This rule has been determined to be not significant for purposes of Executive Order 12866 and has not been reviewed by the Office of Management and Budget (OMB).

The Catalog of Federal Domestic Assistance Program number assigned to the Business and Industry Guaranteed Loan Program is 10.782.

This document has been reviewed in accordance with 7 CFR part 1940, subpart G, “Environmental Program.” Rural Development has determined that this action does not constitute a major Federal action significantly affecting the quality of the human environment and, in accordance with the National Environmental Policy Act (NEPA) of 1969, 42 U.S.C. 4321 et seq., an Environmental Impact Statement is not required.

The program is subject to the provisions of Executive Order 12372, which requires intergovernmental consultation with State and local officials. Consultation will be completed at the time of the action performed.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. The Agency has determined that this rule meets the applicable standards provided in section 3 of the Executive Order. Additionally, (1) All state and local laws and regulations that are in conflict with this rule will be preempted; (2) no retroactive effect will be given to the rule; and (3) administrative appeal procedures, if any, must be exhausted before litigation against the Department or its agencies may be initiated, in accordance with the regulations of the National Appeals Division of USDA at 7 CFR part 11.

The policies contained in this rule do not have any substantial direct effect on 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. Nor does this final rule impose substantial direct compliance costs on state and local governments. Therefore, consultation with states is not required.

Under section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 605(b), the Agency certifies that this rule will not have a significant economic impact on a substantial number of small entities. The Agency made this determination based on the fact that this regulation only impacts those who choose to participate in the program. Small entity applicants will not be impacted to a greater extent than large entity applicants.

This rule contains no Federal mandates (under the regulatory provisions of Title II of the Unfunded Mandates Reform Act of 1995) for State, local, and tribal governments or the private sector. Thus, this rule is not subject to the requirements of sections 202 and 205 of the Unfunded Mandates Reform Act of 1995.

This executive order imposes requirements on Rural Development in the development of regulatory policies that have tribal implications or preempt tribal laws. Rural Development has determined that the final rule does not have a substantial direct effect on one or more Indian tribe(s) or on either the relationship or the distribution of powers and responsibilities between the Federal Government and Indian tribes. Thus, this final rule is not subject to the requirements of Executive Order 13175. If a tribe determines that this rule has implications of which Rural Development is not aware and would like to engage with Rural Development on this rule, please contact Rural Development's Native American Coordinator at (202) 690-1681 or AIAN@wdc.usda.gov.

This rule contains no new reporting or recordkeeping requirements that would require approval under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

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

The Agency reviewed 7 CFR 4279.72, which is composed of three paragraphs, the first two of which are pertinent.

Section 4279.72(a) lays out the conditions under which a guarantee is not enforceable. The text separately identifies four such conditions:

1. In cases of fraud or misrepresentation of which a lender or holder has actual knowledge at the time it becomes such lender or holder or which a lender or holder participates in or condones;

2. To the extent that any loss is occasioned by a provision for interest on interest;

3. To the extent any loss is occasioned by the violation of usury laws, negligent servicing, or failure to obtain the required security regardless of the time at which the Agency acquires knowledge thereof; and

4. To the extent that loan funds are used for purposes other than those specifically approved by the Agency in its Conditional Commitment.

Section 4279.72(b) discusses rights and liabilities when a guaranteed portion of a loan is sold to a holder. It states, in part, that the lender will be liable for payments made by USDA to any holder in the event of “material fraud, negligence or misrepresentation by the lender or the lender's participation in or condoning of such material fraud, negligence or misrepresentation.” Section 4279.72(b) does not, however, refer to the other conditions listed in § 4279.72(a).

The Agency believes the lender's responsibility to reimburse the Agency for the improper activity should not be dependent upon whether the lender or holder owns the loan guarantee. However, the Agency is concerned that this policy is not sufficiently clear in the regulation. Therefore, the Agency is clarifying its position on this matter. The regulatory change is not retroactive nor does it affect the rights of current holders. However, the Agency recognizes that the issue should be clarified in the regulation. Accordingly, the Agency is making the changes in this direct final rule.

Section 4279.72(a) addresses the lender's coverage under the loan note guarantee. It also identifies those instances when the conduct of a holder may jeopardize their interest in the loan note guarantee. Section 4279.72(b) addresses the holder's coverage under the loan note guarantee. The change being made by this rule clarifies that having a holder purchase part of the loan note guarantee does not increase the coverage provided to the lender under the loan note guarantee. Therefore, the Agency will require the lender to reimburse it for any amount it pays to a holder that would not have been paid to a lender under § 4279.72(a).

The Agency is revising § 4279.72(b) to address the situation discussed in the “Background” section and similar situations.

For the reasons set forth in the preamble, chapter XLII, title 7 of the Code of Federal Regulations is amended as follows:

Section 7A of the Clayton Act (the “Act”) requires the parties to certain mergers or acquisitions to file with the Agencies and to wait a specified period of time before consummating such transactions. The reporting requirement and the waiting period that it triggers are intended to enable the Agencies to determine whether a proposed merger or acquisition may violate the antitrust laws if consummated and, when appropriate, to seek a preliminary injunction in federal court to prevent consummation, pursuant to Section 7 of the Act.

On August 13, 2010, the Commission made a Notice of Proposed Rulemaking and Request for Public Comment available on its Web site, and it was published in the Federal Register on September 17, 2010. 1 The comment period closed on October 18, 2010. The Proposed Rules recommended improvements and updates to the HSR Form and associated Instructions as well as amendments in 16 CFR parts 801, 802 and 803 of the Rules.

The Commission received eleven public comments addressing the Proposed Rules. The comments are published on the FTC Web site at http://www.ftc.gov/os/comments/hsr/index.htm.

The following submitted public comments on the Proposed Rules:

The Commission proposed ministerial changes in Items 1 through 3 in order to make the Form easier to use, as well as the revision or deletion of many items, such as Items 2(e), 3(b), 3(c), 4(a), 4(b), 5(a), 5(b)(i), 5(b)(ii), 5(d), 6(a), and 6(b), which currently ask for information that the Agencies no longer consider necessary for their initial review. There were no adverse comments received on these amendments, therefore, the Commission adopts the changes as proposed. The Commission also proposed amending certain Rules and parts of the Form and Instructions, such as Items 2(d), 5(c) and 8 in order to capture additional information (such as current year revenues by 10 digit NAICS product code) that would significantly assist the Agencies in their review. There were also no adverse comments received on these revisions and they are adopted as proposed. In addition, there were no adverse comments received on the proposed minor changes to §§ 801.1, 2 801.15, 801.30, 802.4, 802.21, 802.52, 803.2 and 803.5, and these changes are also adopted as proposed.

The Commission did, however, receive substantive objections or criticisms regarding three proposed changes that commenters found to be overly burdensome additions: Item 4(d), which requires the submission of certain documents separate from those required by Item 4(c); changes to Item 5 requiring the reporting of North American Industry Classification System (“NAICS”) product code information for products manufactured outside of the U.S. and sold into the U.S.; and changes to Items 6(c) and 7 to require the submission of information on the holdings of associates that overlap with the entity(s) or assets that are being acquired. These comments and the Commission's response to them are discussed more fully below.

An acquiring person is required to provide information in its notification with respect to all entities included within it at the time of filing. In some instances, particularly with families of investment funds, entities that are commonly managed with the acquiring person are not included because these “associated” entities are not controlled, as defined in § 801.1(b) of the Rules, by the acquiring Ultimate Parent Entity (“UPE”). As a result, the Agencies do not receive the information they need to get a complete picture of potential antitrust ramifications of an acquisition. This scenario arises frequently in the energy industry with Master Limited Partnerships, where competitive overlaps among limited partnerships (“LPs”) with the same general partner may go undetected.

To capture information on overlaps between entities commonly managed with the acquirer and the target, the Commission proposed three changes: introducing and defining the term associate, creating Item 6(c)(ii), and revising Item 7 to require the submission of information on minority and controlling interests of associates that overlap with the entity(s) or assets that are being acquired.

The Commission received six comments regarding the proposed definition of associate and its application to proposed Items 6(c)(ii) and 7. The comments generally focused on two concerns: the definition of associate as too vague and overly broad, and the burden of compiling the information required by Items 6(c)(ii) and 7 regarding the holdings of associates that overlap with the target, particularly minority holdings. Both will be discussed below.

The Commission proposed the term “associate” in new § 801.1(d)(2) to define entities under common management with the acquiring person, but not controlled by the acquiring person. The proposed definition reads:

Comments 2, 6, 9 and 11 stated that the definition of associate as proposed was not only overly broad, but was also unduly complex and confusing. Comment 2 stated that the phrase “the right, directly or indirectly, to manage, direct or oversee” affairs of the acquiring entity was so expansive as to provide little guidance regarding the relationships to be covered. Comment 6 noted that the definition as proposed was not limited to entities subject to common investment management, but also included entities that were subject to a common ability to “direct and oversee the affairs” of other entities. Comment 9 also addressed the potentially broad scope of the term “oversee.” Comment 11 recommended that the Commission consider limiting associates to master limited partnerships and private equity funds.

Comments 7 and 9 stated that the control rules provided well understood and easily applied guidance as to the scope of HSR filings. Comment 7 stated that requiring filers to determine which entity might be an associate would increase the complexity, burden and expense of HSR filings. Both recommended that the Commission reconsider requiring information on associates.

To address these concerns, the Commission has refined the definition of associate. The Commission's purpose in requiring information on associates is to be able to analyze the holdings of entities that are under common investment or operational management with the person filing notification. The term is not intended to include entities that are under other forms of common management or direction. To clarify this, the definition of associate has been revised to eliminate the terms “direct”, “oversee” and “affairs” from the rule. Any examples that contain these terms have also been revised. Additional examples have also been added to clarify the definition.

The Commission is unwilling to limit the definition to master limited partnerships and private equity funds, as suggested by Comment 11. New types of entities that are not master limited partnerships or private equity funds may emerge in the future, and the Commission does not want to limit the information it would receive about these entities as a result. The Commission believes that the changes to the definition of associate clarify its intent and reduce the burden of identifying associates.

The new definition of associate reads as follows:

The Commission proposed adding Item 6(c)(ii) to require an acquiring person to report, based on its knowledge or belief, all of its associates' holdings of voting securities and non-corporate interests of 5 percent or more but less than 50 percent in the acquired entity(s) and in entities having 6-digit NAICS industry code overlaps with the acquired entity(s) or assets.

The Commission also proposed amending the instructions to Item 7 as follows:

The comments focused on Item 6(c)(ii), citing Item 7 only in reference to Item 6(c)(ii), and addressed the burden of gathering the information required by Item 6(c)(ii). 3 Comment 5 stated that the request in Item 6(c)(ii) to provide information on minority holdings of associates that overlap with the acquired assets or entity(s) exceeded reasonable expectations about the type of information that an acquiring person can obtain when it does not have possession or control of the requested data and does not maintain the data in the ordinary course of its business. In the same vein, Comment 6 contended that the specific requirements of Item 6(c)(ii) imposed a disproportionate burden on filing parties regardless of the benefit to the Agencies. Comment 11 stated that the breadth of Item 6(c)(ii) could create a significant additional burden on a filing party, while providing the Agencies with little additional useful information. It claimed that, as written, this item required a filing party to report minority holdings of minority holdings, and suggested limiting Item 6(c)(ii) to holdings of associates of interests in the target company rather than including holdings of other entities that overlap with the target.

The purpose of Item 6(c)(ii) is not to obtain information on “minority holdings of minority holdings” as Comment 11 suggested, but to receive information on competitively relevant minority holdings of entities that are under common investment or operational management with the acquiring person. For the Agencies, there is clear utility to having the HSR filing contain information regarding the acquiring person's associates' minority holdings in competitors of the target. As such, limiting the response for Item 6(c)(ii) only to holdings of associates in the acquired entity(s), as suggested by Comment 11, is too narrow. Take, for instance, a transaction in which Pharma Fund A is acquiring 100 percent of the voting securities of Acquired Pharma Corp. Pharma Fund A does not have holdings in any competitors of Acquired Pharma Corp, but four associates of Pharma Fund A (Pharma Funds B-E) each hold 15 percent of Pharma Competitor. The Agencies would certainly benefit from knowing that the funds under common management hold an aggregate controlling interest in a competitor. The Agencies, however, may have no other realistic means of learning about the holdings of Pharma Funds B-E, particularly if Pharma Competitor is not publicly traded, making it very difficult to find this information through public sources. Item 6(c)(ii) as proposed requires the disclosure of the holdings of Pharma Funds B-E.

Item 6(c)(ii) would also provide very useful information to the Agencies in transactions involving the intricate structures that often characterize Master Limited Partnerships. For example, consider a transaction in which Pipeline MLP A is acquiring 100 percent of Acquired Pipeline Corp., and Pipeline MLP A's general partner is Pipeline GP, which is also the general partner of Pipeline MLP B and Pipeline MLP C, neither of which holds a minority interest in Acquired Pipeline Corp. or a controlling interest in a competitor of Acquired Pipeline Corp. Thus, Pipeline MLP B and Pipeline MLP C would not be identified in either Item 6(c)(ii) or Item 7 under Comment 11's proposal. Pipeline MLP B and Pipeline MLP C each indirectly hold a 45 percent interest in Competing Pipeline Co., a direct competitor of Acquired Pipeline Corp., through a number of intermediate entities. The Agencies clearly would be interested in these minority holdings in this fairly typical scenario in the oil and gas industry, but might have trouble identifying the relationship as a result of the number of layers between the top level entity and the competitor at the bottom of the structure. Item 6(c)(ii) requires the disclosure of the holdings of Pipeline MLP B and Pipeline MLP C. As these examples illustrate, Item 6(c)(ii) provides the Agencies with a much clearer picture of the competitive impact in transactions involving families of private equity funds or master limited partnerships.

The Commission acknowledges that some filing parties may face an increase in burden the first time they respond to Item 6(c)(ii) but believes that thereafter, the burden should be largely limited to keeping responsive information current. Further, it believes the burden of responding to Item 6(c)(ii) does not outweigh the benefit to the Agencies. An acquiring person must look beyond the concept of control to determine whether it has entities that are under common investment or operational management with the acquiring person. The general partner makes investment or operational decisions for its managed limited partnerships and should therefore have access to information on the holdings of the other managed limited partnerships for the purposes of responding to Item 6(c)(ii).

Further, the Commission notes that Item 6(c)(ii) provides mechanisms for limiting the potential burden. For instance, if an acquiring person cannot provide information on the minority holdings of its associates in response to Item 6(c)(ii) at the NAICS-code level, it could opt to respond on the basis of industry. That is, instead of providing a list of its associates' minority holdings based on an overlapping NAICS code with the target, the acquiring person could provide a list of its associates' minority holdings that fall into the same industry as the target, such as pharmaceuticals, mining, healthcare, etc.

Item 6(c)(ii) also allows the acquiring person to respond to Item 6(c)(ii) by listing all the minority holdings of its associates. This is intended to provide an option for an acquiring person that, despite its best efforts, cannot obtain more granular information about the minority holdings of its associates. The Commission notes that if an acquiring person responds by listing all holdings in Item 6(c)(ii), whether overlapping or not, the review of the filing could be delayed and the parties may be more likely to receive follow up requests from staff to obtain the information. It is thus in the best interests of the acquiring person to limit the list of minority holdings in Item 6(c)(ii) to those that overlap with the acquired entity(s) or assets, even if only by industry, to allow the Agencies to conclude quickly whether the acquisition may be competitively problematic because of these holdings.

The Commission has made one additional change to Item 6(c) to attempt to mitigate further the burden on persons who must respond to this item. The person filing notification may rely on its regularly prepared financials that list investments and the regularly prepared financials of its associates that list investments to respond to Items 6(c)(i) and (ii), provided the financials are no more than three months old. 4 Many investment funds routinely prepare such documents on a quarterly basis, and this change allows acquiring persons to rely on documents prepared in the ordinary course to gather the information necessary to respond to Items 6(c)(i) and (ii). If the acquiring person and its associates make quarterly filings concerning their investments in publicly traded companies with the Securities and Exchange Commission (“SEC”), those lists can be relied on to gather the information necessary to respond to Items 6(c)(i) and (ii) with respect to publicly traded companies, as long as they are no more than three months old. Of course, acquiring persons must still report in Items 6(c)(i) and (ii) their holdings of non-publicly traded companies.

In summary, the Commission believes that the benefits of Item 6(c) and Item 7, as revised, to the Agencies with regard to information on associates outweigh the additional burden on certain acquiring persons of providing the information. Consequently, the Commission promulgates Items 6(c)(i) and 6(c)(ii), with the aforementioned allowance for relying on financial statements and SEC documents, and Item 7, as proposed. The caveats in the language in the instructions to Items 6(c)(i) and 6(c)(ii) that the information be provided based on the knowledge or belief of the acquiring person should ease concerns on certification of the Form. If the information is completely unobtainable the acquiring person can rely on a statement of reasons for noncompliance. 5

In proposing Item 4(d), the Commission noted that certain categories of documents are quite useful for the Agencies' initial substantive analysis of transactions but were not always provided because parties have differing interpretations as to whether they were called for under current Item 4(c). The Commission proposed new Item 4(d) to enumerate these discrete categories of documents and require their submission with the Form.

In expressing concerns regarding proposed Item 4(d), all of the comments raised the overarching issue of the relationship of proposed Item 4(d) to Item 4(c). Item 4(d) is indeed closely related to Item 4(c), as is evident in the language of Item 4(d) which closely parallels the language of Item 4(c). But Item 4(d) seeks different documents from those covered by the language of Item 4(c) as will be more fully discussed below.

Proposed Item 4(d)(i) required filing parties to provide all offering memoranda (or documents that served that function) that reference the acquired entity(s) or assets produced up to two years before the date of filing.

With the exception of Comments 5 and 8, the comments suggested that proposed Item 4(d)(i) uses, in the words of Comment 3, “ambiguous and overbroad language.” For instance, the requirement that materials responsive to Item 4(d)(i) “reference” the acquired entity(s) or assets and documents that “serve the function of”an offering memorandum were imprecise and as drafted could lead to the production of a large of amount of documents in response to Item 4(d)(i). Comments 1, 2, 6, 7, 10, and 11 expressed concern that the Item 4(d)(i) requirement was not limited to the evaluation or analysis of the acquisition, as is the language of Item 4(c). Comments 1, 2, 3, 6, 10 and 11 suggested that a limitation such as the one in Item 4(c) involving only materials prepared by or for any officer(s) or director(s) (or, in the case of unincorporated entities, individuals exercising similar functions) would be helpful in guiding responses to Item 4(d)(i). Comments 1, 2, 3, 4, 6, 7 and 11 expressed the related concern that searching beyond the team of people aware of the transaction would compromise the confidentiality of the transaction. Finally, Comments 1, 2, 9 and 11 stated that the 2-year time frame in Item 4(d)(i) was too long to provide a useful limitation on this item.

In proposing Item 4(d)(i), the Commission intended to capture offering memoranda. These are formal documents created in-house or by a third party that lay out the details of a company, or a part of a company, that is for sale. The Commission intends to reach in Item 4(d)(i) what comment 10 termed “transaction-specific marketing presentation[s]” because they are invaluable to staff in their initial analysis. In order to make the parameters of this item more clear, the Commission uses the term “Confidential Information Memoranda” instead of the broader term “offering memoranda.” Many filing parties already submit Confidential Information Memoranda because these documents often contain a section on the industry or competitive landscape and thus fall within the requirements of Item 4(c). But, in cases where they do not, the in-depth overview of the business, even without competition-related content, is still immensely helpful to staff in understanding the companies and products involved in a transaction.

Confidential Information Memoranda are useful even though, arguably, there may be no “acquisition” at the time they are prepared. Item 4(c) requires the submission of all studies, surveys, analyses and reports prepared by or for any officer(s) or director(s) (or, in the case of unincorporated entities, individuals exercising similar functions) for the purpose of evaluating or analyzing the transaction with respect to market shares, competition, competitors, markets, potential for sales growth or expansion into product or geographic markets. Leaving out of the language of Item 4(d)(i) the Item 4(c) requirement that responsive materials evaluate or analyze “the acquisition” addresses the fact that some parties have relied on the transaction-specific language of Item 4(c) when not submitting Confidential Information Memoranda.

The comments expressed concern that without the requirement that responsive materials evaluate or analyze the transaction, the scope of what was required by Item 4(d)(i) was too broad. In response to this concern, the Commission can provide a more precise parameter than “some reference to the acquired entity(s) or assets.” The Commission intends to capture materials that provide an in-depth overview or analysis of the entities or assets that are for sale, not just those materials that contain a passing reference to them. To make this intent clear, the language in Item 4(d)(i) has been changed to adopt in part the language proposed by Comment 4, namely to capture those Confidential Information Memoranda that “specifically relate to the sale of the acquired entity(s) or assets.”

Comment 4 also suggested narrowing proposed Item 4(d)(i) to “those separate presentations [that] would have been responsive to Item 4(c) if they had been prepared for the filed-for transaction.” The problem with this language is that it requires competition-related content. As discussed above, the underlying rationale behind Item 4(d)(i) is that Confidential Information Memoranda are always helpful, and so Item 4(d)(i) requires their submission regardless of the presence of competition-related content.

Comments 1, 2, 3, 4, 5, 10 and 11 expressed concern that proposed Item 4(d)(i) was not limited to officers and directors. The Commission does not intend to reach those Confidential Information Memoranda, as stated in Comment 1, received by “any employee within the company regardless of their location or involvement in a particular transaction.” Instead, the Commission intends to reach those Confidential Information Memoranda prepared in the specific contemplation of a sale. In reality, an officer or director would likely be informed of the internal or external drafting of such a memorandum. The easiest way to clarify the Commission's intent is by adopting the suggestion in the comments that a limitation involving officer(s) or director(s) be added to Item 4(d)(i). As such, the Commission is promulgating Item 4(d)(i) with a requirement that responsive documents must have been prepared by or for any officer(s) or director(s) or, in the case of unincorporated entities, individuals exercising similar functions. Further, the Commission limits this requirement to any officer(s) or director(s) or, in the case of unincorporated entities, individuals exercising similar functions, of the Ultimate Parent Entity of the Acquiring or Acquired Person and/or any officer(s) or director(s) or, in the case of unincorporated entities, individuals exercising similar functions, of the Acquiring or Acquired Entity(s). These changes also address the concerns raised by many of the comments that gathering documents responsive to Item 4(d)(i) could compromise the confidentiality of the transaction.

Comment 10 suggested that this item be limited to “offering memoranda prepared for the purpose of evaluating or analyzing the transaction and which were shared with prospective buyers.” Sellers will sometimes create a Confidential Information Memorandum and, for one reason or another, it does not end up being shared with the eventual buyer. This, if the Commission limited Item 4(d)(i)'s requirement to submit Confidential Information Memoranda to only those given to the buyer, in some cases, no Confidential Information Memorandum would be submitted even though one was created. This is counter to the rationale behind Item 4(d)(i). Under Item 4(d)(i), if the eventual buyer did not receive a copy of the Confidential Information Memorandum, but one was prepared, that Confidential Information Memorandum must be submitted with the Acquired Person's filing.

Comments 1, 2, 3, 6, 7, 9, 10, and 11, expressed concern about the exact definition of “documents serving the same function as an offering memorandum.” As a starting point, if there was a Confidential Information Memorandum prepared, filing parties do not need under Item 4(d)(i) to supply documents that served the purpose of a Confidential Information Memorandum. The Commission intends to capture only those situations in which no Confidential Information Memorandum was prepared, but the seller has a pre-existing presentation containing an overview of the company that was given to any officer(s) or director(s) of the buyer as an introduction to the company. In this case, the presentation effectively serves the purpose of a Confidential Information Memorandum in an instance in which no Confidential Information Memorandum was prepared. Filing parties often submit such documents when no Confidential Information Memorandum was prepared, and the Commission does not seek any other category of materials in response to this item. For instance, the Commission does not intend this item to require ordinary course documents and/or financial data shared in the course of due diligence, except to the extent that such materials are shared with the buyer specifically to serve the purpose of a Confidential Information Memorandum when no Confidential Information Memorandum was prepared. Unlike the case of Confidential Information Memoranda, a document that served the purpose of a Confidential Information Memorandum will only be responsive to Item 4(d)(i) if it was given to the buyer (and a Confidential Information Memorandum was not). The instructions to Item 4(d)(i) outline these specifics.

Many filing parties already submit materials responsive to Item 4(d)(i) based on longstanding informal interpretations that Confidential Information Memoranda should be submitted as Item 4(c) documents. However, parties have sometimes excluded these documents on the grounds that they were not prepared for the purpose of evaluating or analyzing the acquisition or did not contain competition-related content. Item 4(d)(i) is intended to make clear that Confidential Information Memoranda must be submitted in response to Item 4(d)(i). The Commission intends Items 4(c) and 4(d) to complement one another. For instance, if a filing party includes a document responsive to Item 4(d)(i) with its HSR filing, it need not submit that document separately in response to Item 4(c).

The comments raised concerns about the length of the proposed two year time period applicable to proposed Item 4(d)(i). Although such a timeframe is consistent with the specified “relevant time period” of two years as applicable to second requests in the 2006 merger process reforms, 6 the Commission believes that, as applied to the documents required by Item 4(d)(i), a period of one year is more appropriate. Confidential Information Memoranda are typically drafted within this shorter timeframe and arguably are more useful to staff if they are more recent. The instructions to Item 4(d)(i) have been changed to reflect the one year time period. 7

In summary, the Commission is promulgating Item 4(d)(i) using the term “Confidential Information Memoranda” instead of “Offering Memoranda” and with the clarification that this item requires only those Confidential Information Memoranda that “specifically relate to the sale of the acquired entity(s) or assets” and that were prepared by or for any officer(s) or director(s) or, in the case of unincorporated entities, individuals exercising similar functions, of the Ultimate Parent Entity of the Acquiring or Acquired Person and/or any officer(s) or director(s) or, in the case of unincorporated entities, individuals exercising similar functions, of the Acquiring or Acquired Entity(s) within one year of filing. In addition, the Commission requires the submission of documents that served the function of a Confidential Information Memorandum only when given to the buyer in situations in which no such Confidential Information Memorandum exists.

Proposed Item 4(d)(ii) required filing parties to provide all studies, surveys, analyses and reports prepared by investment bankers, consultants or other third party advisors if they were prepared for any officer(s) or director(s) (or, in the case of unincorporated entities, individuals exercising similar functions) for the purpose of evaluating or analyzing market shares, competition, competitors, markets, potential for sales growth or expansion into product or geographic markets, and that also reference the acquired entity(s) or assets produced up to two years before the date of filing.

In response to proposed Item 4(d)(ii), the comments expressed concern that this item as drafted was too broad and would capture many documents immaterial to staff's initial analysis. Each comment stated that Item 4(d)(ii) as drafted would pull in ordinary course documents because it was not limited to materials that evaluated or analyzed the acquisition. Comments 2, 3, 5, 6, 7, 9, 10, and 11 raised the issue that searching beyond the team of people aware of the transaction would lead to confidentiality concerns. Finally, Comments 1, 5, 7, 8, 9, and 11 contended that the 2 year time frame in Item 4(d)(ii) was too long to provide a useful limitation on this item.

Item 4(d)(ii) is intended to reach materials prepared by investment bankers, consultants or other third party advisors (“third party advisors”) that contain competition-related content pertaining to the transaction. The most typical example of this kind of document is, as defined by Comment 8, “pitch books,” which are “developed by investment banking firms for the purpose of seeking an engagement.” These materials are sometimes also known informally as “bankers' books.” In the Commission's experience, these are typically presentations that contain an overview of several potential courses of action available to a company (e.g., whether to buy another business or sell a particular business) and that also contain several pages analyzing the specific industry at issue.

Item 4(d)(ii) also seeks documents prepared by third party advisors who have been hired by a particular company to develop and analyze a variety of strategic options, one of which is a merger that requires an eventual HSR filing. These materials are different from bankers' books in that the third party advisor has been hired and is already working with the company in detail, but they contain information that is just as valuable to staff. Whether developed by a third party for the purpose of seeking an engagement or after having been engaged, these materials often provide staff with a useful overview of the relevant industry and/or competitive landscape. Sometimes such materials fall within the requirements of Item 4(c). In some cases, however, they may not, as there is arguably no “acquisition” at the time they are prepared.

The most strenuous objection we received to proposed Item 4(d)(ii) was that leaving out the Item 4(c) requirement that responsive materials evaluate or analyze the acquisition made the language of proposed Item 4(d)(ii) too broad. As noted above, leaving this language out of Item 4(d)(ii) addresses the fact that some parties have relied on this language when not submitting this category of documents. As documents responsive to Item 4(d)(ii) must meet all the other requirements of Item 4(c), one approach would be to rely on the language proposed by Comment 4 in reference to Item 4(d)(i) to require only those materials that “would have been responsive to Item 4(c) had they been prepared for the acquisition.” While this language narrows the scope of this item and better reflects the Commission's intent, it leaves Item 4(d)(ii) without the limiting language on the entity(s) or assets for sale and officer(s) and director(s) the Commission has adopted in Item 4(d)(i).

To further clarify the intent of Item 4(d)(ii), the Commission limits materials responsive to Item 4(d)(ii) to those prepared by third party advisors during an engagement or for the purpose of seeking an engagement and, as has been done in Item 4(d)(i), that specifically relate to the sale of the acquired entity(s) or assets. In addition, the Commission similarly limits the officer(s) and director(s) encompassed in Item 4(d)(ii) to any officer(s) or director(s) or, in the case of unincorporated entities, individuals exercising similar functions, of the Ultimate Parent Entity of the Acquiring or Acquired Person and/or any officer(s) or director(s) or, in the case of unincorporated entities, individuals exercising similar functions, of the Acquiring or Acquired Entity(s). These clarifications, included in the instructions to Item 4(d)(ii), also address the confidentiality concerns raised by many of the comments.

