This proposed rule is issued under section 8e of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act,” which provides that whenever the grade, size, quality, or maturity of certain specified commodities, including pistachios, are regulated under a Federal marketing order, imports of these commodities into the United States are prohibited unless they meet the same or comparable grade, size, quality, and maturity requirements as those in effect for the domestically produced commodities. To ensure that these requirements are met, the Act also authorizes the Department of Agriculture (USDA) to perform inspections and related functions such as commodity sampling, and to issue inspection certificates for such imported commodities.

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

There are no administrative procedures that must be exhausted prior to any judicial challenge to the provisions of import regulations issued under section 8e of the Act.

This proposed rule would add a new § 999.600 under 7 CFR part 999—Specialty Crops; Import Regulations, and would establish quality requirements for maximum aflatoxin tolerance levels and mandatory testing and certification requirements for pistachios offered for importation into the United States. The proposed quality requirements for imported pistachios are the same as or comparable to those established for pistachios grown in California, Arizona, and New Mexico under Marketing Agreement and Order No. 983 (7 CFR part 983) (order), both as amended.

This proposed rule would also revise § 999.500, which currently specifies safeguard procedures for the importation of walnuts and dates that are exempt from § 8e regulations. This section would be revised to include safeguard procedures for the importation of pistachios intended for exempted purposes.

The order prohibits the shipping of pistachios for domestic human consumption that do not meet the quality requirements for aflatoxin levels in the nuts. Such quality requirements specify that aflatoxin levels may not exceed the maximum tolerance of 15 ppb. Pistachios that fail to meet these requirements must be reworked and retested, or disposed of as specified in the order. These regulations were designed to ensure that only high quality pistachios containing low levels of aflatoxin are shipped, thus promoting high quality product in the market place and fostering consumer satisfaction.

The order, which was established for California pistachios in 2004, was recently amended to include the states of Arizona and New Mexico. Pistachios grown in California, Arizona, and New Mexico represent over 99 percent of the U.S. domestic production, and 98 percent of the domestic consumption. Thus, almost all domestically produced pistachios are regulated under Marketing Order No. 983. There is no other Federal marketing order in effect for pistachios produced in the United States.

According to USDA's Foreign Agricultural Service (FAS), Iran is typically the world's largest pistachio producer, followed by the U.S. and Turkey, although Syria's production has increased in recent years. During the three most recent crop years (September through August) for which complete data is available, 2007-08 through 2009-10, the production averages in millions of pounds (inshell basis) for Iran, the U.S., Turkey, and Syria were approximately 386, 350, 120, and 141, respectively.

Historically, the bulk of U.S. pistachio imports have come from Turkey and Iran, although Iranian imports have been prohibited since July 2010. The remainder comes from other countries, including Italy, China, Switzerland, France, Australia, Hong Kong, and Israel. Imported pistachios may be inshell or shelled. According to FAS, the U.S. imported an average of approximately 1.7 million pounds of pistachios (inshell basis) annually during the three crop years from 2007-08 through 2009-10. Average U.S. consumption of pistachios during that same period was approximately 100 million pounds (inshell basis) annually. Imports, therefore, represent approximately two percent of U.S. pistachio consumption.

The proposed regulations would include definitions of terms used in the import regulation. Such terms are the same as or comparable to those defined in the marketing order for domestic pistachios as established at 69 FR 17844 (April 5, 2004) and amended at 74 FR 56532 (November 2, 2009).

Under the proposed regulations, “pistachio” would mean the nut of the pistachio tree, Pistachia vera, whether inshell or shelled. “Importer” would be defined as a person who imports pistachios into the United States. “Aflatoxin” would be defined as a mycotoxin that can be found in nuts, dried fruits, and grains. “Aflatoxin inspection certificate” would mean a certificate issued by a USDA or USDA-accredited laboratory. “USDA laboratory” and “USDA-accredited laboratory” would be defined as laboratories authorized to test imported pistachios for aflatoxin content. “Inspector” would mean any inspector authorized by USDA to draw and prepare pistachio samples for testing. “Lot” would mean any quantity of pistachios submitted for testing. Other terms useful in the administration of the import regulation would also be defined.

The presence or absence of aflatoxin is considered a quality characteristic in pistachios  1 because concerns about aflatoxin contamination can impact consumers' perception of the quality of pistachios, and therefore negatively impact demand. According to research provided by the industry, poor quality pistachios impact demand and the potential growth of demand for pistachios. 2 Moreover, any market disturbances related to aflatoxin in pistachios, regardless of the origin of those pistachios, could have a detrimental effect on the pistachio industry. 3

The proposed regulations would establish a maximum aflatoxin tolerance level of 15 ppb for lots of pistachios imported into the U.S. for human consumption. As required under section 8e of the Act, this is the same level currently prescribed for domestic pistachios regulated under the order. Establishing a 15 ppb limit for aflatoxin in all pistachios marketed for human consumption in the United States is expected to bolster overall consumer confidence in pistachio quality and strengthen the demand for pistachios. Comparatively, the international Codex Alimentarius Commission's (Codex) maximum aflatoxin tolerance for pistachios is 10 ppb. The domestic pistachio industry believes that 15 ppb is appropriate to ensure the quality of pistachios sold in U.S. markets, 4 Research also supports the 15 ppb tolerance. 5 Additionally, a 15 ppb tolerance for aflatoxin in domestic and imported pistachios is consistent with existing regulations for all domestic and imported peanuts marketed in the United States, for which USDA has established a 15 ppb aflatoxin tolerance. 6

The proposed regulations provide for aflatoxin sampling procedures based on lot size. Such sampling procedures are the same as or comparable to those established for domestic shipments, and mirror the sampling procedures prescribed for pistachio shipments to the European Union. At the discretion of the importer, pistachio lots arriving at a U.S. port of entry would be warehoused near the port or shipped inland to a pistachio handling facility to await aflatoxin sampling and testing. Importers would be responsible for any transportation or storage fees incurred. Depending on the size of the lot, a specified number of incremental samples would be pulled and combined to form a lot sample. The lot sample would then be divided into smaller test samples, depending upon the size of the lot to be tested. The required weight of lot samples and test samples differs between inshell pistachios and shelled kernels because of the additional weight of the shells for inshell pistachios. The drawing and dividing of all samples must be conducted by or under the supervision of a Federal or Federal-State inspector.

Following the drawing and dividing of samples, each sample would be properly identified and submitted to a USDA or USDA-accredited laboratory for analysis. Test samples would be prepared and analyzed using High Pressure Liquid Chromatography (HPLC) or the Vicam Method (Aflatest). The aflatoxin level would be calculated on a kernel weight basis.

For lots of up to 4,400 lbs, one test sample would be analyzed. If the sample has an aflatoxin level at or below 15 ppb, the lot could be certified as negative for aflatoxin on the aflatoxin inspection certificate, which would be completed by the laboratory. If the aflatoxin level is greater than 15 ppb, the lot fails, and the laboratory would fill out a failed lot notification report for submission to the importer, the U.S. Customs and Border Protection (Customs), and USDA.

For lots of more than 4,400 lbs, two test samples would be prepared. If the first sample has an aflatoxin level at or below 10 ppb, the lot could be certified as negative for aflatoxin on the aflatoxin inspection certificate. Analysis of the other test sample would be unnecessary. If the aflatoxin level of the first test sample is above 20 ppb, the lot fails, and the laboratory would fill out a failed lot notification report for submission to the importer, Customs, and USDA. If the aflatoxin level of the first test sample is higher than 10 ppb and at or below 20 ppb, the importer could elect to test the second sample or rework the lot and resubmit it for testing. If the importer chooses to proceed with testing the second sample, the results from testing both samples would be averaged. If the average results are at or below 15 ppb, the lot may be certified negative for aflatoxin. If the average results are higher than 15 ppb, the lot fails and the accredited lab would submit a failed lot notification report to the importer, Customs, and USDA. If the importer chooses to rework the lot after the first sample is analyzed, the lot would again be subject to sampling and testing as if it were a new lot.

If an aflatoxin inspection certificate is issued certifying that a lot is negative for aflatoxin at any stage of the sequential testing (meaning that the lot's aflatoxin content is below the maximum threshold), the certification would state that the lot meets the § 8e import aflatoxin requirements. The certification would expire after 12 months.

Upon notification of any failed lot, the importer would work with Customs to determine the appropriate disposition of the pistachios. Pistachios that fail to meet the aflatoxin requirements would be required to be sold for non-human consumption, exported to another destination with a higher aflatoxin tolerance, or disposed of under the supervision of Customs, and the Federal or Federal-State Inspection Programs could be called upon to verify disposals. Any costs associated with certifying a disposal would be paid by the importer.

Although reworking and retesting of a failed lot would not be required, importers could opt to take those steps, which would provide them with an opportunity to secure a return for their imported product while maintaining the integrity of the aflatoxin requirements. The alternative would be to dispose of the lot through proper channels as described above. The rework procedures described below are the same as or comparable to those required for domestic pistachios under the order.

Inshell pistachios. Rework procedures for inshell pistachios failing to meet aflatoxin requirements would require importers to remove 100 percent of the failing lot from its bulk or retail packaging. These pistachios would be required to pass through the sorting stages of the handling process in order to remove those nuts having the characteristics most susceptible to harboring aflatoxin. After reworking the lot, the importer would report the weight of the total accepted and rejected product to Customs and USDA on a rework and failed lot disposition report, and the acceptable portion of the reworked lot would be resampled and tested for aflatoxin. In the case of a reworked lot, the lot sample size and the test sample size would be doubled from that specified in the initial testing. If, after having been reworked, the lot fails aflatoxin testing for a second time, the lot could be shelled and the kernels reworked, sampled, and tested in the manner required for an original lot of pistachio kernels. If the importer decides not to pursue further reworking of the failed lot, those pistachios would be prohibited from entering the stream of commerce for domestic human consumption. The lot must be exported, sold for domestic non-human consumption purposes, or disposed of as described above. The importer would report the lot's final disposition to Customs and USDA on a rework and failed lot disposition report.

Shelled pistachios. Rework procedures proposed for pistachio kernels failing to test negative for aflatoxin would also require a reprocessing of 100 percent of the volume of the failing lot. As with inshell pistachios, after reworking, the total weight of the accepted product and the total weight of the rejected product would be reported by the importer to Customs and USDA on the rework and failed lot disposition report. The reworked lot of kernels would be resampled and retested for aflatoxin content as previously described.

Importers could comingle certified lots with other certified lots of pistachios. However, to maintain the integrity of certified lots, the comingling of certified and uncertified lots of pistachios would cause the loss of certification for the comingled lots.

Section 983.70 of the marketing order provides that domestic handlers may handle pistachios free of the regulatory and assessment provisions of the order if such pistachios are handled in quantities not exceeding 5,000 dried pounds during any production year. The purpose of this provision is to provide an exemption from the requirements of the order for small quantities of pistachios such as those that are grown for home or personal use. Further, this exemption is applied on a production year basis. Accordingly, under the proposed import regulation, a comparable 5,000-pound exemption would apply to all shipments of pistachios imported for human consumption. Also, substandard pistachios imported for use in non-human consumption outlets would not be subject to the proposed aflatoxin regulations.

Any importer who violates any provision of the proposed import regulations would be subject to a forfeiture in the amount prescribed in section 608a(5) of the Act (7 U.S.C. 601-674), or, upon conviction, penalties in the amounts prescribed in section 608c(14) of the Act, or to both forfeiture and penalty. False representation to any agency of the United States on any matter within its jurisdiction, knowing it to be false, is a violation of 18 U.S.C. 1001, which provides for a fine or imprisonment or both.

Safeguard procedures in the form of importer and receiver reporting requirements would be used to ensure that substandard pistachios imported for purposes other than human consumption would be used only in authorized outlets exempt from the proposed aflatoxin regulations. The safeguard procedures would be comparable to those currently specified for the importation of other exempted commodities. Under the proposed regulations, importers and receivers of pistachios for other than human consumption purposes would be required to complete and submit to USDA an Importer's Exempt Commodity Form (Form FV-6), the generic form used by importers and receivers of other exempted commodities. The information provided on Form FV-6 would be used by USDA to track pistachios marketed for exempted uses.

The provisions of this proposed rule would establish maximum aflatoxin tolerance levels and mandatory testing and certification requirements for lots of pistachios offered for importation into the United States. The proposed import quality requirements would be implemented in accordance with section 8e of the Act. These provisions are intended to ensure that pistachios imported into the United States for the purposes of domestic human consumption are of a quality comparable to those pistachios regulated under Marketing Order No. 983 and contain no more than 15 ppb of aflatoxin.

Pursuant to the requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this proposed rule on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Import regulations issued under the Act are based on those established under Federal marketing orders.

Small agricultural service firms, which include importers and receivers, have been defined by the Small Business Administration (SBA) (13 CFR 121.201) as those having annual receipts of less than $7,000,000.

AMS estimates that the there are approximately 50 importers and receivers who handled shipments of pistachios into the United States between 2007 and 2009. About 10 of the 50 firms are also substantially engaged in the marketing of U.S. grown pistachios, and are large firms according to the SBA definition. Most of the remaining 40 firms import a number of different food products, and most are also likely to be large firms under the SBA definition, even though they generally import only small quantities of pistachios. There are also nine USDA-accredited laboratories in California that perform aflatoxin testing for pistachios. AMS estimates that four of the nine laboratories would be considered small firms according to the SBA definition.

Turkey and Iran have historically been the source of most pistachios imported into the U.S. Turkish pistachios are imported predominantly in the shell, while Iranian pistachios are typically imported shelled. Imported pistachios also come from Italy, China, Switzerland, France, Australia, Hong Kong, and Italy. Most pistachios imported from other nations are also shelled. The proposed import regulations would establish protocols for aflatoxin analysis for both inshell and shelled pistachios.

Section 8e of the Act provides that when certain domestically produced commodities, including pistachios, are regulated under a Federal marketing order, imports of that commodity must meet the same or comparable grade, quality, size, and maturity requirements.

This rule would establish a minimum quality requirement for lots of imported pistachios by specifying a maximum aflatoxin tolerance level as well as aflatoxin testing and certification requirements. Importers would be responsible for arranging for the required transportation, storage, sampling, testing, and certification of such pistachios prior to importation. Sampling would be conducted by the Federal or Federal-State inspection services, and aflatoxin testing and certification would be performed by USDA or USDA-accredited laboratories.

The proposed import aflatoxin testing and certification requirements are the same as or comparable to those implemented under the order regulating the handling of pistachios grown in California, Arizona, and New Mexico. Pistachios failing to meet the aflatoxin requirements on initial analysis could be reworked and retested, exported to another destination with a higher aflatoxin tolerance, or disposed of in authorized outlets under the supervision of Customs, with assistance from the inspection service if necessary, to verify proper disposal of substandard nuts. Procedures for these activities also are proposed. Lots of imported pistachios that fail aflatoxin testing could be diverted to certain non-human consumption outlets and would be subject to the safeguard provisions of § 999.500. Some reporting and recordkeeping requirements also are proposed in the pistachio import regulation. These requirements also are the same as or comparable to those implemented under the order.

The cost of testing pistachios for aflatoxin would vary, depending on such factors as the location of the port of entry and the size of the lot to be tested. For purposes of estimating an average per-pound testing expense for imported pistachios, this analysis assumes an average lot equal to one container load weighing 16,000 pounds of inshell pistachios arriving at the Port of San Francisco and being tested for aflatoxin by an accredited laboratory in Fresno, California.

In the following example computation of testing costs, there are four elements: (1) A fee (at an hourly rate) charged by the inspection fee to draw the sample, (2) overnight shipping, (3) a fee charged by the laboratory to determine the level of aflatoxin, and (4) the “unit value” of the quantity of pistachios drawn for the sample. The unit value used in this example computation is the average for the last 3 complete marketing years for which import data are available, 2007/08-2009/10. The unit value for the 3-year period ($1.68 per pound) is computed by dividing the average 3-year import value ($2,900,000) by the average import quantity (1,725,000 pounds). Data are from FAS.

The inspection service fee of $74 per hour is multiplied by the estimated time of 2 hours to draw a sample, for a cost of $148. The overnight shipping cost and laboratory fee are estimated at $200 and $100, respectively.

The next step in the example computation is value of pistachios drawn for the sample. Under the new proposed section 996.600, in section (d) Sampling, the weight of a lot sample is 16 kilograms (equivalent to 35.3 pounds) for a lot weighing between 11,001 and 22,000 pounds. Multiplying 35.3 pounds times the unit value of imported pistachios ($1.68) yields a value of the tested sample of approximately $59. Assuming that aflatoxin certification of the 16,000-pound lot requires the testing of only one sample, the sum of the four cost elements would be $507, or approximately 3.2 cents per pound (approximately two percent of the unit value of imported pistachios).

It is likely that a pistachio lot arriving at the Port of San Francisco would be transported to an inland handling facility to await sampling and testing and would incur no additional storage costs. However, if the lot is stored at a Customs warehouse near the port, storage fees ranging between $100 and $500 per day could be incurred while the samples are analyzed. Analysis and certification is estimated to require between two to five days. Assuming a three day turnaround for a lot incurring $200 per day storage fees, approximately $600, or 3.75 cents per pound of pistachios could be added to the testing expense described above.

Regarding the impact of this proposed rule on affected entities, this proposal would establish an import regulation for pistachios as provided in section 8e of the Act. The proposed import regulation would require importers to arrange for the testing and certification of all imports of pistachios for human consumption prior to importation. There would be some increased costs to importers associated with the testing and certification of imported product. However, it is expected that consumer satisfaction, and therefore demand, would be increased by regulating imports and domestic product uniformly. The additional costs are expected to be offset by the benefits of supplying the U.S. marketplace with only high quality pistachios. As mentioned above, the proposed import regulations are the same as or comparable to those established for U.S. domestic pistachio shipments. The domestic industry recently adopted aflatoxin sampling and testing procedures that align with the Codex Alimentarius Commission's (Codex) sampling plan (75 FR 43045; July 23, 2010). The Codex sampling plan is used by the European Commission as its regulation for the importation of tree nuts into the European Union. Thus, the proposed import regulations are comparable to those widely recognized by international pistachio markets.

Industry information suggests that when aflatoxin levels in imported lots of pistachios exceed the FDA maximum tolerance of 20 ppb, the levels are generally significantly higher than 20 ppb. Very few lots test between 15 ppb and 20 ppb. It is anticipated that most imported lots will test below the proposed 15 ppb tolerance. Thus, establishing a maximum aflatoxin tolerance of 15 ppb for imported pistachios is not expected to have a significant impact on trade.

The alternative to this action is to continue to allow pistachios to be imported without having to meet aflatoxin requirements the same as or comparable to those established for domestic pistachios. However, the import regulations are necessary to ensure that imported and domestic pistachios for human consumption in the United States are of uniformly high quality. Further, the Act requires that import regulations be issued whenever marketing order regulations are established for pistachios. Therefore, this alternative is not appropriate.

The additional reporting and recordkeeping requirements that would be imposed under this proposed rule are discussed in more detail below. Reports and forms required under the pistachio import regulation will be periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

Additionally, except for the applicable domestic regulations, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/MarketingOrdersSmallBusinessGuide. Any questions about the compliance guide should be sent to Laurel May at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

In accordance with section 8e of the Act, the United States Trade Representative has concurred with the issuance of this proposed rule.

Interested persons are invited to comment on this initial regulatory flexibility analysis and submit information on the regulatory and informational impacts this proposed action would likely have on small businesses. A 60-day period for comments is provided. All written comments received within the comment period will be considered before a final determination is made on this matter.

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

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), this notice announces that AMS is requesting OMB approval of a new information collection under OMB No. 0581-NEW. Upon approval of this new information collection by OMB, a request will be made to merge this collection with the forms currently approved for use under OMB No. 0581-0215, Pistachios Grown in California, Arizona, and New Mexico.

Title: Pistachios Imported Into the United States.

OMB Number: 0581-New.

Type of Request: New information collection.

Abstract: The information collection requirements contained in this request are necessary in the administration of proposed regulations for pistachios imported into the United States. Such regulations are authorized under Section 8e of the Agricultural Marketing Agreement Act of 1937 (Act), as amended (7 U.S.C. 601-674), which requires that whenever the Secretary of Agriculture issues grade, size, quality, or maturity regulations under domestic marketing orders for certain commodities, the same or comparable regulations on imports of those commodities must be issued.

The proposed rule would establish mandatory aflatoxin testing and certification requirements for pistachios offered for importation into the United States. These requirements would be the same as or comparable to those established under Marketing Order No. 983 regulating the handling of pistachios grown in California, Arizona, and New Mexico.

Under the proposed regulation, laboratories that perform chemical analysis of aflatoxin content for imported pistachios would be required to report any lots that fail aflatoxin testing. The Imported Pistachios—Failed Lot Notification Report (FV-249) would be completed by the laboratory and submitted to the importer, Customs, and USDA within 10 days of the failed test. This report would contain information about the failed lot, including its identity and the aflatoxin level determined during analysis of the lot.

Under the proposed regulations, importers would be required to report the disposition of any failed lots, including those that are reworked to meet the aflatoxin requirements, on the Imported Pistachios—Rework and Failed Lot Disposition Report (FV-251). This report would contain information about the quantity of nuts that were accepted and rejected during rework, and would be used to report the disposition of any pistachios failing aflatoxin testing. Importers would be required to complete and submit the form to Customs and USDA within 10 days of reworking the lot.

USDA and Customs would use the two reports described above to track pistachio lots being offered for importation into the United States and follow up on the disposition of failing lots to ensure that pistachios with aflatoxin levels exceeding the maximum tolerance of 15 ppb are not shipped to domestic human consumption markets.

Safeguard procedures in the form of importer and receiver reporting requirements would be used to ensure that shipments of pistachios exempt from the import regulations are disposed of only in authorized exempt outlets. Under the proposed import regulations, importers of exempt imported pistachios would be required to complete and submit, prior to importation, an Importer's Exempt Commodity Form (FV-6). Form FV-6 would be used for tracking pistachios marketed for exempted uses that do not meet requirements for human consumption. Form FV-6 is an electronic form available through AMS, is used by importers of other commodities to report imports of exempted products, and is already approved by OMB through December 31, 2011 (OMB Control Number 0581-0167—Specified Commodities Imported into the United States Exempt From Import Regulations). Importers and receivers register as users of the electronic form and then are granted access to the reporting system. Receivers use the same system to certify that the commodity has been received and that it will be utilized for authorized exempt purposes.

The two new forms require the minimum amount of information necessary to effectively carry out the requirements of the Act, and their use is necessary to fulfill the intent of the Act and to administer section 8e compliance activities. These reports and the safeguard procedures outlined above are the same as or comparable to the reports and procedures currently required by other domestic marketing orders and import regulations.

The information collected on these forms is used primarily by authorized representatives of USDA, including AMS, Fruit and Vegetable Programs' regional and headquarters staff. AMS is the primary user of the information.

The proposed request for a new information collection under the pistachio import regulations is as follows:

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 12 minutes per response.

Respondents: USDA and USDA-accredited Laboratories.

Estimated Number of Respondents: 7.

Estimated Number of Responses per Respondent: 4.

Estimated Total Annual Burden on Respondents: 5.6 hours.

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 12 minutes per response.

Respondents: Importers of pistachios failing aflatoxin testing.

Estimated Number of Respondents: 10.

Estimated Number of Responses per Respondent: 3.

Estimated Total Annual Burden on Respondents: 6.0 hours.

Comments are invited on: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. Comments should reference OMB No. 0581-NEW and the pistachio import regulations, and be sent to USDA in care of the Docket Clerk at the previously mentioned address. All comments received will be available for public inspection during regular business hours at the same address.

For the reasons set forth above, 7 CFR Part 999 is proposed to be amended as follows:

Comments Invited

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2011-1139; Directorate Identifier 2011-CE-021-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD No.: 2011-0101, dated May 25, 2011 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:

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

Even with potentially reduced aileron deflection, Socata's analysis shows that the airplane is still capable of achieving its published cross wind landing limits.

DAHER-SOCATA has issued Mandatory Service Bulletin SB 70-191-27, dated April 2011; SOCATA TBM 700 Model Maintenance Manual Temporary Revision No. TR040.27, dated April 2011; and SOCATA TBM 850 Maintenance Manual Temporary Revision No. TR015.27, dated April 2011. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.

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

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

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

We estimate that this proposed AD will affect 404 products of U.S. registry. We also estimate that it would take about .5 work-hour per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Required parts would cost about $0 per product.

Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $17,170, or $43 per product.

In addition, we estimate that any necessary follow-on actions would take about 16 work-hours and require parts costing $0, for a cost of $1,360 per product. We have no way of determining the number of products that may need these actions.

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

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

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

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

For the reasons discussed above, I certify this proposed regulation :

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

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

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

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

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2011-1155; Directorate Identifier 2011-CE-032-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD No.: 2011-0146, dated August 3, 2011 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:

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

Schempp-Hirth Flugzeugbau GmbH has issued Schempp-Hirth Flugzeugbau GmbH Technical Note No. 863-14, dated July 18, 2006; and Schempp-Hirth Flugzeugbau GmbH Technical Note No. 863-20, Revision 1, dated July 27, 2011. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.

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

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

We have proposed additional actions in this AD from those in the MCAI to provide for additional inspections. We believe that in addition to the daily pilot inspections of the engine pylon, that an initial and annual repetitive inspection be accomplished by a properly certificated aircraft mechanic. We might also have proposed different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are highlighted in a NOTE within the proposed AD.

We estimate that this proposed AD will affect 3 products of U.S. registry. We also estimate that it would take about 1 work-hour per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour.

Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $255, or $85 per product.

In addition, we estimate that any necessary follow-on actions would take about 8 work-hours and require parts costing $1,697, for a cost of $2,377 per product. We have no way of determining the number of products that may need these actions.

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

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

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

For the reasons discussed above, I certify this proposed regulation:

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

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

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

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

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

Posting of Public Comments: Please note that all comments received are considered part of the public record and made available for public inspection online at http://www.regulations.gov and in the DEA's public docket. Such information includes personal identifying information (such as your name, address, etc.) voluntarily submitted by the commenter.

If you want to submit personal identifying information (such as your name, address, etc.) as part of your comment, but do not want it to be posted online or made available in the public docket, you must include the phrase “PERSONAL IDENTIFYING INFORMATION” in the first paragraph of your comment. You must also place all of the personal identifying information you do not want posted online or made available in the public docket in the first paragraph of your comment and identify what information you want redacted.

If you want to submit confidential business information as part of your comment, but do not want it to be posted online or made available in the public docket, you must include the phrase “CONFIDENTIAL BUSINESS INFORMATION” in the first paragraph of your comment. You must also prominently identify confidential business information to be redacted within the comment. If a comment has so much confidential business information that it cannot be effectively redacted, all or part of that comment may not be posted online or made available in the public docket.

Personal identifying information and confidential business information identified and located as set forth above will be redacted, and the comment, in redacted form, will be posted online and placed in the DEA's public docket file. Please note that the Freedom of Information Act applies to all comments received. If you wish to inspect the agency's public docket file in person by appointment, please see the “For Further Information” paragraph.

In accordance with the provisions of the CSA (21 U.S.C. 811(a)), this action is a formal rulemaking “on the record after opportunity for a hearing.” Such proceedings are conducted pursuant to the provisions of the Administrative Procedure Act (5 U.S.C. 556 and 557) and 21 CFR 1308.41. Pursuant to 21 CFR 1308.44(a)-(c), requests for hearing, notices of appearance, and waivers of participation may be submitted only by interested persons, defined as those “adversely affected or aggrieved by any rule or proposed rule issuable pursuant to section 201 of the Act (21 U.S.C. 811).” Such requests or notices must conform to the requirements of 21 CFR 1308.44(a) or (b) and 1316.47 or 1316.48, as applicable. A request or notice should state, with particularity, the interest of the person in the proceeding and the objections or issues, if any, concerning which the person desires to be heard. Any waiver must conform to the requirements of 21 CFR 1308.44(c), including a written statement regarding the interested person's position on the matters of fact and law involved in any hearing.

Please note that pursuant to 21 U.S.C. 811(a), the purpose and subject matter of the hearing is restricted to “(A) find[ing] that such drug or other substance has a potential for abuse, and (B) mak[ing] with respect to such drug or other substance the findings prescribed by subsection (b) of section 812 of this title for the schedule in which such drug is to be placed * * *” Requests for hearing, notices of appearance at the hearing, and waivers of participation in the hearing should be submitted to DEA using the address information provided above.

Under the CSA, controlled substances are classified in one of five schedules based upon their potential for abuse, their currently accepted medical use, and the degree of dependence the substance may cause. 21 U.S.C. 812. The initial schedules of controlled substances by statute are found at 21 U.S.C. 812(c) and the current list of scheduled substances are published at 21 CFR part 1308.

Pursuant to 21 U.S.C. 811(a)(1), the Attorney General may, by rule, “add to such a schedule or transfer between such schedules any drug or other substance if he (A) finds that such drug or other substance has a potential for abuse, and (B) makes with respect to such drug or other substance the findings prescribed by subsection (b) of section 812 of this title for the schedule in which such drug is to be placed * * *” Pursuant to 28 CFR 0.100(b), the Attorney General has delegated this scheduling authority to the Administrator of DEA.

The CSA provides that scheduling of any drug or other substance may be initiated by the Attorney General (1) on his own motion; (2) at the request of the Secretary of HHS, or (3) on the petition of any interested party. 21 U.S.C. 811(a). This proposed action is based on a recommendation from the Assistant Secretary for Health of the Department of Health and Human Services (HHS) and on an evaluation of all other relevant data by DEA. If finalized, this action would impose the regulatory controls and criminal sanctions of Schedule V on the manufacture, distribution, dispensing, importation, and exportation of ezogabine and products containing ezogabine.

Ezogabine, known chemically as N-[2-amino-4-(4-fluorobenzylamino)-phenyl]-carbamic acid ethyl ester, is a new chemical substance with central nervous system depressant properties and is classified as a sedative-hypnotic. Pharmacological studies indicate that ezogabine primarily acts as a ligand at ion-gated channels in the brain to enhance potassium currents mediated by neuronal KCNQ (Kv7) channels. Additionally, ezogabine indirectly enhances the gamma-aminobutyric acid (GABA) mediated neurotransmission. On June 10, 2011, the Food and Drug Administration (FDA) approved a New Drug Application (NDA) for ezogabine as an adjunct treatment of partial onset seizures, to be marketed under the trade name Potiga.®  2

Pursuant to 21 U.S.C. 811(a), proceedings to add a drug or substance to those controlled under the CSA may be initiated by request of the Secretary of HHS. On January 12, 2011, HHS provided DEA with a scientific and medical evaluation document prepared by FDA entitled “Basis for the Recommendation for Control of Ezogabine in Schedule V of the Controlled Substances Act.” Pursuant to 21 U.S.C. 811(b), this document contained an eight-factor analysis of the abuse potential of ezogabine as a new drug, along with HHS' recommendation to control ezogabine under Schedule V of the CSA.

In response, DEA conducted an eight-factor analysis of ezogabine's abuse potential pursuant to 21 U.S.C. 811(c). Included below is a brief summary of each factor as analyzed by HHS and DEA, and as considered by DEA in the scheduling decision. Please note that both the DEA and HHS analyses are available in their entirety under “Supporting and Related Material” of the public docket for this rule at www.regulations.gov under docket number DEA-354.

1. The Drug's Actual or Relative Potential for Abuse: Ezogabine is a new chemical substance that has not been marketed in the U.S. or in any other country. As such, there is no information available which details actual abuse of ezogabine. However, the legislative history of the CSA offers another methodology for assessing a drug or substance's potential for abuse:

Ezogabine acts as a ligand at ion-gated channels in the brain, similar to the Schedule V substances pregabalin and lacosamide, and, like those drugs, ezogabine is indicated for the treatment of epileptic conditions in humans. There is strong evidence, described below, that ezogabine produces behavioral effects in humans and in animals that are similar to those produced by pregabalin and lacosamide.

