The Agency administers the Thrift Savings Plan (TSP), which was established by the Federal Employees' Retirement System Act of 1986 (FERSA), Public Law 99-335, 100 Stat. 514. The TSP provisions of FERSA are codified, as amended, largely at 5 U.S.C. 8351 and 8401-79. The TSP is a tax-deferred retirement savings plan for Federal civilian employees and members of the uniformed services. The TSP is similar to cash or deferred arrangements established for private-sector employees under section 401(k) of the Internal Revenue Code (26 U.S.C. 401(k)).

As authorized by section 466 of the Social Security Act and 5 U.S.C. 8437(e), the Agency entered into a data-sharing agreement with the Department of Health and Human Services, Administration for Children and Families, Federal Office of Child Support Enforcement (OCSE). As a result of this agreement and two recent data matches, the number of child support orders submitted to the Agency has increased significantly. Year-to-date, the Agency has received more than 7,000 child support orders, which is over thirty-six times the amount the Agency processed in total in 2010. This number is nearly certain to increase even further as several states involved in the data match have yet to submit orders corresponding to matched participant accounts.

Further, in 2009, Congress amended the Agency's statute to provide that TSP accounts are subject to enforcement orders issued pursuant to the Mandatory Victims Restitution Act (MVRA). See 5 U.S.C. 8437(e) as well as Public Law 111-31, The Thrift Savings Plan Enhancement Act of 2009. Pursuant to this authority, the Agency and the Department of Justice are working collaboratively to finalize the process by which TSP accounts may be garnished efficiently—consistent with law and regulation. At this point, the Agency does not have statistics as to the number of MVRA orders it may receive, but it is highly likely that the Agency will receive a significant number of backlogged MVRA orders.

Currently, 5 CFR 1653.5(a)(2) provides that payments of child support orders and similar orders (like MVRA) are generally made 60 days after the date of the TSP decision letter determining the parties' rights in the account. This 60 day period is intended to permit the payee sufficient time to consider decisions about tax withholding, payment by EFT, and transfer options. Though a participant may request an expedited payment, the earliest an expedited payment can be made is 31 days after the date of the TSP decision letter. Given that the Agency is currently processing more than 7,000 child support orders, a 31 to 60 day window for processing child support orders is unduly burdensome, expensive, and inequitable. Indeed, a 31 to 60 day window will likely backlog the Agency's processing of child support orders, thereby increasing the costs of administering the TSP. In addition, a 31 to 60 day window will prevent the Agency from timely processing all child support orders. Consequently, similarly situated child support orders ( i.e., orders received by the Agency on the same day) may be treated differently: While some orders may be timely processed, others orders will not be processed for more than 60 days and, as a result, not all participants' accounts will receive equal treatment.

Thus, in order to promote efficiency and equity, the Agency amends its regulations to provide that payments of child support orders and similar orders (like MVRA) are generally payable within 30 days of the date of the TSP decision letter.

Further, the Agency is amending 5 CFR 1653.5(e) to provide that the Agency will withhold Federal income tax from payments for child support orders and similar orders in accordance with Internal Revenue Code section 3405(b) (which provides for 10 percent withholding unless the taxpayer elects no withholding). Paragraph (e) will also provide that a participant cannot elect zero withholding on such payments. Allowing a participant to elect zero withholding would delay the Agency's processing of these payments, thereby causing inefficiency and inequity. Moreover, it is unlikely that a participant would request zero withholding from payments not received by the participant because withholding on such payments is in a participant's best interest. That is, since the participant will be taxed on the full amount of the payment, it is in the participant's interest that 10 percent of the payment be directed toward satisfying the participant's tax liability.

The Agency considers these amendments to be procedural in character. As a result, no notice and comment period is required by the Administrative Procedure Act (APA). See 5 U.S.C. 553(b)(A). However, if any part of these amendments is held to be substantive in character, the Agency has “good cause,” within the meaning of 5 U.S.C. 553(b)(B), to promulgate the amendments without a notice and comment period. Specifically, it would be impracticable for the Agency to comply with the APA's notice and comment period—and hence the Agency has “good cause”—because doing so would preclude the Agency from executing its statutory duties and carrying out its mission. See 5 U.S.C. 553(b).

Pursuant to statute, the Agency's Executive Director and the members of the Board must act “solely in the interest of the [TSP's] participants and beneficiaries” and for the exclusive purpose of providing benefits to participants and their beneficiaries and “defraying reasonable expenses of administering the [TSP].” 5 U.S.C. 8477(b)(1). Currently, the Agency effectively faces an emergency situation by virtue of the fact that it is trying to process more than 7,000 child support orders. If the Agency processes these orders in accordance with the 31 to 60-day time period prescribed in the current version of 5 CFR 1653.5, then the TSP will incur significant administrative expenses. However, these administrative expenses can be greatly defrayed if the Agency amends 5 CFR 1653.5 to reduce processing time to 30 days. Consequently, any meaningful delay in amending 5 CFR 1653.5 could cause the Agency to incur unreasonably large administrative expenses. Thus, the Agency's compliance with the notice and comment period would be impracticable. As a result, no notice and comment period is required. See 5 U.S.C. 553(b).

I certify that this regulation will not have a significant economic impact on a substantial number of small entities. This regulation will affect Federal employees and members of the uniformed services who participate in the Thrift Savings Plan. It will also affect their legal dependents.

I certify that these regulations do not require additional reporting under the criteria of the Paperwork Reduction Act.

Pursuant to the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 602, 632, 653, 1501-1571, the effects of this regulation on state, local, and Tribal governments and the private sector have been assessed. This regulation will not compel the expenditure in any one year of $100 million or more by state, local, and Tribal governments, in the aggregate, or by the private sector. Therefore, a statement under section 1532 is not required.

Pursuant to 5 U.S.C. 810(a)(1)(A), the Agency submitted 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 before publication of this rule in the Federal Register . This rule is not a major rule as defined at 5 U.S.C. 814(2).

For the reasons stated in the preamble, the Agency amends 5 CFR part 1653 as follows:

On July 10, 2010, the NCUA Board (Board) issued a Notice of Proposed Rulemaking (proposal or proposed rule) to implement section 206(t)  1 of the Federal Credit Union Act (FCU Act), 12 U.S.C. 1786(t), by adding a new part 750 to NCUA's regulations. 75 FR 47236 (August 5, 2010).

The proposed rule would have prohibited, in certain circumstances, an FICU from making golden parachute and indemnification payments to an IAP. The purpose of the proposal, which tracked closely to existing regulations applying to banks, 2 was to safeguard the NCUSIF by preventing the wrongful or improper disposition of FICU assets and to inhibit rewards to IAPs who may have contributed to an FICU's troubled condition or, in the case of indemnification, are the subject of certain types of administrative enforcement actions brought by the regulator. It was also intended to provide FICUs with greater clarity on the distinction between legitimate employee severance payments and improper golden parachute payments.

The public comment period for the proposed rule ended on September 7, 2010. NCUA received comments from eighteen commenters, including two national credit union trade organizations, a national association representing state credit union regulators, seven state credit union leagues, two credit unions, three attorneys or law firms, two credit union service providers (employee compensation/benefits providers), and one individual credit union volunteer. The majority of commenters were generally supportive of the rule, but all disagreed with some aspect of the proposal or offered suggestions on one or more aspects of the proposed rule. Six commenters, however, opposed the proposed rule in full. All of these commenters opposed the rule because they disagreed with the proposed indemnification provisions. One commenter supported the golden parachute provisions but opposed the indemnification provisions. Virtually all commenters who were opposed to the indemnification provisions expressed concern that the proposed provisions would be a deterrent to credit union service and would have a negative impact on the ability of FICUs to attract and maintain qualified volunteers and management personnel. NCUA has carefully reviewed and analyzed the comment letters it received in response to the proposal.

The final rule applies to all FICUs, including natural person and corporate credit unions. NCUA previously issued a final rule to implement section 206(t) for corporate credit unions on September 24, 2010, as part of a comprehensive rule amending part 704, NCUA's rule governing corporate credit unions. 75 FR 64786 (October 20, 2010); see also 74 FR 65210 (Dec. 9, 2009) (publication of the proposed rule). Those provisions, which currently apply only to corporates, are substantially identical to the provisions contained in this final rule. Accordingly, to avoid duplicative sections on the same subject, the Board has determined to delete the indemnification and golden parachute provisions (codified at 12 CFR § 704.20) from the corporate rule. This rulemaking, which applies to corporate as well as natural person credit unions, consolidates the provisions into a single rule.

The final rule prohibits, with some exceptions, FICUs that are insolvent, in conservatorship, rated composite CAMEL or CRIS 4 or 5, subject to a proceeding to terminate or suspend share insurance, undercapitalized (corporates only) or in an otherwise troubled condition  3 from making golden parachute payments. Golden parachutes are defined in the rule as payments made to an IAP that are contingent on the termination of that person's employment and received when the credit union making the payment is troubled. 4

The Board recognizes, however, that certain post-employment payments have reasonable business purposes. Accordingly, the final rule includes several “exceptions” to the general prohibition against golden parachutes to allow FICUs to offer, consistent with normal business practice, “bona fide” deferred compensation plans and “nondiscriminatory” severance pay plans. The rule also includes an exception to permit a troubled FICU, with NCUA's prior approval, to hire and agree to pay a golden parachute to competent management to assist in bringing a troubled credit union back to financial health. Additionally, the final rule permits limited golden parachute payments, with prior NCUA approval, in circumstances involving the merger of a troubled FICU and contains a general exception provision to allow an FICU to seek NCUA approval to pay an otherwise prohibited golden parachute.

The final rule prohibits FICUs, regardless of their financial condition, from paying or reimbursing an IAP's legal or other professional expenses incurred in an administrative or civil action instituted by NCUA or the appropriate state regulatory authority where the IAP is assessed a civil money penalty, removed from office or is required to cease and desist from an action or take an affirmative action described in section 206 of the FCU Act. 12 U.S.C. 1786. Federal credit unions may indemnify their officials and current and former employees in accordance with 701.33(c) of the NCUA regulations, 12 CFR 701.33(c). That section sets forth authority and restrictions on an FCU providing indemnification of officials and employees “for expenses reasonably incurred in connection with any judicial or administrative proceedings to which they are or may become parties by reason of their performance of their official duties.” 12 CFR 701.33(c)(1). Federally insured, state-chartered credit unions look to state law for their general indemnification authority. This part 750 contains restrictions on the ability of all FICUs to provide indemnification payments to credit union officials, but the restrictions apply only in the limited circumstances described in the rule, i.e., in the context of an administrative enforcement action brought by NCUA or the appropriate state regulatory authority. This part would, accordingly, take precedence in that specific instance over broader, generally applicable provisions of § 701.33 or of state law and regulation.

The final rule does permit FICUs to purchase reasonable commercial insurance policies or fidelity bonds. The final rule also allows for partial indemnification in circumstances in which there is a formal and final adjudication or finding in a settlement that the IAP has not violated certain laws or regulations or has not engaged in certain unsafe or unsound practices or breaches of fiduciary duty. In these instances, indemnification would be permitted for only that portion of the legal or professional expenses attributable to the charges for which there has been a finding in favor of the IAP.

FICUs may also advance funds to pay reasonable legal fees and other professional expenses (excluding judgments and penalties) for an IAP's defense of an administrative action under certain circumstances. Specifically, the final rule permits an FICU to advance reasonable legal expenses to an IAP directly if its board of directors, in good faith, makes certain specific findings and the IAP provides a written affirmation and agrees in writing to reimburse the FICU if the administrative action ultimately results in a final order against the IAP.

The Board does not intend for the provisions in the rule restricting golden parachute payments to have a retroactive application. Accordingly, the final rule applies to all new employment contracts or arrangements entered into on or after the rule's effective date, as well as to existing contracts or arrangements that are renewed or materially modified in any way on or after the final rule's effective date. The Board adopts a similar construction for indemnification obligations that are specifically addressed in an employment contract. However, to the extent that an FICU's indemnification provisions are reflected in a general policy statement or a bylaw provision with general applicability, the Board takes the view that, following the effective date of the final rule, the policy or bylaw must be interpreted so as to give effect to the rule's prohibitions.

With respect to the golden parachute provisions, the final rule does not apply to contracts already in existence on the rule's effective date that contain reasonable provisions relating to the entitlement of an IAP to a payment that falls within the definition of a golden parachute. Thus, existing employment contracts that were legal when made and negotiated at arm's length will not be affected by the rule. The Board expects FICUs will, at the first opportunity, such as at renewal, renegotiate existing employment contracts to bring them into compliance with the rule. Moreover, on or after the effective date of the final rule, its restrictions are applicable, even in the case of an FICU in a healthy condition that enters into a contract or arrangement for payment of a golden parachute to an IAP. Should that FICU subsequently fall into a troubled condition, the provisions in the rule would apply to the contract and would govern whether or not the payment called for in the contract could be made.

A detailed analysis and summary of the specific comments pertaining to the final rule's key provisions follows.

Section 750.1 contains definitions applicable to this part. The key definitions are discussed below.

This definition, which appears in the final rule as § 750.1(c), will permit FICUs to continue to provide deferred compensation plans, including supplemental retirement benefits and nonqualified deferred compensation plans, consistent with normal business practices.

Two commenters suggested that language dealing with this subject (§ 750.1(d)(3)(iii) in the proposed rule) should be clarified. These commenters noted that, while typically nonqualified deferred compensation plans vest if the participant remains employed to a specific date, benefits also vest if, prior to the specified vesting date, the participant dies or becomes disabled; in some plans, involuntary termination without cause may also result in vesting. As proposed, § 750.1(d)(3)(iii) required the IAP to have a vested right “at the time of termination of employment” to payments under the deferred compensation plan. Narrowly interpreted, commenters felt this language could be ambiguous with regard to circumstances where a participant vests in the benefit upon death, disability or involuntary termination without cause. Their concern was whether such an occurrence might trigger the restrictions pertaining to golden parachutes.

The Board agrees that this language should not be interpreted to exclude or limit an IAP who vests by death, disability, or, where applicable, involuntary termination without cause, and notes that proposed § 750.1(f)(2)(iii) specifically excluded “any payment made pursuant to a bona fide deferred compensation plan or arrangement” from the definition of “golden parachute payment.” As such, a payment to an IAP who vests in a nonqualified deferred compensation plan by virtue of the provisions in that plan is not a golden parachute payment for the purposes of this rule. Accordingly, the definition for “bona fide deferred compensation plan or arrangement” is adopted in final as proposed. As a technical amendment, the final rule redesignates § 750.1(d) as § 750.1(c).

