

Comment 4: EJ claims that the District provides a chart (2007 Plan at 24, Figure 2) showing a downward trend in air pollution levels that is completely misleading because it does not include EPA-acknowledged exceedances in 2004 and 2005, let alone the many exceedances EPA has ignored in its attainment determination.

Response 4: The District's chart (2007 Plan at 24, Figure 2) shows a long-term downward PM-10 trend from 1990 to 2006 for the SJVAB area by plotting the estimated exceedance days over the NAAQS. The estimated exceedance days in this chart are based on exceedances recorded with FRMs and not FEMs such as continuous beta attenuation monitors (BAMs). EPA believes that the District's chart is not misleading and provides a general picture of the long-term trend for PM-10 and that 1990 is a reasonable year to begin the analysis because that was the year the CAA was amended.

EJ's comment letter (page 4) includes a chart, “PM-10 Trend,” that appears to revise the 2007 Plan's chart by adding the exceedances from BAMs that occurred in 2004 and 2005 and by removing the data for 1990 in order to show a less precipitous decline in PM-10 levels. However, even with the exclusion of the 1990 data and the addition of the exceedances from the BAMs, EJ's “PM-10 Trend” chart still shows a decline in PM-10 levels.

Moreover, the 2007 Plan provides a summary in Table 10 of the declining annual average emissions inventories from 1990 through 2005 which is consistent with the District's trends chart. Table 10 shows PM-10 emissions decreasing by 46 tons per day (tpd) and NO X emissions decreasing by 228 tpd during this time period.

Finally, as discussed above, EPA has not ignored any recorded exceedances but rather has followed its regulations to exclude from regulatory consideration any exceedances that are caused by exceptional events. 73 FR 14687; response to comment 3 above. EPA also set forth in its 2006 attainment determination its conclusions as to prior monitored data. 71 FR 63642.

Comment 5: EJ claims that while the District asserts that growth in the SJV nonattainment area has been rapid since 1990 but that emissions have decreased, the sources of these claimed reductions do not support redesignation.

Response 5: See responses to comments 1, 3 and 4 above, and 7 and 8 below.

Comment 6: EJ alleges that the District and EPA conclude without justification that the District's meteorological analysis shows that favorable meteorology did not lead to the improvements in air quality. Instead, EJ argues, the analysis shows that from 2004 to 2006, the SJV nonattainment area experienced some of the wettest years on record and that 2003 through 2006 experienced lower than average stability levels, which EPA and the District concede would lead to better dispersion conditions and lower PM-10 levels. As a result, EJ claims the data provided undercut any claim that the alleged air quality improvement is likely to be maintained.

Response 6: Our proposed rule summarizes the meteorological analysis provided in the 2007 Plan which includes an examination of the precipitation, temperature wind speeds and atmospheric stability during the period 2003 through 2006. The summary was based on data presented in Appendix C to the 2007 Plan. As EJ comments, there were some conditions that favored lower PM-10 levels; however, there were also conditions that favored higher PM-10 levels. Conditions that favored higher PM-10 levels included no variation in annual average wind speeds (which are generally quite low for the SJV area), warmer than average temperatures and two dry years ranking 98th and 112th in wetness (with the 1st year being the wettest year) during a 128 year period. Since there were conditions that both favored and did not favor higher PM-10 levels, the conclusion of the 2007 Plan and EPA's analysis is that there was no consistent pattern to show that attainment was a result of unusually favorable meteorology. 73 FR 22307, 22312.

Finally we note that the Calcagni memorandum makes clear that “[a]ttainment resulting from * * * unusually favorable meteorology would not qualify as an air quality improvement due to permanent and enforceable emission reductions.” Calcagni memorandum at 4. Therefore EPA disagrees with EJ's comment that the meteorological data indicate that the air quality improvement will not likely be maintained.

In addition, EPA obtained available information on precipitation, average monthly temperatures and wind speeds for 2007 and compared the 2007 data to the averages presented in Appendix C to the 2007 Plan at Tables C-1, C-2 and C-3. (Atmospheric stability data for 2007 was not available.) The total precipitation for 2007 was 7.03 inches ( http://www.wrh.noaa.gov/hnx/fat/normals/fatrnyr.htm ) which is lower than the average precipitation of 10.13 inches for 1878 through 2006 (2007 Plan at Table C-1) and would favor higher PM-10 levels. The average monthly temperatures in degrees Celcius for 2007 were 4.6 for January, 9.5 for February, 14.3 for March, 15.9 for April, 20.7 for May, 24 for June, 26.3 for July, 26.3 for August, 21.7 for September, 16.1 for October, 11.9 for November and 5.5 for December. ( http://www.weather.gov/climate/xmacis.php?wfo=hnx ) When compared to the average monthly temperatures from 1900 through 2005 (2007 Plan at Table C-2), the average temperatures for the months of March, May, June and August were higher in 2007 than average and would favor higher PM-10 levels. Finally, the average wind speed for 2007 was 3.7 miles per hour (mph) ( http://www.cimis.water.ca.gov ) which is consistent with the average wind speed of 3.72 mph for 1984 through 2006 (2007 Plan at Table C-3) and would favor high PM-10 levels. Since the available 2007 meteorological data favor higher PM-10 levels, EPA continues to believe that there is no consistent pattern that would establish that attainment has resulted from unusually favorable meteorology.

Comment 7: EJ disputes EPA's conclusion that improvements in air quality are the result of permanent and enforceable reductions in emissions from rules adopted by the District since 1992. EJ claims that most of these rules were adopted only in the last few years and therefore any trend in emission reductions that can be inferred from the chart provided by the District (2007 Plan at 24, Figure 2) cannot be attributed to these rules. EJ suggests that the drop in exceedance days between 1990 and 1992 might be due to a difference in the methodologies for measuring exceedances for the TSP and PM-10 standards. EJ provides its own chart, “PM-10 Trend,” adjusted to include the exceedance days that it says EPA has acknowledged, that purports to show only minimal changes in the recurring pattern of PM-10 violations over the last 15 years.

Response 7: On July 1, 1987, EPA revised the NAAQS for particulate matter by replacing the standards for total suspended particulate matter (TSP) with new standards applying only to PM-10. 52 FR 24672. While PM-10 monitoring data have been collected since 1987 (see 71 FR 63642, 63653), the District and CARB have not reported TSP data to EPA's Air Quality System (AQS) database since 1989. Therefore any difference in measurement methodologies for the two pollutants could not be the cause of the drop in exceedance days between 1990 and 1992.

Since enactment of the 1990 CAA Amendments, the State has adopted and submitted several PM-10 plans. These include a moderate area plan under CAA section 189(a), a serious area plan under section 189(b) and a serious area plan under section 189(d) (i.e., the 2003 PM-10 Plan approved by EPA in 2004 and discussed above). The 2003 PM-10 Plan provides a summary of the many State, District and EPA rules adopted from 1990 through 2003. See 2003 PM-10 Plan at Tables 4-1, 4-2, 4-3 and 4-4. The 2003 PM-10 Plan also includes commitments for additional PM-10 and NO X measures, all of which were adopted by the District and State after 2003 and most of which have been approved by EPA. See response to comment 8 below.

The District's chart (2007 Plan, Figure 2) shows that PM-10 levels have declined from 1990 through 2006 while these PM-10 plans and rules have been adopted and implemented. We note that even EJ's own “PM-10 Trend” chart shows a general decrease in PM-10 levels since 1992 and since early 2000.

Furthermore, the 2007 Plan shows that significant reductions in PM-10 and NO X emissions occurred from the year 2000 to the year 2005, the time period during which the SJV area attained the PM-10 standard. NO X emissions have declined from 673 tpd in 2000 to 606 tpd in 2005 and PM-10 emissions have declined from 324 tpd in 2000 to 284 tpd in 2005. 2007 Plan; Staff Report, Air Resources Board, “Analysis of the San Joaquin Valley 2007 PM10 Maintenance Plan,” (ARB Staff Report for 2007 Plan) Appendix B. 6

As can be seen from the above discussion and our responses to previous comments, PM-10 exceedance days and PM-10 and NO X emission levels have declined while at the same time the SJV area has exhibited significant growth in population and vehicle miles traveled. 2007 Plan at 24, Figure 2 and at 26, Figures 3 and 4. Thus EPA continues to believe that it is reasonable to attribute the improvement in PM-10 air quality to the emission reductions from adopted rules that are permanent and enforceable.

Comment 8: EJ argues that the District's failure to estimate the tons or percent reduction from the baseline year achieved by its PM-10 control measures makes it difficult to assert that any improvements in air quality are the result of such controls. Further, while EPA claims that the District has adopted all of its rule commitments in the 2003 PM-10 Plan, only 2 of the 14 commitments have received EPA approval according to EJ. The maintenance plan identifies 8 additional rules, only 3 of which have been approved by EPA. EJ states that of the 22 rules the District identified during its PM-10 planning process to help reduce PM-10 in the SJV nonattainment area, only 5 are enforceable elements of the SIP.

Response 8: The 2007 Plan provides a summary of overall NO X and PM-10 emissions and shows that emissions have decreased from approximately 1177 tpd in 1990 to approximately 1000 tpd in 2000 to approximately 900 tpd in 2005 and estimates that they will continue to decrease to approximately 800 tpd in 2010. 2007 Plan at Table 10 and 73 FR 22307, 22312. These declining emissions levels have occurred as population and VMT have increased and are due to the emissions reductions from rules and control measures that have been adopted and implemented since 1990. 2007 Plan at 26 through 27 and 2003 PM-10 Plan at Tables 4-1, 4-2, 4-3 and 4-9.

The 2003 PM-10 Plan summarizes the numerous rules and control measures adopted by the SJVAPCD, the State and EPA prior to 2003. 2003 PM-10 Plan at Tables 4-1, 4-2 and 4-3. The 2003 PM-10 Plan also includes District commitments to achieve additional reductions. 2003 PM-10 Plan at Table 4-9. As discussed below, the commitments have all been converted to adopted rules. The emissions reductions from all of the 2003 PM-10 Plan's rules, control measures and adopted commitments are reflected in the 2007 Plan's emissions inventory. ARB Staff Report for 2007 Plan at Appendix B.

It is not clear what year EJ considers to be the baseline year; however, the 2007 Plan provides emissions inventories for the years 1990, 2000, 2005 and 2010 which include the estimated tpd of reductions achieved by the PM-10 rules, control measures and rules adopted pursuant to commitments. 2007 Plan at Table 10 and ARB Staff Report for 2007 Plan at Appendix B. Thus, EPA believes that the State and District have estimated the tpd reductions from several baseline years (1990, 2000 and 2005) achieved by its PM-10 control measures and have shown that the improvements in air quality are the result of such controls.

Regarding EJ's comment that only five of the 22 rules the District identified during its PM-10 planning process are enforceable elements of the SIP, EPA notes that this information was updated in the 2007 Plan. See “Errata, 2007 PM10 Maintenance Plan and Request for Redesignation,” October 9, 2007, included in the 2007 Plan submittal to EPA. Table 1 below summarizes the EPA-approved rules from the 2003 PM-10 Plan commitments and provides the EPA approval dates for these rules as applicable. EPA has approved all but three of the submitted rules (Rules 4694, 4401 and 9510).

In addition to the rules in Table 1, the 2007 Plan cites reductions from additional rules that were not included in the 2003 PM-10 Plan's commitments. All of these additional rules have been adopted and submitted to EPA by the State and most have been approved by EPA. Table 2 below provides a summary of EPA actions on these additional rules based on the “Errata, 2007 PM-10 Maintenance Plan and Request for Redesignation.”

Thus, contrary to EJ's comment, most of the rules identified in the 2007 Plan have been approved by EPA as federally enforceable elements of the SIP. EPA is continuing to process the remainder of the State's submitted rules.

Comment 9: EJ concludes that because the air quality improvements are premised on ignoring multiple violations of the PM-10 standard and fewer than one quarter of the rules the District relies on for reductions are an enforceable part of the SIP, EPA cannot reasonably attribute air quality improvements to permanent and enforceable emission reductions.

Response 9: See above responses to comments 1, 3, 4, 6, 7 and 8.