Phase 1 clinical studies indicate that the rate of euphoria-related adverse events (AEs) resulting from administration of ezogabine was 6-9%. This is similar to the AE rates for administration of pregabalin (10%) and lacosamide (>7%), while Phase 2/3 clinical studies indicated similar AE rates between ezogabine (<1%) and lacosamide (<2%). Animal studies involving administration of ezogabine to animals produced a sedative behavioral profile similar to that produced from administration of pregabalin and lacosamide, including decreased locomotion, decreased muscle tone, and an increase in ataxia. Further, in abuse potential studies conducted with sedative-hypnotic abusers, ezogabine, pregabalin, and lacosamide, when compared to placebos, are similar in their ability to produce statistically significant increases in subjective responses including “Drug Liking,” “Euphoria,” “Overall Drug Liking,” “Good Drug Effects,” and “High.”

Because of the similarities between ezogabine, pregabalin, and lacosamide, it is very likely that ezogabine will have an abuse potential similar to those Schedule V substances. Currently there is a lack of evidence regarding the diversion, illicit manufacturing or deliberate misuse of ezogabine due to its commercial unavailability in any country, but since ezogabine is not readily synthesized from available substances, any diversion would be from legitimate channels. The above referenced studies, which include demonstration of the significant euphoric effects produced by ezogabine in humans, predict that there will be significant use of ezogabine contrary to or without medical advice.

2. Scientific Evidence of the Drug's Pharmacological Effects, If Known: Ezogabine acts to enhance potassium currents mediated by neuronal KCNQ (Kv7) channels with a secondary action through the augmentation of GABA-mediated neurotransmission without direct GABA receptor stimulation. In individuals with histories of recreational sedative-hypnotic abuse, ezogabine (300 and 600 mg orally) produced increased ratings on the primary positive subjective scales [VAS-Drug-liking, VAS-Overall Drug Liking, ARCI-MBG (Euphoria), VAS-Take Drug Again] for peak responses (Emax for the first eight hours after drug administration) that were significantly different from the placebo. This effect is similar to that produced by alprazolam (1.5 and 3.0 mg orally; Schedule IV). On secondary positive subjective scales [VAS-High, VAS-Good Effects, ARCI-Amphetamine (Activation)] for peak responses, both ezogabine and alprazolam produced significant increases compared to the placebo, while there were no differences between ezogabine and alprazolam on those measures.

In human abuse potential studies, ezogabine (300 and 600 mg), upon oral administration, increased ratings on negative and sedating subjective measures [VAS-Bad Effects, ARCI-LSD (dysphoria) and ARCI-PCAG (sedation)] compared to the placebo, but these increases were lower than those produced by 1.5 and 3.0 mg alprazolam. These data for ezogabine are similar to those produced by lacosamide. A 900 mg dose of ezogabine produced VAS-Drug Liking and VAS-Good Effects that were higher than those produced by the two lower doses of ezogabine and either dose of alprazolam. However, the changes in VAS-Bad Effects and ARCI-LSD (dysphoria) following 900 mg ezogabine were less than or similar to those produced by lower doses of ezogabine and either dose of alprazolam. The adverse events following 900 mg ezogabine are similar to those described in the NDA for the human abuse potential study conducted with lacosamide. These included euphoria, somnolence, visual disturbances, and altered auditory perception.

In human abuse potential studies, ezogabine, similar to pregabalin and lacosamide, also produced ratings on each of the positive subjective responses that were statistically similar to those produced by Schedule IV benzodiazepines (alprazolam or diazepam). Although this appears to suggest that these drugs have an abuse potential similar to that of Schedule IV substances, the other data from human abuse potential studies, the adverse effect profile data from safety and efficacy studies, and the data from the preclinical animal behavioral studies demonstrate that ezogabine has abuse potential less than that of Schedule IV drugs but similar to that of Schedule V drugs.

3. The State of Current Scientific Knowledge Regarding the Drug or Other Substance: The chemical name of ezogabine is N-[2-amino-4-(4-fluorobenzylamino)-phenyl]-carbamic acid ethyl ester. It is an achiral molecule with a molecular formula of C 16 H 18 FN 3 O 2 and a molecular weight of 303.3 g/mol. Ezogabine is a non-hygroscopic white to slightly colored powder with a melting point of 140-143 0 C. It is soluble in 0.9% saline, methanol, chloroform, but only sparingly soluble in ethanol and 0.1N HCL.

Ezogabine in humans has a T max (time required for ezogabine to reach maximum plasma concentration) ranging from 1-4 hours following both acute and multiple dosing, and, without the involvement of cytochrome P450, undergoes an extensive and almost exclusively phase 2 metabolic biotransformation. Ezogabine is predominantly metabolized by N-glucuronidation, resulting in the formation of two distinct N-glucuronides of the unchanged parent drug and to a lesser extent by N-acetylation to form N-acetyl-retigabine, the major bioactive metabolite of ezogabine. The half-life of both ezogabine and N-acetyl-retigabine is approximately eight hours and the C max (maximum plasma concentration) of both components is dose proportional after both acute and multiple dosing, suggesting a lack of accumulation with repeated administration.

4. Its History and Current Pattern of Abuse: As stated in the summary of Factor 1, information on ezogabine's history and current pattern of abuse is unavailable as it has not been marketed in any country. As such, evaluation of abuse potential for ezogabine derives from positive indicators in clinical studies which are believed to be predictive of drug abuse and which are discussed in Factors 1 and 2 above.

5. The Scope, Duration, and Significance of Abuse: Because ezogabine has not been marketed in any country, information on the scope, duration, and significance of abuse of ezogabine is unavailable. However, epidemiological data on pregabalin, a Schedule V drug with an abuse potential similar to that of ezogabine, is available from the Drug Abuse Warning Network (DAWN) database.

The “abuse frequency ratio,” calculated as the ratio of nonmedical use related annual emergency department visits (as reported in DAWN) to the total number of annual prescriptions for pregabalin is less than that for the Schedule IV drug, alprazolam. Further, because ezogabine has abuse-related human and animal data in its NDA similar to data generated for pregabalin, ezogabine is likely to have an abuse potential similar to pregabalin. The “abuse frequency ratios” for pregabalin range from 29 to 47, while those for alprazolam are approximately three to six times higher, ranging from 160 to 235. Thus, pregabalin was placed into Schedule V based both on abuse-related human and animal data submitted in its NDA and by epidemiological data which justified placement relative to drugs in Schedule IV. Given that ezogabine has abuse-related human and animal data in its NDA similar to the data generated by pregabalin, it is likely that ezogabine will have an abuse potential similar to this Schedule V drug.

6. What, if any, Risk There is to the Public Health: The data indicates that ezogabine may present a serious safety risk to the public health, and the predicted level of risk is similar to that observed with pregabalin and lacosamide but less than that produced by Schedule IV benzodiazepines. In Phase 1 clinical safety studies, the overall adverse event profile following ezogabine administration was similar to those from pregabalin and lacosamide and includes not only euphoria, but also somnolence, and feeling or thinking abnormally. Further, the human abuse potential study showed that the majority of subjects receiving the 900 mg dose of ezogabine experienced multiple adverse events such as euphoria, somnolence, visual disturbance, amnesia, hypo-aesthesia, paranoia, fear, confusion and hallucination. Although the 900 mg dose is three times greater than the recommended therapeutic dose, individuals who abuse drugs typically do so at supra-therapeutic doses.

7. Its Psychic or Physiological Dependence Liability: Ezogabine may produce limited psychic or physiological dependence liability following extended administration. Since there are no studies detailing abrupt discontinuation of ezogabine, there are minimal adequate data to evaluate the ability of ezogabine to induce withdrawal symptoms that are indicative of physical dependence. Many of the adverse events reported from the discontinuation of ezogabine were also reported prior to its discontinuation, including dizziness, somnolence, and a state of confusion. By comparison, abrupt or rapid discontinuation of pregabalin in human studies resulted in patient-reported symptoms of nausea, headache or diarrhea, which are suggestive of physical dependence, while abrupt termination of lacosamide produced no signs or symptoms of withdrawal in diabetic neuropathic pain patients.

Unlike ezogabine and pregabalin, the withdrawal syndrome following discontinuation of Schedule IV substances such as alprazolam can range from mild dysphoria and insomnia to a major syndrome including abdominal pain, muscle cramps, vomiting, sweating, tremors and convulsions. These are similar in character to those associated with other sedative-hypnotics.

The study of ezogabine abuse potential in humans with histories of recreational abuse of sedative-hypnotics found that ezogabine produces euphoria (18-33%) in these individuals. Additionally, ezogabine produced euphoria (8.5%) in Phase 1 studies in healthy individuals. These euphoria-related adverse events following administration of ezogabine are suggestive of its ability to produce psychic dependence, and the adverse events appear to be less severe and occur less frequently than Schedule IV drugs (diazepam and alprazolam) and are more similar to those of Schedule V drugs, pregabalin and lacosamide.

8. Whether the Substance is an Immediate Precursor of a Substance Already Controlled Under the CSA: Ezogabine is not an immediate precursor of any controlled substance.

Conclusion: Based on consideration of the scientific and medical evaluation and accompanying recommendation of HHS, and based on DEA's consideration of its own eight-factor analysis, DEA finds that these facts and all relevant data constitute substantial evidence of potential for abuse of ezogabine. As such, DEA hereby proposes to schedule ezogabine as a controlled substance under the CSA.

The CSA establishes five schedules of controlled substances known as Schedules I, II, III, IV, and V. The statute outlines the findings required to place a drug or other substance in any particular schedule. 21 U.S.C. 812(b). After consideration of the analysis and recommendation of the Assistant Secretary for Health of HHS and review of all available data, the Administrator of DEA, pursuant to 21 U.S.C. 812(b)(5), finds that:

(1) Ezogabine has a low potential for abuse relative to the drugs or other substances in Schedule IV. The overall abuse potential of ezogabine is comparable to the Schedule V substances such as pregabalin and lacosamide;

(2) Ezogabine has a currently accepted medical use in treatment in the United States. Ezogabine was approved for marketing by FDA as an adjunct treatment of partial onset seizures; and

(3) Abuse of ezogabine may lead to limited physical dependence or psychological dependence relative to the drugs or other substances in Schedule IV.

Based on these findings, the Administrator of DEA concludes that ezogabine, including its salts, isomers and salts of isomers, whenever the existence of such salts, isomers, and salts of isomers is possible, warrants control in Schedule V of the CSA (21 U.S.C. 812(b)(5)).

If this rule is finalized as proposed, ezogabine would be subject to the CSA and the Controlled Substances Import and Export Act (CSIEA) regulatory controls and administrative, civil and criminal sanctions applicable to the manufacture, distribution, dispensing, importing and exporting of a Schedule V controlled substance, including the following:

Registration. Any person who manufactures, distributes, dispenses, imports, exports, engages in research or conducts instructional activities with ezogabine, or who desires to manufacture, distribute, dispense, import, export, engage in research or conduct instructional activities with ezogabine, would need to be registered to conduct such activities pursuant to 21 U.S.C. 822 and in accordance with 21 CFR part 1301.

Security. Ezogabine would be subject to Schedules III-V security requirements and would need to be manufactured, distributed, and stored pursuant to 21 U.S.C. 823 and in accordance with 21 CFR 1301.71, 1301.72(b), (c), and (d), 1301.73, 1301.74, 1301.75(b) and (c), 1301.76, and 1301.77.

Labeling and Packaging. All labels and labeling for commercial containers of ezogabine which are distributed on or after finalization of this rule would need to be in accordance with 21 CFR 1302.03-1302.07, pursuant to 21 U.S.C. 825.

Inventory. Every registrant required to keep records and who possesses any quantity of ezogabine would be required to keep an inventory of all stocks of ezogabine on hand pursuant to 21 U.S.C. 827 and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11. Every registrant who desires registration in Schedule V for ezogabine would be required to conduct an inventory of all stocks of the substance on hand at the time of registration.

Records. All registrants would be required to keep records pursuant to 21 U.S.C. 827 and in accordance with 21 CFR 1304.03, 1304.04, 1304.06, 1304.21, 1304.22, and 1304.23.

Prescriptions. Ezogabine or products containing ezogabine would be required to be distributed or dispensed pursuant to 21 U.S.C. 829 and in accordance with 21 CFR 1306.03-1306.06, 1306.08, 1306.21, and 1306.23-1306.27.

Importation and Exportation. All importation and exportation of ezogabine would need to be done in accordance with 21 CFR part 1312, pursuant to 21 U.S.C. 952, 953, 957, and 958.

Criminal Liability. Any activity with ezogabine not authorized by, or in violation of, Subchapter I Part D and Subchapter II of the CSA or the CSIEA occurring on or after finalization of this proposed rule would be unlawful.

In accordance with 21 U.S.C. 811(a), this proposed scheduling action is subject to formal rulemaking procedures done “on the record after opportunity for a hearing,” which are conducted pursuant to the provisions of 5 U.S.C. 556 and 557. The CSA sets forth the criteria for scheduling a drug or other substance. Such actions are exempt from review by the Office of Management and Budget pursuant to Section 3(d)(1) of Executive Order 12866 and the principles reaffirmed in Executive Order 13563.

This proposed regulation meets the applicable standards set forth in Sections 3(a) and 3(b)(2) of Executive Order 12988 Civil Justice Reform to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

This proposed rulemaking does not preempt or modify any provision of State law; nor does it impose enforcement responsibilities on any State; nor does it diminish the power of any State to enforce its own laws. Accordingly, this rulemaking does not have federalism implications warranting the application of Executive Order 13132.

This proposed rule will not have Tribal implications and will not impose substantial direct compliance costs on Indian Tribal governments.

This action does not impose a new collection of information under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3521.

For the reasons set out above, 21 CFR part 1308 is proposed to be amended to read as follows:

Please note that all comments received are considered part of the public record and are made available for public inspection online at http://www.regulations.gov. Such information includes personal identifying information (such as your name, address, etc. ) voluntarily submitted by the commenter.

If you want to submit personal identifying information (such as your name, address, etc.) as part of your comment, but do not want it to be posted online, you must include the phrase “PERSONAL IDENTIFYING INFORMATION” in the first paragraph of your comment. You must also locate all the personal identifying information you do not want posted online in the first paragraph of your comment and identify what information you want redacted.

If you want to submit confidential business information as part of your comment but do not want it to be posted online, you must include the phrase “CONFIDENTIAL BUSINESS INFORMATION” in the first paragraph of your comment. You must also prominently identify confidential business information to be redacted within the comment. If a comment has so much confidential business information that it cannot be effectively redacted, all or part of that comment may not be posted on http://www.regulations.gov.

Personal identifying information identified and located as set forth above will be placed in the agency's public docket file, but not posted online. Confidential business information identified and located as set forth above will not be placed in the public docket file. If you wish to inspect the agency's public docket file in person by appointment, please see the “For Further Information Contact” paragraph.

In this document, we propose to revise the regulations which set forth the classification and program review rules and to add a new level of review: progress reviews.

In this proposed section, we explain that the purpose of this subpart is to explain the Bureau's process for classifying newly committed inmates, conducting program reviews, and conducting progress reviews. We have only revised the introductory paragraph of this section, to add the concept of progress reviews (which will be explained below). The three types of reviews listed here will be conducted for all inmates except: (1) Pretrial inmates, who are covered in 28 CFR part 551; and (2) inmates committed for study and observation.

Pretrial inmate reviews are not described in this subpart because they are specifically covered in 28 CFR 551.107. According to that regulation, pretrial inmates are scheduled for an initial review by the unit team within 21 calendar days of the inmate's arrival at the institution, and later reviews are conducted at least once every 90 days.

Inmates committed for study and observation do not receive the reviews described because they do not receive program or work assignments while in this status. Such inmates are typically committed to the Bureau to determine competency to stand trial or for other mental health or medical assessments, and are inappropriate for assignment to work or other Bureau programs.

We propose adding this new section to provide descriptions of each type of review that is covered in this subpart.

This section explains that the purpose of an initial classification is to develop a program plan for the inmate during his/her incarceration. The plan will ordinarily include work and programming activities to help the inmate develop skills to transition into prison life and to ultimately make a successful transition back into the community.

A program review consists of a thorough review of the inmate's initial classification and of the inmate's participation in recommended programs, and it facilitates recommendation of new programs based on skills the inmate has gained during incarceration.

A progress review, which will be the new type of review added by this rule revision, is an abbreviated program review to focus on an inmate's programming activities. This shortened version of the more thorough program review will facilitate more efficiently-used staff and inmate time, in that it will primarily focus on any new or changed aspects of an inmate's initial classification and participation in recommended programs.

This proposed section describes the process for all three types of reviews. An inmate will be notified at least 48 hours before his/her scheduled appearance before the unit team for initial classification, program reviews, or progress reviews. An inmate may submit a written waiver of the 48-hour notice requirement to the unit team. These concepts have not been significantly changed from the current regulations.

This section also reiterates the current regulation provisions in § 524.11 to the effect that if the inmate refuses to appear at a review, the inmate may be subject to disciplinary action. However, the proposed rule also adds a new requirement for staff that is a protection of the inmate's interests: Staff must document on the appropriate review report the inmate's refusal and, if known, the reasons for refusal, and give a copy of this report to the inmate. Receiving such a written report of the staff's understanding of the inmate's refusal will preserve that information for any subsequent disciplinary action that may occur.

This section also contains a chart which describes when each type of review will be conducted. The requirement for an initial classification to be conducted, ordinarily within 28 days for inmates who are newly committed, has not changed. Also unchanged is the requirement for a program review to be conducted at least once every 90 calendar days when an inmate is within twelve months of the projected release date.

The chart also explains that inmates who have 36 months or more until their projected release date will receive alternating program and progress reviews at least once every 180 calendar days. This replaces the previous requirement that only program reviews be conducted every 180 calendar days, although inmates who have less than 36 months and more than twelve months left until their projected release date will continue to receive program reviews every 180 calendar days.

The proposed rule will thus create a new process whereby inmates who are far from their projected release date (36 months or more) will receive progress reviews instead of program reviews approximately once a year.

As of January 29, 2011, the Bureau had 177,780 sentenced inmates in custody. Of these, 83,039 had 36 months or more left before their projected release dates. Therefore, approximately 46.7% of all sentenced inmates in Bureau custody require program reviews twice a year under the current rule but would only require an annual program review and an annual progress review under the proposed new rule. The Bureau estimates that progress reviews will take half the amount of time that is required for full program reviews, meaning that each switch from a program review to a progress review will save approximately 15 minutes. Given the approximate number of inmates who would receive progress reviews instead of program reviews under the proposed rule, the Bureau would save approximately 20,760 hours of staff time over the course of a year.

The inmates affected by the rule change will still continue to receive program reviews, but instead of receiving a full program review twice a year, they will receive the full program review once a year, as well as a progress review six months later. This practice will reduce the burden on staff time and increase the efficiency and efficacy of the inmate review process. The process will also allow staff to devote more time and resources to the reviews of inmates who are closer to their release dates, enabling the Bureau to better fulfill its mission to prepare inmates for eventual release into communities within the United States.

The rule also states that inmates subject to an order of removal/deportation/exclusion will receive less frequent program reviews. The small class of inmates that are under such an order tend to require less directed guidance and evaluation of their participation in BOP programs. However, if such inmates require guidance, they may request it from institution staff or Unit Team.

Current § 524.11(c) describes Program Review Reports. We delete this language, as the process for program and progress reviews is covered in revised §§ 524.11 and 524.12.

Finally, this section makes no substantive change to the language of the current regulation indicating that each sentenced inmate who is physically and mentally able to maintain a work/program assignment is assigned to a program at the time of initial classification. This section states that the inmate may choose not to participate, unless the program is a work assignment or is required by Bureau policy, by court order, or by statute, but that refusal to participate may result in disciplinary action.

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

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

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

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

This rule is not a major rule as defined by § 804 of the Small Business Regulatory Enforcement Fairness Act of 1996.

This rule will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.

Under rulemaking authority vested in the Attorney General in 5 U.S.C 301 and 28 U.S.C. 509, 510, and delegated to the Director, Bureau of Prisons, in 28 CFR 0.96, we propose to amend 28 CFR part 524 as set forth below.

I. General Information A. Does this action apply to me? B. What should I consider as I prepare my comments for EPA? C. Under what legal authority is this rule proposed? II. Background A. The Clean Water Act B. Environmental and Human Health Impacts of CAFOs C. United States Government Accountability Office Report D. United States Office of Management and Budget Report E. Litigation Regarding the 2008 Revised NPDES Permit Regulation and Effluent Limitations Guidelines for CAFOs in Response to the Waterkeeper Decision III. This Proposed Action A. Proposed Action Overview and Objectives B. CWA Section 308 Data Collection and EPA's Approach Toward Collecting Facility-Specific Information From CAFOs Through Rulemaking C. Option 1 Would Apply to All CAFOs 1. What information would EPA require as part of an information gathering survey for CAFOs and why is EPA proposing to require this information? 2. What information would EPA not require as part of the collection request survey for CAFOs? 3. Who would be required to submit the information? 4. When would States that choose to submit the information be allowed to provide the information to EPA and when would CAFOs be required to submit the information to EPA? 5. How would CAFOs submit the information to EPA? 6. How would States submit the information to EPA? D. Option 2 Would Apply to CAFOs in a Focus Watershed 1. How would EPA identify a focus watershed? 2. Considerations When Determining Whether a Focus Watershed Meets the Criteria for Water Quality Protection 3. How would EPA identify CAFOs from which additional information is needed? 4. What information would EPA require as part of an information gathering survey for CAFOs in a focus watershed? 5. How would EPA geographically define a focus watershed? 6. How would EPA inform CAFOs of their responsibility if they were required to respond to an information request? 7. When would CAFOs in a focus watershed be required to submit the information to EPA? 8. How would CAFOs in a focus watershed submit information to EPA? E. Failure To Provide the Information as Required by This Proposed Action F. Alternative Approaches To Achieve Rule Objectives 1. Use of Existing Data Sources 2. Alternative Mechanisms for Promoting Environmental Stewardship and Compliance 3. Require Authorized States to Submit CAFO Information From Their CAFO Regulatory Programs and Only Collect Information From CAFOs if a State Does Not Report IV. Impact Analysis A. Benefits and Costs Overview B. Administrative Burden Impacts V. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review B. Paperwork Reduction Act C. Regulatory Flexibility Act D. Unfunded Mandates Reform Act E. Executive Order 13132: Federalism F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments G. Executive Order 13045: Protection of Children From Environmental Health and Safety Risks H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use I. National Technology Transfer and Advancement Act J. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations I. General Information A. Does this action apply to me?

This proposed rulemaking would apply to concentrated animal feeding operations (CAFOs) as defined in the National Pollutant Discharge Elimination System (NPDES) regulations at 40 CFR 122.23(b)(2), pursuant to section 502(14) of the Clean Water Act (“CWA”). An animal feeding operation (AFO) is a CAFO if it meets the regulatory definition of a Large or Medium CAFO (40 CFR 122.23 (b)(4) or (6)) or has been designated as a CAFO (40 CFR 122.23 (c)) by the NPDES permitting authority or by EPA. The following table provides the size thresholds for Large, Medium and Small CAFOs in each animal sector.

That table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this proposed rulemaking. The table lists the types of entities that EPA is currently aware of that could be regulated by this action. Other types of entities not listed in the table could also be CAFOs. The owners or operators of AFOs that have not been designated and that do not confine the required number of animals to meet the definition of a Large or Medium CAFO are not required to submit information.

To determine whether your operation is a CAFO, you should carefully examine the applicability criteria in 40 CFR 122.23. If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the preceding FOR FURTHER INFORMATION CONTACT section.

When submitting comments, remember to:

• Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number).

• Follow directions—The agency might ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.

• Explain why you agree or disagree, suggest alternatives, and substitute language for your requested changes.

• Describe any assumptions and provide any technical information and/or data that you used.

• If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.

• Provide specific examples to illustrate your concerns, and suggest alternatives.

• Explain your views as clearly as possible.

• Make sure to submit your comments by the comment period deadline identified.

Direct your comments to Docket ID No. EPA-HQ-OW-2011-0188. EPA's policy is that all comments received will be included in the public docket without change and could be made available online at http://www.regulations.gov, including any personal information provided, unless the comment includes information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. The http://www.regulations.gov Web site is an “anonymous access” system, which means that EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through http://www.regulations.gov your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment because of technical difficulties and cannot contact you for clarification, EPA might not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. For additional information about EPA's public docket, visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.

Do not submit CBI information to EPA through http://www.regulations.gov or e-mail. Clearly mark the part of or all the information that you claim to be CBI. For CBI information on a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

Today's proposed rulemaking is issued under the authority of sections 301, 304, 305, 308, 309, 402, 501, and 504 of the CWA, 33 U.S.C. 1311, 1314, 1315, 1318, 1319, 1342, and 1361.

Congress passed the Federal Water Pollution Control Act Amendments of 1972, (“Clean Water Act” or “CWA”) to “restore and maintain the chemical, physical, and biological integrity of the nation's waters” 33 U.S.C. 1251(a). Section 301(a) of the CWA prohibits the “discharge of any pollutant by any person” except in compliance with the Act. 33 U.S.C. 1311(a). Among the core provisions, the CWA establishes the National Pollutant Discharge Elimination System (NPDES) permit program to authorize and regulate the discharge of pollutants from point sources to waters of the United States. 33 U.S.C. 1342. Section 502(14) of the CWA includes the term “CAFO” in the definition of “point source;” specifically, the term “point source” is defined as “any discernible, confined and discrete conveyance, including but not limited to any * * * concentrated animal feeding operation * * * from which pollutants are or may be discharged * * *” 33 U.S.C. 1362(14). Section 501 authorizes the Administrator to promulgate rules to carry out the Administrator's functions under the CWA. EPA has issued comprehensive regulations that implement the NPDES program at 40 CFR parts 122-124.

Section 308 of the CWA authorizes EPA to collect information from the “owner or operator of any point source” for the following purpose:

Section 308(a)(3)(A) of the Act provides that, in furtherance of the stated objectives, EPA may require owners or operators of point sources to establish and maintain records; make reports; install, use, and maintain monitoring equipment; sample effluent; and provide such other information as EPA may reasonably require to carry out the objectives of the Act. 33 U.S.C. 1318(a). Section 309 of the CWA authorizes EPA to assess penalties for violations of section 308 of the CWA. 33 U.S.C. 1319.

Despite more than 35 years of regulating CAFOs, reports of water quality impacts from large animal feeding operations persist. At the time of the 2003 CAFO rulemaking, the Agency received estimates from USDA indicating that livestock operations where animals are confined produce more than 300 million tons of manure annually. 68 FR 7180. On the basis of that figure, EPA estimated that animals raised in confinement generate more than three times the amount of raw waste than the amount of waste that is generated by humans in the United States. Id. For the 2003 CAFO rulemaking, EPA estimated that CAFOs collectively produce 60 percent of all manure generated by farms that confine animals. Id.

Pollutants from manure, litter, and process wastewater can affect human health and the environment. Whether from poultry, cattle, or swine, the manure, litter and process wastewater contains substantial amounts of nutrients (nitrogen, phosphorus, and potassium), pathogens, heavy metals, and smaller amounts of other elements and pharmaceuticals. This manure, litter, and process wastewater commonly is applied to crops associated with CAFO operations or transferred off site. Where over-applied or applied before precipitation events, excess nutrients can flow off of agricultural fields, causing harmful aquatic plant growth, commonly referred to as “algal blooms,” which can cause fish kills and contribute to “dead zones.” In addition, algal blooms often release toxins that are harmful to human health.

To improve the Agency's ability to estimate ecological and human risk for chemical and microbial contaminants that enter water resources, EPA is continuing research to evaluate the effect of CAFOs on surface and ground water quality. Effective control of pathogens originating in livestock manure or poultry litter could improve human and ecosystem health through reductions in waterborne disease organisms and chemicals. More than 40 diseases found in manure can be transferred to humans, including causative agents for Salmonellosis, Tuberculosis, Leptospirosis, infantile diarrheal disease, Q-Fever, Trichinosis, and Giardiasis. Exposure to waterborne pathogen contaminants can result from both recreational use of affected surface water (accidental ingestion of contaminated water and dermal contact during swimming) and from ingestion of drinking water derived from either contaminated surface water or groundwater. JoAnn Burkholder, et al., Impacts of Waste from Concentrated Animal Feeding Operations on Water Quality, 115 Env't Health Perspectives 310 (2007).

Heavy metals such as arsenic, cadmium, iron, lead, manganese, and nickel are commonly found in CAFO manure, litter, and process wastewater. Some heavy metals, such as copper and zinc, are essential nutrients for animal growth—especially for cattle, swine and poultry. However, farm animals excrete excess heavy metals in their manure, which in turn is spread as fertilizer, causing potential runoff problems. U.S. EPA, Risk Assessment Evaluation for Concentrated Animal Feeding Operations, EPA-600-R-04-042 (2004); and U.S. EPA, Development Document for the Final Revisions to the National Pollutant Discharge Elimination System Regulation and the Effluent Guidelines for Concentrated Animal Feeding Operation, EPA-821-R-032-001 (2002). EPA reported approximately 80 to 90 percent of the copper, zinc, and arsenic consumed is excreted. Possible adverse effects reported in the literature include the risk of phytotoxicity, groundwater contamination and deposition in river sediment that may eventually release to pollute the water. U.S. EPA, Risk Assessment Evaluation for Concentrated Animal Feeding Operations, EPA-600-R-04-042 (2004), pp. 43-46. Repeated application of manure above agronomic rates could result in exceedances of the cumulative metal loading rates established in EPA regulations at 40 CFR part 503, thereby potentially impacting human health and the environment. U.S. EPA, Preliminary Data Summary Feedlots Point Source Category Study, EPA-821-R-99-002 (1999), pp. 26-27. The health hazards that may result from chronic exposure to heavy metals at certain concentrations can include kidney problems from cadmium, Public Health Statement Cadmium (CAS #7440-43-9), available at http://www.atsdr.cdc.gov/PHS/PHS.asp?id=46&tid=15; nervous system disorders, and neurodevelopmental problems (IQ deficits) from lead, Lead and Compounds (inorganic) (CASRN 7439-92-1), available at http://www.epa.gov/iris/subst/0277.htm; and cardiovascular effects, diabetes, respiratory effects, nervous system problems, and reproductive effects and cancers from multiple tissues from arsenic, NRC Arsenic in Drinking Water, National Academy Press (2001), available at http://www.nap.edu/openbook/0309076293/html/R1.html.

To promote growth and to control the spread of disease, antibiotics, growth hormones and other pharmaceutical agents are often added to feed rations or water, directly injected into animals, or administered via ear implants or tags. The annual amount of antimicrobial drugs sold and distributed in 2009 for use in food animals was 13.3 million kilograms or 28.8 million pounds. U.S. Food and Drug Administration, 2009 Summary Report on Antimicrobials Sold or Distributed for Use in Food-producing Animals (2010). This was a significant increase in the annual use from 8.8 million kilograms or approximately 18 million pounds reported in 1995. U.S. Congress, Office of Technology Assessment, Impacts of Antibiotic-Resistant Bacteria, OTA-H-629 (1995).

