I. Background

Effective July 21, 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) increases the threshold in the Consumer Leasing Act (CLA) for exempt consumer leases from $25,000 to $50,000. Public Law 111-203 § 1100E, 124 Stat. 1376 (2010). In addition, the Dodd-Frank Act requires that this threshold be adjusted annually for inflation by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as published by the Bureau of Labor Statistics. In April 2011, the Board issued a final rule amending Regulation M (which implements the CLA) consistent with these provisions of the Dodd-Frank Act. 76 FR 18349 (Apr. 4, 2011).

As amended, § 213.2(e)(1) of Regulation M provides that the exemption threshold will be adjusted annually effective January 1 of each year based on any annual percentage increase in the CPI-W that was in effect on the preceding June 1. Furthermore, any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900. See comment 2(e)-9.

Effective January 1, 2012, the adjusted exemption threshold amount is $51,800. This adjustment is based on the CPI-W index in effect on June 1, 2011, which was reported on May 13, 2011. The Bureau of Labor Statistics publishes consumer-based indices monthly, but does not report a CPI change on June 1; adjustments are reported in the middle of the month. The CPI-W is a subset of the CPI-U index (based on all urban consumers) and represents approximately 32 percent of the U.S. population. The adjustment reflects a 3.6 percent increase in the CPI-W from April 2010 to April 2011 and is rounded to the nearest $100 increment. Accordingly, the Board is revising comment 2(e)-9 (as amended effective July 21, 2011) to add a new subparagraph 2(e)-9.iii stating that, from January 1, 2012 through December 31, 2012, the threshold amount is $51,800. This revision is effective January 1, 2012.

Under the Administrative Procedures Act, notice and opportunity for public comment are not required if the Board finds that notice and public comment are unnecessary. 5 U.S.C. 553(b)(B). This annual adjustment is required by statute. The amendment in this notice is technical and applies the method previously established in Regulation M for determining any adjustments to the exemption threshold. For these reasons, the Board has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. Therefore, the amendment is adopted in final form.

The Board certifies that this amendment to Regulation M will not have a significant economic impact on a substantial number of small entities. The only change is to adjust the exemption threshold to reflect any annual percentage increase in the CPI-W. This change is required by statute. In addition, the Board believes that this amendment will not have a significant impact on a substantial number of small entities for the reasons stated in its April 2011 final rule. See 76 FR 18349, 18351-52.

For the reasons set forth in the preamble, the Board amends Regulation M, 12 CFR part 213, as set forth below:

Effective July 21, 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) increases the threshold in the Truth in Lending Act (TILA) for exempt consumer credit transactions from $25,000 to $50,000. Public Law 111-203 § 1100E, 124 Stat. 1376 (2010). In addition, the Dodd-Frank Act requires that this threshold be adjusted annually for inflation by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as published by the Bureau of Labor Statistics. In April 2011, the Board issued a final rule amending Regulation Z (which implements TILA) consistent with these provisions of the Dodd-Frank Act. 76 FR 18354 (Apr. 4, 2011).

As amended, § 226.3(b)(1)(ii) of Regulation Z provides that the exemption threshold will be adjusted annually effective January 1 of each year based on any annual percentage increase in the CPI-W that was in effect on the preceding June 1. Furthermore, any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900. See comment 3(b)-1.

Effective January 1, 2012, the adjusted exemption threshold amount is $51,800. This adjustment is based on the CPI-W index in effect on June 1, 2011, which was reported on May 13, 2011. The Bureau of Labor Statistics publishes consumer-based indices monthly, but does not report a CPI change on June 1; adjustments are reported in the middle of the month. The CPI-W is a subset of the CPI-U index (based on all urban consumers) and represents approximately 32 percent of the U.S. population. The adjustment reflects a 3.6 percent increase in the CPI-W from April 2010 to April 2011 and is rounded to the nearest $100 increment. Accordingly, the Board is revising comment 3(b)-1 (as amended effective July 21, 2011) to add a new subparagraph 3(b)-1.iii stating that, from January 1, 2012 through December 31, 2012, the threshold amount is $51,800. This revision is effective January 1, 2012.

Under the Administrative Procedures Act, notice and opportunity for public comment are not required if the Board finds that notice and public comment are unnecessary. 5 U.S.C. 553(b)(B). This annual adjustment is required by statute. The amendment in this notice is technical and applies the method previously established in Regulation Z for determining any adjustments to the exemption threshold. For these reasons, the Board has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. Therefore, the amendment is adopted in final form.

The Board certifies that this amendment to Regulation Z will not have a significant economic impact on a substantial number of small entities. The only change is to adjust the exemption threshold to reflect any annual percentage increase in the CPI-W. This change is required by statute. In addition, the Board believes that this amendment will not have a significant impact on a substantial number of small entities for the reasons stated in its April 2011 final rule. See 76 FR 18354, 18360-61.

For the reasons set forth in the preamble, the Board amends Regulation Z, 12 CFR part 226, as set forth below:

The Truth in Lending Act (TILA; 15 U.S.C. 1601-1666j) requires creditors to disclose credit terms and the cost of consumer credit as an annual percentage rate. The act requires additional disclosures for loans secured by a consumer's home, and permits consumers to cancel certain transactions that involve their principal dwelling. TILA is implemented by the Board's Regulation Z (12 CFR part 226). The Board's official staff commentary (12 CFR part 226 (Supp. I)) interprets the regulation, and provides guidance to creditors in applying the regulation to specific transactions.

In 1995, the Board published amendments to Regulation Z implementing HOEPA, contained in the Riegle Community Development and Regulatory Improvement Act of 1994, Public Law 103-325, 108 Stat. 2160 (60 FR 15463). These amendments, contained in §§ 226.32 and 226.34 of the regulation, impose substantive limitations and additional disclosure requirements on certain closed-end home mortgage loans bearing rates or fees above a certain percentage or amount. As enacted, the statute requires creditors to comply with the HOEPA requirements if the total points and fees payable by the consumer at or before loan consummation exceed the greater of $400 or 8 percent of the total loan amount. TILA and Regulation Z provide that the $400 figure shall be adjusted annually on January 1 by the annual percentage change in the Consumer Price Index (CPI) that was reported on the preceding June 1. 15 U.S.C. 1602(aa)(3) and 12 CFR 226.32(a)(1)(ii). The Board adjusted the $400 amount to $592 for the year 2011.

The Bureau of Labor Statistics publishes consumer-based indices monthly, but does not report a CPI change on June 1; adjustments are reported in the middle of each month. The Board uses the CPI-U index, which is based on all urban consumers and represents approximately 87 percent of the U.S. population, as the index for adjusting the $400 dollar figure. The adjustment to the CPI-U index reported by the Bureau of Labor Statistics on May 13, 2011, was the CPI-U index in effect on June 1, and reflects the percentage change from April 2010 to April 2011. The adjustment to the $400 figure below reflects a 3.2 percent increase in the CPI-U index for this period and is rounded to whole dollars for ease of compliance.

The fee trigger being adjusted in this Federal Register notice pursuant to TILA section 103(aa) is used in determining whether a loan is covered by section 226.32 of Regulation Z. Such loans have generally been known as “HOEPA loans.” In July 2008, the Board revised Regulation Z to adopt additional protections for “higher-priced” loans, using its authority under TILA section 129(l)(2). Those revisions define a class of dwelling-secured transactions, described in section 226.35 of Regulation Z, using a threshold based on average market rates that the Board publishes on a regular basis. The adjustment published today does not affect the triggers adopted in July 2008 for higher-priced loans.

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Reform Act”) was enacted into law. 1 Section 1431 of the Reform Act revises the statutory fee trigger for HOEPA loans. The amendments made by Section 1431 of the Reform Act will be implemented in a future rulemaking. Accordingly, the adjustment to the fee trigger that is being published today will become effective on January 1, 2012 and will apply for one year, or until final rules under Section 1431 of the Reform Act become effective, whichever is earlier.

Effective January 1, 2012, for purposes of determining whether a home mortgage transaction is covered by 12 CFR 226.32 (based on the total points and fees payable by the consumer at or before loan consummation), a loan is covered if the points and fees exceed the greater of $611 or 8 percent of the total loan amount. Comment 32(a)(1)(ii)-2, which lists the adjustments for each year, is amended to reflect the dollar adjustment for 2012. Because the timing and method of the adjustment are set by statute, the Board finds that notice and public comment on the change are unnecessary. 5 U.S.C. 553(b)(B).

The Board certifies that this amendment to Regulation Z will not have a significant economic impact on a substantial number of small entities. The only change is to increase the threshold for transactions requiring HOEPA disclosures. This change is mandated by statute.

For the reasons set forth in the preamble, the Board amends Regulation Z, 12 CFR part 226, as set forth below:

I. Background

The Housing and Economic Recovery Act of 2008 (HERA), Public Law 110-289, 122 Stat. 2654, amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq. ) (Safety and Soundness Act), and the Federal Home Loan Bank Act (12 U.S.C. 1421-1449) (Bank Act) to establish FHFA as an independent agency of the Federal government. 1 FHFA was established as an independent agency of the Federal Government with all of the authorities necessary to oversee vital components of our country's secondary mortgage markets—the regulated entities and the Office of Finance of the Federal Home Loan Bank System.

The Safety and Soundness Act provides that FHFA is headed by a Director with general supervisory and regulatory authority over the regulated entities and over the Office of Finance, 2 expressly to ensure that the regulated entities operate in a safe and sound manner, including maintaining adequate capital and internal controls; foster liquid, efficient, competitive, and resilient national housing finance markets; comply with the Safety and Soundness Act and rules, regulations, guidelines, and orders issued under the Safety and Soundness Act and the authorizing statutes ( i.e., the charter acts of the Enterprises and the Bank Act); and carry out their respective missions through activities and operations that are authorized and consistent with the Safety and Soundness Act, their respective authorizing statutes, and the public interest. 3

In addition, this law combined the staffs of the now abolished Office of Federal Housing Enterprise Oversight (OFHEO), the now abolished Federal Housing Finance Board (Finance Board), and the Government-Sponsored Enterprise (GSE) mission office at the Department of Housing and Urban Development (HUD). By pooling the expertise of the staffs of OFHEO, the Finance Board, and the GSE mission staff at HUD, Congress intended to strengthen the regulatory and supervisory oversight of the 14 housing-related GSEs.

The Enterprises, combined, own or guarantee more than $5 trillion of residential mortgages in the United States (U.S.), and play a key role in housing finance and the U.S. economy. The Banks, with combined assets of nearly $850 billion, support the housing market by making advances ( i.e., loans secured by acceptable collateral) to their member commercial banks, thrifts, and credit unions, assuring a ready flow of mortgage funding.

Because FHFA's mission is to promote housing and a strong national housing finance system by ensuring the safety and soundness of the Enterprises and the Banks, HERA amended the Safety and Soundness Act to make explicit FHFA's general regulatory and supervisory authority. To this end, section 1311(b)(1) of the Safety and Soundness Act expressly makes each regulated entity “subject to the supervision and regulation of the Agency,” thus amplifying the broad supervisory authority of the Director. See 12 U.S.C. 4511(b)(1). Moreover, the Safety and Soundness Act underscores the breadth of this authority by expressly conveying “general regulatory authority” over the regulated entities to the Director. See 12 U.S.C. 4511(b)(2); see also 12 U.S.C. 4513(a)(1)(B). 4 In addition, the Safety and Soundness Act, as amended by HERA, provides that “[t]he Agency may prescribe such regulations as the Agency determines to be appropriate regarding the conduct of conservatorships or receiverships.” 12 U.S.C. 4617(b)(1).

The Enterprises are currently in conservatorship. FHFA as Conservator has been responsible for the conduct and administration of all aspects of the operations, business, and affairs of both Enterprises since September 6, 2008, the date on which the Director placed Fannie Mae and Freddie Mac in conservatorship. As Conservator, FHFA is authorized to take such action as may be “necessary to put the regulated entity in a sound and solvent condition” and “appropriate to carry on the business of the regulated entity and preserve and conserve the assets and property of the regulated entity.” 12 U.S.C. 4617(b)(2)(D). Similarly, FHFA, as Conservator, may “transfer or sell any asset or liability of the regulated entity in default, and may do so without any approval, assignment, or consent with respect to such transfer or sale.” Id. 4617(b)(2)(G).

The United States Department of the Treasury (“Treasury”) facilitated FHFA's decision to utilize its statutory conservatorship powers in an effort to restore the Enterprises' financial health by agreeing to make funding available to the Enterprises pursuant to Senior Preferred Stock Purchase Agreements (“Treasury Agreements”). 5 Pursuant to these Agreements, as subsequently amended, Treasury has made available, through the Conservator, capital (“Treasury Commitments”) to each of the Enterprises in return for senior preferred stock carrying a preference with regard to dividends and the distribution of assets of the Enterprise in liquidation. As Conservator, FHFA has already drawn on the Treasury Commitments several times to prevent a negative net worth position that would trigger mandatory receivership of each Enterprise.

Congress authorized the Treasury Agreements in section 1117 of HERA, which amended each of the Enterprises' authorizing statutes (Fannie Mae, 12 U.S.C. 1716 et seq.; Freddie Mac, 12 U.S.C. 1451 et seq. ) to empower Treasury to purchase securities of the Enterprises subject to certain conditions. These conditions include that Treasury “protect the taxpayers” by taking into consideration, among other things, “[t]he need for preferences or priorities regarding payments to the Government” and “[r]estrictions on the use of corporate resources.” Pursuant to this statutory mandate, the Treasury Agreements imposed several such preferences, priorities, and restrictions. For instance, while the Treasury Agreements authorize the Conservator to draw on the Treasury Commitment for funds equal to the amount by which an Enterprise's liabilities exceed its assets, excluded from this calculation are liabilities that the Conservator determines shall be subordinated, including “a claim against [an Enterprise] arising from rescission of a purchase or sale of a security issued by [an Enterprise] * * * or for damages arising from the purchase, sale, or retention of such a security.” Treasury Agreements § 1, definition of “Deficiency Amount,” subparagraph (iii). In other words, the Conservator may determine to subordinate such a liability, with the effect that funds could not be drawn under the Treasury Agreements to satisfy it. The Treasury Agreements also contain restrictions on the declaration or payment of dividends or other distributions with respect to the Enterprises' equity interests; redeeming, purchasing, retiring, or otherwise acquiring for value any of the Enterprises' equity interests; or selling, transferring, or otherwise disposing of all or any portion of the Enterprises' assets other than in the ordinary course of business or under other limited exceptions. Treasury Agreements §§ 5.1 and 5.4. In promulgating these regulations, FHFA is required to “ensure that the purposes of * * * the authorizing statutes,” including the authorizing statutes' provisions for stock purchases by Treasury and the preferences, priorities, and restrictions attendant to such purchases, “are accomplished.” 12 U.S.C. 4526(a).

At the time FHFA established the conservatorships, and on several occasions since, FHFA has noted that the conservatorships, combined with the Treasury Senior Preferred Stock Agreements described above, provide an opportunity for Congress to direct the ultimate resolution of the Enterprises.

This final regulation describes, codifies, and implements the changes to the statutory regime enacted by HERA, the authorities granted to FHFA, and eliminates ambiguities regarding those changes. The final rule does not, and the proposed rule, published in the Federal Register at 75 FR 39462 (July 9, 2010), did not, recite all provisions of law relevant to the regulated entities in conservatorship or receivership. It sets out the basic and general framework for conservatorships and receiverships, supplementing statutory provisions that FHFA believed needed elaboration or explanation. The rule cannot be read or applied in isolation, but must be read while also consulting the enabling statutes of FHFA and the regulated entities. The regulation is part of FHFA's implementation of the powers provided by HERA, and does not seek to anticipate or predict future conservatorships or receiverships.

The final rule includes provisions that describe the basic authorities of FHFA when acting as conservator or receiver, including the enforcement and repudiation of contracts. Reflecting the approach in HERA, the rule parallels many of the provisions in the Federal Deposit Insurance Corporation (FDIC) receivership and conservatorship regulations. The rule necessarily differs in some respects, however, from the FDIC regulations, because not all of the regulated entities are depository institutions, none is a Federally insured depository institution, and their important public missions, reflected in congressional charters, differ from those of banks and thrifts.

The final rule establishes procedures for conservatorship and receivership and priorities of claims for contract parties and other claimants. These priorities set forth the order in which various classes of claimants will be paid, partially or in full, in the event that a regulated entity is unable to pay all valid claims.

The final rule contains several provisions that address whether and to what extent claims against the regulated entities by current or former holders of their equity interests for rescission or damages arising from the purchase, sale, or retention of such equity interests will be paid while those entities are in conservatorship or receivership. The potential impact of such claims may be significant and may jeopardize FHFA's ability to fulfill its statutory mission to restore soundness and solvency to insolvent regulated entities and to preserve and conserve their assets and property.

The rule clarifies that for purposes of priority determinations, claims arising from rescission of a purchase or sale of an equity security of a regulated entity, or for damages arising from the purchase, sale, or retention of such a security, will be treated as would the underlying security that establishes the right to the claim. The rule also classifies a payment of these types of claims as a capital distribution, which is prohibited during conservatorship, absent the express approval of the Director. Moreover, the rule provides that payment of securities litigation claims will be held in abeyance during a conservatorship, except as otherwise ordered by the Director. In the event of receivership, such claims will be treated according to the process established by statute and by regulations in this part.

FHFA has considered all of the comments in developing the final rule. FHFA accepted some of the commenters' recommendations and has made changes in the final rule, although the basic approach adopted in the proposed rule remains the same. The changes made in the final rule improve upon the basic approach proposed by FHFA by clarifying certain provisions and by improving the structure of the rule. Specific comments, FHFA's responses, and changes adopted in the final rule are described in greater detail below in the sections describing the relevant rule provisions.

FHFA received comments from a variety of sources, including shareholders for the Enterprises in conservatorship, counsel for shareholder litigants, members of Congress, and the Federal Home Loan Banks.

Some of the fiercest objections to the proposed rule were made against the provisions that would address the status of shareholder claims in conservatorship and receivership. FHFA received several comments from Enterprise shareholders, attorneys for shareholders engaged in litigation against the Enterprises, and several members of Congress, who raised the following concerns:

Redress for victims of securities fraud.

Shareholders urged FHFA not to adopt the proposed rule because the rule would deny victims of securities fraud any avenue for meaningful redress. These commenters also argued that the proposed rule would insulate Fannie Mae and Freddie Mac and their management from accountability for fraud.

After full consideration of these comments, FHFA has determined their concerns to be unfounded. The reality in any insolvency is that there are not enough assets to satisfy everyone with a claim on those assets. The priority provisions of 12 U.S.C. 4617(c) and regulations in this part simply recognize that reality. In light of the different risk profiles that investors and creditors accept when dealing with a business entity, subordination is the rule in corporate bankruptcies. The comments offer no sound reasons why the public policies supporting the rule in bankruptcy are not equally applicable in the context of the entities regulated by FHFA. If anything, the policy justifications for subordination of shareholder claims relative to the Enterprises currently in conservatorship is even greater because of the unique arrangements by which the Enterprises are being kept solvent through infusions of Treasury funds. If securities litigation claimants were treated as ordinary creditors, payment of such a claim against the Enterprises would represent a wealth transfer from the taxpayers of the United States to certain current and former shareholders of Fannie Mae and Freddie Mac. This was not the intent of the Treasury Agreements, and subordination avoids this unintended and unfair result.

FHFA does not intend to allow anyone under its jurisdiction to escape accountability for fraud. The rule, however, deals with a different issue: The priority of competing claims against a limited estate. In the conservatorships of Fannie Mae and Freddie Mac, FHFA immediately replaced the management that was in charge of Fannie Mae and Freddie Mac at the time plaintiffs in the pending securities cases allege the fraud occurred. As set forth in FHFA's 2008 Report to Congress, FHFA fundamentally changed Enterprise management and governance practices by appointing new CEOs, nonexecutive chairmen, and boards of directors to both Enterprises, and by working with both Enterprises to establish a new board committee structure with key changes in charters and responsibilities. 6 Therefore, whether shareholder plaintiffs can collect on claims or judgments against Fannie Mae or Freddie Mac has no connection to and does not further any interest plaintiffs may have in holding accountable the alleged perpetrators of any fraud. Given the financial situations of the Enterprises, the burden of payments on private claims would fall on the U.S. taxpayers, who through the Treasury Agreements provide infusions of cash to make up any quarterly net worth deficits, not on individuals alleged to be responsible for fraud.

Treatment and subordination of securities fraud claims.

Shareholder counsel objected to § 1237.9 of the proposed rule, which would address, among other things, the priority of securities litigation claims in receivership. The proposal reflected a balancing of interests based on the sources of claims. Securities fraud claims in litigation would not exist but for ownership of the underlying security. Therefore, the proposal called for subordinating such claims and, as a matter of fundamental fairness, treating them just as any other claim based on ownership of the security.

By permitting recovery by equity-holders only after creditors have been paid in full, this rule reflects the longstanding “general rule of equity” that “stockholders take last in the estate of a bankrupt corporation.” Gaff v. FDIC, 919 F.2d 384, 392 (6th Cir. 1990); see also In re Stirling Homex Corp. (Jezarian v. Raichle), 579 F.2d 206, 211 (2d Cir. 1978) (“[A]fter all creditors have been paid, provision may be made for stockholders. When the debtor is insolvent, the stockholders, as such, receive nothing.”). The rationale underlying this rule is that “[b]ecause, unlike creditors and depositors, stockholders stand to gain a share of corporate profits, stockholders should take the primary risk of the enterprise failing.” Gaff, 919 F.2d at 392. Moreover, creditors deal with a corporation “in reliance upon the protection and security provided by the money invested by the corporation's stockholders—the so-called `equity cushion.' ” Stirling Homex, 579 F.2d at 214.

The provisions of § 1237.9, confirming that a securities litigation claim has the same priority in receivership as the underlying security out of which it arises, would harmonize aspects of receiverships under the Safety and Soundness Act with the bankruptcy regime that applies to most publicly traded corporations. In aligning the priority of securities litigation Claims in receivership with their treatment in bankruptcy, FHFA follows in the path of a number of Federal circuit courts that have looked to the U.S. Bankruptcy Code for guidance on relative priorities of shareholder claims as well as other issues arising in receiverships of financial institutions. See, e.g., Gaff, 919 F.2d at 393-96; Office and Professional Employees Int'l Union v. FDIC, 962 F.2d 63, 68 (D.C. Cir. 1992) (Ruth Bader Ginsburg, J.); First Empire Bank-New York v. FDIC, 572 F.2d 1361, 1368 (9th Cir. 1978).

The shareholder counsel contend that the Supreme Court's decision in Oppenheimer v. Harriman National Bank & Trust Co. et al., 301 U.S. 206 (1937), mandates that securities fraud claims be treated as creditor claims unless the statute includes specific language akin to section 510(b) of the Bankruptcy Code. They assert that the majority of courts have rejected subordination of securities litigation claims in financial institution receiverships, and that the legislative history of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, from which much of the structure of HERA's conservatorship and receivership regime was drawn, contradicts FHFA's proposed interpretation of HERA, citing cases such as FDIC v. Jenkins et al., 888 F.2d 1537 (11th Cir. 1989), Howard v. Haddad, 916 F.2d 170 (4th Cir. 1990), and Hayes v. Gross, 982 F.2d 104 (3d Cir. 1992).

FHFA disagrees. Oppenheimer is not controlling, fundamentally because it involved a receivership under a different statute. Furthermore, it did not hold that subordination of shareholder claims is inappropriate in all receiverships, or that a statute must use “magic words” to provide or allow for subordination. As one court has explained, Oppenheimer's holding was heavily dependent on the fact that the rescinding shareholder previously satisfied his statutory obligation to creditors under then-existing “double liability” laws. Northwest Racquet Swim & Health Clubs, Inc. v. Resolution Trust Corp. (RTC), 927 F.2d 355, 361 n.17 (8th Cir. 1991) (rejecting attempt by holder of failed thrift's subordinated debt to rescind for alleged fraud and thereby recover on par with general creditors).