Item 4(d)(ii) seeks materials developed by third party advisors during an engagement or for the purpose of seeking an engagement prepared by or for certain officers and directors (as discussed above) that contain competition-related content specifically related to the sale of the acquired entity(s) or assets, and the instructions specify this. Item 4(d)(ii) is not intended to capture many of the broad categories of materials envisioned by the comments; the language of Item 4(d)(ii) is drafted in recognition of the fact that there are numerous kinds of consultants who create responsive materials during an engagement or for the purpose of seeking an engagement. We note that Item 4(d)(ii) does not require, as enumerated in Comment 11, the submission of corporate subscriptions to market studies, information or periodicals; industry reference materials and databases; routine market research; information received by financial investors; unsolicited financial and market analyses from investment bankers and consultants; and reports prepared in the course of patent, securities, antitrust or other forms of litigation. Some unsolicited materials developed by investment banking firms or other third parties for the purpose of seeking an engagement may appear in the files of officers or directors covered by Item 4(d)(ii). Item 4(d)(ii) requires the submission of such unsolicited materials only if they specifically relate to the sale of the acquired entity(s) or assets and contain competition related content as specified in the instructions. 8

Many filing parties already submit materials responsive to Item 4(d)(ii) based on longstanding informal interpretations that materials developed by third party advisors during an engagement or for the purpose of seeking an engagement should be submitted as Item 4(c) documents. However, parties have sometimes excluded these documents on the grounds that they were not prepared for the purpose of evaluating or analyzing the acquisition. Item 4(d)(ii) is intended to make clear that materials developed by third party advisors during an engagement or for the purpose of seeking an engagement must be submitted in response to Item 4(d)(ii). The Commission intends Items 4(c) and 4(d) to complement one another. For instance, if a filing party includes a document responsive to Item 4(d)(ii) with its HSR filing, it need not submit that document separately in response to Item 4(c).

The comments raised concerns about the length of the proposed two-year time period applicable to proposed Item 4(d)(ii). Consistent with the modification to Item 4(d)(i), the time period for this item has been changed to one year. 9

In summary, the Commission is promulgating Item 4(d)(ii) with the clarification that this item seeks materials developed by third party advisors during an engagement or for the purpose of seeking an engagement that “specifically relate to the sale of the acquired entity(s) or assets” and that were prepared by or for any officer(s) or director(s) or, in the case of unincorporated entities, individuals exercising similar functions, of the Ultimate Parent Entity of the Acquiring or Acquired Person and/or any officer(s) or director(s) or, in the case of unincorporated entities, individuals exercising similar functions, of the Acquiring or Acquired Entity(s) within one year of filing.

Proposed Item 4(d)(iii) required filing parties to provide all studies, surveys, analysis and reports evaluating or analyzing synergies and/or efficiencies if they were prepared by or for any officer(s) or director(s) (or, in the case of unincorporated entities, individuals exercising similar functions) for the purpose of evaluating or analyzing the acquisition.

Although proposed Item 4(d)(iii) did not receive as many comments as the other parts of proposed Item 4(d), Comments 2 and 6 questioned staff's need to review these documents in every transaction, suggesting that staff could seek these documents from the parties at a later time if relevant in a specific transaction. Comments 1, 6, and 11 stated that even if filers did not submit synergies documents at the time of filing, they should not be precluded from being able to make arguments concerning applicable synergies at a later time.

Item 4(d)(iii) requires the submission of documents that evaluate or analyze the synergies related to a particular acquisition. Although many filing parties do submit documents discussing synergies in response to Item 4(c), the PNO has long provided the informal advice that this category of documents, without separate competition-related content, is not caught by the language in Item 4(c). At the same time, these kinds of documents are very useful to staff in many transactions. Thus, Item 4(d)(iii) requires that these documents be submitted. The Commission believes that the benefits to the Agencies from receiving this discrete set of documents outweighs the burden to parties of producing them. Filing parties can assert synergies arguments at any time, but there is the possibility that documents submitted with an HSR filing in response to Item 4(d)(iii) may carry greater weight with the Agencies than materials claiming synergies created and submitted at a later time during an investigation.

Incorporating many of the comments as described above, the instructions to Item 4(d) will read as follows:

The Commission proposed changes to Item 5 of the Form to make it easier for filing parties to complete, and to obtain information more useful to the Agencies. In this vein, the Commission proposed modifying the Form to require filing persons to identify the 10-digit NAICS product codes and revenues for each product they manufacture outside the U.S. and sell in the U.S. at the wholesale or retail level, or that they sell directly to customers in the U.S. This would give the Agencies a more accurate understanding of products in the U.S. Filing parties would include 10-digit NAICS product codes and revenues for such foreign manufactured products only for the most recent year in proposed Item 5(a). As proposed, sales made directly to customers in the U.S. would be reported in a manufacturing code while sales made into the U.S. through a wholesale operation within the same person would be reported in both manufacturing (transfer price) and wholesale or retail (sales price) codes, to be consistent with current practice when companies have both domestic manufacturing and wholesale or retail operations.

Comment 1 objected to the proposed reporting of revenues for products manufactured outside the U.S. on the grounds that compiling NAICS code information would be a substantial burden for foreign manufacturers who do not currently use NAICS. Comment 2 objected on the same grounds, and also stated that the double listing of foreign manufacturing and importing revenues was confusing. Comment 6 stated that the Commission specifically declined to require foreign manufactured product data by U.S. census code in the 1978 final rules, and that the burden of providing such data is not significantly smaller today. Comment 7 also stated that finding NAICS information would be burdensome for foreign filers and that only U.S. operations should be reported. Comment 9 also raised this concern and cited to International Competition Network principles that unnecessary costs on transactions should be avoided.

After considering these comments, the Commission is not persuaded that NAICS reporting would be significantly more difficult for foreign manufacturers than it is for domestic manufacturers. One of the reasons the Commission decided to propose the elimination of base year reporting was that HSR practitioners have told the PNO that filers generally do not rely on previous NAICS data compiled for submission to the Bureau of Census, as the Commission previously understood, but rather that the parties determine the appropriate NAICS codes and underlying revenues as they are preparing their filings. That being the case, foreign manufacturers should be able to identify appropriate NAICS codes as readily as domestic manufacturers can; in fact, foreign entities with U.S. wholesale or retail operations already use the NAICS system to report revenues from those operations. Finally, the Commission believes that whatever additional burden may be initially experienced by foreign manufacturers because of their unfamiliarity with NAICS manufacturing codes is outweighed by the usefulness of the information to the Agencies.

Comments 6 and 11 also objected to the double-counting effect that would result from the proposed requirement that foreign manufacturers report revenues under both manufacturing codes (at transfer price) and wholesaling codes (sales revenues) if their products are manufactured outside the U.S. and sold in the U.S. Indeed, Comment 11 stated that this is a long-standing problem with Item 5 in its current form as it relates to domestic manufacturers who sell their product from a separate establishment and must then report manufacturing and wholesaling revenues.

The Commission agrees that double-counting can distort revenues reported in Item 5 and therefore will amend the instruction for Item 5(a) to require that any manufacturer, whether foreign or domestic, report revenues from the sale of its manufactured products only under 10-digit NAICS manufacturing product codes. Sales of products that are not manufactured by the parties but only sold by them would, of course, continue to be reported under 6-digit wholesaling or retailing codes. Comment 6 advocated eliminating the double-counting problem by requiring the listing of revenues from manufactured products by 6-digit wholesaling code only, but this solution would not provide the Agencies with sufficient information about the products being manufactured and sold.

The proposed changes to Item 5 also included a proposal to eliminate the million dollar minimum that currently applies to reporting revenues for non-manufacturing operations in the most recent year. As discussed in the Proposed Rule, the minimum was based on the way filing persons reported non-manufacturing data to the Census Bureau, but given that there appears to be little or no reliance on the part of filers on previously assembled census data for HSR reporting, there seemed to be little reason to retain it. In addition, the minimum was sometimes misconstrued as a minimum for the reporting of overlaps in Item 7, which it is not. Comments 6 and 11 objected to the proposed elimination of the million dollar minimum, stating that the minimum reduces the burden of characterizing minor operations by NAICS code and allocating revenues to those codes; further, the comments suggested that instead of eliminating the minimum, an instruction could be added to clarify that an Item 7 overlap can still exist for operations that generate less than $1 million in revenues in the most recent year.

The Commission accepts that the million dollar minimum is helpful to filers and agrees that amending the instruction to Item 7 to state that the item is applicable to an overlap of operations generating any amount of revenue is a reasonable approach. Therefore, the million dollar minimum will remain for Item 5, and the Item 7 instruction has been amended, as below:

The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires that the agency conduct an initial and final regulatory analysis of the anticipated economic impact of the amendments on small businesses, except where the Commission certifies that the regulatory action will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 605. Because of the size of the transactions necessary to trigger a Hart-Scott-Rodino filing, the premerger notification rules rarely, if ever, affect small businesses. Indeed, these amendments are intended to reduce the burden of the premerger notification program. Further, none of the rule amendments expands the coverage of the premerger notification rules in a way that would affect small business. Accordingly, the Commission certifies that these rules will not have a significant economic impact on a substantial number of small entities. This document serves as the required notice of this certification to the Small Business Administration.

The Paperwork Reduction Act, 44 U.S.C. 3501-3521, requires agencies to submit ``collections of information'' to the Office of Management and Budget (``OMB'') and obtain clearance before instituting them. Such collections of information include reporting, recordkeeping, or disclosure requirements contained in regulations. The existing information collection requirements in the HSR Rules and Form have been reviewed and approved by OMB under OMB Control No. 3084-0005. The current clearance expires on June 30, 2013. On September 23, 2010, the Commission submitted a clearance request to OMB regarding the then proposed amendments to the reporting requirements in the Rules and Form. On November 8, 2010, OMB filed a comment, requesting that the FTC consider public comments on the proposed amendments and to respond to them and make any necessary adjustments in its ensuing submission to OMB for the final amendments. Consistent with the analysis shown here, the Commission is submitting a supplemental response to OMB as a follow-up to its prior clearance request.

The final amendments are primarily changes to the information reported on the Notification and Report Form and do not affect the reportability of a transaction. Most of the ministerial changes to the Rules are clarifications (e.g., the change to § 802.4) or new procedures (e.g., the change to § 801.30), which also would have no effect on reporting obligations. One amendment could theoretically produce an increase in filings. The definition of ``entity'' in § 801.1(a)(2) is being modified to include unincorporated entities engaged in commerce that are controlled by a government. The definition currently includes only corporations engaged in commerce. Another amendment could theoretically produce a decrease in filings. The amendment to the aggregation rules in § 801.15 would eliminate the unintended effect of requiring aggregation when exactly 50 percent of multiple subsidiaries have been acquired and additional voting securities of the same person are newly being acquired. The Commission believes that any increase or decrease in filings as a result of the final ministerial amendments would be negligible.

Premerger Notification Office staff canvassed eight practitioners from the private bar to estimate the projected change in burden due to the then proposed, now final, amendments to the Form. All those consulted are considered HSR experts and have extensive experience with preparing HSR filings for the types of transactions that are most likely to be affected by the amendments.

Many of the final amendments would significantly reduce burden for all filers. Others would increase burden, particularly for acquiring persons that are private equity funds and master limited partnerships. The consensus of those canvassed was that, on average, burden for collecting and reporting would decrease by approximately five percent. Thus, 37 hours (rounded to the nearest hour) will be allocated to non-index filings. 10 [(Current estimate, 39 hours  11 ) × (1 − .05) = 37.05 hours.]

The Form changes only affect non-index filings which, for FY 2011, the FTC projects will total 1,428. The amendments to the HSR Rules and Notification and Report Form should reduce the time required to prepare responses for non-index filings, with an estimated net reduction of 2 hours per filing (39 hours to 37 hours). Cumulatively, however, owing to a projected increase from 841 such filings to 1,428 (independent of the amendments' effects), total burden will increase from the currently cleared estimate of 33,298 hours  12 to 53,756 hours. 13

Applying the revised estimated hours, 53,756, to the previous assumed hourly wage of $460 for executive and attorney compensation, 14 yields $24,728,000 (rounded to the nearest thousand) in labor costs. 15 The amendments presumably will impose minimal or no additional capital or other non-labor costs, as businesses subject to the HSR Rules generally have or obtain necessary equipment for other business purposes. Staff believes that the above requirements necessitate ongoing, regular training so that covered entities stay current and have a clear understanding of federal mandates, but that this would be a small portion of and subsumed within the ordinary training that employees receive apart from that associated with the information collected under the HSR Rules and the corresponding Notification and Report Form.

For the reasons stated in the preamble, the Federal Trade Commission amends 16 CFR parts 801, 802 and 803 as set forth below:

The Consumer Product Safety Improvement Act of 2008 (“CPSIA”) was enacted on August 14, 2008. Public Law 110-314, 122 Stat. 3016 (August 14, 2008). The CPSIA amends statutes that the Commission administers and adds certain new requirements.

Section 223 of the CPSIA expands section 15 of the Consumer Product Safety Act (“CPSA”) to add a new subsection (j). That subsection delegates authority to the Commission to specify by rule, for a consumer product or class of consumer products, characteristics whose presence or absence the Commission considers a substantial product hazard. To issue such a rule, the Commission must determine that those characteristics are readily observable and have been addressed by an applicable voluntary standard. The Commission also must find that the standard has been effective in reducing the risk of injury and that there has been substantial compliance with it. 15 U.S.C. 2064(j).

Drawstrings in children's upper outerwear can present a hazard if they become entangled with other objects. Drawstrings in the neck and hood areas of children's upper outerwear present a strangulation hazard when the drawstring becomes caught in objects, such as playground slides. Drawstrings in the waist or bottom areas of children's upper outerwear can catch in the doors or other parts of a motor vehicle, thereby presenting a “dragging” hazard when the operator of the vehicle drives off without realizing that someone is attached to the vehicle by the drawstring. The injury data associated with drawstrings is discussed below in section C of this preamble.

In 1994, at the urging of the CPSC, a number of manufacturers and retailers agreed to modify or eliminate drawstrings from hoods and necks of children's clothing. In 1997, the American Society for Testing and Materials (now ASTM International) addressed the hazards presented by drawstrings on upper outerwear by creating a voluntary consensus standard, ASTM F 1816-97, Standard Safety Specification for Drawstrings on Children's Upper Outerwear, to prohibit drawstrings around the hood and neck area of children's upper outerwear in sizes 2T to 12, and also to limit the length of drawstrings around the waist and bottom of children's upper outerwear in sizes 2T to 16 to 3 inches outside the drawstring channel when the garment is expanded to its fullest width. For waist and bottom drawstrings in upper outerwear sizes 2T to 16, the Standard prohibited toggles, knots, and other attachments at the free ends of drawstrings. The Standard further required that waist and bottom drawstrings in upper outerwear sizes 2T to 16 that are one continuous string be bartacked ( i.e., stitched through to prevent the drawstring from being pulled through its channel).

We have estimated that the age range of children likely to wear garments in sizes 2T to 12 is 18 months to 10 years. The age range of children likely to wear garments in sizes 2T to 16 is 18 months to 14 years.

On July 12, 1994, we announced a cooperative effort with a number of manufacturers and retailers who agreed to eliminate or modify drawstrings on the hoods and necks of children's clothing.

In February 1996, we issued guidelines for consumers, manufacturers, and retailers that incorporated the requirements that became ASTM F 1816-97.

On May 12, 2006, the CPSC's Office of Compliance posted a letter on CPSC's website to the manufacturers, importers, and retailers of children's upper outerwear, citing the fatalities that had occurred and urging compliance with the industry standard, ASTM F 1816-97. The letter explained that we consider children's upper outerwear with drawstrings at the hood or neck area to be defective and to present a substantial risk of injury under section 15(c) of the Federal Hazardous Substances Act (FHSA), 15 U.S.C. 1274(c).

The 2006 letter also indicated that we would seek civil penalties if a manufacturer, importer, distributor, or retailer distributed noncomplying children's upper outerwear in commerce and/or failed to report that fact to the Commission as required by section 15(b) of the CPSA, 15 U.S.C. 2064(b). From 2006 through 2010, we participated in 115 recalls of noncomplying products with drawstrings and obtained a number of civil penalties based on the failure of firms to report the defective products to CPSC, as required by section 15(b) of the CPSA.

On May 17, 2010, we published a proposed rule (75 FR 27497) that would deem children's upper outerwear garments in sizes 2T to 12, or the equivalent that have neck or hood drawstrings, and in sizes 2T to 16 or the equivalent that have waist or bottom drawstrings that do not meet specified criteria, substantial product hazards. We received seven comments in response to the proposed rule. We describe and respond to the comments in section E of this preamble.

As mentioned in section A of this preamble, ASTM F 1816-97 addresses upper outerwear garments in sizes 2T to 12 that have neck or hood drawstrings, and in sizes 2T to 16 that have waist or bottom drawstrings that do not meet specified criteria. All of the requirements of the ASTM voluntary standard can be evaluated with simple physical manipulations of the garment, simple measurements of portions of the garments, and unimpeded visual observation. Thus, the product characteristics defined by the voluntary standard are readily observable.

We examined reports of fatalities and injuries for the age groups whose upper outerwear is subject to the voluntary standard. We are aware of 56 reports of neck/hood drawstring entanglements occurring between January 1985 and April 2011. Eighteen (32%) of these entanglements were fatal. The majority of the entanglements involved the neck/hood drawstrings snagging on slides. Neck/hood drawstrings also became entangled on parts of cribs in several incidents. Of the 38 nonfatal incidents involving children between the ages of 18 months and 10 years, 30 incidents resulted in injuries. In the remaining eight incidents, the neck/hood drawstring snagged or entangled the child, but no injury was reported. The year with the highest number of reported fatalities—three—is 1994. The three years with the highest number of reported incidents (including fatal and nonfatal incidents) were 1992 (11), 1993 (9), and 1994 (9). Slides were associated with 10 of the fatalities, 26 of the injury incidents, and all 8 of the noninjury incidents (the jackets or sweatshirts snagged by the hood or neck drawstring on playground slides prior to escape or rescue).

The Standard for drawstrings on children's upper outerwear, ASTM F 1816-97, was approved in June 1997, and published in August 1998. We are aware of 12 fatalities and 33 nonfatal incidents involving children ages 18 months to 10 years of age, who were entangled by a neck/hood drawstring of upper outerwear during the 12 years (1985-1996) prior to the Standard. On average, this results in one reported fatality and about three nonfatal incidents a year. In the eight years (1999-2006) for which reporting is complete after ASTM F 1816-97 was published, we received reports of two fatal and two nonfatal neck/hood drawstring incidents. On average, this is approximately one fatality every four years and about one nonfatal entanglement every four years. For the years for which reporting is complete, the data show a reduction in the annual average number of reported fatalities after the ASTM standard of approximately 75 percent. The corresponding reduction in the annual average number of reported nonfatal entrapments is 91 percent. It should be noted that we are continuing to receive incident reports for the years 2007-2010. We are aware of three fatalities between 2007-2010. No fatalities have been reported to date for 2011. When reporting 2010 is considered complete, the percent reduction in the annual average number of reported fatalities associated with neck/hood drawstrings, at most, will be 58 percent, if no additional fatal incidents are reported.

Between January 1985 and April 2011, we received 28 reports of entanglement incidents associated with a waist/bottom drawstring on children's upper outerwear. Of these 28 incidents, 8 (29%) were fatal; 11 (39%) resulted in injuries; and 9 (32%) constituted snags or entanglements that did not result in injuries. No waist/bottom drawstring incidents were reported to us before 1991. All eight fatalities (7 involving a bus, 1 involving a slide) associated with waist/bottom drawstrings occurred between 1991 and 1996. During 1991 to 1996, there were a total of 19 waist/bottom drawstring incidents, of which 13 involved buses (7 bus fatalities and 6 nonfatal bus incidents). We are not aware of any bus-related drawstring incidents after the year 1996. There were nine waist/bottom drawstring incidents from 1997 to the present (all nonfatal), of which three involved children whose waist/bottom drawstring caught on car doors.

All of the reported fatalities associated with waist/bottom drawstrings on children's upper outerwear occurred prior to the approval and publication of ASTM F 1816-97. For years in which reporting is considered complete, the number of reported fatalities associated with waist and bottom drawstrings have fallen from the eight reported fatalities between 1985 and 1996 to zero since adoption of the ASTM voluntary standard in 1997. For corresponding periods for which reporting is complete (1985 through 1996 and 1999 through 2006), reported nonfatal injuries fell from 11 in 12 years to 6 in 8 years. These data suggest that after the ASTM standard was adopted, for waist and bottom drawstrings the annual average of reported fatalities fell by 100 percent and the annual average of reported nonfatal incidents fell by about 18 percent. Reporting is ongoing for 2007-2011. CPSC staff is not aware of any reported fatalities for this time. Staff has two reports of non-fatal incidents occurring between 2007-2011. These numbers may change in the future.

There is no statutory definition of “substantial compliance” in either the CPSIA or the CPSA. Legislative history of the CPSA provision that is related to issuance of consumer product safety standards indicates that substantial compliance should be measured by reference to the number of complying products, rather than the number of manufacturers of products complying with the standard. H.R. Rep. No. 208, 97th Cong., 1st Sess. 871 (1981). Legislative history of this CPSA rulemaking provision also indicates that there is substantial compliance when the unreasonable risk of injury associated with a product will be eliminated or adequately reduced “in a timely fashion.” Id. The Random House Dictionary of the English Language defines “substantial” as “of ample or considerable amount, quantity, size, etc.” Thus “substantial” refers to an amount less than “all” or “total.” The Commission has not taken the position that there is any particular percentage that constitutes substantial compliance. Rather than any bright line, the Commission has indicated in the rulemaking context that the determination needs to be made on a case-by-case basis.

Table 1 shows information about the CPSC recalls involving drawstrings on children's upper outerwear for the years 2006-2010. The number of compliance cases related to recalls of children's upper outerwear garments with drawstrings numbered 115 for that period, involving about 2.5 million units.

The number of recalls in 2008, 2009, and 2010 was more than the number of recalls in 2006 and 2007, with the number of recalls in 2010 representing the largest of those five years; however, fewer units of children's outerwear garments were recalled in 2010, than in 2006, 2007, and 2009.

In response to a comment to the proposed rule regarding whether ties are included in the definition of drawstring (discussed in more detail in section E of this preamble), staff reviewed the recall data to determine how many recall cases involved ties. For the 2006-2010 time period, there were six recalls (occurring in 2009 and 2010) of children's upper outerwear that involved ties, accounting for 135,406 units.

Using population data, garment sizing information, and assumptions about purchase and use, one can calculate the number of units recalled as a proportion of sales. This calculation provides a rough estimate of the extent of compliance with the voluntary standard.

As explained in the preamble to the proposed rule (75 FR at 27498) and in section A of this preamble, the voluntary standard applies to sizes 2T to 12 for neck and hood drawstrings and sizes 2T to 16 for drawstrings at the waist and bottom of upper outerwear. Information available to us indicates that a child's age generally matches the child's clothing size or is a year or two below the clothing size. For example, a child 12 years old might wear a size 12 or a size 14 garment. Similarly, for smaller sizes, children who are as young as 18 months might wear size 2T clothing. Thus, the ages of children wearing size 2T to 12 (the sizes covered by the voluntary standard for upper outerwear with hood or neck drawstrings) would be 18 months to 10 years. The age range of children who typically wear sizes 2T to 16 (the sizes covered by the voluntary standard for upper outerwear with waist or bottom drawstrings) would be 18 months to 14 years.

For each of the years 2006 through 2010, the population of children ages 18 months to 10 years old (those wearing sizes 2T to 12, as noted above) was about 39 million. The population of children ages 18 months to 14 years old (those wearing sizes 2T to 16, as noted above) was about 55 million. 1

No numerical data about recent annual sales of children's upper outerwear is available. However, given children's growth patterns, it may be that, on average, at least one new piece of upper outerwear is purchased each year for each child. If so, then sales of upper outerwear with neck and hood drawstrings or with waist and bottom drawstrings could total the population of children who wear children's sizes 2T to 16, or approximately 55 million units.

Assuming that: (1) All garments violating the drawstring voluntary standard were recalled in the years 2006 through 2010; (2) at least one new piece of upper outerwear, on average, is purchased for each child each year; and (3) annual unit sales of upper outerwear with neck or hood drawstrings totaled 55 million, then it would appear that the number of children's upper outerwear garments that complied with the drawstring requirements of ASTM F 1816-97 was in the very high 90 percent range. While the number of recalled units in the years 2006 through 2010 totaled about 2.5 million, the number of units sold during those five years, under the assumptions above, totaled 275 million. Thus, for the period 2006 through 2010, the units recalled by the CPSC (with ties included or excluded) would account for about 1 percent of all units sold; in other words, given the assumptions above, there was about 99 percent compliance with the voluntary standard. Even if these assumptions are not entirely accurate, the Commission concludes that compliance with ASTM F 1816-97 is very high and constitutes substantial compliance, as that term is used in section 15(j) of the CPSA. This determination extends to ties.

In the Federal Register of May 17, 2010 (75 FR 27497), we published a proposed rule that would specify that children's upper outerwear garments in sizes 2T to 12 or the equivalent that have neck or hood drawstrings, and in sizes 2T to 16 or the equivalent that have waist or bottom drawstrings that do not meet specified criteria, have characteristics that constitute substantial product hazards. We received seven comments on the proposed rule. We summarize and respond to the issues raised by those comments here. To make it easier to identify the comments and our responses, the word “Comment,” in parentheses, will appear before the comment's description, and the word “Response,” in parentheses, will appear before our response. We also numbered each comment to help distinguish between different comments. The number assigned to each comment is purely for organizational purposes and does not signify the comment's value, or importance, or the order in which it was received.

(Comment 1)—One commenter characterized the proposed rule as an “effort to urge voluntary compliance with the garment industry” and asked that we “institute an outright mandatory ban on the types of drawstring garments [the Commission] describe[s] in [the] proposed rule” instead.

(Response 1)—The commenter's characterization of the rule as an effort to urge “voluntary compliance” from the garment industry is misplaced. Section 15(j) of the CPSA, 15 U.S.C. 2064(j), authorizes the Commission to deem characteristics of any consumer product or class of consumer products to be a substantial product hazard under section 15(a)(2) of the CPSA, if we determine that: (A) Such characteristics are readily observable and have been addressed by voluntary standards; and (B) such voluntary standards have been effective in reducing the risk of injury from the consumer product(s) and that there is substantial compliance with such standards. A product that is or has a substantial product hazard is subject to the reporting requirements of section 15(b) of the CPSA. 15 U.S.C. 2064(b). A manufacturer who fails to report a substantial product hazard to the Commission is subject to civil penalties under section 20 of the CPSA and possibly to criminal penalties under section 21 of the CPSA. Id. §§ 2069 and 2070.

A product that is or contains a substantial product hazard is also subject to corrective action under section 15(c) and (d) of the CPSA. Id. § 2064(c) and (d). Thus, we can order the manufacturer, distributor, or retailer of the product to offer to repair or replace the product, or refund the purchase price to the consumer. Finally, a product that is offered for import into the United States and is or contains a substantial product hazard shall be refused admission into the United States under section 17(a) of the CPSA. Id. § 2066(a).

(Comment 2)—One commenter recommended that the rule should cover sizes smaller than 2T and should prohibit drawstrings in pants as well as upper outerwear.

(Response 2)—Both recommendations are outside the scope of this rulemaking. The voluntary standard applicable to drawstrings does not cover sizes smaller than 2T and does not apply to drawstrings in pants. Section 15(j) of the CPSA only allows a determination of a substantial product hazard for product characteristics that have been addressed by voluntary standards with which there is substantial compliance. Therefore, we cannot adopt the commenter's recommendations. If information becomes available showing that such action is needed, then we could consider whether we could make the findings to issue a standard or ban drawstrings in sizes smaller than 2T or in pants, or to support industry in the implementation of a voluntary standard addressing these issues.

(Comment 3)—Two commenters stated that product safety standards should refer to the ages of the children at risk and not to the sizes of the garments.

(Response 3)—This suggestion is outside the scope of this rulemaking. Only those characteristics of a product that have been addressed by a voluntary standard may be deemed to be a substantial product hazard in a rule made under section 15(j) of the CPSA. The applicable voluntary standard for drawstrings in children's upper outerwear, ASTM F 1816-97, addresses garment sizes but not children's ages. Therefore, the Commission cannot take the action requested in this rulemaking.

However, the preamble to the proposed rule (75 FR at 27501 through 27502) discussed what the corresponding ages are—namely, that size 2T would be worn by children about 18 months of age; size 12 would be worn by children about 10 years of age; and size 16 would be worn by children about 14 years of age. Furthermore, although the voluntary standard on which the proposed rule is based (ASTM F 1816-97) refers to children's clothing sizes only, it also references age in the Rationale (Appendix, section X1). That section reports the ages of the victims in incidents involving hood and neck drawstrings (14 months to 8 years) and incidents involving waist and bottom drawstrings (7 years to 14 years). The CPSC Directorate for Epidemiology staff's review of the data on related incidents shows that little has changed with regard to age since the Standard was developed. Those incidents associated with neck drawstrings involved children 10 years old and younger. Incidents associated with waist or bottom drawstrings involved children 14 years old and younger. The ages reported in the incident data correlate well with information from retailer size charts, anthropometric body measurement data, and standard tables of body measurements developed by ASTM. These sources show that the age range of children likely to wear garments in sizes 2T to 12 is 18 months to 10 years, and the age range of children likely to wear garments sizes 2T to 16 is 18 months to 14 years. These are the ages the Standard is intended to cover because children of those ages are most at risk.

(Comment 4)—Two commenters also requested “that CPSC clearly state that adult apparel, marketed to adults, or merchandised in adult departments will not be subject to this rule.” These commenters stated that “adult apparel sized small or extra small could easily pass for a larger sized child's garment. * * * [a] generic adult's sized extra small hooded sweatshirt could easily be mistaken as a children's garment.”

(Response 4)—We agree that garments intended for adults and marketed to adults only would not be subject to the rule because they are not children's garments. We do not believe, however, that consideration of the manufacturer's intended wearer should supersede consideration of the actual or reasonably foreseeable wearers. While a manufacturer, retailer, or distributor may intend that only adults should wear the garment, we will consider the reasonably foreseeable uses and misuses of garments that are labeled ambiguously, including uses by those whom it is reasonably foreseeable will wear it. Many factors could confound a manufacturer's, retailer's, or distributor's intent that only adults would wear a garment.

We believe that consumers make their buying and wearing decisions based primarily on a garment's size and characteristics, including fabric, color, print, texture, and other features, independent of label information related to the intended wearer. We agree that smaller adult apparel could easily pass for an older child's garment. This is evidenced in the overlap of body dimensions used in industry sizing charts to define smaller adult sizes and larger children's sizes. Further, children at the pre-teen and teen stages often want to dress like adults, and adults sometimes wear clothing that appeals to children and is available in sizes for both children and adults ( e.g., clothing with designs relating to cartoon characters and theme-related characters). Because of the overlap in sizes and appeal, it is foreseeable that ambiguously labeled apparel could pass for a child's garment and may be purchased for use by children. Therefore, we believe that such clothing should meet the Standard's drawstring requirements and should be subject to the 15(j) rule for drawstrings and that it would be inappropriate to exclude all “adult apparel” from the rule.