Comment 10: EJ asserts that the District fails to comply with CAA section 107(d)(3)(E) because it has not met all applicable requirements under section 110 and part D. EJ says that in addition to the contingency measure requirement, the District has not met the section 189(b)(1)(B) BACM requirement because BACM were required to be implemented by January 8, 1993 and EPA has still not approved most of the PM-10 rules relied on (as a result of the 2003 PM-10 Plan commitments) as being BACM-level controls.

Response 10: As noted above, in its October 30, 2006 attainment determination EPA suspended the 172(c)(9) contingency measure requirement and as a result it is no longer an applicable part D requirement. 71 FR 63642, 63663; 73 FR 22307, 22313. In any event, as set forth above (see response to comment 2), independent of its suspension, the contingency measure requirement is not an applicable requirement for purposes of redesignation.

With respect to the section 189(b)(1)(B) BACM requirement, as discussed in our proposed rule, EPA determined that this requirement was met for the SJV nonattainment area in our approval of the 2003 PM-10 Plan. See 69 FR 30006, 30035. (“EPA is approving the RACM/BACM demonstration for all significant PM-10 and NO X sources in the SJV as meeting the requirements of sections 189(a)(1)(C) and 189(b)(1)(B)”). In the 2003 PM-10 Plan the District addressed the BACM requirement by providing enforceable commitments to implement BACM rules in the future rather than already adopted rules. During the rulemaking on the 2003 PM-10 Plan, EJ argued that until the relevant BACM requirements are adopted and no longer subject to change in the rule development process for each of these source categories, EPA could not conclusively determine that the plan provides for the implementation of BACM/BACT for all significant sources of PM-10 and PM-10 precursors. In rejecting that argument we stated that:

Comment 11: EJ also claims that the District has failed to submit to EPA a demonstration that the quantitative milestones as required by CAA section 189(c)(1) and (c)(2) and the section 189(d) 5 percent requirement have been met. EJ also claims that the District has not met its commitment to update and improve the 2003 PM-10 Plan by March 2006.

Response 11: CAA section 107(d)(3)(E)(v) requires that a state seeking redesignation of an area to attainment must have met all requirements applicable to the area under section 110 and part D. In interpreting this requirement EPA has stated that “any requirements that came due prior to submittal of the redesignation request must be fully approved into the plan at or before the time EPA redesignates the area.” Calcagni memorandum at 5. Sierra Club v. EPA, 375 F.3d 537 (7th Cir. 2004). EPA has approved the 2003 PM-10 Plan's RFP demonstration as meeting the requirements of 172(c)(2) and 189(c)(1) and has approved the plan as meeting the quantitative milestones requirement in section 189(c)(1). 69 FR 30006, 30034. Also, as we explained in our 2006 attainment finding, we believe that once an area attains the NAAQS the requirements of section 189(c)(2) with respect to milestones no longer applies under the Agency's Clean Data Policy. 71 FR 63642, 63646-63647. We also explained in that rulemaking the application of the Clean Data Policy to PM-10. See 71 FR 40952, 40954-40955 and 71 FR 63642, 63643-63645. Apart from the Clean Data Policy, for an area that has attained the standard and is eligible for redesignation, the requirements for milestone demonstrations under section 189(c) have no further meaning or function. Therefore the District was not required to submit milestone demonstrations pursuant to section 189(c).

In addition, EPA approved a commitment in the 2003 PM-10 Plan by the State to submit a SIP revision by March 31, 2006 based on a mid-course review to determine whether the level of emission reductions in the plan is sufficient to attain the PM-10 standards. 69 FR 30006, 30035. EPA approved this commitment as part of the Plan's attainment demonstration. See 69 FR 5412, 5429. While the SJVAPCD adopted a mid-course review SIP addressing the quantitative milestone reporting requirement and mid-course review SIP commitment and submitted the SIP to the State, the State has not submitted the mid-course review SIP to EPA. Nevertheless, EPA's full approval of the attainment demonstration in the 2003 PM-10 Plan fully satisfies the requirement of CAA section 107(d)(3)(E)(v).

Moreover, EPA has determined that the SJV area attained the PM-10 standard in 2005, and continues to attain the standard. The mid-course review requirement is not a requirement under section 110 or Part D, and therefore is not an applicable CAA requirement for purposes of redesignation. Furthermore, even if it were, the requirement for a mid-course review was approved as part of the attainment demonstration. Therefore, because EPA has determined that the SJV area is attaining the PM-10 standard, a submission under the mid-course review provision would not be required for purposes of redesignation. 57 FR 13498, 13564; Clean Data Policy.

Comment 12: EJ claims that EPA misinterprets an October 14, 1994 memorandum from Mary Nichols, EPA, entitled “Part D NSR Requirements for Areas Requesting Redesignation to Attainment” as allowing the District to replace its new source review (NSR) program with a prevention of significant deterioration (PSD) program. EJ quotes the memorandum as saying that “the part D program may be replaced by the corollary PSD program, if it is shown through the maintenance demonstration that the area will maintain without part D NSR.” EJ asserts that here neither EPA nor the District has made any such demonstration and claims that this is especially worrisome in light of EPA's recent proposed approval of revisions to the District's NSR program exempting “so-called minor agricultural sources such as industrial dairy operations.”

Response 12: First, the commenter overlooks the fact, enunciated in our proposed rule, that EPA has previously fully approved the NSR program for the SJV area. We also noted that EPA has recently proposed approval of some revisions to the NSR rule. 73 FR 22307, 22313. EJ's citation to the October 14, 1994 memorandum from Mary Nichols, EPA, entitled “Part D NSR Requirements for Areas Requesting Redesignation to Attainment” (Nichols memorandum) is misdirected. The Nichols memorandum's discussion of the need to demonstrate maintenance without fully approved NSR addressed the situation, not the case here, where an area's NSR rule has not been approved. Moreover, as our proposed rule explained, even though EPA previously approved the NSR rule, such approval is not a prerequisite to finalizing our approval of the State's redesignation request. Id. If an area does not have a fully approved NSR program, it can still be redesignated if it shows maintenance without NSR in effect. The 2003 PM-10 Plan and 2007 Plan do not rely on reductions from the area's NSR program. Nothing in the plans' inventories or estimated emissions reductions indicates any reliance on NSR program reductions. Thus, the SJVAB area will maintain the NAAQS without NSR. This is consistent with the provisions of the Nichols memorandum. Finally, we note that while the PSD requirements will apply once the area has been redesignated to attainment, the District's SIP-approved NSR rule will continue to apply with respect to PM-10 until EPA approves a revised NSR rule.

Comment 13: EJ maintains that even if all of the other issues it has raised with respect to the redesignation were remedied, EPA cannot approve the redesignation request because the maintenance plan is flawed and cannot be approved. EJ concludes that EPA's decision to approve the maintenance plan without the requisite analysis and without meeting the basic requirements laid out in the Calcagni memorandum leaves little for EJ to comment upon and, as such, is the very definition of arbitrary and capricious. EJ believes that EPA's obligation is to provide not just its legal conclusions but the facts and rationale that support them.

Response 13: EPA disagrees. Our proposed rule lays out all of the requirements for maintenance plans found under the CAA and the Calcagni memorandum and sets forth the Agency's analysis of how the 2007 Plan meets each of those requirements. 73 FR 22307, 22313-22315. In addition, the 2007 Plan itself addresses in detail the requirements in the Calcagni memorandum. Thus EJ's contention that EPA's discussion of the maintenance plan left them “very little” to comment on is without basis.

Comment 14: EJ asserts that the 2005 emissions inventory is insufficient to identify the level of emissions in the area because the continuing PM-10 problem is the result of direct PM-10 emissions during the fall rather than secondary wintertime NO X emissions and the direct PM-10 inventory is expected to increase over the next 10 years. EJ states that EPA's claim that increasing direct PM-10 emissions are offset by a larger decrease in the NO X inventory demonstrates a lack of understanding of the PM-10 problem in the SJV nonattainment area because reducing secondarily formed PM-10 does nothing to reduce the ongoing direct PM-10 problems. EJ concludes that since the maintenance demonstration is based on an inventory that is insufficient to attain the NAAQS, EPA cannot find that the plan will maintain healthful air for 10 years following redesignation.

In a footnote to its comment above regarding the emissions inventory for the maintenance plan, EJ claims that prior to 2004 the District had never asked EPA to waive PM-10 data but in the past 4 years it has been asked to waive 11 separate events, 10 of them after the Agency's original attainment finding. EJ states that if windy days are this common EPA and the District must accept that the SJV nonattainment area has a windblown dust problem and they must do more to control it. EJ states that an event is only exceptional if it is not expected to recur on a regular basis.

Response 14: As discussed in our proposed rule, the Calcagni memorandum provides that a state should provide an attainment emissions inventory to identify the level of emissions in the area sufficient to attain the NAAQS and, where the state as here has made an adequate demonstration that air quality has improved as a result of the SIP (see above responses to comments 3 through 4 and 6 through 8), the attainment inventory will generally be an inventory of actual emissions at the time the area attained.

The 2007 Plan does exactly what the Calcagni memorandum recommends and selects the 2005 PM-10 and NO X inventories as the attainment emission inventories because the SJV area attained the standard in 2005. 73 FR 22307, 22314 and 71 FR 63642. The SJV area relies on reductions of both NO X (a PM-10 precursor) and directly emitted PM-10 sources to achieve attainment. 2003 PM-10 Plan at ES-9 through ES-10, Chapters 2, 4 and 5; 69 FR 5412, 5414 and 69 FR 30006, 30007. Analysis of ambient air quality data for the SJV area shows that it experiences the most frequent and severe exceedances from October through January during stagnant weather conditions ( i.e. , low wind speeds that are unable to disperse the PM-10). 9 Both direct PM-10 and secondary PM-10 (formed by reactions with NO X ) occur during this time. October and November exceedances are dominated by direct PM-10 emissions and December and January are dominated by secondary PM-10 such as ammonium nitrate (formed when NO X reacts with ammonia and other components); however, the reduction of both direct PM-10 and NO X is necessary for reducing ambient PM-10 levels throughout the year. 2003 PM-10 Plan at ES-9 through ES-10 and 5-6 through 5-7. Thus, EPA's belief that the slight increase in PM-10 emissions of 284 tpd in 2005 to 290 tpd in 2020 is insignificant when compared to the substantial NO X decreases of 606 tpd in 2005 to 328 tpd in 2020 is based on an understanding that high PM-10 levels in the SJV area are caused by both direct PM-10 and precursor NO X emissions. In addition, consistent with the Calcagni memorandum, the modeled maintenance demonstration is primarily based on modeling similar to the modeling used for the 2003 PM-10 Plan. 73 FR 22307, 22314. Finally, contrary to EJ's comments, there is no ongoing direct PM-10 problem in the SJVAB as we have determined that the area has attained the PM-10 standard. 71 FR 63642 and 73 FR 14687. See also response to comment 1.

EJ's comment in footnote 3 of its letter does not appear to be related to the inventory or any other provision of the maintenance plan in the 2007 Plan or the maintenance plan requirement of CAA section 107(d)(3)(E)(iv). Rather it appears to be an expansion of EJ's argument that the SJV area has not in fact attained the PM-10 standard. In this regard, see response to comment 1 above. Notwithstanding , EPA notes that not all of the exceptional event days in the past five years in the SJV area have been due to high winds. Of the eleven exceptional event days, seven were caused by high wind events and the remaining four by construction, improper monitor siting and fireworks.

Comment 15: EJ states that it is not clear whether the modeling takes into account the September 2004 and November 2005 exceedances EPA has conceded but if it does not then the modeling for the maintenance plan is flawed because it fails to include these higher values in its projections.