The courts' decisions in Jenkins, Howard, and Hayes do not address subordination of securities litigation claims in relation to competing creditors of an institution. They address the priority of FDIC claims against a failed bank's officers and directors relative to the claims private plaintiffs have against those same defendants. The proposed rule and final rule do not address the priority that FHFA's claims against officers and directors of the Enterprises have versus private plaintiff claims. This rule confirms and clarifies the priority among competing claims against the Enterprises themselves. The Jenkins, Howard, and Hayes decisions do not reach that issue or contradict the proposed rule. For example, in Jenkins the court observed that section 510(b) of the Bankruptcy Code provides for subordination of shareholder “claims against the debtor or an affiliate of the debtor,” but noted that “[i]n the present case, however, the shareholders are not attempting to collect on assets of the failed bank. Rather, they are proceeding against solvent third-parties in non-derivative shareholder suits,” a different situation than is addressed by section 510(b). 888 F.2d at 1545.

Prohibiting capital distributions and payment of securities litigation judgments.

Shareholder counsel also asserts that HERA does not grant FHFA as conservator the authority to prohibit capital distributions or payment of securities litigation claims. In one of their comments, shareholder counsel argued that the agency could not assert the authority to define securities litigation claims as capital distributions and to prohibit such distributions absent an express statutory grant of such authority.

FHFA rejects this argument, as it ignores the fact that the Safety and Soundness Act and HERA grant FHFA broad authority as Conservator to manage the conservatorship estate, including the authority to restrict capital distributions that would cause a regulated entity to become undercapitalized. As one of the primary objectives of conservatorship of a regulated entity would be restoring that regulated entity to a sound and solvent condition, allowing capital distributions to deplete the entity's conservatorship assets would be inconsistent with the agency's statutory goals, as they would result in removing capital at a time when the Conservator is charged with rehabilitating the regulated entity. Under the Safety and Soundness Act and HERA, FHFA has a statutory charge to work to restore a regulated entity in conservatorship to a sound and solvent condition, and to take any action authorized by this section, which FHFA determines to be in the best interests of the regulated entity or FHFA. This express statutory grant of authority grants FHFA as Conservator authority to address capital distribution and other claims against the conservatorship estate in the manner that it deems appropriate.

Shareholder counsel also asserts that HERA does not authorize the Conservator to defy or disregard a Federal court judgment. They suggest that this alleged lack of authority for proposed §§ 1237.12 and 1237.13 is underscored by the fact that 12 U.S.C. 4617(b)(11)(C), which forbids attachment or execution of receivership assets, does not apply during conservatorship, which means a judgment creditor could seize an Enterprise's assets during conservatorship using conventional execution remedies.

FHFA believes that this comment misperceives both the nature of a money judgment and the role of a conservator. In Federal court, “[a] money judgment `is not an order to the defendant; it is an adjudication of his rights or liabilities.' ” 12 Wright & Miller, Federal Practice & Procedure, § 3011 at 94 (2d ed. 2010) (quoting D. Dobbs, Handbook of the Law of Remedies (1971)). “[W]hen a party fails to satisfy a court-imposed money judgment, the appropriate remedy is a writ of execution, not a finding of contempt.” Combs v. Ryan's Coal Co. Inc., 785 F.2d 970, 980 (11th Cir. 1986); accord Shuffler v. Heritage Bank, 720 F.2d 1141, 1147-48 (9th Cir. 1983). Thus, not voluntarily writing a check to cover a money judgment out of a limited estate does not constitute “defiance” or “disregard” of that judgment. Moreover, because the essential function of a conservator is to preserve and conserve the institution's assets, courts are loath to require a conservator to make any particular expenditure out of the conservatorship estate. See, e.g., Rosa v. RTC, 938 F.2d 383, 398 (3d Cir. 1991) (reversing injunction requiring bank in conservatorship to make pension contributions required by the Employee Retirement Income Security Act because “implementation of the injunctive provisions would clearly require the distribution of the assets of City Savings and thereby encroach on the power of the conservator (now receiver) to preserve and dispose of those assets within its control. * * * [and] could result in forcing City Savings to accord the [pension] trustee, and therefore the beneficiaries of the plan, a preference over other creditors”).

Validity of final rules issued by FHFA.

Counsel for shareholder litigants raised a further objection to the proposed rule, arguing that any final rule issued by FHFA would be fundamentally flawed and invalid because FHFA's head is not a validly appointed officer. They contend that the absence of a Senate-confirmed Director for FHFA means that the Appointments Clause of the U.S. Constitution  7 has not been met satisfied which makes it impossible for FHFA to issue binding regulations. FHFA's statute provides for a presidentially designated and Acting Director, without Senate confirmation. FHFA is led by such an Acting Director designated by the President in September 2009. Nonetheless, shareholder counsel argues that the Appointments Clause only permits such acting officials to serve temporarily, and not for an extended or indefinite period of time. They also assert that the designation and appointment of FHFA's Acting Director is invalid unless the appointee succeeds a Senate-confirmed Director because HERA only allows the Acting Director to carry out the duties of a Director. Shareholders' counsel argues that the Acting Director's authority is only derivative of the preceding FHFA Director, a Senate-confirmed Director of a predecessor agency who served as Director of FHFA as provided by statute rather than by a Senate-confirmed appointment to the position. Therefore, according to shareholders' counsel, the Acting Director has no authority because his predecessor had no authority without a Senate confirmation.

The argument is without foundation. FHFA's Acting Director, was properly designated by the President as Acting Director pursuant to 12 U.S.C. 4512(f), which does not require Senate confirmation. Nor does the U.S. Constitution require Senate confirmation for an official designated to serve in an acting capacity. The former Director was the incumbent Director of OFHEO and properly took office pursuant to HERA's transitional provision, 12 U.S.C. 4512(b)(5), when OFHEO's functions were transferred to FHFA as its successor agency. Any alleged question about the validity of the former Director's service would not, in any event, impair the President's subsequent designation of FHFA's Acting Director. Finally, neither the U.S. Constitution nor the statute limits the time period for which FHFA's Acting Director may serve. Accordingly, the Acting Director is properly serving as Acting Director and FHFA has the power to issue this final rule.

The twelve Federal Home Loan Banks (Banks) submitted a joint comment in response to the proposed rule that introduced a number of concerns about the proposed rule.

Differences between the Banks and the Enterprises.

The Banks commented that the proposed rule did not address the unique differences between the Banks and the Enterprises, as required by section 1201 of HERA. 8 They assert that the final rule should apply only to the Enterprises and that FHFA should issue a separate proposed rule specific to the Banks.

According to the Banks, the proposed rule failed to account for their banking activities, including the rights of depositors and the treatment of assets held in safekeeping arrangements, trust or custodial accounts, and other third-party assets. The Banks assert that this failure is highlighted by a few words in the proposed rule's Supplementary Information stating that the “GSEs are not depository institutions,”  9 noting that the statement is untrue with respect to the Banks. While the Banks do take deposits from members, they are not insured depository institutions and such deposits are not a significant funding source for them. Consolidated obligations (“COs”) are their principal funding source. FHFA continues to believe, after consideration of the statutory factors, that the regulations in this part are appropriate to both the Enterprises and the Banks. The joint comment also notes that the proposed rule does not include provisions contained in FDIC conservatorship and receivership regulations, such as provisions addressing qualified financial contracts, treatment of financial assets transferred in connection with a securitization or participation, post-insolvency interest, or various policy statements issued by the FDIC with respect to conservatorship and receiverships. The joint comment suggests that these provisions provide certainty for parties seeking to do business with depository institutions regulated by the FDIC, and suggests that FHFA consider whether these issues should be addressed in connection with the proposed rule.

FHFA believes that the proposed rule adequately accounts for the unique differences between the Banks and the Enterprises and does not require special provisions relating to one or the other. Section 1145 of HERA amended section 1367 of the Safety and Soundness Act to establish a comprehensive and overarching conservatorship and receivership process for both the Enterprises and the Banks. The proposed rule was not, and the final rule is not, intended to codify in regulations the entirety of the statutory conservatorship and receivership regime. The final rule must be read in its context as elaborating on, not substituting for or replacing, statutory text. Moreover, while the proposed rule sought to develop and expand a regulatory framework that parallels the FDIC approach to conservatorships and receiverships, the goal of the proposed rule was never to create a regulatory framework that precisely mirrored the FDIC regulatory regime. This is partly due to differences between the enabling statutes of FHFA and the FDIC, and to the important differences between the regulated entities and the depository institutions insured by the FDIC. The agency has elected to address these issues, to the extent it may become necessary to do so, through policy statements, policy guidances, and decisions by the agency, the conservator or the receiver.

The statutory provisions for conservatorship and receivership, as explained below, provide the guidance necessary for matters that the Banks contend were ignored in the proposed rule. The Banks' comment boils down to an objection that the proposed rule does not recite the statute or does not seek to embellish clear statutory language that applies to them, but might not apply to the Enterprises.

The statutory provisions for conservatorship and receivership provide that “[t]he rights of the conservator or receiver appointed under this section shall be subject to the limitations on the powers of a receiver under sections 402 through 407 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). 10 Section 402 of the FDICIA defines “depository institution,” “net entitlement,” “net obligation,” and “netting contract,” as they apply to banking transactions. 12 U.S.C. 4402(6), (12), (13) and (14). Section 403 of the FDICIA (“Enforceability of security agreements”) requires:

Section 1367(b)(5)(D) of the Safety and Soundness Act (“Authority to Disallow Claims”) covers the receiver's authority to disallow any portion of any claim by a creditor or claim of security, preference, or priority that is not proven to the satisfaction of the receiver. Section 1367(b) also limits the scope of a receiver's authority to disallow claims with respect to “(I) any extension of credit from any Federal Reserve Bank, Federal Home Loan Bank, or the United States Treasury; or (II) any security interest in the assets of the regulated entity securing any such extension of credit.” 12 U.S.C. 4617(b)(5)(D)(iii) (emphasis added).

Consolidated obligations and joint and several liability.

The Banks argued that the proposed rule did not adequately address the joint and several liability of the Banks for COs that they issue. FHFA does not believe that COs require separate treatment in the rule, as opposed to policy statements or discretionary decisions in the context of specific conservatorships and receiverships.

The Banks note that, under 12 CFR 966.9(a), each Bank, individually and collectively, has an obligation to make full and timely payment of all principal and interest on COs when due. Based upon this joint and several liability structure, the Banks contend that if a Bank were placed in conservatorship or receivership and could not make required payments on its COs, this would trigger the requirement that one or more other Banks make the principal and interest payments on the COs on a continuing basis. They noted that this obligation is subject to a right of reimbursement by the non-paying Bank. According to the Banks, the proposed rule's infirmity is its failure to explain how this reimbursement right, including the right to receive interest, would be treated by the conservator or receiver. However, they offered no explanation for why the rule should address these obligations as distinct from any others.

FHFA does not believe that specific provisions are needed in this regulation to address COs and the Banks' joint and several liability on them. Unpaid COs of a defaulted Bank would be general-creditor obligations of that Bank's receivership. In such a case, the Director might well direct other Banks to make payments on those COs to ensure that investors in them received timely payment and market confidence in the Bank System was maintained. The Director has authority to do that under current regulation, 11 which regulations in this part do not affect. Under that regulation, the Banks that paid COs on which a defaulted Bank was primarily liable would have a claim for reimbursement against the defaulted Bank, 12 and that claim would be a general-creditor obligation of the defaulted Bank. None of these outcomes require special provision in this rule. As a practical matter, a troubled Bank might be resolved without creating receivership claims based on COs. In the case of a Bank placed in conservatorship, the Bank would likely continue to pay on its COs as the payments came due. Similarly, if a Bank were closed and the COs transferred to a limited-life regulated entity (LLRE), that LLRE would likely also continue to pay on those COs as the payments came due. In addition, in the case of a Bank that was closed and its assets and liabilities transferred to one or more acquiring Banks, those transactions would plausibly include assignment and apportionment of the failed Bank's COs to and among the acquiring Banks, which would continue to pay on those COs as the payments came due. Therefore, the priority of receivership claims relating to COs would be relevant only in a case of a Bank placed in a liquidating receivership. As stated above, FHFA believes that the situation can be addressed by regulations in this part without making specific provision for COs.

The Banks argued that their joint and several liability for COs could result in a troubled Bank being merged with another Bank under section 26 of the Bank Act, as amended by section 1209 of HERA. 12 U.S.C. 1446. 13 They urged FHFA to delay issuing a conservatorship and receivership rule that covers the Banks until it first publishes proposed rules on Bank voluntary mergers. FHFA does not make any speculation on whether such mergers might result from the Banks' joint and several liability on COs, and does not consider either this rule on conservatorship and receivership or a rule on voluntary mergers of the Banks as dependent on each other. In any event, the rule on voluntary mergers has already been proposed, 14 and work is proceeding on the final rule.

Administrative expenses.

The Banks raised an issue about claims for administrative expenses that receive heightened priority in a resolution. They argued that, in the event a Bank were in a troubled condition, or in default or in danger of default, one or more other Banks could voluntarily provide (or be required to provide by court order, or by FHFA direction or otherwise) some form of managerial, financial, or other assistance to the Bank. They asserted that, because of the Banks' joint and several liability for COs issued by any of the Banks, the final rule should address the priority of a Bank's claim for repayment from another Bank, when the latter Bank is placed into conservatorship or receivership. The determination of whether an expense incurred, either before or during receivership, is entitled to priority as an administrative expense of the receiver, is vested in the discretion of the receiver. FHFA does not believe that the statute requires, or that prudence counsels in favor of, advance prescriptive determination that certain specific types of claims, even those based on providing financial support for a troubled institution, always will be administrative expenses.

The Banks observe that the FDIC has a regulation stating that “administrative expenses of the receiver * * * shall include both pre-failure and post-failure obligations that the receiver determines are necessary and appropriate to facilitate the smooth and orderly liquidation or other resolution of the institution.”  15 FHFA does not believe that further elaboration of that type is needed in FHFA's regulation, because section 1367(c)(3) of the Safety and Soundness Act already defines “administrative expenses” to include “any obligations that the receiver determines are necessary and appropriate to facilitate the smooth and orderly liquidation or other resolution of the regulated entity.” 12 U.S.C. 4617(c)(3).

Priority of expenses and unsecured claims.

The Banks suggested FHFA add clarifying language to § 1237.9 of the proposed rule, which states that the lowest priority of claim is accorded to “[a]ny obligation to current or former shareholders or members arising as a result of their current or former status as shareholders or members, including without limitation, any Securities Litigation Claim.” They argue that members, or former members, of a Bank may have a wide range of transactions and relationships with a failed Bank that could result in obligations that constitute creditor rather than equity holder claims against the receivership. They asserted that members can maintain deposits with a Bank, or enter into transactions under which they are otherwise treated as a creditor of a Bank. These obligations, transactions and relationships arise, because of the nature of the Bank System, from the shareholder status of the member or former member. But, the Banks maintain these types of member transactions and relationships are distinct from a member's, or former member's, ownership of capital stock. They urged FHFA to exempt from § 1237.9(a)(4) of the proposed rule obligations of a failed Bank to members or former members arising from transactions or relationships other than the ownership of capital stock in that Bank, so that those obligations would be treated the same as similar claims by nonmembers.

FHFA is persuaded that the organizational uniqueness of the Bank System requires a clarification to § 1237.9(a)(4) of the final rule. The final rule clarifies that, with respect to members of a failed Bank, the lowest priority position does not apply to claims arising from transactions or relationships distinct from the claimant's past or present ownership, purchase, sale or retention of an equity security of the Bank.

The Banks also commented that eleven of the twelve Banks operate under capital plans adopted under 12 U.S.C. 1426, and approved by the Finance Board. They stated that these capital plans, in accordance with the Bank Act and implementing regulations, may provide for different priorities among holders of various forms of capital stock of a Bank and recommend that FHFA further amend § 1237.9(a)(4) of the proposed rule to address this issue of competing priorities. FHFA agrees that when a regulated entity has issued multiple classes of capital stock, priority as between holders of those different classes should be determined by the capital plans or other underlying corporate instruments, even though all are within § 1237.9(a)(4). Thus, there may be multiple subpriorities within § 1237.9(a)(4). The Safety and Soundness Act establishes the general priorities, including claims of capital stock owners. 12 U.S.C. 4617(c). Within the fourth priority of claims, the priority inhabited by stockholders' claims, FHFA intends to recognize the different stock priorities that may exist among classes and categories of stock, including preferred and common stockholders, and has added language to this effect to § 1237.9(a)(4).

Perfected security interests, safekeeping, and other trust holdings.

The Banks contend that perfected security interests (including exceptions for preferences and fraudulent conveyances), safekeeping, and other trust holdings should be addressed specifically in the final rule to ensure that the interests and legitimate legal rights of third-parties are recognized.

FHFA considered the comment and concludes that no revision of the proposed rule is necessary to address the concerns the Banks have raised. Protection of security interests, with appropriate exceptions for preferential and fraudulent transfers, is provided in 12 U.S.C. 4617(d)(12). The avoidance of fraudulent transfers also is covered in 12 U.S.C. 4617(b)(15). Property held in trust and in custodial arrangements generally is not considered a part of a receivership estate available to satisfy general creditor claims. To the extent appropriate, FHFA expects to follow FDIC and bankruptcy practice in giving effect to this concept in a receivership of a regulated entity.

Period for contract repudiation.

The Banks objected to the provision of the proposed rule that would create an 18-month period for the conservator or receiver to determine whether to repudiate burdensome contracts of a troubled regulated entity. In their joint comment, the Banks suggested that FHFA instead adopt a six-month period for repudiation determinations, or address such matters on a case-by-case basis. While maximizing the discretion of a conservator or receiver by remaining silent as to the reasonable time for repudiation may have some appeal, FHFA does not believe that either a six-month or an open-ended period is appropriate.

FHFA has considered whether to revise that provision of the proposed rule, and has determined that the 18-month period should remain in the final rule. In the proposed rule, FHFA explained that FHFA's experiences as conservator for Fannie Mae and Freddie Mac have shown that it could take at least 18 months for a conservator or receiver to obtain the facts needed to make accurate determinations about its rights of repudiation. Due to the complexity of the contracts and commercial relationships of the regulated entities, FHFA believes that an 18-month period adequately and appropriately balances the need to fully assess the state of a troubled institution, the need for repudiation and the interests of contractual counterparties. Subsequently, experiences as Conservator have given FHFA no reason to change that decision. Moreover, the interests of contractual counterparties are protected by provisions such as 12 U.S.C. 4617(d)(7)(B), which mandates that payments to a counterparty for performance that a conservator or receiver accepts under a pre-conservatorship or -receivership contract for services before making a determination to repudiate the contract shall be treated as an administrative expense of the conservatorship or receivership.

Distinctions between FHFA as conservator and FHFA as receiver.

The Banks' joint comment suggests that § 1237.3 of the proposed rule failed to properly distinguish between actions FHFA is authorized or directed to take in its capacity as conservator from those that the agency is authorized or directed to take as receiver. Specifically, the joint comment notes that § 1237.3 of the proposed rule would provide FHFA as receiver with the authority to continue the missions of the regulated entity; ensure that the operations and activities of each regulated entity foster liquid, efficient, competitive and resilient national housing markets; and ensure that each regulated entity operates in a safe and sound manner. The Banks contend that this authority is limited exclusively to the actions of FHFA as conservator, because FHFA is required to liquidate a regulated entity in receivership.

The ultimate responsibility of FHFA as receiver is to resolve and liquidate the existing entity. A conservator's goal is to continue the operations of a regulated entity, rehabilitate it and return it to a safe, sound and solvent condition. While operating an entity in conservatorship, continuation of the mission of the institution and fostering liquid, efficient, competitive and resilient national housing markets may be in the regulated entity's best interest, and are consistent with the Safety and Soundness Act's provisions governing operating entities. These activities of a conservator may not be aligned with the ultimate duty of a receiver, although in the process of finally resolving a regulated entity FHFA will need to strike the proper balance between continuing certain operations pending liquidation and terminating other operations. This balance may include temporarily operating in support of the failed institution's mission. FHFA agrees with the Banks that some activities appropriate in conservatorship are less consistent with a receivership. Section 1237.3 of the final rule has been revised to recognize the receiver's responsibility to liquidate an entity in receivership.

Treatment of certain types of contracts and commercial agreements.

The Banks' joint comment raises questions about the possible treatment of several types of contracts and commercial agreements in conservatorship and receivership, including the treatment of completed sales of certain assets and liabilities between individual Banks and third-parties, standby letters of credit issued on behalf of Bank members and housing associates, subsidies provided under a Bank's Affordable Housing Program, or contracts for services provided to one or more other Banks. The Banks suggest that the treatment of these various contracts and agreements be addressed in the rule, and ask that FHFA state that it will not use its powers of repudiation as conservator or receiver to set aside or repudiate these obligations and transactions.

FHFA has considered whether to make a declaration about the status of those and other contracts in this rule, and has determined that this rulemaking is not the appropriate vehicle for such an announcement. This rule is not designed and FHFA has declined to limit the discretion of the agency as a future conservator or receiver. The circumstances of any future conservatorship and receivership can vary greatly, and it is necessary for FHFA to preserve the flexibility for the agency as conservator or receiver to make decisions based upon the specific issues facing that troubled regulated entity.

Expedited determination of claims.

The Banks observed that § 1237.7 of the proposed rule provides that FHFA, as receiver, will determine whether or not to allow a claim within 180 days from the date the claim is filed. They contend, however, that the Safety and Soundness Act requires FHFA to establish a separate procedure for expedited relief and claim determination within 90 days after the date of filing for certain claimants. The Banks suggest that the rule should establish the expedited claims process.

Although section 1367(b)(8) of the Safety and Soundness Act requires FHFA to “establish a procedure for expedited relief outside of the routine claims process * * * [in section 1367(b)(5)]” and a 90-day determination period for certain claims, the statute does not require a regulation establishing the expedited procedures. In fact, the statutory text is so explicit that codifying regulatory procedures for expedited claims is more likely to confuse than clarify processing. FHFA believes that implementing these specific provisions is best left to internal operating procedures that can be adjusted quickly as needed to provide consistent notice to claimants and set up internal processes for handling expedited claims separately from routine claims. The purpose of the rule is not to recite the statute, and in this instance the statute is sufficient.

Alternate resolution procedures.

Section 1237.8 of the proposed rule provides that claimants seeking “a review of the determination of claims may seek alternative dispute resolution [(“ADR”)] from [FHFA] as receiver in lieu of a judicial determination.” The Banks asserted that Congress intended ADR to be an alternative to the normal process established under 12 U.S.C. 4617(b)(5) for the receiver to make the initial determination on a claim. Therefore, referring to 12 U.S.C. 4617(b)(7)(A)(i), they contend that FHFA is limited to offering claimants a choice of both non-binding ADR that does not bar subsequent judicial review or binding ADR that precludes judicial review.

FHFA believes that the Banks' interpretation of the statute is excessively narrow and ignores the broad authority and command to the agency. Section 1367(b)(7) of the Safety and Soundness Act provides that “[t]he Agency shall establish such alternative dispute resolution processes as may be appropriate for the resolution of claims filed under paragraph (5)(A)(i) [ i.e., the routine claims allowance/disallowance provision].” 12 U.S.C. 4617(b)(7)(A)(i). This language unambiguously leaves to FHFA the determination of appropriateness. The statute is expressly optional with respect to whether binding or non-binding ADR should be used and that the choice to participate in ADR cannot be forced by one party. 12 U.S.C. 4617(b)(7)(A)(iii). FHFA has determined that ADR is appropriate if all parties agree to it and accept that a condition of ADR is that it is in lieu of seeking judicial relief. Specific procedures and processes are left to development “by order, policy statement, or directive,” as provided in § 1237.8 of the proposed rule. No change in the proposal is required or warranted.