In addition, relying on where or how a given retailer may display a garment would present practical problems. One retailer may offer the garment in the women's section; another retailer may offer the same garment in the children's section; and yet another retailer may offer the garment in a grouping by garment type, without reference to age or gender ( e.g., all sweatshirts). Some retailers may not differentiate at all between departments within their store based on age or gender. It would be impractical and unwise to rely on presumptions about the retail treatment.

For these reasons, if upper outerwear is labeled ambiguously or not marketed clearly for adults only and is equivalent to a size within the range of 2T to 16, then that upper outerwear should meet the Standard's drawstring requirements and should be subject to the 15(j) rule for drawstrings. If a manufacturer, retailer, or distributor has any doubt, it should report the garment to the Commission in accordance with section 15 of the CPSA.

(Comment 5)—Two commenters jointly requested clarification regarding the definition of a “drawstring” as stated in the Standard. Specifically, these commenters stated that the common industry understanding of a drawstring is a cord that passes through a channel, and the commenters raised concerns about the 2009 recall of children's hooded sweatshirts with ties sewn in at the base of the hood. The commenters stated that these ties do not pass through a channel or necessarily provide for closure. They expressed concern about the potential for confusion in the marketplace regarding which closures meet the “drawstring” definition in the Standard.

(Response 5)—The Commission has long understood that nonretractable cords, ribbons, or tapes of any material that pull together parts of upper outerwear to provide for closure constitute drawstrings, regardless of whether they pass through a channel. Drawstrings that fail to comply with or that result in an article of children's upper outerwear failing to comply with the Standard's performance requirements constitute defects that create a substantial risk of injury to children, regardless of whether they pass through a channel. Both where the drawstring is through a channel and where the drawstring is in the form of a tie, if the drawstring becomes caught, the garment's neck, collar, or other such part becomes taut around the neck, leading to possible strangulation. In the Commission's recall and other enforcement efforts, CPSC has interpreted and applied the Standard in a manner consistent with these beliefs.

The Standard defines a “drawstring” as “a non-retractable cord, ribbon, or tape of any material to pull together parts of upper outerwear to provide for closure.” The Standard's “drawstring” definition is not limited to cords, ribbons, or tapes that pass through a channel. Further, the definition does not exclude ties. The Commission believes the definition in the Standard is without ambiguity, and there is sufficient information to determine that there has been substantial compliance with the Standard with respect to ties. Thus, ties continue to be included within the definition of “drawstrings” in this final rule.

We believe that, under section 15 of the CPSA, manufacturers, retailers, and distributors have had a continuing duty to report to the Commission regarding drawstrings, which include ties, and that firms will continue to have such a duty. Reporting will increase the safety of children, a vulnerable population, and, as warranted, we will continue to seek recalls of children's upper outerwear with drawstrings given the substantial risk of injury these garments present to children.

(Comment 6)—A commenter expressed concern about how the Commission would evaluate whether a children's garment falls within the size range stated in the Standard. Noting that apparel sizing varies among companies, the commenter questioned the Commission's position in proposed § 1120.3(b)(2)(v) that a firm's statement of what sizes are equivalent to sizes 2T to 16 may not be used to show that the size of a garment is not equivalent to a size in the range of 2T to 16. The commenter stated that the Commission's position is inconsistent with the CPSIA's definition of the term “children's product,” which lists a statement of the manufacturer's intended use as a factor to be considered. The commenter stated that a manufacturer's statement, if reasonable, should be the primary consideration of whether a garment is covered by the Standard.

(Response 6)—After further evaluation, we are removing § 1120.3(b)(2)(v) in its entirety. We will consider a manufacturer's statement about the intended use of a children's garment, if such statement is reasonable. We do not believe, however, that a manufacturer's statement, even if reasonable, should be the primary consideration in determining whether a garment is covered by the Standard. Rather, in any given matter, we will consider all of the relevant factors and will weigh them appropriately.

(Comment 7)—A commenter recommended that “Lightweight garments worn on the upper body, but intended as an inner layer, or intended for warmer weather climates that do not use outerwear should be excluded.”

(Response 7)—The Standard defines “upper outerwear” as “clothing, such as jackets and sweatshirts, generally intended to be worn on the exterior of other garments.” This definition excludes underwear and inner layers, but includes lightweight outerwear that is appropriate for use in warmer climates. The hazards presented by drawstrings on children's upper outerwear are not limited to heavyweight outerwear. Any drawstring that can dangle from the neck or waist area of outerwear during play activities presents the hazard, even if the garment's fabric is lightweight. Pants, shorts, and skirts are not intended for the upper portion of the body and are excluded from the scope of the Standard.

The final rule for drawstrings creates a new § 1120.3(b)(1) to specify that items of children's upper outerwear that are subject to ASTM F 1816-97, but that do not comply with it, are substantial product hazards under section 15(a)(2) of the CPSA. The rule also creates a new § 1120.2(c) to define a “drawstring” as “a non-retractable cord, ribbon, or tape of any material to pull together parts of outerwear to provide for closure.”

To facilitate determining which garments that are sized under a sizing system other than the numerical system (2T to 16) are equivalent to sizes 2T to 16, § 1120.3(b)(2)(i) provides that garments in girls' size Large (L) and boys' size Large (L) are equivalent to size 12. Section 1120.3(b)(2)(ii) specifies that garments in girls' size Extra-Large (XL) and boys' size Extra-Large (XL) are equivalent to size 16.

Section 1120.3(b)(2)(iii) provides that if a garment is labeled for a range of sizes, the garment will be considered subject to ASTM F 1816-97, if any size within the range is subject to ASTM F 1816-97. Section 1120.3(b)(2)(iv) provides that, in order to fall within the scope of § 1120.3(b)(2)(i) through (iii), a garment need not state anywhere on it, or on its tags, labels, package, or any other materials accompanying it, the term “girls” or the term “boys” or whether the garment is intended for girls or boys. Last, § 1120.3(b)(v) states that the Commission may use any other evidence that would tend to show that an item of children's upper outerwear is a size that is equivalent to sizes 2T to 16.

Section 15(j) of the CPSA authorizes us to issue a rule specifying that a consumer product (or class of consumer products) has characteristics whose presence or absence creates a substantial product hazard. This rule, which falls under section 15 of the CPSA, is not a consumer product safety rule and does not create a consumer product safety standard. Thus, the rule does not trigger any testing or certification requirements under section 14(a) of the CPSA.

Although the final rule does not establish a consumer product safety standard, placing a consumer product on this substantial product hazard list has certain consequences. A product that is or has a substantial product hazard is subject to the reporting requirements of section 15(b) of the CPSA. 15 U.S.C. 2064(b). A manufacturer who fails to report a substantial product hazard to the Commission is subject to civil penalties under section 20 of the CPSA and possibly is subject to criminal penalties under section 21 of the CPSA. 15 U.S.C. 2069, 2070.

A product that is or contains a substantial product hazard is subject to corrective action under section 15(c) and (d) of the CPSA. 15 U.S.C. 2064(c), (d). Thus, the Commission can order the manufacturer, distributor, or retailer of the product to offer to repair or replace the product, or to refund the purchase price to the consumer.

Finally, a product that is offered for import into the United States, and is or contains a substantial product hazard, must be refused admission into the United States under section 17(a) of the CPSA. 15 U.S.C. 2066(a).

The Regulatory Flexibility Act (“RFA”) generally requires that agencies review proposed and final rules for their potential economic impact on small entities, including small businesses. 5 U.S.C. 601-612. In the preamble to the proposed rule (75 FR at 27503), we noted that Commission staff estimates that a very high percentage of small businesses that manufacture or sell children's upper outerwear already sell only garments that comply with, ASTM F 1816-97. Also, the Commission's Office of Compliance and Field Operations already considers children's upper outerwear with hood or neck area drawstrings that are subject to, but do not comply with, ASTM F 1816-97 to be a substantial product hazard and would seek recalls of such products, regardless of whether they are added, by rule, to the list of substantial product hazards under Section 15(j) of the CPSA. Finally, conformance to ASTM F 1816-97 is achieved for many garments distributed in commerce simply by eliminating drawstrings from the manufacturing process with minimal or no increase in resulting production costs. Therefore, we certified that, in accordance with section 605 of the RFA, the rule, if promulgated, would not have a significant economic impact on a substantial number of small entities.

We received no comments concerning the rule's impact on small businesses, and we are not aware of any information that would change our certification.

The Commission's environmental review regulation at 16 CFR part 1021 has established categories of actions that normally have little or no potential for affecting the human environment and therefore do not require either an environmental assessment or an environmental impact statement. This rule is within the scope of the Commission's regulation, at 16 CFR 1021.5(c)(1) that provides a categorical exclusion for rules to provide design or performance requirements for products. Thus, no environmental assessment or environmental impact statement for this rule is required.

The final rule does not impose any information collection requirements. Accordingly, the final rule is not subject to the Paperwork Reduction Act, 44 U.S.C. 3501-3520.

The preamble to the proposed rule indicated that a final rule would take effect 30 days from its date of publication in the Federal Register , such that, after that date, all items of children's upper outerwear that are subject to, but do not comply with, ASTM F 1816-97, would constitute a substantial product hazard.

We received no comments regarding the effective date. Accordingly, the effective date for this rule is August 18, 2011.

Under section 26(a) of the CPSA, 15 U.S.C. 2075(a), if a “consumer product safety standard under [the CPSA]” is in effect and applies to a product, no state or political subdivision of a state may either establish or continue in effect a requirement dealing with the same risk of injury, unless the state requirement is identical to the federal standard. A rule under section 15(j) of the CPSA is not a “consumer product safety standard.” Accordingly, the preemptive effect of section 26(a) of the CPSA does not apply to a rule under section 15(j) of the CPSA.

For the reasons stated above, and under the authority of 15 U.S.C. 2064(j), 5 U.S.C. 553, and section 3 of Public Law 110-314, 122 Stat. 3016 (August 14, 2008), the U.S. Consumer Product Safety Commission amends title 16 of the Code of Federal Regulations as follows:

On July 21, 2010, President Obama signed the Dodd-Frank Act. 1 Title VII of the Dodd-Frank Act amends the CEA  2 to establish a comprehensive new regulatory framework for swaps. The legislation was enacted to reduce risk, increase transparency, and promote market integrity within the financial system by, among other things: (1) Providing for the registration and comprehensive regulation of swap dealers and major swap participants; (2) imposing clearing and trade execution requirements on standardized derivative products; (3) creating robust recordkeeping and real-time reporting regimes; and (4) enhancing the rulemaking and enforcement authorities of the Commission with respect to, among others, all registered entities and intermediaries subject to the Commission's oversight. Title VII also includes amendments to the federal securities laws to establish a similar regulatory framework for security-based swaps under the authority of the Securities and Exchange Commission (“SEC”).

Section 754 of the Dodd-Frank Act states that, unless otherwise provided, the provisions of subtitle A of title VII of the Dodd-Frank Act (“Title VII”)  3 “shall take effect on the later of 360 days after the date of the enactment of this subtitle or, to the extent a provision of this subtitle requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provision of this subtitle.” The date 360 days after the date of enactment is July 16, 2011.

To implement the Dodd-Frank Act, as of July 8, 2011, the Commission has issued 52 advance notices of proposed rulemaking or notices of proposed rulemaking, two interim final rules, six final rules, and one proposed interpretive order. The regulatory requirements that have been proposed by the Commission present a substantially complete mosaic of the Commission's proposed regulatory framework under Title VII. In light of this substantially complete mosaic, the Commission reopened or extended the comment period of many of its proposed rulemakings in order to provide the public with an additional opportunity to comment on the proposed new regulatory framework for swaps, either in part or as a whole. 4 The extended comment period closed on June 3, 2011. The Commission also has solicited public comments on the phasing of rule implementation (i.e., identifying which requirements can be met sooner and which ones will take more time). 5

Section 712(d)(1) of the Dodd-Frank Act requires the Commission and the SEC to further define certain terms used in Title VII, including the terms “swap,” “swap dealer,” “major swap participant,” and “eligible contract participant.”  6 Section 721(c) requires the Commission to adopt a rule to further define the terms “swap,” “swap dealer,” “major swap participant,” and “eligible contract participant” to prevent evasion of statutory and regulatory obligations. 7 The Commission has issued two notices of proposed rulemaking that address these further definitions. 8

The Commission's final rulemakings further defining the terms in sections 712(d) and 721(c) will not be in place as of July 16, 2011. Consequently, concerns have been raised about effects upon the swaps market and the applicability of various regulatory requirements to certain agreements, contracts, and transactions during the period between July 16, 2011 and the date(s) that those rulemakings have been completed. To address these concerns, and to “strive to ensure that current practices will not be unduly disrupted during the transition to the new regulatory regime,”  9 the Commission proposed to exercise its authority under CEA section 4(c) and section 712(f) of the Dodd-Frank Act.

Section 4(c) of the CEA, as amended by the Dodd-Frank Act, provides the Commission with authority to exempt certain agreements, contracts, and transactions (referred to hereafter collectively as “transactions”) that may otherwise be subject to the CEA from various provisions of the CEA. 10 Section 712(f) of the Dodd-Frank Act states that “in order to prepare for the effective dates of the provisions of this Act,” including the general effective date set forth in section 754, the Commission may “exempt persons, agreements, contracts, or transactions from provisions of this Act, under the terms contained in this Act.” Section 754 specifies that unless otherwise provided in Title VII, provisions requiring a rulemaking become effective “not less than 60 days after publication of the final rule” (but not before July 16, 2011).

The provisions of Title VII can be grouped into four major categories: (1) Provisions that require a rulemaking (for which relief was not proposed); (2) self-effectuating provisions that reference terms that require further definition; (3) self-effectuating provisions that do not reference terms that require further definition and that repeal provisions of current law; and (4) self-effectuating provisions for which relief was not proposed.

Category 1 provisions are not self-effectuating because they require a rulemaking. A significant number of the Title VII provisions fall into this category. Examples of Category 1 provisions include new CEA section 4s(a) (governing registration of swap dealers and major swap participants), new CEA section 4s(e) (governing capital and margin requirements for swap dealers and major swap participants), and new CEA section 4s(h) (external business conduct standards for swap dealers and major swap participants). 11 Pursuant to section 754, the rulemakings to implement these provisions of the CEA will not become effective, at a minimum, until 60 days after publication of a final Commission rule (and not before July 16, 2011).

Because the Category 1 provisions are not self-effectuating as of July 16, 2011, it was not necessary for the Commission to propose relief with respect to the same. As noted above, the Category 1 provisions will not go into effect until at least 60 days after publication of a final Commission rule in the Federal Register . 12

The Category 4 provisions also fell outside the scope of the proposed order. They are self-effectuating and do not require relief because, in the judgment of the Commission, compliance with these requirements upon the effective date will not cause undue disruption to affected transactions, markets, or entities, and a delay of the imposition of these statutory requirements would not be in the public interest.

The proposed order, as well as lists of the Category 1 and Category 4 provisions prepared by Commission staff, were published on the Commission's Web site ( http://www.cftc.gov ) on June 14, 2011. A list of the provisions in each of the four categories is provided in the Appendix to this Final Order.

On June 14, 2011, the Commission issued a proposed order to provide temporary exemptive relief in two parts, each addressing one of the remaining categories of provisions noted above: (1) Category 2—provisions that are self-effectuating (i.e., do not require rulemaking) and reference terms that require further definition (i.e., “swap,” “swap dealer,” “major swap participant,” or “eligible contract participant”); and (2) Category 3—provisions that are self-effectuating (i.e., do not require rulemaking) and repeal provisions of current law, but that do not reference terms that require further definition. The Commission's proposed order was published in the Federal Register on June 17, 2011. 13

With respect to part one of the proposed order addressing Category 2 provisions, the Commission proposed to temporarily exempt persons and entities from the provisions of the CEA, as added or amended by the Dodd-Frank Act, that reference one or more of the terms regarding entities or instruments subject to further definition under sections 712(d) and 721(c) of the Dodd-Frank Act, including the terms “swap,” “swap dealer,” “major swap participant,” or “eligible contract participant.”  14 CEA section 4d(f), as amended by section 724 of the Dodd-Frank Act, is an example of a Category 2 provision to which the exemption provided in the proposed order would extend. 15

The Commission made clear that the proposed exemptive relief from such provisions would apply only with respect to those requirements or portions of such provisions that specifically relate to such referenced terms. Further, the Commission stressed that the proposed relief “would not in any way limit the Commission's authority with respect to any person, entity, or transaction pursuant to CEA sections 2(a)(1)(B), 4b, 4o, 6(c), 6(d), 6c, 8(a), 9(a)(2), or 13, or the regulations of the Commission promulgated pursuant to such authorities, including regulations pursuant to CEA section 4c(b) proscribing fraud.”  16

The Commission also placed other limitations on the relief in part one of the proposed order. First, the Commission stated that the relief would not apply to any provisions of Title VII and the CEA that have become effective prior to July 16, 2011 or to Commission regulations already issued. 17 Further, the relief would not affect any effective date set out in any specific Dodd-Frank Act rulemaking by the Commission. 18 In addition, the proposed order would not limit the Commission's authority under section 712(f) of the Dodd-Frank Act to issue rules, orders, or exemptions prior to the effective date of any provision, in order to prepare for the effective date of such provision, provided that such rule, order, or exemption shall not become effective prior to the effective date of the provision. 19 Finally, the Commission stated that the proposed order would not affect the applicability of any provision of the CEA to futures contracts or options on futures contracts. 20

The Commission proposed that the temporary exemptive relief would expire upon the earlier of: (1) The effective date of the applicable final rule further defining the relevant term; or (2) December 31, 2011. 21 In proposing to limit the relief to no more than a fixed period (i.e., December 31, 2011), the Commission provided the following reasons:

In the proposed order, the Commission reiterated its intent: (1) That existing practices should not be unduly disrupted during any transition period; and (2) to deliberatively and efficiently proceed to complete the rulemakings to implement the Dodd-Frank Act. 23 As to timing, the Commission proposed that in the event that a further definitions rulemaking is completed prior to December 31, 2011, the Commission will at the time of such rulemaking address the appropriate phase-in and implementation dates of the resulting regulatory requirements. Alternatively, the Commission stated, should the proposed order expire at the end of the fixed time period—December 31, 2011—such expiration will not affect the Commission's ability to provide further relief, as appropriate, to avoid undue disruption or costs to market participants. 24

With respect to part two of the proposed order addressing Category 3 provisions, the Commission's proposed order identified the existing provisions of the CEA that currently exclude or exempt, in whole or in part, certain transactions from Commission oversight under the CEA. 25 These are as follows:

Under the Dodd-Frank Act, these provisions will be removed from the CEA as of July 16, 2011. However, the Commission noted that part 35 of the Commission's regulations, 36 and part 32 with respect to options, 37 will continue to be available with respect to transactions that meet the conditions therein, until such time as they may be withdrawn, amended, or replaced by the Commission. 38

As the Commission stated in the proposed order, part 35 originally was promulgated in 1993 pursuant to, among others, the Commission's general exemptive authority in CEA section 4(c) and authority under section 4c(b), and provides a broad-based exemption from the CEA for “swap agreements” in any commodity. 39 Specifically, part 35 exempts “swap agreements,” as defined therein, from most of the provisions of the CEA if: (1) They are entered into by “eligible swap participants” (“ESPs”);  40 (2) they are not part of a fungible class of agreements standardized as to their material economic terms;  41 (3) the creditworthiness of any party having an actual or potential obligation under the swap agreement would be a material consideration in entering into or determining the terms of the swap agreement, including pricing, cost, or credit enhancement terms;  42 and (4) they are not entered into or traded on a multilateral transaction execution facility. 43 The Commission stated that transactions fully meeting the conditions of part 35 are outside the scope of the proposed order. 44

However, because part 35 covers essentially non-standardized, non-cleared, non-exchange traded transactions, certain persons or entities that currently rely on the CEA exclusions or exemptions cited above may not qualify for part 35. Therefore, and in response to requests from market participants for greater clarity regarding the applicability of various statutory and regulatory requirements to certain transactions following the general effective date, the Commission, pursuant to its authority under CEA section 4(c), proposed to grant relief for those transactions that satisfy certain criteria specified below. 45

Specifically, the Commission proposed to temporarily exempt a transaction in exempt or excluded commodities (and any person or entity offering or entering into such transaction) from the CEA (other than the anti-fraud and anti-manipulation enforcement provisions identified below) following the general effective date if the transaction otherwise would comply with part 35, notwithstanding that: (1) The transaction may be executed on a multilateral transaction execution facility; (2) the transaction may be cleared; (3) persons offering or entering into the transaction may be eligible contract participants as defined in the CEA (prior to July 16, 2011); (4) the transaction may be part of a fungible class of agreements that are standardized as to their material economic terms; and/or (5) no more than one of the parties to the transaction is entering into the transaction in conjunction with its line of business, but is neither an eligible contract participant nor an ESP, and the transaction was not and is not marketed to the public (the “line of business provision”). 46

Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer, Philip D. Moeller, John R. Norris, and Cheryl A. LaFleur.

1. On March 17, 2011, the Commission issued Order Nos. 748 and 749, which approved new and revised Reliability Standards, including IRO-004-2 and EOP-001. In this order, we grant the North American Electric Reliability Corporation's (NERC) request for clarification of certain aspects of Order No. 748 including: (1) The proper effective date language for Reliability Standard IRO-004-2; (2) the correct version identification for the approval of EOP-001 intended by the Commission; and (3) the proper effective date for Reliability Standard EOP-001-2. The Commission also grants NERC's request for clarification of Order No. 749 with respect to the version EOP-001 the Commission intended to approve and its effective date.

2. Order No. 748  1 approved three new Interconnection Reliability Operations and Coordination (IRO) Reliability Standards and seven revised Reliability Standards related to Emergency Operations and Preparedness (EOP), IRO, and Transmission Operations (TOP). The approved IRO Reliability Standards were designed to prevent instability, uncontrolled separation, or cascading outages that adversely impact the reliability of the interconnection by ensuring that the reliability coordinator has the data necessary to analyze and monitor Interconnection Reliability Operating Limits (IROL) within its Wide-Area . 2 The Final Rule also approved the addition of two new terms to the NERC Glossary of Terms, “Operational Planning Analysis” and “Real Time Assessment.”

3. Order No. 749  3 approved three EOP Reliability Standards as well as the definition of the term “Blackstart Resource.” The approved Reliability Standards require transmission operators, generation operators, and certain transmission owners and distribution providers to ensure that plans, facilities, and personnel are prepared to enable system restoration from Blackstart Resources and require reliability coordinators to establish plans and prepare personnel to enable effective coordination of the system restoration process. The Commission also approved NERC's request to retire four effective and one pending Reliability Standards.

4. On April 18, 2011, NERC submitted a request for clarification of certain aspects of Order No. 748 including: (1) The effective date of Reliability Standard IRO-004-2; (2) the version of EOP-001 approved by the Commission; and (3) the effective date of Reliability Standard EOP-001-2. On the same day, NERC submitted a request for clarification of Order No. 749 similarly seeking clarification on the version of Reliability Standard EOP-001 approved by the Commission and its effective date.

5. With respect to Reliability Standard IRO-004-2, NERC states that the effective date provision in Reliability Standard IRO-004-2 is inconsistent with the implementation of the three new IRO standards. NERC explains that it proposed, in its petition, to retire six of the seven requirements in the IRO-004-1 standard, and designated the one remaining requirement as IRO-004-2. The Commission approved IRO-004-2 in the Final Rule, but the effective date provision in IRO-004-2 states that the entire Reliability Standard should be retired, even though one requirement remains in effect with Commission approval of revised Reliability Standard. NERC requests clarification from the Commission that the effective date language in the IRO-004-2 standard should be revised as “the latter of either April 1, 2009 or the first day of the first calendar quarter, three months after applicable regulatory approval.”

6. Second, NERC requests clarification regarding the Commission's approval of Reliability Standard EOP-001-1. NERC notes that at the same time NERC submitted a Petition in RM10-15-000, NERC filed a petition in Docket No. RM10-16-000 seeking approval of certain EOP Reliability Standards. Each Petition contained specific proposed changes to Reliability Standard EOP-001-0. NERC states in both Petitions that it requested that the Commission approve revised Reliability Standard EOP-001-1 only if the concurrent petition is not previously (or concurrently) approved by the Commission and otherwise to approve Reliability Standard EOP-001-2, which reflected the changes in both Petitions, rather than EOP-001-1. NERC requests clarification that EOP-001-2 is the approved Reliability Standard given the concurrent issuance of the Final Rules.

7. Finally, NERC requests clarification regarding the effective date of Reliability Standard EOP-001-2. NERC states that it requested Reliability Standard EOP-001-1 to become effective “the first day of the first calendar quarter, three months after applicable regulatory approval.” However, NERC states that it also requested that if the Commission previously or concurrently approved Reliability Standard EOP-001-2, it should be made effective “twenty-four months after the first day of the first calendar quarter following applicable regulatory approval.” NERC seeks clarification that Reliability Standard EOP-001-2 be made effective in accordance with the implementation schedule in the EOP-001-2 Reliability Standard given the concurrent issuance of the Final Rules.

8. The Commission grants NERC's request for clarification regarding Reliability Standard IRO-004-2. Consistent with our approval of IRO-004-2, the Commission clarifies that the effective date provision in IRO-004-2 should be modified as requested by NERC to reflect the one requirement in IRO-004-2 that was not retired. NERC has included the modified effective date provision for IRO-004-2 as Exhibit A to its request for clarification. This clarification should alleviate confusion implementing Reliability Standard IRO-004-2.

9. The Commission also clarifies that it approved Reliability Standard EOP-001-2. Each NERC Petition in Docket Nos. RM10-15-000 and RM10-16-000 proposed unique changes to EOP-001-0 not reflected in the other petition presenting a logistical problem with cross-references. Given the issuance of Order Nos. 748 and 749, both on March 17, 2011, Reliability Standard EOP-001-2 is the currently-operative version. Moreover, we clarify that Reliability Standard EOP-001-2 shall become effective according to the implementation schedule in that standard.

10. In addition to publishing the full text of this document in the Federal Register , the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through FERC's Home Page ( http://www.ferc.gov ) and in FERC's Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.

11. From FERC's Home Page on the Internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field.

12. User assistance is available for eLibrary and the FERC's Web site during normal business hours from FERC Online Support at (202) 502-6652 (toll free at 1-866-208-3676) or e-mail at ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-8371, TTY (202) 502-8659. E-mail the Public Reference Room at public.referenceroom@ferc.gov.

This document, all comments, and the final rule may be viewed on line through the Federal eRulemaking portal at: http://www.regulations.gov. The docket identification number is FHWA-2010-0156. The Web site is available 24 hours each day, 365 days each year. Anyone is able to search the electronic form of all comments in any one of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, or labor union). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (Volume 65, Number 70, Pages 19477-78) or you may visit http://DocketsInfo.dot.gov.

The FHWA issued the final rule establishing requirements for the Real-Time System Management Information Program on November 8, 2010, at 75 FR 68418. The final rule document also sought additional comments relating to the costs and benefits of the Real-Time System Management Information Program and general information about current and planned programs. Although the Regulatory Cost Analysis found in the docket for the rulemaking attempts to capture the scope of costs and benefits associated with this rule, the FHWA sought further information to determine a comprehensive picture of costs and benefits given the flexibility of approaches that can be used and the limitations of the current studies.

The specific questions posed in the Request for Comments were:

(1) What are the costs and benefits of each individual provision required under rule? If some provisions have net costs, would certain modifications to those provisions lead to net benefits?

(2) What are the impacts of requiring these provisions on States and Metropolitan Areas (do some States and Metropolitan Areas realize net costs instead of net benefits)? If some States and Metropolitan Areas realize net costs, would certain modifications to provisions ensure net benefits?

(3) Is there a specific, alternative approach to calculating costs and benefits that would be more appropriate than the current use of the Atlanta Navigator Study?

(4) Although information dissemination to the public is not within scope of this rule, it is important to understand how information is typically disseminated so that the technologies used to collect and monitor data are compatible with technologies used to disseminate this information. This is especially important to keep up with new technological advances and to ensure that States use the most effective, low cost methods to both collect and disseminate information.

(A) What technologies will States use to collect and monitor information under this rule?

(B) What technologies are States planning to use to disseminate this information or what are they already using?

(C) Do the technologies States plan to use present any interoperability issues? Do they allow for use of advanced technologies that could be the most cost-effective means of collecting and disseminating this information?

(D) Are there any structural impediments to using low-cost advanced technologies in the future given the provisions and specifications contained in this rule?

(E) Given the research investment into wireless communications systems in the 5.9 GHz spectrum for Intelligent Transportation Systems applications, to what extent could systems in this spectrum also be used to fulfill the requirements of this rule and/or enable other applications?

(F) Given that there are legacy technologies in place now, and that there are new technologies on the horizon that are being adopted, how can we ensure that investments made today to comply with this rule are sustainable over the long term?

(5) This rule defines Metropolitan Areas to mean the geographic areas designated as Metropolitan Statistical Areas by the Office of Management and Budget with a population exceeding 1,000,000 inhabitants. Is this population criterion appropriate, rather than considering traffic, commuting times, or other considerations?

Fourteen of the 31 parties that provided comments responded to at least some of the questions. Other comments provided discussions regarding real-time information or presented questions on specific provisions of the regulation. Clarifications are offered below in addition to summarizing the responses to the Request for Comments.

Three of the general comments to the docket posed questions related to the roadways that are included under the Real-Time System Management Information Program and travel time reporting requirements. The program includes all the roads of the Interstate System (23 CFR 511.311) and other roads in metropolitan areas deemed to be “routes of significance” by the States (23 CFR 511.313). Similar to design exceptions permitted under 23 U.S.C. 103(c)(1)(B)(ii), highways on the Interstate System in Alaska and Puerto Rico may be granted exemptions from the requirements of the Real-Time System Management Information Program upon request from the States. In metropolitan areas, the requirement for travel time information in metropolitan areas under 23 CFR 511.309(a)(4) only applies to roads of the Interstate System and routes of significance that are limited-access roads.

