The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA Airworthiness Directive 2009-0253, dated November 30, 2009 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:

An investigation into the loss of a TRU during landing has revealed that this incident was preceded by the detachment of the TRUs fixed structure front ring rivet lines on the rear flange. It was concluded that the loss of rivet lines was directly associated with a previous translating cowl gearbox stubshaft fracture and the subsequent repair of the fixed structure to Engine Manual repair No. FRS5887. This repair instructs the replacement of the damaged section of the structure but does not require the rivets adjacent to the repair to be replaced although latest analysis has shown that the rivets may have weakened as a result of a translating cowl gearbox stubshaft failure.

You may obtain further information by examining the MCAI in the AD docket.

Rolls-Royce has issued RR Alert Service Bulletin RB.211-78-AG084, Revision 5, dated February 4, 2011. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.

This product has been approved by the aviation authority of the United Kingdom, and is approved for operation in the United States. Pursuant to our bilateral agreement with the United Kingdom, they have notified us of the unsafe condition described in the MCAI and service information referenced above. We are issuing this AD because we evaluated all information provided by EASA and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design.

EASA AD 2009-0253, dated November 30, 2009, requires the following compliance times:

For engines on which the thrust reverser unit (TRU) was previously repaired using either engine manual repair No. FRS4976 or engine manual repair No. FRS5887 and FRS6669 as a result of a translating cowl gearbox stubshaft failure, the MCAI requires compliance before March 31, 2010. This AD requires compliance within 215 cycles-in-service (CIS) after the effective date of this AD.

For engines on which the TRU was previously repaired using engine manual repair No. FRS5887 only, the MCAI requires compliance before December 31, 2012. This AD requires compliance within 2,225 CIS after the effective date of this AD.

Since no domestic operators use this product, notice and opportunity for public comment before issuing this AD are unnecessary. Therefore, we are adopting this regulation immediately.

This AD is a final rule that involves requirements affecting flight safety, and we did not precede it by notice and opportunity for public comment. We invite you to send any written relevant data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2011-0624; Directorate Identifier 2010-NE-11-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD because of those comments.

We will post all comments we receive, without change, to http://www.regulations.gov , including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this AD. Using the search function of the Web site, anyone can find and read the comments in any of our dockets, including, if provided, the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477-78).

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

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

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

For the reasons discussed above, I certify this AD :

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

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

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

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

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

On May 10, 2011, we issued AD 2011-11-03, Amendment 39-16702 (76 FR 31465, June 1, 2011). That AD required actions intended to address an unsafe condition on the products listed above.

Since we issued AD 2011-11-03, we determined that we inadvertently omitted certain airplanes equipped with Rotax 912 A series engines from the Applicability section. We have also determined that we included certain airplanes in the Applicability section that are not equipped with Rotax 912 A series engines.

Rotax Aircraft Engines has issued Mandatory Service Bulletin SB-912-058 and SB-914-041 (same document), dated April 15, 2011. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with this State of Design Authority, they have notified us of the unsafe condition described in the MCAI and service information referenced above. We are issuing this AD because we evaluated all information provided by the State of Design Authority and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design.

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

We might have also required different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are described in a separate paragraph of the AD. These requirements take precedence over those copied from the MCAI.

An unsafe condition exists that requires the immediate adoption of this AD. The FAA has found that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because cracks in the washer of the magneto ring flywheel hub could cause loosening of the magneto flywheel hub. This failure could result in ignition failure and/or damage to the engine, causing in-flight engine shutdown leading to a forced landing. A forced landing could result in damage to the airplane and injury to the occupants. Therefore, we determined that notice and opportunity for public comment before issuing this AD are impracticable and that good cause exists for making this amendment effective in fewer than 30 days.

This AD is a final rule that involves requirements affecting flight safety, and we did not precede it by notice and opportunity for public comment. We invite you to send any written relevant data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2011-0714; Directorate Identifier 2011-CE-024-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD because of those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this AD.

We estimate that this AD will affect 112 products of U.S. registry. We also estimate that it would take about 24 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Required parts would cost about $20 per product.

Based on these figures, we estimate the cost of the AD on U.S. operators to be $230,720, or $2,060 per product.

According to the manufacturer, some of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage for affected individuals. As a result, we have included all costs in our cost estimate.

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

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

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

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

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

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

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

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

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the Federal Register on February 18, 2011 (76 FR 9515). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states:

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

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

Based on the service information, we estimate that this AD would affect about 537 products of U.S. registry. We also estimate that it would take about 60 work-hours per product to comply with this AD. The average labor rate is $85 per work-hour. Required parts would cost about $3,900 per product. Based on these figures, we estimate the cost of the AD on U.S. operators to be $4,833,000.

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

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

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

For the reasons discussed above, I certify this AD:

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

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

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

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

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

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

We are adopting amendments to the following rules: temporary Rule 239T and Rule 146 under the Securities Act of 1933 (“Securities Act”), 1 temporary Rule 12a-10T and Rule 12h-1(h)T under the Securities Exchange Act of 1934 (“Exchange Act”), 2 and temporary Rule 4d-11T under the Trust Indenture Act of 1939 (“TIA”). 3

In January 2009, we adopted interim final temporary Rule 239T and a temporary amendment to Rule 146 under the Securities Act, interim final temporary Rules 12a-10T and 12h-1(h)T under the Exchange Act, and interim final temporary Rule 4d-11T under the TIA (collectively, the “Temporary Rules”), and in September 2009, we extended the expiration dates in these rules from September 25, 2009 to November 30, 2010 and in November 2010, we further extended the expiration dates in these rules to July 16, 2011. 4 We adopted these rules in connection with temporary exemptive orders  5 we issued to clearing agencies acting as central counterparties (“CCP”), which exempted the CCPs from the requirement to register as clearing agencies under Section 17A of the Exchange Act  6 solely to perform the functions of a clearing agency for certain credit default swap (“CDS”) transactions. The CCP exemptive orders also exempted certain eligible contract participants  7 and others from certain Exchange Act requirements with respect to certain CDS. 8 Also at that time, we temporarily exempted any exchange that effects transactions in certain CDS from the requirements under Sections 5 and 6 of the Exchange Act  9 to register as a national securities exchange, and any broker or dealer that effects transactions on an exchange in certain CDS from the requirements of Section 5 of the Exchange Act.

We adopted the Temporary Rules and the CCP exemptive orders to help foster the prompt development of CCPs for CDS because we believed and continue to believe that the existence of CCPs for CDS would be important in helping to reduce counterparty risks inherent in the CDS market. Today, CDS agreements generally are negotiated and entered into bilaterally, but eligible trades may be submitted to the CCP for novation, which results in the bilateral contract being extinguished and replaced by two new contracts where the CCP is the buyer to the original seller and the seller to the original buyer. 10 The operation of a well-regulated CCP can significantly reduce counterparty risks by preventing the failure of a single-market participant from having a disproportionate effect on the overall market, since bilateral counterparty risk is eliminated as the creditworthiness of the original counterparties is replaced by the creditworthiness of the CCP.

At the time of the adoption of the Temporary Rules and the CCP exemptive orders, the OTC market for CDS was a source of concern to us and other financial regulators due to the systemic risk posed by CDS, the possible inability of parties to meet their obligations as counterparties under the CDS, and the potential resulting adverse effects on other markets and the financial system. 11 In response, in January 2009, we took action to help foster the prompt development of CCPs for CDS, including granting conditional exemptions from certain provisions of the Federal securities laws. Since the adoption of the Temporary Rules and the CCP exemptive orders, several clearing agencies have been actively engaged as CCPs in clearing CDS transactions in accordance with our exemptions.

We subsequently extended the expiration dates in the Temporary Rules from September 30, 2009 to November 30, 2010  12 and then from November 30, 2010 to July 16, 2011. 13 The latter extension was adopted to enable the CCPs to continue to clear eligible CDS in accordance with the Temporary Rules and the CCP exemptive orders pending implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). 14 Title VII of the Dodd-Frank Act (“Title VII”) is intended to address regulatory gaps in the existing regulatory structure for the over-the-counter (“OTC”) derivatives markets by providing the Commission and the Commodity Futures Trading Commission (“CFTC”) with the authority to regulate OTC derivatives. The primary goals of Title VII, among others, are to increase the transparency, efficiency and fairness of the OTC derivatives markets, improve investor protection and to reduce the potential for counterparty and systemic risk. 15 To this end, Title VII imposes a comprehensive regime for the regulation of “swaps” and “security-based swaps” (as those terms are defined in Title VII), including the clearing, exchange trading, and reporting of transactions in security-based swaps. 16 Certain CDS are security-based swaps as defined under Title VII.

Title VII amends the Exchange Act to require, among other things, that security-based swaps be cleared through a clearing agency that is registered with the Commission or that is exempt from registration if the security-based swap is of a type that the Commission determines is required to be cleared, unless an exception from mandatory clearing applies. 17 Title VII also provides that a depository institution registered with the CFTC that cleared swaps as a multilateral clearing organization or a derivatives clearing organization registered with the CFTC that cleared swaps pursuant to an exemption from registration as a clearing agency prior to the date of enactment of the Dodd-Frank Act is deemed registered as a clearing agency for the purposes of clearing security-based swaps (the “Deemed Registered Provision”). 18 The Deemed Registered Provision and the other general provisions of Title VII become effective on July 16, 2011. 19

The Dodd-Frank Act also directs us to adopt regulations regarding, among other things clearing agencies for, and the clearing of, security-based swaps, which include CDS. Under Title VII, all security-based swaps, including certain types of CDS, are defined as securities under the Securities Act and the Exchange Act. As part of our review of the applications of the Securities Act, the Exchange Act and the TIA to security-based swaps and the implications for the clearing and exchange trading provisions of the Dodd-Frank Act and our rules implementing them, we are evaluating the necessity and appropriateness of exemptions from the registration requirements of the Securities Act and Exchange Act and the indenture qualification provisions of the TIA for security-based swaps that will be cleared by clearing agencies. To this end, we have proposed exemptions under the Securities Act, the Exchange Act, and the TIA for security-based swaps issued by certain clearing agencies satisfying certain conditions. 20 The Temporary Rules are an interim measure pending final action on the proposed permanent exemptions. However, the Temporary Rules are needed upon the effective date of Title VII to continue facilitating the operation of the CCPs in clearing eligible CDS as we consider rules implementing the clearing provisions of Title VII, including any applicable permanent exemptions.

The implementation of Title VII is a substantial undertaking and we are working toward fulfilling its requirements in a thorough and deliberative manner that includes significant public input and coordination with other regulators. To date, we have adopted an interim final rule regarding the reporting of outstanding security-based swaps entered into prior to the date of enactment of the Dodd-Frank Act  21 and proposed thirteen other rulemakings required by Title VII, including the permanent exemptions noted above, 22 rules regarding standards for the operation and governance of clearing agencies, 23 the obligations of security- based swap data repositories, 24 the registration and regulation of security-based swap execution facilities, 25 the confirmation of security-based swap transactions, 26 trade reporting, data elements, and public dissemination of trade information for security-based swaps, 27 the exception to the mandatory clearing requirement for end users, 28 the mandatory clearing of security-based swaps, 29 definitions and interpretive guidance for key terms in Title VII, 30 and the mitigation of conflicts of interest involving security-based swaps. 31 We have also proposed anti-fraud and anti-manipulation rules regarding security-based swaps. 32 Title VII also calls for additional rulemakings regarding the registration procedures and external business conduct standards for security-based swap dealers and major security-based swap participants.

At the time of adoption of the Temporary Rules in January 2009, we requested comment on various aspects of the Temporary Rules. We received a total of 15 letters, only two of which commented specifically on the Temporary Rules. 33 Although those two letters generally supported allowing CCPs to clear and settle CDS transactions in accordance with the terms of the Temporary Rules, neither of the commenters specifically addressed the duration of the Temporary Rules and temporary amendments. 34 The other commenters raised issues not directly related to this rulemaking. No comments have been submitted to us regarding the Temporary Rules since that time.

Throughout the entire Title VII implementation process, we have sought to engage in an open and transparent implementation process, seeking input on the various rulemakings from interested parties even before issuing formal rule proposals. We have enhanced our public consultative process by expanding the opportunity for public comment beyond what is required by law. For instance, we have made available to the public a series of e-mail boxes to which interested parties can send preliminary comments before rules are proposed and the official comment periods begin. 35 These e-mail boxes are on the Commission's Web site, organized by topic. We also specifically solicited comment, along with the CFTC, on the definitions contained in Title VII. 36 In addition, our staff has sought the views of affected parties. This approach has resulted in meetings with a broad cross-section of interested parties. To further this public outreach effort, our staff has held joint public roundtables and hearings with the CFTC staff on select key topics, including most recently discussing the schedule for implementing final rules for swaps and security-based swaps under Title VII. 37

We are still in the process of proposing and adopting numerous rulemakings relating to the implementation of Title VII, including the provisions relating to the clearing of security-based swaps. While we have taken significant steps to implement the rulemaking required by Title VII, we do not expect to complete the rulemaking we are directed to carry out under Title VII before July 16, 2011, the current termination date for the Temporary Rules. Due to the uncertainty of the timing regarding the adoption of final rules implementing the clearing provisions of Title VII, including any applicable permanent exemptions, we believe that it is important that the CCPs continue to be able to clear eligible CDS without concern that the Temporary Rules are unavailable. As such, we have determined that it is necessary and appropriate to extend the expiration dates in the Temporary Rules to April 16, 2012. If the Commission adopts permanent exemptions for security-based swaps issued by certain clearing agencies before April 16, 2012, the Commission will terminate the effectiveness of the temporary rules as part of that rulemaking.

We are only extending the expiration dates in the Temporary Rules; we are not making any other changes to the Temporary Rules. The Temporary Rules were modeled on other exemptions we have provided in the past to facilitate trading in certain securities. 38 They are limited in scope; in general, they facilitate the operation of the CCPs in clearing eligible CDS.

In January 2009, we adopted the Temporary Rules on a temporary basis until September 25, 2009. We subsequently extended the expiration dates in the Temporary Rules to November 30, 2010 and we further extended the expiration dates to July 16, 2011 to allow CCPs that were clearing and settling CDS transactions in the U.S. and in Europe to continue to clear and settle CDS transactions. Since the adoption of the Temporary Rules and the issuance of the CCP exemptive orders, several clearing agencies have been actively engaged as CCPs in clearing CDS transactions in reliance on our exemptions. We believe that the clearing of CDS transactions by these clearing agencies has contributed and we anticipate it will continue to contribute to increased transparency and the reduction of systemic risk in the CDS market.

Since the adoption of the Temporary Rules and issuance of the CCP exemptive orders, ICE Trust U.S. LLC (“ICE Trust”) and ICE Clear Europe, Ltd. (“ICE Clear Europe”) have been actively engaged as CCPs in clearing CDS transactions in reliance on our exemptions. Most cleared CDS transactions have cleared at ICE Trust or ICE Clear Europe. 39 However, Eurex Clearing AG and the Chicago Mercantile Exchange Inc. are also authorized to operate as CCPs pursuant to the CCP exemptive orders. 40 We believe that the clearing of CDS transactions by the CCPs subject to the CCP exemptive orders has contributed and we anticipate will continue to contribute to increased transparency and the reduction of systemic risk in the CDS market.

The extension of the Temporary Rules is designed to facilitate the continued operation of CCPs for eligible CDS, which we believe is in the public interest. Once we adopt final rules implementing the clearing provisions of Title VII, including any applicable permanent exemptions, the Temporary Rules affecting solely eligible CDS will no longer be necessary. However, until such time, the Temporary Rules are needed to continue facilitating the operation of the CCPs in clearing eligible CDS without being required to comply with the registration requirements of the Securities Act and Exchange Act and the indenture qualification provisions of the TIA. Therefore, due to the limited time the Temporary Rules will be needed, and our ongoing efforts to implement the provisions of Title VII, we are extending the expiration dates in the Temporary Rules to April 16, 2012. If the Commission adopts permanent exemptions for security-based swaps issued by certain clearing agencies before April 16, 2012, the Commission will terminate the effectiveness of the temporary rules as part of that rulemaking.

Section 553(b) of the Administrative Procedure Act (“APA”)  41 generally requires an agency to publish notice of a proposed rule making in the Federal Register . This requirement does not apply, however, if the agency “for good cause finds (and incorporates the finding and a brief statement of reasons therefore in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.”  42 For the reasons we discuss throughout this release, we believe that there is good cause to extend the expiration dates in the Temporary Rules to April 16, 2012. If the Commission adopts permanent exemptions for security-based swaps issued by certain clearing agencies before April 16, 2012, the Commission will terminate the effectiveness of the temporary rules as part of that rulemaking.

We sought comment on the Temporary Rules and as noted above, we received little comment when they were originally promulgated. In addition to the specific comments that we sought and received in connection with the Temporary Rules in January 2009, we have sought public input on implementing the provisions of Title VII, which requires extensive public notice and comment rulemaking regarding proposals that will supplant and subsume the exemptive rules we have crafted as a temporary measure. 43 Further, we have sought and will continue to seek public comment in connection with proposed rulemakings to implement the specific provisions of Title VII relating to the treatment of security-based swaps under the Securities Act and the Exchange Act, including any applicable permanent exemptions. Commenters have full opportunity to provide their views on this new comprehensive regulatory regime.

Absent an extension, the Temporary Rules will expire on July 16, 2011. The Temporary Rules have been in place since January 2009, and CCPs have relied on them in clearing eligible CDS. Extending the expiration dates in the Temporary Rules will not affect the substantive provisions of the Temporary Rules. Extending the expiration dates in the Temporary Rules will allow CCPs to continue to clear eligible CDS without compliance with the registration requirements of the Securities Act and Exchange Act and indenture qualification provisions of the TIA as we consider rules implementing the clearing provisions of Title VII, including any applicable permanent exemptions. Therefore, we believe there is good cause to extend the expiration dates in the Temporary Rules and find that notice and solicitation of comment on the extension to be impracticable, unnecessary, or contrary to the public interest. 44

The APA also generally requires that an agency publish an adopted rule in the Federal Register 30 days before it becomes effective. 45 However, this requirement does not apply if the agency finds good cause not to delay the effective date. 46 For reasons similar to those explained above, the Commission finds good cause not to delay the effective date.

The Temporary Rules do not impose any new “collections of information” within the meaning of the Paperwork Reduction Act of 1995 (“PRA”), 47 nor do they create any new filing, reporting, recordkeeping, or disclosure reporting requirements for a CCP that is or will be issuing or clearing eligible CDS. Accordingly, we did not submit the Temporary Rules to the Office of Management and Budget for review in accordance with the PRA when we adopted them in January 2009. 48 We requested comment on whether our conclusion that there are no collections of information is correct, and we did not receive any comment. The extension of the expiration dates in the Temporary Rules does not change our analysis.

In January 2009, we adopted the Temporary Rules, which exempt eligible CDS that are or will be issued or cleared by a CCP and offered and sold only to eligible contract participants from all provisions of the Securities Act, other than the Section 17(a) anti-fraud provision, as well as from the registration requirements under Section 12 of the Exchange Act and from the provisions of the TIA. In September 2009, we adopted amendments to such rules to extend their expiration date to November 30, 2010. We subsequently adopted amendments to such rules to further extend their expiration date from November 30, 2010 to July 16, 2011. The Temporary Rules were intended to facilitate the operation of one or more CCPs to act as a clearing agency in the CDS market to reduce some of the risks in the CDS market. Today, we are adopting amendments to the Temporary Rules to further extend the expiration dates. Since the adoption of the Temporary Rules and the issuance of the exemptive orders, ICE Trust and ICE Clear Europe have been actively engaged as a CCP in clearing CDS transactions in accordance with our exemptions.

The Dodd-Frank Act was enacted on July 21, 2010. Among other things, the Dodd-Frank Act amends the Exchange Act to require that transactions in security-based swaps be cleared through a clearing agency that is either registered with the Commission or exempt from registration if the transactions are of a type that the Commission determines must be cleared, unless an exemption from mandatory clearing applies. As noted above, the Dodd-Frank Act directs us to regulate, among other things, clearing agencies for, and the clearing of, security-based swaps, which include certain CDS, and in separate rulemakings we have and will propose rules to implement the clearing provisions of the Dodd-Frank Act, among others. Extending the expiration dates in the Temporary Rules will continue to facilitate the operation of the CCPs in clearing eligible CDS as we consider rules implementing the clearing provisions of Title VII, including any applicable permanent exemptions.

Absent the exemptions provided by the Temporary Rules, a CCP may have to file a registration statement covering the offer and sale of eligible CDS that are security-based swaps, may have to satisfy the applicable provisions of the TIA, and may have to register the class of eligible CDS that are security-based swaps that it has issued or cleared under the Exchange Act. The Temporary Rules and the CCP exemptive orders have facilitated the operation of CCPs in the CDS market. Since the adoption of the Temporary Rules, several clearing agencies have been actively engaged as CCPs in clearing CDS transactions in accordance with our exemptions. We believe that extending the expiration dates in the Temporary Rules will continue to facilitate the operation of CCPs  49 and the use by eligible contract participants of CDS CCPs. We believe that the operation of the CCPs in accordance with our exemptions has increased transparency, 50 increased available information about exposures to particular reference entities or reference securities, 51 and reduced risks to participants in the market for CCP-cleared CDS. 52 Not extending the expiration dates in the Temporary Rules could cause significant disruptions in this market. Therefore, we believe that extending the expiration dates in the Temporary Rules provides important benefits to CDS market participants.

We recognize that a consequence of extending the exemptions will be the unavailability of certain remedies under the Securities Act and the Exchange Act and certain protections under the TIA. While an investor will be able to pursue an antifraud action in connection with the purchase and sale of eligible CDS under Exchange Act Section 10(b), 53 it will not be able to pursue civil remedies under Sections 11 or 12 of the Securities Act. 54 We could still pursue an antifraud action in the offer and sale of eligible CDS issued or cleared by a CCP. 55 We believe that the incremental costs from the extension of the expiration dates in the Temporary Rules will be minimal because the amendments are merely an extension of the expiration dates in the Temporary Rules and such extension will not affect information and remedies available to investors as a result of the Temporary Rules.

Section 23(a)(2) of the Exchange Act  56 requires us, when adopting rules under the Exchange Act, to consider the impact that any new rule would have on competition. Section 23(a)(2) prohibits us from adopting any rule that would impose a burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act. In addition, Section 2(b)  57 of the Securities Act and Section 3(f)  58 of the Exchange Act require us, when engaging in rulemaking where we are required to consider or determine whether an action is necessary or appropriate in the public interest, to also consider, in addition to protection of investors, whether the action will promote efficiency, competition, and capital formation.

The Temporary Rules we are extending today exempt eligible CDS issued or cleared by a CCP from all provisions of the Securities Act, other than the Section 17(a) antifraud provision, as well as from the registration requirements under Section 12 of the Exchange Act and the provisions of the TIA. Because these exemptions are available to any registered or deemed registered CCP offering and selling eligible CDS, we do not believe that extending the exemptions imposes a burden on competition. We also anticipate that extending the ability to settle CDS through CCPs will continue to improve the transparency of the CDS market and provide greater assurance to participants as to the capacity of the eligible CDS counterparty to perform its obligations under the eligible CDS. ICE Trust, for example, makes available on its Web site information about open interests, or net exposure, volume and pricing of CDS transactions. We believe that increased transparency in the CDS market could help to minimize market disruption and thereby facilitate the capital formation process.

The Commission hereby certifies pursuant to 5 U.S.C. 605(b) that extending the Temporary Rules will not have a significant economic impact on a substantial number of small entities. The Temporary Rules exempt eligible CDS that are or will be issued or cleared by a CCP. None of the entities that are eligible to meet the requirements of these exemptions is a small entity.

The amendments described in this release are being adopted under the authority set forth in Sections 18, 19 and 28 of the Securities Act; Sections 12(h), 23(a) and 36 of the Exchange Act; and Section 304(d) of the TIA.

We are temporarily amending 17 CFR parts 230, 240, and 260 as follows and the expiration dates in the temporary rules and amendments published January 22, 2009 (74 FR 3967), extended in a release published on September 17, 2009 (74 FR 47719), and further extended in a release published on November 26, 2010 (75 FR 72660), are further extended from July 16, 2011 to April 16, 2012.