Most antibiotics are not metabolized completely and are excreted from the treated animal shortly after medication. As much as 80-90 percent of some administered antibiotics occur as parent compounds in animal wastes . Scott Bradford et al., Reuse of Concentrated Animal Feeding Operation Wastewater on Agricultural Lands, 37 J. Env't Quality 97 (2008). Synthetic steroid hormones are extensively used as growth promoters for cattle in the United States. Id. Steroid hormones are of particular concern because there is laboratory evidence that very low concentrations of these chemicals can adversely affect the reproduction of fish and other aquatic species. Id. The dosing of livestock animals with antimicrobial agents for growth promotion and prophylaxis may promote antimicrobial resistance in pathogens, increasing the severity of disease and limiting treatment options for sickened individuals. U.S. EPA, Detecting and Mitigating the Environmental Impact of Fecal Pathogens Originating from Confined Animal Feeding Operations: Review, EPA600-R-06-021 (2005).

In the most recent National Water Quality Inventory, 29 states specifically identified animal feeding operations as contributing to water quality impairment. U.S. EPA, National Water Quality Inventory: Report to Congress —2004 Reporting Cycle, January 2009. EPA-841-R-08-001. The findings of this report are corroborated by numerous reports and studies conducted by government and independent researchers that identify the animal livestock industry as an important contributor of surface water pollution. For example, the GAO found in its 2008 Report to Congressional Requesters that since 2002, 68 studies had been completed that examined air and water quality issues associated with animal feeding operations. Fifteen of those have directly linked air and water pollutants from animal waste to specific health or environmental impacts. GAO-08-944 (2008). For further discussion of this Report, see the section United States Government Accountability Office Report of this preamble.

Water quality impacts from CAFOs may be due, in part, to inadequate compliance with existing regulations or to limitations in CAFO permitting programs. EPA believes that basic information about CAFOs would assist the Agency in addressing those problems. Complete and accurate information allows governments, regulated communities, interest groups and the public to make more informed decisions regarding ways to protect the environment.

In September 2008, the United States Government Accountability Office (GAO) issued a report to congressional requesters, recommending that EPA “should complete the Agency's effort to develop a national inventory of permitted CAFOs and incorporate appropriate internal controls to ensure the quality of the data.” U.S. Gov't Accountability Office, Concentrated Animal Feeding Operations—EPA Needs More Information and a Clearly Defined Strategy to Protect Air and Water Quality , GAO-08-944 5 (2008), page 48. EPA officials stated that “EPA does not have data on the number and location of CAFOs nationwide and the amount of discharges from these operations. Without this information and data on how pollutant concentrations vary by type of operation, it is difficult to estimate the actual discharges occurring and to assess the extent to which CAFOs may be contributing to water pollution.”, Id. page 31. The report also stated that “despite its long-term regulation of CAFOs, * * * EPA has neither the information it needs to assess the extent to which CAFOs may be contributing to water pollution, nor the information it needs to ensure compliance with the Clean Water Act.” Id. page 48.

The GAO report contains a review of EPA's data on permitted CAFOs, and the GAO determined that data obtained from state agencies “are inconsistent and inaccurate and do not provide EPA with the reliable data it needs to identify and inspect permitted CAFOs nationwide.” Id. page 17. EPA had received its data from EPA Regional offices and from the states relating to permits issued to CAFOs between 2003 and 2008. GAO interviewed officials in 47 states to determine the accuracy and reliability of the data EPA collected. On the basis of that information, GAO determined that EPA's data was not reliable and could not be used to identify trends in permitted CAFOs over the five-year period. In addition to reviewing EPA's data on CAFOs, the GAO also reviewed data from other Federal agencies. GAO concluded that no Federal agency currently collects accurate and consistent data on the number, size, and location of CAFOs as defined by the CAFO regulations. Id. page 4. EPA responded to the draft GAO report stating that the Agency would develop a comprehensive national inventory of CAFOs. Id. page 76.

More recently, the Office of Management and Budget (OMB) issued a report to Congress that describes the value of data collection efforts that minimize burden on reporting entities and have practical utility. In this report, OMB identifies the benefits and costs of Federal regulations and unfunded mandates on states, local and tribal entities. U.S. Office of Management and Budget, 2011 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities (2001). This report stressed the importance of ensuring that regulations are “evidence-based and data-driven and hence based on the best available work in both science and social science.” Id. page 5. Specifically, the report briefly outlines steps and best practices that are consistent with OMB's recent recommendations for “flexible, empirically informed approaches; increased openness about costs and benefits; and the use of disclosure as a regulatory tool.” Id. page 5. EPA believes that today's co-proposed rulemaking would be consistent with OMB's recommendations by promoting transparency and providing a comprehensive body of data that would serve as a basis for sound decision-making about EPA's CAFO program.

EPA's regulation of discharges from CAFOs dates to the 1970s. EPA initially issued national effluent limitations guidelines and standards (ELGs) for feedlots, on February 14, 1974 and NPDES CAFO regulations on March 18, 1976. 39 FR 5704; 41 FR 11458. In February 2003, EPA issued revised CWA permitting requirements, ELGs and new source performance standards for CAFOs. 68 FR 7176. The 2003 CAFO rule required the owners or operators of all CAFOs to seek coverage under an NPDES permit, unless they demonstrated no potential to discharge. With implementation of the 2003 rule, EPA and state permitting authorities would have obtained information about the universe of CAFOs. However, both environmental groups and industry challenged the 2003 final rule, and in February 2005, the U.S. Court of Appeals for the Second Circuit issued its decision in Waterkeeper Alliance et al. v. EPA, 399 F.3d 486 (2d Cir. 2005). Among other things, the court held that EPA does not have authority under the CWA to require CAFOs that have only a potential to discharge to obtain NPDES permits.

In 2008, EPA issued revised regulations in response to the Waterkeeper decision. Among other changes, the revised regulations required only those CAFOs that discharge or propose to discharge to obtain an NPDES permit. Subsequently, environmental groups and industry filed petitions for review of the 2008 rule, which were consolidated in the U.S. Court of Appeals for the Fifth Circuit. EPA signed a settlement agreement with the environmental petitioners in which EPA committed to propose a rule, pursuant to CWA section 308, that would require CAFOs to provide certain information to EPA. The settlement agreement provides the context and timeline for this proposed rulemaking.

The settlement agreement commits EPA to propose, by October 14, 2011, a rule under section 308 of the CWA, 33 U.S.C. 1318, to require all owners or operators of CAFOs, whether or not they have NPDES permits, to submit certain information to EPA. EPA agreed to propose a rule requiring CAFOs to submit the information listed below; or, if EPA decides not to include one of the items in the proposal, EPA would identify the item(s), explain why EPA chose not to propose requiring that information and request comment on the excluded items. EPA committed to take final action on the rule by July 13, 2012. The settlement agreement does not commit EPA to the substance of any final action. The settlement agreement expressly states that nothing in the agreement shall be construed to limit or modify the discretion accorded EPA by the CWA or by general principals of administrative law. Nor does the CWA require EPA to collect the information proposed in today's notice.

The items listed in the settlement agreement to be addressed in the proposal include the following:

1. Name and address of the owner and operator;

2. If contract operation, name and address of the integrator;

3. Location (longitude and latitude) of the operation;

4. Type of facility;

5. Number and type(s) of animals;

6. Type and capacity of manure storage;

7. Quantity of manure, process wastewater, and litter generated annually by the CAFO;

8. Whether the CAFO land-applies;

9. Available acreage for land application;

10. If the CAFO land-applies, whether it implements a nutrient management plan for land application;

11. If the CAFO land-applies, whether it employs nutrient management practices and keeps records on site consistent with 40 CFR 122.23(e);

12. If the CAFO does not land apply, alternative uses of manure, litter and/or wastewater;

13. Whether the CAFO transfers manure off site, and if so, quantity transferred to recipient(s) of transferred manure; and

14. Whether the CAFO has applied for an NPDES permit

On March 15, 2011, the Fifth Circuit Court of Appeals vacated the requirement in EPA's 2008 CAFO rule that CAFOs that “propose” to discharge obtain NPDES permits and held that CAFOs are not liable under the CWA for failing to apply for NPDES permits. Nat'l Pork Producers Council (NPPC) v. EPA, 635 F.3d 738 (5th Cir. 2011) (herein referred to as NPCC ). The Fifth Circuit held that there must be an “actual discharge to trigger the CWA requirement to obtain a permit.” NPPC, 635 F.3d at 751. EPA's authority to collect information under section 308 from “point sources” is broader than EPA's authority to require and enforce a requirement to apply for an NPDES permit, as interpreted by NPPC. In particular, EPA is authorized under section 308 to collect information from any point source, and point sources are defined to include “any discernible, confined and discrete conveyance, including * * * any * * * concentrated animal feeding operation * * * from which pollutants are or may be discharged.” 33 U.S.C. 1362(14). Today's proposed rulemaking is therefore not affected by this ruling of the Fifth Circuit Court of Appeals.

In vacating the requirement that CAFOs that propose to discharge apply for an NPDES permit (the “duty to apply” provision), the court held that “there must be an actual discharge into navigable waters to trigger the CWA's requirements and the EPA's authority. Accordingly, EPA's authority is limited to the regulation of CAFOs that discharge.” NPPC, 635 F.3d at 751. The court's holding that EPA may regulate only those CAFOs that discharge is limited to the specific type of regulation at issue before the court: the duty to apply for a permit. Today's notice proposes options for gathering basic information from CAFOs; it does not require them to obtain permits.

EPA proposes to gather information from CAFOs pursuant to its authority in CWA section 308 to collect information. This information-gathering authority is broader than EPA's authority to require permit coverage, which was at issue in NPPC. Section 308 authorizes information collection from “point sources,” which includes CAFOs that discharge or may discharge. 33 U.S.C 1318(a); 1362(14) (the term “point source” is defined as “any discernible, confined, and discrete conveyance, including * * * any * * * concentrated animal feeding operation * * * from which pollutants are or may be discharged * * *”). The plain language of section 308 expressly authorizes information collection for a list of purposes including assistance in developing, implementing, and enforcing effluent limitations or standards, such as the prohibition against discharging without a permit. 33 U.S.C. 1318(a). The information EPA proposes to collect is limited to basic information about CAFOs and would enable EPA, states, and others to determine the number of CAFOs in the United States and where they are located and would assist EPA in developing, implementing, and enforcing the requirements of the Act.

The purpose of this co-proposal is to improve and restore water quality by collecting facility-specific information that would improve EPA's ability to effectively implement the NPDES program and to ensure that CAFOs are complying with the requirements of the CWA, including the requirement to obtain an NPDES permit if they discharge pollutants to waters of the U.S. Section 402 of the CWA authorizes EPA to regulate all point source discharges through the NPDES permitting program. The NPDES program regulates discharges from such industries as manufacturing and processing plants ( e.g., textile mills, pulp and paper mills), municipal wastewater treatment plants, construction sites and CAFOs. Unlike many other point source industries, EPA does not have facility-specific information for all CAFOs in the United States. Facility location and basic operational characteristics that relate to how and why a facility may discharge is essential information needed to carry out NPDES programmatic functions, which include the following:

• Evaluating NPDES program effectiveness;

• Identifying and permitting CAFOs that discharge;

• Conducting education and outreach to promote best management practices;

• Determining potential sources of water quality impairments and taking steps to address those impairments;

• Estimating CAFO pollutant loadings—by facility, by watershed, or some other geographical area; and

• Targeting resources for compliance assistance or enforcement.

The six categories listed above represent key activities necessary to ensure that CAFOs are meeting their obligations under the CWA regarding protection of water quality from CAFO discharges and can be carried out most efficiently and effectively when EPA and states have access to facility contacts and other basic information about CAFOs. This information could be used to better protect public health and welfare of communities near CAFOs, including environmental justice for minority, indigenous or low-income communities.

In today's proposed rulemaking, EPA co-proposes two options by which the Agency may achieve today's rule objectives: Option 1 ( Section C.) would apply to all CAFOs; Option 2 (Section D) would identify focus watersheds where CAFO discharges may be causing water quality concerns and EPA could use its section 308 authority to obtain information from CAFOs in these areas. However, EPA would make every reasonable effort to assess the utility of existing publicly available data and programs to identify CAFOs by working with partners at the Federal, state, and local level before determining whether requiring CAFOs to provide the information is necessary. Both of these options propose revisions to the NPDES regulations, which would allow EPA to obtain necessary information from CAFOs, including their contact information, location of the CAFO's production area, NPDES permitting status, number, and type of animals, and number of acres available for land application. Section F. Alternative Approaches to Achieve Rule Objectives discusses alternative approaches to a regulatory information request for CAFOs that may achieve similar outcomes ( i.e., ensuring that CAFOs are complying with their obligations under the CWA).

The proposed rulemaking utilizes EPA's authority under section 308 of the CWA, which authorizes EPA to collect information from point sources when necessary to carry out the objectives of the CWA. Since the 1970s, EPA routinely has used its authority under section 308 of the Act to collect information from large groups of point sources when developing and reviewing ELGs. An ELG survey typically will request industrial sources to provide information such as the type and amount of pollutants discharged, technologies available to treat waste streams, the performance capability of these technologies, and financial data. EPA uses this information to determine the appropriate control requirements and to assess the economic feasibility of such additional controls. As an example, when reviewing the ELGs applicable to the steam electric industry, EPA determined that the data available at that time did not include all wastewater streams generated by the steam electric industry. To address this deficiency, EPA issued detailed questionnaires to the industry, which required the industry to respond to questions including contact information, facility address, pollutants in wastewater discharges, volume of discharges, and types and performance of technologies employed to treat the wastewater along with financial information. When developing ELGs for coal bed methane extractions, EPA conducted an industry survey to evaluate the volume of water produced from extraction; the management, storage, treatment and disposal options; and the environmental impacts of surface discharges. Information collection under the CWA, thus, has been a frequently used tool to develop appropriate and environmentally protective standards.

There is precedent for EPA using its section 308 authority to collect information from entities not currently required to obtain NPDES permits. Recently, EPA conducted surveys to gather information to help assess the impact of potential changes that the Agency is considering to its existing stormwater requirements. As part of this effort, EPA sent questionnaires to regulated Municipal Separate Storm Sewer System (MS4s), non-regulated MS4s, transportation MS4s, NPDES permitting authorities, and owners and operators of developed sites.

EPA can use a variety of methods to obtain data required by information collection requests under section 308. The most common method is to mail questionnaires directly to industry contacts. However, because EPA does not know the names and addresses of all CAFOs, mailing surveys to CAFOs is not possible; therefore, a rule is necessary to collect the information. The final Federal Register notice would contain the information collection request form (see the proposed form at the end of this preamble). Under Option 1, CAFOs would be required to respond to the request as issued in the Federal Register unless a state chooses to provide the information on behalf of a CAFO. Under Option 2, CAFOs in a focus watershed would be required to respond, but EPA would make every reasonable effort to assess the utility of existing publicly available data and programs to identify CAFOs by working with partners at the Federal, state, and local level before determining whether requiring CAFOs to respond to a survey request is necessary. This request would be accomplished through a locally-applicable notice in the Federal Register along with other forms of local outreach. In the Federal Register , EPA also would include the description of the focus watershed and the reasons for its selection. To implement the rule effectively, EPA intends to conduct extensive outreach to the CAFO industry to ensure that all CAFOs know of the existence of this rule and any requirement to respond. The owners or operators of AFOs that have not been designated and that do not confine the required number of animals to meet the definition of a Large or Medium CAFO are not required to submit information under this proposed rulemaking.

The rulemaking process is an appropriate way to collect information from CAFOs because rulemaking is a transparent, equitable, and efficient method of collecting information from a large universe of entities. Moreover, allowing the states to submit the information required by this proposed action on behalf of a CAFO, included in the proposed option that would require all CAFOs to submit information, would allow states to collaborate with EPA in reducing the burden on some CAFOs to report the information to EPA. The proposed rule is a reasonable exercise of CWA section 308 authority because the information to be submitted would enable EPA to carry out and ensure compliance with the NPDES permitting program and other CWA requirements for CAFOs. See, e.g. Natural Resources Def. Council, Inc. v. EPA, 822 F.2d 104, 119 (DC Cir. 1987); In re Simpson Paper Co. and Louisiana-Pacific Corp., 3 E.A.D. 541, 549 (1991).

EPA requests comment on obtaining the information through options in this co-proposed rulemaking or whether EPA should explore alternative approaches as described in the Alternative Approaches to Achieve Rule Objectives section of this preamble.

Proposed paragraph § 122.23(k)(2) specifies the information EPA would require respondents to provide to the Agency. Under this proposed option, EPA would require respondents to submit the following information:

(i) The legal name of the owner of the CAFO or an authorized representative, their mailing address, e-mail address (if available) and primary telephone number. An authorized representative must be an individual who is involved with the management or representation of the CAFO. The authorized representative must be located within reasonable proximity to the CAFO, and must be authorized and sufficiently informed to respond to inquiries from EPA on behalf of the CAFO;

(ii) The location of the CAFO's production area identified by the latitude and longitude or by the street address.

(iii) If the owner or operator has NPDES permit coverage as of [the effective date of final rule], the date of issuance of coverage under the NPDES permit, and the permit number. If the owner or operator has submitted an NPDES permit application or a Notice of Intent as of [the effective date of final rule] but has not received coverage, the date the owner or operator submitted the permit application or Notice of Intent;

(iv) For the previous 12-month period, identification of each animal type confined either in open confinement including partially covered area, or housed totally under roof at the CAFO for 45 days or more, and the maximum number of each animal type confined at the CAFO for 45 days or more; and

(v) Where the owner or operator land applies manure, litter, and process wastewater, the total number of acres under the control of the owner or operator available for land application.

Proposed paragraph § 122.23(k)(2)(i) would require CAFOs to provide a point of contact for the CAFO. EPA proposes to allow CAFOs to provide contact information for either the owner of the CAFO or an authorized representative. An authorized representative must be an individual who is involved with the management or representation of the CAFO. The authorized representative must be located within reasonable proximity to the CAFO, and must be authorized and sufficiently informed to respond to inquiries from EPA on behalf of the CAFO. For example, an employee who manages the CAFO or an attorney employed by the CAFO could be an appropriate authorized representative. Respondents would be required to provide complete contact information, including name, telephone number, e-mail (if available), and mailing address. Owners or authorized representatives may provide a P.O. Box in lieu of a street address in the contact information section. All individuals who qualify under 40 CFR. 122.22 can serve as a CAFO's authorized representative, including the operator of a CAFO. EPA proposes to allow qualifying individuals to serve as a CAFO's point of contact to preserve the privacy of a CAFO owner if desired. With this information, EPA would be able to communicate directly with CAFOs when necessary. EPA seeks comment on whether an authorized representative should be permitted to sign the survey form instead of the CAFO owner or operator.

In addition to providing contact information, proposed paragraph § 122.23(k)(2)(ii) would require CAFOs to provide the location of the CAFO's production area in either latitude and longitude or by the street address of the CAFO's production area. (Note that a P.O. Box would not substitute for a street address in the location information section, since it would not identify a CAFO's location). EPA believes that knowing the location of the CAFO's production area, as specified in proposed paragraph § 122.23(k)(2)(ii), is essential for determining sources of water quality impairments and potential mitigation measures. A CAFO's proximity to waterbodies also is relevant to whether it may cause water quality impacts. Comprehensive compliance assistance and education and outreach efforts, which are facilitated by knowing facility location and contact information, are tools a regulatory program can use in partnerships with industry to proactively protect and maintain water quality.

Information related to a CAFO's permit status (proposed paragraph § 122.23(k)(2)(iii)) would indicate whether additional information is publicly available, thus avoiding duplicative efforts to seek information from NPDES permitted CAFOs. Permitting status information also would show which CAFOs are operating without NPDES permit coverage. Even where a facility is not discharging and therefore is not required to be covered by a permit, knowing about the existence of these facilities gives EPA a basis for understanding how many facilities within each sector are actually able to completely prevent discharges. This information might be transferable to other facilities in that sector that currently discharge. EPA or states would be able to provide technical assistance, extend compliance assistance, or inspect such CAFOs where appropriate.

EPA proposes (as specified in proposed paragraph § 122.23(k)(2)(iv)) to collect data on the number and type (cattle, poultry, swine, etc. ) of animals because the scale of the operation and the types of animals confined relate to the type and volume of manure generated and related environmental considerations, and also determine applicable CWA permitting requirements. Specifically, the number and type of animals provides an indication of the quantity and characteristics of the CAFOs' manure ( i.e., wet or dry and possible constituents), which then informs EPA as to the possible environmental effects of that manure. EPA also proposes to collect information about the amount of land available for application (proposed paragraph § 122.23(k)(2)(v)). A CAFO's available land application area is likely to affect the amount of manure that can be land applied for agronomic purposes and the potential amount of nutrients that could flow into surrounding waters of the United States. Combining information about manure quantity and characteristics with land available for application would indicate where issues might exist regarding excess manure.

Section 308(b)(1) of the CWA requires that information collected by the Agency shall be available to the public, except upon a satisfactory showing to the Administrator that any part of the information, report, or record is confidential business information. Under existing regulations, an owner or operator may assert a claim of confidential business information (CBI) with respect to specific information submitted to EPA. 40 CFR part 2, subpart B. Under section 2.208, business information is entitled to confidential treatment if, “the business has satisfactorily shown that disclosure of the information is likely to cause substantial harm to the business's competitive position.” A claim of confidentiality must be made at the time of submission and in accordance with the requirements of 40 CFR 2.203(b). Id. at § 2.203(c). EPA would follow all the requirements related to information submitted with a claim of confidentiality including the required notification to the submitter and rights of appeal available before releasing any information claimed to be confidential. EPA seeks comment on whether any information required by this proposed rule could reasonably be claimed as CBI and the reasons for making this claim.

EPA requests comment on the information that CAFOs would be required to submit as specified by proposed paragraph § 122.23(k)(2). Specifically, EPA is aware that providing latitude and longitude information might raise security or privacy concerns for CAFO owner/operators, many of whom are family farmers. EPA seeks comment on alternatives to submission of the latitude and longitude that would provide general information on a facility's location but not specific coordinates. For example, the survey could request the name of the nearest waterbody to the CAFO. Local knowledge, U.S. Geological Survey topographical maps or internet programs such as Google Maps could be used by the CAFO to make this determination of the nearest waterbody to the CAFO. This would allow EPA to identify the watershed in which a CAFO is located, and to potentially model discharges from the CAFO and their impacts on water quality, but without providing specific information that could be misused to target the CAFO for inappropriate or illegal purposes. EPA also seeks comment on using other systems such as the Public Land Survey System (PLSS) ( i.e. township, range and county information) to identify the location of a CAFO's production area. The PLSS encompasses major portions of the land area of 30 southern and western United States. EPA seeks comment on other possible alternatives as well, such as requesting a business address and county where located, or some other general locational information. Commenters suggesting such alternative should discuss the advantages and limitations of such information both for protecting the security and privacy of CAFOs, and for fulfilling the CWA purposes for which EPA needs the data (discussed above). EPA also seeks comment on how this type of location information would compare with respect to operator burden, accuracy of location identification, and usefulness of the information to identify the production area location. EPA also seeks comment on whether CAFOs would know the operation's latitude and longitude.

Related to the concern discussed above is a concern that providing specific information on the type and number of animals at a CAFO might also raise potential security issues. EPA requests comment on allowing CAFOs to report numbers of animals confined in ranges, rather than providing specific numbers. One option would be to use ranges corresponding to the definitions of large, medium and small CAFOs. EPA also requests comment on collecting the information as specific numbers, but making it available to the public only as ranges.

Additionally, EPA requests comment on the most appropriate 12-month span of time for a CAFO to determine the number of animals at the CAFO ( i.e. fiscal year or calendar year, or the previous 12 months prior to completing the survey).

EPA seeks comment on whether CAFOs would understand the questions asked and on the technical appropriateness of the questions. The proposed survey form that EPA would use to collect the information is included as an appendix to this preamble.

The settlement agreement with the environmental petitioners specifies that EPA would release the information collected pursuant to this rule to the public, except where it is entitled to protection as confidential business information. This is required by section 308 of the CWA. However, neither the settlement agreement nor section 308 specify the venue or format in which the information is to be released. EPA is aware of both security and privacy concerns, referenced above, regarding the potential public release of the information to be collected by this rule. EPA requests comment on any such concerns, on appropriate ways to address those concerns (consistent with section 308), and on appropriate formats or venues to make it available to the public. EPA also requests comment on whether the requirement to make any information collected pursuant to section 308 available to the public (except confidential business information) should factor into its determination about what information, if any, to collect from CAFOs.

In the settlement agreement with the environmental petitioners, arising out of litigation over the 2008 CAFO rule, EPA agreed to propose a rule that would require CAFOs to submit information on 14 items of information; or, if EPA decided not to include one of the items from the settlement agreement in the proposed rule, EPA would identify the item(s), explain why EPA chose not to propose requiring that information and request comment on the excluded items.

This proposed rulemaking requests information on only some of those 14 items because the Agency believes it can effectively obtain site-specific answers for the remaining questions directly from states, other Federal agencies, specific CAFOs, or other sources, when necessary. EPA also is striving to balance the need for information with the burden associated with providing the information to EPA.

EPA seeks comment on its proposal not to collect the following items specified in the settlement agreement:

• Name and address of owner/operator (if the name and address of an authorized representative is provided instead of the name and address of an owner or operator of the CAFO);

• The survey would allow the CAFO's a choice in providing location data of the production area either by the longitude and latitude or the street address of the production area, instead of requiring both;

• If contract operation, name and address of the integrator;

• Type and capacity of manure storage;

• Quantity of manure, process wastewater, and litter generated annually by the CAFO;

• If the CAFO land-applies, whether it implements a nutrient management plan for land application;

• If the CAFO land-applies, whether it employs nutrient management practices and keeps records on site consistent with 40 CFR 122.23(e);

• If the CAFO does not land apply, alternative uses of manure, litter and/or wastewater; and

• Whether the CAFO transfers manure off site, and if so, quantity transferred to recipient(s) of transferred manure.

Under this option, proposed paragraph § 122.23(k)(1) would require all owners or operators of CAFOs to submit the information specified in proposed paragraph 40 CFR 122.23(k)(2). However, an exception is provided by proposed paragraph § 122.23(k)(5), that would allow states with an authorized NPDES program to provide the information proposed to be collected to EPA for CAFOs in the state. The option for a state to submit the information specified by proposed paragraph § 122.23(k)(2) is voluntary. This proposed option would allow states to submit the information because states may have collected all of the information required to be submitted by this proposed rule. A state may have obtained this information through permit applications, annual reports, inspection documentation, or other means and may keep records of this information in a form that is readily transferable to EPA. EPA does not have a preference regarding whether individual CAFOs submit the information or whether states submit it for them. EPA expects that states that do not possess the CAFO information requested would not choose to participate. In other words, EPA does not anticipate that states would submit the data, if it would require them to undertake additional efforts to collect this information from CAFOs. Proposed paragraph § 122.23(k)(2) provides flexibility to states by allowing each state to determine if it can easily submit the information to EPA given the state's resources.

Under proposed paragraph § 122.23(k)(5), in order to submit the information on behalf of its CAFOs, a state would only be allowed to provide information on behalf of a CAFO if it submits all items of information as specified by proposed paragraph § 122.23(k)(2). States that choose to submit this information would be required to use the Agency's information management system to ensure reporting consistency among states choosing to provide the information to EPA. CAFOs for which a state submits all of the required information would be referred to as “listed” CAFOs. States may submit information for CAFOs with NPDES permit coverage or CAFOs without NPDES permit coverage, such as CAFOs with state permits only.

In the case of states for which EPA is the NPDES permit authority and where the NDPES CAFO general or individual permits have been updated in accordance with the 2008 CAFO rule, EPA would provide the information as if it were the state. EPA issues updated NPDES CAFO permits in the states of Idaho, New Mexico, Oklahoma, New Hampshire, and Massachusetts.

The voluntary state submission option does not preclude any CAFO that wishes to do so from submitting the information required by the proposed rule even where a state previously submitted the information for that CAFO. The next section of this preamble, When would states that choose to submit the information be allowed to provide the information to EPA and when would CAFOs be required to submit the information to EPA?, identifies the time frames for submitting the information to EPA that would be required by proposed paragraph § 122.23(k)(2).

Under this proposed option, EPA seeks comment on whether to allow the state submission option as proposed by paragraph § 122.23(k)(5), or whether all CAFOs should be individually required to submit information to EPA. Specifically, EPA solicits comment from CAFO owners or operators as to their willingness to have the state permitting agency submit operation information to EPA on their behalf. EPA also solicits comment from states on the availability of the information as specified by proposed paragraph § 122.23(k)(2); whether states plan to provide all the required information on behalf of CAFOs; and alternatively, if given the opportunity, whether states would provide partial information on behalf of CAFOs. EPA also solicits comments on whether NPDES authorized states should be required to provide the information for their permitted CAFOs.

Following the release of the Agency's information management system and the availability of the proposed survey form, the proposed rule would allow an owner or operator of a CAFO or states to submit the information to EPA any time during their respective reporting periods. EPA proposes the following submission deadlines:

• Required Reporting Period for States Who Chose to Report: As specified by proposed paragraph § 122.23(k)(5)(iii), states that choose to submit information would be required to submit the information in proposed paragraph § 122.23(k)(2) [within 90 days from the effective date of the rule].

• Notification Period: [Within 60 days after the end of the state reporting period], EPA plans to make publicly available a list of all CAFOs by name, permit number, if applicable, and state (“listed CAFOs”).

• CAFO Reporting Period: CAFOs that do not appear on the CAFO list would be required to submit the information on an individual facility basis to EPA within [90 days after the end of the notification period]. CAFOs that appear on the CAFO list may choose to review the information submitted by the state and override the state's submission by submitting its own information, but CAFOs must do so within [90 days after the end of the notification period].

Table 2 summarizes the timeframes for submitting the information as specified in proposed paragraph § 122.23(k)(2) to EPA.

EPA requests comment on allowing 180 days rather than 90 days for states to submit information to EPA on behalf of CAFOs. This would allow additional time for unpermitted CAFOs wishing to be covered by NPDES permits to apply for permit coverage ( e.g., submit an NOI in the case of a general permit) such that states could submit the information for them.

To maintain an updated inventory, EPA proposes that CAFOs without NPDES permits submit the information specified by proposed paragraph § 122.23(k)(2) or update previously submitted information every ten years. EPA proposes a ten-year resubmission period for unpermitted CAFOs because the Agency does not expect the information to change significantly within this ten-year period. Specifically, proposed paragraph § 122.23(k)(4)(iii) would require CAFOs without NPDES permit coverage to submit or update the required information between [January 1 and June 1, 2022] and every tenth year thereafter between those dates. Operations that have NPDES permit coverage or obtain permits before the 2022 resubmission date, or that become CAFOs after [July 2012]—either newly defined, designated, or a new source—and obtain NPDES permit coverage would not be required to submit or update the required information. For example, a CAFO that does not have an NPDES permit as of [July 2012] but obtains NPDES permit coverage before January 1, 2022, would not be required to re-submit the information that today's rulemaking proposes to collect.

Under this proposed option, CAFOs with NPDES permits would not need to update their information every ten years because EPA believes it would be able to maintain an updated inventory for permitted CAFOs from their annual reports and permit applications when renewing permit coverage. EPA invites comments on the schedule for when states and CAFOs would be required to submit the information to EPA. EPA also seeks comment on the requirement for CAFOs without NPDES permit coverage to resubmit the information as specified in proposed paragraph § 122.23(k)(2) every ten years.

Proposed paragraph § 122.23(k)(3) would require owners and operators of CAFOs to use an official survey form provided by EPA to submit, either electronically or by certified mail, the required information to EPA. EPA would not mail surveys to individual CAFOs to request information, as the locations of many CAFO operations are unknown. Rather, the survey form would be available on EPA's Web site or by requesting a hard copy from EPA Headquarters from the EPA contact information provided in the final rule. EPA would conduct extensive outreach with the regulated community, industry groups, environmental groups and states in its effort to notify all stakeholders about the requirements of the rule and how to submit the required information.