Seven of the comments posed questions related to the information requirements of the Real-Time System Management Information Program. There were two specific comments about the need for increased infrastructure or sensors to provide continuous roadway weather monitoring to comply with the requirements of 23 CFR 511.309(a)(3) for roadway weather observations. In addressing similar comments received to the Notice of Proposed Rulemaking, the Final Rule was revised to reduce the frequency and minimum level of roadway weather information required under the program so that observation-level (in contrast to electronically-monitored) information could comply with the requirement.

A couple of these commenters included questions related to determining the quality of the real-time information in meeting the requirements of 23 CFR 511.309(a)(5) and (6). Since the Real-Time System Management Information Program only includes requirements for information and does not include any specific technology or system design requirements, specific methods for measuring the quality of information cannot be included. The States, as designers or procurers of the systems that provide the information required under the program, are in the best position to decide upon the specific methods for gauging the quality of their information systems. Hence, the provision in 23 CFR 511.311(b) requires States to determine the methods to be used in measuring the quality of the real-time information and receive FHWA concurrence in the selected methods.

Finally, three commenters discussed specific aspects of system design or information dissemination related to the Real-Time System Management Information Program, including referring to private sector providers and detailed methods for determining locations. Since the program requirements do not include specific system design or dissemination, these comments, while providing good information and discussion about real-time information systems, are outside the scope of the regulation.

The responses to the first two questions were very similar in nature. Responders noted that determining costs and benefits for individual provisions of the regulation was difficult if not impossible since, as noted by the South Dakota Department of Transportation, “* * * the same infrastructure is used to satisfy multiple provisions, identifying individual costs is also very complex.” The Virginia Department of Transportation commented that the benefits of information depend largely on how such information will be used and decoupling data collection from data usage makes it challenging to properly define or quantify the benefits. In addition, the Minnesota Department of Transportation commented that it is very difficult to determine costs and benefits for the individual rule provisions since the various provisions are not normally implemented separately. Since these functions tend to be deployed simultaneously, separate determination of the costs and benefits is often impossible.

Three responders provided information related to costs to implement and operate various transportation management and information systems. Minnesota provided its costs for installing freeway management systems that include real-time traffic monitoring components but also include video cameras, dynamic message signs, and other components outside the scope of this regulation. Alaska provided costs related to its statewide information system, but also included costs related to highways of significance. Because Alaska does not have any major metropolitan areas (as defined in 23 CFR 511.303), there are no routes of significance subject to this regulation. Kansas provided detailed cost information for its traveler information systems, including costs related to additional installation of roadway devices for real-time monitoring in the Kansas City metropolitan area that reflect implementation across the entire Metropolitan Statistical Area (MSA). As noted later in the summary of responses to the fifth question and responding to concerns related to the expanse of the MSA, the FHWA will develop guidelines to provide assistance in consistent identification of affected roadways in metropolitan areas. This cost information, when examined for potential implementation of systems within the scope of this regulation, aligns with the cost assumptions presented in the rulemaking.

No responder was able to provide any readily-available quantifiable information about benefits of a real-time information program. The Kansas Department of Transportation provided information from an analysis conducted for the Kansas City metropolitan area that indicated an eight to one (8:1) benefit to cost ratio for investments in the intelligent transportation systems (ITS) technologies used in the Kansas City area, but noted that the ratio would likely be lower for rural areas. The Kansas Department of Transportation also noted that potential modifications to the provisions to eliminate continuous reporting of construction, incident, and road condition information or increasing the timeliness of information to more than 20 minutes may reduce overall costs. The North Dakota Department of Transportation similarly commented on the challenges of providing continuous traffic and travel conditions, especially for rural States.

The Minnesota Department of Transportation commented that one consideration of costs and benefits is that for public sector transportation management systems, the benefits accrue to a different entity than the entity that pays the costs. The benefits accrue to individual drivers and to society as a whole, but do not provide funding back into the public agency's budget, although the public agency must manage the costs of installation, operation, and maintenance as part of its constrained budget. Minnesota further commented that one way to increase the benefit-to-cost ratio would be to increase the use of automation, thereby decreasing manual data entry. The personnel that manually enter data are the busiest with their other tasks at the very time the data needs to be entered. Meeting the rule timeliness requirements is most affected by availability of staff to ensure timely data entry, which is a cost consideration. The Alaska Department of Transportation and Public Facilities noted that a Federal requirement for real-time data management requires department-wide cooperation and collaboration at the State and local levels, and it cannot stress this as a benefit enough, considering the many stove pipe systems around the department that should coordinate.

There were four responses to the third question. The Pennsylvania Department of Transportation commented that it anticipated using its own benefit-cost analysis methods for any real-time information system implementations. The Virginia Department of Transportation commented that one alternative approach is to calculate costs and benefits within the contexts of different objective areas, for example, analyzing congestion relief along a corridor or an urban area, improving traveler satisfaction, or improving the effectiveness of traffic incident management. The Kansas Department of Transportation reiterated the approach it used in determining the benefit-to-cost ratio of eight-to-one for the Kansas City area. The South Dakota Department of Transportation commented that an approach that is more clearly applicable to rural areas would be desirable since congestion is not the primary travel concern in rural States such as South Dakota.

The fourth question, with its six parts, was the most complex and received 12responses. Not all responders commented on all parts of the question. The responses to the first two parts related to technologies used to collect and to disseminate information, indicated the use of traditional techniques such as manually-entered information, sensors, cameras, highway advisory radios, dynamic message signs, 511 travel information telephone services, and Internet web sites. Some responders noted the use of newer and emerging techniques such as gathering information from buses serving as traffic probes, acquiring information from private providers, using social media to provide information, electronic mail alerts, and developing applications for use by consumer mobile electronic devices.

Responders to the third part of the fourth question, related to interoperability issues of planned technologies, discussed the desire to use open platform based applications and approved ITS communications standards. The Pennsylvania Department of Transportation noted that interoperability issues associated with meeting the Real-Time System Management Information Program requirements would be similar to interoperability issues associated with deployment of a statewide ITS device command and control software application. The Chicago Department of Transportation noted that it is working with regional stakeholders to address the interoperability, technical, and comparability issues within the framework of the northeastern Illinois regional ITS architecture.

Responses to the fourth part of the fourth question indicated that there may be some challenges to using low-cost advanced technologies, especially related to State procurement or public-private partnership arrangements. The Pennsylvania Department of Transportation noted that a potential impediment may be State procurement laws that could determine how technologies may be obtained, and that there are certain cases where proprietary hardware should be considered. The Minnesota Department of Transportation commented that a structural impediment exists in combining State-owned infrastructure-based information with purchased privately-sourced information. The use of purchased data from private sources to fill in gaps in coverage has been hindered by data ownership issues, necessitating a completely separate data system to ensure that the private-sourced data is not provided to competitors through the State's information dissemination system. These duplicate systems have not been practical, but in geographic areas with little State-owned infrastructure-based information this would be less of an impediment. The Kansas Department of Transportation commented that although it has had a positive experience with public-private partnerships, it is also aware of the risks associated with purchasing from or relying on third-party providers for critical infrastructure components needed for the rule.

The fifth part of the fourth question asked about the potential for 5.9 gigahertz (GHz) wireless communications to fulfill the requirements of the Real-Time System Management Information Program. In general, responders commented that 5.9 GHz communications holds potential for helping meet the regulation's requirements, but in cooperation with other wireless communications methods. The Vehicle Infrastructure Integration Consortium (VIIC) noted that it expects that vehicles and roadway infrastructure equipped with 5.9 GHz communications systems for safety enhancement ultimately could support the purposes of the Program and be used to fulfill some of the requirements of the rule. However, these cooperative communication systems are unlikely to be available widely on vehicles or the infrastructure by the November 2014 date for States to establish their information programs for interstate highways. The Minnesota Department of Transportation noted that, given the likely time frame for deployment of 5.9 GHz communications systems, it is too early to plan for 5.9 GHz as part of the implementation of the Real-Time System Management Information Program. The Virginia Department of Transportation commented that it envisions using 5.9 GHz communications as a component of its future ITS roadside applications since it could facilitate the collection and derivation of travel time information, but Virginia is also testing other wireless technologies to capture travel times. The Illinois Department of Transportation noted that absent a system architecture and standards for this communication and data, there is a significant risk that stakeholders might invest in technologies that will depend on the 5.9 GHz spectrum that may be allocated to other users as the migration to comply with this requirement occurs. Other responders such as the Nebraska Department of Roads and the Alaska Department of Transportation and Public Facilities did not see a role for 5.9 GHz communications at this time.

The last part of the fourth question asked about ensuring that investments made today to comply with the Real-Time System Management Information Program are sustainable over the long term. In general, responders commented that sound planning for investments, including the appropriate use of established standards, offers the best opportunity to ensure that the investments made today and the investments needed in the future are sustainable. One responder commented that technology advancements should not discourage deployment of systems using technologies, but rather sound investments require that agencies and developers need to do a good job with the engineering of these systems. The Pennsylvania Department of Transportation commented that it is always transitioning to newer and more cost-effective technologies where applicable since ITS technologies are ever advancing. The replacement of today's technologies will be addressed as part of the on-going expansion and update of a State's ITS infrastructure, with effective planning, partner participation, and standardization for interoperability where possible assisting with program sustainability. The Chicago Department of Transportation also noted that the regional ITS architectures, the architecture planning process, and the continued engagement of operator-level stakeholders offers the best opportunity to insure that the investments made today and the investments needed in the future are sustainable. Chicago also noted that continued vigilance is required to make sure that changing technologies are appropriately considered in planning for, developing, deploying, and operating Intelligent Transportation Systems. The Minnesota Department of Transportation noted that there have always been legacy technologies and new technologies and it has sought out new technologies and adopted them as appropriate. Minnesota further commented that it will use the best current technologies for new projects and upgrade legacy equipment through attrition, since it is not necessary to replace all the operational legacy equipment every time something new comes out. The Kansas Department of Transportation noted that using existing standards offers the greatest probability of future compatibility as States continue to stay up to date on new technologies, use non-proprietary equipment, support standards compatibility, and cautiously use non-proven technologies. Finally, the VIIC commented that related to the development of 5.9 GHz communications systems, Federal governance is necessary to avoid the implementation of divergent and conflicting requirements at the State or local governance levels, which would make deployment of a 5.9 GHz communications system impracticable for both system providers and users. The VIIC also commented that a Federal role is important to help assure long-term technological stability for these 5.9 GHz communications systems.

The 11 responses to the fifth question were consistent in identifying issues related to metropolitan areas. In general, there was agreement to using the metropolitan statistical area population of at least one million to determine which metropolitan areas should fall under the provisions of the Real-Time System Management Information Program. However, the comments identified issues related to the expanse of the geographic coverage of the roads within the metropolitan area. Because the geographic areas included under the Metropolitan Statistical Area (MSA) designations are expansive to include areas to provide nationally consistent delineations for collecting, tabulating, and publishing Federal statistics, there may be Interstate and other significant roads that rarely if ever experience congestion or variations in travel times. Four responses, three from States that do not include affected metropolitan areas, concurred with the use of the MSA for the Real-Time System Management Information Program. Three responses concurred with the use of the MSA but suggested flexibility be permitted to address the needs reflected by traffic patterns. Four responses suggested using the metropolitan planning boundaries or central counties for the geographic coverage of the Real-Time System Management Information Program. While there are no changes to the definition of metropolitan areas, these comments indicate a need for additional guidelines related to the roadway coverage within the metropolitan areas. The FHWA will develop guidelines from these comments and in collaboration with States and other stakeholders to provide assistance in consistent identification of affected roadways in metropolitan areas for implementation of the Real-Time System Management Information Program.

The FHWA and other programs within the DOT will use the valuable information offered in the responses in shaping program activities and projects. Specifically, FHWA will use the information to help in developing further assistance in implementing the Real-Time System Management Information Program, including working with stakeholders to develop guidelines related to roadway coverage in metropolitan areas.

On July 16, 2010, EBSA published in the Federal Register an interim final rule enhancing required disclosure from certain pension plan service providers to plan fiduciaries as part of a “reasonable” contract or arrangement for services under ERISA section 408(b)(2) (75 FR 41600) (the “408(b)(2) regulation” codified at 29 CFR 2550.408b-2(c)). EBSA subsequently published in the Federal Register , on October 20, 2010, a final rule concerning the disclosure of plan fee and expense information by plan administrators to plan participants and beneficiaries (75 FR 64910) (the “participant-level disclosure regulation” codified at 29 CFR 2550.404a-5). The participant-level disclosure regulation also modifies the disclosure requirements in the Department's regulation under ERISA section 404(c), at 29 CFR 2550.404c-1 (the “404(c) regulation”), in order to avoid duplication and to integrate its requirements with those of the new participant-level disclosure regulation.

As originally published, the effective date for the interim final 408(b)(2) regulation was July 16, 2011, as to both new and existing contracts or arrangements between covered plans and covered service providers. The Department received many requests that this effective date be delayed. A significant number of parties argued that more time is essential to update systems and procedures for information collection and disclosure. Pointing out that the Department had not yet published a final rule, parties explained that, if the Department modifies the current interim final rule, service providers will need additional time to make further changes to their systems and procedures for information collection and disclosure. Based on these concerns, the Department believed that an extension of the rule's effective date would allow time for improved compliance by plans and service providers, and thus would be in the interests of participants and beneficiaries. In February 2011, the Department announced its intention to delay the 408(b)(2) regulation's effective date until January 1, 2012. 1 The Department did not receive any negative comments on this announcement. In order to effectuate its intention, on June 1, 2011, the Department published a proposal to formally delay the effective date of the 408(b)(2) regulation to January 1, 2012.

As with the 408(b)(2) regulation, the Department received many requests that additional time be provided for parties to comply with the participant-level disclosure regulation. Parties argued that it would be preferable to extend application of the participant-level disclosure regulation until after the effective date of the 408(b)(2) regulation. Specifically, these parties pointed to the provision in the 408(b)(2) interim final regulation which requires covered service providers to furnish information requested by a responsible plan fiduciary or plan administrator in order to comply with ERISA's reporting and disclosure requirements, 2 which would include information needed to comply with the participant-level disclosure regulation. It would facilitate compliance with the participant-level disclosure regulation, they argued, if covered contracts and arrangements were first brought into compliance with the 408(b)(2) regulation, so that this reporting and disclosure provision is in effect, prior to the applicability of the participant-level disclosure regulation. The Department agreed that aligning the application of these two regulations would assist plan fiduciaries and plan administrators in obtaining information required to comply with the participant-level disclosure regulation. Further, the Department believed that, similar to the 408(b)(2) regulation, a limited extension of time to satisfy the initial compliance requirements for the participant-level disclosure regulation is in the best interests of covered individual account plans and their participants and beneficiaries. Delaying the application date would better afford plans sufficient time to ensure an efficient and effective implementation of the participant-level disclosure regulation.

To accomplish this, the Department, in its June 1, 2011 Federal Register notice, proposed to amend the transitional rule in paragraph (j)(3)(i) of the participant-level disclosure regulation. The transitional rule (as originally published) required individual account plans to furnish the initial disclosures required under the regulation no later than 60 days after the applicability date. The applicability date is the first day of the first plan year beginning on or after November 1, 2011. The Department proposed to delay the transition rule to provide plans with up to 120 days (rather than 60) after the plan's applicability date to furnish the initial disclosures that otherwise are required to be furnished on or before the date on which a participant or beneficiary can first direct his or her investments. Under the proposed transition rule, the initial disclosures would have to be provided to all participants and beneficiaries who have the right to direct their investments when such disclosures are furnished, not just to those individuals who had the right to direct their investments on the applicability date. This was to ensure that individuals who become plan participants in between the applicability date and the end of the proposed 120-day period receive the important information required under the regulation. 3

In response to its proposal, the Department received 11 comment letters. 4 This section summarizes these comments, the Department's response, and the final regulatory amendments published in this notice.

Commenters generally supported the Department's proposed alignment of the two rules' applicability dates and believe that the 408(b)(2) regulation should, as proposed, be effective before plans are required to comply with the participant-level disclosure regulation. Commenters disagreed, however, about the specific timeframes proposed by the Department (i.e., that the 408(b)(2) regulation would be effective on January 1, 2012 and that the transition rule for the participant-level disclosure regulation would be extended from 60 to 120 days following a covered individual account plan's applicability date). Some commenters endorsed the proposed timeframes. They explained that the Department has been working on fee disclosure and related issues for several years, and that service and investment providers, as well as plan fiduciaries, have had ample time to monitor these developments in fee disclosure and prepare for compliance. Further, one commenter stressed that application of the rules should not be further delayed because of the direct impact of plan fees on participants' and beneficiaries' retirement security.

Other commenters, however, argued that the Department must further delay application of the rules to enable timely compliance by service providers, plan fiduciaries, and plan administrators. Commenters explained that continuing uncertainty exists as to whether the Department will make significant changes from the interim final rule when it publishes the final 408(b)(2) regulation. Given this uncertainty, service providers argued that they will not be able to effectively finalize their system modifications or to firmly establish the content and format of their disclosures to reflect any such changes by January 1, 2012. One commenter also asserted that plan fiduciaries, who will be required to review and analyze the 408(b)(2) regulation's new disclosures, will not have enough time to satisfy these obligations and, if necessary, take action in response to the disclosures received from their plan service providers. Commenters provided several alternatives for further delaying the effective date of the 408(b)(2) regulation, for example, delaying the compliance date for six or twelve months following publication of a final rule or until January 1, 2013. To address commenters' concerns as to any new requirements in the final regulation, commenters suggested that the Department also could provide a delayed effective date for such new requirements, or announce a transition period during which parties may rely on the interim final rule.

Commenters also presented a variety of concerns as to why application of the participant-level disclosure regulation should be further delayed. For example, service providers and plan administrators continue to request interpretive guidance from the Department as to plan administrators' obligations under the participant-level disclosure regulation; commenters believe that such obligations are not clear and that additional guidance from the Department is necessary before parties are required to comply. Commenters also offered a variety of technical issues faced by plans and service providers as they prepare for compliance, for example potential difficulties in obtaining required investment information concerning non-registered plan designated investment alternatives and challenges faced by multi-vendor 403(b) plans that must obtain and compile data from vendors with different recordkeeping systems. Commenters suggested that the transition rule should be revised to be 120 or 180 days following the effective date of the 408(b)(2) regulation (rather than 120 days following the plan's applicability date). Commenters explained that tying the transition rule to the effective date of the 408(b)(2) regulation would avoid inconsistent treatment for non-calendar year plans under the proposed transition rule, which would, for example, result in a November 1 plan being unable to take full advantage of the proposed 120-day transition rule.

Based on its careful review of the comments and consideration of the arguments presented, the Department is amending the effective date of the 408(b)(2) regulation to be April 1, 2012. This is 3 months longer than the length of the extension in the proposal. As of publication of this notice in the Federal Register , the Department has not yet published a final 408(b)(2) regulation. To the extent the final regulation includes changes from the interim final rule, the Department agrees that covered service providers and plan fiduciaries would benefit from additional time to review such changes and make final modifications to their systems and disclosures. The Department wants to ensure that thorough and accurate disclosures, in compliance with the final 408(b)(2) regulation, are furnished to plan fiduciaries to help them carefully analyze plan service contracts and arrangements in compliance with their fiduciary duties under ERISA. Commenters generally requested an extension longer than 3 months. The Department, however, is not persuaded that such an extension is necessary under the circumstances. The Department intends to publish a final 408(b)(2) regulation in the Federal Register before the end of the year, and does not expect that the changes to the interim final rule are likely to require more additional time for compliance than is provided in this document. The Department also believes that a further delay in implementing the regulation is not in the best interest of responsible plan fiduciaries, plan administrators, and plan participants and beneficiaries. In the Department's view, delaying the effective date until April 1, 2012 strikes a balance between these competing considerations.

As proposed, and consistent with commenters' views, these final amendments will continue to align application of the rules so that the 408(b)(2) regulation will be effective prior to plans being required to furnish disclosures pursuant to the participant-level disclosure regulation. However, in response to commenters' concerns, the Department has modified the proposed transition rule for the participant-level disclosure regulation. First, the Department agrees with commenters that the transition rule should be tied to the effective date for the final 408(b)(2) regulation. This linkage will ensure that the 408(b)(2) regulation becomes effective first, and that all plans (regardless of whether they are calendar year plans) will be able to take advantage of the transition period following the 408(b)(2) regulation's effective date. Second, because the Department delayed the effective date of the 408(b)(2) regulation for an additional 3 months, and because the beginning of the transition period under the participant-level disclosure regulation's transitional rule will be correspondingly delayed, the Department is adopting a 60-day transition period for the participant level fee disclosure rule. Given the additional time (3 months) being provided to plan administrators because of the 408(b)(2) regulation's delayed effective date, the Department believes that a 60-day transition period following such delayed date for the participant level fee disclosure rule is sufficient given commenters' concerns. Accordingly, paragraph (j)(3)(i)(A) of the participant-level disclosure regulation now provides that the initial disclosures required on or before the date on which a participant or beneficiary can first direct his or her investments must be furnished no later than the later of 60 days after the plan's applicability date or 60 days after the effective date of the 408(b)(2) regulation.

Finally, the Department also revised the transitional rule by adding a new subsection (j)(3)(i)(B) to provide guidance on when the quarterly disclosures required under paragraphs (c)(2)(ii) and (c)(3)(ii) of the participant-level disclosure regulation must first be furnished. These disclosures must be furnished no later than 45 days after the end of the quarter in which the initial disclosures (referred to in subsection (j)(3)(i)(A) of the transitional rule) are required to be furnished to participants and beneficiaries. The new subsection preserves ordinary sequencing of disclosures under the regulation by preventing the first quarterly disclosure from being due before the first initial disclosure.

The following example illustrates the new bifurcated transitional rule in paragraph (j)(3)(i)(A) and (B). As to calendar year plans, the participant-level disclosure regulation becomes applicable on January 1, 2012. Pursuant to subsection (A) of the final transitional rule, such plans must furnish their first set of initial disclosures (all disclosures other than disclosures required at least quarterly) no later than May 31, 2012, which is 60 days after the April 1, 2012 effective date of the 408(b)(2) regulation. Further, pursuant to subparagraph (B) of the transitional rule, the disclosures required by paragraphs (c)(2)(ii) and (c)(3)(ii) of the regulation ( e.g., the quarterly statement of fees/expenses actually deducted) would have to be furnished no later than August 14, 2012, which is the 45th day after the end of the second quarter (April-June) in which the initial disclosure was required.

A few commenters requested that the Department clarify when plans must comply with the revised 404(c) regulation's disclosures. The final amendments to the 404(c) regulation require, in part, that participants and beneficiaries be furnished: “[t]he information required pursuant to 29 CFR 2550.404a-5” ( i.e., the participant-level disclosure regulation). 5 In a footnote to the proposal's preamble, the Department stated that the amendments to the 404(c) regulation apply for plan years beginning on or after November 1, 2011 and that proposal would have no effect on the applicability of these amendments. Although the transition rule, finalized in this notice, does not itself apply to the amended 404(c) regulation, the Department confirms that plan administrators do not have to furnish the newly required information under the 404(c) regulation before such information must be delivered (subject to the final transition rule) under the participant-level disclosure regulation. Such information is “required pursuant to” the participant-level disclosure regulation only at such time(s) as it must first be furnished under such regulation.

It has been determined that this is not a significant rulemaking for purposes of E.O. 12866. In addition, the Department finds that the amendments in this document will not significantly affect the regulatory flexibility analyses issued in connection with the rules so amended. 75 FR 41629 (July 16, 2010); 75 FR 64934 (Oct. 20, 2010).

Pursuant to 5 U.S.C. 553(d)(3), the Department finds for good cause that in order to accomplish the purposes of these amendments, they must be effective before the current July 16, 2011, effective date of the interim final 408(b)(2) regulation (29 CFR 2550.408b-2(c), RIN 1210-AB08).

Several commenters requested further guidance from the Department as to the standards for electronic delivery that will apply to disclosures furnished to participants and beneficiaries under the participant-level disclosure regulation. Commenters argued that whether, and the extent to which, these disclosures may be furnished electronically will significantly impact service providers' systems design and compliance efforts. Although the Department separately is pursuing a regulatory initiative to explore electronic delivery in the context of participant and beneficiary disclosures, 6 commenters do not believe that the Department will complete its broad review of this issue and publish final guidance as to the standards that will apply before plans will have to comply with the participant-level disclosure regulation. In the meantime, these commenters suggested that the Department extend to the participant-level disclosure regulation the guidance on the manner of delivery that was provided for pension benefit statements in Field Assistance Bulletin (FAB) 2006-03. 7

The Department is carefully analyzing these comments as part of its broader review of public comments in response to its recent request for information concerning ERISA electronic delivery standards generally. 8 These issues, however, are beyond the scope of this rulemaking which is limited to delaying the compliance dates for the 408(b)(2) and participant-level disclosure regulations. Consistent with its statement in the preamble to the final participant-level disclosure regulation, the Department intends to provide guidance on this issue for purposes of the participant-level disclosure regulation in advance of the regulation's compliance date, so as to ensure appropriate notice for plans.

For the reasons set forth in the preamble, the Department of Labor delays the effective date for the interim rule published on July 16, 2010 (75 FR 41600) from July 16, 2011 to April 1, 2012 and further amends 29 CFR part 2550 as follows:

Public Participation and Request for Comments

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

As this interim rule will be in effect before the end of the comment period, the Coast Guard will evaluate and revise this rule as necessary to address significant public comments.

If you submit a comment, please include the docket number for this rulemaking (USCG-2011-0536), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online (via http://www.regulations.gov ) or by fax, mail, or hand delivery, but please use only one of these means. If you submit a comment online via www.regulations.gov, it will be considered received by the Coast Guard when you successfully transmit the comment. If you fax, hand deliver, 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 telephone 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 Rule” and insert “USCG-2011-0536” in the “Keyword” box. Click “Search” then click on the balloon shape in the “Actions” column. If you submit 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 comments 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-2011-0536” 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 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 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 in connection with the public comment period for this interim rule. But you may submit a request for one using one of the four methods specified under ADDRESSES . Please explain why you believe a public meeting 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 . Although they were not held specifically to solicit public comments on this interim rule, and were not announced in the Federal Register , the Coast Guard has held or participated in multiple locally announced informal waterway user meetings where waterway closures and restrictions were discussed, and we anticipate holding one or more additional informal meetings, with opportunity for public questions or comments, during the bridge construction. We will provide written summaries of any such meetings in the docket.

The Coast Guard is issuing this interim rule without prior Federal Register notice 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 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 because the need for waterway closures was not brought to the attention of the Coast Guard until April 5, 2011. Concerned that the initial waterway closures proposed by J.F. White Contracting Company might have a significant impact on waterway users, it was necessary for the Coast Guard to move quickly to protect public safety. There was insufficient time and therefore it was impracticable to issue an NPRM and conduct a prior notice and comment period. We held informal planning meetings at which the construction plans were presented to and discussed with waterway users; stakeholder comments and concerns were identified and many have been incorporated into this regulation. To view the stakeholder comments and concerns see the CSB meeting minutes in the docket. This rule is necessary to protect the safety of both the construction crew and the waterway users operating in the vicinity of the bridge construction zone. A delay or cancellation of the ongoing bridge maintenance in order to accommodate a full notice and comment period would be contrary to the public interest as it would delay necessary operations thus prolonging the time that construction barges and equipment would be in this location. Additionally, the dynamic nature of the construction process and multitude of construction vessels necessitate that all mariners navigate at a safe speed within the RNA in accordance with Rule 6 of the Inland Navigation Rules, as the barge and construction equipment configuration may change on a daily basis. In order to address any further public concerns, this rule is available for public comment until September 19, 2011. At that time the Coast Guard will publish an amended rule if necessary to address public concerns.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register , as immediate action is needed to protect vessels transiting the area from hazards imposed by construction barges and equipment on the Chelsea River under and surrounding the Chelsea Street Bridge, Chelsea, MA. Any delay in the effective date of this rule would be contrary to the public interest as immediate action is necessary to close the channel as needed from July 8, 2011 to May 31, 2012. These closures are necessary in order to protect vessels transiting in the area from hazards imposed by construction barges and equipment and to expedite the removal of the old Chelsea St. Bridge and construction of the new bridge and fender system.

Under the Ports and Waterways Safety Act, the Coast Guard has the authority to establish RNAs in defined water areas that are determined to have hazardous conditions and in which vessel traffic can be regulated in the interest of safety. See 33 U.S.C. 1231 and Department of Homeland Security Delegation No. 0170.1.

The construction of the Chelsea Street Bridge involves large machinery and construction vessel operations above and in the navigable waters of the Chelsea River. The ongoing operations are, by their nature, hazardous and pose risks both to recreational and commercial traffic as well as the construction crew. In order to mitigate the inherent risks involved in the construction, it is necessary to control vessel movement through the area.

The purpose of this rule is to ensure the safety of waterway users, the public, and construction workers for the duration of the Chelsea Street Bridge construction from July 8, 2011 through May 31, 2012. The RNA will also protect vessels desiring to transit the area by ensuring that vessels are only permitted to transit when it is safe to do so.

This action is intended to prohibit vessel traffic on a portion of the Chelsea River, when necessary for the safety of navigation, while construction equipment works in the channel on demolition of the existing bridge and construction of its replacement. The Coast Guard may close the area prescribed in this rule to all vessel traffic during any circumstance, planned or unforeseen, that poses an imminent threat to waterway users operating in the area. Complete waterway closures will be made with as much advance notice as possible.

The Coast Guard has discussed this project at length with the construction contractor, J.F. White Contracting Company, to identify if the project can be completed without channel closures and, if possible, what impact that would have on the project timeline. Through these discussions, it became clear that while the majority of construction activities during the span of this project would not require waterway closures, there are certain tasks that can only be completed in the channel and will require closing the waterway. J.F. White issued a letter on April 5, 2011 detailing the required channel work phases that will need waterway closures.

There are currently two planned and ten proposed channel closure periods which are outlined below:

The first planned closure period will be from September 28-30, 2011, and will coincide with the launching of the new bridge truss.

The second planned closure will be from October 7-9, 2011 and will coincide with the concrete bridge deck placement.

There will be four proposed closure periods on dates to be determined between October and December 2011 for the installation of new bulkheads along both sides of the Chelsea River.

The fifth and sixth proposed closure periods will take place in January 2012 for the demolition of the fendering system and the dredging on the Chelsea, MA side of the Chelsea River. These will be for 15-day periods and will be intermittent closures.

The seventh proposed closure period will take place in February 2012 for the installation of new aids to navigation on the Chelsea, MA side of the Chelsea River and will be a 7-day period with intermittent closures.