Virbac AH, Inc., 3200 Meacham Blvd., Ft. Worth, TX 76137, has informed FDA that it has transferred ownership of, and all rights and interest in, NADA 092-150 for Purina Horse & Colt Wormer (pyrantel tartrate) to Cross Vetpharm Group Ltd., Broomhill Rd., Tallaght, Dublin 24, Ireland. Accordingly, the regulations are amended in 21 CFR 520.2045 to reflect the transfer of ownership.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR part 520 is amended as follows:

The Bureau finalizes regulations on providing psychiatric treatment and medication to inmates. We first published a proposed regulation document on this subject in the Federal Register on December 29, 2003 (68 FR 74892). We then withdrew that proposed regulation document and proposed revised regulations on June 16, 2008 (73 FR 33957). We received four comments, which we address below.

Two commenters addressed § 549.45(b) of the proposed regulation, which states that, “[p]ursuant to 18 U.S.C. § 4042, the Bureau is authorized to provide for the safekeeping, care, and subsistence, of all persons charged with offenses against the United States, or held as witnesses or otherwise. Accordingly, if an examiner determines pursuant to § 549.43 of this subpart that an inmate not subject to hospitalization pursuant to 18 U.S.C. Chapter 313 should be hospitalized for psychiatric care or treatment, and the inmate is unwilling or unable to consent, the Bureau will provide the inmate with an administrative hearing to determine whether hospitalization for psychiatric care or treatment is warranted. The hearing will comply with the applicable procedural safeguards set forth in § 549.46(a).”

The commenters believe that “the administrative hearing process” under this section “is a standard that provides less procedural protection to the inmate than does a court determination.” The commenters felt that “such a standard is unreasonable and unfair to the inmates covered by § 549.45(b)” because these inmates may include “material witnesses and other detainees who may not have been convicted,” and are, therefore, “entitled to a level of review equal to or surpassing that of sentenced inmates.”

In response, we note that proposed § 549.45 states that a court determination is necessary for involuntary hospitalization or commitment of inmates pursuant to 18 U.S.C. Chapter 313, who are in need of psychiatric care or treatment, but are unwilling or unable to voluntarily consent. Section 4245 in that chapter specifically provides for involuntary hospitalization by court order of a person serving a sentence of imprisonment if needed for psychiatric care or treatment. The necessity of a court determination for these types of inmates is, therefore, prescribed by statute.

In contrast, however, no court determination is prescribed by statute with regard to involuntary hospitalization of inmates who are not subject to hospitalization under 18 U.S.C. 4245 (because not serving a sentence of imprisonment), such as alien detainees subject to an order of deportation, exclusion or removal, material witnesses, contempt of court commitments, etc.

Nevertheless, the Director has chosen to provide administrative due process with regard to involuntary hospitalization of such inmates, “[b]ecause prisoners facing involuntary transfer to a mental hospital are threatened with immediate deprivation of liberty interests they are currently enjoying, and because of the inherent risk of a mistaken transfer,” adhering to the principles set forth in Vitek v. Jones, 445 U.S. 480 at 495, 100 S.Ct. 1254 at 1265 (1980).

We note that the availability of this administrative hearing procedure in appropriate cases does not limit the Bureau's ability to seek judicial hospitalization or commitment of inmates under any applicable provision of Chapter 313, such as judicial commitment of inmates, whether sentenced or unsentenced, as sexually dangerous persons under 18 U.S.C. 4248.

However, because the commenters appear to question or misunderstand the due process procedures that the Bureau implements through this final rule that specifically apply to the involuntary hospitalization of inmates who are not subject to hospitalization under 18 U.S.C. 4245, we alter § 549.45(b) as follows: We delete the reference to the due process procedures in § 549.46(a) and simply restate them, tailored for reference to involuntary hospitalization instead of involuntary administration of psychiatric medication, in the relevant regulation, § 549.45(b).

Also, the American Psychiatric Association (APA) and the American Civil Liberties Union (ACLU) commented regarding the Bureau's use of the phrase `qualified health services staff' in § 549.44 of the proposed regulation. The APA recommended that the Bureau “clarify this section by either revising the proposed language in the regulation or issuing a policy guide which defines which personnel are considered ‘qualified health services staff’ for the purposes of these sections.” The ACLU provided a similar comment. The Bureau will issue a policy guide, as suggested by the APA, which will clarify the qualifications for staff with regard to voluntary hospitalization in a suitable facility for psychiatric care or treatment, and voluntary administration of psychiatric medication. Bureau policy guides are called Program Statements, and are designed specifically to provide more detailed staff guidance with regard to implementing Bureau regulations, policies, and programs. Because Program Statements are the primary vehicle for staff guidance, it would be appropriate to detail health services staff qualifications in the relevant Bureau Program Statements.

Also, the APA would “urge that [the Bureau] state that only licensed physicians are qualified to make decisions about the administration of psychopharmacologic medications and that, when possible, a psychiatrist should be consulted. This clarification would provide assurance that inmates are receiving appropriate mental health treatment and that consent to any hospitalization or medication is truly warranted and voluntary and meets state and Federal law requirements.” Likewise, the ACLU commented that “the regulations should be amended to clarify that the exception authorizing more cursory procedures for emergencies requires that any treatment be `medically' appropriate, even in an emergency.”

In response, we state that Bureau policy currently requires that psychiatric medications be prescribed only by Bureau medical health professionals that have a permanent, full, and unrestricted license to practice medicine in a state, District of Columbia, the Commonwealth of Puerto Rico, or a territory of the United States. Bureau policy on pharmacy services is predicated on the requirement that the use of psychiatric medications and controlled substances be restricted to physicians only and prescribed only when medically appropriate. Further, if an order for psychiatric medication is prepared or written by a mid-level practitioner (Physician's Assistant or Nurse Practitioner), it must be signed by a licensed physician before it can be filled by a pharmacist.

Another commenter suggested that the Bureau “recognize psychiatric advance practice nurses as part of the treatment team in correctional facilities.” While the Bureau does utilize nurse practitioners, physician's assistants, and nurses, as stated above, any prescription for psychiatric medication must be signed by a licensed physician.

For the aforementioned reasons, we now finalize the proposed rule published on June 16, 2008 (73 FR 33957), with minor changes for clarity.

This regulation has been drafted and reviewed in accordance with Executive Order 12866, “Regulatory Planning and Review”, section 1(b), Principles of Regulation. The Director has determined that this regulation is not a “significant regulatory action” under Executive Order 12866, section 3(f), and accordingly this regulation has not been reviewed by the Office of Management and Budget.

This regulation will not have substantial direct effects on the States, on the relationship between the national government and the States, or on distribution of power and responsibilities among the various levels of government. Therefore, under Executive Order 13132, we determine that this regulation does not have sufficient Federalism implications to warrant the preparation of a Federalism Assessment.

The Director, under the Regulatory Flexibility Act (5 U.S.C. 605(b)), reviewed this regulation and by approving it certifies that it will not have a significant economic impact upon a substantial number of small entities for the following reasons: This regulation pertains to the correctional management of offenders committed to the custody of the Attorney General or the Director, and its economic impact is limited to the Bureau's appropriated funds.

This regulation will not result in the expenditure by State, local and Tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This regulation is not a major rule as defined by § 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. This regulation will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.

Under the rulemaking authority vested in the Attorney General in 5 U.S.C. 552(a) and delegated to the Director, Bureau of Prisons, we amend 28 CFR part 549 as follows.

Pursuant to the authority granted in 33 U.S.C. 1605, the DoN amends 32 CFR part 706.

This amendment provides notice that the DAJAG (Admiralty and Maritime Law), under authority delegated by the Secretary of the Navy, has certified that USS PITTSBURGH (SSN 720) is a vessel of the Navy which, due to its special construction and purpose, cannot fully comply with the following specific provision of 72 COLREGS without interfering with its special function as a naval ship: Rule 21 (a) pertaining to the centerline position of the masthead light. The DAJAG (Admiralty and Maritime Law) has also certified that the light involved is located in closest possible compliance with the applicable 72 COLREGS requirements.

Moreover, it has been determined, in accordance with 32 CFR parts 296 and 701, that publication of this amendment for public comment prior to adoption is impracticable, unnecessary, and contrary to public interest since it is based on technical findings that the placement of lights on this vessel in a manner differently from that prescribed herein will adversely affect the vessel's ability to perform its military functions.

For the reasons set forth in the preamble, the Navy amends part 706 of title 32 of the Code of Federal Regulations as follows:

We encourage you to participate in this rulemaking by submitting comments and related material. All comments received will be posted, without change, to http://www.regulations.gov and will include any personal information you have provided.

If you submit a comment, please include the docket number for this rulemaking (USCG-2011-0509), indicate the specific section of this document to which each comment applies, and give the reason for each suggestion or recommendation. You may submit your comments and material online, or by fax, mail or hand delivery, but please use only one of these means. If you submit a comment online via http://www.regulations.gov, it will be considered received by the Coast Guard when you successfully transmit the comment. If you fax, hand delivery, or mail your comment, it will be considered as having been received by the Coast Guard when it is received at the Docket Management Facility. We recommend that you include your name and a mailing address, an e-mail address, or a phone number in the body of your document so that we can contact you if we have questions regarding your submission.

To submit your comment online, go to http://www.regulations.gov, click on the “submit a comment” box, which will then become highlighted in blue. In the “Document Type” drop down menu select “Proposed Rules” and insert “USCG-2011-0509” in the “Keyword” box. Click “Search” then click on the balloon shape in the “Actions” column. If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying and electronic filing. If you submit them by mail and would like to know that they reached the Facility, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period and may change this rule based on your comments.

To view comments, as well as documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov, click on the “read comments” box, which will then become highlighted in blue. In the “Keyword” box insert “USCG-2011-0509” and click “Search.” Click the “Open Docket Folder” in the “Actions” column. You may also visit the Docket Management Facility in Room W12-140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. We have an agreement with the Department of Transportation to use the Docket Management Facility.

Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment), if submitted on behalf of an association, business, labor union, etc.). You may review a Privacy Act, system of records notice regarding our public dockets in the January 17, 2008 issue of the Federal Register (73 FR 3316).

We do not now plan to hold a public meeting. But you may submit a request for one on or before August 8, 2011 using one of the four methods specified under ADDRESSES . Please explain why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

The Coast Guard is issuing this temporary interim rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)).

This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule.

The Coast Guard previously issued two temporary deviations from the regulation governing the operation of the 103rd Street (Wards Island) Pedestrian Bridge to facilitate completion of a major rehabilitation project. The first temporary deviation was effective from January 10, 2011 through April 29, 2011. The second temporary deviation became effective on April 30, 2011 and will end on July 8, 2011.

The bridge owner, New York City Department of Transportation, advised the Coast Guard on May 27, 2011, that they recently discovered additional areas of the bridge that are in need of repair, and that the rehabilitation project will not be completed by July 8, 2011. The rehabilitation repairs must be completed before the bridge will be able to open again for the passage of vessel traffic.

It is impractical to issue a NPRM and take public comment before the current temporary deviation expires on July 8, 2011.

We are requesting public comment on the temporary change to the regulation governing the operation of the 103rd Street (Wards Island) Pedestrian Bridge. If we receive public input that indicates a need to revise the temporary change to the drawbridge's operating regulation, or the conditions it imposes, or raises any other significant public concerns, we will address those concerns prior to issuing any final rule.

Under 5 U.S.C. 553(d)(3), the Coast Guard also finds good cause exists, for the same reasons discussed above, for making this rule effective less than 30 days after publication in the Federal Register .

The 103rd Street (Wards Island) Pedestrian Bridge, across the Harlem River, mile 0.0, at New York City, New York, has a vertical clearance in the closed position of 55 feet at mean high water and 60 feet at mean low water. Most vessel traffic that uses this waterway can fit under the draw without requiring bridge openings. The drawbridge operation regulations are listed at 33 CFR 117.789(b)(1).

The bridge has remained in the closed position since January 10, 2011, in order to complete its rehabilitation. The owner of the bridge, New York City Department of Transportation, has requested an extension of the bridge closure to complete unforeseen additional repairs.

The Coast Guard published a temporary deviation from the regulation governing the operation of the 103rd Street (Wards Island) Pedestrian Bridge on January 20, 2011, (76 FR 3516), authorizing the bridge to remain in the closed position effective from January 10, 2011 through April 29, 2011. The bridge owner requested a second temporary deviation on March 21, 2011, to complete the rehabilitation repairs at the bridge. As a result, the Coast Guard published a second temporary deviation on April 11, 2011, (76 FR 19910), effective from April 30, 2011 through July 8, 2011.

On May 27, 2011, the bridge owner requested an extension of the bridge closure through September 30, 2011. They advised the Coast Guard that work would not be completed before the second temporary deviation ended on July 8, 2011, because the bridge owner recently discovered additional areas of the bridge that are in need of repair.

Because the requested extension of the bridge closure would exceed 180 days, we are issuing a temporary interim rule requesting public comment in order to both facilitate completion of the bridge rehabilitation and to have the public participate in the rulemaking process.

Under this temporary interim rule, the 103rd Street (Wards Island) Pedestrian Bridge may remain in the closed position from July 9, 2011 through September 30, 2011.

The Coast Guard is temporarily changing the drawbridge operation regulations listed at 33 CFR 117.789(b)(1).

This temporary interim rule for the 103rd Street (Wards Island) Pedestrian Bridge will allow the bridge to remain in the closed position from July 9, 2011 through September 30, 2011, to facilitate completion of bridge rehabilitation repairs.

We developed this interim rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analysis 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, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders.

The Coast Guard determined that this rule is not a significant regulatory action for the following reasons. The bridge presently can't open for vessel traffic due to the fact that rehabilitation repairs have not been completed. This action will facilitate completion of the bridge repairs. Most vessel traffic that uses this waterway can fit under the draw without requiring bridge openings. Vessels that cannot pass under the closed draw may take an alternate route on the Hudson River.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule will 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 section 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit the bridge.

This action will not have a significant economic impact on a substantial number of small entities for the following reasons. The bridge presently cannot open for the passage of vessel traffic because the rehabilitation repairs are not completed. This action will facilitate completion of the bridge repairs. Most vessel traffic that uses this waterway can fit under the draw without requiring bridge openings. Vessels that cannot pass under the closed draw may take an alternate route using the Hudson River.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we offer to assist small entities in understanding the temporary interim rule so that they can better evaluate its effects on them and participate in the rulemaking. 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 proposed 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 would not create an environmental risk to health or risk to safety that might disproportionately affect children.

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would 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 5100.1, and Commandant Instruction M16475.1D, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is not likely to have a significant effect on the human environment because it simply promulgates the operating regulations or procedures for drawbridges. We seek any comments or information that may lead to the discovery of a significant environmental impact from this rule.

Under figure 2-1, paragraph (32)(e), of the Instruction, an environmental analysis checklist and a categorical exclusion determination are not required for this rule.

For the reasons discussed in the preamble, the Coast Guard is amending 33 CFR part 117 as follows:

The Canadian National Railroad requested a temporary deviation for Elgin, Joliet, and Eastern Railroad Drawbridge, across the Illinois Waterway, mile 270.6, near Morris, Illinois to remain in the closed-to-navigation position for eighty-four hours while the existing lift span is removed and the replacement lift span is installed. The Elgin, Joliet, and Eastern Railroad Drawbridge currently operates in accordance with 33 CFR 117.5, which states the general requirement that drawbridges shall open promptly and fully for the passage of vessels when a request to open is given in accordance with the subpart.

There are no alternate routes for vessels transiting this section of the Illinois Waterway.

The Elgin, Joliet, and Eastern Railroad Drawbridge, in the closed-to-navigation position, provides a vertical clearance of 26.3 feet above flat pool. Due to construction activities, vessels will be unable to pass the bridge site during this 84-hour period. Navigation on the waterway consists primarily of commercial tows and recreational watercraft. This temporary deviation has been coordinated with waterway users. No objections were received.

In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the designated time period. This deviation from the operating regulations is authorized under 33 CFR 117.35.

Definitions

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

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

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

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

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

The CAA (section 110(a)(2)(C)) and 40 CFR 51.160 require states to have legally enforceable procedures to prevent construction or modification of a source if it would violate any SIP control strategies or interfere with attainment or maintenance of the National Ambient Air Quality Standards (NAAQS). Such minor New Source Review (NSR) programs are for pollutants from stationary sources that do not require Prevention of Significant Deterioration (PSD) or nonattainment NSR permits. States may customize the requirements of the minor NSR program as long as their program meets minimum requirements.

In a proposed rule action published on March 4, 2010, EPA proposed to partially approve and partially disapprove revisions to the State of Montana's State Implementation Plan (SIP) submitted on August 26, 1999, May 28, 2003, March 9, 2004, October 25, 2005, and October 16, 2006 (as described below). The revisions contain new, amended, and repealed rules in Subchapter 7 (Permit, Construction and Operation of Air Contaminant Sources) that pertain to the issuance of Montana air quality permits, and in addition other subchapters of the ARM.

On August 26, 1999, the Governor of Montana submitted a SIP revision request. The revision contains amended and repealed rules to various subchapters in the ARM that were adopted by the Montana Board of Environmental Review (Board) on May 14, 1999. Specific to Subchapter 7 (Permit, Construction, and Operation of Air Contaminant Sources), the submittal revised ARM 17.8.705 and 17.8.733 and repealed ARM 17.8.708. However, as indicated below, a May 28, 2003 submittal rescinded the August 26, 1999 revisions to ARM 17.8.705 and 17.8.733.

On May 28, 2003, the Governor of Montana submitted a SIP revision request. The revision contains new, amended, and repealed rules adopted by the Board on December 6, 2002. The new and repealed rules pertain to the issuance of Montana air quality permits and are in Subchapter 7 of the ARM. The amended rules contain references to the new and repealed rules.

The new rules include: ARM 17.8.740, 17.8.743, 17.8.744, 17.8.745, 17.8.748, 17.8.749, 17.8.752, 17.8.755, 17.8.756, 17.8.759, 17.8.760, 17.8.762, 17.8.763, 17.8.764, 17.8.765, 17.8.767, and 17.8.770.

The repealed SIP-approved rules include: ARM 17.8.701, 17.8.702, 17.8.704, 17.8.705, 17.8.706, 17.8.707, 17.8.710, 17.8.715, 17.8.716, 17.8.717, 17.8.720, 17.8.730, 17.8.731, 17.8.732, 17.8.733, and 17.8.734.

The amended SIP-approved rules include: ARM 17.8.101, 17.8.110, 17.8.309, 17.8.310, 17.8.818, 17.8.825, 17.8.826, 17.8.901, 17.8.904, 17.8.905, 17.8.906, 17.8.1004, 17.8.1005, 17.8.1106, and 17.8.1109.

The May 28, 2003 submittal also rescinded outstanding SIP submissions for rules that amended the following: ARM 17.8.702, adopted July 20, 2001 and submitted on December 20, 2001  1 ; and ARM 17.8.705 and 17.8.733, adopted on May 14, 1999 and submitted on August 26, 1999.

On March 9, 2004, the Governor of Montana submitted a SIP revision request. The revision contains amended rules adopted by the Board on September 26, 2003. The amended rules pertain to the issuance of Montana air quality permits. The following rules were amended: ARM 17.8.749, 17.8.759, 17.8.763, and 17.8.764.

On October 25, 2005, the Governor of Montana submitted a SIP revision request. The revision contains amended rules adopted by the Board on June 3, 2005. EPA approved all of the October 25, 2005 submittal on July 19, 2006 (71 FR 40922), except for ARM 17.8.767. We are addressing ARM 17.8.767 in this action.

On October 16, 2006, the Governor of Montana submitted a SIP revision request. The revision contains an amended rule for ARM 17.8.743(1) and new rules codified as ARM 17.8.1601, 17.8.1602, 17.8.1603, 17.8.1604, 17.8.1605, and 17.8.1606, and ARM 17.8.759 adopted by the Board on December 2, 2005. The submittal also requested to withdraw ARM 17.8.743(1)(c) from being incorporated into the SIP. We are addressing ARM 17.8.759 in this action. The revision to ARM 17.8.743(1) and the new rules pertain to the regulation of oil and gas well facilities, and we will address this revision request in a separate action.

EPA received one letter from WildEarth Guardians (WG) commenting on EPA's Federal Register action proposing approval and disapproval of the Montana SIP Provisions in Docket ID No. EPA-R08-OAR-2006-0601. In this section EPA responds to the significant adverse comments made by the commenter.

Comment No. 1 —The commenter opposed EPA's approval of ARM 17.8.743(2) and (3). The commenter alleges that these rules directly contradict 40 CFR 51.160. To the extent the commenter makes this argument, EPA responds below.

EPA Response —EPA disagrees with the commenter's assessment. First, the commenter references 40 CFR 51.160(b) in particular, the requirement that a plan must set forth legally enforceable procedures which include a means for the State or local permitting agency to prevent construction or modification of a source if it will interfere with applicable portions of the control strategy or the attainment or maintenance of a national standard. The commenter asserts that ARM 17.8.743(2) allows a stationary source to initiate construction activities upon receipt of a “completeness determination” pursuant to ARM 17.8.759 and that the “completeness determination” requirements are insufficient to show compliance with 40 CFR 51.160(b).

EPA has determined the Montana rules are consistent with the CAA and EPA regulations, and therefore approvable as a SIP revision. Section 110(a)(2)(C) of the CAA requires that SIPs include a program for regulating the construction and modification of stationary sources as necessary to ensure that the NAAQS are achieved. The Montana regulations clearly regulate the construction and modification of stationary sources and ensure that the NAAQS will be met. In addition, as explained in the proposed rule, EPA's regulations at 40 CFR 51.160 do not require the issuance of a permit for the construction or modification of minor sources, but only that the SIP include legally enforceable procedures to prevent the construction of a source or modification that would violate the SIP control strategy or interfere with attainment or maintenance of the NAAQS. EPA-approved SIP minor NSR programs in several states do not require permits prior to construction, but instead contain other enforceable procedures. See 75 FR 54562 (Sept. 26, 2007) (Missouri), 68 FR 2217 (Jan. 16, 2003) (Idaho).

Montana's rules include enforceable procedures to prevent the construction of any source or modification that would violate SIP requirements. In determining whether or not the SIP includes these legally enforceable procedures, EPA does not look at a particular component of an implementation plan in isolation (such as ARM 17.8.743(2) and (3)). EPA must be able to determine that, with the revisions in place, the whole “plan as revised” meets the requirements of 51.160. In addition, Montana's rule contains sufficient safeguards to meet the requirements of 51.160. First, the State is not obligated to issue a permit where the owner or operator received a completeness determination. ARM 17.8.743(4). Second, the rule contains a provision indicating that if the owner or operator proceeds with the initial construction activities it accepts the regulatory risks of engaging in such activities. ARM 17.8.743(4). Third, Montana's rule contains safeguards regarding the type of activity allowed before permit issuance. The rule only allows installing concrete foundations work, below ground plumbing, installing ductwork, and other infrastructure and/or excavation work involving the same. ARM 17.8.743(2). Fourth, the rule specifically prohibits the construction or installation of emission units (without a permit or a State determination that the unit will not interfere with the NAAQS or a control strategy). ARM 17.8.743(2). Thus EPA disagrees with the commenter's suggestion that the rule does not state that construction or modification of the emission units subject to permitting cannot commence prior to issuance of the permit.

EPA has determined the addition of ARM 17.8.743(2) and (3) to the Montana Air Quality Program (MAQP) do not compromise the legally enforceable procedures in the MAQP and meet the requirements of 40 CFR 51.160.

The commenter also suggests that the phrase “[a] true minor source is not subject to PSD requirements and is not subject to other federal requirements” is confusing and appears to be a contradiction to the requirements of 40 CFR 51.160.

During the rulemaking process, EPA's intent was to make it explicitly clear that ARM 17.8.743(2) and (3) only apply to “true” minor sources in order to ensure that sources that are subject to federal requirements ( i.e., PSD and synthetic minors) do not begin any construction prior to permit issuance. 17.8.743(5) states: “The provisions of (2) do not supersede any other local, State, or federal requirements associated with the activities set forth therein.” EPA has interpreted “federal requirements” to mean synthetic minor permit limits. PSD provisions remain applicable until a proposed project legally obtains synthetic minor status ( i.e., obtains permitted limits which limit the source below the PSD thresholds). Therefore, EPA has concluded that the rule only applies to true minor sources.