Proposed paragraph § 122.23(k)(3) would require the owner or operator of a CAFO to submit the survey form electronically using the Agency's information management system available on EPA's Web site. The Agency's Web-based information management system would be the most effective, inexpensive way to submit the information. The Web-based information management system would leverage components of the Central Data Exchange (CDX) on the Environmental Information Exchange Network. CDX provides a single and centralized point of access for states and CAFO owners or operators to submit information electronically to EPA. CDX is supported by the Cross-Media Electronic Reporting Regulation (CROMERR), which provides the legal framework for electronic reporting under EPA's regulations. CROMERR requires any entity that submits electronic documents directly to EPA to use CDX or an alternative system designated by the Administrator. CDX would ensure the legal dependability of electronically submitted documents and provide a secure environment for data exchange that would also protect personally identifiable information (PII).

The supporting CAFO information management system would leverage Agency standards and enterprise technologies to perform logic checks on the data entered to ensure quality assurance and quality control. Logic checks would reduce the reporting errors and limit the time involved in investigating, checking and correcting submission errors at all levels. While not required, the CAFO owner or operator would be able to print a copy of the information submitted through the Agency's information management system to maintain on site or at a nearby location.

EPA proposes an option to waive the electronic submission requirement if the information management system is otherwise unavailable or the use of the Agency's information management system would cause undue burden or expense over the use of a paper survey form. A CAFO owner or operator would be allowed to request a waiver from this electronic reporting requirement at the time of submission and would not need to obtain approval from EPA before submitting a hard copy of the form. If submitting a hard copy of the survey form, the CAFO owner or operator would be required to check the electronic submission waiver box and explain why electronic submission causes an undue burden on page 1 of the proposed survey form. EPA requests comment on whether it should allow CAFOs to submit a hard copy of the form without requesting a waiver.

CAFOs completing a hard copy of the survey form would submit the information in proposed paragraph § 122.23(k)(2) to EPA via certified mail. The official paper survey form is attached as an appendix to this preamble. There are two ways that a CAFO owner or operator who cannot submit the information electronically would be able to access the official paper survey form and instruction sheet, which are included as Attachment A of this preamble. First, the owner or operator would be able to request a form and instructions from EPA. A form may be requested from EPA Headquarters from the EPA contact information provided in the final rule. Alternatively, the owner or operator would be able to download the form and instructions, which would be available at http://www.epa.gov/npdes/afo/. After receiving the official form, the CAFO owner or operator would complete and return the survey form to EPA using certified mail postmarked by the appropriate deadline specified by proposed paragraph § 122.23(k)(4).

EPA plans to coordinate with states, tribal governments, and interested stakeholders to notify CAFOs about the proposed official survey form and the availability of the Agency's information management system. EPA seeks comment on the data submission approach in proposed paragraph § 122.23(k)(3). EPA also seeks comment on the most effective ways to notify CAFOs, when the rule is finalized, that they must submit the information required as specified by proposed paragraph § 122.23(k)(2).

Only states with an authorized NPDES program would have the option to submit the information on behalf of CAFOs within their states. EPA requests comment on this limitation. In states where EPA is the permitting authority for CAFOs, EPA would submit the information. To participate in the voluntary submission option provided by proposed paragraph § 122.23(k)(5), states would electronically submit the information required by proposed paragraph § 122.23(k)(2) using the Agency's information management system. The electronic submission process for states is similar to the electronic submission process for CAFOs. The electronic submission process would entail submitting information via the information management system through CDX. Proposed paragraph § 122.23(k)(5)(ii) would limit states to providing only current data, including data obtain from the state's most recent application process or from a CAFO's most recent annual report. Because states choose whether to submit information on behalf of CAFOs, EPA anticipates that a state would submit the information only when electronic submission is not overly burdensome.

To clearly identify which CAFOs would not need to submit the information to EPA during the CAFO reporting period, EPA proposes to make available on the Agency's Web site ( http://www.epa.gov/npdes/ ) a final list of CAFOs for which the states have submitted information on behalf of a CAFO. The CAFOs would be listed by name, location and permit number for NPDES permitted CAFOs, and by name and location for unpermitted CAFOs. EPA would also make available the information provided by the states for each CAFO [within 60 days after the end of the 90-day state submission timeframe]. As explained in the section, When would states that choose to submit the information be allowed to provide the information to EPA and when would CAFOs be required to submit the information to EPA?, of this preamble, CAFOs that do not appear on the CAFO list would be required to submit the information [within 90 days of the list and responses being published]. CAFOs on the CAFO list would not be required to submit the information; however, they would be able review and change any information provided by a state.

States would be required to provide the electronic data files in an Extensible Markup Language (XML) format that is prescribed by EPA and compatible with Agency standards in support of regulatory data and information flows by the deadline specified in proposed paragraph § 122.23(k)(5)(iii). If states already store CAFO information within their respective databases, states would need to map their CAFO database elements to the prescribed XML CAFO schema for data exchange. States that do not store CAFO information electronically or maintain records in hardcopy would need to manually populate the CAFO survey using the Web-based submission form, thus using the same submission process as an individual CAFO owner or operator.

In contrast to implementing and enforcing the existing CAFO regulations in 40 CFR part 122, which is a required program element for authorized states, EPA emphasizes that the state submission option would be voluntary. This proposed option would not require that states divert resources from regulatory implementation and enforcement efforts to submit the information required by proposed paragraph § 122.23(k)(2) to EPA. EPA anticipates that states that choose to report on behalf of their state's CAFOs would already possess this information and therefore, would not need to undertake additional efforts to collect this information from CAFOs. EPA assumes the states that choose to provide the information to EPA would be the states for which this task would not be overly burdensome. This proposed option does not express a preference as to whether states or CAFOs submit the information. EPA plans to coordinate with states to help them prepare to submit the information if the state chooses to provide the information to EPA. EPA seeks comment on the proposed data collection approach regarding the way in which states would submit the information to EPA on behalf of CAFOs, and on whether NPDES authorized states should be required to submit the information on behalf of permitted CAFOs.

EPA also proposes an option that would first identify focus watersheds with water quality problems likely attributable to CAFOs, and then potentially identify CAFOs in a focus watershed to respond to a survey request. EPA would make every reasonable effort to assess the utility of existing publicly available data and programs to identify CAFOs by working with partners at the Federal, state, and local level before determining whether an information collection request is necessary. This proposed rulemaking option would allow EPA to list the criteria used to define the focus watersheds, specify the methods to determine the geographic scope of the focus watersheds, survey groups of CAFOs in the selected focus watersheds if the necessary information was not available from other sources, and define the amount of time required for outreach so that CAFOs in these focus watersheds know if and when they are required to respond to a survey request.

Under this proposed option, EPA would focus on collecting information regarding CAFOs in focus watersheds where there are water quality concerns likely associated with CAFOs. EPA would use existing data sources to determine which geographic areas would be identified as a focus watershed for collecting information about CAFOs and to attempt to obtain the necessary data before using its 308 authority to collect it directly from CAFOs.

EPA could use existing data sources to identify areas of water quality concern that correspond with locations of CAFOs. For example, modeling estimates could be used to identify watersheds at an appropriate Hydrologic Unit Codes (HUCs) level with high nitrogen and phosphorus loadings likely originating from agricultural sources. Publicly available data could also be used to identify watersheds with high concentrations of CAFOs. Data from these sources could be further complemented by numerous other existing data from EPA, states, universities, research centers and other sources. EPA would collaborate with states, other Federal agencies, and interested stakeholders to identify other available sources of data pertaining to CAFOs and water quality, including but not limited to watershed characteristics, sources of water quality impairments, pollutant loadings from agriculture, CAFO locations, characteristics of CAFO operations, and CAFO manure management practices when selecting focus watersheds. EPA would make its methodology for identifying focus watersheds and the results of its assessments available to the public.

EPA, other Federal, state, and local agencies, and interested stakeholders could also use the collected information to target their outreach to CAFO owners and operators, target technical and financial assistance that helps CAFOs apply the most effective manure management practices, and implement monitoring and assessments of the effects of these practices. Leveraging stakeholder resources and more precisely focusing on areas of concern could yield strong results in a shorter period.

Identifying focus watersheds could produce additional benefits in addressing water quality impairments. In focus watersheds, Federal and state agencies could partner with industry groups and non-governmental organizations to increase outreach and education to CAFO owners and operators. Additionally, this option could assist EPA and other Federal and state agencies in working with agricultural producers in the focus watershed to develop and implement a coordinated program of manure management practices needed to attain water quality goals, including state water quality standards. EPA could also evaluate results from existing or future water quality monitoring and modeling and provide these results to the public periodically. Such education and outreach efforts could promote the implementation of best management practices. Interested stakeholders could use information collected by this proposed option to target delivery of its technical and financial assistance including conservation systems tailored to the water quality needs and resource profile of each livestock producer.

With this proposed rulemaking option, EPA would collect the information specified in proposed paragraph § 122.23(k)(3) only from CAFOs located in identified focus watersheds. EPA would make every reasonable effort to assess the utility of existing publicly available data and programs to identify CAFOs by working with partners at the Federal, state, and local level before determining whether an information collection request is necessary. EPA seeks comment on this proposed option that would require CAFOs in focus watersheds to report the information specified in proposed paragraph § 122.23(k)(4) if it were not otherwise available.

EPA would identify focus watersheds based on water quality concerns associated with CAFOs, including but not limited to nutrients (nitrogen and phosphorus), pathogens (bacteria, viruses, protozoa), total suspended solids (turbidity), and organic enrichment (low dissolved oxygen). EPA also recognizes that there is a variety of sources, including sewage treatment plants, and industrial discharges that are sources of nutrients and sediment related to water quality impairments. However, for purposes of this survey, this proposed option would require that a focus watershed be one associated with water quality concerns likely to be associated with CAFOs or land application of manure.

Under section 303(d) of the CWA, states are required to assess their waters and list as impaired those that do not meet water quality standards. The 303(d) impairment listings would be one source to consult in identifying a focus watershed based on water quality concerns. EPA's ATTAINS database, which includes listings of impaired waters reported to EPA by states, pursuant to CWA section 303(d), is available to help identify impacted watersheds.

However, relying on impaired waterbody information is limited because many waterbodies have not been assessed or the impairment cause has not been identified. Additionally, in these impaired waterbodies some states have not established water quality standards for all of the pollutants in these impaired waterbodies that might be associated with CAFO discharges. In particular, many states have not set standards for nutrients, which are a key indicator for animal agriculture's impact on water quality. To address this limitation, EPA also could use other data indicating water quality concerns relating to CAFOs, such as nutrient monitoring data from state or Federal agencies. EPA solicits comment on what sources of data could be used to determine where waterbodies are likely to be impacted due to CAFOs.

EPA also could rely on existing partnerships to identify waterbodies with impacts associated with CAFOs. For example, a March, 2011 memorandum reaffirmed EPA's commitment to partnering with states and collaborating with stakeholders to make greater progress in accelerating the reduction of nitrogen and phosphorus loadings to the nation's waters. In addition, some states are working on strategies for reducing nitrogen and phosphorus pollution. U.S. EPA Memorandum, Working Effectively in Partnership with States to Address Phosphorus and Nitrogen Pollution Through Use of a Framework for State Nutrient Reductions (2011), available at http://water.epa.gov/scitech/swguidance/standards/criteria/nutrients/upload/memo_nitrogen_framework.pdf. The information collected by today's proposed rulemaking could assist states as they identify areas with water quality concerns by providing data for their strategy development and implementation. EPA requests comments on sources of information that could be used to identify watersheds with a likelihood of water quality impacts associated with CAFOs.

In addition to being areas where water quality issues of concern are likely to exist due to CAFOs, a focus watershed would be identified based on one or more of the additional following proposed criteria:

a. High priority watershed due to other factors such as vulnerable ecosystems, drinking water source supply, watersheds with high recreational value, or outstanding natural resources waters (Tier 3 waters);

b. Vulnerable soil types;

c. High density of animal agriculture; and/or

d. Other relevant information (such as an area with minority, indigenous, or low-income populations).

EPA solicits comment on whether minimum standards for selection of a focus watershed should be adopted and what such standards might be. EPA also solicits comment on whether the results of a focus watershed assessment, including decisions to focus or not to focus on an area, should be made available to the public. EPA also solicits comment on how frequently EPA should review and/or revise its identification of focus watersheds.

EPA could identify focus watersheds where waters require a greater degree of protection than other waters of the United States. These include waters with excellent water quality, including high quality waters, where water quality conditions must be maintained and protected in accordance with 40 CFR 131.12(a)(2) and outstanding national resource waters, where the waters have exceptional recreational, environmental or economic significance and must be protected in accordance with 40 CFR 131.12(a)(3). Areas near drinking water sources may also be areas identified for survey requests. EPA and its partners would work with CAFOs located within these watersheds in order to promote improved nutrient management practices and to ensure that the applicable CWA requirements are met. EPA would review state and tribal water quality standard data to locate these watersheds. EPA seeks comment on high priority watershed due to other factors as a criterion to identify a focus watershed.

Vulnerable soil types include soils with high nutrient levels. High nutrient soils in a watershed indicate that there may be more nutrients being land applied than being utilized by the crops. For example, there is an increased risk of phosphorus runoff in areas where phosphorus soil test levels are high, particularly in areas that are close to surface waters or have steep slopes. To evaluate and determine which watersheds have soils with high nutrient levels, EPA could review reports on nutrient levels such as the Mid-Atlantic Watershed Program's report of phosphorus; reports prepared for Congress, such as Animal Waste Management and the Environment: Background for Current Issues and Animal Waste Pollution in America: An Emerging National Problem. U.S. Congressional Research Service, CRS-98-451 (1998) available as of September 2011 at http://www.cnie.org/nle/CRSreports/Agriculture/ag-48.cfm ; Tom Harkin, Animal Waste Pollution in America: An Emerging National Problem, Report Compiled by the Minority Staff of the United States Senate Committee on Agriculture, Nutrition, & Forestry for Senator Tom Harkin (Dec. 1997). Data compiled by state conservation districts and data from land grant universities that evaluate the nutrient levels of soils also could be sources of information to support identifying a focus watershed because of high nutrient levels in the soil. In addition to soil nutrient level, estimating areas where manure production is more than the surrounding crop lands can utilize may also be an indicator to focus information collection requests. For example, where the amount of manure generated greatly exceeds the capacity of available land for agronomic application of manure, it is more likely that CAFOs will apply manure in excess of crop nutrient requirements or experience issues associated with inadequate storage capacity. EPA seeks comment on vulnerable soil types as a criterion to identify a focus watershed.

EPA could target outreach and information collection efforts to those geographic regions where Ag Census data, which is publicly available aggregate data, shows a high density of animals or reports a high number of operations that meet the CAFO animal size thresholds as specified by paragraph 40 CFR 122.23(b). EPA could review the aggregate data from the Ag Census to determine counties, geographic regions or sub-regions that have a high density of CAFOs. This type of census data is accessible to both EPA and the public through USDA's existing on-line report generating function and other sources. EPA seeks comment on using high densities of CAFOs as a criterion to identify a focus watershed.

EPA anticipates cases in which a need to collect information from CAFOs could arise because of factors other than the three criteria described above. For example, CAFOs often are located in minority, low-income, and indigenous communities that are or may be disproportionately impacted by environmental pollution. Supporting this statement is a report from The Lawyers' Committee for Civil Rights Under Law stated that “there are 19 times more CAFOs in North Carolina's poorest communities than in wealthier communities and five times more in nonwhite neighborhoods than in white neighborhoods.” (Daria E Neal et al. Now is the Time: Environmental Injustice in the U.S. and Recommendations for Eliminating Disparities , page 56 (2010) available as of July 2011 at http://www.lawyerscommittee.org/admin/site/documents/files/Final-Environmental-Justice-Report-6-9-10.pdf). Working with CAFOs in those communities to address water quality problems would help fulfill the Agency's environmental justice goals. EPA seeks comment on the factors listed above and seeks suggestions of other factors the Agency could use as a criteria to identify a focus watershed. EPA would consider other factors suggested for inclusion in taking final action on this proposal.

After establishing an area with a water quality impairment or water quality concerns likely associated with CAFOs, or otherwise identified as a focus watershed based on the factors identified above, EPA would make every reasonable effort to assess the utility of existing publicly available data and programs to identify CAFOs by working with partners at the Federal, state, and local level before determining whether an information collection request is necessary. However, where EPA was unable to obtain the necessary basic information from such sources, EPA would require CAFOs in the focus watershed to provide the necessary information. EPA requests comment on alternative sources of information that could be used to gather the necessary information.

Under this proposed option, EPA would seek to collect the same information as under the proposed option for using section 308 to collect information from all CAFOs, outlined in section III.(C)(2). Specifically, EPA might require CAFOs in a focus watershed to submit the following information as specified by proposed paragraph § 122.23(k)(4), if the information were not available from other sources:

(i) The legal name of the owner of the CAFO or an authorized representative, 1 their mailing address, e-mail address (if available) and primary telephone number;

(ii) The location of the CAFO's production area identified by the latitude and longitude or by the street address;

(iii) If the owner or operator has NPDES permit coverage as of [the effective date of final rule], the date of issuance of coverage under the NPDES permit, and the permit number. If the owner or operator has submitted an NPDES permit application or a Notice of Intent as of [the effective date of final rule] but has not received coverage, the date the owner or operator submitted the permit application or Notice of Intent;

(iv) For the previous 12-month period, identification of each animal type confined either in open confinement including partially covered area, or housed totally under roof at the CAFO for 45 days or more, and the maximum number of each animal type confined at the CAFO for 45 days or more; and

(v) Where the owner or operator land applies manure, litter, and process wastewater, the total number of acres under the control of the owner or operator available for land application.

Under this proposed option as well as the other proposed option, CAFOs in a targeted area would be able to assert a claim of confidential business information with respect to specific information submitted to EPA. 40 CFR part 2, subpart B. A claim of confidentiality must be made at the time of submission and in accordance with the requirements of 40 CFR 2.203(b). For further discussion of CBI, see section, What information would EPA require as part of an information gathering survey for CAFOs and why is EPA proposing to require this information?, of this preamble.

If EPA did ultimately need to use section 308 to focus on CAFOs in a specific geographic area, that area must be defined in some way so that CAFOs would know if their operation is located within the area, and thus, would be required to respond to the survey request. EPA proposes to define the targeted areas geographically by either Zip Codes, counties, HUC codes, or watersheds. EPA solicits comment on the most effective way to define a focus watershed so that CAFOs would know of their need to respond to EPA.

Where certain areas or groups of CAFOs are required to respond to an information collection request, EPA would conduct a variety of informational outreach efforts. First, EPA would publish in the Federal Register a notice describing the boundaries of the targeted area(s) and the information submission requirements for CAFOs within those areas at least [30] days before the beginning of any information submission period. EPA would also conduct extensive outreach with the regulated community and interested stakeholders to notify CAFOs in the focus watershed of their responsibility to provide information. EPA would work with the state and local authorities in providing this outreach. For example, EPA might hold public meetings in the area, place notices in newspapers, and use other available local media. EPA notes that the owners or operators of AFOs that have not been designated and that do not confine the required number of animals to meet the definition of a Large or Medium CAFO would not be required to submit information as specified in proposed paragraph § 122.23(k)(4) to EPA.

Under proposed paragraph § 122.23(k)(3), EPA would conduct outreach to CAFOs in the targeted area for at least [30 days] prior to the start of any reporting period to notify operations that they are required to report the information specified in proposed paragraph § 122.23(k)(4) to EPA. EPA seeks comment on ways to inform and reach CAFOs in targeted areas if they are required to provide information. EPA also seeks comment on the timeframe provided for outreach to CAFOs in targeted areas.

If EPA needed to use 308 authority to collect information from CAFOs, after the end of EPA's outreach period for CAFOs in the targeted area, CAFOs would have [90 days] to submit the information to EPA. EPA would identify the specific deadline for submitting the information during EPA's outreach period as well as by publishing the deadline in the Federal Register notice, which is required at least [30] days before the beginning of any information submission period.

EPA seeks comment on the amount of time a CAFO in a targeted area would need to submit the information to EPA.

If EPA needed to use 308 authority to collect information from CAFOs, CAFOs in focus watersheds would submit the information in the same manner as specified in proposed option 1 for collecting information from all CAFOs. Specifically, proposed paragraph § 122.23(k)(5) would require the owner or operator of a CAFO to submit the official survey form electronically using the Agency's information management system available on EPA's Web site. EPA proposes to waive the electronic submission requirement if the information management system is otherwise unavailable or the use of the Agency's information management system would cause undue burden or expense over the use of a paper survey form. See section How would CAFOs submit the information to EPA of this preamble for a detailed discussion. EPA seeks comment on the data submission approach in proposed paragraph § 122.23(k)(5).

Under Option 1, and under Option 2 in cases where EPA used its section 308 authority to collect information from CAFOs in focus watersheds, CAFO owners or operators that failed to submit the information in accordance with the requirements specified in proposed paragraph § 122.23(k) would be in violation of the CWA. Section 309 of the CWA provides for administrative, civil and criminal penalties for violations of section 308 of the Act. 33 U.S.C. 1319. EPA assesses monetary penalties associated with civil noncompliance using a national approach as outlined by the Agency's general penalty policy. More information on the amounts and calculations of civil penalties is available at http://cfpub.epa.gov/compliance/resources/policies/civil/penalty/. Additional information on criminal noncompliance, is available at http://cfpub.epa.gov/compliance/resources/policies/civil/penalty/.

The objective of this proposed action is to improve and protect water quality impacted by CAFOs. However, EPA recognizes that there may be other ways to achieve this objective, and the Agency solicits comment on alternative approaches to meet the objectives of this proposed rule. Such alternative approaches may require rulemaking. EPA would consider any such suggested alternative approaches in developing the final rule.

EPA describes three such alternative approaches in this section and seeks public comment on these approaches. EPA seeks public comment on alternative approaches to a data collection request for CAFOs including: (1) An approach that would obtain data from existing data sources, (2) an approach that would expand EPA's network of compliance assistance and outreach tools and (3) an approach requiring NPDES authorized states to submit the information as specified by proposed paragraph § 122.23(k)(2) to EPA, which would require rulemaking. EPA also seeks comment on other alternative approaches besides the three discussed herein that could achieve the same objectives. Any one of these three alternative approaches could be enhanced by stewardship and recognition programs, education or assistance programs or incentive based programs, carried out in coordination with other partners such as states, industry or USDA, and could result in improvements in industry practices more quickly than a data collection effort. EPA solicits comment on programs such as these that could be employed to ensure that CAFOs are implementing measures to protect water quality.

One alternative approach to the proposed rule would be to rely on the use of available existing sources of data on CAFOs, such as information from USDA, states, environmental organizations and other interested stakeholder groups. The discussion below describes the sources of information that currently exist, identifies some of the limitations EPA faces in using these sources and seeks comment on ways in which EPA could leverage these sources collectively to address impacts from CAFOs.

The U.S. Department of Agriculture is a leading source of national, publicly aggregated agricultural data. Federal law prohibits USDA from disclosing or using data collected unless the information has been converted into a statistical or aggregate form that does not allow the identification of the person who supplied particular information 7 U.S.C. 2276(a); see also 7 U.S.C. 8791(b)(2)(A); Confidential Information Protection and Statistical Efficiency Act, 44 U.S.C. 3501(2002). Accordingly, USDA withholds any county-level data if that information would identify individual producers. In counties where no data are available, the USDA indicates where data is omitted because of disclosure limitations or because no CAFOs are in operation.

EPA currently uses the publicly available aggregate data from USDA categorized by animal size thresholds defined by the CAFO rule to refine estimates of the CAFO universe, assess animal densities by counties, and identify the number of operations in those counties. EPA also can determine from the USDA aggregate data the cumulative number of acres that are available for land application at CAFOs, as the total number of acres by county but not by facility. To obtain facility-specific data, EPA is considering ways in which the Agency could combine the publicly available, aggregated data from USDA with other data sources to obtain a comprehensive, consistent national inventory of CAFOs to assess and address their impacts on water quality.

State NPDES permitting programs should have data on permitted CAFOs, which could provide answers to the proposed survey questions in today's notice. EPA estimates that approximately 8,000 CAFOs out of a total universe of 20,000 CAFOs have obtained permit coverage under the NPDES program. Authorized states have information from permit applications and annual reports for CAFOs with permit coverage. Although not all states have made this information electronically accessible, some states have online databases or maps that display CAFO data. For example, Missouri requires permit coverage for all CAFOs as well as a subset of operations with less than 1,000 animal units and displays a map of these operations in relation to waters of the state ( http://www.dnr.mo.gov/env/wpp/afo.htm ). Missouri Department of Natural Resources uses this information to link permitted operations with specific classified stream segments in order to facilitate water quality based planning, total maximum daily load (TMDL) development and reports required under section 305(b) of the CWA. Similarly, in North Carolina all animal feeding operations with a permit, whether under the NPDES program or under other state permitting programs, are listed in a spreadsheet that can be downloaded ( http://portal.ncdenr.org/web/wq/aps/afo/perm ). The spreadsheet contains information on the number of animals at the operation, type of permit issued to an operation and latitude and longitude information for 2,711 operations.

While those two states are examples of comprehensive sources of information that are electronically available, other states maintain CAFO records in paper copy, which may not be complete or readily available. In addition, information on unpermitted CAFOs generally is not available via state records. Currently, EPA provides registered users, such as states, the ability to track permit issuance, permit limits and monitoring data through the Integrated Compliance Information System (ICIS) or through the Online Tracking Information System (OTIS), which integrates ICIS data with information from other databases such as EPA's Permit Compliance System (PCS). EPA estimates that only 15 to 20 percent of CAFO permit data is stored in one of these two systems because many states use separate databases to manage and implement permitting programs. A further challenge in aggregating state permitting data is that the information collected is not based on a national standardized reporting scheme. Reporting inconsistencies across jurisdictions would prevent EPA from compiling a consistent national summary of CAFO information. Thus, a national inventory based solely on state data would not be comprehensive.

EPA solicits comment on ways in which data from state permitting authorities could be used in conjunction with other sources of information, such as the publicly available aggregate data from USDA, to obtain a comprehensive, consistent national inventory of CAFOs to assess and address their impacts on water quality.

Permitting programs administered by the state are not the sole source of state information on CAFOs. Many state agriculture departments have registration or licensing programs that collect information from livestock farms separately from environmental permitting requirements. Such sources could be used as a source of information for the unpermitted universe. However, EPA's investigation of those data sources indicates that registration or licensing programs typically provide only contact information.

Despite the limited information available from registration and licensing programs, these sources may nevertheless provide a comprehensive list of facilities in a particular sector, which EPA could use to supplement information available from a state permitting program. For example, in Arkansas, state law requires poultry operations confining 2,500 or more birds on any given day to register with the county conservation districts. Information that could be obtained from this registration list includes: Number and kind of poultry housed; location of the operation; litter management system used and its capacity; acreage controlled by the operation; litter land applied during the last year; amount and destination of litter transferred; amount of litter utilized by the producer and the type of utilization; and the name of the poultry operation's processor.

Similarly, dairy licensing programs contain site-specific information, which may be publicly available. For example, the Ohio Department of Agriculture requires milk producers of grade A and manufactured milk to obtain a license prior to operation. As part of this process, a milk producer must provide evidence of a safe water supply and submit prepared plans for the milkhouses, milking barns, stables and parlors at the operation. Ohio Department of Agriculture provides a list by county of the number of active dairy farms in the state ( http://www.agri.ohio.gov/apps/DairyFarmsReport/FarmsReportPage.aspx ). This information could be used in conjunction with the USDA's publicly available aggregate data to determine CAFO locations by county in Ohio.

EPA seeks comment on the availability of registration and licensing lists and whether information obtained from such programs could be shared with EPA. If so, such data could also be used as part of a comprehensive effort to address CAFO impact on water quality. EPA seeks input on ways in which data from these lists could be used in conjunction with other sources of information, such as USDA's publicly available aggregated data, to obtain a comprehensive, consistent national inventory of CAFOs to assess and address their impacts on water quality.

EPA, states, and academic institutions have used satellite imagery to locate and map CAFOs. For example, through a cooperative agreement with EPA, Jacksonville State University and Friends of Rural Alabama (JSU and FRA) created the American Environmental Geographic Information System ( http://www.aegis.jsu.edu/ ) to assist in watershed analyses and planning. This system provides maps and environmental data for a variety of industries, including animal feeding operations, in a select number of eastern states. JSU and FRA visually scanned satellite images for structures commonly used to confine animals. Clusters of long, white buildings were identified as poultry operations or as swine operations, when an open-air pit or lagoon system was visible.

EPA also has used aerial flyovers to obtain real time aerial photography for a variety of purposes, including identifying and updating the universe of CAFOs, identifying potential illegal discharges from CAFOs to waters of the United States. and prioritizing follow-up site inspections. While resource intensive, flyovers can be used to cover specific geographic areas and/or areas with difficult terrain.

These methodologies present certain limitations as a source of data on CAFOs. While satellite imagery and aerial photographs may identify location information for some animal feeding operations, a user may not be able to determine whether structures actually contained animals, whether an operation met the regulatory definition of a CAFO or had NPDES permit coverage. Therefore, this information source is most useful when supplemented by on-the-ground efforts to confirm site-specific information. For example, location information from aerial photography or satellite images may be combined with state and county Web sites that provide tax parcel information, building histories and permit histories, so as to identify animal feeding operations that may meet the CAFO requirements for obtaining a permit. EPA solicits comment on other ways to augment information from satellite images and aerial photography location information to obtain a comprehensive, consistent national inventory of CAFOs to assess and address their impacts on water quality.

EPA's Assessment, TMDL Tracking and Implementation System (ATTAINS) database ( http://www.epa.gov/waters/ir ) displays water quality findings reported by the states under section 305(b) and section 303(d) of the Clean Water Act. These findings represent state decisions as to whether assessed waters are meeting their water quality standards. Assessment decisions are made by the states based primarily on monitoring targeted to areas known or suspected to be impaired and may not fully represent all conditions within a state. While not all waters are assessed, the database identifies which watersheds are impaired. The findings are updated in the database as new state Integrated Reports (305b and 303d) are received, reviewed and posted and may reflect 2010, 2008, or 2006 data from states, depending on their latest submission. EPA seeks comment on ways in which impairment information from this source can be compared to CAFO data, such as animal density or number of operations, to inform efforts to address water quality impacts from CAFOs.

Although on a separate track from this proposed rule, EPA is currently in the process of developing a rulemaking to amend reporting requirements for livestock operations on air emissions under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) section 103 and (Emergency Planning & Community Right-to-Know Act) EPCRA section 304. This information collection effort may offer an alternative means of collecting data on livestock operations that would meet the Agency's Clean Water Act needs. As the Agency moves forward with the CERCLA/EPCRA reporting requirements proposed rulemaking, there is an opportunity to explore how to leverage reporting to EPA from livestock operations to meet information needs under CERCLA/EPCRA and the CWA simultaneously. EPA solicits comment on ways in which this could be achieved to obtain a comprehensive, consistent national inventory of CAFOs to assess and address their impacts on water quality.

Nongovernmental entities have published reports on CAFOs, such as the Food & Water Watch Report— Factory Farm Nation: How American Turned Its Livestock Farms into Factories and the Pew Commission report— Putting Meat on the Table: Industrial Farm Animal Production in America. These reports provide helpful background information and case studies. EPA currently uses the results of these studies to identify research needs but solicits comments on how such reports could enhance additional EPA efforts to reduce water quality impairments from CAFOs.