Limited-Life Regulated Entities.

The Banks raised numerous issues regarding proposed rule §§ 1237.10 and 1237.11 with respect to the establishment and operation of a LLRE. They objected that the proposed rule failed to identify or address the wide range of issues that could arise in the context of an LLRE, including the impact of such an entity on members of the Bank in receivership, holders of Bank COs, and other creditors and counterparties of the Bank in receivership. The Banks asked whether a “LLRE Bank” would be considered a new Bank that would cover the same district, and have the same membership, that was served by the Bank in receivership or whether a new permanent Bank would be established to serve that district contemporaneously with the LLRE; whether the LLRE Bank would assume some or all of the primary obligations on COs of the Bank in receivership or on the contracts of the failed Bank; whether it could fund its operations by becoming a primary obligor on new Bank System COs (and, if so, how would such primary obligations be treated upon the termination of the LLRE Bank); and how the existence of the LLRE Bank would impact the Securities and Exchange Commission disclosure obligations of the related Bank for FHFA reporting purposes.

FHFA responds that there is no requirement for the establishment of an LLRE in the case of a failed Bank, unlike in the case of a failed Enterprise. Further, reasons for and details of the operation and establishment of an LLRE are likely to vary based on the specific reasons for failure, the nature of the failed institution's assets and liabilities, and the resolution methodology selected by the receiver. The specificity the Banks suggested, if contained in regulatory text, could restrict the receiver's ability to structure the resolution of a failed institution and leverage its assets and liabilities for the best interests of the Bank System. To the extent that statutory language does not provide answers to the Banks questions, FHFA does not believe it appropriate to limit the resolution tools available to it through a regulation.

Such flexibility is consistent with the statutory framework. For example, section 1367(i)(1)(B)(i) of the Safety and Soundness Act provides that a LLRE may “assume such liabilities of the regulated entity that is in default or in danger of default as the Agency may, in its discretion, determine to be appropriate. * * *” 12 U.S.C. 4617(i)(1)(B)(i). Subparagraph (B)(ii) authorizes the LLRE to “purchase such assets of the regulated entity that is in default, or in danger of default, as the Agency may, in its discretion determine to be appropriate.” Subparagraph (B)(iii) authorizes the LLRE to “perform any other temporary function which the Agency may, in its discretion, prescribe in accordance with this section.” The statutory discretion vested in the agency is significant and necessary. FHFA declines to restrict the discretion Congress vested in it to unnecessarily tie its hands when resolving failed institutions in the future.

The Banks also suggest that the language in § 1237.13(b) of the proposed rule, stating that no shareholder or creditor of a regulated entity shall have any right or claim against the charter of that regulated entity once FHFA has been appointed receiver for the regulated entity and a limited-life regulated entity has succeeded to the charter, does not appear to apply to a Bank in receivership, since 12 U.S.C. 4617(i)(1)(A)(i) provides for FHFA to grant a temporary charter to a limited-life regulated entity for a Bank in receivership.

FHFA does not agree with this comment. The charters are not entities in receivership against which claims can be asserted, nor are the charters assets of a receivership estate from which claims can be paid.

In addition to the comments received from shareholders for the Enterprises in conservatorship, counsel for shareholder litigants, members of Congress, and Banks, FHFA received comments from various other parties, who raised the following concerns:

The conservatorships of Fannie Mae and Freddie Mac.

The Mortgage Bankers Association (MBA) commented that the proposal was too theoretical, preferring a rule that more specifically addressed the issues associated with the current conservatorships of Fannie Mae and Freddie Mac. The MBA suggested that a rule should answer questions such as the specific treatment of subordinated and senior debtholders, and could identify the operations and departments of the Enterprises that are likely to be retained in receivership.

The MBA suggested that FHFA should have used the rulemaking process to explain to the public the criteria that FHFA might use in deciding whether to place the Enterprises into receivership. In their view, announcing in advance the factors or milestones that would trigger receivership would prevent that determination from appearing arbitrary. Finally, the MBA suggested that FHFA could use the rule to set forth the agency's goals in a receivership. They argued that this would give FHFA a chance to explain how several of the possible roles for receivership—a least-cost resolution of the Enterprises, maintaining ongoing support of the housing market by protecting the infrastructure of the Enterprises, or using the assets of the Enterprises to lay the foundation for a new secondary housing market structure—would be applied by FHFA as receiver.

Bank of America also recommended that any final rule issued by FHFA clearly, narrowly, and carefully define the goals of conservatorship or receivership, and other commenters also noted that the proposed rule did not provide a specific model for Fannie Mae and Freddie Mac after the end of the conservatorships and the absence of a detailed restructuring plan for the Enterprises. Other commenters also argued that the proposed rule failed to address the treatment of Fannie Mae or Freddie Mac preferred shareholders in an Enterprise receivership or the potential for harm to shareholders by diminishing or extinguishing the value of their equity interests.

The rule is designed to implement and expand the general framework for conservatorship and receivership operations for the regulated entities. This rule and rulemaking generally are not appropriate vehicles through which to predict the specific resolution of hypothetical future events. It would be too limiting on agency authority to use the rule to explain to the public the criteria that FHFA might use in deciding whether to place the Enterprises into receivership. The criteria for establishing receiverships are enumerated in the Safety and Soundness Act. 16 Congress left considerable decision-making discretion to the agency, and FHFA sees no reason to limit that discretion through a final rule when future circumstances are unknown.

It would be inappropriate to use the rule to explain how several of the asserted possible roles for receivership—a least-cost resolution of the Enterprises, maintaining ongoing support of the housing market by protecting the infrastructure of the Enterprises, or using the assets of the Enterprises to lay the foundation for a new secondary housing market structure—would be applied by the agency as receiver. By leaving such strategic decisions about receivership for the future, the rule retains necessary discretion for the agency to deal with events as they unfold and not artificially limiting a future receiver's choices.

Moreover, this rule is not intended to address discretionary decisions about the treatment of assets in the conservatorship estate, as general policies on that subject are more appropriately handled in FHFA policy guidances and other agency policy statements. More specific discretionary decisions are better addressed by the Conservator on a case-by-case basis. In either case, neither type of decisions is appropriate for a rule that would address conservatorship and receivership operations for all the regulated entities. This rule seeks to avoid limiting the discretion of FHFA as Conservator or Receiver in future insolvencies. The circumstances of each conservatorship or receivership are unique to the issues facing that particular troubled regulated entity. For that reason FHFA has decided to preserve the discretionary authority of the agency as conservator or receiver in addressing those issues, instead of attempting to craft one set of policies that would govern every circumstance.

Notice and hearing before transfer or sale of any asset or liability.

Bank of America has also suggested modifying § 1237.3(c) to provide that the transfer or sale of any asset or liability of an Enterprise in conservatorship or receivership occur only after provision of notice to affected parties and an opportunity for a hearing, unless such transfer or sale is part of the Enterprise's ordinary course of business. FHFA rejects this suggestion. Implementing such a proposal would unnecessarily restrict the ability of FHFA as conservator or receiver to act quickly and decisively in preserving and conserving the assets of a regulated entity. The commenter did not describe any precedent for such a potentially cumbersome process in the conservatorship and receivership practices and procedures of other financial regulators.

Language clarifications for § 1237.9 of the rule.

Bank of America also suggested making § 1237.9 of the proposed rule clearer by substituting the word “claimants” for “creditors” in paragraph (b), and substituting the term “claim of” for “obligation to” in paragraph (a)(4). In response to these suggestions, “creditors” has been changed to “claimants” in § 1237.9(b), and “obligation to” has been changed to “claim by” in § 1237.9(a)(4), and conforming changes have been made to the rule.

Payment of dividends to shareholders during conservatorship.

Some commenters suggested that the rule should address the payment of dividends to shareholders during conservatorship. While FHFA as conservator may restrict dividends for safety and soundness reasons under the Safety and Soundness Act and the Bank Act, a regulated entity may generally pay dividends to shareholders only when it is adequately capitalized. It is unlikely that a regulated entity in conservatorship would be permitted to pay dividends while it is unable to meet its capital requirements. This rulemaking is not the appropriate vehicle for establishing a policy for the payment of dividends by a regulated entity in conservatorship, as this rule was not intended to address specific discretionary decisions about the treatment of assets from the conservatorship estate, and was not designed to limit the discretion of FHFA as conservator in future conservatorships.

Definitional changes.

The proposed definition of “Executive officer” required adjustment to identify the different sources for the definition with respect to the Enterprises and the Banks. The term is clarified in this final rule. A technical correction is made to the definition of “Authorizing statutes.” The proposed definition of “Capital distribution” was located in part 1229, the FHFA rule on capital classifications and prompt corrective action, as more appropriate than amending an OFHEO rule that predated the enactment of HERA.

The definition of “Capital distribution” to include payments of securities litigation claims applies only to the Enterprises. 12 U.S.C. 4513(f) requires FHFA, prior to promulgating regulations relating to the Banks, to consider the differences between the Banks and Enterprises, relating to, among other things, the Banks' cooperative ownership structure and capital structure. There is no established marketplace for capital stock of the Banks and it is not publicly traded. Although the Banks are registered with the Securities and Exchange Commission, the capital stock of the Banks is purchased by members, and redeemed by the applicable Bank, at stated par value rather than any market price. As a result, the Banks face less exposure to securities litigation claims than the Enterprises, whose equity securities are publicly traded with fluctuating market prices. For the Banks, “capital distribution” during conservatorship and receivership shall retain the meaning assigned in Subpart A of FHFA's rule on capital classifications and prompt corrective action, at § 1229.1.

The final regulation does not contain any information collection requirement that requires the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. 3501 et seq. ).

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) requires that a regulation that has a significant economic impact on a substantial number of small entities, small businesses, or small organizations must include an initial regulatory flexibility analysis describing the regulation's impact on small entities. Such an analysis need not be undertaken if the agency has certified that the regulation will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 605(b). FHFA has considered the impact of this final regulation under the RFA. FHFA certifies that the final regulation is not likely to have a significant economic impact on a substantial number of small business entities because the regulation is applicable only to the regulated entities, which are not small entities for purposes of the RFA.

Accordingly, for the reasons stated in the Supplementary Information, under the authority of 12 U.S.C. 4513b, 4526, and 4617 the Federal Housing Finance Agency amends chapter XII of Title 12, Code of Federal Regulations, as follows:

The FAA has determined that notice of, and opportunity for prior public comment on, these special conditions are impracticable because the substance of these special conditions has been subjected to the notice and comment period in several prior instances and has been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. The FAA therefore finds that good cause exists for making these special conditions effective upon issuance.

We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data. We ask that you send us two copies of written comments.

We will file in the docket all comments we receive, as well as a report summarizing each substantive public contact with FAA personnel about these special conditions. You can inspect the docket before and after the comment closing date. If you wish to review the docket in person, go to the address in the ADDRESSES section of this preamble between 7:30 a.m. and 4 p.m., Monday through Friday, except Federal holidays.

We will consider all comments we receive by the closing date for comments. We may change these special conditions based on the comments we receive.

If you want us to acknowledge receipt of your comments on these special conditions, include with your comments a self-addressed, stamped postcard on which you have written the docket number. We will stamp the date on the postcard and mail it back to you.

On March 30, 2006, GALP applied for a type certificate for their new Model G250 airplane. The G250 is an 8-10 passenger (19 maximum), twin-engine airplane with a maximum operating altitude of 45,000 feet and a range of approximately 3,400 nautical miles. Airplane dimensions are 61.69-foot wing span, 66.6-foot overall length, and 20.8-foot tail height. Maximum takeoff weight is 39,600 pounds and maximum landing weight 32,700 pounds. Maximum cruise speed is mach 0.85, dive speed is mach 0.92. The avionics suite will be the Rockwell Collins Pro Line Fusion.

Under the provisions of 14 CFR 21.17, GALP must show that the Model G250 airplane meets the applicable provisions of part 25 as amended by Amendments 25-1 through 25-117.

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 Model G250 airplane 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 novel or unusual design feature, the special conditions would also apply to the other model.

In addition to the applicable airworthiness regulations and special conditions, the Model G250 airplane 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; and the FAA must issue a finding of regulatory adequacy under § 611 of Public Law 92-574, the “Noise Control Act of 1972.”

The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type-certification basis under § 21.17(a)(2).

The Model G250 will incorporate the following novel or unusual design feature:

GALP has requested approval to use an Automatic Takeoff Thrust Control System (ATTCS; referred to by GALP as Automatic Power Reserve (APR)) as the performance level in showing compliance with the approach climb requirements of 14 CFR 25.121(d). Section 25.904 and Appendix I to part 25 of 14 CFR limit the application of performance credit for ATTCS to takeoff only. Since the airworthiness regulations do not contain appropriate safety standards for approach climb performance using ATTCS, special conditions are required to ensure a level of safety equivalent to that established in the regulations.

GALP is proposing to use the APR function of the Model G250 airplane during go-around and is requesting approach climb performance credit for the use of the additional power provided by the uptrim. The GALP powerplant control system comprises a Full Authority Digital Electronic Control (FADEC) for the Honeywell AS907-2-1G engine. The control system includes an ATTCS feature referred to as APR.

The ATTCS (APR) function is integrated into the FADEC such that there is no separate circuitry for the APR function. Both FADECs are connected via a communications bus. Each FADEC sends information to the other. When the FADEC of any engine detects either the loss of communication or an indication of significant thrust loss from the opposite engine, the FADEC of the healthy (or both) engine will increase the power to the APR rating and the “APR” (activated) icon will appear on the EICAS inside the N1 gauge for the engine with its Throttle Lever Angle (TLA) set at takeoff (TO) power. In addition, APR is always available to the flightcrew for each engine, with its TLA set at TO power by pushing the “APR manual” pushbutton. If the TRA is not set to the TO power setting, this just arms both engines for APR. Once manually armed, whenever either TLA is advanced to the TO power setting, that engine increases power to APR rating regardless of the condition of the other engine.

The APR feature is always armed unless the flight crew selects to disarm it for single-engine-operation training purposes. When this disarmed condition is active, an amber caution message is provided. The normal operating procedure will be to leave APR armed at all times. The APR function will be checked as part of the normal FADEC continuous self-test feature. The engine, by virtue of the integrated power schedule imbedded in the FADEC software, cannot continue running if uptrim fails. This function is retained even in the case of a FADEC single-channel failure.

The above description highlights the fact that the APR power is available at all times for any TO operational segment without any additional action from the pilot. This applies during takeoff and go-around (TOGA). The aircraft performance data is based on the availability of the uptrim power during takeoff and approach climb.

The ATTCS, as incorporated on the Model G250 airplane, allows the pilot to use the “Auto APR” procedure for the one-engine-inoperative (OEI) case and the “Manual APR” procedure while both engines are operative; in either case, the pilot obtains the additional go-around power by moving the power levers to the TO power setting. Full APR thrust is provided up to 20,000 ft. MSL.

The part 25 standards for ATTCS, contained in § 25.904 and Appendix I, specifically restrict performance credit for ATTCS to takeoff. Expanding the scope of the standards to include other phases of flight, including go-around, was considered at the time the standards were issued, but flightcrew-workload issues precluded further consideration. As the preamble of amendment 62 to part 25 states:

The ATTCS incorporated on the Model G250 airplane allows the pilot to use the same power-setting procedure during a go-around regardless of whether or not an engine fails. In either case, the pilot obtains go-around power by moving the power levers to the TOGA detent. Since the ATTCS is always armed, it will function automatically following an engine failure, and advance the remaining engine to the APR power level.

Because the airworthiness regulations do not contain appropriate safety standards to allow approach climb performance credit for ATTCS, special conditions are required to ensure a level of safety equivalent to that established in the regulations. The definition of a critical time interval for the approach climb case, during which time it must be extremely improbable to violate a flight path based on the § 25.121(d) gradient requirement, is of primary importance. In the event of a simultaneous failure of an engine and the APR function, falling below the minimum flight path defined by the 2.5-degree approach, decision height, and climb gradient required by § 25.121(d) must be shown to be an extremely improbable event during this critical time interval. The § 25.121(d) gradient requirement implies a minimum OEI flight-path capability with the airplane in the approach configuration. The engine may have been inoperative before initiating the go-around, or it may become inoperative during the go-around. The definition of the critical time interval must consider both possibilities.

As discussed above, these special conditions are applicable to the GALP Model G250 airplane. Should GALP apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, the special conditions would apply to that model as well.

This action affects only certain novel or unusual design features on the GALP Model G250 airplane. It is not a rule of general applicability and it affects only the applicant who applied to the FAA for approval of these features on the airplane.

The FAA has determined that prior public notice and comment are unnecessary and impracticable, and good cause exists for adopting these special conditions upon issuance.

The authority citation for these special conditions is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for the GALP Model G250 airplane.

This document and additional information concerning OFAC are available from OFAC's Web site http://www.treasury.gov/ofac ). Certain general information pertaining to OFAC's sanctions programs also is available via facsimile through a 24-hour fax-on-demand service, tel.: 202/622-0077.

On June 26, 2008, the President issued Proclamation 8271, “Termination of the Exercise of Authorities Under the Trading With the Enemy Act With Respect to North Korea” (73 FR 36785, June 27, 2008), effective at 12:01 a.m. eastern daylight time on June 27, 2008. In Proclamation 8271, the President found that the continuation of the exercise of authorities under the Trading With the Enemy Act (50 U.S.C. App. 1 et seq. ) (“TWEA”) with respect to North Korea, as authorized in Proclamation 2914 of December 16, 1950 (15 FR 9029, December 19, 1950), and most recently continued under Presidential Determination 2007-32 of September 13, 2007 (72 FR 53407, September 18, 2007), was no longer in the national interest of the United States. Accordingly, in section 1 of Proclamation 8271, the President terminated the exercise of TWEA authorities with respect to North Korea, which were implemented by the Foreign Assets Control Regulations, 31 CFR part 500 (the “FACR”), and the Transaction Control Regulations, 31 CFR part 505 (the “TCR”), and rescinded Presidential Determination 2007-32 with respect to North Korea.

Section 2 of Proclamation 8271 authorized and directed the Secretary of the Treasury to take all appropriate measures within the Secretary's authority to give effect to the proclamation.

The only effective provisions in the FACR and TCR immediately prior to the issuance of Proclamation 8271 were those that related to North Korea. Since the issuance of Proclamation 8271, those regulations, to the extent promulgated under TWEA authorities, are no longer in force with respect to North Korea. In a separate final rule also being published today, OFAC is amending the North Korea Sanctions Regulations, 31 CFR part 510, to implement Executive Order 13570 of April 18, 2011, which prohibits the importation into the United States, directly or indirectly, of any goods, services, or technology from North Korea, unless otherwise authorized. As amended, the North Korea Sanctions Regulations will replace certain provisions of the FACR promulgated under sections 73 and 74 of the Arms Export Control Act (22 U.S.C. 2797b and 2797c), which were the only remaining effective provisions of the FACR. Accordingly, OFAC is removing the FACR and the TCR from 31 CFR chapter V.

Because the Regulations involve a foreign affairs function, the provisions of Executive Order 12866 and the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.

This document and additional information concerning OFAC are available from OFAC's Web site ( http://www.treasury.gov/ofac ). Certain general information pertaining to OFAC's sanctions programs also is available via facsimile through a 24-hour fax-on-demand service, tel.: 202/622-0077.

On June 26, 2008, the President, invoking the authority of, inter alia, the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) (“IEEPA”) and the National Emergencies Act (50 U.S.C. 1601-1651) (the “NEA”), issued Executive Order 13466 (73 FR 36787, June 27, 2008) (“E.O. 13466”). On August 30, 2010, the President, invoking the authority of, inter alia, IEEPA, the NEA, and section 5 of the United Nations Participation Act (22 U.S.C. 287c) (the “UNPA”), issued Executive Order 13551 (75 FR 53837, September 1, 2010) (“E.O. 13551”), effective at 12:01 p.m. eastern daylight time on August 30, 2010.

On November 4, 2010, the Department of the Treasury's Office of Foreign Assets Control published the North Korea Sanctions Regulations, 31 CFR part 510 (the “Regulations”), to implement E.O. 13466 and E.O. 13551, pursuant to authorities delegated to the Secretary of the Treasury in those orders (75 FR 67912, November 4, 2010).

On April 18, 2011, the President, invoking the authority of, inter alia, IEEPA, the NEA, and the UNPA, issued Executive Order 13570 (76 FR 22291, April 20, 2011) (“E.O. 13570”), effective at 12:01 a.m. eastern daylight time on April 19, 2011.

This final rule amends the Regulations to implement E.O. 13570, pursuant to authorities delegated to the Secretary of the Treasury in E.O. 13570. A copy of E.O. 13570 appears in appendix C to this part.

These amendments to the Regulations are being published in abbreviated form at this time for the purpose of providing immediate guidance to the public. OFAC intends to supplement part 510 with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance and additional general licenses and statements of licensing policy. (The appendices to the Regulations will be removed when OFAC publishes a more comprehensive set of regulations.)

Because the Regulations involve a foreign affairs function, the provisions of Executive Order 12866 and the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.

The collections of information related to the Regulations are contained in 31 CFR part 501 (the “Reporting, Procedures and Penalties Regulations”). Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), those collections of information have been approved by the Office of Management and Budget under control number 1505-0164. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

On April 12, 2011, we published a notice of proposed rulemaking (NPRM) entitled “Superfund Site, New Bedford Harbor, New Bedford, MA: Anchorage Ground and Regulated Navigation Area” in the Federal Register (76 FR 20287). We received no comments on the proposed rule. A public meeting was not requested and none was held. The Commonwealth of Massachusetts completed a review of this regulatory action and concurred that the activity's effects on resources and uses in Massachusetts coastal zone are consistent with the Coast Zone Management enforceable program policies. The Commonwealth had no objection to the Coast Guard implementing the action in less than 90 days from the date of initial notification as provided in 15 CFR 930.36(b)(2).

The legal basis for the proposed rule is 33 U.S.C. 471, 1221-1236, 2030, 2035, and 2071; 46 U.S.C. chapter 701; 50 U.S.C. 191, 195; 33 CFR 1.05-1(g), 6.04-1, 6.04-6, and 160.5; and Department of Homeland Security Delegation No. 0170.1, which collectively authorize the Coast Guard to define regulatory anchorage grounds and RNAs.

The purpose of the rule is to minimize the potential for human exposure to contamination and to help protect the integrity of the EPA's remedy at a portion of the New Bedford Harbor Superfund Site by reducing an existing anchorage ground so that it no longer overlaps the pilot cap, and by placing the pilot cap in a RNA that would protect the site from damage by mariners, and protect mariners and the general public from contaminants in the site.

The New Bedford Superfund cleanup site is an urban tidal estuary with sediments contaminated by polychlorinated biphenyls (PCBs) and heavy metals. An extensive history and background of the cleanup project can be found on the EPA's Web site, at http://www.epa.gov/nbh/ .

The specific cleanup project and surrounding area addressed by this regulation is the Pilot Underwater Cap (“pilot cap”), which is located south of the New Bedford Harbor hurricane barrier in the outer harbor. The pilot cap consists of sand and gravel covering approximately 20 acres of contaminated sediments. Based on data collected in 2010, the thickness of the cap is predominantly one to two feet (98% of the cap area has a thickness greater than one foot; 68% greater than two feet; and in a few isolated areas, the thickness is up to 6.4 feet). A copy of the latest data for the pilot cap area can be found on EPA's Web site for New Bedford Harbor: http://www.epa.gov/nbh . While the pilot cap is protective of human health and the environment, it remains vulnerable to human actions that tend to disturb the seabed.

Several maritime practices that involve physical contact with the seabed ( e.g., anchoring, dragging, trawling, and spudding) pose a specific threat to the pilot cap. It is also conceivable that PCBs or heavy metals could stick to gear penetrating the seabed; any contaminants that come up with gear could create a threat to human health and the environment. The RNA would prohibit these specific activities without in any way inhibiting surface navigation.