Comment No. 2— The commenter opposed EPA's approval of ARM 17.8.752(1)(a)(i), alleging that this approval appears contrary to Section 110(l) of the CAA in that it would weaken current permitting requirements and will lead to more air pollution than would otherwise be allowed. The commenter states that the current minor source Best Available Control Technology (BACT) provision (triggered for an entire source) has been relied upon by Montana and EPA to ensure that the NAAQS will be attained and maintained pursuant to Section 110 of the CAA. The commenter acknowledges there is no federal requirement for minor source BACT. To the extent the commenter makes this argument, EPA responds below.

EPA Response —EPA disagrees with this comment. As the commenter points out, there is no federal requirement for BACT for minor sources and the inclusion of ARM 17.8.752(1)(a)(i) is a “discretionary” control measure. Measures not tied to an area's classification and not mandated by the CAA are often referred to as “discretionary” measures. States can remove discretionary measures from attainment, nonattainment or maintenance plans. In this instance, the State has not removed this discretionary control measure from its SIP, but has revised it. This revision results in minor source BACT applying only to the specific emissions unit being modified as opposed to the whole source. This revision will result in fewer sources postponing or foregoing modifying emission units, even those that would implement emission reductions, in order to avoid a comprehensive review and expensive upgrades to an entire facility.

EPA again notes that maintaining compliance with the NAAQS and Section 110 of the CAA is not dependent on a single component of the Montana ARM or a single revision of the SIP, but how the revisions as a whole affect attainment and maintenance of the NAAQS. ARM 17.8.752 has been used in addition to the remainder of the MAQP rules, individual control plans for nonattainment areas, generally applicable rules prohibiting certain emitting activities, open burning rules, etc. in order to ensure compliance with the NAAQS. ARM 17.8.752, as revised in this rule, does not weaken the MAQP program and thus a 110(l) analysis is not required before EPA can approve this provision.

Comment No. 3 —The commenter states that the SIP revisions do not set forth legally enforceable procedures that enable the State to determine how construction or modification of a stationary source impacts the ambient air quality standards and how these impacts will be assessed, in particular the ozone and PM 2.5 NAAQS, as required by 40 CFR 160(a)(2). The commenter further alleges that the SIP, in general, is not consistent with the procedures set forth in 40 CFR 160.

EPA Response —EPA disagrees with this comment. The revisions being approved in this action provide legally enforceable procedures for Montana's minor NSR to determine whether the construction of a new or modified source will result in interference with the NAAQS. ARM 17.8.743 requires sources to obtain a Montana air quality permit or a completeness determination before construction of a source may begin. ARM 17.8.743(3) states “* * * the department may issue a letter instructing the owner or operator to immediately cease such activities pending a final determination on an application if it finds that the proposed project would result in a violation of the State Implementation Plan or would interfere with the attainment or maintenance of any federal or state ambient air quality standard.” This satisfies the requirement of 40 CFR 51.160(a)(2) because it is a legally enforceable procedure that enables the State to prevent violations of the control strategy or interference with the NAAQS.

SIP revisions being approved in this action are not intended to determine the ability of the SIP as a whole to implement, maintain, and enforce each NAAQS promulgated by the EPA. For example, Montana submitted a SIP revision to demonstrate that the State meets the requirements of Section 110(a)(1) and (2) of the Clean Air Act for ozone and PM 2.5. This revision addresses basic SIP requirements, including emission inventories, monitoring, enforcement of emission limits and control measures, and modeling to assure attainment and maintenance of the standards. The evaluation of these “infrastructure” SIPs, as well as currently approved section 110 SIPs, need to be considered in determining whether the SIP as a whole provides appropriate legally enforceable procedures to ensure attainment and maintenance of the NAAQS.

EPA is partially approving and partially disapproving SIP revisions submitted by the State of Montana on August 26, 1999, May 28, 2003, March 9, 2004, October 25, 2005, and October 16, 2006. First, in this action EPA is approving the removal of the following provisions from the federally-approved SIP: ARM 17.8.701, 17.8.702, 17.8.704, 17.8.705, 17.8.706, 17.8.707, 17.8.710, 17.8.715, 17.8.716, 17.8.717, 17.8.720, 17.8.730, 17.8.731, 17.8.732, 17.8.733, and 17.8.734.

Second, EPA is approving the following new Subchapter 7 provisions into the federally-approved SIP: ARM 17.8.740 (except 17.8.740(10) and (14) and the following phrases in 17.8.740(8)(a) and (c), respectively, (1) “except when a permit is not required under ARM 17.8.745” and (2) “except as provided in ARM 17.8.745” and the phrase “reasonable period of time for startup and shutdown” in ARM 17.8.740(2)), submitted on May 28, 2003; 17.8.743 (except the phrases “asphalt concrete plants, mineral crushers” in 17.8.743(1)(b) “and 17.8.745” in 17.8.743(1), and 17.8.743(1)(c)), submitted on May 28, 2003; 17.8.744 and 17.8.748, submitted on May 28, 2003; 17.8.749(1), (3), (4), (5), (6), and (8), submitted on May 28, 2003; 17.8.749(7), submitted on March 9, 2004; 17.8.752, 17.8.755, and 17.8.756, submitted on May 28, 2003; 17.8.759(1) through (3), submitted on May 28, 2003; 17.8.759(4) through (6), submitted on October 16, 2006; 17.8.760 and 17.8.762, submitted on May 28, 2003; 17.8.763(1) and (4), submitted on May 28, 2003; 17.8.763(2) and (3), submitted on March 9, 2004; 17.8.764(1) (except the phrase “the emission increase meets the criteria in ARM 17.8.745 for a de minimis change not requiring a permit” in 17.8.764(1)(b)) and (4), submitted on May 28, 2003; 17.8.764(2) and (3), submitted on March 9, 2004; 17.8.765, submitted on May 28, 2003; 17.8.767(1)(a) through (c), submitted on May 28, 2003; and 17.8.767(1)(d) through (g), (2), (3), and (4), submitted on October 25, 2005.

Third, EPA is disapproving the following new Subchapter 7 provisions: ARM 17.8.749(2), ARM 17.8.740(10), 17.8.740(14); and portions of 17.8.740(2).

Fourth, EPA is approving revisions to the following sections of other subchapters submitted on May 28, 2003: ARM 17.8.101(4); 17.8.110(7), (8), and (9); 17.8.818(1); 17.8.825(3); 17.8.826(1) and (2); 17.8.904(1) and (2); 17.8.905(1) and (4); 17.8.906; 17.8.1004; 17.8.1005(1), (2), and (5); 17.8.1106; and 17.8.1109.

Additionally, EPA is not acting, at the request of the State, on the following provisions in Subchapter 7: ARM 17.8.743(1)(c) and ARM 17.8.770, the phrase “asphalt concrete plants, mineral crushers” in ARM 17.8.743(1)(b) and ARM 17.8.745 submitted on May 28, 2003.

Note that, with respect to Montana's rules relating to new source review, EPA has determined that Montana's rules meet the requirements of 40 CFR part 51, subpart I, as currently in effect. And while EPA is approving the state's permit to construct rules, EPA recognizes that it has a responsibility to insure that all states properly implement their preconstruction permitting programs. Therefore, EPA's approval of Montana's rules in no way divests EPA of our continued oversight (as set forth in CAA sections 113, 167, and 505(b)) to insure that Montana's permits are consistent with the CAA, EPA regulations, and the SIP.

Consistent with EPA's proposal, this SIP approval does not extend to Indian country in Montana. See 75 FR 9843.

Finally, EPA is not acting on the following provisions of other subchapters because they were either disapproved in a previous action or they relate to a rule EPA is not taking action on: the following phrases in 17.8.740(8)(a) and (c), respectively, (1) “except when a permit is not required under ARM 17.8.745” and (2) “except as provided in ARM 17.8.745,” submitted on May 28, 2003; ARM 17.8.309(5)(b), 17.8.310(3)(e), 17.8.316(6), and 17.8.901(14)(e)(iii), submitted on May 28, 2003; the phrase “and 17.8.745” in ARM 17.8.743(1), submitted on May 28, 2003; ARM 17.8.749(2) submitted on May 28, 2003; the phrase “the emission increase meets the criteria in ARM 17.8.745 for a de minimis change not requiring a permit,” in ARM 17.8.764(1)(b), submitted on May 28, 2003; and ARM 17.8.743(1), 17.8.1601, 17.8.1602, 17.8.1603, 17.8.1604, 17.8.1605, and 17.8.1606, submitted on October 16, 2006.

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 6, 2011. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

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

We are approving amendments to Indiana's PSD and Emission Offset regulations. Previously, EPA approved revisions to these regulations into the State Implementation Plan (SIP) on June 18, 2007 (72 FR 33395). On November 24, 2010, the Indiana Department of Environmental Management (IDEM) requested that EPA approve PSD and Emission Offset rule amendments to the SIP. The rule amendments include grammatical changes, corrections to numbering notation, the addition of definitions consistent with Federal PSD and NNSR regulations, and removal of references to provisions which were vacated in the New Source Review (NSR) Reform Rules. These amendments are contained in Indiana's PSD rules at 326 IAC 2-2-1, 326 IAC 2-2-2, 326 IAC 2-2-4, 326 IAC 2-2-5, 326 IAC 2-2-7, 326 IAC 2-2-8 and 326 IAC 2-2-10, and Emission Offset rules at 326 IAC 2-3-1, 326 IAC 2-3-2, and 326 IAC 2-3-3.

On December 31, 2002, EPA published final rule changes to the PSD and NSR programs (67 FR 80186) (2002 NSR Reform Rules), and on November 7, 2003, EPA published a notice of final action on the reconsideration of the December 31, 2002 final rule changes (68 FR 63021). After the 2002 NSR Reform Rules were finalized and effective (March 3, 2003), various petitioners challenged numerous aspects, along with portions of EPA's 1980 PSD and NNSR Rules (45 FR 5276, August 7, 1980). On June 24, 2005, the United States Circuit Court of Appeals for the DC Circuit Court issued a decision on the challenges to the 2002 NSR Reform Rules. See New York v. United States, 413 F.3d 3 (DC Cir. 2005). In summary, the DC Circuit Court vacated portions of the 2002 NSR Reform Rules pertaining to “clean units” and “pollution control projects” (PCPs), remanded a portion of the “reasonable possibility” provisions (40 CFR 52.21(r)(6) and 40 CFR 51.166(r)(6)), and either upheld or did not comment on the other provisions included as part of the 2002 NSR Reform Rules.

On June 13, 2007 (72 FR 32526), EPA took final action to revise the 2002 NSR Reform Rules to remove from Federal law all provisions pertaining to clean units and the PCP exemption that were vacated by the DC Circuit Court. In the final partial approval of the NSR Reform rules into the Indiana SIP (72 FR 33395), EPA did not take action on the clean unit and PCP portions of the rules at IDEM's request. Although today's action is proposing to approve Indiana's removal of these provisions, EPA never approved them into the SIP. Indiana has removed the following rules due to references to clean units and PCPs: 326 IAC 2-2-1(m), (dd)(2)(H), (ii)(6)(D), and (ll); 326 IAC 2-2-2 (d)(5) and (f); 2-2-4(a)(3); 2-2-5(b); 2-3-1(j), (y)(2)(H), (cc)(3)(B)(iii), and (cc)(3)(B)(iv)(EE),(gg); 326 IAC 2-3-2(c)(5) and (l); and 326 IAC 2-3-3(b)(12). Additionally, IDEM has removed references to clean units and PCPs in 326 IAC 2-2-4(a) and (b); 2-2-7(a); 2-2-8(b); and 2-2-10; 2-3-2(m), but the remainder of those subsections remain intact.

In New York v. United States, the DC Circuit also remanded EPA's “reasonable possibility” provision, which identifies for sources and reviewing authorities the circumstances under which a major stationary source undergoing a modification that does not trigger major NSR must keep records. On December 21, 2007, EPA addressed the Court's remand, and took final action to establish that a “reasonable possibility” applies where source emissions equal or exceed 50 percent of the Clean Air Act (CAA) NSR significance levels for any pollutant (72 FR 72607). See 40 CFR 52.21(r)(b). IDEM added 326 IAC 2-2-8(b)(6) and 326 IAC 2-3-2(l)(6) to include provisions that are consistent with EPA's reasonable possibility language.

The November 7, 2003, reconsideration rule added the definition for “replacement unit” at 40 CFR 52.21 (b)(33), which means an emissions unit for which all the criteria listed in paragraphs (b)(33)(i) through (iv) of this section are met. No creditable emission reductions shall be generated from shutting down the existing emissions unit that is replaced. The definition has been added to Indiana's regulations at 326 IAC 2-2-1(tt) and 326 IAC 2-3-1(nn).

IDEM has also added “oxides of nitrogen” (unless a NO X waiver is in effect) to the following sections of the Emission Offset rules: 326 IAC 2-3-1(p), (y), (z), (pp); 326 IAC 2-3-2(b) and (g); and 326 IAC 2-3-3(a)(5)(B). Oxides of nitrogen were added pursuant to section 182(f) of the CAA as it is a known precursor to the formation of ozone.

IDEM's revisions in 326 IAC 2-2-1 through 2-2-5, 326 IAC 2-2-7, 326 IAC 2-2-8, 326 IAC 2-2-10, and 326 IAC 2-3-1 through 2-3-3 also include corrections to grammatical errors, use of acronyms and corrections to numbering notations due to several subsections being added and removed.

EPA is approving the revisions to the PSD rules at 326-IAC 2-2-1, 326 IAC 2-2-2, 326 IAC 2-2-4, 326 IAC 2-2-5, 326 IAC 2-2-7, 326 IAC 2-2-8 and 326 IAC 2-2-10, and Emission Offset rules at 326 IAC 2-3-1, 326 IAC 2-3-2, and 326 IAC 2-3-3.

We are publishing this action without prior proposal because we view this as a noncontroversial amendment and anticipate no adverse comments. However, in the proposed rules section of this Federal Register publication, we are publishing a separate document that will serve as the proposal to approve the state plan if relevant adverse written comments are filed. This rule will be effective September 6, 2011 without further notice unless we receive relevant adverse written comments by August 8, 2011. If we receive such comments, we will withdraw this action before the effective date by publishing a subsequent document that will withdraw the final action. All public comments received will then be addressed in a subsequent final rule based on the proposed action. EPA will not institute a second comment period. Any parties interested in commenting on this action should do so at this time. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment. If we do not receive any comments, this action will be effective September 6, 2011.

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

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 6, 2011. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of today's Federal Register , rather than file an immediate petition for judicial review of this direct final rule, so that EPA can withdraw this direct final rule and address the comment in the proposed rulemaking. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

40 CFR part 52 is amended as follows:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. EPA published a final approval of Ohio rules that request use of low RVP fuel in the Cincinnati and Dayton areas on May 25, 2007 (72 FR 29269). Thecodification of this approval states that the Ohio rules require that low-RVP fuel of 7.8 pounds per square inch (psi) be sold in Hamilton, Butler, Clinton, Warren, Clermont, Clark, Greene, Miami, and Montgomery counties. However, the addition of Clinton County in the final rule and the codification was a clerical error. The Ohio rules submitted to EPA for action do not apply to Clinton County, Ohio. The error has resulted in a discrepancy between 40 CFR 52.1870 and the state rules of Ohio. This document corrects the erroneous amendatory language.

In the codification published in the Federal Register on May 25, 2007 (72 FR 29269), on page 29273 in the second column, paragraph numbered (138): “Areas which includes Hamilton, Butler, Clinton, Warren and Clermont, Clark, Greene, Miami, and Montgomery counties.” is corrected to read: “Areas which include Hamilton, Butler, Warren and Clermont, Clark, Greene, Miami, and Montgomery Counties.”

Section 553 of the Administrative Procedure Act, 5 U.S.C. 553(b)(B), provides that, when an agency for good cause finds that notice and public procedure are impracticable, unnecessary or contrary to the public interest, the agency may issue a rule without providing notice and an opportunity for public comment. We have determined that there is good cause for making today's rule final without prior proposal and opportunity for comment because we are merely correcting an incorrect citation in a previous action. The underlying state rule is not affected. Thus, notice and public procedure are unnecessary. We find that this constitutes good cause under 5 U.S.C. 553(b)(B).

Under Executive Order (E.O.) 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and is therefore not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355 (May 22, 2001)). Because the agency has made a “good cause” finding that this action is not subject to notice-and-comment requirements under the Administrative Procedures Act or any other statute as indicated in the Supplementary Information section above, it is not subject to the regulatory flexibility provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), or to sections 202 and 205 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4). In addition, this action does not significantly or uniquely affect small governments or impose a significant intergovernmental mandate, as described in sections 203 and 204 of UMRA. This rule also 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, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of governments, as specified by Executive Order 13132 (64 FR 43255, August 10, 1999). This rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant.

This technical correction action does not involve technical standards; thus the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. The rule also does not involve special consideration of environmental justice related issues as required by Executive Order 12898 (59 FR 7629, February 16, 1994). In issuing this rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct, as required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996). EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1998) by examining the takings implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings” issued under the executive order. This rule does not impose an information collection burden under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Congressional Review Act (5 U.S.C. 801 et seq. ), as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. Section 808 allows the issuing agency to make a rule effective sooner than otherwise provided by the CRA if the agency makes a good cause finding that notice and public procedure is impracticable, unnecessary or contrary to the public interest. This determination must be supported by a brief statement. 5 U.S.C. 808(2). As stated previously, EPA had made such a good cause finding, including the reasons therefore, and established an effective date of July 8, 2011. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . This correction to 40 CFR part 52 for Ohio is not a “major rule” as defined by 5 U.S.C. 804(2).

40 CFR part 52 is amended as follows:

Table of Contents I. Background II. Scope of Action on Infrastructure Submissions III. EPA's Response to Comments IV. Final Actions V. Statutory and Executive Order Reviews I. Background

Section 110(a) of the Clean Air Act imposes the obligation upon states to make a SIP submission to EPA for a new or revised NAAQS, but the contents of that submission may vary depending upon the facts and circumstances. In particular, the data and analytical tools available at the time the state develops and submits the SIP for a new or revised NAAQS affects the content of the submission. The contents of such SIP submissions may also vary depending upon what provisions the state's existing SIP already contains. In the case of the 1997 8-hour ozone NAAQS, states typically have met the basic program elements required in section 110(a)(2) through earlier SIP submissions in connection with previous ozone standards.

On October 2, 2007, EPA issued a guidance document entitled, “Guidance on SIP Elements Required Under Sections 110(a)(1) and (2) for the 1997 8-hour Ozone and fine particle (PM 2.5 ) National Ambient Air Quality Standards.” This guidance noted that to the extent an existing SIP already meets the section 110(a)(2) requirements, states need only certify that fact via a letter to EPA.

The States of Connecticut, Maine, New Hampshire, and Rhode Island each submitted such certification letters to EPA on December 28, 2007, January 3, 2008, December 14, 2007 and December 14, 2007, respectively. All four submittals were deemed complete, effective April 28, 2008. (See 73 FR 16205; March 27, 2008.)

On March 23, 2011, EPA proposed to approve the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions for the 1997 8-hour ozone NAAQS. See 76 FR 16358. A summary of the background for today's final actions is provided below. See EPA's March 23, 2011, proposed rulemaking at 76 FR 16358 for more detail.

More specifically, section 110(a)(1) provides the procedural and timing requirements for SIPs. Section 110(a)(2) lists specific elements that states must meet for “infrastructure” SIP requirements related to a newly established or revised NAAQS. As mentioned above, these requirements include SIP infrastructure elements such as modeling, monitoring, and emissions inventories that are designed to assure attainment and maintenance of the NAAQS. The requirements that are the subject of this proposed rulemaking are listed below:  1

• 110(a)(2)(A): Emission limits and other control measures.

• 110(a)(2)(B): Ambient air quality monitoring/data system.

• 110(a)(2)(C): Program for enforcement of control measures. 2

• 110(a)(2)(D)(ii): Interstate transport.

• 110(a)(2)(E): Adequate resources.

• 110(a)(2)(F): Stationary source monitoring system.

• 110(a)(2)(G): Emergency power.

• 110(a)(2)(H): Future SIP revisions.

• 110(a)(2)(J): Consultation with government officials; public notification; and PSD and visibility protection.

• 110(a)(2)(K): Air quality modeling/data.

• 110(a)(2)(L): Permitting fees.

• 110(a)(2)(M): Consultation/participation by affected local entities.

EPA is taking final action to approve the Connecticut, Maine, New Hampshire and Rhode Island SIPs as demonstrating that the respective States meet the requirements of sections 110(a)(1) and (2) of the CAA for the 1997 8-hour ozone NAAQS. Section 110(a) of the CAA requires that each state adopt and submit a SIP for the implementation, maintenance, and enforcement of each NAAQS promulgated by the EPA, which is commonly referred to as an “infrastructure” SIP. Connecticut, Maine, New Hampshire and Rhode Island certified that the Connecticut, Maine, New Hampshire and Rhode Island SIPs contain provisions that ensure the 1997 8-hour ozone NAAQS is implemented, enforced, and maintained in Connecticut, Maine, New Hampshire and Rhode Island, respectively. The Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions address all the required infrastructure elements for the 1997 8-hour ozone NAAQS. EPA has determined that the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions are consistent with section 110 of the CAA, with the exception of the Connecticut submission with respect to section 110(a)(2)(D)(ii). Therefore, EPA is taking final action to fully approve the submittals from Connecticut, Maine, New Hampshire and Rhode Island, with one exception. EPA is taking direct final action to conditionally approve Connecticut's submittal with respect to section 110(2)(D)(ii), as discussed further in Section III below. Additionally, EPA is responding to comments received on EPA's March 23, 2011 proposed approval of the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions.

EPA is currently acting upon SIPs that address the infrastructure requirements of CAA section 110(a)(1) and (2) for ozone and PM 2.5 NAAQS for various states across the country. Commenters on EPA's recent proposals for some states raised concerns about EPA statements that it was not addressing certain substantive issues in the context of acting on the infrastructure SIP submissions. 3 The commenters specifically raised concerns involving provisions in existing SIPs and with EPA's statements that it would address two issues separately and not as part of actions on the infrastructure SIP submissions: (i) existing provisions related to excess emissions during periods of start-up, shutdown, or malfunction at sources, that may be contrary to the CAA and EPA's policies addressing such excess emissions (“SSM”); and (ii) existing provisions related to “director's variance” or “director's discretion” that purport to permit revisions to SIP approved emissions limits with limited public process or without requiring further approval by EPA, that may be contrary to the CAA (“director's discretion”). EPA notes that there are two other substantive issues for which EPA likewise stated that it would address the issues separately: (i) existing provisions for minor source new source review programs that may be inconsistent with the requirements of the CAA and EPA's regulations that pertain to such programs (“minor source NSR”); and (ii) existing provisions for Prevention of Significant Deterioration programs that may be inconsistent with current requirements of EPA's “Final NSR Improvement Rule,” 67 FR 80,186 (December 31, 2002), as amended by 72 FR 32,526 (June 13, 2007) (“NSR Reform”). In light of the comments, EPA now believes that its statements in various proposed actions on infrastructure SIPs with respect to these four individual issues should be explained in greater depth with respect to these issues.

EPA intended the statements in the proposals concerning these four issues merely to be informational, and to provide general notice of the potential existence of provisions within the existing SIPs of some states that might require future corrective action. EPA did not want states, regulated entities, or members of the public to be under the misconception that the Agency's approval of the infrastructure SIP submission of a given state should be interpreted as a reapproval of certain types of provisions that might exist buried in the larger existing SIP for such state. Thus, for example, EPA explicitly noted that the Agency believes that some states may have existing SIP approved SSM provisions that are contrary to the CAA and EPA policy, but that “in this rulemaking, EPA is not proposing to approve or disapprove any existing State provisions with regard to excess emissions during SSM of operations at facilities.” EPA further explained, for informational purposes, that “EPA plans to address such State regulations in the future.” EPA made similar statements, for similar reasons, with respect to the director's discretion, minor source NSR, and NSR Reform issues. EPA's objective was to make clear that approval of an infrastructure SIP for these ozone and PM 2.5 NAAQS should not be construed as explicit or implicit reapproval of any existing provisions that relate to these four substantive issues.