Extension agents and conservation programs also have information on CAFOs. EPA solicits comment on how the Agency could work with state cooperative extension programs, land grant universities and other conservation programs to gather information on CAFOs and to coordinate efforts to protect water quality. In general, these sources only release aggregated data and may not specifically focus on operations that meet EPA's definition of a CAFO.

In summary, through this alternative approach, EPA could combine a variety of existing data sources to determine where CAFOs are located and overlay this information with existing data on impaired waterbodies to determine where regulatory activities should be focused. While existing data sources are not consistent and are not comprehensive nationwide, the Agency seeks comment on how these sources, as well as additional sources not described herein, could be used collectively to protect water quality from CAFO discharges rather than promulgating a survey requirement for all CAFOs to provide information.

Under this alternative approach, EPA would expand its network of compliance assistance, outreach tools and partnerships with industry to assist in addressing the most significant water quality problems. Comprehensive compliance assistance and outreach efforts are tools a regulatory program can use in partnerships with industry to proactively protect and maintain water quality.

EPA recognizes that stewardship and recognition programs, education or technical assistance programs and incentive based programs, often carried out in coordination with other partners such as states, industry, or USDA, could result in improvements in industry practices more quickly than a data collection effort. Two current examples of such programs are: (1) The Ag Center, ( http://www.epa.gov/agriculture ), which provides compliance and environmental stewardship information related to animal feeding operations and partners with USDA and state land grant universities to promote environmental stewardship and improve manure and nutrient management practices; and (2) EPA's partnership with USDA's extension program, offering a wide range of compliance and environmental stewardship information for livestock operators through the Livestock and Poultry Environmental Learning Center available at http://www.extension.org/animal_manure_management. EPA solicits comment on how best to use alternative mechanisms such as these to ensure CAFOs are implementing measures to protect water quality. This approach would not require a rulemaking; rather it would focus on the use of activities that already are authorized under existing regulations. The success of such efforts would depend in large part on coordination with EPA's state partners and the cooperation and assistance of industry and environmental groups.

This alternative regulatory approach, is a variation of the proposed approach and would require NPDES authorized state regulatory agencies to submit the information proposed by paragraph § 122.23(k)(2). Many states may know the universe of CAFOs in their state to ensure proper implementation and enforcement of the CWA's permitting requirements and to protect water quality.

Although EPA recognizes that states may not have information on all CAFOs in their state, this alternative approach would require states to provide information for CAFOs for which they do have information as part of their CAFO regulatory programs. As a result, the data EPA would collect would not necessarily be comprehensive. Under this approach, EPA would only require information from CAFOs where a state failed to provide the required information to EPA.

It is likely that a number of states already have the information that would be required by proposed paragraph § 122.23(k)(2) for NPDES permitted CAFOs. Some states require CAFOs that have not sought coverage under an NPDES permit to obtain a separate state permit. For example, Maryland requires CAFOs that discharge to obtain NPDES CAFO permits and CAFOs that do not discharge to obtain state Maryland Animal Feeding Operation (MAFO) permits. Other states may have access to other data sources for CAFOs that could be used to provide the information.

Under this alternative approach, each state would be required to report the information to EPA. States would be required to submit the information within a given timeframe, and EPA would compile that information into a database. CAFOs would be required to provide whatever information a state fails to provide.

EPA seeks comment on whether authorized states should be required to provide information from their CAFO regulatory programs on behalf of the CAFOs within their boundaries. EPA also seeks comment on whether it should allow states to submit data from CAFO from sources other than a state regulatory program. EPA also seeks comment on, if it selects this alternative, whether EPA should allow or require CAFOs to review the information in the database.

When EPA issued the revised CAFO regulations on February 12, 2003, it estimated annual pollutant reductions due to the revisions at 56 million pounds of phosphorus, 110 million pounds of nitrogen and two billion pounds of sediment. This proposed rulemaking would not alter the benefits calculated in the 2003 rule. The effect of the proposed rule would be to enable full attainment of the benefits calculated in the 2003 rule by furnishing EPA with information on the universe of CAFOs. To date, EPA estimates that approximately 58 percent of CAFOs do not have NPDES permits. The information collected under this proposal would help ensure that CAFOs that discharge have NPDES permit coverage necessary to achieve these environmental benefits.

The proposed rulemaking would not alter any permitting requirements or the technical requirements under the Effluent Limitations Guidelines and Standards (ELGs), so CAFOs would not incur any compliance costs associated with modifications to structures or operational practices. The only cost associated with this rule to affected entities is the reporting burden to provide the required information to EPA as specified in this proposal.

Since there is no change in technical requirements, cost impacts to CAFOs are exclusively due to changes in the information collection burden. To determine the administrative burden for the Paperwork Reduction Act (PRA) analysis, the Agency projected the burden that CAFOs would incur because of the new requirements.

To complete this projection, the Agency started with its current estimate of the total number of CAFOs in the U.S. and then examined the administrative burden that would be incurred by these operations. It is important to note that while EPA's estimates of CAFOs are adequate for purposes of completing the impact analyses required under statute and executive order, the data are insufficiently detailed for purposes of identifying precise locations of specific CAFOs or clusters of CAFOs, understanding their operational practices and assessing their potential environmental impacts.

EPA's most recent information on the number of CAFOs in the U.S. shows that as of 2010 there were approximately 20,000 CAFOs, both permitted and unpermitted. To estimate the reporting burden faced by these CAFOs under the proposed rule requirements, EPA examined its prior PRA analyses. These analyses had assumed that CAFOs applying for NPDES permit coverage would incur a nine hour administrative burden to complete and file NPDES permit applications or notices of intent. Based on comparing the reporting items for permit applications to the reporting items in the proposed rulemaking, EPA estimated that a CAFO would need one hour to gather and submit the information on the proposed survey form to EPA as indicated in the proposed rulemaking. This burden estimate reflects both the time to understand the reporting requirements as well as time to complete the survey form electronically or by paper, when necessary.

EPA's PRA analysis combines the updated estimates of numbers of CAFOs and the estimates of the reporting burden to project that CAFO operators would collectively experience an increase in total annual administrative burden of approximately $0.2 million under the first proposed option where all CAFOs would submit their information to EPA. The costs associated with the option to collect information only from CAFOs in focus watersheds would be a subset of these costs.

Under the requirements as laid out in proposed paragraph § 122.23(k)(5) for the first proposed option, state permitting authorities would not incur any administrative burden arising out of the rulemaking since CAFOs would report their information directly to EPA. States would have the option of submitting information on their CAFOs electronically; however, EPA anticipates that the states that would choose this option are those for whom this type of batch reporting would not impose an undue burden.

This Federal Register notice also includes an alternative approach that would require states to provide information on CAFOs in their state. EPA costed this alternative approach separately in the proposed rule supporting analysis. Under this approach, the reporting burden would shift from CAFOs to states since states would be responsible for reporting the data proposed to be collected to EPA. To complete a cost estimate for this approach, EPA estimated a cumulative incremental cost based on an assumption that all states would submit their CAFO records as paper files to the Agency. For purposes of costing this scenario, EPA estimated that it would take states one hour to prepare and submit records for 20 facilities. This labor burden combined with photocopying costs yielded a total state respondent average incremental annual cost of $16,391. EPA solicits comment on the burden analysis regarding the requirement for states to submit CAFO information from their regulatory programs.

The documentation in the public record on the PRA analysis for this proposed rulemaking discusses more fully the assumptions used to project the associated administrative burden, including the burden faced by CAFOs that subsequently may need to update any information submitted previously.

Under Executive Order 12866 (58 FR 51,735; October 4, 1993), this proposed action is a “significant regulatory action.'' Accordingly, EPA submitted this proposed action to the Office of Management and Budget (OMB) for review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011) and any changes made in response to OMB recommendations have been documented in the docket for this proposed action.

In addition, EPA prepared an analysis of the potential costs and benefits associated with this proposed action. This analysis is summarized in Section IV of this preamble above, entitled Impact Analysis. A copy of the supporting analysis is available in the docket for this action.

The information collection requirements in this proposed rule have been submitted for approval to the Office of Management and Budget (OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The Information Collection Request (ICR) document prepared by EPA was assigned EPA ICR No. 1989.08.

The proposed rule would require CAFOs to provide EPA with basic facility information. This action would provide EPA with the information on the universe of CAFOs it needs to ensure compliance with the CWA. EPA projects that the proposed rule would cause CAFO operators to experience an increase in annual administrative burden of 6,960 labor hours annually, which translates into an increased annual administrative cost of $0.2 million. The increase in administrative costs is based on projecting submission costs for all CAFOs, and is derived exclusively from the recordkeeping and reporting requirements associated with submitting the required information to EPA as detailed in the proposed rule. EPA assumed for purposes of the PRA analysis that a CAFO would incur a labor burden of one hour for filing the required information. The proposed action would not impose any new capital costs on affected entities. The burden for the initial reporting is averaged over three years for purposes of calculating burden under the PRA. EPA requests comment on its estimate of burden and costs for CAFOs to comply with the reporting requirements in the two co-proposed rule options.

Under the proposed rule, states would have the option of providing EPA with datasets on their CAFOs with existing NPDES permits. However, the effort to generate these datasets is not costed as part of the ICR since EPA assumes that the states that choose to provide the datasets to EPA would be the ones for whom this task would not be overly burdensome, and the burden the states would incur would be in lieu of a comparable burden avoided by CAFOs that the states reported for.

Additional details on the assumptions and parameters of the PRA analysis are available in the ICR document referenced above, which is available in the docket supporting this proposed rulemaking. Burden is defined at 5 CFR 1320.3(b).

A Federal agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.

To comment on the Agency's need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimizing respondent burden, EPA has established a public docket for this proposed rule, which includes the ICR, under Docket ID number EPA-HQ-OW-2011-0188. Please submit any comments related to the ICR to EPA and OMB. See ADDRESSES section at the beginning of this notice for where to submit comments to EPA. Send comments to OMB at the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street, NW., Washington, DC 20503, Attention: Desk Office for EPA. Since OMB is required to make a decision concerning the ICR between 30 and 60 days after October 21, 2011, a comment to OMB is best assured of having its full effect if OMB receives it by November 21, 2011. The final rule would respond to any OMB or public comments on the information collection requirements contained in this proposal.

The Regulatory Flexibility Act (RFA) generally requires a Federal agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule would not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations and small governmental jurisdictions.

For purposes of assessing the impacts of this rule on small entities, small entity is defined as: (1) A small business based on Small Business Administration (SBA) size standards at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district, or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.

After considering the economic impacts of this rule on small entities, I certify that this proposed action would not have a significant economic impact on a substantial number of small entities. This proposed rule does not change any of the substantive requirements for CAFO operators. While it does increase the net paperwork burden faced by facilities compared to the burden imposed under the 2003 CAFO rule, these incremental costs are small compared to the existing paperwork burden faced by CAFOs and represent an increase in annualized compliance costs that is significantly less than one percent of estimated annual sales for any of the affected entities. To reach this determination, EPA examined sales figures reported in USDA's publicly available aggregated data and concluded that it is unlikely that the estimated upper-bound burden impact of one hour per CAFO would exceed one percent of the average annual sales of any of the livestock operations for whom sales figures were reported.

Additionally, this proposed rule would not affect small governments, as the permitting authorities are state or Federal agencies and the information would be submitted directly to EPA.

EPA continues to be interested in the potential impacts of the proposed rule on small entities and welcomes comments on issues related to such impacts.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on state, local, tribal governments and the private sector. Under section 202 of UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “federal mandates” that may result in expenditures by state, local and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective, or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates and informing, educating and advising small governments on compliance with the regulatory requirements.

EPA has determined that this proposed rule does not contain a Federal mandate that may result in expenditures of $100 million or more for state, local and tribal governments, in the aggregate, or the private sector in any one year. The proposed rule also presents an alternative approach that would require states to submit information on CAFOs. EPA determined that this alternative approach, which principally would involve photocopying, would also not result in a burden above the threshold. Thus, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

EPA has determined that this rule would contain no regulatory requirements that might significantly or uniquely affect small governments. There are no local or tribal governments authorized to implement the NPDES permit program and the Agency is unaware of any local or tribal governments who are owners or operators of CAFOs. Thus, this rule is not subject to the requirements of section 203 of UMRA.

This proposed action does not have federalism implications. Since the reporting under the proposed rule would require CAFOs to submit their information directly to EPA, it would not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. The proposed rule would offer states the option of submitting information on behalf of the state's CAFOs. However, the proposed rule would not require states to adopt this option; therefore, EPA does not consider this proposed rule to have a substantial impact on states. Thus, Executive Order 13132 does not apply to this proposed action.

EPA is requesting comment on alternative approaches for gathering CAFO information. One of these approaches would require States to submit information on their CAFOs. EPA examined costs associated with this alterative and concluded based on a conservative estimate of burden impacts that the alternative would not trigger federalism concerns.

In the spirit of Executive Order 13132 and consistent with EPA policy to promote communications between EPA and state and local governments, EPA specifically solicits comment on this proposed action from state and local officials.

This proposed action does not have tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000), because there are currently no tribal governments authorized for the NPDES program. In addition, EPA is not aware of any Indian tribal governments that own CAFOs that would be subject to the proposed reporting requirements. Thus, Executive Order 13175 does not apply to this action.

This proposed rulemaking could have the effect of providing increased opportunities for the tribal governments to obtain information on all CAFOs within their governmental boundaries and, as such, may facilitate their interactions with entities of possible concern.

In the spirit of Executive Order 13175 and consistent with EPA policy to promote communications between EPA and tribal governments, EPA would also distribute information on the outcome of the rulemaking process once the rulemaking action is finalized.

EPA solicits comment on the Agency's approach to meeting its obligations under E.O. 13175 for the proposed action.

Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19,885; April 23, 1997) applies to any rule that: (1) Is determined to be “economically significant” as defined under Executive Order 12866 and (2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.

This proposed rule is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866 and because the Agency does not have reason to believe the environmental health or safety risks addressed by this proposed action present a disproportionate risk to children. The benefits analysis performed for the 2003 CAFO rule determined that the rule would result in certain significant benefits to children's health. (Please refer to the Benefits Analysis in the record for the 2003 CAFO final rule.) This proposed action does not affect the environmental benefits of the 2003 CAFO rule.

This rule is not a “significant energy action” as defined in Executive Order 13211 (66 FR 28355 (May 22, 2001)), because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. EPA has concluded that this rule is not likely to have any adverse energy effects since CAFOs in general do not figure significantly in the energy market, and the regulatory revisions finalized in this rule are not likely to change existing energy generation or consumption profiles for CAFOs.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g., materials specifications, test methods, sampling procedures and business practices) that are developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.

This proposed rulemaking does not involve the use of technical standards. Therefore, EPA is not considering the use of any voluntary consensus standards.

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

EPA has determined that the information collected by this rule could benefit minority and low-income populations by providing information on nearby CAFOs with potential effects on neighboring communities. In addition, the Agency anticipates that the information to be collected under the rulemaking would aid EPA's consideration of environmental justice concerns as the Agency moves forward with implementation of the NPDES CAFO program.

As part of EPA's continued effort to meet its obligations under E.O. 12898, the Agency has completed an analysis to identify those portions of the country where there are both large numbers of CAFOs as well as concentrations of minority and low-income populations. These regions include parts of the Carolina lowlands, central California and the Delmarva Peninsula on the Chesapeake Bay.

EPA solicits comment on the ability of the questions as proposed to support consideration of environmental justice (EJ) concerns related to future design and implementation of the NPDES CAFO program. EPA seeks comment on what other questions beyond those proposed would support EJ concerns and be valuable to EJ communities. EPA welcomes suggestions for EJ groups who could help shape the Agency's outreach to EJ communities. EPA also seeks comment on its analysis supporting E.O. 12898, which shows where large numbers of CAFOs and EJ communities co-exist. The supporting analysis is contained in the docket for the proposed rulemaking.

Terms in italics below are specifically defined in the Survey Form Definitions section of these instructions. Refer to this section for specific meaning of these terms.

Owners of concentrated animal feeding operations (CAFOs) must use this survey form to submit the information required by 40 CFR 122.23(k).

Owners of CAFOs are required to submit the information specified at 40 CFR 122.23(k) regardless of whether the CAFO is required to seek NPDES permit coverage. For the purposes of this survey, a CAFO means an animal feeding operation (AFO) that is defined as a Large CAFO or Medium CAFO by 40 CFR 122.23(b), or that is designated as a CAFO in accordance with 40 CFR 122.23(c). Further definitions for the purpose of this form are in the section, Survey Form Definitions. The owners of AFOs that have not been designated and that do not confine the required number of animals to meet the definition of a Large or Medium CAFO are not required to submit information.

Send the completed and signed survey form to:

Under proposed option 1, owners of CAFOs must submit the survey form to EPA [within 90 days after EPA makes available a list of CAFOs for which a state has provided the information] and under proposed option 2, owners of CAFOs must submit the survey form by [the deadline specified in a separate Federal Register Notice]. NPDES authorized states that choose to submit the information on behalf of a CAFO would be required to submit the information to EPA [within 90 days after the effective date of the rule]. Subsequently, under proposed option 1, owners of CAFOs not authorized by an NPDES permit must resubmit the survey form between [January 1 and June 1, 2022] and every subsequent tenth year thereafter between [January 1 and June 1]. The survey form provides a checkbox that indicates such resubmissions.

CAFOs must provide the information on this survey form electronically except where electronic submission would cause an undue burden or expense. Electronic submissions may be made via the Agency's information management system. Please go to www.epa.gov/npdes/afo for more information on how to submit.

However, EPA is making paper filing available in recognition that not everyone has internet access. If using a hardcopy of the form to submit the information, use blue or black ink only to complete a hardcopy of the survey form. Mark the electronic submission waiver box and provide a reason why the respondent is providing the information by completing and submitting a hard copy of this survey form.

Please print clearly. Mark all applicable checkboxes with an “X”.

Changes at the operation after the owner submits this information are not required to be reported, except that CAFOs not authorized by an NPDES permit must resubmit the survey form every 10 years as specified above.

Regulations governing the confidentiality of business information are contained in the Code of Federal Regulations (CFR) at Title 40 Part 2, Subpart B. Under sections 2.208, business information is entitled to confidential treatment if, “the business has satisfactorily shown that disclosure of the information is likely to cause substantial harm to the business's competitive position. You may assert a business confidentiality claim covering part or all of the information you submit, as described in 40 CFR 2.203(b):

“(b) Method and time of asserting business confidentiality claim. A business which is submitting information to EPA may assert a business confidentiality claim covering the information by placing on or attaching to the information, at the time it is submitted to EPA, a cover sheet, stamped or typed legend, or other suitable form of notice complying language such as `trade secret', `proprietary,' or `company confidential.' Allegedly confidential portions of otherwise nonconfidential documents should be clearly identified by the business, and may be submitted separately to facility identification and handling by EPA. If the business desires confidential treatment only until a certain date or until the occurrence of a certain event, the notice should so state”

Table of Contents I. What are the actions EPA is proposing to take? II. What is the background for EPA's proposed actions? III. What are the criteria for redesignation? IV. Why is EPA proposing these actions? V. What is EPA's analysis of the request? VI. What is EPA's analysis of Kentucky's proposed NO X and PM 2.5 MVEBs for the Northern Kentucky Area? VII. What is the status of EPA's adequacy determination for the proposed NO X and PM 2.5 MVEBs for 2015 and 2021 for the Northern Kentucky Area? VIII. What is EPA's analysis of the proposed 2008 base year emissions inventory for the Northern Kentucky Area? IX. Proposed Action on the Redesignation Request and Maintenance Plan SIP Revision Including Proposed Approval of the 2015 and 2021 NO X and PM 2.5 MVEBs for the Northern Kentucky Area. X. What is the effect of EPA's proposed actions? XI. Statutory and Executive Order Reviews I. What are the actions EPA is proposing to take?

In this action, EPA is proposing to make a determination that this Area is continuing to attain the 1997 Annual PM 2.5 NAAQS  1 and to take several additional actions related to Kentucky's request to redesignate the Northern Kentucky Area which are summarized as follows and described in greater detail throughout this notice of proposed rulemaking: (1) To redesignate the Northern Kentucky Area portion of the Tri-state Cincinnati-Hamilton Area to attainment for the 1997 Annual PM 2.5 NAAQS; (2) to approve, under CAA section 172(c)(3), the emissions inventory submitted with the maintenance plan for Northern Kentucky; and (3) to approve, under section 175A of the CAA, the Northern Kentucky Area's 1997 Annual PM 2.5 NAAQS maintenance plan into the Kentucky SIP, including the associated MVEBs. In addition, and related to today's actions, EPA is also notifying the public of the status of EPA's adequacy determination for the Northern Kentucky Area MVEBs for the PM 2.5 NAAQS.

First, EPA proposes to determine that, if EPA's proposed approval of the 2008 baseline emissions inventory for the Northern Kentucky Area is finalized, the Area has met the requirements for redesignation under section 107(d)(3)(E) of the CAA. In this action, EPA is proposing to approve a request to change the legal designation of Boone, Campbell, and Kenton Counties from nonattainment to attainment for the 1997 Annual PM 2.5 NAAQS. The emissions inventory for the Northern Kentucky Area is being proposed for approval today.

Second, EPA is proposing to approve under the CAA, Kentucky's 2008 emissions inventory for the Northern Kentucky Area (under CAA section 172(c)(3)). Kentucky selected 2008 as the attainment emissions inventory year for the Northern Kentucky Area. This attainment inventory identifies a level of emissions in the Area that is sufficient to attain the 1997 Annual PM 2.5 NAAQS.

Third, EPA is proposing to approve Kentucky's 1997 Annual PM 2.5 NAAQS maintenance plan for the Northern Kentucky Area (such approval being one of the CAA criteria for redesignation to attainment status). Since maintenance of the standard in the Northern Kentucky Area is based in large part on maintaining control of power plant emissions, promulgation of the Transport Rule, also known as the Cross State Air Pollution Rule (CSAPR), 2 was necessary to make recent reductions in power plant emissions (or equivalent reductions at other power plants) permanent and enforceable. The maintenance plan is designed to help keep the Northern Kentucky Area in attainment of the 1997 Annual PM 2.5 NAAQS through 2021. Consistent with the CAA, the maintenance plan that EPA is proposing to approve today also includes NO X and PM 2.5 MVEBs for the years 2015 and 2021 for the Northern Kentucky Area. EPA is proposing to approve (into the Kentucky SIP) the 2015 and 2021 MVEBs that are included as part of Kentucky's maintenance plan for the 1997 Annual PM 2.5 NAAQS.

Further, EPA proposes to make the determination that the Tri-state Cincinnati-Hamilton Area is continuing to attain the 1997 Annual PM 2.5 NAAQS and that all other redesignation criteria have been met for the Northern Kentucky Area. The bases for EPA's determination for the Area are discussed in greater detail below.

EPA is also notifying the public of the status of EPA's adequacy process for the newly-established NO X and PM 2.5 MVEBs for 2015 and 2021 for the Northern Kentucky Area. The adequacy comment period for the Northern Kentucky Area MVEBs began on February 14, 2011, with EPA's posting of the availability of this submittal on EPA's Adequacy Web site ( http://www.epa.gov/otaq/stateresources/transconf/currsips.htm ). The Adequacy comment period for these MVEBs closed on March 16, 2011. No adverse comments were received during the Adequacy public comment period. Please see section VIII of this proposed rulemaking for further explanation of this process and for more details on the MVEBs.

Today's notice of proposed rulemaking is in response to Kentucky's January 27, 2011, SIP submittal, which requests redesignation of the Northern Kentucky Area portion of the Tri-state Cincinnati-Hamilton Area to attainment for the 1997 Annual PM 2.5 NAAQS and addresses the specific issues summarized above and the necessary elements for redesignation described in section 107(d)(3)(E) of the CAA.

Fine particle pollution can be emitted directly or formed secondarily in the atmosphere. The main precursors of PM 2.5 are sulfur dioxide (SO 2 ), NO X , ammonia and volatile organic compounds (VOCs). Unless otherwise noted by the State or EPA, ammonia and VOCs are presumed to be insignificant contributors to PM 2.5 formation, whereas SO 2 and NO X are presumed to be significant contributors to PM 2.5 formation. Sulfates are a type of secondary particle formed from SO 2 emissions of power plants and industrial facilities. Nitrates, another common type of secondary particle, are formed from NO X emissions of power plants, automobiles, and other combustion sources.

On July 18, 1997, EPA promulgated the first air quality standards for PM 2.5 . EPA promulgated an annual standard at a level of 15 micrograms per cubic meter (μg/m 3 ), based on a 3-year average of annual mean PM 2.5 concentrations. In the same rulemaking, EPA promulgated a 24-hour standard of 65 μg/m 3 , based on a 3-year average of the 98th percentile of 24-hour concentrations. On October 17, 2006, at 71 FR 61144, EPA retained the annual average NAAQS at 15 μg/m 3 but revised the 24-hour NAAQS to 35 μg/m 3 , based again on the 3-year average of the 98th percentile of 24-hour concentrations. 3 Under EPA regulations at 40 CFR part 50, the primary and secondary 1997 Annual PM 2.5 NAAQS are attained when the annual arithmetic mean concentration, as determined in accordance with 40 CFR part 50, Appendix N, is less than or equal to 15.0 μg/m 3 at all relevant monitoring sites in the subject area over a 3-year period.

On January 5, 2005, at 70 FR 944, and supplemented on April 14, 2005, at 70 FR 19844, EPA designated the Tri-state Cincinnati-Hamilton Area as nonattainment for the 1997 PM 2.5 NAAQS. In that action, EPA defined the 1997 PM 2.5 Cincinnati-Hamilton Area to include Boone, Campbell, and Kenton Counties in Kentucky, Butler, Clermont, Hamilton, and Warren Counties in Ohio, and a portion of Dearborn Country containing the Lawrenceburg Township in Indiana. On November 13, 2009, at 74 FR 58688, EPA promulgated designations for the 24-hour standard established in 2006, designating the Tri-state Cincinnati-Hamilton Area as attainment for this NAAQS. That action clarified that the Tri-state Cincinnati-Hamilton Area was classified unclassifiable/attainment for the 24-hour NAAQS promulgated in 1997. EPA did not promulgate designations for the annual average NAAQS promulgated in 2006, since the NAAQS was essentially identical to the annual NAAQS promulgated in 1997. Therefore, the Tri-state Cincinnati-Hamilton Area is designated nonattainment for the annual NAAQS promulgated in 1997, and today's action only addresses this designation.

All 1997 PM 2.5 NAAQS areas were designated under subpart 1 of title I, part D, of the CAA. Subpart 1 contains the general requirements for nonattainment areas for any pollutant governed by a NAAQS and is less prescriptive than the other subparts of title I, part D. On April 25, 2007, at 72 FR 20664, EPA promulgated its PM 2.5 Implementation Rule, codified at 40 CFR part 51, subpart Z, in which the Agency provided guidance for state and Tribal plans to implement the 1997 PM 2.5 NAAQS. This rule, at 40 CFR 51.1004(c), specifies some of the regulatory consequences of attaining the NAAQS, as discussed below.

On May 12, 2005, EPA published the Clean Air Interstate Rule (CAIR), which addressed the interstate transport requirements of the CAA and required states to significantly reduce SO 2 and NO X emissions from power plants (70 FR 25162). The associated Federal Implementation Plans (FIPs) were published on April 28, 2006 (71 FR 25328). However, on July 11, 2008, the DC Circuit Court issued its decision to vacate and remand both CAIR and the associated CAIR FIPs in their entirety ( North Carolina v. EPA, 531 F.3d 836 (DC Cir., 2008)). EPA petitioned for rehearing, and the Court issued an order remanding CAIR to EPA without vacating either CAIR or the CAIR FIPs ( North Carolina v. EPA, 550 F.3d 1176 (DC Cir., 2008)). The Court left CAIR in place to “temporarily preserve the environmental values covered by CAIR” until EPA replaces it with a rule consistent with the Court's opinion ( id. at 1178). The Court directed EPA to “remedy CAIR's flaws” consistent with its July 11, 2008, opinion but declined to impose a schedule on EPA for completing that action ( id ). As a result of these court rulings, the power plant emission reductions that resulted solely from the development, promulgation, and implementation of CAIR, and the associated contribution to air quality improvement that occurred solely as a result of CAIR in the Northern Kentucky Area could not be considered to be permanent.

On August 8, 2011, EPA published the Cross State Air Pollution Rule (CSAPR) in the Federal Register under the title, “Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone in 27 States; Correction of SIP Approvals for 22 States” (76 FR 48208, August 8, 2011) to address interstate transport of emissions and resulting secondary air pollutants and to replace CAIR. The CAIR emission reduction requirements limit emissions in Kentucky and states upwind of Kentucky through 2011, and the CSAPR requires similar or greater reductions in the relevant areas in 2012 and beyond. The emission reductions that the CSAPR mandates may be considered to be permanent and enforceable. In turn, the air quality improvement in the Northern Kentucky Area that has resulted from electric generating units emission reductions associated with CAIR (as well as the additional air quality improvement that would be expected to result from full implementation of the CSAPR) may also be considered to be permanent and enforceable. EPA proposes that the requirement in section 107(d)(3)(E)(iii) has now been met because the emission reduction requirements of CAIR address emissions through 2011 and EPA has now promulgated CSAPR which requires similar or greater reductions in the relevant areas in 2012 and beyond. Because the emission reduction requirements of CAIR are enforceable through the 2011 control period, and because CSAPR has now been promulgated to address the requirements previously addressed by CAIR and gets similar or greater reductions in the relevant areas in 2012 and beyond, EPA is proposing to determine that the emission reductions that led to attainment in the Northern Kentucky Area can now be considered permanent and enforceable. Therefore, EPA proposes to find that the transport requirement of CAA section 107(d)(3)(E)(iii) has been met for the Northern Kentucky Area.

The 3-year ambient air quality data for 2007-2009 indicated no violations of the 1997 PM 2.5 NAAQS for the Tri-state Cincinnati-Hamilton Area. As a result, on January 27, 2011, Kentucky requested redesignation of the Northern Kentucky Area to attainment for the 1997 Annual PM 2.5 NAAQS. The redesignation request included three years of complete, quality-assured ambient air quality data for the 1997 Annual PM 2.5 NAAQS for 2007-2009, indicating that the 1997 PM 2.5 NAAQS had been achieved for the entire Tri-state Cincinnati-Hamilton Area. Under the CAA, nonattainment areas may be redesignated to attainment if sufficient, complete, quality-assured data is available for the Administrator to determine that the area has attained the standard and the area meets the other CAA redesignation requirements in section 107(d)(3)(E). From 2007 through the present, the annual PM 2.5 design values for the Tri-state Cincinnati-Hamilton Area have declined. While annual PM 2.5 concentrations are dependent on a variety of conditions, the overall downtrend in annual PM 2.5 concentrations in the Tri-state Cincinnati-Hamilton Area can be attributed to the reduction of emissions, as will be discussed in more detail in section V of this proposed rulemaking.

The CAA provides the requirements for redesignating a nonattainment area to attainment. Specifically, section 107(d)(3)(E) of the CAA allows for redesignation provided the following criteria are met: (1) The Administrator determines that the area has attained the applicable NAAQS; (2) the Administrator has fully approved the applicable implementation plan for the area under section 110(k); (3) the Administrator determines that the improvement in air quality is due to permanent and enforceable reductions in emissions resulting from implementation of the applicable SIP and applicable federal air pollutant control regulations and other permanent and enforceable reductions; (4) the Administrator has fully approved a maintenance plan for the area as meeting the requirements of section 175A; and (5) the state containing such area has met all requirements applicable to the area under section 110 and part D of title I of the CAA.