Response 15: As discussed in our proposed rule, a state may generally demonstrate maintenance of the NAAQS by either showing that future emissions of a pollutant or its precursors will not exceed the level of the attainment inventory, or by modeling to show that the future anticipated mix of sources and emission rates will not cause a violation of the NAAQS. 73 FR 22307, 22314-22315. See also Calcagni memorandum at 9 and Wall v. EPA , 265 F.3d 426 (6th Cir. 2001). While only required to use one of these methods, the SJVAPCD showed both with emissions inventory and modeling that the area would maintain the standard for at least ten years after redesignation, in accordance with section 175A. For areas such as the SJV that used modeling for their attainment demonstrations, the same level of modeling should be used for the maintenance demonstrations. The 2007 Plan uses Chemical Mass Balance (CMB) and rollback to demonstrate maintenance of the 24-hour PM-10 standard until 2020 which is consistent with the modeling performed for the 2003 PM-10 Plan. 73 FR 22307, 22314; 2007 Plan at 6-11. The modeling involves selecting a representative day for each location, determining the speciation data for the site based on analysis of the monitoring filters and sources in the area and determining the emissions reductions that are necessary or that will be achieved due to emissions reductions from implemented rules.

The 2007 Plan's maintenance demonstration modeling was based on the highest episodes during the most recent attainment year at the time, 2006. The District selected representative peak winter days for each of the monitors in the SJVAB for modeling, and used the observed values from those days as the basis of its modeling exercise. In addition, fall episode days were included for several monitors. Table 2 of the 2007 Plan summarizes the episode values and the 2020 projections.

One of the objectives in determining appropriate representative episodes is to choose those days that are approximately as severe as the design value for the modeled pollutant. The design value is based on three years of monitoring data, or in this case, 2004 through 2006, and depends on the frequency and completeness of recorded values. In addition, for PM-10, the design values are generally based on FRM data, but FEM data can also be used; however, as noted in footnote 3 above, data from different monitoring instruments are not combined.

The representative days selected for modeling are consistent with the design values for the Corcoran and Bakersfield sites where the September 2004 and November 2005 values were measured. For the Corcoran FRM, the design value is 140 μg/m 3 , based on a calculation that includes and explicitly accounts for the 217 μg/m 3 measured in September 2004. 10 This value is very close to, and supports the selection of, the two representative high episode values in the 2007 Plan for Corcoran: A 136 μg/m 3 for the winter episode and a 137 μg/m 3 for the fall episode. The small differences between the design value of 140 μg/m 3 and the selected winter and fall episode values is not an issue because the projected maintenance levels are well below the 24-hour PM-10 standard of 150 μg/m 3 . 2007 Plan at Table 2. The Bakersfield FEM does not have a complete set of data from 2004 through 2006, and therefore a design value for this time period cannot be calculated based on the FEM data. However, the 2004-2006 PM-10 design value for Bakersfield using the data collected with the FRM monitor would be 154 ug/m 3 . 11 This concentration is consistent with the values of 153 ug/m 3 and 154 μg/m 3 measured during the representative modeled episodes included in the 2007 Plan for Bakersfield. Therefore, the September 2004 and November 2005 exceedances to which EJ refers in its comment were taken into account in the 2007 Plan's maintenance demonstration modeling.

Comment 16: While EJ is glad that the District plans to continue operation of its PM-10 monitoring network, EJ is troubled that the District suggests in its 2008 “Ambient Air Monitoring Network Plan” that it may reduce the frequency of its monitoring. EJ hopes that the District will strengthen its network because EJ continues to believe that the current network does not adequately represent the west side communities and the near-highway areas of high concentration and that more monitoring is required.

Response 16: In 2003, EPA evaluated the adequacy of the monitoring network for the SJV area and concluded that it meets all the applicable statutory and regulatory requirements. See 69 FR 30006, 30033 and “Evaluation of the Adequacy of the Monitoring Network for the San Joaquin Valley, California for the Annual and 24-Hour PM-10 Standards,” Bob Pallarino, EPA, September 22, 2003. We reaffirmed the adequacy of the network in our 2006 determination of attainment for the SJV area. 71 FR 63642, 63648-63658.

With regard specifically to monitoring frequency, EPA regulations require minimum frequencies for manual PM-10 and PM-2.5 samplers at designated state or local air monitoring stations (SLAMS) sites. See 40 CFR 58.12. On October 17, 2006 EPA revised its monitoring regulations to require air monitoring agencies to perform an assessment of their monitoring networks every five years according to guidance issued by EPA. See 71 FR 61299 and 40 CFR 58.10(d). The first monitoring network assessment required by this regulation must be submitted to EPA by July 1, 2010. Agencies are directed to make changes to their monitoring networks based in part on the results of these network assessments. Such an assessment in the SJVAB area may result in a requirement that the District increase the sampling frequency of certain PM-10 monitors sited to record the maximum concentrations of PM-10 pollution. See 40 CFR 58.12(e).

Most manual PM-10 samplers in the SJV monitoring network currently operate at the minimum required frequency of once every six days, except for Corcoran which operates manual PM-10 samplers once every three days. The District has exceeded this required sampling frequency by operating continuous FEM monitors, which produce a 24-hour average PM-10 concentration every day, at three locations in the SJVAB area, Tracy, Corcoran and Bakersfield. According to the District's 2008 “Ambient Air Monitoring Network Plan,” the Corcoran and Bakersfield-Golden State Highway sites are two of the four PM-10 monitoring sites located to record the highest PM-10 concentrations in the SJVAB area. 12 Therefore, the District has already proactively increased the sampling frequency at two high concentration sites to the maximum frequency possible.

Comment 17: EJ believes that the contingency measure provision in the maintenance plan is much too weak and cannot be approved. EJ states that the provision relies first and foremost on trying to excuse any future violation under the EER and then, in the event of any post-redesignation violations, on seeing if there are any estimated reductions achieved that were not counted towards the attainment demonstration that can be used to “cover” the violation. EJ does not believe this approach makes sense because if an area is violating the standard, there are no “extra” reductions because all of the reductions are by definition not working. EJ believes that while EPA may accept this gaming in the context of RFP demonstrations such an approach would be illegal and arbitrary when real ambient violations are being monitored. EJ believes that the District should adopt the approach suggested in the Calcagni memorandum which sets indicators that trigger contingency provisions before a violation occurs which would avoid NAAQS violations and not just come up with on-paper “covers” for those violations.

Response 17: Under CAA section 175A(d), maintenance plans must contain “such contingency provisions as the Administrator deems necessary to assure that the State will promptly correct any violation of the standard.” The Calcagni memorandum states that “EPA will review what constitutes a contingency plan on a case-by-case basis. At a minimum, it must require that the State will implement all measures contained in the Part D nonattainment plan for the area prior to redesignation. * * * ” Calcagni memorandum at 12-13. The memorandum also makes clear that a monitored violation of the standard is appropriate to serve as the indicator or trigger for contingency measures.

EJ's statement that the contingency provisions of the 2007 Plan “relies first and foremost” on trying to excuse any future violation under the EER is misleading. The 2007 Plan selects an action level or trigger based on an exceedance of the PM-10 NAAQS of 155 micrograms per cubic meter (μg/m 3 ). 13 2007 Plan at 16. In addition, the District may also consider other factors such as a succession of values just below but near the level of the PM-10 standard. In our proposed rule we explained why we believe that an exceedance of 155 μg/m 3 is an appropriate trigger:

Once the contingency plan is triggered, the District would determine the possible causes of the exceedance and determine if emissions reductions from adopted measures that are not needed to maintain the PM-10 NAAQS are available to serve as contingency measures. 2007 Plan at 16. EJ objects to the use of these excess reductions (i.e., those not relied on in the maintenance demonstration) when ambient concentrations are being monitored.

Initially we note that EPA has long approved contingency provisions that rely on reductions from measures that are already in place but are over and above those relied on in the attainment and RFP demonstrations under CAA section 172(c)(9). See, e.g., 62 FR 15844 (April 3, 1997); 62 FR 66279 (December 18, 1997); 66 FR 30811 (June 8, 2001); 66 FR 586 and 66 FR 634 (January 3, 2001). We discussed this interpretation of section 172(c)(9) in our final PM-2.5 implementation rule. See 72 FR 20586, 20642-20643 (April 25, 2007). This interpretation has also been upheld in LEAN v. EPA, 382 F.3d 575 (5th Cir. 2004), and the court in that case set forth in detail the reasoning for accepting excess reductions from already adopted measures as contingency measures.

In addition to being triggered by a failure to meet RFP, contingency measures under section 172(c)(9) are triggered when EPA determines that an area has failed to attain a NAAQS. Determinations of whether an area has attained a NAAQS (see, e.g., section 188(b)(2); 71 FR 40952) are based on monitored concentrations. Likewise, here, a determination of whether the action level has been reached is based on monitored concentrations. Therefore our interpretation that excess emission reductions can appropriately serve as section 172(c)(9) contingency measures is equally applicable to section 175A(d) contingency measures.

Furthermore, section 172(c)(9) is considerably less flexible than section 175A(d) in that under the former provision contingency measures are required to be fully adopted measures that will take effect without further action by the state, whereas this is not a requirement in order for the maintenance plan to be approved. Moreover, section 175A(d) grants considerably more discretion to EPA in determining whether to accept contingency provisions in maintenance plans (maintenance plans must contain “such contingency provisions as the Administrator deems necessary to assure that the State will promptly correct any violation of the standard.” (Emphasis added). In addition, the Calcagni memorandum at 12-13 states that a contingency plan under section 175A(d) “[a]t a minimum must require that the State will implement all measures contained in the Part D nonattainment plan for the area prior to redesignation. * * * ” The 2007 Plan so provides and goes well beyond this minimum threshold.

The U.S. Court of Appeals for the Sixth Circuit addressed the issue of the adequacy of reductions from already adopted measures in the context of section 175A(d) contingency measures in a maintenance plan for Cuyahoga County, Ohio. Greenbaum v. EPA, 370 F.3d 527 (6th Cir. 2004). 14 There EPA had approved section 172(c)(9) contingency measures into the SIP in 1996 as part of the State's moderate area PM-10 nonattainment plan. In approving these measures EPA found that they provided for emission reductions following any prospective determination that the SIP failed to provide for timely attainment of the NAAQS. In 2000, Ohio submitted a redesignation request with a maintenance plan that included as section 175A(d) contingency provisions the already approved section 172(c)(9) contingency measures. Among other things, the petitioners argued that the CAA does not authorize EPA to use other measures outside the maintenance plan to assure correction of a violation. In upholding EPA's approval of the redesignation, the court found that:

Here, the 2007 Plan looks first to emission reductions from adopted measures that are not needed to maintain the PM-10 NAAQS to serve as section 175A(d) contingency measures. If these emission reductions prove to be insufficient to correct the violation, the District commits to proceed with identifying control measures from feasibility studies such as those found in its 2007 Ozone Plan and Proposed 2008 PM2.5 Plan  15 (see 2007 Ozone Plan at Table 6-2 and 2008 PM2.5 Plan at Table 6-4) and with prioritizing measures most relevant for reducing PM-10 emissions. 2007 Plan at 16-17. The SJVAPCD has also provided clarification that if additional control measures are necessary, the SJVAPCD will adopt and implement such measures. Letter from Seyed Sadredin, SJVAPCD, to Deborah Jordan, EPA, April 17, 2008. EPA believes that the 2007 Plan's contingency provisions which rely in part on emissions reductions from adopted measures not needed to maintain the PM-10 NAAQS to correct any PM-10 violation are consistent with the Agency's policies and with the statute. As the court in Greenbaum observed, Congress has expressly delegated to EPA the authority to determine what contingency measures are necessary. Here, EPA has determined that the contingency measures, which include both the potential for emission reductions from already adopted measures and from measures to be adopted, clearly are sufficient.

Finally, with respect to EJ's preference, suggested in the Calcagni memorandum, that the contingency plan for the SJVAB area set indicators that trigger contingency provisions before a violation occurs, we note again that the memorandum provides that contingency provisions are to be judged on a case by case basis. See also Greenbaum. With the exception of the minimum requirement mentioned above, the Calcagni memorandum is not prescriptive and allows for considerable latitude as to what constitutes an adequate contingency plan. The Calcagni memorandum itself provides that a violation of the standard is an appropriate trigger for contingency measures. Calcagni memorandum at 12. See also Greenbaum. It is a common practice in maintenance plans to provide that a violation will trigger the requirement for a contingency measure to be implemented. Moreover, as pointed out above, under the contingency measure provisions, a monitored exceedance of the standard that does not itself constitute a violation (e.g., at a continuous monitor or a one-in-three day FRM monitor) could trigger a contingency measure prior to a violation occurring.