Unfortunately, the commenters and others evidently interpreted these statements to mean that EPA considered action upon the SSM provisions and the other three substantive issues to be integral parts of acting on an infrastructure SIP submission, and therefore that EPA was merely postponing taking final action on the issue in the context of the infrastructure SIPs. This was not EPA's intention. To the contrary, EPA only meant to convey its awareness of the potential for certain types of deficiencies in existing SIPs, and to prevent any misunderstanding that it was reapproving any such existing provisions. EPA's intention was to convey its position that the statute does not require that infrastructure SIPs address these specific substantive issues in existing SIPs and that these issues may be dealt with separately, outside the context of acting on the infrastructure SIP submission of a state. To be clear, EPA did not mean to imply that it was not taking a full final agency action on the infrastructure SIP submission with respect to any substantive issue that EPA considers to be a required part of acting on such submissions under section 110(k) or under section 110(c). Given the confusion evidently resulting from EPA's statements, however, we want to explain more fully the Agency's reasons for concluding that these four potential substantive issues in existing SIPs may be addressed separately.

The requirement for the SIP submissions at issue arises out of CAA section 110(a)(1). That provision requires that states must make a SIP submission “within 3 years (or such shorter period as the Administrator may prescribe) after the promulgation of a national primary ambient air quality standard (or any revision thereof)” and that these SIPs are to provide for the “implementation, maintenance, and enforcement” of such NAAQS. Section 110(a)(2) includes a list of specific elements that “[e]ach such plan” submission must meet. EPA has historically referred to these particular submissions that states must make after the promulgation of a new or revised NAAQS as “infrastructure SIPs.” This specific term does not appear in the statute, but EPA uses the term to distinguish this particular type of SIP submission designed to address basic structural requirements of a SIP from other types of SIP submissions designed to address other different requirements, such as “nonattainment SIP” submissions required to address the nonattainment planning requirements of part D, “regional haze SIP” submissions required to address the visibility protection requirements of CAA section 169A, new source review permitting program submissions required to address the requirements of part D, and a host of other specific types of SIP submissions that address other specific matters.

Although section 110(a)(1) addresses the timing and general requirements for these infrastructure SIPs, and section 110(a)(2) provides more details concerning the required contents of these infrastructure SIPs, EPA believes that many of the specific statutory provisions are facially ambiguous. In particular, the list of required elements provided in section 110(a)(2) contains a wide variety of disparate provisions, some of which pertain to required legal authority, some of which pertain to required substantive provisions, and some of which pertain to requirements for both authority and substantive provisions. 4 Some of the elements of section 110(a)(2) are relatively straightforward, but others clearly require interpretation by EPA through rulemaking, or recommendations through guidance, in order to give specific meaning for a particular NAAQS. 5

Notwithstanding that section 110(a)(2) states that “each” SIP submission must meet the list of requirements therein, EPA has long noted that this literal reading of the statute is internally inconsistent, insofar as section 110(a)(2)(I) pertains to nonattainment SIP requirements that could not be met on the schedule provided for these SIP submissions in section 110(a)(1). 6 This illustrates that EPA must determine which provisions of section 110(a)(2) may be applicable for a given infrastructure SIP submission. Similarly, EPA has previously decided that it could take action on different parts of the larger, general “infrastructure SIP” for a given NAAQS without concurrent action on all subsections, such as section 110(a)(2)(D)(i), because the Agency bifurcated the action on these latter “interstate transport” provisions within section 110(a)(2) and worked with states to address each of the four prongs of section 110(a)(2)(D)(i) with substantive administrative actions proceeding on different tracks with different schedules. 7 This illustrates that EPA may conclude that subdividing the applicable requirements of section 110(a)(2) into separate SIP actions may sometimes be appropriate for a given NAAQS where a specific substantive action is necessitated, beyond a mere submission addressing basic structural aspects of the state's SIP. Finally, EPA notes that not every element of section 110(a)(2) would be relevant, or as relevant, or relevant in the same way, for each new or revised NAAQS and the attendant infrastructure SIP submission for that NAAQS. For example, the monitoring requirements that might be necessary for purposes of section 110(a)(2)(B) for one NAAQS could be very different than what might be necessary for a different pollutant. Thus, the content of an infrastructure SIP submission to meet this element from a state might be very different for an entirely new NAAQS, versus a minor revision to an existing NAAQS. 8

Similarly, EPA notes that other types of SIP submissions required under the statute also must meet the requirements of section 110(a)(2), and this also demonstrates the need to identify the applicable elements for other SIP submissions. For example, nonattainment SIPs required by part D likewise have to meet the relevant subsections of section 110(a)(2) such as section 110(a)(2)(A) or (E). By contrast, it is clear that nonattainment SIPs would not need to meet the portion of section 110(a)(2)(C) that pertains to part C, i.e., the PSD requirement applicable in attainment areas. Nonattainment SIPs required by part D also would not need to address the requirements of section 110(a)(2)(G) with respect to emergency episodes, as such requirements would not be limited to nonattainment areas. As this example illustrates, each type of SIP submission may implicate some subsections of section 110(a)(2) and not others.

Given the potential for ambiguity of the statutory language of section 110(a)(1) and (2), EPA believes that it is appropriate for EPA to interpret that language in the context of acting on the infrastructure SIPs for a given NAAQS. Because of the inherent ambiguity of the list of requirements in section 110(a)(2), EPA has adopted an approach in which it reviews infrastructure SIPs against this list of elements “as applicable.” In other words, EPA assumes that Congress could not have intended that each and every SIP submission, regardless of the purpose of the submission or the NAAQS in question, would meet each of the requirements, or meet each of them in the same way. EPA elected to use guidance to make recommendations for infrastructure SIPs for these NAAQS.

On October 2, 2007, EPA issued guidance making recommendations for the infrastructure SIP submissions for both the 1997 8-hour ozone NAAQS and the 1997 PM 2.5 NAAQS. 9 Within this guidance document, EPA described the duty of states to make these submissions to meet what the Agency characterized as the “infrastructure” elements for SIPs, which it further described as the “basic SIP requirements, including emissions inventories, monitoring, and modeling to assure attainment and maintenance of the standards.”  10 As further identification of these basic structural SIP requirements, “attachment A” to the guidance document included a short description of the various elements of section 110(a)(2) and additional information about the types of issues that EPA considered germane in the context of such infrastructure SIPs. EPA emphasized that the description of the basic requirements listed on attachment A was not intended “to constitute an interpretation of” the requirements, and was merely a “brief description of the required elements.”  11 EPA also stated its belief that with one exception, these requirements were “relatively self explanatory, and past experience with SIPs for other NAAQS should enable States to meet these requirements with assistance from EPA Regions.”  12 For the one exception to that general assumption, however, i.e., how states should proceed with respect to the requirements of section 110(a)(2)(G) for the 1997 PM 2.5 NAAQS, EPA gave much more specific recommendations. But for other infrastructure SIP submittals, and for certain elements of the submittals for the 1997 PM 2.5 NAAQS, EPA assumed that each state would work with its corresponding EPA regional office to refine the scope of a state's submittal based on an assessment of how the requirements of section 110(a)(2) should reasonably apply to the basic structure of the state's SIP for the NAAQS in question.

Significantly, the 2007 Guidance did not explicitly refer to the SSM, director's discretion, minor source NSR, or NSR Reform issues as among specific substantive issues EPA expected states to address in the context of the infrastructure SIPs, nor did EPA give any more specific recommendations with respect to how states might address such issues even if they elected to do so. The SSM and director's discretion issues implicate section 110(a)(2)(A), and the minor source NSR and NSR Reform issues implicate section 110(a)(2)(C). In the 2007 Guidance, however, EPA did not indicate to states that it intended to interpret these provisions as requiring a substantive submission to address these specific issues in the context of the infrastructure SIPs for these NAAQS. Instead, EPA's 2007 Guidance merely indicated its belief that the states should make submissions in which they established that they have the basic SIP structure necessary to implement, maintain, and enforce the NAAQS. EPA believes that states can establish that they have the basic SIP structure, notwithstanding that there may be potential deficiencies within the existing SIP. Thus, EPA's proposals mentioned these issues not because the Agency considers them issues that must be addressed in the context of an infrastructure SIP as required by section 110(a)(1) and (2), but rather because EPA wanted to be clear that it considers these potential existing SIP problems as separate from the pending infrastructure SIP actions.

EPA believes that this approach to the infrastructure SIP requirement is reasonable, because it would not be feasible to read section 110(a)(1) and (2) to require a top to bottom, stem to stern, review of each and every provision of an existing SIP merely for purposes of assuring that the state in question has the basic structural elements for a functioning SIP for a new or revised NAAQS. Because SIPs have grown by accretion over the decades as statutory and regulatory requirements under the CAA have evolved, they may include some outmoded provisions and historical artifacts that, while not fully up to date, nevertheless may not pose a significant problem for the purposes of “implementation, maintenance, and enforcement” of a new or revised NAAQS when EPA considers the overall effectiveness of the SIP. To the contrary, EPA believes that a better approach is for EPA to determine which specific SIP elements from section 110(a)(2) are applicable to an infrastructure SIP for a given NAAQS, and to focus attention on those elements that are most likely to need a specific SIP revision in light of the new or revised NAAQS. Thus, for example, EPA's 2007 Guidance specifically directed states to focus on the requirements of section 110(a)(2)(G) for the 1997 PM 2.5 NAAQS because of the absence of underlying EPA regulations for emergency episodes for this NAAQS and an anticipated absence of relevant provisions in existing SIPs.

Finally, EPA believes that its approach is a reasonable reading of section 110(a)(1) and (2) because the statute provides other avenues and mechanisms to address specific substantive deficiencies in existing SIPs. These other statutory tools allow the Agency to take appropriate tailored action, depending upon the nature and severity of the alleged SIP deficiency. Section 110(k)(5) authorizes EPA to issue a “SIP call” whenever the Agency determines that a state's SIP is substantially inadequate to attain or maintain the NAAQS, to mitigate interstate transport, or otherwise to comply with the CAA. 13 Section 110(k)(6) authorizes EPA to correct errors in past actions, such as past approvals of SIP submissions. 14 Significantly, EPA's determination that an action on the infrastructure SIP is not the appropriate time and place to address all potential existing SIP problems does not preclude the Agency's subsequent reliance on provisions in section 110(a)(2) as part of the basis for action at a later time. For example, although it may not be appropriate to require a state to eliminate all existing inappropriate director's discretion provisions in the course of acting on the infrastructure SIP, EPA believes that section 110(a)(2)(A) may be among the statutory bases that the Agency cites in the course of addressing the issue in a subsequent action. 15

EPA received one set of comments (from the Law Office of Robert Ukeiley, hereinafter referred to as “the Commenter”) on the March 23, 2011, proposed rulemaking to approve revisions to the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions as meeting the requirements of sections 110(a)(1) and (2) of the CAA for the 1997 8-hour ozone NAAQS. Generally, the Commenter's concerns relate to whether EPA's approval of the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions are in compliance with section 110(l) of the CAA, and whether EPA's approval will interfere with the states' compliance with the CAA's prevention of significant deterioration (PSD) requirements. In addition, the commenter has concerns with how the Connecticut SIP addresses the element required by section 110(a)(2)(D)(ii). The comments are provided in the docket for today's final action. A summary of the comments and EPA's responses are provided below.

Comment 1: Under the header “No Clean Air Act Section 110(l) analysis,” the Commenter states “Before providing the technical analysis for why finalizing this proposed rule would be contrary to the Clean Air Act, I wish to point out that it is 2011 and EPA has yet to ensure that these areas have plans to meet the 1997 National Ambient Air Quality Standard (NAAQS) for ozone.” The Commenter goes on to state that “EPA acknowledged that the science indicates that the 1997 NAAQS, which is effectively 85 parts per billion (ppb), does not protect people's health or welfare when in 2008, EPA set a new ozone NAAQS at 75 ppb.”

Response 1: As noted in EPA's proposed rulemaking on the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions and in today's final rulemaking, the very action that EPA is undertaking is a determination that Connecticut, Maine, New Hampshire and Rhode Island have plans to ensure compliance with the 1997 8-hour ozone NAAQS. The level of the 1997 ozone NAAQS is 0.08 parts per million (ppm) on an 8-hour average basis. The Connecticut, Maine, New Hampshire and Rhode Island submissions predate the release of the recent revision to the 8-hour ozone NAAQS on March 12, 2008, and are distinct from any plans that the States of Connecticut, Maine, New Hampshire and Rhode Island may provide to ensure compliance of the 2008 NAAQS. Our actions today are meant to address the 1997 ozone infrastructure requirements under Section 110 of the Act. EPA does not have before us the Section 110 infrastructure requirements for the 2008 ozone NAAQS. Nevertheless, EPA has considered the 2008 8-hour ozone NAAQS to the extent that section 110(l) applies to this action and will expound on this consideration in Response 2 below. Further, EPA agrees that the Agency has made the determination that the 1997 8-hour ozone NAAQS is not as protective as needed for public health and welfare, and as the Commenter mentioned, the Agency established a new ozone NAAQS at a level of 0.075 ppm on an 8-hour average basis. However, EPA notes that the Agency is currently reconsidering the 2008 8-hour ozone NAAQS, and has not yet designated areas for any subsequent NAAQS.

Finally, while it is not clear which areas the Commenter refers to in stating “EPA has yet to ensure these areas have plans to meet” the 1997 ozone NAAQS, the comment may refer to the requirements under section 172, Part D, Title I of the Act for states with nonattainment areas for the 1997 ozone NAAQS to submit nonattainment plans. As discussed in our notice proposing approval of the Connecticut, Maine, New Hampshire and Rhode Island infrastructure SIP, submissions required by section 110(a)(2)(I) which pertain to the nonattainment planning requirements of part D, Title I of the CAA are outside the scope of this action, as such plans are not due within three years after promulgation of a new or revised NAAQS, but rather are due at the time the nonattainment area plan requirements are due pursuant to section 172.

In addition, all of Rhode Island (see 75 FR 64949, Oct. 21, 2010), New Hampshire (see 76 FR 14865, March 18, 2011), and Maine (see 71 FR 71489, Dec. 11, 2006) meet the 1997 ozone NAAQS. The Greater Connecticut 8-hour ozone nonattainment area also meets the 1997 ozone NAAQS (see 75 FR 53219, August 31, 2011). The remainder of the State of Connecticut also meets the 1997 ozone NAAQS based on 2007-2009 ozone data, but EPA has not yet made the formal determination in the Federal Register . In summary, all four states have ozone air quality that meets the 1997 ozone NAAQS.

Comment 2: Also under the header “No Clean Air Act Section 110(l) analysis,” the Commenter cites the section 110(l) CAA requirement, and states “Clean Air Act § 110(l) requires `EPA to evaluate whether the plan as revised will achieve the pollution reductions required under the Act, and the absence of exacerbation of the existing situation does not assure this result.' Hall v. EPA, 273 F.3d 1146, 1152 (9th Cir. 2001).” The Commenter goes on to state that “* * * the Federal Register notices are devoid of any analysis of how these rule makings will or will not interfere with attaining, making reasonable further progress on attaining and maintaining the 75 ppb ozone NAAQS as well as the 1-hour 100 ppb nitrogen oxides NAAQS.”

Response 2: EPA agrees with the Commenter's assertion that consideration of section 110(l) of the CAA is necessary for EPA's action with regard to approving the states' submissions. However, EPA disagrees with the Commenter's assertion that EPA did not consider 110(l) in terms of the March 23, 2011, proposed action. Further, EPA disagrees with the Commenter's assertion that EPA's proposed March 23, 2011 action does not comply with the requirements of section 110(l). Section 110(l) provides in part that: “[t]he Administrator shall not approve a revision of a plan if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress * * *, or any other applicable requirement of this chapter.” EPA has consistently interpreted section 110(l) as not requiring a new attainment demonstration for every SIP submission. EPA has further concluded that preservation of the status quo air quality during the time new attainment demonstrations are being prepared will not interfere with a state meeting its obligations to develop timely attainment demonstrations. The following actions are examples of where EPA has addressed 110(l) in previous rulemakings: See 70 FR 53, 57 (January 3, 2005); 70 FR 17029, 17033 (April 4, 2005); 70 FR 28429, 28431 (May 18, 2005); and 70 FR 58119, 58134 (October 5, 2005). The Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions do not revise or remove any existing emissions limit for any NAAQS or any other existing substantive SIP provisions relevant to the 1997 8-hour ozone NAAQS or the 2010 nitrogen dioxide (NO 2 ) NAAQS. Simply put, the submissions do not make any substantive revision that could result in any change in emissions. As a result, the submissions do not relax any existing requirements or alter the status quo air quality. Therefore, approval of the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions will not interfere with attainment or maintenance of any NAAQS.

Comment 3: Under the header “No Clean Air Act Section 110(l) analysis,” the Commenter states that “We are not required to guess what EPA's Clean Air Act 110(l) analysis would be. Rather, EPA must approve in part and disapprove in part these action and re-propose to approve the disapproved part with a Clean Air Act § 110(l) analysis.” Further, the Commenter states that “EPA cannot include its analysis in its response to comments and approve the actions without providing the public with an opportunity to comment on EPA's Clean Air Act § 110(l) analysis.”

Response 3: Please see Response 2 for a fuller explanation regarding EPA's response to the Commenter's assertion that EPA's action is not in compliance with section 110(l) of the CAA. EPA does not agree with the Commenter's assertion that EPA's analysis did not somehow consider section 110(l) and so, therefore, “EPA must approve in part and disapprove in part these action [sic] and re-propose to approve the disapproved part with a Clean Air Act § 110(l) analysis.” Every action that EPA takes to approve a SIP revision is subject to 110(l) and thus EPA's consideration of whether a state's submission “* * * would interfere with any applicable requirement concerning attainment and reasonable further progress * * *, or any other applicable requirement of this chapter” is inherent in EPA's action to approve or disapprove a submission from a state. In the “Proposed Action” section of the March 23, 2010, rulemaking, EPA notes that EPA is proposing to approve the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions for the 1997 8-hour ozone NAAQS because these submissions are consistent with section 110 of the CAA. Section 110(l) is a component of section 110, so EPA believes that this provides sufficient notice that EPA considered section 110(l) for the proposed action and concluded that section 110(l) was not violated. Further, EPA does not agree with the Commenter's assertion that the Agency cannot provide additional clarification in response to a comment and take a final approval action without “* * * providing the public with an opportunity to comment on EPA's Clean Air Act § 110(l) analysis.” The Commenter does not cite any provision of the Act or other authority for the Commenter's assertion. In fact, the proposition that providing an analysis for the first time in response to a comment on a rulemaking somehow violates the public's opportunity to comment has been rejected by the DC Circuit Court of Appeals. See Int'l Harvester Co. v. Ruckelshaus, 478 F.2d 615, 632 n.51 (D.C. Cir. 1973). Furthermore, as mentioned above, EPA's approval of the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions does not make any substantive revision that could result in any change in emissions, so there is no further “analysis” beyond whether the state has adequate provisions in their SIPs to address the infrastructure requirements for the 1997 8-hour ozone NAAQS. EPA's March 23, 2011, proposed rulemaking goes through each of the relevant infrastructure requirements and provides detailed information on how the Connecticut, Maine, New Hampshire and Rhode Island SIPs address the relevant infrastructure requirements. Beyond making a general statement indicating that the Connecticut, Maine, New Hampshire and Rhode Island submissions are somehow not in compliance with section 110(l) of the CAA, the Commenter does not provide comments on EPA's detailed analysis of each infrastructure requirement to indicate that the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions for the 1997 8-hour ozone NAAQS are deficient in meeting these individual requirements. Therefore, EPA has no basis to question the Agency's determination that the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions meet the requirements for the infrastructure submission for the 1997 8-hour ozone NAAQS, including section 110(l) of the CAA.

Comment 4: Under the header “No Clean Air Act Section 110(l) analysis,” the Commenter further asserts that “EPA's analysis must conclude that this proposed action would violation [sic] § 110(l) if finalized.” An example given by the Commenter is as follows; “For example, a 42 U.S.C. § 7502(a)(2)(J) public notification program based on a 85 [parts per billion (ppb)] ozone level interferes with a public notification program that should exist for a 75 ppb ozone level. At its worst, the public notification system would be notifying people that the air is safe when in reality, based on the latest science, the air is not safe. Thus, EPA would be condoning the states providing information that can physical[ly] hurt people.”

Response 4: EPA disagrees with the Commenter's statement that “EPA's analysis must conclude that this proposed action would violation [sic] § 110(l) if finalized.” As mentioned above, the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions do not revise or remove any existing emissions limit for any NAAQS, nor do they make any substantive revision that could result in any change in emissions. EPA has concluded that the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions do not relax any existing requirements or alter the status quo air quality. Therefore, approval of the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions will not interfere with attainment or maintenance of any NAAQS. See Response 2 and Response 3 above for a fuller discussion. Further, EPA disagrees with the Commenter's assertion that the section 110(a)(2)(J) requirement for public notification for the 1997 8-hour ozone NAAQS based on 85 ppb interferes with a public notification program that should exist for a 75 ppb ozone level, and * * * “EPA would be condoning the states providing information that can physical[ly] hurt people.” First, the 1997 8-hour ozone NAAQS is 0.08 ppm, which is effectively 0.084 ppm or 84 ppb due to the rounding convention, and not “85 ppb” as the Commenter mentioned. Second, EPA establishes the health-based NAAQS and provides extensive resources, technical analyses and support to the states to ensure compliance with the NAAQS to protect human health and the environment. As noted in Response 1, the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions were provided to address the 1997 8-hour ozone NAAQS and were submitted prior to EPA's promulgation of the 2008 8-hour ozone in March 2008. Thus, the States of Connecticut, Maine, New Hampshire and Rhode Island provided sufficient information at that time to meet the requirement for the 1997 8-hour ozone NAAQS which is the subject of this action.

As mentioned, in 2008, EPA issued revised 8-hour ozone NAAQS, which are currently under reconsideration. Infrastructure requirements for the 2008 (or a subsequent) NAAQS are distinct from these requirements for the 1997 8-hour ozone NAAQS. EPA continues to implement the 2008 ozone NAAQS for the purposes of health based air quality notification. When EPA promulgated the 2008 NAAQS (73 FR 16436, March 27, 2008), we revised the Air Quality Index (AQI) for ozone to show that at the level of the 2008 ozone NAAQS (0.075 ppm) the AQI is set to 100, which indicates ozone levels that are unhealthful for sensitive groups. It is this revised AQI that EPA uses to both forecast ozone levels and to provide notice to the public of current air quality. The EPA AIRNOW system uses the revised AQI as its basis for ozone. (See http://www.airnow.gov. ) In addition when the States of Connecticut, Maine, New Hampshire and Rhode Island forecast ozone air quality and provide real-time ozone air quality information to the public, either through the AIRNOW system, or through their own (state-based) Internet system, the four states use the revised ozone AQI keyed to the 2008 revised ozone NAAQS.

Comment 5: Lastly, under the header “No Clean Air Act Section 110(l) analysis,” the Commenter asserts that “if a SIP provides an ozone NAAQS of 85 ppb for PSD purposes, this interferes with the requirement that PSD programs require sources to demonstrate that they will not cause or contribute to a violation of a NAAQS because this requirement includes the current 75 ppb ozone NAAQS.”

Response 5: EPA believes that this comment gives no basis for concluding that EPA approval of the Connecticut, Maine, New Hampshire and Rhode Island infrastructure SIPs violate the requirements of section 110(l). EPA assumes that the comment refers to the requirement that owners and operators of sources subject to PSD demonstrate that the allowable emissions increases from the proposed source or modification, in conjunction with all other applicable emissions increases or reductions (including secondary emissions), will not cause or contribute to a violation of the NAAQS. 40 CFR 51.166(k)(1).

EPA further assumes that the Commenter's language “if a SIP provides an ozone NAAQS of 85 ppb for PSD purposes” refers to a hypothetical SIP-approved PSD program that only requires owners and operators of sources subject to PSD to make the demonstration discussed above for the 1997 ozone NAAQS, and not for the 2008 ozone NAAQS. However, the Commenter gives no indication that Connecticut, Maine, New Hampshire and Rhode Island's SIP-approved PSD program suffers from this alleged defect.