EPA has provided guidance on redesignation in the General Preamble for the Implementation of title I of the CAA Amendments of 1990 (April 16, 1992, 57 FR 13498, and supplemented on April 28, 1992, 57 FR 18070) and has provided further guidance on processing redesignation requests in the following documents:

1. “Procedures for Processing Requests to Redesignate Areas to Attainment,” Memorandum from John Calcagni, Director, Air Quality Management Division, September 4, 1992 (hereafter referred to as the “Calcagni Memorandum”);

2. “State Implementation Plan (SIP) Actions Submitted in Response to Clean Air Act (CAA) Deadlines,” Memorandum from John Calcagni, Director, Air Quality Management Division, October 28, 1992; and

3. “Part D New Source Review (Part D NSR) Requirements for Areas Requesting Redesignation to Attainment,” Memorandum from Mary D. Nichols, Assistant Administrator for Air and Radiation, October 14, 1994.

On January 27, 2011, the Commonwealth of Kentucky, through DAQ, requested the redesignation of the Northern Kentucky Area to attainment for the 1997 Annual PM 2.5 NAAQS. EPA's preliminary evaluation indicates that the Tri-state Cincinnati-Hamilton Area has attained the 1997 Annual PM 2.5 NAAQS and has met the requirements for redesignation set forth in section 107(d)(3)(E), including the maintenance plan requirements under section 175A of the CAA. Additionally, EPA is proposing to approve the 2008 baseline emission inventory under section 172(c)(3) because Kentucky has used methodology consistent with EPA guidance and implementing regulations to develop this inventory. EPA is also announcing the status of its adequacy determination for both the NO X and PM 2.5 MVEBs for 2015 and 2021, which are relevant to the requested redesignation.

As stated above, in accordance with the CAA, EPA proposes in today's action to: (1) Redesignate the Northern Kentucky Area to attainment for the 1997 Annual PM 2.5 NAAQS; (2) approve the Northern Kentucky Area emissions inventory submitted with the maintenance plan; and (3) approve into the Kentucky SIP, the Northern Kentucky's 1997 Annual PM 2.5 NAAQS maintenance plan, including the associated MVEBs. These actions are based upon EPA's determination that the Tri-state Cincinnati-Hamilton Area continues to attain the 1997 Annual PM 2.5 NAAQS and that all other redesignation criteria have been met for the Northern Kentucky Area, provided EPA approves the emissions inventory submitted with the maintenance plan. The five redesignation criteria provided under CAA section 107(d)(3)(E) are discussed in greater detail for the Area in the following paragraphs of this section.

As stated above, in accordance with the CAA, EPA proposes to make the determination that the Tri-state Cincinnati-Hamilton Area is continuing to attain the 1997 Annual PM 2.5 NAAQS and that all other redesignation criteria have been met for the Northern Kentucky Area. The bases for EPA's determination for the Area are discussed in greater detail below.

For redesignating a nonattainment area to attainment, the CAA requires EPA to determine that the area has attained the applicable NAAQS (CAA section 107(d)(3)(E)(i)). EPA is proposing to determine that the Tri-state Cincinnati-Hamilton Area continues to attain the 1997 Annual PM 2.5 NAAQS. For PM 2.5 , an area may be considered to be attaining the 1997 Annual PM 2.5 NAAQS if it meets the 1997 Annual PM 2.5 NAAQS, as determined in accordance with 40 CFR 50.13 and Appendix N of part 50, based on three complete, consecutive calendar years of quality-assured air quality monitoring data. To attain these NAAQS, the 3-year average of the annual arithmetic mean concentration, as determined in accordance with 40 CFR part 50, Appendix N, is less than or equal to 15.0 µg/m 3 at all relevant monitoring sites in the subject area over a 3-year period. The relevant data must be collected and quality-assured in accordance with 40 CFR part 58 and recorded in the EPA Air Quality System (AQS). The monitors generally should have remained at the same location for the duration of the monitoring period required for demonstrating attainment.

On September 29, 2011, at 76 FR 60373, EPA finalized a determination that the Tri-state Cincinnati-Hamilton Area was attaining the 1997 PM 2.5 NAAQS, and that this Area attained the 1997 PM 2.5 NAAQS by its applicable attainment date of April 5, 2011. For that action EPA reviewed PM 2.5 monitoring data from monitoring stations in the Tri-state Cincinnati-Hamilton Area for the 1997 Annual PM 2.5 NAAQS for 2007-2009. The public was provided a 30-day comment period to review and provide comment to EPA on the analysis of this data. EPA did not receive any comments, adverse or otherwise, on the Agency's determination that the Area had attaining data for the period of 2007-2009, and continued to have attaining data through the finalization of EPA's proposal in September 2011. As such, EPA is not seeking additional comment in today's action regarding this data. As noted in EPA's September 29, 2011, action these data were quality-assured and recorded in AQS. The annual mean of the PM 2.5 concentrations for 2007-2010 and the 3-year average of these values ( i.e., design values) are summarized in Table 1.

As discussed above, the design value for an area is the highest annual mean concentration recorded at any monitor in the area for a 3-year period. Therefore, the 3-year design value (2007-2009) submitted by Kentucky for redesignation of the Tri-state Cincinnati-Hamilton Area is 15.0 μg/m 3 , which meets the NAAQS as described above. Several of the above monitoring sites do not meet the 75 percent completeness criteria. In these cases, operation of the monitoring sites were started or shut-down during the 2007-2010 timeframe. Additional details can be found in EPA's final clean data determination for the Tri-state Cincinnati-Hamilton Area (76 FR 60373). EPA has reviewed more recent preliminary data which indicates that the Tri-state Cincinnati-Hamilton Area continues to attain the 1997 PM 2.5 NAAQS beyond the submitted 3-year attainment period of 2007-2009. The design value for the most recent 3-year period of 2008-2010 will be certified by the time EPA takes final action on this proposed rule. 2 At that time, EPA will again ensure that current air quality data demonstrates that the Tri-state Cincinnati-Hamilton Area is continuing to meet the 1997 Annual PM 2.5 NAAQS. If the Area does not continue to attain before EPA finalizes the redesignation, EPA will not go forward with the redesignation. As discussed in more detail below, the Commonwealth of Kentucky has committed to continue monitoring in this Area in accordance with 40 CFR part 58.

For redesignating a nonattainment area to attainment, the CAA requires EPA to determine that the state has met all applicable requirements under section 110 and part D of title I of the CAA (CAA section 107(d)(3)(E)(v)) and that the state has a fully approved SIP under section 110(k) for the area (CAA section 107(d)(3)(E)(ii)). EPA proposes to find that Kentucky has met all applicable SIP requirements for the Northern Kentucky Area under section 110 of the CAA (general SIP requirements) for purposes of redesignation. Additionally, EPA proposes to find that the Kentucky SIP satisfies the criterion that it meet applicable SIP requirements for purposes of redesignation under part D of title I of the CAA (requirements specific to 1997 Annual PM 2.5 nonattainment areas) in accordance with section 107(d)(3)(E)(v). Further, EPA proposes to determine that the SIP is fully approved with respect to all requirements applicable for purposes of redesignation in accordance with section 107(d)(3)(E)(ii). In making these determinations, EPA ascertained which requirements are applicable to the Area and, if applicable, that they are fully approved under section 110(k). SIPs must be fully approved only with respect to requirements that were applicable prior to submittal of the complete redesignation request.

General SIP requirements. Section 110(a)(2) of title I of the CAA delineates the general requirements for a SIP, which include enforceable emissions limitations and other control measures, means, or techniques; provisions for the establishment and operation of appropriate devices necessary to collect data on ambient air quality; and programs to enforce the limitations. General SIP elements and requirements are delineated in section 110(a)(2) of title I, part A of the CAA. These requirements include, but are not limited to, the following: Submittal of a SIP that has been adopted by the state after reasonable public notice and hearing; provisions for establishment and operation of appropriate procedures needed to monitor ambient air quality; implementation of a source permit program; provisions for the implementation of part C requirements (Prevention of Significant Deterioration (PSD)) and provisions for the implementation of part D requirements (New Source Review (NSR) permit programs); provisions for air pollution modeling; and provisions for public and local agency participation in planning and emission control rule development.

Section 110(a)(2)(D) requires that SIPs contain certain measures to prevent sources in a state from significantly contributing to air quality problems in another state. To implement this provision, EPA has required certain states to establish programs to address the interstate transport of air pollutants ( e.g., NO X SIP Call, 5 CAIR, 6 and the CSAPR). The section 110(a)(2)(D) requirements for a state are not linked with a particular nonattainment area's designation and classification in that state. EPA believes that the requirements linked with a particular nonattainment area's designation and classifications are the relevant measures to evaluate in reviewing a redesignation request. The transport SIP submittal requirements, where applicable, continue to apply to a state regardless of the designation of any one particular area in the state. Thus, EPA does not believe that the CAA's interstate transport requirements should be construed to be applicable requirements for purposes of redesignation. However, as discussed later in this notice, addressing pollutant transport from other states is an important part of an area's maintenance demonstration.

In addition, EPA believes other section 110 elements that are neither connected with nonattainment plan submissions nor linked with an area's attainment status are applicable requirements for purposes of redesignation. The area will still be subject to these requirements after the area is redesignated. The section 110 and part D requirements which are linked with a particular area's designation and classification are the relevant measures to evaluate in reviewing a redesignation request. This approach is consistent with EPA's existing policy on applicability ( i.e., for redesignations) of conformity and oxygenated fuels requirements, as well as with section 184 ozone transport requirements. See Reading, Pennsylvania, proposed and final rulemakings (61 FR 53174-53176, October 10, 1996), (62 FR 24826, May 7, 1997); Cleveland-Akron-Loraine, Ohio, final rulemaking (61 FR 20458, May 7, 1996); and Tampa, Florida, final rulemaking at (60 FR 62748, December 7, 1995). See also the discussion on this issue in the Cincinnati, Ohio, redesignation (65 FR 37890, June 19, 2000), and in the Pittsburgh, Pennsylvania, redesignation (66 FR 50399, October 19, 2001).

EPA has not yet completed rulemaking on a submittal from Kentucky dated August 26, 2008, addressing “infrastructure SIP” elements required under the Clean Air Act (CAA or “the Act”) section 110(a)(2) for the 1997 PM 2.5 NAAQS. However, these are statewide requirements that are not a consequence of the nonattainment status of the Northern Kentucky Area. EPA believes that section 110 elements not linked to an area's nonattainment status are not applicable for purposes of redesignation. See the Reading, Pennsylvania, proposed and final rulemakings (61 FR 53174-53176, October 10, 1996 and 62 FR 24826, May 7, 1997), the Cleveland-Akron-Loraine, Ohio, final rulemaking (61 FR 20458, May 7, 1996), and the Tampa, Florida, final rulemaking (60 FR 62748, December 7, 1995). Therefore, notwithstanding the fact that EPA has not yet completed rulemaking on Kentucky's submittal for the PM 2.5 infrastructure SIP elements of section 110(a)(2), EPA believes it has approved all SIP elements that must be approved as a prerequisite for the redesignation to attainment of the Northern Kentucky Area.

Title I, Part D requirements. EPA proposes that with approval of Kentucky's base year emissions inventory, which is part of the maintenance plan submittal, the Kentucky SIP will meet applicable SIP requirements under part D of title I of the CAA. As discussed in greater detail below, EPA believes the emissions inventory is approvable because the 2008 direct PM 2.5, SO 2 , and NO X emissions for Kentucky were developed consistent with EPA guidance for emissions inventories and represent a comprehensive, accurate and current inventory as required by section 172(c)(3).

Part D, subpart 1 applicable SIP requirements. EPA has determined that if the approval of the base year emissions inventories, discussed in section IX of this rulemaking, is finalized, the Kentucky SIP will meet the applicable SIP requirements for the Northern Kentucky Area for purposes of redesignation under part D of the CAA. Subpart 1 of part D, found in sections 172-176 of the CAA, sets for the basic nonattainment requirements applicable to all nonattainment areas. All areas that were designated nonattainment for the 1997 Annual PM 2.5 NAAQS were designated under subpart 1 of the CAA. The applicable subpart 1 requirements are contained in sections 172(c)(1)-(9) and in section 176.

For purposes of evaluating this redesignation request, the applicable part D, subpart 1 SIP requirements for all nonattainment areas are contained in sections 172(c)(1)-(9) and in section 176. A thorough discussion of the requirements contained in section 172 can be found in the General Preamble for Implementation of title I (57 FR 13498, April 16, 1992).

Subpart 1 Section 172 Requirements . Section 172(c)(1) requires the plans for all nonattainment areas to provide for the implementation of all reasonably available control measures (RACM) as expeditiously as practicable and to provide for attainment of the NAAQS. EPA interprets this requirement to impose a duty on all nonattainment areas to consider all available control measures and to adopt and implement such measures as are reasonably available for implementation in each area as components of the area's attainment demonstration. Under section 172, states with nonattainment areas must submit plans providing for timely attainment and meeting a variety of other requirements. However, pursuant to 40 CFR 51.1004(c), EPA's final determination that the Tri-state Cincinnati-Hamilton Area was attaining the PM 2.5 standard suspended Kentucky's obligation to submit most of the attainment planning requirements that would otherwise apply. Specifically, the determination of attainment suspended Kentucky's obligation to submit an attainment demonstration and planning SIPs to provide for reasonable further progress (RFP), RACM, and contingency measures under section 172(c)(9).

The General Preamble for Implementation of Title I (57 FR 13498, April 16, 1992) also discusses the evaluation of these requirements in the context of EPA's consideration of a redesignation request. The General Preamble sets forth EPA's view of applicable requirements for purposes of evaluating redesignation requests when an area is attaining a standard (General Preamble for Implementation of Title I (57 FR 13498, April 16, 1992)).

Because attainment has been reached in the Tri-state Cincinnati Area, no additional measures are needed to provide for attainment, and section 172(c)(1) requirements for an attainment demonstration and RACM are no longer considered to be applicable for purposes of redesignation as long as the Area continues to attain the standard until redesignation. See also 40 CFR 51.1004(c).

The RFP plan requirement under section 172(c)(2) is defined as progress that must be made toward attainment. This requirement is not relevant for purposes of redesignation because EPA has determined that the Tri-state Cincinnati-Hamilton Area, which includes the Northern Kentucky Area, has monitored attainment of the 1997 Annual PM 2.5 NAAQS. See General Preamble, 57 FR 13564. See also 40 CFR 51.1004(c). In addition, because the Tri-state Cincinnati-Hamilton Area has attained the 1997 Annual PM 2.5 NAAQS and is no longer subject to a RFP requirement, the requirement to submit the section 172(c)(9) contingency measures is not applicable for purposes of redesignation. Id.

Section 172(c)(3) requires submission and approval of a comprehensive, accurate, and current inventory of actual emissions. As part of Kentucky's redesignation request for the Northern Kentucky Area, Kentucky submitted a 2008 base year emissions inventory. As discussed below in section VIII, EPA is proposing to approve the 2008 base year inventory submitted with the redesignation request as meeting the section 172(c)(3) emissions inventory requirement.

Section 172(c)(4) requires the identification and quantification of allowable emissions for major new and modified stationary sources to be allowed in an area, and section 172(c)(5) requires source permits for the construction and operation of new and modified major stationary sources anywhere in the nonattainment area. EPA has determined that, since PSD requirements will apply after redesignation, areas being redesignated need not comply with the requirement that a NSR program be approved prior to redesignation, provided that the area demonstrates maintenance of the NAAQS without part D NSR. A more detailed rationale for this view is described in a memorandum from Mary Nichols, Assistant Administrator for Air and Radiation, dated October 14, 1994, entitled, “Part D New Source Review Requirements for Areas Requesting Redesignation to Attainment.” Kentucky has demonstrated that the Northern Kentucky Area will be able to maintain the NAAQS without part D NSR in effect, and therefore Kentucky need not have fully approved part D NSR programs prior to approval of the redesignation request. Nonetheless, Kentucky currently has a fully-approved part D NSR program in place. Kentucky's PSD program will become effective in the Northern Kentucky Area upon redesignation to attainment. Section 172(c)(6) requires the SIP to contain control measures necessary to provide for attainment of the NAAQS. Because attainment has been reached, no additional measures are needed to provide for attainment.

Section 172(c)(7) requires the SIP to meet the applicable provisions of section 110(a)(2). As noted above, EPA believes the Kentucky SIP meets the requirements of section 110(a)(2) applicable for purposes of redesignation.

176 Conformity Requirements. Section 176(c) of the CAA requires states to establish criteria and procedures to ensure that federally-supported or funded projects conform to the air quality planning goals in the applicable SIP. The requirement to determine conformity applies to transportation plans, programs and projects that are developed, funded or approved under title 23 of the United States Code (U.S.C.) and the Federal Transit Act (transportation conformity) as well as to all other federally-supported or funded projects (general conformity). State transportation conformity SIP revisions must be consistent with federal conformity regulations relating to consultation, enforcement and enforceability that EPA promulgated pursuant to its authority under the CAA.

EPA believes it is reasonable to interpret the conformity SIP requirements  7 as not applying for purposes of evaluating the redesignation request under section 107(d) because state conformity rules are still required after redesignation and federal conformity rules apply where state rules have not been approved. See Wall v. EPA, 265 F.3d 426 (upholding this interpretation)(6th Cir. 2001); see also 60 FR 62748 (December 7, 1995, Tampa, Florida). Thus, the Northern Kentucky Area has satisfied all applicable requirements for purposes of redesignation under section 110 and part D of the CAA.

If EPA issues a final approval of the base year emissions inventories, EPA will have fully approved the applicable Kentucky SIP for the Northern Kentucky Area for the 1997 Annual PM 2.5 nonattainment area under section 110(k) of the CAA for all requirements applicable for purposes of redesignation. EPA may rely on prior SIP approvals in approving a redesignation request (see Calcagni Memorandum at p. 3; Southwestern Pennsylvania Growth Alliance v. Browner, 144 F.3d 984, 989-90 (6th Cir. 1998); Wall, 265 F.3d 426) plus any additional measures it may approve in conjunction with a redesignation action (see 68 FR 25426 (May 12, 2003) and citations therein). Following passage of the CAA of 1970, Kentucky has adopted and submitted, and EPA has fully approved at various times, provisions addressing the various SIP elements applicable for the 1997 Annual PM 2.5 NAAQS in the Northern Kentucky Area (65 FR 37879, June 19, 2000).

As indicated above, EPA believes that the section 110 elements not connected with nonattainment plan submissions and not linked to the area's nonattainment status are not applicable requirements for purposes of redesignation. In addition, EPA believes that since the part D subpart 1 requirements did not become due prior to submission of the redesignation request, they are also not applicable requirements for purposes of redesignation. Sierra Club v. EPA, 375 F.3d 537 (7th Cir. 2004); 68 FR 25424, 25427 (May 12, 2003) (redesignation of the St. Louis-East St. Louis Area to attainment of the 1-hour ozone NAAQS). With the approval of the emissions inventory, EPA will have approved all Part D subpart 1 requirements applicable for purposes of this redesignation.

For redesignating a nonattainment area to attainment, the CAA requires EPA to determine that the air quality improvement in the area is due to permanent and enforceable reductions in emissions resulting from implementation of the SIP and applicable federal air pollution control regulations and other permanent and enforceable reductions (CAA section 107(d)(3)(E)(iii)). EPA believes that Kentucky has demonstrated that the observed air quality improvement in the Northern Kentucky Area is due to permanent and enforceable reductions in emissions resulting from implementation of the SIP, federal measures, and other state adopted measures.

Fine particulate matter, or PM 2.5 , refers to airborne particles less than or equal to 2.5 micrometers in diameter. Although treated as a single pollutant, fine particles come from many different sources and are composed of many different compounds. One of the largest components of PM 2.5 is sulfate, which is formed through various chemical reactions from the precursor SO 2 . The other major component of PM 2.5 is organic carbon, which originates predominantly from biogenic emission sources. Nitrate, which is formed from the precursor NO X , is also a component of PM 2.5 . Crustal materials from windblown dust and elemental carbon from combustion sources are less significant contributors to total PM 2.5 .

State and federal measures enacted in recent years have resulted in permanent emission reductions. Most of these emission reductions are enforceable through regulations. A few non-regulatory measures also result in emission reductions. The federal measures that have been implemented include:

Tier 2 vehicle standards. In addition to requiring NO X controls, the Tier 2 rule reduced the allowable sulfur content of gasoline to 30 parts per million (ppm) starting in January of 2006. Most gasoline sold prior to this had a sulfur content of approximately 300 ppm.

Heavy-duty gasoline and diesel highway vehicle standards. The second phase of the standards and testing procedures, which began in 2007, reduces particulate matter (PM) and NO X from heavy-duty highway engines and also reduces highway diesel fuel sulfur content to 15 ppm. The total program is expected to achieve a 90 and 95 percent reduction in PM and NO X emissions from heavy-duty highway engines, respectively.

Nonroad spark-ignition engines and recreational engines standards. Tier 1 of this standard, implemented in 2004, and Tier 2, implemented in 2007, have reduced and will continue to reduce PM emissions.

Large nonroad diesel engine standards. Promulgated in 2004, this rule is being phased in between 2008 and 2014. This rule will reduce sulfur content in nonroad diesel fuel and, when fully implemented, will reduce NO X and direct PM 2.5 emissions by over 90 percent from these engines.

NO X SIP Call . On October 27, 1998 (63 FR 57356), EPA issued a NO X SIP Call requiring the District of Columbia and 22 states to reduce emissions of NO X. Affected states were required to comply with Phase I of the SIP Call beginning in 2004, and Phase II beginning in 2007. Emission reductions resulting from regulations developed in response to the NO X SIP Call are permanent and enforceable.

CAIR and the Cross-State Air Pollution Rule (CSAPR). As previously discussed, the remanded CAIR, originally promulgated to reduce transported pollution, was left in place to “temporarily preserve the environmental values covered by CAIR” until EPA replaced it with a rule consistent with the Court's opinion. To remedy CAIR's flaws, EPA promulgated the final CSAPR on August 8, 2011. CSAPR addresses the interstate transport requirements of the CAA with respect to the 1997 ozone, 1997 PM2.5 and 2006 PM 2.5 NAAQS. As noted previously, the requirements of CAIR address emissions thru the 2011 control period and CSAPR requires similar or greater emission reductions in the relevant areas in 2012 and beyond.

The state measures that have been implemented to date and relied upon by Kentucky to demonstrate attainment and/or maintenance include NO X SIP Call regulations, open burning bans, and fugitive emissions standards.

EPA believes that PM 2.5 and PM 2.5 precursor reductions in and around the Tri-state Cincinnati-Hamilton Area have contributed to improved air quality. The majority of the improvement in ambient PM 2.5 concentrations has resulted from reductions in emissions from coal fired power plants. In addition, local controls of NO X and SO 2 installed on Unit 2 of the Duke Energy East Bend coal fired utility plant in the Boone County have decreased emissions by approximately 38 and 53 percent, for NO X and SO 2 respectively, between 2005 and 2009. These reductions, prompted by the NO X SIP Call and CAIR, included upgrades to flue gas desulfurization system in response to CAIR and selective catalytic reduction (SCR) system installation as a result of the NO X SIP Call. A summary of the emissions reductions from 2005 to 2009 is for the entire Tri-state Cincinnati Hamilton Area is provided in Table 2. EPA's analysis shows that reductions of SO 2 and NO X emissions, in tons per year (tpy) are greater than decreases in emissions that could be attributed to any decreases in electrical demand in the Tri-state Cincinnati-Hamilton Area. These reductions are permanent and enforceable through the NO X SIP Call and CSAPR.

Because PM 2.5 concentrations in the Cincinnati-Hamilton area are impacted by the transport of sulfates and nitrates, the area's air quality is affected by regulation of SO 2 and NO X emissions from power plants. Table 3, below, presents statewide EGU emissions data compiled by EPA's Clean Air Markets Division for the years 2002 and 2008. Emissions for 2008 reflect implementation of CAIR.

This is a summary of the Commission's Notice of Proposed Rulemaking in IB Docket No. 11-133, FCC 11-121, adopted and released on August 9, 2011. The full text of this document 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/db0809/FCC-11-121A1.pdf. The complete text also may be purchased from the Commission's duplicating 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.

Pursuant to §§ 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated above. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

• Electronic Filers: Comments may be filed electronically using the Internet by accessing the Commission's ECFS Web site at http://fjallfoss.fcc.gov/ecfs2/.

• Paper Filers: Parties who choose to file by paper must file an original and one copy of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

• All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St., SW., Room TW-A325, Washington, DC 20554. The filing hours are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.

• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street, SW., Washington, DC 20554.

1. The Notice of Proposed Rulemaking (NPRM) initiates a review of the policies and procedures of the Federal Communications Commission (Commission) that apply to foreign ownership of common carrier radio station licensees— e.g., companies using wireless licenses to provide phone service—and of aeronautical en route and aeronautical fixed radio station licensees (together, aeronautical licensees) pursuant to section 310(b)(4) of the Communications Act of 1934, as amended (the Act), 47 U.S.C. 310(b)(4). For ease of reference, the NPRM refers to applicants, licensees, and spectrum lessees collectively as “licensees” unless the context warrants otherwise. “Spectrum lessees” are defined in section 1.9003 of the Commission's rules, 47 CFR 1.9003.

2. The Commission seeks to reduce to the extent possible the regulatory costs and burdens imposed on wireless common carrier and aeronautical applicants, licensees, and spectrum lessees; provide greater transparency and more predictability with respect to the Commission's filing requirements and review process; and facilitate investment from new sources of capital, while continuing to protect important interests related to national security, law enforcement, foreign policy, and trade policy. The NPRM does not address Commission policies with respect to the application of section 310(b)(4) to broadcast licensees.

3. The Commission seeks comment in the NPRM on measures to revise and simplify the agency's regulatory framework under section 310(b)(4) for authorizing foreign ownership of common carrier and aeronautical radio licensees. The Commission also proposes to codify whatever measures it ultimately adopts to provide more predictability and ensure transparency of the section 310(b)(4) filing requirements and review process. The Commission estimates that adopting the proposals and other options discussed in the NPRM would result in a more than 70 percent reduction in the number of section 310(b)(4) petitions for declaratory ruling filed with the Commission annually, as compared to the current regulatory framework. The Commission also anticipates a reduction in the time and expense associated with filing petitions under the proposed framework.

4. Section 310(b)(4) of the Act establishes a 25 percent benchmark for investment by foreign individuals, corporations, and governments in U.S.-organized entities that directly or indirectly control a U.S. broadcast, common carrier, or aeronautical radio station licensee. This section also grants the Commission discretion to allow higher levels of foreign ownership of a controlling U.S.-organized parent company—up to and including 100 percent of its equity and voting interests—unless the Commission finds that such ownership is inconsistent with the public interest. Licensees must request Commission approval of their U.S. parents' foreign ownership under section 310(b)(4), normally done by filing a petition for declaratory ruling with the agency. In order for the Commission to make the required public interest findings, licensees must file the petition and obtain Commission approval before direct or indirect foreign ownership of their U.S. parent companies exceeds 25 percent.

5. In the 1997 Foreign Participation Order, the Commission concluded that the public interest would be served by permitting greater investment in U.S. common carrier and aeronautical radio licensees by foreign individuals and entities from countries that are Members of the World Trade Organization (WTO) pursuant to the discretionary authority in section 310(b)(4). 1 The Commission adopted a rebuttable presumption by which it presumes that foreign investment from WTO Member countries does not pose competitive concerns in the U.S. market. For purposes of determining whether foreign investors are based in WTO Member countries, the Commission uses the “principal place of business” test to determine the nationality or “home market” of foreign entities that seek to invest directly or indirectly in the U.S. parent of a common carrier or aeronautical radio licensee. The Commission's public interest analysis under section 310(b)(4) also considers any national security, law enforcement, foreign policy or trade policy concerns raised by the proposed foreign investment. In assessing the public interest, the Commission takes into account the record developed in each particular case and accords deference to the expertise of Executive Branch agencies in identifying and interpreting issues of concern related to national security, law enforcement, foreign policy and trade policy.

6. With respect to foreign investment from countries that are not Members of the WTO, the Commission determined in the Foreign Participation Order to continue to apply the “effective competitive opportunities” (ECO) test, adopted in the 1995 Foreign Carrier Entry Order, as part of the Commission's public interest analysis under section 310(b)(4). 2 Thus, to the extent non-WTO Member investment in the controlling U.S. parent of a common carrier or aeronautical radio licensee would exceed 25 percent, the Commission requires the petitioner to submit an ECO showing for the relevant wireless service sector in each non-WTO Member country where an investor has its home market. The Commission found in the Foreign Participation Order that the circumstances that existed when it adopted the Foreign Carrier Entry Order had not changed sufficiently with respect to countries that were not Members of the WTO, as the markets of non-WTO Members, in almost all cases, were not liberalized and presented legal and practical barriers to entry. Thus, the Commission determined that it would deny an application if it found that more than 25 percent of the ownership of an entity that controls a common carrier or aeronautical radio licensee is attributable to parties whose principal place(s) of business are in non-WTO Member countries that do not offer effective competitive opportunities to U.S. investors in the particular service sector in which the applicant seeks to compete in the U.S. market, unless other public interest considerations outweigh that finding. The Commission concluded that its goals of increasing competition in the U.S. telecommunications service market and opening foreign telecommunications service markets would continue to be served by opening the U.S. market to non-WTO investors only to the extent that the investors' home markets are open to U.S. investors.

7. The Distinction Between WTO and non-WTO Investment. The Commission requests comment whether there is a policy basis for retaining the distinction between WTO and non-WTO Member investment in its current form, modifying the Commission's application of the distinction, or eliminating the distinction. The Commission asks commenters to identify changes that have occurred in U.S. and foreign wireless telecommunications markets since 1997 that support their position. In particular, the Commission seeks comment on the extent of foreign ownership in the U.S. telecommunications market today and the trends over the last several years. The Commission also seeks comment on the relative costs and benefits of maintaining the current distinction between WTO and non-WTO Member investment. Specifically, the Commission asks commenters to provide for the record quantification of the costs and burdens currently associated with filing a section 310(b)(4) petition, complying with the limitations of the section 310(b)(4) declaratory ruling, and the extent to which a change in policy would result in cost savings to U.S. wireless carriers and consumers. The Commission also asks commenters to address to what extent any costs and burdens have either deterred foreign investment or added significant transaction costs to the flow of such investments.

8. If the Commission were to eliminate the distinction between WTO and non-WTO Member investment, a U.S. wireless carrier would no longer be required to demonstrate in its section 310(b)(4) petition that non-WTO Member investment in its U.S-organized parent company does not exceed 25 percent or, alternatively, that non-WTO Member investment is from countries that satisfy the ECO test. The Commission would presume, subject to rebuttal, that direct or indirect foreign ownership of a wireless carrier's U.S. parent company does not pose competitive concerns in the U.S. market regardless of the nationality (in the case of an individual) or principal place(s) of business (in the case of a business entity) of the U.S. parent's foreign investor(s). The Commission seeks comment on whether it is prudent to presume that non-WTO Member investment in U.S. parent companies does not raise competitive concerns in the U.S. market and the circumstances, if any, that would allow the leveraging of market power in foreign telecommunications services or facilities into U.S. wireless markets.

9. Commenters should also address whether maintaining the distinction between WTO and non-WTO Member investment, including the ECO test, focuses Commission resources on the most pressing international competitive concerns, and whether eliminating the distinction between WTO and non-WTO Member investment and the ECO test would produce net public interest benefits by reducing asymmetries in regulation of wireless and wireline carriers, which are not subject to the foreign ownership restrictions in section 310(b) except to the extent they hold a common carrier radio license.