Comment 18: EJ maintains that the portion of the San Joaquin Valley that EPA now proposes to split off was designated as part of the SJV nonattainment area because, as provided in CAA section 107(d)(1)(A), it was part of the geographic area “that does not meet (or that contributes to ambient air quality in a nearby area that does not meet) the national primary or secondary air quality standard for that pollutant.” EJ states that EPA makes no attempt to explain how circumstances have changed to justify the removal of this portion of the designated nonattainment area. EJ notes that the SJV area includes other high-elevation areas that are located above the inversion layer and that whether a community is above or below the inversion layer is irrelevant because these areas are part of the Valley and part of the same air basin polluted by emissions generated in the Valley.

Response 18: As discussed in our proposed rule, on January 31, 2008 California requested a boundary redesignation splitting the SJV nonattainment area into two separate nonattainment areas, the SJVAB and East Kern. Section 107(d)(3)(D) of the CAA authorizes the State to submit to EPA a revised designation of any area and EPA is required to approve or deny it within 18 months of receipt of a complete State submittal. The type of revised designation that the State of California requested involves a boundary change only and does not involve a change in status (e.g., from “nonattainment” to “attainment” or “unclassifiable”) of any area. Our criteria for evaluating the State's request are discussed in our proposed rule.

In general, the State has provided a compelling technical justification for splitting the nonattainment area which includes an evaluation of the differences in jurisdiction, geography, population and degree of urbanization, employment and traffic/commuting patterns, emissions and air quality. 73 FR 22307, 22308-22310. EJ notes that there are other high elevation areas in the SJV nonattainment area; however, the State has not made a request to revise any other boundaries. In addition, as discussed in our proposed rule, the SJVAB and East Kern areas are in separate air basins and do not have the same mix of air pollution sources. Id. EPA continues to believe that it should grant the State's request for a revised designation splitting the SJV nonattainment area into two PM-10 nonattainment areas, the SJVAB area and the East Kern area for the reasons set forth in the proposed rule and in this response.

Comment 19: A commenter states that while the proposal to separate the western portion of the KCAPCD is clear and compelling, the commenter is concerned about environmental justice issues for the East Kern area. The commenter states that if the purpose of the separation is to clean-up one area and ignore the other industrialized area with the State prison, then EPA is not following its ethics concerning environmental justice. The commenter states that communities with prisons serve as a target of environmental neglect and should not be abandoned from environmental laws and attainment requirements and should not be forgotten by EPA.

Response 19: EPA's final action to split the SJV nonattainment area into two nonattainment areas does not relax any requirements. EPA is also approving enforceable commitments for the East Kern area that will ensure progress in meeting CAA requirements for the area. These commitments include the installation of a FRM/FEM  16 and submittal of a SIP addressing applicable CAA requirements if the monitor violates the PM-10 standard. 73 FR 22307, 22317. In the meantime, the existing data from the IMPROVE monitor, although not a FRM or FEM, do not indicate an air quality problem in East Kern—rather they show levels that are consistently significantly below the standard. See id. at 22310 (“* * * IMPROVE monitor has, since February 2000, consistently measured PM-10 concentrations far below the PM-10 standard.”).

With respect to the commenter's concerns for fair treatment of the inhabitants of East Kern, EPA is taking steps to assure that the East Kern area will not be forgotten by EPA, and no community in that area will be “abandoned from environmental laws and attainment requirements.” EPA is committed to meeting the goals of environmental justice and is equally concerned for the populations of both the SJVAB and East Kern areas. There is no basis for concluding that the population of East Kern is exposed to ongoing levels above the standard, and EPA and the State have worked to provide assurances that the area will be required to conduct more comprehensive monitoring and to adopt additional requirements if needed. Thus EPA recognizes the role of environmental justice and is observing its principles.

Comment 20: A commenter disagrees with the proposed rule's statement that the boundary redesignation makes sense because of the difference in chemical composition of PM-10 between the two areas. The commenter believes this is not a valid statement because there are no FRMs or FEMs in the East Kern area. Furthermore, the commenter states that the one IMPROVE monitor in the East Kern area is inadequate and the chemical composition of the SJVAB and East Kern should not be compared until there is an adequate monitoring system in East Kern. In addition, the commenter concludes that a reanalysis of reported data must be performed before considering attainment for the SJVAB.

Response 20: We based our conclusion that the SJVAB and East Kern should be separate nonattainment areas on multiple factors, only one of which relates to the difference in the types of air pollutants in the two areas. See 73 FR 22307, 22310. While the commenter is correct that there is no FRM or FEM in the East Kern area, as stated above, the State and the District have committed to install an FRM/FEM in the East Kern area. Pending data from this new monitor, the IMPROVE monitor does provide useful information regarding the composition of PM-10 in the area. See id. and Attachments B and C to letter from James N. Goldstene, CARB, to Deborah Jordan, EPA, January 31, 2008. See also response to comment 19. The newly created East Kern area will retain its nonattainment designation until the State can demonstrate, following assessment of data from the new monitor, that all the applicable CAA requirements for redesignation of the East Kern area are met.

EPA does not agree that a reanalysis of the reported data must be performed before considering whether the SJVAB area has attained the PM-10 standard. As noted above, EPA has found that the SJVAB area has an adequate monitoring system on which to base such a determination. See 69 FR 30006, 30033, 71 FR 63642, 63648 and “Evaluation of the Adequacy of the Monitoring Network for the San Joaquin Valley, California for the Annual and 24-Hour PM-10 Standards,” Bob Pallarino, EPA, September 22, 2003. To demonstrate attainment, an area must show that it meets the standard over a three-year period. The SJVAB area has demonstrated attainment over three separate 3-year periods—2003-2005, 2004-2006, and 2005-2007, and it continues to attain the standard.

Comment 21: A commenter states that there are several gaps in evaluating the PM-10 data for the SJVAB from 1990 to 2004 and that given the cyclical nature of PM-10 the downward trend should be considered inconclusive until all yearly averages are taken into account as well as seasonally weighted averages.

The commenter also states that in the proposed rule's discussion of meteorological conditions a lower stability level would more likely lead to less dispersion and higher PM-10 values. The commenter believes the lower stability means the PM-10 levels were overestimated and provides information as to the unequal distribution in the surrounding community and who is bearing the brunt of the higher exposures.

Response 21: In our proposed rule we reference the expected PM-10 exceedances from 1990-1992, 1998-2000 and 2002-2004 to show that there has been a significant decline in NAAQS exceedances over the past 17 years, i.e., from 1990 through 2006. There are no data gaps; the 2007 Plan includes data for each year. 2007 Plan at 23-24, Figure 2. EPA believes that a 17 year period is sufficient to establish a trend that accounts for any cyclical changes in PM-10 data. In addition, an evaluation of the seasonal conditions causing PM-10 is provided in the 2003 PM-10 Plan. 2003 PM-10 Plan at ES-4 to ES-10 and Chapter 2.

EPA examined meteorological data, including information about atmospheric stability, wind speeds, precipitation and temperature in order to determine if there were any unusually favorable meteorological conditions that would cause PM-10 exceedances. EPA determined that overall there was no consistent pattern of favorable meteorology. 73 FR 22307, 22312; responses to comments 3 and 6 above.

For the SJVAB area, it has been determined that on an annual average basis, unstable conditions (or low stability) result in dispersion of pollutants and lower PM-10 levels and stable conditions (or high stability) result in a temperature inversion which keeps emissions at the surface and leads to higher PM-10 levels. 2007 Plan at Appendix C. During the attainment period of 2003 through 2006, the SJVAB area experienced somewhat low stability which allowed for dispersion of pollutants and lower PM-10 levels; however, as discussed in response to comment 6 above, based on the analysis of all the meteorological parameters, EPA determined that there was no overall pattern which favored improved PM-10 levels.

It is not completely clear to EPA what point the commenter is trying to make regarding stability. EPA acknowledges, however, that unstable conditions combined with other factors (e.g., emissions) in the SJV area can lead to high PM-10 levels on a daily basis, as has been seen with exceedances that occur during high wind events. Such exceedances however have been excluded from regulatory consideration under EPA's Exceptional Events Rule. 73 FR 22307, 22310-22311 and 73 FR 14687.

Comment 22: The SJVAPCD provided comments supporting EPA's proposed actions and also notes a minor typographical error for the proposed transportation conformity budgets found in Table 4 for Merced County for 2005. The SJVAPCD states that the budget should read 39.4 tons per day and not 39.2 tons per day.

Response 22: EPA appreciates the comments and has made the correction in today's final action.

For the reasons set forth in the proposed rule and in the responses to comments above, EPA is taking the final actions summarized below:

Having concluded that the State has addressed all the necessary requirements for a revised boundary designation, EPA is approving the State's request under section 107(d)(3)(D) to revise the boundary designation for the SJV PM-10 nonattainment area by splitting the area into two separate serious PM-10 nonattainment areas, the SJVAB PM-10 nonattainment area and the East Kern PM-10 nonattainment area.

Having concluded that the CAA requirements of section 107(d)(3)(E) for redesignations and section 175A for maintenance plans have been met for the SJVAB area, EPA is approving the State's request to redesignate the newly created serious SJVAB nonattainment area to attainment for the PM-10 NAAQS and approving the 2007 maintenance plan for the area.

EPA is also approving the conformity trading mechanism for the SJVAB area and the motor vehicle emissions subarea budgets for the attainment year, 2005, and the maintenance year, 2020, found in Table 3 below. The 2005 attainment year budget replaces the current attainment budgets from the approved 2003 PM-10 Plan. These budgets are approved as of November 12, 2008 pursuant to section 93.118(f)(2)(iii). 17

EPA is excluding from use in determining that the SJVAB area has attained the PM-10 NAAQS two exceedances that it has concluded were caused by exceptional events on July 4, 2007 and January 4, 2008, and is determining that the SJVAB area continues to attain the PM-10 standard.

Finally, EPA is approving commitments from KCAPCD and CARB to install a FRM or FEM in the newly created East Kern serious PM-10 nonattainment area and to address section 189(d) CAA requirements for the area in a SIP revision in the event the FRM or FEM records a violation of the PM-10 standard.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves a revised boundary designation, a redesignation to attainment for the SJVAB, a maintenance plan for the SJVAB area, motor vehicle emissions budgets and conformity trading mechanism for the area and commitments for the East Kern area, all of which were either requested or submitted by the State. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule does not impose any additional enforceable duty, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

Executive Order 13175 (65 FR 67249, November 9, 2000) requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” Seven Indian tribes have reservations located within the boundaries of the SJVAB. EPA has consulted with representatives of the tribes and will continue to work with the tribes as provided for in Executive Order 13175. Accordingly, EPA has addressed Executive Order 13175 to the extent that it applies to this action. This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves requests or submittals from the State and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act.

Executive Order 12898 establishes a Federal policy for incorporating environmental justice into Federal agency actions by directing agencies to identify and address, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority and low-income populations. Today's action involves approvals of a revised boundary designation, a redesignation to attainment for the SJVAB area, a maintenance plan for the SJVAB area, motor vehicle emissions budgets and conformity trading mechanism for the area and commitments for the East Kern area. It will not have disproportionately high and adverse effects on any communities in the area, including minority and low-income communities.

This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant. The requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply because it would be inconsistent with applicable law for EPA, when determining the attainment status of an area, to use voluntary consensus standards in place of promulgated air quality standards and monitoring procedures that otherwise satisfy the provisions of the Clean Air. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by January 12, 2009. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2)).

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

•  Crop production (NAICS code 111).

•  Animal production (NAICS code 112).

•  Food manufacturing (NAICS code 311).

•  Pesticide manufacturing (NAICS code 32532).

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

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

Under section 408(g) of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2008-0175 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before January 12, 2009.

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket that is described in ADDRESSES . Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit your copies, identified by docket ID number EPA-HQ-OPP-2008-0175, by one of the following methods:

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

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

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

EPA, on its own initiative, in accordance with sections 408(e) and 408(l)(6) of FFDCA, 21 U.S.C. 346a(e) and 346a(1)(6), is establishing a time-limited tolerance for combined residues of the insecticide avermectin B 1 and its delta-8,9-isomer in or on bean, lima, seed at 0.005 parts per million (ppm). This time-limited tolerance expires and is revoked on December 31, 2010. EPA will publish a document in the Federal Register to remove the revoked tolerances from the CFR.