Furthermore, as discussed in detail above, the infrastructure SIP makes no substantive change to any provision of the Connecticut, Maine, New Hampshire and Rhode Island SIP-approved PSD programs, and therefore does not violate the requirements of section 110(l). Had these states submitted SIP revisions that substantively modified their PSD program to limit the required demonstration to just the 1997 ozone NAAQS, then the comment might have been relevant to a 110(l) analysis of that hypothetical SIP revision. However, in this case, the comment gives no basis for EPA to conclude that the four states' infrastructure SIPs would interfere with any applicable requirement of the Act.

In addition, all of Connecticut, Rhode Island, New Hampshire and Maine are in the Ozone Transport Region (OTR) (see CAA Section 184). For ozone and ozone precursors, all new or modified major sources in the OTR are covered by nonattainment new source review (NSR) regulations and must obtain offsets (at a greater than 1 to 1 ratio) for ozone precursors. 16 In summary, for OTR states, the PSD regulations for ozone do not apply and nonattainment NSR regulations require offsets consistent with the CAA's requirements to address the ambient impact of new source construction in these areas.

EPA concludes that approval of the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions will not make the status quo air quality worse and is in fact consistent with the development of an overall plan capable of meeting the Act's requirements. Accordingly, when applying section 110(l) to this submission, EPA finds that approval of Connecticut, Maine, New Hampshire and Rhode Island's infrastructure submissions is consistent with section 110 (including section 110(l)) of the CAA.

Comment 6: The Commenter provided comments on the lack of a designated air quality model to demonstrate that a PSD source will not cause or contribute to a violation of the ozone NAAQS. Specifically, the commenter stated:

To support the position as to the necessity of “[w]hy and which model should be designated,” the Commenter attached a petition  17 and incorporated this petition, and the exhibits to this petition, by reference in the submitted comments.

Response 6: The Commenter referred to the petition for rulemaking from Robert Ukeiley on behalf of the Sierra Club to designate air quality models to use for PSD permit applications with regard to ozone and PM 2.5 . EPA is separately reviewing the July 28, 2010, “Petition for Rulemaking to Designate Air Quality Models to Use for PSD Permit Applications with Regard to Ozone and PM 2.5 ,” which requests that the EPA Administrator designate computer models to determine whether major sources of air pollution cause or contribute to violations of the ozone NAAQS and the PM 2.5 NAAQS and increments. Although the Commenter purports to incorporate the July 28, 2010 petition by reference, that petition arises in a different context, requests different relief, and raises distinct issues from those raised by the comment. EPA believes that the appropriate place to respond to the issues raised in the petition is in a direct response to the petition. Accordingly, this Response to the Comment is not a response to the July 28, 2010 petition, and the issues raised in that petition are being addressed under separate consideration.

Furthermore, the states included in this action are Connecticut, Maine, New Hampshire and Rhode Island. Since these states are in the Ozone Transport Region (OTR), they are required to, under Sections 182(f)(1) and 184(b) of the Clean Air Act, and in fact do, conduct nonattainment NSR for new major and modified major sources of ozone precursors. 18 Section 184(b)(2) requires major stationary sources of volatile organic compounds at the 50 ton per year level in the OTR to meet all “the requirements which would be applicable to major stationary sources if the area were classified as a Moderate nonattainment area.” Section 182(f)(1) has the effect of extending that requirement to major sources of nitrogen oxides at the 100 ton per year level in the OTR. Under the nonattainment NSR program, sources are not required to predict their ambient impacts using modeling. Rather, the program assumes the new or modified sources will contribute to nonattainment in the area. Accordingly, the program requires that these sources secure offsets for their new emissions at a ratio of at least 1.15 to 1 in the OTR. Thus, the offset requirement addresses the ambient impact element of NSR in these states for ozone precursors without reliance on any predictive modeling. Therefore, this comment regarding which model to use in the PSD modeling of single source's ozone precursors is not relevant to this action.

Comment 7: Under the heading “CT's SIP must require notice to affected states,” the Commenter states, “CT's SIP is defective because its PSD regulations fail to require CT to give notice of PSD sources to affected states. 76 FR 16358, 16362 (Mar. 23, 2011). EPA must disapprove this defective provision. The fact that neighboring states have consistently obtained draft permits in the past does not justify approving an illegal SIP. It does not even make sense. To begin with, it is unlikely that EPA actually reviewed all PSD permits issued in the past to actually determine that proper notice was actually given by CT. In any event, CT could change its informal policy in the future, especially if there is a change in management in the agency or state.”

Response 7: Section 110(a)(2)(D)(ii) of the CAA requires SIPs to include provisions insuring compliance with the applicable requirements of sections 126 and 115 (relating to interstate and international pollution abatement). Specifically, section 126(a) requires new or modified major sources to notify neighboring states of potential impacts from the source. As noted in EPA's proposed approval (see 76 FR 16362), Connecticut's PSD regulations provide for notice to most of the parties consistent with the requirements in the EPA PSD program, although there is no specific mandate that affected states receive notice. As also noted in the proposed approval, Connecticut in fact issues extensive notice of its draft permits, and neighboring states consistently get copies on those drafts. However, EPA agrees with the commenter that the current Connecticut SIP does not explicitly require notice to affected states for some sources of air pollution. Subsequent to EPA's proposal, on May 2, 2011, EPA received a written commitment from the State of Connecticut to pursue regulatory revisions to Connecticut's PSD program to adopt a formal requirement to notify nearby states. Connecticut's letter also committed to continue to provide notice to nearby states while shepherding these regulatory revisions through the state process. Therefore, taking all of this information into consideration, EPA has decided to take direct final action to conditionally approve this element of the Connecticut SIP. Conditional approval is appropriate in this circumstance because the State has explicitly committed to continuing its practice of notifying affected states while it conforms its regulations to mandate that practice.

As described above, the Connecticut, Maine, New Hampshire and Rhode Island ozone infrastructure SIP submissions have addressed the elements of the CAA 110(a)(1) and (2) SIP requirements pursuant to EPA's October 2, 2007 guidance to ensure that the 1997 8-hour ozone NAAQS are implemented, enforced, and maintained in the respective state, except for one element in Connecticut. EPA is taking final action to approve the Connecticut, Maine, New Hampshire and Rhode Island infrastructure submissions for the 1997 8-hour ozone NAAQS because these submissions are consistent with section 110 of the CAA, except for the element required by section 110(a)(2)(D)(ii) in Connecticut.

EPA is conditionally approving the Connecticut submittal with respect to the requirement of CAA section 110(a)(2)(D)(ii). The State must submit to EPA by July 9, 2012 the revised PSD regulations requiring notification of nearby states. If the State fails to do so, this approval will become a disapproval on that date. EPA will notify the State by letter that this action has occurred. At that time, this commitment will no longer be a part of the approved Connecticut SIP. EPA subsequently will publish a notice in the notice section of the Federal Register notifying the public that the conditional approval automatically converted to a disapproval. If the State meets its commitment, within the applicable time frame, the conditionally approved submission will remain a part of the SIP until EPA takes final action approving or disapproving the new submittal. If EPA disapproves the new submittal, the conditionally approved submittal will also be disapproved at that time. If EPA approves the new submittal, Connecticut's infrastructure SIP will be fully approved in its entirety and replace the conditionally approved element in the SIP.

If the conditional approval is converted to a disapproval, the final disapproval triggers the Federal Implementation Plan (FIP) requirement under section 110(c).

The EPA is publishing this conditional approval without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. However, in the proposed rules section of this Federal Register publication, EPA is publishing a separate document that will serve as the proposal to conditionally approve the Connecticut submittal with respect to CAA section 110(a)(2)(D)(ii) should relevant adverse comments be filed. This rule will be effective September 6, 2011 without further notice unless the Agency receives relevant adverse comments by August 8, 2011.

If the EPA receives such comments, then EPA will publish a notice withdrawing the final conditional approval and informing the public that the conditional approval will not take effect. All public comments received will then be addressed in a subsequent final rule based on the proposed rule. The EPA will not institute a second comment period on the proposed rule. All parties interested in commenting on the proposed rule should do so at this time. If no such comments are received, the public is advised that the conditional approval will be effective on September 6, 2011 and no further action will be taken on the proposed rule. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

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

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 6, 2011. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2)).

Part 52 of chapter I, title 40 of the Code of Federal Regulations, is amended as follows:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. These sections provide additional information on this final action:

On March 30, 2011 (76 FR 17592), EPA published a proposed rulemaking for the State of Nebraska. This rulemaking proposed approval of Nebraska's submittal dated December 7, 2007 as meeting the relevant and applicable requirements of CAA sections 110(a)(1) and (2) necessary to implement, maintain, and enforce the 1997 8-hour ozone NAAQS.

The above referenced submittal addresses the infrastructure elements specified in CAA sections 110(a)(1) and (2). This submittal refers to the implementation, maintenance and enforcement of the 1997 8-hour ozone NAAQS. The rationale supporting EPA's proposed action is explained in the proposal and EPA incorporates by reference the rationale in the proposal, as supplemented by this notice, as its rationale for the final rule. No public comments were received on the proposed rulemaking.

EPA is currently acting upon SIPs that address the infrastructure requirements of CAA section 110(a)(1) and (2) for ozone and PM2.5 NAAQS for various states across the country. Commenters on EPA's recent proposals for some states raised concerns about EPA statements that it was not addressing certain substantive issues in the context of acting on the infrastructure SIP submissions. 1 The commenters specifically raised concerns involving provisions in existing SIPs and with EPA's statements that it would address two issues separately and not as part of actions on the infrastructure SIP submissions: (i) existing provisions related to excess emissions during periods of start-up, shutdown, or malfunction at sources, that may be contrary to the CAA and EPA's policies addressing such excess emissions (“SSM”); and (ii) existing provisions related to “director's variance” or “director's discretion” that purport to permit revisions to SIP approved emissions limits with limited public process or without requiring further approval by EPA, that may be contrary to the CAA (“director's discretion”). EPA notes that there are two other substantive issues for which EPA likewise stated that it would address the issues separately: (i) existing provisions for minor source new source review programs that may be inconsistent with the requirements of the CAA and EPA's regulations that pertain to such programs (“minor source NSR”); and (ii) existing provisions for Prevention of Significant Deterioration (PSD) programs that may be inconsistent with current requirements of EPA's “Final NSR Improvement Rule,” 67 FR 80186 (December 31, 2002), as amended by 72 FR 32526 (June 13, 2007) (“NSR Reform”). In light of the comments, EPA now believes that its statements in various proposed actions on infrastructure SIPs with respect to these four individual issues should be explained in greater depth with respect to these issues.

EPA intended the statements in the proposals concerning these four issues merely to be informational, and to provide general notice of the potential existence of provisions within the existing SIPs of some states that might require future corrective action. EPA did not want states, regulated entities, or members of the public to be under the misconception that the Agency's approval of the infrastructure SIP submission of a given state should be interpreted as a reapproval of certain types of provisions that might exist buried in the larger existing SIP for such state. Thus, for example, EPA explicitly noted that the Agency believes that some states may have existing SIP approved SSM provisions that are contrary to the CAA and EPA policy, but that “in this rulemaking, EPA is not proposing to approve or disapprove any existing State provisions with regard to excess emissions during SSM of operations at facilities.” EPA further explained, for informational purposes, that “EPA plans to address such State regulations in the future.” EPA made similar statements, for similar reasons, with respect to the director's discretion, minor source NSR, and NSR Reform issues. EPA's objective was to make clear that approval of an infrastructure SIP for these ozone and PM2.5 NAAQS should not be construed as explicit or implicit reapproval of any existing provisions that relate to these four substantive issues.

Unfortunately, the commenters and others evidently interpreted these statements to mean that EPA considered action upon the SSM provisions and the other three substantive issues to be integral parts of acting on an infrastructure SIP submission, and therefore that EPA was merely postponing taking final action on the issue in the context of the infrastructure SIPs. This was not EPA's intention. To the contrary, EPA only meant to convey its awareness of the potential for certain types of deficiencies in existing SIPs, and to prevent any misunderstanding that it was reapproving any such existing provisions. EPA's intention was to convey its position that the statute does not require that infrastructure SIPs address these specific substantive issues in existing SIPs and that these issues may be dealt with separately, outside the context of acting on the infrastructure SIP submission of a state. To be clear, EPA did not mean to imply that it was not taking a full final agency action on the infrastructure SIP submission with respect to any substantive issue that EPA considers to be a required part of acting on such submissions under section 110(k) or under section 110(c). Given the confusion evidently resulting from EPA's statements, however, we want to explain more fully the Agency's reasons for concluding that these four potential substantive issues in existing SIPs may be addressed separately.

The requirement for the SIP submissions at issue arises out of CAA section 110(a)(1). That provision requires that states must make a SIP submission “within 3 years (or such shorter period as the Administrator may prescribe) after the promulgation of a national primary ambient air quality standard (or any revision thereof)” and that these SIPS are to provide for the “implementation, maintenance, and enforcement” of such NAAQS. Section 110(a)(2) includes a list of specific elements that “[e]ach such plan” submission must meet. EPA has historically referred to these particular submissions that states must make after the promulgation of a new or revised NAAQS as “infrastructure SIPs.” This specific term does not appear in the statute, but EPA uses the term to distinguish this particular type of SIP submission designed to address basic structural requirements of a SIP from other types of SIP submissions designed to address other different requirements, such as “nonattainment SIP” submissions required to address the nonattainment planning requirements of part D, “regional haze SIP” submissions required to address the visibility protection requirements of CAA section 169A, new source review permitting program submissions required to address the requirements of part D, and a host of other specific types of SIP submissions that address other specific matters.

Although section 110(a)(1) addresses the timing and general requirements for these infrastructure SIPs, and section 110(a)(2) provides more details concerning the required contents of these infrastructure SIPs, EPA believes that many of the specific statutory provisions are facially ambiguous. In particular, the list of required elements provided in section 110(a)(2) contains a wide variety of disparate provisions, some of which pertain to required legal authority, some of which pertain to required substantive provisions, and some of which pertain to requirements for both authority and substantive provisions. 2 Some of the elements of section 110(a)(2) are relatively straightforward, but others clearly require interpretation by EPA through rulemaking, or recommendations through guidance, in order to give specific meaning for a particular NAAQS. 3

Notwithstanding that section 110(a)(2) states that “each” SIP submission must meet the list of requirements therein, EPA has long noted that this literal reading of the statute is internally inconsistent, insofar as section 110(a)(2)(I) pertains to nonattainment SIP requirements that could not be met on the schedule provided for these SIP submissions in section 110(a)(1). 4 This illustrates that EPA must determine which provisions of section 110(a)(2) may be applicable for a given infrastructure SIP submission. Similarly, EPA has previously decided that it could take action on different parts of the larger, general “infrastructure SIP” for a given NAAQS without concurrent action on all subsections, such as section 110(a)(2)(D)(i), because the Agency bifurcated the action on these latter “interstate transport” provisions within section 110(a)(2) and worked with states to address each of the four prongs of section 110(a)(2)(D)(i) with substantive administrative actions proceeding on different tracks with different schedules. 5 This illustrates that EPA may conclude that subdividing the applicable requirements of section 110(a)(2) into separate SIP actions may sometimes be appropriate for a given NAAQS where a specific substantive action is necessitated, beyond a mere submission addressing basic structural aspects of the State's implementation plan. Finally, EPA notes that not every element of section 110(a)(2) would be relevant, or as relevant, or relevant in the same way, for each new or revised NAAQS and the attendant infrastructure SIP submission for that NAAQS. For example, the monitoring requirements that might be necessary for purposes of section 110(a)(2)(B) for one NAAQS could be very different than what might be necessary for a different pollutant. Thus, the content of an infrastructure SIP submission to meet this element from a state might be very different for an entirely new NAAQS, versus a minor revision to an existing NAAQS. 6

Similarly, EPA notes that other types of SIP submissions required under the statute also must meet the requirements of section 110(a)(2), and this also demonstrates the need to identify the applicable elements for other SIP submissions. For example, nonattainment SIPs required by part D likewise have to meet the relevant subsections of section 110(a)(2) such as section 110(a)(2)(A) or (E). By contrast, it is clear that nonattainment SIPs would not need to meet the portion of section 110(a)(2)(C) that pertains to part C, i.e., the PSD requirement applicable in attainment areas. Nonattainment SIPs required by part D also would not need to address the requirements of section 110(a)(2)(G) with respect to emergency episodes, as such requirements would not be limited to nonattainment areas. As this example illustrates, each type of SIP submission may implicate some subsections of section 110(a)(2) and not others.

Given the potential for ambiguity of the statutory language of section 110(a)(1) and (2), EPA believes that it is appropriate for EPA to interpret that language in the context of acting on the infrastructure SIPs for a given NAAQS. Because of the inherent ambiguity of the list of requirements in section 110(a)(2), EPA has adopted an approach in which it reviews infrastructure SIPs against this list of elements “as applicable.” In other words, EPA assumes that Congress could not have intended that each and every SIP submission, regardless of the purpose of the submission or the NAAQS in question, would meet each of the requirements, or meet each of them in the same way. EPA elected to use guidance to make recommendations for infrastructure SIPs for these NAAQS.

On October 2, 2007, EPA issued guidance making recommendations for the infrastructure SIP submissions for both the 1997 8-hour ozone NAAQS and the 1997 PM2.5 NAAQS. 7 Within this guidance document, EPA described the duty of states to make these submissions to meet what the Agency characterized as the “infrastructure” elements for SIPs, which it further described as the “basic SIP requirements, including emissions inventories, monitoring, and modeling to assure attainment and maintenance of the standards.”  8 As further identification of these basic structural SIP requirements, “attachment A” to the guidance document included a short description of the various elements of section 110(a)(2) and additional information about the types of issues that EPA considered germane in the context of such infrastructure SIPs. EPA emphasized that the description of the basic requirements listed on attachment A was not intended “to constitute an interpretation of” the requirements, and was merely a “brief description of the required elements.”  9 EPA also stated its belief that with one exception, these requirements were “relatively self explanatory, and past experience with SIPs for other NAAQS should enable States to meet these requirements with assistance from EPA Regions.”  10 For the one exception to that general assumption, however, i.e., how states should proceed with respect to the requirements of section 110(a)(2)(G) for the 1997 PM2.5 NAAQS, EPA gave much more specific recommendations. But for other infrastructure SIP submittals, and for certain elements of the submittals for the 1997 PM2.5 NAAQS, EPA assumed that each State would work with its corresponding EPA regional office to refine the scope of a State's submittal based on an assessment of how the requirements of section 110(a)(2) should reasonably apply to the basic structure of the State's implementation plan for the NAAQS in question.

Significantly, the 2007 Guidance did not explicitly refer to the SSM, director's discretion, minor source NSR, or NSR Reform issues as among specific substantive issues EPA expected states to address in the context of the infrastructure SIPs, nor did EPA give any more specific recommendations with respect to how states might address such issues even if they elected to do so. The SSM and director's discretion issues implicate section 110(a)(2)(A), and the minor source NSR and NSR Reform issues implicate section 110(a)(2)(C). In the 2007 Guidance, however, EPA did not indicate to states that it intended to interpret these provisions as requiring a substantive submission to address these specific issues in the context of the infrastructure SIPs for these NAAQS. Instead, EPA's 2007 Guidance merely indicated its belief that the states should make submissions in which they established that they have the basic SIP structure necessary to implement, maintain, and enforce the NAAQS. EPA believes that states can establish that they have the basic SIP structure, notwithstanding that there may be potential deficiencies within the existing SIP. Thus, EPA's proposals mentioned these issues not because the Agency considers them issues that must be addressed in the context of an infrastructure SIP as required by section 110(a)(1) and (2), but rather because EPA wanted to be clear that it considers these potential existing SIP problems as separate from the pending infrastructure SIP actions.

EPA believes that this approach to the infrastructure SIP requirement is reasonable, because it would not be feasible to read section 110(a)(1) and (2) to require a top to bottom, stem to stern, review of each and every provision of an existing SIP merely for purposes of assuring that the state in question has the basic structural elements for a functioning SIP for a new or revised NAAQS. Because SIPs have grown by accretion over the decades as statutory and regulatory requirements under the CAA have evolved, they may include some outmoded provisions and historical artifacts that, while not fully up to date, nevertheless may not pose a significant problem for the purposes of “implementation, maintenance, and enforcement” of a new or revised NAAQS when EPA considers the overall effectiveness of the SIP. To the contrary, EPA believes that a better approach is for EPA to determine which specific SIP elements from section 110(a)(2) are applicable to an infrastructure SIP for a given NAAQS, and to focus attention on those elements that are most likely to need a specific SIP revision in light of the new or revised NAAQS. Thus, for example, EPA's 2007 Guidance specifically directed states to focus on the requirements of section 110(a)(2)(G) for the 1997 PM2.5 NAAQS because of the absence of underlying EPA regulations for emergency episodes for this NAAQS and an anticipated absence of relevant provisions in existing SIPs.

Finally, EPA believes that its approach is a reasonable reading of section 110(a)(1) and (2) because the statute provides other avenues and mechanisms to address specific substantive deficiencies in existing SIPs. These other statutory tools allow the Agency to take appropriate tailored action, depending upon the nature and severity of the alleged SIP deficiency. Section 110(k)(5) authorizes EPA to issue a “SIP Call” whenever the Agency determines that a State's implementation plan is substantially inadequate to attain or maintain the NAAQS, to mitigate interstate transport, or otherwise to comply with the CAA. 11 Section 110(k)(6) authorizes EPA to correct errors in past actions, such as past approvals of SIP submissions. 12 Significantly, EPA's determination that an action on the infrastructure SIP is not the appropriate time and place to address all potential existing SIP problems does not preclude the Agency's subsequent reliance on provisions in section 110(a)(2) as part of the basis for action at a later time. For example, although it may not be appropriate to require a state to eliminate all existing inappropriate director's discretion provisions in the course of acting on the infrastructure SIP, EPA believes that section 110(a)(2)(A) may be among the statutory bases that the Agency cites in the course of addressing the issue in a subsequent action. 13

EPA is taking final action to approve Nebraska's submittal that provides the basic program elements to meet the applicable requirements in CAA sections 110(a)(2)(A), (B), (C), (D)(ii), (E), (F), (G), (H), (J), (K), (L), and (M) necessary to implement, maintain, and enforce the 1997 8-hour ozone NAAQS.

As explained in the proposed rulemaking, this action does not address the requirements of section 110(a)(2)(D)(i) for the 1997 8-hour ozone NAAQS, because it has already been addressed in a separate rulemaking. See 72 FR 71245. The scope of this action is further discussed in section III, above.

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

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 6, 2011. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review, nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

40 CFR part 52 is amended as follows:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This action provides a technical correction to the regulatory language in the final rulemaking published at 75 FR 12088 on March 12, 2010. In that rulemaking, EPA made a determination that the entire Chicago-Gary-Lake County, IL-IN ozone nonattainment area has attained the 1997 eight-hour ozone NAAQS. The determination was based on complete, quality-assured ambient air quality monitoring data for the period of 2006-2008. Additional background on the applicable NAAQS and EPA's data are contained in the September 24, 2009 proposed rule at 74 FR 48703-48706.

As published on March 12, 2010, the regulatory language contained an omission which needs to be corrected. Our determination was properly codified for the Indiana portion of the area (Lake and Porter Counties) in the final rule at 75 FR 12089 with the addition of 40 CFR 52.777(mm)). However, an amendment to 40 CFR 52 codifying our determination for the Illinois portion of the area, Cook, DuPage, Kane, Lake, McHenry, and Will Counties, and portions of Grundy County (Aux Sable and Goose Lake Townships) and Kendall County (Oswego Township), was inadvertently omitted. Therefore, EPA is correcting this error by adding paragraph (jj) to 40 CFR 52.726 for Illinois.

Section 553 of the Administrative Procedure Act, 5 U.S.C. 553(b)(B), provides that, when an agency for good cause finds that notice and public procedure are impracticable, unnecessary or contrary to the public interest, the agency may issue a rule without providing notice and an opportunity for public comment. We have determined that there is good cause for making today's rule final without prior proposal and opportunity for comment because this rule is not substantive and imposes no regulatory requirements, but merely corrects an omitted citation in a previous action. Thus, notice and public procedure are unnecessary. We find that this constitutes good cause under 5 U.S.C. 553(b)(B).