The eighth and ninth proposed closure periods will take place in February and March of 2012 for the demolition of the fendering system and the dredging on the E. Boston, MA side of the Chelsea River. These will be for 15-day periods and will be intermittent closures.

The tenth proposed closure period will take place in March 2012 for the installation of new aids to navigation on the E. Boston, MA side of the Chelsea River and will be a 7-day period with intermittent closures.

The project is expected to be complete in April 2012 but this rule will be made effective through the end of May 2012 to account for any unforeseen construction delays.

On a case-by-case basis, depending on the construction schedule, J.F. White may request a waterway closure on various dates from July 8, 2011 through May 31, 2012. As discussed below, J.F White will notify the Coast Guard of planned activities as soon as possible; preferably four weeks in advance of any event.

The Coast Guard will notify the maritime community of planned waterway closure dates via Marine Information Broadcasts, Coast Guard Local Notices to Mariners and Marine Safety Information Bulletins.

Closure periods listed above will be made available to J. F. White Contracting Company with the understanding that the construction schedule as well as weather and tide conditions may not allow them to use all closures. For that reason, J. F. White will notify the Coast Guard of planned activities as soon as possible and preferably four weeks in advance. Closure periods similar to those outlined above should be expected throughout the duration of this rule. Additionally, during the winter and into the early spring of 2012 there will certain tasks (i.e. bulkhead and Aids to Navigation installation) that will require a more than 24-hour closure as well as several 15-day long, 12 hour closures to complete the demolition of fender systems and dredging operations. Once these closure periods are identified they will be published with the widest distribution among the affected segments of the public. Such means of notification will include, but is not limited to, Broadcast Notice to Mariners and Local Notice to Mariners. Entry into this RNA during a closure is prohibited unless authorized by the Sector Boston Captain of the Port (COTP). In the event of an emergency all construction equipment shall be removed from the channel to allow for emergency vessels to pass (i.e., Fire Rescue Boat, Marine Police Boat, or Environmental Response Boat).

The implementation of this RNA does not negate the fact that the Inland Rules of the Road as found in 33 CFR part 84 (subchapter E) must be strictly adhered to. Mariners are strongly urged to monitor VHF channel 13 when transiting the area and to communicate with fellow mariners to facilitate movement and/or passing arrangements within the channel.

Any violation of the RNA described herein is punishable by, among others, civil and criminal penalties, in rem liability against the offending vessel, and the initiation of suspension or revocation proceedings against Coast Guard-issued merchant-mariner credentials.

The Sector Boston Captain of the Port will cause notice of enforcement, suspension of enforcement, or closure of this RNA to be made by all appropriate means to affect the widest distribution among the affected segments of the public. Such means of notification will include, but is not limited to, Notice of Enforcement published in the Federal Register, Broadcast Notice to Mariners and Local Notice to Mariners.

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

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

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on substantial number of small entities. This rule will affect the following entities some of which may be small entities: The owners or operators of marinas, charter fishing vessels and commercial fishing vessels who intend to transit in those portions of the Chelsea River between July 8, 2011 and May 31, 2012.

This regulation may have some impact on the public, but the potential impact will be minimized for the following reasons: The area of the closure is not likely to be transited by pleasure craft and they will be able to operate on all other portions of the Chelsea River not covered by the RNA. Additionally, many parties that have the potential to be affected have been involved in the discussions and have made plans to work around the closure times. Marine radio broadcasts informing the public of any closures made by the RNA will be made before, during, and at the conclusion of the RNA closure enforcement periods.

Although the RNA will apply to the entire width of the river, under and surrounding the Chelsea Street Bridge traffic will be allowed to pass through the area with the permission of the COTP. Before the effective period, we will issue maritime advisories widely available to users of the river.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offer to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process. If this rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call LT Judson Coleman, Prevention Department, Sector Long Island Sound, at 203-468-4596.

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

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

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

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

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

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

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

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

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

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

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction. This rule involves the establishing of a regulated navigation area and therefore falls within the categorical exclusion noted above. An environmental analysis checklist and a categorical exclusion determination are available in the docket where indicated under ADDRESSES . Any comments received concerning environmental impacts will be considered and changes made to the environmental analysis checklist and categorical exclusion determination as appropriate.

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

The Coast Guard will enforce the regulations found in 33 CFR 100.1303 restricting regular navigation and anchoring activities on the Columbia River during the periods specified in the DATES section.

Under the provisions of 33 CFR 100.1303, no person or vessel may enter or remain in the area without permission of the Captain of the Port, Columbia River or his designated on-scene Patrol Commander. Persons or vessels wishing to enter the area may request permission to do so from the on-scene Captain of the Port representative via VHF Channel 16 or 13. The Coast Guard may be assisted by other Federal, State, or local enforcement agencies in enforcing this regulation.

This notice is issued under authority of 33 CFR 165.1318 and 5 U.S.C. 552 (a). In addition to this notice in the Federal Register , the Coast Guard will provide the maritime community with notification of these enforcement periods via the Local Notice to Mariners.

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

The background for today's actions is discussed in detail in our April 18, 2011 proposal to approve revisions to the Louisiana SIP (76 FR 21682). In that action, we proposed to find the current Louisiana SIP meets the provisions of the CAA sections 110(a)(1) and 110(a)(2) (i.e., 110(a)(2)(A)-(C), (D)(ii), (E)-(H), and (J)-(M)) for the 1997 ozone and 1997 PM 2.5 NAAQS. We also proposed to approve four revisions to the Louisiana PSD SIP that address NO X as a precursor to ozone.

Our April 18, 2011 proposal provides a detailed description of the revisions and the rationale for EPA's proposed actions, together with a discussion of the opportunity to comment. The public comment period for these actions closed on May 18, 2011. See the Technical Support Document (TSD) and our proposed rulemaking at 76 FR 21682 for more information.

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. 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 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 notes that we did not receive comments on these issues in response to our Louisiana proposal (76 FR 21682), but because of the concern raised in the context of action on other state infrastructure SIP submissions, EPA feels it important to further clarify our proposal.

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. 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 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. 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 PM 2.5 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 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. 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

The EPA is approving the Louisiana SIP submittals that identify where and how the 14 basic infrastructure elements are in the EPA-approved SIP as specified in section 110(a)(2) of the Act. We are determining that the following section 110(a)(2) elements are contained in the current Louisiana SIP: emission limits and other control measures (section 110(a)(2)(A)); ambient air quality monitoring/data system (section 110(a)(2)(B)); program for enforcement of control measures (section 110(a)(2)(C)); international and interstate pollution abatement (section 110(a)(2)(D)(ii); adequate resources (section 110(a)(2)(E)); stationary source monitoring system (section 110(a)(2)(F)); emergency power (section 110(a)(2)(G)); future SIP revisions (section 110(a)(2)(H)); consultation with government officials (section 110(a)(2)(J)); public notification (section 110(a)(2)(J)); PSD and visibility protection (section 110(a)(2)(J)); air quality modeling/data (section 110(a)(2)(K)); permitting fees (section 110(a)(2)(L)); and consultation/participation by affected local entities (section 110(a)(2)(M)).

In conjunction with our determination that the Louisiana SIP meets the section 110(a)(1) and (2) infrastructure SIP elements listed above, we are also approving four severable portions of two SIP revisions submitted by the LDEQ to EPA on December 20, 2005 and November 9, 2007. These portions contain rule revisions by LDEQ to (1) regulate NO X emissions in its PSD permit program as a precursor to ozone; (2) add NO X to the PSD definitions for Major Modification and Major Stationary Source; 3) under the PSD definition for Significant, add the emission rate for NO X , as a precursor to ozone, as 40 tons per year (tpy); and 4) under the PSD requirements, allow for an exemption with respect to ambient air quality monitoring data for a source with a net emissions increase less than 100 tpy of NO X . At this time, EPA is not taking action on other portions of the December 20, 2005 and November 9, 2007 SIP revisions submitted by LDEQ; EPA intends to act on the other revisions at a later time.

We received one comment letter on the proposed rulemaking. The comment letter is available for review in the docket for this rulemaking. The comment letter came from the Tulane Environmental Law Clinic, on behalf of the Louisiana Environmental Action Network (LEAN, hereinafter referred to as “the commenter”).

Generally, the commenter's concerns relate to whether EPA's approval of Louisiana's infrastructure SIP submissions are in compliance with section 110(a)(2)(E) and 110(a)(2)(L) of the CAA, and whether EPA's approval is arbitrary and capricious in finding the State has provided necessary assurances in compliance with the CAA's adequate funding and personnel requirements. To the extent comments 1 through 4 address adequate funding for Louisiana's Title V program with respect to elements 110(a)(2)(C), D(ii), (E), and (L), the commenter addresses issues that are subject to statutory and regulatory evaluation beyond the statutory scope of this rulemaking. Section 110(a)(2) falls under Title I of the CAA and governs the implementation, maintenance, and enforcement of the NAAQS, in this instance 1997 ozone and 1997 PM 2.5 , through the federally approved SIP. Section 110 and 40 CFR part 51 also provide mechanisms for programmatic remedies with respect to the SIP. Furthermore, Title I addresses Minor and Major New Source Review SIP preconstruction permits. The Title V program, by contrast, governs operating permits and is addressed by CAA sections 502 through 507. Any evaluation of the Title V program and any consequent programmatic remedies must be done pursuant to CAA section 502 and 40 CFR part 70. The scope of this action is limited to determining whether the Louisiana SIP meets certain infrastructure requirements of CAA 110(a)(2) with respect to the 1997 ozone and 1997 PM 2.5 NAAQS. 14 A summary of the comments and EPA's responses are provided below.

Comment 1: The commenter states that because the record contains no evidence of adequate funding, EPA cannot approve Louisiana's infrastructure SIP. The commenter also states that EPA's approval of various Title I and Title V revisions to Louisiana's permit fee system is more than 15 years out of date and therefore cannot support a finding that Louisiana has adequate personnel and funding to carry out its program today. The commenter also states that Louisiana's fee average is less than the presumptive minimum set out by Title V of the CAA under section 502(b)(3)(B)(i) and (v). The commenter further states that it would be unlawful for EPA to approve Louisiana's infrastructure SIP submissions without specifically considering LDEQ's annual reviews of their Fee Schedule as required by the Louisiana Administrative Code. The commenter also states that EPA cannot lawfully conclude Louisiana can adequately implement its program for less than half of EPA's presumptive fee based on the record which does not include Louisiana's annual reviews of their fees.

Response: We disagree with the commenter's statement that the record contains no evidence of adequate funding. Our TSD was posted in the docket for this rulemaking on April 18, 2011, which is the date the rulemaking was published in the Federal Register . The TSD evaluates where and how the Louisiana SIP addresses each of the section 110(a)(2) infrastructure elements, including 110(a)(2)(E), which begins on page 12 of the TSD. Within the TSD section evaluating 110(a)(2)(E), we include the various funds the state receives to support the 1997 ozone and 1997 PM 2.5 NAAQS.

Section 110(a)(2)(E) requires that the state provide necessary assurances that it will have adequate funding under state law to carry out the SIP. As cited in our TSD, to address adequate funding, Louisiana statute charges the LDEQ with preparing and developing the SIP, and provides the secretary of the LDEQ with the powers and duties to “ * * * receive and budget duly appropriated monies and to accept, receive, and administer grants or other funds or gifts from public and private agencies, including the federal government, to carry out the provisions and purposes of this Subtitle” (LA RS 30:2011.D.10). As cited in our TSD, these state statute-assured funds are supplemented by federal funds, including CAA section 103 and section 105 grants. Consequently, there are additional monetary sources, including Louisiana's Environmental Trust Fund monies provided for under LA RS 30:2015, which contribute to Louisiana's ability to provide adequate personnel and funding to implement the SIP for the 1997 ozone and 1997 PM 2.5 NAAQS.

Funding necessary to implement the SIP, as discussed prior in this Response and in the TSD, is provided for pursuant to section 110(a)(2)(E) by Louisiana state statute and various sources of funding. While Louisiana's various permitting fee system and revisions were approved into the SIP over a decade ago, the rules approved into the Louisiana SIP continue today to mandate Major and Minor NSR SIP preconstruction permitting application and annual maintenance fees pursuant to section 110(a)(2)(E) and (L). EPA's previous SIP approvals, as contained within the record and cited to by the commenter, include required fees as described by 110(a)(2)(E) and (L).

The presumptive $25.00 fee minimum under CAA section 502(b)(3) the commenter refers to is part of Title V, which as previously stated in Section IV, second paragraph, is subject to evaluation under different statutory and regulatory mechanisms provided for outside the SIP parameters for evaluation and remedies under CAA section 110 and 40 CFR part 51.

Section 110(a)(2) does not require a specific quantitative metric or methodology for determining adequate resources. The commenter also did not point to specific program deficiencies or implementation issues due to the perceived lack of resources. As described in our proposal, TSD, and previously in this response, EPA's evaluation and approval of Louisiana's fee system and resources is based, in part, upon various sources of funding, state statutes and rules pursuant to section 110(a)(2), and LDEQ's fulfillment of grant obligations. As explained in the TSD, section 105 grants provide monies to help support the foundation of the State's air quality program, including air monitoring, enforcement and SIP development. States are required to provide matching monies to receive their grant and EPA evaluates the performance of the State each year. In fiscal year 2010, Louisiana successfully completed all of their air program obligations as called for under the section 105 grant with some minor exceptions. 15 EPA noted no significant deficiencies thus indicating that LDEQ has sufficient resources to implement its SIP. For example, as described in our proposal and TSD, apart from the grant review, Louisiana's statewide air quality surveillance network as required by section 110(a)(2)(B) undergoes annual review and EPA's most recent approval of this monitoring network dates January 12, 2011. Therefore, we disagree that the record does not support a finding of adequate resources. The fact that the fee requirement that provides the basis for some of these resources was approved by EPA some time ago does not change this conclusion.

Furthermore, we disagree with the commenter's statement that the record does not support a finding of adequate resources solely because the annual fee review is absent from the record. In response to the commenter's concerns, LDEQ explained their fee review process and stated that the fee review is conducted as part of the budget process and essentially insures that sufficient fees are collected to pay for the staff associated with new source review permitting. 16 Though evaluation of the annual fee review was not part of the proposal for this action, EPA's evaluation and approval of Louisiana's fee system and resources under sections 110(a)(2)(L) and 110(a)(2)(E) is based, in part, upon various sources of funding, state statutes and rules pursuant to section 110(a)(2), and LDEQ's fulfillment of grant obligations as described in the proposal, TSD, the supplemental TSD, and this response. In addition, on September 9, 2010, the EPA determined that the Baton Rouge moderate 8-hour ozone nonattainment area (BRNA) had attained the 1997 8-hour ozone NAAQS (75 FR 54778). On August 31, 2010, the state submitted a request to EPA to redesignate the BRNA to attainment and EPA is reviewing that submission in a separate action. This submission was not statutorily required under the Act and was resource intensive for the LDEQ. This exercise provides additional support that the state has adequate resources to comply with the enforceable emission limitations and other control measures requirement of 110(a)(2)(A).

In sum, the record does support a finding of adequate resources. As discussed in the record for this action, the State has the statutory authority to receive monies. The State does, in fact, collect various fees, revenues and federal grants. Section 110 does not provide a specific methodology for determining the adequacy of resources. The commenter does not specify deficiencies or implementation problems. Our reasons for finding that the Louisiana SIP meets section 110(a)(2)(E) for adequate resources for the 1997 ozone and 1997 PM 2.5 NAAQS are reiterated in our response above, and described in the proposed rulemaking (76 FR 21682) and the TSD. The fact that the fee requirement that provides for some of these resources was approved some time ago does not change this conclusion. 17 Insofar as the commenter states EPA cannot lawfully conclude LDEQ can adequately implement its program for less than half of EPA's presumptive fee, the presumptive fee the commenter is referring to is the Title V presumptive fee. Evaluation of this presumptive fee minimum must be conducted under different statutory and regulatory mechanisms provided for outside the SIP parameters for evaluation and remedies under CAA section 110 and 40 CFR part 51.

Comment 2: Inflation alone shows that EPA cannot rely on its 1995 approval.

Response: The 1995 approval the commenter refers to is found at 60 FR 47296, and was approved pursuant to section 502(b)(3) of the Act and 40 CFR 70.9, the regulations implementing Title V. Title V is not part of the federally approved SIP, and as previously explained in this rulemaking, the mechanism for evaluating the Title V program is legally outside the scope of this rulemaking. The scope of this action is limited to determining whether the existing Louisiana SIP meets certain infrastructure requirements of CAA 110(a)(2) with respect to the 1997 ozone and 1997 PM 2.5 NAAQS.

Comment 3: Louisiana's program will need increased resources to achieve attainment in expanded sulfur dioxide (SO 2 ) and NO X non-attainment areas.

Response: The scope of this action is limited to determining whether the Louisiana SIP meets the requirements of CAA 110(a)(2) with respect to the 1997 ozone and 1997 PM 2.5 NAAQS in attainment areas. We will evaluate whether or not the Louisiana SIP meets the requirements of section 110(a)(2) with respect to the SO 2 and NO 2 standards in one or more separate rulemaking actions. 18

Comment 4: EPA's proposed approval ignores a 2002 audit report by the EPA's Inspector General, which concluded that Louisiana's average fee of $19.00 per ton is well below the EPA-determined presumptive minimum amount of $35.00 to adequately run a state Title V program.

Response: The audit report referred to by the commenter wholly addresses the Louisiana Title V program and thus is outside the legal parameters of evaluating the Louisiana SIP in meeting the requirements of section 110(a)(2) of the Act with respect to the 1997 ozone and 1997 PM 2.5 NAAQS. Any evaluation of the Title V program must be done pursuant to the procedural mechanisms in CAA section 502 and 40 CFR part 70.

Comment 5: The commenter states Louisiana's March 24, 2011 (supplemental) certification letter does not list permitting fees as an area of compliance. EPA must evaluate the adequacy of LDEQ's plan, and there is nothing in the record to support a finding that LDEQ's resources are sufficient to run its program.

Response: The March 24, 2011 letter from LDEQ was not intended to replace the December 11, 2007 and January 7, 2008 certification letters, and the March 2011 letter states that it clarifies and amends the prior two certifications. In its January 7, 2008 certification submitted to EPA, Louisiana listed permitting fees as an area of compliance. We therefore disagree with the commenter that the State did not certify Major and Minor NSR SIP preconstruction permitting fees as an area of compliance. EPA evaluated the Louisiana SIP in the April 18, 2011 proposal and TSD, and this evaluation is based on the two certification letters submitted by the state, dated December 11, 2007 and January 7, 2008, and the supplemental certification letter dated March 24, 2011.

Major and Minor NSR SIP preconstruction permitting application and annual maintenance fees and adequate resources sufficient to implement the Louisiana SIP pursuant to sections 110(a)(2)(E) and 110(a)(2)(L) are provided for under the EPA-approved SIP, state statute, and augmented by other sources of funding as described in EPA's Response to Comment 1 of this final action and in the TSD.

The commenter does not specify where Louisiana might be failing to implement any portions of the 1997 ozone and 1997 PM 2.5 NAAQS SIP, thus we have no specific basis of evaluation or point of reference to evince support of the commenter's allegations of inadequate resources with regards to Louisiana's SIP. Our reasons for finding that the Louisiana SIP meets section 110(a)(2)(E) for adequate resources for the 1997 ozone and 1997 PM 2.5 NAAQS are reiterated in our response above, 19 and described in the proposed rulemaking (76 FR 21682) and the TSD.

We are approving the submittals provided by the State of Louisiana to demonstrate that the Louisiana SIP meets the following requirements of Section 110(a)(1) and (2) of the Act:

Emission limits and other control measures (110(a)(2)(A) of the Act);

Ambient air quality monitoring/data system (110(a)(2)(B) of the Act);

Program for enforcement of control measures (110(a)(2)(C) of the Act);

Interstate Transport (110(a)(2)(D)(ii) of the Act);

Adequate resources (110(a)(2)(E) of the Act);

Stationary source monitoring system (110(a)(2)(F) of the Act);

Emergency power (110(a)(2)(G) of the Act);

Future SIP revisions (110(a)(2)(H) of the Act);

Consultation with government officials (110(a)(2)(J) of the Act);

Public notification (110(a)(2)(J) of the Act);

Prevention of significant deterioration and visibility protection (110(a)(2)(J) of the Act);

Air quality modeling data (110(a)(2)(K) of the Act);

Permitting fees (110(a)(2)(L) of the Act); and

Consultation/participation by affected local entities (110(a)(2)(M) of the Act).

EPA is also approving the following revisions to 33 LAC 5-509, submitted by LDEQ on December 20, 2005 and November 9, 2007:

1. The 2005 non-substantive recodification of the definition for Major Modification subsection 2 to subsection b, and the 2007 substantive change adding NO X to the definition of Major Modification.

2. The 2005 non-substantive recodification at of the definition for Major Stationary Source at subsection 4 to subsection d, and the 2007 substantive change adding NO X to the definition of Major Stationary Source.

3. The 2005 non-substantive recodification of the first paragraph of the definition for Significant at subsection 1 to subsection a, and the 2007 substantive change adding NO X as a precursor to the table's criteria and other pollutants listing for ozone.

4. The 2005 non-substantive recodification of the first paragraph of subsection I.8 to subsection I.5, and the 2007 substantive change allowing for an exemption with respect to ozone monitoring for a source with a net emissions increase less than 100 tpy of NO X .

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 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 19, 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:

I. Background

Throughout this document, whenever “we,” “us,” or “our” is used, we mean EPA. On May 13, 2011, (76 FR 27973) EPA published a notice of proposed rulemaking (NPR) for the State of Delaware. The NPR proposed approval of Delaware's regional haze plan for the first implementation period, through 2018. EPA proposed to approve this revision since it assures reasonable progress toward the national goal of achieving natural visibility conditions in Class I areas for the first implementation period. This revision also meets the requirements of 110(a)(2)(D)(i)(II) and 110(a)(2)(J), relating to visibility protection for the 1997 8-Hour Ozone NAAQS and the 1997 and PM 2.5 NAAQS. An explanation of the CAA's visibility requirements and EPA regional haze rule as they apply to Delaware and EPA's rationale for approving this SIP revision was provided in the NPR and will not be restated here.

The revision includes a long term strategy with enforceable measures ensuring reasonable progress towards meeting the reasonable progress goals for the first planning period, through 2018. Delaware's Regional Haze Plan contains the emission reductions needed to achieve Delaware's share of emission reductions agreed upon through the regional planning process. Other specific requirements of the CAA and EPA's Regional Haze Rule and the rationale for EPA's proposed action are explained in the NPR and will not be restated here. No public comments were received on the NPR.

EPA is approving a revision to the Delaware State Implementation Plan submitted by the State of Delaware, through the Delaware Department of Natural Resources and Environmental Control, on September 25, 2008, that addresses regional haze for the first implementation period. EPA is making a determination that the Delaware Regional Haze SIP contains the emission reductions needed to achieve Delaware's share of emission reductions agreed upon through the regional planning process. Furthermore, Delaware's Regional Haze Plan ensures that emissions from the State will not interfere with the reasonable progress goals for neighboring states' Class I areas. In addition, EPA is approving this revision because it meets the applicable visibility related requirements of the CAA section 110(a)(2) including, but not limited to 110(a)(2)(D)(i)(II) and 110(a)(2)(J), relating to visibility protection for the 1997 8-Hour Ozone NAAQS and the 1997 and 2006 PM 2.5 NAAQS.

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 19, 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 pertaining to Delaware's Regional Haze Plan for the first implementation period, through 2018 may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

40 CFR part 52 is amended as follows:

On May 20, 2011 (76 FR 29180), EPA published a notice of proposed rulemaking (NPR) for the Commonwealth of Pennsylvania. The NPR proposed approval to the control of NO X emissions from Portland cement kilns. The formal SIP revision was submitted by the Pennsylvania Department of the Environmental Protection (PADEP) on July 23, 2010.

The SIP revision adds definitions and terms to Title 25 of the Pennsylvania Code (25 Pa. Code) Chapter 121.1, relating to definitions, used in the substantive provision of this SIP revision. In addition, the SIP revision amends the NO X emission standards in the 25 Pa. Code Chapter 145, Subchapter C (Emissions of NO X from Cement Manufacturing), for Portland cement kilns during the ozone season, from May 1 through September 30, 2011, and for each year thereafter. The amendments to the SIP revision are the following: Standard requirements which include emission requirements; compliance determination by operating and maintaining continuous emissions monitoring systems (CEMS) for NO X emissions; compliance demonstration on a kiln-by-kiln basis, a facility-wide emissions averaging basis or a system-wide averaging basis; and reporting and recordkeeping requirements by reporting CEMS emissions data and maintaining an operating log for each Portland cement kiln on a monthly basis that is maintained onsite for 5 years.

Other specific requirements of the control of NO X emissions from Portland cement kilns and the rationale for EPA's proposed action are explained in the NPR and will not be restated here. No public comments were received on the NPR.

EPA is approving 25 Pa. Code Chapter 121.1, relating to definitions, used in the substantive provision of this SIP revision, and amendments to 25 Pa. Code Chapter 145, Subchapter C (Emissions of NO X from Cement Manufacturing), for the control of NO X emissions from Portland cement kilns as a revision to the Pennsylvania SIP.

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 19, 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, pertaining to Pennsylvania's control of NO X emissions from Portland cement kilns 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.

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

On November 14, 2008, the State of Vermont (VT) submitted a formal revision to its State Implementation Plan (SIP). The SIP revision consists of documenting RACT requirements for the 1997 8-hour ozone standard. 1 Although VT was designated attainment for the 1997 8-hour ozone national ambient air quality standard (NAAQS), 2 the state is part of the Ozone Transport Region (OTR). On May 10, 2011, VT withdrew portions of the November 14, 2008 submittal as discussed in more detail in section II.

Certain stationary source control measures specified in the Clean Air Act (CAA) as applicable to areas considered “moderate” ozone non-attainment areas also apply to states located in the OTR. Specifically, these areas are required to implement reasonably available control technology (RACT) on all major volatile organic compound (VOC) and nitrogen oxide (NO X ) emissions sources and on all sources covered by a Control Techniques Guideline (CTG). A CTG is a document issued by EPA which establishes a “presumptive norm” for RACT for a specific VOC source category.

In 1997, EPA revised the health-based NAAQS for ozone, setting it at 0.08 parts per million (ppm) averaged over an 8-hour time frame. EPA set the 8-hour ozone standard based on scientific evidence demonstrating that ozone causes adverse health effects at lower ozone concentrations and over longer periods of time than was understood when the pre-existing 1-hour ozone standard was set. EPA determined that the 8-hour standard would be more protective of human health, especially with regard to children and adults who are active outdoors, and individuals with a pre-existing respiratory disease, such as asthma.

EPA requires under the 8-hour ozone NAAQS that states meet the CAA RACT requirements, either through a certification that previously adopted RACT controls in their SIP approved by EPA under the 1-hour ozone NAAQS represent adequate RACT control levels for 8-hour attainment purposes, or through the establishment of new or more stringent requirements that represent RACT control levels. See Final Rule To Implement the 8-Hour Ozone National Ambient Air Quality Standard—Phase 2 (the Phase 2 rule). (See 70 FR 71612; November 29, 2005.) EPA has determined that States that have RACT provisions approved in their SIPs for the 1-hour ozone standard have several options for fulfilling the RACT requirements for the 8-hour ozone NAAQS. If a State meets certain conditions, it may certify that previously adopted 1-hour ozone RACT controls in the SIP continue to represent RACT control levels for purposes of fulfilling 8-hour ozone RACT requirements. Alternatively, a State may establish new or more stringent requirements that represent RACT control levels, either in lieu of or in conjunction with a certification. In addition, a State may submit a negative declaration if there are no CTG sources or major sources of VOC and NO x emissions in lieu of or in addition to a certification.

As noted in the Phase 2 rule, the RACT submittal for the 1997 8-hour ozone standard was due from states in the OTR on September 16, 2006. (See 40 CFR 51.916(b)(2).) On March 24, 2008 (73 FR 15416), EPA issued a finding of failure to submit to VT for the 1997 8-hour ozone RACT requirement. Vermont submitted its RACT SIP revision on November 14, 2008, and EPA determined it complete on December 10, 2008, stopping the 18-month finding sanctions clock.

In addition, on October 5, 2006, EPA issued four CTGs which states were required to address by October 5, 2007 (71 FR 58745). Also, on October 9, 2007, EPA issued three CTGs which states were required to address by October 9, 2008 (72 FR 57215). Furthermore, on October 7, 2008, EPA issued four CTGs which states were required to address by October 7, 2009 (73 FR 58841).

In addition, on November 22, 2006, VT submitted newly adopted regulation 5-253.16, Wood Furniture Manufacturing, to EPA as a SIP revision. This regulation includes VOC emission limits for wood furniture manufacturing operations. In addition to this regulation, the SIP submittal also includes revisions to VT's “SIP Narrative,” which contains additional information on how the state implements this rule.

On November 14, 2008, VT submitted a SIP revision documenting RACT requirements for the 1997 8-hour ozone standard. In this SIP revision, VT states that this submittal demonstrates and/or certifies the following with respect to Vermont stationary sources of ozone precursors:

1. All required RACT controls, both CTGs and Major Sources, have been implemented on all relevant stationary sources of VOCs and NO x emissions;

2. All applicable CTG RACT controls required to be submitted under the current RACT SIP call (applicable to CTGs issued prior to 2006) have been previously approved by EPA under the 1-hour ozone NAAQS; and

3. All previously EPA-approved RACT controls, including CTGs issued prior to 2006 and previously submitted Single Source RACT determinations, as well as newly determined Single Source RACT applied to other Major Sources have been certified by the Vermont Air Pollution Control Officer, based on EPA's guidance and standards, to represent RACT control levels under the new 8-hour ozone NAAQS.