Proposed § 750.1(f) defined a “golden parachute payment” as any payment (or agreement to make any payment) to an IAP that is contingent on the termination of that party's employment and received when the FICU making the payment is insolvent, in conservatorship, rated CAMEL 4 or 5, undercapitalized (for corporates), subject to a proceeding to terminate or suspend its share insurance, or in an otherwise troubled condition, as defined in § 701.14(b)(3) and (4).

The proposed golden parachute definition provided exceptions for certain qualified pension or retirement plans under section 401 of the Internal Revenue Code (IRC); employee benefit plans that are permissible under § 701.19; bona fide deferred compensation plans; certain death and disability payments; certain “nondiscriminatory” severance plans; payments required by state law; and payments that the Board has determined permissible under § 750.4. These types of payments would not be considered golden parachute payments for purposes of the rule. The Board adopts § 750.1(f) substantially as proposed, with the exception of a revision pertaining to § 457 plans, as described in more detail below. For purposes of clarification, the Board has also revised the definition of “Benefit Plan” so it is now clear that, to the extent such a plan also exhibits characteristics of a deferred compensation or severance plan, it must meet the more specific requirements ( i.e., “bona fide” and “nondiscriminatory,” respectively) in the rule that apply before payments under such plans will be permissible. Additionally, the Board has added where applicable references to Corporate Risk Information System (CRIS) ratings, which are the corporate credit union counterpart to CAMEL ratings. Finally, as a technical amendment, § 750.1(f) has been redesignated as § 750.1(e) in the final rule.

One commenter believed each of the triggering events enumerated in proposed § 750.1(f)(1)(ii) is unique and FICUs that are either insolvent, undercapitalized, in conservatorship, rated CAMEL or CRIS 4 or 5, subject to a proceeding to terminate or suspend its share insurance or in an otherwise troubled condition should not be treated in the same manner for the purposes of the rule. Another commenter believed the phrase “troubled condition” was vague.

The Board notes that the triggering events in proposed § 750.1(f)(1)(ii) are statutorily defined in the FCU Act, except for the “undercapitalized” standard, which is applicable only to corporates. See 12 U.S.C. 1786(t)(4)(A)(ii). Moreover, while each is a unique condition, the Board believes each triggering event poses a risk sufficient to warrant safeguards to prevent the improper disposition of FICU assets. The Board also notes that the term “troubled condition” is already defined in § 701.14 of NCUA's regulations, which generally requires newly chartered and troubled credit unions to notify NCUA of any change in official. See 12 CFR 701.14(b)(3) and (4). Section 750.1(e)(1)(ii)(C) of the final rule contains a cross-reference to § 701.14; there is no new definition of “troubled condition” created in this rule. The definition of “troubled credit unions” set forth in § 701.14(b)(3) and (4) is not vague: It includes CAMEL and CRIS ratings of 4 and 5 for natural person and corporate credit unions, respectively, as well as credit unions receiving assistance under sections 208 or 216 of the FCU Act. 12 U.S.C. 1788, 1790d.

At least two commenters suggested “457 deferred compensation plans” (457 Plans) should be specifically excluded from the definition of “golden parachute payment”. Deferred compensation plans described in section 457 of the IRC are available for certain state and local governments and tax-exempt organizations under IRC 501(c), including Federal credit unions (tax-exempt under IRC 501(c)(1)) and state chartered credit unions (tax-exempt under IRC 501(c)(14)). These 457 Plans, which can be eligible plans under IRC 457(b) or ineligible plans under IRC 457(f), allow employees of sponsoring organizations to defer income into future years, for retirement purposes, thereby reducing current year income taxes.

The Board agrees 457 Plans should be excluded from the golden parachute definition. The definition is intended to permit FICUs to offer reasonable deferred compensation plans that are typical in executive compensation packages for credit union executives. The Board recognizes that credit unions, as tax-exempt organizations, are not able to offer equity-based incentive compensation. Deferred compensation plans, including 457 Plans, are an important tool for credit unions to attract executive talent in a competitive market. Accordingly, the final rule specifically excludes 457 Plans from the definition of “golden parachute payment” in § 750.1(e)(2)(i).

Another commenter asked for clarification that the golden parachute definition is not intended to extend to collateral assignment, split dollar employee benefit plans (CASD Plans).

The Board notes § 750.1(f)(2)(ii) of the proposed rule excluded from the definition of “golden parachute payment” employee benefit plans that are permissible under § 701.19. NCUA's Office of General Counsel has previously stated FCUs may purchase split dollar life insurance for the purpose of funding employee benefit plan obligations under § 701.19. OGC Op. 05-0117 (January 13, 2005); see also OGC Op. 06-0924 (January 19, 2007). Split dollar life insurance arrangements can be structured in a number of ways, including an arrangement known as a CASD Plan. In general, under this arrangement, an employee owns the insurance policy, while the credit union pays the premiums. The arrangement is structured as a loan from the credit union to the employee, with the loan secured by the employee's assignment of an interest in the policy. To the extent CASD Plans are consistent with § 701.19, these arrangements are excluded from the golden parachute definition under § 750.1(e)(2)(ii) in the final rule.

Section 750.1(i) of the proposed rule defined “nondiscriminatory” as it relates to severance pay plans or arrangements. Under the proposal, only “nondiscriminatory” severance pay plans or arrangements would qualify as an exception to the prohibition on golden parachute payments. To meet the definition of nondiscriminatory under the final rule, a severance pay plan must apply to all employees of an FICU who meet reasonable and customary eligibility requirements applicable to all employees. Disparities in benefits are only acceptable if based on objective criteria like salary, total compensation, length of service, job grade or classification (with a variance in severance benefits relating to any criterion of plus or minus ten percent). Any group of employees that is designated for a different level of benefits based on objective criteria must consist of not less than 33 percent of all employees.

One commenter suggested a greater variance in severance benefits should be permitted and that the size of employee groups designated for a different level of benefits should be capped.

The Board recognizes that severance plans providing somewhat more generous benefits to higher ranking IAPs are typical in the industry but believes the permitted 10 percent variance and required 33 percent group size are appropriate to meet this objective. The Board believes the final rule strikes a reasonable balance to allow FICUs to provide, if appropriate, severance plans with a modest variance in benefits while ensuring that such disparities are based on objective criteria to avoid unwarranted rewards to IAPs. The Board adopts § 750.1(i) as proposed.

Under proposed § 750.1(k), a “prohibited indemnification payment” would be defined as any payment or agreement to make any payment by an FICU to an IAP to pay or reimburse such person for any civil money penalty, judgment, or other liability or legal expense resulting from any administrative or civil action by NCUA or the appropriate state regulatory authority. The rule becomes operative if the IAP is, in fact, assessed a civil money penalty, removed from office or required to cease and desist from or take any affirmative action with respect to the credit union. The definition would not include any reasonable payment to purchase commercial insurance policies or fidelity bonds, provided the policy or bond is not used to pay or reimburse an IAP for the amount of a civil money penalty or judgment assessed against the IAP. The proposed definition would also allow partial indemnification in certain circumstances. The Board adopts § 750.1(k) as proposed.

Several commenters suggested that if an IAP is found not to have violated the law or breached his or her fiduciary duty, full indemnification, as opposed to partial indemnification, should be permitted.

If an IAP is charged with a violation of law and a breach of fiduciary duty and is ultimately absolved of all charges, then the IAP will receive full indemnification in such circumstance. The Board interprets these commenters to be suggesting that, if an IAP is found not to have violated the law or breached his or her fiduciary duty but, at the same time, the IAP is found to have engaged in unsafe or unsound practices, the IAP should nevertheless be fully indemnified. The Board disagrees. Permitting full indemnification of an IAP, including legal or professional expenses attributable to charges for which the IAP has been found liable, would be contrary to the spirit and intent of section 206(t) of the FCU Act. Partial indemnification is an appropriate compromise in circumstances where an IAP is ultimately absolved of some, but not all, charges. Accordingly, the final rule permits payments representing a partial indemnification for legal or professional expenses specifically attributable to charges for which there has been a formal and final adjudication or finding in connection with a settlement that the IAP has not violated certain laws or regulations or has not engaged in certain unsafe or unsound practices or breaches of fiduciary duty. Partial indemnification is not permitted, however, in cases where there is a final prohibition order against the IAP.

One commenter asked for clarification on whether payment by the FICU of the amount of the deductible under an insurance policy would be permissible. The permissibility of a particular deductible payment would depend on the individual policy or bond and the nature of the insurance claim. Under the final rule, proceeds from an insurance policy or bond must not be used to pay or reimburse an IAP for the cost of a civil money penalty or judgment assessed against that IAP. In the same vein, a FICU may not pay any deductible amount to the extent that it would apply to any penalty or judgment against an IAP. However, a FICU may pay a deductible amount that is applied toward legal costs attributable to charges for which the IAP is ultimately found not liable.

Eight commenters provided specific comments on the provision prohibiting golden parachute payments, proposed in § 750.2. Most of the comments were not opposed to the rule but offered suggestions for improvement.

Several commenters expressed concern that the rule penalizes IAPs regardless of their culpability and suggested golden parachute payments should be permissible to IAPs who were not responsible for causing or contributing to the FICU's troubled condition.

The Board emphasizes that the final rule does not create a blanket prohibition on golden parachute payments. The final rule contains several exceptions to avoid unfairly prohibiting payments to individuals who were not responsible for causing or contributing to the FICU's troubled condition. As discussed in more detail below, a FICU may obtain approval to make or agree to make a golden parachute payment under certain circumstances. Where an IAP is not responsible for causing or contributing to the FICU's troubled condition, an FICU may seek approval from NCUA to pay a golden parachute payment to the IAP under the general exception in § 750.4(a)(1).

Section 750.4 of the proposal included three major exceptions to the general prohibition on golden parachute payments. The exceptions would permit, in certain circumstances, payments that would otherwise satisfy the definition of a prohibited golden parachute payment.

First, the proposal included a general exception to permit golden parachute payments where the Board, with written concurrence of the appropriate state supervisory authority in the case of a state chartered credit union or corporate credit union, determines such a payment is permissible.

Second, the proposal included an exception to allow an FICU in a troubled condition to agree to pay a golden parachute payment in order to hire new management to help bring a troubled FICU back to sound financial health. This exception was intended to ensure an FICU can attract qualified senior management with appropriate expertise to help improve a troubled FICU's financial condition. An FICU would be required to notify and obtain the written permission of the Board, and, if applicable, the concurrence of the state supervisory authority, before employing this exception to commit to or make a golden parachute payment.

Third, the proposed rule included an exception to allow FICUs to offer reasonable severance plan payments in the context of a merger involving a troubled credit union. The merger must be unassisted, that is, without assistance from, and at no cost to, NCUA or the National Credit Union Share Insurance Fund. Reasonable severance arrangements related to an unassisted merger must not exceed twelve months' salary. Additionally, under the proposal, an FICU would be required to obtain the written consent of the Board before making the severance payment.

In applying to the Board for any of the three exceptions discussed above, the FICU would be required to demonstrate that the IAP does not bear any responsibility for the troubled condition of the FICU. Specifically, under the proposal, an FICU must demonstrate that it does not possess, and is not aware of, any information providing a reasonable basis to believe that the IAP:

• Has committed any fraudulent act or omission, breach of trust or fiduciary duty, or insider abuse;

• Is substantially responsible for the insolvency of, the appointment of a conservator or liquidating agent for, or the troubled condition of the FICU; or

• Has violated or conspired to violate any applicable Federal or state law or regulation or certain specified criminal provisions of the United States Code.

Under the proposal, the Board would consider the following factors in determining whether to permit a golden parachute payment:

• Whether, and to what degree, the IAP was in a position of managerial or fiduciary responsibility;

• The length of time the IAP was affiliated with the FICU, and the degree to which the proposed payment represents a reasonable payment for services rendered over the period of employment; and

• Any other factors or circumstances which would indicate that the proposed payment would be contrary to the intent of section 206(t) of the FCU Act.

One commenter stated that, in the case of unassisted mergers, severance package decisions should be left to the surviving credit union's management to decide. This commenter also suggested severance packages of 24 months' pay should be permitted under the rule to more accurately reflect common industry standards.

The Board is not convinced a modification to the proposed exception for severance payments made in connection with unassisted mergers is necessary. While the Board believes it is important to provide an exception for circumstances involving payments made in connection with an unassisted merger involving a troubled credit union, reasonable limits need to be placed on such payments. In the Board's opinion, 12 months' pay is an appropriate severance payment in the event of an unassisted merger.

None of the comment letters specifically addressed the other proposed exceptions. As such, the Board adopts § 750.4, substantially as proposed, in the final rule. Minor technical modifications have been made, however, to provide that requests for permission to make a golden parachute payment under § 750.4 must be submitted to “NCUA” rather than “the Board.” Additionally, more detailed filing instructions, further discussed below, are provided in § 750.6 of the final rule to clarify the approval process, including provisions governing the right to appeal an initial adverse decision to the Board.

The Board also emphasizes that some of the general concerns expressed by commenters about the golden parachute provisions should be alleviated by the exceptions available in § 750.4, particularly the general exception in § 750.4(a)(1).

The most prevalent concerns raised by commenters were with regard to the indemnification provisions in the proposed rule. The majority of commenters were either opposed to or concerned about the proposed indemnification provisions. Six commenters opposed the proposed rule in full due to the indemnification provisions. Another eight commenters either opposed one or more aspects of the proposed indemnification provisions, expressed concern with some aspect of the provisions, or offered suggestions on how the rule could be improved or clarified. Four commenters did not provide any comments on the indemnification provisions.

Of the commenters providing specific comment on the proposed indemnification provisions, most expressed concern that the rule would make it difficult, if not impossible, to provide any indemnification to credit union volunteers, thus deterring qualified and experienced individuals from credit union service. Credit union board members serve without pay, on a voluntary basis. Several commenters noted the unique nature of voluntary credit union service, and expressed concern that individuals will be unwilling to serve as board members if they perceive their personal net worth to be at risk because the FICU cannot offer them protection against the potential of personal financial exposure.