Under Executive Order (E.O.) 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and is therefore not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355 (May 22, 2001)). Because the agency has made a “good cause” finding that this action is not subject to notice-and-comment requirements under the Administrative Procedures Act or any other statute as indicated in the Supplementary Information section above, it is not subject to the regulatory flexibility provisions of the Regulatory Flexibility Act (5 U.S.C 601 et seq. ), or to sections 202 and 205 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4). In addition, this action does not significantly or uniquely affect small governments or impose a significant intergovernmental mandate, as described in sections 203 and 204 of UMRA. This rule also 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, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of governments, as specified by Executive Order 13132 (64 FR 43255, August 10, 1999). This rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant.

This technical correction action does not involve technical standards; thus the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. The rule also does not involve special consideration of environmental justice related issues as required by Executive Order 12898 (59 FR 7629, February 16, 1994). In issuing this rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct, as required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996). EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1998) by examining the takings implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings” issued under the executive order. This rule does not impose an information collection burden under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Congressional Review Act (5 U.S.C. 801 et seq. ), as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. Section 808 allows the issuing agency to make a rule effective sooner than otherwise provided by the CRA if the agency makes a good cause finding that notice and public procedure is impracticable, unnecessary or contrary to the public interest. This determination must be supported by a brief statement. 5 U.S.C. 808(2). As stated previously, EPA had made such a good cause finding, including the reasons therefore, and established an effective date of July 8, 2011. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . This correction to 40 CFR part 52 for Illinois is not a “major rule” as defined by 5 U.S.C. 804(2).

40 CFR part 52 is amended as follows:

This is a summary of the Commission's (Third Report and Order and Order on Reconsideration), FCC 10-181, adopted and released on October 14, 2010. The full text of these documents is available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street, SW., CY-A257, Washington, DC, 20554. These documents will also be available via ECFS ( http://www.fcc.gov/cgb/ecfs/ ). (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) The complete text may be purchased from the Commission's copy contractor, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. To request these documents in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

1. In this Third Report and Order (“ Order” ), we remedy shortcomings in our CableCARD rules in order to improve consumers' experience with retail navigation devices (such as set-top boxes and digital cable-ready television sets) and CableCARDs, the security devices used in conjunction with navigation devices to perform the conditional access functions necessary to access cable services. We believe these rule changes are necessary to discharge our responsibility under the Act to assure the development of a retail market for devices that can navigate cable services. We seek to remove the disparity in consumer experience between those who choose to buy a retail device and those who lease the cable provider's set-top box, as the disparity is impeding the development of a retail market for navigation devices. Specifically, we adopt rules today to (1) require cable operators to support the reception of switched digital video services on retail devices to ensure that subscribers are able to access the services for which they pay regardless of whether they lease or purchase their devices; (2) prohibit price discrimination against retail devices to support a competitive marketplace for retail devices; (3) require cable operators to allow self-installation of CableCARDs where device manufacturers offer device-specific installation instructions to make the installation experience for retail devices comparable to the experience for leased devices; (4) require cable operators to provide multi-stream CableCARDs by default to ensure that cable operators are providing their subscribers with current CableCARD technology; and (5) clarify that CableCARD device certification rules are limited to certain technical features to make it easier for device manufacturers to get their products to market. We also modify our rules to encourage home-networking by simplifying our set-top box output requirements. In addition, we adopt a rule to promote the cable industry's transition to all-digital networks by exempting all one-way set-top boxes without recording functionality from the integration ban. Each of the rule changes adopted in this item are intended to meet the goals of Section 629 by further developing a retail market for navigation devices. Finally, we consider nine petitions for reconsideration of prior decisions in CS Docket No. 97-80, PP Docket No. 00-67, and the enforcement proceedings captioned above regarding changes to device certification procedures, the Commission's content encoding and protection rules, and access to switched digital video. Together, the changes we adopt today should benefit consumers who wish to buy navigation devices while at the same time removing unnecessary regulatory obligations on cable operators.

2. Background. In the Telecommunications Act of 1996, Congress added Section 629 to the Communications Act. That section directs the Commission to adopt regulations to assure the commercial availability of navigation devices used by consumers to access services from multichannel video programming distributors (“MVPDs”). Section 629 covers “equipment used by consumers to access multichannel video programming and other services offered over multichannel video programming systems.” Congress, in enacting the section, pointed to the vigorous retail market for customer premises equipment used with the public switched-telephone network and sought to create a similarly vigorous market for devices used with MVPD services.

3. In 1998, the Commission adopted the First Report and Order to implement Section 629. The order required MVPDs to make available a conditional access element separate from the basic navigation or host device, in order to permit unaffiliated manufacturers and retailers to manufacture and market host devices while allowing MVPDs to retain control over their system security. The technical details of this conditional access element were to be worked out in industry negotiations. In 2003, the Commission adopted, with certain modifications, standards on which the National Cable and Telecommunications Association (“NCTA”) and the Consumer Electronics Association (“CEA”) had agreed in a Memorandum of Understanding (“MOU”). The MOU prescribed the technical standards for one-way (from cable system to customer device) CableCARD compatibility. The CableCARD is a security device provided by an MVPD, which can be installed in a retail navigation device bought by a consumer in the retail market to allow the consumer's television to display MVPD-encrypted video programming. To ensure adequate support by MVPDs for CableCARDs, the Commission prohibited MVPDs from integrating the security function into set-top boxes they lease to consumers, thus forcing MVPDs to rely on CableCARDs as well. This “integration ban” was initially set to go into effect on January 1, 2005, but that date was later extended to July 1, 2007. Although the cable industry has challenged the lawfulness of the integration ban on three separate occasions, in each of those cases the DC Circuit denied those petitions.

4. Unfortunately, the Commission's efforts to date have not developed a vigorous competitive market for retail navigation devices that connect to subscription video services. Most cable subscribers continue to use the traditional set-top boxes leased from their cable operator; only 1 percent of the total navigation devices deployed are purchased at retail. Although following adoption of the CableCARD rules some television manufacturers sold unidirectional digital cable-ready products (“UDCPs”), most manufacturers have abandoned the technology. Indeed, since July 1, 2007, cable operators have deployed more than 22.75 million leased devices pre-equipped with CableCARDs, compared to only 531,000 CableCARDs installed in retail devices connected to their networks. Furthermore, while 605 UDCP models have been certified or verified for use with CableCARDs, only 37 of those certifications have occurred since the integration ban took effect in July 2007. This evidence indicates that many retail device manufacturers abandoned CableCARD before any substantial benefits of the integration ban could be realized.

5. Not only were very few retail devices manufactured and subsequently purchased in the retail market, but an additional complication with the installation process further depressed the retail market. The cable-operator leased devices come pre-equipped with a CableCARD, so that no subscriber premises installation of the card is required. But this is not the case with devices purchased at retail. CableCARDs for use in retail devices must be installed in the home, and many cable operators require professional installation by the cable operator. Unfortunately, the record reflects poor performance with regard to subscriber premise installations of CableCARDs in retail devices. This could be a consequence of the fact that only 1 percent of the total navigation devices deployed are purchased at retail and require an actual CableCARD installation, which may have made it difficult to train the cable installers properly. It could also reflect either indifference or reluctance by cable operators to support navigation devices purchased at retail in competition with their own set-top boxes. Regardless of the cause, these serious installation problems further undermine the development of a retail market.

6. A consumer using a unidirectional device cannot take advantage of two-way services offered by a cable operator. The Commission anticipated that the parties to the MOU would negotiate another agreement to achieve bidirectional compatibility, using either a software-based or hardware-based solution. Unlike one-way devices, which can only receive communication from cable headends, bidirectional devices can send requests to the cable headend, which enables those devices to receive services like cable operator-provided interactive programming guides, cable-operator provided video-on-demand and pay-per-view, and other interactive programming services. When the Commission realized in June 2007 that negotiations were not leading to an agreement for bidirectional compatibility between consumer electronics devices and cable systems, it released a Third Further Notice of Proposed Rulemaking, seeking comment on competing proposals for bidirectional compatibility and other related issues. In the wake of the Two-way FNPRM, the six largest cable operators and numerous consumer electronics manufacturers negotiated an agreement for bidirectional compatibility that continues to rely and builds on CableCARDs by using a middleware-based solution called “tru2way.”

7. The National Broadband Plan, released in March of this year, recommended changes in the CableCARD rules to provide benefits to consumers who use retail CableCARD devices without imposing unfair regulatory burdens on the cable industry. The plan suggested that these changes could serve as an interim solution that will benefit consumers while the Commission considers broader changes to develop a retail market for navigation devices. After considering those recommendations, on April 21, 2010 the Commission adopted a Fourth Further Notice of Proposed Rulemaking (“ FNPRM” ) seeking comment on proposed measures to remedy shortcomings in the existing CableCARD system. The Commission proposed five measures intended to remove the disparity between the treatment of consumers who choose to use a retail CableCARD-equipped video device and those who lease a cable provider's video navigation box. In the FNPRM, we sought comment on proposals to (1) Ensure that retail devices have comparable access to video programming that is prescheduled by the programming provider; (2) make CableCARD pricing and billing more transparent; (3) streamline CableCARD installations; (4) require cable operators to offer multi-stream CableCARDs; and (5) clarify certification requirements. In the FNPRM, we also proposed a rule change that would allow cable operators to substitute certain interfaces in lieu of the IEEE-1394 interface currently required on all high-definition set-top boxes, and proposed to define a baseline of functionality that such interfaces must meet. Finally, in order to encourage the cable industry's transition to digital technology, the Commission proposed an exemption to the integration ban for all one-way devices that do not have digital video recording capabilities.

8. DISCUSSION. Reforming the CableCARD System. Based on the record before us, we conclude that modifications to our rules are necessary to improve the CableCARD regime and advance the retail market for cable navigation devices. We are sympathetic to concerns that we are adopting these rules while we consider a successor regime, but we must keep in mind that CableCARD is a realized technology—consumer electronics manufacturers can build to and are building to the standard today. Until a successor technology is actually available, the Commission must strive to make the existing CableCARD standard work by adopting inexpensive, easily implemented changes that will significantly improve the user experience for retail CableCARD devices. Therefore, in this order we adopt rule changes that will (1) require cable operators to provide retail devices with access to switched-digital channels; (2) require cable operators to provide greater transparency in their CableCARD charges; (3) require cable operators to allow subscribers to self-install CableCARDs and require cable operators to inform their subscribers about this option; (4) require cable operators to provide multi-stream CableCARDs by default, unless a subscriber explicitly requests a single-stream CableCARD; and (5) clarify the testing requirements for CableCARD devices. Based on our examination of the record in this proceeding, we believe that these changes will be inexpensive to implement and will eliminate or reduce the disparity in the consumer experience between leased devices and retail devices, which has dampened enthusiasm for retail devices.

9. Switched Digital Video. Switched Digital Video (“SDV”) is a method of delivering linear programming that requires a set-top box to request specific channels from the cable head-end. SDV allows cable providers to offer their services more efficiently, as channels occupy capacity on the system only if subscribers are viewing or recording them. Unfortunately, this can affect one-way retail CableCARD devices adversely because one-way devices are not capable of requesting the switched channels, and therefore subscribers with retail devices are unable to access programming provided using SDV. Certain cable operators that have deployed SDV offer their subscribers free “tuning adapters,” which are repurposed set-top boxes that allow TiVo and Moxi retail set-top boxes and certain home-theater PCs to access switched digital content. These cable operators have provided the tuning adapters voluntarily, as the Commission's rules have not required cable operators to provide access to switched digital channels for one-way retail devices.

10. In the FNPRM, the Commission sought comment on whether this voluntary solution provides adequate support for retail navigation devices. The Commission also sought comment on TiVo's proposal to use an IP backchannel to request switched digital channels. There was vigorous disagreement between commenters on this issue—certain commenters strongly supported maintaining the status quo, while others zealously advocated a rule that would require cable operators who use SDV to support retail devices through the use of an IP backchannel.

11. Commenters who support maintaining the voluntary, market-based tuning adapter solution argue that SDV benefits consumers and that any changes to the status quo could stifle deployment of SDV and its associated benefits. They assert that the tuning adapter solution works adequately, and that there is no evidence that an IP backchannel would work better than the tuning adapter solution. They also argue that it does not make sense to require the industry to develop and deploy an IP backchannel solution, which could be costly and discourage deployment of SDV, particularly with the successor AllVid requirements on the horizon and the current availability of the cable industry's tru2way solution. They argue the additional development time and resources necessary to implement an IP backchannel would be better allocated to AllVid development. Certain commenters also assert that implementing a signaling backchannel over the public Internet would raise security and privacy concerns, including potential denial-of-service attacks, attacks that could provide unauthorized access to proprietary networks, and attacks that could result in theft of service and/or subscriber data. Therefore, these commenters argue, the tuning adapter solution that has developed in the marketplace is the most pragmatic, effective way to ensure that retail devices can access switched channels, and the Commission does not need to adopt rules.

12. While several commenters assert that the tuning adapter solution works adequately, others argue that consumers will not purchase retail CableCARD devices unless they are certain that they will be able to access all of the programming to which they subscribe. Because the Commission's rules do not require operators to provide access by retail CableCARD devices to switched digital video channels, TiVo is concerned that cable operators could withdraw their current willingness to provide tuning adapters at no additional charge to the customer. Furthermore, a number of cable subscribers indicate that they have trouble obtaining tuning adapters that work. These commenters argue that the most effective way to provide retail CableCARD devices with access to switched-digital channels is through the use of an IP backchannel. They assert that the IP-backchannel solution would solve problems that consumers experience with tuning adapters because it would not require additional, potentially unreliable, customer-premises hardware. Furthermore, they argue, the tuning adapter takes up space, is not energy efficient, and limits the ability to use all of the tuners on multi-tuner devices, thereby limiting the ability of multi-tuner devices to record more than two channels at once. TiVo also expresses concern that cable operators are misinforming subscribers that certain channels are not available on retail devices. Finally, TiVo and CEA assert that the IP backchannel solution would be less expensive than tuning adapters in the long run.

13. We conclude that we should mandate SDV support for retail devices without specifying the technology that cable operators must use to ensure such compatibility. SDV is an innovative technology with a number of benefits, and we do not wish to discourage its deployment. The record is replete, however, with comments from consumers who have had negative experiences using tuning adapters to access switched digital channels on their retail CableCARD devices. Both of the proposed solutions have significant benefits and drawbacks, and the Commission believes that with appropriate direction, cable operators will find the most efficient means of effectively supporting SDV. For example, the Commission recognizes that the economics of deploying an IP backchannel solution are different between those operators who have already or will soon deploy SDV, and those operators who will deploy the next generation of SDV hardware. The Commission does not wish to foreclose the possibility of an IP backchannel for those operators to whom it will add de minimis costs as the result of being included in future headend equipment. Conversely, for those operators who currently use SDV and have significant deployments of tuning adapters, the cost to retrofit TiVo's IP backchannel proposal may be prohibitive. Further, the Commission does not presume that these are the only two means of supporting SDV, and expect that some operators may choose other options, such as in-home IP signaling, that provide additional benefits to consumers. We do not foreclose any of these options so long as appropriate documentation is available to enable UDCPs to access SDV channels.

14. Subscribers must be able to use the devices they purchase at retail to access all of the linear channels that comprise the cable package they purchase. Providing retail navigation devices and leased navigation devices with equivalent access to linear programming at an equivalent service price is essential to a retail market for navigation devices. We also want to avoid making deployment of SDV unnecessarily costly. While use of IP-backchannel would not require consumers to purchase additional equipment, we recognize that mandating this approach could be costly for some cable operators. Moreover, we note that operators currently provide tuning adapters at no charge to consumers. Accordingly, pursuant to our authority under Section 629 of the Communications Act, we require cable operators to ensure that cable subscribers who use retail CableCARD navigation devices have satisfactory access to all linear channels, but we will not mandate a specific method by which cable operators must provide such access. We believe that this rule change will address the security concerns raised about the IP-backchannel proposal, as our rule will not require a cable operator to adopt an approach that it believes is insecure. To address the problems with tuning adapters identified by commenters, the satisfactory access standard will require cable operators to ensure that retail devices are able to tune at least as many switched digital channels as that operator's most sophisticated operator-supplied set-top box or four simultaneous channels, whichever is greater. Further, the satisfactory access standard will require the ability to tune and maintain the desired channel as long as it is being watched or recorded, and to do so reliably. Furthermore, we prohibit cable operators from presenting their customers with misleading information regarding retail devices' ability to tune switched digital channels. We adopt these requirements pursuant to Section 629 because we conclude that SDV support for retail devices is necessary to assure a retail market for navigation devices. We will continue to monitor the development of SDV and the access afforded to cable customers who use, or wish to use, retail navigation devices. If we find that customers who want to use retail set-top boxes do not have satisfactory and equivalent access to all of the linear channels that comprise the cable package to which they subscribe, we will revisit our decision here.

15. CableCARD Pricing and Billing. In the FNPRM, the Commission sought comment on a proposal to require cable operators to list the fee for their CableCARDs as a line item on subscribers' bills separate from their host devices. The Commission proposed this rule change as a means to inform customers about retail navigation device options and to enable them to compare the price of a retail device to the price for leasing a set-top box from their cable operator. The proposed rule also was intended to ensure that the price that subscribers pay for CableCARDs in retail devices is the same as the price that subscribers pay for CableCARDs that are affixed to leased devices. Proponents of the Commission's proposed rule suggest that separate billing will facilitate fair choice and promote competition, as a viable retail market depends on transparency, while opponents argue that such billing would be difficult and expensive to implement, with no benefit to subscribers. Proponents of the rule assert that Section 629 requires separate billing and prohibits cross-subsidization. Opponents of the rule point to Section 629(f), which states that “Nothing in this section shall be construed as expanding” the Commission's authority under the Communications Act. Those commenters assert that the proposed rule would be an expansion of the Commission's authority under the statutory rate provision, Section 623, which allows cable operators to aggregate their equipment costs and charge a standard average rate across their footprints.

16. Public Knowledge argues that the proposed rule does not go far enough. Public Knowledge suggests that in addition to requiring cable operators to separate the monthly fee for a CableCARD from the set-top box on a subscriber's bill, the Commission should also require cable operators to provide each subscriber with the aggregate amount the subscriber has spent on set-top box lease fees. Additionally, Public Knowledge argues that cable operators should be required to notify subscribers about the retail options that are available to them. In a similar vein, Montgomery County, Maryland suggests that the Commission allow state legislatures to adopt legislation that would require cable operators to sell the devices that they lease to ensure that consumers have more options to purchase navigation devices.

17. Opponents of the Commission's proposed billing rule assert that a separate billing requirement would only serve to confuse consumers and lead them to believe that their cable operators have added an extra fee to their bills. They also assert that this rule would arbitrarily burden subscribers who lease separated security devices as opposed to those who do not because currently all subscribers pay the same lease fee for a set-top box regardless of whether it has separated security. They argue that implementation of the billing rule would be costly for cable operators, as their billing systems are not designed to separate the cost of a CableCARD from the cost of the set-top box. NCTA and Arris assert that the availability of this information will not affect the retail market because the cost of CableCARDs has no effect on the retail market for set-top boxes.

18. Despite their opposition to the proposed rule as written, NCTA and others are not opposed to the purposes behind the rule, which are to treat retail and leased devices equivalently and encourage pricing transparency. As a compromise, NCTA has proposed that cable operators notify subscribers of the cost of CableCARDs on the operators' Web sites and yearly rate card notices. NCTA asserts that its proposal would serve the same purpose as the Commission's proposed rule without imposing expensive and confusing billing burdens on cable operators.

19. We conclude that NCTA's compromise solution will inform consumers about CableCARD costs and retail options adequately without imposing unnecessary burdens on cable operators. Therefore, we adopt a requirement that cable operators prominently list the fee for their CableCARDs as a line item on their Web sites (readily accessible to all members of the public) and annual rate cards separate from their host devices, and provide such information orally or in writing at a subscriber's request. These CableCARD lease fees must be uniform across a cable system regardless of whether the CableCARD is used in a leased set-top box or a navigation device purchased at retail. We are not convinced that NCTA's solution will ensure that cable operators are not subsidizing the costs of leased set-top boxes with service fees. Accordingly, we also adopt a rule that requires cable operators to reduce the price of packages that include set-top box rentals by the cost of a set-top box rental for customers who use retail devices, and prohibits cable operators from assessing service fees on consumer-owned devices that are not imposed on leased devices. These price reductions must reflect the portion of the package price that is reasonably allocable to the device lease fee. In the event that an interested party (including a consumer, local franchise authority, or device manufacturer) alleges a violation of this “reasonably allocable” standard, the Commission will consider in its evaluation whether the allocation is consistent with one or more of the following factors: (i) an allocation determination approved by a local, state, or Federal government entity; (ii) the monthly lease fee as stated on the cable system rate card for the navigation device when offered by the cable operator separately from a bundled offer; and (iii) the actual cost of the navigation device amortized over a period of no more than 60 months. These rule changes are well within our statutory authority under Section 629. Section 629 gives the Commission broad power to adopt regulations to assure the commercial availability of navigation devices and states that multichannel video programming distributors may lease their own devices, as long as “the system operator's charges to consumers for such devices and equipment are separately stated and not subsidized by charges” for multichannel video programming service. These minor rule changes will serve to ensure that cable operators are not subsidizing the costs of their set-top boxes via service charges and will serve to allow consumers to compare the costs involved in choosing between purchasing or leasing a navigation device. This prohibition on subsidies and increased transparency is vital to the continued development of a retail navigation device market, as it will allow subscribers to make informed economic decisions about whether they should purchase a navigation device at retail.

20. CableCARD Installations. In the FNPRM, the Commission expressed concern that CableCARD installation costs and policies may differ unjustifiably between retail devices and leased boxes. To address this situation, the Commission proposed requiring cable operators to allow subscribers to install CableCARDs in retail devices themselves if the cable operator allows its subscribers to self-install leased set-top boxes. Furthermore, the Commission proposed a rule with regard to professional installations that would require technicians to arrive with at least the number of CableCARDs requested by the customer.

21. Commenters who support adopting the proposed installation rule argue that individual users are more than capable of installing their own CableCARDs. According to these commenters, the installation consists of inserting a CableCARD and calling in to the cable operator to report a series of numbers that appear on an activation screen, which subscribers could easily do with basic instruction. Unfortunately, despite the apparent simplicity of installation, these individual subscribers comment that not all cable technicians are properly trained to install CableCARDs and they do not always arrive with functional CableCARDs; therefore it often takes several days and multiple installation appointments to get functional CableCARDs installed. According to TiVo, “the premise of `plug and play' was that a subscriber should be able to buy a device from a retailer, plug it into her cable connection, and have it work without the cable operator's intervention;” therefore, TiVo argues, until individual subscribers have the option to self-install their own CableCARDs, subscribers will not be able to purchase devices that are truly “plug and play.”

22. NCTA and CEA advocate a modification to the proposed rule that would require cable operators to allow self-installation of CableCARDs on any device for which the manufacturer provides detailed, step-by-step installation instructions. Several major cable operators, including Charter and Comcast, support the self-installation option so long as adequate installation instructions are provided by the manufacturer. Likewise, manufacturers such as Panasonic support the provision of Web-based installation walkthroughs as one means of fulfilling the goal of making step-by-step instructions available to consumers seeking to self-install CableCARDs. The few cable operator proponents do, however, request a four- to six-month phase-in period before this rule takes effect, during which time they will develop and implement necessary internal procedures and training that reflect the new policy.

23. Commenters including CEA/CERC and Panasonic suggest that cable operators should be required to permit retail outlets to sell CableCARDs and to assist in the installation at the point of sale. Commenters from the cable industry were not necessarily opposed to this option, but they did note that allowing retail stores to install CableCARDs at the point of sale would introduce certain business, technical, and operational hurdles, such as identifying the encryption technology that a cable operator uses in the specific subscriber's geographic location. Therefore, they suggest that the Commission encourage industry negotiations to explore this option, but they oppose adoption of a rule that mandates retail installation. TiVo, however, supports this proposal as one of the few means of fulfilling the true purpose of the CableCARD requirement, which is to encourage a competitive market for retail devices that can be purchased, taken home, and installed without the cable operator's intervention.