The submittal also states that it is the Vermont Air Pollution Control Officer's determination that the Vermont Air Pollution Control rules applicable to the following nine CTG categories, which have been approved and/or are pending approval as RACT for the 1-hour ozone standard, also represent RACT for the 8-hour ozone standard, including any subsequent revisions to the ozone standard that maintain an 8-hour averaging period: (1) Design Criteria for Stage 1 Vapor Control Systems—Gasoline Service Stations (November 1975, no EPA number) and Hydrocarbon Control Strategies for Gasoline Marketing Operations (April 1978, EPA450/3-78-017; (2) Control of Volatile Organic Emissions from Solvent Metal Cleaning (November 1977, EPA-450/2-77-022); (3) Control of Hydrocarbons from Tank Truck Gasoline Loading Terminals (October 1977, EPA-450/2-77-026); (4) Control of Volatile Organic Emissions from Bulk Gasoline Plants (December 1977, EPA-450/2-77-035); (5) Control of Volatile Organic Emissions from Storage of Petroleum Liquids in Fixed-Roof Tanks (December 1977, EPA-450-2-77-036); (6) Control of Volatile Organic Compounds from Use of Cutback Asphalt (December 1977, EPA-450/2-77-037); (7) Control of Volatile Organic Emissions from Existing Stationary Sources, Volume VI: Surface Coating of Miscellaneous Metal Parts and Products (June 1978, EPA-450/2-78-032); (8) Control of Volatile Organic Compounds Leaks from Gasoline Tank Trucks and Vapor Collection Systems (December 1978, EPA-450/2-78-051); and (9) Control of Volatile Organic Compound Emissions from Wood Furniture Manufacturing Operations (April 1996, EPA-453/R-96-007). The Vermont Air Pollution Control Regulations (VAPCR) that cover these CTGs are, respectively: (1) VAPCR Section 5-253.5, Stage I Vapor Recovery Controls at Gasoline Dispensing Facilities; 2) VAPCR Section 5-253.14, Solvent Metal Cleaning; (3) VAPCR Section 5-253.2, Bulk Gasoline Terminals; (4) VAPCR Section 5-253.3, Bulk Gasoline Plants; (5) VAPCR Section 5-253.1, Petroleum Liquid Storage in Fixed Roof Tanks; (6) VAPCR Section 5-253.15, Cutback and Emulsified Asphalt; (7) VAPCR Section 5-253.13, Coating of Miscellaneous Metal Parts; (8) VAPCR Section 5-253.4, Gasoline Tank Trucks; and (9) VAPCR Section 5-253.16, Wood Furniture Manufacturing. All of these Vermont regulations, with one exception, were approved into the Vermont SIP on April 22, 1998 (63 FR 19825). The Vermont wood furniture manufacturing regulation is being approved into the VT SIP in this rulemaking.

The SIP submittal also states that the State of Vermont Air Pollution Control Division has determined that there are no applicable stationary sources of VOC in Vermont, for the following CTG categories identified by EPA in CTG documents issued prior to 2006:

1. Surface Coating Operations (November 1976, EPA-450-2-76-028)

2. Surface Coating of Cans (May 1977, EPA-450/2-77-008)

3. Surface Coating of Coils (May 1977, EPA-450/2-77-008)

4. Surface Coating of Fabrics (May 1977, EPA-450/2-77-008)

5. Surface Coating of Paper (May 1977, EPA-450/2-77-008)

6. Surface Coating of Automobiles and Light Duty Trucks (May 1977, EPA-450/2-77-008)

7. Refinery Vacuum Producing Systems, Wastewater Separators, and Process Unit Turnarounds (October 1977, EPA-450/2-77-025)

8. Surface Coating of Metal Furniture (December 1977, EPA-450/2-77-032)

9. Surface Coating for Insulation of Magnet Wire (December 1977, EPA-450/2-77-033)

10. Surface Coating of Large Appliances (December 1977, EPA-450/2-77-034)

11. Factory Surface Coating of Flat Wood Paneling (June 1978, EPA-450/2-78-032)

12. Petroleum Refinery Equipment (June 1978, EPA-450/2-78-036)

13. Manufacture of Vegetable Oils (June 1978, EPA-450/2-78-035)

14. Manufacture of Synthesized Pharmaceutical Products (December 1978, EPA-450/2-78-029)

15. Manufacture of Pneumatic Rubber Tires (December 1978, EPA-450/2-78-030)

16. Graphic Arts-Rotogravure and Flexography (December 1978, EPA-450/2-78-033)

17. Petroleum Liquid Storage in External Floating Roof Tanks (December 1978, EPA-450/2-78-047)

18. Large Petroleum Dry Cleaners (September 1982, EPA-450/3-82-009)

19. Manufacture of High-Density Polyethylene, Polypropylene, and Polystyrene Resins (November 1983, EPA-450/3-83-008)

20. Equipment Leaks from Natural Gas/Gasoline Processing Plants (December 1983, EPA-450/2-83-007)

21. Leaks from Synthetic Organic Chemical and Polymer Manufacturing Equipment (March 1984, EPA-450/3-83-006)

22. Air Oxidation Processes in Synthetic Organic Chemical Manufacturing Industry (December 1984, EPA-450/3-84-015)

23. Reactor Processes and Distillation Operations Processes in the Synthetic Organic Chemical Manufacturing Industry (August 1993, EPA-450/4-91-031)

24. Shipbuilding and Ship Repair Operations (Surface Coating) (April 1994, EPA-453/R-94-032)

25. Coating Operations at Aerospace Manufacturing and Rework Operations (December 1997, EPA-453/R-97-004)

In addition, the SIP submittal also states that the State of Vermont Air Pollution Control Division has also determined that there are no applicable stationary sources of VOC in Vermont for the following CTG categories identified by EPA in CTG documents issued since 2005:

1. Flat Wood Paneling Coatings (September 2006, EPA-453/R-06-004)  3

2. Flexible Package Printing (September 2006, EPA-453/R-06-003)

3. Paper, Film, and Foil Coatings (September 2007, EPA-453/R-07-003)

4. Metal Furniture Coatings (September 2007, EPA-453/R-07-005)

5. Large Appliance Coatings (September 2007, EPA-453/R-07-004)

In addition to the items discussed above, the November 14, 2008 SIP submittal also includes minor changes to two of VT's regulations previously approved into the VT SIP.

Specifically, Subsection (3) of regulation 5-251, Control of Nitrogen Oxides Emissions: RACT for large stationary sources, is being submitted with no changes to the regulatory text. This subsection of VT's regulation was previously approved into the VT SIP as 5-251(2) on April 9, 1997 (62 FR 17084). Due to the adoption of a new subsection in VT's regulation and the resulting numbering changes, the appropriate number change will be made to regulation 5-251(3) and the subsection is being approved into the VT SIP. VT's new regulation subsection 5-251(2) is not being submitted for inclusion in the VT SIP.

Also, regulation 5-253.3, Bulk Gasoline Plants, is being submitted with minor changes to the regulatory text. This regulation was previously approved into the VT SIP on April 22, 1998 (63 FR 19825). The most significant change to VT's adopted revised regulation 5-253.3 is in the regulation's applicability; that is, the revised regulation requires all bulk gasoline plants, for which construction or reconstruction commenced after January 1, 2001, to be subject to the regulation regardless of gasoline throughput. The revised regulation submitted for inclusion into the VT SIP clarified several requirements in the rule related to vapor balance but did not substantively change the requirements of the rule.

Furthermore, Vermont's November 14, 2008 SIP submittal included licenses for four facilities subject to major source VOC requirements and licenses for three facilities subject to major source NO X requirements. On May 10, 2011, VT withdrew one of the VOC licenses (Green Mountain Prestain) and one of the NO X licensees (Dalton Hydro), since these two facilities have closed and their operating permits have been terminated. In addition, VT's May 10, 2011 letter includes a written commitment from VT to re-evaluate RACT for two of the major source facilities subject to VOC requirements, namely Churchill Coatings Corporation and H.B.H. Prestain, Inc., as a result of the RACT limits being established for these two facilities prior to the issuance of the 2006 revised CTG for Flat Wood Paneling Coatings (September 2006, EPA-453/R-06-004).

In addition, on November 22, 2006, VT submitted newly adopted regulation 5-253.16, Wood Furniture Manufacturing, to EPA as a SIP revision. This regulation includes VOC emission limits for wood furniture manufacturing operations. In addition to this regulation, the SIP submittal also includes revisions to VT's “SIP Narrative,” which contains additional information on how the state implements this rule.

EPA has evaluated VT's VOC and NO X regulations which the state certifies meets RACT for the 1997 8-hour standard, and has found that they are generally consistent with the respective EPA guidance documents referenced above. EPA previously approved these rules, with the exception of the wood furniture manufacturing regulation, as meeting RACT for the 1-hour standard. (See 62 FR 17084 and 63 FR 19825.)

VT's newly adopted wood furniture manufacturing regulation, submitted on November 22, 2006, requires facilities, which have allowable emissions of 25 tons per year or more of VOC emissions, to meet specified VOC content limits for the topcoats and sealers used in finishing operations. EPA has evaluated Vermont's rule with respect to EPA's wood furniture manufacturing CTG (referenced above) and has found that this rule, when taken along with the test methods, calculation procedures, record keeping, and monitoring requirements in the SIP narrative, is consistent with EPA guidance. 4

EPA has also evaluated the NO X permits for Killington/Pico Ski Resort Partners, LLC and Okemo Limited Liability Company and the VOC permit for Isovolta, Inc. that were included in this submittal and has found that they are consistent with EPA guidance for major stationary sources of NO X and VOC. For NO X guidance, see control technique document EPA-450/1-78-001, January 1978, and for VOC guidance, see EPA-450/2-78-022, May 1978, and EPA-453/R-95-010, April 1995. EPA has also evaluated two additional permits for major stationary sources of VOC (permits submitted for Churchill Coatings Corporation; and H.B.H. Prestain, Inc.) that were included in this submittal and has found that they are SIP strengthening but are not consistent with the limits established in the 2006 Flat Wood Paneling Coatings CTG. As a result, EPA is conditionally approving the submitted permits for Churchill Coatings Corporation and H.B.H. Prestain, Inc. A brief description of the type of facility, what has been determined as RACT for the facility, and EPA's reasoning for approval, or conditional approval, of such RACT determination, for each of the five permits is as follows:

1. The Killington/Pico Ski Resort Partners, LLC operating permit covers the snowmaking operations at the Killington and Pico ski resorts. The air pollution sources at the facility consist of diesel powered air compressors for snowmaking operations. With the exception of one engine (unit BR11), the permit requires the replacement of all diesel powered air compressor engines, by July 1, 2007, with the cleanest air pollution emitting engines reasonably available at the time of replacement. The replacement engine cannot have a higher horsepower rating than the engine which it is replacing, and must meet emission limits established by the operating permit. Unit BR11 operates with a Selective Catalytic Reduction (SCR) system designed and operated to achieve a minimum of 70% reduction in NO X emissions. The permit requires the Unit BR11 to meet emissions limits (after emissions controls) consistent with federal Tier 2 nonroad diesel engine emission standards. The permit also requires the replacement diesel powered air compressor engines to meet emissions limits consistent with federal Tier 2 or Tier 3 nonroad diesel engine emission standards, depending on the date of replacement. The permit also establishes operational limits on the sulfur content of the fuel oil and limits the annual fuel allowed to be consumed by the stationary diesel engine units. The provisions in this operating permit submitted into the VT SIP constitute RACT.

2. The Okemo Limited Liability Company operating permit covers the snowmaking operations at the Okemo ski resort. The air pollution sources at the facility consist of diesel powered air compressors for snowmaking operations and diesel engine generators utilized for generating electricity for snowmaking operations. The facility owns one diesel-powered compressor utilized for generating compressed air for snowmaking operations, has two rental diesel engine generators utilized for generating electricity, and leases 20 diesel-powered compressors utilized for generating compressed air for snowmaking operations. The permit requires the diesel-powered compressor owned by the facility (Caterpillar 3516) to operate on a combination of emission control technologies. Caterpillar 3516 operates with a SCR system and an oxidation catalyst that jointly achieve over 90% reduction in NO X emissions. The permit requires the Caterpillar 3516 to meet emissions limits (after emissions controls) as stringent as federal Tier 4 nonroad diesel engine emission standards that will be imposed on engines beginning with model year 2011 nonroad diesel engines. The emissions reductions obtained by the Caterpillar 3516, make up for the fact that the two rental units are held to emission limits which are more relaxed than the federal Tier 2 nonroad diesel engine emission standards, for the first two years following the issuance of the operating permit (after which time, the rental units are required to meet emissions limits as stringent as the federal Tier 2 standards). All of the leased diesel engines operated at the facility are required to meet at a minimum the federal Tier 2 nonroad diesel engine emission standards. The permit also establishes operational limits on the sulfur content of the fuel oil, limits the annual fuel allowed to be consumed by the stationary diesel engine units, limits the total capacity of engines operated at the facility for generating electricity and compressed air for snowmaking operations, and limits the hours that each type of engine can be in operation. The provisions in this operating permit submitted constitute RACT.

3. The Isovolta, Inc. (formerly U.S. Samica, Inc.) operating permit covers the insulation paper manufacturing facility in Rutland, VT. On April 9, 1997 (see 62 FR 17084), EPA approved an administrative order for this facility (at that time under U.S. Samica Corporation) which required the use of incineration control devices, which achieve an 81% overall VOC control, on two of their process lines. The administrative order also contained enforceable emissions testing, monitoring, recordkeeping, and reporting requirements. These same conditions are included in the operating permit in VT's November 14, 2008 submittal. The 81% reduction requirement is consistent with EPA's model regulation for VOC sources (See “Model Volatile Organic Compound Rules for Reasonably Available Control Technology”, EPA-Staff Working Document, June 1992). Therefore, EPA is approving the Isovolta, Inc. operating permit as continuing to meet VOC RACT requirements for this facility.

4. The Churchill Coatings Corporation operating permit covers the clapboard painting facility (previously owned by Prestained Lumber Products, Inc.) in North Springfield, VT. The facility consists of two roll coating lines to prime and paint a variety of lumber products. The non-CTG regulation approved by EPA on April 9, 1997 (see 62 FR 17084), defines RACT for coating units as a daily weighted average of VOC content in the coatings of 3.5 pounds of VOC per gallon of coating applied. The operating permit requires the facility to meet the 3.5 pounds of VOC per gallon of coating emission limit and also includes the associated recordkeeping and testing requirements to ensure compliance with these limits. The 3.5 pounds of VOC per gallon of coating emission limit is consistent with EPA's guidance for VOC sources (See “Model Volatile Organic Compound Rules for Reasonably Available Control Technology”, EPA-Staff Working Document, June 1992). However, the RACT determination for some of the operations at this facility must address whether and how the facility can meet the recommended limits for Exterior Siding, specifically 2.1 pounds of VOC per gallon of coating, included in the 2006 Flat Wood Paneling Coatings (September 2006, EPA-453/R-06-004) CTG. Therefore, EPA finds that the VOC limits in the Churchill Coatings Corporation operating permit are SIP-strengthening but do not constitute a complete RACT determination for this facility and is conditionally approving this operating permit into the VT SIP.

5. The H.B.H. Prestain, Inc. operating permit covers the clapboard painting facility in East Arlington, VT. The facility consists of four roll coating lines to prime, paint, and/or stain wooden clapboards, trim boards, and various other building siding products. The VOC coating limits established by this operating permit are also consistent with what has been determined as RACT in the April 9, 1997 (see 62 FR 17084) EPA rulemaking. Specifically, the four coating lines are required to meet a 3.5 pounds of VOC per gallon of coating emission limit. The permit also includes the associated recordkeeping and testing requirements to ensure this limit is enforceable. As noted previously, this emission limit is consistent with EPA's guidance for VOC sources (See “Model Volatile Organic Compound Rules for Reasonably Available Control Technology”, EPA-Staff Working Document, June 1992). However, the RACT determination for some of the operations at this facility must address whether and how the facility can meet the recommended limits for Exterior Siding, specifically 2.1 pounds of VOC per gallon of coating, included in the 2006 Flat Wood Paneling Coatings (September 2006, EPA-453/R-06-004) CTG. Therefore, EPA finds that the VOC limits in the H.B.H. Prestain, Inc. operating permit are SIP-strengthening but do not constitute a complete RACT determination for this facility and is conditionally approving this operating permit into the VT SIP.

With respect to the CTGs issued in 2006 and later, VT has submitted negative declarations for four of these 11 CTGs. The state must still address the remaining seven CTGs.

EPA is approving State Implementation Plan (SIP) revisions submitted by the State of Vermont on November 14, 2008, and November 22, 2006. EPA is approving Vermont's November 14, 2008 RACT certification and negative declarations as meeting RACT for the 1997 8-hour standard. EPA is also approving the following permits conditions  5 as representing RACT for the applicable sources and incorporating these conditions into the SIP:

• Isovolta Inc. (Formerly U.S. Samica, Inc.) Operating Permit RACT provisions Construction and Equipment Specifications (2), Operational Limitations (5), Emission Limitations (9) and (17), and Continuous Temperature Monitoring Systems (19) through (21);

• Killington/Pico Ski Resort Partners, LLC. Operating Permit RACT provisions Construction and Equipment Specifications (3) through (7), Operational Limitations (8) and (10), Emission Limitations (14) through (16), Compliance Testing and Monitoring (23) and (24), Recordkeeping and Reporting (25), (27) and (33), and Appendix A; and

• Okemo Limited Liability Company Operating Permit RACT provisions Construction and Equipment Specifications (2), Operational Limitations (5) through (7) and (9) through (11), Emission Limitations (14) through (16), Compliance Testing and Monitoring (23) and (24), and Recordkeeping and Reporting (25), (26), (31), and (32).

EPA is also approving into the VT SIP revised regulation 5-253.3 “Bulk Gasoline Plants,” revised regulation 5-251(3) “Control of Nitrogen Oxides Emissions: RACT for large stationary sources,” as well as the newly submitted regulation 5-253.16 “Wood Furniture Manufacturing,” along with the associated revisions to the VT SIP narrative.

In addition, EPA is conditionally approving the following permits conditions as SIP-strengthening, but not completely fulfilling the RACT requirements for the applicable sources, and incorporating these conditions into the SIP:

• Churchill Coatings Corporation Operating Permit RACT conditions Emission Limitations (3) through (6) and (11), and Record Keeping and Reporting (14) through (16); and

• H.B.H Prestain, Inc. Operating Permit RACT provisions Emission Limitations (4) through (8), and (13), and Recordkeeping and Reporting (16) through (18).

The State of Vermont must submit to EPA by July 19, 2012, re-evaluated RACT determinations for Churchill Coatings Corporation and H.B.H Prestain. These RACT determinations must include an evaluation of the feasibility of the emission limits in the 2006 flat wood paneling CTG for these two facilities. If VT fails to do so, this conditional approval will become a disapproval on that date. EPA will notify VT by letter that this action has occurred. At that time, this commitment will no longer be a part of the approved VT 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 VT meets its commitment, within the applicable time frame, the conditionally approved portion of the submittal will remain a part of the SIP until EPA takes final action approving or disapproving the new submittal. If EPA approves the new submittal, the new approval will replace the conditionally approved operating permit sections in the VT SIP.

If the conditional approval is converted to a disapproval, such action will trigger EPA's authority to impose sanctions under section 110(m) of the CAA at the time EPA issues the final disapproval or on the date VT fails to meet its commitment. In the latter case, EPA will notify VT by letter that the conditional approval has been converted to a disapproval and that EPA's sanctions authority has been triggered. In addition, the final disapproval triggers the Federal Implementation Plan (FIP) requirement under section 110(c).

The EPA is publishing this action without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. However, in the proposed rules section of this Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve the SIP revision should relevant adverse comments be filed. This rule will be effective September 19, 2011 without further notice unless the Agency receives relevant adverse comments by August 18, 2011.

If the EPA receives such comments, then EPA will publish a notice withdrawing the final rule and informing the public that the rule 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 this rule will be effective on September 19, 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.

In addition, Vermont was issued a finding a failure to submit which started an 18 month sanctions clock and a 24 month Federal Implementation Plan (FIP) clock. The 18 month sanctions clock was stopped when Vermont submitted the SIP and we determined it complete on December 10, 2008. The 24 month FIP clock will stop upon the effective date of our final approval, September 19, 2011.

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 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).

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 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 19, 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).)

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

This is a summary of the First Report and Order portion of the Commission's First Report and Order and Further Notice of Proposed Rulemaking, IB Docket No. 04-112, FCC 11-76, adopted May 12, 2011, and released May 13, 2011. The full text of the First Report and Order and Further Notice of Proposed Rulemaking is available for inspection and copying during normal business hours in the FCC Reference Center, 445 12th Street, SW., Washington, DC 20554. The document also is available for download over the Internet at http://transition.fcc.gov/Daily_Releases/Daily_Business/2011/db0513/FCC-11-76A1.pdf . The complete text also may be purchased from the Commission's copy contractor, Best Copy and Printing, Inc. (BCPI), located in Room CY-B402, 445 12th Street, SW., Washington, DC 20554. Customers may contact BCPI at its Web site: http://www.bcpiweb.com or call 1-800-378-3160.

1. In the First Report and Order and Further Notice of Proposed Rulemaking, the Federal Communications Commission (Commission) continues its comprehensive review of the international reporting requirements for U.S. providers of international telecommunications services. In the First Report and Order portion of the document, the Commission finds that there are several reporting requirements that it can eliminate at this time. The Commission concludes that it no longer needs quarterly traffic and revenue filings or quarterly circuit addition reports. The Commission also finds carriers no longer need to file separately for off-shore U.S. points. In addition, the Commission finds that the toll division reports are out-dated and no longer need to be filed. The Commission concludes, however, that carriers should continue to file annual international traffic and revenue data and international circuit data in order to protect the interests of U.S. consumers and U.S. international service providers, and to facilitate the transition to competition in international markets. This includes certain route-specific data from facilities-based carriers, because the Commission needs route-by-route traffic and revenue information to implement and enforce pro-competitive international policies. The Commission also needs international resale traffic and revenue data on a world-wide basis since most international calls are initiated with a resale carrier. In the Further Notice of Proposed Rulemaking (FNPRM), which is published elsewhere in this issue, the Commission proposes a number of ways to modernize the information that it collects and to make the reporting requirements more tailored to the Commission's needs.

2. Elimination of the Quarterly Large-Carrier Reports (47 CFR 43.61(b)). The Commission's rules currently require facilities-based and facilities-resale carriers to file a quarterly traffic and revenue report for any quarter in which such carrier's traffic exceeds one of four thresholds specified in 47 CFR 43.61(b). The Commission adopted this reporting requirement as a way to detect “one-way bypass” that might result from international simple resale arrangements. In the Notice of Proposed Rulemaking (NPRM), 69 FR 29676, May 25, 2004, the Commission sought comment on whether the application of the Quarterly Large-Carrier Reports continues to be necessary. All those filing comments in response to the NPRM support elimination of the reports. The Commission agrees that the Quarterly Large-Carrier Reports are no longer needed to detect market distortions. The Commission notes that in practice, sudden changes in international traffic flows are not necessarily related to one-way bypass or other anti-competitive causes. Moreover, the Commission found that the quarterly traffic information filed by the carriers has often been subject to substantial revision and thus has been unreliable as an indicator of changes in traffic ratios. The Commission therefore concludes that requiring carriers to continue to file quarterly traffic reports will serve no useful purpose. Instead, the Commission finds that it will be sufficient to rely on annual traffic and revenue data regarding settlement payments and minutes, as well as on complaints by U.S. carriers, to detect and remedy anti-competitive activity by foreign carriers, including one-way bypass.

3. Elimination of the Quarterly Foreign-Affiliated Switched Resale Carrier Reports (47 CFR 43.61(c)). U.S.-authorized providers of international message telephone service (IMTS) resale that are affiliated with a foreign carrier are required to file quarterly traffic and revenue reports on their affiliated routes if they: (1) Have sufficient market power at the foreign end of an international route to affect competition adversely in the U.S. market, and (2) collect settlement payments from U.S. carriers for traffic affiliated in its home market. 47 CFR 43.61(c). The quarterly traffic and revenue report arose out of carrier concerns that overseas incumbent or monopoly telecommunications providers might use their market power to favor their affiliates that operate as carriers in the U.S. market. The report was intended to provide the Commission an early warning of attempts by incumbent carriers to engage in “price squeeze” behavior. In the NPRM, the Commission sought comment whether the continued application of the Quarterly Foreign-Affiliated Switched Resale Carrier Reports is necessary at this time. The commenters disagreed on the continued need for this reporting requirement. The Commission, however, has not received any complaints from U.S. carriers alleging such predatory behavior; nor have the reports revealed any such behavior. Furthermore, the 47 CFR 43.61(c) quarterly report is not the only way the Commission can address concerns that the settlement rates on a particular route remain above cost. The Commission finds that annual traffic and revenue filings provide sufficient information and thus the filing of the Quarterly Foreign-Affiliated Switched Resale Carrier Reports is no longer necessary.

4. Elimination of the Circuit-Addition Report (47 CFR 63.23(e)). Carriers that have been certified as resellers of private lines are required to report, by March 31 of the following year, the number of circuits they added during the year and to identify the services for which the circuits were used. 47 CFR 63.23(e). In the NPRM, the Commission proposed to eliminate the circuit-addition report. The only commenter to address this issue supports elimination of the report. Because the facilities-based carriers from which private line resellers purchase international circuits report those circuits on their circuit-status report, the Commission has a record that the circuits are being used. As a result, the Commission finds that the information from the annual circuit-addition reports does not justify the continuing burden of the reporting requirement.

5. Elimination of the Division of Telegraph Tolls Report (47 CFR 43.53). Telegraph carriers are required file copies of all their agreements with foreign carriers governing the division of tolls for international telegraph traffic. 47 CFR 43.53. In the NPRM, the Commission proposed to eliminate this filing requirement. The Commission agrees with the commenters that the decline in the telegraph industry has made these reports unnecessary. The volume of telegraph traffic has declined sharply over the years as telegraph service has largely been replaced by other means of communication, and this reporting requirement no longer serves a useful purpose.

6. Annual Traffic and Revenue Reports. The Commission shall continue to require carriers to file the annual traffic and revenue reports, albeit on a streamlined basis. The Commission finds that route-specific traffic and revenue data from the annual reports provides it with information that it needs to develop and implement policies to facilitate the continuing transition to competition in international markets, to monitor compliance with rules and policies, to gauge the effect of its decisions on competition in the international market, and for policy discussions in bilateral meetings and multilateral forums and for Commission participation in international organizations. The collection of aggregate world-total data would not be an adequate substitute for route-specific data, as it will not provide the specific data that the Commission needs to perform its functions. The Commission also finds that it cannot fully understand the IMTS market without information about IMTS resale. The Commission concludes that it needs to obtain international traffic and revenue data information directly from the international service providers because there are no other reliable sources of information on international traffic and revenue that will give it the full range of information that the Commission needs. Therefore the Commission shall retain the annual international traffic and revenue reporting requirements. Facilities-based providers of IMTS and private line services will continue to file traffic and revenue data for each international route on which they provide service. Carriers providing IMTS resale services will continue to file traffic and revenue data on a world total basis. The Commission, however, has sought comment on proposals to streamline these filing requirements in the FNPRM portion of the document, which is discussed in a separate Federal Register summary.

7. Annual Circuit-Status Reports. The Commission shall continue to require carriers to file the annual circuit-status reports, albeit on a streamlined basis. The Commission finds that information on international circuits continues to be essential for it to fulfill its mission and that there is no other source for this information. The Commission uses this data to monitor the continuing transition of international routes to competition, to monitor compliance with Commission rules and policies, to gauge the effect of Commission decisions on competition in the international market and to develop policy positions for bilateral and multilateral negotiations and for Commission participation in international organizations. The Commission also uses circuit-status information to ensure that carriers with market power do not use their access to circuit capacity to engage in any anti-competitive behavior, to analyze merger applications, to determine whether a proposed merger might result in an anti-competitive concentration of market power in the international transport market, and to help monitor compliance with the international bearer circuit regulatory fees established in section 9 of the Communications Act, 47 U.S.C. 159. Therefore, the Commission retains the requirement for facilities-based carriers to file international circuit data for each international route on which they provide service. The Commission, however, has sought comment on proposals to streamline these filing requirements in the FNPRM portion of the document, published elsewhere in this issue.

8. Elimination of the Requirement to Report Separately Traffic for Off-Shore U.S. Points. The Commission eliminates the requirement to report separately for off-shore U.S. points for the annual traffic and revenue reports and circuit-status reports. In the NPRM, the Commission proposed to eliminate the requirement that carriers file data for traffic or circuits between a U.S. domestic point and an off-shore U.S. point or between off-shore U.S. points. Several commenters support the proposal, and two commenters argue that the Commission should go further and eliminate disaggregate reports by U.S. points entirely. Because the Commission has not found disaggregate reporting by U.S. points to be of substantial benefit, it cannot justify the additional burden that disaggregate reporting requirements impose on filing carriers. It therefore eliminates all distinctions between domestic and off-shore U.S. points and requires carriers to file a single traffic and revenue report aggregating traffic and revenue data for all U.S. points and a single circuit-status report aggregating circuit data for all for U.S. points. The Commission will therefore no longer require separate reporting for off-shore U.S. points. Carriers should combine the traffic and revenue data and circuit data for the off-shore U.S. points with the data for domestic U.S. points when filing. Carriers thus will only report traffic and revenue data and circuits status for calls and circuits between the “United States” and foreign points. The “United States” shall be defined as the “several States and Territories, the District of Columbia, and the possessions of the United States, but does not include the Canal Zone”—the definition in the Communications Act, 47 U.S.C. 153(58).

9. This First Report and Order adopts new or revised information collection requirements, subject to the Paperwork Reduction Act of 1995 (PRA). These information collection requirements will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA. The Commission will publish a separate document in the Federal Register inviting comment on the new or revised information collection requirements adopted in this document. The requirements will not go into effect until OMB has approved them and the Commission has published a notice announcing the effective date of the information collection requirements. 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.”

10. As required by the Regulatory Flexibility Act, as amended (RFA), the Federal Communications Commission (Commission) included an Initial Regulatory Flexibility Analysis (IRFA) concerning the possible significant economic impact on a substantial number of small entities of the policies and rules proposed in the Notice of Proposed Rulemaking (NPRM) in this proceeding. The Commission sought written public comment on the proposals in the NPRM, including comment on the IRFA. This Final Regulatory Flexibility Analysis (FRFA) addresses the policies and rules that the Commission adopted in the First Report and Order portion of the decision in this proceeding. This First Report and Order retains the annual traffic and revenue report and the annual circuit-status report. The First Report and Order adopts some measures, as described below, to simplify compliance with the reporting requirements but generally does not alter either report. The Commission will consider a number of proposals to streamline the reports and to improve the information that carriers will provide in the Further Notice of Proposed Rulemaking portion of this proceeding. This FRFA conforms to the RFA.

11. The Commission initiated this comprehensive review of the reporting requirements imposed on U.S. carriers providing international telecommunications services under 47 CFR 43.51, 43.61, 43.82, and 63.23(e) of the Commission's rules, to modernize and simplify those requirements. The Commission believes that the policies and rules adopted in the First Report and Order will improve the data filing entities report while making it easier for carriers, both small and large, to provide the information required by the rules.