Section 408(l)(6) of FFDCA requires EPA to establish a time-limited tolerance or exemption from the requirement for a tolerance for pesticide chemical residues in food that will result from the use of a pesticide under an emergency exemption granted by EPA under section 18 of FIFRA. Such tolerances can be established without providing notice or period for public comment. EPA does not intend for its actions on section 18 related time-limited tolerances to set binding precedents for the application of section 408 of FFDCA and the new safety standard to other tolerances and exemptions. Section 408(e) of FFDCA allows EPA to establish a tolerance or an exemption from the requirement of a tolerance on its own initiative, i.e., without having received any petition from an outside party.

Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”

Section 18 of FIFRA authorizes EPA to exempt any Federal or State agency from any provision of FIFRA, if EPA determines that “emergency conditions exist which require such exemption.” EPA has established regulations governing such emergency exemptions in 40 CFR part 166.

The state of California asserts that large lima bean growers have few miticides to work with for controlling spider mites. Confirmed resistance to dicofol has been demonstrated in fields located in Stanislaus County. In 2006, two-spotted spider mite infestations were pervasive on some ranches and some growers experienced 30% crop losses despite use of the available registered alternatives. After having reviewed the submission, EPA determined that emergency conditions exist for this State, and that the criteria for an emergency exemption are met. EPA has authorized under FIFRA section 18 the use of avermectin on large lima beans for control of spider mites in California.

As part of its evaluation of the emergency exemption application, EPA assessed the potential risks presented by residues of avermectin in or on large lima beans. In doing so, EPA considered the safety standard in section 408(b)(2) of FFDCA, and EPA decided that the necessary tolerance under section 408(l)(6) of FFDCA would be consistent with the safety standard and with FIFRA section 18. Consistent with the need to move quickly on the emergency exemption in order to address an urgent non-routine situation and to ensure that the resulting food is safe and lawful, EPA is issuing this tolerance without notice and opportunity for public comment as provided in section 408(l)(6) of FFDCA. Although this time-limited tolerance expires and is revoked on December 31, 2010, under section 408(l)(5) of FFDCA, residues of the pesticide not in excess of the amounts specified in the tolerance remaining in or on large lima beans after that date will not be unlawful, provided the pesticide was applied in a manner that was lawful under FIFRA, and the residues do not exceed a level that was authorized by this time-limited tolerance at the time of that application. EPA will take action to revoke this time-limited tolerance earlier if any experience with, scientific data on, or other relevant information on this pesticide indicate that the residues are not safe.

Because this time-limited tolerance is being approved under emergency conditions, EPA has not made any decisions about whether avermectin meets FIFRA’s registration requirements for use on large lima beans or whether permanent tolerances for this use would be appropriate. Under these circumstances, EPA does not believe that this time-limited tolerance decision serves as a basis for registration of avermectin by a State for special local needs under FIFRA section 24(c). Nor does this tolerance serve as the basis for persons in any State other than California to use this pesticide on this crop under FIFRA section 18 absent the issuance of an emergency exemption applicable within that State. For additional information regarding the emergency exemption for avermectin, contact the Agency's Registration Division at the address provided under FOR FURTHER INFORMATION CONTACT .

Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue....”

Consistent with the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure expected as a result of this emergency exemption request and the time-limited tolerance for combined residues of avermectin B 1 and its delta-8,9-isomer in or on bean, lima, seed at 0.005 ppm. EPA's assessment of exposures and risks associated with establishing the time-limited tolerance follows.

For hazards that have a threshold below which there is no appreciable risk, a toxicological point of departure (POD) is identified as the basis for derivation of reference values for risk assessment. The POD may be defined as the highest dose at which no adverse effects are observed (the NOAEL) in the toxicology study identified as appropriate for use in risk assessment. However, if a NOAEL cannot be determined, the lowest dose at which adverse effects of concern are identified (the LOAEL) or a Benchmark Dose (BMD) approach is sometimes used for risk assessment. Uncertainty/safety factors (UFs) are used in conjunction with the POD to take into account uncertainties inherent in the extrapolation from laboratory animal data to humans and in the variations in sensitivity among members of the human population as well as other unknowns. Safety is assessed for acute and chronic dietary risks by comparing aggregate food and water exposure to the pesticide to the acute population adjusted dose (aPAD) and chronic population adjusted dose (cPAD). The aPAD and cPAD are calculated by dividing the POD by all applicable UFs. Aggregate short-, intermediate-, and chronic-term risks are evaluated by comparing food, water, and residential exposure to the POD to ensure that the margin of exposure (MOE) called for by the product of all applicable UFs is not exceeded. This latter value is referred to as the Level of Concern (LOC).

For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect greater than that expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see http://www.epa.gov/pesticides/factsheets/riskassess.htm .

A summary of the toxicological endpoints for avermectin used for human risk assessment is discussed in a tolerance document entitled Avermectin B 1 and its delta-8,9-isomer; Pesticide Tolerance (70 FR 7876, FRL-7695-7, February 16, 2005).

1. Dietary exposure from food and feed uses . In evaluating dietary exposure to avermectin, EPA considered exposure under the time-limited tolerance established by this action as well as all existing avermectin tolerances in (40 CFR 180.449). EPA assessed dietary exposures from avermectin in food as follows:

i. Acute exposure . In estimating acute dietary exposure, EPA used food consumption information from the United States Department of Agriculture (USDA) 1994-1996 and 1998 Nationwide Continuing Surveys of Food Intake by Individuals (CSFII). The following assumptions were made for the acute exposure assessments: A Tier 3, acute probabilistic dietary exposure assessment was conducted for all supported food uses and drinking water. Acute anticipated residues for many foods were derived using market basket survey and new field trial studies. Estimated concentrations of avermectin in drinking water were incorporated directly into the acute assessment.

ii. Chronic exposure . In conducting the chronic dietary exposure assessment EPA used the DEEM/FCID which incorporates food consumption data as reported by respondents in the USDA 1994-1996 and 1998 Nationwide CSFII, and accumulated exposure to the chemical for each commodity. Percent crop treated and anticipated residues refinements were used. A refined chronic dietary exposure assessment was conducted for the general U.S. population and various population subgroups. The assumptions of the assessment were anticipated residue estimates, PCT estimates for most of the commodities, and default DEEM processing factors when necessary. Estimated concentrations of avermectin in drinking water were incorporated directly into the chronic assessment.

iii. Cancer . An aggregate exposure assessment for the purpose of assessing cancer risk was not performed because avermectin has been classified as “not likely to be carcinogenic to humans.”

iv. Anticipated residue and PCT information . Section 408(b)(2)(E) of FFDCA authorizes EPA to use available data and information on the anticipated residue levels of pesticide residues in food and the actual levels of pesticide residues that have been measured in food. If EPA relies on such information, EPA must require pursuant to FFDCA section 408(f)(1) that data be provided 5 years after the tolerance is established, modified, or left in effect, demonstrating that the levels in food are not above the levels anticipated. For the present action, EPA will issue such data call-ins as are required by FFDCA section 408(b)(2)(E) and authorized under FFDCA section 408(f)(1). Data will be required to be submitted no later than 5 years from the date of issuance of this tolerance.

Section 408(b)(2)(F) of FFDCA states that the Agency may use data on the actual percent of food treated for assessing chronic dietary risk only if:

• Condition a: The data used are reliable and provide a valid basis to show what percentage of the food derived from such crop is likely to contain the pesticide residue.

• Condition b: The exposure estimate does not underestimate exposure for any significant subpopulation group.

• Condition c: Data are available on pesticide use and food consumption in a particular area, the exposure estimate does not understate exposure for the population in such area.

The Agency used PCT information as follows:

Almonds 21%; avocado 20%; balsam pear 1%; cantaloupe 7%; casabas 1%; chayote fruit 1%; Chinese waxgourd 1%; cotton 3%; cress (garden, upland) 1%; cucumber 1%; grape 6%; hops 82%; honeydew melon 1%; plum 1%; pumpkin 1%; squash 1%; strawberry 44%; walnut 2%; watermelon 7%.

In most cases, EPA uses available data from United States Department of Agriculture/National Agricultural Statistics Service (USDA/NASS), proprietary market surveys, and the National Pesticide Use Database for the chemical/crop combination for the most recent 6 years. EPA uses an average PCT for chronic dietary risk analysis. The average PCT figure for each existing use is derived by combining available public and private market survey data for that use, averaging across all observations, and rounding to the nearest 5%, except for those situations in which the average PCT is less than one. In those cases, 1% is used as the average PCT and 2.5% is used as the maximum PCT. EPA uses a maximum PCT for acute dietary risk analysis. The maximum PCT figure is the highest observed maximum value reported within the recent 6 years of available public and private market survey data for the existing use and rounded up to the nearest multiple of 5%.

The Agency believes that the three conditions discussed in Unit III.C.1.iv. have been met. With respect to Condition a, PCT estimates are derived from Federal and private market survey data, which are reliable and have a valid basis. As to Conditions b and c, regional consumption information and consumption information for significant subpopulations is taken into account through EPA's computer-based model for evaluating the exposure of significant subpopulations including several regional groups. Use of this consumption information in EPA's risk assessment process ensures that EPA's exposure estimate does not understate exposure for any significant subpopulation group and allows the Agency to be reasonably certain that no regional population is exposed to residue levels higher than those estimated by the Agency. Other than the data available through national food consumption surveys, EPA does not have available reliable information on the regional consumption of food to which avermectin may be applied in a particular area.

2. Dietary exposure from drinking water . The Agency used screening level water exposure models in the dietary exposure analysis and risk assessment for avermectin in drinking water. These simulation models take into account data on the physical, chemical, and fate/transport characteristics of avermectin. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at http://www.epa.gov/oppefed1/models/water/index.htm . Tier II screening models PRZM (Pesticide Root Zone Model) and EXAMS (Exposure Analysis Modeling System) were used to determine estimated surface water concentrations of avermectin based on the modeled scenario of one seed treatment to cucumbers followed by 3 aerial applications at a 7-day interval in Florida. This use of avermectin represents the worst case potential contribution of avermectin to drinking water when considering currently registered uses, including this one. The full PRZM/EXAMS distribution was used for the acute dietary assessment, and the one in ten year annual mean concentration of 0.190 ppm was used for chronic dietary estimates. Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model.

3. From non-dietary exposure . The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets).

Avermectin is currently registered for use on the following residential non-dietary sites: Residential lawn application for fire ant control and residential indoor crack and crevice application for cockroaches and ants. These registered residential uses may result in short- to intermediate-term exposures; however, based on current use patterns, long-term exposure (6 or more months of continuous exposure) to avermectin is not expected. Adults may be exposed through handling the pesticide and both adults and children may be exposed through contact with treated areas following application. Accordingly, handler and post-application exposures were assessed for two major categories of residential avermectin use which are considered to represent the reasonable high-end residential exposure potential:

i. Granular baits used to treat lawns, and

ii. Indoor crack and crevice dust products.

4. Cumulative effects from substances with a common mechanism of toxicity . Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

EPA has not found avermectin to share a common mechanism of toxicity with any other substances, and avermectin does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that avermectin does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see the policy statements released by EPA’s Office of Pesticide Programs concerning common mechanism determinations and procedures for cumulating effects from substances found to have a common mechanism on EPA's website at http://www.epa.gov/pesticides/cumulative .

1. In general . Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA safety factor (SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional SF when reliable data available to EPA support the choice of a different factor. For avermectin B 1 EPA retained the default 10X factor based on the following combination of factors:

• There is residual uncertainty due to a data gap for a developmental neurotoxicity study (DNT), as well as data gaps for acute and subchronic neurotoxicity studies. These studies are required because avermectin B 1 has been shown to be neurotoxic, with multiple neurotoxic clinical signs (including head and body tremors and limb splay) seen in multiple studies with multiple species.

• For several species, the dose-response curve appears to be steep.