24. In addition to its other proposals, CEA seeks better enforcement of the CableCARD rules, including the new proposed installation rule. CEA suggests that empowering local franchising authorities to enforce the CableCARD rules would encourage cable operators to comply with the rules.

25. Time Warner Cable and Verizon assert that cable operators are best equipped to determine whether customers should be allowed to install their own CableCARDs. They argue that the CableCARD installation process is not straightforward, that consumers may not be equipped to install such equipment, and that the installations are not overly expensive. Verizon further argues that customers have shown no real demand to perform self-installation. Similarly, Cox submits that the low number of interested consumers does not justify development of costly support mechanisms for those who wish to self-install, unless the customer support burden shifts entirely to retail device manufacturers. Verizon also expresses skepticism that the Commission has authority to adopt such a rule.

26. We conclude that the best means of assuring the development of a retail market for navigation devices is to require cable operators to allow subscribers to self-install CableCARDs. We believe cable operators should have time to train staff and develop more robust customer support infrastructures and procedures, and provide nine months to comply for any operators that allow subscribers on any of their systems to self-install any cable modems or leased set-top boxes. We are not persuaded by arguments that cable operators could not support activation of retail CableCARD devices within this reasonable transition period. However, we are concerned that a cable operator that does not permit self-installation of any equipment that attaches to its network may not have the customer support infrastructures in place to handle self-installations and may need a longer transition period. Therefore, we will allow cable operators that do not have any self-installation support in place twelve months to phase in this self-installation requirement. We also require cable operators to inform their subscribers about the self-installation option when they request CableCARDs.

27. With respect to professional installations, we adopt our proposed rule requiring technicians to arrive with at least the number of CableCARDs requested by the customer. We require cable operators to make good faith efforts to ensure that all CableCARDs delivered to customers or brought to professional installation appointments are in good working condition and compatible with their customers' devices, and to allow subscribers to request CableCARDs using the same methods that subscribers can use to request leased set-top boxes. These rules are intended to solve the complaints in the record that professional CableCARD installations often require multiple appointments. We believe that requiring cable technicians to have CableCARDs in good working condition on hand when they are requested and allowing subscribers to self-install CableCARDs will decrease the number of required appointments dramatically. To address Time Warner Cable and Verizon's concerns that subscribers may not be properly equipped to self-install a CableCARD, our self-installation rule will apply only where device manufacturers or vendors provide detailed, device-specific instructions on how to install a CableCARD and the manufacturer's or vendor's toll-free telephone number within the packaging of the device and on the manufacturer's or vendor's Web site. At this time we will not adopt a rule requiring retail installation of CableCARDs; however, since devices will now contain instructions from manufacturers or vendors on self-installation and because such an action will decrease the burden on the cable providers, we encourage cable operators and consumer electronics retailers to reach agreement through continued private negotiations to achieve this type of consumer-friendly retail option.

28. In addition to empowering cable subscribers to install CableCARDs, we will also make it easier for consumers to file complaints relating to cable customer premises equipment (including CableCARDs, tuning adapters, and set-top boxes) with the Commission by adding a specific reference to CableCARDs and other customer premises equipment to the process for filing complaints on our Web site. If a cable operator chooses to provide satisfactory access to SDV channels for retail devices by means of customer-premises equipment such as a tuning adapter, this process will encompass complaints relating to such equipment as well as complaints relating to CableCARDs. We will strictly enforce our navigation device rules in order to ensure proper support for CableCARD devices. We conclude that this streamlined complaint process makes CEA's suggestion that the Commission provide local franchising authorities with the authority to enforce the CableCARD rules unnecessary, and will allow for more consistent enforcement of our CableCARD rules nationwide. In addition, we will develop new consumer education materials specifically discussing the availability of cable boxes at retail as an alternative to leasing a cable box from the cable operator. Within the next few weeks, these materials will be available on our Web site and will be provided by our call center to those customers who lack Web access.

29. The changes we adopt herein will improve the consumer experience substantially, as cable subscribers will no longer have to schedule multiple installation appointments for CableCARD installations. Furthermore, these rule changes will place only a de minimis burden on cable operators, because the device manufacturer's or vendor's self-installation instructions will include the manufacturer's or vendor's toll-free telephone number directing customer questions to the manufacturer or vendor and not to the cable operator. We disagree with Verizon's assertion that the Commission does not have the authority to adopt such a rule, as we believe that this rule falls squarely within our authority under Section 629. The need to schedule multiple installation appointments unquestionably is an impediment to realizing a competitive retail market for navigation devices, and the record is replete with comments from frustrated consumers who have had to schedule multiple appointments with technicians due to CableCARD installation problems. We believe that Congress's intent in adopting Section 629 was to ensure that cable operators treat retail navigation devices in the same manner that they treat leased navigation devices. Accordingly, we believe that we have clear statutory authority under Section 629 to adopt this self-installation rule.

30. Multi-stream CableCARDs. A Multi-stream CableCARD is a single CableCARD that is capable of decrypting multiple channels, thereby allowing consumers to record one channel while simultaneously watching another channel. Original CableCARDs were only capable of decrypting a single stream, therefore requiring devices with multiple tuners, such as most digital video recorders, to include two CableCARD slots. With the release of the Multi-stream CableCARD Interface Specification in 2005, device manufacturers obtained the ability to receive up to six program streams though a single CableCARD. Multi-stream CableCARDs, now called M-Cards, can also be used by older devices that had been designed for single-stream CableCARDs. Operators began deploying M-Cards shortly after the adoption of the Multi-stream CableCARD Interface Specification, and today retail devices often require them. In the FNPRM, the Commission proposed requiring cable operators to offer M-Cards upon request, to reduce the equipment fees paid by subscribers by enabling them to use only one CableCARD per device rather than two or more.

31. Commenters were generally supportive of the proposed rule, though numerous commenters suggested the Commission require the provisioning of M-Cards by default, rather than on request. TiVo, Public Knowledge, and CEA all explicitly suggested this approach. Arris and Tivo note that all leased set-top boxes include M-Cards, and that newer retail devices require M-Cards to function properly. They further claim that the record demonstrates that retail devices are left to use recycled single-stream cards that may not work, while leased set-top boxes are outfitted with new, functioning M-Cards. NCTA also states they do not object to requiring cable operators to provide an M-Card to any subscriber who requests one, though they assert that certain devices work better with single-stream CableCARDs, and therefore cable operators should also have the discretion to deploy them to their subscribers.

32. Only Verizon and John Staurulakis, Inc. assert that the Commission should not require cable operators to deploy M-Cards. They assert that such a requirement would be costly and unnecessary because so few subscribers actually use CableCARDs. Verizon further states that the marketplace is already working to increase the availability of M-Cards for those few subscribers. Comcast goes further, stating that M-Cards have been widely used since 2007, and cable operators have sufficient supplies of multi-stream CableCARDs to meet customer demand for them. NCTA also suggests that the Commission adopt the multi-stream CableCARD rules, which would test for compatibility between UDCPs and M-Cards, that NCTA and the CE industry proposed in 2006.

33. We conclude that the best step we can take in this regard to assure the development of a retail market for navigation devices is to require cable operators to provide multi-stream CableCARDs by default, unless a subscriber expressly requests a single-stream CableCARD. All new devices require multi-stream CableCARDs, and multi-stream CableCARDs have been standard equipment since 2007. Therefore, requiring cable operators to provide multi-stream CableCARDs by default will conform more closely to the concept of common reliance, provide improved customer experience, and impose little, if any, costs on the industry, as our examination of the record indicates that CableCARD manufacturers are no longer making single stream CableCARDs to sell to cable operators. We also adopt the multi-stream CableCARD rules that NCTA and the CE industry proposed in 2006, as they are necessary to update our rules to conform with the current state of CableCARD testing procedures.

34. CableCARD Device Certification. In the FNPRM, the Commission proposed a rule change intended to streamline the process of CableCARD device certification. The proposed rule would prohibit CableLabs or other qualified testing facilities from refusing to certify Unidirectional Digital Cable Products for any reason other than a failure to comply with a device conformance checklist referenced in the Commission's rules. The Commission proposed the rule change based on complaints regarding the cost, complexity, and restrictiveness of device certification. The Commission also committed to “consider any other proposed solution to streamline the CableCARD certification process to facilitate the introduction of retail navigation devices.”

35. Comments regarding CableCARD device certification indicate that the proposed rule would simply codify the CableCARD certification process as it exists today. No commenter opposes the proposed rule, although certain commenters argue that the proposed rule would not do enough to protect device manufacturers. In addition, certain commenters argue that the proposed device certification rule is not rigorous enough to assure a competitive device market. Specifically, CEA and Public Knowledge each encourage the Commission to extend the device certification rule to apply to CableCARD-compatible computers and computer peripheral devices and to limit the terms that CableLabs may dictate in licensing agreements. They assert that these steps will allow start-up companies like SageTV to develop their devices, and that the proposed rule will not be effective without this extension. Indeed, NCTA and MPAA acknowledge that the Commission's proposed rule would have no effect on the SageTV certification problems that the Commission highlighted in the FNPRM.

36. In a similar vein, IPCO and Nagravision encourage the Commission to streamline the certification process for the CableCARD separated security modules, as the Commission does not have a rule that prescribes a certification process for the CableCARD itself. They assert that CableLabs has delayed certification of competitive separated security modules, which limits the companies' ability to develop affordable whole-system solutions to sell to cable operators. They reason that, if device manufacturers can manufacture and test their own CableCARDs in conjunction with their retail devices, they will be able to develop products more rapidly.

37. We conclude that the best step we can take in this regard to carry out our statutory mandate under Section 629 is to (i) modify our rules to reflect updated testing procedures, and (ii) adopt the proposed rule that prohibits CableLabs or other qualified testing facilities from refusing to certify UDCPs for any reason other than a failure to comply with the conformance checklists referenced in our current rules. These rule changes should encourage navigation device manufacturers to build competitive devices by eliminating unnecessary delays and costs associated with device testing, while continuing to recognize the importance of protecting cable networks and service. Based on the comments we have received about the certification process, we believe that these rule changes do little more than codify the certification process as it exists today. These changes require UDCP manufacturers and qualified test facilities to proceed in accordance with Uni-Dir-ATP-I02-040225: “Uni-Directional Receiving Device Acceptance Test Plan,” M-UDCP-PICS-I04-080225, and TP-ATP-M-UDCP-I05-20080304. The Director of the Federal Register approves this incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. You may obtain a copy from Cable Television Laboratories, Inc., 858 Coal Creek Circle, Louisville, Colorado 80027, www.cablelabs.com/opencable/udcp , (303) 661-9100. You may inspect a copy at the Federal Communications Commission, 445 12th St., SW., Reference Information Center, Room CY-A257, Washington, DC 20554, (202) 418-0270 or at the National Archives and Records Administration (NARA). For information of the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.

38. Comments reflect that while the certification process is costly, CableLabs's device testing is conducted in a professional manner and is important to ensure that CableCARD devices work properly. CEA claims generally, however, that certain CableCARD licensing terms may go beyond what is allowed under Sections 76.1201 and 76.1204 of our rules. They assert that these licensing terms limit innovation. To the extent that any interested party has concerns that an aspect of the CableCard licensing regime violates Sections 76.1201 through 76.1204 of the Commission's rules, that party may allege a specific violation of the Commission's rules pursuant to Section 76.7 of our rules.

39. We decline to adopt IPCO and Nagravision's proposal to extend certification rules to the CableCARD security modules by dictating the specific testing procedures that CableLabs must use to certify CableCARD security modules. CableCARDs are an important part of protecting signal theft and protecting cable networks. Section 629(b) prohibits the Commission from adopting regulations that would jeopardize the security of cable systems or interfere with a cable operator's right to prevent theft of service. Therefore, we believe that it would be prudent to defer to CableLabs's policies on certifying whether the CableCARDs themselves, which are the lynchpins of the conditional access scheme, are robust enough to protect cable systems and prevent theft of service.

40. Interface Requirements. The Commission's rules require cable operators to include an IEEE 1394 interface on all high-definition set-top boxes that they acquire for distribution to customers. IEEE 1394, also known as Firewire, is an external serial data connection that allows for audio and video data transfers. The Commission adopted a requirement from the MOU to provide an IEEE 1394 interface on all high-definition set-top boxes as a means of enabling a market for devices which interact with the operator-supplied set-top box. In the FNPRM, the Commission proposed to give cable operators greater flexibility in deciding which type of interface to include on the set-top boxes that they lease. Set-top box manufacturers and cable operators suggested that alternative interfaces could perform the same functions and have wider consumer adoption than the IEEE 1394 interface. The Commission also proposed to clarify that operators must enable bi-directional communication over these interfaces. The proposed clarification would require the interfaces to be able to receive remote-control commands from a connected device and deliver video in any industry-standard format to ensure that video made available over these interfaces can be received and displayed by devices manufactured by unaffiliated manufacturers ( i.e., manufacturers not owned by or under license of the leased set-top box vendor or cable operator) and sold at retail. The record generally supported replacing the IEEE 1394 interface requirement with a rule that would instead require cable operators to include an IP-based connection on all high-definition set-top boxes that they acquire for distribution to customers. The commenters also agreed that the Commission does not need to define the physical interface ( e.g., IEEE 1394, Ethernet, Wi-Fi, or MoCA) used to transfer the IP data. With respect to functionality, commenters disagreed on whether the Commission should set a baseline for functionality of that interface.

41. Certain commenters suggested that the Commission should adopt baseline standards to define a “functional” IP connection on a set-top box. Various industry associations have developed suites of standards that include functionality we might rely on. For example, Panasonic suggested that the Commission require that the IP connection pass through “OpenCable Host Thin Chassis Device” remote commands. OpenCable, branded for consumers as tru2way, was developed by CableLabs, is a set of standards defining a common interface for supporting interactive cable services. As the full implementation, branded for consumers as tru2way, has seen limited adoption in retail devices, the Host Thin Chassis Device standard was developed to provide reduced costs while simultaneously enabling two-way communication with CableCARDs. Among the component parts of the Host Thin Chassis Device standard are specifications for passing remote control commands entered with the TV remote control through to the set-top box.

42. CEA and the Digital Living Network Alliance (“DLNA”) each suggest that the Commission require that devices follow the DLNA guidelines. DLNA standards have been or are being developed to enable widespread network-based connectivity for a wide variety of devices, from handheld viewers to media servers. This focus on broad interoperability has resulted in standards which permit the addition or subtraction of various functional components, including remote control commands and content formats. Three consumers suggested that the Commission require that the interfaces pass through closed captioning data. The 1394 Trade Association and Texas Instruments commented that each leased set-top box should be required to play back any video that is sent to it over an IEEE 1394 interface.

43. Comcast, Verizon, and NCTA each argue that defining “functional” would put a large burden on cable operators. They assert that standards organizations are still working to define standards for functionality over IP-based connections, and that cable operators could not comply with a functionality requirement in the near future. They assure the Commission that the market will determine the specific type of functionality that consumers desire, and therefore urge the Commission not to lock operators into a certain defined set of functions, lest the Commission make the same mistakes it made with regard to the IEEE 1394 interface requirement.

44. We conclude that the best step we can take in this regard to fulfill our statutory mandate under Section 629 is to modify our interface rule to require cable operators to include an IP-based interface on all two-way high-definition set-top boxes that they acquire for distribution to customers without specifying a physical interface. IP has overwhelming marketplace support and serves the same purpose that our IEEE 1394 connection requirement was intended to serve. We agree with commenters that the method of physical transport ( e.g., Ethernet, Wi-Fi, MoCA, or IP implemented over IEEE 1394) is not relevant in this situation, as we predict based on our examination of the record in this proceeding that consumers will use network adapters to choose the physical transport method that they prefer for networking their devices, in furtherance of the goals of Section 629.

45. Contrary to Comcast, Verizon and NCTA's assertions, we believe that it is important to define a baseline of functionality to ensure that consumers who network their devices and device manufacturers can rely on networked devices' ability to communicate with leased set-top boxes. However, as with the physical interface itself, we find that it is appropriate, at this time, to refrain from specifying the exact manner in which this baseline of functionality is to be implemented. Accordingly, we modify our rules to require that the IP-based connection deliver the video in a recordable format ( e.g., MPEG-2, MPEG-4, h.264), and pass through closed captioning data in a standard format. We also believe more advanced functionalities are necessary to provide a foundation for a retail market of navigation devices that are connected to leased set-top boxes with limited capabilities. Those functionalities include service discovery, video transport, and remote control command pass-through standards for home networking. While these functionalities may exist in some form today, there is considerable work ongoing in industry standard bodies to provide those functionalities in a manner designed for IP-based and home network solutions. We, therefore, do not mandate that these additional functionalities be supported by cable operators immediately. We do, however, wish to ensure that consumers benefit from these additional functionalities in a timely manner, and require operators to provide these additional functionalities by December 1, 2012, but do not mandate a particular means by which these functionalities are to be provided.

46. Promoting Cable's Digital Transition. The integration ban, which went into effect in 2007, is designed to support the market for retail navigation devices by creating an incentive for cable operators to fully support CableCARDs, drive costs down through economies of scale, and encourage cable operators to strive to improve and maintain the CableCARD system. In the FNPRM, the Commission proposed to allow operators to place into service new one-way navigation devices (including devices capable of processing a high-definition signal) that perform both conditional access and other functions in a single integrated device provided that the devices do not perform recording functions. The integration ban raises the cost of set-top boxes for cable operators, which discourages operators from transitioning their systems to all-digital. Transitioning to an all-digital cable system allows operators to make more efficient use of spectrum capacity, allowing the operators to dedicate more of their spectrum to broadband and other services. The impetus for this proposed rule change was to remove economic barriers that discourage cable operators from transitioning their systems to all-digital.

47. The rule proposed in the FNPRM would still require operators to offer CableCARDs to any subscribers who request them and to commonly rely on CableCARDs for any digital video recorder and bidirectional devices that they offer for lease or sale. In limiting the proposed rule's applicability to devices with less functionality, the Commission attempted to balance the goal of easing the financial burdens associated with transitioning to digital cable systems with the benefits that stem from common reliance. The Commission also sought comment on whether the potential effect on the retail market supports limiting any relief to smaller cable systems with activated capacity of 552 MHz or less. Some commenters additionally suggested that the integration ban should be eliminated entirely.

48. Exempting Limited Capability High Definition Set-Top Boxes. NCTA, ACA, Comcast, and Time Warner support the proposed rule and suggest that it will not impact the limited retail market for navigation devices that currently exists. Motorola adds that HD capability is commonplace rather than advanced and, therefore, the proposed rule would have no effect on the retail market for navigation devices, as the competitive devices available at retail have advanced functionality such as Internet connectivity and recording capability. Finally, proponents of the rule change assert that it will allow cable operators to deploy less expensive set-top boxes which will ease consumers' financial burden when cable operators transition to digital systems. BBT suggests that, for the sake of regulatory certainty, the Commission should not take a piecemeal approach in applying the integration ban suggesting that the Commission either abandon the integration ban altogether or not at all.

49. Public Knowledge and CEA argue that the proposed rule would undermine the goals of common reliance. They assert that the proposed rule would limit cable operators' incentives to support CableCARDs, and that the current state of CableCARD support suggests that cable operators need more, not fewer, incentives to support CableCARDs. They assert also that the Commission still does not have reliable data regarding the cost of relying on CableCARDs or the economic effect CableCARD exemptions have on the retail market. CEA and Public Knowledge argue that, without such data, the Commission cannot accurately balance the public interest benefits of the integration ban against the benefit of an exemption.

50. Based on our examination of the record, we will adopt the limited exemption to the integration ban proposed in the FNPRM. As the Commission explained in 2005, common reliance ensures that cable operators have incentives to make their services as accessible as possible to CableCARD devices. We find that even if cable operators are allowed to deploy integrated one-way devices they will still have incentives to ensure that CableCARD devices are able to receive their services because all two-way, digital video recorder (“DVR”) and Internet-connected devices deployed by cable operators will still be subject to the integration ban. Furthermore, as NCTA highlights, cable operators have deployed more than 40 times as many CableCARDs in their own separated security devices than in devices purchased at retail, and we believe that the former devices will remain in service for years to come. We conclude that this decision will not undermine the goal of common reliance, as we believe that the majority of operator-leased devices will continue to commonly rely on CableCARDs, and therefore cable operators will continue to have adequate incentives to support CableCARDs in retail devices. Allowing operators to deploy one-way devices with integrated security will help lower the costs of set-top box rentals to subscribers and allow operators to dedicate more of their spectrum to broadband without undermining the effectiveness of the integration ban. In this vein, while we recognize that the inclusion of an IP-based home-networking connection would provide additional functionality, we believe that the costs to consumers of imposing the interface requirement would outweigh the potential benefits. For these reasons, we exempt one-way set-top boxes from the Commission's integration ban and, correspondingly, our interface requirements.

51. Limiting the Proposed Exemption to Small Systems. We decline to put any limitation on the size or capacity of the systems to which the modified rule applies. While no commenter supports adopting an exemption limited to small cable operators as its preferred course of action, Public Knowledge, which encourages the Commission not to adopt any exemption to the integration ban, alternatively suggests that the Commission limit the rule's applicability to small cable systems. Public Knowledge reasons that such a limitation would mitigate the detrimental effects that such a rule would have on common reliance and the development of a retail market for navigation devices. Cable operators oppose such a limitation and assert that limiting the relief would be akin to not offering relief at all. They argue that economies of scale are necessary to encourage manufacturers to develop inexpensive devices with integrated security. They argue that small system operators will not be able to achieve the economies of scale that are necessary to make this relief effective. They also assert that limiting the relief to small systems could unfairly harm subscribers who happen to live in areas with large systems because consumers would benefit if large systems were to transition to all-digital as well. For the same reasons that these commenters present, we agree that a small-system limitation would undermine the benefits of the rule change.

52. Ending the Integration Ban. We disagree with the arguments of NCTA and cable operators that the Commission should abandon the integration ban altogether. They assert that the integration ban is an expensive, discriminatory requirement with no consumer benefit. Cable operators reason that ending the integration ban would decrease the costs of transitioning to all-digital systems and would lead to increased availability of broadband. Finally, they argue that terminating the integration ban would reduce set-top box costs for all subscribers. In addition to the arguments summarized above, opponents of ending the integration ban assert that it would discourage cable operators from negotiating in good faith in developing a successor technology to CableCARD, as cable operators would have no economic incentive to work to develop such a technology in a timely fashion. We agree. The integration ban continues to serve several important purposes—better support for CableCARD devices, economies of scale for CableCARDs, and economic incentives to develop better solutions. Ending the integration ban before a successor standard is developed would undermine the market for retail navigation devices.

53. Two-Way Negotiation Reporting. As the Commission discussed in the FNPRM, in 2005 the Commission adopted a requirement that NCTA and CEA file reports every 60 days regarding the status of negotiations on a bidirectional CableCARD standard. As noted above, the six largest cable operators and numerous consumer electronics manufacturers negotiated an agreement for bidirectional compatibility that continues to rely on and builds on the standards for CableCARDs by using a middleware-based solution called “tru2way.” As the cable industry and the consumer electronics industry have concluded their negotiations on a bidirectional CableCARD standard, we do not believe it is necessary for those parties to continue to file status reports regarding those negotiations, and we therefore eliminate that requirement. As we will still require cable operators to commonly rely on CableCARDs in certain set-top boxes, we will retain the requirement that Comcast Corporation, Time Warner Cable, Cox Communications, Charter Communications, and Cablevision file quarterly reports detailing CableCARD deployment and support.

54. Petitions for Reconsideration. The Commission also has before it eight petitions for reconsideration in this docket. NCTA, DIRECTV, Genesis Microchip, Inc., MPAA, Broadcast Music, Inc. and the American Society of Composers, Authors and Publishers (“BMI and ASCAP”), and the National Music Publishers' Association et al. (“NMPA”) separately filed petitions for reconsideration of the Plug and Play Order, while NCTA and MPAA also petitioned for reconsideration of the Commission's Sua Sponte Reconsideration Order. As noted below, many of these petitioners seek reconsideration of the Commission's encoding rules. Our encoding rules prescribe whether and how MVPDs may mark different forms of content ( e.g., broadcast, non-premium subscription, pay television, video-on-demand, etc. ) to limit the number of times the content may be copied. In addition to the petitions for reconsideration of orders adopted in the plug-and-play dockets, the Commission has before it a petition for reconsideration filed by TiVo, Inc., which is mooted by the rule changes adopted in this order.