The Board does not agree with these commenters. While recognizing that credit unions' voluntary governance structure presents unique recruitment and retention challenges, the scope of the rule is very limited. The indemnification limitations apply only to administrative actions brought by NCUA or appropriate state regulator. Such actions are not only rare, but most often take the form of either a removal action or an action to prohibit an individual from serving on behalf of an insured depository institution in the future. These actions do not typically threaten the individual credit union official with significant exposure to personal liability. Moreover, the Board emphasizes that the rule does not create a blanket prohibition on indemnification payments. Under certain conditions, which are described in more detail below, an FICU may make indemnification available to an IAP unless or until the administrative proceeding or civil action results in civil money penalties, removal or prohibition, or an order against the IAP to cease and desist from or take any affirmative action with respect to the credit union.

Several commenters argued the proposed indemnification provisions may interfere with an IAP's right to counsel. One commenter argued that if IAPs must advance their own legal expenses, they will obtain the most affordable representation, as opposed to the best available representation, in their defense of an administrative action. One commenter suggested that, in prohibiting the advancement of legal expenses, the rule would incentivize IAPs to agree to fines or admit liability in an administrative action to avoid advancing their own personal funds to absolve themselves of the charges brought against them. On the other hand, another commenter stated the rule would be a disincentive to settlement since indemnification payments are prohibited where the settlement provisions are adverse for the IAP. One commenter also suggested NCUA would effectively be depriving IAPs the right of judicial review because indemnification is unavailable following an adverse outcome in an administrative action.

The Board disagrees with these commenters. First, the Board does not agree with the contention that a reasonable limitation on indemnification where an IAP is subject to an adverse final order in an administrative action, such as that proposed, interferes with an IAP's due process rights or is otherwise contrary to public policy. While IAPs may have to use their own funds to pay for or reimburse legal expenses in their defense of an administrative action, IAPs maintain their fundamental right to counsel. Similarly, IAPs maintain their right of judicial review even if indemnification is prohibited. The proposed rule's limitations on indemnification would not disturb an IAP's right to appeal a final administrative order to the U.S. Court of Appeals; furthermore, if the appellate court reversed an administrative order, then the IAP would again be entitled to indemnification. Second, under the proposal an FICU can advance reasonable legal expenses to IAPs directly to assist in defending themselves against administrative actions. While proposed § 750.1(k) defined “prohibited indemnification payment” as any payment for the benefit of an IAP to pay or reimburse such person for, among other things, “any legal expense” resulting from an administrative action, this statement was qualified with the language: “that results in a final order or settlement [against the IAP]”. Thus, under the proposal, an indemnification payment would not be prohibited unless and until the administrative action resulted in a final order or settlement pursuant to which the IAP is assessed or agrees to a civil money penalty, removal from office, prohibition from participating in the conduct of the affairs of an insured credit union, or cease and desist from or take an affirmative action described in section 206 of the FCU Act. 12 U.S.C. 1786.

Proposed § 750.5 then described the circumstance when an indemnification payment would be permissible; specifically, where the FICU's board of directors makes a good faith determination, after due investigation, that:

• The IAP acted in good faith and in a manner he or she believed to be in the best interests of the FICU;

• The payment will not materially adversely affect the FICU's safety and soundness;

• The payments do not ultimately become prohibited indemnification payments as defined in § 750.1(k), that is, the administrative action does not ultimately result in a civil money penalty, removal order, or cease and desist order against the IAP; and

• The IAP agrees in writing to reimburse the FICU, to the extent not covered by payments from insurance, for “that portion of the advanced indemnification payments, if any, which subsequently becomes a prohibited indemnification payment.” (Emphasis added).

Read together, the proposed provisions would allow for reasonable indemnification payments and the advancement of legal expenses to assist IAPs in their defense of administrative actions under certain conditions. To alleviate commenters' concerns, however, the Board has elected to make several modifications in § 750.5 of the final rule to clarify the circumstances under which indemnification will be permissible. These modifications are discussed more fully below.

Several commenters suggested changes or clarifications with regard to proposed § 750.5. As discussed above, a number of commenters expressed concern that the proposal would not permit the advancement of legal funds, essentially depriving an IAP of the right to counsel and otherwise eroding principles of due process.

Additionally, several commenters opposed the requirement that a FICU's board of directors make a “good faith determination” that an indemnification payment will not ultimately become prohibited. These commenters characterized the requirement as overly subjective, insofar as it involves, in their view, the interpretation of law and facts and places an unrealistic expectation on the FICU board to predict the outcome of an administrative action. Thus, according to these commenters, the determination should not reasonably be required to be made by a FICU board. Some commenters expressed concern that NCUA could second guess the credit union's good faith decision to indemnify an IAP and noted there are no safeguards to preclude NCUA from disagreeing with a board's good faith determination and blocking the indemnification payment. One commenter also disagreed with proposed § 750.5(a)(4), which would require an IAP to agree to reimburse the FICU, to the extent not covered by payments from insurance and bonds, for that portion of the advanced indemnification payments for which the IAP has ultimately been found liable. This commenter argued that such a requirement would essentially render futile the mitigating purpose of the exception.

To both alleviate concerns regarding the advancement of legal expenses and to provide clarification about the “good faith determination” requirement, the Board is modifying § 750.5(a) of the final rule. Under the final rule, an FICU may make or agree to make reasonable indemnification payments to an IAP, including advancing funds to pay or reimburse reasonable legal fees and other professional expenses incurred by an IAP in an administrative proceeding or civil action initiated by NCUA or a state regulatory authority. The decision to approve payment of such funds requires the FICU's board of directors to make a good faith determination, after due consideration, that:

• The IAP acted in good faith and in a manner he or she believed to be consistent with his or her fiduciary duty;  5 and

• The payment will not materially adversely affect the FICU's safety and soundness.

The Board has also determined to clarify that the FICU board of directors' determination as to whether or not an advance is appropriate should take into consideration the ability of the affected IAP to repay the advance if required. This would include, for example, a review of the affected individual's financial circumstances, including whether or not he or she has collateral that might be pledged to secure the repayment obligation. Accordingly, the rule text includes this element as part of the board's due consideration.

The IAP will be required to provide:

• A written affirmation of his or her good faith belief that the IAP acted in manner he or she believed to be consistent with his or her fiduciary duty; and

• A written agreement to reimburse the FICU, to the extent not covered by payments from liability insurance or surety bond, for that portion of the advanced indemnification payment which ultimately becomes a prohibited indemnification payment as defined in § 750.1(k).

An indemnification payment can ultimately become a prohibited indemnification payment because of the entry of a final order or settlement pursuant to which the IAP is assessed a civil money penalty, subject to a prohibition or removal order, or required to cease and desist from or take any affirmative action described in section 206 of the FCU Act. If such a final order or settlement is the result, then the IAP must reimburse the FICU for all legal and professional fees advanced. Moreover, the FICU must not, under any circumstance, agree to reimburse any civil money penalty actually entered against the IAP.

The Board believes the final rule is clear in describing how an FICU may provide for the advancement of legal and other professional expenses in appropriate circumstances. The modifications also provide greater clarification about the conditions under which indemnification payments will be permitted under § 750.5. Further, the added requirement that an IAP provide a written affirmation of a good faith belief that he or she acted in a manner believed to be in the best interests of the members will assist the FICU's board in conducting its own due diligence investigation and determination that the “good faith” standard has been met.

The Board believes the new provisions in § 750.5 are consistent with the spirit and intent of § 206(t) of the FCU Act and effectively balance the interest in allowing for the protection of volunteer officials while preventing the improper use of FICU funds to unjustly reward IAPs who are not deserving of indemnification.

Additionally, as discussed above, for purposes of clarification the final rule makes a generic reference to an IAP's fiduciary duty, rather than referring specifically to a duty to serve the “best interests of the institution.” This avoids inconsistency with the NCUA's recent rule outlining the fiduciary duties and responsibilities of Federal credit union directors, ( See, 12 CFR 701.4), while recognizing that applicable standards governing conduct and duties of IAPs of state chartered institutions are established by state law. See footnote 5.

Section 750.6 of the final rule is revised to provide greater detail about the procedures for submitting written requests to make excess nondiscriminatory severance plan payments pursuant to § 750.1(e)(2)(v) and golden parachute payments permitted by § 750.4. The final rule clarifies that, in the case of a Federal or state chartered natural person credit union, such written requests must be submitted to the NCUA regional director for the region in which the credit union is located. In the case of a Federal or state chartered corporate credit union, such written requests must be submitted to the Director of the Office of Corporate Credit Unions. Additionally, the final rule clarifies that, in the case of a state chartered natural person or corporate credit union, where written concurrence by the state supervisory authority is required, the requesting party must submit a copy of its written request to the state supervisory authority where the credit union is located.

The Board has also determined, on its own, to add provisions to this section of the rule outlining a process by which a requester may appeal an adverse decision to the Board. The provisions, at new subsection (b), include time frames and procedural considerations and are modeled on the provisions found elsewhere in NCUA's regulations governing the appeal of creditor and share insurance claims. See 12 CFR 709, 745, 747.

The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a rule may have on a substantial number of small entities (primarily those under ten million dollars in assets). This rule does not impose any regulatory burden but prohibits improper golden parachute and indemnification payments to IAPs by FICUs in certain circumstances. Accordingly, it will not have a significant economic impact on a substantial number of small credit unions, and therefore, no regulatory flexibility analysis is required.

The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in which an agency by rule creates a new paperwork burden on regulated entities or modifies an existing burden. 44 U.S.C. 3507(d). For purposes of the PRA, a paperwork burden may take the form of a either a reporting or a recordkeeping requirement, both referred to as information collections. Part 750 will impose new information collection requirements. Specifically, § 750.6 will require requests for an FICU to make nondiscriminatory severance plan payments under § 750.1(e)(2)(v) and golden parachute payments permitted by § 750.4 to be submitted in writing to NCUA.

In FY 2009, there were 351 problem FICUs with CAMEL 4 or 5 ratings. Of those, 156 FICUs had less than $10 million in total assets and 117 FICUs had between $10 million and $100 million in total assets. As of year-end 2010, there were 365 CAMEL 4 and 5 FICUs. Of those, 163 had less than $10 million in assets and 130 had total assets between $10 million and $100 million. Smaller FICUs are unlikely to seek NCUA approval to make golden parachute payments because these payments are more typically seen in the executive compensation of larger, more complex FICUs. Of the remaining larger, problem FICUs, NCUA anticipates no more than 20 percent would seek NCUA approval to make a golden parachute payment. Accordingly, NCUA estimates that 15 FICUs will need to solicit NCUA approval in advance of making a severance or golden parachute payment within the scope of the proposed rule and that preparing the request for approval may take four hours: 15 FICUs × 4 hours = 60 hours.

As required by the PRA, NCUA has submitted a copy of this final regulation to the Office of Management and Budget (OMB) for its review and approval.

NCUA has determined that this rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 (1998).

The Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) (SBREFA) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the APA. 5 U.S.C. 551. NCUA does not believe this final rule is a “major rule” within the meaning of the relevant sections of SBREFA. NCUA has submitted the rule to the Office of Management and Budget for its determination in that regard.

For the reasons discussed above, NCUA amends 12 CFR parts 704 and 741, and adds part 750 of title 12, chapter VII, of the Code of Federal Regulations as follows:

A. Background

Section 740.5 of NCUA's regulations requires each insured credit union to include NCUA's official advertising statement in all of its advertisements, including on its main Internet page. 12 CFR 740.5(a). The official advertising statement is in substance as follows: “This credit union is federally insured by the National Credit Union Administration.” Insured credit unions, at their option, may use the short title “Federally insured by NCUA” or a reproduction of NCUA's official sign, as depicted in § 740.4(b), as the official advertising statement. 12 CFR 740.4(b); 12 CFR 740.5(b).

The official advertising statement must be in a size and print that is clearly legible. 12 CFR 740.5(b). If the official sign is used as the official advertising statement, an insured credit union may alter the font size to ensure its legibility as provided in § 740.4(b)(2). 12 CFR 740.4(b)(2); 12 CFR 740.5(b).

As noted in the current rule, however, a number of advertisements need not include the official advertising statement. 1 Among those currently exempted advertisements are radio and television advertisements that do not exceed 30 seconds in time. In December 2010, the NCUA Board proposed to rescind these exemptions. 75 FR 82323 (December 30, 2010). In that proposal, NCUA stated that it believes it is important for consumers of those kinds of advertisements to know that the share accounts in the advertising credit union are Federally insured by NCUA. The NCUA Board also stated in the proposal that it believes the benefits to consumers and credit unions of rescinding these exemptions, namely, enhanced consumer confidence and NCUA name recognition, far outweigh the minor inconvenience associated with requiring the inclusion of the official advertising statement.

With respect to print advertisements, the NCUA Board proposed to clarify the requirement that the official advertising statement must be in a size and print that is clearly legible. 12 CFR 740.5(b). NCUA's regulations do not dictate a specific font size be used for the official advertising statement, and NCUA stated it continues to believe this makes sense considering advertisements can range from small magazine advertisements to very large billboard advertisements. The NCUA Board proposed to require, however, that in any particular advertisement, in addition to legibility, the font size for the official advertising statement may be no smaller than the smallest font size used in other portions of the advertisement intended to convey information to the consumer. 75 FR 82323 (December 30, 2010).

Also, the NCUA Board stated in the proposal that it believes an insured credit union's annual report and other statements of condition required to be published by law are significant and a form of advertisement and must include the official advertising statement in a prominent position. Accordingly, the NCUA Board proposed to amend § 740.5 in this regard. Id.

In summary, the proposal rescinded three exemptions from the general rule requiring the use of the official advertising statement. Those three included radio and television advertisements that do not exceed 30 seconds in time and annual reports and other statements of condition required to be published by law. All other exemptions in § 740.5(c) remain in place.

Finally, the NCUA Board sought to clarify the advertising statement rule by proposing a definition of the term “advertisement” which had previously never been defined. Id. The proposed definition is consistent with that used by the Federal Deposit Insurance Corporation in its official advertising statement rule. 12 CFR part 328.