The Coast Guard received no comments on the proposed rulemaking. No changes were made in the Final Rule.

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

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order.

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule would affect the following entities, some of which might be small entities: The owners or operators of recreational and small fishing vessels intending to anchor in New Bedford's outer harbor.

The rule would not have a significant economic impact on a substantial number of small entities for the following reasons: Normal surface navigation will not be affected; approximately half of the existing anchorage area will still be available for use, and there is another, much larger anchorage nearby; the number of vessels using the anchorage is limited due to draft (less than or equal to 18 feet); and anchoring over the pilot cap could pose a risk to human health and the environment, making it an already unattractive option.

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

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

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

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

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

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

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

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

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

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

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

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule is categorically excluded, under figure 2-1, paragraphs (34)(f) and (34)(g) of the Instruction because it involves shrinking an existing anchorage ground, and establishing an RNA prohibiting activities that disturb the seabed.

An environmental analysis checklist and a categorical exclusion determination are available in the docket where indicated under ADDRESSES .

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR parts 110 and 165 as follows:

The information presented in this preamble is organized as follows:

EPA is publishing this final rule without a prior proposed rule because we view this as a noncontroversial action and anticipate no significant adverse comment. These amendments to the national emission standards for hazardous air pollutants (NESHAP) for plating and polishing operations that are area sources (40 CFR part 63, subpart WWWWWW) consist of a clarification stating that the emission control requirements of the plating and polishing area source rule do not apply to bench-scale activities, and technical corrections and clarifications that do not make material changes to the rule's requirements. However, in the “Proposed Rules” section of this Federal Register , we are publishing a separate document that will serve as the proposed rule to amend the area source standards if EPA receives significant adverse comments on this final rule. We will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. For further information about commenting on the rule, see the ADDRESSES section of this document. If we receive significant adverse comments, we will withdraw only those provisions on which we received significant adverse comments. We will publish a timely withdrawal in the Federal Register indicating which provisions will become effective and which provisions are being withdrawn.

The regulated categories and entities potentially affected by the final rule include:

The modified BFEs are not listed for each community in this interim rule. However, the address of the Chief Executive Officer of the community where the modified BFE determinations are available for inspection is provided.

Any request for reconsideration must be based on knowledge of changed conditions or new scientific or technical data.

The modifications are made pursuant to section 201 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are in accordance with the National Flood Insurance Act of 1968, 42 U.S.C. 4001 et seq., and with 44 CFR part 65.

For rating purposes, the currently effective community number is shown and must be used for all new policies and renewals.

The modified BFEs are the basis for the floodplain management measures that the community is required either to adopt or to show evidence of being already in effect in order to qualify or to remain qualified for participation in the National Flood Insurance Program (NFIP).

These modified BFEs, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own or pursuant to policies established by other Federal, State, or regional entities. The changes in BFEs are in accordance with 44 CFR 65.4.

National Environmental Policy Act. This interim rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. An environmental impact assessment has not been prepared.

Regulatory Flexibility Act. As flood elevation determinations are not within the scope of the Regulatory Flexibility Act, 5 U.S.C. 601-612, a regulatory flexibility analysis is not required.

Regulatory Classification. This interim rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism. This interim rule involves no policies that have federalism implications under Executive Order 13132, Federalism.

Executive Order 12988, Civil Justice Reform. This interim rule meets the applicable standards of Executive Order 12988.

Accordingly, 44 CFR part 65 is amended to read as follows:

We first proposed to list the OC coho salmon ESU as threatened under the ESA in 1995 (60 FR 38011; July 25, 1995). Since then, we have completed several status reviews for this species, and its listing classification has changed between threatened and not warranted for listing a number of times. The ESA listing status of the OC coho salmon ESU has been controversial and has attracted litigation in the past. A complete history of this ESU's listing status can be found in our May 26, 2010, proposal to retain the threatened listing for this ESU (75 FR 29489). As part of a legal settlement agreement in 2008, we committed to complete a new status review for this ESU.

The steps we follow when evaluating whether a species should be listed under the ESA are to: (1) Delineate the species under consideration; (2) review the status of the species; (3) consider the ESA section 4(a)(1) factors to identify threats facing the species; (4) assess whether certain protective efforts mitigate these threats; and (5) evaluate and assess the likelihood of the species' future persistence. We provide more detailed information and findings regarding each of these steps later in this final rule.

To aid us in the status review, we convened a team of Federal scientists, known as a biological review team (BRT). The BRT for this OC coho salmon ESU status review was composed of scientists from our Northwest and Southwest Fisheries Science Centers and the USDA Forest Service. As part of its evaluation, the BRT considered ESU boundaries, membership of fish from hatchery programs within the ESU, the risk of extinction of the ESU, and threats facing this ESU. The BRT evaluated the best available information on ESU viability criteria (abundance, ESU productivity, spatial structure, and diversity). It also considered factors affecting ESU viability, including marine survival, trends in freshwater habitat complexity, and potential effects of global climate change. It considered the work products of the Oregon/Northern California Coast Technical Recovery Team and information submitted by the public, State agencies, and other Federal agencies.

We asked the BRT to assess the level of extinction risk facing the species, describing its confidence that the species is at high risk, moderate risk, or neither. We described a species with high risk as one that is at or near a level of abundance, productivity, and/or spatial structure that places its persistence in question. We described a species at moderate risk as one that exhibits a trajectory indicating that it is more likely than not to be at a high level of extinction risk in the foreseeable future, with the appropriate time horizon depending on the nature of the threats facing the species and the species' life history characteristics. The preliminary report of the BRT deliberations (Stout et al., 2010) describes OC coho salmon biology and assesses demographic risks, threats, and overall extinction risk.

On May 26, 2010, we announced completion of the status review and a proposal to retain the threatened listing for this ESU (75 FR 29489). We solicited comments and suggestions from all interested parties including the public, other governmental agencies, the scientific community, industry, and environmental groups. Specifically, we requested information regarding: (1) Assessment methods to determine this ESU's viability; (2) this ESU's abundance, productivity, spatial structure, or diversity; (3) efforts being made to protect this ESU or its habitat; (4) threats to this ESU; and (5) changes to the condition or quantity of this ESU's habitat.

We solicited public comment on the proposed listing of the OC coho salmon ESU for a total of 60 days. We did not receive a request for, nor did we hold, a public hearing on the proposal. Public comments were received from 8 commenters, and copies of all public comments received are available online at: http://www.regulations.gov/#!docketDetail;dct=FR+PR+N+O+SR+PS;rpp=10;so=DESC;sb=postedDate;po=0;D=NOAA-NMFS-2010-0112 .

Several commenters stated that they were in favor of retaining the threatened listing for this ESU but did not present any specific information to support their position. Summaries of the substantive comments received, and our responses, are provided below, organized by category.

In December 2004, the Office of Management and Budget (OMB) issued a Final Information Quality Bulletin for Peer Review establishing minimum peer review standards, a transparent process for public disclosure, and opportunities for public input. In accordance with this guidance, we solicited technical review of the preliminary status report (Stout et al., 2010) from nine independent experts selected from the academic and scientific community. Each reviewer is an expert in either salmon biology, fish risk assessment methodology, ocean/salmon ecology, climate trend assessment, or landscape-scale habitat assessment. Eight reviewers responded to our request.

After considering the information provided during the public comment period and by peer reviewers, the BRT prepared a final report (Stout et al., 2011). In preparing its final report, the BRT also considered some new scientific information that became available since the issuance of its preliminary report.

There was substantial overlap between the comments from the peer reviewers and the substantive public comments. The comments were sufficiently similar to warrant a response to the peer reviewer's comments through our general responses below. The Oregon Department of Fish and Wildlife (ODFW) provided the most substantial technical comments. In the Pacific Northwest, there is unique co-management of salmon and their habitat shared by Federal and State agencies and tribes. Due to this shared management, we specifically identify ODFW's comments in the following section. Other individuals, agencies, and organizations who submitted comments during the public comment period are identified as “commenters,” while peer reviewers are referred to a “reviewers.”

Comment 1: ODFW stated “* * * the BRT makes generalizations regarding trends in coho salmon productivity that are not consistent with patterns of productivity observed over the last twelve years.”

Response: After reviewing its report in response to ODFW's comments, the BRT revised the “Current Biological Status” section extensively to add clarity and better support for their findings. In particular, they added additional information on the historical abundance of the ESU and 20th century trends in two measures of productivity: Pre-harvest recruits per spawner and the natural return ratio. The BRT concluded that there clearly has been a long-term decline in recruits per spawner during the 20th century, consistent with what has been found in previous status reviews (Weikamp et al., 1995; Good et al., 2005). The BRT found no evidence that this decline has reversed. In fact, recruits from the return years 1997-1999 failed to replace parental spawners: A recruitment failure occurred in all three brood cycles even before accounting for harvest-related mortalities. This was the first time this had happened since data collection began in the 1950s. In most years since 2000, improved marine survival and higher rainfall are thought to be factors that have contributed to a recent upswing in recruits. However, in the return years 2005, 2006, and 2007, recruits again failed to replace parental spawners. The BRT discussed several possible explanations for this recruitment failure, including the possibility that the higher spawning abundance levels in recent years have reached the current carrying capacity of the degraded freshwater environment. In addition, the BRT noted that while total spawning abundance has been at its highest level since the 1950s, the total numbers of recruits remain lower than in the 1950s-1970s. The BRT therefore concluded that with the current freshwater habitat conditions, the ability of the OC Coho Salmon ESU to survive another prolonged period of poor marine survival remains in question.

Comment 2: ODFW stated “In summary, we believe that the use of peak count data fundamentally altered the results of the Decision Support System (DSS) analysis. In addition, we believe that negative depensatory effects on coastal coho [are] extremely unlikely based on experience with other populations and because of the lack of any evidence of such effects in the Life Cycle basins or at the population scale.”

Response: The BRT's initial report (Stout et al., 2010) noted that the OC coho salmon Technical Recovery Team's report (Wainwright et al., 2008) analyzed the critical abundance criterion using incorrect data. In particular, the Technical Recovery Team report specifically states that this criterion should be evaluated using peak count data, but inadvertently used area under the curve data. The BRT discovered this discrepancy when rerunning the DSS for the BRT's analysis. The analysis found in the BRT's initial report (Stout et al., 2010) is therefore a correction, not a change. Stated differently, the Technical Recovery Team and the BRT both intended to use peak counts as the selected measure of spawner abundance in the DSS analysis; the use of area under the curve data in the Technical Recovery Team's report was a mistake, later corrected in the BRT's initial report (Stout et al., 2010).

Comment 3: One commenter took issue with the BRT's consideration of depensation as risk based on the spawner density levels found in the North Umpqua River from 1946-2009.

Response: The spawner density levels cited by the commenter were influenced by hatchery returns, which makes it impossible to assess the response of the natural component of that population to low abundance events.

Comment 4: One commenter stated that the model results do not reflect actual production. The commenter contended that the BRT changed the DSS and eliminated the population functionality criterion from the results.

Response: This appears to be a misunderstanding of the BRT's report. The BRT included the population functionality criterion in the DSS. It did, however, discuss the need to reconsider this criterion in the future. In addition, the BRT did not rely solely on the DSS in its deliberations, but considered other factors and sources of information in reaching its final risk conclusions.

Comment 5: One commenter stated that the BRT arbitrarily changed the population assessment model metric for spawner density. The commenter contended that peak count data was arbitrarily used instead of area under the curve data in running the DSS analyses. The commenter stated that the use of area-under-the-curve counts is more commonly accepted in the fisheries profession. The commenter also contended that observer bias was not accounted for in data sets used in the BRT analyses.

Response: As discussed in our response to Comment 2, the Technical Recovery Team and the BRT both intended to use peak counts as the selected measure of spawner abundance in the DSS analysis. The use of area under the curve data in the Technical Recovery Team's report was a mistake, later corrected in the BRT's initial report (Stout et al., 2010). The BRT note that the use of peak count data is well documented in the fishery management literature and cite several studies supporting the use of peak counts to assess salmon spawner abundance. Regarding observer bias, the data set obtained from the ODFW, and used in the DSS, was corrected for observer bias.

Comment 6: One commenter noted that persistence and sustainability of the North Umpqua populations of OC coho salmon is well documented. The commenter suggested that the BRT look to the historical record for evidence of the wide variation of habitat and climatic conditions under which this population has persisted.

Response: The BRT found that the North Umpqua population persistence and sustainability is confounded by high hatchery production in the recent past, and the Technical Recovery Team's productivity analysis takes that into account. That hatchery program has recently been terminated, so future analyses will be better able to assess the sustainability of the North Umpqua population. With respect to the historical record, the BRT did examine the historical record and recognized that there are strong climate driven fluctuations in OC coho salmon abundance and productivity. The BRT risk assessment and Technical Recovery Team criteria account for these fluctuations.

Comment 7: One commenter suggested that the BRT selected unscientific and untested methodologies to support continued listing of the ESU in their assessment.

Response: The BRT used the best available scientific information, including information submitted by the commenter. The overall methodology for conducting the status review was the same as NMFS has used for many past salmon status reviews and as such it has received extensive scientific review. The BRT also used specific methods and analyses developed by the Oregon/Northern California Coast Technical Recovery Team. The Technical Recovery Team consisted of a range of experts from NMFS, ODFW, USDA Forest Service, tribes and independent consultants. The tools and methods it developed reflect that expertise. Both the Technical Recovery Team and BRT reports received extensive peer review that supported the models and analyses.

Comment 8: One commenter stated “The spawning habitat within the Umpqua River Basin is comprised of 409 miles in the Lower Umpqua and Smith River (Lower Umpqua); 433 miles in the upper main stem Umpqua including the Elk and Calapooya and other tributaries (Middle Umpqua); 656 miles in the South Umpqua basin including 131 miles in Cow Creek (South Umpqua); and 126 miles in the North Umpqua (North Umpqua). The wide distribution of habitat and spawning populations within the basin serves as an effective built-in protective mechanism against any one catastrophic event resulting in the extinction of the species.”

Response: We agree diversity and spatial structure are important factors to consider in evaluating extinction risk, and these factors were explicitly evaluated by the BRT and discussed in its report. In addition, the DSS developed by the Technical Recovery Team uses this type of information in its diversity/spatial structure criteria. Specifically, the DSS watershed-level criteria account for the occupancy of both adult spawners and juvenile OC coho salmon in the basins throughout the range of this ESU.

Comment 9: One reviewer noted that it would be useful and informative to include a master table or appendix in the BRT report that clearly listed the metrics and associated data sets that were incorporated into the DSS and the criteria to which they were applied.

Response: We agree. The BRT included this type of information in Appendix A of its final report (Stout et al., 2011).

Comment 10: One commenter stated that viability models for predicting fisheries' responses to management or environmental changes are in relatively early stages of development and involve considerable uncertainty.

Response: We agree, and the BRT stated that there is significant uncertainty in the long term projections it considered. This is why the BRT considered many aspects of OC coho salmon ecology in assessing status and used a variety of information (population viability modeling, the Technical Recovery Team's DSS, habitat assessments, climate assessments, assessment of other threats) in conducting its assessment. The BRT also was careful to characterize the degree of certainty of its conclusions, and this was extensively discussed in both its preliminary and final reports.

Comment 11: One reviewer provided suggestions for adding and changing climate change text, and adding information from four additional scientific articles. This reviewer is a recognized expert on global climate change and had a number of technical suggestions regarding the BRT analysis of effect of climate change on OC coho salmon and their habitat. His comments included discussion, suggestion, and additional references for the following climate related impacts: (1) Possible changes in ocean conditions and subsequent changes in marine ecosystem function, (2) possible changes in stream flow and temperature in the Pacific Northwest, and (3) possible changes in Cascade Mountain snowpack.

Response: The BRT reviewed the suggested articles and revised the “Effects on Climate Change” section of the final report to reflect this new information. The reviewer's comments allowed the BRT to adjust its analysis to reflect the most recent research and latest theories on the potential effects of climate change on salmon and their habitat. Although it was able to update this section of its report, the BRT conclusions regarding climate change remained fundamentally unaltered by the addition of the new information.

Comment 12: One reviewer stated “The inclusion of the potential impacts of climate change on coho habitat was helpful, as was the inclusion of other factors ( e.g., human population growth and land use conversions) that will be likely to cause problems for the species. Given the overwhelmingly strong scientific evidence for climate change and the near certainty of population growth and land conversion along the Oregon coast—all of which have major implications for habitat quality—it would have been imprudent to ignore these factors. Additionally, it is quite probable that there will be interactions among these factors, many unforeseen at present, which could exacerbate habitat loss.”

Response: The BRT carefully evaluated these threats before reaching its conclusion. The BRT noted in its conclusion that “Finally, the BRT was also concerned that global climate change will lead to a long-term downward trend in both freshwater and marine coho salmon habitat compared to current conditions (see Climate section and Wainwright and Weitkamp, in review). There was considerable uncertainty about the magnitude of most of the specific effects climate change will have on salmon habitat, but the BRT was concerned that most changes associated with climate change are expected to result in poorer and more variable habitat conditions for OC coho salmon than exist currently. Some members of the BRT noted that changes in freshwater flow patterns as a result of climate change may not be as severe in the Oregon coast as in other parts of the Pacific Northwest, while others were concerned by recent observations of extremely poor marine survival rates for several West Coast salmon populations. The distribution of the BRT's overall risk scores reflects some of this uncertainty.” The risks posed by climate change, poor marine conditions, and further human development in the area were key factors in reaching our conclusion to retain the threatened listing for this ESU.

Comment 13: One reviewer stated “I work a lot on impacts of temperature on salmonids and was hoping to see a bit more than a paragraph on the issue * * * Perhaps a sentence or two emphasizing the primacy of temperature as a component of habitat and threat to salmon—I believe temperature is the #1 source of water quality impairment in Oregon.”

Response: We agree that more information on the effects of elevated stream temperatures would improve the BRT report. Additional information on elevated stream temperature and its potential effect on OC coho salmon was added to the “Water Quality Degradation,” “Climate Change,” “Water availability,” and “Forest and Agricultural Conversion” sections of the BRT report.

Comment 14: One commenter stated “Not only are we concerned that the current BRT assessment does not reflect the true viability risk as evidenced by the quantitative data that is available for the independent populations, we are also concerned that the BRT has adopted a new and untested qualitative prediction of climatic conditions for the next 100 years that also has a significantly high uncertainty of accuracy. Unfortunately, as with the other models the BRT did not test these predictive climatic models utilizing the long term data sets that were available. In this case historic climatic records illustrate the coho evolved under a high range of climatic fluctuations—fluctuations which can be expected to occur in the future as well.”

Response: The BRT addressed the risks related to climate change using the best available scientific information, including a detailed review of available published, peer-reviewed literature relating to recent and future climate change in the Pacific Northwest and the likely effects of such change on OC coho salmon. The BRT is aware of past and likely future trends and fluctuations in the local climate, and took those trends and fluctuations into account in the analysis. The BRT noted that there is a great deal of uncertainty surrounding the effects of future climate on OC coho salmon ESU, and took that uncertainty into account as a contributing risk factor. Much of the BRT's climate analysis does rely on predictive climate models that have been tested against long-term climate data. The BRT did not conduct its own assessment of the accuracy of these models, but rather relied on a large body of peer-reviewed scientific literature that has reported such assessments.

Comment 15: The ODFW's comments contained a number of technical questions and observations regarding the BRTs assessment of stream habitat trends. ODFW commented it was concerned that the BRT placed too much emphasis on a Bayesian analysis of habitat trends that used a small subset of the available data. It stated that the use of the ODFW Habitat Limiting Factors Model may also be inappropriate, particularly when applied to the full range of streams within the ESU. It also noted that the BRT report did not contain a full description of the Aquatic and Riparian Effectiveness Monitoring Program (AREMP) (Reeves et. al (2004), although data generated by this program played a key role in habitat modeling exercise.

Response: Scientists from our Northwest Fisheries Science Center and ODFW formed a working group to resolve these issues. In its comments, ODFW noted that the BRT's habitat analysis used a small subset of the available data. It also stated that the BRT's initial report contained insufficient explanation of the methodology used to carry out the habitat trend analysis. The group held several meetings to discuss appropriate analyses, data sets, data transforms, etc. The BRT's final report (specifically the In-Channel Stream Complexity section) was revised to reflect the progress the group made in resolving these technical issues. This issue is discussed in detail in the New Habitat Trend Analysis section, below.

Comment 16: One reviewer stated “I think the conclusion here about complexity (rate of continued disturbance outpacing restoration) is likely correct, but we don't know for sure. Local “active” restoration activities are likely dwarfed by the larger human footprint on the landscape, but passive efforts to restore landscape condition ( e.g., improved forest harvest practices) will likely take decades to yield detectable positive trends. Might be worth clarifying the issue here because passive restoration is much more likely to have longer term and much more widespread benefits in the future.”

Response: We generally agree and a short clarification of this issue is now included in the BRT report's “Stream Habitat Complexity Summary” section. Managing watersheds in a manner that allows for natural habitat forming processes to occur is the first step in ensuring that OC coho salmon have suitable freshwater habitat. However, we also acknowledge that active restoration is a key part of an overall strategy to improve stream habitat across the range of this ESU. Active restoration is often the fastest way to address certain reach-level concerns such as lack of instream woody debris or lack of riparian vegetation.

Comment 17: ODFW commented that fish passage issues facing the OC coho salmon ESU are complex and may require additional analysis.

Response: We agree that attempting to analyze fish passage in streams across the range of this ESU is a complex task. ODFW provided several additional sources of information regarding fish passage. The BRT updated its report to reflect this new information. The BRT also considered a new data set on fish passage, the Oregon Fish Passage Barrier Data Set (OFPDS, 2009). Although this data set represents the most up-to-date catalog of fish passage blockages throughout the range of this ESU, it still does not account for some blockages on private land and certain types of blockages including berms and levees (Stout et al., 2011). Berms and levees are common in lowland and estuary habitat that can be important coho salmon rearing habitat. The BRT concluded that fish passage blockages are a source of substantial uncertainty as to the true effect that fish passage barriers present to OC coho salmon.

Comment 18: One reviewer noted that “Conclusions quoted regarding present impacts of hydropower should be expanded to consider future development as well. I know there are possible plans for hydroelectric dams to be placed in some coastal rivers, such as the Siletz River near the former town site of Valsetz. Also the development of small hydro may come into play in the future as the region develops alternative energy sources. This is becoming an issue in other parts of western North America ( e.g. , British Columbia).”

Response: We agree that future hydropower development could affect OC coho salmon in certain areas. The BRT made a slight modification to its report to reflect this. There are, however, numerous protective measures in place to assure that future hydropower projects would be developed in a manner that reduces potential effects on this ESU. For instance, all hydropower projects in the State of Oregon must have a water right issued by the Oregon Water Resources Department. Most significant non-Federal hydropower facilities would need to be licensed by the Federal Energy Regulatory Commission. During these regulatory processes, we expect the addition of conservation measures/project modifications designed to reduce the project's effects on OC coho salmon and their habitat. Although we cannot predict, with certainty, what those specific protective measures might be, it is reasonable to conclude that major adverse effects on this ESU would be avoided. For instance, it is unlikely, although not completely impossible, that the construction of hydropower facilities would be authorized in cases where a large amount of OC coho salmon habitat would be blocked. Currently, it is far more common in the Pacific Northwest for dams to be removed to restore fish passage ( e.g. , Marmot Dam, Elwha Dam) than for new dams to be constructed that would block fish passage. For these reasons, we do not expect development of new hydropower facilities to pose a serious threat to this ESU.

Comment 19: One reviewer provided a copy of a recent report (Bass, 2010) providing information on juvenile coho salmon movement and migration through tide gates.