• Severe effects were seen at the LOAELs in several studies (death, neurotoxicity, and developmental toxicity). Although increased susceptibility of the young was observed in several studies, the degree of concern with that susceptibility was judged to be low. Increased susceptibility (qualitative and/or quantitative) was seen in prenatal developmental toxicity studies in CD-1 mice and rabbits following in utero exposure to avermectin B 1 . There was also an increase in quantitative and qualitative susceptibility in the rat reproductive toxicity study. The concern for susceptibility seen in the developmental study with rabbits and in the reproductive toxicity study in the rat is low because the lowest NOAEL obtained (0.12 mg/kg/day) was used as the basis for the chronic RfD and other non-dietary risk assessment scenarios, which is protective of all of the developmental/offspring effects seen in those studies. Similarly, the concern for susceptibility seen at the LOAEL in the CD-1 mouse developmental toxicity study is low, since the NOAEL in the rat reproductive toxicity study is lower than the dose at which effects were seen in the CD-1 mouse.

EPA determines whether acute and chronic pesticide exposures are safe by comparing aggregate exposure estimates to the aPAD and cPAD. The aPAD and cPAD represent the highest safe exposures, taking into account all appropriate SFs. EPA calculates the aPAD and cPAD by dividing the POD by all applicable UFs. For linear cancer risks, EPA calculates the probability of additional cancer cases given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the POD to ensure that the MOE called for by the product of all applicable UFs is not exceeded.

1. Acute risk . Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to avermectin will occupy 93% of the aPAD for all infants less than 1 year old, the population group receiving the greatest exposure.

2. Chronic risk . Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to avermectin from food and water will utilize 20% of the cPAD for children 1-2 years old, the population group receiving the greatest exposure. Based on the explanation in the unit regarding residential use patterns, chronic residential exposure to residues of avermectin is not expected.

3. Short-term and intermediate-term risk . Short-term aggregate exposure takes into account short-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level).

Avermectin is currently registered for uses that could result in short-term and intermediate-term residential exposure and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with short-term and intermediate-term residential exposures to avermectin.

Using the exposure assumptions described in this unit for short-term and intermediate-term exposures, EPA has concluded the combined short-term food, water, and residential exposures aggregated result in aggregate MOEs of 3,000 for the U.S. population, and 1,700 for children 1-2 years old. These aggregate MOEs are greater than the Agency's level of concern of 1,000 for aggregate exposure to food, water and residential uses and therefore acceptable.

4. Aggregate cancer risk for U.S. population . Avermectin has been classified as “not likely to be carcinogenic to humans” and therefore is not expected to pose a cancer risk to humans.

5. Determination of safety . Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children, from aggregate exposure to avermectin residues.

Adequate enforcement methodology is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; e-mail address: residuemethods@epa.gov .

There are no CODEX residue limits for residues of avermectin on bean, lima, seed.

Therefore, a time-limited tolerance is established for combined residues of the insecticide avermectin B 1 and its delta-8,9-isomer in or on bean, lima, seed at 0.005 ppm. This time-limited tolerance expires and is revoked on December 31, 2010.

This final rule establishes a tolerance under sections 408(e) and 408(l)(6) of FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Because this final rule has been exempted from review under Executive Order 12866, this final rule is not subject to Executive Order 13211, entitled Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq ., nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994).

Since tolerances and exemptions that are established in accordance with sections 408(e) and 408(l)(6) of FFDCA, such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq .) do not apply.

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

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

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

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

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

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

Under section 408(g) of FFDCA, 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2007-0945 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk as required by 40 CFR part 178 on or before January 12, 2009.

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket that is described in ADDRESSES . Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit this copy, identified by docket ID number EPA-HQ-OPP-2007-0945, by one of the following methods:

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

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

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

In the Federal Register of October 24, 2007 (72 FR 60369) (FRL-8150-8), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 7E7257) by Interregional Research Project Number 4 (IR-4), 500 College Road East, Suite 201 W., Princeton, NJ 08540. The petition requested that 40 CFR 180.318 be amended by establishing a tolerance for residues of the herbicide MCPB, 4-(2-methyl-4-chlorophenoxy) butyric acid, in or on mint tops (leaves and stems) at 0.25 parts per million (ppm). That notice referenced a summary of the petition prepared by Nufarm, Inc., the registrant, on behalf of IR-4, which is available to the public in the docket, http://www.regulations.gov . There were no comments received in response to the notice of filing.

Based upon review of the data supporting the petition, EPA has revised the commodity terms and tolerance level. EPA has also revised the tolerance expression to include combined residues of free and conjugated MCPB and its metabolite MCPA. The reasons for these changes are explained in Unit IV.C.

Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”

Consistent with section 408(b)(2)(D) of FFDCA, and the factors specified in section 408(b)(2)(D) of FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for the petitioned-for tolerances for combined residues of free and conjugated MCPB and its metabolite MCPA on peppermint, tops and spearmint, tops at 0.20 ppm. EPA's assessment of exposures and risks associated with establishing tolerances follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

The currently available toxicological database for MCPB is limited; thus it was supplemented with data on the closely related compound, 4-(chloro-2-methylphenoxy)acetic acid (MCPA). Structurally, MCPB and MCPA differ only in that MCPB contains two additional carbon atoms. In both animal and plant metabolism studies, the data indicate that MCPB is readily converted to MCPA. Therefore, EPA has concluded that the toxicity of these compounds is similar at sub-lethal dose levels.

MCPB has low to moderate acute toxicity via the oral, dermal and inhalation routes of exposure. It is mildly to moderately irritating to the eye but is not a dermal irritant or skin sensitizer. In longer-term studies, nephrotoxicity and hepatotoxicity appear to be the most prevalent hazard concerns for MCPB, based on the effects seen throughout the MCPA database and the limited toxicity data set available for MCPB. Signs of neurotoxicity (decreased arousal, impaired coordination and gait, reduced motor activity and reduced grip strength) were also reported after MCPB or MCPA exposure. Developmental and reproduction toxicity studies conducted with MCPB and/or MCPA did not indicate an enhanced sensitivity or susceptibility of the young, as developmental effects (delayed ossifications and decreased fetal or pup body weight) occurred at the same doses eliciting toxicity in the parental animals (mortality, decreased body weight, body weight gain and food consumption and increased absolute and relative ovary weights). MCPB and MCPA have been classified as “not likely to be carcinogenic to humans” based on the absence of increased numbers of tumors in the rat and mouse carcinogenicity studies and no evidence of mutagenicity.

Specific information on the studies received and the nature of the adverse effects caused by MCPB and MCPA, as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies, can be found at http://www.regulations.gov in the document 4-(4-chloro-2-methylphenoxy)butanoic acid (MCPB) ; Human-Health Risk Assessment for Proposed Section 3 New Use on Mint , page 29 in docket ID number EPA-HQ-OPP-2007-0945.

For hazards that have a threshold below which there is no appreciable risk, a toxicological point of departure (POD) is identified as the basis for derivation of reference values for risk assessment. The POD may be defined as the highest dose at which no adverse effects are observed (the NOAEL) in the toxicology study identified as appropriate for use in risk assessment. However, if a NOAEL cannot be determined, the lowest dose at which adverse effects of concern are identified (the LOAEL) or a Benchmark Dose (BMD) approach is sometimes used for risk assessment. Uncertainty/safety factors (UFs) are used in conjunction with the POD to take into account uncertainties inherent in the extrapolation from laboratory animal data to humans and in the variations in sensitivity among members of the human population as well as other unknowns. Safety is assessed for acute and chronic dietary risks by comparing aggregate food and water exposure to the pesticide to the acute population adjusted dose (aPAD) and chronic population adjusted dose (cPAD). The aPAD and cPAD are calculated by dividing the POD by all applicable UFs. Aggregate short-term, intermediate-term, and chronic-term risks are evaluated by comparing food, water, and residential exposure to the POD to ensure that the margin of exposure (MOE) called for by the product of all applicable UFs is not exceeded. This latter value is referred to as the Level of Concern (LOC).

For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect greater than that expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see http://www.epa.gov/pesticides/factsheets/riskassess.htm .

A summary of the toxicological endpoints for MCPB used for human risk assessment is shown in the following Table.

While the Agency has concluded that MCPB converts to MCPA in the environment, and that MCPA may be present in crops, residues of MCPA resulting from the existing use of MCPB on peas and the new use on mint are expected to be negligible, and significantly below analytical method limits of detection. These residues will not contribute significantly to the aggregate exposure to MCPA from other sources, and, therefore, EPA did not conduct an aggregate assessment combining MCPA exposures from MCPA and MCPB uses. The exposure assessments presented here are for MCPB only. A discussion of aggregate risks associated with MCPA can be found in the MCPA Reregistration Eligibility Decision (RED), available on the Office of Pesticide Programs web site at http://www.epa.gov/oppsrrd1/REDs/mcpa_red.pdf

1. Dietary exposure from food and feed uses . In evaluating dietary exposure to MCPB, EPA considered exposure under the petitioned-for tolerances as well as the existing MCPB tolerance in 40 CFR 180.318 on peas, the only commodity for which a tolerance currently exists. EPA assessed dietary exposures from MCPB in food as follows:

i. Acute exposure . Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure.

In estimating acute dietary exposure, EPA used food consumption information from the United States Department of Agriculture (USDA) 1994-1996 and 1998 Nationwide Continuing Surveys of Food Intakes by Individuals (CSFII). As to residue levels in food, EPA assumed that all pea and mint commodities contain tolerance-level residues and that 100 percent of pea and mint commodities are treated with MCPB.

ii. Chronic exposure . In conducting the chronic dietary exposure assessment EPA used the food consumption data from the USDA 1994-1996 and 1998 CSFII. As in the acute exposure assessment, EPA assumed tolerance-level residues and 100 percent crop treated (PCT) for all pea and mint commodities.

iii. Cancer . Based on the results of carcinogenicity studies in rats and mice, EPA classified MCPB as “not likely to be carcinogenic to humans.” Therefore, an exposure assessment for evaluating cancer risk is unnecessary.

iv. Anticipated residue and PCT information . EPA did not use anticipated residue or PCT information in the dietary assessment for MCPB. Tolerance level residues and/or 100 PCT were assumed for all food commodities.

2. Dietary exposure from drinking water . The Agency used screening level water exposure models in the dietary exposure analysis and risk assessment for MCPB in drinking water. These simulation models take into account data on the physical, chemical, and fate/transport characteristics of MCPB. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at http://www.epa.gov/oppefed1/models/water/index.htm .

Based on the First Index Reservoir Screening Tool (FIRST) and Screening Concentration in Ground Water (SCI-GROW) models, the estimated drinking water concentrations (EDWCs) of MCPB for acute exposures are estimated to be 54.7 parts per billion (ppb) for surface water and 2.1 ppb for ground water. The EDWCs for chronic exposures for non-cancer assessments are estimated to be 13.5 ppb for surface water and 2.1 ppb for ground water.

Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For acute dietary risk assessment, the water concentration value of 54.7 ppb was used to assess the contribution to drinking water. For chronic dietary risk assessment, the water concentration of value 13.5 ppb was used to assess the contribution to drinking water.

3. From non-dietary exposure . The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure ( e.g. , for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets).

MCPB is not registered for any specific use patterns that would result in residential exposure.

4. Cumulative effects from substances with a common mechanism of toxicity . Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

EPA has not found MCPB to share a common mechanism of toxicity with any other substances, and MCPB does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that MCPB does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at http://www.epa.gov/pesticides/cumulative .

1. In general . Section 408(b)(2)(c) of FFDCA provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA safety factor (SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

2. Prenatal and postnatal sensitivity . The prenatal and postnatal toxicology database for MCPB includes rat and rabbit developmental toxicity studies; for MCPA it includes rat and rabbit developmental toxicity studies and a 2-generation reproduction toxicity study in rats. There was no evidence of increased quantitative or qualitative susceptibility of fetuses or offspring to MCPA or MCPB exposure in any of these studies. In the developmental rat studies with MCPB and MCPA, decreased ossification and decreased fetal body weights occurred at the same dose causing maternal effects (decreased body weight gain and food consumption). No toxicity to fetuses occurred in the MCPB and MCPA rabbit developmental studies at doses resulting in maternal toxicity (mortality, decreased body weight and food consumption). In the rat reproduction study for MCPA, the only offspring toxicity was decreased weight gain while nursing, which occurred at the same dose causing maternal toxicity (increased absolute and relative ovary weights).