NCUA received only fourteen comments on the proposal. One commenter fully supported the proposal in its entirety. Thirteen commenters opposed some portion of it. The aspect of the proposal commenters expressed the most concern about is rescinding the exemption from using the official advertising statement for radio and television advertisements that do not exceed 30 seconds. Many commenters noted that radio advertisements are their most cost effective form of advertising and are often 10 seconds or less in duration. Commenters stated that requiring the use of the official advertising statement in such short advertisements would detract from their effectiveness or increase their cost. One commenter added this would also apply to short television advertisements. A number of commenters noted the added expense could cause some credit unions to reduce the number of advertisements they place.

NCUA is sensitive to the needs of credit unions to have access to affordable advertising outlets that effectively broadcast their messages. Accordingly, based on the comments, NCUA is amending the proposed requirement for using the official advertising statement with respect to radio and television advertisements. Specifically, NCUA will require the use of the official advertising statement for all radio and television advertisements 15 seconds in length or longer. In other words, all radio and television advertisements less than 15 seconds in duration are exempt from the requirement to use the official advertising statement. This adjustment, adopted in the final rule, exempts those advertisements commenters consider their most cost effective while still enhancing consumer confidence and NCUA name recognition.

Some commenters stated that if the radio and television advertisement aspect of the proposal is adopted, then NCUA should grandfather advertisements already made. Other commenters more generally asked for an extended compliance date if any aspect of the proposal is adopted. To accommodate these requests, although the effective date of the rule will be 30 days after publication in the Federal Register , the mandatory compliance date for this final rule is January 1, 2012. This should suffice to minimize any expense or operational disruptions related to the final rule.

A few commenters opposed having to include the official advertising statement on annual reports and statements of condition as they do not believe these documents are advertisements. Some of these commenters also asked for guidance from NCUA as to where they should place the official advertising statement on these documents. NCUA believes it is appropriate and minimally intrusive to include the statement in these documents. The statement must be legible and placed in a prominent position on the front cover of the document or on the first page readers see if there is no cover page.

With respect to the size requirement proposal for print advertisements, one commenter supported it, and six commenters opposed it stating it would complicate the current standard, reduce the effectiveness of print advertisements, or result in some credit unions placing fewer print ads. NCUA believes the proposed standard is fair, reasonable, and minimally intrusive so as not to confuse consumers or detract from the effectiveness of print ads. NCUA adopts it in the final rule.

Some commenters expressed concern about the proposed definition of the term “advertisement” as too broad. The proposed definition is the same as the current definition of “advertisement” used by the Federal Deposit Insurance Corporation in its official advertising statement rule. 12 CFR part 328. NCUA believes the proposed definition is reasonable and not too broad, and NCUA adopts it in this final rule.

The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a regulation may have on a substantial number of small credit unions (those under $10 million in assets). The amendments enhance consumer confidence and do not impose a burden on credit unions. Accordingly, the NCUA has determined and certifies that this rule will not have a significant economic impact on a substantial number of small credit unions within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601-612.

The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996, Public Law 104-121, provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the Administrative Procedures Act. 5 U.S.C. 551. The Office of Information and Regulatory Affairs, an office within the Office of Management and Budget, has reviewed this rule and determined that, for purposes of SBREFA, this is not a major rule.

This rule does not contain a “collection of information” within the meaning of section 3502(3) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3502(3)) and would not increase paperwork requirements under the Paperwork Reduction Act of 1995 or regulations of the Office of Management and Budget.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. This rule would not have substantial direct effect on the states, on the connection between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined that this rule does not constitute a policy that has federalism implications for purposes of the executive order.

NCUA has determined that this rule would not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 (1998).

For the reasons discussed above, the NCUA Board amends 12 CFR part 740 as follows:

On November 4, 2005, The Boeing Company, P.O. Box 3707, Seattle, WA 98124, applied for an amendment to Type Certificate Number A20WE to include the new Model 747-8 passenger airplane and the new Model 747-8F freighter airplane. The Model 747-8 and the Model 747-8F are derivatives of the 747-400 and the 747-400F, respectively. Both the Model 747-8 and the Model 747-8F are four-engine jet transport airplanes that will have a maximum takeoff weight of 970,000 pounds and new General Electric GEnx -2B67 engines. The Model 747-8 will have two flight crew and the capacity to carry 605 passengers. The Model 747-8F will have two flight crew and a zero passenger capacity, although Boeing has submitted a petition for exemption to allow the carriage of supernumeraries.

These special conditions were originally issued July 29, 2009, and published in the Federal Register on August 12, 2009 (74 FR 40479).

Under the provisions of Title 14, Code of Federal Regulations (14 CFR) 21.101, Boeing must show that Model 747-8 and 747-8F airplanes (hereafter referred as 747-8/-8F) meet the applicable provisions of part 25, as amended by Amendments 25-1 through 25-117, except for earlier amendments as agreed upon by the FAA. These regulations will be incorporated into Type Certificate No. A20WE after type certification approval of the 747-8/-8F.

In addition, the certification basis includes other regulations, special conditions and exemptions that are not relevant to these proposed special conditions. Type Certificate No. A20WE will be updated to include a complete description of the certification basis for these model airplanes.

If the Administrator finds that the applicable airworthiness regulations ( i.e., 14 CFR part 25) do not contain adequate or appropriate safety standards for the 747-8/-8F because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same or similar novel or unusual design feature, or should any other model already included on the same type certificate be modified to incorporate the same or similar novel or unusual design feature, the special conditions would also apply to the other model under § 21.101.

In addition to the applicable airworthiness regulations and special conditions, the 747-8/-8F must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise certification requirements of 14 CFR part 36.

Special conditions, as defined in § 11.19, are issued under § 11.38, and become part of the type certification basis under § 21.101.

The Boeing Model 747-8/8F is equipped with systems that affect the airplane's structural performance, either directly or as a result of failure or malfunction. That is, the airplane's systems affect how it responds in maneuver and gust conditions, and thereby affect its structural capability. These systems may also affect the aeroelastic stability of the airplane. Such systems represent a novel and unusual feature when compared to the technology envisioned in the current airworthiness standards. A special condition is needed to require consideration of the effects of systems on the structural capability and aeroelastic stability of the airplane, both in the normal and in the failed state.

The Boeing 747-8F airplane exhibits an aeroelastic mode of oscillation that is self-excited and does not completely damp out after an external disturbance. The sustained oscillation (also known as a limit cycle oscillation or limit cycle flutter) is caused by an unstable aeroelastic mode that is prevented from becoming a divergent oscillation due to one or more nonlinearities that exist in the airplane.

While the sustained oscillation is not divergent, the FAA considers it to be an aeroelastic instability. Boeing has proposed the addition of an Outboard Aileron Modal Suppression (OAMS) system to the fly-by-wire (FBW) flight control system to reduce, but not eliminate, the amplitude of the sustained oscillation and control the aeroelastic instability.

Section 25.629 requires the airplane to be free of any aeroelastic instability, including flutter. It also requires the airplane to remain flutter free after certain failures. The regulations do not anticipate the use of systems that control flutter modes but do not completely suppress them. The use of the OAMS system is a novel and unusual design feature that the airworthiness standards do not adequately address. The FAA believes such systems can be used to ensure that limit cycle (non-divergent) flutter is kept to safe levels. Therefore, the FAA proposes a special condition that addresses this particular sustained oscillation characteristic and provides the necessary standards that permit the use of such active flutter control systems.

Notice of proposed special conditions No. 25-11-09-SC for Boeing 747-8/-8F airplanes was published in the Federal Register on March 16, 2011 (76 FR 14341). The standards in Section A were modified to incorporate the reference to Section C and remove “flutter control systems” from the applicability. Section B was already adopted in Special Conditions 25-388-SC and was included for reference. Comments were invited on the amended Section A and the proposed text of Section C, Outboard Aileron Modal Suppression System. Several comments were received from one commenter.

The commenter, Leth and Associates, LLC, expressed reservations with the philosophy of controlling an aeroelastic instability (flutter) with an active control system under the current rules and regulations, specifically § 25.629. The commenter's position is that a safety issue is being solved by introducing more risk with the addition of an active suppression system. The commenter also expressed concern that the acceptance of this remedy to a design problem will encourage manufacturers to use a similar approach in solving potentially more onerous design flaws in the future. The commenter acknowledged that active flutter suppression systems may be introduced in advanced designs of the future, and stated that it is incumbent on the regulatory authorities to introduce regulations that clearly address the safety requirement of such systems. The commenter recommended that until these amended rules are in place to address aeroservoelastic systems, it is ill advised to accept ad hoc solutions to safety issues by adding more risk. The commenter further recommended that until such time as the rules have been changed, flutter prevention should rely on true and tested methods, using passive means of stabilization. The commenter did not offer any specific changes to the special conditions. However, the commenter suggested issues that should be addressed during future rulemaking.

Although the FAA agrees with many of the statements and sentiments expressed by the commenter, we believe that the special conditions and the agreed upon means of compliance between the FAA and the applicant, adequately address the commenter's concerns. The FAA does not agree that the acceptance of the use of the OAMS system and the type of sustained oscillation exhibited by the Boeing Model 747-8F need wait until new general rulemaking is completed. Special conditions are a form of rulemaking and are issued when the existing applicable airworthiness standards do not contain adequate or appropriate safety standards because of novel or unusual design features of the product to be type certificated. The phrase “novel or unusual” applies to design features of the product to be certificated when compared to the applicable airworthiness standards. This allows the FAA to make adjustments for individual type certificate projects by developing special conditions where novel or unusual design features are present.

The special conditions addressing the OAMS system and the existence of the limit cycle flutter mode were formulated based on the characteristics observed during flight testing of the 747-8F and Boeing's proposed solution to the problem. The FAA is requiring that the type of sustained oscillation covered by the special conditions must not be a hazard to the airplane nor its occupants with the active system inoperative or failed. This is assured by compliance with the requirements in the special condition.

The FAA is taking a conservative approach to the introduction of active flutter suppression systems on transport category airplanes. At this point in time, the FAA is not prepared to certify active flutter suppression systems that control divergent flutter modes, or limit cycle flutter modes that do not meet the requirements of Section C, paragraphs 2.(a) and 2.(c), of these special conditions with the active system inoperative or failed.

No changes were made as a result of these comments and the special conditions are adopted as proposed.

As discussed above, these special conditions are applicable to Boeing Model 747-8/-8F airplanes. Should Boeing apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design features, these special conditions would apply to that model as well under the provisions of § 21.101.

This action affects only certain novel or unusual design features of the Boeing Model 747-8/-8F airplanes. It is not a rule of general applicability.

The authority citation for this Special Condition is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following amendment to Special Conditions 25-388-SC is issued as part of the type certification basis for the 747-8/-8F airplanes.

The Boeing Model 747-8/8F airplanes are equipped with automatic control systems that affect the airplane's structural performance, either directly or as a result of a failure or malfunction. The influence of these systems and their failure conditions must be taken into account when showing compliance with the requirements of Subparts C and D of part 25. Except as provided in Section C of these special conditions, the following criteria must be used for showing compliance with these special conditions for airplanes equipped with flight control systems, autopilots, stability augmentation systems, load alleviation systems, fuel management systems, and other systems that either directly or as a result of failure or malfunction affect structural performance. If these special conditions are used for other systems, it may be necessary to adapt the criteria to the specific system.

1. The criteria defined here only address the direct structural consequences of the system responses and performances and cannot be considered in isolation; however, they should be included in the overall safety evaluation of the airplane. These criteria may in some instances duplicate standards already established for this evaluation. These criteria are only applicable to structural elements whose failure could prevent continued safe flight and landing. Specific criteria that define acceptable limits on handling characteristics or stability requirements when operating in the system degraded or inoperative mode are not provided in these special conditions.

2. Depending on the specific characteristics of the airplane, additional studies may be required that go beyond the criteria provided in these special conditions in order to demonstrate the capability of the airplane to meet other realistic conditions such as alternative gust or maneuver descriptions for an airplane equipped with a load alleviation system.

3. The following definitions are applicable to these special conditions.

(a) Structural performance: Capability of the airplane to meet the structural requirements of part 25.

(b) Flight limitations: Limitations that can be applied to the airplane flight conditions following an in-flight occurrence and that are included in the airplane flight manual (AFM) ( e.g., speed limitations, avoidance of severe weather conditions).

(c) Operational limitations: Limitations, including flight limitations that can be applied to the airplane operating conditions before dispatch ( e.g., fuel, payload and Master Minimum Equipment List (MMEL) limitations).

(d) Probabilistic terms: The probabilistic terms (probable, improbable, extremely improbable) used in these special conditions are the same as those used in § 25.1309.

(e) Failure condition: The term failure condition is the same as that used in § 25.1309, however these special conditions apply only to system failure conditions that affect the structural performance of the airplane ( e.g., system failure conditions that induce loads, change the response of the airplane to inputs such as gusts or pilot actions, or lower flutter margins). The system failure condition includes consequential or cascading effects resulting from the first failure.

1. General. The following criteria will be used in determining the influence of a system and its failure conditions on the airplane structural elements.

2. System fully operative. With the system fully operative, the following apply:

(a) Limit loads must be derived in all normal operating configurations of the system from all the limit conditions specified in subpart C (or used in lieu of those specified in subpart C), taking into account any special behavior of such a system or associated functions or any effect on the structural performance of the airplane that may occur up to the limit loads. In particular, any significant nonlinearity (rate of displacement of control surface, thresholds or any other system nonlinearities) must be accounted for in a realistic or conservative way when deriving limit loads from limit conditions.

(b) The airplane must meet the strength requirements of part 25 ( i.e., static strength, residual strength), using the specified factors to derive ultimate loads from the limit loads defined above. The effect of nonlinearities must be investigated beyond limit conditions to ensure the behavior of the system presents no anomaly compared to the behavior below limit conditions. However, conditions beyond limit conditions need not be considered when it can be shown that the airplane has design features that will not allow it to exceed those limit conditions.

(c) The airplane must meet the aeroelastic stability requirements of § 25.629.

3. System in the failure condition. For any system failure condition not shown to be extremely improbable, the following apply:

(a) At the time of occurrence, starting from 1-g level flight conditions, a realistic scenario including pilot corrective actions, must be established to determine the loads occurring at the time of failure and immediately after failure.

(1) For static strength substantiation, these loads multiplied by an appropriate factor of safety that is related to the probability of occurrence of the failure are ultimate loads to be considered for design. The factor of safety (F.S.) is defined in Figure 1.