Response: The BRT considered the information in the report and revised the content of the final report accordingly. The BRT noted that at a minimum, tide gates in the OC coho salmon ESU act as partial barriers to fish passage and were, for the most part, unaccounted for in past analyses. It also notes that fish passage barriers have not been identified as a major limiting factor for OC coho salmon in previous assessments conducted by ODFW; however, a great deal of uncertainty exists about the total number of passage barriers throughout the range of this ESU.

Comment 20: ODFW submitted a number of technical comments regarding the BRT's conclusions about the importance of estuaries to OC coho salmon. In summary, ODFW felt that the importance of estuaries to OC coho salmon is somewhat unknown. They questioned whether the BRT may have overstated the degree to which the loss of estuary habitat is a limiting factor for this ESU. ODFW noted that the Oregon Watershed Enhancement Board has funded a substantial amount of estuary restoration over the last several years. It also provided additional information about the role estuaries may play in the life cycle of OC coho salmon.

Response: Both the BRT and ODFW are in agreement that there has been significant loss of estuary habitat along the Oregon Coast during the last 100 years. We acknowledge that there is some scientific disagreement between ODFW and the BRT regarding the severity of the effect of estuary loss on the viability of the OC coho salmon ESU. However, the loss of estuary habitat is only one of many factors affecting the viability of this ESU. In its risk conclusion, the BRT did not specifically identify estuary loss as one of the primary sources of risk to this ESU. Even if the BRT were to adopt ODFW's position on the effect of estuary loss on the viability of this ESU, it would be unlikely to change the outcome of its overall risk assessment.

Comment 21: In contrast to the previous comment, a reviewer stated that “the emphasis given to the importance of estuarine habitat is moderate and adequate given the information available in the literature.” The reviewer noted observing juvenile OC coho salmon rearing in estuaries and feels that this life history strategy is fairly common. The reviewer also provided some specific scientific information to support this statement.

Response: This viewpoint is consistent with the BRT's position on the importance of estuaries to juvenile OC coho salmon. The BRT revised its report's section on estuaries to include the information provided by the reviewer.

Comment 22: One reviewer suggested that a somewhat broader definition of `life history' in the glossary may be useful. The reviewer noted that a `life history' encompasses changes experienced from birth through death, including variation in life history traits, such as the size and age at maturity and fecundity. The reviewer argued that traits such as juvenile growth rate and age at ocean emigration are aspects of species' life history.

Response: We agree and the BRT modified its definition of “life history” as suggested.

Comment 23: The ODFW and Oregon Watershed Enhancement Board commented that in our proposed rule, we underestimated the variety and effectiveness of habitat and watershed process restoration efforts. ODFW also stated that we did not consider the information contained in an effectiveness monitoring report demonstrating the results of several projects designed to increase the amount of woody debris in stream reaches.

Response: In the BRT report and proposed rule, we stated that an analysis conducted by the BRT showed that habitat restoration efforts are not well matched with habitat limiting factors in some areas including the Umpqua Basin. The comments submitted by ODFW contained a number of technical points regarding our statements about restoration efforts matching restoration needs. After reviewing these comments, we decided that the BRT habitat restoration analysis needed further consideration. We decided not to consider the results of the BRT's analysis when we evaluated efforts being made to protect the OC coho salmon ESU. Instead, we acknowledge that a number of restoration projects are occurring throughout the range of this ESU, and we expect that they will have benefits to ESU viability some time in the future. However, we do not have information available that would allow us to predict or quantify these future improvements to ESU viability. Similarly, we acknowledge that the information submitted by ODFW demonstrates that restoration efforts can increase the amount of woody debris in stream reaches and improve habitat complexity. We also agree with ODFW that these improvements are likely to lead to improved survival of OC coho salmon juveniles. However, these improvements will occur primarily at a stream-reach scale (several hundred to several thousand meters maximum). There is currently a lack of scientific information that would allow us to scale the positive collective effects of multiple restoration projects up to the population, strata, or ESU level. We are working with ODFW and our other Federal, State, and tribal co-managers to develop monitoring programs and databases that would assist us in developing these types of analyses in the future.

Even when this information becomes available, we have reason to believe that relying on active restoration to mitigate for the effects of ongoing land management that degrades OC coho salmon habitat is not feasible. The one recent study that has examined this issue (Roni et al., 2010) used a new technique to estimate the amount of restoration needed within a watershed to cause a significant increase in steelhead and coho salmon production. These authors found that the percentage of floodplain and in-channel habitat that would have to be restored in a modeled watershed to detect a 25 percent increase in coho salmon and steelhead smolt production was 20 percent. Although 20 percent may seem like a low value, restoring 20 percent of floodplain and in-channel habitat in any disturbed watershed in the Pacific Northwest would be very costly (Roni et al., 2010). The results of this study highlight the need to protect high quality habitat while strategically improving degraded areas with active restoration.

Comment 24: Another commenter noted that the BRT's analysis of match between habitat restoration efforts and habitat limiting factors “* * * has the potential to provide useful guidance to local groups performing restoration, but some logical lapses affect the conclusions drawn here.” The commenter stated that the level of detail provided “* * * is insufficient to fully evaluate the methods, or to make good use of the results at the local level.”

Response: As stated above, we will no longer be considering the results of the BRT's assessment of habitat restoration in the Umpqua in our evaluation of protective efforts for this ESU. We do believe however, that this type of analysis would be appropriate for consideration during development of a recovery plan for this ESU.

Comment 25: One reviewer pointed out the need for “* * * a way in which future effects of restoration (again, on an ESU-wide basis) could be similarly quantified * * *” The reviewer also noted the “* * * pressing need to determine whether habitat is currently being lost or damaged faster than it can be restored or rehabilitated, particularly because so much money is being spent on recovering salmon habitat based on the belief that long-term improvement can be achieved at very large spatial scales.”

Response: We agree with the reviewer's statement that there is a need for a way in which future effects of restoration could be similarly quantified. As noted above, we are working with our co-managers to develop monitoring programs and data collection systems that will aide us in conducting these types of analyses in the future. In the absence of this information, we must look at measures of ESU viability to determine if restoration efforts are lowering ESU extinction risk.

Comment 26: One commenter noted that the BRT report's section on artificial propagation and membership of hatchery programs in the ESU would benefit from more information.

Response: We agree that the addition of more information would help to clarify this section. The BRT revised its report to include more detail in this section. We must note however, that hatchery production has been significantly curtailed in this ESU and no longer represents a significant limiting factor for most populations in the ESU. There are only three remaining hatchery programs within the range of this ESU. Release numbers have been reduced 10-fold in recent years, substantially reducing interactions between hatchery and wild fish.

Comment 27: One commenter stated that the habitat benefits beavers ( Castor canadensis ) provide are landscape-context specific. The commenter noted that beavers occur within the ESU in a variety of contexts, from brackish estuarine marshes, to lakes, to large mainstem rivers, to smaller tributaries, and the ways in which they may alter this type of aquatic habitat varies considerably. The commenter also stated that beavers are differentially vulnerable to trappers. For instance, beavers tend to be more vulnerable to trappers in headwater areas as opposed to large mainstem rivers.

Response: The BRT revised its report's section on beavers to reflect the information provided by the commenter.

Comment 28: One commenter stated that the BRT's report properly reviewed the legal status of beaver protection in Oregon, but failed to identify cougar predation as a cause of observed beaver declines.

Response: We agree with the commenter in part. Estimated cougar populations have increased since the 1970s over the entire State of Oregon from approximately 214 to over 2,800 individuals by 1992 (Keister and VanDyke, 2002). However, nothing in the literature suggests that predation on beaver is a primary cause for reduction in beaver population. The majority of studies identify deer and elk as the primary food source for cougars (Ackerman et al., 1984).

Comment 29: One commenter noted that many riparian areas throughout the range of the OC coho salmon ESU have been colonized by invasive Reed canarygrass ( Phalaris arundinacea ). The commenter points out that this plant can out-compete trees and shrubs that provide food for beavers. This colonization may disrupt the natural cycle of consumption of shrubs and trees in a given area by beavers followed by recovery of this vegetation as beavers leave the area in search of food elsewhere.

Response: We agree that invasion of riparian areas by Reed canarygrass may pose a threat to beaver food supply. In response to this comment, the BRT noted that more aggressive management actions may be needed to deal with Reed canarygrass as evidenced by recent work that suggests plantings and natural vegetation alone cannot control it. The BRT's report highlights the importance of beavers to the formation and maintenance of habitat for juvenile OC coho salmon.

Comment 30: One reviewer noted that based on the information provided in the BRT report, they could not tell if cycles or trends in beaver activity are evident. The reviewer stated that they thought there was not good evidence for a trend of any kind.

Response: In response to this comment, the BRT added the following statement to the beaver section of their report: “Due to the limited dataset we cannot conclude that there is an overall trend and would recommend a more extensive monitoring effort be pursued to identify short and long-term trends throughout the Oregon Coast Coho Salmon ESU.”

Comment 31: One reviewer noted that some research (Pollack et al., 2003) cited in the section on beavers in the BRT report was conducted in Washington state and is useful for comparison purposes but is not directly relevant to the OC coho salmon ESU.

Response: This observation is correct in that the study sites for this research were in Washington. The BRT added a paragraph to its report's section on beavers to address this issue. The BRT noted that the areas where beaver pond density is highest typically have the same physical characteristics regardless of the ecological region—lower gradient (less than 2 percent), unconfined valley bottoms, in smaller watersheds (drainage areas typically less than 10 square kilometers). Smaller, lowland, rain-dominated Puget Sound watersheds have the same basic physical and hydrological characteristics as the smaller Oregon coast watersheds, thus the relationships we see with respect to beaver pond densities in Puget Sound should also hold true for the Oregon coast.

Comment 32: One reviewer suggested that the BRT report would benefit from a discussion of floodplain development and storm water issues.

Response: We agree that floodplain development and storm water management have the potential to affect water quality, peak/base stream flow and several physical habitat parameters for OC coho salmon. Although these threats may not have been specifically discussed in the initial BRT report, we did note in the proposed rule that “Urbanization has resulted in loss of streamside vegetation and added impervious surfaces, which alter normal hydraulic processes.” We also stated in the proposed rule that “Stormwater and agricultural runoff reaching streams is often contaminated by hydrocarbons, fertilizers, pesticides, and other contaminants.” Nevertheless, in response to the reviewer's suggestion, the BRT added information on how these threats affect OC coho salmon habitat.

Comment 33: One commenter stated that land use conversion trends may be more complex than described in the BRT report. The commenter noted that several types of land use conversion beyond those described in the BRT report, such as agricultural to forest land, and serious agriculture operation to hobby farm, are occurring throughout the range of this ESU. The commenter also noted that residential development is occurring along many reaches of larger rivers in this area, and this may lead to increased recreational fishing.

Response: We agree that a variety of land use conversions are occurring throughout the range of this ESU. The BRT revised its report to include some of the land use conversion types identified in this comment. We also agree that greater human development, especially in riparian areas, could lead to degradation of OC coho salmon habitat. It becomes difficult to predict with any certainty, however, how some of the less common land use conversions (such as serious agricultural operation to hobby farm) would affect coho salmon habitat. The particular management changes resulting from these types of land use conversions can be expected to vary on a case-by-case basis depending on the desired outcomes of a particular land owner. For this reason, it is best to evaluate general trends in land use conversions when trying to predict how these conversions may affect OC coho salmon habitat. This is consistent with the approach taken by the BRT.

Comment 34: One reviewer noted that the BRT report's section on land use conversion did not contain significant information on some of the secondary effects of residential development- water quality degradation from septic drainage, fertilizers and pesticides, and pharmaceuticals. The reviewer noted that there is a great deal of uncertainty about these effects and that a new report on this topic was expected soon from the State of Oregon Independent Multidisciplinary Science Team.

Response: We agree that these secondary effects from residential development may pose a threat to the OC coho salmon ESU. The report of the Independent Multidisciplinary Science Team became available shortly after the publication of the initial BRT report and proposed rule. The BRT discussed this report and agreed with the conclusions of the report, namely that “The pressures of urban and rural residential land use affect aquatic ecosystems and salmonids through alterations of, and interactions among, hydrology, physical habitat structure, water quality, and fish passage. These alterations occur at local and, especially, watershed scales, and thus require study and management at multiple scales. Urban and rural residential development causes profound changes to the pathways, volume, timing, and chemical composition of stormwater runoff. These changes alter stream physical, chemical, and biological structure and potential, as well as the connectivity of streams with their watersheds” (IMST, 2010). The BRT updated its report to reflect this new information.

Comment 35: Several reviewers noted that climate change, invasion of exotic organisms, and increasing human development may lead to drastic changes in riparian and aquatic communities throughout the range of this ESU.

Response: In response to these comments, the BRT discussed this issue more fully, and expanded discussions and literature citations are included in its revised report in the “Ecosystem Impacts of Non-indigenous Species,” “Non-indigenous Plant Species,” and “Non-indigenous Fish” sections.

Comment 36: One reviewer noted that it would be useful for the BRT to identify key data gaps in their risk assessment.

Response: The BRT revised its report to identify some of the key data gaps. For instance, the BRT noted data gaps regarding beaver populations, fish passage, and road density on private lands.

Comment 37: One commenter suggested that NMFS use annual spawner returns to the North Umpqua River as an indicator of population status throughout the ESU.

Response: We believe that evaluating the status of an entire ESU from dam counts for a single population ignores differences in populations within the ESU, such as the diversity found in the Lakes populations, and in the geology and hydrology of other systems. It would essentially restrict our analysis to a small amount of information while ignoring the substantial amount of other information available to us. The suggested approach does not take into account that the habitat in the North Umpqua population is not typical of the rest of the ESU, nor does it reflect the diversity of other habitats found in the ESU. Also, as noted above, the North Umpqua return data have been influenced by hatchery production and thus do not reflect the status of natural populations and their habitats.

Comment 38: One commenter stated that the BRT made several key assumptions about future marine conditions that are not consistent with the known variability in ocean conditions and adopted an overall pessimistic view about future ocean conditions. The commenter stated that the BRT could have used data on this known variability to assess marine conditions in both intra-annual and inter-decadal time frames.

Response: The commenter did not identify which particular key assumptions about future marine conditions were questionable, so it is difficult to respond to this comment. However, any assumptions made by the BRT are consistent with the scientific literature regarding marine survival of coho salmon. The BRT agrees that fluctuations in marine conditions (including the Pacific Decadal Oscillation and other factors) strongly affect survival of OC coho salmon, and has accounted for such fluctuations in its analyses.

Comment 39: One commenter stated that the BRT should have considered data on climate conditions as evidenced by patterns of tree ring growth.

Response: The BRT did examine the historical record and recognized that there are strong climate driven fluctuations in abundance and productivity. These fluctuations are accounted for in both the Technical Recovery Team criteria and the BRT risk assessment.

Comment 40: One reviewer noted the lack of any recommendations for future management within the BRT's report. The commenter thought inclusion of these recommendations would be logical and desirable.

Response: The BRT was tasked with reviewing the status of the OC coho salmon ESU. Specifically, the BRT was asked to assess the level of extinction risk for this ESU and identify the threats facing this ESU (letter from Barry Thom, Acting Regional Administrator, to Usha Varanasi, Science and Research Director of the Northwest Fisheries Science Center, August 13, 2009). Site-specific management actions designed to help conserve the OC coho salmon ESU will be identified in a forthcoming recovery plan for this species.

Comment 41: One reviewer noted that the BRT report's section on predation was dated. The reviewer recommended some reports for the BRT to consider.

Response: The BRT updated its discussion of predation with new (Johnson et al., 2010) as well as older relevant literature (Schreck et al., 2002; Clements and Schreck, 2003), as well as a recent population assessment of double crested cormorants within the ESU and other sources of information. The BRT concluded that the significant increases in avian predation on salmonids appears to be restricted to the Columbia River System and does not affect the OC coho salmon ESU. The Columbia River salmon ESUs suffer the greatest impact because the birds (Caspian terns and double-crested cormorants) have established large nesting colonies in close vicinity to the mainstem Columbia River.

We are responsible for determining whether species, subspecies, or distinct population segments (DPSs) of Pacific salmon and steelhead are threatened or endangered under the ESA. To identify the proper taxonomic unit for consideration in a listing determination for salmon, we use our Policy on Applying the Definition of Species under the ESA to Pacific Salmon (ESU Policy) (56 FR 58612). Under this policy, populations of salmon substantially reproductively isolated from other conspecific populations and representing an important component in the evolutionary legacy of the biological species are considered to be an ESU. In our listing determinations for Pacific salmon under the ESA, we have treated an ESU as constituting a DPS, and hence a “species,” under the ESA.

The OC coho salmon ESU was identified as one of six West Coast coho salmon ESUs in a coast-wide coho status review published by NMFS in 1995 (Weitkamp et al., 1995). Weitkamp et al. (1995) considered a variety of factors in delineating ESU boundaries, including environmental and biogeographic features of the freshwater and marine habitats occupied by coho salmon, patterns of life-history variation and patterns of genetic variation, and differences in marine distribution among populations based on tag recoveries. Regarding the OC coho salmon ESU, Weitkamp et al. (1995) concluded that Cape Blanco to the south and the Columbia River to the north constituted significant biogeographic and environmental transition zones that likely contributed to both reproductive isolation and evolutionary distinctiveness for coho salmon inhabiting opposite sides of these features. These findings were reinforced by discontinuities in the ocean tag recoveries at these same locations. The available genetic data also indicated that OC coho salmon north of Cape Blanco formed a discrete, although quite variable, group compared to samples from south of Cape Blanco or the Columbia River and northward.

The BRT evaluated new information related to ESU boundaries, and found evidence that no ESU boundary changes are necessary (Stout et al., 2011). The basis for its conclusion is that the environmental and biogeographical information considered during the first coast-wide BRT review of coho salmon (Weitkamp et al., 1995) remains unchanged, and new tagging and genetic analysis published subsequent to the original ESU boundary designation continues to support the current ESU boundaries. The BRT also evaluated ESU membership of fish from hatchery programs since the last BRT review (Good et al., 2005). In doing so, it applied our Policy on the Consideration of Hatchery-Origin Fish in ESA Listing Determinations (70 FR 37204; June 28, 2005). The BRT noted that many hatchery programs within this ESU have been discontinued since the first review of coast-wide status of coho salmon (Weitkamp et al., 1995). They identified only three programs—the North Fork Nehalem, Trask (Tillamook basin) and Cow Creek (South Umpqua)—that produce coho salmon within the boundaries of this ESU.

The North Fork Nehalem coho stocks are managed as an isolated harvest program. Natural-origin fish have not been intentionally incorporated into the brood stock since 1986, and only adipose fin clipped brood stock have been taken since the late 1990s. Because of this, the stock is considered to have substantial divergence from the native natural population and is not included in the OC coho salmon ESU. The Trask (Tillamook population) coho salmon stock is also managed as an isolated harvest program. Natural-origin fish have not been incorporated into the brood stock since 1996 when all returns were mass marked. Therefore, this stock is considered to have substantial divergence from the native natural population and, based on our Policy on the Consideration of Hatchery-Origin Fish in ESA Listing Determinations, is not included in the OC coho salmon ESU. The Cow Creek stock (South Umpqua population) is managed as an integrated program and is included as part of the ESU because the original brood stock was founded from the local natural origin population and natural-origin coho salmon have been incorporated into the brood stock on a regular basis. This brood stock was founded in 1987 from natural-origin coho salmon returns to the base of Galesville Dam on Cow Creek, a tributary to the South Umpqua River. Subsequently, brood stock has continued to be collected from returns to the dam, with natural-origin coho salmon comprising 25 percent to 100 percent of the brood stock nearly every year since returning fish have been externally tagged. The Cow Creek stock is probably no more than moderately diverged from the local natural-origin coho salmon population in the South Umpqua River because of these brood stock practices and is therefore considered a part of this ESU.

The BRT conducted an extinction risk assessment for the OC coho salmon ESU considering available information on trends in abundance and productivity, genetic diversity, population spatial structure, and diversity. It also considered marine survival rates, trends in freshwater habitat complexity, and a variety of threats to this ESU, such as possible effects from global climate change. We received a substantial amount of information during the public comment period regarding the BRT risk assessment. One peer reviewer of the BRT report also had numerous comments on the risk assessment. After considering this information, the BRT decided to revise its risk assessment, and conduct its risk voting again, considering this new information.

The BRT noted that spawning escapements in some recent years have been the highest in the past 60 years. This is attributable to a combination of management actions and environmental conditions. In particular, harvest has been strongly curtailed since 1994, allowing more fish to return to the spawning grounds. Hatchery production has been reduced to a small fraction of the natural-origin production. Nickelson (2003) found that reduced hatchery production led directly to higher survival of naturally produced fish, and Buhle et al. (2009) found that the reduction in hatchery releases of OC coho salmon in the mid-1990s resulted in increased natural coho salmon abundance. Ocean survival, as measured by smolt to adult survival of Oregon Production Index area hatchery fish, generally started improving for fish returning in 1999 (Stout et al., 2011). In combination, these factors have resulted in the highest spawning escapements since 1950, although total abundance before harvest peaked at the low end of what was observed in the 1970s (Stout et al., 2011).

The BRT applied the DSS of the Technical Recovery Team (Wainwright et al., 2008) to help assess viability and risk level for this ESU. Our proposed rule discusses the DSS in detail. The BRT updated the DSS with data through 2009. In the process of compiling data for the four years since the Technical Recovery Team analysis, the BRT discovered and reconciled several inconsistencies related to the data that are inputs into the DSS. For this reason the DSS results reported by the BRT are not directly comparable to the results presented in the Technical Recovery Team's report (Wainwright et al., 2008). The DSS results from the Technical Recovery Team's report are presented in the BRT report for historical comparison but were not used by the BRT in its deliberations. Data used in the updated DSS analysis were provided by ODFW.

The DSS result for ESU persistence was 0.34. A value of 1.0 would indicate complete confidence that the ESU will persist for the next 100 years, a value of −1.0 would indicate complete certainty of failure to persist, and a value of 0 would indicate no certainty of either persistence or extinction. The BRT therefore interpreted a value of 0.34 to indicate a moderate certainty of ESU persistence over the next 100 years, assuming no future trends in factors affecting the ESU. The DSS result for ESU sustainability was 0.24, indicating a low-to-moderate certainty that the ESU is sustainable for the foreseeable future, similarly assuming no future trends in factors affecting the ESU. The overall ESU persistence and sustainability scores summarize a great deal of variability in population and stratum level information on sustainability.

In our proposed rule, we summarized the BRT's analyses of habitat complexity across the freshwater habitat of this ESU. We received a number of comments from ODFW regarding this analysis. Scientists from our Northwest Fisheries Science Center and ODFW formed a working group to resolve the technical issues identified in the ODFW comments. A brief background on this issue is provided below.

Over the past decade (1998 to present), the ODFW has monitored wadeable streams (streams that would be shallow enough to wade across during survey efforts) to assess freshwater rearing habitat for the OC coho salmon ESU during the summer low flow period (Anlauf et al., 2009). The goal of this program is to measure the status and trend of habitat conditions throughout the range of the ESU. The following variables related to the quality and quantity of aquatic habitat for coho salmon were monitored: Stream morphology, substrate composition, instream roughness, riparian structure, and winter rearing capacity (Moore, 2008). In 2009, scientists from ODFW and scientists from the BRT independently analyzed these data to answer the question “Has juvenile coho habitat changed during ODFW's monitoring program over the past 11 years?” These analyses reached different conclusions, and the discrepancies between the results prompted the formation of the interagency working group.

The working group found that the most important discrepancy between the BRT analysis and the ODFW analysis (Anlauf et al., 2009) was that different subsets of the ODFW habitat monitoring data were used. The ODFW analysis focused only on sites designated as coho salmon spawning or rearing habitat (1st through 3rd order wadeable streams and below fish passage barriers; Anlauf et al., 2009). In contrast, the BRT's analysis had included sites both within and outside of the area recognized as spawning and rearing habitat for coho salmon. Both approaches are biologically reasonable, but the working group agreed that a common dataset should be used in the joint analysis and that initially only spawning or rearing sites within the OC coho salmon ESU be included for the working group report. Subsequently, the BRT also analyzed the upstream areas in a separate analysis, because these areas also affect water quality and habitat ( e.g., large wood) in downstream areas where coho spawning and rearing occur.