12. In the First Report and Order, the Commission concluded that it continues to need the traffic and revenue information the carriers now file under 47 CFR 43.61(a) of the rules and the circuit information the carriers file under 47 CFR 43.82. The Commission further concluded in the First Report and Order that it no longer needs the information provided by the large carrier quarterly reports required by 47 CFR 43.61(b), the foreign carrier affiliate quarterly report required by 47 CFR 43.61(c), the circuit-addition report required in 47 CFR 63.23(e), or the telegraph division-of-tolls report required by 47 CFR 43.53.

13. Currently, 47 CFR 43.61 requires that all international telecommunications carriers file an annual report of their traffic and revenues. Under 47 CFR 43.82, facilities-based common carriers providing international telecommunications services must file an annual report on the status of their circuits. The information derived from the international revenue and traffic report and circuit-status report is critical in understanding the international telecommunications market. These reports are the only source of publicly available information of this nature.

14. The information obtained from the traffic and revenue and circuit-status reports is used extensively by the Commission, the industry, other government agencies, and the public. The Commission uses the information to evaluate applications for international facilities, track market developments and the competitiveness of each service and geographical market to formulate rules and policies consistent with the public interest, monitor compliance with those rules and policies, and guard the competitive effect of its decisions on the market. Carriers use the information to track the balance of payments in international communications services and for market analysis purposes. Carriers and potential entrants use the information for, among other things, assessment of market opportunities and to monitor competition in markets. The Commission, along with other government agencies such as the Department of Justice and the United States Trade Representative, use the information in merger analyses and negotiations with foreign countries, respectively. In addition, the information contained in the circuit-status report allows the Commission to comply with the statutory requirements of the Omnibus Budget Reconciliation Act of 1993.

15. No comments specifically addressed the IRFA.

16. The RFA directs agencies to provide a description of, and, where feasible, an estimate of the number of small entities that may be affected by the rules adopted herein. 1 The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.”  2 In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. 3 A small business concern is one that: (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). 4

17. The policies adopted in the FR&O apply to entities providing international common carrier services pursuant to section 214 of the Communications Act; entities providing international wireless common carrier services under section 309 of the Act; entities providing common carrier satellite services under section 309 of the Act; and entities licensed to construct and operate submarine cables under the Cable Landing License Act. The Commission has not developed a small business size standard directed specifically toward these entities. As described below, such entities fit within larger categories for which the SBA has developed size standards.

18. The First Report and Order retains the annual traffic and revenue report, which common carriers providing international telecommunications services are now required to file. Such entities include entities providing international common carrier services pursuant to section 214 of the Communications Act and entities providing domestic or international wireless common carrier services under section 309 of the Act. The carriers that the First Report and Order will require to continue to file the traffic and revenue report are a mixture of both large and small entities. The Commission has not developed a small business size standard directed specifically toward these entities. However, as described below, these entities fit into larger categories for which the SBA has developed size standards that provide these facilities or services.

19. Facilities-based Carriers. Facilities-based providers of international telecommunications services would fall into the larger category of interexchange carriers. Neither the Commission nor the SBA has developed a small business size standard specifically for providers of interexchange services. Under SBA rules, providers of interexchange services fall within the size standard category for Wired Telecommunications Carriers. Under that size standard, a Wired Telecommunications Carrier is considered a small entity if it has 1,500 or fewer employees. 5 Census Bureau data for 2007 show that there were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had had employment of 1,000 employees or more. Thus under this category and the associated small business size standard, the majority of these interexchange carriers can be considered small entities. 6 Similarly, according to Commission data, 359 companies reported that their primary telecommunications service activity was the provision of interexchange services. 7 Of these 359 companies, an estimated 317 have 1,500 or fewer employees and 42 have more than 1,500 employees. 8 Consequently, the Commission estimates that the majority of interexchange service providers are small entities that may be affected by rules adopted pursuant to the First Report and Order.

20. In the 2009 annual traffic and revenue report, 38 facilities-based and facilities-resale carriers reported approximately $5.8 billion in revenues from international message telephone service (IMTS). Of these, three reported IMTS revenues of more than $1 billion, eight reported IMTS revenues of more than $100 million, 10 reported IMTS revenues of more than $50 million, 20 reported IMTS revenues of more than $10 million, 25 reported IMTS revenues of more than $5 million, and 30 reported IMTS revenues of more than $1 million. Based solely on their IMTS revenues, the majority of these carriers would be considered non-small entities under the SBA definition. 9

21. The 2009 traffic and revenue report also shows that 45 facilities-based and facilities-resale carriers (including 14 who also reported IMTS revenues) reported $683 million for international private line services. Of these, four reported private line revenues of more than $50 million, 12 reported private line revenues of more than $10 million, 30 reported revenues of more than $1 million, 34 reported private line revenues of more than $500,000, 41 reported revenues of more than $100,000, while 2 reported revenues of less than $10,000.

22. The 2009 traffic and revenue report also shows that seven carriers (including one that reported both IMTS and private line revenues, one that reported IMTS revenues and three that reported private line revenues) reported $51 million for international miscellaneous services, of which two reported miscellaneous services revenues of more than $1 million, one reported revenues of more than $500,000, two reported revenues of more than $200,000, one reported revenues of more than $50,000, while one reported revenues of less than $20,000. Based on its miscellaneous services revenue, only the carrier with revenues of less than $20,000 would be considered a small business under the SBA definition. Based on their private line revenues, most of these entities would be considered non-small entities under the SBA definition.

23. IMTS Resale Carriers. Providers of IMTS resale services are common carriers that purchase IMTS from other carriers and resell it to their own customers. The SBA has developed a small business size standard for the category of “Telecommunications Resellers.” Under that size standard, such a business is small if it has 1,500 or fewer employees. 10 Census data for 2007 show that 1,523 firms provided resale services during that year. Of that number, 1,522 operated with fewer than 1,000 employees and one operated with more than 1,000. 11 Thus under this category and the associated small business size standard, the majority of these resellers can be considered small entities. Similarly, in the 2009 traffic and revenue report, 1,232 carriers reported that they provided IMTS on a pure resale basis. 12 Based on their IMTS resale revenues, Commission data reveals that IMTS resale service is primarily provided by carriers that would be considered small businesses under the SBA definition. For example, of the 1,232 IMTS resale carriers, 644 carriers reported revenues of less than $10,000; 1,025 had revenues less than $500,000; and 1,068 had revenues less than $1 million. 13 Consequently, the Commission estimates that the majority of IMTS resellers are small entities that may be affected by our action.

24. Wireless Carriers and Service Providers. Included among the providers of IMTS resale are a number of wireless carriers that also provide wireless telephony services domestically. The Commission classifies these entities as providers of Commercial Mobile Radio Services (CMRS). At present, most, if not all, providers of CMRS that offer IMTS provide such service by purchasing IMTS from other carriers to resell it to their customers. The Commission has not developed a size standard specifically for CMRS providers that offer resale IMTS. Such entities would fall within the larger category of wireless carriers and service providers. Below, for those services subject to auctions, the Commission notes that, as a general matter, the number of winning bidders that qualify as small businesses at the close of an auction does not necessarily represent the number of small businesses currently in service. Also, the Commission does not generally track subsequent business size unless, in the context of assignments or transfers, unjust enrichment issues are implicated.

25. Wireless Telecommunications Carriers (except Satellite). Since 2007, the Census Bureau has placed wireless firms within this new, broad, economic census category. 14 Prior to that time, such firms were within the now-superseded categories of Paging and Cellular and Other Wireless Telecommunications. 15 Under the present and prior categories, the SBA has deemed a wireless business to be small if it has 1,500 or fewer employees. 16 For the category of Wireless Telecommunications Carriers (except Satellite), Census data for 2007 show that there were 1,383 firms that operated that year. 17 Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees. Thus under this category and the associated small business size standard, the majority of firms can be considered small. Similarly, according to Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony, including cellular service, Personal Communications Service, and Specialized Mobile Radio Telephony services. 18 Of these, an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500 employees. 19 Consequently, the Commission estimates that approximately half or more of these firms can be considered small. Thus, using available data, we estimate that the majority of wireless firms can be considered small.

26. Wireless Communications Services. This service can be used for fixed, mobile, radiolocation, and digital audio broadcasting satellite uses. The Commission defined “small business” for the Wireless Communications Services (WCS) auction as an entity with average gross revenues of $40 million for each of the three preceding years, and a “very small business” as an entity with average gross revenues of $15 million for each of the three preceding years. 20 The SBA has approved these definitions. 21 The Commission auctioned geographic area licenses in the WCS service. In the auction, which commenced on April 15, 1997 and closed on April 25, 1997, seven bidders won 31 licenses that qualified as very small business entities, and one bidder won one license that qualified as a small business entity.

27. The First Report and Order continues to require common carriers that provide international telecommunications services on a facilities basis to file the annual circuit-status report. The Commission has not developed size standards specifically addressed to such carriers, but they fall within larger categories for which the SBA has developed size standards.

28. Facilities-based Carriers. Facilities-based providers of international telecommunications services fall into the larger category of interexchange carriers. Neither the Commission nor the SBA has developed a small business size standard specifically for providers of interexchange services. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. 22 Census Bureau data for 2007 show that there were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had had employment of 1,000 employees or more. Thus under this category and the associated small business size standard, the majority of these interexchange carriers can be considered small entities. 23 According to Commission data, 359 companies reported that their primary telecommunications service activity was the provision of interexchange services. 24 Of these 359 companies, an estimated 317 have 1,500 or fewer employees and 42 have more than 1,500 employees. 25 Consequently, the Commission estimates that the majority of interexchange service providers are small entities that may be affected by rules adopted in the First Report and Order.

29. According to the 2009 circuit-status report, 75 U.S. international facility-based carriers filed information pursuant to 47 CFR 43.82. 26 The report does not report employee or revenue statistics, so it is impossible for us to determine how many carriers could be considered small entities. Each of the 75 carriers, however, reported a small amount of capacity. Although it is possible that a carrier could report a small amount of capacity and have significant revenues, we will consider those 75 carriers to be small entities at this time. In addition, of the 79 carriers that filed an annual circuit-status report for 2009, there were at least four carriers that reported no circuits owned or in use at the end of 2009. 27

30. The First Report and Order retains the annual traffic and revenue report and the annual circuit-status report because the collection and public reporting of this information continues to be necessary and in the public interest. Because carriers currently are required to file the 47 CFR 43.61 annual traffic and revenue report and the 47 CFR 43.82 annual circuit-status report, the decision to retain those reports will not impose an additional significant economic burden on small carriers. Similarly, the decision to retain the reporting of IMTS and international private lines on a route-by-route basis continues the requirement found in 47 CFR 43.61, and therefore will not impose any significant additional burden on small carriers.

31. The decision in the First Report and Order to no longer require carriers to report separately their traffic and revenues for traffic between the conterminous 48 states and off-shore U.S. points will reduce the burden on carriers large and small. The First Report and Order recognizes that the Commission has integrated rates for off-shore U.S. points into the domestic rate structure. As a result, such traffic is no longer considered to be international and, thus, need not be reported in an international traffic and revenue report. Similarly, the First Report and Order no longer requires carriers to separately report their international traffic to or from such off-shore points from or to foreign points. Rather, the Commission concluded that such traffic should be combined with the carriers” traffic and revenues to and from the conterminous 48 states. As a result, this decision will also not impose any significant additional burden on small carriers.

32. The Commission's decision to eliminate the current Large-Carrier Quarterly Report in 47 CFR 43.61(b) will reduce the burden on those large carriers that are now required to file the report. Because the quarterly reporting requirement was limited to large, dominant facilities-based and facilities-resale international carriers, the elimination of the report has no impact on small carriers. Similarly, the decision in the FR&O to eliminate the Foreign-Affiliated Carrier Quarterly Report in 47 CFR 43.61(c) will reduce the burden on the mostly, if not exclusively, large, dominant U.S. carriers that are now required to file the report. The current reporting requirement applies to U.S.-authorized providers of IMTS resale that are affiliated with a foreign telecommunications provider that (1) has sufficient market power in its home market that it could distort competition in the U.S. market and (2) collects money from U.S. carriers for traffic between the United States and its home market.

33. The Commission's decision to eliminate the circuit-addition report under 47 CFR 63.23(e) and the telegraph division of tolls report under 47 CFR 43.51 will reduce the burden on large and small carriers. As such, it will not impose any significant additional burdens on small businesses.

34. The RFA requires an agency to describe any significant, specifically small business, 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 and reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage or the rule, or any part thereof, for small entities.”  28

35. The First Report and Order retains the 47 CFR 43.61(a) traffic and revenue and the 47 CFR 43.82 annual circuit-status reports. That decision does not increase the burden of the reporting requirement on either small or large carriers. Further, the Commission's decision to eliminate the requirement that carriers report separately their traffic between the conterminous 48 states and U.S. off-shore points or report separately the traffic between U.S. off-shore points and foreign points will reduce the burden of the annual traffic and revenue report and the circuit-status reports for both large and small carriers. Further, the decision to eliminate the large-carrier report under 47 CFR 43.61(b), the foreign-affiliated-carrier quarterly reports under 47 CFR 43.61(c), the circuit-addition report under 47 CFR 63.23(e), and the telegraph division-of-tolls report under 47 CFR 43.51 will also reduce the burden of the international reporting requirements on both large and small carriers. As such, we believe that the policies adopted in the First Report and Order will not significantly increase any burdens on small carriers. Because this First Report and Order does not adopt additional regulations for service providers, the Commission does not need to consider any alternative approaches that would minimize the economic impact of the reporting requirements on small businesses.

36. The Commission will send a copy of this First Report and Order and Further Notice of Proposed Rulemaking, including this FRFA, in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional review Act. 29 In addition, the Commission will send a copy of the First Report and Order and Further Notice of Proposed Rulemaking, including a copy of this FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the First Report and Order and Further Notice of Proposed Rulemaking and FRFA (or summaries thereof) will also be published in the Federal Register . 30

37. Accordingly, it is ordered that, pursuant to sections 1, 4(i)-4(j), 11, 201-205, 211, 214, 219, 220, 303(r), 309 and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i)-154(j), 161, 201-205, 211, 214, 219-220, 303(r), 309, 403, the policies, rules and requirements discussed in this Report and Order are adopted and Parts 43 and 63 of the Commission's rules, 47 CFR parts 43 and 63 are amended as set forth below.

38. It is further ordered that the Motion for Leave to File Reply Comments One Day Late filed by Kelley Drye & Warren LLP is granted.

39. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Report and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration in accordance with section 603(a) of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq.

40. It is further ordered that the Commission shall send a copy of this First Report and Order in a report to be sent to Congress and the General Accounting Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR parts 43 and 63 as follows:

This is a synopsis of the Commission's Memorandum Opinion and Order, MM Docket No. 00-148, adopted May 5, 2011, and released May 6, 2011. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. The document may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-378-3160 or http://www.BCPIWEB.com.

A Notice of Proposed Rule Making (“NPRM”) in this proceeding proposed the allotment of a new FM channel at Quanah, Texas. See 65 FR 53689 (September 5, 2000). In response to the NPRM, the Joint Petitioners filed a mutually exclusive Counterproposal involving 22 communities in Texas and Oklahoma, as well as two alternative proposals. The staff dismissed the original Counterproposal and the first alternative proposal for technical defects, and these actions are not contested by the Joint Petitioners. See 68 FR 26557 (May 16, 2003). The Joint Petitioners seek review of the dismissal of the second alternative proposal in the Memorandum Opinion and Order in this proceeding on the grounds that it was a technically acceptable proposal and that the staff should have made it the subject of a separate Notice of Proposed Rule Making. See 69 FR 29242 (May 21, 2004).

The document reasons that, contrary to the Joint Petitioners' contention, the second alternative proposal had two fatal defects that prevented its consideration as either a rule making petition or a counterproposal. Specifically, one of the proposed allotments conflicted with a previously filed, cut-off allotment proposal in another proceeding and was impermissibly contingent upon the staff's approval of a request to withdraw that proposal. Another proposed reallotment had an unsuitable transmitter site located in or near the Colorado River. Because counterproposals must be technically correct and substantially complete when filed, the second alternative proposal was properly dismissed. To the extent that curative amendments have been allowed in some cases, the document finds that this practice has been inconsistently applied and the public interest is better served by no longer entertaining curative amendments for counterproposals or FM allotment rule making proposals.

The Commission will not send a copy of this Memorandum Opinion and Order to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A), because the Application for Review was denied.

Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding. See 46 FR 11549 (February 9, 1981).

This document announces that on July 5, 2011 and July 11, 2011, OMB approved, for a period of three years, the information collection requirements contained in 47 CFR 73.7000, FCC Forms 301 and 340 and the AM Auction Section 307(b) Submissions. The Commission publishes this document to announce the effective date of this rule section and form revisions. See, In the Matter of Policies to Promote Rural Radio Service and to Streamline Allotment and Assignment Procedures, MB Docket No. 09-52; FCC 11-28, 76 FR 18942, April 6, 2011.

As required by the Paperwork Reduction Act of 1995, (44 U.S.C. 3507), the Commission is notifying the public that it received OMB approval on July 5 and July 11, 2011, for the information collection requirement contained in 47 CFR 73.7000, Forms 301 and 340 and the AM Auction Section 307(b) Submissions . Under 5 CFR part 1320, an agency may not conduct or sponsor a collection of information unless it displays a current, valid OMB Control Number.

No person shall be subject to any penalty for failing to comply with a collection of information subject to the Paperwork Reduction Act that does not display a valid OMB Control Number.

The OMB Control Numbers are 3060-0027, 3060-0029 and 3060-0996 and the total annual reporting burdens for respondents for this information collection are as follows:

OMB Control Number: 3060-0027.

Title: Application for Construction Permit for Commercial Broadcast Station, FCC Form 301.

OMB Approval Date: July 5, 2011.

OMB Expiration Date: July 31, 2014.

Form Number: FCC Form 301.

Type of Review: Revision of a currently approved collection.

Respondents: Business or other for-profit entities; Not-for-profit entities; State, local or Tribal governments.

Number of Respondents and Responses: 4,544 respondents; 7,980 responses.

Estimated Time per Response: 1- 6.25 hours (average).

Frequency of Response: On occasion reporting requirement; Third-party disclosure requirement.

Obligation To Respond: Required to obtain or retain benefits. Statutory authority for the information collection requirements is contained in Sections 154(i), 303 and 308 of the Communications Act of 1934, as amended.

Total Annual Burden: 20,257 hours.

Total Annual Costs: $88,116,793.

Nature and Extent of Confidentiality: There is no need for confidentiality with this collection of information.

Privacy Impact Assessment: No impact(s).

Needs and Uses: On January 28, 2010, the Commission adopted a First Report and Order and Further Notice of Proposed Rulemaking in MB Docket No. 09-52, FCC 10-24. On March 3, 2011, the Commission adopted a Second Report and Order (“Second R&O”), First Order on Reconsideration, and Second Further Notice of Proposed Rulemaking in MB Docket No. 09-52, FCC 11-28. The Second R&O adopts modifications to the manner in which the Commission awards preferences to applicants under the provisions of Section 307(b) of the Act. For Section 307(b) purposes, licensees and permittees seeking to change community of license must demonstrate that the facility at the new community represents a preferential arrangement of allotments (FM) or assignments (AM) over the current facility. Applications that are submitted to change an existing radio facility's community of license must include an Exhibit containing information demonstrating that the proposed change of community of license will result in a preferential arrangement of allotments or assignments under Section 307(b).

Consistent with actions taken by the Commission in the Second R&O, the Instructions to the Form 301 have been revised to incorporate the information that must be included in the Exhibit, which is responsive to the “Community of License Change-Section 307(b)” question in the Form 301. The Form 301 itself has not been revised, nor have any questions been added to the Form 301. Rather, the Instructions for the Form 301 have been revised to assist applicants with completing the mandatory, responsive Exhibit.

The modifications to the Commission's allotment and assignment policies adopted in the Second R&O include a rebuttable “Urbanized Area service presumption” under Priority (3), whereby an application to locate or relocate a station as the first local transmission service at a community located within an Urbanized Area, that would place a daytime principal community signal over 50 percent or more of an Urbanized Area, or that could be modified to provide such coverage, will be presumed to be a proposal to serve the Urbanized Area rather than the proposed community.

In the case of an AM station, the determination of whether a proposed facility “could be modified” to cover 50 percent or more of an Urbanized Area will be made based on the applicant's certification in the Exhibit that there could be no rule-compliant minor modifications to the proposal, based on the antenna configuration or site, and spectrum availability as of the filing date, that could cause the station to place a principal community contour over 50 percent or more of an Urbanized Area. In the case of an FM station, the determination of whether a proposed facility “could be modified” to cover 50 percent or more of an Urbanized Area will be based on an applicant's certification in the Exhibit that there are no existing towers in the area to which, at the time of filing, the applicant's antenna could be relocated pursuant to a minor modification application to serve 50 percent or more of an Urbanized Area. Specifically, an FM applicant would need to certify that there could be no rule-compliant minor modification on the proposed channel to provide a principal community signal over 50 percent or more of an Urbanized Area, in addition to covering the proposed community of license. In doing so, FM applicants will be required to consider all existing registered towers in the Commission's Antenna Structure Registration database, in addition to any unregistered towers currently used by licensed radio stations. Furthermore, we expect all applicants to consider widely-used techniques, such as directional antennas and contour protection, when certifying that the proposal could not be modified to provide a principal community signal over the community of license and 50 percent or more of an Urbanized Area.

To the extent the applicant wishes to rebut the Urbanized Area service presumption, the Exhibit must include a compelling showing (a) that the proposed community is truly independent from the Urbanized Area; (b) of the community's specific need for an outlet of local expression separate from the Urbanized Area; and (c) the ability of the proposed station to provide that outlet.

For applicants making a showing under Priority (4), other public interest matters, the Exhibit must provide a description of all populations gaining or losing third, fourth, or fifth reception service, and the percentage of the population in the station's current protected contour that will lose third, fourth, or fifth reception service, if any. The Commission will also require applicants to not only set forth the populations gaining and losing service under the proposal, but also the numbers of services those populations will receive if the application is granted, and an explanation as to how the proposal provides a preferential arrangement of allotments or assignments and advances the revised Section 307(b) policies.

The Commission specifically stated that these modified allotment and assignment procedures will apply to any applications to change community of license that are pending as of the release date of the Second R&O, March 3, 2011. Therefore, an applicant with a pending community of license change application must file an amendment demonstrating how the proposal represents a preferential arrangement of allotments or assignments under the policy modifications adopted in the Second R&O. For example, an applicant claiming Priority (3) would have to file the above-referenced “could be modified” certification, if appropriate, or a showing to rebut the Urbanized Area service presumption, if applicable. Similarly, an applicant claiming Priority (4) will have to make a showing as to the populations gaining or losing service under the proposed community of license change, as well as the numbers of services those populations will receive if the application is granted, and an explanation as to how the proposal advances the revised Section 307(b) priorities set out in the Second R&O. Such amendments must be filed once the information collection requirements are approved by OMB and the effective date for the requirements is announced by the Commission. Finally, under Priority (4) applicants may offer any other information they believe pertinent to a public interest showing and relevant to the Commission's consideration.

OMB Control Number: 3060-0029.

Title: Application for Construction Permit for Reserved Channel Noncommercial Educational Broadcast Station, FCC Form 340.

OMB Approval Date: July 11, 2011.

OMB Expiration Date: July 31, 2014.

Form Number: FCC Form 340.

Type of Review: Revision of a currently approved collection.

Respondents: Business or other for-profit entities; Not-for-profit entities; State, local or Tribal governments.

Number of Respondents and Responses: 2,765 respondents; 2,765 responses.

Estimated Time per Response: 1-6 hours (average).

Frequency of Response: On occasion reporting requirement; Third-party disclosure requirement.

Obligation to Respond: Required to obtain or retain benefits. Statutory authority for the information collection requirements is contained in Sections 154(i), 303 and 308 of the Communications Act of 1934, as amended.

Total Annual Burden: 7,150 hours.

Total Annual Costs: $29,079,700.

Nature and Extent of Confidentiality: There is no need for confidentiality with this collection of information.

Privacy Impact Assessment: No impact(s).

Needs and Uses: On January 28, 2010, the Commission adopted a First Report and Order in the Matter of Policies to Promote Rural Radio Service and to Streamline Allotment and Assignment Procedures, MB Docket No. 09-52, FCC 10-24 (released February 3, 2010). On March 3, 2011, the Commission adopted a Second Report and Order, First Order on Reconsideration, and Second Further Notice of Proposed Rulemaking in MB Docket No. 09-52, FCC 11-28 (released March 3, 2011). In the First Report and Order, the Commission adopted the Tribal Priority proposed in the Notice of Proposed Rule Making, with some modifications. Under the Tribal Priority, a Section 307(b) priority will apply to an applicant meeting all of the following criteria: (1) The applicant is either a Federally recognized Tribe or Tribal consortium, or an entity 51 percent or more owned or controlled by a Tribe or Tribes; (2) at least 50 percent of the daytime principal community contour of the proposed facilities covers Tribal Lands, in addition to meeting all other Commission technical standards; (3) the specified community of license is located on Tribal Lands; and (4) the applicant proposes the first local Tribal-owned noncommercial educational transmission service at the proposed community of license. The proposed Tribal Priority would apply, if at all, before the fair distribution analysis currently used to evaluate noncommercial educational applications. The Tribal Priority does not prevail over an applicant proposing first overall reception service to a significant population. The First Order on Reconsideration modifies the initially adopted Tribal Priority coverage requirement, by creating an alternative coverage standard under criterion (2), enabling Tribes to qualify for the Tribal Priority even when their Tribal Lands are too small or irregularly shaped to comprise 50 percent of a radio station's signal. In such circumstances, Tribes may claim the priority (i) if the proposed principal community contour of the station encompasses 50 percent or more of that Tribe's Tribal Lands, but does not cover more than 50 percent of the Tribal lands of a non-applicant Tribe, (ii) serves at least 2,000 people living on Tribal Lands, and (iii) the total population on Tribal Lands residing within the station's service contour constitutes at least 50 percent of the total covered population, with provision for waivers as necessary to effectuate the goals of the Tribal Priority. This modification will enable Tribes with small or irregularly shaped lands to qualify for the Tribal Priority. The First Order on Reconsideration also provides that, under criterion (2), even an applicant whose Tribal Lands would be covered by 50 percent or more of the proposed principal community contour (the original coverage standard set forth in the First Report and Order) may not claim the credit if the principal community contour would cover more than 50 percent of the Tribal Lands of a non-applicant Tribe.

FCC Form 340 and its instructions have been revised to accommodate those applicants qualifying for the new Tribal Priority. After adoption of the First Report and Order, we added new Questions 1 and 2, which seek information as to the applicant's eligibility for the Tribal Priority and direct applicants claiming the priority to prepare and attach an exhibit, to Section III. The instructions for Section III were also revised to assist applicants with completing the new questions and preparing the exhibit. In the First Order on Reconsideration, the Commission added an alternative definition of “Tribal Coverage” to that adopted in the First Report and Order. Accordingly, we have modified the instructions for Section III, Question 2, to comport with the new alternative Tribal Coverage definition. The form itself has not been revised, nor have any questions been added to Form 340.

OMB Control Number: 3060-0996.

Title: AM Auction Section 307(b) Submissions.

OMB Approval Date: July 5, 2011.

OMB Expiration Date: July 31, 2014.

Form Number: N/A.

Type of Review: Revision of a currently approved collection.

Respondents: Business or other for-profit entities; Not-for-profit entities; State, local or Tribal governments.

Number of Respondents and Responses: 210 respondents; 210 responses.

Estimated Time per Response: 0.5-6 hours (average).

Frequency of Response: On occasion reporting requirement.

Obligation To Respond: Required to obtain or retain benefits. Statutory authority for the information collection requirements is contained in Sections 154(i), 307(b) and 309 of the Communications Act of 1934, as amended.

Total Annual Burden: 1,029 hours.

Total Annual Costs: $2,126,100.

Nature and Extent of Confidentiality: There is no need for confidentiality with this collection of information.

Privacy Impact Assessment: No impact(s).

Needs and Uses: On January 28, 2010, the Commission adopted a First Report and Order and Further Notice of Proposed Rulemaking (“First R&O”) in MB Docket No. 09-52, FCC 10-24. The First R&O adopted changes to certain procedures associated with the award of broadcast radio construction permits by competitive bidding, including modifications to the manner in which it awards preferences to applicants under the provisions of Section 307(b). In the First R&O, the Commission added a new Section 307(b) priority that would apply only to Native American and Alaska Native Tribes, Tribal consortia, and majority Tribal-owned entities proposing to serve Tribal lands. As adopted in the First R&O, the priority is only available when all of the following conditions are met: (1) The applicant is either a Federally recognized Tribe or Tribal consortium, or an entity that is 51 percent or more owned or controlled by a Tribe or Tribes; (2) at least 50 percent of the area within the proposed station's daytime principal community contour is over that Tribe's Tribal lands, in addition to meeting all other Commission technical standards; (3) the specified community of license is located on Tribal lands; and (4) in the commercial AM service, the applicant must propose first or second aural reception service or first local commercial Tribal-owned transmission service to the proposed community of license, which must be located on Tribal lands. Applicants claiming Section 307(b) preferences using these factors will submit information to substantiate their claims.

On March 3, 2011, the Commission adopted a Second Report and Order (“Second R&O”), First Order on Reconsideration, and Second Further Notice of Proposed Rulemaking in MB Docket No. 09-52, FCC 11-28. The First Order on Reconsideration modifies the initially adopted Tribal Priority coverage requirement, by creating an alternate coverage standard under criterion (2), enabling Tribes to qualify for the Tribal Priority even when their Tribal lands are too small or irregularly shaped to comprise 50 percent of a station's signal. In such circumstances, Tribes may claim the priority (i) If the proposed principal community contour encompasses 50 percent or more of that Tribe's Tribal lands, but does not cover more than 50 percent of the Tribal lands of a non-applicant Tribe; (ii) serves at least 2,000 people living on Tribal lands, and (iii) the total population on Tribal lands residing within the station's service contour constitutes at least 50 percent of the total covered population, with provision for waivers as necessary to effectuate the goals of the Tribal Priority. This modification will now enable Tribes with small or irregularly shaped lands to qualify for the Tribal Priority.