(2) For residual strength substantiation, the airplane must be able to withstand two thirds of the ultimate loads defined in subparagraph 3(a)(1). For pressurized cabins, these loads must be combined with the normal operating differential pressure.

(3) Freedom from aeroelastic instability must be shown up to the speeds defined in § 25.629(b)(2). For failure conditions that result in speeds beyond V C /M C , freedom from aeroelastic instability must be shown to increased speeds, so that the margins intended by § 25.629(b)(2) are maintained.

(4) Failures of the system that result in forced structural vibrations (oscillatory failures) must not produce loads that could result in detrimental deformation of the affected structural elements.

(b) For continuation of flight, for an airplane in the system failed state and considering any appropriate reconfiguration and flight limitations, the following apply:

(1) The loads derived from the following conditions (or used in lieu of the following conditions) at speeds up to V C /M C , or the speed limitation prescribed for the remainder of the flight, must be determined:

(i) The limit symmetrical maneuvering conditions specified in § 25.331 and in § 25.345.

(ii) The limit gust and turbulence conditions specified in § 25.341 and in § 25.345.

(iii) The limit rolling conditions specified in § 25.349 and the limit unsymmetrical conditions specified in §§ 25.367 and 25.427(b) and (c).

(iv) The limit yaw maneuvering conditions specified in § 25.351.

(v) the limit ground loading conditions specified in §§ 25.473, 25.491 and 25.493.

(2) For static strength substantiation, each part of the structure must be able to withstand the loads in paragraph (3)(b)(1) of the special condition multiplied by a factor of safety depending on the probability of being in this failure state. The factor of safety is defined in Figure 2.

(3) For residual strength substantiation, the airplane must be able to withstand two thirds of the ultimate loads defined in paragraph (3)(b)(1) of the special condition. For pressurized cabins, these loads must be combined with the normal operating differential pressure.

(4) If the loads induced by the failure condition have a significant effect on fatigue or damage tolerance then their effects must be taken into account.

(5) Freedom from aeroelastic instability must be shown up to a speed determined from Figure 3. Flutter clearance speeds V′ and V″ may be based on the speed limitation specified for the remainder of the flight using the margins defined by § 25.629(b).

(6) Freedom from aeroelastic instability must also be shown up to V′ in Figure 3 above, for any probable system failure condition combined with any damage required or selected for investigation by § 25.571(b).

(c) Consideration of certain failure conditions may be required by other sections of part 25 regardless of calculated system reliability. Where analysis shows the probability of these failure conditions to be less than 10 −9 , criteria other than those specified in this paragraph may be used for structural substantiation to show continued safe flight and landing.

4. Failure indications. For system failure detection and indication, the following apply:

(a) The system must be checked for failure conditions, not extremely improbable, that degrade the structural capability below the level required by part 25 or significantly reduce the reliability of the remaining system. As far as reasonably practicable, the flight crew must be made aware of these failures before flight. Certain elements of the control system, such as mechanical and hydraulic components, may use special periodic inspections, and electronic components may use daily checks, in lieu of detection and indication systems to achieve the objective of this requirement. These Certification Maintenance Requirements (CMRs) must be limited to components that are not readily detectable by normal detection and indication systems and where service history shows that inspections will provide an adequate level of safety.

(b) The existence of any failure condition, not extremely improbable, during flight that could significantly affect the structural capability of the airplane and for which the associated reduction in airworthiness can be minimized by suitable flight limitations, must be signaled to the flight crew. For example, failure conditions that result in a factor of safety between the airplane strength and the loads of subpart C below 1.25, or flutter margins below V″, must be signaled to the crew during flight.

5. Dispatch with known failure conditions. If the airplane is to be dispatched in a known system failure condition that affects structural performance, or affects the reliability of the remaining system to maintain structural performance, then the provisions of these special conditions must be met, including the provisions of paragraph 2 for the dispatched condition, and paragraph 3 for subsequent failures. Expected operational limitations may be taken into account in establishing Pj as the probability of failure occurrence for determining the safety margin in Figure 1. Flight limitations and expected operational limitations may be taken into account in establishing Qj as the combined probability of being in the dispatched failure condition and the subsequent failure condition for the safety margins in Figures 2 and 3. These limitations must be such that the probability of being in this combined failure state and then subsequently encountering limit load conditions is extremely improbable. No reduction in these safety margins is allowed if the subsequent system failure rate is greater than 10 −3 per hour.

1. In general, these special conditions apply to fly-by-wire active flutter suppression systems that are intended to operate on a certain type of aeroelastic instability. This type of instability is characterized by a low frequency, self-excited, sustained oscillation of an aeroelastic vibration mode that is shown to be a stable limit cycle oscillation (LCO), with the system operative and inoperative. (An LCO is considered “stable” if it maintains the same frequency and amplitude for a given excitation input and flight condition.) In addition, the type of sustained oscillation covered by these special conditions must not be a hazard to the airplane nor its occupants with the active system failed. These systems must be shown to reduce the amplitude of the sustained oscillation to acceptable levels and effectively control the aeroelastic instability. Specifically, the following criteria address the existence of such a sustained oscillation on the Boeing Model 747-8/-8F airplanes and the Outboard Aileron Modal Suppression (OAMS) system that will be used to control it.

2. In lieu of the requirements contained in § 25.629, the existence of a sustained, or limit cycle, oscillation that is controlled by an active flight control system is acceptable, provided that the following requirements are met:

(a) OAMS System Inoperative: The sustained, or limit cycle, oscillation must be shown by test and analysis to be stable throughout the nominal aeroelastic stability envelope specified in § 25.629(b)(1) with the OAMS system inoperative. This should include the consideration of disturbances above the sustained amplitude of oscillation.

(b) Nominal Conditions:

(1) With the OAMS system operative it must be shown that the airplane remains safe, stable, and controllable throughout the nominal aeroelastic stability envelope specified in § 25.629(b)(1) by providing adequate suppression of the aeroelastic modes being controlled. All applicable airworthiness and environmental requirements should continue to be complied with. Additionally, loads imposed on the airplane due to any amplitude of oscillation must be shown to have a negligible impact on structure and systems, including wear, fatigue and damage tolerance. The OAMS system must function properly in all environments that may be encountered.

(2) The applicant must establish by test and analysis that the OAMS system can be relied upon to control and limit the sustained amplitude of the oscillation to acceptable levels (per § 25.251) and control the stability of the aeroelastic mode. This should include the consideration of disturbances above the sustained amplitude of oscillation; maneuvering flight, icing conditions; manufacturing variations; Master Minimum Equipment List (MMEL) items; spare engine carriage; engine removed or inoperative ferry flights; and wear, repairs, and modifications throughout the service life of the airplane by:

(i) Analysis to the nominal aeroelastic stability envelope specified in § 25.629(b)(1), and

(ii) Flight flutter test to the V DF /M DF boundary. These tests must demonstrate that the airplane has a proper margin of damping for disturbances above the sustained amplitude of oscillation at all speeds up to V DF /M DF , and that there is no large and rapid reduction in damping as V DF /M DF is approached.

(iii) The structural modes must have adequate stability margins for any OAMS flight control system feedback loop at speeds up to the fail-safe aeroelastic stability envelope specified in § 25.629(b)(2).

(c) Failures, Malfunctions, and Adverse Conditions:

(1) For the OAMS system operative and failed, for any failure, or combination of failures not shown to be extremely improbable, and addressed by §§ 25.629(d), 25.571, 25.631, 25.671, 25.672, 25.901(c) or 25.1309 that results in LCO, it must be established by test or analysis up to the aeroelastic stability envelope specified in § 25.629(b)(2) that the LCO:

(i) Is stable and decays to an acceptable limited amplitude once an external perturbing force is removed;

(ii) Does not result in loads that would cause static, dynamic, or fatigue failure of structure during the expected exposure period;

(iii) Does not result in repeated loads that would cause an additional failure due to wear during the expected exposure period that precludes safe flight and landing;

(iv) Has, if necessary, sufficient indication of OAMS failure(s) and crew procedures to properly address the failure(s);

(v) Does not result in a vibration condition on the flight deck that is severe enough to interfere with control of the airplane, ability of the crew to read the flight instruments, perform vital functions like reading and accomplishing checklist procedures, or to cause excessive fatigue to the crew;

(vi) Does not result in adverse effects on the flight control system or on airplane stability, controllability, or handling characteristics (including airplane-pilot coupling (APC) per § 25.143) that would prevent safe flight and landing; and

(vii) does not interfere with the flight crew's ability to correctly distinguish vibration from buffeting associated with the recognition of stalls or high speed buffet.

(2) The applicant must show that particular risks such as engine failure, uncontained engine, or APU rotor burst, or other failures not shown to be extremely improbable, will not adversely or significantly change the aeroelastic stability characteristics of the airplane.

(3) No MMEL dispatch is allowed with the OAMS system inoperative.

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 October 5, 2010 (75 FR 61361). 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 comments received.

One commenter, Rolls-Royce plc asked us to use a different statement for Rolls-Royce contact information in paragraph (i) of the proposed AD. Rolls-Royce is concerned that responses to requests for information will be delayed if the statement is not clear on how to request information on service bulletins.

We partially agree. Paragraph (i) is now paragraph (j) of this AD, and we have changed paragraph (j) of the AD to supply the relevant contact information.

Two commenters, Continental Airlines and The Boeing Company support the proposed AD as written.

Three commenters, FedEx, American Airlines, and Rolls-Royce plc asked us to change the definition of a shop visit to the definition in the Rolls-Royce Alert Service Bulletin (ASB) RB.211-72-AG272,”at every engine refurbishment and at every 04 and 05 Module Level 3 (Refurbishment) or Level 4 (Overhaul) shop visit.” The commenters believed that the proposed AD definition of a shop visit is too conservative and will result in unnecessarily increased costs without a significant improvement in safety.

We partially agree. We agree that the current definition in the proposed AD is too broad because inspecting the LP turbine disks every time an unrelated major flange is separated is not required. We disagree with using the definition in the service bulletin because the service bulletin definition is not sufficient for our needs. We changed paragraph (f) of the proposed AD to “For the purpose of this AD, an “engine shop visit” is the induction of an engine into the shop for maintenance involving the separation of the intermediate-pressure/low-pressure (IP/LP) turbine module from the engine, separation of the IP turbine case from the combustion outer case, or separation of the LP turbine case from the IP turbine case, except that the separation of engine flanges solely for the purposes of transportation without subsequent engine maintenance does not constitute an engine shop visit.”

One commenter, American Airlines, asked us to clarify the compliance time in paragraph (e)(1) of the proposed AD to state that for engines currently in the shop on the effective date of the AD, the initial inspection is to be carried out if the affected parts are exposed and rebuild has not yet started. The commenter believed that the proposed AD is unclear as to whether engines which have begun their shop visits prior to the effective date of the AD are required to undergo the initial inspection before re-introduction into service.

We agree. Engines currently in the shop at piece part exposure or in a condition prior to, must comply with the AD before any approval for return to service. Engines built up beyond this point will not require compliance with the AD until the next piece part exposure. Engines that are in the shop and have been approved for return to service are considered not to be in the shop. We changed paragraph (f) of the proposed AD to clarify a shop visit.

One commenter, American Airlines, asked us to change the initial inspection requirements in paragraph (e)(1) of the proposed AD to specify “paragraphs 3.C through 3.E.” in ASB RR.211-72-AG272, instead of “Section 3.” The commenter believed that only Section 3.C. through 3.E. address the unsafe condition.

We partially agree. The ASB we reference in paragraph (e)(1) of the proposed AD is not incorporated by reference, so requiring operators to follow specific paragraphs in the ASB is unnecessary. We agree, however, that including the reference may induce confusion. We deleted the reference from the proposed AD.

One commenter, American Airlines, asked us to change the Costs of Compliance Section of the proposed AD. American Airlines stated the number of 90 products installed on U.S. registered airplanes and the number of work-hours for performing the inspections are incorrect. American Airlines stated that they operate more RB211-535 engines than the number listed in the proposed AD. American Airlines also stated that ASB RB.211-72-AG272 lists the total hour for accomplishing the required actions as 70 work-hours. American Airlines requests that the AD reflect the work-hours required as 70 work-hours if limited to refurbishment shop visits. If non-refurbishment shop visits are included, American Airlines estimates the average work-hours at 1,300 hours per shop visit.

We partially agree. As of July 9, 2010, 588 installed engines were on U.S. registered airplanes. We changed the Costs of Compliance Section from “90 products of U.S. registry” to “588 products of U.S. registry.” We also changed the “cost of the AD on U.S. operators” from $229,500 to $1,499,400.

We don't agree with the request to change the time to comply if performed during non-refurbishment shop visits. We base the number of hours in the cost estimate on performing the inspection during the next shop visit as defined in this AD. We made no change to the AD.

We reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting the AD with the changes described previously. We determined that these changes will not increase the scope of the AD.

Based on the service information, we estimate that this AD would affect about 588 products installed on airplanes of U.S. registry. We also estimate that it would take about 30 work-hours per product to comply with this AD. The average labor rate is $85 per work-hour. Required parts would cost about $0 per product. Based on these figures, we estimate the cost of the AD on U.S. operators to be $1,499,400.

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 this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (phone (800) 647-5527) is provided in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

History

On March 21, 2011, the FAA published in the Federal Register a notice of proposed rulemaking to amend controlled airspace at Palmdale, CA (76 FR 15231). Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class D and Class E Airspace designations are published in paragraph 5000, 6004 and 6005, respectively, of FAA Order 7400.9U dated August 18, 2010, and effective September 15, 2010, which is incorporated by reference in 14 CFR part 71.1. The Class D Airspace and the Class E Airspace designations listed in this document will be published subsequently in that Order. Except for editorial changes, this rule is the same as published in the notice of proposed rulemaking March 21, 2011.

This action amends Title 14 Code of Federal Regulations (14 CFR) part 71 by modifying Class D Airspace, Class E Airspace designated as an extension to a Class D surface area, and Class E Airspace extending upward from 700 feet above the surface, at Palmdale Regional Airport/USAF Plant 42, Palmdale, CA, to accommodate IFR aircraft using the ILS LOC standard instrument approach procedures at the airport. This action is necessary for the safety and management of IFR operations. This action also corrects the airport name from Palmdale Production Flight/Test Installation Air Force Plant Number 42 Airport, to Palmdale Regional Airport/USAF Plant 42.