The working group also explored whether differences in the two group's modeling approaches led to significant differences in the results, and concluded that when the same data were used, any differences in modeling approach led to at most minor differences in results. These issues are discussed in detail in the BRT report.

In the BRT's original habitat trend analysis, three measures of habitat complexity were assessed: Winter parr capacity, summer parr capacity, and channel score (AREMP). In addition to winter parr capacity, ODFW also examined trends in large woody debris, and fine organic sediment (Anlauf et al., 2009). The working group agreed that the three measures of complexity would be re-analyzed, in addition to the volume of large woody debris, and fine organic sediment in riffles.

Trend estimates were mixed and vary both among metrics and regions. Habitat complexity and summer parr capacity were decreasing in the Umpqua but increasing in the other regions. Winter parr capacity trended flat in the North Coast and Mid-Coast, but declined in the Mid-South and Umpqua. For the percent of fine sediment in riffles, there appear to be declines in the North and Mid-Coast, a positive trend in the Mid-South, and little change in the Umpqua. Large wood volume appears to have declined in the North Coast and Umpqua, and increased in the Mid-Coast and Mid-South regions.

In contrast to the coho rearing areas, trends in upstream areas were more pronounced. In particular, large woody debris declined substantially in all regions. Trends in sediment were mixed, with increases in the Mid-Coast and Mid-South, and declines in the North Coast and Umpqua

The BRT was impressed with the ODFW habitat monitoring program and believes it is an invaluable source of information on freshwater habitat trends on the Oregon coast. The results from the working group were encouraging in that they resolved some clear discrepancies between earlier analyses. The BRT concluded that the results paint a complex picture of habitat trends along the Oregon coast. Some trends, such as the increase in habitat complexity and summer parr capacity in 3 of the 4 regions were clearly encouraging. Other trends, such as the declines in large woody debris in the North Coast and Umpqua regions and in upstream areas in all regions appear more troubling. The North Coast trend in large woody debris may be a result of large debris dams that formed during the 1996 floods and have been actively redistributed over the past several years, reducing overall large woody debris densities. While the North Coast experienced a large decline, it also had the largest amount of large woody debris relative to the other regions. The declining trends in winter parr capacity (believed to be a limiting life-stage for coho production) in two regions also concerned the BRT.

To reach its final extinction risk conclusions, the BRT used a “risk matrix” as a method to organize and summarize the professional judgment of a panel of knowledgeable scientists with regard to extinction risk of the species. This approach is described in detail by Wainwright and Kope (1999) and has been used for over 10 years in our Pacific salmonid and other marine species status reviews. In this risk matrix approach, the collective condition of individual populations is summarized at the ESU level according to four demographic risk criteria: Abundance, growth rate/productivity, spatial structure/connectivity, and diversity. These viability criteria, outlined in McElhany et al. (2000), reflect concepts that are well founded in conservation biology and are generally applicable to a wide variety of species. These criteria describe demographic risks that individually and collectively provide strong indicators of extinction risk. The summary of demographic risks and other pertinent information obtained by this approach was then considered by the BRT in determining the species' overall level of extinction risk. This analysis process is described in detail in the BRT's report (Stout et al., 2011). The scoring for the risk criteria correspond to the following values: 1—very low risk, 2—low risk, 3—moderate risk, 4—high risk, 5—very high risk.

After reviewing all relevant biological information for the species, each BRT member assigned a risk score to each of the four demographic criteria. The scores were tallied (means, modes, and range of scores), reviewed, and the range of perspectives discussed by the BRT before making their overall risk determination. To allow individuals to express uncertainty in determining the overall level of extinction risk facing the species, the BRT adopted the “likelihood point” method, often referred to as the “FEMAT” method because it is a variation of a method used by scientific teams evaluating options under the Northwest Forest Plan (FEMAT 1993). In this approach, each BRT member distributes ten likelihood points among the three species' extinction risk categories, reflecting their opinion of how likely that category correctly reflects the true species status. This method has been used in all status reviews for anadromous Pacific salmonids since 1999, as well as in reviews of Puget Sound rockfishes (Stout et al., 2001b), Pacific herring (Stout et al., 2001a; Gustafson et al., 2006), Pacific hake, walleye pollock, Pacific cod (Gustafson et al., 2000), and black abalone (Butler et al., 2008).

In its May 2010 preliminary report, the BRT conducted both the risk assessment matrix analysis and the overall extinction risk assessment under two different sets of assumptions. First, the BRT evaluated extinction risk based on the demographic risk criteria (abundance, growth rate, spatial structure and diversity) recently exhibited by the ESU, assuming that the threats influencing ESU status would continue unchanged into the future. This case in effect assumed that all of the threats evaluated in the previous section of the report were already fully manifest in the current ESU status and would in aggregate neither worsen nor improve in the future. Also, in the 2010 preliminary report, the BRT evaluated extinction risk based on the demographic risk criteria currently exhibited by the ESU, taking into account consideration of predicted changes to threats that the BRT evaluated to be not yet manifest in the current demographic status of the ESU. In effect, this scenario asked the BRT to evaluate whether threats to the ESU would lessen, worsen, or remain constant compared to current conditions.

In the time since the completion of the last risk assessment in 2010, the BRT considered additional information on the potential magnitude and trajectory of threats including climate change, changes in ocean conditions, and trends in freshwater habitat. The BRT also further refined the time horizon used to evaluate whether the OC coho salmon ESU was at moderate risk of extinction. The BRT selected a 30 to 80 year time frame, noting that beyond this time horizon, the projected effects on OC coho salmon viability from climate change, ocean conditions, and trends in freshwater habitat become very difficult to predict with any certainty. Considering this new information, the BRT felt it unnecessary and potentially confusing to conduct the risk assessment under multiple sets of assumptions. For the final risk assessment, therefore, each BRT member evaluated all the available information on both current demographic status and future threats to come to a single overall conclusion on the degree of extinction risk.

The mean risk matrix scores for each demographic risk factor fell between the low risk (2) and moderate risk (3) categories (abundance mean score= 2.21, productivity mean score=2.63, spatial structure mean score=2.33 and diversity mean score=2.67) indicating that the BRT as a whole did not consider any of the demographic risk factors as likely to contribute substantially to a high risk of short-term extinction when considered on its own.

The overall assessment of extinction risk of the OC coho salmon ESU indicated considerable uncertainty about its status, with most likelihood points split between “moderate risk” and “not at risk,” and a small minority of points indicating “high risk.” The BRT members placed 6 percent of the likelihood points in the high risk category, 47 percent of the likelihood points in the moderate risk category and 47 percent of the points in the low risk category.

The large range in the demographic risk scores and the lack of a strong mode in the overall assessment of risk were indicative of considerable uncertainty among BRT members about the current level of risk facing the ESU. This uncertainty was largely due to the difficulty in balancing the clear improvements in some aspects of the ESU's status over the last 15 years against persistent threats driving the longer term status of the ESU, which probably have not changed over the same time frame and are predicted to degrade in the future. In addition, the BRT noted that accurately predicting the long-term trend of a complex system is inherently difficult, and this also led to uncertainty in the overall risk assessment.

The BRT concluded that some aspects of the ESU's status have clearly improved since the initial status review in the mid-1990s (Weitkamp et al., 1995). In particular, the BRT assigned a relatively low mean risk score to the abundance factor, noting that spawning escapements were higher in some recent years than they had been since 1970. Recent total returns (pre-harvest recruits) were also substantially higher than the low extremes of the 1990s, but still mostly below levels of the 1960s and 1970s. The BRT attributed the increased spawner escapements largely to a combination of greatly reduced harvest rates, reduced hatchery production, and improved ocean conditions. Even with the recent increases, however, pre-harvest abundance remains at approximately 10 percent of estimated historical abundance (approximately 150,000 current compared to peak abundance of approximately 1.5 million fish historical).

The BRT also noted that compared to the mid-1990s, the ESU contained relatively abundant wild populations throughout its range, leading to a relatively low risk associated with spatial structure. The BRT also discussed the observation that the recent natural origin spawning abundance of the OC coho salmon ESU was higher than that observed for other listed salmon ESUs, although some members noted that the 15-fold variability in abundance since the mid-1990s brings into question how heavily to weigh abundance as an indicator of status. Finally, the BRT noted that hundreds of individual habitat improvement projects over the last 15 years had likely benefited the ESU, although quantifying these benefits is difficult.

The BRT also discussed some ongoing positive changes that are likely to become manifest in abundance trends for the ESU in the future. In particular, hatchery production continues to be reduced with the cessation of releases in the North Umpqua River and Salmon River populations, and the BRT expects that the near-term ecological benefits from these reductions will result in improved natural production for these populations in the future. In addition, the BRT expected that reductions in hatchery releases that have occurred over the past decade may continue to produce increasingly positive effects on the survival of the ESU in the future, due to the time it may take for past genetic impacts to become attenuated.

Despite these positive factors, the BRT also had considerable concerns about the long-term viability of the ESU. The BRT continued to be concerned that there had been a long-term decline in the productivity of the ESU from the 1930s through the 1990s. Despite some improvements in productivity in the early 2000s, the BRT was concerned that the overall productivity of the ESU remains low compared to what was observed as recently as the 1960s and 1970s. The BRT was also concerned that the majority of the improvement in productivity in the early 2000s was likely due to improved ocean conditions, with a relatively smaller component due to reduced hatchery production (Buhle et al., 2009).

The BRT noted that the legacy of past forest management practices combined with lowland agriculture and urban development has resulted in a situation in which the areas of highest habitat capacity (intrinsic potential) are now severely degraded. The BRT also noted that the combined ODFW/NMFS analysis of freshwater habitat trends for the Oregon coast found little evidence for an overall improving trend in freshwater habitat conditions since the mid-1990s, and evidence of negative trends in some strata. The BRT was also concerned that recent changes in the protection status of beaver, which through their dam building activities create coho salmon habitat, could result in further negative trends in habitat quality. The BRT was therefore concerned that when ocean conditions cycle back to a period of poor survival for coho salmon, the ESU may rapidly decline to the low abundance seen in the mid-1990s. Some members of the BRT observed that the reduction in risks from hatchery and harvest are expected to help buffer the ESU when marine survival returns to a lower level, likely resulting in improved status compared to the situation in the mid-1990s. Others noted that potential declines in beaver, observed negative trends in some habitat features, and the potential for more severe declines in marine productivity could result in even lower abundance levels than during the last period of poor ocean conditions. On balance, the BRT was, as a whole, uncertain about whether the long-term downward trajectory of the ESU's status has been arrested and uncertain about the ESU's ability to survive another prolonged period of low ocean survivals.

Finally, the BRT was also concerned that global climate change will lead to a long-term downward trend in both freshwater and marine coho salmon habitat compared to current conditions. There was considerable uncertainty about the magnitude of most of the specific effects climate change will have on salmon habitat, but the BRT was concerned that most changes associated with climate change are expected to result in poorer and more variable habitat conditions for OC coho salmon than exist currently. Some members of the BRT noted that changes in freshwater flow patterns as a result of climate change may not be as severe in the Oregon coast as in other parts of the Pacific Northwest, while others were concerned by recent observations of extremely poor marine survival rates for several West Coast salmon populations. The distribution of overall risk scores reflects some of this uncertainty.

The BRT concluded that, when future conditions are taken into account, the OC coho salmon ESU as a whole is at moderate risk of extinction. The BRT therefore did not explicitly address whether the ESU was at risk in only a significant portion of its range.

Our previous Federal Register Notices, proposed rule, previous BRT reports (Weitkamp et al, 1995; Good et al. 2005), as well as numerous other reports and assessments (ODFW, 1995; State of Oregon, 2005; State of Oregon 2007), have reviewed in detail the effects of historical and ongoing land management practices that have altered OC coho salmon habitat. The BRT reviewed the factors that have led to the current degraded condition of OC coho salmon habitat. We briefly summarize this information here and direct readers to the comprehensive analysis of factors affecting OC coho salmon habitat in the BRT report (Stout et al., 2011) for more detail.

Historical and ongoing timber harvest and road building have reduced stream shade, increased fine sediment levels, reduced levels of instream large wood, and altered watershed hydrology. Historical splash damming removed stream roughness elements such as boulders and large wood and in some cases scoured streams to bedrock. Fish passage has been blocked in many streams by improperly designed culverts. Fish passage has been restricted in most estuary areas by tide gates.

Urbanization has resulted in loss of streamside vegetation and added impervious surfaces, which alter normal hydraulic processes. Agricultural activities have removed stream-side vegetation. Building of dikes and levees has disconnected streams from their floodplains and resulted in loss of natural stream sinuosity. Stormwater and agricultural runoff reaching streams is often contaminated by hydrocarbons, fertilizers, pesticides, and other contaminants. In the Umpqua River basin, diversion of water for agriculture reduces base stream flow and may result in higher summer stream temperatures.

Conversion of forest and agricultural land to urban and suburban development is likely to result in an increase in these effects in the future (Burnett et al., 2007). Loss of beavers from areas inhabited by the OC coho salmon has led to reduced stream habitat complexity and loss of freshwater wetlands. The BRT reports that the amount of tidal wetland habitat available to support coho salmon rearing has declined substantially relative to historical estimates across all of the biogeographic strata (Stout et al., 2011). Instream and off-channel gravel mining has removed natural stream substrates and altered floodplain function.

Historical harvest rates of OC coho salmon ranged from 60 percent to 90 percent from the 1960s into the 1980s (Stout et al., 2011). Modest harvest reductions were achieved in the late 1980s. By 1994, most directed coho salmon harvest was prohibited (Stout et al., 2011). The Pacific Fishery Management Council adopted Amendment 13 to its Salmon Fishery Management Plan in 1998. This amendment was part of the Oregon Plan for Salmon and Watersheds and was designed to reduce harvest of OC coho salmon. Current harvest rates are based on predicted marine survival and range from 0.8 percent to 45 percent. Allowable harvest rates have not exceeded 20 percent (with actual harvest rates being considerably lower) in the past 10 years (PFMC, 2010).

A few small freshwater fisheries on OC coho salmon have been allowed in recent years based on the provision in Amendment 13 that terminal fisheries can be allowed on strong populations as long as the overall exploitation rate for the ESU does not exceed the Amendment 13 allowable rate, and that escapement is not reduced below full seeding of the best available habitat. We have approved these fisheries with the condition that the methodologies used by the ODFW to predict population abundances and estimate full seeding levels are presented to the Pacific Fishery Management Council for review and approval.

While historical harvest management may have contributed to OC coho declines, the BRT concluded that the decreases in harvest mortalities described above have reduced this threat to the ESU and that further harvest reductions would not further reduce the risk to ESU persistence.

The ODFW (2005), in its assessment of OC coho salmon, asserted that disease and parasitism is not an important consideration in the recovery of this ESU. However, as many of the streams coho salmon juveniles inhabit are already close to lethal temperatures during the summer months, and with the expectation of rising stream temperatures due to global climate change, increases in infection rates of juvenile coho by parasites may become an increasingly important stressor both for freshwater and marine survival (Stout et al., 2011) and may become important risks for juvenile fish in the early ocean-entry stage of the lifecycle.

The BRT identified several bird species and marine mammals that prey on OC coho salmon, but concluded that avian and mammalian predation may not have been a significant factor for decline when compared with other factors, but more recent work shows that it may be important to recovery actions in certain populations and specific situations within the OC Coho Salmon ESU.

The BRT was more concerned about predation on OC coho salmon from introduced warm-water fishes such as smallmouth bass ( Micropterus dolomieu ) and largemouth bass ( Micropterus salmoides ). These predatory fish are especially abundant in the streams and lakes of the Lakes and the lower Umpqua River. The BRT concluded that predation and competition from exotic fishes, particularly in light of the warming water temperatures from global climate change, could seriously affect the lake and slow-water rearing life history of OC coho salmon by increasing predation.

Existing regulations governing coho salmon harvest have dramatically improved the ESU's likelihood of persistence. These regulations are unlikely to be weakened in the future. Many hatchery practices that were detrimental to the long-term viability of this ESU have been discontinued. As the BRT notes in its report, some of the benefits of these management changes are being realized as improvements in ESU abundance. However, trends in freshwater habitat complexity throughout many areas of this ESU's range remain discernibly unchanged (Stout et al., 2011). We remain concerned that regulation of some habitat altering actions is insufficient to provide habitat conditions that support a viable ESU. In the Efforts Being Made to Protect the Species section of this Notice, we present our analysis of the current efforts to protect OC coho salmon freshwater and estuarine habitat

Ocean conditions in the Pacific Northwest exhibit patterns of recurring, decadal-scale variability (including the Pacific Decadal Oscillation and the El Niño Southern Oscillation), and correlations exist between these oceanic changes and salmon abundance in the Pacific Northwest (Stout et al., 2011). It is also generally accepted that for at least 2 decades, beginning about 1977, marine productivity conditions were unfavorable for the majority of salmon and steelhead populations in the Pacific Northwest, but this pattern broke in 1998, after which marine productivity has been quite variable (Stout et al., 2011). In considering these shifts in ocean conditions, the BRT was concerned about how prolonged periods of poor marine survival caused by unfavorable ocean conditions may affect the population viability parameters of abundance, productivity, spatial structure, and diversity. OC coho salmon have persisted through many favorable-unfavorable ocean/climate cycles in the past. However, in the past much of their freshwater habitat was in good condition, buffering the effects of ocean/climate variability on population abundance and productivity. It is uncertain how these populations will fare in periods of poor ocean survival when their freshwater, estuary, and nearshore marine habitats are degraded (Stout et al., 2011).

The potential effects of global climate change are also a concern for this species. The BRT noted that there is considerable uncertainty regarding the effects of climate change on OC coho salmon and their freshwater, marine, and estuarine habitat. The final BRT report (Stout et al., 2011) relied on an analysis of climate effects on OC coho salmon developed by two of its members (Wainwright and Weitkamp, in review).

Recent climate change has had widespread ecological effects across the globe, including changes in phenology; changes in trophic interactions; range shifts (both in latitude and elevation and depth); extinctions; and genetic adaptations (Parmesan, 2006). These types of changes have observed in salmon populations (ISAB 2007; Crozier et al., 2008a, and Mantua et al., 2009). Although these changes have undoubtedly influenced the observed VSP attributes for OC coho salmon ESU, the BRT could not partition past climate effects from other factors influencing the status of the ESU. Continuing climate change poses a threat to aquatic ecosystems (Poff et al., 2002) and more locally to Pacific salmon (Mote et al., 2003). The coho salmon life cycle extends across three main habitat types: Freshwater rivers and lakes, estuaries, and marine environments. In addition, terrestrial forest habitats are also essential to coho salmon because they determine the quality of freshwater habitats by influencing the types of sediments in spawning habitats and the abundance and structure of pools in juvenile rearing habitats (Cedarholm and Reid, 1987). The BRT considered these four habitats, how physical climate change is expected to affect those habitats over the next 50 years, and how salmon may respond to those effects during specific life-history stages (Stout et al., 2011; Wainwright and Weitkamp, in review). Climate conditions have effects on each of these habitats, thus affecting different portions of the life cycle through different pathways, leading to a very complex set of potential effects. The BRT recognized that, while we have quantitative estimates of likely trends for some of the physical climate changes, we do not have sufficient understanding of the biological response to these changes to reliably quantify the effects on salmon populations and extinction risk. For this reason, their analysis was qualitative, summarizing likely trends in climate, identifying the pathways by which those trends are likely to affect salmon, and assessing the likely direction and rough magnitude of coho salmon population response.

Throughout the life cycle of OC coho salmon, there are a numerous potential effects of climate change (Stout et al., 2011; Wainwright and Weitkamp, in review). The main predicted effects in terrestrial and freshwater habitats include warmer, drier summers, reduced snowpack, lower summer flows, higher summer stream temperatures, and increased winter floods, which would affect coho salmon by reducing available summer rearing habitat, increasing potential scour and egg loss in spawning habitat, increasing thermal stress, and increasing predation risk. In estuarine habitats, the main physical effects are predicted to be rising sea level and increasing water temperatures, which would lead to a reduction in intertidal wetland habitats, increasing thermal stress, increasing predation risk, and unpredictable changes in biological community composition. In marine habitats, there are a number of physical changes that would likey affect coho salmon, including higher water temperature, intensified upwelling, delayed spring transition, intensified stratification, and increasing acidity in coastal waters. Of these, only intensified upwelling would be expected to benefit coastal-rearing salmon; all the other effects would likely be negative.

Despite the uncertainties involved in predicting the effects of global climate change on the OC coho salmon ESU, the available information indicates that most impacts are likely to be negative. While individual effects at a particular life-history stage may be small, the cumulative effect of many small effects multiplied across life-history stages and across generations can result in large changes in salmon population dynamics (Stout et al., 2011). In its conclusion on the likely effects of climate change, the BRT expressed both positive and negative possible effects but stressed that when effects are considered collectively, their impact on ESU viability is likely to be negative despite the large uncertainties associated with individual effects.

Section 4(b)(1)(A) of the ESA requires the Secretary to take into account efforts being made to protect a species when evaluating a species' listing classification (50 CFR 424.11(f)). In our proposed rule for this action, we presented a comprehensive analysis of Federal, State, and local programs that provide protection to OC coho salmon and their habitat. We did not receive any specific comments regarding our analysis of protective efforts during the public comment period. We present a summary of that analysis below, and direct the reader to the proposed rule for greater detail.

Management of riparian areas on private forest lands within the range of OC coho salmon is regulated by the Oregon Forest Practices Act and Forest Practice Rules (Oregon Department of Forestry, 2005b). These rules require the establishment of riparian management areas (RMA) on certain streams that are within or adjacent to forestry operations. The RMA widths vary from 10 feet (3.05 meters) to 100 feet (30.48 meters) depending on the stream classification, with fish-bearing streams having wider RMA than streams that are not fish-bearing.

Although the Oregon Forest Practices Act and the Forest Practice Rules generally have become more protective of riparian and aquatic habitats over time, significant concerns remain over their ability to adequately protect water quality and salmon habitat (Everest and Reeves, 2007; ODF, 2005b; IMST, 1999). In particular, disagreements continue over: (1) Whether the widths of RMAs are sufficient to fully protect riparian functions and stream habitats; (2) whether operations allowed within RMAs will degrade stream habitats; (3) operations on high-risk landslide sites; and (4) watershed-scale effects. Based on the available information, we were unable to conclude that the Oregon Forest Practices Act adequately protects OC coho habitat in all circumstances. On some streams, forestry operations conducted in compliance with this act are likely to reduce stream shade, slow the recruitment of large woody debris, and add fine sediments. Since there are no limitations on cumulative watershed effects, road density on private forest lands, which is high throughout the range of this ESU, is unlikely to decrease.

Approximately 567,000 acres (2,295 square kilometers) of forest land within the range of OC coho salmon are managed by the Oregon Board of Forestry (Oregon Department of Forestry, 2005). The majority of these lands are managed under the Northwest Oregon Forest Management Plan and the Elliot Forest Management Plan. The plans are described in detail in our proposed rule and in Oregon Department of Forestry (2001 and 2006).