3. Conclusion . EPA has determined that the FQPA safety factor of 10X must be retained as a database uncertainty factor for MCPB acute and chronic risk assessments. This decision is based on the following findings:

i. The toxicity database for MCPB is not complete. Additional data pertaining to MCPB's potential to cause developmental neurotoxicity (DNT) or immunotoxicity are outstanding. EPA's assessment of the uncertainties arising from these data deficiencies follows:

a. Developmental neurotoxicity: EPA has required a developmental neurotoxicity study to be submitted because neurotoxicity was found in acute and subchronic neurotoxicity studies with MCPA in rats (decreased arousal, impaired coordination and gait, reduced motor activity, reduced grip strength), and similar signs of neurotoxicity can be expected with MCPB. The neurotoxic effects seen in the acute neurotoxicity studies were the most sensitive acute effect identified and therefore were used in calculating the aRfD for MCPB. Given these findings of neurotoxicity and sensitivity of the neurotoxic effects, EPA has concluded that it lacks reliable data to remove the FQPA 10X safety factor.

b. Immunotoxicity: EPA began requiring functional immunotoxicity testing (series 870.7800) of all food and non-food use pesticides on December 26, 2007. Since the requirement went into effect after this tolerance petition was submitted, these studies are not yet available for MCPB. In the absence of specific immunotoxicity studies, EPA has evaluated the available toxicity data for MCPB and MCPA regarding potential immunotoxic effects. Evidence of potential immunotoxicity was observed in subchronic 28-day oral toxicity studies in the mouse and dog with MCPA. Involution of the spleen due to lymphocytic depletion was observed in both sexes at the highest dose tested (HDT) and LOAEL of 453.7/223.9 milligrams kilogram day (mg/kg/day) male/female (M/F) in the mouse, and decreased thymus weights were seen in the dog at a dose of 30 mg/kg/day HDT. Lymphoid depletion was observed in the subchronic toxicity study in the dog at a dose of 44 mg/kg/day (HDT) of MCPB. The NOAEL in the mouse and dog for potential immunotoxic effects was 173.4/69.2 mg/kg/day M/F and 20 mg/kg/day, respectively. The NOAEL being used for calculation of the chronic reference dose (cRfD) is 4.4 mg/kg/day. The NOAEL from the mouse study (173.4/69.2 mg/kg/day (M/F)) provides the more appropriate reference for evaluating potential immunotoxic effects in humans. Unlike rodents and humans, dogs are uniquely sensitive to the toxic effects of chlorophenoxy compounds such as MCPB due to their decreased ability to excrete organic acids, and thus the effect levels in the mouse are more relevant to potential immunotoxicity in humans.

After weighing this evidence, EPA retains significant uncertainty regarding potential neurotoxic effects in infants and children but does not have such concerns for immunotoxicity. The immunotoxic effects with most relevance to humans had a NOAEL over 10X greater than the NOAEL used in establishing the cRfD. On the other hand, neurotoxic effects were the most sensitive acute effects seen in the database. Additionally, the DNT study specifically addresses potential risks to developing animals. Given these considerations, EPA has concluded that it lacks reliable data to remove the FQPA children's safety factor.

ii. There is no evidence that MCPB or MCPA results in increased susceptibility in in utero rats or rabbits in the prenatal developmental studies or in young rats in the 2-generation reproduction study.

iii. There are no residual uncertainties identified in the exposure databases. The dietary food exposure assessments were performed based on 100 PCT and tolerance-level residues. EPA made conservative (protective) assumption's in the ground and surface water modeling used to assess exposure to MCPB in drinking water, and residential exposures are not expected. These assessments will not underestimate the exposure and risks posed by MCPB.

EPA determines whether acute and chronic pesticide exposures are safe by comparing aggregate exposure estimates to the aPAD and cPAD. The aPAD and cPAD represent the highest safe exposures, taking into account all appropriate SFs. EPA calculates the aPAD and cPAD by dividing the POD by all applicable UFs. For linear cancer risks, EPA calculates the probability of additional cancer cases given the estimated aggregate exposure. Short-term, intermediate-term, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the POD to ensure that the MOE called for by the product of all applicable UFs is not exceeded.

1. Acute risk . An acute aggregate risk assessment takes into account exposure estimates from acute dietary consumption of food and drinking water. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to MCPB will occupy 5.4% of the aPAD for infants, less than one year old, the population group receiving the greatest exposure.

2. Chronic risk . Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to MCPB from food and water will utilize 22% of the cPAD for infants, less than one year old, the population group receiving the greatest exposure. There are no residential uses for MCPB.

3. Short-term risk . Short-term aggregate exposure takes into account short-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). MCPB is not registered for any use patterns that would result in residential exposure. Therefore, the short-term aggregate risk is the sum of the risk from exposure to MCPB through food and water and will not be greater than the chronic aggregate risk.

4. Intermediate-term risk . Intermediate-term aggregate exposure takes into account intermediate-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). MCPB is not registered for any use patterns that would result in intermediate-term residential exposure. Therefore, the intermediate-term aggregate risk is the sum of the risk from exposure to MCPB through food and water, which has already been addressed, and will not be greater than the chronic aggregate risk.

5. Aggregate cancer risk for U.S. population . EPA has classified MCPB into the category “Not Likely to be Carcinogenic to Humans”. MCPB is not expected to pose a cancer risk.

6. Determination of safety . Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to MCPB residues.

Adequate enforcement methodology (Gas chromatography/Mass Spectrometry) is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; e-mail address: residuemethods@epa.gov .

There are no established or proposed Codex, Canadian, or Mexican maximum residue limits (MRLs) for MCPB.

IR-4 proposed a tolerance for residues of MCPB per se on mint tops (leaves and stems) at 0.25 ppm. EPA has determined that separate tolerances at 0.20 ppm should be established for combined residues of free and conjugated MCPB (4-(4-chloro-2-methylphenoxy)butanoic acid) and MCPA (4-chloro-2-methylphenoxy)acetic acid) on the commodities “spearmint, tops” and “peppermint, tops. The commodity terms were revised to agree with the preferred commodity terms in the Agency's Food and Feed Commodity Vocabulary. EPA determined the appropriate tolerance level for mint tops based on analysis of the residue field trial data using the Agency's Tolerance Spreadsheet in accordance with the Agency's Guidance for Setting Pesticide Tolerances Based on Field Trial Data . Finally, EPA revised the residues of concern to be included in the tolerance expression based on the results of plant metabolism studies.

Therefore, tolerances are established for combined residues of free and conjugated MCPB and MCPA in or on peppermint, tops and spearmint, tops at 0.20 ppm.

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

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

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

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

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

This final rule amends FMVSS No. 208 to update the child restraint systems (CRSs) listed in Appendix A of the standard. The notice of proposed rulemaking (NPRM) preceding this final rule was published on September 25, 2007 (72 FR 54402; Docket 2007-28710).

FMVSS No. 208 (49 CFR 571.208) requires passenger cars and trucks, buses, and multipurpose passenger vehicles with a gross vehicle weight rating (GVWR) of 3,856 kilograms (kg) (8,500 pounds (lb)) or less and an unloaded vehicle weight of 2,495 kg (5,500 lb) or less to be equipped with seat belts and frontal air bags for the protection of vehicle occupants in crashes. While air bags have been very effective in protecting people in moderate and high speed frontal crashes, there have been instances in which they have caused serious or fatal injuries to occupants who were very close to the air bag when it deployed. On May 12, 2000, NHTSA published a final rule to require that air bags be designed to create less risk of serious air bag-induced injuries and provide improved frontal crash protection for all occupants, by means that include advanced air bag technology (“Advanced Air Bag Rule,” 65 FR 30680, Docket No. NHTSA 00-7013). Under the Advanced Air Bag Rule, to minimize the risk to infants and small children from deploying air bags, manufacturers may suppress an air bag in the presence of a CRS or provide a low risk deployment (LRD) system. 1

A carload waybill is a document describing the characteristics of an individual rail shipment: originating and terminating freight stations, the names of all railroads participating in the movement, the points of all railroad interchanges, the number of cars, the car types, movement weight in hundredweight, the commodity, and the freight revenue. Under 49 CFR Part 1244, a railroad is required to file a Waybill Sample for all line-haul revenue waybills terminating on its lines if, in any of the three preceding years, the railroad terminated 4,500 or more carloads, or it terminated at least 5% of the total revenue carloads that terminate in a particular state.

The Waybill Sample is the Board's primary source of information about freight rail shipments terminated in the United States. Of particular importance, the Board relies on the data in the “Total Freight LH Revenue” (also referred to as “Freight Revenue”) field to compute its “Revenue Shortfall Allocation Method” (RSAM) benchmarks. The RSAM benchmarks, which are used in adjudicating certain rate disputes, measure how much a carrier would need to charge its potentially captive traffic in order to obtain adequate revenues overall.

In the last few years, questions have been raised about how railroads reported fuel surcharge revenue in the Waybill Sample. The Board sought to address those questions, and to provide for consistency in the reporting of fuel surcharge revenue in the Waybill Sample, by clarifying that all railroads that are required to submit a Waybill Sample under 49 CFR Part 1244 should report fuel surcharge revenue as part of total freight revenue in the “Freight Revenue” field in the waybill-file-record layout. Waybill Sample, STB Ex Parte No. 385 (Sub-No. 6) ( Clarification ) (published at 72 FR 72000 on December 19, 2007).

In a request for reconsideration filed on December 31, 2007, the National Industrial Transportation League (NITL) argued that the Board's Clarification made it more difficult to identify fuel surcharge revenue in the Waybill Sample and, therefore, did not promote transparency as to the use of fuel surcharges by rail carriers. NITL, with the support of several other shippers, shipping groups, and other interests, asked the Board to require all carriers that submit a Waybill Sample to report fuel surcharge revenue separately in a Waybill Sample field established for that purpose. No rail carrier objected or even responded to NITL's petition.

In a decision served on June 16, 2008, the Board initiated a rulemaking to require all carriers that submit a Waybill Sample to report fuel surcharge revenue in a separate waybill field created by the Board for that purpose, rather than reporting such revenue within the general freight revenue field, commencing with the Waybill Sample filed for January 2009. The Board reasoned that reporting fuel surcharge revenue in a separate field in the Waybill Sample will increase transparency about the use of fuel surcharges by rail carriers without detracting from the Board's ability to obtain consistent results for the purposes of including such revenue in its RSAM calculations. A notice requesting comments regarding the Board's proposal was published in the Federal Register on June 26, 2008 (73 FR 36294). No comments were received.

The Board is adopting the proposed requirement. Statement No. 81-1, Procedure for Sampling Waybill Records by Computer, will be modified to require fuel surcharge revenues to be reported in a new field created for that purpose. The new field (Field 33) will be a 9-byte record. Therefore, the computerized Waybill Sample reported by the railroads will increase from a 228-byte record layout to a 237-byte record layout. To keep reporting consistent within each calendar year, the new field will be required for Waybill Samples commencing with the Waybill Sample filed for January 2009. For consistency and administrative convenience, in addition to reporting in Field 33, carriers are asked to include fuel surcharge revenue as part of total freight revenue in the “Total Freight LH Revenue” field (Field 15), as previously directed in Clarification.

The Board's decisions in this proceeding are available on the Board's Web site at www.stb.dot.gov. Copies of the decisions will also be available for viewing and self-copying in the Board's Public Docket Room, Suite 131, 395 E Street, SW., Washington, DC, or (for a fee) by contacting the Board's Chief Records Officer at (202) 245-0235 or 395 E Street, SW., Washington, DC 20423-0001.

The Director of the Federal Register has approved the Board's request for incorporation by reference of Statement No. 81-1, Procedure for Sampling Waybill Records by Computer (2009 edition). Such approval by the Director requires the insertion of certain language into the regulatory text of the rule as detailed below.

Pursuant to 5 U.S.C. 605(b), the Board certifies that this action will not have a significant economic effect on a substantial number of small entities within the meaning of the Regulatory Flexibility Act.

This action will not significantly affect either the quality of the human environment or the conservation of energy resources.