The FAA has determined this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this regulation: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified this rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the U.S. Code. Subtitle 1, section 106 discusses the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in subtitle VII, part A, subpart I, section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes additional controlled airspace at Palmdale Regional Airport/USAF Plant 42, Palmdale, CA.

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

On November 16, 2010, the FAA published in the Federal Register a notice of proposed rulemaking to amend Class E surface airspace at Brunswick, GA (75 FR 69905) Docket No. FAA-2010-0949. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received. Class E airspace designated as surface areas are published in Paragraph 6002 of FAA Order 7400.9U dated August 18, 2010, and effective September 15, 2010, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.

This amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 amends Class E surface airspace to support new SIAPs developed at Malcolm-McKinnon Airport, Brunswick, GA. Airspace reconfiguration is necessary due to the decommissioning of the McKinnon NDB and cancellation of the NDB approach, and for continued safety and management of IFR operations at the airport. This action also updates the geographic coordinates of the airport to coincide with the FAA's aeronautical database, and reference to the Glenco Jetport is removed from the airspace designation as the Jetport is listed separately in the Order.

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

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

This rulemaking is promulgated under the authority described in subtitle VII, part A, subpart I, section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends Class E airspace at Brunswick, GA.

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

On March 18, 2011, the FAA published in the Federal Register a notice of proposed rulemaking to amend Class E airspace 700 feet above the surface, at Kenbridge, VA (75 FR 14823) Docket No. FAA-2011-0160. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received. Class E airspace designations are published in paragraph 6005 of FAA Order 7400.9U dated August 18, 2010, and effective September 15, 2010, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.

This amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 amends Class E airspace extending upward from 700 feet above the surface to support new standard instrument approach procedures developed at Lunenburg County Airport, Kenbridge, VA. This will enhance the safety and management of IFR operations at the airport.

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

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

This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes Class E airspace at Lunenburg County Airport, Kenbridge, VA.

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

This rule amends Title 14 of the Code of Federal Regulations, Part 97 (14 CFR part 97), by establishing, amending, suspending, or revoking SIAPS, Takeoff Minimums and/or ODPS. The complete regulators description of each SIAP and its associated Takeoff Minimums or ODP for an identified airport is listed on FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR 97.20. The applicable FAA Forms are FAA Forms 8260-3, 8260-4, 8260-5, 8260-15A, and 8260-15B when required by an entry on 8260-15A.

The large number of SIAPs, Takeoff Minimums and ODPs, in addition to their complex nature and the need for a special format make publication in the Federal Register expensive and impractical. Furthermore, airmen do not use the regulatory text of the SIAPs, Takeoff Minimums or ODPs, but instead refer to their depiction on charts printed by publishers of aeronautical materials. The advantages of incorporation by reference are realized and publication of the complete description of each SIAP, Takeoff Minimums and ODP listed on FAA forms is unnecessary. This amendment provides the affected CFR sections and specifies the types of SIAPs and the effective dates of the, associated Takeoff Minimums and ODPs. This amendment also identifies the airport and its location, the procedure, and the amendment number.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as contained in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for some SIAP and Takeoff Minimums and ODP amendments may require making them effective in less than 30 days. For the remaining SIAPS and Takeoff Minimums and ODPS, an effective date at least 30 days after publication is provided.

Further, the SIAPs and Takeoff Minimums and ODPS contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPS and Takeoff Minimums and ODPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedures before adopting these SIAPS, Takeoff Minimums and ODPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making some SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule ” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26,1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or revoking Standard Instrument Approach Procedures and/or Takeoff Minimums and/or Obstacle Departure Procedures effective at 0902 UTC on the dates specified, as follows:

This rule amends Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (FDC)/Permanent Notice to Airmen (P-NOTAM), and is incorporated by reference in the amendment under 5 U.S.C. 552(a), 1 CFR part 51, and § 97.20 of Title 14 of the Code of Federal Regulations.

The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained in FAA form documents is unnecessary. This amendment provides the affected CFR sections and specifies the types of SIAP and the corresponding effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP as modified by FDC/P-NOTAMs.

The SIAPs, as modified by FDC P-NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these changes to SIAPs, the TERPS criteria were applied only to specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for all these SIAP amendments requires making them effective in less than 30 days.

Because of the close and immediate relationship between these SIAPs and safety in air commerce, I find that notice and public procedure before adopting these SIAPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making these SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal regulations, Part 97, 14 CFR part 97, is amended by amending Standard Instrument Approach Procedures, effective at 0901 UTC on the dates specified, as follows:

Section 47 of Title 26 of the United States Code (the Internal Revenue Code), formerly Section 48(g), authorizes tax credits for qualified expenditures of funds for “certified rehabilitation” of “certified historic structures.” This section of the Internal Revenue Code designates the Secretary of the Interior as the authority for review of applications for certifications to verify: (a) That buildings undergoing rehabilitation are “certified historic structures,” and (b) that the rehabilitation preserves the overall historic character of the buildings, and therefore is a “certified rehabilitation.”

These approvals take the form of notifications or “certifications” by the Secretary of the Interior to the Secretary of the Treasury. In addition, section 170(h) of the Internal Revenue Code allows a Federal income tax deduction for the donation of interests in qualified real property for conservation purposes.

Section 170(h) also designates the Secretary of the Interior as the authority who receives applications and issues certifications verifying to the Secretary of the Treasury that the building or buildings contribute to the significance of a historic district.

The final rule removes outdated references to the Internal Revenue Code, and deletes references to the regional offices and substitutes the NPS Washington office in their place. The final rule also lifts the prohibition on appeals from the denial of preliminary certification for rehabilitation of a property that is not a certified historic structure. The final rule also removes the certification fee schedule from the regulation, and incorporates an explanation of the method by which we will determine the kind and amount of review fees to be charged in the future. Until a revised means of determining fees is decided upon, approved, and published, the 1984 fee schedule will remain in effect. The changes are technical rather than substantive in nature.

The proposed rule was published on October 15, 2010 (75 FR 63428) and was open for public comment for 60 days. We received three comments. One was fully in support of the changes. The second made several proposals on how fees charged by NPS for review of rehabilitation certification applications should be set and used by the agency. However, the rule does not change the fee schedule, but merely removes it from the text of the regulations (in accordance with standard government practice). The third suggests that the rule state that the program is administered by the National Park Service in general rather than by the Washington Area Service Office of the NPS. The agency believes it serves a useful purpose to inform the public where the program is administered within a large government agency. Accordingly, the agency does not believe that further change to the rule is warranted

The Office of Management and Budget has determined that this document is not a significant rule. We have made the assessments required by Executive Order 12866 and the results are available as a supporting document with the proposed rule at http://www.regulations.gov.

(1) The results of the NPS cost/benefit analysis are that this rule will not have an effect of $100 million or more on the economy. It will not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or Tribal governments or communities.

(2) This rule will not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency. It is an agency-specific rule. No other Federal agency designates “certified historic structures” or “certified rehabilitations” for Federal income tax incentives.

(3) This rule does not alter the budgetary effects of entitlements, grants, user fees, or loan programs or the rights or obligations of their recipients. This rule updates statutory authority, deletes references to regional offices and substitutes the NPS Washington office in their place, authorizes additional administrative appeals, and removes from the text of the regulations the fee dollar amounts and specific instructions for charging fees.

(4) This rule does not raise novel legal or policy issues.

The Department of the Interior certifies that this document will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act, (5 U.S.C. 601 et seq. ).

The NPS threshold analysis as part of the NPS cost-benefit analysis concluded the proposed rule would generate positive benefits for all affected businesses with no negative impacts.

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

a. Does not have an annual effect on the economy of $100 million or more. The rule merely updates statutory authority, revises references to NPS offices, authorizes additional administrative appeals, and deletes specific dollar amount of application review fees—changes that the Office of Management and Budget (OMB) has determined are purely technical in nature.

b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions. The rule does not impose any new requirements on building owners undertaking building rehabilitations.

c. Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. OMB has determined that the changes proposed in the rule are purely technical. Moreover, the tax incentives program involves purely domestic buildings and entities.

This rule does not impose an unfunded mandate on State, local, or Tribal governments or the private sector of more than $100 million per year. The rule does not have a significant or unique effect on State, local or Tribal governments or the private sector.

Although State Historic Preservation Offices receive applications for the Federal tax incentives and forward them to the NPS, with a recommendation, State participation in this program is funded through the Historic Preservation Fund administered by the NPS.

In accordance with Executive Order 12630, the rule does not have significant takings implications. Application for the Federal historic preservation tax incentives program is on a voluntary basis by owners seeking a benefit in the form of Federal income tax incentives. A takings implication assessment is not required.

Under the criteria in Executive Order 13132, this rule does not have sufficient federalism implications to warrant the preparation of a Federalism summary impact statement. The rule does not preempt or conflict with any State or local law. A Federalism impact statement is not required.

This rule complies with the requirements of Executive Order 12988. Specifically, this rule:

a. Meets the criteria requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and

b. Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.

Under the criteria in Executive Order 13175, we have evaluated this rule and determined that it has no potential effects on Federally recognized Indian Tribes. The rule has no Tribal implications, and does not impose any costs on Indian Tribal governments.

This rule contains information collection requirements and a submission under the Paperwork Reduction Act is required. OMB has approved the information collection and has assigned approval number 1024-0009, expiring on 03/31/2013. A Federal agency may not conduct or sponsor and you are not required to respond to, a collection of information unless it displays a currently valid OMB control number. Part 1 of the application is used in requesting a certification of historic significance or non-significance and preliminary determinations. Part 2 of the application is used in requesting an evaluation of a proposed rehabilitation project or (in conjunction with a request for certification of completed work) a certification of a completed rehabilitation project. Information contained in the application is required to obtain a benefit. We estimate the burden associated with this information collection to be 4.6 hours per response including the time for reviewing instructions, gathering and maintaining data, and completing and reviewing the form. Direct your comments regarding this burden estimate or any aspect of this form to the Manager, Administrative Program Center, National Park Service, 1849 C Street, NW., Washington, DC 20240 and to the Office of Management and Budget, Paperwork Reduction Project Number 1024-0009, Washington, DC 20503.

This rule is developed under the authority of the National Historic Preservation Act, particularly 16 U.S.C. 470a(a)(1)(A), and 26 U.S.C. 47 (Internal Revenue Code), and does not constitute a major Federal action significantly affecting the quality of the human environment. A detailed statement under the National Environmental Policy Act of 1969 is not required because the rule is administrative and procedural in nature and therefore is covered by a categorical exclusion under 43 CFR 46.205(b) and 46.210(i). We have also determined that the rule does not involve any of the extraordinary circumstances listed in 43 CFR 46.215 that would require further analysis under the National Environmental Policy Act.

In developing this rule we did not conduct or use a study, experiment, or survey requiring peer review under the Information Quality Act (Pub. L. 106-554).

This rule is not a significant energy action under the definition in Executive Order 13211. A Statement of Energy Effects is not required.

In consideration of the foregoing, 36 CFR part 67 is amended as follows:

On March 28, 2011, the Postal Regulatory Commission (PRC) approved Adult Signature as a new extra service which will provide a method for customers to obtain a signature (upon delivery) from an adult recipient who is 21 years of age or older. This new extra service will be available only to commercial and online mailers beginning June 5, 2011.

This is the first time the Postal Service is offering a service that includes verification of the age of the recipient at the time of delivery. These services will be available to commercial and online customers using Express Mail®, Priority Mail® (including Critical Mail TM ), Parcel Select® barcoded nonpresort, and Parcel Select Regional Ground mailpieces. The requirements for the two service offerings are:

• Adult Signature Required—requires the signature of someone 21 years of age or older at the recipient's address.

• Adult Signature Restricted Delivery—requires the signature of a specific addressee (or authorized agent), who must be 21 years of age or older.

Prior to signing for the mailpiece, the recipient must show a government-issued photo identification that includes his or her date of birth. Adult Signature mailpieces cannot be left at the address without first obtaining the signature of an adult who is 21 years of age or older.

Adult Signature Required and Adult Signature Restricted Delivery are only available for customers who pay for postage and applicable fees using any of these methods:

• Click-N-Ship®.

• USPS®-approved PC Postage® (registered end-users only).

• Permit imprint, if the customer electronically submits postage statements and mailing documentation.

• USPS-approved Information-Based Indicia (IBI) postage meters that print the IBI with the appropriate price marking and electronically transmit transactional data to USPS.

Technical specifications for privately printed Adult Signature labels are located in the Intelligent Mail Package Barcode Specification and the addendum to Publication 91, Addendum for Intelligent Mail Package Barcode (IMpb) and 3-digit Service Type Code, available on the RIBBS® Web site at http://ribbs.usps.gov.

Additionally, in combination with Express Mail or Priority Mail and postage paid by Click-N-Ship or PC Postage, Adult Signature will provide an optional delivery method for the mailing of cigarettes and smokeless tobacco under the “Exception for Certain Individuals” standard as described in DMM section 601.11.

All other requirements and conditions related to mailing cigarettes and smokeless tobacco products under the Prevent All Cigarette Trafficking Act (PACT) of 2009 remain in effect; such as:

• Each shipment must be presented via a face-to-face transaction with a postal employee.

• No Pickup on Demand or Carrier Pickup options are available.

• Each package must bear its own unique exception package markings.

While the minimum age to purchase tobacco in the state or locality where the shipment is tendered or delivered may be different from age 21, if Adult Signature is used, the recipient must be 21 years of age.

The Postal Service adopts the following changes to Mailing Standards of the United States Postal Service, Domestic Mail Manual (DMM), incorporated by reference in the Code of Federal Regulations. See 39 CFR 111.1.

Accordingly, 39 CFR part 111 is amended as follows:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

Organization of this document. The following outline is provided to aid in locating information in this preamble.

Under CAA section 112(l), EPA may approve state or local rules or programs to be implemented and enforced in place of certain otherwise applicable Federal rules, emissions standards, or requirements. The Federal regulations governing EPA's approval of state and local rules or programs under section 112(l) are located at 40 CFR part 63, subpart E. See 58 FR 62262 (November 26, 1993), as amended by 65 FR 55810 (September 14, 2000). Under these regulations, a state air pollution control agency has the option to request EPA's approval to substitute a state rule for the applicable Federal rule ( e.g., the National Emission Standards for Hazardous Air Pollutants). Upon approval by EPA, the state agency is authorized to implement and enforce its rule in place of the Federal rule.