The Oregon Department of Forestry began an ESA section 10 habitat conservation plan for the Elliot State Forest Management Plan. On July 19, 2009, we notified Oregon Department of Forestry that “we are unable to conclude the strategies would meet the conservation needs of our trust resources and provide for the survival and recovery of Oregon Coast (OC) coho salmon.” (Letter from Kim Kratz, NMFS to Jim Young, Oregon Department of Forestry, dated July 19, 2009). We identified concerns over stream shade, woody debris recruitment, and certain other issues that needed to be resolved before the Habitat Conservation Plan can be approved. On July 27, 2009, the Oregon Department of Forestry responded, stating that the proposed protective measures “will provide a high level of protection for Oregon's fish and wildlife species and a low level of risk” (Letter from Jim Young, Oregon Department of Forestry, to Kim Kratz, NMFS, dated July 27, 2009). There is still significant disagreement over whether the proposed protective measures are sufficient to conserve OC coho salmon and their habitat. Since publication of our proposed rule, no additional progress has been made on this habitat conservation plan. We are as yet unable to conclude that the Elliot State and the Northwest Oregon Forest Management Plans provide for OC coho salmon habitat that is capable of supporting populations that are viable during both good and poor marine conditions.

Since 1994, land management on Forest Service and Bureau of Land Management (BLM) lands in Western Oregon has been guided by the Federal Northwest Forest Plan (USDA and USDI, 1994). The aquatic conservation strategy contained in this plan includes elements such as designation of riparian management zones, activity-specific management standards, watershed assessment, watershed restoration, and identification of key watersheds (USDA and USDI, 1994).

Although much of the habitat with high intrinsic potential to support the recovery of OC coho salmon is on lower-elevation, private lands, Federal forest lands contain much of the current high-quality habitat for this species (Burnett et al., 2007). Relative to forest practice rules and practices on many non-Federal lands, the Northwest Forest Plan has large riparian management zones (1 to 2 site-potential tree heights) and relatively protective, activity-specific management standards (USDA and USDI, 1994). As discussed in the proposed rule, we consider the Northwest Forest Plan, when fully implemented, to be sufficient to provide for the habitat needs of OC coho salmon habitat on Federal lands. Although maintaining this high-quality habitat on Federal lands is necessary for the recovery of OC coho salmon, the recovery of the species is unlikely unless habitat can be improved in streams with high-intrinsic-potential on non-Federal lands (Burnett et al., 2007).

The proposed rule also noted that uncertainty exists about the future of the aquatic conservation strategy on Federal lands in the Pacific Northwest. The Forest Service and Bureau of Land Management have attempted to revise the aquatic conservation strategy of the Northwest Forest Plan several times over the last few years, but have encountered legal challenges each time, resulting in no change to the strategy. In addition, ESA section 7 consultations on the management of riparian forests on Federal lands throughout the range of the OC coho salmon ESU have become increasingly contentious over the last year. Recently, we initiated a dispute resolution process with the Forest Service, Bureau of Land Management, and U.S. Fish and Wildlife Service to help resolve scientific issues associated with the management of riparian forests and its effects on salmon habitat.

Across all populations, agricultural lands occupy approximately 0-20 percent of lands adjacent to OC coho salmon habitat (Burnett et al., 2007). Much of this habitat is considered to have high intrinsic potential (low gradient stream reaches with historically high habitat complexity) but has been degraded by past management activities (Burnett et al., 2007). In our proposed rule, we presented an analysis of the degree of protection afforded to OC coho salmon habitat by: (1) Agricultural water quality programs, (2) state water quality management plans for confined animal feeding operation, (3) state pesticide programs, (4) the Federal pesticide labeling program, and (5) irrigation and water availability regulations. We concluded that these state and Federal programs are partially effective at protecting OC coho salmon habitat. Many of the agricultural actions that have the greatest potential to degrade coho habitat, such as management of animal waste, application of toxic pesticides, and discharge of fill material, have some protective measures in place that limit their adverse effects on aquatic habitat. However, deficiencies in these programs limit their effectiveness at protecting OC coho salmon habitat. In particular, the riparian rules of the water quality management program are vague and enforcement of this program is sporadic. The lack of clear criteria for riparian condition will continue to make the requirements of this program difficult to enforce. Levees and dikes can be maintained and left devoid of riparian vegetation regardless of their proximity to a stream. The lack of streamside buffers in the state's pesticide program likely results in water quality impacts from the application of pesticides. Although new requirements from ESA section 7 consultations on Federal pesticide registration may afford more protection to OC coho salmon, these requirements will only apply if the OC coho salmon ESU remains listed. Although a water leasing program is available, there is much uncertainty about how this program will result in increased instream flow. The available information leads us to conclude that it is likely that the quality of OC coho salmon habitat on private agricultural lands may improve slowly over time or remain in a degraded state. It is unlikely that, under the current programs, OC coho salmon habitat will recover to the point that it can produce viable populations during both good and poor marine conditions.

Several sections of the Federal Clean Water Act, such as section 401 (water quality certification), section 402 (National Pollutant Discharge Elimination System), and section 404 (discharge of fill into waters of the United States), regulate activities that might degrade salmon habitat. Despite the existence and enforcement of this law, a significant percentage of stream reaches in the range of the Oregon Coast coho salmon do not meet current water quality standards. For instance, many of the populations of this ESU have degraded water quality identified as a secondary limiting factor (ODFW, 2007). Forty percent of the stream miles inhabited by OC salmon ESU are classified as temperature impaired (Stout et al., 2011). Although programs carried out under the Clean Water Act are well funded and enforcement of this law occurs, it is unlikely that programs are sufficient to protect salmon habitat in a condition that would provide for viable populations during good and poor marine conditions.

Gravel mining occurs in various areas throughout the freshwater range of OC coho salmon but is most common in the South Fork Umpqua, South Fork Coquille, Nehalem, Nestucca, Trask, Kilchis, Miami, and Wilson rivers. The U.S. Army Corps of Engineers issues permits under section 404 of the Clean Water Act and section 10 of the Rivers and Harbors Act for gravel mining in rivers in the southern extent of the OC coho salmon's range. Although gravel mining activities using similar methods occur within rivers at the northern extent of this ESU's range, such as the Nehalem River, the Corps of Engineers does not always issue permits for these activities. It is unclear why fewer permits are issued in the northern portion of this ESU's range. The Oregon Department of State Lands issues similar permits under both the Removal-Fill Law and the State Scenic Waterway Law.

In our proposed rule we described in detail the potential adverse effects of improperly managed gravel mining on OC coho salmon habitat. We noted that gravel mining can result in a deeper and less complex streambed with reduced refuge areas for juvenile coho salmon. Gravel mining can alter salmonid food webs and reduce the amount of prey available for juvenile salmonids. Removal of riverbed substrates may also alter the relationship between sediment load and shear stress forces and increase bank and channel erosion. This disrupts channel form, and can also disrupt the processes of channel formation and habitat development (Lagasse et al., 1980; Waters, 1995). Operation of heavy equipment in the river channel or riparian areas can result in disturbance of vegetation, exposure of bare soil to erosive forces, and spills or releases of petroleum-based contaminants.

In our proposed rule, we noted that we have issued draft conference opinions under section 7 of the ESA that have concluded that issuance of permits for gravel mining in streams occupied by OC coho salmon would jeopardize the continued existence of this ESU and result in the destruction or adverse modification of their critical habitat (letter from Michael Crouse, NMFS to Larry Evans, Corps of Engineers dated May 29, 2007). Although gravel mining has ceased in some areas occupied by this ESU, gravel mining in the South Fork Coquille and other areas remains a concern.

Recent ESA and Magnuson-Stevens Fishery Conservation and Management Act consultations indicate that, in some cases, the measures governing sand and gravel mining are inadequate to provide for OC coho salmon habitat capable of producing viable populations during good and poor marine conditions.

The Oregon Watershed Enhancement Board funds and facilitates habitat restoration projects throughout the range of the OC coho salmon. Many of these projects occur on private land and are planned with local stakeholder groups known as watershed councils. Biologists and restoration specialists from state, Federal, and tribal agencies often assist in the planning and implementation of projects. Habitat restoration projects funded by the Oregon Watershed Enhancement Board include installation of fish screens, riparian planting, placement of large woody debris, road treatments to reduce sediment inputs to streams, wetland restoration, and removal of fish passage barriers (Oregon Watershed Enhancement Board, 2009). The web-based Oregon Watershed Restoration Inventory ( http://www.oregon.gov/OWEB/MONITOR/OWRI_data.shtml ) and the North Coast Explorer ( http://www.northcoastexplorer.info/ ) systems provide detailed information on restoration projects implemented within the range of OC coho salmon. We also maintain the Pacific Northwest Salmon Habitat Project Database ( http://webapps.nwfsc.noaa.gov/pnshp ) to track salmon habitat restoration projects. Douglas County provided information on several habitat restoration projects completed within the Umpqua River Basin. In addition to state and private efforts, the Forest Service and Bureau of Land Management carry out restoration projects on Federal lands (USDA and USDI, 2005).

A number of restoration projects are occurring throughout the range of this ESU and we expect they will have benefits to ESU viability some time in the future. However, we do not have information available that would allow us to predict or quantify these future improvements to ESU viability. In the absence of this information, we must look at measures of ESU viability to determine if restoration efforts are lowering ESU extinction risk. In the case of OC coho salmon, there are some encouraging signs such as increased abundance over the last several years.

Beavers were once widespread across Oregon. There is general agreement that beavers are a natural component of the aquatic ecosystem and beaver dams provide ideal habitat for overwintering coho salmon juveniles (ODFW, 1997). Currently, beavers in Oregon are classified as nuisance species, so there is no closed season or bag limit. They may be killed at any time they are encountered. Oregon also maintains a trapping season for beavers. The ODFW is currently investigating possible ways to protect beavers and their dams throughout the range of OC coho salmon. All current protective efforts are voluntary, and there is low certainty they will be fully implemented.

Section 4(b)(1) of the ESA requires that a listing determination be based solely on the best scientific and commercial data available, after conducting a review of the status of the species and after taking into account those efforts, if any, being made by any state or foreign nation to protect and conserve the species. We have reviewed the preliminary and final reports of the BRT (Stout et al., 2010, 2011), co-manager comments, peer review, public comments, and other available published and unpublished information. Based on this review, we conclude that there is no new information to indicate that the boundaries of this ESU should be revised or that the ESU membership of existing hatchery populations should be changed.

Ongoing efforts to protect OC coho salmon and their habitat, as described in the previous section, are likely to provide some benefit to this ESU. Considered collectively, however, these efforts do not comprehensively address the threats to the OC coho salmon ESU from past, ongoing, and future land management activities and global climate change.

Based on the best scientific and commercial information available, including the BRT report, we conclude that the OC coho salmon ESU is not presently in danger of extinction, but is likely to become so in the foreseeable future throughout all of its range. Factors supporting a conclusion that this ESU is not presently in danger of extinction include: (1) Abundance of naturally spawned returns has increased recently; (2) this ESU remains well distributed throughout its historical range from just south of the Columbia River to north of Cape Blanco, Oregon; (3) each one of the five major geographical areas comprising this ESU contains at least one relatively healthy population; (4) threats posed by overharvest and hatchery practices have largely been addressed; and (5) spawning escapement levels have improved considerably in recent years.

Factors supporting a conclusion that the DPS is likely to become in danger of extinction in the foreseeable future include: (1) After considering the results of the DSS, other information about the ESU's viability, and threats, the BRT found the OC coho salmon ESU to be at least at a moderate risk of extinction; (2) abundance of naturally spawned returns is one tenth of historic levels of abundance; (3) the BRT's analysis of freshwater habitat trends for the Oregon coast found little evidence for an overall improving trend in freshwater habitat conditions since the mid-1990s, and evidence of negative trends in some strata; (4) current protective efforts are insufficient to provide for freshwater habitat conditions capable of producing a viable ESU; (5) there is ongoing uncertainty about the future management of OC coho salmon habitat, particularly forested habitat on state, Federal, and private lands; (6) global climate change is likely to result in further degradation of freshwater habitat conditions and poor marine survival; (7) there are still numerous primary threats to OC coho persistence, including legacy effects from past forest management, poor marine conditions, agricultural activities and urban development in high intrinsic potential habitat, global climate change, etc.; and (8) this ESU faces a long and growing list of secondary threats including invasions of exotic organisms, poor water quality, and land-use conversion. Therefore, we retain the threatened listing for the OC coho salmon ESU.

Section 9 of the ESA prohibits the take of endangered species. The term “take” means to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct (16 U.S.C. 1532(19)). In the case of threatened species, ESA section 4(d) requires us to issue regulations we deem necessary and advisable for the conservation of the species. Such regulations may include extending section 9 take prohibitions. On February 11, 2008, we issued final protective regulations under section 4(d) of the ESA for the OC coho salmon ESU (73 FR 7816). The new information evaluated in this review of the status of the OC coho ESU does not alter our determinations regarding those portions of our February 11, 2008, rule establishing ESA section 4(d) protections for the species. Accordingly, those protective regulations remain in effect.

Section 7(a)(4) of the ESA requires that Federal agencies confer with NMFS on any actions likely to jeopardize the continued existence of a species proposed for listing and on actions likely to result in the destruction or adverse modification of proposed critical habitat. For listed species, section 7(a)(2) requires Federal agencies to ensure that activities they authorize, fund, or conduct are not likely to jeopardize the continued existence of a listed species or to destroy or adversely modify its critical habitat. If a proposed Federal action may affect a listed species or its critical habitat, the responsible Federal agency must enter into consultation with NMFS or the US Fish and Wildlife Service, as appropriate. Examples of Federal actions likely to affect salmon include authorized land management activities of the Forest Service and the BLM, as well as operation of hydroelectric and storage projects of the Bureau of Reclamation and the U.S. Army Corps of Engineers. Such activities include timber sales and harvest, permitting livestock grazing, hydroelectric power generation, and flood control. Federal actions, including the U.S. Army Corps of Engineers section 404 permitting activities under the Clean Water Act, permitting activities under the River and Harbors Act, Federal Energy Regulatory Commission licenses for non-Federal development and operation of hydropower, and Federal salmon hatcheries, may also require consultation. We have a long history of consultation with these agencies on the OC coho salmon ESU.

ESA sections 10(a)(1)(A) and 10(a)(1)(B) of the ESA provide NMFS with authority to grant exceptions to the ESA's “take” prohibitions. Section 10(a)(1)(A) scientific research and enhancement permits may be issued to entities (Federal and non-Federal) conducting research that involves a directed take of listed species. A directed take refers to the intentional take of listed species. We have issued section 10(a)(1)(A) research/enhancement permits for currently listed ESUs for a number of activities, including trapping and tagging, electroshocking to determine population presence and abundance, removal of fish from irrigation ditches, and collection of adult fish for artificial propagation programs. Section 10(a)(1)(B) incidental take permits may be issued to non-Federal entities performing activities that may incidentally take listed species. The types of activities potentially requiring a section 10(a)(1)(B) incidental take permit include the operation and release of artificially propagated fish by state or privately operated and funded hatcheries, state or academic research that may incidentally take listed species, the implementation of state fishing regulations, logging, road building, grazing, and diverting water into private lands. These “Other Protective ESA Provisions” of the February 11, 2008, rule remain in effect.

Since the OC coho salmon ESU is currently listed as threatened and this final rule is conformation of that finding, this rule is effective immediately.

Section 4(a)(3) of the ESA requires that, to the extent practicable and determinable, critical habitat be designated concurrently with the listing of a species. Designation of critical habitat must be based on the best scientific data available and must take into consideration the economic, national security, and other relevant impacts of specifying any particular area as critical habitat.

On February 11, 2008, we designated critical habitat for the OC coho salmon ESU (73 FR 7816). The new information we evaluated in this review of the status of the OC coho ESU does not alter our determinations regarding those portions of our February 11, 2008 rule designating critical habitat for the species. Accordingly, this critical habitat designation remains in effect.

ESA listing decisions are exempt from the requirements to prepare an environmental assessment or environmental impact statement under the NEPA. See NOAA Administrative Order 216 6.03(e)(1) and Pacific Legal Foundation v. Andrus 657 F2d 829 (6th Cir. 1981). Thus, we have determined that this final listing determination for the OC coho salmon ESU is exempt from the requirements of the NEPA of 1969.

As noted in the Conference Report on the 1982 amendments to the ESA, economic impacts cannot be considered when assessing the status of a species. Therefore, the economic analysis requirements of the Regulatory Flexibility Act are not applicable to the listing process. In addition, this rule is exempt from review under E.O. 12866. This final rule does not contain a collection-of-information requirement for the purposes of the Paperwork Reduction Act.

E.O. 13084 requires that if NMFS issues a regulation that significantly or uniquely affects the communities of Indian tribal governments and imposes substantial direct compliance costs on those communities, NMFS must consult with those governments or the Federal Government must provide the funds necessary to pay the direct compliance costs incurred by the tribal governments. This final rule does not impose substantial direct compliance costs on the communities of Indian tribal governments. Accordingly, the requirements of section 3(b) of E.O. 13084 do not apply to this final rule. Nonetheless, we will continue to inform potentially affected tribal governments, solicit their input, and coordinate on future management actions.

E.O. 13132 requires agencies to take into account any federalism impacts of regulations under development. It includes specific directives for consultation in situations where a regulation will preempt state law or impose substantial direct compliance costs on state and local governments (unless required by statute). Neither of those circumstances is applicable to this final rule. In keeping with the intent of the Administration and Congress to provide continuing and meaningful dialogue on issues of mutual state and Federal interest, the proposed rule was provided to Oregon State and the state was invited to comment. We have conferred with the State of Oregon in the course of assessing the status of the OC coho salmon ESU, and have considered and incorporated their comments and recommendations into this final determination where applicable.

A list of references cited in this notice is available upon request (see ADDRESSES ) or via the Internet at http://www.nwr.noaa.gov. Additional information, including agency reports and written comments, is also available at this Internet address.

For the reasons set out in the preamble, 50 CFR part 223 is amended as follows:

Background

The King and Tanner crab fisheries in the exclusive economic zone of the Bering Sea and Aleutian Islands (BSAI) are managed under the Fishery Management Plan for Bering Sea/Aleutian Islands King and Tanner Crabs (Crab FMP). Groundfish fisheries in the Gulf of Alaska (GOA) are managed under the Fishery Management Plan for Groundfish of the Gulf of Alaska (GOA FMP). The North Pacific Fishery Management Council (Council) prepared, and NMFS approved, the Crab FMP and the GOA FMP under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). Amendments 18 and 19 to the Crab FMP implemented the BSAI Crab Rationalization Program (CR Program). Regulations implementing the FMP, including the CR Program, are located at 50 CFR part 680. Regulations implementing the GOA FMP are at 50 CFR part 679. General regulations governing U.S. fisheries also appear at 50 CFR part 600.

The CR Program allocates BSAI crab resources among harvesters, processors, and coastal communities. The CR Program is a limited access privilege program (LAPP) for nine BSAI crab fisheries. Participants receive exclusive harvesting and processing privileges for a portion of the total allowable catch established for each crab fishery in the CR Program.

Sideboards are implemented within LAPPs to prevent participants who benefit from receiving exclusive harvesting privileges from shifting effort into fisheries that are not managed with a LAPP. In developing the CR Program, the Council anticipated that flexibility inherent in the CR program would allow crab fishermen to expand their fishing operations into other fisheries. Because the Bering Sea snow crab ( Chionoecetes opilio ) and many economically valuable GOA groundfish fisheries were conducted concurrently from January through March the Council was particularly concerned that increased flexibility for recipients of Bering Sea snow crab quota share (QS) could give them an incentive to increase effort in GOA groundfish fisheries.

The Council determined that the CR Program should include sideboards for most GOA groundfish fisheries to prevent Bering Sea snow crab QS recipients from increasing their participation in those fisheries. However, because some Bering Sea snow crab QS recipients had significant historical participation in the GOA Pacific cod fishery, the Council also developed criteria that would exempt from sideboards certain Bering Sea snow crab QS recipients with significant participation in, or dependence on, the GOA Pacific cod fishery. The CR Program did not establish sideboard limits for American Fisheries Act (AFA) vessels with historical participation in the Bering Sea snow crab fishery because these vessels are subject to GOA harvesting and processing restrictions under the AFA and the implementing regulations for the AFA (§ 679.64(b)). Vessels subject to the sideboards are referred to as “non-AFA crab vessels”. Exemption criteria are based on snow crab and groundfish catch history during a set of qualifying years and are fully described in the preamble to the proposed rule for this action (76 FR 17088).

After the CR Program was implemented in 2005, some non-AFA crab vessel operators testified to the Council that the GOA Pacific cod and pollock sideboard limits were too restrictive. These operators indicated that with the sideboard limits they were unable to maintain historical groundfish catch levels in the GOA and should qualify for an exemption from those limits. Some operators testified that although their vessel's catch history exceeded the maximum allowable amount to qualify for the exemption from the Pacific cod sideboard limits, they had significant history in, and dependence on, GOA Pacific cod and pollock fisheries. Based on this public testimony and a review of the effects of the sideboard limits in the first 2 years of the CR Program (2005/2006 and 2006/2007 crab fishing years), the Council determined that the existing criteria for exemption from the sideboard limits in GOA Pacific cod and pollock fisheries should be examined to consider inclusion of additional vessels and LLP licenses with historical participation in and sufficient dependence on these fisheries. The Council initiated an analysis in December 2007 to examine alternatives that would expand the criteria for non-AFA crab vessels to qualify for an exemption from the Pacific cod sideboard limits and that would extend a similar exemption to the pollock sideboard limits.

In October 2008, the Council recommended Amendment 34 to the Crab FMP to exempt additional vessels and groundfish LLP licenses from the GOA Pacific cod and pollock sideboard limits. The Council also clarified that it did not intend for Amendment 34 to disqualify any vessels or groundfish LLP licenses that are currently exempt from non-AFA crab vessel Pacific cod sideboard limits in the GOA.

This final rule implements two actions. The first action modifies the criteria exempting vessels and LLP licenses from the non-AFA crab vessel GOA Pacific cod sideboard limits. Under this action, non-AFA crab vessels are exempt from GOA Pacific cod sideboards if their catch history of Bering Sea snow crab from 1996 to 2000 was less than 750,000 lbs. (340.2 mt) and their catch history of Pacific cod during the same time period was greater than 680 metric tons. In developing these new sideboard exemption criteria, the Council first considered a person's dependence on the GOA Pacific cod fishery demonstrated through both sufficient volume of landings, represented by the 680 metric ton level, which is slightly more than twice the average 1996 to 2000 GOA Pacific cod landings of all non-AFA crab vessels, as well as a person's recent annual participation in the fishery represented by landings of GOA Pacific cod each year from 1998 to 2007. The Council determined, and NMFS agrees, that the Bering Sea snow crab threshold of less than 100,000 lbs. (45.4 mt) of landings between 1996 and 2000 is too restrictive and that increasing the threshold to less than 750,000 lbs. (340.2 mt) of landings between 1996 and 2000 was justified given demonstrated dependence on the GOA Pacific cod fishery by the three additional vessels and licenses that are estimated to qualify for exemption under this final rule. The Council concluded, and NMFS agrees, that the effects of three additional exempt vessels and LLP licenses on other participants in the GOA Pacific cod fishery would be minimal since these three vessels and LLP licenses represent approximately one percent of the number of participating vessels and their combined harvests of Pacific cod from 1995 through 2009 were less than 2 percent of the total catch of GOA Pacific cod during that period.

The second action implemented by this final rule adds an exemption to GOA pollock sideboard limits for non-AFA crab vessels. Under the CR Program, all non-AFA crab vessels are subject to sideboard limits in GOA pollock fisheries. Although some non-AFA crab vessels historically participated in GOA pollock fisheries, the aggregate catch history of GOA pollock by non-AFA crab vessels from 1996 to 2000 yielded sideboard limits that NMFS determined were of an insufficient amount to support directed fishing. Since 2006, NMFS has closed the GOA pollock sideboard fishery to directed fishing by non-AFA crab vessels. With the likelihood of no directed fishing for pollock sideboard limits for the foreseeable future, a GOA pollock-dependent non-AFA crab vessel could not maintain its historical level of participation in GOA pollock fisheries and the Council determined that they are negatively impacted under the status quo.