All sea turtles that occur in U.S. waters are listed as either endangered or threatened under the Endangered Species Act of 1973 (ESA). The Kemp's ridley ( Lepidochelys kempii ), leatherback ( Dermochelys coriacea ), and hawksbill ( Eretmochelys imbricata ) turtles are listed as endangered. The loggerhead ( Caretta caretta ) and green ( Chelonia mydas ) turtles are listed as threatened, except for breeding populations of green turtles in Florida and on the Pacific coast of Mexico, which are listed as endangered.

Sea turtles are incidentally taken, and some are killed, as a result of numerous activities, including fishery-related trawling activities in the Gulf of Mexico and along the Atlantic seaboard. Under the ESA and its implementing regulations, the taking of sea turtles is prohibited, with exceptions identified in 50 CFR 223.206(d), or according to the terms and conditions of a biological opinion issued under section 7 of the ESA, or according to an incidental take permit issued under section 10 of the ESA. The incidental taking of turtles during shrimp or summer flounder trawling is exempted from the taking prohibition of section 9 of the ESA if the conservation measures specified in the sea turtle conservation regulations (50 CFR 223) are followed. The regulations require most shrimp trawlers and summer flounder trawlers operating in the southeastern United States (Atlantic area, Gulf area, and summer flounder sea turtle protection area, see 50 CFR 223.206) to have a NMFS-approved TED installed in each net that is rigged for fishing to allow sea turtles to escape. TEDs currently approved by NMFS include single-grid hard TEDs and hooped hard TEDs conforming to a generic description, the flounder TED, and one type of soft TED—the Parker soft TED (see 50 CFR 223.207).

TEDs incorporate an escape opening, usually covered by a webbing flap, which allows sea turtles to escape from trawl nets. To be approved by NMFS, a TED design must be shown to be 97 percent effective in excluding sea turtles during testing based upon specific testing protocols (50 CFR 223.207(e)(1)). Most approved hard TEDs are described in the regulations (50 CFR 223.207(a)) according to generic criteria based upon certain parameters of TED design, configuration, and installation, including height and width dimensions of the TED opening through which the turtles escape.

The regulations governing sea turtle take prohibitions and exemptions provide for the use of limited tow times as an alternative to the use of TEDs for vessels with certain specified characteristics or under certain special circumstances. The provisions of 50 CFR 223.206(d)(3)(ii) specify that the NOAA Assistant Administrator for Fisheries (AA) may authorize compliance with tow time restrictions as an alternative to the TED requirement if the AA determines that the presence of algae, seaweed, debris, or other special environmental conditions in a particular area makes trawling with TED-equipped nets impracticable. The provisions of 50 CFR 223.206(d)(3)(i) specify the maximum tow times that may be used when tow time limits are authorized as an alternative to the use of TEDs. Each tow may be no more than 55 minutes from April 1 through October 31 and no more than 75 minutes from November 1 through March 31, as measured from the time that the trawl doors enter the water until they are removed from the water. These tow time limits are designed to minimize the level of mortality of sea turtles that are captured by trawl nets not equipped with TEDs.

On September 5 and 15, 2008, NMFS received requests from the Louisiana Department of Wildlife and Fisheries (LDWF) and the Mississippi Department of Marine Resources (MDMR), respectively, to allow the use of tow times as an alternative to TEDs in state and Federal waters because of excessive storm-related debris on the fishing grounds as a result of Hurricanes Gustav and Ike. When a TED is clogged with debris, it can no longer catch shrimp effectively nor can it effectively exclude turtles. Phone conversations between NMFS staff, fishermen, and the states' resource agency staffs confirmed there were problems with debris in state and Federal waters off Louisiana (from the Mississippi/Louisiana boundary to the Texas/Louisiana boundary) extending offshore 20 nautical miles, which were likely to affect the effectiveness of TEDs; discussions between NMFS Southeast Region's Protected Resources staff, fishermen, and the states' resource agency staffs, and a survey of Mississippi waters found no significant remaining issues stemming from storm-related debris on the shrimp fishing grounds. Subsequent to these requests, NMFS issued a 30-day exemption to the TED requirements from September 26 through October 26, 2008, for waters off of Louisiana affected by Hurricanes Gustav and Ike (73 FR 57010, October 1, 2008).

On September 29, 2008, the NMFS Southeast Regional Administrator received a request from the Texas Parks and Wildlife Department (TPWD) to allow the use of tow times as an alternative to TEDs in state and federal waters because of excessive storm-related debris on the fishing grounds as a result of Hurricane Ike. Subsequent to this request, NMFS issued a 30-day exemption to the TED requirements from October 8 through November 7, 2008, for waters off of Texas affected by Hurricane Ike (73 FR 60638, October 14, 2008). Specifically, the affected waters encompassed by that exemption extended from the Texas/Louisiana boundary southward to the boundary shared by Matagorda and Brazoria Counties (approximately 95° 32' W. long.), and offshore 20 nautical miles.

On October 20, 2008, NMFS received a request from the LADWF for an additional 30-day period allowing the use of restricted tow times as an alternative to TEDs in inshore and offshore waters because of excessive storm-related debris that was still present on the fishing grounds as a result of Hurricanes Gustav and Ike. Subsequent to this request, NMFS issued a 30-day exemption to the TED requirements from October 29 through November 28, 2008, for waters off of Louisiana affected by Hurricanes Gustav and Ike (73 FR 65277, November 3, 2008). Specifically, the waters affected extend from the western end of Timbalier Island (approximately 90° 33' W. long.) eastward to the Plaquemines/Jefferson Parish line (approximately 89° 54' W. long.), and offshore 15 nautical miles.

On October 31, 2008, the NMFS Southeast Regional Administrator received a request from the TPWD for an additional 30-day period allowing the use of restricted tow times as an alternative to TEDs in inshore and offshore waters because of excessive storm-related debris that is still present on the fishing grounds as a result of Hurricane Ike. Texas has stated that their marine enforcement agents will enforce the tow time restrictions.

Field investigations and interviews conducted by NMFS Gear Technicians and phone conversations between NMFS Southeast Region's Protected Resources staff, fishermen, and state resource agency staff confirm there are problems with debris in state waters off of Texas. Available information indicates the debris field extends offshore 9 nautical miles from the Texas/Louisiana boundary southward to the boundary shared by Matagorda and Brazoria Counties; approximately 95° 32' W. long. Investigations conducted by NMFS indicate some shrimp fishermen continue to use TEDs in these areas as the TED is able to exclude debris from the trawl; however, these investigations also indicated there are still significant amounts of large debris that can and does render TEDs ineffective at releasing turtles. These investigations also indicate that most offshore fishermen are using their TEDs due to the fact the debris offshore is of a nature and size that the TEDs can “shoot” the debris from the trawl.

The AA finds that debris washed into hurricane-affected state waters off of Texas, extending offshore 9 nautical miles from the Texas/Louisiana boundary southward to the boundary shared by Matagorda and Brazoria Counties (approximately 95° 32' W. long.), has created special environmental conditions that make trawling with TED-equipped nets impracticable. Therefore, the AA issues this notification to authorize the use of restricted tow times as an alternative to the use of TEDs in state waters off of Texas extending offshore 9 nautical miles from the Texas/Louisiana boundary southward to the boundary shared by Matagorda and Brazoria Counties (approximately 95° 32' W. long.), for a period of 30 days. Tow times must be limited to no more than 75 minutes, as measured from the time that the trawl doors enter the water until they are removed from the water.

NMFS encourages shrimp trawlers in the affected areas to continue to use TEDs if possible, even though they are authorized under this action to use restricted tow times.

NMFS' gear experts have provided several general operational recommendations to fishermen to maximize the debris exclusion ability of TEDs that may allow some fishermen to continue using TEDs without resorting to restricted tow times. To exclude debris, NMFS recommends the use of hard TEDs made of either solid rod or of hollow pipe that incorporate a bent angle at the escape opening, in a bottom-opening configuration. In addition, the installation angle of a hard TED in the trawl extension is an important performance element in excluding debris from the trawl. High installation angles can trap debris either on or in front of the bars of the TED; NMFS recommends an installation angle of 45E, relative to the normal horizontal flow of water through the trawl, to optimize the TED's ability to exclude turtles and debris. Furthermore, the use of accelerator funnels, which are allowable modifications to hard TEDs, is not recommended in areas with heavy amounts of debris or vegetation. Lastly, the webbing flap that is usually installed to cover the turtle escape opening may be modified to help exclude debris quickly: the webbing flap can either be cut horizontally to shorten it so that it does not overlap the frame of the TED or be slit in a fore-and-aft direction to facilitate the exclusion of debris. The use of the double cover flap TED will also aid in debris exclusion.

All of these recommendations represent legal configurations of TEDs for shrimpers fishing in the affected areas. This action does not authorize any other departure from the TED requirements, including any illegal modifications to TEDs. In particular, if TEDs are installed in trawl nets, they may not be sewn shut.

The authorization provided by this rule applies to all shrimp trawlers that would otherwise be required to use TEDs in accordance with the requirements of 50 CFR 223.206(d)(2) who are operating in hurricane-affected state waters off Texas, extending offshore 9 nautical miles from the Texas/Louisiana boundary southward to the boundary shared by Matagorda and Brazoria Counties (approximately 95° 32' W. long.), for a period of 30 days. Through this temporary rule, shrimp trawlers may choose either restricted tow times or TEDs to comply with the sea turtle conservation regulations, as prescribed above.

The AA, at any time, may withdraw or modify this temporary authorization to use tow time restrictions in lieu of TEDs through publication of a notice in the Federal Register , if necessary to ensure adequate protection of endangered and threatened sea turtles. Under this procedure, the AA may modify the affected area or impose any necessary additional or more stringent measures, including more restrictive tow times, synchronized tow times, or withdrawal of the authorization if the AA determines that the alternative authorized by this rule is not sufficiently protecting turtles or no longer needed. The AA may also terminate this authorization if information from law enforcement, state authorities, or NMFS indicates compliance cannot be monitored effectively. This authorization will expire automatically on December 7, 2008, unless it is explicitly extended through another notification published in the Federal Register .

This action has been determined to be not significant for purposes of Executive Order 12866.

The AA has determined that this action is necessary to respond to an environmental situation to allow more efficient fishing for shrimp, while providing effective protection for endangered and threatened sea turtles pursuant to the ESA and applicable regulations.

Pursuant to 5 U.S.C. 553(b)(B), the AA finds that there is good cause to waive prior notice and opportunity to comment on this rule. The AA finds that unusually high amounts of debris are creating special environmental conditions that make trawling with TED-equipped nets impracticable. Prior notice and opportunity to comment are impracticable and contrary to the public interest in this instance because providing notice and comment would prevent the agency from providing the affected industry relief from the effects of Hurricane Ike in a timely manner, while continuing to provide effective protection for sea turtles.

Many fishermen may be unable to operate under the special environmental conditions created by Hurricane Ike without an alternative to the use of TEDs. Therefore, The AA finds that there is good cause to waive the 30-day delay in effective date pursuant to 5 U.S.C. 553(d)(3) to provide alternatives to comply with the sea turtle regulations in a timely manner. For the reasons above, the AA finds that this temporary rule should not be subject to a 30-day delay in effective date, pursuant to 5 U.S.C. 553(d)(1).

Since prior notice and an opportunity for public comment are not required to be provided for this action by 5 U.S.C. 553, or by any other law, the analytical requirements of 5 U.S.C. 601 et seq. are inapplicable.

NMFS manages the groundfish fishery in the BSAI 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 Pacific cod TAC allocated to catcher processors using hook-and-line gear in the BSAI is 73,844 metric tons (mt) as established by the 2008 and 2009 final harvest specifications for groundfish in the BSAI (73 FR 10160, February 26, 2008). See § 679.20(a)(7)(ii), § 679.20(c)(3)(iii), and § 679.20(c)(5).

In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that the 2008 Pacific cod directed fishing allowance allocated to catcher processors using hook-and-line gear in the BSAI has been reached. Consequently, NMFS is prohibiting directed fishing for Pacific cod by catcher processors using hook-and-line gear in 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 directed fishing for Pacific cod by catcher processors using hook-and-line gear in 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 November 5, 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 section 679.20 and is exempt from review under Executive Order 12866.