10. The Commission does not propose to change its long-standing requirement that applies to a licensee's determination of basic compliance with the 25 percent statutory benchmark in section 310(b)(4). In making that determination, licensees and their U.S. parent companies are required to count all equity and voting interests held in the U.S. parent, including interests held indirectly in the parent through intermediate companies. The agency seeks comment, however, on whether there are ways to reduce the costs and burdens of ascertaining the level of non-WTO investment in U.S. parent companies while continuing to support the agency's objectives to promote competition in the U.S. market and encourage market-opening in non-WTO Member countries. In particular, the Commission requests comment on allowing U.S. parent companies filing section 310(b)(4) petitions to exclude from their calculations of non-WTO investment those equity and voting interests that are held by a single non-WTO investor or “group” of non-WTO investors in an amount that constitutes 5 percent or less of the U.S. parent company's total capital stock (equity) and/or voting stock. Should the Commission continue to issue section 310(b)(4) rulings subject to the standard condition that prohibits the U.S. parent from accepting non-WTO investment that exceeds, in the aggregate, 25 percent of the U.S. parent's equity interests or 25 percent of its voting interests? If so, should the Commission allow the U.S. parent to exclude from the 25 percent amount those equity and voting interests that are held by a single non-WTO investor or “group” of non-WTO investors in an amount that constitutes 5 percent or less of the U.S. parent company's total capital stock (equity) and/or voting stock?

11. The Commission asks whether it should treat two or more non-WTO investors as a “group” when the investors have agreed to act together for the purpose of acquiring, holding, voting, or disposing of their equity and/or voting interests in the U.S. parent company or any intermediate company(ies) through which any of the investors holds its interests in the U.S. parent. As part of such an approach, should the Commission subject any individual or entity that, directly or indirectly, creates or uses a trust, proxy, power of attorney, or any other contract, arrangement, or device with the purpose of divesting itself, or preventing the vesting, of an equity interest or voting interest in the U.S. parent as part of a plan or scheme to evade the application of our policies that apply to non-WTO investment under section 310(b)(4) to enforcement action by the Commission, including an order requiring divestiture of the investor's direct or indirect interests in the U.S. parent? Should a 5 percent or less exclusion for non-WTO investments apply only when the U.S. parent or an entity that controls the U.S. parent is a publicly-traded company, or also when they are privately-held companies?

12. The Commission requests comment on whether a 5 percent or less exclusion would allow the Commission to adequately screen and potentially disallow non-WTO investment that may be contrary to the public interest; or would the exclusion amount be more properly set at some other level? Are there ways to simplify the principal place of business test? Alternatively, should the agency eliminate the test in favor of a different approach? The Commission also seeks input on whether it is feasible and desirable to modify the ECO test to acknowledge and further encourage the efforts of non-WTO Member countries to open their markets to foreign investment and competition.

13. Regardless of whether the Commission retains the current distinction between WTO and non-WTO Member investment in a modified form or eliminates the distinction, it would continue to coordinate all section 310(b)(4) petitions with the appropriate Executive Branch agencies and accord deference to their views in matters related to national security, law enforcement, foreign policy, or trade policy that may be raised by a particular transaction. The Commission does not propose to adopt any change in policy that would affect the Commission's ability to condition or disallow foreign investment that may pose a risk of harm to important national policies.

14. Issuing Section 310(b)(4) Rulings to the Licensee's U.S. Parent. The Commission proposes to issue section 310(b)(4) rulings in the name of the controlling U.S. parent company of the licensee(s) that are the subject of the petition. Where there are successive, controlling U.S. parent companies in the vertical ownership chain of the licensee, it proposes to issue the ruling in the name of the lowest-tier, controlling U.S. parent. The Commission makes this proposal to ensure that it issues the foreign ownership ruling to the particular entity whose aggregate, direct and/or indirect foreign ownership would trigger the applicability of section 310(b)(4) to the extent it exceeds 25 percent, based on the company's ownership structure at the time the ruling is granted, and to accommodate other aspects of the proposed framework, such as allowing the U.S. parent's ruling to cover automatically any of its subsidiaries or affiliates.

15. Approval of Named Foreign Investors. The Commission proposes to continue to entertain petitions that request authority for foreign individual(s) and entity(ies) named in the petition to hold specified percentages of equity and/or voting interests in the U.S. parent whether directly or indirectly through intervening U.S.-organized entities. It proposes several key changes to the current framework for authorizing ownership of the U.S. parent by named foreign investors and by other potential foreign investors, to reduce the need for U.S. parent companies to return to the Commission, after receiving an initial ruling, to obtain prior approval for subsequent changes in their foreign ownership (including increased interests by foreign investors that the Commission already has approved in the initial ruling and interests to be acquired by new foreign investors).

16. The proposed rules would require a U.S. parent company to include in its section 310(b)(4) petition a request for specific approval of any named foreign individual or entity that holds, or would hold upon closing of any transactions contemplated by the petition, a direct or indirect equity and/or voting interest in the U.S. parent in excess of 25 percent or a controlling interest at any level. The U.S. parent would be required to monitor and stay ahead of changes in ownership of its approved foreign investors to ensure that the parent has an opportunity to obtain Commission approval before a change in ownership of an approved investor results in an unapproved investor acquiring an indirect interest in the U.S. parent that exceeds 25 percent. As is the case under the current regulatory framework, the proposed framework may necessitate the placement of restrictions in the bylaws or other organic documents of the controlling U.S. parent and/or other entities situated above it in the vertical chain of ownership to ensure the parent is able to comply with the terms of its section 310(b)(4) ruling. The Commission seeks comment on this aspect of the proposed framework, including whether it would present any new issues for U.S. common carrier and aeronautical radio licensees. It also requests comment on whether the proposal would be consistent with the statute. To the extent this proposal raises concern regarding the Commission's ability to monitor foreign investment in regulated entities, the Commission seeks comment on how it should modify the proposed framework.

17. The Commission proposes to provide the petitioning U.S. parent with the option of requesting specific approval for any named foreign investor to increase its equity and/or voting interests in the U.S. parent from existing levels (or levels that would exist upon closing of any related transactions) up to a non-controlling, 49.99 percent equity and/or voting interest (the “49.99 percent approval option for named foreign investors”). It requests comment on this option and specifically seeks input whether, once it has reviewed and approved foreign ownership of a licensee's U.S. parent by a named foreign investor after coordination with relevant Executive Branch agencies, there is any public interest reason for the Commission to scrutinize additional investments by the same foreign individual or entity where the investment would not effectuate a transfer of control of the licensee. Commenters who oppose this approach should specify the potential harms such an approach may pose. Would the 49.99 percent approval option encourage the filing of speculative requests to the extent that the resulting administrative costs and burdens on the Commission and relevant Executive Branch agencies would outweigh the potential benefits to U.S. carriers and consumers? Or, are there reasons why a U.S. parent should only request 49.99 percent approval for a particular named foreign investor where the carrier has a reasonable expectation of needing such approval? Would this option increase the likelihood of unauthorized transfers of control because de facto control may be implicated at ownership levels below 49.99 percent depending on the distribution of other shares? To the extent that foreign investment raises unique issues with regard to potential unauthorized transfers of control, what mechanisms, if any, could the Commission adopt or are already in place to minimize such transfers in the event it adopts the 49.99 percent approval option?

18. The Commission also seeks comment on its proposal to provide foreign transferees with the option of seeking approval at the outset, in the section 310(b)(4) petition that is filed in connection with a transfer of control application, to acquire 100 percent of the equity and/or voting interests in the licensee's U.S. parent company (the “100 percent approval option for controlling foreign investors”).

19. The Aggregate Allowance for Unnamed Foreign Investors. The Commission seeks comment on whether, in addition to approving ownership interests held or to be held directly or indirectly in the U.S. parent by named foreign investors for which the petition requests specific approval, it should, as a general rule, authorize the U.S. parent to have, on a going-forward basis, 100 percent aggregate foreign ownership, including by foreign investors for which the parent did not request specific approval in its petition, provided that no single foreign investor or “group” of foreign investors acquires, directly or indirectly, an ownership interest that exceeds 25 percent of the parent's equity interests or 25 percent of its voting interests, or a controlling interests at any level, without the Commission's prior approval. In recent rulings, the Commission and its International Bureau have permitted 100 percent aggregate foreign ownership of U.S. parent companies subject to a 25 percent ceiling on interests acquired by a single foreign investor and the aggregate 25 percent limit on non-WTO investment. The Commission is not aware of any problems that have resulted from this approach or objections raised in the context of any particular proceedings. If the Commission determines to retain the current distinction between WTO and non-WTO Member investment, the Commission would continue to condition the ruling to require that non-WTO investment not exceed, directly or indirectly, in the aggregate, 25 percent of the U.S. parent's equity interests or 25 percent of its voting interests without prior Commission approval.

20. The Commission recognizes that, if it were to adopt such a 100 percent aggregate allowance, the 25 percent aggregate allowance that it currently includes in section 310(b)(4) rulings would effectively increase to 100 percent. It seeks comment on any burdens the current 25 percent allowance may impose on U.S. wireless carriers and whether it can mitigate any such burdens by increasing the allowance in a manner that would not compromise its statutory obligations under the Act. For example, if the Commission were to adopt a 100 percent aggregate allowance, should it provide public notice and an opportunity for comment when a foreign investor's interest would increase from a minority to a majority interest? Or, is it sufficient to rely on the Commission review process that would take place pursuant to section 310(d) of the Act, 47 U.S.C. 310(d)? The Commission requests that commenters also address whether it should apply a 100 percent aggregate allowance only to publicly-traded companies or also to privately-held companies. In addition, the Commission seeks input on the feasibility of applying a 25 percent allowance to a U.S. parent that is wholly owned and controlled by a foreign public company that is traded only on foreign exchanges and that is owned substantially by foreign citizens and entities. Is it possible for such foreign public companies to comply with a 25 percent allowance? Other than including a 100 percent allowance in the U.S. parent's section 310(b)(4) ruling in these circumstances, is there another way to address the possibility that the foreign company may be wholly foreign owned on any given day? If there is no alternative to using a 100 percent allowance in such a case, is there a policy basis for applying a more restrictive 25 percent allowance to U.S. parents that are owned in whole or in part by U.S. public companies? Would such an approach have the effect of treating foreign companies more favorably than U.S. companies? The Commission requests comment on each of these questions. It also seeks comment whether, if it were to adopt a 100 percent aggregate allowance, it should include it in the petitioning U.S. parent's section 310(b)(4) ruling regardless of whether, under the proposed rules, the U.S. parent is required to, or otherwise chooses to, request specific approval for any named foreign investors.

21. The Commission requests comment whether it should adopt a non-controlling, 25 percent standard for triggering prior approval of new or increased foreign investment by a foreign individual or entity, or by a “group” of foreign investors, that has not received specific approval in the U.S. parent's foreign ownership ruling. An investment greater than 25 percent may confer upon a foreign investor substantial influence over the core operations of a U.S. carrier and thus may warrant imposing additional conditions on the operations of the U.S. parent and licensee or disallowing the investment in whole or in part. At the same time, it would appear that the potential for harm from a non-controlling interest at an equity and/or voting level of 25 percent or less can be addressed sufficiently at the time of the initial grant of the parent's ruling through the negotiation of a security agreement or similar arrangement between the U.S. parent and relevant Executive Branch agencies and pursuant to the Commission's authority to impose conditions on a ruling where the Commission deems it is warranted in the public interest.

22. Expanding Beyond Carrier-Specific Rulings. The Commission currently issues foreign ownership rulings to cover only the licensee(s) named in the underlying petition. An affiliated entity must submit its own petition for declaratory ruling pursuant to section 310(b)(4). Similarly, where a licensee is the subject of a transfer of control application under section 310(d) of the Act, the fact that the Commission previously has approved the transferee's foreign ownership does not relieve the transferee of the obligation to obtain section 310(b)(4) approval in the name of licensees in which it proposes to acquire a controlling interest.

23. The Commission proposes to issue section 310(b)(4) rulings in the name of the U.S. parent of the licensee(s) that are the subject of the petition, but also to provide for automatic extension of the U.S. parent's ruling to cover any subsidiary or affiliate of the U.S. parent, whether existing at the time of the ruling or formed or acquired subsequently. It would define “subsidiary or affiliate” as an entity that is wholly owned and controlled by, or is under 100 percent common ownership and control with, the U.S. parent. Any subsidiary or affiliate of the U.S. parent, as so defined, would be covered by the parent's ruling, provided that the U.S. parent remains in compliance with the terms of its ruling(s). The Commission proposes to require that a subsidiary or affiliate attach to any common carrier or aeronautical wireless application a certification, signed by the U.S. parent, stating that the U.S. parent is in compliance with the terms and conditions of its section 310(b)(4) ruling(s) and providing citations to the ruling(s). The Commission also proposes to extend automatically the U.S. parent's section 310(b)(4) ruling to cover successors-in-interest to the parent, provided that foreign ownership of any such successors-in-interest complies with the terms of the ruling. The Commission proposes to require that successors-in-interest notify it within 30 days of the reorganization. The Commission requests comment on these two automatic extension proposals. In particular, are they likely to achieve the intended purpose of reducing the number of section 310(b)(4) petitions that wireless carriers must file under current procedures?

24. Introducing New Foreign-Organized Entities into the Vertical Ownership Chain. A controlling U.S. parent of a licensee may itself have one or more controlling foreign-organized companies situated above it in the vertical chain of ownership, and new foreign-organized parent companies may be added to the vertical chain of ownership over time as a result of internal reorganizations. The Commission seeks input on whether it should permit the insertion of new, controlling foreign-organized companies at any level in the vertical ownership chain above the U.S. parent that has received a foreign ownership ruling without prior Commission approval, provided that any new foreign-organized company(ies), either alone or together, are under 100 percent common ownership and control with the controlling foreign parent for which the U.S. parent has received prior Commission approval. The Commission also requests comment on whether it should permit a U.S. parent company's approved, non-controlling foreign investors to insert new, foreign-organized companies into their vertical chains of ownership without the U.S. parent having to return to the Commission for prior approval, provided that the new foreign company is under 100 percent common ownership and control with the approved foreign investor. It requests comment on the costs and benefits of allowing foreign-organized companies to be introduced into the vertical ownership chains of the U.S. parent company and its approved, non-controlling foreign investors without prior approval once the Commission has issued the U.S. parent a section 310(b)(4) ruling. If the Commission determines to allow such post-ruling changes in foreign ownership, should it require the U.S. parent company to notify the Commission about the changes in ownership and, if so, would 30 days be a reasonable timeframe within which to require the U.S. parent to notify the Commission?

25. Service- and Geographic-Specific Rulings. The Commission requests comment on whether to retain its general practice of issuing rulings on a service-specific and geographic-specific basis. Section 310(b)(4) rulings typically cover only the particular wireless service(s) referenced in the petition for declaratory ruling, and the scope of the ruling may also be limited to the geographic service area of the licenses or spectrum leasing arrangements referenced in the petition. The Commission has previously recognized, in the Secondary Markets Second Report and Order, that service-specific and geographic-specific rulings might require carriers to make multiple filings for section 310(b)(4) approval, resulting in increased transaction costs and regulatory delay. 3 The Commission found that a policy of entertaining petitions that seek “blanket” approval, under section 310(b)(4), to cover future spectrum leasing arrangements and license assignments/transfers for services and geographic coverage areas specified in the petition would eliminate unnecessary regulatory hurdles for carriers seeking maximum flexibility to expand the scope of their service offerings, while continuing to ensure that the Commission and the Executive Branch have a meaningful opportunity to review applications and petitions for potential harms to national security, law enforcement, foreign policy and trade policy. The Commission seeks input on the public interest costs and benefits of issuing section 310(b)(4) rulings on a service-specific basis; and, similarly, on the costs and benefits of issuing section 310(b)(4) rulings on a geographic-specific basis. It requests that comments that advocate a change in policy include specific proposals as to the appropriate service and geographic limitations of section 310(b)(4) rulings, if any.

26. Contents of Section 310(b)(4) Petitions for Declaratory Rulings. The Commission proposes to require that all section 310(b)(4) petitions contain the name, address, citizenship, and principal places of business of any individual or entity, regardless of citizenship, that directly or indirectly holds or would hold, after effectuation of any planned ownership changes described in the petition, at least 10 percent of the equity or voting interests in the controlling U.S. parent company or a controlling interest at any level. Petitioners also would be required to provide the percentage of equity and/or voting interests held or to be held by each such “disclosable interest holder” (to the nearest one percent). The Commission proposes a 10 percent ownership threshold for its disclosure requirement because it essentially mirrors the ownership disclosure requirements that currently apply to most common carrier wireless applicants under the Commission's licensing rules. A foreign investor holding a non-controlling equity and/or voting interest of less than 10 percent in the U.S. parent would not need to be identified in the petition, unless the parent seeks specific approval for that investor (as a “named foreign investor”). The Commission seeks comment on the proposed ownership disclosure requirement. It also seeks comment on whether a lower ownership percentage disclosure threshold, such as an interest that exceeds 5 percent, may be appropriate. Additionally, it seeks input on whether to require a description of the control structure of the U.S. parent, including an ownership diagram and/or identification of the real party-in-interest disclosed in any companion licensing or spectrum leasing applications.

27. The Commission also proposes that section 310(b)(4) petitions include ownership information for each foreign individual or entity for which the petition seeks specific approval: Its name, citizenship, principal business(es), and the percentage of equity and/or voting interest held or to be held by the foreign investor (to the nearest one percent). It proposes that, where the named foreign investor is a corporation or other business entity, the petition shall identify each of the named foreign investor's direct or indirect 10 percent interest holders, specifying each by name, citizenship, principal business(es), and percentage of equity and/or voting interest held in the named foreign investor. The Commission believes that this ownership information is necessary for it to verify the identity and ultimate control of the foreign investor for which the petitioner seeks specific approval. It seeks comment on these proposed information collection requirements, including whether to set the proposed disclosure threshold at interests of more than 5 percent. The Commission believes that it will be particularly critical to obtain ownership information with respect to foreign investors for which a U.S. parent seeks specific approval to the extent the agency adopts its proposal to entertain a U.S. parent's request for approval to allow one or more named foreign investors to increase its interest in the U.S. parent up to and including a non-controlling 49.99 percent equity and/or voting interest.

28. The Commission proposes to adopt rules that set forth the methodology for calculating a petitioner's disclosable interest holders. It also proposes that petitioners requesting specific approval for named foreign investors use the same methodology to calculate the foreign investors' equity and voting interests in the U.S. parent. The proposed rules largely track the methodology articulated in the Foreign Ownership Guidelines for determining the level of foreign equity and voting interests that are held directly and/or indirectly in the U.S. parent of a common carrier or aeronautical licensee that is the subject of a section 310(b)(4) petition. 4

29. That is, in calculating foreign equity interests in a parent company, the Commission uses a multiplier to dilute the percentage of each investor's equity interest in the parent when those interests are held through intervening companies, regardless of whether any particular link in the chain represents a controlling interest in the company positioned in the next lower tier. By contrast, in calculating foreign voting interests in a parent company, the multiplier is not applied to any link in the vertical ownership chain that constitutes a controlling interest in the company positioned in the next lower tier.

30. In circumstances where voting interests in the U.S. parent are held through one or more intervening partnerships, the multiplier is not applied to dilute a general partnership interest or uninsulated limited partnership interest held by a foreign individual or entity. A general partner, and a limited partner that does not specifically demonstrate it is insulated from active involvement in partnership affairs, are considered to hold the same voting interest as the partnership holds in the company situated in the next lower tier of the vertical ownership chain. Where a foreign investor holds an ownership interest indirectly in the U.S. parent through an intervening limited partnership, and the investor is effectively insulated from active involvement in partnership affairs, the U.S. parent may apply the multiplier in calculating the foreign investor's voting interest in the U.S. parent under section 310(b)(4), and its voting interest will be calculated as equal to its equity interest in the U.S. parent. Similarly, where the U.S. parent is itself organized as a limited partnership, an insulated limited partner's voting interest in the U.S. parent will be calculated as equal to the limited partner's equity interest in the parent. A limited partnership interest will be treated as insulated where the section 310(b)(4) petition contains a showing that the foreign limited partner is prohibited by the relevant partnership agreement from participating in the day-to-day management of the partnership, and that only the usual and customary investor protections are contained in the limited partnership agreement.

31. The Commission requests comment on the proposed rules for calculating the equity and voting interests held, or to be held, in a petitioner by its disclosable interest holders and by foreign investors for which the petitioner requests specific approval. In particular, it requests comment on whether to revise its current methodology for calculating voting interests held in U.S. parent companies of common carrier or aeronautical licensees through intervening limited partnerships. It also requests comment on the appropriate methodology for calculating voting interests held in U.S. parent companies of common carrier or aeronautical licensees through intervening limited liability companies, an issue not addressed in the Foreign Ownership Guidelines.

32. The Commission additionally requests comment on whether the insulation standard that applies to foreign limited partners investing in U.S. parents of common carrier and aeronautical licensees is sufficient to support a presumption that an insulated limited partner will not be materially involved in managing partnership affairs. To the extent such a presumption holds true, would it justify treating the limited partner as having no voting interest in the limited partnership under section 310(b)(4), effectively treating the limited partner like a non-voting stockholder of a corporation? Is there a need to relax or clarify the insulation standard: e.g., to require insulation only with respect to the telecommunications-related businesses of the partnership? Alternatively, is there a perceived legal or policy reason to tighten the insulation standard, particularly if the agency determines to treat insulated limited partnership interests like non-voting stock interests? For example, should the Commission codify in its rules a list of investor protections which would not, in themselves, result in a limited partner being deemed uninsulated? Are the matters listed in proposed rule 47 CFR 1.993(c) underinclusive or overinclusive of matters properly considered to be usual and customary investor protections? Regardless of its determination on this issue, the Commission would continue to calculate the pro rata equity holdings of insulated limited partners investing in a U.S. parent directly, where the parent is itself organized as a limited partnership, or indirectly through intervening limited partnerships, as required by section 310(b)(4).

33. The Commission also requests comment as to how it should calculate the voting interests held in U.S. parent companies of common carrier or aeronautical licensees through intervening limited liability companies (and, to the extent they may be used, registered limited liability partnerships). The Commission has previously determined, in the context of its broadcast attribution rules, to treat limited liability companies in the same manner as limited partnerships and has declined to differentiate its treatment of limited liability companies based on whether their management form is centralized or decentralized. It also concluded that it would treat registered limited liability partnerships in the same manner as limited partnerships and limited liability companies. The Commission asks that commenters address whether the Commission should apply to limited liability companies and registered limited liability partnerships the same principles that it ultimately adopts for calculating voting interests in limited partnerships.

34. The Commission additionally requests comment whether it is reasonable for it to rely on a petitioner's certification that it has calculated the ownership interests disclosed in its petition based upon its review of the Commission's rules and that the interests disclosed satisfy each of the pertinent standards and criteria required by the rules. The Commission preliminarily finds that it is reasonable to adopt a certification approach in the context of its section 310(b)(4) ownership disclosure rules, and it seeks comment on the draft certification that is included in the proposed rules. Finally, the Commission requests comment regarding the nature of any other information which the Commission should require to be submitted in support of section 310(b)(4) petitions.

35. Filing and Processing of Section 310(b)(4) Petitions for Declaratory Rulings. The Commission proposes to continue to: place section 310(b)(4) petitions on public notice as accepted for filing after International Bureau staff has reviewed each petition for completeness; ensure that the appropriate Executive Branch agencies receive a copy of each petition; act on each petition after the Executive Branch agencies have completed their review and in light of any comments or objections that the agencies or other interested parties file for the record; and, unless it otherwise specifies in the ruling, issue the ruling subject to the standard terms and conditions that it adopts in this proceeding and codifies in the Commission's rules. The Commission asks whether it should retain its current approach to streamlining section 310(b)(4) petitions. In particular, it seeks input on whether extending the streamlined processing procedures is likely to result in more efficient and timely Commission processing of section 310(b)(4) petitions while continuing to ensure that Executive Branch agencies have sufficient opportunity to engage in a meaningful review. Finally, it seeks comment on whether there may be additional ways to accelerate the section 310(b)(4) review process. It asks commenters addressing ideas for modernizing the current process to discuss how any new approach would affect the Commission's public interest review.

36. Continued Compliance with Section 310(b)(4) Declaratory Rulings. The Commission requests comment on whether to require the U.S. parent to file a periodic certification with the Commission to demonstrate the parent is in compliance with its foreign ownership ruling. The agency asks whether to require a certification every 4 years after the anniversary of the effective date of the ruling or, alternatively, with a licensee's renewal applications.

37. Transition Issues. The Commission does not propose to change retroactively the terms and conditions of any section 310(b)(4) ruling issued prior to the effective date of the rules adopted in this proceeding. It proposes to permit the controlling U.S. parent company of a wireless carrier with an existing ruling to file a new petition under the rules adopted in this proceeding. It seeks comment on this approach and on alternative approaches that would extend the benefits of the rules in a way that minimizes the need for U.S. parent companies to return to the Commission for a new ruling. For example, if the Commission modifies or eliminates current policy with respect to non-WTO Member investment, should it adopt a rule that modifies all existing section 310(b)(4) rulings to incorporate the new policy? If the Commission adopts a 100 percent aggregate allowance, should it adopt a rule that would incorporate this provision in all rulings in place of the current, standard 25 percent aggregate allowance? Are there public policy reasons to require in all cases that a U.S. parent company return to the Commission for a new ruling to obtain the benefits of the rules adopted in this proceeding?

38. This document contains proposed new or modified information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget (OMB) to comment on the information collection requirements contained in this document, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. Public and agency comments are due on or before December 20, 2011. Comments should address: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; (d) ways to minimize the burden of the collection of information on respondents, including the use of automated collection techniques or other forms of information technology; and (e) ways to further reduce the information collection burden on small business concerns with fewer than 25 employees. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment on how we might further reduce the information collection burden for small business concerns with fewer than 25 employees.

39. To view a copy of this information collection request (ICR) submitted to OMB: (1) Go to the web page http://www.reginfo.gov/public/do/PRAMain, (2) look for the section of the Web page called “Currently Under Review,” (3) click on the downward-pointing arrow in the “Select Agency” box below the “Currently Under Review” heading, (4) select “Federal Communications Commission” (FCC) from the list of agencies presented in the “Select Agency” box, (5) click the “Submit” button to the right of the “Select Agency” box, and (6) when the list of FCC ICRs currently under review appears, look for the title of this ICR and then click on the ICR Reference Number. A copy of the FCC submission to OMB will be displayed.

40. The proposed information collection requirements are as follows:

OMB Control Number: 3060-xxxx .

Title: Regulations Applicable to Common Carrier and Aeronautical Radio Licensees Under Section 310(b)(4) of the Communications Act of 1934, as Amended.

Form No.: N/A.

Type of Review: New Collection.

Respondents: Businesses or other profit entities.

Number of Respondents and Responses: 79 respondents and 79 responses.

Estimated Time per Response: 1 hour to 46 hours.

Frequency of Response: On occasion and one-time reporting requirements.

Obligation to Respond: Required to obtain or retain benefits. The statutory authority for these proposed information collections is found in Sections 1, 4(i)-(j), 211, 309, 310, and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i)-(j), 211, 309, 310, and 403.

Total Annual Burden Hours: 942 hours.

Total Annual Costs: $282,600.

Nature and Extent of Confidentiality: An assurance of confidentiality is not offered. This information collection does not require the collection of personally identifiable information (PII) from individuals.

Privacy Act Impact Assessment: No impacts.

Needs and Uses: On August 9, 2011, the Commission adopted a Notice of Proposed Rulemaking in (FCC 11-121) in Review of Foreign Ownership Policies for Common Carrier and Aeronautical Radio Licensees under Section 310(b)(4) of the Communications Act of 1934, as Amended, IB Docket No. 11-133 (rel. Aug. 9, 2011) (Section 310(b)(4) NPRM). The Section 310(b)(4) NPRM initiates a review of the Commission's policies and procedures that apply to foreign ownership of common carrier and aeronautical en route and aeronautical fixed radio station licensees pursuant to section 310(b)(4) of the Communications Act of 1934, as amended. It seeks comment on measures to revise and simplify the Commission's regulatory framework under section 310(b)(4) for authorizing foreign ownership in the U.S. parents of common carrier and aeronautical radio licensees. It also proposes to codify whatever measures the Commission ultimately adopts in this proceeding to provide more predictability and ensure transparency of its section 310(b)(4) filing requirements and review process.

41. The Regulatory Flexibility Act of 1980, as amended (RFA), 5 requires that an initial regulatory flexibility analysis be prepared for notice-and-comment rule making proceedings, unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.”  6 The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.”  7 In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. 8 A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA).

42. In this NPRM, the Commission seeks comment on proposed changes and other options to revise and simplify its policies and procedures implementing section 310(b)(4) of the Act, 47 U.S.C. 310(b)(4), for common carrier and aeronautical radio station licensees while continuing to ensure that the agency has the information it needs to carry out its statutory duties. The proposals in this NPRM are designed to reduce to the extent possible the regulatory costs and burdens imposed on wireless common carrier and aeronautical applicants, licensees, and spectrum lessees; provide greater transparency and more predictability with respect to the Commission's filing requirements and review process; and facilitate investment from new sources of capital, while continuing to protect important interests related to national security, law enforcement, foreign policy, and trade policy.

43. We estimate that the rule changes discussed in this NPRM, if adopted, would result in a more than 70 percent reduction in the number of section 310(b)(4) petitions for declaratory ruling filed with the Commission annually, as compared to the current regulatory framework. 9 We also anticipate a reduction in the time and expense associated with filing petitions under the proposed framework. For example, we propose that U.S. parent companies of common carrier and aeronautical licensees that seek Commission approval to exceed the 25 percent benchmark in section 310(b)(4) no longer be required to request, in their section 310(b)(4) petitions, specific approval of named foreign investors unless a foreign investor proposes to acquire a direct or indirect equity and/or voting interest in the U.S. parent that exceeds 25 percent, or a controlling interest at any level. Another proposal would, if adopted, allow the U.S. parent to request specific approval for foreign investors named in the section 310(b)(4) petition to increase their direct or indirect equity and/or voting interests in the U.S. parent at any time after issuance of the section 310(b)(4) ruling, up to and including a non-controlling 49.99 percent equity and/or voting interest. Under another proposal, if adopted, the Commission would issue section 310(b)(4) rulings in the name of the U.S. parent of the licensee, and allow for automatic extension of the U.S. parent's ruling to cover any of the U.S. parent's subsidiaries or affiliates, whether existing at the time of the ruling or formed or acquired subsequently, provided that the U.S. parent remains in compliance with the terms of its ruling.

44. The Commission believes that the streamlining proposals and other options in the Section 310(b)(4) NPRM will reduce costs and burdens currently imposed on licensees, including those licensees that are small entities, and accelerate the foreign ownership review process, while continuing to ensure that the agency has the information it needs to carry out its statutory duties. Therefore, the Commission certifies that the proposals in the Section 310(b)(4) NPRM, if adopted, will not have a significant economic impact on a substantial number of small entities. The Commission will send a copy of the NPRM, including a copy of this Initial Regulatory Flexibility Certification, to the Chief Counsel for Advocacy of the SBA. 10 This initial certification will also be published in the Federal Register . 11

45. It is ordered that, pursuant to the authority contained in 47 U.S.C. 151, 152, 154(i), 154(j), 211, 303(r), 309, 310 and 403, this Notice of Proposed Rulemaking is adopted.

46. It is futher ordered that notice is hereby given of the proposed regulatory changes to Commission policy and rules described in this Notice of Proposed Rulemaking and that comment is sought on these proposals.

47. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Certification, to the Chief Counsel for Advocacy of the Small Business Administration.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR parts 1 and 25 as follows:

Federal odometer law, which is largely based on the Motor Vehicle Information and Cost Savings Act (Cost Savings Act)  1 and the Truth in Mileage Act of 1986, as amended (TIMA), 2 contains a number of provisions to limit odometer fraud and assure that the buyer of a motor vehicle knows the true mileage of the vehicle. The Cost Savings Act requires the Secretary of Transportation to promulgate regulations requiring the transferor (seller) of a motor vehicle to provide a written statement of the vehicle's mileage registered on the odometer to the transferee (buyer) in connection with the transfer of ownership. This written statement is generally referred to as the odometer disclosure statement. Further, under TIMA, vehicle titles themselves must have a space for the odometer disclosure statement and States are prohibited from licensing a vehicle unless a valid odometer disclosure statement on the title is signed and dated by the transferor. Titles must also be printed by a secure printing process or other secure process. Federal law also contains document retention requirements for odometer disclosure statements.

TIMA's motor vehicle mileage disclosure requirements apply in a State unless the State has alternate requirements approved by the Secretary. The Secretary has delegated administration of the odometer program to NHTSA. Therefore, a State may Petition NHTSA for approval of such alternate odometer disclosure requirements.

Seeking to replace an existing system of paper records for dealer inventories, transfers, and sales—including the transfer of titles and odometer disclosures—with an electronic system, the State of New York has petitioned for approval of alternate odometer disclosure requirements. The New York State Department of Motor Vehicles (“NYSDMV”) proposes a paperless odometer disclosure program for transfers to, between and from licensed New York motor vehicle dealers. The initial transfer of the vehicle to a New York dealer would include an odometer disclosure on a secure paper title, following the present practice. The final transfer of the vehicle from a New York dealer to a non-New York dealer would include an odometer disclosure on a two part paper receipt. The odometer disclosures would be recorded electronically.

In 2009, NHTSA reviewed certain requirements for alternative state programs and approved the Commonwealth of Virginia's alternate odometer disclosure program. 74 FR 643, 650 (January 7, 2009). New York's program bears some similarities to Virginia's program in scope. Like Virginia's program, the scope of New York's proposed program does not include transactions involving leased vehicles, or odometer disclosures by power of attorney. However, while Virginia's program was limited to in-state transfers (Virginia's program required Virginia owners to obtain a paper title for out-of-state transfers), New York's program is not so limited. Moreover, aspects of New York's proposed system, including reassignments between dealers and ultimately from a dealer to a non-dealer, were not examined in NHTSA's analysis of Virginia's program.

As noted above, NHTSA recently reviewed the statutory background of Federal odometer law in its consideration and approval of Virginia's Petition for alternate odometer disclosure requirements. See 73 FR 35617 (June 24, 2008) and 74 FR 643 (January 7, 2009). The statutory background of the Cost Savings Act and TIMA and the purposes behind TIMA, as they relate to odometer disclosure, are discussed at length in NHTSA's Final Determination granting Virginia's Petition. 74 FR 643, 647-48. A brief summary of the statutory background of Federal odometer law and the purposes of TIMA follows.

In 1972, Congress enacted the Cost Savings Act to, among other things, prohibit tampering with odometers on motor vehicles and to establish certain safeguards for the protection of buyers with respect to the sale of motor vehicles having altered or reset odometers. See Public Law 92-513, section 401, 86 Stat. 947, 961-63 (1972). Section 408 of the Cost Savings Act required that, under regulations to be published by the Secretary, the transferor of a motor vehicle provide a written vehicle mileage disclosure to the transferee. 3 In general, the purpose for the disclosure was to assist buyers to know the true mileage of a motor vehicle. The Act also prohibited odometer tampering and provided for enforcement.

A major shortcoming of the odometer provisions of the Cost Savings Act was their failure to require that the odometer disclosure statement be on the vehicle's title. In a number of States, the disclosures were on separate documents that could be easily altered or discarded and did not travel with the title. See 74 FR 644. Consequently, the disclosure statements did not necessarily deter odometer fraud employing altered documents, discarded titles, and title washing. Id.

Congress enacted TIMA in 1986 to address the Cost Savings Act's shortcomings. It amended Section 408 of the Cost Savings Act to add a new subsection (d) to prohibit States from licensing vehicles unless the new owner (transferee) submitted a title from the seller (transferor) containing the seller's signed and dated vehicle mileage statement. See Public Law 99-579, 100 Stat. 3309 (1986); 74 FR 644 (Jan. 7, 2009). Section 408(d) also prohibits the licensing of vehicles, for use in any State, unless the title issued to the transferee is printed using a secure printing process or other secure process, indicates the vehicle mileage at the time of transfer and contains additional space for a subsequent mileage disclosure by the transferee when it is sold again. Id. TIMA also added subsection 408(e)(1), which provided for the use of odometer disclosure statements when leased vehicles are sold or transferred.

TIMA added a provision to the Cost Savings Act allowing States to have alternate odometer disclosure requirements with the approval of the Secretary of Transportation. Section 408(f) of the Cost Savings Act states that the odometer disclosure requirements of subsections (d) and (e)(1) shall apply in a State unless the State has alternate motor vehicle mileage disclosure requirements approved by the Secretary in effect. Section 408(f) further states that the Secretary shall approve alternate motor vehicle mileage disclosure requirements submitted by a State unless the Secretary determines that such requirements are not consistent with the purpose of the disclosure required by subsection (d) or (e), as the case may be.

In 1994, in the course of the recodification of various laws pertaining to the Department of Transportation, the Cost Savings Act, as amended, was repealed, reenacted and recodified without substantive change. See Public Law 103-272, 108 Stat. 745, 1048-1056, 1379, 1387 (1994). The odometer statute is now codified at 49 U.S.C. 32701 et seq. In particular, Section 408(a) of the Cost Savings Act was recodified at 49 U.S.C. 32705(a). Sections 408(d) and (e) as later amended were recodified at 49 U.S.C. 32705(b) and (c). The provisions pertaining to approval of State alternate motor vehicle mileage disclosure requirements were recodified at 49 U.S.C. 32705(d).

As discussed above, the Cost Savings Act, as amended by TIMA in 1986, states that NHTSA “shall approve alternate motor vehicle mileage disclosure requirements submitted by a State unless the [NHTSA] determines that such requirements are not consistent with the purpose of the disclosure required by subsection (d) or (e) as the case may be.” Subsections 408(d), (e) of the Cost Savings Act were recodified to 49 U.S.C. 32705(b) and (c). In light of this provision, we now turn to our interpretation of the purposes of these subsections, as germane to New York's petition.

Our Final Determination granting Virginia's petition for alternate odometer disclosure requirements identified the purposes of TIMA germane to petitions for approval of odometer disclosure requirements on in-state transfers that did not include disclosures involving dealer reassignments, leased vehicles or disclosures by power of attorney. 4 74 FR 643, 647-48 (January 7, 2009). New York's petition encompasses vehicle transfers/reassignments to and among licensed New York dealers and from licensed dealers to a retail or out-of-state purchaser, but does not address transfers involving leased vehicles and disclosures by power of attorney. A brief summary of the purposes identified in the Virginia Final Determination follows. In addition, we address reassignments, which were not addressed in the Virginia petition.

One purpose of TIMA is to assure that the form of the odometer disclosure precludes odometer fraud. 74 FR 647. To prevent odometer fraud facilitated by disclosure statements that were separate from titles, TIMA required mileage disclosures to be on a secure vehicle title instead of a separate document. These titles also had to contain space for the seller's attested mileage disclosure and a new disclosure by the buyer when the vehicle was sold again. This discouraged mileage alterations on titles and limited opportunities for obtaining new titles with lower mileage than the actual mileage. Id. In addition, an aspect of the purpose of assuring that the form of the odometer disclosure precludes fraud is that the transfer by a titled owner must be on the title and not a reassignment document, but a reassignment document subsequently may be used by a transferor in whose name the vehicle has not been titled. 5 To preclude fraud, the reassignment document(s) must have an odometer disclosure executed by the transferor and transferee, and the reassignment document(s) must be accompanied by the title transferring ownership of the vehicle to the dealer, with a proper odometer disclosure. The reassignment document is not a standalone document.

A second purpose of TIMA is to prevent odometer fraud by processes and mechanisms making odometer mileage disclosures on the title a condition of any application for a title, and a requirement for any title issued by a State. 74 FR 647. The same applies to reassignment documents; they must contain odometer disclosures and be presented for titling. This was intended to eliminate or significantly reduce abuses associated with lack of control of the titling process. Id.

Third, TIMA sought to prevent alterations of disclosures on titles and to preclude counterfeit titles through secure processes. 74 FR 648. In furtherance of these purposes, paper titles and reassignment documents (incorporating the disclosure statement) must be produced using a secure printing process or protected by “other secure process.”  6 Id.

A fourth purpose is to create a record of vehicle mileage and a paper trail. 74 FR 648. The underlying purposes of this record and paper trail were to better inform consumers and provide mechanisms for tracing odometer tampering and prosecuting violators. TIMA's requirement that new applications for titles include signed mileage disclosure statements on the titles from the prior owners creates a permanent record that is easily checked by subsequent owners or law enforcement officials. Proper reassignment documents, when accompanied by the title from the initial transferor, similarly create a permanent record. This record provides critical snapshots of vehicle mileage at every transfer, which are the fundamental links of this paper trail.

Finally, the general purpose of TIMA is to protect consumers by assuring that they receive valid representations of the vehicle's actual mileage at the time of transfer based on odometer disclosures. 74 FR 648.

New York, which is in the process of implementing an Electronic Vehicle Inventory and Transfer System (System), petitions for approval of alternate odometer disclosure requirements. New York requests alternate disclosure requirements for transfers of motor vehicles in transactions to, from, and among licensed New York dealers.

As New York stated in its petition, odometer disclosures are made on securely printed documents produced by NYSDMV. Each document—the Certificate of Title (MV-999), the Retail Certificate of Sale (MV-50) (Dealers Reassignment Form), and the Wholesale Certificate of Sale (MV-50W)—may be used depending on the circumstances of the transfer. In order to comply with Federal odometer disclosure requirements, all three documents include built-in security features along with an area to disclose the odometer reading. They have been designed with unique numbers. The MV-999 has space for one odometer disclosure statement and is used where title is held by the transferor. If this space has been filled by an odometer disclosure statement in a prior transaction, New York dealers must use either the MV-50 or MV-50W reassignment document, as appropriate, to make the required odometer disclosure statement and transfer vehicle title. See 15 NYCRR section 78.10.

Currently, in New York, dealers are required by NYSDMV to keep a paper inventory (Book of Registry) in which dealers record identifying information about vehicles they purchase and sell. NYS Vehicle and Traffic Law section 415(15); 15 NYCRR section 78.25. When a New York dealer sells a vehicle to another New York dealer, the purchasing dealer is required to enter the vehicle identifying information including the odometer disclosure statement in its Book of Registry. A dealer's Book of Registry is subject to review during on-site audits by NYSDMV.

When a New York dealer sells a vehicle to a purchaser, an MV-50/MV-50W is filled out with the vehicle identifying information, the name and address of the dealer, and the name and address of the purchaser. The dealer fills in the odometer disclosure statement found on the MV-50/MV-50W and then both the dealer and purchaser sign the statement. Odometer readings are recorded in the selling dealer's Book of Registry, a purchasing dealer's Book of Registry (if the purchaser is a New York dealer), and the MV-50, all of which are subject to audit by NYSDMV. In cases where the purchaser is not another New York dealer, the purchaser would take a copy of the MV-50, along with other ownership documentation provided by the dealer ( e.g. original title, prior MV-50/MV-50Ws), and a completed Vehicle Registration/Title Application (MV-82) to a NYSDMV office to apply for a new title.

According to New York's petition, the System will control access to MV-50 processing. New York dealerships would access the System to enter inventory and record vehicle sales transactions, including making the odometer disclosure statements required under TIMA. Dealers will be required to join the System when they are due for business license renewal. Each licensed New York dealer is required to renew its business license every two years.

To join the System, a dealer first would request access to the system from NYSDMV. NYSDMV would register the dealership as a group and would designate a System administrator for that dealership (a dealership employee chosen by the dealer) to be responsible for assigning System accounts to employees (users) within the dealership. 7 The number of users and the level of access for each user would be determined and controlled at the administrator's discretion. User accounts created by the dealership's administrator would be subject to review during onsite audits by NYSDMV and Enforcement staff.

Each year, the administrator would be prompted by the System to re-certify the facility on the System with the NYSDMV. If the administrator does not comply with the System recertification prompt, dealership access to the System would be turned off, preventing the dealership from completing any sales transaction. An entire dealership or an individual working at a dealership could be denied access to the System any time NYSDMV deemed it necessary. The System would be limited to New York dealer transactions, as others except for NYSDMV would not have access to it.

Under New York's proposal, when a vehicle is transferred to a dealership, the vehicle's identifying information would be entered into the System using a standardized template through a user's account. The vehicle identification number would be automatically verified by the System using the appropriate Vehicle Identification Number Analysis (VINA) file. (VINA is a system used to verify and decode information contained in vehicle identification numbers.) If the vehicle is sold to another New York dealer, the purchasing dealer's System template for that vehicle would pre-fill with the vehicle's identification information from the System. During sales/transfer transactions, the seller would electronically disclose vehicle information including the current mileage and would be issued a unique transaction number.

Because it relies primarily on dealers making entries into the system, New York's proposed Electronic Vehicle Inventory and Transfer System encompasses only transactions involving dealers: Sales of vehicles by non-dealer vehicle owners to dealers, sales of vehicles between licensed New York dealers and vehicle sales from licensed New York dealers to non-dealers, including retail consumers, out of state dealers, vehicle dismantlers, and junk and salvage dealers.

More specifically, NYSDMV's proposed process for handling vehicle transfers to licensed New York dealers would be as follows. When the dealer receives a vehicle (whether from a manufacturer, a customer, or another dealer), including the vehicle ownership documentation, an authorized dealership user would sign on to the System and enter the vehicle's identifying information. The vehicle's odometer reading, disclosed on the title in the case of a consumer trading in or selling a vehicle to the dealer, would be recorded in the system by the dealer.

If a dealer sells a vehicle to another licensed New York dealer, the selling dealer would sign on to the System using its unique sign on and password and would access the vehicle's identifying information on the System. The selling dealer would enter current vehicle information including the current odometer reading and would enter seller and purchaser information on the System. The System would then generate a transaction number. The purchasing dealer would sign on to the System using its unique sign on and password and would access the vehicle's identifying information on the System using the transaction number. The purchasing dealer would then review the vehicle's identifying information, including the odometer disclosure statement made by the selling dealer, 8 and would accept or reject the transaction. If the purchasing dealer accepts the transaction it would be considered complete. The original pre-dealer ownership document (still in the prior owner's name) would be surrendered to the purchasing dealer at the time of sale.

If, during the purchasing dealer user's review of the vehicle's identifying information on the System, the user did not agree with all of the information, the user could reject the transaction. Subsequent transfers between licensed New York dealers would be recorded in the same manner. It is the Agency's understanding that the entire history of the vehicle's identifying information entered into the System at each transfer would be maintained indefinitely on the System.

Under the New York proposal, when a vehicle owned by a New York dealer is sold to a retail purchaser, salvage dealer, auction house, out-of-state buyer or other non-New York dealer purchaser, an authorized user at the selling dealer would sign on to the System and access the vehicle information on the System. The selling dealer would enter current vehicle information including the current odometer reading, and would enter seller and purchaser information on the System. A two-part sales receipt/odometer statement would be created on the System. The purchaser would then review the information, including the odometer statement, on a draft receipt displayed on the computer screen. If the purchaser agrees with the odometer statement and other information, the authorized dealer representative would save the data in the system and then print a two-part sales receipt. Both parties would then sign the odometer disclosure statement printed on each of the two parts of the receipt. The dealer would retain the dealer part of the receipt for its files. The purchaser would be given the purchaser's copy of the receipt along with the original title acquired by the dealer when it purchased the vehicle.

If the purchaser does not agree with any of the information displayed on the dealer's computer screen, 9 the purchaser could reject the transaction. In that case, the dealer would have to cancel the transaction in the System and resubmit using the correct information.

New York's petition further states that during vehicle registration by a New York purchaser, NYSDMV office staff would review the vehicle's data and odometer disclosure on New York's system and compare it to the paper ownership documents and the purchaser's copy of the aforementioned two-part receipt. This would verify the mileage reported on the paper documents. If a vehicle had gone in and out of New York State multiple times, New York's petition states that the proposed system would show the New York State history for the vehicle, which would help to identify gaps in mileage and ownership.

New York contends that its proposed program meets the purposes of TIMA as described by NHTSA in its Final Determination on the Commonwealth of Virginia's Petition for alternate odometer disclosure requirements. The Petition identified the purposes of TIMA and the State's position that its proposed program satisfied each purpose.

One purpose is to assure that the form of the odometer disclosure precludes odometer fraud. As noted by New York based on NHTSA's Virginia program approval notice, the disclosure must be contained on the title provided to the transferee and not on a separate document. New York states that its proposal satisfies this purpose because the odometer disclosure will remain on the back of the New York Certificate of Title (MV-999) and will be added to the Electronic Vehicle Inventory and Transfer System. Other transactions, currently recorded on paper reassignment documents (MV-50 or MV50W), will be recorded in the proposed electronic system. For dealer to dealer transactions that presently use a paper reassignment document, dealers would make disclosures directly into the Electronic Vehicle Inventory and Transfer System after both buyer and seller agree electronically that the information, including the odometer disclosure, is correct. For transactions where a dealer transfers a vehicle to a consumer or other buyers who are not New York dealers, the odometer disclosure would, with the buyer's assent, be entered into the System. The electronic disclosure would also be recorded on a two-part receipt generated by the System and printed by the dealer. Both buyer and seller would sign this paper disclosure and each would retain one part of the two part form. This paper receipt would then be presented when the buyer wishes to register the vehicle and checked against the electronic record by New York DMV personnel.

A second purpose is to prevent odometer fraud by processes and mechanisms making the disclosure of an odometer's mileage on the title a condition of the application for a title and a requirement for the title issued by the State. New York contends that its proposal satisfies this purpose by requiring odometer disclosures to remain on the back of the New York DMV Certificate of Title, requiring electronic odometer disclosures for subsequent reassignments at the time of transfer and requiring that non-dealer purchasers be issued a receipt documenting the electronic disclosure made at the time of purchase. Because these documents will be required when a purchaser applies for a title and NYSDMV will verify the odometer reading through a review of both the Electronic Vehicle Inventory and Transfer System and the documents before issuing a title, New York contends that its proposal meets this TIMA purpose.

A third purpose is to prevent alterations of disclosures on titles and to preclude counterfeit titles through secure processes. New York states that its proposal satisfies the purpose because the paper title (MV-999) will continue to be produced through a secure printing process. Further, the paper reassignment documents (MV-50 or MV50W) used in transfers between licensed New York dealers will be replaced with the secure Electronic Vehicle Inventory and Transfer System that will prevent odometer tampering and allow individuals and NYSDMV to trace a more definitive mileage history. According to New York, the proposed electronic odometer disclosure scheme would also meet this purpose in sales from dealers to consumers and other non-dealer buyers. In that case, the odometer disclosure would be made electronically on the secure System and on a two-part receipt generated by that system. New York contends that the security of the Electronic Vehicle Inventory and Transfer System that will prevent odometer tampering and allow individuals and NYSDMV to trace a more definitive mileage history.

A fourth purpose is to create a record of the mileage on vehicles and a paper trail. New York contends its proposal satisfies this purpose because the odometer disclosure statement from the consumer to the New York dealer will remain on the back of the MV-999 and will be added to the Electronic Vehicle Inventory and Transfer System by the purchasing dealer. Disclosures made at the time of dealer to dealer transfers and when dealers sell to consumers and other non-New York dealer buyers will also be entered into the New York System. As a result, dealers will be able to check, and NYSDMV will be able to monitor, odometer history through the System and fraud will be reduced. Subsequent purchasers, both dealers and consumers alike, will be able to check, and NYSDMV will be able to monitor, odometer history through the System.

A fifth purpose is to protect consumers by assuring that they received valid representations of the vehicle's actual mileage at the time of transfer based on odometer disclosures. New York states that its proposal satisfies this purpose because dealers will be able to use the Electronic Vehicle Inventory and Transfer System to verify the odometer history of the vehicle, and NYSDMV will be able to monitor odometer history. 10 Similarly, New York states that consumers will be able to check odometer history through a Web-based application and thereby evaluate the accuracy of the odometer readings for vehicles they wish to buy.

Under TIMA, NHTSA “shall approve alternate motor vehicle mileage disclosure requirements submitted by a State unless [NHTSA] determines that such requirements are not consistent with the purpose of the disclosure required by subsection (d) or (e) as the case may be.” The purposes are discussed above, as is the New York alternative. We now provide our initial assessment whether New York's proposal satisfies TIMA's purposes as relevant to its Petition. 11

One purpose is to assure that the form of the odometer disclosure precludes odometer fraud. When title is held by the transferor, the disclosure must be contained on the title provided to the transferee and not on a separate document. In the case of a transferor of a vehicle in whose name the vehicle is not titled ( e.g., the transferor of the vehicle is the transferee on the title) the odometer disclosure statement may be made on a secure reassignment document if the title does not have sufficient space for recording the additional disclosure.

NHTSA has initially determined that New York's proposed alternate disclosure requirements satisfy this purpose. Under New York's proposal, when an owner transfers ownership of a vehicle to a dealer, the odometer disclosure statement would be on the paper title. The dealer would input the vehicle's identifying information and odometer disclosure into the Electronic Vehicle Inventory and Transfer System. The odometer disclosure, including the names of the transferor and transferee, would be required. Thereafter the odometer disclosure statement will reside as an electronic record within the System that will be linked to the vehicle by the vehicle's VIN.

If a dealer transfers a vehicle to another licensed New York dealer, the selling dealer would sign on to the System using its unique sign on and password and would access the vehicle's identifying information on the System. The selling dealer would enter current vehicle information including the current odometer reading and would enter seller and purchaser information on the System. The System would then generate a transaction number. The purchasing dealer would use the transaction number to access the vehicle's information on the System, review the information, including the selling dealer's odometer disclosure statement, and accept or reject the transaction. If the transaction is accepted, the sale is completed and the odometer disclosure is recorded in the System. In essence, this is an electronic reassignment from one licensed dealer to another licensed dealer, using a transaction based approach in a secure computer system in which both the selling dealer and purchasing dealer sign off on the odometer disclosure.

When the vehicle is sold from a licensed New York dealer to a person or entity other than a licensed New York dealer, the dealer/seller enters the purchaser's identifying information and the odometer disclosure statement into the System. If the buyer agrees that the odometer disclosure in the System is accurate, the System creates a two part receipt that is signed by the selling dealer and purchaser. The paper title and one part of the receipt must be presented to a State motor vehicle titling and registration agency when the purchaser applies to title and register the vehicle.

NHTSA's initial determination is that the New York proposal meets the TIMA purpose of assuring that the form of the odometer disclosure precludes odometer fraud. We note that New York's proposal involves a proper odometer disclosure on the title itself when the seller is the person in whose name the vehicle is titled. Following transfer of a vehicle to a New York dealer, when the vehicle is not re-titled in the name of the dealer, the proposed New York system would provide for odometer disclosures to be made electronically in a secure electronic system with sign offs by the seller and buyer instead of on the paper reassignment documents currently being used. In addition, the paper title with an odometer disclosure would be transferred to the transferee/purchasing dealer. This is comparable to paper reassignments employing a paper State title and paper State reassignment form. Ultimately, for sales from New York dealers to consumers and other non-dealer buyers, the odometer disclosure would be recorded in the State's electronic system and on a two-part receipt signed by both buyer and seller. The receipt—a form of paper reassignment document—memorializes the electronic disclosure. This would accompany the initial title with an odometer disclosure.

A second purpose of TIMA is to prevent odometer fraud by processes and mechanisms making the disclosure of an odometer mileage on the title both a condition for the application for a title and a requirement for the title issued by the State. NHTSA has initially determined that New York's proposed process satisfies this purpose. New York's proposed transfer process requires disclosure of odometer information on the paper title, at first sale from a titled owner to a New York licensed dealer, and electronically within the System in transfers between New York licensed dealers before the transaction can be completed. In addition, in sales from New York licensed dealers to non-dealer purchasers, the purchaser must present the prior paper title from the initial sale to the first dealer and the receipt of purchase with a mileage disclosure from the last dealer when applying for a vehicle title and registration. New York's proposal requires that the vehicle title from the initial owner in the process to the first dealer—with the odometer disclosure—be provided to the person purchasing the vehicle from the last dealer in the dealer chain. This original title—with an odometer disclosure—along with the buyer's part of the proposed two-part paper receipt and mileage disclosure must both be presented to state titling officials in order for the buyer to obtain a new title.

Another purpose of TIMA is to prevent alterations of disclosures on titles and to preclude counterfeit titles through secure processes. The agency has initially determined that New York's alternate disclosure requirements do not satisfy this purpose. When a vehicle is first transferred to a dealer, the transfer and required odometer disclosure statement are made using the vehicle's secure paper title document (MV-999). Subsequent transfers between licensed New York dealers are processed electronically—the selling dealer submits the vehicle's identifying information into the System, including the odometer disclosure statement; the purchasing dealer then verifies the information on the System, including the odometer disclosure statement made by the selling dealer, and either accepts or rejects the transaction electronically.

Under New York's proposal, upon final retail sale of a vehicle to a consumer or other non-New York dealer entity, the odometer disclosure statement would be made electronically and on a two part paper receipt, one part of which is given to the new owner to use in obtaining a title. More particularly, the selling dealer would access the Electronic Vehicle Inventory and Transfer System and enter the odometer disclosure and the dealer's and buyer's information into the system. If the odometer reading entered is not lower than a prior entry, a two-part odometer statement and receipt would be then be created electronically. The purchaser would review the information on the receipt prior to the receipt being printed and verify the odometer disclosure statement on the receipt. If the purchaser accepts the information, then the two-part sales receipt would be printed and both parties would sign the odometer disclosure statement printed on each part of the receipt. The dealer would retain the dealer part of the receipt for its files and the purchaser would be given the purchaser part of the receipt along with the original ownership document.

New York's petition does not state that the receipt form would be generated by a secure process, and in any event does not describe any such processes. NHTSA cannot assume that the reassignment document would be produced using secure processes. The agency's preliminary conclusion is that New York's use of a non-secure paper receipt and disclosure form does not satisfy the TIMA purpose of preventing alterations of disclosures on titles and precluding counterfeit titles through secure processes.

When, following New York dealer to New York dealer sale(s), a vehicle is purchased by an out-of-state buyer, the non-secure receipt form proposed by New York would be used as a reassignment document outside of New York. This non-secure document therefore would be used to satisfy part of the titling requirements for the vehicle in the State where it would be titled and registered. This non-secure document could be easily altered or counterfeited and used in those jurisdictions outside New York. The result is that the odometer disclosure statement printed by the last New York dealer as part of the sale to a non-New York dealer would not be made by secure processes, and thus would not be not in conformance with a TIMA purpose. We appreciate that the proposed New York system would allow other state motor vehicle agencies to check the electronic disclosure information maintained on New York's electronic system, or that the non-dealer purchaser may be able to obtain a New York title. In our view, as explained further below, this does not rectify the shortcoming in New York's proposed program.

Another purpose of TIMA is to create a record of the mileage on vehicles and a paper trail. The underlying purposes of this record and paper trail are to enable consumers to be better informed and provide a mechanism through which odometer tampering can be traced and violators prosecuted. Under New York's proposal, creation of a paper trail starts with the requirement that the initial transfer to a dealer is processed on the vehicle's secure paper title, including the odometer disclosure statement. Each subsequent dealer-to-dealer transfer is processed electronically, with the selling dealer inputting the vehicle's identifying information into the System, and the purchasing dealer verifying and certifying this information to complete the transfer. Under New York's proposed program, the most recent vehicle odometer disclosure will be available for public view via an online application. A dealer selling a vehicle to a non-dealer would record the odometer statement in the System at the time of sale. A selling dealer must also transfer the paper title obtained from the first seller to the purchasing dealer or retail and/or out of state buyer.

For ultimate sales to New Yorkers, the final retail purchaser would be required to present paperwork (including the title containing an executed odometer disclosure statement used to transfer title of the vehicle from the initial owner to a New York dealer and, if appropriate, one copy of the receipt generated by the System when the dealer transferred the vehicle to the purchaser) to the NYSDMV when applying to register and title the vehicle in the purchaser's name. The NYSDMV would use this paperwork in conjunction with the vehicle's identifying information available on the System to verify the trail of ownership and odometer disclosure statements for the vehicle through the final retail sale. The paper title used to transfer the vehicle to the dealer would be retained by the NYSDMV in a file associated with the vehicle VIN for at least ten years, and it would be available to dealers and NYSDMV and Enforcement staff. The System will maintain the vehicle identifying information, including odometer disclosure, indefinitely. The NYSDMV could track the odometer disclosure statements through the System. The System would not allow a transfer to be completed in which the disclosed odometer reading is lower than a prior odometer disclosure statement. In addition, New York's petition states that it will not issue a title to the buyer unless the disclosures on the foregoing paper documents match those found in the System.

In those cases in which a New York dealer sells a vehicle to a person who would title and register it out-of-state, the buyer would be provided with the title used to transfer it initially to a dealer and one part of the two-part receipt. As noted above, the receipt, which is not specified to be on secure paper, is a vulnerability. A substitute document could readily be created.

In NHTSA's preliminary view, the New York's proposed program would create a scheme of records equivalent to the current “paper trail” that assists law enforcement in identifying and prosecuting odometer fraud, except where the vehicle ultimately is titled in a state other than New York. In those instances, it is less effective than the current system that employs a Paper MV 50 Retail Certificate of Sale (Dealers Reassignment form), which is on secure paper with a control number, and the dealer has a copy. The resolution of whether New York's proposed program satisfies the purpose of creating a paper trail factor turns on the security of the final reassignment document used to obtain a title. At this juncture, it does not satisfy this purpose.

TIMA's overall purpose is to protect consumers by assuring that they receive valid odometer disclosures representing a vehicle's actual mileage at the time of transfer. Here, except for the portions of the proposed program relating to the security of the odometer disclosure statement made on the two-part receipt in a vehicle sale from a licensed New York dealer to an out of state buyer, New York's proposed alternate disclosure requirements include characteristics that would assure that representations of a vehicle's actual mileage would be as valid as those found in current paper title transfers and reassignments.

Other than the portions related to the security of the odometer disclosure statement made at the sale of a vehicle from a licensed New York dealer to an out of state buyer, New York's proposal likely will provide more protection for consumers than the current procedures. Transfers of vehicles between licensed New York dealers, including the required odometer disclosure statements, would be processed and the records maintained electronically in the System. Transfer records would be maintained on the System. The paper title used for the initial transfer to a licensed New York dealer would follow the vehicle and would be required when applying for registration and titling of the vehicle in the final purchaser's (not a licensed New York dealer) name. Potential buyers can examine the most recent odometer disclosure statement online before purchasing the vehicle. In-state consumers are at least as protected under New York's proposed program as they are under the current system.

For the foregoing reasons, NHTSA preliminarily denies New York's Petition regarding proposed alternate disclosure requirements. During the comment period, New York may submit additional information demonstrating how its program satisfies the concerns identified above or may amend its program to satisfy these concerns.

This is not a final agency action. NHTSA invites public comments within the scope of this notice. Should NHTSA decide to issue a final grant of New York's Petition, in whole or in part, it would likely reserve the right to rescind that grant in the event that future information indicates that, in operation, New York's alternate disclosure requirements do not satisfy applicable standards.

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