The Council determined and NMFS agrees that a non-AFA crab vessel that was used to land less than 0.22 percent of all Bering Sea snow crab landings from 1996 to 2000 (1,212,673 lbs. (550 mt)), and made 20 landings of pollock harvested from the GOA from 1996 to 2000, was minimally dependent on the Bering Sea snow crab fishery and sufficiently dependent on the GOA pollock fishery to qualify for an exemption from the pollock sideboard limits. In reaching this decision, the Council determined that the 20-landings minimum threshold for an exemption from the GOA pollock sideboard limit was the minimum level of participation by non-AFA crab vessels that would demonstrate significant participation in, and dependence on, the GOA pollock fishery.

A single vessel is estimated to qualify for an exemption under the criteria selected by the Council. Pollock comprised approximately 80 percent of the vessel's catch in the GOA in most years from 1995 through 2000. Additionally, this vessel was used to make at least twice as many landings of pollock (20) harvested from the GOA from 1996 through 2000 than the three other vessel operations that would qualify under lower landings thresholds considered by the Council. The Council determined and NMFS agrees that this catch information clearly demonstrated the operator's dependence on the GOA pollock fishery. NMFS also agrees with the Council that vessels meeting the proposed threshold for Bering Sea snow crab landings would demonstrate minimal participation in, and dependence on, this fishery because it represents a very low level of harvest relative to other participants in the Bering Sea snow crab fishery. NMFS estimates that the average landings of Bering Sea snow crab per vessel from 1996 through 2000 for all vessels with catch history that generated Bering Sea snow crab QS totaled approximately 2,366,000 lbs (1,073 mt) per vessel. The Council's recommended threshold of a maximum harvest of 1,212,673 lbs (550 mt) is approximately half of this average.

Under Action 2 the Council considered three levels of past participation in the pollock fishery upon which to base the sideboard exemption—5, 10, and 20 landings of GOA pollock from 1996 to 2000 as well as a Bering Sea snow crab landing volume cap of no more than 550 mt of snow crab during the same time period. Four vessels qualified for an exemption under the 5 and 10 landing levels and one qualified under the 20 landing level. In considering the effects of exempting vessels on participants in the GOA pollock fishery, the Council determined that the exemption of one vessel and one LLP license that clearly demonstrated past dependence on the pollock fishery would not negatively affect other participants in the fishery. However, the Council determined, and NMFS agrees, that the exemption of four vessels, three of which had questionable past dependence on the fishery, would negatively affect other GOA pollock fishery participants.

To implement Amendment 34, NMFS will revise non-AFA crab vessel sideboard limit ratios that are specified in the final 2011 and 2012 harvest specifications for the GOA. For Action 1, NMFS will remove from the inshore component GOA Pacific cod sideboard limits the amount of retained catch of Pacific cod harvested in the GOA from 1996 through 2000 by the non-AFA crab vessels that qualify for a sideboard limit exemption under Amendment 34. The ratio calculated after the removal of this catch history will be multiplied by the 2011 and 2012 GOA Pacific cod TACs and apportioned by area and season to determine new sideboard limits in metric tons. For Action 2, Amendment 34 does not modify the non-AFA crab vessel pollock sideboard limits from the ratios implemented in the final 2011 and 2012 GOA harvest specifications. The 2011 and 2012 non-AFA crab vessel Pacific cod and pollock sideboard limit ratio calculations already exclude the retained catch of these species harvested from the GOA from 1996 through 2000 by some of the newly exempt non-AFA crab vessels whose owners took advantage of an agency administrative appeals process to challenge implementation of the sideboard limits on their vessels in 2006 because NMFS removed this catch history during the appeals process. Thus, the 1996 through 2000 catch history of some of the vessels that qualify for an exemption from GOA sideboard limits under Amendment 34 is not currently included in the sideboard limit calculations. As a result, the sideboard limit adjustments necessary to implement Amendment 34 are partially reflected in the 2011 and 2012 harvest specifications.

Table 17 and Table 18 present the final 2011 and 2012 non-AFA crab vessel sideboard limits for GOA groundfish harvest under Amendment 34 based on the Council's recommended harvest specifications for these species.

The king and Tanner crab fisheries in the exclusive economic zone of the Bering Sea and Aleutian Islands (BSAI) are managed under the FMP. The FMP was prepared by the North Pacific Fishery Management Council (Council) under the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) as amended by the Consolidated Appropriations Act of 2004 (Pub. L. 108-199, section 801).

This final rule implements Amendment 37 to the FMP. In April 2010, the Council recommended Amendment 37 to the Secretary of Commerce. NMFS published a Notice of Availability of this amendment in the Federal Register on February 1, 2011 (76 FR 5556), with comments invited through April 4, 2011. NMFS published the proposed rule for this action on February 25, 2011 (76 FR 8700), with comments invited through April 1, 2011. NMFS approved Amendment 37 on April 25, 2011. NMFS received three unique comment letters during the public comment period for Amendment 37 and the proposed rule; however, these comments did not result in any modification to the proposed regulation text. These comments are discussed in greater detail below.

Amendments 18 and 19 amended the FMP to include the Bering Sea/Aleutian Islands Crab Rationalization Program (Program). Regulations implementing the Program are located at 50 CFR part 680. NMFS established the Program as a catch share program for nine crab fisheries in the BSAI. The IFQ portion of the Program assigned quota share (QS) to persons based on their historic participation in one or more of these nine BSAI crab fisheries during a specific time period. Under the Program, NMFS issued four types of QS: Catcher vessel owner (CVO) QS was assigned to holders of License Limitation Program (LLP) licenses who delivered their catch onshore or to stationary floating crab processors; catcher/processor vessel owner QS was assigned to LLP holders that harvested and processed their catch at sea; captains and crew onboard catcher/processor vessels were issued catcher/processor crew QS; and captains and crew onboard catcher vessels were issued catcher vessel crew QS. Each year, a person who holds QS may receive IFQ, which represents an exclusive harvest privilege for a portion of the annual total allowable catch (TAC). Under the program, QS holders can form cooperatives to pool the harvest of the IFQ on fewer vessels to minimize operational costs.

NMFS also issued processor quota share (PQS) under the Program. Each year, PQS yields an exclusive privilege to receive for processing a portion of the IFQ in each of the nine BSAI crab fisheries. This annual exclusive processing privilege is called IPQ. A portion of the QS issued yields IFQ that is required to be delivered to a processor with a like amount of unused IPQ. IFQ derived from CVO QS is subject to annual designation as either Class A IFQ or Class B IFQ. Ninety percent of the IFQ derived from CVO QS for a fishery and region is designated as Class A IFQ, and the remaining 10 percent of the IFQ is designated as Class B IFQ. Class A IFQ must be matched and delivered to a processor with IPQ. Class B IFQ is not required to be delivered to a processor with IPQ. Each year there is a one-to-one match of the total pounds of Class A IFQ with the total pounds of IPQ issued in each crab fishery and region.

In most of the crab fisheries established under the Program, NMFS implemented regional designations for QS and PQS to ensure that municipalities that were historically active as processing ports continue to receive socioeconomic benefits from crab deliveries or to encourage the development of processing capacity in specific isolated municipalities. To accomplish this, the Program imposes regional delivery requirements to specific geographic regions based on historic geographic delivery and processing patterns.

The Western Aleutian Islands golden king crab ( Lithodes aequispinus ) (WAG) fishery is managed under the Program. Existing regulations for the WAG fishery require that 50 percent of the catcher vessel Class A IFQ be delivered in the West region (west of 174° W. Long.). The remaining 50 percent of the Class A IFQ is not subject to a regional delivery requirement. The purpose of the delivery requirement is to support the development of processing facilities in Adak and Akta, two isolated municipalities in the West region. The only shore-based processing facility capable of processing WAG in this region is located in the City of Adak; however, processing capacity in the West region may not be available each season.

In response to a lack of processing capacity in the West region, the Council recommended, and NMFS implemented, an emergency action to exempt West-designated IFQ and West-designated IPQ for the WAG fishery from the West regional designation (February 18, 2010, 75 FR 7205). NMFS extended the emergency action on August 17, 2010 (75 FR 50716). The emergency rule extension expired on February 20, 2011.

At its April 2010 meeting, the Council adopted Amendment 37 to the FMP to address the lack of processing capacity in the West region. Amendment 37 establishes a process for QS holders, PQS holders, and the cities of Adak and Atka to request that NMFS exempt the WAG fishery from the West regional delivery requirements. The Council and NMFS recognize that the regional delivery requirements are untenable if processing capacity is not available in the region, potentially resulting in unutilized TAC. Amendment 37 establishes a means to enhance stability in the fishery, while continuing to promote the sustained participation of the municipalities intended to benefit from the West regional delivery requirements.

The RIR/FRFA prepared for this action describes the costs and benefits of Amendment 37 (see ADDRESSES ). All of the directly regulated entities are expected to benefit from this action relative to the status quo because Amendment 37 provides an additional opportunity for landings of crab from the WAG fishery, in the event that parties are unable to reasonably access processing in the West region of the fishery.

This rule modifies or adds regulations at 50 CFR 680.4(o), 680.7(a)(2), and 680.7(a)(4). These changes apply as described in the following sections of this preamble.

With this rule, NMFS implements Amendment 37 to the FMP. This rule establishes in regulations, at § 680.4(o), a process for eligible contract signatories in the WAG fishery to apply for an exemption to the West regional delivery requirements. If granted, an annual exemption will apply to all West-designated IFQ and IPQ holders. This rule allows eligible contract signatories to complete an application to NMFS requesting an annual exemption from the West regional delivery requirements. Eligible participants can submit an application to NMFS at any time during the crab fishing year. Upon approval of a completed application, NMFS will exempt all West-designated Class A IFQ and IPQ from the West regional delivery requirements for the remainder of the crab fishing year. This exemption allows all West-designated Class A IFQ and IPQ holders to deliver and receive WAG crab at processing facilities outside of the West region (§ 680.7(a)(2) and (a)(4)). This exemption is intended to promote the full utilization of the TAC.

NMFS will continue to annually issue WAG Class A IFQ and IPQ with a West regional delivery requirement but will exempt West-designated IFQ holders and IPQ holders from the West regional delivery requirements if the required parties apply for and are granted an annual exemption. This rule removes the delivery requirements only if eligible contract signatories, who are composed of QS holders, PQS holders, and the cities of Adak and Atka, agree to apply for an exemption.

In some years, it may not be possible for fishery participants to predict the availability of West region processing capacity. Therefore, this action provides the flexibility necessary for eligible contract signatories to request an exemption at any point during a crab fishing year. In order to fully utilize the TAC in a given year, it may be necessary for fishery participants to respond quickly to unforeseen disruptions in processing capacity. From the date an exemption is approved by NMFS, all West-designated WAG IFQ could be delivered east of 174° W. long. until the end of that crab fishing year.

The rationale and effects of this action are described in detail in the preamble to the proposed rule, sections 2 and 3 of the EA/RIR/FRFA prepared to support this rule (see ADDRESSES ), and are briefly summarized in this preamble. For additional detail, please see the proposed rule preamble.

This rule establishes regulations that identify the eligible contract signatories as those QS holders, PQS holders, and municipalities who are eligible to apply for an exemption from the West regional delivery requirements: (1) Any person or company that holds in excess of 20 percent of the West-designated WAG QS; (2) any person or company that holds in excess of 20 percent of the West-designated WAG PQS; and (3) the cities of Adak and Atka. Participants in the WAG fishery that hold QS or PQS are able to verify their portion relative to other QS or PQS holders by accessing the Alaska Region Web site at http://alaskafisheries.noaa.gov. In addition, NMFS will post the QS and PQS holdings on its Web site following the end of the transfer application period (August 1) and prior to the start of the WAG fishery (August 15).

Participants holding 20 percent or less of either share type have no direct input into the contract negotiations or applications; however, once granted, an exemption applies to all West-designated IFQ and IPQ holders. Once granted, the exemption does not obligate an IFQ or IPQ holder who is not a contract signatory to deliver outside of the West region, but does provide that flexibility.

This action ensures that the municipalities intended to benefit from the regional delivery requirements participate in any agreement to deliver West-designated WAG east of 174° W. Long. This action requires the unanimous consent of all eligible contract signatories, to ensure that the interest of the cities of Adak and Atka are protected. The inclusion of the cities of Adak and Atka as required signatories continues to promote the development of consistent processing capacity in the West region because these municipalities would likely withhold consent to an exemption to foster local deliveries. NMFS recognizes the importance of the West regional delivery requirements and requires the unanimous agreement of all eligible contract signatories on an annual basis to exempt the WAG Class A IFQ from the West regional delivery requirements.

This rule adds regulations at § 680.4(o) to establish the process for eligible participants to request an exemption for all West-designated IFQ and IPQ from the West region delivery requirements. All eligible contract signatories must submit a completed application before NMFS will approve an exemption for all IFQ and IPQ holders from the West regional delivery requirements in the WAG fishery. This action requires that all applicants sign and date an affidavit affirming that all information provided on the application is true, correct, and complete to the best of his or her knowledge. Additional documents supporting eligibility may be attached to an application to facilitate approval, including documentation supporting the authority of a representative to sign the affidavit on behalf of the eligible contract signatory.

To be approved, all parties meeting the eligibility requirements at the time the application is submitted must signify their agreement to the exemption on the application. NMFS will grant an exemption to the regional delivery requirements if all eligible contract signatories submit a completed application form, including an affidavit affirming that a master contract has been signed by all eligible contract signatories. NMFS approval of an annual exemption from the WAG West regional delivery requirements will be made publicly available at the NMFS Web site at http://alaskafisheries.noaa.gov.

The evaluation of an application for an annual exemption requires a decision-making process that is subject to administrative appeal. Applications not meeting the requirements will not be approved, and NMFS will issue an initial administrative determination (IAD) to indicate the deficiencies and discrepancies in the information (or the evidence submitted in support of the application) and provide information on how an applicant could appeal an IAD. The appeals process is described under § 679.43. However, if an application is denied, eligible contract signatories can reapply immediately or at any time during a crab fishing year. This program is designed to be flexible and includes no deadlines for submission or limits on the number of times applications could be submitted to NMFS.

This rule retains regulations that require the West regional delivery requirements unless NMFS annually approves an application for an exemption. Regulations at § 680.4(o)(3) establish the effective date of the exemption as the date the completed application is approved by NMFS. Exemptions expire at the end of that crab fishing year (June 30) regardless of when they are approved.

NMFS received three unique letters during the public comment period for Amendment 37 and the proposed rule. One comment letter provided a general criticism of fishery management, and was not relevant to Amendment 37 or the proposed rule. The second comment letter noted that the Bureau of Land Management has no jurisdiction or authority as it pertains to Amendment 37. The third comment letter generally praised Amendment 37 and contained one substantive comment, responded to below. No modifications were made from proposed to final rule.

Comment 1: Regulations at § 680.4(o) would impose an unnecessary logistical burden on the applicants applying for an exemption from the West regional delivery requirements. As proposed, NMFS would require applicants to submit a single application signed by all parties. NMFS should revise the regulations to allow contract signatories to sign and submit multiple counterpart applications.

Response : Due to the logistic issues described by the commenter, NMFS Restricted Access Management Program (RAM) allows parties that submit applications for quota or license transfers to submit separate “counterparty” paperwork. Although NMFS permits the submission of multiple counterpart paperwork, this practice is not explicitly described in regulation. In response to the comment, NMFS clarifies that it will accept multiple counterpart applications for an exemption from the West regional delivery requirements. However, NMFS cannot act on any application until all required information, and an application(s) including signatures from all contract signatories, has been received by NMFS. It is the responsibility of the applicants to ensure that RAM receives a complete application package.

Public comment letters received by NMFS for this action may be obtained from http://www.regulations.gov (see ADDRESSES ).

The Administrator, Alaska Region, NMFS, determined that Amendment 37 is necessary for the conservation and management of the WAG fishery and that it is consistent with the Magnuson-Stevens Act and other applicable laws. The Assistant Administrator for Fisheries, NOAA, has determined that this rule is consistent with Amendment 37 to the FMP, the Magnuson-Stevens Act, and other applicable laws.

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

A FRFA was prepared for this rule, as required by section 604 of the Regulatory Flexibility Act. Copies of the FRFA prepared for this final rule are available from NMFS (see ADDRESSES ). The FRFA incorporates the IRFA, a summary of the significant issues raised by the public comments in response to the IRFA, NMFS responses to those comments, and a summary of the analyses completed to support the action. A summary of the FRFA follows.

The FRFA for this action explains the need for, and objectives of, the rule; notes that no public comments on the initial regulatory flexibility analysis were submitted; describes and estimates the number of small entities to which the rule will apply; describes projected reporting, recordkeeping, and other compliance requirements of the rule; and describes the steps the agency has taken to minimize the significant economic impact on small entities, including a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the final rule and why each one of the other significant alternatives to the rule considered by the agency that affect the impact on small entities was rejected. The need for and objectives of this action; a summary of the comments and responses; a description of the action, its purpose, and its legal basis; and a statement of the factual, policy, and legal reasons for selecting the alternative implemented by this action are described elsewhere in this preamble and are not repeated here.

The Council's preferred alternative for this action, as implemented by this final rule, will regulate certain QS holders, IFQ holders, PQS holders, IPQ holders, the communities of Adak and Atka, and possibly certain shore-based processors in those two communities. The fishery has 16 QS holders, of which 14 are estimated to be small entities. One of these entities is a community development quota (CDQ) group; one is a wholly owned subsidiary of a CDQ group; and the others do not exceed the $4.0 million threshold. In the 2009/2010 season, the fishery had three holders of West region IFQ, two of which are estimated to be small entities. One of these is a wholly owned subsidiary of a CDQ group, and the other is estimated to have annual receipts below the $4.0 million threshold.

The fishery had six holders of West region PQS, of which four are estimated to be small entities. One entity is a CDQ group; another is a wholly owned subsidiary of a CDQ group, and two have fewer than 500 employees. In the 2009/2010 season, the fishery had six holders of West region IPQ, three of which are estimated to be small entities. One entity is a CDQ group; another is a wholly owned subsidiary of a CDQ group, and the third has fewer than 500 employees. Both the communities of Adak and Atka qualify as small entities, as neither has more than 50,000 residents.

As noted above, all or most of the entities that are directly impacted by this regulation are small entities. This action likely will not have a significant adverse impact on some of these entities relative to the status quo alternative. The RIR/FRFA (see ADDRESSES ) prepared for this action notes that these changes are not likely to have a significant economic impact on an LLP license holder.

The proposed rule for this action was published in the Federal Register on February 15, 2011 (76 FR 8700). An Initial Regulatory Flexibility Analysis (IRFA) was prepared for the proposed rule and described in the classification section of the preamble to the proposed rule. The public comment period ended on April 1, 2011. NMFS received three unique comment letters; however, no comments were received on the IRFA or on the economic impacts of the rule more generally. No changes were made in the final rule from the proposed rule.

During the development of this action, the Council considered and rejected alternatives that would have required the consent of holders of less than 20 percent of the pools of QS and PQS, and the consent of shore-based processors in Adak or Atka that processed over a threshold ( i.e., 5 percent, 10 percent, or 20 percent) of the West-designated shares in the year preceding the exemption. The Council elected not to select these options, as the large share holders could more efficiently process the exemption, and the small share holders would be adequately represented by the required parties to the exemption (including the communities of Adak and Atka). The inclusion of shareholders with less economic incentive to harvest or process West-designated WAG could impede effective negotiations by withholding participation in an exemption to extract more favorable terms from larger entities with greater economic incentive to fully harvest and process the IFQ and IPQ. IFQ and IPQ holders that are substantially invested in the fishery are more likely to act quickly to ensure that TAC is fully utilized. Similarly, holders of significant amounts of PQS are only likely to support an exemption in years when processing capacity is unavailable in the West region, thereby facilitating the processing needs of all IPQ holders.

The Council also considered a variety of other approaches to address the problem identified in the purpose and need statement. One approach considered was an exemption that would be available only after a factual finding of the absence of processing capacity. This provision could be administered either directly by NMFS or by an arbitrator selected by the interested parties. The Council elected not to advance this alternative, as factual findings of the absence of processing capacity may be administratively unworkable. With mobile processing platforms, capacity availability can change in a relatively short time period. Determinations of the availability of capacity may not be possible, given the potential for short-term changes in capacity. Small entities that are IFQ or IPQ holders would be disadvantaged by this alternative, since the exemption may be unavailable in circumstances when it might be appropriate.

The Council also considered a provision under the preferred alternative that would have prohibited any party required to consent to the exemption from unreasonably withholding consent to the exemption. The proposed provision would have been administered by an arbitrator jointly selected by the required parties. Although such a provision might be desirable, as it would prevent persons from barring the exemption without reason, the provision would also likely be unadministerable. Even with an arbitrator, NMFS would be required to provide the interested parties with the opportunity to appeal any arbitrator decision. Under the appeal, NMFS would be required to make a de novo finding ( i.e., an original finding without deference to the arbitrator's decision). As a result, the use of an arbitrator may delay the granting of the exemption. In addition, NMFS may be unable to expeditiously process any claim, if factual matters are disputed. To accommodate time constraints associated with contesting a party's withholding consent to an exemption, a timeline for application for the exemption would need to be developed. This timeline would limit flexibility and could prevent the exemption from achieving its intended purpose. Although IFQ holders and IPQ holders that are small entities may benefit from the exemption in some circumstances, it might be denied because of another party's unreasonable decision to withhold consent. Since the provision is generally unworkable, it is unlikely that this alternative would have provided any benefit to these small entities. In addition, the provision might lead small entities to pursue administrative proceedings to challenge another required party's withholding of consent, which could be costly to small entities.

The Council also elected not to advance an alternative to remove the West regional delivery requirements altogether. Since the West regional delivery requirements are intended to induce the development of processing in the region, when such development is feasible, removal of the exemption would be inappropriate. Although this alternative would have removed the burden of the West regional delivery requirements from small entities holding QS, PQS, IFQ, and IPQ, the alternative would have removed any regulatory inducement to process in the West region. The potential future benefit of those requirements would therefore be denied to the communities of Adak and Atka. Although the exemption created by the preferred alternative could reduce the potential for the development of processing capacity in Adak and Atka, it will provide these two small entities with the ability to withhold consent, as a means of inducing PQS and IPQ holders to develop processing capacity in the West region.

Compared with the status quo, the preferred alternative, and the associated suite of options composing the preferred alternative, best minimizes adverse economic impacts on small entities, while providing the most benefits to the directly regulated small entities. The action provides greater economic benefits for participants in the WAG fishery by providing additional processing opportunities when processing capacity is not available in the West region. The Council chose to recommend the preferred alternative because this action best meets the goals of this action. This action minimizes the potential negative impacts to small entities directly, such as unharvested TAC, when compared to the other options, while promoting stability in a region that has traditionally benefited from the regional delivery requirements.

Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules. As part of this rulemaking process, the Small Entity Compliance Guide includes the preambles to the proposed and final rules, and is included in the BSAI Crab Rationalization frequently asked questions, which may be obtained from the Alaska Region Web site at http://alaskafisheries.noaa.gov/sustainablefisheries/crab/rat/progfaq.htm. Copies of the proposed rule, and final rule also are available upon request from the Alaska Regional Office (See ADDRESSES ).

This final rule contains a collection-of-information requirement subject to the Paperwork Reduction Act and which has been approved by Office of Management and Budget (OMB) under Control Number 0648-0514. Public reporting burden per response is estimated to average 2 hours for the Application for Annual Exemption from the Western Aleutian Islands Golden King Crab West Regional Delivery Requirements, and 4 hours for the appeal letter if the application is denied, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection information.

Send comments regarding this burden estimate, or any other aspect of this data collection, including suggestions for reducing the burden, to NMFS (see ADDRESSES ), by e-mail to OIRA_Submission@omb.eop.gov, or fax to 202-395-7285. Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection-of-information subject to the requirements of the Paperwork Reduction Act, unless that collection-of-information displays a currently valid OMB control number.

For the reasons set out in the preamble, 50 CFR part 680 is amended as follows: