On January 28, 2008, the President signed into law the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), which created the Special Inspector General for Afghanistan Reconstruction (SIGAR). In order to establish procedures to facilitate public interaction with SIGAR, the agency is issuing interim final regulations under the FOIA and the Privacy Act.

This interim final rule establishes procedures for SIGAR necessary to implement the FOIA (5 U.S.C. 552) and the Privacy Act (5 U.S.C. 552a). The provisions of this subpart shall apply to all components of SIGAR.

The FOIA provides for the disclosure of agency records and information to the public, unless that information is exempted under delineated statutory exemptions under the FOIA. The Privacy Act serves to safeguard public interest in informational privacy by delineating the duties and responsibilities of federal agencies that collect, store, and disseminate personal information about individuals. The procedures established here are intended to ensure that SIGAR fully satisfies its responsibility to the public to disclose agency information while simultaneously safeguarding individual privacy.

The Privacy Act serves to balance the Government's need to maintain information about individuals with the rights of individuals to be protected against unwarranted invasions of their privacy stemming from federal agencies' collection, maintenance, use, and disclosure of personal information about them. Agencies are required to issue regulations outlining the agency's rules and procedures for implementation of the Privacy Act and its provisions within the agency. This includes procedures on how individuals may request access to information about themselves, request amendment or correction of those records, and request an accounting of disclosures of their records by SIGAR.

These regulations establish procedures under the FOIA and the Privacy Act to facilitate the interaction of the public with SIGAR. SIGAR's policy of disclosure follows the Presidential Memorandum of January 21, 2009, “Transparency and Openness,” 74 FR 4685, and the Attorney General's March 19, 2009 FOIA policy guidance, advising Federal agencies to apply a presumption of disclosure in FOIA decision making. This Interim Final Rule parallels the procedures currently used by other agencies to implement the FOIA and the Privacy Act. SIGAR has determined that good cause exists to publish these regulations as an interim final rule. These rules establish procedures to facilitate SIGAR's interactions with the public and the public's right to gain access to information about SIGAR and about themselves that SIGAR maintains. The absence of Privacy Act regulations could impair the confidentiality and privacy rights of those who submit sensitive information to SIGAR as well as the ability of SIGAR to use that information to carry out its statutory mission. SIGAR has determined that this interim rule should be issued without a delayed effective date pursuant to 5 U.S.C. 553(d)(3).

Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. Chapter 6) do not apply. It has been determined that this rulemaking is not a significant regulatory action for the purposes of Executive Order 12866. Accordingly, a regulatory impact analysis is not required.

For the reasons set forth above, SIGAR establishes 5 CFR Chapter LXXXIII, consisting of part 9301 to read as set forth below.

I. Background

On January 28, 2008, the President signed into law the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), which created the Special Inspector General for Afghanistan Reconstruction (SIGAR). Under 5 U.S.C. 301, heads of Executive or military departments may prescribe regulations governing the conduct of its employees and the custody, use, and preservation of the department's records, papers, and property. Many departments and agencies have promulgated such regulations to provide procedures for the disclosure of official records and information.

Generally, these are termed Touhy regulations, after the Supreme Court's decision in United States ex rel. Touhy v. Regan, 340 U.S. 462 (1951). In that case, the Supreme Court held that an agency employee could not be held in contempt for refusing to disclose agency records or information when following instructions of his or her supervisor regarding the disclosure that were issued pursuant to agency regulations. As such, an agency's Touhy regulations are the instructions agency employees are to follow when those employees receive requests or demands to testify or otherwise disclose agency records or information.

SIGAR's proposed Touhy regulations provide generally that employees of SIGAR may not disclose documents or information in response to a demand or order of a court or any other authority without first being authorized by the agency to do so. The purpose of these regulations is to conserve valuable agency resources, protect SIGAR employees from becoming enmeshed in litigation, and to protect sensitive Government information and decision making processes within the confines of the law. In order to establish procedures to facilitate public interaction with SIGAR, SIGAR is issuing proposed and interim final regulations.

This interim final rule establishes procedures governing the disclosure of information and records in connection with court litigation and certain other types of proceedings.

This interim final rule is generally similar to the Touhy procedures concerning the disclosure of information in litigation that have been adopted by other agencies. Further, this rule relates to agency management and personnel. Accordingly, SIGAR has determined that notice and public procedure thereon are impracticable, unnecessary and contrary to the public interest pursuant to 5 U.S.C. 553(b)(3)(B). For the same reasons, SIGAR has determined that this interim rule should be issued without a delayed effective date pursuant to 5 U.S.C. 553(d)(3). Nevertheless, SIGAR will consider any public comments on this interim final rule before issuing its final rule.

Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply.

It has been determined that this rulemaking is not a significant regulatory action for the purposes of Executive Order 12866. Accordingly, a regulatory impact analysis is not required.

The Agency improves the quality of life in rural America by providing investment capital for deployment of rural telecommunications infrastructure. Financial assistance is provided to rural utilities; municipalities; commercial corporations; limited liability companies; public utility districts; Indian tribes; and cooperative, nonprofit, limited-dividend, or mutual associations. In order to achieve the goal of increasing economic opportunity in rural America, the Agency finances infrastructure that enables access to a seamless, nationwide telecommunications network. With access to the same advanced telecommunications networks as its urban counterparts, especially broadband networks designed to accommodate distance learning, telework, and telemedicine, rural America will eventually see improving educational opportunities, health care, economies, safety and security, and ultimately higher employment. The Agency shares the assessment of Congress, State and local officials, industry representatives, and rural residents that broadband service is a critical component to the future of rural America and modern emergency communications capabilities are critical to the safety and security of all Americans. The Agency is committed to ensuring that rural America will have access to affordable, reliable, telecommunications and broadband services and to provide a healthy, safe, and prosperous place to live and work.

Following the September 11, 2001, attacks on the United States, significant Congressional attention was placed on weaknesses in the nation's emergency communications capabilities. The ability of rural communities, carriers and emergency responders to keep up with changing communications technologies was and continues to be a concern of emergency response professionals. Interoperability; or the ability of emergency responders from various agencies and jurisdictions to communicate with each other is also a pressing national need.

In 2002, the Congress gave the RUS statutory authority to “to expand or improve 911 access and integrated emergency communications systems in rural areas” in section 315 of the RE Act (6102 of the 2002 Farm Security and Rural Investment Act of 2002). No regulations were ever proposed to implement that section.

In 2008, the Congress re-authorized section 315 of the RE Act and added language to further define eligible loan purposes. It also clarified that projects could be funded from appropriations made to the RUS telecommunications program.

In 2011, the President launched a major initiative to use wireless 4G technology to create a nation-wide interoperable emergency communications network. The plan contemplates using dual-use 4G wireless technologies in rural areas to address public safety and private sector communications needs.

Rural areas face significant challenges in deploying emergency communications systems. The 911 Program Office housed within the National Transportation Safety Administration specifically noted that “(r)ural and tribal 911 centers face special challenges. They typically serve areas that are large geographically but less-densely populated than urban areas. Because it may take first responders longer to reach the scene of an emergency, call-takers in public safety answering points (PSAPs) serving rural areas may be required to stay on the phone longer with callers or provide more extensive emergency instruction to callers until help arrives. And in medical emergencies, hospitals are often farther away which results in extended transport times, making the ambulance unavailable for other calls in its response area—in areas that may have very limited coverage to begin with. The limited responder resources typical of rural areas can be more quickly overwhelmed in disasters or large-scale incidents.” The program office went on to observe that “supporting rural PSAPs is vitally important, particularly because it may take longer for help to arrive in rural areas, and the call-taker may make an even bigger difference in the outcome of an emergency situation.” (see http://www.911.gov/911-issues/challenges.html ).

The sixty-minute period immediately following a traumatic injury, like an injury resulting from a car crash is known as the “golden hour.” The risks of death or permanent injury increase dramatically if medical attention is not given within that first hour. In rural America, distance and sparse population work against the quick discovery and treatment of injuries resulting from an individual or mass emergency. In rural areas the ability to reach a person in distress can be the difference between life and death or recovery and disability.

Congress twice enacted section 315 to give the RUS flexible financial tools to help rural communities, service providers and governmental entities address their emergency communications needs. By giving clear loan authority to the agency, RUS would have the tools to leverage public and private resources to speed the rural deployment of a dual-use public safety/commercial wireless network, address homeland security communications needs along America's rural international borders; finance enhanced 911 capabilities for carriers and communities to precisely locate a rural wireless call to 911 or to finance next-gen 911 upgrades which would allow citizens to contact 911 via text message or send to emergency responders cell phone photos or short videos of a crime scene or accident location. E911 location accuracy requirements pose unique challenges for rural wireless carriers. The new authority would give the agency clear authority to finance wireless upgrades which relate to public safety and security, even if it does not finance the entire wireless communications systems.

Without this authority, RUS would be very limited in its ability to make financing available to address specific rural emergency communications needs. Without this authority, the RUS telecommunications statute would generally prohibit the agency from financing municipal investments.

As a loan program which must meet the rigorous financial and engineering feasibility requirements, the agency expects no impact on its subsidy rate.

RUS has conducted extensive tribal consultations in 2010 and 2011 related to implementation of new authorities for substantially underserved trust areas. Through those consultations, the agency had discussions with tribal leaders on the entire portfolio of RUS programs. This authority could be useful in addressing some of the emergency communications needs raised by tribal leaders in some of those discussions. Tribal areas are among the regions of the United States with the least connectivity to 911 and other emergency communications systems.

The regulation would simply codify the authority contained in section 315 of the RE Act.

The amendment to 7 CFR part 1735 implements Section 315 of the Rural Electrification Act of 1936 (RE Act) as provided in Section 6107 of the Food, Conservation, and Energy Act of 2008 by clarifying that the expansion of 911 access & integrated interoperable emergency communications systems are eligible purposes of the RE Act.

Section 6107 of the Food, Conservation, and Energy Act of 2008 added Section 315 of RE Act to clearly authorize the RUS to make loans for the following purposes:

(1) 911 access;

(2) Integrated interoperable emergency communications, including multiuse networks that provide commercial or transportation information services in addition to emergency communications services;

(3) Homeland security communications;

(4) Transportation safety communications; or

(5) Location technologies used outside an urbanized area.

The provision also clarified that the Agency could consider State or local 911 fees to be security for a loan under this section and that loans may be made in certain circumstances to an emergency communication equipment provider to accomplish the purposes of this section where a State or municipality may be prohibited from incurring debt.

Comments on the interim rule were required to be received on or before November 14, 2011. We received one comment supporting the amendments to 7 CFR part 1735 by that date. Therefore, for the reasons given in the interim rule, we are adopting the interim rule as a final rule without change.

This action also affirms information contained in the interim rule concerning Executive Order 12866 and the Regulatory Flexibility Act, Executive Order 12988, and the Paperwork Reduction Act. Further, for this action, the Office of Management and Budget has waived its review under Executive Order 12866.

FHFA is an independent agency of the federal government and was established by the Housing and Economic Recovery Act of 2008 (HERA), Public Law 110-289, 122 Stat. 2654, to regulate and oversee the regulated entities. 1 HERA amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq. ) (“Safety and Soundness Act”) and the Federal Home Loan Bank Act (12 U.S.C. 1421 through 1449) (Bank Act) to enhance the authorities and responsibilities of the new agency.

FHFA's regulatory mission is to ensure, among other things, that each of the regulated entities “operates in a safe and sound manner” and that their “operations and activities * * * foster liquid, efficient, competitive, and resilient national housing finance markets.” (12 U.S.C. 4513(a)(1)(B)). HERA authorizes FHFA to “issue any regulations * * * necessary to carry out” that mission and “to ensure that the purposes of this chapter and the authorizing statutes are accomplished.” (12 U.S.C. 4526(a)). This same grant of rulemaking authority also enables FHFA to draw on its cease-and-desist powers (12 U.S.C. 4631) to prohibit by general rule the same types of unsafe and unsound practices it would be empowered to address through case-by-case adjudications. 2

On August 16, 2010, FHFA published for comment a notice of proposed guidance that would have advised the Enterprises and the Banks not to purchase, or accept as collateral for advances, mortgages on property subject to any private transfer fee covenants. (75 FR 49932).

As described in the proposed guidance, private transfer fee covenants may be attached to real property by the owner or another private party—frequently, the property developer—and provide for a transfer fee to be paid to an identified third party—such as the developer or its trustee—upon each resale of the property. The fee typically is stated as a fixed amount or as a percentage, such as one percent of the property's sales price, and often exists for a period of 99 years.

Many states have enacted legislation to address private transfer fee covenants. State legislative solutions are diverse and include permitting the covenants subject to recordation and disclosure requirements  3 and prohibiting them when fees are paid to private third parties, with exceptions for homeowners' associations, condominiums, cooperatives, and similar organizations that use the fees to directly benefit the properties encumbered by the covenants. 4

In the proposed guidance and the proposed rule that followed, FHFA expressed concerns that private transfer fees may be used to fund purely private continuous streams of income for select market participants either directly or through securitized investment vehicles, may not benefit homeowners or the properties involved, and, therefore, could impair the safety and soundness of the regulated entities that invest in or purchase mortgages secured by such properties as collateral. Another concern expressed about private transfer fees is the adequacy of disclosure of these covenants which, in turn, may impede the marketability and valuation of the encumbered property. Consumers may also be unaware that a fee applies even if the resale price of their home drops below the original purchase price.

FHFA's proposed rule grew out of its consideration of over 4,200 comments received on the proposed guidance. Commenters included the Community Associations Institute (CAI), American Land Title Association (ALTA), National Association of Realtors (NAR), Freehold Capital Partners (Freehold), American College of Real Estate Lawyers, Institute of Real Estate Management, Coalition to Stop Wall Street Home Resale Fees, Sierra Club numerous state and regional real estate agent associations, real estate companies, numerous homeowners', cooperative, and condominium associations and individuals living within such associations, community associations and other nonprofit organizations, conservation funds and land trusts and foundations, housing and conservation boards, state housing and community development agencies, state natural resources agencies, developers, builders, appraisers, accountants, title companies, several Federal Home Loan Banks, members of the U.S. House of Representatives, State Governors, law firms (writing on their own behalf and on behalf of their clients), and other individuals and organizations who wrote to express a wide range of views on private transfer fee covenants. After receiving and reviewing the comments, FHFA determined to address the subject through regulation rather than through guidance.

On February 8, 2011, FHFA published a Notice of Proposed Rulemaking (76 FR 6702) inviting comments on a proposal that incorporated a number of changes to the substance of the former proposed guidance. The proposed rule reflected a narrower focus than the guidance and limited the private transfer fees to which it would be applicable. Among other things, the proposed rule sought comment on an approach to refine the definition of transfer fees eligible for regulated entity investment to include those that provided a direct benefit to the property of the homeowner through maintenance or enhancement of common areas or the structures of multifamily units or the property of the homeowner through support, for instance, of homeowners' or community associations. FHFA also proposed to make the rule prospective in effect, and apply it only to private transfer fee covenants created after the publication date of the proposed rule (February 8, 2011). FHFA proposed further to allow an implementation period of 120 days for the regulated entities within which they might use reasonable means to achieve compliance. FHFA received over one thousand comments on the proposed rule, discussed in more detail below.

In developing the final rule, FHFA reviewed the comments received on the proposed rule as well as, again, the comments received on the previously proposed guidance. In addition to making the intuitive objection that it is wrong to impose a fee on homeowners for exercising the right to sell their own homes, commenters criticized private transfer fees for many reasons in both rounds of comment:

(1) That the impact of transfer fees on property values is uncertain and potentially adverse because of uncertainty over how often the property will be sold during the duration of the covenant; and that, for that reason as well as because property values go up and down, and therefore the fee as well (in the majority of cases in which it is a percentage of property value), the fees paid are likely to not be aligned with the value received in return, if any.

(2) That there is no price transparency because buyers are not offered a choice between a property encumbered by the transfer fee covenant and the same property at a different price without the covenant, or between comparable properties with and without the covenant.

(3) That in many cases the transfer fee is not assessed on the first buyer, making the covenant less likely to be reflected in the initial sale price but more likely to be a surprise upon attempted resale. Similarly, that it is difficult for a buyer to predict the effect of the covenant on the property's value upon resale to subsequent buyers.

(4) That private transfer fees exploit the lack of transparency of complex real estate transactions; further, that they are not normally discoverable until well after the sale contract is executed, when a title search is performed prior to closing, with unpredictable effects on whether the sale will close or whether the price will be renegotiated.

(5) That private transfer fee covenants present questions of legal enforceability, especially if they are not associated with provision of a direct benefit to the burdened property.

These criticisms contribute to FHFA's concerns about the reliability with which properties subject to such encumbrances may be valued, posing safety and soundness risk to FHFA's regulated entities. Many of these concerns are lessened when the fees provide a direct benefit to the burdened properties, and, as described in more detail below, the final rule follows the approach of the proposed rule in excepting defined classes of fee covenants that are associated with a direct benefit.

This rule does not prohibit any private transfer fees. Rather, pursuant to FHFA's safety and soundness authorities under the Safety and Soundness Act and the Bank Act, as augmented with respect to the Enterprises by its additional plenary powers as Conservator, it prospectively instructs the regulated entities that participating in any market for mortgages on property encumbered by certain private transfer fees is an unsafe and unsound practice in which they shall not engage. The rule also identifies the types of private transfer fee covenants that will not disqualify a mortgage for investment.

The public comment period on the proposed rule closed on April 11, 2011. FHFA received over 1,000 comments on all aspects of the proposed rule. Many of the organizations and constituencies that commented on the proposed guidance also commented on the proposed rule. However, the comments differed from those received on the proposed guidance. A very small minority of commenters preferred the more restrictive approach in the proposed guidance. The majority of comments supported the proposed rule because, unlike the guidance, it would not apply to existing transfer fees and because those fees that directly benefit the property on which they are assessed would not disqualify a mortgage for regulated entity investment.

Most comments centered on refinements to the proposed rule to assure it would not inadvertently disqualify certain fee arrangements through omission from the definitions in the proposed rule; on changes to expand parties and activities covered by the “direct benefit” test; and on objections to the proposed rule either because it deviated from the original proposal to disqualify mortgages on property encumbered by any private transfer fee covenant or because it continued to make ineligible for investment mortgages encumbered by fees affecting certain interest groups or business entities.

The comments can be generally characterized as falling into four categories: (1) Comments endorsing the proposed rule; (2) comments generally supporting the proposal, but suggesting specific changes; (3) comments opposed to core elements of the proposed rule; and, (4) comments asserting that the rule lacks prerequisites to proper promulgation. FHFA has accepted suggestions from a number of commenters and made adjustments to the rule to address these comments.

Commenters such as ALTA, the Coalition to Stop Wall Street Home Resale Fees, and the Conference of State Bank Supervisors (CSBS) endorsed the proposed rule's ban on investing in mortgages encumbered with private transfer fee covenants and FHFA's adoption of a “direct benefit” test for permissible covenants. ALTA did note that how the regulated entities would enforce the rule would be of interest, as the title search and examination process would occur late in the home-buying process and that transfer fees often are difficult to detect, if not recorded.

With respect to implementation, ALTA's concern was echoed by other commenters, including the Federal Home Loan Banks as regulated entities. FHFA intends that the regulated entities develop reasonable means for implementation of the regulation in consultation with FHFA. Possible methods include incorporating appropriate restrictions in the seller-servicer guides of the Enterprises; using representations and warranties; or, in the case of the Federal Home Loan Banks, perhaps requiring mortgages to conform to Enterprise purchase standards. The regulated entities have a great deal of experience in developing methods of segregating mortgages in which investment is permissible and those in which investment is not.

The CSBS supported the proposed rule as establishing a “regulatory floor” for the regulated entities. CSBS stated that this “floor” will ensure that the states can continue to enact practical regulations affecting private transfer fees; and that state level supervision of these fees ensures that the regulators are accessible to those they regulate, understand the applicable state laws and are in tune with the local economy. The Joint Editorial Board for Uniform Real Property Acts (JEBURPA) and CSBS were among the commenters urging FHFA to respect state law and avoid preemption of state laws regulating these fees. FHFA believes that § 1228.4 of the final rule adequately addresses this issue.

Many commenters expressed support for the proposed rule, but requested modifications primarily to definitions that would clarify its application.

Hyatt & Stubblefield (H&S) and Sproul Trost (Sproul), two real estate law firms, along with CAI, the National Association of Homebuilders (NAHB), the Mortgage Bankers' Association (MBA), JEBURPA, and others criticized the proposal's “adjacent or contiguous property” requirement as ambiguous when considered with other definitions, unworkable, and too restrictive, particularly the requirement that property be located within 1,000 yards of the burdened community in order to be considered “adjacent or contiguous.” As described below, FHFA has decided to delete the 1,000-yard limitation. The rule does address the issue of properties that may not be adjacent or contiguous, but with a test of direct benefit rather than location.

A significant number of commenters, including NAHB, echoed the CAI comment to broaden the definition of “direct benefit” to embrace all duties and responsibilities that residents ordinarily expect, or choose to require, community or homeowner associations to fulfill. FHFA intends to encompass routine functions of property management and ordinary obligations of governing associations. However, to automatically include any activity that such associations may engage in as a “direct benefit” may not meet the prudential need that the financial burden of such fees be balanced by value actually added to the encumbered property.

Similarly, JEBURPA, noting that the proposed definition of “private transfer fee” contains only four exclusions (fees imposed by court decree; fees payable to the Federal government or a State or local government; fees arising out of a mechanic's lien; and fees arising from an option to purchase land), suggested that the definition should be expanded to exclude loan assumption fees; loan prepayment fees; and deferred purchase price payments or appreciation sharing contracts. Other comments also sought various expansions to the definition, and FHFA has reviewed these comments and state laws with diverse exceptions. CAI recommended using the term “community transfer fee covenant” rather than “excepted transfer fee covenant.” CAI stated that this would more clearly define the fees that FHFA seeks to disqualify by specifically outlining fees FHFA does not seek to restrict.

Patton Boggs, a law firm writing on behalf of its client, Associations, Inc. (Associa), explained that Associa's members support property owners by providing various services, including closing services, to homeowners' associations. While Associa believed these services fall outside the scope of the proposed rule, Patton Boggs suggested adding a fifth exclusion to the private transfer fee definition to codify its understanding. The H&S law firm stated its general support for the proposed rule as an improvement over the proposed guidance, but also objected to the definition of “direct benefit.” H&S argued alternatively that the definition should be expanded to include a number of additional qualifying uses or deleted in favor of revising the definition of “excepted transfer fee covenant” to be more inclusive.

FHFA has made changes in the proposed rule, described below, in response to these comments.

Among others, the Natural Resources Defense Council (NRDC), Coalition to Save Community Benefits (CSCB), the Sierra Club, H&S, Sproul, Endangered Habitats League (EHL), and Shute, Mihaly & Weinberger, LLP, a law firm writing on behalf of several environmental groups, objected to the requirement for covenants to directly and exclusively benefit encumbered property, and the reference to usage fee charges in the event of general public use, as well as the limited definition of “covered association.” The principal theme common to these objections is an assertion that the definitions taken together, and particularly in view of requirements for exclusivity of benefits and possible charges for public use, are too restrictive to benefit charitable organizations. These commenters urge a broader exception for not-for-profit organizations that allows their covenants special treatment, asserting that FHFA's proposal is inconsistent with charitable purposes, which require non-exclusivity of benefits in order to meet the public purposes requirement for tax exempt status under sections 501(c)(3) and 501(c)(4) of the Internal Revenue Code (IRC).

The California Building Industry Association (CBIA) proposed a revision that embraced the concept of a “community benefits covenant” approach to accommodate nonprofit organizations that administer transfer fees. According to CBIA, this approach would allow non-profits to meet the Internal Revenue Service requirements for nonprofit organizations to engage in charitable and public purposes.

In response to the comments questioning the consistency between the direct benefit requirement and requirements for certain types of tax-exempt status under the IRC, FHFA has made certain changes to the section of the rule on direct benefit that may address some concerns expressed in the comments. FHFA takes no position, however, with respect to potential tax consequences for a nonprofit organization that may result from the administration of transfer fees or that otherwise may be associated with the encumbrance of a property with a private transfer fee covenant.

Recording and pre-purchase and pre-foreclosure disclosure requirements were among significant suggestions offered by many commenters including MBA, EHL, CSCB, and the Consumer Mortgage Coalition. Commenters recommended recording and disclosure of private transfer fee covenants as additional measures to protect homebuyers and consumers; as ameliorating implementation difficulties for the regulated entities; and a complete alternative to the rule's method of identifying fees that disqualify mortgages for investment. FHFA views recording and disclosure as valuable adjuncts to consumer and lender awareness of fees and perhaps a “best practice” that might be considered by appropriate state or federal authorities. However, adopting such requirements for real estate transactions potentially injects FHFA into issues of state policy and matters of consumer protection. FHFA's core role is as prudential and mission supervisor of its regulated entities, not as a general regulator of real estate markets and practices. The provisions of the rule focus on those aspects of private transfer fee practice that may affect the value of property underlying mortgages held by the regulated entities. FHFA recognizes that future action might be required to revise the rule. FHFA will assess the effectiveness of this rule, deferring consideration of specific transaction requirements to allow state or other federal policymakers to address these issues in the first instance.

With respect to implementation, although recording and disclosure may make it easier for the regulated entities, FHFA does not intend to establish by rule detailed instructions for how regulated entities will implement the rule. However, all regulated entities have experience in establishing controls to segregate mortgages in which they can invest from those which are disqualified. As stated by FHFA when publishing the proposed rule, acceptable compliance with the final rule may be achieved through a Federal Home Loan Bank's quality control review process or through the Banks' collateral review process, coupled with appropriate direction to their members, as well as robust representations, warranties, or certifications. The Enterprises would be expected to use similar compliance tools such as appropriate provisions in seller-servicer guides, representations and warranties, and quality-control processes. FHFA does not expect that the Federal Home Loan Banks must use such compliance tools with respect to Enterprise securities, because Enterprise securities issued prospectively should comply with the provisions of the final rule. FHFA will work with the regulated entities to develop appropriate methods to implement the rule.

The suggestion offered by some commenters that recording and disclosure are an alternative to the rule's description of covenants that qualify for investment is misplaced. The rule is not directed at controlling private transfer fee covenants. It is instead directed at limiting the risk to regulated entities when investing in property with values that may be compromised by such covenants. Recording and disclosure requirements do not distinguish among levels of risk, but only make identification of an existing covenant easier. Those details, as noted above, are matters best left to state law or other appropriate federal consumer-focused regulation.

A variety of commenters, including Federal Home Loan Banks, law firms, and non-profit organizations, expressed concerns over the date on which the rule would apply. The proposed rule provided that regulated entity compliance was not required until after publication of the final rule. To comply with the rule, regulated entities cannot trade in disqualified “mortgages on properties encumbered by private transfer fee covenants created on or after” February 8, 2011. The obligation on the regulated entities is unequivocally prospective—“The regulated entities shall comply with this part not later than 120 days” after publication of the final rule. The date—February 8, 2011—identifies the private transfer fee covenants to which the regulated entities are to apply the rule's qualification and disqualification tests.

The structure of the proposed rule is clear that the language “created on or after” refers to the date on which the covenant that encumbers the land was created. Covenants that encumbered land before February 8, 2011 do not disqualify mortgages. It is FHFA's intention that the date of creation is the date on which the covenant became legally enforceable with respect to the specific encumbered property that is the subject of a mortgage, whether under state law that is the date of recording or some other date.

The only obligations that the proposed rule would impose are forward looking, and they apply only to the regulated entities. The rule regulates neither private transfer fee covenants nor market participants who create or use them.

National Cable & Telecommunications Association v. Federal Communications Commission, 567 F.3d 659 (D.C. Cir. 2009), is instructive with respect to applying retroactivity principles to this rule. In that case, the Federal Communications Commission (FCC) promulgated a rule that prohibited the enforcement of pre-existing exclusivity contracts between cable operators and multi-unit developments, like apartment buildings. The court upheld the rule and determined that it was not an impermissibly retroactive regulation. Id. at 671-72.

In National Cable, the petitioners asserted that applying the rule to existing contracts violated the presumption against retroactivity contained in the Administrative Procedure Act's “future effect” requirement and was impermissible because of the rule's so-called “secondary retroactivity”; that is, secondary effects of the rule that the FCC failed to consider. The court first emphasized that “[w]e have thus repeatedly made clear that an agency order that only `upsets expectations based on prior law is not retroactive,' Mobile Relay Associates v. FCC, 457 F.3d [1, 11 (D.C. Cir. 2006)].” 567 F.3d at 670.

Even if the proposed rule affects the value of private transfer fee covenants entered between February 8, 2011 and the date of the regulation, it has “not rendered [those covenants] illegal or otherwise sanctionable. ‘It is often the case that a business will undertake a certain course of conduct based on the current law, and will then find its expectations frustrated when the law changes.' Chemical Waste Management, Inc. v. U.S. Environmental Protection Agency (EPA), 869 F.2d 1526, 1536 (D.C. Cir. 1989). Such expectations, however legitimate, cannot furnish a sufficient basis for identifying impermissibly retroactive rules.” 567 F.3d at 670. See also, Landgraf v. USI Film Products, 511 U.S. 244, 269 (1994); Arkema, Inc. v. EPA, 618 F.3d 1, 7 (D.C. Cir. 2010) (“A rule operates retroactively if it takes away or impairs vested rights.”). A retroactive rule “alter[s] the past legal consequences of past actions.” Bowen v. Georgetown University Hospital, 488 U.S. 204, 219 (Scalia, J., concurring) (emphasis in original). If a vested right is not impaired, the rule is not retroactive. See Arkema, 518 F.3d at 7.

This rule might frustrate an assumption that an encumbered mortgage would be eligible for purchase by a regulated entity, but it does not extinguish any third-party right to have a regulated entity trade in that mortgage, because there is no such right. At any time in the past, regulated entities could refuse to make such purchases; no one possessed a right to require them to be purchased and no regulated entity had any obligation to purchase, invest or otherwise trade in them. Since the rule does not impair a vested right, the rule is not retroactive.

“Secondary retroactivity” exists where a rule “affects a regulated entity's investment made in reliance on the regulatory status quo before the rule's promulgation.” Mobile Relay, 457 F.3d at 11. It invalidates a rule only if the rule is arbitrary or capricious. See Bowen, 488 U.S. at 219 (Scalia, J. concurring); Mobile Relay, 457 F.3d at 11. An assessment and balancing of benefits and burdens is required if a rule creates such secondary effects. National Cable, 567 F.3d at 671-72.

Through this rule, FHFA is protecting regulated entities from investments with certain features that impair their value and pose unacceptable levels of risk to the financial safety and soundness of the entities. The regulation is supported by the proliferating use of private transfer fees for purposes unrelated to the encumbered property and proposals to securitize streams of income from them that will never be returned to the property or property owner. By strengthening the safety and soundness of the regulated entities, the rule furthers the central mission of FHFA. It is abundantly clear that FHFA has considered secondary effects. Despite the fact that the rule does not prohibit covenants, it contains a grandfathering provision to allow the regulated entities to trade in mortgages encumbered by otherwise disqualifying covenants if the covenants were created before a date certain. The date certain of February 8, 2011, is the date on which the rule was proposed. It was chosen as a rational date at which markets and market participants could adjust their behavior in case a rule unfavorable to them was eventually adopted and as a means to avoid market disruption that would occur if developers and others attempted to anticipate the forthcoming rule by placing disqualifying covenants on large numbers of previously unencumbered properties during the time that a final rule was being considered. This is an acceptable practice among regulatory agencies.

In National Cable the court upheld the rule despite the fact that “by significantly altering the bargained-for benefits of now unenforceable exclusivity agreements, the Commission has undoubtedly created the kinds of secondary retroactive effects that require agency attention and balancing” because the FCC in fact conducted the balancing analysis and concluded that “banning enforcement of existing contracts was essential.” 567 F.3d at 671. Like FHFA, the FCC concluded that the public interest required it to “prevent the harms from existing contracts `to continue for years,' or `to continue indefinitely in the cases of exclusivity clauses that last in perpetuity.” Id. The court noted that, as FHFA has done here, the FCC considered legitimate expectations and felt they were relatively undisturbed because states and the FCC had been scrutinizing the prohibited arrangements for some time. Id.

FHFA has fully considered the benefits and burdens and primary and secondary effects of the rule. FHFA concludes that this rule is not impermissibly retroactive and that this conclusion is supported by applicable precedent.

Some comments opposed elements so fundamental to the proposed rule that changing or eliminating them as requested would vitiate the purpose of the regulation itself. FHFA considered all comments and assessed whether to issue this rule as a regulation, guidance, or not at all. FHFA determined that the concerns, risks, and issues leading it to propose guidance in the first place have not abated and the comments to the proposed rule reinforce that the housing finance system and its participants are better served by the certainty of a rule on this subject. Consequently, FHFA has not accepted suggestions that would serve to make the rule ineffective and undermine its core principles.

One of the principal objectors to the fundamental underpinnings of the proposed rule is Freehold, joined by law firms, developers, and some builders. These commenters claim that private, profit-motivated entities can use private transfer fees (characterized by them as “capital recovery fees,” although the fees are not tied to any particular capital investment) to provide financial benefits to homeowners and communities by distributing development and infrastructure costs to “future” homeowners, rather than embedding all of these costs in the sales price to the initial homebuyer. They generally liken these benefits to those provided by homeowner associations and similar entities that provide ongoing support to encumbered properties. This view is far from universal, as many builders and the NAHB oppose private transfer fee covenants of this sort.

Freehold and other proponents of private transfer fees contend that creating a right for the developer to receive a future stream of transfer fee payments from successive homebuyers allows the developer to recover investment costs more quickly, enabling more capital investment in new development. This is to be accomplished by securitizing that revenue stream, and selling the security to investors who have no connection to the encumbered property. The developer receives the sale proceeds of the security irrespective of the subsequent market value of the developed property. If the stream of income is not securitized and sold to investors, or otherwise assigned, the developer receives it over the life of the covenant, usually 99 years. Advocates for this model argue that the fees allow developers to pursue or complete projects not otherwise viable due to a housing market downturn. As new developments are completed, they assert, jobs are created and the economy in general benefits. Additionally, proponents claim that by spreading costs into the future, each homebuyer benefits from a price that is lower than if the full costs of the development were recovered from the initial purchaser. However, another commenter, the Center for Regulatory Effectiveness (CRE), challenged Freehold's analysis, finding that private transfer fees paid to developers or to unrelated third parties (as opposed to those directly benefiting owners of burdened property) produce negligible benefits for homeowners, while imposing additional costs and burdens, such as increased difficulty of selling a home encumbered by a private transfer fee. FHFA has carefully considered both analyses and finds CRE's comments more persuasive.

Freehold argues that the purpose of the private transfer fee revenue stream is to fund infrastructure investments. However, FHFA has determined that these arrangements do not require that the revenue stream be spent on infrastructure improvements. To the contrary, Freehold's marketing literature to developers, available on its Web site and cited in CRE's comment on the proposed rule, describes private transfer fees as a means to “extract more value from your real estate projects.” See http://freeholdcapitalpartners.com/forms/freehold_brochure.pdf. That “value” is not used to fund any part of the development, precisely because it is a future revenue stream and not cash in hand to the developer. To FHFA's knowledge, no securities based on these revenue streams have ever been sold, so the asserted benefits of this arrangement to developers as a means of funding projects are speculative.

Even as a matter of principle, the arrangement that Freehold markets to developers cannot work to the benefit of both developers and homebuyers as Freehold argues. In a fully informed, freely functioning marketplace, the initial sale price of a property subject to the covenants should be reduced by the present value of the expected future stream of transfer fee payments with which the property is burdened. The price of the security that the developer sells should also reflect the present value of the expected future stream of transfer fee payments, so there is no net creation of value to the developer. In fact, because the financial intermediaries who would manage the transaction would extract a fee, and because Freehold also would extract a fee, the amount received by the developer would actually be less than the amount the developer loses because of the reduction in the sale price of the burdened properties. The developer gains a benefit only if the home buyers do not reduce the price they are willing to pay by the present value of the future transfer fee burden or even close to it. 5 The arrangement does not work to the benefit of both developers and homebuyers.

FHFA has carefully reviewed and considered Freehold's analysis and has concluded that Freehold's assertion that private transfer fees are economically beneficial to homebuyers and to the economy is based on assumptions that are not verifiable and lack empirical data. In particular, Freehold's present value assertions rest on assumptions about cash flow streams and appropriate discount rates that are unidentified, unexplained, and lack validation.

FHFA does not agree that private transfer fees appropriately and equitably spread initial developer costs across future homeowners. Development costs ostensibly recovered by these fees do not have a value that extends to the typical 99-year life of the covenant. Initial improvements by a developer depreciate in value over a much shorter period of time. In a traditional development, the initial home price captures the value of the developer's investment. Resale prices capture remaining value of the improvement. This method of capital recovery is more equitable and less disruptive to home resale markets than charging future generations of homeowners for capital investments and residual values of the improvements funded by those investments. Instead, FHFA finds that the core purpose behind the Freehold model is reflected in Freehold's own marketing material heralding the returns to developers and remote investors from generations-long extraction of value from land at the expense of successive homebuyers. Nothing in the Freehold model demonstrates that any benefit is ever returned to the property burdened by private transfer fee covenants in exchange for repeated and potentially escalating charges.

A variety of non-profit environmental groups asserted that private transfer fee covenants can be used to promote environmental protections and resource conservation, which they claim inures to the benefit of encumbered property and to society at large. The benefits are argued to transcend the property and property owners and therefore, the commenters assert, the covenants have indirect and non-exclusive benefits that should not cause a mortgage to be ineligible for investment. Commenters opposed to such use of private transfer fees argue that developers are willing to impose private transfer fee covenants on properties in settlement of environmental and similar litigation, because the resulting fees are not paid by the developer but shifted to the homeowners; a phenomenon exacerbated by the fact that the initial sale from developer to first buyer is typically exempt from the fee.

FHFA does not take a position on the merits of the environmental, conservation, or similar projects that are funded by private transfer fees. Instead, in its capacity as the safety and soundness regulator of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks and as the Conservator of the Enterprises, FHFA addresses the subject from the perspective of the valuation issues that such use of private transfer fees may cause for the reasons enumerated above: Unpredictability of future sales and, therefore, the magnitude of the financial burden on the encumbered properties;  6 lack of transparency to sellers and purchasers; and the practice of shifting the payment obligation to future buyers who are not privy to the settlement with environmental groups or to the initial transaction with the developer. 7 As a result, FHFA declines to recognize such private transfer fee covenants as excepted from disqualification unless the activities they fund provide a direct benefit to the burdened properties, as defined in the rule and discussed further below. The environmental commenters' reliance on the National Environmental Policy Act of 1969, as amended (NEPA), (42 U.S.C. 4321 et seq. ), is also discussed below.

A number of commenters asserted that FHFA failed to satisfy prerequisites for rulemaking. Through counsel, a variety of environmental groups, including the NRDC, claimed that FHFA is required to prepare either an Environmental Impact Statement (EIS) or an Environmental Assessment (EA) under NEPA before proceeding with the rule. Freehold contended that FHFA is not complying with the Regulatory Flexibility Act (RFA), 5 U.S.C. 601through 612, because the regulation impacts small business entities and the RFA requires FHFA to undertake a detailed analysis and to adopt the least restrictive means for accomplishing the agency's objectives while minimizing the economic impact on small entities.

For reasons explained below, FHFA disagrees with both of these comments. Neither an EIS nor an EA is required for this rule. The RFA was satisfied by the certification contained in the proposed rule and repeated in this final rule.

Before addressing the commenters' legal arguments, it is useful to review the background in which their private transfer fee practices have arisen. As described above, certain private transfer fees have been put in place to resolve claims of adverse environmental or other impacts that are asserted to result from proposed real estate developments—claims that would otherwise be resolved in court, or before government permitting bodies. Specifically, particular arrangements that commenters have held up as examples of how they would like to continue using private transfer fees have resulted from settlement of litigation or as a negotiated means to obtain government approval. 8 In response to those environmental and other concerns, various possible tools and outcomes are possible in such cases: a development may be blocked; restricted in other ways; or mitigating measures may be funded using means other than private transfer fees, such as by regular assessments that are more transparent and more readily translatable into property valuation than private transfer fees, 9 or by a lump sum from sale of part of the subject property. Other tools may be available as well and, in some cases, the deciding authority would conclude that the development does not pose the concerns that are claimed and can proceed without restriction. Not one of the letters FHFA received raising environmental concerns about the proposed rule has explained why, or even asserted that, private transfer fees are the only or even a specially valuable tool for dealing with the concerns that have been asserted in comparison with other tools, or why they are the tool of preference, if they are. 10 In each case, the environmental and other impacts that are asserted do not result from FHFA's proposed rule on private transfer fees, but from the real estate development to which the commenters object. That federal regulations may make one or another financing tool that the commenters might wish to use less attractive does not mean that those regulations cause environmental impacts.

Even focusing only on private transfer fees, contrary to a commenter's assertion that FHFA “proposed [the] elimination of private transfer fees,” the rule does not restrict or ban them, but restricts its regulated entities from buying mortgages backed by real estate subject to certain types of covenants. Mortgages held in portfolio or securitized in private secondary markets are not affected by the rule.

For these reasons, for purposes of the NEPA, FHFA's rule is financial and economic; it is not “a major Federal action[] significantly affecting the quality of the human environment.” 42 U.S.C. 4332. NEPA does not require the analysis commenters assert without an “injury to the environment; an economic injury will not suffice.” Ranchers Cattlemen Action Legal Fund United Stockgrowers of America, ICA v. United States Department of Agriculture, 415 F.3d 1078, 1103 (9th Cir. 2005) (emphasis added). There must be some causal connection between the rule and the environmental injury. The environmental injury the commenters appear to assert is not caused by FHFA's rule; at best it has a tenuous and speculative nexus to the rule.

The commenters assume that without unrestricted access to a federally supported secondary mortgage market for private transfer fee encumbered mortgages, their environmental protection activities will not just be inconvenienced, but subverted and permanently stopped. The agency recognized that some private transfer fees are used to fund desirable ends, some of which are environmental, social, or cultural. They still can be used for those purposes, but mortgages on property encumbered by them may not qualify for the federally supported secondary mortgage market unless they contain the features required by the rule. Considering all private transfer fee covenants, the rule allows regulated entity investment when property is encumbered by a grandfathered covenant, and also when the covenant creates a direct benefit to the encumbered property. In these circumstances, the regulated entities may invest in encumbered property. That leaves, as the asserted environmental injury, the inability to trade in the secondary mortgage market mortgages on property encumbered by those private transfer fees that do not return a benefit to the encumbered property, and that are not grandfathered as related to a pre-existing litigation settlement or government-approved agreement. No explanation has been offered why regulation of the mortgage market will result in developments with detrimental environmental impacts or that cannot be remedied by other means that do not pose risks to the safety and soundness of the regulated entities.

FHFA is fundamentally responsible for the safety and soundness of the regulated entities. Its statutory command is to ensure their financial safety and soundness. FHFA cannot allow speculative considerations such as those offered by the commenters to interrupt or subordinate its statutory obligation to prohibit the regulated entities from engaging in unsafe and unsound practices. Congress did not condition FHFA's safety and soundness determinations on assessments of their environmental impact. Like the Federal Energy Regulatory Commission in Grand Council of the Crees v. Federal Energy Regulatory Commission (FERC), even if the proposed rule had an environmental impact, when acting to fulfill its independent statutory command to ensure safety and soundness, FHFA would not be required to conduct an EIS or an EA. 198 F.3d 950, 953-54, 956 (D.C. Cir. 2000) (when setting “just and reasonable rates” as commanded by statute, FERC was not required to conduct an EIS or EA, despite the environmental consequences of the action).

Both the proposed rule and this final rule comply with the RFA, 5 U.S.C. 601 through 612, because they contain FHFA's certification that the rule will not have a significant economic impact on a substantial number of small entities. This certification obviates the need for the detailed analysis commenters seek. See 5 U.S.C. 605(b).

The only impacts that require an RFA analysis are the direct impacts of the rule on small entities that are subject to the rule. See, e.g., Cement Kiln Recycling Coalition v. EPA, 255 F.3d 855, 869 (D.C. Cir. 2001) (citing cases “consistently reject[ing] the contention that the [RFA] applies to small businesses indirectly affected by the regulation of other entities”); Mid-Tex Electric Cooperative, Inc. v. FERC, 773 F.2d 327, 343 (D.C. Cir. 1985) (where rule directly regulated utilities, agency did not have to analyze economic impact on wholesale customers of utilities); National Women, Infants, and Children Grocers Association v. Food and Nutrition Service, 416 F. Supp. 2d 92, 108-10 (D.D.C. 2006) (where rule regulated state agencies, agency did not have to analyze impact on vendors that did business with state agencies). The only entities subject to this rule, and the only entities on which the rule will have direct impact, are the FHFA regulated entities—Fannie Mae, Freddie Mac, and the Federal Home Loan Banks—none of which is small. Therefore, an analysis under the RFA is not required. FHFA's certification is sufficient.

FHFA has decided to adopt the rule largely as proposed. However, in response to comments received, FHFA is making a number of changes to the text of the regulation.

Section 1228.2 is changed to ensure no doubt that any activity dealing in mortgages on property encumbered by private transfer fee covenants, including guaranteeing them as well as purchasing or investing in them, is restricted. The new language broadens the proposed phrase “purchase or invest in” to “purchase invest, or otherwise deal in.” The remainder of that section remains unchanged.

A number of commenters criticized the definition of “adjacent or contiguous property,” and particularly the requirement that it be located within 1,000 yards of the burdened community, arguing that some commonly held facilities, such as marinas, beach access, or golf courses, often cannot feasibly be located within that distance, but yet are for the common benefit of the members of the community and contribute to the value of their property to the same extent as if they were closer. In response to that concern, FHFA has removed the proposed 1,000-yard requirement from the regulation.

At the same time, some commenters pointed out that the restrictions on public access that the proposed regulation contemplated as part of the definition of “direct benefit” would be problematic in situations where the covered association uses transfer fees to fund parks or trails that interconnect with a larger municipal park or trail system which is open to the public. In that situation, although the covered association makes the adjacent property open to the public, the community members (and hence their property) receive fair value in exchange, in the form of convenient access to the larger trail or park system. To address this situation, as well as that described above of common facilities located some distance from the burdened community, FHFA is adopting a two-part approach to the use of transfer fees to fund activities or property outside the burdened community. First, the fees may fund property that is open to the public that is actually adjacent, meaning that it borders the burdened community. 11 Second, transfer fees may fund amenities that are more distant, if the amenities are primarily for the benefit of the covered association's members. In light of these revisions, FHFA has deleted the proposed provisions regarding public access for a fee or de minimis use, as adding unnecessary complexity.

Several commenters noted that some planned communities include both master associations and sub-associations, such that all residents are members of both a master association and a sub-association, but not of the same sub-association. The final regulation specifically recognizes that possibility.

Some commenters observed that some payments or charges are secured by a covenant to pay upon the next transfer, but do not impose a continuing obligation to pay whenever the property is transferred. FHFA does not regard such obligations as posing the same valuation problem as continuing transfer fee covenants, and has clarified the regulation to define a private transfer fee as one that is payable on a continuing basis whenever the property is transferred. This clarification makes it unnecessary to except from the definition of “private transfer fee” payments arising from an option to purchase or waiver of the right to purchase the encumbered real property (an exception in the proposed definition which FHFA has removed from the final rule) and other exception items suggested by commenters, such as deferred purchase price payments. Other suggested exceptions are unnecessary; for example, loan prepayment fees need not be excepted because they are not paid “in connection with or as a result of transfer of title to real estate,” but rather because of prepayment of the loan and, therefore, are not covered by the definition of “private transfer fee” as proposed.

In response to some comments and a review of state private transfer fee legislation, FHFA has added to the final rule an exception to the definition of “private transfer fee” for fees and payments that defray actual costs of the transfer, such as new keys, mailboxes, and other features that benefit the new owner.

Some commenters urged that private transfer fees should be used to support local services such as schools, libraries, and fire departments. FHFA has not added an exception for such uses, which normally would fall within the proposed exception for fees paid to government entities. FHFA retains that exception in the final rule. If a particular use of transfer fee covenants would not fall within that exception, FHFA is reluctant to specifically sanction it in the final rule, because such a rule is likely to raise the concern about property valuation in the absence of a direct benefit, which motivates the rule as a whole.

The proposed rule's definition of “private transfer fee” included an exception for fees that are imposed by court judgment, order, or decree. FHFA removes that exception in the final rule. A survey of existing state laws on private transfer fees reveals that most do not contain that exception. Further, review of the many comments discussing the use of private transfer fees to fund preservation or environmental projects that, though they may be meritorious from the perspective of society as a whole, do not contribute directly to the value of the burdened property, raising the valuation concerns that underlie this regulation when funded by private transfer fees, shows that such arrangements often result from settlement of litigation or threatened litigation, and therefore could be structured to escape the effect of this rule by moving to have them embodied in a court decree.

A review of those state statutes on private transfer fees also shows that most of them do not contain the proposed rule's exception for mechanic's liens, plausibly because those liens do not secure an obligation to pay specifically upon transfer (though as a practical matter that obligation, and any other secured obligation, may have to be satisfied in order to clear the title and make the transfer) and are not private transfer fee covenants to begin with. Therefore, FHFA has removed that exception.

Many commenters reacted favorably to FHFA's proposal that the regulation have prospective effect and not apply to private transfer fee covenants created before a date certain. A number of commenters, however, described projects currently underway that are funded by private transfer fees, which could be disrupted to the extent that covenants have not yet been attached to particular parcels that are part of the overall plan. FHFA has clarified the prospective scope of the rule, so that it will not apply to private transfer fee covenants if they are imposed pursuant to a litigation settlement agreement or an agreement approved by a government body before the date certain specified in the rule, February 8, 2011.

Some commenters suggested that the proposed § 1228.4, “State restrictions unaffected,” be revised to state that such state restrictions might include restrictions on validity and enforceability as well as with respect to disclosures or duration, the two examples given in the proposed rule. In cases where a state law restricts the validity or enforceability of private transfer fees, it was not the intention of FHFA to override those restrictions, but rather to provide a framework to protect the regulated entities in the event that private transfer fees could be imposed consistently with state law. For example, one commenter stated that California law does not permit community associations to fund themselves using private transfer fees. That result is not affected by FHFA's rule permitting the regulated entities to buy mortgages that are secured by properties encumbered by such association transfer fees.

And finally, various commenters suggested technical revisions to the proposed regulation in the interest of clarity, and FHFA adopts a number of those suggestions in the final rule.

The rule does not contain any collections of information pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). Therefore, FHFA has not submitted any information to the Office of Management and Budget for review.

The rule applies only to the regulated entities, which do not come within the meaning of small entities as defined in section 601(6) of the RFA. In accordance with section 605(b) of the RFA, FHFA certifies that this rule will not have a significant economic impact on a substantial number of small entities.

For the reasons stated in the Supplementary Information, and under the authority of 12 U.S.C. 4526, the Federal Housing Finance Agency amends Chapter XII of Title 12 of the Code of Federal Regulations by adding new part 1228 to subchapter B to read as follows:

History

On December 22, 2011, the FAA published in the Federal Register a notice of proposed rulemaking to amend controlled airspace at Sheridan, WY (76 FR 79563). Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in paragraph 6002, of FAA Order 7400.9V dated August 9, 2011, and effective September 15, 2011, which is incorporated by reference in 14 CFR Part 71.1. The Class E airspace designations listed in this document will be published subsequently in that Order.

This action amends Title 14 Code of Federal Regulations (14 CFR) Part 71 by amending Class E surface airspace at Sheridan County Airport, Sheridan, WY. Airspace reconfiguration is necessary due to the decommissioning of the Sheridan TACAN. This action is necessary for the safety and management of IFR operations.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Proposed Rule was published on January 3, 2011, in the Federal Register (76 FR 56-57). During the comment period, two public comments were received.

The first commenter asserted that the proposed Privacy Act exemption rule “could possibly be viewed as a violation of [the] constitutional rights * * * [of] U.S. citizen[s],” making reference to the Third, Fifth, Sixth, and Fourteenth Amendments of the Constitution. Also the first commenter commented that the provision “of the answers and/or answer keys should be at the discretion of the test taker, i.e., U.S. citizens.”

The Privacy Act exemption rule addresses an individual's answers to the Armed Services Vocational Aptitude Battery (ASVAB) and the appropriate answer key, allowing the Department of Defense to exempt an individual's ASVAB answers and the answer key from the access provisions of the Privacy Act of 1974.

The exemption rule is intended to ensure that individuals will not compromise the purpose of the ASVAB—to ascertain the skills and abilities of individuals joining the military or seeking to join the military. If individuals were allowed to have the specific responses to the questions as well as the correct answers, the Department of Defense would be unable to ensure that individuals were placed in jobs for which they had an aptitude, or more importantly, placed in jobs for which they had no aptitude. If individuals were allowed to have their individual responses as well as the correct answers, the integrity and scoring of the battery would be compromised rendering the testing worthless.

Individuals taking the test are provided a copy of their scores along with an explanation of what the given scores indicate.

The exemption rule is consistent with the Privacy Act, its underlying purposes, and the U.S. Constitution. Further, the rules published at 32 CFR part 311, The OSD Privacy Program, provide individuals an opportunity to appeal the denial of access to their records, which could include the consideration of alleged constitutional rights violations arising out of the denial of access to requested records.

The second commenter did not address the proposed exemption rule but addressed the first commenter's comments.

It has been determined that Privacy Act rules for the Department of Defense are not significant rules. The rules do not (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in these Executive orders.

It has been determined that this Privacy Act rule for the Department of Defense does not have significant economic impact on a substantial number of small entities because it is concerned only with the administration of Privacy Act systems of records within the Department of Defense.

It has been determined that this Privacy Act rule for the Department of Defense imposes no information requirements beyond the Department of Defense and that the information collected within the Department of Defense is necessary and consistent with 5 U.S.C. 552a, known as the Privacy Act of 1974.

It has been determined that this Privacy Act rulemaking for the Department of Defense does not involve a Federal mandate that may result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more and that such rulemaking will not significantly or uniquely affect small governments.

It has been determined that the Privacy Act rules for the Department of Defense do not have federalism implications. The rule does 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.

Accordingly, 32 CFR part 311 is amended to read as follows:

DoD has determined this rulemaking meets the criteria for a direct final rule because it involves nonsubstantive changes dealing with DoD's management of its Privacy Programs. DoD expects no opposition to the changes and no significant adverse comments. However, if DoD receives a significant adverse comment, the Department will publish a withdrawal of this direct final rule in the Federal Register . A significant adverse comment is one that explains: (1) Why the direct final rule is inappropriate, including challenges to the rule's underlying premise or approach; or (2) why the direct final rule will be ineffective or unacceptable without a change. In determining whether a comment necessitates withdrawal of this direct final rule, DoD will consider whether it warrants a substantive response in a notice and comment process.

It has been determined that Privacy Act rules for the Department of Defense are not significant rules. The rules do not (1) have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in these Executive orders.

It has been determined that this Privacy Act rule for the Department of Defense does not have significant economic impact on a substantial number of small entities because it is concerned only with the administration of Privacy Act systems of records within the Department of Defense.

It has been determined that Privacy Act rules for the Department of Defense impose no additional information collection requirements on the public under the Paperwork Reduction Act of 1995.

It has been determined that this Privacy Act rulemaking for the Department of Defense does not involve a Federal mandate that may result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more and that such rulemaking will not significantly or uniquely affect small governments.

It has been determined that the Privacy Act rules for the Department of Defense do not have federalism implications. The rule does 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.

Accordingly, 32 CFR part 311 is amended as follows:

This direct final rule is consistent with the rule previously published at 32 CFR part 321.13(h) and another rule is being published to remove and reserve 321.13(h).

DoD has determined this rulemaking meets the criteria for a direct final rule because it involves nonsubstantive changes dealing with DoD's management of its Privacy Programs. DoD expects no opposition to the changes and no significant adverse comments. However, if DoD receives a significant adverse comment, the Department will publish a withdrawal of this direct final rule in the Federal Register . A significant adverse comment is one that explains: (1) Why the direct final rule is inappropriate, including challenges to the rule's underlying premise or approach; or (2) why the direct final rule will be ineffective or unacceptable without a change. In determining whether a comment necessitates withdrawal of this direct final rule, DoD will consider whether it warrants a substantive response in a notice and comment process.

It has been determined that Privacy Act rules for the Department of Defense are not significant rules. The rules do not (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in these Executive orders.

It has been determined that this Privacy Act rule for the Department of Defense does not have significant economic impact on a substantial number of small entities because it is concerned only with the administration of Privacy Act systems of records within the Department of Defense.

It has been determined that Privacy Act rules for the Department of Defense impose no additional information collection requirements on the public under the Paperwork Reduction Act of 1995.

It has been determined that this Privacy Act rulemaking for the Department of Defense does not involve a Federal mandate that may result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more and that such rulemaking will not significantly or uniquely affect small governments.

It has been determined that the Privacy Act rules for the Department of Defense do not have federalism implications. The rule does 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.

Accordingly, 32 CFR part 311 is amended as follows:

DoD has determined this rulemaking meets the criteria for a direct final rule because it involves nonsubstantive changes dealing with DoD's management of its Privacy Progams. DoD expects no opposition to the changes and no significant adverse comments. However, if DoD receives a significant adverse comment, the Department will publish a withdrawal of this direct final rule in the Federal Register . A significant adverse comment is one that explains: (1) Why the direct final rule is inappropriate, including challenges to the rule's underlying premise or approach; or (2) why the direct final rule will be ineffective or unacceptable without a change. In determining whether a comment necessitates withdrawal of this direct final rule, DoD will consider whether it warrants a substantive response in a notice and comment process.

It has been determined that Privacy Act rules for the Department of Defense are not significant rules. The rules do not (1) have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in these Executive orders.

It has been determined that this Privacy Act rule for the Department of Defense does not have significant economic impact on a substantial number of small entities because it is concerned only with the administration of Privacy Act systems of records within the Department of Defense.

It has been determined that Privacy Act rules for the Department of Defense impose no additional information collection requirements on the public under the Paperwork Reduction Act of 1995.

It has been determined that this Privacy Act rulemaking for the Department of Defense does not involve a Federal mandate that may result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more and that such rulemaking will not significantly or uniquely affect small governments.

It has been determined that the Privacy Act rules for the Department of Defense do not have federalism implications. The rule does 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.

Accordingly, 32 CFR part 319 is amended as follows:

DoD has determined this rulemaking meets the criteria for a direct final rule because it involves nonsubstantive changes dealing with DoD's management of its Privacy Programs. DoD expects no opposition to the changes and no significant adverse comments. However, if DoD receives a significant adverse comment, the Department will publish a withdrawal of this direct final rule in the Federal Register . A significant adverse comment is one that explains: (1) Why the direct final rule is inappropriate, including challenges to the rule's underlying premise or approach; or (2) why the direct final rule will be ineffective or unacceptable without a change. In determining whether a comment necessitates withdrawal of this direct final rule, DoD will consider whether it warrants a substantive response in a notice and comment process.

It has been determined that Privacy Act rules for the Department of Defense are not significant rules. The rules do not (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in these Executive orders.

It has been determined that Privacy Act rules for the Department of Defense do not have significant economic impact on a substantial number of small entities because they are concerned only with the administration of Privacy Act systems of records within the Department of Defense.

It has been determined that Privacy Act rules for the Department of Defense impose no additional information collection requirements on the public under the Paperwork Reduction Act of 1995.

It has been determined that the Privacy Act rulemaking for the Department of Defense does not involve a Federal mandate that may result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more and that such rulemaking will not significantly or uniquely affect small governments.

It has been determined that the Privacy Act rules for the Department of Defense do not have federalism implications. The rules do 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.

Accordingly, 32 CFR part 319 is amended as follows:

DoD has determined this rulemaking meets the criteria for a direct final rule because it involves nonsubstantive changes dealing with DoD's management of its Privacy Progams. DoD expects no opposition to the changes and no significant adverse comments. However, if DoD receives a significant adverse comment, the Department will publish a withdrawal of this direct final rule in the Federal Register . A significant adverse comment is one that explains: (1) Why the direct final rule is inappropriate, including challenges to the rule's underlying premise or approach; or (2) why the direct final rule will be ineffective or unacceptable without a change. In determining whether a comment necessitates withdrawal of this direct final rule, DoD will consider whether it warrants a substantive response in a notice and comment process.

It has been determined that Privacy Act rules for the Department of Defense are not significant rules. The rules do not (1) have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in these Executive orders.

It has been determined that Privacy Act rules for the Department of Defense do not have significant economic impact on a substantial number of small entities because they are concerned only with the administration of Privacy Act systems of records within the Department of Defense.

It has been determined that Privacy Act rules for the Department of Defense impose no additional information collection requirements on the public under the Paperwork Reduction Act of 1995.

It has been determined that the Privacy Act rulemaking for the Department of Defense does not involve a Federal mandate that may result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more and that such rulemaking will not significantly or uniquely affect small governments.

It has been determined that the Privacy Act rules for the Department of Defense do not have federalism implications. The rules do 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.

Accordingly, 32 CFR part 319 amended as follows:

Direct Final Rule and Significant Adverse Comments

DoD has determined this rulemaking meets the criteria for a direct final rule because it involves nonsubstantive changes dealing with DoD's management of its Privacy Progams. DoD expects no opposition to the changes and no significant adverse comments. However, if DoD receives a significant adverse comment, the Department will publish a withdrawal of this direct final rule in the Federal Register . A significant adverse comment is one that explains: (1) Why the direct final rule is inappropriate, including challenges to the rule's underlying premise or approach; or (2) why the direct final rule will be ineffective or unacceptable without a change. In determining whether a comment necessitates withdrawal of this direct final rule, DoD will consider whether it warrants a substantive response in a notice and comment process.

It has been determined that Privacy Act rules for the Department of Defense are not significant rules. The rules do not (1) have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in these Executive orders.

It has been determined that Privacy Act rules for the Department of Defense do not have significant economic impact on a substantial number of small entities because they are concerned only with the administration of Privacy Act systems of records within the Department of Defense.

It has been determined that Privacy Act rules for the Department of Defense impose no additional information collection requirements on the public under the Paperwork Reduction Act of 1995.

It has been determined that the Privacy Act rulemaking for the Department of Defense does not involve a Federal mandate that may result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more and that such rulemaking will not significantly or uniquely affect small governments.

It has been determined that the Privacy Act rules for the Department of Defense do not have federalism implications. The rules do 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.

Accordingly, 32 CFR part 319 amended as follows:

Direct Final Rule and Significant Adverse Comments

DoD has determined this rulemaking meets the criteria for a direct final rule because it involves nonsubstantive changes dealing with DoD's management of its Privacy Progams. DoD expects no opposition to the changes and no significant adverse comments. However, if DoD receives a significant adverse comment, the Department will publish a withdrawal of this direct final rule in the Federal Register . A significant adverse comment is one that explains: (1) Why the direct final rule is inappropriate, including challenges to the rule's underlying premise or approach; or (2) why the direct final rule will be ineffective or unacceptable without a change. In determining whether a comment necessitates withdrawal of this direct final rule, DoD will consider whether it warrants a substantive response in a notice and comment process.

It has been determined that Privacy Act rules for the Department of Defense are not significant rules. The rules do not (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in these Executive orders.

It has been determined that Privacy Act rules for the Department of Defense do not have significant economic impact on a substantial number of small entities because they are concerned only with the administration of Privacy Act systems of records within the Department of Defense.

It has been determined that Privacy Act rules for the Department of Defense impose no additional information collection requirements on the public under the Paperwork Reduction Act of 1995.

It has been determined that the Privacy Act rulemaking for the Department of Defense does not involve a Federal mandate that may result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more and that such rulemaking will not significantly or uniquely affect small governments.

It has been determined that the Privacy Act rules for the Department of Defense do not have federalism implications. The rules do 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.

Accordingly, 32 CFR 319 is amended as follows:

DoD has determined this rulemaking meets the criteria for a direct final rule because it involves nonsubstantive changes dealing with DoD's management of its Privacy Progams. DoD expects no opposition to the changes and no significant adverse comments. However, if DoD receives a significant adverse comment, the Department will publish a withdrawal of this direct final rule in the Federal Register . A significant adverse comment is one that explains: (1) Why the direct final rule is inappropriate, including challenges to the rule's underlying premise or approach; or (2) why the direct final rule will be ineffective or unacceptable without a change. In determining whether a comment necessitates withdrawal of this direct final rule, DoD will consider whether it warrants a substantive response in a notice and comment process.

It has been determined that Privacy Act rules for the Department of Defense are not significant rules. The rules do not (1) have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in these Executive orders.

It has been determined that Privacy Act rules for the Department of Defense do not have significant economic impact on a substantial number of small entities because they are concerned only with the administration of Privacy Act systems of records within the Department of Defense.

It has been determined that Privacy Act rules for the Department of Defense impose no additional information collection requirements on the public under the Paperwork Reduction Act of 1995.

It has been determined that the Privacy Act rulemaking for the Department of Defense does not involve a Federal mandate that may result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more and that such rulemaking will not significantly or uniquely affect small governments.

It has been determined that the Privacy Act rules for the Department of Defense do not have federalism implications. The rules do 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.

Accordingly, 32 CFR part 322 is amended as follows:

DoD has determined this rulemaking meets the criteria for a direct final rule because it involves nonsubstantive changes dealing with DoD's management of its Privacy Progams. DoD expects no opposition to the changes and no significant adverse comments. However, if DoD receives a significant adverse comment, the Department will publish a withdrawal of this direct final rule in the Federal Register . A significant adverse comment is one that explains: (1) Why the direct final rule is inappropriate, including challenges to the rule's underlying premise or approach; or (2) why the direct final rule will be ineffective or unacceptable without a change. In determining whether a comment necessitates withdrawal of this direct final rule, DoD will consider whether it warrants a substantive response in a notice and comment process.

It has been determined that Privacy Act rules for the Department of Defense are not significant rules. The rules do not (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in these Executive orders.

It has been determined that Privacy Act rules for the Department of Defense do not have significant economic impact on a substantial number of small entities because they are concerned only with the administration of Privacy Act systems of records within the Department of Defense.

It has been determined that Privacy Act rules for the Department of Defense impose no additional information collection requirements on the public under the Paperwork Reduction Act of 1995.

It has been determined that the Privacy Act rulemaking for the Department of Defense does not involve a Federal mandate that may result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more and that such rulemaking will not significantly or uniquely affect small governments.

It has been determined that the Privacy Act rules for the Department of Defense do not have federalism implications. The rules do 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.

Accordingly, 32 CFR part 322 is amended as follows:

Regulatory Information

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” This rule provides proper notice; however, under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) which would provide a comment period with respect to this rule. The Coast Guard received applications for Marine Event Permits on February 2, 2012, and February 6, 2012, from the University of Alabama and the Tuscaloosa Tourism and Sports Commission to conduct their events on April 21, 2012. After reviewing the details of the events and the permit applications, the Coast Guard determined that a special local regulation is needed and delaying or foregoing this safety measure to provide a comment period would be contrary to the public interest. The special local regulation is needed to safeguard persons and vessels from safety hazards associated with the USAT Triathlon and Race Rowing Competition.

The University of Alabama Women's rowing team is sponsoring a Race Rowing Competition between the University of Alabama and the University of Iowa on the Black Warrior River. The Tuscaloosa Tourism and Sports Commission is sponsoring the USAT National Collegiate Championship Triathlon, and the swimming portion of the race is to take place in the Black Warrior River. The introduction of rowing vessels and swimmers into a commercially transited river system poses significant safety hazards to both swimmers and rowing vessels. The COTP Mobile is establishing a temporary special local regulation for a portion of the Black Warrior River, Tuscaloosa, AL, to safeguard persons and vessels during the two events.

The COTP anticipates minimal impact on vessel traffic due to this regulation. However, this special local regulation is deemed necessary for the safeguard of life and property within the COTP Mobile zone.

The Coast Guard is establishing a temporary special local regulation for a portion of the Black Warrior River from mile 338.5 to mile 341.5, Tuscaloosa, AL. This temporary rule will safeguard life and property in this area. Entry into, transiting in or anchoring in this zone is prohibited to all vessels not registered with the sponsor as participants or not part of the regatta patrol, unless specifically authorized by the COTP Mobile or a designated representative. They may be contacted on VHF-FM Channel 16 or through Coast Guard Sector Mobile at 251-441-5976.

The COTP Mobile or a designated representative will inform the public through broadcast notice to mariners of changes in the effective period for the special local regulation. This rule is effective from 7 a.m. until 6 p.m. on April 21, 2012.

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

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

The special local regulation listed in this rule will only restrict vessel traffic from entering, transiting, or anchoring within a small portion of the Black Warrior River, Tuscaloosa, AL. The effect of this regulation will not be significant for several reasons: (1) This rule will only affect vessel traffic for a short duration; (2) vessels may request permission from the COTP to transit through the regulated area; and (3) the impacts on routine navigation are expected to be minimal. Notifications to the marine community will be made through broadcast notice to mariners. These notifications will allow the public to plan operations around the regulated area.

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit or anchor in affected portions of the Black Warrior River, Tuscaloosa, AL, during the two events. This special local regulation will not have a significant economic impact on a substantial number of small entities for the following reasons. The zone is limited in size, is of short duration, and vessel traffic may request permission from the COTP Mobile or a designated representative to enter or transit through the regulated area.

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

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

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on 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. We have analyzed this rule under that Order and determined that this rule does not have implications for federalism.

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

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

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

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

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

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

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies. This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule is categorically excluded, under figure 2-1, paragraph (34)(h), of the Instruction. This rule involves establishing a special local regulation, requiring a permit wherein an analysis of the environmental impact of the regulations was performed. Under figure 2-1, paragraph (34)(h.), of the Instruction, an environmental analysis checklist and a categorical exclusion determination are not required for this rule.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows:

Regulatory Information

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” This rule provides proper notice; however, under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) which would provide a comment period with respect to this rule. The Coast Guard received an application for a Marine Event Permit on January 31, 2011 from Super Boat International, Inc. to conduct a high speed boat race on May 6, 2012. After reviewing the details of the event and the permit application, the Coast Guard determined that a special local regulation is needed and delaying or foregoing this safety measure to provide a comment period would be contrary to the public interest. The special local regulation is needed to safeguard persons and vessels from safety hazards associated with the Emerald Coast Super Boat Grand Prix high speed boat races.

On January 31, 2012, Super Boat International, Inc. applied for a Marine Event Permit to conduct a high speed boat race on Saint Andrew Bay, Panama City, FL on May 6, 2012. This event will draw in a large number of pleasure craft and the high speed boats pose a significant safety hazard to both vessels and mariners operating in or near the area. The COTP Mobile is establishing a temporary special local regulation for a portion of Saint Andrew Bay, Panama City, FL, to safeguard persons and vessels during the high speed boat races.

The COTP anticipates minimal impact on vessel traffic due to this regulation. However, this special local regulation is deemed necessary for the safeguard of life and property within the COTP Mobile zone.

The Coast Guard is establishing a temporary special local regulation for a portion of Saint Andrew Bay, Panama City, FL, enclosed by a bounded area starting at a point on the shore at approximately 30°09′55.62″ N, 085°41′46.30″ W, then east following the shore line to 30°08′39.18″ N, 085°39′27.89″ W, then southwest to 30°08′34.24″ N, 085°39′40.68″ W, then west to 30°09′34.35″ N, 085°41′46.30″ W, then north to the starting point at 30°09′55.62″ N, 085°41′46.30″ W. This temporary rule will safeguard life and property in this area. Entry into, transiting in or anchoring in this zone is prohibited to all vessels not registered with the sponsor as participants or not part of the regatta patrol, unless specifically authorized by the COTP Mobile or a designated representative. They may be contacted on VHF-FM Channel 16 or through Coast Guard Sector Mobile at 251-441-5976.

The COTP Mobile or a designated representative will inform the public through broadcast notice to mariners of changes in the effective period for the special local regulation. This rule will be effective and enforced from 10 a.m. until 4 p.m. on May 6, 2012.

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

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders.

The special local regulation listed in this rule will only restrict vessel traffic from entering, transiting, or anchoring within a small portion of Saint Andrew Bay, Panama City, FL. The effect of this regulation will not be significant for several reasons: (1) This rule will only affect vessel traffic for a short duration; (2) vessels may request permission from the COTP to transit through the regulated area; and (3) the impacts on routine navigation are expected to be minimal. Notifications to the marine community will be made through broadcast notice to mariners. These notifications will allow the public to plan operations around the regulated area.

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit or anchor in affected portions of Saint Andrew Bay during the high speed boat races. This special local regulation will not have a significant economic impact on a substantial number of small entities for the following reasons. The zone is limited in size, is of short duration and vessel traffic may request permission from the COTP Mobile or a designated representative to enter or transit through the regulated area.

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

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

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on 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. We have analyzed this rule under that Order and determined that this rule does not have implications for federalism.

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

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

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

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

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

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

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

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule is categorically excluded, under figure 2-1, paragraph (34)(h), of the Instruction. This rule involves establishing a special local regulation, requiring a permit wherein an analysis of the environmental impact of the regulations was performed. Under figure 2-1, paragraph (34)(h.), of the Instruction, an environmental analysis checklist and a categorical exclusion determination are not required for this rule.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows:

Regulatory Information

On January 18, 2012, we published a notice of proposed rulemaking (NPRM) entitled “Special Local Regulations for Marine Events; Spa Creek and Annapolis Harbor, Annapolis, MD” in the Federal Register (77 FR 11). We received no comments on the proposed rule. No public meeting was requested, and none was held.

On Saturday, May 12, 2012, Competitor Group Inc. of San Diego, California, will sponsor the “TriRock Triathlon Series” in Annapolis, Maryland. The swim segment of the event will occur from 6:30 a.m. to 9:15 a.m. and will be located in Spa Creek and Annapolis Harbor. Up to 300 swimmers will operate on a 500-meter course located between the Annapolis City Dock and the confluence of the Spa Creek with the Severn River. The swimmers will be supported by sponsor-provided watercraft. The start and finish will be located at the Annapolis City Dock. A portion of the swim course will impede the federal navigation channel. Due to the need for vessel control during the event, the Coast Guard will temporarily restrict vessel traffic in the event area to provide for the safety of participants, spectators and other transiting vessels.

The Coast Guard received no comments in response to the NPRM. No public meeting was requested and none was held.

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

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders. We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of DHS is unnecessary. Although this regulation will prevent traffic from transiting a portion of Spa Creek and Annapolis Harbor during the event, the effect of this regulation will not be significant due to the limited duration that the regulated area will be in effect and the extensive advance notifications that will be made to the maritime community via the Local Notice to Mariners and marine information broadcasts, so mariners can adjust their plans accordingly.

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule would affect the following entities, some of which might be small entities: The owners or operators of vessels intending to transit or anchor in the effected portions of Spa Creek and Annapolis Harbor during the event.

Although this regulation prevents traffic from transiting a portion of the Spa Creek and Annapolis Harbor during the event, this rule will not have a significant economic impact on a substantial number of small entities for the following reasons: Though the regulated area extends across the entire width of the waterway, this rule would be in effect for only a limited period; and before the enforcement period, we will issue maritime advisories so mariners can adjust their plans accordingly. All Coast Guard vessels enforcing this regulated area can be contacted at telephone number 410-576-2693 or on marine band radio VHF-FM channel 16 (156.8 MHz).

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

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

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on 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. We have analyzed this rule under that Order and determined that this rule does not have implications for federalism.

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

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

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

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

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

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

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies. This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule is categorically excluded, under figure 2-1, paragraph (34)(h), of the Instruction. This rule involves implementation of regulations within 33 CFR Part 100 applicable to organized marine events on the navigable waters of the United States that could negatively impact the safety of waterway users and shore side activities in the event area. The category of water activities includes but is not limited to sail boat regattas, boat parades, power boat racing, swimming events, crew racing, canoe and sail board racing. An environmental analysis checklist and a categorical exclusion determination are available in the docket where indicated under ADDRESSES .

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows:

The Coast Guard will enforce Special Local Regulations for the annual Neches River Festival in 33 CFR 100.801 (Table 1, paragraph 118) on May 4, 2012, from 3 p.m. to 6 p.m. and on May 5 and May 6, 2012 from 9 a.m. to 10 p.m.

Under the provisions of 33 CFR 100.801 (Table 1, paragraph 118), a vessel may not enter the regulated area, unless it receives permission from the Captain of the Port. Spectator vessels may safely transit outside the regulated area but may not anchor, block, loiter, or impede participants or official patrol vessels. The Coast Guard may be assisted by other federal, state or local law enforcement agencies in enforcing this regulation.

This notice of enforcement is issued under the authority of 33 CFR 100.801 (Table 1, paragraph 118). In addition to this notification in the Federal Register , the Coast Guard will provide the maritime community with notification of this enforcement period via Local Notice to Mariners, Marine Information Broadcasts, and Marine Safety Information Bulletins.

If the Captain of the Port or his designated representative determines that the regulated area need not be enforced for the full duration stated in this notice of enforcement, he or she may use a Broadcast Notice to Mariners to grant general permission to enter the regulated area.

On February 21, 2012, the Postal Service filed a notice (R2012-6) with the Postal Regulatory Commission to temporarily reduce the prices for certain types of First-Class Mail and Standard Mail letters items that contain, in or on the mailpiece, a transactional two-dimensional barcode or similar print technology such as watermarks or tags (collectively “Mobile Barcode” or “Mobile Barcodes”) readable by consumer mobile devices. In recognition of the success of the mobile barcode promotion in the summer of 2011, the Postal Service offers a revised promotion from July 1, 2012, through August 31, 2012.

In this final rule, the Postal Service provides a description of the conditions for eligibility for the price reduction for the mobile commerce and personalization promotion, and the revised mailing standards to implement the promotion.

To be eligible, each Presorted and automation mailpiece in the mailing that is listed on the postage statement for that mailing must have a Mobile Barcode on the outside of each piece or on the contents within each piece. When scanned, the Mobile Barcode must lead the recipient of the mailpiece to either: a Web page that allows the recipient to purchase a product or service, or a personalized URL that leads to a Web page whose Web address and content are unique to the mailpiece recipient. In both cases, the Web site must remain mobile-optimized. Mobile Barcodes that direct consumers to Web pages that allow payment for prior or future purchases, or encourage enrollment in online bill payment or paperless statement services are not eligible for the discount. Mailpieces with Mobile Barcodes that convey postage information, destination, sender, or a machinable serial number for security also are not eligible for the discount.

The promotion provides an upfront price reduction of 2 percent of the eligible postage for qualifying mailpieces containing Mobile Barcodes as described above. Qualifying mailings are Presorted and automation mailings of First-Class Mail cards, letters, and flats, and Standard Mail (including Nonprofit) letters and flats. Commingled, co-mailed and combined mailings are allowed, but a separate postage statement is required for mailpieces with Mobile Barcodes.

Eligible mailings must be accompanied by electronic documentation. Mailings that are prepared by an entity other than the mail owner must indicate the identity of the owner in the electronic documentation. The electronic documentation must identify the mail owner and mail preparer in the “By/For” fields for all mailings, either by Customer Registration ID (CRID), Mailer ID (MID) or other account type that is assigned by USPS®. Mailings of automation letters or flats must have Intelligent Mail® barcodes. Mailpieces with POSTNET TM barcodes will not be eligible for the price reduction.

The price reduction will be taken off the postage amount due at the time of mailing, and there will be no refunds or postage credit provided under this promotion. The promotion discount does not apply to single-piece First-Class Mail pieces including residual single-piece First-Class Mail pieces on a postage statement for Presorted and automation mailings.

Postage payment methods will be restricted to permit imprint, metered postage, or precancelled stamps. Pieces with metered postage must bear an exact amount of postage as stipulated by the class and shape of mail. Affixed postage values for metered mailings will be as follows:

Mailings with postage paid by metered or precancelled stamp postage will have the percentage discount deducted from the additional postage due, except for Value Added Refund mailings, which may include the amount of the discount with the amount to be refunded.

The mobile barcode promotion discount cannot be combined with other incentives, with the exception of the full-service Intelligent Mail barcode discount.

To participate in the promotion, customers must register on the Business Customer Gateway at www.gateway.usps.com and specify which permits and CRIDs will participate in the promotion. Registration opens May 1, 2012, and must be completed at least 24 hours prior to the first mailing date. The Postal Service will implement the promotion and temporary price reduction for mailings made on July 1, 2012, through August 31, 2012. Plant-verified drop shipment (PVDS) mailings accepted no later than August 31, 2012, may be entered at destinations through September 15, 2012. Program requirements, including updated FAQs, are available on the RIBBS Web site at https://ribbs.usps.gov/index.cfm?page=mobilebarcode or by email to mobilebarcode@usps.gov.

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

Accordingly, 39 CFR part 111 is amended as follows:

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

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

EPA is taking two separate and independent actions for the Greater Connecticut one-hour ozone serious nonattainment area (hereafter, “the Greater Connecticut area”).

EPA is determining that the Greater Connecticut area did not attain the one-hour ozone National Ambient Air Quality Standard (NAAQS) by the applicable attainment date, November 15, 2007. This determination is based upon complete, quality-assured and certified air quality monitoring data for the 2005 through 2007 ozone seasons.

In addition, EPA is determining that the Greater Connecticut area is currently attaining the one-hour ozone NAAQS based upon complete, quality-assured and certified ambient air monitoring data showing the area currently monitored attainment of the one-hour ozone NAAQS, and that it has done so continuously since the 2006-2008 monitoring period.

Other specific details related to these determinations and the rationale for EPA's action are explained in the Notice of Proposed Rulemaking (NPR) published on November 23, 2011 (76 FR 72377) and will not be restated here. No comments were received on the NPR.

After revocation of the one-hour ozone standard, EPA must continue to provide a mechanism to give effect to the one-hour anti-backsliding requirements. See SCAQMD v. EPA, 47 F.3d 882, at 903. In keeping with this responsibility, EPA has determined that Greater Connecticut failed to attain the one-hour ozone standard by its applicable attainment date. Consistent with 40 CFR 51.905(e)(2), and the South Coast decision, upon revocation of the one-hour ozone NAAQS for an area, EPA is no longer obligated to determine whether an area has attained the one-hour NAAQS, except insofar as it relates to effectuating the anti-backsliding requirements that are specifically retained. EPA's determination here is linked solely to required, one-hour anti-backsliding, contingency measures. A final determination of failure to attain will not result in reclassification of the area under the revoked one-hour standard, nor is EPA identifying or determining any new one-hour reclassification for the area. EPA is no longer required to reclassify an area to a higher classification for the one-hour ozone NAAQS based upon a determination that the area failed to attain that NAAQS by its attainment date. See 40 CFR 51.905(e)(2)(i)(B). Moreover, EPA has previously approved the one-hour ozone attainment demonstration and Reasonable Further Progress (ROP) plans for this area, and in doing so noted that although there were no state implementation plan contingency measure reductions applicable to the Greater Connecticut area for failure to attain, there were federal measures the state had not accounted for in its attainment demonstration that provided more reductions than necessary to serve the purpose of contingency measures for this area. See 66 FR 634, January 3, 2001. In addition, EPA has also determined that the Greater Connecticut area attained the one-hour ozone standard in 2008, and continues to attain this standard. In this context, EPA has also determined that there are not any additional obligations, including those relating to one-hour ozone contingency measures, for the Greater Connecticut area under the one-hour ozone standard.

EPA is determining that the Greater Connecticut one-hour ozone nonattainment area did not meet its applicable one-hour ozone attainment date of November 15, 2007, based on 2005-2007 quality-assured ozone monitoring data. Separate from and independent of this determination, EPA is also determining that the Greater Connecticut one-hour ozone nonattainment area is currently attaining the one-hour ozone standard, based on the most recent three years (2008-2010) of complete, quality-assured ozone monitoring data at all monitoring sites in the area. EPA's review of the data shows that the area began attaining the one-hour ozone standard in the 2006-2008 period, and has continued to attain this standard through the 2007-2009 and 2008-2010 monitoring periods. Quality assured and quality controlled, but not yet certified, ozone data available for 2011 indicate that the area continues to attain the one-hour NAAQS.

These actions make determinations of attainment based on air quality, result in the suspension of certain Federal requirements, and would not impose additional requirements beyond those imposed by state law. For that reason, these actions:

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

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

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

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

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

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

• Are not significant regulatory actions subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

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

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

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

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing these actions and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2). This rule is effective on April 16, 2012.

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by May 15, 2012. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

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

I. Background Information

The EPA issued “Revisions to Final Response to Petition From New Jersey Regarding SO 2 Emissions From the Portland Generating Station” as a direct final rule on December 22, 2011. See 76 FR 79541. The direct final rule revised the preamble and rule text to the “Final Response to Petition From New Jersey Regarding SO 2 Emissions From the Portland Generating Station” (Portland) published November 7, 2011, to clarify that Portland significantly contributes to nonattainment or interferes with maintenance of the 1-hour sulfur dioxide national ambient air quality standard in the State of New Jersey, and not in specific counties within the state. See 76 FR 69052. The revisions did not change the conclusions that the EPA made in the final rule and did not affect the emission limits, increments of progress, compliance schedules, or reporting provisions.

The EPA issued a parallel proposal under the same name on December 22, 2011, that proposed to make the same revisions outlined in the direct final and solicited comment on those revisions. See 76 FR 79574. We stated in the direct final rule amendments that if we received adverse comment to the parallel proposal by February 21, 2012, we would publish a timely notice of withdrawal of the direct final rule in the Federal Register. We received one adverse comment on the proposed amendments on February 21, 2012. We are consequently withdrawing the “Revisions to Final Response to Petition From New Jersey Regarding SO 2 Emissions From the Portland Generating Station” published as a direct final rule in the Federal Register on December 22, 2012 as of March 16, 2012. See 76 FR 79541. The EPA will address the adverse comment in a subsequent final action based on the parallel proposal also published on December 22, 2011. See 76 FR 79574. As stated in the parallel proposal, we will not institute a second comment period on this action.

I. General Information A. Does this action apply to me?

This action is directed to the public in general and may be of particular interest to those persons who manufacture (defined by statute to include import), process, or export the chemical substances identified in this direct final rule. Because other persons may also be interested, the Agency has not attempted to describe all the specific persons that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the technical person listed under FOR FURTHER INFORMATION CONTACT .

1. Submitting CBI. Do not submit this information to EPA through regulations.gov or email. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the 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.

2. Tips for preparing your comments. When submitting comments, remember to:

i. Identify the document by docket ID number and other identifying information (subject heading, Federal Register date and page number).

ii. Follow directions. The Agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.

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

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

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

vi. Provide specific examples to illustrate your concerns and suggest alternatives.

vii. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.

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

Section 4(a) of TSCA authorizes EPA to require testing if certain findings are made. EPA is amending the chemical testing requirements for certain HPV chemical substances in 40 CFR 799.5085 because some of the findings that EPA made for 10 chemical substances are no longer supported. These findings were that:

1. The chemical substances were produced in substantial quantities.

2. There are insufficient data upon which the effects of manufacture, distribution, processing, use, or disposal of those chemical substances on health or the environment can reasonably be determined or predicted.

3. Testing of the chemical substance with respect to such effects is necessary to develop such data. (See TSCA section 4(a)(1)(B)(i), (ii), and (iii); also, see Ref. 1).

Unit III. discusses which findings are not supported for each specific chemical substance subject to this direct final rule.

EPA is amending the chemical testing requirements for certain HPV chemical substances in 40 CFR 799.5085 by direct final rule. Specifically, this direct final rule revokes the testing requirements for the following four chemical substances: Acetyl chloride (CAS No. 75-36-5); imidodicarbonic diamide (CAS No. 108-19-0); methane, isocyanato- (CAS No. 624-83-9); and urea, reaction products with formaldehyde (CAS No. 68611-64-3). This direct final rule also revokes some of the testing requirements for the following six chemical substances: 9,10-Anthracenedione (CAS No. 84-65-1); 1-chlorododecane (CAS No. 112-52-7); phenol, 4,4′-methylenebis [2,6-bis(1,1-dimethylethyl)]- (CAS No. 118-82-1); methanesulfinic acid, hydroxyl-, monosodium salt (CAS No. 149-44-0); benzenesulfonic acid, [[4-[[4-(phenylamino)phenyl][4-(phenylimino)-2,5-cyclohexadien-1-ylidene]methyl]phenyl]amino]- (CAS No. 1324-76-1); and C.I. Solvent Black 7 (CAS No. 8005-02-5). EPA is basing its decision to revoke all testing requirements for four chemical substances and some of the testing requirements for six other chemical substances on information received since publication of HPV1 (40 CFR 799.5085), as described in this unit.

1. Acetyl chloride. EPA is revoking all testing requirements for acetyl chloride (CAS No. 75-36-5) because there is no longer support for the TSCA section 4(a)(1)(B)(i) “substantial production” finding for this chemical substance. “Substantial production” of a chemical substance under TSCA section 4(a)(1)(B)(i) is generally interpreted by EPA to be an aggregate production (including import) volume equaling or exceeding 1 million pounds per year. See EPA's TSCA section 4(a)(1)(B) Final Statement of Policy (“B” policy) (Ref. 2). The “substantial production” finding for this chemical substance was based on reports from several companies to the 2002 TSCA Inventory Update Reporting (IUR) rule. The Albemarle Corporation which manufactured and imported the largest volume of acetyl chloride, without which a finding of substantial production could not have been made, informed EPA in 2007 that its manufacture and importation of acetyl chloride at the time the test rule was promulgated were only for non-TSCA purposes (i.e., for use in pharmaceuticals) (Ref. 3), and was, therefore, not subject to HPV1.

Three other companies had reported importing smaller volumes of acetyl chloride in the 2002 IUR, the sum of which would not have provided support for a finding of substantial production. Two of these companies, Tessenderlo Kerley, Inc., and a company, which claimed its name as CBI, have since ceased importation of acetyl chloride. Tessenderlo Kerley ceased importation several years ago, and the other company ceased importation over a year prior to the effective date of HPV1, April 17, 2006 (Ref. 4). Neither of these companies is, therefore, subject to HPV1. The third small importer, Chartkit Chemical Corporation, reported that it imported only a small amount of acetyl chloride after the effective date of HPV1 in 2006, but none since (Ref. 5). EPA's review of data in the 2006 IUR (which required reporting on chemical substances manufactured or imported during calendar year 2005) did not identify any companies manufacturing or importing acetyl chloride. (Chartkit Chemical Corporation did not import acetyl chloride in 2005, making a report to the 2006 IUR unnecessary.) Because the finding for substantial production for acetyl chloride was not supported when HPV1 was promulgated, the Agency is revoking all the testing requirements for acetyl chloride (CAS No. 75-36-5) by removing it from Table 2 in 40 CFR 799.5085(j).

2. Imidodicarbonic diamide. EPA is revoking all the testing requirements for imidodicarbonic diamide (CAS No. 108-19-0), also known as biuret, by removing imidodicarbonic diamide from Table 2 in 40 CFR 799.5085(j). EPA considers the test requirements for this chemical substance unnecessary at this time because sufficient data have been provided to allow the Agency to reverse its finding under TSCA section 4(a)(1)(B)(ii) for “insufficient data.” Information that satisfied HPV1's requirements was voluntarily submitted by The Fertilizer Institute (TFI) on behalf of a member company that manufactures the chemical substance as an impurity in its products. EPA considers a company that manufactures a chemical substance only as an impurity to be a Tier 2 manufacturer with regard to its obligations under HPV1. Although subject to HPV1 and responsible for providing reimbursement to persons in Tier 1, Tier 2 manufacturers do not have to respond to HPV1 with a letter of intent to test or a request for exemption, unless directed to do so by EPA through a document published in the Federal Register . Although EPA did not publish such a document, TFI, acting on behalf of its member company, volunteered to provide information to EPA on the endpoints specified by HPV1 for that chemical substance. This information (Refs. 6-8) was provided to the Agency and found to meet the standards prescribed by EPA (Refs. 9-11) and is being made available in the docket for this direct final rule and will be added to the High Production Volume Information System (HPVIS).

3. Methane, isocyanato. EPA is revoking all the testing requirements for methane, isocyanato- (CAS No. 624-83-9) by removing it from Table 2 in 40 CFR 799.5085(j). On May 11, 2007, Bayer CropScience submitted a test plan and robust summaries of existing data for methane, isocyanato- along with a request that EPA determine if the robust summaries satisfied the Agency's need for data on physical/chemical properties (Ref. 12). In the same letter, Bayer CropScience requested a waiver for the requirement to determine an octanol-water partition coefficient and the requirement to conduct aquatic toxicity tests because of the extreme reactivity in water of methane, isocyanato-. Bayer CropScience also asked EPA to consider, as a substitute for aquatic toxicity studies of methane, isocyanato-, robust summaries of aquatic toxicity studies of dimethyl urea (CAS No. 96-31-1) (DMU), one of the two degradation products of methane, isocyanato- in water, the other being carbon dioxide. EPA concluded that the submitted data satisfied the Agency's need for data on the physical/chemical properties of boiling point, melting point, vapor pressure, and water solubility (Ref. 13). EPA also agreed that methane, isocyanato- hydrolyzes very rapidly and, as a result, an octanol-water partition coefficient is not relevant (Ref. 13). Because of the rapid hydrolysis of methane, isocyanato- to carbon dioxide and DMU, EPA is revoking the requirement to test for aquatic toxicity (fish acute toxicity, Daphnia acute toxicity, and toxicity to algae). EPA believes that the aquatic toxicity studies of DMU, provided by Bayer CropScience, which the Agency reviewed and found adequate, provide information on the aquatic effects of methane, isocyanato- (Ref. 14). Therefore, EPA, in this direct final rule, is revoking the testing requirements for boiling point, melting point, vapor pressure, octanol-water partition coefficient, water solubility, fish acute toxicity, Daphnia acute toxicity, and toxicity to algae for methane, isocyanato- by removing it from Table 2 in 40 CFR 799.5085(j).

4. Urea, reaction products with formaldehyde. EPA is revoking all the testing requirements for urea, reaction products with formaldehyde (CAS No. 68611-64-3) by removing it from Table 2 in 40 CFR 799.5085(j). EPA considers the test requirements for this chemical substance unnecessary at this time because sufficient data have been provided to allow the Agency to reverse its finding under TSCA section 4(a)(1)(B)(ii) for “insufficient data.” Information which satisfied HPV1's requirements was voluntarily submitted by TFI on behalf of its member companies that manufacture this chemical substance as an impurity in their products. EPA considers companies that manufacture a chemical substance only as an impurity to be Tier 2 manufacturers with regard to their obligations under HPV1. Although subject to HPV1 and responsible for providing reimbursement to persons in Tier 1, Tier 2 manufacturers did not have to respond to HPV1 with a letter of intent to test or a request for exemption, unless directed to do so by EPA through a document published in the Federal Register . Despite the lack of an EPA published Federal Register document, TFI, acting on behalf of its member companies, volunteered to provide information to EPA on the endpoints specified by HPV1 for this chemical substance. This information (Refs. 7 and 16) has been provided to the Agency and found to meet the standards for testing prescribed by EPA (Refs. 17-19) and is being made available in the docket for this direct final rule and will be added to HPVIS.

1. 9,10-Anthracenedione. In a letter dated July 10, 2006, the Chemical Products Corporation (CPC) requested EPA's permission to submit the values for boiling point and vapor pressure of 9,10-anthracenedione (CAS No. 84-65-1) contained in the International Uniform Chemical Information Database (IUCLID) instead of conducting the tests required by HPV1 (Ref. 20). CPC stated that the ASTM methods specified by HPV1 would not work for 9,10-anthracenedione because the boiling point and vapor pressure listed for that chemical substance in IUCLID and the boiling point listed for that chemical substance in the “Handbook of Chemistry and Physics” (Ref. 21) fell outside the determination ranges of the ASTM methods. EPA agreed and approved CPC's request to submit IUCLID and other existing values because those values matched or were in close agreement with measured values in various literature sources (Ref. 22). CPC also requested a modification of the ASTM method E 324 to determine the melting point for 9,10-anthracenedione (Ref. 23). While evaluating this request, EPA reviewed available data on measured melting points of 9,10-anthracenedione and found the existing data to be in sufficiently close agreement that they could be used to satisfy the Agency's data need for that endpoint (Ref. 22). EPA is, therefore, revoking the requirement that the boiling point, vapor pressure, and melting point of 9,10-anthracenedione be determined by the ASTM methods specified in HPV1 and accepts the submitted existing data as sufficient to satisfy those data needs, making the testing requirements unnecessary. Therefore, EPA is revoking the testing requirements for boiling point, vapor pressure, and melting point for 9,10-anthracenedione by removing those requirements from those listed for 9,10-anthracenedione in Table 2 in 40 CFR 799.5085(j). The test requirements for 9,10-anthracenedione that are not revoked by this direct final rule include tests to determine octanol/water partition coefficient and water solubility, and to screen for reproduction/developmental toxicity. Studies responding to those test requirements have been submitted to the Agency (Ref. 24).

2. 1-Chlorododecane. In a letter dated February 21, 2008, EPA informed Lonza, Inc., that the testing of 1-chlorododecane (CAS No. 112-52-7), which Lonza had committed to sponsor, did not have to include a test for melting point because, in publicly available documents, 1-chlorododecane is reported to be a liquid (Ref. 25). Therefore, EPA is revoking the testing requirement for melting point for 1-chlorododecane by removing that requirement from those listed for 1-chlorododecane in Table 2 in 40 CFR 799.5085(j). The test requirements for 1-chlorododecane that are not revoked by this direct final rule include tests for boiling point, vapor pressure, octanol/water partition coefficient, water solubility, biodegradation, Daphnia chronic toxicity, toxicity to algae, acute mammalian toxicity, mutagenicity, chromosomal damage, and 28-day repeated-dose toxicity with a reproduction/developmental toxicity screen. Studies responding to those test requirements have been submitted to the Agency (Ref. 26).

3. Phenol, 4,4′-methylenebis[2,6-bis(1,1-dimethylethyl)]-. In letters dated May 12, 2006, July 14, 2006, May 1, 2007, and May 16, 2007 (Refs. 27-30), the Albemarle Corporation requested EPA to review existing data that it was submitting for phenol, 4,4′-methylenebis[2,6-bis(1,1-dimethylethyl)]- (CAS No. 118-82-1) to determine if they satisfied the Agency's need for data on water solubility, octanol/water partition coefficient, acute mammalian toxicity, bacterial reverse mutation, and screening level reproduction/developmental toxicity. EPA found that the data satisfied the Agency's data needs for those testing endpoints in HPV1, making the testing requirements unnecessary (Refs. 31-33). Therefore, EPA is revoking the testing requirements for water solubility, octanol/water partition coefficient, acute mammalian toxicity, bacterial reverse mutation assay, and a reproduction/developmental toxicity screen for phenol, 4,4′-methylenebis[2,6-bis(1,1-dimethylethyl)]- by removing those requirements from Table 2 in 40 CFR 799.5085(j). The test requirements for phenol, 4,4′-methylenebis[2,6-bis(1,1-dimethylethyl)]- that are not revoked by this direct final rule include tests for melting point, boiling point, vapor pressure, inherent biodegradation, and chromosomal damage. Studies responding to those test requirements have been submitted to the Agency (Ref. 34).

4. Methanesulfinic acid, hydroxyl-, monosodium salt. On May 14, 2007, the Sodium Formaldehyde Sulfoxylate Consortium (SFS Consortium) formed under the auspices of the Synthetic Organic Chemical Manufacturers Association (SOCMA) submitted existing data to satisfy some of the testing requirements for methanesulfinic acid, hydroxyl-, monosodium salt (CAS No. 149-44-0) (Ref. 35). The submitted studies used the dihydrate form of methanesulfinic acid, hydroxyl-, monosodium salt (CAS No. 6035-47-8) as the test substance to address the endpoints of inherent biodegradation, fish acute toxicity, Daphnia acute toxicity, and toxicity to algae (Ref. 35). Although the hydrated form is identified by a different CAS number, in general, EPA does not recognize a hydrate as a separate entity from the corresponding anhydrous material for TSCA purposes, and accepts studies of the hydrated form of a chemical substance as predictive of the effects of the anhydrous chemical (Ref. 15). EPA found that the submitted study on ready biodegradation satisfied the need for information on biodegradability, making the test requirement for inherent biodegradation unnecessary (Refs. 36 and 37). The existing studies on fish acute toxicity, Daphnia acute toxicity, and toxicity to algae were reviewed by the Agency and found to satisfy EPA's data needs for those endpoints (Ref. 38).

In the test plan submitted with the May 14, 2007 letter, the SFS Consortium requested that EPA revoke the requirement to determine vapor pressure because the chemical substance is an organo-metallic salt that does not volatilize (Ref. 35). The SFS Consortium also requested that EPA revoke the requirement to determine the octanol/water partition coefficient (log K ow ) because its estimated value was −6.17 and HPV1 did not require a determination of octanol/water partition coefficient if its estimated value is less than zero (Ref. 35). EPA agreed with the SFS Consortium's position that testing was not needed to determine vapor pressure (Ref. 39) and octanol/water partition coefficient (Ref. 40). Also, in the test plan submitted on May 14, 2007, (Ref. 35), the SFS Consortium reported that in a test to determine boiling point, the test substance decomposed. EPA, therefore, is waiving the test for boiling point (Ref. 41).

EPA is revoking the testing requirements for boiling point, vapor pressure, octanol/water partition coefficient, biodegradation, fish acute toxicity, Daphnia acute toxicity, and toxicity to algae for methanesulfinic acid, hydroxyl-, monosodium salt by removing those requirements from those listed for that chemical substance in Table 2 in 40 CFR 799.5085(j). The testing requirements for methanesulfinic acid, hydroxyl-, monosodium salt that are not revoked by this direct final rule include tests for melting point, water solubility, chromosomal damage, and 28-day repeated-dose toxicity with a reproduction/developmental toxicity screen. Studies responding to those test requirements, also using the dihydrate form of methanesulfinic acid, hydroxyl-, monosodium salt, were submitted to the Agency (Ref. 42).

5. Benzenesulfonic acid, [[4-[[4-(phenylamino)phenyl][4-(phenylimino)-2,5-cyclohexadien-1-ylidene]methyl]phenyl]amino]-. On July 17, 2006, the Color Pigments Manufacturers Association (CPMA) submitted a test plan for benzenesulfonic acid, [[4-[[4-(phenylamino)phenyl][4-(phenylimino)-2,5-cyclohexadien-1-ylidene]methyl]phenyl]amino]- (CAS No. 1324-76-1), also known as C.I. Pigment Blue 61. CPMA also submitted robust summaries of existing data which CPMA asked EPA to accept as satisfying some of the Agency's data needs for C.I. Pigment Blue 61. Some of the existing data described in the summaries addressed C.I. Pigment Blue 56, a close analog of C.I. Pigment Blue 61, which CPMA requested EPA to accept as satisfying the Agency's data needs for C.I. Pigment Blue 61, providing a structure-activity relationship (SAR) argument in the test plan to justify that request (Refs. 43 and 44). CPMA also asked EPA to accept results for water solubility and octanol/water partition coefficient which were obtained by using an alternative method, due to the extremely low predicted solubility of C.I. Pigment Blue 61, instead of the methods specified by the test rule (Ref. 43). Finally, CPMA asked EPA to accept that determining a melting point for C.I. Pigment Blue 61 was not relevant because the pigment thermally decomposes before it melts (Ref. 43).

EPA reviewed the submitted information on physical/chemical properties and decided that melting point, boiling point, and vapor pressure determinations were not relevant because C.I. Pigment Blue 61 decomposes before it melts and the decomposition temperature had been reported (Ref. 45). EPA accepted the submitted data on water solubility as satisfying the Agency's data needs for that endpoint, but did not accept the calculated value submitted to satisfy the testing requirement for octanol/water partition coefficient (Ref. 45). EPA believes the calculated value would, most likely, underestimate the measured value (Ref. 45) required to be determined by HPV1.

EPA reviewed CPMA's SAR argument concerning C.I. Pigment Blue 61 and C.I. Pigment Blue 56 and agreed that C.I. Pigment Blue 56 is an acceptable surrogate for C.I. Pigment Blue 61, thereby allowing adequate data on C.I. Pigment Blue 56 to satisfy data needs for C.I. Pigment Blue 61 (Ref. 46). As a result, a biodegradation study of C.I. Pigment Blue 56, found adequate by an EPA review, satisfies the need for biodegradation data on C.I. Pigment Blue 61 (Ref. 46). Likewise, a chromosomal damage test of C.I. Pigment Blue 56, which EPA reviewed and found adequate, will satisfy the data need for that endpoint (Ref. 47) for C.I. Pigment Blue 61. EPA's review of the existing data on C.I. Pigment Blue 61 found the studies on fish acute toxicity, mammalian acute toxicity, and bacterial mutation assay to be adequate to satisfy the data needs for those endpoints (Ref. 47). The existing study on repeated-dose toxicity, however, did not satisfy the test requirement for that endpoint (Ref. 47).

Therefore, EPA is revoking the testing requirements for melting point, boiling point, vapor pressure, water solubility, biodegradation, fish acute toxicity, mammalian acute toxicity, bacterial reverse mutation, and chromosomal damage for C.I. Pigment Blue 61 by removing those requirements from those listed for that chemical substance in Table 2 in 40 CFR 799.5085(j). In order to clarify that test requirements for acute toxicity to Daphnia and toxicity to algae had not been satisfied by existing studies, and that the fish acute toxicity test requirement had been satisfied, the test symbol C2 replaces C1 for C.I. Pigment Blue 61 in Table 2 in 40 CFR 799.5085(j). The testing requirements for C.I. Pigment Blue 61 that are not revoked by this direct final rule include tests for octanol/water partition coefficient, acute toxicity to Daphnia, toxicity to algae, and combined 28-day repeated-dose toxicity with a reproduction/developmental toxicity screen. Studies responding to those test requirements were submitted to the Agency. The full studies were claimed to be CBI and are not available to the public, but robust summaries of those studies (Ref. 48) are in the docket.

6. C.I. Solvent Black 7. On July 29, 2006 and August 4, 2006, the Solvent Black 7 Consortium formed under the auspices of SOCMA submitted eight existing studies on C.I. Solvent Black 7 (CAS No. 8005-02-5) and requested EPA to determine if they satisfied some of the Agency's data needs specified in HPV1 (Ref. 49). EPA found that the studies satisfied the need for data on inherent biodegradation, fish acute toxicity, Daphnia acute toxicity, toxicity to algae, acute mammalian toxicity, chromosomal damage, and repeated-dose 28-day oral toxicity in rodents, making those test requirements for C.I. Solvent Black 7 unnecessary (Ref. 50). Although the 28-day oral toxicity study in rodents was accepted, it lacked a required screening test for reproduction/developmental toxicity. Although a test for chronic toxicity to Daphnia was not required for this chemical substance, SOCMA submitted a Daphnia magna reproduction test because the log K ow of C.I. solvent Black 7 is close to 4.2 and a log K ow greater than 4.2 would have made a Daphnia chronic toxicity test a requirement (Refs. 1 and 51). The submitted study was evaluated and was not found adequate to satisfy the objectives of a Daphnia chronic toxicity study because the study was only 10 days long instead of 21 days, and only one concentration was tested and it was lethal, preventing observation of sub-lethal endpoints (Ref. 52).

Therefore, EPA is revoking the testing requirements for inherent biodegradation, fish acute toxicity, Daphnia acute toxicity, toxicity to algae, acute mammalian toxicity, chromosomal damage, and repeated-dose 28-day oral toxicity in rodents for C.I. Solvent Black 7 (CAS No. 8005-02-5) by removing those requirements from those listed for that chemical substance in Table 2 in 40 CFR 799.5085(j). In order to clarify that the requirement for a reproduction/developmental toxicity screening test had not been satisfied, but that the requirement for a repeated-dose 28-day oral toxicity test had been satisfied, the test symbol F2 replaces F1 for C.I. Solvent Black 7 in Table 2 in 40 CFR 799.5085(j). The testing requirements not revoked by this direct final rule include the tests to determine five physical/chemical properties and to screen for reproduction/developmental toxicity. Studies responding to those test requirements have been submitted to the Agency (Refs. 51 and 53).

In the economic impact analysis of this direct final rule, the Agency estimated the total testing cost to industry to be $4.03 million for all 17 chemical substances, with an average of approximately $237,000 per chemical substance (Ref. 54). This total included an additional 25% in administrative costs. An amendment to HPV1 revoking testing requirements for Coke-Oven Light Oil (Coal) reduced the total cost to industry to an estimated $3.7 million for the remaining 16 chemical substances, with an average compliance cost of approximately $232,000 per chemical substance. This direct final rule would have the effect of further reducing the total testing cost by an estimated $1.5 million (approximately 41%), by eliminating all the testing requirements for acetyl chloride; imidodicarbonic diamide; methane, isocyanato-; and urea, reaction products with formaldehyde; as well as some of the testing requirements for 9,10-anthracenedione; 1-chlorododecane; phenol, 4,4′-methylenebis [2,6-bis (1,1-dimethylethyl)]-; methanesulfinic acid, hydroxy-, monosodium salt; benzenesulfonic acid, [[4-[[4-(phenylamino)phenyl][4-(phenylmino)-2,5-cyclohexadien-1-ylidene]methyl]phenyl]amino]-; and C.I. Solvent Black 7 (Ref. 55). In addition, the 25% administrative costs would be eliminated for these tests. The reduced total cost for the remaining 12 chemical substances with testing requirements is estimated to be $2.2 million (i.e., $3.7 million minus $1.5 million), with an average compliance cost per chemical substance of approximately $184,000 (Ref. 55).

On the effective date of the revocations in this direct final rule of the TSCA section 4 testing requirements for acetyl chloride (CAS No. 75-36-5); imidodicarbonic diamide (CAS No. 108-19-0), methane, isocyanato- (CAS No. 624-83-9); and urea, reaction products with formaldehyde (CAS No. 68611-64-3), persons who export or intend to export those chemical substances will no longer be subject to any TSCA section 12(b) export notification requirements triggered by HPV1 (See 40 CFR part 707, subpart D). The export notification requirements remain the same for the other six chemical substances discussed in the preamble of this direct final rule that are listed as subject to the requirements of HPV1 (Ref. 1); these chemical substances are 9,10-anthracenedione (CAS No. 84-65-1); 1-chlorododecane (CAS No. 112-52-7); phenol, 4,4′-methylenebis[2,6-bis(1,1-dimethylethyl)]- (CAS No. 118-82-1); methanesulfinic acid, hydroxy-, monosodium salt (CAS No. 149-44-0); benzenesulfonic acid, [[4-[[4-(phenylamino)phenyl][4-(phenylimino)-2,5-cyclohexadien-1-ylidene]methyl]phenyl]amino]- (CAS No. 1324-76-1); and C.I. Solvent Black 7 (CAS No. 8005-02-5).

EPA is publishing this direct final rule without prior proposal because the Agency views this as a non-controversial amendment and anticipates no adverse comment as this action simply revokes testing which is not feasible, or testing for which the substantial production finding was not supported, or testing for which EPA has adequate data at this time. This direct final rule is effective May 15, 2012 without further notice, unless EPA receives adverse comment or a written request for an opportunity to present oral comments on or before April 16, 2012. If EPA receives adverse comment or a written request for an opportunity to present oral comments on one or more distinct amendments, paragraphs, or sections of this direct final rule, the Agency will publish a timely withdrawal in the Federal Register indicating which provisions will become effective and which provisions are being withdrawn due to adverse comment or a written request for an opportunity to present oral comments. Any distinct amendment, paragraph, or section of this direct final rule for which the Agency does not receive adverse comment or a request for an opportunity to present oral comments is effective May 15, 2012, notwithstanding any adverse comment or request on any other distinct amendment, paragraph, or section of this direct final rule. For any distinct amendment, paragraph, or section of this direct final rule that is withdrawn due to adverse comment or a request for an opportunity to present oral comments, EPA will publish a notice of proposed rulemaking in a future issue of the Federal Register . The Agency will address the comment or request for an opportunity to present oral comments on any such distinct amendment, paragraph, or section as part of that notice of proposed rulemaking.

Each reference listed in this unit has a docket ID number (EPA-HQ-OPPT-2005-0033) followed by a four-digit document ID number. All document ID numbers are listed in numerical order in the docket. To access a particular document in the docket, go to http://www.regulations.gov and follow the online instructions.

This direct final rule only eliminates existing requirements; it does not otherwise impose any new or revised requirements. As such, this action is not subject to review by the Office of Management and Budget (OMB) as a “significant regulatory action” under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Nor does it impose or change any information collection burden that requires additional review by OMB under the provisions of the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq. ).

Because this direct final rule eliminates existing requirements without imposing any new or revised requirements, the Agency certifies pursuant to section 605(b) of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ), that this action will not have a significant economic impact on a substantial number of small entities.

For the same reasons, it is not subject to the requirements of sections 202 and 205 of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1531-1538), and does not significantly or uniquely affect small governments or impose a significant intergovernmental mandate, as described in sections 203 and 204 of UMRA. This direct final rule does not have tribal implications, as specified in Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), or federalism implications as specified in Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999).

Since this action is not economically significant under Executive Order 12866, it is not subject to Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), and 13211, “Actions concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001).

This action does not involve technical standards; thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply.

This direct final rule does not involve special consideration of environmental justice related issues as specified in Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

The Congressional Review Act, 5 U.S.C. 801 et seq., generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report to each House of the Congress and the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . This rule is not a “major rule” as defined by 5 U.S.C. 804(2).

Therefore, 40 CFR chapter I is amended as follows:

The West Indian manatee (Trichechus manatus) was listed as an endangered species on June 2, 1970 (35 FR 8491), under the Endangered Species Conservation Act of 1969 and this status was retained under the Endangered Species Act of 1973, as amended (ESA) (16 U.S.C. 1531 et seq. ), and the population is further protected as a depleted stock under the Marine Mammal Protection Act of 1972, as amended (MMPA) (16 U.S.C. 1361 et seq. ). On October 22, 1979, the U.S. Fish and Wildlife Service (Service) adopted a regulatory process to provide a means for establishing manatee protection areas in waters under the jurisdiction of the United States where manatees were taken by waterborne activities (44 FR 60964). The first manatee protection areas were designated in Kings Bay on November 12, 1980, for the purpose of preventing the take of manatees by harassment from waterborne activities and included the Banana Island Sanctuary (including King Spring), the Sunset Shores Sanctuary, and the Magnolia Springs Sanctuary (45 FR 74880). The Service subsequently designated four additional manatee protection areas in Kings Bay on May 12, 1994, and on October 16, 1998, (including the Buzzard Island Sanctuary, Tarpon Springs Sanctuary, Warden Key Sanctuary, and Three Sisters Springs Sanctuary, respectively) (59 FR 24654 and 63 FR 55553). To prevent the imminent take of manatees by waterborne activities, we published an emergency rule that temporarily established the Kings Bay manatee refuge in Citrus County, Florida, on November 9, 2010 (75 FR 68719). On June 22, 2011, the Service proposed to establish the manatee refuge throughout Kings Bay, while maintaining the seven existing Manatee Sanctuaries in the Bay (76 FR 36493).

The West Indian manatee includes two subspecies: the Florida manatee ( Trichechus manatus latirostris ) and the Antillean manatee ( Trichechus manatus manatus ). Florida manatees can be found throughout the southeastern United States, with Florida at the core of its range. Extensive efforts are ongoing by the Service and the Florida Fish and Wildlife Conservation Commission (Commission or FWC) to recover this species. In particular, significant efforts are made to minimize human-related threats and to reduce the number of manatees taken by human activities.

Take, as defined by section 3(19) of the ESA, means to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, collect, or to attempt to engage in any such conduct. Harm is further defined by regulation at 50 CFR 17.3 to mean an act which actually kills or injures wildlife. Harass is also defined by regulation to mean any intentional or negligent act or omission which creates the likelihood of injury to wildlife by annoying it to such an extent as to significantly disrupt normal behavioral patterns, which include, but are not limited to, breeding, feeding, or sheltering (50 CFR 17.3). Take, as defined by section 3(13) of the MMPA, means to harass, hunt, capture, or kill, or attempt to harass, hunt, capture, or kill any marine mammal. Take is further defined in 50 CFR 18.3 to include, without limitation, any of the following: The collection of dead animals or parts thereof; the restraint or detention of a marine mammal, no matter how temporary; tagging a marine mammal; or the negligent or intentional operation of an aircraft or vessel, or the doing of any other negligent or intentional act which results in the disturbing or molesting of a marine mammal. Under section 3(18) of the MMPA, harassment is defined to include any act of pursuit, torment, or annoyance, which (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B). All takings, including takings by harassment, are prohibited.

The primary human-related causes of death and injury to manatees rangewide include watercraft-related strikes (impacts and/or propeller strikes), entrapment and/or crushing in water control structures (gates, locks, etc.), and entanglement in fishing lines, crab pot lines, etc. A 2005 analysis concluded that watercraft-related mortality was the leading human-related cause of death for manatees throughout Florida (MPSWG 2005, p. 5). A subsequent threats analysis concluded that watercraft strikes and the potential loss of warm-water habitat pose the greatest threats to the Florida manatee population (Runge et al. 2007, p. 17).

The Service may establish manatee protection areas (in the form of a manatee refuge or a manatee sanctuary) whenever there is substantial evidence showing that such establishment is necessary to prevent the taking of one or more manatees. Regulations authorizing designation of manatee refuges and sanctuaries in areas where restrictions or prohibitions on certain waterborne activities are needed to prevent the take of manatees are codified in 50 CFR 17 subpart J. A manatee refuge is defined as an area in which the Director has determined that: (1) Certain waterborne activities would take one or more manatees; or (2) certain waterborne activities must be restricted to prevent the take of one or more manatees, including but not limited to taking by harassment. A manatee sanctuary is an area where it has been determined that any waterborne activity would result in the taking of one or more manatees, including but not limited to a taking by harassment (50 CFR 17.102). Manatee refuges and manatee sanctuaries are established under a different authority from Federal National Wildlife Refuges.

The Florida manatee's range includes Kings Bay, Florida. Kings Bay is a large embayment located at the headwaters of the Crystal River, a tidal river located on Florida's west coast. Springs are the primary water source for this estuarine system; a recent report describes 70 springs that discharge warm, artesian water (that is, water rises under pressure from a permeable stratum overlaid by impermeable rock) into Kings Bay (Vanasse, Hangen, and Brustlin, Inc., 2010, p. 1). Kings Bay is partially located within the City of Crystal River's city limits, and wholly within Citrus County, Florida. Citrus County and the City of Crystal River are an integral part of “Florida's Nature Coast,” a northwestern Florida region marketed for outdoor recreational opportunities, including opportunities for viewing manatees (Nature Coast Coalition 2010 Web site). In addition to viewing manatees, area recreationists engage in snorkeling and diving, boating, canoeing and kayaking, fishing, waterskiing, and other activities (Gold 2008, pp. 4-5). Local eco-tour operators, dive shops, marinas, hotels and motels, restaurants, and other businesses benefit from these activities (Buckingham 1990, p. 6).

The Kings Bay springs constitute one of the most important natural warm-water shelters for manatees. Manatees have historically been attracted to the warm, spring-fed waters in Kings Bay where they retreat from the cold during the winter. As manatee populations have increased, year-round use of Kings Bay by manatees has increased accordingly (Figures 1 and 2). Wintering manatees have been the focus of a manatee viewing industry for many years, and bay waters are widely used by commercial and recreational waterway users for a variety of activities throughout the year. Manatees are struck and killed or injured by watercraft operating in Kings Bay. Manatees are harassed by the viewing public. The number of manatees struck and killed by watercraft in Kings Bay is increasing, as are the number of public reports of acts of manatee harassment.