The modifications to the Commission's allotment and assignment policies adopted in the Second R&O include a rebuttable “Urbanized Area service presumption” under Priority (3), whereby an application to locate or relocate a station as the first local transmission service at a community located within an Urbanized Area, that would place a daytime principal community signal over 50 percent or more of an Urbanized Area, or that could be modified to provide such coverage, will be presumed to be a proposal to serve the Urbanized Area rather than the proposed community. In the case of an AM station, the determination of whether a proposed facility “could be modified” to cover 50 percent or more of an Urbanized Area will be made based on the applicant's certification in the Section 307(b) showing that there could be no rule-compliant minor modifications to the proposal, based on the antenna configuration or site, and spectrum availability as of the filing date, that could cause the station to place a principal community contour over 50 percent or more of an Urbanized Area. To the extent the applicant wishes to rebut the Urbanized Area service presumption, the Section 307(b) showing must include a compelling showing (a) That the proposed community is truly independent from the Urbanized Area; (b) of the community's specific need for an outlet of local expression separate from the Urbanized Area; and (c) the ability of the proposed station to provide that outlet.

In the case of applicants for new AM stations making a showing under Priority (4), other public interest matters, an applicant that can demonstrate that its proposed station would provide third, fourth, or fifth reception service to at least 25 percent of the population in the proposed primary service area, where the proposed community of license has two or fewer transmission services, may receive a dispositive Section 307(b) preference under Priority (4). An applicant for a new AM station that cannot demonstrate that it would provide the third, fourth, or fifth reception service to the required population at a community with two or fewer transmission services may also, under Priority (4), calculate a “service value index” as set forth in the case of Greenup, Kentucky and Athens, Ohio, Report and Order, 2 FCC Rcd 4319 (MMB 1987). If the applicant can demonstrate a 30 percent or greater difference in service value index between its proposal and the next highest ranking proposal, it can receive a dispositive Section 307(b) preference under Priority (4). Except under these circumstances, dispositive Section 307(b) preferences will not be granted under Priority (4) to applicants for new AM stations. The Commission specifically stated that these modified allotment and assignment procedures will not apply to pending applications for new AM stations and major modifications to AM facilities filed during the 2004 AM Auction 84 filing window.

A proposed rule soliciting public comment on making corrections and clarifications to the existing regulations and to ensure the regulations are consistent with the measures adopted by the Council was published in the Federal Register on May 2, 2011 (76 FR 24444) with public comments accepted through May 17, 2011. One comment was received, but it was not relevant to this action. NMFS has approved the corrections, clarifications, and modifications to ensure consistency with the goals of the NE Multispecies FMP, as described in Amendment 16, FW 44, and FW 45 to the FMP, and other applicable laws. For a complete description of each measure, see the preamble text from the proposed rule.

The most recent management actions in the NE multispecies fishery (Amendment 16 and FW 44) were both implemented by final rules that published in the Federal Register on April 9, 2010 (75 FR 18262 and 75 FR 18356, respectively), and became effective on May 1, 2010. FW 45 was implemented by a final rule that published in the Federal Register on April 25, 2011 (76 FR 23042), and became effective on May 1, 2011. Amendment 16 and FW 44 implemented measures necessary to end overfishing and rebuild overfished stocks based on new or existing rebuilding programs and to comply with annual catch limit (ACL) and accountability measure (AM) requirements of the Magnuson-Stevens Act. Amendment 16 also substantially revised existing sector management measures and established new sectors. Amendment 16 superseded measures implemented by an emergency final rule (74 FR 17030, April 13, 2009) to immediately reduce overfishing on certain groundfish stocks managed by the FMP until long-term measures could be implemented by the Amendment 16 final rule. FW 45 implemented a measure to require dockside monitors to inspect fish holds as part of the DSM program.

The final rules implementing Amendment 16, FW 44, and FW 45, as well as other previous actions, contained several inadvertent errors, omissions, and potential inconsistencies with the intent of the these actions, as identified below. This rule corrects these errors, and clarifies or modifies the current regulations to ensure consistency with their original intent. Also, changes are made to some of the regulations to provide additional flexibility for some of the administrative requirements, such as allowing sector managers more time to complete their weekly reports. NMFS is taking these actions under authority in section 305(d) of the Magnuson-Stevens Act, which provides that the Secretary of Commerce may, on his/her own, promulgate regulations necessary to ensure that an FMP or its amendments are carried out in accordance with the provisions of the Magnuson-Stevens Act.

After further consideration, NMFS is not implementing one measure that was in the proposed rule. It was proposed that vessels attempting to only set gear on a trip, and not retrieve any gear or land any fish, be given an exemption from VTR requirements. However, due to monitoring, compliance, and consistency concerns, NMFS no longer believes that this measure is appropriate. The definition of a set-only trip at § 648.2 as defined in the proposed rule will remain in place, as well as the prohibition to possess or land fish while on a set-only trip at § 648.14.

The final rule implementing FW 45 included a new requirement for dockside monitors to board vessels and inspect the fish hold for any trip that is assigned a dockside/roving monitor. NMFS implemented this change to the DSM operations standards to enhance the enforceability of existing provisions and minimize the incentives to underreport/misreport the amount of regulated species landed, after consideration of concerns expressed by the public and enforcement personnel.

This rule modifies the DSM operations standards by removing the requirement for dockside monitors to board each vessel at the conclusion of each offload for the purpose of fish hold inspection, and replacing it with a provision that makes such inspection discretionary, unless it is required in the future by the Regional Administrator. The addition of the requirement to inspect the hold was met with strong opposition from industry members, who cited concerns about privacy, additional time associated with the inspection, the increased potential for accidents, and the adequacy of insurance for coverage of the activity. Upon further review, NMFS has determined that retaining the vessel trip-end (pre-landing) hail requirement currently provides an efficient and effective means for observation and enforcement of vessel landing requirements through unannounced observation of vessel offloads at the discretion of law enforcement, which could include inspection of the hold. The hail requirement and spot inspections allow for deployment of limited monitoring and enforcement resources to the greatest effect. The possibility of such inspection is believed to be a sufficient deterrent at this time. Under the new provision, onboard inspections by dockside monitors will not be required unless the Regional Administrator determines that dockside monitoring of holds will improve the efficiency and effectiveness of monitoring landings. If the Regional Administrator makes such a determination, affected permit holders and monitoring providers will be informed through a letter or other appropriate means. Instructions and guidelines deemed necessary for carrying out such inspections will also be provided. In addition, a sector may also independently authorize dockside/roving monitors to inspect any area of the vessel in which fish are stored. Because this provision was not specified in the proposed rule, it is being implemented as an interim final rule for purposes of seeking additional public comment.

In addition to the “Changes from the Proposed Rule” discussed above, this action makes several other modifications and corrections stated below, which are listed in the order in which they appear in the regulations; the last section of corrections are found throughout the regulations.

The current VTR regulations require that a VTR be submitted by a vessel operator upon entering port with fish. This suggests that vessels that may have conducted fishing activity, but that did not catch any fish, do not have to submit a VTR for that trip. However, the Council in Amendment 5 to NE multispecies FMP stated: “logbooks are required of all vessels with a multispecies permit and must be completed for all trips rather than for only trips on which groundfish were landed.” Additionally, due to monitoring, compliance, and consistency concerns, NMFS no longer believes that this measure is appropriate for trips that are only setting gear and not intending to catch fish. To ensure that vessels submit a VTR for all trips that conduct fishing activity, this rule revises the VTR submission regulations to remove the language that states that only trips that land fish must submit a VTR.

Current regulations at § 648.14(k)(3)(i) are not explicit as to whether they apply to the importation of foreign-caught NE multispecies. Amendment 16 implement zero-retention of certain fish stocks, therefore, the current dealer provisions in this section could allow the importation of the zero-retention species specified in Amendment 16 that would otherwise be prohibited. This creates an unnecessary enforcement burden for NMFS in cases where a dealer lawfully may be in possession of prohibited species that were obtained from sources other than U.S. fishing vessels. In addition, the regulations do not currently prohibit the export of these zero-retention species. This rule revises the regulatory text for the purposes of eliminating any uncertainty whether zero-retention species can be imported or exported.

The regulations at § 648.80(a)(3)(vi) state that a vessel may not fish in either the Gulf of Maine (GOM) or Georges Bank (GB) Exemption Area unless fishing under certain restrictions, including the provisions of an exempted fishery. This paragraph references some, but inadvertently, not all of the exempted fisheries, specifically the exempted fisheries outlined at § 648.80(a)(15), (a)(16), and (a)(18). Therefore, this rule revises the regulations at § 648.80(a)(3)(vi) to reference all applicable exempted fisheries through § 648.80(a)(18) and update other references within § 648.80 to be more consistent with current regulations.

Amendment 16 adopted RGAs that require a common pool vessel, fishing any part of a trip within a RGA under a NE multispecies day-at-sea (DAS), to use selective gear ( i.e., a haddock separator trawl, a Ruhle trawl, a rope separator trawl, hook gear, or flatfish or roundfish gillnets with mesh size greater than or equal to 10 inches (25.4 cm)) to reduce the catch of species requiring substantial reductions in fishing mortality. The current regulations implementing this provision at § 648.81(n) require that these gear restrictions apply to all NE multispecies limited access vessels fishing any part of a trip within a RGA. This rule clarifies that the RGAs only apply to vessels fishing under a NE multispecies DAS, to maintain consistency with the original intent of Amendment 16.

Regulations at § 648.82(b)(5)(i) specify that a vessel electing to fish under the Small Vessel category may retain up to 300 lb (136.1 kg) of cod, haddock, and yellowtail flounder, combined, and one Atlantic halibut per trip, without being subject to DAS restrictions, provided the vessel does not exceed the yellowtail flounder trip limit restrictions specified under § 648.86(g). Additionally, this paragraph currently states that vessels with a Small Vessel category permit are not subject to trip limits for other NE multispecies. Amendment 16 prohibited the possession of four species in any fishery (windowpane flounder, ocean pout, Atlantic wolffish, and SNE/MA winter flounder). The current Small Vessel category regulations could be interpreted to mean that Small Vessel category permits may possess these prohibited species, which undermines the purpose for the prohibition on possessing these species. Therefore, this rule changes the reference to “§ 648.86(g)” in § 648.82(b)(5)(i) to read “§ 648.86,” and removes the sentence “Such vessel is not subject to a possession limit for other NE multispecies” to more accurately reflect the trip limits revised by Amendment 16 and FW 44.

This rule revises the common pool differential DAS counting AM regulations at § 648.82(n)(1), the ACL distribution regulations at § 648.90(a)(4)(iii)(E)( 2 ), and the overall AM regulations at § 648.90(a)(5) to clarify that sector vessel catch of stocks not allocated to sectors ( i.e., Atlantic halibut, SNE/MA winter flounder, ocean pout, windowpane flounder, and Atlantic wolffish) during FYs 2010 and 2011 will be added to the catch of such stocks by common pool vessels during those FYs to determine if the common pool differential DAS counting AM will be triggered. This would ensure that the regulations implementing Amendment 16 correctly reflect the Council's intent and NMFS's understanding that the AMs applicable to the NE multispecies fishery must be sufficient to prevent overfishing on the stock as a whole for FYs 2010 and 2011.

The current regulations at § 648.83(a) includes two separate lists specifying minimum fish sizes. This rule corrects this error by removing paragraph § 684.83(a)(3) in its entirety. This rule will have no affect on legal fish sizes apart from what is in the current regulations and analyzed in Amendment 16.

This rule expands the existing fillet exemption to all vessels issued a limited access NE multispecies DAS permit, including those that are fishing in a sector and exempt from fishing under a DAS. Consistent with the intent of Amendment 16 and the associated regulation at § 648.87(b)(1)(v), all catch by a sector vessel, including fillets retained by crew for personal use, count against the applicable annual catch entitlement (ACE) for the sector in which that vessel participates.

Currently, fillets and parts of fish as referenced at § 648.83(b) are counted at a rate of 3:1 solely for compliance purposes with DAS possession limits. That is, the regulations require the weight of fillets or parts of fish to be multiplied by 3 and added to the weight of whole fish on board. The total weight of whole fish and fillets combined, must comply with trip limits. However, the current system does not accurately account for the fish landed for at-home consumption under sector and common pool sub-ACLs. This rule replaces the current 1:1 counting method with 3:1 counting for quota monitoring purposes to ensure that all fish being landed for at-home consumption would be accounted for. This is consistent with the intentions of the FMP that all catch by common pool and sector vessels be accounted for, and will prevent a sector from unknowingly fishing over its respective ACE.

Amendment 16 states that the catch of stocks of yellowtail flounder by the scallop fishery will be treated as an “other sub-component” of the ACL until AMs for the catch of yellowtail flounder in the scallop fishery can be developed in an amendment to the Atlantic Sea Scallop FMP ( i.e., Amendment 15). Amendment 15 proposes specific AMs for the scallop fishery's yellowtail flounder sub-ACL in FY 2011 and beyond, and also proposes retroactive AMs for the FY 2010 yellowtail sub-component allocated to the scallop fishery in FY 2010. Therefore, this rule removes the regulatory reference to the scallop fishery in § 648.85(a)(2)(ii) and replaces it with a reference to the overall groundfish AM provisions in § 648.90(a)(5)(ii). The final rule implementing Scallop Amendment 15, if approved, would likely be implemented in early July 2011. Because the Amendment 15 ACL and AM measures applicable to the scallop fishery were not implemented at the start of the NE multispecies 2011 FY on May 1, 2011, this correction ensures that any overage of the overall GB yellowtail flounder ACL caused by another fishery will be divided between the common pool and sector sub-components to determine if the respective AMs will be triggered.

Amendment 16 revised the existing closure provisions for the Eastern U.S./Canada Area when 100 percent of the TAC is reached for GB cod. Amendment 16 revised the regulation at § 648.85(a)(3)(iv)(A)( 2 ) to require that when 100 percent of the TAC is reached for GB cod, the Eastern U.S./Canada Area will be closed to all NE multispecies DAS vessels. This regulation mistakenly maintains outdated language that fails to recognize the specific allocation of a portion of the Eastern U.S./Canada TACs for this stock to sectors. To maintain consistency with Amendment 16 and ensure that NMFS has the authority to close the Eastern U.S./Canada Area to each component of the NE multispecies commercial fishery that exceeded its allocation of the Eastern U.S./Canada Area GB cod TAC, this rule clarifies the regulations at § 648.85(a)(3)(iv)(A)( 2 ) by closing the area to all limited access NE multispecies vessels subject to a particular TAC allocation, once that segment's allocation of the Eastern U.S./Canada Area GB cod TAC is projected to be caught.

The current regulations at § 648.85(b)(3)(x)(A) restrict the gear that may be used in the Closed Area II Yellowtail Flounder/Haddock Special Access Program (SAP) to only trawl gear when the SAP in open to targeting yellowtail flounder. This is not consistent with the measure originally implemented in the Amendment 13 final rule (69 FR 22906, April 27, 2004). This rule revises these regulations to clarify that vessels also may use hook gear or gillnet gear in this SAP when it is open to the targeting of yellowtail flounder by revising the text to state that NE multispecies vessels “fishing with trawl gear” must use a haddock separator trawl, flounder net, or Ruhle trawl.

Amendment 16 revised the Regular B DAS Program to require vessels fishing under the Regular B DAS Program in the GB cod stock area with trawl gear to use a haddock separator trawl, a Ruhle trawl, or other approved trawl gear with a codend composed of at least 6-inch (15.24-cm) diamond or square mesh. However, the regulations implementing Amendment 16 did not specify an area where the 6-inch (15.24-cm) mesh codends could be used. Therefore, this rule clarifies the regulations at § 648.85(b)(6)(iv)(J)( 4 ) by specifying that the use of a 6-inch (15.24-cm) codend is only permitted within the GB cod stock area.

In 2005, FW 41 revised the Closed Area I Hook Gear Haddock SAP measures affecting common pool vessels to address concerns identified by NMFS in the original submission of this SAP as part of FW 40-A. The final rule implementing FW 41 inadvertently did not include a provision restricting the bait that may be used by common pool vessels. The final rule implementing Amendment 16 rectified this oversight but inadvertently imposed the bait requirements on sector vessels. This rule revises the bait restrictions for this SAP specified at § 648.85(b)(7)(iv)(E) and (vi) to only apply to common pool vessels.

Current landing limit regulations at § 648.86(m) prohibit NE multispecies permitted vessels from landing regulated NE multispecies or ocean pout more than once in any 24-hr period. These regulations provide an example that indicates that this period of time begins when a vessel departs port, rather than when the vessel returns to port and lands groundfish. Amendment 16 states that the intent was to be based upon time of landing. Therefore, this rule changes the regulations at § 648.86(m) by modifying the example to reflect the current regulations, which are correctly based upon time of landing.

The current regulations at § 648.87(b)(1)(ii) state that a sector may only fish in a particular stock area if it has been allocated or acquires ACE for all stocks caught in that stock area. This text could be interpreted to mean that a sector would have to be allocated or acquire ACE for a stock that sectors are not allocated, such as SNE/MA winter flounder, to be able to fish, for example, in the SNE/MA yellowtail flounder stock area. To clarify that sectors have the ability to fish in a particular stock area for a stock allocated to sectors, the text at § 648.87(b)(1)(ii) will be revised to state that sectors may fish in each stock area provided it has been allocated or acquires ACE for those stocks “allocated” to sectors that are caught within that stock area.

The DSM program requires all NE multispecies sector vessels (and common pool vessels on a NE multispecies DAS trip starting in FY 2012) in which the NE multispecies catch applies against the sector ACE to submit a trip-start hail (TSH) report to the DSM provider. If the vessel operator does not receive a confirmation that the TSH report has been received within 10 min of sending the report, the current regulations at § 648.87(b)(5)(i)(A)( 1 ) require the vessel operator to contact the DSM service provider to confirm the receipt of the TSH report via a back-up system specified by the DSM service provider. The delivery of such reports via VMS often takes more than 10 min because the 10-min response requirement has proven to be impractical. Therefore, this rule eliminates the 10-min requirement currently specified in § 648.87(b)(5)(i)(A)( 1 ), but still require the vessel operator to contact the DSM service provider via a back-up system, after a time determined by the DSM provider, to confirm the receipt of the TSH report.

The DSM provisions require that, for a trip that is selected to be monitored, all offload events must be monitored, including offloads occurring at more than one location, offloads to a truck, and offloads at remote locations. The regulations at § 648.87(b)(5)(ii)(B)( 2 ) specify that the roving monitor (RM) must “record all offloaded catch by species and market class” for offloads to a truck. Based upon input from the fishing industry, NMFS has determined that the regulation requiring that species be sorted by market class is impractical, as sorting does not generally occur at offloads to trucks and in remote locations. Additionally, NMFS has determined that this information is unnecessary to accurately monitor landings data, as catch is monitored at the species/stock level and not at the level of market class. This rule changes the data collection requirement for offloads to a truck by a RM to not require the species be sorted by market class, by removing the language “and market class” from regulations at § 648.87(b)(5)(ii)(B)( 2 ).

The regulations at § 648.87(b)(5)(ii)(B)( 2 ) require offloads to trucks to specify the number of totes of each species offloaded, the weight of fish in each tote, and that each tote is properly labeled with information that identifies the trip to which the tote is associated. The tote-tagging requirement is intended to ensure that all catch offloaded from a vessel to a truck can be tracked from the offload site to the dealer, where it will be accurately weighed and reported. To minimize the burden on RMs and the cost associated with such monitoring activities, this rule exempts the tote-tagging requirement only if the following three conditions are met: (1) The RM that observed the offload at the dock will also serve as the DSM when the truck is offloaded at the dealer; (2) the RM will follow the truck, in line of sight, from the remote offload location to the dealer where the actual weighing of the fish occurs; and (3) the truck is loaded with only the catch from the one trip being monitored.

Amendment 16 implemented a number of sector reporting requirements, including weekly catch reports to be submitted to NMFS by each sector. The regulations at § 648.87(b)(1)(vi)(B) specify that each sector must submit a weekly catch report by 2359 hr on Thursday of the week following the reporting week, however, dealer data are not available until Wednesday. Based on sector manager input, 1 day has not been a sufficient amount of time to accurately complete the weekly sector catch reports. This rule provides additional flexibility by extending the sector deadline submission for the weekly catch report from 2359 hr on Thursday, to 0700 hr on the second Monday for the same reporting week in question.

Exemptions allow NE multispecies charter/party permitted vessels to fish in the GOM Closed Areas provided such vessels first obtain a letter of authorization (LOA) from NMFS. The regulations at § 648.89(e)(3)(iv) implementing this provision state that a vessel may not use any NE multispecies DAS during the period of participation to ensure that vessels operating under the charter/party provisions cannot fish commercially within these closed areas. However, not all commercial NE multispecies vessels fish under a DAS. This rule clarifies the regulations by including language that states that vessels possessing an LOA to fish as a charter/party vessel in the GOM Closed Areas cannot fish on a sector trip, under a NE multispecies DAS, or under the provisions of the Small Vessel, Handgear A, and Handgear B categories during the period of participation.

The regulations at § 648.89(d) will also be corrected to state that charter/party vessels cannot sell, barter, trade, or otherwise transfer for a commercial purpose, or attempt to sell, barter, trade, or otherwise transfer for a commercial purpose, NE multispecies caught or landed while fishing in the U.S. Exclusive Economic Zone (EEZ) unless they are fishing under a NE multispecies “sector trip,” or fishing under a NE multispecies Handgear A, Handgear B, or Small Vessel Category C permit.

The final rule implementing Amendment 16 measures did not clearly prohibit recreational and charter/party vessels from possessing ocean pout and windowpane flounder. However, Section 4.3.2.1 of Amendment 16 indicates that possession of these stocks is prohibited by all fisheries. Although this section is specific to the effort control measures adopted for NE multispecies common pool vessels, based on further consultation with Council staff, it was determined that the intent of Amendment 16 was to prohibit the retention of these species by all vessels. Therefore, this rule restricts the possession of windowpane flounder and ocean pout in all fisheries, including catch by recreational anglers, charter/party vessels, and other fisheries such as the scallop fishery. The possession of Atlantic wolffish and SNE winter flounder is already correctly prohibited by recreational anglers and charter/party vessels as specified at § 648.89(c)(6) and (7), respectively.

The regulations at § 648.92(b)(1)(iii) allow a vessel fishing in the NE multispecies fishery to change its fishing activity declaration after leaving port to reflect the vessel operator's intention to also fish in the monkfish fishery on the same trip. The applicability of the monkfish option is for a vessel fishing under a NE multispecies Category A DAS, which was the universal effort control in the NE multispecies fishing prior to the implementation of substantial revisions to sector measures under Amendment 16. However, NMFS believes that the Council's intent in Amendment 16 was not to exclude vessels from this option when fishing on a sector trip. Therefore, this rule inserts a reference to vessels fishing on a NE multispecies sector trip to enable such vessels to also take advantage of the monkfish option.

In addition to the changes specified above, the following changes are being made to the regulations to correct inaccurate references and to further clarify the intent of the Council.

In § 648.10(k)(3)(ii), N. latitude, Point G9 will be corrected to read “The intersection of the Cape Cod, MA, coastline and 70°00′ W. long.” This current point incorrectly references the “South-facing shoreline of Cape Cod, MA.”

Section § 648.14(k)(6)(ii)(B) will be corrected to reference the special management programs at “§ 648.85(b)(7)(iv)(E)” to replace the current inaccurate reference to “§ 648.85(b)(7)(iv)(F).”

In § 648.80(a)(2)(ii) and (a)(17)(ii), the “Approximate loran C bearings” portion of the table will be removed. The U.S. Coast Guard ceased operations of Loran-C, on February 10, 2010, which renders these coordinates useless. This will have minimum impact, as the same information is displayed in the regulations using latitude and longitude coordinates.

In § 648.80(a)(3)(v), a reference to “§ 648.87(c)” will be added to the beginning of the section, to include sector vessels.

In § 648.80(b)(3)(i), the phrase “unless otherwise restricted in § 648.86” will be added. This paragraph includes ocean pout as one of the list of species exemptions for the SNE RMA; however, Amendment 16 listed ocean pout as a zero-retention species. The Amendment 16 final rule inadvertently failed to cross-reference this prohibition in § 648.86.

In § 648.80(c)(2)(i), the reference to § 648.104(a) will be revised to read “shall be that specified by § 648.104(a).” This was the original regulatory text used to cite the regulations and was inadvertently changed in the final rule implementing Amendment 16.

In § 648.85(a)(1)(ii), this rule corrects the Eastern U.S./Canada Area, N. latitude coordinates for Points USCA 7 and USCA 6 to 40°50′ N. latitude, and Points USCA 5 and 4 to 40°40′ N. latitude. Amendment 13 defined the Eastern U.S./Canada Area as being composed of statistical areas 561 and 562. The coordinates for statistical area 562 used to define the Eastern U.S./ Canada Area were incorrectly transposed in the Amendment 13 final rule and will be rectified by this action.

Section § 648.87(b)(1)(ix) will be corrected to reference the prohibited species regulations at “§ 648.86(l),” instead of the inaccurate reference to “§ 648.87(1).” In addition, a reference to “§ 648.86(c)” will be inserted at § 648.87(b)(1)(ix) to clarify that sector vessels are held to the one-fish per trip possession limit of Atlantic halibut, as intended in Amendment 16.

In § 648.87(c)(2), a reference to “fishing regulations within the groundfish Fishery Management Plan (FMP)” will be inserted to clarify that a NE multispecies sector operations plan can only include exemptions from regulations within the groundfish FMP, as intended in Amendment 16.

In § 648.89(c)(2)(i), the reference to “private recreational vessel” will be corrected to read “charter/party vessel.”

In § 648.90(a)(4), the reference to “(a)(5)” will be corrected to read “(a)(6).”

Section § 648.90(a)(4)(iii)(E) will be revised to include a reference to the recreational fishery. A reference to the recreational fishery was made in the title of this paragraph, but was not included in the regulations.

Pursuant to sections 304(b)(1)(A) and 305(d) of the Magnuson-Stevens Act, I have determined that this interim final rule is consistent with the NE Multispecies FMP, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to further consideration after public comment.

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

The Chief Council for Regulation of the Department of Commerce certified to the Chief Council for Advocacy of the Small Business Administration during the proposed rule stage that this action would not have a significant economic impact on a substantial number of small entities. The factual basis for the certification was published in the proposed rule and is not repeated here. No comments were received regarding this certification. As a result, a regulatory flexibility analysis was not required and none was prepared.

This interim final rule contains reporting and recordkeeping requirements and associated information collections subject to the Paperwork Reduction Act (PRA), which have been previously approved by OMB under control numbers 0648-0202, 0648-0212, and 0648-0229. Measures in this rule include provisions that require revised collection-of-information requirements. Public reporting burden for these collections of information are estimated to average as follows:

1. VMS area and DAS declaration, OMB# 0648-0202, (5 min/response);

2. VMS trip-level catch reports, OMB# 0648-0212, (15 min/response);

3. Request for a LOA to fish in a NE multispecies RGA, OMB# 0648-0202, (5 min/response);

4. VMS declaration to fish in a NE multispecies RGA, OMB# 0648-0202, (5 min/response);

5. Pre-trip hail report to a dockside monitoring service provider, OMB# 0648-0202, (2 min/response);

6. Trip-end hail report to a dockside monitoring service provider, OMB# 0648-0202, (15 min/response);

7. Confirmation of dockside monitoring trip-end hail report, OMB# 0648-0202, (2 min/response);

8. Dockside/roving service provider data entry, OMB# 0648-0202, (3 min/response);

9. Daily VMS catch reports when fishing in the U.S./Canada Management Area and Closed Area II SAPs, OMB# 0648-0212, (15 min/response);

10. Daily VMS catch reports when fishing in the Closed Area I Hook Gear Haddock SAP, OMB# 0648-0212, (15 min/response);

11. Daily VMS catch reports when fishing in the Regular B DAS Program, OMB# 0648-0212, (15 min/response); and

12. Copy of the dealer weigh-out slip or dealer signature of the dockside monitor report, OMB# 0648-0212 (2 min/response).

13. Letter of authorization for charter/party vessels to access the Western GOM Closure Area and the GOM Rolling Closure Areas, OMB# 0648-0202, (5 min/response);

14. Declaration of the monkfish DAS option via VMS, OMB# 0648-0202, (5 min/response);

15. Sector weekly catch report, OMB# 0648-0212, (4 hr/response);

16. VTR requirement, OMB# 0648-0212, (5 min/response); and

17. Dealer report, OMB# 0648-0229, (4 min/response).

These estimates include the time required for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate, or any other aspect of this data collection, including suggestions for reducing the burden, to NMFS (see ADDRESSES ) and by e-mail to OIRA_Submission@omb.eop.gov, or fax to (202) 395-7285.

Notwithstanding any other provision of the law, no person is required to respond to, and no person shall be subject to penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.

Fisheries, Fishing, Reporting and recordkeeping.

For the reason set out in the preamble, 50 CFR part 648 is amended as follows:

On December 30, 2010, NMFS published a rule (75 FR 82296) that, among other actions, revised the Pacific halibut trawl mortality bycatch limit, specified at § 660.55(m), subpart C, and calculations for issuance of IBQ pounds in the Shorebased IFQ Program, specified at § 660.140(d)(1)(ii)(C), subpart D. Further background information for this action is provided in the preamble text of the December 30, 2010, rule and in the supporting documents for that action, and is not repeated here.

One public comment letter was received in response to the December 30, 2010, rule. In its January 31, 2011, letter, the Natural Resource Defense Council urged NMFS to provide adequate protection and adopt conservative harvest levels for rebuilding groundfish species, particularly for yelloweye rockfish, cowcod and darkblotched rockfish. No comments were made specific to provisions at § 660.55(m), subpart C, or § 660.140(d)(1)(ii)(C), subpart D. The provisions that were the subject of the January 31, 2011, letter of comment were superseded by the final rule for the 2011-2012 biennial specifications and management measures (May 11, 2011, 76 FR 27508), and are not related to the measures at issue in this notice.

The Pacific Fishery Management Council is actively working to prepare an amendment to the Pacific Coast Groundfish Fishery Management Plan to address the Pacific halibut trawl mortality bycatch limit and calculation of Pacific halibut IBQ pounds in the Shorebased IFQ Program for 2012 and beyond.

Therefore, this document announces the agency determination made prior to June 29, 2011, to continue through December 31, 2011, the measures set forth in the December 30, 2010, rule at § 660.55(m), subpart C, and § 660.140(d)(1)(ii)(C), subpart D.