EPA promulgated the Dry Cleaning NESHAP on September 22, 1993. See 58 FR 49354 (codified at 40 CFR part 63, subpart M, “National Perchloroethylene Air Emission Standards for Dry Cleaning Facilities”). On August 12, 2003, EPA received ME DEP's request to implement and enforce “Chapter 125: Perchloroethylene Dry Cleaner Regulation” in lieu of the Dry Cleaning NESHAP as applied to area sources. On April 24, 2006, EPA approved the Maine Dry Cleaner Rule in place of the Dry Cleaning NESHAP for area sources pursuant to the provisions of 40 CFR part 63, subpart E. See 71 FR 20895.

Under 40 CFR 63.91(e)(3), if EPA amends or otherwise revises a promulgated CAA section 112 rule or requirement in a way that increases its stringency, EPA will notify any state with a delegated alternative of the need to revise its equivalency demonstration. EPA will consult with the state to set a time frame for the state to submit a revised equivalency demonstration. EPA will then review and approve the revised equivalency demonstration according to the procedures in 40 CFR part 63, subpart E. More stringent NESHAP amendments to a delegated alternative apply to all sources until EPA determines that the approved or revised alternative requirements are equivalent to the more stringent amendments.

On July 27, 2006, September 21, 2006 and July 11, 2008, EPA promulgated amendments to the Dry Cleaning NESHAP. See 71 FR 42724, 71 FR 55280 and 73 FR 39871. In a letter dated October 25, 2006, EPA notified ME DEP that EPA had published more stringent amendments to the Dry Cleaning NESHAP and of the need for ME DEP to revise its equivalency demonstration. Accordingly, ME DEP revised the Maine Dry Cleaner Rule with an effective date of June 24, 2009. On December 11, 2009, ME DEP submitted a request for approval to implement and enforce the amended Maine Dry Cleaner Rule in place of the amended Dry Cleaning NESHAP. On March 4, 2010, EPA determined that Maine's submittal was complete. As explained below, EPA has reviewed the State's submission and determined that the amended Maine Dry Cleaner Rule is no less stringent than the amended Dry Cleaning NESHAP, as applied to area sources.

In addition, in the Federal Register on May 13, 2009, EPA corrected a sequential numbering error in 40 CFR 63.99. See 74 FR 22437. In this rulemaking, paragraph (a)(19) of section 63.99, the subparagraph for the state of Maine, was redesignated as paragraph (a)(20). However, the reference to paragraph (a)(19)(iii) in the incorporation by reference section 63.14(d)(6) was not corrected to refer to paragraph (a)(20)(iii) at that time. Therefore, today's notice also corrects the reference in 40 CFR 63.14(d)(6) to appropriately refer to paragraph (a)(20)(iii).

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

A state must demonstrate that it has satisfied the general delegation/approval criteria contained in 40 CFR 63.91(d). The process of providing “up-front approval” assures that a state has met the delegation criteria in Section 112(l)(5) of the CAA (as codified in 40 CFR 63.91(d)), that is, that the state has demonstrated that its NESHAP program contains adequate authorities to assure compliance with each applicable Federal requirement, adequate resources for implementation, and an expeditious compliance schedule. Under 40 CFR 63.91(d)(3), interim or final Title V program approval satisfies the criteria set forth in 40 CFR 63.91(d) for “up-front approval.” On October 18, 2001, EPA promulgated full approval of ME DEP's operating permits program with an effective date of December 17, 2001. See 66 FR 52874. Accordingly, ME DEP has satisfied the up-front approval criteria of 40 CFR 63.91(d).

Additionally, the “rule substitution” option requires EPA to make a detailed and thorough evaluation of the state's submittal to ensure that it meets the stringency and other requirements of 40 CFR 63.93. A rule will be approved if the state or local government demonstrates: (1) the state and local rules contain applicability criteria that are no less stringent than the corresponding Federal rule; (2) the state and local rule requires levels of control and compliance and enforcement measures that would achieve emission reductions from each affected source that are no less stringent than would result from the otherwise applicable Federal standard; (3) the schedule for implementation and compliance is consistent with the deadlines established in the otherwise applicable Federal rule; and (4) the state requirements include additional compliance and enforcement measures as specified in 40 CFR 63.93(b)(4). See 40 CFR 63.93(b). After reviewing ME DEP's amended partial rule substitution request and equivalency demonstration for the Dry Cleaning NESHAP as it applies to area sources, EPA has determined this request meets all the requirements necessary for approval under CAA section 112(l) and 40 CFR 63.91 and 63.93.

Before we can approve alternative requirements in place of a part 63 emissions standard, the state must submit to us detailed information that demonstrates how the alternative requirements compare with the otherwise applicable Federal standard. Under 40 CFR part 63 subpart E, the level of control in the state rule must be at least as stringent as the level of control in the Federal rule. In addition, in order for equivalency to be granted, the level of control and compliance and enforcement measures (“MRR”) of the state rule, taken together as a whole, must be equivalent to the level of control and MRR of the Federal rule, taken together as a whole. A detailed discussion of how EPA will determine equivalency for state alternative NESHAP requirements is provided in the preamble to EPA's proposed Subpart E amendments on January 12, 1999. See 64 FR 1908.

The following discussion explains the changes that EPA made to the Dry Cleaning NESHAP and how ME DEP addressed these changes in the amended Maine Dry Cleaner Rule. The April 24, 2006 Federal Register Notice initially approving the Maine Dry Cleaner Rule as a substitute for the Dry Cleaning NESHAP contains a more detailed discussion of the differences between the Dry Cleaning NESHAP and the Maine Dry Cleaner Rule. See 71 FR 20895.

The Dry Cleaning NESHAP added definitions for halogenated hydrocarbon detector, perchloroethylene gas analyzer, residence, vapor leak, and vapor barrier. The amended Maine Dry Cleaner Rule adopted the same definitions, with the exception of vapor barrier and residence. Residence is defined in the Dry Cleaner NESHAP as any dwelling or housing in which people reside, excluding short-term housing that is occupied by the same person for a period of less than 180 days (such as a hotel room). Maine's amended Dry Cleaner Rule defines residence as “any dwelling or housing in which people reside,” without exclusion for short-term housing. Maine's definition is more stringent. ME DEP did not adopt the definition of vapor barrier into its amended Maine Dry Cleaner Rule because the requirement is no longer necessary. Specifically, the amended Maine Dry Cleaner Rule specifies that dry cleaning machines installed in a building with a residence after December 21, 2005 must comply with the NESHAP provisions under Section 63.320(b)(2)(ii). See Chapter 125 Section 3.A.(2). Section 63.320(b)(2)(ii) of the Dry Cleaner NESHAP requires any facility installed in a building with a residence between December 21, 2005 and July 13, 2006 ( i.e., those facilities which were required to utilize a vapor barrier under the Dry Cleaning NESHAP) to eliminate perc emissions by July 27, 2009. Therefore, any facility which was required to install a vapor barrier is effectively prohibited from operating under the Dry Cleaner NESHAP and the amended Maine Dry Cleaner Rule as of July 27, 2009. The amended Maine Dry Cleaner Rule is equivalent to the Dry Cleaner NESHAP.

The Dry Cleaning NESHAP requires new area source dry cleaners which commence construction after December 21, 2005, to be equipped with a refrigerated condenser and a non-vented carbon adsorber. The carbon adsorber must be desorbed in accordance with the manufacturer's instruction. See 40 CFR 63.322(o)(2). The amended Maine Dry Cleaner Rule required these control requirements for new dry cleaners installed after February 12, 1997 and added clarifying language for these controls on new dry cleaners installed after December 21, 2005. See Chapter 125 Section 3.B(2) and Section 3.(C)(3). The Maine Dry Cleaner Rule added the requirement for the carbon adsorber to be desorbed in accordance with the manufacturer's instructions. See Chapter 125 Section 3.C(1)(a). The amended Maine Dry Cleaner Rule is accordingly no less stringent than the corresponding Federal rule.

The Dry Cleaning NESHAP requires a vapor barrier and other control requirements for dry cleaners installed in a building with a residence between December 21, 2005 and July 13, 2006. The Dry Cleaning NESHAP requires that such dry cleaners eliminate perc emissions by July 27, 2009. See 40 CFR 63.322(o)(5)(i)-(ii) and 63.320(b)(2)(ii). The Maine Dry Cleaner Rule specifies that such dry cleaners must comply with the Dry Cleaner NESHAP Section 63.320(b)(2)(ii). See Chapter 125 Section 3.A(2). Under both the Dry Cleaning NESHAP and the amended Maine Dry Cleaner Rule, such sources are effectively prohibited from operating as of July 27, 2009. The Maine Dry Cleaner rule is equivalent to the Dry Cleaning NESHAP.

The Dry Cleaning NESHAP does not allow any dry cleaning systems to be installed in a building with a residence as of July 13, 2006. See 40 CFR 63.322(o)(4) and 63.320(b)(3). The amended Maine Dry Cleaner rule prohibits the installation of a dry cleaner co-located with a residence as of June 24, 2009, and requires all new or relocated dry cleaning machines located in a building with a residence which commenced construction on or after December 21, 2005 to comply with 40 CFR Part 63.320(b)(2)(ii). See Chapter 125 Section 3.A(1) and (2). The amended Maine Dry Cleaner rule does not prohibit dry cleaning machines from being installed in a building with a residence between July 13, 2006 and June 24, 2009, the effective date of the amended Maine Dry Cleaner rule. Therefore, EPA is retaining its authority with respect to dry cleaners installed in a residence between July 13, 2006 and June 24, 2009, the effective date of the amended Maine Dry Cleaner rule. In addition, the amended Maine Dry Cleaner rule prohibits the installation of a co-located dry cleaner as of June 24, 2009. See Chapter 125 Section 3.(A)(1). A co-located dry cleaner includes dry cleaning facilities located in a building with a residence, or with a day care center, a health care facility, a prison, an elementary school, a middle or high school or a pre-school, a senior center or a youth center, or other facility inhabited by children or the elderly. Therefore, this provision of the amended Maine Dry Cleaner rule is more stringent than the Dry Cleaning NESHAP because it prohibits all co-located dry cleaners as of June 24, 2009, in addition to prohibiting co-located dry cleaners in a building with a residence as of June 24, 2009.

The Dry Cleaning NESHAP requires all dry cleaners located in a building with a residence to eliminate perc emissions by December 21, 2020. See 40 CFR 63.322(o)(5)(ii). The amended Maine Dry Cleaner rule requires all co-located dry cleaners to cease operation on or before December 21, 2020. See Chapter 125 Section 3.A(3). The amended Maine Dry Cleaner rule is more stringent than the Dry Cleaning NESHAP because this provision applies to all co-located facilities in addition to dry cleaners installed in a building with a residence.

The Dry Cleaning NESHAP effectively prohibits all transfer machines as of July 28, 2008, by requiring the owner or operator to eliminate emissions of perc during the transfer of articles between the washer and the dryer(s) or reclaimer(s). See 40 CFR 63.320(b)(1)) and 63.322(o)(4). The amended Maine Dry Cleaner rule prohibited the installation and use of transfer machines as of January 4, 2003. See Chapter 125 Section 3.(D). The amended Maine Dry Cleaner rule is more stringent because it prohibited transfer machines earlier than the Dry Cleaning NESHAP.

The Dry Cleaning NESHAP added a requirement for area source dry cleaners to conduct leak checks monthly using a halogenated hydrocarbon detector or a PCE gas analyzer that is operated according to the manufacturer's recommendation. See 40 CFR 63.322(o)(1). The amended Maine Dry Cleaner rule requires vapor leak checks weekly with a halogenated hydrocarbon detector or a PCE gas analyzer. See Chapter 125 Section 4.(C)(2). The amended Maine Dry Cleaner rule is more stringent than the Dry Cleaning NESHAP because it requires leak checks with a detector or analyzer to be conducted weekly.

The Dry Cleaning NESHAP added a requirement that allows facilities using a refrigerated condenser to monitor the refrigeration system high pressure and low pressure as an alternative to monitoring for the temperature of the perc vapor gas vapor-stream. See 40 CFR 63.323(a)(1). Maine added this requirement and is therefore equivalent to the Dry Cleaning NESHAP. See Chapter 125 Section 4.(B).

The Dry Cleaning NESHAP added a requirement for facilities to submit a notification of compliance status by July 28, 2008. See 40 CFR 63.324(f). The amended Maine Dry Cleaner rule did not add this requirement but all affected sources were required under the NESHAP to submit this report and the date for submitting the report was prior to the effective date of the Maine Dry Cleaner rule amendments. ME DEP did develop a sample form for the July 28, 2008, NESHAP report and sent a direct mailing to every dry cleaner in the state with the form, notifying sources to submit the report to both EPA and ME DEP. In addition, the amended Maine Dry Cleaner rule requires facilities to register annually with the state. The Dry Cleaning NESHAP does not require an annual report. The annual report was revised to include all of the information required in the July 28, 2008, NESHAP report, except for a statement of compliance. Given that the NESHAP report date has passed, all dry cleaners in Maine were required to send in the report with a statement of compliance under the NESHAP requirements, and that Maine requires an annual report not required by the NESHAP, EPA has determined that reporting requirements of the amended Maine Dry Cleaner rule are equivalent to the requirements of the Dry Cleaning NESHAP.

After reviewing ME DEP's request for approval of the amended Maine Dry Cleaner Rule, EPA has determined that Maine's regulation meets all of the requirements necessary for partial rule substitution under section 112(l) of the CAA and 40 CFR 63.91 and 63.93. The amended Maine Dry Cleaner rule, taken as a whole, is no less stringent than the Dry Cleaning NESHAP, as applied to area sources. Therefore, EPA hereby approves ME DEP's request to implement and enforce Chapter 125, as amended on June 24, 2009, in place of the Dry Cleaning NESHAP for area sources in Maine. EPA retains the requirements for major source dry cleaners and dry cleaners installed in a residence between July 13, 2006 and June 24, 2009. As of the effective date of this action, the amended Maine Dry Cleaner Rule is enforceable by EPA and by citizens under the CAA. Although ME DEP has primary responsibility to implement and enforce the amended Maine Dry Cleaner rule, EPA retains the authority to enforce any requirement of the rule upon its approval under CAA 112. See CAA section 112(l)(7).