55. NCTA. Our device certification rules allow device manufacturers to self-certify CableCARD devices once they have received CableLabs certification for any certified CableCARD device. NCTA urges the Commission to reconsider the rule that a manufacturer's certified first “product” eliminates the need for its first television set to be tested if the manufacturer has already received certification for a set-top box. NCTA asserts that digital televisions (“DTVs”) are more complex than DVR devices or other products, and that a manufacturer's first television should be tested in order to ensure that consumers' televisions are able to receive digital cable programming. We agree. As NCTA explains in its petition for reconsideration, “unless the first tested UDCP is a DTV, there will be no real test that the UDCP actually and clearly displays encrypted programming, [emergency alert system] messages, [Program and System Information Protocol] information, and closed captions so there is no assured compliance with all of the relevant standards in the agreed-upon Joint Test Suite.” We conclude that making such testing a part of our rules is necessary to ensure that new devices are built to comply with the Commission's rules. Accordingly, we grant NCTA's petition for reconsideration with respect to this issue, and modify our rules to clarify that a manufacturer may not self-certify its first DTV.

56. Next, NCTA asserts that the Commission's rules permit too much flexibility in defining a qualified testing facility, and would allow unqualified organizations to test plug and play products because our rules do not require test facilities to be impartial or have appropriate testing equipment. NCTA urges us to define “qualified testing facility” more precisely. CEA disagrees, asserting that NCTA bases its assertions on unfounded security concerns. We agree with NCTA's assertions that it is important for our rules to require that qualified testing facilities are impartial organizations whose employees have a detailed understanding of the Joint Test Suite for CableCARD products. We do not believe that NCTA's security concerns are unfounded, nor do we believe that NCTA's suggested rule change will hinder independent testing facilities from becoming “qualified testing facilities.” Therefore, we adopt NCTA's recommendation by modifying our rules to specifically require testing facilities to be impartial and have appropriate testing equipment. To the extent that there are disagreements regarding whether specific testing facilities meet the standards set forth in our modified rule, we will consider such disagreements on a case-by-case basis.

57. In its final critique of the Plug and Play Order, NCTA takes issue with the language of certain Commission rules. NCTA asserts that the Commission's rules should unequivocally state that digital cable ready products must “pass” applicable tests, rather than the current requirement which merely requires that the devices be subject to testing. NCTA also requests that we amend our rules to clarify that a cable operator may carry more than 12 hours of programming metadata (Program and System Information Protocol or “PSIP” data) if it so chooses, and shall only be required to carry PSIP data that conforms to the standards adopted by the Advanced Television Systems Committee for transmission of that data. As these requests will clarify the Commission's intent in the Plug and Play Order, we adopt them without exception.

58. NCTA's petition for reconsideration of the Sua Sponte Reconsideration Order requests that the Commission clarify that programming that is not retransmitted “substantially simultaneously” to the time it is broadcast is not considered “Unencrypted Broadcast Television” under our encoding rules. Currently, our rules define “Unencrypted Broadcast Television” as the retransmission of any service, program, or schedule or group of programs that is made by a terrestrial television broadcast station in the clear ( i.e., without any encryption). NCTA asserts that it is likely that this definition is broader than the Commission intended. NCTA states, as an example, that the omission of the term “substantially simultaneously” prevents it from placing copy protections on VOD content that was originally delivered over the air because it is a retransmission of a program that was initially made by a terrestrial television broadcast station. With our encoding rules, we intend to reflect consumer expectations that they may freely copy unencrypted broadcast programming as it airs. We also intend to reflect that consumers do not have the expectation that they may freely copy all content simply because it was available over the air at one point during the history of television broadcasting. Therefore, we agree with NCTA's assertion that we should add the phrase “substantially simultaneously” back into the definition of “Unencrypted Broadcast Television,” for the reason that NCTA provides.

59. DIRECTV. DIRECTV urges the Commission to close what it calls the “broadband loophole” in the encoding rules. According to DIRECTV, cable operators and telcos will be able to subvert the Commission's encoding rules by delivering their video offerings over the Internet, which are specifically exempt from our encoding rules. We understand DIRECTV's concern, but there is no evidence that any MVPD is using Internet-based delivery to subvert our encoding rules. If DIRECTV has evidence that this concern is more than hypothetical and is harming consumers, we urge the company to file a petition for declaratory ruling or a petition for rulemaking. Therefore, we deny this portion of DIRECTV's petition for reconsideration.

60. DIRECTV next argues that the Commission should define minimum standards that include an IEEE 1394 interface. DIRECTV is concerned that television manufacturers could build sets with IEEE 1394 connections that support a cable-only version of IEEE 1394, and prevent consumers from connecting satellite boxes to their television sets. Given the rule change that we adopted in Section III.B above to remove the IEEE 1394 output requirement, and the limited consumer adoption of IEEE 1394 outputs on television sets, we dismiss DIRECTV's petition for reconsideration as moot on this point.

61. DIRECTV also takes issue with the Commission's decision to provide CableLabs with the authority to approve and reject content protection technologies for set-top box outputs and to license DFAST technology, which is the content protection scheme used between CableCARDs and UDCPs. DIRECTV's objections are based on a concern that CableLabs could use its licensing power for anti-competitive purposes against DIRECTV's services and devices by preventing DIRECTV devices from using DFAST or rejecting DIRECTV's preferred content protection technologies. The intervening years since the adoption of the Plug and Play Order have demonstrated that these concerns are without merit. Indeed, as of June 30, 2003, 20.4 million households in the U.S. subscribed to DBS service; as of June 2010, that number increased to over 33 million, and DIRECTV has not established that CableLabs has rejected any content protection technology to DIRECTV's detriment. Furthermore, we have invited DIRECTV and others to cooperate with the Commission as we seek to develop a successor technology to CableCARD that would apply to all MVPDs. Accordingly, we deny DIRECTV's petition for reconsideration.

62. Genesis Microchip. Genesis Microchip takes issue with the Commission's requirement that a DVI or HDMI interface be included on a digital cable ready device. Genesis Microchip asserts that DVI and HDMI were not developed by standards development organizations such as IEEE and ANSI, and are not available on a non-discriminatory basis. Genesis Microchip also asserts that the Commission's requirement violates the Administrative Procedure Act. Opponents to Genesis Microchip's petition for reconsideration point out correctly that the Commission addressed Genesis Microchip's arguments in the Plug and Play Order, stating that “the technology underlying these specifications is widely available in the marketplace today” and that “the adopter agreements for these technologies are freely offered on non-discriminatory terms.” Furthermore, HDMI is a ubiquitous output, available on an estimated one billion devices, and we are convinced that Genesis Microchip's objections are not supported by marketplace reality. Therefore, we deny Genesis Microchip's petition for reconsideration.

63. MPAA. MPAA seeks reconsideration of four points in the Plug and Play Order. First, MPAA asserts that the Commission should mandate that all digital cable ready devices be built with the capability to recognize and honor video programming that is encoded with a request to remotely disable selected audio/video outputs, also known as “selectable output control.” MPAA believes that selectable output control functionality is essential to protect content and facilitate future business models that take advantage of selectable output control functionality. We do not believe that such a mandate is necessary. In May 2010, the Commission's Media Bureau released an order granting in part MPAA's request for waiver of the prohibition on the use of selectable output control for certain high-value films in order to support a new business model of delivering early-release films over MVPD systems to consumers. As MPAA argued in support of that waiver, “the use of SOC would have no impact whatsoever on the ability of existing [consumer electronics equipment] to work in exactly the same fashion that such devices work today.” While it is possible that consumer electronics manufacturers may want to build devices with SOC in order to be compatible with future business models like the early-release film model, as they are free to do under our rules, we do not believe that it is necessary to require such functionality to protect high-value content or ensure the success of such future business models. Therefore, we do not believe that it is necessary to mandate that such functionality be built into consumer electronics devices, and we deny MPAA's petition for reconsideration with respect to this issue.

64. Second, MPAA would like Subscription VOD designated as a defined business model. Subscription VOD is a video-on-demand service that requires customers to subscribe to a service to gain access to the on-demand programming. In the Plug and Play Order, the Commission classified Subscription VOD as an Undefined Business Model, in order to “allow [* * *] SVOD to more fully develop as a program offering in the marketplace.” MPAA asserts that because the Commission did not explicitly adopt a rule that allows cable operators to prohibit their subscribers from copying Subscription VOD, the Commission will stifle the development of the service. Starz Encore Group originally opposed this petition, arguing that the Commission's flexible rules would encourage SVOD to flourish, but later withdrew its opposition based on its new position that the “Undefined Business Model” public notification process is “difficult and cumbersome * * * for cable operators to navigate.” We conclude that MPAA's concerns were unfounded, and that the procedures agreed upon in the MOU are sufficient to meet the needs of content owners, MVPDs, and their subscribers. As contemplated in the Plug and Play Order, Subscription VOD services have thrived in the marketplace, as Starz On-Demand, HBO On-Demand, Cinemax On-Demand, and Showtime On-Demand are all popular services available to consumers. Subject to the review process for Undefined Business Models set forth in Section 76.1906 of our rules, content providers and MVPDs are free to negotiate the terms for how such business models are encoded. To the extent that any interested party has specific problems with the current state of the encoding of any SVOD service, our rules set forth procedures for filing complaints regarding how such content is encoded. Accordingly, we deny MPAA's petition for reconsideration with respect to this issue.

65. Third, MPAA seeks simplified procedures for announcing and challenging the launch of an Undefined Business Model for content encoding purposes. When an entity launches a new video programming service that is not defined in our encoding rules, that entity must announce its launch publicly, describe the service, and explain how it will be encoded for recording purposes. Interested parties may then challenge the encoding terms for up to two years after the announcement of the service. MPAA's challenge stems from a concern that Undefined Business Model announcements will lead to regulatory uncertainty because numerous MVPDs will be required to make announcements regarding these new business models, and that the window for accepting such challenges is too long. We disagree. This rule has been in effect for over six years, and the Commission has not received a single challenge regarding the encoding rules for an undefined business model. Accordingly, we conclude that MPAA's speculative challenge is unfounded.

66. Fourth, MPAA seeks clarification that Section 76.1908(a), which allows MVPDs to maintain undistributed copies of audio-visual content that is encoded in any way the MVPD chooses, does not nullify contractual obligations between MVPDs and content providers. MPAA is correct in its assertion that the Commission did not intend that MVPDs be allowed to use Section 76.1908(a) of the Commission's rules to make copies of “Copy Never” content on a PVR in a consumer's home. Therefore, we clarify that Section 76.1908(a) does not permit MVPDs to make copies of content that would violate agreements between content owners and MVPDs.

67. Finally, MPAA seeks review of the Commission's Sua Sponte Reconsideration Order on the same grounds that NCTA does. For the same reasons provided in our consideration of NCTA's petition above in paragraph 57, MPAA's petition is granted with respect to this issue.

68. BMI and ASCAP. BMI and ASCAP have filed a petition for reconsideration seeking a declaration that performance rights organizations are allowed to decrypt content that has been encrypted, when used solely for the purpose of monitoring and tracking transmissions of audiovisual works for royalty purposes. We do not believe that a rule change is necessary for such a narrow exception of our rules, and we agree with the Home Recording Rights Coalition that the Commission does not have the authority to grant a waiver of the Digital Millennium Copyright Act's prohibition on circumventing content encryption. Accordingly, we deny BMI and ASCAP's petition for reconsideration.

69. NMPA. The National Music Publishers Association seeks reconsideration of the Commission's decision not to require output controls on digital audio outputs. NMPA asserts that unprotected digital audio outputs will contribute to illegal copying, and that the Commission's decision not to require content protections on digital audio outputs violates copyright concerns. We continue to believe that our existing treatment of audio outputs is necessary to protect legacy devices that do not have protected digital connections. Moreover, NMPA provides no evidence that illegal copying of the audio channel of cable television programming is anything more than a speculative problem. Accordingly, we deny NMPA's petition for reconsideration.

70. TiVo. On July 27, 2009, TiVo filed a petition for reconsideration of the Commission's decision that our then existing rules did not require cable operators to provide UDCPs with access to switched digital channels. Due to the rule change that we adopt in Section III.A.1 above, which requires cable operators to provide UDCPs with access to switched digital channels, we dismiss TiVo's petition as moot.

71. Conclusion. The steps we take in this order represent inexpensive reforms that will remove the disparity in the subscriber experience for those customers who choose to purchase a retail navigation device as opposed to leasing the cable provider's set-top box. These steps will help to develop a retail market for navigation devices during the interim period before a successor solution is developed and implemented for all MVPDs. While we are optimistic about the prospects of a successor technology, we must also be pragmatic about harnessing realized solutions. Therefore, until a successor technology is actually available, the Commission must strive to make the existing CableCARD standard work effectively.

72. Procedural Matters. Paperwork Reduction Act Analysis. This Order adopts new or revised information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. The requirements will be submitted to the Office of Management and Budget (OMB) for review under section 3507 of the PRA. The Commission will publish a separate notice in the Federal Register inviting comment on the new or revised information collection requirement(s) adopted in this document. The requirement(s) will not go into effect until OMB has approved it and the Commission has published a notice announcing the effective date of the information collection requirement(s). In addition, we note that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we previously sought specific comment on how the Commission might “further reduce the information collection burden for small business concerns with fewer than 25 employees.” We find that the modified information collection requirements must apply fully to small entities (as well as to others) to ensure compliance with our CableCARD rules, as described in the Order.

73. Final Regulatory Flexibility Analysis. As required by the Regulatory Flexibility Act, the Commission has prepared a Final Regulatory Flexibility Analysis (“FRFA”) relating to this Report and Order. The FRFA is set forth in Appendix A.

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

75. Additional Information. For additional information on this proceeding, contact Steven Broeckaert, Steven.Broeckaert@fcc.gov, or Brendan Murray, Brendan.Murray@fcc.gov, of the Media Bureau, Policy Division, (202) 418-2120.

76. For additional information concerning the information collection(s) contained in this document, contact Cathy Williams at (202) 418-2918, or via the Internet at PRA@fcc.gov.

77. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Fourth Further Notice of Proposed Rule Making ( FNPRM ). The Commission sought written public comment on the proposals in the FNPRM, including comment on the IRFA. No commenting parties specifically addressed the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

78. Need for, and Objectives of, the Rules. The need for FCC regulation in this area derives from deficiencies in our rules that prevent consumer electronics manufacturers from developing video navigation devices (such as televisions and set-top boxes) that can be connected directly to cable systems and access cable services without the need for a cable-operator provided navigation device. The objectives of the rules we adopt are to support a competitive market for navigation devices by increasing customer service and by improving audio-visual output functionality on cable-operator-leased devices.

79. Specifically, we adopt rules that (i) require cable operators to provide customer and technical support for retail devices to access switched digital channels; (ii) require that equivalent prices be charged for CableCARDs for use in cable-operator-provided set-top boxes and in retail devices, and that require the pricing information and billing of the CableCARD to be more transparent; (iii) simplify the CableCARD installation process; (iv) require cable operators to provide their subscribers with CableCARDs that can tune multiple streams of programming; and (v) streamline the CableCARD device certification process by modifying our rules to reflect updated testing procedures, and prohibiting a qualified testing facility from refusing to certify UDCPs for any reason other than a failure to comply with the conformance checklists referenced in our current rules.

80. Legal Basis. The authority for the action proposed in this rulemaking is contained in Sections 1, 4(i) and (j), 303, 403, 601, 624A and 629 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i) and (j), 303, 403, 521, 544a and 549.

81. Description and Estimate of the Number of Small Entities to Which the Proposed Rules Will Apply. The RFA directs the Commission to provide a description of and, where feasible, an estimate of the number of small entities that will be affected by the proposed rules. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental entity” under Section 3 of the Small Business Act. In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (“SBA”).

82. Cable Television Distribution Services. Since 2007, these services have been defined within the broad economic census category of Wired Telecommunications Carriers; that category is defined as follows: “This industry comprises establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or a combination of technologies.” The SBA has developed a small business size standard for this category, which is: all such firms having 1,500 or fewer employees. To gauge small business prevalence for these cable services we must, however, use current census data that are based on the previous category of Cable and Other Program Distribution and its associated size standard; that size standard was: all such firms having $13.5 million or less in annual receipts. According to Census Bureau data for 2002, there were a total of 1,191 firms in this previous category that operated for the entire year. Of this total, 1,087 firms had annual receipts of under $10 million, and 43 firms had receipts of $10 million or more but less than $25 million. Thus, the majority of these firms can be considered small.

83. Cable Companies and Systems. The Commission has also developed its own small business size standards, for the purpose of cable rate regulation. Under the Commission's rules, a “small cable company” is one serving 400,000 or fewer subscribers, nationwide. Industry data indicate that, of 1,076 cable operators nationwide, all but eleven are small under this size standard. In addition, under the Commission's rules, a “small system” is a cable system serving 15,000 or fewer subscribers. Industry data indicate that, of 6,635 systems nationwide, 5,802 systems have under 10,000 subscribers, and an additional 302 systems have 10,000-19,999 subscribers. Thus, under this second size standard, most cable systems are small.

84. Cable System Operators. The Communications Act of 1934, as amended, also contains a size standard for small cable system operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” The Commission has determined that an operator serving fewer than 677,000 subscribers shall be deemed a small operator, if its annual revenues, when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate. Industry data indicate that, of 1,076 cable operators nationwide, all but ten are small under this size standard. We note that the Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million, and therefore we are unable to estimate more accurately the number of cable system operators that would qualify as small under this size standard. Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing. The Census Bureau defines this category as follows: “This industry comprises establishments primarily engaged in manufacturing radio and television broadcast and wireless communications equipment. Examples of products made by these establishments are: transmitting and receiving antennas, cable television equipment, GPS equipment, pagers, cellular phones, mobile communications equipment, and radio and television studio and broadcasting equipment.” The SBA has developed a small business size standard for Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing, which is: all such firms having 750 or fewer employees. According to Census Bureau data for 2002, there were a total of 1,041 establishments in this category that operated for the entire year. Of this total, 1,010 had employment of under 500, and an additional 13 had employment of 500 to 999. Thus, under this size standard, the majority of firms can be considered small.

85. Other Communications Equipment Manufacturing. The Census Bureau defines this category as follows: “This industry comprises establishments primarily engaged in manufacturing communications equipment (except telephone apparatus, and radio and television broadcast, and wireless communications equipment).” The SBA has developed a small business size standard for Other Communications Equipment Manufacturing, which is: all such firms having 750 or fewer employees. According to Census Bureau data for 2002, there were a total of 503 establishments in this category that operated for the entire year. Of this total, 493 had employment of under 500, and an additional 7 had employment of 500 to 999. Thus, under this size standard, the majority of firms can be considered small.

86. Electronics Equipment Manufacturers. The SBA has developed a small business size standard for manufacturers of audio and video equipment, which is: all such firms having 750 or fewer employees. Census Bureau data indicates that there are 571 U.S. establishments that manufacture audio and visual equipment, and that 560 of these establishments have fewer than 500 employees and would be classified as small entities. The remaining 11 establishments have 500 or more employees; however, we are unable to determine how many of those have fewer than 750 employees and therefore, also qualify as small entities under the SBA definition. We therefore conclude that there are no more than 560 small manufacturers of audio and visual electronics equipment for consumer/household use.

87. Computer Manufacturers. The Commission has not developed a definition of small entities applicable to computer manufacturers. Therefore, we will utilize the SBA definition of electronic computers manufacturing. According to SBA regulations, a computer manufacturer must have 1,000 or fewer employees in order to qualify as a small entity. Census Bureau data indicates that there are 485 firms that manufacture electronic computers and of those, 476 have fewer than 1,000 employees and qualify as small entities. The remaining 9 firms have 1,000 or more employees. We conclude that there are approximately 476 small computer manufacturers.

88. Description of Projected Reporting, Recordkeeping and Other Compliance Requirements. The rules adopted in the Order will impose additional reporting, recordkeeping, and compliance requirements on cable operators. The Order adopts a rule that requires cable operators to charge equivalent and transparent prices for CableCARDs. This rule change will require certain cable operators to change their billing practices by reporting CableCARD prices on their Web sites, annual rate cards, or monthly bills. The Order also adopts a rule that will require device manufacturers to include CableCARD installation instructions with their devices.

89. Steps Taken To Minimize Significant Impact on Small Entities, and Significant Alternatives Considered. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

90. Four of the final rules did not require the Commission to consider alternatives. Based on our review of the record and analysis, a consideration of alternatives is unnecessary because adoption of these rules leads to far greater consumer and industry benefits that outweigh any de minimis burden that may be placed on small entities. The switched digital support rule places a minor burden on cable operators. This burden is offset because the rule will greatly benefit consumers by ensuring that subscribers are able to access all of the programming for which they pay. This rule ensures consumers will benefit regardless of whether they use retail or leased devices.

91. The installation rule decreases the burden on cable operators with respect to customer service calls. It requires cable technicians to arrive with the number of CableCARDs that a consumer requests, and allow for self-installation of CableCARDs. The effect will be to reduce the difficulties that consumers face when seeking to install a CableCARD in a retail device and to reduce the number of service calls that cable operators and subscribers need to schedule.

92. The rule regarding Multi-stream CableCARDs places a minimal burden on cable operators by requiring cable operators to provide subscribers with Multi-stream CableCARDs. However, the record indicates that Multi-stream CableCARDS have been the standard since 2007 and CableCARD manufacturers are no longer making single stream CableCARDs to sell to cable operators. Therefore, we believe the burden will be minimal and will be greatly outweighed by the benefits to consumers. This rule will reduce the cost that consumers face to use the picture-in-picture and “watch one, record one” functions of their video navigation devices, since fewer CableCARDs will be necessary.

93. The rule that streamlines the CableCARD device certification process will place no burden on qualified testing facilities. To the contrary, it will benefit consumer electronics manufacturers by reducing the cost of the certification process and limiting the influence that testing facilities have in the development of new consumer electronics equipment.

94. The Commission did consider alternatives to the pricing and billing rule. As proposed, the rule change would have required cable operators to separate and report the cost of a CableCARD on every monthly bill. As suggested in comments received in the proceeding, the Commission instead adopted a rule that will instead require cable operators to separate and report the cost on the annual rate card or on the operator's Web site. This new rule places a smaller burden on cable operators than the proposed rule. It will also greatly benefit consumers, resulting in fewer customer service calls, an increase in transparency of pricing, and provide consumers with pricing information prior to purchase, rather than after.

95. Federal Rules Which Duplicate, Overlap, or Conflict with the Commission's Proposals. None.

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR parts 15 and 76 as follows:

NASA published a proposed rule in the Federal Register at 76 FR 7526 on February 10, 2011. The sixty day comment period expired April 11, 2011. Three comments were received from two respondents. No changes are made to the proposed rule as a result of public comments.

Comment: The respondent suggested that the policy should more clearly define in house and external Earned Value Management Requirements.

Response: The regulation in the NASA FAR Supplement, 1834.201, is only directed toward contractor external efforts. Internal Government requirements are included but are not regulatory and not a part of this rulemaking.

Comment: The respondent suggested including a statement requiring any additional reporting requirements for FFP contracts to be identified in the solicitation or subsequent contract modification.

Response: NASA will collect the necessary data for project management and oversight. The rule states: “The contracting officer shall collaborate with the government's program/project manager to ensure the appropriate data can be obtained or generated to fulfill program management needs”. There are various methods to obtain the appropriate data, and the CO will include Data Requirements in the solicitation and/or contract as needed on a case-by-case basis.

Comment: The respondent stated that NASA should consider implementing the change to existing contracts providing additional cost savings to NASA and the industry.

Response: NASA will not require, but may consider, implementing the change on existing contracts, on a case-by-case basis.

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule is not a major rule under 5 U.S.C. 804.

This final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., because it relaxes previous requirements in the NASA FAR Supplement and does not impose a significant economic impact beyond that previously required.

This final rule does not impose any new information collection requirements that require the approval of the Office of Management and Budget (OMB) under 44 U.S.C. 3501, et seq.