EPA is approving the Maine Perchloroethylene Dry Cleaner Regulation, Chapter 125, as amended on June 24, 2009, as a partial rule substitution for the Dry Cleaning NESHAP for area sources in Maine. EPA retains the requirements for major source dry cleaners and dry cleaners installed in a residence between July 13, 2006 and June 24, 2009.

EPA is publishing this action without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. However, in the proposed rules section of this Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve the rule revision should relevant adverse comments be filed. This rule will be effective July 25, 2011 without further notice unless the Agency receives relevant adverse comments by June 27, 2011.

If EPA receives such comments, then EPA will publish a notice withdrawing the direct final rule and informing the public that the direct final rule will not take effect. All public comments received will then be addressed in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on the proposed rule. All parties interested in commenting on the proposed rule should do so at this time. If no such comments are received, the public is advised that this rule will be effective on July 25, 2011 and no further action will be taken on the proposed rule. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule, and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

Under CAA section 307(b)(1), judicial review of this final rule is available only by filing a petition for review in the United States Court of Appeals for the appropriate circuit by July 25, 2011. Under CAA section 307(b)(2), the requirements established by this final rule may not be challenged separately in any civil or criminal proceedings brought by EPA to enforce these requirements.

Section 307(d)(7)(B) of the CAA further provides that “[o]nly an objection to a rule or procedure which was raised with reasonable specificity during the period for public comment (including any public hearing) may be raised during judicial review.” This section also provides a mechanism for us to convene a proceeding for reconsideration, “[i]f the person raising an objection can demonstrate to the EPA that it was impracticable to raise such objection within [the period for public comment] or if the grounds for such objection arose after the period for public comment (but within the time specified for judicial review) and if such objection is of central relevance to the outcome of the rule.” Any person seeking to make such a demonstration to us should submit a Petition for Reconsideration to the Regional Administrator, U.S. Environmental Protection Agency, EPA New England Regional Office, Five Post Office Square, Suite 100 (ORA01-4), Boston, MA 02109-3912, with a copy to the person(s) listed in the preceding FOR FURTHER INFORMATION CONTACT section, and the Regional Counsel, U.S. Environmental Protection Agency, EPA New England Regional Office, Five Post Office Square, Suite 100 (ORA01-4), Boston, MA 02109-3912. Filing a petition for reconsideration by the Administrator of this final rule under CAA section 307(d)(7)(B) does not affect the finality of this rule for the purposes of judicial review, does not extend the time within which a petition for judicial review may be filed, and does not postpone the effectiveness of the rule.

This action approves equivalent state requirements in place of Federal requirements under CAA section 112(l). This type of action is exempt from review under EO 12866.

This action does not impose an information collection burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Burden is defined at 5 CFR 1320.3(b). This action allows the State of Maine to implement equivalent state requirements in lieu of pre-existing Federal requirements as applied only to area source dry cleaners. Thus, this action does not require any person to submit information.

The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of today's rule on small entities, small entity is defined as: (1) A small business that meets the Small Business Administration size standards found at 13 CFR 121.201 (coin operated laundries and drycleaners as defined by NAICS code 812310 with annual receipts of less than $7.0 million or drycleaning and laundry services (except coin operated) as defined by NAICS code 812320 with annual receipts of less than $4.5 million); (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. After considering the economic impacts of today's final rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. This final rule will not have a significant impact on a substantial number of small entities because approvals under CAA section 112(l) and 40 CFR 63.93 do not create any new requirements. Such approvals simply allow a state to implement and enforce equivalent requirements in place of the Federal requirements that EPA is already imposing.

This action contains no Federal mandates under the provisions of Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531-1538 for State, local, or Tribal governments or the private sector. The action imposes no enforceable duty on any State, local or Tribal governments or the private sector. Therefore, this action is not subject to the requirements of sections 202 or 205 of the UMRA. This action is also not subject to the requirements of section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments. This action allows the State of Maine to implement equivalent state requirements in lieu of pre-existing Federal requirements as applied only to area source dry cleaners. Thus, this action does not significantly or uniquely affect small governments.

This action does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. This action simply allows Maine to implement equivalent alternative requirements to replace a Federal rule, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. Thus, Executive Order 13132 does not apply to this action.

This action does not have Tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). This action allows the State of Maine to implement equivalent state requirements in lieu of pre-existing Federal requirements as applied only to area source dry cleaners. This action will not have substantial direct effects on Tribal governments, on the relationship between the Federal government and Indian Tribes, or on the distribution of power and responsibilities between the Federal government and Indian Tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this action.

EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying only to those regulatory actions that concern health or safety risks, such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This action is not subject to Executive Order 13045 because it approves a state program such that it allows the State of Maine to implement equivalent state requirements in lieu of pre-existing Federal requirements as applied only to area source dry cleaners.

This action is not subject to Executive Order 13211 (66 FR 28355 (May 22, 2001)), because it is not a significant regulatory action under Executive Order 12866.

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) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.

This action does not involve technical standards. Therefore, EPA did not consider the use of any voluntary consensus standards.

Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.

EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it does not affect the level of protection provided to human health or the environment. This action allows the State of Maine to implement equivalent state requirements in lieu of pre-existing Federal requirements as applied only to area source dry cleaners. As explained above, the state requirements contain standards that are at least equivalent to the Federal standards; thus, we anticipate only a positive impact from this action.

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). This rule will be effective July 25, 2011.

40 CFR part 63 is amended as follows:

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

This final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. , because the revisions are not considered substantive. This final rule is also exempt from the Regulatory Flexibility Act per 5 U.S.C. 553(a)(2) because it applies to agency management and public property. However, this final rule is being published to provide transparency in the promulgation of Federal policies.

The Paperwork Reduction Act does not apply because this final rule does not impose recordkeeping or information collection requirements, or the collection of information from offerors, contractors, or members of the public which require the approval of OMB under 44 U.S.C. 3501-3520.

This final rule is also exempt from congressional review prescribed under 5 U.S.C. 801 since it relates solely to agency management and personnel.

For the reasons set forth in the preamble, 41 CFR part 102-42 is amended as follows:

The Federal Communications Commission has received OMB approval for the ex parte rules and other procedural rules contained in information collection OMB Control No: 3060-0430, Section 1.1206, Permit-but-Disclose Proceedings. The information collection was revised in the Report and Order and Further Notice of Proposed Rulemaking in CG Docket No. 10-43 which appears at 76 FR 24376, May 2, 2011. The effective date of the rules adopted in that Order was published as June 1, 2011, except for §§ 1.1206(b) and 1.1208, which contain new or modified information collection requirements that would not be effective until approved by the Office of Management and Budget. Through this document, the Commission announces that it has received this approval (OMB Control No. 3060-0430, Expiration Date: November 30, 2011) and that §§ 1.1206(b) and 1.1208 are effective on June 1, 2011.

Pursuant to the Paperwork Reduction Act of 1995, Public Law 104-13, an agency may not conduct or sponsor a collection of information unless it displays a currently valid control number. Notwithstanding any other provisions of law, no person shall be subject to any penalty for failing to comply with a collection of information subject to the Paperwork Reduction Act (PRA) that does not display a valid control number. Questions concerning the OMB control numbers and expiration dates should be directed to Leslie F. Smith, Federal Communications Commission, (202) 418-0217, or via the Internet at Leslie.Smith@fcc.gov.

Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361 et seq. ) direct the Secretary of Commerce (Secretary) to allow, upon request, the incidental, but not intentional taking of marine mammals by U.S. citizens who engage in a specified activity (other than commercial fishing) during periods of not more than five consecutive years each if certain findings are made and regulations are issued or, if the taking is limited to harassment, notice of a proposed authorization is provided to the public for review.

Authorization shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s), will not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses, and if the permissible methods of taking and requirements pertaining to the mitigation, monitoring and reporting of such taking are set forth.

NMFS has defined “negligible impact” in 50 CFR 216.103 as:

The definition of “harassment” as it applies to a “military readiness activity” is as follows (section 3(18)(B) of the MMPA as amended by the National Defense Authorization Act (NDAA) (Pub. L. 108-136)):

In June, 2009, NMFS issued 5-year regulations governing the taking of marine mammals incidental to training activities conducted in the VACAPES Range Complex (74 FR 28328; June 15, 2009) and the JAX Range Complex (74 FR 28349; June 15, 2009) (collectively the “2009 Final Rules”). The VACAPES and JAX Range Complex regulations allow for the issuance of LOAs that authorize the incidental take of marine mammals during the specified activities and described timeframes, and prescribe the permissible methods of taking and other means of effecting the least practicable adverse impact on marine mammal species or stocks and their habitat, as well as requirements pertaining to the monitoring and reporting of such taking. These regulations were drafted in such a way that the Navy's specified activities were strictly quantified by the amount of each type of training event to be carried out and the amount of explosives and sound sources to be used ( e.g., number of events or explosive detonations) over the course of the 5-year regulations.

After the issuance of these rules, the Navy realized that their evolving training programs, which are linked to real world events, necessitate greater flexibility in both the types and amount of training activities that they conduct and the types and amount of underwater detonations and sound sources that they use.

Regarding the types of training events and explosives for which incidental take is authorized, in some cases, the Navy's VACAPES and JAX Range Complex rules identified the most representative or highest power source to represent a group of known similar activities or explosive types. However, the Navy regularly modifies or improves training techniques, often in the way that results in the use of explosive munitions are similar to, but not exactly the same as, existing ones. In its LOA renewal requests submitted to NMFS on January 19, 2011, the Navy requested modification in the amount and types of training activities and the explosives involved for the VACAPES and JAX range complexes. To address this issue, NMFS modifies the 2009 Final Rules to increase the flexibility of the Navy's takings prescriptions by inserting language that will explicitly allow for authorization of take incidental to the previously identified specified explosives or “similar events or explosives” (with similar characteristics that do not change any of the underlying analyses), and in the case of the JAX Range Complex, by allowing FIREX exercises to be conducted in areas similar to those initially specifically identified in the rule (areas BB and CC), provided that the implementation of these changes in annual LOAs does not result in exceeding the incidental take analyzed and identified in the 2009 Final Rules.

Regarding amounts of explosive and number of training activities, the 2009 Final Rules only allow for the authorization of take incidental to a 5-yr maximum amount of use for each specific training activity type and explosive type, even though no change in the environmental impacts would be expected by modifying the amounts of explosives being used in a training event in certain ways. For example, a large number of smaller explosives being used would yield similar impacts to the marine environment as a few larger explosives. To address this issue, NMFS modifies the VACAPES and JAX 2009 Final Rules to increase flexibility by including language that allows for inter-annual variability in the amount of training activities and the number and types of explosives that can be authorized in each annual LOA (e.g., one year the Navy could use a lot of one explosive, and little of another, and the next year those amounts could be reversed), provided it does not result in exceeding the total level of incidental take analyzed and identified in the 2009 Final Rules, and the taking does not result in more than a negligible impact on affected species or stocks.

As indicated above, these regulatory amendments do not change the analyses of marine mammal impacts conducted in the 2009 Final Rules. This fact is assured and illustrated through: (1) The Navy's annual submission of LOA applications for each area, which include take estimates specific to the upcoming year's activities ( i.e., explosive use); (2) their subsequent annual submission of exercise reports, which accurately report the specific amount of use for each explosive and the number of training events conducted over the course of the previous year; and (3) their annual submission of monitoring reports, which describe observed responses of marine mammals to Navy's training activities and the use of explosives collected via visual or passive acoustic methods. Together, these submissions allow NMFS to accurately predict and track the Navy's activities to ensure that both NMFS' annual LOAs, and the impacts of the Navy's activities on marine mammals, remain within what is analyzed and allowed by the VACAPES and JAX 5-year regulations.

Pursuant to the procedures established to implement section 6 of Executive Order 12866, the Office of Management and Budget has determined that this final rule is not significant.

Pursuant to 5 U.S.C. 553, there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment would be impracticable and contrary to the public interest. The 2009 VACAPES and JAX Final Rules established a framework whereby a total number of marine mammals, by species, could be taken incidental to certain military readiness activities during the 5-year period. These rules also enumerated levels of activity for each type of training activity and explosive, but did not include language expressly authorizing deviation from those precise levels if the total number of takes remained within authorized limits. Although the Navy used the best available information and professional judgment to estimate the level of individual activities planned for the ranges, evolving unforeseen real world requirements, and the evolving training and readiness tactics and procedures needed to meet those requirements, necessitate annual flexibility to offset increases in some activities with decreases in others. The Navy requires the flexibility to modify its training activities and the use of certain explosive detonations in the VACAPES and JAX Range Complexes, and these regulations modify the VACAPES and JAX final rules to insert language codifying that flexibility.

The Navy has a compelling need to continue its currently on-going military readiness and testing activities with the specific sound sources at issue without interruption. In 10 U.S.C. 5062, Congress mandated that the Chief of Naval Operations (CNO) man, organize, train, and equip all Naval forces for combat. To accomplish this, naval commands adhere to the Fleet Response Training Plan (FRTP). The FRTP is an arduous sequential training cycle in which unit level training (ULT) and certification is followed by a series of major exercises that bring together various components so they have the opportunity to train and practice as an integrated whole resulting in Major Combat Operation certification. This certification includes critically important anti-submarine warfare that requires training on the use and deployment of the described systems. Interruption or reduction of the Navy's ability to utilize specific sound sources during this period would significantly disrupt vital sequential training, certification, and testing activities essential to our national security and the safety of our armed forces. Therefore, allowing a public comment period for these rules is impracticable and contrary to the public's interest.

Because the requested modifications would not increase the total level of takes authorized in the 2009 Final Rules, the modifications would result in no increased impact to protected species.

For the same reasons above, there is good cause under 5 U.S.C. 553 to waive the 30-day delay in effectiveness. Interruption or reduction of the Navy's ability to utilize specific sound sources would significantly disrupt vital sequential training, certification, and testing activities essential to our national security and the safety of our armed forces. Therefore, there is good cause to waive the 30-day delay in effectiveness and to make this rule effective immediately.

Because prior notice and opportunity for public comment are not required for this rule by 5 U.S.C. 553, or any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. are inapplicable.

For reasons set forth in the preamble, 50 CFR part 218 is amended as follows: